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IMPAIRMENT (Tables) | 12 Months Ended
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Dec. 31, 2017
IMPAIRMENT |
Schedule of impairment losses |
|  | Note |  | 2017 |  | 2016 |  | 2015 |
Property and equipment |  | 15 |  |  | 15 |  |  | 100 |  |  | 150 |
Intangible assets |  | 16 |  |  | — |  |  | 14 |  |  | — |
Goodwill |  |  |  |  | 51 |  |  | 78 |  |  | 95 |
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Total impairment loss |  |  |  |  | 66 |  |  | 192 |  |  | 245 |
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Schedule of goodwill acquired through business combinations allocated to CGUs for impairment testing |
Year ended December 31, 2017 |  | 2017 |  | Impairment |  | Reclassification* |  | Translation adjustment |  | 2016 |
Russia |  |  | 2,434 |  |  | — |  |  | — |  |  | 122 |  |  | 2,312 |
Algeria |  |  | 1,340 |  |  | — |  |  | — |  |  | (53 | ) |  | 1,393 |
Pakistan |  |  | 244 |  |  | — |  |  | (237 | ) |  | (16 | ) |  | 497 |
Kazakhstan |  |  | 177 |  |  | — |  |  | — |  |  | 1 |  |  | 176 |
Kyrgyzstan |  |  | 128 |  |  | (17 | ) |  | — |  |  | — |  |  | 145 |
Uzbekistan |  |  | 46 |  |  | — |  |  | — |  |  | (68 | ) |  | 114 |
Armenia |  |  | 25 |  |  | (34 | ) |  | — |  |  | — |  |  | 59 |
Tajikistan |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Others |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
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Total |  |  | 4,394 |  |  | (51 | ) |  | (237 | ) |  | (14 | ) |  | 4,696 |
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* Reclassified to assets held-for-sale, see Note 5 for further information.
Year ended December 31, 2016 |  | 2016 |  | Impairment |  | Acquisition |  | Translation adjustment |  | 2015 |
Russia |  |  | 2,312 |  |  | — |  |  | — |  |  | 388 |  |  | 1,924 |
Algeria |  |  | 1,393 |  |  | — |  |  | — |  |  | (42 | ) |  | 1,435 |
Pakistan |  |  | 497 |  |  | — |  |  | 201 |  |  | 1 |  |  | 295 |
Kazakhstan |  |  | 176 |  |  | — |  |  | — |  |  | 3 |  |  | 173 |
Kyrgyzstan |  |  | 145 |  |  | (49 | ) |  | — |  |  | 17 |  |  | 177 |
Uzbekistan |  |  | 114 |  |  | — |  |  | — |  |  | (17 | ) |  | 131 |
Armenia |  |  | 59 |  |  | — |  |  | — |  |  | — |  |  | 59 |
Tajikistan |  |  | — |  |  | (21 | ) |  | — |  |  | — |  |  | 21 |
Others |  |  | — |  |  | (8 | ) |  | — |  |  | — |  |  | 8 |
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Total |  |  | 4,696 |  |  | (78 | ) |  | 201 |  |  | 350 |  |  | 4,223 |
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Schedule of total amount of the impairment loss allocated to the carrying amounts of assets | Impairment losses in 2017
|  | Armenia |  | Kyrgyzstan |  | Other |  | Total |
Property and equipment |  |  | — |  |  | — |  |  | 15 |  |  | 15 |
Goodwill |  |  | 34 |  |  | 17 |  |  | — |  |  | 51 |
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Total impairment loss |  |  | 34 |  |  | 17 |  |  | 15 |  |  | 66 |
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Impairment losses in 2016 were allocated to current and non-current assets as follows:
|  | Georgia |  | Kyrgyzstan |  | Tajikistan |  | Other |  | Total |
Property and equipment |  |  | 16 |  |  | — |  |  | 54 |  |  | 30 |  |  | 100 |
Intangibles |  |  | 13 |  |  | — |  |  | 1 |  |  | — |  |  | 14 |
Goodwill |  |  | — |  |  | 49 |  |  | 21 |  |  | 8 |  |  | 78 |
Other assets* |  |  | — |  |  | — |  |  | 12 |  |  | — |  |  | 12 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total impairment loss |  |  | 29 |  |  | 49 |  |  | 88 |  |  | 38 |  |  | 204 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
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* Other assets include trade and other receivables and deferred tax assets. The impairments on these assets have been recognized on the income statement accounts relating to these assets, i.e. Selling, general and administrative expenses and Income tax expense.
