Indicate by check mark whether
the registrant files or will file annual reports under cover of Form
20-F
or Form
40-F:
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule
12g3-2(b)
under the Securities Exchange Act of 1934.
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule
12g3-2(b):
82-
Revenues amounted to 4,819 million euros in
the first quarter of 2017, up 8.5% from 4,440 million euros in the first quarter of 2016. The increase of 379 million euros was attributable to the Brazil Business Unit (284 million euros) and the Domestic Business Unit
(99 million euros).
In terms of organic change, consolidated revenues rose by 2.6% (+121 million euros), and were calculated as follows:
EBITDA totaled 1,990 million euros (1,712 million euros in the first quarter of 2016), increasing by 278 million euros (+16.2%) compared to the
first quarter of 2016; the EBITDA margin was 41.3% (38.6% in the first quarter of 2016; +2.7 percentage points).
Organic EBITDA was up 204 million
euros (+11.4%) compared to the first quarter of 2016; the EBITDA margin rose by 3.3 percentage points, from 38.0% in the first quarter of 2016 to 41.3% in the first quarter of 2017.
Without these expenses, the organic change in EBITDA would have been +8.1%, with an EBITDA margin of 41.8%, up
2.1 percentage points on the first quarter of 2016. Further details are provided in the section “Significant
non-recurring
events and transactions” in this Interim Management Report at March 31,
2017 of the TIM Group.
The positive performance of EBITDA, both in amounts and in terms of EBITDA margin, reflects the benefits from the cost recovery
plan actions, started in the second quarter of 2016 by the Domestic Business Unit and in the third quarter of 2016 by the Brazil Business Unit, that, at constant exchange rates, have sustained and augmented the effects of the above-mentioned
increase in revenues.
EBITDA was particularly impacted by the change in the line items analyzed below:
Other income consisted of the impacts of the contribution fees regulated by partnership agreements signed with several leading
technology suppliers. These agreements are aimed at developing the collaboration between the parties, in order to strengthen and stabilize the business and industrial relationship over time, to actively contribute to TIM’s marketing plan for
the development and use of several strategic services in Italy and in Brazil.
In the first quarter of 2017, the amount for the partnership agreements was
19 million euros.
In the first quarter of 2017, this item amounted to zero (2 million euros in the first quarter of 2016).
In accordance with IAS 36, goodwill is not subject to amortization, but is tested for impairment annually or more frequently, whenever specific events or
circumstances occur that may indicate an impairment. At March 31, 2017, no external or internal events were identified giving reason to believe a new impairment test was required and amounts of goodwill allocated to the individual Cash
Generating Units were therefore confirmed.
EBIT totaled 865 million euros
(704 million euros in the first quarter of 2016), increasing by 161 million euros (+22.9%) compared to the first quarter of 2016; the EBIT margin was 17.9% (15.9% in the first quarter of 2016, +2.0 percentage points).
Organic EBIT was up 146 million euros (+20.3%), with an organic EBIT margin of 17.9% (15.3% in the first quarter of 2016).
Finance income (expenses) showed an increase in net expenses of 358 million euros, moving from 26 million euros for the first quarter of 2016 to
384 million euros for the first quarter of 2017.
This item amounted to
256 million euros, up 35 million euros on the first quarter of 2016 (221 million euros). The tax expense for the first quarter of 2017 included a provision of 93 million euros for several disputes with the tax authorities; this
additional expense was offset by the reduction primarily linked to the lower tax base of the Parent TIM S.p.A..
Profit for the first quarter of 2017 attributable to the Owners of the Parent amounted to 200 million euros
(433 million euros in the first three months of 2016) and was impacted by
non-recurring
net expenses of 115 million euros. On a
like-for-like
basis – i.e. without including the
non-recurring
items and, in the first quarter of 2016, the positive impact
of the fair value measurement of the embedded option in the mandatory convertible bond and, in the first quarter of 2017, an allocation to provisions for
non-operational
risks relating to disputes with the tax
authorities – the Profit attributable to the Owners of the Parent for the first quarter of 2017 was over 50 million euros higher than the figure for the same period of the previous year.
Revenues came to 3,647 million euros for the first quarter of 2017 and were up by 99 million euros (+2.8%), compared to the first quarter of 2016,
continuing the trend of improvement seen in the previous year (fourth quarter 2016 +2.5%, third quarter +1.0%, second quarter
-1.2%,
first quarter
-2.3%).
The same
performance was seen for revenues from services, amounting to 3,342 million euros, essentially in line with the same period of 2016
(-10 million
euros,
-0.3%;
0% on the same number of calendar days, i.e. by normalizing the days of the 2016 leap year).
Revenues
from product sales, including the change in work in progress, amounted to 305 million euros in the first quarter of 2017, up by 109 million euros compared to the first quarter of 2016. This performance was driven by the sales of
smartphones and connected devices (smart TVs, modems, set top boxes, etc.).
EBITDA for the Domestic Business Unit totaled
1,621 million euros for the first quarter of 2017, up by 160 million euros compared to the first quarter of 2016 (+11%), with an EBITDA margin of 44.4% (+3.2 percentage points compared to the same period of the previous year). In organic
terms, the increase was 10.9%. The first quarter of 2017 reflected the negative impact of
non-recurring
expenses totaling 24 million euros (67 million euros for the same period of the previous year),
relating to costs for termination benefits and dispute settlement costs.
Without these expenses, the organic change in EBITDA would have been 7.6%, with an EBITDA margin of 45.1%, up 2.0
percentage points on the first quarter of 2016.
This performance improvement was attributable to the significant reduction in operating expenses, broken down as follows with
reference to the main cost items.
The EBITDA performance, in addition to the improvement in sales earnings and the revenue performance, also reflected the
positive impacts achieved by the program of cost transformation and simplification of business processes, which started to have an effect from the second quarter of 2016. In particular, for the first time in the first quarter of 2017, the proportion
of market-driven costs was higher than process-driven costs, confirming the focus on customers and the importance given to sales drives.
EBIT for the first quarter of 2017 of the Domestic
Business Unit came to 787 million euros (662 million euros in the same period of 2016), up 125 million euros (+18.9%), with an EBIT margin of 21.6% (18.7% in the first quarter of 2016). The EBIT performance mainly reflected the
improvement in EBITDA described above. In organic terms, the increase was 18.7%.
EBIT for the first quarter of 2017 was pulled down by a total of
24 million euros in
non-recurring
expenses (67 million euros for the same period of the previous year), without which the organic change in EBIT would have been 11.1%, with an EBIT margin of 22.2%.
The main financial and operating highlights of the
Domestic Business Unit are reported according to two Cash Generating units (CGU):
Key results for the first quarter of 2017 for the Domestic Business Unit are presented in the following tables,
broken down by market/business segment and compared to the first quarter of 2016.
BRAZIL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
|
(millions of reais)
|
|
|
|
|
|
|
|
|
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amount
|
|
|
%
|
|
|
|
|
(a)
|
|
|
(b)
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|
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(c)
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|
(d)
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|
(c-d)
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|
|
(c-d)/d
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|
|
Revenues
|
|
|
1,181
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|
|
|
897
|
|
|
|
3,951
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|
|
|
3,854
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|
|
|
97
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|
|
|
2.5
|
|
|
EBITDA
|
|
|
372
|
|
|
|
258
|
|
|
|
1,247
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|
|
|
1,107
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|
|
|
140
|
|
|
|
12.6
|
|
|
EBITDA Margin
|
|
|
31.6
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|
28.7
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31.6
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|
|
28.7
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|
|
|
|
|
|
|
2.9 pp
|
|
|
EBIT
|
|
|
81
|
|
|
|
49
|
|
|
|
272
|
|
|
|
210
|
|
|
|
62
|
|
|
|
29.5
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|
|
EBIT Margin
|
|
|
6.9
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5.4
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6.9
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5.4
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1.5 pp
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Headcount at period end (number)
|
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|
9,674
|
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|
(1)
9,849
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|
(175
|
)
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|
(1.8
|
)
|
|
(1)
|
Headcount at December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Lines at period end (thousands)
|
|
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61,868
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|
|
|
(1)
63,418
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|
MOU (minutes/month)
(*)
|
|
|
106.6
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|
|
|
118.6
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|
ARPU (reais)
|
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|
19.0
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17.2
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|
|
(1)
|
Number at December 31, 2016, including corporate lines
|
Revenues
Revenues for the first quarter of 2017 amounted to
3,951 million reais and were up 97 million reais (+2.5%)
year-on-year.
Service revenues totaled 3,744 million reais, an increase of 126 million reais
compared to 3,618 million reais for the first quarter of 2016 (+3.5%). These results confirm the continued improvement in the trend compared to 2016, with positive growth in both total revenues (+2.5% compared to
-1.7%
for the fourth quarter of 2016 and
-8.9%
for the full year 2016) and in revenues from services (+3.5% compared to
-0.7%
for
the fourth quarter of 2016 and
-4.3%
for the full year 2016).
Mobile Average Revenue Per User (ARPU) for the
first quarter of 2017 was 19.0 reais, up on the figure of 17.2 reais for the first quarter of 2016 (+10.5%), due to the general repositioning towards the postpaid segment and new commercial initiatives aimed at increasing data usage and the average
spend per customer.
The total number of lines at March 31, 2017 was 61,868 thousand, corresponding to a market share of 25.5% (26% at
December 31, 2016). The reduction in the number of lines in the quarter
(-1,550
thousand) was entirely attributable to the prepaid segment
(-1,995
thousand) and was
only partially offset by the growth in the postpaid segment (+445 thousand). Postpaid customers represented 25% of the customer base at March 31, 2017 (20% at March 31, 2016).
Revenues from product sales came to 207 million reais (236 million reais in the first quarter of 2016,
-12.3%),
reflecting a commercial policy less focused on the sale of handsets, in addition to the impact of the Brazilian macroeconomic crisis on household spending.
19
EBITDA
EBITDA amounted to 1,247 million reais, up
140 million reais on the first quarter of 2016 (+12.6%). The growth in EBITDA was attributable to the performance of revenues as well as to the benefits from the projects to improve the efficiency of the operating expenses structure started in
the second half of 2016, continuing the positive trend and improving on the +5.8% figure recorded in the fourth quarter of 2016.
The EBITDA margin stood
at 31.6%, 2.9 percentage points higher than in the first quarter of 2016.
You are also reminded that the employee benefits expenses for the first quarter
of 2016 also included
non-recurring
expenses for termination benefits of 33 million reais.
Even without the
impact of these
non-recurring
expenses, EBITDA for the first quarter of 2017 shows an increase (+9.4%) compared to the first quarter of 2016, with an improvement on the performance recorded in the fourth
quarter of 2016 (+2.1%).
The changes in the main cost items are shown below:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
|
(millions of reais)
|
|
|
|
|
|
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Change
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(c-d)
|
|
|
Acquisition of goods and services
|
|
|
627
|
|
|
|
475
|
|
|
|
2,098
|
|
|
|
2,043
|
|
|
|
55
|
|
|
Employee benefits expenses
|
|
|
89
|
|
|
|
88
|
|
|
|
298
|
|
|
|
379
|
|
|
|
(81
|
)
|
|
Other operating expenses
|
|
|
135
|
|
|
|
111
|
|
|
|
451
|
|
|
|
479
|
|
|
|
(28
|
)
|
|
Change in inventories
|
|
|
(8
|
)
|
|
|
(9
|
)
|
|
|
(27
|
)
|
|
|
(40
|
)
|
|
|
13
|
|
EBIT
EBIT came to 272 million reais, up 62 million reais compared to the first quarter of 2016. This result benefited from the greater contribution from
the EBITDA, which was offset by higher depreciation and amortization (+79 million reais).
20
CONSOLIDATED FINANCIAL POSITION AND CASH FLOWS PERFORMANCE
NON-CURRENT
ASSETS
|
•
|
|
Goodwill:
this increased by 16 million euros, from 29,612 million euros at the end of 2016 to 29,628 million euros at March 31, 2017 due to the positive variation in exchange rates for the
Brazilian companies
(
1
)
. Further details are provided in the Note “Goodwill” in
the Condensed Consolidated Financial Statements at March 31, 2017 of the TIM Group.
|
|
•
|
|
Other intangible assets:
were up 22 million euros, from 6,951 million euros at the end of 2016 to 6,973 million euros at March 31, 2017, representing the balance of the following items:
|
|
|
•
|
|
capex (+327 million euros);
|
|
|
•
|
|
amortization charge for the period
(-457 million
euros);
|
|
|
•
|
|
disposals, exchange differences, reclassifications and other changes (for a net positive balance of 152 million euros).
|
|
•
|
|
Tangible assets:
were down 223 million euros, from 16,360 million euros at the end of 2016 to 16,137 million euros at March 31, 2017, representing the balance of the following items:
|
|
|
•
|
|
capex (+504 million euros);
|
|
|
•
|
|
changes in financial leasing contracts (+15 million euros);
|
|
|
•
|
|
depreciation charge for the period
(-672 million
euros);
|
|
|
•
|
|
disposals, exchange differences, reclassifications and other changes (for a net negative balance of 70 million euros).
|
CONSOLIDATED EQUITY
Consolidated equity amounted to 23.950 million euros (23,553 million euros at December 31, 2016), of which 21,555 million euros
attributable to Owners of the Parent (21,207 million euros at December 31, 2016) and 2,395 million euros attributable to
non-controlling
interests (2,346 million euros at December 31,
2016). In greater detail, the changes in equity were the following:
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
At the beginning of the period
|
|
|
23,553
|
|
|
|
21,333
|
|
|
Correction due to errors
|
|
|
—
|
|
|
|
(84
|
)
|
|
At the beginning of the period revised
|
|
|
23,553
|
|
|
|
21,249
|
|
|
Total comprehensive income (loss) for the period
|
|
|
386
|
|
|
|
2,801
|
|
|
Dividends approved by:
|
|
|
—
|
|
|
|
(204
|
)
|
|
TIM S.p.A.
|
|
|
—
|
|
|
|
(166
|
)
|
|
Other Group companies
|
|
|
—
|
|
|
|
(38
|
)
|
|
Issue of equity instruments
|
|
|
2
|
|
|
|
1
|
|
|
Conversion of the Guaranteed Subordinated Mandatory Convertible Bonds due 2016
|
|
|
—
|
|
|
|
1,300
|
|
|
Disposal of the Sofora – Telecom Argentina group
|
|
|
—
|
|
|
|
(1,582
|
)
|
|
Other changes
|
|
|
9
|
|
|
|
(12
|
)
|
|
At the end of the period
|
|
|
23,950
|
|
|
|
23,553
|
|
|
(1)
|
The spot exchange rate used for the translation into euro of the Brazilian real (expressed in terms of units of local currency per 1 euro) was 3.38734 at March 31, 2017 and 3.43542 at December 31, 2016.
|
21
CASH
FLOWS
Adjusted net financial debt stood at 25,235 million euros, up 116 million euros compared to December 31, 2016 (25,119 million
euros).
The table below summarizes the main transactions that had an impact on the change in adjusted net financial debt during the first quarter of
2017:
Change in adjusted net financial debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Change
|
|
|
EBITDA
|
|
|
1,990
|
|
|
|
1,712
|
|
|
|
278
|
|
|
Capital expenditures on an accrual basis
|
|
|
(831
|
)
|
|
|
(944
|
)
|
|
|
113
|
|
|
Change in net operating working capital:
|
|
|
(795
|
)
|
|
|
(750
|
)
|
|
|
(45
|
)
|
|
Change in inventories
|
|
|
(29
|
)
|
|
|
(87
|
)
|
|
|
58
|
|
|
Change in trade receivables and net amounts due from customers on construction
contracts
|
|
|
31
|
|
|
|
30
|
|
|
|
1
|
|
|
Change in trade payables
(*)
|
|
|
(697
|
)
|
|
|
(566
|
)
|
|
|
(131
|
)
|
|
Other changes in operating receivables/payables
|
|
|
(100
|
)
|
|
|
(127
|
)
|
|
|
27
|
|
|
Change in employee benefits
|
|
|
(7
|
)
|
|
|
59
|
|
|
|
(66
|
)
|
|
Change in operating provisions and Other changes
|
|
|
4
|
|
|
|
(52
|
)
|
|
|
56
|
|
|
Net operating free cash flow
|
|
|
361
|
|
|
|
25
|
|
|
|
336
|
|
|
% of Revenues
|
|
|
7.5
|
|
|
|
0.6
|
|
|
|
6.9 pp
|
|
|
|
|
|
|
|
Sale of investments and other disposals flow
|
|
|
2
|
|
|
|
707
|
|
|
|
(705
|
)
|
|
Share capital increases/reimbursements, including incidental costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Financial investments flow
|
|
|
(1
|
)
|
|
|
(9
|
)
|
|
|
8
|
|
|
Dividends payment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Change in financial leasing contracts
|
|
|
(15
|
)
|
|
|
(46
|
)
|
|
|
31
|
|
|
Finance expenses, income taxes and other net
non-operating
requirements flow
|
|
|
(463
|
)
|
|
|
(500
|
)
|
|
|
37
|
|
|
Reduction/(Increase) in adjusted net financial debt from continuing operations
|
|
|
(116
|
)
|
|
|
177
|
|
|
|
(293
|
)
|
|
Reduction/(Increase) in net financial debt from Discontinued
operations/Non-current
assets held for sale
|
|
|
—
|
|
|
|
(38
|
)
|
|
|
38
|
|
|
Reduction/(Increase) in adjusted net financial debt
|
|
|
(116
|
)
|
|
|
139
|
|
|
|
(255
|
)
|
|
(*)
|
Includes the change in trade payables for amounts due to fixed asset suppliers.
|
In addition to what has
already been illustrated with reference to EBITDA, adjusted net financial debt in the first quarter of 2017 was particularly impacted by the following:
Capital expenditures on an accrual basis
The breakdown of capital expenditures by operating
segment is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
1st Quarter 2017
|
|
|
1st Quarter 2016
|
|
|
Change
|
|
|
|
|
|
|
|
% of total
|
|
|
|
|
|
% of total
|
|
|
|
|
|
Domestic
|
|
|
631
|
|
|
|
75.9
|
|
|
|
778
|
|
|
|
82.4
|
|
|
|
(147
|
)
|
|
Brazil
|
|
|
200
|
|
|
|
24.1
|
|
|
|
166
|
|
|
|
17.6
|
|
|
|
34
|
|
|
Other Operations
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Adjustments and eliminations
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Consolidated Total
|
|
|
831
|
|
|
|
100.0
|
|
|
|
944
|
|
|
|
100.0
|
|
|
|
(113
|
)
|
|
% of Revenues
|
|
|
17.2
|
|
|
|
|
|
|
|
21.3
|
|
|
|
|
|
|
|
(4.1)pp
|
|
22
Capital expenditures in the first quarter of 2017 totaled 831 million euros, down 113 million euros on
the first quarter of 2016. In particular:
|
•
|
|
the
Domestic Business Unit
posted capital expenditures of 631 million euros, a decrease of 147 million euros compared to the first quarter of 2016. This reduction was achieved, despite an increase in
innovation expenditure for the development of next-generation networks and services (+24 million euros), thanks to the careful assessment and selection for other types of expenditure.
|
|
•
|
|
The
Brazil Business Unit
recorded an increase in capital expenditure of 34 million euros for the first quarter of 2017 (including a positive currency effect of 46 million euros) compared to the first
quarter of 2016; capital expenditures for the quarter were mainly aimed at the development of industrial infrastructure.
|
Change in net
operating working capital
The change in
net operating working capital for the first quarter 2017 was a decrease of 795 million euros (decrease of 750 million euros in the first quarter 2016). In particular:
|
•
|
|
the change in inventories generated a negative impact of 29 million euros whereas the management of trade receivables generated a positive impact of 31 million euros;
|
|
•
|
|
the change in trade payables
(-697 million
euros) includes the payment of around 257 million euros made by the Brazil Business Unit to the consortium that is carrying
out the clean up of the 700 MHz spectrum, which the Business Unit purchased the user rights to in 2014. The level of trade payables was also influenced by the seasonal peak in payments for bills payable, due to the concentration of capital
expenditure and external costs in the last quarter of the previous year with monetary settlement, usually, occurring in the following quarter;
|
|
•
|
|
the other changes in operating receivables/payables
(-100 million
euros) include a negative amount of 174 million euros, for levies on telecommunications operations paid
by the Brazil Business Unit – the taxes are normally paid every year by the end of March. This change was partly offset by the performance of other operating payables of the Domestic Business Unit.
|
Sale of investments and other disposals flow
This item showed a positive figure of
2 million euros for the first quarter of 2017 and related to disposals of assets within the normal operating cycle.
In the first quarter of 2016, it
was a positive figure of 707 million euros and essentially related to the sale of the Sofora - Telecom Argentina group that took place on March 8, 2016.
Finance expenses, income taxes and other net
non-operating
requirements flow
The item amounted to 463 million euros and
mainly included the payment, during the first quarter of 2017, of net finance expenses and income taxes, as well as the change in
non-operating
receivables and payables.
23
Net financial debt
Net financial debt is composed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
Change
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(a-b)
|
|
|
Non-current
financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds
|
|
|
21,246
|
|
|
|
20,369
|
|
|
|
877
|
|
|
Amounts due to banks, other financial payables and liabilities
|
|
|
7,349
|
|
|
|
7,656
|
|
|
|
(307
|
)
|
|
Finance lease liabilities
|
|
|
2,430
|
|
|
|
2,444
|
|
|
|
(14
|
)
|
|
|
|
|
31,025
|
|
|
|
30,469
|
|
|
|
556
|
|
|
Current financial liabilities
(*)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds
|
|
|
1,893
|
|
|
|
2,595
|
|
|
|
(702
|
)
|
|
Amounts due to banks, other financial payables and liabilities
|
|
|
1,496
|
|
|
|
1,269
|
|
|
|
227
|
|
|
Finance lease liabilities
|
|
|
198
|
|
|
|
192
|
|
|
|
6
|
|
|
|
|
|
3,587
|
|
|
|
4,056
|
|
|
|
(469
|
)
|
|
Financial liabilities directly associated with Discontinued
operations/Non-current
assets held for sale
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross financial debt
|
|
|
34,612
|
|
|
|
34,525
|
|
|
|
87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities other than investments
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
1
|
|
|
Financial receivables and other
non-current
financial
assets
|
|
|
(2,596
|
)
|
|
|
(2,697
|
)
|
|
|
101
|
|
|
|
|
|
(2,596
|
)
|
|
|
(2,698
|
)
|
|
|
102
|
|
|
Current financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities other than investments
|
|
|
(1,069
|
)
|
|
|
(1,519
|
)
|
|
|
450
|
|
|
Financial receivables and other current financial assets
|
|
|
(563
|
)
|
|
|
(389
|
)
|
|
|
(174
|
)
|
|
Cash and cash equivalents
|
|
|
(4,461
|
)
|
|
|
(3,964
|
)
|
|
|
(497
|
)
|
|
|
|
|
(6,093
|
)
|
|
|
(5,872
|
)
|
|
|
(221
|
)
|
|
Financial assets relating to Discontinued
operations/Non-current
assets held for sale
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial assets
|
|
|
(8,689
|
)
|
|
|
(8,570
|
)
|
|
|
(119
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net financial debt carrying amount
|
|
|
25,923
|
|
|
|
25,955
|
|
|
|
(32
|
)
|
|
Reversal of fair value measurement of derivatives and related financial
assets/liabilities
|
|
|
(688
|
)
|
|
|
(836
|
)
|
|
|
148
|
|
|
Adjusted net financial debt
|
|
|
25,235
|
|
|
|
25,119
|
|
|
|
116
|
|
|
Breakdown as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total adjusted gross financial debt
|
|
|
32,796
|
|
|
|
32,574
|
|
|
|
222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total adjusted financial assets
|
|
|
(7,561
|
)
|
|
|
(7,455
|
)
|
|
|
(106
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*)
of which current portion of
medium/long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds
|
|
|
1,893
|
|
|
|
2,595
|
|
|
|
(702
|
)
|
|
Amounts due to banks, other financial payables and liabilities
|
|
|
947
|
|
|
|
670
|
|
|
|
277
|
|
|
Finance lease liabilities
|
|
|
198
|
|
|
|
192
|
|
|
|
6
|
|
The financial risk management policies of the TIM Group are aimed at minimizing market risks, fully hedging exchange rate
risk, and optimizing interest rate exposure through appropriate diversification of the portfolio, which is also achieved by using carefully selected derivative financial instruments. Such instruments, it should be stressed, are not used for
speculative purposes and all have an underlying, which is hedged.
In addition, to determine its exposure to interest rates, the Group sets an optimum
composition for the fixed-rate and variable-rate debt structure and uses derivative financial instruments to achieve that composition. Taking into account the Group’s operating activities, the optimum mix of medium/long-term
non-current
financial liabilities has been established, on the basis of the nominal amount, at a range of 65% - 75% for the fixed-rate component and 25% - 35% for the variable-rate component.
In managing market risks, the Group has adopted Guidelines for the “Management and control of financial risk” and mainly uses IRS and CCIRS
derivative financial instruments.
