2012 Form 20-F

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
‘ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2012
OR
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
OR
‘ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file number 1-13882
Telecom Italia S.p.A.
(Exact name of Registrant as specified in its charter)
Italy
(Jurisdiction of incorporation or organization)
Piazza degli Affari 2, 20123 Milan, Italy
(Address of principal executive offices)
Piergiorgio PELUSO
Head of Administration, Finance and Control
Corso d’Italia, 41, 00198 Rome, Italy
+39.06.36.88.1
piergiorgio.peluso@telecomitalia.it
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
American Depositary Shares, each representing 10 Ordinary Shares of 0.55 euros
par value each (the “Ordinary Share ADSs”) The New York Stock Exchange
Ordinary Shares of 0.55 euros par value each (the “Ordinary Shares”) The New York Stock Exchange*
American Depositary Shares, each representing 10 Savings Shares of 0.55 euros
par value each (the “Savings Share ADSs”) The New York Stock Exchange
Savings Shares of 0.55 euros par value each (the “Savings Shares”) The New York Stock Exchange*
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock
as of the close of the period covered by the annual report.
Ordinary Shares 13,254,622,987
Savings Shares 6,026,120,661
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes È No ‘
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. Yes ‘ No È
Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from
their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes È No ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes ‘ No ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large
accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer È Accelerated filer ‘ Non-accelerated filer ‘
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statement included in this filing:
U.S. GAAP ‘ International Financial Reporting Standards as issued by the International Accounting Standards Board È Other ‘
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to
follow Item 17 ‘ Item 18 ‘
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È
* Not for trading, but only in connection with the registration of American Depositary Shares representing such Ordinary Shares or Savings Shares, as the case
may be, pursuant to the requirements of the Securities and Exchange Commission.

TABLE OF CONTENTS
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
KEY DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 3. KEY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 EXCHANGE RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.3 SELECTED FINANCIAL AND STATISTICAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.4 DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 4. INFORMATION ON THE TELECOM ITALIA GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1 BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2 BUSINESS UNITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.3 REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.4 DISCLOSURE PURSUANT TO SECTION 219 OF THE IRAN THREAT REDUCTION AND SYRIA HUMAN
RIGHTS ACT OF 2012 (ITRSHRA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
4.5 GLOSSARY OF SELECTED TELECOMMUNICATIONS TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
4.6 DESCRIPTION OF PROPERTY, PLANT AND EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Item 4A. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
5.1 CRITICAL ACCOUNTING POLICIES AND ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
5.2 RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 2012 . . . . . . . . . . . . . . . . . . . 96
5.3 LIQUIDITY AND CAPITAL RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
5.4 RESEARCH, DEVELOPMENT AND INNOVATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
5.5 CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE UNITED
STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
6.1 DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
6.2 EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
6.3 BOARD OF AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
6.4 EXTERNAL AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
6.5 EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
6.6 COMPENSATION OF DIRECTORS, OFFICERS AND MEMBERS OF THE BOARD OF AUDITORS . . . . . . . . 164
6.7 OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
Item 7. MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
7.1 MAJOR SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
7.2 RELATED-PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
Item 8. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
8.1 HISTORICAL FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
8.2 LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
Item 9. LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
9.1 TRADING OF TELECOM ITALIA ORDINARY SHARES AND SAVINGS SHARES . . . . . . . . . . . . . . . . . . . . . . . . 180
9.2 SECURITIES TRADING IN ITALY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
i

9.3 CLEARANCE AND SETTLEMENT OF TELECOM ITALIA SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
Item 10. ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
10.1 CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
10.2 EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS . . . . . . . . . . . . . . 197
10.3 DESCRIPTION OF BYLAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
10.4 DESCRIPTION OF CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
10.5 DESCRIPTION OF AMERICAN DEPOSITARY RECEIPTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
10.6 TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
10.7 DOCUMENTS ON DISPLAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS . . . . . . . . . . . . . . . . 220
Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . 221
Item 12A. DEBT SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
Item 12B. WARRANTS AND RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
Item 12C. OTHER SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
Item 12D. AMERICAN DEPOSITARY SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Item 14. MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
Item 15. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
15.1. DISCLOSURE CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
15.2. MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING . . . . . . 226
15.3. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Item 16. [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Item 16B. CODE OF ETHICS AND CONDUCT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES . . . . . . . . . . . . . . 231
Item 16E. REPURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
Item 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
Item 16G. CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232
16.1 DIFFERENCES IN TELECOM ITALIA’S CORPORATE GOVERNANCE AND NEW YORK STOCK
EXCHANGE CORPORATE GOVERNANCE PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232
Item 16H. MINE SAFETY DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235
Item 17. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235
Item 18. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
Item 19. FINANCIAL STATEMENTS AND EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
ii

Introduction
INTRODUCTION
Telecom Italia S.p.A. is incorporated as a joint stock company under the laws of Italy. As used in this Annual
Report, unless the context otherwise requires, the term “Company” means Telecom Italia S.p.A. the operating
company for fixed and mobile telecommunications services in Italy and the holding company for various
businesses, principally telecommunications, and the terms “we”, “us” and “our” refers to the Company, and, as
applicable, the Company and its consolidated subsidiaries.
Unless otherwise indicated, the financial information contained in this Annual Report has been prepared in
accordance with International Financial Reporting Standards issued by the International Accounting Standards
Board (designated as “IFRS”).
Unless otherwise indicated, any reference in this Annual Report to Consolidated Financial Statements is to the
Consolidated Financial Statements for the year ended December 31, 2012 of the Telecom Italia Group (including
the notes thereto) included elsewhere herein.
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. This
Annual Report 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.
The forward-looking statements in this Annual Report include, but are not limited to, the discussion of the
changing dynamics of the telecommunications marketplace, including the continuing developments in
competition in all aspects of our businesses from new competitors and from new and enhanced technologies, our
outlook for growth in the telecommunications industry both within and outside of Italy, including our outlook
regarding developments in the telecommunications industry, and certain trends we have identified in our core
markets, including regulatory developments.
Such statements include, but are not limited to, statements under the following headings: (i) “Item 3. Key
Information—3.1 Risk Factors”, (ii) “Item 4. Information on the Telecom Italia Group—4.1 Business—4.1.7
Updated Strategy”, (iii) “Item 4. Information on the Telecom Italia Group—4.3 Regulation”, (iv) “Item 5.
Operating and Financial Review and Prospects”, (v) “Item 8. Financial Information—8.2 Legal Proceedings” and
(vi) “Item 11. Quantitative and Qualitative Disclosures About Market Risks”, including statements regarding the
likely effect of matters discussed therein.
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 actual results to differ materially from those projected or implied in
any forward-looking statements:
Š our ability to successfully implement our strategy over the 2013-2015 period;
Š our ability to successfully achieve our debt reduction and other targets;
Š the increasing competition from global and local OTT (Over The Top) players (operators offering contents
and services on the internet without owning its own proprietary telecommunications network infrastructure);
Š the continuing impact of increased competition in our markets, including competition from established
domestic competitors and global and regional alliances formed by other telecommunications operators in
our core Italian domestic fixed-line and wireless markets and our other principal markets;
1

Introduction
Š the continuing effects of the global economic crisis in the principal markets in which we operate, including,
in particular, our core Italian market;
Š our ability to introduce new services to stimulate increased usage of our fixed and wireless networks to
offset declines in the traditional voice business mainly due to the continuing impact of regulatory required
price reductions, market share loss and pricing pressures generally;
Š our ability to successfully implement our internet and broadband strategy;
Š the impact of regulatory decisions and changes in the regulatory environment in Italy and other countries in
which we operate, including recent changes to allowable charges for data and voice roaming;
Š the impact of economic development generally on our international business and on our foreign investments
and capital expenditures;
Š as our services are technology-intensive, our ability to develop new technologies in order to avoid our
services becoming non-competitive;
Š the impact of political developments in Italy and other countries in which we operate;
Š the impact of fluctuations in currency exchange and interest rates;
Š our ability to build up our business in adjacent markets and in international markets (particularly in Brazil and
Argentina), due to our specialist and technical resources;
Š our ability to achieve the expected return on the investments and capital expenditures we have made and
continue to make (such as those in Brazil and Argentina);
Š the amount and timing of any future impairment charges for our authorizations, goodwill or other assets;
and
Š the outcome of litigation, disputes and investigations in which we are involved or may become involved.
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.
2

Key Definitions
KEY DEFINITIONS
The following terms appearing in this Annual Report have the meanings set forth below.
EU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . means the European Union.
IASB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . means the International Accounting Standards Board.
IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . means International Financial Reporting Standards
issued by the IASB. IFRS also include all effective
International Accounting Standards (“IAS”) and all
Interpretations issued by the IFRS Interpretations
committee (formerly called International Financial
Reporting Interpretations Committee—IFRIC),
comprising those previously issued by the Standing
Interpretations Committee (“SIC”).
Ordinary Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . means the Ordinary Shares, 0.55 euros par value each,
of Telecom Italia.
Parent, Telecom Italia and Company . . . . . . . . . . . . . . . . means Telecom Italia S.p.A..
Savings Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . means the Savings Shares, 0.55 euros par value each,
of Telecom Italia.
Telecom Italia Group and Group . . . . . . . . . . . . . . . . . . . . . means the Company and its consolidated subsidiaries.
In addition to the foregoing terms, certain technical telecommunication terms relating to our businesses are
defined in the glossary of this Annual Report (see “Item 4. Information on the Telecom Italia Group—4.5
Glossary of Selected Telecommunications Terms”).
In addition, we use the measure “Accesses” when considering certain statistical and other data for our domestic
Italian business. “Access” refers to a connection to any of the telecommunications services offered by the Group
in Italy. We present our customer base using this model because the integration of telecommunications services
in bundled service packages has changed the way residential and corporate customers contract for our
services. Because a single customer may contract for multiple services, we believe it is more accurate to count the
number of accesses, or services a customer has contracted for, as opposed to only counting the number of our
customers. For example, a customer that has fixed line telephony service and broadband service represents two
accesses rather than a single customer. The following are the main categories of accesses:
Š Fixed Telephony accesses: includes PSTN lines (public switched telephone network), ISDN lines (integrated
services digital network) and circuits. For purposes of calculating our number of fixed line accesses, we
multiply our lines to service as follows: PSTN (×1); basic ISDN (×2); primary ISDN (× between 20 and
30 as an average);
Š Internet and data accesses: includes broadband accesses (wholesale ADSL and retail ADSL lines),
narrowband accesses (internet service through the PSTN) and other accesses (unbundled local loops, circuits
and other business data accesses including WiFi and fiber optic cable);
Š IP TV (Internet Protocol TV);
Š Mobile accesses: number of lines;
Š Unbundled local loop: includes accesses to both ends of the copper local loop leased to other operators to
provide voice and DSL services (fully unbundled loop, “fully UL”) or only DSL service (shared unbundled loop,
“shared UL”);
Š Wholesale ADSL: means wholesale asymmetrical digital subscriber line; and
Š Other: includes other circuits for other operators.
3

Item 1. Identity of Directors, Senior Management and Advisers /
Item 2. Offer Statistics and Expected Timetable
PART I
Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not Applicable
Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable
4

Item 3. Key Information Risk Factors
Item 3. KEY INFORMATION
3.1 RISK FACTORS
In addition to the other information contained in this Annual Report, investors should carefully consider the risks
described below before making any investment decision. The risks described below are not the only ones we face.
Additional risks not known to us or that we currently deem immaterial may also impair our business and results of
operations. Our business, financial condition, results of operations and cash flows could be materially adversely
affected by any of these risks, and investors could lose all or part of their investment.
RISKS RELATED TO THE TELECOM ITALIA GROUP
Our business will be adversely affected if we are unable to successfully implement our strategic
objectives. Factors beyond our control may prevent us from successfully implementing our strategy.
On February 8, 2013, we presented our updated 2013–2015 business and strategic plan (the “2013-2015
Plan”). The 2013-2015 Plan sets out our primary strategic objective as well as a number of strategic priorities to
achieve this objective over the next three years:
Š continued deleveraging to reduce our net financial debt, through:
Š focus on strategic markets—Italy, Brazil and Argentina—with the goal of stabilizing consolidated
revenues through the contribution from Latin America;
Š technological developments in fixed-line telephony and mobile telephony in Italy, mobile telephony in
Brazil and network capacity in Argentina to take advantage of growing demand for data;
Š extension and acceleration of our cost reduction policy in order to contribute to the financing of the
above mentioned technological developments;
Š sustainable shareholder remuneration. We announced our intention to revise our dividend policy in
order to bring it into line with the continuing policy of deleveraging the Group.
Our ability to implement and achieve these strategic objective and priorities may be influenced by certain factors,
including factors outside of our control, such as:
Š regulatory decisions and changes in the regulatory environment in Italy, Brazil and Argentina or in the other
countries in which we operate;
Š increasing number of competitors in our principal markets which could cause us to lose further market share;
Š increasing and stronger market competition in our principal markets with a consequent decline in the prices
of services;
Š increasing competition from global and local OTT (Over The Top) players (operators offering content and
services on the internet without owning its own proprietary telecommunications network infrastructure);
Š the success of “disruptive” new technologies which could cause significant reductions in revenues from fixed
and mobile telephony;
Š the continuing effects of the weak global economy, in particular continuing weak gross domestic product
(GDP) growth in Italy and in the other markets in which we operate, including the effects on our customers
and their ability to purchase or continue to purchase our services;
Š the effect of exchange rate fluctuations, particularly in Brazil and Argentina, on our operating revenues,
margins and financial management;
Š our ability to strengthen our competitive position in Italy and in international markets, particularly in Brazil
and Argentina;
Š 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;
Š our ability to manage and reduce costs;
Š our ability to refinance existing indebtedness when due in the capital and bank markets which remain volatile
and subject to disruption;
5

Š 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
Š the costs we may incur due to unexpected events, in particular where our insurance is not sufficient to cover
such costs.
As a result of these uncertainties there can be no assurance that the business and strategic objectives identified
by our management can effectively be attained in the manner and within the time-frames described. Furthermore,
if we are unable to attain our strategic priorities, our goodwill may be further impaired which could result in
further significant write-offs.
The global economic crisis and the continuing weakness of the Italian economy over the past several
years has adversely affected our business and continuing global economic weakness and volatility in
the Eurozone could further adversely affect our business and therefore have a negative impact on our
operating results and financial condition.
Since the modest recovery in GDP in Italy in 2010 and 2011 following sharp declines that were triggered by the
global financial crisis, GDP declined in 2012, with a negative growth of -2.4%. The continuing weakness of the
Italian economy is attributable in part to fiscal tightening (a mix of spending cuts and tax increases), aimed at
reinforcing the multi-year budget deficit reduction plan and balancing the structural deficit by 2013; this process
is expected to continue under the “Fiscal Compact” rules1. This fiscal policy should result in structural
adjustments and sustainability in the long term, but it has contributed to the weakness in domestic demand
experienced by the Italian market during 2012, which is expected to continue for the coming years.
Weakness in the Italian economy, our core market and, in particular, low or negative GDP growth and increasing
levels of unemployment, has had and, if such economic weakness persists, may continue to have a direct negative
impact on the spending patterns of customers, both in terms of the products and services they subscribe for and
the extent to which they use such products and services. During periods of deteriorating economic conditions and
high unemployment, retail customers generally have less discretionary income with which to purchase products
and services. Our consumer segments are most directly impacted by a reduction in discretionary income, and as a
result of continued economic weakness in Italy, it may be more difficult for us to attract new customers, or retain
existing customers, and our revenues and Average Revenue Per User (“ARPU”), particularly in consumer
segments, may continue to decline.
Additionally, our business and corporate customers are also affected by general economic conditions and
consumer spending, and therefore an extended recession, or public perception of declining economic conditions,
is and could continue to substantially decrease telecommunications and IT expenditures among our business and
corporate customers, which would in turn adversely affect our revenues in our business and corporate segments.
In addition to the economic weakness, the competitive environment is expected to continue to place downward
pressure in telecommunications service prices leading to a negative impact on our domestic revenues.
The continuing global economic weakness could also adversely affect our businesses in our principal international
markets of Brazil and Argentina which may also have a negative impact on our operating results and financial
condition.
If we fail to successfully implement our plans to improve efficiency and optimize expenditures, our results of
operations and financial condition could be adversely affected.
1 The Fiscal Compact is an intergovernmental treaty introduced as a new and stricter version of the previous Stability and Growth Pact. The
treaty entered into force on January 1, 2013 for those Member States of the European Union which had completed ratification prior to
this date. Under the Fiscal Compact, ratifying Member States are required to have enacted laws requiring their national budgets to be in
balance or in surplus within the treaty’s definition within one year after the Fiscal Compact enters into force for them. The laws must also
provide for a self-correcting mechanism to prevent their breach. The treaty defines a balanced budget as a general budget deficit less
than 3.0 per cent. of the GDP, and a structural deficit of less than 1.0 per cent. of GDP if the debt level is below 60 per cent.—or else it
shall be below 0.5 per cent. of GDP.
6

Our leverage is such that deterioration in cash flow can change the expectations of our ability to repay
our debt and the inability to reduce our debt could have a material adverse effect on our business.
Continuing volatility in the international credit markets may limit our ability to refinance our financial
debt.
Our consolidated gross financial debt was 40,181 million euros at December 31, 2012 compared with
41,951 million euros at December 31, 2011. Our consolidated net financial debt was 29,053 million euros at
December 31, 2012 compared with 30,819 million euros at December 31, 2011. Our high leverage has been a
factor in our strategic decisions for a number of years and the reduction of our leverage remains a key strategic
objective. As a result, however, we are reliant on cost cutting and free cash flow to finance critical technology
improvements and upgrades to our network.
Due to the competitive environment and continuing weak economic conditions, there could be deterioration in
our income statement and statement of financial position measures used by investors and rating agencies in
determining our credit quality. Ratios derived from these same separate income statement and statement of
financial position measures are used by the rating agencies, such as Moody’s, S&P and Fitch, which base their
ratings on our ability to repay our debt.
Although rating downgrades do not have an immediate impact on outstanding debt, except for outstanding debt
instruments that specifically contemplate ratings in order to determine interest expense, or on its relative cost to
us, downgrades could lead to a greater risk with respect to refinancing existing debt or higher refinancing costs.
Factors which are beyond our control such as deterioration in performance by the telecommunications sector,
unfavorable fluctuations in interest rates and/or exchange rates, further disruptions in the capital markets,
particularly debt capital markets, and, in a broader sense, deterioration in general economic conditions at the
sovereign level as a result of the continuing effects of the economic and financial crisis could have a significant
effect on our ability to reduce our debt, or our ability to refinance existing debt through further access to the
financial markets. As a result of the reduction of debt being a key element of our strategy, the failure to reduce
debt could be viewed negatively and adversely affect our credit ratings.
The management and further development of our business will require us to make significant further capital and
other investments. If we are unable to finance our capital investment as described above, we may therefore need
to incur additional debt in order to finance such investment. Our future results of operations may be influenced by
our ability to enter into such transactions, which in turn will be determined by market conditions and factors that
are outside our control. In addition, if such transactions increase our leverage it could adversely affect our credit
ratings.
We are continuously involved in disputes and litigation with regulators, competition authorities,
competitors and other parties and are the subject of a number of investigations by judicial authorities.
The ultimate outcome of such proceedings is generally uncertain. If any of these matters are resolved
against us, they could, individually or in the aggregate, have a material adverse effect on our results of
operations, financial condition and cash flows in any particular period.
We are subject to numerous risks relating to legal, tax, competition and regulatory proceedings in which it is
currently a party or which could develop in the future. We are also the subject of a number of investigations by
judicial authorities. Such proceedings and investigations are inherently unpredictable. Legal, tax, competition and
regulatory proceedings and investigations in which we are, or may become, involved (or settlements thereof)
may, individually or in the aggregate, have a material adverse effect on our results of operations and/or financial
condition and cash flows in any particular period. Furthermore, our involvement in such proceedings and
investigations may adversely affect our reputation.
Operational risks could adversely affect our reputation and our profitability.
We face numerous operational risks inherent in our business, including those resulting from inadequate internal
and external processes, fraud, employee errors or misconduct, failure to comply with applicable laws, failure to
document transactions properly, loss or disclosure of critical or commercially sensitive data or personally
identifiable information or systems failures. These events can result in direct or indirect losses and adverse legal
and regulatory proceedings, and harm our reputation and operational effectiveness.
7

We have in place risk management practices designed to detect, manage and monitor at a senior level the
evolution of these operational risks. However, there is no guarantee that these measures will be successful in
effectively controlling the operational risks that we face and such failures could have a material adverse effect on
our results of operations and could harm our reputation.
Risks associated with Telecom Italia’s ownership chain.
Telco S.p.A. (“Telco”)—a company in which interests are held by the Generali group (“Generali”)
(30.58 per cent.), Intesa Sanpaolo S.p.A. (“Intesa Sanpaolo”) (11.62 per cent.), Mediobanca S.p.A.
(“Mediobanca”) (11.62 per cent.), and Telefónica S.A. (“Telefónica”) (46.18 per cent.)—is Telecom Italia’s
largest shareholder, holding an interest of approximately 22.38 per cent. of the voting rights.
On February 29, 2012, Telefónica, Intesa Sanpaolo, Mediobanca, and Generali entered into a renewal agreement
(the “2012 Shareholders Agreement”) in which they agreed to enter into a new shareholders agreement for a
period of three years on the same terms and conditions set out in the original shareholders’ agreement dated as
of April 28, 2007, as subsequently amended and supplemented. Please see “Item 7 Major Shareholders and
Related-Party Transactions—7.1 Major Shareholders—7.1.1 Shareholders’ Agreements”.
The 2012 Shareholders Agreement sets out the criteria for drawing up the list of candidates for the appointment
of the Board of Directors of Telecom Italia:
Š Telefónica, insofar as it holds at least 30 per cent. of Telco’s share capital, will be entitled to designate two
candidates; and
Š the other shareholders of Telco, as they hold the absolute majority of its share capital, have the right to
designate the other members on the list, of which three candidates would be appointed unanimously and the
others on a proportional basis.
Based on the foregoing, Telco may exert a significant influence on all matters to be decided by a vote of
shareholders, including appointment of directors. In the shareholders’ meeting held on April 12, 2011, 12 out of
15 Board members were elected from a list proposed by Telco, while the remaining three Directors were elected
from a list proposed by a group of asset management companies and international institutional investors. In
principle, the interests of Telco in deciding shareholder matters could be different from the interests of Telecom
Italia’s other ordinary shareholders, and it is possible that certain decisions could be taken that may be influenced
by the needs of Telco.
In addition, Telefónica is the largest shareholder of Telco. Presently, Telefónica and its associated companies (the
“Telefónica Group”) and the Telecom Italia Group are direct competitors outside of their respective domestic
markets, including Brazil and Argentina; nevertheless, the 2012 Shareholders Agreement provides that the
Telecom Italia Group and the Telefónica Group will be managed autonomously and independently. The 2012
Shareholders Agreement provides, among other things, that the directors designated by Telefónica in Telco and
Telecom Italia shall be directed by Telefónica to neither participate nor vote at Board of Directors’ meetings which
discuss matters relating to companies of the Telecom Italia Group in countries where the Telefónica Group and
the Telecom Italia Group compete. Specific additional matters have been agreed with respect to the Telecom
Italia Group’s operations in Brazil and Argentina. The presence of Telefónica in Telco could, however, result in
legal or regulatory proceedings or affect regulatory decisions in countries where the Telecom Italia Group may
wish to operate if the Telefónica Group is also an operator or competitor in such jurisdictions. For further
information, please see “Item 7 Major Shareholders and Related-Party Transactions—7.1 Major Shareholders—
7.1.1 Shareholders’ Agreements” and “Item 10. Additional Information—10.1 Corporate Governance”. See also
“Note—Contingent liabilities, other information, commitments and guarantees” of the Notes to the Consolidated
Financial Statements included elsewhere herein.
Telco is a holding company and the sole operating company in which it has an interest is Telecom Italia.
Therefore, should Telco be unable to obtain funding from its shareholders, present or future, or from other
sources, its cash flows would be entirely dependent upon the dividends paid on the Telecom Italia shares for its
funding needs.
8

The Italian State, through the Treasury, is in a position to exert certain powers with respect to
Telecom Italia.
Although no shareholder is in a position to prevent a takeover of Telecom Italia, the Italian State, through the
Treasury, is in a position to exert certain powers with respect to Telecom Italia through the exercise of the special
powers included in Telecom Italia’s bylaws pursuant to compulsory legal provisions.
On March 26, 2009, the European Court of Justice (the “ECJ”) declared that Italy, through the special powers,
failed to comply with its obligations under the EC Treaty. According to the ECJ’s ruling, the alleged infringement
of the EC Treaty arose due to the applicable Italian legal provisions not making sufficiently clear the conditions for
the exercise of the Treasury’s special powers, so that investors would not be in a position to know in what
situations the powers will be used. Through a decree passed on May 20, 2010, the Italian Government amended
the criteria under which it may exercise such special powers although the ruling by the ECJ did not have any
immediate or direct impact on Telecom Italia’s bylaws.
In May 2012 regulations relating to the special powers on share ownership in the sectors of defense and national
security, and regarding activities of strategic importance in the energy, transport and communication sectors
were published and became effective. The regulations provide that, at the moment the Prime Ministerial
implementing decrees come into force with respect to “the networks and systems, goods and relationships of
strategic importance for the communications […] sector”, the clauses in the Company’s bylaws on special
powers will cease to have effect and will be replaced by these regulations. In brief, the new regulations will
provide:
Š the Italian Government with the authority to impose conditions and possibly to oppose the purchase, for any
reason whatever, by non-EU citizens, of controlling shareholdings in companies which hold strategic assets
identified in the regulations. For non-EU citizens, any right to purchase will be permitted solely on condition
of reciprocity with the purchaser’s home jurisdiction;
Š a power of veto granted to the Italian Government (including through prescriptions or conditions) on any
resolution, act or transaction which has the effect of modifying the ownership, control or availability of
strategic assets or changing their use, including resolutions of merger, demerger, transfer of registered
office abroad, transfer of the company or business units which contain the strategic assets or their
assignment by way of guarantee, amendment to company’s bylaws purpose, company dissolution or
amendment in bylaws provisions relating to limitations on voting rights.
The exercise of such powers, or the right or ability to exercise such powers, could make a change of control
transaction with respect to Telecom Italia (whether by merger or otherwise) more difficult to achieve, if at all, or
discourage certain bidders from making an offer relating to a change of control that could otherwise be beneficial
to shareholders.
For further information, please see “Item 7 Major Shareholders and Related-Party Transactions—7.1 Major
Shareholders—7.1.3 Continuing Relationship with the Italian Treasury”.
System failures could result in reduced user traffic and reduced revenue and could harm our
reputation.
Our success largely depends on the continued and uninterrupted performance of our information technology,
network systems and of certain hardware and datacenters that we manage for our clients. Our technical
infrastructure (including our network infrastructure for fixed-line and mobile telecommunications services) is
vulnerable to damage or interruption from information and telecommunication technology failures, power loss,
floods, windstorms, fires, terrorism, intentional wrongdoing, human error and similar events. Unanticipated
problems at our facilities, system failures, hardware or software failures, computer viruses or hacker attacks could
affect the quality of our services and cause service interruptions. Any of these occurrences could result in reduced
user traffic and reduced revenue and could negatively affect our levels of customer satisfaction and harm our
reputation.
Our business depends on the upgrading of our existing networks.
We must continue to maintain, improve and upgrade our existing networks in a timely and satisfactory manner in
order to retain and expand our customer base in each of our markets. A reliable and high quality network is
9

necessary to manage churn by sustaining our customer base, to maintain strong customer brands and reputation
and to satisfy regulatory requirements, including minimum service requirements. The maintenance and
improvement of our existing networks depends on our ability to:
Š upgrade the functionality of our networks to offer increasingly customized services to our customers;
Š increase coverage in some of our markets;
Š expand and maintain customer service, network management and administrative systems;
Š expand the capacity of our existing fixed copper and mobile networks to cope with increased bandwidth
usage; and
Š upgrade older systems and networks to adapt them to new technologies.
In addition, due to rapid changes in the telecommunications industry, our network investments may prove to be
inadequate or may be superseded by new technological changes. Our network investments may also be limited by
market uptake and customer acceptance. If we fail to make adequate capital expenditures or investments, or to
properly and efficiently allocate such expenditures or investments, the performance of our networks, both in real
terms and in relative terms as compared to our competitors, could suffer, resulting in lower customer satisfaction,
diminution of brand strength and increased churn.
Many of these tasks are not entirely under our control and may be affected by applicable regulation. If we fail to
maintain, improve or upgrade our networks, our services and products may be less attractive to new customers
and we may lose existing customers to competitors, which could have a material adverse effect on our business,
financial condition and results of operations.
RISKS RELATED TO THE TELECOMMUNICATIONS INDUSTRY AND FINANCIAL MARKETS
The value of our operations and investments may be adversely affected by political and economic
developments in Italy or other countries. Continuing global economic weakness could reduce
purchases of our products and services and adversely affect our results of operations, cash flows and
financial condition.
Our business is dependent to a large degree on general economic conditions in Italy and in our other principal
markets, Brazil and Argentina, including levels of interest rates, inflation, taxes and general business conditions. A
significant deterioration in economic conditions could adversely affect our business and results of operations. The
weak economic conditions of the last several years have had an adverse impact on our business, particularly in
Italy.
The economic recession that the Italian market has been experiencing in recent years have weighed, and may
continue to weigh heavily, on the development prospects of our domestic market.
Continuing uncertainty about global economic conditions poses a significant risk as consumers and businesses
postpone spending in response to tighter credit, negative financial news (including high levels of unemployment)
or declines in income or asset values, which could have a material negative effect on the demand for our products
and services. Economic difficulties in the credit markets and other economic conditions may reduce the demand
for or the timing of purchases of our products and services. A loss of customers or a reduction in purchases by our
current customers could have a material adverse effect on our financial condition, results of operations and cash
flow and may negatively affect our ability to meet our targets. Other factors that could influence customer
demand include access to credit, consumer confidence and other macroeconomic factors.
We may also be adversely affected by political developments in Italy and in the countries where we have made
significant investments. Certain of these countries have political and legal systems that are less predictable than
in Western Europe.
Political or economic upheaval or changes in laws or in their application in the countries outside Italy where we
have significant investments may harm the operations of the companies in which we have invested and impair the
value of these investments.
10

In particular, in recent years the Argentine Government has taken several actions to re-nationalize concessions
and public service companies that were privatized in the 1990’s, such as Aguas Argentinas S.A. and Aerolíneas
Argentinas S.A. Additionally, in May 2012, Law No. 26,741, established the expropriation of the 51% of the capital
stock of YPF S.A. and the 51% of the capital stock of YPF GAS S.A., which were directly or indirectly owned by
Repsol YPF S.A. (“Repsol”). To date, the Argentine Government has not compensated any of the expropriated
investors. These actions had a negative effect on the market. We cannot provide any assurance that similar
actions of the Argentine Government will not be extended to other private companies or other sectors in the near
future.
In the past, the Argentine Government has imposed a number of monetary and currency exchange control
measures, including temporary restrictions on the free availability of funds deposited with banks and restrictions
or limitations on the access to foreign exchange markets and transfers of funds abroad, including for purposes of
paying principal and interest on debt, trade liabilities to foreign suppliers and dividend payments to foreign
shareholders. Between the end of 2001 and 2002, the Argentine Government implemented a unified exchange
market (Mercado Único y Libre de Cambios—“MULC”) with significant regulations and restrictions for the
purchase and transfer of foreign currency.
Since late 2011 the Argentine Government implemented a series of measures aimed to increase controls on the
foreign trade and capital flows. To that effect, certain measures were implemented to control and limit the
purchase of foreign currency, such as the prior approval of the Administración Federal de Ingresos Públicos
(Argentine Federal Tax Authority—“AFIP”) for any purchase of foreign currency made by private companies and
individuals for saving purposes. In addition, the Banco Central de la Republica Argentina (“BCRA”) expanded the
controls and measures to make payments abroad accessing the local foreign exchange market, regarding trade
payables and financial debt, and also established demanding procedures that must be met to pay certain trade
payables with related parties. Although there are no regulations that prohibit making dividend payment to foreign
shareholders, in practice authorities have substantially limited any purchase of foreign currency to pay dividends
since these exchange controls were implemented. There can be no assurance that the BCRA or other government
agencies will not increase controls and restrictions for making payments to foreign creditors, dividend payments
to foreign shareholders, which would limit our ability to comply in a timely manner with payments related to our
liabilities to foreign creditors or non-resident shareholders.
Pursuing the same objective, in October 2011 Decree No. 1,722 eliminated an exception for oil, gas and mining
companies, and thus requires these companies to liquidate all their export receipts in the local foreign exchange
market. Moreover, in October 2011 the National Insurance Bureau issued Resolution No. 36,162 imposing the
obligation for insurance companies to repatriate all investments and liquid assets allocated outside Argentina. We
cannot ensure that similar measures will not be implemented for other private companies or other sectors in the
future.
In addition, starting in February 2012, all import operations of goods and services must be filed and approved in
advance by AFIP. Such procedure could negatively affect the provision of imported products and services within
our Argentinean supply chain.
Since we operate in a heavily regulated industry, regulatory decisions and changes in the regulatory
environment could materially adversely affect our business.
Our fixed and mobile telecommunications operations, as well as our broadband services and television
broadcasting businesses, are subject to regulatory requirements in Italy and our international operations are
subject to regulation in their host countries. In Italy, we are the only operator subject to universal service
obligations, which requires us to provide fixed line public voice telecommunications services in non-profitable
areas. As a member of the EU, Italy has adapted its telecommunications regulatory framework to the legislative
and regulatory framework established by the EU for the regulation of the European telecommunications market.
The last review of the EU common regulatory framework was approved at the end of 2009 and has been
transposed in Italy in 2012.
In compliance with the regulatory framework the Italian regulator responsible for the regulation of the
telecommunications, radio and television broadcasting sectors (“AGCom”) has to identify operators with
“significant market power” (“SMP”) based on market analyses in relevant retail and wholesale markets, identified
11

in an EC Recommendation. The framework established criteria and procedures for identifying remedies applicable
to operators with SMP in various markets. An operator designated by a national authority as having SMP will be
subject to a set of obligations necessary to safeguard competition. AGCom’s regulatory approach is mainly
focused on the regulation of our wholesale business, while the regulation of retail markets is being gradually
withdrawn.
Regulatory uncertainty and regulatory changes imposed on us can have an adverse effect on our revenues as well
as making it difficult to make important decisions on investments. In September 2012 AGCom launched the third
round of market analysis which should have set wholesale access fees for LLU, WLR and Bitstream services on the
copper and fiber-based networks for the 2013-2015 period. However, AGCom decided to set the fees for the
above mentioned copper-based access services only for the year 2013 while postponing the decision regarding
the fees for the 2014-2016 period. This approach has created uncertainty because the 2013 fees have been fixed
without a market analysis and for the following 2014-2016 period only the range of the final year (2016) access
charges has been submitted for public consultation.
In addition the Council of State (Consiglio di Stato) published two judgments on both fixed and mobile
termination rates: the first judgment upheld the complaint filed by Fastweb (one of Telecom Italia’s main
competitors in the fixed line market) and revoked the symmetry of 2012 Time Division Multiplexing (“TDM”) fixed
termination tariffs among operators; the second one upheld the complaint filed by H3G (the fourth mobile
operator in Italy) and revoked the decrease on termination fees on the H3G network in the period November
2008-June 2009. As a result, Telecom Italia’s costs for fixed and/or mobile termination services could be
expected to increase.
The regulatory framework of the Next Generation Access Network (“NGAN”) is not yet completely defined.
Proceedings to establish NGAN regulation with a view to introducing: 1) a cost model for the pricing of passive
and active wholesale services and the definition of the so-called “NGAN competitive areas” where the price of
fiber-based bitstream and virtual access services are not subject to the cost orientation obligation; 2) the
perspective enforcement of symmetric obligations on all operators, for the access to fiber vertical wiring and to
building connection segments; and 3) potential amendments to the regulation of the copper sub-loop unbundling
service in light of the possible introduction of the vectoring technology on Fiber to the Cabinet -Very High- Speed
Digital Subscriber Line (“FTTCab-VDSL”) accesses. As Next Generation Access will require significant investments,
the regulatory approach regarding the obligations which could be imposed on us could have an adverse effect on
our cash flows and financial condition potentially hampering future investments.
On April 4, 2012, the Italian Parliament approved a law mandating AGCom to impose on us the obligation to
separately offer our ancillary services (activation and maintenance) for the LLU lines so that they might be
provided also by third parties. However, in July 2012, the EU Commission formally opened an infringement
procedure against Italy, in relation to the possible breach of the EU regulatory framework stating the principle of
independence and autonomy of national authorities by the above mentioned law. From a technical point of view
granting the possibility for third parties to manage the maintenance of the incumbent’s network may cause
serious negative effects on the quality of the service, on the security and integrity of the network as well as on the
efficient deployment of the infrastructure to the detriment of end-users. In February 2013 the EU Commission
issued a reasoned opinion concluding that the Italian Government has infringed the European legislation. As a
consequence, the Italian Government was required to change the law within two months and therefore the law
aimed at the transposition in the Italian framework of the EU rules (“Legge Comunitaria 2013”), preliminarily
discussed in March 2013, includes a specific provision aimed at withdrawing the obligation for AGCom to impose
on Telecom Italia the disaggregated offer of its LLU ancillary services. The formal approval of this law by the
Italian Parliament will end the infringement procedure by the European Commission.
Our Brazilian and Argentinean Business Units are subject to extensive regulation in their respective countries. Our
international operations, therefore, confront similar regulatory issues as we face in Italy, including the possibility
for regulators to impose obligations and conditions on how we operate our businesses in these countries as well
as taking decisions that can have an adverse effect on our results, including setting, and in particular, reducing the
rates we can charge or, as is the case in Argentina, freezing, since 2002, the rates we can charge for basic fixed
line telephony services. As a result, the decisions of regulators or the implementation of new regulations in Brazil
and Argentina, and the costs of our compliance with any such decisions or new regulations, may limit our
flexibility in responding to market conditions, competition and changes in our cost base which could individually
or in the aggregate, have a material adverse effect on our business and results of operations.
12

For example, in 2012 the Argentine Government cancelled the auction for the 850 MHz and 1900 MHz spectrum
bands that were returned by Telefónica Móviles Argentina S.A. These spectrum bands were returned due to the
spectrum cap restrictions of 50 MHz.
In December 2012 the Argentine President announced the launching of a new state owned mobile company
branded “libre.ar”. The government’s dual-role, as both regulator and competitor, opens several risks to our
Argentine mobile business including possible adverse changes in the regulatory framework and the current
market rules. The lack of allocation of additional frequency bands is negatively affecting the quality of service of
all the Argentinean mobile operators. It could also adversely affect our mobile competitive position and may
require higher capital expenditures to continue providing high quality mobile services to our customers.
In Brazil we operate under authorizations granted by the Brazilian Government. As a result, we are obliged to
maintain minimum quality and service standards. Our failure to comply with all the requirements imposed by
Anatel and by the Brazilian Government may result in the imposition of fines or other government actions,
including the suspension of the service commercialization for a given period.
Due to the continuous evolution of the regulatory regime affecting various parts of our business in Italy and in our
international operations, we are unable to clearly predict the impact of any proposed or potential changes in the
regulatory environment in which we operate both in Italy and internationally. Regulations in the
telecommunications industry are constantly changing to adapt to new competition and technology. Changes in
laws, regulation or government policy could adversely affect our business and competitiveness. In particular, our
ability to compete effectively in our existing or new markets could be adversely affected if regulators decide to
expand the restrictions and obligations to which it is subject or extend them to new services and markets. Finally,
decisions by regulators regarding the granting, amendment or renewal of our authorizations, or those of third
parties, could adversely affect our future operations in Italy and in other countries where it operates.
There is also a general risk related to the possible imposition of fines by the competent authorities for violations
of regulations to which we are subject.
For further information regarding the matters discussed above and other aspects of the regulatory environments
in which Telecom Italia Group’s businesses operates, see “Item 4.3. Regulation”.
We operate under authorizations granted by government authorities.
Many of our activities require authorizations from governmental authorities. These authorizations specify the
types of services the operating company holding such authorization may provide. The continued existence and
terms of our authorizations are subject to review by regulatory authorities and to interpretation, modification or
termination by these authorities. Although authorization renewal is not usually guaranteed, most authorizations
do address the renewal process and terms that, however, may be affected by political and regulatory factors.
Many of these authorizations are revocable for public interest reasons. The rules of some of the regulatory
authorities with jurisdiction over our operating companies require us to meet specified network build-out
requirements and schedules. In particular, our existing authorizations typically require us to satisfy certain
obligations, including minimum specified quality, service and coverage conditions. Failure to comply with these
obligations could result in the imposition of fines or even in the revocation or forfeiture of the authorization. In
addition, the need to meet scheduled deadlines may require us to expend more resources than otherwise
budgeted for a particular network build-out.
Additional authorizations may also need to be obtained if we expand our services into new product areas, and
such authorizations may be related to auctions (such as the assignment or the right of use of spectrum) or
otherwise prove expensive or require significant cash outlays, or have certain terms and conditions, such as
requirements related to coverage and pricing, with which we may not have previously had to comply. If we are
unable to obtain such authorizations within the expected timeframe, at a commercially acceptable cost, or at all,
or if the authorizations includes onerous conditions, it could have a material adverse effect on our business,
financial condition and results of operations.
13

The Pesification and freezing of rates may continue to adversely affect Telecom Argentina’s revenues.
In accordance with the Argentine Public Emergency Law, in January 2002, rates for Basic telephone services and
long distance services were converted to Argentine pesos and fixed at an exchange rate of P$1.00=US$1.00 (the
“Pesification”). The rates that Telecom Argentina may charge in the future will be determined by negotiations
between Telecom Argentina and the Argentine Government.
In March 2006, Telecom Argentina executed a Letter of Understanding (the “2006 Letter of Understanding”)
with the Argentine Government pursuant to which Telecom Argentina will be permitted to raise certain rates and
incorporate certain modifications to the current regulatory framework.
The 2006 Letter of Understanding contemplated the signing and effectiveness of the Minutes of Agreement of the
Renegotiation upon the fulfillment of certain necessary steps, which as of the date of this Annual Report have yet
to occur. Although Telecom Argentina expects such fulfillment to occur, we cannot guarantee if or when this will
happen. We are unable to predict the outcome of the negotiations with regard to further rate increases and the
rate scheme which will be applied in the future. Moreover, Telecom Argentina is unable to predict whether the
Argentine Government will impose additional conditions or requirements, and if these conditions or requirements
are imposed, whether Telecom Argentina will be able to satisfy them.
In addition, in early 2013 the Argentine Government adopted certain initiatives in order to reduce current inflation
rates, including price agreements with certain non-regulated sectors such as supermarkets and retailers. In this
context and considering the increasing demands of service quality improvements that all Argentine mobile
operators are facing, our mobile subsidiary Personal decided not to implement the rate increases announced in
the fourth quarter of 2012 (to be effective as from March 2013) for postpaid and “cuentas claras” customers.
Although mobile telephony is a non-rate regulated industry, we cannot predict whether current or new factors—
including governmental initiatives in order to reduce inflation rates—would negatively impact Personal’s ability to
apply rate increases, thus negatively affecting the profit margins and the level of requested funds for capital
expenditures to maintain or increase the quality of the service.
Rate restrictions for regulated services of Telecom Argentina may continue for a number of years and may
continue affecting revenues from fixed line and other services. In a high—inflation environment this may
continue to significantly affect Telecom Argentina’s financial results.
Strong competition in Italy or other countries may reduce our core market share for
telecommunications services and may cause reductions in prices and margins thereby having a
material adverse effect on our results of operations and financial condition.
Strong competition exists in all of the principal telecommunications business areas in Italy in which we operate,
including, most significantly, the fixed-line and mobile voice telecommunications and broadband businesses.
Competition has been intense since the liberalization of the Italian telecommunications market in 1998 and there
is now entrenched competition from international operators’ who have been present in the Italian market for
some time and direct competition with our fixed-line and mobile telephony businesses and for broadband
services.
As of the date of this Annual Report, there are a number of significant competitors offering fixed-line and
broadband services and three operators (in addition to us) offering mobile services in the Italian domestic market.
In addition, some virtual mobile operators have been operating in the Italian mobile market since 2007 as a result
of commercial agreements reached with operators of mobile networks, some of which “originated” from fixed line
operators.
Moreover, convergence enables lateral competition from IT, Media and Devices/Consumer Electronic players.
This competition may further increase due to the consolidation and globalization of the telecommunications
industry in Europe, including Italy, and elsewhere. We face competition from international competitors who have
entered local markets to compete with existing operators as well as from local operators, each of which has
increased the direct competition we face in our Italian domestic fixed-line, mobile telephony and broadband
businesses.
14

Competition in our principal lines of business has led, and could lead, to:
Š price and margin erosion for our products and services;
Š a loss of market share in our core markets;
Š loss of existing or prospective customers and greater difficulty in retaining existing customers;
Š obsolescence of existing technologies and more rapid deployment of new technologies;
Š an increase in costs and payback period related to investments in new technologies that are necessary to
retain customers and market share; and
Š difficulties in reducing debt and funding strategic and technological investments if we cannot generate
sufficient profits and cash flow.
Although we have taken a number of steps to realize additional efficiencies and to rebalance revenue mix through
the continuing introduction of innovative and value added services, if any or all of the events described above
should occur, the impact of such factors could have a material adverse effect on our results of operations and
financial condition.
In addition to competitive pressures, as a result of the increasing substitution of data services in place
of traditional voice and SMS communications, our traditional voice and SMS markets also have been
decreasing and are expected to continue to decrease due to increasing competition from alternative
modes of telecommunications.
We face increasing competition from non-traditional data services on new voice and messaging over the internet
technologies, in particular over-the-top (OTT) applications, such as Skype, Google Talk, FaceTime and WhatsApp.
These applications are often free of charge, other than for data usage, accessible via smartphones, tablets and
computers and allow their users to have access to potentially unlimited messaging and voice services over the
internet, bypassing more expensive traditional voice and messaging services such as short message service (SMS)
which have historically been a source of significant revenues for fixed and mobile network operators such as us.
With the growing share of smartphones, tablets and computers in Italy as well as our international markets of
Brazil and Argentina, an increasing number of customers are using OTT applications services in substitution for
traditional voice or SMS communications.
Historically, we have generated a substantial portion of our revenues from voice and SMS services, particularly in
our mobile business in Italy, and the substitution of data services for these traditional voice and SMS volumes has
had and is likely to continue to have a negative impact on our revenues and profitability. As a result of these and
other factors, we face a mobile market in which price pressure has been increasing.
All mobile network operators, including ourselves, are currently competing with OTT application providers who
leverage on existing infrastructures and who generally do not operate capital-intensive business models
associated with traditional mobile network operators like us. OTT application service providers have recently
become more sophisticated competitors, and technological developments have led to a significant improvement
in the quality of service, in particular speech quality, delivered via data communications applications such as OTT.
In addition, players with strong brand capability and financial strengths, such as Apple, Google and Microsoft,
have turned their attention to the provision of OTT application services. In the long term, if non-traditional mobile
voice and data services or similar services continue to increase in popularity, as they are expected to do, and if we
and other mobile network operators are not able to address this competition, this could contribute to further
declines in ARPU and lower margins across many of our products and services, thereby having a material adverse
effect on our business, results of operations, financial condition and prospects.
Our business and our revenues may be negatively affected if we are unable to continue the
introduction of new services, stimulating increased usage of our fixed and wireless networks.
The maturity of telecommunications markets (particularly in our core Italian market) and the rapidly changing
competitive landscape (for example, the rise of global platform/networks of organizations (an “ecosystem”)
delivering a specific product or service through both competition and cooperation) have resulted in a continuous
erosion in traditional service revenues for telecommunications operators.
15

In this context, our strategy has led to integration of our core offering portfolio with new services outside
traditional telecommunications domains (eg. Cloud Services, Digital Media, M2M services), which are able to
generate new revenue streams and at the same time stimulate increased usage of our fixed and wireless
networks. A deep knowledge of customers’ needs and preferences, the ability to respond rapidly to their changes
and a thorough understanding of the specialized needs of certain industries are particularly important for
exploiting such opportunities.
Failing to exploit these business opportunities and to identify an appropriate role in the relative ecosystems may
have a material adverse effect on our revenue streams.
Continuing rapid changes in technologies could increase competition, reduce usage of traditional
services or require us to make substantial additional investments.
Many of the services we offer are technology-intensive and the development or acceptance of new technologies
may render such services non-competitive, replace such services or reduce prices for such services. Our markets
are characterized by rapid and significant changes in technology, customer demand and behavior, and, as a result
feature a constantly changing competitive environment. In addition, as the convergence of services accelerates,
we make and will have to make substantial additional investments in new technologies to remain competitive. The
new technologies we choose may prove to be commercially unsuccessful. Moreover, we may not receive the
necessary authorizations to provide services based on new technologies in Italy or abroad, or may be negatively
impacted by unfavorable regulation regarding the usage of these technologies. Furthermore, our most significant
competitors in the future may be new entrants to our markets who do not have to maintain an installed base of
older equipment.
As a result, if we are unable to effectively anticipate, react to or access technological changes in our
telecommunications markets we could lose customers, fail to attract new customers or incur substantial costs in
order to maintain our customer base or to maintain revenues from such customer base, all of which could have a
material adverse effect on our business, financial condition and results of operations.
The mobile communications markets have matured and competition has increased.
Although mobile communications markets have reached maturity levels in our domestic market in the voice
services segment, the mobile broadband business continues to grow. However such change has had an adverse
effect on revenues from our mobile services.
The evolution of the mobile telecommunications markets in which we operate will depend on a number of factors,
many of which are outside our control. These factors include:
Š the activities of our competitors;
Š competitive pressures and regulations applicable to retail and wholesale prices;
Š the development and introduction of new and alternative technologies for mobile telecommunications
products and services and their attractiveness to our customers; and
Š the success of new disruptive or substitute technologies.
In addition, as our core domestic Italian market has become increasingly saturated there is a growing focus on
customer retention. Such focus could result in increased expenses to retain customer loyalty or, if we are unable
to satisfactorily offer better value to our customers, our market share and revenues could decline. The main
mobile competitors in Italy, including us, suffered higher levels of churn in 2012 than we had experienced in
recent years. Such a high level of churn is indicative of the intense competition in this market. Furthermore,
during the first months of 2013 we have experienced a significant deterioration in the Italian mobile market, with
a strong increase in the level of competition and nearly unprecedented price pressure in comparison with prior
periods; a continuation of such price pressure could have an adverse effect on our current and future revenues
and results of operations.
If the mobile telecommunications markets in which we operate perform worse than expected, or if we are unable
to retain our existing customers or stimulate increases in customer usage, our financial condition and results of
operations may be harmed. In particular, our goodwill may be further impaired which could result in further
significant write-offs.
16

We may be adversely affected if we fail to successfully implement our Internet and broadband
strategy.
The continuing development of Internet and broadband services is an important part of our strategic objectives
and means to increase the use of our networks in Italy and abroad. Our strategy includes the development of
broadband and value added services in order to offset the decline of traditional voice services. Our ability to
successfully implement this strategy may be affected if:
Š Internet usage in Italy continues to grow more slowly than anticipated, for reasons such as changes in
Internet users’ preferences or lower than expected penetration rate growth for PCs, tablets, smartphones
and other Internet connected devices;
Š broadband penetration does not grow as we expect;
Š competition increases, for reasons such as the entry of new competitors (telcos, OTT players or players from
adjacent markets), consolidation in the industry or technological developments introducing new platforms
for Internet access and/or Internet distribution or other operators can provide broadband connections
superior to those that we can offer; and
Š we experience any network interruptions or related problems with network infrastructure.
Any of the above factors may adversely affect the successful implementation of our strategy, our business and
results of operations.
Our business may be adversely affected if we fail to successfully implement our Information and
Communications Technology (ICT) strategy.
We intend to continue focusing on IT-TLC convergence by addressing the ICT market, offering network and
infrastructure management, as well as application management.
Moreover as the use of cloud IT services matures and their adoption grows, we may take advantage of the new
cloud opportunities especially in the Business customer segment providing a full range of services (from “core”
Infrastructure to Software as a Service through partners’ ecosystem) integrated with a wide range of connectivity
options and end-to-end SLAs. We expect to experience increasing competition in this market as additional
competitors (mainly Telco operators through acquisition and partnership with IT operators) also enter this
market.
There is no assurance that the services offered will be successful; as a result our revenues could be negatively
affected.
Actual or perceived health risks or other problems relating to mobile handsets or transmission masts
could lead to litigation or decreased mobile communications usage.
The effects of, and any damage caused by, exposure to an electromagnetic field were and are the subject of
careful evaluations by the international scientific community, but until now there is no scientific evidence of
harmful effects on health. We cannot rule out that exposure to electromagnetic fields or other emissions
originating from wireless handsets will not be identified as a health risk in the future.
Our mobile communications business may be harmed as a result of these alleged health risks. For example, the
perception of these health risks could result in a lower number of customers, reduced usage per customer or
potential consumer liability. In addition, although Italian law already imposes strict limits in relation to
transmission equipment, these concerns may cause regulators to impose greater restrictions on the construction
of base station towers or other infrastructure, which may hinder the completion of network build-outs and the
commercial availability of new services and may require additional investments.
Fluctuations in currency exchange and interest rates may adversely affect Telecom Italia Group’s
results.
In the past, we have made substantial international investments, primarily in U.S. dollars, and have significantly
expanded our operations outside of the Euro zone, particularly in Latin America.
17

We generally hedge our foreign exchange exposure, but do not cover translation risk relating to our foreign
subsidiaries. Movements in exchange rates of the Euro relative to other currencies (in particular the Brazilian Real
and Argentine Peso) may adversely affect our consolidated results. In particular, with respect to Argentina, we
currently utilize for all purposes the official exchange rate of the Argentine Peso because it is the exchange rate
that Telecom Argentina accesses for making payment to foreign creditors and for collections from foreign
operators. The increasing restrictions in the exchange rates market increased the gap between the official Peso
exchange rate and the implicit exchange rate, reached through the valuation of securities trading in the local
market in pesos and the same ones trading in an external market in another currency. Given the economic and
political conditions in Argentina, we cannot predict whether, and to what extent, the value of the peso may
depreciate against the U.S. dollar, the Euro or other foreign currencies, in such a form that it will capture partially
or totally the current gap between the official exchange rate and the implicit exchange rate. A rise in the value of
the Euro relative to other currencies in certain countries in which we operate or have made investments will
reduce the relative value of the revenues or assets of our operations in those countries and, therefore, may
adversely affect our operating results or financial position.
In addition, we have raised, and may raise in an increasing proportion in the future, financing in currencies other
than the Euro, principally the U.S. dollar and British pound. In accordance with our risk management policies, we
generally hedge the foreign currency risk exposure related to non-Euro denominated liabilities, through cross-
currency and interest rate swaps.
Furthermore, we enter into derivative transactions hedging our interest rate exposure to change interest rates in
order to manage the volatility of our income statement, while remaining within predefined target levels. However,
no assurance can be given that fluctuations in interest rates will not adversely affect our results of operations or
cash flows.
Furthermore, an increase of sovereign spreads, and of the default risk it reflects, in the countries where we
operate, may affect the value of our assets in such countries.
18

Item 3. Key Information Exchange Rates
3.2 EXCHANGE RATES
We publish our consolidated financial statements in euros. References to “€”, “euro” and “Euro” are to the euro,
the single unified currency that was introduced in Italy and 10 other member states of the EU on January 1, 1999.
References to “U.S. dollars”, “dollars”, “U.S.$” or “$” are to U.S. dollars, the currency of the United States of
America.
For convenience only (except where noted otherwise), certain euro figures have been translated into dollars at the
rate (the “Euro/Dollar Exchange Rate”) of €1.00= U.S.$ 1.3186, using the last noon buying rate in The City of
New York for cable transfers in foreign currencies as announced by the Federal Reserve Bank of New York for
customs purposes (the “Noon Buying Rate”) on December 31, 2012.
These translations should not be construed as a representation that the euro amounts actually represent such
dollar amounts or have been or could be converted into dollars at the rate indicated.
For the purpose of this Annual Report, “billion” means a thousand million.
The following table sets forth for the years 2008 to 2012 and for the beginning of 2013 certain information
regarding the Noon Buying Rate for Dollars expressed in U.S.$ per €1.00.
Calendar Period High Low Average(1) At Period end
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6010 1.2446 1.4725 1.3919
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5100 1.2547 1.3936 1.4332
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4536 1.1959 1.3262 1.3269
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4875 1.2926 1.3931 1.2973
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3463 1.2062 1.2859 1.3186
2013 (through April 5, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3692 1.2782 1.3173 1.3027
Monthly Rates High Low Average(1) At Period end
October 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3133 1.2876 1.2974 1.2958
November 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3010 1.2715 1.2837 1.3010
December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3260 1.2930 1.3119 1.3186
January 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3584 1.3047 1.3304 1.3584
February 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3692 1.3054 1.3347 1.3079
March 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3098 1.2782 1.2953 1.2816
April 2013 (through April 5, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3027 1.2836 1.2884 1.3027
(1) Average of the rates for each month in the relevant period.
The Ordinary Shares and Savings Shares of Telecom Italia trade on Mercato Telematico Azionario
(“Telematico”), managed by Borsa Italiana S.p.A. (“Borsa Italiana”) in euro. Fluctuations in the exchange rate
between the euro and the U.S. dollar will affect the U.S. dollar equivalent of the euro price of the Ordinary Shares
and the Savings Shares and the price of the Ordinary Share American Depositary Shares (“Ordinary Share
ADSs”) and the Savings Share American Depositary Shares (“Savings Share ADSs”), on the New York Stock
Exchange (“NYSE”). Cash dividends are paid in euro. Exchange rate fluctuations will affect the U.S. dollar
amounts received by owners of Ordinary Share ADSs and Savings Share ADSs upon conversion by the Depositary
of cash dividends paid in euro on the underlying Ordinary Shares and Savings Shares. See “Item 10. Additional
Information—10.5 Description of American Depositary Receipts”.
19

Item 3. Key Information Selected Financial And Statistical Information
3.3 SELECTED FINANCIAL AND STATISTICAL INFORMATION
The selected financial data set forth below is consolidated financial data of the Telecom Italia Group as of and for
each of the years ended December 31, 2012, 2011, 2010, 2009 and 2008, which have been extracted or derived,
with the exception of amounts presented in U.S. dollars, financial ratios and statistical data, from the
Consolidated Financial Statements of the Telecom Italia Group prepared in accordance with IFRS as issued by
IASB and which have been audited, with respect to 2012, 2011 and 2010, by the independent auditor
PricewaterhouseCoopers S.p.A., which replaced Reconta Ernst & Young S.p.A., as part of the normal required
rotation of auditors. 2009 and 2008 were audited by the independent auditor Reconta Ernst & Young S.p.A.
In 2012, the Group applied the accounting policies on a basis consistent with those of the previous years, except
for:
Š the early adoption, starting from the first half of 2012, of the revised version of IAS 19 (Employee Benefits),
whose effects are described in “Note—Accounting Policies” of the Notes to the Consolidated Financial
Statements included elsewhere in this Annual Report. The early adoption of such amendments resulted in the
restatement of the 2011 and 2010 separate consolidated income statements and consolidated statements of
comprehensive income;
Š the new standards and interpretations adopted by the Group since January 1, 2012 (IAS 12 (Income Taxes)
and IFRS 7 (Disclosures—Transfers of Financial Assets)), that did not have any effect on the consolidated
financial statements at December 31, 2012.
20

The selected financial data below should be read in conjunction with the Consolidated Financial Statements and
notes thereto included elsewhere in this Annual Report.
Year ended December 31
2012(*) 2012(*) 2011(*) 2010(*) 2010 2009 2008
(Restated) (Restated)
(millions of
U.S. dollars,
except percentages,
ratios, employees
and per share
amounts)(1)
(millions of euros,
except percentages, ratios, employees
and per share amounts)
Separate Consolidated Income
Statement Data:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,903 29,503 29,957 27,571 27,571 26,894 28,746
Operating profit (loss) . . . . . . . . . . . . . . . . . 2,540 1,926 (680) 5,858 5,818 5,493 5,437
Profit (loss) before tax from continuing
operations . . . . . . . . . . . . . . . . . . . . . . . . . . (58) (44) (2,743) 4,128 4,132 3,339 2,894
Profit (loss) from continuing
operations . . . . . . . . . . . . . . . . . . . . . . . . . . (1,686) (1,279) (4,353) 3,579 3,582 2,218 2,217
Profit (loss) from Discontinued operations/
Non-current assets held for sale . . . . . . . . 3 2 (13) (7) (7) (622) (39)
Profit (loss) for the year . . . . . . . . . . . . . . . (1,684) (1,277) (4,366) 3,572 3,575 1,596 2,178
Profit (loss) for the year attributable to
owners of the Parent(2) . . . . . . . . . . . . . (2,145) (1,627) (4,811) 3,118 3,121 1,581 2,177
Capital Expenditures . . . . . . . . . . . . . . . . . . . 6,851 5,196 6,095 4,583 4,583 4,543 5,040
Financial Ratios:
Operating profit (loss)/Revenues
(ROS)(%) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5% 6.5% — 21.2% 21.1% 20.4% 18.9%
Ratio of earnings to fixed charges(3) . . . . 0.98 0.98 (0.29) 2.84 2.84 2.51 2.21
Employees, average salaried workforce
in the Group, including personnel
with temporary work contracts:
Employees (excluding employees relating to
the consolidated companies considered
as Discontinued operations/Non current
assets held for sale) (average number) . . . 78,564 78,564 78,369 70,150 70,150 69,964 73,508
Employees relating to the consolidated
companies considered as Discontinued
operations/Non current assets held for
sale (average number) . . . . . . . . . . . . . . . . . — — — — — 2,168 3,277
Basic and Diluted earnings per Share
(EPS)(4):
Ordinary Share . . . . . . . . . . . . . . . . . . . . . . (0.11) (0.08) (0.25) 0.16 0.16 0.08 0.11
Savings Share . . . . . . . . . . . . . . . . . . . . . . . (0.11) (0.08) (0.25) 0.17 0.17 0.09 0.12
Of which:
From continuing operations:
Ordinary Share . . . . . . . . . . . . . . . . . . . (0.11) (0.08) (0.25) 0.16 0.16 0.11 0.11
Savings Share . . . . . . . . . . . . . . . . . . . . (0.11) (0.08) (0.25) 0.17 0.17 0.12 0.12
From Discontinued operations/Non-
current assets held for sale:
Ordinary Share . . . . . . . . . . . . . . . . . . . — — — — — (0.03) —
Savings Share . . . . . . . . . . . . . . . . . . . . — — — — — (0.03) —
Dividends:
per Ordinary Share(5) . . . . . . . . . . . . . . . . . . 0.026 0.020 0.043 0.058 0.058 0.050 0.050
per Saving Share(5) . . . . . . . . . . . . . . . . . . . 0.041 0.031 0.054 0.069 0.069 0.061 0.061
21

As of December 31,
2012 2012 2011 2010 2009 2008
(millions of
U.S. dollars,
except
employees)(1) (millions of euros, except employees)
Consolidated Statement of Financial
Position Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,264 77,555 83,886 89,040 86,267 86,223
Equity:
Equity attributable to owners of the Parent . . 25,552 19,378 22,790 28,819 25,952 25,598
Non-controlling interests . . . . . . . . . . . . . . . . . . . . 4,792 3,634 3,904 3,736 1,168 730
Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,344 23,012 26,694 32,555 27,120 26,328
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,920 54,543 57,192 56,485 59,147 59,895
Total equity and liabilities . . . . . . . . . . . . . . . . . . . 102,264 77,555 83,886 89,040 86,267 86,223
Share capital(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,982 10,604 10,604 10,600 10,585 10,591
Net financial debt(7) . . . . . . . . . . . . . . . . . . . . . . . . . 38,309 29,053 30,819 32,087 34,747 34,039
Employees, number in the Group at year-
end, including personnel with temporary
work contracts:
Employees (excluding employees relating to
the consolidated companies considered as
Discontinued operations/Non-current
assets held for sale) (number at
year-end) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,184 83,184 84,154 84,200 71,384 75,320
Employees relating to the consolidated
companies considered as Discontinued
operations/Non-current assets held for
sale (number at year-end) . . . . . . . . . . . . . . . . . — — — — 2,205 2,505
As of December 31,
2012 2011 2010 2009 2008
(thousands)
Statistical Data:
Domestic (Italy) Business Unit
Physical accesses(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,153 21,712 22,122 22,256 22,289
Of which physical accesses (retail) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,978 14,652 15,351 16,097 17,352
Broadband accesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,967 9,089 9,058 8,741 8,134
Of which retail broadband accesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,020 7,125 7,175 7,000 6,754
Mobile lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,159 32,227 31,018 30,856 34,797
Brazil Business Unit
Mobile lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,362 64,070 51,015 41,102 36,402
Argentina Business Unit
Fixed-line network connections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,128 4,141 4,107 4,060 4,010
Broadband accesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,629 1,550 1,380 1,214 1,032
Mobile lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,276 20,342 18,212 16,281 14,390
(*) Starting from 2012, the Telecom Italia Group has early adopted and retrospectively applied revised IAS 19 (Employee Benefits);
therefore, the comparative figures for 2011 and 2010 have been restated on a consistent basis. The adoption of IAS 19 does not have any
effect on the Group’s statement of financial position other than certain reclassifications under “Equity.” Further details and the effects on
the years ended December 31, 2011 and 2010 are provided in the “Note—Accounting Policies” of the Notes to the Consolidated Financial
Statements included elsewhere in this Annual Report. 2009 and 2008 data has not been restated for the adoption of IAS 19 as the
company considered the impact immaterial.
(1) For the convenience of the reader, Euro amounts for 2012 have been converted into U.S. dollars using the Euro/Dollar Exchange Rate in
effect on December 31, 2012, of €1.00 =1.3186 U.S.$.
22

(2) For the purposes of IFRS, “Parent”, as used in this Annual Report, means Telecom Italia S.p.A.
(3) Due to the loss in 2012 and in 2011, the ratio coverage was less than 1:1. The company would have needed to generate additional
earnings of 38 million euros in 2012 and 2,704 million euros in 2011 to achieve a coverage of 1:1. For purposes of calculating the ratio of
“earnings to fixed charges”:
Š “Earnings” is calculated by adding:
– profit (loss) before tax from continuing operations;
– “fixed charges” (as defined below);
– amortization of capitalized interest and debt issue discounts or premiums;
– dividends from associates and joint ventures accounted for using the equity method; and
– share of losses of associates and joint ventures accounted for using the equity method and then subtracting:
– capitalized interest for the applicable period; and
– share of earnings of associates and joint ventures accounted for using the equity method.
Š “Fixed charges” is calculated by adding:
– interest expenses (both expensed and capitalized);
– issue costs and any original debt issue discounts or premiums; and
– an estimate of the interest within rental expense for operating leases.
(4) In accordance with IAS 33 (Earnings per share), basic earnings per Ordinary Share is calculated by dividing the Group’s profit (loss)
available to shareholders by the weighted average number of shares outstanding during the year, excluding treasury shares. Since
Telecom Italia has both Ordinary and Savings Shares outstanding, the calculations also take into account the requirement that holders of
Savings Shares are entitled to an additional dividend equal to 2% of the par value of shares above dividends paid on the Ordinary Shares.
For the purpose of these calculations, the weighted average number of:
– Ordinary Shares was 13,277,621,082 for the year ended December 31, 2012, was 13,264,375,078 for the year ended
December 31, 2011, 13,239,883,276 for the year ended December 31, 2010, 13,220,792,908 for the year ended December 31,
2009 and 13,246,643,947 for the year ended December 31, 2008;
– Savings Shares was 6,026,120,661 for the years ended December 31, 2012, 2011, 2010, 2009 and 2008.
For diluted earnings per share the weighted average number of shares outstanding is adjusted assuming conversion of all dilutive
potential shares. Potential shares are those securities that, if converted into shares, would increase the total number of shares
outstanding and reduce the earnings attributable to each share. Potential shares include options, warrants and convertible securities. The
Group’s profit (loss) is also adjusted to reflect the impact of the conversion of potential shares net of the related tax effects.
(5) Subject to approval, at the Annual Shareholders’ Meeting to be held on April 17, 2013, Telecom Italia’s dividend coupons for the year
ended December 31, 2012, will be clipped on April 22, 2013, and will be payable from April 25, 2013.
(6) Share capital represents share capital issued net of the par value of treasury shares.
(7) Net Financial Debt is a “Non-GAAP Financial Measure” as defined in Item 10(e) of Regulation S-K under the 1934 Act. For further details
please see “Item 5. Operating and Financial Review and Prospects—5.2 Results of Operations for the Three Years Ended December 31,
2012—5.2.3 Non-GAAP Financial Measures”.
(8) Physical accesses include Broadband accesses.
23

Item 3. Key Information Dividends
3.4 DIVIDENDS
The determination of our future dividend policy, and the amounts thereof, will depend upon a number of factors,
including but not limited to our earnings, financial condition and cash requirements, prospects and such other
factors as may be deemed relevant at the time. As part of our 2013-2015 Plan, we announced our intention to
reduce our annual dividend beginning in 2012 in order to bring it into line with our strategic priority of continuing
to deleverage and reduce our net financial debt. See “Item 4—Information on the Telecom Italia Group—4.1.7
Updated Strategy”.
The following table sets forth the dividends per Ordinary Share and per Savings Share declared by Telecom Italia
with respect to each of the last five fiscal years and the aggregate dividends paid in such years. Actual dividends
paid are rounded to the nearest whole cent.
Dividends on Ordinary Shares Dividends on Savings Shares
Year ended December 31,
Euros per
Share
U.S. Dollars
per Share(1)
(millions of
euros) Euros per Share
U.S. Dollars
per Share(1)
(millions of
euros)
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0500 0.0652 667.16 0.0610 0.0796 367.59
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0500 0.0619 667.16 0.0610 0.0755 367.59
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0580 0.0846 775.48 0.0690 0.1006 415.80
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0430 0.0563 575.30 0.0540 0.0707 325.41
2012(2) . . . . . . . . . . . . . . . . . . . . . . . . . 0.0200 0.0261 267.59 0.0310 0.0404 186.81
(1) Euro amounts have been translated into U.S. dollars using the Noon Buying Rate in effect on the respective payment dates. For the year
ended December 31, 2012, Euro amounts have been translated into U.S. dollars using the Noon Buying Rate in effect on April 5, 2013.
(2) Subject to approval at the Annual Shareholders’ Meeting to be held on April 17, 2013. Pursuant to Italian Stock Exchange rules, dividends
on the Ordinary Shares and the Savings Shares are payable from the fourth trading day after the third Friday of each month, and in any
case, at least four business days after the Shareholders’ Annual Meeting approving the dividends. Telecom Italia’s dividend coupons for
the year ended December 31, 2012, will be clipped on April 22, 2013, and will be payable from April 25, 2013.
Payment of annual dividends is subject to approval by the holders of Ordinary Shares at the annual general
shareholders’ meeting, which must be held within 180 days after the end of the financial year to which it relates
(pursuant to article 18, second paragraph, of the Company’s Bylaws). In addition, Article 21 of the Company’s
Bylaws gives the Board of Directors the power to approve the distribution of “interim dividends”. Pursuant to
Italian law, the distribution may be approved after the final approval of the preceding year’s financial statements,
and the interim dividends may not exceed the lower of (i) the difference between profits from the preceding fiscal
year and amounts required to be attributed to legal and statutory reserves and (ii) available reserves. Once paid in
compliance with applicable laws, shareholders cannot be required to repay interim dividends to the Company if
the shareholders collected such dividends in good faith. Dividends not collected within five years from the date
they become payable will be forfeited in favor of the Company. If profits are not fully distributed, additional
reserves are created.
According to the Italian Civil Code, before dividends may be paid with respect to any year, an amount equal to 5%
of the profit of the Company for such year must be set aside to the legal reserve until the legal reserve, including
amounts set aside during prior years, is at least equal to one-fifth of the par value of the Company’s issued share
capital. This legal reserve is not available for payment of dividends. Such restriction on the payment of dividends
applies, on a non-consolidated basis, to each Italian subsidiary of the Telecom Italia Group. The Company may
also pay dividends out of available retained earnings from prior years or other reserves.
Dividends in respect of Ordinary Shares and Savings Shares held with Monte Titoli S.p.A. (“Monte Titoli”) are
automatically credited to the accounts of the beneficial owners with the relevant participant of Monte Titoli,
without the need for presentation by such beneficial owners of any documentation. See “Item 10. Additional
Information—10.4 Description of Capital Stock”.
Arrangements between Euroclear or Clearstream and Monte Titoli permit the shareholders to collect the dividends
through Euroclear or Clearstream. Holders of American Depositary Receipts (“ADRs”) are entitled to receive
payments in respect of dividends on the underlying Ordinary Shares and Savings Shares, as the case may be, in
accordance with the relevant Deposit Agreement.
24

Item 3. Key Information Dividends
Dividends payable on the Company’s Ordinary Shares and Savings Shares may be subject to deduction of Italian
withholding tax. See “Item 10. Additional Information—10.6 Taxation”. Italian regulations do not contain any
specific restrictions on the payment of dividends to non-residents of Italy. See “Item 10. Additional
Information—10.2 Exchange Controls and Other Limitations Affecting Security Holders”.
Pursuant to Italian law, in connection with the payment of dividends, participants of Monte Titoli are required to
supply to the Italian tax authorities certain information concerning the identity of non-resident shareholders
holding Ordinary Shares or Savings Shares. Shareholders are required to provide their Italian tax identification
number, if any, or alternatively, in the case of legal entities, their name, country of establishment and address, or
in the case of individuals, their name, address and place and date of birth, or in the case of partnerships, the
information required for legal entities and the information required for individuals with respect to one of their
representatives. In the case of Ordinary Share ADSs and Savings Share ADSs owned by non-residents in Italy,
Telecom Italia understands that the provision of information concerning the Depositary, in its capacity as holder
of record of the Ordinary Shares and Savings Shares, as the case may be, will satisfy these requirements.
The Depositary, in accordance with instructions from Telecom Italia, will provide information to beneficial owners
of Ordinary Share ADSs and Savings Share ADSs, that are considered U.S. residents for purposes of applicable law.
To the extent such owners wish to benefit from reduced withholding tax rates on dividends under an income tax
treaty, claims for such benefits must be accompanied by the required information. See “Item 10. Additional
Information—10.6 Taxation”.
25

Item 4. Information On The Telecom Italia Group Business
Item 4. INFORMATION ON THE TELECOM ITALIA GROUP
4.1 BUSINESS
4.1.1 BACKGROUND
The legal and commercial name of the company is Telecom Italia S.p.A. Telecom Italia is a joint-stock company
established under Italian law on October 29, 1908, with registered offices in Milan at Piazza degli Affari 2. The
telephone number is +39 (02) 85951. The company is recorded in the Milan Companies Register at number
00488410010, R.E.A. number 1580695, R.A.E.E. number IT08020000000799.
Our Depositary in New York (JP Morgan Chase) is presently located at 4 New York Plaza, New York, New York
10004.
The duration of the company, as stated in the company’s Bylaws, extends until December 31, 2100.
On October 25, 2007, Assicurazioni Generali S.p.A. (“Generali”), Sintonia S.A. (“Sintonia”), Intesa Sanpaolo
S.p.A. (“Intesa Sanpaolo”), Mediobanca S.p.A. (“Mediobanca”) and Telefónica S.A. (“Telefónica”), through
their wholly owned subsidiary Telco S.p.A. (“Telco”), completed the purchase of the entire share capital of
Olimpia S.p.A., which held approximately 18% of the share capital, from Pirelli & C. S.p.A. and Sintonia S.p.A.
5.6% of the ordinary share capital of Telecom Italia was contributed on the same date by Mediobanca and
companies of the Generali group to Telco. As of October 25, 2007, the total investment held by Telco equaled
23.595% of Telecom Italia’s ordinary share capital.
Telco was held by Generali (28.1%), Intesa Sanpaolo (10.6%), Mediobanca (10.6%), Sintonia (8.4%) and Telefónica
(42.3%).
On March 20, 2008 Telco acquired a further 121.5 million Ordinary Shares and increased its ownership in Telecom
Italia’s ordinary share capital to 24.5%.
On December 22, 2009 Telco and Sintonia executed a purchase and sale agreement pursuant to which Sintonia
acquired from Telco shares representing approximately 2.06% of Telecom Italia’s share capital and Telco
voluntarily reduced its share capital by acquiring and cancelling Sintonia’s Telco shares and Sintonia left the
shareholder group which controls Telco.
On February 29, 2012, Telefónica, Intesa Sanpaolo, Mediobanca and Generali entered into a new shareholders’
agreement for a period of three years on the same terms and conditions set out in the original Shareholders’
Agreement dated as of April 28, 2007 as it had been subsequently amended and supplemented (the “2012
Shareholders Agreement”).
Currently Telco interests are held by Generali (30.58%), Intesa Sanpaolo (11.62%), Mediobanca (11.62%) and
Telefónica (46.18%). See “Item 7. Major Shareholders and Related-Party Transactions” for a description of the
existing shareholder arrangements.
4.1.2 DEVELOPMENT
On February 8, 2013, Telecom Italia presented its 2013–2015 Plan. The 2013-2015 Plan sets out the primary
strategic objective of the Telecom Italia Group over the next three years as well as a number of strategic priorities
to achieve this objective. This objective focuses on continued deleveraging to reduce the Telecom Italia Group’s
net financial debt.
Telecom Italia also announced its intention to revise its dividend policy in order to bring it into line with its
primary strategic objective of deleveraging the Group.
For more details, please see “4.1.7 Updated Strategy”.
26

4.1.3 BUSINESS
The Group operates mainly in Europe, South America and the Mediterranean Basin.
The Telecom Italia Group is engaged principally in the communications sector and, particularly, the fixed and
mobile national and international telecommunications sector.
The operating segments of the Telecom Italia Group are organized according to the respective geographical
location of the telecommunications business (Domestic—Italy, Brazil and Argentina) and according to the specific
businesses for the other segments.
The principal changes in the scope of consolidation in 2012 are as follows:
Š Matrix—Other Operations: the company was sold on October 31, 2012, and consequently excluded from
the consolidation area.
Š companies entering the scope of consolidation:
Š Tim Fiber—Brazil Business Unit: on October 31, 2011, we acquired a 100% stake in the company
Eletropaulo Telecomunicações Ltda and a 98.3% stake in AES Communications Rio de Janeiro S.A., both
telecommunications infrastructure operators in the states of São Paolo and Rio de Janeiro, now
renamed Tim Fiber SP and Tim Fiber RJ, respectively. The original ownership interest in Tim Fiber RJ
was subsequently increased to 99.1% and the remaining 0.9% was the object of a tender offer which was
concluded at the end of February 2012 and brought the percentage interest to 99.7%. The acquisitions
were carried out through the subsidiary Tim Celular S.A., into which the two companies were recently
merged;
Š 4GH group—Domestic Business Unit: on July 27, 2011, the 4G Holding group entered the scope of
consolidation (retail sale of telephony products) following the acquisition of 71% of the ordinary shares
of 4G Holding S.p.A. which in turn holds 100% of 4G Retail S.r.l.; the two companies merged in 2012;
Š companies exiting the scope of consolidation:
Š Loquendo—Domestic Business Unit: on September 30, 2011, Loquendo S.p.A. was sold and
consequently exited the scope of consolidation.
For further details please see “Item 5. Operating and Financial Review and Prospects—5.2 Results of Operations
for the Three Years Ended December 31, 2012—5.2.2. Reorganization of Business” and “Note—Form, Content
and Other General Information” of the Notes to the Consolidated Financial Statements included elsewhere in this
Annual Report.
Following is a summary description of the Telecom Italia group’s principal geographical business areas.
Domestic Business Area
Telecom Italia operates as the consolidated market leader in Italy in providing telephone and data services on
fixed-line and mobile networks for final customers (retail) and other operators (wholesale). Furthermore the
Telecom Italia Sparkle group operates in the international wholesale sector.
Telecom Italia is one of three mobile operators authorized to provide services using GSM 900 technology in Italy
and one of three operators authorized to provide services using GSM 1800 (formerly DCS 1800) technology in
Italy. It is also one of four operators holding a UMTS authorization and providing third-generation telephony
services in Italyand it is one of the three operators that acquired a 800MHz spectrum in 2011 to provide 4G
services.
At December 31, 2012 the Telecom Italia Group had approximately 14.0 million physical accesses (retail) in Italy,
a decrease of 0.7 million compared to December 31, 2011. This decrease reflects a market characterized by a
continuing trend of customers replacing fixed lines with mobile, resulting in a continuing fall in fixed line
27

accesses. The Wholesale customer portfolio in Italy reached approximately 7.2 million accesses for telephone
services at December 31, 2012, an increase of approximately 0.1 million compared to December 31, 2011.
The broadband portfolio in Italy was 9.0 million accesses at December 31, 2012 (consisting of approximately
7.0 million retail accesses corresponding to a market share of approximately 52% and 2.0 million wholesale
accesses), a decrease of approximately 0.1 million compared to December 31, 2011.
In addition, the Telecom Italia Group had approximately 32.2 million mobile telephone lines at December 31,
2012 in Italy, approximately stable compared to December 31, 2011.
Brazil Business Area
The Telecom Italia Group operates in the mobile and fixed telecommunications sector in Brazil through the Tim
Brasil group which offers mobile services using UMTS and GSM technologies. Focus is also on continued 2G and
3G expansion while 4G roll-out begins. Moreover, with the acquisitions of Intelig Telecomunicações, Tim Fiber RJ
and Tim Fiber SP, the portfolio of services has been expanded by offering fiber optic data transmission using full
IP technology such as DWDM and MPLS and offering residential broadband services.
At December 31, 2012, the Telecom Italia Group had 70.4 million mobile telephone lines in Brazil (64.1 million at
December 31, 2011).
Argentina Business Area
The Telecom Italia Group operates in Argentina and Paraguay through the Sofora—Telecom Argentina group. In
particular, in Argentina it operates in fixed telecommunications through the company Telecom Argentina and in
mobile telecommunications through the company Telecom Personal; in Paraguay it operates in mobile
telecommunications with the company Núcleo.
At December 31, 2012 the Telecom Italia Group had approximately 4.1 million fixed lines (in Argentina),
21.3 million mobile telephone lines (of which 19.0 million in Argentina and 2.3 million in Paraguay) and
1.6 million broadband accesses.
4.1.4 DISPOSALS AND ACQUISITIONS OF SIGNIFICANT EQUITY INVESTMENTS IN 2012
For a description of disposals and acquisitions of significant equity investments in 2012 please see “Note—Form,
Content and Other General Information”, “Note—Investments in Associates and Joint Ventures Accounted for
Using the Equity Method” and “Note—Other Investments” of the Notes to the Consolidated Financial Statements
included elsewhere in this Annual Report.
4.1.5 RECENT DEVELOPMENTS DURING 2013
Possible integration with 3 Italia and project for the network separation
On April 11, 2013, the Telecom Italia Board of Directors examined the possible integration with 3 Italia and the
progress of the project for the network separation.
Management reported on preliminary contacts with 3 Italia and its ultimate parent company Hutchison Whampoa
(“HW”) on a business combination of the company with Telecom Italia, possibly via contribution in kind or
merger, which the HW Group has made subject to the acquisition of an additional stake in Telecom Italia, such
that the HW Group would become the leading shareholder of the Company.
The Board of Directors established a special committee, chaired by the Chairman of the Board of Directors
(Director Franco Bernabè) and composed of the Lead Independent Director (Director Zingales), the Chairman of
the Control and Risk Committee (Director Catania) and Directors Linares and Galateri, in order to verify within a
short time the Company’s interest in carrying on such a transaction.
Moreover, the Board of Directors mandated the management to define the operational process and the feasibility
of the structural separation of the access network.
For a description of other recent developments please see “Item 8. Financial Information—8.2 Legal
Proceedings” and “Note—Events Subsequent to December 31, 2012” of the Notes to the Consolidated Financial
Statements included elsewhere in this Annual Report.
28

4.1.6 OVERVIEW OF THE TELECOM ITALIA GROUP’S MAJOR BUSINESS AREAS
The following is a chart of the Telecom Italia Group’s Business Units as of December 31, 2012:
Consumer Telecom Italia
Sparkle group:
Tim Brasil group Sofora
group
Telecom
Italia Media
group (**)
Olivetti
group
Business
Top − Lan Med Nautilus group
National Wholesale
Other (support structures)
Telecom Italia Group
Domestic Brazil Media Olivetti
Core
Domestic
(*)
International
Wholesale
Argentina
− Telecom Italia Sparkle
S.p.A.
(*) Main subsidiaries: Telecom Italia S.p.A.; Telenergia S.p.A.; Telecontact Center S.p.A., PAth.Net S.p.A.; HR Services S.r.l. and Shared
Service Center S.r.l.(now Telecom Italia Information Technology S.r.l.).
(**) With reference to the sale of La7 S.r.l., please see “Note—Events subsequent to December 31, 2012” of the Notes to the Consolidated
Financial Statements included elsewhere herein.
On October 31, 2012, Telecom Italia S.p.A. completed the sale of its wholly-owned subsidiary, Matrix, to Libero,
controlled by Weather Investment II S.à.r.l.. In 2012 Matrix was also moved to Other Operations and was
consequently no longer part of Core Domestic in the Domestic Business Unit.
For further details about companies which are part of the various Business Units, please see Note “List of
companies of the Telecom Italia Group” of the Notes to the Consolidated Financial Statements included
elsewhere herein.
For the revenues, operating profit (loss), capital expenditures and number of employees of the Telecom Italia
Group’s Business Units please see “Item 5. Operating and financial review and prospects—5.2 Results of
operations for the three years ended December 31, 2012—5.2.5 Business unit financial data”.
4.1.7 UPDATED STRATEGY
Strategic Priorities and Objectives of the 2013-2015 Plan
On February 8, 2013, Telecom Italia presented its updated 2013–2015 Plan. The 2013-2015 Plan sets out the
Telecom Italia Group’s primary strategic objective as well as a number of strategic priorities to achieve this
objective over the next three years:
Š continued deleveraging to reduce its net financial debt, through:
– focus on strategic markets—Italy, Brazil and Argentina—with the goal of stabilizing consolidated
revenues through the contribution from Latin America;
– technological developments in fixed-line telephony and mobile telephony in Italy, mobile telephony in
Brazil and network capacity in Argentina to take advantage of growing demand for data;
– extension and acceleration of the Group’s cost reduction policy in order to contribute to the financing of
the above mentioned technological developments;
29

– sustainable shareholder remuneration. Telecom Italia announced its intention to revise its dividend
policy in order to bring it into line with the continuing policy of deleveraging the Group.
Domestic market
In the Domestic market Telecom Italia, leveraging on its fixed and mobile network infrastructure, intends to:
Š stabilize revenues;
Š defend market share on traditional services through quality of service;
Š grow innovative services leveraging on both access and applications services such as Cloud services;
Š develop UBB (UltraBroadband) networks taking into account further developments in the regulatory
framework and technological changes.
Brazil
Tim Brasil’s strategic priorities are to:
Š expand its customer base through FMS (Fixed Mobile Substitution);
Š pursue high potential in mobile broadband penetration;
Š continue network evolution, mainly through the increase of coverage on 3G and the roll out of the 4G
network;
Š satisfy the growing demand for Internet services, while optimizing capital expenditure.
Argentina
Telecom Argentina Group’s strategic priorities are to:
Š further build on its market share and its fixed and mobile platforms;
Š enlarge its network capacity;
Š support premium positioning on mobile to boost value added services’ revenues;
Š fully exploit the high demand for data traffic.
There can be no assurance that these objectives will actually be achieved. See “Introduction—Cautionary
Statement for Purposes of the “Safe Harbor” Provisions of the United States Private Securities Litigation Reform
Act of 1995.”.
30

4.1.8 THE ORGANIZATIONAL STRUCTURE
The following diagram highlights the organizational structure of the Telecom Italia Group as of April 10, 2013:
BUSINESS SUPPORT
OFFICER
HUMAN RESOURCES
AND ORGANIZATION
NATIONAL WHOLESALE
SERVICES
INNOVATION
& INDUSTRY RELATIONS
CHIEF INFORMATION
OFFICER
TECHNOLOGYBUSINESSCONSUMER
COMPLIANCE
DEPARTMENT
MARCO PATUANO
ANTONIO MIGLIARDI SIMONE BATTIFERRILUCA ROSSETTOCESARE SIRONIALESSANDRO TALOTTAPAOLO VANTELLINI
GIUSEPPE ROBERTO
OPILIO
GIANLUCA PANCACCINI
VALERIO CAVALLO
GIUSEPPINA CARLOTTA
VENTURA
DOMESTIC
MEDIA
AUDIT
DEPARTMENT
FEDERICO MAURIZIO
d’ANDREA
IT & SECURITY
COMPLIANCE
ROBERTO MAZZILLI
FRANCO BERNABÈ
LEGAL AFFAIRS PUBLIC & REGULATORY
AFFAIRS
ADMINISTRATION,
FINANCE AND CONTROL
STRATEGY TI
MEDIA
SECURITY
DAMIANO TOSELLIPIERGIORGIO PELUSOFRANCO BRESCIAANTONINO CUSIMANOOSCAR CICCHETTI SEVERINO SALVEMINI
PRESS OFFICE &
OPINION MAKERS
RELATIONS
CARLO DE MARTINO
SOUTH AMERICA
GENERAL
MANAGEMENT
ANDREA MANGONI
TIM
BRASIL
TELECOM
ARGENTINA
STEFANO DE ANGELISRODRIGO ABREU
(*) Director Gabriele Galateri di Genola
ensures the reconciliation of functions with
the Board of Directors
CARING SERVICES
DIVISION
STEFANO CIURLI
CORPORATE IDENTITY &
PUBLIC RELATIONS
MARCELLA ELVIRA
LOGLI
Project Management Office
Equivalence of Input
Pietro Labriola
Strategic Project Planning
and Monitoring
Mario Di Mauro
INITIATIVES AND
SPECIAL PROJECTS
UMBERTO RAPETTO
BOARD OF
DIRECTORS
(*)
EXECUTIVE CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
DOMESTIC MANAGING
DIRECTOR AND CHIEF
OPERATING OFFICER
* * *
Andrea Mangoni will leave the Telecom Italia Group on April 30, 2013.
31

Item 4. Information On The Telecom Italia Group Business Units
4.2 BUSINESS UNITS
4.2.1 DOMESTIC
The Domestic Business Unit operates as the consolidated market leader in Italy in providing telephone and data
services on fixed-line and mobile networks for final retail voice customers and other wholesale operators. In the
international field, the Business Unit develops fiber optic networks for wholesale customers (in Europe, in the
Mediterranean and in South America).
On October 31, 2012, Telecom Italia S.p.A. completed the sale of the company Matrix, a wholly-owned subsidiary,
to Libero, controlled by Weather Investment II S.à.r.l.. In 2012 Matrix was also moved to Other Operations and
was consequently no longer part of Core Domestic in the Domestic Business Unit.
The Domestic Business Unit is organized as follows as of December 31, 2012:
•Consumer
•Business
•Top
•National Wholesale
•Other (support structure)
•Telecom Italia Sparkle group:
•Telecom Italia Sparkle S.p.A.
•Lan Med Nautilus group
DOMESTIC
CORE DOMESTIC (*) INTERNATIONAL WHOLESALE
(*) Principal companies: Telecom Italia S.p.A., Telenergia S.p.A., Telecontact Center S.p.A., PAth.Net S.p.A., HR Service Center S.r.l. and
Shared Service Center S.r.l. (now Telecom Italia Information Technology S.r.l.).
The principal operating and financial data of the Domestic Business Unit are reported according to two Cash-
generating units (“CGU”):
Š Core Domestic: Core Domestic includes all telecommunications activities within the Italian market.
Revenues are divided according to the net contribution of each market segment to the CGU’s results,
excluding intrasegment transactions. The sales market segments defined on the basis of the “customer
centric” organizational model are as follows:
Š Consumer: Consumer comprises the aggregate of voice and internet services and products managed
and developed for individuals and families in the fixed and mobile telecommunications markets and
public telephony;
Š Business: Business comprises the aggregate of voice, data, internet and ICT solutions services and
products managed and developed for SMEs (small and medium enterprises) and SOHOs (Small Office
Home Office) in the fixed and mobile telecommunications markets;
Š Top: Top comprises the aggregate of voice, data, internet and ICT solutions services and products
managed and developed for Top, Public Sector, Large Account and Enterprise clientele in the fixed and
mobile telecommunications markets;
Š National Wholesale: National Wholesale consists of the management and development of the
portfolio of regulated and unregulated wholesale services for fixed and mobile telecommunications
operators in the Italian domestic market;
Š Other (support structures):
Š Technology & IT: services related to the development, building and operation of network
infrastructures, real estate—properties and plant engineering, delivery processes and assurance
regarding client services in addition to the development and operation of information services;
32

