(18) Other Intangible Assets

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The “Table of Other Intangible Assets” provides the components and a reconciliation of the changes in other intangible assets.

As of 31 December 2014 and 2013, the line item software comprises internally developed software with a carrying amount of TEUR 24,575 and TEUR 32,910, acquisition cost of TEUR 136,803 and TEUR 144,683 and the related accumulated amortisation of TEUR 112,228 and TEUR 111,773, respectively. Additions in 2014 and 2013 amounted to TEUR 1,890 and TEUR 5,488, respectively.

In 2014 and 2013, transfers include reclassifications of advances/construction in progress to tangible and intangible assets.

In 2014 and 2013, interest capitalised totalled TEUR 8,799 and TEUR 84, respectively. Calculation of capitalised borrowing cost was based on an interest rate of 3.125% and 4.3% for the years 2014 and 2013, respectively. Borrowing cost capitalised in 2014 relate to licenses acquired in Austria in 2013.

As of 31 December 2014 and 2013, purchase commitments for intangible assets amounted to TEUR 15,163 and TEUR 16,708, respectively.

Licenses are recorded at cost and amortised on a straight-line basis. The following table sets forth the terms and total cost incurred for each of the major license agreements:

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GSM licenses

UMTS licenses

LTE licenses

License cost

1,312,248

303,661

567,423

End of the term

2015–2034

2015–2027

2015–2033

Telekom Austria Group holds mobile telecommunication licenses provided by regulatory authorities in Austria, Croatia, Slovenia, Serbia, Bulgaria, Belarus and Macedonia.

On 3 April 2014, the Bulgarian subsidiary Mobiltel prolonged its existing license portfolio of 2 x 11.2 MHz in the 900-MHz spectrum band and 2 x 10 MHz in the 1800-MHz spectrum band for a total amount of TEUR 30,596. The allocated spectrum remains the same. The spectrum has a maturity of 10 years, until 8 June 2024. The terms of the prolongation were set by the Communications Regulation Commission (CRC).

On 28 April 2014, Si.mobil acquired 2 x 90 MHz of FDD spectrum and 1 x 45 MHz of TDD spectrum at the combinatorial clock auction in Slovenia, equivalent to approximately 48% of total auctioned spectrum, for a total consideration of TEUR 63,874. The new 800-MHz spectrum and the 2600-MHz spectrum licenses are valid from mid-2014 until mid-2029. The 2100-MHz TDD spectrum license, also valid from mid-2014, was granted until September 2021. The 900-MHz and 1800-MHz spectrum license will be valid from January 2016 until January 2031. Si.mobil has to cover 95% of the Slovenian population with LTE technology within three years to comply with regulatory coverage obligations as well as the objectives of the European digital agenda concerning the coverage of so-called ‘whitespots’.

On 21 October 2013, A1 Telekom Austria acquired four blocks of the 800 MHz spectrum, three blocks of the 900 MHz spectrum and seven blocks of the 1800 MHz spectrum at the Austrian spectrum auction. By official notice of 19 November 2013, the total consideration was set at TEUR 1,029,896 and was reported in advances/construction in progress at 31 December 2013.

The use of the 800 MHz spectrum band started on 1 January 2014 and will expire on 31 December 2029. The license was transferred from the item advances/construction in progress to licenses. The 800 MHz spectrum provides an unparalleled position to roll out a leading LTE network across Austria. This fully supports Telekom Austria Group’s high value strategy and network quality leadership and allows Telekom Austria Group to protect its fixed-line as well as its mobile customer base, in particular in rural areas.

The blocks in the 900 MHz and the 1800 MHz band were granted until 31 December 2034 for all operators. The blocks in the 900 MHz band serve to protect the existing GSM customer base, while the blocks in the 1800 MHz band provide further network capacity on a long-term basis to be able to offer modern multimedia services in highest quality. The start of the licensing period depends on the requirements stipulated by the official notice, on the current allocation of frequencies and on the other hand on the technical implementation of the intended use, which is subject to evaluation on an annual basis. According to the official notice, the use of the 900 MHz band starts on 1 January 2016 and the use of the 1800 MHz band will start between 1 January 2016 and 1 January 2020.

