Deferred Revenue Estimation in the telcos mobile companies in emergent markets

Deferred Revenue Estimation in the telcos mobile companies in emergent markets October 25, 2009

Posted by nindjin in Practices - Standard, Best or Worst.
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In Africa and in many countries in development, people have not banking account. So,they use prepaid cards to make calls.That’ s why prepaid revenue represent around 90% of total revenue of many telcos mobiles companies. The main issue is how posting the correct revenue base on IFRS principles and estimate all airtimes sold but not used at the end of each years

Deferred Revenue estimation

deferred revenue explanation

Deferred revenue

deferred revenue

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1. Saurabh Jain - October 26, 2009: Good Morning Chief

As per difination Deferred income, in accrual accounting, (e.g. advance payment received from a client) is, according to revenue recognition, revenue not earned until the delivery of goods or services, which until then, is still owed to the payer, hence remaining a liability.

In telecom Prepaid services all the sold cards are accumulate in advance liability till it was not used by the customer . Hence i think in case of prepaid we can’t booked even on the basis of estimation.

But in case of pospaid unbilled amount lying between bill cycle last month & current month can be booked on estimation basis.

Regards

Saurabh Jain

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2. Rob Mattison - October 26, 2009: thanks ninjdin,

this is a great write up

I wonder if anyone else has some examples??

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