to download Telecom Italia Annual Report 2011 - Company Reporting

In detail:
(millions of euros) 2011 2010 Change
Historical EBIT (1,945) 5,162 (7,107)
Exchange rate effect (2) 2
Differences in the scope of consolidation (4) 4
Non-organic (income) expenses 7,355 328 7,027
Non-organic expenses already described under EBITDA 108 346 (238)
Core Domestic CGU goodwill impairment charge 7,307 - 7,307
Gains)/losses, impairment (Reversals)/losses on noncurrent
assets and investments
(60) (18) (42)
Comparable EBIT 5,410 5,484 (74)
In particular, with reference to the goodwill impairment charge of the Core Domestic CGU, for
7,307 million euros, in preparing the annual financial statements the Telecom Italia Group repeated the
impairment test that had been performed in the first half of 2011 which led to the recognition in the
Half-year Financial Report at June 30, 2011 of an impairment loss of 3,182 million euros referring to the
Core Domestic cash-generating unit. The macroeconomic and market climate was marked by a
slowdown in the higher growth economies and fears of a recession in the mature ones which was more
accentuated in the domestic market. Added to this was an escalation, in the second half of the year, of
financial market pressures, with particular reference to the trend of interest rates. The measurement
therefore took into account such deterioration of the financial markets in general terms, with reference
to interest rates, while the worsening of expectations regarding the market prospects of the Business
Unit in question were considered in specific terms.
Further details are provided in the Note “Goodwill” in the consolidated financial statements at
December 31, 2011 of the Telecom Italia Group.
Capital expenditures
Capital expenditures total 4,200 million euros, up 1,094 million euros compared to 2010. The increase
is due principally to the acquisition of the user rights for 800, 1800 and 2600 MHz LTE frequencies to
be designated for broadband mobile communications for a total of 1,223 million euros. This follows the
auction by the Ministry of Economic Development which took place in the second half of the year. The
user rights, formally awarded by the Ministry on October 3, 2011, were assigned in February 2012.
The percentage of capital expenditures to revenues is 22.1%, excluding the acquisition of the above LTE
frequencies, the ratio is 15.6%, basically in line with 2010 (15.5%).
Headcount
Headcount is 55,389 at December 31, 2011, with a reduction of 1,141 compared to December 31,
2010 and includes 4 persons with temp work contracts (8 at December 31, 2010).
Commercial developments
MOBILE CONSUMER
In 2011, sales actions in the mobile services market focused on the acquisition of new lines by pushing
the plans of the Tutto Compreso Ricaricabile range. This was enhanced by the addition of the option
offering “unlimited calls to a TIM number of the customer’s choice” and the promotion “Switch to TIM
and Double your Top-ups” for customers acquired through Mobile Number Portability (MNP).
Greater effort was devoted to the target of younger customers with the launch of the TIM Young rate
plan (with plenty of free, exclusive content with special rates for new customers from October) and the
new TIM Cloud service, offering customers the option of saving content (photos, films and music) on the
‘Cloud’ and sharing it with friends.
Report on Operations The Business Units of the Telecom Italia Group – Domestic 51