Schedule of key assumptions and inputs used by the Company in determining the recoverable amount |
Assumption |  | Description
Discount rate |  | Discount rates are initially determined in US$ based on the risk-free rate for 20-year maturity bonds of the United States Treasury, adjusted for a risk premium to reflect both the increased risk of investing in equities and the systematic risk of the specific CGU relative to the market as a whole.
|  | The equity market risk premium used was 6.0% (2016: 5.5%, 2015: 5.5%). The systematic risk, beta, represents the median of the raw betas of the entities comparable in size and geographic footprint with the ones of the Company ("Peer Group").
|  | The debt risk premium is based on the median of Standard & Poor's long-term credit rating of the Peer Group.
|  | The weighted average cost of capital is determined based on target debt-to-equity ratios representing the median historical five-year capital structure for each entity from the Peer Group.
|  | The discount rate in functional currency of a CGU is adjusted for the long-term inflation forecast of the respective country in which the business operates, as well as the applicable country risk premium.
Projected revenue growth rates |  | The revenue growth rates vary based on numerous factors, including size of market, GDP (Gross Domestic Product), foreign currency projections, traffic growth, market share and others.
Projected average operating margin |  | The Company estimates operating margin based on Adjusted EBITDA divided by Total Operating Revenue for each CGU and each future year. The forecasted operating margin is based on the budget of the following year and assumes cost optimization initiatives which are part of on-going operations, as well as regulatory and technological changes known to date, such as telecommunication license issues and price regulation among others.
Average capital expenditure as a percentage of revenue |  | Capital expenditure ("CAPEX") is defined as purchases of property and equipment and intangible assets other than goodwill. The cash flow forecasts for capital expenditure are based on past experience and amounts budgeted for the following year(s) and include the network roll-outs plans and license requirements.
Projected license and spectrum payments |  | The cash flow forecasts for license and spectrum payments for each operating company for the initial five years include amounts for expected renewals and newly available spectrum. Beyond that period, a long-run cost of spectrum is assumed.
Long-term growth rate |  | A long-term growth rate into perpetuity is estimated based on a percentage that is lower than or equal to the country long-term inflation forecast, depending on the CGU.
Schedule of key assumptions used in fair value less costs of disposal calculations |
|  | Discount rate (functional currency) |  | Average annual revenue growth rate during forecast period |  | Terminal growth rate |
|  | 2017 |  | 2016 |  | 2015 |  | 2017 |  | 2016 |  | 2015 |  | 2017 |  | 2016 |  | 2015 |
Russia |  |  | 10.6 | % |  | 9.7 | % |  | 11.2 | % |  | 1.9 | % |  | 2.4 | % |  | 2.4 | % |  | 1.0 | % |  | 1.0 | % |  | 1.0 | %