To provide a better representation of the true performance of Net Financial Debt, from 2009, in addition to the usual
indicator (renamed “Net financial debt carrying amount”), a measure called “Adjusted net financial debt” has also been shown, which neutralizes the effects caused by the volatility of financial
24
markets. Given that some components of the fair value measurement of derivatives (contracts for setting the exchange and interest rate for contractual flows) and derivatives embedded in other
financial instruments do not result in actual monetary settlement, the “Adjusted net financial debt” excludes these purely accounting and
non-monetary
effects (including the effects resulting from
the introduction of IFRS 13 – Fair Value Measurement from January 1, 2013) from the measurement of derivatives and related financial assets/liabilities.
Sales of receivables to factoring companies
Sales of
trade receivables to factoring companies finalized during the first quarter of 2017 resulted in a positive effect on net financial debt at March 31, 2017 of 783 million euros (1,091 million euros at December 31, 2016).
Gross financial debt
Bonds
Bonds at March 31, 2017 were recorded for a total of 23,139 million euros (22,964 million euros at December 31, 2016). Their nominal
repayment amount was 22,781 million euros, up 364 million euros compared to December 31, 2016 (22,417 million euros).
Changes in
bonds over the first quarter of 2017 are shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of original currency)
|
|
Currency
|
|
|
Amount
|
|
|
Issue date
|
|
|
New issues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecom Italia S.p.A. 1,000 million euros 2.500% maturing 7/19/2023
|
|
|
Euro
|
|
|
|
1,000
|
|
|
|
1/19/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of original currency)
|
|
Currency
|
|
|
Amount
|
|
|
Repayment date
|
|
|
Repayments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecom Italia S.p.A. 545 million euros 7.000%
(1)
|
|
|
Euro
|
|
|
|
545
|
|
|
|
1/20/2017
|
|
|
(1)
|
Net of buybacks by the Company of 455 million euros during 2015.
|
With reference to the Telecom Italia
S.p.A. 2002–2022 bonds, reserved for subscription by employees of the Group, the nominal amount at March 31, 2017 was 200 million euros, down 1 million euros compared to December 31, 2016 (201 million euros).
Revolving Credit Facility and Term Loan
The following
table shows the composition and the draw down of the committed credit lines available at March 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(billions of euros)
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
|
|
Agreed
|
|
|
Drawn down
|
|
|
Agreed
|
|
|
Drawn down
|
|
|
Revolving Credit Facility – expiring May 2019
|
|
|
4.0
|
|
|
|
—
|
|
|
|
4.0
|
|
|
|
—
|
|
|
Revolving Credit Facility – expiring March 2020
|
|
|
3.0
|
|
|
|
—
|
|
|
|
3.0
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7.0
|
|
|
|
—
|
|
|
|
7.0
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIM has two syndicated Revolving Credit Facilities for amounts of 4 billion euros and 3 billion euros expiring
May 24, 2019 and March 25, 2020 respectively, both not yet drawn down.
TIM also has:
|
•
|
|
a bilateral Term Loan from Banca Regionale Europea expiring July 2019 for 200 million euros, drawn down for the full amount;
|
|
•
|
|
a bilateral Term Loan from Cassa Depositi e Prestiti expiring April 2019, for 100 million euros, drawn down for the full amount;
|
|
•
|
|
two bilateral Term Loans from Mediobanca respectively for 200 million euros expiring in November 2019 and 150 million euros expiring in July 2020, drawn down for the full amount;
|
|
•
|
|
a bilateral Term Loan from ICBC expiring July 2020 for 120 million euros, drawn down for the full amount;
|
25
|
•
|
|
a bilateral Term Loan from Intesa Sanpaolo expiring August 2021 for 200 million euros, drawn down for the full amount;
|
|
•
|
|
an overdraft facility with Banca Popolare dell’Emilia Romagna expiring July 2017 for 200 million euros, drawn down for the full amount.
|
On March 6, 2017, TIM S.p.A. signed a supplementary agreement with Mediobanca under which it will make an early repayment on July 3, 2017 of
75 million euros for the bilateral term loan of 150 million euros maturing in July 2020, a loan that has been fully drawn down.
On
April 10, 2017, TIM S.p.A. early repaid the bilateral term loan with Cassa Depositi e Prestiti for the amount of 100 million euros maturing in April 2019; this loan had been fully drawn down.
Maturities of financial liabilities and average cost of debt
The average maturity of
non-current
financial liabilities (including the current portion of medium/long-term financial
liabilities due within 12 months) is 7.89 years.
The average cost of the Group’s debt, considered as the cost for the year calculated on an annual
basis and resulting from the ratio of debt-related expenses to average exposure, is about 5.0%.
For details on the maturities of financial liabilities in
terms of expected nominal repayment amounts, as contractually agreed, see the Notes “Financial liabilities
(non-current
and current)” in the Condensed Consolidated Financial Statements at
March 31, 2017 of the TIM Group.
Current financial assets and liquidity margin
The TIM Group’s available liquidity margin amounted to 12,530 million euros at March 31, 2017, corresponding to the sum of “Cash and
cash equivalents” and “Current securities other than investments”, totaling 5,530 million euros (5,483 million euros at December 31, 2016), and the committed credit lines, mentioned above, of which a total of
7,000 million euros has not been drawn down. This margin is sufficient to cover Group financial liabilities due at least for the next 24 months.
In
particular:
Cash and cash equivalents
amounted to 4,461 million euros (3,964 million euros at December 31, 2016). The different
technical forms of investing available cash at March 31, 2017 can be analyzed as follows:
|
•
|
|
Maturities: investments have a maximum maturity of three months;
|
|
•
|
|
Counterparty risk: investments by the European companies are made with leading banking, financial and industrial institutions with high credit quality. Investments by the companies in South America are made with leading
local counterparties;
|
|
•
|
|
Country risk: deposits have been made mainly in major European financial markets.
|
Current securities other
than investments amounted to 1,069 million euros (1,519 million euros at December 31, 2016): these forms of investment represent alternatives to the investment of liquidity with the aim of improving returns. They include
557 million euros of Italian treasury bonds purchased respectively by TIM S.p.A. (255 million euros), Telecom Italia Finance S.A. (292 million euros) and Inwit S.p.A. (10 million euros) as well as 511 million euros of bonds
purchased by Telecom Italia Finance S.A. with different maturities, all with an active market and consequently readily convertible into cash. The purchases of the above government bonds, which, pursuant to Consob Communication no. DEM/11070007 of
August 5, 2011, represent investments in “Sovereign debt securities”, have been made in accordance with the Guidelines for the “Management and control of financial risk” adopted by the TIM Group since August 2012.
26
CONSOLIDATED FINANCIAL STATEMENTS – TIM GROUP
TIM prepares and publishes Interim Management Reports for the first and third quarter of each year on a voluntary basis.
The Interim Management Report at March 31, 2017 of the TIM Group includes the Condensed Consolidated Financial Statements at March 31, 2017,
prepared in compliance with the IFRS issued by the IASB and endorsed by the EU and, specifically, with IAS 34 Interim Reports. The Condensed Consolidated Financial Statements at March 31, 2017 have not been audited.
The accounting policies and consolidation principles adopted in the preparation of the condensed consolidated financial statements at March 31, 2017
are the same as those adopted in the TIM Group consolidated financial statements at December 31, 2016, to which reference can be made. No new standards and interpretations were endorsed by the EU and in force from January 1, 2017.
The TIM Group, in addition to the conventional financial performance measures established by IFRS, uses certain alternative performance measures in order
to present a better understanding of the trend of operations and financial condition. Specifically, these alternative performance measures refer to: EBITDA; EBIT; the organic change in revenues, EBITDA and EBIT; EBITDA margin and EBIT margin; and
net financial debt carrying amount and adjusted net financial debt.
Moreover, the part entitled “Business Outlook for 2017” contains
forward-looking statements in relation to the Group’s intentions, beliefs or current expectations regarding financial performance and other aspects of the Group’s operations and strategies. Readers of the present Interim Management Report
are reminded not to place undue reliance on forward-looking statements; actual results may differ significantly from forecasts owing to numerous factors, the majority of which are beyond the scope of the Group’s control.
MAIN CHANGES IN THE SCOPE OF CONSOLIDATION
No changes in the
scope of consolidation occurred during the first quarter of 2017.
The following changes in the scope of consolidation occurred during 2016:
|
•
|
|
TIMVISION S.r.l. (Domestic Business Unit): established on December 28, 2016;
|
|
•
|
|
Noverca S.r.l. (Domestic Business Unit): On October 28, 2016 TIM S.p.A. acquired 100% of the company;
|
|
•
|
|
Flash Fiber S.r.l. (Domestic Business Unit): established on July 28, 2016;
|
|
•
|
|
Sofora - Telecom Argentina group: classified as Discontinued Operations (Discontinued
operations/Non-current
assets held for sale) was sold on March 8, 2016;
|
|
•
|
|
Revi Immobili S.r.l., Gestione Due S.r.l. and Gestione Immobili S.r.l. (Domestic Business Unit): on January 11, 2016, INWIT S.p.A. purchased 100% of these companies, which were subsequently merged by absorption.
|
27
Separate Consolidated Income Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Change
(a-b)
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
amount
|
|
|
%
|
|
|
Revenues
|
|
|
4,819
|
|
|
|
4,440
|
|
|
|
379
|
|
|
|
8.5
|
|
|
Other income
|
|
|
78
|
|
|
|
47
|
|
|
|
31
|
|
|
|
66.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues and other income
|
|
|
4,897
|
|
|
|
4,487
|
|
|
|
410
|
|
|
|
9.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of goods and services
|
|
|
(2,061
|
)
|
|
|
(1,923
|
)
|
|
|
(138
|
)
|
|
|
(7.2
|
)
|
|
Employee benefits expenses
|
|
|
(760
|
)
|
|
|
(848
|
)
|
|
|
88
|
|
|
|
10.4
|
|
|
Other operating expenses
|
|
|
(273
|
)
|
|
|
(247
|
)
|
|
|
(26
|
)
|
|
|
(10.5
|
)
|
|
Change in inventories
|
|
|
28
|
|
|
|
85
|
|
|
|
(57
|
)
|
|
|
(67.1
|
)
|
|
Internally generated assets
|
|
|
159
|
|
|
|
158
|
|
|
|
1
|
|
|
|
0.6
|
|
|
Operating profit before depreciation and amortization, capital gains (losses) and impairment
reversals (losses) on
non-current
assets (EBITDA)
|
|
|
1,990
|
|
|
|
1,712
|
|
|
|
278
|
|
|
|
16.2
|
|
|
Depreciation and amortization
|
|
|
(1,129
|
)
|
|
|
(1,009
|
)
|
|
|
(120
|
)
|
|
|
(11.9
|
)
|
|
Gains/(losses) on disposals of
non-current
assets
|
|
|
4
|
|
|
|
3
|
|
|
|
1
|
|
|
|
33.3
|
|
|
Impairment reversals (losses) on
non-current
assets
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
2
|
|
|
|
—
|
|
|
Operating profit (loss) (EBIT)
|
|
|
865
|
|
|
|
704
|
|
|
|
161
|
|
|
|
22.9
|
|
|
Share of profits (losses) of associates and joint ventures accounted for using the equity
method
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Other income (expenses) from investments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Finance income
|
|
|
385
|
|
|
|
1,120
|
|
|
|
(735
|
)
|
|
|
(65.6
|
)
|
|
Finance expenses
|
|
|
(769
|
)
|
|
|
(1,146
|
)
|
|
|
377
|
|
|
|
32.9
|
|
|
Profit (loss) before tax from continuing operations
|
|
|
481
|
|
|
|
678
|
|
|
|
(197
|
)
|
|
|
(29.1
|
)
|
|
Income tax expense
|
|
|
(256
|
)
|
|
|
(221
|
)
|
|
|
(35
|
)
|
|
|
(15.8
|
)
|
|
Profit (loss) from continuing operations
|
|
|
225
|
|
|
|
457
|
|
|
|
(232
|
)
|
|
|
(50.8
|
)
|
|
Profit (loss) from Discontinued
operations/Non-current
assets held for sale
|
|
|
—
|
|
|
|
47
|
|
|
|
(47
|
)
|
|
|
—
|
|
|
Profit (loss) for the period
|
|
|
225
|
|
|
|
504
|
|
|
|
(279
|
)
|
|
|
(55.4
|
)
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the Parent
|
|
|
200
|
|
|
|
433
|
|
|
|
(233
|
)
|
|
|
(53.8
|
)
|
|
Non-controlling
interests
|
|
|
25
|
|
|
|
71
|
|
|
|
(46
|
)
|
|
|
(64.8
|
)
|
28
Consolidated Statements of Comprehensive Income
In accordance with IAS 1
(Presentation of
Financial Statements
), the following consolidated statements of comprehensive income include the Profit (loss) for the period as shown in the Separate Consolidated Income Statements and all
non-owner
changes in equity.
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Profit (loss) for the period
|
|
(a)
|
|
|
225
|
|
|
|
504
|
|
|
Other components of the Consolidated Statements of Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
Other components that subsequently will not be reclassified in the Separate Consolidated Income
Statements
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurements of employee defined benefit plans (IAS 19):
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial gains (losses)
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Income tax effect
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(b)
|
|
|
—
|
|
|
|
—
|
|
|
Share of other profits (losses) of associates and joint ventures accounted for using the equity
method:
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss)
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Income tax effect
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(c)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other components that subsequently will not be reclassified in the Separate Consolidated
Income Statements
|
|
(d=b+c)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other components that subsequently will be reclassified in the Separate Consolidated Income
Statements
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
financial
assets:
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) from fair value adjustments
|
|
|
|
|
(3
|
)
|
|
|
87
|
|
|
Loss (profit) transferred to the Separate Consolidated Income Statements
|
|
|
|
|
(3
|
)
|
|
|
(82
|
)
|
|
Income tax effect
|
|
|
|
|
2
|
|
|
|
(4
|
)
|
|
|
|
(e)
|
|
|
(4
|
)
|
|
|
1
|
|
|
Hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) from fair value adjustments
|
|
|
|
|
69
|
|
|
|
(679
|
)
|
|
Loss (profit) transferred to the Separate Consolidated Income Statements
|
|
|
|
|
56
|
|
|
|
382
|
|
|
Income tax effect
|
|
|
|
|
(33
|
)
|
|
|
88
|
|
|
|
|
(f)
|
|
|
92
|
|
|
|
(209
|
)
|
|
Exchange differences on translating foreign operations:
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) on translating foreign operations
|
|
|
|
|
73
|
|
|
|
146
|
|
|
Loss (profit) on translating foreign operations transferred to the Separate Consolidated Income
Statements
|
|
|
|
|
—
|
|
|
|
304
|
|
|
Income tax effect
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(g)
|
|
|
73
|
|
|
|
450
|
|
|
Share of other profits (losses) of associates and joint ventures accounted for using the equity
method:
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss)
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Loss (profit) transferred to the Separate Consolidated Income Statements
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Income tax effect
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(h)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other components that subsequently will be reclassified to the Separate Consolidated
Income Statements
|
|
(i=e+f+g+h)
|
|
|
161
|
|
|
|
242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other components of the Consolidated Statements of Comprehensive Income
|
|
(k=d+i)
|
|
|
161
|
|
|
|
242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss) for the period
|
|
(a+k)
|
|
|
386
|
|
|
|
746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the Parent
|
|
|
|
|
337
|
|
|
|
638
|
|
|
Non-controlling
interests
|
|
|
|
|
49
|
|
|
|
108
|
|
29
Consolidated Statements of Financial Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
Change
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(a-b)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
|
29,628
|
|
|
|
29,612
|
|
|
|
16
|
|
|
Intangible assets with a finite useful life
|
|
|
|
|
6,973
|
|
|
|
6,951
|
|
|
|
22
|
|
|
|
|
|
|
|
36,601
|
|
|
|
36,563
|
|
|
|
38
|
|
|
Tangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment owned
|
|
|
|
|
13,725
|
|
|
|
13,947
|
|
|
|
(222
|
)
|
|
Assets held under finance leases
|
|
|
|
|
2,412
|
|
|
|
2,413
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
16,137
|
|
|
|
16,360
|
|
|
|
(223
|
)
|
|
Other
non-current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in associates and joint ventures accounted for using the equity method
|
|
|
|
|
18
|
|
|
|
18
|
|
|
|
—
|
|
|
Other investments
|
|
|
|
|
48
|
|
|
|
46
|
|
|
|
2
|
|
|
Non-current
financial assets
|
|
|
|
|
2,596
|
|
|
|
2,698
|
|
|
|
(102
|
)
|
|
Miscellaneous receivables and other
non-current
assets
|
|
|
|
|
2,339
|
|
|
|
2,222
|
|
|
|
117
|
|
|
Deferred tax assets
|
|
|
|
|
705
|
|
|
|
877
|
|
|
|
(172
|
)
|
|
|
|
|
|
|
5,706
|
|
|
|
5,861
|
|
|
|
(155
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Non-current
assets
|
|
(a)
|
|
|
58,444
|
|
|
|
58,784
|
|
|
|
(340
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
|
|
299
|
|
|
|
270
|
|
|
|
29
|
|
|
Trade and miscellaneous receivables and other current assets
|
|
|
|
|
5,621
|
|
|
|
5,426
|
|
|
|
195
|
|
|
Current income tax receivables
|
|
|
|
|
34
|
|
|
|
94
|
|
|
|
(60
|
)
|
|
Current financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities other than investments, financial receivables and other current financial
assets
|
|
|
|
|
1,632
|
|
|
|
1,908
|
|
|
|
(276
|
)
|
|
Cash and cash equivalents
|
|
|
|
|
4,461
|
|
|
|
3,964
|
|
|
|
497
|
|
|
|
|
|
|
|
6,093
|
|
|
|
5,872
|
|
|
|
221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
sub-total
|
|
|
|
|
12,047
|
|
|
|
11,662
|
|
|
|
385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations/Non-current
assets held for
sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of a financial nature
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
of a
non-financial
nature
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current assets
|
|
(b)
|
|
|
12,047
|
|
|
|
11,662
|
|
|
|
385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
(a+b)
|
|
|
70,491
|
|
|
|
70,446
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
Change
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(a-b)
|
|
|
Equity and Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to Owners of the Parent
|
|
|
|
|
21,555
|
|
|
|
21,207
|
|
|
|
348
|
|
|
Non-controlling
interests
|
|
|
|
|
2,395
|
|
|
|
2,346
|
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity
|
|
(c)
|
|
|
23,950
|
|
|
|
23,553
|
|
|
|
397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
financial liabilities
|
|
|
|
|
31,025
|
|
|
|
30,469
|
|
|
|
556
|
|
|
Employee benefits
|
|
|
|
|
1,359
|
|
|
|
1,355
|
|
|
|
4
|
|
|
Deferred tax liabilities
|
|
|
|
|
304
|
|
|
|
293
|
|
|
|
11
|
|
|
Provisions
|
|
|
|
|
844
|
|
|
|
830
|
|
|
|
14
|
|
|
Miscellaneous payables and other
non-current
liabilities
|
|
|
|
|
1,646
|
|
|
|
1,607
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Non-current
liabilities
|
|
(d)
|
|
|
35,178
|
|
|
|
34,554
|
|
|
|
624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current financial liabilities
|
|
|
|
|
3,587
|
|
|
|
4,056
|
|
|
|
(469
|
)
|
|
Trade and miscellaneous payables and other current liabilities
|
|
|
|
|
7,215
|
|
|
|
7,646
|
|
|
|
(431
|
)
|
|
Current income tax payables
|
|
|
|
|
561
|
|
|
|
637
|
|
|
|
(76
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
sub-total
|
|
|
|
|
11,363
|
|
|
|
12,339
|
|
|
|
(976
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities directly associated with Discontinued
operations/Non-current
assets held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of a financial nature
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
of a
non-financial
nature
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
(e)
|
|
|
11,363
|
|
|
|
12,339
|
|
|
|
(976
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
(f=d+e)
|
|
|
46,541
|
|
|
|
46,893
|
|
|
|
(352
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity and Liabilities
|
|
(c+f)
|
|
|
70,491
|
|
|
|
70,446
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
|
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) from continuing operations
|
|
|
|
|
|
|
225
|
|
|
|
457
|
|
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
1,129
|
|
|
|
1,009
|
|
|
Impairment losses (reversals) on
non-current
assets
(including investments)
|
|
|
|
|
|
|
13
|
|
|
|
2
|
|
|
Net change in deferred tax assets and liabilities
|
|
|
|
|
|
|
155
|
|
|
|
90
|
|
|
Losses (gains) realized on disposals of
non-current
assets
(including investments)
|
|
|
|
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
Share of losses (profits) of associates and joint ventures accounted for using the equity
method
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Change in employee benefits
|
|
|
|
|
|
|
(7
|
)
|
|
|
59
|
|
|
Change in inventories
|
|
|
|
|
|
|
(29
|
)
|
|
|
(87
|
)
|
|
Change in trade receivables and net amounts due from customers on construction contracts
|
|
|
|
|
|
|
31
|
|
|
|
30
|
|
|
Change in trade payables
|
|
|
|
|
|
|
(48
|
)
|
|
|
(25
|
)
|
|
Net change in current income tax receivables/payables
|
|
|
|
|
|
|
76
|
|
|
|
96
|
|
|
Net change in miscellaneous receivables/payables and other assets/liabilities
|
|
|
|
|
|
|
(156
|
)
|
|
|
(279
|
)
|
|
Cash flows from (used in) operating activities
|
|
|
(a
|
)
|
|
|
1,385
|
|
|
|
1,348
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of intangible assets
|
|
|
|
|
|
|
(327
|
)
|
|
|
(342
|
)
|
|
Purchase of tangible assets
|
|
|
|
|
|
|
(519
|
)
|
|
|
(648
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchase of intangible and tangible assets on an accrual basis
|
|
|
|
|
|
|
(846
|
)
|
|
|
(990
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in amounts due for purchases of intangible and tangible assets
|
|
|
|
|
|
|
(634
|
)
|
|
|
(494
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchase of intangible and tangible assets on a cash basis
|
|
|
|
|
|
|
(1,480
|
)
|
|
|
(1,484
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of control in subsidiaries or other businesses, net of cash acquired
|
|
|
|
|
|
|
—
|
|
|
|
(6
|
)
|
|
Acquisitions/disposals of other investments
|
|
|
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
Change in financial receivables and other financial assets
|
|
|
|
|
|
|
383
|
|
|
|
862
|
|
|
Proceeds from sale that result in a loss of control of subsidiaries or other businesses, net of
cash disposed of
|
|
|
|
|
|
|
—
|
|
|
|
492
|
|
|
Proceeds from sale/repayment of intangible, tangible and other
non-current
assets
|
|
|
|
|
|
|
2
|
|
|
|
3
|
|
|
Cash flows from (used in) investing activities
|
|
|
(b
|
)
|
|
|
(1,095
|
)
|
|
|
(136
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in current financial liabilities and other
|
|
|
|
|
|
|
(214
|
)
|
|
|
(522
|
)
|
|
Proceeds from
non-current
financial liabilities (including
current portion)
|
|
|
|
|
|
|
1,182
|
|
|
|
931
|
|
|
Repayments of
non-current
financial liabilities (including
current portion)
|
|
|
|
|
|
|
(775
|
)
|
|
|
(2,157
|
)
|
|
Cash flows from (used in) financing activities
|
|
|
(c
|
)
|
|
|
193
|
|
|
|
(1,748
|
)
|
|
Cash flows from (used in) Discontinued
operations/Non-current
assets held for sale
|
|
|
(d
|
)
|
|
|
—
|
|
|
|
(45
|
)
|
|
Aggregate cash flows
|
|
|
(e=a+b+c+d
|
)
|
|
|
483
|
|
|
|
(581
|
)
|
|
Net cash and cash equivalents at beginning of the period
|
|
|
(f
|
)
|
|
|
3,952
|
|
|
|
3,216
|
|
|
Net foreign exchange differences on net cash and cash equivalents
|
|
|
(g
|
)
|
|
|
24
|
|
|
|
26
|
|
|
Net cash and cash equivalents at end of the period
|
|
|
(h=e+f+g
|
)
|
|
|
4,459
|
|
|
|
2,661
|
|
32
Additional Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Income taxes (paid) received
|
|
|
(17
|
)
|
|
|
(26
|
)
|
|
Interest expense paid
|
|
|
(613
|
)
|
|
|
(721
|
)
|
|
Interest income received
|
|
|
120
|
|
|
|
165
|
|
|
Dividends received
|
|
|
—
|
|
|
|
—
|
|
Analysis of Net Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Net cash and cash equivalents at beginning of the period
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - from continuing operations
|
|
|
3,964
|
|
|
|
3,559
|
|
|
Bank overdrafts repayable on demand – from continuing operations
|
|
|
(12
|
)
|
|
|
(441
|
)
|
|
Cash and cash equivalents - from Discontinued
operations/Non-current
assets held for sale
|
|
|
—
|
|
|
|
98
|
|
|
Bank overdrafts repayable on demand – from Discontinued
operations/Non-current
assets held for sale
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
3,952
|
|
|
|
3,216
|
|
|
Net cash and cash equivalents at end of the period
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - from continuing operations
|
|
|
4,461
|
|
|
|
2,665
|
|
|
Bank overdrafts repayable on demand – from continuing operations
|
|
|
(2
|
)
|
|
|
(4
|
)
|
|
Cash and cash equivalents - from Discontinued
operations/Non-current
assets held for sale
|
|
|
—
|
|
|
|
—
|
|
|
Bank overdrafts repayable on demand – from Discontinued
operations/Non-current
assets held for sale
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
4,459
|
|
|
|
2,661
|
|
33
OTHER
INFORMATION
Average salaried workforce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(equivalent number)
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Change
|
|
|
Average salaried workforce – Italy
|
|
|
45,877
|
|
|
|
47,444
|
|
|
|
(1,567
|
)
|
|
Average salaried workforce – Outside Italy
|
|
|
9,436
|
|
|
|
11,925
|
|
|
|
(2,489
|
)
|
|
Total average salaried workforce
(1)
|
|
|
55,313
|
|
|
|
59,369
|
|
|
|
(4,056
|
)
|
|
Discontinued
operations/Non-current
assets held for sale -
Sofora - Telecom Argentina group
|
|
|
—
|
|
|
|
10,322
|
|
|
|
(10,322
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total average salaried workforce - including Discontinued
operations/Non-current
assets held for sale
|
|
|
55,313
|
|
|
|
69,691
|
|
|
|
(14,378
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
Includes employees with temp work contracts: 3 average headcount in the first quarter of 2017 (2 in Italy and 1 outside Italy). In the first quarter of 2016, the average headcount was 3 (1 in Italy and 2 outside Italy).
|
Headcount at period end
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(number)
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
Change
|
|
|
Headcount – Italy
|
|
|
51,006
|
|
|
|
51,125
|
|
|
|
(119
|
)
|
|
Headcount – Outside Italy
|
|
|
9,924
|
|
|
|
10,104
|
|
|
|
(180
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total headcount at period end
(1)
|
|
|
60,930
|
|
|
|
61,229
|
|
|
|
(299
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
Includes employees with temp work contracts: 3 at 3/31/2017 and 4 at 12/31/2016.
|
Headcount at period end
– Breakdown by Business Unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(number)
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
Change
|
|
|
Domestic
|
|
|
51,163
|
|
|
|
51,280
|
|
|
|
(117
|
)
|
|
Brazil
|
|
|
9,674
|
|
|
|
9,849
|
|
|
|
(175
|
)
|
|
Other Operations
|
|
|
93
|
|
|
|
100
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
60,930
|
|
|
|
61,229
|
|
|
|
(299
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
EVENTS SUBSEQUENT TO MARCH 31, 2017
For details of subsequent events, see the Note “Events Subsequent to March 31, 2017” in the TIM Group condensed consolidated financial
statements.
