I'll work through this step-by-step.

## Step 1: Identify the relevant industry

Terna S.p.A. is Italy's electricity transmission system operator (TSO). This is a **Regulated Utility** - specifically an electricity transmission network company. The methodology for Regulated Utilities applies.

## Step 2: Estimate Adjusted Debt

**Reported Debt:**
- Long-term borrowings: €8,416,700,000
- Short-term borrowings: €444,100,000
- Current portion of long-term borrowings: €1,909,300,000
- Total reported debt = 8,416,700,000 + 444,100,000 + 1,909,300,000 = **€10,770,100,000**

**Leases:**
The financial statements don't explicitly break out lease liabilities separately, but they may be embedded in borrowings or financial liabilities. The noncurrent financial liabilities (€247,200,000) and current financial liabilities (€44,900,000) could include lease liabilities under IFRS 16. I'll include these as debt-like items:
- Noncurrent financial liabilities: €247,200,000
- Current financial liabilities: €44,900,000
- Total lease/financial liabilities = €292,100,000

**Pension deficit:**
- Noncurrent provisions for employee benefits: €48,400,000

**Hybrid bonds:**
Terna issued €989,000,000 in perpetual hybrid bonds during 2022, classified as equity. Under S&P methodology, hybrid instruments typically receive intermediate equity content, meaning roughly 50% is treated as debt and 50% as equity.
- Hybrid debt portion = 989,000,000 × 0.50 = **€494,500,000**

**Eligible cash deduction:**
S&P typically allows some cash to be netted. For regulated utilities, S&P is generally conservative about cash netting. I'll assume a portion of cash is surplus. Given the large cash balance of €2,155,100,000, I'll assume S&P would net a modest amount. Typically for utilities, S&P may not net operating cash. I'll be conservative and not deduct cash (or deduct minimal working cash needs).

However, looking more carefully, S&P often does not net cash for regulated utilities unless clearly surplus. I'll assume no cash deduction for conservatism.

**Adjusted Debt calculation:**
Adjusted_Debt = 10,770,100,000 + 292,100,000 + 48,400,000 + 494,500,000
= **€11,605,100,000**

## Step 3: Estimate Adjusted EBITDA

**Reported EBITDA (from income statement):**
- Operating profit (EBIT): €1,333,500,000
- D&A and impairment: €725,700,000
- EBITDA = 1,333,500,000 + 725,700,000 = **€2,059,200,000**

**Lease adjustments:**
Under S&P methodology, lease depreciation is added back to EBITDA (already in D&A), and lease interest is also added back. The current financial liabilities of €44,900,000 likely include lease payments. The implicit lease interest might be small. I'll estimate lease-related interest is embedded in finance costs. For simplicity, the IFRS 16 treatment already captures depreciation in D&A (added back).

**Pension adjustments:**
S&P adjusts for pension service costs vs. cash contributions. The difference is typically modest. Without specific data, I'll assume minimal adjustment.

**Hybrid bond coupon adjustment:**
The coupon on hybrid bonds (€21,100,000) was charged to equity. S&P would treat 50% of this as interest (debt portion) and add it back/adjust. Since it wasn't in EBITDA to begin with (charged to equity), no EBITDA adjustment needed for this.

**Discontinued operations:**
Loss from discontinued operations (€20,300,000) - typically excluded from ongoing EBITDA, which is already the case since EBIT is from continuing operations.

**Adjusted EBITDA:**
≈ €2,059,200,000

Adding lease-related adjustments (operating lease rents added back, approximately captured already in IFRS 16 D&A). The EBITDA figure should be approximately **€2,059,200,000**.

## Step 4: Calculate Adjusted Debt / Adjusted EBITDA

Adjusted_Debt / Adjusted_EBITDA = 11,605,100,000 / 2,059,200,000 = **5.64**

<answer>5.64</answer>