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2.6.1 |
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Fibre pair
right-of-use |
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Google granted Openserve the right-of-use of a distinct
fibre pair. The transaction contains a lease as defined in
IFRS 16 which resulted in the recognition of a right-of-use
asset and a corresponding lease liability.
The lease is for a period of 15 years and the full payment
is payable on or before the end of the first half of the 2025
financial year, thus, similar to 30 September 2023, the
lease remains classified as a current liability. |
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Google handed over the fibre pair to Openserve in
May 2023.
Initially a right-of-use asset as well as a corresponding
lease liability of R994 million were recognised.
During the second half of the 2024 financial year,
Openserve paid cash of R23 million, which is a portion
of the R994 million liability that was recognised on,
30 September 2023 and the remainder is payable
on or before the end of the first half of the 2025
financial year.
The lease liability was recalculated to reflect the
latest payment terms agreed by the parties. Further,
the right-of-use asset was adjusted by depreciation
and the lease liability by interest. |
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2.6.2.1 |
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Cable landing
station
right-of-use |
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Openserve granted Google the right to use a distinct space
on its cable landing station. The lease period is for 15 years.
The transaction met the classification criteria of an operating
lease in accordance with IFRS 16.
The terms of the arrangement requires Google to pay
Openserve in advance for the use of the cable landing station
and annually for the maintenance and operating costs.
Google made the advance payment in May 2023 of
USD3.6 million. USD3.4 million was recognised in deferred
lease revenue and will be released to the statement of profit
or loss and other comprehensive income as lease revenue
on a straight-line basis over the lease period. USD0.2 million
was recognised immediately in the statement of profit or
loss and other comprehensive income as it related to the
acquisition of permits.
The maintenance and operating income are recognised as
other income on an annual basis. |
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Openserve handed over the cable landing station
to Google in April 2023.
Cash and cash equivalents of R62 million has been
recognised as well as deferred lease revenue of
R62 million. The deferred revenue has been split
between the current and non-current portion. |
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2.6.2.2 |
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Grant of use
of terrestrial
network on
system 1 |
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Openserve grants Google 50% terrestrial network capacity
on the South African and Botswana border routes. The use
of this network met the IFRS 15 revenue recognition criteria.
Google will pay Openserve USD17.7 million in advance for
the use of the South African network and USD0.6 million in
advance for the use of the Botswana border network, over a
period of 15 years. The advance payment will be deferred
and released to the statement of profit or loss and other
comprehensive income as revenue over 15 years. In addition,
a contract liability and trade receivable, adjusted for significant
financing in terms of IFRS 15, were recognised for the advanced
payment relating to the network.
Google will pay annual maintenance and operating costs to
Openserve, which are recognised as other income. |
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System 1 of the terrestrial network was provided to Google in June 2023.
A trade receivable of R348 million was recognised in
addition to R11.5 million cash and cash equivalents
for the advance payment in respect of the Botswana
border network and R360 million as deferred revenue.
The deferred revenue has been split between the
current and non-current portion.
The trade receivable is receivable on or before the
end of the first half of the 2025 financial year, and
was subjected to expected credit loss assessment.
The assessment considered credit risk, the updated
payment terms and payment negotiations between
the parties, and based on the assessment an
immaterial expected credit loss was recognised. |
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2.6.2.3 |
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Grant of use
of submarine
cable |
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Openserve grants Google the use of its submarine network
bandwidth capacity on the Eastern African Submarine Cable
System (EASSy), West Africa Cable System (WACS) and South
Atlantic 3 West Africa Submarine cable (S3WS) for an initial
period of 15 years or the lifespan of the cable systems,
whichever is shorter.
The terms of the agreement provide that Google will pay
Openserve in advance for the use of the cables. The advanced
payment has been recognised as deferred revenue and will
be released to the statement of profit or loss and other
comprehensive income as revenue over 15 years. R254 million
was recognised as cash and cash equivalents and deferred
revenue for the advanced payment. The deferred revenue
has been split between the current and non-current portion.
In addition, Google will pay Openserve annually for maintenance
and operating expenses, which are recognised as other income.
Openserve owns a percentage of the capacity in each of
the submarine cables, which is not physically distinct and
will grant a portion of its capacity to Google. According to
IFRS 16: B20, a capacity or other portion of an asset that is not
physically distinct is not an identified asset, unless it represents
substantially all of the capacity of the asset and thereby
provides the customer with the right to obtain substantially
all of the economic benefits from the use of the asset. Due
to the fact that the cable capacity is not physically distinct,
and the capacity granted by Openserve is not substantially
all of the capacity of the whole cable, the capacity granted
by Openserve to Google is not a lease. Therefore, the grant
of use of the submarine cable is accounted for as an IFRS 15
transaction. |
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Openserve handed over the submarine cable and
the services commenced in April 2023 (WACS, S3WS
and EASSy).
R254 million was recognised as cash and cash
equivalents and deferred revenue for the advanced
payment. The deferred revenue has been split
between the current and non-current portion. |
