to download Telecom Italia Annual Report 2011 - Company Reporting

(millions of Argentine pesos)
2011
(a)
2010
(b)
Change
(a-b)
Writedowns and expenses in connection with credit management 169 115 54
Telecommunications operating fees and charges 348 273 75
Indirect duties and taxes 1,286 1,064 222
Sundry expenses 100 86 14
Total 1,903 1,538 365
EBIT
EBIT rose by 57 million pesos (+2.0%) to 2,925 million pesos in 2011. It includes the effects of the
application of the purchase price method which led to higher expenses, mainly for amortization and
depreciation, for a total of 907 million pesos (about 158 million euros); such higher expenses had an
effect on the 2010 results from October 13, 2010 only and amounted to 281 million pesos (about
54 million euros).
In the absence of such expenses, EBIT would have been higher by 683 million pesos (+21.7% compared
to 2010), thanks to the higher contribution by EBITDA.
The EBIT margin is 15.8%, down 3.8 percentage points compared to 2010. Excluding the effects of the
adoption of the purchase price method described above, the EBIT margin would have been 20.7% or
0.8 percentage points lower than the prior year.
Capital expenditures
Capital expenditures stand at 3,192 million pesos, increasing 24.8% over last year. Such amount
includes 746 million pesos for the capitalization of subscriber acquisition costs for the subscription of
binding 18 month contracts for mobile customers and 12 month contracts for broadband customers
(551 million pesos in 2010).
With regard to the fixed network, capital expenditures have been directed to the expansion of the fiber
optic infrastructure and the access network, the development of backhauling for mobile traffic, DWDM
technology and expansion of the IP backbone in order to improve transmission capacity and increase the
access speed offered to customers.
At the same time, Telecom Personal has principally invested in the 3G network to increase capacity and
expand coverage as well as in the platforms to expand value-added services and in IT projects.
Capital expenditures by Núcleo are aimed mainly at the 3G access network.
Headcount
Headcount at December 31, 2011 is 16,350, an increase of 700 compared to December 31, 2010
(+4.5%). About 34% of the increase refers to the fixed-line sector and the remaining 66% to the mobile
sector.
At December 31, 2011, the Argentina Business Unit had temp work contracts for 1 person (18 persons
at December 31, 2010).
Commercial developments
Fixed-line telephony and broadband services
In the residential fixed-line telephony segment, Telecom Argentina concentrated its efforts on meeting
customer access demand, seeking to control the fall in the minutes used because of a shift to mobile
traffic while maintaining the growth of ARPU. At the local level, voice services featured promotions with
the aim of eliminating the set-up charge and a demand for services which include access to broadband.
With regard to national and international long-distance services, efforts continued to encourage people
to acquire subscriber plans, and improve the customer ARPU. With regard to value-added services, there
was an improvement in sales of the Aladino 410 and Aladino Deco cordless phones.
The leadership of the "Arnet" brand benefited from an effective advertising campaign and a different
offer for each segment at competitive prices.
In December 2011, with the launch of Arnet 10 mega, the range of available access speeds was
extended, thus creating an alternative in terms of average speed.
Report on Operations The Business Units of the Telecom Italia Group – Argentina 68