| 12. | Intangible assets |
Turkcell - 2G License
On 27 April 1998, the Company was granted a 25-year GSM license (the “2G License”) for a consideration of USD 500,000, the carrying amount of the 2G license is TL 241,407 at 31 December 2017 (31 December 2016: TL 287,390) and it is amortized over 25 years.
Turkcell - 3G License
On 30 April 2009, the Company signed a license agreement (the “3G License”) with the ICTA which provides authorization for providing IMT 2000/UMTS services and infrastructure. The Company acquired the A-type license providing the widest frequency band for a consideration of EUR 358,000 (excluding VAT). The license is effective for 20 years starting from 30 April 2009. The carrying amount of the 3G License is TL 436,014 at 31 December 2017 (31 December 2016: TL 474,486) and it is amortized over 25 years.
Turkcell - 4.5G License
On 26 August 2015, “Authorization Tender on IMT Services and Infrastructure” publicly known as 4.5G license tender, was held by the Information Technologies and Communication Authority and the Company was granted a total frequency band of 172.4M Hz for 13 years for a consideration of EUR 1,623,460 (excluding VAT).
IMT authorization period expires on 30 April 2029 and operators commenced service delivery for 4.5G from 1 April 2016. 2x1.4 MHz frequency band in 900MHz spectrum and 2 units of 2x5 MHz frequency band in 2100 MHz spectrum were commenced on 1 December 2015, while remaining packages were commenced on 1 April 2016.
Tender price amounting to EUR 1,623,460 (excluding VAT) was paid semi-annually by four equal installments total of which amounted to EUR 1,655,290 including interest and excluding VAT of 18%.
As at 31 December 2017, there is no payable related to the 4.5G license (31 December 2016: TL 1,522,615 in current liabilities).
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Cost |
Balance at 1 January 2017 |
Additions | Disposals | Transfers | Impairment | Effects of movements in exchange rates |
Balance at 31 December 2017 |
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Telecommunication licenses |
8,039,431 | 10,154 | — | 69,945 | — | 20,098 | 8,139,628 | |||||||||||||||||||||
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Computer software |
6,076,405 | 470,457 | (8,624 | ) | 569,153 | — | 9,725 | 7,117,116 | ||||||||||||||||||||
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Transmission line software |
71,602 | 218 | — | — | — | — | 71,820 | |||||||||||||||||||||
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Central betting system operating right |
11,981 | — | — | — | — | — | 11,981 | |||||||||||||||||||||
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Indefeasible right of usage |
46,017 | 66,539 | — | — | — | — | 112,556 | |||||||||||||||||||||
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Brand name |
7,040 | — | — | — | — | — | 7,040 | |||||||||||||||||||||
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Customer base |
15,512 | — | — | — | — | — | 15,512 | |||||||||||||||||||||
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Goodwill |
32,834 | — | — | — | — | — | 32,834 | |||||||||||||||||||||
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Other |
38,321 | 5,016 | — | (588 | ) | — | — | 42,749 | ||||||||||||||||||||
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Construction in progress |
142,875 | 620,463 | — | (638,357 | ) | — | 2,656 | 127,637 | ||||||||||||||||||||
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Total |
14,482,018 | 1,172,847 | (8,624 | ) | 153 | — | 32,479 | 15,678,873 | ||||||||||||||||||||
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Accumulated amortization |
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Telecommunication licenses |
1,878,895 | 537,162 | — | — | — | 3,173 | 2,419,230 | |||||||||||||||||||||
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Computer software |
4,237,996 | 537,805 | (8,120 | ) | — | 1,219 | 1,980 | 4,770,880 | ||||||||||||||||||||
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Transmission line software |
58,203 | 3,498 | — | — | 767 | — | 62,468 | |||||||||||||||||||||
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Central betting system operating right |
10,588 | 903 | — | — | — | — | 11,491 | |||||||||||||||||||||
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Indefeasible right of usage |
18,785 | 4,489 | — | — | — | — | 23,274 | |||||||||||||||||||||
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Brand name |
5,808 | 704 | — | — | — | — | 6,512 | |||||||||||||||||||||
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Customer base |
11,286 | 488 | — | — | — | — | 11,774 | |||||||||||||||||||||
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Other |
24,468 | 8,366 | — | — | — | — | 32,834 | |||||||||||||||||||||
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Total |
6,246,029 | 1,093,415 | (8,120 | ) | — | 1,986 | 5,153 | 7,338,463 | ||||||||||||||||||||
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Net book amount |
8,235,989 | 79,432 | (504 | ) | 153 | (1,986 | ) | 27,326 | 8,340,410 | |||||||||||||||||||
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Amortization expenses for the years ended 31 December 2017, 2016 and 2015 amounting to TL 1,095,401, TL 921,812 and TL 549,251, respectively include impairment losses and are recognized in cost of revenue.
