Intangible Assets

In thousands of Kazakhstani Tenge GSM
network
license and
rights
Computer
software and
software license
rights
Other
telecom
licenses
Other Total
Cost at 31 December 2010 14,462,162 12,601,920 3,317,778 6,575 30,388,435
Accumulated amortisation (6,080,379) (5,236,611) (758,981) (3,020) (12,078,991)
Carrying amount at 31 December 2010 8,381,783 7,365,309 2,558,797 3,555 18,309,444
Additions - 3,111,943 - - 3,111,943
Transfers - 725 - (725) -
Disposals (net) - - - - -
Amortisation charge (1,081,649) (1,574,141) (331,778) (128) (2,987,696)
Cost at 31 December 2011 14,462,162 15,739,232 3,317,778 3,998 33,523,170
Accumulated amortisation (7,162,028) (6,835,396) (1,090,759) (1,296) (15,089,479)
Carrying amount at 31 December 2011 7,300,134 8,903,836 2,227,019 2,702 18,433,691
Additions 102,417 1,572,280 - - 1,674,697
Transfers - - - - -
Disposals (net) - - - - -
Amortisation charge (1,068,358) (2,568,371) (331,778) (127) (3,968,634)
Cost at 31 December 2012 14,564,579 17,311,512 3,317,778 3,998 35,197,867
Accumulated amortisation (8,230,386) (9,403,767) (1,422,537) (1,423) (19,058,113)
Carrying amount at 31 December 2012 6,334,193 7,907,745 1,895,241 2,575 16,139,754

The original GSM network license (GSM-900) was provided by the State Committee of Telecommunications and Information of the Republic of Kazakhstan for a fee in amount of 4.5 billion Tenge and is valid for 15 years, commencing June 1998. On 28 August 2008, the Group obtained a radiofrequency band of 5 MHz spectrum (receipt/transit) in the range of 1800 MHz under the existing GSM network license (Note 1) for the amount of 2.5 billion Tenge. The acquired frequencies were capitalised as intangible assets within “GSM network license and rights” category.

The Group acquired two dormant local entities AR-Telecom LLP (“AR-Telecom”) in 2007 and KT-Telecom LLP (“KT‑Telecom”) in 2008.  The purpose of these acquisitions was to obtain non-term WLL licenses and other related telecom licenses held by AR-Telecom and KT-Telecom that provide a right to organise wireless radio-access networks and data transfer services on the territory of Kazakhstan. The acquisitions of these entities were accounted for as acquisitions of groups of assets (licenses) rather than businesses.  The acquired licenses were included in category “other telecom licenses” within intangible assets. Management estimated their economic useful life at 10 years.

On 25 December 2010, the Group received a right to operate 3G network by utilising a radiofrequency band of 20 MHz (receipt/transit) in the range of 1920-1980 MHz and 2110-2170 MHz.  The radiofrequencies were provided in the form of addendum to the existing GSM license.  The acquisition cost was 5 billion Tenge.