Tiscali 1999 Annual Report Download - page 39

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Analysis of purchases:
Description (Euro) 31/12/99 31/12/98 Change % Change
Telephone cards 183,572 125,465 58,107 46.31%
Consumables 1,596,378 17,916 1,578,461 8810.21%
Packaging 11,191 5,323 5,867 110.22%
Promotional materials 556,014 138,776 417,239 300.66%
Other 261,556 854 260,703 30540.32%
2,608,711 288,334 2,320,377 804.75%
The sharp growth recorded with respect to the previous financial year is linked to the increase in revenues
and to the start-up phase of the free internet access service, which required a huge outlay in promotional
and information materials, as well as the purchase of telephone and customized routers. This account is
partially amended by the posting of inventories.
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Analysis and composition of expenses for services:
Description (Euro) 31/12/99 31/12/98 Change % Change
Rental of telephone lines 10,361,885 531,304 9,830,581 1850.28%
Procurement of traffic 15,255,619 222,386 15,033,233 6759.98%
Other telecommunications services 611,742 250,716 361,026 144.00%
Maintenance 116,397 37,262 79,135 212.37%
Advisory services 630,535 34,291 596,243 1738.75%
Costs for administrative services 357,119 32,557 324,562 996.90%
Transportation expenses 257,348 23,145 234,204 1011.92%
Travel and transportation 168,619 21,760 146,858 674.89%
Commissions 1,647,596 126,298 1,521,298 1204.53%
Advertising 2,603,379 6,477 2,596,902 40085.89%
Expenses for external labour 174,718 128,628 46,090 35.83%
Other services 320,316 31,662 288,654 911.67%
32,505,273 1,446,490 31,058,786 2147.18%
The increase of these expenses is directly linked to the development of Company activities and the
expansion of the offer of telephone services to cover the whole Italian territory. With regards to Internet,
the increase is linked to the gradual commissioning of the exchanges located at the 24 sites covering the
whole national territory. The completion of the network, with the gradual linkup of the 24 exchanges, has
involved a sharp increase in “backbone” expenses incurred for each exchange, in order to reach the
optimum use, when fully operational, of installed connection capacity. The line item “Procurement of
Traffic” includes mainly interconnection expenses for the collection, termination and procurement of
traffic from international carriers.