to download Telecom Italia Annual Report 2011 - Company Reporting

Concessions, licenses, trademarks and similar rights at December 31, 2011 mainly refer to:
• unamortized cost of telephone licenses (1,433 million euros for Telecom Italia S.p.A.,
703 million euros for the Brazil Business Unit and 462 million euros for the Argentina Business
Unit);
• Indefeasible Rights of Use-IRU (227 million euros) referring mainly to the Telecom Italia Sparkle
group companies (International Wholesale), amortized over the period of the individual contracts;
• TV frequencies of the Media Business Unit (116 million euros). The user rights to the frequencies
used for digital terrestrial transmission are amortized over 20 years;
• unamortized cost of the trademarks of the Argentina Business Unit (329 million euros), amortized
over 20 years.
The net carrying amount of telephone licenses totaling 2,598 million euros refers to the following:
Type of license
The net carrying
amount at
12/31/2011
(millions of euros)
Amortization period
in years
Amortization charge
for 2011
(millions of euros)
Telecom Italia S.p.A.:
UMTS 1,343 18 134
UMTS 2100 MHz 74 12 7
Wireless Local Loop 6 15 1
WiMax 10 15 1
Tim Brasil group:
GSM and 3G (UMTS) 677 8-15 103
TDMA 26 14 24
Sofora group - Telecom Argentina:
PCS of Nucleo S.A. 21 12 2
PCS of Telecom Personal S.A. 441 Indefinite useful life -
Other intangible assets with a finite useful life at December 31, 2011 basically include:
• 788 million euros of customer relationships relating to the Argentina Business Unit, measured upon
acquisition of control; these are amortized over a period which varies between 5 and 12 years,
according to the type of clientele and service:
• 246 million euros of capitalized subscriber acquisition costs referring to some sales campaigns of
Telecom Italia S.p.A. (151 million euros) and the Argentina Business Unit (95 million euros). The
subscriber acquisition costs are amortized over the underlying minimum contract period (between
12 or 24 months) and eliminated from the books after completion of the amortization process.
• 26 million euros of “entry fees and charges as goodwill” in connection with the Telecom Italia S.p.A.
“stores project” amortized on a straight-line basis over a period of three years.
Work in progress and advance payments include the above user rights for the 800, 1800 and 2600
MHz mobile frequencies and capitalized borrowing costs for 12 million euros since they are directly
chargeable to the acquisition and because the time period necessary to ready the asset for use is more
than 12 months. The interest rate used for the capitalization of the borrowing costs is between 5.3% and
6%. Such costs are deducted directly from “Other finance expenses”.
Amortization and impairment losses are recorded in the income statement as components of the
operating result.
Telecom Italia Group
Consolidated Financial Statements Note 5 – Other intangible assets 185