to download Telecom Italia Annual Report 2011 - Company Reporting

Mobile telephony service: Telecom Personal mobile lines in Argentina increased by 1,860 thousand
compared to the end of 2010, arriving at a total of 18,193 thousand lines at December 31, 2011, 32%
of which were postpaid. At the same time, thanks to high-value customer acquisitions and clear
leadership in the smartphone segment, ARPU gained about 16%, reaching 51.4 pesos (44.4 pesos in
2010). A large part of this growth can be traced to value-added services (including SMS text messaging)
and the mobile internet service which, on the whole, accounts for approximately 48% of revenues from
mobile telephony services in 2011.
In Paraguay, the Núcleo customer base grew about 14% compared to December 31, 2010 and at
December 31, 2011 has 2,149 thousand lines, 17% of which were postpaid.
Broadband: Telecom Argentina’s portfolio of total broadband lines at December 31, 2011 reached
1,550 thousand accesses, with an increase of 170 thousand accesses compared to the end of 2010
and representing about 12% growth. During 2011, the growth of internet access lines was accompanied
by a price increase with a consequent rise in ARPU.
EBITDA
EBITDA is up 1,154 million pesos (+24.1%) reaching 5,947 million pesos in 2011. The EBITDA margin is
32.2%, down 0.6 percentage points compared to 2010, mainly due to higher costs for the acquisition of
goods and services and employee benefits expenses.
With regard to changes in costs, the following is noted:
(millions of euros)
2011
(a)
2010
(b)
(millions of Argentine pesos)
2011
(c)
2010
(d)
Change
(c-d)
Acquisition of goods and services 1,398 1,195 8,031 6,201 1,830
Employee benefits expenses 478 391 2,746 2,030 716
Other operating expenses 331 296 1,903 1,538 365
Change in inventories (17) 19 (96) 97 (193)
• acquisition of goods and services: totals 8,031 million pesos (6,201 million pesos in 2010). The
increase of 29.5% compared to the prior year (+1,830 million pesos) is mainly due to higher outside
service costs for 932 million pesos and higher purchases of raw materials, auxiliaries, consumables
and merchandise for 777 million pesos;
• employee benefits expenses: stand at 2,746 million pesos, increasing 716 million pesos compared
to 2010 (+35.3%). The change comes from salary increases, as a result of periodical revisions in
union agreements and largely connected to inflation. Moreover, an increase is recorded in the
average number of employees in the mobile area. The percentage of employee benefits expenses to
total revenues is 14.8%, increasing 0.9 percentage points over 2010;
• other operating expenses: amount to 1,903 million pesos, increasing 23.7% (1,538 million pesos in
2010). Such expenses consist of the following:
Report on Operations The Business Units of the Telecom Italia Group – Argentina 67