20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

ANNUAL REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010 Commission file number: 1-3330

PT Indosat Tbk

(Exact name of Registrant as specified in its charter)

REPUBLIC OF INDONESIA

(Jurisdiction of incorporation or organization)

Indosat Building

Jalan Medan Merdeka Barat No.21

Jakarta 10110—Indonesia

(62-21) 3869615

(Address and telephone number of principal executive offices)

Name:	Nicholas Swierzy
Telephone:	+62-21-3869615
Email:	investor@indosat.com
Facsimile:	+62-21-30003757
Address:	Jalan Medan Merdeka Barat No. 21
	Jakarta 10110
	Indonesia

Securities registered pursuant to Section 12(b) of the Act.

Title of each Class	Name of each exchange on which registered
American Depositary Shares, each representing 50 Series B shares, par value Rp100 per share	New York Stock Exchange
Series B shares, par value Rp100 per share	New York Stock Exchange*

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Series A shares, par value Rp100 per share	1
Series B shares, par value Rp100 per share	5,433,933,499

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  x    No  ¨

If this report is annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of the Securities Exchange Act of 1934.

Yes  ¨    No  x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  ¨    No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  ¨    International Financial Reporting Standards as issued by the International Accounting Standards Board  x    Other  ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17  ¨    Item 18  ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ¨    No   x

* The Series B shares were registered in connection with the registration of the American Depositary Shares and are not listed for trading on the New York Stock Exchange.

TABLE OF CONTENTS

		Page
CERTAIN DEFINITIONS, CONVENTIONS AND GENERAL INFORMATION			ii
FORWARD-LOOKING STATEMENTS			ii
GLOSSARY			iii
PART I
Item 1:	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS		1
Item 2:	OFFER STATISTICS AND EXPECTED TIMETABLE		1
Item 3:	KEY INFORMATION		1
Item 4:	INFORMATION ON THE COMPANY		26
Item 5:	OPERATING AND FINANCIAL REVIEW AND PROSPECTS		64
Item 6:	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES		96
Item 7:	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS		105
Item 8:	FINANCIAL INFORMATION		107
Item 9:	THE OFFER AND LISTING		112
Item 10:	ADDITIONAL INFORMATION		115
Item 11:	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		128
Item 12:	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES		132
PART II
Item 13:	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES		134
Item 14:	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS		134
Item 15:	CONTROLS AND PROCEDURES		134
Item 16A:	AUDIT COMMITTEE FINANCIAL EXPERT		135
Item 16B:	CODE OF ETHICS		135
Item 16C:	PRINCIPAL ACCOUNTANT FEES AND SERVICES		135
Item 16D:	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES		136
Item 16E:	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS		136
Item 16F:	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT		137
Item 16G:	CORPORATE GOVERNANCE		137
PART III
Item 17:	FINANCIAL STATEMENTS		139
Item 18:	FINANCIAL STATEMENTS		139
Item 19:	EXHIBITS		139

i

CERTAIN DEFINITIONS, CONVENTIONS AND GENERAL INFORMATION

Unless the context otherwise requires, references in this Form 20-F to the “Company,” “Indosat,” “we,” “us,” and “our” are to PT Indosat Tbk and its consolidated subsidiaries. All references to “Indonesia” are references to the Republic of Indonesia. All references to the “Government” herein are references to the Government of the Republic of Indonesia. References to “United States” or “U.S.” are to the United States of America. References to “United Kingdom” are to the United Kingdom of Great Britain and Northern Ireland. References to “Indonesian rupiah” or “Rp” are to the lawful currency of Indonesia and references to “U.S. dollars” or “US$” are to the lawful currency of the United States. Certain figures (including percentages) have been rounded for convenience, and therefore indicated and actual sums, quotients, percentages and ratios may differ.

Our consolidated financial statements as of January 1, 2009 and December 31, 2009 and 2010, and for the years ended December 31, 2008, 2009 and 2010 included in this annual report have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Our consolidated financial statements as of January 1, 2009 and December 31, 2009, and for the years ended December 31, 2008 and 2009 included in this annual report contains the restatement of our consolidated statement of financial position, consolidated statement of comprehensive income and consolidated statement of changes in stockholders’ equity for the years ended December 31, 2008 and 2009, to cover the accounting policy change relating to leases, which is detailed in Note 2g to our consolidated financial statements included elsewhere in this annual report. Before January 1, 2010, under IFRS, the costs to acquire landrights, as well as other expenses associated with such acquisition, are capitalized as prepaid landrights lease, and were amortized over the period of the right to use the land obtained from the Government, ranging from 20 to 30 years. Starting January 1, 2010, based on an amendment to IAS 17, we classify our land leases as finance leases and present them in our financial statements as property and equipment. We give retroactive application to this accounting change, and amortize land leases over 50 years.

Solely for the convenience of the reader, certain Indonesian rupiah amounts have been translated into U.S. dollars at specified rates. Unless otherwise indicated, U.S. dollar equivalent information for amounts in Indonesian rupiah is translated at the Indonesian Central Bank Rate for December 31, 2010, which was Rp8,991 to US$1.00. The exchange rate of Indonesian rupiah for U.S. dollars on April 20, 2011 was Rp8,657 to US$1.00. The Federal Reserve Bank of New York does not certify for customs purposes a noon buying rate for cable transfers in Indonesian rupiah. No representation is made that the Indonesian rupiah or U.S. dollar amounts shown herein could have been or could be converted into U.S. dollars or Indonesian rupiah, as the case may be, at any particular rate or at all. See “Item 3: Key Information—Exchange Rate Information” for further information regarding rates of exchange between Indonesian rupiah and U.S. dollars.

FORWARD-LOOKING STATEMENTS

This Form 20-F contains “forward-looking statements,” as defined in Section 27A of the Securities Act, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, and within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our expectations and projections for our future operating performance and business prospects. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” and similar words identify forward-looking statements. In addition, all statements other than statements of historical facts included in this Form 20-F are forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements herein are reasonable, we can give no assurance that such expectations will prove to be correct. These forward-looking statements are subject to a number of risks and uncertainties, including changes in the economic, social and political environments in Indonesia. This Form 20-F discloses, under “Item 3: Key Information—Risk Factors” and elsewhere, important factors that could cause actual results to differ materially from our expectations.

ii

GLOSSARY

The explanations of technical terms set forth below are intended to assist you to understand such terms, but are not intended to be technical definitions.

“2G” second generation of wireless telephone technology that includes GSM, Interim Standard-95 (IS-95) and personnel digital cellular (PDC) technology

“3G” third generation of mobile telecommunications standards, including Wideband Code Division Multiple Access/Universal Mobile Telecommunication System (WCDMA/UMTS)

“ADS” American Depository Share, a security that represents an ownership interest in the shares of a foreign private issuer. Each of our ADSs represents 50 shares of our common stock.

“analog” a signal, whether voice, video or data, which is transmitted in similar, or analogous, signals; commonly used to describe telephone transmission and/or switching services that are not digital

“ARPM” the average monthly revenue per minute (in Indonesian rupiah), computed by dividing revenues from monthly recurring prepaid and postpaid cellular services, excluding non-recurring revenues such as activation fees and special auctions of telephone numbers, for the relevant period, by the total minutes (billed and unbilled) of outgoing call usage of prepaid and postpaid cellular subscribers for such period

“ARPU” Average Revenue Per User, an evaluation statistic for a network operator’s subscriber base. ARPU is computed by dividing monthly recurring prepaid and postpaid cellular services revenues (usage charges, value-added services, interconnection revenues and monthly subscription charges), excluding non-recurring revenues such as activation fees and special auctions of telephone numbers, for the relevant period by the average number of prepaid and postpaid cellular subscribers. The average number of prepaid and postpaid cellular subscribers is the sum of the total number of active cellular subscribers at the beginning and end of each month divided by two. We define an “active cellular subscriber” as a cellular subscriber who: (i) in the case of a postpaid cellular subscriber, has no outstanding balance remaining due more than 120 days after the last statement date; or (ii) in the case of a prepaid cellular subscriber, recharges the SIM card within a 33-day “grace period” immediately following the SIM card’s expiry date by adding certain minimum amounts to the SIM card. Due to changes in the method used to calculate the number of our prepaid cellular subscribers, our ARPU set forth in this annual report are not comparable between certain periods. See “Item 3: Key Information—Risk Factors—Risks Relating to Our Cellular Services Business—Our subscriber related operating data may not be comparable between periods”

iii

“ATM” Asynchronous Transfer Mode, the standard packet-switching protocol for transmitting and receiving data via cell relay (uniform 53-byte cells), wherein information for multiple service types, such as voice, video or data is conveyed in small, fixed-size cells

“attenuation” gradual loss in intensity of radio frequency signals by absorption and scattering

“backbone” the highest level in hierarchical network and designed to carry the heaviest traffic. Backbones are either switched (using ATM, frame relay or both) or routed (using only routers and no switches). The transmission links between nodes or switching facilities consist of microwave, submarine cable, satellite, optical fiber or other transmission technology

“bandwidth” the capacity of a communication link

“base station controller” the controlling equipment in a 2G network that coordinates the operation of multiple BTSs

“BTS” Base Transceiver Station, a mobile phone base station comprised of radio transmitter and receiver units used for transmitting and receiving voice and data to and from mobile phones in a particular cell area

“CDMA” Code Division Multiple Access, a transmission technology where each transmission is sent over multiple frequencies and a unique code is assigned to each data or voice transmission, allowing multiple users to share the same frequency spectrum

“cellular backhaul” the transmission lines that connect base station controllers, BTSs and mobile switching centers

“churn rate” the subscriber disconnections for a given period, determined by dividing the sum of voluntary and involuntary deactivations during the period by the average number of cellular subscribers for the same period. The average number of cellular subscribers is the sum of the total number of active cellular subscribers at the beginning and end of each month divided by two

“dBW” decibel referencing one watt

“digital” a method of storing, processing and transmitting information through the use of distinct electronic or optical pulses that represent the binary digits 0 and 1. Digital transmission and switching technologies employ a sequence of these pulses to represent information as opposed to the continuously variable analog signal. Compared to analog networks, digital networks allow for greater capacity, lower interference, protection against eavesdropping and automatic error correction

“DLD” Domestic Long-Distance, long-distance telecommunications services within a country

iv

“EDGE” Enhanced Data GSM Environment, a faster version of the global system for GSM wireless service designed to deliver data at rates of up to 384 Kbps, thereby enabling the delivery of multimedia and other broadband applications to mobile users

“fiber optic cable” a transmission medium constructed from extremely pure and consistent glass through which digital signals are transmitted as pulses of light. Fiber optic cables offer greater transmission capacity and lower signal distortion than traditional copper cables

“Fixed telecommunication” also referred to as “fixed voice service” and includes IDD, DLD and fixed local service. This service also includes fixed wireless access service

“frame relay” a form of packet switching protocol which breaks data stream into small data packets called “frames,” equipped with more sophisticated error detection and correction checking, compared to traditional forms of packet switching (also referred to as “frame net” in our audited consolidated financial statements included elsewhere in this annual report)

“FWA” Fixed Wireless Access service, a limited mobility service that links to an area code

“GSM” Global System for Mobile Communications, a digital cellular telecommunications system standardized by the European Telecommunications Standards Institute based on digital transmission and cellular network architecture with roaming in use throughout Europe, Japan and in various other countries

“GPRS” General Packet Radio Service, a standard for cellular communications which supports a wide range of bandwidths and is particularly suited for sending and receiving data, including e-mail and other high bandwidth applications

“HSDPA” High Speed Downlink Packet Access, a packet-based data service or protocol in the 3G (WCDMA/UMTS) standard which provides downlink transmission data at speeds of up to 14.4 Mbps

“HSPA+” High Speed Packet Access +, a packet-based data service or protocol in the 3G (WCDMA/UMTS) standard which provides higher downlink and uplink transmission data speeds by enhancing higher order modulation and utilizing multiple-input and multiple-output (MIMO) and multicarrier technologies, reaching downlink speed of up to 42Mbps and uplink speed of up to 11.6Mbps

“IDD” International Direct Dialing, a telecommunications service that allows a user to make international long-distance calls without using an operator

“interconnection” practice of allowing a competing telecommunications operator to connect its network to the network or network elements of other telecommunications operators to enable the termination of traffic originated by customers of the competing telecommunications operator’s network to the customers of the other telecommunications operator’s network

v

“IPLC” an international private line circuit

“IP VPN” Internet Protocol Virtual Private Network, a packet-based IP routing service that provides economic data transaction facilities between customer locations while maintaining the level of privacy, reliability and service quality dictated by rapidly evolving businesses. IP VPN service provides flexible any-to-any connectivity using Internet Protocol and allows businesses to communicate privately with branch offices, to exchange corporate network traffic, and to establish communication with trusted external partners at low-wide area networking costs

“ISP” Internet Service Provider, a company that provides access to the Internet by providing the interface to the Internet backbone

“Kbps” kilobits per second, a measure of digital transmission speed

“LAN” Local Area Network, a short-distance network designed to connect computers within a localized environment to enable the sharing of data and other communication

“Mbps” megabits per second, a measure of digital transmission speed

“media gateway” a translation unit between telecommunications networks using different standards, such as PSTN, next generation networks and radio access networks

“MIDI” Fixed data services, which include Multimedia, Data Communications and Internet services

“Minutes of Usage” the minutes of usage per cellular subscriber, computed by dividing the total minutes of outgoing call usage of prepaid and postpaid cellular subscribers for each month by the average number of prepaid and postpaid cellular subscribers. The average number of prepaid and postpaid cellular subscribers is the sum of the total number of active cellular subscribers at the beginning and end of each month divided by two. We define an “active cellular subscriber” as a cellular subscriber who: (i) in the case of a postpaid cellular subscriber, has no outstanding balance remaining due more than 120 days after the last statement date; or (ii) in the case of a prepaid cellular subscriber, recharges the SIM card within a 33 day “grace period” immediately following the SIM card’s expiry date by adding certain minimum amounts to the SIM card. Due to changes in the method used to calculate the number of our prepaid cellular subscribers, our minutes of usage per cellular subscriber set forth in this annual report are not comparable between certain periods. See “Item 3: Key Information—Risk Factors—Risks Relating to Our Cellular Services Business—Our subscriber-related operating data may not be comparable between periods”

“MMS” Multimedia Messaging Services, a cellular telecommunications system that allows SMS messages to include graphics, audio or video components

vi

“MPLS” Multi-Protocol Label Switching, a data packet forwarding technology with improved forwarding speed of routers using labels to make data-forwarding decisions that increase the efficiency of data traffic flow through a traffic management pattern that classifies data based on its application

“network infrastructure” the fixed infrastructure equipment consisting of fiber optic cables, copper cables, transmission equipment, multiplexing equipment, switches, radio transceivers, antennas, management information systems and other equipment that receives, transmits and processes signals to and from subscriber equipment and/or between wireless networks and fixed networks

“Node B” a BTS for a 3G network

“PSTN” Public Switched Telephone Network, a fixed telephone network operated and maintained by PT Telekomunikasi Indonesia Tbk

“RIO” Reference Interconnect Offer, a regulatory term that refers to the document that covers technical, operational, economical and other aspects of interconnection access by one telecommunications network operator in favor of other telecommunications operators

“roaming” the cellular telecommunications feature that permits subscribers of one network to use their mobile handsets and telephone numbers when in a region with cellular network coverage provided by another provider

“SIM” or “SIM card” Subscriber Identity Module, the “smart” card designed to be inserted into a mobile handset containing all subscriber-related data such as phone numbers, service details and memory for storing messages

“SMS” Short Message Service, a means to send or receive alphanumeric messages to or from mobile handsets

“VoIP” Voice over Internet Protocol, a means of sending voice information using Internet protocol. The voice information is transmitted in discrete packets in digital form rather than the traditional circuit-committed protocols of the PSTN, thereby avoiding the tolls charged by conventional long-distance service providers

“VSAT” Very Small Aperture Terminal, a relatively small satellite dish, typically 1.5 to 3.8 meters in diameter, placed at users’ premises and used for two-way data communications through satellite

“WAP” Wireless Application Protocol, an open and global standard of technology platform that enables mobile users to access and interact with mobile information services such as e-mail, websites, financial information, online banking information, entertainment (infotainment), games and micro-payments

“x.25” a widely used data packet-switching standard that has been partially replaced by frame relay services

vii

PART I

Item 1: IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

Item 2: OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

Item 3: KEY INFORMATION

Selected Financial and Other Data

The following tables present our selected consolidated financial information and operating statistics as of the dates and for each of the periods indicated. The selected financial information as of and for the years ended December 31, 2008, 2009 and 2010 presented below is based upon our audited consolidated financial statements prepared in conformity with IFRS as issued by IASB. The selected consolidated financial information as of and for the years ended December 31, 2008 and 2009 presented below has been adjusted to reflect the restatement of our consolidated statement of financial position and consolidated statement of comprehensive income for the years ended December 31, 2008 and 2009, as more fully described in the front of this annual report and in Note 2g to our consolidated financial statements included elsewhere in this annual report. The selected financial information as of and for the years ended December 31, 2008, 2009 and 2010 should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements, including the notes thereto, and the other information included elsewhere in this annual report. The selected financial information as of and for the years ended December 31, 2006 and 2007 is based upon our audited consolidated financial statements prepared in conformity with generally accepted accounting principles in Indonesia (“Indonesian GAAP”), with a reconciliation to U.S. GAAP. The selected financial information as of and for the years ended December 31, 2006 and 2007 should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements, including the notes thereto, and the other information included elsewhere in our previous annual reports filed with the U.S. SEC on May 8, 2008. Therefore, financial information for 2008, 2009 and 2010 are not comparable with financial information for 2006 and 2007 and are presented separately. The audited consolidated financial statements as of and for the years ended December 31, 2006, 2007, 2008 and 2009 have been audited by Purwantono, Sarwoko & Sandjaja and the audited consolidated financial statements as of and for the year ended December 31, 2010 has been audited by Purwantono, Suherman & Surja, the Indonesian member firm of Ernst & Young Global.

1

	As of December 31,
	2008 (Restated) Rp.		2009 (Restated) Rp.		2010 Rp.		2010 US$(1)
	(Rp in billions and US$ in millions, except for number of outstanding shares)
Financial Position Data:
IFRS:
Assets
Cash and cash equivalents		5,737.9		2,836.0		2,075.3		230.8
Other current assets (other than cash and cash equivalents)—net		3,953.9		4,302.9		4,083.6		454.2
Due from related parties—net		42.5		7.2		8.4		0.9
Deferred tax assets—net		70.8		88.0		95.0		10.5
Long-term investments		3.4		3.2		2.7		0.3
Property and equipment—net		38,333.6		44,358.1		43,489.4		4,837.0
Goodwill and other intangible assets—net		2,060.7		2,042.8		2,063.2		229.5
Other non-current assets		1,659.7		1,796.8		1,608.1		178.9
Total assets		51,862.5		55,435.0		53,425.7		5,942.1
Liabilities
Current liabilities		10,719.7		13,067.3		11,909.9		1,324.6
Due to related parties		14.7		13.8		22.1		2.5
Deferred tax liabilities—net		1,348.8		1,651.8		1,951.3		217.0
Loans payable (net of current maturities)		10,812.2		12,715.5		7,666.8		852.7
Bonds payable (net of current maturities)		10,315.6		8,472.2		12,114.1		1,347.4
Other non-current liabilities		871.8		939.5		1,059.5		117.8
Total liabilities		34,082.8		36,860.1		34,723.7		3,862.0
Net assets (total assets—total liabilities)		17,779.7		18,574.9		18,702.0		2,080.1
Capital stock		543.4		543.4		543.4		60.4
Stockholders’ equity		17,779.7		18,574.9		18,702.0		2,080.1
Total liabilities and stockholders’ equity		51, 862.5		55,435.0		53,425.7		5,942.1
Number of outstanding shares		5,433,933,500		5,433,933,500		5,433,933,500		N/A

2

	For the years ended December 31,
	2008 (Restated) Rp			2009 (Restated) Rp			2010 Rp			2010 US$(1)
	(Rp in billions and US$ in millions, except per share and per ADS data)
Comprehensive Income Data:
IFRS:
Operating revenues:
Cellular		14,460.8			14,331.3			15,867.1			1,764.8
MIDI		2,733.4			2,712.6			2,488.1			276.7
Fixed telecommunication		2,021.8			1,803.0			1,293.2			143.8
Total operating revenues		19,216.0			18,846.9			19,648.4			2,185.3
Total operating expenses		14,487.8			15,621.4			16,126.7			1,793.6
Operating income		4,728.2			3,225.5			3,521.7			391.7
Other income (expense):
Interest income		460.1			139.0			143.4			15.9
Gain (loss) on foreign exchange—net		(885.7	)		1,656.4			492.4			54.8
Gain (loss) on change in fair value of derivatives—net		136.6			(486.9	)		(448.8	)		(49.9	)
Financing cost		(1,858.3	)		(1,873.0	)		(2,271.6	)		(252.7	)
Other expense—net		(25.6	)		(116.8	)		(111.8	)		(12.4	)
Total other expense—net		(2,172.9	)		(681.3	)		(2,196.4	)		(244.3	)
Income tax expense—net		(485.3	)		(783.9	)		(422.4	)		(47.0	)
Profit for the year		2,070.0			1,760.3			902.9			100.4
Attributable to owners of the Company		2,043.8			1,704.0			824.7			91.7
Attributable to non-controlling interests		26.2			56.3			78.2			8.7
Weighted average number of shares outstanding		5,433,933,500			5,433,933,500			5,433,933,500			N/A
Basic and diluted earnings per share attributable to owners of the Company (in full amounts)(2)		376.11			313.57			151.76			—
Dividends declared per share (in full amounts)(2)		172.85			137.86			—			—
Dividends declared per share (in full amounts) (in US$)(2)(4)		0.02			0.015			—			—
Dividends declared per ADS (in full amounts) (in US$)(2)(3)(4)		0.86			0.77			—			—

3

	As of and for the years ended December 31,
	2008 (Restated) Rp.			2009 (Restated) Rp.			2010       Rp.			2010       US$(1)
	(Rp in billions and US$ in millions, except for number of outstanding shares, EBITDA margin and financial ratios)
IFRS:
Cash Flow Statement Data
Net cash provided by (used in):
Operating activities		6,513.3			4,051.2			6,839.0			760.6
Investing activities		(10,286.9	)		(10,670.7	)		(5,970.7	)		(664.1	)
Financing activities		1,458.5			3,724.7			(1,629.7	)		(181.2	)
Other Financial Data (unaudited)
EBITDA(5)		9,293.6			8,797.1			9,684.5			1,077.1
EBITDA margin(6)		48.4	%		46.7	%		49.3	%		49.3	%
Other Financial Data
Capital expenditures(7)		12,341.9			11,584.5			5,515.0			613.4
Financial Ratios (unaudited)
Total Debt to EBITDA(8)		2.38x			2.93x			2.52x			—
Net Debt to EBITDA(9)		1.76x			2.90x			2.48x			—
EBITDA to Interest Expense		5.23			4.86x			4.66x			—

4

	As of December 31,
	2006 Rp		2007 Rp
	(Rp in billions and US$ in millions, except for number of outstanding  shares)
Balance Sheet Data:
Indonesian GAAP:
Assets
Cash and cash equivalents		2,807.3		8,053.0
Other current assets (other than cash and cash equivalents)		2,858.2		2,773.1
Due from related parties—net		23.3		56.5
Deferred tax assets—net		46.6		87.1
Long-term investments		8.8		3.0
Property and equipment—net		24,918.6		30,572.8
Goodwill and other intangible assets—net		2,394.5		2,087.2
Other non-current assets		1,171.4		1,672.4
Total assets		34,228.7		45,305.1
Liabilities
Current liabilities		6,803.2		11,658.6
Due to related parties		29.4		64.9
Deferred tax liabilities—net		1,244.5		1,482.2
Loans payable (net of current portion)		1,504.8		4,249.0
Bonds payable (net of current portion)		8,734.0		10,088.7
Other non-current liabilities		510.4		919.6
Total liabilities		18,826.3		28,463.0
Net assets (total assets—total liabilities)		15,402.4		16,842.1
Minority interest		200.6		297.4
Stockholders’ equity		15,201.8		16,544.7
Total liabilities and stockholders’ equity		34,228.7		45,305.1
Number of outstanding shares		5,433,933,500		5,433,933,500
U.S. GAAP:(10)
Total assets		36,990.9		48,840.1
Total stockholders’ equity		16,574.8		18,260.6

5

	For the years ended December 31,
	2006              Rp			2007              Rp
	(Rp in billions and US$ in millions, except per share and per ADS data)
Income Statement Data:
Indonesian GAAP:
Operating revenues:
Cellular(11)(17)		9,446.9			12,924.8
MIDI		1,902.6			2,168.6
Fixed telecommunication(17)		1,146.8			1,780.4
Total operating revenues		12,496.3			16,873.8
Total operating expenses(11)		9,097.6			12,354.2
Operating income		3,398.7			4,519.6
Other income (expense):
Interest income		212.8			232.4
Gain (loss) on foreign exchange—net		304.4			(155.3	)
Gain (loss) on change in fair value of derivatives—net		(438.8	)		68.0
Amortization of goodwill		(226.5	)		(226.5	)
Financing cost		(1,248.9	)		(1,428.6	)
Other expense—net		21.2			(80.0	)
Total other expense—net		(1,375.8	)		(1,590.0	)
Equity in net income of associated companies		(0.2	)		—
Minority interest in net income of subsidiaries		(36.5	)		(28.1	)
Income tax expense—net		(576.1	)		(859.5	)
Net income		1,410.1			2,042.0
Weighted average number of shares outstanding		5,404,654,859			5,433,933,500
Operating income from operations per share		628.8			831.7
Diluted earnings per share		258.8			375.8
Basic earnings per share(2)		260.9			375.8
Dividends declared per share(2)		129.75			187.90
Dividends declared per share (in US$)(2)(4)		0.014			0.017
Dividends declared per ADS (in US$)(2)(3)(4)		0.69			0.86
U.S. GAAP:(10)
Net income		1,751.0			2,475.8
Basic earnings per share(2)		324.0			455.6
Basic earnings per ADS(2)(3)		16,199.3			22,781.0
Diluted earnings per share		321.9			455.6
Diluted earnings per ADS		16,097.2			22,781.0

6

	As of and for the years ended December 31,
	2006              Rp			2007              Rp
	(Rp in billions and US$ in millions, except for number of outstanding shares, EBITDA margin and financial ratios)
Indonesian GAAP
Cash Flow Statement Data
Net cash provided by (used in):
Operating activities		5,669.6			8,273.9
Investing activities		(6,331.0	)		(7,290.4	)
Financing activities		(1,248.7	)		4,237.0
Other Financial Data (unaudited)
EBITDA(12)		7,027.2			8,682.8
EBITDA margin(13)		56.2	%		51.4	%
Other Financial Data
Capital expenditures(14)		6,921.3			9,726.4
Financial Ratios (unaudited)
Total Debt to EBITDA(15)		1.64x			1.94x
Net Debt to EBITDA(16)		1.24x			1.01x
EBITDA to Interest Expense		5.83x			6.22x

Footnotes to Selected Financial Information:

⁽¹⁾  Translated into U.S. dollars based on a conversion rate of Rp8,991 = US$1.00, the Indonesian Central Bank Rate on December 31, 2010. See “—Exchange Rate Information” below.

⁽²⁾  Basic earnings per share/ADS, and dividends declared per share/ADS are reported in whole Indonesian rupiah and U.S. dollars. Basic earnings per share/ADS and dividends declared per share/ADS for all periods presented have been computed based upon the weighted average number of shares outstanding, after considering the effect of the stock option where applicable.

⁽³⁾  The basic earnings and dividends declared per ADS data is calculated on the basis that each ADS represents fifty shares of common stock and does not make allowance for withholding tax to which the holders of the ADSs will be subject.

⁽⁴⁾  Calculated using the Indonesian Central Bank Rate on each dividend payment date.

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⁽⁵⁾  We have defined EBITDA as earnings before interest, non-operating income and expense, income tax expense, depreciation and minority interest in net income of subsidiaries as reported in the consolidated financial statements included in this annual report prepared under IFRS. EBITDA is not a standard measure under IFRS. As the telecommunications business is capital intensive, capital expenditure requirements and levels of debt and interest expenses may have a significant impact on the net income of companies with similar operating results. Therefore, we believe that EBITDA provides a useful reflection of our operating results and that net income is the most directly comparable financial measure to EBITDA as an indicator of our operating performance. You should not consider our definition of EBITDA in isolation or as an indicator of operating performance, liquidity or any other standard measure under IFRS, or other companies’ definition of EBITDA. Our definition of EBITDA does not account for taxes and other non-operating cash expenses. Funds depicted by this measure may not be available for debt service due to covenant restrictions, capital expenditure requirements and other commitments. The following table reconciles profit attributable to owners of the Company under IFRS to our definition of EBITDA for the periods indicated:

	For the years ended December 31,
	2008 (Restated)  Rp.			2009 (Restated)  Rp.			2010 Rp.
	(Rp in billions)
EBITDA		9,293.6			8,797.1			9,684.5
Adjustments:
Gain (loss) on foreign exchange—net		(885.7	)		1,656.4			492.4
Interest income		460.1			139.0			143.4
Financing cost (including interest expense)		(1,858.3	)		(1,873.0	)		(2,271.6	)
Gain (loss) on change in fair value of derivatives—net		136.6			(486.9	)		(448.8	)
Others—net		(25.6	)		(116.8	)		(111.8	)
Income tax expense—net		(485.3	)		(783.9	)		(422.4	)
Depreciation and amortization		(4,565.4	)		(5,571.6	)		(6,162.8	)
Profit attributable to non controlling interest		(26.2	)		(56.3	)		(78.2	)
Profit attributable to owners of the Company		2,043.8			1,704.0			824.7

⁽⁶⁾  EBITDA margin is computed by dividing EBITDA as defined in note (5) above by total operating revenues recorded under IFRS.

⁽⁷⁾  Capital expenditures is computed by adding total additions of property and equipment and total additions of goodwill and other intangible assets recorded under IFRS.

⁽⁸⁾  We define total debt as total loans payable and bonds payable (current and non-current maturities), unamortized issuance cost (loans, bonds and notes), unamortized consent solicitation fees (loans and bonds) and unamortized discounts (loans and notes) recorded under IFRS.

⁽⁹⁾  We define net debt as total debt less cash and cash equivalents recorded under IFRS.

⁽¹⁰⁾  U.S. GAAP amounts reflect adjustments resulting principally from differences in the accounting treatment of capitalization of interest expense, capitalization of net foreign exchange losses, revenue recognition, equity in net income (loss) of associated companies, amortization of goodwill, amortization of land rights, post-retirement benefit cost, pension plan and deferred income tax effect of U.S. GAAP adjustments.

⁽¹¹⁾  In 2007, the Government adopted a new cost-based interconnection regime, replacing the previous revenue-sharing interconnection regime. Under this new regime, we now report operating revenues on a gross basis rather than on a net-based method. Under the net-based method, we recognized interconnection income net of interconnection expenses. Under the gross basis method, we recognize interconnection income in operating revenue and interconnection expenses in operating expenses.

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⁽¹²⁾  We have defined EBITDA as earnings before financing cost (including interest expense), interest income, income tax expense (net), depreciation and amortization expense, amortization of goodwill, loss on foreign exchange (net), loss on change in fair value of derivatives (net), other non-operating expenses (net), and minority interest in net income of subsidiaries as reported in the consolidated financial statements included in this report prepared under Indonesian GAAP. EBITDA is not a standard measure under either Indonesian GAAP or U.S. GAAP. As the telecommunications business is capital intensive, capital expenditure requirements and levels of debt and interest expenses may have a significant impact on the net income of companies with similar operating results. Therefore, we believe that EBITDA provides a useful reflection of our operating results and that net income is the most directly comparable financial measure to EBITDA as an indicator of our operating performance. You should not consider our definition of EBITDA in isolation or as an indicator of operating performance, liquidity or any other standard measure under either Indonesian GAAP or U.S. GAAP or other companies’ definition of EBITDA. Funds depicted by this measure may not be available for debt service due to covenant restrictions, capital expenditure requirements and other commitments. The definition of EBITDA under certain agreements related to our indebtedness may differ from the definition we use here. The following table reconciles our net income under Indonesian GAAP to our definition of EBITDA for the periods indicated:

	For the years ended December 31,
	2006       Rp			2007       Rp
	(Rp in billions, US$ in millions)
EBITDA		7,027.2			8,682.8
Adjustments:
Other income (expense):
Interest income		212.8			232.4
Gain (loss) on foreign exchange—net		304.4			(155.3	)
Gain (loss) on change in fair value of derivatives—net		(438.8	)		68.0
Amortization of goodwill		(226.5	)		(226.5	)
Financing cost		(1,248.9	)		(1,428.6	)
Others income (expense)—net		21.2			(80.0	)
Equity in net income of associated companies		(0.2	)		—
Minority interest in net income of subsidiaries		(36.5	)		(28.1	)
Income tax expense—net		(576.1	)		(859.5	)
Depreciation and amortization		(3,628.5	)		(4,163.2	)
Net income		1,410.1			2,042.0

⁽¹³⁾  EBITDA margin is computed by dividing EBITDA as defined in note (12) above by total operating revenues recorded under Indonesian GAAP.

⁽¹⁴⁾  Capital expenditures is computed by adding total additions of property and equipment and total additions of goodwill and other intangible assets recorded under Indonesian GAAP.

⁽¹⁵⁾  We define total debt as total loans payable and bonds payable (current and non-current maturities), unamortized issuance cost (loans, bonds and notes), unamortized consent solicitation fees (loans and bonds) and unamortized discounts (loans and notes) recorded under Indonesian GAAP.

⁽¹⁶⁾  We define net debt as total debt less cash and cash equivalents recorded under Indonesian GAAP.

⁽¹⁷⁾  Cellular revenue arising from airtime and roaming calls are recognized based on the duration of successful calls made through the Company’s cellular network, which up to December 31, 2007, had been presented on a net basis. To improve the comparability of the consolidated financial statements, the Company made accounts reclassification in the consolidated financial statements for the year ended December 31, 2006 and 2007.

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Exchange Rate Information

	Exchange Rates of Indonesian Rupiah Per U.S. Dollar
	Period end		Average(1)(2)		Low		High
Period
2006		9,020		9,141		9,395		8,775
2007		9,419		9,137		9,479		8,672
2008		10,950		9,761		12,400		9,051
2009		9,400		10,398		12,065		9,293
2010		8,991		9,085		9,413		8,888
October		8,928		8,928		8,947		8,913
November		9,013		8,938		9,033		8,888
December		8,991		9,023		9,050		8,978
2011
January		9,057		9,037		9,088		8,976
February		8,823		8,913		9,042		8,823
March		8,709		8,761		8,824		8,708
April (through April 20, 2011)		8,657		8,666		8,699		8,641

Source: Bank Indonesia

⁽¹⁾  The annual average exchange rates are calculated as averages of each monthly period-end exchange rate.

⁽²⁾  The monthly average exchange rates are calculated as averages of each daily close exchange rate.

Bank Indonesia is the sole issuer of Indonesian rupiah and is responsible for maintaining its stability. Since 1970, Indonesia has implemented three exchange rate systems: (i) a fixed rate system between 1970 and 1978; (ii) a managed floating exchange rate system between 1978 and 1997; and (iii) a free-floating exchange rate system since August 14, 1997. Under the floating exchange rate system, Bank Indonesia maintained stability of the Indonesian rupiah through a trading band policy, pursuant to which Bank Indonesia would enter the foreign currency market and buy or sell Indonesian rupiah, as required, when trading in the Indonesian rupiah exceeded bid and offer prices announced by Bank Indonesia on a daily basis. On August 14, 1997, Bank Indonesia terminated the trading band policy and permitted the exchange rate for the Indonesian rupiah to float without an announced level at which it would intervene, which resulted in a substantial decrease in the value of the Indonesian rupiah relative to the U.S. dollar. Under the current system, the exchange rate of the Indonesian rupiah is determined by the market, reflecting the interaction of supply and demand in the market. However, Bank Indonesia may take measures to maintain a stable exchange rate. The prevailing exchange rate was Rp10,950 = US$1.00 as of December 31, 2008, Rp9,400 = US$1.00 as of December 31, 2009 and Rp8,991 = US$1.00 as of December 31, 2010, respectively. On April 20, 2011, the exchange rate was Rp8,657 per U.S. dollar. The Federal Reserve Bank of New York does not certify for customs purposes a noon buying rate for cable transfers in Indonesian rupiah.

The Indonesian rupiah has been and in general is freely convertible or transferable. Bank Indonesia has introduced regulations to restrict the movement of Indonesian rupiah from banks within Indonesia to offshore banks without underlying trade or investment reasons, thereby limiting offshore trading to existing sources of liquidity. In addition, Bank Indonesia has the authority to request information and data concerning the foreign exchange activities of all people and legal entities that are domiciled, or plan to reside, in Indonesia for at least one year.

Foreign Exchange

Foreign exchange controls were abolished in 1971, and Indonesia now maintains a liberal foreign exchange system that permits the free flow of foreign exchange. Capital transactions, including remittances of capital, profits, dividends and interests, are free from exchange controls. A number of regulations, however, have an impact on the exchange system. Bank Indonesia recently introduced regulations to restrict the movement of Indonesian rupiah from banks within Indonesia to offshore banks without underlying trade or investment reasons, thereby limiting offshore trading to existing sources of liquidity. In addition, Bank Indonesia has the authority to request information and data concerning the foreign exchange activities of all people and legal entities that are domiciled in Indonesia or plan to domicile in Indonesia for at least one year.

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RISK FACTORS

Risks Relating to Indonesia

We are incorporated in Indonesia and substantially all of our operations, assets and customers are located in Indonesia. As a result, future political, economic, legal and social conditions in Indonesia, as well as certain actions and policies which the Government may, or may not, take or adopt may have a material adverse effect on our business, financial condition, results of operations and prospects.

Domestic, regional or global economic changes may adversely affect our business

The economic crisis which affected Southeast Asia, including Indonesia, from mid-1997 was characterized in Indonesia by, among other things, currency depreciation, negative economic growth, high interest rates, social unrest and extraordinary political events. These conditions had a material adverse effect on Indonesian businesses, including a material adverse effect on the quality and growth of our subscriber base and service offerings, which depend on the health of the overall Indonesian economy. In addition, the economic crisis resulted in the failure of many Indonesian companies to meet their debt obligations. Many Indonesian companies have not fully recovered from the economic crisis, and many such companies are still in the process of restructuring their debt obligations or are engaged in disputes arising from defaults under their debt obligations. More recently, the global financial crisis which was triggered in part by the subprime mortgage crisis in the United States, caused failures of large U.S. financial institutions and rapidly evolved into a global credit crisis. U.S. bank failures were followed by failures in a number of European banks and declines in various stock indexes, as well as large reductions in the market value of equities and commodities worldwide, including in Indonesia. The world economic downturn has adversely affected the economic performance of Indonesia, resulting in declining economic growth, slowing household consumption and weakening investment due to loss of external demand and increased uncertainty in the world economy. These conditions have had a negative impact on Indonesian businesses and consumers, which may result in reduced demand for telecommunication services.

Volatility in oil prices and potential food shortages may also cause an economic slowdown in many countries, including Indonesia. An economic downturn in Indonesia could also lead to additional defaults by Indonesian borrowers and could have a material adverse effect on our business, financial condition and results of operations and prospects. The Government continues to have a large fiscal deficit and a high level of sovereign debt. Its foreign currency reserves are modest and the banking sector is weak and suffers from relatively high levels of non-performing loans. The current high inflation rate in Indonesia may also result in less disposable income available to consumers to spend or cause consumer purchasing power to decrease, which may reduce consumer demand for telecommunication services, including our services.

A loss of investor confidence in the financial systems of emerging and other markets, or other factors, including the deterioration of the global economic situation, may cause increased volatility in the Indonesian financial markets and a slowdown in economic growth or negative economic growth in Indonesia. Any such increased volatility or slowdown or negative growth could have a material adverse effect on our business, financial condition and results of operations and prospects.

Political and social instability may adversely affect us

Since 1998, Indonesia has experienced a process of democratic change, resulting in political and social events that have highlighted the unpredictable nature of Indonesia’s changing political landscape. These events have resulted in political instability as well as general social and civil unrest on certain occasions in the past few years. As a relatively new democratic country, Indonesia continues to face various socio-political issues and has, from time to time, experienced political instability and social and civil unrest.

Since 2000, thousands of Indonesians have participated in demonstrations in Jakarta and other Indonesian cities both for and against former President Wahid, former President Megawati, and current President

11

Yudhoyono, as well as in response to specific issues, including fuel subsidy reductions, privatization of state assets, anti-corruption measures, the bailout of PT Bank Century in 2008, decentralization and provincial autonomy and the American-led military campaigns in Afghanistan and Iraq.

In June 2001, demonstrations and strikes affected at least 19 cities after the Government mandated a 30.0% increase in fuel prices. Similar demonstrations occurred in January 2003, when the Government again tried to increase fuel prices, as well as electricity rates and telephone charges. In both instances, the Government was forced to drop or substantially reduce the proposed increases. In March 2005, the Government implemented an approximately 29.0% increase in fuel prices. In October 2005, the Government terminated fuel subsidies on premium and regular gasoline and decreased fuel subsidies on diesel, which resulted in increases in fuel prices. In response, several non-violent mass protests were organized in opposition to the increases in domestic fuel prices, and political tensions have resulted from the Government’s decision. In May 2008, the Government further decreased fuel subsidies to the public, which led to public demonstrations. Although these demonstrations were generally peaceful, some turned violent. We cannot assure you that this situation will not lead to further political and social instability.

Regional political instability and clashes between religious and ethnic groups remain problematic. Separatist movements and clashes between religious and ethnic groups have resulted in social and civil unrest in parts of Indonesia. In the provinces of Aceh and Papua (formerly Irian Jaya), there have been clashes between supporters of those separatist movements and the Indonesian military, although there has been little conflict in Aceh since a memorandum of understanding was signed in August 2005. In April 2006, hundreds of people were involved in a violent protest directed at Freeport’s gold mining operations in the province of Papua. In recent years, political instability in Maluku and Poso, a district in the province of Central Sulawesi, has intensified and clashes between religious groups in these regions have resulted in thousands of casualties and displaced persons in Central Kalimantan and Central Sulawesi over the past several years. In recent years, the Government has made limited progress in negotiations with these troubled regions, except in the Province of Aceh where peaceful local elections were recently held which resulted in former separatists winning the election and becoming the governors of the Province.

In 2004, Indonesians directly elected the President, Vice-President and representatives in the Indonesian parliament for the first time through proportional voting with an open list of candidates. At the lower governmental level, Indonesians have started directly electing their respective heads of local governments. In 2009, another set of elections were held in Indonesia to elect the President, Vice-President and representatives in the Parliament. Increased political activity can be expected in Indonesia. Although the 2004 and 2009 elections were conducted peacefully, political campaigns in Indonesia may bring a degree of political and social uncertainty to Indonesia.

Political and related social developments in Indonesia have been unpredictable in the past, and we cannot assure you that social and civil disturbances will not occur in the future and on a wider scale, or that any such disturbances will not, directly or indirectly, have a material adverse effect on our business, financial condition, results of operations and prospects.

Indonesia is located in an earthquake zone and is subject to significant geological risks which could lead to social unrest and economic loss

Many parts of Indonesia are vulnerable to natural disasters such as earthquakes, tsunamis, floods, volcanic eruptions as well as droughts, power outages or other events beyond our control. In recent years, several natural disasters have occurred in Indonesia (in addition to the Asian tsunami in 2004), including an explosive eruption of Mount Merapi and Mount Bromo, a tsunami in Mentawai in West Sumatera, both in 2010, a tsunami in Pangandaran in West Java in 2006, an earthquake in Jogyakarta in Central Java in 2006, a hot mud eruption and subsequent flooding in East Java in 2006 and separate earthquakes in Papua, West Java, Sulawesi and Sumatra in 2009. Indonesia also experienced significant flooding in Jakarta in February 2007 and in Solo in Central Java in January 2008. In March 2009, torrential rain caused a dam to burst outside Jakarta, flooding homes in a densely

12

populated neighborhood, resulting in the death of approximately 100 people. The flood submerged hundreds of homes and resulted in a number of people being reported missing. Recently, in October 2010, at least 145 people died in a flash flood in Wasior district, West Papua. Also in October 2010, an earthquake off the coast of Western Sumatra released a tsunami on the Mentawai Islands in which more than 500 people died. From October 24, 2010 to November 5, 2010, Mount Merapi, a volcano in Southern Java near Yogyakarta, erupted a number of times and is believed to have killed more than 380 people.

As a result of these natural disasters, the Government has had to spend significant amounts on emergency aid and resettlement efforts. Most of these costs have been underwritten by foreign governments and international aid agencies. We cannot assure you that such aid will continue to be forthcoming, or that it will be delivered to recipients on a timely basis. If the Government is unable to timely deliver foreign aid to affected communities, political and social unrest could result. Additionally, recovery and relief efforts are likely to continue to impose a strain on the Government’s finances, and may affect its ability to meet its obligations on its sovereign debt. Any such failure on the part of the Government, or declaration by it of a moratorium on its sovereign debt, could trigger an event of default under numerous private-sector borrowings including those of our Company, thereby materially and adversely affecting our business.

We cannot assure you that our insurance coverage will be sufficient to protect us from potential losses resulting from such natural disasters and other events beyond our control. In addition, we cannot assure you that the premium payable for these insurance policies upon renewal will not increase substantially, which may materially and adversely affect our financial condition and results of operations. We also cannot assure you that future geological or meteorological occurrences will not have more of an impact on the Indonesian economy. A significant earthquake, other geological disturbance or weather-related natural disaster in any of Indonesia’s more populated cities and financial centers could severely disrupt the Indonesian economy and undermine investor confidence, thereby materially and adversely affecting our business, financial condition, results of operations and prospects.

Terrorist activities in Indonesia could destabilize the country, thereby adversely affecting our business, financial condition, results of operations and prospects

Several bombing incidents have taken place in Indonesia, most significantly in October 2002 in Bali, a region of Indonesia previously considered safe from the unrest affecting other parts of the country. Other bombing incidents, although on a lesser scale, have also been committed in Indonesia on a number of occasions over the past few years, including at shopping centers and places of worship. In April 2003, a bomb exploded outside the main United Nations building in Jakarta and in front of the domestic terminal at Soekarno Hatta International Airport. In August 2003, a bomb exploded at the JW Marriott Hotel in Jakarta, and in September 2004, a bomb exploded in front of the Australian embassy in Jakarta. In May 2005, bomb blasts in Central Sulawesi killed at least 21 people and injured at least 60 people. In October 2005, bomb blasts in Bali killed at least 23 people and injured at least 101 others. Indonesian, Australian and U.S. government officials have indicated that these bombings may be linked to an international terrorist organization. Demonstrations have taken place in Indonesia in response to plans for and subsequent to U.S., British and Australian military action in Iraq. In January 2007, sectarian terrorists conducted bombings in Poso. In July 2009, bomb blasts in the JW Marriott and Ritz Carlton hotels in Jakarta killed six people and injured at least 50 people. Further terrorist acts may occur in the future and may be directed at foreigners in Indonesia. Violent acts arising from, and leading to, instability and unrest could destabilize Indonesia and the Government and have had, and may continue to have, a material adverse effect on investment and confidence in, and the performance of, the Indonesian economy, and may have a material adverse effect on our business, financial condition, results of operations and prospects.

Our operations may be adversely affected by an outbreak of Severe Acute Respiratory Syndrome (“SARS”), avian influenza, Influenza A (H1N1) virus or other epidemics

In 2003, certain countries in Asia including, Indonesia, the China, Vietnam, Thailand and Cambodia, experienced an outbreak of SARS, a highly contagious form of atypical pneumonia, which seriously interrupted the economic activities in, and the demand for goods plummeted in, the affected regions.

13

During the last four years, large parts of Asia experienced unprecedented outbreaks of avian influenza. As of June 2, 2009, the World Health Organization (“WHO”) had confirmed a total of 262 fatalities in a total number of 433 cases reported to the WHO, which only reports laboratory confirmed cases of avian influenza. Of these, the Indonesian Ministry of Health reported to the WHO 115 fatalities in a total number of 141 cases of avian influenza in Indonesia. In addition, the WHO announced in June 2006 that human-to-human transmission of avian influenza had been confirmed in Sumatra, Indonesia. According to the United Nations Food and Agricultural Organization, avian influenza virus is entrenched in 31 of Indonesia’s 33 provinces and efforts to contain avian influenza are failing in Indonesia, increasing the possibility that the virus may mutate into a deadlier form. No fully effective avian influenza vaccines have been developed and an effective vaccine may not be discovered in time to protect against a potential avian influenza pandemic.

In April 2009, there was an outbreak of the Influenza A (H1N1) virus, which originated in Mexico but has since spread globally, including confirmed reports in Hong Kong, Indonesia, Japan, Malaysia, Singapore and elsewhere in Asia. The Influenza A (H1N1) virus is believed to be highly contagious and may not be easily contained.

An outbreak of SARS, avian influenza, Influenza A (H1N1) virus or a similar epidemic, or the measures taken by the governments of affected countries, including Indonesia, against such an outbreak, could severely disrupt the Indonesian and other economies and undermine investor confidence, thereby materially and adversely affecting our financial condition or results of operations.

Labor activism and unrest may adversely affect our business

The liberalization of regulations permitting the formation of labor unions, combined with weak economic conditions, has resulted, and will likely continue to result, in labor unrest and activism in Indonesia. In 2000, the Government issued a labor regulation allowing employees to form unions without employer intervention. In March 2003, the Government enacted a manpower law, Law No. 13/2003 (the “Labor Law”), which, among other things, increased the amount of required severance, service and compensation payments to terminated employees, and required employers with 50 or more employees to establish bipartite forums with the participation of employers and employees. To negotiate a collective labor agreement with such a company, a labor union’s membership must consist of more than 50.0% of the company’s employees. In response to a challenge to its validity, the Indonesian Constitutional Court declared the Labor Law to be mostly valid, except for certain provisions. The Government proposed to amend the Labor Law in a manner which, in the view of labor activists, would result in reduced pension benefits, the increased use of outsourced employees and prohibitions on unions to conduct strikes. The proposal has been suspended and the new Government regulation addressing lay-offs of workers has not yet become effective. Labor unrest and activism could disrupt our operations and could adversely affect the financial condition of Indonesian companies in general and the value of the Indonesian rupiah relative to other currencies, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Depreciation in the value of the Indonesian rupiah may adversely affect our business, financial condition, results of operations and prospects

One of the most important immediate causes of the economic crisis which began in Indonesia in mid-1997 was the depreciation and volatility of the value of the Indonesian rupiah, as measured against other currencies, such as the U.S. dollar. Although the Indonesian rupiah has appreciated considerably from its low point of approximately Rp17,000 per U.S. dollar in 1998, it may experience volatility again in the future. During the period between January 1, 2008 through December 31, 2010, the Indonesian rupiah/U.S. dollar exchange rate ranged from a low of Rp12,400 per U.S. dollar to a high of Rp8,888 per U.S. dollar. As a result, we recorded a loss on foreign exchange-net of Rp885.7 billion in 2008, a gain of Rp1,656.4 billion in 2009 and a gain of Rp492.4 in 2010. We cannot assure you that further depreciation of the Indonesian rupiah against other currencies, including the U.S. dollar, will not occur. To the extent the Indonesian rupiah depreciates further from the exchange rates at December 31, 2010, our obligations under our accounts payable, procurements payable and

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our foreign currency-denominated loans payable and bonds payable would increase in Indonesian rupiah terms. Such depreciation of the Indonesia rupiah would result in additional losses on foreign exchange translation and significantly impact our other income and net income.

In addition, while the Indonesian rupiah has generally been freely convertible and transferable (except that Indonesian banks may not transfer Indonesian rupiah to persons outside of Indonesia who lack a bona fide trade or investment purpose), from time to time, Bank Indonesia has intervened in the currency exchange markets in furtherance of its policies, either by selling Indonesian rupiah or by using its foreign currency reserves to purchase Indonesian rupiah. We cannot assure you that the current floating exchange rate policy of Bank Indonesia will not be modified or that the Government will take additional action to stabilize, maintain or increase the value of the Indonesian rupiah, or that any of these actions, if taken, will be successful. Modification of the current floating exchange rate policy could result in significantly higher domestic interest rates, liquidity shortages, capital or exchange controls or the withholding of additional financial assistance by multinational lenders. This could result in a reduction of economic activity, an economic recession, loan defaults or declining usage of our subscribers, and as a result, we may also face difficulties in funding our capital expenditures and in implementing our business strategy. Any of the foregoing consequences could have a material adverse effect on our business, financial condition, results of operations and prospects.

Downgrades of credit ratings of the Government or Indonesian companies could adversely affect our business

Beginning in 1997, certain recognized statistical rating organizations, including Moody’s, Standard & Poor’s, and Fitch, downgraded Indonesia’s sovereign rating and the credit ratings of various credit instruments of the Government and a large number of Indonesian banks and other companies. As of April 20, 2011, Indonesia’s sovereign foreign currency long-term debt is rated Ba1 by Moody’s, BB by Standard & Poor’s and BBB- by Fitch. These ratings reflect an assessment of the Government’s overall financial capacity to pay its obligations and its ability or willingness to meet its financial commitments as they become due.

We cannot assure you that Moody’s, Standard & Poor’s, Fitch or any other statistical rating organization will not downgrade the credit ratings of Indonesia or Indonesian companies, including us. Any such downgrade could have an adverse impact on liquidity in the Indonesian financial markets, the ability of the Government and Indonesian companies, including us, to raise additional financing and the interest rates and other commercial terms at which such additional financing is available. Interest rates on our floating rate Indonesian rupiah-denominated debt would also likely increase. Such events could have material adverse effects on our business, financial condition, results of operations and prospects.

We are subject to corporate disclosure and reporting requirements that differ from those in other countries

As we are a public company listed in the Indonesia Stock Exchange and New York Stock Exchange, we are subject to corporate governance and reporting requirements in Indonesia and the United States that differ, in significant respects, from those applicable to companies in certain other countries. The amount of information made publicly available by issuers in Indonesia may be less than that made publicly available by comparable companies in certain more developed countries, and certain statistical and financial information of a type typically published by companies in certain more developed countries may not be available. As a result, investors may not have access to the same level and type of disclosure as that available in other countries, and comparisons with other companies in other countries may not be possible in all respects.

We are incorporated in Indonesia, and it may not be possible for investors to effect service of process, or enforce judgments, on us within the United States, or to enforce judgments of a foreign court against us in Indonesia

We are a limited liability company incorporated in Indonesia, operating within the framework of Indonesian laws relating to foreign capital invested companies, and all of our significant assets are located in Indonesia. In addition, several of our Commissioners and substantially all of our Directors reside in Indonesia and a substantial

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portion of the assets of such persons is located outside the United States. As a result, it may be difficult for investors to effect service of process, or enforce judgments, on us or such persons within the United States, or to enforce against us or such persons in the United States, judgments obtained in U.S. courts.

We have been advised by our Indonesian legal advisor that judgments of U.S. courts, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws or the securities laws of any state within the United States, are not enforceable in Indonesian courts, although such judgments could be admissible as non-conclusive evidence in a proceeding on the underlying claim in an Indonesian court. There is doubt as to whether Indonesian courts will enter judgments in original actions brought in Indonesian courts predicated solely upon the civil liability provisions of the U.S. federal securities laws or the securities laws of any state within the United States. As a result, the claimant would be required to pursue claims against us or such persons in Indonesian courts.

Risks Relating to Our Business

We operate in a legal and regulatory environment that is undergoing significant reforms. These reforms may result in increased competition, which may result in reduced margins and operating revenues, among other things, all of which may have a material adverse effect on us

The regulatory reform of the Indonesian telecommunications sector, which was initiated by the Government in 1999, has to a certain extent resulted in the liberalization of the telecommunications industry, including facilitation of new market entrants and changes to the competitive structure of the telecommunications industry. However, in recent years, the volume and complexity of regulatory changes has created an environment of considerable regulatory uncertainty. In addition, as the reform of the Indonesian telecommunications sector continues, competitors, potentially with greater resources than us, may enter the Indonesian telecommunications sector and compete with us in providing telecommunications services.

For example, since January 2007, the Government, through the Ministry of Communication and Information Technology (“MOCIT”), has been responsible for setting tariffs for interconnection services. See “Item 3: Key Information—Risk Factors—Risks Relating to Our Business—We depend on interconnection agreements relating to the use of our competitors’ cellular and fixed-line telephone networks.” The MOCIT sets interconnection tariffs for dominant service providers on a “cost” basis, based on RIOs submitted by the dominant service providers, which include us. In contrast, telecommunications operators which are not designated as dominant operators may simply notify the MOCIT regarding their tariffs and may implement such tariffs for its customers without MOCIT approval. The disparity in the treatment of dominant and non-dominant telecommunications operators may create opportunities for new entrants in the telecommunications industry, providing them with increased flexibility to establish lower tariffs and offer lower pricing terms to their customers. In addition, the tariffs in our RIOs have been decreasing in the past few years, and we expect this downward trend to continue. Any decrease in the amount of interconnection costs might reduce our revenue and also our costs for inter-operator traffic.

On January 25, 2010, the MOCIT passed a new regulation pursuant to which an existing telecommunications network operator that already has an allocated frequency and access code for the provision of a certain network is exempted from following the selection process when seeking to obtain a new network license with another access code. This is expected to allow certain telecommunications network operators to expand their businesses more easily.

On December 13, 2010, the Government issued Government Regulation No. 76/2010 on the Amendment of PP No.7/2009 on the types and tariffs of non-tax state income applicable to MOCIT. This regulation affects the calculation method and payment of the spectrum fee due on the spectrum allocated to the Company (800 Mhz, 900 Mhz and 1,800 MHz frequency bands).

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On December 31, 2010, Badan Regulasi Telekomunikasi Indonesia (BRTI or Indonesian Telecommunications Regulatory Bureau) issued letter No.227/BRTI/XII/2010 regarding the implementation of new interconnection tariffs which will take into effect on January 1, 2011 and will be used by all telecommunications operators.

In the future, the Government may announce or implement other regulatory changes, such as changes in interconnection or tariff policies, which may adversely affect our business or our existing licenses. We cannot assure you that we will be able to compete successfully with other domestic and foreign telecommunications operators or that regulatory changes, amendments or interpretations of current or future laws and regulations promulgated by the Government will not have a material adverse effect on our business, financial condition, results of operations and prospects.

We may be unable to fund the capital expenditures needed for us to remain competitive in the telecommunications industry in Indonesia

The delivery of telecommunications services is capital intensive. In order to be competitive, we must continually expand, modernize and update our telecommunications infrastructure technology, which involves substantial capital investment. For the years ended December 31, 2008, 2009 and 2010, our actual consolidated capital expenditures totaled Rp12,341.9 billion, Rp11,584.5 billion, and Rp5,515.0 billion (US$613.4 million), respectively. During 2011, we intend to allocate US$794.5 million for new capital expenditures, which, taken together with estimated actual capital expenditures expended for 2011 for capital expenditure commitments in prior periods, will result in approximately US$1,053.8 million total actual capital expenditures for 2011. Our ability to fund capital expenditures in the future will depend on our future operating performance, which is subject to prevailing economic conditions, levels of interest rates and financial, business and other factors, many of which are beyond our control, and upon our ability to obtain additional external financing. We cannot assure you that additional financing will be available to us on commercially acceptable terms, or at all. In addition, we can only incur additional financing in compliance with the terms of our debt agreements. Accordingly, we cannot assure you that we will have sufficient capital resources to improve or expand our telecommunications infrastructure technology or update our other technology to the extent necessary to remain competitive in the Indonesian telecommunications market. Our failure to do so could have a material adverse effect on our business, financial condition, results of operations and prospects.

We depend on interconnection agreements relating to the use of our competitors’ cellular and fixed-line telephone networks

We are dependent on interconnection agreements relating to the use of our competitors’ cellular and fixed-line telephone networks and associated infrastructure for the successful operation of our business. If any disputes involving such interconnection arrangements arise, whether due to a failure by a counterparty to perform its contractual obligations or for any other reason, the delivery of one or more of our services may be delayed, interrupted or stopped, the quality of our services may be lowered, our subscriber churn rates may increase or our interconnection rates may increase. Any disputes involving our current interconnection agreements, as well as our failure to enter into or renew interconnection agreements, could have a material adverse effect on our business, financial condition, results of operations and prospects.

We may become subject to limitations on foreign ownership in the telecommunication services business

Presidential Regulation No. 36 of 2010 (the “Presidential Regulation”) sets out the industries and business fields in which foreign investment is prohibited, restricted or subject to the fulfillment of certain conditions as stipulated by the applicable Governmental authorities (the “Negative List”). The telecommunication industry is one of the industries set out in the Negative List, and foreign investment in the Indonesian telecommunication industry is accordingly subject to applicable restrictions and conditions. The Negative List is implemented by the Capital Investment Coordinating Board (“BKPM”). Restrictions applicable to the telecommunication industry are

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dependent upon the type of telecommunication business undertaken. Different limitation thresholds are applicable depending upon whether the business pertains to telecommunication networks or services. The limitation on foreign holdings in companies engaging in the telecommunication network business ranges from 49.0%—65.0%, and the limitation on foreign shareholdings in Indonesian companies engaged in the provision of multimedia services (including data communication such as broadband wireless services), from 49.0%—95.0%. Pursuant to Article 8 of the Presidential Regulation, the restrictions set forth therein shall not apply to investments that have been approved prior to the effectiveness of the Presidential Regulation pursuant to investment approval issued by BKPM unless such restrictions are more favorable to the investments. The Presidential Regulation does not change the limitation of foreign shareholding in our business.

On June 22, 2008, Qatar Telecom (Qtel) Q.S.C. (“Qtel”), through its subsidiary, Qatar South East Asia Holding S.P.C. purchased all of the issued and outstanding shares of capital stock of each of Indonesia Communications Limited (“ICLM”), and Indonesia Communications Pte. Ltd. (“ICLS”) from Asia Mobile Holdings Pte. Ltd. (“AMH”), a company incorporated in Singapore. Following this acquisition, a change of control occurred in the Company, requiring Qtel to conduct a mandatory tender offer. In connection with the tender offer, on December 23, 2008, the Capital Market and Financial Institution Supervisory Agency of the Ministry of Finance of the Republic of Indonesia (“Bapepam-LK”) issued a letter (i) noting that it had received a letter from BKPM dated December 19, 2008, pursuant to which BKPM confirmed that the maximum amount of foreign capital ownership in the Company shall be 65.0%, and that the Company may still conduct its cellular network operation and local fixed network business and (ii) permitting Qtel to conduct the tender offer. Following the issuance of such letter, Qtel conducted a mandatory tender offer to acquire up to 1,314,466,775 Series B Shares, representing approximately 24.19% of our total issued and outstanding Series B Shares (including Series B Shares represented by ADSs).

As we are a publicly listed company, we believe that the Negative List restrictions do not apply to us. If the relevant regulatory authorities were to apply the Negative List to us, notwithstanding our status as a publicly listed company, our controlling and/or other foreign shareholders may be required to reduce their shareholding in us, which could create downward pressure on the trading price for our shares. This could have a material adverse effect on our business, financial condition, results of operations and prospects. We may also be required to separate our business entity into two sectors, mobile or cellular network and fixed network, in order to comply with the relevant regulation. Separating our business into two sectors may involve divesting either our fixed network or mobile or cellular network operation businesses to a subsidiary or a third party, which could materially alter our operations and result in a reduction of our total operating revenue. In addition, if the relevant regulatory authorities determine that our foreign ownership still exceeds the Negative List restriction, the regulatory authorities may prohibit us from participating in bidding for or obtaining further licenses or additional spectrum. If this occurs, our business, prospects, financial condition and results of operations would be adversely affected.

A failure in the continuing operations of our network, certain key systems, gateways to our network or the networks of other network operators could adversely affect our business, financial condition, results of operations and prospects

We depend to a significant degree on the uninterrupted operation of our network to provide our services. For example, we depend on access to the PSTN for termination and origination of cellular telephone calls to and from fixed-line telephones, and a significant portion of our cellular and international long-distance call traffic is routed through the PSTN. The limited interconnection facilities of the PSTN available to us have adversely affected our business in the past and may adversely affect our business in the future.

Because of interconnection capacity constraints, our cellular subscribers have at times experienced blocked calls. We cannot assure you that these interconnection facilities can be increased or maintained at current levels.

We also depend on certain technologically sophisticated management information systems and other systems, such as our customer billing system, to enable us to conduct our operations. In addition, we rely to a

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certain extent on interconnection to the networks of other telecommunications operators to carry calls from our subscribers to the subscribers of fixed-line operators and other cellular operators, both within Indonesia and overseas. Our network, including our information systems, information technology and infrastructure and the networks of other operators with whom our subscribers interconnect, are vulnerable to damage or interruptions in operation from a variety of sources including earthquake, fire, flood, power loss, equipment failure, network software flaws, transmission cable disruption or similar events. For example, our telecommunications control and information technology back-up facilities are highly concentrated within our headquarters and our principal operating and tape back-up storage facilities are located at two sites in Jakarta. Any failure that results in an interruption of our operations or of the provision of any service, whether from operational disruption, natural disaster or otherwise, could damage our ability to attract and retain subscribers, cause significant subscriber dissatisfaction and adversely affect our business, financial condition, results of operations and prospects.

Our failure to react to rapid technological changes could adversely affect our business

The telecommunications industry is characterized by rapid and significant changes in technology. We may face increasing competition due to technologies currently under development or which may be developed in the future. Future development or application of new or alternative technologies, services or standards could require significant changes to our business model, the development of new products, the provision of additional services and substantial new investments by us. For example, the development of fixed-mobile convergence technology, which allows a call that originates on a cellular handset to bypass a cellular network and instead be carried over a fixed-line telephone network, could adversely affect our business. New products and services may be expensive to develop and may result in the introduction of additional competitors into the marketplace. We cannot accurately predict how emerging and future technological changes will affect our operations or the competitiveness of our services. We cannot assure you that our technologies will not become obsolete, or be subjected to competition from new technologies in the future, or that we will be able to acquire new technologies necessary to compete in changed circumstances on commercially acceptable terms. Our failure to react to rapid technological changes could adversely affect our business, financial condition, results of operations and prospects.

The Government is the majority shareholder of our major competitors, Telkom and Telkomsel. The Government may give priority to Telkom’s or Telkomsel’s businesses over ours

As of December 31, 2010, the Government had a 14.29% equity stake in us, including the Series A share, which has special voting rights and veto rights over certain strategic matters under our Articles of Association, including decisions on dissolution, liquidation and bankruptcy, and also permits the Government to nominate one Director to our Board of Directors and one Commissioner to our Board of Commissioners.

As of December 31, 2010, the Government also had a 52.47% equity stake in Telkom, which is our foremost competitor in fixed IDD telecommunications services. As of the same date, Telkom owns a 65.0% interest in Telkomsel, one of our two main competitors in the provision of cellular services. The percentage of the Government’s ownership interest in Telkom is significantly greater than its ownership interest in us. We cannot assure you that significant Government policies and plans will support our business or that the Government will treat us equally with Telkom and Telkomsel when implementing future decisions, or when exercising regulatory power over the Indonesian telecommunications industry. If the Government were to give priority to Telkom’s or Telkomsel’s business over ours, our business, financial condition, and results of operations and prospects could be materially and adversely affected.

Our controlling shareholders’ interests may differ from those of our other shareholders

As of December 31, 2010, Qatar Telecom (Qtel Asia) Pte. Ltd. (“Qtel Asia”), owned approximately 65.0% of our issued and outstanding share capital. Qtel Asia is currently wholly owned and controlled by Qtel, which is majority-owned by the State of Qatar and its affiliated entities. Qtel Asia and its controlling shareholder have the

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ability to exercise a controlling influence over our business and may cause us to take actions that are not in, or may conflict with, our or our other shareholders’ best interests, including matters relating to our management and policies. Although nominees of Qtel Asia hold positions on our Board of Commissioners and Board of Directors, we cannot assure you that our controlling shareholder will elect directors and commissioners or be able to influence our business in a way that benefits our other shareholders.

We rely on key management personnel, and our business may be adversely affected by any inability to recruit, train, retain and motivate our key employees

We believe that our current management team contributes significant experience and expertise to the management of our business. The continued success of our business and our ability to execute our business strategies in the future will depend in large part on the efforts of our key personnel. There is a shortage of skilled personnel in the telecommunications industry in Indonesia and this shortage is likely to continue. As a result, competition for certain specialist personnel is intense. In addition, as new market entrants begin or expand operations in Indonesia, certain of our key employees may leave their current positions. Our inability to recruit, train, retain and motivate key employees could have a material adverse effect on our business, financial condition, results of operations and prospects.

The implementation of our organizational restructuring may disrupt our business and may not successfully achieve improved longer-term operating results

In January 2011, the Company introduced an organizational restructuring which forms part of our transformation program that began in 2009 to increase the Company’s productivity and improve our longer-term operating results. The Company is offering special compensation packages to employees who meet certain criteria as determined by the Company and who opt to end their employment relationship with the Company as part of such organizational restructuring under the Voluntary Separation Scheme (VSS) Program.

We anticipate having significant workforce reduction that may result in the Company incurring certain costs, which may include the costs in connection with the aforementioned special compensation packages. We cannot assure you that the consequences of the organizational restructuring program may not harm our business and our future results of operations.

If we are found liable for price fixing by the Indonesian Anti-Monopoly Committee and for class action allegations, we may be subject to substantial liability which could lead to a decrease in our revenue and affect our business, reputation and profitability

On November 1, 2007, the Indonesian Supervising Committee for Business Competition (the “KPPU”) issued a decision regarding a preliminary investigation involving us and eight other telecommunication companies based on allegations of price-fixing for SMS services and breach of Article 5 of the Anti-monopoly Law (“Law No. 5 / 1999”). On June 18, 2008, the KPPU determined that Telkom, Telkomsel, XL Axiata Tbk. (“XL”), PT Bakrie Telecom Tbk (“Bakrie Telecom”), PT Mobile-8 Telecom Tbk (“Mobile-8”) which we understand has changed it’s Company name to PT Smartfren Telecom Tbk, effective March, 2011 and PT Smart Telecom (“Smart Telecom”) had jointly breached Article 5 of Law No. 5 / 1999. Mobile-8 appealed this ruling to the Central Jakarta District Court, where Telkomsel, XL, Telkom, Indosat, PT Hutchison CP Telecommunication (“Hutchison”), Bakrie Telecom, Smart Telecom, PT Natrindo Telepon Selular (“Natrindo”) were summoned to appear as co-defendants in the hearing, while Telkomsel appealed this ruling to the South Jakarta District Court. Although the KPPU decided in our favor with respect to the allegations of price-fixing of SMS, we cannot assure you that the District Court will affirm the KPPU decision. The District Court will consider objections against the KPPU decision based on a re-examination of the KPPU decision and case files submitted by KPPU. If the District Court issues a verdict against us, we could be subjected to the payment of a fine, the amount of which will be subject to the discretion of the District Court, which could have an adverse effect on our business, reputation and profitability.

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In addition, a series of class action lawsuits were filed against us and Telkomsel during 2007 and 2008 in the District Court of Bekasi, the Central Jakarta District Court and the Tangerang District Court, relating to Temasek Holding’s prior cross ownership of shares in us and Telkomsel, which is alleged to have caused price fixing of telecommunications services that harmed the public. The plaintiffs have since revoked the lawsuit filed with the District Court of Bekasi. On January 27, 2010, the judges ruled that the class action filed with the Central Jakarta District Court was unacceptable because the plaintiffs refused to prove their legal standing and two members of the plaintiff class did not qualify to stand as class representatives. Since the time limit to file an appeal lapse on March 18, 2010, the decision of the Central Jakarta District Court dated January 27, 2010 is final and binding. The Tangerang class action continued on May 3, 2010, whereby the defendants submitted a demurrer, and on May 24, 2010, the judges ruled that the class action filed with the Tangerang District Court was unacceptable because the plaintiffs were not serious in filing the lawsuit and the plaintiffs failed to prove legal standing as class representatives. Since the time limit to file an appeal lapsed on July 21, 2010, the decision of the Tangerang District Court dated May 24, 2010 is final and binding. See “Item 8: Financial Information—Legal Proceedings” Although the class action allegation was not accepted by neither the Central Jakarta District Court nor the Tangerang District Court and the lawsuit filed with the District Court of Bekasi was revoked, we cannot assure you that other subscribers will not file similar cases in the future. If any new class action suit or the District Court issues a verdict in favor of such plaintiffs, it could have an adverse effect on our business, reputation and profitability.

We are exposed to interest rate risk

Our debt includes bank borrowings to finance our operations. Where appropriate, we seek to minimize our interest rate risk exposure by entering into interest rate swap contracts to swap floating interest rates for fixed interest rates over the duration of certain of our borrowings. However, our hedging policy may not adequately cover our exposure to interest rate fluctuations and this may result in a large interest expense and an adverse effect on our business, financial condition and results of operations.

We are exposed to counter-party risk

We may enter into various transactions from time to time which will expose us to the credit of our counter-parties and their ability to satisfy the terms of contracts with us. For example, we may enter into swap arrangements, which expose us to the risk that counter-parties may default on their obligations to perform under the relevant contract. In the event a counter-party, including a financial institution, is declared bankrupt or becomes insolvent, this may result in delays in obtaining funds or us having to liquidate our position, potentially leading to losses.

We may not be able to successfully manage our foreign currency exchange risk

Changes in exchange rates have affected and may continue to affect our financial condition and results of operations. Most of our debt obligations are denominated in Indonesian rupiah and a majority of our capital expenditures are denominated in U.S. dollars. A substantial portion of our revenues are denominated in Indonesian rupiah, but a portion of our operating revenues are U.S. dollar-denominated or U.S. dollar-linked. We may also incur additional long-term indebtedness in currencies other than the Indonesian rupiah, including the U.S. dollar, to finance further capital expenditures.

We currently hedge a portion of our foreign currency exposure principally because our annual U.S. dollar-denominated operating revenues are less than the sum of our U.S. dollar-denominated operating obligations, such as our U.S. dollar-denominated expenses and our U.S. dollar-denominated principal and interest payments. In 2005, in an effort to manage our foreign currency exposure and lower our overall funding costs, we entered into several foreign currency swap contracts with three separate international financial institutions. From 2006 to 2009, we also entered into several foreign currency swap contracts with seven international financial institutions in an effort to reduce our foreign currency risk exposure. For these contracts, we pay either an upfront or fixed rate premium. We cannot assure you that we will be able to manage our exchange rate risk successfully in the

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future or that our business, financial condition or results of operations will not be adversely affected by our exposure to exchange rate risk. See “Item 11: Quantitative and Qualitative Disclosures about Market Risk.”

Risks Relating to our Cellular Services Business

Competition from industry incumbents and new market entrants may adversely affect our cellular services business

The Indonesian cellular services business is highly competitive. Competition among cellular service providers in Indonesia is based on various factors, including pricing, network quality and coverage, the range of services, features offered and customer service. Our cellular services business competes primarily against Telkomsel and XL. Several other smaller GSM and CDMA operators also provide cellular services in Indonesia, including Hutchison, Natrindo and Smart Telecom. In addition to current cellular service providers, the MOCIT may license additional cellular service providers in the future, and such new entrants may compete with us.

We expect competition in the cellular services business to further intensify. New and existing cellular service providers may offer more attractive product and service packages or new technologies or the convergence of various telecommunication services, resulting in higher churn rates, lower ARPU or a reduction of, or slower growth in, our cellular subscriber base. In 2010, the continuing competition from industry incumbents and new market entrants in the cellular services market led to aggressive pricing campaigns by cellular service providers. The decrease in prices for cellular usage also led to an increase in the number of subscribers and in network traffic, resulting in increased network congestion among operators, which has required us to incur additional capital expenditures to continue to expand our network. On the other hand, mobile penetration is quite high and we expect growth to be slower.

The competitive landscape in the cellular services business may also be affected by industry consolidation. In March 2010, Smart Telecom and Mobile-8 announced that they entered into a cooperation agreement to use the same logo and brand under the name “smartfren.”

Competition from providers of new technology, together with new entrants, incumbents, almost saturated market and consolidated providers could adversely affect our competitive position, cellular services business, financial condition, results of operations and prospects.

Cellular network congestion and limited spectrum availability could limit our cellular subscriber growth and cause reductions in our cellular service quality

We expect to continue to offer promotional plans to attract subscribers and increase usage of our network by our cellular subscribers. We also expect to continue to promote our data services, including our BlackBerry™ and wireless broadband services. As a result, we may experience increased network congestion, which may affect our network performance and damage our reputation with our subscribers. In addition, higher cellular usage in dense urban areas may require us to use radio frequency engineering techniques, including a combination of macro, micro and indoor cellular designs, to maintain cellular network quality despite radio frequency interference and tighter radio frequency re-use patterns. However, if our cellular subscriber base or usage of our voice and data services should grow significantly in high-density areas, we cannot assure you that these efforts will be sufficient to maintain and improve service quality. To support such additional demands on our network, we may be required to make significant capital expenditures to improve our network coverage. Such additional capital expenditures, together with the possible degradation of our cellular services, could adversely affect our competitive position, business, financial condition, results of operations and prospects.

Despite expending significant financial resources to increase our cellular subscriber base, the number of our cellular subscribers may increase without a corresponding increase in our operating revenues

We have expended significant financial resources to develop and expand our cellular network and add to our cellular subscriber base. However, the uncertain economic situation in Indonesia and increasing prices of primary

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goods may decrease our cellular subscribers’ purchasing power. Moreover, a continued decline in effective tariffs for voice usage resulting from “free-talk” campaigns and recent tariff discount promotions, increasing SMS usage, and greater cellular penetration in the lower-income segment of the market has led to a decrease in ARPU in 2010. Our number of cellular subscribers (including wireless broadband subscribers) increased from approximately 36.5 million as of December 31, 2008 to approximately 33.0 million as of December 31, 2009, to approximately 44.3 million as of December 31, 2010. For the years ended December 31, 2008, 2009 and 2010, our ARPU was Rp38,639, Rp37,664 and Rp34,712, respectively. While we intend to continue to expend significant financial resources to expand our cellular subscriber base and expand our cellular network to support the requirements of such an expanded cellular subscriber base, we cannot assure you that such expenditures will be accompanied by a corresponding increase in our ARPU or operating revenues. Accordingly, our subscriber acquisition costs and the capital expenditures required to expand our network capacity could increase without a corresponding increase in our revenue or profitability, which would materially and adversely affect our business, financial condition, results of operations and prospects.

We experience a high churn rate

We experience a high churn rate, as is common for Indonesian telecommunication operators providing prepaid cellular services. We believe that our high churn rate is due to the fact that many of our prepaid subscribers own multiple SIM cards from various cellular providers, allowing them to choose the cheapest package available. We believe that our high churn rate was exacerbated by our efforts, during the first nine months of 2009, to clean up our subscriber base by discouraging “calling card” behavior and focusing instead on subscriber loyalty. We believe that such subscribers were short-term subscribers and were not likely to recharge their SIM cards. Our high churn rates may result in loss of revenue, which could have a material adverse effect on our business, financial condition, results of operations and prospects. At the end of the third quarter of 2010, we launched a retention and loyalty program called “Senyum Setia Indosat” which gives benefits to our customers who extend their subscription. We believe that this program contributed to the decrease of our churn rate to 13.3% in 2010, compared to 15.1% in 2009.

We depend on the availability of telecommunications towers

We are highly dependent on our and others’ telecommunications tower infrastructure to provide GSM, FWA and 3G network and mobile cellular telecommunications services, as we typically install transmitter and transceiver antennas and other BTS supporting facilities on such towers. The availability and installation of such telecommunication towers require licenses from the relevant central and regional authorities. Recently, a number of regional authorities have implemented regulations which limit the number and location of telecommunication towers and established requirements for operators to share in the utilization of telecommunications towers. In addition, on March 17, 2008, the MOCIT issued a regulation on the sharing of telecommunications towers. See “Item 4: Information on the Company—Regulation of the Indonesian Telecommunications Industry—Tower Sharing Obligation.” Under the regulation, the construction of telecommunications towers requires permits from the relevant governmental institution, while the local government determines the placement and location at which telecommunications towers can be constructed. Moreover, a joint regulation promulgated on March 30, 2009 by the Minister of Home Affairs, the Minister of Public Works, the MOCIT and the Head of the Indonesia Investment Coordinating Board requires a tower construction permit for every tower built and used for telecommunications services, which would demonstrate compliance with certain technical specifications. If a tower owner fails to obtain such a permit, the appropriate regional authorities will be entitled to impose penalties on the tower owner. Moreover, a telecommunications provider which owns telecommunication towers or tower owner is obligated to allow other telecommunication operators to utilize its telecommunication towers (other than the towers used for its main network), without any discrimination.

Such regulatory requirements may require us to adjust our telecommunications tower construction and leasing plans, relocate our existing telecommunications towers, allow other operators access to our telecommunications towers and perform other measures which may result in the increase of telecommunications

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tower construction costs, delays in the construction process and potential service disruption for our subscribers. If we cannot fulfill the regulatory requirements for telecommunications towers or meet our own network capacity needs for telecommunications towers, we may face difficulties in developing and providing cellular GSM, FWA and 3G telecommunications services. Our dependency on our own or others’ telecommunications tower infrastructure, combined with the burden of sharing our telecommunications towers in certain instances, may also adversely affect our competitive advantage relative to other operators. Any of these events could result in a material adverse effect on our network capacity, the performance and quality of our networks and services, our reputation, business, results of operations and prospects.

Our ability to maintain and expand our cellular network or conduct our business may be affected by disruptions of supplies and services from our principal suppliers

We rely upon a few principal vendors to supply a substantial portion of the equipment we require to maintain and expand our cellular network, including our microwave backbone, and upon other vendors in relation to other supplies necessary to conduct our business. We depend on equipment and other supplies and services from such vendors to maintain and replace key components of our cellular network and to operate our business. If we are unable to obtain adequate supplies or services in a timely manner or on commercially acceptable terms, or if there are significant increases in the cost of such supplies or services, our ability to maintain and to expand our cellular network and our business, financial condition, results of operations and prospects may be adversely affected.

We depend on our licenses to provide cellular services, and our licenses could be cancelled if we fail to comply with their terms and conditions

We rely on licenses issued by the MOCIT for the provision of our cellular services as well as for the utilization of our allocated spectrum frequencies. The MOCIT, with due regard to prevailing laws and regulations, may amend the terms of our licenses at its discretion. Any breach of the terms and conditions of our licenses or failure to comply with applicable regulations could result in our licenses being cancelled. Any revocation or unfavorable amendment of the terms of our licenses, or any failure to renew them on comparable terms, could have a material adverse effect on our business, financial condition, results of operations and prospects.

Our subscriber-related operating data may not be comparable between periods

We define an “active cellular subscriber” as a cellular subscriber who, in the case of a prepaid cellular subscriber, recharges their SIM card within a 33-day “grace period” immediately following the SIM card’s expiry date by adding a minimum amount to the SIM card.

We have from time to time decreased the grace period applicable to our calculation of prepaid cellular subscribers in order to more accurately reflect those subscribers whom were most likely to recharge their SIM cards. Increasing or decreasing the grace period affects the calculation of our number of subscribers, Minutes of Usage per subscriber and ARPU.

As a result of the foregoing, our number of subscribers, Minutes of Usage per subscriber and ARPU may not reflect the actual number of subscribers and are not comparable between periods. Accordingly, you should not place undue reliance on the accuracy of this data or comparison of this data from period to period.

A significant increase in frequency fees could adversely affect our business, financial condition and results of operations

Previously, we were required to pay frequency fees for 800 MHz, 900 MHz and 1800 Mhz bands based on the number of radio stations. Starting on December 15, 2010, the government changed the basis of computing frequency fees to a new formula based on the width of allocated spectrum occupied by operators. As the largest holder of spectrum in Indonesia, Indosat is expected to pay a large amount of frequency fees going forward. The increase of the frequency fees will mainly be based on the consumer price index and the population of Indonesia.

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Allegations of health risks from the electromagnetic fields generated by BTSs and cellular handsets, and the lawsuits and publicity relating to them, regardless of merit, could adversely affect our operations

There has been public speculation about possible health risks to individuals from exposure to electromagnetic fields from BTSs and from the use of cellular handsets. We cannot assure you that future studies of these health risks will not suggest a link between electromagnetic fields and adverse health effects which may subject us to legal action from individuals alleging personal injuries or otherwise adversely affect our business.

Risks Relating to Our Fixed Data (“MIDI”) Services Business

Our MIDI services are facing increasing competition, and we may experience declining margins from such services as such competition intensifies

Our MIDI services are facing increased competition from new and established operators, which may have wider customer bases and greater financial resources than us, such as Telkom, with its regional international reach and developed domestic infrastructure. In addition, operators such as XL, First Media and Icon+, some of which have alliances with foreign telecommunications operators, compete with us in this business segment. In 2009, our World Link leased line services faced increased competition following the launch of an international “Matrix” cable operated by PT NAP Info Lintas Nusa in August 2008.

Our satellite business also faces increasing competition as new and more powerful satellites are launched by our competitors and as companies acquire exclusive licenses to provide broadcast services in Indonesia. Our Palapa-C2 and Palapa-D satellite transponder capacity agreements generally involve terms of between two to five years, and we estimate the remaining useful life of such satellites to be approximately three and 9.7 years, respectively. As additional satellites become operational and our transponder leases expire or are terminated and price competition intensifies, our transponder lessees may utilize other satellites, thereby adversely affecting our operating margins and operating revenues from such services.

Our satellites have limited operational life and may be damaged or destroyed during in-orbit operation. The loss or reduced performance of our satellites, whether caused by equipment failure or its license being revoked, may adversely affect our financial condition, results of operations and ability to provide certain services

Our Palapa-C2 and Palapa-D satellites have a limited operational life, currently estimated to end in 2014 and 2020, respectively. A number of factors affect the operational lives of satellites, including the quality of their construction, the durability of their systems, subsystems and component parts, on-board fuel reserves, accuracy of their launch into orbit, exposure to micrometeorite storms, or other natural events in space, collision with orbital debris, or the manner in which the satellite is monitored and operated. We currently use satellite transponder capacity on our satellites in connection with many aspects of our business, including direct leasing of such capacity and routing for our international long-distance and cellular services. We note, that based on the factors identified above, our Palapa-C2 satellite could fail prior to 2014 and our Palapa-D satellite could fail prior to 2020, and in-orbit repairs would not be feasible with the exception of repairs that may be addressed through ground-based software or operational fixes. Moreover, International Telecommunication Union (“ITU”) regulations specify that a designated satellite slot has been allocated for Indonesia, and the Government has the right to determine which party is licensed to use such slot. While we currently hold a license to use the designated satellite slot, in the event our Palapa-D satellite experiences technical problems or failure, the Government may determine that we have failed to optimize the existing slot under our license, which may result in the Government withdrawing our license and granting it to one of our competitors. We cannot assure you that we will be able to maintain use of the designated satellite slot in a manner deemed satisfactory by the Government.

We maintain in-orbit insurance on our Palapa-C2 and Palapa-D satellites on terms and conditions consistent with industry practice. As of December 31, 2010, we had an insurance policy with a total coverage limit of US$153 million for total and partial loss of our Palapa-C2 and Palapa D satellites. If damage or failure renders our satellites unfit for use, we may elect to cease our satellite operations or lease transponder capacity from a

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third-party provider rather than acquiring a new satellite. The termination of our satellite business could increase operating expenses associated with our provision of other telecommunications services and could adversely affect our business, financial condition and results of operations.

Risks Relating to Our Fixed Telecommunications Services Business

The entry of additional Indonesian telecommunications operators as providers of international long-distance services could adversely affect our fixed telecommunications services operating margins, market share and results of operations

Telkom, a well-established Indonesian telecommunications incumbent with significant political and financial resources, obtained a license to provide international long-distance services and launched its commercial service in 2004. As a result of Telkom’s entry into the international long-distance market, we lost market share and experienced other adverse effects relating to our fixed telecommunications services business. By the end of 2006, Telkom had acquired significant market share for IDD services. In addition, in 2009, the Government issued Bakrie Telecom an international long-distance license in an effort to encourage greater competition in the international long-distance services market. The operations of incumbents and the entrance of new operators into the international long-distance market, including the VoIP services provided by such operators, continue to pose a significant competitive threat to us. We cannot assure you that such adverse effects will not continue or that such increased competition will not continue to erode our market share or adversely affect our fixed telecommunications services operating margins and results of operations.

We face risks related to the opening of new long distance access codes

In an attempt to liberalize DLD services, the Government has issued regulations requiring each provider of DLD services to implement a three-digit access code to be dialed by customers making DLD calls. In 2005, the MOCIT announced that three-digit access codes for DLD calls will be implemented gradually within five years and that it would assign us the “011” DLD access code for five major cities, including Jakarta, and allow us to progressively extend it to all other area codes within five years. Telkom was assigned “017” as its DLD access code. In December 2007, the Government issued new regulations opening DLD access codes in the first city in Balikpapan in April 2008. Following the implementation, Balikpapan residents will be able to choose from options “0”, “011” or “017” in connecting their long distance calls.

In April 2008, we and Telkom agreed to open DLD access from our respective subscribers in Balikpapan. Whether the opening of the DLD access code will be implemented in other cities will be based on a study by the Indonesian Telecommunication Regulatory Board. The implementation of any new DLD access codes can potentially increase competition by offering our subscribers more options for DLD services. In addition, the opening of new DLD access codes is expected to result in increased competition and less cooperation among industry incumbents, which may result in reduced margins and operating revenue, among other things, all of which may have a material adverse effect on us. We cannot assure you that our access codes will remain intact or be successful in increasing our revenues from DLD services.

Item 4: INFORMATION ON THE COMPANY

History and Development of the Company

PT Indosat Tbk was established on November 10, 1967 as a foreign investment company to provide international telecommunications services in Indonesia and began commercial operations in September 1969 to build, transfer and operate an International Telecommunications Satellite Organization (“Intelsat”) earth station in Indonesia to access Intelsat’s Indian Ocean Region satellites for a period of 20 years. In 2001, as part of the Government’s initiative to restructure the telecommunications industry, we entered into an agreement with Telkom to eliminate our respective cross-shareholdings in several operating subsidiaries, including:

• our acquisition of Telkom’s 22.5% ownership interest in Satelindo (at the time the second largest cellular operator in Indonesia);

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• Telkom’s acquisition of our 35.0% ownership interest in Telkomsel; and

• our acquisition of Telkom’s 37.2% ownership interest in Lintasarta and the purchase of Lintasarta’s convertible bonds held by Telkom.

Subsequent to the agreement with Telkom, we completed the acquisition of the remaining minority interests in Satelindo in June 2002. Since entering the Indonesian cellular market through our acquisition of Satelindo and establishment of IM3 and the subsequent integration of such companies in 2003, cellular services have become the largest contributor to our operating revenues.

In August 2002, we entered the domestic fixed line telecommunications sector by obtaining a license to provide local fixed network services in the Jakarta and Surabaya areas.

In 2002, the Government divested 517.5 million shares, representing approximately 50.0% of our outstanding Series B shares at the time, in two stages. In May 2002, the Government sold 8.1% of our outstanding shares through an accelerated global tender. In December 2002, the Government divested 41.9% of our outstanding Series B shares to a former subsidiary of STT Communications Ltd. (“STT”).

In June 2008, Qtel acquired STT’s interest in us, triggering a mandatory tender offer by Qtel to acquire up to 1,314,466,775 Series B Shares, representing approximately 24.19% of our total issued and outstanding Series B Shares, at a purchase price of the U.S. Dollar equivalent of Rp369,400 per ADS and Rp7,388 per Series B Share. Qtel is a publicly held corporation which is majority-owned by the State of Qatar and its affiliated entities. Qtel is organized under the laws of the State of Qatar with shares listed on the Doha Securities Market, as well as the Abu Dhabi Securities Market, and Global Depository Receipts traded on the London Stock Exchange.

As of December 31, 2010, the Government owned 14.29% of our outstanding shares, including 1 Series A share, Qtel Asia owned approximately 65.00% of our outstanding Series B shares and SKAGEN AS owned approximately 5.11% of our outstanding Series B shares. Qtel Asia is owned by Qtel. The remaining 15.59% of our outstanding Series B shares is owned by public shareholders as of December 31, 2010. See “Item 6: Directors, Senior Management and Employees—Share Ownership.”

For a description of our principal capital expenditures since January 1, 2008 and principal capital expenditures currently in progress, including the amount invested and method of financing, see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Capital Expenditures.”

Our registered office is located at Indosat Building, Jalan Medan Merdeka Barat, No. 21, Jakarta 10110, Republic of Indonesia, and our telephone number is +62-21-3869615. Our corporate website may be accessed through the URL http://www.indosat.com. The information found on our corporate website does not, however, form part of this annual report and is not incorporated by reference herein. Our agent for service of process in the United States with respect to our ADSs is Bank of New York Mellon, Depository Receipt Division, 101 Barclay Street, New York, New York 10286, U.S.A.

Business Overview

We are a fully integrated Indonesian telecommunications network and service provider and we offer a full complement of national and international telecommunications services in Indonesia. We are the second-largest cellular operator, as measured by number of cellular subscribers, and a leading provider of international long-distance services in Indonesia. We also provide MIDI services for domestic and regional corporate and wholesale customers as well as domestic retail customers. For the years ended December 31, 2008, 2009 and 2010, our operating revenues totaled Rp19,216.0 billion, Rp18,864.9 billion and Rp19,648.4 billion (US$2,185.3 million), respectively.

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Our principal products and services include:

• Cellular services. We provide GSM 900 and 1800 and 3G cellular services to approximately 44.3 million cellular subscribers (including wireless broadband subscribers) throughout Indonesia, as of December 31, 2010. We also commenced providing wireless broadband services using our 3G platform in 2006 and, as of December 31, 2010, had approximately 536,675 subscribers.

• MIDI services. We provide broadband and narrowband MIDI services consisting of Internet services and Data Communication services, such as International and Domestic Leased Circuit, Frame Relay services, and MPLS-based services. We also offer satellite-based services such as Transponder leasing and VSAT services and Value Added Services, such as Disaster Recovery Center and Data Center services. We provide these services directly and through our subsidiaries, Lintasarta and IM2. We offer this suite of products and services primarily to our valued corporate and wholesale customers in an attempt to be their information and telecommunication solution provider.

• Fixed telecommunications (voice) services. We are one of the leading providers of international long-distance services in Indonesia, as measured by aggregate incoming and outgoing call minutes for 2010. To complement our cellular services and to enhance our access to domestic and international long-distance customers, we also provide fixed wireless access services using CDMA 2000 1x technology. We have also provided DLD services since 2003 and local fixed telephony services since 2002.

Our business does not experience significant seasonality.

Our principal shareholders are Qtel Asia, with an ownership interest of approximately 65.00% of our common stock, and the Government through the Ministry of State-Owned Enterprises, with an ownership interest of 14.29% of our common stock, including the one Series A share and SKAGEN AS, with an ownership of interest of approximately 5.11% of our common stock, in each case as of December 31, 2010. Qtel Asia is wholly owned by Qtel.

As a fully integrated Indonesian telecommunications network and service provider, we offer our customers a full complement of national and international telecommunications services in Indonesia, including cellular services and international long-distance services. As of December 31, 2010, our postpaid cellular subscribers could roam internationally in 153 countries. In addition, for our international long-distance services, we maintain direct connections with 64 foreign telecommunications operators in 40 countries.

As part of the global coverage we offer to our customers, we offer international calling services to Iran and to Cuba, Sudan, and Syria. There are roaming arrangements between Indosat and each of Mobile Company of Iran (“MCI”), C Com, Syriatel Mobile Telecom SA (“Syriatel”) and Sudanese Mobile Telephone Co. (“Mobitel”) for Iran, Cuba, Syria and Sudan, respectively. We consider the business between Indosat and Telecommunications Company of Iran (“TCI”), MCI, C Com, Syriatel and Mobitel, as well as business in Iran, Cuba, Syria and Sudan, as being insignificant relative to our size.

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	As of and for the years ended December 31,
	2008		2009(7)		2010
	(unaudited)
Operating Data:
Cellular:(1)
Number of cellular subscribers (excluding wireless broadband):
Prepaid		35,591,033		31,163,859		43,170,139
Postpaid (Matrix)		661,213		1,082,215		565,503
Total cellular subscribers		36,252,246		32,246,074		43,735,642
Number of wireless broadband subscribers:(2)
Prepaid		116,341		610,446		448,116
Postpaid		141,659		110,681		88,559
Total wireless broadband subscribers		258,000		721,127		536,675
Total cellular subscribers:		36,510,246		32,967,201		44,272,317
ARPU (Rp)(3)		38,639		37,664		34,712
Minutes of Usage(4)		98		102		113
ARPM (Rp)(5)		287		220		163
Number of base station sites(6)		13,662		16,353		18,108
Number of base station controllers(6)		265		315		330
Number of mobile switching centers(6)		73		95		87
MIDI:
International High Speed Leased Circuit (’000s)		46		80		218
Domestic High Speed Leased Circuit (’000s)		129		171		251
Fixed telecommunications:
Incoming traffic (in millions of minutes)		1,582		1,559		1,724
Outgoing traffic (in millions of minutes)		474		502		463
Incoming/outgoing call ratio		3.3		3.1		3.7

⁽¹⁾  Due to changes in the method used to calculate the number of our prepaid cellular subscribers, our number of cellular subscribers, minutes of usage per cellular subscriber and ARPU set forth in this report are not comparable between certain periods. See “Item 3: Key Information—Risk Factors—Risks Relating to Our Cellular Services Business—Our subscriber-related operating data may not be comparable between periods.”

⁽²⁾  The number of wireless broadband subscribers only includes those who exclusively subscribe to our wireless broadband services, and does not include those who use our “broadband on demand” services.

⁽³⁾  The average monthly revenue (in Indonesian rupiah) per cellular subscriber, or APRU, is computed by dividing monthly recurring prepaid and postpaid cellular services revenues (usage charges, value-added services, interconnection revenues and monthly subscription charges), excluding non-recurring revenues such as activation fees and special auctions of telephone numbers recorded under Indonesian GAAP, for the relevant period by the average number of prepaid and postpaid cellular subscribers. The average number of prepaid and postpaid cellular subscribers is the sum of the total number of active cellular subscribers at the beginning and end of each month divided by two. Due to changes in the method used to calculate the number of our prepaid cellular subscribers, our ARPU set forth in this report are not comparable between certain periods. See “Item 3: Key Information—Risk Factors—Risks Relating to Our Cellular Services Business—Our subscriber-related operating data may not be comparable between periods.”

⁽⁴⁾  The Minutes of Usage per cellular subscriber is computed by dividing the total minutes of outgoing call usage of prepaid and postpaid cellular subscribers for each month by the average number of prepaid and postpaid cellular subscribers. The average number of prepaid and postpaid cellular subscribers is the sum of the total number of active cellular subscribers at the beginning and end of each month divided by two. Due to changes in the method used to calculate the number of our prepaid cellular subscribers, our minutes of usage per cellular subscriber set forth in this report are not comparable between certain periods. See “Item 3: Key Information—Risk Factors—Risks Relating to Our Cellular Services Business—Our subscriber-related operating data may not be comparable between periods.”

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⁽⁵⁾  ARPM (in Indonesian rupiah) is computed by dividing the monthly recurring revenues from prepaid and postpaid cellular services (usage charges, value-added services, interconnection revenues and monthly subscription charges), excluding non-recurring revenues such as activation fees and special auctions of telephone numbers recorded under Indonesian GAAP, for the relevant period, by the total minutes of outgoing call usage of prepaid and postpaid cellular subscribers for such period.

⁽⁶⁾  Prior to the first quarter of 2010, newly-built or newly-acquired base station sites, base station controllers or mobile switching centers which were not yet in operation were included in the number of base station sites, base station controllers or mobile switching centers reported by the Company (the “Prior Computation”). Beginning in the first quarter of 2010, as disclosed herein, the Company included newly-built or newly-acquired base station sites, base station controllers or mobile switching centers in its various reports only when such base station sites, base station controllers or mobile switching centers were actually put in operation. Under the Prior Computation, the Company would have reported that it owned 14,162, 16,804 and 18,704 base station sites, 279, 315 and 331 base station controllers and 73, 96 and 92 mobile switching centers for the year ended December 31, 2008, 2009 and 2010, respectively.

⁽⁷⁾  As reported in our Form 6-K filed on July 22, 2010, we issued a restatement of our cellular subscriber base as at March 31, 2010 from 39.1 million to 37.7 million. This discrepancy arose during the compilation of data from multiple reporting systems. The same issue resulted in an over-reporting of subscribers in the second and third quarters of 2009. Accordingly, the total number of subscribers of 33.0 million and ARPU of Rp37,664 for 2009 reported above reflect the restated figures, compared with the total number of subsrcribers of 33.1 million and ARPU of Rp37,330 previously reported.

The following table sets forth the breakdown of our operating revenues for each of the periods indicated and the percentage contribution of each of our services to our operating revenues:

	For the year ended December 31,
	2008 (Restated)				2009 (Restated)				2010
	Rp		%		Rp		%		Rp		%
	(Rp in billions, except percentages)
Cellular services		14,460.8		75.3		14,331.3		76.0		15,867.1		80.8
MIDI services		2,733.4		14.2		2,712.6		14.4		2,488.1		12.7
Fixed telecommunications		2,021.8		10.5		1,803.0		9.6		1,293.2		6.5
Total operating revenues		19,216.0		100.0		18,846.9		100.0		19,648.4		100.0

Cellular Services

Cellular services contributed revenues of Rp15,867.1 billion (US$1,764.8 million) for the year ended December 31, 2010, representing 80.8% of our total consolidated operating revenues in 2010. We are the second-largest cellular provider in Indonesia, as measured by the number of cellular subscribers, with 44.3 million subscribers (including wireless broadband subscribers) as of December 31, 2010. For 2010, we had an estimated subscriber market share of 24.8%, which figure is based on our estimates based on available market data. Our cellular network currently provides network coverage in all major cities and population centers across Indonesia. We provide our cellular services using GSM 900 and GSM 1800 technology and, for our 3G platform, IMT-2000 technology. We are also one of the leading providers of prepaid and postpaid wireless broadband services in Indonesia. As of December 31, 2010, we had approximately 536,675 prepaid and postpaid wireless broadband subscribers.

Services

Our principal cellular services are the provision of voice and data services, which we sell through postpaid and prepaid plans. Our prepaid and postpaid subscribers are able to make and receive “on-net” voice calls to and from other Indosat subscribers (including our Matrix, Mentari, and IM3 subscribers) on our telecommunication network, as well as “off-net” voice calls to and from subscribers of other telecommunication operators on their fixed and cellular telecommunication networks.

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We offer prepaid plans under the brand names “Mentari” and “IM3.” Both products have a high degree of brand recognition, providing us with an advantage when attempting to attract and retain subscribers in a competitive market. We have differentiated our two prepaid brands based on market segments. Such differentiation allows us to target the usage and spending patterns of different consumer segments through our promotional plans. Our Mentari brand is marketed towards a more mature market, with voice services being promoted at competitive prices. Our IM3 brand is marketed toward the younger generation, with very attractive voice, SMS and data packages. We continue to develop the Mentari and IM3 brands, offer promotions and engage in advertising tailored for those specific market segments. Frontier Consulting Group and Marketing Magazine awarded us the “Top Brand Award” in 2008, 2009 and 2010 for both our Mentari and IM3 brands for outstanding achievement in building our brand awareness and market share.

We offer postpaid plans, designed for high-end professional and corporate users, under the brand name “Matrix.” Matrix is a basic service package with a postpaid payment plan that provides the ability to register with numerous other supplementary plans, value-added services and corporate-based services. We offer various “Matrix” packages with different features and benefits to suit the needs of our subscribers. Our Matrix brand received the “Top Brand Award” in 2010 from the Frontier Consulting Group and Marketing Magazine.

Prepaid and postpaid subscribers have access to local, DLD and international direct long-distance dialing. In addition, we offer a variety of value-added services, functions and features to our subscribers. Such services, functions and features, which, in certain cases, are free of charge, can be purchased individually, or bundled according to the package selected, include:

• SMS: allows subscribers to send short text messages to other cellular users’ mobile phone display screens;

• MMS: allows subscribers of GSM service to send pictures, text and sound/voice in a single packet message;

• Voice SMS: allows subscribers to send audible messages;

• Ring-back tone: allows subscribers to choose their favorite song as the ringtone that is heard by callers for incoming calls;

• GPRS: provides mobile data communications with GSM-based technology, including mobile Internet, data transfer and push e-mail (BlackBerry™ services);

• Mobile data and broadband services: allows subscribers to browse and download sports, news, horoscope, movies, music and finance content to their mobile handsets, connect to a computer as modem, send and receive using GPRS and 3G network for broadband quality;

• Facsimile services: allows subscribers to send and receive faxes;

• BlackBerry™ services: allows subscribers to register and use a full suite of BlackBerry™ services, including email, chat, browsing, GPS, and many other BlackBerry™ based applications;

• Voicemail: enables callers to leave voice messages that can be retrieved by subscribers;

• Caller identification: displays the incoming call number on a subscriber’s mobile phone display screen;

• Call holding: allows subscribers to place an incoming or outgoing call on hold while making or receiving other calls;

• Call waiting: signals subscribers that they have an incoming call while the line is engaged. Upon hearing such a signal, subscribers can answer the second call and place the original call on hold;

• Call forwarding: enables subscribers to forward incoming calls to other cellular or fixed-line numbers;

• Detailed billing: provides subscribers with detailed billing statements indicating the duration and cost of calls made to and from a particular mobile phone;

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• Direct debit payment: provides a payment option that automatically deducts billed amounts from the subscriber’s bank account or credit card;

• Recharge via SMS and automated teller machines: enables subscribers to recharge their prepaid airtime plans via SMS and automated teller machines automatically deducting billed amounts from the subscriber’s bank account; and

• International roaming: allows prepaid and postpaid subscribers to send/receive SMS, voice and data (GPRS/3G) services while roaming on foreign cellular networks.

Facsimile services, detailed billing and direct debit payments are only available to postpaid subscribers. Since 2009, postpaid subscribers have been able to request delivery of printed billing statements or billing statements by e-mail, which minimizes the number of unreceived bills. We offer certain services free of charge, including caller identification, call holding, call waiting and call forwarding, while others, such as SMS, mobile data, broadband, BlackBerry™, facsimile services and detailed billing, carry additional fees.

We provide our SMS service to prepaid and postpaid cellular subscribers. Usage levels have increased from an average of approximately 90.4 million text messages (excluding value-added service SMSs, such as SMSs related to promotions by content providers and advertisers) per day in December 2007 to a daily average of approximately 516.0 million text messages (excluding value-added service SMSs) in December 2010. In 2008, 2009 and 2010, SMS usage fees represented a substantial portion of our operating revenues from value-added cellular services and features. However, we have recently seen an increase in revenues from mobile data services. We expect SMS to continue to contribute a substantial portion of revenues from value-added cellular services and features, but anticipate a continuing increase in revenues from GPRS, BlackBerry™ and other mobile data services in the future.

We have entered into interconnection agreements with other Indonesian telecommunications operators to allow our cellular networks to interconnect with the PSTN operated by Telkom, our international gateways and the networks of each of the other Indonesian cellular and fixed wireless access operators, thereby allowing our cellular subscribers to communicate with customers of other telecommunications service providers.

We offer international roaming services to our cellular subscribers to enable them to make and receive calls and to send and receive SMS text messages and use Data connection (on GPRS or 3G) when outside Indonesia. We have entered into roaming agreements with operators of GSM cellular networks in Africa, Europe, North and South America and Asia. As of December 31, 2010, our postpaid cellular subscribers could roam internationally on 468 networks, owned by 336 operators in 153 countries, and our prepaid cellular subscribers could roam internationally on 20 networks, owned by 20 operators in 16 countries.

On December 12, 2006, we became a member of the largest international telecommunications operator alliance in Asia, CONEXUS, which was formed to increase each member’s competitive value in providing international telecommunication services in its respective country and across the Asia-Pacific region. To support current roaming services through GSM, GPRS and wideband code division multiple access (“W-CDMA”), the members of the alliance are cooperating to provide roaming with HSDPA technology. This alliance has expanded service coverage to more than 150 million customers in nine countries, including Indonesia. Within the CONEXUS and DIGI (Malaysia) networks, our postpaid subscribers can enjoy a special flat data/internet/BlackBerry™ usage rate of Rp 25,000 per day of unlimited data usage.

Mobile Data Services

We launched our portfolio of mobile data services in 2000. Mobile data services can be accessed through, among others, SMS, direct dial-up connection to a WAP server or wireless broadband, where subscribers can access a variety of information, including movie listings, stock quotes, exchange rates, sports and business news and astrological predictions, and recharge their prepaid SMS cards. In addition, subscribers can send and receive e-mail and conduct mobile banking services with several leading banks through their mobile handsets.

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We provide GPRS service with EDGE technology in most large cities in Java, Bali, Sumatra, Kalimantan, Sulawesi and Papua. We were the first telecommunications provider to launch the BlackBerry^™ service in Indonesia. In cooperation with Research-In-Motion (“RIM”), we introduced BlackBerry^™ Enterprise Service to our Postpaid/Matrix corporate customers in December 2004 and BlackBerry^™ services for personal Postpaid/Matrix users in March 2005. In June 2008, to differentiate ourselves from other BlackBerry™ service operators, we launched I-GPS and I-Stock applications which allow our BlackBerry^™ customers to access a navigation system and real-time stock prices. In January 2009, we launched a BlackBerry^™ service subscription via our prepaid brands, Mentari and IM3. In October 2010, we increased the link capacity to RIM to 500 Mbps dual link, providing our BlackBerry^™ subscribers with faster access. This increase means that we have the largest link capacity to RIM in Indonesia. We have approximately 600,000 BlackBerry^™ subscribers as of December 31, 2010. Indonesia is the second largest growth market in the world for BlackBerry^™ devices.

On February 8, 2006, the Government conducted an open bidding process for 3G spectrum licenses and, following satisfactory completion of the bidding process, we were awarded one 3G spectrum license for 5 MHz of paired spectrum. In the same bidding, Telkomsel and XL were also awarded 3G spectrum licenses. In 2007, we began offering an enhanced 3G (“3.5G”) broadband service using HSDPA technology, a mobile wireless telecommunication service with enhanced 3G technology. In August 2009, we were granted additional spectrum under our existing license, which will allow us to double our network capacity to serve our broadband subscribers. In 2009, we started to deploy the new 3.5G network using HSPA+ technology, with downlink speeds of up to 42Mbps and uplink speeds up of to 5.6Mbps, and we began offering such services in 2010.

In 2007, we began offering 3.5G broadband services, a mobile wireless telecommunications service with 3.5G technology. In August 2009, we were granted additional spectrum for a second 3.5G carrier, which we believe will allow us to double our network capacity to serve our broadband subscribers. We have started to deploy the new HSPA+ 3.5G network, with downlink speed of up to 42Mbps and uplink speed up of to 5.6Mbps. We have re-aligned our broadband portfolio to focus more on our target segments. Since September 2009, pure data/Internet broadband services, which is for use on personal computers (data only/large screen), have been managed and sold by IM2. Wireless broadband services for handheld devices (for small screen use) are provided through Matrix, Mentari and IM3. In December 2009, we successfully launched our “Broadband-On-Request” program, which is activated by subscribers via SMS or USSD, for Mentari and IM3 customers, and on October 2010 for matrix subscribers providing options of daily, weekly and monthly packages, with quotas allocated for the respective period of subscription and unlimited packages.

Subscribers and Marketing

We segment the Indonesian population by location, disposable income and other factors we believe indicate the desire and ability of individuals and corporations to purchase our products and services. We then target areas that are generally more prosperous as these areas tend to yield a higher density of potential cellular subscribers. Through this approach, we have achieved a diversified cellular subscriber base spread throughout Indonesia’s major population centers. We implemented this strategy to adapt to competition from new entrants and pricing pressures in major urban areas.

Our prepaid subscriber base has grown significantly over the past three years relative to our postpaid subscriber base. As of December 31, 2008, we had 661,213 postpaid and 35,591,033 prepaid cellular subscribers. As of December 31, 2009, we had 1,082,215 postpaid and 31,163,859 prepaid cellular subscribers. As of December 31, 2010, we had 565,503 postpaid (Matrix) and 43,170,139 prepaid cellular subscribers. We conduct nationwide marketing and promotional activities in an attempt to retain our existing valued cellular subscribers and to acquire new cellular subscribers. We believe Indonesian cellular subscribers tend to favor the convenience, ease of activation, avoidance of fixed commitments and lack of credit checks associated with prepaid cellular plans. Accordingly, we have focused on this particular subscriber base in our marketing efforts.

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The following table presents certain information regarding our cellular subscriber base, ARPU, Minutes of Usage and ARPM as of the dates indicated:

	As of or for the years ended December 31,
	2008		2009(7)		2010
Number of cellular subscribers (excluding wireless broadband)(1)(2) :
Prepaid		35,591,033		31,163,859		43,170,139
Postpaid (Matrix)		661,213		1,082,215		565,503
Total cellular subscribers		36,252,246		32,246,074		43,735,642
Number of wireless broadband subscribers(3) :
Prepaid		116,341		610,446		448,116
Postpaid		141,659		110,681		88,559
Total wireless broadband subscribers		258,000		721,127		536,675
Total cellular subscribers:		36,510,246		32,967,201		44,272,317
ARPU (Rp)(4)		38,639		37,664		34,712
Minutes of Usage(5)		98		102		113
ARPM (Rp)(6)		287		220		163

⁽¹⁾  Due to changes in the method used to calculate the number of our prepaid cellular subscribers, our number of cellular subscribers, minutes of usage per cellular subscriber and ARPU set forth in this are not comparable between certain periods. See “ Item 3: Key Information—Risk Factors—Risks Relating to Our Cellular Services Business—Our subscriber-related operating data may not be comparable between periods.”

⁽²⁾  Cellular subscribers means total registered and active cellular subscribers at the end of the relevant period. Due to changes in the method used to calculate the number of our prepaid cellular subscribers, our number of cellular subscribers, minutes of usage per cellular subscriber and ARPU set forth in this annual report are not comparable between certain periods. See “Item 3: Key Information—Risk Factors—Risks Relating to Our Cellular Services Business—Our subscriber-related operating data may not be comparable between periods.”

⁽³⁾  The number of wireless broadband subscribers only includes those who exclusively subscribe to our wireless broadband services, and does not include those who use our “broadband on demand” services.

⁽⁴⁾  The average monthly revenue (in Indonesian rupiah) per cellular subscriber, or ARPU, is computed by dividing monthly recurring prepaid and postpaid cellular services revenues (usage charges, value-added services, interconnection revenues and monthly subscription charges), excluding non-recurring revenues such as activation fees and special auctions of telephone numbers recorded under Indonesian GAAP, for the relevant period by the average number of prepaid and postpaid cellular subscribers. The average number of prepaid and postpaid cellular subscribers is the sum of the total number of active cellular subscribers at the beginning and end of each month divided by two. Due to changes in the method used to calculate the number of our prepaid cellular subscribers, our ARPU set forth in this annual report are not comparable between certain periods. See “Item 3: Key Information—Risk Factors—Risks Relating to Our Cellular Services Business—Our subscriber-related operating data may not be comparable between periods.”

⁽⁵⁾  The Minutes of Usage per cellular subscriber is computed by dividing the total minutes of outgoing call usage of prepaid and postpaid cellular subscribers for each month by the average number of prepaid and postpaid cellular subscribers. The average number of prepaid and postpaid cellular subscribers is the sum of the total number of active cellular subscribers at the beginning and end of each month divided by two. Due to changes in the method used to calculate the number of our prepaid cellular subscribers, our minutes of usage per cellular subscriber set forth in this annual report are not comparable between certain periods. See “Item 3: Key Information—Risk Factors—Risks Relating to Our Cellular Services Business—Our subscriber-related operating data may not be comparable between periods.”

⁽⁶⁾  ARPM (in Indonesian rupiah) is computed by dividing revenues from monthly recurring prepaid and postpaid cellular services, excluding non-recurring revenues such as activation fees and special auctions of telephone numbers recorded under Indonesian GAAP, for the relevant period, by the total minutes (billed and unbilled) of outgoing call usage of prepaid and postpaid cellular subscribers for such period.

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⁽⁷⁾  As reported in our Form 6-K filed on July 22, 2010, we issued a restatement of our cellular subscriber base as at March 31, 2010 from 39.1 million to 37.7 million. This discrepancy arose during the compilation of data from multiple reporting systems. The same issue resulted in an over-reporting of subscribers in the second and third quarters of 2009. Accordingly, the total number of subscribers of 33.0 million and ARPU of Rp37,664 for 2009 reported above reflect the restated figures, compared with the total number of subscribers of 33.1 million and ARPU of Rp37,330 previously reported.

As of December 31, 2010, we had approximately 44,272,317 subscribers, including approximately 536,675 subscribers to our wireless broadband services.

To consolidate our marketing channels for cellular services, we have opened integrated walk-in centers, under the names “Galeri Indosat,” which we operate, and “Griya Indosat,” which are operated by our exclusive distributors. These walk-in centers function as sales outlets and provide potential and existing cellular subscribers with customer service and product information. We also have a dedicated team of employees who coordinate sales and services to Indonesian corporations.

To supplement our direct marketing channels, we maintain a network of approximately 51 independent dealers, to whom we offer various incentives for the promotion and sale of our services. These independent regional and multi-regional dealers have their own distribution networks throughout Indonesia and promote our cellular services, primarily to individuals. These dealers include major distributors of mobile handsets and typically have their own retail networks, direct sales forces and sub-dealers in Indonesia. These outlets serve as additional branch outlets for us and offer a broad range of services, including product and service information, customer service and bill payment processing. Existing and new cellular subscribers can activate and register and pay for all of our prepaid cellular services at these outlets. We continue to maintain our relationships with our dealers in an attempt to generate higher sales volume through better product placement, an integrated dealer network and enhanced dealer loyalty.

Tariff Structure and Pricing

The MOCIT establishes a tariff formula that determines the amounts that operators may charge for prepaid and postpaid cellular services, although allows cellular service providers to offer promotional programs that offer lower prices than the ceiling tariffs. We currently price our prepaid cellular services under a variety of ongoing promotional programs pursuant to which we offer a variety of incentives to attract new subscribers, stimulate demand and improve our competitive position. We may charge different rates for prepaid and postpaid cellular services, depending on various factors that apply to a particular type of service. For instance, the billing expenses we incur to serve our postpaid subscribers will likely be higher and accordingly, our rates for postpaid cellular services tend to be higher than those for prepaid cellular services.

The Indonesian cellular telecommunications market uses a “calling party pays” system, which requires the originators of telephone calls to pay for calls. If our subscriber makes a call to another network, we incur interconnection charges. SMS operates on a “sender-keeps-all” basis, which means that we earn revenues whenever one of our cellular subscribers sends an SMS, but not when a customer of another telecommunications operator sends an SMS to one of our cellular subscribers. For our GPRS service, we charge cellular subscribers Rp3 per kilobyte of data downloaded for the first 300k and Rp0.5/kB up to Rp2/kB (excluding tax) thereafter, depending on the download time(off peak or peak time). We receive roaming settlements from foreign telecommunications operators when their cellular subscribers roam on our network. For our wireless broadband services, we offer various pricing packages depending on the payment method (prepaid or postpaid), transmission speed and monthly quotas.

Activation Fees and Monthly Charges. Activation fees represent the initial connection fees charged to new prepaid subscribers when subscribing to a cellular network. Monthly charges represent fixed amounts charged to postpaid subscribers, particularly Corporate BlackBerry^™ Enterprise Service users that require new BlackBerry™ software. Since 1998, we have not charged our postpaid subscribers an activation fee. We offer

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several programs for postpaid subscribers, including a minimum monthly usage of Rp25,000, “Matrix Strong” package plan for Rp50,000 providing 75 free on-net calls and 75 SMS, “Matrix Unlimited” package plan providing unlimited calls to 1 or 2 registered Indosat numbers starting from Rp60,000 per month and other promotional programs.

Usage charges. There are three types of calls: local, domestic long distance, and international calls. Calls are charged on different charging blocks, from per second up to per minute block, depending on the package plan chosen by the subscriber. Calls may terminate on any of the cellular, fixed or satellite networks. For on-net calls, our subscribers are charged favorable rates because of our ability to offer bundled products, such as cellular and international long-distance services. For off-net calls, the usage charges of subscribers are greater because of interconnection, domestic long-distance, and international long-distance charges.

Value-added Services. Prior to 2008, tariffs for value-added services were not regulated by the Government. Since April 2008, the MOCIT has been responsible for setting the tariff formula for SMS. As with voice services, we offer promotional discounts for SMS and mobile data services for both postpaid and prepaid subscribers.

Interconnection

The charges for postpaid subscription services consist of monthly subscription and interconnection-based usage charges. Charges for prepaid subscription services likewise include interconnection-based usage charges. The interconnection-based usage charges for both prepaid and postpaid cellular services are calculated by considering three interconnection costs: originating, transit and terminating costs.

Since January 2007, the MOCIT has set a tariff formula for interconnection services. The MOCIT sets this tariff formula on a “cost” basis, based on RIOs submitted by dominant service providers in Indonesia, which include us. The MOCIT approved the RIOs we submitted in 2007 and 2008, which have not been adjusted for 2009 and 2010. On December 31, 2010, BRTI issued letter No. 227/BRTI/XII/2010 which set a new set of interconnection tariffs. The new interconnection tariffs took effect on January 1, 2011 and will be reflected in the adjustment of our RIOs. We will apply the charges in our RIOs to the interconnection agreements we have with other operators. The charges under our RIOs have been decreasing in the past few years, and we expect the downward trend to continue.

We currently interconnect with fixed line and cellular networks operated by all network operators at numerous locations throughout Indonesia. To minimize our interconnection expenses, we utilize our own backbone transmission facilities whenever possible and in compliance with applicable regulations. For example, routing a long-distance call from a customer in Surabaya to a destination customer in Jakarta through our fiber optic or microwave transmission lines allows us to avoid the use of another operator’s network, thereby lowering our interconnection expenses associated with routing our intra-network usage.

Activation, Billing and Collection

Prepaid cellular subscribers can purchase starter packs from our sales and distribution points or through our various independent dealers. To activate service, a new prepaid cellular subscriber must register with us by following the instructions using the interactive menu. Potential postpaid subscribers can apply for our cellular services at our sales and distribution points or through our independent dealers. Many of our independent dealers, however, can only receive new applications for postpaid cellular services, which are then forwarded to us for processing. A potential subscriber for our postpaid service is required to provide proof that such subscriber meets our minimum credit requirements. If a potential subscriber does not meet our postpaid requirements, our sales representative recommends our prepaid services. Once approved, postpaid service SIM cards are activated within 24 hours.

We bill our postpaid subscribers on a monthly basis through our centralized billing division. In the case of prepaid subscribers, the wireless billing system automatically reduces the value of each prepaid subscriber’s

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account as originating, transit and terminating charges are assessed. Our postpaid subscribers have a variety of payment options in paying their monthly bills. Payments may be made by cash and major credit cards through Indosat galleries, bank tellers or post office branches. In addition, subscribers can also make payment via automatic debit through banks or participating credit card companies, bank transfers, automated teller machines, Electronic Data Capture, mobile banking, Internet banking, and phone banking. Payments are due 20 days after the account statement date. Twenty-seven days after the statement date, we remind subscribers who have not paid their balance and block their ability to make outgoing calls. We block a subscriber’s ability to make or receive calls 40 days after the statement date if he or she still has not paid his or her balance. We suspend the service for accounts that are more than 50 days past due and remove such subscriber’s data from our network and permanently disconnect the number and SIM card after 120 days from the statement date.

We have taken a number of steps to prevent subscriber fraud and to minimize losses. We deliver prepaid vouchers to our independent dealers only on a cash-on-delivery basis and we do not collect payments for our services from cellular subscribers through our independent dealers. In addition, depending on usage levels, we may require refundable deposits from subscribers. We also review accounts of our high-usage subscribers at regular intervals to ensure that the deposit levels continue to be adequate.

Competition

The cellular services business in Indonesia has become increasingly competitive during recent years. Competition in the cellular communications industry is based principally on network coverage, technical quality, price, the availability of data services and special features, and quality and responsiveness of customer service. Based on our internal estimates, the three major providers of wireless services in Indonesia, Telkomsel (which is majority-owned by Telkom), us and XL (which is indirectly majority-owned by Axiata Bhd. of Malaysia), accounted for almost 77% of the 2010 wireless subscriber base in Indonesia.

We also compete with others fixed wireless access service providers. In May 2003, Telkom introduced TelkomFlexi, a CDMA 2000-1X service in the Jakarta area. Currently, Telkom offers this service nationwide. Telkom offers this service as a fixed wireless access service, but the service has expanded mobility and value-added features similar to cellular services. After receiving requests from industry associations, the MOCIT issued a decree stating that the service area of the fixed wireless access network must be limited to an area equal to one area code of the local fixed network service. An operator of fixed wireless access service is therefore prohibited from extending its roaming services to other area codes, but CDMA operators still have the ability to achieve similar results by giving subscribers a new number when they move to other cities. In addition to TelkomFlexi, other telecommunications operators offer similar services such as Bakrie Telecom and Mobile-8, which offer their services nationwide.

