Annual-report-2011

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Unformatted text preview: generating capacity of the assets and assumptions of the future market conditions. A significant part of the Group’s operations is in countries with emerging markets. The political, regulatory and economical situation in these countries may change rapidly and global financial turmoil and recession may have a significant impact on these countries. Recessionary effects and increased macroeconomic risks may impact the estimates of future performance and /page 34/ telenor annual report 2011 notes to the financial statements / telenor group discount rates used in estimating recoverable amounts of assets. Changes in circumstances and in management’s evaluations and assumptions may give rise to impairment losses in the relevant periods. There are significant variations between different markets with respect to growth, mobile penetration, ARPu, market share and similar parameters, resulting in differences in EBITDA margins. The future developments of EBITDA margins are important in the Group’s impairment assessments, and the long-term estimates of EBITDA margins are highly uncertain. In particular, this is the case for emerging markets that are still not in a mature phase. As a consequence of a court ruling that withdraws uninor’s licenses, an impairment loss of NOK 4.1 billion was recognised in 2011. The impairment loss was based on value in use calculations as of 31 December 2011 assuming continuing operations of uninor. There are uncertainties about the form of the future operations, the cost of new licenses and the estimated future cash flows, see also note 38. This may affect future evaluations. deferred tax assets, see also note 14 Deferred tax assets are recognised to the extent that it is probable that the tax assets will be realised. Significant judgement is required to determine the amount that can be recognised and depends foremost on the expected timing, level of taxable profits as well as tax planning strategies and the existence of taxable temporary differences. The judgements relate primarily to tax losses carried forward in some of the Group’s foreign operations. When an entity has a history of recent losses the deferred tax asset arising from unused tax losses is recognised only to the extent that there is convincing evidence that sufficient future taxable profit will be generated. Estimated future taxable profit is not considered as convincing evidence unless the entity has demonstrated the ability of generating significant taxable profit for this year or there are certain other events providing sufficient evidence of future taxable profit. uncertainty related to new transactions and events and the interpretation of new tax rules may also affect these judgements. Associated companies, see note 21 The Group has as of 31 December 2011 an ownership interest of 31.7% in VimpelCom Ltd. (VimpelCom) and accounts for the investment in VimpelCom in accordance with the equity method. After the combination of VimpelCom and Kyivstar GSM in the second quarter of 2010 and the combination of VimpelCom and Wind Telecom in the second quarter of 2011, the carrying amount and share of net income from VimpelCom was significantly increased. Financial statements of VimpelCom as of the reporting date were not available before the Board of Telenor ASA approved its unaudited interim consolidated financial statements for the fourth quarter 2011. VimpelCom is listed on the New York Stock Exchange and the company is not able to provide financial information to one investor without providing equivalent information to all other investors at the same time. As a consequence, the share of net income from VimpelCom, has from 2010 been recognised in the consolidated financial statements of the Group with a one quarter lag. Thus, share of net income from VimpelCom for 2010 included share of net income for the period 1 January to 30 September 2010. For 2011, the share of net income from VimpelCom includes share of net income for the period 1 October 2010 to 30 September 2011. Adjustments were made for the effects of publicly available information on any significant transactions and events that occur between the latest interim financial reporting from VimpelCom and the date of the Group’s consolidated financial statements. This required significant judgement. In the second quarter of 2011, VimpelCom acquired Wind Telecom for a consideration comprising cash, ordinary shares and preferred shares. As a result of the transaction, the Group’s ownership share in VimpelCom was diluted and a gain of NOK 1.6 billion was recognised. The estimation of the gain was based upon assumptions that required management to make judgements about fair value of the Wind Telecom contribution. Tax uncertainty, legal proceedings, claims and regulatory discussions, see also note 14 and 35 The Group is subject to various legal proceedings, disputes and claims including regulatory discussions related to the Group’s business, licenses, tax positions, investments etc., the outcomes of which are subject to significant uncertainty. Management evaluates, among other factors, the degree of probability of an unfavourable outcome and the ability to make a reasonable estimate of the amo...
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This document was uploaded on 03/21/2014.

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