Note 9: Other Intangible Assets and Goodwill
Intangible assets at December 31, 2007 and 2006, comprised the following:
| December 31, 2007 | December 31, 2006 | ||||||||||||
| Useful lives | Gross carrying value |
Accumulated amortization | Net carrying value |
Gross carrying value |
Accumulated amortization | Net carrying value |
|||||||
| Amortized intangible assets | |||||||||||||
| Billing and telecommunication software |
13 to 180 months | $1,280,614 | $(604,635) | $675,979 | $919,400 | $(383,358) | $536,042 | ||||||
| Acquired customer base | 20 to 60 months | 205,510 | (105,714) | 99,796 | 114,850 | (95,751) | 19,099 | ||||||
| Rights to use radio frequencies | 2 to 15 years | 199,981 | (69,398) | 130,583 | 163,963 | (52,882) | 111,081 | ||||||
| Accounting software | 13 to 48 months | 130,968 | (48,291) | 82,677 | 125,277 | (38,595) | 86,682 | ||||||
| Numbering capacity with finite contractual life |
5 to 10 years | 102,857 | (82,701) | 20,156 | 90,138 | (64,522) | 25,616 | ||||||
| Office software | 13 to 48 months | 45,577 | (27,471) | 18,106 | 63,605 | (34,113) | 29,492 | ||||||
| Other software | 3 to 15 years | 18,593 | (11,537) | 7,056 | 18,931 | (11,204) | 7,727 | ||||||
| 1,984,100 | (949,747) | 1,034,353 | 1,496,164 | (680,425) | 815,739 | ||||||||
| Unamortized intangible assets | |||||||||||||
| Goodwill | 359,450 | — | 359,450 | 165,462 | — | 165,462 | |||||||
| Numbering capacity with indefinite contractual life |
36,060 | — | 36,060 | 20,177 | — | 20,177 | |||||||
| Total other intangible assets | $2,379,610 | $(949,747) | $1,429,863 | $1,681,803 | $(680,425) | $1,001,378 | |||||||
As a result of the limited availability of local telephone numbering capacity in Moscow and the Moscow region, MTS has been required to enter into agreements for the use of telephone numbering capacity with several telecommunication operators in Moscow. The costs of acquired numbering capacity with a finite contractual life are amortized over a period of five to ten years in accordance with the terms of the contract to acquire such capacity. Numbering capacity with an indefinite contractual life is not amortized.
Amortization expense for the years ended December 31, 2007, 2006 and 2005, amounted to $294.8 million, $195.0 million and $202.3 million, respectively. Based on the amortizable intangible assets existing at December 31, 2007, the estimated amortization expense is $270.1 million for 2008, $263.4 million for 2009, $231.6 million for 2010, $177.3 million for 2011, $31.8 million for 2012 and $60.2 million thereafter. The actual amortization expense reported in future periods could differ from these estimates as a result of new intangible asset acquisitions, changes in useful lives and other relevant factors.
The change in the net carrying amount of goodwill for 2007 and 2006 by reportable segments was as follows:
| Russia | Ukraine | Other | Total | ||||
| Balance as of December 31, 2005 | $100,751 | $8,000 | $46,470 | $155,221 | |||
| Acquisitions (Note 3) | 10,241 | — | — | 10,241 | |||
| Balance as of December 31, 2006 | 110,992 | 8,000 | 46,470 | 165,462 | |||
| Acquisitions (Note 3) | 5,123 | — | 155,544 | 160,667 | |||
| Currency translation adjustment | 18,703 | — | 14,618 | 33,321 | |||
| Balance as of December 31, 2007 | $134,818 | $8,000 | $216,632 | $359,450 |