From time to time, Indonesian telecommunications operators conduct aggressive subscriber acquisition programs with the goal of increasing individual market share. Through the offer of discounts, bonuses and special rates, operators attempt to differentiate their services from those of other operators, primarily based on price. This competition has caused tariffs to decline and, as a result, we believe cellular subscriber ARPU has continued to decline for most Indonesian telecommunications operators.

We believe competition for 3G services will be intense as telecommunications operators begin to deploy their networks in major population centers. Currently, there are five telecommunications operators holding 3G licenses: Telkomsel, Hutchison, Natrindo, XL and us. We commenced providing wireless broadband services using our 3G platform in 2009 and, as of December 31, 2009, we offered 3G services in 50 cities nationwide.

Our main competitors for wireless broadband services are Telkomsel, with its “Flash” service, and XL with its “XL Unlimited”, both of which use 3.5G W-CDMA technology. Other operators such as Smart Telecom and Mobile 8 also provide wireless broadband service with EVDO-CDMA technology.

We believe barriers to entry in the Indonesian cellular and fixed wireless access services industry are currently comparatively high due to the limited availability of frequency spectrum, a capital intensive operating

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environment, difficulties in acquiring tower sites for network expansion and the established market presence of the three incumbents, us, Telkomsel and XL. Nevertheless, we are anticipating continued intense competition within the Indonesian cellular and fixed wireless access services industry generally. In response to this, we intend to dedicate a substantial portion of our future capital expenditures to our cellular business in an effort to increase network capacity and service quality and to provide various value-added services.

MIDI Services

The products and services that we offer in this business segment include high-speed point-to-point international and domestic leased line with broadband and narrowband capacity, a high-performance packet-switching service, and Internet service, a multi layer of MPLS-based services, satellite transponder leasing for telecommunication providers and broadcaster segments, and value added services such as Disaster Recovery Center and Data Center. Recognizing the significant growth potential of data and other network services, including Internet-based services, and their increasing importance to our overall business strategy, we have placed considerable emphasis on this business segment. The growing emphasis on reliable data transmission and interconnectivity by our corporate customers, especially those with multiple branches or locations, presents an excellent opportunity for us. MIDI services represented Rp2,488.1 billion (US$276.7 million), or 12.7% of our total consolidated operating revenues for the year ended December 31, 2010.

	For the years ended December 31,
	2008		2009		2010
MIDI:
International High Speed Leased Circuit (’000s)		46		80		218
Domestic High Speed Leased Circuit (’000s)		129		171		251

Services

World Link, Direct Link and Domestic Link. World Link is an IPLC that provides international connection of high-speed digital data circuits on a point-to-point basis via submarine and terrestrial cables and offers line speeds from 64 Kbps and multiples thereof up to 2 Mbps for narrowband or 45 Mbps and above for broadband. Direct Link is a leased line service through satellite / VSAT connections which provides high-speed digital data circuits on point-to-multipoint basis and offers line speeds from 64 Kbps and multiples thereof up to 2 Mbps for narrowband. Domestic Link is a domestic private leased circuits service that provides high-speed digital data circuits on a point-to-point basis and offers line speeds from 64 Kbps and multiples thereof up to 2 Mbps for narrowband or 45 Mbps and above for broadband. Most of our broadband World Link customers are telecommunications providers who require dedicated broadband international data links, and our narrowband World Link customers consist primarily of corporate users who subscribe to our World Link service for their own internal use. Direct Link is used for international connections and other leased line users located in areas that are not covered by terrestrial domestic networks. Our broadband Domestic Link customers in the domestic market include telecommunications providers that need dedicated domestic broadband data links, and our narrowband Domestic Link customers mostly are corporate users who use the service for their own internal use. We recorded operating revenues of Rp278.8 billion (US$31.0 million), from World Link, Direct Link and Domestic Link operations, representing 11.2% of our consolidated MIDI services operating revenues for the year ended December 31, 2010.

IP VPN. We provide both international and domestic IP VPN services through Indosat, Lintasarta, and IM2, which provide customers with multi-point connectivity for data communication through our robust IP network cloud. These services support flexibility, scalability, and accommodate complex distributed computing applications, while maintaining the quality of service, security, and reliability close to that of private leased circuit. As of December 31, 2010, Indosat’s, Lintasarta’s, and IM2 domestic IP VPN services were available in 74 major cities in Indonesia, and Indosat’s international IP VPN services have a strong presence in South East

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Asia, with coverage extensions to North Asia, Europe, Japan, and the United States, in cooperation with several global service providers such as AT&T, C&W, BT, and NTT. We recorded operating revenue of Rp605.7 billion (US$67.4 million) from IP VPN operations, representing 24.3% of our consolidated MIDI services operating revenues for the year ended December 31, 2010.

MPLS and Metro Ethernet. MPLS and Metro Ethernet are domestic and international leased line services, provided through our robust Internet Protocol network cloud. MPLS is a technology platform that has an ability to provide various classes of services on an Internet Protocol network, resulting in a flexible, scalable, reliable and secure data communication link, both for point-to-point or multipoint domestic inter-city and international connections. Our MPLS-based services consist of Premium Ethernet Point to Point, Premium Ethernet Multi Point, and IP VPN; and offer line speeds from 64 Kbps and multiples thereof up to 2 Mbps for narrowband or 45 Mbps and 155 Mbps for broadband. Metro Ethernet provides high-speed domestic inner-city bandwidth connections with line port speeds of 10 Mbps, 100 Mbps and 1 Gbps and an Ethernet base with an incremental guaranteed bandwidth of nx1 Mbps.

Frame Relay and ATM. We provide both international and domestic Frame Relay and ATM services, a high-speed leased packet switch technology, primarily through Indosat and Lintasarta, supplying customers with multilateral connectivity, reliable LAN interconnections and the power to support complex distributed computing applications.

We offer our various data connectivity services—World Link, Direct Link, Domestic Link, IP VPN, MPLS and Metro Ethernet, Frame Relay and ATM—to our various corporate customers, including multinational corporations, tailored to fit their specific information and telecommunications requirements, pricing parameters, speed requirements, and security concerns.

Satellite Services. We lease transponder capacity on our Palapa-D satellite, which is positioned in an orbital slot located over the Asia-Pacific region, to broadcasters and telecommunications operators. Indonesia has a large television market in which a number of privately-owned domestic broadcasters and international programmers compete with the state-owned broadcaster and many of these domestic and international broadcasters lease capacity on our satellite. We have entered into lease arrangements governing transponders on our Palapa-D satellite that vary in duration but generally terminate within two to five years of the effective date of the lease. Transponder leases may be terminated for breach of the lease agreement and, most of the leases provide that the lessee may terminate the lease with notice (generally six to 12 months) subject to the payment by the lessee of a termination fee equal to a percentage of the lease payments that would have been due had the lease not been terminated. Apart from our own use, we also lease transponder capacity on our Palapa-C2 satellite, with a maximum lease term of three years, to other telecommunications operators.

We also provide a variety of other supplementary satellite services, including occasional use for TV services, Indosat TV link, private network services, Internet access and multimedia and video conferencing. We expect demand for satellite services to continue to grow, mainly driven by accelerating growth of satellite derivative services. Pressure on pricing is expected to ease as a consequence of improved demand. Satellite services represented Rp136.0 billion (US$15.1 million) or 5.5% of our MIDI services operating revenues for the year ended December 31, 2010.

Internet Services. We provide Internet Network Provider Services for ISPs and Dedicated Internet Access services for end users and corporate customers. For the year ended December 31, 2010, we operated three ISPs that contributed revenues of Rp519.6 billion (US$57.8 million). IM2 provides dedicated and dial-up services, and as of December 31, 2010, it had 2,130 corporate and small-to medium-size enterprises (“SME”) subscribers and 12,756 retail subscribers. In anticipation of increased competition in the Internet business, IM2 has developed a strategy to expand its business by developing an Internet protocol backbone through potential growth areas, deploying public hotspot services, establishing customer care centers, developing its network through joint investment schemes by using hybrid fiber and coaxial technology, and improving its business processes.

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Lintasarta offers its Internet subscribers “IdOLA” and “LintasartaNet” service for corporate subscribers. With IdOLA and LintasartaNet, subscribers can access information from many content providers in Indonesia and worldwide. Corporations may use LintasartaNet for Internet promotions, software and computer allocations, co-operative ventures or domestic and international trade transactions. We derived 20.9% of our consolidated MIDI services operating revenues from Internet services for the year ended December 31, 2010.

VSAT Net/IP and VSAT Link. Lintasarta’s VSAT Net/IP and VSAT Link services are satellite-based data networking systems. VSAT Net/IP connects and controls data traffic among remote locations, allowing for quick development of data for network customers with low-to-medium traffic in such sectors as financial services, transportation, trading and distribution. VSAT Link provides point-to-point digital transmission for remote locations by businesses with medium-to-heavy traffic such as those in the manufacturing, mining and financial services industries.

Disaster Recovery Center (DRC) and Data Center. We provide DRC and Data Center through Indosat and Lintasarta. We offer co-location, rack, cage, power, and other supporting facilities as value added services to corporate customers. We also provide backbone or domestic leased line services from our DRC or Data Center locations to customer headquarters, as part of our total telecommunications solutions.

Customers and Marketing

Our customers for MIDI services are primarily corporate clients and SMEs, although we also have wholesale and retail customers for certain services, such as our Internet services. Our marketing activities for MIDI services include group presentations, direct mail, partner promotions, customer retention programs and advertisements in publications and printed media. In June 2010, we launched our Indosat Corporate Solutions Micro site, which aims to facilitate corporate customers obtain information about Indosat Corporate Solutions products and services and increase brand awareness of the services. Each business unit seeks to maintain existing customer relationships through activities such as user forums, training seminars, courtesy visits and informal gatherings with customers. Lintasarta focuses on expanding its market share in industry segments outside its core competencies in banking and finance, in light of the anticipated consolidation and restructuring of those industries in Indonesia. In addition, Lintasarta has increasingly focused its sales and marketing efforts on SMEs by repackaging its products and services for their particular needs. Lintasarta is expanding the existing geographic coverage of its products and services to address the increasing demand for telecommunications infrastructure in outlying regions as a result of Indonesian political developments, including increased regional autonomy.

We support our subscribers through local area staff, a 24-hour help desk and integrated real-time network management. In April 2000, Lintasarta achieved ISO 9002 certification for its frame relay, digital data network and VSAT services. In January 2002, we obtained ISO 9001 certification for our frame relay, digital data network and VSAT services, evidencing our commitment to customer satisfaction and continuous service quality improvement. As a result of these activities, Frontier and Marketing Magazine awarded us the “Top Brand Award” in the ISP category for the years 2005 through 2010 and the “Best Contact Center Award” for 2007, 2008 and 2009. As appreciation of our commitment to operational excellence, in June 2010, Cable and Wireless awarded Indosat as “Best Partner” in the Maintain and Achieve Operational Excellent in Asia category in the Cable and Wireless Global partner Gathering in Singapore.

Tariff Structure and Pricing

Customers of our various MIDI services are charged based on the type of product and service provided, the capacity leased, their industry sector, geographic location and the length of service contracts with us (which generally range from one to three years). Service charges generally include the following components: initial installation; monthly service charges (based on location and access speed); transactional charges (based on the volume, duration and/or distance traveled for network traffic); and other charges for services such as consultancy and project management.

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Satellite transponder lease rates to international lessees are negotiated individually with customers and depend on the supply and demand for services in the areas covered by our Palapa-C2 and Palapa-D satellites. Our offshore leases average US$1.03 million per annum for a full transponder. Almost all offshore lease payments are payable quarterly in advance in U.S. dollars and other widely used currencies.

Competition

Data communications service providers in Indonesia compete principally on the basis of price, range of services provided and customer service quality. During the last few years, competition among data communications service providers has intensified principally due to the issuance of new licenses resulting from the deregulation of the Indonesian telecommunications industry. We expect competition to continue to intensify. We believe that our major competitors are Citra Sari Makmur, Tangara Mitracom, Satkomindo and Primacom with respect to our VSAT services, and Telkom, XL, Indonesia Comnet Plus (Icon+), and Citra Sari Makmur, with respect to our domestic leased line services. In 2010, our international leased line services faced great challenges from new operators, such as Matrix and Moratel besides our main competitors, Telkom and XL. The Government declared Telkom as a dominant operator for leased circuits in 2007. As a result of this declaration, we believe Telkom will be subject to more regulatory approvals while we will be able to propose new tariffs without the requirement of Government approval.

ISPs in Indonesia compete on the basis of network quality, price and network coverage. With respect to Internet-related value-added services, we compete against Telkom and other existing ISPs, such as First Media, Biznet, CBN, Berca and Indonet. We also face significant competition from any new ISPs whose licenses are approved by the MOCIT.

As corporate markets demand greater speed at affordable prices, many bandwidth suppliers have begun making significant investments toward building superior infrastructure using new technology, such as “Dense Wavelength Division Multiplexing,” or DWDM technology. DWDM technology poses a competitive threat to our business services since its infrastructure enables bandwidth suppliers to offer more bandwidth capacity with better cost efficiency. The bandwidth industry has been facing recent challenges from the emergence of new operators, such as Moratel and Matrix Cable System, which set up international cables linking Indonesia and Singapore in 2008.

Companies in the satellite business compete primarily on coverage, transponder power, product offerings and cost. Generally, the cost of service depends upon the combination of power and coverage. In recent years, competition within the satellite business in the Asia-Pacific region has been intense. Our satellite operations have primarily consisted of leasing transponders to broadcasters and telecommunications operators of VSAT, cellular and IDD services and ISPs. We face competition from foreign and domestic service providers in each of these areas. In leasing our transponders on the Palapa-D satellite, we compete most closely in Indonesia with Telkom and PT Pasifik Satelit Nusantara (“Pasifik Satelit Nusantara”). Pasifik Satelit Nusantara also owns transponders on the Mabuhay Philippines Satellite. Telkom currently operates its own satellites (Telkom-1 and Telkom-2) and earth stations primarily to provide backbone transmission links for its network. Telkom also leases satellite transponder capacity and provides earth station satellite uplinking and downlinking service to domestic and international users. Other private satellites serving the broadcast market within the coverage area of the Palapa satellites include AsiaSat-4, AsiaSat-3S, Apstar-2R, Apstar-5, Apstar-6, ThaiCom4, ThaiCom5, Measat-3, Measat-3a, Intelsat7, Intelsat8, Intelsat10 and Intelsat12. Measat Sdn. Bhd, which operates the Measat satellites, APT Satellite, which operates the Apstar satellites, and ThaiCom Public Company Ltd, which operates the ThaiCom satellites, also compete directly with us in the Asian regional market. Moreover, with the increasing popularity of Direct-To-Home television (“DTH”), our satellite business will face increasing competition as new and more powerful regional satellites are launched. DTH is the reception of satellite programs with a personal dish in an individual home. National broadcasters are seeking DTH licenses to provide nationwide broadcast services in Indonesia. DTH television will enable broadcasters to distribute their program content without utilizing our telecommunication network support. In addition, because of the growing popularity of DTH, we face the possible loss of customers because DTH uses a satellite platform that we do not provide.

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Fixed Telecommunications Services

Our fixed telecommunication services include international and domestic long distance as well as fixed wireless access services. For the year ended December 31, 2010, we recorded operating revenues of Rp1,293.2 billion (US$143.8 million) from our fixed telecommunications services, representing 6.5% of our total consolidated operating revenues. Except with respect to payments from our cellular, fixed wireless and fixed line subscribers, we do not receive any payments directly from the end users of our international long-distance services. For the year ended December 31, 2010, 12.4% of our fixed telecommunications services operating revenues were derived from amounts received or receivable from Telkom and other domestic operators in respect of outgoing calls, 64.4% was derived from net settlements with foreign telecommunications operators in respect of incoming calls and the remaining 23.2% was derived from fixed wireless access services, direct billing for specific services, such as from calling card and fixed-line subscribers for the same period.

Services

International Long-Distance Services. We provide a variety of international voice telecommunications services and both international switched and non-switched telecommunications services. Switched services require interconnection with either the PSTN or another mobile cellular operator’s facilities; non-switched services can be completed through our transmission facilities without the need for interconnection.

Through our “001” and “008” international long-distance services, we currently handle approximately 25% of the traditional IDD business in Indonesia. To address increased competition resulting from industry deregulation, we launched “FlatCall 016” service in March 2005 and marketed it as a new product aimed at consumers in the most price-sensitive market segment. Beginning January 2007, in compliance with a decree from the Government, we changed the access code to a five digit code and named it “FlatCall 01016.” The “FlatCall 01016” product offers competitive tariff rates for certain top destination countries while offering regular VoIP tariff rates for other countries.

Our outgoing international long-distance calls are routed through one of our four international gateways. From these gateways, international long-distance services are transferred via satellite or submarine cable based on predetermined routing plans developed in collaboration with foreign telecommunications operators. The foreign carriers receiving calls through the international gateways are responsible for terminating the calls to their recipients. Similarly, international long-distance calls received at our gateways are switched from the gateway to their destinations domestically through Telkom’s local network, our cellular network, our fixed local network or one of the other cellular operators with which we maintain interconnection arrangements.

For the year ended December 31, 2010, our revenues from international long-distance services amounted to Rp993.2 billion (US$110.5 million).

The following table sets forth certain operating data for our international direct dialing services for the periods indicated:

	For the year ended December 31,
	2008				2009				2010
	minutes		% change		minutes		% change		minutes		% change
	(in millions, except percentages)
Incoming paid minutes		1,582.4		23.2		1,558.5		-1.5		1,723.9		10.6
Outgoing paid minutes		474.0		59.6		502.0		5.9		463.0		-7.8
Incoming and outgoing paid minutes		2,056.4		30.0		2,060.5		0.2		2,186.9		6.1
Ratio of incoming to outgoing traffic		3.3		—		3.0		—		3.7

Note: Starting in 2010, we count domestic interconnection traffic as part of international incoming traffic; prior to 2010, we excluded this traffic from the calculation of incoming traffic.

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During 2008, 2009 and 2010, our international outgoing calls measured by paid minutes increased by 59.6%, 5.9% and decreased by 7.8%, compared to the previous year, while our international incoming calls measured by paid minutes increased by 23.2%, decreased by 1.5% and increased by 10.6% for the same period. Combined outgoing and incoming calls, also measured by paid minutes, increased 30.0%, 0.2% and 6.1% during 2008, 2009 and 2010. We believe our growth in 2010 relative to the prior year was primarily due to our aggressive business strategy of emphasizing volume-based sales. We believe that increased competition from Telkom and VoIP operators, some of which are unlicensed, will continue to affect our business in the future.

Fixed Wireless Access Services. We launched our fixed wireless access services in 2004 to expand our fixed telecommunications business segment and to complement our cellular services. Using CDMA 2000 1x technology, our fixed wireless access services offer a cost-effective alternative to our cellular services to subscribers who have limited mobility requirements. As of December 31, 2010, our fixed wireless access service, “StarOne,” had a total subscriber base of 550,130 subscribers with 61,123 postpaid subscribers and 489,007 prepaid subscribers. For the year ended December 31, 2010, revenues from fixed wireless access services totaled Rp174.1 billion (US$19.4 million). On December 12, 2006, the Government granted us a license for two channels of nationwide fixed wireless access in the 800 MHz frequency. This license replaced our previous 1900 MHz fixed wireless access license and by the end of 2007, we migrated our CDMA frequency from 1900 MHz to the new 800 MHz frequency in the greater Jakarta area. We expanded our StarOne services to 82 cities by December 2010.

Local and Domestic Long Distance Services. We launched local and domestic long distance service from Indosat access points such as “StarOne” and “INDOSAT phone” in October 2005. We currently have local and domestic long-distance coverage of 82 major cities in Indonesia.

Customers and Marketing

The principal customers of our fixed telecommunications services are corporate clients, our own cellular, fixed telecommunications and fixed wireless access customers, and the customers of other telecommunications operators.

We employ a specialized sales force, including a sales group, which focuses on our 500 largest customers, including hotels, large corporate customers, government offices and embassies. We have also implemented a customer loyalty program, which provides incentives to regular users. In addition, we seek to broaden our customer base by conducting joint promotions with other international telecommunications companies to promote our services. We strive to deliver high-quality services that maximize customer satisfaction.

We have undertaken a variety of marketing initiatives to improve our services to fixed telecommunications customers. Our marketing strategy focuses on: (i) strengthening our price-tiering strategy through implementation of “FlatCall 01016” to compete with VoIP services; (ii) expanding our market share while retaining our customers through bundling initiatives; (iii) establishing volume commitments for incoming traffic from foreign telecommunications operators; and (iv) expanding coverage of our fixed wireless access services. We have traditionally maintained a nationwide advertising campaign, using television, newspapers, magazines, websites and radio to increase brand awareness among business and retail customers. We also maintain regional sales offices in eight locations throughout Indonesia.

In 2010, approximately 36.8% of our outgoing international long-distance call minutes (including calls placed through “Flatcall 01016”) originated in the greater Jakarta area, followed by Eastern Java and Bali Nusa Tenggara, which together accounted for 23.9% of our outgoing international long-distance call minutes.

We maintain a proprietary database of customer information, which allows us to analyze consumer preferences and usage patterns and to develop tailored marketing and products. We conduct our own market research and also engage consultants to perform broader research on customer behavior and needs.

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Tariff Structure, Universal Service Obligations and Pricing

Rates. Prior to 2008, the MOCIT set tariffs for fixed telecommunications services, which were based on the division of all destinations into six zones. On April 30, 2008, the MOCIT established a tariff formula for basic services on fixed networks and required operators to calculate prices using a cost-based formula, which are then submitted to the Government for approval. However, our international long-distance rates have not changed, and so we intend to continue applying international long-distance rates based on the previous regulations which base tariffs on six zones for call destinations.

The provision of international long-distance services between two countries is normally established between telecommunications carriers on a bilateral basis. We typically apply a market termination rate-based pricing system, pursuant to which we agree on asymmetric rates for incoming and outgoing calls. We maintain direct connections with 64 foreign telecommunications operators in 40 countries. Our agreements with these carriers set the terms of payment by us to the foreign telecommunications operators for use of their facilities in connecting international long-distance services billed in Indonesia and by the foreign telecommunications operators to us for use of our facilities (and the local Indonesian networks) in connecting international long-distance services billed abroad. The practice among telecommunications carriers is for charges due in respect of the use of overseas networks to be recorded, collected and forwarded by the telecommunications carrier from the country in which the call is billed. Based on the rates negotiated with each foreign telecommunications operator, we make payments to the carrier for outgoing traffic billed in Indonesia, and we receive payments from such carrier for inbound traffic billed outside Indonesia. Settlements among carriers are normally made quarterly on a net-based method. Our largest correspondent carriers are those located in Malaysia, Singapore, Taiwan, the Middle East and Hong Kong.

VoIP service providers may determine their own collection charges, and each service provider must negotiate with the applicable network provider for interconnection charges. We have entered into an agreement for Telkom to be our network provider for VoIP interconnection.

Interconnection with Domestic Networks. Although we provide international gateways for outgoing calls from and incoming calls to Indonesia, all international long-distance services must terminate on one of the domestic fixed or cellular networks. The MOCIT sets interconnection tariffs for international long-distance services which traverse the domestic fixed-line and fixed wireless access networks. We have separate interconnection agreements, which reflect these tariffs, with those operators that interconnect directly with our international gateways.

Universal Service Obligations. The Government imposes a Universal Service Obligation (“USO”) tariff, which from 2005 through 2009 was 0.75% of annual gross revenues less interconnection expenses paid to other telecommunication carriers and bad debts. In January 2009, the Government increased USO tariffs from 0.75% of annual gross revenue to 1.25% of annual gross revenue (after deducting interconnection charges and bad debts).

Customer Billing and Interconnection Charges

Domestic operators maintain control over the billing and collection process for international long-distance services, which are initiated on the domestic networks. Domestic operators retain the appropriate interconnection charges owed to them from the amounts collected and remit the balance (without interest) in Indonesian rupiah to us within not less than 25 days of collection from the customer in Indonesia. The collection cycle for most of the domestic operators is approximately 30 days. We are responsible for generating and delivering such billing information to the domestic operators, through a module known as the System Online Clearing Interconnection service, every twelfth day of the month, which is then billed by the domestic operators approximately five days after receipt from us, resulting in a collection cycle of approximately 50 to 80 days. For purposes of financial reporting, we recognize revenues on a monthly basis based upon our own traffic records. We bill our domestic cellular operators in the middle of the following month and require payment by the end of the month. Accordingly, the normal collection cycle with respect to domestic cellular operators is approximately 20 to 60 days.

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We remit the appropriate interconnection charge to the relevant operator for incoming calls terminating on the domestic networks. We generally remit such charges in 20 to 60 days by netting the receivables for outgoing calls. The settlements from foreign telecommunications operators are typically paid in U.S. dollars, which are deposited in Indonesia, and amounts representing interconnection payments payable by us to the domestic network operators are remitted in Indonesian rupiah.

Customer usage of fixed wireless access and domestic long-distance services is calculated starting from the beginning of the month until the end of the month. Customer billing is generated at the beginning of the following month and completed by the fifth day of that month. Billing statements are generally received by customers no later than the tenth of the month and payments are due by the twentieth of the month. For fixed wireless access service, we block the subscribers’ ability to make calls when they have not paid their balance due by the twenty-second day of the month. We block a customer’s ability to make or receive calls 40 days after the statement date if he or she still has not paid his or her balance. We permanently disconnect service and cancel accounts for customers whose bills are more than 60 days past due from the first day of the generated bill. For domestic long-distance services, by the end of the month, we block customers from making calls if they have not paid their balance. For customers who have not paid their balance due by the end of the second month, we block the customers’ ability to make or receive calls. We permanently disconnect service and cancel accounts for customers whose bills are 90 days past due from the first day of the generated bill.

Competition

We are no longer the only authorized provider of traditional IDD (i.e., non-VoIP) call services in Indonesia. The MOCIT has granted operational licenses to provide IDD services to Telkom, which includes the right to use the IDD access code “007” to enter the international long-distance market, and Bakrie Telecom. The Government may also issue new licenses for IDD services to other telecommunications operators, which will increase competition. In addition, Telkom no longer operates a monopoly for DLD services. The traditional IDD market has become even more competitive with the increased usage of VoIP technology. Our VoIP business has increased significantly from 201.9 million minutes, 442.4 million minutes, and 411.7 million minutes in 2008, 2009 and 2010, respectively.

In April 2008, we and Telkom agreed to open DLD access from our respective customers in Balikpapan, pursuant to which Telkom’s fixed network customers can dial “011” to access our DLD network while our local fixed network customers can dial “017” to access Telkom’s network. In addition, in 2008, Bakrietel was issued a license as a new DLD operator. The opening of DLD access among competitors and the commencement of operations of new DLD operators is expected to increase competition by providing customers with more options for DLD services.

We also face competition from other fixed wireless access service providers. Currently, Telkom, the largest fixed wireless access operator, offers TelkomFlexi, a CDMA 2000 1x service in Indonesia. Bakrie Telecom, which offers services in Indonesia, and Mobile-8, have also been granted new nationwide fixed wireless access services licenses, further intensifying competition in this segment.

Facilities and Infrastructure

The discussion below relates to our cellular network, fixed telecommunications network (including IDD network), and other communications facilities and infrastructure, including that of our significant operating subsidiaries.

Cellular Network

The principal components of our cellular network are:

• base transceiver/Node B stations: consisting of a transmitter and receiver and serving as a bridge between mobile users in one cell and the mobile switching center via base station controllers and radio network controllers;

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• base station controllers/radio network controller: devices that connect to and control the base station within each cell site;

• mobile switching centers: centers that control the base station controllers and the routing of telephone calls; and

• transmission lines: lines that link the mobile switching centers, base station controllers, base stations and the PSTN.

Our cellular network currently operates using 10 MHz x 2 uplink and downlink of radio frequency bandwidth in the GSM 900 spectrum, 20 MHz x 2 uplink and downlink of frequency bandwidth in the DCS 1800 spectrum and 10 MHz x 2 uplink and downlink in the IMT-2000 spectrum. The following table sets forth selected information regarding the composition of our cellular network as of the dates indicated:

	As of December 31,
	2008		2009		2010
Base transceiver stations(1)		12,237		14,385		15,216
Node B Stations (3G BTS)(1)		1,425		1,968		2,892
Total BTS (including 2G and 3G)(1)		13,662		16,353		18,108
Base station controllers(1)		265		315		330
Mobile switching centers(1)		73		95		87
Radio network controllers(1)		14		20		34
Media gateways(1)		40		73		79

⁽¹⁾  Prior to the first quarter of 2010, newly-built or newly-acquired base transceiver stations, node B stations, BTS, base station controllers, mobile switching centers, radio network controllers or media gateways which were not yet in operation were included in the reports of the Company. Beginning in the first quarter of 2010, as disclosed herein, the Company included newly-built or newly-acquired base transceiver stations, node B stations, BTS, base station controllers, mobile switching centers, radio network controllers or media gateways in its various reports only when they were actually put in operation. Under the Prior Computation, the Company would have the following numbers:

	As of December 31,
	2008		2009		2010
Base transceiver stations		12,677		14,621		15,870
Node B Stations (3G BTS)		1,485		2,183		2,834
Total BTS (including 2G and 3G)		14,162		16,804		18,704
Base station controllers		279		315		331
Mobile switching centers		73		96		92
Radio network controllers		16		21		34
Media gateways		54		80		87

We purchase our cellular telecommunications equipment primarily from European and Chinese suppliers. Our network is an integrated system employing switching equipment, cell site equipment and a transmission network of point-to-point microwave radio. Most of our cell sites and radio base stations are located in or on buildings or on vacant lots, which we own, or for which leases have been individually negotiated by us for terms typically varying from five to 20 years.

As a result of operating three legacy networks using equipment from numerous suppliers, our capital expenditures have historically been higher than would be the case if we were operating a single network using fewer suppliers. Commencing in 2009, as part of our functional management strategy, we began to rationalize our capital expenditure and procurement planning through our newly-established investment committee. We have focused our procurement on fewer suppliers and have adopted a framework agreement approach with such suppliers, which we believe has significantly increased the efficiency of our capital expenditure program.

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We are considering various options in connection with the operation, ownership and use of our tower assets that we believe will optimize the value of such assets.

Fixed Telecommunications Network

We have built a fixed telecommunications network consisting of six international gateways served by satellite circuits, submarine cables and microwave transmission. By the end of 2010, we offered fixed wireless access services across 82 cities in Indonesia.

International Gateways. For our international long-distance business, we operate through six gateways, three gateways in Jakarta, and one gateway in Surabaya, Medan and Batam, which provide all of the connections for our services to our international long-distance network. The gateway-switching equipment was purchased from Lucent Technologies, Inc. (which has since merged with Alcatel) and Siemens.

As of December 31, 2010, we had available international bandwidth capacity of 1,998.72 Mbps for voice and 21,387.00 Mbps for data transmission. All of our destinations are digitally connected. The bandwidth available to us is significantly higher than the utilized capacity to allow for anticipated growth in traffic. It is our policy to maintain average utilization at less than 80.0% of capacity to allow for increased usage during peak hours.

Each international gateway is linked to the other international gateways, which permits multiple routing options for each call and provides the system with backup capability in case of equipment failure or overcrowding at any gateway. We have placed interconnection equipment at the facilities of Telkom and certain of the cellular operators to connect our international long-distance network to the domestic telecommunications network.

International transmission of voice and data between international gateways occurs across either satellite circuits or submarine cables. Satellite circuits are unaffected by distance and offer broadcast services making them flexible with regard to call destinations. Submarine cables, especially fiber optic digital cables, can offer less expensive high-quality services. However, cable costs increase with distance and destinations are fixed. Satellite circuits can be degraded by atmospheric conditions, while submarine cables can suffer damage from human or natural causes. In general, we use submarine cables with cable-to-cable backup for medium-distance links in Asia and satellite links backup for longer-distance transmission. We use microwave and fiber optic links for connections between gateways and earth stations, as well as for the Batam gateway, which has microwave links to Singapore. It is our policy to maintain 100% redundancy for all of our international long-distance links (which may require routing through a third country) in an effort to provide high-quality services to our customers.

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Submarine Cables. We have ownership interests in and access to capacity in submarine cables interconnecting the Asia-Pacific region, North Africa and Europe, as well as those linking the Asia-Pacific region with North America. The table below sets forth the geographic coverage and allocated capacity of our cable network, as December 31, 2010:

Submarine Cable Network	Geographic Coverage	Capacity
		(in Mbps)
APCN-2	China, Japan, Malaysia, Philippines, Singapore, Hong Kong South Korea and Taiwan		310.00
SEA-ME-WE 3	Australia, Austria, Belgium, Brunei, Canada, China, Egypt, France, Germany, Greece, Hong Kong, India, Iran, Italy, Japan, Macau, Malaysia, Myanmar, Netherlands, Oman, Pakistan, Portugal, Saudi Arabia, Qatar, Singapore, South Korea, Spain, Sri Lanka, Taiwan, Thailand, Turkey, United Arab Emirates, United States and United Kingdom		47,753.00
Jakabare	Singapore		143,860.00
China-US	China, Taiwan, South Korea and United States		1,414.00
Asia America Gateway	Singapore, Malaysia, Thailand, Vietnam, Brunei, Hong Kong, the Philippines, and United States		4,000.00
Jakabare	Java, Kalimantan, Batam (Indonesia)		118,205.00
Jakasusi	Java, Kalimantan, Sulawesi (Indonesia)		56,470.00
Jasutra	Java, Sumatera (Indonesia)		179,375.00
Jakarta—Surabaya	Java (Indonesia)		36,200.00
Total			587,587.00

To support the operations of our gateway in Surabaya, we have operated the Jakarta-Surabaya submarine fiber optic cable link since January 1997. This link enhances network reliability and improves the quality of our services in the Surabaya region.

We, along with the Telecommunications Company of Iran (“TCI”), are among more than 80 companies that have an ownership interest in, and access to capacity in the SEA-ME-WE 3 submarine cable. Our ownership interest in the SEA-ME-WE 3 submarine cable stands at approximately 3.4% while TCI’s ownership interest stands at approximately 0.3%. The SEA-ME-WE 3 submarine cable does not have any landing point in Iran. The connection to Iran is through the UAE-Iran submarine cable system that lands at Fujairah Cable Landing Station (UAE). International Satellite Circuits. As of December 31, 2010, our available data circuits through the earth station at our Jakarta gateway was 0.64 Mbps. Our satellite capacity is currently obtained principally from Intelsat and, to a lesser extent, from our Palapa-D satellite. Since December 31, 2002, we have been migrating traffic from satellite transmission to submarine cables due to higher quality, increased availability and lower costs of submarine cables.

Our fixed wireless access network currently operates using 5 MHz of radio frequency bandwidth in the 800 MHz spectrum. The following table sets forth selected information regarding our fixed wireless access network as of the dates indicated:

	As of December 31,
	2008		2009		2010
Base transceiver stations(1)		1,454		1,421		1,576
Base station controllers(1)		34		31		37
Mobile switching centers(1)		9		8		8
Media gateways(1)		17		25		29

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⁽¹⁾  Prior to the first quarter of 2010, newly-built or newly-acquired base transceiver stations, base station controllers, mobile switching centers and media gateways which were not yet in operation were included in the reports of the Company. Beginning in the first quarter of 2010, as disclosed herein, the Company included newly-built or newly-acquired base transceiver stations, base station controllers, mobile switching centers and media gateways in its various reports only when they were actually put in operation. Under the Prior Computation, the Company would have the following numbers:

	As of December 31,
	2008		2009		2010
Base transceiver stations		1,454		1,505		1,505
Base station controllers		34		34		34
Mobile switching centers		9		9		9
Media gateways		17		17		17

Other Communication Facilities

Our Palapa-C2 and Palapa-D satellite communication systems and fiber optic link to major commercial centers as well as remote areas of Indonesia are used in the provision of our MIDI services and for cellular backhaul.

Satellite Communication System. Communications satellites are of varying use, depending on features such as their footprint, or coverage areas, transponder power (typically stated in dBW), and transponder bandwidth. Transponder bandwidth, expressed in terms of megahertz, varies between C-band and Ku-band transponders. C-band is used worldwide as a standard for satellite communications to transmit signals with minimum atmospheric interference. They can provide very broad coverage over most of the Asian continent, making them very popular for applications such as television broadcasting. Ku-band transponders operate at a frequency of approximately 11-14 gigahertz. While Ku-band frequencies are more prone to moisture and rain attenuation than C-band frequencies, they are more suitable for small antenna applications. Ku-band is generally used for the same purposes as C-band, as well as for satellite news-gathering (truck-mounted antennas) and some VSAT applications. Ku-band is especially prevalent in areas with dense ground-based microwave systems. To compensate for loss of signal strength caused by moisture and rain attenuation, Ku-band transponders are generally of higher-power than C-band transponders and their footprints are smaller.

On August 31, 2009, we launched a new satellite, Palapa-D, to replace Palapa-C2 at orbital slot 113E, which will significantly increase our transponder capacity and provide wider satellite coverage. After a successful traffic transfer from Palapa-C2 to Palapa-D in early November 2009, Palapa-C2 moved to orbital slot 150.5E and operates in inclined orbit until approximately 2014 to carry our cellular backhaul. When our Palapa-D satellite became operational, we significantly increased our transponder capacity, which allowed us to meet our own satellite transponder requirements, in addition to the requirements of customers who lease transponder capacity from us. Thus, approximately 60% of our Palapa-D standard C-band transponder capacity is currently being leased to third parties while the remaining 40% is being used to meet our own requirements. We successfully transferred the source of our own satellite requirements from Palapa D to Palapa-C2, thereby making approximately 40% of Palapa-D’s standard C-band transponder capacity, in addition to Palapa-D’s 11 new extended C-band transponders, available for lease to third parties in the third quarter of 2011.

The Palapa-D satellite has eleven 36-megahertz extended C-band transponders, twenty-four 36-megahertz standard C-band transponders, and five 36-megahertz Ku-band transponders wholly owned by us. The maximum power on each of the C-band and Ku-band transponders is 43 and 53 dBW, respectively. The Palapa-D satellite provides C-band coverage to substantially all of Asia with a footprint stretching from the Arabian Peninsula to Japan and China to New Zealand, including central and eastern parts of Australia. Its dBW levels range from a beam edge of 32 dBW to a beam center of 43 dBW. With this power, the Palapa-D satellite has the capability to

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provide uplink and downlink services from any location within the satellite footprint. The five Ku-band transponders provide coverage over Indonesia and some of ASEAN Countries with peak transponder power of 53 dBW.

The Palapa-C2 satellite has six 36-megahertz extended C-band transponders owned by Pasifik Satelit Nusantara, and twenty-four 36-megahertz Standard C-band transponders and four 72-megahertz Ku-band transponders owned by us. The maximum power on each of the C-band transponders is 40 dBW. Since the new location of Palapa-C2 is close to another satellite with the same Ku-band frequency plan, we, consistent with the rules and regulations of the International Telecommunication Union and our license, do not operate Ku-band transponders to avoid harmful interference from the other satellite. The Palapa-C2 satellite provides C-band coverage to substantially all of Asia, with a footprint stretching from Central Asia to Japan and southern China to New Zealand, including parts of Australia. Its dBW levels range from a beam edge of 32 dBW to a beam center of 40 dBW. With this power, the Palapa-C2 satellite has the capacity to provide uplink and downlink services from any location within the satellite footprint.

Fiber Optic and Microwave Terrestrial Links. Our new optical fiber backbone based on DWDM connects all provincial cities in Sumatera, Java, Kalimantan, and part of Sulawesi. The optical fiber backbone conveys cellular traffic within and between the cities at 40-60 gigabits per second and facilitates our progressive growth of Internet broadband through 3.5 HSDPA and fixed broadband wireless access. Due to capacity and technology considerations, the existing microwave terrestrial system has been shifted to cover remote spur route areas. As of December 31, 2010, we had fiber optic and microwave terrestrial links to more than 25 major cities nationwide. These links are primarily used to deliver Internet and other MIDI services to corporate customers.

In December 2010, we entered into a purchase order with Alcatel Lucent Submarine Networks to upgrade the capacity of existing JAKASUSI submarine cable system, which required us to spend approximately US$ 2.6 million in capital expenditure. The upgraded system will increase inter-island capacity from/to Jawa—Kalimantan (90 Gbps) and Kalimantan—Sulawesi (60 Gbps). The upgraded system is expected to be ready for service in July 2011.

In December 2010, we entered into a purchase order with IFactor Sdn Bhd, Malaysia to construct the JAVALI submarine cable system, a new submarine cable system which will link Jawa (East Jawa) island and Bali island and provide high capacity bandwidth, and which involved a total project cost of US$10.8 million. The JAVALI submarine cable system will be wholly-owned by us and is designed with 24 optical fiber cores (unrepeated system). The system will be initially equipped with 50 gigabits per second capacity with its ultimate capacity at 160 gigabits per second capacity per fiber pairs. The construction of this new cable system is expected to be ready for service in July 2011.

IP/MPLS Backbone and Metro Ethernet Network. As of December 31, 2010, we had completed our Metro Ethernet Network deployment project in more than 299 points of presence in Indonesia with fiber optic connectivity. Through this network, we provide virtual leased lines offering point-to-point Ethernet access, virtual private LAN service offering multipoint-to-multipoint Ethernet access and virtual private routed networks offering locally linked IP VPN and Internet. We also use our Metro Ethernet Network for backhauling our 2G and 3G cellular traffic. Dual redundant routers for IP-MPLS backbone have also been deployed in 24 cities and are connected through our fiber optic backbone. A Metro Ethernet network has also been deployed in nine major Indonesian cities to provide broadband access to the corporate market in high-rise buildings and cellular backhaul for 3.5 HSDPA service. Internet access, broadcasting service and data center connectivity are among the services used by our customers.

As the technology moves towards “all IP” and the demand of IP-based services is increasing due to its advantages over legacy networks, we aim to deploy a future network to allow IP-based services to be widely available in the region. In 2008, we completed construction of a Disaster Recovery Center (“DRC”) in Jatiluhur for corporate customers to allow them to have a data back-up center to secure and protect their business information.

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Organizational Structure

The following chart illustrates our simplified corporate structure as of December 31, 2010, including our direct and indirect equity ownership in major subsidiaries, together with the jurisdiction of incorporation or organization of each entity. A complete list of our significant subsidiaries and investments in associated companies, and our ownership percentage of each entity, as of December 31, 2010 is contained in Note 1d to our consolidated financial statements included elsewhere in this annual report.

Lintasarta was established in 1988. Pursuant to its articles of association, Lintasarta engages in the business of providing system data telecommunication and information technology services and network application services, which include providing physical infrastructure and software application and consultation services in data communication and information system for banking, finance and other industries.

PT Indosat Mega Media (“IM2”) was established in 1996 to engage in the business of providing Internet and television services.

PT Starone Mitra Telekomunikasi (“SMT”) was established in 2006 to provide telecommunication services and develop telecommunication infrastructure, including multimedia.

PT Artajasa Pembayaran Elektronis (“Artajasa”) was established in 2000 to provide general trade and application services to industries, particularly the banking industry, information technology consultation services, and telecommunication services.

PT Lintas Media Danawa was established on July 28, 2008 to provide information and communication services, such as data center services, e-learning and distant learning for public education services, and content services based on Internet Protocol (e.g., IPTV, internet game and internet payment gateway).

PT Interactive Vision Media (“IVM”) was established on April 21, 2009 to engage in the Pay TV business and is currently in the process of obtaining a license to conduct such business. IM2 made the initial capital injection to IVM in March 2011 amounting to Rp4.99 billion.

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Insurance

As of December 31, 2010, we carried insurance on our property and equipment (except submarine cables and land rights), including business interruption insurance. During 2010, we did not have any insurance against consequential losses associated with the insured property. We generally do not experience difficulty renewing our insurance policies, and we believe that our insurance is reasonable and consistent with industry standards.

We maintain in-orbit insurance on the Palapa-C2 and Palapa-D satellites on terms and conditions consistent with industry practice. As of December 31, 2010, we had an insurance policy coverage with a total coverage limit of US$153.0 million, for total and partial loss of our Palapa-C2 and Palapa-D satellite.

Intellectual Property

We have registered trademarks and copyrights for our corporate name, logo and certain services with the Ministry of Law and Human Rights of Indonesia (formerly the Ministry of Justice and Human Rights of Indonesia). We believe that our trademarks are important to our success. We have never had to defend any of our trademarks, but we would vigorously do so if necessary.

Properties

Except for ownership rights granted to individuals in Indonesia, the title to land rests with the Indonesian State under the Basic Agrarian Law No. 5/1960. Land use is accomplished through land rights whereby the holder of the land right enjoys the full use of the land for a stated period of time, subject to renewal and extensions. In most instances, the land rights are freely tradable and may be pledged as security under loan agreements. Our most important properties are located in Jakarta (approximately 12,050 sq.m. used for international gateways and head office), Ancol (approximately 11,809 sq.m. used as a cable station and switching center), Tanjung Pakis, Karawang (approximately 1,850 sq.m. used as a cable station), Daan Mogot (approximately 134,925 sq.m. used as a satellite earth station complex), Jatiluhur (approximately 135,800 sq.m. used as a satellite earth station complex), Medan (approximately 9,780 sq.m. used for international gateways), Pantai Cermin (approximately 68,228 sq.m. used as an earth station and a cable station), Batam Sekupang (approximately 19,989 sq.m. used for international gateways and an earth station), Tanjung Bemban (approximately 3,500 sq.m. used as a cable station), Surabaya (approximately 10,565 sq.m. used as a regional office) and Banyu Urip-Gresik (approximately 125,344 sq.m. used as an earth station, for international gateways and as a cable station), Takisung—Banjarmasin (approximately 1,000 sq.m. used as a cable station), Aeng Batu-batu-Makasar (approximately 2,000 sq.m. used as a cable station) and Sei Kakap Pontianak (approximately 5,394 sq.m. used as a cable station). Except for our property in Daan Mogot, which we lease from Telkom, we hold registered land rights to some of our properties, the initial periods of which are for approximately years. We expect that our land rights will be renewed at nominal costs for the foreseeable future. None of our properties are mortgaged or otherwise encumbered.

Principal Registered Offices

Headquarters:	Jl. Medan Merdeka Barat No. 21 Jakarta 10110, Indonesia Tel: (62-21) 3000 3001, 3869 999 Fax: (62-21) 3000 3754, 3000 3757
Jabotabek & West Java Region Office	Jl. Medan Merdeka Selatan No. 17 Jakarta 10110, Indonesia Tel: (62-21) 3000 7001 Fax: (62-21) 3000 5702
Jakarta Area Office	Jl. Medan Merdeka Selatan No. 17 Jakarta 10110, Indonesia Tel: (62-21) 3000 7001 Fax: (62-21) 3000 5702

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Bogor Tangerang Bekasi Area Office	Jl. Veteran No. 40 Bekasi selatan 17141, Indonesia Tel: (62-21) 3017 7075, 3017 7076 Fax: (62-21) 3000 0811
West Java Area Office	Jl. Asia Afrika No. 141-147 Bandung 40112, Indonesia Tel: (62-22) 3000 0900 Fax: (62-22)3000 5702
Sumatera Region Office	Komplek Nagoya Gateway Blok E No. 1 Jl. Raden Patah - Baloi Batam , Indonesia Tel: (62-778) 6000 815 Fax: (62-778) 6000 855
Northern Sumatera Area Office	Jl. Perintis Kemerdekaan No. 39 Medan 20236, Indonesia Tel: (62-61) 4567 001 Fax: (62-61) 4531 031
Southern Sumatera Area Office	J1. Angkatan 45 No. 222 Palembang 30137, Indonesia Tel: (62-711) 605 9999 Fax: (62-711) 605 9966, 605 9977
Central Java, East Java & Bali Nusra Region Office	Jl. Kayoon No. 72 Surabaya 60271, Indonesia Tel: (62-31) 6000 6001 Fax: (62-31) 5456 001, 5464 392
Central Java Area Office	Jl. Pandanaran No. 131 Semarang 50134, Indonesia Tel: (62-24) 3300 2000 Fax: (62-24) 3300 1001
East Java Area Office	Jl. Kayoon No. 72 Surabaya 60271, Indonesia Tel: (62-31) 6000 6001 Fax: (62-31) 5456 001, 5464 392
Bali Nusra Area Office	Jl. Raya Bay Pass Ngurah Rai No. 88 Kuta Bali 80361, Bali, Indonesia Tel: (62-361) 300 5000 Fax: (62-361) 300 5005
Kalimantan & Sulampapua Region Office	Jl. MT Haryono No. 69 Balikpapan 76114, Indonesia Tel: (62-542) 741 001, 3030 001 Fax: (62-542) 7514 001, 7206 750
Kalimantan Area Office	Jl. MT Haryono No. 69 Balikpapan 76114, Indonesia Tel: (62-542) 741 001, 3030 001 Fax: (62-542) 7514 001, 7206 750
Sulampapua Area Office	Jl. Slamet Riyadi No. 4 Makassar 90111, Indonesia Tel: (62-411) 326 808 Fax: (62-411) 326 828

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Indonesian Telecommunications Industry

Background

Since 1961, telecommunications services in Indonesia have been provided by a succession of state-owned companies. As in other developing economies, the expansion and modernization of telecommunications infrastructure is instrumental to Indonesia’s general economic development. In addition, Indonesia’s large population and economic growth have led to increased demand for telecommunications services.

Indonesia had an estimated population of approximately 229.96 million people as of 2009, ranking it the fourth most-populated country in the world based on International Telecommunications Union estimates. Indonesia’s gross domestic product, or GDP, has grown significantly from US$257.6 billion in 2004 to US$540.3 billion in 2009 in current U.S. dollars according to the World Bank, which represents a growth rate of 4.5%. This growth rate compares favorably against the approximately -2.2% and approximately -1.7% GDP growth experienced by Thailand and Malaysia, respectively, during the same period. According to the World Bank, GDP per capita at purchasing power parity has also increased from US$3,004.9 in 2003 to US$4,205 in 2008.

The Government, through the MOCIT, has extensive regulatory authority and supervisory control over the telecommunications sector. While the Government has historically maintained a monopoly over telecommunications services in Indonesia, recent reforms, the majority of which came into effect on September 8, 2000, have attempted to create a regulatory framework to promote competition and accelerate infrastructure investment in telecommunications facilities.

In Indonesia, fixed-line services are mostly provided by Telkom, a majority state-owned company, which owns and operates the country’s primary PSTN and fixed wireless access points. Before the implementation of the new interconnection regime, telecommunications operators interconnected with Telkom’s network to access all fixed-line and cellular users. Telkom’s local fixed-line monopoly ceased on August 1, 2002, and we have since commenced our build-out of a separate fixed-line network. According to the new interconnection regime, telecommunications operators may enter into bilateral agreements which enable them to interconnect directly with other telecommunications operators.

Although cellular penetration is low relative to its regional peers, based on International Telecommunications Union estimates, Indonesia’s cellular penetration rates have increased from approximately 28.7 % in 2006 to approximately 69.3% in 2009, a compound annual growth rate of 42.4%. Indonesia’s GDP growth profile and relatively low penetration rates suggest the potential for increased cellular customer demand in Indonesia. Moreover, in 2009, the number of fixed lines, including fixed wireless access, was approximately 33.9 million, representing a fixed-line penetration of 14.8 %, among the lowest in the region and a result of stagnant fixed-line growth under previous regulatory systems. The table below summarizes certain information regarding Indonesian and regional cellular and fixed-line penetration in 2009:

	For the year ended December 31, 2009
	Population(1)		Fixed-line penetration(1)			Cellular penetration(1)(2)			GDP per capita
	(millions)								(US$)(3)
Hong Kong		7.02		60.9	%		179.4	%		45,277
Singapore		4.74		40.6	%		145.1	%		50,705
South Korea		48.33		53.7	%		100.7	%		27,168
Malaysia		27.47		17.6	%		109.7	%		13,982
Thailand		67.76		10.6	%		97.3	%		8,004
Philippines		91.98		7.4	%		100.3	%		3,546
China		1,345.75		23.3	%		55.5	%		6,838
India		1,198.00		3.1	%		43.8	%		3,275
Indonesia		229.96		14.8	%		69.3	%		4,205

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⁽¹⁾  Source: International Telecommunications Union World Telecommunication / ICT Indicators Database & World Bank estimates, ICT Statistics 2009.

⁽²⁾  Cellular penetration is the number of cellular subscribers as a percentage of the population.

⁽³⁾  Source: World Bank 2009.

Cellular Services Market

The telecommunications industry in Indonesia has experienced significant growth in cellular telecommunications services in recent years. Based on International Telecommunications Union estimates, the total number of cellular subscribers in Indonesia increased from approximately 63.8 million as of December 31, 2006 to approximately 159.2 million as of December 31, 2009, representing an increase in cellular penetration from approximately 28.7% to approximately 69.3%. Despite this rapid growth rate, the cellular penetration rate of 69.3% as of December 31, 2009, is relatively low compared to other countries in the region.

The following table contains information relating to the cellular telecommunications industry in Indonesia as of and for the periods indicated:

	As of December 31,
	2006			2007			2008			2009			Compound Annual Growth Rate 2006 – 2009
	(in millions, except percentages)
Indonesian population(1)		222			225			227			229.96			1.20	%
Cellular subscribers(1)		64			93			141			159.2			44.22	%
Cellular penetration(2)		28.7	%		41.6	%		61.8	%		69.3	%		42.40	%

⁽¹⁾  Source: International Telecommunications Union World Telecommunication / ICT Indicators Database ICT Statistics 2009, excluding fixed wireless access services.

⁽²⁾  Cellular penetration is the number of cellular subscribers as a percentage of the Indonesian population.

The wireless market in Indonesia is currently dominated by three major GSM operators: Telkomsel, us and XL. Starting in 2002, the Government issued new cellular licenses for using CDMA technology to Mobile-8 and fixed wireless access services licenses using CDMA technology to Telkom, Indosat, and Bakrie Telecom. As of December 31, 2010, these nationwide GSM operators collectively held almost 90.8% share of the Indonesian wireless market based upon our estimates. As of December 31, 2010, Telkomsel was the largest national licensed cellular services provider in Indonesia, with approximately 94.0 million cellular subscribers and approximately more than 49.4% GSM market share. We were the second largest cellular provider with approximately 44.3 million cellular subscribers and approximately 21.0% GSM market share as of the same date. XL, the third-largest provider, had approximately 40.4 million cellular subscribers and an approximately 20.4% GSM market share as of the same date. Fixed wireless access service is dominated by Telkom under the brand Flexi with 16.8 million subscribers, as reported in Telkom’s press release as of December 31, 2010. The second largest provider is Bakrie Telecom under the brand Esia with 21.1 million subscribers, as reported in Bakrie Telecom’s Full Year 2009 report. Our fixed wireless access is 0.6 million subscribers under the brand StarOne. There are other smaller players in Indonesian wireless market, such as HCPT, NTS, Mobile-8, Smart Telecom and STI.

In part, wireless subscriber growth in Indonesia has been driven by the “calling party pays” system, the launch of prepaid service, as well as the introduction of SMS. The calling party pays system requires the originators of telephone calls to pay for calls. Based on international experience, countries that implement a calling party pays system typically experience higher wireless penetration rates because wireless subscribers are more likely to give out their telephone numbers and keep their handsets switched on.

Since its introduction in 1998, prepaid service has been popular in Indonesia, as in other Asian countries, because it permits customers to register for wireless service without undergoing a credit review. Prepaid service

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also gives customers more control over monthly expenditures. SMS has proven to be popular in Indonesia, particularly on the prepaid platform, as it provides a convenient and cost-efficient alternative to voice and e-mail communications. Competition in the Indonesian wireless services industry is based primarily on service quality, pricing, availability of data services and value-added features such as voice mail and text messaging.

International Long-Distance Market

International long-distance providers in Indonesia generate revenues from both inbound and outbound international long-distance traffic. The three international long-distance service providers are Telkom, which offers its “007” service, Bakrietel with its “009” IDD access code and us with our “001” and “008” access codes. Outgoing tariffs are based on rates set by the MOCIT while incoming tariffs are settled at the applicable accounting rates. Outgoing traffic is generated by fixed-line and mobile subscribers and delivered to the three international service providers directly through international gateways or indirectly through Telkom’s PSTN. Incoming international traffic is received at international gateways and either routed directly to its intended destination from the gateways or indirectly through Telkom’s PSTN network through which it is ultimately switched to its intended destination.

In Indonesia, as in many emerging market countries, inbound communications traffic has exceeded outbound traffic as more developed countries generate a disproportionate amount of international long-distance traffic.

Historically, inter-operator traffic has been settled based on a concept of accounting rates which provide a common method of compensating the originating and terminating carrier. In general, international long-distance carriers negotiate per minute accounting rates on a route-by-route basis with a single rate used by all carriers on that route. During 2003, we began to replace the accounting rate system with a market termination rate-based pricing system with several of our largest foreign telecommunications counterparts, pursuant to which we agreed on asymmetric rates for incoming and outgoing calls. Under the market termination rate-based system, we are able to reduce the rates we pay for outgoing calls to most international destinations by a greater amount than the reduction in prices for calls from such destinations to Indonesia. While this pricing has reduced the prices we receive for incoming calls, we believe that, overall, it will improve our margins on international long-distance services, in particular for outgoing calls.

Competition from VoIP providers offering services, including budget calls such as “01017” provided by Telkom and “FlatCall 01016” provided by us, and prepaid calling cards has adversely affected and is expected to continue to adversely impact revenues from traditional international long-distance calling services.

As the data communications infrastructure expands in Indonesia, demand for VoIP services may increase. VoIP uses data communications connections to transfer voice traffic over the Internet, which usually provides substantial cost savings to subscribers.

Although the Government has implemented a licensing system to limit the number of VoIP operators in Indonesia, the Government does not presently control the rates charged to end users of VoIP services. However, the Government has indicated that it intends to regulate such rates in the future, and it is expected that such regulations would limit VoIP tariffs to amounts that represent a maximum discount of approximately 40.0% from the then-current PSTN tariffs.

Data Communications Market

Historically, data services in Indonesia primarily consisted of narrow bandwidth leased line services, x.25 service, digital data network service and integrated service digital network service. Digital data network services are digital leased line services for data transmission. Integrated service digital network is a protocol which offers high capacity dial-in access for public networks. This protocol allows simultaneous handling of digitized voice

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and data traffic on the same digital links via integrated switches across the public network. x.25 is an open standard packet switching protocol that allows low- to medium-speed terminals to have either dial-in or permanent access to a network from a user’s premises and operate on a network. Charges for these services have been declining in recent years.

The rise of the Internet and the wider adoption of multimedia applications are expected to increase demand for sophisticated broadband data services. Operators in Indonesia are deploying advanced broadband networks to provide high-end data services such as frame relay, asynchronous transfer mode and Internet protocol service. In particular, virtual private network services, utilizing ATM and Internet protocol technologies, may capture a larger portion of the market share as they provide a reliable and cost-effective alternative to private networks that rely on dedicated leased lines.

Satellite Services Market

In recent years, competition in the Asia-Pacific satellite market has been intense. Companies in this business compete primarily on coverage power, product offerings and price. On September 6, 2005 through MD No.13/2005, the Government issued regulations requiring all telecommunications operators using satellites in connection with the provision of telecommunications services to possess both earth station and space station operating licenses. These operating licenses will be granted only to telecommunications operators with a landing right and on the condition that the radio frequency spectrum used does not cause harmful interference to existing operators. Foreign satellites are allowed to operate in Indonesia if Indonesian telecommunications operators have reciprocal operating rights in such satellite’s country of origin.

Industry Trends

We believe that the trends driving the telecommunications industry in Indonesia include:

Wireless Services

• Continued growth in wireless telecommunications. We expect that the wireless telecommunications industry and demand for wireless telecommunications services will continue to grow at a steady rate of around 9% as Indonesia develops and modernizes. A significant amount of this growth will still come from the “traditional core” markets.

• In addition to the growth in core markets, there are sizable emerging segments of strong growth, primarily in consumer broadband and mobile towers.

• It took a century to connect one billion places with phone lines but less than 30 years to connect five billion people with mobiles, and it is expected that up to 50 billion objects will be connected in the next 20 years or less. This is an easy way to compare the penetration between wireless and wireline.

• Significant growth in wireless penetration rates in regions outside Java. The relatively low wireless penetration rates in regions outside Java offer growth potential for wireless services providers in Indonesia as the population residing outside Java becomes more affluent.

• Growing use of value-added services. The growth in usage for value-added services such as SMS, content, and Internet access is expected to increase in coming years, thereby helping to stabilize the decrease in usage rates and ARPU for voice services.

• Today, there are multiple mobile operators and many companies are aggressively pushing for subscribers and traffic to quickly gain scale and earn market share. We expect consolidation to continue, especially beyond the three large players (Telkomsel, Indosat, XL). One of the major threats to the market is further price deterioration. Service offering and innovation will become the major driver in the competition.

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International Long-Distance Services

• Increased competition in international long-distance services. We expect further governmental deregulation and service quality improvements for VoIP services to increase competition for international long-distance services.

• Moderate growth in call volumes. We believe continued domestic economic growth and increase in cellular voice usage will stimulate incremental volume growth for international long-distance services. In addition, the growth of VoIP services is also expected to increase demand for international long-distance services.

MIDI Services

• Increasing demand for advanced data communication services. We believe increasing Internet usage and the broadening market for multimedia applications will boost demand for sophisticated data communication services.

• Intensified competition in the ISP market. As a result of market liberalization and the continued issuance of new licenses, we anticipate competition in the ISP market will increase. We believe competition will be based primarily on price, quality of service and network coverage.

• Increasing demand for broadband services for both fixed and wireless. We believe the expected increase in customer preference and demand for high-speed Internet access will stimulate growth of domestic broadband service.

Regulation of the Indonesian Telecommunications Industry

The Government of the Republic of Indonesia, through the MOCIT, exercises both regulatory authority and control and implements policies that govern the telecommunications industry in Indonesia. The legal framework for the telecommunications industry is based on specific laws as well as government, ministerial and directorate general regulations that are promulgated from time to time. Prior to March 1998, the Ministry of Tourism, Post and Telecommunications regulated the telecommunications industry in Indonesia. Following the 1999 general elections and a change of government in 2001, the Ministry of Communication assumed responsibility for regulating the telecommunications industry. In February 2005, the authority to regulate the telecommunications industry was transferred from the Ministry of Communication to the MOCIT.

Through the MOCIT, the Government regulates telecommunications network operations and the provision of telecommunications services. In addition, the MOCIT regulates the radio frequency spectrum allocation for all telecommunications operators, each of whom must be licensed by the DGPT in order to utilize the radio frequency spectrum. In addition to radio frequency spectrum fees, the Government requires all telecommunications operators to pay a concession license fee equal to 0.5% of gross revenues, less interconnection expenses and provisions for bad debt, for each fiscal year, payable in equal quarterly installments.

The Government’s telecommunications reform policy is set out in its “Blueprint of the Indonesian Government’s Policy on Telecommunications” dated September 17, 1999. The policies, as stated in the blueprint, are to:

• increase the telecommunications sector’s performance;

• liberalize the telecommunications sector with a competitive structure by removing monopolistic controls;

• increase transparency and predictability of the regulatory framework;

• create opportunities for national telecommunications operators to form strategic alliances with foreign partners; and

• create business opportunities for small-and medium-size enterprises and facilitate new job opportunities.

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The recent regulatory reforms of the Indonesian telecommunications sector have their foundation in the Telecommunications Law.

The Telecommunications Law

The Telecommunications Law became effective on September 8, 2000 and provides key guidelines for industry reforms, including industry liberalization, facilitation of new entrants and enhanced competition. The Government implements such guidelines through Government regulations, ministerial decrees or regulations and other directives by Government bodies. The Telecommunications Law grants the Government, through the Ministry of Communication, the power to make policies, and to regulate, supervise and control the telecommunications industry. Until 2005, the Ministry of Communication, the former regulatory body of the telecommunications industry, had authority over the telecommunications sector in Indonesia and could issue regulations, policies and licenses, and formulate tariffs.

Government Regulation No. 52/2000 on Telecommunications Operations (the “Telecommunications Operations Regulation”) and Government Regulation No. 53/2000 on Radio Frequency Spectrum and Satellite Orbits, were the initial implementing regulations of the Telecommunications Law. The Ministry of Communication also promulgated various decrees, including (i) Ministry of Communication Decree No. KM 20 Year 2001, which was replaced by MOCIT Decree No. 01/PER/M.KOMINFO/01/2010 on Telecommunications Network Operation (the “Telecommunications Network Regulation”), (ii) Ministry of Communication Decree No. KM 21 Year 2001, which was amended by MOCIT Decree No. 31/PER/M.KOMINFO/09/2008 on Telecommunications Services Operation (the “Telecommunications Services Regulation”), and (iii) Ministry of Communication Decree No. KM 31 TAHUN 2003, which was revoked by MOCIT Decree No. 36/PER/M.KOMINFO/2008 and amended by MOCIT Decree No. 31/PER/M.KOMINFO/8/2009 on the Establishment of an Indonesian Telecommunications Regulatory Body (the “Telecommunications Regulatory Body Regulation”).

On July 11, 2003, the Ministry of Communication promulgated the Telecommunications Regulatory Body Regulation, pursuant to which it delegated its authority to regulate, supervise and control the Indonesian telecommunications sector to the BRTI, while maintaining the authority to formulate policies for the industry. The BRTI, which first convened in January 2004, consists of seven members, including a chair position held by the DGPT, from the DGPT and the Telecommunications Regulatory Committee. Members of the Telecommunications Regulatory Committee are appointed by the MOCIT. All members of the Telecommunications Regulatory Committee must: (i) be Indonesian citizens; (ii) have professional expertise in telecommunications, information technology, economics, law or any social science; (iii) not have any interests in any of the telecommunications operators; and (iv) not serve as a director, commissioner or employee of any of the telecommunications operators.

Ministry of Communications Decree No. KM 67 of 2003 governs the relationship between the Ministry of Communications (and subsequently, MOCIT) and the BRTI. As part of its regulatory function, BRTI is authorized to (i) carry out licensing for telecommunications networks and services in accordance with the MOCIT’s policies and (ii) propose to the MOCIT operational performance, service quality, interconnection charges and equipment standards for telecommunications networks and services. The BRTI is authorized to monitor and required to report to the MOCIT on (i) the implementation of such operation performance standards; (ii) competition among network and service operators; and (iii) compliance with the standards of utilization of telecommunication equipment. As part of its controlling function, the BRTI is also required to report to the MOCIT regarding (i) progress of any dispute resolution among network and service operators; (ii) the control of the use of telecommunications equipment and (iii) the implementation of service quality standards.

Classification of Telecommunications Providers

The Telecommunications Law classifies telecommunications providers into (i) network operators, (ii) services providers and (iii) special providers. Network operators are further classified as (i) fixed

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telecommunications network operators and (ii) mobile telecommunications network operators. Under the Telecommunications Law, licenses are required for each category of telecommunications operators. A telecommunications network operator is licensed to own and/or operate a telecommunications network. By contrast, a telecommunications service provider license allows a service provider to provide services, but does not require such provider to own a network. Special telecommunications licenses are required for providers of private telecommunications services or for purposes relating to broadcasting and national security interests. The Telecommunications Network Regulation provides that telecommunications network operating licenses must be issued by the MOCIT. The Telecommunications Services Regulation differentiates the basic telephony service operating license to be issued by the MOCIT from the other value-added telephony and some multimedia service operating licenses issued by the DGPT.

Termination of Exclusivity Rights

In 1995, Telkom was granted a monopoly to provide local fixed-line telecommunications services until December 31, 2010, and DLD services until December 31, 2005. Indosat and Satelindo (which has subsequently merged with Indosat) were granted a duopoly for provision of basic international telecommunications services until 2004.

As a consequence of the Telecommunications Law and MOCIT Decree No. 21 (2001), the Government terminated the exclusive rights of Telkom and the duopoly rights of Indosat and Satelindo. The Government instead adopted a duopoly policy with Telkom and us competing as full network and service providers.

The market for provision of IDD services was liberalized in August 2003 with the termination of Indosat’s and Satelindo’s exclusive rights. We began operating fixed line services in 2002 and fixed wireless access and DLD services in 2003 after receiving our DLD services license. Telkom subsequently received an IDD services license and began offering IDD services under the international access code “007” in 2004 in direct competition with us.

In an attempt to liberalize DLD services, the Government issued regulations requiring each provider of DLD services to implement a three-digit access code to be dialed by customers making DLD calls. On April 1, 2005, the MOCIT announced that three-digit access codes for DLD calls will be implemented gradually within five years of such date and that it would assign us the “011” DLD access code for five major cities, including Jakarta, and allow us to progressively expand to all other area codes within five years. Telkom was assigned “017” as its DLD access code. On December 3, 2007, MOCIT promulgated regulation No. 43/P/M.KOMINFO/12/2007, which delayed the implementation of the DLD access code until April 3, 2008 and also set forth a schedule on implementing “01X” long distance access. In January 2007, the Government implemented new interconnection regulations and a five-digit access code system for VoIP services. In April 2008, these access codes were implemented in Balikpapan. Balikpapan residents are able to choose from options “0”, “01016” or “01017” to connect their long distance calls. Whether the DLD access code will be implemented in other cities will be based on a study by the Indonesian Telecommunication Regulatory Board of Indosat and Telkom’s fixed phone service customers .

Tariff for Fixed and Cellular Services

The MOCIT is responsible for setting and adjusting tariff formulas. In 2006, the MOCIT promulgated a number of ministerial decrees/regulations, such as (i) No. 8/Per/ M.KOMINF /02/2006 on cost-based interconnection, (ii) No. 2/ PER/M.KOMINFO/1/2006, No. 4/PER/M.KOMINFO/1/2006, No. 7/PER/M.KOMINFO/2/2006, and No. 19/PER/M.KOMINFO/3/2006 on 3G Service Provision, (iii) No. 5/PER/M.KOMINFO/1/2006 on Telecommunication Kiosk, (iv) No. 09/PER/M.KOMINF/02/2006, which was replaced by No. 15/PER/M.KOMINFO/4/2008 on Fixed Telecommunications Tariff, (v) No. 11/Per/M.KOMINF/02/2006 on Lawful Interception, (vi) No. 12 Per/M.KOMINF/02/2006, which was replaced by MOCIT Regulation No. 09/PER/M.KOMINFO/09/2008 on Cellular Tariffs, and (vii) MOCIT Decision No. 102/ Kep/M.Kominfo/10/2006 on Indosat 2G and 3G Cellular Network License, as amended by

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MOCIT Decree No. 181/2006 on Migration of FWA Network to 800MHz Allocated Frequency. In 2007, the MOCIT promulgated new ministerial decrees, including No. 162/2007 on the 800 MHz radio frequency channel allocation for operating FWA-CDMA and cellular networks (amendment of MOCIT decree No. 181/2006), MOCIT Regulation No. 05/PER/M.KOMINFO/2/2007 on Guidance For Tariff Implementation on USO Contributions, No. 03/PER/M.KOMINFO/1/2007 on Leased Circuits, No. 11/PER/M.KOMINFO/4/2007 (now No. 38/2007) on the implementation of infrastructure development using USO funds and MOCIT Regulation No. 43/P/M.KOMINFO/12/2007 on changes to all four FTPs (Fundamental Technical Plans)—2000, which delayed the date of implementation of the long distance access code in Balikpapan to April 3, 2008. In April 2008, the MOCIT promulgated ministerial regulation No. 9/PER/M.KOMINFO/04/2008 on tariff determination for cellular services, which determines the type and structure of cellular retail tariffs based on a formula, and No. 15/PER/M.KOMINFO/04/2008 on tariff determination for basic telephony services through fixed networks. The tariff covers basic telephony, roaming and multimedia services. The tariff for basic telephony services includes activation fees, monthly fees, usage fees and value-added service fees. Ceiling tariffs for retail cellular services differ between operators due to the use of different calculation methods. Based on the new regulation, the tariff value of basic telephony services through fixed networks and SMS as an additional facility must be calculated by the operator using a cost-based formula with the calculation results stated as ceiling tariffs. The Government is expected to change the fixed telecommunications tariff formulations in the near future. The Government regulates the tariff formulations for Leased Circuit businesses through MOCIT Regulation No. 03/PER/M.KOMINFO/1/2007.

Consumer Protection

Under the Telecommunications Law, each operator must meet certain service levels. In the event of losses caused by a telecommunication operator’s fault or negligence, the aggrieved party may file claims for damages against the telecommunications operator.

MOCIT Regulations on service level standards can be found in: (i) MOCIT Regulation No. 11/PER/M.KOMINFO/09/2008 dated April 21, 2008 on the Service Level for Basic Telephony Service in Local Fixed Network, (ii) MOCIT Regulation No. 12/PER/M.KOMINFO/09/2008 dated April 21, 2008 on the Service Level for Basic Telephony Service in the Cellular Mobile Network, and (iii) MOCIT Regulation No. 13/PER/M.KOMINFO/4/2008 on the Service Level for Basic Telephony Service in Fixed Networks with Limited Mobility.

Public Telephone

Based on our fixed telecommunications license for basic telephony service, we have an obligation to provide public telephone lines consisting of 3.0% of the installed network capacity for fixed telecommunications networks that we build.

Universal Service Obligations

Under the Telecommunications Law, all telecommunications network and service operators are bound by Universal Service Obligations (“USO”), which require participation by all operators in the provision of telecommunications facilities and infrastructure in MOCIT USO-designated areas. The USO is a measure intended to provide telecommunication access and/or services to areas that previously lacked access or service.

Through Government Regulation No. 28/2005 and MOCIT Regulation No. 15 PER/M.KOMINFO/9/2005, the Government announced regulations establishing the mechanism for USO payments and changing the USO tariff from Rp750 for each successful international outgoing or incoming call to 0.75% of an amount equal to gross revenues less interconnection expenses paid to other telecommunication carriers and bad debts. By Government Regulation No. 7/2009, the Government increased this USO tariff from 0.75% to 1.25%.

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In March 2004, the MOCIT promulgated Decree No. KM 34 year 2004, which included specifications for USO implementation program zones, technical requirements, operation, financing and monitoring (“KM 34/2004”). KM 34/2004 has been replaced with MOCIT Regulation No. 11/PER/M.KOMINFO/4/2007, which, in turn, has been amended by MOCIT Regulation No. 38/PER/M.KOMINFO/09/2007, which regulates the procedure for utilizing USO funds to develop network and telecommunication services in areas with no telecommunication network. In 2008, the Government promulgated MOCIT Regulation No. 32/PER/M.KOMINFO/10/2008 (as amended by MOCIT Regulation No. 03/PER/M.KOMINFO/02/2010), which replaced MOCIT Regulation No. 11/PER/M.KOMINFO/4/2007. According to this decree, a telecommunication network provider which has won tender to provide telecommunication services in areas with no telecommunication network (a “USO Zone”) will use the funds collected through the USO tariff to provide telecommunication access and services, including telephony service, SMS and internet access. While providing such telecommunication service in USO Zones, a telecommunications provider has the right to: (i) use technology, (ii) enter into interconnection arrangement with other telecommunication providers, and (iii) use a frequency spectrum of 2.390-2.400 MHz.

Interconnection Arrangements

In accordance with the express prohibitions in the Telecommunications Law on activities that may create monopolistic practices and unfair business competition, the Telecommunications Law requires network providers to allow users on one network to access users or services on other networks by paying fees agreed upon by each network operator. The Telecommunications Operations Regulation provides that interconnection charges between two or more network operators shall be transparent, mutually agreed on and fair.

On February 8, 2006, through MOCIT Regulation No. 8/PER/M.KOMINFO/02/2006, the Government issued new interconnection provisions setting out a cost-based interconnection regime, which replaced the previous revenue-sharing interconnection regime. As required under this regulation, the Government set a formula as guidance for calculating the interconnection cost for every operator. The results of the calculation are evaluated and used by the Government as a reference point.

Operators must include the result of the government’s formula in all RIO proposals, together with the proposals for call scenarios, traffic routing, point of interconnection, procedure for requesting and providing interconnection, and other matters. RIO proposals must also disclose the type of interconnection services and tariffs charged for each service offered. Interconnection access providers must implement a queuing system on a First-in-First-Serve basis. Additionally, the interconnection mechanism must also be transparent and without any discrimination.

Dominant IDD telecommunications operators, such as us, and non-dominant operators submitted RIOs in September 2006. The RIOs of dominant operators were approved by the Government in October 2006 and the implementation of the new regime began in January 2007 through bilateral agreements among operators. Based on current regulations, RIOs can be amended every year. On April 11, 2008, the Government approved RIO proposals from dominant operators to replace the previous RIOs.

The Government’s National Fundamental Technical Plan sets out technical requirements for routing plans, numbering, and technical aspects for interconnection of the networks of telecommunications operators, which allows all network operators to interconnect directly without rather than through the PSTN.

Fee Regime

Under the Telecommunications Law, in conjunction with other regulations, each telecommunications operator is required to pay the Government a license concession fee, a frequency fee and a satellite orbit fee, as applicable. The concession license fee for each telecommunications operator is approximately 0.5% of gross revenues, consisting of revenues from leasing of networks, interconnection charges, activation of new customers, usage charges, roaming charges and SIM card charges. In addition to these fees, the Government requires all

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telecommunications operators to pay a USO tariff equal to 1.25% of gross revenues less interconnection expenses and provisions for bad debt for each fiscal year, payable in equal quarterly installments. The frequency fee for CDMA 800 MHz, GSM 900 MHz, DCS 1800 MHz and 3G 2100 MHz is based on its bandwidth allocated frequency. In addition, certain users must pre-pay a one-time satellite orbital connection fee while their satellites are in operation.

Prepaid Cellular Subscriber Registration

On October 28, 2005, the Government began requiring telecommunications operators to register prepaid cellular subscribers. The regulations specified that such registration process must be completed no later than April 28, 2006, which deadline was later extended to September 28, 2006. We instituted procedures in order to complete the required registration at the initial point of sale and finalized the mandatory registrations by the deadline through the cancellation of 1.3 million unregistered accounts. As stated in MOCIT Regulation No. 23//M.KOMINFO/10/2005 on Registration of Telecommunication Service Customers, all operators have an ongoing duty to register their new prepaid cellular subscribers.

Satellite Regulation

The international satellite industry is highly regulated. In addition to domestic licensing and regulation in Indonesia, both the in-orbit placement and operation of our satellites are subject to registration with the Radio Regulation Bureau. Following the World Radiocommunication Conference, which took place from October 22, 2007 to November 16, 2007, some of Indonesia’s satellite characteristics at orbital slots 113E and 150.5E have been reinstated by the International Telecommunication Union. To facilitate utilization of the 150.5E orbital slot, the DGPT promulgated Decree No. 79/DIRJEN/2009 on March 12, 2009, which created a working group consisting of the DGPT, Telkom and us. In conjunction, on March 16, 2009, the MOCIT issued Letter No. 110/M. KOMINFO/03/2009 agreeing to work with us and Telkom to facilitate prompt utilization of the orbital slot.

Frequency of Fixed Wireless Access-CDMA

Through MOCIT Decree No. 181/2006, the Government reallocated 800 MHz frequency to FWA operators as part of a frequency clearance for 3G services (IMT-2000) to Bakrie Telecom, Telkom, Mobile-8, and us. We had previously been granted 5 MHz in uplink and downlink in the following frequencies: uplink frequency 1880-1885 MHz and downlink 1960-1965 MHz in Jakarta, Banten and West Java and uplink and downlink frequency 830-835 MHz and downlink 875-880 MHz in other parts of Indonesia. According to the new regulation, we have been granted 2x1.23 MHz in frequency (uplink 842.055-843.285 MHz and downlink 887.055-888.285 MHz) in Jakarta, Banten and West Java and (uplink 843.285-844.515 MHz and downlink 888.285-889.515) nationwide. The migration of the frequency was successfully implemented as of December 31, 2007.

Tower Sharing Obligation

On March 17, 2008, the MOCIT issued MOCIT Regulation No. 02/PER/M. KOMINFO/3/2008 on the Guidelines on Construction and Utilization of Sharing Telecommunication Towers (“Tower Decree”). Under the Tower Decree, the construction of telecommunications towers requires permits from the relevant governmental institution, while the local government determines the placement and location at which telecommunications towers can be constructed. In addition, telecommunications providers that own telecommunication towers and tower owners are obligated to allow other telecommunication operators to utilize their telecommunication towers (other than the tower used for its main network), without any discrimination.

Moreover, on March 30, 2009 the Minister of Home Affairs, the Minister of Public Works, the MOCIT and the Head of the Indonesia Investment Coordinating Board promulgated the Joint Regulation No. 19/PER/M. KOMINFO/03/2009 on the Guidelines on Construction and Utilization of Sharing Telecommunication

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Towers. (the “Joint Regulation”) requires a tower construction permit for every tower built and used for telecommunications services demonstrating compliance with certain technical specifications. However, through the enactment of this Joint Regulation, the Tower Decree prevails as long as any provision contemplated therein is not contrary with the provisions regulated under the Joint Regulation.

Other than the Joint Regulation and the Tower Decree, several regional authorities have implemented regulations limiting the number and location of telecommunication towers and require operators to share in the utilization of telecommunications towers.

On September 9, 2009, parliament passed Act No. 28 Year 2009 regarding local and regional taxes which took effect on January 1, 2010 and which imposes a new kind of tax that may add regulatory costs to the operation of our towers. The new tax is limited to a maximum of 2% of the tax object’s selling value, which refers to the resale value of the tower determined by the relevant tax authorities. The implementation of the new tax will be largely influenced by regional government policies.

Item 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion should be read in conjunction with our audited consolidated financial statements and the related notes thereto as of December 31, 2008, 2009 and 2010. The audited consolidated financial statements have been prepared in accordance with IFRS. Certain amounts (including percentage amounts) have been rounded for convenience. This discussion contains forward-looking statements that reflect our current views with respect to future events and our future financial performance. These statements involve risks and uncertainties, and our actual results may differ materially from those anticipated in these forward-looking statements as a result of particular factors such as those set forth under “Forward-Looking Statements” and Item 3. “Key Information—Risk Factors” and elsewhere in this report.

A. OPERATING RESULTS

We are a fully integrated Indonesian telecommunications network and service provider and provide a full complement of national and international telecommunications services in Indonesia. As of December 31, 2010, we were the second-largest cellular operator in Indonesia in terms of number of cellular subscribers. We provide MIDI services to Indonesian and regional corporate and retail customers as well as international long-distance services in Indonesia.

Factors Affecting our Results of Operations and Financial Condition

Our results of operations and financial condition have been affected and will continue to be affected by a number of factors, including the following:

Cellular Subscriber Base and Usage Patterns

Our number of cellular subscribers and their usage of our cellular services directly affects our cellular operating revenues as well as our operating expenses, including interconnection expenses and depreciation and amortization expenses. In order to meet increasing demand for our services, we may be required to expand our cellular network coverage and capacity, which requires additional capital expenditures. Increases in our capital expenditures affects our cash flows, interest expense and depreciation expense.

We are the second-largest cellular provider in Indonesia, as measured by the number of cellular subscribers, with 44.3 million subscribers (including wireless broadband subscribers) as of December 31, 2010.

In 2009, we implemented a strategy to minimize lower-value “calling card” type subscribers, whom we believed were short-term subscribers and were not likely to recharge their SIM cards. Pursuant to this strategy, we identified the prepaid subscribers who did not reload their starter packs after we significantly reduced the

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benefits (such as activation bonuses and on-net preloads) available to such subscribers. We believe this strategy contributed significantly to the decline in our subscriber base during 2009. Due to such strategy, during the first nine months of 2009, we removed 6.8 million such subscribers. Our total subscribers declined by approximately 9.7% from December 31, 2008, but our cellular operating revenues declined by only 0.9% for the year ended December 31, 2009 compared to the same period in 2008. Starting in the third quarter of 2009, we began seeing signs of stabilization in our subscriber base and we added 4.4 million subscribers, net of subscriber disconnections, in the fourth quarter of 2009. Our total subscribers increased by approximately 34.3%, from 33.0 million in 2009 to 44.3 million in 2010.

Competition

We face intense competition in all of our business segments. Among other things, such competition affects the tariffs we are able to charge for our services, demand for and usage of our services and our operating margins and results of operations.

The cellular services business in Indonesia has become increasingly competitive, as demonstrated by the aggressive subscriber acquisition programs of Indonesian cellular operators in recent years. Competition in the cellular communications industry has historically been based on network coverage, technical quality, price, the availability of data services and special features, and the quality and responsiveness of customer service. Commencing in 2007, competition became more focused on pricing as many operators, including ourselves, began to offer significant promotional discounts to attract subscribers, which we believe to have resulted in high customer churn rates. The high Indonesian customer churn rate can be attributed to the high price sensitivity of subscribers, especially prepaid users and the low switching costs for postpaid subscribers, due to limited contractual lock-ins. Beginning in late 2009, we believe that the market focus on pricing as the key determinant in customers’ product selection has declined and that subscribers are again focused on the historical drivers of network coverage, technical quality, price, the availability of data services and special features.

Based on our internal estimates, the three major providers of wireless services in Indonesia, Telkomsel, us and XL, accounted for almost 77% of the wireless subscriber base in Indonesia in 2010. We compete with Telkomsel and XL primarily on the basis of network coverage, quality or service and price. We believe that the size of our subscriber base provides us with a significant competitive advantage over the smaller cellular providers, since we have a larger base of “on net” subscribers and we are able to provide more attractive pricing for on net calls, since we do not pay any interconnection charges to third parties.

Competition in our MIDI services has also continued to increase. During the last few years, competition among data communications service providers has intensified principally due to the issuance of new licenses after the deregulation of the Indonesian telecommunications industry. In addition, our satellite operations, which primarily consist of leasing transponders to broadcasters and telecommunications operators of VSAT, cellular and IDD services and ISPs, face competition from foreign and domestic service providers serving the same customer base.

We are no longer the only authorized provider of traditional IDD (i.e., non-VoIP) call services in Indonesia. The Government may issue more licenses for IDD services to other telecommunications operators, which will increase competition in our fixed telecommunications operations.

We expect competition in our three business segments to continue to be intense. Competition has had, and is expected to have, an impact on our results of operations and financial condition.

Tariff and Pricing Levels

Under existing regulations, the MOCIT establishes a tariff formula that determines the amounts that operators may charge for cellular and fixed telecommunications services. However, the MOCIT allows cellular

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and fixed telecommunications operators, including us, to offer promotional packages that offer prices lower than the ceiling tariff determined in accordance with the tariff formula. We currently price our cellular services under a variety of ongoing promotional programs intended to attract new subscribers, stimulate demand and improve our competitive position. Any changes in our pricing structure, either as a result of Government tariff policies or in response to competition, could affect our revenues, operating results and financial condition.

The Indonesian Economy

We believe that the growth in the Indonesian telecommunications industry has been driven in part by recent growth of the Indonesian economy, and that demand for such services should continue, as the Indonesian economy continues to develop and modernize. Our performance and the quality and growth of our customer base and service offerings are necessarily dependent on the health of the overall Indonesian economy.

Capital Expenditures

The delivery of telecommunications services is capital intensive. In order to be competitive, we must continually expand, modernize and update our technology, which involves substantial capital investment. In order to address the demand associated with the substantial increase in subscribers and in network usage during 2008 through 2010, we had to substantially increase our capital expenditures, in particular to expand the capacity of our network. For the years ended December 31, 2008, 2009 and 2010, our actual consolidated capital expenditures totaled Rp12,341.9 billion, Rp11,584.5 billion and Rp5,515.0 billion (US$613.4 million), respectively. During 2011, we intend to allocate US$794.5 million for new capital expenditures, which, taken together with estimated actual capital expenditures expended for 2011 for capital expenditure commitments in prior periods, will result in approximately US$1,053.8 million total actual capital expenditures for 2011, which we intend to use for the development of fixed assets in our cellular, fixed data and fixed telecommunications business lines. See “—Capital Expenditures.”

Historically, we have funded our capital expenditures through internal resources and cash flow from operations, as well as debt financings through bank loans and the capital markets. We expect to continue to finance our capital expenditures through such sources. We face liquidity risk if certain events occur, including but not limited to, slower than expected growth in the Indonesian economy, downgrading of our debt ratings or deterioration of our financial performance or financial ratios. If we cannot raise the amounts needed to support our planned capital expenditures for 2011, we may be unable to improve or expand our cellular telecommunications infrastructure or update our other technology to the extent necessary to remain competitive in the Indonesian telecommunications market, which would affect our financial condition, results of operations and prospects.

In addition, unexpected changes in technology, demand for increased network capacity from our subscribers and responses to the operations and product innovation of our competitors may require us to increase our capital expenditures, which could affect our revenues, operating results and financial condition.

Foreign Exchange Volatility

The Indonesian rupiah has appreciated considerably over the last decade from its low point of approximately Rp17,000 per U.S. dollar during the Asian financial crisis. During the period between January 1, 2008 through December 31, 2010, the Indonesian rupiah/U.S. dollar exchange rate ranged from a low of Rp12,400 per U.S. dollar to a high of Rp8,888 per U.S. dollar, and, during the year 2010, the Indonesian rupiah/U.S. dollar exchange rate ranged from a low of Rp9,413 per U.S. dollar to a high of Rp8,888 per U.S. dollar. The prevailing Bank Indonesia exchange rate was Rp8,991per U.S. dollar on December 31, 2010. While a substantial portion of our operating revenues is denominated in Indonesian rupiah, a portion of our operating revenues is U.S. dollar-denominated. In addition, a substantial portion of our borrowings, capital expenditures and operating expenses, including interest payments on our Guaranteed Notes due 2020 and ING/DBS Syndicated Loan Facility, are

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denominated in currencies other than Indonesian rupiah, principally the U.S. dollar. As of December 31, 2010, 43.4% of our borrowings were denominated in Indonesian rupiah, with the balance in U.S. dollars. A depreciation in the value of the Indonesian rupiah against the U.S. dollar affects our financial condition and results of operations because, among other things, the Indonesia rupiah value of expenses payable in U.S. dollars will increase by the same factor, thereby requiring us to convert more Indonesian rupiah to pay our U.S. dollar obligations. Conversely, an appreciation in the value of the Indonesian rupiah against the U.S. dollar affects our financial condition and results of operations because, among other things, it causes a decrease in revenue from foreign carriers for inbound international calls, roaming by foreign carriers’ subscribers in Indonesia and operating revenues from our MIDI services and satellite operations. For the year ended December 31, 2008, we recorded a loss on foreign exchange-net of Rp885.7 billion; for the year ended December 31, 2009, we recorded a gain on foreign exchange-net of Rp1,656.4 billion; and for the year ended December 31, 2010, we recorded a gain on foreign exchange-net of Rp492.4 billion.

In addition, certain of our monetary assets and liabilities are subject to foreign currency exposure. These monetary assets primarily consist of cash, cash equivalents and accounts receivable from foreign telecommunications carriers, as well as our foreign currency-denominated accounts receivable. Our monetary liabilities subject to foreign currency exposure consist of procurements payable, loans payable and bonds payable which were incurred for capital expenditure-related liabilities. The level of our net monetary assets is influenced by the extent to which incoming calls exceed outgoing calls in our IDD business and our foreign currency denominated source of revenues. In an effort to manage our foreign currency exposure and lower our overall funding costs, we entered into several foreign currency swap contracts. We cannot assure you that we will be able to manage our exchange rate risk successfully in the future or that we will not continue to be adversely affected by our exposure to exchange rate risk. Our exposure to foreign exchange fluctuations, particularly as against the U.S. dollar, may increase if we incur additional U.S. dollar-denominated debt to finance our capital expenditure plans.

In February and March 2009, we obtained consents to amendments to certain of our debt instruments and agreements in order to provide additional flexibility in our debt to equity, debt to EBITDA and EBITDA to interest payment ratio maintenance covenants. While we believe that such amendments will provide us with sufficient cushion in the event of volatility in the Indonesian rupiah / U.S. dollar exchange rates, we cannot assure you that further and more intense volatility than that experienced in the past 12 months will not occur, which could cause us to breach our financial covenants. See “—Principal Indebtedness.”

Overview of Operations

Operating Revenues

We generate operating revenues primarily by providing cellular, MIDI and fixed telecommunications (principally international long-distance) services. The following table sets forth the breakdown of our total operating revenues and the percentage contribution of each of our services to our total operating revenues for each of the periods indicated:

	For the years ended December 31,
	2008 (Restated)				2009 (Restated)				2010
	Rp		%		Rp		%		Rp		%
	(Rp in billions, except percentages)
Cellular services		14,460.8		75.3		14,331.3		76.0		15,867.1		80.8
MIDI services		2,733.4		14.2		2,712.6		14.4		2,488.1		12.7
Fixed telecommunications		2,021.8		10.5		1,803.0		9.6		1,293.2		6.5
Total operating revenues		19,216.0		100.0		18,846.9		100.0		19,648.4		100.0

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The principal drivers of our operating revenues for all of our services are our subscriber base, usage levels and the rates for services. Usage levels for our services are affected by several factors, including continued growth in demand for telecommunications services in Indonesia, the continued development of the Indonesian economy, and competition.

Cellular Services. We derive our cellular services operating revenues from charges for cellular usage, value-added features, monthly subscriptions, sales of wireless broadband modems and cellular handsets, and connection fees, as well as interconnection charges from other telecommunications providers and tower leasing fees. In the fourth quarter of 2008, we began recording sales of wireless broadband modems and usage of wireless broadband data communications as cellular services operating revenues. Such revenue was previously recorded under MIDI services operating revenues.

The following table sets forth the components of our cellular services operating revenues for the periods indicated:

	For the years ended December 31,
	2008 (Restated)						2009 (Restated)									2010
	Rp.			%			Rp.			%			Rp.			US$		%
	(Rp. in billions, US$ in millions, except percentages)
Usage charges		8,492.8			58.7			7,085.7			49.4			7,944.0			883.6		50.1
Value-added services		5,052.6			35.0			5,999.0			41.9			7,039.2			782.9		44.4
Interconnection revenues		1,833.8			12.6			1,709.2			11.9			1,252.7			139.3		7.9
Tower leasing		—			—			62.4			0.4			252.0			28.0		1.6
Monthly subscription charges		66.3			0.5			184.2			1.3			200.5			22.3		1.3
Sale of Blackberry handsets and modems		82.5			0.6			206.5			1.4			35.0			3.9		0.2
Others		136.2			0.9			171.4			1.2			177.3			19.7		1.1
Up front discount and customer loyalty program		(1,203.4	)		-8.3			(1,087.1	)		-7.5			(1,033.6	)		-114.9		-6.6
Total cellular services operating revenues		14,460.8			100.0	%		14,331.3			100.0	%		15,867.1			1,764.8		100.0	%

A substantial proportion of our cellular subscribers, approximately 97.5% as of December 31, 2010, are prepaid subscribers. We offer a variety of value-added services to our prepaid subscribers, which have increased cellular services operating revenues from value-added services, particularly SMS and value-added SMS, which allows subscribers to access a variety of information, such as politics, sports and business news. Revenues from value-added services (including SMS) represented 35.0%, 41.9% and 44.4% of our cellular services operating revenues for the years ended December 31, 2008, 2009 and 2010, respectively. We expect the revenues derived from SMS and other value-added services to continue to increase, which we believe will be primarily driven by our wireless broadband services, the popularity of social networking sites and the development of other popular online content.

We recognize cellular revenues as follows:

• cellular revenues arising from airtime and roaming calls are recognized based on the duration of successful calls made through our cellular network;

• for post-paid subscribers, monthly service fees are recognized as the service is rendered;

• for prepaid subscribers, the activation component of starter package sales is deferred and recognized as revenue over the expected average period of the customer relationship. Sales of initial/reload vouchers are recorded as deferred revenue and recognized as revenue upon usage of the airtime or upon expiration of the airtime;

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• sales of wireless broadband modems and cellular handsets are recognized upon delivery to the customers;

• revenues from wireless broadband data communications are recognized based on the duration of usage or fixed monthly charges depending on the arrangement with the customers;

• cellular revenues are presented on a net basis, after compensation to value added service providers;

• revenues from network interconnection with other domestic and international telecommunications carriers are recognized monthly on the basis of the actual recorded traffic for the month.

MIDI Services. Our MIDI services operating revenues consist primarily of revenues from (i) Internet services provided by us, Indosat Mega Media (“IM2”) and PT Aplikanusa Lintasarta (“Lintasarta”), (ii) IP VPN services, high-speed leased lines and frame relay services provided by us and Lintasarta, (iii) digital data network services provided by Lintasarta, (iv) satellite services, and (v) World link and Direct link.

We deferred installation service revenues for Internet services, frame net, World link and Direct line services, upon the completion of the installation or connection of equipment, and recognized as revenue over the expected customer relationship. We recognize revenues from monthly service fees and other MIDI services as the services are rendered. Revenues from usage charges for Internet services are recognized monthly based on the duration of Internet usage or based on the fixed amount of charges depending on the arrangement with the customers. We record satellite revenues on a straight-line basis over the lease period for the transponder. Monthly rent for satellite transponder capacity is based primarily on leased capacity.

A substantial portion of our MIDI services operating revenues is denominated in U.S. dollars and is thus affected by fluctuations in the Indonesian rupiah/U.S. dollar exchange rate. Our MIDI services operating revenues have also been affected recently by a number of other factors, including competition from domestic and international providers, declining tariffs and a migration from legacy services to IP-based services. We expect such trends to continue but believe that the effects on our operating revenues will be offset by increased volume of services leased by our corporate customers and increased demand for our customized services, as well as the operation of our new Palapa-D satellite.

Fixed Telecommunications Services. Fixed telecommunications services include international long-distance, fixed wireless access services, and fixed line services. International long-distance services, which are comprised of our “001” and “008” IDD services, “Flatcall 01016” as well as operator-assisted and value-added services, represented 76.8% of our operating revenues from fixed telecommunications services for the year ended December 31, 2010, and fixed wireless access and fixed line services represented the balance.

International Long-distance Services. Our international long-distance services operating revenues have two primary sources, incoming call revenues and outgoing call revenues. We have negotiated volume commitments and accounting rates with foreign telecommunications operators or have implemented a market termination rate-based pricing system, and receive net settlement payments from such carriers. Net settlement payments and accounting rates are generally denominated and paid in currencies other than the Indonesian rupiah, principally the U.S. dollar; accordingly, incoming call revenues are affected by fluctuations in exchange rates between the Indonesian rupiah and other currencies.

Fixed Wireless Access Services. As of December 31, 2010, we had 550,130 fixed wireless access subscribers in 82 cities in Indonesia. By the end of 2010, we expanded our fixed wireless access services to several additional cities in order to create capacity for approximately four million fixed wireless access subscribers. As a result, we expect fixed wireless services to become a more important source of fixed telecommunications services operating revenues in future periods.

Fixed wireless access revenues arising from usage charges are recognized based on the duration of successful calls made through our fixed network. For postpaid subscribers, monthly service fees are recognized

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as the service is provided. For prepaid subscribers, the activation component of starter package sales is deferred and recognized as revenue over the estimated life of the customer relationship Sale of initial or reload vouchers is recorded as unearned income and recognized as income upon usage of the airtime or upon expiration of the airtime.

Fixed Line Services. We currently have local and domestic long-distance coverage of 82 major cities in Indonesia. Revenues from fixed line installations are recognized as revenue over the estimated life of customer relationship. Revenues from usage charges are recognized based on the duration of successful calls made through our fixed network.

Operating Expenses

Our principal operating expenses include cost of services, depreciation and amortization, personnel expenses, marketing expenses and general and administration expenses.

Certain of our expenses are denominated in U.S. dollars or currencies other than the Indonesian rupiah. Such expenses may include those for international interconnection settlements, certain maintenance agreements and consultancy fees.

Costs of Services. Costs of services expenses include interconnection expenses, radio frequency fee, maintenance, utilities, rents, leased circuits, the cost of SIM cards and pulse reload vouchers, USO, Blackberry access fee, installation and concession fee.

Depreciation and Amortization. We use the straight-line depreciation method for our property, facilities and equipment over their estimated useful lives. A significant portion of our depreciation expenses relate to our cellular services assets. As we continue to expand and enhance the coverage, capacity and quality of our networks, we expect expenses for depreciation to increase.

Marketing. Marketing expenses primarily include exhibition, promotion and advertisement expenses associated with our marketing programs.

Personnel. Personnel expense primarily include salaries, incentives and other employee benefits, bonuses, employee income tax, post-retirement healthcare benefits, medical expense and outsourcing.

General and Administration. General and administration expenses primarily include rent, professional fees, utilities, provision for impairment of receivables, transportation and office.

Other Income (Expense)

The major components of our other income (expense) are interest income, gain (loss) on foreign exchange—net, financing cost, gain (loss) on change in the fair value of derivatives—net. Foreign exchange gain or loss has typically been affected by the amount of non-Indonesian rupiah-denominated debt outstanding, accounts receivable from overseas international carriers and non-Indonesian rupiah-denominated cash and cash equivalents. We currently hedge a portion of our ING/DBS Syndicated Loan Facility. See “Item 11: Quantitative and Qualitative Disclosure About Market Risk.” Financing cost includes interest on loans, bank charges and loss on redemption of our Guaranteed Notes due 2010 and 2012.

Taxation

Current tax expense is provided based on the estimated taxable income for the period. Deferred tax assets and liabilities are recognized for temporary differences between the financial and the tax bases of assets and liabilities at each reporting date. Future tax benefits, such as the carryover of unused tax losses, are also

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recognized to the extent that realization of such benefits is probable. The tax effects for the period are allocated to current operations, except for the tax effects from transactions which are directly charged or credited to stockholders’ equity.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Changes in the carrying amount of deferred tax assets and liabilities due to a change in tax rates are credited or charged to current period operations, except to the extent that they relate to items previously charged or credited to stockholders’ equity.

For each of the consolidated entities, the tax effects of temporary differences and tax loss carryover, which individually are either assets or liabilities, are shown at the applicable net amounts.

Net Income

Our net income for the years ended December 31, 2008, 2009 and 2010 is not necessarily commensurate to our operating revenues and operating income during such periods, in part due to large fluctuations in several non-operating items, which have impacted our net income over such periods. Such non-operating items include, among others, fluctuations in income tax deferred, gain or loss on foreign exchange net, and gain or loss on change in the fair value of derivatives net.

Results of Operations

The following table sets forth selected comprehensive income data expressed as a percentage of total operating revenues for the periods indicated:

	For the years ended December 31,
	2008 (Restated)			2009 (Restated)			2010
Operating revenues:
Cellular		75.3	%		76.0	%		80.8	%
MIDI		14.2	%		14.4	%		12.7	%
Fixed telecommunications		10.5	%		9.6	%		6.5	%
Total operating revenues		100.0	%		100.0	%		100.0	%
Operating expenses:
Cost of services		34.5	%		37.6	%		36.2	%
Depreciation and amortization		23.8	%		29.6	%		31.4	%
Personnel		8.5	%		7.7	%		7.2	%
Marketing		4.8	%		4.3	%		4.0	%
General and administration		3.8	%		3.7	%		3.3	%
Total operating expenses		75.4	%		82.9	%		82.1	%
Net Profit:
Operating income		24.6	%		17.1	%		17.9	%
Other expense-net		(11.3	)%		(3.6	)%		(11.2	)%
Profit before income tax		13.3	%		13.5	%		6.7	%
Income tax expense-net		(2.6	)%		(4.2	)%		(2.1	)%
Profit attributable to Owners of the Company		10.6	%		9.0	%		4.2	%
Profit attributable to Non-controlling interest		0.1	%		0.3	%		0.4	%

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The following table sets forth our operating revenues from our various business segments for the periods indicated:

	For the years ended December 31,
	2008 (Restated)					2009 (Restated)					2010
	Rp					Rp					Rp			US$
	(Rp in billions, US$ in millions, except percentages)
Cellular Services
Usage charges		8,492.8		58.7	%		7,085.7		49.4	%		7,944.0			883.6	50.1	%
Value-added services		5,052.6		35.0	%		5,999.0		41.9	%		7,039.2			782.9	44.4	%
Interconnection revenues		1,833.8		12.6	%		1,709.2		11.9	%		1,252.7			139.3	7.9	%
Tower leasing		—		—			62.4		0.4	%		252.0			28.0	1.6	%
Monthly subscription charges		66.3		0.5	%		184.2		1.3	%		200.5			22.3	1.3	%
Sale of Blackberry handsets and modems		82.5		0.6	%		206.5		1.4	%		35.0			3.9	0.2	%
Others		136.2		0.9	%		171.4		1.2	%		177.3			19.7	1.1	%
Up front discount and customer loyalty program		(1,203.4	)	-8.3	%		(1,087.1	)	-7.5	%		(1,033.6	)		-114.9	-6.6	%
Subtotal		14,460.8		100.0	%		14,331.3		100.0	%		15,867.1			1,764.8	100.0	%
MIDI
IP VPN		585.6		21.4	%		566.1		20.9	%		605.7			67.4	24.3	%
Internet		703.9		25.8	%		677.4		25.0	%		519.6			57.8	20.9	%
World link and direct link		456.7		16.7	%		394.2		14.5	%		278.8			31.0	11.2	%
Frame net		315.8		11.6	%		276.5		10.2	%		227.1			25.3	9.1	%
Leased line		231.6		8.5	%		211.1		7.8	%		189.0			21.0	7.6	%
Application services		118.9		4.3	%		146.1		5.4	%		168.2			18.7	6.8	%
Satellite lease		96.3		3.5	%		113.1		4.2	%		136.0			15.1	5.5	%
Digital data network		124.9		4.6	%		144.6		5.3	%		94.7			10.5	3.8	%
MPLS		25.1		0.9	%		67.1		2.5	%		66.6			7.4	2.7	%
Others		74.6		2.7	%		116.4		4.2	%		202.4			22.5	8.1	%
Subtotal		2,733.4		100.0	%		2,712.6		100.0	%		2,488.1			276.7	100.0	%
Fixed Telecommunications
International Calls		1,650.1		81.6	%		1,422.2		78.9	%		993.2			110.5	76.8	%
Fixed Wireless		244.3		12.1	%		249.9		13.9	%		174.1			19.4	13.5	%
Fixed Line		126.7		6.3	%		129.9		7.2	%		125.4			13.9	9.7	%
Others		0.7		0.0	%		1.0		0.0	%		0.5			0.0	0.0	%
Subtotal		2,021.8		100.0	%		1,803.0		100.0	%		1,293.2			143.8	100.0	%
Total		19,216.0					18,846.9					19,648.4			2,185.3

Operating Revenues

Year ended December 31, 2009 to Year Ended December 31, 2010

Total operating revenues increased from Rp18,846.9 billion in 2009 to Rp19,648.4 billion (US$2,185.3 million), or 4.3%, primarily as a result of an increase in our cellular services revenue. During 2010, operating revenues from cellular services increased by Rp1,535.8 billion, or 10.7%, from Rp14,331.3 billion in 2009. Operating revenues from MIDI services decreased by Rp224.5 billion, or 8.3%, from Rp2,712.6 billion in 2009. Operating revenues from fixed telecommunications services in 2010 decreased by Rp509.8 billion, or 28.3 %, from Rp1,803.0 billion in 2009.

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Cellular Services. In 2010, we recorded cellular services operating revenues of Rp15,867.1 billion (US$1,764.8 million), an increase of 10.7% from Rp14,331.3 billion in 2009. We believe that the increase was primarily a result of an increase in the number of subscribers. Operating revenues from cellular services represented 80.8 % of our total operating revenues for 2010, which is higher than the percentage for 2009.

Usage charges increased by Rp858.3 billion, or 12.1%, from 2009, and represented 50.1% of our total cellular services operating revenues. This increase in usage was primarily due to an increase in the minutes of usage by our subscribers.

In 2010, cellular services operating revenues generated by value-added services increased by Rp1,040.2 billion, or 17.3%, compared to 2009. The contribution of value-added services to cellular services operating revenues increased by 2.6% from 41.8% in 2009 to 44.4% in 2010. The increase in operating revenues from value-added services, as well as the increase in the contribution of revenues from value-added services to our overall cellular operating revenues, was driven by an increase in usage of SMS and wireless broadband.

MIDI Services. In 2010, operating revenues from MIDI services decreased by Rp224.5 billion from Rp2,712.6 billion in 2009 to Rp2,488.1 billion (US$276.7 million) in 2010. IP VPN operating revenues represent the largest component of MIDI services operating revenue. IP VPN operating revenues increased by Rp39.6 billion from Rp566.1 billion in 2009 to Rp605.7 billion in 2010. The reduction in MIDI services operating revenues, including those from Internet services, as well as international and domestic leased line services, was primarily due to increased competition and a decline in prices of our services.

Fixed Telecommunications Services. There was a decrease in fixed telecommunications services operating revenues from Rp1,803.0 billion in 2009 to Rp1,293.2 billion (US$143.8 million) in 2010. Operating revenues from international calls and fixed wireless access services represented 76.8% and 13.5%, respectively, of fixed telecommunications services operating revenues in 2010. The remaining 9.7% of fixed telecommunications services operating revenues in 2010 was generated by fixed line and other services. Revenues from international calls decreased from Rp1,422.2 billion in 2009 to Rp993.2 billion (US$110.5 million) in 2010 due to a decrease in outgoing IDD traffic from Indosat and non-Indosat subscribers. The total volume of international calls from our “001” and “008” gateways increased by 6.1 % from 2,060.5 million minutes in 2009 to 2,186.9 million minutes in 2010. Total incoming traffic increased by 10.6% from 1,558.5 million minutes in 2009 to 1,723.9 million minutes in 2010, primarily due to volume commitments from foreign telecommunications operators. Outgoing traffic decreased by 7.8 % from 502.0 million minutes in 2009 to 463.0 million minutes in 2010 due to the decrease in volume commitments from foreign telecommunications operations.

Operating Expenses

Operating expenses increased by Rp505.3 billion, or 3.2%, from Rp15,621.4 billion in 2009 to Rp16,126.7 billion (US$ 1,793.6 million) in 2010, primarily due to increases in depreciation and amortization expenses and cost of services expenses. This increase was offset in part by decreases in personnel cost, marketing expense and administration and general expenses in the year.

Cost of services expenses increased by Rp25.5 billion, or 0.4%, from Rp7,087.9 billion in 2009 to Rp7,113.4 billion (US$791.2 million) in 2010, primarily as a result of increased Government levies on frequency fees, USO and concession fees. The increase can also be attributed to rental payments for additional BTSs, increases in interconnection cost and increase in maintenance relating to increase in our fixed assets.

Depreciation and amortization expenses increased by 10.6% from Rp5,571.6 billion in 2009 to Rp6,162.8 billion (US$685.4 million), primarily as a result of the continued growth of our fixed asset base, including our new Palapa-D satellite. The total cost of our property and equipment increased from Rp74,818.5 billion in 2009 to Rp78,101.2 billion (US$8,686.6 million) in 2010.

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Personnel expense decreased by Rp40.4 billion, or 2.8%, from Rp1,451.6 billion in 2009 to Rp1,411.2 billion (US$157.0 million) in 2010, primarily due to a decrease in the post-employment benefits, of salary continuation before retirement (MPP) benefit and offsetted with the increase in the salaries and bonuses.

Marketing expenses decreased by Rp37.7 billion, or 4.6%, from Rp816.9 billion in 2009 to Rp779.2 billion (US$86.7 million) in 2010, primarily due to a decrease in advertising, promotion and exhibition expenses, in line with the targeted marketing strategy and efficiency program we have adopted.

General and administration expenses decreased by Rp33.4 billion, or 4.8%, from Rp693.4 billion in 2009 to Rp 660.0 billion (US$73.4 million) in 2010, primarily due to a decrease in provision for impairment of receivables, rental cost, professional fee and office supplies expenses, as we continued to implement our efficiency program, designed to minimize non operational costs.

Operating Income

As a result of the above factors, operating income increased by Rp296.2 billion, or 9.2%, from Rp3,225.5 billion in 2009 to Rp3,521.7 billion (US$ 391.7 million) in 2010.

Other Expenses-Net

Other expenses-net increased by Rp1,515.1 billion, from Rp 681.3 billion in 2009 to Rp2,196.4 billion (US$244.3 million) in 2010, primarily due to a lower gain on foreign exchange, driven by the smaller appreciation of the Indonesian rupiah against the U.S. dollar compared to the previous year. Gain on foreign exchange-net of Rp1,656.4 billion in 2009 decreased to Rp492.4 billion (US$54.8 million) in 2010. The exchange rate decreased from Rp9,400 : US$1 as of December 31, 2009 to Rp8,991 :US$1 as of December 31, 2010, compared to the decrease from Rp10,950 :US$1 as of December 31, 2008 to Rp9,400 :US$1 as of December 31, 2009.

Loss on change in fair value of derivatives-net decreased by Rp 38.1 billion from Rp486.9 billion in 2009 to Rp448.8 billion (US$49.9 million) in 2010 due to the appreciation of the Indonesian rupiah against the U.S. dollar.

We recorded an increase in interest income to Rp143.4 billion (US$15.9 million) in 2010, which represented an increase of Rp4.4 billion, or 3.2%, over 2009, due to our higher average cash balance. Others-net decreased by Rp5.0 billion, from Rp116.8 billion in 2009 to Rp111.8 billion (US$12.4 million) in 2010 primarily due to an increase in submarine cable restoration revenue and gain on sale of property and equipment.

Income Tax Expense-Net

We recorded income tax expense—net of Rp422.4 billion (US$47.0 million) in 2010 compared to Rp783.9 billion in 2009. The decrease in income tax expense-net was primarily due to the lower in income before tax related to lower gain on foreign exchange and higher financing cost.

Net Profit

Our net profit decreased by Rp857.4 billion, or 48.7%, from Rp1,760.3 billion in 2009 to Rp902.9 billion (US$100.4 million) due to the foregoing factors.

Year ended December 31, 2009 to Year Ended December 31, 2008

Total operating revenues decreased marginally from Rp19,216.0 billion in 2008 to Rp18,846.9 billion in 2009, or 1.9%, primarily as a result of a decrease in our cellular services revenue. During 2009, operating revenues from cellular services decreased by Rp129.5 billion, or 0.9%, from Rp14,460.8 billion in 2008 to Rp14,331.3 in 2009. Operating revenues from MIDI services decreased by Rp20.8 billion, or 0.8%, from Rp2,733.4 billion in 2008 to Rp2,712.6 in 2009. Operating revenues from fixed telecommunications services in 2009 decreased marginally by Rp218.8 billion, or 10.8%, from Rp2,021.8 billion in 2008 to Rp1,803.0 in 2009.

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Cellular Services. In 2009, we recorded cellular services operating revenues of Rp14,331.3 billion, a decrease of 0.9% from Rp14,460.8 billion in 2008. We believe that the decrease was primarily a result of our value strategy, which started in 2009, to minimize lower-value “calling card” type subscribers. Removing “calling-card” type subscribers resulted in a decline of less than 1.6% in cellular operating revenues. In addition, we believe that the reduction of our cellular services operating revenues also resulted from the decline of our ARPU from Rp38,639 in 2008 to Rp37,664 in 2009. Operating revenues from cellular services represented 76% of our total operating revenues for 2009, which is slightly the same percentage 75.3% for 2008.

Usage charges decreased by Rp1,407.1 billion, or 16.6%, from 2008, and represented 49.4% of our total cellular services operating revenues. This decrease in usage was primarily due to the decrease in our subscriber base, which was partially offset by an increase in our revenues from value-added features.

In 2009, cellular services operating revenues generated by value-added services increased by Rp946.4 billion, or 18.7%, compared to 2008. The contribution of value-added services to cellular services operating revenues increased by 6.9% from 35.0% in 2008 to 41.9% in 2009. The increase in operating revenues from value-added services, as well as the increase in the contribution of revenues from value-added services to our overall cellular operating revenues, was driven by an increase in usage of our wireless broadband services.

MIDI Services. In 2009, operating revenues from MIDI services remained relatively constant, with Rp2,733.4 billion in 2008 and Rp2,712.6 billion in 2009. Internet operating revenues continued to represent the largest component of MIDI services operating revenue, although there was a decrease in Internet operating revenues of Rp26.5 billion in 2009. The reduction in operating revenues from Internet services, as well as international and domestic leased line services, was primarily due to increased competition and a decline in prices of our services.

Fixed Telecommunications Services. There was a decrease in fixed telecommunications services operating revenues from Rp2,021.8 billion in 2008 to Rp1,803.0 billion in 2009. Operating revenues from international calls and fixed wireless access services represented 78.9% and 13.9%, respectively, of fixed telecommunications services operating revenues in 2009. The remaining 7.2% of fixed telecommunications services operating revenues in 2009 was generated by fixed line and other services. Revenues from international calls decreased from Rp1,650.1 billion in 2008 to Rp1,422.2 billion in 2009 due to a decrease in outgoing IDD traffic from non-Indosat subscribers. The total volume of international calls from our “001” and “008” gateways increased by 0.2% from 2,056.4 million minutes in 2008 to 2,060.5 million minutes in 2009. Total incoming traffic decreased by 1.5%, with 1,582.4 million minutes in 2008 and 1,558.5 million minutes in 2009, primarily due to a decrease in volume commitments from foreign telecommunications operators. Outgoing traffic increased by 5.9% from 474.0 million minutes in 2008 to 502.0 million minutes in 2009 primarily due to increased user traffic from our subscribers, such as those using the “Flatcall 01016” service.

Operating Expenses

Operating expenses increased by Rp1,133.6 billion, or 7.8%, from Rp14,487.8 billion in 2008 to Rp15,621.4 billion in 2009, primarily due to increases in depreciation and amortization expenses and cost of services expenses, which are our two biggest operating expenses. This increase was offset in part by decreases in personnel expense, marketing expenses and general and administration expenses in the year.

Cost of services expenses increased by Rp460.1 billion, or 6.9%, from Rp6,627.8 billion in 2008 to Rp7,087.9 billion in 2009, primarily as a result of increased Government levies on frequency fees, our annual 3G license fee payment, including the fees for added spectrum in 2009, USOs and concession fees. The increase can also be attributed to rental payments for additional BTSs, increases in the cost of modems and handsets driven by higher BlackBerry^™ sales, and increases in expenses relating to our leased line, Internet and transponder leasing operations.

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Depreciation and amortization expenses increased by 22.0% from Rp4,565.4 billion in 2008 to Rp5,571.6 billion in 2009, primarily as a result of the continued growth of our fixed asset base, including our new Palapa-D satellite, as well as the accelerated depreciation of unutilized elements of our cellular network. Our property and equipment acquisition cost increased from Rp63,478.4 billion in 2008 to Rp74,818.5 billion in 2009.

Personnel expenses decreased by Rp187.4 billion, or 11.4%, from Rp1,639.0 billion in 2008 to Rp1,451.6 billion in 2009, primarily due to a decrease in the effective personnel income tax rate, as well as decreases in bonuses, incentives and other employee benefits, outsourcing expenses and post-retirement healthcare benefits.

Marketing expenses decreased by Rp101.2 billion, or 11.0%, from Rp918.1 billion in 2008 to Rp816.9 billion in 2009, primarily due to a decrease in advertising, promotion and exhibition expenses, in line with the targeted marketing strategy and efficiency program we have adopted.

General and administration expenses decreased by Rp44.0 billion, or 6.0%, from Rp737.4 billion in 2008 to Rp693.4 billion in 2009 primarily due to decreases in transportation costs, training, education and research costs, professional fees, office services expenses and catering costs, as we continued to implement our efficiency program, designed to minimize non-operational costs.

Operating Income

As a result of the above factors, operating income decreased by Rp1,502.7 billion, or 31.8%, from Rp4,728.2 billion in 2008 to Rp3,225.5 billion in 2009.

Other Expenses-Net

Other expenses-net decreased by Rp1,491.6 billion, from Rp2,172.9 billion in 2008 to Rp681.3 billion in 2009, primarily due to increase in gains on foreign exchange, driven by the appreciation of the Indonesian rupiah against the U.S. dollar. From a loss on foreign exchange-net Rp885.7 billion in 2008, we recorded a gain on foreign exchange-net of Rp1,656.4 billion in 2009.

We recorded a gain on change in fair value of derivative-net of Rp136.6 billion in 2008 and a loss on change in fair value of derivatives-net of Rp486.9 billion in 2009 due to the appreciation of the Indonesian rupiah against the U.S. dollar.

We recorded a decrease in interest income to Rp139.0 billion in 2009, which represented a decrease of Rp321.1 billion, or 69.8%, over 2008, due to the lower average cash balance we maintained.

Others-net increased by Rp91.2 billion, from Rp25.6 billion in 2008 to Rp116.8 billion in 2009 primarily due to an increase in damage losses caused by more natural calamities, such as earthquakes, that occurred in Indonesia in 2009 compared to 2008 in which the insurance company decreased the claimable amount for the insured damaged assets as more restrictions were imposed on the amended agreements we filed, several assessment letters on tax under payment (SKPKB) from Directorate General Tax on June 8, 2009 for Satelindo’s corporate income tax and income tax article 4(2), 21 and 23 for fiscal years 2002 and 2003 and Satelindo’s tax audit for VAT fiscal year 2002 and 2003.

Income Tax Expense-Net

We recorded income tax expense—net of Rp485.3 billion in 2008 compared to Rp783.9 billion in 2009. The increase in income tax expense-net was primarily due to the adjustment of income tax benefit deferred due to changes in the income tax rate in 2008.

Net Profit

Our net profit decreased by Rp309.7 billion, or 15.0%, from Rp2,070.0 billion in 2008 to Rp1,760.3 billion in 2009 due to the foregoing factors.

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B. LIQUIDITY AND CAPITAL RESOURCES

Our liquidity requirements have historically arisen from the need to finance investments and capital expenditures related to the expansion of our telecommunications business. Our telecommunications business requires substantial capital to construct and expand mobile and data network infrastructure and to fund operations, particularly during the network development stage. Although we have substantial existing network infrastructure, we expect to incur additional capital expenditures in order to focus cellular network development in areas that we anticipate to be high-growth areas, as well as to enhance the quality and coverage of our existing network.

We believe our current cash and cash equivalents, cash flow from operations and available sources of financing will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and planned capital expenditures, for the foreseeable future. Nonetheless, if global or Indonesian economic conditions worsen, competition or product substitution accelerates beyond current expectations or the value of the Indonesian rupiah depreciates significantly against the U.S. dollar, our net cash flow from operating activities may decrease and the amount of required capital expenditures in Indonesian rupiah terms may increase, any of which may negatively impact our liquidity.

Cash Flows

The following table sets forth certain information regarding our historical cash flows:

	For the years ended December 31,
	2008			2009			2010
	Rp			Rp			Rp			US$
	(Rp in billions, US$ in millions)
Net cash flows:
Provided by operating activities		6,513.3			4,051.2			6,839.0			760.6
Used in investing activities		(10,286.9	)		(10,670.7	)		(5,970.7	)		(664.1	)
Provided by (used in) financing activities		1,458.5			3,724.7			(1,629.7	)		(181.2	)

Net Cash Provided by Operating Activities

Net cash provided by operating activities amounted to Rp6,513.3 billion, Rp4,051.2 billion and Rp6,839.0 billion (US$760.6 million) for 2008, 2009 and 2010, respectively. In 2010, net cash provided by operating activities increased primarily due to receipt from customers.

Net Cash Used in Investing Activities

Net cash used in investing activities amounted to Rp10,286.9 billion, Rp10,670.7 billion and Rp5,970.7 billion (US$664.1 million) for 2008, 2009 and 2010, respectively. Net cash used in investing activities for 2008, 2009 and 2010 has been driven primarily by acquisitions of property and equipment, totaling Rp10,307.9 billion, Rp10,684.7 billion and Rp6,495.1 billion (US$722.4 million), respectively, as we expanded our network coverage and capacity during those years. The property and equipment purchased consisted primarily of exchange and network assets, subscribers’ apparatus and other equipment and buildings and building and leasehold improvements.

Net Cash Provided by (Used In) Financing Activities

Net cash provided by (used in) financing activities amounted to Rp1,458.5 billion, Rp3,724.7 billion and Rp1,629.7 billion (US$181.2 million) in 2008, 2009 and 2010, respectively. Net cash used in financing activities in 2010 related primarily to repayment of long-term debts and bonds payable which was partially offset by proceeds from bonds payable.

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Principal Indebtedness

The following table shows our outstanding borrowings as of December 31, 2008, 2009 and 2010:

	As of December 31,
	2008		2009		2010
	Rp		Rp		Rp		US$
	(Rp in billions, US$ in millions)
Loans payable (net of unamortized issuance costs and unamortized consent fees, and current maturities)		10,812.2		12,715.5		7,666.8		852.7
Bonds payable (net of unamortized issuance costs, unamortized discount, unamortized consent fees, and current maturities)		10,315.6		8,472.2		12,114.1		1,347.4
Current maturities of loans payable		572.5		1,440.2		3,184.2		354.1
Current maturities of bonds payable		56.4		2,840.7		1,098.1		122.1

The decrease in loans payable (net of unamortized issuance cost, unamortized consent fee and current maturities) to Rp7,666.8 billion (US$852.7 million) as of December 31, 2010, from Rp12,715.5 billion as of December 31, 2009 was primarily due to the early repayment of our facilities with BCA Bank, Mandiri and Bank DBS Indonesia. The increase in bonds payable (net of unamortized issuance cost, unamortized discount, unamortized consent fees and current maturities) from Rp8,472.2 billion as of December 31, 2009 to Rp12,114.1 billion (US$1,347.4 million) as of December 31, 2010 was primarily due to the issuance of our Guaranteed Notes due 2020.

