Page 265 - 2012 Annual Report

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VIVENDI l 2012 l Annual Report
FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS –
STATUTORY FINANCIAL STATEMENTS 4
4
III - CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 13 Intangible and tangible assets of telecom operations
(a) SFR holds licenses for its networks and for the supply of its telecommunications services in France, for a 15-year period for GSM (between March 2006
and March 2021) and a 20-year period for both UMTS (between August 2001 and August 2021) and LTE (between January 2012 and January 2032),
with the following financial conditions:
− for the GSM license, an annual payment over 15 years comprised of a (i) fixed portion in an amount of €25 million for each year (capitalized over the
period based on a present value of €278 million in 2006) and (ii) a variable portion equal to 1% of the yearly revenues generated by this technology;
− for the UMTS license, the fixed amount paid in 2001 (€619 million) was recorded as an intangible asset and the variable part of the fee is equal to
1% of the yearly revenues generated by this technology. Moreover, as part of this license, SFR acquired new spectrum for €300 million in June 2010,
over a 20-year period; and
− for the LTE licenses, the fixed amounts paid in October 2011 (€150 million) and January 2012 (€1,065 million), respectively, were recorded as
intangible assets at the acquisition date of the spectrum band, and the variable portion of the fee is equal to 1% of the yearly revenues generated
by this technology.
The variable portions of the fees that cannot be reliably determined are not recorded in the Statement of Financial Position. They are recorded as an
expense, when incurred.
SFR’s network coverage commitments related to telecommunication licenses
✱ On November 30, 2009, the “Autorité de Régulation des
Communications Electroniques et des Postes” or “Arcep” (the French
Telecommunications Regulatory Agency) addressed a notice to SFR
regarding its compliance in the UMTS network coverage of the French
metropolitan population: 98% by December 31, 2011, and 99.3% by
December 31, 2013. As of December 31, 2011, with 98.4% of the
French metropolitan population covered, SFR was in compliance with
its coverage commitments. As of December 31, 2012, the network
coverage was 99.0%.
✱ As part of the grant of the first band of LTE spectrum in October 2011,
SFR has committed itself to ensure a specific coverage rate for the
French metropolitan population: 25% by October 11, 2015, 60% by
October 11, 2019, and 75% by October 11, 2023.
✱ As part of the grant of the second band of LTE spectrum in
January 2012, SFR has committed itself to comply with the following
obligations:
(i) SFR is required to provide the following very high-speed mobile
network coverage:
– coverage of 98% of the French metropolitan population by
January 2024 and 99.6% by January 2027,
– coverage in the priority zone (approximately 18% of the French
metropolitan population and 63% of the territory): within this zone,
SFR is required to cover 40% of the population by January 2017
and 90% of the population by January 2022,
– coverage obligations at a departmental level: SFR has to cover 90%
of the population of each French department by January 2024, and
95% of the population of each French department by January 2027.
(ii) SFR and Bouygues Telecom have a mutual network sharing or
spectrum pooling obligation in the priority zone;
(iii) SFR has an obligation to offer national roaming to Free Mobile within
the priority zone upon building of its own 2.6 GHz network covering at
least 25% of the French population provided that it has not signed a
national roaming agreement with another operator; and
(iv) SFR has a joint coverage obligation with the other 800 MHz license
holders to cover the hot-spots that have been identified by the French
administration within the framework of the “white zones” program
(beyond 98% of the population) within 15 years.