Impairment losses on intangible assets for the years ended 31 December 2017, 2016 and 2015 are TL 1,986, TL 3,181 and nil respectively and are recognized in amortization expenses.
Computer software includes capitalized software development costs that meet the definition of an intangible asset. The amount of capitalized development costs is TL 124,504 for the year ended 31 December 2017 (31 December 2016: TL 126,916).
The amortization expenses related to capitalized software development costs for the years ended 31 December 2017, 2016 and 2015 amounting to TL 37,532, TL 30,148 and TL 28,560, respectively are recognized in cost of revenue.
| Cost | Balance at 1 January 2016 |
Additions | Disposals | Transfers | Impairment | Effects of movements in exchange rates |
Balance at 31 December 2016 |
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Telecommunication licenses |
3,950,729 | 34,494 | (4 | ) | 4,021,090 | — | 33,122 | 8,039,431 | ||||||||||||||||||||
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Computer software |
5,342,056 | 329,836 | (6,444 | ) | 390,248 | — | 20,709 | 6,076,405 | ||||||||||||||||||||
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Transmission line software |
71,506 | 96 | — | — | — | — | 71,602 | |||||||||||||||||||||
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Central betting system operating right |
11,907 | — | — | 74 | — | — | 11,981 | |||||||||||||||||||||
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Indefeasible right of usage |
42,132 | 3,885 | — | — | — | — | 46,017 | |||||||||||||||||||||
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Brand name |
7,040 | — | — | — | — | — | 7,040 | |||||||||||||||||||||
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Customer base |
15,512 | — | — | — | — | — | 15,512 | |||||||||||||||||||||
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Goodwill |
32,834 | — | — | — | — | — | 32,834 | |||||||||||||||||||||
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Other |
29,713 | 8,607 | (184 | ) | 185 | — | — | 38,321 | ||||||||||||||||||||
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4.5G license not yet available for use |
3,984,954 | 33,316 | — | (4,018,270 | ) | — | — | — | ||||||||||||||||||||
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Construction in progress |
52,597 | 478,179 | — | (391,496 | ) | — | 3,595 | 142,875 | ||||||||||||||||||||
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Total |
13,540,980 | 888,413 | (6,632 | ) | 1,831 | — | 57,426 | 14,482,018 | ||||||||||||||||||||
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Accumulated amortization |
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Telecommunication licenses |
1,429,944 | 445,069 | (4 | ) | — | — | 3,886 | 1,878,895 | ||||||||||||||||||||
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Computer software |
3,771,710 | 454,111 | (2,972 | ) | — | — | 15,147 | 4,237,996 | ||||||||||||||||||||
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Transmission line software |
52,058 | 3,615 | — | — | 2,530 | — | 58,203 | |||||||||||||||||||||
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Central betting system operating right |
9,663 | 925 | — | — | — | — | 10,588 | |||||||||||||||||||||
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Indefeasible right of usage |
15,446 | 3,339 | — | — | — | — | 18,785 | |||||||||||||||||||||
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Brand name |
5,104 | 704 | — | — | — | — | 5,808 | |||||||||||||||||||||
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Customer base |
10,111 | 1,175 | — | — | — | — | 11,286 | |||||||||||||||||||||
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Other |
14,307 | 9,693 | (183 | ) | — | 651 | — | 24,468 | ||||||||||||||||||||
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Total |
5,308,343 | 918,631 | (3,159 | ) | — | 3,181 | 19,033 | 6,246,029 | ||||||||||||||||||||
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Net book amount |
8,232,637 | (30,218 | ) | (3,473 | ) | 1,831 | (3,181 | ) | 38,393 | 8,235,989 | ||||||||||||||||||
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