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

The Group’s investment in associates includes goodwill (net of accumulated amortisation) on acquisition.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group
does not recognise further losses, unless the Group has incurred obligations or made payments on behalf
of the associate.
2.4 Goodwill
Goodwill arising on consolidation represents the excess of the costs of acquisition over the Group’s
interests in the fair value of identifiable assets and liabilities of a subsidiary, associate or jointly controlled
entity at the date of acquisition. Goodwill arising on acquisitions that occurred prior to 31 March 2000 was
charged directly against reserves.
Goodwill arising on subsequent acquisitions, is capitalised and amortised on a straight-line basis over its
useful economic life, not exceeding 20 years.
Goodwill arising on the acquisition of an associate is included within the carrying amount of the associate.
Goodwill arising on the acquisition of subsidiaries and jointly controlled entities is presented separately in
the balance sheet.
On disposal of a subsidiary, joint venture entity or associate, the attributable amount of unamortised
goodwill or negative goodwill is included in the determination of income.
2.5 Investments
Investments, including those in subsidiary companies, are stated at cost, less amounts written off where
there has been a permanent diminution in value.
2.6 Revenue recognition
Revenue, which excludes value-added taxation, represents the net invoiced value of goods and services
supplied by the Group.
Revenue from rendering of services is recognised when it is probable that the economic benefits associated
with a transaction will flow to the Group and the amount of revenue, and associated costs incurred or to be
incurred can be measured reliably.
The main categories of revenue and the bases of recognition are as follows:
2.6.1 Contract products
● Connection fees
Revenue is recognised on the date of activation of SIM cards of the subscriber.
● Subscription fees
Revenue is recognised in the period to which it relates.
● Airtime
Revenue is recognised on the usage basis commencing on the date of activation.
The terms and conditions of the bundled airtime products allow the carry over of unused
minutes and accumulation to a maximum of one month’s allocation. This unused airtime is
deferred in full. Deferred revenue related to the unused airtime is recognised when utilised by
the customer. Upon termination of the customer contract, all deferred revenue for unused
airtime is recognised.
2.6.2 Prepaid products
● Connection fees
Revenue is recognised on the date of activation of SIM cards by subscribers.
● Airtime
Revenue is recognised on the usage basis commencing on the date of activation.
● SIM cards
Revenue is recognised on delivery and acceptance.
2.6.3 Other income
● Cellular telephone and accessory sales
All equipment sales are recognised only when delivery and acceptance has taken place.
● Interconnect
Revenue is recognised on the usage basis.
MTN BUSINESS REPORT 2003
PAGE 71