The new revenue model is a reality: The new global revenue recognition standard will apply a single model to all contracts with customers in order to improve comparability within an industry, across industries and capital markets. Telecom entities will have to carefully consider outsourcing and network IT contracts, various types of activation/connection services and other upfront services to determine if these services meet the definition of a separate performance obligation. The timing of recognition of revenue for telecom entities that currently do not account for equipment (such as handsets) separately from the telecom services may be significantly affected.
The new model will have accounting impacts including:
It is clear that adoption of the new standard will impact people, policies, processes and systems. Management will need to perform a comprehensive review of existing contracts, business models, company practices, accounting policies, information technology systems, and internal processes and controls to assess the extent of changes needed as a result of the new standard. PwC can help as companies navigate this complex change. Resources are provided below to help you assess the impact on your organization, however feel free to contact our subject matter experts to have a more in depth conversation.