axiata group berhad | annual report 2015
211
Potential exposure
2015
2014
RM’million RM’million
1,365.3
1,161,7
28. ASSOCIATES (CONTINUED)
List of contingent liabilities of an associate, Idea as at 31 December are as follows:
Description
1.
One-off excess spectrum charges
On 8 January 2013, the local regulator, the Department of Telecommunications (“DoT”) had issued
demand notices towards one time spectrum charges:
(a) for spectrum beyond 6.2 MHz in respective service areas for retrospective period from 1 July 2008
to 31 December 2012, amounting to INR3,691.3 million, and
(b) for spectrum beyond 4.4 MHz in respective service areas effective 1 January 2013 till expiry of the
period as per respective licenses amounting to INR17,443.7 million.
In the opinion of the Directors, inter-alia, the above demand amounts to alteration of financial terms
of the licenses issued in the past. The Directors believe, based on independent legal opinion and its
evaluation, it is not probable that the claim will materialise and therefore, pending outcome of this
matter, no provision has been recognised.
2.
Tax notice
The Income Tax Department (“Tax Department’’) had issued a INR39.0 billion notice on an associate. The
Tax Department alleged that the licenses, assets and liabilities transferred in between the companies in
2009 resulted in taxable capital gains which Idea and its subsidiary did not treat as taxable.
In the opinion of the Directors, based on independent legal opinion and its evaluation, it is not probable
that the claim will materialise and therefore, pending outcome of this matter, no provision has been
recognised.
3.
Revenue share license fee assessment
During the financial year, the DoT has raised a demand notice to an associate for further payment of
license fee in respect of years of assessment (“YA”) 2011-2012 amounting to INR1.1 billion.
In previous financial year, the DoT has raised a demand notice to an associate for further payment of
license fee in respect of YA 2007-2008 amounting to INR1.5 billion and a demand cum show cause notice
for YA 2009-2012 amounting to INR14.0 billion. The associate has responded to DoT and challenged
these demand cum show cause and stay has been granted by the High Court.
In the opinion of the Directors, based on independent legal opinion and its evaluation, it is not probable
that the claim will materialise and therefore, pending outcome of matters, no provision has been
recognised.
4.
Income tax demands raised in 2015
During the financial year to date, an associate of the Group received two demands from income tax
authorities in respect of its income tax returns for the financial years 2008/09 and 2009/10 amounting
to INR34,147.0 million and INR6,408.0 million respectively. The tax demands are mainly on the difference
between fair value of investment made in Indus Towers Limited and net book value of the assets
transferred to Idea Infrastructure Services Limited (a 100.0% subsidiary of the associate, which further
through a scheme of merger got merged with Indus Towers Limited under High Court approved scheme).
The associate has filed an appeal against these demands at the Commissioner of Income Tax appeals.
2,519.4
2,147.1
1,072.4
853.3
2,619.9
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