10. Property, Plant and Equipment, net

a) An analysis of property, plant and equipment, net at December 31, 2015, 2016 and 2017 is as follows:


	At December 31, 2014			Additions		Retirements			Business combinations		Spin-off effects (Note 12)			Effect of translation of foreign subsidiaries			Depreciation of the year			At December 31, 2015
Cost
Network in operation and equipment	Ps.	642,617,237		Ps.	78,632,899	Ps.	(16,061,956	)	Ps.	4,293,671	Ps.	—		Ps.	(68,097,149	)	Ps.	—		Ps.	641,384,702
Land and buildings		56,463,536			2,559,088		(2,492,288	)		54,902		—			(1,790,852	)		—			54,794,386
Other assets		105,550,807			27,711,493		(10,169,829	)		820,329		(12,643,381	)		(4,800,817	)		—			106,468,602
Construction in process and advances plant suppliers ⁽¹⁾		39,107,185			72,899,705		(68,666,020	)		160,311		(348,395	)		(4,302,010	)		—			38,850,776
Inventories for operation of the network		20,848,714			44,423,898		(43,911,307	)		—		—			(1,018,916	)		—			20,342,389

Total		864,587,479			226,227,083		(141,301,400	)		5,329,213		(12,991,776	)		(80,009,744	)		—			861,840,855

Accumulated depreciation
Network in operation and equipment		234,527,131			—		(31,529,529	)		—		(7,403,656	)		(51,082,202	)		92,219,984			236,731,728
Buildings		3,728,405			—		(433,368	)		—		—			(1,334,962	)		2,607,513			4,567,588
Other assets		38,276,028			—		(4,533,893	)		—		—			(1,995,119	)		15,310,068			47,057,084
Inventories for operation of the network		(50,265	)		—		(13,405	)		—		—			1,409			17,838			(44,423	)

Total	Ps.	276,481,299		Ps.	—	Ps.	(36,510,195	)	Ps.	—	Ps.	(7,403,656	)	Ps.	(54,410,874	)	Ps.	110,155,403		Ps.	288,311,977

Net Cost	Ps.	588,106,180		Ps.	226,227,083	Ps.	(104,791,205	)	Ps.	5,329,213	Ps.	(5,588,120	)	Ps.	(25,598,870	)	Ps.	(110,155,403	)	Ps.	573,528,878


	At December 31, 2015			Additions		Retirements			Business combinations		Effect of translation of foreign subsidiaries		Depreciation of the year			At December 31, 2016
Cost
Network in operation and equipment		Ps. 641,384,702		Ps.	101,794,197		Ps. (8,963,076)		Ps.	1,873,445		Ps. 235,186,745	Ps.	—			Ps. 971,276,013
Land and buildings		54,794,386			2,900,511		(2,845,298	)		3,839		7,281,973		—			62,135,411
Other assets		106,468,602			24,368,918		(10,717,096	)		69,937		24,736,655		—			144,927,016
Construction in process and advances plant suppliers⁽¹⁾		38,850,776			70,517,319		(70,911,593	)		11,255		11,252,127		—			49,719,884
Inventories for operation of the network		20,342,389			34,010,751		(27,641,919	)		5,520		1,566,307		—			28,283,048

Total		861,840,855			233,591,696		(121,078,982)			1,963,996		280,023,807		—			1,256,341,372

Accumulated depreciation
Network in operation and equipment		236,731,728			—		(1,968,376	)		—		153,147,349		107,976,385			495,887,086
Buildings		4,567,588			—		(975,284	)		—		3,709,952		3,179,066			10,481,322
Other assets		47,057,084			—		(25,099,710	)		—		10,396,438		16,105,885			48,459,697
Inventories for operation of the network		(44,423	)		—		(54,280	)		—		20,896		401,008			323,201

Total		Ps. 288,311,977		Ps.	—		Ps. (28,097,650	)	Ps.	—		Ps. 167,274,635	Ps.	127,662,344			Ps. 555,151,306

Net Cost		Ps. 573,528,878		Ps.	233,591,696		Ps. (92,981,332	)	Ps.	1,963,996		Ps. 112,749,172	Ps.	(127,662,344	)		Ps. 701,190,066

At
December 31,
2016

Additions

Retirements

Business
combinations

Effect of
translation of
foreign
subsidiaries

Depreciation
of
the year

At
December 31,
2017

Cost

Network in operation and equipment

Ps.