Certain of our debt instruments (other than the Guaranteed Notes due 2020) obligate us to maintain a specified maximum ratio of debt (or loans) to equity, or the debt to equity ratio, which, prior to February 2009, was 1.75 to 1.0, or 175%. As a result of amendments we requested to such instruments and agreements, and agreed with our lenders and the trustee for bondholders in February and March 2009, the debt to equity ratio is now 2.50 to 1.0, or 250%. We also requested and were granted consents to amendments to certain defined terms in the debt to equity ratios so that the definition is uniform across all such instruments and agreements. The Guaranteed Notes due 2020 do not contain a debt to equity ratio requirement.

Our debt increased 30.5% from Rp16,692.2 billion as of December 31, 2007 to Rp21,756.7 billion as of December 31, 2008 primarily due to (i) an increase in the issuance of new debt in 2008 to support the increase in capital expenditures in 2008 compared to 2007 and (ii) the accounting impact of the depreciation of the Indonesian rupiah against the U.S. dollar. The U.S. dollar to Indonesian rupiah exchange rate fell from US$1.00 to Rp10,950 as of December 31, 2008 to US$1.00 to Rp9,400 as of December 31, 2009. Because a portion of our liabilities are U.S. dollar-denominated, we were exposed to fluctuations in the Indonesian rupiah. Depreciation in the Indonesian rupiah and an increase in foreign exchange volatility exposed us to short-term accounting adjustments which impacted our financial ratios.

To help address the impact of such currency fluctuations going forward, in 2009, we amended the debt to equity ratio covenants in all of our applicable debt instruments and agreements to increase the ratio from 1.75 to 2.50, in order to provide us with additional “cushion” in the event of adverse foreign exchange movements. We also amended the debt to equity ratio covenants in order to better reflect the effect of our hedging policies on this ratio, and amended the definitions of “Debt” and “Equity” in such debt instruments and agreements in order to provide additional headroom under these line items. The Guaranteed Notes due 2020 do not contain a debt to equity requirement.

As part of the amendments approved in 2009, we obtained consents to the following amendments to defined terms in certain of our applicable debt instruments and agreements: (i) excluding non-cash items, including foreign exchange gains or losses, from the definition of “EBITDA”; (ii) excluding interest-bearing procurement payables from the definition of “Debt” unless their maturities are in excess of six months from the invoice date; and (iii) including in “Equity” (a) minority interests, for entities the debt of which is 100% consolidated by us, and (b) subordinated shareholder loans.

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While we believe that the foregoing amendments will provide us with sufficient cushion in the event of volatility in the U.S. dollar—Indonesian rupiah exchange rates, we cannot assure you that further and more intense volatility than that experienced in the past 12 months will not occur, which could cause us to breach our financial covenants.

Set forth below are calculations of our historical financial ratios that are contained in our financial covenants under Indonesian GAAP as required by our debt agreements. The historical financial ratios as of December 31, 2008 are calculated based on the amended definitions of “Debt” (also defined as “Loan” in certain translations of our debt instruments and agreements), “Equity” and “EBITDA” in our various debt instruments and agreements as if such defined terms applied as of such dates.

			As of and for  the years ended December 31,
	Ratio Required		2008		2009		2010
			Rp		Rp		Rp		US$
			(Rp in billions, US$ in millions, except percentages)
Financial Position and Comprehensive Income Data:
Current maturities from:
Loans payable				572.5		1,440.2		3,184.2		354.1
Bonds payable				56.4		2,840.7		1,098.1		122.1
Loans payable—net of current maturities:
Related party				1,596.2		2,192.5		997.0		110.9
Third parties				9,216.0		10,528.8		6,669.8		741.8
Bonds payable—net of current maturities				10,315.6		8,472.2		12,114.1		1,347.4
Unamortized issuance cost, consent solicitation fees and discounts				312.3		338.5		336.1		37.4
Total Debt(1)				22,069.0		25,812.9		24,399.3		2,713.7
Total Assets				51,693.3		55,041.5		52,818.2		5,874.6
Total Liabilities				33,994.8		36,753.2		34,581.7		3,846.3
Total Equity(2)				17,698.5		18,288.3		18,236.5		2,028.3
Operating Income				4,733.3		3,213.0		3,473.9		386.4
Depreciation and Amortization				4,555.9		5,561.4		6,151.9		684.2
EBITDA(3)				9,289.2		8,774.4		9,625.8		1,070.6
Interest Expense(4)				1,776.5		1,808.6		2,080.3		231.3
Financial Ratios:
Debt to Equity ratio(5)		<2.50x		1.25x		1.41x		1.34x		—
Debt to EBITDA ratio(6)		<3.50x		2.38x		2.94x		2.53x		—
EBITDA to Interest Expense ratio(7)		>3.00x		5.23x		4.85x		4.63x		—

⁽¹⁾  We define total debt as total loans payable and bonds payable (current and non-current maturities), unamortized issuance cost (loans, bonds and notes), unamortized consent solicitation fees (loans and bonds) and unamortized discounts (loans and notes).

According to the amended definition, “Debt” means, with respect to any person on any date of determination (without duplication):

(a) the principal of and premium (if any) in respect of debt of such person for money borrowed and debt evidenced by notes, debentures, bonds or other similar instruments for the payment of which such person is responsible or liable which in any such case, bears interest or on which interest accrues; and

(b) all obligations of such person in relation to procurement payables constituting accounts payable to such person’s suppliers which bear interest or on which interest accrues and payment for such accounts payable is due more than six (6) months after the relevant invoice date, but, in relation to any member of the Company or its subsidiaries (together the “Group”), or the Group, deducting all indebtedness advanced by any (direct or indirect) shareholder of the Company to such member of the Group which is subordinated to any indebtedness falling under paragraph (a) or (b) above.

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⁽²⁾  We define equity as total stockholders’ equity and minority interest. According to the amended definition, “Equity” means total assets less total liabilities, where total liabilities exclude all indebtedness advanced by any (direct or indirect) shareholder of the Company to any member of the Group which is subordinated to any Debt.

⁽³⁾  We have defined EBITDA as earnings before interest, amortization of goodwill, non-operating income and expense, income tax expense, depreciation and minority interest in net income of subsidiaries as reported in the consolidated financial statements prepared under Indonesian GAAP. EBITDA is not a standard measure under either Indonesian GAAP or IFRS. As the telecommunications business is capital intensive, capital expenditure requirements and levels of debt and interest expenses may have a significant impact on the net income of companies with similar operating results. Therefore, we believe that EBITDA provides a useful reflection of our operating results and that net income is the most directly comparable financial measure to EBITDA as an indicator of our operating performance. You should not consider our definition of EBITDA in isolation or as an indicator of operating performance, liquidity or any other standard measure under either Indonesian GAAP or IFRS, or other companies’ definition of EBITDA. Our definition of EBITDA does not account for taxes and other non-operating cash expenses. Funds depicted by this measure may not be available for debt service due to covenant restrictions, capital expenditure requirements and other commitments. According to the amended definition, “EBITDA” means, for any period, an amount equal to the sum of operating income (calculated before finance costs, taxes, non-operating income or expenses and extraordinary and exceptional items) plus depreciation and amortization and, in the case of any testing or calculation of the ratio of aggregate Debt of the Group, to EBITDA of the Group after giving pro forma effect to any material acquisition or disposal of assets or businesses as if such acquisition or disposal had occurred on the first day of such period. The following table reconciles our net income under Indonesian GAAP to our definition of EBITDA for the periods indicated:

	For the years ended December 31,
	2008			2009			2010
	Rp			Rp			Rp			US$
	(Rp in billions, US$ in millions)
EBITDA under Indonesian GAAP		9,289.2			8,774.4			9,625.8			1,070.6
Adjustments:
Amortization of goodwill		(227.3	)		(235.4	)		(226.4	)		(25.2	)
Interest income		460.1			139.0			143.4			15.9
Financing cost (including interest expense)		(1,858.3	)		(1,873.0	)		(2,271.6	)		(252.7	)
Gain (loss) on change in fair value of derivatives—net		136.6			(517.7	)		(418.1	)		(46.5	)
Others—net		(33.6	)		(150.3	)		(111.8	)		(12.4	)
Gain (loss) on foreign exchange—net		(885.7	)		1,656.4			492.4			54.8
Income tax expense—net		(419.8	)		(677.3	)		(357.8	)		(39.8	)
Depreciation and amortization		(4,555.9	)		(5,561.4	)		(6,151.9	)		(684.2	)
Minority interest in net income of subsidiaries		(26.8	)		(56.5	)		(76.8	)		(8.5	)
Net income under Indonesian GAAP		1,878.5			1,498.2			647.2			72.0

The following table reconciles our EBITDA under Indonesian GAAP to IFRS for the periods indicated:

	For the years ended December 31,
	2008		2009		2010
	Rp		Rp		Rp		US$
	(Rp in billions, US$ in million)
EBITDA under Indonesian GAAP		9,289.2		8,774.4		9,625.8		1,070.6
Dealer commissions		—		—		46.9		5.2
Deferred connection fees		4.4		22.7		11.8		1.3
EBITDA under IFRS*		9,293.6		8,797.1		9,684.5		1,077.1

* See “Item 3: Key Information—Selected Financial and Other Data” for reconciliation of our EBITDA under IFRS to our profit attributable to owners of the Company under IFRS.

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⁽⁴⁾  “Interest Expense” means, for any period, interest expense on Debt.

⁽⁵⁾  Using IFRS results, Total Debt would be Rp22,069.0 billion, Rp25,807.1 billion and Rp24,399.3 billion as of December 31, 2008, 2009 and 2010, respectively, and Total Equity would be Rp17,779.7 billion, Rp18,574.9 billion and Rp18,702.0 billion as of December 31, 2008, 2009 and 2010, respectively, resulting in a Debt to Equity ratio of 124%, 139% and 130% as of December 31, 2008, 2009, and 2010, respectively.

⁽⁶⁾  Using IFRS results, Total Debt would be Rp22,069.0 billion, Rp25,807.1 billion and Rp24,399.3 billion as of December 31, 2008, 2009 and 2010, respectively, and EBITDA would be Rp9,293.6 billion, Rp8,797.1 billion and Rp9,684.5 billion for the year ended December 31, 2008, 2009 and 2010, respectively, resulting in a Debt to EBITDA ratio of 237%, 293 % and 252% as of December 31, 2008, 2009 and 2010, respectively.

⁽⁷⁾  Using IFRS results, EBITDA would be Rp9,293.6 billion, Rp8,797.1 billion and Rp9,684.5 billion for the year ended December 31, 2008, 2009 and 2010, respectively, and Interest Expense would be Rp1,776.5 billion, Rp1,808.6 billion and Rp2,080.3 billion for the year ended December 31, 2008, 2009 and 2010, respectively, resulting in an EBITDA to Interest Expense ratio of 523%, 486% and 466% as of December 31, 2008, 2009, and 2010 respectively.

From time to time, we may repurchase a portion of our debt securities through open-market transactions based on general market conditions.

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The following table summarizes our primary long-term indebtedness and bonds payable as of December 31, 2008, 2009 and 2010.

	As of December 31,
	2008		2009		2010
	Rp		Rp		Rp		US$
	(Rp in billions, US$ in millions)
Bonds Payable:
Guaranteed Notes Due 2020—net of unamortized discount and unamortized notes issuance cost		—		—		5,749.6		639.5
Fifth Indosat Bonds—net of unamortized bonds issuance cost		2,593.1		2,587.2		2,589.0		288.0
Guaranteed Notes Due 2010—net of unamortized notes issuance cost		2,563.5		2,202.7		—		—
Seventh Indosat Bonds—net of unamortized bonds issuance cost		—		1,293.8		1,294.6		144.0
Sixth Indosat Bonds—net of unamortized bonds issuance cost		1,075.7		1,073.0		1,074.6		119.5
Guaranteed Notes Due 2012—net of unamortized notes discount and unamortized notes issuance cost		1,185.3		1,018.8		—		—
Fourth Indosat Bonds—net of unamortized bonds issuance cost		810.5		811.0		813.6		90.5
Third Indosat Bonds—net of unamortized bonds issuance cost		637.3		637.9		—		—
Indosat Sukuk Ijarah III—net of unamortized bonds issuance cost		567.8		566.4		567.4		63.1
Indosat Sukuk Ijarah II—net of unamortized bonds issuance cost		399.0		398.1		398.5		44.3
Indosat Syari’ah Ijarah Bonds—net of unamortized bonds issuance cost		283.4		283.6		284.5		31.6
Second Indosat Bonds		200.0		199.4		199.3		22.2
Indosat Sukuk Ijarah IV—net of unamortized bonds issuance cost		—		199.0		199.1		22.1
Limited Bonds II issued by Lintasarta(1)		31.1		25.0		25.0		2.8
Limited Bonds I issued by Lintasarta(2)		25.3		17.0		17.0		1.9
Total bonds payable		10,372.0		11,312.9		13,212.2		1,469.5
Less current maturities		56.4		2,840.7		1,098.1		122.1
Bonds Payable: Non-current portion		10,315.6		8,472.2		12,114.1		1,347.4
Loans Payable:
Related Party—net of unamortized debt issuance cost		1,796.2		2,592.4		1,297,1		144.2
Third parties—net of unamortized bonds issuance cost		9,588.5		11,563.3		9,553.9		1,062.6
Total loans payable		11,384.7		14,155.7		10,851.0		1,206.8
Less current maturities		572.5		1,440.2		3,184.2		354.1
Loans payable: Non-current portion		10,812.2		12,715.5		7,666.8		852.7

⁽¹⁾  After elimination of Limited Bonds II amounting to Rp35.0 billion issued to the Company.

⁽²⁾  After elimination of Limited Bonds I amounting to Rp9.6 billion issued to the Company.

Indosat Bonds

The specific terms of each of our Second Indosat Bonds, Third Indosat Bonds, Fourth Indosat Bonds, Fifth Indosat Bonds, Sixth Indosat Bonds and Seventh Indosat Bonds (the “Indosat Bonds”), are discussed below. The Indosat Bonds are not secured by any specific assets or guaranteed by other parties and rank pari passu with our other unsecured debt. We agreed to certain covenants in connection with the issuance of the Indosat Bonds, including but not limited to agreeing to maintain:

• equity capital of at least Rp5,000.0 billion;

• a ratio of total debt to EBITDA of less than 3.5 to 1.00, as reported in each annual consolidated financial report;

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• a debt to equity ratio of 2.5 to 1, as reported in each quarterly consolidated financial report; and

• a ratio of EBITDA to interest expense, as reported in each annual consolidated financial report of at least 3.0 to 1.

On March 24, 2009, we held meetings with holders of our Indonesian rupiah-denominated bonds, including holders of our Indosat Bonds, and obtained consents to amend the definitions of “Debt” “EBITDA”, to include new definitions for “Equity” and “Group” and to change the ratio of Debt to Equity from 1.75 to 1 to 2.5 to 1 in the trustee agreement governing these bonds, pursuant to the terms of the deed of amendment for the Second, Third, Fourth, Fifth and Sixth Indosat Bonds.

Second Indosat Bonds. On November 6, 2002, we issued our Indosat Bonds II (the “Second Indosat Bonds”), with fixed and/or floating rates, the only outstanding series of which are the Series B bonds. The Series B bonds, with an original face value of Rp200.0 billion, bear interest at a fixed rate of 16.0% per annum and are payable quarterly for 30 years beginning February 6, 2003. We have the right to redeem the Series B bonds, in whole but not in part, on each of the 5th, 10th, 15th, 20th and 25th anniversaries of the issuance of the Series B bonds at a price equal to 101% of the Series B bonds’ nominal value. Holders of the Series B bonds have a put right that allows such holders to demand early repayment from us at a price equal to 100% of the Series B bonds’ nominal value at (i) any time, if the rating of such bonds is reduced to “_id AA-” or lower or (ii) upon the occurrence of any of the 15th, 20th and 25th anniversaries of the issuance of the Series B bonds. The Series B bonds mature on November 6, 2032.

Third Indosat Bonds. On October 22, 2003, we issued our Indosat Bonds III (the “Third Indosat Bonds”), the only outstanding series of which are the Series B bonds. The Series B bonds, which will mature on October 22, 2010 and have a total face value of Rp640.0 billion, bear interest at a fixed rate of 12.875% per annum. Interest on the Third Indosat Bonds is paid on a quarterly basis. We have the right to make early payment for all of the Series B bonds on the fourth and sixth anniversaries of the bonds at a price equal to 100% of the bonds’ nominal value. After the first anniversary of the issuance of the bonds, we have the right to buy back part or all of the bonds at the market price. On October 22, 2010, we paid in full the series of the Third Indosat Bonds amounting to Rp 640.0 billion.

Fourth Indosat Bonds. On June 21, 2005, we issued our Indosat Bonds IV (the “Fourth Indosat Bonds”). The Fourth Indosat Bonds have a total face value of Rp815.0 billion and will mature in June 21, 2011. The Fourth Indosat Bonds bear interest at a fixed rate of 12.0% per annum, payable on a quarterly basis. We have the right to prepay all of the bonds on the fourth anniversary of the bonds at a price equal to 100% of the bonds’ nominal value. After the first anniversary of the issuance of the bonds, we have the right to buy back part or all of the bonds at the market price.

Fifth Indosat Bonds. On May 29, 2007, we issued our Indosat Bonds V (the “Fifth Indosat Bonds”), in two series with a total face value of Rp2,600.0 billion. The Series A bonds, which have a face value of Rp1,230.0 billion, will mature on May 29, 2014 and the Series B bonds, which have a face value of Rp1,370.0 billion, will mature on May 29, 2017. The Series A bonds bear interest at a fixed rate of 10.20% per annum and the Series B bonds bear interest at a fixed rate of 10.65% per annum. After the first anniversary of the issuance of the bonds, we have the right to buy back part or all of the bonds at the market price, either temporarily or for the purpose of early settlement.

Sixth Indosat Bonds. On April 9, 2008, we issued our Indosat Bonds VI (the “Sixth Indosat Bonds”), in two series with a total face value of Rp1,080.0 billion. The Series A bonds, which have a face value of Rp760.0 billion, will mature on April 9, 2013 and the Series B bonds, which have a face value of Rp320.0 billion will mature on April 9, 2015. The Series A bonds bear interest at a fixed rate of 10.25% per annum and the Series B bonds bear fixed interest rate of 10.80% per annum. After the first anniversary of the issuance of the bonds, we have the right to buy back part or all of the bonds at market price, either temporarily or for the purpose of early settlement.

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Seventh Indosat Bonds. On December 8, 2009, we issued our Indosat Bonds VII (the “Seventh Indosat Bonds”), in two series with a total face value of Rp1,300.0 billion. The Series A bonds, which have a face value of Rp700.0 billion, will mature on December 8, 2014 and the Series B bonds, which have a face value of Rp600.0 billion, will mature on December 8, 2016. The Series A bonds bear interest at a fixed rate of 11.25% per annum and the Series B bonds bear interest at a fixed rate of 11.75% per annum. After the first anniversary of the issuance of the bonds, we have the right to buy back part or all of the bonds at market price, either temporarily or for the purpose of early settlement.

Guaranteed Notes due 2010 and Guaranteed Notes 2012

In October 2003, our finance subsidiary, Indosat Finance Company B.V. (“Indosat Finance”), issued the Guaranteed Notes due 2010. The Guaranteed Notes due 2010 have a total face value of US$300.0 million and mature on November 5, 2010. The Guaranteed Notes due 2010 bear interest at a fixed rate of 7.75% per annum payable in semi-annual installments due on May 5 and November 5 of each year, commencing May 5, 2004.

On June 22, 2005, our finance subsidiary, Indosat International Finance Company B.V. (“Indosat International”), issued the Guaranteed Notes due 2012. The Guaranteed Notes due 2012 have a total face value of US$250.0 million which was issued at 99.3% of their principal amount and mature on June 22, 2012. The Guaranteed Notes due 2012 bear interest at a fixed rate of 7.125% per annum payable in semi-annual installments due on June 22 and December 22 of each year, commencing December 22, 2005.

On May 12, 2010, we, together with Indosat Finance and Indosat International, announced the commencement by Indosat Finance and Indosat International of cash tender offers to purchase for cash any and all of Indosat Finance’s outstanding Guaranteed Notes due 2010 and Indosat International’s outstanding Guaranteed Notes due 2012. In addition to its offer to purchase the 2010 Notes, Indosat Finance also solicited, as one proposal, consents to certain proposed amendments to the amended and restated indenture, dated as of January 25, 2006 (the “2010 Indenture”), which would shorten the notice period for optional redemption of the Guaranteed Notes due 2010, and to the release of Indosat International as a guarantor under the 2010 Indenture.

On August 2, 2010, Indosat Finance paid a total of US$174.7 million for the Guaranteed Notes 2010 purchased pursuant to the cash tender offer, with a total principal amount of US$167.8 million (for notes which were tendered early) and US$0.1 million (for notes tendered after the early tender date) at price equal to 102.1875% (for notes which were tendered early) and 101.9375% (for notes tendered after the early tender date), respectively, of the principal amount purchased, plus the accrued and unpaid interest up to settlement date and other additional expenses. On August 10, 2010, Indosat Finance paid a total of US$69.5 million for the purchase of the remaining portion of the 2010 Notes which were redeemed, with a total principal amount of US$66.9 million at a price equal to 101.9375% of principal amount called, plus the accrued and unpaid interest up to settlement date and other additional expenses.

On August 2, 2010, Indosat International paid a total of US$58.6 million for the 2012 Notes purchased pursuant to the cash tender offer with a total principal amount of US$55.8 million (for notes which were tendered early) and US$0.2 million (for notes tendered after the early tender date) at a price equal to 103.8125% (for notes which were tendered early) and 103.5625% (for notes tendered after the early tender date), respectively, of the principal amount purchased, plus the accrued and unpaid interest up to settlement date and other additional expenses. On September 2, 2010, Indosat International paid a total of US$56.0 million for the purchase of the remaining portion of the 2010 Notes which were redeemed with a total principal amount of US$53.4 million at a price equal to 103.5625% of principal amount called, plus the accrued and unpaid interest up to settlement date and other additional expenses.

Guaranteed Notes Due 2020

On July 29, 2010 we, through Indosat Palapa Company B.V. (“Indosat Palapa”) issued our guaranteed Notes 2020 with a total face value of US$650.0 million. The notes were issued at 99.478% of their principal amount

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and mature on July 29, 2020. The notes bear interest at the fixed rate of 7.375% per annum payable in semi-annual installment due on January 29 and July 29 of each year, commencing January 29, 2011. The notes will be redeemable at the option of Indosat Palapa, in while or in part, at any time on or after July 29, 2015 at prices equal to 103.6875%, 102.4583%, 101.2292% and 100% of the principal amount during the 12-month period commencing July 29, 2015, 2016, 2017 and 2018 and thereafter, respectively, plus accrued and unpaid interest and additional amounts, if any. In addition, prior to July 29, 2013, Indosat Palapa may redeem up to a maximum of 35% of the original aggregate principal amount, with the proceeds of one or more public equity offerings of us at a price equal to 107.375% of the principal amount thereof, plus accrued and unpaid interest and additional amounts, if any. The notes are also redeemable at option of Indosat Palapa or us, in whole but not in part, at any time, at a price equal to 100% of principal amount thereof, plus any accrued and unpaid interest to (but not including) the redemption date any additional amounts, in the event of certain changes effecting withholding taxes in Indonesia and the Netherlands. Upon a change in control of Indosat (including sale, transfer, assignment, lease, conveyance or other disposition of all or substantially all of our assets), holders of the notes have the right to require Indosat Palapa to repurchase all or any part of such holders’ notes at a purchase price equal to 101% of principal amount thereof, plus accrued and unpaid interest and additional amounts, if any, to the purchase date.

The net proceeds, after deducting the underwriting fees and offering expenses, were received on July 29, 2010 and used (i) to fund the offers to purchase the outstanding Guaranteed Notes Due 2010 and Guaranteed Notes due 2012 and any consent solicitation relating to, or redemption of, such notes and (ii) to refinance part of our other existing indebtedness . The notes are unconditionally and irrevocably guaranteed by Indosat.

Based on the notes indenture, we are required to comply with certain conditions, such as maintaining certain financial ratios.

Export Credit Facility

On May 12, 2006, we entered into a term facility agreement with Finnish Export Credit Ltd as the original lender, and The Royal Bank of Scotland, N.V. (formerly known as ABN Amro Bank, N.V.) as the facility agent, for an export credit facility (the “Export Credit Facility”) in the aggregate principal amount of US$38.0 million. The Export Credit Facility tenor is 60 months from the date of the agreement and payments must be made in ten equal installments distributed evenly over the life of the facility. The Export Credit Facility has an interest rate of 4.15% per annum, which was calculated with reference to the commercial interest reference rate for U.S. dollars. Once amounts under the Export Credit Facility have been drawn down and repaid, such amounts do not become available for borrowing on a revolving basis. The Export Credit Facility contains certain financial covenants. During 2009 and 2010, we paid installments on this facility in the amount of US$7.6 million and US$7.6 million, respectively.

Syari’ah Ijarah Bonds (Sukuk Ijarah)

The specific terms of each of our First Syari’ah Ijarah Bonds, Second Syari’ah Ijarah Bonds, Third Syari’ah Ijarah Bonds and Fourth Syari’ah Ijarah Bonds (the “Syari’ah Ijarah Bonds”), are discussed below. The Syari’ah Ijarah Bonds are not secured by any specific assets or guaranteed by other parties and rank pari passu with our other unsecured debt.

In connection with the issuance of the Syari’ah Ijarah Bonds, we agreed to maintain certain covenants which are similar to the covenants contained in our Indosat Bonds. In addition, we are also prohibited from performing activities which contravene Syari’ah principles. Aside from these prohibitions, there are no material differences in the covenants between the Syari’ah Ijarah Bonds and the Indosat Bonds. On March 24, 2009, we held meetings with holders of our Indonesian rupiah-denominated bonds, including holders of our Syari’ah Ijarah Bonds, and obtained consents to amend to the definitions of “Debt” and “EBITDA”, to add new definitions for “Equity” and “Group” and to change the ratio of Debt to Equity from 1.75 to 1 to 2.5 to 1 in the trustee agreement governing these bonds.

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First Syari’ah Ijarah Bonds. On June 21, 2005, we issued our Sukuk Ijarah Indosat I (the “First Syari’ah Ijarah Bonds”), which contain terms customary for Islamic financing facilities, with Bank Rakyat Indonesia acting as trustee. The First Syari’ah Ijarah Bonds have a total face value of Rp285.0 billion and mature on June 21, 2011. Holders of the First Syari’ah Ijarah Bonds receive an Ijarah installment fee, payable on a quarterly basis. The total Ijarah installment fee expected to be paid to the holders of the First Syari’ah Ijarah Bonds is Rp34.2 billion per annum. We have the right to make early payment for all of the First Syari’ah Ijarah Bonds on the fourth anniversary of the First Syari’ah Ijarah Bonds at a price equal to 100% of the bonds’ nominal value. After the first anniversary of the issuance of the First Syari’ah Ijarah Bonds, we have the right to buy back part or all of the First Syari’ah Ijarah Bonds at the market price, either temporarily or for the purpose of early settlement.

Second Syari’ah Ijarah Bonds. On May 29, 2007, we issued our Sukuk Ijarah Indosat II (the “Second Syari’ah Ijarah Bonds”), which contain terms customary for Islamic financing facilities, with Bank Rakyat Indonesia acting as trustee. The Second Syari’ah Ijarah Bonds have a total face value of up to Rp400.0 billion and mature in May 29, 2014. Holders of the Second Syari’ah Ijarah Bonds receive an Ijarah installment fee, payable on a quarterly basis. The total Ijarah installment fee to be paid to the holders of the Second Syari’ah Ijarah Bonds is Rp40.8 billion per annum. After the first anniversary of issuance of the Second Syari’ah Ijarah Bonds, we have the right to buyback part or all of such bonds at the then-prevailing market price.

Third Syari’ah Ijarah Bonds. On April 9, 2008, we issued our Sukuk Ijarah Indosat III (the “Third Syari’ah Ijarah Bonds”), which contain terms customary for Islamic financing facilities, with Bank Rakyat Indonesia acting as trustee. The Third Syari’ah Ijarah Bonds have a total face value of up to Rp570.0 billion and mature in April 9, 2013. Holders of the Third Syari’ah Ijarah Bonds receive an Ijarah installment fee, payable on a quarterly basis. The total Ijarah installment fee expected to be paid to the holders of the Third Syari’ah Ijarah Bonds is Rp58.4 billion per annum. After the first anniversary of the issuance of the Third Syari’ah Ijarah Bonds, we have the right to buyback part or all of such bonds at the then-prevailing market price.

Fourth Syari’ah Ijarah Bonds. On December 8, 2009, we issued our Sukuk Ijarah Indosat IV (the “Fourth Syari’ah Ijarah Bonds”), which contain terms customary for Islamic financing facilities, with Bank Rakyat Indonesia acting as trustee. The Fourth Syari’ah Ijarah Bonds have a total face value of Rp200.0 billion. The Series A Syari’ah Ijarah Bonds, which have a face value of Rp28.0 billion, will mature on December 8, 2014 and the Series B Syari’ah Ijarah Bonds, which have a face value of Rp172.0 billion, will mature on December 8, 2016. Holders of the Fourth Syari’ah Ijarah Bonds receive an Ijarah installment fee, payable on a quarterly basis. The total Ijarah installment fee expected to be paid to the holders of the Fourth Syari’ah Ijarah Bonds is Rp3.2 billion per annum for the Series A Fourth Syari’ah Ijarah Bonds and Rp20.2 billion per annum for the Series B Fourth Syari’ah Ijarah Bonds. After the first anniversary of the issuance of the Fourth Syari’ah Ijarah Bonds, we have the right to buyback part or all of such bonds at the then-prevailing market price.

Goldman Sachs International Loan Facility

On May 30, 2007, we received from Goldman Sachs International (“GSI”) a loan amounting to Rp434.3 billion, which was received in U.S. dollars amounting to US$50.0 million, for the purchase of telecommunications equipment. The loan will mature on May 30, 2013. The loan bears interest at a fixed annual rate of 8.75%, which is payable quarterly every February 28, May 30, August 30 and November 30, commencing August 30, 2007, up to May 30, 2012.

The loan agreement provides an option for GSI to convert the loan into a U.S. dollar loan of US$50.0 million on May 30, 2012 (the “Conversion Option”). The fair value of the Conversion Option is presented as part of long-term debt. If GSI exercises such option, starting May 30, 2012, the loan will bear interest at the fixed annual rate of 6.45% on the principal amount of US$50.0 million. The principal amount in U.S. dollars and interest thereon will be due on May 30, 2013.

We are required to notify GSI regarding of certain events which can result in loan termination, such as (i) certain changes affecting withholding taxes in the United Kingdom or Indonesia, (ii) default under our

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Guaranteed Notes due 2012, (iii) default under any notes issued or guaranteed by us where the settlement is in U.S. dollars or default under any notes issued or guaranteed by us where the settlement is in Indonesian rupiah, (iv) redemption, purchase or cancellation of the Guaranteed Notes due 2012 and there being no other U.S. dollar indebtedness outstanding upon such redemption, purchaser or cancellation and (v) a change of control. On June 24, 2008, GSI waived its rights to terminate the loan as a result of the change of control triggered by Qtel’s acquisition of a 40.81% interest in our issued and outstanding share capital in June 2008.

Bank Central Asia Loan Facilities

On August 28, 2007, we obtained a five-year Rp1,600.0 billion unsecured credit facility from Bank Central Asia (“BCA”) for the repayment of our Syndicated Loan Facility II and the purchase of telecommunications equipment. The loan bears (i) fixed annual interest rates for the first two years (9.75% on the first year and 10.5% on the second year) and (ii) floating interest rates for the remaining years based on the prevailing annual rate of three-month JIBOR plus 1.5% per annum; all interest is payable quarterly. On September 20, 2007, we obtained an additional credit facility of Rp400.0 billion from BCA. As a result, the aggregate principal amount under our credit facility with BCA is Rp2,000.0 billion. The repayment of the loan drawdowns will be made annually, as follows: (a) 10.0% of the total loan drawdowns in the first and second years after the first drawdown; (b) 15.0% of the total loan drawdowns in the third and fourth years after the first drawdown; and (c) 50.0% of the total loan drawdowns in the fifth year after the first drawdown. On September 27, October 26 and December 27, 2007, we made the first, second and third loan drawdowns totaling Rp2,000.0 billion. Under the loan agreement, we have agreed to certain covenants, including maintenance covenants, which are similar to the covenants contained in the Indosat Bonds. On September 27, 2008 and September 25, 2009, we paid the first and second semi-annual installment amounting to Rp200.0 billion each. On September 27, 2010, we paid the third annual installment amount to Rp 300.0 billion.

On September 17, 2008, we entered into a three-year unsecured credit facility agreement with BCA amounting to Rp500.0 billion for the purchase of, and/or the refinancing of debt incurred to purchase, telecommunications equipment. The loan bears interest at 3-month JIBOR plus 2.25% per annum. The repayment of the loan drawdowns will be made annually, as follows: (a) 20% of the total loan drawdowns in the first year, (b) 30% of the total loan drawdowns in the second year, and (c) 50% of the total loan drawdowns in the third year. On March 16, 2009, we made the loan drawdown amounting to Rp500.0 billion. Voluntary early repayment (in whole or for any part of the loan) is permitted with a penalty of 1% of the prepaid amount. Based on the loan agreement, we are required to comply with certain covenants, such as maintaining certain financial ratios. On March 16, 2010, we paid the first annual installment amounting to Rp100.0 billion. Voluntary early repayment (whole or any part of the loan) is permitted with a penalty of 1% of the prepaid amount. On October 19, 2010, we made an early repayment of this credit facility amounting to Rp400.0 billion.

On February 12, 2009, we amended our five-year and three-year BCA credit facility agreements, based on the consent letter received on February 6, 2009, to change the definitions of “EBITDA”, to insert definitions for “Debt”, “Equity”, and “Group” and to change the ratio of Debt to Equity from 1.75 to 1 to 2.5 to 1 in the loan agreement governing this loan facility.

On June 8, 2009, we entered into a five-year unsecured credit facility agreement with BCA amounting to Rp1,000.0 billion for the procurement of, and/or the refinancing of debt incurred to purchase, telecommunications equipment. The loan bears interest at 3-month JIBOR plus 4.00% per annum. The repayment of the loan drawdowns will be made annually, as follows: (a) 10% of the total loan drawdowns in the first and second years, (b) 15% of the total loan drawdowns in the third and fourth years, and (c) 50% of the total loan drawdowns in the fifth year. On June 25, 2009, we made the loan drawdown amounting to Rp1,000.0 billion. On June 25, 2010, we paid the first annual installment amounting to Rp100.0 billion. Voluntary early repayment (in whole or for any part of the loan) is permitted, subject to a 1% penalty of the prepaid amount, except for prepayment to refinance this credit facility. Based on the loan agreement, we are required to comply with certain covenants, such as maintaining certain financial ratios. On April 28, 2010, we received a letter from BCA

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regarding the change of interest rate from 3-month JIBOR plus 4.00% per annum to 3-month JIBOR plus 2.25% per annum, effective on June 25, 2010. On October 19, 2010, we made an early repayment of this credit facility amounting to Rp900.0 billion.

On February 10, 2011, the Company entered into a Time Loan Revolving facility agreement with BCA covering a maximum amount of Rp1,000.0 billion to fund the Company’s capital expenditure and/or for general corporate purposes. This facility will be available from February 10, 2011 to February 10, 2014 and drawdowns bear interest at 1-month JIBOR plus 1.4% per annum. We have not drawn on this facility as of April 20, 2011.

Bank Mandiri Loan Facilities

On September 18, 2007, we obtained a five-year unsecured credit facility from Bank Mandiri amounting to Rp2,000.0 billion for the purchase of telecommunications equipment. The loan bears interest at (i) fixed annual rates for the first two years (9.75% on the first year and 10.5% on the second year), and (ii) floating rates for the remaining years based on the prevailing annual rate of three-month JIBOR plus 1.5% per annum; all interest is payable quarterly. The repayment of the loan drawdowns will be made annually, as follows: (a) 10.0% of the total loan drawdowns in the first and second years after the first drawdown; (b) 15.0% of the total loan drawdowns in the third and fourth years after the first drawdown; and (c) 50.0% of the total loan drawdowns in the fifth year after the signing date of the agreement. On September 27 and December 27, 2007, we made the first and second loan drawdowns totaling Rp2,000.0 billion. Based on the loan agreement, we have agreed to certain covenants, including maintaining certain financial ratios. On September 27, 2008 and September 25, 2009, we paid the first and second semi-annual installment amounting to Rp200.0 billion each. On March 23, 2009, we entered into an agreement with Bank Mandiri to amend the definitions of “EBITDA”, to insert new definitions for “Debt”, “Equity”, and “Group” and to change the ratio of Debt to Equity in the loan agreement governing this loan facility. On September 27, 2010, we paid the third annual installment amounting to Rp300.0 billion under this facility.

On July 28, 2009, we entered into a five-year unsecured credit facility agreement with Mandiri amounting to Rp1,000.0 billion for general corporate purposes. The loan bears interest at an average rate of 3-month JIBOR plus 4.00% per annum. On July 31, 2009, the Company drew down Rp1,000.0 billion from this credit facility. The repayment of the loan drawdowns will be made annually, as follows: (a) 10% of the total loan drawdowns in the first and second years from the first drawdown, (b) 15% of the total loan drawdowns in the third and fourth years from the first drawdown, and (c) 50% of the total loan drawdowns in the fifth year after the signing of the agreement. Voluntary early repayment (in whole or for any part of the loan) is permitted, subject to a 2% penalty of the prepaid amount. Based on the loan agreement, we are required to comply with certain covenants, such as maintaining certain financial ratios. On May 20, 2010, we received a letter from Mandiri regarding the change of interest rate from average 3-month JIBOR plus 4.00% per annum to average 3-month JIBOR plus 2.25% per annum, effective on May 31, 2010. On July 30, 2010, we paid the first annual installment amounting to Rp100.0 billion. On November 15, 2010, we made an early repayment of this credit facility amounting to Rp900.0 billion.

Bank DBS Indonesia Loan Facility

On November 1, 2007, we obtained a five-year credit facility from Bank DBS Indonesia for Rp500.0 billion for the purchase of telecommunications equipment. The loan bears interest at (i) fixed annual rates for the first two years (9.7% on the first year and 10.4% on the second year), and (ii) floating rates for the remaining years based on the prevailing annual interest rate of three-month certificates of Bank Indonesia plus 1.5% per annum; all interest is payable quarterly. The repayment of the loan drawdowns will be made annually, as follows: (a) 10.0% of the total loan drawdowns in the first and second years after the first drawdown; (b) 15.0% of the total loan drawdowns in the third and fourth years after the first drawdown; and (c) 50.0% of the total loan drawdowns in the fifth year after the first drawdown. Based on the loan agreement, we have agreed to certain covenants, including maintaining certain financial ratios. On January 31, 2008, we drew down Rp500.0 billion from the facility. On March 25, 2009, we entered into an agreement with Bank DBS Indonesia to insert new

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definitions for “Debt”, “EBITDA”, “Equity”, and “Group” and to change the ratio of Debt to Equity in the loan agreement governing this loan facility. On January 30, 2009, we paid the first annual installment amounting to Rp50.0 billion, On March 25, 2009, the Company amended the credit facility agreement based on the consent letter received on February 27, 2009. The amendment included changes in the definition of certain terms and the financial ratios required to be maintained. On February 1, 2010, we paid the second annual installment amounting to Rp50.0 billion. On October 30, 2010, we made an early repayment of this credit facility amounting to Rp400.0 billion.

HSBC

On November 27, 2007, we signed two unsecured facility agreements with HSBC France and one unsecured facility agreement with The Hongkong and Shanghai Banking Corporation Limited, Jakarta Branch (“HSBC Jakarta”) to finance our new telecommunications satellite. These combined export credit and commercial financing facilities consist of the following:

• a 12-year term facility agreement amounting to US$157.2 million to finance the payment of 85.0% of the French Content under the Palapa-D satellite contract, plus 100% of the COFACE Premium, as such terms are defined in the facility agreement. The loan bears fixed annual interest at a fixed rate of 5.69% per annum, which is payable semi-annually. On March 29, 2010, September 29, 2010, and March 29, 2011, we paid the first, second and third semi-annual installments amounting to US$7.9 million each;

• a 12-year term facility agreement amounting to US$44.2 million to finance the payment of 85.0% of the amounts payable under the Launch Service Contract (as defined in the term facility agreement) with respect to our Palapa D Satellite. The loan bears floating interest rate based on U.S. dollars at LIBOR plus 0.35% per annum, which is payable semi-annually. On March 29, 2010, September 29, 2010 and March 29, 2011, we paid the first, second and third semi-annual installments amounting to US$2.2 million each; and

• a nine-year Commercial Facility Agreement amounting to US$27.0 million to finance the construction and launch of the satellite and the payment of the premium associated with the medium-long term buyer credit insurance policy issued in connection with the Sinosure Facility. The loan bears floating interest rate based on U.S. dollars at LIBOR plus 1.45% per annum, which is payable semi-annually. On November 27, 2009 we paid the first semi-annual installment amounting to US$1.4 million. On May 27 and November 29, 2010, we paid the second and third semi-annual installments, respectively, amounting to US$1.4 million each.

The facilities contain certain financial covenants. On March 18, 2009, we entered into agreements with HSBC France and HSBC Jakarta to amend the definitions of “Debt”, “EBITDA”, and “Equity” and the ratio of Debt to Equity in our COFACE Term Facility Agreement, Sinosure Term Facility Agreement and Commercial Facility Agreement, as applicable. According to the agreement, we are required to maintain: (i) equity capital in excess of Rp5,000.0 billion, (ii) a debt to equity ratio not to exceed 2.5:1, (iii) an EBITDA to interest ratio not to be less than 2.5:1, and (iv) a Debt to EBITDA ratio not to exceed 3.5:1.

In addition, on December 4, 2009, we entered into a Corporate Facility Agreement with HSBC to finance short term working capital needs. The facility consists of a combined limit in the amount of US$30.0 million and a revolving loan in the amount of US$30.0 million. We have not drawn on this facility as of April 20, 2011.

ING/DBS Syndicated Loan Facility

On June 12, 2008, we entered into a US$450.0 million syndicated loan facility with 13 banks and financial institutions, with ING Bank N.V., Singapore Branch and DBS Bank Ltd. serving as arrangers. The amount of interest to be paid on the outstanding amount of the loan will be the aggregate of (i) the applicable margin of 1.85% per annum for non-Indonesian lenders or 1.90% per annum for lenders resident in Indonesia and

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(ii) LIBOR. The repayment of the loan drawdowns will be made in semi-annual installments commencing June 12, 2011. On February 24, 2009, we entered into an agreement with the majority lenders to amend the definitions of “Debt”, “EBITDA”, and “Equity” and the ratio of Debt to Equity in our ING/DBS Syndicated Loan Facility. Pursuant to the terms of the ING/DBS Syndicated Loan Facility agreement, as amended by the deed of amendment, we have agreed to certain covenants, including but not limited to the following maintenance covenants:

• a ratio of total debt to EBITDA of less than 3.5 to 1;

• a total debt to equity ratio of 2.5 to 1; and

• a ratio of EBITDA to interest expense, as reported as at the end of each financial year and as at the end of each of first three quarters of our financial year, of at least 2.5 to 1.

The repayment of the loan drawdowns will be made semi-annually, as follows: (a)25% of the total loan drawdowns in the third year after the signing date of the agreement (first repayment date), (b) 24% of the total loan drawdowns on the sixth month after the first repayment date, (c) 8% each of the total loan drawdowns on the 12^th and 18^th months after the first repayment date, and (d) 35% of the total loan drawdowns on the 24^th month after the first repayment date.

On September 26 and October 30, 2008, the Company received the first and second drawdowns from this credit facility totaling US$450.0 million. As of December 31, 2010, the outstanding balance owed on this facility totaled US$450.0 million.

AB Svensk Exportkredit (“SEK”) Loan Facility Guaranteed by Export Kredit Namnden (“EKN”)

On August 18, 2009, we obtained credit facilities from SEK, guaranteed by EKN, an export credit agency of the Kingdom of Sweden, for the maximum total amount of US$315,000,000 to be used for the purchase of Ericsson telecommunication equipment, with The Hongkong and Shanghai Banking Corporation Limited (“HSBC”), Hong Kong and The Royal Bank of Scotland N.V. (formerly known as ABN AMRO Bank N.V.), Hong Kong Branch as the original lenders and arrangers, while HSBC Bank PLC, London, United Kingdom acted as the facility agent and EKN agent. On September 2, 2009, the original lenders transferred such rights and obligations to SEK, pursuant to the terms of the agreement.

The credit facilities consist of facilities A, B and C with maximum amounts of US$100.0 million, US$155.0 million and US$60.0 million, respectively. Facility A bears interest at LIBOR plus 0.25% per annum, together with SEK funding costs and an EKN premium margin. Facility B and Facility C bear interest at 0.05% per annum plus 2.60% per annum plus the EKN Premium Margin. The repayment of each of facilities A, B and C shall be made in fourteen installments starting six months after May 31, 2009, February 28, 2010 and November 30, 2010, respectively. Based on the agreement, we are required to comply with certain covenants, such as maintaining certain financial ratios, which are substantially the same as the covenants under the ING/DBS Syndicated Loan Facility. In addition, we are required to maintain a minimum consolidated equity of at least Rp5,000.0 billion. As of March 31, 2011, we have already drawn US$100.0 million, US$155.0 million and US$60.0 from facilities A, B and C, respectively.

On November 30, 2009, May 27, 2010 and November 30, 2010, the Company paid the first, second and third semi-annual installments, respectively, for Facility A amounting to US$7.1 million each. On August 28, 2010 and February 28, 2011, the Company paid the first and second semi-annual installment for Facility B amounting to US$11.1 million each.

Lintasarta

Lintasarta’s long-term debt comprises of certain investment credit facilities from CIMB Niaga Tbk, formerly PT Bank Niaga Tbk and unsecured limited bonds. As of December 31, 2010, the investment credit facility from CIMB Niaga totaled Rp94.9 billion, and the outstanding bonds totaled Rp42.0 billion.

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Investment Credit Facility V. On July 10, 2007, Lintasarta obtained a credit facility from CIMB Niaga amounting to Rp50.0 billion for the purchase of telecommunications equipment, computers and other supporting facilities. The loan bears interest at the prevailing annual rate for one-month certificates of Bank Indonesia plus 2.25% per annum. We commenced quarterly repayment of the principal on October 10, 2008 in the amount of Rp5.0 billion. Such repayments are payable each quarter until January 10, 2011.

Investment Credit Facility VI. On February 24, 2009, Lintasarta obtained a credit facility from CIMB Niaga amounting to Rp75.0 billion for the purchase of telecommunications equipment, computers and other supporting facilities. The loan bears interest at the annual rate of 14.5%, subject to change by CIMB Niaga based on the market condition. We commenced quarterly repayments of the principal on May 24, 2010 in the amount of Rp7.5 billion. Such repayments are payable each quarter until August 24, 2012. As of December 31, 2010, Lintasarta has fully drawn this credit facility.

Limited Bonds I. On June 2, 2003, Lintasarta agreed with its stockholders to issue limited bonds to stockholders totaling Rp40.0 billion, including our portion of Rp9.6 billion. Such limited bonds are unsecured and had an initial maturity date of June 2, 2006. The bonds bear interest at the fixed rate of 16.0% per annum for the first year and floating interest rates for the following years based on the average three-month time deposit rates of PT Bank Mandiri (Persero) Tbk, PT Bank Negara Indonesia (Persero) Tbk, PT Bank Rakyat Indonesia (Persero) Tbk and PT Bank Tabungan Negara (Persero) plus a 3.0% margin, with a maximum rate of 19.0% per annum and a minimum rate of 11.0% per annum. Interest is payable quarterly from September 2, 2003. On June 14, 2006, Lintasarta agreed with the holders to extend the maturity date from June 2, 2006 to June 2, 2009 and the nominal value of the limited bonds became Rp34.9 billion, including our portion of Rp9.6 billion. On June 2, 2009, Lintasarta repaid a portion of the limited bonds amounting to Rp8,303 million. On August 25, 2009, the agreement governing the Limited Bonds I was amended to amend the face value of the bonds to become Rp26.6 billion, extend the maturity date to June 2, 2012 and to amend the floating interest rate to be based on JIBOR + 4%, not to exceed 19%, with a minimum floating interest rate of 12.75%.

Limited Bonds II. On June 14, 2006, Lintasarta entered into an agreement with its stockholders for the former to issue Limited Bonds II amounting to Rp66.2 billion. The limited bonds represent unsecured bonds which were originally set to mature on June 14, 2009 and bore interest at the floating rates determined using the average 3 month rupiah time deposit rates with PT Bank Mandiri (Persero) Tbk, PT Bank Negara Indonesia (Persero) Tbk, PT Bank Rakyat Indonesia (Persero) Tbk and PT Bank Tabungan Negara (Persero) plus a fixed premium of 3.0%. The maximum limit of the floating rates was 19.0% per annum and the minimum limit was 11.0% per annum. The interest is payable on a quarterly basis starting September 14, 2006. The proceeds of the limited bonds were used for capital expenditure to expand Lintasarta’s telecommunications peripherals.

On July 17, 2006, Lintasarta obtained approval from CIMB Niaga on the issuance of the limited bonds.

On June 14, 2009, Lintasarta paid a portion of the Limited Bonds amounting to Rp6.2 billion. Based on the Minutes of the Joint Meeting of Lintasarta’s Boards of Commissioners and Directors held on May 20, 2009, the representatives of Lintasarta’s stockholders agreed to extend the maturity date of the remaining Limited Bonds II of Rp60.0 billion to June 14, 2012 and to increase the minimum limit of the floating interest rates 12.75%. On August 25, 2009, the Limited Bonds II agreement, after being amended to accommodate the changes in maturity date and minimum limit of floating interest rates, was finalized.

Dividend Practice

Our shareholders determine dividend payouts in the Annual General Meeting of Shareholders pursuant to recommendations from our Board of Directors. At our 2008, 2009 and 2010 Annual General Meetings of Shareholders, our shareholders declared final cash dividends amounting to 50.0% of our net income for each of the years ended December 31, 2007, 2008 and 2009, respectively. We intend to continue paying dividends in such amount to allow us to meet sound financial governance and investor expectations.

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Capital Resources

We believe that our cash flow from operations and drawings from our existing credit facilities will provide sufficient financing for our anticipated capital expenditures, anticipated debt repayment and interest obligations and other operating needs under our current business plan. However, we face liquidity risks if certain events occur, including but not limited to, slower than expected growth in the Indonesian economy, downgrading of our debt ratings or deterioration of our financial performance or financial ratios.

In the event we cannot finance our planned capital expenditures with internally generated cash flows, we may seek other external sources of funding. Our ability to raise additional debt financing will be subject to certain covenants in our existing indebtedness. We cannot assure you that we will be able to obtain suitable financing arrangements (including vendor or other third-party financing) for our planned capital expenditures. In the event that we are unable to find such additional external funding sources, we may elect to reduce our planned capital expenditures. Such reduction in capital expenditures may have an adverse effect on our operating performance and our financial condition.

Capital Expenditures

Historical Capital Expenditures

From January 1, 2008 through December 31, 2010, we had capital expenditures totaling Rp29,441.4 billion (US$2,972.9 million). With these funds, we primarily purchased equipment and services from foreign suppliers in connection with the development of our cellular network. We had capital expenditures of Rp5,515.0 billion (US$613.4 million) during the year ended December 31, 2010, with such investment predominantly focused on expansion of our cellular coverage through the addition of 1,755 base transceiver stations.

Capital Expenditures for 2011

Under our capital expenditure program for our various businesses, our planned capital expenditures are less than the amounts spent in each of 2008 and 2009 but slightly more than 2010, as instead focus on optimizing and enhancing the capacity and quality of our existing cellular, fixed and MIDI network and telecommunications infrastructure. For the years ended December 31, 2008, 2009 and 2010, our actual consolidated capital expenditures totaled Rp12,341.9 billion, Rp11,584.5 billion and Rp5,515.0 billion (US$613.4 million), respectively. During 2011, we intend to allocate US$794.5 million for new capital expenditures, which, taken together with estimated actual capital expenditures expended for 2011 for capital expenditure commitments in prior periods, will result in approximately US$1,053.8 million total actual capital expenditures for 2011. We intend to allocate our capital expenditures for 2011 as follows:

• Cellular network investment: We plan to apply a large majority of our capital expenditures to finance the continued enhancement and expansion of the capacity and coverage of our cellular network.

• Other investment: We plan to invest the remainder of our capital expenditures budget in non-cellular network areas, including the fixed-access network, as we increase network access for our corporate customers and continue to provide them with voice, long-distance and MIDI services and make improvements to our backbone.

The foregoing amounts represent our budgeted investment plans; actual expenditures on a cash basis will vary depending on several factors, including the method of financing and timing of completion of delivery of equipment and services purchased. Historically, expenditure on a cash basis trails budgeted expense by approximately at least 20.0% of our budget.

The foregoing capital expenditure plan is based on our understanding of current market and regulatory conditions and we may amend our plans in response to changes in such conditions. In particular, depending on the regulatory framework for other wireless services, we may decide to increase our investment in fixed wireless

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access networks and services, either through increased capital expenditures, reallocation of our existing planned expenditures, through revenue-sharing schemes or a combination of the foregoing. Revenue-sharing schemes would include partnerships with private investors under which such investors would finance construction of a project in exchange for revenues from the project, similar to a build-operate-transfer structure.

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with IFRS. References to IFRS include the application of International Financial Reporting Standards, International Accounting Standards (“IAS”), Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”) and its predecessor the former Standards Interpretation Committee (“SIC”).

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and assumptions on historical experience and other factors that are believed to be reasonable under the circumstances. We continually evaluate such estimates and assumptions. Actual results could differ from those estimates under different assumptions or actual conditions. We believe that, of our significant accounting policies, the following may involve a higher degree of judgment or complexity.

Goodwill and Other Intangible Assets

The consolidated financial statements and results of operations reflect acquired businesses after the completion of the respective acquisition. We account for the acquired businesses using the purchase method of accounting which requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair market values of the acquiree’s identifiable assets and liabilities at the acquisition date. Any excess in the purchase price over the estimated fair market values of the net assets acquired is recorded as goodwill in the consolidated statements of financial position. These business acquisitions have resulted in goodwill and intangible assets, which are subject to periodic impairment test and amortization, respectively. Thus, the numerous judgments made in estimating the fair market value to be assigned to the acquiree’s assets and liabilities can materially affect our financial performance.

Estimated Useful Lives and Impairment of Property and Equipment

We estimate the useful lives of our property and equipment and intangible assets based on expected asset utilization as anchored on business plans and strategies that also consider expected future technological developments and market behavior. The estimation of the useful lives of property and equipment is based on our collective assessment of industry practice, internal technical evaluation and experience with similar assets. The estimated useful lives are reviewed at least each financial year-end and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limitations on the use of the assets. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in the factors mentioned above.

The amounts and timing of recorded expenses for any period will be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of the our property and equipment will increase the recorded operating expenses and decrease non-current assets.

Estimation of Pension Cost and Other Employee Benefits

The determination of our obligation and cost for pension and other employee benefits is dependent on the selection of certain assumptions used by actuary in calculating such amounts. Those assumptions include, among

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other things, discount rates, expected returns on plan assets and rates of compensation increases. Actual results that differ from our assumptions are recognized as income or expense when the net cumulative unrecognized actuarial gains and losses at the end of the previous reporting period exceed 10% of the higher of the defined benefit obligation and the fair value of plan assets at that date.

While we believe that their assumptions are reasonable and appropriate, significant differences in our actual experience or significant changes in their assumptions may materially affect the costs and obligations of pension and other employee benefits.

Realizability of Deferred Income Tax Assets

We review the carrying amounts of deferred income tax assets at the end of each reporting period and reduce these to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred income tax assets to be utilized. Our assessment on the recognition of deferred income tax assets on deductible temporary differences is based on the level and timing of forecasted taxable income of the subsequent reporting periods. This forecast is based on our past results and future expectations on revenues and expenses as well as future tax planning strategies.

Estimating Allowance for Impairment Losses on Receivables

We estimate the allowance for impairment losses related to their trade receivables that are specifically identified as doubtful for collection. The level of allowance is evaluated by management on the basis of factors that affect the collectability of the accounts. In these cases, we use judgment based on the best available facts and circumstances, including but not limited to, the length of our relationship with the customers and the customers’ credit status based on third-party credit reports and known market factors, to record specific reserves for customers against amounts due in order to reduce our receivables to amounts that they expect to collect. These specific reserves are re-evaluated and adjusted as additional information received affect the amounts estimated.

In addition to specific allowance against individually significant receivables, we also assess a collective impairment allowance against credit exposure of their customers which are grouped based on common credit characteristic, which, although not specifically identified as requiring a specific allowance, have a greater risk of default than when the receivables were originally granted to customers. This collective allowance is based on historical loss experience using various factors such as historical performance of the customers within the collective group, deterioration in the markets in which the customers operate, and identified structural weaknesses or deterioration in the cash flows of customers.

Determination of Fair Values of Financial Assets and Financial Liabilities

We carry certain financial assets and liabilities at fair values, which require extensive use of accounting estimates and judgments for the fair values of financial assets and liabilities. While significant components of fair value measurement are determined using verifiable objective evidence (i.e., foreign exchange rates, interest rates and volatility rates), the amount of changes in fair value will differ if we utilize a different valuation methodology. Any change in fair value of these financial assets will directly affect our consolidated statements of financial position, statements of comprehensive income and or consolidated statements of changes in equity.

New Accounting Standards and Interpretations to Existing Standards Effective Subsequent to December 31, 2011

Please see Note 2—Summary of Significant Accounting Policies to the accompanying consolidated financial statements in Item 19 for a discussion of new accounting standards that will become effective subsequent to December 31, 2010 and their anticipated impact on our consolidated financial statements for the current and future periods.

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C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

For the three years ended December 31, 2008, 2009 and 2010, we did not conduct significant research and development activities.

D. TREND INFORMATION

Please refer to the introductory discussion to “—Operating and Financial Review and Prospects—Operating Results” above for a detailed discussion of significant trends impacting our operating results and financial condition. See also “Item 3: Key Information—Risk Factors” for more information regarding why reported financial information may not necessarily be indicative of future operating results.

In January 2011, the Company introduced an organizational restructuring which forms part of our transformation program that began in 2009 to increase the Company’s productivity and improve our longer-term operating results. The Company is offering special compensation packages to employees who meet certain criteria as determined by the Company and who opt to end their employment relationship with the Company as part of such organizational restructuring under the VSS Program. IAS 37 on the Provisions, Contingent Liabilities and Contingent Assets requires us to disclose the total number of employees who participate in the program and the compensation paid; however, we have not disclosed this information in this annual report as it could lead to a precipitate presumption on the outcome of the program since the Company is still currently offering the program to its employees.

E. OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2010, we had no off-balance sheet arrangements that were reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

As of December 31, 2010, we had contractual obligations in the amount of US$1,635.3 million in US$ denominated contracts and Rp12,133.9 billion in Indonesian rupiah-denominated contracts. The US$ denominated contractual obligations require payments totaling US$373.6 million in 2011, US$365.5 million from 2012 to 2013 and US$121.2 million from 2014 to 2015 and US$775.0 million from 2016 and thereafter. The Indonesian rupiah-denominated contractual obligations require payments totaling Rp2,304.1 billion in 2011, Rp3,918.0 billion from 2012 to 2013, Rp2,678.0 billion from 2014 to 2015 and Rp3,233.8 billion from 2016 and thereafter.

	Payments due by the period December 31
	Total				2011				2012-2013				2014-2015				2016 and thereafter
	Rp		US$		Rp		US$		Rp		US$		Rp		US$		Rp		US$
	(Rp in billions and US$ in millions)
Contractual obligations:
Loans payable(1)		3,091.7		886.6		634.9		283.6		2,456.8		356.8		—		121.2		—		125.0
Bonds payable(1)		7,492.0		650.0		1,100.0		—		1,372.0		—		2,678.0		—		2,342.0		650.0
Purchase obligations		569.2		90.0		569.2		90.0		—		—		—		—		—		—
Other non-current liabilities and other non-current financial liabilities		981.0		8.7		—		—		89.2		8.7		—		—		891.8		—
Total contractual cash obligations		12,133.9		1,635.3		2,304.1		373.6		3,918.0		365.5		2,678.0		121.2		3,233.8		775.0

⁽¹⁾  These amounts exclude the related contractual interest obligations and have been calculated under the assumption that the options related to any loans and bonds payable are not exercised.

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Item 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors and Senior Management

In accordance with Indonesian law, we have a Board of Commissioners and a Board of Directors. The two boards are separate, and no individual may be a member of both boards.

Board of Commissioners

Our Board of Commissioners consists of ten members, one of whom is designated the President Commissioner. The members of the Board of Commissioners are elected and dismissed by shareholders’ resolutions at a general meeting of shareholders, provided that one member of the Board of Commissioners shall be nominated by the holder of the one Series A share. In accordance with regulations of the Indonesian Capital Market and Financial Institution Supervisory Agency, or BAPEPAM-LK, and Indonesia Stock Exchange rules, four commissioners have been designated as Independent Commissioners: George Thia Peng Heok, Alexander Rusli, Soeprapto S.IP and Chris Kanter. As of April 20, 2011, our Board of Commissioners consisted of ten members as listed below:

Name	Age		Commissioner Since		Position
Abdulla Mohammed S.A. Al Thani		51		2008	President Commissioner
Dr. Nasser Mohammed Marafih		50		2008	Commissioner
Parikesit Suprapto		59		2011	Commissioner
Richard Farnsworth Seney		56		2009	Commissioner
Rachmat Gobel		48		2008	Commissioner
Rionald Silaban		45		2008	Commissioner
George Thia Peng Heok		62		2008	Independent Commissioner
Alexander Rusli		40		2010	Independent Commissioner
Soeprapto S.IP		64		2005	Independent Commissioner
Chris Kanter		58		2010	Independent Commissioner

Set forth below is a short biography of each of our Commissioners.

Sheikh Abdulla Mohammed S.A Al Thani has been the President Commissioner since August 2008. Sheikh Abdulla is currently the Chairman of the Board of Directors of Qtel. In his capacity as Chairman, he has helped enhance Qtel’s corporate governance system to ensure Qtel is directed and controlled in line with international practices, thereby reinforcing both corporate accountability and the sustained creation of shareholder whealth. Sheikh Abdulla has also overseen the restructuring and regional expansion of Qtel. After Qtel’s acquisition of Kuwait-based Wataniya, in what was considered at that time to be the largest telecommunications deal in the Arab world, Sheikh Abdulla was appointed Chairman of Wataniya. Sheikh Abdulla previously held several high profile positions in Qatar including Chief of the Royal Court (Amiri Diwan) from 2000 to 2005. He also served as a member of the Qatari Planning Council from 2001 to 2004. A certified pilot instructor by way of the British Royal Air Force, Sheikh Abdulla has an extensive background in both the military and in aviation. He completed his studies at the Senior Army War College, Carlisle Barracks in the United States of America.

Dr. Nasser Mohammed Marafih has been a Commissioner at Indosat since August 2008 and is the Chairman of the Remuneration and Budget Committee. He began his career at Qatar Telecom (Qtel) in 1992 as an expert advisor from the University of Qatar and was subsequently appointed in 1994 as the Director of Strategic Planning and Development and finally to his current role as Chief Executive Officer in 2002. In this capacity, Dr Marafih has participated in a number of high-level government committees and is a member of the Board of Directors of a number of Qtel subsidiaries. He also sits on the Board of Directors of the GSM Association. Dr. Marafih helped guide Qtel through its transformation into a global company and he played a key role in Qtel’s major acquisition. Dr. Marafih served as a lecturer and assistant professor in the Electrical Engineering

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Department of the University of Qatar. Dr. Marafih holds a Bachelor of Science in Electrical engineering, a Master of Science and a Ph.D. in Communication Engineering, all from George Washington University in the United States. has been a member of the Institute of Electrical and Electronics Engineers Inc. for over ten years.

Parikesit Suprapto has been a Commissioner since February 2011. He currently serves as Deputy Minister of State-Owned Enterprises for Services but has previously held various positions, including as Deputy Minister of State-Owned Enterprises for Banking and Financial Industry from 2008 to 2010, Expert Advisor on Small Enterprises for the Minister for State-Owned Enterprises from 2006 to 2008, Assistant to the Deputy Minister of State Owned Enterprises in Restructuring and Privatization of Financial and Construction Industry from 2002 to 2005 and Director of the Restructuring and Privatization of the Directorate General State-Owned Enterprise of the Ministry of Finance from 2001 to 2002. Mr. Suprapto received a Bachelor’s degree in Corporate Economy from Sekolah Tinggi Manajemen Industri, Jakarta in 1980, a Master’s Degree in Economic Development from Indiana University in the United States in 1990 and a Doctoral Degree in Economic Development from the University of Notre Dame in the United States in 1995.

Richard Farnsworth Seney has been a Commissioner since June 2009. Mr. Seney has served as Chief Operating Officer of Qtel International (QI) from 2007 to the present, President and Chief Executive Officer of MCT Corp. (including predecessors) from 1992 to 2007, Executive Vice President and General Manager of MCT Investors, L.P. from 1987 to 2002, and Executive Vice President and Chief Financial Officer of Charisma Communications Corporation from 1985 to 1992. Mr. Seney received a Bachelor degree in Commerce from the University of Virginia McIntire School of Commerce.

Rachmat Gobel has been a Commissioner since August 2008. He currently is the Chairman of the Gobel Group of companies that has operations in manufacturing, trading, services, integrated logistics management as well as food and hospitality, including industrial catering. Gobel Group is the Indonesian joint venture partner of Matsushita Electric Industrial Co., Ltd., a global leader in electronics and electrical goods under the brand name of Panasonic. He also serves as Vice Chairman of the Board of Advisors of the Indonesian Chamber of Commerce and Industry (KADIN), the Vice Chairman of the Employers Association of Indonesia (APINDO), the Chairman of the Federation of Electronic & Telematics Association (F.GABEL) and was appointed as a member of the National Innovation Committee by President Susilo Bambang Yuhoyono. Mr. Gobel graduated with a Bachelor of Science degree in International Trade from Chuo University, Tokyo in 1987 and was awarded an Honorary Doctorate Degree from Takushoku University, Tokyo, Japan in 2002. In 2009, he received the prestigious “Distinguished Engineering Award in Manufacturing Technology” from the Agency for the Assessment and Application of Technology (BPPT). Mr. Gobel is also actively involved in numerous social activities, including the Indonesian Olympic Committee and the Indonesian Red Cross.

Rionald Silaban, has been a Commissioner since June 2008 and was appointed as a member of the Risk Management Committee in the same year. He currently serves as a Director of the Center for Policy Analysis and Harmonization of the Ministry of Finance in Indonesia. In the past he held several positions including as the Director of Fiscal Risk Management of the Ministry of Finance from 2006 to 2008, Senior Advisor at the World Bank in Washington D.C., U.S. from 2004 to 2006, Division Head in Secretariat General of the Ministry of Finance from 2002 to 2004, Head of the Assets Monitoring Division of the Indonesian Banking Restructuring Agency from 2000 to 2002, Division Head for Financial Service of the Legal Bureau of the Ministry of Finance from 1998 to 2000, Deputy Director for Privatization of Directorate General State-Owned Enterprise of the Ministry of Finance from 1997 to 1998, Head of Section of the Legal Bureau of the Ministry of Finance from 1994 to 1997 and Head of Secretariat for Privatization Committee of Ministry of Finance from 1994 to 1997. Mr. Silaban received a law degree from the University of Indonesia in 1989 and a LL.M. degree from the Georgetown University Law Center, Washington D.C. in the United States, in 1993.

George Thia Peng Heok has been an Independent Commissioner and Chairman of the Audit Committee since June 2008. Mr. Thia currently serves as Director/Consultant in Asiainc Private Limited. In the past he has held several positions including as Consultant/Director, Strategic Advisory Private Limited from 2003 to 2006, Executive Chairman, MediaStream Limited from 1999 to 2003, Director/Consultant, Phoenix Capital Private Limited from 1995 to 1998, Executive Chairman, Asia Matrix Limited from 1993 to 1995, Managing Director,

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Lum Chang Securities Private Limited from 1991 to 1993, Managing Director, Sun Hung Kai Securities Private Limited from 1989 to 1991, Managing Director, Merrill Lynch International Bank Limited from 1987 to 1989, Executive Director/Partner, Kay Hian Private Limited from 1985 to 1987 and Managing Director, Morgan Grenfell (Asia) Limited from 1975 to 1985. Mr. Thia is a Certified Public Accountant and a Fellow Member of both the Chartered Association of Certified Accountants (United Kingdom) and the Singapore Institute of Directors.

Alexander Rusli has been an Independent Commissioner since January 2010 and currently serves as member of our Remuneration Committee. Mr. Rusli currently is a commissioner of PT Krakatau Steel (Persero), the 100% state-owned company that produces carbon-steel products. He was formerly Expert Advisor to the Minister for State-Owned Enterprises, with oversight of 140 State-owned enterprises and more than 500 subsidiaries. Prior to such time, he was an Expert Advisor to the Minister of Communications and Information Technology, where he was involved in the formulation of policy and regulation and in overseeing the national state ICT infrastructure projects, a position he held under two cabinet ministers. Mr. Rusli has also acted as a Principal Consultant for Pricewaterhouse Coopers. He holds a Doctor of Philosophy, Information Systems, Curtin University of Technology, Australia.

Soeprapto S.IP has been an Independent Commissioner and a member of the Audit Committee since June 2005. In the past, Mr. Soeprapto has held several positions, including as Assistant Personnel to the Army Chief of Staff of the Republic of Indonesia from 2000 to 2001, and currently serves as Commissioner of PT Sawit Kaltim Lestari from 2010. Mr. Soeprapto earned a degree in Political Science from the Terbuka University, Jakarta and participant of the Regular Course (KRA 29) in 1996 at the Indonesian National Resiliance Institute (LEMHANAS).

Chris Kanter has been Independent Commissioner since January 2010. Mr. Kanter currently serves as Chairman and Founder of Sigma Sembada Group, a major turnkey contractor with transportation and logistics arms. He had been Vice President for Investment, Telecommunication, Information-Technology, Transportation and Tourism of the Indonesian Chamber of Commerce and Industry (KADIN Indonesia) from 1994 to 2010. He has recently been reappointed for a further five year term to 2015 as Vice Chairman Board Advisor. He has also recently appointed as Vice Chairman of APINDO (Indonesia Employer Association) and Chairman of the Board of Founders of the Swiss German University. Mr. Kanter has also held a number of roles in the Indonesian Government and has been closely involved with The Policy Package for Improving Investment Climate in Indonesia and also served as member of the Consultative Congress (MPR) of the Republic of Indonesia from 1998 to 2002 and recently appointed by the President of the Republic of Indonesia as member of the National Economic Council (KEN) reporting directly to the President. Mr. Kanter is a graduate of the Faculty of Engineering, Trisakti University, Indonesia.

The term of each of the Commissioners concludes at the close of the fourth annual general meeting of shareholders after the date of appointment, expiring in 2012 for the current Commissioners. A Commissioner may be removed prior to the expiration of his term of office at a general meeting of the shareholders. The Commissioners’ business address is Jalan Medan Merdeka Barat 21, Jakarta, 10110, Republic of Indonesia.

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Board of Directors

Our Board of Directors is responsible for our overall management and day-to-day operations under the supervision of the Board of Commissioners. The Board of Directors consists of at least three members, including one President Director. The members of the Board of Directors are elected and dismissed by shareholders’ resolutions at a general meeting of shareholders, provided that one member of the Board of Directors shall be nominated by the holder of the one Series A share. As of April 20, 2011, our Board of Directors consisted of five members as listed below:

Name	Age	Director Since		Position
Harry Sasongko Tirtotjondro	51		2009	President Director & Chief Executive Officer
Fadzri Sentosa	47		2007	Director & Chief Wholesale and Infrastructure Officer
Peter Wladyslaw Kuncewicz	57		2009	Director & Chief Financial Officer
Stephen Edward Hobbs*	60		2009	Director & Chief Technology Officer
Hans Christiaan Moritz*	57		2011	Director & Chief Technology Officer
Laszlo Imre Barta	42		2010	Director & Chief Commercial Officer

* Pursuant to the Extraordinary General Meeting of Shareholders convened on February 8, 2011, the Shareholders have discharged Stephen Edward Hobbs as of April 30, 2011 and appointed Hans Christiaan Moritz as his replacement beginning on May 1, 2011.

Set forth below is a short biography of each of our Directors:

Harry Sasongko Tirtotjondro has been the President Director and Chief Executive Officer since August 2009. Mr. Sasongko has previously held the positions of President Director and Chief Executive Officer of GE Consumer Finance from 2005 to 2009, where he was recognized as one of Indonesia’s top 10 best CEOs in 2008 by the SWA Magazine & Synovate awards. From 1998 to 2005, he was a member of the Lippo Group, where he served as Managing Director of the Matahari Retail & Lippo Bank. He was formerly the Managing Director of the Consumer Banking of PT Bank Tiara Asia from 1995 to 1998, and was Director of PT Citicorp Finance and Citibank, N.A. in 1998. Mr. Sasongko earned a Bachelor in Civil Engineering degree from Bandung Institute of Technology Indonesia, a Master of Science degree from the Ohio State University in the United States, and is a Chartered Financial Consultant (ChFC), obtained from the Singapore College of Insurance / American College in the United States.

Fadzri Sentosa has been a Director since June 2007 and a Director and Chief Wholesale and Infrastructure Officer since June 2009. Currently, Mr. Sentosa is a member of the Board of Commissioners of PT Aplikanusa Lintasarta. Mr. Sentosa has previously held various positions with us, including as member of the Board of Commissioners of PT Indosat Mega Media from 2005 to 2009, Group Head of National Card and Channel Management from 2006 to 2007, Senior Vice President of Commerce, Jabotabek Region from 2005 to 2006 and Senior Vice President of Cellular Sales from 2003 to 2004, member of the Board of Directors of Satelindo in 2003 and a member of the Board of Director of IM3 from 2002 to 2003. Mr. Sentosa received a Master degree in International Business Management from the University of Technology, Sydney in 2001 and a Bachelor degree in Telecommunications Engineering from the Bandung Institute of Technology in 1986.

Peter Wladyslaw Kuncewicz has been a Director and Chief Financial Officer since September 2009. Mr. Kuncewicz has 30 years experience in finance across multiple international markets, 10 of them in the telecommunications sector. From 2006 to 2009, Mr. Kuncewicz was the Chief Financial Officer of Telenor Pakistan, the No. 2 player in an active market of five players in Pakistan. From 1998 to 2006, he was the Chief Financial Officer of Star Foods SA, an FMCG Company, and from 1996 to 1997, he was the Finance Director at United Biscuits Poland. He also worked in finance procurement and IT roles at Batelco, Bahrain from 1996 to 1998. He received a Bachelor degree in Biology from the University of Sussex, England, and a Master of Science degree in Business Planning and Finance from University of Salford, England. He is also a member of the Chartered Institute of Management Accountants of the United Kingdom.

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Hans Christiaan Moritz was appointed as Director and Chief Technology Officer in February 2011 and assumed his duties as of May 1, 2011. Mr. Moritz has 22 years experience in the Mobile Telecom industry and has previously held various positions, including Head Corporate Project Officer at Vodafone India from 2009 to 2011, Group Operations Director Africa/Chief Technology Officer at Zain from 2006 to 2009, Chief Technology Officer at Zain Uganda from 2004 to 2006, Chief Operating Officer at KPN Internet, from 2003 to 2004, General Manager of the Business Unit Broadband Network at KPN Telecom from 2001 to 2003, Chief Operating Officer at BASE and from 1998 to 2000, Operations Director Asia (based in Indonesia) at KPN Asia from 1994 to 1997. Mr. Moritz received a Master degree in Mathematics in 1986 and various Bachelor degrees, i.e Electronics in 1978, Feedback and Control Systems in 1984 and Water Management in 1984.

Laszlo Imre Barta has been a Director and Chief Commercial Officer since May 1, 2010. He was formerly the Deputy Chief Marketing Officer of Grameenphone in Bangladesh. He spent more than four years at Grameenphone in Bangladesh, during which time he developed and led the rollout of the business market strategy, established and led the SME department, and served as Sales Director. Prior to being seconded to Grameenphone by the Telenor Group, Mr. Barta was at Pannon GSM in Hungary, where he headed the Corporate Clients department. Before Pannon, Mr. Barta was with Ericsson Hungary where he led the sale of handsets and accessories to local Hungarian mobile operators. He joined Ericsson from Philip Morris, where he started his career in Sales. Mr. Barta received a Postgraduate Award in Management Studies from the Szamalk Open Business School, Budapest in 2004 and has degrees in Accounting and Landscape Architecture & Engineering from Hungarian universities.

Stephen Edward Hobbs has been a Director and Chief Technology Officer since June 2009. Mr. Hobbs has assumed the role of CTO for Asiacell in Iraq for the first nine months of its operation, following its CPA license award between 2003 and 2004. Mr. Hobbs has been previously engaged in independent consulting practice, supporting key clients such as Virgin Management, United Kingdom, C&W, United Kingdom, Wataniya Telecom (Kuwait) and Sapient (United Kingdom/United States), supporting the areas of technology, development and strategy. Mr. Hobbs has experience as Chief Engineer of C&W Mobile, CTO Asia, CTO Global Mobile, Vice President Mobile and ASP services (C&W Global) until 2001, as a pioneer in small antenna satellite systems and an expert in security programs in wireless environments. He has over three decades of international management experience in the telecommunications and technology industries across Europe and Asia. Mr. Hobbs was a Petty Officer Radio Electrician (Royal Navy) at Cable & Wireless Telecommunication.

The Directors’ terms of appointment end at the close of the fifth annual general meeting after the date of their appointment. At a general meeting of shareholders, the shareholders may remove any Director before the expiration of his term of office. A Director’s term of office will automatically terminate upon bankruptcy, if he is put under custody by court order, upon his resignation or death or in the event that the Director is prohibited by law from holding such position. In the event any member of the Board of Directors resigns, a written notice of such resignation must be submitted by the resigning Director to us, for the attention of the Board of Commissioners and Board of Directors. We are required to convene a general meeting of shareholders to resolve such resignation within 60 days after we receive the resignation letter. Within 45 days after a vacancy is created on the Board of Directors that causes the number of members of the Board of Directors to be less than the minimum required number of Directors as stipulated in our Articles of Association, a general meeting of shareholders must be convened to fill the vacancy. A member of the Board of Directors may not assume a concurrent position, which may cause a conflict of interest, directly or indirectly, with our interests. A member of the Board of Directors may assume a concurrent position that does not cause a conflict of interest, subject to the approval of the Board of Commissioners and notification to a general meeting of shareholders. Should the President Director want to assume a concurrent position of this type, the approval of a general meeting of shareholders is also required. The business address of the Board of Directors is Jalan Medan Merdeka Barat 21, Jakarta, 10110, Republic of Indonesia.

None of our Commissioners or Directors has a service contract with us, nor are any such contracts proposed or under consideration. There is no family relationship between or among any of the Commissioners or Directors listed above.

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Compensation of Commissioners and Directors

For their services, our Commissioners and Directors are entitled to remuneration, which is determined by the annual general meeting of shareholders. The net amount of remuneration paid to our Commissioners and Directors for the year ended December 31, 2010, including basic compensation and short and long-term incentives, was Rp39.5 billion (US$4.4 million).

The remuneration of our Directors is determined by the Board of Commissioners, pursuant to a delegation of authority by the shareholders in a general meeting. In making its determination, the Board of Commissioners must consider any recommendations provided by our Remuneration Committee and must report the determination to our shareholders at the annual general meeting of shareholders. Since 2006, semi-annual incentives were eliminated and we introduced a Restricted Share Unit plan as a long-term incentive for Commissioners and an Economic Profit Sharing Plan for Directors which is divided into cash bonus payment as short-term incentive and Restricted Share Unit Plan as long-term incentive.

Pension, Retirement and Other Benefits

We and Lintasarta have defined benefit and contribution pension plans that cover substantially all of our qualified permanent employees. PT Asuransi Jiwasraya, a state-owned life insurance company, manages the plans and the amount of pension benefits to be paid upon retirement is based on the employees’ most recent basic salary and their number of years of service.

For the year ended December 31, 2010, we, Lintasarta and IM2 incurred a total expense of Rp193.1 billion for pension, post-retirement benefits (i.e., benefits under Labor Law 13) and post-retirement healthcare for our employees. As of December 31, 2010, we and Lintasarta also recognized total prepaid pension costs of Rp113.3 billion, while we, Lintasarta and IM2 recognized total accrued liability of post-retirement benefits and post-retirement healthcare of Rp844.8 billion. For more information about our pension plan, including the total amount set aside to provide pension, retirement or similar benefits, see Note 17 and Note 24 to our audited consolidated financial statements.

Board Practices

Our Board of Commissioners acts as our overall supervisory and monitoring body with principal functions including reviewing our development plan, monitoring the performance of our work plan and reviewing and approving our budget. It is required to perform its duties, authorities and responsibilities in accordance with the provisions of our Articles of Association and resolutions of the shareholders’ general meeting. Decisions above certain monetary thresholds must be referred by our Board of Directors to our Board of Commissioners or shareholders for their review and approval. In carrying out its supervisory activities, the Board of Commissioners represents the interests of our Company.

Meetings of our Board of Commissioners must be held at least once every three months, or when deemed necessary by the President Commissioner or upon request of at least one-third of the total members of the Board of Commissioners. A meeting of the Commissioners may make lawful and binding decisions only if a majority of the Commissioners are present or represented. At any meeting each Commissioner is entitled to one vote and, in addition, may cast one vote for each Commissioner he is representing. A Commissioner may be represented at a meeting of the Commissioners only by another Commissioner appointed pursuant to a power of attorney. Except as otherwise provided in our Articles of Association, resolutions of the Board of Commissioners must be adopted by deliberation and consensus. If no agreement is reached through this method, resolutions must be passed by a simple majority of the Commissioners. In the event of a tie vote, the proposal is deemed rejected unless the matter concerns an individual, in which case the President Commissioner may cast the deciding vote. The Board of Commissioners may adopt lawful and binding decisions without convening a meeting of the Commissioners if all of the members of the Board of Commissioners approve and sign the decision.

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Our Board of Directors is generally responsible for managing our business in accordance with applicable laws, our Articles of Association and the policies and directives issued by the general meeting of shareholders and the Board of Commissioners. The President Director alone has the authority to represent and act on behalf of the Board of Directors and us. However, if the President Director is absent or unavailable, then one of the Directors designated by the President Commissioner shall have such authority to represent the Directors.

The Board of Directors must obtain written approval from the Board of Commissioners to: (i) purchase and/or sell shares of other companies in the capital markets; (ii) enter into, commit to enter into, amend and/or terminate a license agreement or cooperation, joint venture, management and similar agreement with other enterprises or parties; (iii) purchase, dispose, sell, pledge or encumber all or part of the business, title to or the fixed or other assets of the Company (including any interest therein); (iv) cease to collect and write-off accounts receivable from the books as well as supplies of goods; (v) bind the Company as guarantor (borg or avalist) or in any other way in which the Company becomes liable to another party’s debt obligation, whether by an agreement to take over another party’s debt, an agreement to grant financing to another party to purchase goods or services, or by the purchase of shares, capital participation, advance payment or loan to pay in full another party’s debt; (vi) accept or grant or commit to grant medium/long-term loans and accept or grant non-operational short-term loans (except for granting loans to a subsidiary and/or employees of the Company which have been approved pursuant to applicable internal procedures); (vii) conduct the expenditure of capital goods in 1 (one) transaction or an inter-related transaction with a nominal value higher than the permitted value determined by the Board of Commissioners from time to time; (viii) issue bonds or other securities than can be converted into shares; (ix) propose the issuance of new shares of the Company; (x) provide an indemnity to or otherwise guarantee the obligation of any person; (xi) determine and/or change the Company’s management structure; (xii) make a new business plan or change the business plan; (xiii) change the accounting, financial, or tax practice and system of the Company or its subsidiary; (xiv) change the Company’s name; (xv) approve the financial statement provided to the shareholders in the GMS; (xvi) determine the annual budget of the Company and the annual budget of a subsidiary; (xvii) carry out capital participation or dispose capital participation of the Company in other enterprises that are not carried out through the capital markets; (xviii) establish a subsidiary or approve the relinquishment or the reduction of its interest, whether directly or indirectly, in each of the subsidiaries, or take over the shares in any company or relinquish any shares in any company; (xix) take any corporate action or investments related to any subsidiary of the Company; (xx) use any right of the shareholders in a Company’s subsidiary, or any other company in which the Company has a share participation; (xxi) approve the payment of any bonus or similar payment to the Company’s employees or change the remuneration structureof employees; (xxii) undertake a merger, consolidation, acquisition or separation, each as defined under the law No. 40 of 2007 on Limited Liability (as amended from time to time); (xxiii) establish or change the Company’s asset liability management policy; (xxiv) establish or change standing delegations among members of the Board of Directors relating to signing authority limits for expenditures, assets purchases and sales, loans and other commitments; and (xxv) engage in any other material transaction or matters as may be determined by the Board of Commissioners from time to time having a value of the lower of 5.0% (five percent) or more of total revenue or 2.5% (two and half percent) or more of our non-current assets on a consolidated basis as set out in our audited consolidated financial statements. The Board of Commissioners shall be obligated to determine thresholds in respect of the actions referenced to in (i) to (viii), (x) and (xxi) above and shall be entitled to change such thresholds from time to time. In the event actions are taken within the applicable threshold, then the approval from the Board of Commissioners’ is not required. In granting a written approval for the actions above, the Board of Commissioners must observe prevailing capital markets regulations.

Meetings of the Board of Directors are convened when called by the President Director, or when requested by more than one-third of the total members of the Board of Directors. A meeting of the Directors is valid and entitled to adopt binding decisions only if a majority of the Directors are present or represented. A Director may be represented at a meeting of the Board of Directors only by another Director appointed pursuant to a power of attorney issued for that particular purpose. At any meeting of the Board of Directors each Director is entitled to one vote and, in addition, one vote for each other Director he is representing. Resolutions of the Board of Directors must be adopted by deliberation and consensus. If no agreement is reached by deliberation and

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consensus, the resolutions must be passed by a majority vote, and, in the event of a tie vote, the President Director has a deciding vote. The Board of Directors may adopt valid and binding resolutions without convening a meeting of the Directors if all of the Directors approve and sign the resolutions in writing.

Individual Directors are charged with specific responsibilities. In the event that a vacancy occurs in the Board of Directors, so long as the position remains vacant, one of the other Directors will be nominated by the Board of Commissioners to perform the work of the absentee Director. If, for any reason, we cease to have any Directors, the Board of Commissioners is to assume the ongoing obligations of the Board of Directors and must convene a general meeting of shareholders to elect a new Board of Directors within 45 days.

Our Articles of Association provide that if there is a conflict between our interests and those of a Director, then with the approval of the Board of Commissioners, we shall be represented by another member of the Board of Directors. If all Directors have a conflict, we shall be represented by the Board of Commissioners or one Commissioner designated by the President Commissioner. If the entire Board of Commissioners has a conflict, the shareholders may appoint one or more persons to represent us at the general meeting of shareholders.

Audit Committee

In accordance with BAPEPAM-LK, Indonesia Stock Exchange and New York Stock Exchange regulations, we have formed an independent Audit Committee, consisting of five persons and chaired by one of the Independent Commissioners. The duties of the Audit Committee include providing professional, independent advice to the Board of Commissioners and identifying matters that require the attention of the Board of Commissioners, including a review of the following: our financial information (including financial reports and projections); the independence and objectivity of our public accountant; the adequacy of our public accountant’s audits that all material risks have been considered; the adequacy of our internal controls; our compliance as a listed company with the prevailing capital markets regulations and other regulations related to our business and our internal auditors’ duties. The Audit Committee also examines and reports complaints to the Board of Commissioners, maintains the confidentiality of documents, data and information relating to us, conducts an audit of any alleged mistake in the resolutions of a Board of Directors’ meeting or deviations in the implementation of the resolutions of such meeting and maintains the Audit Committee charter.

On June 5, 2008, George Thia Peng Heok was appointed as Chairman of the Audit Committee. On January 29, 2010, Chris Kanter was elected to our Audit Committee. As of December 31, 2010, the members of our Audit Committee were George Thia Peng Heok (Chairman), Soeprapto S.IP, Chris Kanter, Kanaka Puradiredja and Unggul Saut Marupa Tampubolon. BAPEPAM-LK regulations require at least two outside persons to serve as members of the Audit Committee: Kanaka Puradiredja and Unggul Saut Marupa Tampubolon serve as the independent outside members of our Audit Committee. We have posted the written charter of the Audit Committee on our website at www.indosat.com, where it is publicly available.

Such charter is reviewed annually and a revised charter has been approved by our Board of Commissioners and is attached hereto as Exhibit 15.14.

Remuneration Committee

Our Remuneration Committee is responsible for providing recommendations to our Board of Commissioners regarding remuneration, bonuses and other benefits for members of our Board of Commissioners and Board of Directors as well as employees, including the structure, terms and issuance of stock options. On January 29, 2010, Alexander Rusli was elected to our Remuneration Committee. As of December 31, 2010, the members of our Remuneration Committee were Dr. Nasser Mohammed Marafih (Chairman), Alexander Rusli and Soeprapto S.IP. We have posted the written charter of the Remuneration Committee on our website at www.indosat.com, where it is publicly available.

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Risk Management Committee

On October 26, 2005, we established a Risk Management Committee, which reports to our Board of Commissioners. Our Risk Management Committee evaluates potential risks regarding our business and provides recommendations to our Board of Commissioners regarding our policies regarding risk assessment and risk management, including making recommendations for improvements to our existing procedures as necessary. As of December 31, 2010, the members of our Risk Management Committee were Rachmat Gobel (Chairman), George Thia Peng Heok, Jarman and Rionald Silaban. Following the Company’s Extraordinary General Meeting of Shareholders, as of February 8, 2011, the members of our Risk Management Committee are Rachmat Gobel (Chairman), George Thia Peng Heok, and Rionald Silaban. We have posted the written charter of the Risk Management Committee on our website at www.indosat.com, where it is publicly available.

Budget Committee

Our Budget Committee assists the Board of Commissioners in performing the Board’s supervisory and advisory duties by reviewing and giving its recommendations to the Board in relation to the Company’s strategic plans, the annual work plan and budget (which includes the capital expenditure plan). As of December 31, 2010, the members of our Budget Committee were Dr. Nasser Marafih (Chairman), George Thia Peng Heok, Richard Farnsworth Seney and Jarman. Following the Company’s Extraordinary General Meeting of Shareholders, as of February 8, 2011, the members of our Budget Committee are Dr. Nasser Marafih (Chairman), George Thia Peng Heok and Richard Farnsworth Seney.

Employees

As of December 31, 2010, on a consolidated basis, we employed 6,694 employees, 4,838 of whom were permanent employees and 1,856 of whom were non-permanent employees. As of December 31, 2010, excluding seconded employees, our subsidiaries employed approximately 1.005 permanent employees. As of December 31, 2010, our permanent employees included 787 managerial-level employees (employees with the rank of manager or higher) and 3,046 non-managerial employees, compared to 735 managerial-level employees and 3,152 non-managerial employees as of December 31, 2009, and 772 managerial and 3,221 non-managerial employees as of December 31, 2008. Our turnover rate for employees during 2010 was 2.37% per annum. As a result, as of December 31, 2010, our employees had worked for us for an average of 13.07 years.

In January 2011, the Company introduced an organizational restructuring which forms part of our transformation program that began in 2009 to increase the Company’s productivity and improve our longer-term operating results. The Company is offering special compensation packages to employees who meet certain criteria as determined by the Company and who opt to end their employment relationship with the Company as part of such organizational restructuring under the VSS Program. IAS 37 on the Provisions, Contingent Liabilities and Contingent Assets requires us to disclose the total number of employees who participate in the program and the compensation paid; however, we have not disclosed this information in this annual report as it could lead to a precipitate presumption on the outcome of the program since the Company is still currently offering the program to its employees.

We provide a number of benefits to our employees, including a pension plan, medical benefits, life insurance, income tax allowances and access to a cooperative established by the employees.

On August 25, 1999, our employees established a union called the Serikat Pekerja Indosat, or SPI (Union). On September 15, 2006, our management and SPI signed a collective labor agreement covering general terms of employment, including working hours, payroll, employee development and competency, occupational safety and health, employees’ welfare, social allowances, employees’ code of conduct and mechanisms for handling disputes. This collective labor agreement was renewed on December 31, 2010. We believe we maintain a good relationship with the union. As stipulated by Article 7.3 of the collective labor agreement, we conduct meetings with the union at least once every 3 months.

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Some of our employees are entitled to a pension under a defined benefit plan, pursuant to which they receive both a lump sum payment and a monthly benefit through an insurance program managed by PT Asuransi Jiwasraya (Persero), a state-owned insurance company. As of December 31, 2010, we insured 2,343 permanent employees through a fully-funded pension program. In this program, an employee who resigns at 56 years of age will receive a pension benefit. In addition, we established a defined contribution pension plan for our employees in May 2001. Following the merger of Satelindo and IM3 into Indosat, we combined the defined contribution plans established for our legacy subsidiaries’ employees with our plan. Under the defined contribution plan, employees contribute 10.0% to 13.33% of their base salaries to the plan. We then make a contribution to the plan equivalent to 50% of each employee’s contribution.

Our employees have also established a cooperative, Koperasi Pegawai Indosat (“Kopindosat”). Kopindosat provides various benefits, such as consumer loans, principally to our employees, and car and equipment rental, principally to us. The management of Kopindosat is elected by our employees every three years at a members’ meeting. Kopindosat has a minority stake in some of our affiliates. We have also temporarily seconded several of our employees to support Kopindosat and its subsidiaries in conducting their business, as well as to provide job training for its employees.

Share Ownership

One of our directors beneficially owns less than one percent of our common stock and his beneficial share ownership in us has been recorded in our special register.

Item 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

As of December 31, 2010, our issued and fully paid capital was divided into 1 Series A share and 5,433,933,499 Series B shares, each with a par value of Rp100. The Government, through the Ministry of State-Owned Enterprises, owns the 1 Series A share and has special voting rights, and owns 776,624,999 Series B shares representing 14.29% of our shares. Qtel Asia owns 3,031,528,000 Series B shares and 500,528,600 Series B shares underlying our American Depositary Shares, or a total of 3,532,056,600 Series B shares representing 65% of our shares. SKAGEN AS owns 7,000,000 Series B shares and 270,824,400 Series B shares underlying our American Depositary Shares, or a total of 277,824,400 Series B shares representing 5.11% of our shares. As of December 31, 2010, 82,868,450 of our ordinary shares underlying our American Depositary Shares, representing in aggregate approximately 1.52% of our outstanding shares, and 764,559,050 Series B shares representing 14.07% of our shares were held by the public. Because many of our Series B shares and American Depositary Shares were held by brokers and other institutions on behalf of security holders in street name, we believe that the number of beneficial holders of our ordinary shares is higher.

The following table sets forth information as of December 31, 2010 regarding (i) persons known to us to own more than 5.0% of our common stock (whether directly or beneficially through American Depositary Shares) and (ii) the total amount of any class of our common stock owned by individual members of the Board of Commissioners and the Board of Directors:

Title of class	Name	Number of Shares Held		Percentage of Total Outstanding Shares of Class
Series A	Government		1		100.00	%
Series B	Qtel Asia(1)		3,532,056,600		65.00
Series B	Government		776,624,999		14.29
Series B	SKAGEN AS		277,824,400		5.11
Series B	Fadzri Sentosa		*		*

* Less than 1.0%

⁽¹⁾  Qtel Asia is wholly owned by Qtel.

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The Government

Prior to our initial public offering in 1994, the Government owned 100% of our outstanding common stock. As of the beginning of 2002, the Government owned 65.0% of our outstanding common stock. By virtue of its common stock ownership, the Government had retained control over us and had the power to elect all of our Board of Commissioners and our Board of Directors and to determine the outcome of substantially all actions requiring the approval of our shareholders. In addition, pension plans, insurance funds and other Indonesian investors owned or controlled, directly or indirectly, by the Government, purchased shares of common stock in the initial public offering.

On May 16, 2002, the Government sold 8.1% of our outstanding common stock through an accelerated global tender, reducing the Government’s shareholding to 56.9%. On December 20, 2002, the Government sold 41.9% of our outstanding common stock to ICLM (described below), further reducing the Government’s shareholding to 15.0%. Although Government’s ownership has been reduced, the Government retains a significant degree of control over us through the 1 Series A share.

As the holder of the 1 Series A share, the Government has special voting rights. The material rights and restrictions which are applicable to our common stock are also applicable to the 1 Series A share, except that the Government may not transfer the Series A share. In addition, through the Series A share, the Government has veto rights with respect to: (i) increases in our share capital without pre-emptive rights; (ii) mergers, consolidations, acquisitions and demerger involving us; (iii) dissolution, liquidation and bankruptcy; (iv) amendments to our Articles of Association related to our purposes and objectives and the Series A holder’s veto rights.

ICLM and Qtel Asia

On December 15, 2002, ICLM, which, at the time was a subsidiary of STT, entered into a share purchase agreement and a shareholders’ agreement with the Government, acting through the Ministry of State-Owned Enterprises in its capacity as our shareholder. STT is 100% owned by ST Telemedia, which is indirectly owned by Temasek Holdings (Private) Limited. Pursuant to the share purchase agreement, the Government sold to ICLM 434,250,000 Series B Shares representing 41.9% of the total outstanding Series B Shares. After consummation of this sale and purchase, the Government held 155,324,999 Series B Shares, representing 15.0% of the total outstanding Series B Shares. As of May 4, 2006, ICLM owned 2,171,250,000 (39.96%) of our Series B shares, the Government owned 1 Series A share and 776,624,999 of our Series B shares (14.29%) and ICLS, an affiliate of ICLM, owned 46,340,000 (0.85%) of our Series B shares.

On January 17, 2007, ICLM notified us regarding the intention of Qtel to make an equity investment of approximately 25.0% in AMH which, at the time, was wholly owned by STT, which we understand closed on March 1, 2007. Upon the closing of the transaction, STT effectively controlled approximately 75.0% of AMH, which directly owns ICLM and ICLS.

On June 22, 2008, following negotiations with ST Telemedia, Qtel purchased all of the issued and outstanding shares of capital stock of each of ICLM and ICLS. Pursuant to the share purchase agreement, Qtel, through its subsidiary Qatar South East Asia Holding S.P.C., acquired all of the capital stock of ICLM and ICLS from AMH, which is 75.0% indirectly owned by STT and 25.0% indirectly owned by Qtel. Following this acquisition, pursuant to Indonesian law requirements, Qtel conducted a mandatory tender offer to acquire up to 24.19% of our outstanding Series B Shares (including Series B Shares underlying ADSs) and now owns 65.0% of our shares. On June 4, 2009, ICLM sold its 39.96% ownership in Indosat to ICLS and, pursuant thereto, ICLS became the legal owner of 3,532,056,600 shares representing 65.0% of our shares. On September 11, 2009, ICLS changed its name to Qatar Telecom (Qtel Asia) Pte. Ltd. Qtel is 68%-owned by the Qatar government.

Qtel provides significant financial expertise, procurement, legal, operational, network build and maintenance, marketing, human resources, business development and technical support to us. Qtel has

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management representation in us and actively participates in business strategy formulation. We intend to take advantage of synergies existing and created by membership in the Qtel group of companies, thereby enhancing our position in the Indonesian telecommunications market.

Skagen AS

In September 2010, we were informed by SKAGEN AS, a Norwegian investment company with eleven mutual funds under management, that through certain purchases of our ADSs, it owns more than 5% of our shares. As of December 31, 2010, SKAGEN AS owns approximately 5.11% of our shares.

Related Party Transactions

We are a party to certain agreements and engage in transactions with a number of entities that are related to us, including joint venture companies, cooperatives and foundations, as well as our controlling shareholders, the Government and Qtel Asia, and entities that are related to or owned or controlled by the Government and Qtel Asia. The most significant of these transactions include cash and cash equivalents in the amount of Rp1,615.6 billion deposited in state-owned banks as of December 31, 2010 operating revenues from Telkom amounting to Rp587.4 billion and cost of services to the Ministry of Communication and Information Technology amounting to Rp1,939.4 billion. For further information on interest rate in relation to our outstanding loans, see “Item 5: Operating and Financial Review and Prospects—Principal Indebtedness.” In addition, we are a party to various agreements with other state-owned entities such as insurance companies, banks and various suppliers. For a discussion of some of significant transactions entered into with related parties, see Note 25 of our consolidated financial statements included elsewhere in this annual report.

Item 8: FINANCIAL INFORMATION

Consolidated Financial Statement and Other Financial Information

See “Item 17: Financial Statements” for our audited consolidated financial statements filed as part of this annual report. There has not been any significant change since the date of our audited financial statements.

Legal Proceedings

From time to time, we are involved in legal proceedings concerning matters arising in connection with the conduct of our business. We are not currently involved in, and have not recently been involved in, any legal or arbitration proceedings that we believe would be likely to have a material effect on our financial condition or results of operations other than as disclosed in this annual report.

On May 5, 2004, we received the Supreme Court’s verdict No. 1610K/PDT/2003 in favor of Primer Koperasi Pegawai Kantor Menteri Negara Kebudayaan dan Pariwisata (known as Primkopparseni), regarding a disputed foreign currency exchange transaction. The court’s judgment required us to pay Rp13.7 billion plus 6.0% interest per annum from February 16, 1998 until the final settlement date and on December 22, 2004, we satisfied the judgment through payment of Rp19.3 billion to the Central Jakarta District Court. Furthermore, in January 2005, we filed a motion for reconsideration against the Supreme Court’s verdict. As of April 20, 2011, the Supreme Court has not issued a verdict for the reconsideration.

In order to recover the amount we paid to Primkopparseni, we initiated a new action in the Central Jakarta District Court asserting that the Primkopparseni members’ meeting at which the members decided to proceed with the dispute against us was invalid. On January 19, 2005, the Central Jakarta District Court held that such members’ meeting was unlawful, but did not require Primkopparseni to compensate us, prompting us and Primkopparseni to file an appeal of that decision with the Jakarta High Court on February 1, 2005. The Jakarta High Court through its decision No. 483 / PDT / 2005 / PT.DKI decided in our favor by ruling that such meeting was unlawful, but, on the other hand, did not require Primkopparseni to compensate us. We and Primkopparseni appealed to the Supreme Court to ask for compensation for the costs of legal fees and injury to our brand name,

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but the Supreme Court declined our appeal on August 13, 2008 through its decision No. 229/K/PDT/2008. Since we did not take any further legal action with respect to the Supreme Court’s decision, this case is now final and binding.

Based on Qtel’s Schedule TO dated as of January 20, 2009 and filed with the SEC on January 20, 2009, on November 19, 2007, the KPPU, decided that Temasek Holdings, Pte. Ltd., a company incorporated under the laws of Singapore (“Temasek”), jointly with Singapore Technologies Telemedia Pte. Ltd. (“ST Telemedia”), STT, Asia Mobile Holding Company Pte. Ltd. (“AMHC”), AMH, ICLM, ICLS, Singapore Telecommunications Ltd., a company incorporated under the laws of Singapore (“SingTel”), and Singapore Telecom Mobile Pte. Ltd., a company incorporated under the laws of Singapore (“SingTel Mobile”), were in violation of the Indonesian competition laws and ordered Temasek, jointly with the STT, AMHC, AMH, ICLM, ICLS and SingTel (the “Temasek Affiliated Entities”), to divest their share ownership in either Telkomsel or Indosat within two years, effective from the date the judgment became legally enforceable. Indonesian competition laws state that business agents are prohibited from owning majority shares in a number of similar companies which conduct business in the same market if such ownership results in one or a group of business agents controlling over 50.0% of the market share of one kind of good or service. Temasek and other relevant parties filed an appeal against the KPPU’s judgment in the Central Jakarta District Court. In a Decision and Order dated May 9, 2008, the Central Jakarta District Court upheld and corrected the ruling by the KPPU, and ordered Temasek and the Temasek Affiliated Entities to divest their holdings in either Telkomsel or Indosat within twelve months after the Central Jakarta District Court judgment became legally enforceable. The decision of the Central Jakarta District Court was appealed to the Supreme Court. On September 10, 2008, the Supreme Court rejected the appeal and corrected the Central Jakarta District Court’s decision as follows, among others: (1) declaring that Temasek, jointly with the Temasek Affiliated Entities was in violation of Article 27 point (a) of Law No. 5 of 1999; (2) ordering Temasek, jointly with the Temasek Affiliated Entities, to terminate their cross-ownership of shares in Telkomsel and Indosat by transferring its shares in either Telkomsel or Indosat, within twelve months from the date the decree became legally enforceable; or reduce 50.0% of its share ownerships in each of Telkomsel and Indosat by no later than twelve months from the date the court’s decision is legally enforceable; and (3) ordering Temasek, jointly with the Temasek Affiliated Entities, to determine the company that they will relinquish their shares from and to relinquish the voting rights and the rights to appoint the directors and commissioners in either Telkomsel or Indosat until the relinquishment of all of their shares or the reduction of 50.0% of their shares in each of Telkomsel and Indosat as stipulated in point (2) above. On June 22, 2008, Qtel acquired all of the Temasek Affiliated Entities’ 40.81% share ownership in Indosat. Temasek and the STT, AMHC, AMH, SingTei and ICLM as well as ICLS filed a motion for reconsideration, but based on the Supreme Court’s official website, the motion for the reconsideration wa rejected under the decision No. Reg. 128 PK/PDT.SUS/2009 dated May 5, 2010. Therefore, Temasek and the STT, AMHC, AMH, SingTei and ICLM as well as ICLS are obliged to pay the fine in amount of Rp15 billion to KPPU.

A series of class action lawsuits were also filed against us and Telkomsel in the District Court of Bekasi, the Central Jakarta District Court and the Tangerang District Court relating to Temasek Holding’s prior cross ownership of shares in Indosat and Telkomsel, which is alleged to have caused high price fixing of telecommunications services that harmed to the public. On October 31, 2007, a group of consumers of cellular telephones in Indonesia filed suit in the District Court of Bekasi demanding, among other remedies, Rp1,231.7 billion in compensation for losses allegedly suffered. We are also a defendant in a similar class action suit filed in the Tangerang District Court on December 19, 2007 (the “Tangerang Class Action”). The plaintiffs represent our customers and the customers of Telkomsel and XL throughout Indonesia who used the Simpati, Mentari, Kartu As, IM3, Kartu Halo, Matrix, Jempol, Xplor, and Bebas services and are demanding compensation amounting to Rp30,808.7 billion, among other remedies. On April 22, 2008, we received notification that we, Temasek Holdings, ST Telemedia, STT, AMH, ICLM, ICLS, SingTel, SingTel Mobile, Telkomsel, Telkom and the Ministry of State-Owned Enterprises, were defendants in another class action filed in the Central Jakarta District Court (the “Central Jakarta Class Action”). The plaintiffs represent customers of Telkomsel, Indosat and XL and have asserted allegations similar to that of the Tangerang Class Action. The plaintiffs are demanding compensation amounting to Rp30,808.7 billion, among other remedies. In July 2008, we were notified that the class action in the Bekasi District Court was revoked by the plaintiffs and the class action

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in the Central Jakarta District Court was merged with the Tangerang Class Action. The class action suit in the Tangerang District Court was postponed by the judges pending resolution of an appeal to the Supreme Court by the plaintiffs from the class action filed in Central Jakarta District Court. On March 27, 2009, we were informed that the Supreme Court issued a decision on January 21, 2009 revoking the Central Jakarta District Court decision and ordering the Central Jakarta District Court to continue with the class action. On December 22, 2009, Indosat submitted a proposal in the mediation process asserting that no evidence of customers’ loss has been presented during STT’s ownership. At the same time, Indosat is preparing a claim of inadequacy of representation as well as a response to the lawsuit. On January 5, 2010 the defendants were given the right to provide arguments regarding the legal standing of the class representation under the Class Action Lawsuit Procedure. On January 27, 2010, the Judges ruled that that the Central Jakarta Class Action lawsuit was unacceptable and ordered the plaintiffs and defendants to stop the case because (i) the plaintiffs refused to prove their legal standing and (ii) two members of the plaintiffs’ class did not qualify to stand as class representatives. The period for appeal having lapsed on March 18, 2010, the decision of the Central Jakarta District Court dated January 27, 2010 is now final and binding.

On March 22, 2010, the trial of the Tangerang Class Action continued, but the plaintiffs failed to appear. On May 3, 2010, the Company submitted a demurrer and on May 24, 2010, the judges ruled that the class action filed with the Tangerang District Court was unacceptable because the plaintiffs were not serious in filing the lawsuit and the plaintiffs failed to prove their legal standing for qualification as class representatives. Since the time limit to file an appeal lapsed on July 21, 2010, the decision of the Tangerang District Court dated May 24, 2010 is final and binding.

In addition to the above, we have received a letter from the KPPU, No. 398 / AK / KTPP / XI / 2007, dated November 15, 2007 relating to the possible breach of Article 5 of Law No. 5 / 1999 through price-fixing of SMS by telecommunications operators (case number 26 / KPPU-L / 2007). On June 18, 2008, the KPPU determined that only Telkom, Telkomsel, XL, Bakrie Telecom, Mobile-8 and Smart Telecom have jointly breached Article 5 of Law No. 5 / 1999. Telkomsel appealed this ruling to the South Jakarta District Court while Mobile-8 appealed this ruling to the Central Jakarta District Court where XL, Telkomsel, Indosat, Telkom, Hutchison, Bakrie Telecom, Smart Telecom, PT Natrindo Telepon Seluler were summoned to appear as co-defendants.

During tax audits and assessments of our tax payments for 2004 and 2005 by the Tax Office for State-Owned Enterprises (the “Tax Office”), on December 4, 2006 and March 27, 2007, respectively, we were notified that our withholding tax for interest paid on intercompany loans for Indosat Finance Company B.V. and Indosat International Finance Company B.V. relating to our US$300.0 million principal amount Guaranteed Notes 2010 and US$250.0 million principal amount Guaranteed Notes 2012, respectively, should be 20.0%, rather than 10.0%. Based on advice from our tax advisors and our understanding of Indonesian law, we believe that our original calculations of withholding tax are accurate and submitted objection letters to the Tax Office regarding these assessments. On February 18, 2008 and June 4, 2008, we received Decision Letters from the Directorate General of Taxation rejecting our objections to our assessed tax payments for 2004 and 2005 in the amount of Rp60,493 million and Rp82,126 million, respectively. On May 14, 2008, the Company submitted an appeal letter to the Tax Court concerning the Company’s objection to the correction of the income tax article 26 for fiscal year 2004. On May 25, 2010, the Company received the Decision Letter from the Tax Court which declined the Company’s objection to the correction of the 2004 income tax article 26. The Company charged the tax correction to current operations, which was presented as part of “Other Income (Expenses)—Others—Net”.

We are also currently disputing an assessment of tax overpayment for fiscal year 2005 with the Tax Office. On March 27, 2007, we received an assessment letter for tax overpayment, indicating that the Directorate General of Taxation approved the refund of an overpayment of 2005 corporate income tax amounting to Rp135,766 million, which amount is lower than the amount of Rp176,645 million that we recognize. We filed an objection with the Tax Office on June 22, 2007 and claimed for the difference amounting to Rp40,879 million. On May 27, 2008, we received a Decision Letter from the Directorate General of Taxation which partially accepted our objection, but only for the amount of Rp2,725 million. On August 21, 2008, the Company

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submitted an appeal letter to the Tax Court concerning the Company’s remaining objection on the 2005 corporate income tax. On October 29, 2010, the Company received the Decision Letter from the Tax Court which accepted the Company’s objection to the correction of the 2005 corporate income tax amounting to Rp38,155 million, which was offset against the underpayment of the Company’s 2008 and 2009 income tax article 26 based on Tax Collection Letters (“STPs”) received by the Company on September 17, 2010.

On December 24, 2008, we received the Decision Letter from the Directorate General of Taxation which increased the overpayment amount by Rp84,650 million in the assessment letter on tax overpayment for fiscal year 2004, which amount was lower than the amount stated in an earlier Decision Letter received on July 4, 2008. On January 21, 2009, we filed suit objecting to the discrepancy in the amount of tax overpayment during fiscal year 2004. With respect thereto, on November 17, 2009 the Tax Court revoked the Directorate General of Taxation’s assessment letter No. KEP-539/WPJ.19/BD.05/2008, dated December 24, 2008. On March 17, 2010, the Directorate General of Taxation issued a decision favorable to the Company, informing it that the tax overpayment for fiscal year 2004 should be Rp126,403 million instead of Rp84,650 million, which would entitle the Company to get a refund of the difference, amounting to Rp41,753 million. The Company then subsequently received the payment of such tax refund amounting to Rp41,753 million from Directorate General of Taxation on April 13, 2010.

On June 8, 2009, the Company received the assessment letter on tax underpayment (“SKPKB”) from the DGT for Satelindo’s corporate income tax for fiscal year 2002 amounting to Rp105,809 million (including penalties and interest) . The Company accepted a part of the correction of the 2002 corporate income tax amounting to Rp2,646 million which was charged to current operations in 2009. Under Indonesian Tax Law, a taxpayer is required to pay the tax underpayment amount as stated in the SKPKB within one month from the date of the SKPKB. The taxpayer can reclaim the tax paid through an objection or appeal process. On August 28, 2009, the Company submitted an objection letter to the Tax Office regarding the remaining correction on Satelindo’s 2002 corporate income tax. On July 15, 2010, the Company received the Decision Letter No.KEP-357/WPJ.19/BD.05/2010 from the DGT declining the Company’s objection to the correction on Satelindo’s corporate income tax for fiscal year 2002. On October 14, 2010, the Company submitted an appeal letter to the Tax Court concerning the Company’s objection to the correction on Satelindo’s corporate income tax for fiscal year 2002. As of April 20, 2011, the Company has not received any decision from the Tax Court on such appeal.

On June 8, 2009, the Company also received SKPKBs from the DGT for Satelindo’s 2002 and 2003 income tax article 26 amounting to Rp51,546 million and Rp40,307 million (including penalties and interests), respectively. On August 27, 2009, the Company submitted an objection letter to the Tax Office for the correction of the Satelindo’s 2002 and 2003 income tax article 26. On July 16, 2010, the Company received the Decision Letters No.KEP-367/WPJ.19/BD.05/2010 and KEP-368/WPJ.19/BD.05/2010 from the DGT declining the Company’s objection to the correction of the Satelindo’s 2002 and 2003 income tax article 26. On October 12, 2010, the Company submitted appeal letters to the Tax Court concerning the Company’s objection to the correction of Satelindo’s 2002 and 2003 income tax article 26. As of April 20, 2011, the Company has not received any decision from the Tax Court on such appeal.

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On September 7, 2009, the Company received the Decision Letter No.KEP-335/WPJ.19/BD.05/2009 from the DGT which declined the Company’s objection to the remaining corrections of the 2006 corporate income tax. On December 2, 2009, the Company submitted an appeal letter to the Tax Court regarding the remaining corrections of the Company’s 2006 corporate income tax. As of April 20, 2011, the Company has not received any decision from the Tax Court on such appeal.

On September 17, 2010, the Company received STPs from the DGT for the underpayment of the Company’s 2008 and 2009 income tax article 26 totalling Rp80,018 million (including interest). On October 13, 2010, the Company submitted cancellation letters to the Tax Office regarding such STPs. Subsequently, on November 16, 2010, the Company was required to pay a certain portion of these STPs by using the approved tax refund claim for on the Company’s corporate Income Tax for fiscal year 2005 amounting to Rp38,155 million. On January 7, 2011, the Company paid the remaining amount of Rp41,863 million.

We are not involved in any other material cases, including civil, criminal, bankruptcy, state administration cases or arbitration cases in the Indonesian National Board of Arbitration or labor cases in Industrial Relation Court which may materially affect our performance.

Dividend Policy

Our shareholders determine dividend payouts in the Annual General Meeting of Shareholders pursuant to recommendations from our Board of Directors. At our 2008, 2009 and 2010 Annual General Meetings of Shareholders, our shareholders declared final cash dividends amounting to 50.0% of our net income for each of the years ended December 31, 2007, 2008 and 2009, respectively. We intend to continue paying dividends in such amount to allow us to meet sound financial governance and investor expectations.

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Item 9: THE OFFER AND LISTING

Offer and Listing Details

The table below sets forth, for periods indicated, the reported high and low quoted prices for our common stock on the Jakarta Stock Exchange, or the JSX, and the Indonesian Stock Exchange, or the IDX. All reported prices prior to December 3, 2007 are from the JSX and all reported prices after December 3, 2007 are from the IDX, following its commencement of operation:

	Price per Share
	High		Low
	(in Rp)
Calendar Year
2006		6,750		4,050
2007		9,900		5,600
2008		8,750		3,950
2009		5,950		4,200
2010		6,300		4,400
Financial Quarter
First Quarter 2009		5,900		4,200
Second Quarter 2009		5,950		4,850
Third Quarter 2009		5,700		5,050
Fourth Quarter 2009		5,700		4,600
First Quarter 2010		6,200		4,700
Second Quarter 2010		6,150		4,775
Third Quarter 2010		5,500		4,400
Fourth Quarter 2010		6,300		5,100
Month
October 2010		6,300		5,600
November 2010		6,100		5,400
December 2010		5,850		5,100
January 2011		5,650		4,875
February 2011		5,050		4,800
March 2011		5,300		4,975
April 2011 (through April 20, 2011)		5,450		5,250

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The table below sets forth, for the periods indicated, the reported high and low quoted prices of the ADSs on the New York Stock Exchange, or the NYSE.

	Price per ADS
	High		Low
	(in US$)
Calendar Year
2006		38 71/128		21 13/16
2007		51 13/16		30 13/64
2008		47 1/64		16
2009		30 47/128		16 189/256
2010		35 37/64		24 7/32
Financial Quarter
First Quarter 2009		26 1/4		16 95/128
Second Quarter 2009		26 83/128		20 127/128
Third Quarter 2009		28 45/128		24 37/128
Fourth Quarter 2009		30 47/128		24 9/32
First Quarter 2010		33 123/128		25 97/256
Second Quarter 2010		34 3/16		25 31/32
Third Quarter 2010		30 59/128		24 7/32
Fourth Quarter 2010		35 37/64		28 1/64
Month
October 2010		35 37/64		30 29/32
November 2010		33 91/128		30 39/128
December 2010		32 1/4		28 1/64
January 2011		31 1/64		27 9/64
February 2011		28 41/128		27 3/64
March 2011		30 33/128		27 37/64
April 2011 (through April 20, 2011)		31 5/64		30 5/64

Markets

Our common stock is listed on the IDX. The IDX is the principal non-U.S. trading market for our common stock. In addition, our ADSs, each representing 50 shares of our common stock, are listed on the NYSE. After the stock split, which became effective on March 10, 2004, each ADS represents 50 Series B shares (as compared to the ten Series B shares previously represented thereby).

The Indonesian Securities Market

On November 30, 2007, the Jakarta Stock Exchange and the Surabaya Stock Exchange merged to become the IDX. The IDX began operation on December 3, 2007 and in 2007, had a market capitalization of Rp2,539.041 billion, in which Rp1,982 billion of it came from equities, Rp79,065 billion and US$105 million came from corporate bonds and Rp477 trillion came from the government bonds.

Overview of the IDX

There are currently two daily trading sessions for regular and negotiable markets from Monday to Thursday, 9:30 a.m. to 12:00 noon, and 1:30 p.m. to 4:00 p.m. There are two trading sessions for regular and negotiable market on Friday, from 9:30 a.m. to 11:30 a.m. and from 2:00 p.m. to 4:00 p.m. There is only one cash market trading session from Monday to Thursday, 9.30 a.m to 12.00 noon and Friday, 9.30 a.m to 11.30 a.m. Trading on the IDX is based on an order-driven market system. Investors must contact brokerage companies, or IDX

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members, that will execute their orders through the IDX trading system. Trading on the IDX can only be done by IDX members who are registered as members of the Indonesian Clearing and Guarantee Corporation, or KPEI. A brokerage company may also buy and sell securities for its own account. No limitation of share ownership by foreign investors or foreign institutions exists through direct placement or through trading on the IDX, except for banking institutions, which may only be 99.0% foreign owned.

Trading is divided into three market segments: regular market, negotiable market, and cash market. The regular market is the mechanism for trading stock in standard lots on a continuous auction market during exchange hours. With respect to the trading of stock, a round lot consists of 500 shares. The price movements are limited as follows: (i) if the share price is below Rp200, then the price moves in increments of Rp1 with the aggregate daily price movement limited to Rp10; (ii) if the share price is equal to Rp200 or more, but less than Rp500, then the price moves in increments of Rp5 with the aggregate daily price movement limited to Rp50; (iii) if the share price is equal to Rp500 or more, but less than Rp2,000, then the price moves in increments of Rp10 with the aggregate daily price movement limited to Rp100; (iv) if the share price is equal to Rp2,000 or more, but less than Rp5,000, then the price moves in increments of Rp25 with the aggregate daily price movement limited to Rp250; and (v) if the share price is equal to or exceeds Rp5,000, then the price moves in increments of Rp50 with the aggregate daily price movement limited to Rp500. Orders are processed by computers that carry out matching processes of the outstanding “bids” and “asks” according to price and time priority. Price priority gives priority to buying orders at a lower price or selling orders at a higher price. If buying or selling orders are placed at the same price, priority is given to the buying or selling order placed first (time priority).

Trades in the negotiated market can be completed without using the round lot system and price step rule. IDX members can advertise selling or buying orders through the IDX trading system and amend their order by negotiating with another member. The ultimate price is based on agreement, but it is recommended to be based on the stock price on the regular market.

Transactions on the IDX regular market and non-regular market are required to be settled no later than the third trading day after the transactions. In case of a default by an exchange member on settlement upon the due date, they are liable to pay 125.0% of the highest price of the same securities or the same trading day.

The IDX board of directors may cancel a transaction if proof exists of fraud, manipulation or the use of insider information. The board of directors may also suspend trading if there are indications of bogus transactions or jacking up of share prices, misleading information, use of insider information, counterfeit securities or securities blocked from trading, or other important events.

IDX members may charge fees for their services based on an agreement with their clients. When conducting stock transactions on the IDX, exchange members are required to pay a transaction fee equal to 0.03% of the cumulative transaction value for each month plus an additional 0.01% for cash and regular market transactions guaranteed by KPEI (subject to a minimum transaction fee of Rp2,000,000). The commissions and transaction fees do not include the 10.0% value-added tax and the 0.1% transaction tax levied on the cumulative value of the sales of the shares.

The Indonesian capital markets are generally less liquid than those in countries with more developed capital markets. This illiquidity is especially pronounced for large blocks of securities. Also, prices in the Indonesian capital markets are typically more volatile than in such other markets. Accordingly, we cannot assure you that a holder of common stock will be able to dispose of common stock at prices or at times at which such holder would be able to do so in more liquid markets or at all. Further, we cannot assure you that a holder of common stock will be able to dispose of common stock at or above such holder’s purchase price.

Trading on the NYSE

The Bank of New York serves as depositary, or the Depositary, with respect to our ADSs, which are traded on the NYSE. After the stock split, which became effective on March 10, 2004, each ADS represents 50 shares

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of our common stock (as compared to the ten Series B shares previously represented thereby). As of December 31, 2010, 17,084,429 ADSs, representing 15.72% of our common stock, were outstanding in the United States and there were 50 registered owners of our ADSs.

Item 10: ADDITIONAL INFORMATION

Description of Articles of Association and Capital Stock

As of December 31, 2010, the authorized capital of Indosat is Rp2,000,000,000,000, divided into 20,000,000,000 shares consisting of one Series A share and 19,999,999,999 Series B shares, each share of par value Rp100. Of the authorized capital, 5,433,933,500 shares were subscribed to and fully paid up in cash, consisting of one Series A share and 5,433,933,499 Series B shares, or with a total nominal value of Rp543,393,350,000 by:

a. the Republic of Indonesia, one Series A share and 776,624,999 Series B shares with a total nominal value of Rp77,662,500,000;

b. Qtel Asia, 3,532,056,600 Series B shares with a total value of Rp353,205,660,000; and

c. the Public, 1,125,251,900 Series B shares with a total nominal value of Rp112,525,190,000.

