PT Indosat Tbk (IIT)

Depreciation and amortization expenses. It increased by 9.3% from Rp2,818.7 billion in  2004 to Rp3,080.2 billion in  2005 primarily due to increase in fixed assets mainly cellular business related fixed assets procured in  2005.

Personnel costs. We could manage personnel costs hence it only increased by 4.7% in 2005 which was lower than the percentage increase of operating revenues and overall operating expenses.

Compensation expenses to telecommunications carriers and service providers. It decreased by Rp104.9 billion from Rp513.4 billion in  2004 to Rp408.4 billion in  2005 primarily due to increased delivery of IDD traffic through our own network and the decrease in incoming and outgoing traffics from other local operators.

Maintenance expenses.  It increased by 29.8% year-on-year, from Rp. 473.4 billion in  2004 to Rp. 614.6 billion in  2005 primarily due to increased maintenance expenses associated with our increased capital expenditure on cellular equipment, primarily base transceiver stations and additional cellular equipment installed during such periods.

Administration and general expenses. It increased by 28.6% year-on-year, from Rp. 471.3 billion in  2004 to Rp. 606.0 billion in  2005 primarily due to increase in provision for doubtful account amounting to Rp. 127.4 billion. The increase of Rp 127.4 billion of provision in 2005 was a result of the standardization of the Company’s accounting policy for provision for doubtful accounts effective since 2004 following the merger of Satelindo and IM3 into Indosat, as well as due to the additional provision provided for cellular postpaid subscribers.

Marketing expenses. It increased by Rp10.2 billion, or 2.9%, from Rp349.8 billion in  2004 to Rp360.0 billion in  2005 due primarily promotional and sales campaign.

Leased circuit expenses. It related primarily to the use of leased circuits by our cellular and MIDI services businesses. Leased circuits expenses increased by Rp44.5 billion, or 45.6%, from Rp97.7 billion in  2004 to Rp142.2 billion in  2005 due primarily due to the increase in MIDI services i.e. the leased lines & Internet capacity.

Other cost of services expenses.  It increased by 12.4% year-on-year, from Rp1,300.4 billion in  2004 to Rp1,461.7 billion in  2005 mainly due increase in expenses related to government levies (BHP Frequency, USO, Concession Fee) due to the higher of cellular base stations and revenues in 2005, also rent & utilities expenses to support our increased property and equipment. On the other hand, we managed to significantly decrease the cost of SIM cards and reloaded vouchers By 18.7% or Rp79.6 billion by reducing the average unit prices of the cards/vouchers.