2015 FORM 20-F

Plancia Telecom 20-F 2014.qxp 25/03/15 15:53 Pagina 1
| Telecom Italia

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, 2015
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)
Via Gaetano Negri 1, 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 (the
“Ordinary Share ADSs”) The New York Stock Exchange
Ordinary Shares (the “Ordinary Shares”) The New York Stock Exchange*
American Depositary Shares, each representing 10 Savings Shares (the “Savings
Share ADSs”) The New York Stock Exchange
Savings Shares (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 13,499,911,771
Savings Shares 6,027,791,699
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.3 SELECTED FINANCIAL AND STATISTICAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Item 4. INFORMATION ON THE TELECOM ITALIA GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.1 BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.2 BUSINESS UNITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.3 REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.4 TRANSACTIONS WITH U.S. SANCTIONED COUNTRIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.5 GLOSSARY OF SELECTED TELECOMMUNICATIONS TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
4.6 DESCRIPTION OF PROPERTY, PLANT AND EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Item 4A. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
5.1 CRITICAL ACCOUNTING POLICIES AND ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
5.2 RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 2015 . . . . . . . . . . . . . . . . . . . 90
5.3 LIQUIDITY AND CAPITAL RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
5.4 RESEARCH AND DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
5.5CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE UNITED
STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
6.1 DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
6.2 EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
6.3 BOARD OF AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
6.4 EXTERNAL AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
6.5 EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
6.6 COMPENSATION OF DIRECTORS, OFFICERS AND MEMBERS OF THE BOARD OF AUDITORS . . . . . . . . 169
6.7 OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
Item 7. MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
7.1 MAJOR SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
7.2 RELATED-PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
Item 8. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
8.1 HISTORICAL FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
8.2 LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
Item 9. LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
9.1 TRADING OF TELECOM ITALIA ORDINARY SHARES AND SAVINGS SHARES . . . . . . . . . . . . . . . . . . . . . . . . 183
9.2 SECURITIES TRADING IN ITALY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
i

9.3 CLEARANCE AND SETTLEMENT OF TELECOM ITALIA SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
Item 10. ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
10.1 CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
10.2 EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS . . . . . . . . . . . . . . 200
10.3 DESCRIPTION OF BYLAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
10.4 DESCRIPTION OF CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
10.5 DESCRIPTION OF AMERICAN DEPOSITARY RECEIPTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
10.6 TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
10.7 DOCUMENTS ON DISPLAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222
Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS . . . . . . . . . . . . . . . . 223
Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . 224
Item 12A. DEBT SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Item 12B. WARRANTS AND RIGHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Item 12C. OTHER SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Item 12D. AMERICAN DEPOSITARY SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Item 14. MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Item 15. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
15.1. DISCLOSURE CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
15.2. MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING . . . . . . 229
15.3. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230
Item 16. [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
Item 16B. CODE OF ETHICS AND CONDUCT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232
Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES . . . . . . . . . . . . . . 234
Item 16E. REPURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
Item 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
Item 16G. CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235
16G.1 DIFFERENCES IN TELECOM ITALIA’S CORPORATE GOVERNANCE AND NEW YORK STOCK
EXCHANGE CORPORATE GOVERNANCE PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235
Item 16H. MINE SAFETY DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
Item 17. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
Item 18. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239
Item 19. FINANCIAL STATEMENTS AND EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239
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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, 2015 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 in the future;
Š a further deterioration of the economic environment in the principal markets in which we operate, including,
in particular, our core Italian market;
Š the impact of regulatory decisions and changes in the regulatory environment in Italy, Brazil and other
countries in which we operate;
Š the impact of political developments in Italy, Brazil and other countries in which we operate;
Š our ability to successfully meet competition on both price and innovation capabilities of new products and
services;
1

