to download Telecom Italia Annual Report 2011 - Company Reporting

Change in net financial debt
(millions of euros) 2011 2010 Change
EBITDA 9,000 9,089 (89)
Capital expenditures on an accrual basis (4,122) (3,018) (1,104)
Change in net operating working capital: (99) (237) 138
Change in inventories (13) 56 (69)
Change in trade receivables and net amounts due on construction
contracts 132 292 (160)
Change in trade payables (*) (142) (588) 446
Other changes in operating receivables/payables (76) 3 (79)
Change in provisions for employees benefits (221) 57 (278)
Change in operating provisions and Other changes (61) (390) 329
Net operating free cash flow 4,497 5,501 (1,004)
% of Revenues 24,9 29,0
Sale of investments and other disposals flow 60 (37) 97
Financial investments flow (42) (199) 157
Dividends flow (936) 1,323 (2,259)
Issue of equity instruments - 23 (23)
Financial expenses, income taxes and other net non-operating requirements
flow (3,395) (3,502) (107)
Reduction (Increase) in net financial debt 184 3,109 (2,925)
(*) Includes the change in trade payables for amounts due to fixed asset suppliers.
The reduction in net operating free cash flow in 2011 compared to 2010 (-1,004 million euros) is due to
higher requirements for capital expenditures (mainly in connection with the acquisition of LTE frequency
rights); such change is partially compensated by the improvement in working capital.
In addition to what has already been described with reference to EBITDA, net financial debt in 2011 has
been particularly impacted by the following:
Capital expenditures flow
Capital expenditures total 4,122 million euros (3,018 million euros in 2010), up 1,104 million euros
(36.6%), due to the acquisition of user rights for the 800 MHz, 1800 MHz and 2600 MHz frequencies to
be used for broadband mobile communication services, 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.
Sale of investments and other disposals flow
Sale of investments and other disposals flow amounts to 60 million euros and principally relates to the
collection of the consideration on the sale of the investment in Loquendo (equal to 55 million euros).
Financial investments flow
Financial investments flow amounts to 42 million euros for payments made to subsidiaries and
associates for share capital increases or replenishments of share capital and/or the coverage of losses
(of which 15 million euros is in favor of TLC Commercial Services and 10 million euros in favor of SSC).
Report on Operations Review of Operating and Financial Performance – Telecom Italia S.p.A. 86