Together good things happen - Airtel

17. Leases
a) Operating Lease – As a Lessee
The lease rentals charged during the year for
cancelable/non-cancelable leases relating to rent of
building premises and cell sites as per the agreements
and maximum obligation on long-term non-cancelable
operating leases are as follows:
(Rs '000)
Particulars As at
As at
March 31, 2010 March 31, 2009
Lease Rentals
(Excluding Lease
Equalisation Reserve) 21,948,740 11,509,517
Obligations on non
cancelable leases :
Not later than one year 23,585,093 17,248,848
Later than one year but
not later than five years 49,694,452 41,385,602
Later than five years 77,296,795 59,479,474
Total 150,576,341 118,113,924
The escalation clause includes escalation ranging from 0
to 50%, includes option of renewal from 1 to 99 years
and there are no restrictions imposed on lease
arrangements.
b) Operating Lease – As a Lessor
i) The Group has entered into a non–cancelable lease
arrangement to provide approximately 100,000 Fiber
pair kilometers of dark fiber on indefeasible right of use
(IRU) basis for a period of 18 years. The lease rental
receivable proportionate to actual kilometers accepted
by the customer is credited to the Profit and Loss Account
on a straight – line basis over the lease term. Due to the
nature of the transaction, it is not possible to compute
gross carrying amount, depreciation for the year and
accumulated depreciation of the asset given on
operating lease as at March 31, 2010 and accordingly,
disclosures required by AS 19 are not provided.
ii) The future minimum lease payments receivable are:
(Rs '000)
Particulars As at As at
March 31, 2010 March 31, 2009
Not later than one year 20,057,132 17,353,227
Later than one year but
not later than five years 47,404,245 34,081,089
Later than five years 37,854,066 21,035,282
Total 105,315,443 72,469,598
iii) The Group has given VSAT assets like BIT, routers, modem
etc on operating lease to various customers, which are
capitalized under fixed assets. The agreements are
cancelable and are generally of one year. The lease rentals
recognized in the Profit and Loss Account on a straight
line basis over the lease term amount to Rs 151,337
thousand (March 31, 2009 Rs 127,258 thousand).
iv) The Group has entered into a non-cancelable lease
arrangement to provide access to the Passive
Infrastructure located at 12 Circles on indefeasible right
Bharti Airtel Annual Report 2009-10
of use (IRU) basis for a period of 6 months to its Joint
Venture Company, Indus Tower Limited from January 1,
2009. The term is extendable for further period of six (6)
months, until such time as the Passive Infrastructure is
transferred to its Joint Venture Company, Indus Tower
Limited. However the term shall not be automatically
extended for any period beyond an aggregate period of
two (2) years. The term may be extended for a further
period of one (1) year beyond a two (2) year period by
mutual agreement.
The Group has credited lease rental receivable to the
Profit and Loss Account on a straight-line basis over the
lease term amounting to Rs 2,796,760 thousand (March
31, 2009 – Rs 699,190 thousand)
c) Finance Lease – As a Lessor
The Company had given Broadband Interactive Terminals
(‘BIT’) on finance lease. The gross investment in assets
given on finance lease and their present value as at
March 31, 2010 is NIL.
As at March 31, 2009
Particulars Gross Unearned
(Rs '000)
Present
Investment Finance
Income
Value
Not later than one year
Later than one year but
2,436 163 2,273
not later than five years 218 2 216
Total 2,654 165 2,489
d) Finance Lease – As a Lessee
i) The Company entered into a composite IT outsourcing
agreement, whereby the vendor supplied fixed assets
and IT related services to the Company. Based on the risks
and rewards incident to the ownership, the fixed assets
received are accounted for as a finance lease transaction.
Accordingly, the asset and liability are recorded at the fair
value of the leased assets at the time of receipt of the
assets, since it is not possible for the Company to
determine. These assets are depreciated over their useful
lives as in the case of the Company’s own assets.
Since the entire amount payable to the vendor towards
the supply of fixed assets during the year is accrued,
there are no minimum lease payments outstanding as at
the year-end in relation to these assets and accordingly,
other disclosures as per AS 19 are not applicable.
There are no restrictions imposed on lease arrangements.
ii) Finance lease obligation of the Group as at 31 March,
2010 is as follows:
(Rs '000)
Particulars Future minimum Interest Present
lease payments Value
Not later than one year 49,257 12,804 36,452
Later than one year but
not later than five years 73,414 9,581 63,833
Later than five years - - -
Total 122,671 22,385 100,285
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