to download Telecom Italia Annual Report 2011 - Company Reporting

Acquisition of control of Sofora Telecomunicaciones S.A.
On October 13, 2010, once the necessary government authorizations were obtained, an agreement was
formalized for the transfer of an 8% interest in Sofora Telecomunicaciones S.A. (“Sofora”) – the holding
company which controls Telecom Argentina – from the Werthein group to Telecom Italia International, as
established in the agreements signed between the Telecom Italia Group and the Werthein group on
August 5, 2010.
The accounting effects of the business combination, as set forth in IFRS 3, can be summarized as
follows:
• the measurement of the interest acquired is equal to 130 million euros and corresponds to the fair
value of the options relinquished by the Telecom Italia Group. Such measurement also includes the
control premium;
• the interest held in the Sofora group before acquisition of control, previously accounted for using
the equity method, was remeasured at fair value at the acquisition date of control and the value
came to about 394 million euros. This remeasurement produced a positive impact on the 2010
separate consolidated of income statement of 266 million euros, net of the reversal in the separate
consolidated income statement of the reserve for negative exchange differences;
• all the assets acquired and liabilities assumed were measured for their recognition at fair value.
During the course of 2011 the provisional amounts of the assets and liabilities recorded at the
acquisition date were adjusted with retroactive effect to take into account their acquisition-date fair
value with the consequent recalculation of goodwill. Besides the amounts allocated to the assets
acquired and the liabilities assumed, goodwill was recognized for 177 million euros, calculated as
illustrated in the following table:
(millions euros)
Final
fair value
amounts
2011
Provisional
amounts
(Financial
Statements
2010) Change
Measurement of interest acquired 130 130 -
Fair Value of interest held in the Sofora group before
acquisition of control 394 394 -
Amount of net assets allocated to the non-controlling interests 1,948 2,003 (55)
Total (a) 2,472 2,527 (55)
Net assets acquired (b) 2,295 2,361 (66)
Goodwill (a–b) 177 166 11
The most important acquisition-date amounts of the assets and liabilities of the Sofora group (Argentina)
are summarized as follows:
Telecom Italia Group
Consolidated Financial Statements
Note 3 – Business combinations 177