Network assets: components and useful lives

Network assets are most of an operator's balance sheet, and their useful lives drive the largest expense after staff and leases. Every technology generation, from 2G to 5G, has forced operators to revisit those lives. This guide sets out typical components and lives, what happens when a network is switched off early, and the capitalisation questions that arise during roll-outs.

By Hamza Fida, Chartered Accountant. Reviewed by Mirza Fahad Baig, Chartered Accountant. 3 minute read.

Short answer

Telecom network depreciation follows IAS 16: network assets are split into components with different useful lives, such as towers and civil works over 20 years or more, fibre over 20 to 30 years, radio equipment over 5 to 10 years and IT systems over 3 to 5 years, and each is depreciated over its own life. Technology change is the biggest judgement. When an operator decides to switch off a legacy network early, the remaining useful life is shortened prospectively: in this guide's example, radio equipment with 312.5 million left is depreciated over 2 years instead of 5, raising annual depreciation from 62.5 million to 156.2 million.

At a glance

Standard
IAS 16 Property, Plant and Equipment
Approach
Componentise, depreciate each part
Longest lives
Towers, ducts and fibre
Shortest lives
Radio, core and IT equipment
Life changes
Prospective, as a change in estimate
Also
Impairment and site restoration
Network assets: components and useful livesStandard: IAS 16 Property, Plant and Equipment; Approach: Componentise, depreciate each part; Longest lives: Towers, ducts and fibre; Shortest lives: Radio, core and IT equipment; Life changes: Prospective, as a change in estimate; Also: Impairment and site restoration.KEY FACTS AT A GLANCENetwork assets: components and useful livesStandardIAS 16 Property, Plantand EquipmentApproachComponentise, depreciateeach partLongest livesTowers, ducts and fibreShortest livesRadio, core and ITequipmentLife changesProspective, as a changein estimateAlsoImpairment and siterestorationTax BakersNetwork assets: components and useful livesStandard: IAS 16 Property, Plant and Equipment; Approach: Componentise, depreciate each part; Longest lives: Towers, ducts and fibre; Shortest lives: Radio, core and IT equipment; Life changes: Prospective, as a change in estimate; Also: Impairment and site restoration.KEY FACTS AT A GLANCENetwork assets: components anduseful livesStandardIAS 16 Property, Plant and EquipmentApproachComponentise, depreciate each partLongest livesTowers, ducts and fibreShortest livesRadio, core and IT equipmentLife changesProspective, as a change in estimateAlsoImpairment and site restorationTax Bakers
Key facts at a glance, as set out in this guide.

Telecom network depreciation: what are typical useful lives?

Typical telecom network componentsTypical telecom network componentsTypical lifeMain judgementTowers andcivil works15 to 30 yearsSite retentionDucts and fibre20 to 30 yearsPhysical wearRadio equipment5 to 10 yearsTechnology changeCore andtransmission5 to 10 yearsCapacity upgradesIT and networksoftware3 to 5 yearsReplacement cycles
Illustrative ranges; each operator sets its own lives.

The ranges are typical of published operator policies, not rules; each operator sets lives from its own technical plans and replacement history. Components with materially different lives, such as a tower and the radio equipment mounted on it, are depreciated separately.

What happens when legacy networks are switched off early?

An operator bought radio equipment for its 3G network for CU 500 million, depreciating it over 8 years. After 3 years, with 312.5 million still on the balance sheet, it decides to switch 3G off in 2 years to reuse the spectrum for 5G.

Before the decisionAfter the decision
Carrying amount312.5312.5
Remaining useful life5 years2 years
Annual depreciation62.5156.2

The change is a change in accounting estimate under IAS 8, applied from the date of the decision with no restatement of earlier years. The operator also checks for impairment: if the equipment's cash flows over the remaining two years do not support the carrying amount, an impairment loss is recognised first. Equipment that will be reused on the new network keeps its life.

Which roll-out costs are capitalised?

  • Equipment, installation and commissioning costs, and site preparation.
  • Internal labour of engineers directly building the network, tracked through project codes.
  • Borrowing costs on networks that take a substantial time to build, under IAS 23.
  • The estimated cost of removing equipment and restoring sites, added to the asset; see site restoration provisions.

Planning, training, general overheads and the costs of running the network are expensed. Spares held for network maintenance are inventory or property, plant and equipment depending on how long they are expected to be used.

What about vendor swaps and credits?

When a vendor replaces an operator's old equipment as part of a new supply contract, it may give credits for the old kit or discounts on future purchases. Credits are generally a reduction in the cost of the new equipment rather than income, and the old equipment is derecognised, with any remaining carrying amount written off. Large swaps are often negotiated as a package, so the price has to be allocated across equipment, software and services.

How is network software treated?

Software that is integral to equipment, such as the operating system of a base station, is part of the property, plant and equipment. Separately acquired software, such as billing and network management systems, is an intangible asset under IAS 38, usually with a shorter life. Cloud-based network functions bought as a service are generally expensed; see software and cloud computing costs.

How often are useful lives reviewed?

At least at each financial year end, as IAS 16 requires, and whenever technology plans change. Many operators have shortened radio equipment lives as 5G roll-outs accelerated, and later extended lives of fibre and ducts as evidence showed they last longer. See depreciation methods, component depreciation and telecom accounting.

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Questions people ask

How are telecom network assets depreciated?

Under IAS 16, by splitting them into components with different useful lives, such as towers, fibre, radio and core equipment, and depreciating each over its own life.

What useful life is used for telecom radio equipment?

Typically 5 to 10 years, depending on the operator's technology plans.

What happens to depreciation when a network is switched off early?

The remaining useful life is shortened prospectively, so the remaining carrying amount is depreciated over the shorter period, after an impairment check.

Are engineers' salaries capitalised during a network roll-out?

Yes, to the extent they are directly attributable to building the network and are tracked reliably.

Sources

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

  1. IFRS Foundation: IAS 16 Property, Plant and Equipment

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.

TelecomTelecom accounting: the key IFRS issuesTelecomSite restoration provisionsIAS 16Component depreciation

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