Notes to the Group financial statements | Note 11
for the year ended 31 December 2010
    Goodwill
Rm		   Licences
Rm		   Customer
relationships
Rm		   Software
Rm		   Other
intangible
assets
Rm		   Total
Rm		  
11. INTANGIBLE ASSETS                        
  Balance at 1 January 2009 31 914   13 761   4 625   3 822   226   54 348  
  Additions —   697   —   1 444   87   2 228  
  Arising from business combinations 1 750   —   284   —   —   2 034  
  Reallocations —   —   —   192   60   252  
  Effect of movements in exchange rates (8 908)   (2 823)   (192)   (634)   53   (12 504)  
  Balance at 31 December 2009 24 756   11 635   4 717   4 824   426   46 358  
  Balance at 1 January 2010 24 756   11 635   4 717   4 824   426   46 358  
  Additions —   105   60   1 170   8   1 343  
  Disposals —   —   —   (142)   (1)   (143)  
  Reallocations —   —   —   245   4   249  
  Impairment loss (32)   —   —   —   —   (32)  
  Other movements (50)   —   32   8   10   —  
  Effect of movements in exchange rates (3 877)   (1 445)   (181)   (481)   (16)   (6 000)  
  Balance at 31 December 2010 20 797   10 295   4 628   5 624   431   41 775  
  Amortisation and impairment losses                        
  Balance at 1 January 2009 —   (3 764)   (3 079)   (1 570)   (149)   (8 562)  
  Amortisation for the year —   (903)   (1 070)   (569)   (126)   (2 668)  
  Additions —   3   —   131   (62)   72  
  Impairment loss —   —   —   —   (14)   (14)  
  Effect of movements in exchange rates —   386   255   194   43   878  
  Balance at 31 December 2009 —   (4 278)   (3 894)   (1 814)   (308)   (10 294)  
  Balance at 1 January 2010 —   (4 278)   (3 894)   (1 814)   (308)   (10 294)  
  Amortisation for the year —   (830)   (337)   (798)   (155)   (2 120)  
  Disposals —   —   —   71   —   71  
  Other movements —   —   (63)   6   57   —  
  Effect of movements in exchange rates —   449   135   243   7   834  
  Balance at 31 December 2010 —   (4 659)   (4 159)   (2 292)   (399)   (11 509)  
  Carrying amounts                        
  At 1 January 2009 31 914   9 997   1 546   2 252   77   45 786  
  At 31 December 2009 24 756   7 357   823   3 010   118   36 064  
  At 1 January 2010 24 756   7 357   823   3 010   118   36 064  
  At 31 December 2010 20 797   5 636   469   3 332   32   30 266  
   
 

Impairment testing of cash-generating units containing goodwill

Goodwill is allocated to the Group’s cash-generating units (CGU) identified according to country of operation.

A summary of the goodwill allocation is presented below
      December
2010
Rm		     December
2009
Rm		  
  MTN Côte d’Ivoire SA   1 313     2 023  
  Scancom Limited (Ghana)   7 353     8 693  
  MTN Sudan Company Limited   2 759     3 527  
  MTN Yemen   1 647     1 949  
  MTN Afghanistan Limited   1 040     1 113  
  MTN Uganda Limited   465     631  
  MTN Congo SA   546     653  
  MTN Syria (JSE)   300     355  
  MTN Cyprus Limited   456     786  
  Spacetel Benin SA   721     888  
  Areeba Guinea SA (Conakry)   446     669  
  Others   3 751     3 469  
      20 797     24 756  
 

Goodwill is tested annually for impairment. There was no impairment of any of the CGU’s above to which goodwill had been allocated, apart from the impairment charge in respect of the Cameroon CGU. The impairment charge arose in the Cameroon CGU amounting to R32 million (2009: Rnil) during the year in respect of its ISP business included in one of its subsidiaries, where forecasts were revised downwards in light of the difficult economic trading conditions.

The recoverable amount of a CGU was determined based on value-in-use calculations. The calculations mainly used cash flow projections based on financial budgets approved by management covering a five to eleven-year period. Cash flows beyond the above period were extrapolated using the estimated growth rates measured below. The following key assumptions were used for the value-in-use calculations:

• Growth rate: We used a steady growth rate to extrapolate revenues beyond the budget period cash flows. The growth rate was consistent with publicly available information relating to long-term average growth rates for each of the markets in which the respective CGU operated. The average growth rates used ranged from 1% to 4,5% (2009: 2% to 4%).
• Discount rate: Discount rates range from 9,2% to 15,9% (2009: 7,3% to 17,9%). Discount rates used reflect specific risks relating to the relevant CGU.