Ukraine |  |  | 17.1 | % |  | 17.2 | % |  | 18.2 | % |  | 3.9 | % |  | 3.6 | % |  | 3.9 | % |  | 2.0 | % |  | 1.0 | % |  | 3.0 | %
Algeria |  |  | 10.7 | % |  | 9.8 | % |  | 11.4 | % |  | 1.0 | % |  | (0.8 | )% |  | (0.9 | )% |  | 3.0 | % |  | 3.0 | % |  | 4.0 | %
Pakistan |  |  | 15.0 | % |  | 14.3 | % |  | 15.7 | % |  | 5.0 | % |  | 7.6 | % |  | 4.8 | % |  | 4.0 | % |  | 4.0 | % |  | 5.0 | %
Bangladesh |  |  | 12.7 | % |  | 11.9 | % |  | 13.4 | % |  | 5.0 | % |  | 6.4 | % |  | 6.5 | % |  | 4.6 | % |  | 4.7 | % |  | 5.9 | %
Kazakhstan |  |  | 10.8 | % |  | 12.4 | % |  | 12.3 | % |  | 3.2 | % |  | 4.4 | % |  | 3.5 | % |  | 2.4 | % |  | 2.0 | % |  | 3.0 | %
Kyrgyzstan |  |  | 15.5 | % |  | 14.5 | % |  | 14.2 | % |  | (1.5 | )% |  | (1.8 | )% |  | 2.4 | % |  | 3.5 | % |  | 2.5 | % |  | 2.5 | %
Uzbekistan |  |  | 15.3 | % |  | 15.4 | % |  | 18.4 | % |  | 6.9 | % |  | 1.7 | % |  | 1.7 | % |  | 6.5 | % |  | 1.0 | % |  | 2.0 | %
Armenia |  |  | 13.0 | % |  | 12.0 | % |  | 12.9 | % |  | (1.0 | )% |  | (2.8 | )% |  | (0.7 | )% |  | 3.0 | % |  | 1.0 | % |  | 2.0 | %
Georgia |  |  | 11.0 | % |  | 10.3 | % |  | 12.6 | % |  | 5.6 | % |  | 6.4 | % |  | 6.5 | % |  | 1.0 | % |  | 1.0 | % |  | 3.0 | %
Tajikistan |  |  | n.a. |  |  | n.a. |  |  | 13.5 | % |  | n.a. |  |  | n.a. |  |  | (4.2 | )% |  | n.a. |  |  | n.a. |  |  | 2.0 | %
|  | Average operating margin |  | Average CAPEX as a percentage of revenue |
|  | 2017 |  | 2016 |  | 2015 |  | 2017 |  | 2016 |  | 2015 |
Russia |  |  | 36.4 | % |  | 38.6 | % |  | 44.1 | % |  | 15.7 | % |  | 15.9 | % |  | 16.5 | %
Ukraine |  |  | 49.9 | % |  | 44.9 | % |  | 44.9 | % |  | 15.6 | % |  | 17.0 | % |  | 19.1 | %
Algeria |  |  | 46.2 | % |  | 50.8 | % |  | 48.7 | % |  | 14.8 | % |  | 15.8 | % |  | 16.3 | %
Pakistan |  |  | 43.6 | % |  | 33.3 | % |  | 39.2 | % |  | 15.3 | % |  | 14.3 | % |  | 14.1 | %
Bangladesh |  |  | 38.7 | % |  | 44.9 | % |  | 41.2 | % |  | 14.3 | % |  | 14.6 | % |  | 15.8 | %
Kazakhstan |  |  | 44.5 | % |  | 43.6 | % |  | 52.3 | % |  | 17.9 | % |  | 18.8 | % |  | 20.3 | %
Kyrgyzstan |  |  | 42.0 | % |  | 43.9 | % |  | 54.1 | % |  | 16.4 | % |  | 17.0 | % |  | 12.3 | %
Uzbekistan |  |  | 42.9 | % |  | 58.2 | % |  | 61.2 | % |  | 14.1 | % |  | 18.2 | % |  | 16.3 | %
Armenia |  |  | 29.7 | % |  | 37.8 | % |  | 35.5 | % |  | 19.6 | % |  | 14.1 | % |  | 11.8 | %
Georgia |  |  | 25.2 | % |  | 25.7 | % |  | 32.2 | % |  | 23.3 | % |  | 17.3 | % |  | 16.4 | %
Tajikistan |  |  | n.a. |  |  | n.a. |  |  | 42.4 | % |  | n.a. |  |  | n.a. |  |  | 13.6 | %
Schedule of sensitivity to changes in assumptions |
|  |  |  | Potential impairment if an assumption changes by 1.0pp |
CGU |  | Headroom |  | Discount rate |  | Average growth rate |  | Average operating margin |  | Average CAPEX / revenue |  | Terminal growth rate |
Bangladesh |  |  | 82 |  |  | (33 | ) |  | — |  |  | — |  |  | — |  |  | (17 | )
Uzbekistan |  |  | 15 |  |  | (9 | ) |  | (3 | ) |  | — |  |  | (1 | ) |  | (7 | )
Georgia |  |  | 9 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |

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