2020 Annual Report
2020 ANNUAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS
MEGACABLE.
V.
Renewal
vi.
As of January 2016, all concession titles that expire will be adhered to the aforementioned single concession
title, as the Group provides the services on a continuous basis. The validity of the single concession is 30
years from June 4, 2015, which will be renewable, in accordance with the provisions of Article 113 of the
Federal Telecommunications Broadcasting Act, which indicates concessions on public telecommunications
networks, and which may be extended up to periods equal to those originally established. In order to obtain
an extension, concessionaires must have complied with the conditions established in the concession that it
wishes to have extended, and apply for the extension during the year in which the last fifth of the term of the
concession begins, and accept the new conditions established by the authority in accordance with this Act
and other applicable provisions. The IFT will issue its resolution within 180 calendar days.
Guarantees
In January and June of each year, respectively, the concessionaire must contract a performance bond for
the obligations contracted in each concession with a surety institution authorized by the Ministry of Finance
and Public Credit (SHCP) for an amount equal to 4,000 days of the general minimum wage in force in the
Federal District for the year to be guaranteed. The Federal Treasury must be the intended beneficiary of the
performance bond. The guarantee must be updated annually in accordance with the CPI.
The withdrawal of any of the Group's concessions would have a significant adverse effect on its activities reported in the
financial position and operating results, which would be directly reflected in operating income and costs, and possibly a
reserve for impairment of its assets by ceasing to generate cash flows.
c) Consolidation of entities in which the Group holds than 51% of shares
Management considers that the Group has control with 51% of the voting rights. The Company is the majority shareholder
with 51% of the shares, while the other shareholders individually do not own more than 40% of the equity. There is no
record of shareholders who form a group to exercise their voting rights jointly. The total non-controlling interest as at
December 31, 2020 and 2019 is $170,890 and $162,384, respectively.
The determining factors that establish such control are related to the power that is exercised over the subsidiaries, the
right to obtain variable returns and the combination of these two factors, which results in the ability to exercise said power
to influence the returns from such investments. The Group has power over its subsidiaries since it has rights that allow it
to direct the relevant activities; that is, activities that significantly affect the investee's returns.
Its power arises from the voting rights granted by the shares it holds in each investment, which in all cases represent
51% of the total shares. In all cases, the rest of the shares are divided among several shareholders and in this sense, it is
important to mention that there are no contractual agreements in which strategic alliances of any kind are established
between the rest of the shareholders with voting rights, nor is there any precedent of such agreements.
The Group's interest in each one of its subsidiaries in all cases expose it, and grant it the right to obtain variable returns
from its involvement in such companies, where it also has decision-making rights that directly influence obtaining the
aforementioned returns. There are no legal or any type of barriers that prevent the Group from exercising its rights, and
on the contrary, there are established practical mechanisms that allow the exercise of such rights when so determined by
Management.
In most cases, the Board of Directors is comprised of the same number of members of the Group and the rest of the
shareholders, although one of the directors of the rest of the shareholders does not have a vote. The Group also appoints
the chair and treasurer within the board, and in the shareholders' meeting-the supreme corporate body of the company-,
it still has the majority of votes, which allows it to make decisions about the relevant activities of the subsidiaries without
the need for consent from the rest of the parties. The resolutions adopted in the meeting are final and do not require
additional or subsequent approval by the Board of Directors, as long as the same shareholding percentage is maintained.
Details on the relevant totals of assets, liabilities and consolidated results of these subsidiaries are provided in Note 9.
Accounting Estimates:
d) Goodwill impairment estimate
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy
described in Note 20). The recoverable amounts of the Cash Generating Units (CGU) have been determined based on
calculations of their values in use. These calculations require the use of estimates (See Note 11).
In 2020 and 2019, there were no impairment effects in any of the CGUS and the most sensitive variables in the calculations
are the discount rate and the gross operating margin.
If the estimated cost of capital used to determine the discount rate before taxes applied to the Company's CGUs had been
10% higher than Management's estimate, it would not give rise to a goodwill impairment.
The discount rates in pesos and in nominal terms in Mexico used by the Company as of December 31, 2020 and 2019 are
8.60% and 11.72%, respectively, it is estimated through the Weighted Average Cost of Capital ("WACC"), and 5-year flows
were discounted.
e) Income tax
The Group is subject to the payment of income tax. Significant judgments are required to recognize current and deferred
income tax. There are many transactions and calculations for which the tax computation is uncertain. In the event that
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