Bridging theory and practice: International valuation standards and asset valuation in the telecommunications sector

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In the rapidly evolving telecommunications industry, accurate valuation of tangible assets remains a critical challenge that requires adherence to universally recognized standards. This study addresses the pressing need for transparent and precise asset valuation methodologies that are pivotal for informed investment decisions and financial reporting. It aims to bridge the theoretical and practical divide in asset valuation by applying International Valuation Standards (IVS) 300 and 400 to Asiacell Communications PJSC, a leading entity in the sector. Focusing on five key tangible assets from 2018 to 2022 – lands, buildings, plant and equipment, means of transport and transfer, and furniture and office equipment – the study employs the income approach, augmented by a random walk model for future cash flow forecasting and the weighted average cost of capital for discounting. This innovative methodology offers a comprehensive valuation framework, revealing that despite Asiacell’s consistent growth rate of 4.63%, all asset categories experienced a depreciation upon revaluation. The study’s findings underscore the significance of implementing IVS in elucidating the asset valuation process, demonstrating the potential discrepancies between book values and standards-based valuations. The application of IVS 300 and IVS 400 not only enhances the transparency and accuracy of asset valuation but also provides valuable insights into the contributions of tangible assets to future income within the prevailing market conditions. By offering a replicable model for asset valuation in dynamic industries, this study contributes to the broader discourse on financial reporting and investment analysis, setting a foundation for future exploration in the field.

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    • Table 1. Tangible assets in book value of Asiacell Communications PJSC (million dinars)
    • Table 2. Relative weight of tangible assets
    • Table 3. Total cash flows of Asiacell Communications PJSC (million dinars)
    • Table 4. Contribution of tangible assets to cash flow of Asicacell Communications PJSC (million dinars)
    • Table 5. Tangible assets of Asiacell Communications PJSC measured according to the IVS 300 and IVS 400 using the income approach (million dinars)
    • Conceptualization
      Mohammed Hayder Mohammed Shanshool
    • Investigation
      Mohammed Hayder Mohammed Shanshool
    • Methodology
      Mohammed Hayder Mohammed Shanshool
    • Project administration
      Mohammed Hayder Mohammed Shanshool
    • Visualization
      Mohammed Hayder Mohammed Shanshool
    • Writing – original draft
      Mohammed Hayder Mohammed Shanshool
    • Data curation
      Bushra Najem Aubdullah Al-Mashhadani
    • Formal Analysis
      Bushra Najem Aubdullah Al-Mashhadani
    • Supervision
      Bushra Najem Aubdullah Al-Mashhadani
    • Validation
      Bushra Najem Aubdullah Al-Mashhadani
    • Writing – review & editing
      Bushra Najem Aubdullah Al-Mashhadani