(2) Business Combinations

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In June 2014, Telekom Austria Group signed an agreement for the merger of its subsidiary mobilkom liechtenstein into Telecom Liechtenstein AG (“Telecom Liechtenstein”) to form a convergent market leader in Liechtenstein. Closing of this non-cash transaction was carried out on 27 August 2014 and resulted in Telekom Austria Group holding a stake of 24.9% and the Principality of Liechtenstein 75.1% in Telecom Liechtenstein. As a result of Telekom Austria Group’s significant influence, Telecom Liechtenstein is accounted for under the equity method and reported in Corporate & Other (see Note (15)). Telecom Liechtenstein offers bundled products consisting of fixed line, mobile communications, internet and TV services. The fair value corresponds to the entity value determined and mutually agreed upon by both parties to the contract in the course of the valuation. The fair value of Telekom Austria Group’s stake in the Telecom Liechtenstein is TEUR 34,330 and the transaction resulted in a gain of TEUR 26,785 which was recognised in other operating income in the consolidated statements of profit or loss (see Note (5)).

Due to the merger, Telekom Austria Group lost control of mobilkom Liechtenstein. The following table shows the assets and liabilities disposed of.

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Dispose of mobilkom liechtenstein

in TEUR

 

 

Property, plant and equipment

1,612

Intangible assets

1,345

Trade and other receivables

3,167

Cash and cash equivalents

4,458

Liabilities

−2,976

On 30 July 2014, Telekom Austria Group acquired 100% of blizoo DOOEL, Macedonia (“blizoo”). The fair values of the assets acquired and liabilities assumed at the acquisition date were determined based on the allocation of the consideration transferred and are shown in the following table:

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Acquisition of blizoo

in TEUR

 

Fair values on acquisition date

Property, plant and equipment

12,223

Intangible assets

3,008

Other assets and receivables

1,021

Cash and cash equivalents

321

Short-term borrowings

−7,454

Accounts payable – trade and other liabilities

−8,236

Net assets acquired

883

Goodwill

12,952

Total purchase consideration

13,835

Cash paid for receivable acquired

11,165

Cash and cash equivalents acquired

−321

Net cash outflow

24,679

Blizoo is the leading cable operator in the Republic of Macedonia, offering TV services, broadband and fixed voice. The acquisition represents a significant step in fulfilling Telekom Austria Group´s convergence strategy and enables Vip operator and blizoo to offer bundled fixed and mobile services in Macedonia. The factors contributing to the recognised goodwill are expected future earnings from the positive development of the market share (including increase in customer benefit by usage of Vip operator’s network) and expected synergies in cost. The cash paid for a receivable acquired relates to a receivable of the seller, which was additionally acquired.

Acquisition-related costs recognised in other operating expenses in profit or loss amount to TEUR 551. Since the acquisition date blizoo has contributed revenues in the amount of TEUR 4,377 and a net loss of TEUR 255. Since the effect of the acquired entity on the Consolidated Financial Statements of Telekom Austria Group is not considered significant, no pro-forma information is presented.

On 15 September 2014, Telekom Austria Group acquired 100% of Dastin d.o.o., Bjelovar (“Dastin”) in Croatia. The fair values of the assets acquired and liabilities assumed at the acquisition date were determined based on the allocation of the consideration transferred and are shown in the following table:

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Acquisition of Dastin

in TEUR

 

Fair values on acquisition date

Intangible assets

457

Other assets and receivables

40

Cash and cash equivalents

4

Deferred tax liabilities

−91

Accounts payable – trade and other liabilities

−47

Net assets acquired

363

Goodwill

135

Consideration transferred

498

Cash and cash equivalents acquired

−4

Net cash outflow

494

Acquisition-related costs recognised in other operating expenses in profit or loss amount to TEUR 16. In December 2014, Dastin was merged into Vipnet, which did not have any effect on the Consolidated Financial Statements of Telekom Austria Group.

In June 2014, the remaining deferred consideration for the acquisition of SOBS Base Stations GmbH (“SOBS”) in the amount of TEUR 1,904 was paid. SOBS was the company into which the base stations of Orange Austria had been demerged and which was merged into A1 Telekom Austria AG in 2013. As of 31 December 2013, this outstanding consideration was recorded in other current liabilities (see Note (23)).

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