to download Telecom Italia Annual Report 2011 - Company Reporting

Research and Development
As for “Research and Development”, this area is discussed in a specific paragraph of the Sustainability
Section of this Report on Operations, under “The Community” in this Report on Operations.
Events Subsequent to December 31, 2011
With regard to subsequent events, reference should be made to the specific Note “Events subsequent to
December 31, 2011” in the consolidated financial statements at December 31, 2011 of the
Telecom Italia Group.
Business Outlook for the Year 2012
As for the Telecom Italia Group’s outlook for the current year, the objectives linked to the principal
economic indicators, as outlined in the Business Plan 2012-2014, are, for the full year 2012:
• Revenues and EBITDA basically stable compared to 2011
• Adjusted net financial debt of about 27.5 billion euros
Principal risks and uncertainties
The business outlook for 2012 could be affected by risks and uncertainties caused by a multitude of
factors, the majority of which are beyond the Group’s control.
The following are the main risks and uncertainties concerning the Telecom Italia Group’s activities in
2012.
Macroeconomic trend
Italy’s exposure to the sovereign debt crisis overshadowing the Euro area may cause a new weakening
of the Italian economy, after the slight recovery that in 2010 and in 2011 had followed the heightened
downward swing produced by the global economic crisis that began at the end of 2008. The Italian
economy is facing a restrictive fiscal policy (a mix of spending cuts and tax increases) aimed at putting
into place a long-term plan to reduce the budget deficit with the objective of balancing the budget by
2013. Such restrictive fiscal policy pursues structural adjustments which guarantee the sustainability
over the long term of public finances. Furthermore, the tight credit situation deriving from the growing
problems of the banking sector in the Eurozone, contributes further to lowering the forecasts of growth
for the next few years: the climate for investments remains difficult and the confidence of the consumer
low.
The macroeconomic scenario in Brazil is expected to show steady growth, supported by high levels of
domestic and foreign investments, high consumption, falling inflation and a steady rate of exchange. The
overall economic equilibrium has permitted the Central Bank to cut interest rates as a precautionary
measure, in case the economy is affected by the global recession. At the moment, the Brazilian
macroeconomic context seems to be fairly stable, although it is expanding more slowly than in the past,
but any worsening of the situation could have an adverse effect on the demand for telecommunications
services.
The Argentine economy is expected to grow in 2012, although at a lower rate than in the previous years
when the country recorded strong economic expansion. Private consumption should continue to be the
primary driver of the economy, however, the effects of the fall in agriculture production, of growing
external restrictions and of a more conservative tax approach could give rise to growth that is in some
Report on Operations Business Outlook for the Year 2012 35