TIM S.p.A. | CIK:0000948642 | 3

  • Filed: 4/23/2018
  • Entity registrant name: TIM S.p.A. (CIK: 0000948642)
  • Generator: Donnelley Financial Solutions
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    • ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory

    NOTE 7—TANGIBLE ASSETS (OWNED AND UNDER FINANCE LEASES)

    Property, plant and equipment owned

    Property, plant and equipment owned increased by 269 million euros compared to December 31, 2016. The breakdown and movements are as follows:

     

        As of
    December 31,
    2015    		     Addition     Depreciation     Impairment
    losses /
    Reversals    		     Disposals     Exchange
    Differences    		     Other
    changes    		     As of
    December 31,
    2016    		  
        (millions of euros)  

    Land

    		     171       21         (2 )        2       11       203  

    Buildings (civil and industrial)

    		     444       87       (48 )        (1 )      4       23       509  

    Plant and equipment

    		     10,909       2,113       (2,170 )        (17 )      457       417       11,709  

    Manufacturing and distribution equipment

    		     41       11       (15 )            1       38  

    Other

    		     378       93       (157 )        (5 )      28       54       391  

    Construction in progress and advance payments

    		     716       824         (1 )      (1 )      54       (495 )      1,097  
     

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		  

    Total

    		     12,659       3,149       (2,390 )      (3 )      (24 )      545       11       13,947  
     

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		  

     

        As of
    December 31,
    2016    		     Addition     Depreciation     Impairment
    losses /
    Reversals    		     Disposals     Exchange
    Differences    		     Other
    changes    		     As of
    December 31,
    2017    		  
        (millions of euros)  

    Land

    		     203       6             (2 )      6       213  

    Buildings (civil and industrial)

    		     509       10       (39 )          (3 )      11       488  

    Plant and equipment

    		     11,709       2,601       (2,286 )      (8 )      (8 )      (332 )      373       12,049  

    Manufacturing and distribution equipment

    		     38       12       (16 )            2       36  

    Other

    		     391       88       (159 )        (2 )      (18 )      76       376  

    Construction in progress and advance payments

    		     1,097       541         1       (1 )      (41 )      (543 )      1,054  
     

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		  

    Total

    		     13,947       3,258       (2,500 )      (7 )      (11 )      (396 )      (75 )      14,216  
     

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		  

    Land comprises both built-up land and available land and is not subject to depreciation. The figure for December 31, 2017 refers primarily to TIM S.p.A. (178 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 for 2017 mainly refers to TIM S.p.A. (450 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 December 31, 2017 was mainly attributable to TIM S.p.A. (9,183 million euros) and to companies of the Brazil Business Unit (2,059 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.

    Additions in 2017 increased by 109 million euros compared to the previous year, driven mainly by higher capex in network innovation, and included 354 million euros of internally generated assets (350 million euros in 2016). Further details are provided in the Note “Internally generated assets”.

    Depreciation, impairment losses and reversals have been recorded in the income statement as components of the operating result.

    Depreciation for the years 2017, 2016 and 2015 was calculated on a straight-line basis over the estimated useful lives of the assets according to the following minimum and maximum rates:

     

    Buildings (civil and industrial)

    		      2%-5.55%  

    Plant and equipment

    		      3%-50%  

    Manufacturing and distribution equipment

    		      20%  

    Other

    		      10%-50%  
      

     

     

    		  

    The gross carrying amount, accumulated impairment losses and accumulated depreciation at December 31, 2017 and 2016 can be summarized as follows:

     

         As of December 31, 2016  
         Gross
    carrying
    amount    		      Accumulated
    impairment
    losses    		     Accumulated
    depreciation    		     Net carrying
    amount    		  
         (millions of euros)  

    Land

    		      207        (4 )        203  

    Buildings (civil and industrial)

    		      1,705        (1 )      (1,195 )      509  

    Plant and equipment

    		      69,372        (67 )      (57,596 )      11,709  

    Manufacturing and distribution equipment

    		      304        (1 )      (265 )      38  

    Other

    		      4,010        (2 )      (3,617 )      391  

    Construction in progress and advance payments

    		      1,098        (1 )        1,097  
      

     

     

    		     

     

     

    		    

     

     

    		    

     

     

    		  

    Total

    		      76,696        (76 )      (62,673 )      13,947  
      

     

     

    		     

     

     

    		    

     

     

    		    

     

     

    		  

     

         As of December 31, 2017  
         Gross
    carrying
    amount    		      Accumulated
    impairment
    losses    		     Accumulated
    depreciation    		     Net carrying
    amount    		  
         (millions of euros)  

    Land

    		      218        (5 )        213  

    Buildings (civil and industrial)

    		      1,717          (1,229 )      488  

    Plant and equipment

    		      68,964        (62 )      (56,853 )      12,049  

    Manufacturing and distribution equipment

    		      310        (1 )      (273 )      36  

    Other

    		      3,988        (2 )      (3,610 )      376  

    Construction in progress and advance payments

    		      1,054            1,054  
      

     

     

    		     

     

     

    		    

     

     

    		    

     

     

    		  

    Total

    		      76,251        (70 )      (61,965 )      14,216  
      

     

     

    		     

     

     

    		    

     

     

    		    

     

     

    		  

    Impairment losses on “Plant and equipment”, mainly relating to years prior to 2004, refer to the Telecom Italia Sparkle group. With respect to the gross carrying amounts of tangible assets, in 2017 TIM S.p.A. carried out disposals for a total amount of 2,223 million euros, mainly in relation to fully depreciated assets. Disposals mainly involved plant and equipment for around 2,188 million euros.

