Airtel 2013 Annual Report Download - page 167

Consolidated Financial Statements 165
Notes to consolidated financial statements
spot rate of exchange ruling at the reporting date with
resulting exchange difference recognised in profit or
loss. Non-monetary items that are measured in terms
of historical cost in a foreign currency are translated
using the exchange rates as at the dates of the initial
transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value is
determined. Exchange component of the gain or loss
arising on fair valuation of non monetary items is
recognised in line with the gain or loss of the item that
gave rise to the such exchange difference.
Exchange differences arising on a monetary item
that forms part of a Group entity’s net investment
in a foreign operation is recognised in profit or loss
in the separate financial statements of the Group
entity or the individual financial statements of the
foreign operation, as appropriate. In the consolidated
financial statements, such exchange differences are
recognised in other comprehensive income.
c. Translation of Foreign Operations’ Financial
Statements
The assets and liabilities of foreign operations
are translated into Rupees at the rate of exchange
prevailing at the reporting date and their income
statements are translated at average exchange rates
prevailing during the year. The exchange differences
arising on the translation are recognised in other
comprehensive income. On disposal of a foreign
operation (reduction in percentage ownership
interest), the component of other comprehensive
income relating to that particular foreign operation is
reclassified to profit or loss.
d. Translation of Goodwill and Fair Value Adjustments
Goodwill and fair value adjustments arising on the
acquisition of foreign entities are treated as assets
and liabilities of the foreign entities and are recorded
in the functional currencies of the foreign entities
and translated at the exchange rates prevailing at
the date of statement of financial position and the
resultant change is recognised in statement of other
comprehensive income.
3.17 Revenue Recognition
Revenue is recognised to the extent that it is probable
that the economic benefits will flow to the Group
and the revenue can be reliably measured. Revenue is
measured at the fair value of the consideration received/
receivable, excluding discounts, rebates, and VAT, service
tax or duty. The Group assesses its revenue arrangements
against specific criteria, i.e., whether it has exposure to the
significant risks and rewards associated with the sale of
goods or the rendering of services, in order to determine if
it is acting as a principal or as an agent.
a. Service Revenues
Service revenues include amounts invoiced for usage
charges, fixed monthly subscription charges and
internet and VSAT services usage charges, bandwidth
services, roaming charges, activation fees, processing
fees and fees for value added services (‘VAS’). Service
revenues also include revenues associated with
access and interconnection for usage of the telephone
network of other operators for local, domestic long
distance and international calls and data messaging
services.
Service revenues are recognised as the services are
rendered and are stated net of discounts, waivers
and taxes. Revenues from pre-paid customers are
recognised based on actual usage. Processing fees
on recharge coupons is being recognised over the
estimated customer relationship period or coupon
validity period, whichever is lower. Activation
revenue and related activation costs, not exceeding
the activation revenue, are deferred and amortised
over the estimated customer relationship period. The
excess of acquisition costs over activation revenue, if
any, are expensed as incurred.
Service revenues from the internet and VSAT business
comprise revenues from registration, installation and
provision of internet and VSAT services. Registration
fee and installation charges are deferred and
amortised over the period of agreement with the
customer. Service revenue is recognised from the date
of satisfactory installation of equipment and software
at the customer site and provisioning of internet and
VSAT services.
Revenues from national and international long
distance operations comprise revenue from provision
of voice services which are recognised on provision of
services while revenue from provision of bandwidth
services (including installation) is recognised over the
period of arrangement.
Unbilled revenue represent revenues recognised from
the bill cycle date to the end of each month. These are
billed in subsequent periods based on the terms of the
billing plans/contractual arrangements.
Deferred revenue includes amount received in advance
from customers which would be recognised over the
periods when the related services are expected to be
rendered.
b. Equipment Sales
Equipment sales consist primarily of revenues from
sale of telecommunication equipment and related