Š Staff & Other: services carried out by Staff functions and other support activities performed by
minor companies of the Group also offered to the market and other Business Units.
Š International Wholesale: International Wholesale includes the activities of the Telecom Italia Sparkle
group which operates in the international voice, data and internet services market aimed at fixed and mobile
telecommunications operators, ISPs/ASPs (Wholesale market) and multinational companies through its own
networks in the European, Mediterranean and South American markets.
❖ MARKETING CHANNELS AND DISTRIBUTION
As a result of the customer centric approach, Telecom Italia utilizes a sales structure as follows for each of its
customer segments:
Distribution
The sales structure is organized according to a vertical, multi-channel approach, in which different types of
distribution channels are specialized for different customer segments of the market, based on clusters of
customers and services. This approach enhances the focus and customization of our products.
Š Consumer
Consumer customers are now managed by several channels focused on volume and value acquisitions,
including:
Š the “Push Sales Channel” consisting of an outbound telephone channel called “Telesales” with a
network of approximately 18 partners having a total of 2,500 operators supported by 21 employees and
the “Agent” channel made up of sales agents with a network of 40 partners with 700 sales agents
assisted by 20 employees. An additional 59 employees support sales in the following Headquarters
areas: Development, Coordination and Sales Management;
Š the “Pull” channel: consisting of the retail network of shops, dealers, and organized and specialized
large-scale distribution, amounting to a total of approximately 6,200 retail points of sale (at December
2012). Points of sale are geographically widespread and of many different types: direct; franchisee;
monobrand; multibrand; organized and specialized large-scale distribution.
In addition to these partners, distribution also is done through the “Public Telephone” channel, a network of
17 partners focused on National and International prepaid card services and associated traffic packages.
Š Business
The business distribution channels are made up of:
Š “BP—Business Partner” channel (approximately 80): a network focused on standard offers with about
1,500 agents;
Š “VAR—Value Added Reseller” channel (approximately 70): a network organized geographically focused
on VAS, customized solutions and complex networks (250 agents) and on ICT (200 agents);
Š Outbound Call Center: 12 partners focused on specific canvass and loyalty activities;
Š Shops: some specific shops (approximately 3,000) offering business products and assistance (14 Key
Account).
Š TOP
The Top Customers department is organized in separate units, one dedicated to Private Top Customers
(Large Companies, Banks, Insurance, etc), two dedicated to the Public Sector (Public Administration, Health,
etc.) and four focused on Strategic, Large and Medium Enterprises. At the end of 2012 around 640 Sales
personnel and about 143 Partner (Senior Account channel) had a dedicated portfolio to supervise and
develop, supported by structures focused on pre-sales (e.g. offers design) and post sales processes (e.g.
assistance). The main activities include:
Š offering the whole range of services (fixed and mobile telephone, data, ICT services and products); and
Š supporting the customer and providing assistance, when required.
33

Š National Wholesale Services
The National Wholesale Services (“NWS”) division manages relationships with approximately 300 other telco
operators, who can be both customers and competitors of Telecom Italia. These customers purchase
Telecom Italia network and professional services to build services for their own customers.
In order to ensure complete management of the relationship with customers, the NWS Department is
organized to cover all stages of the process:
Š analysis of technological innovation, for New Products and Service Innovation Marketing;
Š analysis of business evolution in wholesale market, for Marketing development;
Š definition of the offer for wholesale regulated services, such as Interconnection, Data Services, Access
Services; the offer is developed by the marketing group according to conditions and rules set by
National and European Authorities;
Š sales through direct vendors, which are supported by presales and project managers;
Š contracts definition and disputes solution through specialized personnel;
Š billing, credit and administrative activities, revenue integrity control; and
Š caring and business process reengineering.
The NWS department is set up as an independent department, which allows Telecom Italia, along with other
conditions (accounting separation, compliance with the resolutions of the Authorities) to manage
transparency and fairness in its relationship with other operators, as well as compliance with all regulatory
requirements.
❖ CUSTOMER AND LINES
The table below sets forth, for the periods indicated, certain statistical data of the Domestic Business Unit:
As of and for the years ended
December 31,
2012 2011 2010
DOMESTIC FIXED
Physical accesses (thousand)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,153 21,712 22,122
Of which retail physical accesses (thousand) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,978 14,652 15,351
Broadband accesses in Italy at year-end (thousand) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,967 9,089 9,058
Of which retail broadband accesses (thousand) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,020 7,125 7,175
Network infrastructure in Italy:
access network in copper (millions of km—pair, distribution and connection) . . . . 114.5 112.2 111.7
access and carrier network in optical fiber (millions of km—fiber) . . . . . . . . . . . . . . . 5.7 4.6 4.3
Network infrastructure abroad:
European backbone (km of fiber) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,000 55,000 55,000
Mediterranean (km of submarine cable) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500 7,500 7,000
South America (km of fiber) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 30,000 30,000
Atlantic (km of submarine cable) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 15,000 15,000
Total traffic:
Minutes of traffic on fixed-line network (billions): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.8 108.9 121.5
Domestic traffic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85.9 93.3 104.1
International traffic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.9 15.6 17.4
DownStream and UpStream traffic volumes (PBytes): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,202 1,937 1,647
DOMESTIC MOBILE
Number of lines at year-end (thousand) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,159 32,227 31,018
Change in lines (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.2) 3.9 0.5
Churn rate (%)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.6 21.9 22.0
Total outgoing traffic per month (millions of minutes) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,664 3,633 3,305
Total average outgoing and incoming traffic per month (millions of minutes) . . . . . . . . . 4,921 4,843 4,597
Mobile browsing volumes (PBytes)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93.1 75.9 53.0
Average monthly revenues per line(4) (euro) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.5 17.4 19.7
34

(1) Total physical accesses includes broadband accesses.
(2) The data refers to total lines. The churn rate for the whole year represents the number of mobile customers who discontinued service
during the period expressed as a percentage of the average number of customers.
(3) National traffic, excluding roaming.
(4) The values are calculated on the basis of revenues from services (including revenues from prepaid cards) as a percentage of the average
number of lines.
At December 31, 2012 the Telecom Italia Group had approximately 14.0 million physical accesses (retail) in Italy,
a decrease of 0.7 million compared to December 31, 2011. The Wholesale customer portfolio in Italy reached
approximately 7.2 million accesses for telephone services at December 31, 2012, an increase of approximately
0.1 million compared to December 31, 2011.
The broadband portfolio in Italy was 9.0 million accesses at December 31, 2012 (consisting of approximately
7.0 million retail accesses corresponding to a market share of approximately 52% and 2.0 million wholesale
accesses), a decrease of approximately 0.1 million compared to December 31, 2011.
In addition, the Telecom Italia Group had approximately 32.2 million mobile telephone lines at December 31,
2012 in Italy, stable compared to December 31, 2011.
❖ MAIN CHANGES IN THE REGULATORY FRAMEWORK
For the main regulatory events which occurred in 2012 that may have a significant impact on the operation of the
Domestic Business Unit, please see “Item 4. Information On The Telecom Italia Group—4.3 Regulation”.
❖ COMPETITION
The market
The Italian telecommunications market continues to be highly competitive with significant pricing pressure, which
has led to an ongoing decline in the traditional service components, particularly voice service.
In this context, the key element in the evolution of the market continues to be the increased penetration of
broadband, particularly mobile, facilitated by the greater penetration of next-generation handsets.
The development of broadband has also led to an evolution of increasing competition, with greater interaction
between players of different markets. This has opened the field to competition from non-traditional operators (in
particular Over the Top companies—OTTs—and producers of electronic and consumer devices), as well as given
telecommunication operators the opportunity to develop new “network based” services (mainly in the IT and
Media fields).
For the legacy telecommunications operators, in addition to the core competition from the other traditional
operators in the sector, there has been increased competition from OTTs and device producers who take
advantage of their better understanding of the evolution of consumer trends, consumer electronics and software
environments and who operate entirely in the digital world, basing their behavior on competition approaches that
are completely different to those of telecommunications operators.
Over time, therefore, the traditional players’ business models have had to change to meet the challenges from the
new entrants and to exploit new opportunities:
Š in Media, broadcasters, who are vertically integrated players, continue to dominate the scene; however, with
the Web becoming increasingly important as a complementary distribution platform, they are increasingly
under pressure from consumer electronics companies and OTTS;
Š in Information Technology (where Italy continues to have a level of investment relative to its GDP
significantly lower than that of the United States and other European countries), the decline in revenues is
driving the various players towards the cloud computing “growth oasis” as a way of protecting market shares
in their respective core businesses. Telecommunications operators are expected to strengthen in this sector,
including through partnerships;
35

Š in the Consumer Electronics market, producers can develop services that can be used through the internet,
building on handset ownership and management of the user experience, loosening or breaking the
relationship between customers and telecommunications operators and competing with the media and OTTs,
through games consoles and set-top boxes, for the role of net enabler through the living room screen;
Š OTTs have, for some time now, been leading the transformation of the methods of use of
telecommunications services (including voice), increasingly integrating them with Media and IT.
Conversely, with regard to the positioning of the telecommunications operators in converging markets, there are
a number of aspects at varying levels of development:
Š initiatives involving innovative services in the IT market with the expansion of Cloud services for business
and consumer customers;
Š new wireless applications such as Machine-to-Machine (MTM) and mobile payment;
Š significant presence as enablers of online digital content use on the living room screen using OTT TV
multidevice solutions.
Competition in Fixed-Line Telecommunications
The fixed-line telecommunications market is characterized by the rapid decline in voice revenues due to reduction
in prices and the progressive shift of voice traffic to mobile. In recent years all the operators have attempted to
offset this phenomenon by concentrating mainly on the ability to innovate their offering by developing the
penetration of ADSL and introducing bundled voice, broadband and services deals (double play), in a highly
competitive environment with consequent pricing pressure.
The evolution of the competitive product offering has also been influenced by consolidation, among competitors,
of an approach based on the control of infrastructure (above all Local Loop Unbundling—LLU). The main fixed
operators are now also offering mobile services, as Mobile Virtual Operators (MVOs).
In 2012, the migration of customers from fixed-line to mobile telephony services continued, as well as the
migration to alternative communications solutions (Voice Over IP, messaging, e-mail and social network chat)
due to the widespread penetration of personal computers and tablets. For years, both for retail consumers and
small and medium businesses, mature traditional voice services have been replaced by value-added content and
services based on the internet protocol. This shift has been facilitated by the use of the internet and changes in
user preferences, by the spread of broadband, personal computers and other connected devices, and by the
quality of the service.
The competitive scenario in the Italian fixed telecommunications market is characterized by the presence, in
addition to Telecom Italia, of a number of operators such as Wind-Infostrada, Fastweb, Vodafone-TeleTu, BT
Italia that have different business models focused on different segments of the market.
At the end of 2012, fixed accesses in Italy numbered approximately 21.4 million, slightly (‫)%2.3מ‬ down from
2011 (22.1 million). The growing competition in the access market has led to a gradual reduction in Telecom
Italia’s market share.
In the broadband market, at December 31, 2012 fixed broadband customers in Italy numbered about 13.6 million
with a penetration rate on fixed accesses of about 63%.
The spread of broadband is driven not only by the penetration of personal computers, but also by the growing
demand for speed and access to new IP based services (Voice over IP, Content, social networking services, online
gaming, IP Centrex, etc.). In 2012, however, the slowdown in growth of the fixed-line broadband market
continued, due both to a general tendency of operators to concentrate on the growth of flat-rate plans (dual play)
with higher added value and to the continuing weakness of the macroeconomic environment. The decline
continued in revenues from the data transmission segment, which suffered the effects of competition that has led
to reduction in average prices.
Competition in Mobile Telecommunications
The mobile market, although saturated and mature in its traditional component of voice services, continues to see
growth in the number of mobile lines, driven by the increase in multiSIM/multidevice customers and in
36

non-human lines (lines which operate with a SIM card but are not used for voice services such as an Apple iPad)
(at December 31, 2012, mobile lines in Italy numbered about 97 million with growth of about 1% over 2011 and
with a penetration rate of approximately 159% of the population).
Along with the progressive contraction in traditional service components, such as voice and messaging, which
also reflect the increasing spread of “communication apps”, there has been significant growth in the mobile
broadband market, which, in the last few years has been, and in the future will continue to be, the main
opportunity for the strategic and commercial growth of the mobile telecom industry. This growth will be
facilitated by the launch of Ultra Broadband fourth generation mobile phone systems.
In 2012, the growth in mobile broadband customers continued, both large and small screen, with a high
penetration rate on mobile lines as a result of the increasing spread of smartphones and tablets.
Alongside innovative services that have already caught on and are under full-scale development, as in the case of
mobile Apps, there are other market environments, associated with the development of mobile broadband, with
major potential for growth in the medium term, such as mobile payment.
In the Italian mobile telecommunications market, competition is dominated by Telecom Italia and also by the
infrastructured operators (Vodafone, Wind, H3G) which are focused on different segments of the market or have
different strategies.
In addition to these operators, the field also includes mobile virtual operators (MVO), of which PosteMobile is the
most important player. These operators currently have a limited share of the market, but continue to enjoy
significant growth compared to infrastructured operators.
4.2.2 BRAZIL
The Telecom Italia Group operates in the mobile and fixed telecommunications sector in Brazil through the Tim
Brasil group which offers mobile services using UMTS and GSM technologies. Moreover, with the acquisitions of
Intelig Telecomunicações, Tim Fiber RJ and Tim Fiber SP (now merged into Tim Celular S.A.), the portfolio of
services has been expanded by offering fiber optic data transmission using full IP technology such as DWDM and
MPLS and offering residential broadband services.
• Tim Brasil Serviços e Participações S.A.
• Tim Participações S.A.
• Intelig Telecomunicações Ltda
• Tim Celular S.A.
BRAZIL
The Tim Brasil group’s services cover an area which includes around 95% of Brazil’s urban population. Tim Brasil
group has approximately 70.4 million mobile lines which covers each of the Brazilian states and the Federal
District. As of December 31, 2012, its combined penetration reached approximately 132.7% of the Brazilian
population and our combined market share totaled approximately 26.9%.
Since the Tim Brasil group began operating in the Brazilian market, its intention has been to provide its customers
with state-of-the-art technology and services. This goal has been achieved through the offer of edge technology,
that has allowed convergence between voice services—either mobile or fixed—, internet access and data
transfer. Management believes this convergence has been made feasible with developments under 3G.
37

The table below sets forth, for the periods indicated, the number of mobile lines of the Brazil Business Unit:
As of and for the years
ended December 31,
2012 2011 2010
Number of lines at year-end (thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,362 64,070 51,015
MOU (minutes/months) (*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135.8 128.6 116.0
ARPU (Reais) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.1 21.4 23.7
(*) Net of visitors.
❖ MARKETING
During 2012, Tim Brasil intensified promotional activity on voice plans and further expanded data services.
In the Consumer segment, TIM has continuously developed the Infinity and Liberty concept (prepaid and
postpaid, respectively), adding the “Plano Controle” to its Liberty platform, in order to develop its own prepaid
value base upon the migration to a Controle plane, boosting this segment’s profitability. The profitability increase
is possible because a Controle plan has hybrid characteristics, combining postpaid and prepaid benefits, giving the
liberty and convenience of a postpaid plan and also allowing customers to control their expenses, like a prepaid
user.
Gross acquisitions in 2012 amounted to 37.4 million new lines compared to 39.6 million new lines in 2011, a
decrease of -5.7% over the corresponding period of 2011. Net additions in 2012 amounted to 6.3 million lines
compared to 13.1 million lines in 2011, a decrease of -51.8% over the corresponding period of 2011.
In the Business segment, TIM continued to enhance and differentiate its offering, maintaining an emphasis on
simplified service and transparency. TIM launched a number of new products and services based on the needs of
its business clients and also maintained its focus on the provision of internet solutions, providing companies of all
sizes with improved unlimited internet connectivity.
Main Plans marketed are:
Š Infinity (Prepaid): customer is charged per call of unlimited duration to TIM numbers and local fixed
telephones; for SMS and mobile internet services, clients are charged for day of use, and services are
provided unlimitedly;
Š Infinity Tri (Prepaid in Rio Grande do Sul): customer of Rio Grande do Sul are charged per day of use for
voice (to TIM numbers and local fixed telephones), SMS and mobile internet services;
Š Tim Beta (Prepaid): limited segmented plan addressed to young customers, charged per day for voice (to
TIM numbers), SMS and mobile internet services;
Š Tim Liberty: customer pays a fixed monthly rate; no limits on calls to any TIM number in Brazil, without
limitation as to call, or call duration. Also, they may add further benefits to this plan using the Liberty Rádios
plan to talk unlimitedly to any radio user (SME), without deduction from its package of minutes; and
Š Liberty Controle: for customers that want no limits on calls to TIM numbers in Brazil, keeping bill under total
control. Customers pay a fixed rate every month, no limits on calls to TIM numbers, and also receives bonus
to use other types of calls/services.
In 2012, TIM improved its “Combos” offers (including minute package and handset), with focus on handsets that
encourage the use of internet and value added services, as Smartphone, modems, and tablets. Combos had strong
commercial appeal, either offering handsets or being associating with data offers.
TIM continued to aggressively market itself to larger companies as potential clients, offering, in addition to
customized pricing plans, handset options under loan for use contracts.
38

❖ DISTRIBUTION
Tim Brasil’s services are marketed through the largest distribution network in Brazil, with over 10,000 points of
sale, among premium stores and dealers (exclusive or multi-brand), in addition to relying on the distribution
capacity of a number of major retail chains. Tim Brasil’s prepaid service customers rely, in addition to traditional
points of sale, on alternative recharge channels, such as supermarkets and newsstands, totaling about 470,000
points spread all over Brazil. Sales of Tim Brasil’s products and services are offered by Tim Brasil’s sales personnel,
as well as by authorized dealers. Most devices are sold on credit card and in 12 installments.
For the main regulatory developments which occurred in 2012 that may have an economic impact on the Brazil
Business Unit, please see “Item 4. Information On The Telecom Italia Group—4.3 Regulation”.
❖ COMPETITION
At the end of 2012, the Brazilian mobile market reached 261.8 million lines. This is 8.1% more than at the end of
2011 and a penetration of 132.7% of the population (123.9% in 2011). Net total line increases in 2012 was
19.5 million lines, 19.7 million fewer net lines than in 2011.
4.2.3 ARGENTINA
The Telecom Italia Group operates in the fixed and mobile telecommunications sector in Argentina mainly
through Telecom Argentina and Telecom Personal (thereafter Personal), respectively, as well as mobile
telecommunications operations in Paraguay through Núcleo. In particular, Telecom Argentina is one of the largest
private-sector companies in Argentina. Telecom Argentina has a non-expiring license to provide fixed-line
telecommunications services and also provides other telephone related services such as international long-
distance service, data transmission, IT solutions outsourcing and Internet services. Personal has a non-expiring
licence to provide mobile services in Argentina and Núcleo has a renewable license to provide mobile services in
Paraguay.
• Sofora Telecomunicaciones S.A. (Sofora) (*)
• Nortel Inversora S.A. (*)
• Telecom Argentina S.A.
• Microsistemas S.A. (**)
• Telecom Argentina USA, Inc.
• Telecom Personal S.A.
• Núcleo S.A. (Paraguay)
• Springville S.A. (Uruguay) (**)
ARGENTINA
(*) Holding companies.
(**) Non-operating companies.
Telecom Argentina’s business strategy is focused on increasing its profitability and maximizing value generation
for its customers, shareholders, employees and the broader community it serves. In order to promote the
achievement of its goals in a sustainable and consistent manner, the Argentine Business Unit develops business
plans according to the market and macroeconomic environment and invests in products and services innovation
aimed at improving its customers’ user experience by adding content, interactivity and convenience to
communication.
39

In fixed services, the growth was led by the increase in the Broadband business, as a result of a 5% increase in
Internet accesses (reaching 1.6 million accesses as of December 31, 2012) and an 18% increase in the Broadband
ARPU (access+ISP) compared to 2011. Fixed lines remained at 4.1 million as of December 31, 2012, the same
level as at December 31, 2011.
In the mobile business, the Personal customer base increased by 0.8 million in 2012 reaching 19.0 million lines
as of December 31, 2012 (of which 33% are postpaid contracts). At the same time, ARPU increased approximately
12% over the prior year. A large part of this growth can be traced to value-added services which, on the whole,
accounted for approximately 53% of Personal mobile service revenues in 2012. Additionally, Personal successfully
implemented number portability in 2012. Due to, among other things, enhanced retention efforts, number
portability has so far not had any significant impact on Telecom Personal’s revenues.
In Paraguay, Núcleo’s customer base grew by about 7% over the prior year reaching 2.3 million lines at year-end,
of which 19% were postpaid.
The table below sets forth certain operating data for the Argentina Business Unit as of and for the years ended
December 31, 2012, 2011 and 2010:
December 31,
2012 2011 2010
Number of fixed lines (thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,128 4,141 4,107
ARBU (Average Revenue Billed per User) (Argentine pesos) . . . . . . . . . . . . . . . . . . . . . . 48.2 45.7 42.8
Telecom Personal mobile lines (thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,975 18,193 16,333
MOU Telecom Personal (minutes/months) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 99 102
ARPU Telecom Personal (Argentine pesos) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57.7 51.4 44.4
Nucleo mobile lines (thousands)(*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,301 2,149 1,878
Broadband accesses (thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,629 1,550 1,380
ARPU (Argentine pesos)(**) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.3 87.0 76.1
(*) Wimax lines included.
(**) The calculation method was updated in order to exclude, from the customer base, the internet sticks sold to customers who already have
ADSL access.
❖ MARKETING
Fixed Services
The residential fixed line business grew moderately in voice services based on the increase in the sale of
subscription plans with monthly charges and the sale of supplementary services. Telecom Argentina has
concentrated its efforts on satisfying its customers access demand, and increasing the ARBU (Average Revenue
Billed per User). Regarding voice Value-added Services (VAS), focus was placed in the sale of VAS package offers
and line maintenance service. Additionally, the portfolio of “Aladino” handsets was expanded.
In the Internet business, the leadership of the brand “Arnet” was based on effective communication with
differentiated offers by segment and competitive prices. Also, the portfolio of access speeds available to
customers was expanded during the year. With respect to VAS on broadband access, during 2012 focus was
placed to increase the penetration of VAS by the expansion of the service portfolio such as: offers that combine
mail, calls and Internet; Arnet Móvil (which provides access to Internet through the Personal 3G network) and
Arnet Play (a video-streaming service for residential customers).
Corporate segment continued its strategy of providing converged solutions that integrate voice, data, Internet,
multimedia, ICT, data centers and applications.
40

Mobile Services
Product and service offers developed during 2012 were focused on increasing customer acquisition and loyalty
since the implementation of number portability in March 2012. With respect to high value customers, Personal
continued to expand its portfolio of plans, adding a benefit that allows unused minutes during one month to be
used in the next month and by launching innovative handsets. Also, Personal continued with the strategy of
recharge benefits and differential benefits for members of Club Personal, Personal’s loyalty program. Additionally,
the benefit “Grupo Familiar” was launched, which is available for all lines belonging to the same family, by
enabling them to talk and send SMS for free between themselves. Finally, Personal continued offering unlimited
Internet per day (US$1 per day), a disruptive offer that allowed Personal to be considered as the industry
benchmark.
With respect to Núcleo, during 2012 new packaged offers of voice, messages and data for the prepaid segment,
and tailored plans for postpaid and Plan Control segments were launched. In addition, Núcleo consolidated its
leadership in mobile Internet based on packaged offers for prepaid customers, at competitive prices. At strategic
level, Núcleo performed retention and loyalty actions for high value customers, mainly through a major campaign
to replace handsets. Finally, in the fourth quarter of 2012 Núcleo focused its actions in connection with the
implementation of the number portability, assuming the role of educating the market regarding the benefits of
portability.
❖ DISTRIBUTION
During 2012, Arnet continued with multimedia communication campaigns that further served to strengthen brand
positioning. With respect to web sites, their main target was to become a channel for the exploration of Telecom
Argentina products and services and for the improvement of the relationship with its customers. The web sites
focused on communicating in real time all the brand offers, creating a digital experience with both Arnet (Internet
products and services) and Telecom (voice products and services) products, and enriching customer self-
management. In this regard, during November 2012 “Mi Cuenta” (My Account) was launched, a web site that
allows clients to view information and perform several tasks in a simple way.
During 2012 Personal’s sales offices strengthened its model of management, with a focus on client counseling and
education based on the sale of value added products, handsets upgrade and improved technology.
In addition, Personal opened new sales offices with a renewed design nationwide and the restyling, expansion and
relocation of certain existing offices. The direct sale channel reinforced the comprehensive customer care to high-
value customers, while the indirect sale channel “Agents” continued to increase, mainly based on the sale of VAS
and smartphones.
Also, during 2012, Núcleo promoted self-management by its clients through the launch of the web portal “My
Personal World” and by nontraditional channels such as social networks, SMS, chat and email.
For the main regulatory developments on the Argentina Business Unit which occurred in 2012, please see “Item 4.
Information On The Telecom Italia Group—4.3 Regulation”.
❖ COMPETITION
The telecommunications markets in Argentina and Paraguay continue to show strong demand for new services
and higher access speed in a fiercely competitive environment in the different business segments.
Specifically, in the mobile segment in Argentina, Personal is one of three operators offering services at the
national level and competes with Claro (America Móvil group) and Movistar (Telefónica group). Following the
introduction of number portability in 2012 competition has intensified. The acquisition and retention of high-value
customers will continue to be central to Personal’s strategy, which intends to lend support to mobile use through
the launch of new products and services that not only enable retention of existing customers, but also put
Personal in the position of being the preferred operator in the mobile sector in Argentina.
41

In Paraguay, Núcleo, operates in a market featuring strong competition, especially since the implementation of
number portability in Paraguay in November 2012. Its main competitor is Tigo (Millicom group).
In the broadband segment, the Argentina Business Unit operates through the Arnet brand and its competitors are
mainly ADSL Speedy (Telefónica group), Fibertel (Clarín group), which offers broadband access services using
cable modems, and Telecentro, which offers triple play plans.
4.2.4 MEDIA
On May 9, 2012 the Board of Directors of Telecom Italia Media approved the decision of the Board of Directors of
Telecom Italia S.p.A. to start the process of selling the Media segment. As a result, in May 2012, a corporate
restructuring was initiated, which resulted in the establishment of La7 S.r.l., a wholly-owned subsidiary of
Telecom Italia Media S.p.A. With effect as of September 1, 2012, the television assets became part of this new
company, through the contribution of a business segment by Telecom Italia Media S.p.A.
Following completion of the above restructuring, the Telecom Italia Media group is now organized into the
following operating units:
– La7: includes the Telecom Italia Media’s operations relating to the television broadcasters La7 and La7d
and the Multimedia/Web area (La7.it and La7.tv) and is being sold;
– MTV group: includes the operations of MTV Italia and its subsidiary MTV Pubblicità relating to the
television broadcasters MTV and MTV Music, the 360° Playmaker production unit, the production of
multimedia musical platforms and satellite channels, in addition to MTV Mobile and Digital (Web);
– Network Operator (TIMB): includes the operations of Telecom Italia Media Broadcasting relating to
managing the digital broadcasting networks of La7 and MTV and the Digital Multiplex channels operated
by the Group, in addition to accessory services and radio and television broadcasting platforms offered
to Group companies and third parties.
As of December 31, 2012, the Business Unit was organized as follows:
OO
• La7 S.r.l. • MTV Italia S.r.l.
• MTV Pubblicità S.r.l.
• Telecom Italia Media
Broadcasting S.r.l.
MEDIA
La7 MTV GROUP NETWORK OPERATOR
The table below sets forth, for the periods indicated, certain statistical data of the Media Business Unit:
December 31,
2012 2011 2010
La7 audience share Free to Air (average during the period, in %) . . . . . . . . . . . . . . . . . 3.5 3.8 3.1
Gross advertising revenues (millions of euros) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 242 208
At December 31, 2012, the three Digital Multiplexes of Telecom Italia Media Broadcasting cover 94.9% of the
Italian population.
42

For the main regulatory events which occurred in 2012 that may have an economic impact on Media Business
Unit, please see “Item 4. Information On The Telecom Italia Group—4.3 Regulation”.
4.2.5 OLIVETTI
The Olivetti group mainly operates in the manufacture of office products and services for Information Technology.
It carries out Solution Provider activities to automate processes and business activities for small and medium-size
enterprises, large corporations and vertical markets.
The Business Unit’s markets are mainly in Europe, Asia and South America.
Effective January 1, 2012, the contact center business and resources of Advalso S.p.A. were sold to Telecontact
Center S.p.A. (a subsidiary of Telecom Italia—Domestic Business Unit), under the project aimed at unitary
management—under the control of Telecontact Center—of the call center activities conducted in the Telecom
Italia Group. Moreover, on June 13, 2012, the shareholders’ meeting of the subsidiary Olivetti I-Jet S.p.A.
approved the wind-up of the company.
As of December 31, 2012, the Olivetti Business Unit was organized as follows (the main companies are indicated):
OLIVETTI
• Olivetti S.p.A.
• Advalso S.p.A.
• Olivetti I-Jet S.p.A.
• European affiliates
❖ COMPETITION
Competition continues to have an adverse effect on Olivetti revenues. It resulted in lower prices for many
products and services reflecting a market subject to significant price pressure. This is also attributable to
customers having reduced their IT budget.
4.2.6 COMPETITION
We face domestic competition in all of our businesses. Competition continues to have an adverse effect on our
revenues as it resulted in lower tariffs for many of our products and services as well as the introduction of flat-
rate pricing plans which have been used to enhance retention efforts but at the same time reducing revenues
from such customers.
For details please see “Item 4. Information on the Telecom Italia Group—4.1 Business—4.1.7 Updated Strategy”,
“Item 4. Information on the Telecom Italia Group—4.2.1 Domestic” and “Item 4. Information on the Telecom
Italia Group—4.2.2 Brazil” and “Item 4. Information on the Telecom Italia Group—4.2.3 Argentina”.
43

Item 4. Information On The Telecom Italia Group Regulation
4.3 REGULATION
The EU regulatory framework
Telecom Italia’s operations in the European Union (“EU”) are subject to the EU framework on
telecommunications regulation which includes directives, regulations, recommendations and communications. As
such, being a member of the EU, Italy is required to implement the directives issued by the EU. Regulations,
however, adopted at the EU level have general application and are binding and directly applicable in each EU
Member States without the need of further national implementation. Recommendations and communications, on
the other hand, are not legally binding although politically important.
The European Commission began liberalizing the telecommunications market to competition in the late 1980s and
early 1990s. In Italy, as well as in all the main EU Member States, liberalization opened up competition of public
voice telephony and public network infrastructure in 1998.
The need for a revision of the 1998 framework emerged from the growing convergence between
telecommunications, broadcasting and information technology. A new EU Regulatory Framework (consisting of
five Directives: the framework; access and interconnection; authorization; the universal service and users’ rights;
privacy and data protection directives) was adopted in 2002, regulating all forms of fixed and wireless
telecommunications, data transmission and broadcasting.
A recommendation adopted in February 2003, on relevant product and service markets susceptible of ex ante
regulation, completed this set of legal instruments. In December 2007, the European Commission (“EC”)
amended this first Recommendation on relevant markets, reducing the previous 18 markets susceptible to ex-ante
regulation to 7: retail access at a fixed location (market 1) and, at wholesale level, call origination at a fixed
location (market 2); call termination at a fixed location (market 3): wholesale (physical) network infrastructure
access (including shared or fully unbundled access) at a fixed location (market 4); wholesale broadband access
(market 5); wholesale terminating segments of leased lines (market 6) and voice call termination on mobile
networks (market 7).
The EU regulatory framework obliges National Regulatory Authorities (“NRAs”, in Italy “AGCom”) to run market
analyses before imposing appropriate obligations on individual operators having Significant Market Power
(“SMP”) according to specific EU guidelines. A company is deemed to have SMP if, either individually or jointly
with others, such company enjoys a position equivalent to dominance, that is to say a position of economic
strength providing the company itself with the power to behave, to an appreciable extent, independently of
competitors, customers and ultimately consumers. Market shares are normally used as a proxy for market power:
while undertakings with market shares of no more than 25% are not likely to enjoy a (single) dominant position,
single dominance concerns normally arise in the case of undertakings with market shares of over 40% and market
shares in excess of 50 % are in themselves, except in exceptional circumstances, evidence of the existence of a
dominant position.
The market analyses carried out by NRAs are subject to the assessment of the EU Commission which, to a certain
extent, can challenge the NRAs findings, having a “veto power” on the definition of the market and on the
identification of SMP operators. As per the choice of remedies the EU Commission has no veto power but can
raise serious doubts after which the “Body of European Regulators for Electronic Communications (“BEREC”) is
required to give an opinion. The EU Commission, BEREC and the NRA involved then have to cooperate to find a
solution within three months. Neither the Commission nor BEREC are able to make a binding intervention. Should
a NRA decide not to amend or withdraw a draft measure after the EU Commissions expresses serious doubts, it
shall provide a “reasoned justification”.
The EU legal framework was revised in November 2007, with the aim of defining a new European regulatory
framework for the sector.
The revision of the framework established a set of rules composed of the “Better Regulation Directive” (Directive
2009/140/EC, amending the “Framework”, “Access” and “Authorisation” directives) and the “Citizens’ Rights
Directive” (Directive 2009/136/EC amending the “Universal Service” and “E-Privacy” directives and the
Regulation 2006/2004 on Consumer Protection Cooperation) to be transposed into national laws of the 27 EU
Member States by May 25, 2011 and by the Regulation—which was directly applicable—establishing the new
European Telecoms Authority BEREC”. The new EU telecoms rules were officially adopted on December 18, 2009.
44

The revised directives were transposed into the Italian legal framework by means of the “Legge Comunitaria
2010” which was published in the Italian Official Journal on January 2, 2012; the Italian Government was
delegated the authority to adopt (within three months) measures aiming at transposing the revised directives. The
Legislative Decrees of May 28, 2012 (n. 69 and 70) transposing the EU 2009 regulatory framework entered into
force on June 1, 2012.
Telecommunication Regulatory Framework in Italy
The legal basis for the electronic communications sector in Italy is as follows:
(i) Law 36 of February 22, 2001 aimed at protecting the population from the effects of the exposure to electric,
magnetic and electromagnetic fields and Prime Ministerial Decree (Decreto del Presidente del Consiglio dei
Ministri—DPCM) of July 8, 2003, which sets up “Exposure limits, attention values and quality goals to
protect the population against electric, magnetic and electromagnetic fields generated by frequencies
between 100 KHz and 300 GHz”;
(ii) the “Electronic Communications Code” (“ECC”), which transposed into national law the EU Access,
Authorisation, Framework and Universal Service directives;
(iii) “Data Protection Code”;
(iv) the “Consolidated Law on Radio-Television” containing the principles regulating the organization of radio-
television system and its convergence with different means of interpersonal and mass communications;
(v) the “Consumer Code”;
(vi) Legislative Decree October 3, 2006, n. 262 which contained “Urgent measures regarding tax and financial
issues” and, partially amended the sanctions’ regime set by the ECC by introducing further examples of
administrative offences, a generalized increase in the fines for each sanction and the elimination of the
partial cash settlements of fines;
(vii) Decree Law January 31, 2007, n. 7 containing urgent measures for the protection of consumers, for the
promotion of competition, for the development of economic activities. The above mentioned law impacts the
electronic communications sector by prohibiting top-up charges and the expiration of phone traffic for
prepaid phone cards;
(viii) Legislative Decree May 30, 2008, n. 109 transposing into national law the EU Directive 2006/24/EC on the
retention of data generated or processed in connection with the provision of publicly available electronic
communications services or of public communications networks;
(ix) Law June 18, 2009, n. 69 providing measures to simplify the procedures for the installation and development
of optical fiber networks (Article 1 “Broadband”);
(x) Decree Law July 6, 2011, n. 98, enacted by Law July 15, 2011, n. 111 further simplifying the procedure for
the installation of small mobile equipment (0.5 sq. radiator area) and low power equipment (7 watt);
(xi) the 2011 Budget Law (Law December 13, 2010, n. 220), regulating the procedures for the issue of 800, 1800,
2000 and 2600 MHz frequencies’ rights of use;
(xii) Decree Law October 18, 2012 n. 179 (enacted by Law December 17, 2012 n. 221) providing for further
broadband network funding to cancel the digital divide, measures to accelerate the roll-out of mobile fourth
generation networks and administrative simplifications for optical fiber layout;
(xiii) Decree Law February 9, 2012 n. 5 (enacted by Law April 4, 2012 n. 35) imposing on Telecom Italia two
further obligations: a) the disaggregation of maintenance costs for lines in unbundling; and b) the possibility
for OLOs to buy ancillary services from third parties;
(xiv) the 2013 Budget Law (“Legge di Stabilità 2013”) modifying art. 96 of the Italian Communication Code
regarding mandatory services required by public authorities to telecom operators for crime prevention and
punishment purposes.
45

Furthermore, the ECC confirmed the responsibilities of the Ministry of Communications and of AGCom as set by
the previous legislation. In particular:
(i) the Ministry is responsible for postal services, telecommunications, multimedia networks, informatics,
telematics, radio and television broadcasts and innovative technologies applied to the communications
sector. In May 2008, the functions of the Ministry of Communications and its resources were transferred to
the Ministry of Economic Development;
(ii) AGCom is an independent regulatory authority granting fair competition among operators and protecting
consumers. It must report on its activities to the Italian Parliament, which set up its powers, defined its
bylaws and elected its members.
4.3.1 TELECOMMUNICATION REGULATION IN ITALY
In July 2008, Telecom Italia proposed to AGCom several undertakings related to its access network
(“Undertakings”) aimed at integrating and strengthening the non-discrimination obligations (imposed by
AGCom in 2002) amongst Telecom Italia’s own retail divisions and other operators in the provision of wholesale
access network services.
AGCom approved Telecom Italia’s Undertakings, which are divided into 14 main groups and pursue four main
goals:
Š offering additional guarantees of equal treatment amongst Telecom Italia’s commercial divisions and other
electronic communications operators (“Operators”) purchasing wholesale access services from Telecom
Italia;
Š providing benefits to Operators and final users, through the improvement in the quality of the fixed access
network and of related services;
Š making the evolution of Telecom Italia’s fixed access network more transparent for Operators; and,
Š ensuring the maintenance of competitive conditions in the migration towards new generation networks.
Following the AGCom approval of the Undertakings, a number of proceedings which could have resulted in
sanctions against Telecom Italia were suspended.
At the beginning of 2008, Telecom Italia created its Open Access department, a separate business unit focusing
its activities on the implementing the Undertakings. To ensure equal treatment for its own retail divisions and
those of the Operators (“internal-external equal treatment”), Telecom Italia undertook a set of activities focused
on three main areas:
Š technical-organizational domain: solutions for the improvement of internal delivery processes and to assure
that SMP services were adopted;
Š cultural-behavioral domain: a Code of Conduct has been adopted and intensive training activities have been
carried out in order to spread the principles of internal-external equal treatment; and,
Š economic-regulatory domain: service contracts were drafted and transfer charges adopted to implement
equality of economic treatment.
The implementation of the Undertakings, their complexity and their impact on the stakeholders’ system, required
the creation of a governance system. In particular, the following bodies were set up: an independent body (the
“Supervisory Board”) and the AGCom Undertakings’ Monitoring Group for the monitoring of the work in
progress (“GMI”) and the Italian Office of Telecommunications Adjudicator (“OTA Italia”), whose mission is to
prevent and settle disputes amongst Operators and the Next Generation Network Committee submitting
possible solutions to technical, organizational and economic issues raised by the transition to the Next Generation
Network.
In November 2011, three years after the formalization of the Undertakings AGCom recognised that Telecom Italia
had fully implemented all the Undertakings and terminated certain proceedings against Telecom Italia that were
suspended following the approval of the Undertakings.
46

At the end of 2012, 45 Operators had joined in the “New Delivery Process” (“NDP”) for Bitstream, 17 Operators
for “Local Loop Unbundling” (“LLU”) and 12 Operators for “Wholesale Line Rental” (“WLR”).
GMI continues to monitor the implementation of the Undertakings.
After the AGCom’s positive assessment and the notification to the European Commission, the access network
operational separation model adopted by Telecom Italia can be considered a new European regulatory model and
a viable alternative to the Access Network Functional Separation adopted by British Telecom (Open Reach).
Telecom Italia’s Operational Separation model will further continue to ensure quality of treatment (both in
economic and technical terms), the promotion of an “Equivalence Culture”, through personnel formation
programs, and transparency to alternative network operators (AltNets) for both Copper and Fiber Access Network.
In July 2012, Telecom Italia submitted to AGCom the undertakings to be applicable to new generation access
network services.
Market analyses
Following a first round (2006-2007) and a second round (2008-2009) of market analyses, in December, 2010,
AGCom started the third round of market analyses reviewing the mobile termination market to define the relevant
market, identifying SMP Operators and setting regulatory obligations on SMP Operators. The final decision was
published on November 2011 containing the new glide path for Mobile Termination Rates (“MTRs”) for the period
from July 1, 2012 to July 1, 2013. With respect to fixed markets, the third round of market analysis on wholesale
and retail access markets was launched in September 2012.
The main developments regarding markets in the electronic communications sector that occurred in 2012 and in
the first quarter of 2013 are described below.
Š Retail-fixed markets
As a result of the first round of fixed retail market analyses, AGCom identified Telecom Italia as SMP operator and
imposed regulatory obligations, including a price cap mechanism and price control.
In particular, the relevant retail fixed regulated markets included: access to the public telephone network
provided at a fixed location for residential and business customers (markets 1 and 2); local, national and fixed-
mobile services markets—retention component only—for residential and non-residential customers (markets 3
and 5, removed from the revised 2007 Recommendation); international telephone services, for residential and
non-residential customers, provided at a fixed location (markets 4 and 6, removed from the revised 2007
Recommendation); leased lines market (market 7, removed from the revised 2007 Recommendation).
At the end of 2009, AGCom concluded the second round of assessment of the international calls market and of
the minimum set leased lines market and deregulated both markets withdrawing all ex ante obligations on
Telecom Italia starting from 2010.
In 2010 AGCom concluded the second round of market analysis of the national retail fixed voice services. As a
consequence, AGCom decided to withdraw all regulatory obligations starting from six months after the publication
of its final decision. In the transitional six-month period (until January 12, 2011), AGCom maintained the
obligation of prior notification of new tariffs. Since January 12, 2011 Telecom Italia has been allowed to fix retail
tariffs without prior notification to or approval by AGCom.
In September 2010, AGCom set new rules for the assessment of Telecom Italia’s retail offers, including non-
standard offers (public tender and tailored top business offers) and bundles (multiple-play offers). The new price
test methodology is based on a replicability test developed on the basis of the following key principles: (i) a
single replicability test valid for offers commercialized in different (both traditional and innovative) contexts,
reference to the most efficient technology and network architecture that could be used by AltNets to replicate
Telecom Italia’s offers and, hence, to a combination of wholesale inputs (ULL, WLR, bitstream, etc.); (ii) the
evaluation of network and downstream AltNets’ costs on the basis of avoidable or long run incremental costs;
47

(iii) application of the price test to the whole bundle, taking into account the overall cost of provisioning without
considering whether each component of the bundle may be replicated by an alternative operator; (iv) ad hoc
assessment of offers within tenders, taking into account the most efficient network architecture that could be
used by AltNets to compete in a specific context. Following the publication of the AGCom document “Circolare
Attuativa” (July 8, 2011), Telecom Italia asked for its revision. AGCom started a preliminary investigation and, in
June 2012, rejected Telecom Italia’s requests, stating that its on-going practice allowed the resolution of the
critical procedural aspects claimed by Telecom Italia.
In 2012, Telecom Italia introduced a set of measures to simplify the tariff structure of the basic offers for both
consumer and business customers. The last step of this simplification path is the new pricing schemes that
Telecom Italia introduced early in 2013. For business customers, starting from January 1, 2013, the basic offer
will consist of a single charge for all national calls, a price reduction for fixed-to-mobile calls and a change in the
connection fee. For the consumer customers’ basic offer, starting from April 1, 2013 Telecom Italia introduced
price simplification based on the introduction of a single price for all national and fixed-to-mobile calls, a change
in the connection fee and the introduction of a discount equal to 50% for all national calls lasting more than three
hours (the pricing is per 60 seconds’ telephone fees charged in advance). The tables below summarize the
standard offers schemes described above:
Business prices (VAT not included)
€cent/minut (VAT not included) Previous prices New prices
(until 12/31/2012) (from 01/01/2013)
Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 0.0
National . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0 0.0
Fixed-Mobile (TIM, Vodafone, Wind, Tre, etc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 3.0
Set up fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.0 €cent 20.0 €cent
Consumer prices (VAT included)
€cent/minut (VAT included) Previous prices New prices
(until 03/31/2013) (from 04/01/2013)
Local and national . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.90 5.0(*)
Fixed-Mobile (TIM, Vodafone, Wind, Tre, etc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0 5.0
Set up fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.94 €cent 5.0 €cent
(*) Over 3 hours/ month, 50% discount.
With respect to the retail access market, AGCom reduced regulatory constraints removing, starting from 2010,
the price cap mechanism used to control residential and business subscriber monthly fees, now subject only to a
price test (see above for details), in order to ensure replicability by an efficient operator. At the same time,
AGCom maintained the obligation to notify prices and conditions 30 days in advance of the commercial launch
(instead of the previous 60 days), but a clause of “tacit approval” at the end of the notice period was introduced.
As for bundling services, the previous prohibition has been withdrawn as a consequence of the increased demand
for Telecom Italia’s WLR offer.
Starting from April 1, 2013, an increase of the RTG consumers monthly fee entered into force (from €16.6/month,
VAT included, to €17.40/month, VAT included) to adjust the fees for inflation; prices of the ISDN monthly fee and
of all business connections’ monthly fees have not been changed. Starting from April 1, 2013, Telecom Italia also
introduced a single fee for the resolution of the contract after the first 12 months. This fee applies to all
customers (consumer and business), whenever the resolution of the contract is not due to Telecom Italia. Such a
fee was reduced from €48.40 or €60.50 VAT included (respectively for the single line/ADSL for anticipated or
contextual resolution of the contract fee of both service components) to €34.90 VAT included.
With the aim to ensure the start-up of Telecom Italia’s commercial optical fiber retail offers, pending the
implementation of NGA regulation (see the “Wholesale fixed markets” paragraph for further details), AGCom
authorized (in December 2012) Telecom Italia to launch NGAN retail offers in areas where NGAN services were
already offered by other operators. It provided that: (i) the service should be offered only in towns where
48

comparable offers by other alternative operators were already in place (Milan, Rome, Turin, Bologna, Genoa,
Naples and Bari); (ii) the maximum number of Telecom Italia connectable customers’ premises should be of
40,000 units; and (iii) wholesale ultra broadband offers shall be provided at prices based on the retail price
reduced by a given percentage in the ranges of 20%-30% (retail minus approach). After 60 days from the approval
of the new NGA wholesale offers, Telecom Italia may launch offers not limited by the above restrictions.
Š Wholesale fixed markets
The first round of market analyses for fixed wholesale markets was concluded in 2006. In particular, the following
markets were analyzed: Call origination (market 8); Call termination (market 9); Transit services (market 10,
removed from the revised 2007 Recommendation); Unbundled access (including shared access) to metallic loops
and sub-loops for the purpose of providing broadband and voice services (market 11); Broadband access (market
12); Terminating segments of leased lines (market 13) and Trunk segments of leased lines (market 14, removed
from the revised Recommendation).
As a result of market analyses, AGCom in 2006 imposed on Telecom Italia, as SMP operator, regulatory measures
including price control in the form of a network cap (except for the wholesale broadband access market).
The network cap mechanism was applied to calculate the prices of wholesale call origination, termination and
transit services and of unbundled network-access services (i.e. Local Loop Unbundling and Shared Access). This
mechanism was also applied to circuits, with the aim of ensuring that cost orientation is used to calculate the
prices of the termination and long-distance circuit segments.
Following the conclusion of the second round of market analyses of the wholesale access market, in December
2009, AGCom confirmed the current regulatory regime applicable to wholesale access obligations on copper
infrastructure (unbundling and bitstream), whereas, with regard to price setting, for the period May 1, 2010 to
December 31, 2012 a network cap mechanism based on a Bottom-Up Long-Run Incremental Cost (“BU-LRIC”)
model was re-introduced. Following the adoption of the above-mentioned cost model, in November 2010 AGCom
set new wholesale rates for the following wholesale services: unbundling, bitstream and WLR and the value of
weighted average cost of capital (“WACC”) related to wholesale access services to be applied from May 2010 to
December 2012. The WACC was set at a value equal to 9.36%. AGCom set the following LLU monthly fees:
€8.70/month as of May 1, 2010; €9.02/month as of January 1, 2011; and €9.28/month as of January 1, 2012.
The increases in the LLU monthly fee and in other wholesale services for the 2011-2012 periods were, however,
conditioned on the assessment, by AGCom, of the parameters related to network quality improvement and to the
updating of Telecom Italia’s access network. Following evaluation by an external auditor, AGCom’s assessments
were positive and, therefore, Telecom Italia was allowed to increase the intended wholesale prices.
Referring to the WLR service, AGCom required Telecom Italia to provide the service, only in the areas where
disaggregated access services are not offered. The price for the service was calculated according to the network
cap method, for the period from May 1, 2010 to December 31, 2012, based on a BU-LRIC model (see above),
instead of the previous retail-minus regime. However, at the end of May 2012, AGCom approved the 2012 WLR
Reference Offer with reference to the technical conditions launching a public consultation at national level on the
WLR monthly fee. The above procedure did not imply any market analysis in contrast, according to Telecom Italia,
to the regulatory certainty principle. In this procedure, AGCom proposed a monthly rental fee equal to
€11.90/month which should be applied from June 1, 2012 versus the €12.88/month previously established. The
AGCom introduced this reduction on the basis of new market conditions which would make the AltNets’ retail
offers based on WLR (in areas not suitable for LLU) non-profitable. In addition to AGCom failing to utilize proper
market analysis in establishing the amendment of the 2012 WLR monthly rental mentioned above, Telecom Italia
reiterated to AGCom the non-existence of competitive issues in the areas not suitable for LLU, in the light of the
fact that, despite a decline in the fixed line market, the WLR service availability was continuously increasing. At
the end of December 2012, AGCom with Decision 643/12/CONS set a monthly rental fee equal to €11.70/month
to be applied from June 1, 2012.
In September 2012, AGCom launched the third round of market analysis on wholesale and retail access markets.
As a result, a new network cap for wholesale access services over copper was supposed to be set for the 2013-
2015 period. However, the decision aimed at defining the new network caps obliged AGCom to impose on
Telecom Italia the obligation to breakdown the costs of maintenance services for the supply of LLU lines and the
49

acquisition of maintenance services from third parties. However, AGCom itself underlined—within the above
decision—that the EU Commission had formally opened an infringement procedure against Italy, in relation to the
possible breach of the Framework Directive (July 2012) since the abovementioned law violates the autonomy and
independence of the National Regulatory Authority. On February 21, 2013, the European Commission issued a
reasoned opinion in which it considered this matter the comments received from the Italian Government as
unpersuasive. As a consequence, the Italian Government shall, within two months, comply with the EU reasoned
opinion and change the law accordingly. The Italian Government preliminarily discussed in March 2013 and is
going to approve—within the decree law aimed at transposition in the Italian framework the EU rules (“Legge
Comunitaria 2013”)—a specific provision aimed at withdrawing the AGCom obligation to impose on Telecom
Italia the disaggregated offer for its LLU ancillary services independently of its autonomous decision based on a
market analysis procedure. The formal approval of this law by the Italian Parliament is expected to end the
infringement procedure by the European Commission.
Pending the conclusion of the third round of market analyses on the wholesale and retail access markets, AGCom
extended the economic conditions of the wholesale access services published in the Reference Offers approved for
the year 2012(LLU, Bitstream and WLR services).
However, on December 20, 2012, following the request by the European Commission to make the cost positioning
between the LLU, WLR and Bitstream fixed line wholesale services consistent, the Authority launched two public
consultations on the 2013 pricing of WLR services and of Bitstream services, anticipating the results of the
analysis to be carried out during the third round of market analyses in the retail and wholesale access markets up
to 2013. In particular, AGCom proposed the reduction of 2013 Naked Bitstream access monthly fee from 19.50 €
to 17.50 € (-10.3%) while confirming the analogue WLR monthly fee (11.70 €) set for the period June-December
2012. As to LLU, on March 27, 2013 a public consultation was opened aimed at defining 2013 prices. Following
the above public consultation the new prices for shared access, sub-loop unbundling as well as a first increase of
WACC will also be defined. In particular, AGCom decided for submit for public consultation the following ranges
of prices related to the monthly rental fees: 8.62 € - 9.25 € for LLU (9.28 € in 2012), 5.75 € - 6.17 € for sub-loop
unbundling (6.19 € in 2012) and 0.79 € - 0.96 € for shared access (1.35 € in 2012), including a WACC value of
9.83% (currently at 9.36%). As a consequence, due to the above, the third round of market analyses on the
wholesale access market will focus on setting prices and WACC value for the 2014-2016 period (instead of the
2013-2015 period).
In the meantime (March 25, 2013), the Council of State granted the requests filed by Eutelia and WIND, and
issued a decision on the 2010-2012 market analysis setting the fees for WLR and Naked Bitstream services. The
Council of State focused on the AGCom decision to anchor the network cap mechanism for the above mentioned
fees on a retail minus method rather than on a cost orientation one, stating that the decision lacks proper ground
and rationale. AGCom has to issue a new statement; however the new decision may not necessarily be different
from the previous one, i.e. AGCom can confirm the previous decision providing a more sound legal and
economical ground.
In order to complete the NGAN set of rules published, in February 2012, AGCom opened three proceedings
aimed at introducing: 1) a cost model for the pricing of passive and active wholesale services and the definition of
the so called “NGAN competitive areas” where price of fiber based bitstream and virtual access services are not
subject to the cost orientation obligation; 2) potential regulatory amendments of the copper sub-loop unbundling
service in light of the possible introduction of the vectoring technology on “Fiber To The Cabinet—Very High-
speed Digital Subscriber Line” (“FTTCab-VDSL”) accesses; and 3) the perspective enforcement of symmetric
obligations on all operators, for the access to fiber vertical wiring and to building connection segment. In
February 2013, the foregoing proceedings were included in the 3rd round market analysis procedure on wholesale
and retail access markets while on March 28, 2013 a new public consultation was opened on symmetric regulation
for the access to fiber vertical wiring and to building connection segment.
On February 28, 2013, AGCom approved with modifications Telecom Italia’s first NGA Reference Offers for passive
infrastructure access and wholesale broadband access. For 2012 AGCom approved, among other things, lower
than initially proposed monthly fees for the new local level Ethernet bitstream access product (VULA). In details,
the monthly rental for VULA over FTTC (30/3 Mbps, naked access) was set at €21.51 (Telecom Italia’s initial
proposal €31.01 with a reduction of -31%) and for VULA over FTTH (100/10 Mbps) was set at €24.90 (Telecom
50

Italia’s initial proposal €38.00 with a reduction of -35%). With respect to the hi-house fiber wiring, actual
bottleneck of the NGA distribution network, the monthly rental fee was set at €5.96 compared with the Telecom
Italia’s proposal equal to €9.50 (with a reduction of -37%).
With respect to migration between operators, AGCom revised fixed-line customer migration rules,
substantially reducing the processing times (reduced to five days as of March 2010) for the donating operator to
verify the recipient’s migration request (so called “Phase II”). Moreover, in cases where migration is not
requested, the user will have the right to restore, free of charge, the previous configuration within five working
days. Furthermore, in order to prevent the activation of services not requested by retail customers fixed-line
operators introduced (starting from February 2011) an individual security code provided to the customer when
they sign the contract for the access service. Finally, with Decision 62/11/CIR, published on July 2011, the daily
capacity of each operator for the migration order management has been increased by 60%.
The regulatory framework should gradually reduce the above-mentioned timeframe.
With reference to fixed call termination and origination, in April 2011, AGCom approved fixed interconnection
charges from July 1, 2011 to the end of 2013 (prices provided for call origination were set equal to the ones for
call termination). In particular, with respect to fixed termination rates (FTRs) of both Telecom Italia and AltNets
having SMP, AGCom set 2011 prices at the same level as 2010, therefore maintaining AltNet’ asymmetric prices
equal to Telecom Italia’s termination charge for the SGT level. Moreover, AGCom deferred to 2012 the application
of symmetric termination fares, equal to Telecom Italia’s tariff at local exchange level (SGU), among the AltNets
and Telecom Italia itself. AGCom, finally, decided that, starting from 2013, only IP termination would be
regulated, with a single symmetric tariff for Telecom Italia and for other fixed network operators, resulting from
the BU-LRIC model to be developed consistent with EU Recommendation 2009/396/EC on termination rates. In
2012, AGCom, approved Telecom Italia’s reference offer for fixed services offered in TDM mode, setting a value of
€ cent 0.272/min for local level (SGU) termination. Moreover, on October 31, 2012, Telecom Italia published its
reference offer for the year 2013 for interconnection services in both TDM and IP technology in line with the
applicable regulatory framework so that the tariffs for IP termination service were regulated while TDM services
were provided on commercial basis. Following a public consultation, in January 2013, AGCom notified to the
European Commission the IP interconnection glide path for the 2012–2015 period, setting the origination service
trend separated from the termination one; previously a unique value was applicable to both the origination and
termination services AGCom proposes to apply a glide path until January 1, 2015 in order to allow operators to
reach the efficiency required by the application of the pure LRIC model; only starting from that date will tariffs
defined through a pure BU-LRIC model be applied to fixed termination rates. With a letter dated February 7, 2013,
the European Commission opened a Phase II investigation into the fixed IP termination rates proposed by the
Italian regulator, because the fully cost oriented rate (€cent 0.043/min) based on a bottom-up pure long run
incremental cost (pure LRIC) model would not be reached before January 1, 2015 contrary to the Commission’s
guidelines. The Commission’s Phase II investigation suspended the adoption of AGCom’s draft measure on IP
FTRs for three months. In the meantime, due to the delay in setting the technical specifications of IP
interconnection the migration towards IP could not be achieved by 2012 as envisaged by AGCom. The “specifica
tecnica ST769” was published on MiSE’s website only on January 8, 2013. As a consequence, the Authority
launched a public consultation to set regulated rates for TDM services for the year 2013.
The legal dispute over fixed termination prices’ asymmetry between Telecom Italia and AltNets for the period
June 2010-June 2011 was decided on May 15, 2012. The Third Section of the Council of State admitted the
appeals filed by some of the alternative operators and by AGCom against the ruling of the Administrative Court of
Lazio which overruled decisions regarding 2010 and 2011 tariffs and overcoming the asymmetries between the
reverse termination tariffs applied by AltNets and the ones applied by Telecom Italia. In brief, the Council of
State, revising the Administrative Court ruling, agreed with the alternative operators’ claims that the differences
existing between Telecom Italia’s network architecture and the alternative architectures, determine different
costs. Fastweb recently appealed against the Council of State decision since, in its opinion, the Court did not deal
with its appeal against the symmetry of termination rates at local level for the year 2012 and should have
cancelled 2012 symmetry. The hearing on the appeal was held on January 25, 2013 and, the Council of State
upheld the complaint filed by Fastweb and revoked the application of symmetry of TDM 2012 termination tariffs
among operators. Consequently, AGCom with Decision 187/13/CONS restored symmetry at national level (SGT)
retroactively for 2012; TI therefore, shall pay to terminate on AltNets’ networks 0.361 eurocent/min instead of
0.272 eurocent/min.
51

Concerning transit services, in April 2010, AGCom identified two markets: (i) local conveyance and transit
market (which includes the single transit service involving only one switch and the transit service between two or
more switches located in the same telephone district and the transit services provided jointly with the originating
or terminating service) and (ii) national conveyance and transit market (including transit services between two or
more switches located in different telephone districts, also when provided jointly with the originating or
terminating service). While the regulation for the national conveyance and transit service markets has been
withdrawn, AGCom maintained the regulation for the local conveyance and transit market.
Regarding the wholesale markets for trunk segments of leased lines and for terminating segments of
leased lines, AGCom, in January 2010, stated that the market for trunk services was competitive and removed all
ex-ante obligations. As to the terminating services market, AGCom identified the following two separate markets:
(i) circuits provided between a Telecom Italia node and end user’s premises (market A); and (ii) circuits provided
between a Telecom Italia node and a mobile operator’s base station (market B). AGCom decided to deregulate
market B, removing existing ex ante obligations starting from 31 December 2010. AGCom, however, identified
Telecom Italia as a SMP in Market A and imposed a network cap for the years 2010-2012.
Š Mobile markets
In February 2009, AGCom confirmed that the wholesale market for access and call origination on mobile networks
should not be subject to ex-ante regulation.
With respect to the wholesale market for voice call termination on mobile networks, AGCom introduced in
November 2008 a four year gradual decline in tariffs, setting the Maximum Termination Rate (“MTR”) for each
SMP mobile network operator and the elimination of asymmetry enjoyed by the third entrant (WIND) in July 2011
(5.3 eurocents/min) and by the last entrant (H3G) in July 2012 (4.5 eurocents/min).
Following this decision, AGCom developed a new cost model for MTRs taking into account the May 2009 EU
Recommendation on the regulation of termination rates. The new cost model was used in the third round of
market review in order to update the values of the glide path (multiyear mechanism of price control) set for
mobile termination rates.
In November 2011, AGCom published its final decision on wholesale prices for voice call termination on individual
mobile networks. The new glide path, based on half-monthly (instead of annual) variations, started from July 1,
2012 and expires on July 1, 2013 with the commencement of a symmetric termination rate for all mobile
operators (0.98 eurocents/min).
Mobile networks vocal termination
eurocents/min.
Prices applied
from 7.1.2011 New glide path
from 7.1.2012 from 1.1.2013 from 7.1.2013
Termination on H3G network . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 3.5 1.7 0.98
Termination on Telecom Italia, Vodafone and Wind
networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 2.5 1.5 0.98
AGCom’s final decision on wholesale prices was challenged before the Administrative Court by Vod/Win/H3G
complaining that it introduced a very steep reduction of MTR; Telecom Italia appealed only against the provision
stating that asymmetry for H3G should end as of July 1, 2013. On January 2013, AGCom, after providing evidence
of the rationale of the above asymmetry in favor of H3G, following two TAR sentences, confirmed the application
of asymmetry to H3G up to June 30, 2013. Telecom Italia has challenged this decision with the Regional
Administrative Court of Lazio.
In February 2013, the Council of State, accepted the appeals filed by H3G, revoked the original 2008 decision to
reduce certain termination rates “due to lack of justification and ad hoc proceeding”. The Council of State
concluded that the termination price decrease introduced by AGCom for H3G in the period November 2008-June
2009 from €cent 16.26/min to €cent 13.00/min was not legitimate. AGCom has not yet issued any decision
following the above judgment.
52

Concerning the wholesale market for SMS termination, as a consequence of a public consultation concluded in
October 2012, AGCom decided not to regulate the above mentioned market because it tends towards competition
over time, and therefore the second criterion of the three criteria test for ex ante regulation could not be
considered as met. Consequently the SMS termination prices continue to be commercially negotiated on a
reciprocity basis among operators.
Mobile number portability (MNP)
On January 7, 2011 AGCom published Decision 147/11/CIR on “Amendment to the regulations on mobile
number portability”. The Decision, among other things, provides that:
Š MNP should be set up by 8.30 a.m. of the second working day following input of the customer’s request in
the recipient operator’s systems;
Š from January 1, 2013, the recipient operator must refund the customer, upon request, in case of delays in
the activation of the MNP, for a minimum of 2.5 euros for each working day of delay, up to a maximum of
50 euros. The refund is not due for delays up to two working days; for delays over two working days, the
refund calculation takes into account all the days late including the first two; and
Š the data of the customers who request the MNP activation is to be treated by the donating operator with
confidentiality and used only for the activation of the service.
International roaming
The new roaming Regulation (531/2012, the so called “Roaming III Regulation”) was approved by the European
Parliament and the Council in June 2012 and entered into force on July 1, 2012.
The Roaming III Regulation provides for the following measures applicable to roaming services within the EU
(extended to European Economic Area countries):
Š transparency measures (such as cut off limit to prevent “bill shock” and info SMS on the applied retail tariffs)
and the adoption of price caps both on voice, SMS and data (retail and wholesale). The retail caps will remain
in force until 2017 and the wholesale caps until the expiry of the new regulation in 2022;
Š the unbundling/decoupling of the roaming services from the domestic services starting from July 2014
(structural solution). In the unbundling scenario, the customer will buy the roaming services (separately
from the domestic services) from an alternative roaming provider (mobile network operator—MNO or mobile
virtual network operator—MVNO/reseller). The definition of the structural solution was delegated to an
implementing regulation by the European Commission;
Š the obligation to provide wholesale roaming access to MNO/MVNO/resellers at regulated prices.
The agreed price caps are the following:
at wholesale level:
WHOLESALE ROAMING III
July 1, 2012 July 1, 2013 July 1, 2014
voice (cent/min) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 10 5
sms (cent/sms) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2 2
data (cent/MB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 15 5
at retail level:
RETAIL ROAMING III
July 1, 2012 July 1, 2013 July 1, 2014
voice out (cent/min) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 24 19
voice in (cent/min) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 7 5
sms (cent/sms) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 8 6
data (cent/MB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 45 20
53

In December 2012 the European Commission published the implementing regulation indicating Single IMSI
(International mobile subscriber identity) and LBO (local break out) as the structural solutions to be implemented
for decoupling. It remains a high level document which delegates to BEREC the definition of guidelines on the
technical elements necessary to enable the separate sale of roaming services and provides for the creation of an
Industry Forum to ensure a coordinated approach among market players, BEREC and the Commission.
Such Industry Forum defined the Technical Specifications of the unbundling solution, whose details are being
further defined by ad hoc technical working groups. The results of the working groups will be used to define
detailed implementation guidelines which BEREC is expected to publish by the end of June 2013.
Long Term Evolution (“LTE”) Frequencies
The so-called “digital dividend” is the allocation of a portion of the broadcasting frequency band to other
telecommunication services. AGCom published guidelines for the frequency national plan aiming at fostering the
release of the digital dividend band (as required by the European Commission Recommendation 2009/848/EC of
October 28, 2009) at present allocated to a large number of local broadcasters (about 600).
On December 7, 2010, following the approval of the 2011 Financial Bill, ACGom and the Ministry for the Economic
Development—Communications Department launched the process to award, by means of a tender, radio
frequencies’ rights of use to be assigned to broadband mobile electronic communication services.
On June 10, 2011, AGCom published its decision regulating the procedures aiming at issuing the 800, 1800, 2000
and 2600 MHz frequencies’ rights of use. Finally, on June 27, 2011, the Ministry for the Economic Development
published the “Invitation to Tender” for the award of the frequencies’ rights of use.
The minimum tender rates for each frequency lot were as follows:
BAND
Minimum rate
per lot (in euros)
800 – FDD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353,303,732.16
1800 – FDD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,869,293.60
2000 – TDD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,934,646.80
2600 – FDD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,668,726.75
2600 – TDD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,802,472.10
The Ministry for the Economic Development granted Telecom Italia the right to file offers for the use of
frequencies.
On October 3, 2011, the Ministry for the Economic Development—Communications Department awarded Telecom
Italia two 2x5 MHz standard blocks at 800 MHz each, a 2x5 MHz block at 1800 MHz and three 2x5 MHz standard
blocks at 2600 MHz each. Telecom Italia’s total investment amounts to 1.223 million euro, net of a 38 million
euros discount due to Telecom Italia’s commitment to implement the new networks using more than 50%
environmental sustainable equipment. Given this discount, a specific credit guarantee was set up.
On November 3, 2011, Telecom Italia made a payment of 767 million euros for the award of the above-mentioned
frequency blocks and established a five-year guarantee of the remaining 456 million euros to be paid.
The rights of use, formally awarded by the Ministry on October 3, 2011, were allocated on February 2012.
The 2600 MHz band can be used starting from January 1, 2013; at the beginning of January 2013, the Ministry
communicated that the 800 MHz band is also available to be used.
54

Quality of services of broadband internet access at fixed location
Since November 2008, the operators have been required to provide information about the service level of internet
access services at a fixed location:
Š operators must state their minimum standards of service quality (including the minimum connection speed)
and other information about the characteristics of the access. Subscribers can terminate their contract if the
quality of their connection is below the claimed minimum standards;
Š operators shall undertake statistical measurements at regional level (for example speed data transmission;
delay; rate of packet loss). At present, this activity has been taken in 15 regions and will be gradually
extended to all 20 Italian regions.
Since the autumn of 2010, customers have been able to measure the quality of their broadband connections.
AGCom has also introduced a super-partes agency verifying operators’ measurements.
Quality of services of broadband internet access within mobile network
In February 2011, the NRA launched a working group with operators to measure the quality of data service
provided by mobile networks.
The working group developed “drive test” campaigns to be performed every six months in the main cities of all
Italian regions. In the June—October 2012 period an experimental campaign was conducted aiming at refining
the data gathering process. Currently the first campaign is in progress and the results will be available by
September.
Universal Service
The Universal Service is a minimum set of services of a certain quality, which shall be made available to all
customers, regardless of their geographical location and shall be offered at a reasonable price, taking into account
the specific national conditions,. To date, Telecom Italia is the only operator with the obligation of providing the
Universal Service (“USO”) throughout Italy.
A fund, set up by the Ministry of Communications, is used to contribute to finance the net cost for the provision of
Universal Service. All the main companies in the sector including Telecom Italia contribute to the above fund.
The net cost of providing the Universal Service is calculated as the difference between the company’s net cost
when it is subject to the obligation of providing the Universal Service and the net cost of the same operation
should the obligation not exist. It is AGCom’s responsibility to verify the net cost of the Universal Service.
In March 2008, AGCom published a Decision introducing a new method of calculating the net cost based on
historical cost accounting (the previous was based on current cost accounting) in order to reduce the net cost for
the provision of Universal Service. Such a calculation affects credits related to the Universal Service net cost for
the years 2004, 2005 and 2006 which have been re-calculated and submitted to AGCom under the new
methodology.
With Decision 153/11/CIR, AGCom assessed the 2004 net cost for universal service. The Authority decided the
applicability of the sharing mechanism and assessed the net cost for the year 2004 was 25.9 million euros. The
contribution rate due by other operators (Vodafone, Wind and Fasteweb, Teletu Italia and BT) amounts to
8.7 million euros.
With Decision 139/12/CIR AGCOM completed the process for the evaluation of the 2005 net cost of universal
service. The Authority established the applicability of the sharing mechanism and determined the net cost for the
year 2005 in total 25.6 million euros. The contribution rate due by other operators (Vodafone, Wind and Fastweb,
Italy TeleTu and BT) amounted to 10.3 million euros.
Net costs calculations for the years 2006, 2007, 2008, 2009, 2010, 2011 and 2012 have been submitted by
Telecom Italia to AGCom. At present the independent auditor appointed by AGCom is verifying 2006 calculations.
55

In September 2011, with Decisions 106, 107, 108 and 109/11/CIR, AGCom confirmed the amounts to be paid by
Vodafone for the years 1999-2003. Vodafone filed new appeals against those decisions with the Council of State
(Consiglio di Stato) and with the Administrative Court of Lazio. The sums in discussion (except for the amount for
2001 which is not the subject of appeal) amounted to approximately 37 million euros.
With Decision 153/11/CIR AGCom completed the 2004 US net cost evaluation process. Vodafone and Fastweb
filed an appeal with the administrative regional court. The date of the hearings to deal with the merits have not
been fixed yet.
Public Telephony
In April 2010 AGCom confirmed that the criteria regarding the distribution of public telephones on the national
territory was no longer consistent with current social needs and removed “quantitative” obligations for Telecom
Italia. As a result, Telecom Italia was authorized to remove public telephones after consultation with local
municipalities and interested citizens. Since 2010, approximately 25,000 public telephones have been removed. At
the end of 2012 the total number of public telephones in place amounted to around 90,000.
Accounting separation and fixed network cost accounting
SMP operators are required to have a transparent accounting system as to their costs. These operators shall
provide AGCom annually with both a description and a report on their cost accounting system to assess their
compliance with the requirements of the electronic telecommunications regulatory framework. Moreover, SMP
fixed and mobile operators must keep a separate accounting system separating the activities in each of the
relevant wholesale and retail markets defined by AGCom according to the periodic market analyses.
The “rules” on regulatory accounting in Italy are set in accordance with EC Recommendations, particularly with
Recommendation on “Cost Accounting and Accounting Separation”, issued on September 2005.
Changes in the regulation on cost accounting and accounting separation follow detailed rules set out in periodical
market analyses.
The weighted average cost of capital employed was set by the AGCom at 9.36% nominal pre-tax in December
2010; Telecom Italia stated that this underestimated the cost and caused regulated service’s costs to be
undervalued and asked that the decision be reviewed.
Since 2008 the regulatory asset base includes Telecom Italia’s goodwill which amounts (according to the 2012
statement of financial position) to 30.6 billion euros (approximately 45.8% of the total assets).
Since the services provided by Telecom Italia are capital intensive, decisions related to the perimeter and the cost
of capital are absolutely material: as a matter of fact, according to the regulatory accounting for 2010 (the last
published) the average employed capital for the sole regulated wholesale services amounts to approximately
11 billion euros. As a consequence, increasing WACC by 1% would increase by 110 million euros the reference
cost base for the calculation of prices for wholesale services.
During the first half of 2012, the independent auditors appointed by AGCom to review Telecom Italia’s accounting
separation of the fixed network services for the year 2010 completed their audit and delivered the requested audit
reports to AGCom. Reports of the auditors are approved by means of an AGCom decision; regulatory accounts and
accounting methodology are also published by Telecom Italia on its website.
The regulatory accounting report for the year 2011 was produced during 2012 and delivered to AGCom in January
2013 meeting AGCom’s final approval (December 2012) of new accounting rules regarding internal contracts,
transfer charges and further reporting requirements aimed at complying with the “equivalence” principle.
At present, Telecom Italia is fully compliant with its regulatory accounting obligations.
56

Accounting separation and mobile network cost accounting
In connection with AGCom’s second round of market analyses concerning the “market for the termination of
voice calls on individual mobile networks”, AGCom requested SMP operators to produce economic and
quantitative data related to regulatory accounting methodologies for the purpose of setting new network cap
values. Consultation on the main assumptions of Mobile LRIC model was closed in November 2010.
During 2011, AGCom started a new round of market analyses and stated a new glide path for MTRs for the 2012-
2015 period. AGCom also:
(A) updated the glide path in three steps: 07/01/2012, 01/01/2013 and 07/01/2013 in order to speed up
the process towards symmetric rates; and
(B) clarified the rules to be applied for regulatory accounting.
During 2012:
Š auditing activities regarding accounts at historical costs for the year 2010 ended in March 2012;
Š reports of the auditor were published by AGCom on December 2012;
Š regulatory accounting report for the year 2011 was delivered to AGCom in January 2013, in compliance
with AGCom’s Decisions.
At present, Telecom Italia is fully compliant with its regulatory accounting obligations.
AGCom 2011-2012 fee
In January 2011, AGCom carried out an assessment of the compliance by Telecom Italia and all other
telecommunications companies with respect to their obligation to pay annual fees to the Authority for the years
2006 through 2010. On March 1, 2011, AGCom notified Telecom Italia that the Company had not fully paid its
operating expenses due for the relevant periods, listing additional accounting items which, in its opinion, should
have been included in the cost basis used to make the calculation. Telecom Italia was therefore required by
AGCom to pay an extra sum for amounts not paid in the five years 2006-2010. Telecom Italia appealed this
decision with the Lazio Regional Administrative Court which suspended the terms of the payment until the end of
the proceeding.
On March 3, 2011, AGCom published its decision on the payment of the annual fee for the year 2011 with which
the Authority raised the contribution share from 1.5‰ to 1.8‰ of 2009 communications sector revenues. On
April 30, 2011, Telecom Italia paid (with reservation) an amount equal to 24.2 million euros, calculated
consistently with the reasoning on which it calculated its fees for the 2006-2010 period and, at the same time,
contested the 2011 decision with the Lazio Regional Administrative Court in relation both to the increase in the
level of the contribution and to the broadening of the accounting items to be considered in the cost basis.
With respect to the two appeals filed by the Company, two orders were published by the II Section of the Lazio
Regional Administrative Court in December 2011. These orders suspended the above-mentioned rulings and
referred to the EU Court of Justice a preliminary question, i.e. the assessment of AGCom’s national financing
system consistency with the principles deriving from the EU sectorial Directives. This decision is pending.
On March 28, 2012, AGCom published its decision on the payment of the fee for the year 2012 (Decision
650/11/CONS), setting the calculation methodology on 2.0‰ of 2010 revenues of the communications sector. On
April 30, 2012, Telecom Italia paid (with reservation) an amount equal to 23.0 million euros and challenged
Decision 650/11/CONS before the Regional Administrative Court of Lazio.
Broadband and digital divide
Over the last few years, AGCom introduced several measures aimed at endorsing the development of fixed and
mobile broadband through the provision of simplified procedures to deploy the relevant networks.
57

Particularly important in this respect were laws introducing:
Š a lighter authorization procedure for the deployment of broadband mobile equipment; and,
Š simplified rules for the use of innovative digging techniques (mini-trench) for the deployment of optical
fiber equipment.
In 2010 the simplification process also affected the authorization procedure for the deployment of electronic
communication equipment in protected areas. Since half of Italy is considered as a protected area (“area di
conservazione”), provisions aiming at accelerating digging authorizations are important levers for broadband
expansion throughout the country.
In 2011 new laws were implemented to simplify the administrative procedure for the expansion of small mobile
equipment (0.5 sq. area) and of low power equipment (7 watt). The deployment of mobile equipment falling
within the above-mentioned thresholds was actually exempted from the DIA regime (“Denuncia di Inizio
Attività”—“Commencement Notice”) previously provided for by the Electronic Communications Code and subject
to a simple notification, to be made at the time of commencement of the works.
Further important measures to promote the development of fixed and mobile networks were recently introduced
by means of art. 14 of the Decree Law. 179/2012 “Further urgent measures for the economic development of the
Country”) enacted by Law 221/2012. Particularly—regarding the deployment of optical fiber and cables—the
measures provide for:
Š reducing the terms already established by the Code of the Electronic Communications for the release of
authorizations to dig (copper and fibre both) by reducing the period of the administrative procedure through
introduction of the tacit approval principle;
Š modifying the rules of the roads (“Codice della Strada”) introducing the use of techniques aimed at limiting
the environmental impact by reducing the depth of excavations; and
Š established that telecommunication operators can access common parts of buildings—also without the
consent of the condominium—in order to lay optical fiber.
With reference to the diffusion of the mobile digital technologies, art. 14 modified the criteria for calculation of
electromagnetic field allowing a better use of the electromagnetic power available. The implementation of this
rule is subject to the adoption of a further regulation which is, at present, under discussion.
The new law also improved the simplification introduced by the L. 211/11 granting the possibility to install
equipment up to 10 watts after the provision to City Hall and Arpa of a mere self-certification of activation.
4.3.2 PRIVACY AND DATA PROTECTION
Telecom Italia must comply with Italy’s Personal Data Protection Code (Legislative Decree June 30, 2003 n. 196,
hereinafter as “Privacy Code”), which came into force on January 1, 2004.
The Privacy Code is divided into three parts: (1) general data protection principles; (2) additional measures
applicable to organizations in certain areas, including telecommunications’ services; and (3) sanctions and
remedies.
The Privacy Code applies to all data processing within Italy and also affects organizations not being based in Italy
but using equipment located in Italy, such as computer-based systems.
According to the Code, personal data shall be processed lawfully and fairly, retained accurately and up to date and
must not be excessive or stored for a longer period than needed. Therefore, information systems shall be
configured in order to minimize the use of personal data.
The “data subject” (any natural person that is the subject of the personal data) and the “subscriber” (any natural
or legal person who or which is party to a contract with the provider of publicly available electronic
communications services, or is the recipient of such services by means of pre-paid cards) shall receive preliminary
information on the purposes and modalities of data processing. Consent of the data subject is necessary to
58

process personal data, except in specific cases (i.e. obligations imposed by law or by a contract with the data
subject). Furthermore, the data subject has the right to access his/her personal data and to obtain information on
the purposes and methods of the processing.
Italy’s Privacy Provisions Related to Specific Processing Operations in the Electronic Communications
Sector
With respect to data retention, communications service providers (“CSPs”) are allowed to retain traffic data for a
six-month period in order to deal with disputes over billing and subscriber services. CSPs are also required to
retain telephone and electronic communications traffic data for the purpose of detecting and preventing crimes.
At present, data retention terms for crime prevention and prosecution are: 24 months for telephony traffic (fixed
and mobile); 12 months for electronic communications traffic; and 30 days for unsuccessful call attempts.
Traffic data must be kept and controlled in compliance with general provisions issued by the Italian Data
Protection Authority (“Garante per la protezione dei dati personali”), which requires electronic
communication operators to adopt strict security measures.
Customer profiling in the electronic communications sector is regulated by the Italian Data Protection Authority.
CSPs must obtain the consent of the data subject for profiling based on individual and detailed personal data,
while prior approval of the Italian Data Protection Authority is needed to process aggregated personal data
without the data subject’s consent.
Concerning direct marketing activities, the general rule is the “opt-in system”. Nevertheless Privacy Code also
allows the processing of personal data obtained from directories of subscribers, in order to carry out operator-
assisted telephone calls for commercial purposes; such processing is possible unless the entity entered its
respective telephone numbers in a public “opt-out register”, which came into force on February 1, 2011.
At present, OTT players are benefitting from current regulation. This is especially true with regards to privacy
legislation: indeed, differently from telecom operators, OTTs, in particular from the USA, have significantly fewer
constraints in collecting personal data and using it for marketing purposes. Such a situation provides OTTs with an
important competitive advantage over Telco operators.
Recent amendments
Legislative decrees that transposed the EU 2009 regulatory framework into Italian law, including the revised
e-Privacy Directive, entered into force on June 1, 2012.
The two decrees amended the Privacy Code and the Electronic Communications Code.
These amendments set out that storing information, or accessing information already stored in the terminal
equipment of subscriber/user (i.e. by cookies) shall only be permitted on condition that the subscriber/user has
given his consent. Such a consent shall be obtained by means of simplified arrangements not yet defined by the
Italian Data Protection Authority (DPA). Such simplified arrangements will result from the outcome of a public
consultation (closed last March, 19 2013), taking into account the proposals put forward by consumer
associations and other stakeholders (i.e. industry associations involved). Consent may be given through the use of
specific computer programs or devices which may be easily managed by the users.
Cookies are exempted from the requirement of informed consent, if they satisfy one of the following criteria: i)
are used exclusively for the purpose of carrying out the transmission of a communication on an electronic
communications network; ii) are strictly necessary to the provider of an information society service that has been
explicitly requested by the subscriber/user to provide the above service.
The Privacy Code requires providers of publicly available electronic communications services to adopt technical
and organizational measures that are adequate in the light of the existing risk, in order to safeguard the security
of their services and to take measures when breaches of personal data occur. Such measures must protect
personal data against the risk of their accidental or unlawful destruction or loss and of unauthorized access to the
data or of processing operations that are either unlawful or inconsistent with the purposes for which the data have
been collected.
59

Under the Privacy Code, in case of a “personal data breach”, (i.e., a security breach leading, accidentally or not, to
the destruction, loss, alteration, unauthorized disclosure of or access to personal data transmitted, stored or
otherwise processed in the context of the provision of a publicly available communications service) the provider
shall inform without delay the Italian Data Protection Authority (currently the Italian Data Protection Authority
specified the term in 24 hours for the first communication and in 3 days for the communication of further details
on the personal data breach). Moreover, where the breach is likely to adversely affect the personal data or privacy
of a subscriber or other individuals, the provider must also inform them without delay.
According to new article 70 of the amended Communications Code regarding the information that should be
included in the contract at the user’s request, the provider shall include information on:
Š any procedures put in place to measure and shape traffic in a network “in compliance with the right of
protection of personal data of the user” so as to avoid saturation of the network; and
Š on how those procedures could impact service quality.
4.3.3 ANTITRUST IN ITALY
Legislation on competition
Telecom Italia is subject to Italian competition law.
Law October 10, 1990 n. 287 (“Provisions aiming at protecting competition and the market”) set up the Autorità
Garante della Concorrenza e del Mercato, or “Antitrust Authority”.
The Antitrust Authority is responsible for:
(i) applying Law 287/1990 and supervising: (a) restrictive agreements; (b) abuses of a dominant position; and
(c) concentrations of enterprises;
(ii) applying, whenever the necessary conditions are met, the relevant EU provisions (i.e., Articles 101 and 102
of the Treaty on the Functioning of the European Union);
(iii) applying Legislative Decree September 6, 2005 n. 206 concerning unfair commercial practices; and,
(iv) monitoring conflicts of interest in the case of individuals holding government positions.
In addition, the Antitrust Authority may (i) adopt interim measures; and (ii) enforce commitments binding upon
the proposing parties in order to dispel identified anticompetitive concerns closing the investigation without any
finding of a violation.
Antitrust Proceedings
For a discussion of the significant antitrust proceedings to which the Telecom Italia Group is a party please see
“Note—Contingent Liabilities, Other Information, Commitments and Guarantees of the Notes to the Consolidated
Financial Statements included elsewhere in this Annual Report”.
4.3.4 ANTITRUST ISSUES AT THE EUROPEAN LEVEL
Legislation on competition
Telecom Italia is subject to the European competition law. European competition policy was developed from the
three central rules set out in the Treaty on the Functioning of the European Union:
1. agreements between two or more independent market operators which restrict competition are
prohibited by Article 101 of the Treaty on the Functioning of the European Union (TFEU or “Treaty”)).
This provision covers both horizontal agreements (between actual or potential competitors operating at
the same level of the supply chain) and vertical agreements (between firms operating at different levels,
i.e. agreement between a manufacturer and its distributor). Only limited exceptions are foreseen in the
general prohibition. The most flagrant example of illegal conduct infringing Article 101 is the creation of
a cartel between competitors (which may involve price-fixing and/or market sharing).
60

2. Article 102 of the Treaty prohibits firms holding a dominant position on a determined market to abuse
that position, for example by charging unfair prices, by limiting production, or by refusing to innovate to
the prejudice of consumers.
3. State aid distorting competition and trade within the EU are prohibited (art. 107 of the Treaty). State aid
is defined as an advantage in any form whatsoever conferred on a selective basis to undertakings by
national public authorities. Therefore, subsidies granted to individuals or general measures open to all
enterprises are not covered by Article 107 of the Treaty and do not constitute State aid. Furthermore,
the EC Treaty provides that in some circumstances, government interventions are necessary for a well-
functioning and equitable economy stating some exceptions and sector specific rules . The “Guidelines
for the application of State aid rules in relation to rapid deployment of broadband networks” state that
public funding of broadband projects is not considered state aid if one of three possible exemption
routes is used: a) the public authority invests under the same conditions that would be applied to a
private investor (MEIP principle); b) the public contribution is limited to the compensation of the
provision of a service of general economic interest (SGEI principle); c) it meets certain conditions
(promoting the economic development of underdeveloped areas, promoting the execution of an
important project of common European interest or to remedy a serious disturbance in the economy of a
Member State, facilitating the development of certain activities or areas, promoting culture and heritage
conservation.
The Commission is empowered by the Treaty to apply these prohibition rules and holds a number of investigative
powers to that end (e.g. inspection at business and non-business premises, written requests for information, etc.).
It may also impose fines on undertakings which violate the EU antitrust rules. The main rules on procedures are
set out in Council Regulation (EC) 1/2003.
Since May 1, 2004 all National Competition Authorities have also been empowered to fully apply EU Antitrust
rules (i.e. Articles 101 and 102 of the TFEU) in order to ensure that competition is not distorted or restricted.
National courts may also apply these provisions in order to protect the individual rights conferred on citizens by
the Treaty.
State aids rules, on the contrary, can only be applied by the European Commission.
As part of the overall enforcement of EU competition law, the Commission has also developed and implemented a
policy on the application of EU competition law to actions for damages before national courts. It also cooperates
with national courts in order to ensure the coherent application of the EU competition rules within the Member
States.
Main Antitrust proceedings pending in front of the European Commission
On February 2011, Telecom Italia and the Autonomous province of Trento (“PAT”) signed a MoU to establish a
Public-Private Partnership for NGAN (fiber optics) deployment in the Trentino region (around 150,000
households). The Public-Private Partnership is based on a market-driven approach (no state aid) and should allow
a shorter time to deployment for the Trentino region an area where only one broadband network operator is
present). The project foresees the participation of PAT, Telecom Italia and other industrial partners. A newly
established corporation (“Newco”) (the “Trentino NGN Joint Venture”) will deploy a fiber network (dark fiber)
based on a FTTH 3-GPON architecture and will sell accesses to any Telco/ISP operator based on equivalence
principles. Telecom Italia will confer network assets useful for NGAN deployment and will have the possibility to
acquire a majority stake or 100% stake of Newco by exercising a call option awarded to it by a shareholders’
agreement that will govern the public-private partnership.
On July 25, 2012, the European Commission opened an investigation aiming at assessing compliance of the
Trentino NGN Joint Venture with European rules on State aid.
The proceeding is aimed at assessing the compliance of the project with the MEIP principle as was in the
intentions of the parties. The parties, in fact, have not notified it as State aid nor are interested in an assessment
concluding that the project results in State aid compatible with EU rules. The purpose of the investigation is to
assess whether there is State aid (Phase I) and, in case it is concluded that there is State aid, whether such aid is
compatible with the relevant EU Rules (Phase II).
61

The parties are not interested in going to Phase II, therefore either the Commission states that the project is
MEIP compliant (thus no State aid) in which case the proceedings stop physiologically at Phase I; or, the
Commission considers that the project is not MEIP compliant thus implying State aids. In this latter case the
Commission should normally go to Phase II but this would not happen in this case because the parties would
withdraw the project before the conclusion of Phase I.
Accordingly, if the Commission concludes that the project complies with the MEI principle, it will close the
investigation and declare that there is no State aid.
If, on the other hand, the European Commission assessment recognizes the existence of an economic advantage
for Telecom Italia and, hence, State aid, it would normally further evaluate whether the aid is compatible with the
internal market. In this case, if the Commission concludes that there is State aid the parties will withdraw the
project. This has little impact on the business of Telecom Italia as a whole as the project is a pilot which could be
replicated in case of positive outcome but would not have negative consequences in case of withdrawal.
PAT submitted its brief on the Commission’s assessment on November 22, 2012. Telecom Italia requested an
extension of the deadline and submitted its brief on December 3, 2012. Telecom Italia explained its position to
the Commission in an ad hoc meeting on December 5, 2012.
PAT has subsequently had access to the complainants’ objections on the Commission’s assessment on January 29,
2013. PAT filed with the Commission its reply to the latter objections on March 1, 2013. The parties are confident
that their submissions will dispel the Commission’s concerns and will be available to provide any further
information and/or clarification on this issue, being also available to discuss with the Commission possible
modifications of the project to overcome Commission’s eventual residual doubts on the applicability of the MEIP
principle.
4.3.5 TELECOMMUNICATION REGULATORY FRAMEWORK IN BRAZIL
Telecom Italia Group’s operations in Brazil are subject to the 1997 General Law on Telecommunications (Lei Geral
de Telecomunicações—”LGT”) and to a comprehensive regulatory framework for the provision of
telecommunications services adopted by the Regulatory Agency for Telecommunications—Agência Nacional de
Telecomunicações (“ANATEL”).
ANATEL is responsible for the regulation and implementation of national policies in matter of
telecommunications. It is a quasi-independent body (the relationship with the Ministry of Communication is
institutional, but not hierarchical) enjoying financial and operational autonomy and a wide range of functions and
powers, to ensure competition and to avoid concentration of services. The board members have a fixed term, are
selected and appointed by the President under approval by the Senate.
ANATEL has the power to impose restrictions, limitations or conditions on concessions, permits or authorizations.
ANATEL has the authority to propose and issue legally binding regulations on telecommunications service
providers. The rules issued by ANATEL are subject to periodic updates. Any proposed regulation or action by
ANATEL is subject to a period of public consultation, which may include public hearings, and can be challenged in
Brazilian courts.
ANATEL privatized the former public monopolistic operator and progressively opened the market to competition,
in addition to promoting universal access to basic telecommunications services.
With regard to the operational activity of TIM, Intelig and TIM Fiber, ANATEL developed regulations for mobile
communication services (“SMP”—Personal Mobile Services), fixed communications services (“STFC”) and data
transmission and multimedia services (“SCM”).
In October 2008, ANATEL approved the proposed “General Update Plan in Telecommunications Regulation”
(“PGR”) aiming at planning the actions to be promoted by ANATEL for the next ten years, in order to update the
regulation of telecommunications in Brazil. Implementation of the Local Loop Unbundling and Virtual Mobile
Operators were included in the expected short-term actions by the PGR.
Number portability was introduced in Brazil beginning in September 2008 and became fully operational in March
2009.
62

The exploitation of mobile services by Mobile Virtual Operators, based on commercial agreements between
established operators and virtual operators was introduced in 2010.
Authorizations
ANATEL carried out the privatization of the former public monopoly operator and gradually opened the sector to
competition, in addition to fostering universal access to basic telecom services. According to the General
Telecommunications Law and to the regulations issued by ANATEL, licenses to provide telecommunications
services are granted either under the public regime, by means of a Concession or a Permission, or under the
private regime, by means of an Authorization. Only certain fixed-line service providers are currently operating
under the public regime (Telefónica, Embratel and Oi, commonly referred to as “Concessionaires”). All the other
telecommunications services providers in Brazil are currently operating under the private regime, including all the
mobile and data service providers.
Since the launch of GSM mobile services in 2002, four main players operate in the mobile market (Claro, Vivo, Oi
and TIM) and compete nationwide. Third generation mobile services deployment started in 2008 while the
deployment of fourth generation mobile services started in 2012.
The authorizations for fixed and mobile services give the Telecom Italia Group (which operate under the brand
names TIM, TIM Fiber and Intelig) coverage of the entire Brazil allowing to provide fixed, mobile, long distance
and multimedia services.
According to Brazilian law, Internet access is considered a value-added service, and providers of Internet services
are not considered to be telecommunications operators. The rules require that all telecommunications services’
operators allow network access to any interested party to provide value-added services, without discrimination,
unless technically impossible. The voice service providers can also provide value-added service through their own
networks.
Interconnection rules
Telecommunication operators must publish a public interconnection offer highlighting both economic and
technical conditions and are subject to the “General Interconnection Regulatory Framework” enforced by ANATEL
in 2005.
The interconnection charges for fixed network (“TU-RL”) amount to a percentage of retail prices for the
incumbent operators. Alternative operators (including TIM) can apply asymmetrical interconnection rates
exceeding up to 20% the one applied by the incumbents.
The values of mobile interconnection rates (“VU-M”) are freely negotiated by operators. The National Regulatory
Authority has, however, arbitration power in case of disagreement being able to determine a reference value
according to criterion set up by regulation.
Interconnection agreements are subject to prior approval by ANATEL.
National Broadband Plan
In May 2010, the Brazilian government approved a National Broadband Program to extend national broadband
coverage by 2014. The plan includes the reactivation of Telebras, responsible for managing and operating a
national fiber network, and a new framework aimed at reducing the wholesale connectivity price and consequently
allowing a more affordable price of “entry level” broadband residential connections.
Other measures in the plan are represented by fiscal incentives to induce the operators to offer broadband access
to low income families, public investments in research and financial support to national industries.
63

