2020 Annual Report

2020 ANNUAL REPORT CONSOLIDATED FINANCIAL STATEMENTS MEGACABLE. Significant terms of payment Based on its activities, the Group has determined two terms of payment related to most of its operations. Mass market In the case of mass market (which refers to customers in the Cable TV, Internet, and Digital Telephone segments) the payment period is within the first ten days after the monthly cut-off date established in each subscriber's contract. Business market In the case of the business market, Company receives the corresponding consideration on a monthly basis, in accordance with the amounts agreed to by both parties. The payment period for the services depends on the negotiations carried out between the Group and Customer, which in no case will be more than 36 months. The Group recognizes a contract liability when it has an unconditional right to receive a consideration before transferring control over a good and/or customer service. When payment is received, the amount is recognized in trade advances and it must be derecognized (and recognized as revenue) upon transferring control over the goods or services to the customer. Receivable or payable amounts to customers related to long-term projects in process are recognized as current assets and liabilities, whichever the case may be, without offsetting the balances between these accounts. These accounts include collections made, costs incurred, and profits and losses recognized. Interest Interest income is recognized using the effective interest method. Interest income are earned mainly from loans granted to related parties and it is recognized in profit or loss using the effective interest method. When a loan or account receivable is impaired, its book value is adjusted to its recoverable amount, which is determined by discounting the estimated future cash flow at the original effective interest rate of the instrument. Interest income on impaired loans or accounts receivable is recognized using the original effective interest rate. Based on the payment conditions that maintained with both mass market and business market customers, the Group expects that the period between time that control of the goods or service is transferred and the time the customer pays will be less than one year. Therefore, there was no need to adjust the transaction price due to the effects of a significant financing component. (y) Pending performance obligations- The following table shows the pending performance obligations resulting from long-term business market contracts that are partially or totally unmet and are determined based on the agreed price of the monthly payments for the number of months pending at the end of the year: Metrocarrier Hola 2021 2022 2023 $ 1,515,784 123,949 1,401,654 35,001 989,721 The Group expects that 40% of the total amount of the transaction allocated of unpaid contracts as at December 31, 2020 will be recognized as revenue during 2021. The remaining 60% will be recognized in 2022 and 2023. The amount disclosed above does not include the variable consideration derived from the fact that they are immaterial. This revenue is recognized over time on a monthly basis. The Group does not disclose the information regarding its outstanding obligations for the mass market since the contracts entered into by the Group in this segment establish compulsory terms of less than 12 months. During 2020 and 2019, no revenue was recognized from performance obligations that were partially or totally satisfied in previous years. (z) Customer contract costs (commissions)- Management recognizes costs that are directly related to obtaining or fulfilling a contract as assets, since it considers that these may be recovered. The costs to obtain a contract (sales commissions paid to employees) are determined considering that they can be directly related to a specific contract, are recoverable, and can be reliably quantified. Amortization is recognized based on the useful life of each subscription (three years). An impairment loss is recognized in net profit or loss for the period when the book value of the asset exceeds the unrecognized amount of the consideration the entity expects to receive in exchange for providing the associated goods or services, less the remaining costs that relate directly to providing those goods or services and that have not been recognized as expenses. 47

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