BUSINESS OUTLOOK FOR THE YEAR 2017
As envisaged in the 2017–2019 Plan, TIM will continue the process of profound transformation of the Company. This process consists of firm financial
discipline in support of development, aimed at creating more room for core investments (Fiber and mobile UltraBroadband) and eliminating unproductive cash costs, as well as maximizing the return on investment. The objective is to ensure structural
growth in revenue and EBITDA and consolidate TIM’s position as the market leader in terms of technology, network quality and service excellence in the Fixed-line and Mobile segments. The key elements of this approach are innovation,
convergence, exclusive content and closeness to the Customer.
In the Domestic Fixed segment, TIM expects to further reduce the contraction of the number
of customers – and that all loss lines will be brought to zero by 2018 – through the faster spread and subsequent adoption of fiber optic networks. TIM’s NGN will cover around 95% of Italian homes in 2018 and around 99% in 2019. A
crucial role will also be played by our commercial strategy that aims to retain and increase the number of customers by offering, inter alia, devices and appliances connected to the home network – the Internet of Things – directly charged
in the phone bill.
Within the Domestic Mobile segment, in an increasingly polarized and segmented competitive scenario, TIM – particularly in the
high-end
market with ever-increasing data usage – will leverage the reach of its 4G network (expected population coverage of over 99% in 2019) and the diffusion of convergent services and quality content. Kena,
the second
no-frills
brand (launched in April), will allow the company to compete in the more price sensitive segments.
Operations will be characterized by greater selectivity in investment choices and efficiency recovery actions through structural cost optimization programs.
At the same time, the transformation and simplification of organization and processes – combined with the commercial development and the expected growth in revenue – will provide the Group with EBITDA growth (low single digit) and the cash
generation needed to reduce the Adjusted net financial debt to reported EBITDA ratio, which is expected to be below 2.7x in 2018.
In Brazil, the Plan
provides for the continued turnaround of Tim Brasil through its
re-positioning
based on product and network quality, thereby enabling the company to successfully compete in the postpaid segment, while
recovering a solid profitability. More specifically, further impetus will be given to the construction of the UBB Mobile infrastructure – at completion of the Plan, the 4G network will reach 95% of the population with coverage of about 3,600
cities – and the development of convergent offers, including through agreements with major premium content providers.
35
MAIN RISKS AND UNCERTAINTIES
The business outlook for 2017 could be affected by risks and uncertainties caused by a multitude of factors, the majority of which are beyond the Group’s
control.
In such a scenario, risk management becomes a strategic tool for value creation. The TIM Group has adopted an Enterprise Risk Management Model
based on the methodology of the Committee of Sponsoring Organizations of the Treadway Commission (ERM CoSO Report), which enables the identification and management of risk in a uniform manner across the Group companies, highlighting potential
synergies among the actors involved in the assessment of the Internal Control and Risk Management System. The ERM process is designed to identify potential events that may affect the business, to manage risk within acceptable limits and to provide
reasonable assurance regarding the achievement of corporate objectives.
The main risks affecting the business activities of the TIM Group, which may
impact, even significantly, the ability to achieve the objectives of the Group are presented below.
STRATEGIC RISKS
Risks related to macro-economic factors
The TIM Group’s economic and financial situation is subject to the influence of numerous macroeconomic factors such as economic growth, political
stability, consumer confidence, and changes in interest rates and exchange rates in the markets in which it operates. The expected results may be affected, in the domestic market, by the struggling economic recovery: growth at
year-end
2016 was 0.9%, a low figure when compared to the average of the EMU countries, albeit higher than that expected for 2017. The consumption cycle, which had driven the recovery in 2013 and supported it in the
following years, is slowing down also due to a more cautious attitude by households: confidence has weakened while the propensity to save is rising again. The unemployment rate continues to be at high levels, with possible repercussions on the
income available for consumption.
In the Brazilian market, the expected results may be affected by the further deterioration of the macroeconomic
environment, with the country currently in economic recession: for 2017, as of the second quarter, moderate growth is expected, driven by improved confidence, the recovery of investment and a slightly less uncertain political climate. The high
unemployment rate of just under 12% in late 2016 could have a negative impact on household consumption. These factors mean that the consequent recognition of goodwill impairment losses cannot be ruled out.
Risks related to competition
The telecommunications market is characterized by strong competition that may reduce market share in the geographical areas where the TIM Group is engaged as
well as erode prices and margins. Competition is focused, on one hand, on innovative products and services and, on the other hand, on the price of traditional services. In addition, in the area of infrastructure competition, the growth of
alternative operators could represent a threat for TIM, particularly in the years of the Plan after 2017 and also beyond the Plan period.
In the mobile
market, Iliad S.A. is about to launch a new mobile operator in Italy with the aim of acquiring
10-15%
of the market, as per its own announcements, by adopting the strategies it has already used for the French
market. For its part, TIM has launched a new operator with its own independent systems and features.
In addition, Open Fiber and Infratel have announced
their plans for the development of an ultrabroadband telecommunications network as an alternative to the TIM network, respectively in the major Italian cities and the “market failure” areas.
36
In Brazil, the deterioration of the macroeconomic environment continues to negatively impact on the
telecommunications market. Competitive risk comprises both an acceleration in the deterioration of the business model tied to traditional services not fully replaced by innovative services and the rationalization of consumption by customers as a
result of a contraction of their purchasing power. In this scenario, the Tim Brasil group may be further impacted in the short term to a greater extent than its main competitors, due to the higher proportion of customers with prepaid services, which
are more affected by the current macroeconomic situation, and by a slowdown in their replacement with postpaid customers.
OPERATIONAL RISKS
Operational risks inherent in our business relate to possible inadequacies in internal processes, external factors, frauds, employee errors, errors in properly
documenting transactions, loss of critical or commercially sensitive data and failures in systems and/or network platforms.
Risks related to business
continuity
The success of the TIM Group
heavily depends on the ability to offer in a continuous and uninterrupted manner our services/ products through the availability of processes and their supporting assets; among these, in addition to our personnel, a specific focus concerns the
resilience of the Network infrastructure and the Information Systems business continuity and/or Disaster Recovery policies. In particular, the Network Infrastructure and the Information Systems are sensitive to various internal and external threats:
power outage, floods, storms, human errors, system failures, hardware and software failures, software bugs, cyber attacks, earthquakes, facility failures, strikes, fraud, vandalism, terrorism, etc.. Each of these events could lead to an interruption
in the supply of services/products and potentially affect our business both directly and indirectly: reduction in revenues and/or increased recovery costs, decrease in customer satisfaction, increased churn rate, costs related to penalties and
fines, negative impact on the Group’s image and reputation.
Risks related to the development of fixed and mobile networks
To maintain and expand our customer portfolio in
each of the markets in which we operate, it is necessary to maintain, update and improve existing networks in a timely manner. A reliable and high quality network is necessary to maintain the customer base and minimize the terminations to protect
the Company’s revenues from erosion. The maintenance and improvement of existing installations depend on our ability to:
|
•
|
|
upgrade the capabilities of the networks to provide customers with services that are closer to their needs; in this regard, the TIM Group may participate in tenders for broadcasting frequencies;
|
|
•
|
|
increase the geographical coverage of innovative services;
|
|
•
|
|
upgrade the structure of the systems and the networks to adapt it to new technologies;
|
|
•
|
|
sustaining the necessary level of capital expenditure in the long term.
|
Risks of internal/external fraud
The TIM Group has adopted an
organizational model to prevent fraud. However, the implementation of this model cannot ensure the total mitigation of the risk. Dishonest activities and illegal acts committed by people inside and outside the organization could adversely affect the
Company’s operating results, financial position and image.
37
Risks related to disputes and litigation
The TIM Group has to deal with disputes and
litigation with tax authorities, regulators, competition authorities, other telecommunications operators and other entities. The possible impacts of such proceedings are generally uncertain. In the event of settlement unfavorable to the Group, these
issues may, individually or as whole, have an adverse effect, which may even be significant, on its operating results, financial position and cash flows.
FINANCIAL RISKS
The TIM Group may be exposed to financial risks, such as risks arising from fluctuations in interest rates and exchange rates, credit risk, liquidity risk and
risks related to the performance of the equity markets in general, and – more specifically – risks related to the performance of the share price of the TIM Group companies. These risks may adversely impact the earnings and the financial
structure of the Group. Accordingly, to manage those risks, the TIM Group has established guidelines, at central level, which must be followed for operational management, identification of the most suitable financial instruments to meet set goals,
and monitoring the results achieved. In particular, in order to mitigate the liquidity risk, the TIM Group aims to maintain an “adequate level of financial flexibility”, in terms of cash and syndicated committed credit lines, enabling it
to cover refinancing requirements at least for the next 12
-18
months.
On June 23, 2016, a referendum was
held in the United Kingdom, commonly referred to as “Brexit”, in which voters approved the UK’s exit from the European Union. The potential impact of Brexit will depend, in part, on the outcome of the negotiations on tariffs, trade,
regulations and other matters. The result of the referendum had an adverse effect on the global markets and currencies, including a sharp decline in the pound against the dollar and the euro. Brexit and the possible changes during the exit
negotiations could create further instability in the global financial markets and uncertainty about the laws of the European Union that the United Kingdom decides to replace or replicate with national laws and regulations. Any of these effects of
Brexit could, among other things, have an adverse effect on our financial conditions, our business and the related earnings and cash flows.
REGULATORY AND COMPLIANCE RISKS
Regulatory risks
The telecommunications industry is highly regulated. In this context, new decisions by the Communications Authority (AGCom) may lead to changes in the
regulatory framework that may affect the expected results of the Group. More specifically, the main elements that introduce uncertainty are:
|
•
|
|
lack of predictability in
start-up
timing and consequent new process decisions;
|
|
•
|
|
decisions with retroactive effect (for example, price revisions for previous years as a result of judgments issued by the Administrative Courts);
|
|
•
|
|
decisions that can influence the technological choices made and to be made, with potential impact on the timing of return on infrastructure investment.
|
The implementation of the New Equivalence Model (NEM), launched by TIM in 2015, is being completed; its aim is to further improve the effectiveness of
guarantees on equal treatment between own business divisions and competitors that buy wholesale services. The NEM and the related implementation roadmap were approved by the Board of Directors of TIM on November 5, 2015. The Italian Antitrust
Authority (AGCM) and the AGCom positively evaluated the effectiveness of the NEM and decided, respectively, to close the
non-compliance
proceedings A428C, acknowledging that TIM has complied with the earlier
A428 decision, and to discontinue the ongoing penalty proceedings.
38
Compliance risks
The TIM Group may be exposed to risks of
non-compliance
due to
non-observance/breach
of internal (self-regulation, such as, for example, bylaws, code of ethics) and external rules (laws and regulations), with
consequent judicial or administrative penalties, financial losses or reputational damage.
The TIM Group aims to ensure that processes, and, therefore,
the procedures and systems governing them, and corporate conduct comply with legal requirements. The risk is associated with potential time lags in making the processes compliant with regulatory changes or whenever
non-conformities
are identified.
39
INFORMATION FOR INVESTORS
TIM S.P.A. SHARE CAPITAL AT MARCH 31,
2017
|
|
|
|
|
|
|
Share capital
|
|
|
11,677,002,855.10 euros
|
|
|
Number of ordinary shares (without nominal value)
|
|
|
15,203,122,583
|
|
|
Number of savings shares (without nominal value)
|
|
|
6,027,791,699
|
|
|
Number of TIM S.p.A. ordinary treasury shares
|
|
|
37,672,014
|
|
|
Number of TIM S.p.A. ordinary shares held by Telecom Italia Finance S.A.
|
|
|
126,082,374
|
|
|
Percentage of ordinary treasury shares held by the Group to total share capital
|
|
|
0.77
|
%
|
|
Market capitalization (based on March 2017 average prices)
|
|
|
16,223 million euros
|
|
Regarding the trading of shares issued by Group companies on regulated markets, the ordinary and savings shares of TIM S.p.A.
are listed in Italy (FTSE index), as well as the ordinary shares of INWIT S.p.A., whereas the ordinary shares of Tim Participações S.A. are listed in Brazil (BOVESPA index).
The ordinary and savings shares of TIM S.p.A., and the ordinary shares of Tim Participações S.A. are also listed on the NYSE (New York Stock
Exchange); trading occurs through ADS (American Depositary Shares) that respectively represent 10 ordinary shares and 10 savings shares of TIM S.p.A. and 5 ordinary shares of Tim Participações S.A..
SHAREHOLDERS
Composition of TIM
S.p.A. shareholders according to the Shareholders Book at March 31, 2017, supplemented by communications received and other available sources of information (ordinary shares):
There are no significant shareholders’ agreements for TIM pursuant to Article 122 of Italian Legislative Decree
58/1998.
40
MAJOR
HOLDINGS IN SHARE CAPITAL
At March 31, 2017, taking into account the entries in the Shareholders Book, communications sent to Consob and to the
Company pursuant to Italian Legislative Decree 58 of February 24, 1998, Article 120, and other available sources of information, the relevant holdings of TIM S.p.A.‘s ordinary share capital are as follows:
|
|
|
|
|
|
|
|
|
|
|
Holder
|
|
Type of ownership
|
|
|
Percentage of ownership
|
|
|
Vivendi S.A.
|
|
|
Direct
|
|
|
|
23.94
|
%
(*)
|
|
Norges Bank
|
|
|
Direct
|
|
|
|
3.44
|
%
|
|
(*)
|
Equity interest obtained following receipt of a notification by Vivendi S.A. pursuant to Article 152 octies, paragraph 7, of the Consob Issuer Regulations.
|
Blackrock Inc. also notified Consob that, on November 15, 2016, as an asset management company, it indirectly held a quantity of ordinary shares equal to
3.10% of the total ordinary shares of TIM S.p.A. at March 31, 2017.
Norges Bank also notified Consob that, on April 13, 2017, it was the holder
of a quantity of ordinary shares equal to 2.58% of the total ordinary shares of TIM S.p.A..
COMMON REPRESENTATIVES
|
•
|
|
The special meeting of the savings shareholders held on June 16, 2016 renewed the appointment of Dario Trevisan as the common representative for three financial years, up to the approval of the financial statements
for the year ended December 31, 2018.
|
|
•
|
|
By decree of April 11, 2014, the Milan Court confirmed the appointment of Enrico Cotta Ramusino (already appointed by decree of March 7, 2011) as the common representative of the bondholders for the
“Telecom Italia S.p.A. 2002-2022 bonds at variable rates, open special series, reserved for subscription by employees of the TIM Group, in service or retired”, with a mandate for the three-year period 2014-2016. On April 6, 2017, in
view of the expiry of his term of office, a General Meeting was called of the bondholders for the Telecom Italia S.p.A. 2002-2022 bonds at variable rates, open special series, reserved for subscription by employees of the TIM Group, in service or
retired, which was not held due to lack of the required quorum.
|
|
•
|
|
By decree of June 12, 2015, the Milan Court appointed Monica Iacoviello as the common representative of the bondholders for the “Telecom Italia S.p.A. 1,250,000,000 euros 5.375 percent. Notes due
2019” up to the approval of the 2017 Annual Report.
|
RATING AT MARCH 31, 2017
At March 31, 2017, the three rating agencies – Standard & Poor’s, Moody’s and Fitch Ratings – rated TIM as follows:
|
|
|
|
|
|
|
|
|
Rating
|
|
Outlook
|
|
STANDARD & POOR’S
|
|
BB+
|
|
Stable
|
|
MOODY’S
|
|
Ba1
|
|
Negative
|
|
FITCH RATINGS
|
|
BBB-
|
|
Stable
|
WAIVER OF THE OBLIGATION TO PUBLISH DISCLOSURE DOCUMENTS FOR EXTRAORDINARY OPERATIONS
On January 17, 2013, the board of directors of TIM S.p.A. resolved to exercise the option, as per article 70 paragraph 8 and article 71 paragraph
1-bis
of the Consob Regulation 11971/99, to waive the obligations to publish disclosure documents in the event of significant operations such as mergers, demergers, capital increases by means of the transfer of
assets in kind, acquisitions and disposals.
41
CORPORATE BOARDS AT MARCH 31, 2017
BOARD OF DIRECTORS
The Board of Directors of the Company at
March 31, 2017 was composed as follows:
|
|
|
|
|
Chairman
|
|
Giuseppe Recchi
|
|
Deputy Chairman
|
|
Arnaud Roy de Puyfontaine
|
|
Chief Executive Officer
|
|
Flavio Cattaneo
|
|
Directors
|
|
Tarak Ben Ammar
Davide Benello (Lead
Independent Director)
Lucia Calvosa (independent)
Laura Cioli
(independent)
Francesca Cornelli (independent)
Jean Paul
Fitoussi
Giorgina Gallo (independent)
Félicité
Herzog (independent)
Denise Kingsmill (independent)
Luca
Marzotto (independent)
Hervé Philippe
Stéphane
Roussel
Giorgio Valerio (independent)
|
|
Secretary to the Board
|
|
Agostino Nuzzolo
|
All the board members are domiciled for the positions they hold in TIM at the registered offices of the Company in Milan, Via
G. Negri 1.
The following board committees were in place at March 31, 2017:
|
•
|
|
Control and Risk Committee:
composed of the Directors: Lucia Calvosa (Chair appointed in the meeting of May 8, 2014), Laura Cioli, Francesca Cornelli, Giorgina Gallo, and Félicité Herzog
(appointed by the Board of Directors on February 15, 2016, which also decided to increase the number of members of the committee from 5 to 6) and Giorgio Valerio;
|
|
•
|
|
Nomination and Remuneration Committee:
composed of the Directors: Davide Benello (Chair appointed in the meeting of May 9, 2014), Luca Marzotto, Arnaud Roy de Puyfontaine and Stéphane Roussel
(appointed on February 15, 2016 by the Board of Directors, which accepted the resignation of Jean Paul Fitoussi and decided to increase the number of members of the committee from 4 to 5), and Giorgio Valerio (appointed on June 20, 2016 by
the Board of Directors, to replace the director Denise Kingsmill, who resigned on June 15, 2016);
|
|
•
|
|
Strategy Committee:
composed
of the Chairman of the Board of Directors, Giuseppe Recchi, the Chief Executive Officer, Flavio Cattaneo, and the Deputy Chairman, Arnaud Roy de Puyfontaine (who was appointed
Chairman of the Committee in the meeting of September 30, 2016), and the Directors Davide Benello and Laura Cioli.
|
BOARD OF STATUTORY AUDITORS
The ordinary shareholders’ meeting of May 20, 2015 appointed the Company’s Board of Statutory Auditors with a term up to the approval of the
2017 financial statements.
42
The Board of Statutory Auditors of the Company is now composed as follows:
|
|
|
|
|
Chairman
|
|
Roberto Capone
|
|
Acting Auditors
|
|
Vincenzo Cariello
|
|
|
|
Paola Maiorana
|
|
|
|
Gianluca Ponzellini
|
|
|
|
Ugo Rock
|
|
Alternate Auditors
|
|
Francesco Di Carlo
|
|
|
|
Gabriella Chersicla
|
|
|
|
Piera Vitali
|
|
|
|
Riccardo Schioppo
|
INDEPENDENT AUDITORS
The shareholders’ meeting held on
April 29, 2010 appointed the audit firm PricewaterhouseCoopers S.p.A. to audit TIM financial statements for the nine-year period 2010-2018.
MANAGER RESPONSIBLE FOR PREPARING THE CORPORATE
FINANCIAL REPORTS
At the meeting of April 18, 2014, the Board of Directors confirmed Piergiorgio Peluso (Head of the Group Administration, Finance
and Control Function) as the manager responsible for preparing TIM’s financial reports.
43
MACRO-ORGANIZATION CHART
AT MARCH 31, 2017
44
SIGNIFICANT NON-RECURRING EVENTS AND TRANSACTIONS
The effect of significant
non-recurring
events and transactions on the results of the TIM Group is reported below.
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Employee benefits expenses:
|
|
|
|
|
|
|
|
|
|
Expenses related to restructuring and rationalization
|
|
|
(5
|
)
|
|
|
(73
|
)
|
|
Other operating expenses:
|
|
|
|
|
|
|
|
|
|
Sundry expenses and provisions
|
|
|
(19
|
)
|
|
|
(2
|
)
|
|
Impact on Operating profit (loss) before depreciation and amortization, capital gains (losses)
and impairment reversals (losses) on
non-current
assets (EBITDA)
|
|
|
(24
|
)
|
|
|
(75
|
)
|
|
Gains (losses) on
non-current
assets:
|
|
|
|
|
|
|
|
|
|
Gains on disposals of
non-current
assets
|
|
|
—
|
|
|
|
1
|
|
|
Impact on EBIT – Operating profit (loss)
|
|
|
(24
|
)
|
|
|
(74
|
)
|
|
Finance expenses:
|
|
|
|
|
|
|
|
|
|
Interest expenses and miscellaneous finance expenses
|
|
|
(7
|
)
|
|
|
(5
|
)
|
|
Impact on profit (loss) before tax from continuing operations
|
|
|
(31
|
)
|
|
|
(79
|
)
|
|
Effect on income taxes on
non-recurring
items
|
|
|
9
|
|
|
|
24
|
|
|
Provision charges for Sparkle tax dispute
|
|
|
(93
|
)
|
|
|
—
|
|
|
Discontinued operations – Effect of the disposal of the Sofora – Telecom Argentina
group
|
|
|
—
|
|
|
|
(12
|
)
|
|
Impact on profit (loss) for the period
|
|
|
(115
|
)
|
|
|
(67
|
)
|
POSITIONS OR TRANSACTIONS RESULTING FROM ATYPICAL AND/OR UNUSUAL OPERATIONS
In the first quarter of 2017, the Telecom Italia Group did not undertake any atypical and/or unusual transactions, as defined in Consob Communication
DEM/6064293 of July 28, 2006.
45
ALTERNATIVE PERFORMANCE MEASURES
In this Interim Management Report at March 31, 2017 of the TIM Group, in addition to the conventional financial performance measures required by IFRS, a
series of
alternative performance measures
are presented for the purposes of providing a better understanding of results from operations and the financial position. Such measures, which are also presented in other periodical financial reports
(annual and interim) should, however, not be construed as a substitute for those required by IFRS.