Main regulatory developments
Fixed Termination Rates
In May 2012, ANATEL approved a new regulation on fixed termination rates setting local interconnection rates in
case of a traffic unbalance of at least 75% of traffic exchanged amongst fixed network operators. Fixed networks
will only remunerate each other when there is a 75%-25% imbalance of interconnection traffic (previously, it was
55% versus 45%). Below that threshold a system of “bill and keep” applies.
ANATEL also decided that starting from January 2014, the Bill and Keep system will generally apply, i.e., all
operators take rights of tariffs generated on their networks, and no interconnection remuneration will be in place.
Leased Lines
In May 2012, ANATEL approved new regulations on Wholesale Leased Lines (EILD).
Operators holding a significant market power are obliged to provide EILD at a reference price 30% lower than the
one previously practiced. The provision of “special” Leased Lines, at a higher price than the standard lines, should
be amply justified and limited to requests requiring larger investments or, only in case of copper lines, when the
premises are located far from the central offices. Existing contracts shall be adapted to the new ANATEL
provisions.
Suspension of new sales because of alleged service complaints
In July 2012 ANATEL suspended the sales of new mobile plans by the three main carriers in certain states,
because of alleged consumer complaints about dropped calls and spotty coverage, ANATEL imposed the
suspension of new sales in various states to Oi (in 5 states), TIM (19 states) and America Movil SA’s Brazilian unit
Claro (3 states). Together, the three companies represent about 70% of Brazil’s mobile market.
The suspension was an unusually strong sanction and one of the toughest measures ever taken by ANATEL.
The companies had 30 days to present investment plans to regulators showing how they’ll improve service. Only
after plans’ approval, sales were resumed.
The operators committed themselves to invest in improving the quality level of mobile services in the next
two years. The plans submitted by the operators cover all states and the Federal District, and include investments
in network improvements, improved customer service and reduced service interruptions. The providers showed
improvement proposals detailed state by state, including measures to ensure quality of service and networks.
As a consequence, in August 2012 ANATEL lifted the ban on new sales of mobile phone plans for the
three carriers, considering satisfactory the investment plans to ensure better service and coverage.
In February 2013 ANATEL released the first quarterly review of the National Action Plan to Improve the Provision
of Personal Mobile Service. The above review includes the assessment of the first three months of long-term plans
submitted by providers to ANATEL to improve services. The evaluation will be continuous over two years.
The report was released after detailed analysis of the results presented between August and October last year.
Assignment of frequencies in the 2.5GHz and 450MHz bands
In June 2012, the auction for the allocation of radio frequencies in the 2.5GHz band was held. Together with the
2.5GHz frequencies, enabling 4G/LTE applications, a portion of frequencies in the range of 450MHz was assigned.
Since no bidder was interested in separately acquiring frequencies in the 450MHz band, because of the lack of
standards and the burdensome coverage obligations, frequencies were then assigned, along with coverage
obligations, to the 2.5GHz frequency winners.
64

TIM Brasil was awarded a 10MHz block of national spectrum and 6 regional licenses in the 2.5GHz band bidding
approximately 148 million euros.
Telefónica Brazil (Vivo) was the largest bidder in the auction, agreeing to pay approximately 407 million euros for
20MHz of national 2.5GHz spectrum.
Claro was awarded 20 MHz and 19 regional licenses vis-à-vis a fee of approximately 383 million euros.
Oi, part-owned by Portugal Telecom, was awarded a 10MHz block of national spectrum along with 11 regional
licenses bidding approximately 154 million euros.
Coverage obligations:
Š 450MHz: by December 31, 2015, rural areas within 30 km from the City Hall covered with voice and data
services;
Š 2.5 GHz: by December 31, 2016, gradual coverage by means of 4G services of the cities with more than
100,000 inhabitants (starting from the cities involved in the 2014 FIFA World Cup).
Cost models’ implementation
In 2005, ANATEL issued a ruling for “Accounting Separation and Cost Accounting”, introducing on license holders
and groups holding Significant Market Power in the offering of fixed and/or mobile network interconnection and
wholesale leased lines (“Exploração Industrial De Linha Dedicada”—”EILD”) the obligation to present the
Accounting Separation and Allocation Document (“Documento de Separação e Alocação de Contas”—”DSAC”).
Starting from 2006 (for fixed operators) and 2008 (for mobile operators), operators (TIM included) are providing
ANATEL with the requested information.
In August 2011, ANATEL launched a project called “Modelo de Custos”, setting up a consortium of consultants
(Advisia, Analysys Mason, Grant Thornton) in charge of developing, within two years, the cost model for fixed and
mobile networks for communications services.
Between July and August 2012, ANATEL held a public consultation on the conceptual approach and
recommendations for the construction of the Long Run Incremental Cost model for fixed and mobile networks.
By 2014, when the cost model will be available, ANATEL should have an instrument for the effective application of
the obligation of cost orientation for the development of regulated wholesale services.
General Competition Plan (“PGMC”)
In November 2012, ANATEL published the General Competition Target Plan (PGMC), introducing tools for market
analysis, for the identification of operators with market power and for the consequent imposition of asymmetric
measures.
The approval of the PGMC represents a milestone in the development of the Brazilian regulation, which is
gradually evolving towards a model based on market analysis and towards the application of ex ante regulatory
obligations in presence of obstacles to the competition development.
The decision opens significant market power operators’ fixed networks to unbundling and wholesale broadband
access, and improves transparency measures by the creation of a Supervisory Board to ensure the respect of the
wholesale service quality levels.
Fixed networks in fiber optics will benefit from a regulatory holiday of nine years, which will have to be confirmed
in four years, when PGMC will be revised.
In each market, ANATEL imposed a set of asymmetrical obligations to operators having significant market power.
65

The most important measure imposed in the fixed access market is the further opening of wholesale fixed
networks through the introduction of access obligations on copper networks (eg, Leased Lines, bitstream
unbundling) for the vertically integrated, fixed operators having significant market power: Oi, Telefónica and
Telmex.
TIM Brasil was appointed as significant market power operator in the wholesale markets of mobile termination,
national roaming and the access to ducts and trenches. The measures applied to the significant market power
operator in those markets, include:
Š a glide path on mobile termination rates for the 2013-2015 period, based on a price cap system, with a
decrease of almost 50% in the next three years;
Š the obligation to offer the service of national roaming to operators not having significant market power:
regional licensed CTBC and Sercomtel and national licensed Nextel.
The obligation to offer the access to own ducts and trenches.
Mobile interconnection rate glide path
As a result of the November 2012 decision by ANATEL on market analysis (PGMC), the “full billing” of the
exchanged traffic was maintained amongst the undertakings considered as having significant market power in the
market of mobile interconnection (Claro, Oi, TIM and Vivo), whereas the partial bill and keep will be applied
amongst operators being designated as having significant market power and operators not designated
(Sercomtel, CTBC and Nextel).
The imbalance between incoming and outgoing traffic over which the termination fee will be paid amongst
operators being designated as having significant market power and operators not being designated will be 80%
from January 2013 to February 2015. From that date, it will decline to 60% until February 2016, when the “full
billing” methodology will be applied again.
ANATEL also modified the October 2011 “glide path” to be applied to the reference value of the mobile
termination for calls coming from the fixed networks.
As a result, the expected reduction of MTR, from February 2013, R$0,37/min (approximately €0.14/min) to
R$0.34R/min (approximately €0.13/min) was confirmed: the successive reductions for 2014 and 2015 have been
increased: R$0.25R/min (approximately €0.1/min) in 2014 and R$0.17/min (approximately €0.07/min) in 2015.
From 2016, the values will be cost-oriented and, according to the statement by the ANATEL rapporteur, should
converge to approximately R$$0.10/min (approximately €0.04/min).
Proposal on new allocation of the 700 MHz band
A public consultation proposed by ANATEL on the new allocation of the 700 MHz band was held from February 21
to April 14, 2013. The draft Regulation on Conditions for Use of Radio Frequencies concerns the allocation of the
range of frequency from 698MHz to 806MHz (the so called 700 MHz band), allowing the allocation of the band for
the provision of fourth generation telecommunication services and high speed internet.
Currently, the 700 MHz band is used for broadcasting. The new destination will be possible due to the transition
from analogue TV to digital TV, which allows greater density in the frequency range dedicated to broadcasting,
freeing up more space for the provision of telecommunications services.
The decision should be approved and released in the first half of 2013. The auction for the allocation of the
frequencies to the mobile operators is expected by the first half of 2014.
4.3.6 TELECOMMUNICATION REGULATORY FRAMEWORK IN ARGENTINA
Telecom Argentina and Telecom Personal operate in a regulated industry. Regulation not only covers rates and
service conditions, but also the terms under which various licensing and technical requirements are imposed.
66

Telecom Argentina’s and Telecom Personal’s activities are supervised and controlled by the “Comisión Nacional
de Comunicaciones” (“CNC”), a governmental agency under the supervision of “Secretaría de Comunicaciones”
(“SECOM”), which is embodied within the Ministry of Federal Planning, Public Investments & Services. The
SECOM develops, enforces and implements policies which are applicable to telecommunications services, reviews
the applicable legal regulatory framework, approves major technical plans and resolves administrative appeals
filed against CNC resolutions.
The Argentinean regulatory framework is mainly featured by:
Š the Privatization Regulations, including the List of Conditions and the Transfer Agreement;
Š the Licenses granted to Telecom Argentina and its subsidiaries;
Š the Agreements on Rates; and
Š various governmental decrees, including Decree n. 764/00, establishing the regulatory framework for
licenses, interconnection, universal service and radio spectrum management, Public emergency law
(law n. 25561) dated January 6, 2002 (regarding, among others, rules freezing fixed telephony rates).
Regulatory Authorities abroad
Núcleo, Telecom Personal’s Paraguayan controlled company, is supervised by “Comisión Nacional de
Telecomunicaciones” (“CONATEL”) the National Communications Commission of Paraguay.
Telecom Argentina USA, Telecom Argentina’s subsidiary, is supervised by the Federal Communications
Commission (“FCC”).
Authorizations
In March 1998, the Argentinean government issued the Decree n. 264/98, introducing a plan for the liberalisation
of the Argentinean telecommunications industry.
This Decree provided for the extension of the period of exclusivity with respect to the provision of Basic telephone
services until sometime between October 8, 1999, and November 8, 1999, depending on the particular region.
The Plan also provided for: (i) the liberalization of public telephone services and (ii) the liberalization of telephone
service in rural areas. In addition, the Plan contemplated that in January 1999, data transmission services within
the countries included in Mercosur would be open to competition, subject to some conditions established therein.
Finally, the full liberalization of local, domestic and international long-distance services took place in November
2000 under Decree n. 764/00. By means of this Decree a new general regulation for full liberalization of
telecommunication services was established, with the approval of new rules for licenses, interconnection,
Universal Services and radio- frequencies spectrum control, allowing each new licensed company to launch its
services in November 2000.
This Decree established a new Regulation of Licenses based on a single nationwide license for the provision of all
telecommunication services to the public, including fixed-line, wireless, national and international services. It also
established a new Interconnection Regulation that includes the obligation to give transparent networks
interconnection and to publish a “Reference Interconnection Offer” (“RIO”) including the infrastructure elements
and services that the dominant operator is required to provide. The commercial conditions for interconnection are
defined by free agreement between the parts, while costs for basic interconnection elements are established in
this regulation.
The main licensees providing local and/or fixed long-distance telephone services in Argentina are, among others,
Telmex, Global Crossing, Comsat, IPlan, Telephone2, Telefónica de Argentina and Telecom Argentina.
Telecom Argentina has been granted non-expiring licenses to provide the following services in Argentina: Local
fixed telephony; Public telephony; Domestic and international long-distance telephony; Domestic and
international point-to-point link services; Domestic and international telex services; Value added services, data
transmission, videoconferencing and broadcasting signal transport services; and Internet access.
67

Telecom Personal, the affiliated company dedicated to mobile services under the brand Personal, has been
granted a non-exclusive and non-expiring license to provide mobile telecommunication services.
Núcleo, in Paraguay, has been granted a renewable five-year period license to provide mobile telecommunication
services in Paraguay as well as Personal Communications Services (“PCS”) and Internet access in specific areas
of the country.
The freezing of rates for fixed telephony
The “Price Cap” regime was the methodology originally applied to calculate changes in Telecom Argentina’s basic
services rates.
Following the 2001 economic crisis, the Public Emergency Law 25561 froze, from January 2002, all tariffs for fixed
telephony services (provided under a concession regime by Telecom Argentina and Telefónica de Argentina), and
explicitly prohibited rate adjustments. In accordance with this Law, in January 2002, rates for Basic telephone
services and long-distance services were converted to pesos and fixed at an exchange rate of P$1.00=US$1.00.
The rates Telecom Argentina may charge in the future will be determined by negotiations between Telecom
Argentina and the Argentine government.
In accordance with the abovementioned Public Emergency Law, a Renegotiation Unit (“UNIREN”) was created,
with the task to renegotiate the rates of all public services.
In May 2004 a Memorandum of Understanding (“MoU”) between the Government and each operator was agreed;
the MoU maintained till December 2004 the same tariff level, and granted the continuity of other contractual
rights.
In March 2006, Telecom Argentina executed a Letter of Understanding (the “Letter of Understanding 2006”) with
the Argentine government pursuant to which Telecom Argentina will be permitted to raise the termination charge
for international incoming calls, increase the time bands for peak-hour rates applied to local and domestic long-
distance calls and incorporate certain modifications to the current regulatory framework.
The Letter of Understanding 2006 contemplated the signing and effectiveness of the Minutes of Agreement of the
Renegotiation upon the fulfillment of certain necessary administrative steps.
As of the date of this Annual Report, such fulfillment has yet to occur, and the Public Emergency Law has been
subsequently extended through December 31, 2013. Also, the freeze of regulated rates still remain in force.
Therefore, the Price Cap regime is suspended and it is unknown if and when it will come back into effect or be
replaced by other rate regulation procedures.
Universal Service (“SU”) Regulation
The obligation to pay contributions to the SU has been in force since January 2001 by the regulation approved by
Decree 764/00 but could not be implemented.
The SU regime created by Decree No. 764/00 was modified in April 2008 by Decree 558/08. In defining SU the
new regulation established two categories: (a) areas with uncovered or unsatisfied needs and (b) customer groups
with unsatisfied needs. It also determined that the Secretary of Communication (SC) would have exclusive
responsibility for the issuance of general and specific resolutions regarding the new regulation, as well as for its
interpretation and application.
The new regime established that the SC will review SU programs which were established under the previous
regulation, granting the continuity of SU programs already being administered and implementing programs that
had been under review. The financing of SU ongoing programs which were recognized as such will be determined
by the SC, whereas telecommunications providers appointed to participate in future SU Programs will be selected
by competitive bidding.
68

The Decree requires telecommunications service providers to contribute 1% of their revenues (from
telecommunication services, net of taxes) to the SU Fund and keeps the “pay or play” mechanism for compliance
with the mandatory monthly contribution to the US Fund or, to claim the correspondent receivable, as the case
may be.
On November 11, 2010, the SC issued Resolution No. 154/10 adopting the methodology for the deposit of the SU
contributions to the trustee’s escrow account. The Resolution includes several provisions related to the
determination of the contributions that correspond to the periods before and after Decree No. 588/08 was issued.
It also states that telecommunication providers may discount the amounts incurred in the implementation of the
SU Initial Programs from the contributions to the SU Fund until the SC determines if those Initial Programs
qualify as such. However, if as a result of the SC’s verification some amounts are not recognized as “Initial
Programs,” those amounts would have to be contributed into the SU Fund or would have to be allocated to
develop US projects previously approved by the SC.
On January 26, 2011, the SC issued Resolution No. 9/11 establishing the “Infrastructure and Equipment
Program.” The Resolution provides that telecommunication service providers can contribute to the projects in this
program only the amounts corresponding to their pending SU contributions under Decree No. 764/00, before the
effective date of Decree No. 558/08.
Incumbent operators have not yet received any set-offs for the services rendered under the SU regime since
2001, and the resolution by the SC of the appeals filed by Telecom Argentina are still pending.
In compliance with Resolution No. 154/10 Telecom Personal contributes to the SU Fund monthly.
In March 2011, Personal submitted to the SC an investment project, pursuant to SC Resolution No. 9/11, for the
development of network infrastructure in locations in the Northern Region of Argentina with no mobile coverage.
This program is still pending the approval of the SC.
“Argentina Conectada” Plan
In October 2010, the Government approved the Plan “Argentina Conectada” setting up a commission for the
coordination of various initiatives to promote digital inclusion and broadband connectivity throughout the
country.
The objectives of the plan are:
Š the extension of broadband services to the majority of the country’s locations by 2015;
Š the deployment and management by Arsat (public operator that so far has offered satellite services) of
a new backbone network, renting fiber from existing operators or by sharing agreements (“swaps”) of
optical fiber;
Š the allocation of public funds of approximately 8 billion pesos (about 1.4 billion euro) within 3 years;
Š the financing of broad band connectivity in schools and libraries through the Universal Service Fund.
Main regulatory developments
Spectrum
In May 2011 a tender for the allocation of frequencies in the 1900 band (called PCS) and 850 MHz bands (i.e.
“SRCM”) was published. The frequencies were returned by Movistar (Telefónica Group), following the merger with
Bell South in 2005 which resulted in it exceeding the limit of 50MHz (spectrum cap) applicable in each region
(North, South, Greater Buenos Aires).
Personal took part in the spectrum auction process and expected to acquire additional spectrum to complete its
“Spectrum cap” throughout Argentina, but, on September 5, 2012, SC notified Personal Resolution No. 71, by
which, as provided for in Article 10 of the List of Conditions, the auction approved by SC Resolution No. 57/11
was canceled for reasons of opportunity, merit and convenience of the Argentine Government.
69

Later in December 2012 two presidential decrees regarding spectrum were issued (decree 2426 and 2427), whose
application will result in:
• the direct allocation to the state-owned company ARSAT of the frequencies that should be awarded, by
means of a mandate to the NRA (SECOM);
• the creation of the virtual mobile operator commercial concept;
• the allocation of the 700MHz (698MHz to 806MHz) and AWS (Advanced Wireless Services—1710-1755 MHz
uplink, 2110-2155MHz downlink) bands to mobile telecommunication terrestrial services;
• the declaration of public interest of the Federal Wireless Network), managed by the Ministry of Federal
Planning, Public Investment and Services, to be executed through ARSAT, under the National
Telecommunication Plan “Argentina Conectada”, which provides the infrastructure necessary for this
purpose, according to the general guidelines established in the Decree’s Annex;
• the instruction to the “Ministerio de Planificación Federal” (Ministry of Federal Planning) being the majority
shareholder of AR-SAT, to adopt the necessary actions and the business decisions of its responsibility for the
execution and delivery of the services required as a result of the development the federal wireless network.
Also, on December 21, 2012, SC published in the Official Bulletin the Resolution No. 222/09 which assigned
ARSAT the telecommunication services license authorizing the state company to provide any kind of
telecommunication services with or without owned infrastructure. It also provided the authorization for the
provision of value-added services, data transmission and transportation of audio and video signals.
By Resolution No. 9/13, published on February 7, 2013, the SC granted ARSAT the registration of Mobile Services
and National and International Long Distance Services and the Provision of Telecommunication Facilities.
Mobile Number Portability Implementation
Mobile number portability was implemented from March 2012; a new Data Base Administrator (ABD) was set up
to track the number portability.
Portability of mobile numbers are to be completed within 10 working days.
4.3.7 BROADCASTING REGULATORY FRAMEWORK IN ITALY
Consolidated Act on Broadcasting (Legislative Decree 177, July 31, 2005) and Legislative Decree
44, March 15, 2010
Broadcasting activity in Italy is mainly regulated by the Consolidated Act on Broadcasting (Legislative Decree
July 31, 2005 n. 177), amended by Legislative Decree March 15, 2010 n. 44 (Decree 44/10), implementing the
Audio Visual Media Services (“AVMS”) Directive, which entered into force on March 30, 2010.
Decree 44/10 introduced changes in the audio-visual legislation in the areas of advertising and product
placement, promotion of European works, short extracts rights, protection of minors, and extends regulation to
non-linear audio-visual services.
AGCom implemented the new rules through regulation, including the adjustment of authorizations already
released prior to these new rules.
On June 30, 2011, AGCom approved a new regulation (Decision 353/11/CONS) for digital terrestrial broadcasting
activities (both concerning network operators and content providers).
Logical Channel Numbering (LCN) Plan
On August 31, 2012, the State Council issued four judgments canceling the Automatic Numbering Plan and, in
particular, the assignment to La7 and to MTV of—respectively—numbers 7 and 8. The State Council objected to
the assignment of numbering 8 to MTV, considering the latter not a generalist but a thematic channel. There were
no objections to La7 retaining its number 7.
70

With a resolution published in October 2012, AGCom launched a public consultation for the new numbering plan
together with a new survey on users habits. As a consequence of the above public consultation, with a Resolution
adopted on March 21, 2013 AGCom confirmed the assignment of the numbers 7, 8, and 9 to generalist channels
defined as former analogic channels with programming and informative obligations (Decision 237/13/CONS).
Such a decision leaves to La7 and MTV numbers 7 and 8 on the TV remote control.
The Switch off completion
As of July 4, 2012, the process of switch-off (complete move to digital broadcasting) across the country was
completed.
Digitalization of broadcasting networks and frequencies
In response to the infringement procedure 2005/5086 filed by the EC against Italy, in June 2008 the Government
passed Law n. 101, replacing the special licensing regime for digital terrestrial network operators with an
authorization regime compliant with the Code of Electronic Communications and the EU Directives.
As a consequence, the licenses granted have been converted to general authorizations lasting 20 years.
The European Commission approved the changes introduced by Law 101/08, but asked more spectrum resources
to be assigned to new entrants (the “Digital Dividend”). In response to these further requests, AGCom set up the
criteria for the complete digital conversion of the television terrestrial networks.
AGCom established the “National Plan of Assignment of the Frequencies” (“PNAF”) which will provide for 21
national “Digital Video Broadcasting- Terrestrial” (“DVB-T”) networks with 80% coverage of national territory and
4 “Digital Video Broadcasting- Handheld” (“DVB-H”) national Networks. Out of the 25 networks, 5 DVBT and 1
DVBH will constitute the Digital Dividend to be assigned on the basis of competitive bidding procedures.
The Ministry for Economic Development—Communication Department—assigned to the Telecom Italia Media
group only 3 DVB-T Networks (out of the 4 Networks managed by the Group). Telecom Italia Media group
appealed against this decision in order to safeguard its interests.
Concerning the Digital Dividend, in November 2010 AGCom issued a Decision on the criteria to be adopted in the
tenders for the assignment of the Digital Dividend based on a beauty contest with notice published in August
2011.
In December 16, 2011, the new Government suspended the Beauty Contest procedure and canceled it in April
2012.
On April 16, 2012, the Government approved a provision establishing that frequencies will be assigned by the
Ministry for the Economic Development through a bidding auction within 120 days from the approval of such
provision, on the basis of criteria defined by the Italian Authority. The provision was approved on May 2, 2012.
Telecom Italia Media group participated in the public consultation on the Regulation for the competitive
procedure for the assignment of frequencies economic, which ended December 17, 2012 through TIMB, the
network operator.
Following the scheme in consultation, 3 lots of frequencies below 700 MHz (LOTS L) should be assigned for a
period of 20 years as well as 3 lots of frequencies above 700 MHz (LOTS U) expiring on December 31, 2017. The
starting price of the bid is not defined.
TIMB is excluded from participating to the bid for LOTS L, having been treated as RAI and Mediaset, the
incumbent operators on the Italian TV market.
PNAF and digital dividend for mobile services
In order to assign the frequencies in the digital switch off areas and for the DVB-T Digital Dividend AGCom issued
a decision enforcing the National Plan of Assignment of the Frequencies.
71

Furthermore, this decision provided a Digital Dividend for mobile service in the band 790-862 MHz (channels
61-69 Ultra High Frequency—“UHF”) after the switch off of analogue broadcasting. The Italian Budget Law
established that those frequencies, previously assigned to local televisions, should be used for mobile services.
The tender took place in the summer 2011, with 4 billion euro revenues.
At the end of 2012 channels 61-69 were released by local broadcasters and assigned to mobile services.
175 million euros have been allocated to compensate local broadcasters current assignee of channel 61-69 in
Piemonte, Lombardia, Veneto, Trentino Alto Adige, Friuli Venezia Giulia, Emilia Romagna, Lazio and Campania.
72

Item 4. Information On The Telecom Italia Group Disclosure Pursuant to Section 219 of the Iran Threat Reduction and
Syria Human Rights Act of 2012 (ITRSHRA)
4.4 DISCLOSURE PURSUANT TO SECTION 219 OF THE IRAN THREAT REDUCTION AND SYRIA HUMAN
RIGHTS ACT OF 2012 (ITRSHRA)
Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the
Exchange Act. Section 13(r) requires an issuer to disclose in its annual or quarterly reports filed with the SEC
whether the issuer or any of its affiliates has knowingly engaged in certain activities, transactions or dealings with
the Government of Iran, relating to Iran or with designated natural persons or entities involved in terrorism or the
proliferation of weapons of mass destruction during the period covered by the annual or quarterly report.
Disclosure is required even when the activities were conducted outside the United States by non-U.S. entities and
even when such activities were conducted in compliance with applicable law.
In accordance with our Code of Ethics and Conduct, we seek to comply with all applicable international trade laws
including applicable sanctions and embargoes.
Activities relating to Iran
The only activities we have that, to our knowledge, relate in any way to Iran are:
i. roaming agreements with the following Iran mobile phone operators: Taliya, KFZO—TKC (formerly Payam
Kish), Irancell (MTN) and Mobile Company of Iran (MCI) (formerly TCI);
ii. commercial relationship for the delivery of traffic from Iran to our networks and from our networks to Iran
(“International Carrier Agreements”). To this end, our subsidiary Telecom Italia Sparkle S.p.A.
(“TI Sparkle”)—directly and through its subsidiaries—entered into agreements with Telecommunication
Infrastructure Company (TIC) in Iran.
Roaming agreements
We operate one of the largest mobile network in Italy. Through our foreign subsidiaries, we also have large
mobile operations in Brazil (Tim Participações S.A. by means of its subsidiary TIM Celular S.A.) and Argentina
(Telecom Argentina S.A. by means of its subsidiary Telecom Personal S.A.).
It is pursuant to roaming agreements that a mobile customer is able to use his or her mobile phone on a network
different from such mobile subscriber’s home network. The following is the definition of roaming that we provide
in the glossary of this Annual Report (see “4.5 Glossary of Selected Telecommunications Terms”):
Roaming: A function that enables wireless subscribers to use the service on networks of operators other than the
one with which they signed their initial contract. The roaming service is active when wireless is used in a foreign
country (included in GSM network).
Like all major mobile networks, in response to the competition and customers’ demands, Telecom Italia, Tim
Participações S.A. and Telecom Argentina S.A. have entered into roaming agreements with many foreign mobile
networks, so as to allow their customers to make and receive calls abroad.
Roaming agreements are, including those relating to Iran, on standard terms and conditions. In fact, entering into
roaming agreements is an activity carried out in the ordinary course of business by a mobile network operator.
Roaming agreements are, generally, reciprocal. Pursuant to a roaming agreement our mobile customers may,
when in a foreign country covered by the network (the “Foreign Network”) of an operator with which we have a
roaming agreement, make and receive calls on their mobile using such operator’s network. Likewise, when a
customer of such Foreign Network is in Italy (or Brazil or Argentina), such customer may make and receive calls
using our networks or the networks of other mobile operators in Italy (or Brazil or Argentina) if this foreign
Network has International Roaming Agreement with other Italian (or Brazilian or Argentine) Operators.
The calls made and received by our customers who use the services of the Foreign Network are billed by the
Foreign Network to us at the roaming rate agreed upon in the applicable roaming agreement. Then, we will bill
our end customers according to the specific tariff plan of the subscription they have signed with us. Likewise, we
bill the Foreign Network at the roaming rate agreed upon in the applicable roaming agreement. The Foreign
Network will bill its clients for the calls made and received using our networks according to their specific offer to
their customer base. Roaming contracts do not, generally, contemplate other fees or disbursements.
73

Item 4. Information On The Telecom Italia Group Disclosure Pursuant to Section 219 of the Iran Threat Reduction and
Syria Human Rights Act of 2012 (ITRSHRA)
In 2012, the impact on net profit (loss) arising from such Roaming contracts is analyzed as follows:
Š our total revenues from roaming agreements with Iranian networks were approximately 330 thousand euros
(of which 322 thousand euros recorded by Telecom Italia S.p.A.);
Š our total charges from roaming agreements with Iranian networks were approximately 319 thousand euros
(of which 296 thousand euros recorded by Telecom Italia S.p.A.).
The purpose of all of these roaming agreements is to provide our customers with coverage in areas where we do
not own networks. For that purpose, we intend to continue maintaining these agreements.
International Carrier Agreements
As a rule in the modern telecommunication business, when traffic from a specific network is placed to or
transported through a network of ours, we receive a fee from the incoming network. Likewise, when traffic
coming from a network of ours is placed to or transported through another network, we owe a fee to such
network.
In 2012, the impact on net profit (loss) arising from the above International Carrier Agreements is analyzed as
follows:
Š our total revenues from traffic from networks located in Iran to our networks were approximately 9.3 million
euros; and
Š our total charges from traffic to networks in Iran from our networks were approximately 0.4 million euros.
The purpose of this agreement is to allow exchange of international traffic. Consequently, we intend to continue
maintaining this agreement.
****
Furthermore, in 2012 our subsidiary Olivetti I-Jet in liquidation recorded 2,500 euros for the sale of a printer
together with the related print heads.
All such amounts of revenues and charges are deminimis with respect to our consolidated revenues and operating
expenses, respectively.
74

Item 4. Information On The Telecom Italia Group Glossary of Selected Telecommunications Terms
4.5 GLOSSARY OF SELECTED TELECOMMUNICATIONS TERMS
The following explanations are not intended as technical definitions, but to assist the general reader to
understand certain terms as used in this Annual Report.
2G (second-generation Mobile System). Second-generation protocols using digital encoding and including
GSM, D-AMPS (TDMA) and CDMA. 2G networks are in current use all over Europe and other parts of the world.
These protocols support high bit rate voice and limited data communications. 2G networks technology offer
auxiliary services such as data, fax and SMS. Most 2G protocols offer different levels of encryption.
3G (third-generation Mobile System). Third-generation wireless service, designed to provide high data
speeds, always-on data access, and greater voice capacity. 3G networks allow the transfer of both voice data
services (telephony, messaging) and non-voice data (such as downloading Internet information, exchanging
email, and instant messaging). The high data speeds, measured in Mbps, are significantly higher than 2G and, 3G
networks technology enable full motion video, high-speed internet access and video-conferencing. 3G technology
standards include UMTS, based on WCDMA technology (quite often the two terms are used interchangeably) and
CDMA2000.
Access charge. Amount charged per minute by national operators for the use of their network by operators of
other networks. Also known as an “interconnection charge”.
ADSL (Asymmetric Digital Subscriber Line). A modem technology which converts existing twisted-pair
telephone lines into access paths for multimedia and high-speed data communications. ADSL can receive Mbps
and transmit over 832 Kbps in both directions. Such rates expand existing access capacity by a factor of 50 or
more without new cabling.
Analog. A transmission which is not digital, e.g., the representation of voice, video or other not in digital form.
ANOs (Alternative Network Operators). Companies other than the incumbent operator which operate
telecommunications systems in a national market.
Backbone. Portion of telecommunication network with the highest traffic intensity and from which the
connections for services in the local areas depart.
Bitstream. Wholesale broadband access service which consists of supplying an access to XDSL Telecom Italia
network and transmission capacity to the network of another Operator.
Broadband services. Services characterized by a transmission speed of 2 Mbit/s or more. According to
international standards, these services are divided into two categories: (i) Interactive services, including
videotelephone/videoconferencing (both point-to-point and multipoint); videomonitoring; interconnection of
local networks; file transfer; CAD; highspeed fax; e-mail for moving images or mixed documents; broadband
videotex; Video on demand; retrieval of sound programs or fixed and moving images; and (ii) Broadcast services,
such as sound programs, television programs (including high-definition TV and pay TV) and selective document
acquisition.
Broadcast. Simultaneous transmission of information to all nodes and terminal equipment of a network.
BSC (Base Station Controller). Interface with the MSC switching exchange. Has the task of supervising and
controlling radio resources, both during the phase when a call is being set up and during the maintenance phase.
BSS (Business Support System). The system used by network operators to manage business operations such
as billing, sales management, customer-service management and customer databases. A type of Operations
Support System (OSS).
BTS (Base Transceiver Station). Radio base station which sends the GSM radio signal via the antenna to
cover an area (cell) and coordinates one or more radio transceivers (TRX).
75

Bundle. Commercial offer including different telecommunication services (voice, broadband internet, IPTV,
other) by an operator under the same brand. Bundle Dual Play offer includes fixed telecommunication services and
broadband internet; bundle Triple Play offer is the “bundle dual play” integrated with IPTV; bundle Quadruple
Play offer is the “bundle triple play” integrated with mobile telecommunication services.
Carrier. Company that makes available the physical telecommunication network.
CDMA (Code Division Multiple Access). A digital wireless technology used in radio communication for
transmission between a mobile phone and a radio base station. CDMA was developed by Qualcomm, and
commercially introduced in 1995. It enables the simultaneous transmission and reception of several messages,
each of which has a coded identity to distinguish it from the other messages.
Cell. Geographical portion of the territory illuminated by a BTS: 900MHz / 1800MHz.
Cellular. A technique used in mobile radio technology to use the same spectrum of frequencies in one network
multiple times. Low power radio transmitters are used to cover a “cell” (i.e., a limited area) so that the
frequencies in use can be reused without interference for other parts of the network.
Channel. The portion of a communications system that connects a source to one or more destinations. Also
called circuit, line, link or path.
Closed User Group. A group of telecommunications users that share a longstanding economic interest. This
definition has arisen in a regulatory context; it permits the partial liberalization of some telecommunications
services.
Community. A group of customers who have subscribed to specific offers which include special pricing for
traffic towards other customers of the same telco.
D-AMPS (Digital-Advanced Mobile Phone Service). It is a digital version of AMPS (Advanced Mobile
Phone Service), the original analog standard for cellular telephone service in the United States.
DCS 1800 (Digital Communication System). A derivative of the GSM cellular mobile telephone standard.
“1800” refers to the frequency used of 1800 MHz. DCS 1800 is the European PCN standard.
Digital. A mode of representing a physical variable such as speech using digits 0 and 1 only. The digits are
transmitted in binary form as a series of pulses. Digital networks are rapidly replacing the older analog ones. They
allow for higher capacity and higher flexibility through the use of computer-related technology for the
transmission and manipulation of telephone calls. Digital systems offer lower noise interference and can
incorporate encryption as a protection from external interference.
Digital divide. The gap between people with effective access to digital and information technology and those
with very limited or no access at all. The term encompasses among others: gaps in ownership of or regular access
to a computer, internet access—today primarily broadband, and related skills.
Digital Terrestrial TV. Digital Terrestrial Television Broadcasting is a new type of broadcasting technology that
provides a more effective way of transmitting television services using a digital system instead of the existing
analogue system.
DSL Network (Digital Subscriber Line Network). A network built on existing telephone lines with DSL
technology devices which use sophisticated modulation schemes to pack data onto copper wires for connections
from a telephone switching station to a home or office.
DSLAM (Digital Subscriber Line Access Multiplexer). The DSLAM denotes telecommunications equipment
able to process digital signals of various clients and multiply them in a data link to the nodes of the Internet.
DVB—H (Digital Video Broadcasting—Handheld). DVB—H technology combines digital video with the
Internet Protocol (IP): contents are subdivided into packets using the same basic technology employed by the
Internet. The use of IP technology allows the transmission of TV and radio programs, web pages, music and video
games to smartphones/PDA’s.
76

DWDM (Dense Wavelength Division Multiplexing). This is a technology for multiplying and transmitting
different wavelengths along a single optical fiber contemporaneously.
EDGE (Enhanced Data for GSM Evolution). This is a powerful technology that increases the data
transmission rate of the GPRS standard from rates of 30-40 kbit/s to more than 100 kbit/s and even up to
200 kbit/s with optimal radio conditions.
Exchange. See Switch.
FTT HOME, FTT CURB, FTT (Fiber to the …). It is the term used to indicate any network architecture that
uses fiber optic cables in partial or total substitution of traditional copper cables used in telecommunications
networks. The various technological solutions differ in the point of the distribution network where the fiber
connection is made, with respect to the end-user’s location. In the case of FTT Curb (Fibre to the Curb) the fiber
connection reaches the equipment (distribution cabinet) located on the pavement, from where copper
connections are run to the customer; in the case of FTTHome (Fibre to the Home), the fiber connection
terminates inside the customer premises.
Gateway. A connection between the LANs and WANs of one or more suppliers. Can also mean the access nodes
to international networks of various kinds.
GGSN (Gateway GPRS Support Node). Junction connecting an external packed network or GPRS system of a
different mobile network.
GPON (Gigabit capable Passive Optical Network). A passive optical network (PON) is a network
architecture that brings fiber cabling and signals to the home using a point-to-multipoint scheme that enables a
single optical fiber to serve multiple premises.
GRX (GPRS Roaming eXchange for Mobile Operators). The GRX service allows Mobile Operators to
interconnect GPRS networks around the world and offer global GPRS roaming coverage.
GSM (Global System for Mobile Communication). A standard for digital cellular telephony used in the
world and working on 900MHz and 1800MHz band.
HDSL (High-bit-rate Digital Subscriber Line). Technology for business customers which allows the
provision of local loop circuits at higher speeds and lower cost than through conventional means.
Home Access Gateway—Access Gateway—Home gateway—Residential Gateway. A residential gateway
is a home networking device, used as a gateway to connect devices in the home to the Internet or other WAN.
HSDPA (High-Speed Downlink Packet Access/UMTS Hi Speed—Universal Mobile Telecommunications
System). UMTS evolution allows broadband connections up to 3.6 Mbps.
HLR (Home Location Register). Database where are recorded the customer data.
Kvar (kilovolt–amperes reactive). Reactive energy: measurement system, expressed in kilovolt, of power
losses in an AC electrical system.
ICT (Information and communication(s) technology). Broad area concerned with information technology,
telecommunications networking and services and other aspects of managing and processing information,
especially in large organizations.
IEEE (Institute of Electrical and Electronics Engineers). An organization of engineers, scientists and
students involved in electrical, electronics and related fields. IEEE also functions as a publishing house and
standards body.
IMSI (International Mobile Subscriber Identity). The International Mobile Subscriber Identity is a unique
identification associated with all cellular networks. It is stored as a 64 bit field and is sent by the phone to the
network.
77

Interactive. Allowing the user to change some aspect of the program.
Internet. The world’s best-known data network. Initially used by the U.S. Department of Defense, the Internet
now provides an interface for networks based on different technologies (LANs, WANs, data networks, etc.), but
which use the TCP/IP protocol platform.
Internet Protocol TV or IPTV. The service provides the distribution of television channels over Internet
connections using the IP protocol. More than just duplicating a distribution means, IPTV enables interactive
services so that the viewer can interact with the show as it is broadcast.
IP (Internet Protocol). A set of communications protocols for exchanging data over the Internet.
IP/MPLS (Internet Protocol/Multi Protocol Labeling Switching). A packet switching protocol to optimize
network behaviors of mapping Layer3 (IP) end-to-end data flow to Layer2 traffic between adjacent network
nodes.
IPTV (Internet Protocol Television). A system that utilises the Internet Protocol infrastructure to transmit
digital television content over a network and deliver it via a broadband Internet connection.
ISDN (Integrated Services Digital Network). A system in which several services (e.g., speech and data) may
be simultaneously transmitted end to end in digital form.
ISPs (Internet Service Provider). A vendor who provides access to the Internet and World Wide Web.
ITU (International Telecommunication Union). The worldwide policy, spectrum regulation and
standardization body in telecommunication operating under the auspices of the United Nations.
LAN (Local Area Network). A private network that covers a local geographic area and provides public
telecommunications services as well as interconnection between personal computers.
LLU (Local Loop Unbundling). System through which OLO can rent the “last mile” of local loop, connecting to
their equipments.
Local Loop. Copper wire-couple, through which the telephone connection reaches users; it is the foundation of
traditional telephone lines and it is often called “last mile”.
LTE (Long Term Evolution). Represents the fourth generation (4G) mobile phone systems. LTE belongs to the
standard 3GPP (Third Generation Partnership Project) and it is the latest evolution of GSM / UMTS / HSPA
standard. LTE offers a higher spectral efficiency in bits per Hertz and download bandwidth up to 150 Mbit / s per
cell reducing the latency time. LTE enabled services that require high interactivity (eg, gaming, video
conferencing). A further development of LTE, called “LTE Advanced”, will perform bitrates even higher.
MGCP (Media Gateway Control Protocol). An Internet Engineering Task Force (IETF) signaling protocol
proposal allowing a bridge between classic telephone networks and Internet (i.e., IP-based) infrastructures.
MEMS (Micro-Electro-Mechanical Systems). MEMS are miniaturized devices ranging in size from a few
micrometers to a few millimeters, which execute one or more monitoring, processing or actuation functions by
deploying a combination of electronic, mechanical, optical, chemical or biological components integrated on a
usually silicon hybrid circuit.
MGW (Media GateWay). Junction for the connections which carry user traffic.
MPLS (Multi Protocol Label Switching). A packet switching protocol to optimize network behaviors of
mapping Layer3 end-to-end data flow to Layer2 traffic between adjacent network nodes.
MS SPRING. A form of traffic protection mechanism for the equipment.
78

MSC (Mobile Switching Center). Executes functions such as controlling calls, switching traffic, taxation,
controlling network interfaces and acts as an interface with other networks.
MSP. The name of a general purpose programmable switch made by Redcom Laboratories.
Multimedia. A service involving two or more communications media (e.g., voice, video, text, etc.) and hybrid
products created through their interaction.
MVNO. (Mobile Virtual Network Operator). MVNO Is a wireless communications services provider that does
not own the radio spectrum or wireless network infrastructure over which the MVNO provides services to its
customers.
Network. An interconnected collection of elements. In a telephone network, these consist of switches
connected to each other and to customer equipment. The transmission equipment may be based on fibre optic or
metallic cable or point to point radio connections.
NGAN (New Generation Access Network). New generation network access that can be realized with
different technological solutions, typically fiber optic and VDSL pairs.
NGNs (Non-Geographic Numbers). The non-geographic numbers are unique as they are by definition not
associated with any particular geographic location (e.g. premium rate services, toll free, directory assistance
services).
NGN2 (Next Generation Network). New generation network created by Telecom Italia to meet the demands
of corporates, public administrations and citizens. The new network architecture guarantees an infrastructure
designed to face multiple offers by increasing customisation levels and bandwidth availability, removing
bandwidth limits and providing an impressive capacity along with a wide selection of access systems.
Node. Topological network junction, commonly a switching center or station.
Node B (counterpart of BTS in GSM). This is the Radio Base Station in UMTS technology which, via an
antenna, sends the UMTS radio signal which creates the coverage of the cell (typically 3 for Node B). It also
performs functions which are strictly associated with managing the radio connection.
OLOs (Other Licensed Operators). Companies other than the incumbent operator which operate
telecommunications systems in a national market.
Optical fiber. Thin glass, silica or plastic wires, building the interstructure base for data transmission. An
optical fiber cable contains several individual fibers, and each of them is capable of driving a signal (light impulse)
at illimited bandwidth. Optical fibers are usually employed for long-distance communication: they can transfer
“heavy” data loads, and the signal reaches the recipient, protected from possible disturbances along the way. The
driving capacity of optical fibers is higher than the traditional cable ones.
OSS (Operations Support System). Methods and procedures (whether mechanized or not) which directly
support the daily operation of the telecommunications infrastructure.
OTT (Over the Top) players. Operators offering contents and services on the internet without owning the
proprietary TLC network infrastructure.
Outsourcing. Hiring outsiders to perform various telecommunications services, which may include planning,
construction, or hosting of a network or specific equipment belonging to a company, and, ultimately, the
management of entire telecommunications systems. Value-added applications may also be provided in various
sectors.
Packet-Switched Services. Data services based on parceling or breaking the data stream into packets and
switching the individual packets. Information transmitted (whether voice or data) is segmented into cells of a
standardized length, which are then transmitted independently of one another, allowing maximization of available
capacity and usage of single transmission path for multiple communications. The cells are then reassembled upon
reaching their destination.
79

Pay-Per-View or PPV. A system by which the viewer pays to see a single program (such as a sporting event,
film or concert) at the moment at which it is transmitted or broadcast.
Pay TV. Paid-for TV channels. To receive Pay TV or Pay-Per-View programs, a decoder must be connected to
the television set, and a conditional access system.
PCS. Personal communications services.
PDA (Personal Digital Assistant). A handheld computer with a memory size up to several megabytes and a
touch-sensitive screen, often using a stylus to input data. The PDA is mainly used for calendar, address book and
memoranda functions, but can incorporate advanced office or multimedia functions such as voice calls,
messaging, video, mp3 player, etc.
Penetration. The measurement of the take-up of services. As of any date, the penetration is calculated by
dividing the number of subscribers by the population to which the service is available and multiplying the quotient
by 100.
Platform. The total input, including hardware, software, operating equipment and procedures, for producing
(production platform) or managing (management platform) a particular service (service platform).
POP (Point Of Presence). Internet provider locations for network connection, often through dial-up phone
lines. When a Pop is within a specific local area, users can connect to the Internet by dialing a local phone
number.
POTS (Plain Old Telephone Service). Refers to the basic telephony service (homes use) supplying standard,
single-line telephones, fixed-line services and access to public voice telephony network. In contrast, telephone
services based on digital communications lines, such as ISDN, are not POTS. The main distinctions between POTS
and non-POTS services are speed and bandwidth. POTS is generally restricted to about 52 Kbps.
PSTN (Public Switched Telephone Network). The public telephone network delivering the basic telephone
service and, in certain circumstances, more advanced services.
RNC (Radio Network Controller—counterpart of BSC in GSM). Supervises and controls radio resources,
both during the phase of setting up the call, and during the maintenance phase (for example, handover between
different cells). Furthermore, it handles connectivity from and towards: Node B, MSC*, and other RNC.
Roaming. A function that enables wireless subscribers to use the service on networks of operators other than
the one with which they signed their initial contract. The roaming service is active when wireless is used in a
foreign country (included in GSM network).
RTG. Is the network of the world’s public circuit-switched telephone networks in much the same way that the
Internet is the network of the world’s public IP-based packet-switched networks.
SDH Standard (Synchronous Digital Hierarchy). The European standard for high-speed digital transmission.
Service Provider. The party that provides end users and content providers with a range of services, including a
proprietary, exclusive or third-party service center.
SGT (Transit exchange interconnection level for telephone traffic). Transit Exchange for telephone traffic
carriage, routing and transmission.
SGU (Local exchange interconnection level for telephone traffic). Local Exchange for telephone traffic
carriage, routing and transmission.
Shared Access. Methods of shared access, through the user’s duplex cable, with another TLC service provider.
This method permits the retention of voice telephony from Telecom Italia (or other operators) alongside ADSL on
the proprietary network of the shared access operator, that is, not passing through the Telecom Italia networks
but travelling directly along the operator’s channels at the substation.
80

SME. The small- and medium-size enterprise market which consists of businesses having between 3 and 50
employees.
SMS (Short Message Service). Short text messages that can be received and sent through GSM-network
connected cellular phones. The maximum text length is 160 alpha-numerical characters.
SNCP. A form of traffic protection mechanism for the equipment.
SOHO. The small office/home office market which consists of businesses that use telephone lines to connect to
the Internet, as opposed to dedicated lines, and is made up of small businesses, generally with one or two
employees, and businesses conducted out of the home.
Switch. These are used to set up and route telephone calls either to the number called or to the next switch
among the path. They may also record information for billing and control purposes.
Synchronous. Type of data transmission in which there is permanent synchronization between the transmitter
and the receiver.
TDMA (Time Division Multiple Access). A technology for digital transmission of radio signals between, for
example, a mobile phone and a radio base station. TDMA breaks signals into sequential pieces of defined length,
places each piece into an information conduit at specific intervals and then reconstructs the pieces at the end of
the conduit.
TRX. Radio transceivers located in BTS.
ULL (Unbundling Local Loop). System through which ANO can rent the “last mile” of local loop, connecting
to their equipments.
UMTS (Universal Mobile Telecommunications System). Third-generation mobile communication standard.
It’s constituted by a broadband system in which data travel at 2Mb-per-second, communication is faster, quality
is better and multimedia contents can travel trough the Net.
UMTS Cell. Geographical portion of the territory illuminated by a Node B.
UMTS Channels. These enable all the customers of the cell to access both the CS (Circuit Switched) services
and the PS (Packet Switched) services of UMTS technology.
Unbundling. A process which allows telephone carriers (other than Telecom Italia) to lease the last part of the
telephone loop, that is to say, the copper wire-cable, connecting Telecom Italia central station to the user’s home,
disconnecting the user from Telecom terminals and connecting him/her to the telephone carrier’s terminals.
Universal service. The obligation to supply basic service to all users throughout the national territory at
reasonable prices.
VAS (Value Added Services). Value Added Services provide a higher level of functionality than the basic
transmission services offered by a telecommunications network for the transfer of information among its
terminals, which include wired or wireless switched-circuit analog voice communications; direct “unrestricted”
digital point-to-point service at 9,600 bit/s; packet switching (virtual call); direct broadband analog transmission
of TV signals, and supplementary services, such as closed user groups; call waiting; collect calls; call forwarding,
and identification of number called. Value Added Services performed by the network, the terminals or the
specialized centers include message handling services (MHS) (which can be used, among other things, for
commercial documents in predetermined formats); electronic directories listing users, network addressees and
terminals; e-mail; fax; teletex; videotex and videotelephone. Value Added Services could include also value added
voice telephony services such as Freephone or Premium Rate Services.
VDSL (Very-high-data-rate Digital Subscriber Line). Access technology that allows providers to give
clients, by means of an apparatus installed in their homes, access to voice and TV services on the traditional
telephone line with a speeds of up to 100 Mbps in downstream (VDSL2).
81

VOD (Video On Demand). TV-programme supply on user’s request, with payment of a fee for each purchased
programme (a movie, a soccer match, etc). Broadcast in a special method for cable and satellite TV.
VoIP (Voice Over IP). Transmission of voice communications over Internet Protocol (IP) data networks, such
as IP-based LANs, intranets or the Internet.
VPN (Virtual Private Network). A network designed for a business or government agency, using the
infrastructures of a carrier and providing customized services, and which operates in such a manner as to appear
dedicated to the user thereof.
WAN (Wide Area Network). A private network that covers a wide geographic area using public
telecommunications services.
WI-FI. A service for wireless Internet connection and high speed access.
WLL (Wireless Local Loop). The means of configuring a local loop without the use of wiring.
Wi—Max (Worldwide Interoperability for Microwave Access). The Wi—MAX—is a technology that allows
wireless access to broadband telecommunications networks. It is defined by the Wi—MAX Forum, a global
consortium formed by major companies in the field of fixed and mobile telecommunications which has the
purpose to develop, test and promote the interoperability of systems based on IEEE 802.16-2004 standards for
fixed access and IEEE.802.16e-2005 for fixed and mobile access.
WLR (Wholesale Line Rental). The WLR Service consists in the resale to wholesale of the basic telephony
services and advanced “ISDN” associated with the fees paid by certified residential and non-residential customers
of Telecom Italia’s public telephone network.
XDSL (Digital Subscriber Line). It is a technology that makes use of standard telephone lines and it includes
different categories including: ADSL Asymmetric DSL, HDSL High-data-rate DSL and VDSL, Very high bit rate DSL.
This technology uses a digital signal with a very high frequency in order to increase the data transfer rate.
82

Item 4. Information On The Telecom Italia Group Description Of Property, Plant And Equipment
4.6 DESCRIPTION OF PROPERTY, PLANT AND EQUIPMENT
GENERAL
As of December 31, 2012 and 2011, property, plant and equipment owned and leased are detailed as follows:
As of December 31, 2012 As of December 31, 2011
Owned Leased
Total
property,
plant and
equipment
% of total
property,
plant and
equipment Owned Leased
Total
property,
plant and
equipment
% of total
property,
plant and
equipment
(millions of euros, except percentage)
Land . . . . . . . . . . . . . . . . . . 232 — 232 1.5 235 — 235 1.5
Civil and industrial
buildings . . . . . . . . . . . . 698 972 1,670 10.8 795 1,042 1,837 11.5
Plant and equipment . . 11,837 — 11,837 76.5 12,108 — 12,108 75.7
Manufacturing and
distribution
equipment . . . . . . . . . . 39 — 39 0.3 32 — 32 0.2
Other . . . . . . . . . . . . . . . . . 677 17 694 4.5 724 16 740 4.6
Construction in
progress and
advance
payments . . . . . . . . . . . 982 25 1,007 6.5 1,005 36 1,041 6.5
Total . . . . . . . . . . . . . . . . . 14,465 1,014 15,479 100.0 14,899 1,094 15,993 100.0
The principal categories of our equipment are exchanges and transmission equipment, cable networks, base
stations for cellular networks and equipment for radio communications. There are no encumbrances that may
affect our utilization of our property or equipment.
Real Estate (Land, Civil and Industrial Buildings)
As of December 31, 2012, the Company owned many buildings located throughout Italy. Specialized buildings for
telecommunications services account for the majority of properties both in number and book value. Such
buildings house mainly exchange equipment and transmission equipment, and are used as part of our continuing
telecommunications operations. General purpose properties consist chiefly of offices, depots and computer
centers.
Network Infrastructure (Plant and Equipment)
The Telecom Italia Group network infrastructure includes the domestic and international fixed network, the
domestic mobile network, the Brazilian mobile network and the Argentinean and Paraguayan Networks. See
“-4.5 Glossary of Selected Telecommunications Terms”, for definitions of the technical terms used in this section.
Domestic Fixed Network
General. Our domestic fixed voice network consists of 611 main local switches. Concerning the OLO
interconnection, each local switch belongs to only one of the 33 gateway areas. Each local switch is physically
interconnected to 2 out of 24 (12 pairs) Backbone Nodes (“BBN”).
The fixed long-distance transmission network (Arianna SDH and Phoenix) routes 4,819 VC-4, supports also 93
optical channels 2.5 Gbps point to point and more than 620 optical channels 10 Gbps point to point (also called
lambdas from the greek letter λ used for wavelength in physics).
In terms of cable infrastructures, the fixed network includes 114.5 million km of copper pairs, mainly in the
distribution network and also 5.7 million km of fiber, both in access and trunk network.
Fiber optic cables significantly increase network capacity and make it possible to offer hi-tech services based on
the simultaneous transmission of various types of signal, such as voice, data and video.
83

At December 31, 2012, the domestic fixed network had the following figures:
Central Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . approximately 10,400
Switching areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611
Gateway areas (TDM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Aggregation areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Copper network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114.5 million kilometers-pair
Fiber optic access/carrier network . . . . . . . . . . . . . . . . . . . . . . 5.74 million kilometers-fiber
Long Distance VC4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,819
Long Distance Lambda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 at 2.5 Gbps
more than 627 at 10 Gbps
BroadBand/ADSL network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,135 Central Offices covered
Main PoP data networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
TRANSMISSIONS. The Synchronous Digital Hierarchy (“SDH”) transmission systems operates on fiber optics
from 155 Mbit/sec up to 10 Gbit/sec.
The nationwide network (Long distance) has been continuously upgraded during 2012. It is based on SDH and
optical DWDM technology (Dense Wavelength Division Multiplexing) and still represents the Telecom Italia high
capacity transport network.
In order to save fibers usage, DWDM systems have been implemented to multiply, by a factor of 12 up to 96, the
available optical fiber band and the current transmission capacity, thus increasing the total transport capacity.
OPB (Optical Packet Backbone). In 2012 Telecom Italia continued to introduce in the data backbone the
Terarouter technology, deployed in the majority of the 32 PoPs of the network (in 2013 all the POPs will be
updated). At the end of 2012 OPB network had Terarouter nodes in the following PoPs: two “Centro Stella” PoPs
in Rome, two “Centro Stella” in Milan (Inner Core PoPs) and twenty-eight OPB PoPs located in Naples, Turin,
Florence, Palermo, Bari, Bologna, Brescia, Padua, Catania, Nola, Venice, Pisa, Ancona, Taranto, Modena, Verona,
Catanzaro, Rimini, Bolzano, Perugia, Pescara, Alessandria, Savona, Bergamo, Cagliari, Genova, Trieste and Como
(Outer Core PoPs).
The OPB network support:
Š Internet traffic of residential, business and Wholesale customers;
Š VPN traffic (Virtual Private Network) of business customers;
Š Voice traffic;
Š Video traffic related to IPTV services;
Š Mobile data traffic.
OPM (Optical Packet Metro). At the end of 2012 OPM network consisted of 30 metro-regional networks to
collect traffic to and from customers through IP DSLAM to supply IPTV and xDSL services. The OPM supports also
the services based on Gigabit Ethernet technology (the Ethernity, Hyperway, Gigabusiness and GEA services on
GBE optical access). At the end of 2012 Gigabit Ethernet Access was available in 59 towns in Italy. Moreover the
OPM network is used for backhauling UMTS and LTE access Nodes.
Broadband/xDSL network. Telecom Italia’s broadband network offers hi-tech telecommunications services
and multimedia applications. In 2012, the xDSL commercial services for residential and business customers (retail
and wholesale) have been extended to 7,351 towns, including S. Marino (compared to 7,241 at the end of 2011).
At the end of 2012 9,135 local switching areas were covered by ADSL technology (compared to 9,002 at the end
of 2011, consolidated data).
NGAN (Next Generation Access Network). In 2012 Telecom Italia continued to deploy its NGAN based on
optical fiber cables. The NGAN deployment is based on FTTH (Fiber To The Home) and FTTCab (Fiber To The
Cabinet) architecture. Up to now FTTH have been utilized for deployment in Milan while FTTCab in all other cities.
84

FTTCab uses fiber to the street cabinets equipped with VDSL2 cards.
By the end of 2012 about 2,300,000 households had been passed in the following cities: Ancona, Bari, Bergamo,
Bologna, Brescia, Brindisi, Catania, Catanzaro, Como, Firenze, Forlì, Genova, L’Aquila, Milano, Monza, Napoli,
Padova, Palermo, Perugia, Pisa, Prato, Reggio Emilia, Roma, Taranto, Torino, Treviso, Udine, Varese, Venezia,
Verona, Vicenza.
Telecom Italia normally installs new optical cables; in Milan Telecom Italia has also acquired the right of use (IRU
approach) for 15 years on fiber optics owned by Metroweb (a utility that already owns a widespread optical access
network in Milan).
Domestic Mobile Network
The domestic mobile network consists of:
Š GSM network (2G: second generation network);
Š UMTS network (3G: third generation network);
Š LTE network.
On December 31, 2012 Telecom Italia domestic mobile network had the following figures:
GSM/EDGE network
Š 16,778 BTS (Base Transceiver Station) GSM radio station (15,298 BTS at the end of 2011) +9.7%;
Š 1,435 of them are µBTS;
Š 807,664 radio channels (784,056 at the end of 2011) +3%;
Š 280 BSC (Base Station Controller) (382 at the end of 2011), -27% due to the adoption of new generation
more performing equipments;
Š GSM Core Network: 10 Transit Exchange and 13 Gateways.
UMTS/HSPA network
Š 13,643 node B UMTS radio base station (12,943 node B at the end of 2011) +5.4%;
Š 2,017,232 radio channels (1,958,944 radio channels at the end of 2011) +2.98%;
Š 117 RNC (Radio Network Controller) +8 new RNC compared to total at the end of 2011;
Š GSM/UMTS Core Network: 67 MSC-server; 110 MGW; 42 HLR (Home Location Register); 23 GGSN; 47 SGSN.
In 2012 Telecom Italia continued the implementation plan to distribute the High Speed Downlink Packet Access
(“HSDPA”) and the High Speed Uplink Packet Access (“HSUPA”); these systems aim to increase the overall data
transmission speed offered by UMTS.
In particular the deployment of HSDPA at 42 Mbit/s reached the coverage level of the 20% of the resident
population.
LTE network
After an auction, in September 2011, additional frequency blocks on 800 MHz, 1800 MHz and 2600 MHz were
acquired by Telecom Italia.
The three bands will be used for LTE deployment to provide ultrabroadband services to mobile customers.
As of the date of this Annual Report, the LTE network covers the major Italian cities.
85

International Fixed Network
Telecom Italia Sparkle provides voice, IP and data connectivity services to national and international wholesale
customers and to multinational corporates relying on an international network made of a proprietary cross-border
backbone and bilateral connections.
The coverage of the Mediterranean and of Central and South America is provided by the interconnection with
Lan Med Nautilus regional backbones.
Telecom Italia Sparkle international backbone spans 450,000 km covering all of the major regions worldwide and
connects over 500 international voice operators.
The cross-border backbone integrates 4 regional networks:
Š Europe (PEB);
Š Latin America backbone;
Š Mediterranean basin backbone;
Š USA backbone.
In detail:
Š PEB (Pan European Backbone). Proprietary fiber optic network spanning the main European countries:
Italy, France, United Kingdom, Netherlands, Belgium, Germany, Switzerland, Austria, Spain, Czech Republic,
Slovakia and Romania. The overall length is 55,000 km.
Š Latin American backbone. High-capacity backbone based on fiber optic ring networks, both terrestrial
and submarine, with an overall length of 30,000 km, including the Miami-New York section. The ring has a
capacity up to 1.8 Tbit/sec and has automatic optical traffic protection connecting the main cities of South
and Central America to North America.
Š Mediterranean backbone. Submarine ring network with a highly reliable configuration, a total length of
7,500 km and a design capacity close to 4.5 Tbit/sec connecting the main markets of the Mediterranean
area: Italy, Greece, Cyprus, Turkey and Israel. Currently, the main landing points are Catania, Athens,
Chania-Crete, Haifa, Tel Aviv and Istanbul.
Š USA backbone. Proprietary high capacity terrestrial backbone with POPs in: Newark, New York, Miami,
Ashburn, Atlanta, Chicago, Palo Alto, Los Angeles and Dallas.
The services supplied include Voice, IP and Managed Bandwidth in Europe and in the USA, Managed Bandwidth
and IP in the Mediterranean and in South America.
Telecom Italia Sparkle’s network is an integrated multi-service backbone based on an IP-MPLS core handling
differentiated classes of services. The transport layer is based over DWDM with 10, 40 and 100 Gbit/s optical
lambdas while voice services are provided by Class 4 switches.
Traffic protection is implemented by MS SPRING (Multiplex Section Shared Protection Ring), SNCP (Sub Network
Connection Protection), OTN (Optical Transport Network), MSP 1+1 (Multi Section Protection) and “meshed”
technologies.
In 2012 capacity upgrades were carried out on the international backbone in order to cope with increasing IP and
Managed Bandwidth sales.
In order to support the Internet traffic increase, all of the major IP PoPs were upgraded and a new fiber optic
metro ring was built in Amsterdam connecting the Pan European backbone to the Evoswitch telehouse with the
aim to interconnect with major content providers.
In Paris a new POP in the Equinix telehouse along with a new router in the Courbevoie POP were made available
in order to extend the coverage of the “MEF” (Metro Ethernet Forum) compliant Ethernet services and to support
the sales growth.
86

In the Milan POP additional new generation IP cards were added in the existing Terabit Routers “multi-chassis”
architecture in order to strongly increase the number of 10Gbit/s links handled.
IP architecture was deeply reviewed in the Frankfurt POP connecting local edge routers to the IP-MPLS core in
the Milan PoP in order to optimize traffic routing and the expenditures for additional upgrades.
In the Pan European backbone major activities were carried out also on the transport network: the OTN
technology was extended to all of the main POPs (London, Frankfurt, Amsterdam, Paris, Marseille). As regards the
SDH and metro DWDM platforms, outdated equipment was decommissioned in order to reduce operation and
maintenance costs and capital expenditures for new upgrades.
With reference to submarine cables, additional capacity on IMEWE and SMW-4 was delivered by the cable
consortia while the Mestre-Umagcable linking Italy to Croatia underwent a 20Gbit/s upgrade.
In the USA backbone, outdated routers were replaced by advanced Ethernet equipment in order to strongly
increase the IP traffic that can be handled and provide “MEF” compliant services and traffic protection
technologies. The new IP equipment is now available in New York, Ashburn, Miami, Dallas, Atlanta and Los
Angeles. A backbone capacity upgrade among the New York, Newark and Miami POPs was also completed.
In Singapore, the capacity on the fiber backhaul linking the POP to the Sea-Me-We3 and Sea-Me-We4 landing
station in Tuas was expanded. A new advanced Ethernet router was introduced replacing an SDH router in order to
address the increasing demand for Ethernet services. Backbone upgrades were also carried out on the Singapore-
Hong Kong-Palo Alto route adding a new 10Gbit/s link while capacity between Singapore and Los Angeles was
groomed replacing the existing 2,5Gbit/s links with a single 10Gbit/s trunk.
In the Djibouti IP POP which is managed through the partnership with a local operator, access capacity was nearly
doubled in order to keep up with increasing sales to regional customers.
As for mobile services, a new SBC (Session Border Controller) equipment was deployed in the Newark POP for the
IPX interconnections. SBC equipment handle inter-alia VoIP (Voice over IP) traffic allowing an improved
interworking among all the interconnected networks and an end-to-end monitoring of the Quality of Service.
Outdated DNS servers for GRX (GPRS Roaming eXchange) and IPX services were replaced and SS7 and SIGTRAN
(Signaling over IP protocol) signaling networks were upgraded. New capabilities mainly for Mobile number
portability management were deployed in the SMS Hub and SMS Transit platforms.
With reference to voice services, a new hub was deployed in Milan for the management of the remote DCMEs
(Digital Multiplex Compression Equipment) installed in the far end voice operators’ premises. The pre-paid traffic
platform was upgraded in terms of number of concurrent calls that can be handled. In addition, a new software
release was uploaded in the Softswitches and SBC’s in order to increase traffic filtering and routing capabilities.
As regards the service offer for multinational corporates, a new access layer for MEF compliant Carrier Ethernet
services was deployed in all of the major POPS: Milan, Frankfurt, Paris, London, Hong Kong, Chicago, Newark,
Miami, Bucharest, Singapore and Dubai. In Dubai a new POP was opened partnering with a local operator in order
to offer both Ethernet over SDH (EoSDH) and Ethernet over MPLS (EoMPLS) services. New EoSDH equipment
were deployed also in Catania for the interconnection with LANMED backbone and in a customer’s site in Rome. A
new IPsec router was added in the Newark POP. Access capacity was also increased in Frankfurt, Prague and
Milan to cope with sales growth.
Mediterranean Backbone
In 2012 a new IP POP was deployed in Sofia along with a fiber optic link connecting Istanbul and Sofia. Major
upgrades were also completed on the express Tel Aviv-Cyprus fiber (+200Gbit/s), on the Catania-Istanbul fiber
(+100Gbit/s) and on the Italy-Greece-Israel Omnibus fiber (+250Gbit/s) of the MED cable.
Latin American Backbone
In 2012 40Gbit/s DWDM platform were deployed on the SAC ring along with the existing 10Gbit/s platform.
Upgrades were also completed on the MAC (40Gbit/s), Cooks (30Gbit/s) and TAC (70Gbit/s) network segments.
87

Brazilian Network
Telecom Italia Group’s principal properties in Brazil consist of transmission equipment, switching equipment,
which connect calls to and from customers, and radio base stations, which comprise certain signal transmission
and reception equipment covering a defined area. At our radio base stations we have also installed antennas and
certain equipment to connect these antennas with our switching equipment.
As of December 31, 2012, we had 118 mobile switches for voice capacity, 212 thousand TRXs, 8,256 Node B and
approximately 39,000 kilometers in fiber optic cable networks (of which 11,500 in metropolitan areas and 27,400
for Long Distance coverage). We generally lease or buy the sites where our mobile telecommunications network
equipment is installed.
Tim Brasil plans to invest up to 11 billion Brazilian reais in capital expenditures, in accordance with its industrial
plan for the years 2013-2015.
Argentinean and Paraguayan Network
Telecom Italia Group’s operation in Argentina is carried out in two major areas. Voice, data and Internet services
(provided through Telecom Argentina) and mobile services (provided through Personal). In Paraguay, there is
only a mobile operation (through Núcleo).
In connection with providing the above services, the major fixed assets owned by these companies are comprised
of outside plant (external wiring), urban and regional fiber links to a modern internet connection and to connect
major telecommunication buildings and mobile sites, access facilities (radio base stations) for the mobile system,
switching equipment to connect calls to and from fixed and mobile customers, transmission equipment to
interconnect all switching equipment and IP network to carry all data traffic. The transmission and IP facilities are
used by both areas, “mobile” and “fixed”. It is also remarkable the importance of the software and computing
equipment that support both the operation and administration of fixed and mobile businesses.
88

Item 4A. Unresolved Staff Comments
Item 4A. UNRESOLVED STAFF COMMENTS
None.
89

Item 5. Operating And Financial Review And Prospects Critical Accounting Policies And Estimates
Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion should be read in conjunction with the Consolidated Financial Statements included
elsewhere in this Annual Report. Such financial statements have been prepared in accordance with IFRS as issued
by the IASB.
5.1 CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analyses of our financial condition and results of operations is based upon our Consolidated
Financial Statements, which have been prepared in accordance with IFRS as issued by the IASB (designated as
“IFRS”). Our reported financial condition and results of operations as reported under IFRS are based on the
application of accounting methods which involve the use of subjective assumptions and estimates that underlie
the preparation of our financial statements. We base our estimates on historical experience and on various other
assumptions that we believe are reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are not readily available. Actual results
could differ, even significantly, from these estimates owing to possible changes in the factors considered in the
determination of such estimates. Estimates are reviewed periodically.
In the absence of a Standard or an Interpretation that specifically applies to a particular transaction, management
carefully considers subjective valuation techniques and uses its judgment as to the accounting methods to adopt
with a view to providing financial statements which faithfully represent the economic substance of the
transactions, are neutral, prepared on a prudent basis and complete in all material respects and in accordance
with IFRS.
Since our selection and application of accounting policies involve judgments and other assumptions affecting the
application of those policies, reported results are sensitive to changes in conditions or assumptions of
management and these are factors to be considered when reading our Consolidated Financial Statements. We
believe the critical accounting policies described below involve the most significant subjective assumptions and
estimates used in the preparation of our Consolidated Financial Statements under IFRS.
Revenue recognition
Revenues are recognized to the extent that it is probable that economic benefits will flow to the Group and their
amount can be measured reliably. Revenues are stated net of discounts, allowances, and returns.
Š Revenues from services rendered
Revenues from services rendered are recognized in the separate consolidated income statement according to
the stage of completion of the service and only when the outcome of the service rendered can be estimated
reliably.
Traffic revenues from interconnection and roaming are reported gross of the amounts due to other TLC
operators.
Revenues for delivering information or other content are recognized when the information or content is
delivered to the customer. In the event that the Group is acting as agent, only the commission received from
the content provider is recognized as revenue.
Revenues from the activation of telephone services (as well as the related costs) are deferred over the
expected duration of the relationship with the customer (generally 8 years for retail customers and 3 years
for wholesale customers). In particular, costs from the activation of telephone services are deferred taking
also into account the reasonable expectations of cash flows arising from these services. To determine the
expected duration of the relationship with customers we perform an analysis of our historical customer
relationship trends.
Revenues from prepaid traffic are recorded on the basis of the minutes used at the contract price per minute.
Deferred revenues for unused minutes are recorded in “Trade and miscellaneous payables and other current
liabilities” in the consolidated statement of financial position.
90

Š Revenues from sales and bundled offerings
Revenues from sales (telephone and other equipment) are recognized when the significant risks and rewards
of ownership are transferred to the buyer.
For offerings which include the sale of mobile handsets and service contracts, we recognize revenues related
to the sale of the handset when it is delivered to the final customer whereas traffic revenues are recorded on
the basis of the minutes used; the related subscriber acquisition costs, including handset subsidies and sales
commissions, are expensed as incurred. The revenues allocated to the handset sale are limited to the
contract amount that is not contingent upon the rendering of telecommunication services, i.e. the residual of
the amount paid by the customer exceeding the services value. The determination of fair values in the
telecommunications business is complex, because some of the components are price-sensitive and, thus,
volatile in a competitive marketplace.
A small portion of our bundled offerings in the mobile and broadband businesses are contracts with a
minimum contractual period between 12 and 30 months which include an enforced termination penalty. For
these contracts, the subscriber acquisition costs are capitalized under “Intangible assets with a finite useful
life” if the conditions for capitalization as described in the related accounting policy are met.
Š Revenues on construction contracts
Revenues on construction contracts are recognized based on the stage of completion (percentage of
completion method).
Revenue recognition is subject to estimation in respect of the expected duration of customer relationships, the
estimate of relative fair values and estimates of discounts, returns and allowances. Revisions to such estimates
may significantly affect our future operating results.
Allowance for doubtful accounts
Management maintains an allowance for doubtful accounts to account for estimated losses resulting from the
inability of our customers to make required payments. Management bases its estimates on the ageing of our
accounts receivable balances and our historical write-off experience with similar receivables, customer credit-
worthiness and changes in our customer payment history when evaluating the adequacy of our allowance for
doubtful accounts. If the financial condition of our customers were to deteriorate, our actual write-offs might be
higher than we estimate.
Accounting for tangible and intangible non-current assets
Accounting for tangible and intangible non-current assets involves the use of estimates for determining fair value
at the acquisition date in the case of assets acquired in a business combination and the expected useful lives of
assets with a finite useful life. The determination of the fair values of assets, as well as the useful lives of the
assets is based on management’s judgment. Changes in the economic conditions of the markets in which we
operate, technology and competitive forces could significantly affect the estimated useful lives of these assets and
may lead to a difference in the timing and amount of depreciation and amortization expense.
Acquisition accounting, goodwill and purchase price allocation
We have entered into certain acquisitions and in the future may make further acquisitions. The calculation of the
purchase price, and the subsequent allocation of that purchase price to the fair value of the assets acquired and
liabilities assumed, is critical due to the long-term impact on the separate consolidated income statement.
Under IFRS, we are required to perform a purchase price allocation and, consequently, as part of that allocation,
all consideration, including the fair value of exchanged shares, shall be valued. When equity instruments are
issued as part of the consideration, under IFRS we measure them at their fair value as of the date of exchange.
The purchase price is then allocated to the fair value of the assets acquired and liabilities assumed.
91

The purchase price allocation requires that all assets and liabilities be recorded at fair values which requires
significant estimates and judgments to be made. A change in any of these estimates or judgments could change
the amount allocated to the assets and liabilities. The resulting change in the purchase price allocation to assets
or liabilities has a direct impact on the final amount of the purchase price that is allocated to goodwill.
If actual results differ from these estimates, or we adjust the estimated useful economic lives in future periods,
operating results could be significantly affected by these estimates and judgments which involve:
Š the definition of the purchase price;
Š the identification of the assets acquired and liabilities assumed in the acquisition;
Š the valuation of these assets and liabilities in the purchase price allocation; and
Š the assessment of whether selected assets have a finite or indefinite useful life.
These could have a significant impact on both the level of total goodwill and ultimately on the separate
consolidated income statement.
Accounting for transactions involving interests in group companies
We have entered into certain transactions involving interests in Group companies, and in the future we may make
further similar transactions.
Under IAS 27, changes in a parent’s ownership interest in a subsidiary that do not result in a loss of control are
accounted for as equity transactions (i.e. transactions with owners in their capacity as owners). In such
circumstances the carrying amounts of the controlling and non-controlling interests shall be adjusted to reflect
the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-
controlling interests are adjusted and the fair value of the consideration paid or received shall be recognized
directly in equity and attributed to the owners of the parent.
Impairment of assets
The determination of impairment of intangible and tangible assets involves the use of estimates that include, but
are not limited to, the cause, timing and amount of the impairment.
Š Goodwill. Goodwill is tested for impairment at least annually or more frequently whenever events or
changes in circumstances indicate that goodwill may be impaired, as set forth in IAS 36 (Impairment of
Assets); however, when the conditions that gave rise to an impairment loss no longer exist, the original
amount of goodwill is not reinstated.
The test is generally conducted at the end of every year so the date of testing is the year-end closing
date of the financial statements. Goodwill acquired and allocated during the year is tested for
impairment at the end of the year in which the acquisition and allocation took place.
To test for impairment, goodwill is allocated, at the date of acquisition, to each cash-generating unit or
groups of cash-generating units which is expected to benefit from the acquisition.
Allocation is made to the lowest level at which goodwill is monitored for management purposes and
that lowest level is not larger than the operating segment determined in accordance with IFRS 8
(Operating Segments).
If the carrying amount of the cash-generating unit (or group of cash-generating units) exceeds the
recoverable amount, an impairment loss is recognized in the separate consolidated income statement.
The impairment loss is first recognized as a deduction of the carrying amount of goodwill allocated to
the cash-generating unit (or group of cash-generating units) and then only applied to the other assets of
the cash-generating unit in proportion to their carrying amount, up to the recoverable amount of the
assets with a finite useful life. The recoverable amount of a cash-generating unit (or group of cash-
generating units) to which goodwill is allocated is the higher of fair value less costs to sell and its value
in use.
92

In calculating the value in use, the estimated future cash flows are discounted to present value using a
discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset. The future cash flows are those arising from an explicit time horizon between three and
five years as well as those extrapolated to estimate the terminal value. The long-term growth rate used
to estimate the terminal value of the cash-generating unit (or group of cash-generating units) is
assumed not to be higher than the average long-term growth rate of the segment, country or market in
which the cash-generating unit (or group of cash-generating units) operates.
The value in use of a cash-generating unit which operates in a foreign currency is estimated in the local
currency by discounting cash flows to their present value on the basis of an appropriate rate for that
currency. The present value obtained is translated to Euro at the spot rate on the date of the
impairment test (in the case of the Telecom Italia Group, the date of the financial statements).
Future cash flows are estimated by referring to the current operating conditions of the cash generating
unit (or group of cash-generating units) and, therefore, do not include either benefits originating from
future restructuring for which the entity is not yet committed, or future investments for the
improvement or optimization of the cash-generating unit.
For the purpose of calculating impairment, the carrying amount of the cash-generating unit is
established based on the same criteria used to determine the recoverable amount of the cash-
generating unit, excluding surplus assets (that is, financial assets, deferred tax assets and net non-
current assets held for sale) and includes the goodwill attributable to non-controlling interests.
After conducting the goodwill impairment test for the cash-generating unit (or groups of cash-
generating units), a second level of impairment testing is carried out which includes the corporate
assets which do not generate positive cash flows and which cannot be allocated by a reasonable and
consistent criterion to the single units. At this second level, the total recoverable amount of all cash-
generating units (or groups of cash-generating units) is compared to the carrying amount of all cash-
generating units (or groups of cash-generating units), including also those cash-generating units to
which no goodwill was allocated, and the corporate assets.
See “Note—Goodwill” of the Notes to the Consolidated Financial Statements included elsewhere in this
Annual Report.
Š Intangible and tangible assets with a finite useful life. At every annual or interim closing date,
the Group assesses whether there are any indications of impairment of intangible and tangible assets
with a finite useful life. Both internal and external sources of information are used for this purpose.
Internal sources include obsolescence or physical damage, and significant changes in the use of the
asset and the economic performance of the asset compared to estimated performance. External sources
include the market value of the asset, changes in technology, markets or laws, increases in market
interest rates and the cost of capital used to evaluate investments, and an excess of the carrying
amount of the net assets of the Group over market capitalization. When indicators of impairment exist,
the carrying amount of the assets is reduced to the recoverable amount. The recoverable amount of an
asset is the higher of fair value less costs to sell and its value in use. In calculating the value in use, the
estimated future cash flows are discounted to their present value using a discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. Where it is
not possible to estimate the recoverable amount of an individual asset, we estimate the recoverable
amount of the cash-generating unit to which the asset belongs. Impairment losses are recognized in the
separate consolidated income statement. When the conditions that gave rise to an impairment loss no
longer exist, the carrying amount of the asset or cash-generating unit is increased to the revised
estimate of its recoverable amount, up to the carrying amount that would have been recorded had no
impairment loss been recognized. The reversal of an impairment loss is recognized as income in the
separate consolidated income statement.
The identification of impairment indicators, the estimation of future cash flows and the determination of fair
values of assets or groups of assets (or cash-generating units) require management to make significant
judgments concerning the identification and validation of impairment indicators, expected cash flows, applicable
discount rates, useful lives and residual values. These estimates can have a material impact on fair value and the
amount of any write-downs.
93

Financial assets
Financial assets include in particular investments, some of which are publicly traded and have highly volatile share
prices. Generally, an impairment charge is recorded when an investment’s carrying amount exceeds the present
value of its estimated future cash flows. The calculation of the present value of estimated future cash flows and
the determination of whether an impairment is other than temporary involve judgments and rely heavily on
assessments by management regarding the future development and prospects of the investee company. In
determining value, quoted market prices are used, if available, or other valuation methodologies. To determine
whether an impairment is other than temporary, we consider the ability and intent to hold the investment for a
reasonable period of time to ascertain whether a forecasted recovery of fair value exceeds the carrying amount,
including an assessment of factors such as the length of time and magnitude of the excess of carrying value over
market value, the forecasted results of the investee company, the regional economic environment and state of the
industry. Future adverse changes in market conditions, particularly a downturn in the telecommunications
industry, or poor operating results could result in losses or an inability to recover the carrying amount of the
investment, which could result in impairment charges.
Derivative financial instruments
Telecom Italia enters into several different types of derivative contracts in order to manage its exposure to
exchange rate and interest rate risks and to diversify the parameters of debt so that costs and volatility can be
reduced to within pre-established operational limits. The changes in the fair value of derivatives which do not
qualify for hedge accounting, fair value hedge derivatives and the ineffective portion of cash flow hedge
derivatives are recognized in the separate consolidated income statement in the period of change. The gain or
loss on the effective portion of qualifying cash flow hedges is recognized directly in a specific equity reserve. The
cumulative gain or loss is removed from equity and recognized in the separate consolidated income statement at
the same time the hedged transaction affects the separate consolidated income statement. The assessment of the
fair value of a derivative contract requires the use of quoted market prices, banker price quotations, price
quotations for similar instruments traded in different markets and, where applicable, pricing models. Pricing
models and their underlying assumptions impact the amount and timing of unrealized gains and losses
recognized. We rely on these pricing models when external fair values are unavailable. The estimates regarding
future prices require estimating several factors, including interest rates, currency values and cash flows. Prices
realized in the future could differ from these estimates, therefore producing different financial results.
Provision for employee severance indemnity
Employee severance indemnity, mandatory for Italian companies pursuant to art. 2120 of the Italian Civil Code, is
a deferred compensation and is based on the employees’ years of service and the compensation earned by the
employee during the service period.
Under IAS 19 (Employee Benefits), the employee severance indemnity is considered a “Defined benefit plan”,
except when employees, starting from the year 2007, choose to direct their accruing indemnity portions to
supplementary pension funds or to the Treasury Fund managed by the Italian Social Security Institute (INPS); in
such case the employee severance indemnity is classified as a “Defined contribution plan”.
The obligation for the employee severance indemnity classified as a defined benefit plan is determined in
accordance with actuarial methods. In the event that changes in assumptions are required, the future amounts of
the post employment benefit may be materially affected.
Provisions and contingent liabilities
We exercise considerable judgment in determining our exposure to and recognizing provisions for contingent
liabilities related to pending litigations or other outstanding claims subject to negotiated settlement, mediation,
arbitration or government regulation as well as other contingent liabilities.
Judgment is necessary in assessing the likelihood that a pending claim will succeed or a liability will arise and to
quantify the possible range of the final settlement. Provisions are recorded for liabilities when losses are
considered probable and can be reasonably estimated. Because of the inherent uncertainties in making such
94

judgments, actual losses may be different from the originally estimated provision. Significant estimates are
involved in the determination of provisions related to taxes, environmental liabilities, our workforce reduction
initiative and litigation risks. These estimates are subject to change as new information becomes available,
primarily with the support of internal specialists or outside consultants, such as actuaries or legal counsel.
Adjustments to loss provisions may significantly affect future operating results.
Income tax expense
The Group calculates income tax expense in each of the tax jurisdictions in which it operates. This process
involves a jurisdiction-by-jurisdiction calculation of the current tax charge and an assessment of temporary
differences resulting from the different treatment of certain items for consolidated financial and tax reporting
purposes. Temporary differences result in the recognition of deferred tax assets or liabilities in the consolidated
financial statements. Deferred tax assets are recognized to the extent that their realization is probable. The
realization of deferred tax assets depends, among other things, on the company’s ability to generate sufficient
taxable income in future years and the reversal of taxable temporary differences, taking into account any
restrictions on the carry-forward of tax losses. Various factors are used to assess the probability of the future
realization of deferred tax assets, including future reversals of existing taxable temporary differences, past
operating results, operational plans, loss carry-forward periods, and tax planning strategies. If actual results differ
from these estimates or, if these estimates must be adjusted in future periods, the financial position and results of
operations may be affected. In the event of a change in the assessment of future utilization of deferred tax assets,
the recognized deferred tax assets must be increased or decreased, as the case may be, and the consequent
effects recognized in the separate consolidated income statement.
95

Item 5. Operating And Financial Review And Prospects Results Of Operations For The Three Years Ended December 31, 2012
5.2 RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 2012
5.2.1 SIGNIFICANT TRENDS IMPACTING OUR CORE BUSINESSES
Increased competition continues to have a significant impact on the development of our business. Key trends
affecting our core businesses are:
Domestic Business Unit
Telecommunications are strengthening their central role in society, driven by the growing importance of
broadband, both fixed and mobile. The ongoing convergence of telecommunications, Information Technology,
Media and Consumer Electronics has led to greater competition and faster innovation, thus increasing the
industry’s complexity. These macro factors have, and continue to have, a material impact on how we plan for, and
manage our business.
In the Italian telecommunications market there has been a reduction in consumer and business customers’
spending on both fixed and mobile services, driven by a decline of traditional voice services, only partially offset
by the growth of new Broadband services.
The main strategic priorities and objectives of Telecom Italia in the Domestic market are to:
Š stabilize revenues;
Š defend market share on traditional services through quality of service;
Š grow innovative services leveraging on both access and applications services such as cloud services; and
Š develop UBB (UltraBroadband) networks taking into account further developments in the regulatory
framework and technological changes.
Brazil Business Unit
Growth in the Brazilian telecommunications market is driven by mobile. Significant trends include acceleration of
fixed to mobile substitution and the further development of broadband.
Mobile broadband represents in Brazil a competitive alternative to fixed broadband, considering the country’s
geography and fixed network characteristics.
In light of these market trends, TIM Brasil’s main strategic priorities and objectives are to:
Š expand its customer base through fixed to mobile substitution;
Š pursue high potential in mobile broadband penetration;
Š continue network evolution, mainly through the increase of coverage on 3G and the roll out of the 4G
network;
Š satisfy the growing demand for Internet services, while optimizing capital expenditure.
With respect to the telecommunications market in Argentina, growth is expected to be driven by fixed broadband
and VAS, and mobile Internet and VAS.
Argentina’s strategic priorities are to:
Š further build on its market share and its fixed and mobile platforms;
Š enlarge its network capacity;
Š support premium positioning on mobile to boost value added services’ revenues;
Š fully exploit the high demand for data traffic.
96

5.2.2 BUSINESS SEGMENTS
The Telecom Italia Group reports its financial results on basis of the following operating segments:
Š Domestic: includes operations in Italy for voice and data services on fixed and mobile networks for final
customers (retail) and other operators (wholesale), the operations of the Telecom Italia Sparkle group
(International wholesale) as well as the related support activities;
Š Brazil: includes mobile (TIM Celular) and fixed (TIM Celular and Intelig) telecommunications operations in
Brazil;
Š Argentina: includes fixed (Telecom Argentina) and mobile (Telecom Personal in Argentina and Núcleo in
Paraguay) telecommunications operations;
Š Media: includes television network operations and management;
Š Olivetti: includes manufacture of office products and services for Information Technology. It carries out
Solution Provider activities to automate processes and business activities for small and medium-size
enterprises, large corporations and vertical markets;
Š Other Operations: includes finance companies and other minor companies not strictly related to the core
business of the Telecom Italia Group.
Š Matrix – Other Operations: the company was sold on October 31, 2012, and consequently excluded from
the consolidation area as of such date.
Š companies entering the scope of consolidation:
Š Tim Fiber – Brazil Business Unit: on October 31, 2011, we acquired a 100% stake in the company
Eletropaulo Telecomunicações Ltda and a 98.3% stake in AES Communications Rio de Janeiro S.A., both
telecommunications infrastructure operators in the states of São Paolo and Rio de Janeiro, now
renamed Tim Fiber SP and Tim Fiber RJ, respectively. As a result of certain further transactions, the
original ownership interest in Tim Fiber RJ was subsequently increased to 99.7%. The acquisitions were
carried out through the subsidiary Tim Celular S.A., into which the two companies were recently
merged;
Š 4GH group – Domestic Business Unit: on July 27, 2011, the 4G Holding group entered the scope
of consolidation (retail sale of telephony products) following the acquisition of 71% of the ordinary
shares of 4G Holding S.p.A. which in turn holds 100% of 4G Retail S.r.l.; the two companies merged in
2012;
Š companies exiting the scope of consolidation:
Š Loquendo – Domestic Business Unit: on September 30, 2011, Loquendo S.p.A. was sold and
consequently exited the scope of consolidation.
For a description of certain of these businesses, see “Item 4. Information on the Telecom Italia Group–4.2
Business Units”.
For purposes of the following discussion selected financial data of each Business Unit has been provided for 2012,
2011, and 2010 consistent with the structure of each Business Unit at December 31, 2012.
5.2.3 NON-GAAP FINANCIAL MEASURES
In this Annual Report on Form 20-F, in addition to figures presented in accordance with IFRS as issued by IASB,
we disclose figures derived from IFRS that are non-GAAP financial measures (“Non-GAAP Measures”).
Such financial data is considered Non-GAAP financial measures as defined in Item 10(e) of Regulation S-K under
the 1934 Act.
97

In this Annual Report the Non-GAAP Measure used relate to Net Financial Debt.
Net Financial Debt is a Non-GAAP financial measure as defined in Item 10(e) of Regulation S-K under the 1934
Act, but is widely used in Italy by financial institutions to assess liquidity and the adequacy of a company’s
financial structure. We believe that Net Financial Debt provides an accurate indicator of our ability to meet our
financial obligations (represented by gross debt) by our available liquidity, represented by the other items shown
in the reconciliation table. Net Financial Debt allows us to show investors the trend in our net financial condition
over the periods presented. The limitation on the use of Net Financial Debt is that it effectively assumes that gross
debt can be reduced by our cash and other liquid assets. In fact, it is unlikely that we would use all of our liquid
assets to reduce our gross debt all at once, as such assets must also be available to pay employees, suppliers, and
taxes, and to meet other operating needs and capital expenditure requirements. Net Financial Debt and its ratio to
equity (including Non-controlling Interest), or leverage, are used to evaluate our financial structure in terms of
sufficiency and cost of capital, level of debt, debt rating and funding cost, and whether our financial structure is
adequate to achieve our business plan and our financial targets. Our management believes that our financial
structure is sufficient to achieve our business plan and financial targets. Our management monitors the Net
Financial Debt and leverage or similar measures as reported by other telecommunications operators in Italy and
outside Italy, and by other major listed companies in Italy, in order to assess our liquidity and financial structure
relative to such companies. We also monitor the trends in our Net Financial Debt and leverage in order to
optimize the use of internally generated funds versus funds from third parties. Net Financial Debt is reported in
our Italian Annual Report to shareholders and is used in presentations to investors and analysts. Net Financial
Debt is calculated as follows:
As of December 31,
2012 2011
(millions of euros)
Non-current financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,091 35,860
Current financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,150 6,091
Gross financial debt (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,241 41,951
Non-current financial assets (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,496) (2,949)
Current financial assets:
Securities other than investments (current assets) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (754) (1,007)
Financial receivables and other current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (502) (462)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,436) (6,714)
Total current financial assets (C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,692) (8,183)
Financial assets (D=B+C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,188) (11,132)
Net financial debt (A+D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,053 30,819
5.2.4 OVERVIEW OF 2012 RESULTS OF OPERATIONS
In 2012, the following characterized the results in our domestic market:
Š in the Domestic Fixed Telecommunications Service Business, service revenues posted a -3.8%
year on year result, a modest decline compared to the previous year. The continuing erosion of the
access market, the decrease in market share (674 thousand fixed line losses in 2012 compared to
699 thousand fixed line losses in 2011 and 746 thousand fixed line losses in 2010) and lower traditional
services demand and prices (both voice and data, especially in the Business segment) continued in
2012. The line loss was due to, apart from churn in favor of OLOs, disconnection of fixed lines without
migration to other operators (a trend that is currently observed e.g. with respect to second homes or
clients who abandon their landline and use their mobile phone only). On the revenue side these
dynamics are partially offset by actions aimed to preserve the value of our customer base focused on
the upselling of high value solutions, especially in the Broadband area;
Š the Domestic Mobile Telecommunications Service Business, is still characterized by aggressive
and competitive behavior that has resulted in a decrease in prices, especially for traditional services
(voice and data). This dynamic, in combination with the sharp reduction in mobile termination rates
98