On March 8, 2004, we held an Extraordinary General Meeting of Shareholders which approved the split of nominal value of Series A share and Series B shares from Rp500 to Rp100 per share, which increased our authorized shares to 20,000,000,000 shares and our issued shares to 5,177,500,000 shares. After the stock split, the authorized capital of Indosat is Rp2,000,000,000,000 divided into 20,000,000,000 shares consisting of one Series A share and 19,999,999,999 Series B shares, each share of par value Rp100. Of our authorized capital, 5,177,500,000 shares were subscribed to and fully paid up in cash, consisting of one Series A share and 5,177,499,999 Series B shares, or with a total nominal value of Rp517,750,000,000 by:

a. the Republic of Indonesia, one Series A share and 776,624,999 Series B shares with a total nominal value of Rp77,662,499,900;

b. ICLM, 2,171,250,000 Series B shares with a total value of Rp217,125,000,000; and

c. the Public, 2,229,625,000 Series B shares with a total nominal value of Rp222,962,500,000.

The amendment to the Articles of Association of Indosat, necessitated by the stock split, has been reported to and accepted by the Minister of Justice and Human Rights of Indonesia under number C-05582 HT.01.04.TH.2004, dated March 8, 2004. Such amendment has been registered in the Central Jakarta Company Register Office under number 0540 / RUB.09.05 / III / 2004, dated March 9, 2004. On October 20, 2004, the Ministry of Justice and Human Rights of Indonesia changed its name to the Ministry of Law and Human Rights of Indonesia.

On January 28, 2010, Indosat convened an Extraordinary General Meeting of Shareholders to approve, among others, an amendment to Article 3 of Indosat’s Articles of Association, covering its purposes and objective. Such amendment was required in compliance with Rule of Bapepam dan LK No. IX.J.1.

Our Articles of Association, or the Articles, state that any transaction involving a conflict of interest as defined in prevailing capital market regulations should obtain the approval of the independent shareholders in a general meeting of shareholders especially convened for such purpose.

Each Director receives an annual bonus as well as other incentives in the event we surpass certain financial and operating targets, the amounts of which are determined by our Board of Commissioners and reported at our annual general meeting of shareholders. Bonuses are budgeted annually and are based on the recommendation of our Board of Directors, whose recommendation must be approved by our Board of Commissioners prior to

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submission to our shareholders. Each Commissioner is granted a monthly honorarium and certain other allowances, the amounts of which are determined by our shareholders at our annual general meeting of shareholders.

Our Board of Directors are responsible for leading and managing us in accordance with our objectives and purposes as well as to control, preserve and manage our assets. To complete these responsibilities, our Board of Directors are authorized to cause us to borrow such sums as required from time to time subject to the limitations set forth in the Articles. The borrowing powers of our Board of Directors may only be varied through an amendment to the Articles. The Articles do not contain any requirement for the Directors to retire by a specified age or to own any or a specified number of our common shares.

Common Stock

The following is a summary of the material rights and restrictions related to the common stock of Indosat based upon applicable provisions of Indonesian law and provisions of our Articles of Association, which were amended on January 28, 2010 and approved by the Minister of Law and Human Rights of Indonesia on February 25, 2010. This description does not purport to be complete and is qualified by reference to the Articles of Association and the laws of Indonesia relating to companies, which may in certain instances differ from provisions contained in the Articles of Association.

All of the shares of common stock are registered shares and are issued in the name of the owner of the common stock registered in the register of shareholders of Indosat. The Board of Directors keep a register of shareholders of Indosat, and Indosat must treat the person whose name is entered in such register of shareholders as the only person entitled to exercise any rights conferred by law with respect to such common stock.

All transfers of common stock must be evidenced by an instrument of transfer signed by or on behalf of the transferor and by or on behalf of the transferee or based on other letters, which give satisfactory evidence of such transfer in the opinion of the Board of Directors. Transfers of common stock take effect only after the transfer is registered in the register of shareholders. The transferor of any common stock will be treated as the owner of such common stock until the name of the transferee has been entered in the register of shareholders.

The holders of common stock are entitled to pre-emptive rights if Indosat issues common stock, convertible bonds, warrants or similar securities. Such pre-emptive rights may be transferred or assigned to third parties subject to the restrictions set forth in the stipulations in the Articles, prevailing capital markets regulations and Indonesian law. Any rights issue shall be first approved by Indosat’s general meeting of shareholders and an announcement of such a plan shall be made by the Board of Directors in two daily newspapers (one in the English language and one in the Indonesian language). If the holders of common stock do not exercise their pre-emptive rights within the period fixed by the Board of the Directors in accordance with the relevant regulations, the Board of Directors may issue such common stock, convertible bonds, warrants or similar securities to third parties at a price and on terms at least the same as that offered previously to the existing shareholders and as determined by the Board of Directors.

Indosat’s authorized capital stock may be increased or decreased only by a resolution of an extraordinary general meeting of shareholders and an amendment of the Articles. Any such Amendment will be effective only after it receives approval from the Minister of Law and Human Rights of Indonesia.

As an exception to the above provisions, Indosat, with the approval of a general meeting of shareholders at which the holder of the Series A share attends and approves the resolution, may issue new shares without conducting a limited public offer to shareholders. This issuance may be done provided that this issue is made for a specified number of shares and such shares are issued within a specified period of time in compliance with the Indonesian capital market regulations or under any exemption Indosat may receive therefrom, and the said shares may be sold by Indosat to any person at a price and upon such conditions as may be determined by the Board of Directors, provided that the price is not lower than par value. There are no limitations on the rights of foreign investors to own our common stock if such stock is acquired through capital markets.

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These provisions also apply mutatis mutandis in the event Indosat issues convertible bonds and/or warrants and/or other similar securities, provided that any new share issued resulting from convertible bonds and/or warrants and/or other similar securities shall be for a specified number of shares and within a specified period of time in compliance with the Indonesian capital market regulations or any exemption as Indosat may receive therefrom.

Series A Share

The material rights and restrictions which are applicable to the common stock are also applicable to the one Series A share, except that the Government may not transfer the Series A share and it has veto rights with respect to: (i) amendment to the objective and purposes of the Company; (ii) increase of capital without pre-emptive rights; (iii) merger, consolidation, acquisition and demerger; and (iv) amendment to the provisions regarding the rights of “A” share as stipulated in the Articles of Association; and (v) dissolution, bankruptcy and liquidation of the Company.

Purpose and Duration

Pursuant to Article 3 of our Articles of Association, as amended on January 28, 2010, in order to comply with the Capital Market and Financial Institution Supervisory Board (Badan Pengawas Pasar Modal dan Lembaga Keuangan/”Bapepam dan LK”) Rule No. IX.J.1 on guidelines of articles of association of a company who conduct public offering on equity securities and public companies, Indosat’s purposes, objectives and business activities are as follows:

1. The purposes and objectives of the Company are to provide telecommunications networks, telecommunication services as well as information technology and/or convergence technology services.

2. In order to achieve the abovementioned purposes and objectives, the Company may carry out activities including the main business as follows:

a. To provide telecommunication networks, telecommunication services as well as information technology and/or convergence technology services, including but not limited to provision of basic telephony services, multimedia services, internet telephony services, network access point services, internet services, mobile telecommunication networks and fixed telecommunication networks; and

b. To engage in the payment transaction and money transfer service through telecommunication networks as well as information technology and/or convergence technology.

3. In order to achieve the abovementioned purposes and objectives and in order to support the main business of the Company as mentioned above, the Company can conduct supporting business activities, as follows:

a. To plan, to procure, to modify, to build, to provide, to develop and to operate, to lease, to rent, to maintain infrastructure/facilities including resources to support the Company business in providing telecommunication networks, telecommunication services as well as information technology and/or convergence technology services;

b. To conduct business and operating activities (including development, marketing and sales of telecommunication networks, telecommunication services as well as information technology and/or convergence technology services by the Company), including research, customer services, education and courses both domestic and overseas; and

c. To conduct other activities necessary to support and/or related with the provision of telecommunication networks, telecommunication services as well as information technology and/or convergence technology services including but not limited to electronic transactions and provision of hardware, software, content as well as telecommunication managed services.

We were established on November 10, 1967 with no time limit on our establishment.

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Voting Rights

Each share of common stock entitles the registered holder thereof to one vote at any general meeting of shareholders of Indosat. Shareholders appoint members of the Board of Directors for a period commencing from the date of the general meeting of shareholders that appointed them and ending at the closing of the 5th annual general meeting of shareholders subsequent to the date of their appointment.

An annual general meeting of shareholders must be held, at the latest, on June 30 of each year. At such annual general meeting, the Directors must (i) report on the affairs and management of Indosat and the results for the most recent financial year; (ii) submit the audited balance sheet and audited profit and loss statement for such financial year to the meeting for approval; (iii) determine the plan for use of profit and the amount of dividend for such financial year; (iv) submit a request for the appointment of a public accountant; and (v) submit all other matters to be addressed at the meeting. In addition, the Board of Commissioners should also report their supervisory activities during the proceeding fiscal year as stipulated in the annual report. All materials described in (i) through (v) will be made available at Indosat for inspection by shareholders from the date of the invitation for the annual general meeting of shareholders until the date of the annual general meeting of shareholders. Proposals duly submitted by shareholders representing at least 10.0% of Indosat’s subscribed shares may be included in the agenda of such meeting, provided that such proposals are received by the Board of Directors at least 21 days prior to such meeting.

The Board of Directors or the Board of Commissioners may convene an extraordinary general meeting of shareholders and must convene such a meeting upon receipt of written notice from a shareholder or shareholders representing at least 10.0% of the subscribed shares of Indosat. Upon receipt of such written notice, within 22 days of the date such written notice is accepted, the Board of Directors shall discuss, resolve, and if the Board of Directors have resolved to convene such extraordinary meeting of shareholders, the Board of Directors shall announce notice of the extraordinary meeting of shareholders at the latest 14 days prior to the invitation of the extraordinary meeting of shareholders without counting the announcement date and the invitation date. No later than 14 days prior to the extraordinary meeting of shareholders, without counting the invitation date and the meeting date, the Board of Directors shall announce invitation to the extraordinary meeting of shareholders. If the Directors fail to provide notice of such a meeting, the shareholders concerned can re-submit their notice to the Board of Commissioners. Upon receipt of such notice, within 22 days of the date such notice is accepted, the Board of Commissioners shall discuss, resolve, and if the Board of Commissioners have resolved to convene such extraordinary meeting of shareholders, the Board of Commissioners shall announce notice to the extraordinary meeting of shareholders at the latest 14 days (excluding notification date and invitation date) prior to the invitation of the extraordinary meeting of shareholders. No later than 14 days prior to the extraordinary meeting of shareholders, without counting the invitation date and the meeting date, the Board of Commissioners shall announce invitation to the extraordinary meeting of shareholders. If the Board of Commissioners fails to make notice of the extraordinary meeting of shareholders within 22 days as of the receipt of such request, the shareholders concerned may call such meeting at the expense of Indosat after obtaining approval from the Chairman of District Court.

Announcement of a general meeting is given to shareholders at least 14 days (excluding notification date and invitation date) prior to the notice for the general meeting by an advertisement in at least two daily newspapers (one in the Indonesian language and one in the English language), one of which has a wide circulation in Indonesia. Notice must be given by placement of advertisement in at least two daily newspapers, one of which is in the Indonesian language and has a wide circulation in Indonesia and one of which is in the English language at least 14 days before the date of the annual general meeting or extraordinary general meeting, excluding the date of the notice and the date of the meeting.

If all shareholders are present and/or represented, notice requirements may be waived and the general meeting of shareholders may adopt binding resolutions.

Generally, the quorum for a general meeting of shareholders requires shareholders representing more than 50.0% of the issued shares of common stock to be represented in person or by a power of attorney at such meeting.

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Shareholders may be represented at a general meeting of shareholders by a person holding a power of attorney, but no Commissioner, Director or employee of Indosat may act in such capacity. Unless otherwise provided in the Articles, and subject to the special voting rights of the Special Share, resolutions in order to be adopted must receive the affirmative vote of the holders of more than 50.0% of the shares of common stock which are present and being voted at the meeting (simple majority votes).

Fiscal Year and Accounts

Our fiscal year commences on January 1 and ends on December 31.

No later than 90 days from the closing of the fiscal year, the Board of Directors must submit the balance sheet, profit and loss account and other financial statements audited by a public accountant to the Board of Commissioners, who must review these statements and report on this review to the general meeting of shareholders. Copies of such documents must be available at the head office of Indosat from the date of notice for the annual general meeting of shareholders up to the date of closing of the annual general meeting of shareholders.

The annual general meeting of shareholders will consider and decide whether or not the balance sheet and profit and loss account of Indosat is approved. Such approval fully discharges the Board of Directors and the Board of Commissioners from their responsibilities during the fiscal year concerned to the extent that such actions are reflected in such balance sheet and profit and loss account.

Utilization of Profit and Dividends

The profit of Indosat, as determined by the annual general meeting of shareholders, after deduction of corporate tax, must be used as a reserve fund, for dividends and for other purposes, the percentage of which must be determined annually by a general meeting of shareholders.

Dividends are paid in accordance with a resolution adopted at a general meeting of shareholders, upon the recommendation of the Board of Directors, which resolution also determines the time and manner of payment of the dividends. All shares of common stock which are fully paid and outstanding at the time a dividend or other distribution is declared are entitled to share equally in such dividends or other distribution. Dividends are payable to the persons whose names are entered in the register of shareholders of Indosat, on a business day determined by the general meeting of shareholders at which the resolution for the distribution of dividends is adopted.

The Board of Directors and the Board of Commissioners may, by resolutions of both, declare interim dividends if the financial condition of Indosat so permits, provided that such interim dividends are offset against the dividends to be declared at the subsequent annual general meeting.

Dividends unclaimed after five years from the date of which they are payable cease to be payable and are to be credited to the reserve fund of Indosat. Notices concerning dividends and interim dividends must be announced in a at least two daily newspapers in the Indonesian language with wide or national circulation in Indonesia, in one daily newspaper in the English language and on the stock exchange where the shares are listed.

If the profit and loss account in one fiscal year shows a loss which cannot be covered by the reserve fund referred to below, the loss remains recorded as such in the profit and loss account and for the succeeding years Indosat is deemed not to have made a profit if the loss recorded as such in the profit and loss account has not been fully covered.

To cover future losses, a reserve fund may be created and the amount of the reserve fund will be determined by a general meeting of shareholders. The reserve fund may be used for capital outlays or other purposes as determined at the annual general meeting of shareholders. However, it must only be used for the benefit of Indosat. Any profits earned from such reserve fund shall be entered in the profit and loss account of Indosat.

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Liquidation

In the event that we go into liquidation, the Board of Directors will act as liquidator if required by the prevailing regulations. The balance of any liquidation account which is set up, after payment of all our debts and obligations, will be used to pay all of our shares. If possible, payment on these shares shall be made at a price written on the share certificates. The remaining balance of the liquidation account shall be distributed according to resolutions of the general meeting of shareholders.

Amendments to the Articles of Association

Amendments to our Articles of Association may be made only by a resolution of an extraordinary general meeting of shareholders attended by at least two-thirds of the shareholders and approved by more than two-thirds of the shareholders with voting rights, provided that (i) increases in our share capital without pre-emptive rights, (ii) merger, consolidation, acquisition and demerger involving us, (iii) dissolution and liquidation, (iv) amendments to the Articles of Association related to our purposes and objectives and the Series A holder’s veto rights can be affected only if the meeting is attended and the action approved by the holder of the Series A share.

A resolution regarding a reduction of the authorized or subscribed capital must be published by the Board of Directors in at least two daily newspapers, one of which is in the Indonesian language having a national circulation, and the other in the English language, for the benefit of creditors within the period at the latest of seven days after the date of the general meeting of shareholders. In case a quorum for the extraordinary general meeting is not reached, within ten to twenty-one days from the original extraordinary general meeting a second meeting may be held to decide on matters which were not resolved at the first meeting. The second meeting can result in a valid and binding decision if attended by at least three-fifths of the shareholders and be approved by more than half of the shareholders with voting rights. Amendments related to a reduction of capital only become effective upon the approval of the Ministry of Law and Human Rights of Indonesia.

Transactions with Affiliates

It is the policy of Indosat not to enter into transaction with affiliates unless the terms thereof are no less favorable to Indosat than those which could be obtained by Indosat on an arm’s length basis from an unaffiliated third party.

Under BAPEPAM-LK regulations and Article 19 of our Articles of Association, any transaction in which there is a conflict of interest (as defined below) must be approved by a majority of the shareholders of common stock who do not have a conflict of interest in the proposed transaction, unless the conflict existed before Indosat was listed and was fully disclosed in the offering documents. A conflict of interest is defined in BAPEPAM-LK Rule No. IX.E.1 to mean the difference between Indosat’s interests, on the one hand, and the personal economic interests of the members of our Board of Commissioners, Board of Directors or our majority shareholders (a holder of 20.0% or more of our issued shares) of Indosat in one transaction which may impose losses on us . A conflict of interest also exists under BAPEPAM-LK rules when members of the Board of Commissioners, Board of Directors or a controlling shareholder of Indosat is involved in a transaction in which their personal interests may be in conflict with the interest of Indosat, unless otherwise excepted by BAPEPAM-LK regulations.

We expect, in light of the substantial presence which enterprises owned or controlled by the Government or Qtel Asia or one of their affiliates have in Indonesia, that it may be desirable, in connection with the development and growth of our business, for us to enter into joint ventures or other arrangements or transactions with such enterprise from time to time. Under such circumstances, we may seek to consult BAPEPAM-LK in determining whether the proposed joint venture, arrangement or transaction would require a vote of disinterested shareholders under the terms of the BAPEPAM-LK rule. If BAPEPAM-LK were of the view that the proposed joint venture, arrangement or transaction would not require a vote of disinterested shareholders under its rule, we would

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proceed without seeking disinterested shareholder approval. If, however, BAPEPAM-LK were to take the position that the proposal would require a vote of disinterested shareholders under its rule, we would either seek to obtain the requisite disinterested shareholder approval or abandon the proposal.

Material Contracts

On July 30, 2007, we entered into a cooperation agreement with Telkomsel to set up network interconnection between our fixed local telecommunications network and Telkomsel’s cellular mobile network. Pursuant to this agreement, we and Telkomsel agreed to enable each party’s customers to make local, long-distance and international calls between our fixed local telecommunications network and Telkomsel’s cellular mobile network. We amended this agreement through the first amendment No. Telkomsel: AMD.2283/LG.05/PD-00/XII/2007—No Indosat: 029/C00-CC0/LG/07 dated December 2007, the second amendment No. Telkomsel: AMD.339/LG.05/PD-00/III/2008—No. Indosat: 004/C00-CC0/LGL/08 dated March 3, 2008 and the third amendment No.Telkomsel: 1762/LG.05/PD-00/XI/2010 and No. Indosat: 011/C00-C0AA/LGL/10 dated November 1, 2010.

On December 18, 2007, we entered into an interconnection agreement with Telkom to set up network interconnection between our cellular wireless network and Telkom’s fixed telecommunications network. Under this agreement, we and Telkom agreed to open prefixes and access codes belonging to the other party, which enable each party’s customers to make interconnection calls of various types between our cellular wireless network and Telkom’s fixed telecommunications network. The agreement sets forth the interconnection tariffs for providing interconnection services based upon a cost-based regime and is valid for two years, but can be extended or terminated based upon mutual agreement of the parties. We amended this agreement as stipulated in first amendment No. Telkom 47/HK.820/DCI-A1000000/2008—No. Indosat 021/C00-CC0/LGL/2008 dated March 31, 2008 and second amendment No. Telkom 123/HK.820/DCI-A1000000/2009—No. Indosat007/C00-C0A/LGL/2009 dated December 30, 2009 and the third amendment as stipulated in the form of mutual office minutes No. Telkom Tel.024/YN.000/DCI-A1050000/2011—No. Indosat 003/C00-C0H/LGL/2011dated January 31, 2011.

On December 18, 2007, we entered into an interconnection agreement with Telkom to set up network interconnection between our fixed telecommunications network and Telkom’s fixed telecommunications network. Under this agreement, we and Telkom agreed to open prefixes and access codes belonging to the other party which enable each party’s customers to make local, long-distance and international calls between our fixed telecommunications network and Telkom’s fixed telecommunications network. The agreement sets forth the interconnection tariffs for providing interconnection services based upon a cost-based regime and is valid for two years, but can be extended or terminated based upon mutual agreement of the parties. We amended this agreement through the first amendment No Telkom 48/HK.820/DCI-A1000000/2008—No Indosat 020/C00-CC0/LGL/2008 dated March 31, 2008, the second Amendment No Telkom 125/HK.820/DCI-A1000000/2009—No Indosat 006/C00-COA/LGL/2009 dated December 30, 2009 and the third amendment as stipulated in the form of mutual office minutes No Telkom Tel.025/YN.000/DCI-A1050000/2011—No Indosat 002/C00-C0H/LGL/2011 dated January 31, 2011.

On December 19, 2007, we entered into a cooperation agreement with Telkomsel to set up network interconnection between our cellular mobile network and Telkomsel’s cellular mobile network. Pursuant to this agreement, we and Telkomsel agreed to enable each party’s customers to make or receive interconnection calls of various types between our cellular mobile network and Telkomsel’s cellular mobile network. The agreement is automatically renewed every two years but can be unilaterally terminated by either party upon three month’s written notice. We amended the agreement through the first amendment No Telkomsel: AMD.233/LG.05/PD-00/II/2008 and No. Indosat: 003/C00-CC0/LGL/08 dated February 18, 2008 and through the second amendment No. Telkomsel : 1392/LG.05/PD-00/IX/2010 and No. Indosat: 009/C00-C0AA/LGL/10 dated September 7, 2010.

On November 25, 2009, we entered into two trustee agreements with PT Bank Rakyat Indonesia (Persero) Tbk, as trustee, in connection with our Seventh Indosat Bonds and our Fourth Syari’ah Ijarah Bonds. The

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Seventh Indosat Bonds were issued on December 8, 2009 and have total face value of Rp1,300.0 billion. The Fourth Syari’ah Ijarah Bonds were issued on December 8, 2009 and have a total face value of Rp200.0 billion.

On September 17, 2008 and on June 8, 2009, we entered into a three-year unsecured credit facility agreement and a five-year unsecured credit facility agreement with BCA, amounting to Rp500 billion and Rp1,000 billion, respectively.

On July 28, 2009, we entered into a five-year unsecured credit facility agreement with Mandiri amounting to Rp1,000 billion and on August 18, 2009, we obtained an export credit facility from EKN totaling US$315.0 million.

On March 24, 2009, we held meetings with holders of our Series B Second Indosat Bonds, Third Indosat Bonds, Fourth Indosat Bonds, Fifth Indosat Bonds, Sixth Indosat Bonds, First Syari’ah Ijarah Bonds, Second Syari’ah Ijarah Bonds and Third Syari’ah Ijarah Bonds, and obtained consents to, among other things, amendments to the definitions of “Debt,” “EBITDA,” and “Equity” and to change the ratio of Debt to Equity from 1.75 to 1 to 2.5 to 1 in the trustee agreements to these bonds.

On July 29, 2010 we, through Indosat Palapa Company B.V. (“Indosat Palapa”) issued guaranteed Notes 2020 with a total face value of US$650.0 million. The notes were issued at 99.478% of their principal amount and mature on July 29, 2020. The notes bear interest at the fixed rate of 7.375% per annum payable in semi-annual installment due on January 29 and July 29 of each year, commencing January 29, 2011.

On February 10, 2011, we entered into a three-year unsecured time loan revolving facility agreement with BCA, amounting to Rp1,000 billion. For further information on these agreements, see “Item 5: Operating and Financial Review and Prospects—Principal Indebtedness.”

Tower Lease Agreements

To comply with the Minister of Communication and Information Regulation No. 02/PER/M.KOMINFO/2008 in conjunction with The Joint Decree of Minister of Communication and Information, Minister of Internal Affairs, Minister of Public Work and Head of Coordination Investment Board concerning Guidelines For Construction And Utilization Of Joint Telecommunication Towers, we have entered into tower lease agreements with several tenants, as follows:

On January 29, 2010 we entered into a tower lease agreement with PT Hutchison CP Telecommunications (“HCPT”), pursuant to which HCPT intends to lease the towers of Indosat at basic service (without civil, mechanical and electrical components). The term of this agreement is 12 years and can be extended for a minimum of six years thereafter, unless HCPT intends to terminate the agreement with prior written notice submitted within one month before the end of the agreement.

On April 15, 2010 we entered into a tower lease agreement with PT Natrindo Telepon Seluler (“NTS”), pursuant to which NTS intends to lease the towers of Indosat at basic service (without civil, mechanical and electrical components). The term of this agreement is 10 years and can be extended automatically for the same period of the initial term, unless NTS intends to terminate the agreement with prior written notice submitted within 90 days before the end of the agreement.

On May 24, 2010 we entered into a tower lease agreement with PT XL Axiata (“XL”), pursuant to which XL intends to lease towers of Indosat at basic service (without civil, mechanical and electrical components). The term of this agreement is 10 years and can be extended for a minimum of five years unless XL intends to terminate the agreement with prior written notice submitted within 120 days before the end of the agreement.

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On June 3, 2010 we entered into a tower lease agreement with PT Berca Global Access (“BERCA”), pursuant to which BERCA intends to lease the towers of Indosat at basic service (without civil, mechanical and electrical components). The term of this agreement is 10 years and can be extended for a minimum of six years unless BERCA intends to terminate the agreement with prior written notice submitted within one month before the end of the agreement.

On February 4, 2011, we entered into a tower lease agreement with PT Daya Mitra Telekomunikasi (“Mitratel”), pursuant to which Mitratel intends to lease the towers of Indosat at basic service (without civil, mechanical and electrical components) and reserves the right to re-lease it to PT Telekomunikasi Indonesia Tbk Group with full services (including civil, mechanical and electrical components). The term of this agreement shall be 10 years period and can be extended for a minimum of five years based on mutual consent of the parties.

On February 10, 2011, we entered into a memorandum of agreement with PT First Media Tbk (“FM”), pursuant to which FM leased Indosat’s tower with full services (including civil, mechanical and electrical components). The term of this memorandum of agreement is five years and can be extended for a minimum of five years period based on mutual consent of the parties.

A copy, summary and/or translation of the above agreements are filed as Exhibits 4.2 through 4.11, 15.2, 15.4, 15.11, 15.12, and 15.15 through 15.26 attached hereto.

Exchange Controls

See “Item 3: Key Information—Foreign Exchange” included elsewhere in this annual report.

Taxation

The following summary contains a description of the principal Indonesian and U.S. federal tax consequences of the purchase, ownership and disposition of ADSs or shares of common stock. This summary does not purport to be a competitive description of all of the tax considerations that may be relevant to a decision to purchase, own or dispose of ADSs or shares of common stock. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS ABOUT THE INDONESIAN AND U.S. FEDERAL, STATE AND LOCAL TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF ADSs OR SHARES OF COMMON STOCK.

Indonesian Taxation

The following is a summary of the principal Indonesian tax consequences of the ownership and disposition of common stock or ADSs to a non-resident individual or non-resident entity that holds common stock or ADSs (a “Non-Indonesian Holder”). As used in the preceding sentence, a “non-resident individual” is a foreign national individual who is not physically present in Indonesia for 183 days or more during any twelve-month period or present for any period with the intent to reside in Indonesia, during which period such non-resident individual receives income in respect of the ownership or disposition of common stock or ADSs, and a “non-resident entity” is a corporation or a non-corporate body that is established, domiciled or organized under the laws of a jurisdiction other than Indonesia and does not have a fixed place of business or otherwise conducts business or carries out activities through a permanent establishment in Indonesia during an Indonesian tax year in which such non-Indonesian entity receives income in respect of the ownership or disposition of common stock or ADSs. In determining the residency of an individual or entity, consideration will be given to the provisions of any applicable double taxation treaty to which Indonesia is a party.

Dividends. Dividends declared by us out of retained earnings and distributed to a Non-Indonesian Holder in respect of common stock or ADSs are subject to Indonesian withholding tax, currently at the rate of 20.0%, on the amount of the distribution (in the case of cash dividends) or on the shareholders’ proportional share of the

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value of the distribution. A lower rate provided under double taxation treaties may be applicable provided the recipient is the beneficial owner of the dividend and has provided to us (with a copy to the Indonesian Office of Tax Services where we are registered) a certificate of tax domicile issued by the competent authority, or its designee, of the jurisdiction where the Non-Indonesian Holder is domiciled. Indonesia has concluded double taxation treaties with over 50 countries, including Australia, Belgium, Canada, France, Germany, Japan, Malaysia, The Netherlands, Singapore, Sweden, Switzerland, the United Kingdom and the United States of America. Under the U.S.-Indonesia tax treaty, the withholding tax on dividends is generally, in the absence of a 20.0% voting interest, reduced to 15.0%.

Capital Gains. The sale or transfer of common stock listed on an Indonesian stock exchange is subject to tax at the rate of 0.1% of the value of the transaction. The broker handling the transaction is obligated to withhold such tax. The holding, sale or transfer of founder shares listed on an Indonesian stock exchange may, under current Indonesian tax regulations, be subject to an additional 0.5% final income tax. Subject to the promulgation of implementing regulations (which have not been issued to date), the estimated net income received or accrued from the sale of movable assets in Indonesia, which may include common stock not listed on an Indonesian stock exchange or ADSs, by a Non-Indonesian holder (with the exception of the sale of assets under Article 4 paragraph (2) of the Indonesian income tax law) may be subject to Indonesian withholding tax at the rate of 20.0%. However, this provision in the income tax law is not currently applied in practice. It is expected that, if and when further implementing regulations are issued in respect to this provision in the income tax law, in practice this withholding tax will (i) only be applied if common stock not listed on an Indonesian stock exchange is purchased and paid for by an Indonesian resident subject to tax or by a permanent establishment in Indonesia of a non-resident entity or individual and (ii) not affect the net proceeds from any sale or transfer of ADSs through a regular trade on the NYSE by a Non-Indonesian Holder.

In cases where a purchaser or Indonesian broker will be required under Indonesian tax laws to withhold tax on payment of the purchase price for common stock or ADSs, that payment may be exempt from Indonesian withholding or other Indonesian income tax under applicable double taxation treaties to which Indonesia is a party (including the U.S.-Indonesia double taxation treaty). However, current Indonesian tax regulations do not provide specific procedures for removing the purchaser’s or Indonesian broker’s obligation to withhold tax from the proceeds of such sale. To take advantage of the double taxation treaty relief, Non-Indonesian Holders may have to seek a refund from the Indonesian Tax Office by making a specific application accompanied by a Certificate of Domicile issued by the competent tax authority, or its designee, of the jurisdiction in which the Non-Indonesian Holder is domiciled.

Stamp Duty. Transactions in common stock in Indonesia are subject to stamp duty payable at the rate of Rp6,000 on transactions with a value of more than Rp1,000,000 and Rp3,000 on transactions with a value of between Rp250,000 to Rp1,000,000. Transactions with a value of less than Rp250,000 are not subject to stamp duty.

U.S. Federal Income Taxation

The following discussion addresses the principal U.S. federal income tax consequences to a U.S. Holder, as defined below, of owning ADSs or shares of common stock. The description below is based on the Internal Revenue Code of 1986, as amended, or the Code, Treasury Regulations promulgated thereunder, the income tax convention between the United States and Indonesia and judicial and administrative interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly retroactively. The tax treatment of a holder of ADSs or shares of common stock may vary depending upon the holder’s particular situation. Certain holders (including, but not limited to, insurance companies, tax-exempt organizations, financial institutions, persons subject to the alternative minimum tax, broker-dealers, persons that have a “functional currency” other than the U.S. dollar, persons that received ADSs or shares of common stock as compensation for services, persons owning, directly or indirectly, 10.0% or more of our voting shares, and persons who hold ADSs or shares of common stock as part of a “hedge,” “straddle” or “conversion transaction” within the meaning of Sections 1221, 1092 and 1258 of the Code and the Treasury Regulations thereunder) may be subject to special rules not

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discussed below. Except as discussed below with regard to persons who are not U.S. Holders, the following summary is limited to U.S. Holders who will hold ADSs or shares of common stock as “capital assets” within the meaning of Section 1221 of the Code. The discussion below does not address the effect of any state or local tax law on a holder of ADSs or shares of common stock.

As used herein, the term “U.S. Holder” means a holder of ADSs or shares of common stock that is for U.S. federal income tax purposes (i) a citizen or resident of the United States; (ii) a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; (iii) an estate whose income is subject to U.S. taxation regardless of its source; (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust; or (v) a holder whose income in respect of the ADSs or shares of common stock is subject to U.S. federal income tax on a net income basis.

If a partnership or other entity or arrangement treated as a partnership for U.S. federal income tax purposes holds ADSs or shares of common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. A U.S. Holder that is a partner in a partnership holding ADSs or shares of common stock is urged to consult its own tax advisor.

The summary below does not discuss all aspects of U.S. federal income taxation that may be relevant to a particular holder of ADSs or shares of common stock in light of the holder’s particular circumstances and income tax situation. Prospective holders should consult their own tax advisors as to the specific tax consequences to them of the purchase, ownership and disposition of ADSs or shares of common stock, including the application and the effect of state, local, foreign and other tax laws and the possible effects of changes in United States or other tax laws.

Taxation of Distributions. Subject to the discussion under “Passive Foreign Investment Company Status” below, for U.S. federal income tax purposes, the amount of a distribution with respect to ADSs or shares of common stock (including any withholding tax deemed to be imposed with respect to such distributions) will be treated as a dividend taxable as ordinary income on the date of receipt by the Depositary or the holder, respectively, to the extent of our current and accumulated earnings and profits as determined for U.S. federal income tax purposes. Distributions, if any, in excess of such current and accumulated earnings and profits will first constitute a non-taxable return of capital to the extent thereof, and then as a capital gain realized on the disposition of the ADSs or shares of common stock. The portion of any distribution treated as a non-taxable return of capital will reduce such holder’s adjusted tax basis in such ADSs or shares of common stock. Such capital gain will be long-term if the ADSs or shares of common stock have been held longer than one year. U.S. Holders will not be eligible for the dividends received deduction otherwise allowed under the Code for distributions to domestic corporations in respect of distributions on the ADSs or common stock.

For taxable years beginning before January 1, 2013, “qualified dividend income” received by an individual is subject to federal income taxation at rates lower than those applicable to other types of ordinary income. Based upon our existing and anticipated future operations and current assets, we believe that we are a “qualified foreign corporation” and that our dividends paid to U.S. Holders who are individuals will be eligible to be treated as “qualified dividend income” provided that applicable holding period requirements with respect to the ADSs or common stock and other applicable requirements are satisfied by such U.S. Holders. Dividends paid by a foreign corporation that is classified as a passive foreign investment company, or PFIC, are not “qualified dividend income.” See “—Passive Foreign Investment Company Status” below.

If a distribution is paid in any currency other than U.S. dollars, the amount of the distribution will be translated into U.S. dollars at the spot rate on the date the distribution is received (which for holders of ADSs, would be the date such dividend is received by the Depositary), regardless of whether the distributions are in fact converted into U.S. dollars on that date. Any gain or loss in respect of such non-U.S. currency arising from exchange rate fluctuations after that date will be ordinary income or loss.

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Taxation of Capital Gains and Losses. Subject to the discussion under “Passive Foreign Investment Company Status” below, a U.S. Holder will generally recognize a taxable gain or loss on the sale, exchange or other disposition of ADSs or shares of common stock in an amount equal to the difference between the amount realized on the sale, exchange or other disposition and such holder’s adjusted tax basis in such ADSs or shares of common stock. This will result in a long-term or short-term capital gain or loss, depending on whether the ADSs or shares of common stock have been held for more than one year. For non-corporate U.S. Holders, the U.S. income tax rate applicable to the net long-term capital gain recognized for a year upon a sale, exchange or other disposition of ADSs or shares of common stock is currently 15.0% for taxable years beginning before January 1, 2013. Deposit and withdrawal of common stock in exchange for ADSs by a U.S. Holder will not result in a realization of gain or loss for U.S. federal income tax purposes.

Passive Foreign Investment Company Status. Special U.S. federal income tax rules apply to a U.S. Holder that holds an equity interest in a PFIC. In general, a foreign corporation will constitute a PFIC for any taxable year for United States federal income tax purposes if 75.0% or more of its gross income for such taxable year consists of passive income (generally, interest, dividend, rents, royalties and net gain from the disposition of assets that give rise to such income) or 50.0% or more of its average assets held during such taxable year consist of assets that produce or are held for the production of passive income.

Based upon our existing and anticipated future operations and current assets, we believe that we are not, and anticipate that we will not become in the foreseeable future, a PFIC. If we are not operated in the manner currently anticipated, however, we may be considered a PFIC for the current or for a subsequent year depending upon our actual activities. Furthermore, because PFIC status is determined on a year-by-year basis and depends upon the composition of a company’s income and assets and the market value of its assets from time to time, there can be no assurance that we will not be considered a PFIC for any taxable year.

If we are a PFIC for any taxable year during which a U.S. Holder holds ADSs or shares of common stock, such U.S. Holder will be subject to special tax rules with respect to any “excess distribution” received and any gain realized from a sale or other disposition, including a pledge, of ADSs or shares of common stock. Distributions received in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or such U.S. Holder’s holding period for ADSs or shares of common stock will be treated as excess distributions. Under these special tax rules: (a) the excess distribution or gain will be allocated rateably over such U.S. Holder’s holding period for ADSs or shares of common stock, (b) the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and (c) the amount allocated to each other year will generate an additional tax that is due for the current taxable year and that is equal to the total, for each such other year, of (i) the amount allocated to such year multiplied by the highest tax rate in effect for such year and (ii) an amount equal to the interest charge that would have been imposed for underpaying that amount of tax for such year.

An election may be available to avoid these adverse tax consequences if certain conditions are met and the U.S. Holder elects to annually mark-to-market the ADSs or shares of common stock. Furthermore, although a PFIC shareholder may mitigate the rules described above by electing to treat a PFIC as a “qualified electing fund” under Section 1295 of the Code, this option is not available to U.S. Holders because we do not intend to comply with the requirements necessary to permit a U.S. Holder to make this election.

U.S. Holders are advised to consult their tax advisors concerning the U.S. federal income tax consequences of holding the ADSs or shares of common stock and of making the mark-to-market election if we are considered a PFIC in any taxable year. A U.S. Holder who owns ADSs or shares of common stock during any year that we are a PFIC must file with the Internal Revenue Service, or IRS, Form 8621.

Foreign Tax Credit Considerations. For United States federal income tax purposes, U.S. Holders will be treated as having received the amount of any Indonesian tax withheld upon the payment of a dividend and as then

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having paid over the withheld taxes to Indonesia. As a result of this rule, the amount of dividend included in a U.S. Holder’s gross income may be greater than the amount of cash actually received (or receivable) by the U.S. Holder.

Subject to the limitations and conditions set forth in the Code, U.S. Holders may elect to claim a credit against their U.S. federal income tax liability for Indonesian tax withheld from dividends or Indonesian tax imposed on capital gains, if any, or, if they do not elect to credit any foreign tax for the taxable year, they may deduct such tax. For purposes of the foreign tax credit limitation, dividends and capital gains will, depending on a U.S. Holder’s particular circumstances, generally constitute “passive” or “general” income. Furthermore, dividends will generally constitute foreign source income and currency gains and capital gains will generally constitute U.S. source income. Capital loss will generally be allocated against U.S. source income. Because capital gains will generally constitute U.S. source income, as a result of the U.S. foreign tax credit limitation, any Indonesian or other foreign tax imposed upon capital gains in respect of ADSs or shares of common stock may not be currently creditable unless a U.S. Holder had other foreign source income for the year in the appropriate foreign tax credit limitation basket or an election to treat such gain as foreign source income is available. Investors are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

Non-U.S. Holders. Except for the possible imposition of U.S. backup withholding tax (see “—U.S. Backup Withholding and Information Reporting”), payments of any dividend on an ADS or share of common stock to a holder who is not a U.S. Holder (a “non-U.S. Holder”) will not be subject to U.S. federal income tax and gain from the sale, redemption or other disposition of an ADS or a shares of common stock, provided that:

a. the non-U.S. Holder shall not be or have been engaged in a trade or business in the United States;

b. there is no present or former connection between such non-U.S. Holder and the United States, including, without limitation, such non-U.S. Holder’s status as a former citizen thereof or former resident thereof; and

c. in the case of a gain from the sale, redemption or other disposition of an ADS or share of common stock by an individual, the non-U.S. Holder is not present in the United States for 183 days or more in the taxable year of the sale or certain other conditions are met.

If dividends, gain or income with respect to an ADS or share of common stock of a non-U.S. Holder is effectively connected with the conduct of such trade or business (or attributable to a permanent establishment in the United States, in the case of a holder who is a resident of a country which has an income tax treaty with the United States), the non-U.S. Holder may be subject to U.S. income taxes on such dividend, gain or income at the statutory rates provided for U.S. Holders after deduction of deductible expenses allocable to such effectively connected income. In addition, if such a non-U.S. Holder is a foreign corporation, it may be subject to a branch profits tax currently equal to 30.0% of its effectively connected earnings and profits for the taxable year, as adjusted for certain items, unless a lower rate applies under a United States income tax treaty with the non-U.S. Holder’s country of residence. For this purpose, dividends, gain or income in respect of an ADS or share of common stock will be included in earnings and profits subject to the branch profits tax if the dividend, gain or income is effectively connected with the conduct of the United States trade or business of the non-U.S. Holder.

U.S. Backup Withholding and Information Reporting. Payments made by a U.S. paying agent or other U.S. intermediary broker in respect of ADSs or shares of common stock may be subject to information reporting to the IRS and to a backup withholding tax. Backup withholding will not apply, however, (i) to a holder who furnishes a correct taxpayer identification number and makes any other required certification or (ii) to a holder who is otherwise exempt from backup withholding.

Any amounts withheld under the backup withholding rules from a payment to a holder will be allowed as a refund or a credit against such holder’s U.S. federal income tax, provided that the holder has complied with applicable reporting obligations.

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Information with Respect to Foreign Financial Assets. Under recently enacted legislation, individuals that own “specified foreign financial assets” with an aggregate value in excess of $50,000 in taxable years beginning after March 18, 2010 will generally be required to file an information report with respect to such assets with their tax returns. “Specified foreign financial assets” include any financial accounts maintained by certain foreign financial institutions, as well as any of the following, but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-US persons, (ii) financial instruments and contracts held for investment that have non-U.S. issuers or counterparties and (iii) interests in foreign entities. U.S. holders that are individuals are urged to consult their tax advisors regarding the application of this legislation to their ownership of ADSs or shares of common stock.

Documents on Display

Any material which is filed as an exhibit to this annual report on Form 20-F with the U.S. Securities and Exchange Commission is available for inspection at our offices. See “Item 4: Information on the Company—Principal Registered Offices.”

Item 11: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosure about Market Risk

We are exposed to market risks primarily from changes in interest rates, changes in foreign currency exchange rates, and equity price risk on the value of our long-term investments. To manage our foreign exchange and interest rate risks, we have entered into interest rate swap contracts, cross currency swap contracts and other transactions aimed at reducing and/or managing the adverse impact of changes in foreign exchange and interest rates on our operating results and cash flows. We enter into such transactions to minimize risk without engaging in speculative practices. We account for these instruments as transactions not designated as hedges, wherein changes in the fair value are charged or credited directly as expenses or income for the relevant year. We also convert surplus Indonesian rupiah funds to U.S. dollars on a regular basis in amounts necessary to meet our U.S. dollar expenses.

Interest Rate Sensitivity

As of December 31, 2010, most of our debt outstanding was at fixed rates. The following table provides information regarding our financial instruments that are sensitive to changes in interest rates. For long-term debt and bonds payable, the table presents principal cash flows and related interest rates by expected maturity dates. The information presented in the table has been determined based on the following assumptions: (i) variable interest rates in time deposits denominated in U.S. dollar and Indonesian rupiah are based on the available interest rate in 2010; (ii) interest rates for long-term deposits denominated in Indonesian rupiah are based on one-month Certificate of Bank Indonesia and three month JIBOR on December 2010 plus a margin; and (iii) interest rates for long-term debts in U.S. dollars are based on provisions in the various agreements. However, we cannot assure you that such assumptions will be correct for future periods. Such assumptions and the information described in the table may be influenced by a number of factors, including increases in interest rates in Indonesia resulting from continued tight liquidity and other monetary and macroeconomic factors affecting Indonesia.

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		Outstanding Balance as at December 31, 2010						Expected Maturity Date as of December 31
	Interest Rate	Foreign Currency			Rupiah Equivalent			2011			2012			2013			2014			2015			2016 and Thereafter			Total
		(In USD million)			(In Rp billion)			(in Rp billion)
Assets
Variable rate
Time deposits and deposits on call
Rp	2.5% – 10.00%		—			945.2			945.2			—			—			—			—			—			945.2
USD	0.05% – 4.75%		94.2			846.6			846.6			—			—			—			—			—			846.6
Total Assets			94.2			1,791.8			1,791.8			—			—			—			—			—			1,791.8
Liabilities
Loans payable
Fixed rate
Rp
Principal			—			434.3			—			—			434.3			—			—			—			434.3
Interest	Fixed rate of 8.75% p.a.		—			—			38.0			38.0			19.0			—			—			—			95.0
USD
Principal			295.3			2,654.8			374.6			340.4			395.0			340.4			340.4			864.0			2,654.8
Interest	Fixed rates, ranging from 4.15% p.a. – 5.69% p.a.		—			—			124.1			106.8			90.3			73.8			57.3			85.1			537.4
Variable rate
Rp
Principal			—			2,657.4			634.9			2,022.5			—			—			—			—			2,657.4
Interest	Floating rate of 3-month JIBOR + 1.5% – 2.25%		—			—			210.0			125.7			—			—			—			—			335.7
USD
Principal			591.3			5,316.7			2,175.0			852.0			1,620.7			204.7			204.7			259.6			5,316.7
Interest	Floating rates of 6-month LIBOR + 0.35% – 2.87%					—			94.9			61.8			51.7			30.0			22.4			19.9			280.7
Bonds payable
Fixed rate
Rp
Principal						7,450.0			1,100.0			—			1,330.0			2,358.0			320.0			2,342.0			7,450.0
Interest	Fixed rates, ranging from 10.2% p.a. – 16.0% p.a.					—			753.7			687.7			619.5			468.2			285.9			853.4			3,668.4
USD
Principal			650.0			5,844.1			—			—			—			—			—			5,844.1			5,844.1
Interest	7.38%					—			431.0			431.0			431.0			431.0			431.0			2,155.0			4,310.0
Variable rate
Rp
Principal						42.0			—			42.0			—			—			—			—			42.0
Interest	Maximum of 19% p.a. and Minimum of 12.75% p.a.					—			5.4			2.6			—			—			—			—			8.0
Total Liabilities			1,536.6			24,399.3			5,941.6			4,710.5			4,991.5			3,906.1			1,661.7			12,423.1			33,634.5
Net Cash Flows			(1,442.4	)		(22,607.5	)		(4,149.8	)		(4,710.5	)		(4,991.5	)		(3,906.1	)		(1,661.7	)		(12,423.1	)		(31,842.7	)

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In addition, as of December 31, 2010, we held U.S. dollar-denominated and Indonesian rupiah-denominated deposits, which also have exposure to interest rate fluctuations.

Exchange Rate Sensitivity

Our exposure to exchange rate fluctuations results primarily from U.S. dollar long-term debt obligations, bonds payable and accounts receivable and payable.

Our accounts payable are primarily foreign currency net settlement payments to foreign telecommunications operators, while most of our accounts receivable are Indonesian rupiah-denominated payments from domestic operators. During the period between January 1, 2008 through December 31, 2010, the Indonesian rupiah/U.S. dollar exchange rate ranged from a low of Rp12,151 per U.S. dollar to a high of Rp8,924 per U.S. dollar, and, during 2010, ranged from a low of Rp9,365 per U.S. dollar to a high of Rp8,888 per U.S. dollar. On December 31, 2010, the prevailing Bank Indonesia exchange rate was Rp8,991 per U.S. dollar. As a result, we recorded a loss on foreign exchange-net of Rp885.7 billion in 2008, a gain of Rp1,656.4 billion in 2009 and a gain of Rp492.4 billion (US$54.8 million) in 2010.

The following table provides information about our financial instruments by functional currency and presents such information in Indonesian rupiah equivalents, which is our reporting currency. The table summarizes information on instruments and transactions that are sensitive to foreign exchange rates, including term deposits, accounts payable and receivable, and our financial instruments including term deposits, account receivable and account payable, and their long term debt. The table presents principal cash flows by expected maturity dates.

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The information presented in the table has been determined based on assumptions that the exchange rate for U.S. dollars is based on the Indonesian Central Bank Rate on December 31, 2010 of Rp8,991 per US$1.00. However, we cannot assure you that such assumptions will be correct for future periods. Such assumptions and the information described in the table may be influenced by a number of factors, including a further depreciation of the Indonesian rupiah in future periods.

	Expected Maturity Date as of December 31,
	Foreign Currency			2011			2012			2013			2014			2015			2016 and Thereafter			Total
	(US$ in millions)												(Rp in billion)
Assets:
Cash and cash equivalents(1)
US$ denominated		111.8			1,005.1			—			—			—			—			—			1,005.1
Accounts receivable
US$ denominated		116.1			1,043.6			—			—			—			—			—			1,043.6
Derivative assets
US$ denominated		7.7			69.3			—			—			—			—			—			69.3
Other current financial assets
US$ denominated		1.7			15.4			—			—			—			—			—			15.4
Due from related parties
US$ denominated		0.1			—			1.1			—			—			—			—			1.1
Other non-current financial assets
US$ denominated		1.4			—			12.8			—			—			—			—			12.8
Total Assets		238.8			2,133.4			13.9			—			—			—			—			2,147.3
Liabilities:
Accounts payable—rade
US$ denominated		32.8			294.8			—			—			—			—			—			294.8
Procurement payable
US$ denominated		246.6			2,217.3			—			—			—			—			—			2,217.3
Accrued expenses
US$ denominated		46.3			416.0			—			—			—			—			—			416.0
Deposits from customers
US$ denominated		1.5			13.3			—			—			—			—			—			13.3
Derivative liabilities
US$ denominated		23.9			215.4			—			—			—			—			—			215.4
Other current financial liabilities
US$ denominated		0.1			0.6																		0.6
Other current liabilities
US$ denominated		6.1			55.0			—			—			—			—			—			55.0
Loans payable including current maturities
US$ denominated		886.6			2,549.6			1,192.4			2,015.7			545.1			545.1			1,123.5			7,971.4
Bonds payable including current maturities
US$ denominated		650.0			—			—			—			—			—			5,844.2			5,844.2
Other non-current liabilities
US$ denominated		8.7			—			78.5			—			—			—			—			78.5
Total Liabilities		1,902.6			5,762.0			1,270.9			2,015.7			545.1			545.1			6,967.7			17,106.5
Net Cash Flows		(1,663.8	)		(3,628.6	)		(1,257.0	)		(2,015.7	)		(545.1	)		(545.1	)		(6,967.7	)		(14,959.2	)

⁽¹⁾  Cash and cash equivalents consist of cash on hand, cash in banks and time deposits.

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Equity Price Risk

Our long-term investments consist primarily of minority investments in the equity of private Indonesian companies and equity of foreign companies. With respect to the Indonesian companies in which we have investments, the financial performance of such companies may be adversely affected by economic conditions in Indonesia.

Foreign Currency Swap Contracts

As of December 31, 2010, we maintained foreign currency swap contracts that we entered between 2005 and 2008. From 2008 to 2009, we settled the remainder of our structured currency forward contracts with three separate international financial institutions. As of December 31, 2010, we had hedging facilities amounting to US$275.0 million, representing 17.9% of our U.S. dollar-denominated bonds and loans as of December 31, 2010.

As of December 31, 2010, we have outstanding foreign currency contracts under which we agreed to pay Indonesian rupiah in exchange for the counterparty’s obligation to pay U.S. dollars, based upon agreed spot rates. However, in the event that the Indonesian rupiah appreciates against the U.S. dollar, we would recognize losses on such transactions, which could have a material and adverse effect on our financial condition.

Interest Rate Swap Contracts

As of December 31, 2010, we maintained interest rate swap contracts that we entered into between 2008 to 2009 with respect to US$478.3 million in aggregate in which we agreed to make fixed interest rate payments in exchange for a six-month U.S. dollar LIBOR-linked floating rate plus either 0.35%, 1.45% or 1.85% per annum in order to hedge the interest rate risks on our HSBC Sinosure and HSBC Commercial satellite financing agreements and our ING/DBS Syndicated Loan, respectively.

Item 12: DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Fees and Charges Our American Depositary Shares (ADS) Holders May Have to Pay

The Bank of New York Mellon, the depositary of our ADS program, charges the following to any party depositing or withdrawing ordinary shares or any party surrendering ADRs or to whom ADRs are issued, whichever applicable, pursuant to the deposit agreement with the depositary: (1) taxes and other governmental charges, (2) registration fees as may from time to time be in effect for the registration of transfers of shares, (3) cable, telex and facsimile transmission expenses as are expressly provided in the deposit agreement to be at the expense of persons depositing shares or owners, (4) expenses incurred by the depositary in the conversion of foreign currency pursuant to the deposit agreement, (5) a fee not in excess of $5.00 per 100 ADSs (or portion thereof) for the execution and delivery of ADSs and the surrender of ADSs and, (6) a fee for the distribution of proceeds of sales of securities or rights pursuant to the deposit agreement, respectively, in an amount equal to the fee for the issuance of ADSs referred to above which would have been charged as a result of the deposit by owners of shares received in exercise of rights distributed to them pursuant to the deposit agreement, respectively, but which securities or rights are instead sold by the depositary and the net proceeds distributed. Under the deposit agreement, the depositary collects such fees by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees.

Fees to be made by the Depositary to Us

The depositary has agreed to reimburse certain of our expenses related to our ADS program and incurred by us in connection with the program. The depositary reimbursed to us, or paid amounts on our behalf to third parties, or waived its fees and expenses, in the gross amount of US$222,697.21 for the year ended December 31, 2010.

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The table below sets forth the types of expenses that the depositary has agreed to reimburse, and the invoices relating to the year ended December 31, 2010 that were reimbursed:

Type of Fees	Amount
Printing costs	$	0.00
New York Stock Exchange Listing Fee	$	54,083.96
Costs related to ADS program	$	49,363.26
Total	$	103,447.22

The depositary has also agreed to waive fees for standard costs associated with the administration of the ADS program and has paid certain expenses directly to third parties on our behalf. The table below sets forth those expenses that the depositary has waived or paid directly to third parties relating to the year ended December 31, 2010:

Type of Fees	Amount
Mailing, printing and service fees and expenses	$	0.00
Meeting-related expenses	$	4,116.16
Fees and expenses related to the administration of the ADS program	$	115,133.83
Total	$	119,249.99

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PART II

Item 13: DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Following the Asian financial crisis and the related devaluation of the Indonesian rupiah against the U.S. dollar in late 1997, Satelindo defaulted on its debt obligations in 1998. Satelindo restructured its debt obligations in 2000. Immediately prior to the restructuring, Satelindo had a total principal amount of indebtedness of US$530.5 million, of which US$519.1 million was restructured. As of December 31, 2010, neither we nor our subsidiaries had a material default relating to our outstanding indebtedness.

Item 14: MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

Item 15: CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of December 31, 2010, or the Evaluation Date, our management, including our President Director and Finance Director, carried out an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13(a)-15(e) and 15(d)-15(e) under the Exchange Act. Based on that evaluation, we concluded that, as of the Evaluation Date, our disclosure controls and procedures were sufficient to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our President Director and Finance Director, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

As required by section 404 of the Sarbanes-Oxley Act of 2002, our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Our system of internal control over financial reporting was designed to provide reasonable assurance to our management and Audit Committee of the reliability of our financial reporting and the preparation of published financial statements in accordance with generally accepted accounting principles. Our Board of Directors conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2010 based on the framework in Internal Control—Integrated Framework, which is issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of our Board of Directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Based on this criteria, our management concluded that, as of December 31, 2010, our internal control over financial reporting was effective.

All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention or overriding of the controls and procedures which may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions.

134

Purwantono, Suherman & Surja, a member firm of Ernst & Young Global Limited, the independent registered public accounting firm, has audited our consolidated financial statements included in this annual report and has issued an attestation report on internal control over financial reporting as of December 31, 2010. This attestation report is set forth on page 3 of our consolidated financial statements attached hereto.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the period covered by this annual report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 16A: AUDIT COMMITTEE FINANCIAL EXPERT

The Board of Commissioners has determined that each of George Thia Peng Heok and Kanaka Puradiredja constitute an “audit committee financial expert,” as defined in Item 16A of Form 20-F, and that such person is also “independent,” as defined in Rule 10A-3 under the Exchange Act. For more information about George Thia Peng Heok, see “Item 6. Directors, Senior Management and Employees—Directors and Senior Management—Board of Commissioners.”

Item 16B: CODE OF ETHICS

We have adopted a Code of Ethics that applies to all employees, including our Board of Directors. We have posted this Code of Ethics on our website at www.indosat.com, where it is publicly available. A copy of our Code of Ethics was filed as Exhibit 11.1 to our annual report on Form 20-F for the fiscal year ended December 31, 2009. We have issued a Guide to the implementation of PT Indosat Tbk’s Code of Ethics on November 20, 2010 as a reiteration of the Board of Directors Decree No.002/DIREKSI/2007 on the Code of Ethics.

Item 16C: PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table contains a summary of the fees paid to Purwantono, Sarwoko & Sandjaja, the Indonesian member firm of Ernst & Young Global, our independent external auditors for the years ended December 31, 2008 and 2009 and the fees paid to Purwantono, Suherman & Surja, the Indonesian member firm of Ernst & Young Global, our independent external auditors for the years ended December 31, 2010:

	2008		2009		2010
	(in US$)
Audit fees(1)		1,963,307		2,330,298		2,287,934
Audit-related fees(2)		953,962		1,279,708		1,543,584
Tax fees(3)		—		—		—
All other fees(4)		—		—		—
Total Fees		2,917,269		3,610,006		3,831,518

⁽¹⁾  Audit fees represent fees for professional services provided for the financial audit of our financial statements and of our subsidiaries, PT Indosat Mega Media, PT Aplikanusa Lintasarta, PT Starone Mitra Telekomunikasi and PT Artajasa Pembayaran Elektronis and our internal control audit and attestation services in compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

⁽²⁾  Audit-related fees in 2008, 2009 and 2010 primarily consist of fees for performing limited reviews of our interim financial information including those of our subsidiaries and for performing services in connection with our bond issuances in 2008, 2009 and 2010.

⁽³⁾  Tax fees represent fees for professional services related to tax compliance and tax planning / advisory consultation.

⁽⁴⁾  All other fees represent professional services provided for services not directly supporting financial statement audits.

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These professional services are covered within the scope of audit services as defined by the Commission’s regulations.

In June 2004, the Audit Committee adopted a policy pursuant to which all audit and non-audit services must be pre-approved by the Audit Committee. Under no circumstances may our principal external auditors provide services that are prohibited by the Sarbanes-Oxley Act of 2002 or rules issued thereunder. Non-prohibited audit-related services may be provided to us, subject to such pre-approval process and prohibitions. The pre-approval policy relates to all services provided by our principal external auditor and does not include any pre-set fee limits that do not require pre-approval or any de minimis exception.

Item 16D: EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

In accordance with Indonesian law, we have a two-tier board structure, consisting of a Board of Commissioners and a Board of Directors. The executive management functions are carried out by our Board of Directors, while our Board of Commissioners is principally responsible for supervising our Board of Directors in the operation and management of us and to give advice to our Board of Directors.

Under Indonesia Stock Exchange rules, our Audit Committee must consist of at least three members, one of whom must be an independent commissioner and concurrently the chairman of the Audit Committee, while the other two members must be external independent parties of whom at least one such party shall have accounting and/or finance expertise. Our Audit Committee is composed of five members and is chaired by one of our Independent Commissioners. Members of our Audit Committee are appointed and dismissed by our Board of Commissioners.

New listing rules adopted pursuant to Rule 10A-3 under the Exchange Act require a foreign private issuer with securities listed on the NYSE to have an audit committee comprised of independent directors. The rules became effective on July 31, 2005. Under Rule 10A-3(c)(3), foreign private issuers are exempt from such independence requirements if (i) the home country government or stock exchange requires the company to have an audit committee; (ii) the audit committee is separate from the board of directors or has members from both inside and outside the board of directors; (iii) the audit committee members are not elected by the management and no executive officer of the company is a member of the audit committee; (iv) the home country government or stock exchange has requirements for an audit committee independent from the management of the company; and (v) the audit committee is responsible for the appointment, retention and oversight of the work of external auditors. We rely on the general exemption under Rule 10A-3(c)(3) of the Exchange Act with respect to the composition of our Audit Committee as set forth in our Section 303A.11 website disclosure, which is made publicly available on our website, www.indosat.com.

We believe our reliance on the exemption would not materially or adversely affect the ability of our Audit Committee to act independently. We also believe the intent of such provisions are meant to ensure that the Audit Committee is independent from influence by management and would provide a forum separate from management in which auditors and other interested parties can candidly discuss concerns. The Indonesia Stock Exchange rules require that each member of the Audit Committee be independent. The rules also require that at least two of the members of the Audit Committee be external independent members, which means that they must be independent of not only the Board of Directors but also the Board of Commissioners and us as a whole. Accordingly, we believe the standard established by the Indonesia Stock Exchange rules are at least equally effective in ensuring the ability of our Audit Committee to act independently.

Item 16E: PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

136

Item 16F: CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

There were no changes in or disagreements with our accountants on any matter of accounting principle, practice or financial disclosure during the last two fiscal years.

Item 16G: CORPORATE GOVERNANCE

We are incorporated under the laws of the Republic of Indonesia and the principal trading market for our ordinary shares is the IDX. Our ordinary shares are registered with the U.S. Securities and Exchange Commission and are listed on the NYSE. As such, we are subject to certain corporate governance requirements.

Our home country requirements for corporate governance are embodied primarily in Law No. 40 of 2007 on Limited Liability Companies, Law No. 8 of 1995 on Capital Markets, the Regulations of the Indonesian Capital Market and Financial Institution Supervisory Board, or the BAPEPAM-LK Regulations, and the rules issued by the Indonesian stock exchanges, namely the IDX. In addition to these statutory requirements, our Articles of Association incorporate provisions directing certain corporate governance practices.

However, many of the corporate governance rules contained in the NYSE Listed Company Manual, or the NYSE listing standards, are not required for “foreign private issuers” and we are permitted to follow our home country corporate governance practices in lieu of most corporate governance standards contained in the NYSE listing standards. Although we have complied voluntarily with most of the corporate governance rules contained in the NYSE listing standards, there are certain important differences between our corporate governance standards and those standards applicable to U.S. companies listed on the NYSE which are described below.

Audit Committee

The NYSE listing standards require NYSE-listed companies to maintain an audit committee comprised of at least three members satisfying the requirements for independence set forth in Section 303A.02. Pursuant to BAPEPAM-LK Regulations, public companies in Indonesia must maintain audit committees comprised of at least one independent commissioner and two members from outside the company. Our Audit Committee consists of five members, three of whom are Independent Commissioners and two of whom are independent outsiders, as required by BAPEPAM-LK Regulations.

Unlike the requirements set forth in the NYSE listing standards, our Audit Committee does not have direct responsibility for the appointment, retention and compensation of our external auditor. Our Audit Committee can only recommend the appointment of the external auditor to the Board of Commissioners, and the Board of Commissioner’s decision is subject to shareholder approval as required by Indonesian law. A copy of our Audit Committee’s written charter can be found on our website at www.indosat.com and is attached hereto as Exhibit 15.14.

Composition of Board of Directors; Nominating Committee

The NYSE listing standards require that the board of directors of an NYSE-listed company consist of a majority of independent directors and that a nominating committee be established. We have a dual board structure, with a separate Board of Directors and Board of Commissioners, separating the powers of management (exercised by the Board of Directors) from those of supervision (exercised by the Board of Commissioners). As such, when the NYSE listing standards apply corporate governance principles to the directors of a NYSE-listed company, we evaluate our practices with reference to our Commissioners. As required by BAPEPAM-LK Regulations and IDX rules, our ten-member Board of Commissioners maintains a minimum of at least three independent members. Further, we do not have a nominating committee. At meetings of our shareholders, our shareholders nominate and elect persons to our Board of Commissioners.

137

Pursuant to the NYSE listing standards, directors of NYSE-listed companies must meet at regularly-scheduled executive sessions without management. Neither the BAPEPAM-LK Regulations nor IDX rules require us to hold such executive sessions where the Board of Commissioners meets without any Directors present. In the past, our Board of Commissioners, which is entirely composed of non-management persons, has met in executive session periodically, in addition to the customary presentation of information by our Board of Directors to the Board of Commissioners. In early 2005, we instituted procedures by which our Board of Commissioners started meeting in executive sessions at the end of each regularly-scheduled meeting, which currently occur at least on a quarterly basis.

Compensation Committee

The NYSE listing standards require NYSE-listed companies to maintain a compensation committee composed entirely of independent directors with a written charter addressing the committee’s performance and responsibilities as well as requiring an annual performance evaluation. Our Remuneration Committee currently has three members from our Board of Commissioners and has the responsibilities contained in the NYSE listing standards. However, only one commissioner of the three committee members is independent and its written charter does not provide for an annual performance evaluation of the Remuneration Committee. A copy of our Remuneration Committee’s written charter can be found on our website at www.indosat.com.

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PART III

Item 17: FINANCIAL STATEMENTS

The financial statements listed in Item 19(a) of this annual report, together with the reports of our independent auditors thereon, are filed as part of this annual report.

Item 18: FINANCIAL STATEMENTS

Not applicable. See Item 17.

Item 19: EXHIBITS

(a)	Index to Consolidated Financial Statements
	Report of Independent Registered Public Accounting Firm	F-2-F-3
	Consolidated Statements of Financial Position as of January 1, 2009 and December 31, 2009 and 2010	F-4-F-6
	Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2008, 2009 and 2010	F-7- F-8
	Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2008, 2009 and 2010	F-9-F-11
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2009 and 2010	F-12-F-13
	Notes to Consolidated Financial Statements for the Years ended December 31, 2008, 2009 and 2010	F-14-F-137

(b)	Index to Exhibits
1.1	Notarial Deed No. 118 Relating to the Amendment and Restatement of the Articles of Association, dated June 11, 2009(1)
1.2	Notarial Deed No. 123, Relating to the Amendment of the Articles of Association, dated January 28, 2010(1)
4.1	Form of Non-Compete Agreement(4)
4.2	Agreement for Network Interconnection for Indosat’s Fixed Local Telecommunication Network between and Telkomsel’s Cellular Mobile Network, dated July 30, 2007 and its Amendments dated December 19, 2007(2), March 30, 2008(1) and November 1, 2010.
4.3	Agreement for Network Interconnection for Cellular Mobile Network between Indosat and Telkomsel, dated December 19, 2007 and its Amendments dated February 18, 2008(2) and September 7, 2010.
4.4	Agreement for Network Interconnection for Indosat’s Cellular Mobile Network and Telkom’s Fixed Local Telecommunication Network, dated December 18, 2007 and its Amendments dated March 31, 2008(2), December 30, 2009(1) and January 31, 2011.
4.5	Agreement for Network Interconnection for Fixed Telecommunication Network between Indosat and Telkom, dated December 18, 2007 and Amendments dated March 31, 2008(2), December 30, 2009(1) and January 31, 2011.
4.6	Tower Lease Agreement between Indosat and PT Hutchison CP Telecommunications dated January 29, 2010
4.7	Tower Lease Agreement between Indosat and PT Natrindo Telepon Seluler dated April 15, 2010
4.8	Tower Lease Agreement between Indosat and PT XL Axiata dated May 24, 2010
4.9	Tower Lease Agreement between Indosat and PT Berca Global Access dated June 3, 2010
4.10	Tower Lease Agreement between Indosat and PT Daya Mitra Telekomunikasi dated February 4, 2011

139

4.11	Memorandum of Agreement between Indosat and PT First Media Tbk dated February 10, 2011
7.1	Operating and Financial Ratios
8.1	List of Our Subsidiaries
11.1	Code of Ethics, dated January 24, 2007(4)
12.1	Certification by the Chief Executive Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002
12.2	Certification by the Chief Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002
13.1	Certification by the Chief Executive Officer Required by 18 U.S.C. §1350
13.2	Certification by the Chief Financial Officer Required by 18 U.S.C. §1350
15.1	Term Facility Agreement, dated May 12, 2006, among PT Indosat Tbk, as borrower, arranged by ABN Amro Bank N.V., Jakarta Branch, with Finnish Export Credit Ltd, as original lender, and ABN Amro Bank N.V., Stockholm Branch, acting as facility agent in connection with a US$38,000,000 export credit facility(5) and its Amendment on March 20, 2009(2)
15.2	Trustee Agreement for the Fifth Indosat Bonds, dated May 9, 2007(3) and its Amendment on May 4, 2009(1)
15.3	Credit Agreement with Goldman Sachs International dated May 30, 2007(3)
15.4	Trustee Agreement for the Second Syari’ah Ijarah Bonds, dated May 9, 2007(3) and its Amendment on May 4, 2009(1)
15.5	Credit Agreement with Bank Central Asia, dated August 28, 2007(3), its Amendment on October 30, 2007(3) and on February 12, 2009(2)
15.6	Credit Agreement with Bank Mandiri, dated September 18, 2007(3) and its Amendment on March 23, 2009(2)
15.7	Credit Agreement with Bank DBS Indonesia, dated November 1, 2007(3) and its Amendment on March 25, 2009(2)
15.8	Sinosure Term Facility Agreement with HSBC France, dated November 27, 2007(2) and its Amendment on March 18, 2009(2)
15.9	COFACE Term Facility Agreement with HSBC France, dated November 27, 2007(2) and its Amendment on March 18, 2009(2)
15.10	Commercial Facility Agreement with the Hongkong Shanghai Corporation Limited, Jakarta Branch, dated November 27, 2007(2) and its Amendment on March 18, 2009(2)
15.11	Trustee Agreement for the Sixth Indosat Bonds, dated March 17, 2008(3) and its Amendment on May 4, 2009(1)
15.12	Trustee Agreement for the Third Syari’ah Ijarah Bonds, dated March 17, 2008(3) and its Amendment on May 4, 2009(1)
15.13	Syndicated Loan Facility with ING/DBS, dated June 12, 2008(2) and its Amendment on February 24, 2009(2)
15.14	Revised Audit Committee Charter, dated April 27, 2011
15.15	Credit Agreement with Bank of Central Asia, dated September 17, 2008(2)
15.16	Deed of Amendment of Trustee Agreement for the Second Indosat Bonds, dated May 4, 2009(1)
15.17	Deed of Amendment of Trustee Agreement for the Third Indosat Bonds, dated May 4, 2009(1)
15.18	Deed of Amendment of Trustee Agreement for the Fourth Indosat Bonds, dated May 4, 2009(1)
15.19	Deed of Amendment of Trustee Agreement for the Syariah Ijarah Bonds, dated May 4, 2009(1)

140

15.20	Credit Agreement with Bank Central Asia, dated June 8, 2009(1)
15.21	Credit Agreement with Bank Mandiri, dated July 28, 2009(1)
15.22	EKN Facility Agreement with HSBC Hongkong and ABN Amro Bank Hongkong, dated August 18, 2009(1)
15.23	Trustee Agreement for the Seventh Indosat Bonds, dated November 25, 2009(1)
15.24	Trustee Agreement for the Fourth Syari’ah Ijarah Bonds, dated November 25, 2009(1)
15.25	Indenture dated July 29, 2010 covering our Guaranteed Notes 2020
15.26	Time Loan Revolving Credit Facility Agreement with Bank Central Asia, dated February 10, 2011

⁽¹⁾  Incorporated by reference to our annual report on Form 20-F for the fiscal year ended December 31, 2009 (File No.001-13330) filed with the U.S. Securities and Exchange Commission on June 1, 2010.

⁽²⁾  Incorporated by reference to our annual report on Form 20-F for the fiscal year ended December 31, 2008 (File No. 001-13330) filed with the U.S. Securities and Exchange Commission on April 15, 2009.

⁽³⁾  Incorporated by reference to our annual report on Form 20-F for the fiscal year ended December 31, 2007 (File No. 001-13330) filed with the U.S. Securities and Exchange Commission on May 5, 2008.

⁽⁴⁾  Incorporated by reference to our annual report on Form 20-F for the fiscal year ended December 31, 2006 (File No. 001-13330) filed with the U.S. Securities and Exchange Commission on May 10, 2007.

⁽⁵⁾  Incorporated by reference to our annual report on Form 20-F for the fiscal year ended December 31, 2005 (File No. 001-13330) filed with the U.S. Securities and Exchange Commission on June 28, 2006.

We have not included as exhibits certain instruments with respect to our long-term debt, the total amount of debt authorized under each of which does not exceed 10.0% of our total consolidated assets. We agree to furnish a copy of any such instrument to the Commission upon request.

141

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Date: May 18, 2011

PT INDOSAT TBK
By:	/s/ Harry Sasongko Tirtotjondro
Name:	Harry Sasongko Tirtotjondro
Title:	President Director and Chief Executive Officer

PT INDOSAT Tbk AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

WITH REPORT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

JANUARY 1, 2009 AND DECEMBER 31, 2009 AND 2010

AND YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010

Table of Contents

	Page
Report of Independent Registered Public Accounting Firm		F-2-F-3
Consolidated Statements of Financial Position		F-4-F-6
Consolidated Statements of Comprehensive Income		F-7-F-8
Consolidated Statements of Changes in Stockholders’ Equity		F-9-F-11
Consolidated Statements of Cash Flows		F-12-F-13
Notes to Consolidated Financial Statements		F-14-F-137

***************************

F-1

Report of Independent Registered Public Accounting Firm

Report No. RPC-1030/PSS/2011

The Stockholders and Boards of Commissioners and Directors

PT Indosat Tbk

We have audited the accompanying consolidated statements of financial position of PT Indosat Tbk (“the Company”) and its subsidiaries as of January 1, 2009 and December 31, 2009 and 2010, and the related consolidated statements of comprehensive income, changes in stockholders’ equity and cash flows for the years ended December 31, 2008, 2009 and 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards established by the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of PT Indosat Tbk and its subsidiaries as of January 1, 2009 and December 31, 2009 and 2010, and the consolidated results of their operations and their cash flows for the years ended December 31, 2008, 2009 and 2010 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

As discussed in Note 2.g to the consolidated financial statements, the Company changed its method of accounting for leases effective January 1, 2010.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), PT Indosat Tbk and its subsidiaries’ internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 20, 2011 expressed an unqualified opinion thereon.

Purwantono, Suherman & Surja

Jakarta, Indonesia

April 20, 2011

F-2

Report of Independent Registered Public Accounting Firm

Report No. RPC-1031/PSS/2011

The Stockholders and Boards of Commissioners and Directors

PT Indosat Tbk

We have audited PT Indosat Tbk (“the Company”) and its subsidiaries’ internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on PT Indosat Tbk and its subsidiaries’ internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, PT Indosat Tbk and its subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the COSO criteria.

We also have audited, in accordance with auditing standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of financial position of PT Indosat Tbk and its subsidiaries as of January 1, 2009 and December 31, 2009 and 2010, and the related consolidated statements of comprehensive income, changes in stockholders’ equity and cash flows for the years ended December 31, 2008, 2009 and 2010, and our report dated April 20, 2011 expressed an unqualified opinion thereon.

Purwantono, Suherman & Surja

Jakarta, Indonesia

April 20, 2011

F-3

PT INDOSAT Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

January 1, 2009 and December 31, 2009 and 2010

(Expressed in millions of rupiah, except share data)

					December 31,
	Notes		January 1,  2009 (Restated)*		2009 (Restated)*		2010
			Rp		Rp		Rp
ASSETS
CURRENT ASSETS
Cash and cash equivalents		2f8,4,16 25,31		5,737,866		2,835,999		2,075,270
Short-term investments—net of allowance for decline in value of Rp25,395 as of January 1, 2009 and December 31, 2009 and 2010		2f8,16		—		—		—
Accounts receivable		2d,2f,5,3b
Trade—net of allowance for impairment of Rp496,163 as of January 1, 2009, Rp461,810 as of December 31, 2009 and Rp496,110 as of December 31, 2010		16,25,31		1,340,706		1,385,125		1,548,426
Others—net of allowance for impairment of Rp18,867 as of January 1, 2009, Rp16,544 as of December 31, 2009 and Rp15,281 as of December 31, 2010				16,914		564,859		10,031
Inventories—net of allowance for obsolescence of Rp3,368 as of January 1, 2009, Rp10,769 as of December 31, 2009 and Rp13,961 as of December 31, 2010		2f20		241,991		112,260		105,885
Derivative assets		2f8,2f15
		16,28,31		656,594		224,004		69,334
Advances		29f		39,151		35,173		67,273
Taxes receivable		6,12		247,185		396,581		479,786
Prepaid expenses		2f19,2f21,9, 24,25		1,019,073		1,125,091		1,527,254
Other current assets		2f5		347,516		424,623		222,476
Other current financial assets		2f8,16,31		44,777		35,173		53,119
Total Current Assets				9,691,773		7,138,888		6,158,854
NON-CURRENT ASSETS
Due from related parties—net of allowance for impairment of Rp2,419 as of January 1, 2009, Rp1,182 as of December 31, 2009 and Rp646 as of December 31, 2010		2f8,16,25,31		42,496		7,215		8,421
Deferred tax assets—net		2f6,3b,12		70,744		87,999		95,018
Investments in associated companies—net of allowance for decline in value of Rp56,586 as of January 1, 2009 and December 31, 2009 and Rp56,300 as of December 31, 2010		2f3,2f22		700		422		—
Other long-term investments—net of allowance for decline in value of Rp99,977 as of January 1, 2009 and December 31, 2009 and 2010		2f8,16		2,730		2,730		2,730
Property and equipment—net		2f16,2f17,2f18, 2f22,2g,7		38,333,613		44,358,138		43,489,401
Goodwill and other intangible assets—net		2f1,2f2,2f22, 3b,8		2,060,709		2,042,817		2,063,177
Long term prepaid rentals—net of current portion		2d,9		632,566		735,185		750,472
Long-term prepaid licenses—net of current portion		2f19, 2f21		199,289		463,549		397,708
Long-term advances		2f21, 10		456,093		294,391		216,643
Long-term prepaid pension—net of current portion		2f7,3b,24,25		169,986		147,380		111,344
Long-term receivables		2d,2f8		67,081		50,767		45,911
Other non-current financial assets		2d,2f8,16		72,800		100,004		77,675
Other non-current assets		2d,2f21,25		61,899		5,518		8,341
Total Non-current Assets				42,170,706		48,296,115		47,266,841
TOTAL ASSETS				51,862,479		55,435,003		53,425,695

* Certain amounts shown here do not correspond to the 2009 financial statement and reflect reclassifications and adjustments made as detailed in Notes 2d and 2g, respectively.

The accompanying notes form an integral part of these consolidated financial statements.

F-4

PT INDOSAT Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION—(Continued)

January 1, 2009 and December 31, 2009 and 2010

(Expressed in millions of rupiah, except share data)

				December 31,
	Notes	January 1,  2009 (Restated)*		2009 (Restated)*		2010
		Rp		Rp		Rp
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable—trade	2f9,16,25,31		608,754		537,476		645,505
Procurement payable	2f9,11,16, 25,31		6,446,357		5,289,782		3,644,467
Taxes payable	2f6,12		111,169		61,948		23,789
Accrued expenses	2f9,13,16,24, 25,31		1,445,238		1,525,561		1,710,885
Unearned income	2f5		867,456		962,975		1,106,914
Deposits from customers	31		32,121		22,463		50,279
Derivative liabilities	2f9,2f15, 16,28,31		315,866		174,540		215,403
Current maturities of:
Loans payable	2f9,14,16,31		572,469		1,440,259		3,184,147
Bonds payable	2f9,15,16,31		56,442		2,840,662		1,098,131
Other current liabilities	2d,24,25,31		232,821		167,937		207,268
Other current financial liabilities	2f9,16,31		31,022		43,721		23,127
Total Current Liabilities			10,719,715		13,067,324		11,909,915
NON-CURRENT LIABILITIES
Due to related parties	2f9,16,25,31		14,699		13,764		22,099
Deferred tax liabilities—net	2f6,2g,12		1,348,746		1,651,818		1,951,306
Loans payable—net of current maturities	2f9,14, 16,25,31		10,812,160		12,715,492		7,666,804
Bonds payable—net of current maturities	2f9,15,16,31		10,315,616		8,472,175		12,114,104
Employee benefit obligations	2d,17		695,687		825,714		872,407
Other non-current liabilities	2d,25,31		130,661		113,807		187,097
Other non-current financial liabilities	2d,2f9,16,31		45,511		—		—
Total Non-current Liabilities			23,363,080		23,792,770		22,813,817
TOTAL LIABILITIES			34,082,795		36,860,094		34,723,732

* Certain amounts shown here do not correspond to the 2009 financial statement and reflect reclassifications and adjustments made as detailed in Notes 2d and 2g, respectively.

The accompanying notes form an integral part of these consolidated financial statements.

F-5

PT INDOSAT Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION—(Continued)

January 1, 2009 and December 31, 2009 and 2010

(Expressed in millions of rupiah, except share data)

					December 31,
	Notes		January 1, 2009 (Restated)*		2009 (Restated)*		2010
			Rp		Rp		Rp
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY
Capital stock—Rp100 par value per A share and B share Authorized—1 A share and 19,999,999,999 B shares Issued and fully paid—1 A share and 5,433,933,499 B shares		18		543,393		543,393		543,393
Premium on capital stock		18		1,546,587		1,546,587		1,546,587
Retained earnings
Appropriated				100,678		119,464		134,446
Unappropriated		2g		14,885,383		15,631,240		15,691,773
Other components of equity		2b,2f3,2f4		417,395		406,473		401,377
Total Equity Attributable to Owners of the Company				17,493,436		18,247,157		18,317,576
Non-controlling Interests		2g		286,248		327,752		384,387
TOTAL STOCKHOLDERS’ EQUITY				17,779,684		18,574,909		18,701,963
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY				51,862,479		55,435,003		53,425,695

* Certain amounts shown here do not correspond to the 2009 financial statement and reflect reclassifications and adjustments made as detailed in Notes 2d and 2g, respectively.

The accompanying notes form an integral part of these consolidated financial statements.

F-6

PT INDOSAT Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah, except share data)

	Notes		2008 (Restated)*			2009 (Restated)*			2010
			Rp			Rp			Rp
OPERATING REVENUES		2f5,3b,19, 25,30
Cellular		2d		14,460,806			14,331,235			15,867,091
Multimedia, Data Communication, Internet (“MIDI”)				2,733,412			2,712,632			2,488,110
Fixed telecommunication		2d		2,021,753			1,803,039			1,293,177
Total Operating Revenues				19,215,971			18,846,906			19,648,378
OPERATING EXPENSES		2f5.4
Cost of services		2d,20,25		6,627,804			7,087,850			7,113,410
Depreciation and amortization		2f2,2f16,7, 8		4,565,370			5,571,600			6,162,851
Personnel		2f7,21,24,25		1,638,993			1,451,560			1,411,244
Marketing				918,124			816,934			779,192
General and administration		22,25		737,432			693,437			659,987
Total Operating Expenses				14,487,723			15,621,381			16,126,684
OPERATING INCOME				4,728,248			3,225,525			3,521,694
OTHER INCOME (EXPENSES)		2f5
Gain (loss) on foreign exchange—net		2f4,2f11,5		(885,729	)		1,656,407			492,401
Interest income		2f5.2,25		460,089			138,951			143,402
Financing cost		23,25		(1,858,294	)		(1,872,967	)		(2,271,628	)
Gain (loss) on change in fair value of derivatives—net		2f11,2f15,28		136,603			(486,916	)		(448,831	)
Others—net		12		(25,597	)		(116,821	)		(111,830	)
Other Expenses—Net				(2,172,928	)		(681,346	)		(2,196,486	)
PROFIT BEFORE INCOME TAX				2,555,320			2,544,179			1,325,208
INCOME TAX BENEFIT (EXPENSE)		2f6,3b,12
Current				(587,642	)		(494,490	)		(128,171	)
Deferred		2g		102,302			(289,459	)		(294,167	)
Income Tax Expense—Net				(485,340	)		(783,949	)		(422,338	)
PROFIT FOR THE YEAR				2,069,980			1,760,230			902,870
OTHER COMPREHENSIVE INCOME		12
Differences in foreign currency translation				9,485			(14,563	)		(6,795	)
Income tax effect				(2,371	)		3,641			1,699
Differences in foreign currency translation—net of tax				7,114			(10,922	)		(5,096	)
Difference in transaction of equity changes in associated company				389			—			—
Income tax effect				(97	)		—			—
Difference in transaction of equity changes in associated company—net of tax				292			—			—

* Certain amounts shown here do not correspond to the 2009 financial statement and reflect reclassifications and adjustments made as detailed in Notes 2d and 2g, respectively.

The accompanying notes form an integral part of these consolidated financial statements.

F-7

PT INDOSAT Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME—(Continued)

Years Ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah, except share data)

	Notes	2008 (Restated)*		2009 (Restated)*			2010
		Rp		Rp			Rp
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX	2f4		7,406		(10,922	)		(5,096	)
NET COMPREHENSIVE INCOME			2,077,386		1,749,308			897,774
PROFIT FOR THE YEAR ATTRIBUTABLE TO:
Owners of the Company			2,043,775		1,703,898			824,637
Non-controlling interests			26,205		56,332			78,233
Total			2,069,980		1,760,230			902,870
OTHER COMPREHENSIVE INCOME—NET OF TAX ATTRIBUTABLE TO:
Owners of the Company			7,406		(10,922	)		(5,096	)
Non-controlling interests			—		—			—
Total			7,406		(10,922	)		(5,096	)
NET COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the Company			2,051,181		1,692,976			819,541
Non-controlling interests			26,205		56,332			78,233
Total			2,077,386		1,749,308			897,774
BASIC AND DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY	2f25,18,26		376.11		313.57			151.76
BASIC AND DILUTED EARNINGS PER AMERICAN DEPOSITARY SHARE (ADS) (50 B SHARES PER ADS) ATTRIBUTABLE TO OWNERS OF THE COMPANY	2f25,18,26		18,805.67		15,678.31			7,587.85

* Certain amounts shown here do not correspond to the 2009 financial statement and reflect reclassifications and adjustments made as detailed in Notes 2d and 2g, respectively.

The accompanying notes form an integral part of these consolidated financial statements.

F-8

PT INDOSAT Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Years Ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah)

			Attributable to the Owners of the Company
	Notes		Capital Stock— Issued and Fully Paid		Premium on Capital Stock		Difference in Transactions of Equity Changes in Associated Companies/ Subsidiaries*		Difference in Foreign Currency Translation**		Retained Earnings					Total			Non- controlling Interests			Net Equity
Description											Appropriated		Unappropriated
Balance as of January 1, 2008, as previously reported				543,393		1,546,587		403,812		6,177		80,258		13,846,541			16,426,768			294,794			16,721,562
Accounting policy change		2g		—		—		—		—		—		36,523			36,523			444			36,967
Balance as of January 1, 2008, as restated				543,393		1,546,587		403,812		6,177		80,258		13,883,064			16,463,291			295,238			16,758,529
Profit for the year, as previously reported				—		—		—		—		—		2,037,753			2,037,753			25,998			2,063,751
Accounting policy change		2g		—		—		—		—		—		6,022			6,022			207			6,229
Other comprehensive income				—		—		292		7,114		—		—			7,406			—			7,406
Total comprehensive income for the year, as restated				—		—		292		7,114		—		2,043,775			2,051,181			26,205			2,077,386
Resolution during the Annual Stockholders’ General Meeting on June 5, 2008		27
Declaration of cash dividend				—		—		—		—		—		(1,021,036	)		(1,021,036	)		—			(1,021,036	)
Appropriation for reserve fund				—		—		—		—		20,420		(20,420	)		—			—			—
Changes in non-controlling interest				—		—		—		—		—		—			—			(35,195	)		(35,195	)
Balance as of December 31, 2008, as restated				543,393		1,546,587		404,104		13,291		100,678		14,885,383			17,493,436			286,248			17,779,684

* This reserve includes difference in foreign currency translation resulting from reduction in tax rates.

** This reserve arose from the translation of the financial statements of Indosat Finance B.V. and Indosat International Finance Company B.V. from euro, and Indosat Singapore Pte. Ltd. from U.S. dollar to rupiah, net of applicable taxes.

The accompanying notes form an integral part of these consolidated financial statements.

F-9

PT INDOSAT Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY—(Continued)

Years Ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah)

			Attributable to the Owners of the Company
Description	Notes		Capital Stock— Issued and Fully Paid		Premium on Capital Stock		Difference in Transactions of Equity Changes in Associated Companies/ Subsidiaries*		Difference in Foreign Currency Translation**			Retained Earnings					Total			Non- controlling Interests			Net Equity
												Appropriated		Unappropriated
Balance as of January 1, 2009, as previously reported				543,393		1,546,587		404,104		13,291			100,678		14,842,838			17,450,891			285,597			17,736,488
Accounting policy change		2g		—		—		—		—			—		42,545			42,545			651			43,196
Balance as of January 1, 2009, as restated				543,393		1,546,587		404,104		13,291			100,678		14,885,383			17,493,436			286,248			17,779,684
Profit for the year, as previously reported				—		—		—		—			—		1,690,804			1,690,804			56,194			1,746,998
Accounting policy change		2g		—		—		—		—			—		13,094			13,094			138			13,232
Other comprehensive income				—		—		—		(10,922	)		—		—			(10,922	)		—			(10,922	)
Net comprehensive income, as restated				—		—		—		(10,922	)		—		1,703,898			1,692,976			56,332			1,749,308
Resolution during the Annual Stockholders’ General Meeting on June 19, 2009		27
Declaration of cash dividend				—		—		—		—			—		(939,255	)		(939,255	)		—			(939,255	)
Appropriation for reserve fund				—		—		—		—			18,786		(18,786	)		—			—			—
Changes in non-controlling interest				—		—		—		—			—		—			—			(14,828	)		(14,828	)
Balance as of December 31, 2009, as restated				543,393		1,546,587		404,104		2,369			119,464		15,631,240			18,247,157			327,752			18,574,909

* This reserve includes difference in foreign currency translation resulting from reduction in tax rates.

** This reserve arose from the translation of the financial statements of Indosat Finance B.V. and Indosat International Finance Company B.V. from euro, and Indosat Singapore Pte. Ltd. from U.S. dollar to rupiah, net of applicable taxes.

The accompanying notes form an integral part of these consolidated financial statements.

F-10

PT INDOSAT Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY—(Continued)

Years Ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah)

			Attributable to the Owners of the Company
Description	Notes		Capital Stock— Issued and Fully Paid		Premium on Capital Stock		Difference in Transactions of Equity Changes in Associated Companies/ Subsidiaries*		Difference in Foreign Currency Translation**			Retained Earnings					Total			Non- controlling Interests			Net Equity
												Appropriated		Unappropriated
Balance as of January 1, 2010, as previously reported				543,393		1,546,587		404,104		2,369			119,464		15,575,601			18,191,518			326,963			18,518,481
Accounting policy change		2g		—		—		—		—			—		55,639			55,639			789			56,428
Balance as of January 1, 2010, as restated				543,393		1,546,587		404,104		2,369			119,464		15,631,240			18,247,157			327,752			18,574,909
Profit for the year				—		—		—		—			—		824,637			824,637			78,233			902,870
Other comprehensive income				—		—		—		(5,096	)		—		—			(5,096	)		—			(5,096	)
Net comprehensive income				—		—		—		(5,096	)		—		824,637			819,541			78,233			897,774
Resolution during the Annual Stockholders’ General Meeting on June 22, 2010		27
Declaration of cash dividend				—		—		—		—			—		(749,122	)		(749,122	)		—			(749,122	)
Appropriation for reserve fund				—		—		—		—			14,982		(14,982	)		—			—			—
Changes in non-controlling interest				—		—		—		—			—		—			—			(21,598	)		(21,598	)
Balance as of December 31, 2010				543,393		1,546,587		404,104		(2,727	)		134,446		15,691,773			18,317,576			384,387			18,701,963

* This reserve includes difference in foreign currency translation resulting from reduction in tax rates.

** This reserve arose from the translation of the financial statements of Indosat Finance B.V. and Indosat International Finance Company B.V. from euro, and Indosat Singapore Pte. Ltd. and Indosat Palapa B.V. from U.S. dollar to rupiah, net of applicable taxes.

The accompanying notes form an integral part of these consolidated financial statements.

F-11

PT INDOSAT Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah)

	Notes	2008			2009			2010
		Rp			Rp			Rp
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash received from:
Customers			18,336,914			18,415,890			19,678,609
Interest income			460,020			146,826			145,067
Refund of taxes	6		271,321			84,650			41,753
Settlement from derivative contract	28a		58,375			—			—
Cash paid to/for:
Suppliers and others			(7,992,693	)		(10,116,183	)		(9,061,007	)
Financing cost			(1,776,934	)		(1,730,149	)		(2,175,997	)
Employees			(1,708,174	)		(1,359,817	)		(1,310,556	)
Income taxes			(897,161	)		(878,137	)		(215,874	)
Interest rate swap contracts	28v-ai		(2,432	)		(47,715	)		(117,231	)
Swap cost from cross currency swap contracts	28a,c-o		(235,971	)		(125,748	)		(121,449	)
Settlement from derivative contract	28c,28k		—			—			(24,431	)
Long-term prepaid licenses	2f19		—			(338,408	)		—
Net Cash Provided by Operating Activities			6,513,265			4,051,209			6,838,884
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds of Palapa D-Satellite insurance claim	7		—			—			537,657
Cash dividend received from other long-term investment			26,348			26,774			19,281
Proceeds from sale of property and equipment	7		1,131			2,253			7,741
Acquisitions of property and equipment	7		(10,307,932	)		(10,684,690	)		(6,495,146	)
Acquisition of intangible assets	8		(6,952	)		(15,044	)		(40,052	)
Proceeds from sale of short-term investment			1,250			—			—
Purchase of investment in an associated company			(700	)		—			(194	)
Net Cash Used in Investing Activities			(10,286,855	)		(10,670,707	)		(5,970,713	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bonds payable	15		1,650,000			1,500,000			5,851,301
Proceeds from long-term loans	14		5,126,570			3,892,786			1,092,059
Settlement from derivative contract	28b		109,099			—			59,925
Decrease (increase) in restricted cash and cash equivalents			4,200			(18,206	)		2,846
Repayment of long-term loans	14		(506,220	)		(632,814	)		(4,098,277	)
Repayment of bonds payable	15		(3,828,827	)		(14,453	)		(3,720,815	)
Cash dividend paid by the Company	27		(1,021,037	)		(939,255	)		(749,122	)
Swap cost from cross currency swap contract	28b		(64,009	)		(54,116	)		(46,136	)
Cash dividend paid by subsidiaries to non-controlling interest			(11,326	)		(9,291	)		(21,436	)
Net Cash Provided by (Used in) Financing Activities			1,458,450			3,724,651			(1,629,655	)

The accompanying notes form an integral part of these consolidated financial statements.

F-12

PT INDOSAT Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)

Years Ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah)

	Notes		2008			2009			2010
			Rp			Rp			Rp
NET DECREASE IN CASH AND CASH EQUIVALENTS				(2,315,140	)		(2,894,847	)		(761,484	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR				8,053,006			5,737,866			2,835,999
CASH AND CASH EQUIVALENTS OF LIQUIDATED SUBSIDIARY*				—			(7,020	)		—
CASH AND CASH EQUIVALENTS OF ACQUIRED SUBSIDIARY		1b		—			—			755
CASH AND CASH EQUIVALENTS AT END OF YEAR		4		5,737,866			2,835,999			2,075,270
DETAILS OF CASH AND CASH EQUIVALENTS:
Time deposits with original maturities of three months or less and deposits on call				5,469,039			2,611,529			1,791,783
Cash on hand and in banks				268,827			224,470			283,487
Cash and cash equivalents as stated in the consolidated statements of financial position				5,737,866			2,835,999			2,075,270
SUPPLEMENTAL CASH FLOW INFORMATION:
Transactions not affecting cash flows:
Acquisitions of property and equipment credited to:
Long-term advances				190,906			161,702			77,748
Long-term loans payable				1,516,354			723,112			—
Procurement payables				274,248			—			—
Other non-current liabilities				45,511			—			—

* PT Satelindo Multi Media (“SMM”) was liquidated on June 23, 2009.

The accompanying notes form an integral part of these consolidated financial statements.

F-13

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

1. GENERAL

a. Company’s Establishment

PT Indosat Tbk (“the Company”) was established in the Republic of Indonesia on November 10, 1967 within the framework of the Indonesian Foreign Investment Law No. 1 of 1967 based on the notarial deed No. 55 of Mohamad Said Tadjoedin, S.H. The deed of establishment was published in Supplement No. 24 of State Gazette No. 26 dated March 29, 1968 of the Republic of Indonesia. In 1980, the Company was sold by American Cable and Radio Corporation, an International Telephone & Telegraph subsidiary, to the Government of the Republic of Indonesia (“the Government”) and became a State-owned Company (Persero).

On February 7, 2003, the Company received the approval from the Capital Investment Coordinating Board (BKPM) in its letter No. 14/V/PMA/2003 for the change of its legal status from a State-owned Company (Persero) to a Foreign Capital Investment Company. Subsequently, on March 21, 2003, the Company received the approval from the Ministry of Justice and Human Rights of the Republic of Indonesia on the amendment of its Articles of Association to reflect the change of its legal status.

The Company’s Articles of Association has been amended from time to time. The latest amendment was covered by notarial deed No. 123 dated January 28, 2010 of Aulia Taufani, S.H., (as a substitute notary of Sutjipto, S.H.) as approved in the Stockholders’ Extraordinary General Meeting held on January 28, 2010, in order to comply with the Indonesian Capital Market and Financial Institutions Supervisory Agency (BAPEPAM-LK) Rule No. IX.J.1 dated May 14, 2008 on the Principles of Articles of Association of Limited Liability Companies that Conduct Public Offering of Equity Securities and Public Companies and Rule No. IX.E.1 on Affiliate Transactions and Certain Conflict of Interests Transactions. The latest amendment of the Company’s Articles of Association has been approved by and reported to the Ministry of Law and Human Rights of the Republic of Indonesia based on its letters No. AHU-09555.AH.01.02 Year 2010 dated February 22, 2010 and No. AHU-AH.01.10-04964 dated February 25, 2010. The amendments relate to, among others, the changes in the Company’s purposes, objectives and business activities, appointment of acting President Director if the incumbent President Director is unavailable and definition of conflict of interests.

According to article 3 of its Articles of Association, the Company’s purposes and objectives are to provide telecommunications networks, telecommunications services as well as information technology and/or convergence technology services by carrying out the following main business activities:

a. To provide telecommunications networks, telecommunications services as well as information technology and/or convergence technology services, including but not limited to providing basic telephony services, multimedia services, internet telephony services for public use, interconnection internet services, internet access services, mobile telecommunications networks and fixed telecommunications networks; and

b. To engage in payment transactions and money transfer services through telecommunications networks as well as information technology and/or convergence technology.

The Company can provide supporting business activities in order to achieve the purposes and objectives, and to support its main businesses, as follows:

a. To plan, to procure, to modify, to build, to provide, to develop, to operate, to lease, to rent, and to maintain infrastructures/facilities including resources to support the Company’s business in providing telecommunications networks, telecommunications services as well as information technology and/or convergence technology services;

F-14

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

b. To conduct business and operating activities (including development, marketing and sales of telecommunications networks, telecommunications services as well as information technology and/or convergence technology services by the Company), including research, customer services, education and courses (both domestic and overseas); and

c. To conduct other activities necessary to support and/or related to the provision of telecommunications networks, telecommunications services as well as information technology and/or convergence technology services including but not limited to electronic transactions and provision of hardware, software, content as well as telecommunications-managed services.

The consolidated financial statements of the Company and its subsidiaries (collectively referred to hereafter as “the Companies”) as of January 1, 2009 and December 31, 2009 and 2010 and for each of the three years in the period ended December 31, 2010 were approved and authorized for issue by the Board of Directors on April 20, 2011, as reviewed and recommended for approval by the Audit Committee.

b. Structure of the Company’s Subsidiaries

As of January 1, 2009 and December 31, 2009 and 2010, the Company has direct and indirect ownership in the following subsidiaries:

Name of Subsidiary	Location	Principal Activity	Start of Commercial Operations		Percentage of Ownership (%)
					January 1, 2009		December 31, 2009		December 31, 2010
Indosat Palapa Company B.V. (“IPBV”) (2)	Amsterdam	Finance		2010		—		—		100.00
Indosat Mentari Finance Company B.V. (“IMBV”) (2)	Amsterdam	Finance		2010		—		—		100.00
Indosat Finance Company B.V. (“IFB”) (3)	Amsterdam	Finance		2003		100.00		100.00		100.00
Indosat International Finance Company B.V. (“IIFB”) (4)	Amsterdam	Finance		2005		100.00		100.00		100.00
Indosat Singapore Pte. Ltd. (“ISPL”)	Singapore	Telecommunication		2005		100.00		100.00		100.00
PT Indosat Mega Media (“IMM”)	Jakarta	Multimedia		2001		99.85		99.85		99.85
PT Starone Mitra Telekomunikasi (“SMT”)	Semarang	Telecommunication		2006		72.54		72.54		72.54
PT Aplikanusa Lintasarta (“Lintasarta”)	Jakarta	Data Communication		1989		72.36		72.36		72.36
PT Lintas media Danawa (“LMD”)	Jakarta	Information and Communication Services		2008		—		—		50.65
PT Artajasa Pembayaran Elektronis (“APE”) (Note 2b)	Jakarta	Telecommunication		2000		39.80		39.80		39.80
PT Satelindo Multi Media (“SMM”) (1)	Jakarta	Telecommunication		1999		99.60		—		—

F-15

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	Total Assets (Before Eliminations)
Name of Subsidiary	January 1, 2009 (Restated)		December 31, 2009 (Restated)		December 31, 2010
IPBV (2)		—		—		5,966,764
IMBV (2)		—		—		5,946,885
IFB (3)		2,637,074		2,261,226		21,876
IIFB (4)		1,235,816		1,044,174		9,635
ISPL		21,167		28,779		54,353
IMM		735,632		738,371		814,652
SMT		147,814		139,833		155,277
Lintasarta		1,326,762		1,407,461		1,739,049
LMD		—		—		2,671
APE		133,241		179,681		221,297
SMM (1)		10,690		—		—

⁽¹⁾ Liquidated on June 23, 2009

⁽²⁾  IPBV and IMBV were incorporated in Amsterdam on April 28, 2010 to engage in treasury activities, to lend and borrow money, whether in the form of securities or otherwise, to finance enterprises and companies, to grant security in respect of their obligation or those of their group companies and third parties.

⁽³⁾  Based on an IFB shareholder’s resolution dated November 6, 2008, IFB decided to refund capital injection amounting to EUR99,996. The Company received such refund in February 2009.

⁽⁴⁾  Based on an IIFB shareholder’s resolution dated November 6, 2008, IIFB decided to refund capital injection amounting to EUR1,124,064. The Company received such refund in February 2009.

c. Merger of the Company, Satelindo, Bimagraha and IM3

Based on Merger Deed No. 57 dated November 20, 2003 (“merger date”) of Poerbaningsih Adi Warsito, S.H., the Company, PT Satelit Palapa Indonesia (“Satelindo”), PT Bimagraha Telekomindo (“Bimagraha”) and PT Indosat Multi Media Mobile (“IM3”) agreed to merge, with the Company as the surviving entity. All assets and liabilities owned by Satelindo, Bimagraha and IM3 were transferred to the Company on the merger date. These three companies were dissolved by operation of law without the need to undergo the regular liquidation process.

The names “Satelindo” and “IM3” in the following notes refer to these entities before they were merged with the Company, or as the entities that entered into contractual agreements that were taken over by the Company as a result of the merger.

F-16

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied consistently in the preparation of the consolidated financial statements for the years ended December 31, 2008, 2009 and 2010 are as follows:

a. Basis of Consolidated Financial Statements

The consolidated financial statements are presented using the historical cost basis of accounting, except for inventories which are stated at the lower of cost or net realizable value and derivative financial instruments and available-for-sale financial assets which are stated at fair value.

The consolidated statements of cash flows classify cash receipts and payments into operating, investing and financing activities. The cash flows from operating activities are presented using the direct method.

The consolidated financial statements are presented in Indonesian rupiah, which is the Company’s functional and reporting currency.

b. Principles of Consolidation

The consolidated financial statements include the Company’s accounts and those of its subsidiaries (Note 1b).

In accordance with IAS 27 (Revised 2008), the Company prepares and presents the consolidated financial statements for a group of entities under its control.

Control is presumed to exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. Control also exists when the parent owns half or less of the voting power of an entity when there is:

a) power over more than half of the voting rights by virtue of an agreement with other investors;

b) power to govern the financial and operating policies of the entity under a statute or an agreement;

c) power to appoint or remove the majority of the members of the board of directors or equivalent governing body and control of the entity is by that board or body; or

d) power to cast the majority of votes at meetings of the board of directors or equivalent governing body and control of the entity is by that board or body.

The consolidated financial statements also include the accounts of APE (Lintasarta’s subsidiary). The accounts of APE in 2008, 2009 and 2010 were consolidated because its financial and operating policies were controlled by Lintasarta.

The accounts of IPBV, IMBV, IFB, IIFB, and ISPL were translated into rupiah amounts at the middle rates of exchange prevailing at balance sheet date for balance sheet accounts and the average rates during the year for profit or loss accounts. The resulting differences arising from the translations of the financial statements of IPBV, IMBV, IFB, IIFB, and ISPL are presented as part of “Other Components of Equity” under the Stockholders’ Equity section of the consolidated balance sheets.

Non-controlling interest in subsidiaries represents the minority stockholders’ proportionate share in the equity (including net income) of the subsidiaries which are not wholly-owned. Intergroup balances, transactions, income and expenses are eliminated in full on consolidation.

F-17

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

c. Statement of Compliance

The consolidated financial statements of the Companies have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

d. Reclassifications

Certain accounts were reclassified to allow their comparison with 2010 accounts. The following items discuss the significant reclassifications in the consolidated financial statements:

For the year ended December 31, 2008:

As Previously Reported	As Reclassified	Amount
Operating revenues—cellular	Operating expenses—cost of services		267,542	*
Operating revenues—fixed telecommunications	Operating revenues—cellular		7,811

As of January 1, 2009:

As Previously Reported	As Reclassified	Amount
Long-term receivables	Other non-current financial assets		14,443
Other non-current assets	Long-term prepaid rentals—net of current portion		632,566
Other non-current liabilities	Employee benefit obligations—net of current portion		695,687
Other non-current financial liabilities	Other non-current liabilities		6,667

As of and for the year ended December 31, 2009:

As Previously Reported	As Reclassified	Amount
Accounts receivable—others	Accounts receivable—trade—third parties		28,428
Long-term receivables	Other non-current financial assets		15,844
Other non-current assets	Long-term prepaid rentals—net of current portion		735,185
Other non-current liabilities	Employee benefit obligations—net of current portion		825,714
	Other current liabilities		3,112
Other non-current financial liabilities	Other non-current liabilities		6,546
Operating revenues—cellular	Operating expenses—cost of services		217,421	*
Operating revenues—fixed telecommunications	Operating revenues—cellular		154,140

* Refer to Note 2g

F-18

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

e. Adoption of New and Revised Accounting Standards

New and amended standards and interpretations

The accounting policies adopted are consistent with those of the previous financial year, except for the following new and amended IFRS and IFRIC interpretations for financial statements beginning on or after January 1, 2010:

• IFRS 2 Share-based Payment: Group Cash-settled, Share-based Payment Transactions for financial statements beginning on or after January 1, 2010

• IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended) for financial statements beginning on or after July 1, 2009, including consequential amendments to IFRS 2, IFRS 5, IFRS 7, IAS 7,IAS 21, IAS 28, IAS 31 and IAS 39

• IAS 39 Financial Instruments: Recognition and Measurement—Eligible Hedged Items effective July 1, 2009

• IFRIC 17 Distributions of Non-cash Assets to Owners for financial statements beginning on or after July 1, 2009

• Improvements to IFRSs (May 2008)

• Improvements to IFRSs (April 2009)

The adoption of the standards or interpretations is described below:

IFRS 2 Share-based Payment (Revised)

The IASB issued an amendment to IFRS 2 that clarified the scope and the accounting for group cash-settled share-based payment transactions. It did not have an impact on the financial position or performance of the Companies.

IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended)

IFRS 3 (Revised) introduces significant changes in the accounting for business combinations occurring after becoming effective. Changes affect the valuation of non-controlling interest, the accounting for transaction costs, the initial recognition and subsequent measurement of a contingent consideration and business combinations achieved in stages. These changes will impact the amount of goodwill recognized, the reported results in the period that an acquisition occurs and future reported results.

IAS 27 (Amended) requires that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as a transaction with owners in their capacity as owners. Therefore, such transactions will no longer give rise to goodwill, nor will it give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes by IFRS 3 (Revised) and IAS 27 (Amended) affect acquisitions or loss of control of subsidiaries and transactions with non-controlling interests after January 1, 2010.

The change in accounting policy was applied prospectively and had no material impact on earnings per share.

F-19

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

IAS 39 Financial Instruments: Recognition and Measurement—Eligible Hedged Items

The amendment clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as a hedged item. This also covers the designation of inflation as a hedged risk or portion in particular situations. The Companies have concluded that the amendment will have no impact on the financial position or performance of the Companies, as the Companies have not entered into any such hedges.

IFRIC 17 Distribution of Non-cash Assets to Owners

This interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends. The interpretation has no effect on either the financial position or performance of the Companies.

Improvements to IFRSs

In May 2008 and April 2009, the IASB issued omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption of the following amendments resulted in changes to accounting policies but did not have any impact on the financial position or performance of the Companies, except for the amendment on IAS 17 Leases as disclosed in Note 2g.

Issued in May 2008

• IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: clarifies that when a subsidiary is classified as held for sale, all its assets and liabilities are classified as held for sale, even when the entity remains a non-controlling interest after the sale transaction. The amendment is applied prospectively and has no impact on the financial position nor financial performance of the Companies.

Issued in April 2009

• IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: clarifies that the disclosures required in respect of non-current assets and disposal groups classified as held for sale or discontinued operations are only those set out in IFRS 5. The disclosure requirements of other IFRSs only apply if specifically required for such non-current assets or discontinued operations. This amendment did not have an impact on the financial position or performance of the Companies.

• IFRS 8 Operating Segments: clarifies that segment assets and liabilities need only be reported when those assets and liabilities are included in measures that are used by the chief operating decision maker. As the Companies’ chief operating decision maker does review segment assets and liabilities, the Companies have continued to disclose this information in Note 32.

• IAS 7 Statement of Cash Flows: states that only expenditure that results in recognizing an asset can be classified as a cash flow from investing activities.

• IAS 36 Impairment of Assets: the amendment clarifies that the largest unit permitted for allocating goodwill, acquired in a business combination, is the operating segment as defined in IFRS 8 before aggregation for reporting purposes. The amendment has no impact on the Companies as the annual impairment test is performed before aggregation.

F-20

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Other amendments resulting from Improvements to IFRSs to the following standards did not have any impact on the accounting policies, financial position or performance of the Companies:

Issued in April 2009

• IFRS 2 Share-based Payment

• IAS 1 Presentation of Financial Statements

• IAS 34 Interim Financial Reporting

• IAS 38 Intangible Assets

• IAS 39 Financial Instruments: Recognition and Measurement

• IFRIC 9 Reassessment of Embedded Derivatives

• IFRIC 16 Hedge of a Net Investment in a Foreign Operation

Standards and Interpretations in issue not yet adopted

Standards issued but not yet effective up to the date of issuance of the Companies’ financial statements are listed below. This listing is of standards and interpretations issued, which the Companies reasonably expect to be applicable at a future date. The Companies intend to adopt those standards when they become effective.

IAS 24 Related Party Disclosures (Amendment)

The amended standard is effective for annual periods beginning on or after January 1, 2011. It clarified the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised standard introduces a partial exemption of disclosure requirements for government-related entities. The Companies do not expect any impact on their financial position or performance. Early adoption is permitted for either the partial exemption for government-related entities or for the entire standard.

IAS 32 Financial Instruments: Presentation—Classification of Rights Issues (Amendment)

The amendment to IAS 32 is effective for annual periods beginning on or after February 1, 2010 and amended the definition of a financial liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases where such rights are given pro rata to all of the existing owners of the same class of an entity’s non-derivative equity instruments, or to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. This amendment will have no impact on the Companies after initial application.

IFRS 9 Financial Instruments: Classification and Measurement

IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of financial assets as defined in IAS 39. The standard is effective for annual

F-21

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

periods beginning on or after January 1, 2013. In subsequent phases, the IASB will address classification and measurement of financial liabilities, hedge accounting and derecognition. The completion of this project is expected in early 2011. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Companies’ financial assets. The Companies will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

IFRIC 14 Prepayments of a minimum funding requirement (Amendment)

The amendment to IFRIC 14 is effective for annual periods beginning on or after January 1, 2011 with retrospective application. The amendment provides guidance on assessing the recoverable amount of a net pension asset. The amendment permits an entity to treat the prepayment of a minimum funding requirement as an asset. The amendment is deemed to have no impact on the financial statements of the Companies.

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

IFRIC 19 is effective for annual periods beginning on or after July 1, 2010. The interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability qualify as consideration paid. The equity instruments issued are measured at their fair value. In case that this cannot be reliably measured, the instruments are measured at the fair value of the liability extinguished. Any gain or loss is recognized immediately in profit or loss. The adoption of this interpretation will have no effect on the financial statements of the Companies.

Improvements to IFRSs (issued in May 2010)

The IASB issued Improvements to IFRSs, an omnibus of amendments to its IFRS standards. The amendments have not been adopted as they become effective for annual periods on or after either July 1, 2010 or January 1, 2011. The amendments listed below, are considered to have a reasonable possible impact on the Companies:

• IFRS 3 Business Combinations

• IFRS 7 Financial Instruments: Disclosures

• IAS 1 Presentation of Financial Statements

• IAS 27 Consolidated and Separate Financial Statements

• IFRIC 13 Customer Loyalty Programs

The Companies, however, expect no impact from the adoption of the amendments on their financial position or performance.

f. Significant Accounting Policies and Practices

f1. Business combinations and goodwill

Business combinations from January 1, 2010

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the

F-22

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.

When the Companies acquires a business, they assess the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Companies’ cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Business combinations prior to January 1, 2010

In comparison to the above-mentioned requirements, the following differences applied:

Business combinations were accounted for using the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minority interest) was measured at the proportionate share of the acquiree’s identifiable net assets.

Business combinations achieved in stages were accounted for as separate steps. Any additional acquired share of interest did not affect previously recognized goodwill.

When the Companies acquired a business, embedded derivatives separated from the host contract by the acquire were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that significantly modified the cash flows that otherwise would have been required under the contract.

F-23

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Contingent consideration was recognized if, and only if, the Companies had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognized as part of goodwill.

f2. Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the consolidated statements of comprehensive income in the expense category consistent with the function of the intangible assets.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

At the time of acquisition of a subsidiary, any intangible assets recognized are amortized using the straight-line method based on the estimated useful lives of the assets as follows:

	Years
Customer base
—Prepaid		6
—Post-paid		5
Spectrum license		5
Brand		8

Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in the consolidated statements of comprehensive income in the year in which the expenditure is incurred.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the consolidated statements of comprehensive income when the asset is derecognized.

F-24

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

f3. Investments in associated companies

The Company’s investment in its associate is accounted for using the equity method. An associate is an entity in which the Company has significant influence.

Under the equity method, the investment in the associate is carried in the consolidated statements of financial position at cost plus post acquisition changes in the Company’s share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortized nor individually tested for impairment.

The consolidated statements of comprehensive income reflect the share of the results of operations of the associate. Where there has been a change recognized directly in the equity of the associate, the Company recognizes its share of any changes and discloses this, when applicable, in the consolidated statements of changes in equity. Unrealized gains and losses resulting from transactions between the Company and the associate are eliminated to the extent of the interest in the associate.

The share of profit of an associate is shown on the face of the consolidated statements of comprehensive income. This is the profit attributable to equity holders of the associate and therefore is profit after tax and non-controlling interests in the subsidiaries of the associate.

The financial statements of the associate are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

After application of the equity method, the Company determines whether it is necessary to recognize an additional impairment loss on the Company’s investment in its associate. The Company determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in the ‘share of profit of an associate’ in the consolidated statements of comprehensive income.

Upon loss of significant influence over the associate, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss.

f4. Foreign currency translation

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchange prevailing at the end of the reporting period. All differences are taken to the statements of comprehensive income, except for foreign exchange differences that qualify as capitalizable borrowing costs for qualifying properties under construction and installation. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.

The functional currency and presentation currency of IPBV, IMBV, IFB and IIFB are in Euro, while ISP is in U.S. dollar. As at the end of the reporting period, the assets and liabilities of these subsidiaries are translated into the presentation currency of the Company at the spot rate which is the exchange rate

F-25

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

prevailing at the end of the reporting period and their statement of comprehensive income is translated at the average rate during the period. The resulting differences arising from the translations of the financial statements of IPBV, IMBV, IFB, IIFB and ISP are included in other comprehensive income and presented as part of “Difference in Foreign Currency Translation” in the consolidated statements of changes in stockholders’ equity.

f5. Revenue recognition and expense recognition

f5.1 Service Revenues

Cellular

Cellular revenues arising from airtime and roaming calls are recognized based on the duration of successful calls made through the Company’s cellular network.

For post-paid subscribers, monthly service fees are recognized as the service is rendered.

For prepaid subscribers, the activation component of starter package sales is deferred and recognized as revenue over the expected average period of the customer relationship. Sales of initial/reload vouchers are recorded as deferred revenue and recognized as revenue upon usage of the airtime or upon expiration of the airtime.

Sales of wireless broadband modems and cellular handsets are recognized upon delivery to the customers.

Revenues from wireless broadband data communications are recognized based on the duration of usage or fixed monthly charges depending on the arrangement with the customers.

Cellular revenues are presented on a net basis, after compensation to value added service providers.

Customer Loyalty Program

The Company operates a customer loyalty program called “Poin Plus Plus”, which allows customers to accumulate points for every reload and payment by the Company’s prepaid and post-paid subscribers, respectively. The points can then be redeemed for free telecommunication and non-telecommunication products, subject to a minimum number of points being obtained.

Customer loyalty credits are accounted for as a separate component of the sales transaction in which they are granted. The consideration received at the time of reload and payment by the Company’s prepaid and post-paid subscribers, respectively, is allocated between the cellular products sold and the points issued, with the consideration allocated to the points equal to their fair value. Fair value of the points issued is deferred and recognized as revenue when the points are redeemed or when the redemption period expires.

Dealer Commissions

Consideration in the form of sales discount given by the Company to a dealer is recognized as a reduction of revenue.

If the Company receives, or will receive, an identifiable benefit in exchange for a consideration given by the Company to a dealer, and the fair value of such benefit can be reasonably estimated, the consideration will be recorded as a marketing expense.

F-26

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Tower Leasing

Revenue from tower leasing is recognized on the straight-line basis over the lease term based on the amount stated in the agreement between the Company and the lessee. Based on the Company’s assessment on the current tower leasing arrangements, the leasing transactions are classified as operating leases.

MIDI

• Internet

Revenues arising from installation service are deferred and recognized over the expected average period of the customer relationship. Revenues from monthly service fees are recognized as the services are rendered. Revenues from usage charges are recognized monthly based on the duration of internet usage or based on the fixed amount of charges depending on the arrangement with the customers.

• Frame Net, World Link and Direct Link

Revenues arising from installation service are deferred and recognized over the expected average period of the customer relationship. Revenues from monthly service fees are recognized as the services are rendered.

• Satellite Operating Lease

Revenues are recognized on the straight-line basis over the lease term.

• Other MIDI services

Revenues from other MIDI services are recognized when the services are rendered.

Fixed Telecommunication

• International Calls

Revenues from outgoing international call traffic are recognized on the basis of the actual recorded traffic for the year and had been reported on a net basis up to December 31, 2009, after allocations to overseas international carriers.

In addition, starting January 1, 2010, the Company has decided to reclassify the portion of incoming calls revenue that belongs to the Company’s cellular segment. The Company believes that this change will bring the Company’s revenue presentation to be aligned more closely with the Company’s profit or loss performance and to provide reliable and more relevant information to shareholders and users of the accounts.

To improve the comparability of the consolidated financial statements, the Company made accounts reclassification in the consolidated financial statements for the year ended December 31, 2009 (Note 2d).

• Fixed Wireless

Fixed wireless revenues arising from usage charges are recognized based on the duration of successful calls made through the Company’s fixed network.

F-27

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

For post-paid subscribers, monthly service fees are recognized as the services are rendered.

For prepaid subscribers, the activation component of starter package sales is deferred and recognized as revenue over the expected average period life of the customer relationship.

Sale of initial/reload vouchers is recorded as deferred revenue and recognized as income upon usage of the airtime or upon expiration of the airtime.

• Fixed Line

Revenues from fixed line installations are deferred and recognized as revenue over the expected average period of the customer relationship. Revenues from usage charges are recognized based on the duration of successful calls made through the Company’s fixed network.

Interconnection Revenue

Revenues from network interconnection with other domestic and international telecommunications carriers are recognized monthly on the basis of the actual recorded traffic for the month.

f5.2 Interest Income

Interest income is recognized as it accrues on a time proportion basis taking into account the principal amount outstanding and the effective interest rate. Majority of interest income represents interest earned from cash and cash equivalents.

f5.3 Dividends

Dividend income is recognized when the Company’s right to receive the payment is established.

f5.4 Expenses

Expenses are recognized when incurred.

f6. Income tax

Current income tax

Current income tax assets and liabilities for the current year are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Companies operate and generate taxable income.

Current income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated statements of comprehensive income. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

F-28

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Deferred tax

Deferred tax is provided using the balance sheet liability method on all temporary differences at the end of the reporting year between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences except: (1) where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss and (2) in respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is possible that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences and carryforward of unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and carryforward of unused tax losses can be utilized except: (1) where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss and (2) in respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Sales tax

Revenues, expenses and assets are recognized net of the amount of sales tax.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the consolidated statements of financial position.

F-29

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

f7. Pensions and other post-employment benefits

Funded Plans

The Companies have defined benefit pension plans which require contributions to be made to separately administered funds. Pension costs under the Companies’ defined benefit pension plans are determined by periodic actuarial calculation using the projected-unit-credit method and applying the assumptions on discount rate, expected return on plan assets and annual rate of increase in compensation. Actuarial gains or losses are recognized as income or expense when the net cumulative unrecognized actuarial gains or losses for each individual plan at the end of the previous reporting year exceed 10% of the present value of the defined benefit obligation or fair value of plan assets, whichever is greater, at that date. These gains or losses in excess of the 10% corridor are recognized on a straight-line basis over the expected average remaining working lives of the employees.

The past service costs are recognized as an expense on a straight-line basis over the average period until the benefits become vested. If the benefits have already vested, immediately following the introduction of or changes to a pension plan, past service costs are recognized immediately.

Actuarial gains or losses and past service costs from other long-term employee benefits are recognized immediately in the current year’s consolidated statement of income.

The defined benefit asset or liability comprises the present value of the defined benefit obligation (using a discount rate based on government bonds), less past service costs and actuarial gains and losses not yet recognized and less the fair value of plan assets out of which the obligations are to be settled. Plan assets are assets that are held by qualifying insurance policies. Fair value is based on market price information and in the case of quoted securities, it is the published bid price. The value of any defined benefit asset recognized is restricted to the sum of any past service costs and actuarial gains and losses not yet recognized and the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan.

Unfunded Plans

The Companies also provide other post-employment benefits to their employees, such as benefits under Labor Law No.13/2003 (“Labor Law”) and post-retirement healthcare benefits. These benefits are unfunded. The accounting treatment for the unfunded plans is the same as that of the funded plans above.

f8. Financial assets

Initial recognition

Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Companies determine the classification of their financial assets at initial recognition.

All financial assets are recognized initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the trade date, i.e., the date that the Companies commit to purchase or sell the assets.

F-30

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The Companies’ financial assets include cash and cash equivalents, trade and other receivables, due from related parties, quoted and unquoted financial instruments, derivative financial instruments and other current and non-current financial assets.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

• Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss.

Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchase in the near term. This category includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Derivative assets are also classified as held for trading unless they are designated as effective hedging instruments.

Financial assets at fair value through profit and loss are carried in the consolidated statements of financial position at fair value with changes in fair value recognized in the statements of comprehensive income.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not carried at fair value. These embedded derivatives are measured at fair value with changes in fair value recognized in the consolidated statements of comprehensive income. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.

• Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate method (EIR), less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in the consolidated statements of comprehensive income. The losses arising from impairment are recognized in the consolidated statements of comprehensive income.

The Companies’ cash and cash equivalents, trade and other receivables, due from related parties, other current financial assets and other non-current assets are included in this category.

Time deposits with original maturities of three months or less at the time of placement are considered as “Cash Equivalents”.

Cash in banks and time deposits which are pledged as collateral for long-term debts and bank guarantees and time deposits with original maturities of more than three months are not classified

F-31

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

as part of “Cash and Cash Equivalents”. These are presented as part of either “Other Current Financial Assets” or “Other Non-current Financial Assets”.

