(formely M-Cell Limited) - Business Report 2003 - MTN Group

40. CLASSIFICATION OF MTN MAURITIUS AS A FOREIGN ENTITY
MTN Mauritius has been accounted for, on consolidation, as a foreign entity, i.e. a foreign operation that is
not integral to those of the reporting enterprise. The distinction between accounting for MTN Mauritius as
a foreign entity as compared to an integral foreign operation is however judgmental as MTN Mauritius has
characteristics of both a foreign entity and an integral foreign operation.
A conclusion was reached that MTN Mauritius meets the criteria as defined by SA GAAP under AC112
“The effects of changes in foreign exchange rates” paragraph 26 resulting in the accounting treatment
for foreign entities being adopted.
MTN Mauritius’ investments in the International operations are classified as foreign entities in terms of
AC112. If MTN Mauritius had been classified as an integral foreign operation, the effect on the income
statement for the current year would have been the recognition of a translation gain amounting to
R632 million (credit) (2002: R614 million (debit)), with an equivalent reduction in the foreign currency
translation reserve.
41. LICENCE AGREEMENTS
MTN Network Operator
The licence authorises MTN Network Operator to construct, maintain and use a 900 MHz GSM national
mobile cellular telecommunication service within the South African geographical territory.
The licence was published on 29 October 1993 and is valid for a period of 15 years from 1 June 1994,
automatically renewable on mutatis mutandis, the same terms and conditions, subject to certain provisions.
The Group paid an initial fee of R100 million and an annual licence fee based on 5% of net operating
income as defined in the licence.
MTN Cameroon
The licence authorises MTN Cameroon to set up and run a 900 MHz national mobile GSM cellular telephony
network within the Cameroonian geographical territory. The licence was granted on 15 February 2000 and
is valid for a period of 15 years, renewable every 10 years thereafter. The Group paid an initial licence fee of
CFA 40,4 billion.
MTN Nigeria
The licence authorises MTN Nigeria to provide and operate a 900 and 1800 MHz second generation digital
mobile service within the Nigerian geographical territory. The licence was granted on 9 February 2001 and
is valid for a period of 15 years, renewable every five years thereafter. The Group paid an initial licence fee
of US$285 million and an annual licence fee based on 2,5% of audited net revenue as defined in the licence.
MTN Rwanda
The licence authorises MTN Rwanda to construct, maintain and operate a 900, 1800 and 1900 MHz
(including cellular public pay telephone) GSM telecommunication network within the Rwandan
geographical territory. The licence was granted on 2 April 1998 and is valid for 10 years and may be
terminated thereafter with a two-year written notice period. The Group paid an initial licence fee of
US$200 000 and an annual licence fee based on 2,5% of network revenue as defined in the licence and an
annual spectrum fee of US$2 000 per 1 MHz granted. 12,5 MHz is currently being utilised.
MTN Swaziland
The licence authorises MTN Swaziland to provide and operate a 900 MHz GSM network within the
Swaziland geographical territory. The licence was granted on 31 July 1998 and is valid for a period of
10 years, renewable for 10 years thereafter. The Group pays annual spectrum fees of: E20 000 per channel
used (with a minimum of E600 000) and licence fees of 5% of audited net operational income as defined
in the licence.
MTN Uganda
The licence authorises MTN Uganda to operate a telecommunication system within the Ugandan
geographical territory. The licence was granted on 15 April 1998 and is valid for a period of 20 years.
The Group paid an initial licence fee of US$200 000 and an annual licence fee based on 2,5% of gross
revenue as defined in the licence.
42. IMPLEMENTATION OF ACCOUNTING STANDARD AC133 – FINANCIAL INSTRUMENTS: RECOGNITION
AND MEASUREMENT
Preparations have been made to implement AC133 with effect from 1 April 2003. The adjustment required
to accumulated profit and other reserves at that date is a charge of R15,3 million. The Group will first report
to shareholders under AC133 in respect of its interim results to 30 September 2003.
MTN BUSINESS REPORT 2003
PAGE 103