The alternative performance measures used are
described below:
|
•
|
|
EBITDA
: this financial measure is used by TIM as the financial target in internal presentations (business plans) and in external presentations (to analysts and investors). It represents a useful unit of
measurement for the evaluation of the operating performance of the Group (as a whole and at the Business Unit level), in addition to
EBIT
. These measures are calculated as follows:
|
|
|
|
|
|
Profit (loss) before tax from continuing operations
|
|
+
|
|
Finance expenses
|
|
-
|
|
Finance income
|
|
+/-
|
|
Other expenses (income) from investments
|
|
+/-
|
|
Share of profits (losses) of associates and joint ventures accounted for using the equity method
|
|
EBIT - Operating profit (loss)
|
|
+/-
|
|
Impairment losses (reversals) on
non-current
assets
|
|
+/-
|
|
Losses (gains) on disposals of
non-current
assets
|
|
+
|
|
Depreciation and amortization
|
|
EBITDA - Operating profit (loss) before depreciation and amortization, Capital gains (losses) and Impairment reversals (losses) on
non-current
assets
|
|
•
|
|
Organic change in Revenues, EBITDA and EBIT
: these measures express changes (amount and/or percentage) in revenues, EBITDA and EBIT, excluding, where applicable, the effects of the change in the scope of
consolidation and exchange differences.
|
TIM believes that the presentation of the organic change in revenues, EBITDA and
EBIT allows for a more complete and effective understanding of the operating performance of the Group (as a whole and at the Business Unit level). This method of presenting information is also used in presentations to analysts and investors. This
Interim Management Report provides a reconciliation between the “reported figure” and the “organic” figure.
|
•
|
|
EBITDA margin and EBIT margin:
TIM believes that these margins represent useful indicators of the Group’s ability, as a whole and at Business Unit level, to generate profits from its revenues. In fact,
EBITDA margin and EBIT margin measure the operating performance of an entity by analyzing the percentage of revenues that are converted, respectively, into EBITDA and EBIT. Such indicators are used by TIM in internal presentations
(business
plans) and in external presentations (to analysts and investors) in order to illustrate the results from operations also through the comparison of the operating results of the reporting period with those of the previous periods.
|
|
•
|
|
Net Financial Debt:
TIM believes that Net Financial Debt represents an accurate indicator of the Group’s ability to meet its financial obligations. It is represented by Gross Financial Debt less Cash and
Cash Equivalents and other Financial Assets. This Interim Management Report includes tables showing the amounts taken from the statement of financial position and used to calculate the Net Financial Debt of the Group.
|
To better represent the real performance of Net Financial Debt, in addition to the usual indicator (called “Net financial debt carrying
amount”), “Adjusted net financial debt” is also shown, which excludes effects that are purely accounting and
non-monetary
in nature deriving from the fair value measurement of derivatives and
related financial assets and liabilities.
46
Net financial debt is calculated as follows:
|
|
|
|
|
+
|
|
Non-current
financial liabilities
|
|
+
|
|
Current financial liabilities
|
|
+
|
|
Financial liabilities directly associated with Discontinued
operations/Non-current
assets held for sale
|
|
A)
|
|
Gross financial debt
|
|
+
|
|
Non-current
financial assets
|
|
+
|
|
Current financial assets
|
|
+
|
|
Financial assets relating to Discontinued
operations/Non-current
assets held for sale
|
|
B)
|
|
Financial assets
|
|
C=(A - B)
|
|
Net financial debt carrying amount
|
|
D)
|
|
Reversal of fair value measurement of derivatives and related financial assets/liabilities
|
|
E=(C + D)
|
|
Adjusted net financial debt
|
47
TIM GROUP
CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
AT MARCH 31, 2017
CONTENTS
TIM GROUP CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AT MARCH 31, 2017
49
C
ONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
|
|
|
note
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
|
|
|
4)
|
|
|
|
29,628
|
|
|
|
29,612
|
|
|
Intangible assets with a finite useful life
|
|
|
|
|
|
|
5)
|
|
|
|
6,973
|
|
|
|
6,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,601
|
|
|
|
36,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible assets
|
|
|
|
|
|
|
6)
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment owned
|
|
|
|
|
|
|
|
|
|
|
13,725
|
|
|
|
13,947
|
|
|
Assets held under finance leases
|
|
|
|
|
|
|
|
|
|
|
2,412
|
|
|
|
2,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,137
|
|
|
|
16,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
non-current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in associates and joint ventures accounted for using the equity method
|
|
|
|
|
|
|
|
|
|
|
18
|
|
|
|
18
|
|
|
Other investments
|
|
|
|
|
|
|
|
|
|
|
48
|
|
|
|
46
|
|
|
Non-current
financial assets
|
|
|
|
|
|
|
|
|
|
|
2,596
|
|
|
|
2,698
|
|
|
Miscellaneous receivables and other
non-current
assets
|
|
|
|
|
|
|
|
|
|
|
2,339
|
|
|
|
2,222
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
|
705
|
|
|
|
877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,706
|
|
|
|
5,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Non-current
assets
|
|
|
(a)
|
|
|
|
|
|
|
|
58,444
|
|
|
|
58,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
|
|
|
|
|
|
|
|
299
|
|
|
|
270
|
|
|
Trade and miscellaneous receivables and other current assets
|
|
|
|
|
|
|
|
|
|
|
5,621
|
|
|
|
5,426
|
|
|
Current income tax receivables
|
|
|
|
|
|
|
|
|
|
|
34
|
|
|
|
94
|
|
|
Current financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities other than investments, financial receivables and other current financial
assets
|
|
|
|
|
|
|
|
|
|
|
1,632
|
|
|
|
1,908
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
4,461
|
|
|
|
3,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,093
|
|
|
|
5,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
sub-total
|
|
|
|
|
|
|
|
|
|
|
12,047
|
|
|
|
11,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations/Non-current
assets held for
sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of a financial nature
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
of a
non-financial
nature
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current assets
|
|
|
(b)
|
|
|
|
|
|
|
|
12,047
|
|
|
|
11,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
(a+b)
|
|
|
|
|
|
|
|
70,491
|
|
|
|
70,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
Equity and Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
|
|
|
note
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
7
|
)
|
|
|
|
|
|
|
|
|
|
Share capital issued
|
|
|
|
|
|
|
|
|
|
|
11,677
|
|
|
|
11,677
|
|
|
less: Treasury shares
|
|
|
|
|
|
|
|
|
|
|
(90
|
)
|
|
|
(90
|
)
|
|
Share capital
|
|
|
|
|
|
|
|
|
|
|
11,587
|
|
|
|
11,587
|
|
|
Additional
paid-in
capital
|
|
|
|
|
|
|
|
|
|
|
2,094
|
|
|
|
2,094
|
|
|
Other reserves and retained earnings (accumulated losses), including profit (loss) for the
period
|
|
|
|
|
|
|
|
|
|
|
7,874
|
|
|
|
7,526
|
|
|
Equity attributable to Owners of the Parent
|
|
|
|
|
|
|
|
|
|
|
21,555
|
|
|
|
21,207
|
|
|
Non-controlling
interests
|
|
|
|
|
|
|
|
|
|
|
2,395
|
|
|
|
2,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity
|
|
|
(c
|
)
|
|
|
|
|
|
|
23,950
|
|
|
|
23,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
financial liabilities
|
|
|
|
|
|
|
8
|
)
|
|
|
31,025
|
|
|
|
30,469
|
|
|
Employee benefits
|
|
|
|
|
|
|
|
|
|
|
1,359
|
|
|
|
1,355
|
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
|
|
304
|
|
|
|
293
|
|
|
Provisions
|
|
|
|
|
|
|
|
|
|
|
844
|
|
|
|
830
|
|
|
Miscellaneous payables and other
non-current
liabilities
|
|
|
|
|
|
|
|
|
|
|
1,646
|
|
|
|
1,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Non-current
liabilities
|
|
|
(d
|
)
|
|
|
|
|
|
|
35,178
|
|
|
|
34,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current financial liabilities
|
|
|
|
|
|
|
8
|
)
|
|
|
3,587
|
|
|
|
4,056
|
|
|
Trade and miscellaneous payables and other current liabilities
|
|
|
|
|
|
|
|
|
|
|
7,215
|
|
|
|
7,646
|
|
|
Current income tax payables
|
|
|
|
|
|
|
|
|
|
|
561
|
|
|
|
637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
sub-total
|
|
|
|
|
|
|
|
|
|
|
11,363
|
|
|
|
12,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities directly associated with Discontinued
operations/Non-current
assets held for sale of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a financial nature
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
of a
non-financial
nature
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
(e
|
)
|
|
|
|
|
|
|
11,363
|
|
|
|
12,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
(f=d+e
|
)
|
|
|
|
|
|
|
46,541
|
|
|
|
46,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity and Liabilities
|
|
|
(c+f
|
)
|
|
|
|
|
|
|
70,491
|
|
|
|
70,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51
SE
PARATE CONSOLIDATED INCOME STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
note
|
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
4,819
|
|
|
|
4,440
|
|
|
Other income
|
|
|
|
|
|
|
78
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues and other income
|
|
|
|
|
|
|
4,897
|
|
|
|
4,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of goods and services
|
|
|
|
|
|
|
(2,061
|
)
|
|
|
(1,923
|
)
|
|
Employee benefits expenses
|
|
|
|
|
|
|
(760
|
)
|
|
|
(848
|
)
|
|
Other operating expenses
|
|
|
|
|
|
|
(273
|
)
|
|
|
(247
|
)
|
|
Change in inventories
|
|
|
|
|
|
|
28
|
|
|
|
85
|
|
|
Internally generated assets
|
|
|
|
|
|
|
159
|
|
|
|
158
|
|
|
Operating profit before depreciation and amortization, capital gains (losses) and impairment
reversals (losses) on
non-current
assets (EBITDA)
|
|
|
|
|
|
|
1,990
|
|
|
|
1,712
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
(1,129
|
)
|
|
|
(1,009
|
)
|
|
Gains/(losses) on disposals of
non-current
assets
|
|
|
|
|
|
|
4
|
|
|
|
3
|
|
|
Impairment reversals (losses) on
non-current
assets
|
|
|
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
Operating profit (loss) (EBIT)
|
|
|
|
|
|
|
865
|
|
|
|
704
|
|
|
Share of profits (losses) of associates and joint ventures accounted for using the equity
method
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Other income (expenses) from investments
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Finance income
|
|
|
|
|
|
|
385
|
|
|
|
1,120
|
|
|
Finance expenses
|
|
|
|
|
|
|
(769
|
)
|
|
|
(1,146
|
)
|
|
Profit (loss) before tax from continuing operations
|
|
|
|
|
|
|
481
|
|
|
|
678
|
|
|
Income tax expense
|
|
|
|
|
|
|
(256
|
)
|
|
|
(221
|
)
|
|
Profit (loss) from continuing operations
|
|
|
|
|
|
|
225
|
|
|
|
457
|
|
|
Profit (loss) from Discontinued
operations/Non-current
assets held for sale
|
|
|
|
|
|
|
|
|
|
|
47
|
|
|
Profit (loss) for the period
|
|
|
|
|
|
|
225
|
|
|
|
504
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the Parent
|
|
|
|
|
|
|
200
|
|
|
|
433
|
|
|
Non-controlling
interests
|
|
|
|
|
|
|
25
|
|
|
|
71
|
|
|
|
|
|
|
|
(euros)
|
|
|
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (Basic)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary Share
|
|
|
|
|
|
|
0.01
|
|
|
|
0.02
|
|
|
Savings Share
|
|
|
|
|
|
|
0.02
|
|
|
|
0.03
|
|
|
of which:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from Continuing operations attributable to Owners of the Parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary Share
|
|
|
|
|
|
|
0.01
|
|
|
|
0.02
|
|
|
Savings Share
|
|
|
|
|
|
|
0.02
|
|
|
|
0.03
|
|
|
Earnings per share (Diluted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary Share
|
|
|
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
Savings Share
|
|
|
|
|
|
|
0.02
|
|
|
|
0.02
|
|
|
of which:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from Continuing operations attributable to Owners of the Parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary Share
|
|
|
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
Savings Share
|
|
|
|
|
|
|
0.02
|
|
|
|
0.02
|
|
52
CO
NSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Note 7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
|
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Profit (loss) for the period
|
|
|
(a
|
)
|
|
|
225
|
|
|
|
504
|
|
|
Other components of the Consolidated Statements of Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other components that subsequently will not be reclassified in the Separate Consolidated Income
Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurements of employee defined benefit plans (IAS 19):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial gains (losses)
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Income tax effect
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
(b
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Share of other profits (losses) of associates and joint ventures accounted for using the equity
method:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss)
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Income tax effect
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
(c
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Total other components that subsequently will not be reclassified in the Separate Consolidated
Income Statements
|
|
|
(d=b+c
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Other components that subsequently will be reclassified in the Separate Consolidated Income
Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
financial
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) from fair value adjustments
|
|
|
|
|
|
|
(3
|
)
|
|
|
87
|
|
|
Loss (profit) transferred to the Separate Consolidated Income Statements
|
|
|
|
|
|
|
(3
|
)
|
|
|
(82
|
)
|
|
Income tax effect
|
|
|
|
|
|
|
2
|
|
|
|
(4
|
)
|
|
|
|
|
(e
|
)
|
|
|
(4
|
)
|
|
|
1
|
|
|
Hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) from fair value adjustments
|
|
|
|
|
|
|
69
|
|
|
|
(679
|
)
|
|
Loss (profit) transferred to the Separate Consolidated Income Statements
|
|
|
|
|
|
|
56
|
|
|
|
382
|
|
|
Income tax effect
|
|
|
|
|
|
|
(33
|
)
|
|
|
88
|
|
|
|
|
|
(f
|
)
|
|
|
92
|
|
|
|
(209
|
)
|
|
Exchange differences on translating foreign operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) on translating foreign operations
|
|
|
|
|
|
|
73
|
|
|
|
146
|
|
|
Loss (profit) on translating foreign operations transferred to the Separate Consolidated Income
Statements
|
|
|
|
|
|
|
—
|
|
|
|
304
|
|
|
Income tax effect
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
(g
|
)
|
|
|
73
|
|
|
|
450
|
|
|
Share of other profits (losses) of associates and joint ventures accounted for using the equity
method:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss)
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Loss (profit) transferred to the Separate Consolidated Income Statements
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Income tax effect
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
(h
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other components that subsequently will be reclassified to the Separate Consolidated
Income Statements
|
|
|
(i=e+f+g+h
|
)
|
|
|
161
|
|
|
|
242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other components of the Consolidated Statements of Comprehensive Income
|
|
|
(k=d+i
|
)
|
|
|
161
|
|
|
|
242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss) for the period
|
|
|
(a+k
|
)
|
|
|
386
|
|
|
|
746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the Parent
|
|
|
|
|
|
|
337
|
|
|
|
638
|
|
|
Non-controlling
interests
|
|
|
|
|
|
|
49
|
|
|
|
108
|
|
53
CO
NSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Changes from January 1, 2016 to March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to Owners of the Parent
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
Share
capital
|
|
|
Additional
paid-in
capital
|
|
|
Reserve
for
available-
for-sale
financial
assets
|
|
|
Reserve for
cash flow
hedges
|
|
|
Reserve
for
exchange
differences
on
translating
foreign
operations
|
|
|
Reserve
for
remeasurements
of employee
defined
benefit
plans
(IAS 19)
|
|
|
Share of
other
profits
(losses)
of
associates
and
joint
ventures
accounted
for
using the
equity
method
|
|
|
Other
reserves
and
retained
earnings
(accumulated
losses),
including
profit (loss)
for the
period
|
|
|
Total
|
|
|
Non-controlling
interests
|
|
|
Total
equity
|
|
|
Balance at December 31, 2015
|
|
|
10,650
|
|
|
|
1,731
|
|
|
|
32
|
|
|
|
(249
|
)
|
|
|
(1,459
|
)
|
|
|
(87
|
)
|
|
|
—
|
|
|
|
6,992
|
|
|
|
17,610
|
|
|
|
3,723
|
|
|
|
21,333
|
|
|
Correction due to errors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
(102
|
)
|
|
|
(56
|
)
|
|
|
(28
|
)
|
|
|
(84
|
)
|
|
Adjusted Balance at December 31, 2015
|
|
|
10,650
|
|
|
|
1,731
|
|
|
|
32
|
|
|
|
(249
|
)
|
|
|
(1,413
|
)
|
|
|
(87
|
)
|
|
|
—
|
|
|
|
6,890
|
|
|
|
17,554
|
|
|
|
3,695
|
|
|
|
21,249
|
|
|
Changes in equity during the period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends approved
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total comprehensive income (loss) for the period
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
(209
|
)
|
|
|
413
|
|
|
|
|
|
|
|
|
|
|
|
433
|
|
|
|
638
|
|
|
|
108
|
|
|
|
746
|
|
|
Disposal of the Sofora – Telecom Argentina group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
(1,795
|
)
|
|
|
(1,795
|
)
|
|
Other changes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
27
|
|
|
|
16
|
|
|
Balance at March 31, 2016
|
|
|
10,650
|
|
|
|
1,731
|
|
|
|
33
|
|
|
|
(458
|
)
|
|
|
(1,000
|
)
|
|
|
(87
|
)
|
|
|
—
|
|
|
|
7,312
|
|
|
|
18,181
|
|
|
|
2,035
|
|
|
|
20,216
|
|
Changes from January 1, 2017 to March 31, 2017 Note 7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to Owners of the Parent
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
Share
capital
|
|
|
Additional
paid-in
capital
|
|
|
Reserve
for
available-
for-sale
financial
assets
|
|
|
Reserve for
cash flow
hedges
|
|
|
Reserve
for
exchange
differences
on
translating
foreign
operations
|
|
|
Reserve
for
remeasurements
of employee
defined
benefit
plans
(IAS 19)
|
|
|
Share of
other
profits
(losses)
of
associates
and
joint
ventures
accounted
for
using the
equity
method
|
|
|
Other
reserves
and
retained
earnings
(accumulated
losses),
including
profit (loss)
for the
period
|
|
|
Total
|
|
|
Non-controlling
interests
|
|
|
Total
equity
|
|
|
Balance at December 31, 2016
|
|
|
11,587
|
|
|
|
2,094
|
|
|
|
39
|
|
|
|
(551
|
)
|
|
|
(366
|
)
|
|
|
(113
|
)
|
|
|
—
|
|
|
|
8,517
|
|
|
|
21,207
|
|
|
|
2,346
|
|
|
|
23,553
|
|
|
Changes in equity during the period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends approved
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total comprehensive income (loss) for the period
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
92
|
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
200
|
|
|
|
337
|
|
|
|
49
|
|
|
|
386
|
|
|
Issue of equity instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
2
|
|
|
Other changes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
9
|
|
|
|
9
|
|
|
|
—
|
|
|
|
9
|
|
|
Balance at March 31, 2017
|
|
|
11,587
|
|
|
|
2,094
|
|
|
|
35
|
|
|
|
(459
|
)
|
|
|
(317
|
)
|
|
|
(113
|
)
|
|
|
—
|
|
|
|
8,728
|
|
|
|
21,555
|
|
|
|
2,395
|
|
|
|
23,950
|
|
54
C
ONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
|
|
|
note
|
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) from continuing operations
|
|
|
|
|
|
|
|
|
|
|
225
|
|
|
|
457
|
|
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
1,129
|
|
|
|
1,009
|
|
|
Impairment losses (reversals) on
non-current
assets
(including investments)
|
|
|
|
|
|
|
|
|
|
|
13
|
|
|
|
2
|
|
|
Net change in deferred tax assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
155
|
|
|
|
90
|
|
|
Losses (gains) realized on disposals of
non-current
assets
(including investments)
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
Share of losses (profits) of associates and joint ventures accounted for using the equity
method
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Change in employee benefits
|
|
|
|
|
|
|
|
|
|
|
(7
|
)
|
|
|
59
|
|
|
Change in inventories
|
|
|
|
|
|
|
|
|
|
|
(29
|
)
|
|
|
(87
|
)
|
|
Change in trade receivables and net amounts due from customers on construction contracts
|
|
|
|
|
|
|
|
|
|
|
31
|
|
|
|
30
|
|
|
Change in trade payables
|
|
|
|
|
|
|
|
|
|
|
(48
|
)
|
|
|
(25
|
)
|
|
Net change in current income tax receivables/payables
|
|
|
|
|
|
|
|
|
|
|
76
|
|
|
|
96
|
|
|
Net change in miscellaneous receivables/payables and other assets/liabilities
|
|
|
|
|
|
|
|
|
|
|
(156
|
)
|
|
|
(279
|
)
|
|
Cash flows from (used in) operating activities
|
|
|
(a
|
)
|
|
|
|
|
|
|
1,385
|
|
|
|
1,348
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of intangible assets
|
|
|
|
|
|
|
5
|
)
|
|
|
(327
|
)
|
|
|
(342
|
)
|
|
Purchase of tangible assets
|
|
|
|
|
|
|
6
|
)
|
|
|
(519
|
)
|
|
|
(648
|
)
|
|
Total purchase of intangible and tangible assets on an accrual basis
|
|
|
|
|
|
|
|
|
|
|
(846
|
)
|
|
|
(990
|
)
|
|
Change in amounts due for purchases of intangible and tangible assets
|
|
|
|
|
|
|
|
|
|
|
(634
|
)
|
|
|
(494
|
)
|
|
Total purchase of intangible and tangible assets on a cash basis
|
|
|
|
|
|
|
|
|
|
|
(1,480
|
)
|
|
|
(1,484
|
)
|
|
Acquisition of control in subsidiaries or other businesses, net of cash acquired
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
(6
|
)
|
|
Acquisitions/disposals of other investments
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
Change in financial receivables and other financial assets
|
|
|
|
|
|
|
|
|
|
|
383
|
|
|
|
862
|
|
|
Proceeds from sale that result in a loss of control of subsidiaries or other businesses, net of
cash disposed of
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
492
|
|
|
Proceeds from sale/repayment of intangible, tangible and other
non-current
assets
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
3
|
|
|
Cash flows from (used in) investing activities
|
|
|
(b
|
)
|
|
|
|
|
|
|
(1,095
|
)
|
|
|
(136
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in current financial liabilities and other
|
|
|
|
|
|
|
|
|
|
|
(214
|
)
|
|
|
(522
|
)
|
|
Proceeds from
non-current
financial liabilities (including
current portion)
|
|
|
|
|
|
|
|
|
|
|
1,182
|
|
|
|
931
|
|
|
Repayments of
non-current
financial liabilities (including
current portion)
|
|
|
|
|
|
|
|
|
|
|
(775
|
)
|
|
|
(2,157
|
)
|
|
Cash flows from (used in) financing activities
|
|
|
(c
|
)
|
|
|
|
|
|
|
193
|
|
|
|
(1,748
|
)
|
|
Cash flows from (used in) Discontinued
operations/Non-current
assets held for sale
|
|
|
(d
|
)
|
|
|
|
|
|
|
—
|
|
|
|
(45
|
)
|
|
Aggregate cash flows
|
|
|
(e=a+b+c+d
|
)
|
|
|
|
|
|
|
483
|
|
|
|
(581
|
)
|
|
Net cash and cash equivalents at beginning of the period
|
|
|
(f
|
)
|
|
|
|
|
|
|
3,952
|
|
|
|
3,216
|
|
|
Net foreign exchange differences on net cash and cash equivalents
|
|
|
(g
|
)
|
|
|
|
|
|
|
24
|
|
|
|
26
|
|
|
Net cash and cash equivalents at end of the period
|
|
|
(h=e+f+g
|
)
|
|
|
|
|
|
|
4,459
|
|
|
|
2,661
|
|
Additional Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Income taxes (paid) received
|
|
|
(17
|
)
|
|
|
(26
|
)
|
|
Interest expense paid
|
|
|
(613
|
)
|
|
|
(721
|
)
|
|
Interest income received
|
|
|
120
|
|
|
|
165
|
|
|
Dividends received
|
|
|
—
|
|
|
|
—
|
|
55
Analysis of Net Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
1st Quarter
2017
|
|
|
1st Quarter
2016
|
|
|
Net cash and cash equivalents at beginning of the period
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - from continuing operations
|
|
|
3,964
|
|
|
|
3,559
|
|
|
Bank overdrafts repayable on demand – from continuing operations
|
|
|
(12
|
)
|
|
|
(441
|
)
|
|
Cash and cash equivalents - from Discontinued
operations/Non-current
assets held for sale
|
|
|
—
|
|
|
|
98
|
|
|
Bank overdrafts repayable on demand – from Discontinued
operations/Non-current
assets held for sale
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
3,952
|
|
|
|
3,216
|
|
|
Net cash and cash equivalents at end of the period
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - from continuing operations
|
|
|
4,461
|
|
|
|
2,665
|
|
|
Bank overdrafts repayable on demand – from continuing operations
|
|
|
(2
|
)
|
|
|
(4
|
)
|
|
Cash and cash equivalents - from Discontinued
operations/Non-current
assets held for sale
|
|
|
—
|
|
|
|
—
|
|
|
Bank overdrafts repayable on demand – from Discontinued
operations/Non-current
assets held for sale
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
4,459
|
|
|
|
2,661
|
|
56
N
OTE 1
FORM, CONTENT AND OTHER GENERAL INFORMATION
Form and content
Telecom Italia S.p.A. (the “
Parent
”), also known in short as “TIM S.p.A.”, and its subsidiaries form the “TIM Group” or
the “Group”.
TIM is a joint-stock company (S.p.A.) organized under the laws of the Republic of Italy.
The registered offices of the Parent, TIM, are located in Milan, Italy at Via Gaetano Negri 1.
The duration of TIM S.p.A., as stated in the company’s bylaws, extends until December 31, 2100.
The TIM Group operates mainly in Europe, the Mediterranean Basin and South America.
The Group is engaged principally in the communications sector and, particularly, the fixed and mobile national and international telecommunications sector.
