to download Telecom Italia Annual Report 2011 - Company Reporting

In order to limit the risk of the non-fulfillment of the obligations undertaken by the counterpart, deposits
of the European companies are made with leading high-credit-quality banking and financial institutions.
Investments by the companies in South America are made with leading local counterparts. Moreover,
deposits are made generally for periods of less than three months. With regard to other temporary
investments of liquidity, there are investments in Euro Commercial Paper (the issuers all have an A-
rating by S&P’s and headquarters in Europe) and bonds featuring a limited level of risk. All investments
have been made in accordance with the “Guideline policy for liquidity investments using financial
instruments” adopted by the Telecom Italia Group in July 2009.
In order to minimize credit risk, the Group also pursues a diversification policy for its investments of
liquidity and allocation of its credit positions among different banking counterparts. Consequently, there
are no significant positions with any one single counterpart.
Liquidity risk
The Group pursues the objective of achieving an “adequate level of financial flexibility” which is
expressed by maintaining a current treasury margin to cover the refinancing requirements at least for
the next 12 months with irrevocable bank lines and liquidity.
Current financial assets at December 31, 2011, together with unused committed bank lines, ensure
complete coverage of debt repayment obligations for the next 24 months.
13% of gross financial debt at December 31, 2011 (nominal repayment amount) will become due in the
next 12 months.
The following tables report the contractual cash flows, not discounted to present value, relative to gross
financial debt at nominal repayment amounts and the interest flows, determined using the conditions
and the interest and exchange rates in place at December 31, 2011. The portions of principal and
interest of the hedged liabilities includes both the disbursements and the receipts of the relative
hedging derivatives.
Financial liabilities – Maturities of contractually expected disbursements
(millions of euros)
maturing by 12/31/ of the year:
2012 2013 2014 2015 2016 After
2016
Total
Bonds Principal 3,131 3,449 2,912 1,801 2,250 13,432 26,975
Interest 1,526 1,418 1,210 1,067 969 8,326 14,516
Loans and other financial liabilities Principal 789 1,606 3,008 1,029 548 1,696 8,676
Interest 284 207 109 41 32 (439) 234
Finance lease liabilities Principal 230 115 176 151 135 727 1,534
Interest 99 92 84 76 67 179 597
Non-current financial liabilities (*) Principal 4,150 5,170 6,096 2,981 2,933 15,855 37,185
Interest 1,909 1,717 1,403 1,184 1,068 8,066 15,347
Current financial liabilities Principal 870 - - - - - 870
Interest 10 - - - - - 10
Total Financial liabilities Principal 5,020 5,170 6,096 2,981 2,933 15,855 38,055
Interest 1,919 1,717 1,403 1,184 1,068 8,066 15,357
(*) These include hedging and non-hedging derivatives.
Telecom Italia Group
Consolidated Financial Statements
Note 17 – Financial risk management 225