to download Telecom Italia Annual Report 2011 - Company Reporting

Type of license
The net carrying
amount at
12/31/2011
(thousands of euros)
Amortization period
in years
Amortization charge
for 2011
(thousands of euros)
UMTS 1,342,788 18 134,279
UMTS 2100 MHz 73,617 12 7,362
Wireless Local Loop 5,593 15 1,119
WiMax 10,511 15 921
Other intangible assets mainly include the capitalization of subscriber acquisition costs (SAC) of the
Business and Consumer segments in the mobile telephony area; the unamortized cost is
150,512 thousand euros at December 31, 2011 (131,817 thousand euros at December 31, 2010). The
amortization of these capitalized costs – equal to 166,241 thousand euros - is generally taken over a
24-month period, corresponding to the minimum duration of the contracts signed with the clientele.
Other intangible assets also include expenses (mainly entrance fees and charges for goodwill) incurred
in connection with the start of the “stores project”. The scope of the project aims to renovate the layout
of the direct and indirect points-of-sale and to increase the number of franchised and owned stores. The
project also calls for the switch-over from “Centro TIM/Alice” and “Il Telefonino/Alice” signs to TIM signs
only. The unamortized cost at December 31, 2011 is 25,876 thousand euros and the amortization of
these costs – equal to 14,276 thousand euros – is being amortized over a period of three years,
corresponding to the minimum duration of the dealer agreements.
Work in progress and advance payments increased 1,214,003 thousand euros following the acquisition
of the user rights for the 800, 1800 and 2600 MHz mobile frequencies and also borrowing costs
capitalized for 12,216 thousand 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 separate income statement as components of
the operating result.
Gross carrying amount, accumulated impairment losses and accumulated amortization at
December 31, 2011 and 2010 can be summarized as follows:
12/31/2011
Accumulated
impairment
losses
(thousands of euros)
Gross
carrying
amount
Accumulated
amortization
Net carrying
amount
Industrial patents and intellectual property rights 9,806,184 (6,765) (8,173,473) 1,625,946
Concessions, licenses, trademarks and similar rights 2,624,962 - (1,120,020) 1,504,942
Other intangible assets 367,602 - (190,916) 176,686
Work in progress and advance payments 1,565,880 (8,569) - 1,557,311
Total 14,364,628 (15,334) (9,484,409) 4,864,885
12/31/2010
(thousands of euros)
Gross
carrying
amount
Accumulated
impairment
losses
Accumulated
amortization
Net carrying
amount
Industrial patents and intellectual property rights 10,576,929 (6,765) (8,749,121) 1,821,043
Concessions, licenses, trademarks and similar rights 2,611,442 - (971,105) 1,640,337
Other intangible assets 347,718 - (182,524) 165,194
Work in progress and advance payments 351,939 (8,631) - 343,308
Total 13,888,028 (15,396) (9,902,750) 3,969,882
Telecom Italia S.p.A. Separate Financial Statements Note 4 – Intangible assets with a finite useful life 329