12) PROPERTY, PLANT AND EQUIPMENT
a) Breakdown and changes
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Switching |
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Terminal |
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Assets and |
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and |
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equipment |
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Estimated |
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facilities under |
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equipment |
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/ modems |
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Infrastructure |
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Land |
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Other P&E |
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losses (1) |
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construction |
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Total |
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Annual depreciation rate(%) |
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2.50 to 25.00 |
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|
6.67 to 66.67 |
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2.50 to 66.67 |
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— |
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10.00 to 25.00 |
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— |
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— |
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— |
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Balances and changes: |
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Balance at 12/31/15 |
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20,935,963 |
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3,146,109 |
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3,655,951 |
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315,705 |
|
1,066,452 |
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(494,149) |
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1,850,734 |
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30,476,765 |
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Additions |
|
634,635 |
|
|
203,775 |
|
159,081 |
|
215 |
|
288,666 |
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(19,962) |
|
5,543,398 |
|
6,809,808 |
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Write-offs, net (2) |
|
(24,236) |
|
|
(816) |
|
(99,437) |
|
(201) |
|
3,059 |
|
28,539 |
|
(38,959) |
|
(132,051) |
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Net transfers |
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3,473,332 |
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|
677,572 |
|
523,995 |
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— |
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(159,702) |
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(3) |
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(4,625,143) |
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(109,949) |
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Depreciation (Note 24) |
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(2,787,820) |
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(1,438,333) |
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(514,383) |
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— |
|
(379,119) |
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— |
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— |
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(5,119,655) |
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Balance at 12/31/16 |
|
22,231,874 |
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|
2,588,307 |
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3,725,207 |
|
315,719 |
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819,356 |
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(485,575) |
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2,730,030 |
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31,924,918 |
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Additions |
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42,999 |
|
|
141,132 |
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91,160 |
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550 |
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259,620 |
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(37,374) |
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6,085,487 |
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6,583,574 |
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Write-offs, net |
|
(88,766) |
|
|
(7,602) |
|
(6,966) |
|
(1,916) |
|
(2,522) |
|
162,319 |
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(18,897) |
|
35,650 |
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Net transfers |
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3,634,293 |
|
|
1,471,431 |
|
619,008 |
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— |
|
34,093 |
|
132,578 |
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(5,910,612) |
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(19,209) |
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Depreciation (Note 24) |
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(3,011,291) |
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(1,468,936) |
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(544,454) |
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— |
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(284,983) |
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— |
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— |
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(5,309,664) |
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Business Combination (Note 1.c.1) |
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— |
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— |
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1,342 |
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— |
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4,888 |
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— |
|
817 |
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7,047 |
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Balance at 12/31/17 |
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22,809,109 |
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2,724,332 |
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3,885,297 |
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314,353 |
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830,452 |
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(228,052) |
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2,886,825 |
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33,222,316 |
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At 12.31.16 |
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Cost |
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70,789,534 |
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|
15,294,619 |
|
15,023,890 |
|
315,719 |
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4,308,718 |
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(485,575) |
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2,730,030 |
|
107,976,935 |
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Accumulated depreciation |
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(48,557,660) |
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|
(12,706,312) |
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(11,298,683) |
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— |
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(3,489,362) |
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— |
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— |
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(76,052,017) |
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Total |
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22,231,874 |
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|
2,588,307 |
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3,725,207 |
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315,719 |
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819,356 |
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(485,575) |
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2,730,030 |
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31,924,918 |
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At 12.31.17 |
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Cost |
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74,100,056 |
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16,845,903 |
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15,728,808 |
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314,353 |
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4,687,395 |
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(228,052) |
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2,886,825 |
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114,335,288 |
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Accumulated depreciation |
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(51,290,947) |
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(14,121,571) |
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(11,843,511) |
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— |
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(3,856,943) |
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— |
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— |
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(81,112,972) |
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Total |
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22,809,109 |
|
|
2,724,332 |
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3,885,297 |
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314,353 |
|
830,452 |
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(228,052) |
|
2,886,825 |
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33,222,316 |
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(1) |
The Company recognized estimated losses for potential obsolescence of materials used in property and equipment maintenance, based on levels of historical use and expected future use. |
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(2) |
Net write-offs regarding “Infrastructure and Assets and Facilities under Construction” for the year ended December 31, 2016, include the amount of R$99,210 regarding the disposal of 1,655 towers owned by the Company to Telxius Torres Brasil Ltda, a directly controlled Telefónica subsidiary. |
b) Depreciation rates
In accordance with IAS 16, the Company performed valuations of useful lives applied to its property, plant and equipment using the direct comparative method of market data. The results of these evaluations did not indicate the need for changes in useful lives in 2017.
In relation to 2016, these evaluations indicated the need for changes in useful lives and annual depreciation rates for some items of asset classes. This change in the accounting estimate, which was applied reduced the depreciation expense for the annual period ended December 31, 2016 by R$157,053.
c) Property and equipment items pledged in guarantee
At December 31, 2017, the Company had consolidated amounts of property and equipment items pledged in guarantee for lawsuits, amounting to R$176,591 (R$203,600 at December 31, 2016).
d) Reversible assets
The STFC service concession arrangement establishes that all assets owned by the Company and that are indispensable to the provision of the services described in the referred to arrangement are considered “reversible” (returnable to the concession authority). At December 31, 2017, estimated residual value of reversible assets was R$8,763,355 (R$8,813,916 at December 31, 2016), which comprised switching and transmission equipment and public use terminals, external network equipment, energy, system and operational support equipment.
e) Finance lease
At December 31, 2017, classes of switching and transmission equipment, infrastructure and other assets included the net residual amounts of R$280,103 (R$298,604 as of December 31, 2016), in which the Company is a lessee of financial leasing operations.