Accounting for revenue in the telecom industry - challenges and solutions

Accounting for revenue in the telecom industry - challenges and solutions Adobe PDF Format

Proposals to change the way in which companies account for revenue have attracted more debate in the telecom industry than any other issue since the widespread adoption of IFRS in 2005.

The most significant reservation concerns the proposed treatment for recognition of revenue for a device, such as, for example, a mobile handset, a tablet PC or a cable/satellite receiver, provided to a customer in order for the customer to make use of the operator’s service.  

This paper explains the key impacts of the recent Exposure Draft and subsequent statements from the IASB and the FASB on the telecom industry and investigates some ways in which the industry might respond.    It looks particularly at:

• why telecom operators have severe reservations about aspects of the proposed new standard; and
• ways in which operators might respond to the new accounting rules, by making changes to their commercial models or by developing practical methods to apply the more onerous requirements.

We hope you will find this paper useful and, as always, will welcome your feedback.