        Granted/       Renewable   Fee
  Licence agreements Type   Renewed   Term   term   currency
  South and East Africa region                  
  Mobile Telephone Networks ECS licence*   15/01/2009   15 years   Renewable on application    
  (Proprietary) Limited             using the prescribed format    
                for similar licence period   ZAR
    ECNS licence*   15/01/2009   20 years   Renewable on application    
                using the prescribed format    
                for similar licence period    
  * During the year the three existing network licences, namely 900MHz; 1 800MHz                  
  and 3G, were converted into ECS and ECNS (reflected above). This conversion was                  
  retrospectively effective from 15 January 2009.                  
  MTN Uganda Limited 900MHz   15/04/1998   20 years   5 years   USD
    1 800MHz                
  MTN Rwandacell S.A.R.L. 900MHz   17/03/2000   13 years   5 years   USD
    1 800MHz                
    1 800MHz                
    Fixed lin   30/06/2006   5 years   5 years    
  Mascom Wireless Botswana Limited 900   13/06/2007   15 years   Determined in   BWP
    1 800           renewal process    
    2 100                
  MTN Zambia Limited 1 800MHz   23/09/1995   15 years   5 years   ZMK
  Swazi MTN Limited 900MHz   28/11/2008   10 years   10 years   SZL
                     
    1 800MHz                
                     

  Initial license/      
  Renewal fee   Annual fees Further fees/obligations where applicable
         
  —   Not applicable Further obligations require a contribution of 1,5% of gross profit as
        defined by the Electronic Communications Act No 36 of 2005
         
  100 million   Not applicable Further obligations require a contribution of 1,5% of gross profit as
        defined by the Electronic Communications Act No 36 of 2005
         
         
         
         
  5,8 million   Spectrum fee of 1% of gross network revenue Not applicable
         
  200 000   3% of network revenue as defined in the licence RWF1,2 million per MHz annually
      Spectrum fee of 50 000 Renewal fee of 500 000
         
  350 000      
  —   Licence operation of 1,1 million 3% of annual net turnover
         
  —   Licence system of 0,2 million  
  100 million   2,7 billion Monthly licence fees – 3% of airtime revenues
  3,6 million   Spectrum fee of 20 000 per channel used with a minimum Universal services obligation of 0,5% of net operating income
      of 600 000  
      Licence fee of 5% of net operating income with a minimum  
      of 6 million  

        Granted/       Renewable   Fee
  Licence agreements Type   Renewed   Term   term   currency
  West and Central Africa                  
  MTN Nigeria Communications Limited 900MHz   09/02/2001   15 years   5 years   USD
    1 800MHz                
    3G Spectrum Licence   01/05/2007   15 years   Dependent on the Nigerian    
                Communications Commission    
    Unified Access Licence   01/09/2006   10 years   5 years   NGN
    (including international                
    gateway)                
    International Submarine   01/01/2010   20 years   20 years   USD
    Cable Infrastructure                
    and Landing                
    Station Licence (WACS)                
  Scancom Limited (Ghana) 900MHz   02/12/2004   15 years   10 years   USD
    1 800MHz                
    3G   23/01/2009   15 years   Provisional licence    
    WAC licence   17/02/2010   20 years   Not applicable    
  MTN Cameroon Limited 900MHz   15/02/2000   15 years   10 years   CFA
                     
                     
  MTN Côte d’Ivoire SA 900MHz   02/04/1996   20 years   Determined in   XOF
                renewal process    
    1 800MHz                
    WiMax 2,5 – 3,5Ghz   31/07/2002   20 years        
  Spacetel Benin SA 900MHz   19/10/2007   10 years   5 years   CFA
                     
    1 800MHz                
                     
  Areeba Guinea SA 900MHz   31/08/2005   18 years   Determined in   EUR
                renewal process    
    1 800MHz                
    WiMax   04/06/2009   5 years       GNF
  MTN Congo SA 900MHz   15/10/1999   15 years   15 years   XAF
    1 800MHz   21/08/2002   15 years   15 years    
    International gateway   05/02/2002   15 years   15 years    
    Optical fibre   02/04/2010   15 years   15 years    
  Lonestar Communications Corporation 900MHz   24/03/2009   15 years   Determined in   USD
  LLC (Liberia)             renewal process    
    1 800MHz                
    WiMax   24/03/2009   15 years        
  Spacetel Guinea-Bissau SA 900MHz   01/03/2004   10 years   Determined in   EUR
                renewal process    
    1 800MHz                
  Middle East and North Africa                  
  Irancell Telecommunication Company Services 900MHz   27/11/2006   15 years   Two periods of five    
                years each    
                     