(MTR) (from 5.3 euro cent to 2.5 euro cent) and the EU price cap on mobile data resulted in a drop of
service revenues (-9.0% vs. -8.7% in 2011), only partially offset by the solid growth of mobile internet
and by the sales of tablets and smartphones.
In 2012, the following characterized the results in our international markets:
Š Brazil. Tim Brasil’s customer base grew in 2012 by 9.8% compared to 2011 (adding 6.3 million new
customers); its market share expanded to 26.9% from 26.5% in 2011. Based on value market share (share in
service revenues) Tim Brasil was the second largest Brazilian mobile operator. The company also recorded
growth in its pre-paid segment increasing 8.9% year over year (reaching 59.7 million customers), while the
post-paid clients increased 15.2% year over year (totaling 10.7 million subscribers).
Tim Brasil continued to focus on growth and profitability, through cost discipline and initiatives to increase
revenue from value-added services, increase traffic volumes/usage and network service quality. In
particular, revenues from services increased in 2012 by 6.9% compared to 2011 and revenues from handsets
grew in 2012 by 35.3% compared to 2011, reflecting the company’s strategy of market penetration with
high-end handsets (smartphones/webphones and tablets) as a lever to grow mobile data services.
On the cost side, Tim Brasil adopted a disciplined approach to client acquisition, credit analysis and operating
expenses.
Š Argentina. In the Fixed Business growth was mainly due to the increase in the broadband business. The
leadership of the brand “Arnet” was based on effective communication with a differentiated offer by
segment and competitive pricing. The broadband accesses increased by more than 5% over the prior year
reaching 1.6 million accesses as of December 31, 2012. The ARPU increased by 17.6% over the prior year
reaching 102.3 Argentine Pesos.
Rates for regulated voice services continued to be affected by the freezing of rates established by the Public
Emergency Law enacted in January 2002. During 2012, the lines in service remained broadly stable at
4.1 million lines as of December 31, 2012. The ARBU (Average Revenue Billed per User) increased by more
than 5% over the prior year as a result of the increase in value-added services and the penetration of traffic
plans.
In the Mobile Business Telecom Personal’s customer portfolio increased by 0.8 million customers (+4.3%
over the prior year), reaching 19 million lines as of December 31, 2012, of which 33% were post-paid
customers.
At the same time, ARPU improved approximately by 12% over the prior year. A large part of this growth can
be traced to value-added services (including SMS text messaging and the mobile internet service) which
accounted for approximately 53% of mobile services revenues in 2012.
In Paraguay, the Núcleo customer base grew by about 7% over the prior year and at the end of 2012 Núcleo
reached 2.3 million lines, of which 19% were postpaid. During the fourth quarter of 2012, Núcleo focused its
efforts on the introduction of Mobile number portability (MNP), which took place on November 30, seeking
to inform the market on the MNP benefits.
99

The following table sets forth our consolidated income statement for the years ended December 31, 2012, 2011
and 2010.
Starting from the first half of 2012 the Telecom Italia Group early adopted and retrospectively applied the revised
version of IAS 19 (Employee Benefits). Accordingly, the comparative figures of 2011 and 2010 have been restated
on a consistent basis.
2012 2011 2010
(millions of euros)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,503 29,957 27,571
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298 299 255
Total operating revenues and other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,801 30,256 27,826
Acquisition of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,948) (12,859) (11,383)
Employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,919) (3,992) (3,981)
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,882) (1,859) (1,422)
Change in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 56 (135)
Internally generated assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581 569 547
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,340) (5,496) (5,542)
Gains (losses) on disposals of non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 3 11
Impairment reversals (losses) on non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,432) (7,358) (63)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,926 (680) 5,858
Share of profits (losses) of associates and joint ventures accounted for using the
equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) (39) 99
Other income (expenses) from investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 16 289
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,082 2,464 3,081
Finance expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,048) (4,504) (5,199)
Profit (loss) before tax from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . (44) (2,743) 4,128
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,235) (1,610) (549)
Profit (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,279) (4,353) 3,579
Profit (loss) from Discontinued operations/Non-current assets held for sale . . . . . 2 (13) (7)
Profit (loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,277) (4,366) 3,572
Attributable to:
Owners of the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,627) (4,811) 3,118
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350 445 454
5.2.5 BUSINESS UNIT FINANCIAL DATA
As from the first half of 2012 the Telecom Italia Group early adopted and retrospectively applied the revised
version of IAS 19 (Employee Benefits). Accordingly, the comparative figures of 2011 and 2010 for the Business
Units have been restated on a consistent basis.
On October 31, 2012, Telecom Italia S.p.A. completed the sale of its wholly-owned subsidiary Matrix, to Libero,
controlled by Weather Investment II S.à.r.l.. In 2012 Matrix was also moved to Other Operations and was
consequently no longer part of Core Domestic in the Domestic Business Unit. Accordingly, the comparative figures
of 2011 and 2010 have been restated on a consistent basis.
100

The table below sets forth revenues, operating profit (loss), capital expenditures and number of employees by
Business Units, for the periods indicated.
Domestic Brazil Argentina(1) Media Olivetti
Other
Operations
Adjustments
and
eliminations
Consolidated
Total
(millions of euros, except number of employees)
Revenues(2) . . . . . . . . . . . . . . 2012
2011
2010
17,884
18,991
20,025
7,477
7,343
6,199
3,784
3,220
798
222
238
258
280
343
391
62
119
205
(206)
(297)
(305)
29,503
29,957
27,571
Operating profit (loss) . . . . . 2012
2011
2010
1,078
(1,996)
5,197
966
984
685
214
509
110
(263)
(88)
(92)
(65)
(43)
(24)
(3)
(37)
(34)
(1)
(9)
16
1,926
(680)
5,858
Capital expenditures on an
accrual basis . . . . . . . . . . . .
2012
2011
2010
3,072
4,185
3,087
1,500
1,290
1,216
557
556
188
57
61
67
3
5
5
7
16
23
—
(18)
(3)
5,196
6,095
4,583
Number of employees at
year-end(3) . . . . . . . . . . . . .
2012
2011
2010
53,224
55,047
56,106
11,622
10,539
10,114
16,803
16,350
15,650
735
765
777
778
1,075
1,090
22
378
463
—
—
—
83,184
84,154
84,200
(1) In the scope of consolidation since October 13, 2010.
(2) Revenues are total revenues of the various business units of the Telecom Italia Group before elimination of intercompany sales (but after
elimination of sales between companies within the same major business area).
(3) The number of employees at year-end excludes employees relating to the consolidated companies considered as Discontinued
operations/Non-current assets held for sale, and includes personnel with temporary work contracts.
5.2.6 Year Ended December 31, 2012 Compared With Year Ended December 31, 2011
❖ REVENUES
Revenues amounted to 29,503 million euros in 2012, a decrease of 454 million euros, or 1.5%, compared to
29,957 million euros in 2011.
The table below sets forth for the periods indicated gross revenues by Business Unit and consolidated revenues.
2012 2011 Changes
Revenues(1)
% of
Consolidated
revenues Revenues(1)
% of
Consolidated
revenues (a-b) %
(a) (b)
(millions of euros, except percentages)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,884 60.6 18,991 63.4 (1,107) (5.8)
Core Domestic . . . . . . . . . . . . . . . . . . . . . . . . 16,933 57.4 18,082 60.4 (1,149) (6.4)
International Wholesale . . . . . . . . . . . . . . . 1,393 4.7 1,393 4.6 — —
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,477 25.3 7,343 24.5 134 1.8
Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,784 12.8 3,220 10.7 564 17.5
Media, Olivetti and Other Operations(2) . . . . . 564 1.9 700 2.3 (136)
Adjustments and eliminations . . . . . . . . . . . . . . . (206) (0.6) (297) (0.9) 91
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,503 100.0 29,957 100.0 (454) (1.5)
(2) The Other Operations of the Telecom Italia Group consist of the financial companies and other minor companies not associated with the
core business of the Telecom Italia Group.
The Domestic Business Unit (divided into Core Domestic and International Wholesale) reported a decline of
1,107 million euros (-5.8%) in revenues in 2012, compared to 2011.
101

This decrease is partly attributable to the entry into force, in July 2012, of the new mobile termination rates
(MTR), which reduced these rates by 53% (from 5.3 to 2.5 eurocents), representing a sharp decrease compared to
the tariffs in effect for full year 2011.
The performance of the domestic market was also affected by the macroeconomic environment and continuing
competitive pressures.
In particular:
Š revenues from services were 17,077 million euros in 2012, down -5.6% compared to 2011. Specifically,
revenues from services in the Mobile business decreased by 9.0% compared to 2011. The Fixed-line business
revenues from services declined 496 million euros (-3.8% compared with 2011). The decrease in revenues in
the mobile market was mainly due to the dilution of the ARPU on traditional services such as voice and text
messaging and to the above-mentioned reduction of MTR tariffs (-286 million euros), which decrease was
only partly offset by the growth of users and mobile internet. With respect to the fixed line market, the
reduction is mainly attributable to the above-mentioned decrease in access lines and the contraction of
prices and revenues from traditional services, both voice and data, in particular in the TOP Client segment;
Š product revenues of 807 million euros were 93 million euros (-10.3%) lower compared to 2011. The growth
in Mobile devices, driven by a greater commercial push on mobile internet-enabled devices was more than
offset by the sharp decline in Fixed-line products, attributable to a contraction of the market, but also to a
more selective commercial strategy to defend the profit base.
With respect to the Brazil Business Unit, revenues grew by 1.8% in 2012 compared to the prior year. Revenues
from services continued their positive trend, driven by the growth of the customer base (reaching approximately
70.4 million lines at December 31, 2012, up 9.8% compared to December 31, 2011). Handset revenues also
increased compared to 2011.
With respect to the Argentina Business Unit, revenues increased 17.5% compared to 2011
(+564 million euros).
For a more detailed analysis of revenue performance by individual Business Units, reference should be made to
“Item 4. Information On The Telecom Italia Group—4.2 Business Units”.
❖ OTHER INCOME
The following table sets forth other income for the years ended December 31, 2012 and 2011:
2012 2011 Changes
(a) (b) (a-b) %
Late payment fees charged for telephone services . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 71 (2) (2.8)
Recovery of employee benefit expenses, purchases and services rendered . . . 36 36 — —
Capital and operating grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 24 (6) (25.0)
Damage compensation, penalties and sundry recoveries . . . . . . . . . . . . . . . . . . . . . 53 36 17 47.2
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 132 (10) (7.6)
Total other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298 299 (1) (0.3)
❖ OPERATING EXPENSES
Our operating expenses amounted to 27,875 million euros in 2012, a decrease of 3,061 million euros, or 9.9%
compared to 30,936 million euros in 2011. Operating expenses declined primarily as a result of the reduced
impairment losses on non-current assets which decreased from 7,358 million euros in 2011 to 4,432 million euros
in 2012. The components of our operating expenses include the following:
Š Acquisition of goods and services amounted to 12,948 million euros in 2012, an increase of 89 million
euros compared to 2011 (12,859 million euros). The increase is largely due to the increase in the commercial
102

and technical costs of the Argentina Business Unit (+300 million euros, including a negative exchange rate
effect of 24 million euros) and the Brazil Business Unit (+109 million euros, including a negative exchange
rate effect of 320 million euros), needed to support the growth of the customer base, voice and data traffic
volumes, sales of mobile internet-enabled devices and, consequently revenues in Latin America. Offsetting
these increases, the domestic business reduced acquisitions of goods and services by 345 million euros
compared to 2011, partly attributable to a decrease in the portion of revenues to be paid to other operators,
related to the reduction in mobile termination rates.
The following table sets forth the acquisition of goods and services for the years ended December 31, 2012 and
2011:
2012 2011 Changes
(a) (b) (a-b) %
Purchase of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,610 2,525 85 3.4
Portion of revenues to be paid to other operators and interconnection
costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,018 4,232 (214) (5.1)
Commercial and advertising costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,154 2,259 (105) (4.6)
Power, maintenance and outsourced services . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,847 1,618 229 14.2
Rent and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 666 647 19 2.9
Other service expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,653 1,578 75 4.8
Total acquisition of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,948 12,859 89 0.7
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.9 42.9
Š Employee benefits expenses
The following table sets forth employee benefits expenses for the years ended December 31, 2012 and 2011:
2012 2011 Changes
(a) (b) (a-b) %
Employee benefits expenses—Italian companies:
Ordinary employee expenses and costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,945 3,144 (199) (6.3)
Corporate restructuring expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 12 (4) (33.3)
Total employee benefits expenses—Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,953 3,156 (203) (6.4)
Employee benefits expenses—Outside Italy
Ordinary employee expenses and costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 949 836 113 13.5
Corporate restructuring expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 — 17
Total employee benefits expenses—Outside Italy . . . . . . . . . . . . . . . . . . . . . . . 966 836 130 15.6
Total employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,919 3,992 (73) (1.8)
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3 13.3
Employee benefits expenses were 3,919 million euros in 2012 compared to 3,992 million euros in 2011, a
decrease of 73 million euros. The change was affected by:
Š the reduction of 203 million euros in the Italian component of employee benefits expenses, mainly due to
the reduction in ordinary employee benefits expenses, resulting from the decrease in the average salaried
workforce of 1,214 compared to 2011, and from restructuring expenses that were 4 million euros lower
(8 million euros in 2012; 12 million euros in 2011). In 2012, these expenses derive from the balance between
the provision charge of 15 million euros for Olivetti I-Jet (resulting from the agreements signed with the
trade unions of the company put into liquidation in June 2012 a decline of 1.8%) and the use of a total of
103

7 million euros from the remaining provision for mobility under Law 223/91 by Telecom Italia S.p.A. (6
million euros), and by TI Sparkle and TI Information Technology (1 million euros). In 2011 the provision for
mobility under Law 223/91, relating to the agreements signed in 2010 with the trade unions of the Parent
Telecom Italia S.p.A. and of TI Information Technology, was adjusted by a total of 12 million euros;
Š the increase of 130 million euros in the foreign component of employee benefits expenses, due to the
increase of 1,409 in the average salaried workforce, relating to the Brazil Business Unit and the Argentina
Business Unit. In addition there was an increase of 17 million euros in restructuring expenses, related to the
provision charge of the Argentina Business Unit (15 million euros) and Olivetti Engineering S.A., a subsidiary
of Olivetti I-Jet (2 million euros).
The Group’s average salaried workforce for the periods indicated was as follows:
2012 2011 Changes
(a) (b) (a-b) %
(full time equivalent
units, except percentages)
Average salaried workforce—Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,347 53,561 (1,214) (2.3)
Average salaried workforce—Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,217 24,808 1,409 5.7
Total average salaried workforce(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,564 78,369 195 0.2
(1) Includes the average employees with temp work contracts: 61 in 2012 (58 in Italy and 3 outside Italy). In 2011 the headcount was 87
(75 in Italy and 12 outside Italy).
Group’s employees at December 31, 2012 and 2011 were as follows:
As of December 31,
2012 2011 Changes
(a) (b) (a-b) %
(units, except percentages)
Employees—Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,419 56,878 (2,459) (4.3)
Employees—Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,765 27,276 1,489 5.5
Total Employees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,184 84,154 (970) (1.2)
(1) Includes employees with temporary work contracts: 43 units at December 31, 2012 and 42 units at December 31, 2011.
Š Other operating expenses
The following tables sets forth other operating expenses for the years ended December 31, 2012 and 2011.
2012 2011 Changes
(a) (b) (a-b) %
Writedowns and expenses in connection with credit management . . . . . . . 548 533 15 2.8
Accruals to provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214 128 86 67.2
Indirect duties and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391 349 42 12.0
TLC operating fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621 675 (54) (8.0)
Penalties, compensation and administrative sanctions . . . . . . . . . . . . . . . . . . 29 41 (12) (29.3)
Association dues and fees, donations, scholarships and traineeships . . . . 25 23 2 8.7
Sundry expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 110 (56) (50.9)
Total other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,882 1,859 23 1.2
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 6.2
Other operating expenses in 2012 are substantially in line with 2011.
104

The decreases for the Domestic Business Unit (-70 million euros) and the Brazil Business Unit (-28 million
euros, including a negative exchange rate effect of 54 million euros) are substantially offset by the increases
for the other Business Units, primarily the Argentina Business Unit (+76 million euros, including a negative
exchange rate effect of 6 million euros). In particular:
Š writedowns and expenses in connection with credit management (548 million euros; 533 million euros
in 2011) consist of 370 million euros (389 million euros in 2011) relating to the Domestic Business Unit,
100 million euros (unchanged compared to 2011) relating to the Brazil Business Unit and 47 million
euros (29 million euros in 2011) relating to the Argentina Business Unit;
Š accruals to provisions (214 million euros; 128 million euros in 2011) consist of 91 million euros
(60 million euros in 2011) relating to the Brazil Business Unit, 92 million euros (50 million euros in
2011) relating to the Domestic Business Unit and 17 million euros (unchanged compared to 2011)
relating to the Argentina Business Unit;
Š TLC operating fees (621 million euros; 675 million euros in 2011) consist of 487 million euros
(554 million euros in 2011) relating to the Brazil Business Unit, 73 million euros (61 million euros in
2011) relating to the Argentina Business Unit and 59 million euros (58 million euros in 2011) relating to
the Domestic Business Unit.
Š Depreciation and Amortization
The following table sets forth depreciation and amortization for the years ended December 31, 2012 and
2011.
2012 2011 Changes
(a) (b) (a-b) %
Amortization of intangible assets with a finite useful life . . . . . . . . . . . . . . . . 2,212 2,163 49 2.3
Depreciation of tangible assets—owned and leased . . . . . . . . . . . . . . . . . . . . 3,128 3,333 (205) (6.2)
Total depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,340 5,496 (156) (2.8)
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 18.3
The decrease in depreciation and amortization charges is mainly attributable to the Domestic Business Unit
(-305 million euros) principally due to lower amounts of depreciable or amortizable assets. This decrease was
offset by the increase in depreciation and amortization charges of the Argentina Business Unit (+130 million
euros), partly due to the reduction in the useful lives of Customer Relationships which resulted in an increase
of 66 million euros in amortization charges.
Š Gains (losses) on disposals of non-current assets
In 2012, gains on disposals of non-current assets were 53 million euros and included the gain, net of the
incidental expenses of 49 million euros, in connection with the completion of the sale of Matrix on
October 31, 2012, as well as net gains on non-current assets mainly relating to the Domestic Business Unit.
In 2011, net gains on disposals of non-current assets amounted to 3 million euros and included the gain of
35 million euros, net of the related incidental expenses, realized on the sale of Loquendo at the end of
September 2011 and the net losses from the disposal of tangible assets, mainly of the Parent, for the
replacement and subsequent disposal of dedicated mobile telephony plant.
Š Net impairment losses on non-current assets
Net impairment losses on non-current assets were 4,432 million euros in 2012 (7,358 million euros in 2011)
and are attributable to the annual impairment test conducted for the annual financial statements.
Specifically, this item refers to:
– 4,016 million euros of the impairment loss is due to the Core Domestic Cash-generating Unit in the
Domestic Business Unit. This was a further write down to the goodwill write down of 7,307 million
euros in 2011;
105

– a total impairment of non-current assets and goodwill of 157 million euros in the Media Business
Unit, established following the impairment test process and also taking account of the prospective sale
of the investee La7 S.r.l. Specifically, the amount of impairment loss relating solely to the goodwill of
the Media Business Unit was 105 million euros, while the remainder relates to non-current assets. This
goodwill was previously written down by 57 million euros in 2011;
– a total impairment loss of 253 million euros on Intangible assets and Goodwill in the Argentina
Business Unit, recognized at the time control was acquired by the Telecom Italia Group. In detail, the
amount of the impairment loss on Goodwill was 168 million euros, while the remaining portion (85
million euros) related to the impairment loss on Customer relationships.
Further details are provided in the “Note—Goodwill” of the Notes to the Consolidated Financial Statements
❖ OPERATING PROFIT (loss)
Operating profit was 1,926 million euros in 2012 (operating loss of 680 million euros in 2011).
The operating profit was adversely affected by the impact of the impairment charge of 4,426 million euros in
2012 (7,364 million euros in 2011 and resulted in an operating loss for that period).
❖ SHARE OF PROFITS (LOSSES) OF ASSOCIATES AND JOINT VENTURES ACCOUNTED FOR USING THE EQUITY
METHOD
The Share of profits (losses) of associates and joint ventures accounted for using the equity method was a
loss of 6 million euros in 2012, and mainly related to Tiglio I S.r.l.
In 2011 this was a loss of 39 million euros, due to the writedown of the entire investment in the Italtel
Group.
❖ OTHER INCOME (EXPENSES) FROM INVESTMENTS
In 2012 other income (expenses) from investments shows a net income of 2 million euros.
In 2011, the income balance of Other income (expenses) from investments was 16 million euros and referred
to the gain (17 million euros) on the sale of the entire 27% investment in the Cuban operator EtecSA.
❖ FINANCE INCOME (EXPENSES)
Finance income (expenses) was a net expense of 1,966 million euros (a net expense of 2,040 million euros in
2011), an improvement of 74 million euros. This decrease was mainly due to the positive change in the value
of several hedging derivatives, attributable to market fluctuations linked to currency translation. These
changes, which are unrealized accounting changes, do not result in any actual monetary settlement. Other
positive effects derive from the higher capitalization of finance expenses relating to the purchase of rights to
use LTE mobile telephony frequency bands, by the Domestic Business Unit.
For further details about finance income and finance expenses, please see “Note—Finance income and
Finance expenses”, of the Notes to the Consolidated Financial Statements included elsewhere in this Annual
Report.
❖ INCOME TAX EXPENSE
Income tax expense was 1,235 million euros, a decrease of 375 million euros compared to 2011. This item
also includes 319 million euros relating to the recognition of the credit for the refund receivables for years
prior to 2012, following the entry into force of Decree Law 16/2012, which enabled a request for a refund of
IRES tax for the IRAP tax calculated on the cost of labor. Net of this effect, income tax decreased by
56 million euros compared to 2011, mainly as a result of the reduction in the tax base of the Parent Telecom
Italia.
106

❖ PROFIT (LOSS) FROM DISCONTINUED OPERATIONS/NON-CURRENT ASSETS HELD FOR SALE
In 2012, the balance was a profit of 2 million euros, while in 2011 was a loss of 13 million euros and included
profits and losses incurred in connection with sales transactions of prior years.
5.2.7 RESULTS OF OPERATIONS OF BUSINESS UNITS FOR THE YEAR ENDED DECEMBER 31, 2012 COMPARED WITH
THE YEAR ENDED DECEMBER 31, 2011
❖ DOMESTIC
was consequently no longer part of Core Domestic in the Domestic Business Unit. Accordingly, the comparative
figures of 2011 have been restated on a consistent basis.
The following table sets forth, certain financial and other data for the Domestic Business Unit for the years ended
December 31, 2012 and 2011.
2012 2011 Changes
(a) (b) (a-b) %
(millions of euros, except
percentages and employees)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,884 18,991 (1,107) (5.8)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,078 (1,996) 3,074
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0
Employees at year-end (units)(*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,224 55,047 (1,823) (3.3)
(*) The 1,823 headcount change includes the effects resulting from the acquisition, as of January 1, 2012, of the Contact Center business
and the related 249 staff from the company Advalso of the Olivetti Business Unit.
Revenues
Revenues decreased by 1,107 million euros, or 5.8%, from 18,991 million euros in 2011 to 17,884 million euros in
2012.
Such decrease was due in part to the continuing weak economy and a market characterized by sharp price
reductions on traditional services and tough competition.
The decrease was primarily attributable to the decline in revenues on traditional services as well as the decline in
revenues due to the new mobile termination rates (MTR)—which reduced these rates by 53% (from 5.3 to 2.5
euro cents)—and a Europe-wide cap on the price of roaming traffic. These decreases were only partly offset by
the growth in innovative services, especially fixed-line broadband and mobile internet.
The following table sets forth the Domestic Business Unit’s revenues by market segment for the years ended
Š Core Domestic
2012 2011 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,933 18,082 (1,149) (6.4)
Consumer(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,835 9,168 (333) (3.6)
Business(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,777 3,064 (287) (9.4)
Top(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,102 3,529 (427) (12.1)
National Wholesale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,052 2,104 (52) (2.5)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 217 (50) (23.0)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 958 (2,136) 3,094
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 (11.8)
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,289 54,038 (1,749) (3.2)
107

(1) The company Matrix was sold on October 31, 2012. In 2012 Matrix was also classified under Other Operations, and thus excluded from
the Consumer segment of Core Domestic. The periods under comparison have been reclassified accordingly.
(2) 2011 figures for the Business and Top segments have been reclassified for purposes of comparison with the 2012 figures, which take into
account the new customer classification criteria introduced at the beginning of 2012.
Š Consumer: revenues for the Consumer segment were 8,835 million euros, a decrease of 333 million euros
compared to 2011 (-3.6%); although revenues declined, this reflects an improvement in the overall recovery
from the reduction recorded in 2011 (-5.0%) despite the negative impact of lower termination rates
(-211 million euros). This improvement was due in particular to a stabilization of the erosion in voice
revenues (both Fixed and Mobile), strong growth in Browsing revenues and growth in sales of devices (+118
million euros, +35.4%), especially mobile internet enabled devices. The decrease, which is entirely
attributable to revenues from services (-451 million euros, -5.1%), is due—in addition to the aforementioned
lower termination rates—to traditional Voice and Messaging services, the effects of which are in part offset
by growth in mobile internet (+70 million euros, +13%) and fixed broadband access (+34 million euros,
+3.6%).
Š Business: revenues in the Business segment were 2,777 million euros in 2012, a decrease of 9.4% or
287 million euros compared to 2011, due to erosion of the customer base (-6.6% Fixed and -4.8% Mobile,
excluding data only lines, compared to 2011) and to a fall in usage and Average Revenue Per User (ARPU)
especially on voice services.
Š Top: revenues in the Top segment were 3,102 million euros in 2012, a decrease of 427 million euros
(-12.1%) compared to 2011, mainly due to a slow down in demand due to the weak economy. Revenues from
services decreased 260 million euros (-8.6%), primarily attributable to traditional voice and data services,
only partly offset by growth in new services, in particular cloud and mobile internet. Revenues from sales
decreased 167 million euros (-34% compared to 2011). This performance, in addition to the deteriorating
economy already noted for services, also reflects more selective commercial policies aimed at improving
profitability.
Š National Wholesale: revenues in the Wholesale segment amounted to 2,052 million euros in 2012, a
decline of 52 million euros (-2.5%) on 2011, mainly due to lower carrying and interconnection revenues, only
partly offset by growth in access services to alternative operators.
Š International Wholesale
2012 2011 Changes
(a) (b) (a-b) %
(millions of euros, except percentages and employees)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,393 1,393 — —
Of which third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 985 960 25 2.6
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 141 (20) (14.2)
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 10.1
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . 935 1,009 (74) (7.3)
International Wholesale segment revenues were 1,393 million euros in 2012, in line with the previous year.
During 2012 International Wholesale continued to pursue rationalization measures aimed at a more selective
customer portfolio and traffic strategy.
Revenue performance in Voice (+1.4%) and IP/Data (+5.8%) businesses helped to contain the contraction
reported in the other segments, especially multinational customers (-10%).
Operating profit (loss)
Operating profit (loss) was a profit of 1,078 million euros, compared to a loss of 1,996 million euros in 2011, up
3,074 million euros. This improvement in 2012 in reporting an operating profit is mainly due to the lower goodwill
impairment loss of 4,016 million euros in 2012 attributable to the Core Domestic cash-generating unit compared
to a goodwill write-off of 7,307 million euros in 2011.
108

The operating profit (loss) was impacted by the change in the following line items as reflected in the table below.
2012 2011 Changes
(a) (b) (a-b) %
Acquisition of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . 6,409 6,754 (345) (5.1)
Employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,834 3,031 (197) (6.5)
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699 769 (70) (9.1)
In detail:
Š acquisition of goods and services decreased 345 million euros (-5.1%) compared to 2011. This decrease
was mainly due to a decline in revenues due to other telecommunication operators, owing principally to the
reduction in Mobile termination rates;
Š employee benefits expenses decreased 197 million euros from 2011, attributable mostly to the reduction
in the average salaried workforce by 710 compared to the previous year, offset by higher expenses as a
result of the acquisition, as of January 1, 2012, of the Contact Center business and the related 249 staff from
the company Advalso of the Olivetti Business Unit;
Š other operating expenses decreased 70 million euros compared with 2011, as shown in the following
table:
2012 2011 Changes
(a) (b) (a-b) %
Impairments and expenses in connection with credit
management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370 389 (19) (4.9)
Provision charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 50 42 84.0
TLC operating fees and charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 58 1 1.7
Indirect duties and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 108 (5) (4.6)
Sundry expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 164 (89) (54)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699 769 (70) (9.1)
Employees
Employees are 52,289 as of December 31, 2012, a reduction of 1,749 units compared to December 31, 2011.
❖ BRAZIL
The following table sets forth certain financial and other data for the Brazil Business Unit for the years ended
2012 2011 2012 2011 Changes
(a) (b) (a-b) %
percentages and
employees)
(millions of Brazilian reais, except
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,477 7,343 18,764 17,086 1,678 9.8
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 966 984 2,424 2,289 135 5.9
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.9 13.4 12.9 13.4
Employees at year-end (units) . . . . . . . . . . . . . . . . . 11,622 10,539 11,622 10,539 1,083 10.3
Revenues
Revenues for 2012 were 18,764 million Brazilian reais, an increase of 1,678 million Brazilian reais on 2011
(+9.8%). Revenues from services were 16,420 million Brazilian reais, up from 15,353 million Brazilian reais in
109

2011 (+6.9%). Revenues from product sales increased from 1,733 million Brazilian reais in 2011 to 2,344 million
Brazilian reais in 2012 (+35.3%), reflecting the company’s strategy of market penetration with high-end handsets
(smartphones/webphones and tablets) as an important lever for the expansion of revenues from data services.
Mobile Average Revenue Per User (ARPU) was 19.1 reais in 2012 compared with 21.4 reais for 2011 (-10.7%). The
performance of ARPU and revenues from services not only reflects competitive pressures that have led to a
decline in unit prices in the voice business, but also the lower mobile operator network interconnection rate, in
force since February 2012.
The total number of lines at December 31, 2012 was 70.4 million, 9.8% higher than at December 31, 2011,
representing a 26.9% market share measured by number of lines.
Operating profit
Operating profit was 2,424 million Brazilian reais, up 135 million Brazilian reais on 2011. Operating profit growth
was sustained by the increase in revenues, mainly VAS, offset in part by higher termination costs due to increased
traffic volumes and costs strictly linked to changes in the customer base.
It should be noted that operating profit includes the administrative penalties imposed by the Brazilian
telecommunications authority (ANATEL) and other expenses of 53 million Brazilian reais. In particular, disputes
with ANATEL concerning the years 2007/2009 and amounting to 26 million Brazilian reais, were recognized
following confirmation by the Board of the Brazilian telecommunications authority of measures taken against TIM
Brasil. An additional 11 million Brazilian reais relates to disputes with other operators regulated by ANATEL for the
years 2008-2011.
With regard to changes in costs, the following table sets forth certain expenses for the years ended December 31,
2012 and 2011.
2012 2011 2012 2011 Changes
(a) (b) (a-b) %
(millions of euros) (millions of Brazilian reais,
except percentages)
Acquisition of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,508 4,399 11,313 10,234 1,079 10.5
Employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344 321 865 747 118 15.8
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 719 747 1,804 1,738 66 3.8
Change in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 (19) 4 (45) 49 —
Š acquisition of goods and services were 11,313 million Brazilian reais (10,234 million Brazilian reais in 2011).
The 10.5% increase compared to the previous year (+1,079 million Brazilian reais) was due to the following:
Š +418 million Brazilian reais in revenues due to other TLC operators;
Š +497 million Brazilian reais, mainly, for the purchases of products;
Š +191 million Brazilian reais for rent and lease costs;
Š -27 million Brazilian reais for external services costs;
Š employee benefits expenses, were 865 million Brazilian reais, up 118 million Brazilian reais compared with
2011 (+15.8%). The average salaried workforce grew from 9,194 in 2011 to 10,051 in 2012. The percentage
of employee benefits expenses to revenues was 4.6% in 2012, increasing 0.2 percentage points compared to
2011;
110

Š other operating expenses were 1,804 million Brazilian reais, an increase of 3.8% (1,738 million Brazilian reais
in 2011). Such expenses are set forth in the table below for the years ended December 31, 2012 and 2011.
2012 2011 Changes
(a) (b) (a-b) %
(millions of Brazilian reais,
except percentages)
Writedowns and expenses in connection with credit management . . . . . . . 251 232 19 8.2
Accruals to provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228 140 88 62.9
TLC operating fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,223 1,290 (67) (5.2)
Indirect duties and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 33 (3) (9.1)
Sundry expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 43 29 67.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,804 1,738 66 3.8
Employees
Employees were 11,622 at December 31, 2012, an increase of 1,083 people compared to December 31, 2011
(10,539 units).
❖ ARGENTINA
The following table sets forth certain financial and other data for the Argentina Business Unit for the years ended
2012 2011 2012 2011 Changes
(a) (b) (a-b) %
percentages and
employees)
(millions of Argentine pesos, except
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,784 3,220 22,116 18,496 3,620 19.6
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214 509 1,253 2,925 (1,672) (57.2)
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 15.8 5.7 15.8
Employees at year-end (units)(*) . . . . . . . . . . . . . . . . . . . . 16,803 16,350 16,803 16,350 453 2.8
(*) Includes employees with temporary work contracts: 3 and 1 as of December 31, 2012 and 2011, respectively.
Revenues
Revenues in 2012 were 22,116 million Argentine pesos, an increase of 3,620 million Argentine pesos
(+19.6%) compared with 2011 (18,496 million Argentine pesos) principally due to growth of the broadband and
mobile customer base, as well as ARPU. The main source of revenues for the Argentina Business Unit is mobile
telephony, which accounts for about 73% of the consolidated revenues of the Business Unit, increasing more than
22% compared to 2011.
Operating profit
Operating profit for 2012 was 1,253 million Argentine pesos compared to 2,925 million Argentine pesos for 2011.
The decrease (1,672 million Argentine pesos) was mainly due to full impairment of the goodwill recognized at the
time control was acquired by the Telecom Italia Group (979 million Argentine pesos), the partial impairment of its
Customer relationships (501 million Argentine pesos) and an increase in amortization charges for Customer
relationships resulting from the updating of their useful lives (383 million Argentine pesos).
Changes in costs are explained as follows:
Š acquisition of goods and services were 9,927 million Argentine pesos (8,031 million Argentine pesos in
2011). The increase of 23.6% compared to the same period of the prior year (+1,896 million Argentine
pesos) was mainly due to higher external service costs of 1,246 million Argentine pesos and higher
purchases of raw materials, auxiliaries, consumables and merchandise of 424 million Argentine pesos;
111

Š employee benefits expenses were 3,422 million Argentine pesos, an increase of 676 million Argentine pesos
compared to 2011 (+24.6%). The increase was principally due to salary increases, resulting from the
periodic revision of trade union agreements, mainly to reflect the effect of inflation, and staff restructuring
costs of 90 million Argentine pesos only partially offset by a reduction in other employee benefits expenses
totaling 65 million Argentine pesos. In addition, there was an increase in the average salaried workforce in
the mobile area. The percentage of employee benefits expenses to total revenues is 15.5%, increasing
0.7 percentage points over 2011;
Š other operating expenses were 2,387 million Argentine pesos, an increase of 25.4% (1,903 million Argentine
pesos in 2011). Such expenses consist of the following.
2012 2011 Changes
(a) (b) (a-b) %
(millions of Argentine pesos, except percentages)
management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275 169 106 62.7
TLC operating fees and charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424 348 76 21.8
Indirect duties and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,592 1,286 306 23.8
Sundry expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 100 (4) (4.0)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,387 1,903 484 25.4
Employees
Employees were 16,803 at December 31, 2012, an increase of 453 units compared to December 31, 2011
(16,350).
❖ MEDIA
On May 9, 2012, the Board of Directors of Telecom Italia Media approved of the decision of the Board of Directors
of Telecom Italia S.p.A. to initiate the process of disposal of the Media segment. As a result, in May 2012 a
company restructuring transaction was initiated that led to the creation of La7 S.r.l., a wholly owned subsidiary of
Telecom Italia Media S.p.A., to which—with effect from September 1, 2012—the television assets were
transferred through the assignment of a business unit by Telecom Italia Media S.p.A.
The following table sets forth certain financial and other data for the Media Business Unit for the years ended
2012 2011 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 238 (16) (6.7)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (263) (88) (175)
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (118.5) (37.0)
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 735 765 (30) (3.9)
Revenues were 222 million euros in 2012, a decrease of 16 million euros compared to 238 million euros in 2011.
Such revenues included:
Š La7 (in 2011 and until June 2012 this Business area was called TI Media—La7 and it included Corporate
activities in addition to the TV business) revenues in 2012, before intragroup eliminations, were 123 million
euros, down 16 million euros on the previous year. This result reflects the reduction in net advertising
revenues which in 2012 declined by 3 million euros (-2.7% on 2011). This decline was exacerbated by the
loss of revenues from the Competence Center, which ceased operations in September 2011, and had
previously generated revenues of 13 million euros. In 2012, La7 had an average daily audience share of 3.5%
and the La7d channel reported net advertising revenues of 8 million euros, up 2 million euros (+27.7%);
112

Š MTV Group revenues were 55 million euros, before intragroup eliminations, a decrease of 19 million euros
compared to 2011 (74 million euros). This decrease is mainly due to lower net advertising revenues
(40 million euros in 2012 compared to 50 million euros in 2011) and the decrease in Playmaker activities to
third parties by 7 million euros;
Š revenues from Network Operator activities (TIMB), before intragroup eliminations were 75 million euros,
compared to 55 million euros in the previous year, an increase of 20 million euros. The positive change is
due both to the evolution of existing contracts and to new channels put under contract at the end of 2011 for
digital terrestrial TV on Multiplexes, which led to the full use of the available digital band since February
2012.
Operating loss
Operating loss was 263 million euros, compared to a loss of 88 million euros for 2011, representing an increase of
175 million euros. Specifically, 2012 includes a total impairment of non-current assets and Goodwill of 157 million
euros, established following the impairment test process and also taking account of the prospective sale of the
investee LA7 Srl. The impairment loss relating to goodwill is 105 million euros (57 million euros of impairment
loss in 2011).
In particular:
Š the operating loss of LA7 was 160 million euros, an increase in the loss of 137 million euros compared to
2011 (23 million euros including the above mentioned compensation). This result largely reflects both the
contraction in revenues mentioned above and higher operating costs mostly connected with programming
costs of La7 and La7d channels (+30 million euros and +4 million euros, respectively);
Š the operating loss of MTV group was 38 million euros, a decrease of 25 million euros compared to 2011
primarily due to the decrease in revenues described above, and as a result of the deep editorial
transformation of the main channel which during the year went from being a purely musical channel to a
more entertainment oriented channel targeted to a young/adult audience;
Š the operating loss of the Network Operator was 54 million euros, an increase in the loss of 9 million euros
over 2011; this result was influenced by the above mentioned increase in sales while operating costs were
substantially in line with the previous year and by the goodwill writedown for 70 million euros in 2012
(43 million euros in 2011).
Employees
Employees were 735 at December 31, 2012, a decrease of 30 units compared to December 31, 2011 (765 units).
Sale of La7 S.r.l.
On March 4, 2013 the Board of Directors of Telecom Italia Media S.p.A., a subsidiary of Telecom Italia S.p.A.,
voted to grant a mandate to finalize the agreement for the sale of the entire investment in La7 S.r.l. to Cairo
Communication S.p.A., excluding the 51% investment in MTV Italia S.r.l. On March 6, 2013, Telecom Italia Media
and Cairo Communication signed an agreement for the sale of 100% of La7 S.r.l..
Under the agreements reached, Telecom Italia Media S.p.A. will receive a sale consideration of 1 million euros.
La7 S.r.l. will be recapitalized for a sufficient amount to ensure a positive net financial position, at the transfer
date, of no less than 88 million euros. This recapitalization will also contribute to reaching the agreed level of
equity of 138 million euros at the transfer date.
As a result of the transaction, Telecom Italia S.p.A. has waived intragroup financial receivables, due from Telecom
Italia Media S.p.A., for a total amount of 100 million euros.
According to the agreements, a long-term transmission capacity supply contract will also be entered into between
La7 S.r.l. and Telecom Italia Media Broadcasting S.r.l.
113

This sale allows the Telecom Italia Group to terminate its financial support of La7 S.r.l. while keeping the network
operator Telecom Italia Media Broadcasting S.r.l. within its scope of operations.
The completion of the sale is subject to the receipt of required regulatory approvals.
❖ OLIVETTI
On January 1, 2012, the activities and resources of the Advalso S.p.A. contact center were sold to Telecontact
Center S.p.A. (a subsidiary of Telecom Italia—Domestic Business Unit), as part of a project to bring all Telecom
Italia Group call center operations under centralized management.
In addition, on June 13, 2012 the shareholders of the subsidiary Olivetti i-Jet S.p.A. voted to place the company
in liquidation.
The following table sets forth, certain financial and other data for the Olivetti Business Unit for the years ended
2012 2011 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280 343 (63) (18.4)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (65) (43) (22) (51.2)
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23.2) (12.5)
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 778 1,075 (297) (27.6)
Revenues
Revenues for 2012 were 280 million euros, down 63 million euros compared to 2011. The decrease in revenues is
largely related to: lower sales of 21 million euros in the indirect channel in Italy (SME and professional offices),
the channel most exposed to the current weak economy; lower sales of 10 million euros in the International and
Latin America areas, due to the cancellation of product supply contracts with unsatisfactory margins; and lower
product supply contracts with Telecom Italia of 4 million euros. The remaining decline in revenues was due to
lower sales of industrial applications resulting from the winding up Olivetti I-Jet S.p.A.
Operating loss
Operating loss was 65 million euros in 2012 compared with an operating loss of 43 million euros 2011.
The result is affected by provision charges for restructuring expenses and other winding up expenses totaling
31 million euros, as a result of the start of the liquidation of Olivetti I-Jet S.p.A, in accordance with the process of
repositioning the Business Unit’s activities, in line with the shift towards a paperless world and mobile
applications.
In addition, the result was also affected, by impairment losses on assets of 3 million euros related to the winding-
up Olivetti I-Jet S.p.A..
Employees
Employees at December 31, 2012 were 778, a reduction of 297 compared to December 31, 2011 (1,075 units).
5.2.8 YEAR ENDED DECEMBER 31, 2011 COMPARED WITH YEAR ENDED DECEMBER 31, 2010
Starting from the first half of 2012 the Telecom Italia Group early adopted and retrospectively applied the revised
version of IAS 19 (Employee Benefits). Accordingly, the comparative figures of 2011 and 2010 have been restated
on a consistent basis.
114

❖ REVENUES
Revenues amounted to 29,957 million euros in 2011, an increase of 2,386 million euros, or 8.7%, compared to
27,571 million euros in 2010.
The table below sets forth for the periods indicated gross revenues by Business Unit and consolidated revenues.
2011 2010 Changes
Revenues(1)
% of
Consolidated
revenues Revenues(1)
% of
Consolidated
revenues (a-b) %
(a) (b)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,991 63.4 20,025 72.6 (1,034) (5.2)
Core Domestic . . . . . . . . . . . . . . . . . . . . . . 18,082 60.4 19,022 69.0 (940) (4.9)
International Wholesale . . . . . . . . . . . . . 1,393 4.6 1,569 5.7 (176) (11.2)
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,343 24.5 6,199 22.5 1,144 18.5
Argentina(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,220 10.7 798 2.9 2,422 —
Media, Olivetti and Other Operations(3) . . 700 2.3 854 3.1 (154) (18.0)
Adjustments and eliminations . . . . . . . . . . . . (297) (0.9) (305) (1.1) 8 —
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . . 29,957 100.0 27,571 100.0 2,386 8.7
(2) In the scope of consolidation since October 13, 2010.
(3) The Other Operations of the Telecom Italia Group consist of the financial companies and other minor companies not associated with the
Revenues in the Domestic Business Unit (divided into Core Domestic and International Wholesale) declined by
5.2% compared to 2010. The decrease in revenues, notwithstanding the weak domestic economy and continuing
competitive pressures, was slowing and improving. This was due to higher mobile revenues (particularly revenues
from services and internet mobile devices), protection of the value of the customer base and development of ICT
services in the fixed area.
Revenues from services in 2011 indicated an improving trend over the prior year. Revenues from services in the
mobile area were still being impacted, although to a lesser degree, by the competitive repositioning of TIM’s
plans particularly as regards voice traffic.
The fixed-line area, with a decline in revenues from services, displayed a considerable improvement in the fourth
quarter of 2011. In particular, revenues from retail customers decreased at a lower pace than that recorded in
2010 and showed an improving trend during the course of 2011.
With respect to handset sales, revenues recovered entirely driven by the mobile area which benefited from a
greater sales push on handsets offering mobile internet connectivity.
With respect to the Brazil Business Unit, revenues totaled 7,343 million euros in 2011, an increase of
1,144 million euros compared to 2010. Revenues from services increased, mainly due to the growth of the
customer base (over 64 million mobile lines at December 31, 2011, up 25.6% over the prior year). Handset
revenues also, increased significantly where, as in the domestic business, the strategy focused on smartphones
and webphones as the lever for the growth of mobile data traffic revenues.
As for the Argentina Business Unit (included in the scope of consolidation since October 13, 2010), revenues
totaled 3,220 million euros in 2011, an increase of 2,422 million euros compared to 2010 which only included the
two and a half months in 2010. In particular, the increase was related to the mobile business revenues.
For a more detailed analysis of revenue performance by individual Business Units, reference should be made to
“Item 4. Information on The Telecom Italia Group—4.2 Business Units”.
115

❖ OTHER INCOME
The following table sets forth other income for the years ended December 31, 2011 and 2010.
2011 2010 Changes
(a) (b) (a-b) %
Late payment fees charged for telephone services . . . . . . . . . . . . . . . . . . . . . . 71 72 (1) (1.4)
Recovery of employee benefit expenses, purchases and services
rendered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 47 (11) (23.4)
Capital and operating grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 38 (14) (36.8)
Damage compensations, penalties and sundry recoveries . . . . . . . . . . . . . . . 36 18 18 100.0
Sundry income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 80 52 65.0
Total other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299 255 44 17.3
❖ OPERATING EXPENSES
Our operating expenses amounted to 30,859 million euros in 2011, an increase of 8,851 million euros, or 40.2%
compared to 22,008 million euros in 2010. The increase is attributable to the following:
Š Acquisition of goods and services amounted to 12,859 million euros in 2011, an increase of 1,476 million
euros, or 13.0%, compared to 2010 (11,383 million euros). The increase was largely due to the entry of the
Argentina Business Unit in the scope of consolidation for the full-year 2011 (+1,052 million euros, including
a negative exchange rate effect for 34 million euros) and the significant increase in the sales and technical
costs of the Brazil Business Unit—the main cause of the overall increase of 879 million euros—needed to
support the growth of the customer base and sales. Offsetting these increases in part were declines in the
domestic business which benefitted from cost cutting actions which contributed to a reduction in purchases
of 365 million euros compared to 2010 (-5.1%).
The following table sets forth acquisition of goods and services for the years ended December 31, 2011 and 2010.
2011 2010 Changes
(a) (b) (a-b) %
percentages)
Purchase of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,525 1,568 957 61.0
Portion of revenues to be paid to other operators and interconnection
costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,232 4,275 (43) (1.0)
Commercial and advertising costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,259 2,100 159 7.6
Power, maintenance and outsourced services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,618 1,258 360 28.6
Rent and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 647 594 53 8.9
Other service expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,578 1,588 (10) (0.6)
Total acquisition of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,859 11,383 1,476 13.0
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.9 41.3
116

Š Employee benefits expenses
The following table sets forth employee benefit expenses for the years ended December 31, 2011 and 2010.
2011 2010 Changes
(a) (b) (a-b) %
Employee benefits expenses—Italian companies:
Ordinary employee expenses and costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,144 3,273 (129) (3.9)
Corporate restructuring expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 258 (246) (95.3)
Total employee benefits expenses—Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,156 3,531 (375) (10.6)
Employee benefits expenses—Outside Italy
Ordinary employee expenses and costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 836 450 386 85.8
Corporate restructuring expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Total employee benefits expenses—Outside Italy . . . . . . . . . . . . . . . . . . . . . . 836 450 386 85.8
Total employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,992 3,981 11 0.3
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3 14.4
The change was affected by:
Š the increase connected with the consolidation of the Argentina Business Unit for the full year 2011
(+11,521 average salaried workforce compared to 2010);
Š lower expenses owing to the contraction of the average salaried workforce (the above effect relating to
the Argentina Business Unit is already excluded) by 3,301 compared to 2010;
Š the provisions for expenses for mobility under Law 223/91, related to the 2010 agreements with the
unions entered into by the Parent Telecom Italia S.p.A. and Telecom Italia Information Technology, had
been adjusted by 12 million euros, of which 9 million euros for the Parent Telecom Italia and 3 million
euros for Telecom Italia Information Technology.
The Group’s average number of salaried workforce for the periods indicated was as follows:
2011 2010 Changes
(a) (b) (a-b) %
(Full time equivalent units, except percentages)
Average salaried workforce—Italy . . . . . . . . . . . . . . . . . . . . . . . . . 53,561 57,087 (3,526) (6.2)
Average salaried workforce—Foreign(1) . . . . . . . . . . . . . . . . . . . 24,808 13,063 11,745 89.9
Total average salaried workforce(2) . . . . . . . . . . . . . . . . . . . 78,369 70,150 8,219 11.7
(1) The increment in the average employees of the salaried workforce is primarily attributable to the consolidation of the Argentina Business
Unit for the full year 2011 (15,232 average headcount in 2011).
(2) Includes the average employees with temp work contracts: 87 in 2011 (75 in Italy and 12 outside Italy). In 2010 the headcount was 84
(68 in Italy and 16 outside Italy).
Group’s employees at December 31, 2011 and 2010 were as follows:
As of December 31,
2011 2010 Changes
(a) (b) (a-b) %
(units, except percentages)
Employees—Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,878 58,045 (1,167) (2.0)
Employees—Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,276 26,155 1,121 4.3
Total Employees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,154 84,200 (46) (0.1)
(1) Includes employees with temporary work contracts: 42 units at December 31, 2011 and 71 units at December 31, 2010.
117

Š Other operating expenses
The following table sets forth other operating expenses for the years ended December 31, 2011 and 2010.
2011 2010 Changes
(a) (b) (a-b) %
Writedowns and expenses in connection with credit
management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533 478 55 11.5
Accruals to provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 80 48 60.0
Indirect duties and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 200 149 74.5
TLC operating fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 675 484 191 39.5
Penalties, compensation and administrative sanctions . . . . . . . . 41 105 (64) (61.0)
Association dues and fees, donations, scholarships and
traineeships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 24 (1) (4.2)
Sundry expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 51 59 115.7
Total other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,859 1,422 437 30.7
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 5.2
Other operating expenses in 2011 grew 437 million euros compared to 2010, largely on account of the entry
of the Argentina Business Unit in the scope of consolidation for the full year 2011 (+248 million euros,
including a negative exchange rate effect of 8 million euros), the increase in the Brazil Business Unit (+159
million euros) and the Domestic Business Unit (+69 million euros). In particular:
Š writedowns and expenses in connection with credit management include mainly 397 million euros (317
million euros in 2010) attributable to the Domestic Business Unit, 100 million euros (133 million euros
in 2010) attributable to the Brazil Business Unit and 29 million euros attributable to the Argentina
Business Unit;
Š accruals to provisions recorded for pending disputes relate mainly to 60 million euros (18 million euros
in 2010) of the Brazil Business Unit, 50 million euros (53 million euros in 2010) of the Domestic
Business Unit and, 17 million euros of the Argentina Business Unit;
Š TLC operating fees comprise 554 million euros (412 million euros in 2010) attributable primarily to the
Brazil Business Unit, 61 million euros attributable to the Argentina Business Unit and 58 million euros to
the Domestic Business Unit.
Š Depreciation and Amortization
The following table sets forth depreciation and amortization for the years ended December 31, 2011 and
2010.
2011 2010 Changes
(a) (b) (a-b) %
percentages)
Amortization of intangible assets with a finite useful life . . . . . . . . . . . 2,163 2,216 (53) (2.4)
Depreciation of tangible assets—owned and leased . . . . . . . . . . . . . . . . 3,333 3,326 7 0.2
Total depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,496 5,542 (46) (0.8)
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.3 20.1
The increase in amortization and depreciation charges due to the entry of the Argentina Business Unit in the
scope of consolidation (+390 million euros, including a negative exchange rate effect of 13 million euros),
was more than offset by the decrease in amortization and depreciation charges of the Domestic Business
Unit (-329 million euros) and the Brazil Business Unit (-108 million euros, including the effect of the change
in the real/euro exchange rate of +3 million euros).
118

Š Gains (losses) on disposals of non-current assets
Net gains on disposals of non-current assets were 3 million euros. The gain of 35 million euros, net of the
relative transaction costs, realized on the sale of Loquendo at the end of September 2011 was offset by net
losses from the disposal of tangible assets, mainly of the Parent, for the replacement and subsequent
disposal of dedicated mobile telephony plant.
In 2010, net gains on disposals of non-current assets were 11 million euros and included the gain, net of the
related transaction costs, of 19 million euros, in connection with the completion of the transactions for the
sale of Elettra by the Domestic Business Unit—International Wholesale.
Š Impairment losses on non-current assets
Net impairment losses on non-current assets amounted to 7,358 million euros in 2011 (63 million euros in
2010).
This item includes 7,307 million euros for the impairment charge on the goodwill allocated to the Core
Domestic cash-generating unit in the Domestic Business Unit and 57 million euros for the impairment charge
on the goodwill allocated to the Media Business Unit, which had been written down by 46 million euros in
2010.
In particular, in preparing the annual financial statements, the Telecom Italia Group repeated the
impairment test that had been performed in the first half of 2011 which led to the recognition, in the Half-
year Financial Report at June 30, 2011, of an impairment loss of 3,182 million euros relating to the Core
Domestic cash-generating unit.
Macroeconomic and market conditions reflected a slowdown in the higher growth emerging economies and
fears of a recession in many mature economies, in particular countries in the Euro zone, which was
particularly acute in the domestic market. Added to this was an escalation, in the second half of the year, of
financial market pressures, with particular reference to higher interest rates for the Italian government. The
impairment test therefore took into account the deterioration of the financial markets in general terms, with
reference to interest rates, while worsening expectations regarding the market prospects of the Domestic
and Media Business Unit were major factors in making the determination of impairment in specific terms.
It should be emphasized that the cost of capital of the Core Domestic CGU recorded a significant increase
compared to December 31, 2010, principally due to the rise in long-term rates of the sovereign securities of
Italy, from 7.90% to 8.90%.
Further details are provided in the “Note—Goodwill” of the Notes to the Consolidated Financial Statements
Furthermore, this item includes other impairment charges on tangible assets.
❖ OPERATING PROFIT (loss)
Operating loss was 680 million euros in 2011 (operating profit of 5,858 million euros in 2010). The operating
loss is attributable to the impact of the impairment charge of 7,364 million euros on the goodwill allocated to the
Domestic and Media Business Units.
❖ SHARE OF PROFITS (LOSSES) OF ASSOCIATES AND JOINT VENTURES ACCOUNTED FOR USING THE EQUITY
METHOD
2011 2010 Changes
(a) (b) (a-b) %
EtecSA (Cuba) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 84 (84) (100.0)
Italtel group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (38) 3 (41)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) 12 (13) (108.3)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (39) 99 (138) (139.4)
119

The Share of profits (losses) of associates and joint ventures accounted for using the equity method was a loss of
39 million euros in 2011 (profit of 99 million euros in 2010). In particular, the year 2011 was negatively affected
by the writedown of the entire investment in the Italtel Group: taking into account the overall macroeconomic
situation and the specific prospects of future evolution of the company’s business led us to conclude that the
recovery of our investment in this associate was not probable.
The year 2010 included the positive contribution of our investment in EtecSA (Cuba), including the share of
results up to September 30, 2010 and the reversal of impairment losses (30 million euros) after agreements were
reached at the end of 2010 for the sale of the investment which was subsequently finalized on January 31, 2011.
For further details about the above mentioned investments accounted for using the equity method please see
“Note—Other Non-current assets” of the Notes to the Consolidated Financial Statements included elsewhere in
this Annual Report.
❖ OTHER INCOME (EXPENSES) FROM INVESTMENTS
In 2011, Other income (expenses) from investments was income balance of 16 million euros and includes
17 million euros for the gain on the sale of the entire 27% investment in the Cuban operator EtecSA. That amount
was in addition to the benefit from the impairment reversal of 30 million euros, recorded in 2010.
In 2010, Other income (expenses) from investments was an income balance of 289 million euros and specifically
included the revaluation, net of the negative exchange rate effect, of 266 million euros on the investment interest
held in Sofora Telecomunicaciones (50%). In particular, as set forth in IFRS 3, following the acquisition of control
of Sofora Telecomunicaciones, which took place on October 13, 2010, the investment interest previously held in
the subsidiary, accounted for using the equity method, was remeasured at fair value at the acquisition date of
control. The line item also included the net gain of 29 million euros realized on the settlement agreement reached
between the Telecom Italia Group and the Bolivian government for the resolution of the dispute over the
May 1, 2008 expropriation by that government of the investment held by the Group in Entel Bolivia.
❖ FINANCE INCOME (EXPENSES)
Finance income (expenses) was a net expense of 2,040 million euros (a net expense of 2,118 million euros in
2010), with a positive change of 78 million euros largely arising from lower net debt exposure.
For further details about finance income and finance expenses, please see “Note—Finance income and Finance
expenses”, of the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.
❖ INCOME TAX EXPENSE
Income tax expense was 1,610 million euros an increase of 1,061 million euros compared to 2010 (549 million
euros). In particular, income taxes in 2010 included a benefit of more than 600 million euros deriving mainly from
the recognition of deferred tax assets by the Brazil Business Unit. Such deferred tax assets were in connection
with tax loss carryforwards which became recoverable on the basis of the prospects of earnings of the companies
in the Business Unit. In addition to this effect, the increase in income taxes was also due to the higher taxable
base of the Parent, Telecom Italia, the Brazil Business Unit as well as the consolidation of the Argentina Business
Unit for the full year 2011.
❖ LOSS FROM DISCONTINUED OPERATIONS/NON-CURRENT ASSETS HELD FOR SALE
In 2011, the balance was a loss of 13 million euros and includes expenses incurred in connection with sales
transactions of prior years. In 2010, the balance was a loss of 7 million euros and included the same type of
transactions.
120

5.2.9 RESULTS OF OPERATIONS OF BUSINESS UNITS FOR THE YEAR ENDED DECEMBER 31, 2011 COMPARED WITH
THE YEAR ENDED DECEMBER 31, 2010
❖ DOMESTIC
was consequently no longer part of Core Domestic in the Domestic Business Unit. Accordingly, the comparative
figures of 2011 and 2010 have been restated on a consistent basis.
The table below sets forth certain financial and other data for the Domestic Business Unit for the years ended
2011 2010 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,991 20,025 (1,034) (5.2)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,996) 5,197 (7,193) (138.4)
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.0
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,047 56,106 (1,059) (1.9)
Revenues decreased by 1,034 million euros, or 5.2%, from 20,025 million euros in 2010 to 18,991 million euros
in 2011.
The table below sets forth the Domestic Business Unit’s revenues by market segment for the years ended
Š Core Domestic
2011 2010 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,082 19,022 (940) (4.9)
Consumer (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,168 9,688 (520) (5.4)
Business (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,267 3,509 (242) (6.9)
Top (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,327 3,515 (188) (5.3)
National Wholesale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,104 2,076 28 1.3
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 234 (18) (7.7)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,136) 5,002 (7,138) (142.7)
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12) 26.3 (38.1) (144.9)
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,038 55,051 (1,013) (1.8)
(1) The company Matrix, was sold on October 31, 2012. In 2012 Matrix was also classified under Other Operations, and thus excluded from
the Consumer segment of Core Domestic. 2011 and 2010 have been reclassified accordingly.
(2) 2011 and 2010 figures for the Business and Top segments doesn’t take into account the new customer classification criteria introduced at
the beginning of 2012.
In 2011, except for National Wholesale, revenues in all segments declined but reflected an improving trend during
the course of the year due to the growth of the mobile customer base, a reduction in the loss of fixed accesses
and the effectiveness of new offers both in terms of the slowdown in price reductions and the development of new
services (Broadband and ICT). In particular:
Š Consumer: the Consumer segment reported a decrease in revenues of 520 million euros (-5.4%) compared
to 2010. 2010 included revenues of 35 million euros relating to the end of the “1001TIM” loyalty program
which had resulted in the recognition of revenues from previously deferred bonus points that had not been
121

used by the customer. The decrease was attributable to a decline in revenues from services. This decline was
attributable to traditional voice services, both mobile and fixed, that were only partly offset by higher mobile
internet revenues (+81 million euros, or +17.8% compared to 2010 and +28 million euros, or +22.6% in
the fourth quarter compared to the same period of the prior year).
Š Business: in 2011, revenues in the Business segment decreased by -242 million euros (-6.9%). This decline
principally related to the mobile services and traditional fixed-line voice services, with the latter, in
particular, attributable to the smaller customer base (-5.8% compared to 2010);
Š Top: the reduction in revenues in 2011 by the Top segment was 188 million euros (-5.3%) compared to
2010. Such decline principally related to revenues from services (-144 million euros, or -4.8%), due, in
particular, to a decline in fixed telephony and a reduction in per unit mobile voice revenues which was only
partially compensated by the growth in fixed-line ICT.
Š National Wholesale: the increase in the revenues of National Wholesale (+28 million euros, or +1.3%) was
generated by the growth of the customer base of ANOs utilizing services for Local Loop Unbundling,
Wholesale Line Rental and Bitstream.
Š International Wholesale
2011 2010 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,393 1,569 (176) (11.2)
Of which third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 960 1,099 (139) (12.6)
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 194 (53) (27.3)
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 12.4
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,009 1,055 (46) (4.4)
Revenues of International Wholesale (the Telecom Italia Sparkle group) were 1,393 million euros in 2011,
down 176 million euros, or -11.2% compared to 2010. Such decline was almost entirely due to voice services
(-167 million euros, or -14.8%), which were adversely impacted by strong price pressure caused by market
competition and also measures to rationalize the sector based on a more selective approach in terms of the
quality of the customer portfolio and traffic, without any significant impact on margins. Revenues in 2010
included 29 million euros generated by the subsidiary Elettra which was sold in September 2010.
Operating profit (loss)
Operating profit (loss) was a loss of 1,996 million euros in 2011, a decrease of 7,193 million euros compared to
2010. In particular, operating loss in 2011 included the goodwill impairment charge of 7,307 million euros
relating to the Core Domestic cash-generating unit, recorded on the basis of the results of the impairment test as
described above.
The operating profit (loss) was impacted by the change in the following line items.
2011 2010 Changes
(a) (b) (a-b) %
percentages)
Acquisition of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,754 7,129 (375) (5.3)
Employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,031 3,405 (374) (11.0)
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 769 704 65 9.2
In detail:
Š acquisition of goods and services: decreased by 375 million euros (-5.3%) compared to 2010. Such
decrease was mainly due to a decrease in the amounts to be paid to other operators, owing principally
122

to the reduction in mobile termination rates. The higher expense for certain items, such as energy and
variable costs related to product/service sales, was absorbed by efficiency measures applied to fixed
operating costs;
Š employee benefits expenses: decreased by 374 million euros compared to 2010, attributable mainly to
the reduction in the average salaried workforce, and the introduction also of the new law on pensions (Law
214 of December 22, 2011) which extended the retirement age. It should be noted that employee benefits
expenses in 2010 included a total of 254 million euros for the start by the Parent, Telecom Italia, SSC—
Shared Service Center S.r.l. and Telecom Italia Sparkle of the mobility procedure under Law 223/91. In
2011, the provisions were adjusted by only 12 million euros, of which 9 million euros was for the Parent,
Telecom Italia, and 3 million euros for SSC—Shared Service Center S.r.l.;
Š other operating expenses: rose by 65 million euros compared to 2010, mainly due to the increase in
expenses and provision charges connected with credit management and credit risks, particularly related to
Business clientele reflecting the general weak economic conditions.
The goodwill impairment charge of the Core Domestic CGU (7,307 million euros in 2011), was due to the result of
the impairment test conducted at June 30, 2011 (impairment loss of 3,182 million euros) and at December 31,
2011 (impairment loss of 4,125 million euros), using the same method adopted in previous impairment tests.
Macronomic and market conditions reflected a slowdown in the higher growth emerging economies and fears of a
recession in many mature economies, in particular countries in the Euro zone, which was particularly acute in the
domestic market. Added to this was an escalation, in the second half of the year, of financial market pressures,
with particular reference to higher interest rates paid by the Italian government for issuing debt. The impairment
test therefore took into account the deterioration of the financial markets in general terms, with reference to
interest rates, while worsening expectations regarding the market prospects of the Domestic and Media Business
Unit were major factors in making the determination of impairment.
Further details are provided in the Note “Goodwill” of the Notes to the Consolidated Financial Statements
included elsewhere herein.
Employees
Employees are 55,047 as of December 31, 2011, a reduction of 1,059 units compared to December 31, 2010.
❖ BRAZIL
The following table sets forth certain financial and other data for the Brazil Business Unit for the years ended
2011 2010 2011 2010 Changes
(a) (b) (a-b) %
(millions of Brazilian reais, except
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,343 6,199 17,086 14,457 2,629 18.2
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 984 685 2,289 1,597 692 43.3
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4 11.0 13.4 11.0
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . 10,539 10,114 10,539 10,114 425 4.2
Revenues
Revenues totaled 17,086 million Brazilian reais, an increase of 2,629 million Brazilian reais compared to 2010
(+18.2%).
Service revenues in 2011 were 15,353 million Brazilian reais, an increase of 1,782 million Brazilian reais compared
to 13,571 million Brazilian reais in the prior year (+13.1%); product revenues increased from 886 million Brazilian
123

reais in 2010 to 1,733 million Brazilian reais in 2011 (+95.6%), reflecting the strategy to penetrate the market
with high-value smartphones and webphones as leverage for the development of mobile data services.
The mobile ARPU, or average revenue per user, was 21.4 Brazilian reais at December 2011 compared to
23.7 Brazilian reais at December 2010 (-9.8%).
Total mobile lines at December 31, 2011 were 64.1 million, an increase of 25.6% over December 31, 2010,
corresponding to a 26.5% market share of mobile lines.
Operating profit
Operating profit was 2,289 million Brazilian reais in 2011, an increase of 692 million Brazilian reais compared to
2010. This improvement in operating profit was attributable to the increase of revenues partnered by operating
efficiencies achieved on the front of industrial cost, employees benefit expenses and trade receivables
management.
Operating profit also was positively impacted by lower depreciation and amortization charges of 254 million
Brazilian reais (2,340 million Brazilian reais in 2011, compared to 2,594 million Brazilian reais in 2010). In
particular, the reduction in amortization was partly due to the revision of the useful life of software (+166 million
Brazilian reais) carried out in 2010 and partly to reduced use of handset subsidies during 2011.
Š acquisition of goods and services totaled 10,234 million Brazilian reais (8,208 million Brazilian reais in 2010).
The increase of 24.7% compared to the prior year (+2,026 million Brazilian reais) was the result of higher
rent and lease costs of 184 million Brazilian reais, higher external service costs of 220 million Brazilian reais,
higher purchases of raw materials, auxiliaries, consumables and merchandise for 1,259 million Brazilian reais
(of which +985 million Brazilian reais is product cost) and a higher portion of revenues to be paid to other
TLC operators of 363 million Brazilian reais;
Š employee benefits expenses, amounted to 747 million Brazilian reais, an increase of 88 million Brazilian reais
compared to 2010 (+13.4%). The average salaried workforce increased from 8,727 in 2010 to 9,194 in 2011.
The percentage of employee benefits expenses to revenues was 4.4%, decreasing 0.2 percentage points
compared to 2010; and
Š other operating expenses, amounted to 1,738 million Brazilian reais in 2011, an increase of 26.8% (1,371
million Brazilian reais in 2010). Such expenses consisted of the following:
2011 2010 Changes
(a) (b) (a-b) %
(millions of Brazilian reais, except percentages)
Writedowns and expenses in connection with credit
management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232 311 (79) (25.4)
Accruals to provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 41 99 241.5
TLC operating fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,290 961 329 34.2
Indirect duties and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 26 7 26.9
Sundry expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 32 11 34.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,738 1,371 367 26.8
Employees
Employees were 10,539 at December 31, 2011, an increase of 425 people compared to December 31, 2010
(10,114 units).
124

❖ ARGENTINA
The following table gives the main results reported by the Argentina Business Unit for the full year 2011 and, for
2010, starting from the acquisition date of control of the Business Unit by the Telecom Italia Group (October 13,
2010). The amounts presented include the effects of the application of the purchase price method. Specifically, all
the assets and liabilities of the Sofora group were measured for their recognition at fair value at the acquisition
date. Such amounts, as required by IFRS, were adjusted by the definitive amounts determined during the course
of 2011, within 12 months of the acquisition date. The income statement for the 12 months of 2011 thus includes
the effects of such measurements and particularly the higher amortization and depreciation related thereto (equal
to 858 million Argentine pesos, about 149 million euros, in 2011). Such higher amortization and depreciation in
2010 only had an impact from October 13, 2010 and amounted to 221 million Argentine pesos (about 43 million
euros).
Year ended
December 31, 2011
Period from October 13, 2010 to
December 31, 2010
(millions of euros,
except percentages
and employees)
(millions of
Argentine pesos,
except percentages
and employees)
(millions of euros,
except percentages
and employees)
(millions of
Argentine pesos,
except percentages
and employees)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,220 18,496 798 4,142
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . 509 2,925 110 568
% of Revenues 15.8 15.8 13.7 13.7
Employees at year-end (units)(*) . . . . . . . 16,350 16,350 15,650 15,650
(*) Includes employees with temporary work contracts: 1 and 18 at December 31, 2011 and 2010, respectively.
For a better understanding of the performance of the Argentina Business Unit, the following table sets out certain
selected financial data for the full year 2011 compared to the full year 2010. The 2010 full year data are unaudited
and provided solely for information purposes (illustrative and comparative) and were only part of the consolidated
results of the Telecom Italia Group from October 13, 2010, the date of acquisition of control by the Telecom Italia
Group.
2011 2010 2011 2010 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,220 2,820 18,496 14,627 3,869 26.5
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509 553 2,925 2,868 57 2.0
% of Revenues 15.8 19.6 15.8 19.6
Employees at year-end (units)(*) . . . . . . . . . . . . . . . . 16,350 15,650 16,350 15,650 700 4.5
(*) Includes employees with temporary work contracts: 1 and 18 as of December 31, 2011 and 2010, respectively.
Revenues
Revenues were 18,496 million Argentine pesos in 2011, an increase of 26.5% compared to the prior year (14,627
million Argentine pesos in 2010). The increase was mainly due to the growth of the customer base in the fixed
and broadband businesses as well as mobile businesses, in addition to the higher ARPU. The main source of
revenues for the Argentina Business Unit was mobile telephony which accounted for 71% of consolidated
revenues, an increase of 32% in 2011 compared to 2010.
Operating profit
Operating profit rose by 57 million Argentine pesos (+2.0%) to 2,925 million Argentine pesos in 2011. It included
the effects of the application of the purchase price method which led to higher net expenses, mainly for
amortization and depreciation, of 907 million Argentine pesos (about 158 million euros); such higher expenses
had an effect on the 2010 results from October 13, 2010 only and amounted to 281 million Argentine pesos
(about 54 million euros).
125

Š acquisition of goods and services: totalled 8,031 million Argentine pesos (6,201 million Argentine pesos in
2010). The increase of 29.5% compared to the prior year (+1,830 million Argentine pesos) was mainly due
to higher outside service costs of 932 million Argentine pesos and higher purchases of raw materials,
auxiliaries, consumables and merchandise of 777 million Argentine pesos;
Š employee benefits expenses, of 2,746 million Argentine pesos, increased by 716 million Argentine pesos
compared to 2010 (+35.3%). The change came from salary increases, as a result of periodical revisions in
union agreements and largely connected to inflation. In addition, the average salaried workforce in the
mobile area increased. The percentage of employee benefits expenses to total revenues was 14.8%,
increasing 0.9 percentage points over 2010;
Š other operating expenses: amounted to 1,903 million Argentine pesos, increasing 23.7% (1,538 million
Argentine pesos in 2010). Such expenses consisted of the following:
2011 2010 Changes
(a) (b) (a-b) %
percentages)
management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 115 54 47.0
TLC operating fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 273 75 27.5
Indirect duties and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,286 1,064 222 20.9
Sundry expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 86 14 16.3
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,903 1,538 365 23.7
Employees
Employees were 16,350 at December 31, 2011, an increase of 700 units compared to December 31, 2010
(+4.5%).
❖ MEDIA
The table below sets forth certain financial and other data for the Media Business Unit for the years ended
2011 2010 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238 258 (20) (7.8)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (88) (92) 4 (4.3)
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (37.0) (35.7)
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . 765 777 (12) (1.5)
Revenues were 238 million euros in 2011, a decrease of 20 million euros (-7.8%) compared to 258 million euros in
2010. The decrease in revenues was due to the following:
Š revenues of La7 in 2011, amounted to 139 million euros (115 million euros in 2010), increasing 24 million
euros (+21.0%) compared to 2010, due to the significant increase of 32.1% in overall gross advertising sales
in 2011 compared to 2010, which amounted to 186 million euros. In 2011, advertising sales were positively
influenced by the excellent audience performance of the La7 channel, which reported an average daily
audience share of 3.8%, and the La7d channel, with net advertising sales amounting to 6 million euros;
Š MTV Group revenues were 74 million euros in 2011, a decrease of 24 million euros compared to 2010
(98 million euros). This result was mainly due to:
Š the decrease in net advertising sales of 9 million euros;
126

Š lower revenues of Playmaker (-7 million euros);
Š lower revenues of MTV Mobile (-2 million euros), due to the contractual amendment at the end of 2010;
and
Š the decrease in the revenues from the music satellite channels (-2 million euros) following the
renegotiation of the contract—at lower values—with Sky;
Š revenues from Network Operator activities, amounted to 55 million euros in 2011, compared to 76 million
euros in 2010, down by 21 million euros. This result was partly due to the loss of turnover of the customer
Dahlia (-26 million euros), whose activities were discontinued at early 2011. The decrease in revenues from
analog business towards the Group, in relation to the switch-off process, was offset by higher revenues for
the lease of the digital band on its Multiplexes.
Operating loss
Operating loss was 88 million euros in 2011, a reduction of 4 million euros compared to a loss of 92 million euros
in 2010, due to the contribution of 21 million euros related to the indemnity for the early termination of the
Competence Center contract. In particular:
Š the operating profit of La7, which includes the above mentioned 21 million euros indemnity, was a loss of
23 million euros, an improvement of 33 million euros compared to 2010 (an operating loss of 56 million
euros); such result was affected by the higher contribution of revenues as previously described, which more
than offset the higher operating costs linked largely to the programming of La7 and La7d channels;
Š the operating profit of the MTV Group was down in 2011, decreasing of 5 million euros compared to 2010,
due to the reduction in sales only partially offset by the containment of operating costs;
Š the Network Operator’s operating profit was a negative 2 million euros compared to a profit of 10 million
euros in 2010, a decrease of 12 million euros; this performance was affected by the above-mentioned
revenue decline from Dahlia TV, which was partially offset by a reduction in operating costs achieved through
a greater efficiency of the network management.
As a result of the impairment test, the goodwill of the Media Business Unit was written down by 57 million euros
in 2011 (46 million euros in 2010).
Employees
Employees were 765 at December 31, 2011, a decrease of 12 units compared to December 31, 2010 (777 units),
included 37 units with temporary work contracts (44 units at December 31, 2010). Without considering the
reduction in the temporary staff (7 units), the decrease of 5 units was due to the change both in the number of
fixed term employees, who decreased by 10 units (TI Media—La7 +1, MTV Group -11) and employees with
indefinite-term contracts, who increased by 5 units (TI Media-La7 +15, Network Operator -1, MTV Group -9). In
particular the increase of 15 units for the indefinite-term employees of TI Media—La7 is mainly due to the
stabilization of some job relationship and to the introduction of some new human resources as consequence of
the internalization process regarding External Relations.
❖ OLIVETTI
The following table sets forth certain financial and other data for the Olivetti Business Unit for the years ended
2011 2010 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343 391 (48) (12.3)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (43) (24) (19) 79.2
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12.5) (6.1)
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,075 1,090 (15) (1.4)
127

Revenues
Revenues were 343 million euros in 2011, a decrease of 48 million euros compared to 2010, partly due to the
negative exchange rate effect of 3 million euros. The market context was particularly depressed for the third
consecutive year and the deterioration of the Italian and European macroeconomic condition had an adverse
effect on 2011; this caused a decisive fall in ICT expenditures in Italy.
The weak economy resulted in a sharp reduction in sales to the Parent, Telecom Italia by Olivetti S.p.A.
(-23 million euros compared to 2010) and is reason in itself for almost half of the decline in year-over-year
revenues.
Sales in Italy in the indirect channel came to an abrupt stop in the last part of 2011 (-6 million euros compared to
2010) in parallel with the heightening of the crisis which particularly hit hard the SMEs and professional offices
customer channel; conversely, the direct sales channel in Italy of large customers exceeded 2010 (+4 million
euros), in part due to the positive contribution of new service offers.
European sales were up in the French and British affiliates, a fall in both the German affiliate (since January 2012,
sales operations are conducted through a local agency) and in the Spanish affiliate which was materially impacted
by the weak macroeconomic climate in that country. Revenues were-stable in the international sales channel
(sales to extra EU and extra Latin America customers). The gains made by South America in sales were significant.
This market is recording strong growth such that expectations are for a strengthening of Olivetti’s presence there.
Operating loss
Operating loss was 43 million euros, an increase of 19 million euros compared to the loss of 24 million euros in
2010.
In 2011, as an increase in share capital, Telecom Italia S.p.A. contributed trademarks (12 million euros) and
patents (4 million euros) to Olivetti S.p.A. The result of this contribution was the resolution of contracts with
Telecom Italia which covered the utilization of these rights, with a negative impact of 10 million euros.
Added to this first effect were lower margins of 10 million euros associated with the decline in revenues, of which,
about 4 million euros in particular was the effect of the ongoing contraction in the ink-jet segment.
Employees
Employees at December 31, 2011 were 1,075 (984 in Italy and 91 outside Italy), a reduction of 15 compared to
December 31, 2010 (1,090, of whom 1,001 in Italy and 89 outside Italy). During the year, 33 persons were added
and 48 persons left, consistently with the professional remix focused on the new Olivetti sales offerings.
128

Item 5. Operating And Financial Review And Prospects Liquidity And Capital Resources
5.3 LIQUIDITY AND CAPITAL RESOURCES
The Telecom Italia Group’s policy is to manage financial risks (market risk, credit risk and liquidity risk) by
defining, at a central level, guidelines for directing operations, identifying the most appropriate financial
instruments to meet pre-determined objectives, monitoring the results achieved and excluding the use of financial
instruments for speculative purposes.
Telecom Italia has a centralized Finance Department which operates in the interests of the entire Group:
Š allocating liquidity where necessary;
Š obtaining excess cash resources from the Group companies;
Š guaranteeing an adequate level of liquidity compatible with individual needs;
Š supporting its subsidiaries to gain access to the loan market; and
Š providing financial consulting services to its subsidiaries.
These activities reduce the Group companies’ need to seek bank lines and enable those companies to obtain
better conditions from the banking system by constantly monitoring cash flows and ensuring a more efficient use
of liquidity in excess of requirements.
Furthermore, the Telecom Italia Group has a centralized financial risk management policy for market, credit and
liquidity risks. For additional details on funding and treasury policies and risk policies reference should be made to
the “Note—Financial Activities” and “Note—Financial risk management” of the Notes to the Consolidated
Financial Statements included elsewhere in this Annual Report.
The Telecom Italia Group’s goal is to achieve an “adequate level of financial flexibility” which is expressed by
maintaining a treasury margin (composed by cash and cash equivalents, marketable securities and undrawn
committed credit lines) to cover refinancing requirements at least for the next 12 months.
5.3.1 LIQUIDITY
Telecom Italia Group’s primary source of liquidity is cash generated from operations and its principal use of funds
are the payment of operating expenses, capital expenditures and investments, the servicing of debt, the payment
of dividends to shareholders and strategic investments, such as international acquisitions.
For additional details, reference should be made to the “Note—Financial Activities” of the Notes to the
Consolidated Financial Statements included elsewhere in this Annual Report.
The table below summarizes, for the periods indicated, the Telecom Italia Group’s cash flows.
2012 2011 2010
(millions of euros)
Cash flows from (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,521 8,512 6,873
Cash flows from (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,683) (6,301) (3,319)
Cash flows from (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,864) (713) (3,904)
Cash flows from (used in) discontinued operations/non-current assets held for
sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
Aggregate cash flows (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 974 1,498 (350)
Net cash and cash equivalents at beginning of the year: (*) (B) . . . . . . . . . . . 6,670 5,282 5,484
Net foreign exchange differences on net cash and cash equivalents (C) . . (247) (110) 148
Net cash and cash equivalents at end of the year: (*) (D=A+B+C) . . . . . . . 7,397 6,670 5,282
(*) For further details please see the Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010 of the
Consolidated Financial Statements included elsewhere in this Annual Report.
129

Cash flows from operating activities. Cash flows from operating activities were 8,521 million euros in 2012,
8,512 million euros in 2011 and 6,873 million euros in 2010.
2012 compared to 2011
The increase of 9 million euros in 2012 compared to 2011 was attributable to:
Š an increase in profit (loss) from continuing operations of 3,074 million euros (a loss of 1,279 million euros in
2012 compared to a loss of 4,353 million euros in 2011);
Š a positive effect of change in trade receivable and net amounts due from customers on construction
contracts equal to 848 million euros (a net source of 851 million euros in 2012 compared to a net source of
3 million euros in 2011);
Š a positive effect of change in trade payables of 25 million euros (a net use of 139 million euros in 2012
compared to a net use of 164 million euros in 2011); and
Š an positive effect of change in inventories of 48 million euros (12 million euros in 2012 compared to a
decrease of 36 million euros in 2011).
Such increases in cash flows were partially offset by:
Š a negative effect of impairment losses (reversals) on non-current assets (including investments) of
2,931 million euros (a net source of 4,434 million euros in 2012 compared to a net source of 7,365 million
euros in 2011), due to the results of the impairment test for goodwill principally relating to the Domestic
Business;
Š a negative effect of net change in current income tax receivables/payables of 563 million euros (a net use of
473 million euros in 2012 compared to a net source of 90 million euros in 2011);
Š a decrease in depreciation and amortization of 156 million euros (5,340 million euros in 2012 compared to
5,496 million euros in 2011);
Š a negative effect of net change in miscellaneous receivables/payables and other assets/liabilities of
144 million euros (a net use of 35 million euros in 2012 compared to a net source of 109 million euros in
2011);
Š a negative effect of net change in deferred tax assets and liabilities equal to 77 million euros (a net source of
79 million euros in 2012 compared to a net source of 156 million euros in 2011);
Š a negative effect of change in employee benefits of 46 million euros (a net use of 221 million euros in 2012
compared to a net use of 175 million euros in 2011);
Š an increase in losses realized on disposals of non-current assets (including investments) of 36 million euros
(a net use of 54 million euros in 2012 compared to a net use of 18 million euros in 2011); and
Š a negative effect of share of losses of associates and joint ventures accounted for using the equity method of
33 million euros (a net source of 6 million euros in 2012 compared to a net source of 39 million euros in
2011).
The increase of 1,639 million euros in 2011 compared to 2010 was primarily attributable to:
Š a positive effect of impairment losses (reversals) on non-current assets (including investments) of
7,481 million euros (a net source of 7,365 million euros in 2011 compared to a net use of 116 million euros
in 2010), due to the results of the impairment test for goodwill relating to the Domestic Business;
Š a positive effect of net change in deferred tax assets and liabilities equal to 904 million euros (a net source of
156 million euros in 2011 compared to a net use of 748 million euros in 2010);
Š a positive effect due to a decrease in net gains realized on disposals of non-current assets (including
investments) of 23 million euros (a net use of 18 million euros in 2011 compared to a net use of 41 million
euros in 2010);
130

Š a positive effect of share of losses of associates and joint ventures accounted for using the equity method of
138 million euros (from a net use of 99 million euros in 2010 to a net source of 39 million euros in 2011);
Š a positive effect of change in trade payables of 114 million euros (a net use of 164 million euros in 2011
compared to a net use of 278 million euros in 2010);
Š a positive effect of net change in current income tax receivables/payables of 260 million euros (a net source
of 90 million euros in 2011 compared to a net use of 170 million euros in 2010); and
Š a positive effect of net change in miscellaneous receivables/payables and other assets/liabilities of
1,090 million euros (a net source of 109 million euros in 2011 compared to a net use of 981 million euros in
2010).
Such increases in cash flows were partially offset by:
Š a decrease in profit (loss) from continuing operations of 7,935 million euros (from a profit of 3,582 million
euros in 2010 compared to a loss of 4,353 million euros in 2010);
Š a decrease in depreciation and amortization of 48 million euros (5,542 million euros in 2010 compared to
5,496 million euros in 2011);
Š a negative effect of change in employee benefits of 248 million euros (a net use of 175 million euros in 2011
compared to a net source of 73 million euros in 2010); and
Š a negative effect of change in inventories of 132 million euros (a net use of 36 million euros in 2011
compared to a net source of 96 million euros in 2010).
Cash flows used in investing activities. Cash flows used in investing activities were 4,683 million euros in
2012, 6,301 million euros in 2011 and, 3,319 million euros in 2010.
The decrease in cash used in investing activities in 2012 compared to 2011 of 1,618 million euros was due to:
Š the effect of change in financial receivables and other financial assets of 1,099 million euros (a net source of
519 million euros in 2012 compared to net use of 580 million euros in 2011);
Š a decrease in capital expenditures (tangible and intangible assets on a cash basis) of 229 million euros (5,309
million euros in 2012 compared to 5,538 million euros in 2011); and
Š a decrease in acquisition of control of subsidiaries or other businesses of 661 million euros (a net use of
7 million euros in 2012 compared to a net use of 668 million euros in 2011).
Such effects were partially offset by:
Š a decrease of 358 million euros in proceeds from sale/repayments of intangible, tangible and other non-
current assets (a net source of 77 million euros in 2012 compared to a net source of 435 million euros in
2011);
Š a decrease of 11 million euros in proceeds from sale that result in a loss of control of subsidiaries or other
businesses, net of cash disposed of (a net source of 40 million euros in 2012 compared to a net source of
51 million euros in 2011); and
Š a negative effect of acquisition/disposals of other investments of 2 million euros (a net use of 3 million euros
in 2012 compared to a net use of 1 million euros in 2011).
The increase in cash used in investing activities in 2011 compared to 2010 of 2,982 million euros was mainly due
to:
Š an increase in capital expenditures (tangible and intangible assets on a cash basis) of 1,058 million euros
(5,538 million euros in 2011 compared to 4,480 million euros in 2010);
131

Š an increase in acquisition of control of subsidiaries or other businesses of 664 million euros (a net use of
668 million euros in 2011 compared to a net use of 4 million euros in 2010);
Š a negative effect of change in financial receivables and other financial assets of 1,082 million euros (a net
use of 580 million euros in 2011 compared to a net source of 502 million euros in 2010);
Š net cash and cash equivalents arising from the acquisition of the control of the Sofora group—Argentina that
in 2011 was nil (in 2010 amounted to 392 million euros); and
Š a decrease of 129 million euros in proceeds from sale that result in a loss of control of subsidiaries or other
businesses, net of cash disposed of (a net source of 51 million euros in 2011 compared to a net source of
180 million euros in 2010).
Such effects were partially offset by:
Š an increase in proceeds from sale/repayments of intangible, tangible and other non-current assets of
379 million euros (a net source of 56 million euros in 2010 compared to a net source of 435 million euros in
2011).
Cash flows used in financing activities. Cash flows used in financing activities were 2,864 million euros in
2012, 713 million euros in 2011 and 3,904 million euros in 2010.
Cash flows used in financing activities in 2012 of 2,864 million euros reflected mainly the following:
Š an decrease in financial liabilities and other of 1,831 million euros, as a result of the issuance of new debt
(4,624 million euros), the change in current financial liabilities and other (negative of 796 million euros) and
the repayments of non-current financial liabilities (5,659 million euros); and
Š the payment of dividends of 1,031 million euros.
Cash flows used in financing activities in 2011 of 713 million euros reflected mainly the following:
Š an increase in financial liabilities and other of 584 million euros, as a result of the issuance of new debt
(4,523 million euros) and the change in current financial liabilities and other (1,351 million euros) partially
offset by repayments of non-current financial liabilities (5,290 million euros); and
Š the payment of dividends of 1,326 million euros.
5.3.2 CAPITAL RESOURCES
Net Financial Debt
Net Financial Debt is a non-GAAP financial measure as defined in Item 10(e) of Regulation S-K under the
1934 Act. For further details please see “5.2.3—Non-GAAP Financial Measures”.
On a consolidated basis, at December 31, 2012 Net Financial Debt was 29,053 million euros compared to
30,819 million euros at December 31, 2011 (a decrease of 1,766 million euros).
The net financial position of Telecom Italia is independent of that of Telco and Telecom Italia has no obligation to
repay the debt held by Telco since they are two distinct legal entities.
In our updated 2013-2015 Plan we confirmed as one of our strategic priorities the continuing deleveraging to
reduce the Group’s Net Financial Debt.
Please see “Introduction–Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the United States
Private Securities Litigation Reform Act of 1995”, included elsewhere in this Annual Report, for a discussion of
factors which could cause our actual results to differ materially from the target discussed above. See, also,
“Item 3. Key Information–3.1 Risk Factors”.
There can be no assurance that we will be able to achieve the financial targets we have established.
132

Net Financial Debt as of December 31, 2012, 2011 and 2010 is set forth in the following table.
As of December 31,
2012 2011 2010
(millions of euros)
Non-current financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,091 35,860 34,348
Current financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,150 6,091 6,882
Financial liabilities directly associated with Discontinued operations/Non-current
assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
GROSS FINANCIAL DEBT (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,241 41,951 41,230
NON-CURRENT FINANCIAL ASSETS (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,496) (2,949) (1,863)
Current financial asset:
Securities other than investments (current assets) . . . . . . . . . . . . . . . . . . . . . . . . . . (754) (1,007) (1,316)
Financial receivables and other current financial assets . . . . . . . . . . . . . . . . . . . . . . (502) (462) (438)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,436) (6,714) (5,526)
Financial assets relating to Discontinued operations/Non-current assets held
for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
TOTAL CURRENT FINANCIAL ASSETS (C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,692) (8,183) (7,280)
FINANCIAL ASSETS (D=B+C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,188) (11,132) (9,143)
NET FINANCIAL DEBT (A+D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,053 30,819 32,087
The non-current portion of gross financial debt was 34,091 million euros at December 31, 2012 (35,860 million
euros at December 31, 2011 and 34,348 million euros at December 31, 2010) and corresponds to 84.7% of total
gross financial debt.
The financial risk management policies of the Telecom Italia Group are directed towards diversifying market risks,
hedging exchange rate risk in full and optimizing interest rate exposure by an appropriate diversification of the
portfolio, which is also achieved by using carefully selected derivative financial instruments. It should be stressed
that such instruments are not used for speculative purposes.
Furthermore, in order to determine its exposure to interest rates, the Group defines an optimum composition for
the fixed-rate and variable-rate debt structure and uses derivative financial instruments to achieve that prefixed
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, in a range of 65%-75%
for the fixed-rate component and 25%-35% for the floating-rate component.
In managing market risks, the Group has adopted a “Guideline policy for debt management using derivative
instruments” and mainly uses Interest Rate Swaps (IRS) and Cross Currency Interest Rate Swaps (CCIRS)
derivative financial instruments.
Volatility in the levels of interest rates and exchange rates since the fourth quarter of 2008 due to the financial
crisis, significantly impacted the fair value measurement of derivative positions and the related financial assets
and liabilities.
133

CHANGE IN NET FINANCIAL DEBT DURING 2012
The following table summarizes the main transactions which had an impact on the change in net financial debt
during 2012:
(millions of euros)
Net financial debt as of December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,819
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,196
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,031
Financial investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Share capital increases/decreases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Disposal of investments and other divestitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Cash flows from operating activities, net of other uses (sources) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,156)
Net change in 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,766)
In particular:
Š Capital expenditures on an accrual basis were 5,196 million euros in 2012, a decrease of 899 million
euros compared to 2011. The breakdown is as follows:
2012 2011 Changes
(a) % (b) % (a-b)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,072 59.1 4,185 68.7 (1,113)
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 28.9 1,290 21.2 210
Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557 10.7 556 9.1 1
Media, Olivetti and other activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 1.3 82 1.3 (15)
Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (18) (0.3) 18
Total consolidated capital expenditures . . . . . . . . . . . . . . . . . . . 5,196 100.0 6,095 100.0 (899)
% on revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.6 20.3
In particular:
Š the Domestic Business Unit reported a decline of 1,113 million euros in capital expenditures in 2012.
Excluding capital expenditures for 2011 relating to the purchase of user rights for LTE mobile telephony
frequency bands (1,223 million euros) there was a 110 million euro increase in 2012 compared to 2011,
attributable in particular to the development of next generation networks (LTE and fiber) in part offset
by the lower requirement in relation to delivery of new systems owing to the slowdown and contraction
of the fixed-line business;
Š the Brazil Business Unit reported an increase of 210 million euros in capital expenditures in 2012
(including a negative exchange rate effect of 94 million euros), for the purchase of user rights for fourth
generation (4G) mobile telephony frequency bands (145 million euros) as well as investments to
improve the quality of the network infrastructure;
Š the Argentina Business Unit reported capital expenditures in line with the prior year (+1 million
euros taking account of a negative exchange rate effect of 9 million euros). In addition to costs of
customer acquisition, expenditure was aimed at enlarging and upgrading broadband services to improve
transmission capacity and increase access speed, at traditional fixed-line access to meet demand and at
backhauling to support mobile access growth. Telecom Personal also invested primarily in increased
capacity and enlargement of the 3G network to support Mobile Internet growth.
Š Financial investments were 10 million euros in 2012 and mainly relate to the payment of incidental
expenses and other payables in connection with the acquisition of investments during the last part of the
year. In 2011, the amount was 925 million euros, mainly relating to the increase in the stake held in the
Sofora—Telecom Argentina group, the acquisition of control of the 4G Holding Group and the acquisition of
control of the companies Tim Fiber SP and Tim Fiber RJ.
134