    Assets held under finance leases

    Assets held under finance lease decreased by 82 million euros compared to December 31, 2016. The breakdown and movements are as follows:

     

        As of
    December 31,
    2015    		     Addition     Change
    in
    finance
    lease
    contracts    		     Depreciation     Exchange
    Differences    		     Other
    changes    		     As of
    December 31,
    2016    		  
        (millions of euros)  

    Land

    		     16                 16  

    Buildings (civil and industrial)

    		     1,880       23       70       (125 )        (13 )      1,835  

    Plant and equipment

    		     284         28       (17 )      69       1       365  

    Other

    		     7         134       (16 )          125  

    Construction in progress and advance payments

    		     21       63             (12 )      72  
     

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		  

    Total

    		     2,208       86       232       (158 )      69       (24 )      2,413  
     

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		  

     

        As of
    December 31,
    2016    		     Addition     Change
    in
    finance
    lease
    contracts    		     Depreciation     Exchange
    differences    		     Other
    changes    		     As of
    December 31,
    2017    		  
        (millions of euros)  

    Land

    		     16                 16  

    Buildings (civil and industrial)

    		     1,835       47       2       (130 )        14       1,768  

    Plant and equipment

    		     365       72       14       (21 )      (43 )      (34 )      353  

    Other

    		     125         52       (29 )      (1 )      (9 )      138  

    Construction in progress and advance payments

    		     72       32             (48 )      56  
     

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		  

    Total

    		     2,413       151       68       (180 )      (44 )      (77 )      2,331  
     

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		    

     

     

    		  

    The additions consisted of the acquisition of IRU transmission capacity, due to full payment 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 changes in financial leasing contracts mainly related to TIM S.p.A. (54 million euros) and only for a residual amount to the Brazil Business Unit.

     

    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.

    Other changes include changes to the carrying amount deriving from revisions of estimates to take into account significant changes between estimated costs at the start of the contracts and the costs effectively incurred.

    The item Other mainly comprises finance leases on vehicles. In 2017, 3,583 new leases on industrial vehicles were negotiated by the Parent, resulting in an impact on the balance sheet at December 31, 2017 of 52 million euros in terms of higher tangible assets and related payables for financial leases.

    Depreciation and impairment losses have been recorded in the income statement as components of the operating result.

    The gross carrying amount, accumulated impairment losses and accumulated depreciation at December 31, 2017 and 2016 can be summarized as follows:

     

         As of December 31, 2016  
         Gross
    carrying
    amount    		      Accumulated
    impairment
    losses    		     Accumulated
    depreciation    		     Net
    carrying
    amount    		  
         (millions of euros)  

    Land

    		      16            16  

    Buildings (civil and industrial)

    		      3,330        (27 )      (1,468 )      1,835  

    Plant and equipment

    		      394          (29 )      365  

    Other

    		      164          (39 )      125  

    Construction in progress and advance payments

    		      72            72  
      

     

     

    		     

     

     

    		    

     

     

    		    

     

     

    		  

    Total

    		      3,976        (27 )      (1,536 )      2,413  
      

     

     

    		     

     

     

    		    

     

     

    		    

     

     

    		  

     

         As of December 31, 2017  
         Gross
    carrying
    amount    		      Accumulated
    impairment
    losses    		     Accumulated
    depreciation    		     Net
    carrying
    amount    		  
         (millions of euros)  

    Land

    		      16            16  

    Buildings (civil and industrial)

    		      3,391        (27 )      (1,596 )      1,768  

    Plant and equipment

    		      397          (44 )      353  

    Other

    		      200          (62 )      138  

    Construction in progress and advance payments

    		      56            56  
      

     

     

    		     

     

     

    		    

     

     

    		    

     

     

    		  

    Total

    		      4,060        (27 )      (1,702 )      2,331  
      

     

     

    		     

     

     

    		    

     

     

    		    

     

     

    		  

    At December 31, 2017 and 2016, finance lease payments due in future years and their present value are as follows:

     

         As of December 31,  
         2017      2016  
         Minimum lease
    payments    		      Present value of
    minimum lease
    payments    		      Minimum lease
    payments    		      Present value of
    minimum lease
    payments    		  
         (millions of euros)  

    Within 1 year

    		      271        234        298        230  

    From 2 to 5 years

    		      1,031        691        1,088        707  

    Beyond 5 years

    		      2,878        1,391        3,123        1,539  
      

     

     

    		     

     

     

    		     

     

     

    		     

     

     

    		  

    Total

    		      4,180        2,316        4,509        2,476  
      

     

     

    		     

     

     

    		     

     

     

    		     

     

     

    		  

     

         As of December 31,  
         2017     2016  
         (millions of euros)  

    Future net minimum lease payments

    		      4,180       4,509  

    Interest portion

    		      (1,864 )      (2,033 ) 
      

     

     

    		    

     

     

    		  

    Present value of lease payments

    		      2,316       2,476  
      

     

     

    		    

     

     

    		  

    Financial lease liabilities

    		      2,430       2,636  

    Financial receivables for lease contracts

    		      (114 )      (160 ) 
      

     

     

    		    

     

     

    		  

    Total net finance lease liabilities

    		      2,316       2,476  
      

     

     

    		    

     

     

    		  

    At December 31, 2017, the inflation adjustment to finance lease payments was 13 million euros (16 million euros at December 31, 2016) and related to TIM S.p.A.