Unformatted text preview: ollected on behalf on
the authorities. Revenues primarily comprise sale of
• Services: subscription and traffic fees, connection fees, interconnection fees, roaming charges, fees for leased lines and
leased networks, fees for data network services and fees for TV
distribution and satellite services.
• Customer equipment is primarily mobile devices/phones.
subscription and traffic fees
Revenues from subscription fees are recognised over the
subscription period while revenues from voice and non-voice
services are recognised upon actual use. Consideration from the
sale of prepaid cards to customers where services have not been /page 28/
telenor annual report 2011
notes to the financial statements / telenor group rendered at the reporting date is deferred until actual usage or when
the cards are expired or forfeited.
Connection fees that are charged and not allocated to the other
elements of an arrangement are deferred and recognised over the
periods in which the fees are expected to be earned. The earning
period is the expected period of the customer relationship and is
based on past history of churn and expected development in the
individual Group companies. When connection fees are charged in multiple element
arrangements where discounts are provided on other identifiable
components in the transactions, the connection fees are allocated
to sale of the discounted equipment or services, limited to the
amount of the discounts, and recognised as revenues at the same
time as the equipment or services are recognised as revenues.
Revenues from sales of customer equipment are normally
recognised when the equipment, including the related significant
risks and rewards of ownership, is transferred to the buyer and the
Group retains neither continuing managerial involvement to the
degree usually associated with ownership nor effective control over
the goods sold.
Multiple element arrangements
When the Group delivers multiple services and/or equipment as
part of one contract or arrangement, the consideration is allocated
to the separate identifiable components if the delivered item has
value to the customer on a standalone basis and there is objective
and reliable evidence of the fair value of undelivered items. The
consideration is allocated between the elements based on their
relative fair values, and recognition of the revenue allocated to the
delivered item is limited to the amount that is not contingent on the
delivery of additional items or other specified performance criteria.
discounts Discounts are often provided in the form of cash discounts or free
products and services delivered by the Group or by external parties.
Discounts are recognised on a systematic basis over the period the
discount is earned. Cash discounts or free products and services
given as part of sales transactions are recognised as a reduction of
revenue. Free products or services provided that are not related to
sales transactions are recognised as expenses.
The determination of whether the Group is acting as principal or
agent in a transaction is based on an evaluation of the substance of
the transaction, the responsibility for providing the goods or services
and setting prices and the underlying financial risks and rewards.
Where the Group acts as a principal, the revenues are recognised on
a gross basis. This requires revenue to comprise the gross value of
the transaction billed to the customers, after trade discounts, with
any related expenses charged as operating costs. Where the Group
acts as an agent, the expenses are offset against the revenues and
the resulting net revenues represent the margins or commissions
earned for providing services in the capacity of an agent. Revenues from roaming are recognised gross in line with general
accepted accounting principles within the telecommunications
industry. Revenues from transit traffic are recognised based on an evaluation
of the substance in the agreement, and will be recognised gross or
net depending on whether the Group acts as a principal or agent in
License fees payable to telecommunications authorities that are
calculated on the basis of revenue share arrangements are not
offset against the revenues. Instead, they are recognised as license
costs because the Group is considered to be the primary obligor.
interest and dividend income
Interest income is accrued on a time proportion basis that reflects
an effective yield on the asset. Dividend income from investments is
recognised when the Group’s rights to receive payment have been
established (declared by the General Meeting or otherwise).
The Group’s obligations related to defined benefit plans are valued
at the present value of accrued future pension benefits for the
employees at the end of the reporting period. Pension plan assets
are valued at their fair value. Accumulated effects of changes in
estimates, changes in assumptions and deviations from actuarial
assumptions (actuarial gains or losses) that are less than 10% of
the higher of the pension benefit obligations and the pension plan
assets at the beginning of the year are not recognised. When the
accumulated effect is above 10%, the excess amount is recognised
in the income state...
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