In October 2013, Vipnet acquired a 2x5 MHz block for a total amount of TEUR 23,110. The license is valid until 18 October 2024. Vipnet has to ensure a coverage of 50% of the territory of Croatia within a period of five years which starts once the national regulatory agency has ratified the spectrum as usable.

On 10 July 2013, Vip operator acquired a 10 MHz paired frequency block (in total 20 MHz) of the 800 MHz spectrum and a 15 MHz paired block (in total 30 MHz) in the 1800 MHz spectrum for a total amount of TEUR 10,300 in Macedonia. The frequency blocks have a term of 20 years. Vip operator has to ensure a coverage of 70% of the population of the Republic of Macedonia within a period of six years beginning with the date the blocks were awarded. The acquisition of the frequency blocks of the 800 MHz spectrum will enable Vip operator to provide LTE services.

In 2013, Si.mobil prolonged frequencies in the 900 MHz spectrum for a consideration of TEUR 3,519 and acquired 2x10 MHz frequency blocks in the 1800 MHz spectrum for a total consideration of TEUR 886. The licenses are valid until 2016.

In 2013, the useful lives of certain items of software in the segment Austria were reduced, which led to an increase in amortisation of TEUR 721.

The following table presents expected amortisation expense related to intangible assets with a finite useful life for each of the following periods:

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2015

291,730

2016

238,400

2017

182,671

2018

145,801

2019

121,880

Thereafter

1,054,957

The following table presents the changes of the carrying values of brand names by segment:

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in TEUR

Austria

Bulgaria

Croatia

Belarus

Additional Markets

Total

At 1 January 2013

145,897

245,706

28,996

97,422

4,305

522,327

Acquisitions

22,950

0

0

0

0

22,950

Amortisation

−3,333

−1,394

−1,026

0

0

−5,753

Translation adjustment

0

0

−256

0

−19

−275

Hyperinflation adjustment

0

0

0

967

0

967

At 31 December 2013

165,514

244,312

27,714

98,389

4,286

540,215

Acquisitions

0

0

0

0

772

772

Disposals

0

0

0

0

−1,158

−1,158

Amortisation

−6,667

−608

−1,019

0

−107

−8,401

Translation adjustment

0

−0

−111

0

20

−91

Hyperinflation adjustment

0

0

0

5,603

0

5,603

At 31 December 2014

158,847

243,704

26,584

103,992

3,813

536,941

Regarding the acquisitions and disposals of brand names see Note (2).

Brand names classified as intangible assets with indefinite useful lives are tested for impairment in the fourth quarter of each year in accordance with IAS 36, as described in Note (1). If an event or circumstance indicates that an asset may be impaired, impairment tests are carried out. Due to the fact that brand names do not generate cash inflows that are largely independent of those from other assets, the value in use can be determined only for the asset’s cash-generating unit. The second step according to IAS 36.107 is to determine whether an impairment loss should be recognised based on the total cash-generating unit.

As Telekom Austria Group does not intend to continue using the brand name “blizoo” acquired in the segment Additional Markets in 2014 (see Note (2)), it is amortised on a straight-line basis over a period of three years. The brand name “ONE” acquired in the segment Austria in 2013 was amortised on a straight-line basis over a period of 1.5 years. Furthermore, the brand names acquired in the segments Bulgaria and Croatia in 2011 will only be used for a specific period of time and are thus amortised on a straight-line basis. The useful life in Croatia is five years. In 2012, the useful life in Bulgaria was reduced from six to 3.4 years.

Brand names were allocated to the following cash-generating units:

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in TEUR, at 31 December

2014

2013

A1 Telekom Austria

144,910

144,910

Cable Runner

491

491

Paybox Bank

496

496

YESSS!

12,950

12,950

ONE

0

6,667

Total Austria

158,847

165,514

 

 

 

Mobiltel

243,704

243,704

Megalan

0

249

Spectrum Net

0

194

Orbitel

0

165

Total Bulgaria

243,704

244,312

 

 

 

Vipnet

24,976

25,079

B.net

1,608

2,635

Total Croatia

26,584

27,714

 

 

 

velcom

103,992

98,389

Total Belarus

103,992

98,389

 

 

 

mobilkom liechtenstein

0

1,138

Si.mobil

3,148

3,148

blizoo

665

0

Total Additional Markets

3,813

4,286

 

 

 

Total Brand Names

536,941

540,215

Thereof with indefinite useful live

534,668

530,306

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