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Consolidated Reported EBIT: is a negative 603 million euros in 2011 (a positive 5,818 million euros in
2010) and is penalized by the impact of the above impairment charges for a total of 7.4 billion euros
relating to the Goodwill allocated to Core Domestic and Media.
Consolidated Organic EBIT: is 6,808 million euros in 2011 (+5.1% compared to 2010) and
1,756 million euros in the fourth quarter of 2011 (+5.9%). The consolidated Organic EBIT Margin is
22.7%, with an improvement of 0.5 percentage points compared to the prior year.
Finance income/expenses and Investment Results: show the balance of Finance income and expenses
presenting an improvement of 76 million euros mainly in connection with the reduction in Net financial
debt. At the same time, investment management and the equity valuation of associates display an
overall decline of 411 million euros; the change is mainly due to the presence, in 2010, of the positive
impact of the fair value adjustment of the stake held in the Sofora group prior to acquisition of control
(266 million euros) and the negative effect of the equity valuation of associates (negative for 39 million
euros in 2011 and positive for 99 million euros in the prior year).
Loss for the year attributable to owners of the Parent: is 4,726 million euros, with a reduction of
7,847 million euros compared to 2010 (profit of 3,121 million euros). In comparable terms, the result
attributable to owners of the Parent is in line with 2010. In particular, comparable profit in 2011 would
be 2.6 billion euros, calculated by excluding the impact of the goodwill impairment charge and other
non-recurring items; the profit in 2010 would have been the same amount if calculated by excluding the
positive impact connected with the acquisition of control of Sofora, the benefit of over 600 million euros
from the recognition of deferred tax assets in Brazil and other non-recurring items.
Operating free cash flow: is 5,767 million euros in 2011 and 446 million euros lower than the prior year
mainly owing to the acquisition of LTE (Long Term Evolution) frequencies for 1,223 million euros.
Excluding the impact of the acquisition of LTE frequencies in 2011 and the payment made to the
Revenue Agency relating to the Telecom Italia Sparkle case in 2010, operating free cash flow would
record an improvement of 388 million euros. This is a confirmation of the Group’s strong and growing
capacity to generate cash flow, thanks to the staying power of Domestic and the positive contribution of
Brazil and also the entry of the Argentina Business Unit in the scope of consolidation.
Adjusted net financial debt: is 30,414 million
euros at December 31, 2011, with a reduction of
1,054 million euros compared to December 31,
2010 (31,468 million euros). This reduction is even
more significant when considering that in the
fourth quarter of 2011 an amount of 1,223 million
euros was spent for the acquisition of LTE
frequencies. Excluding this investment, net
financial debt would have been more than 2 billion
euros lower.
More to the point, cash generated by operating
activities, together with the receipt of 464 million
euros from the sale of the investments in EtecSA
(millions of euros)
Adjusted Net Financial Debt
31,468 -1,054
30,414
12/31/2010 Change
12/31/,2011
(Cuba) and Loquendo and the effects of the subscription by the market to the TIM Participações S.A.
capital increase (about 240 million euros, net of the relative incidental expenses), more than
guaranteed the cash requirements for the payment of dividends (1,326 million euros, of which 1,183
million euros was distributed to the market by the Parent), income taxes (1,381 million euros),
acquisition of control of two companies in the AES Atimus group in Brazil (about 686 million euros) and
purchases of shares which in 2011 enabled the Telecom Italia Group to increase its economic interest
in the Telecom Argentina group from 16.2% to 22.7%.
Annual Report 2011 Key Operating and Financial Data - Telecom Italia Group 10