Š Share capital increase/decrease. In 2012 these amount to a negative 2 million euros and relate to
incidental expenses connected to the capital increase in Tim Participações S.A that took place in 2011: on
October 31, 2011, the capital increase of Tim Participações S.A. was completed with a cash in for the
Telecom Italia Group of 240 million euros, net of the related incidental expenses.
Š Disposal of investments and other divestitures amounted to 151 million euros in 2012 and principally
relates to:
Š 85 million euros received, net of related incidental expenses and the net financial debt of the investee,
from the sale on October 31, 2012 of the entire stake held in Matrix;
Š 59 million euros from the collection of the installments on the sale of the investment in EtecSA Cuba,
which took place at the end of January 2011.
***
The following should also be taken into account with respect to net financial debt:
Š Sales of receivables to factoring companies
The sales of receivables to factoring companies during 2012 had a positive effect on net financial debt at
December 31, 2012 of 1,233 million euros (1,334 million euros at December 31, 2011).
CHANGE IN NET FINANCIAL DEBT DURING 2011
The following chart summarizes the main transactions which had an impact on the change in net financial debt
during 2011:
(millions of euros)
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,095
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,326
Financial investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 925
Share capital increases/decreases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (240)
Disposal of investments and other divestitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (486)
Cash flows from operating activities, net of other uses (sources) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,888)
Net change in 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,268)
In particular:
Š Capital expenditures on an accrual basis were 6,095 million euros in 2011, an increase of 1,512 million
euros compared to 2010. The breakdown is as follows:
2011 2010 Changes
(a) % (b) % (a-b)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,185 68.7 3,087 67.4 1,098
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,290 21.2 1,216 26.5 74
Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556 9.1 188 4.1 368
Media, Olivetti and other activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 1.3 95 2.1 (13)
Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18) (0.3) (3) (0.1) (15)
Total consolidated capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . 6,095 100.0 4,583 100.0 1,512
% on revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.3 16.6
135

In particular:
Š the Domestic Business Unit reported an increase of 1,098 million euros in 2011. The increase was
due to the acquisition of the user rights for 800, 1800 and 2600 MHz LTE frequencies, to be used for
broadband mobile communication services, for a total of 1,223 million euros. This followed the auction
by the Ministry of Economic Development which took place in the second half of 2011. The user rights,
formally awarded by the Ministry on October 3, 2011, were assigned in February 2012;
Š the Brazil Business Unit reported an increase of 74 million euros in 2011. The success of the new
sales strategy has brought a gradual reduction in the portion of subscriber acquisition costs capitalized
and an increase in the expenditures dedicated to network infrastructures so as to sustain the growth of
voice and data traffic;
Š the Argentina Business Unit reported an increase of 368 million euros in 2011. With respect to the
fixed network, capital expenditures were directed to the expansion of the optical fiber infrastructure and
access network, development of Backhauling for mobile traffic, DWDM technology and expansion of the
IP backbone in order to improve transmission capacity and increase the access speed offered to
customers. At the same time, Personal principally invested in the 3G network to increase capacity and
expand coverage as well as in the platforms to expand the Value-Added Services and in IT projects.
Š Share capital increases were 240 million euros in 2011, an increase of 173 million euros compared to
2010 and were solely attributable to the share capital increase of Tim Participações S.A.
Š Financial investments were 925 million euros in 2011, an increase of 869 million euros compared to 2010,
and were attributable to:
Š Acquisition of stakes in the Sofora—Telecom Argentina group. During 2011, the Telecom Italia Group
increased the stakes held in Sofora Telecomunicaciones S.A. and in Nortel Inversora S.A. (the
controlling holding company of the Telecom Argentina group, which, in turn, is controlled by Sofora
Telecomunicaciones) for a total investment of 211 million euros. Following those acquisitions, Telecom
Italia Group’s economic interest in Telecom Argentina moved from 16.2% as of December 31, 2010 to
22.7% as of December 31, 2011.
Š Acquisition of control of the 4GH group. On July 27, 2011, Telecom Italia, after having received the
National Antitrust Authority’s (AGCM) approval, finalized the acquisition of a 71% stake in the company
4G Holding S.p.A., with a total impact on net financial debt of 27.4 million euros, for an outlay of about
8.6 million euros (including transaction costs) and the consolidation of the financial debt of the acquired
companies.
Š Acquisition of control of the companies Tim Fiber SP and Tim Fiber RJ. On October 31, 2011, two
companies belonging to the AES Atimus group, telecommunications infrastructure operators in the
states of São Paolo and Rio de Janeiro, were acquired from Companhia Brasiliana de Energia, through
the subsidiary Tim Celular S.A. The total impact on net financial debt was 686 million euros, attributable
to the payment of 656 million euros (including transaction costs) and the consolidation of the financial
debt of the acquired group.
Š Disposal of investments and other divestitures amounted to 486 million euros in 2011 and principally
relates to:
Š 411 million euros for the portion already received, net of related transaction costs, on the sale of EtecSA
(Cuba). The transaction specifically provided that the Telecom Italia Group would receive a total of
706 million U.S. dollars, of which 500 million U.S. dollars was paid by the buyer on January 31, 2011;
the remaining amount is to be paid by EtecSA in 36 monthly installments. The receivable is secured by
specific guarantees;
Š 53 million euros received, net of related transaction costs and the net financial debt of the subsidiary,
on the sale of the entire stake held in Loquendo.
***
136

The following should also be taken into account with respect to net financial debt:
Š Sales of receivables to factoring companies
The sales of receivables to factoring companies during 2011 had a positive effect on net financial debt at
December 31, 2011 of 1,334 million euros (1,209 million euros at December 31, 2010).
Gross Financial Debt
On a consolidated basis, at December 31, 2012, our gross financial debt amounted to 40,241 million euros
(41,951 million euros at December 31, 2011) and included non-current financial liabilities (long-term debt) of
34,091 million euros (35,860 million euros at December 31, 2011) and current financial liabilities (short-term
debt) of 6,150 million euros (6,091 million euros at December 31, 2011).
As of December 31, 2012, approximately 65.4% of our gross financial debt was denominated in Euro, while the
remainder was primarily denominated in U.S. Dollars, Pound Sterling, Brazilian Reais, Argentine Peso and
Japanese Yen.
The following table sets out the currency composition of our gross financial debt:
(millions of foreign currency)
USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,499 9,474 12,386 9,572
GBP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,535 3,106 2,532 3,032
BRL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,945 1,092 2,624 1,081
JPY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,865 175 20,809 208
ARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331 51 740 133
PYG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,347 22 140,043 24
EURO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,321 27,901
Total gross financial debt . . . . . . . . . . . . . . . . . . . . . 40,241 41,951
For information regarding the split of our debt between fixed rate and floating rate please see Note “Financial risk
management” of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report.
Long-term debt includes notes we have issued in order to reduce our dependence on short-term debt, extend the
average life of our financial debt and expand our investor base. For this purpose, we have issued long-term debt in
the capital markets under, among others:
Active programs:
Š the Telecom Italia Euro Medium Term Note (“EMTN”) Programme. The maximum amount permitted to be
issued under the Programme, including multiple tranches and multiple currencies, is 20 billion euros. This is
the Group’s only active debt program although it can issue debt instruments on an ad hoc basis if needed.
Inactive programs:
Š the Shelf Registration Statement, expired on December 29, 2011, which allowed for the issuance, by
Telecom Italia S.p.A.’s wholly-owned subsidiary Telecom Italia Capital S.A. and under a guarantee by
Telecom Italia S.p.A., of an indeterminate amount of debt securities at various terms, rates and maturities;
Š the Olivetti Euro Medium Term Note Programme, which allowed for the issuance of a total amount of 15
billion euros in debt (or the equivalent in other currencies), at various terms, rates and maturities; and
Š the Old Telecom Italia Global Medium Term Note Program (“Global Note Program”), which allowed for the
issuance of a total amount of U.S.$12 billion in debt (or the equivalent in other currencies), at various terms,
rates and maturities.
137

The following table highlights the utilization of the above mentioned EMTN Programme at the end of 2012.
As of December 31, 2012
EMTN Programme
(millions of euros)
Total amount of the program (max outstanding notes) . . . . . . . . . . . . . . . . . . . . . . (A) 20,000.00
Notes and bonds issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,802.79
Notes and bonds repaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,745.23
Net utilization of the program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (B) 16,057.56
Remaining available amount of the program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A-B) 3,942.44
Notes and bonds
At December 31, 2012 we had notes and bonds outstanding of 27,549 million euros (28,373 million euros at
December 31, 2011). Their nominal repayment amount was 26,323 million euros, a decrease of 652 million euros
compared to December 31, 2011 (26,975million euros).
Changes in bonds during 2012 were as follows:
Currency
Amount
(millions)
NEW ISSUES Issue date
Telecom Italia S.p.A. 750 million euros 4.625% maturing 06/15/2015 . . . . . . Euro 750 06/15/2012
Telecom Italia S.p.A. 750 million euros 6.125% maturing 12/14/2018 . . . . . . Euro 750 06/15/2012
Telecom Italia S.p.A. 1,000 million euros 4.500% maturing 09/20/2017 . . . . Euro 1,000 09/20/2012
Telecom Italia S.p.A. 1,000 million euros 4.000% maturing 01/21/2020 . . . . Euro 1,000 12/21/2012
Currency
Amount
(millions) Repayment date
REPAYMENTS
Telecom Italia S.p.A. 6.250% 1,222.5 million euros(1) . . . . . . . . . . . . . . . . . . . . . . Euro 1,222.5 02/01/2012
Telecom Italia Finance S.A. 107.7 million euros, 3 month Euribor+1.30% . . . Euro 107.7 03/14/2012
Telecom Italia Finance S.A. 7.250% 790 million euros(2) . . . . . . . . . . . . . . . . . . . Euro 790 04/24/2012
Telecom Italia S.p.A. 1,000 million euros, 3 month Euribor+0.53% . . . . . . . . . Euro 1,000 12/06/2012
(1) Net of buybacks by the Company of 27.5 million euros during 2011.
(2) Net of buybacks by the Company of 210 million euros during 2011 and 2012.
Currency
Amount
(millions) Buyback period
BUYBACKS
Telecom Italia Finance S.A., 790 million euros 7.250%, maturing April
2012(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Euro 11.6 January 2012
Telecom Italia Finance S.A. 678 million euros 6.875%, maturing
January 2013(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Euro 80.8 January – May 2012
Telecom Italia S.p.A. 432 million euros 6.750%, maturing March
2013(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Euro 212.9 July 2012
Telecom Italia S.p.A. 268 million euros 3 month Euribor+0.63%,
maturing July 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Euro 232.3 July 2012
Telecom Italia S.p.A. 284 million euros 7.875%, maturing January
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Euro 215.9 July 2012
Telecom Italia S.p.A. 557 million euros 4.750%, maturing May 2014 . . Euro 116.2 July 2012
(1) Buybacks of the above bonds during 2011 amounted to 290 million euros (199 million euros on the bonds maturing April 2012 and
91 million euros on the bonds maturing January 2013). As a result, the total amount bought back was 382 million euros.
(2) As of December 2011, bonds had already been bought back for a total of 5 million euros. As a result, the total amount bought back was
218 million euros.
138

In reference to the Telecom Italia S.p.A. 2002-2022 bonds, reserved for subscription by employees of the Group,
at December 31, 2012, the nominal amount is equal to 230 million euros and decreased by 36 million euros
compared to December 31, 2011 (266 million euros).
For further details about the outstanding notes and bonds as of December 31, 2012 please see also “Note—
Financial liabilities (non-current and current)” of the Notes to the Consolidated Financial Statements included
elsewhere in this Annual Report.
Subordinated bond issue
On March 20, 2013, the Parent issued a 750 million euros subordinated bond to institutional investors. The bond
matures in 2073, is callable in 2018 and bears interest at 7.75%.
Revolving Credit Facility and Term Loan
The following table shows the composition and the drawdown of the syndicated committed credit lines available
at December 31, 2012.
As of December 31,
2012
As of December 31,
2011
Committed Drawdown Committed Drawdown
(billions of euros)
Revolving Credit Facility—expiring February 2013 . . . . . . . . . . . . . . . . 1.25 — 1.25 0.25
Revolving Credit Facility—expiring August 2014 . . . . . . . . . . . . . . . . . 8.00 1.50 8.00 2.00
Revolving Credit Facility—expiring December 2013 . . . . . . . . . . . . . . 0.20 — 0.20 0.20
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.45 1.50 9.45 2.45
On May 24, 2012, Telecom Italia signed a new contract to extend half of the Revolving Credit Facility (RCF) of 8
billion euros expiring August 2014. The extension was obtained through a Forward Start Facility of 4 billion euros
which will come into effect in August 2014 (or at a prior date if Telecom Italia prematurely cancels the
commitments under the current RCF 2014) and will expire in May 2017.
On September 21 and 28, 2012 the drawdowns were repaid of 200 million euros and 250 million euros from the
revolving credit facilities expiring respectively in December 2013 and February 2013.
On October 8, 2012 a drawdown of 500 million euros on the revolving credit facility expiring August 2014 was
repaid. As a result, the overall facility of 8 billion euros has currently been drawn down for a total of 1.5 billion
euros.
Telecom Italia also has a bilateral stand-by credit line expiring August 3, 2016 for 100 million euros from Banca
Regionale Europea, drawn down for the full amount.
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 7.13 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 5.4%.
For further details about the maturities of financial liabilities in terms of the expected nominal repayment amount,
as contractually agreed, please see “Item 5. Operating And Financial Review And Prospects—5.3 Liquidity And
Capital Resources—Contractual Obligations and Commitments”.
Current financial assets and liquidity margin
The Telecom Italia Group’s available liquidity margin amounts to 16,140 million euros at December 31, 2012,
corresponding to the sum of Cash and cash equivalents and current Securities other than investments, totaling
8,190 million euros (7,721 million euros at December 31, 2011), and the committed credit lines, mentioned
above, of which a total of 7,950 million euros has not been drawn down. This margin was more than adequate to
cover the Group’s debt maturing over the next 24 months measured from January 1, 2013.
139

In particular:
Š Cash and cash equivalents amount to 7,436 million euros (6,714 million euros at December 31, 2011).
The different technical forms of investing available cash at December 31, 2012 may be broken down as
follows:
Š Maturities: investments have a maximum maturity of three months;
Š Counterpart 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 counterparts;
Š Country risk: investments are made mainly in major European financial markets.
Š Securities other than investments amount to 754 million euros at December 31, 2012 (1,007 million
euros at December 31, 2011). Such forms of investment represent alternatives to the investment of liquidity
with the aim of raising the return. They include: Italian treasury bonds (BTPs) purchased by Telecom Italia
S.p.A. and Telecom Italia Finance S.A., amounting respectively to 358 million euros and 204 million euros,
Italian Treasury Credit Certificates (CCTs) for 5 million euros (assigned to Telecom Italia S.p.A. as the holder
of trade receivables, as stated by the Italian Ministry of the Economy and Finance Decree of December 3,
2012) and 183 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 BTPs and CCTs, which represent
investments in “Sovereign debt securities”, were purchased in compliance with the Guidelines for the
“Management and control of financial risk” adopted by the Telecom Italia Group in August 2012, in
replacement of the previous policy in force since July 2009. For further details please see “Note—Financial
Risk Management” of the Notes to Consolidated Financial Statements included elsewhere in this Annual
Report.
Treasury policies
The Group uses a variety of instruments to finance its operations and raise liquidity, in particular bond issues,
alongside committed and uncommitted bank lines.
Off-Balance Sheet Arrangements
As of December 31, 2012, the Telecom Italia Group had the following items that are considered to be off-balance
sheet arrangements.
Guarantees for 18 million euros, net of back-to-back guarantees received, by Telecom Italia on behalf of
associates (5 million euros) and other third parties for medium/long-term financial transactions.
Guarantees were provided by banks and other financial institutions on behalf of Telecom Italia to Group
companies, amounting to 5,213 million euros, to guarantee financing received (2,343 million euros) and
performance under outstanding contracts (2,870 million euros).
Among the guarantees provided by banks and other financial institutions on behalf of Telecom Italia are two
guarantees in favor of the Ministry of Economic Development for the auction to assign the user rights for the 800,
1800 and 2600MHz frequencies. The guarantees amount, respectively, to 38 million euros (for the commitment
undertaken by the Company to build equipment networks according to eco-sustainability characteristics) and
456 million euros (for the request to pay back the total amount owed over a period of 5 years). In particular, the
Company has made a commitment to achieve energy savings in the new LTE technologies of approximately 10%
on infrastructure and 20% on transmission devices over a period of 5 years (compared to energy consumed by
current technology).
For further details please see “Note—Contingent liabilities, other information, commitments and guarantees” of
the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.
Contractual Obligations and Commitments
The following table aggregates our contractual obligations and commitments with definitive payment terms which
will require significant cash outlays in the future based on nominal amounts.
140

As of December 31, 2012, the nominal repayment amounts of payables and the relating expiration dates were
as follows:
Amounts due as of December 31,
2013 2014 2015 2016 2017 After 2017 Total
(millions of euros)
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,894 2,546 2,544 2,250 2,919 13,170 26,323
Amounts due to banks, other financial
payables and liabilities . . . . . . . . . . . . . . . . . . . . 1,416 2,753 1,118 624 818 1,569 8,298
Finance lease liabilities . . . . . . . . . . . . . . . . . . . . . . 205 108 144 151 162 594 1,364
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,515 5,407 3,806 3,025 3,899 15,333 35,985
Current financial liabilities . . . . . . . . . . . . . . . . . . . 638 — — — — — 638
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,153 5,407 3,806 3,025 3,899 15,333 36,623
For further details please see also “Note—Derivatives” and “Note—Other information, Operating leases” of the
Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.
5.3.3 CAPITAL EXPENDITURES
The table below sets forth, for the periods indicated, our total capital expenditures (on an accrual basis) allocated
to the Business Units at December 31, 2012.
2012 2011 2010
(millions of euros)
Purchase of tangible assets:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,856 1,821 1,845
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 908 769 758
Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413 404 156
Media, Olivetti and Other Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 35 43
Adjustments and eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
Total purchase of tangible assets(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,201 3,029 2,802
Purchase of intangible assets(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,995 3,066 1,781
Total capital expenditures(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,196 6,095 4,583
(1) Purchase of tangible assets is mainly related to local and long distance networks, exchange equipment, investments in subscribers’
equipment, radio and transmission equipment.
(2) Purchase of intangible assets includes expenditures for software for telecommunications systems and licenses.
(3) Intercompany capital expenditures are adjusted to eliminate intercompany profit.
In the three years ended December 31, 2012, 2011 and 2010, cash flows from operating activities exceeded
capital expenditures on an accrual basis. For further details please see “—5.3.2 Capital Resources”, “—5.2.7
Results Of Operations Of Business Units For The Year Ended December 31, 2012 Compared With The Year Ended
December 31, 2011”, “5.2.9 Results Of Operations Of Business Units For The Year Ended December 31, 2011
Compared With The Year Ended December 31, 2010”.
The capital expenditures planned for the 2013-2015 period at Telecom Italia Group level, will be approximately
16 billion euros, excluding the acquisition of spectrum in Argentina.
In particular:
Š Domestic Business Unit: cumulative capital expenditures for the 2013-2015 period will be kept at 9 billion
euros; continued strengthening of the Network infrastructure with a strong focus on Fiber and LTE
deployment, to support wave of data growth, ensuring quality and performance excellence in fixed and
mobile access. The increase in innovative capital expenditure will be balanced by efficiencies and right
spending in other areas;
141

Š Brazil Business Unit (Tim Brasil): cumulative capital expenditures will stand at 10.7 billion Brazilian reais in
the 2013-2015 period, with a confirmed strong focus on increasing the network capacity with a priority on
quality improvement; and
Š Argentina Business Unit: capital expenditures will be 4.7 billion Argentine pesos in 2013 (17% capital
expenditures on revenues, excluding spectrum acquisition). The capital expenditures /revenues trend will
grow in 2013-2015 period compared to 2012. Capital expenditures priority focus is to deliver better network
service quality, extending reach and capacity of mobile access, especially for mobile data, and to accelerate
FTTC deployment.
The Telecom Italia Group expects to fulfill its future commitments for capital expenditures primarily through the
use of cash generated from operations.
* * *
For details about market risk disclosures please see “Item 11. Quantitative And Qualitative Disclosures About
Market Risks”.
142

Item 5. Operating And Financial Review And Prospects Research, Development And Innovation
5.4 RESEARCH, DEVELOPMENT AND INNOVATION
Research and development activities at Telecom Italia are carried out by the Information Technology, TILab and
Innovation & Industry Relations departments, which oversee the analysis of new technologies and the
development of the engineering activities supporting our offers to customers.
Activities to enhance and generate competitive advantage for the Group are of particular importance and are
pursued through strategic management of the relationship between research, Intellectual Property Rights (IPR)
and business, aimed at developing the company’s patent portfolio. 14 new applications for patents were filed
during 2012.
In order to support entrepreneurial and research projects in the Web 2.0 sector, Telecom Italia launched
“Working Capital” in 2009, which has become a blueprint for initiatives to support innovation. The project intends
to promote the development of a new generation of Italian entrepreneurs, providing them with financial support,
skills, technologies and dedicated services. The plan for 2013 is to create 3 “accelerators” (one each in Milan,
Rome and Catania), centers of excellence for innovation, providing places to study, test and implement projects.
At the end of 2012, the “Changemakers” project was launched to identify and support the development of 10 new
entrepreneurial ideas presented by talented young people to improve the lives of at least 10 million citizens. The
young people selected will be given the opportunity to join a management support process that will begin in
March 2013 with an 8-week residential experience on a campus where participants will be shadowed by teachers
and mentors with recognised expertise.
Projects and initiatives
Projects and initiatives in this field can be divided into 4 macro-areas:
Š New generation network;
Š Future Internet applications;
Š Positive environmental impacts;
Š Positive social impacts.
New generation network projects
Š Electromagnetic compatibility analyses continued on the new generation wireless LTE (Long Term Evolution)
networks currently being designed. The tests focused in particular on the interference issues associated with
the proximity in the 800 MHz band spectrum between LTE channels and digital TV (DVB-T) channels and the
issues arising from compliance with legal restrictions regarding emissions from the electromagnetic fields of
antenna sites.
Š A technical specification was drawn up for the creation of Telecom Italia Sparkle’s new Pan European
Backbone. This is a long distance transport network (transmission backbone) created using the latest optical
interface technologies that provide high transmission speeds (up to 100 Gbit/s) and flexibility of operation
with transmission flow reconfiguration carried out inside the new network equipment (Reconfigurable Optical
Add-Drop Multiplexer and OTN Cross Connect).
Š Live TV broadcast of the Turin Marathon for RAI achieved with an innovative architecture that uses the LTE
network to receive live video signals from motorbikes and remote controlled drones. The initiative allowed
production costs to be reduced and avoided the use of helicopters for radio bridging and filming, with
positive environmental impacts in terms of a reduction in fuel consumption and therefore atmospheric
emissions.
Š Continuation of the EARTH (Energy Aware Radio and NeTwork TecHnologies) project, which began in
January 2010 and is scheduled to last two and a half years. Funded by the European Union, the project
addresses broad themes including:
Š the development of a new generation of devices and components, focusing in particular on mobile
systems such as LTE and its evolutions (LTE-Advanced), while not excluding 3G technologies (UMTS,
HSPA);
143

Š the adoption of new network management system development strategies;
Š the use of innovative algorithms for the efficient use of radio resources.
The project aims to reduce system energy use by a factor of more than 50%, with consequent benefits in
terms of savings and lower emissions. A demonstrator was built at the Turin laboratories.
Š During the last quarter of 2012, the METIS (Mobile and wireless communications Enablers for Twenty-twenty
(2020) Information Society) project was launched, which will run for 30 months in total. European FP7
financing programme approved in the context of “Call 8”. The project involves 29 partners, including the
main equipment manufacturers, universities, research centres and operators, including Telecom Italia, with a
significant amount of resources. The aim of the project is to set up the new radio system beyond LTE,
working in a number of innovative design directions that focus in particular on communication between
objects and equipment, with a view to achieving greater overall energy efficiency. As part of the Metis
project, Telecom Italia is actively involved in establishing guidelines for designing the new system, as well as
pursuing the specific subject of multi-node communication.
Š The last quarter of 2012 also saw the launch of the iJOIN (Interworking and JOINt Design of an Open Access
and Backhaul Network Architecture for Small Cells based on Cloud Networks) project funded by the European
Union and lasting 30 months. The project introduces the concept of RAN-as-a-Service (RANaaS), i.e. a mobile
network in which radio functions are managed flexibly and in a centralised way through an open IT platform
based on a cloud infrastructure, allowing greater energy efficiency to be achieved.
The project, in which Telecom is participating as the sole operator and with a leadership role in the
coordination activities, will present solutions developed internally regarding the deployment of microcells
with fibre backhauling and potential centralised control.
Future Internet application projects
Š Telecom Italia has confirmed itself as a protagonist in the development of NFC (Near Field Communications),
the technology that allows electronic transactions to be performed with a mobile phone. When it was
previewed in Milan, during the Mobile Money Summit event organised by GSMA, a group of over 1,000
people tested the new NFC services around the city while going about their usual everyday activities. In
particular, the system allowed them to pay for bus, tram, underground and train tickets, make purchases
from around a thousand different stores using the credit card on the smartphone SIM card, use coupons and
discount vouchers, all in full compliance with the requirements for the security and privacy of transactions.
NFC technology is also used by employees working at Telecom Italia’s 3 sites to access the company’s
offices, pay for meals in the canteen, cafés, and make purchases from vending machines. It is also the basis
for the “Share IT” service prototype for sustainable mobility, whereby an NFC smartphone can be used both
to book a car and to access and use the car itself.
Š Over the past few years, the way in which we interact with the world around us and the objects within it has
changed. The “Augmented Reality” project allows the outside world to be combined with digital information
and content that is invisible to the human eye but visible to the watchful eye of the mobile phone. The
technology used allows interactive objects to be superimposed on the screen, making reality “clickable and
connected”. There are dozens of potential applications: from searching for places of interest for tourism
(including restaurants and museums) to social activities, “enhanced” reading of books/magazines, “seeing
inside” objects and interacting with them, enhanced homes, 3D interaction and many more.
Š A number of young researchers working at the CNR institute for computing and high performance networks,
who set up the Eco4Cloud company in 2010, have devised an Internet algorithm that allows an energy saving
of up to around 35%, by observing the behaviour of ants. On average, only 30% of a computer’s capacity is
used. Rather than distributing the workload equally among all the computers connected to a network (1000
computers used at 50% capacity use more energy than 500 used at 100% capacity) half of them could be
switched off or put into low energy hibernation. In November 2012, the project won the Working Capital
special award, with which Telecom Italia has enhanced and supported new business ideas, and last July the
algorithm was tested on 32 computers at the company’s data processing centre in Bari, confirming the
specified energy saving.
144

Projects with positive environmental impacts
Š In July 2012, Telecom Italia, Enel Distribuzione, Indesit Company and Electrolux Appliances set up the non-
profit-making and legally recognised Energy@home association with the aim of using new computer and
electronic technologies to redesign homes as ecosystems of intercommunicating devices: meter and
electricity system, domestic appliances and broadband telecommunication network. Communication allows
these systems to integrate smartly, becoming nodes in the Internet of Things in order to reduce waste,
increase the reliability and security of the domestic energy system, but above all give consumers more
information and choice, educating them in the virtuous use of products and encouraging sustainable
lifestyles. The Association is the result of a collaborative project launched in 2009, which has already helped
to create a prototype currently being tested by 10 Italian households. The Energy@home system allows
power consumption to be monitored and displayed in real time remotely, producing cost information and
detailed analysis reports for each individual domestic appliance.
Š In the field of sustainable mobility, Telecom Italia is working with the Fiat Research Centre in the context of
the “Connected Car” project to develop solutions that allow mobile terminals to integrate with units installed
in vehicles, exchange data and share audio and video resources, thus enabling new services for passengers
and drivers. The collaboration has led to the creation of an initial prototype in the laboratory which, once
connected to a vehicle, allows fuel consumption and the condition of the vehicle to be monitored using the
mobile phone in the car. Again in the context of ICT solutions applied to the world of transport, Telecom
Italia is a long-standing member of the main industry associations (ERTICO, TTS Italia, GSMA CCF) and has
been active at European level in the development of ITS (Intelligent Transport Systems) architectures and
solutions and standardisation activities (ETSI TC ITS) supporting European legislation for the sector, in line
with the ITS Action Plan published by the European Commission and currently being transposed by EU
Member States.
Š As part of the activities devoted to developing new mobile access technologies, tests are being carried out on
“Active Antenna Systems” technology, based on a type of antenna that includes active elements and is
normally linked by optical fibre to the connected part at the foot of the radio station. This solution, which
involves the use of innovative algorithms for efficient use of radio resources, also allows the energy
efficiency of the Radio Base Stations (RBS) to be improved by replacing coaxial cables with optical fibres in
the aerial cable. Additional benefits are also expected, again in terms of consumption, as a result of the
introduction of appropriate beamforming technologies (generating specific radiation patterns).
Š Work continued on the ECONET (low Energy COnsumption NETworks) project lasting three years and
officially launched in October 2010. Funded by the European Union, the project focuses on the energy used
by systems constituting the fixed telecommunication network, for both operators and customers. ECONET,
which brings together a consortium of 15 partners including industries, universities, research centres and
SMEs from several European and non-European countries, aims to develop and test new integrated control
technologies and mechanisms to enable energy saving by the dynamic adaptation of network capacity and
resources according to the actual traffic load and requirements of users, while ensuring quality of service at
the same time. The aim is to allow the energy requirement of equipment to be reduced by 50% in the short
to medium term and 80% in the long term, based on an unchanged business scenario.
Š Telecom Italia coordinated the specific activity relating to Common Power Supplies for fixed terminals in the
context of the Home Gateway Initiative (HGI), the final document of which (published in April 2010)
provided guidance for the transposition of this specification in the ETSI ATTM context. A number of single
power supply prototypes were tested by TILab, which also carried out a comparative LCA (Life Cycle
Assessment) of the HGI/ETSI solution compared to the power supplies previously used for the access
gateways installed until 2009. With regard to common power supplies for mobile terminals, Telecom Italia
worked with the ITU-T to review the L.1000 Recommendation regarding the Universal Mobile Charger, with
the aim of reducing the cable and connector options as much as possible and thus converging towards a
single power supply solution. For this purpose, the ITU-T issued a specific press release in which Telecom
Italia is mentioned first in the list of companies involved in dealing with this issue.
Projects with positive social impacts
Š Telecom Italia has contributed with technological support to supplying networks, services and tutors in the
context of the Working Capital programme for a project implemented by Compagnia di San Paolo in the field
145

of Social Housing. The project concerned a building used temporarily in the area of Porta Palazzo in Turin,
which has offered temporary users (university students, workers under mobility procedure, employees with
no job security, young couples, people leaving sheltered communities) and city users (tourists) 28
apartments since 2012 for a total of 50/60 users. The objective has been to allow temporary and city users
to share accommodation, telecommunication and ICT services, as well as “social” services including
entertainment, tourism, training, etc. The project is of great social importance and significance in the urban
environment as it promotes interaction among the temporary users and their integration in the social context
of the city.
Š A social reading tool called SOCIETY (SOCIal Ebook communiTY) was launched which provides a new way of
teaching, promoting technological evolution in schools and integrating “traditional” teaching methods with
the potential offered by new communication technologies. Social reading is an emerging technique for
sharing the reading experience: the reader is no longer passive but becomes a contributor and to a certain
extent the author of the book itself. In this new teaching context, new forms of learning can also develop:
teachers can guide students in reading a passage, comment on it together with them, add notes, analyse
them in class and set a reading/study task to be completed by students on their own at home.
Š In the context of reading and social and collaborative teaching, Telecom Italia is also dealing with the
subject of dyslexia, which is a growing phenomenon in schools (10-20% of the school age population have
learning difficulties and in 2-5% of cases these are attributable to dyslexia-related disorders). The first stage
of the project, carried out with the Turin-based Egò association, is intended to map the actual needs of the
individual by means of interviews with the people involved (psychologists, speech therapists, teachers,
parents and young people affected by dyslexia). A number of joint initiatives are being launched at both
European (EIT projects) and national level (e.g. projects with the ASPHI association and with the Universities
of Modena and Reggio Emilia and Eastern Piedmont) to identify effective functions to support dyslexic
people, both at school and at home, through an app installed on a tablet computer.
Š Testing of the HELP telemedicine project has been launched at the Polytechnic of Palermo for patients
suffering from Parkinson’s disease, with the aim of improving their quality of life. Through a capsule inserted
in a dental prosthesis for the gradual release of drugs and using mobile phones connected to the TIM
network, doctors can interact with the equipment and monitor the clinical parameters of patients remotely.
HELP was named winner of the AAL (Ambient Assisted Living Joint Programme ) Award for 2012.
For additional details, reference should be made to the Note “Other information”, of the Notes to the
Consolidated Financial Statements included elsewhere herein.
146

Item 5. Operating And Financial Review And Prospects Cautionary Statement For Purposes Of The “Safe Harbor”
Provisions Of The United States Private Securities Litigation
Reform Act Of 1995
5.5 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
foregoing discussion in “Item 5—Operating and Financial Review and Prospects” and the following discussion
under “Item 11—Quantitative and Qualitative Disclosures About Market Risks” contain 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 actual results to differ materially from those projected or implied in
any forward-looking statements:
Š our ability to successfully implement our strategy over the 2013-2015 period;
Š our ability to successfully achieve our debt reduction and other targets;
Š the increasing competition from global and local OTT (Over The Top) players (operators offering contents
and services on the internet without owning its own proprietary telecommunications network infrastructure);
Š the continuing impact of increased competition in our markets, including competition from established
domestic competitors and global and regional alliances formed by other telecommunications operators in
our core Italian domestic fixed-line and wireless markets and our other principal markets;
Š the continuing effects of the global economic crisis in the principal markets in which we operate, including,
in particular, our core Italian market;
Š our ability to introduce new services to stimulate increased usage of our fixed and wireless networks to
offset declines in the traditional voice business mainly due to the continuing impact of regulatory required
price reductions, market share loss and pricing pressures generally;
Š our ability to successfully implement our internet and broadband strategy;
Š the impact of regulatory decisions and changes in the regulatory environment in Italy and other countries in
which we operate, including recent changes to allowable charges for data and voice roaming;
Š the impact of economic development generally on our international business and on our foreign investments
and capital expenditures;
Š as our services are technology-intensive, our ability to develop new technologies in order to avoid our
services becoming non-competitive;
Š the impact of political developments in Italy and other countries in which we operate;
Š the impact of fluctuations in currency exchange and interest rates;
Š our ability to build up our business in adjacent markets and in international markets (particularly in Brazil and
Argentina), due to our specialist and technical resources;
Š our ability to achieve the expected return on the investments and capital expenditures we have made and
continue to make (such as those in Brazil and Argentina);
Š the amount and timing of any future impairment charges for our authorizations, goodwill or other assets;
and
Š the outcome of litigation, disputes and investigations in which we are involved or may become involved.
147

Item 5. Operating And Financial Review And Prospects Cautionary Statement For Purposes Of The “Safe Harbor”
Provisions Of The United States Private Securities Litigation
Reform Act Of 1995
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.
148

Item 6. Directors, Senior Management and Employees Directors
Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6.1 DIRECTORS
On April 12, 2011 the Shareholders’ Meeting of the Company elected the present Board of Directors of Telecom
Italia.
The Shareholders’ Meeting established the number of Directors at 15 and their term of office for three years, until
the Shareholders’ Meeting which will approve the financial statements of the Company for the year ended
December 31, 2013; set the overall annual remuneration for the Board of Directors at 2,200,000 euros (to be
divided among the members thereof in accordance with the resolutions to be adopted by the Board itself);
authorized the Directors to continue with the activities specified in their respective curricula vitae, and released
them from restrictions on competition, as permitted under Article 2390 of the Italian Civil Code.
On April 13, 2011, the Board of Directors elected Franco Bernabè as Executive Chairman of the Board and Chief
Executive Officer of Telecom Italia S.p.A., Aldo Minucci as Deputy Chairman and Marco Patuano as Domestic
Managing Director and Chief Operating Officer of the Company.
Following the resignation tendered on June 6, 2011 by Ferdinando Beccalli Falco and the termination on
November 16, 2011 of Francesco Profumo (who was appointed Italian Minister of Education on that day), at its
meetings on August 4, and December 1, 2011 respectively the Board of Directors co-opted Lucia Calvosa and
Massimo Egidi as Company Directors.
On May 15, 2012, the Shareholders’ Meeting confirmed Lucia Calvosa and Massimo Egidi as Directors, with their
term of office to run until the shareholders’ meeting approving the financial statements for the year ended
December 31, 2013.
Consequently, at April 10, 2013 the Board of Directors of Telecom Italia was composed as follows:
Name Age Position Appointed
Franco Bernabè . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Executive Chairman and Chief Executive
Officer/Director . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Aldo Minucci . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Deputy Chairman/Director . . . . . . . . . . . . . . . . 2011
Marco Patuano . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Domestic Managing Director and Chief
Operating Officer/Director . . . . . . . . . . . . . . . . 2011
César Alierta Izuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Tarak Ben Ammar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Lucia Calvosa(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Elio Cosimo Catania(1) . . . . . . . . . . . . . . . . . . . . . . . . . 66 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Massimo Egidi(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Jean Paul Fitoussi(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Gabriele Galateri di Genola . . . . . . . . . . . . . . . . . . . . . 66 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Julio Linares López . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Gaetano Micciché . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Renato Pagliaro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Mauro Sentinelli(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Luigi Zingales(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
(1) Independent Directors. For details on the criteria applied to determine independence, see “Item 10 Additional Information—10.1
Corporate Governance”.
At April 10, 2013 the Secretary of the Board of Directors was the General Counsel of Telecom Italia, Antonino
Cusimano.
In 2012:
Š the Board of Directors met twelve times, with meetings generally scheduled pursuant to a calendar set forth
in advance;
149

Š the Executive Committee (as of December 31, 2012 composed of Franco Bernabè—Chairman, Marco
Patuano, Elio Cosimo Catania, Julio Linares López, Aldo Minucci, Renato Pagliaro and Mauro Sentinelli) met
two times;
Š the Internal Control and Corporate Governance Committee (as from December 6, 2012, the Control and Risk
Committee; as of December 31, 2012 composed of Elio Cosimo Catania—Chairman, Lucia Calvosa, Jean Paul
Fitoussi, Mauro Sentinelli and Luigi Zingales) held twenty meetings. Where deemed desirable in light of the
issues on the agenda, the Committee and the Board of Auditors held joint meetings;
Š the Nomination and Remuneration Committee (as of December 31, 2012 composed of Elio Cosimo Catania—
Chairman, Jean Paul Fitoussi, Massimo Egidi and Gabriele Galateri) met ten times.
For a detailed description of Telecom Italia’s corporate governance, including activities, responsibilities and
organization of the Board of Directors and the Committees, see “Item 10 Additional Information—10.1.
Corporate Governance”.
* * *
6.1.1 BIOGRAPHICAL DATA
The following are the selected biographical data of the Directors in charge as of April 10, 2013.
Franco Bernabè: Franco Bernabè was born in Vipiteno/Sterzing (Bozen) in 1948. He was appointed Executive
Chairman of Telecom Italia by the Board of Directors on April 13, 2011; previously he had served as the Managing
Director and Chief Executive Officer as from December 2007. After earning his degree with honors in Economics
and Political Science at the University of Turin in 1973, Mr. Bernabè worked for two years as a post-graduate
fellow at the Einaudi Foundation. He began his professional career in 1976 as a Senior Economist at the OECD
Department of Economics and Statistics in Paris. In 1978 he joined the Planning Department of FIAT as Chief
Economist. In 1983 he joined Eni as an Assistant to the Chairman and became subsequently the Head of
Corporate Planning, Financial Control and Corporate Development. From 1992 to 1998 Mr. Bernabè was CEO of
Eni. During this two terms, he achieved the turnaround of the company and its successful privatization bringing
Eni to be one of the largest oil companies by market capitalization worldwide. In November 1998 he became CEO
of Telecom Italia, a position he retained until 1999, when he left following the takeover of Telecom Italia by
Olivetti. At the end of 1999 he founded FB Group, an investment company active in the areas of financial advisory,
ICT and renewable energy. From 2004 to 2007, Mr. Bernabè was Vice Chairman of Rothschild Europe.
Aldo Minucci: Aldo Minucci was born in Reggio Calabria in 1946. He was appointed Deputy Chairman of the
Board of Directors on April 13, 2011. Mr. Minucci has been a Director of Telecom Italia since April 16, 2007. After
graduating in Law, in 1972 he was employed by Assicurazioni Generali S.p.A., working in the Tax Consulting
Service, for which he became Manager in 1983. In 1993 he was appointed Central Executive Officer with
responsibility for the Administration and Tax Coordination Service, and supervision of the Tax Consultancy
Service. In 1995 he took on the role of Deputy General Manager for Technical-Commercial Coordination for the
Insurance Companies in Italy, and he is Supervisor of the Group’s Internal Audit Service. Mr. Minucci is Director
of AC.E.GA.S. S.p.A.. He is also Chairman of GENERTEL S.p.A., ANIA (National Association of Insurance
Companies) and ANIA per la Sicurezza Stradale Foundation.
Marco Patuano: Marco Patuano was born in Alessandria in 1964. Mr. Patuano was appointed Domestic
Managing Director and Chief Operating Officer by the Board of Directors on April 13, 2011. Previously he had been
Head of Domestic Market Operations since November 2009. He began his career at SIP Central Management in
May 1990. From 1990 to 2002, he worked in various departments at Administration, Finance and Control. He was
promoted through the ranks at Financial Management between 1998 and 2002. In April 2003, he became CFO at
Tim Brasil and Telecom Italia America Latina S.A., a Group subsidiary based in Brazil. Between 2004 and 2006, he
served as General Manager at Telecom Italia Latam. In 2006, he moved to Telecom Argentina as Head of Fixed-
Line Telephony. He served as General Manager, Operations for Telecom Argentina between May 2007 and July
2008. From August 2008 to November 2009 he was Telecom Italia’s Chief Financial Officer. Mr. Patuano is also
member of the Board of Olivetti S.p.A., Matrix S.p.A., Telecom Italia Foundation, Bocconi Foundation and UPA
(Utenti Pubblicità Associati).
150

César Alierta Izuel: César Alierta Izuel was born in Zaragoza in 1945. Mr. Alierta took a degree in law from the
University of Zaragoza and earned an MBA at Columbia University (New York). Mr. Alierta has been a Director of
Telecom Italia since November 8, 2007. He has been Chairman and Executive Chairman of the Board of Directors
of Telefónica, S.A. Mr. Alierta began his career in 1970 as general manager of the capital markets division at
Banco Urquijo, S.A. in Madrid, where he worked until 1985. Subsequently, he founded and served as chairman of
Beta Capital Sociedad de Valores, S.A. which he combined as from 1991 with his post as chairman of the Spanish
Financial Analysts’ Association (Asociación Espanola de Analistas Financieros). Between 1996 and 2000, he was
director and chairman of Tabacalera. S.A. At that time Tabacalera, S.A. changed its name into Altadis. S.A.
(following its merger with the French Group, Seita-Société Nationale D’Exploitation Industrielle des Tabacs et
Allumettes) and he became director and chairman of Altadis, S.A. He has also been a member of the board of
directors of the Madrid Stock Exchange (Bolsa de Madrid), Plus Ultra Compania de Seguros y Reaseguros, S.A. and
of Iberia S.A. In January 1997 Mr. Alierta was appointed as Director of Telefónica and on July 26, 2000 he was
appointed as Executive Chairman. Mr. Alierta has been a Director of China Unicom (Hong Kong) Ltd since
October 15, 2008 and of International Consolidated Airline Group (IAG) since September 2010. He is currently a
member of the Columbia Business School Board of Overseers, and Chairman of Social Board of the UNED (National
Long Distance University).
Tarak Ben Ammar: Tarak Ben Ammar was born in Tunis in 1949. Mr. Ben Ammar has been a Director of
Telecom Italia since April 14, 2008. He started his career in 1977, as a film producer. In 1990, he formed Quinta
Communications, a company used as a vehicle for a number of investments and as a production and distribution
company, that was also engaged in trading of audiovisual rights (acquired from U.S. producers and sold to
European Broadcasters); in addition Quinta diversified its activities by building up a portfolio of strategic
investments in the media services industry. In addition, Mr. Ben Ammar established close working relationships
with a selected number of prominent International investors in the media industry. Mr. Ben Ammar was awarded
the “Legion d’Honneur” in 1984 for his cultural contributions. Mr. Ben Ammar is Chief Executive Officer of Europa
TV, Prima TV, Ex Machina SAS, Andromeda Tunisie SA, Promotions et Participations International SA, Holland
Coordinator & Service Company Italia S.p.A., Eagle Pictures S.p.A. He is a member of the Board of Director of
Mediobanca S.p.A. and of other companies.
Lucia Calvosa: Lucia Calvosa was born in Rome in 1961. She was appointed as a member of Telecom Italia
Board of Directors on August 4, 2011. She is a professor of commercial law in the Faculty of Economics of Pisa
University. After graduating in 1983 in Pisa, she worked at Pisa University throughout her academic career. After
obtaining a permanent position as a researcher, she qualified as an associate professor in 1998, and as a full
professor in 2000. In the Faculty of Economics at Pisa, in addition to teaching Commercial Law and Bankruptcy
Law in the Faculty of Economics, she also taught Private Law and Banking Law for some years. She was appointed
to chair the degree course in Economics and Commerce and served two terms of office, chairs the Scientific
Teaching Committee of her regional professional association of chartered accountants (Associazione Ordine
Dottori Commercialisti dell’Alto Tirreno) and is a member of the Board of academic tutors for postgraduate
research in Italian and international commercial law at Cattolica University in Milan. From 2005 to 2012 she was a
member of the Board of Directors of the Fondazione Teatro di Pisa, and of the Board of Directors of the
Fondazione Arpa. From 2009 to 2012 she was a member of the Board of Directors of the Pisa Chamber of
Commerce. From 2008 to 2012 she was a member of the Fondazione Cassa di Risparmio di San Minato. From
June 2008 to April 2011 she was Chairman of the Cassa di Risparmio di San Miniato S.p.A. Presently she is a
member of the Fondazione Cassa di Risparmio di Pisa.
Elio Cosimo Catania: Elio Cosimo Catania was born in Catania in 1946. Mr. Catania has been a Director of
Telecom Italia since April 14, 2008. He graduated in Electrical Engineering at Rome University and earned a
Master in Management Science at Sloan Management School, MIT, Boston. Elio Cosimo Catania performed a large
proportion of his managerial work at IBM, which he joined in 1970. He operated in four continents and held the
following posts, among others: President of IBM Latin America, based in New York; Vice President of Marketing
for IBM Europe, based in Paris; President and Chief Executive of IBM Italia; President of IBM South Europe. From
2004 to 2006 he has been Chairman and Chief Executive Officer of Ferrovie dello Stato. Mr. Catania was Chairman
and Managing Director of ATM Group (Milan Transport Company) from May 2004 to 2011. He is Member of the
Board of Management of Banca Intesa SanPaolo, Vice Chairman of Assonime (Association of Italian Joint Stock
Companies), Vice President of the Council for Relations between Italy and the United States (CRISU), Member of
the Committee of Confindustria and was awarded the Cavaliere del Lavoro honor in 2001.
151

Massimo Egidi: Massimo Egidi was born in Turin in 1942. He was appointed as a member of Telecom Italia
Board of Directors as of December 1, 2011. He is a professor of Economics at the LUISS Guido Carli University in
Rome of which he has been the Dean since 2005. His university career took place in Turin, at the Polytechnic and
then at the University’s Faculty of Political Sciences (1965-86), then in Trento (from 1987 to 2004) and finally in
Rome (2005 to date). He was the Dean of the University of Trento, from 1996 to 2004. He is currently Chairman of
the Bruno Kessler Foundation of Trento. He is also a member of the Università Italo Francese and is a founding
member of the Università Italo Tedesca, of which he is currently the Chairman pro tempore. He is co-chairman of
the Herbert Simon Society and director of the Laboratory of Experimental and Computational Economics (CEEL,
Trento). He is also a member of many scientific and academic committees, including the Scientific Committee of
ESNIE—European School on New Institutional Economics, the Université de Paris X, of the Doctorate in
Economics at Sciences Po (Paris). He was responsible for the National Research Programme in the sector of
Economics and Social Sciences 2009-2013. He is also a member of the Scientific Committee of Confindustria.
Jean Paul Fitoussi: Jean-Paul Fitoussi was born in La Goulette (Tunisia) in 1942. Mr. Fitoussi has been a
Director of Telecom Italia since May 6, 2004. Mr. Fitoussi is Professor Emeritus of Economics at the Institut
d’Études Politiques in Paris, where he has taught from 1982 to 2010. He is currently research Director at the
Observatoire Français des Conjonctures Economiques (OFCE), an economic research and forecasting institute.
Mr. Fitoussi graduated cum laude in Law and Economics from the University of Strasbourg with a thesis on
inflation, equilibrium and unemployment. He began his academic career as a professor at the University of
Strasbourg. Between 1979 and 1983 he taught at the European University Institute, Florence, and in 1984 was
visiting professor at the University of California, Los Angeles. Since 1998 he has been a member of the board of
the École Normale Supérieure. In 1997 he became a member of the Prime Minister’s Council for Economic
Analyses. In 1996 he was named to the Commission Économique de la Nation. He was secretary of the
International Economic Association beginning in 1984 and has been an expert for the Economic and Monetary
Committee of the European Parliament. Between 1990 and 1993 he was Chairman of the Economic Council of the
European Bank for Reconstruction and Development. In the field of publishing, Mr. Fitoussi is managing editor of
the Revue et Lettre de L’OFCE, member of the Editorial Board of Labour and The International Journal of
Development Planning Literature and the scientific committee of International Labour Review and Critique
Internationale. His writing appears regularly in newspapers in France and abroad and he is commentator for La
Repubblica and Le Monde. From 2000 to 2010 he was President of the Scientific Committee at the Institut
d’Etudes Politiques. In the field of research, Mr. Fitoussi has concentrated on inflation theory, unemployment,
foreign trade and the role of macroeconomic policy. As President of the OFCE and founder of its International
Economic Policy Group (of which he is a member), he has made numerous contributions to the current economic
policy debate, particularly on the issues of economic integration and transition. Mr. Fitoussi has received the
Association Français de Sciences Économiques (French Association for Economic Sciences) Award, and the Rossi
Award from the Académie des Sciences Morales et Politiques (Academy of Moral and Political Sciences). He has
been awarded various honours including the Honorary Deanship of the Faculty of Economics in Strasbourg,
Honoris Causa degree at the Buenos Aires University, and in his own country the decorations of officier de l’Ordre
National du Mérite (Knight of the National Order of Merit) and officier de la Legion d’Honneur (Knight of the
Legion of Honour). He is a Member of various boards of national and international businesses, foundations and
organizations (member of the Board of Directors of FNSP and of the Supervisory Board of Intesa SanPaolo,
member of Executive Committee of the Association Internationale de Sciences Economiques, Chairman of the
Commission des Nations-Unies sur la reforme du systeme monetaire financier international).
Gabriele Galateri di Genola: Gabriele Galateri di Genola was born in Rome in 1947. He was Chairman of
Telecom Italia from December 2007 to April 2011. Since April 8, 2011 he has been Chairman of Assicurazioni
Generali S.p.A. After earning his MBA at the Columbia University Business School, Mr. Galateri di Genola began his
career in 1971 at the Headquarters of the Banco di Roma, where he started as Head of the Financial Analyses
Office before being appointed to manage the International Loans Office. From 1974 to 1976 he worked as
Financial Director of the Saint Gobain Group in Italy. In 1977, he joined FIAT S.p.A., where he moved from Head
of North, Central and South American Operations at the International Finance Office, to Head of International
Finance and, ultimately, to Director of Finance. Mr. Galateri di Genola became CEO of Ifil S.p.A. in 1986. In 1993,
he took on the positions of CEO and General Manager of IFI, which he retained until 2002. In June 2002, he was
appointed CEO of FIAT S.p.A.. He was a Chairman of TIM Brasil Serviços e Participações S.A. from February 2010
to April 2, 2013, Chairman of TIM Participações S.A. from August 2008 to January 2009 and a non-executive
Board member of TIM Participações S.A. from January 2009 to April 2, 2013; he is a non-executive Board member
152

of SAIPEM S.p.A., Italmobiliare S.p.A., Azimut-Benetti, Accademia Nazionale Santa Cecilia Foundation and
Edenred S.A.. He is also Chairman of the Istituto di Tecnologie and member of the International Advisory Board of
the Columbia Business School.
Julio Linares López: Julio Linares López was born in Medina de Pomar (Spain) in 1945. He has been a Director
of Telecom Italia since November 8, 2007 and member of the Executive Committee since April 15, 2008.
Mr. Linares has been a member of the Board of Directors and Chief Operating Officer for Telefónica since
December 19, 2007. In May 1970, he joined Telefónica’s Research and Development Center, where he held
several positions until he was appointed head of the Technology Department. In April 1990, he was appointed
General Manager of Telefónica Investigación y Desarrollo, S.A. In December 1994, he became deputy general
manager of Marketing and Services Development department in the commercial area and subsequently, deputy
general manager far Corporate Marketing. In July 1997, he was appointed chief executive officer of Telefónica
Multimedia S.A. and chairman of Telefónica Cable and Producciones Multitemàtícas S.A. In January 2000, he was
appointed executive chairman of Telefónica de Espana, S.A., a position which he held until December 2005, when
he was appointed managing director for Coordination, Business Development and Synergies of Telefónica. He is
also a member of the Board of Directors of Telefónica Espana, Telefónica Europe, Telefonica Latinoamerica and of
the Social Council of the Complutense University of Madrid. Mr. Linares holds a degree in telecommunications
engineering from the Polytechnic University of Madrid (Universidad Politécnica de Madrid).
Gaetano Miccichè: Gaetano Miccichè was born in Palermo in 1950. Mr. Miccichè has been a Director of
Telecom Italia since July 24, 2007. He graduated in Law and then obtained a Master in Business Administration
with merit at the SDA Bocconi. He began his professional experience in 1971 as Manager for Corporate Clients at
Cassa Centrale Risparmio Province Siciliane. In 1989 he was appointed Central Financial Director at Rodriguez
S.p.A., world leading company in the high-speed navigation sector. From 1992 to 1995 he was Managing Director
and later Liquidating Administrator at Gerolimich—Unione Manifatture, Holding Company with stakes in various
industrial sectors. In 1996 he became General Manager of Santavaleria S.p.A., industrial Holding Company in
chemical and glass sectors. From 1997 to 2002 he was Chief Executive Officer and General Manager of Olcese
S.p.A. Since 2002 he has been in Intesa Sanpaolo S.p.A. as Head of Corporate & Investment Banking Division.
Since 2007 Mr. Miccichè has been Chief Executive Officer of Banca IMI. He is also Member of the Board of
Directors of Alitalia—Compagnia Aerea Italiana S.p.A., Prada S.p.A., Edison S.p.A., Borsa Italiana S.p.A., Banca
Infrastrutture Innovazione e Sviluppo S.p.A., Banca Caboto S.p.A., 21 Investimenti S.p.A., Nuovo Trasporto
Viaggiatori S.p.A. and of the other companies. He is member of Supervisory Board of Fondazione Ricerca e
Imprenditorialità.
Renato Pagliaro: Renato Pagliaro was born in Milan in 1957. Mr. Pagliaro has been a Director of Telecom Italia
since May 6, 2004. A registered auditor, with a Degree in Corporate Economics from Bocconi University, he joined
Mediobanca—Banca di Credito Finanziario S.p.A. in 1981, where he has held positions of increasing responsibility.
In April 2003 he was appointed Co-General Manager and Secretary to the Board of Directors of Mediobanca
S.p.A.; he was Chairman of the Management Board from July 2007 to October 2008 and Managing Director of
Mediobanca S.p.A. from October 2008 to May 2010. From 1993 to 2012 he was a member of the Board of Auditors
of Istituto Europeo di Oncologia S.r.l. In May 2010 he was appointed Chairman of the Board of Directors of
Mediobanca. He is a Director of Pirelli & C. S.p.A.
Mauro Sentinelli: Mauro Sentinelli was born in Rome in 1947. Mr. Sentinelli was appointed a Director of
Telecom Italia on April 29, 2010. An electronic engineer with a masters degree in telecommunications,
Mr. Sentinelli joined SIP (presently Telecom Italia) in 1974, where he specialized in the mobile business. In 1991
he became Director of Marketing and Planning in the Mobile Division of the company and in 1994 he was
appointed Deputy Managing Director of Telecom Italia’s Mobile Division (to become a separate company in 1995
as a result of the Tim de-merger). In May 1997 he left TIM for an experience in the U.S. and in July 1999 he
returned to TIM as Group Managing Director. In April 2002 he became a director of TIM, finally leaving the
company in January 2005. He was Deputy Chairman of the GSM Association from 2003 to 2008. In 2009
Mr. Sentinelli was appointed Director in Barthi Airtel first Indian TLC operator. Presently Mr. Sentinelli is a
Member of the Board of GSMA Ltd, the industrial branch of the GSM Association, Ecotel International S.r.l.,
Bellariva Enertel 09 S.r.l. and of the Maruzza Lefebre D’Ovidio Foundation.
Luigi Zingales: Luigi Zingales was born in Padua in 1963. Mr. Zingales has been a Director of Telecom Italia
since April 16, 2007. Luigi Zingales is the Robert C. McCormack Professor of Entrepreneurship and Finance at the
153

Graduate School of Business of the University of Chicago, where he has been a member of the faculty since 1992.
In 2005-2006 he held the Taussig Research Professorship at Harvard University. He is a faculty research fellow of
the NBER, a research fellow of the Centre for Economic Policy Research (CEPR), a member of the Committee on
Capital Market Regulation, and of the United Nation Advisory Board on Microfinance. In 2003 he won the Bernacer
Prize for the best young European financial economist. From 2005 to 2009 he was a director of the American
Finance Association. His research interests span from corporate governance to financial development, from
political economy to the economic effects of culture. He has published extensively in the major economics and
financial journals. He is an editorialist for “Il Sole 24 ore” (the leading Italian financial newspaper) and for
L’Espresso.
154

Item 6. Directors, Senior Management and Employees Executive Officers
6.2 EXECUTIVE OFFICERS
As of April 10, 2013 the executive officers of Telecom Italia and their respective positions were as follows:
Name Age Position Appointed
Directors:
Franco Bernabè . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Executive Chairman and Chief Executive
Officer(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Marco Patuano . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Domestic Managing Director and Chief
Operating Officer (1) . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Managers(2):
Simone Battiferri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Head of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012
Stefano De Angelis . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Dirección General Ejecutiva (CEO) Telecom
Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013
Franco Brescia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Head of Public & Regulatory Affairs . . . . . . . . . . . . 2011
Paolo Vantellini . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Head of Business Support Office . . . . . . . . . . . . . . . 2013
Antonino Cusimano . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Head of Legal Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . 2008
Piergiorgio Peluso . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Chief Financial Officer and Head of
Administration Finance and Control . . . . . . . . . 2012
Antonio Migliardi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Head of Human Resources and Organization . . . 2008
Giuseppe Roberto Opilio . . . . . . . . . . . . . . . . . . . . . . 54 Head of Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Luca Rossetto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Head of Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011
Alessandro Talotta . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Head of National Wholesale Services . . . . . . . . . . . 2011
Andrea Mangoni . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 General Manager—South America . . . . . . . . . . . . . 2012
Rodrigo Abreu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 CEO Tim Participacoes . . . . . . . . . . . . . . . . . . . . . . . . . 2013
(1) Appointed by the Board of Directors on April 13, 2011.
(2) On May 4, 2012, Mr. Luca Luciani, the CEO of Tim Participações and executive officer of Telecom Italia, resigned from Tim Brasil
and Tim Participações, giving up all his mandates in the Group’s companies.
The following are the selected biographical data of the executive officers, other than Directors (for the
biographical data of Mr. Franco Bernabè and Mr. Marco Patuano, please see above under “—6.1 Directors”):
Simone Battiferri: Mr. Battiferri was born in Rome in 1967. Since December 27, 2012 he has been Business
Director. From December 30, 2011 to December 26, 2012 he was Head of Top Clients and Public Sector at
Telecom Italia. He started with the Telecom Italia Group in 2001 as Head of Marketing in Datacom—eBusiness
Solutions Business Unit. At the end of 2001, in the context of the new organisational model involving the merger
of the previous Business Units into Telecom Italia Wireline, he became Head of Web Services Marketing, and
remained there until April 2004, when he became Head of the Business Opportunity Evaluations Area in the
International Business sector.
This marked the start of his involvement in the international activities, which last until the beginning of 2010. In
April 2006 he became Head of Marketing in Telecom Argentina, occupying this position until April 2007, when he
was appointed COO of the Wireline Unit in the same company. In July 2009, after the merging of the Top Clients
Unit into the Wireline one, he became COO of the new Wireline & Top Clients Unit.
In February 2010 he came back to Italy to be appointed Head of Top Clients at Telecom Italia.
Before entering the Telecom Italia Group he spent several years in Etnoteam, where he occupied increasingly
important positions and left the company as VP for the Telecommunications & Media Market and Director of
Etnoteam Labs.
Among his various professional experiences before Etnoteam, in Italy and abroad (mainly in the United States, as
well as Germany and the Czech Republic), he conducted research & development activities with the “La Sapienza”
University of Rome in the Rome Electrical Machine and Power Electronics Group (REMPEG). Mr. Battiferri is also
member of the Board of Directors of Telecom Italia Sparkle S.p.A. and Path.Net S.p.A.
Franco Brescia: Mr. Brescia was born in San Costantino Albanese (Potenza) in 1961. Since April 15, 2011 he
has been Head of Public and Regulatory Affairs at Telecom Italia.
After graduating cum laude in Business and Economics at La Sapienza University of Rome, he began his
professional career in 1985 as a researcher at Censis.
155

From 1987 to 1989 he was National Press, Research and Parliament Relations Manager at the Italian
Confederation of Cooperatives.
In December 1989 he joined Stet-Telecom Italia Group, where he was given progressively increasing
responsibilities in the fields of Management Control, Marketing, International, Press and Institutional Relations
until he became Staff Head of Presidents and Deputy Managers.
In 2003 he joined Poste Italiane as Head of Local Institutional Affairs.
In October 2006 he joined Telecom Italia, where he took different positions: first he was Assistant to the
Chairman; in December 2006 he was appointed Head of Public Affairs; in May 2007 he became Head of Business
Management & Intellectual Property Rights; from February 2008 he was an Executive Assistant to the Deputy
Manager; in February 2010 he was appointed Head of Institutional Relations.
Franco Brescia also obtained a Master’s degree in Communication at La Sapienza University of Rome and a
Master’s degree in Lobbying e Public Affairs at Lumsa University of Rome. Moreover, he is a Contract Professor.
Antonino Cusimano: Mr. Cusimano was born in Palermo in 1964. Since September 15, 2008 he was Head
Legal Affairs and General Counselof Telecom Italia, Secretary to the Board of Directors since April 13, 2011.
Mr. Cusimano was an associate at Hill Taylor Dickinson, London, prior to joining the Pittsburgh based company,
PPG Industries Inc. in 1994. He was appointed General Counsel of PPG Industries Europe in 2000, with
responsibility for a wide range of legal and business issues. From 2003 to 2005 he served as General Manager,
Environmental, Health and Security Protection of PPG Industries Europe and between May and December 2005,
he held the position of Corporate Counsel.
Mr. Cusimano joined General Electric, Oil & Gas based in Florence serving as Senior Counsel Global Services and
Transactions. During his time at GE, he was a Director and Vice President at Nuovo Pignone Holding S.p.A. and
Nuovo Pignone S.p.A.
Rodrigo Modesto de Abreu: Mr. Abreu was born in São Paulo in 1969. He holds a degree in electrical
engineering from the University of Campinas and an MBA from the Stanford Graduate School of Business. With
more than 20 years of experience in the Telecommunications and Information Technology, Mr. Abreu worked in
various companies in the sector in Brazil and abroad. Mr. Abreu served as strategic consultant at McKinsey & Co in
the United States. In Brazil, was named CEO of Promon IP in 2000, later became CEO of Telecom Promon and the
following year, CEO Promom Technology. In 2004, he assumed the presidency of Nortel Networks Brazil and his
last work experience was as president of Cisco in Brazil, where he served for 7 years.
Stefano De Angelis: Mr. De Angelis was born in Rome in 1967 and holds a degree in Economics and Business
Administration from Università degli Studi La Sapienza, Rome, Italy and also an MBA from Scuola di
Amministrazione Aziendale dell’ Università di Torino, Italy. He was appointed as Chief Executive Officer of the
Telecom Argentina Group in February 2013. From September 2007 until February 2013 Mr. De Angelis was
Director of Administration, Planning and Control in Telecom Italia S.p.A. Before that, he was the Chief Financial
and Investor Relations Officer of TIM Participações S.A. between 2006 and 2007. He also served as Chief
Administration, Finance and Control Officer of the TIM Companies in Brazil since July 2004. Between 2002 and
2004, he was responsible for the planning and controlling operations of Telecom Italia Mobile S.p.A. in Italy.
Mr. De Angelis also worked in the Consodata Group Ltd, H.M.C. S.p.A., Stet S.p.A. and at Fiat Geva S.p.A. He was
member of the Board of Directors of TIM Participações S.A. from February 2011 to April 11, 2013.
Antonio Migliardi: Mr. Migliardi was born in Reggio Calabria in 1958. On May 1, 2008, he became Head of
Human Resources and Organization of Telecom Italia. After graduating in Law, Mr. Migliardi began his career at
SIP (later Telecom Italia) with responsibility for Human Resources. At first, he was Responsible for Human
Resources and Industrial Relations Regional Dept., then he assumed a central responsibility in the Industrial
Relations Sector. From 1998 to 2004 he was in charge of the Development and Organization Dept. in FS Group.
Reporting to the Chief Executive Officer and the Managing Director of the Group, he was appointed to head the
project and implement the reorganization of the Italian railways. He was appointed as internal member of
Trenitalia’s (the most important subsidiary of F.S. Group, constituted in 2000) board. In charge of Trenitalia’s
System Dept. (logistics & maintenance, Information and Communication Technology and Total Quality
Management), he reported to the Chief Executive Officer, mission and corporate goals: obtaining the alignment of
these systems to the new competitive scenario in which Trenitalia had to act in the coming years. As head of Total
Quality Management, he was also member of the board of “Qualital” (an Italian consortium for the Engineering of
Total Quality). From 2004 to 2006 he was with Alitalia, reporting to the Chief Executive Officer, as Chief
Production Officer (Flight Ops, Ground Ops, Maintenance etc.) and Accountable Manager according to the
156

international regulations (JAR Ops) until the recapitalization of the Company. From 2006 to 2008 he was in charge
of Human Resources and Organization Dept. of Vitrociset. Mr. Migliardi is also member of the Board of Directors
of Telecontact S.p.A. and Telecom Italia Sparkle S.p.A.
Piergiorgio Peluso: Mr. Peluso was born in Rome in 1968. Since September 26, 2012 he has been Head of
Administration, Finance and Control at Telecom Italia. After graduating in “Economic and Social Sciences” from
the Università Commerciale Luigi Bocconi in 1992, with a specialization in Finance, from 1992 to 1994 he held the
position of experienced accountant at Arthur Andersen & Co.. Following a period at Mediobanca as Senior
Financial Analyst (1994-1998) and with Credit Suisse First Boston as Vice President of Financial Institutions Group
(1998-2000) and Mergers & Acquisitions Group (2000-2001), in 2002 he joined Medio Credito Centrale S.p.A.
(Capitalia Group) as Central Director Advisory Area. He retained this position until 2005, when he was appointed
Central Director at Capitalia S.p.A. From 2007 to 2009, following the merger of Capitalia S.p.A. and UniCredit
Group S.p.A., he was Head of Investment Banking Italy at UniCredit Group S.p.A.. In 2009 he was appointed CEO
of UniCredit Corporate Banking S.p.A.. Following the merger of UniCredit Corporate Banking S.p.A. with UniCredit
S.p.A., in 2010 he was appointed Head of Corporate & Investment Banking Italy, UniCredit Group. From 2011 to
September 2012 he was Managing Director of Fondiaria SAI S.p.A. He is a non-executive member of the Board of
Directors of TIM Participações S.A. since April 11, 2013.
Giuseppe Roberto Opilio: Mr. Opilio was born in Rome in 1958. Since April 15, 2011 he has been Head of
Technology at Telecom Italia.
Mr. Opilio began his career at the Parfina Group (a chemicals company) in 1982 as an assistant to the plant
manager.
In 1983, he joined GEPI as Head of Organizational Consulting/Group EDP.
He moved to management consulting company Galgano in 1988 to work as operations manager.
He joined TIM in 1991 as Head of Organizational Development. In 2001, he was appointed Director of Human
Resources, a position he held until 2004, when he was named Head of Customer Operations.
Following the merger of TIM and Telecom Italia, he went to run Business Customer Operations (fixed-line/mobile
integration), and later became Head of Group Quality.
In February 2008 he was appointed Manager of the Open Access Department.
He won the “Human Resources Excellence Award” (AIDP-EAPM) in 2001.
Mr. Opilio was a director at a number of companies, including STET Hellas (Greece), Atesia, Assida, and
Telecontact. Mr. Opilio is also member of the Board of Directors of Telecom Italia Sparkle S.p.A.
Luca Rossetto: Mr. Rossetto was born in Biella in 1962. Since April 15, 2011 he has been Consumer Director at
Telecom Italia.
His professional career began in Tekfen Group in 1985.
From 1987 to 1992 he was Senior Expert in Andersen. From 1993 to 1998 he was in Boston Consulting Group, first
as a Consultant and later as a Project Manager.
In 1998 he joined Autogrill S.p.A., where he first held the position of Sales and Logistic Director, then became
General Manager in 2000. From 2002 to January 2005 he was in Vodafone as Chief Operating Officer and member
of the Board of Directors. In 2005 he was appointed Chief Executive Officer in La Rinascente/UPIM S.p.A., a
position he maintained until 2009. From 2009 to April 2011 he worked as a Consultant. In April 2011 he joined
Telecom Italia as Consumer Director.
Alessandro Talotta: Mr. Talotta was born in Catanzaro in 1966. Since April 15, 2011 he has been Head of
National Wholesale Services at Telecom Italia and member of the Board of Directors of Telecom Italia Sparkle and
since May 18, 2012 is member of the Board of Directors of Trentino N.G.N.
He began his career in 1990 at Italtel S.p.A. (Società Italiana per le Telecomunicazioni) in the Strategic Planning
and Marketing Development, where for six years he worked as Senior Manager.
In 1996, he joined Infostrada S.p.A. as Head of Strategic Planning and National/International Interconnection.
He remained at Infostrada after Enel’s 2001 acquisition of the company from Vodafone, as head of Fixed and
Mobile International Carrier Development.
That same year he moved to the Telecom Italia Group as Operations Supervisor. Before the year was out, he was
put in charge of National Wholesale Services Marketing, Sales, Customer Service, Project management and
Pricing for Wholesale, as well as overseeing operational services for this business segment.
In 2005, after Telecom Italia Mobile (TIM) merged into the Telecom Italia Group, the Wholesale department took
over responsibility for mobile network services too. In 2008, Mr. Talotta joined the Business Strategies &
157

International Development Management unit with the same responsibilities as before. Mr. Talotta was appointed
Manager and Executive Vice President of Telecom Italia National Wholesale Services from December 2001 to
April 2008.
In April 2008 he was appointed Chief Regulatory Officer of Telecom Italia and Member of the CROG at the GSMA.
He is also a Deputy Chairman of the IPTV Association.
Paolo Vantellini: Mr. Vantellini was born in Varedo (MB) in 1961. Since December 18, 2012, he has been the
Head of the Business Support Officer department of Telecom Italia, ensuring coordination of the processes of
supply chain, property asset development and management, energy procurement requirements optimisation and
management, quality and customer satisfaction and compliance of Domestic activities. After graduating in
Business Economics with a major in Corporate Finance from Luigi Bocconi Business University in Milan, in 1984,
he started working as a lecturer for the Corporate Finance Unit at SDA Bocconi School of Management. In 1990 he
was appointed Lecturer in Corporate Finance on the MBA course at SDA Bocconi and Contract Professor in
Industrial Company Economics at Bocconi University. Until 2010 he continued as a contract professor in
Economics and Business Management, then in Corporate Finance and finally in Business Financial Policy—Master
of Science course. At the same time he worked as a business consultant in Corporate Finance, company valuation
and corporate governance. During the period 1997-2012 he became Member of the Boards of Directors and of
Statutory Auditors at various companies including Director of Banco Ambrosiano Veneto S.p.A. from 1997 to
2000, Director of Lavorwash S.p.A. (from 2002 to 2004), a listed company, Director of Esprinet S.p.A. (from 2001
to 2009), a listed company, at which he was a member of the Committee for Internal Control and the Strategies
and Investments Committee, Director of BNP Paribas Personal Finance S.p.A., BNL group, Chairman of the Board
of Statutory Auditors of Investindustrial Advisors S.p.A., Member of the Board of Auditors of FOMAS HOP S.p.A.,
Chairman of the Board of Statutory Auditors of Nomura SIM S.p.A., Member of the Board of Auditors of ATEL
Impianti S.p.A., Chairman of the Board of Directors of SIRTI S.p.A. in 2011-2012, Chairman of the Board of
Directors of several Intesa Group vehicle companies.
158

Item 6. Directors, Senior Management and Employees Board Of Auditors
6.3 BOARD OF AUDITORS
On May 15, 2012 the Shareholders Meeting appointed the present Board of Statutory Auditors, that will remain in
office until approval of the 2014 annual financial statements.
On September 18, 2012 the Acting Auditor Sabrina Bruno resigned and was replaced by Roberto Capone, who had
been appointed as an alternate by the May 15, 2012 Shareholders Meeting and will remain in office until the
Shareholders’ Meeting, to be held on April 17, 2013. At such Shareholders’ Meeting it will be proposed that
Roberto Capone be confirmed as Acting Auditor and that Fabrizio Riccardo Di Giusto be appointed as a new
Alternate Auditor.
The following table lists the members of the Telecom Italia Board of Statutory Auditors as of April 10, 2013.
Name Position Appointed
Enrico Maria Bignami(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chairman 2012
Gianluca Ponzellini . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acting Auditor 2012
Roberto Capone(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acting Auditor 2012
Salvatore Spiniello . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acting Auditor 2012
Ferdinando Superti Furga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acting Auditor 2012
Franco Patti(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alternate Auditor 2012
Vittorio Giacomo Mariani . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alternate Auditor 2012
Ugo Rock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alternate Auditor 2012
(1) Elected by minority shareholders.
The positions held by the members of the Board of Statutory Auditors in other listed companies are shown below:
Enrico Maria Bignami . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chairman of the Board of Auditors of Biancamano S.p.A.
Gianluca Ponzellini . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chairman of the Board of Auditors of De Longhi S.p.A.;
member of the Supervisory Board of Intesa Sanpaolo S.p.A.
Salvatore Spiniello . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chairman of the Board of Auditors of Telecom Italia Media
S.p.A.; Director of Fondiaria SAI S.p.A.
Ferdinando Superti Furga . . . . . . . . . . . . . . . . . . . . . . . . Chairman of the Board of Auditors of Arnoldo Mondadori
S.p.A. and Saras S.p.A.
For a detailed description of Telecom Italia’s corporate governance, including activities and responsibilities of the
Board of Auditors (acting as Audit Committee of the Company) and the mechanics for its appointment, see
“Item 10 Additional Information—10.1 Corporate Governance”.
159

Item 6. Directors, Senior Management and Employees External Auditors
6.4 EXTERNAL AUDITORS
The audit of Italian issuers and their groups is governed by legislative decrees on statutory audits of annual
accounts and consolidated accounts. In particular, such legislative decrees fix the duration of audit engagements
at nine years and prohibit the renewal or the re-engagement unless at least three years have elapsed from the
date of termination of previous assignment.
The Shareholders’ Meeting held on April 29, 2010 appointed PricewaterhouseCoopers S.p.A. as Telecom Italia’s
independent auditors for the nine-year period 2010-2018 beginning with the financial year ended December 31,
2010.
Italian audit principles require that, in case of corporate groups, the audit firm of Telecom Italia should carry out
the audit of the group’s most important entities in terms of the nature of operations, in such a way that it can act
as the main group audit firm and express a professional evaluation on the financial statements in their entirety. In
addition, the Guidelines for the Appointment of external Auditors (the “Group Procedure”), issued by Telecom
Italia in March 2010 in view of the engagement of PricewaterhouseCoopers S.p.A. for the 2010-2018 period,
provides that the auditor of Telecom Italia is the principal auditor of the entire group headed by Telecom Italia
and consequently is the auditor to be preferred in the conferral of appointments by subsidiaries for mandatory
auditing.
160

Item 6. Directors, Senior Management and Employees Employees
6.5 EMPLOYEES
6.5.1 EMPLOYEES AND CHANGES IN THE TELECOM ITALIA GROUP
The number of Group employees at December 31, 2012 and 2011 was the following:
2012 2011 Changes
(units)
Employees—Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,380 56,838 (2,458)
Employees—Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,761 27,274 1,487
Total Employees at payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,141 84,112 (971)
Employees with temporary work contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 42 1
Employees allocated to non-current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
Total Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,184 84,154 (970)
The workforce turnover is detailed as follows:
Š the exclusion of Matrix from the scope of consolidation (253 units);
Š the workforce turnover down by 718 units. The workforce turnover is detailed below by individual Business
Unit:
Hirings Terminations Changes
(units)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 958 3,030 (2,072)
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,793 4,710 1,083
Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,340 889 451
Media, Olivetti, Other Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 310 (180)
Turn over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,221 8,939 (718)
2012 2011 Changes
(units)
Personnel on payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,606 47,801 (3,195)
The reduction of 3,195 units recorded, was due to:
Š the exclusion of 1,179 units due to the transfer of the Information Technology department to SSC (now
Telecom Italia Information Technology);
Š the inclusion of 118 units due to the merger of TI Audit into Telecom Italia;
Š a balance of 27 units departing to join other Group companies;
Š workforce turn over down by 2,107 units, as detailed below:
(units)
Telecom Italia S.p.A.—Turn over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297 2,404 (2,107)
Tim Brasil group
2012 2011 Changes
(units)
Tim Brasil group—Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,622 10,539 1,083
161

The increase of 1,083 units recorded was due to:
Š the inclusion of 17 units from other Group companies;
Š workforce turn overup by 1,066 units, as detailed below:
(units)
Tim Brasil group—Turn over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,776 4,710 1,066
2012 2011 Changes
(units)
Argentina Business Unit—Total(*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,800 16,349 451
(*) Not includes employees with temporary work contracts: 3 and 1 as of December 31, 2012 and 2011.
The increase of 451 units recorded was due to:
Š workforce turn over up by 451 units, as detailed below:
(units)
Argentina Business Unit—Turn over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,340 889 451
6.5.2 INDUSTRIAL RELATIONS
Telecom Italia
On December 31, 2011, the National Collective Labour Agreement for employees of telecommunication service
operating companies expired. During the first half of 2012, negotiations were launched for the renewal of this
contract, coordinated by the Italian telecommunications employers’ trade association Assotelecomunicazioni
(ASSTEL). On February 1, 2013, ASSTEL and employees’ trade unions representing a majority of the employees of
the Italian telecommunications sector (SLC CGIL, FISTel CISL, UILCOM UIL and UGL Telecomunicazioni) signed
an agreement for the renewal of the National Collective Labour Agreement for the employees of
telecommunication service companies, applicable to the three-year period 2012-2014. Currently, as part of the
due enactment process, final meetings with employee representatives are being held. The agreement will come
into force after it has been approved by such employee meetings, that is, after signatory unions have put aside
their reservations. The renewed National Collective Labour Agreement will be binding upon Telecom Italia S.p.A.,
Telecom Italian Sparkle S.p.A., Telecom Italia Information Technology S.r.l., Telecontact Center S.p.A., Path.Net
S.p.A., HR Services S.r.l. and Telsy S.p.A.
In January 2012, an agreement was signed with the most representative trade unions, providing for the
introduction of new working hours within the Fixed Customer Operations Consumer—187 Business Service
function, our customer service line for landline customers, aimed at improving customer satisfaction. In this
context, the company and the unions also envisaged, in a specific agreement, modifications intended to improve
work-life balance (e.g., more flexible working hours for pregnant women) and the working environment.
On March 27, 2013, Telecom Italia and the most representative trade unions reached an agreement relating to
workforce redundancies and productivity improvements. With respect to 3,000 surplus employees identified for
the period 2013-2014, the agreement provides that 2,500 employees will be retained through the regime of
solidarity contracts (contratti di solidarietà) (providing for a reduction of working hours) covering around 32,000
employees, while another 500 employees will be gradually cut through ordinary fluctuation (voluntary retirements
and reaching of legal pension age). While the agreement thus avoids immediate layoffs, it also enables Telecom
Italia to respect its three-year plan efficiency targets. In particular, Telecom Italia has committed to postpone the
envisaged spin-off of the Caring Services division until April 1, 2014, in turn for the trade union’s agreement that
47 Caring Services points of presence be closed. The agreement further provides that our maintenance and
customer repair team engineers will increasingly work from their homes and receive a company car equipped with
162

a navigation and geolocation system, allowing this team to operate more flexibly, efficiently and with significantly
improved reaction times. Finally, the agreement includes certain Telecom Italia commitments relating to the
Directory Assistance function and sets out a new bonus regime for the 2013-2015 period. Pursuant to this regime,
bonuses will be linked to the achievement of annual targets relating to the company’s financial (EBITDA,
revenues) and customer satisfaction survey results.
During the first half of 2012, numerous agreements were reached and signed with trade unions for training
programmes. Training plays an important role in the process of teaching new skills and preventing professional
obsolescence and is a recurring feature in the application of the guidelines established by in prior labour
agreements.
On December 31, 2011, the performance bonus agreement expired. Since no negotiations could be held for the
new premium while negotiations were under way for the first level collective labour agreement, Telecom Italia
decided to recognise the contribution made by employees to the economic and productive performance of the
company by disbursing a fixed amount for each contract level for the period January 1,—June 30, 2012.
In this respect, a specific agreement was reached with trade union representatives in June.
Also in June 2012, senior executives presented the trade unions with the guidelines for Telecom Italia Domestic’s
2012-14 business plan.
The content of the presentation was then discussed in detail. Telecom Italia will continue implementing its cost
control policy in 2013 and 2014, focusing on improving efficiency, setting up discussion meetings with the trade
unions. It will also be working with the Unions to verify that the Government creates the conditions for
completion of the social safety net plan required by the agreement signed with the Ministry of Economic
Development and the Ministry of Labour on August 4, 2010.
Telecom Italia made a specific commitment to protect workers who left the company before December 31, 2012
under mobility procedure (on a voluntary basis and according to the non-opposition criterion under existing
agreements), if, following legislative changes, they found themselves unable to qualify for a pension; the
guarantees offered by the Company provide that, at the end of the redeployment period, these workers will be
hired on fixed-term contracts, under the same financial conditions and job categories they had at the time of their
termination, for the period needed to qualify for a pension according to current legal provisions. In this respect,
agreements were signed in October 2012 with the most representative trade unions according to Telecom Italia
S.p.A., Telecom Italia Sparkle S.p.A. and Shared Services Center S.r.l.
163

Item 6. Directors, Senior Management and Employees Compensation Of Directors, Officers and Members of the Board of
Auditors
6.6 COMPENSATION OF DIRECTORS, OFFICERS AND MEMBERS OF THE BOARD OF AUDITORS
6.6.1 COMPENSATION OF DIRECTORS
The General Shareholders’ Meeting held on April 12, 2011 set the maximum total annual remuneration of the
Board of Directors (to remain in office for a three-year term, until the approval of the 2013 financial statements),
according to article 2389, first paragraph, of the Italian Civil Code up to 2.2 million euros, such amount to be
divided amongst the directors in accordance with the resolution adopted by the Board itself in connection
therewith.
According to the resolution adopted by the Board on May 5, 2011, as subsequently amended, the above
mentioned overall amount was distributed as follows (gross amounts on a yearly basis):
Š 110,000 euros to be paid to each director in office;
Š an additional 35,000 euros to be paid to each member of the Executive Committee;
Š an additional 45,000 euros to be paid to each member of the Internal Control and Corporate Governance
Committee;
Š an additional 20,000 euros to be paid to each member of the Nomination and Remuneration Committee;
Š an additional 20,000 euros to be paid to the director appointed to the Supervision Panel set up under
Legislative Decree 231/2001. With effect from May 2012, with the assignment of the functions of
Supervisory Panel under Legislative Decree no. 231/2000 to the Board of Statutory Auditors, this
remuneration is no longer paid (see “Item 10 Additional Information—10.1 Corporate Governance”);
Š an additional 90,000 euros to be paid to the Deputy Chairman (Aldo Minucci), in view of his responsibilities
for the internal control system. After the Deputy Chairman gave up his responsibilities for the internal control
system (August 1, 2012), on November 8, 2012 the Board of Directors decided to divide the above
compensation between the Deputy Chairman and Director Galateri, who has been assigned the role of link
between the Board and the control functions which report directly to the Board.
The total compensation paid by Telecom Italia and by the Telecom Italia Group subsidiaries in 2012 to the
members of the Board of Directors of Telecom Italia was 4.8 million euros.
Following the renewal of the Board of Directors (Shareholders’ Meeting of April 12, 2011) the remuneration
package of the Executive Chairman (Mr. Bernabè, who is not an employee of the Company), for the three years of
his appointment to the board, has been agreed by contract as follows:
Š fixed annual remuneration of 110,000 euros gross for his position as a Director;
Š fixed annual remuneration of 1.4 million euros gross for his position as Chairman of the Board of Directors;
Š fixed annual remuneration of 35,000 euros gross for his position as member of the Executive Committee;
Š variable remuneration linked to annual performance objectives, with a target value equal to his fixed annual
remuneration for the position of Chairman of the Board of Directors and a range of between 50% and 150%,
depending on the level of achievement of the targets assigned;
Š one-off participation in the Long Term Incentive Plan 2011, with pay opportunity at target corresponding to
300% of his fixed annual remuneration for the position of Chairman of the Board of Directors, consisting of:
Š a cash bonus of 2.1 million euros (150% of the fixed annual remuneration); and
Š 2,253,702 ordinary shares (150% of the fixed annual remuneration expressed in shares, valued
according to the average of official prices of Telecom Italia ordinary shares between 7 June and 6 July
2011);
Š benefits similar to those granted to Group executives (company car, medical and accident insurance,
complementary healthcare, complementary welfare) enjoyed free of any direct or indirect charges, with a
corresponding increase in the remuneration for the position of Executive Chairman by the amount required
to pay the tax applicable to taxed benefits. With specific reference to complementary welfare, provision is
made for the Company to make an annual net payment to the Company complementary welfare fund
amounting to (i) 10% of his fixed remuneration and (ii) 10% of the annual bonus applicable for achievement
of the target results.
164

Auditors
Provision was also made for the payment to the Executive Chairman of amounts due until the end of the period of
office, including the variable component, calculated to correspond to the average of disbursements already made,
in the event of early termination of his term of office (i) for objective reasons, (ii) on the company’s initiative
without just cause, (iii) on the initiative of Mr. Bernabè with just cause. Finally, the Company has reserved the
right to enter into a one year non-competition agreement, in exchange for a one-off payment equal to a year’s
remuneration (fixed component and variable component calculated to correspond to the average of
disbursements already made), to be implemented after termination.
The remuneration package of the Domestic Managing Director and Chief Operating Officer of the Company
(Mr. Patuano, who is an employee of Telecom Italia) has been agreed by contract as follows, subject to waiver of
the remuneration due for the position of Director and member of the Executive Committee:
Š fixed annual remuneration of 1.0 million euros gross as the annual gross remuneration for his employment
relationship with the Company;
Š variable remuneration for the position of Chief Executive Officer linked to annual performance objectives,
with a target value equal to his fixed annual remuneration and a range of between 50% and 150%, depending
on the level of achievement of the targets assigned;
Š one-off participation in the Long Term Incentive Plan 2011, with pay opportunity at target corresponding to
300% of his fixed annual remuneration, consisting of
Š a cash bonus of 1.5 million euros (150% of the fixed annual remuneration) and
Š 1,609,787 ordinary shares (150% of the fixed annual remuneration expressed in shares, valued
according to the average of official prices Telecom Italia ordinary shares between 7 June and 6 July
2011);
Š benefits similar to those granted to Group executives (company car, accident and medical insurance,
complementary healthcare, complementary welfare).
Provision was also made for the payment of remuneration for the special position held (short term variable
remuneration value, calculated as the average of the amounts received since 2011), in the event of early
termination due to (i) early withdrawal of the administration relationship by the Company without just cause;
(ii) resignation by Mr. Patuano at the request of the Board of Directors; (iii) resignation by Mr. Patuano with just
cause. The procedure set forth in the collective labour agreement for company executives was established as
being applicable in the event of a termination of employment relationship by the Company (unless there is just
cause) or resignation requested by the Board of Directors. Finally, the Company has reserved the right to enter
into a one year non-competition agreement, in exchange for a one-off payment equal to a year’s remuneration
(fixed component and variable component calculated to correspond to the average of disbursements already
made), to be implemented after termination.
The performance indicators for short-term variable component of compensation for the year 2012 were
established as follows, on the basis of a proposal by the Nomination and Compensation Committee and with the
approval of the Board of Statutory Auditors:
Š Executive Chairman of the Board of Directors and Chief Executive Officer of Telecom Italia
Š Consolidated Net Income post minorities (weight: 25%),
Š Consolidated Net Financial Position (weight: 15%),
Š Consolidated Organic ebitda (weight: 20%),
Š Group Total Organic Revenues (weight: 20%).
Š Domestic Managing Director and Chief Operating Officer of the Company
Š Consolidated Net Income post minorities (weight: 15%),
Š Italy Net Financial Position (weight: 20%),
Š Telecom Italia Domestic ebitda (weight: 10%),
Š Telecom Italia Customer Satisfaction Index (weight: 10%),
Š Domestic Organic Total Revenues (weight: 25%).
165

Auditors
The targets for the above parameters were set in accordance with the 2012 budget and allowed for a negative
deviation down to a minimum threshold value and a maximum payout for the achievement of predetermined
positive deviations. Deviations were differentiated according to the relevant indicators and intermediate
performance results were to be measured proportionally. In addition to the parameters linked with the 2012
budget (the total weight of which was 80%) there was an ordinary share valuation indicator for the period January
2012-January 2013 (the weight of which was 20%) with respect to a basket consisting of Vodafone, Telefónica,
Deutsche Telekom, France Télécom, Teliasonera, Telenor, KPN, Swisscom, British Telecom, as well as Telecom
Italia itself. The access threshold was the positioning of the Company at third place in the ranking.
The final pay-outs of the short term compensation of the Executive Chairman and the Domestic Managing Director
for the year 2012 were 37.5% and 27.7% of their fixed compensation, that are 525,000 and 277,000 euros,
respectively.
***
166

Auditors
The following table lists the Directors who served during 2012 and their respective compensation as of
December 31, 2012, according to the disclosure format set forth by Consob, the Italian market regulator
(Regulation for the implementation of Legislative Decree dated February 24, 1998, adopted by Consob under
Resolution 11971 dated May, 14, 1999 and subsequent amendments and additions):
Name and surname Position
Period for
which the
position
was held
Expiry of
term of
office
Fixed
remuneration
Remuneration
for
involvement
in committees
Variable
non-equity
remuneration
Non-
monetary
benefits
Other
remuneration Total
Fair Value of
equity
remuneration
Compensation
for loss of
office or
termination of
employment
Bonuses
and other
incentives
Profit
sharing
(thousands of euros)
Franco Bernabè(1) Executive
Chairman
and CEO
1/1 –
12/31/2012
12/31/2013 1,918 35 525 490 2,968 313
Marco Emilio
Angelo
Patuano(2)
Domestic
Managing
Director
and COO
1/1 –
12/31/2012
12/31/2013 1,005 279 38 1,322 224
Aldo Minucci(3) Deputy
Chairman
Director
1/1 –
12/31/2012
12/31/2013 169 35 204
Cesar Izuel
Alierta(4)
Director 1/1 –
12/31/2012
12/31/2013 110 110
Tarak Ben
Ammar(5)
Director 1/1 –
12/31/2012
12/31/2013 110 110
Lucia Calvosa(6) Director 1/1 –
12/31/2012
12/31/2013 110 45 155
Elio Catania(7) Director 1/1 –
12/31/2012
12/31/2013 110 100 210
Massimo Egidi(8) Director 1/1 –
12/31/2012
12/31/2013 110 19 129
Jean Paul
Fitoussi(9)
Director 1/1 –
12/31/2012
12/31/2013 118 65 183
Gabriele Galateri
di Genola
Director 1/1 –
12/31/2012
12/31/2013
(I) Remuneration in the company that draws up the
financial statements(10) 117 20 137
(II) Remuneration from subsidiaries and
associates(11) 67 67
(III) Total 184 20 204
Julio Linares
Lopez(12)
Director 1/1 –
12/31/2012
12/31/2013 110 35 145
Gaetano
Miccichè(13)
Director 1/1 –
12/31/2012
12/31/2013 110 110
Renato
Pagliaro(14)
Director 1/1 –
12/31/2012
12/31/2013 110 35 145
Mauro
Sentinelli(15)
Director 1/1 –
12/31/2012
12/31/2013 110 80 190
Luigi Zingales(16) Director 1/1 –
12/31/2012
12/31/2013 110 45 155
Andrea Mangoni South
America
Gen. Man.
8/1 –
12/31/2012
4/30/2013
financial statements(17) 557 363 40 960
(III) Total 892 363 40 1,295
Luca Luciani Diretor
Presidente
—Tim
Part.
1/1 –
5/4/2012
5/4/2012
financial statements 289 300 54 643 4,400
(III) Total 472 300 54 826 4,400
(I) Total remuneration in the company that draws
up the financial statements 5,273 514 1,467 — 622 — 7,876 537 4,400
(II) Total remuneration from subsidiaries and
associates 585 — — — — — 585 — —
(III) Total 5,858 514 1,467 — 622 — 8,461 537 4,400
(1) The fixed remuneration includes the remuneration pursuant to article 2389, paragraph 3, of the Italian Civil Code (1,400,000 euros) and
paragraph 1 of the Italian Civil Code (110,000 euros) including other remuneration offsetting the tax burdens applicable to taxed benefits
(408,000 euros). The remuneration for involvement in committees refers to the remuneration received as member of the Executive
Committee. The amount of bonuses and other incentives refers to the bonus relating to the financial year for targets achieved in the year
itself, assessed on the basis of the official closing statements.
(2) The fixed remuneration includes the remuneration for work as employee (1,000,000 euros) and travel expenses (5,000 euros). The
amount of bonuses and other incentives refers to the bonus relating to the financial year for targets achieved in the year itself, assessed
on the basis of the official closing statements (277,000 euros) including other remuneration offsetting the tax burdens applicable to taxed
benefits relating to employment (2,000 euros).
167