• Held-to-maturity (HTM) investments

Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as HTM when the Companies have the positive intention and ability to hold them to maturity. After initial measurement, HTM investments are measured at amortized cost using the effective interest method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in the consolidated statements of comprehensive income. The losses arising from impairment are recognized in the consolidated statements of comprehensive income.

The Companies did not have any held-to-maturity investments during the years ended December 31, 2008, 2009 and 2010.

• Available-for-sale (AFS) financial assets

AFS financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the three preceding categories. After initial measurement, AFS financial assets are measured at fair value with unrealized gains or losses recognized in other comprehensive income until the investment is derecognized. At which time, the cumulative gain or loss is recognized or determined to be impaired, and the cumulative loss is reclassified from equity to profit or loss.

The Companies have the following investments classified as AFS:

- Investments in shares of stock that do not have readily determinable fair value in which the equity interest is less than 20%, and other long-term investments are carried at cost.

- Investments in equity shares that have readily determinable fair value in which the equity interest is less than 20% and which are classified as available-for-sale, are recorded at fair value.

f9. Financial liabilities

Initial recognition

Financial liabilities within the scope of IAS 39 are categorized as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Companies determine the classification of their financial liabilities at initial recognition.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings, inclusive of directly attributable transaction costs.

The Companies’ financial liabilities include trade payables, accrued expenses, procurement payable, loans and bonds payable, due to related parties, derivative financial instruments, other current and non-current financial liabilities.

F-32

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Subsequent measurement

The measurement of financial liabilities depends on their classification as follows:

• Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are acquired for the purpose of selling or repurchase in the near term. This category includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognized in the consolidated statements of comprehensive income.

• Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate method.

Gains and losses are recognized in the consolidated statements of comprehensive income when the liabilities are derecognized as well as through the EIR amortization process.

f10. Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statements of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

f11. Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs. For financial instruments where there is no active market, fair value is determined using valuation techniques. Such techniques may include using recent arm’s length market transactions, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis or other valuation models.

Credit risk adjustment

The Company adjusts the price in the more advantageous market to reflect any differences in counterparty credit risk between instruments traded in that market and the ones being valued for financial asset positions. In determining the fair value of financial liability positions, the Company’s own credit risk associated with the instrument is taken into account.

F-33

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

f12. Amortized cost of financial instruments

Amortized cost is computed using the effective interest rate method less any allowance for impairment and principal repayment or reduction. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate.

f13. Impairment of financial assets

The Companies assess at the end of each reporting period whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

• Financial assets carried at amortized cost

For loans and receivables carried at amortized cost, the Companies first assess whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Companies determine that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, they include the asset in a group of financial assets with similar credit risk characteristics and collectively assess them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has occurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan receivable has a variable interest rate, the discount rate for measuring impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the consolidated statements of comprehensive income. Interest income continues to be accrued on the reduced carrying amount based on the rate of interest used to discount future cash flows for the purpose of measuring impairment loss. Loans and receivables, together with the associated allowance, are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Companies. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is recognized in profit or loss.

F-34

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

• AFS financial assets

In the case of equity investments classified as an AFS financial asset, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.

Where there is objective evidence of impairment, the cumulative loss—measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognized in profit or loss—is reclassified from equity to profit or loss. Impairment losses on equity investments are not reversed through the profit or loss; increases in their fair value after impairment are recognized in other comprehensive income.

In the case of debt instruments classified as available-for-sale, impairment is assessed based on the same criteria as financial assets carried at amortized cost. Future interest income is based on the reduced carrying amount and is accrued based on the rate of interest used to discount future cash flows for the purpose of measuring impairment loss. Such accrual is recorded as part of “Interest income” account in the consolidated statements of comprehensive income. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed through profit or loss.

f14. Derecognition of financial assets and liabilities

Financial assets

A financial asset (or where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized when: (1) the rights to receive cash flows from the asset have expired; or (2) the Companies have transferred their rights to receive cash flows from the asset or have assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Companies have transferred substantially all the risks and rewards of the asset, or (b) the Companies have neither transferred nor retained substantially all the risks and rewards of the asset, but have transferred control of the asset.

Financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or has expired.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss.

f15. Derivative financial instruments

The Company enters into and engages in cross currency swap, interest rate swap, currency forward and other permitted instruments, if considered necessary, for the purpose of managing its foreign exchange and interest rate exposures emanating from the Company’s loans and bonds payable in foreign currencies. These derivative financial instruments do not meet the criteria for hedge accounting and are initially recognized at fair value on the date the derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

F-35

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Any gains or losses arising from changes in fair value on derivatives during the year that do not qualify for hedge accounting are taken directly to the profit or loss.

Derivative assets and liabilities are presented under current assets and liabilities, respectively. Embedded derivative is presented with the host contract on the consolidated statements of financial position which represents an appropriate presentation of overall future cash flows for the instrument taken as a whole.

The net changes in fair value of derivative instruments, swap cost or income, termination cost or income, and settlement of derivative instruments are charged or credited to “Gain (Loss) on Change in Fair Value of Derivatives—Net”, which is presented under Other Income (Expenses) in the consolidated statements of comprehensive income.

f16. Property and equipment

Property and equipment are stated at cost (which includes capitalization of certain borrowing costs incurred during the construction phase), less accumulated depreciation, amortization and impairment in value. Depreciation and amortization of property and equipment is computed using the straight-line method based on the estimated useful lives of the assets.

Property and equipment acquired in exchange for a non-monetary asset or for a combination of monetary and non-monetary assets are measured at fair values unless:

(i) the exchange transaction lacks commercial substance, or

(ii) the fair value of neither the assets received nor the assets given up can be measured reliably.

The acquired assets are measured this way even if the Companies cannot immediately derecognize the assets given up. If the acquired assets cannot be reliably measured at fair value, their value is measured at the carrying amount of the assets given up.

An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in profit or loss in the year the asset is derecognized.

The estimated useful lives of the assets are as follows:

	Years
Landrights		50
Exchange and network assets		3 to 15
Subscribers’ apparatus and other equipment		3 to 15
Buildings and building & leasehold improvements		20 and 3 to 15

Personnel costs which are directly related to the development, construction and installation of property and equipment are capitalized as part of the cost of such assets.

The cost of maintenance and repairs is charged to income as incurred. Significant renewals and betterments which enhance the asset condition on its initial performance, are capitalized. When properties are retired or otherwise disposed of, their costs and the related accumulated depreciation are derecognized from the accounts, and any resulting gains or losses are recognized in profit or loss for the year.

F-36

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Properties under construction and installation are stated at cost. This includes cost of construction, equipment, capitalizable borrowing costs and other direct costs. Property under construction is not depreciated until such time that the relevant asset is completed and available for its intended use.

The residual values, useful lives and methods of depreciation and amortization of property and equipment are reviewed and adjusted prospectively, if appropriate, at each financial year end.

f17. Borrowing costs

Borrowing costs are capitalized if they are directly attributable to the acquisition, construction or production of a qualifying asset. Capitalization of borrowing costs commences when the activities necessary to prepare the asset for its intended use are in progress and expenditures and borrowing costs are being incurred. Borrowing costs are capitalized until the asset is available for its intended use. If the resulting carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognized. Borrowing costs include interest charges and other costs incurred in connection with the borrowing of funds, as well as exchange differences arising from foreign currency borrowings used to finance these projects, to the extent that they are regarded as an adjustment to interest costs (estimated quarterly by capping the exchange differences taken as borrowing costs at the amount of borrowing costs on the functional currency equivalent borrowings).

f18. Asset retirement obligations

The Companies are legally required under various lease agreements to dismantle the installation in leased sites and restore such sites to their original condition at the end of the lease contract term.

The amount of asset retirement obligations is accreted, and such accretion is recognized as interest expense.

f19. Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.

The Companies, as lessees, classify a lease as a finance lease if it transfers to them substantially all the risks and rewards incidental to ownership. All other leases are classified as operating leases.

A finance lease gives rise to a depreciation expense for the asset, as well as an interest expense for each year. Finance charges are charged directly to current operations. The depreciation policy for leased assets which is based on straight-line method is consistent with that for depreciable assets that are directly owned.

Leased assets are depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term, if there is no reasonable certainty that the Companies will obtain ownership of the leased asset at the end of the lease term.

In 2006, the Company was granted a license to use 2.1 GHz radio frequency spectrum by the Ministry of Communications and Information and Technology (“MOCIT”). The upfront fee is recorded as Long-term Prepaid License for the non-current portion and Prepaid Expenses for the current portion, and amortized over the 10-year license term using the straight-line method.

F-37

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

In 2009, the Company received additional 3G license and IMM was granted an operating license for “Packet Switched” local telecommunication network using 2.3 GHz radio frequency spectrum of Broadband Wireless Access (“BWA”). The Company and IMM were obliged to, among others, pay upfront fee and annual radio frequency fee over the next 10 years (Note 29h).

Management believes, as supported by written confirmation from the DGPT, that the 3G and BWA licenses may be returned at any time without any financial obligation to pay the remaining outstanding annual radio frequency fees (i.e., the license arrangement does not transfer substantially all the risks and rewards incidental to ownership).

Accordingly, the Company and IMM recognize the annual radio frequency fee as operating lease expense amortized using the straight-line method over the term of the rights to operate the 3G and BWA licenses. Management evaluates its plan to continue to use the licenses on an annual basis.

f20. Inventories

Inventories, which mainly consist of SIM cards, broadband modems, starter packs and pulse reload vouchers and cellular handsets, are valued at the lower of cost or net realizable value. Cost is determined using the weighted-average method. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

f21. Prepaid expenses

Prepaid expenses, which mainly consist of frequency fee, rentals, upfront fee of 3G and BWA licenses and insurance are expensed as the related asset is utilized. The non-current portions of prepaid rentals and upfront fee of 3G and BWA licenses are shown as part of “Long-term Prepaid Rentals—Net of Current Portion” and “Long-term Prepaid Licenses—Net of Current Portion”, respectively.

f22. Impairment of non-financial assets

Property and equipment

The Companies assess at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists or when annual impairment testing for an asset is required, the Companies make an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of such asset’s or cash-generating unit’s fair value less costs to sell or its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent from those of other assets or groups of assets in which case it is determined for the cash-generating unit to which the asset belongs. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining the fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. Impairment losses of continuing operations are recognized in the consolidated statements of comprehensive income.

For assets, excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such

F-38

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

indication exists, the Companies make an estimate of the recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset is increased to its recoverable amount. The increase cannot exceed the carrying amount that would have been determined, net of depreciation and amortization, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the consolidated statements of comprehensive income. After such reversal, the depreciation and amortization charges are adjusted in future years to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining economic useful life.

The following criteria are also applied in assessing impairment of specific assets:

Goodwill and other intangible assets

Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating unit or group of cash-generating units to which the goodwill relates. Where the recoverable amount of the cash-generating unit or group of cash-generating units is less than the carrying amount of the cash-generating unit or group of cash-generating units to which goodwill has been allocated, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level, as appropriate. The amount of impairment is calculated as being the difference between the recoverable amount of the intangible asset and its carrying amount and is recognized in the consolidated statements of comprehensive income. Impairment losses relating to intangible assets can be reversed in future periods.

Investments in associates

The Companies determine at each balance sheet date whether there is any objective evidence that their investments in associates are impaired. If this is the case, the Companies calculate the amount of impairment as the difference between the recoverable amount of the investments in associates and its carrying amount. The amount of impairment loss should be recognized in the consolidated statements of comprehensive income.

f23. Provisions

Provisions are recognized when the Companies have a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. When the Companies expect some or all of provisions to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in profit or loss net of any reimbursement.

f24. Operating segment

An operating segment is a component of entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other

F-39

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

components of the same entity), whose operating results are reviewed regularly by the entity’s chief operating decision maker (Board of Directors) to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available.

f25. Basic and diluted earnings per share/ADS

Basic earnings per share is computed by dividing net income for the year attributable to ordinary owners of the Company by the weighted-average number of ordinary shares outstanding during the year (Note 26).

Basic earnings per ADS is computed by multiplying basic earnings per share by 50, which is equal to the number of shares per ADS.

Diluted earnings per share is computed by dividing net income for the year attributable to ordinary owners of the Company (after adjusting profit or loss effect related to dilutive potential ordinary shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all potentially dilutive ordinary shares.

g. Accounting Policy Change

IAS 17 Leases

Before January 1, 2010, under IFRS as issued by IASB, the costs to acquire the landrights as well as other expenses associated with the acquisition are capitalized as prepaid landrights lease, and are amortized over the period of the right to use the land obtained from the Government which ranges from 20 to 30 years.

Based on IAS 17 amendment (as part of the Improvements Project), starting January 1, 2010, the Companies classify land leases as finance leases and present them in the financial statements as property and equipment. The Companies adopted a retrospective application of this amendment and amortize land leases over 50 years (i.e., over the initial lease term of 30 years plus one extension of 20 years).

As a result of the accounting policy change, the following adjustments were made to the financial statements:

For the year ended December 31, 2008:

	December  31, 2008 (Previously Reported)		Increase (Decrease)			December  31, 2008 (Restated)
OPERATING EXPENSES
Cost of services		6,375,987		(15,725	)		6,627,804
				267,542	*
Depreciation and amortization		4,555,891		9,479			4,565,370
INCOME TAX BENEFIT (EXPENSE)
Deferred		102,319		(17	)		102,302
NET COMPREHENSIVE INCOME ATRIBUTABLE TO:
Non-controlling interests		25,998		207			26,205

F-40

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

As of January 1, 2009:

	January  1, 2009 (Previously Reported)		Increase (Decrease)			January 1,  2009 (Restated)
ASSETS
Property and equipment—net		37,904,724		428,889			38,333,613
Prepaid landrights lease		386,622		(386,622	)		—
LIABILITIES
Deferred tax liabilities—net		1,349,675		(929	)		1,348,746
STOCKHOLDER’S EQUITY
Retained earnings Unappropriated		14,842,838		42,545			14,885,383
Non-controlling interest		285,597		651			286,248

* Refer to Note 2d

As of and for the year ended December 31, 2009:

	December  31, 2009 (Previously Reported)			Increase (Decrease)			December  31, 2009 (Restated)
ASSETS
Property and equipment—net		43,922,342			435,796			44,358,138
Prepaid landrights lease		377,868			(377,868	)		—
LIABILITIES
Deferred tax liabilities—net		1,650,318			1,500			1,651,818
STOCKHOLDER’S EQUITY
Retained earnings Unappropriated		15,575,601			55,639			15,631,240
Non-controlling interest		326,963			789			327,752
OPERATING EXPENSE
Cost of services		6,896,300			(25,871) 217,421*			7,087,850
Depreciation and amortization		5,561,390			10,210			5,571,600
INCOME TAX BENEFIT (EXPENSE)
Deferred		(287,030	)		(2,429	)		(289,459	)
NET COMPREHENSIVE INCOME ATRIBUTABLE TO:
Non-controlling interests		56,194			138			56,332

* Refer to Note 2d

F-41

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The effect on earnings per share related to the restatement in 2008 and 2009 was less than Rp1.10 and Rp2.50, respectively.

The effect on earnings per ADS related to the restatement in 2008 and 2009 was less than Rp55.50 and Rp120.50, respectively.

3. MANAGEMENT’S USE OF JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Companies’ consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

a. Judgments

In the process of applying the Company’s accounting policies, management has made the following judgments, apart from those including estimations and assumptions, which have the most significant effect on the amounts recognized in the consolidated financial statements:

• Determination of functional currency

The functional currencies of the entities under the Company are the currency of the primary economic environment in which each entity operates. It is the currency that mainly influences the revenue and cost of rendering services.

• Leases

The Companies have various lease agreements as lessors in respect of certain properties and equipment. The Companies evaluate whether significant risks and rewards of ownership of the leased properties are transferred to the lessee or retained by the Companies based on IAS 17, “Leases”, which requires the Companies to make judgments and estimates of transfer of risks and rewards of ownership of leased properties.

b. Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

• Determination of fair values of financial assets and financial liabilities

Where the fair value of financial assets and financial liabilities recorded in the statements of financial position cannot be derived from active markets, their fair value is determined using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. The judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

F-42

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

• Estimating useful lives of property and equipment and intangible assets

The Companies estimate the useful lives of their property and equipment and intangible assets based on expected asset utilization as anchored on business plans and strategies that also consider expected future technological developments and market behavior. The estimation of the useful lives of property and equipment is based on the Companies’ collective assessment of industry practice, internal technical evaluation and experience with similar assets. The estimated useful lives are reviewed at least each financial year-end and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limitations on the use of the assets. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in the factors mentioned above.

The amounts and timing of recorded expenses for any period will be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of the Companies’ property and equipment will increase the recorded operating expenses and decrease non-current assets.

• Goodwill and intangible assets

The consolidated financial statements and results of operations reflect acquired businesses after the completion of the respective acquisition. The Company accounts for the acquired businesses using the acquisition method starting January 1, 2010 and purchase method for prior year acquisitions, which requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair market values of the acquiree’s identifiable assets and liabilities at the acquisition date. Any excess in the purchase price over the estimated fair market values of the net assets acquired is recorded as goodwill in the consolidated statements of financial position. Thus, the numerous judgments made in estimating the fair market value to be assigned to the acquiree’s assets and liabilities can materially affect the Company’s financial performance.

• Realizability of deferred income tax assets

The Companies review the carrying amounts of deferred income tax assets at the end of each reporting date and reduce these to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred income tax assets to be utilized. The Companies’ assessment on the recognition of deferred income tax assets on deductible temporary differences is based on the level and timing of forecasted taxable income of the subsequent reporting periods. This forecast is based on the Companies’ past results and future expectations on revenues and expenses as well as future tax planning strategies. However, there is no assurance that sufficient taxable income will be generated to allow all or part of deferred income tax assets to be utilized.

• Estimating allowance for impairment of receivables

If there is an objective evidence that an impairment loss has been incurred in trade receivables, the Companies estimate the allowance for impairment losses related to their trade receivables that are specifically identified as doubtful for collection. The level of allowance is evaluated by management on the basis of factors that affect the collectibility of the accounts. In these cases, the Companies use judgment based on the best available facts and circumstances, including but not limited to, the length of the Companies’ relationship with the customers and the customers’ credit status based on third-party credit reports and known market factors, to record specific reserves for

F-43

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

customers against amounts due in order to reduce the Companies’ receivables to amounts that they expect to collect. These specific reserves are re-evaluated and adjusted as additional information received affect the amounts estimated.

In addition to specific allowance against individually significant receivables, the Companies also assess a collective impairment allowance against credit exposure of their customers which are grouped based on common credit characteristics, which, although not specifically identified as requiring a specific allowance, have a greater risk of default than when the receivables were originally granted to customers. This collective allowance is based on historical loss experience using various factors such as historical performance of the customers within the collective group, deterioration in the markets in which the customers operate, and identified structural weaknesses or deterioration in the cash flows of customers.

• Estimation of pension cost and other employee benefits

The cost of defined benefit plan and present value of the pension obligation are determined using the projected-unit-credit method. Actuarial valuation includes making various assumptions which consist, among other things, discount rates, expected rates of return on plan assets, rates of compensation increases and mortality rates. Actual results that differ from the Companies’ assumptions are recognized as income or expense when the net cumulative unrecognized actuarial gains and losses at the end of the previous reporting year exceed 10% of the higher of the present value of defined benefit obligation and the fair value of plan assets at that date. Due to complexity of valuation, the underlying assumptions and their long-term nature, a defined benefit obligation is highly sensitive to changes in assumptions.

While the Companies believe that their assumptions are reasonable and appropriate, significant differences in the Companies’ actual experience or significant changes in their assumptions may materially affect the costs and obligations of pension and other long-term employee benefits. All assumptions are reviewed at each reporting date.

• Asset retirement obligations

Asset retirement obligations are recognized in the year in which they are incurred if a reasonable estimate of fair value can be made. This requires an estimation of the cost to restore/dismantle on a per location basis and is based on the best estimate of the expenditure required to settle the obligation at the future restoration/dismantlement date, discounted using a pre-tax rate that reflects the current market assessment of the time value of money and, where appropriate, the risk specific to the liability.

• Revenue recognition

The Company’s revenue recognition policies require the use of estimates and assumptions that may affect the reported amounts of revenues and receivables.

The Company’s agreements with domestic and foreign carriers for inbound and outbound traffic subject to settlements require traffic reconciliations before actual settlement is done, which may not be the actual volume of traffic as measured by Company. Initial recognition of revenues is based on observed traffic adjusted by normal experience adjustments, which historically are not material to the consolidated statements of comprehensive income. Differences between the amounts initially recognized and the actual settlements are taken up in the account upon reconciliation. However, there is no assurance that the use of such estimates will not result in material adjustments in future periods.

F-44

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The Companies recognize revenues from installation and activation related fees and the corresponding costs over the expected average periods of customer relationship for cellular, MIDI and fixed telecommunication services. The Companies estimate the expected average period of customer relationship based on the most recent churn-rate analysis.

• Uncertain tax exposure

In certain circumstances, the Companies may not be able to determine the exact amount of their current or future tax liabilities due to ongoing investigations by, or negotiations with, the taxation authority. Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. In determining the amount to be recognized in respect of an uncertain tax liability, the Companies apply similar considerations as they would use in determining the amount of a provision to be recognized in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The Companies make an analysis of all tax positions related to income taxes to determine if a tax liability for unrecognized tax benefit should be recognized.

As of December 31, 2010, the Company is subject to tax audit for tax year 2009.

The Companies record interest and penalties for the underpayment of income tax, if any, in income tax expense account in the consolidated financial statements.

F-45

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

4. CASH AND CASH EQUIVALENTS

This account consists of the following:

	January 1, 2009		December 31,
			2009		2010
Cash on hand (including US$10 on January 1, 2009 and US$12 on December 31, 2010)		1,626		1,581		1,792
Cash in banks
Related parties (Note 25) (including US$328 on January 1, 2009, US$4,365 on December 31, 2009 and US$4,726 on December 31, 2010)		31,509		91,783		116,107
Third parties (including US$16,905 on January 1, 2009, US$9,759 on December 31, 2009 and US$12,885 on December 31, 2010)		235,692		131,106		165,588
		268,827		224,470		283,487
Time deposits and deposits on call
Related parties (Note 25) (including US$309,079 on January 1, 2009, US$265 on December 31, 2009 and US$81,705 on December 31, 2010)		4,505,596		1,976,259		1,499,544
Third parties (including US$43,925 on January 1, 2009, US$22,725 on December 31, 2009 and US$12,454 on December 31, 2010)		963,443		635,270		292,239
		5,469,039		2,611,529		1,791,783
Total		5,737,866		2,835,999		2,075,270

F-46

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Time deposits and deposits on call denominated in rupiah earned interest at annual rates ranging from 1.25% to 14.00% on January 1, 2009, from 2.50% to 14.50% in 2009 and from 2.50% to 10.00% in 2010, while those denominated in U.S. dollar earned interest at annual rates ranging from 0.002% to 6.00% on January 1, 2009, from 0.001% to 6.00% in 2009 and from 0.05% to 4.75% in 2010.

The interest rates on time deposits and deposits on call in related parties are comparable to those offered by third parties.

5. ACCOUNTS RECEIVABLE—TRADE

This account consists of the following:

			December 31,
	January 1, 2009		2009		2010
Related parties (Note 25)
Telkom (including US$271 on January 1, 2009, US$75 on December 31, 2009 and US$55 on December 31, 2010)		32,801		31,724		56,108
Others (including US$5,032 on January 1, 2009, US$6,322 on December 31, 2009 and US$7,764 on December 31, 2010)		112,721		151,726		214,038
Sub-total		145,522		183,450		270,146
Less allowance for impairment		69,444		57,538		47,640
Net		76,078		125,912		222,506
Third parties
Overseas international carriers (including US$81,810 on January 1, 2009, US$98,042 on December 31, 2009 and US$93,755 on December 31, 2010)		895,820		921,595		842,954
Local companies (including US$24,987 on January 1, 2009, US$15,291 on December 31, 2009 and US$13,956 on December 31, 2010)		506,191		463,069		628,224
Post-paid subscribers from:
Cellular		249,124		252,008		255,973
Fixed telecommunication		40,212		26,813		47,239
Sub-total		1,691,347		1,663,485		1,774,390
Less allowance for impairment		426,719		404,272		448,470
Net		1,264,628		1,259,213		1,325,920
Total		1,340,706		1,385,125		1,548,426

F-47

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The aging schedule of the accounts receivable—trade is as follows:

	January 1, 2009				December 31, 2009				December 31, 2010
Number of Months Outstanding	Amount		Percentage (%)		Amount		Percentage (%)		Amount		Percentage (%)
Related parties
0 - 6 months		82,495		56.69		121,522		66.24		201,256		74.50
7 - 12 months		10,199		7.01		27,207		14.83		47,973		17.76
13 - 24 months		3,382		2.32		2,661		1.45		6,913		2.56
Over 24 months		49,446		33.98		32,060		17.48		14,004		5.18
Total		145,522		100.00		183,450		100.00		270,146		100.00
Third parties
0 - 6 months		984,794		58.23		820,082		49.30		787,871		44.40
7 - 12 months		191,825		11.34		287,533		17.28		279,806		15.77
13 - 24 months		266,779		15.77		285,407		17.16		308,808		17.40
Over 24 months		247,949		14.66		270,463		16.26		397,905		22.43
Total		1,691,347		100.00		1,663,485		100.00		1,774,390		100.00

As of January 1, 2009 and December 31, 2009 and 2010, the Companies have no “past due and not impaired” accounts receivable.

The movements in the allowance for impairment on accounts receivable—trade are as follows:

	Total			Related Parties			Third Parties
January 1, 2009
Balance at beginning of year		414,484			88,342			326,142
Provision (reversal) (Note 22)		74,281			(23,514	)		97,795
Write-offs		(35,134	)		(2,044	)		(33,090	)
Net effect of foreign exchange adjustment		42,532			6,660			35,872
Balance at end of year		496,163			69,444			426,719
Individual impairment		212,008			66,503			145,505
Collective impairment		284,155			2,941			281,214
Total		496,163			69,444			426,719
Gross amount of receivables, individually impaired, before deducting any individually assessed impairment allowance		591,363			70,901			520,462

F-48

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	Total			Related Parties			Third Parties
December 31, 2009
Balance at beginning of year		496,163			69,444			426,719
Provision (Note 22)		98,042			6,635			91,407
Write-offs		(101,586	)		(9,398	)		(92,188	)
Net effect of foreign exchange adjustment		(29,560	)		(9,143	)		(20,417	)
Deduction due to liquidation of SMM (Note 1b)		(1,249	)		—			(1,249	)
Balance at end of year		461,810			57,538			404,272
Individual impairment		162,967			52,137			110,830
Collective impairment		298,843			5,401			293,442
Total		461,810			57,538			404,272
Gross amount of receivables, individually impaired, before deducting any individually assessed impairment allowance		790,213			63,391			726,822
	Total			Related Parties			Third Parties
December 31, 2010
Balance at beginning of year		461,810			57,538			404,272
Provision (reversal)—net (Note 22)		67,041			(9,712	)		76,753
Write-offs		(23,586	)		—			(23,586	)
Net effect of foreign exchange adjustment		(9,155	)		(186	)		(8,969	)
Balance at end of year		496,110			47,640			448,470
Individual impairment		182,175			37,576			144,599
Collective impairment		313,935			10,064			303,871
Total		496,110			47,640			448,470
Gross amount of receivables, individually impaired, before deducting any individually assessed impairment allowance		405,926			118,486			287,440

The net effect of foreign exchange adjustment was due to the strengthening or weakening of the rupiah vis-à-vis the U.S. dollar in relation to U.S. dollar accounts previously provided with allowance and was credited or charged to “Gain or (Loss) on Foreign Exchange Net”.

Information about the Companies’ exposure to credit risk is disclosed in Note 31.

Management believes the established allowance is sufficient to cover impairment of accounts receivable—trade.

F-49

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

6. TAXES RECEIVABLE

This account consists of claims for tax refund as of January 1, 2009 and December 31, 2009 and 2010 amounting to Rp247,185, Rp396,581 and Rp479,786, respectively, mainly consisting of the Company’s corporate income tax for fiscal years 2004, 2005, 2006, 2009 and 2010 and Satelindo’s corporate income tax for fiscal year 2002.

On July 4, 2008, the Company received Decision Letter No. KEP-00080/WPJ.19/KP.0303/2008 (KEP-00080) from the Tax Court which accepted the Company’s objection to the correction of the 2003 corporate income tax amounting to Rp126,403. On December 24, 2008, the Company received Decision Letter No. KEP-539/WPJ.19/BD.05/2008 from the DGT which increased the overpayment amount by Rp84,650 in the assessment letter on tax overpayment (“SKPLB”) for fiscal year 2004, which amount is lower than the amount stated in KEP-00080. On January 21, 2009, the Company filed an appeal letter to the Tax Court to increase the SKPLB for fiscal year 2004 as stated in KEP-00080. On February 2, 2009, the Company received the tax refund from the Tax Office amounting to Rp84,650 for the additional tax overpayment of corporate income tax for fiscal year 2004. On December 4, 2009, the Company received from the Tax Court its Decision No. Put.20644/PP/M.II/2009 which granted the request to increase the SKPLB for fiscal year 2004. Furthermore, on December 15, 2009, the DGT issued Decision Letter No. KEP-00101/WPJ.19/KP.0303/2009 to implement such Tax Court Decision. On April 13, 2010, the Company received the tax refund from the Tax Office amounting to Rp41,753 for the remaining tax overpayment of corporate income tax for the fiscal year 2004.

On August 21, 2008, the Company submitted an appeal letter to the Tax Court concerning the Company’s remaining objection to the correction of the 2005 corporate income tax. On October 29, 2010, the Company received the Decision Letter from the Tax Court which accepted the Company’s objection to the correction of the 2005 corporate income tax amounting to Rp38,155 (Note 33k), which was offset against the underpayment of the Company’s 2008 and 2009 income tax article 26 based on Tax Collection Letters (“STPs”) received by the Company on September 17, 2010 (Note 29c).

On June 8, 2009, the Company received the assessment letter on tax underpayment (“SKPKB”) from the DGT for Satelindo’s corporate income tax for fiscal year 2002 amounting to Rp105,809 (including penalties and interest). The Company accepted a part of the correction of the 2002 corporate income tax amounting to Rp2,646 which was charged to current operations in 2009. Under Indonesian Tax Law, a taxpayer is required to pay the tax underpayment amount as stated in the SKPKB within one month from the date of the SKPKB. The taxpayer can reclaim the tax paid through an objection or appeal process. On August 28, 2009, the Company submitted an objection letter to the Tax Office regarding the remaining correction on Satelindo’s 2002 corporate income tax. On July 15, 2010, the Company received Decision Letter No.KEP-357/WPJ.19/BD.05/2010 from the DGT declining the Company’s objection to the correction on Satelindo’s corporate income tax for fiscal year 2002. On October 14, 2010, the Company submitted an appeal letter to the Tax Court concerning the Company’s objection to the correction on Satelindo’s corporate income tax for fiscal year 2002. As of April 20, 2011, the Company has not yet received any decision from the Tax Court on such appeal.

On September 7, 2009, the Company received Decision Letter No.KEP-335/WPJ.19/BD.05/2009 from the DGT which declined the Company’s objection to the remaining corrections of the 2006 corporate income tax. On December 2, 2009, the Company submitted an appeal letter to the Tax Court regarding the remaining corrections of the Company’s 2006 corporate income tax. As of April 20, 2011, the Company has not yet received any decision from the Tax Court on such appeal.

F-50

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

7. PROPERTY AND EQUIPMENT

The details of property and equipment are as follows:

	Exchange and network assets			Subscribers’ apparatus and other equipment			Buildings and building & leasehold improvements			Landrights		Properties under construction and installation			Total
Cost
At January 1, 2008 (restated)		32,414,532			3,120,129			7,190,475			428,828		8,010,903			51,164,867
Additions		276,929			138,288			8,354			7,712		11,903,668			12,334,951
Derecognitions		(17,381	)		(4,026	)		—			—		—			(21,407	)
Reclassifications		3,715,632			231,418			2,004,008			36,569		(5,987,627	)		—
At December 31, 2008 (restated)		36,389,712			3,485,809			9,202,837			473,109		13,926,944			63,478,411
Additions		158,871			56,996			18,922			—		11,334,716			11,569,505
Derecognitions		(89,448	)		(34,507	)		(14,604	)		—		(84,218	)		(222,777	)
Divestment of SMM—a subsidiary		—			(6,617	)		(70	)		—		—			(6,687	)
Reclassifications		14,701,390			368,118			2,369,910			31,511		(17,470,929	)		—
At December 31, 2009 (restated)		51,160,525			3,869,799			11,576,995			504,620		7,706,513			74,818,452
Additions		364,134			51,381			4,088			15,977		5,039,357	*		5,474,937
Derecognitions		(2,091,220	)		(30,657	)		(70,346	)		—		—			(2,192,223	)
Reclassifications		7,572,859			412,498			1,278,139			20,490		(9,283,986	)		—
At December 31, 2010		57,006,298			4,303,021			12,788,876			541,087		3,461,884			78,101,166
Accumulated depreciation, amortization and impairment
Accumulated depreciation, amortization and impairment at January 1, 2008 (restated)		15,856,348			2,023,547			2,712,199			50,981		—			20,643,075
Depreciation and amortization charge for the year		3,336,090			499,939			676,717			9,479		—			4,522,225
Derecognitions		(17,357	)		(3,145	)		—			—		—			(20,502	)
Accumulated depreciation, amortization and impairment at December 31, 2008 (restated)		19,175,081			2,520,341			3,388,916			60,460		—			25,144,798
Depreciation and amortization charge for the year		4,156,188			431,015			857,032			10,210		—			5,454,445
Derecognitions		(89,448	)		(34,359	)		(9,637	)		—		—			(133,444	)
Divestment of SMM—a subsidiary		—			(5,415	)		(70	)		—		—			(5,485	)
Accumulated depreciation, amortization and impairment at December 31, 2009 (restated)		23,241,821			2,911,582			4,236,241			70,670		—			30,460,314
Depreciation and amortization charge for the year		4,784,832			437,982			950,794			10,940		—			6,184,548
Derecognitions		(1,932,935	)		(29,838	)		(70,324	)		—		—			(2,033,097	)
Accumulated depreciation, amortization and impairment at December 31, 2010		26,093,718			3,319,726			5,116,711			81,610		—			34,611,765

* including additional property and equipment purchased from Lintasarta amounting to Rp71,423 (net of intercompany loss of Rp11,683)

F-51

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	Exchange and network assets		Subscribers’ apparatus and other equipment		Buildings and building & leasehold improvements		Landrights		Properties under construction and installation		Total
Net book value
At January 1, 2008 (restated)		16,558,184		1,096,582		4,478,276		377,847		8,010,903		30,521,792
At December 31, 2008 (restated)		17,214,631		965,468		5,813,921		412,649		13,926,944		38,333,613
At December 31, 2009 (restated)		27,918,704		958,217		7,340,754		433,950		7,706,513		44,358,138
At December 31, 2010		30,912,580		983,295		7,672,165		459,477		3,461,884		43,489,401

Submarine cables (presented as part of exchange and network assets) represent the Company’s proportionate investment in submarine cable circuits jointly constructed, operated, maintained and owned with other countries, based on the respective contracts and/or the construction and maintenance agreements.

Depreciation and amortization expense charged to profit or loss amounted to Rp4,522,225, Rp5,454,445 and Rp6,184,548 in 2008, 2009 and 2010, respectively.

Management believes that there is no impairment in assets value or recovery of the impairment reserve for the current year.

On August 31, 2009, the Company launched its Satellite Palapa-D. The Satellite experienced an under-performance of the launch vehicle during the Satellite’s placement to its intended orbital position. Consequently, its orbital lifetime has been reduced. The insurance claim for the partial loss of the Satellite has been made and is recorded as a reduction of the cost of the Satellite. The Satellite has been in operation since November 2009 after going through the process of testing and arranging its orbital position in September and October 2009. On January 4 and 19, 2010, the Company collected the Palapa-D Satellite insurance claim amounting to US$58,008 (equivalent to Rp537,657) as a loss compensation for the decrease in the Satellite’s useful life from 15 years to 10.77 years due to the under-performance of the launch vehicle in the Satellite’s orbital process.

As of December 31, 2010, approximately Rp31,691 of property and equipment are pledged as collateral to credit facilities obtained by Lintasarta (Note 14).

As of December 31, 2010, the Companies insured their respective property and equipment (except submarine cables) for US$232,785 and Rp40,306,958 including insurance on the Company’s satellite amounting to US$153,000. Management believes that the sum insured is sufficient to cover possible losses arising from fire, explosion, lightning, aircraft damage and other natural disasters.

The details of the Companies’ properties under construction and installation as of January 1, 2009 and December 31, 2009 and 2010 are as follows:

	Percentage of Completion		Cost		Estimated Date of Completion
January 1, 2009
Exchange and network assets		5 - 99		12,415,087	January - September 2009
Subscribers’ apparatus and other equipment		40 - 98		147,966	January - June 2009
Buildings and building & leasehold improvements		15 - 99		1,363,891	January 2009 - January 2010
Total				13,926,944

F-52

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	Percentage of Completion		Cost		Estimated Date of Completion
December 31, 2009
Exchange and network assets		5 - 99		6,819,312	January - September 2010
Subscribers’ apparatus and other equipment		55 - 95		120,609	January - July 2010
Buildings and building & leasehold improvements		6 - 75		766,592	January 2010 - December 2011
Total				7,706,513
December 31, 2010
Exchange and network assets		5 - 99		3,158,581	January - December 2011
Subscribers’ apparatus and other equipment		25 - 95		25,853	January - December 2011
Buildings and building & leasehold improvements		6 - 95		277,450	January - December 2011
Total				3,461,884

Borrowing costs capitalized to properties under construction and installation for the years ended December 31, 2008, 2009 and 2010 amounted to Rp134,875, Rp181,522 and Rp18,698, respectively.

For the years ended December 31, 2008, 2009 and 2010, sales or exchange of certain property and equipment were made as follows:

	2008			2009			2010
	Rp			Rp			Rp
Exchange of Assets (Note 29b)
Carrying amount of assets received		—			—			158,285
Carrying amount of assets given up		—			—			(158,285	)
Sales of Assets
Proceeds		1,131			2,253			7,741
Net book value		(905	)		(5,115	)		(841	)
Gain (loss)		226			(2,862	)		6,900

In the above exchange of assets transaction, the fair value of neither the asset received nor the assets given up cannot be measured reliably, hence, the value of the asset received is measured at the carrying amount of the assets given up.

8. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill arose from the acquisition of ownership in Bimagraha and Satelindo in 2001 and 2002, respectively, and from the acquisition of additional ownership in Lintasarta in 2005, in SMT in 2008 and LMD in 2010, respectively.

F-53

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The details of the other intangible assets arising from the acquisition of Satelindo in 2002 are as follows:

	Amount
Spectrum license		222,922
Customer base
—Post-paid		154,220
—Prepaid		73,128
Brand		147,178
Total		597,448

The changes in the goodwill and other intangible assets account are as follows:

	Non-integrated Software		Other Intangible Assets		Goodwill		Total
Cost:
At January 1, 2008		213,581		597,448		2,934,638		3,745,667
Additions		6,952		—		9,724		16,676
At January 1, 2009		220,533		597,448		2,944,362		3,762,343
Additions		15,044		—		—		15,044
At December 31, 2009		235,577		597,448		2,944,362		3,777,387
Additions		40,052		—		—		40,052
At December 31, 2010		275,629		597,448		2,944,362		3,817,439
Accumulated Amortization:
At January 1, 2008		182,096		545,531		930,862		1,658,489
Amortization		18,722		24,423		—		43,145
At January 1, 2009		200,818		569,954		930,862		1,701,634
Amortization		14,539		18,397		—		32,936
At December 31, 2009		215,357		588,351		930,862		1,734,570
Amortization		10,595		9,097		—		19,692
At December 31, 2010		225,952		597,448		930,862		1,754,262
Net book value:
At January 1, 2008		31,485		51,917		2,003,776		2,087,178
At January 1, 2009		19,715		27,494		2,013,500		2,060,709
At December 31, 2009		20,220		9,097		2,013,500		2,042,817
At December 31, 2010		49,677		—		2,013,500		2,063,177

F-54

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Other intangible assets consist of the following:

	Useful lives (years)		January 1, 2009						December 31, 2009						December 31, 2010
			Gross				Net		Gross				Net		Gross				Net
			Carrying Amount		Accumulated Amortization				Carrying Amount		Accumulated Amortization				Carrying Amount		Accumulated Amortization
Customer base:
Post-paid		5		154,220		154,220		—		154,220		154,220		—		154,220		154,220		—
Prepaid		6		73,128		73,128		—		73,128		73,128		—		73,128		73,128		—
Spectrum license		5		222,922		222,922		—		222,922		222,922		—		222,922		222,922		—
Brand		8		147,178		119,684		27,494		147,178		138,081		9,097		147,178		147,178		—
Total				597,448		569,954		27,494		597,448		588,351		9,097		597,448		597,448		—

Impairment testing of goodwill

Goodwill acquired through business combinations has been allocated to Cellular business unit, which is also considered as one of the Companies’ operating segments.

The Company performed its annual impairment testing of goodwill at December 31, 2008, 2009 and 2010.

The business enterprise value of the Cellular business unit has been determined based on discounted cash flow and weighted average cost of capital (WACC) covering a five-year period. This projection is based on the Companies’ long-term plan approved by the Board of Directors, which management believes is reasonable and is management’s best estimate of the ranges of economic conditions that will exist over the remaining useful life of the asset.

Key assumptions used in fair value less cost to sell (FVLCTS) calculation at December 31, 2010:

Discount rates—The Company has chosen to use WACC as a discounted rate for the discounted cash flow. The estimated WACC applied in determining the recoverable amount of the unit is between 12% and 14%.

Compounded Annual Growth Rate (CAGR)—The CAGR projection for the 5-year budget period of cellular segment revenue made by management is approximately 12%. This is higher than the historical revenue CAGR of approximately 7% due to tighter competition. The total operating expenses (including depreciation) are projected as a percentage of revenue.

Cost to Sell—As the recoverable amount of the Cellular Business is determined using FVLCTS, the estimated cost to sell the business is based on a certain percentage of the equity value. The estimated cost to sell used for this calculation is at approximately 1.5% of the enterprise value.

9. LONG-TERM PREPAID RENTALS—NET OF CURRENT PORTION

This account represents mainly the long-term portion of prepaid rentals on sites and towers.

F-55

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

10. LONG-TERM ADVANCES

This account represents advances to suppliers and contractors for the purchase and construction/installation of property and equipment which will be reclassified to the related property and equipment accounts upon the receipt of the property and equipment purchased or after the construction/installation of the property and equipment has reached a certain percentage of completion.

11. PROCUREMENT PAYABLE

This account arose from purchases of capital and operating expenditures procured from the following:

			December 31,
	January 1, 2009		2009		2010
Related parties (Note 25) (including US$505 January 1, 2009, US$631 in 2009 and US$404 in 2010)		77,718		117,284		68,681
Third parties (including US$411,796 on January 1, 2009, US$309,520 in 2009 and US$246,211 in 2010)		6,368,639		5,172,498		3,575,786
Total		6,446,357		5,289,782		3,644,467

The billed amount of procurement payable amounted to Rp1,266,204, Rp1,478,057 and Rp360,508 as of January 1, 2009 and December 31, 2009 and 2010, respectively. The unbilled amount of procurement payable amounted to Rp5,180,153, Rp3,811,725 and Rp3,283,959 as of January 1, 2009 and December 31, 2009 and 2010, respectively.

12. TAXES PAYABLE

This account consists of the following:

			December 31,
	January 1, 2009		2009		2010
Estimated corporate income tax payable, less tax prepayments of Rp500,923 on January 1, 2009, Rp439,147 in 2009 and Rp123,281 in 2010		78,800		21,826		4,890
Income tax article 25		32,369		40,122		18,899
Total		111,169		61,948		23,789

F-56

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The computation of the income tax expense for the years ended December 31, 2008, 2009 and 2010 is as follows:

				December 31,
	2008			2009			2010
Estimated taxable income (tax loss) of the Company		1,529,795			1,117,916			(1,142,061	)
Income tax expense—current (at statutory tax rates)
Company		458,921			313,016			—
Subsidiaries		120,802			147,957			128,171
Tax correction from previous year paid during the year		7,919			33,517			—
Total income tax expense—current		587,642			494,490			128,171
Income tax expense (benefit)—deferred—effect of temporary differences at enacted maximum tax rates (30% in 2008, 28% or 25% in 2009 and 25% in 2010)
Company
Depreciation—net		132,066			228,846			423,027
Loss on sale of property and equipment—net		—			1,036			86,055
Amortization of other intangible assets		67,565			58,962			47,642
Equity in net income of investees		50,834			34,073			42,652
Amortization of 3G licenses		(194	)		1,722			8,751
Tax loss		—			—			(285,515	)
Write-off of accounts receivable (provision for impairment of receivables)—net		(24,056	)		15,517			(8,685	)
Provision for termination, gratuity and compensation benefits of employees		(6,574	)		(7,662	)		(8,217	)
Net periodic pension cost		(458	)		(115	)		(4,253	)
Accrual of employee benefits—net		(38,496	)		(27,818	)		(3,820	)
Amortization of debt and bonds issuance costs, consent solicitation fees and discount (Notes 14 and 15)		(1,990	)		548			(2,580	)
Others		(16,950	)		(1,992	)		4,402
Net		161,747			303,117			299,459
Subsidiaries
Net periodic pension cost		542			1,524			720
Write-off of accounts receivable (provision for impairment of receivables)—net		(985	)		(2,943	)		533
Depreciation—net		(8,528	)		(10,549	)		(6,073	)
Accrued expenses		1,303			(506	)		(948	)
Tax loss carryforward		13,318			—			—
Others		(522	)		(1,184	)		476
Net		5,128			(13,658	)		(5,292	)
Net income tax expense—deferred		166,875			289,459			294,167
Deferred tax expense (benefit) resulting from reduction in tax rate
Company		(283,047	)		—			—
Subsidiaries		13,870			—			—
Net		(269,177	)		—			—
Income tax expense—net		485,340			783,949			422,338

F-57

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The computation of the estimated income tax payable is as follows:

	December 31,
	2008		2009		2010
Income tax expense—current
Company		458,921		313,016		—
Subsidiaries		120,802		147,957		128,171
Tax correction from previous year		7,919		33,517		—
Total income tax expense—current		587,642		494,490		128,171
Less prepayments of income tax of the Company
Article 22		99,462		101,137		52,126
Article 23		9,053		7,071		6,810
Article 25		317,745		299,289		28,795
Total prepayments of income tax of the Company		426,260		407,497		87,731
Less prepayments of income tax of Subsidiaries
Article 22		1,036		7,534		1,107
Article 23		3,214		3,306		3,696
Article 25		72,086		151,693		194,309
Total prepayments of income tax of Subsidiaries		76,336		162,533		199,112
Total prepayments of income tax		502,596		570,030		286,843
Estimated income tax payable
			December 31,
	January 1, 2009		2009		2010
Company		32,661		—		—
Subsidiaries		46,139		21,826		4,890
Total estimated income tax payable		78,800		21,826		4,890
			December 31,
	January 1, 2009		2009		2010
Claim for tax refund (presented as part of “Taxes Receivable”)
Company		—		94,481		87,731
Subsidiaries		1,673		36,402		75,831
Total claim for tax refund		1,673		130,883		163,562

F-58

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The reconciliation between the income tax expense calculated by applying the applicable tax rate of 30% in 2008, 28% in 2009 and 25% in 2010 to the profit before income tax and the income tax expense as shown in the consolidated statements of comprehensive income for the years ended December 31, 2008, 2009 and 2010 is as follows:

	December 31,
	2008			2009			2010
Profit before income tax		2,555,320			2,544,179			1,325,208
Income tax expense at the applicable tax rate of 30% in 2008, 28% in 2009 and 25% in 2010		766,596			712,370			331,302
Company’s equity in Subsidiaries’ income before income tax and reversal of inter-company consolidation eliminations		48,539			56,265			58,384
Tax effect on permanent differences
Assessment for income taxes and related penalties		2,878			15,497			20,844
Employee benefits		19,027			15,815			16,180
Donation		18,632			3,577			6,037
Amortization of landrights		2,844			2,859			2,735
Interest income already subjected to final tax		(140,563	)		(41,764	)		(36,200	)
Others		9,073			(5,918	)		11,161
Tax correction from previous year		7,919			33,517			—
Adjustment due to tax audit and others		19,572			(8,269	)		11,895
Net deferred tax benefits resulting from reduction in tax rates		(269,177	)		—			—
Income tax expense—net per consolidated statements of comprehensive income		485,340			783,949			422,338

The tax effects of significant temporary differences between financial and tax reporting of the Company are as follows:

			December 31,
	January 1, 2009 (Restated)		2009 (Restated)		2010
Deferred tax assets
Tax loss		—		—		285,515
Accrual of employee benefits—net		187,587		223,067		235,104
Allowance for impairment of receivables		125,027		109,510		118,195
Allowance for decline in value of investment in associated company and other long-term investments		39,069		39,069		39,069
Pension cost		17,775		17,890		22,143
Allowance for decline in value of short-term investments		6,349		6,349		6,349
Others		10,153		5,242		4,483
Total		385,960		401,127		710,858

F-59

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

			December 31,
	January 1, 2009 (Restated)		2009 (Restated)		2010
Deferred tax liabilities
Property and equipment		1,490,947		1,711,076		2,220,158
Investments in subsidiaries/associated companies-net of amortization of goodwill and other intangible assets		230,232		308,680		398,974
Deferred debt and bonds issuance costs, consent solicitation fees and discount		2,805		13,106		10,527
Long-term prepaid licenses		3,089		4,811		13,562
Difference in transactions of equity changes in associated company		1,460		1,460		1,460
Others		5,088		9,132		11,075
Total		1,733,621		2,048,265		2,655,756
Deferred tax liabilities—net		1,347,661		1,647,138		1,944,898

The breakdown by entity of the deferred tax assets and liabilities:

					December 31,
	January 1, 2009				2009				2010
	Deferred Tax Assets		Deferred Tax Liabilities (Restated)		Deferred Tax Assets		Deferred Tax Liabilities (Restated)		Deferred Tax Assets		Deferred Tax Liabilities
Company		—		1,347,661		—		1,647,138		—		1,944,898
Subsidiaries
Lintasarta		66,104		—		76,475		—		77,755		—
IMM		4,640		—		11,524		—		17,263		—
APE		—		565		—		3,070		—		4,383
ISP		—		331		—		619		—		428
SMT		—		189		—		991		—		1,597
LMD		—		—		—		—		—		—
Total		70,744		1,348,746		87,999		1,651,818		95,018		1,951,306

The deferred tax assets of Lintasarta relate mainly to the deferred tax on the temporary difference in the recognition of depreciation of property and equipment.

The significant temporary differences on which deferred tax assets have been computed are not deductible for income tax purposes until the accrued employee benefits are paid, the doubtful accounts are written off, the allowance for decline in value of investment in associated company and other long-term investments is realized upon sale of the investments, and the pension cost is paid.

The significant deferred tax liabilities relate to the differences in the book and tax bases of property and equipment, investments in subsidiaries/associated companies, debt and bonds issuance costs, consent solicitation fees and discount, and long-term prepaid licenses.

F-60

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The Company provides for deferred tax liabilities and deferred tax assets relating to the book-versus-tax-basis differences in its investment in domestic subsidiaries as the Company believes that for certain subsidiaries the investment will be recovered through the sale of the shares which is a taxable transaction and for certain subsidiaries the differences will be deductible from ordinary income as a result of a merger.

In September 2008, Law No. 7 Year 1983 regarding “Income Tax” was revised for the fourth time with the issuance of Law No. 36 Year 2008. The revised Law stipulates change in the corporate tax rates from progressive tax rates to a single rate of 28% for fiscal year 2009 and 25% for fiscal years 2010 onwards. The revised Law was effective on January 1, 2009. The Companies recorded the effects of the changes in tax rates for the year ended December 31, 2008 resulting from the reduction in tax rates as a reduction of income tax expense amounting to Rp269,177 and credits amounting to Rp292 and Rp886, respectively, to “Other Components of Equity—Difference in transactions of equity changes in associated companies/subsidiaries” and “Difference in foreign currency translation”, which are presented as part of other comprehensive income in the consolidated statements of comprehensive income.

On June 8, 2009, the Company received SKPKB from the DGT for Satelindo’s 2003 corporate income tax amounting to Rp30,870 (including interest), which was paid to the Tax Office on July 7, 2009 and charged to current operations in 2009.

The tax losses carryover of SMT and the Company as of December 31, 2010 can be carried forward through 2015 based on the following schedule:

Year of Expiration	Amount
2011		14,190
2012		30,205
2013		26,660
2014		31,901
2015		1,192,832
Total		1,295,788

F-61

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

13. ACCRUED EXPENSES

This account consists of the following:

			December 31,
	January 1, 2009		2009		2010
Interest		231,640		228,743		339,957
Network repairs and maintenance		303,200		301,857		265,428
Employee benefits (Notes 17 and 24)		122,049		152,447		216,732
Radio frequency fee		257,671		240,718		195,686
Dealer incentive (Note 2f5.1)		80,760		80,778		125,836
Marketing		161,698		125,908		120,092
Utilities		8,202		94,359		85,650
Consultancy fees		45,792		66,218		65,288
Universal Service Obligation (“USO”)		38,526		62,378		59,899
Concession fee		49,227		2,468		38,005
Link		3,614		7,204		31,111
Rental		21,762		18,225		28,090
General and administration		25,829		25,546		27,706
Blackberry access fee		2,507		10,340		20,679
Others (each below Rp20,000)		92,761		108,372		90,726
Total		1,445,238		1,525,561		1,710,885

F-62

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

14. LOANS PAYABLE

This account consists of the following:

			December 31,
	January 1, 2009		2009		2010
Related party (Note 25)
Mandiri—net of unamortized debt issuance cost and consent solicitation fee of Rp3,858 on January 1, 2009, Rp7,511 in 2009 and Rp2,955 in 2010		1,796,142		2,592,489		1,297,045
Third parties—net of unamortized debt issuance cost and consent solicitation fee of Rp233,736 on January 1, 2009, Rp250,888 in 2009 and Rp189,979 in 2010; and unamortized debt discount of Rp31,844 on January 1, 2009, Rp25,892 in 2009 and Rp19,267 in 2010		9,588,487		11,563,262		9,553,906
Total loans payable		11,384,629		14,155,751		10,850,951
Less current maturities (net of unamortized debt issuance cost and consent solicitation fees of Rp373 in 2010):
Related party		200,000		400,000		300,000
Third parties		372,469		1,040,259		2,884,147
Total current maturities		572,469		1,440,259		3,184,147
Long-term portion		10,812,160		12,715,492		7,666,804
The loans from third parties consist of the following:
Syndicated U.S. Dollar Loan Facility—net of unamortized debt issuance cost and consent solicitation fee of Rp47,276 on January 1, 2009, Rp44,563 in 2009 and Rp27,122 in 2010		4,880,224		4,185,437		4,018,828
AB Svensk Exportkredit, Sweden with Guarantee from Export Kredit Namnden—net of unamortized debt issuance cost of Rp36,909 in 2009 and Rp27,593 in 2010		—		1,200,551		1,972,905
HSBC France—net of unamortized debt issuance cost and consent solicitation fee of Rp176,408 on January 1, 2009, Rp156,357 in 2009 and Rp129,167 in 2010		1,276,607		1,736,678		1,500,434
BCA—net of unamortized debt issuance on cost and consent solicitation fee of Rp3,858 on January 1, 2009, Rp7,055 in 2009 and Rp2,903 in 2010		1,796,142		3,092,945		1,297,097
Goldman Sachs International Principal, net of unamortized debt discount of Rp31,844 on January 1, 2009, Rp25,892 in 2009 and Rp19,267 in 2010		402,456		408,408		415,033
Foreign Exchange (FX) Conversion Option—net of credit risk adjustment		185,768		97,942		54,595
9-Year Commercial Loan—net of unamortized debt issuance cost and consent solicitation fee of Rp3,962 on January 1, 2009, Rp3,707 in 2009 and Rp2,821 in 2010		292,093		237,733		203,805

F-63

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	January 1, 2009		December 31,
			2009		2010
Investment Credit Facility 6 from CIMB Niaga		—		23,772		52,483
Finnish Export Credit Ltd.—net of unamortized debt issuance cost and consent solicitation fee of Rp1,463 on January 1, 2009, Rp1,113 in 2009 and Rp373 in 2010		206,587		106,047		33,793
Investment Credit Facility 5 from CIMB Niaga		44,933		24,933		4,933
Investment Credit Facility 4 from CIMB Niaga		4,446		—		—
DBS—net of unamortized debt issuance cost and consent solicitation fee of Rp769 on January 1, 2009 and Rp1,184 in 2009		499,231		448,816		—
Total		9,588,487		11,563,262		9,553,906
Less current maturities		372,469		1,040,259		2,884,147
Long-term portion		9,216,018		10,523,003		6,669,759

The details of the loans from a related party and third parties are as follows:

Counterparties	Loan Type	Maturity	Amount	Interest Structure	Early Repayment
a. Mandiri*	•     5-year unsecured credit facility 1 •     Loan drawdowns are payable annually	September 18, 2012	Rp2,000,000	•     Year 1: 9.75% p.a. •     Year 2: 10.5% p.a. •     Years 3-5: Average 3-month Jakarta Inter-Bank Offered Rate (“JIBOR”) + 1.5% p.a. •     Payable quarterly	•     Without penalty if the repayment is made after the 24th month after the agreement date subject to 7 days’ prior written notice •     With penalty of 2% of the prepaid amount for repayment prior to the 24th month after the agreement date
b. Mandiri*	•     5-year unsecured credit facility 2 •     Loan drawdowns are payable annually	July 28, 2014	Rp1,000,000	•     Average 3-month JIBOR + 4% p.a. •     Effective May 31, 2010: average 3-month JIBOR + 2.25% p.a. •     Payable quarterly	•     Permitted - subject to 2% penalty of the prepaid amount •     On November 15, 2010, the Company made an early repayment of the remaining loan balance amounting to Rp900,000.
c. Syndicated U.S. Dollar Loan Facility—13 Financial Institutions	•     5-year unsecured credit facility •     Loan drawdowns are payable semi-annually	June 12, 2013	US$450,000	•     USD London Inter-Bank Offered Rate (“LIBOR”) + 1.9% p.a. (onshore lenders);         USD LIBOR + 1.85% p.a. (off- shore lenders) •     Payable semi-annually	•     Permitted only after the 6th month from the date of loan agreement subject to 15 days’ prior written notice (in the minimum amount of US$10,000 and in an amount divisible by US$1,000)

* a related party (Note 25)

F-64

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Counterparties	Loan Type	Maturity	Amount	Interest Structure	Early repayment
d. AB Svensk Exportkredit (“SEK”), Sweden with Guarantee from Export Kredit Namnden (“EKN”)	•     Credit facilities consisting of Facilities A,B and C with maximum amounts of US$100,000, US$155,000 and US$60,000, respectively •     Loan drawdowns are payable semi-annually	May 31, 2016 for facility A, February 28, 2017 for facility B and November 30, 2017 for facility C	US$315,000	•     Facility A: Margin of 0.25%, LIBOR, SEK Funding Cost of 1.05% and EKN Premium Margin of 1.58% •     Facility B: Margin of 0.05%, Commercial Interest Reference Rate (“CIRR”) and EKN Premium Margin of 1.61% •     Facility C: Margin of 0.05%, CIRR and EKN Premium Margin of 1.61%.	•     Permitted only in proportionate amount for each Facility A, B and C, after the last day of the availability period and on a repayment date subject to 20 days’ prior written notice •     In minimum amount of US$5,000 and in an amount divisible by US$500 •     Any repayment shall satisfy the obligations of loan repayment in inverse chronological order.
e. HSBC France	•     12 year - COFACE term facility •     Payable in twenty semi-annual installments	November 27, 2019	US$157,243	•     5.69% p.a. •     Payable semi-annually	•     Permitted with a corresponding proportionate voluntary prepayment under the SINOSURE Facility after the last day of the availability period and on a repayment date subject to 30 days’ prior written notice •     In minimum amount of US$10,000 and in an amount divisible by US$1,000 •     Any repayment shall satisfy the obligations of loan repayment in inverse chronological order.
f. HSBC France	•     12 year - SINOSURE term facility •     Payable in twenty semi-annual installments	November 27, 2019	US$44,200	•     USD LIBOR + 0.35% p.a. •     Payable semi-annually	•     Permitted with a corresponding proportionate voluntary prepayment under the COFACE Facility after the last day of the availability period and on a repayment date subject to 30 days’ prior written notice •     In minimum amount of US$10,000 and in an amount divisible by US$1,000 •     Any repayment shall satisfy the obligations of loan repayment in inverse chronological order.

F-65

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Counterparties	Loan Type	Maturity	Amount	Interest Structure	Early repayment
g. BCA	•     5-year unsecured credit facility 1 •     Loan drawdowns are payable annually	August 28, 2012	Rp2,000,000	•     Year 1: 9.75% p.a. •     Year 2: 10.5% p.a. •     Years 3-5: 3-month JIBOR + 1.5% p.a. •     Payable quarterly	•     Without penalty if the repayment is made after the 24th month after the agreement date subject to 7 days’ prior written notice •     With penalty of 2% of the prepaid amount for repayment prior to the 24th month after the agreement date.
h. BCA	•     3-year unsecured credit facility 2 •     Loan drawdowns are payable annually	March 16, 2012	Rp500,000	•     3-month JIBOR + 2.25% p.a.	•     With penalty of 1% of the prepaid amount •     On October 19, 2010, the Company made an early repayment of the remaining loan balance amounting to Rp400,000.
i. BCA	•     5-year unsecured credit facility 3 •     Loan drawdowns are payable annually	June 25, 2014	Rp1,000,000	•     3-month JIBOR + 4% p.a. •     Effective June 25, 2010: 3-month JIBOR + 2.25% p.a.	•     With penalty of 1% of the prepaid amount, except for prepayment to refinance this credit facility •     On October 19, 2010, the Company made an early repayment of the remaining loan balance amounting to Rp900,000.
j. Goldman Sachs International (GSI)	•     Investment loan •     provides an “FX Conversion Option” for GSI to convert the loan payable into a U.S. dollar loan of US$50,000 on May 30, 2012 (“FX Conversion Option”). •     Fair value of FX Conversion Option as of January 1, 2009, December 31, 2009 and 2010 amounting to US$16,965.12, US$10,419.43 and US$6,072.20 (equivalent to Rp185,768, Rp97,943 and Rp54,595), respectively	May 30, 2013	Rp434,300	•     8.75% p.a. •     Payable quarterly •     If GSI takes FX Conversion Option, starting May 30, 2012, the loan will bear interest at the fixed annual rate of 6.45% applied on the US$50,000 principal.	•     Certain changes affecting withholding taxes in the United Kingdom or Indonesia. •     Default under Guaranteed Notes due 2012 •     Default under the Company’s USD Notes and IDR Bonds •     Redemption, purchase or cancellation of the Guaranteed Notes Due 2012 and there are no USD Indosat Notes outstanding upon such redemption, purchase or cancellation •     Change of control in the Company.

F-66

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Counterparties	Loan Type	Maturity	Amount	Interest Structure	Early repayment
k. HSBC Jakarta Branch, CIMB Niaga and Bank of China     Limited, Jakarta Branch	•     9-year unsecured commercial facility •     Payable in fifteen semi-annual payments after 24 months from the date of loan agreement. For the 1st five installments: US$1,351.85 each; and US$2,027.78 each for the remaining installments thereafter	November 27, 2016	US$27,037	•     USD LIBOR + 1.45% p.a. •     Payable semi-annually	•     Permitted only on each repayment date after first repayment date subject to 30 days’ prior written notice •     In minimum amount of US$5,000 and in an amount divisible by US$1,000 •     Any prepayment shall satisfy the obligations of loan repayment proportionately.
l. CIMB Niaga	•     Investment credit facility 6 obtained by Lintasarta •     Payable quarterly	June 24, 2012	Rp75,000	•     14.5% p.a., subject to change by CIMB Niaga depending on the market condition	•     Permitted only on interest payment date subject to 15 days’ prior written notice. Lintasarta may repay the whole or any part of the loan before the due date only by using the fund from Lintasarta’s operational activities. Repayment using the fund from loans obtained from other parties is allowed with penalty determined by CIMB Niaga.
m. Finnish Export Credit Ltd.	•     5-year credit facility •     Payable semi-annually	May 12, 2011	US$38,000	•     4.15% p.a. •     Payable semi-annually	Permitted only after 60 days of the loan agreement subject to 15 days’ prior written notice (in the minimum amount of US$10,000 and in an amount divisible by US$1,000).
n. CIMB Niaga	•     Investment credit facility 5 obtained by Lintasarta •     Payable quarterly	January 10, 2011	Rp50,000	•     1-month SBI + 2.25% p.a.	Permitted only on interest payment date subject to 13 days’ prior written notice. Lintasarta may repay the whole or any part of the loan before the due date only by using the fund from Lintasarta’s operational activities. Repayment using the fund from loans obtained from other parties is allowed with 1% penalty of the early repaid amount.
o. DBS	•     5-year unsecured credit facility •     Loan drawdowns are payable annually	November 1, 2012	Rp500,000	¡ Year 1: 9.7% ¡ Year 2: 10.4% ¡ Years 3-5: 3-month SBI + 1.5% p.a. ¡ Payable quarterly	•     Without penalty if the repayment is made after the 24th month after the agreement date subject to 15 days’ prior written notice •     With penalty of 1% of the prepaid amount for repayment prior to the 24th month after the agreement date •     On October 30, 2010, the Company made an early repayment of the remaining loan balance amounting to Rp400,000.

F-67

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The scheduled principal payments from 2011 to 2015 and thereafter of all the loans payable as of December 31, 2010 are as follows:

	Twelve months ending December 31,
	2011		2012		2013		2014		2015 and thereafter		Total
In rupiah
Mandiri*		300,000		1,000,000		—		—		—		1,300,000
BCA*		300,000		1,000,000		—		—		—		1,300,000
GSI*		—		—		434,300		—		—		434,300
CIMB Niaga*		34,933		22,483		—		—		—		57,416
Sub-total		634,933		2,022,483		434,300		—		—		3,091,716
In U.S. dollar
Syndicated U.S. Dollar Loan facility (US$450,000)*		1,982,516		647,352		1,416,082		—		—		4,045,950
SEK, Sweden (US$222,500)*		327,529		327,529		327,529		327,529		690,382		2,000,498
HSBC France (US$181,248.02)*		181,067		181,067		181,067		181,067		905,333		1,629,601
9-Year Commercial Facility (US$22,981.45)*		24,309		36,463		36,463		36,463		72,928		206,626
GSI (US$6,072.20)*		—		—		54,595		—		—		54,595
FEC (US$3,800)*		34,166		—		—		—		—		34,166
Sub-total		2,549,587		1,192,411		2,015,736		545,059		1,668,643		7,971,436
Total		3,184,520		3,214,894		2,450,036		545,059		1,668,643		11,063,152
Less:
—unamortized debt issuance costs and consent solicitation fees												(192,934	)
—unamortized debt discount												(19,267	)
Net												10,850,951

* Refer to previous discussion on early repayment options for each loan.

The amortization of debt issuance costs, consent solicitation fees and debt discount on the loans amounted to Rp15,331 in 2008, Rp35,838 in 2009 and Rp72,091 in 2010 (Note 23).

As of January 1, 2009 and December 31, 2009 and 2010, the Companies have complied with all financial ratios required to be maintained under the loan agreements.

F-68

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

15. BONDS PAYABLE

This account consists of the following:

		January  1, 2009		December 31,
				2009		2010
a)	Guaranteed Notes Due 2020—net of unamortized notes issuance cost of Rp64,885 and discount of Rp29,666		—		—		5,749,599
b)	Fifth Indosat Bonds in Year 2007 with Fixed Rates—net of unamortized bonds issuance cost and consent solicitation fees of Rp6,948 on January 1, 2009, Rp12,793 in 2009 and Rp11,041 in 2010		2,593,052		2,587,207		2,588,959
c)	Seventh Indosat Bonds in Year 2009 with Fixed Rates—net of unamortized bonds issuance cost of Rp6,198 in 2009 and Rp5,362 in 2010		—		1,293,802		1,294,638
d)	Sixth Indosat Bonds in Year 2008 with Fixed Rates—net of unamortized bonds issuance cost and consent solicitation fees of Rp4,256 on January 1, 2009, Rp7,050 in 2009 and Rp5,414 in 2010		1,075,744		1,072,950		1,074,586
e)	Fourth Indosat Bonds in Year 2005 with Fixed Rate—net of unamortized bonds issuance cost and consent solicitation fees of Rp4,404 on January 1, 2009, Rp4,050 in 2009 and Rp1,382 in 2010		810,596		810,950		813,618
f)	Indosat Sukuk Ijarah III in Year 2008—net of unamortized bonds issuance cost and consent solicitation fees of Rp2,229 on January 1, 2009, Rp3,601 in 2009 and Rp2,625 in 2010		567,771		566,399		567,375
g)	Indosat Sukuk Ijarah II in Year 2007—net of unamortized bonds issuance cost and consent solicitation fees of Rp1,042 on January 1, 2009, Rp1,872 in 2009 and Rp1,517 in 2010		398,958		398,128		398,483
h)	Indosat Syari’ah Ijarah Bonds in Year 2005—net of unamortized bonds issuance cost and consent solicitation fees of Rp1,560 on January 1, 2009, Rp1,429 in 2009 and Rp487 in 2010		283,440		283,571		284,513
i)	Second Indosat Bonds in Year 2002 with Fixed and Floating Rates—net of unamortized consent solicitation fees of Rp656 in 2009 and Rp652 in 2010		200,000		199,344		199,348
j)	Indosat Sukuk Ijarah IV in Year 2009—net of unamortized bonds issuance cost of Rp982 in 2009 and Rp873 in 2010		—		199,018		199,127
k)	Limited Bonds II issued by Lintasarta*		31,150		25,000		25,000
l)	Limited Bonds I issued by Lintasarta**		25,292		16,989		16,989
m)	Guaranteed Notes Due 2010—net of unamortized notes issuance cost of Rp6,977 on January 1, 2009 and Rp3,879 in 2009		2,563,503		2,202,743		—
n)	Guaranteed Notes Due 2012—net of unamortized notes discount of Rp4,129 on January 1, 2009, Rp3,116 in 2009; and unamortized notes issuance cost of Rp8,649 on January 1, 2009 and Rp6,521 in 2009		1,185,261		1,018,817		—
o)	Third Indosat Bonds in Year 2003 with Fixed Rates—net of unamortized bonds issuance cost and consent solicitation fees of Rp2,709 on January 1, 2009 and Rp2,081 in 2009		637,291		637,919		—
Total bonds payable			10,372,058		11,312,837		13,212,235
Less current maturities (net of unamortized bonds issuance cost and consent solicitation fees totalling Rp5,960 in 2009 and Rp1,869 in 2010)			56,442		2,840,662		1,098,131
Long-term portion			10,315,616		8,472,175		12,114,104

* after elimination of Limited Bonds II amounting to Rp35,000 issued to the Company

** after elimination of Limited Bonds I amounting to Rp9,564 issued to the Company

F-69

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Bond	Nominal Amount	Interest	Maturity	Remarks
a. Guaranteed Notes Due 2020	US$650,000	•      7.375% p.a. •      Payable semi-annually	July 29, 2020	The notes are redeemable at the option of IPBV: •      At any time on or after July 29, 2015. •      Prior to July 29, 2013, IPBV may redeem up to a maximum of 35% of the original aggregate principal amount. •      At any time, upon not less than 30 days nor more than 60 days prior notice, at a price equal to 100% of the principal amount thereof, plus any accrued and unpaid interest to (but not including) the redemption date and any additional amounts, in the event of certain changes affecting withholding taxes in Indonesia and the Netherlands. •      Upon a change in control of IPBV, the holder of the notes has the right to require IPBV to repurchase all or any part of such holder’s notes.
b. Fifth Indosat Bonds in Year 2007
•      Series A •      Series B	Rp1,230,000 Rp1,370,000	•      10.20% p.a. •      Payable quarterly •      10.65% p.a. •      Payable quarterly	May 29, 2014 May 29, 2017	•      The Company has option to buy back part or all of the bonds, after the 1st anniversary of the bonds, at market price temporarily or as an early settlement. •      Based on the latest rating report released in October 2010, the bonds have idAA+ (stable outlook) rating from PT Pemeringkat Efek Indonesia (“Pefindo”).

F-70

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Bond	Nominal Amount	Interest	Maturity	Remarks
c. Seventh Indosat Bonds in Year 2009
•      Series A	Rp700,000	•      11.25% p.a. •      Payable quarterly	December 8, 2014	The Company has option to buy back part or all of the bonds, after the 1st anniversary of the bonds, at market price temporarily or as an early settlement.
•      Series B	Rp600,000	•      11.75% p.a. •      Payable quarterly	December 8, 2016
d. Sixth Indosat Bonds in Year 2008
•      Series A	Rp760,000	•      10.25% p.a. •      Payable quarterly	April 9, 2013	The Company has option to buy back part or all of the bonds, after the 1st anniversary of the bonds, at market price temporarily or as an early settlement.
•      Series B	Rp320,000	•      10.80% p.a. •      Payable quarterly	April 9, 2015
e. Fourth Indosat Bonds in Year 2005 with Fixed Rate	Rp815,000	•      12% p.a. •      Payable quarterly	June 21, 2011	The Company has early settlement option on the 4th anniversary of the bonds at 100% of the bonds’ nominal value and buy-back option after the 1st anniversary of the bonds at market price temporarily or as an early settlement.
f.  Indosat Sukuk Ijarah III in Year 2008 (“Sukuk Ijarah III”)	Rp570,000	•      Bondholders are entitled to annual fixed Ijarah return (“Cicilan Imbalan Ijarah”) totalling Rp58,425, payable on a quarterly basis starting July 9, 2008 up to April 9, 2013.	April 9, 2013	The Company has option to buy back part or all of the bonds, after the 1st anniversary of the bonds, at market price.
g. Indosat Sukuk Ijarah II in Year 2007 (“Sukuk Ijarah II”)	Rp400,000	•      Bondholders are entitled to annual fixed Ijarah return (“Cicilan Imbalan Ijarah”) totalling Rp40,800, payable on a quarterly basis starting August 29, 2007 up to May 29, 2014.	May 29, 2014	The Company has option to buy back part or all of the bonds, after the 1st anniversary of the bonds, at market price.

F-71

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Bond	Nominal Amount	Interest	Maturity	Remarks
h. Indosat Syari’ah Ijarah Bonds in Year 2005 (“Syari’ah Ijarah Bonds”)	Rp285,000	•      Bondholders are entitled to annual fixed Ijarah return (“Cicilan Imbalan Ijarah”) totalling Rp34,200, payable on a quarterly basis starting September 21, 2005 up to June 21, 2011.	June 21, 2011	The Company has early settlement option on the 4th anniversary of the bonds at 100% of the bonds’ nominal value and buy-back option after the 1st anniversary of the bonds at market price temporarily or as an early settlement.
i.  Second Indosat Bonds in Year 2002—Series B	Rp200,000	•      16% p.a. •      Payable quarterly	November 6, 2032	The Company has buy option on the 10th, 15th, 20th and 25th anniversaries of the bonds at 101% of the bonds’ nominal value and the bondholder has sell option if the rating of the bonds decreases to id AA- or lower or on the 15th, 20th and 25th anniversaries of the bonds.
j.  Indosat Sukuk Ijarah IV in Year 2009 (“Sukuk Ijarah IV”)
•      Series A	Rp28,000	•      Bondholders are entitled to annual fixed ijarah return (“Cicilan Imbalan Ijarah”) totalling Rp3,150, payable on a quarterly basis starting March 8, 2010 up to December 8, 2014.	December 8, 2014	The Company has option to buy back part or all of the bonds, after the 1st anniversary of the bonds, at market price.
•      Series B	Rp172,000	•      Bondholders are entitled to annual fixed ijarah return (“Cicilan Imbalan Ijarah”) totalling Rp20,210, payable on a quarterly basis starting March 8, 2010 up to December 8, 2016.	December 8, 2016	The Company has option to buy back part or all of the bonds, after the 1st anniversary of the bonds, at market price.

F-72

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Bond	Nominal Amount	Interest	Maturity	Remarks
k. Limited Bonds II issued by Lintasarta (amended on August 25, 2009)	Rp66,150, with the remaining amount of Rp60,000 since June 14, 2009	•      Average 3-month rupiah time deposit rates with Mandiri, BNI, BRI and BTN, plus a fixed premium of 3%          (The maximum limit of floating rates was 19% and the minimum limit was 11% p.a. and starting June 14, 2009, the minimum limit increased to 12.75%.) •      Payable quarterly	June 14, 2009 extended to June 14, 2012	—
l.  Limited Bonds I issued by Lintasarta (amended on August 25, 2009)	Rp34,856, with the remaining amount of Rp26,553 since June 2, 2009	•      Average 3-month rupiah time deposit rates with Mandiri, BNI, BRI and BTN, plus a fixed premium of 3%          (The maximum limit of floating rates was 19% and the minimum limit was 11% p.a. and starting June 2, 2009, the minimum limit increased to 12.75%.) •      Payable quarterly	June 2, 2009 extended to June 2, 2012	—

F-73

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Bond	Nominal Amount	Interest	Maturity	Remarks
m. Guaranteed Notes Due 2010	US$300,000	•      7.75% p.a. •      Payable semi-annually	November 5, 2010	The notes are redeemable at the option of IFB: •      At any time on or after November 5, 2008. •      At any time, in the event of certain changes affecting withholding taxes in Indonesia and the Netherlands that would require IFB or the Company to pay an additional amount in respect of any note in excess of certain amounts. •      Upon a change in control of IFB, the holder of the notes has the right to require IFB to repurchase all or any part of such holder’s notes. •      On September 19, 2008, IFB paid for the purchased portion of the notes with a total principal amount of US$65,253. •      On August 2, 2010, IFB paid for the purchased portion of the 2010 Notes under tender offers with total principal amount of US$167,874. •      On August 10, 2010, IFB paid for the remaining purchased portion of the 2010 Notes which was called with a total principal amount of US$66,873.

F-74

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Bond		Nominal Amount	Interest	Maturity	Remarks
n.	GuaranteedNotes Due 2012	US$250,000	•     7.125% p.a. •     Payable semi-annually	June 22, 2012	The notes are redeemable at the option of IIFB: •     At any time on or after June 22, 2010. •     At any time, in the event of certain changes affecting withholding taxes in Indonesia and the Netherlands that would require IIFB or the Company to pay an additional amount in respect of any note in excess of certain amounts. •     Upon a change in control of IIFB, the holder of the notes has the right to require IIFB to repurchase all or any part of such holder’s notes. •     On September 19, 2008, IIFB paid for the purchased portion of the notes with a total principal amount of US$140,590. •     On August 2, 2010, IIFB paid for the purchased portion of the 2012 Notes under tender offers with total principal amounts of US$56,035. •     On September 2, 2010, IIFB paid for the remaining purchased portion of the 2012 Notes which was called with a total principal amount of US$53,375.
o.     Third Indosat Bonds in Year 2003
	•      Series A •      Series B	Rp1,860,000 Rp640,000	•     12.5% p.a. •     Payable quarterly •     12.875% p.a. •     Payable quarterly	October 21, 2008 October 22, 2010	•     The Company has early settlement option on the 6th anniversary of the bonds for Series B bonds at 100% of the bonds’ nominal value and buy-back option after the 1st anniversary of the bonds at market price temporarily or as an early settlement. •     On October 22, 2010, the Company paid in full the Series B bonds.

F-75

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The scheduled principal payments of all the bonds payable outstanding as of December 31, 2010 are as follows:

	Twelve months ending December 31,
	2011		2012		2013		2014		2015 and thereafter*		Total
In U.S. dollar
Guaranteed Notes* Due 2020 (US$650,000)		—		—		—		—		5,844,150		5,844,150
In Rupiah
Fifth Indosat Bonds*		—		—		—		1,230,000		1,370,000		2,600,000
Seventh Indosat Bonds*		—		—		—		700,000		600,000		1,300,000
Sixth Indosat Bonds*		—		—		760,000		—		320,000		1,080,000
Fourth Indosat Bonds*		815,000		—		—		—		—		815,000
Sukuk Ijarah III*		—		—		570,000		—		—		570,000
Sukuk Ijarah II*		—		—		—		400,000		—		400,000
Syari’ah Ijarah Bonds*		285,000		—		—		—		—		285,000
Second Indosat Bonds*		—		—		—		—		200,000		200,000
Sukuk Ijarah IV*		—		—		—		28,000		172,000		200,000
Limited Bonds II		—		25,000		—		—		—		25,000
Limited Bonds I		—		16,989		—		—		—		16,989
Sub-total		1,100,000		41,989		1,330,000		2,358,000		2,662,000		7,491,989
Total		1,100,000		41,989		1,330,000		2,358,000		8,506,150		13,336,139
Less:
—unamortized notes issuance cost												(64,885	)
—unamortized bonds issuance costs and consent solicitation fees												(29,353	)
—unamortized notes discount												(29,666	)
Net												13,212,235

* Refer to previous discussion on early repayment options for each bond/note.

The total amortization of bonds issuance cost, consent solicitation fees, notes issuance cost and discount for the years ended December 31, 2008, 2009 and 2010 amounted to Rp38,210, Rp15,467 and Rp18,025, respectively (Note 23).

As of January 1, 2009 and December 31, 2009 and 2010, the Companies have complied with all financial ratios required to be maintained under the Notes Indenture and Trustee Agreements.

16. FINANCIAL ASSETS AND LIABILITIES

The Companies have various financial assets such as cash and cash equivalents, trade and other accounts receivable, other current financial assets, due from related parties, other non-current financial assets, short-term investments and other long-term investments, which arise directly from the Companies’ operations. The Companies’

F-76

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

principal financial liabilities, other than derivatives, consist of trade payables, procurement payable, accrued expenses, deposits from costumers, loans and bonds payable, other current financial liabilities, due to related parties and other non-current financial liabilities. The main purpose of these financial liabilities is to finance the Companies’ operations. The Company also enters into derivative transactions, primarily cross currency swaps and interest rate swaps for the purpose of managing its foreign exchange and interest rate exposures emanating from the Company’s loans and bonds payable in foreign currencies.

The following table sets forth the Companies’ financial assets and financial liabilities as of January 1, 2009 and December 31, 2009 and 2010:

			December 31,
	January 1, 2009		2009		2010
Financial Assets
Held for trading
Derivative assets		656,594		224,004		69,334
Loans and receivables
Cash and cash equivalents		5,737,866		2,835,999		2,075,270
Accounts receivable—trade and others—net		1,357,620		1,949,984		1,558,457
Other current financial assets		44,777		35,173		53,119
Due from related parties—net		42,496		7,215		8,421
Other non-current financial assets		72,800		100,004		77,675
Available for sale
Short-term investments—net		—		—		—
Other long-term investments—net		2,730		2,730		2,730
Total Financial Assets		7,914,883		5,155,109		3,845,006
Financial Liabilities
Held for trading
Derivative liabilities		315,866		174,540		215,403
Liabilities at amortized cost
Accounts payable—trade		608,754		537,476		645,505
Procurement payable		6,446,357		5,289,782		3,644,467
Accrued expenses		1,445,238		1,525,561		1,710,885
Deposits from customers		32,121		22,463		50,279
Loans payable—current maturities		572,469		1,440,259		3,184,147
Bonds payable—current maturities		56,442		2,840,662		1,098,131
Other current financial liabilities		31,022		43,721		23,127
Due to related parties		14,699		13,764		22,099
Loans payable—net of current maturities		10,812,160		12,715,492		7,666,804
Bonds payable—net of current maturities		10,315,616		8,472,175		12,114,104
Other non-current financial liabilities		45,511		—		—
Total Financial Liabilities		30,696,255		33,075,895		30,374,951

F-77

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The following table sets forth the carrying values and estimated fair values of the Companies’ financial instruments that are carried in the consolidated statements of financial position:

	Carrying Amount						Fair Value
	January 1, 2009		December 31,				January 1, 2009		December 31,
			2009		2010				2009		2010
Current Financial Assets
Cash and cash equivalents		5,737,866		2,835,999		2,075,270		5,737,866		2,835,999		2,075,270
Short-term investments—net		—		—		—		—		—		—
Accounts receivable—trade and others—net		1,357,620		1,949,984		1,558,457		1,357,620		1,949,984		1,558,457
Derivative assets		656,594		224,004		69,334		656,594		224,004		69,334
Other current financial assets		44,777		35,173		53,119		44,777		35,173		53,119
Total current financial assets		7,796,857		5,045,160		3,756,180		7,796,857		5,045,160		3,756,180
Non-current Financial Assets
Due from related parties—net		42,496		7,215		8,421		32,414		6,263		7,176
Other long-term investments—net		2,730		2,730		2,730		2,730		2,730		2,730
Other non-current financial assets		72,800		100,004		77,675		54,129		81,369		73,309
Total non-current financial assets		118,026		109,949		88,826		89,273		90,362		83,215
Total Financial Assets		7,914,883		5,155,109		3,845,006		7,886,130		5,135,522		3,839,395
Current Financial Liabilities
Accounts payable—trade		608,754		537,476		645,505		608,754		537,476		645,505
Procurement payable		6,446,357		5,289,782		3,644,467		6,446,357		5,289,782		3,644,467
Accrued expenses		1,445,238		1,525,561		1,710,885		1,445,238		1,525,561		1,710,885
Deposits from customers		32,121		22,463		50,279		32,121		22,463		50,279
Derivative liabilities		315,866		174,540		215,403		315,866		174,540		215,403
Loans payable—current portion maturities		572,469		1,440,259		3,184,147		567,337		1,425,325		3,155,634
Bonds payable—current portion maturities		56,442		2,840,662		1,098,131		57,251		2,904,566		1,110,737
Other current financial liabilities		31,022		43,721		23,127		31,022		43,721		23,127
Total current financial liabilities		9,508,269		11,874,464		10,571,944		9,503,946		11,923,434		10,556,037
Non-current Financial Liabilities
Due to related parties		14,699		13,764		22,099		11,212		11,948		18,833
Loans payable—net of current maturities		10,812,160		12,715,492		7,666,804		10,826,572		13,281,903		7,510,510
Bonds payable—net of current maturities		10,315,616		8,472,175		12,114,104		9,806,811		8,495,278		13,228,171
Other non-current financial liabilities		45,511		—		—		45,511		—		—
Total non-current financial liabilities		21,187,986		21,201,431		19,803,007		20,690,106		21,789,129		20,757,514
Total Financial Liabilities		30,696,255		33,075,895		30,374,951		30,194,052		33,712,563		31,313,551

F-78

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Fair Value Measurement

The fair values of the financial assets and liabilities are presented at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate such value:

Short-term financial assets and liabilities:

• Short-term financial instruments with remaining maturities of one year or less (cash and cash equivalents, trade and other accounts receivable, other current financial assets, trade accounts payable, procurement payable, accrued expenses, deposits from customers and other current financial liabilities).

These financial instruments approximate their carrying amounts largely due to their short-term maturities.

• Derivative Financial Instruments

Cross currency swap contracts (including bifurcated embedded derivative)

These derivatives are measured at their fair values using internal valuation techniques as no quoted market prices exist for such instruments. The principal technique used to value these instruments is the use of discounted cash flows. The key inputs include interest rate yield curves, foreign exchange rates, Credit Default Spread (“CDS”), and the spot price of the underlying instruments.

Interest rate swap contracts

These derivatives are measured at their fair values, computed using discounted cash flows based on observable market inputs which include interest rate yield curves and payment dates.

Long-term financial assets and liabilities:

• Long-term fixed-rate and variable-rate financial liabilities (unquoted loans and bonds payable)

The fair value of these financial liabilities is determined by discounting future cash flows using applicable rates from observable current market transactions for instruments with similar terms, credit risk and remaining maturities.

• Other long-term financial assets and liabilities (due from/to related parties, other long-term investments, other non-current financial assets and liabilities)

Estimated fair value is based on discounted value of future cash flows adjusted to reflect counterparty risk (for financial assets) and the Companies’ own credit risk (for financial liabilities) and using risk-free rates for similar instruments.

• Financial instruments quoted in an active market

The fair value of the bonds issued by the Company which are traded in an active market is determined with reference to their quoted market prices.

For equity investments classified as available-for-sale, the fair value is determined based on the latest market quotation as published by the Indonesia Stock Exchange as of January 1, 2009 and December 31, 2009 and 2010.

F-79

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Fair Value Hierarchy

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

The best evidence of fair value is quoted prices in an active market. If the market for a financial instrument is not active, an entity establishes fair value by using a valuation technique. The objective of using a valuation technique is to establish what the transaction price would have been on the measurement date in an arm’s length exchange motivated by normal business considerations. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. If there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, the entity uses that technique. The chosen valuation technique makes maximum use of market inputs and relies as little as possible on entity-specific inputs. It incorporates all factors that market participants would consider in setting a price and is consistent with accepted economic methodologies for pricing financial instruments. Periodically, the Company calibrates the valuation technique and tests it for validity using prices from any observable current market transactions in the same instrument (i.e., without modification or repackaging) or based on any available observable market data.

The Company’s fair value hierarchy as of December 31, 2009 and 2010 are as follows:

December 31, 2009	TOTAL		Quoted prices in active markets for identical assets or liabilities (Level 1)		Significant and observable inputs, directly or indirectly (Level 2)		Significant unobservable inputs (Level 3)
Current Financial Assets
Derivative assets		224,004		—		224,004		—
Total Financial Assets		224,004		—		224,004		—
Current Financial Liabilities
Derivative liabilities		174,540		—		174,540		—
Embedded derivatives		97,942		—		97,942		—
Total Financial Liabilities		272,482		—		272,482		—
December 31, 2010
Current Financial Assets
Derivative assets		69,334		—		69,334		—
Total Financial Assets		69,334		—		69,334		—
Current Financial Liabilities
Derivative liabilities		215,403		—		215,403		—
Embedded derivatives		54,595		—		54,595		—
Total Financial Liabilities		269,998		—		269,998		—

During the reporting periods ending December 31, 2009 and 2010, there were no transfers between Level 1 and Level 2 fair value measurements.

F-80

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

17. EMPLOYEE BENEFIT OBLIGATIONS

This account consists of the non-current portions of employee benefit obligations as follows:

			December 31,
	January 1, 2009		2009		2010
Post-retirement healthcare (Note 24)		474,118		549,007		639,271
Labor Law 13 (Note 24)		111,174		147,790		187,944
Service award		27,207		31,265		43,058
Accumulated leave benefits		741		1,391		2,134
Post-retirement benefit of salary continuation before retirement*		82,447		96,261		—
Total		695,687		825,714		872,407

* Before December 31, 2010, the current portion of salary continuation before retirement included in accrued expenses (Note 13) amounted to Rp1,412 and the non-current portion included in employee benefit obligations amounted to Rp117,773, before deducting benefit payments made during the year amounting to Rp852. On December 31, 2010, the Company and its employees’ union reached a collective labor agreement (“CLA”) on the revocation of post-retirement benefit of salary continuation before retirement effective January 1, 2011. This revocation eliminates the Company’s legal or constructive obligation on the benefit. Consequently, the Company reversed the outstanding accrual for this benefit as of December 31, 2010 amounting to Rp118,333.

18. CAPITAL STOCK

The Company’s capital stock ownership details as of January 1, 2009 and December 31, 2009 and 2010 are as follows:

Stockholders	Number of Shares Issued and Fully Paid		Amount		Percentage of Ownership (%)
January 1, 2009
A Share
Government		1		—		—
B Shares
Indonesia Communications Limited, Mauritius (“ICL”)		2,171,250,000		217,125		39.96
Government		776,624,999		77,662		14.29
Stockholders holding more than 5%:
Fidelity Entities		553,479,050		55,348		10.19
Goldman Sachs (Asia) L.L.C		469,653,300		46,965		8.64
Noonday (Farallon Entities)		432,226,800		43,223		7.95
SKAGEN Funds (SKAGEN AS)		349,945,317		34,995		6.44
Indonesia Communications Pte. Ltd., Singapore (“ICLS”)		46,340,000		4,634		0.85
Directors:
Raymond Tan Kim Meng		222,500		22		0.01
Wahyu Wijayadi		152,500		15		0.00
Wong Heang Tuck		75,000		8		0.00
Johnny Swandi Sjam		30,000		3		0.00
Fadzri Sentosa		10,000		1		0.00
Others (each holding below 5%)		633,924,033		63,392		11.67
Total		5,433,933,500		543,393		100.00

F-81

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Stockholders	Number of Shares Issued and Fully Paid		Amount		Percentage of Ownership (%)
December 31, 2009
A Share
Government		1		—		—
B Shares
Qatar Telecom (Qtel Asia) Pte. Ltd. (previously ICLS)		3,532,056,600		353,206		65.00
Government		776,624,999		77,662		14.29
Director:
Fadzri Sentosa		10,000		1		0.00
Others (each holding below 5%)		1,125,241,900		112,524		20.71
Total		5,433,933,500		543,393		100.00
December 31, 2010
A Share
Government		1		—		—
B Shares
Qatar Telecom (Qtel Asia) Pte. Ltd.		3,532,056,600		353,206		65.00
Government		776,624,999		77,662		14.29
SKAGEN Funds (SKAGEN AS)		277,824,400		27,782		5.11
Director:
Fadzri Sentosa		10,000		1		0.00
Others (each holding below 5%)		847,417,500		84,742		15.60
Total		5,433,933,500		543,393		100.00

The “A” share is a special share held by the Government and has special voting rights. The material rights and restrictions which are applicable to the “B” shares are also applicable to the “A” share, except that the Government may not transfer the “A” share, which has a veto right with respect to (i) amendment to the objective and purposes of the Company; (ii) increase of capital without pre-emptive rights; (iii) merger, consolidation, acquisition and demerger; (iv) amendment to the provisions regarding the rights of “A” share as stipulated in the Articles of Association; and (v) dissolution, bankruptcy and liquidation of the Company. The “A” share also has the right to appoint one director and one commissioner of the Company.

On June 6, 2008, STT Communications Limited (“STTC”) entered into a Share Purchase Agreement to sell its 75% ownership in ICL and ICLS to Qtel. The closing process of such sale was made on June 22, 2008 and resulted in Qtel’s direct ownership in ICL and ICLS. As a result, Qtel has become the ultimate shareholder of the Company and all of STTC’s affiliations ceased to be related parties of the Companies.

On January 8, 2009, Qtel filed tender offer statements with the United States Securities and Exchange Commission (“U.S. SEC”) and the BAPEPAM-LK to purchase additional Company shares which became effective on January 16, 2009. Subsequently, as required by the U.S. SEC, on January 20, 2009, the Company filed schedule 14D-9, Solicitation/Recommendation Statement, with the U.S. SEC in response to the Tender Offers made by Qtel in the United States of America and Indonesia through Qtel’s indirect wholly owned

F-82

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

subsidiary, ICLS, to purchase Series B shares (including Series B shares held as ADS, each representing 50 Series B shares) which represent approximately 24.19% of the Company’s total issued and outstanding Series B shares. On March 4, 2009, ICLS increased its ownership interest in the Company from 0.85% to 25.04%.

On May 29, 2009, ICL entered into a Share Purchase Agreement to sell its 39.96% ownership in the Company to ICLS. The closing process of such sale was made on June 4, 2009; consequently, from this date, ICLS has become the legal owner of 3,532,056,600 “B” shares representing 65.00% ownership in the Company.

On September 11, 2009, ICLS changed its name into Qatar Telecom (Qtel Asia) Pte. Ltd.

19. OPERATING REVENUES

This account consists of the following:

	2008 (Restated)			2009 (Restated)			2010
Cellular
Usage charges		8,492,799			7,085,741			7,943,960
Value added services		5,052,615			5,998,963			7,039,243
Interconnection revenues		1,833,768			1,709,193			1,252,751
Tower leasing (Note 29e)		—			62,365			251,981
Monthly subscription charges		66,302			184,174			200,519
Sale of blackberry handsets and modems		82,476			206,481			34,956
Others		136,226			171,382			177,269
Upfront discount and customer loyalty program (Note 2f5.1)		(1,203,380	)		(1,087,064	)		(1,033,588	)
Net		14,460,806			14,331,235			15,867,091
MIDI
Internet Protocol Virtual Private Network (IP VPN)		585,658			566,105			605,685
Internet		703,914			677,375			519,553
World link and direct link		456,692			394,189			278,788
Frame net		315,791			276,477			227,051
Leased line		231,570			211,092			189,112
Application services		118,895			146,137			168,196
Satellite lease		96,280			113,060			136,008
Digital data network		124,891			144,619			94,686
Multiprotocol Label Switching (MPLS)		25,161			67,141			66,579
Others		74,560			116,437			202,452
Sub-total		2,733,412			2,712,632			2,488,110
Fixed Telecommunication
International Calls		1,650,104			1,422,268			993,165
Fixed Wireless		244,304			249,886			174,157
Fixed Line		126,660			129,935			125,383
Others		685			950			472
Sub-total		2,021,753			1,803,039			1,293,177
Total		19,215,971			18,846,906			19,648,378

F-83

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Operating revenues from related parties amounted to Rp1,790,115, Rp1,474,208 and Rp1,640,591 for the years ended December 31, 2008, 2009 and 2010, respectively. These amounts represent 9.32%, 7.82% and 8.35% of total operating revenues in 2008, 2009 and 2010, respectively (Note 25).

The operating revenues from interconnection services are presented on a gross basis (Note 2f5).

20. OPERATING EXPENSES—COST OF SERVICES

This account consists of the following:

	2008 (Restated)		2009 (Restated)		2010
Interconnection		2,242,797		1,880,105		1,735,942
Radio frequency fee (Note 1)		1,025,082		1,331,416		1,612,375
Maintenance		903,244		922,225		943,503
Utilities		507,985		772,450		715,349
Rent		361,319		449,759		517,432
Leased circuits		447,319		487,074		377,580
Cost of SIM cards and pulse reload vouchers		391,101		326,472		259,323
USO		123,452		218,210		214,636
Blackberry access fee		14,099		50,068		197,434
Installation		88,179		97,142		133,746
Concession fee		170,321		83,970		112,404
Delivery and transportation		84,825		80,157		84,075
Cost of handsets and modems		111,537		247,135		74,266
Billing and collection		49,209		44,297		54,816
License		32,504		67,030		31,543
Others		74,831		30,340		48,986
Total		6,627,804		7,087,850		7,113,410

Interconnection relates to the expenses for the interconnection between the Company’s telecommunications networks and those owned by Telkom or other telecommunications carriers (Note 2f5).

F-84

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

21. OPERATING EXPENSES—PERSONNEL

This account consists of:

	2008		2009		2010
Salaries		420,297		451,150		492,452
Incentives and other employee benefits		278,837		260,884		277,361
Bonuses		279,483		207,690		236,950
Employee income tax		251,950		145,421		131,630
Post-retirement healthcare benefits (Note 24)		120,147		88,615		104,600
Medical expense		61,220		68,471		69,509
Outsourcing		115,890		74,809		60,858
Pension (Note 24)		36,796		32,336		45,688
Separation, appreciation and compensation expense under Labor Law No. 13/2003 (Note 24)		27,581		40,972		42,833
Early retirement*		19,598		38,106		16,253
Post-retirement benefit of salary continuation before retirement (Note 17)		9,052		14,933		(96,820	)
Others		18,142		28,173		29,930
Total		1,638,993		1,451,560		1,411,244

* On June 27, 2006, the Company’s Directors issued Decree No. 051/DIREKSI/2006, “Additional Benefits for Voluntarily Resigned Employees”. Under this decree, employees qualified for early retirement and who voluntarily resigned after the approval from the Board of Directors were given benefits of additional remuneration, traveling and training package. For the years ended December 31, 2008, 2009 and 2010, there were additional 41, 66 and 19 employees, respectively, who took the option.

The personnel expenses capitalized to properties under construction and installation during the years ended December 31, 2008, 2009 and 2010 amounted to Rp37,111, Rp34,092 and Rp38,668, respectively.

22. OPERATING EXPENSES—GENERAL AND ADMINISTRATION

This account consists of:

	2008		2009		2010
Rent		141,245		144,585		120,428
Professional fees		116,043		103,916		109,374
Utilities		60,760		77,318		97,518
Provision for impairment of receivables (Note 5)		74,281		98,042		67,041
Transportation		122,987		58,882		64,485
Office		49,673		44,710		48,370
Insurance		26,093		29,183		39,807
Catering		22,045		20,730		25,585
Others (each below Rp20,000)		124,305		116,071		87,379
Total		737,432		693,437		659,987

F-85

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

23. FINANCING COST

This account consists of:

	2008		2009		2010
Interest on loans		1,776,514		1,808,620		2,080,274
Loss on the redemption of GN 2010 and GN 2012 (Note 15)		19,493		—		96,487
Amortization of debt and bonds / notes issuance costs, consent solicitation fees and discount (Notes 14 and 15)		53,541		51,305		90,116
Bank charges		8,746		13,042		4,751
Total		1,858,294		1,872,967		2,271,628

24. PENSION PLAN

The Company, Satelindo and Lintasarta have defined benefit and defined contribution pension plans covering substantially all of their qualified permanent employees.

Defined Benefit Pension Plan

The Company, Satelindo and Lintasarta provide defined benefit pension plans to their respective employees under which pension benefits to be paid upon retirement are based on the employees’ most recent basic salary and number of years of service. PT Asuransi Jiwasraya (“Jiwasraya”), a state-owned life insurance company, manages the plans. Pension contributions are determined by periodic actuarial calculations performed by Jiwasraya.

Based on an amendment dated December 22, 2000 of the Company’s pension plan, which was further amended on March 29, 2001, the benefits and premium payment pattern were changed. Before the amendment, the premium was regularly paid annually until the plan would be fully funded and the benefits consisted of retirement benefit (regular monthly or lump-sum pension) and death insurance. In conjunction with the amendment, the plan would be fully funded after making installment payments up to January 2002 of the required amount to fully fund the plan determined as of September 1, 2000. The amendment also includes an additional benefit in the form of thirteenth-month retirement benefit, which is payable annually 14 days before Idul Fitri (“Moslem Holiday”).

The amendment covers employees registered as participants of the pension plan as of September 1, 2000 and includes an increase in basic salary pension by 9% compounded annually starting from September 1, 2001. The amendment also stipulates that there will be no increase in the premium even in cases of mass employee terminations or changes in marital status.

The total premium installments based on the amendment amounted to Rp355,000 and were paid on due dates.

F-86

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

On March 1, 2007, the Company entered into an agreement with Jiwasraya to provide defined death insurance plan to 1,276 employees as of January 1, 2007, who are not covered by the defined benefit pension plan as stated above. Based on the agreement, a participating employee will receive:

• Expiration benefit equivalent to the cash value at the normal retirement age, or

• Death benefit not due to accident equivalent to 100% of insurance money plus cash value when the employee dies not due to accident, or

• Death benefit due to accident equivalent to 200% of insurance money plus cash value when the employee dies due to accident.

The premium of Rp7,600 was fully paid on March 29, 2007. Subsequently, in August 2007, February to December 2008, January to December 2009 and January to December 2010, the Company made payments for additional premium of Rp275 for additional 55 employees, Rp805 for additional 161 employees, Rp415 for additional 81 employees and Rp120 for additional 14 employees, respectively.

On June 25, 2003, Satelindo entered into an agreement with Jiwasraya to amend the benefits and premium payment pattern of the former’s pension plan. The amendment covers employees registered as participants of the pension plan as of December 25, 2002 up to June 25, 2003. Other new conditions include the following:

• An increase in pension basic salary at 6% compounded annually starting from December 25, 2002

• Thirteenth-month retirement benefit, which is payable annually 14 days before Idul Fitri

• An increase in periodic payment of retirement benefit at 6% compounded annually starting one year after receiving periodic retirement benefit for the first time

• If the average annual interest rate of time deposits of government banks exceeds 15%, the participants’ retirement benefit will be increased by a certain percentage in accordance with the formula agreed by both parties.

On April 15, 2005, Lintasarta entered into an agreement with Jiwasraya to replace their existing agreement. Based on the new agreement, the benefits and premium payment pattern were changed. This agreement is effective starting January 1, 2005. The total premium installments based on the agreement amount to Rp61,623, which is payable in 10 annual installments starting 2005 until 2015.

The new agreement covers employees registered as participants of the pension plan as of April 1, 2003. The conditions under the new agreement include the following:

• An increase in pension basic salary by 3% (previously was estimated at 8%) compounded annually starting April 1, 2003

• An increase in periodic payment of retirement benefit at 5% compounded annually starting one year after receiving periodic retirement benefit for the first time

• If the average annual interest rate of time deposits of government banks exceeds 15%, the participants’ retirement benefit will be increased by a certain percentage in accordance with the formula agreed by both parties.

F-87

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

On May 2, 2005, Lintasarta entered into an agreement with Jiwasraya to amend the above agreement. The amendment covers employees registered as participants of the pension plan as of April 1, 2003 up to November 30, 2004 with additional 10 annual premium installments totalling Rp1,653 which are payable starting 2005 until 2015.

The contributions made by Lintasarta to Jiwasraya amounted to Rp9,653 each for the years ended December 31, 2008, 2009 and 2010, respectively.

The net periodic pension cost for the pension plans for the years ended December 31, 2008, 2009 and 2010 was calculated based on the actuarial valuations as of December 31, 2008, 2009 and 2010, respectively. The actuarial valuations were prepared by an independent actuary, using the projected-unit-credit method and applying the following assumptions:

	2008			2009			2010
Annual discount rate		12.0	%		10.5 - 10.7	%		8.5 - 9.0	%
Expected annual rate of return on plan assets		4.5 - 9.0	%		4.5 - 9.0	%		4.5 - 9.0	%
Annual rate of increase in compensation		3.0 - 9.0	%		3.0 - 9.0	%		3.0 - 9.0	%
Mortality rate (Indonesian Mortality Table—TMI)		TMI 1999			TMI 1999			TMI 1999

a. The composition of the net periodic pension cost for the years ended December 31, 2008, 2009 and 2010 is as follows:

	2008			2009			2010
Interest cost		66,100			63,648			74,558
Service cost		29,502			39,510			41,749
Amortization of unrecognized actuarial loss (gain)		5,088			(1,429	)		850
Return on plan assets		(63,894	)		(69,393	)		(71,469	)
Net periodic pension cost (Note 21)		36,796			32,336			45,688

b. The funded status of the plans as of January 1, 2009 and December 31, 2009 and 2010 is as follows:

				December 31,
	January 1, 2009			2009			2010
Plan assets at fair value		805,199			813,588			852,958
Projected benefit obligation		(541,239	)		(726,427	)		(750,625	)
Excess of plan assets over projected benefit obligation		263,960			87,161			102,333
Unrecognized actuarial loss (gain)		(90,860	)		62,659			10,928
Total prepaid pension cost		173,100			149,820			113,261

F-88

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

c. Movements in the fair value of plan assets during the years ended December 31, 2008, 2009 and 2010 are as follows:

December 31, 2008	The Company			Lintasarta			Total
Fair value of plan assets at beginning of year		697,641			33,146			730,787
Expected return on plan assets		60,960			2,934			63,894
Actuarial gain (loss) on plan assets		37,546			(1,632	)		35,914
Contributions		805			9,653			10,458
Actual benefits paid		(33,252	)		(2,602	)		(35,854	)
Fair value of plan assets at end of year		763,700			41,499			805,199
December 31, 2009	The Company			Lintasarta			Total
Fair value of plan assets at beginning of year		763,700			41,499			805,199
Expected return on plan assets		65,745			3,648			69,393
Actuarial loss on plan assets		(8,910	)		(3,000	)		(11,910	)
Contributions		415			9,653			10,068
Actual benefits paid		(57,706	)		(1,456	)		(59,162	)
Fair value of plan assets at end of year		763,244			50,344			813,588
December 31, 2010	The Company			Lintasarta			Total
Fair value of plan assets at beginning of year		763,244			50,344			813,588
Expected return on plan assets		67,149			4,320			71,469
Actuarial loss on plan assets		(12,283	)		(2,677	)		(14,960	)
Contributions		120			9,653			9,773
Actual benefits paid		(24,566	)		(2,346	)		(26,912	)
Fair value of plan assets at end of year		793,664			59,294			852,958

d. Movements in the present value of the defined benefit obligation during the years ended December 31, 2008, 2009 and 2010 are as follows:

December 31, 2008	The Company			Lintasarta			Total
Benefit obligation at beginning of year		639,131			33,014			672,145
Interest cost		62,859			3,241			66,100
Current service cost		27,280			2,222			29,502
Actuarial gain on obligation		(10,588	)		(8,144	)		(18,732	)
Actual benefits paid		(32,694	)		(1,607	)		(34,301	)
Effect of changes in actuarial assumptions		(173,475	)		—			(173,475	)
Present value of obligation at end of year		512,513			28,726			541,239

F-89

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

December 31, 2009	The Company			Lintasarta			Total
Benefit obligation at beginning of year		512,513			28,726			541,239
Interest cost		60,288			3,360			63,648
Current service cost		36,496			3,014			39,510
Actuarial loss on obligation		624			7,809			8,433
Actual benefits paid		(57,057	)		(1,093	)		(58,150	)
Effect of changes in actuarial assumptions		131,747			—			131,747
Present value of obligation at end of year		684,611			41,816			726,427
December 31, 2010	The Company			Lintasarta			Total
Benefit obligation at beginning of year		684,611			41,816			726,427
Interest cost		70,279			4,279			74,558
Current service cost		38,375			3,374			41,749
Actuarial loss on obligation		(156,345	)		2,912			(153,433	)
Actual benefits paid		(24,102	)		(2,166	)		(26,268	)
Effect of changes in actuarial assumptions		87,592			—			87,592
Present value of obligation at end of year		700,410			50,215			750,625

e. Movements in the prepaid pension cost during the years ended December 31, 2008, 2009 and 2010 are as follows:

December 31, 2008	The Company			Lintasarta			Total
Prepaid pension cost at beginning of year		187,801			13,190			200,991
Net periodic pension cost		(33,607	)		(3,189	)		(36,796	)
Refund from Jiwasraya		(558	)		(995	)		(1,553	)
Contribution to Jiwasraya		805			9,653			10,458
Prepaid pension cost at end of year		154,441			18,659			173,100
December 31, 2009	The Company			Lintasarta			Total
Prepaid pension cost at beginning of year		154,441			18,659			173,100
Net periodic pension cost		(29,487	)		(2,849	)		(32,336	)
Refund from Jiwasraya		(649	)		(363	)		(1,012	)
Contribution to Jiwasraya		415			9,653			10,068
Prepaid pension cost at end of year		124,720			25,100			149,820
December 31, 2010	The Company			Lintasarta			Total
Prepaid pension cost at beginning of year		124,720			25,100			149,820
Net periodic pension cost		(41,505	)		(4,183	)		(45,688	)
Refund from Jiwasraya		(464	)		(180	)		(644	)
Contribution to Jiwasraya		120			9,653			9,773
Prepaid pension cost at end of year		82,871			30,390			113,261

F-90

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

f. Prepaid pension cost consists of:

			December 31,
	January 1, 2009		2009		2010
Current portion (presented as part of “Prepaid Expenses”)
The Company		2,712		1,715		1,401
Lintasarta		402		725		516
		3,114		2,440		1,917
Long-term portion
The Company		151,729		123,005		81,470
Lintasarta		18,257		24,375		29,874
		169,986		147,380		111,344
Total prepaid pension cost		173,100		149,820		113,261

The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

				December 31,
	January 1, 2009			2009			2010
Investment in mutual fund		71.67	%		74.28	%		78.90	%
Investment in time deposits		12.84	%		13.68	%		12.16	%
Investment in debt securities		9.71	%		6.81	%		5.06	%
Investment in shares and properties		5.77	%		5.22	%		3.87	%
Other investments		0.01	%		0.01	%		0.01	%

The overall expected rate of return on assets is determined based on the market expectations prevailing on that date, applicable to the period over which the obligation is to be settled. There has been a significant change in the expected rate of return on assets due to the improved stock market scenario.

Defined Contribution Pension Plan

In May 2001 and January 2003, the Company and Satelindo assisted their employees in establishing their respective employees’ defined contribution pension plans, in addition to the defined benefit pension plan as mentioned above. Starting June 2004, the Company also assisted ex-IM3 employees in establishing their defined contribution pension plan. Under the defined contribution pension plan, the employees contribute 10% - 20% of their basic salaries, while the Company does not contribute to the plans. Total contributions of the employees for the years ended December 31, 2008, 2009 and 2010 amounted to Rp16,866, Rp19,451 and Rp46,557, respectively. The plan assets are being administered and managed by seven financial institutions appointed by the Company and Satelindo, based on the choice of the employees.

Labor Law No. 13/2003

The Company, Lintasarta and IMM also accrue benefits under Labor Law No. 13/2003 (“Labor Law”) dated March 25, 2003. Their employees will receive the benefits under this law or defined benefit pension plan, whichever amount is higher.

F-91

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The net periodic pension cost under the Labor Law for the years ended December 31, 2008, 2009 and 2010 was calculated based on the actuarial valuations as of December 31, 2008, 2009 and 2010, respectively. The actuarial valuations were prepared by an independent actuary, using the projected-unit-credit method and applying the following assumptions:

	2008			2009			2010
Annual discount rate		12.0	%		10.5	%		8.5 - 9.0	%
Annual rate of increase in compensation		10.0 - 11.0	%		9.0 - 10.0	%		8.0 - 9.0	%

a. The composition of the periodic pension cost under the Labor Law for the years ended December 31, 2008, 2009 and 2010 is as follows:

	2008		2009		2010
Service cost		16,779		19,587		21,747
Interest cost		10,357		18,639		19,586
Amortization of unrecognized actuarial loss		445		1,842		1,500
Immediate recognition of past service cost—vested benefit		—		904		—
Total periodic pension cost under the Labor Law (Note 21)		27,581		40,972		42,833

b. The composition of the accrued pension cost under the Labor Law as of January 1, 2009 and December 31, 2009 and 2010 is as follows:

				December 31,
	January 1, 2009			2009			2010
Projected benefit obligation		156,454			187,888			217,754
Unrecognized actuarial loss		(42,698	)		(27,147	)		(17,245	)
Unrecognized past service cost		(427	)		(10,348	)		(9,632	)
Accrued pension cost		113,329			150,393			190,877

c. Movements in the present value of pension cost obligation under the Labor Law during the years ended December 31, 2008, 2009 and 2010 are as follows:

December 31, 2008	The Company			Lintasarta			IMM			Total
Benefit obligation at beginning of year		94,063			6,297			4,168			104,528
Actuarial loss (gain) on obligation		27,284			2,285			(667	)		28,902
Current service cost		14,736			1,019			1,024			16,779
Interest cost		9,317			628			412			10,357
Actual benefits paid		(2,526	)		(46	)		(16	)		(2,588	)
Effect of changes in actuarial assumption		(1,558	)		1,281			(1,247	)		(1,524	)
Present value of obligation at end of year		141,316			11,464			3,674			156,454

F-92

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

December 31, 2009	The Company			Lintasarta			IMM			Total
Benefit obligation at beginning of year		141,316			11,464			3,674			156,454
Actuarial gain on obligation		(3,316	)		(78	)		(368	)		(3,762	)
Current service cost		16,173			1,817			1,597			19,587
Interest cost		16,832			1,372			435			18,639
Actual benefits paid		(3,841	)		(47	)		(20	)		(3,908	)
Past service cost		—			10,853			—			10,853
Effect of changes in actuarial assumption		(8,109	)		(3,208	)		1,342			(9,975	)
Present value of obligation at end of year		159,055			22,173			6,660			187,888
December 31, 2010	The Company			Lintasarta			IMM			Total
Benefit obligation at beginning of year		159,055			22,173			6,660			187,888
Actuarial loss (gain) on obligation		1,166			(890	)		804			1,080
Current service cost		17,661			1,967			2,119			21,747
Interest cost		16,574			2,319			693			19,586
Actual benefits paid		(2,150	)		(97	)		(102	)		(2,349	)
Effect of changes in actuarial assumption		(9,734	)		(1,132	)		668			(10,198	)
Present value of obligation at end of year		182,572			24,340			10,842			217,754

d. Movements in the accrued pension cost under the Labor Law during the years ended December 31, 2008, 2009 and 2010 are as follows:

December 31, 2008	The Company			Lintasarta			IMM			Total
Accrued pension cost under the Labor Law at beginning of year		78,604			7,013			2,719			88,336
Periodic Labor Law cost		24,440			1,642			1,499			27,581
Benefit payment		(2,526	)		(46	)		(16	)		(2,588	)
Accrued pension cost under the Labor Law at end of year		100,518			8,609			4,202			113,329
December 31, 2009	The Company			Lintasarta			IMM			Total
Accrued pension cost under the Labor Law at beginning of year		100,518			8,609			4,202			113,329
Periodic Labor Law cost		34,739			4,209			2,024			40,972
Benefit payment		(3,841	)		(47	)		(20	)		(3,908	)
Accrued pension cost under the Labor Law at end of year		131,416			12,771			6,206			150,393
December 31, 2010	The Company			Lintasarta			IMM			Total
Accrued pension cost under the Labor Law at beginning of year		131,416			12,771			6,206			150,393
Periodic Labor Law cost		35,019			4,974			2,840			42,833
Benefit payment		(2,150	)		(97	)		(102	)		(2,349	)
Accrued pension cost under the Labor Law at end of year		164,285			17,648			8,944			190,877

F-93

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

As of January 1, 2009 and December 31, 2009 and 2010, the current portion of pension cost under the Labor Law included in accrued expenses (Note 13) amounted to Rp2,155, Rp2,603 and Rp2,933, respectively, and the non-current portion included in employee benefit obligations (Note 17) amounted to Rp111,174, Rp147,790 and Rp187,944, respectively.

Post-retirement Healthcare

The Company provides post-retirement healthcare benefits to its employees who leave the Company after the employees fulfill the early retirement requirement. The spouse and children who have been officially registered in the administration records of the Company are also eligible to receive benefits. If the employees die, the spouse and children are still eligible for the post-retirement healthcare until the spouse dies or remarries and the children reach the age of 25 or get married.

The utilization of post-retirement healthcare is limited to an annual maximum ceiling that refers to monthly pension from Jiwasraya as follows:

• 16 times the Jiwasraya monthly pension for a pensioner who receives monthly pension from Jiwasraya

• 16 times the equality monthly pension for a pensioner who became permanent employee after September 1, 2000

• 16 times the last monthly pension for a pensioner who retired after July 1, 2003 and does not receive Jiwasraya monthly pension.

The net periodic post-retirement healthcare cost for the years ended December 31, 2008, 2009 and 2010 was calculated based on the actuarial valuations as of December 31, 2008, 2009 and 2010. The actuarial valuations were prepared by an independent actuary, using the projected-unit-credit method and applying the following assumptions:

	2008			2009			2010
Annual discount rate		12.0	%		11.0	%		9.5	%
Ultimate cost trend rate		6.0	%		6.0	%		6.0	%
Next year trend rate		18.0	%		16.0	%		14.0	%
Period to reach ultimate cost trend rate		6 years			5 years			4 years

a. The composition of the periodic post-retirement healthcare cost for the years ended December 31, 2008, 2009 and 2010 is as follows:

	2008		2009		2010
Interest cost		76,300		58,535		65,919
Service cost		16,997		19,628		28,229
Amortization of unrecognized past service cost		10,452		10,452		10,452
Amortization of unrecognized actuarial loss		16,398		—		—
Periodic post-retirement healthcare cost (Note 21)		120,147		88,615		104,600

F-94

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

b. The composition of the accrued post-retirement healthcare cost as of January 1, 2009 and December 31, 2009 and 2010 is as follows:

				December 31,
	January 1, 2009			2009			2010
Projected benefit obligation		492,615			605,660			846,636
Unrecognized past service cost		(52,158	)		(41,705	)		(31,253	)
Unrecognized actuarial gain (loss)		43,315			(2,150	)		(161,443	)
Accrued post-retirement healthcare cost		483,772			561,805			653,940

c. Movements in the present value of defined benefit obligation during the years ended December 31, 2008, 2009 and 2010 are as follows:

	2008			2009			2010
Benefit obligation at beginning of year		767,828			492,615			605,660
Interest cost		76,300			58,535			65,919
Current service cost		16,997			19,628			28,229
Actual benefits paid		(8,181	)		(10,582	)		(12,465	)
Actuarial gain on obligation		(150,730	)		(37,177	)		(38,574	)
Effect of changes in actuarial assumptions		(209,599	)		82,641			197,867
Present value of obligation at end of year		492,615			605,660			846,636

d. Movements in the accrued post-retirement healthcare cost during the years ended December 31, 2008, 2009 and 2010 are as follows:

	2008			2009			2010
Beginning balance		371,806			483,772			561,805
Net periodic post-retirement healthcare cost		120,147			88,615			104,600
Benefit payment		(8,181	)		(10,582	)		(12,465	)
Ending balance		483,772			561,805			653,940

F-95

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

e. The effect of a one percentage point change in assumed post-retirement healthcare cost trend rate would result in aggregate service and interest costs for the years ended December 31, 2008, 2009 and 2010 and accumulated post-retirement healthcare benefit obligation as of January 1, 2009 and December 31, 2009 and 2010 as follows:

	2008		2009		2010
Increase
Service and interest costs		116,060		95,709		116,581
			December 31,
	January 1, 2009		2009		2010
Accumulated post-retirement healthcare benefit obligation		588,492		725,664		1,030,938
	2008		2009		2010
Decrease
Service and interest costs		75,753		64,493		76,868
			December 31,
	January 1, 2009		2009		2010
Accumulated post-retirement healthcare benefit obligation		416,360		510,522		702,632

As of January 1, 2009 and December 31, 2009 and 2010, the current portion of post-retirement healthcare cost included in accrued expenses (Note 13) amounted to Rp9,654, Rp12,798 and Rp14,669, respectively, and the non-current portion included in employee benefit obligations (Note 17) amounted to Rp474,118, Rp549,007 and Rp639,271, respectively.