971,276,013

Ps.

78,272,882

Ps.

(21,657,715

)

Ps.

599,306

Ps.

(38,824,540

)

Ps.

—

Ps.

989,665,946

Land and buildings

62,135,411

2,858,996

(415,219

)

27,686

(2,022,685

)

—

62,584,189

Other assets

144,927,016

19,287,525

(8,112,571

)

80,734

(5,866,897

)

—

150,315,807

Construction in process and advances plant suppliers⁽¹⁾

49,719,884

66,383,381

(41,279,573

)

34,705

(737,023

)

—

74,121,374

Inventories for operation of the network

28,283,048

27,013,148

(27,979,816

)

3,576

(728,358

)

—

26,591,598

Total

1,256,341,372

193,815,932

(99,444,894

)

746,007

(48,179,503

)

—

1,303,278,914

Accumulated depreciation

Network in operation and equipment

495,887,086

—

(21,214,724)

—

(32,860,339

)

110,533,486

552,345,509

Buildings

10,481,322

—

(1,568,542

)

—

(940,054

)

2,682,559

10,655,285

Other assets

48,459,697

—

(4,572,509

)

—

(2,251,958

)

21,724,299

63,359,529

Inventories for operation of the network

323,201

—

(9,205

)

—

(4,339

)

265,736

575,393

Total

Ps.

555,151,306

Ps.

(27,364,980

)

Ps.

(36,056,690

)

Ps.

135,206,080

Ps.

626,935,716

Net Cost

Ps.

701,190,066

Ps.

193,815,932

Ps.

(72,079,914

)

Ps.

746,007

Ps.

(12,122,813

)

Ps.

(135,206,080

)

Ps.

676,343,198

⁽¹⁾	Construction in progress includes fixed and mobile network facilities as well as satellite developments and fiber optic which is in the process of being installed.

The completion period of construction in progress is variable and depends upon the type of fixed assets under construction.

b) At December 31, 2016 and 2017, property, plant and equipment include the following assets under capital leases:


	2016			2017
Assets under capital leases		Ps. 8,210,557			Ps. 8,116,532
Accumulated depreciation		(4,839,007	)		(3,475,014	)

		Ps. 3,371,550			Ps. 4,641,518

c) At December 31, 2017, Claro Brasil has land and buildings and other equipment that are pledged in guarantee of legal proceedings in the amount of Ps. 3,521,082 (Ps. 3,530,845 as of December 31, 2016).

d) Relevant information related to the computation of the capitalized borrowing costs is as follows:

Years ended December 31,

2015

2016

2017

Amount invested in the acquisition of qualifying assets

Ps. 52,922,105

Ps. 52,974,400

Ps. 49,642,370

Capitalized interest

3,524,841

2,861,307

2,875,034

Capitalization rate

6.7%

5.4%

5.8%

Capitalized interest is being amortized over a period of seven years, which is the estimated useful life of the related assets.

e) On October 20, 2017, our subsidiary Star One signed a contract with SSL — Space Systems Loral for construction of the Star One D2 satellite, which will be equipped with transponders 52 in the C and Ku bands, 20 Gbps of capacity in Band Ka and a certain capacity in X-band. The cost of this Project is estimated to be approximately Ps. 6,391,104 (US$ 323,000) and the launch will take place at the end of 2019. At December 31, 2017 the amount recorded in Construction in progress amounts to Ps. 916,240 (R$153,179).

f) The Company’s concessions in Brazil establish certain conditions under which assets may be reverted to the government, as discussed in Note 16(c).

g) During 2016, Claro Brasil reviewed the useful life of its set top boxes. Such review was supported by historical data, change in the economic environment in which Claro Brasil operates and based on a professional technical evaluation. Based on the review the Company shortened such useful lives and recorded an increase in depreciation expense for Ps. 2,468,415 (R$458,234).

In some of the jurisdictions where the Company operates and under certain circumstances, the Company may be required to transfer certain assets covered by some of their concessions to the government pursuant to valuation methodologies that vary in each jurisdiction (assets reversion). It is uncertain whether reversion would ever be applied and how reversion provisions would be interpreted in practice.