Moody's: Differences in E.U. telecoms reporting

Although European Union-based telecoms operators now report under International Financial Reporting Standards, an examination of the annual reports of seven investment-grade operators reveals several accounting differences of varying magnitude and significance, Moody's Investors Service said in a special report.

The companies covered are BT Group plc (rated Baa1/stable), Deutsche Telekom AG (A3/prime-2/stable), France Telecom (A3/prime-2/stable), Koninklijke KPN NV (Baa2/prime-2/stable), Telecom Italia SpA (Baa2/negative), Telefónica SA (Baa1/prime-2/stable), and Vodafone Group plc (Baa1/prime-2/stable).

While there is little consistency in the financial reports, Moody's said this is not surprising as there are no standard definitions for these key measures.

However, Moody's said that a lack of consistency in the amounts that are reported as interest expense, lease expense and current tax expense is more unexpected. These accounting differences make it harder to compute credit metrics on a comparable basis, the agency said. The report said there are many differences in the companies' reported allowances for doubtful debts, capital spending on software and the depreciation of property, plant and equipment.

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