Item 6. Directors, Senior Management and Employees Compensation Of Directors, Officers And Members of the Board of
Auditors
(3) The fixed remuneration refers to the remuneration received as member of the Board of Directors (pursuant to article 2389, subsection 1,
of the Italian Civil Code) 110,000 and as Vice Chairman (with responsibility for the operation of the internal control system for the period
1/1 – 1/8/2012 59,000). The remuneration for involvement in committees refers to the remuneration received as member of the
Executive Committee.
of the Italian Civil Code). This remuneration is not received by the person concerned but paid to Telefonica S.A.
of the Italian Civil Code).
of the Italian Civil Code). The remuneration for involvement in committees refers to the remuneration received as member of the
Internal Control and Corporate Governance Committee.
Executive Committee 35,000 euros, the Nomination and Remuneration Committee 20,000 euros and of the Internal Control and
Corporate Governance Committee 45,000 euros.
Nomination and Remuneration Committee for the period 1/19-12/31/2012.
of the Italian Civil Code) 110,000 euros and of the Supervisory Board pursuant to Legislative Decree 231/2001 for the period 1/1 –
5/28/2012 8,000 euros. The remuneration for involvement in committees refers to the remuneration received as member of the Internal
Control and Corporate Governance Committee 45,000 euros and Nomination and Remuneration Committee 20,000 euros.
of the Italian Civil Code) 110,000 euros and as link between the Board of Directors and the corporate control departments which report
hierarchically to the Board for the period 11/8 – 12/31/2012 7,000 euros. The remuneration for involvement in committees refers to the
remuneration received as member of the Nomination and Remuneration Committee.
(11) This amount refers to the remuneration received as member of the Board of Directors in TIM Participações 168,000 R$ converted into
euros at the average exchange rate for 2012 at 12/31/2012 (Real/€ 2.50953).
Executive Committee. This remuneration is not received by the person concerned but paid to Telefonica S.A.
of the Italian Civil Code). This remuneration is not received by the person concerned but paid to Intesa San Paolo S.p.A.
Executive Committee. This remuneration is not received by the person concerned but paid to Mediobanca S.p.A.
Executive Committee 35,000 euros and of the Internal Control and Corporate Governance Committee 45,000 euros. This remuneration is
not received by the person concerned but paid to Ecotel International S.r.l.
Internal Control and Corporate Governance Committee.
(17) The fixed remuneration includes the remuneration for work as employee (441,000 euros) for the entire financial year 2012, and travel
expenses (116,000 euros). The amount of bonuses and other incentives refers to the bonus relating to the financial year for targets
achieved in the year itself, assessed on the basis of the official closing statements (113,000 euros) and to the bonus for managerial
services in South America 250,000 euros.
(18) This amount refers to the remuneration received for the appointment in TIM Participações converted into euros at the average exchange
rate for 2012 at 12/31/2012 (Real/€ 2.50953).
(19) The amount relating to the local work contract has been converted into euros at the average exchange rate for 2012 at 5/31/2012 (Real/
€ 2.50826).
Applicable Italian law requires disclosure of individual compensation in the form of stock options for members of
the Board of Directors.
168

Auditors
The following table have been prepared according to the format required by the Regulation for the
implementation of Legislative Decree dated February 24, 1998, adopted by Consob under Resolution 11971 dated
May, 14, 1999 and subsequent amendments and additions.
Options held at the beginning
of the financial year Options assigned during the financial year
Options exercised during
the financial year
Options
expired
during
the
financial
year
Options
held at the
end of the
financial
year
Options
for the
year
A B (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16)
Name and
Surname Position
Plan
and
respective
resolution
Number of
options
Exercise
price
Possible
exercise
period
(from–to)
Number
of
options
Exercise
price
Possible
exercise
period
(from – to)
Fair
value on
assignment
date
Date of
assignment
Market
price of
underlying
options on
assignment
of options
Number
of
options
Exercise
price
Market
price of
underlying
shares on
exercise
date
Number
of
options
(15)=
(2)+(5)-
(11)-(14)
Fair
value
Gabriele
Galateri . . . . Director(*)
TOP 2008
4/15/2008 2,250,000 1.95
4/15/2011–
4/15/2014 2,250,000 66
Franco
Bernabè . . . Chairman
TOP 2008
4/15/2008 6,300,000 1.95
4/15/2011–
4/15/2014 6,300,000 186
(I) Remuneration in the company that
draws up the financial
statements . . . . . . . . . . . . . . 8,550,000 8,550,000 252
(II) Remuneration from subsidiaries
and associates . . . . . . . . . . . .
(III) Total . . . . . . . . . . . . . . . . . 8,550,000 8,550,000 252
(*) The 2008 TOP Plan was assigned at the time when Mr. Galateri was Chairman of the Board of Directors.
For further details, please see “Note—Stock option and performance share granting plans of the Telecom Italia
Group” of the Notes to the Consolidated Financial Statements, included elsewhere herein.
6.6.2 Compensation of Executive Officers
The total compensation due by the Company or by any of the Company’s subsidiaries in 2012 to the Company’s
executive officers (including the Executive Chairman and Chief Executive Officer of the Board of Directors and the
Domestic CEO) was 16,515 thousand euros.
There is no generalized standard practice regarding severance pay for key managers with strategic
responsibilities. However, the general policy established since 2008 is the following:
Š at the time of appointment to an executive position, an executive who already has an employment contract
with the Group will be subject to the provisions of the collective labour agreement for company executives;
Š at the time of engagement of an executive from outside the company, any severance clauses will not
normally exceed the maximum amount payable under the collective labour agreement for executives;
Š in the event of specific executive staff redundancy campaigns, more generous payments may be made than
are required by the collective labour agreement.
There are no general non-competition policies for key managers with strategic responsibilities. For a small
number of key managers with strategic responsibilities there is still a duty not to compete with group companies
under agreements signed prior to 2008, for which the respective consideration has already been disbursed.
The specific provisions applicable to the current Executive Chairman and Chief Executive Office of the Board of
Directors, who has no work relationship with the Company other than his relationships as Executive Director of
Telecom Italia, and the current Domestic Managing Director, who is an employee of the Company, are described
under 6.6.1 “Compensation of Directors”.
Applicable Italian law requires disclosure of individual compensation in the form of stock options for General
Managers and, in the aggregate and divided by plan, the stock options granted by Telecom Italia S.p.A. to
Executive Officers.
169

Auditors
The following tables have been prepared according to the format required by the Regulation for the
implementation of Legislative Decree dated February 24, 1998, adopted by Consob under Resolution 11971 dated
May 14, 1999 and subsequent amendments and additions.
Financial
instruments
assigned in
previous
financial
years not
vested during
the financial
year Financial instruments assigned during the financial year
Financial
instruments
vested during
the financial
year and not
assigned
Financial instruments vested
during the financial year
and assigned
Financial
instruments
for the year
A B (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Name and
Surname Position
Plan and
respective
resolution
Number and
type of
financial
instruments
Vesting
Period
Number
and
type of
financial
instruments
Fair value
on
assignment
date
Vesting
Period
Date of
assignment
Market price
on
assignment
Number and
type of
financial
instruments
Number and
type of
financial
instruments
Value on
assignment
date Fair value
Franco Bernabè . . . . . . . Chairman LTI 2011
07/07/2011 3,380,553 939
Apr 2011
Mar 2014 July 7, 2011 0.90459 313
Marco Patuano . . . . . . CEO LTI 2011 2,414,681 671 Apr-2011 July 7, 2011 0.90459 223
. 07/07/2011 Mar-2014
(I) Remuneration in the company that draws
up the financial statements . . . . . . . . . 5,795,234 1,610 536
associates . . . . . . . . . . . . . . . . . . .
(III) Total . . . . . . . . . . . . . . . . . . . . . . . 1,610 536
6.6.3 COMPENSATION OF MEMBERS OF THE BOARD OF AUDITORS
The General Shareholders’ Meeting of May 15, 2012 (which appointed the current Board of Auditors) authorized
annual compensation of 95,000 euros for each Auditor and 135,000 euros for the Chairman of the Board of
Auditors. Such compensation took into account the role of Board of Statutory Auditors acting as Supervisory Panel
established under Legislative Decree 231/2001.
The total compensation paid by the Company or by any of the Telecom Italia Group subsidiaries in 2012 to the
members of the Board of Auditors was 600 thousand euros.
The following table sets forth the members of the Board of Auditors in office during 2012 and the compensation
received by the Board of Auditors for services rendered during the year ended December 31, 2012:
Individuals Description of the position Compensation
Name Position held
Period during which
position was held Office expiry
Compensation
base
Non
cash
benefits
Bonuses
and other
incentives
Other
Compensations Total
(thousand of euros)
Enrico Maria
BIGNAMI . . . . . . Chairman 1/1-12/31/2012 31/12/2014 129 — — — 129
Sabrina BRUNO . . . Acting Auditor 5/16-9/18/2012 31/12/2014 33 33
Roberto
CAPONE . . . . . . . Acting Auditor 9/19-12/31/2012
Next
shareholders
meeting 27 — — — 27
Gianluca
PONZELLINI . . . Acting Auditor 1/1-12/31/2012 31/12/2014 89 — — — 89
Lorenzo POZZA . . . Acting Auditor 1/1-5/15/2012 31/12/2014 30 — — — 30
Salvatore
SPINIELLO . . . . Acting Auditor 1/1-12/31/2012 31/12/2014
(I) Remuneration in the company that draws up the financial
statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 — — — 89
(II) Remuneration from subsidiaries and associates(1) . . . . . . . . . . . . . 101 101
(III) Total . . . . . . . 190 190
Ferdinando
SUPERTI
FURGA(1) . . . . . . Acting Auditor 1/1-12/31/2012 31/12/2014 95 — — — 95
(I) Remuneration in the company that draws up the financial
statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 492 — — — 492
(II) Remuneration from subsidiaries and associates(2) . . . . . . . . 101 — — — 101
(III) Total . . . . . . . 593 593
170

Auditors
(1) This amount includes the remuneration received as member of the Board of Statutory Auditors (89,000 euros) and Chairman of the
Supervisory Board pursuant to Legislative Decree 231/01 for the period 1/1 – 5/15/2012 (6,000).
(2) This amount refers to the remuneration received for the office of Chairman of the Board of Statutory Auditors of the listed subsidiary
Telecom Italia Media S.p.A. (43,000 euros); for the office of independent Director (50,000 euros) and for the office of member of the
Supervisory Board (8,000 euros) of the affiliated companies Italtel Group and Italtel S.p.A. (remuneration paid by the latter company),
held for the period 1/1 – 12/31/2012).
171

Item 6. Directors, Senior Management and Employees Options To Purchase Securities From Registrant
6.7 OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT
At December 31, 2012, the outstanding stock option plans related to options which give the right to subscribe for
new Telecom Italia Ordinary Shares and new Tim Participações ordinary shares. In addition, at December 31,
2012 other Telecom Italia S.p.A. equity compensation plans were outstanding.
For further details, see “Note—Equity compensation plans” of the Notes to the Consolidated Financial Statements
The Telecom Italia Shareholders’ Meeting held on May 15, 2012 resolved to launch the “Long Term Incentive Plan
2012”. The new plan replicates the basic rationale of the Long Term Incentive Plan 2011. It covers top
management and selected management. The plan is formulated according to a rolling perspective so that,
normally, each year a new incentive cycle comes into effect, factored over the time frame of the company’s
strategic planning.
The objective of the plan is to reinforce the connection between management’s compensation and, on one hand,
the company performance defined in the business plan 2012-2014 (absolute performance: 35% weighted), and on
the other hand, the growth of value relative to a group of peers (relative performance: 65% weighted).
The plan calls for granting:
Š to selected management, a cash bonus, with the option of investing 50% of the bonus in Telecom Italia
Ordinary Shares at market price and the grant of bonus Matching Shares when specific conditions are met
two years after subscription;
Š to top management, a 50% bonus in cash and 50% for rights to a bonus grant of Telecom Italia Ordinary
Shares after two years;
On June 28, 2012, the Telecom Italia Board of Directors approved the start of the Plan, which covered 19 top
managers and 127 selected members of management. At December 31, 2012, this situation remained unchanged.
On December 31, 2012 the three-year performance period of the Long Term Incentive Plan 2010-2015 (which
covered selected managers) expired. The Board of Directors on March 7, 2013 acknowledged that the Total
Shareholders Return performance criterion (relative performance: 65% weight) had not been met, while the
absolute performance requirement (35% weight) was over the minimum threshold, for an individual pay-out
equalling 4% of the annual remuneration of the beneficiaries.
On September 5, 2012, the shareholders’ meeting of Tim Participações S.A. approved the second granting of stock
options for managers in key positions in the company and its subsidiaries. In keeping with the structure of the
plan initiated in 2011, the exercise of the options is subordinate to the simultaneous achievement of two
performance targets: increase in the value of TIM shares and performance of TIM shares against a benchmark
index composed of TLC and Media Technology companies listed on the Bovespa and in the Bovespa indices.
Of the options assigned in 2012, a third can be exercised at the end of September 2013, another third from
September 2014 and the remaining third from September 2015.
On September 5, 2012, the grantees of the options were granted the right to purchase a total of 2,661,752 shares.
As of December 31, 2012, there were no options that could have already been exercised.
The Board of Directors on March 7, 2013, taking account of the overall performance of the Company, resolved to
suspend the launch of a new Long Term Incentive cycle, while it submitted for approval to the Shareholders’
Meeting on April 17, 2013 a new Employee Share Ownership Plan. The scheme makes available a total of
54,000,000 ordinary shares at a 10% discount off the market price, and in any case not below par value, in
possible installments. Individuals who hold shares for one year, and providing they remain employees, will be
granted one free bonus share for every three shares purchased. To service the plan, it is proposed that the Board
of Directors be granted powers to increase share capital by a maximum €39,600,000, part paid and part without
charge, via the assignment of profits or profit reserves.
172

Item 7. Major Shareholders And Related-Party Transactions Major Shareholders
Item 7. MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS
7.1 MAJOR SHAREHOLDERS
At December 31, 2012, according to the shareholders register and other information in the Company’s possession,
the parties which held shares with voting rights, directly or indirectly, in excess of 2% of the ordinary share capital
of Telecom Italia were the following:
Major Shareholders
Type of
ownership
No. Ordinary
Shares
% of ordinary
share capital
Telco S.p.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (direct) 3,003,586,907 22.39
Findim Group S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (direct) 668,931,444 4.99
As of April 10, 2013, the above mentioned position is the following:
As of April 10, 2013
Type of
ownership
No. Ordinary
Shares
% of ordinary
share capital
Telco S.p.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (direct) 3,003,586,907 22.39
Findim Group S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (direct) 668,931,444 4.99
At December 31, 2012, Telecom Italia held 37,672,014 of its own Ordinary Shares, while the subsidiary Telecom
Italia Finance S.A. held another 124,544,373 Ordinary Shares, for a total of 1.21% of capital with voting rights.
For more details about the significant changes in the percentage of ownership held by major shareholders
organizational structure, please see “Item 4. Information on the Telecom Italia Group—4.1 Business—4.1.1
Background”.
7.1.1 SHAREHOLDERS’ AGREEMENTS
The information contained herein regarding shareholders’ agreements has been derived from publicly available
information filed by the parties involved with regulatory authorities. So far as Telecom Italia is aware, no facts
have been omitted herein which would render the information misleading. No further or other responsibility in
respect of such information is accepted by Telecom Italia.
On February 29, 2012 the shareholders of Telco (Generali Group with a 30.58% stake, Intesa Sanpaolo with a
11.62% stake, Mediobanca with a 11.62% stake and Telefónica with a 46.18% stake) terminated the New
Shareholders’ Agreement (the last version of an agreement initially made on April 28, 2007, and then amended on
October 25, 2007, November 19, 2007, October 28, 2009, January 11, 2010 and December 10, 2010), and entered
into the 2012 Shareholders’ Agreement, on the same terms and conditions as the pre-existing one, with a
duration until February 28, 2015.
The 2012 Shareholders’ Agreement defines, among other things, the criteria for the composition of the slate of
candidates for appointment to the Board of Directors of Telecom Italia:
Š Telefónica, insofar as it holds at least 30% of Telco’s share capital, will be entitled to designate two
candidates;
Š the other shareholders of Telco, as they hold the absolute majority of its share capital, have the right to
designate the other members on the slate, of whom three candidates unanimously and the others on a
proportional basis.
The 2012 Shareholders’ Agreement provides that the Telecom Italia Group and the Telefónica Group are managed
autonomously and independently. In particular, the Board members designated by Telefónica to serve in Telco
and Telecom Italia are instructed by Telefónica not to attend or vote in board meetings that examine proposals
and resolutions regarding the policies, management and operations of companies directly or indirectly controlled
173

by Telecom Italia and that provide their services in countries where legal or regulatory restrictions or limitations
concerning the exercise of voting rights by Telefónica are in force. In addition, specific provisions and prohibitions
regarding Brazil and Argentina take account (i) of the prescriptions imposed by the Brazilian telecommunications
authority (Anatel) and by the Brazilian Antitrust Commission (CADE) and (ii) of the “Compromiso” signed before
the Comisión Nacional de Defensa de Competencia of Argentina (CNDC) on October 6, 2010 by the contracting
parties, by Telco and—as intervening parties in order to execute the obligations assumed—by Telecom Italia,
Telecom Italia International N.V., Sofora Telecomunicaciones SA, Nortel Inversora SA, Telecom Argentina SA,
Telecom Personal SA, Telefónica de Argentina SA, and Telefónica Moviles SA.
Consistently with the provisions of the agreement, board members Alierta and Linares undertook at the time of
their appointment not to participate in the discussion and voting of the Board of Directors (as well as of the
Executive Committee) of Telecom Italia when matters are proposed or discussed that relate to the activities of
the Company and its subsidiaries in the telecommunications markets of Brazil and Argentina, as well as, in
general, in all cases where there could be possible prejudice to the Telecom Italia Group.
As indicated above, the 2012 Shareholders’ Agreement has a duration until February 28, 2015. Each party:
– may request the de-merger of Telco by sending a communication to the other parties between August 1, and
August 28, 2014, with an obligation to give effect to the de-merger within the subsequent six months;
– may withdraw from the agreement and request the de-merger of Telco by sending a communication to the
other parties in the period between September 1, and September 28, 2013, with an obligation to give effect
to the de-merger within the subsequent six months.
At the same time as signing the 2012 Shareholders’ Agreement, on February 29, 2012 Telco and Telefónica
renewed and extended to February 28, 2015 the option to purchase shares in the Company initially agreed on
November 6, 2007 and then amended on October 28, 2009. In accordance with the existing agreements, in the
case of dissent by Telefónica from the decision by the Telco Board of Directors to transfer or set up encumbrances
on the Telecom Italia shares in its portfolio, Telefónica could alternatively purchase the Telecom Italia shares
from Telco at the same price and under the same conditions offered by a third party proposing to buy them, or
require the de-merger of Telco.
7.1.2 SHAREHOLDERS OWNERSHIP
❖ BOARD OF DIRECTORS
In accordance with applicable Italian law, the following table shows the investments held in Telecom Italia S.p.A.
and in the related subsidiaries by all the individuals who, during 2012 or a part of that year, have held the post of
director in Telecom Italia S.p.A.
Name Company
Class of
shares
Number
of shares
held at the
end of 2011
(or at the
date of
appointment)
Number of
shares
purchased in
2012
Number of
shares sold in
2012
Number of shares
held at the end of
2012 (or as of the
date on which
individual left
post, if before)
Franco BERNABÈ . . . . . Telecom Italia S.p.A. Ordinary(1) 318,000 150,000 — 468,000
Savings(2) 330,000 150,000 — 480,000
Aldo MINUCCI . . . . . . . Telecom Italia S.p.A. Ordinary 2,595 — — 2,595
Marco PATUANO . . . . . Telecom Italia S.p.A. Ordinary — 70,000 — 70,000
Savings — 30,000 — 30,000
Gabriele GALATERI DI
GENOLA . . . . . . . . . . . Telecom Italia S.p.A. Ordinary 352,000 — — 352,000
Savings 176,000 — — 176,000
Renato PAGLIARO . . . . Telecom Italia S.p.A. Savings 60,000 — — 60,000
Luigi ZINGALES . . . . . . Telecom Italia S.p.A. Ordinary 58,000 — — 58,000
(1) Of which 18,000 shares held indirectly.
174

❖ BOARD OF AUDITORS
statutory auditor in Telecom Italia S.p.A.
Name Company
Class of
shares
Number of shares
held at the end of
2011 (or at the
date of
appointment)
Number of
shares
purchased in
2012
Number of
shares sold in
2012
Number of shares
held at the end of
2012 (or as of the
date on which
individual left
post, if before)
Roberto
CAPONE . . . Telecom Italia S.p.A. Ordinary 1,319 — — 1,319
❖ EXECUTIVE OFFICERS
executive officers in Telecom Italia S.p.A.
Company
Class of
shares
Number of shares
held at the end of
2011 (or at the
date of
appointment)
Number of
shares
purchased
in 2012
Number of
shares sold
in 2012
Number of shares
held at the end of
2012 (or as of the
date on which
individual left post,
if before)
Telecom Italia S.p.A.(1) . . . . . . . . . . . . . . . . . Ordinary 31,412 10,000 10,000 31,412
Telecom Italia S.p.A. . . . . . . . . . . . . . . . . . . . . Savings 55,484 55,484
Telecom Italia Media S.p.A. . . . . . . . . . . . . . Ordinary 4 4
* * *
As of April 10, 2013 no member of the Board of Directors, Board of Auditors or Executive Officers beneficially
owned more than 1% of the Ordinary Shares or Savings Shares.
7.1.3 CONTINUING RELATIONSHIP WITH THE ITALIAN TREASURY
The Italian Treasury continues to be in a position to exert certain powers with respect to Telecom Italia through
the exercise of the special powers included in Telecom Italia’s Bylaws. Such powers, the so-called “golden share,”
were established in 1997 according to Law No. 474/1994, when Telecom Italia—formerly controlled by the
Italian Treasury—was privatized.
On May 22, 2003, taking into account the proposed merger of Telecom Italia into Olivetti S.p.A., a Decree by the
Minister of Economy and Finance, in agreement with the Minister for Productive Activities, maintained the power
of approving the acquisition of major shareholding in the company’s voting capital (3% of Telecom Italia’s voting
share capital or more) and the power of veto over resolutions to dissolve the company, approve mergers,
demergers or dispositions of the business, transfer the registered office abroad, change the corporate purposes or
amend and modify the special powers. On the other hand, the Treasury’s power to approve major shareholders’
agreements and the power to appoint one Director and one Statutory Auditor were relinquished.
Law No. 350/2003, adopted in December 2003, significantly modified the rules governing the special powers, of
the Italian Government with respect to privatized companies stating, in particular, that the Government no longer
has the power to approve or disapprove the acquisition of material interests in the share capital of such
companies, but instead may object, within a ten-day period, in case of prejudice to vital State Interests and each
time there is the need to protect subsequent undeniable reasons of public interest, in accordance with specific
criteria set forth in an ad-hoc decree of the Government dated June 10, 2004.
175

As a result, on April 1, 2005 a new Decree by the Minister for Economy and Finance, in agreement with the
Minister for Productive Activities redefined accordingly the content of the “special powers” clause in the Telecom
Italia bylaws, and stated its exact wording. Subsequently the relevant provision of the bylaws was amended
accordingly.
On March 26, 2009, the European Court of Justice declared that, by adopting the provisions contained in decree
of the Government dated June 10, 2004 defining the criteria for the exercise of the special powers, the Italian
Republic failed to fulfil its obligations under the EC Treaty. Specifically, infringement of Articles 43 (freedom of
establishment) and 56 (freedom of movement of capital) of the EC Treaty arose from the fact that the Decree of
2004 did not make sufficiently clear the conditions for the exercise of the special powers, and did not enable
investors to know in what situations the powers would be used. The extremely broad description of the
circumstances permitting recourse to these special powers gave those powers a discretionary nature. As a result,
the above factors discourage investors generally and more specifically those contemplating investing in Italy with
a view to exerting some influence on the management of the companies to which the legislation at issue applies.
As a result of the ruling by the European Court of Justice the Prime Minister’s Decree dated June 10, 2004 was
amended on May 20, 2010. As a result of these amendments, presently the special powers may only be exercised
when justified by substantial and compelling reasons of general interest, particularly with regard to public order,
security, health and defense, as appropriate and proportionate to the protection of those interests.
On May 14, 2012 a new law was published, containing “Regulations relating to the special powers on share
ownership in the sectors of defence and national security, and regarding activities of strategic importance in the
energy, transport and communication sectors”. The regulations provide that, at the moment the implementing
Prime Ministerial decrees come into force with respect to “the networks and systems, goods and relationships of
strategic importance for the communications […] sector”, the statutory clauses on special powers will cease to
have effect to be replaced by these regulations. In brief, the new regulations will provide:
Š the Italian Government with the authority to impose conditions and possibly to oppose the purchase, for any
reason whatever, by non-EU citizens, of controlling shareholdings in companies which hold strategic assets
identified in the regulations. Any right to purchase by a non-EU entity will in any case be permitted solely on
condition of reciprocity in the purchaser’s home jurisdiction;
Š a power of veto granted to the Italian Government (including through prescriptions or conditions) on any
resolution, act or transaction which has the effect of modifying the ownership, control or availability of
strategic assets or changing their use, including resolutions of merger, demerger, transfer of registered
office abroad, transfer of the company or business units which contain the strategic assets or their
assignment by way of guarantee, amendment to the company’s by-laws purpose, company dissolution or
amendment in by-laws provisions relating to limitations of voting rights.
176

Item 7. Major Shareholders And Related-Party Transactions Related-Party Transactions
7.2 RELATED-PARTY TRANSACTIONS
There are no significant transactions with related parties, including intragroup transactions, which are non
recurring or unusual and/or atypical in nature. Such transactions, when not dictated by specific laws, are usually
conducted at arm’s length.
For further information on related party transactions please see “Note—Related party transactions” of the Notes
to the Consolidated Financial Statements included elsewhere in this Annual Report.
177

Item 8. Financial Information Historical Financial Statements
Item 8. FINANCIAL INFORMATION
8.1 HISTORICAL FINANCIAL STATEMENTS
See “Items 18 and 19” for a list of financial statements and other financial information filed with this report.
178

Item 8. Financial Information Legal Proceedings
8.2 LEGAL PROCEEDINGS
We are continuously involved in disputes and litigation with regulators, competitors and other parties.
For further details, please see “Note—Contingent liabilities, other information, commitments and guarantees” to
the Consolidated Financial Statements included elsewhere in this Annual Report.
179

Item 9. Listing Trading Of Telecom Italia Ordinary Shares And Savings Shares
Item 9. LISTING
9.1 TRADING OF TELECOM ITALIA ORDINARY SHARES AND SAVINGS SHARES
The principal trading market for the Ordinary Shares and the Savings Shares is on Mercato Telematico Azionario
or (“Telematico”), an automated screen trading system managed by Borsa Italiana (See “—9.2 Securities
Trading in Italy”).
Ordinary and Savings Share ADSs, each representing respectively ten Ordinary Shares and ten Savings Shares
have been listed on the NYSE since August 4, 2003. JPMorgan Chase Bank is the Company’s Depositary issuing
ADRs evidencing the Ordinary Share ADSs and the Savings Share ADSs.
The table below sets forth, for the periods indicated, reported high and low official prices of the Ordinary Shares
on Telematico and high and low closing prices of Ordinary Share ADSs on the NYSE from the First Quarter of
2008.
Telematico NYSE
High Low High Low
(€) (U.S.$)
2008:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.143 1.212 31.180 18.820
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.485 1.257 23.540 19.380
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.347 1.050 21.270 14.800
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.169 0.759 16.250 9.530
2009:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.193 0.780 16.540 9.640
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.048 0.920 14.360 11.960
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.253 0.946 18.500 13.130
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.218 1.050 17.990 15.150
2010:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.138 1.019 15.910 13.970
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.134 0.889 15.460 10.500
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.089 0.890 14.080 11.200
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.109 0.951 15.610 12.320
2011:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.144 0.984 15.940 13.130
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.090 0.897 15.650 12.690
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.953 0.728 13.930 10.000
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.941 0.768 13.510 10.180
2012:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.923 0.772 12.300 10.170
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.892 0.663 11.980 8.200
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.847 0.618 10.990 7.370
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.801 0.671 10.480 8.430
2013:
January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.765 0.696 10.160 9.100
February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.730 0.551 9.960 7.210
March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.619 0.547 8.000 7.050
April (through April 10, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.597 0.542 7.840 6.870
Source: Reuters data
At the close of business on April 10, 2013 there were 29,310,298 Ordinary Share ADSs outstanding held by
122 registered holders. One of the registered holders is the Depository Trust Company (“DTC”) which holds
29,301,130 Ordinary Share ADSs on behalf of beneficial holders.
180

Item 9. Listing Trading Of Telecom Italia Ordinary Shares And Savings Shares
The table below sets forth, for the periods indicated, reported high and low official prices of the Savings Shares on
Telematico and high and low closing prices of the Savings Share ADSs on the NYSE from the First Quarter of 2008.
Telematico NYSE
High Low High Low
(€) (U.S.$)
2008:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.609 0.942 23.570 14.750
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.179 1.016 18.520 15.630
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.067 0.803 16.740 11.270
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.811 0.552 11.340 6.710
2009:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.859 0.610 12.040 7.510
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.814 0.633 10.910 8.590
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.875 0.665 12.910 9.250
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.861 0.749 12.770 10.780
2010:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.880 0.762 12.020 10.620
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.900 0.714 12.190 8.490
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.888 0.722 11.430 9.230
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.893 0.802 12.590 10.490
2011:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.014 0.822 14.180 10.830
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.959 0.766 13.760 10.910
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.806 0.667 11.730 9.170
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.788 0.656 11.270 8.460
2012:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.752 0.634 9.930 8.420
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.744 0.543 9.950 6.690
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.699 0.522 9.040 6.210
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.695 0.581 8.960 7.390
2013:
January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.654 0.607 8.640 7.900
February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.626 0.489 8.510 6.410
March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.545 0.478 7.170 6.040
April (through April 10, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.525 0.476 6.890 5.960
Source: Reuters data
At the close of business on April 10, 2013, there were 18,543,405 Savings Share ADSs outstanding held by
18 registered holders.
One of the registered holders is the Depository Trust Company (“DTC”) which holds 18,539,447 Savings Share
ADSs on behalf of beneficial holders.
Fluctuations between the Euro and the U.S. dollar will affect the dollar equivalent of the price of the Ordinary
Share and the Savings Shares on Telematico and the price of the Ordinary Share ADSs and the Savings Share
ADSs on the New York Stock Exchange.
On April 5, 2013 the Noon Buying Rate for the Euro was U.S.$ 1.3027 = €1.00.
181

Item 9. Listing Securities Trading In Italy
9.2 SECURITIES TRADING IN ITALY
Italian equity securities are traded on the regulated electronic stock market Mercato Telematico Azionario or MTA
(“Telematico”), which operates under the control of the Commissione Nazionale per le Società e la Borsa (the
National Commission for Companies and the Stock Exchange or “Consob”), the public authority in charge of
regulating the securities markets and all public offerings of securities in Italy in order to ensure the transparency
and regularity of trading and protect investors.
Telematico is managed by Borsa Italiana, a joint stock company part of the London Stock Exchange Group,
responsible for the organization and management of the Italian stock exchange.
Securities transactions on Telematico are settled on a cash basis. Cash transactions are settled on the third
trading day following the trading date. Borsa Italiana publishes information on transactions in each listed security,
including the volume traded and the high and low prices of the day. No last price is reported, but an “official
price” calculated as a weighted average price of all trades performed during the trading day and a “reference
price” as for the closing auction price. The Bank of Italy, in accordance with Consob, regulates the governing of
the clearing system that is currently performed in Italy on an exclusive basis by Monte Titoli (a centralized
securities clearing system owned by certain major Italian banks and financial institutions).
If in the course of a trading day the maximum price variation between two consecutive contracts is ±5%, or
maximum price variation of the contracts with respect to the reference price is ±10% an automatic five-minute
suspension is declared. Furthermore Borsa Italiana has the authority to suspend trading in any security in
response to extreme price fluctuations or for other reasons.
The most liquid shares traded on Telematico, including the Telecom Italia ordinary shares, are traded on “Mercato
After Hours”, an automated screen trading system managed by Borsa Italiana. “Mercato After Hours” operates,
from 6.00 p.m. to 8.30 p.m., substantially under the same rules as Telematico except that the price of any security
may not fluctuate by more than 3.5% from the reference price of said securities on Telematico on the same day.
The FTSE MIB Index is the primary benchmark index for the Italian equity market. Capturing approximately 80%
of the domestic market capitalisation, the FTSE MIB Index measures the performance of the 40 most liquid and
capitalised Italian shares and seeks to replicate the broad sector weights of the Italian stock market. The index is
derived from the universe of stocks trading on Borsa Italiana’s Telematico market.
The index is calculated in accordance with the Industry Classification Benchmark (“ICB”) where main sectors are:
Oil & Gas, Constructions & Material, Industrials Goods and Services, Automobiles & Parts, Media,
Telecommunications, Utilities, Banks, Technology, Insurance and Personal & Household Goods. Each FTSE MIB
constituent is weighted by its free float capital, considering the effective number of shares tradable in the market.
Index Constituents weights are capped at 15%; they are reviewed and their weights are rebalanced quarterly
(March, June, September and December). The weighting structure can also be changed following extraordinary
events (if the capital of a stock increases or other events).
182

Item 9. Listing Clearance And Settlement Of Telecom Italia Shares
9.3 CLEARANCE AND SETTLEMENT OF TELECOM ITALIA SHARES
All financial instruments publicly traded on regulated markets including treasury bonds are dematerialized.
Companies that issue financial instruments that are publicly traded on regulated markets must inform Monte
Titoli, which will open an account in the name of each company in its register.
Beneficial owners of Ordinary Shares and Savings Shares must hold their interests through specific deposit
accounts with any participant having an account with Monte Titoli. The beneficial owners of Ordinary Shares and
Savings Shares held with Monte Titoli may transfer their shares, collect dividends, create liens and exercise other
rights with respect to those Ordinary Shares and Savings Shares through such accounts and may no longer obtain
physical delivery of share certificates in respect of their Ordinary Shares and Savings Shares. All new issues of
Ordinary Shares and Savings Shares and all other transactions involving Ordinary Shares and Savings Shares must
settle electronically in book-entry form.
Ordinary Shares and Savings Shares are accepted for clearance through Euroclear and Clearstream. Holders of
shares may elect to hold such Ordinary Shares and Savings Shares through Euroclear or Clearstream (outside the
United States).
183

Item 10. Additional Information Corporate Governance
Item 10. ADDITIONAL INFORMATION
10.1 CORPORATE GOVERNANCE
GENERAL
The Company’s corporate governance system is made up of a series of principles, rules and procedures drawn
from applicable laws and regulations and from international best practices. The system, designed and constructed
bearing in mind the principles formulated by the Committee for Corporate Governance of Borsa Italiana, has been
implemented with the adoption of codes, regulations and policies covering the activity of all the organizational
and operational components of the Company. Most of these documents are available in an English language
version on the Internet at www.telecomitalia.com under “Governance”.
According to applicable Italian law, listed issuers shall annually disclose information on their compliance with
codes of conduct issued by regulated stock exchange companies (such as the aforementioned Corporate
Governance Code by Borsa Italiana) or by trade associations.
❖ CHANGES IN THE REGULATORY FRAMEWORK
Law no. 120 of July 12, 2011, amending articles 147-ter and 148 of Legislative Decree no. 58 of February 24,
1998, set forth the principle of gender balance in the Board of Directors and Board of Auditors of listed
companies. The rule is mandatory for three periods of office from the first subsequent renewal one year after the
regulations came into force (in August 2011) and requires that one fifth of the persons appointed in the first
period of office, and one third of those appointed for the following two periods of office be reserved for the less
represented gender, rounding up fractions to the nearest whole number, as detailed by Consob Resolution
no. 18079 of January 20, 2012 (new article 144-undecies of the Issuer Regulations).
The Shareholders’ Meeting held on July 15, 2012 amended the Company’s bylaws consistently with the
aforementioned gender diversity principle.
The Company complies with the recommendations set forth by the Code of Self Discipline of the Committee for
Corporate Governance of Borsa Italiana. Such document was amended in December 2011, with significant
changes regarding internal controls, to be implemented by the issuers by the end of 2012. To this end, on
December 6, 2012 Telecom Italia rescinded its own internal code, considered obsolete, and adopted corporate
governance principles (the Corporate Governance Principles) that amend and/or supplement the framework of
applicable rules regarding the duties and operation of the corporate bodies, referring to the principles and criteria
of the Borsa Italia Code (December 2011 edition) for the remainder.
In relation to the internal Code previously in force, the new Corporate Governance Principles:
– reaffirm the responsibilities of the Board of Directors, with a greater focus on the internal control and risk
management system;
– simplify the listing of strategic operations subject to prior board resolutions, making clear that the listing is
given by way of example;
– confirm the principles by which the Board operates, introducing the principle of advance scheduling of Board
agenda items;
– confirm the presence of a Lead Independent Director and three Board committees: the Executive Committee,
the Nomination and Remuneration Committee, and the Control and Risk Committee (which replaces and
incorporates the responsibilities of the Committee for Internal Control and Corporate Governance);
– transfer the issue of the annual appraisal of the Board of Directors from the Committee for Internal Control
and Corporate Governance to the Nomination and Remuneration Committee;
– introduce specific references to the procedures designed to assure that the undertakings given to the
Brazilian and Argentine authorities to ensure the “separateness” of Telefónica in the management of the
Group’s South American subsidiaries are respected;
– renew the internal control and risk management system rules in their entirety.
The articles regarding the management of corporate information, transactions with related parties, shareholders’
meetings and relations with investors and shareholders have been abolished.
184

❖ CODE OF ETHICS AND CONDUCT
The Code of Ethics and Conduct (the “Code of Ethics”) of the Telecom Italia Group is central to Telecom Italia
Group’s system of corporate governance as it spells out the Company’s fundamental values and the principles
considered necessary to ensure an ethically oriented conduct of business. The Code can be considered as the
basis of the whole corporate governance system, since every instrument of corporate governance is based on the
principles of transparency, fairness and loyalty specified in the Code. The Code specifies the principles to be
respected in relations with all the main stakeholders of the Company: shareholders, financial markets, customers,
local communities and employees.
The Code of Ethics was drawn up on the basis of generally accepted ethical principles and in accordance with the
highest international standards, taking into account the principles of Section 406 of the Sarbanes Oxley Act.
As with all of the Company’s corporate governance codes and principles, the Code of Ethics is updated in order to
conform it to the developments in the applicable law and market regulations, taking into account national and
international best practices.
The Board of Directors on December 6, 2012 acknowledged the launch of a comprehensive update programme of
the Group’s Compliance Program, with particular focus on the Code of Ethics and Conduct, as well on the
Organizational Model pursuant to Legislative Decree n. 231/2001.A stepwise approach was defined for the Code
of Ethics, starting from a few focused additions in the current Code and ending with a general review of the whole
document to be completed by the end of 2013. The Board of Directors has also adopted a specific policy
framework for compliance with applicable anti-corruption laws and regulations.
For further details, please see “Item 16B. Code of Ethics and Conduct”.
❖ BOARD OF DIRECTORS
The Company’s system of corporate governance is centered around the Board of Directors. The Corporate
Governance Principles of Telecom Italia supplement the applicable rules concerning the tasks and functioning of
the Board of Directors and all the directors are required to comply with the Corporate Governance Principles.
Such Principles have been adopted by the Board of Directors as a self-regulatory measure only and can therefore
be amended at any time with a resolution adopted by the Board and promptly disclosed to the market.
Since 2005, Telecom Italia’s directors have carried out an annual Board performance evaluation.
Role and tasks
In accordance with the Italian Stock Exchange Code (by which Telecom Italia fully abides) the Board of Directors
plays an active role both in the strategic guidance of the Company and in the control of operations, with the
power to formulate strategy and responsibility for intervening directly in decisions having the greatest impact on
the activity of the Company and the Group. The Board of Directors shall, in particular, have overall responsibility
for the internal control and risk management system, including the definition of the nature and level of risk
consistent with the specific strategic objectives of the business.
Pursuant to the Company’s Corporate Governance Principles, the following matters are deemed to have a notable
effect on the business of the Company and the Group, and as such are subject to resolutions of the board:
Š agreements with competitors which, considering the subject, commitments, conditions, or limits that they
may produce, have long-term effects on the freedom of strategic business decisions;
Š investments and disinvestments exceeding 250 million euros, and in any event purchases or sales of
shareholdings, or businesses or business units that are of strategic significance in the overall framework of
the business; transactions that, in their execution or upon their completion, can create commitments and/or
purchases and/or sales of this nature and scale;
Š the acceptance of loans for amounts exceeding 500 million euros and the granting of loans and guarantees in
favor of non-subsidiary companies for amounts exceeding 250 million euros; transactions that, in their
execution or upon their completion, can create commitments and/or deeds of this nature and scale;
185

Š the above transactions, to be performed by unlisted subsidiaries of the Group, excluding those controlled by
listed subsidiaries;
Š the listing and delisting of financial instruments issued by the Company or Group companies in regulated
markets inside or outside Europe;
Š instructions to be given to listed subsidiaries (and their subsidiaries), when the Parent Company exercises its
management and coordination activity for the performance of transactions with the characteristics indicated
above.
Since 2002, the Company has adopted guidelines for carrying out transactions with related parties in order to
ensure both procedural and substantial fairness and transparency.
On November 4, 2010 the Board of Directors introduced the set of procedures currently in force, as amended on
June 28, 2012. In addition to “related parties”, as defined by Consob regulation No. 17221 of March 12, 2010 and
IAS 24, the new procedure (effective as from January 1, 2011) must also be applied—for self-regulatory
principles—to participants in shareholders’ agreements that regulate candidacy to the position of Director of
Telecom Italia, in the case of a majority slate. The procedure classifies the transactions in different categories
and, according to this classification, different assessment and approval procedures are applied, if these
transactions are to be carried out with related parties.
For information on the subject of related-party transactions, see “Item 7. Major Shareholders and Related-Party
Transactions—7.2 Related-Party Transactions”.
In its function of monitoring and guiding the performance of operations, the Board of Directors assesses the
adequacy of the organizational, administrative and accounting structure of the Company on the basis of
information made available by the management and, with specific reference to the adequacy of the internal
control system, in light of the results of the investigations made by the Control and Risk Committee.
The internal control and risk management system is organised and operates according to the principles and
criteria set out in the Italian Stock Exchange Code. It is an integral part of the general organisational structure of
the Company and the Group, and involves several components that act in a coordinated way according to their
respective responsibilities—the responsibility of the Board of Directors to direct and provide strategic oversight,
the responsibility of the Executive Directors and management to monitor and manage, the responsibility of the
Control and Risk Committee and the Head of the Audit Department to overview and provide support to the Board
of Directors, and the supervisory responsibilities of the Board of Statutory Auditors.
The Board of Directors, insofar as it is responsible for the internal control and risk management system, defines
the guidelines of the system and verifies its adequacy, effectiveness and proper functioning, so that the main
corporate risks (including, among others, operational, compliance-related, economic and financial risks) are
properly identified and managed over time.
The establishment and maintenance of the internal control system are assigned to the Executive Directors
(currently, the Chairman and Chief Executive Officer Franco Bernabè and the Domestic Managing Director, Chief
Operating Officer Marco Patuano, each with respect to the area delegated to him), and to the Manager in charge
of preparing the Company’s financial report for his area of responsibility (such position is held by the Head of
Administration, Finance and Control, Piergiorgio Peluso, who took over the role held by Andrea Mangoni in the
board meeting on September 13, 2012), so as to ensure the overall adequacy of the system and its functionality,
in a risk-based perspective, which is also taken into account in determining the agenda for the Board’s
proceedings.
The Board of Directors at its meeting on April 13, 2011 charged the Deputy Chairman with responsibility for the
internal control system; the Deputy Chairman exercised his role not as such, but in terms of representing the
Board of Directors in its entirety towards the various bodies responsible for the internal control system. In the
Board meeting on August 1, 2012, the Deputy Chairman renounced this responsibility and the Board resolved
(i) to confirm, in relation to the Internal Audit Manager, and point out, in relation to the Group Compliance Officer
and the IT & Security Compliance Department Manager, that they report directly to the full Board; (ii) to attribute
the role of link between the Board of Directors and said control structures to a non-executive Director. This role
was assigned to Director Gabriele Galateri di Genola in the meeting on November 8, 2012.
186

The assessment of the performance of operations is based on a continuous flow of information coordinated by the
Chairman of the Board of Directors and directed towards the non-executive directors and the members of the
Board of Statutory Auditors. Assessments are made, notably, with a comparison of the results achieved with those
budgeted during the examination of the financial reports.
Meetings
The Corporate Governance Principles require the Board to meet periodically (and at least quarterly).
Through April 10, 2013, in 2013 the Board of Directors has had 4 meetings.
When board meetings are to be held, documentation permitting effective participation in the proceedings is
provided well in advance, subject to circumstances of the case (as a rule, the Friday preceding the day on which
the meeting is to be held, which is normally a Thursday), to enable informed participation in the meetings. When
required by the subjects discussed, representatives of the Company management or external consultants are
invited to take part, who ensure the necessary technical and professional support.
Appointment of Directors
As noted above, Telecom Italia’s bylaws (Article 9) provide for the Board of Directors to be elected by the
Shareholders’ Meeting through a slate system, which is presently mandatory under Italian law.
The slate system is designed to ensure the presence on the Board of Directors of persons drawn from slates
presented by minority shareholders. Shareholders who together hold at least 0.5% of the ordinary share capital
(or the different stake annually required to this end by Consob), can put forward slates of candidates. The slates
and the accompanying documentation (such as the curricula vitae of the candidates) must be filed at the
Company’s registered office at least 25 days and made available to the public at least 21 days before the date
scheduled for the shareholders’ meeting. Consob requires the Company to make the slates and the relevant
information available to the public at its registered office, at Borsa Italiana and on its website
www.telecomitalia.com. According to Telecom Italia’s bylaws, slates of candidates can be put forward also by the
outgoing Board of Directors. The Board of Directors is elected as follows:
Š four fifths of the directors to be elected are chosen from the slate that obtains the majority of the votes cast
by the shareholders, in the order in which they are listed on the slate; in the event of a fractional number, it
is rounded down to the nearest whole number;
Š the remaining directors are chosen from the remaining slates. To that end, the votes obtained by the various
slates are divided successively by whole numbers from one up to the number of directors to be appointed
and the results (quotients) obtained are assigned to the candidates on each slate in the order specified
thereon. On the basis of the quotients assigned, the candidates on the various slates are arranged in a single
decreasing ranking. Those who have obtained the highest quotients are elected.
An amendment to the Company’s bylaws was approved by the Shareholders’ Meeting held on May 15, 2012 to the
effect that all slates that present three or more candidates should have a gender ratio of at least 1:3 among the
candidates (1:5 on the occasion of the first application). In case the vote on the slates does not fulfill the diversity
requirement in the composition of the Board, the appointment of the last of the persons elected from the majority
slate who are of the more represented gender will be forfeited, and they will be replaced with the first unelected
candidates of the less represented gender on the same slate, in the number needed to ensure the prescribed
gender balance. In any case, should the slate mechanism fail, the Shareholders’ Meeting retains the right to
appoint directors by a subsequent vote, applying the legal majorities, so that the so-called gender diversity
requirement may in any event be ensured in the composition of the Board.
The shareholders’ meeting held on April 12, 2011, established the number of Telecom Italia directors at 15 and
appointed the Board for a three-year period. The slate of candidates proposed by Telco S.p.A. obtained the highest
number of votes and therefore 12 out of 15 of Telecom Italia’s Directors were elected from that slate (Cesar
Alierta Izuel, Tarak Ben Ammar, Franco Bernabè, Elio Cosimo Catania, Jean Paul Fitoussi, Gabriele Galateri di
Genola, Julio Linares Lopez, Gaetano Miccichè, Aldo Minucci, Renato Pagliaro, Marco Patuano and Mauro
Sentinelli); the remaining three directors (at the time Luigi Zingales, Ferdinando Falco Beccalli and Francesco
187

Profumo) were elected from the slate proposed by a group of institutional shareholders. Subsequently Ferdinando
Beccalli Falco was replaced by Lucia Calvosa and Francesco Profumo was replaced by Massimo Egidi. See: Risks
associated with Telecom Italia’s ownership chain under “Item 3. Key Information—3.1 Risk Factors”.
With respect to the current composition of the Board, see above “Item 6- Directors, Senior Management and
Employees”.
Composition
According to the bylaws, the shareholders’ meeting decides the exact number of Board members within a
minimum and a maximum number (from 7 to 19). Directors may serve for a maximum term of three years, they
may be re-elected and there is no statutory age limit for their eligibility. There are no provisions in Italian law that
set age or shareholding requirements for directors’ qualification. There are no provisions in the Telecom Italia
bylaws relating to the retirement of a director under an age limit requirement or a shareholding requirement for
director’s qualification.
If during the term of the Board of Directors one or more directors cease to hold such position for any reason, the
Board of Directors is allowed to appoint replacements by a resolution approved by the Board of Auditors. The
directors so appointed will remain in office until the next Shareholders’ Meeting. As a rule, the replacements
finally appointed by the Shareholders’ Meeting will remain in office for the same term as the other members
already in office at the time of their appointments; the Shareholders’ Meeting may establish a different term of
office for them. In the event of replacement of an independent board member, the Appointment and
Remuneration Committee is responsible for proposing a candidate.
Article 3 of the Company’s Corporate Governance Principles establishes a cap on the maximum number of
positions that Telecom Italia directors may hold in management and control bodies of other companies. The
general rule is that the position of Telecom Italia director is not compatible with directorships or auditorships in
more than five companies, other than Telecom Italia subsidiaries or affiliates, when such companies:
Š are listed and included in the FTSE/MIB index; and/or
Š operate prevalently in the financial sector on a public basis; and/or
Š engage in banking or insurance.
The directorship in Telecom Italia is also considered not compatible with holding more than three executive
positions in companies of the types specified above. The Board of Directors may nonetheless permit exceptions to
these rules, such exceptions to be made public. If a Director holds office in more than one company belonging to the
same Group, only one office held within that Group is taken into account, when calculating the number of offices.
Impact of Shareholders’ Agreements on the Nomination of Telecom Italia Group’s Companies Boards
Telco is Telecom Italia’s main shareholder with an interest of 22.38% in the ordinary share capital. In turn Telco is
owned by Intesa S.p.A. (11.62%), Mediobanca S.p.A. (11.62%), companies belonging to the Generali
Group (30.58%) and Telefónica S.A. (46.18%).
On the basis of information in the public domain, the shareholders of Telco signed an agreement that, among
other things, lays down the criteria pursuant to which the board of directors of Telco will approve the list of
candidates to be submitted to the shareholders’ meeting of Telecom Italia for the appointment of the directors of
Telecom Italia. The criteria are set out below:
Š Telefónica, to the extent holding at least 30% of Telco’s share capital, will have the right vis-à-vis the other
shareholders to designate two directors of Telecom Italia: (a) to be included as designees for appointment in
the board of Telecom Italia in the list presented by Telco, and (b) to the extent feasible, with respect to the
substitution of such directors;
Š the other shareholders of Telco, to the extent holding at least 50% plus one share of Telco’s share capital,
will designate the other members of the list as follows: (a) three members unanimously and (b) the
remaining members on a proportional basis as set out in the shareholders agreement.
The agreement among Telco shareholders provides for the Telecom Italia Group and the Telefónica Group to be
run autonomously and independently and contains specific provisions to this end. See “Item 7. Major
Shareholders and Related-Party Transactions—Item 7.1.1. The Shareholders’ Agreements”.
188

Independent Directors
At least two members of the Board of Directors must satisfy the independence requirements set forth by the
Consolidated Law on Finance for the members of the Board of Auditors. Moreover, Article 3 of the Corporate
Governance Principles incorporate by reference the independence criteria set out in the Borsa Italiana’s Corporate
Governance Code.
To qualify as independent under Borsa Italiana’s Corporate Governance Code and the Company’s Corporate
Governance Principles, Telecom Italia directors should not maintain, nor have recently maintained, directly or
indirectly any business relationships with the issuer or persons linked to the issuer (Group companies, executive
directors or members of their families), of such a significance as to influence their autonomous judgment, and
should not be in a position to influence the Company as a consequence of the shares they hold or their
participation in shareholders’ agreements. Specific presumptions are listed in Borsa Italiana’s Corporate
Governance Code.
The Board of Directors verifies the independence requirements at the first meeting after the appointment of the
Board and subsequently once a year. On the basis of the declarations made by the interested parties and verified by
the Board of Directors, at present 6, out of the 15 directors are considered independent, according to the criteria set
forth by the Consolidated Law on Finance as well as the criteria set forth by Borsa Italiana Code: Lucia Calvosa, Elio
Cosimo Catania, Massimo Egidi, Jean Paul Fitoussi, Mauro Sentinelli and Luigi Zingales. The Board of Auditors
verified the correct application of the principles adopted by the Board to evaluate the independence of directors.
See “Item 16G. Corporate Governance—16.1. Differences in Telecom Italia’s Corporate Governance and New
York Stock Exchange Corporate Governance Practices”.
Executive Directors and Activities of the Board
The authority to grant delegated powers to directors and revoke such mandates is reserved to the Board of
Directors, which also establishes their objects, limits, manner of exercise and the intervals—of not more than
three months—at which persons with delegated powers must report on their activity, the general results of
operations, and the transactions of greatest economic, financial or balance sheet significance concluded by the
Company or its subsidiaries.
The Board of Directors entrusted the Executive Directors with the following powers and responsibilities:
Š to the Executive Chairman (Franco Bernabè), in addition to legal representation of the Company, as provided
for in the bylaws,the following powers:
Š overall governance of the Group, including coordinating the activities of the Chief Executive Officer, and
defining the Company’s strategic guidelines;
Š responsibility for extraordinary transactions and extraordinary finance operations to be proposed to the
Board of Directors;
Š to the Domestic Managing Director, in addition to legal representation of the Company, as provided for in the
bylaws,the responsibility for the overall governance of operations in Italy.
There are no other Telecom Italia executive directors. As of April 10, 2013, Telecom Italia’s non-executive
directors are: Cesar Alierta Izuel, Tarak Ben Ammar, Lucia Calvosa, Elio Cosimo Catania, Massimo Egidi, Jean Paul
Fitoussi, Gabriele Galateri di Genola, Julio Linares Lopez, Gaetano Miccichè, Aldo Minucci, Renato Pagliaro, Mauro
Sentinelli, Luigi Zingales.
As a result of the Telco shareholders’ agreement providing for the Telecom Italia Group and the Telefónica Group
to be run autonomously and independently, Cesar Alierta Izuel and Julio Linares Lopez committed not to take part
in any discussion or to vote in matters concerning activities of Telecom Italia or Telecom Italia’s subsidiaries in
the Brazilian or Argentinian telecommunications markets.
In addition,
Š in compliance with the ANATEL Ruling, issued on October 23, 2007 and subsequently on July 7, 2009, in
2007 the Board of Directors of Telecom Italia adopted an ad hoc internal procedure aimed at assuring the
189

segregation of Telecom Italia’s activities in Brazil from any potential influence of Telefónica. This procedure
was subsequently amended and updated in September 2009 and in January 2012; on April 28, 2010, the
board of the Brazilian Antitrust Commission (CADE) approved the acquisition by Telco of an indirect minority
shareholding in Telecom Italia in 2007, subject to the simultaneous signing of an agreement, by and
between all the Telco shareholders—Mediobanca, Generali, Intesa Sanpaolo and Telefónica—and CADE,
which was aimed at maintaining the separation and independence of the Telefónica and Telecom Italia
groups in the business carried out in Brazil, preserving competition conditions in that market. Tim Brasil
executed such agreement exclusively as an intervening party, on behalf of the Telecom Italia Group since the
latter was not formally a party of the antitrust proceedings. As occurred for the measures imposed by Anatel,
the undertakings given to CADE were incorporated in a special internal procedure (as per a resolution by the
Board of Directors on May 6, 2010), amended in January 2012;
Š as a result of having reached an agreement with the Argentinean authorities, a further procedure was
introduced by the Board of Directors of Telecom Italia on November 4, 2010, taking into account the
undertakings by the Group toward Argentina’s CNDC to obtain approval of the transfer of 8% of Sofora S.A.
to Telecom Italia International N.V. These commitments were aimed at maintaining the separation and
independence of the Telefónica and Telecom Italia groups in the activities carried out in Argentina. Please
see “Item 7. Major Shareholders and Related Party Transactions 7.1.1. The Shareholders’ Agreement”.
See “Item 7. Major Shareholders and Related-Party Transactions—Item 7.1.1. The Shareholders’ Agreements”.
Internal Committees
According to article 13 of the Bylaws, the Board may set up committees from among its members charged with
giving advice and making proposals and shall establish their powers and duties. The Corporate Governance
Principles provide for three Committees: the Executive Committee, the Nomination and Remuneration Committee
and the Control and Risk Committee (formerly the Internal Control and Corporate Governance Committee).
With regard to the composition, while the Executive Committee consists of the Executive Directors (Executive
Chairman and Domestic Managing Director) and of non-executive directors, with the Chairman of the Committee
being the Chairman of the Board of Directors, both the Control and Risk Committee and the Nomination and
Remuneration Committee are composed of non-executive directors the majority of which are required to be
independent directors, including at least one drawn from a minority list.
Executive Committee
The Executive Committee is composed of the Executive Directors (who coordinate the Committee’s activity with
the management) and non-executive directors. The Committee’s Chair is entrusted to the Chairman of the Board
of Directors.
As per Telecom Italia’s Corporate Governance Principles the Committee is charged with monitoring the
performance of operations at Company and Group level, approving the executive directors’ proposals for macro
organizational arrangements, submitting opinions to the Board on the budget, strategic transactions and the
strategic, business and financial plans of the Company and the Group and performing any other tasks delegated
by the Board of Directors.
Control and Risk Committee
The Committee assists the Board of Directors in the performance of its tasks in matters concerning internal
control and assesses, together with the manager responsible for preparing the Company’s financial reports and
the external auditor, the correctness of the application of accounting standards and their uniformity for the
purpose of preparing consolidated financial statements.
In Telecom Italia the Committee also:
Š monitors compliance with the rules of corporate governance and their updating;
Š expresses its opinion on the proposals for appointing, removing and assigning duties to the person
responsible for internal control and the manager responsible for preparing the Company’s financial reports;
190

Š defines the procedures and time limit for conducting the “board performance evaluation”; and
Š performs the additional tasks that may be assigned to it by the board of directors.
Nomination and Remuneration Committee
The Committee is charged with putting forward proposals for the remuneration of the directors who hold
particular offices, division of the overall amount set forth by the Shareholders’ Meeting as the annual
remuneration for the Board as a whole and criteria for the remuneration of the Company’s senior management,
nomination of candidates for the Board of Directors in the event of replacement of an independent board member
and defining procedures and time limit for conducting the annual board performance evaluation.
For more information concerning the remuneration of directors and top management see “Item 6. Directors,
Senior Management and Employees—6.6 Compensation of Directors, Officers and Members of the Board of
Auditors”.
Internal Control System
The internal control system is a set of rules, procedures and organizational structures that, through a process of
identifying, measuring, managing and monitoring the main risks, allows the sound and fair operation of the
company in line with the pre-established objectives. As such this process is aimed at pursuing the values of both
procedural and substantial fairness, transparency and accountability, which are considered key factors for
managing Telecom Italia’s business, in compliance with the Code of Conduct and Ethics of the Group and the
Company’s Corporate Governance Principles. This process, constantly monitored with a view to progressive
improvement, is intended to ensure, in particular, the efficiency of company operations and entrepreneurial
conduct, its transparency and verifiability, the reliability of information and management and accounting data,
and compliance with applicable laws and regulations as well as the safeguarding of company integrity and its
assets, in order to prevent fraud against the Company and the financial markets.
The Board of Directors, insofar as it is responsible for the internal control system, sets the guidelines, verifying its
adequacy, effectiveness and proper functioning, so that the main company risks (operational, compliance-related,
economic and financial) are properly identified and managed over time.
In the exercise of its responsibility for the internal control system the Board benefits from the activities of the
Control and Risk Committee, but also of the Head of the Internal Audit Department, a manager who is given an
adequate level of independence and means suitable to perform this duty. The Head of the Audit Department
assesses the adequacy, full functioning and effectiveness of the control and risk management system and
consequently proposes corrective measures in case of anomalies and malfunctions.
In particular, in accordance with the provisions of the Corporate Governance Code of Borsa Italiana, the Head of
the Audit Department:
The Head of the Audit Department also has a role in ensuring respect of the principles and values expressed in the
Code of Ethics and Conduct, by handling reports from employees, collaborators, consultants, employers and third
parties in business relationships with the Group on violations of laws or regulations, of the Code itself, and of
internal procedures, as well as irregularities or negligence (including accounting), and promoting the most
appropriate resulting initiatives, including the proposal to impose sanctions.
The oversight role of the Head of Internal Audit is directed towards expressing an assessment in terms of
reasonable certainty about the capacity of the internal control system to impact on the actual achievement of the
objectives assigned to individual company structures (effectiveness profile), taking account of the rational use of
resources for their realization (efficiency profile) in the light of the (qualitative/quantitative) risk factors present
and the probability of their affecting the achievement of those objectives.
As regards internal controls over financial reporting, the Company has drawn on the substantial work done in
order to comply with US reporting requirements to fulfill the transparency requirements introduced by Article
154-bis of the Consolidated Law on Finance.
191

The Company’s internal control system is completed by the so-called 231 Organizational Model, which provides a
model of organization and management adopted pursuant to Italian Legislative Decree No. 231/2001, and is
aimed at preventing offences that can result in liability for the Company.
The 231 Organizational Model is subject to continuing improvement. Some revisions are made necessary by
changes in the law, while others are proposed when deemed appropriate in the light of the results of the model’s
application.
Monitoring of the functioning and compliance with the model as from May 2012 is performed by the Board of
Statutory Auditors (supported in its activities by appropriate offices within the Company) which oversees the
operation and observance of the Organizational Model and reports to the Board of Directors the checks it has
undertaken and their outcome.
The Organizational Model is a dynamic instrument, which affects the corporate operation and is constantly
updated in the light of feedback, as well as the evolution of the regulatory framework. The amendments are
drafted by a managerial committee called Steering Committee 231, briefed by the Board of Statutory Auditors
acting as Supervisory Panel and approved by the Board of Directors when of a significant nature.
The Organizational Model incorporates, in terms of application, the identified conduct of offences provided for in
Legislative Decree 231/2001, excluding those deemed not to be directly applicable for the Telecom Italia Group.
In January 2013, a new version of the Model was adopted that incorporated the new identified offences of
corruption between private entities and unlawful inducement to promise or give profit to a public official/public
service employee, introduced by Law 190 of 6/11/12. As well as adapting and updating the internal control
schemes based on the new offences, the new version of the Organizational Model 231 contains an explicit
reference to the fight against all forms of corruption and to the Anti-corruption Policy adopted by the Group on
December 1, 2012.
❖ Board of Auditors
Tasks and role
The Board of Auditors verifies compliance with the law and the Bylaws and verifies adherence to the best
administration principles, the adequacy and reliability of corporate structures, internal audit procedures and
accounting system, and the adequacy of instructions given by the Company to its subsidiaries. The Board of
Auditors must receive timely disclosures, at least on a quarterly basis, from the Board of Directors about the
company’s business and significant transactions performed by the company and its subsidiaries, including related
parties transactions. Statutory Auditors must inform the Consob of any irregularity they detect in the course of
their duties and are required to attend Shareholders’ Meetings, Board of Directors meetings and Executive
Committee meetings.
In addition to that, under the provisions of Legislative Decree 231/2001, Supervisory Panel functions have been
granted to the Board of Auditors.
During 2012, there were 39 meetings of the Board of Statutory Auditors (10 of which were held jointly with the
Control and Risk Committee). In addition, its members participated in the meetings of the Board of Directors and
the Executive Committee and periodically received the reports from the executive directors, as provided in the
above mentioned procedure.
Appointment
Telecom Italia’s Board of Auditors is composed of five regular auditors, and four alternate auditors. The Board of
Auditors is appointed by the Shareholders’ Meeting through the slate system under the same procedure used for
the election of the Board of Directors. Three regular auditors and two alternate auditor are drawn from the so
called “majority slate” (that is the slate that obtained the majority of the votes cast by the shareholders), two
regular auditors and two alternate auditors are taken from the other slates, so called “minority slates”.
An amendment to the Company’s bylaws was approved by the Shareholders’ Meeting on May 15, 2012 to the
effect that all slates that present three or more candidates should have a gender ratio of at least 1:3 among the
candidates (1:5 on the occasion of the first application). In case the vote on the slates does not fulfill the diversity
192

requirement in the composition of the Board, the appointment of the last of the persons elected from the majority
slate who are of the more represented gender will be forfeited, and they will be replaced with the first unelected
candidates of the less represented gender on the same slate, in the number needed to ensure the prescribed
gender balance. In any case, should the slate mechanism fail, the Shareholders’ Meeting retains the right to
appoint auditors by a subsequent vote, applying the legal majorities, so that the so-called gender diversity
requirement may in any event be ensured in the composition of the Board.
Pursuant to applicable Italian law, the Chairman of the Board of Auditors is appointed by the shareholders’
meeting from among the auditors elected from a “minority slate”.
Auditors serve for a three-year term, may be reappointed and may be removed from their office for just cause and
upon a resolution approved by the competent court.
The present Board of Auditors was elected, for a three year term, by the shareholders meeting of May 15, 2012,
on the basis of three slates presented respectively by Telco (presently Telecom Italia’s largest shareholder),
Findim (presently Telecom Italia’s second largest shareholder) and by a group of minority shareholders. Salvatore
Spiniello, Ferdinando Superti Furga and Gianluca Ponzellini were elected from the “majority slate”, while Enrico
Maria Bignami and Sabrina Bruno (which was subsequently replaced by Paolo Capone, appointed from the same
“minority slate”) were elected from the “minority slates”. Enrico Maria Bignami was also appointed as Chairman
of the Board.
Audit Committee
As described above, the Board of Auditors plays a key role in the Company’s system of corporate governance.
More specifically, according to Rule 10A-3 under the 1934 Act and NYSE listing standards, the Board of Auditors
has been identified to act as Telecom Italia’s Audit Committee. The Board of Auditors meets the requirements of
the general exemption contained in Rule 10A-3(c)(3):
Š the Board of Auditors is established pursuant to applicable Italian law and Telecom Italia’s Bylaws;
Š under Italian legal requirements, the Board of Auditors is separate from the Board of Directors;
Š the Board of Auditors is not elected by the management of the Company and no executive officer is a
member of the Board of Auditors;
Š all of the members of the Board of Auditors meet specific independence requirements from the
Company and its Group, the management and the auditing firm, as set forth by Italian legal provisions;
Š the Board of Auditors, in accordance with and to the extent permitted by Italian law, is responsible for
the appointment, retention (via proposal to the shareholders’ meeting) and oversight of the work of the
Company’s external auditors engaged for the purpose of issuing the audit report on the annual financial
statements;
Š the Board of Auditors is authorized to engage independent counsel and other advisers, as it deems
appropriate; and
Š the Board of Auditors has adopted a complaints procedure in accordance with Rule 10A-3 of the 1934
Act.
In view of its responsibilities under Italian law and the obligations deriving from US law, the Board of Auditors
adopted a complaints procedure for receiving, retaining and treating the “reports” it receives. Such reports can be
of the following kinds:
Š statements of violations submitted by shareholders concerning matters deemed to be improper;
Š complaints by any person, thus including non-shareholders, concerning alleged irregularities, improper
facts or, more generally, any problem or issue deemed to merit investigation by the control body;
Š complaints specifically regarding accounting, internal accounting controls, or auditing matters; and
Š confidential, possibly anonymous submissions of “concerns” by employees of the Company or the
Group regarding questionable accounting or auditing matters.
193

A short description of how such reports are to be submitted to the Board of Auditors/Audit Committee is available
on the Company’s website under “Governance”.
❖ Shareholders’ Meetings
Meetings of Ordinary Shareholders
Holders of Ordinary Shares are entitled to attend and vote at ordinary and extraordinary shareholders’ meetings.
At any Shareholders’ Meeting, each holder is entitled to cast one vote for each Ordinary Share held. Votes may be
cast personally or by proxy. According to the bylaws, the issuer may designate, for each Shareholders’ Meeting,
one or more representatives on whom those entitled to vote may confer a proxy free of charge. The person so
designated, and the necessary operating instructions, shall be stated in the notice calling the meeting. Holders of
Ordinary Shares can also vote by mail or through a proprietary, web based platform, if so specified in the notice of
the specific meeting and in the ways specified therein.
Shareholders’ Meetings are called by the Company’s Board of Directors when required by law or the shareholders
or deemed necessary.
Shareholders’ Meetings must be convened at least once a year. At these ordinary meetings, holders of Ordinary
Shares (i) approve the annual accounts, (ii) appoint/revoke directors and auditors and determine their
remuneration, when necessary, (iii) vote on other issues defined in the Bylaws, if any, (iv) authorize the
completion of the transactions by the directors, if and when the Bylaws call for such previous authorization, it
being understood that directors remain directly responsible for the transactions accomplished, and (v) adopt rules
of procedure for the shareholders’ meetings (Meeting Regulations).
Presently Telecom Italia’s Bylaws grant the ordinary Shareholders’ Meeting the power to authorise the execution
of transactions with parties related to the Company, as per the specific procedure governing related-party
transactions adopted by the Board of Directors on November 4, 2010 and subsequently amended. More
specifically, with respect to transactions of major importance, this procedure requires the approval by the Board
of Directors, subject to the prior approval of a Committee comprised of all the independent directors. In case this
Committee gives a negative opinion on interest and conditions of a transaction of major importance, and this
opinion is not superseded through a so called double majority at the meeting of the Board (a “general” majority,
of all the Directors at the meeting, and a “specific” one, of Independent Directors in non-related positions), in
order to be carried out the transaction of major importance, even if authorized by the Board, must be authorized
by the shareholders’ meeting. There it must obtain the favourable vote of the majority of the non-related
shareholders entitled to vote.
It is compulsory for issuers to publish their annual report within 120 days of the close of their fiscal year; if the
bylaws so provide (and this is the case in Telecom Italia), the approval by the annual general meeting can follow, but
in any event the annual general meeting must take place no later than 180 days after the end of the fiscal year.
Extraordinary Shareholders’ Meetings may be called to pass upon proposed amendments to the Bylaws, capital
increases, mergers, dissolutions, issuance of convertible debentures (which can also be delegated to the Board of
Directors), appointment of receivers and similar extraordinary actions.
As a rule shareholders are informed of all Shareholders’ Meetings to be held by publication of a notice at least
30 days (40 days in case of Shareholders’ Meetings convened to appoint corporate bodies) before the date fixed
for the meeting. The notice must be published (either in full or in extract form) in at least one national daily
newspaper, posted in the issuer’s internet site and filed with the Italian Stock Exchange and Consob. Telecom
Italia’s bylaws allow the Shareholders’ Meeting to be called either in a single call or with up to two meeting dates
for an ordinary Shareholders’ Meeting and up to three meeting dates for an extraordinary Shareholders’ Meeting.
When the meeting is convened in a single call—the quorums of second calls of ordinary Shareholders’ Meeting
and second calls of extraordinary Shareholders’ Meeting, as the case may be, apply.
An ordinary Shareholders’ Meeting is duly constituted on first call with the attendance of at least 50% of the
outstanding Ordinary Shares, while on second call there is no quorum requirement. In either case, resolutions are
approved by holders of the majority of the Ordinary Shares represented at the meeting.
194

Extraordinary Shareholders’ Meetings are duly constituted with the attendance of shareholders representing at
least one-half or more than one-third or at least one-fifth of the company’s ordinary share capital, on the first call,
second call and third call, respectively. The favorable vote of at least two-thirds of the Ordinary Shares
represented at the meeting is necessary for the resolution approval.
To attend and vote at any Shareholders’ Meeting, holding of shares on the record date (statutorily set at seven
trading days before the meeting) is the sole requirement, but to certify that an ad hoc communication by the
authorized intermediary must have been received by the Company.
Special arrangements with the Depositary may be required for the beneficial owner of ADRs representing ADSs to
attend Shareholders’ Meetings and exercise voting rights with respect to underlying Ordinary Shares. See
“—10.5 Description of American Depositary Receipts—Voting of Deposited Securities”.
Votes cast in the Shareholders’ Meeting are open, as the minutes of the meeting are required to evidence how
attending shareholders voted.
Shareholders may attend the meeting by proxy using a power of attorney. There is no limit to the number of
shareholders any one proxy can represent. A proxy may be appointed only for one single meeting (including,
however, the first, second and—in case of extraordinary meetings—third call) and may be substituted by the
person expressly indicated in the form or, if the proxy is so authorized, by the substitute the proxy appoints.
Votes by proxy may be solicited and collected for the shareholders’ meetings of listed companies. Proxy
solicitation provisions allow individuals (and even the issuer), to promote the soliciting of votes by proxy at
shareholders’ meetings. There is no ownership requirement to this end. Proxy solicitation is subject to specific
rules and disclosure requirements set forth by Consob.
In addition to that, shareholders associations composed of at least 50 people, each with no more than 0.1% voting
share capital, may collect proxies among their group, without any specific disclosure requirement. In order to
facilitate such operation among employee shareholders, the Bylaws provides that special measures will be made
available to such shareholders associations in order to facilitate dissemination of information about solicitation
and proxy collection operations.
Ordinary Shareholders may also vote by mail. The “vote by mail” cannot be cast by proxy. The system is
essentially based on the following principles: (a) the notice calling the shareholders’ meetings must specify that
shareholders can vote by mail and must describe the procedures they have to follow; (b) shareholders wishing to
vote by mail (to be duly entitled to vote through timely communication to the issuer, as described above) must
send the company a special form (so called ballot) made available for such purpose by the issuer, which has to
comply with specific Consob requirements; (c) votes cast by mail must be delivered to the company at least on
the day before the Shareholders’ Meeting takes place; and, finally, (d) votes cast by mail remain valid for the
second and third calls of the meeting and can be revoked by a written declaration until the day before the
meeting, or directly in the meeting through an ad-hoc statement by the interested party.
The Company’s bylaws provide that, if the notice of the meeting specifies it and in the ways described therein,
Ordinary Shareholders may also vote electronically, in advance of the meeting.
The shareholders’ meetings shall be called when requested by shareholders representing at least 5% of a
company’s share capital. In the case the directors or in their place the statutory auditors don’t call the
Shareholders Meeting, the Court orders with a decree the call of the Shareholders Meeting, after having heard the
directors and statutory auditors, if the refusal is unjustified. Shareholders are not allowed to present requests on
topics upon which the Shareholders Meeting resolves, pursuant to Italian law, on directors’ proposal or on a
project basis or on their reports only.
Shareholders representing at least 2.5% of the share capital may request, within ten days of the publication of the
notice convening the meeting, addition to the agenda of the shareholders meeting or presentation to the
shareholders meeting of alternative proposals for resolution on items already on the agenda. Added items and
alternative proposed resolutions on items already on the agenda, have to be disclosed in the same ways as the
notice calling the meeting, at least fifteen days prior to the date scheduled for the shareholders’ meeting.
195

Additions to the agenda and/or alternative proposed resolutions cannot be submitted for matters on which the
shareholders’ meeting is required by law to resolve on proposals put forward by the directors or on the basis of a
plan or report by the Board of Directors.
The Shareholders’ Meeting on May 6, 2004 adopted a set of Rules of Proceeding, which apply to both Ordinary
and Extraordinary meetings, which were amended by the shareholders’ Meeting of April 12, 2011. The current
version of the Rules is posted on the Company’s website under “Governance”.
Meetings of Savings Shareholders
Although holders of Savings Shares are not entitled to vote in meetings of holders of Ordinary Shares, they are
entitled to attend special meetings of holders of Savings Shares (“Special Meetings”) and to appoint a joint
representative (the “Joint Representative”) to represent them, with respect to the Company.
The Joint Representative, who is appointed by the Special Meeting or, in default, by the Court, is entitled (i) to
inspect certain corporate books of the Company, (ii) to attend the Shareholders’ Meetings and (iii) to challenge in
court the resolutions adopted by such meetings. The Joint Representative is appointed for a maximum three-year
term and, according to the Bylaws, is kept informed by the Company regarding corporate events that can affect
the price trend of Savings Shares. The Savings Shareholders Meeting held on May 28, 2010 appointed
Mr. Emanuele Rimini as joint Representative for a three year period which will expire with the Ordinary
Shareholders’ Meeting to be convened for approval of the Company’s financial statements for the year 2012.
Special Meetings of Savings Shareholders may be called when deemed necessary or upon request by Savings
Shareholders representing at least 1% of the outstanding Savings Shares either by the Joint Representative or by
the Company’s Board of Directors in order to (a) appoint and revoke the Joint Representative, (b) approve the
resolutions of the Shareholders’ Meetings that may affect the rights of Savings Shares, (c) set up an expense fund
for the coverage of costs incurred in protecting rights of the Savings Shareholders, (d) negotiate possible disputes
with the Company; and (e) resolve other issues relating to their position as holders of Savings Shares. To adopt
resolutions related to (a), (c) and (e) above, a favorable vote of at least 20% of the Savings Shares is required at
Special Meetings held on the first call, a favorable vote of at least 10% is required at Special Meetings held on the
second call, and a favorable vote of at least a majority of the Savings Shares present is required at Special
Meetings held on the third call. To adopt resolutions related to (b) and (d) above, a favorable vote of at least
20% of the Savings Shares is required at all calls of the Special Meetings.
To attend an vote at any Special Meeting, holding of Savings Shares on the record date (statutorily set at seven
trading days before the meeting) is the sole requirement, but to certify that, an ad hoc communication by an
authorized intermediary must have been received by the Company. Special arrangements with the Depositary may
be required for the beneficial owner of ADRs representing Savings Share ADSs to attend Special Meetings and
exercise voting rights with respect to underlying Savings Shares. See “—10.5 Description of American Depositary
Receipts—Voting of Deposited Securities”.
❖ Disclosure
Transparent relations with the financial markets, and the provision of accurate information are paramount for the
Telecom Italia Group.
A specific procedure (posted on the Company’s website under “Governance”) covers the handling—including the
public disclosure—of inside information concerning Telecom Italia, its unlisted subsidiaries and listed financial
instruments, and is addressed to all the members of the governing bodies, employees and outside consultants of
Group companies who have potential access to inside information. It also applies as an instruction to all
subsidiaries for the purpose of promptly obtaining the necessary information for timely and correct compliance
with public disclosure requirements.
With reference to the preparation of the financial statements for 2012, the procedures for the Preparation of the
Telecom Italia 2012 annual report for Italian purposes and Telecom Italia 2012 Form 20-F provide for specific
mechanisms of upward attestation by the people in charge of the various corporate structures involved in the
process of gathering and handling data and drafting the document. This is aimed at giving adequate assurance and
support to the senior officers, the Board of Auditors, the Control and Risk Committee and the Board of Directors as a
whole in fulfilling their responsibility for oversight of the accuracy and timeliness of required disclosures.
196

Item 10. Additional Information Exchange Controls And Other Limitations Affecting Security Holders
10.2 EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
Foreign Investment and Exchange Control Regulations in Italy
There are no exchange controls in Italy. Residents of Italy may hold foreign currency and foreign securities of any
kind, within and outside Italy. Non-residents may invest in Italian securities and may export cash, instruments of
credit and securities, in both foreign currency and euro, representing interest, dividends, other asset distributions
and the proceeds of dispositions without restriction other than those outlined below. There are no limitations on
the right of non-resident or foreign beneficial owners to vote their Shares except as provided for all Telecom Italia
shareholders by law. See “—10.4 Description of Capital Stock—Limitations on Voting and Shareholdings”.
Reporting and record-keeping requirements are contained in Italian legislation which implements an EU Directive
regarding the free movement of capital. Such legislation requires that transfers of cash or bearer bank or postal
passbooks or bearer instruments in euro or in foreign currency, effected for whatsoever reason between different
parties, shall be carried out by means of credit institutions and any other authorized intermediaries when the total
amount of the value to be transferred is equal to or more than 1,000 euros. The threshold referred to above also
applies when there is reason to believe that several transactions, effected at different times within a certain
period of time, constitute part of a single transaction, even if individually below the threshold amount specified.
Whenever the execution of such transactions leads to belief that there are irregularities in their performance, such
transactions shall be reported in writing to the Italian Central Bank which shall carry out necessary checks. Credit
institutions and other intermediaries effecting such transactions on behalf of residents or non-residents of Italy
are required to maintain records of such transactions for ten years, which may be inspected at any time by Italian
authorities. Non-compliance with the above may result, among others, in administrative fines or, criminal
penalties if the transactions fall within a case ruled by the criminal code. Certain additional procedural
requirements are imposed for tax reasons. Non-corporate residents of Italy effecting transfers to and from Italy in
excess of 10,000 euros in one year must disclose them in their annual income tax returns. Non-corporate
residents must also give details in their income tax returns of financial assets held outside Italy at the end of the
fiscal year and of transfers in excess of 10,000 euros to, from, within and between foreign countries in connection
with such assets during the fiscal year. No tax return is required in respect of foreign investments and foreign
income-earning assets that are exempt from income tax or subject to withholding tax in Italy. Such disclosure
requirements do not apply (i) if the total value of the investments and assets at the end of the taxable period or
the total amount of the transfers effected during the year is not greater than 10,000 euros or (ii) in respect of
foreign investments, foreign assets or transfers within the EU (except for transfer from or to Italy). For corporate
residents there is no requirement for such a declaration because their financial statements (on the basis of which
their tax returns are prepared) already contain the information.
There can be no assurance that the present regulatory environment in or outside Italy will endure or that
particular policies presently in effect will be maintained, although Italy is required to maintain certain regulations
and policies by virtue of its membership in the EU and other international organizations and its adherence to
various bilateral and multilateral international agreements.
197

Item 10. Additional Information Description Of Bylaws
10.3 DESCRIPTION OF BYLAWS
Object
Telecom Italia’s corporate purpose is described in Article 3 of the Bylaws and consists of:
Š to install and operate fixed or mobile equipment and installations for the purpose of providing and operating
telecommunications services and to carry out the activities directly or indirectly related thereto;
Š to hold interests in other businesses falling within the scope of the above stated corporate object or
otherwise related thereto; and
Š to control and provide the strategic, technical, administrative and financial coordination, overseeing and
managing the financial activities of controlled companies and businesses, and carrying out all transactions
related thereto.
Directors
There are no provisions in the Bylaws relating to: (1) the power of a director to vote on a proposal in which such
director is materially interested, (2) the power of a director to (in the absence of an independent quorum) vote
compensation to himself or any member of its body, (3) the power of a director to borrow money from the
Company, (4) the retirement of a director under an age limit requirement and (5) the number of shares required
for director’s qualification.
The Board of Directors grants specific positions to any of its members in compliance with the Bylaws of the
company; such positions include, among others, those of Chairman and Managing Director. According to Italian
law the remuneration corresponding to such positions is then defined by the Board of Directors in its discretion,
after acknowledging the opinion of the Board of Auditors.
There are no provisions in Italian law that govern the issue of directors borrowing money from the company and
that set age or shareholding requirements for director’s qualification.
Recent amendments
The shareholders’ meeting held on May, 15 2012 approved amendments to articles 9 and 17 of the Company
Bylaws (“gender quotas”) governing appointments to the Board of Directors and Statutory Board of Auditors to
ensure balance between the male and female members, as required by law.
198

Item 10. Additional Information Description of Capital Stock
10.4 DESCRIPTION OF CAPITAL STOCK
As of April 10, 2013, the subscribed and fully paid-up capital stock was equal to 10,693,628,019.25 euros divided
into 13,416,839,374 Ordinary Shares and 6,026,120,661 Savings Shares, each with a par value of 0.55 euros. On
March 7, 2013 the Board of Directors resolved to issue for cash up to 576,544 Ordinary Shares, to be offered to
the beneficiaries of the “2010-2015 Long-Term Incentive Plan” with a time limit for subscription set at April 30,
2013, providing that if the increase resolved is not fully subscribed within that time limits, the capital will be
increased by an amount equal to the subscriptions received up to such time. As of April 10, 2013 no such Ordinary
Share has been issued yet.
For five years starting from April 29, 2010 the Directors may increase the share capital as follows:
– to service the implementation of the “2010-2015 Long-Term Incentive Plan,” in the maximum amount of
5,000,000 euros by the allotment of the corresponding maximum amount of profits pursuant to Art. 2349 of
the Civil Code, by the issuance of the number of ordinary shares with a par value of Euro 0.55 each necessary
for the allotment of one bonus share for every share subscribed for cash by employee beneficiaries of the
“2010-2015 Long-Term Incentive Plan” within the time periods and under the terms and conditions provided
for therein.
For five years starting from April 12, 2011 the Directors may increase the share capital to service the “Long Term
Incentive Plan 2011” as follows, as approved by the Company Shareholders’ Meeting of that date:
– (i) for cash, by the issue of new ordinary shares of Euro 0.55 par value each, with regular dividend
entitlement, up to a maximum amount of 5,000,000 euros, excluding the right of pre-emption pursuant to
article 2441, subsection 8, of the Italian Civil Code, and of article 134, subsection 2, of legislative decree
no. 58/1998, to be reserved for some of the employees who are beneficiaries of the “Long Term Incentive
Plan 2011” as previously identified by the Board of Directors of the Company, and then, subsequently (ii) for
a maximum amount of 5,000,000 euros by allocation of the corresponding maximum amount of profits or
retained profits pursuant to article 2349 of the Italian Civil Code, by the issue of a sufficient number of
ordinary shares for the allocation of one free share for every paid share subscribed, as above, subject to the
terms and conditions and by the methods specified in the “Long Term Incentive Plan 2011”;
– up to a maximum amount of 5,500,000 euros by allocation of the corresponding maximum amount of profits
or retained profits pursuant to article 2349 of the Italian Civil Code, with the issue of ordinary shares
reserved to some of the employees who are beneficiaries of the “Long Term Incentive Plan 2011” as
previously identified by the Board of Directors of the Company, subject to the terms and conditions and by
the methods specified in the “Long Term Incentive Plan 2011”.
Regarding the increase in capital for cash, the Board of Directors shall establish the share issue price (inclusive of
the share premium) in accordance with the provisions of the “Long Term Incentive Plan 2011”, and shall also set
the period of time within which they may be subscribed, providing that, if the resolved increase should not be fully
subscribed within said period of time, the share capital shall be understood to have been increased by an amount
equal to the subscriptions received up until that date.
For five years starting from May 15, 2012 the Directors may increase the share capital to service the “Long Term
Incentive Plan 2012” as follows, as approved by the Company Shareholders’ Meeting of that date:
– (i) for cash, by the issue of new ordinary shares of Euro 0.55 par value each, with regular dividend
entitlement, up to a maximum amount of 5,500,000 euros, excluding the right of pre-emption pursuant to
article 2441, subsection 8, of the Italian Civil Code, and of article 134, subsection 2, of legislative decree
no. 58/1998, to be reserved for some of the employees who are beneficiaries of the “Long Term Incentive
Plan 2012” as previously identified by the Board of Directors of the Company, and then, subsequently (ii) for
a maximum amount of 5,500,000 euros by allocation of the corresponding maximum amount of profits or
retained profits pursuant to article 2349 of the Italian Civil Code, by the issue of a sufficient number of
ordinary shares for the allocation of one free share for every paid share subscribed, as above, subject to the
terms and conditions and by the methods specified in the “Long Term Incentive Plan 2012”;
– up to a maximum amount of 4,000,000 euros by allocation of the corresponding maximum amount of profits
or retained profits pursuant to article 2349 of the Italian Civil Code, with the issue of ordinary shares
199

reserved to some of the employees who are beneficiaries of the “Long Term Incentive Plan 2012” as
previously identified by the Board of Directors of the Company, subject to the terms and conditions and by
the methods specified in the “Long Term Incentive Plan 2012”.
Regarding the increase in capital for cash, the Board of Directors shall establish the share issue price (inclusive of
the share premium) in accordance with the provisions of the “Long Term Incentive Plan 2012”, and shall also set
the period of time within which they may be subscribed, providing that, if the resolved increase should not be fully
subscribed within said period of time, the share capital shall be understood to have been increased by an amount
equal to the subscriptions received up until that date.
For five years starting from April 8, 2009 the Directors may increase the share capital in one or more tranches by
up to a maximum total amount of 880,000,000 euros by means of cash issues, with or without a share premium,
of up to a maximum of 1,600,000,000 ordinary shares with a par value of €0.55 each:
(i) to be offered with the right of pre-emption to persons having entitlement; or, including just a part thereof,
(ii) to employees of Telecom Italia S.p.A. and its subsidiaries with the exclusion of the right of pre-emption
pursuant to the combined effects of the last paragraph of Article 2441 of the Civil Code and Article 134(2) of
Legislative Decree 58/1998.
Resolutions to increase the share capital adopted by the Board of Directors in exercising the powers attributed
above shall set the subscription price (including any premium) and a time limit for the subscription of the shares;
they may also provide, in the event that the increase approved is not fully subscribed within the time limit
established for each issue, for the capital to be increased by an amount equal to the subscriptions received up to
such time.
The Board of Directors may issue, in one or more tranches and for up to a maximum of five years from 8 April
2009, bonds convertible into ordinary shares to be offered with the right of pre-emption to persons having
entitlement up to a maximum nominal amount of 1,000,000,000 euros.
In connection with the new Employee Share Ownership Plan, the Shareholders’ Meeting to be held on May 15,
2012 will be asked to authorize the Board of Directors—by amending Article 5 of the Bylaws—to increase the
Company’s share capitalby issuing(i) up to 54,000,000 ordinary shares for cash at a 10% discount off the market
price, and in any case not below par value and (ii) up to a maximum amount of 18,000,000 ordinary shares by
allocation of profits or retained profits pursuant to article 2349 of the Italian Civil Code, to be granted according
to a ratio of one free bonus share for every three shares purchased, in case such shares are held for one year, and
providing the subscribers remain employees.
Classes of shares
According to Italian law, Savings Shares may not be issued for an amount which, including other preferred shares,
if any, exceeds one-half of the Company’s share capital.
Pursuant to Telecom Italia’s Bylaws any reduction in share capital made for the purpose of absorbing losses is
applied to the par value of the Ordinary Shares until they have been reduced to zero and only then is the par value
of the Savings Shares reduced. If, as a consequence of capital reduction, the Savings Shares exceed half of the
Company’s share capital, such excess must be eliminated within the following two years.
Form and Transfer
The Dematerialization Decree provides for the dematerialization of financial instruments publicly traded on
regulated markets, including treasury bonds.
As a result, Ordinary Shares and Savings Shares must be held with Monte Titoli. Most Italian banks, brokers and
securities dealers have securities accounts as participants with Monte Titoli, and beneficial owners of Ordinary
Shares and Savings Shares may hold their interests through special deposit accounts with any such participant.
The beneficial owners of Ordinary Shares and Savings Shares held with Monte Titoli may transfer their Ordinary
200