The TIM Group condensed consolidated financial statements at March 31, 2017 have been prepared on a going concern basis (for further details see the
Note “Accounting policies”) and in accordance with the International Financial Reporting Standards issued by the International Accounting Standards Board and endorsed by the European Union (designated as “
IFRS
”), as well
as the laws and regulations in force in Italy.
The TIM Group condensed consolidated financial statements at March 31, 2017 have been prepared in
compliance with IAS 34 (
Interim Reports
) and, as permitted by this standard, do not include all the information required in the annual consolidated financial statements; accordingly, these financial statements should be read together with the
2016 TIM Group consolidated financial statements.
For purposes of comparison, the consolidated statements of financial position at December 31, 2016
and the separate consolidated income statements, the consolidated statements of comprehensive income, the consolidated statements of cash flows, as well as the consolidated statements of changes in equity for the first quarter of 2016 are presented.
The TIM Group condensed consolidated financial statements at March 31, 2017 are expressed in euro (rounded to the nearest million unless otherwise
indicated).
Publication of the TIM Group condensed consolidated financial statements for the period ended March 31, 2017 was approved by resolution
of the Board of Directors’ meeting held on May 3, 2017.
FINANCIAL STATEMENT FORMATS
The financial statement formats
adopted are consistent with those indicated in IAS 1. In particular:
|
•
|
|
the
consolidated statements of financial position
have been prepared by classifying assets and liabilities according to the “current and
non-current”
criterion;
|
|
•
|
|
the
separate consolidated income statements
have been prepared by classifying operating expenses by nature of expense as this form of presentation is considered more appropriate and representative of the specific
business of the Group, conforms to internal reporting and is in line with the TIM Group’s industrial sector.
|
In
addition to EBIT or Operating profit (loss), the separate consolidated income statements include the alternative performance measure of EBITDA or Operating profit (loss) before depreciation and amortization, Capital gains (losses) and Impairment
reversals (losses) on
non-current
assets.
57
In particular, besides EBIT, EBITDA is used by TIM as the financial target in internal
presentations (business plans) and in external presentations (to analysts and investors). It represents a useful unit of measurement for the evaluation of the operating performance of the Group (as a whole and at the Business Unit level). EBIT and
EBITDA are calculated as follows:
|
|
|
|
|
Profit (loss) before tax from continuing operations
|
|
+
|
|
Finance expenses
|
|
-
|
|
Finance income
|
|
+/-
|
|
Other expenses (income) from investments
|
|
+/-
|
|
Share of profits (losses) of associates and joint ventures accounted for using the equity method
|
|
EBIT - Operating profit (loss)
|
|
+/-
|
|
Impairment losses (reversals) on
non-current
assets
|
|
+/-
|
|
Losses (gains) on disposals of
non-current
assets
|
|
+
|
|
Depreciation and amortization
|
|
EBITDA - Operating profit (loss) before depreciation and amortization, Capital gains (losses) and Impairment reversals (losses) on
non-current
assets
|
|
(5)
|
the
consolidated statements of comprehensive income
include the profit or loss for the period as shown in the separate consolidated income statements and all other
non-owner
changes in equity;
|
|
(6)
|
the
consolidated statements of cash flows
have been prepared by presenting cash flows from operating activities according to the “indirect method”, as permitted by IAS 7 (Statement of Cash Flows).
|
SEGMENT REPORTING
An operating segment is a component of an
entity:
|
(7)
|
that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity);
|
|
(8)
|
whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources (for the TIM Group, the Board of Directors of the Parent) to be allocated to the
segment and assess its performance; and
|
|
(9)
|
for which discrete financial information is available.
|
In particular, the operating segments of the TIM Group
are organized according to geographic location (Domestic and Brazil) for the telecommunications business.
The Sofora - Telecom Argentina group, which was
sold on March 8, 2016, has been recognized under Discontinued operations.
The term “operating segment” is considered synonymous with
“Business Unit”.
The operating segments of the TIM Group are as follows:
|
•
|
|
Domestic
: includes operations in Italy for voice and data services on fixed and mobile networks for end customers (retail) and other operators (wholesale), the operations of the Telecom Italia Sparkle group
(International wholesale), which, at international level (Europe, the Mediterranean and South America), develops fiber optic networks for wholesale customers, the operations of Olivetti (products and services for Information Technology), as well as
INWIT S.p.A. (a company operating in the electronic communications infrastructure sector, and in particular the infrastructure for hosting radio transmission equipment for mobile telephone networks, both for TIM and other operators) and the units
supporting the Domestic sector.
|
See the section “Financial and Operating Highlights of the Business Units of the TIM
Group – Domestic Business Unit” of the Interim Management Report for more details.
|
•
|
|
Brazil
: includes mobile (TIM Celular) and fixed (TIM Celular and Intelig) telecommunications operations in Brazil;
|
|
•
|
|
Other Operations
: include finance companies and other minor companies not strictly related to the core business of the TIM Group.
|
58
NOTE 2
ACCOUNTING POLICIES
GOING CONCERN
The condensed consolidated financial statements at March 31, 2017 have been prepared on a going concern basis as there is the reasonable expectation that
TIM will continue its operational activities in the foreseeable future (and in any event with a time horizon of at least twelve months).
In particular,
the following factors have been taken into consideration:
|
•
|
|
the main risks and uncertainties (that are for the most part of an external nature) to which the Group and the various activities of the TIM Group are exposed:
|
|
|
•
|
|
changes in the general macroeconomic situation in the Italian, European and Brazilian markets, as well as the volatility of financial markets in the Eurozone also as a result of the “Brexit” referendum in the
United Kingdom;
|
|
|
•
|
|
variations in business conditions, also related to competition;
|
|
|
•
|
|
changes to laws and regulations (price and rate variations);
|
|
|
•
|
|
outcomes of legal disputes and proceedings with regulatory authorities, competitors and other parties;
|
|
|
•
|
|
financial risks (interest rate and/or exchange rate trends, changes in the Group’s credit rating by rating agencies);
|
|
•
|
|
the mix between equity and debt capital considered optimal as well as the policy for the remuneration of equity, described in the 2016 consolidated financial statements in the paragraph devoted to the “Share
capital information” under the Note “Equity”;
|
|
•
|
|
the policy for financial risk management (market risk, credit risk and liquidity risk) as described in the Note “Financial risk management” in the annual consolidated financial statements at December 31,
2016.
|
Based on these factors, the Management believes that, at the present time, there are no elements of uncertainty regarding the
Group’s ability to continue as a going concern.
ACCOUNTING POLICIES AND PRINCIPLES OF CONSOLIDATION
The
accounting policies and consolidation principles adopted in the preparation of the condensed consolidated financial statements at March 31, 2017 are the same as those adopted in the annual consolidated financial statements at December 31,
2016, to which reference can be made, except for the changes required because of the nature of interim financial reporting.
Furthermore, in the condensed
consolidated financial statements at March 31, 2017, income tax expense for the period of the individual consolidated companies are calculated according to the best possible estimate based on available information and on a reasonable forecast
of performance up to the end of the tax period. Conventionally, the income tax liabilities (current and deferred) on the profit for the interim period of the individual consolidated companies are recorded net of advances and tax receivables
(excluding receivables for which refunds have been requested) as well as deferred tax assets, under “Deferred tax liabilities”; if the balance between deferred tax assets and deferred tax liabilities is an asset it is conventionally
recognized in “Deferred tax assets”.
USE OF ESTIMATES
The preparation of the condensed consolidated
financial statements at March 31, 2017 and related disclosure in conformity with IFRS requires management to make estimates and assumptions based also on subjective judgments, past experience and scenarios considered reasonable and realistic in
relation to the information known at the time of the estimate. Such estimates have an effect on the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the
amount of revenues and costs during the period. Actual results could differ, even significantly, from those estimates owing to possible changes in the factors considered in the determination of such estimates. Estimates are reviewed periodically.
59
With regard to the most important accounting estimates, please refer to those illustrated in the annual
consolidated financial statements at December 31, 2016.
NEW STANDARDS AND INTERPRETATIONS ENDORSED BY THE EU AND IN FORCE FROM JANUARY 1, 2017
There were no new Standards and Interpretations that had been endorsed by the EU and were in force from January 1, 2017.
NEW STANDARDS AND INTERPRETATIONS ISSUED BY IASB BUT NOT YET APPLICABLE
At the date of preparation of these condensed consolidated financial statements, the following new standards and interpretations, which have not yet entered
into force, had been issued by the IASB.
|
|
|
|
|
|
|
|
|
Mandatory
application
starting from
|
|
|
New Standards and Interpretations endorsed by the EU
|
|
|
|
|
|
IFRS 15 (Revenues from contracts with customers)
|
|
|
1/1/2018
|
|
|
IFRS 9 (Financial Instruments)
|
|
|
1/1/2018
|
|
|
|
|
|
New Standards and Interpretations not yet endorsed by the EU
|
|
|
|
|
|
IFRS 16 (Leases)
|
|
|
1/1/2019
|
|
|
Amendments to IFRS 10 (Consolidated Financial Statements) and to IAS 28 (Investments in Associates
and Joint Ventures): Sale or contribution of assets between an investor and its associate/joint venture
|
|
|
Application
deferred
indefinitely
|
|
|
Amendments to IAS 12 (Income taxes) – Recognition of Deferred Tax Assets for Unrealized
Losses
|
|
|
1/1/2017
|
|
|
Amendments to IAS 7 (Cash flow statement - Disclosure initiative)
|
|
|
1/1/2017
|
|
|
Clarifications to IFRS 15 (Revenue from contracts with customers)
|
|
|
1/1/2018
|
|
|
Amendments to IFRS 2 (Classification and measurement of share-based payments)
|
|
|
1/1/2018
|
|
|
Improvements to the IFRS (2014-2016 cycle) – Amendments to IFRS 12 and IAS 28
|
|
|
1/1/2017
for IFRS 12
1/1/2018
for IAS 28
|
|
|
IFRIC 22 (Foreign currency transactions and advance consideration)
|
|
|
1/1/2018
|
|
|
Amendments to IAS 40 (Investment property)
|
|
|
1/1/2018
|
|
The potential impacts on the consolidated financial statements from application of these standards and interpretations are
currently being assessed. With regard to the adoption of IFRS 15, IFRS 16 and IFRS 9, specific projects have been initiated at Group level and therefore a reliable estimate of their quantitative effects will only be possible when each project has
been completed.
For further details on each project please see the Note “Accounting policies” of the annual consolidated financial statements
at December 31, 2016.
60
N
OTE 3
SCOPE OF CONSOLIDATION
There were no changes in the scope of
consolidation in the first quarter of 2017 with respect to December 31, 2016.
The breakdown by number of subsidiaries and associates of the TIM
Group is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2017
|
|
|
Companies:
|
|
Italy
|
|
|
Outside Italy
|
|
|
Total
|
|
|
subsidiaries consolidated
line-by-line
|
|
|
25
|
|
|
|
48
|
|
|
|
73
|
|
|
joint ventures accounted for using the equity method
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
associates accounted for using the equity method
|
|
|
19
|
|
|
|
—
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total companies
|
|
|
45
|
|
|
|
48
|
|
|
|
93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2016
|
|
|
Companies:
|
|
Italy
|
|
|
Outside Italy
|
|
|
Total
|
|
|
subsidiaries consolidated
line-by-line
|
|
|
25
|
|
|
|
48
|
|
|
|
73
|
|
|
joint ventures accounted for using the equity method
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
associates accounted for using the equity method
|
|
|
19
|
|
|
|
—
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total companies
|
|
|
45
|
|
|
|
48
|
|
|
|
93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2016
|
|
|
Companies:
|
|
Italy
|
|
|
Outside Italy
|
|
|
Total
|
|
|
subsidiaries consolidated
line-by-line
|
|
|
28
|
|
|
|
50
|
|
|
|
78
|
|
|
joint ventures accounted for using the equity method
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
associates accounted for using the equity method
|
|
|
18
|
|
|
|
—
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total companies
|
|
|
47
|
|
|
|
50
|
|
|
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61
NOTE 4
GOODWILL
The breakdown and the changes in Goodwill during the
first three months of 2017 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
12/31/2016
|
|
|
Reclassifications
|
|
|
Increase
|
|
|
Decrease
|
|
|
Impairments
|
|
|
Exchange
differences
|
|
|
3/31/2017
|
|
|
Domestic
|
|
|
28,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,489
|
|
|
Core Domestic
|
|
|
28,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,077
|
|
|
International Wholesale
|
|
|
412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
412
|
|
|
Brazil
|
|
|
1,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
|
1,139
|
|
|
Other Operations
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
29,612
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16
|
|
|
|
29,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In accordance with IAS 36, goodwill is not subject to amortization, but is tested for impairment annually or more frequently,
whenever specific events or circumstances occur that may indicate an impairment.
At March 31, 2017, no external or internal events were identified
giving reason to believe a new impairment test was required and amounts of goodwill allocated to the individual Cash Generating Units in the consolidated financial statements at December 31, 2016 were therefore confirmed.
62
N
OTE 5
INTANGIBLE ASSETS WITH A FINITE USEFUL LIFE
Intangible assets
with a finite useful life increased by 22 million euros compared to December 31, 2016. Details of the breakdown and movements are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
12/31/2016
|
|
|
Additions
|
|
|
Depreciation
and
amortization
|
|
|
Impairment
(losses) /
reversals
|
|
|
Disposals
|
|
|
Exchange
differences
|
|
|
Capitalized
borrowing
costs
|
|
|
Other
changes
|
|
|
3/31/2017
|
|
|
Industrial patents and intellectual property rights
|
|
|
2,458
|
|
|
|
101
|
|
|
|
(326
|
)
|
|
|
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
|
|
143
|
|
|
|
2,391
|
|
|
Concessions, licenses, trademarks and similar rights
|
|
|
2,854
|
|
|
|
4
|
|
|
|
(100
|
)
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
2,761
|
|
|
Other intangible assets
|
|
|
109
|
|
|
|
35
|
|
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
—
|
|
|
|
114
|
|
|
Work in progress and advance payments
|
|
|
1,530
|
|
|
|
187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
24
|
|
|
|
(48
|
)
|
|
|
1,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,951
|
|
|
|
327
|
|
|
|
(457
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
33
|
|
|
|
24
|
|
|
|
95
|
|
|
|
6,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions in the first three months of 2017 include 67 million euros of internally generated assets (73 million
euros in the first three months of 2016).
Industrial patents and intellectual property rights
at March 31, 2017 essentially consisted of
software applications purchased outright and user license rights of unlimited duration, relating to TIM S.p.A. (1,198 million euros) and the Brazil Business Unit (1,168 million euros).
Concessions, licenses, trademarks and similar rights
at March 31, 2017 mainly related to:
|
(1)
|
the remaining cost of telephone licenses and similar rights (1,890 million euros for TIM S.p.A., 309 million euros for the Brazil Business Unit);
|
|
(2)
|
Indefeasible Rights of Use - IRU (299 million euros) mainly relating to companies of the Telecom Italia Sparkle group (International Wholesale);
|
|
(3)
|
TV frequencies of the company Persidera in the Core Domestic segment (117 million euros).
|
Other
intangible assets
with a
finite
useful life at March 31, 2017 essentially consisted of 99 million euros of capitalized subscriber acquisition costs (SACs) (65 million euros for the Parent and 34 million euros for
the Brazil Business Unit), mainly related to commissions for the sales network, for a number of commercial deals that lock in customers for a set period.
Work in progress and advance payments
includes the user rights for the 700 MHz frequencies, acquired in 2014 by the Tim Brasil group for a total of
2.9 billion reais. Since the assets require a period of more than 12 months to be ready for use, also in the first quarter of 2017, borrowing costs of 24 million euros were capitalized, as they were directly attributable to the
acquisition. The yearly rate used for the capitalization of borrowing costs in reais is 12.03%. Capitalized borrowing costs in reais have been recorded as a direct reduction of the income statement item “Finance expenses - Interest expenses to
banks”.
63
N
OTE 6
TANGIBLE ASSETS (OWNED AND UNDER FINANCE LEASES)
PROPERTY, PLANT AND EQUIPMENT OWNED
Property, plant and equipment owned decreased by 222 million euros compared to December 31, 2016. The breakdown and movements are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
12/31/2016
|
|
|
Additions
|
|
|
Depreciation
and
amortization
|
|
|
Impairment
(losses) /
reversals
|
|
|
Disposals
|
|
|
Exchange
differences
|
|
|
Other
changes
|
|
|
3/31/2017
|
|
|
Land
|
|
|
203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
205
|
|
|
Buildings (civil and industrial)
|
|
|
509
|
|
|
|
1
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
500
|
|
|
Plant and equipment
|
|
|
11,709
|
|
|
|
288
|
|
|
|
(573
|
)
|
|
|
|
|
|
|
(1
|
)
|
|
|
32
|
|
|
|
205
|
|
|
|
11,660
|
|
|
Manufacturing and distribution equipment
|
|
|
38
|
|
|
|
1
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
36
|
|
|
Other
|
|
|
391
|
|
|
|
7
|
|
|
|
(42
|
)
|
|
|
|
|
|
|
(1
|
)
|
|
|
2
|
|
|
|
30
|
|
|
|
387
|
|
|
Construction in progress and advance payments
|
|
|
1,097
|
|
|
|
187
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
7
|
|
|
|
(353
|
)
|
|
|
937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
13,947
|
|
|
|
484
|
|
|
|
(631
|
)
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
41
|
|
|
|
(113
|
)
|
|
|
13,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions in the first three months of 2017 include 92 million euros of internally generated assets (85 million
euros in the first three months of 2016).
Land
comprises both
built-up
land and available land and is not
subject to depreciation. The figure at March 31, 2017 mainly related to TIM S.p.A. (119 million euros) and TIM Real Estate S.r.l. (55 million euros).
Buildings (civil and industrial)
almost exclusively includes buildings for industrial use hosting telephone exchanges or for office use, and light
constructions. The figure at March 31, 2017 mainly related to TIM S.p.A. (233 million euros) and TIM Real Estate S.r.l. (215 million euros).
Plant and equipment
includes the aggregate of all the structures used for the functioning of voice and data telephone services. The figure at
March 31, 2017 was mainly attributable to TIM S.p.A. (8,699 million euros) and to companies of the Brazil Business Unit (2,380 million euros).
Manufacturing and distribution equipment
consists of instruments and equipment used for the operations and maintenance of plants and equipment; the
amount was essentially in line with the end of the prior year and primarily related to TIM S.p.A..
The item
Other
mainly consists of hardware for
the functioning of the Data Center and for work stations, furniture and fixtures and, to a minimal extent, transport vehicles and office machines.
Construction in progress and advance payments
refer to the internal and external costs incurred for the acquisition and internal production of tangible
assets, which are not yet in use.
64
ASSETS HELD UNDER FINANCE LEASES
Assets held under finance
leases decreased by 1 million euros compared to December 31, 2016. The breakdown and movements are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
12/31/2016
|
|
|
Additions
|
|
|
Change in
financial
leasing
contracts
|
|
|
Depreciation
and
amortization
|
|
|
Exchange
differences
|
|
|
Other
changes
|
|
|
3/31/2017
|
|
|
Land under lease
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
Buildings (civil and industrial)
|
|
|
1,835
|
|
|
|
3
|
|
|
|
2
|
|
|
|
(29
|
)
|
|
|
|
|
|
|
4
|
|
|
|
1,815
|
|
|
Plant and equipment
|
|
|
365
|
|
|
|
16
|
|
|
|
2
|
|
|
|
(5
|
)
|
|
|
5
|
|
|
|
5
|
|
|
|
388
|
|
|
Other
|
|
|
125
|
|
|
|
|
|
|
|
11
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
129
|
|
|
Construction in progress and advance payments
|
|
|
72
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9
|
)
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,413
|
|
|
|
20
|
|
|
|
15
|
|
|
|
(41
|
)
|
|
|
5
|
|
|
|
—
|
|
|
|
2,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The additions consisted of the acquisition of IRU transmission capacity, due to the full financial settlement at the beginning
of the contract, and improvements and incremental expenses incurred for movable and immovable third-party assets used on the basis of finance lease agreements.
The item
Buildings (civil and industrial)
includes buildings under long rent contracts and related building adaptations, almost exclusively
attributable to TIM S.p.A..
The item
Plant and equipment
mainly includes the recognition of the value of the telecommunications towers sold by the
Tim Brasil group to American Tower do Brasil and subsequently repurchased in the form of finance lease. It also includes capital expenditure for the acquisition of IRU transmission capacity, purchased by the Parent and amounting to 16 million
euros.
The item
Other
mainly comprises the finance leases on autovehicles.
65
NO
TE 7
EQUITY
Equity consisted of:
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
Equity attributable to owners of the Parent
|
|
|
21,555
|
|
|
|
21,207
|
|
|
Non-controlling
interests
|
|
|
2,395
|
|
|
|
2,346
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
23,950
|
|
|
|
23,553
|
|
|
|
|
|
|
|
|
|
|
|
The breakdown of
Equity attributable to Owners of the Parent
is provided below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
|
|
|
3/31/2017
|
|
|
|
|
|
12/31/2016
|
|
|
Share capital
|
|
|
|
|
|
|
11,587
|
|
|
|
|
|
|
|
11,587
|
|
|
Additional
paid-in
capital
|
|
|
|
|
|
|
2,094
|
|
|
|
|
|
|
|
2,094
|
|
|
Other reserves and retained earnings (accumulated losses), including profit (loss) for the
period
|
|
|
|
|
|
|
7,874
|
|
|
|
|
|
|
|
7,526
|
|
|
Reserve for
available-for-sale
financial assets
|
|
|
35
|
|
|
|
|
|
|
|
39
|
|
|
|
|
|
|
Reserve for cash flow hedges
|
|
|
(459
|
)
|
|
|
|
|
|
|
(551
|
)
|
|
|
|
|
|
Reserve for exchange differences on translating foreign operations
|
|
|
(317
|
)
|
|
|
|
|
|
|
(366
|
)
|
|
|
|
|
|
Reserve for remeasurements of employee defined benefit plans (IAS 19)
|
|
|
(113
|
)
|
|
|
|
|
|
|
(113
|
)
|
|
|
|
|
|
Share of other profits (losses) of associates and joint ventures accounted for using the equity
method
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
Sundry reserves and retained earnings (accumulated losses), including profit (loss) for the
period
|
|
|
8,728
|
|
|
|
|
|
|
|
8,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
21,555
|
|
|
|
|
|
|
|
21,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
POTENTIAL FUTURE CHANGES IN SHARE CAPITAL
The table below shows
future potential changes in share capital, based on: the issuance of the convertible bond by TIM S.p.A. in March 2015; the authorizations to increase the share capital in place at March 31, 2017; and the options and rights granted under equity
compensation plans, still outstanding at that date:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of maximum
shares issuable
|
|
|
Share capital
(thousands of
euros)
|
|
|
Additional
Paid-in capital
(thousands of
euros)
|
|
|
Subscription
price per share
(euros)
|
|
|
Capital increases already approved (ordinary shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 Convertible Bond (ordinary shares)
(*)
|
|
|
1,082,485,386
|
|
|
|
2,000,000
|
|
|
|
n.a.
|
|
|
|
n.a.
|
|
|
2014-2016 Stock Option Plan
|
|
|
133,042
491,583
893,617
13,762,204
|
|
|
|
73
270
492
7,569
|
|
|
|
80
226
393
5,367
|
|
|
|
1.15
1.01
0.99
0.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
2,008,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*)
|
The number of shares potentially issuable shown may be subject to adjustments.
|
Further details are provided in the Note “Financial liabilities
(non-current
and current)”.
