Axiata Group Berhad - Annual Report 2016

Axiata Group Berhad | Annual Report 2016

FINANCIAL STATEMENTS

208

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016

25. INTANGIBLE ASSETS (CONTINUED)

Impairment tests for goodwill

The Group undertakes an annual test for impairment of its goodwill allocated to the CGUs identified according to operating segment.

The following CGUs, being the lowest level of asset for which the management monitors the goodwill of the Group:

2016

RM’000

2015

RM’000

Malaysia

4,031,110

Indonesia

5,439,695

5,292,704

Sri Lanka

271,173

269,693

Cambodia

225,415

215,667

Nepal

3,338,045

Others

198,412

149,078

Total

13,503,850

9,958,252

Key assumptions used

The recoverable amount of the Malaysia’s, Indonesia’s, Sri Lanka’s and Cambodia’s CGU including goodwill in this test is determined based on VIU

calculation and Nepal’s CGU is based on FVLCS. Malaysia’s, Indonesia’s, Nepal’s and Cambodia’s CGU consist of mobile business meanwhile Sri

Lanka’s CGUs consist of fixed telecommunication business (consist of fixed telephone, data and infrastructure) and television business respectively.

The VIU and FVLCS calculations apply a discounted cash flow model using cash flow projections based on forecasts and projections approved by

the management covering:

a three (3) year period for the mobile business in Malaysia, Nepal and Cambodia;

a five (5) year period for mobile business in Indonesia, and

a ten (10) years period for the fixed telecommunication and television business in Sri Lanka due to the long term nature and intensive capital

required in the initial phase of the business.

These forecasts and projections reflect the management’s expectation of revenue growth, operating costs and margins based on past experience

and future outlook of the CGUs.

Cash flows beyond third (3

) year for the mobile business in Malaysia, Nepal and Cambodia, fifth (5

) year for the mobile business in Indonesia,

meanwhile tenth (10

) for fixed telecommunication business and television business in Sri Lanka are extrapolated in perpetuity using estimated

terminal growth rate which takes into consideration the current Gross Domestic Product, inflation and average growth rate for the telecommunication

industry. These rates have been determined with regards to projected growth rates for the market in which the CGUs participates and are not

expected to exceed the long term average growth rates for this market.