                    EUR
    1 800MHz                
    WiMAX   28/02/2009   6 years   5 years    
                     
  MTN Syria SA 900MHz   29/06/2002   15 years   3 years at discretion   USD
                of Syrian licensing authority    
                     
    1 800MHz   22/03/2007   10,25 years        
    3G   29/04/2009   8,16 years       SYP
    ISP   31/05/2009   3 years       SYP
  MTN Sudan Company Limited 900MHz   25/10/2003   20 years   Determined in   EUR
                renewal process    
    1 800MHz                
    3G                
  MTN Afghanistan Limited 900MHz   15/10/2005   15 years   10 years   USD
    1 800MHz                
  MTN Yemen 900MHz   31/07/2000   15 years   Determined in   USD
                renewal process    
    1 800MHz   17/02/2008            
  MTN Cyprus Limited 900MHz   01/12/2003   20 years   Determined in   EUR
                renewal process    
    1 800MHz                
    3G                

  Initial license/      
  Renewal fee   Annual fees Further fees/obligations where applicable
         
  285 million   Annual operating levy 2,5% of gross revenue Not applicable
         
  150 million   Annual operating levy 2,5% of net revenue Not applicable
         
         
  114,6 million   Annual operating levy 2,5% of net revenue Not applicable
         
         
  220,500 (thousand)   Annual operating levy 2,5% of net revenue Not applicable
         
         
  22,5 million   Annual fee of 1% of revenue Not applicable
         
  28 million   Annual fee of 1% of revenue Not applicable
  1,025 million   Annual fee of 1% of revenue Not applicable
  44 billion   Regulatory management fee of 1,06% of network revenue Spectrum fee – 200 000 accrued annually based on a temporary
        agreement with the regulator
      Telecoms development fund of 2% of network revenue  
  40 billion   No annual fees specified in the licence agreement. Not applicable
        Not applicable
  10 million   No annual fees specified in the licence agreement. Not applicable
  30 billion   15 per minute for each international interconnect call Regulations Authority operations fee of 1% of revenue
      terminated in Benin  
        Universal access fee of 1% of revenue
      2 franc on all national outgoing minute including on net Regional development fee of 0,5% of revenue
        Training and research fee of 0,5% of revenue
  30 million   GNF25 billion (fully paid as at 31/12/2010) GNF16,33 billion
         
  3 billion   Not applicable GNF700 million
  365 million   3% of local outgoing traffic Frequency management fee of 265 million
  150 million   3% of local outgoing traffic Frequency usage fee of 708 million
  150 million   6% international outgoing traffic Included in licence above
  505 million   Not applicable Not applicable
  15 million   0,7 million Not applicable
         
         
  5 million   0,6 million Not applicable
  2,2 million   XOF 160 million per base station Annual microwave links fee of XOF 49 million
         
      XOF 0,2 million per base station  
         
  300 million   Regulatory fee of 0,25% of revenue of preceding contractual year Annual fee in total not exceeding 5% of revenue of the previous
        contractual year
      Universal service contribution fee of 3% preceding contractual year Revenue share cost of 28,1% of revenue in each contractual year,
      and other fixed fees with a minimum guaranteed amount based upon 80% of 28,1%
        of the revenue amount included in the business plan, subject to
  50,7 million   Numbering fee certain conditions being met, on an annual basis
      Dedicated frequency fee Not applicable
  20 million   Frequency protection fee of 50 000 or SP2,5 million per 1 MHz for Revenue share costs of 30% of revenue for the first three years,
      transmission and reception 40% for next three years and 50% thereafter. A 60% revenue share
        applicable if the licence term is renewed
  15 million      
  250 million      
  1,5 million      
  150 million   0,5% of revenue Not applicable
         
      Not applicable Not applicable
      Not applicable Not applicable
  40 million   4,5% of revenue AFN 200 000 per duplex 200KHz
         
  10 million   0,5 million Not applicable
         
  1 million   1,2 million Not applicable
  21,8 million   No annual fees specified in the licence agreement Not applicable
         
        Not applicable
        Not applicable