66
N
OTE 8
FINANCIAL LIABILITIES
(NON-CURRENT
AND CURRENT)
Non-current
and current financial liabilities
(gross financial debt) were broken down as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
Financial payables (medium/long-term):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds
|
|
|
|
|
|
|
19,407
|
|
|
|
18,537
|
|
|
Convertible bonds
|
|
|
|
|
|
|
1,839
|
|
|
|
1,832
|
|
|
Amounts due to banks
|
|
|
|
|
|
|
5,331
|
|
|
|
5,461
|
|
|
Other financial payables
|
|
|
|
|
|
|
210
|
|
|
|
306
|
|
|
|
|
|
|
|
|
|
26,787
|
|
|
|
26,136
|
|
|
Finance lease liabilities (medium/long-term)
|
|
|
|
|
|
|
2,430
|
|
|
|
2,444
|
|
|
Other financial liabilities (medium/long-term):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedging derivatives relating to hedged items classified as
non-current
assets/liabilities of a financial nature
|
|
|
|
|
|
|
1,794
|
|
|
|
1,876
|
|
|
Non-hedging
derivatives
|
|
|
|
|
|
|
14
|
|
|
|
13
|
|
|
Other liabilities
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
1,808
|
|
|
|
1,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
non-current
financial liabilities
|
|
|
(a
|
)
|
|
|
31,025
|
|
|
|
30,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial payables (short-term):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds
|
|
|
|
|
|
|
1,893
|
|
|
|
2,589
|
|
|
Convertible bonds
|
|
|
|
|
|
|
—
|
|
|
|
6
|
|
|
Amounts due to banks
|
|
|
|
|
|
|
1,190
|
|
|
|
1,072
|
|
|
Other financial payables
|
|
|
|
|
|
|
198
|
|
|
|
117
|
|
|
|
|
|
|
|
|
|
3,281
|
|
|
|
3,784
|
|
|
Finance lease liabilities (short-term)
|
|
|
|
|
|
|
198
|
|
|
|
192
|
|
|
Other financial liabilities (short-term):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedging derivatives relating to hedged items classified as current assets/liabilities of a
financial nature
|
|
|
|
|
|
|
99
|
|
|
|
69
|
|
|
Non-hedging
derivatives
|
|
|
|
|
|
|
9
|
|
|
|
11
|
|
|
Other liabilities
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
108
|
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current financial liabilities
|
|
|
(b
|
)
|
|
|
3,587
|
|
|
|
4,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities directly associated with Discontinued
operations/Non-current
assets held for sale
|
|
|
(c
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Financial liabilities (Gross financial debt)
|
|
|
(a+b+c
|
)
|
|
|
34,612
|
|
|
|
34,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67
Gross financial debt according to the original currency of the transaction is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
|
|
(millions of foreign
currency)
|
|
|
(millions of euros)
|
|
|
(millions of foreign
currency)
|
|
|
(millions of euros)
|
|
|
USD
|
|
|
7,447
|
|
|
|
6,965
|
|
|
|
7,504
|
|
|
|
7,119
|
|
|
GBP
|
|
|
2,050
|
|
|
|
2,396
|
|
|
|
2,017
|
|
|
|
2,356
|
|
|
BRL
|
|
|
7,591
|
|
|
|
2,241
|
|
|
|
7,128
|
|
|
|
2,075
|
|
|
JPY
|
|
|
20,077
|
|
|
|
168
|
|
|
|
20,032
|
|
|
|
162
|
|
|
EURO
|
|
|
|
|
|
|
22,842
|
|
|
|
|
|
|
|
22,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
34,612
|
|
|
|
|
|
|
|
34,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The breakdown of gross financial debt by effective interest rate bracket, excluding the effect of any hedging instruments, is
provided below:
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
Up to 2.5%
|
|
|
4,872
|
|
|
|
5,041
|
|
|
From 2.5% to 5%
|
|
|
10,446
|
|
|
|
9,368
|
|
|
From 5% to 7.5%
|
|
|
11,986
|
|
|
|
12,629
|
|
|
From 7.5% to 10%
|
|
|
3,958
|
|
|
|
3,918
|
|
|
Over 10%
|
|
|
688
|
|
|
|
673
|
|
|
Accruals/deferrals, MTM and derivatives
|
|
|
2,662
|
|
|
|
2,896
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
34,612
|
|
|
|
34,525
|
|
|
|
|
|
|
|
|
|
|
|
Following the use of derivative hedging instruments, on the other hand, the gross financial debt by nominal interest rate
bracket is:
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
Up to 2.5%
|
|
|
10,726
|
|
|
|
9,410
|
|
|
From 2.5% to 5%
|
|
|
7,332
|
|
|
|
7,775
|
|
|
From 5% to 7.5%
|
|
|
9,971
|
|
|
|
10,586
|
|
|
From 7.5% to 10%
|
|
|
1,423
|
|
|
|
1,430
|
|
|
Over 10%
|
|
|
2,498
|
|
|
|
2,428
|
|
|
Accruals/deferrals, MTM and derivatives
|
|
|
2,662
|
|
|
|
2,896
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
34,612
|
|
|
|
34,525
|
|
|
|
|
|
|
|
|
|
|
|
The maturities of financial liabilities according to the expected nominal repayment amount, as defined by contract, are the
following:
Details of the maturities of financial liabilities – at nominal repayment amount:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
maturing by 03/31 of the year:
|
|
|
(millions of euros)
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
After
2022
|
|
|
Total
|
|
|
Convertible bonds
|
|
|
1,505
|
|
|
|
2,640
|
|
|
|
2,423
|
|
|
|
1,111
|
|
|
|
3,084
|
|
|
|
12,018
|
|
|
|
22,781
|
|
|
Loans and other financial liabilities
|
|
|
809
|
|
|
|
1,267
|
|
|
|
1,889
|
|
|
|
677
|
|
|
|
686
|
|
|
|
275
|
|
|
|
5,603
|
|
|
Finance lease liabilities
|
|
|
145
|
|
|
|
116
|
|
|
|
108
|
|
|
|
109
|
|
|
|
101
|
|
|
|
1,986
|
|
|
|
2,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,459
|
|
|
|
4,023
|
|
|
|
4,420
|
|
|
|
1,897
|
|
|
|
3,871
|
|
|
|
14,279
|
|
|
|
30,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current financial liabilities
|
|
|
545
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,004
|
|
|
|
4,023
|
|
|
|
4,420
|
|
|
|
1,897
|
|
|
|
3,871
|
|
|
|
14,279
|
|
|
|
31,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68
The main components of financial liabilities are commented below.
Bonds
are broken down as follows:
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
Non-current
portion
|
|
|
19,407
|
|
|
|
18,537
|
|
|
Current portion
|
|
|
1,893
|
|
|
|
2,589
|
|
|
|
|
|
|
|
|
|
|
|
|
Total carrying amount
|
|
|
21,300
|
|
|
|
21,126
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustment and measurements at amortized cost
|
|
|
(519
|
)
|
|
|
(709
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total nominal repayment amount
|
|
|
20,781
|
|
|
|
20,417
|
|
|
|
|
|
|
|
|
|
|
|
The
convertible bonds
consist of the unsecured equity-linked bond for 2,000 million euros, with a coupon of
1.125%, issued by TIM S.p.A., convertible into newly-issued ordinary shares, maturing in 2022.
|
•
|
|
This item was broken down as follows:
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
Non-current
portion
|
|
|
1,839
|
|
|
|
1,832
|
|
|
Current portion
|
|
|
—
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
Total carrying amount
|
|
|
1,839
|
|
|
|
1,838
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustment and measurements at amortized cost
|
|
|
161
|
|
|
|
162
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nominal repayment amount
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
|
|
The nominal repayment amount of the bonds and convertible bonds totaled 22,781 million euros and was up 364 million
euros compared to December 31, 2016 (22,417 million euros), as a result of the new issues and repayments in the first quarter of 2017.
69
The following table lists the bonds issued by companies of the TIM Group, by issuing company, expressed at the
nominal repayment amount, net of bond repurchases, and also at market value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency
|
|
Amount
(millions)
|
|
Nominal
repayment
amount
(millions of
euros)
|
|
|
Coupon
|
|
|
Issue date
|
|
|
Maturity date
|
|
|
Issue price
(%)
|
|
|
Market price
at 3/31/17
(%)
|
|
|
Market value at
3/31/17
(millions of
euros)
|
|
|
Bonds issued by TIM S.p.A.
|
|
|
Euro
|
|
628.2
|
|
|
628.2
|
|
|
|
4.500
|
%
|
|
|
9/20/12
|
|
|
|
9/20/17
|
|
|
|
99.693
|
|
|
|
102.049
|
|
|
|
641
|
|
|
GBP
|
|
750
|
|
|
876.7
|
|
|
|
7.375
|
%
|
|
|
5/26/09
|
|
|
|
12/15/17
|
|
|
|
99.608
|
|
|
|
104.194
|
|
|
|
913
|
|
|
Euro
|
|
592.9
|
|
|
592.9
|
|
|
|
4.750
|
%
|
|
|
5/25/11
|
|
|
|
5/25/18
|
|
|
|
99.889
|
|
|
|
105.180
|
|
|
|
624
|
|
|
Euro
|
|
581.9
|
|
|
581.9
|
|
|
|
6.125
|
%
|
|
|
6/15/12
|
|
|
|
12/14/18
|
|
|
|
99.737
|
|
|
|
110.090
|
|
|
|
641
|
|
|
Euro
|
|
832.4
|
|
|
832.4
|
|
|
|
5.375
|
%
|
|
|
1/29/04
|
|
|
|
1/29/19
|
|
|
|
99.070
|
|
|
|
109.417
|
|
|
|
911
|
|
|
GBP
|
|
850
|
|
|
993.5
|
|
|
|
6.375
|
%
|
|
|
6/24/04
|
|
|
|
6/24/19
|
|
|
|
98.850
|
|
|
|
109.314
|
|
|
|
1,086
|
|
|
Euro
|
|
719.5
|
|
|
719.5
|
|
|
|
4.000
|
%
|
|
|
12/21/12
|
|
|
|
1/21/20
|
|
|
|
99.184
|
|
|
|
109.260
|
|
|
|
786
|
|
|
Euro
|
|
547.5
|
|
|
547.5
|
|
|
|
4.875
|
%
|
|
|
9/25/13
|
|
|
|
9/25/20
|
|
|
|
98.966
|
|
|
|
113.618
|
|
|
|
622
|
|
|
Euro
|
|
563.6
|
|
|
563.6
|
|
|
|
4.500
|
%
|
|
|
1/23/14
|
|
|
|
1/25/21
|
|
|
|
99.447
|
|
|
|
113.202
|
|
|
|
638
|
|
|
Euro
|
|
(b)
199.8
|
|
|
199.8
|
|
|
|
6 month Euribor (base 365)
|
|
|
|
1/1/02
|
|
|
|
1/1/22
|
|
|
|
100
|
|
|
|
100
|
|
|
|
200
|
|
|
Euro
|
|
883.9
|
|
|
883.9
|
|
|
|
5.250
|
%
|
|
|
2/10/10
|
|
|
|
2/10/22
|
|
|
|
99.295
|
|
|
|
117.496
|
|
|
|
1,039
|
|
|
Euro
|
|
(c)
2,000
|
|
|
2,000
|
|
|
|
1.125
|
%
|
|
|
3/26/15
|
|
|
|
3/26/22
|
|
|
|
100
|
|
|
|
98.117
|
|
|
|
1,962
|
|
|
Euro
|
|
1,000
|
|
|
1,000
|
|
|
|
3.250
|
%
|
|
|
1/16/15
|
|
|
|
1/16/23
|
|
|
|
99.446
|
|
|
|
106.281
|
|
|
|
1,063
|
|
|
GBP
|
|
375
|
|
|
438.3
|
|
|
|
5.875
|
%
|
|
|
5/19/06
|
|
|
|
5/19/23
|
|
|
|
99.622
|
|
|
|
112.630
|
|
|
|
494
|
|
|
Euro
|
|
1,000
|
|
|
1,000
|
|
|
|
2.500
|
%
|
|
|
1/19/17
|
|
|
|
7/19/23
|
|
|
|
99.288
|
|
|
|
101.251
|
|
|
|
1,013
|
|
|
Euro
|
|
750
|
|
|
750
|
|
|
|
3.625
|
%
|
|
|
1/20/16
|
|
|
|
1/19/24
|
|
|
|
99.632
|
|
|
|
106.245
|
|
|
|
797
|
|
|
USD
|
|
1,500
|
|
|
1,403.0
|
|
|
|
5.303
|
%
|
|
|
5/30/14
|
|
|
|
5/30/24
|
|
|
|
100
|
|
|
|
101.402
|
|
|
|
1,423
|
|
|
Euro
|
|
1,000
|
|
|
1,000
|
|
|
|
3.000
|
%
|
|
|
9/30/16
|
|
|
|
9/30/25
|
|
|
|
99.806
|
|
|
|
101.001
|
|
|
|
1,010
|
|
|
Euro
|
|
1,000
|
|
|
1,000
|
|
|
|
3.625
|
%
|
|
|
5/25/16
|
|
|
|
5/25/26
|
|
|
|
100
|
|
|
|
104.326
|
|
|
|
1,043
|
|
|
Euro
|
|
670
|
|
|
670
|
|
|
|
5.250
|
%
|
|
|
3/17/05
|
|
|
|
3/17/55
|
|
|
|
99.667
|
|
|
|
100.840
|
|
|
|
676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
|
|
16,681
|
|
|
|
|
|
|
|
17,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds issued by Telecom Italia Finance S.A. and guaranteed by TIM S.p.A.
|
|
|
Euro
|
|
1,015
|
|
|
1,015
|
|
|
|
7.750
|
%
|
|
|
1/24/03
|
|
|
|
1/24/33
|
|
|
|
(a)
109.646
|
|
|
|
131.990
|
|
|
|
1,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
|
|
1,015
|
|
|
|
|
|
|
|
1,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds issued by Telecom Italia Capital S.A. and guaranteed by TIM S.p.A.
|
|
|
USD
|
|
(d)
676.6
|
|
|
632.9
|
|
|
|
6.999
|
%
|
|
|
6/4/08
|
|
|
|
6/4/18
|
|
|
|
100
|
|
|
|
105.281
|
|
|
|
666
|
|
|
USD
|
|
(d)
759.7
|
|
|
710.5
|
|
|
|
7.175
|
%
|
|
|
6/18/09
|
|
|
|
6/18/19
|
|
|
|
100
|
|
|
|
109.060
|
|
|
|
775
|
|
|
USD
|
|
1,000
|
|
|
935.4
|
|
|
|
6.375
|
%
|
|
|
10/29/03
|
|
|
|
11/15/33
|
|
|
|
99.558
|
|
|
|
101.248
|
|
|
|
947
|
|
|
USD
|
|
1,000
|
|
|
935.4
|
|
|
|
6.000
|
%
|
|
|
10/6/04
|
|
|
|
9/30/34
|
|
|
|
99.081
|
|
|
|
98.974
|
|
|
|
926
|
|
|
USD
|
|
1,000
|
|
|
935.4
|
|
|
|
7.200
|
%
|
|
|
7/18/06
|
|
|
|
7/18/36
|
|
|
|
99.440
|
|
|
|
106.550
|
|
|
|
997
|
|
|
USD
|
|
1,000
|
|
|
935.4
|
|
|
|
7.721
|
%
|
|
|
6/4/08
|
|
|
|
6/4/38
|
|
|
|
100
|
|
|
|
111.479
|
|
|
|
1,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
|
|
5,085
|
|
|
|
|
|
|
|
5,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
22,781
|
|
|
|
|
|
|
|
24,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Weighted average issue price for bonds issued with more than one tranche.
|
|
(b)
|
Reserved for employees.
|
|
(c)
|
Bond convertible into newly-issued TIM S.p.A. ordinary treasury shares.
|
|
(d)
|
Net of the securities bought back by TIM S.p.A. on July 20, 2015.
|
The regulations and the Offering
Circulars relating to the bonds of the TIM Group are available on the corporate website www.telecomitalia.com.
The following table lists the changes in
bonds during the first quarter of 2017:
New issues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of original currency)
|
|
Currency
|
|
|
Amount
|
|
|
Issue date
|
|
|
Telecom Italia S.p.A. 1,000 million euros 2.500% maturing 7/19/2023
|
|
|
Euro
|
|
|
|
1,000
|
|
|
|
1/19/2017
|
|
Repayments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of original currency)
|
|
Currency
|
|
|
Amount
|
|
|
Repayment date
|
|
|
Telecom Italia S.p.A. 545 million euros 7.000%
(1)
|
|
|
Euro
|
|
|
|
545
|
|
|
|
1/20/2017
|
|
|
(1)
|
Net of buybacks by the Company of 455 million euros during 2015.
|
70
Medium/long-term
amounts due to banks
of 5,331 million euros (5,461 million euros at
December 31, 2016) decreased by 130 million euros. Short-term amounts due to banks totaled 1,190 million euros (1,072 million euros at December 31, 2016) and included 721 million euros of the current portion of
medium/long-term amounts due to banks.
Medium/long-term other financial payables
, amounting to 210 million euros (306 million euros at
December 31, 2016), decreased by 96 million euros and included 163 million euros of the Telecom Italia Finance S.A. loan for 20,000 Japanese yen maturing in 2029. Short-term other financial payables amounting to 198 million euros
(117 million euros at December 31, 2016) increased by 81 million euros and included 117 million euros of the current portion of medium/long-term other financial payables, of which 101 million euros relating to the TIM S.p.A.
loan from Cassa Depositi e Prestiti originally maturing in April 2019, but repaid in advance on April 10, 2017.
Medium/long-term
finance lease
liabilities
totaled 2,430 million euros (2,444 million euros at December 31, 2016) and mainly related to property leases accounted for using the financial method established by IAS 17. Short-term finance lease liabilities amounted
to 198 million euros (192 million euros at December 31, 2016).
Hedging derivatives
relating to items classified as
non-current
liabilities of a financial nature amounted to 1,794 million euros (1,876 million euros at December 31, 2016). Hedging derivatives relating to items classified as current liabilities of a
financial nature totaled 99 million euros (69 million euros at December 31, 2016).
Non-hedging
derivatives
classified as
non-current
financial liabilities totaled 14 million euros (13 million euros at December 31, 2016).
Non-hedging
derivatives
classified as current financial liabilities totaled 9 million euros (11 million euros at December 31, 2016). These also include the measurement of derivatives which, although put into place for hedging purposes, do not possess the
formal requisites to be considered as such under IFRS.
“COVENANTS” AND “NEGATIVE PLEDGES” EXISTING AT MARCH 31, 2017
The bonds issued by the TIM Group do not contain financial covenants (e.g. ratios such as Debt/EBITDA, EBITDA/Interest, etc.) or clauses that would force the
early redemption of the bonds in relation to events other than the insolvency of the TIM Group. Furthermore, the repayment of the bonds and the payment of interest are not covered by specific guarantees nor are there commitments provided relative to
the assumption of future guarantees, except for the full and unconditional guarantees provided by TIM S.p.A. for the bonds issued by Telecom Italia Finance S.A. and Telecom Italia Capital S.A..
Since these bonds have been placed principally with institutional investors in major world capital markets (Euromarket and the U.S.A.), the terms which
regulate the bonds are in line with market practice for similar transactions effected on these same markets. Consequently, for example, there are commitments not to use the company’s assets as collateral for loans (“negative
pledges”).
With regard to the loans taken out by TIM S.p.A. with the European Investment Bank (“EIB”), at March 31, 2017, the nominal
amount of outstanding loans amounted to 1,950 million euros, of which 800 million euros at direct risk and 1,150 million euros secured.
EIB loans not secured by bank guarantees for a nominal amount equal to 800 million euros need to apply the following covenants:
|
•
|
|
in the event the company becomes the target of a merger, demerger or contribution of a business segment outside the Group, or sells, disposes or transfers assets or business segments (except in certain cases, expressly
provided for), it shall immediately inform the EIB which shall have the right to ask for guarantees to be provided or changes to be made to the loan contract, or, only for certain loan contracts, the EIB shall have the option to demand the immediate
repayment of the loan (should the merger, demerger or contribution of a business segment outside the Group compromise the Project execution or cause a prejudice to EIB in its capacity as creditor);
|
|
•
|
|
with the 500 million euros loan, signed on December 14, 2015, TIM undertook to ensure that, for the entire duration of the loan, the total financial debt of the Group companies other than TIM S.p.A. –
except for the cases when that debt is fully and irrevocably secured by TIM S.p.A. – is lower than 35% (thirty-five percent) of the Group’s total financial debt.
|
|
•
|
|
EIB loans secured by banks or entities approved by the EIB for a total nominal amount of 1,150 million euros, and direct risk loans, respectively for 300 million euros, signed on July 30, 2014 and
500 million euros, signed on December 14, 2015, must apply the following covenants:
|
|
•
|
|
“Inclusion clause”, covering a total of 1,650 million euros of loans, under which, in the event
TIM commits to uphold financial covenants in other loan contracts (and even more restrictive clauses for 2014 and 2015 direct risk loans, including, for instance, cross default clauses and commitments restricting the sale of goods) that are not
present in or are stricter than those granted to the EIB, the EIB will have the right – if, in its
|
71
|
|
reasonable opinion, it considers that such changes may have a negative impact on TIM’s financial capacity – to request the provision of guarantees or the modification of the loan
contract in order to establish an equivalent provision in favor of the EIB;
|
|
•
|
|
“Network Event”, covering a total of 1,350 million euros of loans, under which, in the event of the disposal of the entire fixed network or of a substantial part of it (in any case more than half in
quantitative terms) to third parties or in the event of disposal of the controlling interest in the company in which the network or a substantial part of it has previously been transferred, TIM must immediately inform the EIB, which shall have the
option of requiring the establishment of guarantees or amendment of the loan contract or an alternative solution.
|
The loan agreements of
TIM S.p.A. do not contain financial covenants (e.g. ratios such as Debt/EBITDA, EBITDA/Interests, etc.) which would oblige the Company to repay the outstanding loan if the covenants are not observed.
The loan agreements contain the usual other types of covenants, including the commitment not to use the Company’s assets as collateral for loans
(negative pledges), the commitment not to change the business purpose or sell the assets of the Company unless specific conditions exist (e.g. the sale takes place at fair market value). Covenants with basically the same content are also found in
the export credit loan agreement.
In the Loan Agreements and the Bonds, TIM is required to provide notification of change of control. Identification of
the occurrence of a change of control and the applicable consequences – including the establishment of guarantees or the early repayment of the amount paid and the cancellation of the commitment in the absence of agreements to the contrary
– are specifically covered in the individual agreements.
In addition, the outstanding loans generally contain a commitment by TIM, whose breach is
an Event of Default, not to implement mergers, demergers or transfer of business, involving entities outside the Group. Such Event of Default may entail, upon request of the Lender, the early redemption of the drawn amounts and/or the annulment of
the undrawn commitment amounts.
In the documentation of the loans granted to certain companies of the Tim Brasil group, the companies must generally
respect certain financial ratios (e.g. capitalization ratios, ratios for servicing debt and debt ratios) as well as the usual other covenants, under pain of a request for the early repayment of the loan.
Lastly, at March 31, 2017, no covenant, negative pledge clause, or other clause relating to the aforementioned debt position had in any way been breached
or infringed.
72
REVOLVING CREDIT FACILITY
The following table shows the
composition and the draw down of the
committed credit lines available at March 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(billions of euros)
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
|
|
Agreed
|
|
|
Agreed
|
|
|
Agreed
|
|
|
Drawn down
|
|
|
Revolving Credit Facility – expiring May 2019
|
|
|
4.0
|
|
|
|
—
|
|
|
|
4.0
|
|
|
|
—
|
|
|
Revolving Credit Facility – expiring March 2020
|
|
|
3.0
|
|
|
|
—
|
|
|
|
3.0
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7.0
|
|
|
|
—
|
|
|
|
7.0
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIM has two syndicated Revolving Credit Facilities for amounts of 4 billion euros and 3 billion euros expiring
May 24, 2019 and March 25, 2020 respectively, both not yet drawn down.
TIM also has:
|
•
|
|
a bilateral Term Loan from Banca Regionale Europea expiring July 2019 for 200 million euros, drawn down for the full amount;
|
|
•
|
|
a bilateral Term Loan from Cassa Depositi e Prestiti expiring April 2019, for 100 million euros, drawn down for the full amount;
|
|
•
|
|
two bilateral Term Loans from Mediobanca respectively for 200 million euros expiring in November 2019 and 150 million euros expiring in July 2020, drawn down for the full amount;
|
|
•
|
|
a bilateral Term Loan from ICBC expiring July 2020 for 120 million euros, drawn down for the full amount;
|
|
•
|
|
a bilateral Term Loan from Intesa Sanpaolo expiring August 2021 for 200 million euros, drawn down for the full amount;
|
|
•
|
|
a
Hot Money
loan with Banca Popolare dell’Emilia Romagna expiring July 2017 for 200 million euros, drawn down for the full amount.
|
On March 6, 2017, TIM S.p.A. signed a supplementary agreement with Mediobanca under which it will make an early repayment on July 3, 2017 of
75 million euros for the bilateral term loan of 150 million euros maturing in July 2020, a loan that has been fully drawn down.
On
April 10, 2017, TIM S.p.A. early repaid the bilateral term loan with Cassa Depositi e Prestiti for the amount of 100 million euros maturing in April 2019; this loan had been fully drawn down.
TIM’S RATING AT MARCH 31, 2017
At March 31, 2017,
the three rating agencies – Standard & Poor’s, Moody’s and Fitch Ratings – rated TIM as follows:
|
|
|
|
|
|
|
|
|
Rating
|
|
Outlook
|
|
STANDARD & POOR’S
|
|
BB+
|
|
Stable
|
|
MOODY’S
|
|
Ba1
|
|
Negative
|
|
FITCH RATINGS
|
|
BBB-
|
|
Stable
|
73
NOT
E 9
NET FINANCIAL DEBT
The following table shows the net financial
debt at March 31, 2017 and December 31, 2016, calculated in accordance with the criteria indicated in the “Recommendations for the Consistent Implementation of the European Commission Regulation on Prospectuses”, issued on
February 10, 2005 by the European Securities & Markets Authority (ESMA), and adopted by Consob.
For the purpose of determining such figure,
the amount of financial liabilities has been adjusted by the effect of the relative hedging derivatives recorded in assets and the receivables arising from financial subleasing.