Shares, collect dividends and exercise other rights with respect to those shares through such accounts. Such
shares held by Monte Titoli are transferred between beneficial owners by appropriate instructions being given to
the relevant participants associated with Monte Titoli to debit the account with the bank of the vendor and to
credit the account with the bank of the purchaser.
Voting rights relating to Ordinary Shares and Savings Shares that have not been deposited with Monte Titoli may
be exercised only by depositing them with an authorized intermediary. The Company may act as an intermediary
for its own shares.
Each person owning a beneficial interest in Ordinary Shares and Savings Shares held through Euroclear or
Clearstream must rely on the procedures of Euroclear or Clearstream, respectively, and of institutions that have
accounts with Euroclear or Clearstream to exercise any rights of a holder of shares. Holders may request
Euroclear or Clearstream to transfer their Ordinary Shares and Savings Shares to an account of such holder with a
participant of Monte Titoli, in which case such holders may transfer their shares, collect dividends and exercise
other shareholder rights through that participant. Any such transfer through that participant is not subject to
Italian transfer tax if non-Italian parties are involved. See “—10.6 Taxation”.
Dividend Rights
Holders of Savings Shares are entitled each year to a distribution with respect to such year’s net income in the
amount up to 5% of the par value of their shares (so called privilege). If with respect to any year a lesser amount
is paid, the entitlement to payment of the shortfall is carried over for two successive years. In the event that
dividends are paid to holders of Ordinary Shares, holders of Savings Shares have a preferential right to receive a
dividend per share that is higher by 2% of its par value than the dividend per Ordinary Share (so called
enhancement).
In case the net income is insufficient, the Annual Ordinary Shareholders’ meeting is allowed to satisfy both the
aforementioned preferential rights (privilege and enhancement) by distributing reserves, when available.
Subscription Rights
New Ordinary Shares and/or Savings Shares may be issued pursuant to a resolution of holders of Ordinary Shares
at any extraordinary Shareholders’ Meeting.
Pursuant to Italian law, shareholders (including holders of Savings Shares) are entitled to subscribe for new issues
of Ordinary Shares and/or Savings Shares, debentures convertible into Ordinary Shares and/or Savings Shares
and rights to subscribe for Ordinary Shares and/or Savings Shares in proportion to their respective shareholdings.
Nevertheless, subject to certain conditions principally designed to prevent dilution of the rights of shareholders,
subscription rights may be waived or limited by resolutions taken by the extraordinary Shareholders’ Meeting. On
the other hand, according to the Bylaws the subscription rights can be excluded by the extraordinary
Shareholders’ Meeting in the amount of 10% of the pre-existent share capital with no special quorum or disclosure
requirement, on condition that the subscription price is equal to the shares market price and this is confirmed in
the proper independent auditors’ report.
Shareholders can adopt a resolution, at an extraordinary Shareholders’ Meeting, to convert available reserves into
additional share capital. In such case, either the par value of all outstanding shares is identically raised or the
shares resulting from the increase in share capital are allocated to the shareholders in proportion to their
ownership before the increase without further contribution or payment from the shareholder.
Liquidation Rights
Subject to the satisfaction of all other creditors, holders of Ordinary Shares are entitled to a distribution in
liquidation.
Holders of Savings Shares and preferred shares, if any, are entitled to a preferred right to distribution from
liquidation up to their par value. No liquidation dividend is payable to the holders of other classes of shares until
201

such preferential right has been satisfied in full. Thereafter, in case of surplus assets, holders of all classes of
shares rank equally in the distribution of such surplus assets. Shares rank pari passu among themselves in a
liquidation.
Purchase of Ordinary Shares or Savings Shares by the Company
The Company may purchase its own Ordinary Shares or Savings Shares subject to certain conditions and
limitations. Such purchases must be authorized by a Shareholders’ Meeting and made only out of retained
earnings or distributable reserves as shown on the most recent financial statements approved by the
Shareholders’ Meeting. The par value of the Ordinary Shares or Savings Shares purchased by the Company,
including the Ordinary Shares or Savings Shares, if any, held by the Company’s subsidiaries, may not exceed 10%
of the Company’s share capital. The Company may purchase its own Ordinary Shares or Savings Shares:
Š by means of a tender offer;
Š on regulated markets in accordance with trading methods laid down in the market rules, that do not
permit the direct matching of buy orders with predetermined sell orders;
Š by means of the purchase and sale of derivative instruments traded on regulated markets that provide
for the delivery of the underlying shares, provided the market rules lay down methods for the purchase
and sale of such instruments that (i) do not permit the direct matching of buy orders with
predetermined sell orders and (ii) ensure the easy participation of investors in the trading of such
derivative instruments used for buybacks;
Š by granting shareholders, in relation to the shares they hold, a put option to be exercised within a
period established by the shareholders’ meeting authorizing the share purchase programme.
Before entering into transactions aimed at the purchase of its own shares other than by means of a tender offer
(which in Italy is governed by specific disclosure requirements), the Company must disclose to the public all the
details of the share purchase programme.
Ordinary Shares or Savings Shares purchased and held by the Company or one of its subsidiaries may be disposed
of only pursuant to a resolution of the Company’s or, if applicable, its subsidiary’s shareholders’ meeting.
As a rule, neither the Company nor any company under its control may vote or subscribe for new Ordinary Shares
or Savings Shares of the Company, but the shareholders’ meeting may authorize the exercise of subscription
rights. If no such authorization is granted, the subscription rights accrue to the other holders so long as such
Ordinary Shares or Savings Shares are held by the Company or a company under its control. The Ordinary Shares
or the Savings Shares, as long as they are owned by the Company, are not entitled to receive dividends.
As of April 10, 2013, Telecom Italia owns 37,672,014 of its own Ordinary Shares, while the subsidiary Telecom
Italia Finance S.A. holds another 124,544,373 Ordinary Shares, for a total of 1.21% of capital with voting rights.
In October 2012 the authorization to purchase Telecom Italia S.p.A. savings shares within a maximum
expenditure limit of Euro 800,000,000, as per the resolution of the Shareholders’ Meeting held on April 12, 2011,
expired.
Reporting Requirements and Restrictions on Acquisitions of Shares
Pursuant to Italian securities regulations any acquisition or sale of an interest in excess of 2%, 5%, 10%, 15%, 20%,
25%, 30%, 50%, 66.6%, 90% and 95% in the voting shares of a listed company, must be notified to the listed
company and to Consob within five trading days (defined as days on which Borsa Italiana is open) following the
acquisition or sale. Consob must make such information public within three trading days from the notification.
For the purpose of the aforementioned disclosure obligations, shares of which a party is the principal, even if the
voting rights are due or assigned to third parties or suspended, are considered as investments. Shares in relation
to which a party is assigned or due voting rights are also considered investments where one of the following
criteria or a combination of such, is met: (i) voting rights due as pledgee or usufructuary; (ii) voting rights due as
depositary or third party account holder, as long as this right can be exercised at discretion; (iii) voting rights due
202

by virtue of power of attorney, as long as the right can be exercised at discretion with no specific instructions by
the delegating party; (iv) voting rights due on the basis of an agreement envisaging the provisional, paid transfer
of it.
The disclosure obligations envisaged above shall also apply to the treasury shares held directly or via subsidiary
companies. In the event of shares subject to security lending or contango transactions, the disclosure obligation
is both the lender or the contango payer’s and the borrower or the contango broker’s. For the same disclosure
obligation, shall also be included both the shares owned by nominees, trustees or subsidiary companies and the
shares of which the voting rights belong or are assigned to such persons.
Shareholder agreements concerning the voting shares of a listed company must be notified to Consob, published
in abridged form in the daily press and filed with the Company Register of the place where the company has its
registered office if they provide for duties of consultation before voting, set limits on the transfer or provide for
the purchase of the relevant shares, have as their object or effect the exercise of a dominant influence on the
company, aim to encourage or frustrate a takeover bid or equity swap, including commitments relating to non-
participation in a takeover bid. The same rule applies when the shareholder agreements concern the shares issued
by a non-listed company that controls a listed company. The notification must include the share ownership of all
parties filing it.
When listed companies change their share capital, they must notify Consob and Borsa Italiana of the amount of
the share capital and the number and classes of shares into which it is divided. Consob and Borsa Italiana must
make the information available to the public no later than the day following the notification. The notification shall
be made no later than the day following the event causing such modification or the day following the filing of the
amended Bylaws.
In accordance with Italian antitrust laws and regulations, the Antitrust Authority is required to prohibit
acquisitions of sole or joint control over a company that would create or strengthen a dominant position in the
domestic market or a significant part thereof. However, if the acquiring party and the company to be acquired
operate in more than one Member State of the EU and exceed certain revenue thresholds, the antitrust approval
of the acquisition falls within the exclusive jurisdiction of the European Commission. See “Item 4. Information on
the Telecom Italia Group—4.3 Regulation”.
Limitations on Voting and Shareholdings
There are no limitations imposed by Italian law or by the Bylaws of Telecom Italia on the rights of non-residents
of Italy or foreign persons to hold or vote the Shares other than those limitations resulting from the special
powers of the State, which apply equally to all owners of Shares, Italian and foreign alike.
203

Item 10. Additional Information Description Of American Depositary Receipts
10.5 DESCRIPTION OF AMERICAN DEPOSITARY RECEIPTS
Following the Merger, Olivetti as the surviving company changed its name to “Telecom Italia S.p.A.”, succeeded
to the Exchange Act registration of Old Telecom Italia and became subject to the foreign private issuer reporting
requirements of the Exchange Act. Telecom Italia completed the listing of its Ordinary Share American Depositary
Shares and Savings Share American Depositary Shares on the New York Stock Exchange. Telecom Italia has
entered into two Deposit Agreements among the Company, JPMorgan Chase Bank, as depositary, and the
registered Holders from time to time of ADRs issued thereunder. The first such Deposit Agreement, dated as of
July 17, 2003, provides for the deposit of Ordinary Shares in registered form, par value 0.55 euros each and the
issuance of the Ordinary Share ADSs; the second such Deposit Agreement, also dated as of July 17, 2003 provides
for the deposit of Savings Shares in registered form, par value 0.55 euros each and the issuance of the Savings
Share ADSs. Because these agreements are otherwise substantially identical, such agreements (including all
exhibits and amendments thereto) are referred to herein as the “Deposit Agreement”, deposited Shares as well as
deposited Savings Shares are referred to as “Shares”, and the Ordinary Share ADSs or Savings Share ADSs, as the
case may be, are referred to as the “ADSs”. The following is a summary of the material provisions of the Deposit
Agreement. This summary does not purport to be complete and is qualified in its entirety by reference to the
Deposit Agreement. Copies of the Deposit Agreement are available for inspection at the principal office of the
Depositary in New York (the “Principal New York Office”), which is presently located at 4 New York Plaza,
New York, New York 10004. Terms used herein and not otherwise defined shall have the respective meanings set
forth in the Deposit Agreement.
ADRs evidencing ADSs are issuable by the Depositary pursuant to the terms of the Deposit Agreement. Each ADS
represents, as of the date hereof, the right to receive 10 Ordinary Shares (in the case of each Ordinary Share ADS)
or 10 Savings Shares (in the case of each Savings Share ADS) in each case deposited under the Deposit
Agreement (together with any additional Ordinary Shares deposited thereunder and all other securities, property
and cash received and held thereunder at any time in respect of or in lieu of such deposited Ordinary Shares, the
“Deposited Securities”) with the Custodian, currently the Milan office of BNP Paribas (together with any successor
or successors thereto, the “Custodian”). An ADR may evidence any number of ADSs. Only persons in whose
names ADRs are registered on the books of the Depositary will be treated by the Depositary and the Company as
Holders.
Deposit, Issuance, Transfer and Withdrawal
In connection with the deposit of Ordinary Shares under the Deposit Agreement, the Depositary or the Custodian
may require the following in form satisfactory to it: (a) a written order directing the Depositary to issue or execute
and deliver to, or upon the written order of, the person or persons designated in such order an ADR or ADRs
evidencing the number of ADSs representing such Deposited Securities (a “Delivery Order”); (b) proper
endorsements or duly executed instruments of transfer in respect of such Deposited Securities; and
(c) instruments assigning to the Custodian or its nominee any distribution on or in respect of such Deposited
Securities until the Ordinary Shares are registered in the name required by the Depositary or indemnity therefore.
As soon as practicable after the Custodian receives Deposited Securities pursuant to any such deposit or pursuant
to any distribution upon Deposited Securities or change affecting Deposited Securities, the Custodian shall
present such Deposited Securities for registration of transfer into the name of the Custodian or its nominee, to
the extent such registration is practicable, at the cost and expense of the person making such deposit (or for
whose benefit such deposit is made) and shall obtain evidence satisfactory to it of such registration. Deposited
Securities shall be held by the Custodian for the account and to the order of the Depositary at such place or places
and in such manner as the Depositary shall determine. The Depositary agrees to instruct the Custodian to place all
Ordinary Shares accepted for deposit into a segregated account separate from any Ordinary Shares of the
Company that may be held by such Custodian under any other depositary receipt facility relating to the Ordinary
Shares. Deposited Securities may be delivered by the Custodian to any person only under the circumstances
expressly contemplated in the Deposit Agreement. To the extent that the provisions of or governing the Shares
make delivery of certificates therefore impracticable, Ordinary Shares may be deposited by such delivery thereof
as the Depositary or the Custodian may reasonably accept, including, without limitation, by causing them to be
credited to an account maintained by the Custodian for such purpose with the Company or an accredited
intermediary, such as a bank, acting as a registrar for the Ordinary Shares, together with delivery of the
documents, payments and Delivery Order referred to herein to the Custodian or the Depositary. Neither the
Depositary nor the Custodian shall lend Deposited Securities.
204

After any such deposit of Ordinary Shares, the Custodian shall notify the Depositary of such deposit and of the
information contained in any related Delivery Order by letter, first class airmail postage prepaid, or, at the
request, risk and expense of the person making the deposit, by cable, telex or facsimile transmission. After
receiving such notice from the Custodian (or such other evidence as the Company may accept), the Depositary,
subject to the Deposit Agreement, shall properly issue or execute and deliver, as the case may be at the transfer
office of the Depositary (the “Transfer Office”), to or upon the order of any person named in such notice, an ADR
or ADRs registered as requested and evidencing the aggregate ADSs to which such person is entitled. ADSs may
be issued in certificated form or through the direct registration system utilized by the Depositary pursuant to
which the Depositary may record the ownership of ADRs without the issuance of a certificate, which ownership
shall be evidenced by periodic statements issued by the Depositary to the Holders entitled thereto.
Subject to the terms of the Deposit Agreement, the Depositary may so issue ADRs for delivery at the Transfer
Office only against deposit with the Custodian of: (a) Ordinary Shares in form satisfactory to the Custodian;
(b) rights to receive Ordinary Shares from the Company or any registrar, transfer agent, clearing agent or other
entity recording Share ownership or transactions; or (c) other rights to receive Shares (until such Shares are
actually deposited pursuant to (a) or (b) above, “Pre-released ADRs”) only if (i) Pre-released ADRs are fully
collateralized (marked to market daily) with cash or U.S. government securities held by the Depositary for the
benefit of Holders (but such collateral shall not constitute Deposited Securities), (ii) each recipient of Pre-released
ADRs agrees in writing with the Depositary that such recipient (a) owns such Shares, (b) assigns all beneficial
right, title and interest therein to the Depositary, (c) holds such Shares for the account of the Depositary and
(d) will deliver such Shares to the Custodian as soon as practicable and promptly upon demand therefore and
(iii) all Pre-released ADRs evidence not more than 20% of all ADSs (excluding those evidenced by Pre-released
ADRs) provided; however, that the Depositary reserves the right to change or disregard such limit from time to
time as it deems appropriate. The Depositary may retain for its own account any earnings on collateral for Pre-
released ADRs and its charges for issuance thereof. At the request, risk and expense of the person depositing
Shares, the Depositary may accept deposits for forwarding to the Custodian and may deliver ADRs at a place other
than its office. Shares or evidence of rights to receive Shares may be deposited through (x) electronic transfer of
such Shares to the account maintained by the Custodian for such purpose at Monte Titoli S.p.A., (y) evidence
satisfactory to the Custodian of irrevocable instructions to cause such Shares to be transferred to such account or
(z) delivery of the certificates representing such Shares. If use of the Monte Titoli book-entry system in
connection with the Shares is discontinued at any time for any reason, the Company shall make other book-entry
arrangements (if any) that it determines, after consultation with the Depositary, are reasonable. Every person
depositing Shares under the Deposit Agreement represents and warrants that such Shares are validly issued and
outstanding, fully paid, non assessable and free of pre-emptive rights, that the person making such deposit is duly
authorized so to do and that such Shares (A) are not “restricted securities” as such term is defined in Rule 144
under the Securities Act of 1933 unless at the time of deposit they may be freely transferred in accordance with
Rule 144(k) and may otherwise be offered and sold freely in the United States or (B) have been registered under
the Securities Act of 1933. Such representations and warranties shall survive the deposit of Shares and issuance
of ADRs.
Subject to the terms and conditions of the Deposit Agreement, upon surrender of (i) a certificated ADR in form
satisfactory to the Depositary at the Transfer Office or (ii) proper instructions and documentation in the case of a
Direct Registration ADR, the Holder is entitled to delivery at the Custodian’s office of the Deposited Securities at
the time represented by the ADSs evidenced thereby. At the request, risk and expense of the Holder of an ADR,
the Depositary may deliver such Deposited Securities at such other place as may have been requested by the
Holder.
Distributions on Deposited Securities
Subject to the terms and conditions of the Deposit Agreement, to the extent practicable, the Depositary will
distribute to each Holder entitled thereto on the record date set by the Depositary therefore at such Holder’s
address shown on the ADR Register, in proportion to the number of Deposited Securities (on which the following
distributions on Deposited Securities are received by the Custodian) represented by ADSs evidenced by such
Holder’s ADRs:
Š Cash. Any U.S. dollars available to the Depositary resulting from a cash dividend or other cash
distribution or authorized portion thereof (“Cash”), on an averaged, if possible, or other practicable
205

basis, subject to appropriate adjustments for (i) taxes withheld, (ii) such distribution being
impermissible or impracticable with respect to certain Holders, and (iii) deduction of the Depositary’s
expenses in (1) converting any foreign currency to U.S. dollars by sale or in such other manner as the
Depositary may determine to the extent that it determines that such conversion may be made on a
reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as
the Depositary may determine to the extent that it determines that such transfer may be made on a
reasonable basis, (3) obtaining any approval or license of any governmental authority required for such
conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and
(4) making any sale by public or private means in any commercially reasonable manner.
Š Shares. (i) Additional ADRs evidencing whole ADSs representing any Shares available to the
Depositary resulting from a dividend or free distribution on Deposited Securities consisting of Shares (a
“Share Distribution”) and (ii) U.S. dollars available to it resulting from the net proceeds of sales of
Shares received in a Share Distribution, which Shares would give rise to fractional ADSs if additional
ADRs were issued therefore, as in the case of Cash.
Š Rights. (i) Warrants or other instruments in the discretion of the Depositary after consultation with
the Company, to the extent practicable, representing rights to acquire additional ADRs in respect of any
rights to subscribe for additional Shares or rights of any nature available to the Depositary as a result of
a distribution on Deposited Securities (“Rights”), to the extent that the Company timely furnishes to the
Depositary evidence satisfactory to the Depositary that the Depositary may lawfully distribute the same
(the Company has no obligation to so furnish such evidence), or (ii) to the extent the Company does not
so furnish such evidence and sales of Rights are practicable, any U.S. dollars available to the Depositary
from the net proceeds of sales of Rights as in the case of Cash, or (iii) to the extent the Company does
not so furnish such evidence and such sales cannot practicably be accomplished by reason of the non-
transferability of the Rights, limited markets therefore, their short duration or otherwise, nothing (and
any Rights may lapse).
Š Other Distributions. (i) Securities or property available to the Depositary resulting from any
distribution on Deposited Securities other than Cash, Share Distributions and Rights (“Other
Distributions”), by any means that the Depositary may deem equitable and practicable, or (ii) to the
extent the Depositary deems distribution of such securities or property not to be equitable and
practicable, any U.S. dollars available to the Depositary from the net proceeds of sales of Other
Distributions as in the case of Cash. Such U.S. dollars available will be distributed by checks drawn on a
bank in the United States for whole dollars and cents (any fractional cents being withheld without
liability for interest and added to future Cash distributions).
To the extent that the Depositary determines in its discretion that any distribution is not practicable with respect
to any Holder, the Depositary, after consultation with the Company, may make such distribution as it so deems
practicable, including the distribution of foreign currency, securities or property (or appropriate documents
evidencing the right to receive foreign currency, securities or property) or the retention thereof as Deposited
Securities with respect to such Holder’s ADRs (without liability for interest thereon or the investment thereof).
There can be no assurance that the Depositary will be able to effect any currency conversion or to sell or
otherwise dispose of any distributed or offered property, subscription or other rights, Shares or other securities in
a timely manner or at a specified rate or price, as the case may be.
Disclosure of Interests
To the extent that the provisions of or governing any Deposited Securities may require disclosure of or impose
limits on beneficial or other ownership of Deposited Securities, other Shares and other securities and may provide
for blocking transfer, voting or other rights to enforce such disclosure or limits, Holders and all persons holding
ADRs agree to comply with all such disclosure requirements and ownership limitations and to cooperate with the
Depositary in the Depositary’s compliance with any Company instructions in respect thereof, and the Depositary
will use reasonable efforts to comply with such Company instructions.
206

Record Dates
The Depositary shall, to the extent necessary, after consultation with the Company, if practicable, fix a record date
(which shall be as near as practicable to any corresponding record date set by the Company) for the
determination of the Holders who shall be entitled to receive any distribution on or in respect of Deposited
Securities, to give instructions for the exercise of any voting rights, to receive any notice or to act in respect of
other matters and only such Holders at the close of business on such record date shall be so entitled.
Voting of Deposited Securities
Upon receipt of notice of any meeting or solicitation of consents or proxies of holders of Shares the Depositary
will, unless otherwise instructed by the Company, promptly thereafter, distribute to all Holders a notice containing
(i) the information (or a summary thereof) included in any such notice received by the Depositary, including the
agenda for the meeting, (ii) a statement that the Holders as of the close of business on a specified record date will
be entitled, subject to applicable provisions of Italian law and of the Company’s Certificate of Incorporation and
Bylaws (any such provisions, if material, will be summarized in such notice), to instruct the Depositary as to the
exercise of voting rights, if any (subject to compliance by such Holder with the requirements described below)
pertaining to the number of Shares represented by their respective ADSs, (iii) if applicable, a statement as to the
manner in which such Holders may request a proper communication to the issuer attesting that beneficial
ownership of the related Shares is in the name of the Holders and therefore enabling them to exercise voting
rights with respect to the Shares represented by their ADSs without the use of ADS proxy cards, (iv) if applicable,
an ADS proxy card pursuant to which such Holder may appoint the Depositary (with power of substitution) as his
or her proxy to vote at such meeting in accordance with the directions set out in such ADS proxy card, and
(v) such other information, including any such modification to the foregoing procedures as agreed between the
Depositary and the Company.
Upon receipt by the Depositary of a properly completed ADS proxy card, on or before the date set by the
Depositary for such purpose, the Depositary will attempt, insofar as practicable and permitted under any
applicable provisions of Italian law and the Company’s Certificate of Incorporation and Bylaws, to vote or cause to
be voted the Shares underlying such ADRs in accordance with any nondiscretionary instructions set forth in such
ADS proxy card. The Depositary will not vote or attempt to exercise the right to vote that attaches to Shares
underlying such ADRs other than in accordance with such instructions.
A Holder desiring to exercise voting rights with respect to the Shares represented by its ADSs without the use of
an ADS proxy card may do so by (A) depositing its ADRs in a blocked account with the Depositary until the
completion of such meeting and (B) instructing the Depositary to (x) furnish the Custodian with the name and
address of such Holder, the number of ADSs represented by ADRs held by such Holder and any other information
required in accordance with Italian law or the Company’s Certificate of Incorporation and Bylaws, (y) notify the
Custodian of such deposit, and (z) instruct the Custodian to issue a communication for such meeting, which gives
notice to the Company of such Holder’s intention to vote the Shares underlying its ADRs. By giving the
instructions set forth under point (B) above, Holders will be deemed to have authorized the Custodian to prohibit
any transfers of the related Shares for the blocked period.
A precondition for the issue of the communication for a specific meeting by the Custodian may be that beneficial
ownership of the related Shares has been in the name of the Holder for a specific number of days prior to the date
of the meeting according to applicable provisions (if any) of Italian laws and regulations and/or applicable
provisions (if any) of the Company’s Certificate of Incorporation and Bylaws.
Under Italian law, shareholders at shareholders’ meetings may modify the resolutions presented for their approval
by the Board of Directors. In such case Holders who have given prior instructions to vote on such resolutions, and
whose instructions do not provide for the case of amendments or additions to such resolutions, will be deemed to
have elected to have abstained from voting on any such revised resolution.
When the Company makes its annual accounts available at its offices in connection with a general meeting of
shareholders at which a vote will be taken on such accounts, the Company will deliver to the Depositary and the
Custodian copies of such accounts. Until such meeting, the Depositary will make available copies of such accounts
for inspection at the office of the Depositary in New York (the “Transfer Office”), the office of the Custodian in
Milan, Italy and any other designated transfer offices.
207

In the Deposit Agreement, the Depositary and the Company agree to use reasonable efforts to make and maintain
arrangements (in addition to or in substitution of the arrangements described in this paragraph) to enable Holders
to vote the Shares underlying their ADRs.
Inspection of Transfer Books
The Deposit Agreement provides that the Depositary or its agent will keep books at its Transfer Office for the
registration, registration of transfer, combination and split-up of ADRs, and, in the case of Direct Registration
ADRs, shall include the Direct Registration System which at all reasonable times will be open for inspection by the
Holders and the Company for the purpose of communicating with Holders in the interest of the business of the
Company or a matter relating to the Deposit Agreement.
Reports and Other Communications
The Deposit Agreement, the provisions of or governing Deposited Securities and any written communications
from the Company, which are both received by the Custodian or its nominee as a holder of Deposited Securities
and made generally available to the holders of Deposited Securities, are available for inspection by Holders at the
offices of the Depositary and the Custodian and at the Transfer Office. The Depositary will mail copies of such
communications (or English translations or summaries thereof) to Holders when furnished by the Company.
On or before the first date on which the Company makes any communication generally available to holders of
Deposited Securities or any securities regulatory authority or stock exchange, by publication or otherwise, the
Company shall transmit to the Depositary a copy thereof in English or with an English translation or summary. The
Company has delivered to the Depositary and the Custodian, a copy of all provisions of or governing the Shares
(other than copies of Italian law) and any other Deposited Securities issued by the Company or any affiliate of the
Company, if any, and, promptly upon any change thereto, the Company shall deliver to the Depositary and
Custodian, a copy (in English or with an English translation) of such provisions (other than copies of Italian law)
as so changed.
Changes Affecting Deposited Securities
Subject to the terms of the Deposit Agreement and the ADRs, the Depositary may, in its discretion, amend the
ADRs or distribute additional or amended ADRs (with or without calling ADRs for exchange) or cash, securities or
property on the record date set by the Depositary therefore to reflect any change in par value, split-up,
consolidation, cancellation or other reclassification of Deposited Securities, any Share Distribution or Other
Distribution not distributed to Holders or any cash, securities or property available to the Depositary in respect of
Deposited Securities from (and the Depositary is hereby authorized to surrender any Deposited Securities to any
person and to sell by public or private sale any property received in connection with) any recapitalization,
reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all the
assets of the Company, and to the extent the Depositary does not so amend the ADRs or make a distribution to
Holders to reflect any of the foregoing, or the net proceeds thereof, whatever cash, securities or property results
from any of the foregoing shall constitute Deposited Securities and each ADS evidenced by ADRs shall
automatically represent its pro rata interest in the Deposited Securities as then constituted.
Amendment and Termination of Deposit Agreement
The ADRs and the Deposit Agreement may be amended by the Company and the Depositary, provided that any
amendment that imposes or increases any fees or charges (other than stock transfer or other taxes and other
governmental charges, transfer or registration fees, cable, telex or facsimile transmission costs, delivery costs or
other such expenses), or that shall otherwise prejudice any substantial existing right of Holders, shall become
effective 30 days after notice of such amendment shall have been given to the Holders. Every Holder of an ADR at
the time any amendment to the Deposit Agreement so becomes effective shall be deemed, by continuing to hold
such ADR, to consent and agree to such amendment and to be bound by the Deposit Agreement and the ADRs as
amended thereby. In no event shall any amendment impair the right of the Holder of any ADR to surrender such
ADR and receive the Deposited Securities represented thereby, except in order to comply with mandatory
provisions of applicable law. Any amendments or supplements which (i) are reasonably necessary (as agreed by
208

the Company and the Depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act
of 1933 or (b) the ADSs or Shares to be traded solely in electronic book-entry form and (ii) do not in either such
case impose or increase any fees or charges to be borne by Holders, shall be deemed not to prejudice any
substantial rights of Holders. Notwithstanding the foregoing, if any governmental body should adopt new laws,
rules or regulations which would require amendment or supplement of the Deposit Agreement or the form of ADR
to ensure compliance therewith, the Company and the Depositary may amend or supplement the Deposit
Agreement and the ADR at any time in accordance with such changed rules. Such amendment or supplement to
the Deposit Agreement in such circumstances may become effective before a notice of such amendment or
supplement is given to Holders or within any other period of time as required for compliance.
Upon any resignation of the Depositary which does not become effective during the earlier of (i) 90 days from the
date of the Depositary shall have resigned as such and (ii) the date on which the Company shall have appointed a
successor depositary or on any removal of the Depositary pursuant to the Deposit Agreement, the Depositary
may, and shall at the written direction of the Company, terminate the Deposit Agreement and this ADR by mailing
notice of such termination to the Holders at least 30 days prior to the date fixed in such notice for such
termination. After the date so fixed for termination, the Depositary and its agents will perform no further acts
under the Deposit Agreement and this ADR, except to receive and hold (or sell) distributions on Deposited
Securities and deliver Deposited Securities being withdrawn. As soon as practicable after the expiration of six
months from the date so fixed for termination, the Depositary shall sell the Deposited Securities and shall
thereafter (as long as it may lawfully do so) hold in a segregated account the net proceeds of such sales, together
with any other cash then held by it under the Deposit Agreement, without liability for interest, in trust for the pro
rata benefit of the Holders of ADRs not theretofore surrendered. After making such sale, the Depositary shall be
discharged from all obligations in respect of the Deposit Agreement and this ADR, except to account for such net
proceeds and other cash. After the date so fixed for termination, the Company shall be discharged from all
obligations under the Deposit Agreement except for its obligations to the Depositary and its agents.
Charges of Depositary
The Depositary may charge each person to whom ADSs are issued against deposits of Shares, including deposits
in respect of Share Distributions, Rights and Other Distributions, and each person surrendering ADSs for
withdrawal of Deposited Securities, U.S.$5.00 for each 100 ADSs (or portion thereof) delivered or surrendered.
The Depositary may sell (by public or private sale) sufficient securities and property received in respect of Share
Distributions, Rights and Other Distributions prior to such deposit to pay such charge. In addition, the Depositary
may charge Holders, a fee for the distribution of securities, such fee being in an amount equal to the fee for the
execution and delivery of ADSs referred to above which would have been charged as a result of the deposit of
such securities (for purposes hereof treating all such securities as if they were Shares) but which securities or the
net cash proceeds from the sale thereof are instead distributed by the Depositary to Holders entitled thereto. The
Company will pay all other charges and expenses of the Depositary and any agent of the Depositary (except the
Custodian) pursuant to agreements from time to time between the Company and the Depositary, except (i) stock
transfer or other taxes and other governmental charges (which are payable by Holders or persons depositing
Shares), (ii) cable, telex and facsimile transmission and delivery charges incurred at the request of persons
depositing, or Holders delivering Shares, ADRs or Deposited Securities (which are payable by such persons or
Holders), (iii) transfer or registration fees for the registration of transfer of Deposited Securities on any applicable
register in connection with the deposit or withdrawal of Deposited Securities (which are payable by persons
depositing Shares or Holders withdrawing Deposited Securities; there are no such fees in respect of the Shares as
of the date of the Deposit Agreement), (iv) expenses of the Depositary in connection with the conversion of
foreign currency into U.S. dollars (which are paid out of such foreign currency) and (v) such fees and expenses as
are incurred by the Depositary (including without limitation expenses incurred on behalf of Holders in connection
with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment)
in delivery of Deposited Securities or otherwise in connection with the Depositary’s or its Custodian’s compliance
with applicable law, rule or regulation (see “Item 12D. American Depositary Shares”).
Liability of Holders for Taxes
If any tax or other governmental charge shall become payable by or on behalf of the Custodian or the Depositary
with respect to an ADR, any Deposited Securities represented by the ADSs evidenced thereby or any distribution
209

thereon, such tax or other governmental charge shall be paid by the Holder thereof to the Depositary. The
Depositary may refuse to effect any registration, registration of transfer, split-up or combination or, only for those
reasons set forth in General Instruction I.A.(1) of Form F-6 under the Securities Act, any withdrawal of Deposited
Securities until such payment is made. The Depositary may also deduct from any distributions on or in respect of
Deposited Securities, or may sell by public or private sale for the account of the respective Holder any part or all
of such Deposited Securities (after attempting by reasonable means to notify the Holder thereof prior to such
sale), and may apply such deduction or the proceeds of any such sale in payment of such tax or other
governmental charge, the respective Holder remaining liable for any deficiency, and shall reduce the number of
ADSs evidenced thereby to reflect any such sales of Shares.
In connection with any distribution to Holders, the Company or its agents will remit to the appropriate
governmental authority or agency all amounts (if any) required to be withheld and owing to such authority or
agency by the Company or its agents; and the Depositary and the Custodian will remit to the appropriate
governmental authority or agency all amounts (if any) required to be withheld by the Depositary or the Custodian.
The Depositary shall forward to the Company or its agent such information from its records as the Company may
request to enable the Company or its agent to file necessary reports with governmental authorities or agencies. If
the Depositary determines that any distribution in property other than cash (including Shares or rights) on
Deposited Securities is subject to any tax that the Depositary or the Custodian is obligated to withhold, the
Depositary may dispose of all or a portion of such property in such amounts and in such manner as the Depositary
deems necessary and practicable to pay such taxes, by public or private sale, and the Depositary shall distribute
the net proceeds of any such sale or the balance of any such property after deduction of such taxes to the Holders
entitled thereto.
The Depositary and the Company agree to use reasonable efforts to make and maintain arrangements (in addition
to or in substitution of the arrangements described herein) to enable persons that are considered United States
residents for purposes of applicable law to receive any rebates, tax credits or other benefits (pursuant to treaty or
otherwise) relating to distributions on the ADSs to which such persons are entitled. Notwithstanding the above,
the Company may, by written notice to the Depositary, modify or withdraw the procedures described in this
paragraph (including by ceasing to pay to the Depositary any amounts in respect of refunds of Italian withholding
taxes), to the extent the Company determines that its participation in the refund process is no longer lawful or
practical.
See “—10.6 Taxation” for additional information on tax issues relating to ADRs.
General Limitations
The Depositary, the Company, their agents and each of them shall: (a) incur no liability (i) if any present or future
law, regulation, the provisions of or governing any Deposited Securities, act of God, war or other circumstance
beyond its control shall prevent, delay or subject to any civil or criminal penalty any act which the Deposit
Agreement or this ADR provides shall be done or performed by it, or (ii) by reason of any exercise or failure to
exercise any discretion given it in the Deposit Agreement or this ADR; (b) assume no liability except to perform its
obligations to the extent they are specifically set forth in this ADR and the Deposit Agreement without gross
negligence or bad faith; (c) in the case of the Depositary and its agents, be under no obligation to appear in,
prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or this ADR; (d) in
the case of the Company and its agents hereunder be under no obligation to appear in, prosecute or defend any
action, suit or other proceeding in respect of any Deposited Securities or this ADR, which in its opinion may
involve it in expense or liability, unless indemnity satisfactory to it against all expense (including fees and
disbursements of counsel) and liability be furnished as often as may be required; or (e) not be liable for any action
or inaction by it in reliance upon the advice of or information from legal counsel, accountants, any person
presenting Shares for deposit, any Holder, or any other person believed by it in good faith to be competent to give
such advice or information. The Depositary, its agents and the Company may rely and shall be protected in acting
upon any written notice, request, direction or other document believed by them in good faith to be genuine and to
have been signed or presented by the proper party or parties. The Depositary and its agents will not be
responsible for any failure to carry out any instructions to vote any of the Deposited Securities (provided that such
act or omission to act is in good faith), for the manner in which any such vote is cast or for the effect of any such
vote. The Depositary and its agents may own and deal in any class of securities of the Company and its affiliates
and in ADRs. Neither the Company, the Depositary nor any of their respective agents shall be liable to Holders or
beneficial owners of interests in ADSs for any indirect, special, punitive or consequential damages.
210

Prior to the issue, registration, registration of transfer, split-up or combination of any ADR, the delivery of any
distribution in respect thereof, or, subject to the last sentence of this paragraph, the withdrawal of any Deposited
Securities, and from time to time, in the case of clause (b)(ii) of this paragraph, the Company, the Depositary or
the Custodian may require: (a) payment with respect thereto of (i) any stock transfer or other tax or other
governmental charge, (ii) any stock transfer or registration fees in effect for the registration of transfers of Shares
or other Deposited Securities upon any applicable register and (iii) any applicable charges; (b) the production of
proof satisfactory to it of (i) the identity and genuineness of any signature and (ii) such other information,
including without limitation, information as to citizenship, residence, exchange control approval, beneficial
ownership of any securities, compliance with applicable law, regulations, provisions of or governing Deposited
Securities and terms of the Deposit Agreement and the ADRs, as it may deem necessary or proper; and
(c) compliance with such regulations as the Depositary may establish consistent with the Deposit Agreement. The
Depositary shall provide to the Company, promptly upon its written request, copies of any such proofs of
citizenship or residence or other information referred to in (b) above so requested. The issuance of ADRs, the
acceptance of deposits of Shares, the registration, registration of transfer, split-up or combination of ADRs or,
subject to the last sentence of this paragraph, the withdrawal of Deposited Securities may be suspended,
generally or in particular instances, when the ADR register or any register for Deposited Securities is closed or
when any such action is deemed necessary or advisable by the Depositary or the Company. Notwithstanding any
other provision of the Deposit Agreement or the ADRs, the withdrawal of Deposited Securities may be restricted
only for the reasons set forth in General Instruction I.A.(1) of Form F-6 (as such instructions may be amended
from time to time) under the Securities Act.
Governing Law
The Deposit Agreement is governed by and shall be construed in accordance with the laws of the State of
New York.
211

Item 10. Additional Information Taxation
10.6 TAXATION
Unless otherwise indicated, for purposes of the following discussion regarding taxation, the Ordinary Shares and
the Savings Shares are collectively referred to as the “Telecom Italia Shares”.
10.6.1 ITALIAN TAXATION
The following is a summary of material Italian tax consequences of the ownership and disposition of Ordinary
Shares, Savings Shares or ADSs as at the date hereof. It does not purport to be a complete analysis of all potential
tax matters relevant to a decision to hold Ordinary Shares, Savings Shares or ADSs. For purposes of Italian law
and the Italian-U.S. Income Tax Convention (the “Treaty”), holders of ADSs which are evidenced by ADRs will be
treated as holders of the underlying Ordinary Shares or Savings Shares, as the case may be. The 1999 Treaty
between Italy and U.S. entered into force and took effect for taxable periods beginning on or after January 1,
2010.
Income Tax
As a general principle, non-resident taxpayers are liable for Italian income tax with respect to income which is
treated as arising in Italy, unless such income is subject to a final withholding tax deducted by the payer of the
income. Payments of dividends, either to holders of Ordinary Shares and applicable ADSs or to holders of Savings
Shares and applicable ADSs, who are not Italian residents and do not have a permanent establishment in Italy to
which dividends are connected are subject to a 20% final withholding tax. The obligation to withhold such tax is
imposed on the resident company/intermediary paying the dividends.
All shares of Italian listed companies have to be registered in a centralized deposit system. With respect to
dividends paid in connection with shares held in the centralized deposit system managed by Monte Titoli, such as
Telecom Italia Shares, instead of the withholding tax mentioned above, a substitute income tax will apply at the
same tax rate as the above-mentioned withholding tax. This substitute income tax is levied by, and under the
responsibility of, the Italian authorized intermediaries participating in the Monte Titoli system and with whom the
securities are deposited and also by non-Italian authorized intermediaries participating, directly or through a non-
Italian centralized deposit system, in the Monte Titoli system. With respect to any dividends paid within the above
mentioned centralized deposit system, Telecom Italia assumes no responsibility for the withholding of tax at the
source (and application of tax treaties, as discussed below) as such responsibility lies entirely on the Italian
authorized intermediaries with whom the securities are deposited.
Non-resident holders of Ordinary Shares and applicable ADSs have the right to recover within 48 months from the
date of payment of the Italian substitute income tax, up to one-fourth of such 20% substitute tax on their dividend
income, upon providing adequate evidence, certified by the tax authorities in their home country, that they paid a
corresponding amount of income tax in their home country on the same dividend income.
These refunds are normally subject to extensive delays. In addition, these refunds are an alternative to seeking
any relief from double taxation under an income tax treaty, including the Treaty.
U.S. resident beneficial owners of Shares (either Ordinary or Savings Shares) and related ADSs may be entitled to
a reduced tax rate on their dividends under the Treaty. Where: (i) a U.S. resident owner qualifies for the benefits
of the Treaty and meets all the requirements of the Treaty provision dealing with limitation on benefits, (ii) the
U.S. resident owner is the actual beneficial owner of the dividends, and (iii) the dividends paid are not connected
with a permanent establishment in Italy through which the U.S. resident owner carries on a business or with a
fixed base in Italy through which the U.S. resident owner performs independent personal services, the Treaty
generally provides that Italian taxes cannot exceed 15% of the gross amount of the dividend (this 15% rate may
be reduced to 5% when the beneficial owner of the dividends is a U.S. company which has owned at least
25 percent of the voting stock of the company paying the dividends for a 12-month period ending on the date the
dividend is declared).
212

To obtain the reduced tax rate afforded by the Treaty, a beneficial owner of Telecom Italia Shares or ADSs must
provide, before the dividend is paid (usually, according to the intermediary’s instructions), the intermediary with
which the shares are deposited and which participates in the Monte Titoli system with the following
documentation:
(i) a declaration by the beneficial owner containing all the data identifying such person as the beneficial owner
and establishing the existence of all the conditions necessary for the application of the Treaty; and
(ii) in the case of a U.S. holder, a certification (Form 6166) issued by the U.S. Internal Revenue Service that
states that the beneficial owner is a U.S. resident for tax purposes. The certification is valid until March 31 of
the year following the submission.
The processing of requests for certification by the U.S. Internal Revenue Service may take a substantial period of
time. Accordingly, in order to be eligible for the procedure described below, eligible ADS holders should begin the
process of obtaining Form 6166 as soon as possible after receiving instructions from the Depositary on how to
claim the reduced rate provided by the Treaty.
The Depositary’s instructions, which will be sent to all ADS holders before the dividend payment date, will specify
certain deadlines for delivering to the Depositary any documentation required to obtain the reduced rate provided
by the Treaty, including the certification that the eligible ADS holders must obtain from the U.S. Internal Revenue
Service. In the case of ADSs held through a broker or other financial intermediary, the required documentation
should be delivered to such financial intermediary for transmission to the Depositary. In all other cases, the
eligible ADS holders should deliver the required documentation directly to the Depositary.
If the holder of Telecom Italia Shares or ADSs fails to obtain the reduced rate provided by the Treaty at the time
the dividend is paid, a refund equal to the difference between the Treaty rate and the Italian tax withheld at the
payment of dividends may be claimed directly from the Italian tax authorities. Extensive delays have been
encountered by U.S. residents seeking payments directly from the Italian authorities.
In the case of dividends paid to a U.S. partnership, the reduction of the tax rate under the Treaty is only available
to the extent such dividends are subject to U.S. tax in the hands of the partners.
Capital Gains Tax
Under Italian law, capital gains tax (“CGT”) is levied on capital gains realized by non-residents from the disposal
of shares in companies resident in Italy for tax purposes even if those shares are held outside of Italy. However,
capital gains realized by non-resident holders on the sale of non-qualified shareholdings (as defined below) in
companies whose shares or ADSs are listed on a stock exchange and resident in Italy for tax purposes (as is the
case for Telecom Italia) are not subject to CGT.
A “qualified shareholding” consists of securities (except for Saving Shares and applicable ADSs) that (i) entitle the
holder to exercise more than 2% of the voting rights of a company with shares listed on a stock exchange
(Telecom Italia is such a company) in the ordinary meeting of the shareholders or (ii) represent more than 5% of
the share capital of a company with shares listed on a stock exchange (Telecom Italia is such a company). A “non-
qualified shareholding” is any shareholding that does not meet the above mentioned requirements to be qualified
as a “qualified shareholding”.
The relevant percentage is calculated taking into account the shareholdings sold during the prior 12-month period
(the period starting from the day on which the taxpayer holds shareholding higher than the abovementioned
percentages of 2% or 5%).
Pursuant to the Treaty, a U.S. resident will not be subject to Italian CGT on a sale of qualified shareholdings
unless the Telecom Italia Shares or ADSs form part of the business property of a permanent establishment of the
holder in Italy or pertain to a fixed base available to a holder in Italy for the purpose of performing independent
personal services. U.S. residents who sell Telecom Italia Shares or ADSs may be required to produce appropriate
documentation establishing that the above mentioned conditions of non-taxability pursuant to the Treaty
provisions have been satisfied if CGT would otherwise be applicable.
213

Inheritance and Gift Tax
The transfers of any valuable asset (including Ordinary Shares, Savings Shares and ADSs) as a result of death or
donation (or other transfers for no consideration) and the creation of liens on such assets for a specific purpose
are taxed as follows:
(i) transfers in favour of the spouse and of direct descendants or ascendants are subject to an inheritance and
gift tax applied at a rate of 4% on the value of the inheritance or the gift exceeding €1,000,000 (per
beneficiary);
(ii) transfers in favour of brothers and sisters are subject to an inheritance and gift tax applied at a rate of 6% on
the value of the inheritance or the gift exceeding €100,000 (per beneficiary). The same tax rate applies in
favour of handicapped individuals on the value of inheritance or gift exceeding €1,500,000 (per beneficiary);
(iii) transfers in favour of all other relatives up to the fourth degree or relatives-in-law up to the third degree, are
subject to an inheritance and gift tax applied at a rate of 6% on the entire value of the inheritance or the gift;
(iv) any other transfer is subject to an inheritance and gift tax applied at a rate of 8% on the entire value of the
inheritance or the gift.
With respect to listed shares, the value for inheritance and gift tax purposes is the average stock exchange price
of the last quarter preceding the date of the succession or of the gift (increased by the interest accrued during the
interim). With respect to unlisted shares, the value is determined proportionally to the equity resulting from the
last approved balance sheet of the company.
There is currently no gift tax convention between Italy and the United States.
Registration Tax
Contracts relating to the transfer of securities are subject to the registration tax as follows: (i) public deeds and
notarized deeds are subject to fixed registration tax at a rate of 168 euros; (ii) private deeds are only subject to
registration tax in case of use or voluntary registration.
Stamp taxes and duties
On January 1, 2012, a new law on stamp duty on securities and financial products entered into force. The
implementing rules on such stamp duty were provided by Decree of the Ministry of Economy and Finance dated as
of May 24, 2012. The stamp tax applies on a yearly basis at the rate of 0.15 per cent (0.1 per cent in 2012) on the
market value or—if no market value is available—on the nominal value or the redemption amount of any financial
product or financial instrument (including the Telecom Italia shares or ADSs). The stamp duty cannot be lower
than 34.2 euros and, for taxpayers other than individuals, cannot exceed 4,500 euros. In 2012, the cap was 1,200
euros for all taxpayers.
In the absence of specific guidelines, it may be argued that the stamp duty applies to both Italian resident
shareholders and to non-Italian resident shareholders, to the extent that the shares (or ADSs) are held with an
Italian-based financial intermediary.
Tax on financial transactions
1. Shares and other equity instrument transactions
Law No. 228 as of December 24, 2012 introduced a new tax on financial transactions (“FTT”). Detailed
regulations of such tax were provided by the Decree of the Ministry of Economy and Finance as of
February 21, 2013. According to the relevant provisions, from March 1, 2013 the tax on financial
transactions generally applies to:
a) transfer of the ownership of shares and participating financial instruments which have been
issued by companies registered in Italy; and
b) transfer of the ownership of securities (such as ADSs) representing equity investments
referred to in point a) above, irrespective of the country of residence of the issuer of these
securities.
214

The relevant tax criterion is the place of residence (i.e., the place of the registered office) of the issuer
of the shares and the participating financial instruments. So, with reference to the transfer of ADSs, the
place of residence of the Depositary is not relevant. Instead the country of residence of Telecom Italia
is relevant.
The place where the transfers are completed and the residence of the contractual counterparties is not
relevant in defining taxed transactions. Accordingly, transfers performed outside the Italian territory
through foreign intermediaries are also subject to tax.
The tax is determined proportionally by applying a percentage rate to the value of the counter value of
the transaction that varies in relation to the market on which the transaction is carried out. In
particular, transfers of ownership mentioned at points a) and b) above, carried out in a non-regulated
market, will be subject to tax at a rate of 0.20 percent (increased to 0.22 percent only in 2013); in
contrast, transfers carried out on regulated markets and multilateral trading facilities are subject to tax
at the 0.10 percent rate (increased to 0.12 percent only in 2013).
The tax on these types of transactions is owed by the persons to which the ownership of shares,
financial instruments and securities representing equity investments (such as ADSs) is transferred,
regardless of their country of residence and the place where the contract is concluded.
With reference to the payment of the tax, it should be noted that generally one has to determine a
distinction between the person economically affected by the tax and the person liable for the payment
of the tax. Economically, the burden of the tax on transfers of shares (or ADSs) and certificates is
imposed on the beneficiary of the transfer of the ownership; in contrast, the person liable for the
assessment and the payment of the tax is the intermediary (i.e., banks, trust companies, investment
firms and other intermediaries) involved in the execution of such transactions. Where several
intermediaries are involved in the execution of the transaction, the tax must be paid by the intermediary
that receives the order to execute the transaction directly from the purchaser or the final counterparty.
Non-Italian intermediaries and other non-resident persons involved in the transaction must comply with
the obligations deriving from the application of such tax through their Italian permanent establishment,
if any. Non-Italian intermediaries and other non-resident persons having no permanent establishment in
Italy can appoint a tax representative in order to comply with all the relevant tax obligations. In cases
other than the above (i.e., where an intermediary is not interposed in a taxable transaction), the
obligations, including the payment of the tax, must be fulfilled directly by the foreign person
(purchaser), according to guidelines that are still to be issued by the Agenzia delle Entrate (i.e., the
Italian Revenues Agency). Until guidelines are issued, it is not clear how such tax will be applied to
trading of ADSs on the NYSE involving persons or intermediaries not connected with Italy.
Given that the person economically affected by the tax (i.e., the purchaser) and the person liable for the
assessment and the payment of the tax (i.e., the intermediary) are generally different, it is anticipated
that a withholding mechanism of recovery will be put in place, under which the intermediary will
withhold from the purchaser of the financial instrument the amount necessary for the payment of the
tax.
10.6.2 UNITED STATES FEDERAL INCOME TAXATION
The following is a description of the material U.S. federal income tax consequences to the U.S. Holders described
below of owning and disposing of Telecom Italia Shares or ADSs representing Telecom Italia Shares, but it does
not purport to be a comprehensive description of all tax considerations that may be relevant to a particular
person’s decision to hold the securities. This discussion applies only to a U.S. Holder that holds Telecom Italia
Shares or ADSs as capital assets for U.S. federal income tax purposes. In addition, it does not describe all of the
tax consequences that may be relevant in light of the U.S. Holder’s particular circumstances, including alternative
minimum tax consequences and the potential application of the provisions of the Internal Revenue Code of 1986,
as amended (the “Code”), known as the Medicare contribution tax, and tax consequences applicable to U.S.
Holders subject to special treatment, such as:
Š certain financial institutions;
Š dealers or traders in securities who use a mark-to-market method of tax accounting;
215

Š persons holding Telecom Italia Shares or ADSs as part of a hedging transaction, straddle, wash sale,
conversion transaction or integrated transaction or persons entering into a constructive sale with respect to
the Telecom Italia Shares or ADSs;
Š persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;
Š entities classified as partnerships for U.S. federal income tax purposes;
Š tax-exempt entities, including “individual retirement accounts” or “Roth IRAs”;
Š persons that own or are deemed to own ten percent or more of the voting stock of Telecom Italia;
Š persons who acquired Telecom Italia Shares or ADSs pursuant to the exercise of an employee stock option or
otherwise as compensation; or
Š persons holding Telecom Italia Shares in connection with a trade or business conducted outside of the
United States.
If an entity that is classified as a partnership for U.S. federal income tax purposes holds Telecom Italia Shares or
ADSs, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of
the partner and the activities of the partnership. Partnerships holding Telecom Italia Shares or ADSs and partners
in such partnerships should consult their tax advisers as to the particular U.S. federal income tax consequences of
holding and disposing of the Telecom Italia Shares or ADSs.
This discussion is based on the Code, administrative pronouncements, judicial decisions, final, temporary and
proposed Treasury regulations, and the Treaty, all as of the date hereof, any of which is subject to change,
possibly with retroactive effect. It is also based in part on representations by the Depositary and assumes that
each obligation under the Deposit Agreement and any related agreement will be performed in accordance with its
terms.
A “U.S. Holder” is a holder who, for U.S. federal income tax purposes, is a beneficial owner of Telecom Italia
Shares or ADSs who is eligible for the benefits of the Treaty and is:
Š a citizen or individual resident of the United States;
Š a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the
United States, any state therein or the District of Columbia; or
Š an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.
In general, a U.S. Holder who owns ADSs will be treated as the owner of the underlying Ordinary Shares or Saving
Shares, as the case may be, represented by those ADSs for U.S. federal income tax purposes. Accordingly, no gain
or loss will be recognized if a U.S. Holder exchanges ADSs for the underlying Ordinary Shares or Saving Shares, as
the case may be, represented by those ADSs.
The U.S. Treasury has expressed concern that parties to whom American depositary shares are released before
shares are delivered to the depositary (“pre-release”), or intermediaries in the chain of ownership between
holders and the issuer of the security underlying the American depositary shares, may be taking actions that are
inconsistent with the claiming of foreign tax credits by holders of American depositary shares. These actions
would also be inconsistent with the claiming of the reduced rate of tax, described below, applicable to dividends
received by certain non-corporate holders. Accordingly, the creditability of Italian taxes, and the availability of the
reduced tax rate for dividends received by certain non-corporate U.S. Holders, each described below, could be
affected by actions taken by such parties or intermediaries.
U.S. Holders should consult their tax advisers concerning the U.S. federal, state, local and foreign tax
consequences of owning and disposing of Telecom Italia Shares or ADSs in their particular circumstances.
This discussion assumes that Telecom Italia is not, and will not become, a passive foreign investment company,
as described below.
216

Taxation of distributions
Distributions made with respect to the Telecom Italia Shares or ADSs (other than certain pro rata distributions of
Telecom Italia Shares or ADSs), including any Italian tax withheld, will generally constitute foreign-source
dividend income for U.S. federal income tax purposes to the extent such distributions are made from Telecom
Italia’s current or accumulated earnings and profits, as determined in accordance with U.S. federal income tax
principles. Because Telecom Italia does not maintain calculations of earnings and profits under U.S. federal
income tax principles, it is expected that distributions will generally be reported to U.S. Holders as dividends. If
you are a non-corporate U.S. Holder, subject to applicable limitations that may vary depending on your particular
circumstances and the discussion above regarding concerns expressed by the U.S. Treasury, dividends paid to you
may be taxable at the favorable rates applicable to long-term capital gains. Non-corporate U.S. Holders should
consult their own tax advisers regarding the availability of the reduced tax rate on dividends. If you are a
corporate U.S. Holder you will not be entitled to claim a dividends-received deduction for dividends paid on the
Telecom Italia Shares or ADSs. The amount of any cash distribution paid in euros, including the amount of any
Italian tax withheld, will be included in your income in an amount equal to the U.S. dollar value of such euros on
the date of receipt by the Depositary, in the case of U.S. Holders of ADSs, or by the U.S. Holder, in the case of U.S.
Holders of Telecom Italia Shares, regardless of whether the payment is in fact converted into U.S. dollars. If the
dividend is converted into U.S. dollars on the date of receipt, you generally should not be required to recognize
foreign currency gain or loss in respect of the dividend income. You may have foreign currency gain or loss if the
amount of such dividend is not converted into U.S. dollars on the date of its receipt. Gain or loss, if any,
recognized on the sale or other disposition of such euros will be U.S.-source ordinary income or loss. The amount
of any distribution of property other than cash will be the fair market value of such property on the date of
distribution.
Subject to certain limitations and restrictions and the discussion above regarding concerns expressed by the
U.S. Treasury, Italian taxes withheld from distributions on Telecom Italia Shares or ADSs at a rate not in excess of
that applicable under the Treaty will be eligible for credit against a U.S. Holder’s U.S. federal income tax liability.
Italian taxes withheld in excess of the rate applicable under the Treaty will generally not be eligible for credit
against a U.S. Holder’s U.S. federal income tax liability (See “Section 10.6.1—Italian Taxation—Income Tax” for a
discussion of how to obtain the Treaty withholding rate). Instead of claiming a credit, you may, at your election,
deduct such Italian taxes in computing your taxable income, subject to generally applicable limitations under
U.S. law. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all taxes paid or
accrued in the taxable year to foreign countries and possessions of the United States. You should consult your tax
adviser concerning the foreign tax credit implications of the payment of any Italian withholding taxes.
Taxation of capital gains
A U.S. Holder will generally recognize U.S.-source capital gain or loss on the sale or other disposition of Telecom
Italia Shares or ADSs, which will be long-term capital gain or loss if the U.S. Holder held the Telecom Italia Shares
or ADSs for more than one year. The amount of gain or loss will be equal to the difference between the gross
amount realized and the U.S. Holder’s adjusted tax basis in the Telecom Italia Shares or ADSs, in each case as
determined in U.S. dollars. U.S. Holders should consult their own tax advisers about the treatment of capital
gains, which may be taxed at lower rates than ordinary income for non-corporate taxpayers, and capital losses,
the deductibility of which may be limited.
Passive Foreign Investment Company Rules
Telecom Italia believes that it was not a “passive foreign investment company” (“PFIC”) for U.S. federal income
tax purposes for 2012. However, since PFIC status depends upon the composition of Telecom Italia’s income and
assets and the market value of Telecom Italia’s assets (including, among others, less than 25% owned equity
investments) from time to time, there can be no assurance that Telecom Italia will not be a PFIC for any taxable
year. If Telecom Italia were a PFIC for any taxable year during which a U.S. Holder held Telecom Italia Shares or
ADSs, certain adverse tax consequences could apply to the U.S. Holder.
217

Foreign Financial Asset Reporting
Certain U.S. Holders who are individuals may be required to report information relating to their ownership of an
interest in certain foreign financial assets, including stock of a non-U.S. person, generally on an Internal Revenue
Service Form 8938, subject to exceptions (including an exception for stock held through a U.S. financial
institution). Certain U.S. Holders that are entities may be subject to similar rules in the future. U.S. Holders should
consult their tax advisers regarding their reporting obligations with respect to their Telecom Italia Shares or
ADSs.
Information Reporting and Backup Withholding
Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related
financial intermediaries generally are subject to information reporting, and may be subject to backup withholding,
unless (i) the U.S. Holder is an exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides
a correct taxpayer identification number and certifies that it is not subject to backup withholding.
The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the
U.S. Holder’s U.S. federal income tax liability and may entitle it to a refund, provided that the required information
is timely furnished to the Internal Service Revenue.
218

Item 10. Additional Information Documents On Display
10.7 DOCUMENTS ON DISPLAY
We file Annual Reports on Form 20-F and furnish periodic reports on Form 6-K to the SEC. You may read and copy
any of these reports at the SEC’s public reference room in Washington, D.C. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the
public from commercial document retrieval services. Some of our SEC filings are also available at the website
maintained by the SEC at the website www.sec.gov.
Our ADSs are listed on the New York Stock Exchange under the symbol “TI”. You may inspect any periodic reports
and other information filed with or furnished to the SEC by us at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005.
As a foreign private issuer, we are exempt from the rules under the Exchange Act which prescribe the furnishing
and content of proxy statements, and our officers, directors and principal shareholders are exempt from the
reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act.
We are subject to the informational requirements of the Italian securities commission and the Italian stock
exchanges, and we file reports and other information relating to our business, financial condition and other
matters with the Italian securities commission and the Italian stock exchange. You may read such reports,
statements and other information, including the annual, semi-annual and quarterly financial statements, at the
website www.borsaitaliana.it. Some of our Italian securities commission filings are also available at the website
maintained by the Italian securities commission at the website www.consob.it.
As described elsewhere in this Annual Report, certain reports, statements and presentations related to Telecom
Italia can be found on our website at www.telecomitalia.com.
We have appointed JPMorgan Chase Bank, N.A. to act as depositary for our ADSs. JPMorgan Chase Bank will, as
provided in the deposit agreement, arrange for the mailing of summaries in English of such reports and
communications to all record holders of our ADSs. Any record holder of our ADSs may read such reports and
communications or summaries thereof at JPMorgan Chase Bank’s office located at 4 New York Plaza, New York,
New York 10004.
219

Item 11. Quantitative And Qualitative Disclosures About Market Risks
Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
With regard to the quantitative and qualitative disclosures about market risks, please see the “Note—Financial
Risk Management” of the Notes to the Consolidated Financial Statements included elsewhere herein, which
provides:
Š the objectives and the policies for the management of the financial risks of Telecom Italia Group, and
Š the sensitivity analyses of the market risks we are exposed to.
The above mentioned Note should be read in conjunction with the “Note—Accounting Policies”, “Note—
Derivatives” and “Note—Supplementary Disclosures on Financial Instruments” of the Notes to the Consolidated
Financial Statements included elsewhere in this Annual Report, which provide other information relating to
financial instruments.
220

Item 12. Description Of Securities Other Than Equity Securities
Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Item 12A. DEBT SECURITIES
Not applicable.
Item 12B. WARRANTS AND RIGHTS
Not applicable.
Item 12C. OTHER SECURITIES
Not applicable.
Item 12D. AMERICAN DEPOSITARY SHARES
Description of fees and charges paid by ADR Holders
As provided for in the American Depositary Receipt included as Exhibit A to the Deposit Agreement between
JP Morgan Chase Bank, as depositary (the “Depositary”), Telecom Italia S.p.A. and Holders of American
Depositary Receipts dated as of July 17, 2003, holders of American Depositary Shares may be charged, directly or
indirectly, the following amounts in relation to the ownership of depositary receipts held in the Company’s ADR
Program, which amounts are payable to the Depositary.
221

Category of Service Depositary Actions Associated Fee
a) Deposit of underlying shares or
surrender of ADRs
Each person to whom ADSs are
issued against deposits of shares,
including deposits in respect of
share distributions, rights and
other distributions.(1)
Each person surrendering ADRs
for the withdrawal of deposited
securities.
US$5.00 for each 100 ADSs (or
portion thereof) delivered or
surrendered.
b) Cash dividends or distributions Distribution of cash resulting from
a cash dividend or other cash
distribution.
Subject to deduction of Depositary’s
expenses in (i) converting foreign
currency to US dollars by sale or such
other manner considered reasonable
by the Depositary (ii) transferring the
foreign or US dollars to the United
States and (iii) obtaining any license
or approval of any governmental
authority required for such
conversion or transfer.
c) Distribution of securities Distribution of securities (the fee
being an amount equal to the fees
for the execution and delivery of
ADSs which would have been
charged as a result of the deposit
of such securities).
US$5.00 for each 100 ADSs (or
portion thereof) delivered or
surrendered.
d) Expenses of the Depositary Expenses incurred on behalf of
Holders in connection with:
i) Stock transfer or other taxes
and other governmental
charges.
As necessary.
ii) Cable, telex and facsimile
transmission and delivery.
US$20.00 per transaction.
iii) Expenses of the Depositary in
connection with the
conversion of foreign
currency into US dollars
(which are paid out of such
foreign currency)
As necessary.
iv) Such fees and expenses as
are incurred by the
Depositary (including without
limitation expenses incurred
on behalf of Holders in
connection with compliance
with foreign exchange
control regulations or any
law or regulation relating to
foreign investment) in
delivery of deposited
securities or otherwise in
connection with the
Depositary’s or its
Custodian’s compliance with
applicable law, rule or
regulation.
As necessary.
(1) The Depositary may sell (by public or private sale) sufficient securities and property received in respect of such share distributions, rights
and other distributions prior to such deposit to cover such charge.
222

Direct and indirect payments made by J.P. Morgan to Telecom Italia in relation to the Company’s ADR
program
J.P. Morgan, as Depositary, has agreed to reimburse the Company for reasonable expenses incurred related to the
Company’s ADR Program including legal fees, investor relations servicing, investor relations presentations, broker
reimbursements, ADR related advertising and public relations, accountant’s fees and other bona fide third party
expenses. In 2012 the Depositary reimbursed the Company in the amount of US$1,000,000, all of which was used
to cover accounting fees incurred in connection with the preparation of the 2010 and 2011 Form 20-F.
As part of its service to the Company, J.P. Morgan has agreed to cover the standard costs associated with the
administration of the ADR Program. Such costs include fees and expenses related to (1) general services
(administration of the ADR Program, administration of ADR holders’ accounts, maintenance of the ADR registry
and other general services), services related to distribution of dividends and other cash distributions and tax and
regulatory compliance services; (2) services related to the annual meeting; and (3) services to investor relations
such as market updates, quarterly newsletters and market research.
223

Item 13. Defaults, Dividend Arrearages And Delinquencies
PART II
Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
224

Item 14. Material Modification to the Rights Of Security Holders And
Use Of Proceeds
Item 14. MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
225

Item 15. Controls And Procedures Disclosure Controls And Procedures
Management’s Annual Report On Internal
Control Over Financial Reporting
Item 15. CONTROLS AND PROCEDURES
15.1. DISCLOSURE CONTROLS AND PROCEDURES
The Company, under the supervision of the Executive Chairman and Chief Executive Officer, of the Domestic
Managing Director and Chief Operating Officer and of the Head of Administration, Finance and Control, according
to the Company’s 404 Process guidelines (revised also to meet the reporting requirements set forth by article
154-bis of the Italian Legislative Decree 58/1998; the aforementioned Italian rule provides for a special report by
the Executive Chairman and Chief Executive Officer, the Domestic Chief Executive Officer and Chief Operating
Officer and the Head of Administration, Finance and Control of the issuer, broadly corresponding in scope to the
certifications and the management’s report on internal control over financial reporting required by the Sarbanes
Oxley Act) performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures as
of December 31, 2012. The Company’s management necessarily applied its judgment in assessing the costs and
benefits of such controls and procedures, which by their nature can provide only reasonable assurance regarding
management’s control objectives. Based on this evaluation, the Company’s Executive Chairman and Chief
Executive Officer, the Company’s Domestic Managing Director and Chief Operating Officer and the Company’s
Head of Administration, Finance and Control concluded that the Company’s disclosure controls and procedures (as
defined in Rule 13a-15(e) of the Exchange Act) are effective at the reasonable assurance level.
15.2. MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company’s management is responsible for establishing and maintaining adequate internal control over
financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated
under the Exchange Act as a process designed by, or under the supervision of, the Company’s Executive Chairman
and Chief Executive Officer, the Company’s Domestic Managing Director and Chief Operating Officer and the
Company’s Head of Administration, Finance and Control and effected by the Company’s Board of Directors,
management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles and includes those policies and procedures that:
Š pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transaction
and dispositions of the assets of the company;
Š provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures
for the company are being made only in accordance with authorizations of management and directors of the
company; and
Š provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use of
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
The Company’s management assessed the effectiveness of the company’s internal control over financial reporting
as of December 31, 2012. In making this assessment, the Company’s management used the criteria set forth by
the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-
Integrated Framework.
Based on management’s assessment, management has concluded that, as of December 31, 2012, the Company’s
internal control over financial reporting is effective based on those criteria.
PricewaterhouseCoopers S.p.A., the independent registered public accounting firm that audited the consolidated
financial statements included in this annual report, has audited the effectiveness of internal control over financial
reporting as of December 31, 2012. Their attestation report on internal control over financial reporting is included
herein.
226

Item 15. Controls And Procedures Changes In Internal Control Over Financial Reporting
15.3. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There has been no change in the Company’s internal control over financial reporting that occurred during the
period covered by this annual report that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.
227

Item 16A. Audit Committee Financial Expert
Item 16B. Code Of Ethics And Conduct
Item 16. [RESERVED]
Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Auditors in office as of April 10, 2013 determined that each of its members is an “audit committee
financial expert” as defined in Item 16A of Form 20-F. For the names of the members of the Board of Auditors,
see “Item 6 Directors, Senior Management and Employees—6.3 Board of Auditors”.
Item 16B. CODE OF ETHICS AND CONDUCT
On March 23, 2004, Telecom Italia adopted its Code of Ethics and Conduct which applies—among the others—to
the Chairman, the Chief Executive Officer, the Chief Financial Officer, as well as to all the Group’s employees in
and outside Italy; the suppliers of the Company are required to accept and apply it, too. The Code of Ethics and
Conduct has subsequently been amended from time to time by the Board of Directors, which acted on the basis of
opinions by the Internal Controls and Corporate Governance Committee (now the Control and Risk Committee)
and the Board of Statutory Auditors, in order to conform it to the developments in the applicable law and market
regulations, taking into account national and international best practices. The Code of Ethics and Conductin force
is available on Telecom Italia’s website at www.telecomitalia.com. See also under “Item 16G. Corporate
Governance—16.1.1 Differences in Telecom Italia’s Corporate Governance and New York Stock Exchange
Corporate Governance Practices” and “Item 10 Additional Information—10.1 Corporate Governance”.
228

Item 16C. Principal Accountant Fees And Services
Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
For the year ended December 31, 2012, PricewaterhouseCoopers S.p.A. is serving as Telecom Italia’s independent
auditor.
“PricewaterhouseCoopers” means PricewaterhouseCoopers S.p.A., the auditor of the Company, as well as all the
Italian and foreign entities belonging to the PricewaterhouseCoopers network.
The following table sets forth the aggregate fees for professional services and other services rendered by
PricewaterhouseCoopers in 2012 and in 2011.
Fiscal year ended
December 31,
Type of Fees 2012 2011
(thousands of euros)
Audit Fees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,729 7,853
Audit-related Fees(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 422
Tax Fees(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 86
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,130 8,361
(1) Audit fees consist of fees billed for professional services in connection with Telecom Italia’s annual financial statements, reviews of
interim financial statements as well as comfort letters issued in relation to capital market transactions, agreed upon procedures for
certain financial statement areas, included those required for some transactions by regulations in Italy and abroad, and technical
accounting consultations.
(2) Audit-related fees consist of fees billed for professional services rendered in connection with assurance and related services not included
under “Audit Fees”.
(3) Tax fees consist of fees billed for professional services rendered for tax compliance and tax advice.
The Board of Auditors (also in its role as Telecom Italia’s Audit Committee), in accordance with and to the extent
permitted by applicable Italian law, is responsible for the appointment, retention and oversight of the work of the
Company’s external auditors engaged for the purpose of issuing the audit report on the annual financial
statements. To this effect, according to current Italian law, the Board of Auditors makes a reasoned proposal to
the Shareholders’ Meeting which appoints the external auditors and determines their compensation.
In March 2010, Telecom Italia, together with its Board of Auditors, adopted new Guidelines for the Appointment
of external Auditors (the “Group Procedure”). Such procedure became effective concurrently with the
appointment of PricewaterhouseCoopers S.p.A. as Telecom Italia’s primary independent auditors.
The above mentioned Group Procedure provides instructions, among other things, for the following:
Š appointment to audit the Company’s financial statements: the appointment is authorized by Telecom Italia’s
shareholders’ meeting, acting on a reasoned proposal from the Board of Auditors;
Š additional appointments: the pre-approval, by Telecom Italia’s Board of Auditors, of certain audit and
permissible non-audit services to be provided by the external auditors (and associated persons) and the
prohibition for certain services.
An approval is not granted if the service falls within a category of services not permitted by current law or if it is
inconsistent with maintaining auditor independence.
According to the Group Procedure, the Telecom Italia Board of Auditors pre-approved the following audit and
permitted non-audit services.
Audit Services:
Š audit of the financial statements and reporting packages for consolidation of Telecom Italia’s subsidiaries;
Š review of the working papers of another auditor when necessary for the audit of the financial reports of
Telecom Italia or companies it controls;
229

Item 16C. Principal Accountant Fees And Services
Š verification services for the issue of consent letters;
Š audit of financial statements and/or balance sheets to be published in prospectuses and information
documents, offering memoranda and the like;
Š accounting assistance and advice, including in relation to requests coming from CONSOB, the United States
Securities and Exchange Commission and similar authorities;
Š audit/verification services in connection with the awarding of grants/loans or obtaining specific tax or social
security contribution treatment;
Š verification of the conformity of so-called sustainability and social reports;
Š issuance of comfort letters in relation to the implementation of extraordinary corporate actions;
Š reports and opinions requested under law from the Appointed Auditor;
Š attestations to participate in competitive tenders organized by (national or supranational) governmental
bodies.
Permitted Non-audit Services:
Š agreed procedures for aspects of regulatory accounting;
Š accounting due diligence procedures for companies to be sold or acquired.
The Board of Auditors has the right to establish guidelines and qualitative and quantitative criteria regarding the
appointment of auditors to provide various services both audit and non-audit services, valid for the entire Group,
which it did by requiring the introduction, from January 1, 2012, of an operative procedure which provides for
prior examination by the Board of Auditors (even for pre-approved appointments and services) if certain
qualitative conditions or when specific quantitative thresholds are exceeded. The Board of Auditors also stated
that it will endorse the corresponding determinations adopted by the audit committees of the SEC-registered
subsidiary companies, provided that they are made on the basis of rules compliant with the applicable
regulations—including United States regulations—and in conformity with the Group Guidelines in the matter.
Furthermore, in accordance with the Group Procedure above, the Manager responsible for preparing the
Company’s financial reports (who acts under the supervision of the Telecom Italia Board of Auditors) sends, on a
quarterly basis, to the Board of Auditors and the Control and Risk Committee (the former Internal Control and
Corporate Governance Committee), the information gathered on any Additional Appointments awarded and
services provided. In relation to the above-mentioned appointments, the Board of Auditors and the Control and
Risk Committee may have any verifications of compliance deemed necessary carried out by the Internal Control
Manager.
230

Item 16D. Exemptions From The Listing Standards For Audit Committees
Item 16E. Repurchases Of Equity Securities
Item 16F. Change In Registrant’s Certifying Accountant
Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Please see “Item 10. Additional Information—10.1. Corporate Governance”.
Item 16E. REPURCHASES OF EQUITY SECURITIES
From January 1, 2012, to December 31, 2012, no purchases of Shares or Savings Shares were made by or on
behalf of Telecom Italia or any affiliated company.
Item 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
231

Item 16G. Corporate Governance Differences In Telecom Italia’s Corporate Governance And
New York Stock Exchange Corporate Governance Practices
Item 16G. CORPORATE GOVERNANCE
16.1 DIFFERENCES IN TELECOM ITALIA’S CORPORATE GOVERNANCE AND NEW YORK STOCK EXCHANGE CORPORATE
GOVERNANCE PRACTICES
We believe the following to be the significant differences between our corporate governance practices and NYSE
corporate governance rules applicable to US companies.
Independent Directors. Under NYSE listing rules applicable to US companies, independent directors must
comprise a majority of the board of directors.
Article 147-ter of the Italian Consolidated Law on Finance requires boards, with more than seven members, to
have at least two directors who meet the criteria set forth by Article 148 for the independence of the members of
the Board of Statutory Auditors; in addition the Borsa Italiana Corporate Governance Code requires Boards of
Directors to have an adequate number of independent members, and defines the criteria to be applied in
determining independence. Telecom Italia’s Corporate Governance Principles incorporate by reference the same
independence criteria set forth by the Borsa Italiana Code. As of April 10, 2013, 6 out of 15 members of the
Telecom Italia Board qualify as independent, as they meet both the requirements set forth by Article 148, and the
criteria set forth by the Borsa Italiana Corporate Governance Code.
For further details, see also “—10.1 Corporate Governance—General—Board of Directors—Independent
Directors”.
Non-management Directors Meeting. Pursuant to NYSE listing standards, non-management directors must meet
on a regular basis without management present and independent directors must meet separately at least once per
year. Borsa Italiana’s Corporate Governance Code requires independent directors to meet at least once a year
without management present.
Telecom Italia’s Corporate Governance Principles set forth the position of Lead Independent Director. The
position is intended to provide a point of reference and coordination for the needs and inputs of the independent
directors and is entrusted with the power to call special meetings of independent members (Independent
Directors’ Executive Sessions) to discuss, separately from the management, issues related to the working of the
Board and the management of the business. In 2012 a total of eight such sessions were held. The Lead
Independent Director may use the Company’s support functions in performing his tasks. As of April 10, 2013 the
position is held by Luigi Zingales. For further details, see also “—10.1 Corporate Governance—General—Board of
Directors—Executive Directors and Activities of the Board”.
Board of Directors’ Internal Committees. According to NYSE listing standards, US companies listed on the NYSE
are required to have a Nominating/Corporate Governance Committee, a Compensation Committee and an Audit
Committee. Also according to Borsa Italiana’s Corporate Governance Code, the Board of Directors shall establish
among its members a Nominating Committee (made up, for the majority, of independent directors) a
Remuneration Committee (made up of independent directors or of non executive directors, the majority of which
to be independent) and a Control and Risk Committee (made up of independent directors of non executive
directors, the majority of which being independent).
Nominating/Corporate Governance Committee. Under NYSE standards, the nominating/corporate governance
committee is composed entirely of independent directors. In addition to identifying individuals qualified to
become board members, this committee must develop and recommend to the board a set of corporate
governance principles. Pursuant to NYSE standards, this committee should also adopt a written charter.
Article 9 of Telecom Italia’s bylaws provides for the members of the Board of Directors to be elected using the
slate system, which permits shareholders, who, alone or together, hold shares representing at least 0.5% of the
share capital (or the different stake annually required to this end by Consob), to put forward slates of nominees
for the appointment as directors: the system is intended to ensure the presence on the Board of persons
designated by minority shareholders. Thus, the Company’s view is that using the slate system meets the needs
otherwise served by the creation of a Nominating Committee.
232

Item 16G. Corporate Governance Differences In Telecom Italia’s Corporate Governance And
On the other hand, Telecom Italia has a Control and Risk Committee (made up of non-executive directors only, a
majority of whom must be independent, one of them chosen from a minority slate) which, among other activities,
actively participates and assists in developing and implementing the corporate governance procedures adopted by
Telecom Italia. In addition, the Company’s Corporate Governance Principles entrust the Nomination and
Remuneration Committee with a nomination responsibility, when it is necessary to substitute an independent
director.
For further details, see also “—10.1 Corporate Governance—General—Board of Directors—Internal
Committees”.
Remuneration Committee. Under NYSE standards, the Remuneration Committee is composed entirely of
independent directors. In addition to the review and approval of corporate goals relevant to CEO compensation
and evaluation of the CEO performance in light of those given, this committee must determine and approve the
CEO’s compensation and make recommendations to the Board of Directors with respect to non-CEO
compensation, incentive-compensation plans and equity-based plans.
Telecom Italia has a Nomination and Remuneration Committee, made up of a majority of independent directors
(one of them chosen from a minority slate). Pursuant to the Company’s Corporate Governance Principles, the
Remuneration Committee shall, among other things:
Š oversee the succession plan for Executive Directors, and monitor the updating of the company management
replacement lists, prepared by the Executive directors;
Š establish the procedure and period for the annual evaluation of the Board of Directors;
Š propose the criteria for allocating the total annual compensation established by the Shareholders’ Meeting
for the whole Board of Directors;
Š perform other duties assigned to it by the Board of Directors;
Š express opinions to the Board of Directors regarding its size and composition and express recommendations
with regard to the professional skills necessary within the Board;
Š submit the Board of Directors candidates for directors offices in case of cooptation, should the replacement
of independent directors be necessary;
Š periodically evaluate the adequacy, overall consistency and actual application of the policy for the
remuneration of directors and key management personnel, on the basis of the information provided by the
managing directors; it shall formulate proposals to the Board of Directors in that regard;
Š submit proposals or issues opinions to the Board of Directors for the remuneration of executive directors and
other directors who cover particular offices as well as for the identification of performance objectives related
to the variable component of that remuneration; it shall monitor the implementation of decisions adopted by
the Board of Directors and verify, in particular, the actual achievement of performance objectives.
According to the procedure for transactions with the Company’s related parties, adopted by board resolution of
4 November 2010 and subsequently amended (available on the www.telecomitalia.com website, Governance
section—Governance System channel), resolutions regarding the remuneration of directors and key managers
with strategic responsibilities made in accordance with the remuneration policy submitted for examination by the
Shareholders’ Meeting, are not considered to be relevant transactions with related parties and are not therefore
subject to the Regulations adopted by Consob by means of resolution no. 17221/2010 and subsequent
amendments. The tasks assigned to the board committee by the Telecom Italia procedure are in this case
performed by the Committee.
For further details, see also “—10.1 Corporate Governance—General—Board of Directors—Internal
Committees”.
Audit Committee. US companies listed on the NYSE are required to establish an Audit Committee that satisfies
the requirements of Rule 10A-3 under the 1934 Act.
233

Item 16G. Corporate Governance
Item 16H. Mine Safety Disclosure
Differences In Telecom Italia’s Corporate Governance And
The Board of Auditors, as permitted by Rule 10A-3, is performing the corresponding functions for Telecom Italia,
which therefore is exempted from the requirement to have a separate audit committee.
A Rule 303A written affirmation to this end was submitted to the NYSE on May 22, 2012. For further details, see
also “10.1 Corporate Governance—General—Board of Directors” and “—10.1 Corporate Governance—General—
Board of Auditors”.
Adoption and Disclosure of Corporate Governance Guidelines. US companies listed on the NYSE are required to
adopt and disclose corporate governance guidelines.
Such disclosures are included in this Form 20-F and English translations of the Telecom Italia Group’s corporate
governance policies can be found on Telecom Italia’s website: www.telecomitalia.com under “Governance”.
Code of business conduct and ethics. NYSE listing standards require US companies to adopt a code of business
conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for
directors or executive officers. The code should provide for the reporting of violations of its provisions or of laws
and regulations.
Telecom Italia has adopted such a Code. See also below under “—16.1.2 General—Code of Ethics and Conduct”.
Annual Certification by The Chief Executive Officer. A chief executive officer of a US company listed on the NYSE
must annually certify that he or she is not aware of any violation by the company of NYSE corporate governance
standards.
In accordance with NYSE listing rules applicable to foreign private issuers, Telecom Italia submitted its foreign
private issuer annual written affirmation on May 22, 2012.
Item 16H. MINE SAFETY DISCLOSURE
Not applicable.
234

Item 17. Financial Statements
PART III
Item 17. FINANCIAL STATEMENTS
Not applicable.
235

Item 18. Financial Statements
Item 19. Financial Statements and Exhibits
Item 18. FINANCIAL STATEMENTS
Reference is made to Item 19 for a list of all financial statements filed as part of this Annual Report.
Item 19. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Page
Report of Independent Registered Public Accounting Firm—Pricewaterhouse Coopers S.p.A. . . . . . . . . . . . . . . . F-2
Consolidated Statements of Financial Position as of December 31, 2012 and December 31,
2011—Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Financial Position as of December 31, 2012 and December 31, 2011—Equity
and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Separate Consolidated Income Statements for the years ended December 31, 2012, 2011 (Restated) and
2010 (Restated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011
(Restated) and 2010 (Restated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Consolidated Statements of Changes in Equity for the years ended December 31, 2012, 2011 and 2010 . . . . F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 (Restated) and 2010
(Restated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-12
(b) Exhibits
1.1 Bylaws of the Company.
2.1 Deposit Agreements.
(a) Deposit Agreement dated as of July 17, 2003, as amended, among the Company, JPMorgan Chase Bank,
as Depositary and the holders from time to time of American Depositary Receipts representing Ordinary
Shares of the Company.(1)
(b) Deposit Agreement dated as of July 17, 2003, as amended, among the Company, JPMorgan Chase Bank,
as Depositary and holders from time to time of American depositary Receipts representing Savings shares of
the Company.(2)
2.2 Trust deed dated January 23, 2004, between Telecom Italia (as Issuer and Guarantor), Telecom Italia
Finance (as Issuer) and J.P. Morgan Corporate Trustee Services Limited relating to a 10 billion euros Medium
Term Note Program. We hereby agree to furnish to the Commission, upon its request, a copy of any
instrument defining the rights of holders of our long-term debt or that of our subsidiaries for which
consolidated or unconsolidated financial statements are required to be filed.(3)
4.1 Public Telecommunications Authorization.(4)
(a) Decision No. 820/00/CONS of 22.11.2000. General Authorization, former individual license for
installation and supply of public telecommunications network and for the provision to the public of a voice
telephony service (modifications to the concessions and annexed conventions, ex SIP, Iritel and Italcable).
4.2 Stock Option Plans
(a) Top 2008 Plan—Stock Option Plan reserved to the Chairman and the Chief Executive Officer of Telecom
Italia S.p.A.(5)
(b) Long Term Incentive Plan 2010-2015.(6)
(c) Long Term Incentive Plan 2011.(7)
(d) Long Term Incentive Plan 2012.
7.1 Statement explaining computation of ratio of “Earnings to fixed charges” under IFRS.
8.1 List of Subsidiaries.(8)
12(a) Certification by the Executive Chairman and Chief Executive Officer of Telecom Italia S.p.A.
236

12(b) Certification by the Domestic Managing Director and Chief Operating Officer of Telecom Italia S.p.A.
12(c) Certification by the Head of Administration, Finance and Control of Telecom Italia S.p.A.
13.1 Section 906 Certification submitted for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of
the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.
(1) Incorporated by reference to exhibit (a) filed with Olivetti’s Registration Statement on Form F-6 filed with the SEC on July 18, 2003 (File
No. 333-107144).
(2) Incorporated by reference to exhibit (a) filed with Olivetti’s Registration Statement on Form F-6 filed with the SEC on July 18, 2003 (File
No. 333-107142).
(3) Incorporated by reference to the Exhibits filed with the Company’s Annual Report on Form 20-F on June 10, 2004 (File No. 001-13882).
(4) Incorporated by reference to the Exhibits filed with the Company’s Annual Report on Form 20-F/A on June 29, 2001 (File
No. 001-13882).
(5) Incorporated by reference to the Exhibits filed with the Company’s Annual Report on Form 20-F on May 8, 2008 (File No. 001-13882).
(6) Incorporated by reference to the Exhibits filed with the Company’s Annual Report on Form 20-F on April 11, 2011 (File No. 001-13882).
(7) Incorporated by reference to the Exhibits filed with the Company’s Annual Report on Form 20-F on May 14, 2012 (File No. 001-13882).
(8) Please see “Note—List of Companies of the Telecom Italia Group” of the Notes to the Consolidated Financial Statements included
elsewhere herein.
237

SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it
meets all the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TELECOM ITALIA S.p.A
By: /s/ FRANCO BERNABÈ
Name: Franco Bernabè
Title: Executive Chairman and Chief Executive Officer
Dated April 16, 2013
238

TABLE OF CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2012 AND
2011—ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2012 AND 2011—EQUITY
AND LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
SEPARATE CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2012, 2011
(Restated) AND 2010 (Restated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31,
2012, 2011 (Restated) AND 2010 (Restated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2012,
2011 AND 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2012, 2011
(Restated) AND 2010 (Restated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10
NOTE 1—FORM, CONTENT AND OTHER GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-12
NOTE 2—ACCOUNTING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-14
NOTE 3—BUSINESS COMBINATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-29
NOTE 4—GOODWILL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-33
NOTE 5—OTHER INTANGIBLE ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-37
NOTE 6—TANGIBLE ASSETS (OWNED AND UNDER FINANCE LEASES) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-40
NOTE 7—INVESTMENTS IN ASSOCIATES AND JOINT VENTURES ACCOUNTED FOR USING THE EQUITY
METHOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-43
NOTE 8—OTHER INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-44
NOTE 9—FINANCIAL ASSETS (NON-CURRENT AND CURRENT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-45
NOTE 10—MISCELLANEOUS RECEIVABLES AND OTHER NON-CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . F-47
NOTE 11—INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-47
NOTE 12—INVENTORIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-51
NOTE 13—TRADE AND MISCELLANEOUS RECEIVABLES AND OTHER CURRENT ASSETS . . . . . . . . . . . . . . . . . . . F-51
NOTE 14—EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-53
NOTE 15—FINANCIAL LIABILITIES (NON—CURRENT AND CURRENT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-59
NOTE 16—FINANCIAL RISK MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-68
NOTE 17—DERIVATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-73
NOTE 18—SUPPLEMENTARY DISCLOSURES ON FINANCIAL INSTRUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-75
NOTE 19—EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-83
NOTE 20—PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-86
NOTE 21—MISCELLANEOUS PAYABLES AND OTHER NON—CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . F-86
NOTE 22—TRADE AND MISCELLANEOUS PAYABLES AND OTHER CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . F-87
NOTE 23—CONTINGENT LIABILITIES, OTHER INFORMATION, COMMITMENTS AND GUARANTEES . . . . . . . F-88
NOTE 24—REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-99
NOTE 25—OTHER INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-99
NOTE 26—ACQUISITION OF GOODS AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-99
NOTE 27—EMPLOYEE BENEFITS EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-100
NOTE 28—OTHER OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-101
NOTE 29—INTERNALLY GENERATED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-103
NOTE 30—DEPRECIATION AND AMORTIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-103
NOTE 31—GAINS (LOSSES) ON DISPOSALS OF NON—CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-104
NOTE 32—IMPAIRMENT REVERSALS (LOSSES) ON NON—CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-104
NOTE 33—OTHER INCOME (EXPENSES) FROM INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-105
NOTE 34—FINANCE INCOME AND FINANCE EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-106
NOTE 35— PROFIT (LOSS) FOR THE YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-109
NOTE 36—EARNINGS PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-110
NOTE 37—SEGMENT REPORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-113
NOTE 38— RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-118
NOTE 39—EQUITY COMPENSATION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-130
NOTE 40—OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-136
NOTE 41—EVENTS SUBSEQUENT TO DECEMBER 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-137
NOTE 42—LIST OF COMPANIES OF THE TELECOM ITALIA GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-138
F-1

Consolidated Financial Statements Report Of Independent Registered Public Accounting Firm
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders of Telecom Italia SpA
In our opinion, the accompanying consolidated statements of financial position and the related consolidated
statements of income, comprehensive income, changes in equity and cash flows present fairly, in all material
respects, the financial position of Telecom Italia SpA and its subsidiaries at December 31, 2012 and 2011, and the
results of their operations and their cash flows for each of the three years in the period ended December 31, 2012
in conformity with International Financial Reporting Standards as issued by the International Accounting
Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2012, based on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).The
Company’s management is responsible for these financial statements, for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal control over financial reporting,
included in Management’s Annual Report on Internal Control Over Financial Reporting appearing in Item 15.2 of
the 2012 Annual Report to Shareholders. Our responsibility is to express opinions on these financial statements
and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our
audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement and whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the financial statements included examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall financial statement presentation.
Our audit of internal control over financial reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audits also included performing such
other procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers S.p.A.
Rome, Italy
April 16, 2013
F-2

Consolidated Financial Statements Consolidated Statements Of Financial Position
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2012
AND 2011—ASSETS
Note
As of
December 31,
2012
As of
December 31,
2011
(millions of euros)
NON-CURRENT ASSETS
Intangible assets
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 32,410 36,902
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 7,927 8,637
40,337 45,539
Tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Property, plant and equipment owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,465 14,899
Assets held under finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,014 1,094
15,479 15,993
Other non-current assets
Investments in associates and joint ventures accounted for using the equity
method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 65 47
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 39 38
Non-current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2,496 2,949
Miscellaneous receivables and other non-current assets . . . . . . . . . . . . . . . . . . . . . . 10 1,496 1,128
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1,432 1,637
5,528 5,799
TOTAL NON-CURRENT ASSETS (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,344 67,331
CURRENT ASSETS
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 436 447
Trade and miscellaneous receivables and other current assets . . . . . . . . . . . . . . . . 13 7,006 7,770
Current income tax receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 77 155
Current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Securities other than investments, financial receivables and other
current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,256 1,469
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,436 6,714
8,692 8,183
Current assets sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,211 16,555
Discontinued operations /Non-current assets held for sale
of a financial nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
of a non-financial nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
— —
TOTAL CURRENT ASSETS (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,211 16,555
TOTAL ASSETS (A+B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,555 83,886
The accompanying notes are an integral part of these consolidated financial statements
F-3

Consolidated Financial Statements Consolidated Statements Of Financial Position
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2012
AND 2011—EQUITY AND LIABILITIES
Note
As of
December 31,
2012
As of
December 31,
2011
(millions of euros)
EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Share capital issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,693 10,693
Less: treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (89) (89)
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,604 10,604
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,704 1,704
Other reserves and retained earnings (accumulated losses), including profit
(loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,070 10,482
Equity attributable to owners of the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,378 22,790
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,634 3,904
TOTAL EQUITY (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,012 26,694
NON-CURRENT LIABILITIES
Non-current financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 34,091 35,860
Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 872 850
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 848 1,084
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 863 831
Miscellaneous payables and other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . 21 1,053 1,156
TOTAL NON-CURRENT LIABILITIES (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,727 39,781
CURRENT LIABILITIES
Current financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 6,150 6,091
Trade and miscellaneous payables and other current liabilities . . . . . . . . . . . . . . . . 22 10,542 10,984
Current income tax payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 124 336
Current liabilities sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,816 17,411
Liabilities directly associated with Discontinued operations/
Non-current assets held for sale
of a financial nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
of a non-financial nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
— —
TOTAL CURRENT LIABILITIES (C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,816 17,411
TOTAL LIABILITIES (D=B+C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,543 57,192
TOTAL EQUITY AND LIABILITIES (A+D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,555 83,886
F-4

Consolidated Financial Statements Separate Consolidated Income Statements
SEPARATE CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2012, 2011
(Restated) AND 2010 (Restated)
Note 2012 2011 2010
(millions of euros)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 29,503 29,957 27,571
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 298 299 255
Total operating revenues and other income . . . . . . . . . . . . . . . . . . . . . . . . . 29,801 30,256 27,826
Acquisition of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 (12,948) (12,859) (11,383)
Employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 (3,919) (3,992) (3,981)
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 (1,882) (1,859) (1,422)
Change in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 56 (135)
Internally generated assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 581 569 547
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 (5,340) (5,496) (5,542)
Gains (losses) on disposals of non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . 31 53 3 11
Impairment reversals (losses) on non-current assets . . . . . . . . . . . . . . . . . . . . . 32 (4,432) (7,358) (63)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,926 (680) 5,858
Share of profits (losses) of associates and joint ventures accounted for
using the equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 (6) (39) 99
Other income (expenses) from investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 2 16 289
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 2,082 2,464 3,081
Finance expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 (4,048) (4,504) (5,199)
Profit (loss) before tax from continuing operations . . . . . . . . . . . . . . . . . (44) (2,743) 4,128
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,235) (1,610) (549)
Profit (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,279) (4,353) 3,579
Profit (loss) from Discontinued operations/Non-current assets held for
sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 (13) (7)
Profit (loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 (1,277) (4,366) 3,572
Attributable to:
Owners of the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,627) (4,811) 3,118
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350 445 454
2012 2011 2010
(Restated)
(Euros)
(Restated)
Basic and Diluted Earnings Per Share (EPS)(*) . . . . . . . . . . . . . . . . . . . . . . 36
Ordinary Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.08) (0.25) 0.16
Savings Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.08) (0.25) 0.17
Of which:
From continuing operations
Ordinary Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.08) (0.25) 0.16
Savings Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.08) (0.25) 0.17
From Discontinued operations/Non-current assets held for sale
Ordinary Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
Savings Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
(*) Basic EPS is equal to Diluted EPS.
F-5

