| |
| |
2017 |
|
| |
|
|
|
| Impairment losses recognised are as follows: |
|
|
|
|
| Intangible assets (Note 10) |
– |
|
(66) |
|
| Property, plant and equipment (Note 9) |
(4) |
|
(18) |
|
| |
(4) |
|
(84) |
|
| In the prior year, the impairment losses related to the phasing out of the M-Pesa product
offering in South Africa. |
|
|
|
|
| |
|
|
|
| Carrying amount of goodwill is as follows: |
|
|
|
|
| Vodacom (Pty) Limited |
2 554 |
|
2554 |
|
| Other 1 |
125 |
|
136 |
|
| |
2 679 |
|
2 690 |
|
| Notes: |
| 1 |
This constitutes the aggregate carrying amount of goodwill allocated across multiple cash-generating units of which the amounts so allocated to each
cash-generating unit is insignificant compared to the total carrying amount of goodwill. |
The recoverable amounts of all cash-generating units are based on value in use calculations.
Key assumptions used in value in use calculations
The key assumptions, applicable to all cash-generating units, on which management has based all its cash flow projections for
the period covered by the most recent five-year forecasts are:
| Key assumptions |
|
Basis for determining values assigned to key assumptions |
| Forecast capital expenditure |
|
The cash flow forecasts for capital expenditure are based on past experience,
benchmarks in similar markets and include the ongoing normal capital expenditure
required to roll out networks to provide voice and data products and services, and to
meet the population coverage requirements in terms of licences. Capital expenditure
includes cash outflows for the purchase of property, plant and equipment and
computer software. |
| Forecast EBITDA |
|
Forecast EBITDA has been based on past experience adjusted for the following:
- voice and messaging revenue which is expected to benefit from increased usage
from new and existing customers, the introduction of new services and traffic moving
from fixed networks to mobile networks, though these factors will be partially offset
by increased competitor activity, which may result in price declines and the trend of
falling termination rates;
- non-messaging data revenue which is expected to continue to grow strongly as the
penetration of third generation (3G) and long term evolution (LTE) enabled devices
rises and new products and services are introduced;
- fixed-line revenue growth expectations as a result of entering the ’Fibre to the
Business and Home’ market as well as continued expansion of fixed services to
enterprise businesses; and
- margins which are expected to be impacted by negative factors such as an increase
in the cost of acquiring and retaining customers in increasingly competitive markets
and the expectation of further termination rate cuts by regulators and by positive
factors such as the efficiencies expected from the implementation of Group
initiatives.
|
| Long-term growth rate |
|
For businesses where the five-year management plans are used for the Group’s value in
use calculations, a long-term growth rate into perpetuity has been determined as the
lower of:
- a combination of the average long-term real GDP rate and CPI forecast for the
country of operation; and
- the five-year compound annual growth rate in EBITDA estimated by management.
|
| Risk adjusted discount rate used
in adjusted present value
calculations |
|
The discount rate applied to the cash flows of each of the Group’s operations is based on
the capital asset pricing model. Inputs include the risk-free rate for 10-year
bonds issued
by the government in the respective market, if available, adjusted for a risk premium to
reflect the risk associated with investing in equities, as well as an adjustment for the
systematic risk of the specific Group operating company. In making this adjustment,
inputs required are the equity market risk premium (that is the increased return required
over and above a risk-free rate by an investor who is investing in the market as a whole),
the beta, applied to reflect the risk of the specific Group operating company relative to
the market as a whole and where necessary, a company specific risk premium. In
determining the risk adjusted discount rate, management has applied an adjustment for
the systematic risk to each of the Group’s operations determined using a beta based on
comparable listed mobile telecommunications companies and, where available and
appropriate, across a specific territory. Management has used a forward-looking equity
market risk premium that takes into consideration both studies by independent
economists, the observed long-term market average equity market risk premium,
and the market risk premiums typically used by investment banks in evaluating
acquisition proposals. |
| % |
Vodacom (Pty) Limited |
|
| 31 March 2018 |
|
|
| Long-term growth rate |
3.9 |
|
| Risk adjusted discount rate |
12.3 |
|
| 31 March 2017 |
|
|
| Long-term growth rate |
2.7 |
|
| Risk adjusted discount rate 1 |
12.0 |
|
Sensitivity to changes in key assumptions
Vodacom (Pty) Limited is the only cash-generating unit for which the carrying amount of goodwill allocated to that unit is
significant in comparison with the Group’s total carrying amount of goodwill.
Management believes that no reasonable possible change in any of the aforementioned key assumptions would cause
the carrying amount of any cash-generating unit to which a significant amount of goodwill has been allocated, to exceed
its recoverable amount.
| Notes: |
| 1 |
For the current period the long-term growth rate considers a combination of the average long-term real GDP rate and CPI forecast for the country of operation;
while the prior year considered only the average long-term real GDP rate. |
|