This table also shows the reconciliation of the net financial debt determined according to the criteria indicated by the ESMA and net financial debt
calculated according to the criteria of the TIM Group.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
Non-current
financial liabilities
|
|
|
|
|
|
|
31,025
|
|
|
|
30,469
|
|
|
Current financial liabilities
|
|
|
|
|
|
|
3,587
|
|
|
|
4,056
|
|
|
Financial liabilities directly associated with Discontinued
operations/Non-current
assets held for sale
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross financial debt
|
|
|
(a
|
)
|
|
|
34,612
|
|
|
|
34,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
financial assets
(
°
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
financial receivables for lease
contract
|
|
|
|
|
|
|
(98
|
)
|
|
|
(101
|
)
|
|
Non-current
hedging derivatives
|
|
|
|
|
|
|
(2,416
|
)
|
|
|
(2,497
|
)
|
|
|
|
|
(b
|
)
|
|
|
(2,514
|
)
|
|
|
(2,598
|
)
|
|
Current financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities other than investments
|
|
|
|
|
|
|
(1,069
|
)
|
|
|
(1,519
|
)
|
|
Financial receivables and other current financial assets
|
|
|
|
|
|
|
(563
|
)
|
|
|
(389
|
)
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
(4,461
|
)
|
|
|
(3,964
|
)
|
|
Financial assets relating to Discontinued
operations/Non-current
assets held for sale
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
(c
|
)
|
|
|
(6,093
|
)
|
|
|
(5,872
|
)
|
|
Net financial debt as per Consob communication DEM/6064293/2006 (ESMA)
|
|
|
(d=a+b+c
|
)
|
|
|
26,005
|
|
|
|
26,055
|
|
|
Non-current
financial assets
(
°
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities other than investments
|
|
|
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Other financial receivables and other
non-current
financial assets
|
|
|
|
|
|
|
(82
|
)
|
|
|
(99
|
)
|
|
|
|
|
(e
|
)
|
|
|
(82
|
)
|
|
|
(100
|
)
|
|
Net financial debt
(
*
)
|
|
|
(f=d+e
|
)
|
|
|
25,923
|
|
|
|
25,955
|
|
|
Reversal of fair value measurement of derivatives and related financial
assets/liabilities
|
|
|
(g
|
)
|
|
|
(688
|
)
|
|
|
(836
|
)
|
|
Adjusted net financial debt
|
|
|
(f+g
|
)
|
|
|
25,235
|
|
|
|
25,119
|
|
|
(°)
|
At March 31, 2017 and at December 31, 2016,
“Non-current
financial assets” (b+e) amounted to 2,596 million euros and 2,698 million euros,
respectively.
|
|
(*)
|
For details of the effects of related party transactions on net financial debt, see the specific table in the Note “Related party transactions”.
|
74
N
OTE 10
SUPPLEMENTARY DISCLOSURES ON FINANCIAL INSTRUMENTS
MEASUREMENT AT FAIR VALUE
The fair value measurement of the financial instruments of the Group is classified according to the three levels set out in IFRS 7. In particular, the fair
value hierarchy introduces three levels of input:
(2) Level 1: quoted prices in active market;
(3) Level 2: prices calculated using observable market inputs;
(4) Level 3: prices calculated using inputs that are not based on observable market data.
The tables below provide additional information on the financial instruments, including the table relating to the hierarchy level for each class of financial
asset/liability measured at fair value at March 31, 2017.
Key for IAS 39 categories
|
|
|
|
|
|
|
Acronym
|
|
Loans and Receivables
|
|
LaR
|
|
Financial assets
Held-to-Maturity
|
|
HtM
|
|
Available-for-Sale
financial assets
|
|
AfS
|
|
Financial Assets/Liabilities Held for Trading
|
|
FAHfT/FLHfT
|
|
Financial Liabilities at Amortized Cost
|
|
FLAC
|
|
Hedging Derivatives
|
|
HD
|
|
Not applicable
|
|
n.a.
|
75
Hierarchy levels for each class of financial asset/liability measured at fair value at 3/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hierarchy Levels
|
|
|
(millions of euros)
|
|
|
|
|
IAS 39
Categories
|
|
|
Note
|
|
|
Carrying
amount in
financial
statements
at
3/31/2017
|
|
|
Level 1
(*)
|
|
|
Level 2
(*)
|
|
|
Level 3
(*)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments
|
|
|
|
|
|
|
AfS
|
|
|
|
|
|
|
|
48
|
|
|
|
3
|
|
|
|
18
|
|
|
|
|
|
|
Securities, financial receivables and other
non-current
financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of which securities
|
|
|
|
|
|
|
AfS
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of which hedging derivatives
|
|
|
|
|
|
|
HD
|
|
|
|
|
|
|
|
2,416
|
|
|
|
|
|
|
|
2,416
|
|
|
|
|
|
|
of which
non-hedging
derivatives
|
|
|
|
|
|
|
FAHfT
|
|
|
|
|
|
|
|
35
|
|
|
|
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
(a
|
)
|
|
|
|
|
|
|
|
|
|
|
2,499
|
|
|
|
3
|
|
|
|
2,469
|
|
|
|
—
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of which
available-for-sale
financial assets
|
|
|
|
|
|
|
AfS
|
|
|
|
|
|
|
|
1,068
|
|
|
|
1,068
|
|
|
|
|
|
|
|
|
|
|
of which
held-for-trading
financial assets
|
|
|
|
|
|
|
FAHfT
|
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Financial receivables and other current financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of which hedging derivatives
|
|
|
|
|
|
|
HD
|
|
|
|
|
|
|
|
262
|
|
|
|
|
|
|
|
262
|
|
|
|
|
|
|
of which
non-hedging
derivatives
|
|
|
|
|
|
|
FAHfT
|
|
|
|
|
|
|
|
27
|
|
|
|
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
(b
|
)
|
|
|
|
|
|
|
|
|
|
|
1,358
|
|
|
|
1,069
|
|
|
|
289
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(a+b
|
)
|
|
|
|
|
|
|
|
|
|
|
3,857
|
|
|
|
1,072
|
|
|
|
2,758
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of which hedging derivatives
|
|
|
|
|
|
|
HD
|
|
|
|
9
|
)
|
|
|
1,794
|
|
|
|
|
|
|
|
1,794
|
|
|
|
|
|
|
of which
non-hedging
derivatives
|
|
|
|
|
|
|
FLHfT
|
|
|
|
9
|
)
|
|
|
14
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
(c
|
)
|
|
|
|
|
|
|
|
|
|
|
1,808
|
|
|
|
—
|
|
|
|
1,808
|
|
|
|
—
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of which hedging derivatives
|
|
|
|
|
|
|
HD
|
|
|
|
9
|
)
|
|
|
99
|
|
|
|
|
|
|
|
99
|
|
|
|
|
|
|
of which
non-hedging
derivatives
|
|
|
|
|
|
|
FLHfT
|
|
|
|
9
|
)
|
|
|
9
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
(d
|
)
|
|
|
|
|
|
|
|
|
|
|
108
|
|
|
|
|
|
|
|
108
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(c+d
|
)
|
|
|
|
|
|
|
|
|
|
|
1,916
|
|
|
|
—
|
|
|
|
1,916
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*)
|
Level 1: quoted prices in active markets.
|
|
|
Level 2: prices calculated using observable market inputs.
|
|
|
Level 3: prices calculated using inputs that are not based on observable market data.
|
76
N
OTE 11
CONTINGENT LIABILITIES, OTHER INFORMATION
A description is
provided below of the most significant judicial, arbitration and tax disputes in which TIM Group companies are involved as of 31 March 2017, as well as those that came to an end during the period.
The TIM Group has posted liabilities totalling 478 million euros for those disputes described below where the risk of losing the case has been considered
probable.
A) SIGNIFICANT DISPUTES AND PENDING LEGAL ACTIONS
For the
following disputes and pending legal actions no significant facts have emerged with respect to what was published in the 2016 Annual Report:
(4)
international tax and regulatory disputes;
(5) administrative offence charge pursuant to Legislative Decree 231/2011 for the
so-called
TIM Security Affair;
(6) irregularities concerning transactions for the leasing/rental of assets.
Telecom Italia Sparkle – Relations with
I-Globe,
Planetarium, Acumen, Accrue Telemedia and Diadem:
investigation by the Public Prosecutor’s Office of Rome
The Rome Public Prosecutor’s Office has challenged the judgement of the Court of Rome of October 2013 with which the three former managers of Telecom
Italia Sparkle were fully acquitted of the charges of transnational conspiracy for the purpose of tax evasion and false declarations through the use of invoices or other documents for
non-existent
transactions
(“carousel fraud”), also in relation to the position of the Telecom Italia Sparkle employees; currently, judgement is pending in the Court of Appeal in Rome. Telecom Italia Sparkle is still being investigated for the administrative offence
pursuant to Legislative Decree 231/2001, with the predicate offence of conspiracy and translational money laundering.
Following the outcome of the
immediate trial, the Company fully released the provisions for risk in the profit and loss account during 2014 and obtained from the Judicial Authority the release and return of all the sums issued to guarantee any obligations deriving from the
application of Legislative Decree 231/2001; the sum of 1,549,000 euros, which corresponds to the maximum fine applicable for the administrative offence, still remains under seizure.
As for risks of a fiscal nature, it should be noted that in February 2014 the Revenues Agency (Lazio Regional Office) served three formal notifications of
fines for the years 2005, 2006 and 2007, based on the assumption that the telephone traffic in the “carousel fraud” did not exist. The amount of the fines – 25% of the “crime related costs” unduly deducted – total
280 million euros. In this respect the Company has filed an appeal to the Provincial Tax Commission in April 2014. The Commission rejected the appeal with a decision filed in May 2016.
The Company lodged an appeal with the Regional Tax Commission in October 2016, opposing the judgement in the first instance, requesting a suspension of the
enforcement of this first instance judgement subject to presentation of an appropriate guarantee. In December 2016, the Regional Tax Commission granted this suspension, fixing the date for a hearing on the merits in April 2017.
On 5 April 2017 the appeal was discussed before the Regional Tax Commission of Lazio. On 26 April 2017 the second tier ruling was filed (2310/2017 -
sec. 11) which rejected the Company’s appeal.
Even on the basis of the assessments made by the professionals assisting the Company in the matter, it
is estimated that the risk to be requalified as probable will amount to 93 million euros, namely the remaining 1/3 not yet registered, subject to provision in this Interim Report on Operations at 31 March 2017.
— ● —
77
It should be noted that for some disputes described below, on the basis of the information available at the
closing date of the present document and with particular reference to the complexity of the proceedings, to their progress, and to elements of uncertainty of a technical-trial nature, it was not possible to make a reliable estimate of the size
and/or times of possible payments, if any. Moreover, in the case in which the disclosure of information relative to the dispute could seriously jeopardise the position of TIM or its subsidiaries, only the general nature of the dispute is described.
Of the disputes with the aforementioned characteristics, no significant facts have emerged for those listed below with respect to what was published
in the 2016 Annual Report:
|
(10)
|
Italian Competition Authority Case
I-761;
|
|
(14)
|
Investigation by the Monza Public Prosecutor’s Office;
|
|
(15)
|
COLT TECHNOLOGY SERVICES;
|
|
(16)
|
KPNQ West Italia S.p.A.;
|
|
(18)
|
EUTELIA and VOICEPLUS;
|
|
(20)
|
Vodafone Dispute - Universal Service;
|
|
(21)
|
Olivetti – Asbestos exposure;
|
|
(23)
|
Elinet S.p.A. Bankruptcy;
|
|
(24)
|
Dispute relative to “Adjustments on license fees” for the years 1994-1998;
|
|
(25)
|
Formal Notice of Assessments against TIM S.p.A.;
|
|
(26)
|
Brazil - Docas/JVCO Arbitration;
|
|
(27)
|
Brazil – CAM JVCO Arbitration.
|
Antitrust Case A428
At the conclusion of case A428, in May 2013,
Italian Competition Authority AGCM imposed two administrative sanctions of 88,182,000 euros and 15,612,000 euros on TIM for abuse of its dominant position. The Company allegedly (i) hindered or delayed activation of access services requested by
OLOs through unjustified and spurious refusals; (ii) offered its access services to final customers at economic and technical conditions that allegedly could not be matched by competitors purchasing wholesale access services from TIM itself,
only in those geographic areas of the Country where disaggregated access services to the local network are available, and hence where other operators can compete more effectively with the Company.
TIM appealed against the decision before the Regional Administrative Court (TAR) for Lazio, applying for payment of the fine to be suspended. In particular,
it alleged: infringement of its rights to defend itself in the proceedings, the circumstance that the organisational choices challenged by AGCM and allegedly at the base of the abuse of the OLO provisioning processes had been the subject of specific
rulings made by the industry regulator (AGCom), the circumstance that the comparative examination of the internal/external provisioning processes had in fact shown better results for the OLOs than for the TIM retail department (hence the lack of any
form of inequality of treatment and/or opportunistic behaviour by TIM), and (regarding the second abuse) the fact that the conduct was structurally unsuitable to reduce the margins of the OLOs.
In May 2014, the judgement of the Lazio TAR was published, rejecting TIM’s appeal and confirming the fines imposed in the original order challenged. In
September 2014 the Company appealed against this decision.
In May 2015, with the judgement no. 2497/15, the Council of State found the decision of the
court of first instance did not present the deficiencies alleged by TIM and confirmed the AGCM ruling. The company had already proceeded to pay the fines and the accrued interest.
In a decision notified in July 2015, AGCM started proceedings for
non-compliance
against TIM, to ascertain if the
Company had respected the notice to comply requiring it to refrain from undertaking behaviours analogous to those that were the object of the breach ascertained with the concluding decision in case A428 dated May 2013.
On 13 January 2017 TIM was notified of the conclusive assessment of the Italian Competition Authority (AGCM), acknowledging that TIM has fully complied
with the judgement in proceedings A428 and that therefore the conditions do not exist for the imposition of any sanctions for
non-compliance.
78
AGCM recognises, furthermore, that TIM’s behaviour subsequently to the 2013 proceedings has been directed
towards continuous improvement of its performance in the supply of wholesale access services concerning not only the services which were the subject of the investigation, but also the new super-fast broadband access services. In assessing
compliance, AGCM recognised the positive impact of the implementation, albeit not yet completed, of TIM’s New Equivalence Model (NME). AGCM’s decision forces TIM to: (i) proceed with the implementation of the NME until its completion
which is expected to be by 30 April 2017; (ii) to inform the Authority about the performance levels of the systems for providing wholesale access services and about the completion of the corresponding internal reorganisation plan by the end of
May 2017.
Vodafone lodged an appeal with the Regional Administrative Court of Lazio against the final decision in the proceedings for
non-compliance
taken by AGCM. TIM filed an appearance, as it did in the trials brought in the month of March 2017 by the operators CloudItalia, Kpnqwest and Digitel.
VODAFONE
(I-761)
With a writ of summons before the Milan Court,
Vodafone has sued TIM and some network companies, bringing claims for compensation from the Company for around 193 million euros for damages arising from alleged anti-competitive conduct censured in the known AGCM case
I-761
(on corrective maintenance) referring to the period from 2011 to 2017.
Like Wind before it, with which a similar
judgement is pending, Vodafone contests the abuse of a dominant market position allegedly carried out by TIM in the wholesale markets giving access to its fixed network (LLU lines; Bitstream; WLR), through an unlawful agreement with the maintenance
companies to maintain the monopoly on the offer of corrective maintenance services on its network. In particular this restrictive agreement would have concerned the coordination, by the Company, of the financial conditions contained in the offers
formulated by the aforementioned companies with respect to the OLOs, for the maintenance service, at artificially high prices with respect to the cost of the maintenance included in the regulated access subscription charge, in order to make it seem
as if the unbundling of the service itself were not convenient. The Company will file an appearance, contesting all of the other party’s requests.
Brazil - Opportunity Arbitration
In May 2012, TIM and Telecom Italia International N.V (now merged in Telecom Italia Finance) were served with a notice of arbitration proceedings brought by
the Opportunity group, claiming compensation for damages allegedly suffered for presumed breach of a settlement agreement signed in 2005. Based on the claimant’s allegations, the damages relate to circumstances that emerged in the criminal
proceedings pending before the Milan Court regarding,
inter alia
, unlawful activities undertaken by former employees of TIM.
The investigatory
phase having been completed, the hearing for oral discussion took place in November 2014, after which the parties filed their concluding arguments in preparation for the decision on the case.
In September 2015, the Board of Arbitration declared the proceedings closed, as the award was going to be filed.
Subsequently, the Board of Arbitration allowed the parties to exchange short arguments and the ICC Court extended the term for the filing of the award.
In September 2016 the ICC Court notified the parties of its judgement, based on which the Board of Arbitration rejected all the claims made by the Opportunity
group and decided that the legal costs, administrative costs and costs for expert witnesses should be split between the parties.
In April 2017 the
Opportunity group filed an appeal against the arbitration award before the Court of Appeal of Paris.
79
B)
OTHER INFORMATION
With reference to the cases listed below no significant facts have emerged with respect to that published in the 2016 Annual Report:
|
•
|
|
Dispute concerning the license fees for 1998,
|
|
•
|
|
Vodafone (previously TELETU),
|
Mobile telephony - criminal proceedings
In March 2012 TIM was served notice of the
conclusion of the preliminary enquiries, which showed that the Company was being investigated by the Public Prosecutor of Milan pursuant to the Legislative Decree n. 231/2001, for the offences of handling stolen goods and counterfeiting committed,
according to the alleged allegations, by fourteen employees of the
so-called
“ethnic channel”, with the participation of a number of dealers, for the purpose of obtaining undeserved commissions from
TIM.
The Company, as the injured party damaged by such conduct, had brought two legal actions in 2008 and 2009 and had proceeded to suspend the employees
involved in the criminal proceedings (suspension later followed by dismissal). It has also filed an initial statement of defence, together with a technical report by its own expert, requesting that the proceedings against it be suspended, and that
charges of aggravated fraud against the Company be brought against the other defendants. In December 2012, the Public Prosecutor’s Office filed a request for 89 defendants and the Company itself to be committed for trial.
During the preliminary hearing, the Company was admitted as civil party to the trial and, in November 2013, the conclusions in the interest of the civil party
were filed, reaffirming TIM’s total lack of involvement in the offences claimed.
At the end of the preliminary hearing, which took place in March
2014, the Judge for the Preliminary Hearing committed for trial all the defendants (including TIM) who had not asked for their situation to be settled with alternative procedures, on the grounds that “examination in a trial” was needed. In
April 2016, at the end of the first part of the trial, the Public Prosecutor asked for TIM to be sentenced to pay an administrative fine of 900 thousand euros, but decided not to ask for confiscation of any of the presumed profits of the
offences (quantified in the committal proceedings as totalling several million euros), based on the assumption that TIM had in any event remedied the presumed organisational inadequacies. While acknowledging the considerable redimensioning of the
accusations, the Company has reiterated its total
non-involvement
in the facts at issue. In November 2016 the Court gave a verdict acquitting the Company on the grounds that there was no case to answer. All
the individuals charged were also acquitted on various grounds. The acquittal judgement is not final, as it was challenged in April 2017 by the Public Prosecutor who sought appeal before the Court of Cassation.
80
N
OTE 12
SEGMENT REPORTING
A) SEGMENT REPORTING
Segment reporting is based on the following
operating segments:
81
Separate Consolidated Income Statements by Operating Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
Domestic
|
|
|
Brazil
|
|
|
Other Operations
|
|
|
Adjustments and
eliminations
|
|
|
Consolidated Total
|
|
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
Third-party revenues
|
|
|
3,639
|
|
|
|
3,539
|
|
|
|
1,180
|
|
|
|
896
|
|
|
|
—
|
|
|
|
5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,819
|
|
|
|
4,440
|
|
|
Intragroup revenues
|
|
|
8
|
|
|
|
9
|
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
(9
|
)
|
|
|
(11
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Revenues by operating segment
|
|
|
3,647
|
|
|
|
3,548
|
|
|
|
1,181
|
|
|
|
897
|
|
|
|
—
|
|
|
|
6
|
|
|
|
(9
|
)
|
|
|
(11
|
)
|
|
|
4,819
|
|
|
|
4,440
|
|
|
Other income
|
|
|
71
|
|
|
|
43
|
|
|
|
6
|
|
|
|
4
|
|
|
|
—
|
|
|
|
1
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
78
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues and other income
|
|
|
3,718
|
|
|
|
3,591
|
|
|
|
1,187
|
|
|
|
901
|
|
|
|
—
|
|
|
|
7
|
|
|
|
(8
|
)
|
|
|
(12
|
)
|
|
|
4,897
|
|
|
|
4,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of goods and services
|
|
|
(1,440
|
)
|
|
|
(1,450
|
)
|
|
|
(627
|
)
|
|
|
(475
|
)
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
7
|
|
|
|
6
|
|
|
|
(2,061
|
)
|
|
|
(1,923
|
)
|
|
Employee benefits expenses
|
|
|
(669
|
)
|
|
|
(756
|
)
|
|
|
(89
|
)
|
|
|
(88
|
)
|
|
|
(2
|
)
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(760
|
)
|
|
|
(848
|
)
|
|
of which: accruals to employee severance indemnities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Other operating expenses
|
|
|
(137
|
)
|
|
|
(138
|
)
|
|
|
(135
|
)
|
|
|
(111
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
3
|
|
|
|
(273
|
)
|
|
|
(247
|
)
|
|
of which: write-downs and expenses in connection with credit management and provision
charges
|
|
|
(83
|
)
|
|
|
(74
|
)
|
|
|
(44
|
)
|
|
|
(32
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(127
|
)
|
|
|
(107
|
)
|
|
Change in inventories
|
|
|
20
|
|
|
|
80
|
|
|
|
8
|
|
|
|
9
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
28
|
|
|
|
85
|
|
|
Internally generated assets
|
|
|
129
|
|
|
|
134
|
|
|
|
28
|
|
|
|
22
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
|
2
|
|
|
|
159
|
|
|
|
158
|
|
|
EBITDA
|
|
|
1,621
|
|
|
|
1,461
|
|
|
|
372
|
|
|
|
258
|
|
|
|
(4
|
)
|
|
|
(6
|
)
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
1,990
|
|
|
|
1,712
|
|
|
Depreciation and amortization
|
|
|
(834
|
)
|
|
|
(797
|
)
|
|
|
(295
|
)
|
|
|
(212
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,129
|
)
|
|
|
(1,009
|
)
|
|
Gains/(losses) on disposals of
non-current
assets
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
3
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
4
|
|
|
|
3
|
|
|
Impairment reversals (losses) on
non-current
assets
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
EBIT
|
|
|
787
|
|
|
|
662
|
|
|
|
81
|
|
|
|
49
|
|
|
|
(4
|
)
|
|
|
(5
|
)
|
|
|
1
|
|
|
|
(2
|
)
|
|
|
865
|
|
|
|
704
|
|
|
Share of profits (losses) of associates and joint ventures accounted for using the equity
method
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Other income (expenses) from investments
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Finance income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
385
|
|
|
|
1,120
|
|
|
Finance expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(769
|
)
|
|
|
(1,146
|
)
|
|
Profit (loss) before tax from continuing operations
|
|
|
|
|
|
|
|
481
|
|
|
|
678
|
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(256
|
)
|
|
|
(221
|
)
|
|
Profit (loss) from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
225
|
|
|
|
457
|
|
|
Profit (loss) from Discontinued
operations/Non-current
assets held for sale
|
|
|
|
|
|
|
|
—
|
|
|
|
47
|
|
|
Profit (loss) for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
225
|
|
|
|
504
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the Parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200
|
|
|
|
433
|
|
|
Non-controlling
interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
71
|
|
Revenues by operating segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
Domestic
|
|
|
Brazil
|
|
|
Other Operations
|
|
|
Adjustments and
eliminations
|
|
|
Consolidated Total
|
|
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
Revenues from equipment sales - third party
|
|
|
306
|
|
|
|
195
|
|
|
|
62
|
|
|
|
55
|
|
|
|
—
|
|
|
|
5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
368
|
|
|
|
255
|
|
|
Revenues from equipment sales - intragroup
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues from equipment sales
|
|
|
306
|
|
|
|
195
|
|
|
|
62
|
|
|
|
55
|
|
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
368
|
|
|
|
255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from services - third party
|
|
|
3,334
|
|
|
|
3,343
|
|
|
|
1,118
|
|
|
|
841
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,452
|
|
|
|
4,184
|
|
|
Revenues from services - intragroup
|
|
|
8
|
|
|
|
9
|
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(9
|
)
|
|
|
(10
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues from services
|
|
|
3,342
|
|
|
|
3,352
|
|
|
|
1,119
|
|
|
|
842
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(9
|
)
|
|
|
(10
|
)
|
|
|
4,452
|
|
|
|
4,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues on construction contracts - third party
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
1
|
|
|
Revenues on construction contracts-intragroup
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues on construction contracts
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total third-party revenues
|
|
|
3,639
|
|
|
|
3,539
|
|
|
|
1,180
|
|
|
|
896
|
|
|
|
—
|
|
|
|
5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,819
|
|
|
|
4,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intragroup revenues
|
|
|
8
|
|
|
|
9
|
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
(9
|
)
|
|
|
(11
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues by operating segment
|
|
|
3,647
|
|
|
|
3,548
|
|
|
|
1,181
|
|
|
|
897
|
|
|
|
—
|
|
|
|
6
|
|
|
|
(9
|
)
|
|
|
(11
|
)
|
|
|
4,819
|
|
|
|
4,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82
Purchase of intangible and tangible assets by operating segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
Domestic
|
|
|
Brazil
|
|
|
Other Operations
|
|
|
Adjustments and
eliminations
|
|
|
Consolidated Total
|
|
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
1st
Quarter
2017
|
|
|
1st
Quarter
2016
|
|
|
Purchase of intangible assets
|
|
|
190
|
|
|
|
222
|
|
|
|
137
|
|
|
|
120
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
327
|
|
|
|
342
|
|
|
Purchase of tangible assets
|
|
|
454
|
|
|
|
602
|
|
|
|
65
|
|
|
|
46
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
519
|
|
|
|
648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchase of intangible and tangible assets
|
|
|
644
|
|
|
|
824
|
|
|
|
202
|
|
|
|
166
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
846
|
|
|
|
990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of which: capital expenditures
|
|
|
631
|
|
|
|
778
|
|
|
|
200
|
|
|
|
166
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
831
|
|
|
|
944
|
|
|
of which: change in financial leasing contracts
|
|
|
13
|
|
|
|
46
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15
|
|
|
|
46
|
|
Headcount by Operating Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(number)
|
|
Domestic
|
|
|
Brazil
|
|
|
Other Operations
|
|
|
Consolidated Total
|
|
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
Headcount
|
|
|
51,163
|
|
|
|
51,280
|
|
|
|
9,674
|
|
|
|
9,849
|
|
|
|
93
|
|
|
|
100
|
|
|
|
60,930
|
|
|
|
61,229
|
|
Assets and liabilities by Operating Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
Domestic
|
|
|
Brazil
|
|
|
Other Operations
|
|
|
Adjustments and
eliminations
|
|
|
Consolidated Total
|
|
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
3/31/2017
|
|
|
12/31/2016
|
|
|
Non-current
operating assets
|
|
|
47,311
|
|
|
|
47,428
|
|
|
|
7,761
|
|
|
|
7,711
|
|
|
|
4
|
|
|
|
5
|
|
|
|
1
|
|
|
|
1
|
|
|
|
55,077
|
|
|
|
55,145
|
|
|
Current operating assets
|
|
|
4,465
|
|
|
|
4,472
|
|
|
|
1,435
|
|
|
|
1,209
|
|
|
|
16
|
|
|
|
16
|
|
|
|
4
|
|
|
|
(1
|
)
|
|
|
5,920
|
|
|
|
5,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating assets
|
|
|
51,776
|
|
|
|
51,900
|
|
|
|
9,196
|
|
|
|
8,920
|
|
|
|
20
|
|
|
|
21
|
|
|
|
5
|
|
|
|
—
|
|
|
|
60,997
|
|
|
|
60,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments accounted for using the equity method
|
|
|
18
|
|
|
|
18
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18
|
|
|
|
18
|
|
|
Discontinued
operations/Non-current
assets
held for sale
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Unallocated assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,476
|
|
|
|
9,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,491
|
|
|
|
70,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating liabilities
|
|
|
8,830
|
|
|
|
8,968
|
|
|
|
2,062
|
|
|
|
2,397
|
|
|
|
54
|
|
|
|
57
|
|
|
|
(9
|
)
|
|
|
(16
|
)
|
|
|
10,937
|
|
|
|
11,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities directly associated with Discontinued
operations/Non-current
assets held for sale
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Unallocated liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,604
|
|
|
|
35,487
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,950
|
|
|
|
23,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity and Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,491
|
|
|
|
70,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B) REPORTING BY GEOGRAPHICAL AREA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
Non-current operating assets
|
|
|
(millions of euros)
|
|
|
|
Breakdown by location of operations
|
|
Breakdown by location of customers
|
|
Breakdown by location of operations
|
|
|
|
|
|
|
1st Quarter 2017
|
|
1st Quarter 2016
|
|
1st Quarter 2017
|
|
1st Quarter 2016
|
|
3/31/ 2017
|
|
|
12/31/ 2016
|
|
|
Italy
|
|
(a)
|
|
3,555
|
|
3,468
|
|
3,350
|
|
3,250
|
|
|
46,849
|
|
|
|
46,948
|
|
|
Outside Italy
|
|
(b)
|
|
1,264
|
|
972
|
|
1,469
|
|
1,190
|
|
|
8,228
|
|
|
|
8.197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
(a+b)
|
|
4,819
|
|
4,440
|
|
4,819
|
|
4,440
|
|
|
55,077
|
|
|
|
55,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83
C)
INFORMATION ABOUT MAJOR CUSTOMERS
None of the TIM Group’s customers exceeds 10% of consolidated revenues.
