Telstra 2016 Annual Report Download - page 92
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90
Notes to the financial statements (continued)
Section 2. Our performance (continued)
90 | Telstra Corporation Limited and controlled entities
2.2 Income (continued)
2.2.1 Recognition and measurement (continued)
(c) Sales incentives (continued)
Impact of revised NBN Definitive
Agreements (NBN DAs) on sales
revenue and other income
nbn co makes decisions about the access technologies (e.g. fibre to the premises
'FTTP', fibre to the basement 'FTTB', fibre to the node 'FTTN' or Hybrid Fibre Coaxial
‘HFC’) which it intends to use to serve premises in each of its rollout regions. In any
given rollout region these decisions trigger its election to acquire the relevant
Telstra assets, the ownership of which we are progressively transferring to nbn co
under the revised NBN DAs. These assets include lead-in conduits (LICs), certain
copper and HFC assets and associated passive infrastructure (being infrastructure
that supports the relevant copper and HFC assets).
Under the revised NBN DAs, we receive Infrastructure Ownership Payments (IOPs)
for the transfer of LICs, certain copper and HFC assets and associated passive
infrastructure over the duration of the nbnTM network rollout. IOPs are CPI adjusted
and linked to the level of nbnTM network rollout progress.
We also provide to nbn co long-term access to certain infrastructure, including
dark fibre, exchange rack space, ducts and pits. Payments for access to ducts and
pits, i.e. Infrastructure Access Payments (IAPs), are also indexed to CPI, will grow in
line with the nbnTM network rollout and will continue for an average contracted
period of 30 years.
IOPs and IAPs are classified in the income statement as other income and sales
revenue respectively and are recognised on a percentage rollout basis of the nbnTM
network footprint (addressable market).
For any given period, the IOPs and IAPs amounts ultimately received from nbn co
may vary from the amounts recognised in the income statement depending on how
quickly the nbnTM network rollout progresses and the final size of the nbnTM
network fixed line footprint. A change in the nbnTM network rollout progress and/or
the final size of the nbnTM network fixed line footprint could result in a material
change to the amount of IOPs and IAPs recognised in the income statement.
We have applied management judgement to determine our best estimate of the
amounts of IOPs and IAPs recognised for the financial year 2016. The changes in
these estimates in the current year had no material impact on the amounts
recognised in the income statement. Should evidence exist in future reporting
periods that changes these best estimates, other income and sales revenue will be
adjusted in future reporting periods.