Amounts for the current annual period and previous four annual periods of employee benefits:

	Defined Benefit Pension Plan
	December 31,						January  1, 2009			December 31,
	2006			2007						2009			2010
The Company
Plan assets		702,852			697,641			763,700			763,244			793,664
Projected benefit obligation		(616,715	)		(639,131	)		(512,513	)		(684,611	)		(700,410	)
Excess of plan assets over projected benefit obligation		86,137			58,510			251,187			78,633			93,254
Unrecognized actuarial loss (gain)		139,158			129,291			(96,746	)		46,087			(10,383	)
Net Prepaid Pension		225,295			187,801			154,441			124,720			82,871
Lintasarta
Plan assets		24,804			33,146			41,499			50,344			59,294
Projected benefit obligation		28,188			(33,014	)		(28,726	)		(41,816	)		(50,215	)
Excess of plan assets over projected benefit obligation		(3,384	)		132			12,773			8,528			9,079
Unrecognized actuarial loss		11,663			13,058			5,886			16,572			21,311
Net Prepaid Pension		8,279			13,190			18,659			25,100			30,390
Total		233,574			200,991			173,100			149,820			113,261

F-96

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	Labor Law No.13/2003
	December 31,						January  1, 2009			December 31,
	2006			2007						2009			2010
The Company
Projected benefit obligation		(77,419	)		(94,063	)		(141,316	)		(159,055	)		(182,572	)
Unrecognized actuarial loss		14,447			15,459			40,798			27,639			18,287
Net		(62,972	)		(78,604	)		(100,518	)		(131,416	)		(164,285	)
Lintasarta
Projected benefit obligation		(9,704	)		(6,297	)		(11,464	)		(22,173	)		(24,340	)
Unrecognized actuarial loss (gain)		4,254			(716	)		2,855			(547	)		(2,569	)
Unrecognized past service cost		—			—			—			9,949			9,261
Net		(5,450	)		(7,013	)		(8,609	)		(12,771	)		(17,648	)
IMM
Projected benefit obligation		(1,096	)		(4,168	)		(3,674	)		(6,660	)		(10,842	)
Unrecognized actuarial loss (gain)		118			994			(955	)		55			1,527
Unrecognized past service cost		—			455			427			399			371
Net		(978	)		(2,719	)		(4,202	)		(6,206	)		(8,944	)
Total		(69,400	)		88,336			(113,329	)		(150,393	)		(190,877	)
	Post-retirement Healthcare
	December 31,						January 1, 2009			December 31,
	2006			2007						2009			2010
The Company
Projected benefit obligation		(526,231	)		(767,828	)		(492,615	)		(605,660	)		(846,636	)
Unrecognized past service cost		73,063			62,610			52,158			41,705			31,253
Unrecognized actuarial loss (gain)		180,210			333,412			(43,315	)		2,150			161,443
Net		(272,958	)		(371,806	)		(483,772	)		(561,805	)		(653,940	)

F-97

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

25. ACCOUNTS AND TRANSACTIONS WITH RELATED PARTIES

The details of the accounts and the significant transactions entered into with related parties (affiliates, unless otherwise indicated) are as follows:

	Amount						Percentage to Total Assets/ Liabilities (%)
	January 1, 2009		December 31, 2009		December 31, 2010		January 1, 2009		December 31, 2009		December 31, 2010
Cash and cash equivalents (Note 4)
PT Bank Rakyat Indonesia (Persero)Tbk (“BRI”)		763,563		171,500		799,125		1.47		0.31		1.50
PT Bank Mandiri (Persero)Tbk (“Mandiri”)		2,207,564		1,450,937		522,449		4.26		2.62		0.98
PT Bank Negara Indonesia (Persero) Tbk (“BNI”)		1,283,174		207,983		146,189		2.47		0.37		0.27
PT Bank Tabungan Negara (Persero)Tbk (“BTN”)		69,400		117,000		89,770		0.13		0.21		0.17
PT Bank Syariah Mandiri (“Mandiri Syariah”)		202,786		107,310		32,215		0.39		0.19		0.06
“BPD-Jabar”		—		142		9,885		—		—		0.02
BRI Syariah		—		—		5,000		—		—		0.01
“BPD-NTT”		—		—		4,475		—		—		0.01
“BPD-Papua”		—		—		2,473		—		—		0.00
PT Bank Pembangunan Daerah Yogyakarta (“BPD-DIY”)		2,175		1,896		1,256		0.01		0.00		0.00
PT Bank Pembangunan Daerah DKI Jakarta		4,158		4,652		935		0.01		0.01		0.00
PT Bank Pembangunan Daerah Jawa Tengah		1,500		3,500		—		0.00		0.01		—
Others		2,785		3,122		1,879		0.01		0.01		0.00
Total		4,537,105		2,068,042		1,615,651		8.75		3.73		3.02
Accounts Receivable—trade (Note 5)
State-owned banks		17,644		42,860		91,774		0.03		0.08		0.17
Telkom		32,801		31,724		56,108		0.06		0.06		0.11
PT Televisi Republik Indonesia (Persero) (“TVRI”)		27,016		25,322		38,261		0.05		0.04		0.07
PT Citra Sari Makmur (“CSM”)		10,932		13,807		13,135		0.02		0.02		0.02
PT Telekomunikasi Selular (“Telkomsel”)		20,346		5,318		9,073		0.04		0.01		0.02
PT Pos Indonesia (Persero)		11,966		10,752		8,935		0.02		0.02		0.02
PT Pasifik Satelit Nusantara (“PSN”)		6,419		2,746		8,607		0.01		0.00		0.02
Q-tel		—		3,460		2,827		—		0.01		0.01
Perusahaan Tambang Minyak Negara (“Pertamina”)		—		1,737		2,281		—		0.00		0.00
Comnet		—		—		1,683		—		—		0.00
PT Angkasa Pura (Persero)		—		1,515		—		—		0.00		—
Others		18,398		44,209		37,462		0.05		0.09		0.07
Total		145,522		183,450		270,146		0.28		0.33		0.51
Less allowance for impairment of accounts receivable		69,444		57,538		47,640		0.13		0.10		0.09
Net		76,078		125,912		222,506		0.15		0.23		0.42
Prepaid expenses
MOCIT		632,350		783,533		1,186,669		1.22		1.41		2.22
Kopindosat		2,790		2,306		3,294		0.01		0.00		0.01
Telkom		1,434		1,434		2,452		0.00		0.00		0.01
PT Industri Telekomunikasi Indonesia (Persero) (“INTI”)		1,648		2,116		1,947		0.00		0.00		0.00
Jiwasraya (Note 26)		3,114		2,440		1,917		0.01		0.01		0.00
Others		2,091		3,051		5,367		0.00		0.01		0.01
Total		643,427		794,880		1,201,646		1.24		1.43		2.25

F-98

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	Amount						Percentage to Total Assets/ Liabilities (%)
	January 1, 2009		December 31, 2009		December 31, 2010		January 1, 2009		December 31, 2009		December 31, 2010
Other current assets
Tax Office		345,695		421,745		—		0.67		0.76		—
Others		7		54		—		0.00		0.00		—
Total		345,702		421,799		—		0.67		0.76		—
Other current financial assets
State-owned banks		26,045		20,173		35,957		0.05		0.04		0.07
Total		26,045		20,173		35,957		0.05		0.04		0.07
Due from related parties
Kopindosat		5,958		5,958		5,958		0.01		0.01		0.01
Senior management		817		68		1,362		0.00		—		0.01
Telkomsel		2,892		1,558		1,053		0.00		0.00		0.00
Directorate General of Customs and Excise		23,629		—		—		0.05		—		—
Pertamina		7,153		—		—		0.01		—		—
Others		4,466		813		694		0.01		0.00		0.00
Total		44,915		8,397		9,067		0.08		0.01		0.02
Less allowance for impairment of receivables		2,419		1,182		646		0.00		0.00		0.00
Net		42,496		7,215		8,421		0.08		0.01		0.02
Long-term prepaid pension (Note 26)
Jiwasraya		169,986		147,380		111,344		0.33		0.27		0.21
Total		169,986		147,380		111,344		0.33		0.27		0.21
Long-term advance
INTI		1,830		3,108		3,705		0.00		0.01		0.01
Kopindosat		2,577		2,059		1,016		0.01		0.00		0.00
Total		4,407		5,167		4,721		0.01		0.01		0.01
Long-term prepaid rentals
Telkom		21,032		19,598		18,164		0.04		0.04		0.03
Kopindosat		12,288		11,982		12,817		0.02		0.02		0.02
INTI		4,744		5,499		3,658		0.01		0.01		0.01
Others		1,733		2,608		2,850		0.01		0.00		0.01
Total		39,797		39,687		37,489		0.08		0.07		0.07
Other non-current financial assets
State-owned banks		32,520		46,170		55,274		0.06		0.08		0.10
Total		32,520		46,170		55,274		0.06		0.08		0.10
Other non-current assets
Others		—		—		87		—		—		0.00
Total		—		—		87		—		—		0.00

F-99

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	Amount						Percentage to Total Assets/ Liabilities (%)
	January 1, 2009		December 31, 2009		December 31, 2010		January 1, 2009		December 31, 2009		December 31, 2010
Accounts payable—trade
Telkomsel		—		30,901		20,292		—		0.08		0.06
Indonesia Comnet Plus (“Comnet”)		5,226		2,793		1,345		0.02		0.01		0.00
Telkom		431		4,447		456		0.00		0.01		0.00
Qtel		1,699		—		—		0.01		—		—
Others		4,753		529		167		0.01		0.00		0.00
Total		12,109		38,670		22,260		0.04		0.10		0.06
Procurement payable (Note 11)
INTI		34,737		30,143		24,048		0.10		0.08		0.07
Kopindosat		25,240		25,509		22,123		0.08		0.07		0.06
PT Personel Alih daya		17,739		13,907		13,210		0.05		0.04		0.04
PT Pembangunan Perumahan		—		—		7,007		—		—		0.02
PT Perusahaan Listrik Negara (“PLN”)		—		35,911		—		—		0.10		—
TVRI		—		11,797		—		—		0.03		—
Others		2		17		2,293		0.00		0.00		0.01
Total		77,718		117,284		68,681		0.23		0.32		0.20
Accrued expenses
MOCIT		345,424		305,564		293,590		1.01		0.83		0.85
PLN		3,330		94,337		81,578		0.01		0.26		0.23
Senior management		15,914		27,825		33,553		0.05		0.08		0.10
PT Personel Alih Daya		—		9,305		16,906		—		0.02		0.05
Kopindosat		18,441		—		13,838		0.05		—		0.04
Telkom		—		1,112		1,063		—		0.00		0.00
Others		4,872		—		—		0.02		—		—
Total		387,981		438,143		440,528		1.14		1.19		1.27
Other current liabilities
Telkomsel		2,738		1,664		1,664		0.01		0.00		0.00
Tax Office		157,721		99,872		—		0.46		0.27		—
Others		620		—		—		0.00		—		—
Total		161,079		101,536		1,664		0.47		0.27		0.00
Due to related parties
TVRI		6,910		10,147		19,141		0.02		0.03		0.06
Kopindosat		1,303		1,490		1,490		0.00		0.01		0.00
State-owned banks		2,072		977		101		0.01		0.00		0.00
Telkom		601		59		—		0.00		0.00		—
PT Pos Indonesia (Persero)		3,813		48		—		0.01		0.00		—
Others		—		1,043		1,367		—		0.00		0.00
Total		14,699		13,764		22,099		0.04		0.04		0.06

F-100

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	Amount						Percentage to Total Assets/ Liabilities (%)
	January 1, 2009		December 31, 2009		December 31, 2010		January 1, 2009		December 31, 2009		December 31, 2010
Loans payable (Note 14)
State-owned Banks		1,796,142		2,592,489		1,297,045		5.27		7.03		3.74
Total		1,796,142		2,592,489		1,297,045		5.27		7.03		3.74
Other non-current liabilities
Telkomsel		9,782		8,118		6,454		0.02		0.02		0.02
Kas Negara		—		—		3,895		—		—		0.01
Total		9,782		8,118		10,349		0.02		0.02		0.03

	Amount						Percentage to Respective Income or Expenses (%)
	2008		2009		2010		2008		2009		2010
Operating revenues
Telkom		919,410		672,225		587,386		4.78		3.57		2.99
Telkomsel		375,198		260,345		414,860		1.95		1.38		2.11
State-owned banks		214,631		301,434		387,546		1.12		1.60		1.97
Qtel		2,546		6,714		36,521		0.01		0.04		0.19
PSN		9,847		7,202		23,694		0.05		0.04		0.12
Governmental Department		20,909		12,668		23,478		0.11		0.07		0.12
TVRI		4,178		22,547		19,698		0.02		0.12		0.10
PT Pos Indonesia		6,297		14,379		15,378		0.03		0.08		0.08
Pertamina		2,439		11,238		10,431		0.01		0.06		0.05
State-owned universities		5,203		17,348		8,445		0.03		0.09		0.04
Comnet		10,534		5,831		8,121		0.05		0.03		0.04
CSM		7,420		14,855		7,124		0.04		0.08		0.04
PT Angkasa Pura (Persero)		4,888		3,887		6,213		0.03		0.02		0.03
Badan Pusat Statistik		—		—		3,922		—		—		0.02
PLN		2,059		2,667		2,527		0.01		0.01		0.01
PT Infomedia Nusantara		1,478		2,274		2,248		0.01		0.01		0.01
Badan Meteorologi dan Geofisika (“BMG”)		1,797		3,027		2,217		0.01		0.02		0.01
PT Aneka Tambang		1,445		1,591		1,623		0.01		0.01		0.01
StarHub*		36,748		—		—		0.19		—		—
Private banks		28,161		—		—		0.15		—		—
SingTel*		17,304		—		—		0.09		—		—
Others		117,623		113,976		79,159		0.62		0.59		0.41
Total		1,790,115		1,474,208		1,640,591		9.32		7.82		8.35

F-101

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	Amount						Percentage to Respective Income or Expenses (%)
	2008		2009		2010		2008		2009		2010
Operating expenses
Cost of services
MOCIT		1,318,855		1,633,596		1,939,415		9.10		10.46		12.03
Telkom		941,224		711,784		550,124		6.50		4.56		3.41
Telkomsel		584,470		566,334		528,067		4.03		3.62		3.28
PLN		390,965		617,953		508,473		2.70		3.95		3.15
PT Personel Alih Daya		68,948		57,714		80,902		0.48		0.37		0.50
Kopindosat		2,615		5,661		59,205		0.02		0.04		0.37
Comnet		37,649		36,741		27,681		0.26		0.24		0.17
Qtel		—		—		27,375		—		—		0.17
PT Pos Indonesia		—		—		14,947		—		—		0.09
INTI		7,015		3,367		10,040		0.05		0.02		0.06
Perusahaan Gas Negara (“PGN”)		8,388		3,213		1,933		0.06		0.02		0.01
PSN		2,206		1,692		1,024		0.01		0.01		0.01
SingTel*		12,637		—		—		0.09		—		—
StarHub*		3,321		—		—		0.02		—		—
Others		3,570		—		—		0.02		—		—
Total		3,381,863		3,638,055		3,749,186		23.34		23.29		23.25

* no longer a related party since June 6, 2008 (Note 18)

F-102

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	Amount									Percentage to Respective Income or Expenses (%)
	2008			2009			2010			2008			2009			2010
Personnel
Senior management		134,613			145,510			131,906			0.93			0.93			0.82
Jiwasraya		36,796			32,336			45,688			0.25			0.21			0.28
PT Personel Alih Daya		—			56,613			40,139			—			0.36			0.25
Kopindosat		114,368			—			—			0.79			—			—
Total		285,777			234,459			217,733			1.97			1.50			1.35
General and administration
PLN		42,436			75,967			88,697			0.30			0.49			0.55
Kopindosat		45,124			24,465			26,072			0.31			0.16			0.16
PT Personel Alih Daya		—			35,912			17,914			—			0.23			0.11
Telkom		—			—			2,393			—			—			0.01
Usaha Gedung Bank Dagang Negara (“UGBDN”)		4,806			887			1,603			0.03			0.00			0.01
State-owned banks		505			1,971			1,567			0.00			0.01			0.01
Others		6,891			4,122			6,727			0.05			0.03			0.05
Total		99,762			143,324			144,973			0.69			0.92			0.90
Other income (expenses)
Interest income
State-owned banks		222,727			101,693			106,177			10.25			14.93			4.83
Private banks*		36,458			—			—			1.68			—			—
Others		879			306			754			0.04			0.04			0.04
		260,064			101,999			106,931			11.97			14.97			4.87
Financing cost
State-owned banks		(196,667	)		(225,216	)		(231,530	)		(9.05	)		(33.05	)		(10.54	)
Private banks*		(16,302	)		—			—			(0.75	)		—			—
Others		(6,715	)		(5,624	)		—			(0.31	)		(0.83	)		—
		(219,684	)		(230,840	)		(231,530	)		(10.11	)		(33.88	)		(10.54	)
Net		40,380			(128,841	)		(124,599	)		1.86			(18.91	)		(5.67	)

* no longer a related party since June 6, 2008 (Note 18)

F-103

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The relationship and nature of account balances/transactions with related parties are as follows:

No.	Related Parties	Relationship	Nature of Account Balances/Transactions
1.	PT Bank Rakyat Indonesia (Persero) Tbk (“BRI”)	Affiliate	Cash and cash equivalents
2.	PT Bank Mandiri (Persero) Tbk (“Mandiri”)	Affiliate	Cash and cash equivalents
3.	PT Bank Negara Indonesia (Persero) Tbk (“BNI”)	Affiliate	Cash and cash equivalents
4.	PT Bank Tabungan Negara (Persero) Tbk (“BTN”)	Affiliate	Cash and cash equivalents
5.	PT Bank Syariah Mandiri (“Mandiri Syariah”)	Affiliate	Cash and cash equivalents
6.	BPD—Jabar	Affiliate	Cash and cash equivalents
7.	BRI Syariah	Affiliate	Cash and cash equivalents
8.	BPD—NTT	Affiliate	Cash and cash equivalents
9.	BPD—Papua	Affiliate	Cash and cash equivalents
10.	PT Bank Pembangunan Daerah Yogyakarta (“BPD—DIY”)	Affiliate	Cash and cash equivalents
11.	PT Bank Pembangunan Daerah DKI Jakarta (“BPD—DIY”)	Affiliate	Cash and cash equivalents
12.	PT Bank Pembangunan Daerah Jawa Tengah (“BPD—DIY”)	Affiliate	Cash and cash equivalents
13.	State-owned banks	Affiliate	Cash and cash equivalents, loans payable and operating revenues—MIDI
14.	Telkom (Note 29)	Affiliate	Operating revenues—cellular, fixed telecommunication and MIDI; operating expenses—cost of services
15.	TVRI	Affiliate	Operating revenues—MIDI
16.	CSM	Affiliate	Operating revenues—MIDI
17.	Telkomsel	Affiliate	Operating revenues—cellular and fixed telecommunication
18.	PT Pos Indonesia (Persero)	Affiliate	Operating revenues—MIDI
19.	PSN	Affiliate	Operating revenues—MIDI

F-104

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

No.	Related Parties	Relationship	Nature of Account Balances/Transactions
20.	Qtel	Ultimate Stockholder	Operating revenues—fixed telecommunication
21.	Pertamina	Affiliate	Operating revenues—MIDI
22.	Comnet	Affiliate	Operating expenses—cost of services
23.	PT Angkasa Pura (Persero)	Affiliate	Operating revenues—MIDI
24.	MOCIT	Government Agency	Operating revenues—MIDI; operating expenses—cost of services
25.	Kopindosat	Affiliate	Operating expenses—personnel expenses, general and administration expenses
26.	INTI	Affiliate	Procurement payable
27.	Jiwasraya	Affiliate	Long-term prepaid pension
28.	Tax Office	Government Agency	Other current asset and other current liabilities
29.	Senior management	Key management personnel	Operating expenses—personnel expenses, and prepaid expense—unamortized portions of housing and transformation advances, and transformation incentives
30.	Directorate General of Customs and Excise	Government Agency	Other current liabilities
31.	PT Personel Alih Daya	Affiliate	Operating expenses—personnel expenses and cost of services
32.	PT Pembangunan Perumahan	Affiliate	Procurement payable
33.	PLN	Affiliate	Operating expenses—cost of services
34.	Governmental Departments	Government Agency	Operating revenues—MIDI
35.	State-owned universities	Affiliate	Operating revenues—MIDI
36.	Badan Pusat Statistik	Government Agency	Operating revenues—MIDI
37.	PT Infomedia Nusantara	Affiliate	Operating revenues—MIDI
38.	BMG	Affiliate	Operating revenues—MIDI
39.	PT Aneka Tambang	Affiliate	Operating revenues—MIDI

F-105

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

No.	Related Parties	Relationship	Nature of Account Balances/Transactions
40.	StarHub*	Affiliate	Operating revenues—international calls, operating expenses—cost of service
41.	SingTel*	Affiliate	Operating revenues—international calls, operating expenses—cost of service
42.	PGN	Affiliate	Operating expenses—cost of services
43.	UGBDN	Affiliate	Operating expenses—cost of services
44.	Private banks	Affiliates	Cash and cash equivalents, loans payable and operating revenues—MIDI

* no longer a related party since June 6, 2008 (Note 18)

26. BASIC AND DILUTED EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:

	2008 (Restated)		2009 (Restated)		2010
Numerator for basic and diluted earnings per share—profit for the year attributable to the Owners of the Company, as previously reported		2,037,753		1,690,804		824,637
Accounting policy change (Note 2g)		6,022		13,094		—
Numerator for basic and diluted earnings per share—profit for the year attributable to the Owners of the Company		2,043,775		1,703,898		824,637
Denominator for basic and diluted earnings per share—Weighted-average number of shares outstanding during the year		5,433,933,500		5,433,933,500		5,433,933,500
Basic and diluted earnings per share		376.11		313.57		151.76
Basic and diluted earnings per ADS (50 B shares per ADS)		18,805.67		15,678.31		7,587.85

There are no potential dilutive outstanding shares as of December 31, 2008, 2009 and 2010.

F-106

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

27. DISTRIBUTION OF INCOME AND APPROPRIATION OF RETAINED EARNINGS

At the Company’s Annual Stockholders’ General Meeting (“ASGM”), the stockholders approved, among others, the appropriation of annual net income for reserve fund and cash dividend distribution, as follows, and the utilization of the remaining amount for reinvestment and working capital.

ASGM Date	Reserve Fund (Rp)		Dividend per Share (Rp)		Dividend Payment Date
2007 Net Comprehensive Income June 5, 2008		20,420		187.90	July 15, 2008
2008 Net Comprehensive Income June 11, 2009		18,786		172.85	July 22, 2009
2009 Net Comprehensive Income June 22, 2010		14,982		137.86	August 2, 2010

Dividend for the Government was paid in accordance with the prevailing laws and regulations in Indonesia.

28. DERIVATIVES

The Company entered into several swap contracts. Listed below is the information related to the contracts and their fair values (net of credit risk adjustment) as of January 1, 2009 and December 31, 2009 and 2010:

				Fair Value (Rp)
							December 31,
		Notional Amount (US$)		January 1, 2009			2009			2010
				Receivable (Payable)			Receivable (Payable)			Receivable (Payable)
Cross Currency Swap Contracts:
a.	Standard Chartered Bank, Jakarta Branch (“StandChart“) (6)		25,000		—			—			—
b.	GSI (9)		100,000		223,306			88,523			—
c.	GSI (9)		25,000		36,569			(10,033	)		—
d.	GSI		75,000		22,604			70,588			50,866
e.	Merrill Lynch Capital Market Bank Limited (“MLCMB”) (5)		25,000		—			—			—
f.	MLCMB (3)		25,000		—			—			—
g.	StandChart		25,000		59,003			(431	)		(12,055	)
h.	MLCMB (4)		25,000		—			—			—
i.	StandChart		25,000		73,690			11,885			(1,731	)
j.	StandChart		25,000		83,663			22,768			9,443
k.	HSBC, Jakarta Branch (10)		25,000		69,427			14,428			—
l.	Merrill Lynch International Bank Limited, London Branch (“MLIB”)		50,000		(31,106	)		3,272			(2,234	)
m.	MLIB		25,000		(4,418	)		(6,646	)		2,154
n.	MLIB		25,000		(1,345	)		5,425			3,778
o.	DBS		25,000		(20,991	)		1,497			3,093
p.	GSI (11)		84,000		87,600			5,618			—
Sub-total					598,002			206,894			53,314

F-107

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

				Fair Value (Rp)
							December 31,
		Notional Amount (US$)		January 1, 2009			2009			2010
				Receivable (Payable)			Receivable (Payable)			Receivable (Payable)
Currency Forward Contracts:
q.	StandChart (1)		2,000		—			—			—
r.	JPMorgan Close Bank, Singapore Branch (“JPMorgan”) (2)		3,000 or 6,000		—			—			—
s.	DBS (7)		5,000		—			—			—
t.	DBS (7)		5,000		—			—			—
u.	DBS (8)		5,000		—			—			—
Sub-total					—			—			—
Interest Rate Swap Contracts:
v.	HSBC, Jakarta Branch		27,037 with decreasing amount		(28,549	)		(9,184	)		(13,100	)
w.	HSBC, Jakarta Branch		44,200 with decreasing amount		(67,402	)		(19,935	)		(29,027	)
x.	GSI		100,000		(111,690	)		(73,226	)		(90,273	)
y.	DBS		25,000 with decreasing amount		(16,941	)		(10,680	)		(9,238	)
z.	DBS		25,000 with decreasing amount		(13,856	)		(9,927	)		(9,343	)
aa.	Bank of Tokyo MUFJ (“BTMUFJ”)		25,000 with decreasing amount		(7,094	)		(5,134	)		(6,656	)
ab.	BTMUFJ		25,000 with decreasing amount		(5,271	)		(3,920	)		(5,885	)
ac.	BTMUFJ		25,000 with decreasing amount		(3,882	)		(3,116	)		(5,297	)
ad.	StandChart		40,000 with decreasing amount		732			(1,311	)		(6,814	)
ae.	DBS		26,000 with decreasing amount		(3,321	)		(3,414	)		(4,966	)
af.	DBS		26,000 with decreasing amount		—			(2,307	)		(4,303	)
ag.	BTMUFJ		36,500 with decreasing amount		—			(6,485	)		(7,347	)
ah.	ING Bank N.V.		25,000 with decreasing amount		—			(4,340	)		(4,014	)
ai.	ING Bank N.V.		33,500		—			(4,451	)		(3,120	)
Sub-total					(257,274	)		(157,430	)		(199,383	)
Total					340,728			49,464			(146,069	)

⁽¹⁾  contract entered into in February 2007 and settled in February 2008

⁽²⁾  contract entered into in April 2007 and settled in April 2008

⁽³⁾  contract entered into in November 2005 and restructured into a new contract in August 2008

⁽⁴⁾  contract entered into in March 2006 and restructured into a new contract in August 2008

⁽⁵⁾  contract entered into in September 2005 and restructured into a new contract in September 2008

F-108

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

⁽⁶⁾  contract entered into in April 2004 and settled in November 2008

⁽⁷⁾  contracts entered into in May 2009 and settled in August 2009

⁽⁸⁾  contract entered into in May 2009 and settled in November 2009

⁽⁹⁾  contract entered into in May 2005 and settled in November 2010

⁽¹⁰⁾  contract entered into in August 2006 and settled in November 2010

⁽¹¹⁾  contract entered into in December 2008 and settled in November 2010

The net changes in fair value of the swap contracts and embedded derivative (Note 14j), totaling Rp136,603, (Rp486,916) and (Rp448,831) in 2008, 2009 and 2010, respectively, were charged to “Gain (Loss) on Change in Fair Value of Derivatives—Net”, which is presented under Other Income (Expenses) in the consolidated statements of comprehensive income.

The following are the details of the contracts:

Cross Currency Swap Contracts

No.	Counter- parties	Contract Period and Swap Amount	Annual Swap Premium Rate	Swap Premium Payment Date	Amount of Swap Premium Paid/ Amortized (Rp)
					2008		2009		2010
a.	StandChart  (i)	April 23, 2004 - November 5, 2008 Swap Rp214,625 for US$25,000	6-month U.S. dollar LIBOR plus 2.60%	Every May 5 and November 5		16,263		—		—
b.	GSI (iv)	May 13, 2005 - November 5, 2010 Swap Rp832,250 for US$100,000	(i) Fixed rate of 6.96% per annum for US$50,000 and (ii) 6-month U.S. dollar LIBOR plus 2.62% per annum for US$50,000, netted with (a) 6-month U.S. dollar LIBOR per annum multiplied by US$11,750 during the period May 13, 2005 through May 13, 2008 and (b) the amount of US$11,750 on May 13, 2008. On May 14, 2008, the Company received from GSI the fixed amount of US$11,750 (equivalent to Rp109,099) related to the cross currency swap contract.	Every May 5 and November 5		64,009		54,116		46,136
c.	GSI (v)	May 13, 2005 - November 5, 2010 Swap Rp245,000 for US$25,000	4.30% of US$25,000	Every May 5 and November 5		11,005		10,906		9,841

F-109

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

No.	Counter- parties	Contract Period and Swap Amount	Annual Swap Premium Rate	Swap Premium Payment Date	Amount of Swap Premium Paid/ Amortized (Rp)
					2008		2009		2010
d.	GSI	August 22, 2005 - June 22, 2012 The Company will swap the following: •    US$75,000 which is equal to US$75,000 multiplied by the lowest IDR/USD exchange rate within the period of August 22, 2005 - June 22, 2012 if the IDR/USD spot rate at termination date is less than or equal to the lowest of IDR/USD exchange rate mentioned above plus Rp4,300 (in full amounts) •    US$75,000 which is equal to US$75,000 multiplied by IDR/USD spot rate at termination date minus Rp4,300 (in full amount) if IDR/USD spot rate at termination date is greater than the lowest of IDR/USD exchange rate mentioned above plus Rp4,300 (in full amounts)	3.28% of US$75,000	Every June 22 and December 22		25,665		24,357		22,866

F-110

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

No.	Counter- parties	Contract Period and Swap Amount	Annual Swap Premium Rate	Swap Premium Payment Date	Amount of Swap Premium Paid/ Amortized (Rp)
					2008		2009		2010
e.	MLCMB (ii)	September 20, 2005 - June 22, 2012 The Company will receive the following: •    zero amount if the IDR/USD spot rate at termination date is less than Rp9,500 to US$1 (in full amounts) •    certain U.S. dollar amount which is equal to US$25,000 multiplied by (1-Rp9,500 divided by IDR/USD spot rate) (in full amounts) if the IDR/USD spot rate at termination date is greater than Rp9,500 but is less than or equal to Rp14,000 to US$1 (in full amounts) •    certain U.S. dollar amount which is equal to US$25,000 multiplied by (Rp14,000-Rp9,500 divided by IDR/USD spot rate) (in full amounts) if the IDR/USD spot rate at termination date is greater than Rp14,000 to US$1 (in full amounts)	2.99% of US$25,000	Every June 22 and December 22		3,482		—		—
f.	MLCMB (ii)	November 16,2005 - June 22, 2012 Swap Rp245,000 for US$25,000	5.50% of US$25,000	Every June 22 and December 22		6,406		—		—
g.	StandChart	January 11, 2006 - June 22, 2012 Swap Rp236,250 for US$25,000	4.78% of US$25,000	Every June 22 and December 22		12,474		11,791		11,034
h.	MLCMB (ii)	March 1,2006 - June 22, 2012 Swap Rp229,975 for US$25,000	4.15% of US$25,000	Every June 22 and December 22		4,887		—		—
i.	StandChart	March 15, 2006 - June 22, 2012 Swap Rp228,550 for US$25,000	3.75% of US$25,000	Every June 22 and December 22		9,786		9,250		8,657

F-111

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

No.	Counter- parties	Contract Period and Swap Amount	Annual Swap Premium Rate	Swap Premium Payment Date	Amount of Swap Premium Paid/ Amortized (Rp)
					2008		2009		2010
j.	StandChart	May 12, 2006 - June 22, 2012 Swap Rp217,500 for US$25,000	3.45% of US$25,000	Every June 22 and December 22		9,004		8,510		7,964
k.	HSBC (vi)	August 8, 2006 - November 5, 2010 Swap Rp225,000 for US$25,000	4.00% of US$25,000	Every May 5 and November 5		10,184		10,145		9,074

⁽ⁱ⁾ On November 5, 2008, this contract expired and the Company received settlement gain on the cross currency swap amounting to Rp58,375.

⁽ⁱⁱ⁾ On September 8, 2008, the Company restructured this contract into a new contract.

^(iv) On November 5, 2010 this contract expired and the Company received settlement gain on the cross currency swap amounting to Rp59,925.

^(v) On November 5, 2010 this contract expired and the Company paid settlement loss on the cross currency swap amounting to Rp21,881.

^(vi) On November 5, 2010, this contract expired and the Company paid settlement loss on the cross currency swap amounting to Rp2,550.

No.	Counter- parties	Contract Period and Swap Amount	Annual Swap Premium Rate	Swap Premium Payment Date	Amount of Swap Premium Paid/ Amortized (Rp)
					2008		2009		2010
l.	MLIB (iii)	August 8, 2008 - June 22, 2012 The Company will receive the following: •     zero amount if the IDR/USD spot rate at termination date is less than or equal to Rp8,950 to US$1 (in full amounts) •     certain U.S. dollar amount which is equal to US$50,000 multiplied by (1 - Rp8,950 divided by IDR/USD spot rate) (in full amounts) if the IDR/USD spot rate at termination date is greater than Rp8,950 but is less than or equal to Rp11,000 to US$1 (in full amounts) •     certain U.S. dollar amount which is equal to US$50,000 multiplied by (Rp11,000 - Rp8,950) divided by IDR/USD spot rate (in full amounts) if the IDR/USD spot rate at termination date is greater than Rp11,000 to US$1 (in full amounts)	4.22% of US$50,000	Every June 22 and December 22		11,988		22,778		23,965

F-112

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

No.	Counter- parties	Contract Period and Swap Amount	Annual Swap Premium Rate	Swap Premium Payment Date	Amount of Swap Premium Paid/ Amortized (Rp)
					2008		2009		2010
m.	MLIB	September 2, 2008 - June 12, 2013 The Company will receive the following: •     zero amount if the IDR/USD spot rate at termination date is less than or equal to Rp8,800 to US$1 (in full amounts) •     certain U.S. dollar amount as arranged in the contract multiplied by (IDR/USD spot rate - Rp8,800) divided by IDR/USD spot rate (in full amounts) if the IDR/USD spot rate at termination date is greater than Rp8,800 but is less than or equal to Rp12,000 to US$1 (in full amounts) •     certain U.S. dollar amount as arranged in the contract multiplied by (Rp3,200 divided by IDR/USD spot rate) (in full amounts) if the IDR/USD spot rate at termination date is greater than Rp12,000 to US$1 (in full amounts)	4.10% of US$25,000 up to June 12, 2011 , and 4.10% of decreasing U.S. dollar amount as arranged in the contract up to June 12, 2013	Every June 12 and December 12		3,203		11,230		11,852
n.	MLIB (ii)	September 8, 2008 - June 22, 2012 The Company will receive the following: •     zero amount if the IDR/USD spot rate at termination date is less than or equal to Rp9,000 to US$1 (in full amounts) •     certain U.S. dollar amount which is equal to US$25,000 multiplied by (1 - Rp9,000 divided by IDR/USD spot rate) (in full amounts) if the IDR/USD spot rate at termination date is greater than Rp9,000 but is less than or equal to Rp11,000 to US$1 (in full amounts) •     certain U.S. dollar amount which is equal to US$25,000 multiplied by (Rp11,000 - Rp9,000) divided by IDR/USD spot rate (in full amounts) if the IDR/USD spot rate at termination date is greater than Rp11,000 to US$1 (in full amounts)	2.52% of US$25,000	Every June 22 and December 22		3,579		6,801		7,156

⁽ⁱⁱ⁾ On September 8, 2008, the Company restructured this contract into a new contract.

⁽ⁱⁱⁱ⁾ On August 8, 2008, the Company restructured these contracts into a new contract.

F-113

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

No.	Counter- parties	Contract Period and Swap Amount	Annual Swap Premium Rate	Swap Premium Payment Date	Amount of Swap Premium Paid/ Amortized (Rp)
					2008		2009		2010
o.	DBS	September 10, 2008 - June 12, 2013 The Company will receive the following: •     zero amount if the IDR/USD spot rate at the scheduled settlement date is at or less than Rp8,800 to US$1 (in full amounts) •     certain U.S. dollar amount which is equal to U.S. dollar amount at scheduled settlement date multiplied by (IDR/USD spot rate - Rp8,800) divided by IDR/USD spot rate (in full amounts) if the IDR/USD spot rate at settlement date is greater than Rp8,800 and is at or less than Rp12,000 to US$1 (in full amounts) •     certain U.S. dollar amount which is equal to U.S. dollar amount at scheduled settlement date multiplied by (Rp12,000 - Rp8,800) divided by IDR/USD spot rate (in full amounts) if the IDR/USD spot rate at settlement date is greater than Rp12,000 to US$1 (in full amounts)	3.945% of US$25,000 up to June 12, 2011 , and 3.945% of decreasing U.S. dollar amount as arranged in the contract up to June 12, 2013	Every June 12 and December 12		2,833		9,980		9,044

F-114

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

No.	Counter- parties	Contract Period and Swap Amount	Annual Swap Premium Rate	Swap Premium Payment Date	Amount of Swap Premium Paid/ Amortized (Rp)
					2008		2009		2010
p.	GSI (vii)	December 16, 2008 - November 5, 2010 The Company will receive the following: •     zero amount if the IDR/USD spot rate at termination date is less than or equal to Rp11,500 to US$1 (in full amounts) •     certain U.S. dollar amount which is equal to US$84,000 multiplied by (IDR/USD spot rate - Rp11,500 divided by IDR/USD spot rate) (in full amounts) if the IDR/USD spot rate at termination date is greater than Rp11,500 but is less than or equal to Rp15,000 to US$1 (in full amounts) •     certain U.S. dollar amount which is equal to US$84,000 multiplied by (Rp3,500 divided by IDR/USD spot rate) (in full amounts) if the IDR/USD spot rate at termination date is greater than Rp15,000 to US$1 (in full amounts)	Upfront premium of US$9,500 (equivalent to Rp105,212) which was fully paid on December 19, 2008. The premium is amortized over the contract period.	—		1,991		55,899		47,323

^(vii)  On November 5, 2010, this contract expired and the Company received zero settlement on the cross currency swap.

All cross currency swap contracts with GSI (contracts No. a, b and c) are structured to include credit-linkage with the Company as the reference entity and with the Company’s (i) bankruptcy, (ii) failure to pay on certain debt obligations or (iii) restructuring of certain debt obligations as the relevant credit events. Upon the occurrence of any of these credit events, the Company’s obligations and those of GSI under these swap contracts will be terminated without any further payments or settlements being made by or owed to either party, including a payment by either party of any marked-to-market value of the swap contracts.

Currency Forward Contracts

No.	Counter-parties	Contract Period	IDR/USD Fixing Rate (in full amounts)	Settlement Dates
q.	StandChart (viii)	February 15, 2007 - February 20, 2008	Rp8,950 to US$1	Every month starting March 20, 2007 to February 20, 2008
r.	JPMorgan (viii)	April 24, 2007 - April 28, 2008	Spot rate on the settlement date	Every month starting May 25, 2007 to April 28, 2008
s.	DBS (ix)	May 8, 2009 - August 12, 2009	Rp10,610 to US$1	August 12, 2009
t.	DBS (ix)	May 8, 2009 - August 12, 2009	Rp10,610 to US$1	August 12, 2009
u.	DBS(ix)	May 11, 2009 - November 3, 2009	Rp10,750 to US$1	November 13, 2009

^(viii)  These contracts (q and r) expired on February 20, 2008 and April 28, 2008, respectively.

^(ix)  Contracts s and t expired on August 12, 2009 and contract u, on November 13, 2009.

F-115

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Interest Rate Swap Contracts

No.	Counter- parties	Contract Period	Annual Interest Swap Rate	Swap Income (Expense) Receipt Date	Amount of Swap Income (Expense) Received (Paid) (Rp)
					2008			2009			2010
v.	HSBC	April 23, 2008 - November 27, 2016	5.42% of US$27,037, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.45% per annum	Every April 1 and October 1 up to October 2009, and every May 27 and November 27 up to termination date		(1,784	)		(4,320	)		(7,589	)
w.	HSBC	April 23, 2008 - September 29, 2019	4.82% of US$44,200, the notional amount of which will decrease based on predetermined schedule, in exchange for U.S. dollar LIBOR plus 0.35% per annum	Every January 28 and July 28 up to July 2009, and every March 29 and September 29 up to termination date		(648	)		(7,309	)		(16,920	)
x.	GSI	September 2, 2008 - June 12, 2013	(8.10% - underlyer return) of US$100,000 per annum, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum	Every June 10 and December 10 up to June 2011, and every June 12 and December 12 up to termination date		—			(24,051	)		(39,332	)
y.	DBS	September 5, 2008 - June 12, 2013	5.625% of US$25,000 per annum, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum	Every June 10 and December 10 up to December 2010, and every June 12 and December 12 up to termination date		—			(4,539	)		(7,289	)
z.	DBS	October 23, 2008 - June 12, 2013	5.28% of US$25,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum	Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date		—			(2,106	)		(6,676	)

F-116

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

No.	Counter- parties	Contract Period	Annual Interest Swap Rate	Swap Income (Expense) Receipt Date	Amount of Swap Income (Expense) Received (Paid) (Rp)
					2008		2009			2010
aa.	BTMUFJ	December 1, 2008 - June 12, 2013	4.46% of US$25,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum	Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date		—		(1,107	)		(4,778	)
ab.	BTMUFJ	December 4, 2008 - June 12, 2013	4.25% of US$25,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum	Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date		—		(935	)		(4,291	)
ac.	BTMUFJ	December 12, 2008 - June 12, 2013	4.09% of US$25,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum	Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date		—		(835	)		(3,921	)
ad.	StandChart	December 19, 2008 - June 12, 2013	3.85% of US$40,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum	Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date		—		(504	)		(5,384	)

F-117

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

No.	Counter- parties	Contract Period	Annual Interest Swap Rate	Swap Income (Expense) Receipt Date	Amount of Swap Income (Expense) Received (Paid) (Rp)
					2008		2009			2010
ae.	DBS	December 22, 2008 - December 12, 2012	4.02% of US$26,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum	Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date		—		(558	)		(3,909	)
af.	DBS	January 21, 2009 - December 12, 2012	3.83% of US$26,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum	Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date		—		(302	)		(3,451	)
ag.	BTMUFJ	March 2, 2009 - June 12, 2012	4.10% of US$36,500, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum	Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date		—		(627	)		(5,758	)
ah.	ING Bank N.V.	March 3, 2009 - December 12, 2011	4.0094% of US$25,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum	Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date		—		(522	)		(3,734	)
ai.	ING Bank N.V.	April 14, 2009 - June 12, 2011	3.75% of US$33,500, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum	Every March 25 and September 25 up to March 2011, and on June 12, 2011		—		—			(4,199	)

F-118

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

29. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES

a. As of December 31, 2010, commitments on capital expenditures which are contractual agreements not yet realized relate to the procurement and installation of property and equipment amounting to US$90,015 (Note 33r) and Rp569,173.

The significant commitments on capital expenditures are as follows:

Contract Date	Contract Description	Vendor	Amount of Contract/ Purchase Orders (“POs”) Already Issued	Amount of Contract/ POs Not Yet Served
December 10, 2010	The Procurement of Technology Upgrade for 2G and 3G Telecommunications Network in Kalimantan (see “b” below)	PT Nokia Siemens Networks and Nokia Siemens Networks Oy	US$38,439	US$17,959
June 16, 2010	The Procurement of Telco Infrastructure	PT Nokia Siemens Networks and Nokia Siemen Networks Oy	US$106,655 and Rp461,479	US$13,344 and Rp142,002
May 16, 2007	Supply of GSM Cellular Infrastructure	PT Nokia Siemens Networks, Nokia Siemens Networks Oy and Nokia Siemens Networks GmbH & Co. KG.	US$318,446 and Rp1,385,390	US$4,118 and Rp55,310
April 20, 2007	Telecommunications Equipment Supply and Service	PT Alcatel Lucent Indonesia and Alcatel Shanghai Bell Co. Ltd.	US$79,311 and Rp679,301	US$2,334 and Rp41,105
April 3, 2007	Supply of GSM Infrastructure	PT Ericsson Indonesia and Ericsson AB	US$383,104 and Rp1,110,375	US$358 and Rp24,871

b. On December 10, 2010, the Company agreed with PT Nokia Siemens Networks and Nokia Siemens Networks OY (“Nokia”) to restate and amend the agreement for “The Procurement of Technology Upgrade for 2G and 3G Telecommunication Network in Kalimantan” that was originally entered into on June 30, 2010. Based on the new agreement, the Company agreed to exchange certain existing cellular technical equipment units in Kalimantan area with new equipment units from Nokia with total value of US$75,243 consisting of cellular technical equipment with net book value of U$66,963 (net of discount amounting to US$2,029) for 1,325 units of 2G Base Transceiver Station [BTS], 24 units of Base Station Controller [BSC], 11 units of Transcoders, 66 units of Node B equipment and 3 units of Radio Network Controller [RNC], and pay US$6,251 to Nokia for the installation services. As of December 31, 2010, the carrying amount of the cellular technical equipment units given up (122 units of 2G BTS, 5 units of BSC, 25 units of Node B equipment and 1 unit of RNC) totalled Rp158,285 (Note 7). The Company also committed to procure additional equipment units from Nokia with a total value of US$11,708 until the end of 2012.

F-119

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

c. On September 17, 2010, the Company received STPs from the DGT for the underpayment of the Company’s 2008 and 2009 income tax article 26 totalling Rp80,018 (including interest). On October 13, 2010, the Company submitted cancellation letters to the Tax Office regarding such STPs. Subsequently, on November 16, 2010, the Company was required to pay a certain portion of these STPs by using the approved tax refund claim on the Company’s corporate Income Tax for fiscal year 2005 (Note 6) amounting to Rp38,155. As of December 31, 2010, the remaining amount of Rp41,863 has not yet been paid (Note 33b).

d. On August 18, 2010, the Company and Telkom signed a memorandum of understanding on the cooperation for joint utilization of filling of satellite networks at 150.5 degree East geostationary orbital slot. This cooperation will include procuring, operating and maintaining satellite between the Company and Telkom in order to utilize filling of satellite networks at 150.5 degree East geostationary orbital slot after the termination of the operation of Satellite Palapa C-2 owned by the Company. The capital expenditure related to such cooperation will be borne on a pro rata basis between the Company and Telkom.

As of December 31, 2010, the Company has not made any capital expenditure related to such cooperation.

e. On January 29, April 15, May 24 and June 3, 2010, the Company agreed to lease part of its telecommunications towers and sites to PT Hutchison CP Telecommunication (“Hutchison”) for a period of 12 years, to PT Natrindo Telepon Selular (“NTS”) for a period of 10 years, to PT XL Axiata Tbk (“XL Axiata”, formerly PT Excelcomindo Pratama Tbk or “Excelcom”) for a period of 10 years and to PT Berca Global Access (“Berca”) for a period of 10 years, respectively. Hutchison, NTS, and XL Axiata (on annual basis) and Berca (on quarterly basis) are required to pay the lease and maintenance fees in advance which are recorded as part of unearned income.

The agreements are cancellable before termination under certain conditions, as stated in the agreements.

f. On April 15, 2010, Lintasarta, a subsidiary, entered into agreements with MOCIT-Balai Telekomunikasi dan Informatika Pedesaan (MOCIT-BTIP), whereby Lintasarta agreed to provide Pusat Layanan Jasa Akses Internet Kecamatan (Center for Internet Access and Services in Rural Areas) (PLIK) for Work Packages (Paket Pekerjaan) 7, 8 and 9 that cover the provinces of Bali, West Nusa Tenggara, East Nusa Tenggara, West Kalimantan, South Kalimantan, East Kalimantan, Central Kalimantan, Maluku and Papua. On December 22, 2010, the agreements were amended to increase the contract values. The agreement covers four years starting from October 15, 2010 with contract values amounting to Rp91,895, Rp143,668 and Rp116,721 for Work Packages 7, 8 and 9, respectively. As of December 31, 2010, Lintasarta has outstanding advance payments from MOCIT-BTIP related with the agreements amounting to Rp56,573 and Rp11,739 which are classified as part of unearned income for the current portion and other non-current liabilities for the long-term portion, respectively. In accordance with the agreements, Lintasarta placed its time deposits totalling Rp18,200 as a performance bond for the four-year contract period which is classified as part of other non-current financial assets (Note 2f8).

On May 6, 2010, Lintasarta entered into an agreement with PT Wira Eka Bhakti (WEB), for the procurement of equipment and infrastructure required for the construction of PLIKs, as agreed with the

F-120

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

MOCIT-BTIP above, with total contract value amounting to Rp189,704. On October 20, 2010, the agreement was amended to increase the contract value to become Rp203,776. As of December 31, 2010, Lintasarta has outstanding advances to WEB totalling Rp39,107 and Rp2,668 which are classified as part of advances for the current portion and long-term advances for the long-term portion, respectively.

On December 12, 2010, Lintasarta entered into agreements with MOCIT-BTIP to provide Pusat Layanan Jasa Akses Internet Kecamatan Bergerak (Mobile Center for Internet Access and Services in Rural Areas) (PLIKB) for Work Packages 2, 3, 11, 15, 16 and 18 that cover the provinces of North Sumatra, West Sumatra, East Nusa Tenggara, West Kalimantan, South Kalimantan and East Kalimantan. The agreements cover four years starting on June 22, 2011 with contract values amounting to Rp79,533, Rp92,003, Rp71,879, Rp84,583, Rp69,830 and Rp60,149 for Work Packages 2, 3, 11, 15, 16 and 18, respectively. As of December 31, 2010, Lintasarta has outstanding advance payments from MOCIT-BTIP related with the agreements amounting to Rp9,725 and Rp73,543 which are classified as part of unearned income for the current portion and other non-current liabilities for the long-term portion, respectively.

g. On May 25, 2007, the Company and six other telecommunications operators signed a memorandum of understanding on the construction of the national optical fiber network Palapa Ring for the eastern part of Indonesia (“Palapa Ring Project Phase I”) wherein the Company will share 10% of the total project cost of Rp3,000,000. In addition, they also agreed to equally bear the cost of preparation and implementation (“preparation cost”) of Palapa Ring Project Phase I up to the amount of Rp2,000. If the preparation cost exceeds Rp2,000, there will be further discussion among them. However, one of the telecommunications operators subsequently decided not to join the project.

On November 10, 2007, the Company and the other five telecommunications operators (including Telkom, a related party) signed the agreement on the consortium for the construction and maintenance of Palapa Ring wherein the Company agreed to bear 13.36% of the total project cost of US$225,037. This agreement replaced the previous memorandum of understanding.

Furthermore, three of the telecommunications operators also no longer joined the project. Consequently, as of December 31, 2010, the remaining telecommunications operators which are still committed to this project are the Company, Telkom and Bakrie Telecom. Hence, the project’s commitment is being evaluated to accommodate the change in the number of participating telecommunications operators.

As of December 31, 2010, the Company has paid the amount of US$1,503 which is recorded as part of other non-current financial assets.

h. The Company and IMM have committed to pay annual radio frequency fee over the 3G and BWA licenses period, provided the Company and IMM hold the 3G and BWA licenses. The amount of annual payment is based on the payment scheme set out in Regulations No. 7/PER/M.KOMINFO/2/2006, No. 268/KEP/M.KOMINFO/9/2009 and No. 237/KEP/M.KOMINFO/7/2009 dated February 8, 2006, September 1, 2009 and July 27, 2009, respectively, of the MOCIT.

F-121

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

i. On July 20, 2005, the Company obtained facilities from HSBC to fund the Company’s short-term working capital needs. These facilities were amended on May 14, 2007 to extend the expiration date to February 28, 2008. On December 4, 2009, these facilities were further amended to extend the expiration date to April 30, 2010. Subsequently, on June 17, 2010, these facilities were further extended up to April 30, 2011. The facilities consist of the following:

• Overdraft facility amounting to US$2,000 (including overdraft facility denominated in rupiah amounting to Rp17,000). Interest is charged on daily balances at 3.75% per annum and 6% per annum below the HSBC Best Lending Rate for the loan portions denominated in rupiah and U.S. dollar, respectively.

• Revolving loan facility amounting to US$30,000 (including revolving loan denominated in rupiah amounting to Rp255,000). The loan matures within a maximum period of 180 days and can be drawn in tranches with minimum amounts of US$500 and Rp500 for loans denominated in U.S. dollar and rupiah, respectively. Interest is charged on daily balances at 3% per annum above the HSBC Cost of Fund Rate for the loans denominated either in rupiah or U.S. dollar.

As of December 31, 2010, the Company has not used these facilities.

j. In 1994, the Company was appointed as a Financial Administrator (“FA”) by a consortium which was established to build and sell/lease Asia Pacific Cable Network (“APCN”) submarine cable in countries in the Asia-Pacific Region. As an FA, the Company collected and distributed funds from the sale of APCN’s Indefeasible Right of Use (“IRU”), Defined Underwritten Capacity (“DUC”) and Occasional Commercial Use (“OCU”).

The funds received from the sale of IRU, DUC and OCU and for upgrading the APCN cable did not belong to the Company and, therefore, were not recorded in the Company’s books. However, the Company managed these funds in separate accounts.

As of December 31, 2010, the balance of the funds (including interest earned) which are under the Company’s custody amounted to US$5,428. Besides receiving their share of the funds from the sale of IRU, DUC and OCU, the members of the consortium also received their share of the interest earned by the above funds.

k. Other agreements made with Telkom are as follows:

• Under a cooperation agreement, the compensation to Telkom relating to leased circuit/channel services, such as world link and bit link, is calculated at 15% of the Company’s collected revenues from such services.

The Company and Satelindo also lease circuits from Telkom to link Jakarta, Medan and Surabaya.

• In 1994, Satelindo entered into a land transfer agreement for the transfer of Telkom’s rights to use a 134,925-square meter land property located at Daan Mogot, West Jakarta, where Satelindo’s earth control station is currently situated. The land transfer agreement enables Satelindo to use the land for a period of 30 years from the date of the agreement, for a price equivalent to US$40,000 less Rp43,220. The term of the agreement may be extended based on mutual agreement.

This agreement was subsequently superseded by a land rental agreement dated December 6, 2001, generally under the same terms as those of the land transfer agreement.

F-122

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

• In 1999, Lintasarta entered into an agreement with Telkom, whereby Telkom agreed to lease transponder to Lintasarta. This agreement has been amended several times, the latest amendment of which is based on the ninth amendment agreement dated May 24, 2010. Transponder lease expense charged to operations amounting to Rp30,255 and Rp27,547 in 2009 and 2010, respectively, is presented as part of “Operating Expenses—Cost of Services” in the consolidated statements of income.

30. OPERATING SEGMENT INFORMATION

The Companies manage and evaluate their operations in three major reportable segments: cellular, fixed telecommunication and MIDI. The operating segments are managed separately because each offers different services/products and serves different markets. The Companies operate in one geographical area only, so no geographical information on segments is presented.

The cellular segment currently provides the network coverage in all major cities and population centers across Indonesia by using GSM 900 and GSM 1800 technology. Its primary service is the provision of voice and data transfer which is sold through post-paid and prepaid plans.

The fixed telecommunication segment is the provider of international long-distance services, fixed wireless services, DLD services and local fixed telephony services.

The MIDI segment offers products and services which include internet, high-speed point-to-point international and domestic digital leased line broadband and narrowband services, a high-performance packet-switching service and satellite transponder leasing and broadcasting services.

Refer to Notes 2f5 and 19 for the description of type of products and services under each reporting segment.

No operating segments have been aggregated to form the above reportable operating segments.

Segment results and assets include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Expenditures for segment assets represent the total costs incurred during the period to acquire segment assets that are expected to be used for more than one year.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects, as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. The Companies’ financing (including finance costs and finance income) and income taxes are managed on a group basis and are not allocated to operating segments.

Operating segments are reported based on financial information determined in conformity with generally accepted accounting principles in Indonesia (“Indonesian GAAP”), which information is also consistent with the internal reporting provided to the chief operation decision maker. The chief operation decision maker is responsible for allocating resources and assessing performance of the operating segments, and has been identified as a steering committee that makes strategic decisions.

F-123

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Consolidated information by industry segment follows:

	Major Segments							Inter-Segment Eliminations (1)
	Cellular			Fixed Telecommunication		MIDI					Total			Adjustments  (2)			Consolidated
December 31, 2008
Operating revenues
Revenues from external customers		14,454,275			2,021,753		2,735,495		—			19,211,523			4,448			19,215,971
Inter-segment revenues		(363,347	)		363,347		472,460		(472,460	)		—			—			—
Total operating revenues		14,090,928			2,385,100		3,207,955		(472,460	)		19,211,523			4,448			19,215,971
Income
Operating income		3,151,926			790,640		790,713		—			4,733,279			(5,031	)		4,728,248
Interest income												460,089			—			460,089
Gain on change in fair value of derivatives—net												136,603			—			136,603
Financing cost												(1,858,294	)		—			(1,858,294	)
Loss on foreign exchange												(885,729	)		—			(885,729	)
Income tax expense—net												(419,830	)		(65,510	)		(485,340	)
Amortization of goodwill												(227,317	)		227,317			—
Others—net												(33,516	)		7,919			(25,597	)
Profit for the year												1,905,285			164,695			2,069,980
January 1, 2009
Segment assets		39,472,716			2,570,142		7,115,939		(5,375,381	)		43,783,416			169,156			43,952,572
Unallocated assets																		7,909,907
Assets—net																		51,862,479
Segment liabilities		29,574,729			1,197,315		3,795,130		(4,099,410	)		30,467,764			88,031			30,555,795
Unallocated liabilities																		3,527,000
Liabilities—net																		34,082,795
Other disclosures
Capital expenditures		10,042,807			682,907		1,616,189		—			12,341,903			—			12,341,903
Depreciation and amortization		3,698,620			290,842		566,429		—			4,555,891			9,479			4,565,370

F-124

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	Major Segments						Inter-Segment Eliminations (1)
	Cellular		Fixed Telecommunication		MIDI					Total			Adjustments  (2)			Consolidated
December 31, 2009
Operating revenues
Revenues from external customers		14,300,163		1,803,039		2,720,984		—			18,824,186			22,720			18,846,906
Inter-segment revenues		—		—		515,961		(515,961	)		—			—			—
Total operating revenues		14,300,163		1,803,039		3,236,945		(515,961	)		18,824,186			22,720			18,846,906
Income
Operating income		2,003,034		330,401		879,580		—			3,213,015			12,510			3,225,525
Gain on foreign exchange—net								—			1,656,407			—			1,656,407
Interest income								—			138,951			—			138,951
Financing cost								—			(1,872,967	)		—			(1,872,967	)
Income tax expense—net								—			(677,265	)		(106,684	)		(783,949	)
Loss on change in fair value of derivatives—net								—			(517,655	)		30,739			(486,916	)
Amortization of goodwill								—			(235,420	)		235,420			—
Others—net								—			(150,338	)		33,517			(116,821	)
Profit for the year								—			1,554,728			205,502			1,760,230
Segment assets		43,871,953		2,606,166		7,776,333		(4,953,666	)		49,300,786			393,516			49,694,302
Unallocated assets																	5,740,701
Assets—net																	55,435,003
Segment liabilities		31,678,430		1,028,375		3,748,888		(3,542,963	)		32,912,730			106,890			33,019,620
Unallocated liabilities																	3,840,474
Liabilities—net																	36,860,094
Other disclosures
Capital expenditures		9,661,360		579,862		1,343,327		—			11,584,549			—			11,584,549
Depreciation and amortization		4,585,081		335,270		641,039		—			5,561,390			10,210			5,571,600

F-125

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	Major Segments							Inter-Segment Eliminations (1)
	Cellular		Fixed Telecommunication			MIDI					Total			Adjustments  (2)			Consolidated
December 31, 2010
Operating revenues
Revenues from external customers		16,027,062		1,293,177			2,476,276		—			19,796,515			(148,137	)		19,648,378
Inter-segment revenues		—		—			563,726		(563,726	)		—			—			—
Total operating revenues		16,027,062		1,293,177			3,040,002		(563,726	)		19,796,515			(148,137	)		19,648,378
Income
Operating income		2,745,063		(34,495	)		763,376		—			3,473,944			47,750			3,521,694
Gain on foreign exchange—net									—			492,401			—			492,401
Interest income									—			143,402			—			143,402
Financing cost									—			(2,271,628	)		—			(2,271,628	)
Loss on change in fair value of derivatives—net									—			(418,092	)		(30,739	)		(448,831	)
Income tax expense—net									—			(357,798	)		(64,540	)		(422,338	)
Amortization of goodwill									—			(226,380	)		226,380			—
Others—net									—			(111,830	)		—			(111,830	)
Profit for the year									—			724,019			178,851			902,870
Segment assets		45,875,021		2,020,957			8,459,948		(7,802,547	)		48,553,379			607,508			49,160,887
Unallocated assets																		4,264,808
Assets—net																		53,425,695
Segment liabilities		27,195,689		630,442			3,250,615		(6,219,525	)		24,857,221			142,031			24,999,252
Unallocated liabilities																		9,724,480
Liabilities—net																		34,723,732
Other disclosures
Capital expenditures		4,455,608		210,770			848,611		—			5,514,989			—			5,514,989
Depreciation and amortization		5,052,691		297,334			801,886		—			6,151,911			10,940			6,162,851

⁽¹⁾  These include inter-segment assets, liabilities and revenues eliminated upon consolidation.

⁽²⁾  These are adjustments to reconcile segment financial information to consolidated IFRS financial statements. Segment financial information, as reported to the chief operation decision maker, is still managed and maintained by the Companies under Indonesian GAAP.

31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

A. Risk Management

The main risks arising from the Companies’ financial instruments are interest rate risk, foreign exchange rate risk, equity risk, credit risk and liquidity risk. The importance of managing these risks has significantly increased in light of the considerable change and volatility in both Indonesian and international financial markets. The Company’s Board of Directors reviews and approves the policies for managing these risks which are summarized below.

F-126

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companies’ exposure to the risk of changes in market interest rates relates primarily to their loans and bonds payable with floating interest rates.

The Company’s policies relating to interest rate risk are as follows:

(1) Manage interest cost through a mix of fixed and variable rate debts. The Company evaluates the fixed to floating rate ratio of its loans and bonds payable in line with movements of relevant interest rates in the financial markets. Based on management’s assessment, new financing will be priced either on a fixed or floating rate basis, and

(2) Manage interest rate exposure on its loans and bonds payables by entering into interest rate swap contracts.

As of January 1, 2009 and December 31, 2009 and 2010, more than 70%, 50% and 60%, respectively, of the Companies’ debts are fixed-rated.

Several interest rate swap contracts are entered into to hedge floating rate U.S. dollar debts. These contracts are accounted as transactions not designated as hedges, wherein the changes in the fair value are credited or charged directly to profit or loss for the year.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Company’s consolidated profit for the year ended December 31, 2010 (through the impact on floating rate borrowings which is based on LIBOR for U.S. dollar borrowings and on JIBOR for rupiah borrowings).

	2008			2009			2010
Increase or (decrease) in basis points:
U.S. dollar		(2	)		2			1
Rupiah		(280	)		(10	)		41
Effect on profit for the year
U.S. dollar		USD18 (equivalent to Rp195	)		USD(106 (equivalent to Rp(993	)     ))		USD(57 (equivalent to Rp(509	)     ))
Rupiah		Rp86,757			Rp3,857			Rp(9,490	)

Management conducted a survey among the Company’s banks to determine the outlook of the LIBOR and JIBOR interest rates until the Company’s next reporting dates of March 31, 2009, 2010 and 2011. The outlook is that the LIBOR and JIBOR interest rates may move 2 and 280 basis points lower, 2 and 10 basis points higher and lower and 1 and 41 basis points higher, respectively, as compared to the year-end interest rates of 2008, 2009 and 2010, respectively.

If LIBOR interest rates were 2 basis points lower, 2 and 1 basis points higher than the market levels for the years ended December 31, 2008, 2009 and 2010, respectively, with all other variables held constant, the Companies’ profit for the years then ended and the consolidated stockholders’ equity would be Rp2,043,970, Rp1,702,905 and Rp824,128 and Rp17,493,631, Rp18,246,164 and Rp18,317,067,

F-127

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

respectively, which are higher, lower and lower than the actual results for the years ended December 31, 2008, 2009 and 2010, respectively, mainly due to the lower, higher and higher interest expense on floating rate borrowings.

If JIBOR interest rates were 280 and 10 basis points lower and 41 basis points higher than the market levels for the years ended December 31, 2008, 2009 and 2010, respectively, with all other variables held constant, the Company’ profit for the years then ended and the consolidated stockholders’ equity would be Rp2,130,532, Rp1,707,755 and Rp815,147 and Rp17,580,193, Rp18,251,014 and Rp18,308,086, respectively, which are higher, higher and lower than the actual results for the years ended December 31, 2008, 2009 and 2010, respectively, mainly due to the lower, lower and higher interest expense on floating rate borrowings.

Foreign exchange rate risk

Foreign exchange rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Companies’ exposure to exchange rate fluctuations results primarily from U.S. dollar-denominated loans and bonds payable, accounts receivable, accounts payable and procurement payable.

To manage the Companies’ foreign exchange rate risks, several cross currency swap contracts and other permitted instruments, if considered necessary, are entered into. These contracts are accounted for as transactions not designated as hedges, wherein the changes in the fair value are charged or credited directly to profit or loss for the year.

The Companies’ accounts payable are primarily foreign currency net settlement payables to foreign telecommunications operators, while most of the Companies’ accounts receivable are Indonesian rupiah-denominated collections from domestic operators.

To the extent the Indonesian rupiah depreciated further from the exchange rates in effect at December 31, 2008, 2009 and 2010, the Companies’ obligations under such loans and bonds payable, accounts payable and procurement payable would increase in Indonesian rupiah terms. However, the increases in these obligations would be offset in part by increases in the values of foreign currency-denominated time deposits and accounts receivable. As of January 1, 2009 and December 31, 2009 and 2010, 51.42%, 43.31% and 17.90%, respectively, of the Company’s U.S. dollar-denominated debts were insured from exchange rate risk by entering into several cross currency swap contracts.

F-128

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The following table shows the Companies’ consolidated U.S. dollar-denominated assets and liabilities as of January 1, 2009 and December 31, 2009 and 2010:

	January 1, 2009				December 31, 2009				December 31, 2010
	U.S. Dollar		Rupiah *		U.S. Dollar		Rupiah *		U.S. Dollar		Rupiah *
Assets:
Cash and cash equivalents		370,247		4,054,207		37,114		348,875		111,782		1,005,042
Accounts receivable
Trade		112,100		1,227,495		119,730		1,125,462		115,530		1,038,726
Others		467		5,114		58,086		546,008		544		4,893
Derivative assets		59,963		656,594		23,830		224,004		7,711		69,334
Other current assets		36		397		—		—		—		—
Other current financial assets		2,223		24,339		1,686		15,850		1,715		15,418
Due from related parties		756		8,278		70		658		117		1,047
Other non-current financial assets		1,131		12,388		1,392		13,083		1,427		12,833
Total assets		546,923		5,988,812		241,908		2,273,940		238,826		2,147,293
Liabilities:
Accounts payable—trade		31,044		339,932		4,927		46,316		32,788		294,797
Procurement payable		412,301		4,514,696		310,151		2,915,419		246,615		2,217,320
Accrued expenses		32,903		360,284		32,345		304,047		46,263		415,953
Deposits from customers		1,010		11,059		841		7,907		1,477		13,275
Derivative liabilities		28,846		315,866		18,568		174,540		23,958		215,403
Other current liabilities		6,145		67,292		6,189		58,172		6,124		55,058
Other current financial liabilities		23		252		40		373		67		602
Due to related parties		1		11		—		—		—		—
Loans payable (including current maturities)		645,698		7,070,388		830,536		7,807,038		886,602		7,971,436
Bonds payable (including current maturities)		344,157		3,768,519		344,157		3,235,076		650,000		5,844,150
Other non-current liabilities		8,495		93,024		8,365		78,637		8,730		78,494
Other non-current financial liabilities		4,765		52,178		—		—		—		—
Total liabilities		1,515,388		16,593,501		1,556,119		14,627,525		1,902,624		17,106,488
Net liabilities position		968,465		10,604,689		1,314,211		12,353,585		1,663,798		14,959,195

* The exchange rates used to translate the U.S. dollar amounts into rupiah were Rp10,950 to US$1.00 (in full amounts), Rp9,400 to US$1.00 (in full amounts) and Rp8,991 to US$1.00 (in full amounts) as published by the Indonesian Central Bank as of January 1, 2009 and December 31, 2009 and 2010, respectively.

F-129

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The following table demonstrates the sensitivity to a reasonably possible change in the U.S. dollar exchange rates, with all other variables held constant, of the Company’s profit for the year:

	2008			2009			2010
Change in US dollar		6	%		-3	%		-3	%
Effect on profit for the year		(445,397	)		266,837			336,582

Management conducted a survey among the Company’s banks to determine the outlook of the U.S. dollar exchange rate until the Company’s next reporting dates of March 31, 2009, 2010 and 2011. The outlook was that the U.S. dollar exchange rate may strengthen by 6% as compared to the exchange rate at December 31, 2008 and weaken by 3% as compared to the exchange rate at December 31, 2009 and 2010, respectively.

If the U.S. dollar exchange rate strengthened by 6% and weakened by 3% as compared to the exchange rate as of December 31, 2008, 2009 and 2010, with all other variables held constant, the Companies’ profit for the years then ended and the consolidated stockholders’ equity would be Rp1,598,378, Rp1,970,735 and Rp1,161,219; and Rp17,048,039, Rp18,513,994 and Rp18,654,158, respectively, which are lower, higher and higher than the actual results as of December 31, 2008, 2009 and 2010, respectively, mainly due to the consolidated foreign exchange loss and gain on the translation of U.S. dollar-denominated net liabilities.

Equity price risk

The Companies’ long-term investments consist primarily of minority investment in the equity of private Indonesian companies and equity of foreign companies. With respect to the Indonesian companies in which the Companies have investments, the financial performance of such companies may be adversely affected by the economic conditions in Indonesia.

Credit risk

Credit risk is the risk that the Companies will incur a loss arising from their customers, clients or counterparties that fail to discharge their contractual obligations. There are no significant concentrations of credit risk. The Companies manage and control this credit risk by setting limits on the amount of risk they are willing to accept for individual or collective customers and by monitoring exposures in relation to such limits.

The Companies trade only with recognized and creditworthy third parties. It is the Companies’ policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis to reduce the exposure to bad debts.

F-130

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The table below shows the maximum exposure to credit risk for the components of the consolidated statements of financial position.

	Gross Maximum Exposure (1)						Net Maximum Exposure (2)
	January 1, 2009		December 31, 2009		December 31, 2010		January 1, 2009		December 31, 2009		December 31, 2010
Loans and receivables:
Cash and cash equivalents		5,737,866		2,835,999		2,075,270		5,737,866		2,835,999		2,075,270
Accounts receivable
Trade—net		1,340,706		1,385,125		1,548,426		1,328,003		1,385,125		1,548,426
Others—net		16,914		564,859		10,031		16,914		564,859		10,031
Other current financial assets		44,777		35,173		53,119		44,777		35,173		53,119
Due from related parties—net		42,496		7,215		8,421		42,496		7,215		8,421
Other non-current financial assets		72,800		100,004		77,675		72,800		100,004		77,675
Held-for-trading:
Cross currency swaps		655,862		224,004		69,334		655,862		224,004		69,334
Interest rate swap		732		—		—		732		—		—
Available-for-sale investments:
Other long-term investments—net		2,730		2,730		2,730		2,730		2,730		2,730
Total		7,914,883		5,155,109		3,845,006		7,902,180		5,155,109		3,845,006

⁽¹⁾ gross financial assets before taking into account any collateral held or other credit enhancements or offsetting arrangements

⁽²⁾ net financial assets after taking into account any collateral held or other credit enhancements or offsetting arrangements

Liquidity risk

The liquidity risk is defined as a risk when the cash flow position of the Companies indicates that the short-term revenue is not enough to cover the short-term expenditure.

The Companies’ liquidity requirements have historically arisen from the need to finance investments and capital expenditures related to the expansion of their telecommunications business. The Companies’ telecommunications business requires substantial capital to construct and expand mobile and data network infrastructure and to fund operations, particularly during the network development stage. Although the Companies have substantial existing network infrastructure, the Companies expect to incur additional capital expenditures primarily in order to focus cellular network development in areas they anticipate will be high-growth areas, as well as to enhance the quality and coverage of their existing network.

F-131

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

In the management of liquidity risk, the Companies monitor and maintain a level of cash and cash equivalents deemed adequate to finance the Companies’ operations and to mitigate the effects of fluctuation in cash flows. The Companies also regularly evaluate the projected and actual cash flows, including their loan maturity profiles, and continuously assess conditions in the financial markets for opportunities to pursue fund-raising initiatives. These activities may include bank loans, debt capital and equity market issues.

The table below summarizes the maturity profile of the Companies’ financial liabilities based on contractual undiscounted payments.

	Expected maturity as of January 1, 2009
	2009		2010		2011		2012		2013 and thereafter		Total		Discount/ Debt issuance cost and consent solicitation fees			Carrying value as of January 1, 2009
Financial Liabilities:
Accounts payable—trade		608,754		—		—		—		—		608,754		—			608,754
Procurement payable		6,446,357		—		—		—		—		6,446,357		—			6,446,357
Accrued expenses		1,445,238		—		—		—		—		1,445,238		—			1,445,238
Deposits from customers		32,121		—		—		—		—		32,121		—			32,121
Derivative liabilities		315,866		—		—		—		—		315,866		—			315,866
Other current financial liabilities		31,022		—		—		—		—		31,022		—			31,022
Due to related parties		—		14,699		—		—		—		14,699		—			14,699
Other non-current financial liabilities		—		45,511		—		—		—		45,511		—			45,511
Loans payable
In rupiah		474,446		670,000		679,933		2,075,000		684,300		4,583,679		(40,329	)		4,543,350
In U.S. dollar		98,023		258,127		1,448,392		1,766,509		3,499,337		7,070,388		(229,109	)		6,841,279
Total loans payable		572,469		928,127		2,128,325		3,841,509		4,183,637		11,654,067		(269,438	)		11,384,629
Bonds payable
In rupiah		56,442		640,000		1,100,000		—		4,850,000		6,646,442		(23,148	)		6,623,294
In U.S. dollar		—		2,570,480		—		1,198,039		—		3,768,519		(19,755	)		3,748,764
Total bonds payable		56,442		3,210,480		1,100,000		1,198,039		4,850,000		10,414,961		(42,903	)		10,372,058
Total financial liabilities		9,508,269		4,198,817		3,228,325		5,039,548		9,033,637		31,008,596		(312,341	)		30,696,255

F-132

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	Expected maturity as of December 31, 2009
	2010		2011		2012		2013		2014 and thereafter		Total		Discount/ Debt issuance cost and consent solicitation fees			Carrying value as of December 31, 2009
Financial Liabilities:
Accounts payable—trade		537,476		—		—		—		—		537,476		—			537,476
Procurement payable		5,289,782		—		—		—		—		5,289,782		—			5,289,782
Accrued expenses		1,525,561		—		—		—		—		1,525,561		—			1,525,561
Deposits from customers		22,463		—		—		—		—		22,463		—			22,463
Derivative liabilities		174,540		—		—		—		—		174,540		—			174,540
Other current financial liabilities		43,721		—		—		—		—		43,721		—			43,721
Due to related parties		—		13,764		—		—		—		13,764		—			13,764
Loans payable
In rupiah		993,772		1,029,933		2,625,000		984,300		1,000,000		6,633,005		(41,642	)		6,591,363
In U.S. dollar		446,487		2,509,510		1,090,597		1,992,239		1,768,204		7,807,037		(242,649	)		7,564,388
Total loans payable		1,440,259		3,539,443		3,715,597		2,976,539		2,768,204		14,440,042		(284,291	)		14,155,751
Bonds payable
In rupiah		640,000		1,100,000		41,989		1,330,000		5,020,000		8,131,989		(40,712	)		8,091,277
In U.S. dollar		2,206,622		—		1,028,454		—		—		3,235,076		(13,516	)		3,221,560
Total bonds payable		2,846,622		1,100,000		1,070,443		1,330,000		5,020,000		11,367,065		(54,228	)		11,312,837
Total financial liabilities		11,880,424		4,653,207		4,786,040		4,306,539		7,788,204		33,414,414		(338,519	)		33,075,895

F-133

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

	Expected maturity as of December 31, 2010
	2011		2012		2013		2014		2015 and thereafter		Total		Discount/ Debt issuance cost and consent solicitation fees			Carrying value as of December 31, 2010
Financial Liabilities:
Accounts payable—trade		645,505		—		—		—		—		645,505		—			645,505
Procurement payables		3,644,467		—		—		—		—		3,644,467		—			3,644,467
Accrued expenses		1,710,885		—		—		—		—		1,710,885		—			1,710,885
Deposits from customers		50,279		—		—		—		—		50,279		—			50,279
Derivative liabilities		215,403		—		—		—		—		215,403		—			215,403
Other current financial liabilities		23,127		—		—		—		—		23,127		—			23,127
Due to related parties				22,099		—		—		—		22,099		—			22,099
Loans payable
In rupiah		634,933		2,022,483		434,300		—		—		3,091,716		(25,125	)		3,066,591
In U.S. dollar		2,549,587		1,192,411		2,015,736		545,059		1,668,643		7,971,436		(187,076	)		7,784,360
Total loans payable		3,184,520		3,214,894		2,450,036		545,059		1,668,643		11,063,152		(212,201	)		10,850,951
Bonds payable
In rupiah		1,100,000		41,989		1,330,000		2,358,000		2,662,000		7,491,989		(29,353	)		7,462,636
In U.S. dollar		—		—		—		—		5,844,150		5,844,150		(94,551	)		5,749,599
Total bonds payable		1,100,000		41,989		1,330,000		2,358,000		8,506,150		13,336,139		(123,904	)		13,212,235
Total		10,574,186		3,278,982		3,780,036		2,903,059		10,174,793		30,711,056		(336,105	)		30,374,951

B. Capital Management

The Companies aim to achieve an optimal capital structure in pursuit of their business objectives, which include maintaining healthy capital ratios and strong credit ratings, and maximizing stockholder value.

Some of the Companies’ debt instruments contain covenants that impose maximum leverage ratios. In addition, the Company’s credit ratings from the international credit ratings agencies are based on its ability to remain within certain leverage ratios. The Companies have complied with all externally imposed capital requirements.

Management monitors capital using several financial leverage measurements such as debt-to-equity ratio. The Company’s objective is to maintain its debt-to-equity ratio at a maximum of 1.75, 2.50 and 2.50 as of January 1, 2009 and December 31, 2009 and 2010.

F-134

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

The Companies continue to manage their debt covenants and capital structure based on financial information determined under Indonesian GAAP. As of January 1, 2009 and December 31, 2009 and 2010, the Companies’ debt-to-equity ratio accounts are as follows:

	January 1, 2009		December 31, 2009		December 31, 2010
Long-term debts, including current maturities—gross		22,069,028		25,807,107		24,399,291
Interest-bearing procurement payable, which are overdue 6-month after the date of invoice		—		—		—
Total Debts		22,069,028		25,807,107		24,399,291
Equity attributable to owners of the Company		17,493,436		18,247,157		18,317,576
Debt-to-equity ratio		1.26		1.41		1.33

Under IFRS, the debt-to-equity ratios of the Companies are 1.26, 1.41 and 1.33 as of January 1, 2009 and December 31, 2009 and 2010, respectively, due to reconciliation difference in the equity attributable to owners of the Company.

C. Collateral

The loans of a subsidiary, Lintasarta, which were obtained from CIMB Niaga, are collateralized by all equipment (Note 7) purchased by Lintasarta from the proceeds of the credit facilities and receivables (Note 5) from frame relay operations. There are no other significant terms and conditions associated with the use of collateral.

The Company did not hold any collateral as of January 1, 2009 and December 31, 2009 and 2010.

32. ECONOMIC CONDITIONS

The operations of the Companies have been affected and may continue to be affected for the foreseeable future by the market events and economic conditions in Indonesia that are mainly characterized by volatility in currency values and interest rates, which could negatively impact economic growth. Economic improvements and recovery are dependent upon several factors, such as fiscal and monetary actions being undertaken by the Government and others, actions that are beyond the control of the Companies. The financial statements include the effects of the economic conditions to the extent they can be estimated.

33. EVENTS AFTER THE REPORTING PERIOD

a. On January 1, 2011, Lintasarta paid the last installment amounting to Rp4,933 on Investment Credit Facility 5 loan from CIMB Niaga (Note 14n).

b. On January 7, 2011 the Company paid the remaining amount of Rp41,863 on the underpayment of the Company’s 2008 and 2009 income tax article 26 based on STPs from the DGT (Note 29c). Subsequently, on April 11, 2011, the Company received letter from the Tax Office which declined the request for cancellation of such STPs. As of April 20, 2011, the Company is preparing an appeal letter to the Tax Court for such letter.

F-135

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

c. On January 11, 2011 and February 9, 2011, the Company agreed to amend the latest interconnection agreements with Telkom and Bakrie Telcom, respectively, to meet the requirement in the BRTI letter No. 227/BRTI/XII/2010 dated December 31, 2010 regarding the implementation of new interconnection tariff in 2011.

d. On January 20, 2011, the Company’s Board of Directors issued Directors’ Decree No. 003/Direksi/2011 regarding the Organizational Restructuring Program through an offering program on the basis of mutual agreement between the Company and certain employees (Voluntary Separation Scheme), that became effective on the same date. Under IAS 37, “Provisions, Contingent Liabilities and Contingent Assets”, the Company is required to disclose the total number of employees who participate in the program and the compensation paid. However, the Company did not disclose such required information in the consolidated financial statements, as the Company believes it could affect the precipitate presumption on the outcome of the program, since the Company currently still offers such program to its employees.

e. On February 4, 2011, the Company and Dayamitra Telekomunikasi (“Mitratel”) entered into a Tower Lease Agreement. Mitratel may sub-lease the Company’s tower to Telkom and Telkomsel with additional infrastructure at Mitratel’s cost.

f. On February 8, 2011, the Company held an Extraordinary General Meeting of Stockholders approving the changes in the composition of the Company’s Board of Commissioners (until the closing of the Annual General Meeting in 2012) and Board of Directors (until the closing of the Annual General Meeting in 2015).

g. On February 10, 2011, the Company entered into a Revolving Time Loan facility agreement with BCA covering a maximum amount of Rp1,000,000 to fund the Company’s capital expenditure and/or for general corporate purposes. This facility will be available from February 10, 2011 to February 10, 2014 and drawdowns bear interest at 1-month JIBOR plus 1.4% per annum.

h. On February 10, 2011 and March 11, 2011, SKAGEN AS increased its ownership in the Company to 5.15% and 9.38%, respectively.

i. On February 10, 2011, the Company agreed to lease part of its telecommunications towers and sites to PT First Media Tbk (FM) for a period of 5 years. FM is required to pay the lease and maintenance fees in advance on a semi-annual basis.

j. On February 24, 2011, the Company received letter No. MPK-161/SP.51/II/2011 from the Tax Court regarding the re-evaluation of the Tax Court’s decision letter on its acceptance of the Company’s remaining objection on its 2005 corporate income tax, which was previously released on October 29, 2010 (Note 6).

k. On February 28, 2011, the Company paid the second installment of SEK credit facility B amounting to US$11,071.43 (Note 14d).

l. On February 28, 2011, Lintasarta paid the loan installment of CIMB Niaga Investment Credit Facility 6 amounting to Rp7,500 (Note 14l).

m. On March 3, 2011, the Company and XL Axiata entered into the latest amendment of interconnection agreement in order to meet the implementation of new interconnection charge for the year 2011.

n. On March 3, 2011, the Company and Hutchison entered into the latest amendment of interconnection agreement in order to meet the implementation of new interconnection charge for the year 2011.

F-136

PT INDOSAT Tbk AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as of January 1, 2009 and December 31, 2009 and 2010

and for the years ended December 31, 2008, 2009 and 2010

(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)

o. On March 9 and 30, 2011, IMM made the first and second capital injections, respectively to its newly established subsidiary, PT Interactive Vision Media (“IVM”), totalling Rp4,999 which is equal to 99.98% ownership. IVM will engage in Pay TV business.

p. On March 29, 2011, the Company paid the third semi-annual installments of its COFACE and SINOSURE facilities from HSBC France amounting to US$7,859.34 and US$2,210, respectively.

q. On March 30, 2011, the Company drew down US$60,000 from the SEK credit facility C (Note 14d).

r. As of April 20, 2011, the prevailing exchange rate of the rupiah to U.S. dollar is Rp8,657 to US$1 (in full amounts), while as of December 31, 2010, the prevailing exchange rate was Rp8,991 to US$1 (in full amounts). Using the exchange rate as of April 20, 2011, the Companies earned foreign exchange gain amounting to approximately Rp555,708 (excluding the effect of revaluing derivative contracts on April 20, 2011) on the foreign currency liabilities, net of foreign currency assets, as of December 31, 2010 (Note 31).

The translation of the foreign currency liabilities, net of foreign currency assets, should not be construed as a representation that these foreign currency liabilities and assets have been, could have been, or could in the future be, converted into rupiah at the prevailing exchange rate of the rupiah to U.S. dollar as of December 31, 2010 or at any other rate of exchange.

The commitments for the capital expenditures denominated in foreign currencies as of December 31, 2010 as disclosed in Note 29a are approximately Rp779,260 if translated at the prevailing exchange rate as of April 20, 2011.

F-137

EX-4.2

Exhibit 4.2

Interconnection Agreement between PT Telekomunikasi Seluler (“Telkomsel”) and PT Indosat, Tbk (“Indosat”) as stipulated in Cooperation Agreement in Interconnection between Indosat and Telkomsel on Interconnection between Telkomsel’s Cellular Mobile Network and Indosat’s Fixed Local Telecommunication Network No. 1522/LG.05/PD-00/VII/2007, No. 006/C00-CC0/LGL/2007 dated July 30^th, 2007, and its Amendments as stipulated in First Amendment No. AMD.2283/LG.05/PD-00/XII/2007, No. 029/C00-CC0/LGL/07 dated December 19^th, 2007, the Second Amendment No. AMD.339/LG.05/PD-00/III/2008, No. 004/C00-CC0/LGL/08 dated March 3^rd, 2008 and the Third Amendments No.Telkomsel: 1762/LG.05/PD-00/XI/2010 and No. Indosat: 011/C00-C0AA/LGL/10.dated November 1^st, 2010.

The Parties:

1. Telkomsel; and

2. Indosat

Scope of the Agreement:

Interconnection between Telkomsel Cellular Mobile Network with Indosat Fixed Local Telecommunication Network, so that customers of each Party may make or receive interconnection calls.with the terms and condition set out in this agreement and its amendments.

Period of Agreement:

This Agreement is valid for two (2) years as from August 1^st, 2007 until July 31^st, 2009.

Rights and Obligations of the Parties:

Rights and obligations of Indosat:

1. Provide infrastructure that connect to Telkomsel DDF at POI location use for canalized outgoing international traffic from and to Telkomsel network;

2. Manage whole Indosat network;

3. Keeping the perform and Interconnection quality service in Indosat network;

1. Receive payments from Telkomsel and pay Telkomsel for interconnection tariff and other expenses arising from this Agreement;

2. Earn interconnection quality service;

3. Responsible for anything include but not limited to customer complain throughout Indosat network.

Limitation for the Parties:

Each party is prohibited to conduct or let the occurrence of fraud in the form of technical engineering, administrative engineering and/or any other fraud.

The aforementioned technical engineering, administrative engineering and/or fraud shall include but not limited to:

1. Creating dummy numbers without the other party justification;

2. Changing, amending, adding and/or lessening the information/digit on the signaling system between the telecommunication network without any reason that can be justified by the other party;

3. Add and/or remove data/information in CDR.

1

Termination of Agreement:

The Parties agree to waive the application of Article 1266 and 1267 of the Indonesian Civil Code so that a Party can unilaterally terminate the Agreement by providing a written notice not later than three (3) month before the date of termination intended.

Assignment of Agreement:

No party shall sell, assign or transfer this Agreement, in part or in whole, to any third party.

Governing Law:

The laws of Indonesia.

Dispute Settlement:

The Parties agree to amicably settle any dispute arising with relation to this Agreement and if the Parties fail to reach such an amicable settlement within twenty (20) days, the dispute shall settle by BRTI, if BRTI fail to provide solution, then the dispute will be referred to the BANI for settlement.

2

EX-4.3

Exhibit 4.3

Interconnection Agreement between PT Telekomunikasi Seluler (“Telkomsel”) and PT Indosat, Tbk (“Indosat”) as stipulated in Cooperation Agreement in Interconnection between Indosat and Telkomsel on Interconnection between Telkomsel’s Cellular Mobile Network and Indosat’s Cellular Mobile Network Network No. Telkomsel: 2216/LG.05/PD-00/XII/2007 and No Indosat: 014/C00-CC0/LGL/07 dated December 19^th, 2007, and its Amendments as stipulated in First Amendment No. Telkomsel AMD.233/LG.05/PD-00/II/2008 and No. Indosat: 003/C00-CC0/LGL/08 dated February 18^th, 2008, the Second Amendment No. Telkomsel 1392/LG.05/PD-00/IX/2010 and No Indosat: 009/C00-C0AA/LGL/10 dated September 7^rd, 2010.

The Parties:

1. Telkomsel; and

2. Indosat

Scope of the Agreement:

Interconnection between Telkomsel Cellular Mobile Network with Indosat Cellular Mobile Network, so that customers of each Party may make or receive interconnection calls.with the terms and condition set out in this agreement and its amendments.

Period of Agreement:

This Agreement is valid for two (2) years, which in effect as of December 1^st, 2007 until November 30^th, 2009 and can be extended automatically for two (2) years periods.

Rights and Obligations of the Parties:

Rights and obligations of Indosat:

1. Provide infrastructure that connect to Telkomsel DDF at POI location use for canalized outgoing international traffic from and to Telkomsel network;

2. Manage whole Indosat network;

3. Keeping the perform and Interconnection quality service in Indosat network;

1. Receive payments from Telkomsel and pay Telkomsel for interconnection tariff and other expenses arising from this Agreement;

2. Earn interconnection quality service;

3. Responsible for anything include but not limited to customer complain throughout Indosat network.

Limitation for the Parties:

Each party is prohibited to conduct or let the occurrence of fraud in the form of technical engineering, administrative engineering and/or any other fraud.

The aforementioned technical engineering, administrative engineering and/or fraud shall include but not limited to:

1. Creating dummy numbers without the other party justification;

2. Changing, amending, adding and/or lessening the information/digit on the signaling system between the telecommunication network without any reason that can be justified by the other party;

3. Add and/or remove data/information in CDR.

1

Termination of Agreement:

The Parties agree to waive the application of Article 1266 and 1267 of the Indonesian Civil Code so that a Party can unilaterally terminate the Agreement by providing a written notice not later than three (3) month before the date of termination intended.

Assignment of Agreement:

No party shall sell, assign or transfer this Agreement, in part or in whole, to any third party.

Governing Law:

The laws of Indonesia.

Dispute Settlement:

The Parties agree to amicably settle any dispute arising with relation to this Agreement and if the Parties fail to reach such an amicable settlement within twenty (20) days, the dispute shall settle by BRTI, if BRTI fail to provide solution, then the dispute will be referred to the BANI for settlement.

2

EX-4.4

Exhibit 4.4

Interconnection Agreement between PT Telekomunikasi Indonesia (“Telkom”) and PT Indosat, Tbk (“Indosat”) as stipulated in Cooperation Agreement in Interconnection between Telkom and Indosat on Interconnection between Jartap Telkom (Telkom Fixed Network) and Jarbersel Indosat (Indosat Cellular Mobile Network) No. 145/HK.810/DCI-A1000000/2007, No. 0002/C00-CC0/LGL/2007 dated December 18^th, 2007, and its Amendments as stipulated in First Amendment No Telkom 47/HK.820/DCI-A1000000/2008 - No Indosat 021/C00-CC0/LGL/2008 dated March 31th 2008 and Second Amendments No Telkom 123/HK.820/DCI-A1000000/2009–No.Indosat007/C00-C0A/LGL/2009 dated December 30^th,2009 and the Third Amendments as stipulated in the form of Mutual Office Minutes No Telkom Tel.024/YN.000/DCI-A1050000/2011 – No Indosat 003/C00-C0H/LGL/2011 dated January 31th, 2011 (“Agreement”).

The Parties:

1. Telkom; and

2. Indosat

Scope of the Agreement:

The Parties agree to interconnect Telkom Fixed Network with Indosat Cellular Mobile Network, so that customers of each Party may make or receive interconnection including canalize interconnection in different types of telecommunication services and telecommunication network between the Parties, and pursuant to the requirement of BRTI’s letter No. 227/BRTI/XII/2010 dated on December 31th, 2010 concern implementation of Interconnection Cost of 2011 in effect as of January 1^st, 2011, and referred to the article 38 of Interconnection Agreement, the third amendment made in the form of Mutual Office Minutes, including to implement the new interconnection tariff, its respective call scenario and to changes interconnection cost of basic telephony.

Period of Agreement:

This Agreement is valid for two (2) years as from January 1^st, 2008 until December 31^st, 2010 and can be extended before the expiration based on the agreement of Parties.

Rights and Obligations of the Parties:

Rights and obligations of Indosat:

1. Conducting the interconnection billing process for interconnection settlement;

2. Implement provisions in agreed billing mechanism and invoicing, associated with Telkom access / services by Indosat cellular subscriber or Indosat access / services by Telkom fixed subscriber.

3. Receive payments from Telkom and pay Telkom for interconnection tariff and other expenses arising from this Agreement;

Limitation for the Parties:

Each party is prohibited to :

4. Conduct or let the occurrence of fraud in the form of technical engineering, administrative engineering and/or any other fraud;

5. Conduct technical interference that can jeopardize safety of people;

6. Material breach to the Agreement;

1

Termination of Agreement:

The Parties agree to waive the application of Article 1266 of the Indonesian Civil Code so that a Party can unilaterally terminate the Agreement by providing a written notice not later than three (3) month before the date of termination intended.

Assignment of Agreement:

No party shall sell, assign or transfer this Agreement, in part or in whole, to any third party without written concern of the other party.

Governing Law:

The laws of Indonesia.

Dispute Settlement:

The Parties agree to amicably settle any dispute arising with relation to this Agreement and if the Parties fail to reach such an amicable settlement within twenty (20) days, the dispute shall settle by MENKOMINFO, if MENKOMINFO fail to provide solution, then the dispute will be referred to the BANI for settlement.

2

EX-4.5

Exhibit 4.5

Interconnection Agreement between PT Telekomunikasi Indonesia Tbk (“Telkom”) and PT Indosat Tbk (“Indosat”) as stipulated in Cooperation Agreement in Interconnection between Telkom’s Fixed Telecommunication Network and Indosat’s Fixed Telecommunication Network No. Telkom 139/HK.820/DCI-A1000000/2007 – No. Indosat: 004/C00-CC0/LGL/2007 dated December 18^th, 2007 and its Amendments as stipulated in First Amendment No Telkom 48/HK.820/DCI-A1000000/2008 - No Indosat 020/C00-CC0/LGL/2008 dated March 31th, 2008 and Second Amendments No Telkom 125/HK.820/DCI-A1000000/2009 – No Indosat 006/C00-COA/LGL/2009 dated December 30^th, 2009 and the Third Amendments as stipulated in the form of Mutual Office Minutes No Telkom Tel.025/YN.000/DCI-A1050000/2011 – No Indosat 002/C00-C0H/LGL/2011 January 31th, 2011.

The Parties:

1. Telkom; and

2. Indosat.

Scope of The Mutual Office Minutes:

The Parties agree to interconnect Telkom Fixed Network with Indosat Fixed Network, so that customers of each Party may make or receive interconnection including canalize interconnection in different types of telecommunication services and telecommunication network between the Parties.

The Parties intends to amendment the Interconnection agreement which pursuant to the requirement of BRTI’s letter No. 227/BRTI/XII/2010 dated on December 31th, 2010 concern implementation of Interconnection Cost of 2011 in effect as of January 1^st, 2011, and referred to the Article 38 of Interconnection Agreement, this amendment made in the form of Mutual Office Minutes.

In relation with the statement above, the Parties agreed to changes block numbering of both parties, changes interconnection Tariff of basic telephony and to implement new interconnection tariff.

Period of Agreement:

This Agreement is valid for two (2) years as from January 1^st, 2008 until December 31^th, 2010 and can be extended before the expiration based on the agreement of Parties.

1

EX-4.6

Exhibit 4.6

Tower Leased Agreement between PT Hutchison CP Telecommunications (‘HCPT”) and PT Indosat Tbk (“Indosat”), No. HCPT: 042/LGL-AGR-Tower/PT Indosat Tbk/BH-MM/Tech/I/10 and No. Indosat: 016/C00-C0DC/LGL/10 dated January 29^th, 2010.

The Parties:

1. HCPT; and

2. Indosat

Scope of The Agreement

This agreement was made to comply with the Minister of Communication and Information Regulation No. 02/PER/M.KOMINFO/3/2008 Juncto a Joint Decree of Minister of Communication and Information, Minister of Internal Affairs, Minister of Public Work and Head of Coordination Investment Board concerning Guidelines For Construction And Utilization Of Joint Telecommunication Towers, which in this case HCPT intends to lease towers of Indosat at Basic Service (in this services Indosat’s not provide Civil Mechanical Electrical).

Period of Agreement:

This Agreement will be in effect since the initial application form submitted by HCPT, will be held for Twelve (12) years and can be extend minimum for Six (6) years period, unless HCPT intends to terminated the agreement with a prior written notice form within one (1) month before the end of the agreement.

Rights and Obligations of the Parties:

1. To provide lease land and tower to installation HCPT’s equipments.

2. To resolve community issue which happened during the lease period

3. Receive payments from HCPT for utilize Indosat towers and other expenses arising from this agreement.

Limitation for The Parties:

1. Signal and/or physical interference to the equipments which causes by building construction, installation, operations and or maintenance to the tower.

2. Breach the terms and condition of the contract and/or the prevailing laws.

3. To multiply and/or combine its signal which was not agreed by Indosat.

Termination of Agreement:

The Parties agreed to waive the application of article 1266 of the indonesian civil code so that a party can unilaterally terminate the agreement. this agreement can be terminated if the lease periods was terminated and can not extended by the parties and/or since the signing of the agreement.

Assignment of Agreement:

No party shall sell, assign or transfer the agreement, in part or in whole, to any third party without written concent of the other party.

1

Governing Laws:

The laws of Indonesia.

Dispute Settlement:

The Parties agree to amicably settle any dispute arising with relation to the agreement and if the parties fail to reach an amicable settlement within sixty (60) days, the dispute shall settle will referred to Indonesian National Arbitration Board (BANI) for settlement.

2

EX-4.7

Exhibit 4.7

Tower Leased Agreement between PT Indosat Tbk (“Indosat”) and PT Natrindo Telepon Seluler (“NTS”) as stipulated in Cooperation Agreement on Tower Lease between Indosat and NTS No. 149/C00-C0D/LGL/10, 166/JKT-NTS/IV/2010 dated
April, 15^th, 2010.

The Parties:

1. Indosat; and

2. NTS

Scope of the Agreement:

This Agreement was made to comply with the Minister of Communication and Information Regulation No. 02/PER/M.KOMINFO/3/2008 Juncto a Joint Decree of Minister of Communication and Information, Minister of Internal Affairs, Minister of Public Work and Head of Coordination Investment Board concerning Guidelines For Construction And Utilization Of Joint Telecommunication Towers, which in this case NTS intends to lease towers of Indosat at Basic Service to placed its telecommunication device (in this services Indosat’s not provide Civil Mechanical Electrical).

Period of Agreement:

This Agreement will be in effect since the initial application form submitted by NTS, will be held for Ten (10) years and can be extended which outlined in Application Lease form that submitted by NTS to Indosat within ninety (90) days before the end of the Agreement, unless NTS intends to terminated the agreement with a prior written notice form within ninety (90) days before the end of the agreement.

Rights and Obligations of the Parties:

4. To Provide lease land and tower, thereafter NTS can be install its equipments.

5. To resolve community issue which happened during the lease period

6. Receive payments from NTS for utilize Indosat towers and other expenses arising from this Agreement.

Limitation for the Parties:

Each party is prohibited to :

1. Signal and/or Physical Interference to the equipments which causes by building construction, installation, operations and or maintenance to the Tower.

2. Breach the terms and condition of the contract and/or the prevailing laws.

3. To multiply and/or combine its signal which was not agreed by Indosat.

Termination of Agreement:

The Parties agreed to waive the application of article 1266 of the Indonesian Civil Code so that a Party can unilaterally terminate the agreement. this agreement can be terminated if the lease periods was terminated and can not extended by the parties and/or since the signing of the Agreement.

1

Assignment of Agreement:

No party shall sell, assign or transfer the agreement, in part or in whole, to any third party without written concent of the other party.

Governing Laws:

The laws of Indonesia.

Dispute Settlement:

The Parties agree to amicably settle any dispute arising with relation to the Agreement and if the parties fail to reach an amicable settlement within sixty (60) days, the dispute shall settle will referred to Indonesian National Arbitration Board (BANI) for settlement.

2

EX-4.8

Exhibit 4.8

Tower Leased Agreement between PT XL Axiata Tbk (‘XL”) and PT Indosat Tbk (“Indosat”), No. XL: 2078.A/XXVII.A.6169/XL/V/2010 and No. Indosat: 226/C00-C0D/LGL/10 dated May 24^th, 2010.

The Parties:

1. XL; and

2. Indosat

Scope of the Agreement:

This Agreement was made to comply with the Minister of Communication and Information Regulation No. 02/PER/M.KOMINFO/3/2008 Juncto a Joint Decree of Minister of Communication and Information, Minister of Internal Affairs, Minister of Public Work and Head of Coordination Investment Board concerning Guidelines For Construction And Utilization Of Joint Telecommunication Towers, which in this case XL intends to lease towers of Indosat at Basic Service to placed its telecommunication device (in this case Indosat’s not provide Civil Mechanical Electrical).

Period of Agreement:

This Agreement will be in effect since the initial application form submitted by XL, will be held for Ten (10) years and can be extend minimum for Five (5) years period, unless XL intends to terminated the agreement with a prior written notice form within one hundred and twenty (120) days before the end of the agreement.

Rights and Obligations of the Parties:

1. To Provide lease land and tower, thereafter XL can be install its equipments.

2. To resolve community issue which happened during the lease period

3. Receive payments from XL for utilize Indosat towers and other expenses arising from this Agreement.

Limitation for the Parties:

Each party is prohibited to:

1. Signal and/or Physical Interference to the equipments which causes by building construction, installation, operations and or maintenance to the Tower.

2. Breach the terms and condition of the contract and/or the prevailing laws.

3. To multiply and/or combine its signal which was not agreed by Indosat.

Termination of Agreement:

The Parties agreed to waive the application of article 1266 of the Indonesian Civil Code so that a party can unilaterally terminate the agreement. this agreement can be terminated if the lease periods was terminated and can not extended by the parties and/or since the signing of the agreement.

Assignment of Agreement:

No party shall sell, assign or transfer the agreement, in part or in whole, to any third party without written concent of the other party.

1

Governing Laws:

The laws of Indonesia.

Dispute Settlement:

The Parties agree to amicably settle any dispute arising with relation to the agreement and if the parties fail to reach an amicable settlement within sixty (60) days, the dispute shall settle will referred to Indonesian National Arbitration Board (BANI) for settlement.

2

EX-4.9

Exhibit 4.9

Tower Leased Agreement between PT Berca Global Access (‘BERCA”) and PT Indosat Tbk (“Indosat”), No. BERCA: 017/BGA-PKS/0306/2010 and No. Indosat: 289/C00-C0D/LGL/10 dated June 03^th, 2010.

The Parties:

1. BERCA; and

2. Indosat

Scope of The Agreement

This Agreement was made to comply with the Minister of Communication and Information Regulation No. 02/PER/M.KOMINFO/3/2008 Juncto a Joint Decree of Minister of Communication and Information, Minister of Internal Affairs, Minister of Public Work and Head of Coordination Investment Board concerning Guidelines For Construction And Utilization Of Joint Telecommunication Towers, which in this case BERCA intends to lease towers of Indosat at Basic Service (in this services Indosat’s not provide Civil Mechanical Electrical).

Period of Agreement:

This agreement will be in effect since the initial application form submitted by BERCA, will be held for Ten (10) years and can be extend minimum for Six (6) years period, unless BERCA intends to terminated the agreement with a prior written notice form within one (1) month before the end of the agreement.

Rights and Obligations of the Parties:

1. To provide lease land and tower to installation BERCA’s equipments.

2. To resolve community issue which happened during the lease period

3. Receive payments from BERCA for utilize Indosat towers and other expenses arising from this Agreement.

Limitation for The Parties:

1. Signal and/or Physical Interference to the equipments which causes by building construction, installation, operations and or maintenance to the Tower.

2. Breach the terms and condition of the contract and/or the prevailing laws.

3. To multiply and/or combine its signal which was not agreed by Indosat.

Termination of Agreement:

The Parties agreed to waive the application of article 1266 of the Indonesian Civil Code so that a Party can unilaterally terminate the Agreement. This Agreement can be terminated if the lease periods was terminated and can not extended by the Parties and/or since the signing of the Agreement.

Assignment of Agreement:

No party shall sell, assign or transfer the Agreement, in part or in whole, to any third party without written concent of the other party.

1

Governing Laws:

The laws of Indonesia.

Dispute Settlement:

The Parties agree to amicably settle any dispute arising with relation to the Agreement and if the parties fail to reach an amicable settlement within sixty (60) days, the dispute shall settle will referred to Indonesian National Arbitration Board (BANI) for settlement.

2

EX-4.10

Exhibit 4.10

Tower Leased Agreement between PT Dayamitra Telekomunikasi (‘Mitratel”) and PT Indosat Tbk (“Indosat”), No. Mitratel: 90/PKS/DMT-CEO/II/2011 and No. Indosat: 129/C00-C0D/LGL/11 dated February 4^th, 2011.

The Parties:

1. Mitratel; and

2. Indosat

Scope of The Agreement

This Agreement was made to comply with the Minister of Communication and Information Regulation No. 02/PER/M.KOMINFO/3/2008 Juncto a Joint Decree of Minister of Communication and Information, Minister of Internal Affairs, Minister of Public Work and Head of Coordination Investment Board concerning Guidelines For Construction And Utilization Of Joint Telecommunication Towers, which in this case Mitratel intends to lease towers of Indosat at Basic Service (without Civil Mechanical Electrical) and reserve the right to re-lease it to TELKOM Group (“Tenants”) with a Full Service methods (plus Civil Mechanical Electrical).

Period of Agreement:

This Agreement will be in effect since the initial application form submitted by Mitratel, will be held for Ten (10) years and can be extend minimum for Five (5) years period based on mutual consent of the Parties .

Rights and Obligations of the Parties:

1. To protect and/or repair the tower from damages which causes by failure construction and/or malfunction.

2. To resolve community issue which happened during the lease period

3. Receive payments from Mitratel for utilize Indosat towers and other expenses arising from this Agreement.

Limitation for The Parties:

1. Signal and/or Physical Interference to the equipments which causes by building construction, installation, operations and or maintenance to the Tower.

2. Breach the terms and condition of the contract and/or the prevailing laws.

3. To lease the Tower to the others tenants in addition to Telkom Group.

4. To multiply and/or combine its signal which was not agreed by Indosat.

Termination of Agreement:

The Parties agreed to waive the application of article 1266 of the Indonesian Civil Code so that a Party can unilaterally terminate the Agreement. This Agreement can be terminated if the lease periods was terminated and can not extended by the Parties and/or since the signing of the Agreement.

Assignment of Agreement:

No party shall sell, assign or transfer the agreement, in part or in whole, to any third party without written concent of the other party.

1

Governing Laws:

The laws of Indonesia.

Dispute Settlement:

The Parties agree to amicably settle any dispute arising with relation to the Agreement and if the parties fail to reach an amicable settlement within sixty (60) days, the dispute shall settle will referred to Indonesian National Arbitration Board (BANI) for settlement.

2

EX-4.11

Exhibit 4.11

Memorandum of Agreement between PT First Media Tbk (‘FM”) and PT Indosat Tbk (“Indosat”), No. FM: PK-037/CSL/INDOSAT/II/11 and No.Indosat: 174/C00-C0D/LGL/11 dated February 10, 2011

The Parties:

1. FM; and

2. Indosat

Scope of The Memorandum of Agreement

This memorandum of agreement was made to comply with the Minister of Communication and Information Regulation No. 02/PER/M.KOMINFO/3/2008 Juncto a Joint Decree of Minister of Communication and Information, Minister of Internal Affairs, Minister of Public Work and Head of Coordination Investment Board concerning Guidelines For Construction And Utilization Of Joint Telecommunication Towers, which in this case FM lease the Company’s Tower in Full Services. In such Full Services methods, the Company shall provide Civil Mechanical Electrical to support the functions of FM network equipments.

Period of Memorandum of Agreement:

The periods of this memorandum of agreement will effect from since the Installation permits submitted by FM, will be held for Five (5) years and can be extend minimum for Five (5) years period based on mutual consent of the Parties.

Rights and Obligations of the Parties:

1. Provide Civil Mechanical Electrical in accordance with the terms and conditions in memorandum of agreement;

2. Received and making payment for utilize the towers and other expenses arising from the memorandum of agreement.

Termination of Memorandum of Agreement:

The Parties agreed to waive the application of article 1266 of the Indonesian Civil Code so that a Party can unilaterally terminate the agreement. this memorandum of agreement can be terminated if the lease periods was terminated and can not extended by the parties and/or since the signing of the master lease agreement.

Assignment of Memorandum of Agreement:

No party shall sell, assign or transfer the memorandum of agreement, in part or in whole, to any third party without written concent of the other party.

Governing Laws:

The laws of Indonesia.

Dispute Settlement:

The Parties agree to amicably settle any dispute arising with relation to the memorandum of agreement and if the parties fail to reach an amicable settlement within sixty (60) days, the dispute shall settle will referred to Indonesian National Arbitration Board (BANI) for settlement.

1

EX-7.1

Exhibit 7.1

INDOSAT Financial Covenants

As of 31 December 2010 - Using the Indonesian GAAP audited figures

Set forth below are calculations of our historical financial ratios that are contained in our financial covenants under Indonesian GAAP as required by our debt agreements:

Bond/ Loan	Ratio	Requirement		Period	Result 2010		Summary of Data
Second Indosat Bonds Series B, Fourth Indosat Bonds and Syari’ah Ijarah Bonds, Fifth Indosat Bonds and Second Syari’ah Ijarah Bonds, Sixth Indosat Bonds and Third Syari’ah Ijarah Bonds, Seventh Indosat Bonds and Fourth Syari’ah Ijarah Bonds	Debt to EBITDA		< 3.50	Relevant period(1)		2.53	Total Debt	24,399,291
	EBITDA to Interest Payment		> 3.00	Relevant period(1)		4.63	Equity	18,236,486
							Interest Expense	2,080,274
	Consolidated Equity		> IDR 5T	at any time		18,236,486	EBITDA	9,625,855
	Debt to Equity		< 2.50	at any time		1.34
Guaranteed Notes due 2020	Consolidated Debt to EBITDA		< 4.00	Quarterly		2.50	Consolidated Debt(2)	24,399,291
							EBITDA(3)	9,767,557
FEC Facility	Debt to EBITDA		< 3.50	Relevant period(1)		2.53	Total Debt	24,399,291
							Equity	18,236,486
	EBITDA to Interest Expense		> 3.00	Relevant period(1)		4.63	Interest Expense	2,080,274
							EBITDA	9,625,855
	Debt to Equity		< 2.50	Quarterly		1.34
HSBC Satellite Financing	Consolidated Equity		> IDR 5T	Quarterly		18,236,486	Total Debt	24,399,291
							Equity	18,236,486
	Debt to EBITDA		< 3.50	Relevant period(1)		2.53	Interest Expense	2,080,274
							EBITDA	9,625,855
	EBITDA to Interest Expense		> 2.50	Relevant period(1)		4.63
	Debt to Equity		< 2.50	Quarterly		1.34
ING/DBS Syndicated Loan Facility	Debt to EBITDA		< 3.50	Relevant period(1)		2.53	Total Debt	24,399,291
							Equity	18,236,486
	EBITDA to Interest Expense		> 2.50	Relevant period(1)		4.63	Interest Expense	2,080,274
							EBITDA	9,625,855
	Debt to Equity		< 2.50	Quarterly		1.34
Mandiri Loan and BCA Loan Facilities	Debt to EBITDA		< 3.50	Relevant period(1)		2.53	Total Debt	24,399,291
							Equity	18,236,486
	EBITDA to Interest Payment		> 3.00	Relevant period(1)		4.63	Interest Expense	2,080,274
							EBITDA	9,625,855
	Debt to Equity		< 2.50	Quarterly		1.34
SEK Loan Facility Guaranteed by EKN	Consolidated Equity		> IDR 5T	Quarterly		18,236,486	Total Debt	24,399,291
							Equity	18,236,486
	Debt to EBITDA		< 3.50	Relevant period(1)		2.53	Interest Expense	2,080,274
							EBITDA	9,625,855
	EBITDA to Interest Expense		> 2.50	Relevant period(1)		4.63
	Debt to Equity		< 2.50	Quarterly		1.34

1

(1) Based on the loan/bonds agreements, “relevant period” means each period of twelve (12) months ending on the last day of the Borrower’s financial year and each period of twelve (12) months ending on the last day of each of the first three quarters of the Borrower’s financial year.

(2) Consolidated debt based on Guaranteed Notes Due 2020 define as:

Debt means, with respect to any person on any date of determination (without duplication):

(a) the principal of and premium (if any) in respect of:

(1) debt of such person for money borrowed; and

(2) debt evidence by notes, debentures, bonds or other similar instruments for the payment of which such person is responsible or liable;

(b) all capital lease obligations of such person and all attributable debt in respect of sale and leaseback transaction entered into by such person;

(c) all obligations of such person issued or assumed as the deferred purchase price of property or services, all conditional sale obligations of such person and all obligations of such person under any title retention agreement (but excluding trade accounts payable, accrued commissions and other similar accrued current liabilities arising in the ordinary course of business that, in each instance, are (i) not more than 120 days overdue or (ii) are being contested in good faith by such person; provided that, with respect to such contested current liabilities that are also more than 120 days overdue, this exclusion shall apply only to the actual portion of such liabilities that are in dispute);

(d) all obligations of such person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (a) through (c) above) entered into in the ordinary course of business of such person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third business day following receipt by such person of a demand for reimbursement following payment on the letter of credit);

(e) the amount of all obligations of such person with respect to the repayment of any disqualified stock or, with respect to any subsidiary of such person, any preferred stock (but excluding, in each case, any accrued dividends);

(f) all obligations of the type referred to in clauses (a) through (e) of other persons and all dividends of other persons for the payment of which, in either case, such person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any guarantee;

(g) all obligations of the type referred to in clauses (a) through (f) of other persons secured by any lien on any property of such person (whatever or not such obligation is assumed by such person), the amount of such obligation being deemed to be the lesser of the value of such property or the amount of the obligation so secured; and

(h) to the extent not otherwise included in this definition, hedging obligations of such person; and

(i) all amounts raised under any Islamic financing transaction, including permitted Islamic financing obligations;

provided that debt shall not include: (i) procurement payables that are non-interest bearing if such procurement payables have a maturity date of six months of less; or (ii) permitted shareholder loan debt.

The amount of debt of any person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. The amount of debt represented by a hedging obligation shall be equal to:

(1) zero, if such hedging obligation has been incurred pursuant to clauses (v) or (vi) of the second paragraph of the covenant described under “Certain Covenants - Limitation on Debt;” or

(2) the notional amount of such hedging obligation if not incurred pursuant to any of such clauses.

(3) EBITDA based on Guaranteed Notes Due 2020 define as:

for any period, an amount equal to, for the parent and its consolidated restricted subsidiaries:

(a) the sum of consolidated net income for such period, plus the following to the extent reducing consolidated net income for such period:

(1) the provision of taxes based on income or profits or utilized in computing net loss;

(2) Consolidated interest expense;

(3) depreciation;

(4) amortization of intangibles; and

(5) any other non-cash items (other than any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period); minus

(b) all non cash items increasing consolidated net income for such period (other than any such non-cash item to the extent that it will result in the receipt of cash payments in any future period).

EBITDA for the relevant four fiscal quarter period shall be calculated after giving pro forma effect to such Asset Sale, Investment or acquisition as if such Asset Sale, Investment or acquisition occurred on the first day of such period

2

EX-8.1

Exhibit 8.1

LIST OF OUR SUBSIDIARIES

Name of Subsidiary	Location	Principal activity	Start of Commercial Operations		Ownership Percentage
					2010		2009		2008		2007
Indosat International Finance Company B.V	The Netherlands	Finance		2005		100.00		100.00		100.00		100.00
Indosat Finance Company B.V	The Netherlands	Finance		2003		100.00		100.00		100.00		100.00
Satelindo International Finance B.V(1)	The Netherlands	Finance		1996		—		—		—		100.00
Indosat Palapa Company B.V.(2)	The Netherlands	Finance		2010		100.00		—		—		—
Indosat Mentari Company B.V.(2)	The Netherlands	Finance		2010		100.00		—		—		—
Indosat Singapore Pte Ltd	Singapore	Telecommunications		2005		100.00		100.00		100.00		100.00
PT Satelindo Multi Media(3)	Indonesia	Multimedia		1999		—		99.60		99.60		99.60
PT Aplikanusa Lintasarta	Indonesia	Data Communication		1989		72.36		72.36		72.36		72.36
PT Artajasa Pembayaran Elektronis(4)	Indonesia	Telecommunications		2000		39.80		39.80		39.80		39.80
PT Lintas Media Danawa(5)	Indonesia	Telecommunications		2008		50.65		25.33		25.33		—
PT Indosat Mega Media	Indonesia	Multimedia		2001		99.85		99.85		99.85		99.85
PT Starone Mitra Telekomunikasi(6)	Indonesia	Telecommunications		2007		72.54		72.54		72.54		55.36
PT Multi Media Asia Indonesia	Indonesia	Multimedia		1997		26.67		26.67		26.67		26.67
Asean Telecom Holding Sdn Bhd	Malaysia	Holding		1995		14.24		14.24		14.24		14.24
Acasia Communictions Sdn Bhd	Malaysia	Telecommunications		1995		12.80		12.80		12.80		12.80
ASEAN Cableship Pte. Ltd	Singapore	Telecommunications		1995		16.67		16.67		16.67		16.67
PT First Media Tbk(7)	Indonesia	Multimedia		1994		1.07		2.29		2.29		2.29
PT Padang Golf Bukit Sentul	Indonesia	Golf		1994		18.89		18.89		18.89		18.89
ICO Global Communication Ltd	United States	Telecommunications		1995		0.00867		0.00867		0.00867		0.00867
PT Swadharma Marga Inforindo(8)	Indonesia	Telecommunications		1997		20.00		20.00		20.00		20.00
PT Interactive Vision Media(9)	Indonesia	Multimedia		2009		99.98		99.98		—		—

(1) Satelindo International Finance B.V. was liquidated in January 2007.

(2) Indosat Palapa Company B.V and Indosat Mentari Company B.V were incorporated in Amsterdam on April 28, 2000 to engage in treasury facilities, to lend and borrow money, whether in the form of securities or otherwise, to finance enterprises and companies to grant security in respect of its obligation or those of its group companies and third parties.

(3) PT Satelindo Multi Media was liquidated on June 23, 2009.

(4) PT Aplikanusa Lintasarta holds a 55.0% equity interest in PT Artajasa Pembayaran Elektronis.

(5) On July 28, 2008, PT Aplikanusa Lintasarta investment 35.00% as equity interest in PT Lintas Media Danawa (LMD). PT Aplikanusa Lintasarta increased ownership shares in LMD from 35% to 55% dated November 24, 2010 and 55% to 70% dated December 21, 2010.

(6) On December 3, 2008, the Company made payment for the additional equity interest in SMT amounting to Rp33,680. This made the Company’s ownership in SMT become 72.54%.

(7) PT First Media Tbk’s registration of shares pursuant to a right issue on February 5, 2007, caused Indosat’s ownership percentage to decline to 2.29% and it’s registration of shares pursuant to a right issue on May 20, 2010 caused Indosat’s ownership percentage to decline to 1.07%.

(8) PT Aplikanusa Lintasarta holds a 20.0% equity interest in PT Swadharma Marga Inforindo, which was finally liquidated in October 2010.

(9) PT Indosat Mega Media holds a 99.98% equity interest in PT Interactive Vision Media.

EX-12.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Harry Sasongko Tirtotjondro, certify that:

1. I have reviewed this annual report on Form 20-F of PT Indosat Tbk;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Dated May 18, 2011

By:	/s/ Harry Sasongko Tirtotjondro
	Harry Sasongko Tirtotjondro President Director and Chief Executive Officer

EX-12.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter Wladyslaw Kuncewicz, certify that:

1. I have reviewed this annual report on Form 20-F of PT Indosat Tbk;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Dated May 18, 2011

By:	/s/ Peter Wladyslaw Kuncewicz
	Peter Wladyslaw Kuncewicz Director and Chief Financial Officer

EX-13.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. §1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of PT Indosat Tbk (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the accompanying Annual Report on Form-20-F of the Company for the annual period ended December 31, 2010 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated May 18, 2011

By:	/s/ Harry Sasongko Tirtotjondro
	Harry Sasongko Tirtotjondro President Director and Chief Executive Officer

This foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. §1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-13.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. §1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of PT Indosat Tbk (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the accompanying Annual Report on Form-20-F of the Company for the annual period ended December 31, 2010 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated May 18, 2011

By:	/s/ Peter Wladyslaw Kuncewicz
	Peter Wladyslaw Kuncewicz Finance Director and Chief Finance Officer

This foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. §1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-15.14

Exhibit 15.14

PT INDOSAT Tbk

Audit Committee Charter

General

1. PT INDOSAT Tbk (the Company) is a company listed on the Indonesia Stock Exchange (IDX) and New York Stock Exchange (NYSE) and is subject to the rules and regulations of the Indonesian Capital Market and Financial Institution Supervisory Board (BAPEPAM-LK), U.S. Securities and Exchange Commission (SEC), IDX and NYSE.

2. Pursuant to the requirements of the abovementioned authorities, the Audit Committee (AC) is responsible for overseeing the following:

• quarterly financial reports;

• audited annual financial reports;

• internal controls over disclosure and financial reporting; and

• annual reports (including annual reports filed on Form 20-F as required by the SEC rules), as well as audited financial reports contained therein.

All financial information in the above reports must be prepared in accordance with Indonesian Generally Accepted Accounting Principles (Indonesian GAAP) as issued by Indonesian Institute of Accountants, and/or International Financial Report Standards (IFRS) as issued by the International Accounting Standards Board.

Overall Purposes

3. The AC is a committee of the Board of Commissioners (BOC). Its primary function is to (i) assist the BOC in fulfilling its oversight of (a) the integrity of the Company’s financial statements, (b) the Company’s compliance with capital markets and other regulations which are relevant for the operation of the Company, (c) the qualifications, the independence and performance of the Company’s external auditor (External Auditor), (d) the operation of the Company’s internal auditing department (Internal Auditor), and (ii) prepare the AC report required to be included in the Company’s annual report.

4. In performing its duties, the AC will work closely with the BOC, the Board of Directors (BOD), the Sarbanes-Oxley (SOX) Team, the Internal Auditor and the External Auditor.

5. The AC relies on the information provided by the BOD and all designated individuals who represent the BOD (Management) including the SOX Team, the Internal Auditor and the External Auditor, in carrying out its oversight responsibilities.

6. The AC will perform its functions in accordance with the prevailing laws and regulations of IDX, NYSE Listed Company Manual, U.S. or Indonesian rules and regulations (including regulations of BAPEPAM-LK) (Capital Markets Laws) and in accordance with specific instructions received from the BOC.

PT Indosat Tbk – Audit Committee Charter Page 1 of 8

Duties and Responsibilities

The AC is appointed and authorized by the BOC to assist the BOC in fulfilling certain of its statutory, fiduciary and regulatory responsibilities. As such, the AC exercises the authority and power delegated to it by the BOC in accordance with:

(a) the prevailing statutes, regulations, laws and/or regulatory authority obligations;

(b) the Company’s Articles of Association;

(c) this Charter (as defined below); and

(d) separate BOC delegations, resolutions and approvals granted to it from time to time.

To fulfill its responsibilities and duties the AC shall adopt a formal written charter that is approved by the BOC (the “Charter”).

7. The AC will oversee the following:

7.1. Financial Statements or Reports – The integrity of the Company’s financial statements and any other published financial information for specific purposes, by undertaking a review and discussion of:

• quarterly and annual audited financial reports with Management and the External Auditor before they are filed. AC shall recommend the release of the annual audited financial statements and quarterly financial statements to the BOC;

• any other financial information, including the disclosures under the caption “Operating and Financial Review and Prospects”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Financial Results” or similar captions prior to filing or distribution to BAPEPAM-LK or the SEC before it is published. The review should include discussion with Management and the External Auditor of significant issues regarding accounting principles, practices, and judgments;

• quarterly unaudited financial results, projections and other unaudited financial information (including press releases of the Company’s financial information) before their release or submission to BAPEPAM-LK, SEC and/or the public; and

• the effect of regulatory and accounting pronouncements on the Company’s financial reports with Management and the External Auditor.

7.2. Annual Reports – The review of annual reports, including those reported on Form 20-F pursuant to the SEC rules.

PT Indosat Tbk – Audit Committee Charter Page 2 of 8

7.3. Internal Controls – The Company’s system of internal controls through:

• discussions with Management, the Internal Auditor and the External Auditor on the adequacy of the Company’s system of internal controls;

• discussions with Management and the External Auditor on their qualitative judgments about the quality and acceptability of accounting principles and financial disclosures used or proposed to be adopted by the Company;

• review of the operation of the Disclosure Committee;

• review of any audit problems or difficulties with the External Auditor or the Internal Auditor and review of Management’s responses;

• review the responsibilities, budget and staffing of the Internal Auditor;

• annual review of Management’s assessment of internal controls over financial reporting and an assessment of the certification process conducted by Management for purposes of the Company’s annual report on Form 20-F with the SOX Team; and

• review and discussion with the External Auditor of the results of the External Auditor’s report on the effectiveness of internal controls over financial reporting.

7.4. Assurance Activities – The functions of the Internal Auditor and External Auditor, which include:

• conducting the selection and review of and providing recommendations on the appointment, retention and termination of the External Auditor. The AC may delegate to members of the AC the authority to evaluate the independence of the External Auditor, the establishment of audit engagement contracts and the execution of such audit engagement contracts;

• providing recommendations to the BOC in selecting, appointing and reviewing candidates for the position of Head of the Internal Auditor;

• reviewing and providing comments, if any, on the External Auditor fees;

• facilitating the process to resolve disagreements between Management and the External Auditor regarding financial reporting;

• reviewing and evaluating the six-year rotation of the External Auditor and three-year rotation of its engagement partner, to the extent required by the Capital Markets Laws;

• reviewing the internal audit policies and guidelines which are prepared by Management, and making recommendations to the BOC regarding those policies and guidelines;

• reviewing the Internal Auditor’s and External Auditor’s annual audit plan and results of audit activities conducted by the External Auditor and the Internal Auditor. This includes a review of all accounting adjustments proposed by the External Auditor but not reflected in the financial statements, if any. The External Auditor may also conduct an interim financial review prior to the Company’s quarterly filing with BAPEPAM-LK, IDX and the SEC. The AC will monitor and discuss with Management, the Internal Auditor or the External Auditor, as appropriate, any findings of the Internal Auditor and the External Auditor and ensure that all recommended input on improvements and changes in financial or accounting practices and internal controls have been implemented;

PT Indosat Tbk – Audit Committee Charter Page 3 of 8

• reviewing and providing recommendations to the BOC on the Internal Audit Charter;

• obtaining assurance from the External Auditor that the audit has been conducted in a manner consistent with the prevailing laws and regulations including Section 10A of U.S. Securities Exchange Act of 1934, as amended (Exchange Act);

• pre-approving all audit and non-audit services to be provided by the External Auditor. The AC may delegate to one or more of its members the authority to grant such pre-approvals, provided that any such decision by such member(s) must be presented to the full AC at its next scheduled meeting;

• obtaining an annual statement from the External Auditor describing (i) the External Auditor’s internal quality control procedures; (ii) any material issues raised by the latest internal controls review or peer review of the firm or any inquiry by government or professional authorities within the last five years (in respect of one or more independent audits performed by the firm) and any remediation taken; and (iii) overall relationships between the External Auditor and the Company, including its relationship with the Company and setting out the services it provides in order to determine all significant relationships which may impact the External Auditor’s independence;

• evaluating the reasonableness of the planned resources and budget of the Internal Auditor;

• ensuring that clear hiring policies for employees and former employees of the External Auditor are in place and meet the requirements of Capital Markets Laws; and

• reviewing and discussing the External Auditor’s interim and final management letter with Management, monitoring any remediation action taken by Management and ensure that remediation results are communicated by Management to the External Auditor.

