Annual Report 2012, PDF - Axiata Group Berhad - Investor Relations

Axiata Group Berhad (242188-H) Annual Report 201229. ASSOCIATES (CONTINUED)Key assumptions used in the VIUThe recoverable amount was determined based on VIU calculation, which apply a discounted cash flow modelbased on the forecasts and projections approved by the management. These forecasts and projections reflectmanagement’s expectations based on the current assessment of market share, expectations of market growthand industry growth as benchmarked with external sources.The key assumptions used in determining the VIU are:AssumptionsProjection periodPre-tax adjusted discount ratebasis of determinationA ten (10) years (31.12.2011: 10 years, 1.1.2011: 10 years) cash flow forecast isused as the overall penetration rate in India is relatively low, based on pastexperience of emerging markets, the prospects are good, notwithstandingthat it would take longer time frame to achieve optimal operational levels.13.4% (31.12.2011: 13.4%, 1.1.2011: 13.4%) was used in line with the marketanalysis.Terminal growth rate long term terminal growth rate is estimated to be 3.0% (31.12.2011: 3.0%,1.1.2011: 3.5%) applied beyond the tenth (10 th ) year cash flows to perpetuity.Blended Average Revenue Compound Annual Growth Rate of 2.0% (31.12.2011: 0.3%, 1.1.2011: 0.6%)per user (“ARPU”)throughout the ten (10) years projection period.Blended subscribersblended subscriber base ranged between 117.3 million in 2013 to 159.7 millionin 2022 (31.12.2011: ranged between 100.4 million in 2012 to 194.0 million in2021, 1.1.2011: ranged between 84.6 million in 2011 to 144.6 million in 2020).Blended Earnings BeforeRanging from 25.5% in 2013 to 32.0% in 2022, (31.12.2011: ranging fromDepreciation and Amortisation 22.06% in 2012 to 30.72% in 2021, 1.1.2011: ranging from 21.9% in 2011 to(“EBITDA”) Margin 32.4% in 2020).Effective tax rateCapital expenditure20.0% from 2013 to 2017, 34.0% in 2018 and beyond (31.12.2011: 20.0% from2012 to 2016, 34.0% in 2017 and beyond, 1.1.2011: 20.0% from 2011 to 2019,34.0% in 2020 and beyond).The cash flow forecasts for capital expenditure are based on past experienceand include the ongoing capital expenditure required to continue to roll outnetworks in emerging markets to provide voice and data products andservices and to meet the population coverage requirements of certainlicenses of Idea.capital expenditure forecasted excludes excess spectrum charges, which arecurrently being deliberated and highly uncertain. Capital expenditureforecasted includes assumption on the level of renewal fees to be paid forlicenses expiring during the projection period.Management believes that no reasonably possible change in any of the key assumptions would cause thecarrying value of Idea to exceed its recoverable amount.267