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In detail, the organic change in EBIT is calculated by:
• considering the effect of the change in the scope of consolidation (286 million euros, mainly in
reference to the consolidation of the Argentina Business Unit);
• considering the effect of exchange differences (-12 million euros);
• excluding (Revenues and income)/Costs and expenses, with details as follows:
(millions of euros) 2011 2010 Change
Non-organic (Revenues and income)/Costs and expenses already
described under EBITDA 93 354 (261)
Goodwill impairment charge 7,364 46 7,318
(Gains)/losses, Impairment (Reversals)/losses on non-current assets
and investments (46) (17) (29)
Total net non-organic (Revenues and income)/Costs and expenses 7,411 383 7,028
Share of profits (losses) of associates and joint ventures accounted for using the equity method
Details are as follows:
(millions of euros) 2011 2010 Change
EtecSA (Cuba) - 84 (84)
Italtel Group (38) 3 (41)
Other (1) 12 (13)
Total (39) 99 (138)
The Share of profits (losses) of associates and joint ventures accounted for using the equity method is a
loss of 39 million euros in 2011 (profit of 99 million euros in 2010). In particular, the year 2011 was
negatively affected by the writedown of the entire investment in the Italtel Group: the overall
macroeconomic situation on the one hand and the specific prospects of future evolution of the
company’s business on the other, have led to believe, in fact, that the recovery of the entire amount of
the associate is not probable.
The year 2010 included the positive impact relating to the investment in EtecSA (Cuba), including the
share of results up to September 30, 2010 and the reversal of impairment losses (30 million euros)
after agreements were reached at the end of 2010 for the sale of the investment which was
subsequently finalized on January 31, 2011.
Other income (expenses) from investments
In 2011, Other income (expenses) from investments is an income balance of 16 million euros and
includes 17 million euros for the net gain on the sale of the entire 27% investment in the Cuban
operator EtecSA. That amount is in addition to the benefit from the impairment reversal of 30 million
euros, recorded in 2010.
In 2010, Other income (expenses) from investments was an income balance of 289 million euros and
specifically included the revaluation, net of the negative exchange rate effect, of 266 million euros on
the investment interest already held in Sofora Telecomunicaciones (50%). In particular, as set forth in
IFRS 3, following the acquisition of control of Sofora Telecomunicaciones, which took place on
October 13, 2010, the investment interest previously held in the subsidiary, accounted for using the
equity method, was remeasured at fair value at the acquisition date of control. The line item also
included the net gain of 29 million euros realized on the settlement agreement reached between the
Telecom Italia Group and the Bolivian government for the resolution of the dispute over the May 1, 2008
expropriation by that government of the investment held by the Group in Entel Bolivia.
Finance income (expenses)
Finance income (expenses) is an expense balance of 1,998 million euros (an expense balance of
2,074 million euros in 2010), with a positive change of 76 million euros largely arising from lower net
debt exposure.
Report on Operations Review of Operating and Financial Performance - Telecom Italia Group 22