84
NO
TE 13
RELATED PARTY TRANSACTIONS
The following tables show the figures
relating to related party transactions and the impact of those amounts on the separate consolidated income statements, consolidated statements of financial position and consolidated statements of cash flows.
The procedure adopted by the Company for the management of related party transactions expressly applies “also to the participants in significant
shareholder agreements pursuant to Article 122 of the Consolidated Law on Finance that govern the candidature to the office of Board Director of the Company, when the majority of the Directors appointed are drawn from the resulting list
submitted”. Accordingly, since the majority of the members of the Board of Directors of TIM in office (appointed by the Ordinary Shareholders’ Meeting of April 16, 2014 and subsequently supplemented by the Ordinary Shareholders’
Meeting of December 15, 2015) were drawn from the list submitted then by the shareholder Telco, whose shareholders (Generali group, Mediobanca S.P.A., Intesa Sanpaolo S.p.A. and Telefonica S.A.) were bound at the time by a significant
shareholder agreement pursuant to Article 122 of Italian Legislative Decree 58/1998, the participants in that shareholder agreement and the companies controlled by them continue to be considered as related parties of TIM (even though that
shareholder agreement has been terminated in the meantime).
Related party transactions, when not dictated by specific laws, were conducted at arm’s
length. The transactions were subject to the above-mentioned internal procedure (available for consultation on the Company’s website at the following address: www.telecomitalia.com, section Group – channel governance system) which
establishes procedures and time scales for verification and monitoring.
On November 13, 2013, the TIM Group accepted the offer for the purchase of
the entire controlling interest held in the Sofora – Telecom Argentina group; as a result, from the 2013 consolidated financial statements, the investment has been classified as Discontinued Operations (Discontinued
operations/Non-current
assets held for sale). The sale was completed on March 8, 2016.
85
The effects on the individual line items of the separate consolidated income statements for the first three
months of 2017 and 2016 are as follows:
SEPARATE CONSOLIDATED INCOME STATEMENTS LINE ITEMS FIRST QUARTER 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
Total
|
|
|
Related Parties
|
|
|
|
|
|
|
|
Associates,
subsidiaries of
associates and
joint ventures
|
|
|
Other
related
parties
(*)
|
|
|
Pension
funds
|
|
|
Key
managers
|
|
|
Total
related
parties
|
|
|
Transactions of
Discontinued
Operations
|
|
|
Total related
parties net of
Discontinued
Operations
|
|
|
% of
financial
statement
item
|
|
|
|
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
|
(b/a)
|
|
|
Revenues
|
|
|
4,819
|
|
|
|
1
|
|
|
|
93
|
|
|
|
|
|
|
|
|
|
|
|
94
|
|
|
|
|
|
|
|
94
|
|
|
|
2.0
|
|
|
Other income
|
|
|
78
|
|
|
|
16
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
19
|
|
|
|
24.4
|
|
|
Acquisition of goods and services
|
|
|
2,061
|
|
|
|
6
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
63
|
|
|
|
|
|
|
|
63
|
|
|
|
3.1
|
|
|
Employee benefits expenses
|
|
|
760
|
|
|
|
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
21
|
|
|
|
2.8
|
|
|
Finance income
|
|
|
385
|
|
|
|
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
27
|
|
|
|
|
|
|
|
27
|
|
|
|
7.0
|
|
|
Finance expenses
|
|
|
769
|
|
|
|
13
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
38
|
|
|
|
|
|
|
|
38
|
|
|
|
4.9
|
|
|
(*)
|
Other related parties both through directors, statutory auditors and key managers and as participants in shareholder agreements pursuant to Article 122 of the Consolidated Law on Finance.
|
SEPARATE CONSOLIDATED INCOME STATEMENTS LINE ITEMS FIRST QUARTER 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Associates,
subsidiaries of
associates and
joint ventures
|
|
|
Other
related
parties
(*)
|
|
|
Pension
funds
|
|
|
Key
managers
|
|
|
Total
related
parties
|
|
|
Transactions of
Discontinued
Operations
|
|
|
Total related
parties net of
Discontinued
Operations
|
|
|
% of
financial
statement
item
|
|
|
|
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
|
(b/a)
|
|
|
Revenues
|
|
|
4,440
|
|
|
|
1
|
|
|
|
102
|
|
|
|
|
|
|
|
|
|
|
|
103
|
|
|
|
(23
|
)
|
|
|
80
|
|
|
|
1.8
|
|
|
Acquisition of goods and services
|
|
|
1,923
|
|
|
|
6
|
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
66
|
|
|
|
(14
|
)
|
|
|
52
|
|
|
|
2.7
|
|
|
Employee benefits expenses
|
|
|
848
|
|
|
|
|
|
|
|
1
|
|
|
|
21
|
|
|
|
9
|
|
|
|
31
|
|
|
|
|
|
|
|
31
|
|
|
|
3.7
|
|
|
Finance income
|
|
|
1,120
|
|
|
|
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
29
|
|
|
|
|
|
|
|
29
|
|
|
|
2.6
|
|
|
Finance expenses
|
|
|
1,146
|
|
|
|
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
33
|
|
|
|
|
|
|
|
33
|
|
|
|
2.9
|
|
|
Profit (loss) from Discontinued
operations/Non-current
assets held for sale
|
|
|
47
|
|
|
|
(1
|
)
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*)
|
Other related parties both through directors, statutory auditors and key managers and as participants in shareholder agreements pursuant to Article 122 of the Consolidated Law on Finance.
|
86
The effects on the individual line items of the consolidated statements of financial position at March 31,
2017 and at December 31, 2016 are as follows:
CONSOLIDATED STATEMENT OF FINANCIAL POSITION LINE ITEMS AT 3/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
Total
|
|
|
Related Parties
|
|
|
|
|
|
|
|
Associates,
subsidiaries of
associates and
joint ventures
|
|
|
Other
related
parties
(*)
|
|
|
Pension
funds
|
|
|
Total
related
parties
|
|
|
Transactions of
Discontinued
Operations
|
|
|
Total related
parties net of
Discontinued
Operations
|
|
|
% of
financial
statement
item
|
|
|
|
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
|
(b/a)
|
|
|
Net financial debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
financial assets
|
|
|
(2,596
|
)
|
|
|
|
|
|
|
(507
|
)
|
|
|
|
|
|
|
(507
|
)
|
|
|
|
|
|
|
(507
|
)
|
|
|
19.5
|
|
|
Securities other than investments (current assets)
|
|
|
(1,069
|
)
|
|
|
|
|
|
|
(68
|
)
|
|
|
|
|
|
|
(68
|
)
|
|
|
|
|
|
|
(68
|
)
|
|
|
6.4
|
|
|
Financial receivables and other current financial assets
|
|
|
(563
|
)
|
|
|
|
|
|
|
(23
|
)
|
|
|
|
|
|
|
(23
|
)
|
|
|
|
|
|
|
(23
|
)
|
|
|
4.1
|
|
|
Cash and cash equivalents
|
|
|
(4,461
|
)
|
|
|
|
|
|
|
(487
|
)
|
|
|
|
|
|
|
(487
|
)
|
|
|
|
|
|
|
(487
|
)
|
|
|
10.9
|
|
|
Current financial assets
|
|
|
(6,093
|
)
|
|
|
|
|
|
|
(578
|
)
|
|
|
|
|
|
|
(578
|
)
|
|
|
|
|
|
|
(578
|
)
|
|
|
9.5
|
|
|
Non-current
financial liabilities
|
|
|
31,025
|
|
|
|
|
|
|
|
819
|
|
|
|
|
|
|
|
819
|
|
|
|
|
|
|
|
819
|
|
|
|
2.6
|
|
|
Current financial liabilities
|
|
|
3,587
|
|
|
|
|
|
|
|
206
|
|
|
|
|
|
|
|
206
|
|
|
|
|
|
|
|
206
|
|
|
|
5.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net financial debt
|
|
|
25,923
|
|
|
|
|
|
|
|
(60
|
)
|
|
|
|
|
|
|
(60
|
)
|
|
|
|
|
|
|
(60
|
)
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other statement of financial position line items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and miscellaneous receivables and other current assets
|
|
|
5,621
|
|
|
|
28
|
|
|
|
92
|
|
|
|
|
|
|
|
120
|
|
|
|
|
|
|
|
120
|
|
|
|
2.1
|
|
|
Miscellaneous payables and other
non-current
liabilities
|
|
|
1,646
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
0.1
|
|
|
Trade and miscellaneous payables and other current liabilities
|
|
|
7,215
|
|
|
|
28
|
|
|
|
161
|
|
|
|
26
|
|
|
|
215
|
|
|
|
|
|
|
|
215
|
|
|
|
3.0
|
|
|
(*)
|
Other related parties both through directors, statutory auditors and key managers and as participants in shareholder agreements pursuant to Article 122 of the Consolidated Law on Finance.
|
87
CONSOLIDATED STATEMENT OF FINANCIAL POSITION LINE ITEMS AT 12/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
Total
|
|
|
Related Parties
|
|
|
|
|
|
|
|
Associates,
subsidiaries
of
associates
and joint
ventures
|
|
|
Other
related
parties
(
*
)
|
|
|
Pension
funds
|
|
|
Total
related
parties
|
|
|
Transactions
of
Discontinued
Operations
|
|
|
Total related
parties net of
Discontinued
Operations
|
|
|
% of
financial
statement
item
|
|
|
|
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
|
(b/a)
|
|
|
Net financial debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
financial assets
|
|
|
(2,698
|
)
|
|
|
(12
|
)
|
|
|
(520
|
)
|
|
|
|
|
|
|
(532
|
)
|
|
|
|
|
|
|
(532
|
)
|
|
|
19.7
|
|
|
Securities other than investments (current assets)
|
|
|
(1,519
|
)
|
|
|
|
|
|
|
(110
|
)
|
|
|
|
|
|
|
(110
|
)
|
|
|
|
|
|
|
(110
|
)
|
|
|
7.2
|
|
|
Financial receivables and other current financial assets
|
|
|
(389
|
)
|
|
|
|
|
|
|
(22
|
)
|
|
|
|
|
|
|
(22
|
)
|
|
|
|
|
|
|
(22
|
)
|
|
|
5.7
|
|
|
Cash and cash equivalents
|
|
|
(3,964
|
)
|
|
|
|
|
|
|
(621
|
)
|
|
|
|
|
|
|
(621
|
)
|
|
|
|
|
|
|
(621
|
)
|
|
|
15.7
|
|
|
Current financial assets
|
|
|
(5,872
|
)
|
|
|
|
|
|
|
(753
|
)
|
|
|
|
|
|
|
(753
|
)
|
|
|
|
|
|
|
(753
|
)
|
|
|
12.8
|
|
|
Non-current
financial liabilities
|
|
|
30,469
|
|
|
|
|
|
|
|
912
|
|
|
|
|
|
|
|
912
|
|
|
|
|
|
|
|
912
|
|
|
|
3.0
|
|
|
Current financial liabilities
|
|
|
4,056
|
|
|
|
|
|
|
|
133
|
|
|
|
|
|
|
|
133
|
|
|
|
|
|
|
|
133
|
|
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net financial debt
|
|
|
25,955
|
|
|
|
(12
|
)
|
|
|
(228
|
)
|
|
|
|
|
|
|
(240
|
)
|
|
|
|
|
|
|
(240
|
)
|
|
|
(0.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other statement of financial position line items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and miscellaneous receivables and other current assets
|
|
|
5,426
|
|
|
|
9
|
|
|
|
127
|
|
|
|
|
|
|
|
136
|
|
|
|
|
|
|
|
136
|
|
|
|
2.5
|
|
|
Miscellaneous payables and other
non-current
liabilities
|
|
|
1,646
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
0.1
|
|
|
Trade and miscellaneous payables and other current liabilities
|
|
|
7,646
|
|
|
|
37
|
|
|
|
200
|
|
|
|
26
|
|
|
|
263
|
|
|
|
|
|
|
|
263
|
|
|
|
3.4
|
|
|
(*)
|
Other related parties both through directors, statutory auditors and key managers and as participants in shareholder agreements pursuant to Article 122 of the Consolidated Law on Finance.
|
88
The effects on the individual line items of the consolidated statements of cash flows for the first three months
of 2017 and 2016 are shown below:
CONSOLIDATED STATEMENT OF CASH FLOWS LINE ITEMS - FIRST QUARTER 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
Total
|
|
|
Related Parties
|
|
|
|
|
|
|
|
Associates,
subsidiaries
of
associates
and joint
ventures
|
|
|
Other
related
parties
(*)
|
|
|
Pension
funds
|
|
|
Total
related
parties
|
|
|
Transactions
of
Discontinued
Operations
|
|
|
Total related
parties net of
Discontinued
Operations
|
|
|
% of
financial
statement
item
|
|
|
|
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
|
(b/a)
|
|
|
Purchase of intangible and tangible assets on an accrual basis
|
|
|
846
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
34
|
|
|
|
|
|
|
|
34
|
|
|
|
4.0
|
|
|
(*)
|
Other related parties both through directors, statutory auditors and key managers and as participants in shareholder agreements pursuant to Article 122 of the Consolidated Law on Finance.
|
CONSOLIDATED STATEMENT OF CASH FLOWS LINE ITEMS - FIRST QUARTER 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of euros)
|
|
Total
|
|
|
Related Parties
|
|
|
|
|
|
|
|
Associates,
subsidiaries
of
associates
and joint
ventures
|
|
|
Other
related
parties
(*)
|
|
|
Pension
funds
|
|
|
Total
related
parties
|
|
|
Transactions
of
Discontinued
Operations
|
|
|
Total related
parties net of
Discontinued
Operations
|
|
|
% of
financial
statement
item
|
|
|
|
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
|
(b/a)
|
|
|
Purchase of intangible and tangible assets on an accrual basis
|
|
|
990
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
34
|
|
|
|
(1
|
)
|
|
|
33
|
|
|
|
3.3
|
|
|
Cash flows from (used in) Discontinued
operations/Non-current
assets held for sale
|
|
|
(45
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*)
|
Other related parties both through directors, statutory auditors and key managers and as participants in shareholder agreements pursuant to Article 122 of the Consolidated Law on Finance.
|
At March 31, 2017, TIM S.p.A. had issued guarantees in favor of the joint venture Alfiere S.p.A. for 1 million euros.
89
Remuneration to Key Managers
In the first quarter of 2017, the total remuneration
recorded on an accrual basis by TIM S.p.A. or by subsidiaries of the Group in respect of key managers amounted to 6.1 million euros (8.8 million euros in the first quarter of 2016), broken down as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter
|
|
|
1st Quarter
|
|
|
(millions of euros)
|
|
2017
|
|
|
2016
|
|
|
Short-term remuneration
|
|
|
2.6
|
|
|
|
2.4
|
|
|
Long-term remuneration
|
|
|
1.3
|
|
|
|
|
|
|
Employment termination benefit incentives
|
|
|
|
|
|
|
6.0
|
|
|
Share-based payments
(*)
|
|
|
2.2
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.1
|
|
|
|
8.8
|
|
|
|
|
|
|
|
|
|
|
|
|
(*)
|
These refer to the fair value of the rights, accrued to March 31, under the share-based incentive plans of TIM S.p.A. and its subsidiaries (2014/2016 Stock Option Plan, Special Awards and Stock Option Plans of the
South American subsidiaries).
|
Short-term remuneration is paid during the period it pertains to, and, at the latest, within the six months
following the end of that period.
The amounts shown in the table do not include the effects:
|
•
|
|
the allocation of a total amount of 2.5 million euros – as the 2016/2019 Special Award for the discretionary amount allocated to the managers and/or directors of TIM or its subsidiaries – to which the Key
Managers may potentially be beneficiaries in whole or in part;
|
|
•
|
|
resulting from the reversal of accruals for costs of the 2014/2016 Stock Option Plan of
-1.6 million
euros.
|
In the first quarter of 2017, the contributions paid in to defined contribution plans (Assida and Fontedir) by TIM S.p.A. or by subsidiaries of the Group on
behalf of key managers amounted to 22,000 euros (29,000 euros in the first quarter of 2016).
90
In the first quarter of 2017, the “Key Managers”, i.e. those who have the power and responsibility,
directly or indirectly, for the planning, management and control of the operations of the TIM Group, including directors, had been identified as follows:
|
|
|
|
|
Directors:
|
|
|
|
Giuseppe Recchi
|
|
Executive Chairman of TIM S.p.A.
|
|
Flavio Cattaneo
|
|
Managing Director and Chief Executive Officer of TIM S.p.A.
|
|
|
|
General Manager of TIM S.p.A.
|
|
|
|
|
Managers:
|
|
|
|
Stefano De Angelis
|
|
Diretor Presidente Tim Participações S.A.
|
|
Stefano Azzi
|
|
Head of Consumer & Small Enterprise
|
|
Stefano Ciurli
|
|
Head of Wholesale
|
|
Giovanni Ferigo
|
|
Head of Technology
|
|
Lorenzo Forina
|
|
Head of Business & Top Clients
|
|
Francesco Micheli (interim)
|
|
Head of Human Resources & Organizational Development
|
|
Cristoforo Morandini
|
|
Head of Regulatory Affairs and Equivalence
|
|
Piergiorgio Peluso
|
|
Head of Administration, Finance and Control
|
|
Piergiorgio Peluso (interim)
|
|
Head of Business Support Office
|
91
N
OTE 14
EVENTS SUBSEQUENT TO MARCH 31, 2017
There were no
significant events after March 31, 2017.
92
DECLARATION BY THE MANAGER RESPONSIBLE FOR PREPARING THE CORPORATE FINANCIAL REPORTS
The manager responsible for preparing the corporate financial reports declares, pursuant to paragraph 2, article
154-bis
of the Consolidated Law on Finance, that the accounting disclosures contained in the Interim Management Report at March 31, 2017 of the TIM Group correspond to the Company’s documents,
accounting records and entries.
The Manager Responsible for Preparing
the Company’s Financial Reports
Piergiorgio Peluso
93
Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the United States Private
Securities Litigation Reform Act of 1995.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking
statements. The Group’s interim report as of and for the three months ended March 31, 2017 included in this Form
6-K
contains certain forward-looking statements. Forward-looking statements are
statements that are not historical facts and can be identified by the use of forward-looking terminology such as “believes,” “may,” “is expected to,” “will,” “will continue,” “should,”
“seeks” or “anticipates” or similar expressions or the negative thereof or other comparable terminology, or by the forward- looking nature of discussions of strategy, plans or intentions.
Actual results may differ materially from those projected or implied in the forward-looking statements. Such forward-looking information is based on certain
key assumptions which we believe to be reasonable but forward-looking information by its nature involves risks and uncertainties, which are outside our control, that could significantly affect expected results.
The following important factors could cause our actual results to differ materially from those projected or implied in any forward-looking statements:
|
|
1.
|
our ability to successfully implement our strategy over the 2017-2019 period;
|
|
|
2.
|
the continuing effects of the global economic crisis in the principal markets in which we operate, including, in particular, our core Italian market;
|
|
|
3.
|
the impact of regulatory decisions and changes in the regulatory environment in Italy and other countries in which we operate;
|
|
|
4.
|
the impact of political developments in Italy and other countries in which we operate;
|
|
|
5.
|
our ability to successfully meet competition on both price and innovation capabilities of new products and services;
|
|
|
6.
|
our ability to develop and introduce new technologies which are attractive in our principal markets, to manage innovation, to supply value added services and to increase the use of our fixed and mobile networks;
|
|
|
7.
|
our ability to successfully implement our internet and broadband strategy;
|
|
|
8.
|
our ability to successfully achieve our debt reduction and other targets;
|
|
|
9.
|
the impact of fluctuations in currency exchange and interest rates and the performance of the equity markets in general;
|
|
|
10.
|
the outcome of litigation, disputes and investigations in which we are involved or may become involved;
|
|
|
11.
|
our ability to build up our business in adjacent markets and in international markets (particularly in Brazil), due to our specialist and technical resources;
|
|
|
12.
|
our ability to achieve the expected return on the investments and capital expenditures we have made and continue to make in Brazil;
|
|
|
13.
|
the amount and timing of any future impairment charges for our authorizations, goodwill or other assets;
|
|
|
14.
|
our ability to manage and reduce costs;
|
|
|
15.
|
any difficulties which we may encounter in our supply and procurement processes, including as a result of the insolvency or financial weaknesses of our suppliers; and
|
|
|
16.
|
the costs we may incur due to unexpected events, in particular where our insurance is not sufficient to cover such costs.
|
The foregoing factors should not be construed as exhaustive. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such
forward-looking statements, which speak only as of the date hereof. We undertake no obligation to release publicly the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date
hereof, including, without limitation, changes in our business or acquisition strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events.
94
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: May 22, 2017
|
|
|
|
|
TIM S.p.A.
|
|
|
|
|
BY:
|
|
/s/ Umberto Pandolfi
|
|
|
|
Umberto Pandolfi
|
|
|
|
Company Manager
|
Telcom Italia (PK) (USOTC:TIAOF)
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