7.5 Compliance – The review of the Company’s compliance with prevailing laws and regulations relevant to its operations, including Capital Markets Laws, together with the Company’s legal department and corporate secretary. All financial reports, earnings releases, or reports on financial disclosure controls or procedures implementation should be reviewed to ensure compliance with the prevailing Capital Markets Laws.

7.6. Risk Management – The receipt of copies of all RMG reports to the Risk Management Committee and to Management. The AC should familiarize itself with established policies on enterprise risk assessment and risk management and monitor the effectiveness of implementation of key risk management procedures relevant to internal controls over financial reporting. However, the ultimate responsibility for assessing and managing the Company’s exposure to such risks remains with Management.

PT Indosat Tbk – Audit Committee Charter Page 4 of 8

7.7. Code of Ethics – The receipt and periodical review of the implementation of the Company’s Code of Ethics, to ensure that it is adequate and up to date as well as the review Management’s monitoring report on compliance with the Company’s Code of Ethics.

7.8 Complaints – The AC shall establish procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters and (ii) the confidential anonymous submission by the employees of the Company and other interested parties of concerns regarding questionable accounting or auditing matters. The AC shall periodically review these whistleblower procedures and any significant complaints received with the BOC, Management and the Internal Auditor.

7.9. Report – The preparation of an annual report to the BOC on AC activities including that to be inserted in the Company’s Annual Report and preparing reports on special assignments, if any, instructed by the BOC to the AC. A review of implementation of the BOC and BOD compensation package will also be included in AC annual report.

Authorization

8. Investigation – The BOC authorizes the AC to investigate any activity, within the scope of its responsibilities and to access any data within its scope of responsibilities, including but not limited to:

• unlimited access to the Company’s assets, resources and documents;

• unrestricted direct access to the Management and managers in the Company as well as to the External Auditor; and

• any relevant external parties, including relevant advisors to assist it in the conduct of any investigation.

9. Confidentiality – AC members are obligated to maintain the confidentiality of all documents, data and information of the Company at all times.

10. Direct Access – Outside of AC meetings, the AC will have unrestricted access to finance executives, the External Auditor and the Internal Auditor. In addition, to draw appropriate matters to the attention of the AC, the following individuals shall have direct access to the AC: the Chief Executive Officer, the Chief Financial Officer, Group Head Finance, Group Head Corporate Secretary, Group Head Legal, Group Head SOX, Group Head Enterprise Risk Management, the External Auditor and the Internal Auditor.

11. External Advisors – The AC shall have the sole authority to obtain, at the Company’s expense, but at funding levels determined by the AC, advice and assistance from outside legal, accounting or other advisors. The AC shall also have the authority to obtain advice and assistance from any officer or employee of the Company.

PT Indosat Tbk – Audit Committee Charter Page 5 of 8

12. Committee’s Budget – The AC is empowered to propose an annual budget for the AC to the BOC for approval. Without limiting the generality of the foregoing, the Company shall provide appropriate funding for payment of: (i) compensation to any External Auditor engaged for the purposes of preparing or issuing an audit report or performing other audit, review or attestation services for the Company; (ii) compensation to any advisors employed by the AC as described above; and (iii) for ordinary administrative expenses of the AC that are necessary or appropriate to carry out its duties.

Composition

13. The AC will consist of at least one independent Commissioner and two independent individuals and all members shall meet the independence and other applicable requirements of the Capital Markets Laws.

14. The Chairman of the AC will be appointed by the BOC and must be an independent commissioner of the Company.

15. At least one AC member shall satisfy the criteria to be an “audit committee financial expert” as defined under SEC rules and shall have an accounting or financial education background as required under BAPEPAM rules. All of the AC members must have a proper knowledge to read and comprehend financial statements as required pursuant to BAPEPAM, IDX and SEC rules. All AC members shall also have adequate knowledge of Capital Markets Laws and other relevant laws and regulations.

16. The term of office of AC members shall be no longer than the term of office of BOC members as stipulated in the Company’s Articles of Association and can be extended for one additional term. This additional term shall not be longer than the maximum term of office of a BOC member under the Company’s Articles of Association. An AC member, however, who has completed 2 (two) terms, can be re-appointed after a 1 (one) year cooling-off period. Subject to the maximum term of office stated above, the AC members shall serve for such terms as the BOC may determine, or until their earlier resignation, death, or (if a commissioner) their cessation of office as a commissioner or removal by the BOC.

17. The BOC shall nominate, appoint and dismiss the AC members and will report such changes in membership at the General Meeting of Shareholders (GMS). Resignation from the AC must be made in writing to the BOC not less than 1 (one) month before the effective date.

18. In the event that a member of the AC can not perform its duties, for whatever reasons, reducing the number of AC to less than 3 (three) or less than 2 (two) for the member from outside, the BOC will appoint a new AC member for a maximum period of 6 (six) months until an acceptable permanent member is identified and appointed.

Meetings

19. Formal AC meetings will be conducted at least 4 (four) times a year. Additional meetings may be convened as required, including those conducted by the AC Working Group (as defined below). The Chairman of the AC shall approve an agenda prior to each meeting and a formal agenda and meeting place will be delivered prior to the meeting day.

PT Indosat Tbk – Audit Committee Charter Page 6 of 8

20. The AC will report regularly to and meet at least annually with Management (in accordance with the quorum requirements for BOD members under the Company’s Articles of Association), Head of Internal Auditor and External Auditor in a separate executive sessions to discuss any matter that the AC or each of these groups believe should be discussed privately.

21. Senior representatives of the External Auditor and the Internal Auditor are expected to attend each scheduled meeting of the AC. In addition, the AC should meet with the External Auditor and the President Director and the Finance Director or such other person acting in such position in accordance with the Company’s Articles of Association at least every quarter to review the Company’s financial reports prior to its filing or its release.

22. “AC Working Group” is a group consisting of at least 2 (two) AC members.

23. The AC may conduct its meetings by telephone or video conference and may take action by unanimous written consent.

24. Other than the members of the AC and the BOC’s Secretary, a party may only attend the meeting of the AC for specific topic(s) based on a written invitation from the AC.

25. All meetings, including AC Working Group meetings will be minuted. The AC shall maintain copies of minutes of each AC meeting, and each written consent to action taken without a meeting, reflecting the actions so authorized or taken by the AC. The minutes will be signed by all members in attendance and distributed to all AC members.

26. The Secretary of the BOC shall act as the Secretary of the AC and AC Working Group (unless the AC determines otherwise). A copy of the minutes of each meeting and all written consents shall be kept by the BOC’s Secretary.

27. The AC Secretary will develop an annual agenda containing issues to be considered by AC members for the full year.

28. During meetings, each member of the AC shall have 1 (one) vote. Half of the members, but not less than 2 (two) (one of which must be an independent commissioner), shall constitute a quorum. If the quorum for the AC is not met, the meeting shall be adjourned. The AC shall be authorized to take any permitted action only by the affirmative vote of a majority of all of the AC members or by the unanimous written consent of all of the AC members. In the event there is a tie in votes, the Chairman of the AC would have a casting vote.

Amendments to Charter

29. The AC will review and update the AC Charter annually to ensure that it is in the best interest of the Company and its shareholders and in compliance with Capital Markets Laws. Any amendment to the Charter shall be adopted in the meeting of the BOC in accordance with the Company’s Articles of Association. The Charter should be disclosed in accordance with Capital Markets Laws, to extent applicable.

30. In the case of any conflict between this Charter and appropriate regulations including the Capital Markets Laws, the enacted regulations will prevail.

PT Indosat Tbk – Audit Committee Charter Page 7 of 8

Assessment

31. The AC shall perform a self assessment at least once a year to assess whether it is functioning effectively as stipulated in this Charter.

Acknowledgement

32. The BOC acknowledges that while the AC has been given certain duties and responsibilities pursuant to this Charter, the AC is not responsible for guaranteeing the accuracy of the Company’s financial statements or reports or the quality of Company internal controls or accounting practices. This responsibility rests with Management.

33. The BOC also recognizes that the responsibilities of an AC requires a degree of flexibility. To the extent that procedures included in this Charter go beyond what is required of an AC by existing law and regulation, such procedures are meant to serve as guidelines rather than inflexible rules and the AC is encouraged to adopt such different or additional procedures as it deems necessary from time to time.

34. This Charter shall be effective as of the date of approval of BOC on 27 April 2011 and, therefore, the previous charter dated October 20, 2009 is declared null and void as of the effective date of this Charter.

Audit Comittee Members:
Thia Peng Heok George
Chairman
Soeprapto	Chris Kanter
Kanaka Puradiredja	U.S.M. Tampubolon

PT Indosat Tbk – Audit Committee Charter Page 8 of 8

EX-15.25

Exhibit 15.25

Indosat Palapa Company B.V.

(as Issuer)

and

PT Indosat Tbk

(as Guarantor)

and

The Bank of New York Mellon

(as Trustee)

US$650,000,000 7.375% Guaranteed Senior Notes Due 2020

INDENTURE

Dated as of July 29, 2010

TABLE OF CONTENTS

		PAGE
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01.	Definitions		1
Section 1.02.	Other Definitions		22
Section 1.03.	Incorporation by Reference of TIA		22
Section 1.04.	Rules of Construction		22
ARTICLE 2
THE NOTES
Section 2.01.	Original Notes; Additional Notes		23
Section 2.02.	Form and Dating		24
Section 2.03.	Execution and Authentication		24
Section 2.04.	Registrar and Paying Agent		24
Section 2.05.	Paying Agent to Hold Money in Trust		25
Section 2.06.	Holder Lists		25
Section 2.07.	Replacement Notes		25
Section 2.08.	Outstanding Notes		25
Section 2.09.	Temporary Notes		25
Section 2.10.	Cancellation		26
Section 2.11.	Defaulted Interest		26
Section 2.12.	CUSIP, ISIN and Common Code Numbers		26
ARTICLE 3
REDEMPTION
Section 3.01.	Notices to Trustee		26
Section 3.02.	Selection of Notes to be Redeemed		26
Section 3.03.	Notice of Redemption		26
Section 3.04.	Effect of Notice of Redemption		27
Section 3.05.	Deposit of Redemption Price		27
Section 3.06.	Notes Redeemed in Part		27
ARTICLE 4
COVENANTS
Section 4.01.	Payment of Notes		27
Section 4.02.	Maintenance of Office or Agency		28
Section 4.03.	Corporate Existence		28
Section 4.04.	Payment of Taxes and Other Claims		28
Section 4.05.	Maintenance of Properties and Insurance		28
Section 4.06.	Compliance Certificate; Notice of Default		29
Section 4.07.	Compliance with Laws		29
Section 4.08.	Waiver of Stay, Extension or Usury Laws		29
Section 4.09.	Commission Reports		29
Section 4.10.	Limitation on Debt		30
Section 4.11.	Limitation on Restricted Payments		31
Section 4.12.	Limitation on Liens		32

i

		PAGE
Section 4.13.	Limitation on Issuance or Sale of Capital Stock of Restricted Subsidiaries		32
Section 4.14.	Limitation on Asset Sales		32
Section 4.15.	Limitation on Restrictions on Distributions from Restricted Subsidiaries		34
Section 4.16.	Limitation on Transactions with Affiliates		35
Section 4.17.	Designation of Restricted and Unrestricted Subsidiaries		36
Section 4.18.	Limitation on Sale and Leaseback Transactions		36
Section 4.19.	Limitation on Business		36
Section 4.20.	Change of Control		37
Section 4.21.	Suspension of Certain Covenants		38
Section 4.22.	Additional Amounts		39
Section 4.23.	Further Instruments and Acts		40
Section 4.24.	Limitation on Issuer Activities		40
Section 4.25.	Amendments to or Prepayments of the Intercompany Loan		41
ARTICLE 5
MERGER, CONSOLIDATION AND SALE OF PROPERTY
Section 5.01.	When Parent or Guarantor May Merge or Transfer Assets		42
Section 5.02.	Successor Corporation Substituted		43
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01.	Events of Default		43
Section 6.02.	Acceleration		44
Section 6.03.	Other Remedies		45
Section 6.04.	Waiver of Past Defaults		45
Section 6.05.	Control by Majority		45
Section 6.06.	Limitation on Suits		45
Section 6.07.	Rights of Holders to Receive Payment		46
Section 6.08.	Collection Suit by Trustee		46
Section 6.09.	Trustee May File Proofs of Claim		46
Section 6.10.	Priorities		46
Section 6.11.	Undertaking for Costs		46
Section 6.12.	Waiver of Stay or Extension Laws		46

ARTICLE 7
TRUSTEE
Section 7.01.	Duties of Trustee	47
Section 7.02.	Rights of Trustee	48
Section 7.03.	Individual Rights of Trustee	49
Section 7.04.	Trustee’s Disclaimer	49
Section 7.05.	Notice of Defaults	49
Section 7.06.	Reports by Trustee to Holders	49
Section 7.07.	Compensation and Indemnity	50
Section 7.08.	Replacement of Trustee	50
Section 7.09.	Successor Trustee by Merger	51
Section 7.10.	Eligibility; Disqualification	51
Section 7.11.	Preferential Collection of Claims Against Issuer	51
Section 7.12.	Other Capacities	51

ii

		PAGE
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.01.	Discharge of Liability on Notes; Defeasance.		51
Section 8.02.	Conditions to Defeasance		52
Section 8.03.	Application of Trust Money		53
Section 8.04.	Repayment to the Issuer		53
Section 8.05.	Indemnity for Government Obligations		53
Section 8.06.	Reinstatement		53
ARTICLE 9
AMENDMENTS
Section 9.01.	Without Consent of Holders		54
Section 9.02.	With Consent of Holders		54
Section 9.03.	Compliance with Trust Indenture Act		55
Section 9.04.	Revocation and Effect of Consents and Waivers		55
Section 9.05.	Notation on or Exchange of Notes		55
Section 9.06.	Trustee to Sign Amendments and Waivers		56
Section 9.07.	Payment for Consent		56
ARTICLE 10
GUARANTEE
Section 10.01.	Guarantee.		57
Section 10.02.	Severability		59
Section 10.03.	Release of a Guarantor		59
Section 10.04.	Waiver of Subrogation		59
Section 10.05.	Evidence of Guarantee		59
Section 10.06.	Waiver of Stay, Extension or Usury Laws		60
ARTICLE 11
MISCELLANEOUS
Section 11.01.	Notices		60
Section 11.02.	Communication by Holders with Other Holders		61
Section 11.03.	Certificate and Opinion as to Conditions Precedent		61
Section 11.04.	Statements Required in Certificate or Opinion		61
Section 11.05.	When Notes Disregarded		62
Section 11.06.	Rules by Trustee, Paying Agent and Registrar		62
Section 11.07.	Legal Holidays		62
Section 11.08.	Governing Law		62
Section 11.09.	Waiver of Immunities		62
Section 11.10.	Consent to Jurisdiction; Appointment of Agent for Service of Process; Judgment Currency		63
Section 11.11.	No Recourse Against Others		64
Section 11.12.	Successors		64
Section 11.13.	Multiple Originals		64
Section 11.14.	Table of Contents; Headings		64
Section 11.15.	Law of the Republic of Indonesia No. 24 of 2009		64
Appendix A	- Provisions Relating to Notes		A-1
Exhibit A	- Form of Note		Exh-A-1

iii

INDENTURE dated as of July 29, 2010, among Indosat Palapa Company B.V., a private company with limited liability incorporated under the laws of The Netherlands and having its statutory seat in Amsterdam, The Netherlands (the “Issuer”), PT Indosat Tbk, a corporation organized under the laws of the Republic of Indonesia (“Indosat” or the “Parent”), and The Bank of New York Mellon, a New York banking corporation, as Trustee, Registrar (as defined herein) and Principal Paying Agent (as defined herein).

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the holders of the Issuer’s US$650,000,000 7.375 Guaranteed Senior Notes due 2020, to be issued as provided in this Indenture (the “Notes”):

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01. Definitions

“Accreted Value” of any Debt issued at a price less than the principal amount at Stated Maturity, means, as of any date of determination, an amount equal to the sum of (a) the issue price of such Debt as determined in accordance with Section 1273 of the Code or any successor provisions plus (b) the aggregate of the portions of the original issue discount (the excess of the amounts considered as part of the “stated redemption price at maturity” of such Debt within the meaning of Section 1273(a)(2) of the Code or any successor provisions, whether denominated as principal or interest, over the issue price of such Debt) that shall theretofore have accrued pursuant to Section 1272 of the Code (without regard to Section 1272(a)(7) of the Code) from the date of issue of such Debt to the date of determination, minus all amounts theretofore paid in respect of such Debt, which amounts are considered as part of the “stated redemption price at maturity” of such Debt within the meaning of Section 1273(a)(2) of the Code or any successor provisions (whether such amounts paid were denominated principal or interest).

“Additional Notes” means, subject to the Issuer’s compliance with Section 4.10, 7.375% Guaranteed Notes due 2020 issued from time to time after the Issue Date under the terms of this Indenture pursuant to Section 2.01 and all Notes issued in exchange therefor. Following their issuance in accordance with this Indenture, Additional Notes shall constitute “Notes” hereunder.

“Adjusted Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield in maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

“Affiliate” of any specified Person means:

(a) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, or

(b) any other Person who is a commissioner or director or officer of:

(1) such specified Person;

(2) any Subsidiary of such specified Person; or

(3) any Person described in clause (a) above.

1

For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. For purposes of Sections 4.14 and 4.16 only, “Affiliate” shall also mean any beneficial owner of shares representing 5% (or 10% in the case of a Person who is entitled to file a short-form statement on Schedule 13G with the Commission) or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Parent or of rights or warrants to purchase such Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof.

“Applicable Premium” means with respect to a Note at any redemption date, the greater of (a) 1.00% of the principal amount of such Note and (b) the excess of (i) the present value at such redemption date of (A) the redemption price of such Note on July 29, 2015 (such redemption price being described in section 5 of the initial Note exclusive of any accrued interest) plus (B) all required remaining scheduled interest payments due on such Note through July 29, 2015, (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Adjusted Treasury Rate plus 50 basis points, over (ii) the principal amount of such Note.

“Asset Sale” means any sale, lease, transfer, issuance or other disposition (or series of related sales, leases, transfers, issuances or dispositions) by the Parent or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a “disposition”), of:

(a) any shares of Capital Stock of a Restricted Subsidiary (other than directors’ qualifying shares), or

(b) any other assets of the Parent or any Restricted Subsidiary outside of the ordinary course of business of the Parent or any Restricted Subsidiary;

other than, in the case of clauses (a) and (b) above,

(i) any disposition by a Restricted Subsidiary to the Parent or by the Parent or any Restricted Subsidiary to a Wholly-Owned Subsidiary;

(ii) any disposition that constitutes a Permitted Investment;

(iii) any disposition that is made in connection with the issuance of a Permitted Islamic Financing Obligation provided that (A) the consideration received upon the disposition of the assets made in connection with the issuance of a Permitted Islamic Financing Obligation does not materially exceed the amount raised by the Permitted Islamic Financing Obligation; and (B) the obligation is documented, if there is a disposition of assets from the Parent or a Restricted Subsidiary to a Wholly-Owned Finance Subsidiary, to be limited to a disposition where the financiers, holders of Sukuk certificates and/or trustee do not have the right to sell, assign or lease the assets to anyone other than to the Parent or a Restricted Subsidiary. Such assets will be available for the benefit of the senior unsecured creditors of the Parent and its Subsidiaries, whether or not such obligation has been repaid, upon an occurrence of a dissolution event under the documentation (where a dissolution event includes the maturity of the obligation, an insolvency event of the Parent of the obligor or any other event of default under the financing); and

(iv) any disposition effected in compliance with the first paragraph of Section 5.01.

“Attributable Debt” in respect of a Sale and Leaseback Transaction means, at any date of determination,

(a) if such Sale and Leaseback Transaction is a Capital Lease Obligation, the amount of Debt represented thereby according to the definition of “Capital Lease Obligation;” and

(b) in all other instances, the greater of:

(i) the Fair Market Value of the Property subject to such Sale and Leaseback Transaction, and

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(ii) the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended).

“Average Life” means, as of any date of determination, with respect to any Debt or Preferred Stock, the quotient obtained by dividing:

(a) the sum of the product of the numbers of years (rounded to the nearest one-twelfth of one year) from the date of determination to the dates of each successive scheduled principal payment of such Debt or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by

(b) the sum of all such payments.

“Bankruptcy Law” means Title 11, United States Code, or any similar law for the relief of debtors in the Republic of Indonesia or the United States, now or hereafter in effect.

“Board of Directors” means the board of directors or managing directors of the Parent, the Issuer or any Restricted Subsidiary, as the case may be, or any committee thereof duly authorized to act on behalf of such board.

“Board Resolution” means a copy of a resolution certified by the managing director, secretary or an assistant secretary of the Issuer or the Parent, as the case may be, to have been duly adopted by the Board of Directors of the Issuer or the Parent, as the case may be, and to be in full force and effect on the date of such certification.

“Business Day” means any day which is not a Saturday, Sunday, Legal Holiday or other day on which banking institutions in The City of New York, Jakarta or Singapore (or in any other place in which payments on the Notes are to be made) are authorized by law or governmental regulation to close.

“Capital Lease Obligation” means any obligation under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP; and the amount of Debt represented by such obligation shall be the capitalized amount of such obligations determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. For purposes of Section 4.12, a Capital Lease Obligation shall be deemed secured by a Lien on the Property being leased.

“Capital Stock” means with respect to any Person, any shares or other equivalents (however designated) of any class of corporate stock or partnership interests or any other participations, rights, warrants, options or other interests in the nature of an equity interest in such Person, including Preferred Stock, but excluding any debt security convertible or exchangeable into such equity interest.

“Change of Control” means the occurrence of any of the following events:

(a) the Permitted Holders cease to be the “beneficial owners” (as defined in Rule 13d-3 under the Exchange Act, except that a person will be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, in the aggregate of more than 50% of the total voting power of the Voting Stock of the Parent; or

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(b) if (1) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successor provisions to either of the foregoing), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act, other than any one or more of the Permitted Holders, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act, except that a person will be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 35% or more of the total voting power of the Voting Stock of the Parent and (2) the Permitted Holders are the “beneficial owners” (as defined in Rule 13d-3 under the Exchange Act, except that a person will be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, in the aggregate of a lesser percentage of the total voting power of the Voting Stock of the Parent than such other person or group (for purposes of this clause (b), such person or group shall be deemed to beneficially own any Voting Stock of a specified corporation held by any other corporation (the “parent corporation”) so long as such person or group beneficially owns, directly or indirectly, in the aggregate a majority of the total voting power of the Voting Stock of such parent corporation); or

(c) the sale, transfer, assignment, lease, conveyance or other disposition, directly or indirectly, of all or substantially all the assets of the Parent and the Restricted Subsidiaries considered as a whole shall have occurred (which, for the avoidance of doubt, would not include a Qualified Tower Sale), or the Parent merges, consolidates or amalgamates with or into any other Person or any other Person merges, consolidates or amalgamates with or into the Parent, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Parent is reclassified into or exchanged for cash, securities or other Property, other than any such transaction where:

(i) the outstanding Voting Stock of the Parent is reclassified into or exchanged for Voting Stock of the surviving corporation, and

(ii) the holders of the Voting Stock of the Parent immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the surviving corporation immediately after such transaction and in substantially the same proportion as before the transaction; or

(d) the shareholders of the Parent shall have approved any plan of liquidation or dissolution of the Parent.

“Change of Control Triggering Event” means the occurrence of a Change of Control and, in the case of clauses (a) and (b) of the definition of Change of Control, a Rating Decline (as set forth in the definition thereof).

“Clearstream” means Clearstream Banking, société anonyme, or any successor clearing agency.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Commission” means the United States Securities and Exchange Commission.

“Comparable Treasury Issue” means a United States Treasury security having a constant maturity most nearly equal to the period from the redemption date to July 29, 2015 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to July 29, 2015.

“Comparable Treasury Price” means, with respect to any redemption date:

(a) the average bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such redemption date, as set forth in the daily statistical release (of any successor release) published by the Federal Reserve Bank of New York and designated “Composite 3:30 p.m. Quotations for U.S. Government Securities”; or

(b) if such release (or any successor release) is not published or does not contain such prices on such Business Day, (i) the average of Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (ii) if fewer than three such Reference Treasury Dealer Quotations are available, the average of all such quotations.

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“Consolidated Debt to EBITDA Ratio” means, as of any date of determination, the ratio of:

(a) the aggregate consolidated principal amount, or in the case of Debt issued at a discount, the then-Accreted Value, of Debt of the Parent and its consolidated Restricted Subsidiaries outstanding as of the most recent available quarterly or annual balance sheet of the Parent, after giving pro forma effect to the Incurrence of such Debt and any other Debt Incurred or repaid since such balance sheet date and the receipt and the application of the net proceeds thereof; to

(b) an amount equal to the aggregate EBITDA for the most recent four consecutive fiscal quarters of the Parent next preceding the Incurrence of such Debt for which consolidated financial statements of the Parent are available;

provided, however, that if:

(i) since the beginning of the relevant four fiscal quarter period the Parent or any Restricted Subsidiary shall have made any Asset Sale or an Investment (by merger or otherwise) in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of Property which constitutes all or substantially all of an operating unit of a business;

(ii) the transaction giving rise to the need to calculate the Consolidated Debt to EBITDA Ratio is such an Asset Sale, Investment or acquisition; or

(iii) since the beginning of the relevant four fiscal quarter period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Parent or any Restricted Subsidiary since the beginning of the relevant four fiscal quarter period) shall have made such an Asset Sale, Investment or acquisition;

EBITDA for the relevant four fiscal quarter period shall be calculated after giving pro forma effect to such Asset Sale, Investment or acquisition as if such Asset Sale, Investment or acquisition occurred on the first day of such period.

“Consolidated Interest Expense” means, for any period, the total interest expense of the Parent and its consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent Incurred by the Parent or its Restricted Subsidiaries:

(a) interest expense attributable to leases constituting part of a Sale and Leaseback Transaction and to Capital Lease Obligations;

(b) amortization of debt discount and debt issuance cost, including commitment fees;

(c) capitalized interest;

(d) non-cash interest expenses;

(e) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing;

(f) net costs associated with Hedging Obligations (including amortization of fees);

(g) Disqualified Stock Dividends;

(h) Preferred Stock Dividends;

(i) interest Incurred in connection with Investments in discontinued operations;

(j) interest accruing on any Debt of any other Person to the extent such Debt is guaranteed by the Parent or any Restricted Subsidiary; and

(k) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Parent) in connection with Debt Incurred by such plan or trust.

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(l) profit payments under any Islamic financing transaction, including Permitted Islamic Financing Obligations.

“Consolidated Net Income” means, for any period, the net income (loss) of the Parent and its consolidated Subsidiaries; provided, however, that there shall not be included in such Consolidated Net Income:

(a) any net income (loss) of any Person (other than the Parent) if such Person is not a Restricted Subsidiary, except that:

(i) subject to the exclusion contained in clause (d) below, the Parent’s equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Person during such period to the Parent or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (c) below); and

(ii) the Parent’s equity in a net loss of any such Person other than an Unrestricted Subsidiary for such period shall be included in determining such Consolidated Net Income;

(b) any net income (loss) of any Person acquired by the Parent or any of its consolidated Subsidiaries in a pooling of interests transaction for any period prior to the date of such acquisition;

(c) any net income (loss) of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions, directly or indirectly, to the Parent, except that:

(i) subject to the exclusion contained in clause (d) below, the Parent’s equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Restricted Subsidiary during such period to the Parent or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitation contained in this clause); and

(ii) the Parent’s equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income;

(d) any gain (but not loss) realized upon the sale or other disposition of any Property of the Parent or any of its consolidated Subsidiaries (including pursuant to any Sale and Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary course of business;

(e) any extraordinary gain (but not loss); and

(f) the cumulative effect of a change in accounting principles.

“Consolidated Net Worth” means the total of the amounts shown on the consolidated balance sheet of the Parent and its Restricted Subsidiaries as of the end of the most recent fiscal quarter of the Parent ending at least 30 days prior to the taking of any action for the purpose of which the determination is being made, as:

(a) the par or stated value of all outstanding Capital Stock of the Parent; plus

(b) paid-in capital or capital surplus relating to such Capital Stock; plus

(c) any retained earnings or earned surplus, less:

(i) any accumulated deficit;

(ii) any amounts attributable to Disqualified Stock;

(iii) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within 12 months after the acquisition of such business) subsequent to the Issue Date in the book value of any asset;

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(iv) all Investments in Persons that are not Restricted Subsidiaries (except Permitted Investments); and

(v) all unamortized debt discount and expense and unamortized deferred charges;

all of the foregoing determined in accordance with GAAP.

“Currency Exchange Protection Agreement” means, in respect of a Person, any foreign exchange contract, currency swap agreement, currency option or other similar agreement or arrangement designed to protect such Person against fluctuations in currency exchange rates.

“Debt” means, with respect to any Person on any date of determination (without duplication):

(a) the principal of and premium (if any) in respect of:

(i) debt of such Person for money borrowed; and

(ii) debt evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable;

(b) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale and Leaseback Transactions entered into by such Person;

(c) all obligations of such Person issued or assumed as the deferred purchase price of Property or services, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable, accrued commissions and other similar accrued current liabilities arising in the ordinary course of business that, in each instance, are (i) not more than 120 days overdue or (ii) are being contested in good faith by such Person; provided that, with respect to such contested current liabilities that are also more than 120 days overdue, this exclusion shall apply only to the actual portion of such liabilities that are in dispute);

(d) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (a) through (c) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit);

(e) the amount of all obligations of such Person with respect to the Repayment of any Disqualified Stock or, with respect to any Subsidiary of such Person, any Preferred Stock (but excluding, in each case, any accrued dividends);

(f) all obligations of the type referred to in clauses (a) through (e) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any guarantee;

(g) all obligations of the type referred to in clauses (a) through (f) of other Persons secured by any Lien on any Property of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such Property or the amount of the obligation so secured;

(h) to the extent not otherwise included in this definition, Hedging Obligations of such Person; and

(i) all amounts raised under any Islamic financing transaction, including Permitted Islamic Financing Obligations; provided that “Debt” shall not include: (i) procurement payables that are non-interest bearing if such procurement payables have a maturity date of six months or less; or (ii) Permitted Shareholder Loan Debt.

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The amount of Debt of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. The amount of Debt represented by a Hedging Obligation shall be equal to:

(i) zero if such Hedging Obligation has been Incurred pursuant to clauses (v) or (vi) of the second paragraph of Section 4.10, or

(ii) the notional amount of such Hedging Obligation if not Incurred pursuant to any of such clauses.

“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

“Disqualified Stock” means, with respect to any Person, any Capital Stock that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, in either case at the option of the holder thereof) or otherwise:

(a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;

(b) is or may become redeemable or repurchaseable at the option of the holder thereof, in whole or in part; or

(c) is convertible or exchangeable at the option of the holder thereof for Debt or Disqualified Stock, on or prior to, in the case of clauses (a), (b) or (c), the first anniversary of the Stated Maturity of the Notes.

“Disqualified Stock Dividends” means all dividends with respect to Disqualified Stock of the Parent held by Persons other than a Wholly-Owned Subsidiary. The amount of any such dividend shall be equal to the quotient of such dividend divided by the difference between one and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0) then applicable to the Parent.

“Dollar Equivalent” means, with respect to any monetary amount in a currency other than U.S. dollars, at any time for the determination thereof, the amount of U.S. dollars obtained by converting such foreign currency involved in such computation into U.S. dollars at the base rate for the purchase of U.S. dollars with the applicable foreign currency as quoted by Bank Indonesia on the date of determination.

“DTC” means The Depository Trust Company.

“EBITDA” means, for any period, an amount equal to, for the Parent and its consolidated Restricted Subsidiaries:

(a) the sum of Consolidated Net Income for such period, plus the following to the extent reducing Consolidated Net Income for such period:

(i) the provision for taxes based on income or profits or utilized in computing net loss;

(ii) Consolidated Interest Expense;

(iii) depreciation;

(iv) amortization of intangibles; and

(v) any other non-cash items (other than any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period); minus

(b) all non-cash items increasing Consolidated Net Income for such period (other than any such non-cash item to the extent that it will result in the receipt of cash payments in any future period).

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Notwithstanding the foregoing clause (a), the provision for taxes and the depreciation, amortization and non-cash items of a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to the Parent by such Restricted Subsidiary without prior approval (that has not been obtained) other than shareholders’ approval, pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its shareholders.

“Equity Interests” means all Capital Stock and all warrants or options with respect to, or other rights to purchase, Capital Stock, but excluding Debt convertible into equity.

“Euroclear” means Euroclear Banking S.A./N.V. or any successor clearing agency.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Existing Debt” means Debt of the Parent and the Restricted Subsidiaries in existence on the Issue Date until repaid.

“Fair Market Value” means, with respect to any Property, the price that could be negotiated in an arm’s-length free market transaction, for cash, between a willing seller and a willing buyer neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined, except as otherwise provided:

(a) if such Property has a Fair Market Value equal to or less than US$5 million, by any Officer of the Parent; or

(b) if such Property has a Fair Market Value in excess of US$5 million, by a majority of the Board of Directors of the Parent and evidenced by a Board Resolution of the Parent, dated within 30 days of the relevant transaction, delivered to the Trustee.

“Fitch” means Fitch Ratings Ltd. or any successor to the rating agency business thereof.

“GAAP” means Indonesian generally accepted accounting principles as in effect on the Issue Date, except with respect to Section 4.09 in which case GAAP means such principles as in effect from time to time. All ratios and computations based on GAAP contained in this Indenture shall be computed in conformity with GAAP.

“Guarantee” means the guarantee to the Notes provided by the Guarantor.

“guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Debt of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:

(a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise), or

(b) entered into for the purpose of assuring in any other manner the obligee against loss in respect thereof (in whole or in part);

provided, however, that the term “guarantee” shall not include:

(i) endorsements for collection or deposit in the ordinary course of business, or

(ii) a contractual commitment by one Person to invest in another Person for so long as such Investment is reasonably expected to constitute a Permitted Investment under clause (b) of the definition of “Permitted Investment.”

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“Guarantor” means the Parent and each of Parent’s Restricted Subsidiaries that in the future executes a supplemental indenture in which such Restricted Subsidiary agrees to be bound by the terms of this Indenture as a Guarantor; provided that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its respective Guarantee is released in accordance with the terms of this Indenture.

“Hedging Obligation” of any Person means any obligation of such Person pursuant to any Interest Rate Agreement, Currency Exchange Protection Agreement or any other similar agreement or arrangement.

“Holder” means the Person in whose name a Note is registered on the Note Register described in Section 2.04.

“Incur” means, with respect to any Debt or other obligation of any Person, to create, issue, incur, extend, assume, guarantee or become liable in respect of such Debt or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Debt or obligation on the balance sheet of such Person (and “Incurrence” and “Incurred” shall have meanings correlative to the foregoing); provided, however, that any Debt or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary; provided further, however, that a change in GAAP that results in an obligation of such Person that exists at such time, and is not theretofore classified as Debt, becoming Debt shall not be deemed an Incurrence of such Debt; provided further, however, that solely for purposes of determining compliance with Section 4.10, amortization of debt discount shall not be deemed to be the Incurrence of Debt.

“Indenture” means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof.

“Independent Appraiser” means an investment banking firm of national standing or any third party appraiser of national standing; provided that such firm or appraiser is not an Affiliate of the Parent.

“Indosat” has the meaning provided in the first paragraph of this Indenture.

“Indonesian Government Obligation” means direct obligations (or certificates representing an ownership interest in such obligations) of the Republic of Indonesia (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the Republic of Indonesia is pledged and which are not callable or redeemable at the issuer’s option. For purposes of the definition of Temporary Cash Investments, Indonesian Government Obligations include mutual funds or money market funds the assets of which are comprised exclusively of Investments in Indonesian Government Obligations.

“Indosat Towers” means telecommunication tower structures owned by the Parent or any Restricted Subsidiary designed and constructed specially to support antennae for transmission or reception and retransmission of electronic signals in the Telecommunication Business, including associated civil and mechanical structure and interests in the real property on which any such tower structure is located.

“Intercompany Loans” means the loan or loans in U.S. dollars between the Parent, as obligor, and Indosat Mentari Company B.V. (and its permitted assignees), as obligee, pursuant to one or more intercompany loan agreements as may be entered into, for an amount equal to at least the net proceeds of the offering of the Notes, or any similar intercompany loan entered into between the Parent and Indosat Mentari Company B.V. in connection with the sale of Additional Notes.

“Interest Rate Agreement” means, for any Person, any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement designed to protect against fluctuations in interest rates or reduce borrowing costs and/or costs of Currency Exchange Protection Agreements.

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“Investment” by any Person means any direct or indirect loan (other than (i) advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person and (ii) advances or prepayments of compensation for the personal services of employees of the Parent or any of the Restricted Subsidiaries made in the ordinary course and consistent with the compensation of similar employees), advance or other extension of credit or capital contribution (by means of transfers of cash or other Property to others or payments for Property or services for the account or use of others, or otherwise) to, or Incurrence of a guarantee of any obligation of, or purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or evidence of Debt issued by, any other Person. In determining the amount of any Investment made by transfer of any Property other than cash, such Property shall be valued at its Fair Market Value at the time of such Investment.

“Investment Grade Rating” means a rating equal to or higher than BBB (or the equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P.

“Issue Date” means the date on which the Notes are initially issued.

“Issuer” has the meaning provided in the first paragraph of this Indenture.

“Lien” means, with respect to any Property of any Person, any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, lien, charge, easement (other than any easement not materially impairing usefulness or marketability), encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such Property (including any Capital Lease Obligation, conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing or any Sale and Leaseback Transaction (other than a Sale and Leaseback Transaction described in clause (b)(iii) of the definition of Asset Sale)).

“Material Asset Sale” means one Asset Sale or a series of related Asset Sales where the Fair Market Value of the Property sold is equal to or greater than 5% of Total Assets.

“Material License” means, with respect to the Parent or a Restricted Subsidiary, a license, authorization or concession to operate a Telecommunications Business, which, at the time of determination, accounts for more than 10% of the EBITDA for the four full fiscal quarters next preceding the date of determination for which consolidated financial statements are available.

“Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

“Net Available Cash” from any Asset Sale means cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Debt or other obligations relating to the Property that is the subject of such Asset Sale or received in any other non-cash form), in each case net of:

(a) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all U.S. federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Sale;

(b) all payments made on any Debt that is secured by any Property subject to such Asset Sale, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such Property, or which must by its terms, or in order to obtain a necessary consent to such Asset Sale, or by applicable Law, be repaid out of the proceeds from such Asset Sale;

(c) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale; and

(d) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the Property disposed in such Asset Sale and retained by the Parent or Restricted Subsidiary after such Asset Sale.

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“Non-Public Purchase Money Debt” means Purchase Money Debt, provided that it (A) is not listed, quoted or tradeable on any exchange or market, including any market for securities eligible for resale pursuant to Rule 144A under the Securities Act, (B) does not clear or settle through the facilities of The Depository Trust Company, Euroclear, Clearstream or any similar facilities, (C) is not issued or sold by means of any prospectus, offering memorandum (but not an information memorandum of the type used in a bank syndication) or similar document typically used in connection with road show presentations, (D) is not marketed in an underwritten securities offering and (E) if placed with or through an agent, the agent does not place it with its high-yield bond accounts.

“Non-Recourse Debt” means Debt:

(a) as to which neither the Parent nor any of its Restricted Subsidiaries (1) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Debt) (other than pledges of Equity Interests of Unrestricted Subsidiaries for the benefit of lenders of Unrestricted Subsidiaries), (2) is directly or indirectly liable as a guarantor or otherwise or (3) constitutes the lender; and

(b) no default with respect to which (including any rights that the holders of the Debt may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Debt (other than the Notes) of the Parent or any of its Restricted Subsidiaries to declare a default on such other Debt or cause the payment of the Debt to be accelerated or payable prior to its Stated Maturity.

“Notes” has the meaning provided in the second paragraph of this Indenture.

“Officer” means the President Director, Deputy President Director, Managing Director or any Director of the Parent, the Issuer or any other Guarantor, as the case may be.

“Officers’ Certificate” means a certificate signed by two Officers of the Parent, at least one of whom shall be the principal executive officer or principal financial officer of the Parent, or such number of managing directors of the Issuer as required by its articles of association to represent the Issuer, as the case may be, and delivered to the Trustee (except that any such certificates delivered as of the date of this Agreement may be signed by one Officer or Managing Director and delivered to the Trustee).

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of the Parent or counsel to the Parent or the Trustee.

“Parent” has the meaning provided in the first paragraph of this Indenture.

“Payment Event of Default” means any event of default (as defined in the 7.75% Guaranteed Notes Indenture or the 7.125% Guaranteed Notes Indenture) relating to the failure to make the payment of principal of, or premium, if any, or interest (including additional amounts) on any of the 7.75% Guaranteed Notes due 2010 or the 7.125% Guaranteed Notes due 2012.

“Permitted Holders” means Qatar Telecom (Qtel) Q.S.C. and its Related Persons.

“Permitted Investment” means any Investment by the Parent or any Restricted Subsidiary in:

(a) any Restricted Subsidiary or any Person that will, upon the making of such Investment, become a Restricted Subsidiary; provided that the primary business of such Restricted Subsidiary is a Telecommunications Business;

(b) any Person if as a result of such Investment such Person is merged or consolidated with or into, or transfers or conveys all or substantially all its Property to, the Parent or a Restricted Subsidiary; provided that such Person’s primary business is a Telecommunications Business;

(c) Temporary Cash Investments;

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(d) receivables owing to the Parent or a Restricted Subsidiary, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Parent or such Restricted Subsidiary deems reasonable under the circumstances;

(e) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

(f) loans and advances to employees made in the ordinary course of business consistent with a policy adopted by the Board of Directors of the Parent;

(g) stock, obligations or other securities received in settlement of debts created in the ordinary course of business and owing to the Parent or a Restricted Subsidiary or in satisfaction of judgments;

(h) any Person to the extent such Investment represents the non-cash portion of the consideration received in connection with an Asset Sale consummated in compliance with Section 4.14;

(i) any investment pursuant to an Interest Rate Agreement entered into by the Parent or any Restricted Subsidiary in the ordinary course of business and otherwise permitted by this Indenture;

(j) any investment pursuant to a Currency Exchange Protection Agreement entered into by the Parent or any Restricted Subsidiary in the ordinary course of business and otherwise permitted by this Indenture; and

(k) other Investments made for Fair Market Value that do not exceed US$10 million.

“Permitted Islamic Financing Obligation” means an unsecured obligation of the Parent or a Wholly-Owned Finance Subsidiary in any Islamic financing transaction.

“Permitted Liens” means:

(a) Liens to secure Purchase Money Debt of the Parent or any Restricted Subsidiary; provided that:

(i) the aggregate principal amount of such Debt subject to such Liens does not exceed 100% of the sum of (i) the Fair Market Value (on the date of the Incurrence thereof) of the applicable Telecommunications Assets, (ii) the Fair Market Value of any services to be provided to the Parent or such Restricted Subsidiary by the seller of the applicable Telecommunications Assets in connection with the construction and installation of such assets, (iii) the amount of interest on such Debt permitted to be capitalized during the period of construction and installation of such assets under GAAP and (iv) any fees required to be paid by the Parent or such Restricted Subsidiary with respect to such Debt; and

(ii) any such Lien may not extend to any Property of the Parent or Restricted Subsidiary, other than the Property acquired, constructed or leased with the proceeds of such Purchase Money Debt and any improvements or accessions to such Property;

(b) Liens for taxes, assessments or governmental charges or levies on the Property of the Parent or any Restricted Subsidiary if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision that shall be required in conformity with GAAP shall have been made therefor;

(c) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens and other similar Liens, on the Property of the Parent or any Restricted Subsidiary arising in the ordinary course of business and securing payment of obligations that are not more than 60 days past due or are being contested in good faith and by appropriate proceedings;

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(d) Liens on the Property of the Parent or any Restricted Subsidiary Incurred in the ordinary course of business to secure performance of obligations with respect to statutory or regulatory requirements, performance or return-of-money bonds, surety bonds or other obligations of a like nature and incurred in a manner consistent with industry practice, in each case which are not Incurred in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of Property and which do not in the aggregate impair in any material respect the use of Property in the operation of the business of the Parent and the Restricted Subsidiaries taken as a whole;

(e) Liens on Property at the time the Parent or any Restricted Subsidiary acquired such Property, including any acquisition by means of a merger or consolidation with or into the Parent or any Restricted Subsidiary; provided, however, that any such Lien may not extend to any other Property of the Parent or any Restricted Subsidiary; provided further, however, that such Liens shall not have been Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Property was acquired by the Parent or any Restricted Subsidiary;

(f) Liens on the Property of a Person at the time such Person becomes a Restricted Subsidiary; provided, however, that (i) any such Lien may not extend to any other Property of the Parent or any Restricted Subsidiary that is not a direct Subsidiary of such Person and (ii) any such Lien was not Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Person became a Restricted Subsidiary;

(g) Pledges or deposits by the Parent or any Restricted Subsidiary under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Debt) or leases to which the Parent or any Restricted Subsidiary is party, or deposits to secure public or statutory obligations of the Parent, or deposits for the payment of rent, in each case Incurred in the ordinary course of business;

(h) Utility easements, building restrictions and such other encumbrances or charges against real Property as are of a nature generally existing with respect to properties of a similar character;

(i) Liens existing on the Issue Date not otherwise described in clauses (a) through (h) above;

(j) Liens on the Property of the Parent or any Restricted Subsidiary to secure any Refinancing, in whole or in part, of any Debt secured by Liens referred to in clauses (e), (f) or (g) above; provided, however, that any such Lien shall be limited to all or part of the same Property that secured the original Lien (together with improvements and accessions to such Property) and the aggregate principal amount of Debt that is secured by such Lien shall not be increased to an amount greater than the sum of:

(i) the outstanding principal amount, or, if greater, the committed amount, of the Debt secured by Liens described under clauses (e), (f) or (g) above at the time the original Lien became a Permitted Lien under this Indenture; and

(ii) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, incurred by the Issuer or such Restricted Subsidiary in connection with such Refinancing;

(k) Liens on the assets of Unrestricted Subsidiaries, or on the Capital Stock of Unrestricted Subsidiaries, that secure Non-Recourse Debt of Unrestricted Subsidiaries;

(l) Liens not otherwise permitted by clauses (a) through (k) above securing Debt not in excess of US$25 million outstanding at any time; and

(m) Liens encumbering customary initial deposits and margin deposits, netting provisions and setoff rights, in each case securing Debt under Hedging Obligations.

“Permitted Refinancing Debt” means any Debt that Refinances any other Debt, including any successive Refinancings, so long as:

(a) such Debt is in an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) not in excess of the sum of:

(i) the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding of the Debt being Refinanced; and

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(ii) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, related to such Refinancing;

(b) the Average Life of such Debt is equal to or greater than the Average Life of the Debt being Refinanced;

(c) the Stated Maturity of such Debt is no earlier than the Stated Maturity of the Debt being Refinanced; and

(d) the new Debt shall not be senior in right of payment to the Debt that is being Refinanced;

provided, however, that Permitted Refinancing Debt shall not include:

(x) Debt of a Subsidiary that Refinances Debt of the Parent, or

(y) Debt of the Parent or a Restricted Subsidiary that Refinances Debt of an Unrestricted Subsidiary.

“Permitted Shareholder Loan Debt” means an unsecured Subordinated Obligation to a Shareholder of the Parent where, until the Notes have been repaid in full, (i) no cash interest payments may be made to the lender and (ii) no principal payments may be paid to the lender.

“Person” means any individual, corporation, company (including any limited liability company), association, partnership, joint venture, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

“Preferred Stock” means any Capital Stock of a Person, however designated, which entitles the holder thereof to a preference with respect to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of any other class of Capital Stock issued by such Person.

“Preferred Stock Dividends” means all dividends with respect to Preferred Stock of Restricted Subsidiaries held by Persons other than the Parent or a Wholly-Owned Subsidiary. The amount of any such dividend shall be equal to the quotient of such dividend divided by the difference between one and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0) then applicable to the issuer of such Preferred Stock.

“principal” of any Debt (including the Notes) means the principal amount of such Debt plus the premium, if any, on such Debt.

“pro forma” means, with respect to any calculation made or required to be made pursuant to the terms hereof, a calculation performed in accordance with Article 11 of Regulation S-X promulgated under the Securities Act, as interpreted in good faith by the Board of Directors of the Parent, or otherwise a calculation made in good faith by the Board of Directors of the Parent, as the case may be.

“Property” means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including Capital Stock in, and other securities of, any other Person. For purposes of any calculation required pursuant to this Indenture, the value of any Property shall be its Fair Market Value.

“Public Equity Offering” means an underwritten public offering of common stock of the Parent; provided that the aggregate gross cash proceeds received by the Parent from such offering shall be no less than US$75 million.

“Purchase Money Debt” means Debt:

(a) consisting of the deferred purchase price of Telecommunications Assets, conditional sale obligations, obligations under any title retention agreement, other purchase money obligations and obligations in respect of industrial revenue bonds, in each case where the maturity of such Debt does not exceed the anticipated useful life of the Telecommunications Assets being financed, and

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(b) Incurred to finance the acquisition, construction or lease by the Parent or a Restricted Subsidiary of Telecommunications Assets, including additions and improvements thereto;

provided, however, that such Debt is Incurred within 180 days after the acquisition, construction or lease of such Telecommunications Assets by the Parent or such Restricted Subsidiary.

“Qualified Tower Sale” means, with respect to the Parent or any Restricted Subsidiary:

(a) one or more transactions involving the disposal and lease back of Indosat Towers (or part(s) thereof), directly or through the sale of shares in a Restricted Subsidiary, where the higher of aggregate market value or aggregate consideration receivable does not exceed 10% of the Total Assets; and

(b) one or more transactions involving any disposal and lease back or further disposal and lease back of Indosat Towers (or part(s) thereof), directly or through the sale of shares in a Restricted Subsidiary, where (i) the higher of aggregate market value or aggregate consideration receivable, when aggregated with the higher of market value or consideration receivable under (a) above does not exceed 20% of the Total Assets, (ii) any such disposal and lease back is entered into with a counterparty which is competent to own and operate Telecommunication Assets similar to the Indosat Towers and will result in the Parent or its Restricted Subsidiaries continuing to have sufficient use of and access to the Indosat Towers to allow it to carry on its business until the Notes are repaid in full, (iii) the Parent obtains a written report from a telecommunications technical consultant of international standing to the effect that such disposal and lease back will not have any adverse operational impact on the business of the Parent and its Restricted Subsidiaries, taken as a whole, (iv) the Parent’s board of directors approves the sale, as evidenced by a Board Resolution delivered to the Trustee, after determining, in good faith, that such disposal and lease back will not have a material adverse commercial impact on the business and financial standing of the Parent and its Restricted Subsidiaries, taken as a whole, (v) the Parent obtains a written opinion from an accountant or an investment banking firm of international standing to the effect that the consideration to be paid or received in connection with such disposal and lease back is fair, from a financial point of view, to the Parent and the Restricted Subsidiaries, and (vi) the Parent obtains an Opinion of Counsel that such disposal and lease back will be in compliance with the prevailing rules and regulations for telecommunications and related businesses in Indonesia.

“Rating Agencies” means Fitch, Moody’s and S&P.

“Rating Category” means (1) with respect to S&P, any of the following categories: “BB,” “B,” “CCC,” “CC,” “C” and “D” (or equivalent successor categories); (2) with respect to Fitch, any of the following categories: “BB,” “B,” “CCC,” “CC,” “C” and “DDD” (or equivalent successor categories); and (3) with respect to Moody’s, any of the following categories: “Ba,” “B,” “Caa,” “Ca,” “C” and “D” (or equivalent successor categories). In determining whether the rating of the Notes has decreased by one or more gradations, gradations within Rating Categories (“+” and “–” for S&P and Fitch; “1”, “2” and “3” for Moody’s shall be taken into account (e.g., with respect to S&P and Fitch, a decline in a rating from “BB+” to “BB,” as well as from “B+” to “B”, will constitute a decrease of one gradation)).

“Rating Date” means in connection with an event described under clauses (a) or (b) of the definition of Change of Control, that date which is 90 days prior to the public notice of the occurrence of such actions or of the intention by the Parent or any other Person or Persons to effect such actions.

“Rating Decline” means in connection with a Change of Control Triggering Event, the occurrence on, or within six months after, the date, or public notice of the occurrence of, a Change of Control or the intention by the Parent or any other Person or Persons to effect a Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies) of any of the events listed below:

(a) in the event the Notes are rated by at least two of the Ratings Agencies on the Rating Date as Investment Grade, the rating of the Notes by either of such Rating Agencies shall be below Investment Grade; or

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(b) in the event the Notes are not rated Investment Grade by at least two Rating Agencies on the Rating Date, (i) in the case of clause (a) of the definition of Change of Control only, the rating of the Notes by any Rating Agency with a rating below Investment Grade shall be decreased by one or more gradations (including gradations within Rating Categories as well as between Rating Categories) and (ii) in the case clause (b) of the definition of Change of Control, no Rating Decline is required to cause a Change of Control Triggering Event.

“Reference Treasury Dealer” means each of any three investment banks of recognised standing that is a primary U.S. Government securities dealer in The City of New York, selected by the Issuer in good faith.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day immediately preceding such redemption date.

“Refinance” means, in respect of any Debt, to refinance, extend, renew, refund, repay, prepay, repurchase, redeem, defease or retire, or to issue other Debt, in exchange or replacement for, such Debt. “Refinanced” and “Refinancing” shall have correlative meanings.

“Related Persons” means any Person who is controlled by a Permitted Holder; provided, that for purposes of this definition “control” means the beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of the Voting Stock of a Person normally entitled to vote in the election of directors, managers or trustees, as applicable, of a Person.

“Repay” means, in respect of any Debt, to repay, prepay, repurchase, redeem, legally defease or otherwise retire such Debt. “Repayment” and “Repaid” shall have correlative meanings.

“Restricted Payment” means:

(a) any dividend or distribution declared or paid on or with respect to any shares of Capital Stock of the Parent or any Restricted Subsidiary (including any payment in connection with any merger or consolidation with or into the Parent or any Restricted Subsidiary), except for any dividend or distribution that is made solely to the Parent or any Restricted Subsidiary (and, if such Restricted Subsidiary is not a Wholly-Owned Subsidiary, to the other shareholders of such Restricted Subsidiary on a pro rata basis or on a basis that results in the receipt by the Parent or a Restricted Subsidiary of dividends or distributions of greater value than it would receive on a pro rata basis) or any dividend or distribution payable or paid in shares of Capital Stock (other than Disqualified Stock) of the Parent;

(b) the purchase, repurchase, redemption, acquisition or retirement for value of any Capital Stock of the Parent or any Restricted Subsidiary (other than from the Parent or any Restricted Subsidiary) or any securities exchangeable for or convertible into any such Capital Stock, including the exercise of any option to exchange any Capital Stock (other than for or into Capital Stock of the Parent that is not Disqualified Stock);

(c) the purchase, repurchase, redemption, acquisition or retirement for value, prior to the date for any scheduled maturity, sinking fund or amortization or other installment payment, of any Subordinated Obligation (other than the purchase, repurchase or other acquisition of any Subordinated Obligation purchased in anticipation of satisfying a scheduled maturity, sinking fund or amortization or other installment obligation, in each case due within one year of the date of acquisition); or

(d) any Investment (other than Permitted Investments) in any Person.

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“Restricted Subsidiary” means:

(a) any Subsidiary of the Parent unless such Subsidiary shall have been designated an Unrestricted Subsidiary as permitted or required pursuant to Section 4.17; and

(b) an Unrestricted Subsidiary that is redesignated as a Restricted Subsidiary as permitted pursuant to such covenant.

“S&P” means Standard & Poor’s Ratings Services or any successor to the rating agency business thereof.

“Sale and Leaseback Transaction” means any direct or indirect arrangement relating to Property now owned or hereafter acquired whereby the Parent or any Restricted Subsidiary transfers such Property to another Person and the Parent or such Restricted Subsidiary leases it back from such Person.

“Securities Act” means the U.S. Securities Act of 1933, as amended from time to time.

“Senior Debt” means all Debt of the Parent or a Restricted Subsidiary, as relevant, whether outstanding on the Issue Date or thereafter created, except for Debt which, in the instrument creating or evidencing the same, is expressly stated to be subordinated in right of payment to the Notes; provided that Senior Debt does not include any obligation to the Parent or any Restricted Subsidiary (other than the Intercompany Loans).

“Significant Subsidiary” means any Subsidiary that would be a “Significant Subsidiary” of the Parent within the meaning of Rule 1.02 under Regulation S-X promulgated by the Commission, Indosat Palapa Company B.V. and Indosat Mentari Company B.V.

“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred).

“Subordinated Obligation” means any Debt of the Parent (whether outstanding on the Issue Date or thereafter Incurred) that is subordinate or junior in right of payment to the Notes and the Guarantee pursuant to a written agreement to that effect.

“Subsidiary” means, in respect of any Person, any corporation, company (including any limited liability company), association, partnership, joint venture or other business entity of which a majority of the total voting power of the Voting Stock is at the time owned or controlled, directly or indirectly, by:

(a) such Person;

(b) such Person and one or more Subsidiaries of such Person; or

(c) one or more Subsidiaries of such Person.

“Telecommunications Assets” means (a) any Property (other than cash, cash equivalents and Capital Stock or other securities) to be owned by the Parent or any Restricted Subsidiary and used in the Telecommunications Business; or (b) Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Parent or another Restricted Subsidiary from any Person other than an Affiliate of the Parent; provided, however, that, in the case of clause (b), such Person is primarily engaged in the Telecommunications Business; and provided further, however, that for purposes of the definition of Purchase Money Debt, Telecommunications Assets shall consist only of Property described in clause (a) above and shall not include Property constituting all or substantially all the assets of a business or an operating unit of a business.

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“Telecommunications Business” means the business of (a) transmitting, or providing services relating to the transmission of, voice, video or data, (b) constructing, creating, developing or marketing communications networks, related network transmission equipment, software and other devices for use in a communications business or (c) evaluating, participating in or pursuing any other activity or opportunity that is primarily related to those identified in clauses (a) or (b) above; provided that the determination of what constitutes a Telecommunications Business shall be made in good faith by the Board of Directors of the Parent.

“Temporary Cash Investments” means any of the following:

(a) Investments in U.S. Government Obligations and Indonesian Government Obligations maturing within 365 days of the date of acquisition thereof; provided that the amount of Investments in Indonesian Government Obligations at any one time outstanding, together with the amount of investments in SBIs made under clause (c) below, shall not exceed an aggregate amount of US$50 million (or the Dollar Equivalent thereof);

(b) Investments in time deposit accounts, certificates of deposit and money market deposits maturing within 90 days of the date of acquisition thereof issued by a bank or trust company organized under the laws of the United States of America or any state thereof, Australia, Belgium, Canada, England, France, Germany, Hong Kong, The Netherlands, New Zealand or Singapore having capital, surplus and undivided profits aggregating in excess of US$500 million and whose long-term debt is rated “A-3” or “A-” or higher according to Moody’s or S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act));

(c) SBIs maturing within 365 days of the acquisition thereof; provided that the amount of Investments in SBIs at any one time outstanding, together with the amount of Investments in Indonesian Government Obligations made under clause (a) above, shall not exceed an aggregate amount of US$50 million (or the Dollar Equivalent thereof);

(d) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) entered into with:

(i) a bank meeting the qualifications described in clause (b) above, or

(ii) any primary government securities dealer reporting to the Market Reports Division of the Federal Reserve Bank of New York;

(e) Investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Parent) organized and in existence under the laws of the United States of America with a rating at the time as of which any Investment therein is made of “P-1” (or higher) according to Moody’s or “A-1” (or higher) according to S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act));

(f) Investments in debt securities issued by a corporation (other than an Affiliate of the Parent) organized and in existence under the laws of the Republic of Indonesia with a rating at the time as of which any Investment therein is made of “B3” (or higher) according to Moody’s or “B-” (or higher) according to S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act)); provided that such Investments at any one time outstanding shall not exceed US$10 million;

(g) direct obligations (or certificates representing an ownership interest in such obligations) of any state of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of such state is pledged and which are not callable or redeemable at the issuer’s option; provided that:

(i) the long-term debt of such state is rated “A-3” or “A-” or higher according to Moody’s or S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act)), and

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(ii) such obligations mature within 180 days of the date of acquisition thereof;

(h) Investments in debt securities maturing not more than 365 days after the date of acquisition issued by a corporation (other than an Affiliate of the Parent), the repayment of principal of which is guaranteed by a bank or trust company meeting the requirements described in clause (b) of this definition; provided that the amount of such Investments at any one time outstanding shall not exceed US$10 million; and

(i) Investments in money market mutual funds with a rating at the time as of which any Investment therein is made of “Aa2” (or higher) according to Moody’s or “AA” (or higher) according to S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act)).

(j) Investments of the type described in clauses (b) and (c) above issued by or entered into with any bank incorporated or licensed to operate under the laws of the Republic of Indonesia whose long term debt is rated “A” or higher according to at least one recognized statistical rating organization in Indonesia (which may be a domestic or international rating organization) and which has capital and surplus in excess of US$200.0 million; provided that an Investment of no more than US$100.0 million may be made in any one such entity on any date.

“TIA” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of this Indenture; provided, however, that, in the event the TIA is amended after such date, “TIA” means, to the extent required by any such amendments, the Trust Indenture Act of 1939, as so amended.

“Total Assets” means, as of any date of determination, the total consolidated assets recorded in the Parent’s most recent quarterly consolidated financial statements prepared in accordance with GAAP.

“Trust Officer” means any officer within the Global Corporate Trust department of the Trustee (or any successor group of the Trustee) responsible for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

“Trustee” means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor.

“Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to time.

“Unrestricted Subsidiary” means any Subsidiary of the Parent that is designated by the Board of Directors of the Parent as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary:

(a) has no Debt other than Non-Recourse Debt;

(b) is not party to any agreement, contract, arrangement or understanding with the Parent or any Restricted Subsidiary of the Parent unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Parent or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Parent; and

(c) is a Person with respect to which neither the Parent nor any of its Restricted Subsidiaries has any direct or indirect obligation (1) to subscribe for additional Equity Interests or (2) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results.

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Any designation of a Subsidiary of the Parent as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 4.11. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Debt of such Subsidiary will be deemed to be Incurred by a Restricted Subsidiary of the Parent as of such date and, if such Debt is not permitted to be Incurred as of such date under Section 4.10, the Parent will be in Default of such covenant. The Board of Directors of the Parent may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will be deemed to be an Incurrence of Debt by a Restricted Subsidiary of the Parent of any outstanding Debt of such Unrestricted Subsidiary and such designation will only be permitted if (1) such Debt is permitted under Section 4.10, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period and (2) no Default or Event of Default would be in existence following such designation.

“U.S.” means the United States of America.

“U.S. Dollars,” “dollars” or the sign “US$” means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts.

“U.S. Government Obligations” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer’s option.

“Voting Stock” of any Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

“Wholly-Owned Finance Subsidiary” means, at any time, a Wholly-Owned Subsidiary established for the purpose of issuing Debt solely to finance the activities of the Parent or any of its Restricted Subsidiaries engaged in a Telecommunications Business, which Debt is unconditionally and irrevocably guaranteed by the Parent, and to engage in other activities incidental thereto.

“Wholly-Owned Subsidiary” means, at any time, a Restricted Subsidiary all the Voting Stock of which (except directors’ qualifying shares) is at such time owned, directly or indirectly, by the Parent and its other Wholly-Owned Subsidiaries.

“7.125% Guaranteed Notes due 2012” means the 7.125% Guaranteed Notes due 2012 issued by Indosat International Finance Company B.V., a wholly owned finance subsidiary of the Parent, and unconditionally and irrevocably guaranteed by PT Indosat Tbk, originally issued in an aggregate principal amount of US$250,000,000 pursuant to the 7.125% Guaranteed Notes Indenture.

“7.125% Guaranteed Notes Indenture” means the indenture dated as of June 22, 2005, among Indosat International Finance Company B.V., as issuer, PT Indosat Tbk, as guarantor, and The Bank of New York, as trustee, as supplemented from time to time.

“7.75% Guaranteed Notes due 2010” means the 7.75% Guaranteed Notes due 2010 issued by Indosat Finance Company B.V., a wholly owned finance subsidiary of the Parent, and unconditionally and irrevocably guaranteed by PT Indosat Tbk, originally issued in an aggregate principal amount of US$300,000,000 pursuant to the 7.75% Guaranteed Notes Indenture.

“7.75% Guaranteed Notes Indenture” means the indenture dated as of November 5, 2003, among Indosat Finance Company B.V., as issuer, PT Indonesian Satellite Corporation Tbk, PT Satelit Palapa Indonesia and PT Indosat MultiMedia Mobile, as guarantors, and The Bank of New York, as trustee, as supplemented from time to time.

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Section 1.02. Other Definitions.

Term	Defined in Section
“Additional Amounts”		4.22
“Affiliate Transaction”		4.16
“Allocable Excess Proceeds”		4.14
“Change of Control Offer”		4.20
“Change of Control Payment Date”		4.20
“Change of Control Purchase Price”		4.20
“covenant defeasance”		8.01
“Events of Default”		6.01
“Excess Proceeds”		4.14
“Global Notes”		Appendix A
“legal defeasance”		8.01
“Legal Holiday”		11.07
“Note Register”		2.04
“Notice of Default”		6.01
“Original Notes”		2.01
“Paying Agent”		2.04
“Permitted Debt”		4.10
“Prepayment Offer”		4.14
“Principal Paying Agent”		2.04
“Registrar”		2.04
“Relevant Jurisdiction”		2.0422
“Reversion Date”		4.21
“Surviving Person”		5.01
“Suspended Covenants”		4.21
“Suspension Date”		4.21
“Suspension Period”		4.21

Section 1.03. Incorporation by Reference of TIA. The following TIA terms have the following meanings:

“indenture securities” means the Notes.

“indenture security holder” means a Holder.

“indenture to be qualified” means this Indenture.

“indenture trustee” or “institutional trustee” means the Trustee.

“obligor” on the indenture securities means the Issuer and any other obligor on the indenture securities.

All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule have the meanings assigned to them by such definitions.

Section 1.04. Rules of Construction. Unless the context otherwise requires:

(a) a term has the meaning assigned to it;

(b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

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(c) “or” is not exclusive;

(d) “including” means including without limitation;

(e) words in the singular include the plural and words in the plural include the singular;

(f) unsecured Debt shall not be deemed to be subordinate or junior to secured Debt merely by virtue of its nature as unsecured Debt;

(g) the principal amount of any non-interest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP;

(h) the principal amount of any Preferred Stock shall be the greater of (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock; and

(i) any reference to principal, premium or interest will be deemed also to refer to any Additional Amounts which may be payable.

ARTICLE 2

THE NOTES

Section 2.01. Original Notes; Additional Notes. Subject to Section 2.03, the Trustee shall authenticate Notes for original issue on the Issue Date in the aggregate principal amount of US$650,000,000 (the “Original Notes”) and shall, pursuant to the terms hereof, authenticate and deliver Notes upon registration of transfer of, or in exchange for, or in lieu of, Original Notes pursuant to Section 2.07, 2.08, 2.09 or 3.06 or Appendix A.

The Issuer shall be entitled, subject to its compliance with Section 4.10, to issue Additional Notes under this Indenture, which shall have identical terms as the Original Notes issued on the Issue Date, other than with respect to date of issuance and issue price, and which will rank equally with the Notes in all respects, except for the payment of interest accruing prior to the issue date of the Additional Notes and except for the first payment of interest following the issue date of the Additional Notes; provided, however, that unless such Additional Notes are issued under a separate CUSIP number, either such Additional Notes are part of the same “issue” within the meaning of United States Treasury Regulation section 1.1275-1(f) or neither the Notes nor such Additional Notes are issued with more than de minimis original issue discount for United States federal income tax purposes. The Original Notes issued on the Issue Date and any Additional Notes issued shall be treated as a single class for all purposes under this Indenture. Subject to Section 2.03, the Trustee shall authenticate such Additional Notes and shall, pursuant to the terms hereof, authenticate and deliver Notes upon registration of transfer of, or in exchange for, or in lieu of, Additional Notes pursuant to Section 2.07, 2.08, 2.09 or 3.06 or Appendix A.

With respect to Additional Notes, the Issuer shall set forth in a Board Resolution and an Officers’ Certificate, a copy of each of which shall be delivered to the Trustee, the following information:

(a) the aggregate principal amount of such Additional Notes to be authenticated and delivered under this Indenture;

(b) the issue price, the issue date and the CUSIP, ISIN or Common Code number of such Additional Notes; and

(c) the applicability of Appendix A to such Additional Notes and whether such Additional Notes shall be issued in one of the forms set forth in Appendix A.

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Section 2.02. Form and Dating. Provisions relating to the Notes are set forth in Appendix A, which is hereby incorporated in and expressly made part of this Indenture. The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A to Appendix A which is hereby incorporated in and expressly made a part of this Indenture. The Notes may have notations, legends or endorsements required by law, stock exchange rules, agreements to which the Issuer is subject, if any, or usage, provided that any such notation, legend or endorsement is in a form reasonably acceptable to the Issuer. Each Note shall be dated the date of its authentication. The terms of the Original Notes set forth in Exhibit A to Appendix A are part of the terms of this Indenture.

Section 2.03. Execution and Authentication. An Officer shall sign the Notes for the Issuer by manual or facsimile signature.

If an Officer whose signature is on an Original Note no longer holds that office at the time the Trustee authenticates the Original Note, the Original Note shall be valid nevertheless.

At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Original Notes executed by the Issuer to the Trustee for authentication, together with a written order of the Issuer in the form of an Officers’ Certificate for the authentication and delivery of such Original Notes, and the Trustee in accordance with such written order of the Issuer shall authenticate and deliver such Original Notes.

An Original Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Original Note. The signature shall be conclusive evidence that the Original Note has been authenticated under this Indenture.

The Trustee may appoint an authenticating agent reasonably acceptable to the Issuer to authenticate the Original Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Original Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.

Section 2.04. Registrar and Paying Agent. The Issuer shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange in the Borough of Manhattan, The City of New York, New York (the “Registrar”) and one or more offices or agencies where Notes may be presented for payment (the “Principal Paying Agent”) at all times in the Borough of Manhattan, The City of New York, New York (which initially will be the corporate trust office of The Bank of New York Mellon) and as long as the Notes are listed on the Singapore Exchange Securities Trading Limited (the “Singapore Exchange”) and if the rules of the Singapore Exchange require, in Singapore (the “Singapore Paying Agent” and together with the Principal Paying Agent, the “Paying Agent”). The Registrar will maintain a register (the “Note Register”) reflecting ownership of the Notes outstanding from time to time and will make payments on and facilitate transfer of the Notes on behalf of the Issuer. The Issuer may have one or more co-registrars and one or more additional paying agents. The term “Paying Agent” includes any additional paying agent. The Issuer may change the Paying Agent or Registrar without prior notice to the holders, but only if the Issuer pays Additional Amounts with respect to taxes that may result from such change.

The Issuer shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent. The Issuer shall notify the Trustee of the name and address of any such agent. If the Issuer fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Issuer or any Wholly-Owned Subsidiary incorporated or organized within the United States may act as Paying Agent, Registrar, co-registrar or transfer agent.

The Issuer initially appoints the Trustee as Registrar and Principal Paying Agent in the Borough of Manhattan, The City of New York, New York in connection with the Notes.

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Section 2.05. Paying Agent to Hold Money in Trust. At least one Business Day prior to each due date of the principal and interest on any Note, the Issuer shall deposit with the Paying Agent a sum sufficient to pay such principal and interest when so becoming due. Each Paying Agent shall hold in trust for the benefit of holders of the Notes or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Notes and shall notify the Trustee of any default by the Issuer in making any such payment. If the Issuer or a Wholly-Owned Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Issuer at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee.

Notwithstanding the foregoing, if for any reason the amounts received by the Paying Agent pursuant to this Section 2.05 hereof shall be insufficient (together with any funds held by the Paying Agent which are available for such purpose) to satisfy all claims for principal, premium (if any), any other payment obligation of the Issuer and all Additional Amounts in respect of the Notes then due and payable, none of the Paying Agents shall be bound to pay any such claim until either the Paying Agent has received the full amount of the moneys then due and payable in respect of the Notes or other arrangements satisfactory to the Paying Agent have been made.

Section 2.06. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of holders of the Notes. If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of holders of the Notes.

Section 2.07. Replacement Notes. If a mutilated Note is surrendered to the Registrar or if the holder of a Note claims that such Note has been lost, destroyed or wrongfully taken, the Issuer shall issue and the Trustee, upon written order of the Issuer pursuant to Section 2.03, shall authenticate a replacement Note if the requirements of Section 8-405 of the Uniform Commercial Code are met and the holder of a Note satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Issuer, such holder of a Note shall furnish an indemnity bond sufficient in the judgment of the Issuer and the Trustee to protect the Issuer, the Trustee, the Paying Agent, the Registrar and any co-registrar from any loss which any of them may suffer if a Note is replaced. The Issuer and the Trustee may at their absolute discretion charge the holder of a Note for their expenses in replacing a Note.

Every replacement Note is an additional obligation of the Issuer.

Section 2.08. Outstanding Notes. Notes outstanding at any time are all authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding. A Note does not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds the Note.

If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee and the Issuer receive proof satisfactory to them that the replaced Note is held by a bona fide purchaser.

If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Notes (or portions thereof) to be redeemed or maturing, as the case may be, then on and after that date such Notes (or portions thereof) cease to be outstanding and interest on them ceases to accrue.

Section 2.09. Temporary Notes. Until definitive Notes are ready for delivery, the Issuer may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Issuer considers appropriate for temporary Notes. Without unreasonable delay, the Issuer shall prepare and the Trustee, upon written order of the Issuer pursuant to Section 2.03, shall authenticate definitive Notes and deliver them in exchange for temporary Notes.

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Section 2.10. Cancellation. The Issuer at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for payment. The Trustee and no one else shall cancel and destroy all Notes surrendered for payment or cancellation and deliver a certificate of such destruction to the Issuer unless the Issuer directs the Trustee to deliver canceled Notes to the Issuer. The Issuer may not issue new Notes to replace Notes it has redeemed, paid or delivered to the Trustee for cancellation. The Trustee shall not authenticate Notes in place of canceled Notes other than pursuant to the terms of this Indenture.

Section 2.11. Defaulted Interest. If the Issuer defaults in a payment of interest on the Notes, the Issuer shall pay the defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Issuer may pay the defaulted interest to the persons who are holders of Notes on a subsequent special record date. The Issuer shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail to each holder of a Note a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.

Section 2.12. CUSIP, ISIN and Common Code Numbers. The Issuer in issuing the Notes may use “CUSIP,” “ISIN” or “Common Code” numbers (if then generally in use) and, if so, the Trustee shall use “CUSIP,” “ISIN” or “Common Code” numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Issuer shall promptly notify the Trustee of any change in the “CUSIP,” “ISIN” and “Common Code” numbers.

ARTICLE 3

REDEMPTION

Section 3.01. Notices to Trustee. If the Issuer elects to redeem Notes pursuant to paragraph 5 or 6 of the Notes, it shall notify the Trustee in writing of the redemption date, the principal amount of Notes to be redeemed and that such redemption is being made pursuant to paragraph 5 or 6 of the Notes, as the case may be.

The Issuer shall give each notice to the Trustee provided for in this Section at least 45 days before the redemption date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers’ Certificate of the Issuer and an Opinion of Counsel from the Issuer to the effect that such redemption will comply with the conditions herein.

Section 3.02. Selection of Notes to be Redeemed. If fewer than all the Notes are to be redeemed, the Trustee shall select the Notes to be redeemed pro rata or by lot or by a method that complies with applicable legal and securities exchange requirements, if any, and that the Trustee considers fair and appropriate and in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances. The Trustee shall make the selection from outstanding Notes not previously called for redemption. The Trustee may select for redemption portions of the principal of Notes that have denominations larger than US$1,000. Notes and portions of them the Trustee selects shall be in amounts of US$1,000 or a whole multiple of US$1,000. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. The Trustee shall notify the Issuer promptly of the Notes or portions of Notes to be redeemed.

Section 3.03. Notice of Redemption. At least 30 days but not more than 60 days before a date for redemption of Notes, the Issuer shall mail a notice of redemption by first-class mail to each holder of Notes to be redeemed.

The notice shall identify the Notes to be redeemed and shall state:

(a) the redemption date;

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(b) the redemption price;

(c) the name and address of the Paying Agent;

(d) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

(e) if fewer than all the outstanding Notes are to be redeemed, the identification and principal amounts of the particular Notes to be redeemed;

(f) that, unless the Issuer defaults in making such redemption payment, interest on Notes (or portion thereof) called for redemption ceases to accrue on and after the redemption date;

(g) the paragraph of the Notes pursuant to which the Notes called for redemption are being redeemed;

(h) the CUSIP, ISIN or Common Code number, if any, printed on the Notes being redeemed; and

(i) that no representation is made as to the correctness or accuracy of the CUSIP, ISIN or Common Code number, if any, listed in such notice or printed on the Notes.

At the Issuer’s request, the Trustee shall give the notice of redemption in the Issuer’s name and at the Issuer’s expense. In such event, the Issuer shall provide the Trustee with the information required by this Section at least 45 days before the redemption date.

Section 3.04. Effect of Notice of Redemption. Once notice of redemption is mailed, Notes called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surrender to the Paying Agent, such Notes shall be paid at the redemption price stated in the notice, plus accrued interest to the redemption date (subject to the right of holders of Notes of record on the relevant record date to receive interest due on the related interest payment date that is on or prior to the date of redemption). Failure to give notice or any defect in the notice to any holder of a Note shall not affect the validity of the notice to any other holder of a Note. Any notice of redemption is irrevocable.

Section 3.05. Deposit of Redemption Price. At least one Business Day prior to the redemption date, the Issuer shall deposit with the Paying Agent (or, if the Issuer or a Wholly-Owned Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest (subject to the right of holders of Notes of record on the relevant record date to receive interest due on the related interest payment date that is on or prior to the date of redemption) on all Notes to be redeemed on that date other than Notes or portions of Notes called for redemption that have been delivered by the Issuer to the Trustee for cancellation.

Section 3.06. Notes Redeemed in Part. Upon surrender of a Note that is redeemed in part, the Issuer shall execute and the Trustee, upon written order of the Issuer pursuant to Section 2.03, shall authenticate for the holder of a Note (at the Issuer’s expense) a new Note equal in principal amount to the unredeemed portion of the Note surrendered.

ARTICLE 4

COVENANTS

Section 4.01. Payment of Notes. The Issuer shall promptly pay the principal of and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due.

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The Issuer shall pay interest on overdue principal at the rate specified therefor in the Notes, and it shall pay interest on overdue installments of interest at the rate borne by the Notes to the extent lawful.

Section 4.02. Maintenance of Office or Agency. The Issuer shall maintain such offices or agencies required under Section 2.04. The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 11.01.

Section 4.03. Corporate Existence. Except as otherwise permitted by or excluded from Article 5, the Parent shall do or cause to be done, at its own cost and expense, all things reasonably necessary to preserve and keep in full force and effect its corporate or other existence and the corporate or other existence of each of the Restricted Subsidiaries in accordance with the respective organizational documents of each such Restricted Subsidiary and the material rights (charter and statutory) and franchises of the Issuer and each such Restricted Subsidiary; provided, however, that the Parent shall not be required to preserve, with respect to the Issuer and any other Guarantor, any material right or franchise and, with respect to any Restricted Subsidiaries (other than, subject to Section 4.24, the Issuer and Indosat Mentari Company B.V.) that are not Guarantors, any such existence, material right or franchise, if the Board of Directors of the Parent, the Issuer, any other Guarantor, or such other Restricted Subsidiary, as the case may be, shall determine in good faith that the preservation thereof is no longer reasonably necessary or desirable in the conduct of the business of the Parent and its Subsidiaries, taken as a whole, and shall not adversely affect the holders of the Notes in any material respect.

Section 4.04. Payment of Taxes and Other Claims. The Parent shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon it or any of its Subsidiaries or its Properties or any of its Subsidiaries’ Properties and (b) all lawful claims for labor, materials and supplies that, if unpaid, might by law become a Lien upon its Properties or any of its Subsidiaries’ Properties, except, in each case, as would not be, in the aggregate, reasonably likely to have a material adverse effect on the business and financial condition of the Parent and its Restricted Subsidiaries, taken as a whole; provided, however, that the Parent shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings properly instituted and diligently conducted for which adequate reserves, to the extent required under GAAP, have been taken.

Section 4.05. Maintenance of Properties and Insurance. (a) The Parent shall, and shall cause each of its Restricted Subsidiaries to, maintain its Properties in good working order and condition (subject to ordinary wear and tear) and make all reasonably necessary repairs, renewals, replacements, additions, betterments and improvements thereto and actively conduct and carry on its business, unless the failure to do so, in each case, would not be, in the aggregate, reasonably likely to have a material adverse effect on the business and financial condition of the Parent and its Restricted Subsidiaries, taken as a whole; provided, however, that nothing in this Section 4.05 shall prevent the Parent or any of its Restricted Subsidiaries from discontinuing the operation and maintenance of any of its Properties if such discontinuance is, in the good faith judgment of the Board of Directors or other governing body of the Parent or the Restricted Subsidiary concerned, as the case may be, desirable in the conduct of its businesses and is not disadvantageous in any material respect to the holders of the Notes.

(b) The Parent shall maintain insurance (including appropriate self-insurance) against loss or damage of the kinds that, in the good faith judgment of the Parent, are prudent and customary for the conduct of the business of the Parent and its Restricted Subsidiaries, in such amounts, with such deductibles, and by such methods as shall be customary, in the good faith judgment of the Parent, for companies similarly situated in the industry.

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Section 4.06. Compliance Certificate; Notice of Default. (a) The Issuer and the Parent shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Parent ending after the Issue Date, an Officers’ Certificate stating that a review of its activities during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether it has kept, observed, performed and fulfilled its obligations under this Indenture and further stating, as to each such Officer signing such certificate, that to the best of such Officer’s knowledge, after due inquiry, the Issuer, the Parent and any other Guarantor during such preceding fiscal year has kept, observed, performed and fulfilled each and every such covenant and the obligations contained in this Indenture and the Notes and no Default or Event of Default occurred during such year and at the date of such certificate there is no Default or Event of Default that has occurred and is continuing or, if such signers do know of such Default or Event of Default, the certificate shall describe the Default or Event of Default and its status with particularity. The Officers’ Certificate shall also notify the Trustee should either the Issuer or the Parent elect to change the manner in which it fixes its fiscal year end. The Issuer and the Parent will also be obligated to notify the Trustee of any default or defaults in the performance of any covenants or agreements under this Indenture.

(b) The Parent shall deliver written notice in the form of an Officers’ Certificate to the Trustee within 30 days after the occurrence of any such event that, with the giving of notice or the lapse of time would become an Event of Default, setting forth the status of such event and what action the Parent is taking or proposes to take with respect thereto.

Section 4.07. Compliance with Laws. The Parent shall, and shall cause each of its Subsidiaries to, comply with all applicable statutes, rules, regulations, orders and restrictions of the Republic of Indonesia, the United States of America, and The Netherlands, all states and municipalities thereof, and any other jurisdiction in which any of them controls a business or owns property and, in each case, all subdivisions thereof, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the Republic of Indonesia, the United States of America, The Netherlands and any other jurisdiction in which any of them controls a business or owns property and, in each case, all subdivisions thereof, in respect of the conduct of its businesses and the ownership of its properties, except for such noncompliances as are not in the aggregate reasonably likely to have a material adverse effect on the business or financial condition of the Parent and its Subsidiaries, taken as a whole.

Section 4.08. Waiver of Stay, Extension or Usury Laws. The Issuer and each Guarantor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Issuer or any such Guarantor, as the case may be, from paying all or any portion of the principal of or interest on the Notes or performing its Guarantee, as the case may be and as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) the Issuer and each Guarantor, hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.

Section 4.09. Commission Reports. So long as any of the Notes remain outstanding, the Parent will file with the Trustee and furnish to the holders upon request, as soon as they are available but in any event not more than ten calendar days after they are filed with the Indonesia Stock Exchange or any other national stock exchange on which the Parent’s Capital Stock is at anytime listed for trading, true and correct copies of any financial or other report in the English language (and an English translation of any financial or other report in any other language) filed with such exchange; provided that, if at any time the Common Stock of the Parent ceases to be listed for trading on the Indonesia Stock Exchange or any other national stock exchange, the Parent will file with the Trustee and furnish to the holders:

(a) as soon as they are available, but in any event within 120 calendar days after the end of the fiscal year of the Parent, copies of its financial statements (on a consolidated basis and in the English language) in respect of such financial year (including a statement of income, balance sheet and cash flow statement) audited by a member firm of an internationally recognized firm of independent accountants; and

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(b) as soon as they are available, but in any event within 60 calendar days after the end of each quarterly period of the Parent, copies of its financial statements (on a consolidated basis and in the English language) in respect of such quarterly period (including a statement of income, balance sheet and cash flow statement).

In addition, the Parent and the Issuer shall furnish to the holders of the Notes and to prospective investors designated by such holders, upon the request of such holders, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the Notes are not freely transferable under the Securities Act by Persons that are not “affiliates” under the Securities Act.

Section 4.10. Limitation on Debt. The Parent shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Debt unless, after giving effect to the application of the proceeds thereof, no Default or Event of Default would occur as a consequence of such Incurrence or be continuing following such Incurrence and either:

(a) such Debt is Debt of the Issuer, a Wholly-Owned Finance Subsidiary, or the Guarantor or such Debt is secured or unsecured Non-Public Purchase Money Debt of a Restricted Subsidiary and after giving effect to the Incurrence of such Debt and the application of the proceeds thereof, the Consolidated Debt to EBITDA Ratio would be less than 4.0 to 1.0; or

(b) such Debt is Permitted Debt.

The term “Permitted Debt” shall mean the following:

(i) Debt of the Issuer evidenced by the Notes (excluding Additional Notes), the Guarantee and the Debt of the Parent evidenced by any Intercompany Loan;

(ii) Existing Debt;

(iii) (A) Debt of the Guarantor owing to and held by any Restricted Subsidiary (other than an Intercompany Loan), and (B) Debt of any Restricted Subsidiary owing to and held by the Guarantor or any Wholly-Owned Subsidiary; provided, however, that (x) with respect to Debt referred to in clause (iii)(A) above, such Debt is subordinate and junior in right of payment to the Notes and the Guarantee and shall not be secured by any Lien, and (y) subsequent issue or transfer of Capital Stock or other event that results in any such Restricted Subsidiary or Wholly-Owned Subsidiary ceasing to be a Restricted Subsidiary or Wholly-Owned Subsidiary, or any subsequent transfer of any such Debt (except to the Guarantor or Restricted Subsidiary (in the case of clause (iii)(A) above) or to the Guarantor or Wholly-Owned Subsidiary (in the case of clause (iii)(B) above)) shall be deemed, in each case, to constitute the Incurrence of such Debt by the issuer thereof;

(iv) Debt of a Restricted Subsidiary outstanding on the date on which such Restricted Subsidiary was acquired by the Guarantor or otherwise became a Restricted Subsidiary (other than Debt Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Subsidiary of the Guarantor or was otherwise acquired by the Guarantor); provided that at the time such Restricted Subsidiary was acquired by the Guarantor or otherwise became a Restricted Subsidiary and after giving effect to the Incurrence of such Debt, the Parent would have been able to Incur US$1.00 of additional Debt pursuant to clause (a) of the first paragraph of this Section 4.10;

(v) Debt under Interest Rate Agreements entered into by the Parent or any Restricted Subsidiary for the purpose of limiting interest rate risk in the ordinary course of the financial management of the Parent or such Restricted Subsidiary or reducing borrowing costs and/or costs of Currency Exchange Protection Agreements and not for speculative purposes; provided that the obligations under such agreements are directly related to payment obligations on Debt Incurred or intended in good faith to be incurred and otherwise permitted by the terms of this Section 4.10;

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(vi) Debt under Currency Exchange Protection Agreements entered into by the Parent or any Restricted Subsidiary for the purpose of limiting currency exchange rate risks directly related to transactions entered into or intended in good faith to be entered into by the Parent or such Restricted Subsidiary in the ordinary course of business and not for speculative purposes;

(vii) Debt of the Parent in an aggregate principal amount outstanding at any one time not exceeding US$30 million;

(viii) Debt of the Parent or any Restricted Subsidiary in an aggregate principal amount outstanding at any one time not exceeding US$20 million;

(ix) Debt of PT Aplikanusa Lintasarta in an aggregate principal amount outstanding at any one time not exceeding US$50 million or any guarantee provided by the Parent with respect to such Debt;

(x) Permitted Refinancing Debt Incurred in respect of Debt Incurred pursuant to clause (a) of the first paragraph of this Section 4.10 and clauses (i), (ii) and (iv) above; and

(xi) Debt in respect of customary agreements providing for indemnification, adjustments of purchase price after closing, or similar obligations, or from guarantees or letters of credit, surety bonds or performance bonds securing any such obligations of the Parent or any Restricted Subsidiary pursuant to such agreements, Incurred in connection with the disposition of any business, assets or Restricted Subsidiary of the Parent or any Restricted Subsidiary (other than guarantees of Debt Incurred by any Person acquiring all or any portion of any such business, assets or Restricted Subsidiary of the Parent or any Restricted Subsidiary for the purpose of financing such acquisition) and in an aggregate principal amount not to exceed the gross proceeds actually received by the Parent or any Restricted Subsidiary in connection with such disposition.

For purposes of determining compliance with this Section 4.10, in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, including under clause (a) of this Section 4.10, the Issuer, in its sole discretion, shall classify, and from time to time may reclassify, such item of Indebtedness. The Guarantor and the Issuer shall not incur any Debt (including Permitted Debt) that is contractually subordinated in right of payment to any other Debt of the Guarantor and the Issuer unless such Debt is also contractually subordinated in right of payment to the Notes and the Guarantee on substantially identical terms.

Section 4.11. Limitation on Restricted Payments. The Parent shall not make, and shall not permit any Restricted Subsidiary to make, directly or indirectly, any Restricted Payment unless at the time of, and after giving effect to, such proposed Restricted Payment:

(a) no Default or Event of Default would occur or be continuing; and

(b) the Parent could incur at least US$1.00 of additional Debt pursuant to clause (a) of the first paragraph of Section 4.10.

(c) Notwithstanding the foregoing limitation:

(i) the Parent may pay dividends on its Capital Stock within 60 days of the declaration thereof if, on said declaration date, such dividends could have been paid in compliance with the first paragraph of this Section 4.11; provided, however, that at the time of such payment of such dividend, no Default or Event of Default shall have occurred and be continuing (or result therefrom);

(ii) the Parent may purchase, repurchase, redeem, legally defease, acquire or retire for value Capital Stock of the Parent or Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Parent (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Parent or an employee stock ownership plan or trust established by the Parent or any such Subsidiary for the benefit of their employees);

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(iii) the Parent may purchase, repurchase, redeem, legally defease, acquire or retire for value any Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of Permitted Refinancing Debt; and

(iv) the Parent may make an Investment in any Person in exchange for the Capital Stock of the Parent (other than Disqualified Stock), provided, however, that at the time of, and after giving effect to, such Investment, the Parent is in compliance with clause (a) of the first paragraph of this Section 4.11.

Section 4.12. Limitation on Liens. The Parent shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or suffer to exist, any Lien (other than the Permitted Liens) upon any of their Property, whether owned at the Issue Date or thereafter acquired, or any interest therein or any income or profits therefrom, unless it has made or will make effective provision whereby the Notes will be secured by such Lien equally and ratably with (or prior to) all other Debt of the Parent or any Restricted Subsidiary secured by such Lien.

Section 4.13. Limitation on Issuance or Sale of Capital Stock of Restricted Subsidiaries. The Parent shall not, and shall not permit any Restricted Subsidiary to:

(a) sell, pledge, hypothecate or otherwise dispose of any shares of Capital Stock of a Restricted Subsidiary; or

(b) permit any Restricted Subsidiary to, directly or indirectly, issue or sell or otherwise dispose of any of its shares of Capital Stock;

other than, in the case of either clause (a) or (b):

(i) directors’ qualifying shares to the extent required by applicable law;

(ii) to the Parent or a Wholly-Owned Subsidiary;

(iii) Permitted Liens; or

(iv) a disposition of 100% of the shares of Capital Stock of such Restricted Subsidiary held by the Parent and its Restricted Subsidiaries; provided, however, that, in the case of this clause (iv), such disposition is effected in compliance with Section 4.14; or

(v) the issuance or sale of Capital Stock of a Restricted Subsidiary (other than the Issuer or Indosat Mentari Company B.V.) which remains a Restricted Subsidiary after any such issuance or sale; provided, however, that the Parent or such Restricted Subsidiary applies the Net Available Cash of such issuance or sale in accordance with Section 4.14.

Section 4.14. Limitation on Asset Sales. The Parent shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Sale in any one transaction or series of transactions unless:

(a) no Default will have occurred and be continuing or would occur as a result of such Asset Sale;

(b) the Parent or such Restricted Subsidiary receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the Property subject to such Asset Sale;

(c) in the case of an Asset Sale that constitutes a Material Asset Sale, or which would fall under clause (b) of the second paragraph of this Section 4.14, the Parent could Incur at least US$1.00 of additional Debt pursuant to Section 4.10(a) and

(d) at least 75% of the consideration paid to the Parent or such Restricted Subsidiary in connection with such Asset Sale is in the form of any of the following (or any combination thereof):

(i) cash or cash equivalents;

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(ii) the assumption by the purchaser of liabilities of the Parent or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes or the Guarantee) as a result of which the Parent and the Restricted Subsidiaries are no longer obligated with respect to such liabilities; and

(iii) Telecommunications Assets.

The Net Available Cash (or any portion thereof) from Asset Sales shall be applied as follows:

(a) subject to clause (b) of the second paragraph of this Section 4.14, in the case of an Asset Sale that is not a Material Asset Sale, the Net Available Cash may be applied in any manner that does not constitute a Restricted Payment;

(b) if the aggregate Fair Market Value of the Property subject to Asset Sales (other than a Material Asset Sale) in any 12-month period exceeds 5% of Total Assets, the excess of such amount in such 12-month period available as Net Available Cash shall be applied in accordance with clause (c) of the second paragraph of this Section 4.14; and

(c) in the case of an Asset Sale that is a Material Asset Sale, the Net Available Cash (or any portion thereof) may be applied by the Parent or a Restricted Subsidiary, to the extent the Parent or such Restricted Subsidiary elects (or is required by the terms of any Debt) as follows:

(i) to Repay Senior Debt (excluding, in any such case, any Debt owed to an Affiliate of a Guarantor, other than the Intercompany Loans); or

(ii) to reinvest in Telecommunications Assets (including by means of an Investment in Telecommunications Assets by a Restricted Subsidiary with Net Available Cash received by the Parent or another Restricted Subsidiary).

Any Net Available Cash from an Asset Sale not applied in accordance with clauses (c)(i) and (c)(ii) of the second paragraph of this Section 4.14 within 360 days from the date of the receipt of such Net Available Cash shall constitute “Excess Proceeds.”

When the aggregate amount of Excess Proceeds exceeds US$50 million (taking into account any income earned on such Excess Proceeds), the Issuer will be required to make an offer to purchase the Notes (the “Prepayment Offer”) which offer shall be in the amount of the Allocable Excess Proceeds, on a pro rata basis according to principal amount, at a purchase price equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the purchase date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date) and Additional Amounts, if any, in accordance with the procedures (including prorating in the event of over-subscription) set forth in this Indenture. To the extent that any portion of Net Available Cash remains after compliance with the preceding sentence, and provided that all holders of Notes have been given the opportunity to tender their Notes for purchase in accordance with this Indenture, the Parent or such Restricted Subsidiary may use such remaining amount for any purpose permitted by this Indenture and the amount of Excess Proceeds will be reset to zero.

The term “Allocable Excess Proceeds” will mean the product of:

(a) the Excess Proceeds; and

(b) a fraction:

(i) the numerator of which is the aggregate principal amount of the Notes outstanding on the date of the Prepayment Offer; and

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(ii) the denominator of which is the sum of the aggregate principal amount of the Notes outstanding on the date of the Prepayment Offer and the aggregate principal amount of other Debt of the Parent outstanding on the date of the Prepayment Offer that is pari passu in right of payment with the Notes and subject to terms and conditions in respect of Asset Sales similar in all material respects to the covenant described hereunder and requiring the Issuer to make an offer to purchase such Debt at substantially the same time as the Prepayment Offer.

Within five Business Days after the Issuer is obligated to make a Prepayment Offer as described in the preceding paragraph, the Parent and the Issuer shall send a written notice, by first-class mail, to the holders of Notes, accompanied by such information regarding the Parent and its Subsidiaries as the Parent and the Issuer in good faith believe will enable such holders of Notes to make an informed decision with respect to such Prepayment Offer. Such notice shall state, among other things, the purchase price and the purchase date, which shall be, subject to any contrary requirements of applicable law, a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed.

The Issuer will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and with any other applicable securities laws or regulations in connection with the repurchase of Notes pursuant to this Section 4.14. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 4.14, the Parent and the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its or their obligations under this Section 4.14 by virtue thereof.

Section 4.15. Limitation on Restrictions on Distributions from Restricted Subsidiaries. The Parent shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist any consensual restriction on the right of any Restricted Subsidiary to:

(a) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock, or pay any Debt or other obligation owed, to the Parent or any other Restricted Subsidiary;

(b) make any loans or advances to the Parent or any Restricted Subsidiary; or

(c) transfer any of its Property to the Parent or any Restricted Subsidiary.

The foregoing limitations will not apply:

(i) with respect to clauses (a), (b) and (c), to restrictions:

(A) in Existing Debt;

(B) relating to Debt of a Restricted Subsidiary existing at the time it became a Restricted Subsidiary, provided that (x) such restriction was not created in connection with or in anticipation of the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary and (y) such restriction is not applicable to any Persons other than such Restricted Subsidiary;

(C) that result from the Refinancing of Debt Incurred pursuant to an agreement referred to in clause (i)(A) or (B) above or in clause (ii)(A) or (B) below; provided that such restriction is no more restrictive than those contained in such Refinanced Debt;

(D) existing under or by reason of applicable law, decree, regulation or rule;

(E) pursuant to any amendment or modification of a restriction permitted by clause (i)(A), (B) or (C) above, provided such restriction as amended or modified is no more restrictive than the restriction prior to such amendment or modification; and

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(F) pursuant to the terms of any Debt permitted to be Incurred by clause (viii) or (ix) under the second paragraph of Section 4.10 or any agreement pursuant to which such Debt was Incurred; provided that (x) the Parent reasonably determines at the time any such Debt is Incurred (and at the time of any modification of the terms of any such encumbrance or restriction) that any such restriction will not materially affect the Parent’s and the Issuer’s ability to make principal or interest payments on the Notes and (y) the restriction is not materially more disadvantageous to the holders of the Notes than is customary in comparable financings or agreements (as determined by the Parent in good faith).

(ii) with respect to clause (c) only, to restrictions:

(A) relating to Debt that is permitted to be Incurred and secured pursuant to Sections 4.10 and 4.12 that limit the right of the debtor to dispose of the Property securing such Debt;

(B) encumbering Property at the time such Property was acquired by the Parent or any Restricted Subsidiary, so long as such restriction relates solely to the Property so acquired and was not created in connection with or in anticipation of such acquisition;

(C) resulting from customary provisions restricting subletting or assignment of leases or customary provisions in other agreements that restrict assignment of such agreements or rights thereunder; or

(D) customarily contained in asset sale agreements limiting the transfer of such Property pending the closing of such sale.

(iii) with respect to clauses (a) and (c), to restrictions created in connection with a Permitted Islamic Financing Obligation.

Section 4.16. Limitation on Transactions with Affiliates. The Parent shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, conduct any business or enter into or suffer to exist any transaction or series of transactions (including the purchase, sale, transfer, assignment, lease, conveyance or exchange of any Property or the rendering of any service) with, or for the benefit of, any Affiliate of the Parent (an “Affiliate Transaction”), unless:

(a) the terms of such Affiliate Transaction are: (i) set forth in writing, (ii) in the best interests of the Parent or such Restricted Subsidiary, as the case may be, and (iii) no less favorable to the Parent or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate of the Parent; and

(b) if such Affiliate Transaction involves aggregate payments or value in excess of US$20 million, the Board of Directors of the Parent (including a majority of the disinterested members of the Board of Directors of the Parent) approves such Affiliate Transaction and, in its good faith judgment, believes that such Affiliate Transaction complies with clauses (a)(ii) and (a)(iii) of the first paragraph of this Section 4.16, as evidenced by a Board Resolution promptly delivered to the Trustee; or

(c) if such Affiliate Transaction involves aggregate payments or value in excess of US$25 million, the Parent obtains a written opinion from an Independent Appraiser to the effect that the consideration to be paid or received in connection with such Affiliate Transaction is fair, from a financial point of view, to the Parent and the Restricted Subsidiaries.

Notwithstanding the foregoing limitation, the Parent or any Restricted Subsidiary may enter into or suffer to exist the following:

(a) any transaction or series of transactions between the Parent and one or more Restricted Subsidiaries or between two or more Restricted Subsidiaries in the ordinary course of business; provided that no more than 5% of the total voting power of the Voting Stock (on a fully diluted basis) of any such Restricted Subsidiary is owned by an Affiliate of the Parent (other than a Restricted Subsidiary);

(b) the payment of compensation (including amounts paid pursuant to employee benefit plans) for the personal services of officers, directors, commissioners and employees of the Parent or any of the Restricted Subsidiaries;

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(c) any agreement as in effect as of the Issue Date that is disclosed in the offering memorandum with respect to the Notes dated July 22, 2010 or any amendment thereto or renewal or extension thereof or any transaction contemplated thereby (including pursuant to any amendment thereto or renewal or extension thereof) or in any replacement agreement thereto so long as any such amendment, renewal, extension or replacement agreement is not more disadvantageous to the holders of the Notes in any material respect than the original agreement as in effect on the Issue Date;

(d) any transaction or series of transactions solely between the Parent and one or more Wholly-Owned Subsidiaries or between two or more Wholly-Owned Subsidiaries;

(e) payments to the Indonesian government or any subdivision thereof or transactions entered into, in each case as required under (i) the laws of the Republic of Indonesia or applicable decrees, regulations or rules thereof or (ii) any license or permit issued by the Indonesian government or any subdivision thereof (for the avoidance of doubt, Indonesian government or any subdivision thereof excludes any corporate entity or business enterprise controlled by the Indonesian government or any subdivision thereof); and

(f) Affiliate Transactions in the ordinary course of business of the Parent or any Restricted Subsidiary, provided that the terms of any of such Affiliate Transactions comply with clauses (a) and (b) of the first paragraph of this Section 4.16, except that the terms of any of such Affiliate Transactions pursuant to interconnection agreements, roaming agreements or transmission or leased line agreements with other telecommunications carriers shall only be required to comply with clause (a) of the first paragraph of this Section 4.16.

Section 4.17. Designation of Restricted and Unrestricted Subsidiaries. The Board of Directors of the Parent may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Parent and its Restricted Subsidiaries in the Subsidiary properly designated will be deemed to be an Investment made as of the time of the designation and subject to Section 4.11 or under one or more clauses of the definition of “Permitted Investments,” as determined by the Parent. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The definition of “Unrestricted Subsidiary” requires that all Debt of an Unrestricted Subsidiary, whether in existence at the time of designation as an Unrestricted Subsidiary, or Incurred thereafter, be Non-Recourse Debt. The Board of Directors of the Parent may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default.

Section 4.18. Limitation on Sale and Leaseback Transactions. The Parent shall not, and shall not permit any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction with respect to any Property unless:

(a) the Parent or such Restricted Subsidiary would be permitted to:

(i) Incur Debt in an amount equal to the Attributable Debt with respect to such Sale and Leaseback Transaction pursuant to Section 4.10; and

(ii) create a Lien on such Property securing such Attributable Debt pursuant to Section 4.12; and

(b) such Sale and Leaseback Transaction is effected in compliance with Section 4.14.

Notwithstanding the foregoing limitation, the Parent and any Restricted Subsidiaries may enter into Sale and Leaseback Transactions in connection with any Qualified Tower Sale.

Section 4.19. Limitation on Business. The Parent shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, engage in any business other than a Telecommunications Business, except to such extent as would not exceed one percent of the total consolidated tangible assets of the Parent and the Restricted Subsidiaries.

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Section 4.20. Change of Control. Upon the occurrence of a Change of Control Triggering Event, each holder of Notes shall have the right to require the Issuer to repurchase all or any part of such holder’s Notes pursuant to the offer described below (the “Change of Control Offer”) at a purchase price (the “Change of Control Purchase Price”) equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Additional Amounts, if any, to the repurchase date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date that is on or prior to the date of repurchase).

(a) Within 30 days following any Change of Control Triggering Event, the Issuer and the Parent shall send, by first-class mail, with a copy to the Trustee, to each holder of Notes, at such holder’s address appearing in the Register, a notice stating: (i) that a Change of Control Triggering Event has occurred and a Change of Control Offer is being made pursuant to this Section 4.20 and that all Notes timely tendered will be accepted for payment; (ii) the Change of Control Purchase Price and the purchase date, which shall be, subject to any contrary requirements of applicable law, a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”); (iii) the circumstances and relevant facts regarding the Change of Control Triggering Event (including information with respect to pro forma historical income, cash flow and capitalization after giving effect to the Change of Control); and (iv) the procedures that holders of Notes must follow in order to tender their Notes (or portions thereof) for payment, and the procedures that holders of Notes must follow in order to withdraw an election to tender Notes (or portions thereof) for payment.

(b) Holders of Notes electing to have a Note purchased shall be required to surrender the Note, with an appropriate form duly completed, to the Issuer or its agent at the address specified in the notice at least three Business Days prior to the Change of Control Payment Date. Holders of Notes shall be entitled to withdraw their election if the Trustee or the Issuer receives not later than 10 a.m., The City of New York time, one Business Day prior to the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the holder of a Note, the principal amount of the Note that was delivered for purchase by the holder of a Note and a statement that such holder of a Note is withdrawing its election to have such Note purchased.

(c) On or prior to the Business Day before the Change of Control Payment Date, the Issuer shall irrevocably deposit with the Trustee or with the Paying Agent (or, if the Issuer or any of its Wholly-Owned Subsidiaries is acting as the Paying Agent, segregate and hold in trust) in cash an amount equal to the Change of Control Purchase Price payable to the holders of Notes entitled thereto, to be held for payment in accordance with the provisions of this Section. On the Change of Control Payment Date, the Issuer shall deliver to the Trustee the Notes or portions thereof that have been properly tendered to and are to be accepted by the Issuer for payment. The Trustee or the Paying Agent shall, on the Change of Control Payment Date, mail or deliver payment to each tendering holder of a Note of the Change of Control Purchase Price. In the event that the aggregate Change of Control Purchase Price is less than the amount delivered by the Issuer to the Trustee or the Paying Agent, the Trustee or the Paying Agent, as the case may be, shall deliver the excess to the Issuer immediately after the Change of Control Payment Date.

(d) The Issuer and the Parent will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.20, the Issuer and the Parent will comply with the applicable securities laws and regulations and will not be deemed to have breached its or their obligations under this Section 4.20 by virtue of such compliance.

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Section 4.21. Suspension of Certain Covenants. Following the first day (the “Suspension Date”) that (a) the Notes have Investment Grade Ratings from at least two Rating Agencies and (b) no Default or Event of Default has occurred and is continuing, the Parent and the Restricted Subsidiaries will not be subject to the following provisions of this Indenture:

• Section 4.10,

• Section 4.11,

• Section 4.13,

• Section 4.14,

• Section 4.15,

• Section 4.16,

• Section 4.17,

• Clauses (a)(i) and (b) of Section 4.18,

• Section 4.19, and

• Clauses (e) and (g) of Section 5.01

(collectively, the “Suspended Covenants”). In the event that the Parent and the Restricted Subsidiaries are not subject to the Suspended Covenants for any period of time as a result of the preceding sentence and, on any subsequent date (the “Reversion Date”), either (i) two or more Rating Agencies have assigned ratings to the Notes below the required Investment Grade Ratings or (ii) a Default or Event of Default occurs and is continuing, then the Parent and the Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants. The period of time between the Suspension Date and the Reversion Date is referred to in this Section 4.21 as the “Suspension Period”. Notwithstanding that the Suspended Covenants may be reinstated, no Default will be deemed to have occurred as a result of a failure to comply with the Suspended Covenants during the Suspension Period.

On the Reversion Date, all Debt Incurred during the Suspension Period will be classified to have been Incurred pursuant to clause (a) of the first paragraph or one of the clauses set forth in the second paragraph of Section 4.10 (to the extent such Debt would be permitted to be Incurred thereunder as of the Reversion Date and after giving effect to Debt Incurred prior to the Suspension Period and outstanding on the Reversion Date). To the extent such Debt would not be so permitted to be Incurred pursuant to clause (a) of the first paragraph or one of the clauses set forth in the second paragraph of Section 4.10, such Debt will be deemed to have been in existence on the Issue Date for the purposes of the definition of “Existing Debt” so that it is classified as permitted under clause (ii) of the second paragraph of Section 4.10.

On the Reversion Date, all Restricted Payments and Permitted Investments declared or made during the Suspension Period will be classified to have been declared or made in compliance with Section 4.11.

For purposes of determining compliance with clause (c) of the second paragraph of Section 4.14, on the Reversion Date, the Net Available Cash from all Asset Sales not applied in accordance with the covenant will be deemed to be reset to zero.

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Section 4.22. Additional Amounts. All payments of principal of, and premium, if any, and interest on the Notes and all payments under the Guarantee will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or within any jurisdiction in which the Issuer or the Guarantor, is organized or resident for tax purposes (or any political subdivision or taxing authority thereof or therein) (each, as applicable, a “Relevant Jurisdiction”) or through which payment is made, unless such withholding or deduction is required by law or by regulation or governmental policy having the force of law. In such event, the Issuer or the Guarantor, as the case may be, will make such deduction or withholding, make payment of the amount so withheld to the appropriate governmental authority and will pay such additional amounts (“Additional Amounts”) as will result in receipt by the holder of such amounts as would have been received by such holder had no such withholding or deduction been required, provided that no Additional Amounts will be payable:

(a) for or on account of:

(i) any tax, duty, assessment or other governmental charge that would not have been imposed but for:

(A) the existence of any present or former connection between the holder or beneficial owner of such Note or Guarantee, as the case may be, and the Relevant Jurisdiction or jurisdiction through which payment is made including, without limitation, such holder or beneficial owner being or having been a citizen or resident of such Relevant Jurisdiction or jurisdiction through which payment is made or treated as a resident thereof or being or having been physically present or engaged in a trade or business therein or having or having had a permanent establishment therein, other than merely holding such Note, the receipt of payments thereunder or under the Guarantee or enforcing payment under the Note or the Guarantee;

(B) the presentation of such Note (where presentation is required) more than 30 days after the later of the date on which the payment of the principal of, premium, if any, or interest on, such Note became due and payable pursuant to the terms thereof or was made or duly provided for, except to the extent that the holder thereof would have been entitled to such Additional Amounts if it had presented such Note for payment on any date within such 30-day period;

(C) the failure of the holder or beneficial owner to comply with a timely request of the Issuer or the Guarantor addressed to the holder or beneficial owner, as the case may be, to provide information to the Issuer or the Guarantor concerning such holder’s or beneficial owner’s nationality, residence, identity or connection with any Relevant Jurisdiction or jurisdiction through which payment is made, if and to the extent that due and timely compliance with such request would have reduced or eliminated any withholding or deduction as to which Additional Amounts would have otherwise been payable to such holder, provided that the information must not be materially more onerous, in form, in procedure or in substance of information disclosed, to a holder or beneficial owner of a Note than comparable information or other reporting requirements imposed under United States tax law, regulations and administrative practice; or

(D) the presentation of such Note (where presentation is required) for payment in the Relevant Jurisdiction or jurisdiction through which payment is made, unless such Note could not have been presented for payment elsewhere;

(ii) any estate, inheritance, gift, sale, transfer, excise or personal property or similar tax, assessment or other governmental charge;

(iii) any withholding or deduction in respect of any tax, duty, assessment or other governmental charge where such withholding or deduction is imposed or levied on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of November 26-27, 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directives;

(iv) any tax, duty, assessment or other governmental charge which is payable other than (a) by deduction or withholding from payments of principal of or interest on the Note or payments under the Guarantee, or (b) by direct payment by the Issuer or the Guarantor in respect of claims made against the Issuer or the Guarantor; or

(v) any combination of taxes, duties, assessments or other governmental charges referred to in the preceding clauses (i), (ii), (iii) and (iv); or

(b) with respect to any payment of the principal of, or premium, if any, or interest on, such Note or any payment under the Guarantee to such holder, if the holder is a fiduciary, partnership or person other than the sole beneficial owner of any payment to the extent that such payment would be required to be included in the income under the laws of a Relevant Jurisdiction or jurisdiction through which payment is made, for tax purposes, of a beneficiary or settlor with respect to the fiduciary, or a member of that partnership or a beneficial owner who would not have been entitled to such Additional Amounts had that beneficiary, settlor, partner, or beneficial owner been the holder thereof.

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As a result of these provisions, there are circumstances in which taxes could be withheld or deducted but Additional Amounts would not be payable to some or all beneficial owners of Notes.

Each of the Issuer and the Guarantor, as applicable, will also:

(1) withhold or deduct the taxes, duties, assessments or governmental charges as required;

(2) remit the full amount of taxes, duties, assessments or governmental charges deducted or withheld to the relevant taxing authority in accordance with all applicable laws;

(3) use its reasonable efforts to obtain from each relevant taxing authority imposing such taxes, duties, assessments or governmental charges certified copies of tax receipts evidencing the payment of any taxes, duties, assessments or governmental charges deducted or withheld; and

(4) upon request, make available to the holders and beneficial owners (to the extent such beneficial owners provide evidence reasonably satisfactory to the Issuer or the Guarantor as the case may be, of their beneficial ownership of Notes) of Notes, within 60 days after the date the payment of any taxes, duties, assessments or governmental charges deducted or withheld is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by the Issuer or the Guarantor or, if, notwithstanding the efforts of the Issuer or the Guarantor to obtain such receipts, the same are not obtainable, other evidence of such payments.

In addition, the Issuer and the Guarantor, as applicable, will pay any stamp, issue, registration, documentary or other similar taxes and duties, including interest, penalties and Additional Amounts with respect thereto, payable in any Relevant Jurisdiction or any political subdivision or taxing authority of or in the foregoing in respect of the creation, issue, offering, enforcement, redemption or retirement of any Notes or Guarantee.

Whenever there is mentioned in any context the payment of principal, premium or interest in respect of any Note or under the Guarantee, such mention will be deemed to include payment of Additional Amounts provided for in this Indenture to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

Section 4.23. Further Instruments and Acts. Upon request of the Trustee, the Issuer and the Parent shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

Section 4.24. Limitation on Issuer Activities. Notwithstanding anything contained in this Indenture to the contrary, the Issuer will not engage in any business activity or undertake any other activity, except any activity (a) relating to the offering, sale or issuance of the Notes, the incurrence of Indebtedness represented by the Notes or any Additional Notes issued under this Indenture, (b) relating to the offering, sale or issuance of debt obligations similar to the Notes in the future and the incurrence of Debt represented by such debt obligations (and in connection with which the Issuer contributes the proceeds thereof as provided in the following clause (c)), (c) relating to contributing the proceeds of debt issuances under clauses (a) and (b) to invest in share capital through the issuance of new shares of, and as contribution as share premium to the shares in the capital of Indosat Mentari Company B.V., to use share premium to issue new shares in the capital of Indosat Mentari Company B.V. or to advance loans to Indosat Mentari Company B.V., (d) relating to an assignment to it of the Intercompany Loans and acting as lender under the Intercompany Loans, (e) undertaken with the purpose of fulfilling any obligations under the Indebtedness referred to in clauses (a) and (b) or this Indenture or any future indenture related to such Debt or for purposes of any consent solicitation or tender for such Indebtedness or refinancing of such Indebtedness or (f) directly related to the establishment and/or maintenance of the Issuer’s corporate existence.

The Issuer shall not (a) issue any Capital Stock other than the issuance of its ordinary shares to the Parent or (b) acquire or receive any property or assets (including, without limitation, any Capital Stock or Debt of any Person), other than (i) the capital stock of Indosat Mentari Company B.V., or the Intercompany Loans and (ii) cash for ongoing corporate activities of the Issuer described in the preceding paragraph of this Section 4.24.

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The Issuer shall not create, incur, assume or suffer to exist any Lien of any kind against or upon any of its property or assets, or any proceeds therefrom.

The Issuer shall at all times remain a Wholly-Owned Subsidiary of the Parent.

The Issuer shall not merge, consolidate, amalgamate or otherwise combine with or into another Person except the Parent, or sell, convey, transfer, lease or otherwise dispose of any material property or assets to any Person except the Parent; provided that, in the event it so combines with the Parent or so disposes of property or assets to the Parent, then immediately after such transaction the Parent (or if the Parent is not the Surviving Person, such Surviving Person) shall (a) assume all of the obligations of the Issuer under this Indenture and the Notes pursuant to a supplemental indenture in form satisfactory to the Trustee and (b) deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each of which complies with applicable provisions of this Indenture and provided further that the Issuer may merge, consolidate, amalgamate or otherwise combine with Indosat Mentari Company B.V. following the assignment of the Intercompany Loans to the Issuer. Notwithstanding anything in the immediately foregoing sentence, the Issuer shall not merge, consolidate, amalgamate or otherwise combine with Indosat Mentari Company B.V. unless (i) the Issuer shall be the surviving Person and (ii) the Issuer shall have delivered to the Trustee an Opinion of Counsel of recognized standing with respect to such matter to the effect that the holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such merger, consolidation, amalgamation or other combination and will be subject to U.S. federal income tax on the same amounts and at the same times as would be the case if such merger, consolidation, amalgamation or other combination had not occurred and there will be no additional taxes, duties, levies, imposts, assessments or governmental charges of whatever nature imposed on any payments made pursuant to the Notes. Except as contemplated by this paragraph, for so long as any Notes are outstanding, neither the Issuer nor the Parent will commence or take any action to cause a winding-up or liquidation of the Issuer or Indosat Mentari Company B.V. except in connection with the winding-up or liquidation of Indosat Mentari Company B.V. when it is no longer a lender under any Intercompany Loan.

Except as necessary to permit timely delivery to the Paying Agent of sums sufficient to pay principal and interest when so becoming due under the Notes, the Issuer shall not at any time maintain cash balances in amounts greater than the minimum amounts required by applicable law or regulation or in order to maintain or reduce withholding or income taxes which may be applicable to or payable by the Issuer or the Parent in respect of the Notes. In the event that the Issuer is the obligor on Indebtedness owed to Indosat Mentari Company B.V., such Debt must be unsecured and expressly subordinated in right of payment to the Notes. Whenever the Issuer receives a dividend or distribution on the Capital Stock of Indosat Mentari Company B.V., it shall use all or substantially all of the funds received solely to satisfy its obligations (to the extent of the amount owing in respect of such obligations) under the Notes and this Indenture.

Section 4.25. Amendments to or Prepayments of the Intercompany Loan. The Issuer and the Parent (and any Restricted Subsidiary) will not, (a) prepay or otherwise reduce or permit the prepayment or reduction of any Intercompany Loan or (b) amend, modify or alter the instrument governing any Intercompany Loan in any manner adverse to the holders; provided that, without the consent of all holders, the Issuer and the Parent will not, and will not permit any Restricted Subsidiary to, amend, modify or alter any Intercompany Loan to:

(i) change the Stated Maturity of such loan;

(ii) change the currency for payment of principal or interest on such loan; or

(iii) reduce the above-stated percentage of Notes the consent of whose holders is necessary to modify or amend such loans.

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Notwithstanding the foregoing, without the consent of any holder of Notes, any Intercompany Loan may be amended solely (a) to provide for the issuance of Additional Notes, and may be prepaid or reduced to facilitate or otherwise accommodate or reflect a redemption, repurchase or exchange of outstanding Notes in accordance with the terms of this Indenture or through any tender offer or exchange offer or (b) to reduce any withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or within any jurisdiction in which the Issuer or the Parent is incorporated, organized or resident for tax purposes; provided that in the case of clause (b), prior to such amendment, the Issuer or the Parent will deliver to the Trustee an Opinion of Counsel or an opinion of a tax consultant of recognized international standing that such amendment will reduce such withholding or deduction.

The Issuer and the Parent will not, and will not permit Indosat Mentari Company B.V. to, sell any Intercompany Loan or to directly or indirectly, incur, assume or permit to exist any Lien on any Intercompany Loan.

ARTICLE 5

MERGER, CONSOLIDATION AND SALE OF PROPERTY

Section 5.01. When Parent or Guarantor May Merge or Transfer Assets. The Parent shall not, and shall not permit any other Guarantor to merge, consolidate or amalgamate with or into any other Person (other than a merger of a Wholly-Owned Subsidiary into the Parent) or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all its Property in any one transaction or series of transactions (other than a Qualified Tower Sale) unless:

(a) the Parent or such Guarantor shall be the surviving Person (the “Surviving Person”) or the Surviving Person (if other than the Parent or such Guarantor) formed by such merger, consolidation or amalgamation or to which such sale, transfer, assignment, lease, conveyance or disposition is made shall be a corporation organized and existing under the laws of the Republic of Indonesia;

(b) the Surviving Person (if other than the Parent or such Guarantor) expressly assumes, by supplemental indenture in a form satisfactory to the Trustee, executed and delivered to the Trustee by such Surviving Person, all of the obligations of the Parent or such Guarantor hereunder and the Parent’s or such Guarantor’s Guarantee of the Notes;

(c) in the case of a sale, transfer, assignment, lease, conveyance or other disposition of all or substantially all the Property of the Parent or such Guarantor, such Property shall have been transferred as an entirety or virtually as an entirety to one Person;

(d) immediately before and after giving effect to such transaction or series of transactions on a pro forma basis (and treating, for purposes of this clause (d) and clauses (e) and (f) below, any Debt that becomes, or is anticipated to become, an obligation of the Surviving Person or any Restricted Subsidiary as a result of such transaction or series of transactions as having been Incurred by the Surviving Person or such Restricted Subsidiary at the time of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing;

(e) in the case of a transaction involving the Parent, immediately after giving effect to such transaction or series of transactions on a pro forma basis, the Parent or the Surviving Person, as the case may be, would be able to Incur at least US$1.00 of additional Debt under clause (a) of the first paragraph of Section 4.10;

(f) the Surviving Person shall have delivered to the Trustee an Opinion of Counsel of recognized standing with respect to such matter to the effect that the holders of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such transaction or series of transactions and will be subject to U.S. federal income tax on the same amounts and at the same times as would be the case if the transaction or series of transactions had not occurred and there will be no additional taxes, duties, levies, imposts, assessments or governmental charges of whatever nature imposed on any payments made pursuant to the Notes;

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(g) in the case of a transaction involving the Parent, immediately after giving effect to such transaction or series of transactions on a pro forma basis, the Surviving Person shall have a Consolidated Net Worth in an amount which is not less than the Consolidated Net Worth of the Parent immediately prior to such transaction or series of transactions; and

(h) the Parent shall deliver, or cause to be delivered, to the Trustee, in form and substance satisfactory to the Trustee, an Officers’ Certificate and an Opinion of Counsel, each stating that such transaction, and the supplemental indenture, if any, in respect thereto comply with this Section 5.01 and that all conditions precedent herein provided for relating to such transaction have been satisfied.