Consolidated Financial Statements Consolidated Statements Of Comprehensive Income
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31,
2012, 2011 (Restated) AND 2010 (Restated) (see Note 14)
2012 2011 2010
(millions of euros)
Profit (loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A) (1,277) (4,366) 3,572
Other components of the Statements of
Comprehensive Income:
Available-for-sale financial assets:
Profit (loss) from fair value adjustments . . . . . . . . 57 5 (7)
Loss (profit) transferred to the Separate
Consolidated Income Statement . . . . . . . . . . . . . 1 2 5
Net fiscal impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11) (4) (1)
(B) 47 3 (3)
Hedging instruments:
Profit (loss) from fair value adjustments . . . . . . . . (702) 523 767
Consolidated Income Statement . . . . . . . . . . . . . 272 (230) (480)
Net fiscal impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 (83) (77)
(C) (309) 210 210
Exchange differences on translating foreign
operations:
Profit (loss) on translating foreign operations . . . (1,068) (612) 659
Loss (profit) on translating foreign operations
transferred to the Separate Consolidated
Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . — 75 18
Net fiscal impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
(D) (1,068) (537) 677
Remeasurements of employee defined benefit
plans (IAS 19):
Actuarial gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . (56) 117 4
Net fiscal impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (33) (1)
(E) (42) 84 3
Share of other comprehensive income (loss) of
associates and joint ventures accounted for
using the equity method:
Profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 109
Consolidated Income Statement . . . . . . . . . . . . . — — —
Net fiscal impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
(F) — — 109
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (G=B+C+D+E+F) (1,372) (240) 996
Total comprehensive income (loss) for the year . . . . . (A+G) (2,649) (4,606) 4,568
Attributable to:
Owners of the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,516) (4,826) 3,855
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . (133) 220 713
F-6

ConsolidatedFinancialStatementsConsolidatedStatementsOfChangesInEquity
CONSOLIDATEDSTATEMENTSOFCHANGESINEQUITYFORTHEYEARSENDED
DECEMBER31,2012,2011AND2010
ŠCHANGESINEQUITYIN2010(seeNote14)
Share
capital
Paid-in
capital
Reservefor
available-for-
salefinancial
assets
Reserve
forcash
flow
hedges
Reservefor
exchange
differenceson
translating
foreign
operations
Remeasurements
ofemployee
definedbenefit
plans(IAS19)(*)
Shareofother
comprehensive
income(loss)of
associatesand
jointventures
accountedfor
usingtheequity
method
Otherreserves
andretained
earnings
(accumulated
losses),
including
profit(loss)
fortheyear(*)
Equity
attributableto
ownersofthe
Parent
Non-controlling
interestsTotalEquity
(a)(b)(c)(d)(e)(f)(g)(h)
(i=a+b+c+d+e+f+g
+h)(l)(i+l)
(millionsofeuros)
BalanceatDecember31,2009............10,5851,689(4)(494)983109(110)13,19425,9521,16827,120
Changesinequityintheyearended
December31,2010:
Dividendsapproved......................(1,029)(1,029)(135)(1,164)
Totalcomprehensiveincome(loss)for
theyear...............................(3)21041831093,1183,8557134,568
Grantofequityinstruments..............15893232
EffectofcapitaltransactionsbyTelecom
ItaliaMedia...........................334447
Effectarisingfromtheconsolidationof
Soforagroup(Argentina)(**).........—1,9481,948
Otherchanges...........................66(2)4
BalanceatDecember31,2010............10,6001,697(7)(284)1,401112(1)15,30128,8193,73632,555
(*)TheReserveispresentedasaresultoftheearlyadoptionoftherevisedIAS19.TherecognitionofthisReserveledtothereduction,forthesameamount,oftheopeningbalanceof“Otherreservesandretainedearnings
(accumulatedlosses),includingprofit(loss)fortheyear”.
(**)AnalyzedinNote3.
Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements
F-7

Share
capital
Paid-in
capital
Reservefor
available-for-
salefinancial
assets
Reserve
forcash
flow
hedges
Reservefor
exchange
differenceson
translating
foreign
operations
Remeasurements
ofemployee
definedbenefit
plans(IAS19)(*)
Shareofother
comprehensive
income(loss)of
associatesand
jointventures
accountedfor
usingtheequity
method
Otherreserves
andretained
earnings
(accumulated
losses),
including
profit(loss)for
theyear(*)
Equityattributable
toownersofthe
Parent
Non-controlling
(a)(b)(c)(d)(e)(f)(g)(h)
(i=a+b+c+d+e+f+g
+h)(l)(i+l)
(millionsofeuros)
Changesinequityintheyearended
December31,2011
Dividendsapproved......................(1,184)(1,184)(118)(1,302)
Totalcomprehensiveincome(loss)for
theyear...............................3210(312)84(4,811)(4,826)220(4,606)
Grantofequityinstruments..............47(4)77
Effectofincreaseineconomicstakein
ArgentinaBusinessUnit...............(57)(57)(153)(210)
EffectofcapitaloperationsofBrazil
BusinessUnitcompanies..............1919221240
Otherchanges...........................1212(2)10
F-8

Share
capital
Paid-in
capital
Reservefor
available-for-
salefinancial
assets
Reserve
forcash
flow
hedges
Reservefor
exchange
differenceson
translating
foreign
operations
Remeasurements
ofemployee
definedbenefit
plans(IAS19)(*)
Shareofother
comprehensive
income(loss)of
associatesand
jointventures
accountedfor
usingtheequity
method
Otherreserves
andretained
earnings
(accumulated
losses),
including
profit(loss)for
theyear(*)
Equityattributable
toownersofthe
Parent
Non-controlling
(a)(b)(c)(d)(e)(f)(g)(h)
(i=a+b+c+d+e+f+g
+h)(l)(i+l)
(millionsofeuros)
BalanceatDecember31,2011.....10,6041,704(4)(74)1,089196(1)9,27622,7903,90426,694
Changesinequityintheyear
endedDecember31,2012
Dividendsapproved..............(895)(895)(143)(1,038)
Totalcomprehensiveincome
(loss)fortheyear..............47(309)(585)(42)(1,627)(2,516)(133)(2,649)
Grantofequityinstruments......222
Otherchanges...................(3)(3)63
BalanceatDecember31,2012.....10,6041,70443(383)504154(1)6,75319,3783,63423,012
F-9

Consolidated Financial Statements Consolidated Statements Of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 2012, 2011 (Restated) AND 2010 (Restated)
Note 2012 2011 2010
(millions of euros)
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,279) (4,353) 3,579
Adjustments for:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,340 5,496 5,542
Impairment losses (reversals) on non-current assets (including
investments) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,434 7,365 (116)
Net change in deferred tax assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 156 (750)
Losses (gains) realized on disposals of non-current assets (including
investments) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (54) (18) (41)
Share of losses (profits) of associates and joint ventures accounted for
using the equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 39 (99)
Change in provisions for employees benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (221) (175) 33
Change in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (36) 96
Change in trade receivables and net amounts due from customers on
construction contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 851 3 13
Change in trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (139) (164) (278)
Net change in current income tax receivables/payables . . . . . . . . . . . . . . . . . . . (473) 90 (170)
Net change in miscellaneous receivables/payables and other assets/
liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35) 109 (936)
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES (A) . . . . . . . . . . . . . . 8,521 8,512 6,873
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of intangible assets on an accrual basis . . . . . . . . . . . . . . . . . . . . 5 (1,995) (3,066) (1,781)
Purchase of tangible assets on an accrual basis . . . . . . . . . . . . . . . . . . . . . . 6 (3,201) (3,029) (2,802)
Total purchase of intangible and tangible assets on an accrual basis . . . . . . . . . . . . (5,196) (6,095) (4,583)
Change in amounts due to fixed asset suppliers . . . . . . . . . . . . . . . . . . . . . . (113) 557 103
Total purchase of intangible and tangible assets on a cash basis . . . . . . . . . . . . . . . . (5,309) (5,538) (4,480)
Acquisition of control of subsidiaries or other businesses, net of cash
acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) (668) (4)
Net cash and cash equivalents arising from the acquisition of control of the
Sofora group-Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 — — 392
Acquisitions/disposals of other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (3) (1) 35
Change in financial receivables and other financial assets . . . . . . . . . . . . . . . . . . . . . . 519 (580) 502
Proceeds from sale that result in a loss of control of subsidiaries or other
businesses, net of cash disposed of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 51 180
Proceeds from sale/repayments of intangible, tangible and other non-current
assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 435 56
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES (B) . . . . . . . . . . . . . . . (4,683) (6,301) (3,319)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in current financial liabilities and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (796) 1,351 957
Proceeds from non-current financial liabilities (including current portion) . . . . . . 4,624 4,523 2,007
Repayments of non-current financial liabilities (including current portion) . . . . . . (5,659) (5,290) (5,842)
Share capital proceeds/reimbursements (including subsidiaries) . . . . . . . . . . . . . . . (2) 240 67
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,031) (1,326) (1,093)
Changes in ownership interests in consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . — (211) —
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (C) . . . . . . . . . . . . . . . (2,864) (713) (3,904)
CASH FLOWS FROM (USED IN) DISCONTINUED OPERATIONS/
NON-CURRENT ASSETS HELD FOR SALE (D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
AGGREGATE CASH FLOWS (E=A+B+C+D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 974 1,498 (350)
NET CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR (F) . . . 6,670 5,282 5,484
Net foreign exchange differences on net cash and cash
equivalents (G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (247) (110) 148
NET CASH AND CASH EQUIVALENTS AT END OF THE YEAR
(H=E+F+G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,397 6,670 5,282
F-10

Consolidated Financial Statements Consolidated Statements Of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE YEARS ENDED DECEMBER 31, 2012, 2011 (Restated) AND 2010 (Restated)
2012 2011 2010
(millions of euros)
ADDITIONAL CASH FLOW INFORMATION:
Income taxes (paid) received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,522) (1,381) (1,392)
Interest expense paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,518) (3,044) (3,079)
Interest income received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,687 1,332 1,176
Dividends received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2 3
ANALYSIS OF NET CASH AND CASH EQUIVALENTS:
NET CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR:
Cash and cash equivalents—from continuing operations . . . . . . . . . . . . . . . . . . . . 6,714 5,526 5,504
Bank overdrafts repayable on demand—from continuing operations . . . . . . . . . (44) (244) (101)
Cash and cash equivalents—from Discontinued operations/Non-current
assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 81
Bank overdrafts repayable on demand—from Discontinued operations/Non-
current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
6,670 5,282 5,484
NET CASH AND CASH EQUIVALENTS AT END OF THE YEAR:
Cash and cash equivalents—from continuing operations . . . . . . . . . . . . . . . . . . . . 7,436 6,714 5,526
Bank overdrafts repayable on demand—from continuing operations . . . . . . . . . (39) (44) (244)
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
7,397 6,670 5,282
F-11

Consolidated Financial Statements Notes To Consolidated Financial Statements
NOTE 1—FORM, CONTENT AND OTHER GENERAL INFORMATION
Form and content
Telecom Italia (the “Parent”) and its subsidiaries form the “Telecom Italia Group” or the “Group”. Telecom
Italia is a joint-stock company (S.p.A.) organized under the laws of the Republic of Italy.
The registered offices of the Parent are located in Milan at Piazza degli Affari 2, Italy.
The duration of the company, as stated in the company’s Bylaws, extends until December 31, 2100.
The Telecom Italia 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 Telecom Italia Group consolidated financial statements for the year ended December 31, 2012 have been
prepared on a going concern basis (for further details see Note “Accounting policies”) and in accordance with the
International Financial Reporting Standards issued by the International Accounting Standards Board (designated
as “IFRS”).
In 2012, the Group applied the accounting policies on a basis consistent with those of the previous years, except for:
Š the early adoption, starting from the first half of 2012, of the revised version of IAS 19 (Employee
Benefits) whose effects are described in Note “Accounting Polices”. The early adoption of such
amendments resulted in the restatement of the 2011 and 2010 separate consolidated income
statements and consolidated statements of comprehensive income;
Š the new standards and interpretations adopted by the Group since January 1, 2012, that did not have
any effect on the consolidated financial statements at December 31, 2012.
The consolidated financial statements have been prepared under the historical cost convention, except for
available-for-sale financial assets, financial assets held for trading and derivative financial instruments which have
been measured at fair value. The carrying amounts of hedged assets and liabilities have been adjusted to reflect
the changes in fair value of the hedged risks (fair value hedge).
In accordance with IAS 1 (Presentation of Financial Statements) comparative information included in the
consolidated financial statements is, unless otherwise indicated, that of the preceding two years.
The Telecom Italia Group consolidated financial statements are expressed in euro (rounded to the nearest million,
unless otherwise indicated).
Publication of the Telecom Italia Group consolidated financial statements for the year ended December 31, 2012
was approved by resolution of the Board of Directors’ meeting held on March 7, 2013.
Financial statement formats
The financial statement formats adopted are consistent with those indicated in IAS 1. In particular:
Š the consolidated statement of financial position has been prepared by classifying assets and
liabilities according to “current and non-current” criterion;
Š the separate consolidated income statement has 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 industrial sector
of reference;
Š the consolidated statement of comprehensive income includes the profit or loss for the year as
shown in the separate consolidated income statement and all other non-owner changes in equity;
Š the consolidated statement of cash flows has been prepared by presenting cash flows from
operating activities according to the “indirect method”, as permitted by IAS 7 (Statement of Cash
Flows).
F-12

Segment Reporting
An operating segment is a component of an entity:
Š 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);
Š whose operating results are regularly reviewed by the entity’s chief operating decision maker to make
decisions about resources (for the Telecom Italia Group the Board of Directors of the Parent) to be
allocated to the segment and assess its performance; and
Š for which discrete financial information is available.
In particular, the operating segments of the Telecom Italia Group are organized according to the relative
geographical location of the telecommunications business (Domestic, Brazil and Argentina) and according to the
specific businesses for the other segments.
The term “operating segment” is considered synonymous with “Business Unit”. The operating segments of the
Telecom Italia Group are as follows:
Š Domestic: includes operations in Italy for voice and data services on fixed and mobile networks for
final customers (retail) and other operators (wholesale), the operations of the Telecom Italia Sparkle
group (International wholesale) as well as the related support activities;
Š Brazil: includes mobile (TIM Celular) and fixed (TIM Celular and Intelig) telecommunications
operations in Brazil;
Š Argentina: includes fixed (Telecom Argentina) and mobile (Telecom Personal in Argentina and Núcleo
in Paraguay) telecommunications operations;
Š Media: includes television network operations and management;
Š Olivetti: includes manufacturing operations for products and services for Information Technology. It
carries out Solution Provider activities to automate processes and business activities for small and
medium-size enterprises, large corporations and vertical markets;
Š Other Operations: includes finance companies and other minor companies not strictly related to the
Scope of consolidation
The changes in the scope of consolidation at December 31, 2012 compared to December 31, 2011 are listed
below. Such changes did not materially impact the consolidated financial statements as of, and for the year ended
December 31, 2012.
Š Entry of companies in the scope of consolidation:
Company Business Unit Month
LA7 S.r.l. new company(*) Media May 2012
(*) Such new company is the result of the spin-off of the television asset by Telecom Italia Media S.p.A.
Š Exit of companies from the scope of consolidation:
Matrix S.p.A. sold Other operations October 2012
Olivetti Holding B.V. liquidated Other operations October 2012
Latin American Nautilus Mexico S.A. liquidated Domestic May 2012
Teco Soft Argentina S.A. liquidated Other operations March 2012
F-13

Š Merger of companies:
4G Holding S.p.A. merged in 4G Retail S.r.l. Domestic November 2012
Mediterranean Nautilus B.V. merged in Lan Med Nautilus Ltd Domestic November 2012
Saiat Società Attività Intermedie
Ausiliarie TLC S.p.A.
merged in Telecom Italia S.p.A. Other operations November 2012
Tim Fiber SP Ltda
Tim Fiber RJ S.A.
merged in Tim Celular S.A. Brazil August 2012
Telecom Italia Audit and Compliance
Services Scarl
merged in Telecom Italia S.p.A. Domestic January 2012
A breakdown by number of the subsidiaries, associates and joint ventures of the Telecom Italia Group at
December 31, 2012 and December 31, 2011 is as follows:
December 31, 2012
Italy Abroad Total
Companies
subsidiaries consolidated line-by-line . . . . . . . . . . . . . . . . . . . . . . . . . . 42 61 103
joint ventures accounted for using the equity method . . . . . . . . . . 1 — 1
associates accounted for using the equity method . . . . . . . . . . . . . 15 — 15
Total companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 61 119
December 31, 2011
Italy Abroad Total
Companies
subsidiaries consolidated line-by-line . . . . . . . . . . . . . . . . . . . . . . . . . . 45 67 112
joint ventures accounted for using the equity method . . . . . . . . . . 1 — 1
associates accounted for using the equity method . . . . . . . . . . . . . 15 — 15
Total companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 67 128
Further details are provided in Note “List of companies of the Telecom Italia Group”.
NOTE 2—ACCOUNTING POLICIES
Going concern
The consolidated financial statements for the year ended December 31, 2012 have been prepared on a going
concern basis as there is the reasonable expectation that Telecom Italia will continue its operational activities in
the foreseeable future (and in any event with a time horizon of at least twelve months).
In particular, consideration has been given to the following factors which management believes, at this time, are
not such as to generate doubts as to the Group’s ability to continue as a going concern:
Š 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 Telecom Italia Group are exposed:
Š changes in the general macroeconomic condition in the Italian, European and South American
markets;
Š variations in business conditions;
Š changes to laws and regulations (price and rate variations);
Š outcomes of legal disputes and proceedings with regulatory authorities, competitors and other
parties;
Š financial risks (interest rate and/or exchange rate trends);
F-14

Š the mix between risk capital and debt capital considered optimal as well as the policy for the
remuneration of risk capital, described in the paragraph “Share capital information” under the Note
“Equity”;
Š the policy for financial risk management (market risk, credit risk and liquidity risk) described in the Note
“Financial risk management”.
Principles of consolidation
The consolidated financial statements include the financial statements of all subsidiaries from when control over
such subsidiaries commences until the date that control ceases.
The statement of financial position date of all the subsidiaries’ financial statements coincides with that of the
Parent.
Control exists when the Parent, directly or indirectly, has the majority of voting rights or has the power to
determine, also through contractual agreements, the financial and operating policies of an enterprise so as to
obtain benefits from its activities.
In the preparation of the consolidated financial statements, assets, liabilities, revenues and expenses of the
consolidated companies are consolidated on a line-by-line basis and non-controlling interests in equity and in the
profit (loss) for the year are disclosed separately under appropriate captions, respectively, in the consolidated
statement of financial position, in the separate consolidated income statement and in the consolidated statement
of comprehensive income.
Under IAS 27, the total comprehensive loss (including the profit or loss for the year) is attributed to the owners of
the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit
balance.
All intragroup balances and transactions and any gains and losses arising from intragroup transactions are
eliminated in consolidation.
The carrying amount of the investment in each subsidiary is eliminated against the corresponding share of equity
in each subsidiary, after adjustment, if any, to fair value at the acquisition date of control. At that date, goodwill is
recorded as an intangible asset, as described below, whereas any gain from a bargain purchase or negative
goodwill is recognized in the separate consolidated income statement.
Assets and liabilities of foreign consolidated subsidiaries expressed in currencies other than euro are translated using
the exchange rates in effect at the statement of financial position date (the current method); income and expenses
are translated at the average exchange rates for the year. Exchange differences resulting from the application of this
method are classified as equity until the entire disposal of the investment or upon loss of control of the foreign
subsidiary. Upon partial disposal, without losing control, the proportionate share of the cumulative amount of
exchange differences related to the disposed interest is recognized in non-controlling interests.
The cash flows of foreign consolidated subsidiaries expressed in currencies other than Euro included in the
consolidated statement of cash flows are translated into Euro at the average exchange rates for the year.
Goodwill and fair value adjustments arising from the allocation of the purchase price of a foreign entity are
recorded in the relevant foreign currency and are translated using the year-end exchange rate.
In the consolidated financial statements, investments in associates and joint ventures are accounted for using the
equity method, as provided, respectively, by IAS 28 (Investments in Associates) and IAS 31 (Interests in Joint
Ventures). Associates are enterprises in which the Group holds at least 20% of the voting rights or exercises a
significant influence, but no control or joint control over the financial and operating policies.
In particular, under the equity method the investment is initially recognized at cost and adjusted thereafter for
the post-acquisition change in the investor’s share of net assets of the investee. The profit or loss of the investor
includes the investor’s share of the profit or loss of the investee.
F-15

The consolidated financial statements include the Group’s share of profits (losses) of associates and joint ventures
accounted for using the equity method from the date that significant influence or joint control commences until
the date such circumstances cease. When the Group’s share of losses of an associate or a joint venture, if any,
exceeds the carrying amount of the investment on the Group’s statement of financial position, the carrying
amount of the investment is reduced to zero and the share of further losses is not recognized except to the extent
that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.
Gains and losses arising from transactions with associates or joint ventures are eliminated to the extent of the
Group’s interest in those entities.
Under IAS 27, changes in a parent’s ownership interest in a subsidiary that do not result in a loss of control are
accounted for as equity transactions. In such circumstances the carrying amounts of the controlling and non-
controlling interests shall be adjusted to reflect the changes in their relative interests in the subsidiary. Any
difference between the amount by which the non-controlling interests are adjusted and the fair value of the
consideration paid or received shall be recognized directly in equity and attributed to the owners of the Parent.
Intangible assets
Goodwill
Under IFRS 3 (Business Combinations), goodwill is recognized as of the acquisition date of control and measured
as the excess of (a) over (b) below:
a) the aggregate of:
Š the consideration transferred (measured in accordance with IFRS 3; it is generally recognized on the
basis of the acquisition date fair value);
Š the amount of any non-controlling interest in the acquiree measured at the non-controlling interest’s
proportionate share of the acquiree’s identifiable net assets;
Š in a business combination achieved in stages, the acquisition date fair value of the acquirer’s previously
held equity interest in the acquiree;
b) the acquisition date fair value of the identifiable assets acquired net of the identifiable liabilities assumed
measured at the acquisition date of control.
IFRS 3 requires, inter alia, the following:
Š incidental costs incurred in connection with a business combination are charged to the separate
consolidated income statement;
Š in a business combination achieved in stages, the acquirer shall remeasure its previously held equity
interest in the acquiree at its fair value at the acquisition date of control and recognize the resulting
gain or loss, if any, in the separate consolidated income statement.
Goodwill is classified in the statement of financial position as an intangible asset with an indefinite useful life.
Goodwill initially recorded is subsequently reduced only for impairment losses. Further details are provided in the
accounting policy Impairment of tangible and intangible assets—Goodwill, reported below. In case of loss of
control of a subsidiary, the relative amount of goodwill is taken into account in calculating the gain or loss on
disposal.
In the context of IFRS first-time adoption, the Group elected not to apply IFRS 3 (Business Combinations)
retrospectively to those business combinations which had arisen before January 1, 2004. As a consequence,
goodwill on acquisitions before the date of transition to IFRS was brought forward at the previous Italian GAAP
amounts, and was tested for impairment at that date.
Other intangible assets with an indefinite useful life
Intangible assets with an indefinite useful life are not amortized systematically. Instead, they undergo impairment
testing at least annually.
F-16

Development costs
Costs incurred internally for the development of new products and services represent either intangible assets
(mainly costs for software development) or tangible assets produced internally. Such costs are capitalized only
when all the following conditions are satisfied: i) the cost attributable to the development phase of the asset can
be measured reliably, ii) there is the intention, the availability of financial resources and the technical ability to
complete the asset and make it available for use or sale and iii) it can be demonstrated that the asset will be able
to generate future economic benefits.
Capitalized development costs comprise only expenditures that can be attributed directly to the development
process and are amortized systematically over the estimated product or service life so that the amortization
method reflects the pattern in which the asset’s future economic benefits are expected to be consumed by the
entity.
Other intangible assets with a finite useful life
Other purchased or internally-generated assets with a finite useful life are recognized as assets, in accordance
with IAS 38 (Intangible Assets), where it is probable that the use of the asset will generate future economic
benefits and where the cost of the asset can be measured reliably.
Such assets are recorded at purchase or production cost and amortized on a straight-line basis over their
estimated useful lives; the amortization rates are reviewed annually and revised if the current estimated useful life
is different from that estimated previously. The effect of such changes is recognized in the separate consolidated
income statement prospectively.
For a small portion of mobile and broadband offerings, the Group capitalizes directly attributable subscriber
acquisition costs (represented by commissions for the sales network and subsidies for the purchase of handsets)
when the following conditions are met:
Š the capitalized costs can be measured reliably;
Š there is a contract binding the customer for a specific period of time;
Š it is probable that the amount of the capitalized costs will be recovered through the revenues generated
by the services contractually provided, or, where the customer withdraws from the contract in advance,
through the collection of the penalty.
Capitalized subscriber acquisition costs are amortized on a straight-line basis over the foreseen minimum period
of the underlying contract (between 12 and 30 months).
In all other cases, subscriber acquisition costs are expensed when incurred.
Tangible assets
Property plant and equipment owned
Property, plant and equipment owned is stated at acquisition or production cost. Subsequent expenditures are
capitalized only if they increase the future economic benefits embodied in the related item of property, plant and
equipment. All other expenditures are expensed as incurred.
Cost also includes the expected costs of dismantling the asset and restoring the site if a legal or constructive
obligation exists. The corresponding liability is recognized when the obligation arises in the statement of financial
position under provisions at its present value. These capitalized costs are depreciated and charged to the separate
consolidated income statement over the useful life of the related tangible assets.
The recalculation of estimates for dismantling costs, discount rates and the dates in which such costs are
expected to be incurred is reviewed annually, at each financial year-end. Changes in the above liability must be
recognized as an increase or decrease of the cost of the relative asset; the amount deducted from the cost of the
asset must not exceed its carrying amount. The excess if any, should be recorded immediately in the separate
consolidated income statement, conventionally under the line item “Depreciation”.
Depreciation of property, plant and equipment owned is calculated on a straight-line basis over the estimated
useful life of the assets.
F-17

The depreciation rates are reviewed annually and revised if the current estimated useful life is different from that
estimated previously. The effect of such changes is recognized in the separate consolidated income statement
prospectively.
Land, including land pertaining to buildings, is not depreciated.
Assets held under finance leases
Assets held under finance leases, in which substantially all the risks and rewards of ownership are transferred to
the Group, are initially recognized as assets of the Group at fair value or, if lower, at the present value of the
minimum lease payments, including bargain purchase options. The corresponding liability due to the lessor is
included in the statement of financial position under financial liabilities.
Lease payments are apportioned between interest (recognized in the separate consolidated income statement)
and principal (recognized as a deduction from liabilities). This split is determined so as to produce a constant
periodic rate of interest on the remaining balance of the liability.
Furthermore, gains realized on sale and leaseback transactions that are recorded under finance lease contracts are
deferred over the lease term.
The depreciation policy for depreciable assets held under finance leases is consistent with that for depreciable
assets that are owned. If there is no reasonable certainty over the acquisition of the ownership of the asset at the
end of the lease period, assets held under finance leases are depreciated over the shorter of the lease term and
their useful lives.
Leases where the lessor retains substantially all the risks and rewards of ownership of the assets are accounted for
as operating leases. Operating lease rentals are charged to the separate consolidated income statement on a
straight-line basis over the lease term.
Capitalized borrowing costs
Under IAS 23 (Borrowing Costs), the Group capitalizes borrowing costs only if they are directly attributable to the
acquisition, construction or production of a qualifying asset, that is an asset that takes a substantial period of time
(conventionally more than 12 months) to get ready for its intended use or sale.
Capitalized borrowing costs are recorded in the separate consolidated income statement and deducted from the
“finance expense” line item to which they relate.
Impairment of intangible and tangible assets
Goodwill
Goodwill is tested for impairment at least annually or more frequently whenever events or changes in
circumstances indicate that goodwill may be impaired, as set forth in IAS 36 (Impairment of Assets); however,
when the conditions that gave rise to an impairment loss no longer exist, the original amount of goodwill is not
reinstated.
The test is generally conducted at the end of every year so the date of testing is the year-end closing date of the
financial statements. Goodwill acquired and allocated during the year is tested for impairment at the end of the
year in which the acquisition and allocation took place.
To test for impairment, goodwill is allocated, at the date of acquisition, to each cash-generating unit or group of
cash-generating units which is expected to benefit from the acquisition.
If the carrying amount of the cash-generating unit (or group of cash-generating units) exceeds the recoverable
amount, an impairment loss is recognized in the separate consolidated income statement. The impairment loss is
first recognized as a deduction of the carrying amount of goodwill allocated to the cash-generating unit (or group
F-18

of cash-generating units) and then only applied to the other assets of the cash-generating unit in proportion to
their carrying amount, up to the recoverable amount of the assets with a finite useful life. The recoverable amount
of a cash-generating unit (or group of cash-generating units) to which goodwill is allocated is the higher of fair
value less costs to sell and its value in use.
In calculating the value in use, the estimated future cash flows are discounted to present value using a discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. The
future cash flows are those arising from an explicit time horizon between three and five years as well as those
extrapolated to estimate the terminal value. The long-term growth rate used to estimate the terminal value of the
cash-generating unit (or group of cash-generating units) is assumed not to be higher than the average long-term
growth rate of the segment, country or market in which the cash-generating unit (or group of cash-generating
units) operates.
The value in use of cash-generating units which operate in a foreign currency is estimated in the local currency by
discounting cash flows to present value on the basis of an appropriate rate for that currency. The present value
obtained is translated to Euro at the spot rate on the date of the impairment test (in the case of the Telecom
Italia Group, the date of the financial statements).
Future cash flows are estimated by referring to the current operating conditions of the cash generating unit (or
group of cash-generating units) and, therefore, do not include either benefits originating from future restructuring
for which the entity is not yet committed, or future investments for the improvement or optimization of the cash-
generating unit.
For the purpose of calculating impairment, the carrying amount of the cash-generating unit is established based
on the same criteria used to determine the recoverable amount of the cash generating unit, excluding surplus
assets (that is, financial assets, deferred tax assets and net non-current assets held for sale) and includes the
goodwill attributable to non-controlling interests.
After conducting the goodwill impairment test for the cash-generating unit (or groups of cash-generating units), a
second level of impairment testing is carried out which includes the corporate assets which do not generate
positive cash flows and which cannot be allocated by a reasonable and consistent criterion to the single units. At
this second level, the total recoverable amount of all cash-generating units (or groups of cash-generating units) is
compared to the carrying amount of all cash-generating units (or groups of cash-generating units), including also
those cash-generating units to which no goodwill was allocated, and the corporate assets.
Intangible and tangible assets with a finite useful life
At every closing date, the Group assesses whether there are any indications of impairment of intangible and
tangible assets with a finite useful life. Both internal and external sources of information are used for this purpose.
Internal sources include obsolescence or physical damage, and significant changes in the use of the asset and the
economic performance of the asset compared to estimated performance. External sources include the market
value of the asset, changes in technology, markets or laws, increases in market interest rates and the cost of
capital used to evaluate investments, and an excess of the carrying amount of the net assets of the Group over
market capitalization.
When indicators of impairment exist, the carrying amount of the assets is reduced to the recoverable amount. The
recoverable amount of an asset is the higher of fair value less costs to sell and its value in use. In calculating the
value in use, the estimated future cash flows are discounted to present value using a discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. Where it is not possible
to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
Impairment losses are recognized in the separate consolidated income statement.
When the conditions that gave rise to an impairment loss no longer exist, the carrying amount of the asset or
cash-generating unit is increased to the revised estimate of its recoverable amount, up to the carrying amount
that would have been recorded had no impairment loss been recognized. The reversal of an impairment loss is
recognized as income in the separate consolidated income statement.
F-19

Financial instruments
Other investments
Other investments (other than those in subsidiaries, associates and joint ventures) are classified as non-current or
current assets if they will be kept in the Group’s portfolio for a period of more or not more than 12 months,
respectively.
Upon acquisition, investments are classified in the following categories:
Š “available-for-sale financial assets”, as non-current or current assets;
Š “financial assets at fair value through profit or loss”, as current assets held for trading.
Other investments classified as “available-for-sale financial assets” are measured at fair value; changes in the fair
value of these investments are recognized in a specific equity reserve under the other components of the
statement of comprehensive income (Reserve for available-for-sale financial assets) until the financial asset is
disposed of or impaired, at which time the equity reserve is reversed to the separate consolidated income
statement.
Other unlisted investments classified as “available-for-sale financial assets” whose fair value cannot be measured
reliably are measured at cost adjusted by any impairment losses which are recognized in the separate
consolidated income statement, as required by IAS 39.
Impairment losses recognized on other investments classified as “available-for-sale financial assets” are not
reversed.
Changes in the value of other investments classified as “financial assets at fair value through profit or loss” are
recognized directly in the separate consolidated income statement.
Securities other than investments
Securities other than investments classified as non-current assets are those held to maturity. The assets are
recorded on the trade date and, on initial recognition, are stated at acquisition cost, including transaction costs,
and subsequently measured at amortized cost.
Amortized cost represents the initial cost of the financial instrument net of principal repayments received,
adjusted (up or down) by the amortization of any differences between the initial amount and the maturity amount
using the effective interest method, less any writedown for impairment or uncollectibility, if any.
Securities other than investments classified as current assets are those that, by decision of the directors, are
intended to be kept in the Group’s portfolio for a period of not more than 12 months, and are included in the
following categories:
Š held to maturity (originally more than 3 months but less than 12 months, or, with an original maturity
of more than 12 months but the remaining maturity at the date of purchase is more than 3 months but
less than 12 months) and measured at amortized cost;
Š held for trading and measured at fair value through profit or loss;
Š available-for-sale and measured at fair value with a contra-entry to an equity reserve.
Changes in the value of securities other than investments classified as available-for-sale are recognized in an
equity reserve (Reserve for available-for-sale financial assets) until the financial asset is disposed of or impaired,
at which time the equity reserve is reversed to the separate consolidated income statement.
When the conditions that gave rise to impairment losses on securities other than investments held to maturity or
classified as “available-for-sale financial assets” no longer exist, the impairment losses are reversed.
F-20

Receivables and loans
Receivables and loans classified as either non-current or current assets are initially recognized at fair value and
subsequently measured at amortized cost.
Cash and cash equivalents
Cash and cash equivalents are recorded, according to their nature, at nominal value or amortized cost.
Cash equivalents are short-term and highly liquid investments that are readily convertible to known amounts of
cash, subject to an insignificant risk of change in value and their original maturity or the remaining maturity at the
date of purchase does not exceed 3 months.
Impairment of financial assets
At every closing date, assessments are made as to whether there is any objective evidence that a financial asset
or a group of financial assets may be impaired. If any such evidence exists, an impairment loss is recognized in
the separate consolidated income statement for financial assets measured at cost or amortized cost; for
“available-for-sale financial assets” reference should be made to the accounting policy reported previously.
Financial liabilities
Financial liabilities comprise financial debt, including advances received on the assignment of accounts receivable
and other financial liabilities such as derivatives and finance lease obligations.
In accordance with IAS 39, they also include trade and other payables.
Financial liabilities other than derivatives are initially recognized at fair value and subsequently measured at
amortized cost. Amortized cost represents the initial amount net of principal repayments made, adjusted (up or
down) by the amortization of any differences between the initial amount and the maturity amount using the
effective interest method.
Financial liabilities hedged by derivative instruments designed to manage exposure to changes in fair value of the
liabilities (fair value hedge derivatives) are measured at fair value in accordance with the hedge accounting
principles of IAS 39. Gains and losses arising from re-measurement at fair value, to the extent of the hedged
component, are recognized in the separate consolidated income statement and are offset by the effective portion
of the gain or loss arising from re-measurement at fair value of the hedging instrument.
Financial liabilities hedged by derivative instruments designed to manage exposure to variability in cash flows
(cash flow hedge derivatives) are measured at amortized cost in accordance with the hedge accounting principles
of IAS 39.
Derivatives
Derivatives are used by the Telecom Italia Group to manage its exposure to exchange rate and interest rate risks
and to diversify the parameters of debt so that costs and volatility can be reduced to within pre-established
operational limits.
In accordance with IAS 39, derivative financial instruments qualify for hedge accounting only when:
a) at the inception of the hedge, the hedging relationship is formally designated and documented;
b) the hedge is expected to be highly effective;
c) its effectiveness can be reliably measured;
d) the hedge is highly effective throughout the financial reporting periods for which it is designated.
All derivative financial instruments are measured at fair value in accordance with IAS 39.
F-21

When derivative financial instruments qualify for hedge accounting, the following accounting treatment applies:
Š Fair value hedge—Where a derivative financial instrument is designated as a hedge of the exposure to
changes in fair value of an asset or liability due to a particular risk, the gain or loss from re-measuring
the hedging instrument at fair value is recognized in the separate consolidated income statement. The
gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the
hedged item and is recognized in the separate consolidated income statement.
Š Cash flow hedge—Where a derivative financial instrument is designated as a hedge of the exposure to
variability in cash flows of an asset or liability or a highly probable forecasted transaction, the effective
portion of any gain or loss on the derivative financial instrument is recognized directly in a specific
equity reserve (Reserve for cash flow hedges). The cumulative gain or loss is removed from equity and
recognized in the separate consolidated income statement at the same time the hedged transaction
affects the separate consolidated income statement. The gain or loss associated with the ineffective
portion of a hedge is recognized in the separate consolidated income statement immediately. If the
hedged transaction is no longer probable, the cumulative gains or losses included in the equity reserve
are immediately recognized in the separate consolidated income statement.
If hedge accounting is not appropriate, gains or losses arising from the measurement of the fair value of
derivative financial instruments are directly recognized in the separate consolidated income statement.
Sales of receivables
The Telecom Italia Group carries out sales of receivables under factoring arrangements in accordance with
Law 52/1991. These sales, in the majority of cases, are characterized by the transfer of substantially all the risks
and rewards of ownership of the receivables to third parties, meeting IFRS requirements for derecognition.
Specific servicing contracts, through which the buyer institutions conferred a mandate to Telecom Italia S.p.A. for
the collection and management of the receivables, leave the current Company/customer relationship unaffected.
Amounts due from customers on construction contracts
Amounts due from customers under construction contracts, regardless of the duration of the contracts, are
recognized in accordance with the percentage of completion method and classified under current assets.
Losses on such contracts, if any, are recorded in full in the separate consolidated income statement when they
become known.
Inventories
Inventories are measured at the lower of purchase and production cost and estimated realizable value; cost is
determined on a weighted average basis. Provision is made for obsolete and slow-moving inventories based on
their expected future use and estimated realizable value.
Non-current assets held for sale/Discontinued operations
Non-current assets (or disposal groups) whose carrying amount will mainly be recovered through sale, rather than
through ongoing use, are classified as held for sale and shown separately in the statement of financial position
from other assets and liabilities. The corresponding amounts for the previous period are not reclassified.
An operating asset sold (Discontinued Operations) is a component of an entity that has been divested or classified
as held for sale and:
Š represents a major line of business or geographical area of operations;
Š is part of a single coordinated plan to dispose of a separate major line of business or geographical area
of operations; or
Š is a subsidiary acquired exclusively with a view to resale.
F-22

The results arising from Discontinued Operations—whether disposed of or classified as held for sale—are shown
separately in the separate consolidated income statement, net of tax effects. The corresponding values for the
previous periods, where present, are reclassified and reported separately in the separate consolidated income
statement, net of tax effects, for comparative purposes.
Non-current assets (or disposal groups) classified as held for sale are first recognized in compliance with the
appropriate IFRS applicable to the specific assets and liabilities and subsequently measured at the lower of the
carrying amount and the fair value, less costs to sell. Any subsequent impairment losses are recognized as a direct
adjustment to the non-current assets (or disposal groups) classified as held for sale and expensed in the separate
consolidated income statement.
An entity shall recognize a gain for any subsequent increase in fair value less costs to sell of an asset, but not in
excess of the cumulative impairment loss that has been recognized.
Employee benefits
Provision for employee severance indemnity
Employee severance indemnity, mandatory for Italian companies pursuant to art. 2120 of the Italian Civil Code, is
deferred compensation and is based on the employees’ years of service and the compensation earned by the
employee during the service period.
Under IAS 19 (Employee Benefits), the employee severance indemnity as calculated is considered a “Defined
benefit plan” and the related liability recognized in the statement of financial position (Provision for employee
severance indemnities) is determined by actuarial calculations.
Following the early adoption of the revised version of IAS 19 (Employee Benefits), starting from the first half of
2012, the remeasurements of the net defined benefit liability are recognized in other components of other
comprehensive income. Service cost of Italian companies that employ less than 50 employees, as well as interest
expenses related to the “time value” component of the actuarial calculations (the latter classified as Finance
expenses), are recognized in the separate consolidated income statement.
Starting from January 1, 2007, Italian Law introduced for employees the choice to direct their accruing indemnity
either to supplementary pension funds or leave the indemnity as an obligation of the company. Companies that
employ at least 50 employees should transfer the employee severance indemnity to the “Treasury fund” managed
by INPS, the Italian Social Security Institute.
Consequently, the Group’s obligation to INPS and the contributions to supplementary pension funds take the
form, under IAS 19, of a “Defined contribution plan” whereas the amounts recorded in the provision for employee
severance indemnities retain the nature of a “Defined benefit plan”.
Equity compensation plans
The companies of the Group provide additional benefits to certain managers of the Group through equity
compensation plans (stock options and long-term incentive plans). The above plans are recognized in accordance
with IFRS 2 (Share-Based Payment).
In accordance with IFRS 2, such plans represent a component of the beneficiaries’ compensation. Therefore, for
the plans that provide for compensation in equity instruments, the cost is represented by the fair value of such
instruments at the grant date, and is recognized in the separate consolidated income statement in “Employee
benefits expenses” over the period between the grant date and vesting date with a contra-entry to an equity
reserve denominated “Other equity instruments”. Changes in the fair value subsequent to the grant date do not
affect the initial measurement. At the end of each year, adjustments are made to the estimate of the number of
rights that will vest up to expiry. The impact of the change in estimate is deducted from “Other equity
instruments” with a contra-entry to “Employee benefits expenses”.
For the portion of the plans that provide for the payment of compensation in cash, the amount is recognized in
liabilities as a contra-entry to “Employee benefits expenses”; at the end of each year such liability is measured at
fair value.
F-23

Provisions
The Group records provisions for risks and charges when it has a present obligation, legal or constructive, to a
third party, as a result of a past event, when it is probable that an outflow of Group resources will be required to
satisfy the obligation and when the amount of the obligation can be estimated reliably.
If the effect of the time value is material, and the payment date of the obligations can be reasonably estimated,
provisions to be accrued are the present value of the expected cash flows, taking into account the risks associated
with the obligation. The increase in the provision due to the passage of time is recognized as “Finance expenses”.
Treasury shares
Treasury shares are recognized as a deduction from equity. In particular, the nominal amount of treasury shares is
reported as a deduction from the share capital issued while the excess cost of acquisition over the nominal
amount is presented as a deduction from “Other reserves and retained earnings (accumulated losses), including
profit (loss) for the year”.
Foreign currency transactions
Transactions in foreign currencies are recorded at the foreign exchange rate prevailing at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign
exchange rate prevailing at the statement of financial position date. Exchange differences arising from the
settlement of monetary items or from their conversion at rates different from those at which they were initially
recorded during the year or at the end of the prior year, are recognized in the separate consolidated income
statement.
Revenues
Revenues include only the gross inflows of economic benefits received and receivable by the entity on its own
account. Amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value
added taxes are not economic benefits which flow to the entity and do not result in increases in equity. Therefore,
they are excluded from revenues.
Revenues are recognized to the extent that it is probable that economic benefits will flow to the Group and their
amount can be measured reliably. Revenues are stated net of discounts, allowances, and returns.
Š Revenues from services rendered
Revenues from services rendered are recognized in the separate consolidated income statement according to
the stage of completion of the service and only when the outcome of the service rendered can be estimated
reliably. Traffic revenues from interconnection and roaming are reported gross of the amounts due to other
TLC operators. Revenues for delivering information or other content are recognized on the basis of the
amount invoiced to the customer, when the service is rendered directly by the Group. In the event that the
Group is acting as agent (for example non-geographic numbers) only the commission received from the
content provider is recognized as revenue.
Revenues from the activation of telephone services (as well as the related costs) are deferred over the
expected duration of the relationship with the customer (generally 8 years for retail customers and 3 years
for wholesale customers). In particular, costs from the activation of telephone services are deferred taking
also into account the reasonable expectations of cash flows arising from these services.
Revenues from prepaid traffic are recorded on the basis of the minutes used at the contract price per minute.
Deferred revenues for unused minutes are recorded in “Trade and miscellaneous payables and other current
liabilities” in the statement of financial position.
Š Revenues from sales and bundled offerings
Revenues from sales (telephone and other equipment) are recognized when the significant risks and rewards
of ownership are transferred to the buyer.
F-24

For offerings which include the sale of mobile handsets and service contracts, the Telecom Italia Group
recognizes revenues related to the sale of the handset when it is delivered to the final customer whereas
traffic revenues are recorded on the basis of the minutes used; the related subscriber acquisition costs,
including handset subsidies and sales commissions, are expensed as incurred. The revenues allocated to the
handset sale are limited to the contract amount that is not contingent upon the rendering of
telecommunication services, i.e. the residual of the amount paid by the customer exceeding the services
value.
A small portion of the offerings in the mobile and broadband businesses are contracts with a minimum
contractual period between 12 and 30 months which include an enforced termination penalty. For these
contracts, the subscriber acquisition costs are capitalized under “Intangible assets with a finite useful life” if
the conditions for capitalization as described in the related accounting policy are met.
Š Revenues on construction contracts
Revenues on construction contracts are recognized based on the stage of completion (percentage of
completion method).
Research costs and advertising expenses
Research costs and advertising expenses are charged directly to the separate consolidated income statement in
the year in which they are incurred.
Finance income and expenses
Finance income and expenses are recognized on an accrual basis and include interest accrued on the related
financial assets and liabilities using the effective interest rate method, the changes in fair value of derivatives and
other financial instruments measured at fair value through profit or loss, gains and losses on foreign exchange
and financial instruments (including derivatives).
Dividends
Dividends received from companies other than subsidiaries, associates and joint ventures are recognized in the
separate consolidated income statement in the year in which they become receivable following the resolution by
the shareholders’ meeting for the distribution of dividends of the investee companies.
Dividends payable to third parties are reported as a change in equity in the year in which they are approved by the
shareholders’ meeting.
Taxes
Income taxes include all taxes calculated on the basis of the taxable income of the companies of the Group.
Income taxes are recognized in the separate consolidated income statement, except to the extent that they relate
to items directly charged or credited to equity, in which case the related tax is recognized in the relevant equity
reserves. In the Statement of comprehensive income the amount of income taxes relating to each item included
as “Other components of the Statement of comprehensive income” is indicated.
The income tax expense that could arise on the remittance of a subsidiary’s retained earnings is only recognized
where there is the actual intention to remit such earnings.
Deferred tax liabilities / assets are recognized using the “Balance sheet liability method”. They are calculated on
all temporary differences that arise between the tax base of an asset or liability and the carrying amounts in the
consolidated financial statements, except for non tax-deductible goodwill and for those differences related to
investments in subsidiaries which will not reverse in the foreseeable future. Deferred tax assets relating to unused
tax loss carryforwards are recognized to the extent that it is probable that future taxable income will be available
against which they can be utilized. Current and deferred tax assets and liabilities are offset when the income taxes
are levied by the same tax authority and there is a legally enforceable right of offset. Deferred tax assets and
F-25

liabilities are determined based on enacted tax rates in the respective jurisdictions in which the Group operates
that are expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled.
Taxes, other than income taxes, are included in “Other operating expenses”.
Earnings per share
Basic earnings per ordinary share is calculated by dividing the Group’s profit attributable to ordinary shares by the
weighted average number of ordinary shares outstanding during the year, excluding treasury shares. Similarly,
basic earnings per savings share is calculated by dividing the Group’s profit attributable to savings shares by the
weighted average number of savings shares outstanding during the year. For diluted earnings per ordinary share,
the weighted average number of shares outstanding is adjusted by all dilutive potential shares (for example, the
exercise of rights on shares with dilutive effects). The Group profit is also adjusted to reflect the impact of these
transactions net of the related tax effects.
Use of estimates
The preparation of consolidated financial statements and related disclosure in conformity with IFRS requires
management to make estimates and assumptions based also on subjective judgments, past experience and
hypotheses 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 year.
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.
The most important accounting estimates which require a high degree of subjective assumptions and judgments
are addressed below:
Financial statement
line item/area Accounting estimates
Goodwill The impairment test on goodwill is carried out by comparing the carrying amount of
cash-generating units and their recoverable amount. The recoverable amount of a
cash-generating unit is the higher of fair value, less costs to sell, and its value in use.
This complex valuation process entails the use of methods such as the discounted
cash flow method which uses assumptions to estimate cash flows. The recoverable
amount depends significantly on the discount rate used in the discounted cash flow
model as well as the expected future cash flows and the growth rate used for the
extrapolation. The key assumptions used to determine the recoverable amount for the
different cash generating units, including a sensitivity analysis, are detailed in the Note
“Goodwill”.
Business combinations The recognition of business combinations requires that assets and liabilities of the
acquiree be recorded at their fair value at the acquisition date of control, as well as
the possible recognition of goodwill, through the use of a complex process in
determining such values.
Bad debt provision The recoverability of receivables is measured by considering the uncollectibility of
receivables, their age and losses on receivables recognized in the past by type of
similar receivables.
Depreciation and
amortization expense
Changes in the economic conditions of the markets, technology and competitive
forces could significantly affect the estimated useful lives of tangible and intangible
non-current assets and may lead to a difference in the timing and amount of
depreciation and amortization expense.
F-26

Financial statement
line item/area Accounting estimates
Accruals, contingent
liabilities and employee
benefits
As regards the provisions for restoration costs the estimate of future costs to
dismantle tangible assets and restore the site is a complex process that requires an
assessment of the liability arising from such obligations which seldom are entirely
defined by law, administrative regulations or contract clauses and which normally are
to be complied with after an interval of several years.
The accruals related to legal, arbitration and fiscal disputes are the result of a complex
estimation process based upon the probability of an unfavorable outcome.
Employee benefits, especially the provision for employee severance indemnities, are
calculated using actuarial assumptions; changes in such assumptions could have a
material impact on such liabilities.
Revenues Revenue recognition is influenced by:
Š the expected duration of the relationship with the customer for revenues from
telephone service activations (as well as the related costs);
Š the estimate of the amount of discounts, allowances and returns to be recorded
as a direct deduction from revenues.
Income taxes Income taxes (current and deferred) are calculated in each country in which the Group
operates according to a prudent interpretation of the tax laws in effect. This process
sometimes involves complex estimates to determine taxable income and deductible
and taxable temporary differences between the carrying amounts and the taxable
amounts. In particular, deferred tax assets are recognized to the extent that future
taxable income will be available against which they can be utilized. The measurement
of the recoverability of deferred tax assets, recognized based on both unused tax loss
carryforwards to future years and deductible differences, takes into account the
estimate of future taxable income and is based on conservative tax planning.
Derivative instruments
and equity instruments
The fair value of derivative instruments and equity instruments is determined on the
basis of either prices in regulated markets or quoted prices provided by financial
counterparts, or using valuation models which also take into account subjective
measurements such as, for example, cash flow estimates, expected volatility of prices,
etc.
As required by IAS 8 (Accounting Policies, Changes in Accounting Estimates and Errors) prf. 10, in the absence of
a Standard or an Interpretation that specifically applies to a particular transaction, management carefully
considers subjective valuation techniques and uses its judgment as to the accounting methods to adopt with a
view to providing financial statements which faithfully represent the financial position, the results of operations
and the cash flows of the Group, which reflect the economic substance of the transactions, are neutral, prepared
on a prudent basis and complete in all material respects.
New Standards and Interpretations issued by IASB and in force from January 1, 2012
As required by IAS 8, the application of amendments to IAS 12 (Income Taxes) and to IFRS 7 (Disclosures-
Transfers of Financial Assets), in force from January 1, 2012, did not have an impact on the consolidated financial
statements at December 31, 2012.
New Standards and Interpretations issued by IASB, not yet in force and early adopted
IAS 19 (2011) (Employee benefits)
In June 2011, IASB issued the revised version of IAS 19 (Employee Benefits) which is applicable retrospectively,
starting from January 1, 2013, in accordance with IAS 8 (Accounting Policies, Changes in Accounting Estimates
and Errors). As permitted, Telecom Italia decided to early adopt the amendments to IAS 19 starting from the
Half-year Financial Report at June 30, 2012 in order to reduce the volatility of the values recognized in the
separate consolidated income statement. In particular, under the amended IAS 19 (2011), with reference to the
F-27

employee defined benefit plans (e.g. employee severance indemnity), remeasurements of the net defined benefit
liability are recognized in other components of other comprehensive income. Therefore, other options previously
provided were deleted (including the one adopted by the Telecom Italia Group whereby these components had
been recorded in Employee benefits expenses in the separate consolidated income statement). Service costs as
well as interest expenses related to the “time value” component of the actuarial calculations (the latter
reclassified to Finance expenses), are still recognized in the separate consolidated income statement. The early
adoption of such amendments resulted in the restatement of the 2011 and 2010 separate consolidated income
statements and consolidated statements of comprehensive income, and did not have any impact on the Equity,
other than the reclassification between some reserves (please see Note “Equity”).
Separate consolidated income statements
2011 2010
(millions of euros)
Employee benefits expenses—reversal of actuarial gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (117) (4)
Employee benefits expenses—interest component reclassification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 44
Finance expenses—interest component reclassification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (42) (44)
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 1
Impact on profit (loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84) (3)
The adoption of such amendments did not have any effect on basic and diluted earnings per share in 2010, while
in 2011 had a negative effect of 0.01 euro.
Consolidated statements of comprehensive income
2011 2010
(millions of euros)
Impact on profit (loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84) (3)
Remeasurements of employee defined benefit plans (IAS19)
Actuarial gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 4
Net fiscal impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33) (1)
84 3
Impact on comprehensive profit (loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Consolidated statements of cash flows
The early adoption of the amendments to IAS 19 (2011) did not have an impact on the “Aggregate cash flows” of
the 2011 and 2010 consolidated statements of cash flows and, in particular, the “Cash flows from (used in)
operating activities”.
Consolidated statements of financial position
The early adoption of the amendments to IAS 19 (2011) did not have any impact on the Consolidated statement
of financial position.
F-28

New Standards and Interpretations issued by IASB not yet in force
At the date of preparation of the accompanying consolidated financial statements, the following IFRS,
Amendments and IFRIC interpretations had been published, but their application was not yet mandatory:
IASB/IFRIC documents
Mandatory application:
annual periods
beginning on or after
Amendments to IAS 1 (Presentation of Financial Statements) January 1, 2013
Amendments to IFRS 7 (Disclosures—Offsetting Financial Assets and Financial Liabilities) January 1, 2013
IFRS 13 (Fair value measurement) January 1, 2013
IAS 27 (Separate Financial Statements) January 1, 2013
IAS 28 (Investments in associates and joint ventures) January 1, 2013
IFRS 10 (Consolidated financial statements) January 1, 2013
IFRS 11 (Joint Arrangements) January 1, 2013
IFRS 12 (Disclosure of interests in other entities) January 1, 2013
Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) January 1, 2013
Improvements to IFRS 2009-2011 January 1, 2013
Amendments to IAS 32 (Financial instruments: Presentation—Offsetting Financial Assets
and Financial Liabilities) January 1, 2014
IFRS 9 (Financial Instruments) January 1, 2015
The impacts, if any, arising from their application on the consolidated financial statements are currently being
assessed.
NOTE 3—BUSINESS COMBINATIONS
YEAR 2012
In 2012, there were no business combinations transactions as defined in IFRS 3.
YEAR 2011
Acquisition of the 4G Holding group (4GH)
On July 27, 2011, Telecom Italia, after having received authorization from the Antitrust Authority, finalized the
acquisition of a 71% interest in the company 4G Holding S.p.A., which in turn holds a 100% interest in 4G Retail
S.r.l.. The acquisition involved an outlay of about 8.6 million euros (including incidental expenses). The
transaction was carried out through TLC Commercial Services S.r.l., a wholly-owned subsidiary of the Parent.
4G Holding S.p.A. and 4G Retail S.r.l.. were merged in 2012.
In view of the reciprocal commitments already undertaken by the Telecom Italia Group and the current sole
minority shareholder, Gir S.r.l., as regards the future transfer of the shares held by the latter, the accounting
effects of the business combination have been calculated based on an economic interest of 100% and, as set forth
in IFRS 3, can be summarized as follows:
Š the measurement of the interest acquired is equal to 16 million euros and is inclusive of the
measurement of the future acquisition of the interest held by the minority shareholder;
Š all the assets acquired and the liabilities assumed of the acquired group have been measured for their
recognition at fair value.
Following the measurement of the Assets acquired and Liabilities assumed by 4G group for their recognition at
fair value, the amounts originally determined were confirmed and are shown below:
Final fair value amount
(millions of euros)
Measurement of consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) 16
Value of assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) 67
Value of liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) (67)
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a–b-c) 16
F-29

In addition, the amounts of the most important assets and liabilities of the 4G group as of the acquisition date are
summarized as follows:
4G group—acquisition-date amounts
Final fair value
amount
Carrying
amount
(millions of euros)
Goodwill deriving from business combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 —
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 29
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 45
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) 83 74
Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 5
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 55
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) 67 60
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a-b) 16 14
Acquisition of Tim Fiber SP and Tim Fiber RJ
On October 31, 2011, the acquisition, through the subsidiary Tim Celular S.A., of telecommunications
infrastructure operators in the states of São Paulo and Rio de Janeiro from Companhia Brasiliana de Energia was
finalized and the companies were renamed Tim Fiber SP and Tim Fiber RJ. The acquisition involved an outlay of
approximately 656 million euros (including incidental expenses).
As a result of the above transaction, a 100% interest has been acquired in the company Tim Fiber SP and a 98.3%
interest, subsequently increased to 100%, in the company Tim Fiber RJ.
The accounting effects of the business combination have been calculated based on 100% ownership, as required
by IFRS 3, and can be summarized as follows on a provisional basis:
Š the measurement of the consideration for both companies is equal to 657 million euros and is inclusive of
the non-controlling interest acquired after October 31, 2011;
Š all the assets acquired and the liabilities assumed of the acquired group have been measured for their
recognition at fair value.
During the course of 2012—and in any case within 12 months of acquisition—the provisional amounts of the
assets and liabilities recorded at the acquisition date have been adjusted with retroactive effect to take into
account their acquisition-date fair value with the consequent recalculation of goodwill. In addition to the amounts
of the assets acquired and liabilities assumed, overall final goodwill of 499 million euros was recognized,
calculated as illustrated in the following table:
Tim Fiber SP + Tim
Fiber RJ
Final fair value
amount
Tim Fiber SP + Tim
Fiber RJ
Provisional fair value
amount Change
(millions of euros)
Measurement of consideration . . . . . . . . . . . . . . . . . . . . . . . . . (a) 657 657 —
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) 158 101 57
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a-b) 499 556 (57)
F-30

The most important acquisition-date amounts of the assets and liabilities of the companies Tim Fiber SP and Tim
Fiber RJ are summarized as follows:
Tim Fiber SP and Tim Fiber RJ—acquisition-date amounts
Tim Fiber SP + Tim Fiber RJ
Final fair value
amount
(a)
Provisional
Fair value
amount
(b) Carrying amounts
Change
(a-b)
(millions of euros)
Goodwill arising from the business
combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 556 — (57)
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . 218 131 131 87
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 39 39 —
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) 756 726 170 30
Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . 72 42 42 30
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 27 27 —
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) 99 69 69 30
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a-b) 657 657 101 —
The final allocation of the consideration paid led to a higher loss for the year of 1 million euros in the 2011
separate consolidated income statement. In addition, the changes shown in the table above were mainly due to
the effect of changes in exchange rates.
YEAR 2010
Acquisition of control of Sofora Telecomunicaciones S.A.
On October 13, 2010, once the necessary government authorizations were obtained, an agreement was formalized
for the transfer of an 8% interest in Sofora Telecomunicaciones S.A. (“Sofora”)—the holding company which
controls Telecom Argentina—from the Werthein group to Telecom Italia International, as established in the
agreements signed between the Telecom Italia Group and the Werthein group on August 5, 2010.
The accounting effects of the business combination, as set forth in IFRS 3, can be summarized as follows:
Š the measurement of the interest acquired is equal to 130 million euros and corresponds to the fair value of
the options relinquished by the Telecom Italia Group. Such measurement also includes the control premium;
Š the interest held in the Sofora group before acquisition of control, previously accounted for using the equity
method, was remeasured at fair value at the acquisition date of control and the value came to about
394 million euros. This remeasurement produced a positive impact on the 2010 separate consolidated
income statement of 266 million euros, net of the reversal in the separate consolidated income statement of
the reserve for negative exchange differences;
Š all the assets acquired and liabilities assumed were measured for their recognition at fair value. During the
course of 2011 the provisional amounts of the assets and liabilities recorded at the acquisition date were
adjusted with retroactive effect to take into account their acquisition-date fair value with the consequent
recalculation of goodwill. Besides the amounts allocated to the assets acquired and the liabilities assumed,
goodwill was recognized for 177 million euros, calculated as illustrated in the following table:
Final fair value
amount as
determined in
2011
Provisional
amount
(2010 Financial
Statements) Change
(millions of euros)
Measurement of interest acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 130 —
Fair value of interest held in the Sofora group before acquisition of
control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394 394 —
Amounts of net assets allocated to the non-controlling interests . . . . . . . . 1,948 2,003 (55)
Total (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,472 2,527 (55)
Net assets acquired (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,295 2,361 (66)
Goodwill (a-b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 166 11
F-31

The amounts of the most important assets and liabilities of the Sofora group (Argentina) as of the acquisition date
are summarized as follows:
Sofora group—acquisition date amounts
Final fair value
amount as
determined in 2011
Provisional amount
(2010 Financial
Statements) Carrying amounts
(millions of euros)
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 166 —
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,546 3,648 1,483
of which Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . 1,840 1,807 214
of which Tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,688 1,823 1,251
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 887 887 873
of which Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . 392 392 392
Total assets (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,610 4,701 2,356
Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,101 1,137 377
of which Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 771 807 44
of which Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 100 100
of which Non-current financial liabilities . . . . . . . . . . . . . . . . 183 183 183
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,037 1,037 1,035
of which Current financial liabilities . . . . . . . . . . . . . . . . . . . . 216 216 216
Total liabilities (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,138 2,174 1,412
Net assets (A-B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,472 2,527 944
Share of Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . 1,948 2,003 814
Share of the Telecom Italia Group . . . . . . . . . . . . . . . . . . 524 524 130
“Non-controlling interests” have been measured in proportion to the share of the non-controlling interests in the
net identifiable assets of the acquired company.
Final allocation of the consideration paid led to lower depreciation and amortization charges of 5 million euros
and higher income taxes of 2 million euros in the 2010 separate consolidated income statement.
In 2011, the Telecom Italia Group increased its investment in Sofora Telecomunicaciones S.A. and in Nortel
Inversora S.A. (the controlling holding company of the Telecom Argentina group, which, in turn, is controlled by
Sofora Telecomunicaciones), for a total outlay of 211 million euros (incidental costs included).
In particular:
Š on January 24, 2011, the Telecom Italia Group, through its subsidiary Telecom Italia International N.V.,
purchased 2,351,752 Nortel American Depositary Shares (ADS), representing Preferred B shares, from
Fintech Investment Ltd for 65.8 million U.S. dollars (approximately 48 million euros). The ADSs in question
represent 117,587.6 Preferred B shares (without voting rights). This share package was later transferred to
the Argentina subsidiary Tierra Argentea S.A., a wholly-owned subsidiary of the Telecom Italia Group;
Š on March 9, 2011, Telecom Italia, through its subsidiary Telecom Italia International N.V., purchased,
for a total amount of approximately 104 million euros, a 10% stake in Sofora Telecomunicaciones S.A.
from the local partner Werthein and by so doing increased its investment holding in Sofora from 58% to
68% of the company’s share capital;
Š on October 27, 2011, Tierra Argentea S.A., purchased 14.48 million Telecom Argentina Class B shares at
the price of 20.50 Argentine pesos per share. In the following months of November and December, the
company purchased another 1.1 million shares of the same class. The equivalent amount of the
transactions was equal in total to 319 million Argentine pesos (about 56 million euros).
The transactions did not alter or modify either the governance rights of the Telecom Argentina group established
by agreement between the shareholders signed by the Telecom Italia Group and Werthein, which is still in force,
or the commitments undertaken by the Telecom Italia Group with the Argentine antitrust authorities.
F-32

Following these acquisitions, the economic interest of the Telecom Italia Group in Telecom Argentina went from
16.2% at December 31, 2010 to 22.7% at December 31, 2011.
NOTE 4—GOODWILL
Goodwill shows the following breakdown and changes during 2011 and 2012:
As of
December 31,
2010 Increase Decrease Impairments
Exchange
differences
As of
December 31,
2011
(millions of euros)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,947 16 (10) (7,307) 34,646
Core Domestic . . . . . . . . . . . . . . . . . . 41,532 16 (10) (7,307) 34,231
International Wholesale . . . . . . . . 415 415
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,609 499 (154) 1,954
Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 (8) 176
Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 (57) 126
Other operations . . . . . . . . . . . . . . . . . . . . — —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,923 515 (10) (7,364) (162) 36,902
As of
December 31,
2011 Increase Decrease Impairments
Exchange
differences
As of
December 31,
2012
(millions of euros)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,646 (4,016) 30,630
Core Domestic . . . . . . . . . . . . . . . . . . 34,231 (4,016) 30,215
International Wholesale . . . . . . . . 415 415
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,954 (195) 1,759
Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 (168) (8) —
Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 (105) 21
Other operations . . . . . . . . . . . . . . . . . . . . — —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,902 — — (4,289) (203) 32,410
The decrease of 4,492 million euros in 2012 includes:
Š the goodwill impairment loss in 2012 of 4,016 million euros for the Domestic Business Unit, due to the
result of the impairment test conducted at December 31, 2012;
Š the goodwill impairment loss of 168 million euros (corresponding to 979 million Argentine pesos,
translated into euros using the average exchange rate for the year) for the Argentina Business Unit, due
to the result of the impairment test at December 31, 2012;
Š the goodwill impairment loss of 105 million euros for the Media Business Unit, due to the result of the
impairment test at December 31, 2012;
Š negative exchange differences, totaling 203 million euros, relating to the goodwill of the Brazil and
Argentina Business Units.
As already mentioned above in the Note “Business combinations” within 12 months from the acquisition that took
place on October 31, 2011 the process of allocation of the acquisition price for the companies Tim Fiber SP and
Tim Fiber RJ was completed, with the consequent definitive determination of the related goodwill at
December 31, 2011.
The completion of the process of allocation of the acquisition price for the 4G group, on the other hand,
confirmed the amount of goodwill already determined during 2011.
F-33

The gross carrying amounts of goodwill and the relative accumulated impairment losses from January 1, 2004
(date of allocation to the cash-generating units—CGU) to December 31, 2012 and 2011 can be summarized as
follows:
Gross carrying
amount
Accumulated
impairment
losses
Net carrying
amount
Gross carrying
amount
Accumulated
impairment losses
Net carrying
amount
(millions of euros)
Domestic . . . . . . . . . . . . . . 42,245 (11,615) 30,630 42,245 (7,599) 34,646
Core Domestic . . . . 41,830 (11,615) 30,215 41,830 (7,599) 34,231
International
Wholesale . . . . . . 415 — 415 415 — 415
Brazil . . . . . . . . . . . . . . . . . . 1,766 (7) 1,759 1,961 (7) 1,954
Argentina . . . . . . . . . . . . . . 151 (151) — 176 — 176
Media . . . . . . . . . . . . . . . . . . 229 (208) 21 229 (103) 126
Olivetti . . . . . . . . . . . . . . . . 6 (6) — 6 (6) —
Other operations . . . . . . . — — — — — —
Total . . . . . . . . . . . . . . . . . . 44,397 (11,987) 32,410 44,617 (7,715) 36,902
The goodwill for the Brazil and Argentina Business Units are shown in euros, converted at the exchange rate at the
closing date of the financial statements. The gross carrying amount of the goodwill for the Brazil Business Unit
corresponds to 4,742 million Brazilian reais, while the gross carrying amount of the goodwill for the Argentina
Business Unit corresponds to 979 million Argentine pesos, which was written down in full in 2012.
Goodwill, under IAS 36, is not amortized but is tested for impairment annually or more frequently if specific
events or circumstances indicate that it may be impaired.
The impairment test is carried out on two levels. At a first level, an estimate is made of the recoverable amount of
the individual cash-generating units (or groups of units) to which goodwill is allocated and at a second level the
group is considered as a whole.
The cash-generating units (or groups of units) to which goodwill has been allocated are the following:
Segment Cash-generating units (or groups of units)
Domestic Core Domestic
International Wholesale
Brazil Tim Brasil group
Argentina Sofora group
Media Telecom Italia Media group
The value used to determine the recoverable amount of the cash-generating units (or groups of units) to which
goodwill has been allocated is the value in use for the CGUs of the Domestic and Brazil segments. The Argentina
CGU has been valued on the basis of market capitalization (fair value), whereas, for the Telecom Italia Media CGU,
the recoverable amount has been determined for each of its constituent CGUs (MTV group, TIMB network
operator and La7) on the basis of the impairment test applied by the subsidiary, in order to better reflect the
greater granularity used by the CGU in its own impairment test.
For the Core Domestic CGU, the estimate of the recoverable amount at December 31, 2012 is less than the
carrying amount. As a result an impairment loss of 4,016 million euros has been recognized.
For the Argentina CGU, the estimate of the recoverable amount at December 31, 2012 is less than the respective
carrying amount. As a result, an impairment loss has been recognized for the entire amount of the goodwill
allocated to the CGU (168 million euros).
For the Telecom Italia Media CGU, impairment losses identified through the company’s impairment test have
been incorporated in full (105 million euros).
F-34

With regard to Core Domestic, International Wholesale and Brazil the basic assumptions to which the estimate of
the value in use is more sensitive are reported in the following table:
Core Domestic International Wholesale Brazil
EBITDA margin (EBITDA/revenues)
during the period of the plan
Growth of EBITDA during the period
of the plan
Growth of EBITDA during the
period of the plan
Growth of EBITDA during the
period of the plan
Capital expenditures rate
(capex/revenues)
(capex/revenues)
(capex/revenues)
BRL/euro exchange rate
Cost of capital Cost of capital Cost of capital
Long-term growth rate Long-term growth rate Long-term growth rate
In accordance with the new procedure approved by the Board of Directors of Telecom Italia S.p.A. on February 18,
2013, the estimate of the value in use for the Core Domestic CGU is based on the analytical forecasts of cash
flows extended for a time period of five years (2013-2017). This extension of the analytical forecast period for the
cash flows, compared to the three years used in the impairment test for the previous year, was required to reflect
the contribution of the NGN and LTE ultrabroadband capital expenditure in the recoverable value of the CGU. The
use of analytical forecast periods of more than three years for the impairment tests is common practice among
the major European telecommunications operators.
For the estimate of the value in use of the Core Domestic CGU the Company also verified that the analytical
estimates of EBITDA flows used over the plan period were within the range of the analyst forecasts produced after
the announcement of the business plan.
The estimate of the value in use for International Wholesale and Brazil CGUs was based on the figures in the
2013-2015 business plan, with cash flows for the Brazil CGU expressed in local currency (reais).
The nominal growth rates used to estimate the terminal value are the following (the growth rates for Brazil refer
to flows in Brazilian reais):
Core Domestic International Wholesale Brazil
0.0% 0.0% 3.93%
In particular, the growth rates for the CGUs of the Domestic segment are in line with the range of growth rates
applied by the analysts who follow Telecom Italia (as can be seen in the reports published after the presentation
of the business plan).
Since the growth rate in the terminal value is in relation to the level of capital expenditures (capex) necessary to
sustain such growth, for purposes of the estimate of the earnings flow to be capitalized a level of capital
expenditure (capex/revenues) of the Core Domestic CGU in line with the median of the analysts’ terminal year
forecasts (equal to 16.17%) was used.
The cost of capital was estimated by considering the following:
Š the criterion applied was the criterion for the estimate of CAPM—Capital Asset Pricing Model (the
criterion used by the Group to estimate the value in use and referred to in Annex A of IAS 36);
Š in the case of International Wholesale, a “full equity” financial structure was considered since it is
representative of the normal financial structure of the business; for the remaining CGUs, a Group target
financial structure was assumed in line with the average of the European telephone incumbents,
including Telecom Italia itself;
F-35

Š the Beta coefficient for the Core Domestic CGU and the International Wholesale CGU was arrived at by
using the Beta coefficients of the European telephone incumbents, including Telecom Italia itself,
adjusted to take into account the financial structure (Core Domestic CGU beta coefficient = 1.32;
International Wholesale CGU = 0.73 (unlevered beta));
Š the Beta coefficient for the Brazil CGU was calculated on the basis of the list price of the corresponding
ADR compared to the relative stock market index (beta coefficient = 0.97); for the Core Domestic CGU
a base estimate of weighted average cost of capital (WACC) was used, with verification that the rate of
capitalization (wacc—g) was in line with the analyst consensus after the presentation of the business
plan.
With regard to the Brazil CGU, the increase in the nominal growth rate (3.93% in local currency) compared to the
previous annual impairment test (3.13%) reflects the increase in the average inflation differential between the
local currency (Real) and the euro over the time horizon covered by the business plan, whereas the capital
expenditure rate used to estimate the terminal value was increased to 16.01% from 13.32% for the previous
annual impairment test.
On the basis of these elements, the post-tax and pre-tax weighted average cost of capital and the relative
capitalization rates (WACC—g) have been estimated for each cash-generating unit (the values of Brazil refer to
flows in reais) as follows:
Core Domestic
International
Wholesale Brazil
% % %
WACC post-tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.63 9.48 12.30
WACC post-tax—g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.63 9.48 8.37
WACC pre-tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.50 13.65 16.36
WACC pre-tax—g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.50 13.65 12.43
The differences between the values in use and the carrying amounts before impairment test at December 31,
2012 for the three CGUs considered amount to:
Core Domestic
International
Wholesale Brazil
(millions of euros)
Difference between values in use and carrying amounts . . . . . . . (4,016) 140 2,323
For purposes of the sensitivity analysis, four principal variables were considered for the two CGUs whose value in
use is in excess of the carrying amount: the pre-tax discount rate, the growth rate in the terminal value (g), the
compound annual growth rate (CAGR) of EBITDA in the years 2013-2015 (CAGR 2013-2015) and capital
expenditures in proportion to revenues (capex/revenues). The following tables report the values of the key
variables used in estimating the value in use and the changes in each of such variables needed to render the
recoverable amount of the respective CGUs equal to their carrying amount.
Value of key variables used in estimating the value in use
International
Wholesale Brazil
% %
Pre-tax discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.65 16.36
Long-term growth rate (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3.93
Compound Annual Growth Rate (CAGR) of EBITDA 2013-2015 . . . . . . . . . . (1.03) 11.63
Capital expenditures rate (Capex/Revenues) . . . . . . . . . . . . . . . . . . . . . . . . . . . from 5.16 to 8.36 from 16.01 to 18.49
F-36

Changes in key variables needed to render the recoverable amount equal to the carrying amount
International
Wholesale Brazil
% %
Pre-tax discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.31 4.25
Long-term growth rate (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.84) (5.73)
Compound Annual Growth Rate (CAGR) of EBITDA 2013-2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.99) (5.60)
Capital expenditures rate (Capex/Revenues) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.34 3.75
A second level impairment test was then conducted to test for impairment at the level of the entire Group, in
order to include the Central Functions and the financial cash-generating units of the Group without any goodwill
allocation (Olivetti). The total recoverable amount of all the cash-generating units of the Group was compared to
the carrying amount of the total operating capital referring to the same units/segments post-impairment losses at
the first level. No impairment losses resulted at this further level of testing.
NOTE 5—OTHER INTANGIBLE ASSETS
Other intangible assets decreased 710 million euros compared to December 31, 2011. Details on the composition
and movements are as follows:
As of
December 31,
2010 Addition Amortization
Impairment
losses/
Reversals Disposals
Exchange
Differences
Capitalized
borrowing
costs
Other
changes
As of
December 31,
2011
(millions of euros)
Industrial patents and
intellectual property
rights . . . . . . . . . . . . . . . 2,629 1,252 (1,425) (1) (69) 189 2,575
Concessions, licenses,
trademarks and similar
rights . . . . . . . . . . . . . . . 3,700 60 (325) 9 (6) (107) 5 3,336
of which Licenses with
an indefinite useful
life . . . . . . . . . . . . . 462 (21) 441
Other intangible assets
with a finite useful
life . . . . . . . . . . . . . . . . . 1,212 331 (413) (51) 55 1,134
Work in progress and
advance payments . . . . . 395 1,423 (3) (2) 12 (233) 1,592
Total . . . . . . . . . . . . . . . . . 7,936 3,066 (2,163) 9 (10) (229) 12 16 8,637
As of
December 31,
2011 Addition Amortization
Impairment
losses/
Reversals Disposals
Exchange
Differences
Capitalized
borrowing
costs
Other
changes
As of
December 31,
2012
(millions of euros)
Industrial patents and
intellectual property
rights . . . . . . . . . . . . . . . 2,575 1,051 (1,382) (40) (1) (96) 228 2,335
Concessions, licenses,
trademarks and similar
rights . . . . . . . . . . . . . . . 3,336 192 (336) (190) 168 3,170
of which Licenses with
an indefinite useful
life . . . . . . . . . . . . . 441 (63) 378
Other intangible assets
with a finite useful
life . . . . . . . . . . . . . . . . . 1,134 350 (494) (85) (108) (2) 795
Work in progress and
advance payments . . . . . 1,592 402 (2) (4) (1) 52 (412) 1,627
Total . . . . . . . . . . . . . . . . . 8,637 1,995 (2,212) (127) (5) (395) 52 (18) 7,927
F-37

In 2011, Telecom Italia S.p.A. was awarded the rights of use of the 800, 1800 and 2600 MHz frequencies to be
allocated to mobile broadband services for a total of 1,223 million euros. The decrease in additions of
1,071 million euros compared to the previous year, is mainly due to the above event.
Additions in 2012 also include 295 million euros of internally generated assets (288 million euros in 2011).
Further details are provided in the Note “Internally generated assets”.
The other changes in 2012 include, among others, the effects of the change in consolidation scope, 19 million
euros of which is attributable to the sale of Matrix (previously included in Other operations) on October 31, 2012.
Industrial patents and intellectual property rights at December 31, 2012 consist mainly of applications
software purchased outright and user license rights acquired, amortized over a period between 3 and 5 years.
They mainly refer to Telecom Italia S.p.A. (1,390 million euros) and to the Brazil Business Unit (903 million euros).
The write-down made in 2012 mainly relates to the Media Business Unit which takes account of the outcome of
the impairment test as well as the expected sale of La7 S.r.l..
Concessions, licenses, trademarks and similar rights at December 31, 2012 mainly refer to:
Š unamortized cost of telephone licenses and similar rights (1,435 million euros for Telecom Italia S.p.A.,
671 million euros for the Brazil Business Unit and 16 million euros for the Argentina Business Unit); in
2011 Telecom Italia S.p.A. started the amortization of the first tranche of frequency rights acquired in
2011 (LTE—1800 MHz band);
Š Indefeasible Rights of Use - IRU (237 million euros) mainly relate to companies of the Telecom Italia
Sparkle group (International Wholesale);
Š TV frequencies of the Media Business Unit (109 million euros). The rights of use for the frequencies
used for digital terrestrial transmission are amortized over 20 years;
Š unamortized cost of the trademarks of the Argentina Business Unit (268 million euros), amortized over
20 years.
The net carrying amount of telephone licenses and similar rights totalling 2,500 million euros refers to the
following:
Type of license
Net carrying
amount at
December 31,
2012
(millions of
euros)
Amortization period
(years)
Amortization
charges for 2012
(millions of
euros)
Telecom Italia S.p.A.:
UMTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,209 18 134
UMTS 2100 MHz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 12 7
Wireless Local Loop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 15 1
WiMax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 15 1
LTE 1800 MHz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 18 9
Tim Brasil group:
GSM and 3G (UMTS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529 9-13 107
4G (LTE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 15 2
TDMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 14 20
Sofora group—Telecom Argentina:
PCS of Nucleo S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 12 2
PCS of Telecom Personal S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378 indefinite useful life —
Other intangible assets with a finite useful life at December 31, 2012 basically include:
Š 457 million euros of customer relationships relating to the Argentina Business Unit, measured upon
acquisition of control. In 2012 their useful lives were remeasured and shortened on the basis of an
F-38

analysis conducted by an external specialized company, resulting in additional amortization of 66 million
euros. The original amortization period, which was between 5 and 12 years depending on the type of
clients and service provided, is now between 4 and 8 years. These assets were also tested for
impairment and subsequently written down by 85 million euros. The remeasured useful lives, as well as
the impairment losses, were mainly attributable to changes in the Argentinian market and the
macroeconomic environment in that country. Additional amortization for 2013 and 2014 is expected of
approximately 43 million euros (on the basis of the average pesos/euro exchange rate in 2012);
Š 272 million euros of capitalized subscriber acquisition costs—SAC referring to a number of sales
campaigns of Telecom Italia S.p.A. (182 million euros) and the Argentina Business Unit (90 million
euros). The subscriber acquisition costs are amortized over the underlying minimum contract period
(between 12 or 30 months).
Work in progress and advance payments include the 800 and 2600 MHz mobile frequency rights, to be
allocated to broadband mobile services, acquired by Telecom Italia S.p.A. in 2011, and capitalized borrowing costs
of 64 million euros at December 31, 2012 (12 million euros at December 31, 2011), since they are directly
attributable to the acquisition and because the time period necessary to ready the asset for use is more than
12 months. The interest rate used for the capitalization of the borrowing costs is between 4.6% and 5.2%. Such
costs are deducted directly from “Miscellaneous finance expenses”.
Amortization and impairment losses are recorded in the income statement as components of the operating result.
Gross carrying amount, accumulated impairment losses and accumulated amortization at December 31, 2012 and
2011 can be summarized as follows:
Gross
carrying
amount
Accumulated
impairment
losses
Accumulated
amortization
Net
carrying
amount
(millions of euros)
Industrial patents and intellectual property rights . . . . . . . . . . . . . . . . 12,544 (46) (10,163) 2,335
Concessions, licenses, trademarks and similar rights . . . . . . . . . . . . . . 5,750 (245) (2,713) 2,792
Other intangible assets with a finite useful life . . . . . . . . . . . . . . . . . . . . 1,703 (77) (831) 795
Work in progress and advance payments . . . . . . . . . . . . . . . . . . . . . . . . . 1,631 (4) 1,627
Total intangible assets with a finite useful life . . . . . . . . . . . . . . . 21,628 (372) (13,707) 7,549
Intangible assets with an indefinite useful life . . . . . . . . . . . . . . . 378 — — 378
Total Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,006 (372) (13,707) 7,927
Gross
carrying
amount
Accumulated
impairment
losses
Accumulated
amortization
Net
carrying
amount
(millions of euros)
Industrial patents and intellectual property rights . . . . . . . . . . . . . . . . 13,405 (7) (10,823) 2,575
Concessions, licenses, trademarks and similar rights . . . . . . . . . . . . . . 5,623 (250) (2,478) 2,895
Other intangible assets with a finite useful life . . . . . . . . . . . . . . . . . . . . 1,779 (645) 1,134
Work in progress and advance payments . . . . . . . . . . . . . . . . . . . . . . . . . 1,602 (10) — 1,592
Total intangible assets with a finite useful life . . . . . . . . . . . . . . . 22,409 (267) (13,946) 8,196
Intangible assets with an indefinite useful life . . . . . . . . . . . . . . . 441 — — 441
Total Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,850 (267) (13,946) 8,637
Impairment losses on “Concessions, licenses, trademarks and similar rights” basically refer to the Indefeasible
Rights of Use (IRU) for the transmission capacity and cables for international connections acquired by the Lan
Med group (the former Latin American Nautilus group).
Such impairments, principally relating to the years prior to 2004, were reversed in part in 2011 following
improved prospects, particularly in the South American market. The increase in accumulated impairment is mainly
F-39

attributable to the above-mentioned impairment losses recognized by the Argentina Business Unit and the Media
Business Unit, which were partly offset by exchange differences relating to impairment losses recognized in
previous years by the Lan/Med group. Lastly, works in progress were written off by the Parent for 9 million euros
for abandoned and previously written down software projects.
NOTE 6—TANGIBLE ASSETS (OWNED AND UNDER FINANCE LEASES)
Property, plant and equipment owned
Property, plant and equipment owned decreased 434 million euros compared to December 31, 2011. Details on
the composition and movements are as follows:
As of
December 31,
2010 Addition Depreciation
Impairment
losses/
Reversals Disposals
Exchange
Differences
Other
changes
As of
December 31,
2011
(millions of euros)
Land . . . . . . . . . . . . . . . . . . . . . . . . 243 4 (7) (5) 235
Buildings (civil and industrial) . . . . 844 9 (73) (2) (19) 36 795
Plant and equipment . . . . . . . . . . . . 12,019 2,097 (2,796) 1 (25) (213) 1,025 12,108
Manufacturing and distribution
equipment . . . . . . . . . . . . . . . . . 28 5 (15) 14 32
Other . . . . . . . . . . . . . . . . . . . . . . . . 787 236 (333) (8) (30) 72 724
Construction in progress and
advance payments . . . . . . . . . . . 1,317 634 (4) (3) (40) (899) 1,005
Total . . . . . . . . . . . . . . . . . . . . . . . . 15,238 2,985 (3,217) (3) (45) (307) 248 14,899
As of
December 31,
Impairment
losses/
Reversals Disposals
Exchange
Differences
Other
changes
As of
December 31,
2012
(millions of euros)
Land . . . . . . . . . . . . . . . . . . . . . . . . 235 (17) 14 232
Buildings (civil and industrial) . . . . 795 12 (73) (1) (50) 15 698
Plant and equipment . . . . . . . . . . . . 12,108 2,215 (2,614) (12) (20) (395) 555 11,837
Manufacturing and distribution
equipment . . . . . . . . . . . . . . . . . 32 12 (14) 9 39
Other . . . . . . . . . . . . . . . . . . . . . . . . 724 194 (306) (2) (7) (50) 124 677
Construction in progress and
advance payments . . . . . . . . . . . 1,005 726 (1) (1) (64) (683) 982
Total . . . . . . . . . . . . . . . . . . . . . . . . 14,899 3,159 (3,007) (16) (28) (576) 34 14,465
Land comprises both built-up land and available land and is not subject to depreciation. The balance at
December 31, 2012 mainly refers to Telecom Italia S.p.A. (117 million euros) and the Argentina Business Unit
(93 million euros).
Buildings (civil and industrial) almost exclusively includes buildings for industrial use hosting telephone
exchanges or for office use and light constructions. The balance at the end of 2012 is largely in reference to
Telecom Italia S.p.A. (363 million euros) and the companies belonging to the Argentina Business Unit (282 million
euros).
Plant and equipment includes the aggregate of all those structures used for the functioning of voice and data
telephone traffic. The balance at December 31, 2012 is principally attributable to Telecom Italia S.p.A.
(8,204 million euros), the companies in the Brazil Business Unit (2,362 million euros) and the companies in the
Argentina Business Unit (876 million euros).
Manufacturing and distribution equipment consists of instruments and equipment used for the running and
maintenance of plant and equipment; the amount is in line with the end of the prior year and is primarily carried
by Telecom Italia S.p.A.
Other is mostly made up 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.
F-40

Construction in progress and advance payments refers to the internal and external costs incurred for the
acquisition and internal production of tangible assets, which are not yet in use.
Additions in 2012 increased by 174 million euros compared to the prior year, and include 286 million euros of
internally generated assets (281 million euros in 2011). 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 2012 and 2011 is 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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.33%
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3%-50%
Manufacturing and distribution equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20%
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11%-33%
The impairment losses recognized during the year primarily relate to the Media Business Unit—as the outcome of
the impairment test and the expected sale of La7 S.r.l.—as well as the Olivetti Business Unit.
Gross carrying amount, accumulated impairment losses and accumulated depreciation at December 31, 2012 and
Gross
carrying
amount
Accumulated
impairment
losses
Accumulated
depreciation
Net carrying
amount
(millions of euros)
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232 232
Buildings (civil and industrial) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,768 (6) (1,064) 698
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,174 (67) (53,270) 11,837
Manufacturing and distribution equipment . . . . . . . . . . . . . . . . . . . . 268 (2) (227) 39
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,211 (6) (3,528) 677
Construction in progress and advance payments . . . . . . . . . . . . . . 983 (1) — 982
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,636 (82) (58,089) 14,465
Gross
carrying
amount
Accumulated
impairment
losses
Accumulated
depreciation
Net carrying
amount
(millions of euros)
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 235
Buildings (civil and industrial) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,099 (5) (1,299) 795
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,913 (56) (51,749) 12,108
Manufacturing and distribution equipment . . . . . . . . . . . . . . . . . . . . 248 (1) (215) 32
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,183 (4) (3,455) 724
Construction in progress and advance payments . . . . . . . . . . . . . . 1,006 (1) — 1,005
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,684 (67) (56,718) 14,899
F-41

Assets held under finance leases
Assets held under finance leases decreased 80 million euros compared to December 31, 2011. Details on the
composition and movements are as follows:
As of
December 31,
Other
changes
As of
December 31,
2011
(millions of euros)
Buildings (civil and industrial) . . . . . . . . . . . . . . . . . . . . . 1,124 23 (110) 5 1,042
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 11 (6) 16
Construction in progress and advance payments . . 42 10 (16) 36
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,177 44 (116) (11) 1,094
As of
December 31,
Other
changes
As of
December 31,
2012
(millions of euros)
Buildings (civil and industrial) . . . . . . . . . . . . . . . . . . . . . 1,042 24 (113) 19 972
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 10 (8) (1) 17
Construction in progress and advance payments . . 36 8 (19) 25
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,094 42 (121) (1) 1,014
Buildings (civil and industrial) includes those under long rent contracts and related building adaptations. They
refer almost entirely to Telecom Italia S.p.A.
Other basically comprises the capitalization of finance leases of Data Center hardware.
Depreciation and impairment losses are recorded in the income statement as components of the operating result.
Gross carrying amount, accumulated impairment losses and accumulated depreciation at December 31, 2012 and
Gross
carrying
amount
Accumulated
impairment
losses
Accumulated
depreciation
Net
carrying
amount
(millions of euros)
Buildings (civil and industrial) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,078 (27) (1,079) 972
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 (81) 17
Construction in progress and advance payments . . . . . . . . . . . . . . . . . . 25 25
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,201 (27) (1,160) 1,014
Gross
carrying
amount
Accumulated
impairment
losses
Accumulated
depreciation
Net
carrying
amount
(millions of euros)
Buildings (civil and industrial) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,042 (27) (973) 1,042
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 (74) 16
Construction in progress and advance payments . . . . . . . . . . . . . . . . . . 36 36
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,168 (27) (1,047) 1,094
F-42

At December 31, 2012 and 2011, lease payments due in future years and their present value are as follows:
As of December 31,
2012 2011
Minimum
lease
payments
Present
value of
minimum
lease
payments
Minimum
lease
payments
Present
value of
minimum
lease
payments
(millions of euros)
Within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229 204 238 222
From 2 to 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 880 599 859 609
Beyond 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 857 364 1,049 450
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,966 1,167 2,146 1,281
As of December 31,
2012 2011
(millions of euros)
Future net minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,966 2,146
Interest portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (799) (865)
Present value of lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,167 1,281
Financial lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,378 1,549
Financial receivables for lease contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (211) (268)
Total net finance lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,167 1,281
At December 31, 2012, the inflation adjustment to lease payments was about 31 million euros (about 28 million
euros at December 31, 2011) and refers almost entirely to Telecom Italia S.p.A.
NOTE 7—INVESTMENTS IN ASSOCIATES AND JOINT VENTURES ACCOUNTED FOR USING THE EQUITY
METHOD
Investments accounted for using the equity method increased 18 million euros compared to December 31, 2011
and include:
As of December 31,
2012 2011
(millions of euros)
Investments accounted for using the equity method:
Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 46
Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 47
Investments in associates accounted for using the equity method are detailed as follows:
As of
December 31,
2010 Investments
Disposals and
reimbursements of
capital
Valuation
using
equity
method Other changes
As of
December 31,
2011
(millions of euros)
Italtel Group . . . . . . . . . . . . . . . . 38 (38) —
Tiglio I S.r.l. . . . . . . . . . . . . . . . . 23 (1) 22
Tiglio II . . . . . . . . . . . . . . . . . . . . 1 1
Others . . . . . . . . . . . . . . . . . . . . . . 22 1 23
Total . . . . . . . . . . . . . . . . . . . . . . . 84 — — (39) 1 46
F-43

As of
December 31,
2011 Investments
Disposals and
reimbursements of
capital
Valuation
using
equity
method Other changes
As of
December 31,
2012
(millions of euros)
Trentino NGN S.r.l.. . . . . . . . . . 25 25
Tiglio I S.r.l. . . . . . . . . . . . . . . . . 22 (7) 15
Tiglio II . . . . . . . . . . . . . . . . . . . . 1 1
Others . . . . . . . . . . . . . . . . . . . . . . 23 3 (3) 1 24
Total . . . . . . . . . . . . . . . . . . . . . . . 46 3 (3) (6) 25 65
With reference to investments in associates, on May 18, 2012, following the transfer of a twenty-year right of
use of spaces available in its passive infrastructure (ducts and pilings), throughout the territory of the
Autonomous Province of Trento, Telecom Italia S.p.A. acquired a 41.1% interest in the company Trentino NGN
S.r.l

2012 Form 20-F

More Related Content

What's hot (10)

Similar to 2012 Form 20-F (20)

More from Gruppo TIM (20)

Recently uploaded (20)

2012 Form 20-F