IFRS 18 worked example: a telecom income statement before and after

The clearest way to understand IFRS 18 is to watch one income statement change. Northline Telecom is fictional, but its items are typical of an operator: network equipment, tower disposals, leases, a decommissioning provision, a foreign currency loan and an associate.

By Muhammad Bilal, Chartered Accountant. Reviewed by Hamza Fida, Chartered Accountant. Checked against official sources on . 3 minute read.

Short answer

This example restates a telecom company's income statement from IAS 1 to IFRS 18. Revenue of CU 1,000 million and profit for the year of CU 131 million do not change. Operating profit falls from CU 230 million to CU 222 million, and a new subtotal, profit before financing and income taxes, shows CU 254 million, because seven items move between categories.

At a glance

Revenue
1,000
Operating profit, IAS 1
230
Operating profit, IFRS 18
222
Profit before financing and income taxes
254
Profit for the year
131, unchanged
Items reclassified
7
IFRS 18 worked example: a telecom income statement before and afterRevenue: 1,000; Operating profit, IAS 1: 230; Operating profit, IFRS 18: 222; Profit before financing and income taxes: 254; Profit for the year: 131, unchanged; Items reclassified: 7.KEY FACTS AT A GLANCEIFRS 18 worked example: a telecom income statementbefore and afterRevenue1,000Operating profit, IAS 1230Operating profit, IFRS 18222Profit before financing and incometaxes254Profit for the year131, unchangedItems reclassified7Checked against official sourcesTax BakersIFRS 18 worked example: a telecom income statement before and afterRevenue: 1,000; Operating profit, IAS 1: 230; Operating profit, IFRS 18: 222; Profit before financing and income taxes: 254; Profit for the year: 131, unchanged; Items reclassified: 7.KEY FACTS AT A GLANCEIFRS 18 worked example: a telecomincome statement before and afterRevenue1,000Operating profit, IAS 1230Operating profit, IFRS 18222Profit before financing and income taxes254Profit for the year131, unchangedItems reclassified7Checked against official sourcesTax Bakers
Key facts at a glance, as set out in this guide.

What did the income statement look like under IAS 1?

CU millionAmountWhat it contains
Revenue1,000
Cost of services(580)
Gross profit420
Selling and distribution expenses(90)
Administrative expenses(110)
Other income25Tower disposal gain 10, rent 8, exchange gain on payables 4, dividends 3
Other expenses(15)Impairment of network equipment 12, exchange loss on a US dollar loan 3
Operating profit230Northline's own definition
Finance income12Interest on bank deposits
Finance costs(70)Borrowings 52, lease liabilities 14, unwinding of decommissioning provision 4
Share of profit of associate9A tower company
Profit before tax181
Income tax expense(50)
Profit for the year131

What does it look like under IFRS 18?

CU millionAmountCategory
Revenue1,000Operating
Cost of services(580)Operating
Gross profit420
Selling and distribution expenses(90)Operating
Administrative expenses(110)Operating
Gain on disposal of towers10Operating
Impairment of network equipment(12)Operating
Exchange gain on trade payables4Operating
Operating profit222
Share of profit of associate9Investing
Rental income from investment property8Investing
Dividend income3Investing
Interest income on deposits12Investing
Profit before financing and income taxes254
Interest expense on borrowings(52)Financing
Exchange loss on US dollar loan(3)Financing
Interest expense on lease liabilities(14)Financing
Unwinding of discount on decommissioning provision(4)Financing
Profit before income taxes181
Income tax expense(50)Income taxes
Profit for the year131

Why did each item move?

  • Rent and dividends (CU 11 million) to investing: the surplus property and the shareholding earn a return largely on their own, apart from the network business.
  • Interest on deposits (CU 12 million) to investing: income from cash and cash equivalents is investing for a company that does not finance customers.
  • Share of associate's profit (CU 9 million) in investing: equity-accounted results always go there.
  • Exchange loss on the loan (CU 3 million) to financing: it follows the loan. The gain on trade payables stays in operating.
  • Lease interest and the provision's discount (CU 18 million) in financing: the interest element of liabilities that are not pure borrowings.
  • Tower gain and impairment stay in operating: they relate to network assets used in the main business, and unusual items are not excluded.

What is specific to telecom operators?

  • Tower sale and leaseback: the gain is operating; the interest on the new lease liability is financing.
  • Handset financing: if financing customers is a main business activity, the related interest income moves to operating. See main business activities.
  • Spectrum licences bought on deferred terms: the unwinding of the discount on the payable is financing.
  • EBITDA: most operators publish it, often adjusted. Check it against the rules on management-defined performance measures.

Every number above is in the IFRS 18 income statement mapper (Excel), ready to be replaced with your own.

Getting ready for IFRS 18?

We help finance teams map their income statement to the new categories, restate comparatives and prepare the new disclosures.

Book a call Chat on WhatsApp

Questions people ask

Does revenue change under IFRS 18?

No. Revenue and profit for the year are unchanged in this example; only the layout and subtotals change.

Why did operating profit fall from 230 to 222?

Rental and dividend income of CU 11 million moved to investing, and a CU 3 million exchange loss on a loan moved to financing.

Where does a tower disposal gain go under IFRS 18?

In the operating category, because the towers were used in the main business.

Why does profit before financing and income taxes differ from operating profit?

It adds the investing category. In this example that is the associate's share of profit and the rental, dividend and interest income, CU 32 million in total.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IFRS Foundation: IFRS 18 Presentation and Disclosure in Financial Statements
  2. Australian Accounting Standards Board: AASB 18, the Australian equivalent of IFRS 18 (full text)
  3. IFRS Foundation: IFRS 18, the new requirements (presentation)

Rules and fees change. If you are reading this long after October 4, 2026, confirm the figures with the source before you rely on them.

IFRS 18IFRS 18 income statement categories: operating, investing and financingIFRS 18Operating profit under IFRS 18: what is in and what is outIFRS 18IFRS 18 transition: dates, restated comparatives and the reconciliation

More in IFRS 18

Next in this topicIFRS 18 implementation checklist: what to do and in what orderTopicAll 12 guides in IFRS 18

This guide is general information. It is not tax or legal advice for your situation.