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Leases
 12 Months Ended
Dec. 31, 2019
Presentation Of Leases For Lessee [Abstract]  
Leases

10.

Leases

Group as a Lessee

We have lease contracts for various items of sites, buildings, leased circuits and poles used in our operations.  We considered in the lease term the non-cancellable period of the lease together with the periods covered by an option to extend and option to terminate the lease.

Our consolidated estimated useful life of ROU assets as at December 31, 2019 are estimated as follows:

 

Sites

 

1 – 30 years

International leased circuits

 

5 – 7 years

Poles

 

1 – 10 years

Domestic leased circuits

 

5 – 10 years

Office buildings

 

1 – 15 years

Co-located sites

 

7 years

Our consolidated rollforward analysis of this account as at December 31, 2019 are as follows:

 

 

 

Site

 

 

International Leased Circuits

 

 

Poles

 

 

Domestic Leased Circuits

 

 

Office Buildings

 

 

Co-located Sites

 

 

Total

 

 

 

(in million pesos)

 

Costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at beginning

   of the year (as previously

   stated)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Effect of adoption of IFRS 16

   (Notes 2 and 29)

 

 

8,980

 

 

 

3,779

 

 

 

607

 

 

 

551

 

 

 

298

 

 

 

11

 

 

 

14,226

 

Balances at beginning

   of the year (as restated)

 

 

8,980

 

 

 

3,779

 

 

 

607

 

 

 

551

 

 

 

298

 

 

 

11

 

 

 

14,226

 

Additions (Note 29)

 

 

3,506

 

 

 

562

 

 

 

100

 

 

 

489

 

 

 

413

 

 

 

2

 

 

 

5,072

 

Asset retirement obligation

 

 

1,679

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

124

 

 

 

—

 

 

 

1,803

 

Modifications

 

 

319

 

 

 

—

 

 

 

19

 

 

 

174

 

 

 

91

 

 

 

(2

)

 

 

601

 

Termination

 

 

(72

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(20

)

 

 

—

 

 

 

(92

)

Balances at end of the year

 

 

14,412

 

 

 

4,341

 

 

 

726

 

 

 

1,214

 

 

 

906

 

 

 

11

 

 

 

21,610

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation and

   amortization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at beginning

   of the year (as previously

   stated)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Effect of adoption of IFRS 16 (Note 2)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Balances at beginning

   of the year (as restated)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Termination

 

 

44

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

14

 

 

 

—

 

 

 

58

 

Modifications

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3

 

 

 

—

 

 

 

1

 

 

 

4

 

Charges from asset retirement

   obligation

 

 

(1,297

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(92

)

 

 

—

 

 

 

(1,389

)

Depreciation (Notes 2 and 3)

 

 

(2,673

)

 

 

(834

)

 

 

(340

)

 

 

(186

)

 

 

(358

)

 

 

(2

)

 

 

(4,393

)

Balances at end of the year

 

 

(3,926

)

 

 

(834

)

 

 

(340

)

 

 

(183

)

 

 

(436

)

 

 

(1

)

 

 

(5,720

)

Net book value at end

   of the year (Note 2)

 

 

10,486

 

 

 

3,507

 

 

 

386

 

 

 

1,031

 

 

 

470

 

 

 

10

 

 

 

15,890

 

The following amounts are recognized in our consolidated income statement for the year ended December 31, 2019:

 

 

 

(in million pesos)

 

Depreciation expense of ROU assets (Notes 2 and 3)

 

 

4,393

 

Interest expense on lease liabilities (Notes 2 and 5)

 

 

1,061

 

Variable lease payments (included in general and administrative expenses)

 

 

708

 

Expenses relating to short-term leases

   (included in general and administrative expenses)

 

 

378

 

Expenses relating to leases of low-value assets

   (included in general and administrative expenses)

 

 

204

 

Total amount recognized in consolidated income statement

 

 

6,744

 

Our consolidated rollforward analysis of lease liabilities as at December 31, 2019 are as follows:

 

 

 

(in million pesos)

 

Balances at beginning of the year (as previously stated)

 

 

—

 

Effect of adoption of IFRS 16 (Notes 2 and 29)

 

 

15,233

 

Balances at beginning of the year (as restated)

 

 

15,233

 

Additions (Note 29)

 

 

5,065

 

Accretion expenses (Notes 2 and 5)

 

 

1,061

 

Lease modifications

 

 

463

 

Foreign exchange loss – net

 

 

(12

)

Termination

 

 

(96

)

Settlement of obligations (Note 2)

 

 

(5,399

)

Balances at end of the year (Notes 2 and 3)

 

 

16,315

 

Less current portion of lease liabilities (Notes 2 and 28)

 

 

3,215

 

Noncurrent portion of lease liabilities (Notes 2 and 28)

 

 

13,100

 

 We had total cash outflows for leases of Php5,399 million for the year ended December 31, 2019.  We also had non-cash additions to ROU assets and lease liabilities of Php5,072 million and Php5,065 million, respectively, as at December 31, 2019.  The future cash outflows relating to leases that have not yet commenced are disclosed in Note 28 – Financial Assets and Liabilities.

We have entered into several lease contracts that include automatic extension and termination options.  These options are negotiated by us to provide flexibility in managing the leased-asset portfolio and align with our business needs.  However, in some of these lease contracts, we did not impute the renewal period in our assessment of the lease terms of these contracts since said renewal period is not yet reasonably estimable at the time of transition or commencement date of the lease, see Note 3 Managements Use of Accounting Judgments, Estimates and Assumptions – Determining the lease term of contracts with renewal and terminal options – Company as a Lessee – Beginning January 1, 2019.

Group as a Lessor

We have entered into operating leases on its investment property portfolio consisting of certain office buildings and business offices.  See Note 14 – Investment Properties.  These leases have term of five years.  All leases include a clause to enable upward revision of the rental charge on annual basis according to prevailing market conditions.  The lessee is also required to provide a residual guarantee on the properties.  Rental income recognized by us amounted to Php6 million as at December 31, 2019 and nil as at December 2018 and 2017, respectively.

Future minimum rentals receivable under non-cancellable operating leases as at December 31, 2019 are as follows:

 

 

 

(in million pesos)

 

Within one year

 

 

10

 

After one year but not more than five years

 

 

—

 

More than five years

 

 

—

 

 

 

 

10