The Surviving Person shall succeed to, and be substituted for, and may exercise every right and power of the Parent under this Indenture, but the predecessor company in the case of:

(a) a sale, transfer, assignment, conveyance or other disposition (unless such sale, transfer, assignment, conveyance or other disposition is of all the assets of the Parent as an entirety or virtually as an entirety), or

(b) a lease,

shall not be released from any of the obligations or covenants under this Indenture, including with respect to the payment of the Notes.

Section 5.02. Successor Corporation Substituted. In the event of any transaction described in and complying with the conditions listed in Section 5.01 in which the Parent or any other Guarantor is not the surviving entity and the surviving entity is to assume all the obligations of the Parent or such Guarantor under the Notes, the Guarantee and this Indenture pursuant to a supplemental indenture, such surviving Person shall succeed to, and be substituted for, and may exercise every right and power of the Parent or such Guarantor, as the case may be, and such Guarantor shall be discharged from its obligations under this Indenture, the Notes and the Guarantee.

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01. Events of Default. The following events shall be “Events of Default”:

(a) failure to make the payment of any interest (including Additional Amounts) on the Notes when the same becomes due and payable, and such failure continues for a period of 30 days;

(b) failure to make the payment of any principal of, or premium, if any, on, any of the Notes when the same becomes due and payable at its Stated Maturity, upon acceleration, redemption, optional redemption, required repurchase or otherwise;

(c) failure to comply with Section 5.01;

(d) failure to comply with any other covenant or agreement in the Notes or in this Indenture (other than a failure that is the subject of the foregoing clauses (a), (b) or (c)) and such failure continues for 30 days after written notice is given to the Issuer as provided below;

(e) a default under any Debt by the Parent or any Restricted Subsidiary that results in acceleration of the maturity of such Debt, or failure to pay any such Debt at final maturity, in an aggregate amount greater than US$30 million or its foreign currency equivalent at the time (the “cross-acceleration provisions”);

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(f) any final judgment or judgments for the payment of money in an aggregate amount in excess of US$30 million (or its foreign currency equivalent at the time) that shall be rendered against the Parent, the Issuer or any Restricted Subsidiary and that shall not be waived, satisfied or discharged for any period of 30 consecutive days during which a stay of enforcement shall not be in effect (the “judgment default provisions”);

(g) the Issuer, the Parent or any Significant Subsidiary pursuant to or within the meaning of any applicable Bankruptcy Law or similar law for the relief of debtors:

(i) commences a voluntary case;

(ii) consents to the entry of an order for relief against it in an involuntary case;

(iii) consents to the appointment of a custodian, receiver, trustee, assignee, liquidator or similar official of it or for any substantial part of its property; or

(iv) makes a general assignment for the benefit of its creditors;

or takes any comparable action under any foreign laws relating to insolvency;

(h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law or similar law for the relief of debtors that:

(i) is for relief against the Issuer, the Parent or any Significant Subsidiary in an involuntary case;

(ii) appoints a custodian, receiver, trustee, assignee, liquidator or similar official of the Issuer, the Parent or any Significant Subsidiary or any substantial part of the property of any of them;

(iii) orders the winding up or liquidation of the Issuer, the Parent or any Significant Subsidiary; or

(iv) grants any similar relief under any foreign laws;

(i) any of (i) the revocation, suspension or termination of any Material License or (ii) the failure of the Parent to renew, or extend, or the expiration, release, surrender or transfer of, any Material License;

(j) the Guarantor denies or disaffirms its obligations under the Guarantee or, except as permitted by this Indenture, the Guarantee is determined to be unenforceable or invalid or shall for any reason cease to be in full force and effect; and

(k) a Payment Event of Default with respect to the 7.75% Guaranteed Notes due 2010 and 7.125% Guaranteed Notes due 2012.

A Default under clause (d) will not be an Event of Default until the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then outstanding notify the Issuer of the Default and the Issuer does not procure the cure of such Default within the time specified after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a “Notice of Default.”

Section 6.02. Acceleration. If an Event of Default (other than an Event of Default specified in section 6.01(g) or (h)) occurs and is continuing, the Trustee may, and shall upon the written request of holders of not less than 25% in aggregate principal amount of the Notes then outstanding, having been indemnified and/or secured to its satisfaction, by notice to the Issuer, declare the principal of and accrued and unpaid interest to the date of such acceleration, premium, if any, and any Additional Amounts on all the Notes to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 6.01(g) or (h) occurs, the principal of and accrued and unpaid interest to the date of such acceleration on all the Notes shall, automatically and without any action by the Trustee or any Holder, become and be immediately due and payable. After any such acceleration, but before a judgment or decree based upon acceleration is obtained by the Trustee, the Holders of a majority in aggregate principal amount of the outstanding Notes, by written notice to the Trustee and the Issuer, may choose to rescind and annul such declaration of acceleration if the rescission would not conflict with any judgment or decree and if all existing Events of Default, other than the non-payment of accelerated principal, premium or interest, have been cured or waived as provided in this Indenture. No such rescission shall affect any subsequent Default or impair any right consequent thereto.

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Section 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any holder of the Notes in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.

Section 6.04. Waiver of Past Defaults. The holders of Notes of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may waive an existing Default and its consequences except (a) a Default in the payment of the principal of, premium or interest on a Note or (b) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each holder of the Notes. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right.

Section 6.05. Control by Majority. The holders of the Notes of a majority in aggregate principal amount of the Notes then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee with respect to the Notes. However, the Trustee will be under no obligation and may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines in good faith is unduly prejudicial to the rights of other holders of Notes or would involve the Trustee in personal liability or to the extent that it does not receive indemnification and/or security to its satisfaction; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification and/or security to the satisfaction of the Trustee against all losses and expenses caused by taking or not taking such action.

Section 6.06. Limitation on Suits. A holder of a Note may not institute any proceeding with respect to this Indenture or for the appointment of a receiver or trustee, or for any remedy thereunder, unless:

(a) such holder of a Note shall have previously given to the Trustee written notice of a continuing Event of Default;

(b) the holders of Notes of not less than 25% in aggregate principal amount of the Notes then outstanding shall have made a written request, and such holder of a Note of or holders of Notes shall have offered the Trustee indemnity and/or security satisfactory to the Trustee against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction, to institute such proceeding as trustee;

(c) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity and/or security to its satisfaction; and

(d) the Trustee has not received from the holders of Notes of at least a majority in aggregate principal amount of the Notes outstanding a direction inconsistent with such request.

The foregoing limitations on the pursuit of remedies by a holder of a Note shall not apply to a suit instituted by a holder of Notes for the enforcement of payment of the principal of, and premium, if any, or interest on, such Note on or after the applicable due date specified in such Note. A holder of Notes may not use this Indenture to prejudice the rights of another holder of Notes or to obtain a preference or priority over another holder of Notes.

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Section 6.07. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any holder of Notes to receive payment of principal of and interest on the Notes held by such holder of Notes, on or after the respective due dates expressed in the Notes, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such holder of Notes.

Section 6.08. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.07.

Section 6.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the holders of Notes allowed in any judicial proceedings relative to the Issuer, the Parent or any other Guarantor, their creditors or their property and, unless prohibited by law or applicable regulations, may vote on behalf of the holders of Notes in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each holder of Notes to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the holders of Notes, to pay to the Trustee any amount due to it for the compensation, expenses, disbursements and advances properly incurred by the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07.

Section 6.10. Priorities. If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:

FIRST: to the Trustee for amounts due under Section 7.07;

SECOND: to holders of Notes for amounts due and unpaid on the Notes for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; and

THIRD: to the Issuer, the Parent or any other Guarantor of the Notes, as their interests may appear, or as a court of competent jurisdiction may direct.

The Trustee may fix a record date and payment date for any payment to holders of Notes pursuant to this Section. At least 15 days before such record date, the Issuer or the Parent shall mail to each holder of Notes and the Trustee a notice that states the record date, the payment date and amount to be paid.

Section 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess costs, including attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a holder of Notes pursuant to Section 6.06 or a suit by holders of Notes of more than 10% in aggregate principal amount of the Notes.

Section 6.12. Waiver of Stay or Extension Laws. None of the Parent, the Issuer and the Restricted Subsidiaries (to the extent any of them may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and each of the Parent and the Issuer (to the extent that either of them may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.

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ARTICLE 7

TRUSTEE

Section 7.01. Duties of Trustee.

(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs. The Trustee will be under no obligation to exercise any rights or powers conferred under this Indenture for the benefit of the holders of Notes unless such holders have offered to the Trustee indemnity and/or security satisfactory to the Trustee against any loss, liability or expense.

(b) Except during the continuance of an Event of Default:

(i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

(c) The Trustee may not be relieved from liability for its own grossly negligent action, its own grossly negligent failure to act or its own wilful misconduct, except that:

(i) this paragraph does not limit the effect of paragraph (b) of this Section;

(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was grossly negligent in ascertaining the pertinent facts; and

(iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.06.

(d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.

(e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Parent.

(f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

(g) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers under this Indenture at the request of any Holder, unless such Holder has offered to the Trustee security and/or indemnity satisfactory to it against costs (including but not limited to legal costs), loss, liabilities and expenses.

(h) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and to the provisions of the TIA, if applicable, and the provisions of this Article 7 shall apply to the Trustee in its role as Registrar, Paying Agent and Note Custodian (as defined in Appendix A).

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(i) The Trustee shall not be deemed to have notice of a Default or an Event of Default unless (i) the Trustee has received written notice thereof from the Issuer, the Parent or any Holder or (ii) a Trust Officer shall have actual knowledge thereof.

(j) Under no circumstances shall the Trustee be liable to any other party to this Indenture for any consequential loss (being loss of business, goodwill, opportunity or profit) even if advised of the possibility of such loss or damage.

(k) The Trustee, Registrar and Paying Agents shall not incur any liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder by reason of any occurrence beyond the control of the Trustee, Registrar or Paying Agents (including but not limited to any act or provision of any present or future law or regulation or governmental authority which restricts or prohibits the performance of obligations contemplated by this Indenture, any act of God or war or any failure of equipment or interruption of communications or computer facilities).

(l) The Trustee has no obligation to monitor the financial performance of the Issuer or any Guarantor.

Section 7.02. Rights of Trustee.

(a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. The Trustee may, however, in its discretion make such further inquiry or investigation into such facts or matters as it may see fit and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Parent, the Issuer and any Restricted Subsidiary, personally or by agent or attorney.

(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers’ Certificate or Opinion of Counsel.

(c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

(d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers; provided, however, that the Trustee’s conduct does not constitute wilful misconduct or gross negligence.

(e) The Trustee may consult with professional advisors and counsel of its selection, and the advice or opinion of such professional advisors or counsel with respect to legal matters or otherwise relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

(f) The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as a duty unless so specified herein.

(g) The Trustee shall not be obligated to supervise the performance of any parties to the transaction documents, including this Indenture, of their respective obligations under the transaction documents or any other documents related thereto and the Trustee shall be entitled to assume, until it has actual knowledge to the contrary, that all such persons are properly performing their duties thereunder.

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(h) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer will be sufficient if signed by an Officer of the Issuer.

(i) Whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer’s Certificate.

(j) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it may make a request for information from the Issuer to the extent the sharing of such information is permitted by law and not subject to any confidentiality restrictions.

(k) The Trustee may request that the Issuer deliver an Officers’ Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person authorized to sign an Officers’ Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.

(l) The Trustee may purchase, hold and dispose of Notes and may enter into any transaction (including, without limitation, any depositary, trust or agency transaction) with any Holders of Notes or with any other party hereto in the same manner as if it had not been appointed as Trustee, without being obliged to account for any profits.

Section 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Parent, the Issuer or their Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-registrar may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.

Section 7.04. Trustee’s Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity, priority or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuer’s or the Parent’s use of the proceeds from the Notes, and it shall not be responsible for any statement of the Issuer in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication.

Section 7.05. Notice of Defaults. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail, at the expense of the Parent, to each holder of Notes notice of the Default or Event of Default within 90 days after it occurs or 30 days after it is known to a Trust Officer or written notice of it is received by the Trustee. Except in the case of a Default or Event of Default in payment of principal of or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its trust officers in good faith determines that withholding the notice is in the interests of holders of Notes.

Section 7.06. Reports by Trustee to Holders. If required by TIA § 313(a), as promptly as practicable after each July 29 beginning with July 29, 2010 and in any event prior to October 29 in each year, the Trustee shall mail, at the expense of the Parent, to each Holder a brief report dated as of July 29 each year that complies with TIA § 313(a). The Trustee shall also comply with TIA § 313(b) and TIA § 313(c).

A copy of each report at the time of its mailing to holders of Notes shall be filed with the Commission and each stock exchange (if any) on which the Notes are listed. The Parent agrees to notify promptly the Trustee whenever the Notes become listed on any stock exchange and of any delisting thereof.

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Section 7.07. Compensation and Indemnity. The Parent shall pay to the Trustee from time to time compensation for its services as agreed between the Trustee and the Issuer. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Parent shall reimburse the Trustee upon request for all out-of-pocket expenses properly incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the properly incurred compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants and experts. The Parent shall indemnify the Trustee against any and all loss, liability or expense (including properly incurred attorneys’ fees) incurred by it in connection with the acceptance and administration of this trust and the performance of its duties hereunder. The Trustee shall notify the Parent promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Parent shall not relieve the Parent of its obligations hereunder. The Parent shall defend the claim and the Trustee may have separate counsel and the Parent shall pay the fees and expenses of such counsel. The Parent need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee’s own wilful misconduct or gross negligence. The Parent need not pay for any settlement made by the Trustee without the Parent’s consent, such consent not to be unreasonably withheld. All indemnifications and releases from liability granted hereunder to the Trustee shall extend to its officers, directors, employees, agents, successors and assigns.

To secure the Parent’s payment obligations in this Section, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Notes.

The Parent’s payment obligations pursuant to this Section shall survive the resignation or removal of the Trustee and the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(g) or (h) with respect to the Parent, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.

Section 7.08. Replacement of Trustee. The Trustee may resign at any time by so notifying the Parent. The holders of Notes of a majority in aggregate principal amount of the Notes then outstanding may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Parent shall remove the Trustee if:

(a) the Trustee fails to comply with Section 7.10;

(b) the Trustee is adjudged bankrupt or insolvent;

(c) a receiver or other public officer takes charge of the Trustee or its property; or

(d) the Trustee otherwise becomes incapable of acting.

If the Trustee resigns, is removed by the Parent or by the holders of Notes of a majority in aggregate principal amount of the Notes then outstanding and such holders of Notes do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Parent shall promptly appoint a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Parent. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to holders of Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07.

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the holders of Notes of 10% in aggregate principal amount of the Notes then outstanding may petition any court of competent jurisdiction for the appointment of a successor Trustee.

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If the Trustee fails to comply with Section 7.10, any holder of Notes who has been a bona fide holder of a Note for at least six months may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Notwithstanding the replacement of the Trustee pursuant to this Section, the Parent’s obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.

Section 7.09. Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Trustee.

In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any such successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force any certificate of the Trustee has pursuant to the Notes or this Indenture.

Section 7.10. Eligibility; Disqualification. The Trustee shall at all times satisfy the requirements of TIA § 310(a). The Trustee shall have (or, in the case of a corporation included in a bank holding company system, the related bank holding company shall have) a combined capital and surplus of at least US$50,000,000 as set forth in its (or its related bank holding company’s) most recent published annual report of condition. The Trustee shall comply with TIA § 310(b), provided, however, that there shall be excluded from the operation of TIA § 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Issuer are outstanding if the requirements for such exclusion set forth in TIA § 310(b)(1) are met.

Section 7.11. Preferential Collection of Claims Against Issuer. The Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.

Section 7.12. Other Capacities. Except as otherwise specifically provided herein, (a) all references in this Indenture to the Trustee shall be deemed to refer to the Trustee in its capacity as Trustee and in its capacities as Registrar and Paying Agent and (b) every provision of this Indenture relating to the conduct or affecting the liability or offering protection, immunity or indemnity to the Trustee shall be deemed to apply with the same force and effect to the Trustee acting in its capacities as Registrar and Paying Agent.

ARTICLE 8

DISCHARGE OF INDENTURE; DEFEASANCE

Section 8.01. Discharge of Liability on Notes; Defeasance.

(a) When (i) the Issuer delivers to the Trustee all outstanding Notes (other than Notes replaced pursuant to Section 2.07) for cancellation or (ii) all outstanding Notes have become due and payable, whether at maturity or as a result of the mailing of a notice of redemption pursuant to Article 3 and the Issuer irrevocably deposits with the Trustee funds sufficient to pay at maturity or upon redemption all outstanding Notes, including interest thereon to maturity or such redemption date (other than Notes replaced pursuant to Section 2.07), and if in either case the Issuer pays all other sums payable hereunder by the Issuer, then this Indenture shall, subject to Section 8.01(c), cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Issuer accompanied by an Officers’ Certificate and an Opinion of Counsel and at the cost and expense of the Issuer.

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(b) Subject to Sections 8.01(c) and 8.02, the Issuer or the Guarantor at any time may terminate (i) all of their obligations under the Notes and this Indenture (“legal defeasance”) or (ii) their obligations under Sections 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 4.24 and 4.25 and the operation of Sections 6.01(e), 6.01(f), 6.01(g) and 6.01(h) (but, in the case of Sections 6.01(g) and (h), with respect only to Significant Subsidiaries) and the limitations contained in clauses (e) and (g) of the first paragraph of Section 5.01 (“covenant defeasance”). The Issuer may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option.

If the Issuer exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If the Issuer exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in Sections 6.01(d) (with respect to the covenants of Article 4 identified in the immediately preceding paragraph), 6.01(e), 6.01(f), 6.01(g) or 6.01(h) (with respect only to Significant Subsidiaries in the case of Sections 6.01(g) and 6.01(h)) or because of the failure of the Parent to comply with the limitations contained in clauses (e) and (g) of the first paragraph of Section 5.01.

Upon satisfaction of the conditions set forth herein and upon request of the Issuer, the Trustee shall acknowledge in writing the discharge of those obligations that the Issuer terminates.

(c) Notwithstanding clauses (a) and (b) above, the Issuer’s and the Guarantor’s obligations in Sections 2.04, 2.05, 2.06, 2.07, 4.22, 7.07, 7.08, 8.05 and 8.06 shall survive until the Notes have been paid in full. Thereafter, the Issuer’s obligations in Sections 7.07 and 8.05 shall survive.

Section 8.02. Conditions to Defeasance. The Issuer may exercise its legal defeasance option or its covenant defeasance option only if:

(a) the Issuer irrevocably deposits in trust with the Trustee money or U.S. Government Obligations for the payment of principal of, premium and interest on the Notes to maturity or redemption, as the case may be;

(b) the Issuer delivers to the Trustee a certificate from a nationally-recognized firm of independent certified public accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal, premium and interest when due on all the Notes to maturity or redemption, as the case may be;

(c) 123 days pass after the deposit is made and during the 123-day period no Default specified in Section 6.01(g) or (h) with respect to the Issuer, the Parent or any other Person making such deposit occurs that is continuing at the end of the period;

(d) no Default or Event of Default has occurred and is continuing on the date of such deposit and after giving effect thereto;

(e) the deposit does not constitute a default under any other agreement or instrument binding on the Issuer, the Parent or any Guarantor;

(f) the Issuer delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940;

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(g) in the case of the legal defeasance option, the Issuer shall have delivered to the Trustee an Opinion of Counsel of recognized standing with respect to U.S. federal income tax matters stating that (i) the Issuer has received from the Internal Revenue Service a ruling, or (ii) since the date of this Indenture there has been a change in the applicable U.S. federal income tax law, to the effect, in either case, that and based thereon such Opinion of Counsel shall confirm that, the beneficial owners of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same time as would have been the case if such defeasance had not occurred;

(h) in the case of the covenant defeasance option, the Issuer shall have delivered to the Trustee an Opinion of Counsel of recognized standing with respect to U.S. federal income tax matters to the effect that the beneficial owners of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred;

(i) the Issuer delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes as contemplated by this Article 8 have been complied with; and

(j) the Issuer delivers to the Trustee an Opinion of Counsel in The Netherlands and the Republic of Indonesia to the effect that beneficial owners of the Notes will not recognize income, gain or loss for Dutch or Indonesian tax purposes as a result of such deposit and defeasance and will be subject to Dutch or Indonesian taxes (including withholding taxes) on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred.

Before or after a deposit, the Issuer may make arrangements satisfactory to the Trustee for the redemption of Notes at a future date in accordance with Article 3.

Section 8.03. Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Notes.

Section 8.04. Repayment to the Issuer. The Trustee and the Paying Agent shall promptly turn over to the Issuer any excess money or securities held by them at any time.

Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Issuer upon request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, holders of Notes entitled to the money must look only to the Issuer for payment as general creditors.

Section 8.05. Indemnity for Government Obligations. The Issuer and the Parent shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.

Section 8.06. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuer’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 8; provided, however, that, if the Issuer has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.

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ARTICLE 9

AMENDMENTS

Section 9.01. Without Consent of Holders. The Issuer, the Guarantor and the Trustee may amend this Indenture or the Notes without notice to or consent of any holder of the Notes:

(a) to cure any ambiguity, omission, defect or inconsistency;

(b) to provide for uncertificated Notes in addition to or in place of certificated Notes; provided, however, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code;

(c) to add additional Guarantees with respect to the Notes;

(d) to secure the Notes, to add to the covenants of the Parent for the benefit of the holders of the Notes or to surrender any right or power herein conferred upon the Parent; or

(e) to make any change that does not adversely affect the rights of any holder of the Notes.

After an amendment under this Section becomes effective, the Parent shall mail to holders of Notes a notice briefly describing such amendment. The failure to give such notice to all holders of Notes, or any defect therein, will not impair or affect the validity of an amendment under this Section.

Section 9.02. With Consent of Holders. The Issuer and the Trustee may amend this Indenture or the Notes with the written consent of the holders of Notes of at least a majority in aggregate principal amount of the Notes then outstanding. However, without the consent of each holder of Notes affected, an amendment, supplement or waiver may not:

(a) reduce the amount of Notes whose holders must consent to an amendment or waiver;

(b) reduce the rate of or extend the time for payment of interest on any Note;

(c) reduce the principal of or extend the Stated Maturity of any Note;

(d) make any Note payable in a currency other than that stated in the Note;

(e) impair the right of any holder of the Notes to receive payment of principal of and interest on such holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder’s Notes;

(f) subordinate the Notes to any other obligation of the Issuer or the Guarantor;

(g) release any security interest that may have been granted in favor of the holders of Notes other than pursuant to the terms of such security interest;

(h) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed;

(i) reduce the premium payable upon a Change of Control or, at any time after a Change of Control has occurred, change the time at which the Change of Control Offer relating thereto must be made or at which the Notes must be repurchased pursuant to such Change of Control Offer;

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(j) at any time after the Issuer is obligated to make a Prepayment Offer with the Excess Proceeds from Asset Sales, change the time at which such Prepayment Offer must be made or at which the Notes must be repurchased pursuant thereto;

(k) modify the provisions of Section 4.25;

(l) release the Parent or any other Guarantor from any of its obligations under any Guarantee of the Notes or this Indenture, except in accordance with the terms of this Indenture;

(m) amend, change or modify the Guarantee in a manner that adversely affects the holders of the Notes;

(n) amend or modify the provisions of Section 4.22 or Section 6 of the Notes; or

(o) make any change in the preceding amendment and waiver provisions.

It shall not be necessary for the consent of the holders of Notes under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.

After an amendment under this Section becomes effective, the Issuer shall mail to holders of Notes at the holder’s address as it appears on the registration books of the Registrar a notice briefly describing such amendment. The failure to give such notice to all holders of Notes, or any defect therein, shall not impair or affect the validity of an amendment under this Section.

Section 9.03. Compliance with Trust Indenture Act. If this Indenture is, at any time, required to be qualified under the TIA, from the date of such qualification, every amendment to this Indenture or the Notes shall comply with the TIA as then in effect.

Section 9.04. Revocation and Effect of Consents and Waivers. A consent to an amendment or a waiver by a holder of a Note shall bind the holder of a Note and every subsequent holder of that Note or portion of the Note that evidences the same debt as the consenting holder’s Note, even if notation of the consent or waiver is not made on the Note. However, any such holder or subsequent holder may revoke the consent or waiver as to such holder’s Note or portion of the Note if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every holder of the Notes. An amendment or waiver becomes effective upon the execution of such amendment or waiver by the Trustee.

The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the holders of Notes entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were holders of Notes at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be holders of Notes after such record date. No such consent shall be valid or effective for more than 120 days after such record date.

Section 9.05. Notation on or Exchange of Notes. If an amendment changes the terms of a Note, the Trustee may require the holder of the Note to deliver such Note to the Trustee. The Trustee may place an appropriate notation on the Note regarding the changed terms and return such Note to the holder of the Note. Alternatively, if the Issuer or the Trustee so determines, the Issuer in exchange for the Note shall issue and the Trustee, upon written order of the Issuer pursuant to Section 2.03, shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment.

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Section 9.06. Trustee to Sign Amendments and Waivers. The Trustee and the Issuer shall sign any amendment or supplemental indenture authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment or waiver the Trustee shall be entitled to receive indemnity satisfactory to it and to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture and complies with the provisions hereof (including Section 9.03).

Section 9.07. Payment for Consent. The Issuer will not directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid and is paid to all holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Notwithstanding the foregoing, the Issuer shall be permitted, in any offer or payment of consideration for, or as an inducement to, any consent, waiver or amendment of any of the terms or provisions of this Indenture, to exclude holders of Notes in any jurisdiction where (a) the solicitation of such consent, waiver or amendment in the manner deemed appropriate by the Issuer and the payment of consideration therefor would require the Issuer or the Parent to (i) file a registration statement, prospectus or similar document or subject the Issuer or the Parent to ongoing periodic reporting or similar requirements under any securities laws (including, but not limited to, the United States federal securities laws and the laws of the European Union or its member states), (ii) qualify as a foreign corporation or other entity or as a dealer in securities in such jurisdiction if it is not otherwise required to so qualify, (iii) generally consent to service of process in any such jurisdiction or (iv) subject the Issuer or the Parent to taxation in any such jurisdiction if it is not otherwise so subject; or (b) such solicitation would otherwise not be permitted under applicable law in such jurisdiction.

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ARTICLE 10

GUARANTEE

Section 10.01. Guarantee.

(a) The Guarantor hereby guarantees to each of the holders of the Notes and their respective successors and assigns and to the Trustee on behalf of each of the holders of the Notes, that: (i) the principal of and interest and any other amounts due on the Notes (the “Guaranteed Obligations”) will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration or otherwise, and interest on the overdue principal, if any, and interest on any interest, to the extent lawful, of the Notes and all other obligations of the Issuer to the holders of the Notes hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any of the Notes or of any such other obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration or otherwise. The Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any of the holders of the Notes with respect to any provisions hereof or thereof, the failure to obtain recovery of any judgment against the Issuer, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever and covenants that the Guarantee will not be discharged except by complete performance of the obligations contained in the Notes, this Indenture and in the Guarantee. If any holder of the Notes or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Issuer or the Guarantor, any amount paid by the Issuer or the Guarantor to the Trustee or such holder of the Notes, the Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect as before return of such amounts. The Guarantor further agrees that, as between the Guarantor, on the one hand, and the holders of the Notes and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of the Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in Article 6, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of the Guarantee.

(b) Without limiting the foregoing, the Guarantor agrees that:

(i) The occurrence of any one or more of the following shall not affect the enforceability or effectiveness of the Guarantee or this Indenture in accordance with their respective terms or affect, limit, reduce, discharge or terminate the liability of the Guarantor, or the rights, remedies, powers and privileges of the Trustee or any holder of the Notes, under the Guarantee or this Indenture:

(A) any modification or amendment (including without limitation by way of amendment, extension, renewal or waiver), or any acceleration or other change in the time for payment or performance of the terms of all or any part of the Guaranteed Obligations or any Note or this Indenture, or any other agreement or instrument whatsoever relating thereto;

(B) any release, termination, waiver, abandonment, lapse or expiration, subordination or enforcement of the liability of the Guarantor under this Indenture or the Guarantee of all or any part of the Guaranteed Obligations;

(C) any application of the proceeds of any other guarantee (including without limitation any letter of credit or the obligations of any other guarantor of all or any part of the Guaranteed Obligations) to all or any part of the Guaranteed Obligations in any such manner as the holders of the Notes may determine;

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(D) any release of any other Person (including without limitation any other guarantor with respect to all or any part of the Guaranteed Obligations) from any personal liability with respect to all or any part of the Guaranteed Obligations;

(E) any settlement, compromise, release, liquidation or enforcement, upon such terms and in such manner as the holders of the Notes may determine, of all or any part of the Guaranteed Obligations or any other guarantee of (including without limitation any letter of credit issued with respect to) all or any part of the Guaranteed Obligations;

(F) the giving of any consent to the merger or consolidation of, the sale of substantial assets by, or other restructuring or termination of the corporate existence of the Issuer or any other Person or any disposition of any shares of the Guarantor;

(G) any proceeding against the Issuer or any other Guarantor of all or any part of the Guaranteed Obligations or any collateral provided by any other Person or the exercise of any rights, remedies, powers and privileges of the Trustee and the holders of the Notes under this Indenture or the Guarantee or otherwise in such order and such manner as the holders of the Notes may determine, regardless of whether the Trustee or the holders of the Notes shall have proceeded against or exhausted any collateral, right, remedy, power or privilege before proceeding to call upon or otherwise enforce this Indenture or the Guarantee;

(H) the entering into such other transactions or business dealings with the Issuer, any Subsidiary or Affiliate of the Issuer or any other guarantor of all or any part of the Guaranteed Obligations as the holders of the Notes may desire; or

(I) all or any combination of any of the actions set forth in this Section 10.01(b).

(c) The enforceability and effectiveness of this Indenture and the liability of the Guarantor, and the rights, remedies, powers and privileges of the Trustee and the holders of the Notes under this Indenture and the Guarantee shall not be affected, limited, reduced, discharged or terminated, and the Guarantor hereby expressly waives to the fullest extent permitted by law any defense now or in the future arising by reason of:

(A) the illegality, invalidity or unenforceability of all or any part of the Guaranteed Obligations, this Indenture, the Guarantee or any other agreement or instrument whatsoever relating to all or any part of the Guaranteed Obligations;

(B) any disability or other defense with respect to all or any part of the Guaranteed Obligations, including the effect of any statute of limitations that may bar the enforcement of all or any part of the Guaranteed Obligations or the obligations of any such other Guarantor;

(C) the illegality, invalidity or unenforceability of any security for or other guarantee (including without limitation any letter of credit) of all or any part of the Guaranteed Obligations;

(D) the cessation, for any cause whatsoever, of the liability of the Issuer or any other Guarantor with respect to all or any part of the Guaranteed Obligations (other than by reason of the full payment of all Guaranteed Obligations);

(E) any failure of the Issuer or any holder of the Notes to marshal assets in favor of the Issuer or any other Person (including any other Guarantor of all or any part of the Guaranteed Obligations), to exhaust any collateral for all or any part of the Guaranteed Obligations, to pursue or exhaust any right, remedy, power or privilege it may have against the Issuer or any other Guarantor of all or any part of the Guaranteed Obligations or any other Person or to take any action whatsoever to mitigate or reduce such or any other Person’s liability under this Indenture or the Guarantee, the holders of the Notes being under no obligation to take any such action notwithstanding the fact that all or any part of the Guaranteed Obligations may be due and payable and that the Issuer may be in default of its obligations under this Indenture or any Notes;

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(F) any counterclaim, set-off or other claim which the Issuer or any other Guarantor of all or any part of the Guaranteed Obligations has or claims with respect to all or any part of the Guaranteed Obligations;

(G) any failure of the Trustee or any holder of the Notes or any other Person to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person;

(H) any bankruptcy, insolvency, reorganization, winding-up or adjustment of debts, or appointment of a custodian, liquidator or the like of it, or similar proceedings commenced by or against any Person, including any discharge of, or bar or stay against collecting, all or any part of the Guaranteed Obligations (or any interest on all or any part of the Guaranteed Obligations) in or as a result of any such proceeding;

(I) any action taken by the Trustee or any holder of the Notes that is authorized by this Section 10.01 or otherwise in this Indenture or the Guarantee or any omission to take any such action; or

(J) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.

Section 10.02. Severability. In case any provision of the Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 10.03. Release of a Guarantor

(a) Upon the repayment of all of the Notes, the Guarantor shall be deemed released from all obligations under this Article 10 without any further action required on the part of the Trustee or any holder of the Notes.

(b) The Trustee shall deliver an appropriate instrument evidencing such release upon receipt of a request by the Issuer or any Guarantor accompanied by an Officers’ Certificate certifying as to the compliance with this Section 10.03. If the Guarantor is not so released, the Guarantor shall remain liable for the full amount of principal of and interest on the Notes as provided in this Article 10.

Section 10.04. Waiver of Subrogation. The Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against the Issuer that arise from the existence, payment, performance or enforcement of the Guarantor’s obligations under its Guarantee and this Indenture, including, without limitation, any right of subrogation, reimbursement, exoneration, indemnification, and any right to participate in any claim or remedy of any holder of the Notes against the Issuer, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Issuer, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to the Guarantor in violation of the preceding sentence and the Notes shall not have been paid in full, such amount shall be deemed to have been paid to the Guarantor for the benefit of, and held in trust for the benefit of, the holders of the Notes, and shall forthwith be paid to the Trustee for the benefit of such holders of the Notes to be credited and applied upon the Notes, whether matured or unmatured, in accordance with the terms of this Indenture. The Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 10.04 is knowingly made in contemplation of such benefits.

Section 10.05. Evidence of Guarantee. To evidence the guarantee to the holders of the Notes set forth in this Article 10, the Guarantor hereby agrees to execute the notation of Guarantee in substantially the form attached to the form of Notes, included as an exhibit to this Indenture. The notation of Guarantee shall be signed on behalf of the Guarantor by an Officer (whom shall have been duly authorized by all requisite corporate actions).

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Section 10.06. Waiver of Stay, Extension or Usury Laws. The Guarantor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Guarantor from performing its Guarantee as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) the Guarantor hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE 11

MISCELLANEOUS

Section 11.01. Notices. Any notice or communication shall be in writing and delivered in person or mailed by first-class mail or sent by facsimile (with a hard copy delivered in person or by mail promptly thereafter) and addressed as follows:

(a) if to the Issuer:

Indosat Palapa Company B.V.

Jan Luijkenstraat 12

1071 CM Amsterdam

The Netherlands

Fax: 31 020 890 6930

with a copy to:

PT Indosat Tbk

Jl. Medan Merdeka Barat No. 21

Jakarta 10110

Indonesia

Attention of:

Legal Group

Fax: 62 21 3000 1339

(b) if to the Guarantor:

PT Indosat Tbk

Jl. Medan Merdeka Barat No. 21

Jakarta 10110

Indonesia

Attention of:

Legal Group

Fax: 62 21 3000 1339

(c) if to the Trustee:

The Bank of New York Mellon

21^st Floor West

101 Barclay Street

New York, New York 10286

Attention of:

Global Corporate Trust

Fax: 1 212 815 5802/5803/5915

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with a copy to:

The Bank of New York Mellon

One Temasek Avenue

#03-01 Millenia Tower

Singapore 039192

Attn: Global Corporate Trust

The Issuer, the Guarantor or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

Any notice or communication mailed to a holder of a Note shall be mailed, at the expense of the Issuer, to the holder of a Note at the holder of a Note’s address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.

Any such notice or demand will be deemed to have been sufficiently given or served when so sent or deposited and, if to the holders, when delivered in accordance with the applicable rules and procedures of DTC. Any such notice shall be deemed to have been delivered on the day such notice is delivered to DTC or if by mail, when so sent or deposited.

The Issuer or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

Failure to mail a notice or communication to a holder of a Note or any defect in such notice shall not affect its sufficiency with respect to other holders of Notes. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

Section 11.02. Communication by Holders with Other Holders. Holders of Notes may communicate pursuant to TIA § 312(b) with other holders of Notes with respect to their rights under this Indenture or the Notes. The Issuer, the Parent and any other Guarantor, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

Section 11.03. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Issuer to the Trustee to take or refrain from taking any action under this Indenture, the Issuer and the Parent shall furnish to the Trustee:

(a) an Officers’ Certificate in form and substance satisfactory to the Trustee and complying with Section 11.04 stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(b) an Opinion of Counsel in form and substance satisfactory to the Trustee and complying with Section 11.04 stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

Section 11.04. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:

(a) a statement that the individual making such certificate or opinion has read such covenant or condition;

(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

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(c) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

Section 11.05. When Notes Disregarded. In determining whether the holders of Notes of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer or Parent or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or Parent shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded. Also, subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination.

Section 11.06. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by or at a meeting of holders of Notes. The Registrar and the Paying Agent or co-registrar may make reasonable rules for their functions.

Section 11.07. Legal Holidays. A “Legal Holiday” is a Saturday, a Sunday or a day on which banking institutions or trust companies are authorized or obligated to close in The City of New York, Jakarta, Indonesia, Singapore or The Netherlands. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected.

Section 11.08. Governing Law. THIS INDENTURE, THE NOTES AND THE GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

The issuance of the Notes and the Guarantee will also be subject to a certain extent to the respective laws of the jurisdiction of formation of the Issuer and the Guarantor.

Section 11.09. Waiver of Immunities. To the extent that the Issuer and the Guarantor or any of their properties, assets or revenues may have or may hereafter become entitled to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, from the giving of any relief in any such legal action, suit or proceeding, from set off or counterclaim, from the competent jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution of judgment, or from execution of judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any competent jurisdiction in which proceedings may at any time be commenced, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Indenture and the transactions contemplated hereby, the Issuer and the Guarantor hereby irrevocably and unconditionally waive, and agree not to plead or claim, any such immunity and consent to such relief and enforcement.

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Section 11.10. Consent to Jurisdiction; Appointment of Agent for Service of Process; Judgment Currency

(a) the Issuer and the Guarantor by the execution and delivery of this Indenture, irrevocably agrees that service of process may be made upon Law Debenture Corporate Services Inc. (“Law Debenture”), with offices at 40 Madison Avenue, Suite 4D, New York, New York 10017 (or its successors as agent for service of process), in the County, City and State of New York, United States of America, in any suit or proceeding against the Issuer or the Guarantor instituted by the Trustee, based on or arising under this Indenture and the transactions contemplated hereby in any federal or state court in the Borough of Manhattan in the City of New York, and each of the Issuer and the Guarantor and the Trustee hereby irrevocably consents and submits to the jurisdiction of any such court and to the courts of its own corporate domicile in respect of actions brought against it as a defendant generally and unconditionally in respect of any such suit or proceeding.

(b) the Issuer and the Guarantor further, by the execution and delivery of this Indenture, irrevocably designate, appoint and empower Law Debenture, with offices at 40 Madison Avenue, Suite 4D, New York, New York 10017, as its designee, appointee and authorized agent to receive for and on its behalf service (i) of any and all legal process, summons, notices and documents that may be served in any action, suit or proceeding brought against the Issuer or the Guarantor with respect to their obligations, liabilities or any other matter arising out of or in connection with this Indenture and the transactions contemplated hereby and (ii) that may be made on such designee, appointee and authorized agent in accordance with legal procedures prescribed for such courts, and it being understood that the designation and appointment of Law Debenture as such authorized agent shall become effective immediately without any further action on the part of the Issuer or the Guarantor. The Issuer and the Guarantor represent to the Trustee that they have notified Law Debenture of such designation and appointment and that Law Debenture has accepted the same, and that Law Debenture has been paid its full fee for such designation, appointment and related services through the date that is one year from the date of this Indenture. The Issuer and the Guarantor further agree that, to the extent permitted by law, service of process upon Law Debenture (or its successors as agent for service of process) and written notice of said service to the Issuer and the Guarantor pursuant to Section 11.01 of this Indenture, shall be deemed in every respect effective service of process upon the Issuer and the Guarantor in any such suit or proceeding. If for any reason such designee, appointee and agent hereunder shall cease to be available to act as such, the Issuer and the Guarantor agree to designate a new designee, appointee and agent in The City of New York, New York on the terms and for the purposes of this Section 11.10 reasonably satisfactory to the Trustee. The Issuer and the Guarantor further hereby irrevocably consent and agree to the service of any and all legal process, summons, notices and documents in any such action, suit or proceeding against the Issuer or the Guarantor by serving a copy thereof upon the relevant agent for service of process referred to in this Section 11.10 (whether or not the appointment of such agent shall for any reason prove to be ineffective or such agent shall accept or acknowledge such service) and by mailing copies thereof by registered or certified air mail, postage prepaid, to the Issuer and the Guarantor at their addresses specified in or designated pursuant to this Indenture. The Issuer and the Guarantor agree that the failure of any such designee, appointee and agent to give any notice of such service to it shall not impair or affect in any way the validity of such service or any judgment rendered in any action or proceeding based thereon. Nothing herein shall in any way be deemed to limit the ability of the Trustee to serve any such legal process, summons, notices and documents in any other manner permitted by applicable law. The Issuer and the Guarantor hereby irrevocably and unconditionally waive, to the fullest extent permitted by law, any objection that they may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Indenture brought in federal or state court in the State of New York, County of New York, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

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(c) The Issuer and the Guarantor, jointly and severally, agree to indemnify each holder of the Notes against any loss incurred, as incurred, as a result of any judgment or award in connection with this Indenture being expressed in a currency (the “Judgment Currency”) other than U.S. Dollars and as result of any variation as between (i) the spot rate of exchange in the City of New York at which the Judgment Currency could have been converted into U.S. Dollars as of the date such judgment or award is paid and (ii) the spot rate of exchange at which the indemnified party converts such Judgment Currency. The foregoing constitutes a separate and independent obligation of the Issuer and the Guarantor and will continue in full force and effect notwithstanding any such judgment or award. The term “spot rate of exchange” includes any premiums and costs of exchange payable in connection with the purchase of, or conversion into, the relevant currency.

(d) The provisions of this Section shall survive any termination of this Indenture, in whole or in part.

Section 11.11. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Parent shall not have any liability for any obligations of the Issuer or the Guarantor under the Notes or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Note, each holder of a Note shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Notes.

Section 11.12. Successors. All agreements of the Issuer or the Guarantor in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.

Section 11.13. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture.

Section 11.14. Table of Contents; Headings. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

Section 11.15. Law of the Republic of Indonesia No. 24 of 2009. This Indenture constitutes the whole and only indenture between the parties. This Indenture will be entered into in the languages of English and Bahasa Indonesia. The parties hereto agree that the English version of this Indenture shall be controlling for all purposes and that the Bahasa Indonesia version has been prepared in compliance with Law No. 24/2009 on National Flag, Language, Coat of Arms and Anthem and shall be for reference only. In the event of any discrepancy or inconsistency between the English text of this Indenture (or any agreement resulting herefrom or relating hereto) and the Bahasa Indonesia version and/or any translation thereof, the English language version shall always prevail.

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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

INDOSAT PALAPA COMPANY B.V., as Issuer
By:
	Name:
	Title:

PT INDOSAT TBK, as Guarantor
By:
	Name:
	Title:

THE BANK OF NEW YORK MELLON, as Trustee, Registrar and Principal Paying Agent
By:
	Name:
	Title:

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APPENDIX A

PROVISIONS RELATING TO THE NOTES

1. Definitions

1.1 Definitions

For the purposes of this Appendix A the following terms shall have the meanings indicated below. Terms used but not defined in this Appendix A shall have the meanings assigned to such terms in this Indenture.

“Definitive Note” means a certificated Note bearing, if required, the restricted securities legend set forth in Section 2.3(c)(i) of this Appendix A.

“Depository” means The Depository Trust Company, its nominees and their respective successors.

“Initial Purchasers” means Citigroup Global Markets Limited, as Sole Global Coordinator, and DBS Bank Ltd, Deutsche Bank AG, Singapore Branch, The Hongkong and Shanghai Banking Corporation Limited and The Royal Bank of Scotland plc.

“Notes” means the Original Notes which have been issued and any Additional Notes, treated as a single class.

“Notes Custodian” means the custodian with respect to a Global Note (as appointed by the Depository) or any successor person thereto, who shall initially be the Trustee.

“Original Notes” means the 7.375% Guaranteed Notes due 2020 in the aggregate principal amount of US$650,000,000 issued on July 29, 2010.

“Purchase Agreement” means the Purchase Agreement dated as of July 22, 2010, among the Issuer, the Guarantor and the Initial Purchasers relating to the Original Notes, or any similar agreement relating to any future sale of Additional Notes by the Issuer.

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

“Transfer Restricted Notes” means Definitive Notes and any other Notes that bear or are required to bear the legend set forth in Section 2.3(c)(i) of this Appendix A.

1.2 Other Definitions

Term	Defined in Section:
“Agent Members”		2.1	(b)
“Global Notes”		2.1	(a)
“Regulation S”		2.1
“Regulation S Global Note”		2.1	(a)
“Rule 144A”		2.1
“Rule 144A Global Note”		2.1	(a)

2. The Notes

2.1 Form and Dating

The Notes will be offered and sold by the Issuer, from time to time, pursuant to one or more Purchase Agreements. The Notes will be resold, initially only to QIBs in reliance on Rule 144A under the Securities Act (“Rule 144A”) and outside the United States in reliance on Regulation S under the Securities Act (“Regulation S”). Notes may thereafter be transferred to, among others, QIBs and purchasers outside the United States in reliance on Regulation S, subject to the restrictions on transfer set forth herein.

A-1

(a) Global Notes. Notes initially resold pursuant to Rule 144A shall be issued initially in the form of one or more permanent global Notes in definitive, fully registered form (collectively, the “Rule 144A Global Note”) and Notes initially resold pursuant to Regulation S shall be issued initially in the form of one or more permanent global securities in definitive, fully registered form (collectively, the “Regulation S Global Note”), in each case without interest coupons and with the global securities legend and restricted securities legend set forth in Exhibit A hereto, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Notes Custodian, and registered in the name of the Depository or a nominee of the Depository, duly executed by the Issuer and authenticated by the Trustee as provided in this Indenture. The Rule 144A Global Note and Regulation S Global Note are collectively referred to herein as “Global Notes.” The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee as hereinafter provided.

(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global Note deposited with or on behalf of the Depository.

The Issuer shall execute and the Trustee shall, in accordance with this Section 2.1(b) and pursuant to an order of the Issuer, authenticate and deliver initially one or more Global Notes that (a) shall be registered in the name of the Depository for such Global Note or Global Notes or the nominee of such Depository and (b) shall be delivered by the Trustee to such Depository or pursuant to such Depository’s instructions or held by the Trustee as Notes Custodian.

Members of, or participants in, the Depository (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depository or by the Trustee as Notes Custodian or under such Global Note, and the Depository may be treated by the Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Trustee or any agent of the Issuer or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices of such Depository governing the exercise of the rights of a holder of a beneficial interest in any Global Note.

(c) Definitive Notes. Except as provided in Section 2.3 or 2.4, owners of beneficial interests in Global Notes will not be entitled to receive physical delivery of Definitive Notes.

2.2 Authentication. The Trustee shall authenticate and deliver: (1) Original Notes for original issue in an aggregate principal amount of US$650,000,000 and (2) Additional Notes, if and when issued in accordance with Section 2.01 of the Indenture, upon a written order of the Issuer signed by an Officer of the Issuer. Such order shall specify the amount of the Notes to be authenticated and the date on which the original issue of Notes is to be authenticated.

A-2

2.3 Transfer and Exchange.

(a) Transfer and Exchange of Definitive Notes. When Definitive Notes are presented to the Registrar or a co-registrar with a request:

(x) to register the transfer of such Definitive Notes; or

(y) to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations, the Registrar or co-registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Notes surrendered for transfer or exchange:

(i) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Issuer and the Registrar or co-registrar, duly executed by the holder of a Note thereof or his attorney duly authorized in writing; and

(ii) if such Definitive Notes bear a restricted securities legend, are being transferred pursuant to clause (A), (B), (C) or (D) below, and are accompanied by the following additional information and documents, as applicable:

(A) if such Definitive Notes are being delivered to the Registrar by a holder for registration in the name of such holder, without transfer, a certification from such holder to that effect;

(B) if such Definitive Notes are being transferred to the Issuer, a certification to that effect;

(C) if such Definitive Notes are being transferred pursuant to an exemption from registration in accordance with Rule 144A under the Securities Act, (i) a certification to that effect and (ii) if the Issuer so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section 2.3(c)(i); or

(D) if such Definitive Notes are being transferred outside the United States in accordance with Regulation S under the Securities Act, (i) a certification to that effect and (ii) if the Issuer so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section 2.3(c)(i).

(b) Transfer and Exchange of Global Notes.

(i) The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depository, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depository therefor. A transferor of a beneficial interest in a Global Note shall deliver (i) a written order given in accordance with the Depository’s procedures containing information regarding the participant account of the Depository to be credited with a beneficial interest in the Global Note and (ii) a certification in the form of the Assignment Form attached to such Note, and such account shall be credited in accordance with such instructions with a beneficial interest in the Global Note and the account of the Person making the transfer shall be debited by an amount equal to the beneficial interest in the Global Note being transferred.

(ii) If the proposed transfer is a transfer of a beneficial interest in one Global Note to a beneficial interest in another Global Note, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of Global Note from which such interest is being transferred.

(iii) Notwithstanding any other provisions of this Appendix A (other than the provisions set forth in Section 2.4), a Global Note may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository.

(iv) If the Global Note in which a beneficial interest is to be transferred or exchanged bears a restricted securities legend, such beneficial interest shall be transferred or exchanged pursuant to an effective registration statement under the Securities Act or pursuant to clauses (B), (C) or (D) of Section 2.3(a)(ii), in each case without regard to sub-clause (ii) of clause (C) or (D) and substituting beneficial interests in a Global Note in place of Definitive Notes.

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(c) Legend.

(i) Except as permitted by the following paragraph (ii), each Note certificate evidencing the Global Notes and the Definitive Notes (and all Notes issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form:

“THIS NOTE AND THE GUARANTEE RELATED TO THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN THE TIME PERIOD REFERRED TO IN RULE 144 UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) IF SUCH PURCHASER IS AN INITIAL PURCHASER, (I) TO INDOSAT PALAPA COMPANY B.V. OR PT INDOSAT TBK; (II) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT; (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT; (IV) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE); OR (B) IF SUCH PURCHASER IS A SUBSEQUENT PURCHASER OF AN INTEREST IN THE RESTRICTED GLOBAL NOTE, AS SET FORTH IN (A) ABOVE AND, IN ADDITION, PURSUANT TO ANY AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (PROVIDED THAT AS A CONDITION TO THE REGISTRATION OF TRANSFER OF ANY NOTES OTHERWISE THAN AS DESCRIBED IN (A) ABOVE OR (C) BELOW, THE ISSUER, THE GUARANTOR OR THE TRUSTEE MAY, IN CIRCUMSTANCES THAT ANY OF THEM DEEMS APPROPRIATE, REQUIRE EVIDENCE AS TO COMPLIANCE WITH ANY SUCH EXEMPTION); OR (C) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE OR AN INTEREST HEREIN WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION” AND “UNITED STATES” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.”

Each Definitive Note will also bear the following additional legend:

“IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.”

(ii) Upon any sale or transfer of a Transfer Restricted Note (including any Transfer Restricted Note represented by a Global Note) pursuant to Rule 144 or Regulation S under the Securities Act:

(A) in the case of any Transfer Restricted Note that is a Definitive Note, the Registrar shall permit the holder of a Note thereof to exchange such Transfer Restricted Note for a Definitive Note that does not bear the legends set forth above and rescind any restriction on the transfer of such Transfer Restricted Note; and

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(B) in the case of any Transfer Restricted Note that is represented by a Global Note, the Registrar shall permit the holder of a Note thereof to exchange such Transfer Restricted Note for a Definitive Note that does not bear the legends set forth above and rescind any restriction on the transfer of such Transfer Restricted Note,

in either case, if the holder of a Note certifies in writing to the Registrar that its request for such exchange was made in reliance on Rule 144 or Regulation S (such certification to be in the form set forth on the reverse of the initial Note).

(d) Cancellation or Adjustment of Global Note. At such time as all beneficial interests in a Global Note have either been exchanged for Definitive Notes, redeemed, repurchased or canceled, such Global Note shall be returned by the Depository to the Trustee for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for Definitive Notes, redeemed, repurchased or canceled, the principal amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Notes Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Notes Custodian, to reflect such reduction.

(e) Obligations with Respect to Transfers and Exchanges of Notes.

(i) To permit registrations of transfers and exchanges, the Issuer shall execute and the Trustee, upon written order of the Issuer pursuant to Section 2.03 of the Indenture, shall authenticate Definitive Notes and Global Notes at the Registrar’s or co-registrar’s request.

(ii) No service charge shall be made for any registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any transfer tax, assessments or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchange or transfer pursuant to Sections 3.06, 4.14, 4.20 and 9.05 of the Indenture).

(iii) The Registrar or co-registrar shall not be required to register the transfer of or exchange of any Note for a period beginning 15 days before the mailing of a notice of redemption or an offer to repurchase Notes or 15 days before an interest payment date.

(iv) Prior to the due presentation for registration of transfer of any Note, the Issuer, the Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of the Issuer, the Trustee, the Paying Agent, the Registrar or any co-registrar shall be affected by notice to the contrary.

(v) All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange.

(f) No Obligation of the Trustee.

(i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, a member of, or a participant in the Depository or any other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption or repurchase) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the holders of Notes and all payments to be made to holders of Notes shall be given or made only to the registered holders of Notes (which shall be the Depository or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners.

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(ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depository participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

2.4 Definitive Notes

(a) A Global Note deposited with the Depository or with the Trustee as Notes Custodian pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form of Definitive Notes in an aggregate principal amount equal to the principal amount of such Global Note, in exchange for such Global Note, only if such transfer complies with Section 2.3 and (i) the Depository notifies the Issuer that it is unwilling or unable to continue as a Depository for such Global Note or if at any time the Depository ceases to be a “clearing agency” registered under the Exchange Act, and a successor Depository is not appointed by the Issuer within 120 days of such notice, or (ii) the Depository so requests following notification that an Event of Default has occurred and is continuing or that any Note has become immediately due and payable in accordance with the terms of the Indenture, or (iii) the Issuer, in its sole discretion, notifies the Trustee in writing that it elects to exchange in whole but not in part the Global Note for Definitive Notes, or (iv) the owner of an interest in a Global Note requests an exchange in writing delivered through the Depository, Euroclear or Clearstream upon notification that any of the Notes has become immediately due and payable in accordance with the terms of the Indenture.

(b) Any Global Note that is transferable to the beneficial owners thereof pursuant to this Section 2.4 shall be surrendered by the Depository to the Trustee, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount of certificated Notes of authorized denominations. Definitive Notes issued in exchange for any portion of a Global Note transferred pursuant to this Section shall be executed, authenticated and delivered only in denominations of US$1,000 and any integral multiple thereof and registered in such names as the Depository shall direct. Any Definitive Note delivered in exchange for an interest in the Global Note shall, except as otherwise provided by Section 2.3(c), bear the restricted securities legend set forth in Exhibit A hereto.

(c) The registered holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action that a holder of a Note is entitled to take under this Indenture or the Notes.

(d) In the event of the occurrence of any of the events specified in Section 2.4(a)(i), (ii) or (iii), the Issuer will promptly make available to the Trustee a reasonable supply of Definitive Notes in definitive, fully registered form without interest coupons.

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EXHIBIT A

[FORM OF FACE OF INITIAL NOTE]

[Global Notes Legend]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (“DTC”) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

UNTIL 40 DAYS AFTER THE COMMENCEMENT OF THE OFFERING, AN OFFER OR SALE OF NOTES WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT.

[Transfer Restricted Notes Legend]

“THIS NOTE AND THE GUARANTEE RELATED TO THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN THE TIME PERIOD REFERRED TO IN RULE 144 UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) IF SUCH PURCHASER IS AN INITIAL PURCHASER, (I) TO INDOSAT PALAPA COMPANY B.V. OR PT INDOSAT TBK; (II) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT; (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT; (IV) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE); OR (B) IF SUCH PURCHASER IS A SUBSEQUENT PURCHASER OF AN INTEREST IN THE RESTRICTED GLOBAL NOTE, AS SET FORTH IN (A) ABOVE AND, IN ADDITION, PURSUANT TO ANY AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (PROVIDED THAT AS A CONDITION TO THE REGISTRATION OF TRANSFER OF ANY NOTES OTHERWISE THAN AS DESCRIBED IN (A) ABOVE OR (C) BELOW, THE ISSUER, THE GUARANTOR OR THE TRUSTEE MAY, IN CIRCUMSTANCES THAT ANY OF THEM DEEMS APPROPRIATE, REQUIRE EVIDENCE AS TO COMPLIANCE WITH ANY SUCH EXEMPTION); OR (C) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE OR AN INTEREST HEREIN WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION” AND “UNITED STATES” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.”

Exh-A-1

[Definitive Notes Legend]

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

Exh-A-2

[FORM OF FACE OF NOTE]

INDOSAT PALAPA COMPANY B.V.

7.375% Guaranteed Notes Due 2020

No. US$                   CUSIP No ISIN No. Common Code No.

Indosat Palapa Company B.V., a private company with limited liability incorporated under the laws of The Netherlands and having its statutory seat in Amsterdam, The Netherlands, promises to pay to [Name of holder], or registered assigns, the principal sum [of US$            ]^* [as set forth on the Schedule of Increases or Decreases annexed hereto]^** on July 29, 2020.

Interest Payment Dates: January 29 and July 29 of each year, commencing on January 29, 2011.

Record Dates: January 14 and July 14.

Additional provisions of this Note are set forth on the other side of this Note.

IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.

Date:                            

INDOSAT PALAPA COMPANY B.V.
By:
	Name:
	Title:

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

Date:                             

THE BANK OF NEW YORK MELLON,     as Trustee, certifies that this is one of the Notes referred to in the Indenture.
By:
	Authorized Signatory

* Insert for Definitive Securities.

** Insert for Global Securities.

Exh-A-3

[FORM OF REVERSE SIDE OF INITIAL NOTE]

7.375% Guaranteed Note Due 2020

1. Interest.

INDOSAT PALAPA COMPANY B.V., a private company with limited liability incorporated under the laws of The Netherlands and having its statutory seat in Amsterdam, The Netherlands (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Issuer”), promises to pay interest on the principal amount of this Note at the rate per annum shown above. The Issuer will pay interest semiannually on January 29 and July 29 of each year, commencing on January 29, 2011. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from July 29, 2010. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Issuer shall pay interest on overdue principal at the rate borne by the Notes plus 1% per annum, and it shall pay interest on overdue installments of interest at the rate borne by the Notes to the extent lawful.

2. Method of Payment.

The Issuer will pay interest on the Notes (except defaulted interest) to the Persons who are registered holders of Notes at the close of business on the January 14 or July 14 next preceding the interest payment date even if Notes are canceled after the record date and on or before the interest payment date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Issuer will pay principal and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Notes represented by a Global Note (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Issuer will make all payments in respect of a Definitive Note (including principal, premium and interest) by mailing a check to the registered address of each holder of a Note thereof; provided, however, that payments on the Notes may also be made, in the case of a holder of a Note of at least US$1,000,000 aggregate principal amount of Notes, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such holder of a Note elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

3. Paying Agent and Registrar.

Initially, The Bank of New York Mellon, a New York banking association (the “Trustee”), will act as Principal Paying Agent and Registrar, and, as long as the Notes are listed on the Singapore Exchange Securities Trading Limited (the “Singapore Exchange”) and if the rules of the Singapore Exchange requires, the Issuer shall appoint a paying agent in Singapore. The Issuer may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Issuer or any Wholly-Owned Subsidiary incorporated or organized within the United States may act as Paying Agent, Registrar or co-registrar.

4. Indenture.

The Issuer issued the Notes under an Indenture dated as of July 29, 2010 (the “Indenture”), among the Issuer, the Guarantor and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “TIA”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and holders of the Notes are referred to the Indenture and the TIA for a statement of those terms.

Exh-A-4

The Notes are senior unsecured obligations of the Issuer, unconditionally and irrevocably guaranteed by the Guarantor. The Notes consist of US$650,000,000 aggregate principal amount of Original Notes and any Additional Notes that may be issued under the Indenture. The Original Notes and any Additional Notes are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Parent and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, incur Debt, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, issue or sell shares of capital stock of such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens, make Asset Sales, enter into or permit Sale and Leaseback Transactions and engage in business other than a Telecommunications Business. The Indenture also imposes certain obligations with respect to the payment of Additional Amounts. The Indenture further imposes limitations on the ability of the Parent to consolidate or merge with or into any other Person or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all of the Property of the Parent. These covenants are subject to important exceptions and qualifications and certain of them are subject to suspension during any period that the Notes have an Investment Grade Rating from at least two Rating Agencies.

5. Optional Redemption.

Except as set forth below, the Notes may not be redeemed prior to July 29, 2015. On and after that date, the Issuer may redeem the Notes in whole or in part at any time and from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued and unpaid interest and Additional Amounts thereon, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date that is on or prior to the date of redemption), if redeemed during the 12-month period beginning on or after July 29 of the years set forth below:

Period	Redemption Price
2015		103.6875	%
2016		102.4583	%
2017		101.2292	%
2018 and thereafter		100.0000	%

At any time and from time to time, prior to July 29, 2013, the Issuer may, upon not less than 30 days’ nor more than 60 days’ prior notice, redeem up to a maximum of 35% of the original aggregate principal amount of the Notes issued with the proceeds of one or more Public Equity Offerings at a redemption price equal to 107.375% of the principal amount thereof, plus accrued and unpaid interest and Additional Amounts thereon, if any, to the redemption date (subject to the right of holders of Notes of record on the relevant record date to receive interest due on the relevant interest payment date that is on or prior to the date of redemption); provided, however, that after giving effect to any such redemption, at least 65% of the original aggregate principal amount of the Notes remains outstanding. Any such redemption shall be made within 75 days of such Public Equity Offering.

Prior to July 29, 2015, the Issuer will be entitled at its option to redeem all or any portion of the Notes at a redemption price equal to 100% of the principal amount of the Notes plus the Applicable Premium as of, and accrued and unpaid interest to, the redemption date (subject to the right of holders of the Notes on the relevant record date to receive interest due on the relevant interest payment date). Notice of such redemption must be mailed by first-class mail to each holder’s registered address, not less than 30 nor more than 60 days prior to the redemption date.

Exh-A-5

6. Redemption for Tax Reasons.

The Notes may be redeemed, at the option of the Issuer or the Parent, in whole but not in part, at any time upon not less than 30 days’ nor more than 60 days’ notice as provided in the Indenture to the holders of the Notes (which notice will be irrevocable), at a price equal to 100% of the principal amount thereof plus any accrued and unpaid interest to (but not including) the redemption date and any Additional Amounts which otherwise would be payable only if, as a result of (1) any change in, or amendment to, the laws or any regulations or rulings promulgated thereunder of a Relevant Jurisdiction, as defined below, affecting taxation; or (2) any change in, or amendment to, the official position regarding the application or interpretation of such laws, regulations or rulings (including a holding, judgment or order by a court of competent jurisdiction), which change or amendment becomes effective on or after the Issue Date with respect to any payment due or to become due under the Notes, the Indenture, any Intercompany Loan or the Guarantee, the Issuer or the Guarantor, as the case may be, is, or on the next Notes Interest Payment Date would be, required to pay Additional Amounts (or, in the case of any payment with respect to an Intercompany Loan, would be required to withhold or deduct any taxes, duties, assessments or governmental charges of whatever nature), and such requirement cannot be avoided by taking reasonable measures by the Issuer or the Guarantor, as the case may be; provided that changing the jurisdiction of the Issuer or the Guarantor is not a reasonable measure for the purposes of this section; provided further that no such notice of redemption will be given earlier than 90 days prior to the earliest date on which the Issuer or the Guarantor, as the case may be, would be obligated to pay such Additional Amounts (or, in the case of an Intercompany Loan, withhold or deduct such taxes, duties, assessments or governmental charges) if a payment in respect of the Notes (or on an Intercompany Loan, as applicable) were then due; provided further that where any such requirement to pay Additional Amounts (or withhold or deduct an amount from any payment with respect to any Intercompany Loan) is due to taxes of the Republic of Indonesia (or any political subdivision or taxing authority thereof or therein), the Issuer or the Parent shall be permitted to redeem the Notes in accordance with the provisions above only if the rate of withholding or deduction in respect of which Additional Amounts are required (or in respect of which withholding is required on payments on an Intercompany Loan) is in excess of 20.0%.

Prior to the mailing of any notice of redemption of the Notes pursuant to the foregoing, the Issuer or the Guarantor, as the case may be, will deliver to the Trustee:

(a) an Officers’ Certificate stating that such change or amendment referred to in clauses (1) or (2) of the first paragraph of this Section 6 above has occurred, and describing the facts related thereto and stating that such requirement cannot be avoided by the Issuer or the Guarantor, as the case may be, taking reasonable measures available to it; and

(b) an Opinion of Counsel (from the Relevant Jurisdiction) stating that the requirement to pay such Additional Amounts results from such change or amendment referred to in clauses (1) and (2) of the first paragraph of this Section 6.

The Trustee will accept such certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent described above, and it will be conclusive and binding on the holders. The Trustee has no duty to and will not investigate or verify such certificate and opinion.

7. Additional Amounts.

All payments of principal of, and premium, if any, and interest on the Notes and all payments under the Guarantee will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or within any jurisdiction in which the Issuer or the Guarantor, is organized or resident for tax purposes (or any political subdivision or taxing authority thereof or therein) (each, as applicable, a “Relevant Jurisdiction”) or through which payment is made, unless such withholding or deduction is required by law or by regulation or governmental policy having the force of law. In such event, the Issuer or the Guarantor, as the case may be, will make such deduction or withholding, make payment of the amount so withheld to the appropriate governmental authority and will pay such additional amounts (“Additional Amounts”) as will result in receipt by the holder of such amounts as would have been received by such holder had no such withholding or deduction been required, provided that no Additional Amounts will be payable:

(a) for or on account of:

(i) any tax, duty, assessment or other governmental charge that would not have been imposed but for:

Exh-A-6

(A) the existence of any present or former connection between the holder or beneficial owner of such Note or Guarantee, as the case may be, and the Relevant Jurisdiction or jurisdiction through which payment is made including, without limitation, such holder or beneficial owner being or having been a citizen or resident of such Relevant Jurisdiction or jurisdiction through which payment is made or treated as a resident thereof or being or having been physically present or engaged in a trade or business therein or having or having had a permanent establishment therein, other than merely holding such Note, the receipt of payments thereunder or under the Guarantee or enforcing payment under the Note or the Guarantee;

(B) the presentation of such Note (where presentation is required) more than 30 days after the later of the date on which the payment of the principal of, premium, if any, or interest on, such Note became due and payable pursuant to the terms thereof or was made or duly provided for, except to the extent that the holder thereof would have been entitled to such Additional Amounts if it had presented such Note for payment on any date within such 30-day period;

(C) the failure of the holder or beneficial owner to comply with a timely request of the Issuer or the Guarantor addressed to the holder or beneficial owner, as the case may be, to provide information to the Issuer or the Guarantor concerning such holder’s or beneficial owner’s nationality, residence, identity or connection with any Relevant Jurisdiction or jurisdiction through which payment is made, if and to the extent that due and timely compliance with such request would have reduced or eliminated any withholding or deduction as to which Additional Amounts would have otherwise been payable to such holder, provided that the information must not be materially more onerous, in form, in procedure or in substance of information disclosed, to a holder or beneficial owner of a Note than comparable information or other reporting requirements imposed under United States tax law, regulations and administrative practice; or

(D) the presentation of such Note (where presentation is required) for payment in the Relevant Jurisdiction or jurisdiction through which payment is made, unless such Note could not have been presented for payment elsewhere;

(ii) any estate, inheritance, gift, sale, transfer, excise or personal property or similar tax, assessment or other governmental charge;

(iii) any withholding or deduction in respect of any tax, duty, assessment or other governmental charge where such withholding or deduction is imposed or levied on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of November 26-27, 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directives;

(iv) any tax, duty, assessment or other governmental charge which is payable other than (A) by deduction or withholding from payments of principal of or interest on the Note or payments under the Guarantee, or (B) by direct payment by the Issuer or the Guarantor in respect of claims made against the Issuer or the Guarantor; or

(v) any combination of taxes, duties, assessments or other governmental charges referred to in the preceding clauses (i), (ii), (iii) and (iv); or

(b) with respect to any payment of the principal of, or premium, if any, or interest on, such Note or any payment under the Guarantee to such holder, if the holder is a fiduciary, partnership or person other than the sole beneficial owner of any payment to the extent that such payment would be required to be included in the income under the laws of a Relevant Jurisdiction or jurisdiction through which payment is made, for tax purposes, of a beneficiary or settlor with respect to the fiduciary, or a member of that partnership or a beneficial owner who would not have been entitled to such Additional Amounts had that beneficiary, settlor, partner, or beneficial owner been the holder thereof.

As a result of these provisions, there are circumstances in which taxes could be withheld or deducted but Additional Amounts would not be payable to some or all beneficial owners of Notes.

Exh-A-7

Each of the Issuer and the Guarantor, as applicable, will also:

(1) withhold or deduct the taxes, duties, assessments or governmental charges as required;

(2) remit the full amount of taxes, duties, assessments or governmental charges deducted or withheld to the relevant taxing authority in accordance with all applicable laws;

(3) use its reasonable efforts to obtain from each relevant taxing authority imposing such taxes, duties, assessments or governmental charges certified copies of tax receipts evidencing the payment of any taxes, duties, assessments or governmental charges deducted or withheld; and

(4) upon request, make available to the holders and beneficial owners (to the extent such beneficial owners provide evidence reasonably satisfactory to the Issuer or the Guarantor as the case may be, of their beneficial ownership of Notes) of Notes, within 60 days after the date the payment of any taxes, duties, assessments or governmental charges deducted or withheld is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by the Issuer or the Guarantor or, if, notwithstanding the efforts of the Issuer or the Guarantor to obtain such receipts, the same are not obtainable, other evidence of such payments.

In addition, the Issuer and the Guarantor, as applicable, will pay any stamp, issue, registration, documentary or other similar taxes and duties, including interest, penalties and Additional Amounts with respect thereto, payable in any Relevant Jurisdiction or any political subdivision or taxing authority of or in the foregoing in respect of the creation, issue, offering, enforcement, redemption or retirement of any Notes or Guarantee.

Whenever there is mentioned in any context the payment of principal, premium or interest in respect of any Note or under the Guarantee, such mention will be deemed to include payment of Additional Amounts provided for in this Indenture to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

8. Sinking Fund.

The Notes are not subject to any sinking fund.

9. Notice of Redemption.

At least 30 days but not more than 60 days before a date for redemption of Notes, the Issuer shall mail a notice of redemption by first-class mail to each holder of Notes to be redeemed, which notice shall also be sent at least once to the Dow Jones News Service or similar business news service in the United States.

The notice shall identify the Notes to be redeemed and shall state:

(1) the redemption date;

(2) the redemption price;

(3) the name and address of the Paying Agent;

(4) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

Exh-A-8

(5) if fewer than all the outstanding Notes are to be redeemed, the identification and principal amounts of the particular Notes to be redeemed;

(6) that, unless the Issuer defaults in making such redemption payment, interest on Notes (or portion thereof) called for redemption ceases to accrue on and after the redemption date;

(7) the paragraph of the Notes pursuant to which the Notes called for redemption are being redeemed;

(8) the CUSIP, ISIN or Common Code number, if any, printed on the Notes being redeemed; and

(9) that no representation is made as to the correctness or accuracy of the CUSIP, ISIN or Common Code number, if any, listed in such notice or printed on the Notes.

At the Issuer’s request, the Trustee shall give the notice of redemption in the Issuer’s name and at the Issuer’s expense. In such event, the Issuer shall provide the Trustee with the information required by this Section at least 45 days before the redemption date.

10. Repurchase of Notes at the Option of Holders upon Change of Control Triggering Event.

Upon the occurrence of a Change of Control Triggering Event, each holder of Notes shall have the right, subject to certain conditions specified in the Indenture, to require the Issuer to repurchase all or any part of such holder’s Notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Additional Amounts, if any, to the date of repurchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date that is on or prior to the date of repurchase) as provided in, and subject to the terms of, the Indenture.

11. Denominations; Transfer; Exchange.

The Notes are in registered form without coupons in denominations of US$50,000 and whole multiples of US$1,000. A holder of Notes may transfer the Notes in accordance with the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a holder of Notes, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed) or to transfer or exchange any Notes for a period of 15 days prior to a selection of Notes to be redeemed or 15 days before an interest payment date.

12. Persons Deemed Owners.

The registered Holder of this Note may be treated as the owner of it for all purposes.

13. Unclaimed Money.

If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Issuer unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Issuer and not to the Trustee for payment.

14. Discharge and Defeasance.

Subject to certain conditions specified in the Indenture, the Issuer at any time may terminate some of or all its obligations under the Notes and the Indenture if the Issuer deposits with the Trustee money or U.S. Government Obligations for the payment of principal of and interest on the Notes to maturity or redemption, as the case may be.

Exh-A-9

15. Amendment; Waiver.

Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Notes may be amended without prior notice to any holder of Notes but with the written consent of the holders of Notes of at least a majority in aggregate principal amount of the outstanding Notes and (ii) a Default or noncompliance with certain provisions may be waived with the written consent of the holders of Notes of at least a majority in aggregate principal amount of the outstanding Notes. Subject to certain exceptions set forth in the Indenture, without the consent of any holder of Notes, the Issuer and the Trustee may amend the Indenture or the Notes (a) to cure any ambiguity, omission, defect or inconsistency; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes; (c) to add additional Guarantees with respect to the Notes; (d) to secure the Notes, to add to the covenants of the Parent for the benefit of the holders of the Notes or surrender any right or power conferred upon the Parent in the Indenture; or (e) to make any change that does not adversely affect the rights of any holder of the Notes.

16. Defaults and Remedies.

If an Event of Default occurs and is continuing, the Trustee or the holders of Notes of not less than 25% in aggregate principal amount of the Notes then outstanding, subject to certain limitations, may declare the principal of and accrued and unpaid interest to the date of such acceleration on all the Notes to be immediately due and payable. Certain events of bankruptcy or insolvency are Events of Default and shall result in the Notes being immediately due and payable upon the occurrence of such Events of Default without any further act of the Trustee or any holder of the Notes.

Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Notes unless it receives indemnity and security to its satisfaction. Subject to certain limitations, holders of Notes of a majority in aggregate principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power under the Indenture. The holders of a majority in aggregate principal amount of the Notes then outstanding, by written notice to the Issuer and the Trustee, may rescind and annul any declaration of acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration.

17. Trustee Dealings with the Issuer.

Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Trustee.

18. No Recourse Against Others.

A director, officer, employee or stockholder, as such, of the Parent shall not have any liability for any obligations of the Issuer under the Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Note, each holder of a Note waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes.

19. Authentication.

This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Note.

20. Abbreviations.

Customary abbreviations may be used in the name of a holder of Notes or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

Exh-A-10

21. Governing Law.

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

22. CUSIP, ISIN and Common Code Numbers.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP, ISIN or Common Code numbers to be printed on the Notes and has directed the Trustee to use CUSIP, ISIN or Common Code numbers in notices of redemption as a convenience to holders of Notes. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

The Issuer will furnish to any holder of Notes upon written request and without charge to the holder of Notes a copy of the Indenture which has in it the text of this Note. Request may be made to:

PT Indosat Tbk

Jl. Medan Merdeka Barat No. 21

Jakarta 10110

Indonesia

Attention of:

Legal Group

Exh-A-11

NOTATION OF GUARANTEE

The Guarantor on the attached signature page hereto (the “Guarantor”) has unconditionally guaranteed (such guarantee being referred to herein as the “Guarantee”), that (i) the principal of and interest and any other amounts due on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration or otherwise and interest on the overdue principal, if any, and interest on any interest, to the extent lawful, on the Notes and all other obligations of the Issuer to the Holders hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and the Indenture; and (ii) in case of any extension of time of payment or renewal of any Notes or of any of such other obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration or otherwise, subject, however, in the case of clauses (i) and (ii) above, to the limitations set forth in Article 10 of the Indenture.

The Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which the Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers.

PT INDOSAT TBK
By:
	Name: Title:

Exh-A-12

ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

(Print or type assignee’s name, address and zip code)

(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint             agent to transfer this Note on the books of the Issuer. The agent may substitute another to act for him.

Date: Your Signature:

Sign exactly as your name appears on the other side of this Note.

In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act after the later of the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by the Issuer or any Affiliate of the Issuer, the undersigned confirms that such Notes are being transferred in accordance with its terms:

CHECK ONE BOX BELOW

(1) ¨ to the Issuer or the Guarantor; or

(2) ¨ pursuant to an effective registration statement under the Securities Act of 1933; or

(3) ¨ inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or

(4) ¨ outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or

(5) ¨ pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered holder of Notes thereof; provided, however, that if box (4) or (5) is checked, the Trustee may require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information as the Issuer has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.

	Your Signature
Signature Guarantee:
Date:
Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to the Trustee	Signature of Signature Guarantee

Exh-A-13

TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of
Rule 144A (“Rule 144A”) under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated:
	NOTICE: To be executed by an executive officer

Exh-A-14

[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

The initial principal amount of this Global Note is $[            ]. The following increases or decreases in this Global Note have been made:

Date of Exchange Amount of decrease in
Principal Amount of
this Global Note Amount of increase in
Principal Amount of
this Global Note Principal amount of this
Global Note following
such decrease or
increase Signature of authorized
signatory of Registrar

Exh-A-15

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.14 (Limitation on Asset Sales) or 4.20 (Change of Control) of the Indenture, check the box:

¨

If you want to elect to have only part of this Note purchased by the Issuer pursuant to Section 4.14 or 4.20 of the Indenture, state the amount:

$            

Date: Your Signature:

(Sign exactly as your name appears on the other side of the Note)

Signature Guarantee:

Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to the Trustee.

Exh-A-16

EX-15.26

Exhibit 15.26

[Official Translation]

NOTARY PUBLIC

MRS. POERBANINGSIH ADI WARSITO, SH

Decree of the Minister of Justice of the Republic of Indonesia, No. M-96-HT.03.01-TH.1984, dated 7 December 1984 in conjunction with the Decree of the Minister of Law and Human Rights of the Republic of Indonesia, No. AHU.07.AH.02.03.TAHUN 2010, dated 24 March 2010

DEED DATED	:	10 February 2011
NUMBER	:	09.-

CREDIT AGREEMENT

(COPY)

1

CREDIT AGREEMENT

-Number: 09.-

At 17:00 (seventeen) Western Indonesia Time.

-On this day, Thursday, 10-02-2011 (the tenth of February, two thousand and eleven).

-Appeared before me, Mrs. POERBANINGSIH ADI WARSITO, Sarjana Hukum (Bachelor of Law), a Notary Public in Jakarta, in the presence of the witnesses who are known to me, a Notary Public, and whose names will be mentioned at the end of this notarial instrument or deed:

I. 1. Mister WIRA CHANDRA, born in Rumbai, on 26-03-1966 (the twenty sixth of March, nineteen sixty-six), an Indonesian citizen, the Head of the Corporate Business Group of the Company which will be mentioned below, residing in Jakarta Selatan (South Jakarta), at [Street] Jalan Permata Hijau N/29, [Neighborhood Association] Rukun Tetangga 005, [Citizens Association] Rukun Warga 001, [Lowest Administrative Unit] Kelurahan Grogol Utara, [Jakarta-specific Municipal Sub-division] Kecamatan Kebayoran Lama.

- the Holder of Resident’s Identity Card Number 09.5305.260366.0185.

2. Mrs. SULASWATI, born in Indramayu, on 16-08-1966 (the sixteenth of August nineteen sixty-six), the Head of Corporate Credit Administration of the Company which will be mentioned below, residing in Jakarta Selatan, at Jalan Cipulir Permai Y-18, Rukun Tetangga 006, Rukun Warga 012, Kelurahan Grogol Utara, [Jakarta-specific Municipal Sub-division] Kecamatan Kebayoran Lama.

- the Holder of Resident’s Identity Card Number 09.5305.560866.0415.

- according to their statement, acting:

a. in their respective aforementioned capacities;

b. by virtue of 2 (two) letters of appointment made privately, each numbered: 0473/SK/DHR/A/2006 dated 31-03-2006 (the thirty first of March, two thousand and six) and 0629/SK/DHR/A/2010 dated 01-05-2010 (the first of May, two thousand and ten), the originals of which have been produced to me, the Notary Public;

thereby jointly representing the Board of Directors of, and, therefore, for and on behalf of, PT BANK CENTRAL ASIA Tbk. (plc/Inc.), having its domicile and head office in Central Jakarta, whose memorandum and articles of association together with amendments thereto were published consecutively in the State Gazette of the Republic of Indonesia:

- dated 14-04-2000 (the fourteenth of April, two thousand) under number: 30, Supplement thereto number: 1871;

- dated 10-07-2001 (the tenth of July, two thousand and one) under number: 55, Supplement thereto number: 273;

- dated 04-09-2001 (the fourth of September, two thousand and one) under number: 71, Supplement thereto number: 345;

- dated 25-06-2002 (the twenty-fifth of June, two thousand and two) under number: 51, Supplement thereto number: 438;

- dated 23-08-2002 (the twenty-third of August, two thousand and two) under number: 68, Supplement thereto number: 602;

- dated 18-02-2003 (the eighteenth of February, two thousand and three) under number: 14, Supplement thereto number: 132;

2

- dated 20-02-2007 (the twentieth of February, two thousand and seven) under number: 15, Supplement thereto number: 185;

The articles of association were subsequently amended in its entirety in order to conform with Law Number 40 of 2007 (two thousand and seven) on the Limited Liability Company, as contained in the State Gazette of the Republic of Indonesia dated 15-01-2009 (the fifteenth of January, two thousand and nine), under number: 12790, Supplement thereto number: 38;

- Further on referred to as “BCA.”

II. 1. - [Engineer] Insinyur HARRY SASONGKO TIRTOTJONDRO, born in Bandung, on 17-12-1959 (the seventeenth of December, nineteen fifty-nine), an Indonesian citizen, President Director of the company which will be mentioned below, residing in Jakarta Selatan [South Jakarta], at Jalan Ciasem III number: 1, Rukun Tetangga 003, Rukun Warga 004, Kelurahan Rawa Barat, Kecamatan Kebayoran Baru.

- the Holder of Resident’s Identity Card number: 09.5308.171259.0550.

2. - Mister PETER WLADYSLAW KUNCEWITCZ, born in Coventry, on 19-12-1953 (the nineteenth of December nineteen fifty three), a British Citizen, a Director of the Company which will be mentioned below, residing in Jakarta Selatan (South Jakarta, at Jalan Metro Alam IV/PE 17- 18, Pondok Indah.

-the Holder of Passport number: 704726772.

-According to their statement in this matter, acting in their respective aforementioned capacities, thereby jointly representing the Board of Directors; and, for the purpose of the legal acts below, being approved by the Company’s Board of Commissioners, as it transpires from the Minutes of The Open Session of PT Indosat Tbk (the “Company”) Board of Commissioners Meeting dated 29-01-2010 (the twenty ninth of January two thousand and ten) and from the Minutes of The Open Session of PT Indosat Tbk (the “Company”) Board of Commissioners Meeting dated 21-06-2010 (the twenty first of June two thousand and ten), both taken privately, the original of which has been produced to me, the Notary Public, of and therefore for and on behalf of and lawfully representing PT INDOSAT Tbk, domiciled in Central Jakarta, whose memorandum and articles of association were amended in its entirety for the purpose of adjustment to Law No. 40 of 2007 (two thousand and seven) on the Limited Liability Company, as contained in the deed dated 14-07-2008 (the fourteenth of July, two thousand and eight) under number: 109, drawn up before SUTJIPTO, Sarjana Hukum (Bachelor of Law), a Notary Public in Jakarta, which deed was approved by the Minister of Law and Human rights of the Republic of Indonesia dated 06-08-2008 (the sixth of August, two thousand and eight), under Number: AHU-48398.AH.01.02.Tahun [Year] 2008, and was announced in the State Gazette of the Republic of Indonesia dated 24-10-2008 (the twenty fourth of October two thousand and eight) under number: 86, Supplement thereto number: 21195;

The Memorandum and Articles of Association were further amended consecutively by deeds:

- dated 11-06-2009 (the eleventh of June two thousand and nine) under number: 118, drawn up before AULIA TAUFANI, Sarjana Hukum (Bachelor of Law), substitute of Mister SUTJIPTO, Sarjana Hukum (Bachelor of Law), the Notary Public in Jakarta, which deed was approved by the Minister of Law and Human Rights of the Republic of Indonesia under the Decree dated 07-07-2009 (the seventh of July two thousand and nine) under number: AHU-31103.AH.01.02.Tahun [Year] 2009;

- dated 28-01-2010 (the twenty eighth of January two thousand and ten) under number: 123, drawn up before AULIA TAUFANI, Sarjana Hukum (Bachelor of Law), substitute of Mister SUTJIPTO, Sarjana Hukum (Bachelor of Law), the Notary Public in Jakarta, which deed was approved by the Minister of Law and Human Rights of the Republic of Indonesia, through the Director General of General Legal Administration under a Decree dated 22-02-2010 (the twenty second of February two thousand and ten) under number: AHU-09555.AH.01.02.Tahun [year] 2010 in connection with which the Notice of Amendment to the Memorandum and Articles of Association was received by the Minister of Law and Human Rights of the Republic of Indonesia, through the Director General of General Legal Administration through the latter’s acknowledgment dated 25-02-2010 (the twenty fifth of February two thousand and ten) under Number: AHU-AH.01.10-04964; and likewise, the Notice of Change of the Company’s Data was received by the Minister of Law and Human Rights of the Republic of Indonesia, through the Director General of General Legal Administration through the latter’s acknowledgment dated 25-02-2010 (the twenty fifth of February two thousand and ten) under Number: AHU-AH.01.10-04965;

3

- dated 22-06-2010 (the twenty second of June two thousand and ten) under Number: 164, drawn up before AULIA TAUFANI, Sarjana Hukum (Bachelor of Law), substitute of Mister SUTJIPTO, Sarjana Hukum (Bachelor of Law), the Notary Public in Jakarta, in relation to which deed was received the Notice of Change of the Company’s Data by the Minister of Law and Human Rights of the Republic of Indonesia, through the Director General of General Legal Administration through the acknowledgment dated 19-07-2010 (the nineteenth of July two thousand and ten) under Number: AHU-AH.01.10-18089.

-The composition of the Board of Directors and that of the Board of Commissioners of the Company last appeared in a deed dated 08-02-2011 (the eighth of February two thousand and eleven) under Number: 27, drawn up by AULIA TAUFANI, Sarjana Hukum (Bachelor of Law), substitute of Mister SUTJIPTO, Sarjana Hukum (Bachelor of Law), the Notary Public in Jakarta.

-Further on referred to as the “DEBTOR.”

-The parties hereto, acting in their respective, aforementioned capacities, have hereby agreed to enter into a Credit Agreement under the following terms and conditions:

Article 1

DEFINITIONS

-For the purpose of this Credit Agreement, each term below shall have the meaning as described below:

“Permitted Collateral or Guarantee” means

(i) Existing Collateral and Guarantee of the DEBTOR or any of its Subsidiaries, provided that if the asset made Collateral or Guarantee has been released as security, the asset may be legally bound again as Collateral and Guarantee in the interest of another party than BCA;

(ii) Collateral and Guarantee given for a deposit, or to guarantee the payment of an import duty or rent;

(iii) Collateral and Guarantee given in order to secure certain obligations in respect of the DEBTOR’s or its Subsidiary’s accounts payable in their respective, day-to-day business;

(iv) Collateral and Guarantee with respect to an allowance for taxes payable;

(v) Collateral and Guarantee for financing the acquisition of an asset on credit in general, for export credit or a supplier, and for vendor financing or leasing, in which such asset will be the object of the Collateral and Guarantee for the said financing;

(vi) Collateral and Guarantee given for the financing of a cooperative project between the DEBTOR or a Subsidiary thereof and another party in which the financing is provided by such other party (including the parties the DEBTOR and the Subsidiary thereof are cooperating with);

(vii) Collateral and Guarantee given for the purpose of the tender process for the implementation of a project carried out by the DEBTOR or Subsidiary thereof.

“Subsidiary” means any company whose:

(i) shares are directly or indirectly controlled by the DEBTOR for at least 50% (fifty percent) of the total number of shares issued in such company;

4

(ii) financial statement is consolidated with that of the DEBTOR in accordance with the generally accepted accounting principles in Indonesia.

“Drawdown Time Limit” means the period for the drawdown of the Credit Facility, as meant in Article 3 of the Credit Agreement.

“EBITDA” means, for any period, operating income (calculated before finance costs, taxes, non-operating income or non-operating and other extraordinary expenses) plus depreciation and amortization, and, for the purpose of calculation of the ratio of the aggregate Loans to EBITDA, as referred to in Article 12.j. EBITDA also takes into account the pro forma effect of any material acquisition or disposal on the assets or businesses as if such acquisition or disposal occurred on the first day of such period.

“Equity” means the total assets less the total liabilities, where the total liabilities exclude all loans (direct or indirect) owed by members of the Group to any of the shareholders of the DEBTOR, which are subordinate to the Loan.

“Credit Facility” means the credit facility(-ies) approved by BCA to be granted to the DEBTOR, as elaborated in Article 2 pursuant to the terms and conditions hereof.

“Group” means the DEBTOR and its Subsidiaries.

“Business Day” means any day on which the BCA branch office at which the Credit Facility is administrated is open for business and conducts banking services for the public.

“JIBOR” or “Jakarta Inter-bank Offered Rate” means the interest rate on the inter-bank money market in Jakarta as published by Reuters in the Reuters Interest Rate Monitoring Service (Reuters Screen) at 11:00 (eleven) in the morning of the local time 3 (three) Business Days prior to an Interest Period, indicating the inter-bank primary interest rate in Jakarta to which the rate of interest determined on Rupiah- denominated loans refer for a period of 1 (one) month, and for the purpose of this Credit Agreement the JIBOR interest rate of up to 1/1000 (one per mil) shall be rounded.

“Event of Default” means any action or event as described in Article 14 of this Credit Agreement.

“Material” means a value which equals or exceeds 20% (twenty percent) of the Equity.

“Security” means the security provided by the DEBTOR in order to guarantee anything owed by Indosat Palapa Company BV or any other company formed specifically for the issuance of bonds under the following terms and conditions:

(i) the DEBTOR does not violate the financial ratio as governed in article 12, the point of letter j of this Credit Agreement; and

(ii) the DEBTOR’s obligation relating to the security shall have a pari passu position in relation to a cross default with the DEBTOR’s obligation to BCA under this Credit Agreement.

“Interest Period” means a period during which an interest rate applies, calculated on a 1 (one)-month or shorter basis in accordance with the Date of Interest Payment under the following terms and conditions:

(i) computation of the first Interest Period shall commence on the date of the Credit Facility Drawdown and end on the same date falling 1 (one) month thereafter or shorter in accordance with the Date of Interest Payment;

5

(ii) computation of the Interest Period shall, if the DEBTOR extends the term for payment of the Credit Facility drawn, commence on the expiry date of the preceding Interest Period, and expire on the same date falling 1 (one) month thereafter or shorter in accordance with the Date of Interest Payment;

“Credit Agreement” means this agreement and any renewal thereof, amendment and/or addition thereto.

“Loan” means, with respect to any party (without duplication):

(i) the principal and premium (if any) in respect of the debt to such party and that as evidenced by notes, promissory notes, bonds or other similar instruments bearing interest payable; and

(ii) all obligations to a party in relation to a procurement debt constituting accounts payable to suppliers:

(a) which bear interest; and

(b) the maturity of which is longer than six (6) months after the date of issuance of the invoice, but, in relation to any member of the Group, are exclusive of all debts obtained (directly or otherwise) by such members of the Group from the shareholders of the DEBTOR, which are subordinate to any debt received by such members of the Group from non-members of the Group.

“Interest Payment Date” means the date on which the DEBTOR shall obligatorily make interest payment, as will further be specified in Article 4.2 of the Credit Agreement.

“Time Loan Revolving” means the credit facility the drawing of which may be done repeatedly and the total Debt already paid may be re-drawn by the DEBITOR so long as it does not exceed the principal of the facility in accordance with Article 2.1 hereof and is within the Time Limit to the Credit Facility Draw-down.

“Debt” means all sums owed by the DEBITOR sometime to BCA hereunder, to include the principal, interest, commission, penalty, expenses and/or other obligations hereunder.

Article 2

AMOUNT AND PURPOSE OF THE CREDIT FACILITY

2.1. With regard to the terms and conditions of this Credit Agreement, BCA agrees to grant a Credit Facility to the DEBTOR in the form of the Time Loan Revolving Facility, with the principal not exceeding Rp.1,000,000,000,000.00 (one trillion Rupiah).

2.2. The DEBTOR hereby agrees to the above amount of the Credit Facility.

2.3. The Credit Facility shall be used for general-purpose financing and/or the financing of the capital expenditure of the DEBTOR.

The DEBTOR shall be responsible for the appropriate use of the Credit Facility.

Article 3

CREDIT FACILITY DRAWDOWN TIME LIMIT

3.1. With regard to the terms and condition of this Credit Agreement, the Credit Facility Drawdown Time Limit shall, as fixed, commence on 10-02-2011 (the tenth of February two thousand and eleven) and expire on 10-02-2014 (the tenth of February two thousand and fourteen).

3.2. Upon expiry of the Credit Facility Drawdown Time Limit, as described in article 3.1., BCA shall no longer have the obligation to grant the Credit Facility to the DEBTOR.

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Article 4

INTEREST, COMMISSION, AND COMMITMENT FEE

4.1. On any loan outstanding under the Credit Agreement, the DEBTOR shall obligatorily pay interest at the rate of JIBOR plus 1.4% (one point four percent) per annum, calculated based on the amount of the Credit Facility withdrawn, but not yet repaid by the DEBTOR.

4.2. Calculation of the interest thereon shall be on a daily basis with a fixed divider of 360 (three hundred sixty) days in a year and be obligatorily repaid in full to BCA on each Interest Payment Date, namely, the date of maturity for payment, as meant in Article 7.1 hereof.

The interest payment may be made by debiting the DEBTOR’s account with BCA or otherwise, as mutually agreed on by the parties hereto, with the provisions that:

a. Interest Payment Date shall not exceed the date on which the Credit Facility shall obligatorily be paid in full.

b. the total interest to be obligatorily paid by the DEBTOR to BCA shall be calculated as of the date on which the total interest payable arises through the date of full repayment of the total interest payable by the DEBTOR to BCA.

4.3. On the grant of the Credit Facility, it is mandatory for the DEBTOR to pay a commission to BCA of 0.15% (zero point fifteen percent) during the Credit Facility Draw-down Time Limit, as governed in Article 3.1 hereof, namely, 3 (three) years calculated from the total Credit Facility so granted and obligatorily paid once only on the first withdrawing of the Credit Facility.

4.4. On the grant of the Credit Facility, it is mandatory for the DEBTOR to pay a commitment fee of 0.25% (zero point twenty five percent) per annum calculated from the daily average total Credit Facility not withdrawn by the DEBTOR on the date falling 3 (three) months as of 01-04-2011 (the first of April two thousand and eleven) and further on the same date falling 3 (three) months thereafter during the Credit Facility Draw-down Time Limit during the Credit Facility Draw-down Time Limit, as governed in Article 3.1 hereof.

4.5. Payment of the commission and/or commitment fee may be made by debiting the DEBTOR’s account with BCA or otherwise, as mutually agreed on by the parties hereto.

4.6. For the purpose of debiting the account, the DEBTOR shall authorize BCA, as described in Article 19.1 hereof.

4.7. If the Date of Payment of Interest and/or that of the commission, and/or that of the commitment fee fall on a Non-business Day, it is mandatory for the DEBTOR to make available a fund in its account with BCA in payment of the interest and/or commission, and/or commitment fee on the previous Business Day.

4.8. If, despite signature of the Credit Agreement, the Credit Facility is not used by the DEBTOR, or if the Debt becomes due for the causes appearing in Article 14.2 and Article 18.6 hereof, BCA shall not be obliged to refund the DEBTOR, the commission so paid by the DEBTOR to BCA.

Article 5

EVIDENCE OF INDEBTEDNESS

Book entries and records that have been and will be made by BCA shall constitute full and absolute evidence with respect to the Debt and such evidence shall be binding on the DEBTOR, unless the contrary is provable.

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Article 6

TERMS AND CONDITIONS OF THE DRAWDOWN AND/OR USE OF THE CREDIT FACILITY

6.1. Drawdown of the Credit Facility can be made by the DEBTOR on any Business Day if the DEBTOR has met the terms and conditions as follows:

a. DEBTOR has submitted to BCA:

- authenticated photocopy of the DEBTOR’s Memorandum and Articles of Association and amendments thereto; and

- other documents as may be required by BCA, among others, the Taxpayer ID Number (NPWP), Certificate of Corporate Registration, and business license;

- other documents reasonably required for administrative purposes.

b. No Event of Default is occurring, nor is there any action or event which gives rise to an Event of Default or an action or event which by notice or lapse of time or both will constitute an Event of Default;

c. The statements given under the Representations as meant in article 11 hereof are true and conform to the actual conditions.

6.2. DEBTOR has meet the special requirements for the method of drawdown and/or use of the Credit Facility as follows:

a. DEBTOR has submitted an application for drawdown/ payment extension of the Time Loan Revolving Facility at least 2 (two) Business Days prior the planned drawdown/ payment extension of the Time Loan Revolving Facility by completing, signing, and submitting the application for the drawdown/ payment extension of the Time Loan Revolving Facility in the form specified by BCA;

b. term for repayment, as appears in the Application for drawdown of the Credit Facility/ Payment extension shall be a maximum of 1 (one) month as of the drawdown/ payment extension;

c. drawdown shall be done within the Credit Facility Drawdown Time Limit, as referred to in the provision of article 3 of the Credit Agreement.

Article 7

PAYMENT OF THE DEBT

7.1. Payment of the Debt shall obligatorily be made by the DEBTOR in the same currency as that of the Credit Facility granted by BCA, and shall have been received by BCA at its branch office at Jl. M.H. Thamrin number 1, Jakarta 10310, no later than 14:00 (fourteen) o’clock of the local time on the date of maturity, as appears in the application for the drawdown/ payment extension of the Credit Facility, provided that the date of maturity shall not exceed the date of expiry of the Credit Facility Drawdown Time Limit.

7.2. If the date of Debt payment falls on a Non-business Day, the DEBTOR shall obligatorily provide funds in its account with BCA for the purpose of such payment on the preceding Business Day.

7.3. Payment of the Debt received by BCA after 14:00 (fourteen) o’clock of the local time shall be deemed to have been received by BCA on the subsequent Business Day.

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Article 8

PENALTY

8.1. If the DEBTOR fails to pay the Debt for any reason whatsoever on the due date, the DEBTOR shall obligatorily pay a penalty for the unpaid amount calculated from the date on which such amount becomes obligatorily payable up to the same being paid in full at 2% (two percent) per annum above the applicable interest rate.

8.2. Calculation of the penalty shall be on a daily basis with a fixed divider of 360 (three hundred sixty) days in a year.

Article 9

SPECIAL PROVISIONS

DEBTOR may repay, in part or in whole, the total amounts payable before the due date of payment, as specified in the application for the drawdown/payment extension of the Credit Facility, with no penalty, to the extent of compliance with the following provisions:

a. DEBTOR gives notice in writing to BCA at least 1 (one) Business Day in advance of the plan for the accelerated payment, by specifying the amount and date of payment;

b. notice shall be incapable of cancellation by the DEBTOR.

Article 10

COLLATERAL AND GUARANTEE

This Credit Facility is not secured by any special collateral in the form of any object or income or other asset of the DEBTOR in any manner whatsoever, and is not guaranteed by any party.

However, in compliance with Articles 1131 and 1132 of the Code of Civil Law, all assets of the DEBTOR, that are both movable and immovable, have existed and will do so in the future, except for the assets of the DEBTOR that have been specifically put as security to the creditors, shall constitute general collateral against all of the DEBTOR’s debts to other parties neither specifically secured nor privileged, including this Credit Facility on a pari passu basis.

Article 11

REPRESENTATIONS

The DEBTOR hereby represents and warrants to BCA regarding the veracity of the following:

- DEBTOR has obtained all approvals required by the memorandum and articles of association.

- DEBTOR shall, in order to receive the Credit Facility from BCA under this Credit Agreement (including approvals of the DEBTOR’s Board of Commissioners) and the person(s) appointed to represent the DEBTOR to execute this Credit Agreement, be entitled and authorized to represent the DEBTOR and to sign the Credit Agreement, and, therefore, this Credit Agreement is valid and is binding on the DEBTOR;

- DEBTOR has acquired the requisite permits to carry out its businesses as appropriate, and hereby undertakes to extend or renew such permits upon their expiration if so required by the prevailing regulatory provisions;

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- not a single civil or state administrative case, tax claim, police investigation or criminal case, or dispute is ongoing, which threatens or may have an impact on the DEBTOR or the assets thereof, thus materially affecting the financial or businesses conditions thereof, or likely to disrupt the ability thereof to perform the obligations hereunder;

- as of the date of this Credit Agreement, no event occurs and/or no circumstances are taking place constituting an Event of Default or which, with the lapse of time or notice or both, will so do;

- all documents, data and statements provided by the DEBTOR to BCA is true and no other document, data or statements are not given by the DEBTOR, which, if so done or conveyed by the DEBTOR to BCA will affect BCA’s decision on the granting of the Credit Facility;

- in the entry into and implementation of this Credit Agreement and/or other agreements in connection with the Credit Agreement, the DEBTOR does not contravene nor violate any prevailing law or government regulation, policy, directive or instruction, or court ruling, or any of the memorandum and articles of association. Likewise, such entry into or implementation thereof cause or will cause no event of default to any other agreement entered into by the DEBTOR;

- as of the execution of this Credit Agreement, the DEBTOR’s memorandum and articles of association and amendments thereto appear in the recital of this deed. In addition to such deed(s), no other deed(s) is (are) are not/have not yet been furnished by the DEBTOR to BCA;

- as of the signing of this Credit Agreement, the shareholders of the DEBTOR are:

1. State of the Republic of Indonesia 1 (one) Series-A share and 776,624,999 (seven hundred seventy six million six hundred twenty four thousand nine hundred ninety nine) Series-B shares or in a face value of Rp. 77.662,500,000.00 (seventy seven billion six hundred sixty two million five hundred thousand Rupiah;

2. QATAR TELECOM (QTEL ASIA) PTE.LTD., 3,532,056,600 (three billion five hundred thirty two million fifty six thousand six hundred) Series-B shares or in a face value of Rp. 353,205,660,000.00 (three hundred fifty three billion two hundred five million six hundred sixty thousand Rupiah).

3. GENERAL PUBLIC, 1,125,251,900 (one billion one hundred twenty five million two hundred fifty one thousand nine hundred) Series-B shares or in a face value of Rp. 112,525,190,000.00 (one hundred twelve billion five hundred twenty five million on hundred ninety thousand Rupiah).

In addition to those whose names are mentioned, no other person or party constitutes the shareholder of the DEBTOR;

- as of the signing of this Credit Agreement, the composition of the Board of Directors and that of the Board of Commissioners of the DEBTOR are as follows:

- President Director	:	Engineer (Insinyur) HARRY SASONGKO TIRTOTJONDRO;
- Director	:	Mister LASZLO IMRE BARTA;
- Director	:	Mister FADZRI SENTOSA;
- Director	:	Mister PETER WLADYSLAW KUNCEWICZ;
- Director	:	Mister STEPHEN EDWARD HOBBS;
- President Commissioner	:	Mister ABDULLA MOHAMMED S.A. AL THANI;
- Commissioner	:	Mister PARIKESIT SUPRAPTO;
- Commissioner	:	Mister RIONALD SILABAN;
- Commissioner	:	Doctor (Doktor) NASSER MOHD.A.MARAFIH;

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- Commissioner	:	Mister RACHMAD GOBEL;
- Commissioner	:	Mister RICHARD FARNSWORTH SENEY;
- Independent Commissioner	:	Mister ALEXANDER RUSLI;
- Independent Commissioner	:	Mister SOEPRAPTO;
- Independent Commissioner	:	Mister THIA PENG HEOK GEORGE;
- Independent Commissioner	:	Mister CHRIS KANTER;
- Independent Commissioner	:	MisterCHRIS KANTER;

In addition to those whose names are mentioned above, no other person or party is acting as a member of the Board of Directors or as a member of the Board of Commissioners of the DEBTOR.

Article 12

DEBTOR’S OBLIGATIONS

Unless otherwise specified in writing by BCA, the DEBTOR shall obligatorily:

a. use the Credit Facility granted by BCA only for the purposes as described in Article 2.3 of this Credit Agreement;

b. comply with all laws/acts, government regulations, policies, directives or instructions applicable to the DEBTOR;

c. immediately notify BCA in writing of any case involving the DEBTOR, civil or state administrative case, or a tax claim, police investigation or a criminal case that will materially affect the business or assets of the DEBTOR;

d. pay all expenses arising from and relating to the granting of the Credit Facility and the implementation of the terms and conditions of the Credit Agreement, in spite of non-use of such Credit Facility and/or of revocation of such Credit Agreement;

e. provide all information sought by BCA relating to the granting of the Credit Facility;

f. defend its rights over intellectual property, including copyright, patents and trademarks which are or will be owned by the DEBTOR;

g. establish and maintain an accounting system, financial administration and supervision in accordance with the generally accepted accounting principles in Indonesia and continually applied in order to reasonably reflect the conditions of the assets, finances, and operating income of the DEBTOR;

h. allow BCA or persons designated by BCA, on 7 (seven) Business Days’ prior notice, to, at any time, inspect activities, accounts and other records done and made by the DEBTOR; with the obligations of BCA or the parties designated by BCA to keep confidential any information gained, unless BCA is obliged to disclose, under law and statutory and regulatory provisions, by court order, at the instruction of any of governmental agencies, including the Bank of Indonesia;

i. submit to BCA in the form and particulars acceptable to BCA:

- annual financial statements (balance sheet and loss profit statement) audited by the Certified/Registered Public Accountant Office in the form of

- long form audited report, to be obligatorily delivered by no later than 180 (one hundred eighty) days following the closing date of the fiscal year;

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- home statement (balance sheet and quarterly loss & profit statement), which shall obligatorily be delivered no later than 90 (ninety) days following the end of each reporting period;

- copies/photocopies of the licenses and permits directly related to the DEBTOR’s primary lines of business in accordance with the applicable laws and regulations in order for the DEBTOR to continue doing business;

j. maintain the DEBTOR’s consolidated financial ratio, as follows:

a. the ratio of EBITDA to the payment of loan interest shall be at least 3 (three) times, as indicated in every audited annual consolidated financial statement.

b. the ratio of the total Loan to EBITDA shall not exceed 4 (four) times, as stated in every audited annual consolidated financial statement.

c. the ratio of the total Loan to the Equity shall not exceed 2.5 (two point five) times, as stated in every 3-(three)-monthly consolidated financial statement.

k. immediately notify BCA of

- any Event of Default that comes to the knowledge of the DEBTOR and may materially affect the DEBTOR’s condition, and explain such Event of Default and any measure that will be taken against such Event of Default;

- any Event of Default committed by Indosat Palapa Company BV or another company specifically established for the purpose of issuance of promissory notes to execute the Pledge;

l. take all necessary measures in order to maintain its status as a legal entity and to ensure that the DEBTOR has the right and capacity to conduct its business as appropriate in every applicable jurisdiction and to obtain and maintain all key licenses needed to carry out its business within such jurisdictions;

m. make every effort to maintain all the powers and approvals, obligatorily and forthwith obtain all other approvals necessary to allow it to deliver all the things governed by this Credit Agreement;

n. insure the DEBTOR’s assets with an insurance company under the terms and conditions normally applied by the DEBTOR and, if so requested by BCA, report any insurance coverage of its assets;

o. at the request of BCA, take any measures and prepare and sign all documents related to the implementation or applicability of this Credit Agreement;

p. notify BCA of any amendment to the DEBTOR’s Memorandum and Articles of Association requiring the approval of the Minister of Law and Human Rights of the Republic of Indonesia within 7 (seven) Business Days of acquirement of such approval.

Article 13

MATTERS THAT THE DEBTOR ARE PROHIBITED FROM DOING

Insofar as the DEBTOR has not fully repaid the Debt or the Credit Facility Drawdown Time Limit has not yet expired, the DEBTOR shall not undertake any of the following without prior written approval by BCA:

1. put as security any of the DEBTOR’s assets to another party, except for the Permitted Collateral and Guarantee;

2. make a Material transaction with a person or party, including, but not limited to any of its affiliates, except on an arm’s length basis or in support of the DEBTOR’s main or supportive lines of business or in accordance with the existing practices;

3. sell or dispose of Material part of its immovable or key assets in carrying out its business, except in its day-to-day course of business;

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4. conduct spin-off/segregation, merger, consolidation, acquisition or dissolution;

5. reduce or decrease the DEBTOR’s paid-up capital; and

6. change the DEBTOR’s main line or nature of business.

Article 14

EVENT OF DEFAULT

14.1. Any one or several of the actions or events below shall constitute an Event of Default:

a. the DEBTOR fails to pay the Debt within the time and in the manner as provided under the Credit Agreement, with regard to which the mere lapse of time will have provided valid and sufficient evidence that the DEBTOR has failed to perform its obligations;

b. the DEBTOR defaults or fails to meet any of the terms and conditions of Article 12 and Article 13 or others hereof, whether those which exist or will be made in the future, and that such default remains un-remedied by the DEBTOR for a period of 30 (thirty) calendar days from the date of notice of such event from BCA to the DEBTOR.

c. the DEBTOR uses the Credit Facility in deviation from its intended use and purpose;

d. in the opinion of BCA, the financial condition, good standing and solvability of the DEBTOR has gone into a Material decline, thus affecting the DEBTOR’s financial ability to pay the Debt and that such condition has not yet been remedied by the DEBTOR within 30 (thirty) calendar days from the date of notice thereof by BCA to the DEBTOR;

e. the DEBTOR files a petition for bankruptcy or is declared bankrupt or files a moratorium or for any reason whatsoever is no longer entitled to administer and exercise control over the DEBTOR’s assets and/or that a bankruptcy petition is filed by another party against the DEBTOR or for a third party to be appointed to control a Material part of the DEBTOR’s assets and that such situation cannot be resolved by the DEBTOR within 30 (thirty) days of the filing of the petition or appointment;

f. a substantial part or all of the DEBTOR’s assets are seized as a result of implication in a law case or dispute which can Materially affect the DEBTOR’s capacity to meet the obligations under this Credit Agreement;

g. fact that the representations contained in article 11 of this Credit Agreement is found to be untrue and incorrect and that situation has not yet been remedied by the DEBTOR within 30 (thirty) calendar days of the date of notice of the same from BCA to the DEBTOR;

h. the DEBTOR is obligated to pay compensation which can Materially affect the DEBTOR’s ability to pay the Debt;

i. the DEBTOR has committed an action in breach of a prevailing legal provision or regulation that may result in the DEBTOR’s permit as a cellular and International Direct Dialing (SLI) operator being revoked and/or that can directly or indirectly, Materially affect the DEBTOR’s ability to perform its obligations under this Credit Agreement;

j. the DEBTOR is dissolved or liquidated;

k. the DEBTOR is declared in default of any of its obligations to the other party, which, in the opinion of BCA, may Materially affect the DEBTOR’s ability to perform its obligations under this Credit Agreement, and that such default has not yet been remedied by the DEBTOR within 30 (thirty) calendar days of the date of notice of the event by BCA to the DEBTOR;

l. Indosat Palapa Company BV or any other company established for the specific purpose of issuance of bonds is declared in default by its creditors with respect to the issuance of the such bonds in which the DEBTOR acts as a guarantor, and that such default has not yet been remedied by the DEBTOR within 30 (thirty) calendar days of the date of notice of the event by BCA to the DEBTOR;

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14.2. Upon the occurrence of an event of default as governed in article 14.1 of this Credit Agreement, BCA shall be entitled to declare the Debt to be immediately due and obligatorily payable in full by the DEBTOR to BCA without regard to the provision on Debt Payment as specified in article 7 of this Credit Agreement, provided that the DEBTOR’s obligations arising from this Credit Agreement shall continue to be satisfied.

The parties hereto waive the applicability of Article 1266 of the Code of Civil Law, specifically that governing the requirement to file for revocation of the agreement with the relevant District Court.

14.3. If the DEBTOR is obliged to perform an obligation under this Credit Agreement within a specified period, and the DEBTOR fails to perform such obligation, then the mere lapse of time shall be sufficient, lawful evidence of the DEBTOR’s default, thus no formal summons or other letter of similar nature or notice of warning from the court bailiff shall be necessary.

14.4. If the Debt becomes due as referred to in article 14.2 of this Credit Agreement, BCA shall be entitled to exercise its rights as the Creditor to procure repayment of the Debt by way of exercise of its entitlements against the DEBTOR and/or its assets.

Article 15

USE OF PAYMENTS

15.1. Any amount received by BCA from payment of the Debt and/or by way of a set-off with the DEBTOR’s funds in BCA shall be used according to the following priorities:

-Firstly	:	to cover all costs expended or paid by BCA in connection with the exercise of its rights under the Credit Agreement not yet paid by the DEBTOR;
-Secondly	:	to pay in full all incurred penalties that have not yet been paid by the DEBTOR to BCA in connection with this Credit Agreement;
-Thirdly	:	to effect full payment of all accrued interests and/or commissions that have not yet been paid by DEBTOR to BCA in connection with this Credit Agreement;
-Fourthly	:	to effect full payment of the principal obligatorily required to be paid by the DEBTOR to BCA in connection with this Credit Agreement.

15.2. If upon full settlement of all the obligations of the DEBTOR, funds, as it turns out, still remain, BCA shall transfer such excess amount to the DEBTOR or any party having the right over such excess amount, without any obligation on the part of BCA to pay interest on such excess amount.

Article 16

TAXES

16.1. Any and all amounts obligatorily payable by the DEBTOR to BCA hereunder shall be free, net of and without any deduction or withholding tax, levies, fees or charges in any form and amount.

16.2. If the DEBTOR is obligatorily required by any of the prevailing statutory and regulatory provisions to effect a deduction of the sum obligatorily payable under this Credit Agreement, the DEBTOR shall obligatorily pay such a substantial additional amount to BCA that after such deduction, will receive from the DEBTOR an amount it is entitled to as if such deduction had never been made.

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Article 17

ALTERATION TO ANY OF THE PROVISIONS OF THE CREDIT AGREEMENT

In the event of alteration to any of the provisions of this Credit Agreement, such alteration shall be governed in a separate agreement or letter signed by the parties hereto, which agreement or letter shall form an inseparable part of this Credit Agreement.

Article 18

MISCELLANEOUS PROVISIONS

18.1. BCA shall be entitled, without prior approval from the DEBTOR, to transfer or assign in any manner whatsoever part or all of BCA rights and/or obligations with respect to the granting of the Credit Facility under this Credit Agreement to another financial institution, bank, or creditor, which shall suffice by giving written notice to the DEBTOR within at least 30 (thirty) calendar days prior to such transfer or assignment.

To that end the DEBTOR shall presently and later on confer upon BCA a power of attorney to provide all data and/or statements needed to such other financial institutions, banks, or creditors.

18.2. In the event of an Event of Default, as governed in Article 14.1 hereof, BCA shall be entitled, without prior approval from the DEBTOR to block/ freeze and/or disburse and/or debit the funds in the accounts of the DEBTOR with BCA and to use the proceeds therefrom to be included in the calculation of compensated against the Debt.

18.3. In the event of:

a. increase of the costs required by BCA to maintain the Credit Facility granted to the DEBTOR as a result of alteration to a regulation/provision of the Bank of Indonesia or any other government agency that must be complied with by BCA, causing the interest rate applicable to the DEBTOR to be unable to cover the costs to be incurred by BCA, then BCA shall give notice in writing of the amount such (additional) costs and expenses to be imposed on the DEBTOR, which notice shall form inseparable part of this Credit Agreement (“Notice of Cost Increase”), provided that the DEBTOR may elect to negotiate within no later than 7 (seven) calendar days of the date of the Notice of Cost Increase and if after the lapse of such period of negotiation, no agreement is reached on the amount of the additional cost to be charged by BCA to the DEBTOR, then the DEBTOR shall have the option to repay the Debt beyond the payment dates, as contained in the letter of application for the drawdown/ payment extension without incurring any penalty for accelerated payment insofar as such payment is made within 14 (fourteen) calendar days of the expiry of the period of negotiation, as prescribed above;

b. any adverse and/or significant monetary, financial, economic or political change which cause the liquidity of BCA or the DEBTOR’s collectability, whether with BCA or with other bank(s) to decrease into Substandard, Doubtful, or Loss, then BCA may:

(i) change/adjust the rate of interest as meant in article 4.1 of this Credit Agreement; and/or

(ii) defer the date of drawdown of the Credit Facility applied for by the DEBTOR; and/or

(iii) reduce the Credit Facility; and/or

(iv) replace the granting of the Credit Facility, as referred to in article 2.1 of the Credit Agreement, with another currency available from BCA; and/or

(v) terminate the Credit Facility.

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c. If BCA has exercised its rights, it shall notify the DEBTOR in writing of the implementation, provided that the DEBTOR may elect to negotiate within no later than 7 (seven) calendar days of the date of the Notice of Cost Increase and if after the lapse of such period of negotiation no agreement is reached, the DEBTOR shall have the option to repay its Debt beyond the payment dates as contained in the letter of application for the drawdown/ payment extension of the Credit Facility without incurring any penalty for accelerated payment insofar as such payment is made within 14 (fourteen) calendar days of the expiry of the period of negotiation, as prescribed above.

18.4. With respect to the fixing of interest, as mentioned in Article 4.1 of this Credit Agreement:

(i) DEBTOR shall agree that if in the future, as it turns out, the JIBOR instrument, to which the interest rate on a Credit Facility refers, becomes entirely or incompletely available or is no longer issued or deleted, BCA may at any time review the same and shall be entitled to make changes of or adjustments to the interest rate decided under this Credit Agreement, including, among others, changes of or adjustments to the margin;

(ii) if BCA opts to exercise such right, BCA shall inform the DEBTOR in writing of the rate of interest to be applied to the DEBTOR, by way of notice, which shall form inseparable part of this Credit Agreement (“Notice of the Interest Rate”), provided that the DEBTOR may elect to conduct negotiations within no later than 7 (seven) calendar days of the date of the Notice of the Interest Rate;

(iii) as of the occurrence of the situation, as referred to in point (i) above up to the fact that agreement has been reached regarding the interest rate to be applied to the Credit Facility, the Credit Facility shall not be withdrawn by the DEBTOR, unless the DEBTOR agrees that for every drawdown of the Facility Credit by the DEBTOR, an interest rate shall, as the DEBTOR is notified by BCA in accordance with point (ii) above, apply;

(iv) if up to the expiry of the period of negotiation no agreement is reached regarding the interest rate to be applied to the Credit Facility, the DEBTOR shall be entitled to:

- terminate this Credit Agreement and repay the entire Debt within 14 (fourteen) calendar days of the expiry of the negotiations, as referred to in point (ii) above; or;

- continue with the Credit Facility provided by BCA to the DEBTOR; provided that the rate of interest applicable to the Credit Facility up to the full repayment of the Debt (if the DEBTOR repays all of the Debt) or insofar as the Credit Facility is continuing (if the DEBTOR elects to continue with the Credit Facility) shall be at the rate as notified by BCA to the DEBTOR pursuant to point (ii) above.

18.5. DEBTOR shall also agree that in the event of an increase in costs incurred by BCA as a consequence of a monetary, fiscal and economic change, in order to finance the provision of the Credit Facility (Cost of the fund), thus rendering the applicable interest rate to be unable to cover the costs expended by BCA to maintain the granting of the Credit Facility, BCA may at any time review the same and shall be entitled to effect any change or adjustment to the interest rate reference as determined in this Credit Agreement, including, among others, changes of or adjustments to the margin, without prior approval of the DEBTOR, and in this matter, the provisions contained in points (ii), (iii) and (iv) in article 18.4 of the Credit Agreement shall apply, mutatis mutandis, to BCA and the DEBTOR.

18.6. BCA shall be entitled to (in deviation from the provision of article 7 of this Credit Agreement) declare the Debt to be due and, therefore, the DEBTOR shall obligatorily repay the Debt to BCA in the event of:

(i) any legislation or amendments thereto or of entry into force of a regulation which renders it to be unlawful for BCA to maintain and/or perform its obligations hereunder, no later than within the period stated in the relevant regulation or 60 (sixty) calendar days of the date on which notice is received from BCA of the demand for repayment, whichever occurs earlier; or

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(ii) a political, economic and social situation, which, in the reasonable and prudent opinion of BCA, may affect the smooth repayment of the Debt by the DEBTOR, no later than 60 (sixty) calendar days after the date on which such notice is received from BCA regarding the demand for repayment, therefore the Repayment of the Debt pursuant to the above provision, the DEBTOR shall not incur a penalty.

18.7. If one or more provisions of this Credit Agreement are declared inapplicable or no longer unenforceable by the court of competent jurisdiction, or are deemed to be in contravention of any of the prevailing statutory and regulatory provisions, the remaining ones hereof shall continue to be in effect and binding on the parties hereto.

18.8. This Credit Agreement shall inure to the parties hereto and their respective successors, provided that the DEBTOR shall not assign and/or transfer its rights and/or obligations under the Credit Agreement and/or other agreements, in relation hereto, without prior written approval of BCA.

18.9. Failure and/or delay by BCA to exercise its rights, powers, or privileges under this Credit Agreement shall not be construed as a waiver by BCA of such rights, powers, or privileges. Likewise, the exercise, in whole or in part, of the rights, powers, or privileges granted hereunder shall not preclude any further exercise of such rights, powers, or privileges.

18.10. For purposes of supervision, safeguarding, and settlement/repayment of the Credit Facility, BCA shall have the authority to undertake the following:

a. to place a BCA officer with the DEBTOR;

b. to commission a consulting firm of good and trustworthy reputation for purposes of supervision, consultation, and/or administration/ management of the DEBTOR’s company, with the obligations of BCA or the party designated by BCA to keep confidential any information gained, unless BCA is obliged to disclose, under law and statutory and regulatory provisions, by court order, at the instruction of any of governmental agencies, including the Bank of Indonesia.

Article 19

POWER OF ATTORNEY

19.1. For the purpose of payment of the Debt pursuant to this Credit Agreement, the DEBTOR hereby grants a power of attorney to BCA to debit, from time to time, the account of the DEBTOR in connection with the exercise of BCA’s rights hereunder.

19.2. To be surer of the orderly repayment of the Debt, as referred to in 18.2 of this Credit Agreement, the DEBTOR shall, in the present and future, grant a power of attorney to BCA, for and on behalf of the DEBTOR, to disburse and/or otherwise debit the funds available in any of the DEBTOR’s accounts with BCA.

19.3. Any power of attorney granted by the DEBTOR hereunder shall form inseparable part of this Credit Agreement and therefore each of such powers of attorney shall be irrevocable in any manner and situation whatsoever, and the parties hereby waive the applicability of articles 1813, 1814, and 1816 of the Code of Civil Law insofar as the Debt under this Credit Agreement has not yet been settled in full.

Article 20

JURISDICTION

In respect of this Credit Agreement and all its consequences and delivery, BCA and the DEBTOR have elected a permanent domicile at the Registrar’s Office of the Central Jakarta District Court.

-The persons appearing or parties hereby guarantees the authenticity of their identities in agreement with their identity cards produced to me, the Notary Public, and their accountability for the foregoing, and the parties hereto further represent that they have understood the contents of this deed.

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-In witness whereof:

THIS DEED

-Has been drawn up minutes, read and signed in Jakarta on the day and date as stated at the beginning of this deed, in the presence of:

1. Mrs. INDAH FATMAWATI, Sarjana Hukum (Bachelor of Law), born in Jakarta on 28-07-1959 (the twenty-eighth of July, nineteen fifty-nine), an Indonesian Citizen, domiciled in South Jakarta, at Tebet Timur Dalam VI K/4, Rukun Tetangga 003, Rukun Warga 006, Kelurahan Tebet Timur, Kecamatan Tebet.

-the Holder of Resident’s Identity Card number: 09.5007.680759.0199.

2. Mrs. DYAH SUWATI, born in Solo, on 26-10-1964 (the twenty sixth of October, nineteen sixty four), an Indonesian Citizen, domiciled in Tangerang, at Jalan Talas II, Pondok Cabe Ilir, Rukun Tetangga 02, Rukun Warga 01, Kelurahan Pondok Cabe Ilir, Kecamatan Pamulang.

-the Holder of Resident’s Identity Card number: 3219222004.1786503, temporarily being in Jakarta.

both being Assistants to the Notary Public, as the witnesses hereto.

-Immediately upon perusal of this deed by me, the Notary Public, to the parties and witnesses hereto, this deed is signed by the parties and witnesses hereto, and me, the Notary Public.

-Done with two deletions with replacements.

-The original of this deed has been duly signed.

“GIVEN AS A COPY OF THE SAME TENOR.”

[Duty stamp: Rp.6,000.-]

[Notary Public’s seal and signature]

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