Introduction
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 successfully implement our internet and broadband strategy;
Š our ability to successfully achieve our financial targets (including debt reduction);
Š the impact of fluctuations in currency exchange and interest rates and the performance of the equity markets
in general;
Š the outcome of litigation, disputes and investigations in which we are involved or may become involved;
Š our ability to build up our business in adjacent markets and in international markets (particularly in Brazil),
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 in Brazil;
Š the amount and timing of any future impairment charges for our authorizations, goodwill or other assets;
Š our ability to manage any business transformation plans and reduce costs;
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.
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. Telecom Italia undertakes 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, of Telecom Italia.
Parent, Telecom Italia and Company . . . . . . . . . . . . . . . . means Telecom Italia S.p.A..
Savings Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . means the Savings Shares, 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. The following are the main categories of accesses:
Š Physical Accesses: in the domestic fixed telephony business, includes retail accesses, as well as wholesale
accesses directly managed by Telecom Italia, excluding OLOs, for which infrastructure is fully developed, and
FWA-Fixed Wireless Accesses;
Š Broadband Accesses: in the domestic fixed telephony business, includes broadband retail accesses and
broadband wholesale accesses directly managed by Telecom Italia and excludes OLO LLU and NAKED,
satellite, full-infrastructured and FWA - Fixed Wireless Accesses. Broadband retail accesses are included as
part of physical accesses;
Š Mobile accesses: number of lines.
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 impact 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.
We present below:
1) our main objectives as set out in our 2016-2018 three-year strategic plan (the “2016-2018 Plan” or the
“Plan”); and
2) factors that may prevent us from achieving our objectives. For purposes of presenting our risk factors we
have identified our risks based on the main risk categories, set out in the Committee of Sponsoring
Organization of the Treadway Commission1:
– strategic risks;
– operational risks;
– financial risks; and
– compliance risks.
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 16, 2016, we presented our updated Plan, which, following up on the previous strategic plan,
provides for an acceleration of investments over the Plan period, with the primary aim of ensuring long-term
growth for the Group.
The main strategic priorities in the Domestic (Italian) Market are:
Š acceleration of investments, mainly those relating to innovative networks and services;
Š completing the transition from traditional telecommunications company to digital telecommunications &
platform company, an enabler of the country’s digital life;
Š in the Mobile segment, Telecom Italia will aim to accelerate the penetration of smart devices and to market
bundle offers that generate a higher ARPU;
Š in the Fixed segment, the Group plans to minimize the decrease of its customer base;
Š convergence continues to be central to the Group’s growth and innovative investments strategy;
Š strengthening the position in multimedia entertainment;
Š thanks to its ICT and cloud services, Telecom Italia also intends to continue helping Italian businesses
enable their digital transformation process;
Š maintaining strong financial discipline.
The main strategic priorities in the Brazilian Market are:
Š strengthen Telecom Italia’s market position by leveraging network quality, innovation and customer
experience;
Š protect value of prepaid customer base, shifting focus from lines market share to share of total revenue;
Š increase share of mid/high value customers;
Š shore up the corporate customer base;
Š sustain network investment through the adoption of a prioritized approach and focus on 4G;
Š focus on efficiency.
1 CoSO Report-ERM Integrated Framework 2004.
5

Our ability to implement and achieve our strategic objectives and priorities may be influenced by certain factors,
including those outside of our control. Such factors include:
services;
in general;
continue to make in Italy and Brazil;
Š our ability to manage any business transformation plans and, as a consequence, reduce costs;
Š the costs we 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 following sets out more specific factors that may prevent us from achieving our objectives.
STRATEGIC RISKS
Continuing weak global economic conditions, including the continuing weakness of the Italian
economy over the past several years and deteriorating economic conditions in Brazil, have adversely
affected our business and continuing global and European economic weakness could further adversely
affect our business and therefore have a negative impact on our operating results and financial
condition.
Our business is dependent to a large degree on general economic conditions in Italy and in our other principal
market, Brazil, 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 Italy has experienced in recent years has weighed, and may continue to weigh
heavily, on the development prospects of our core Italian market.
6

In Brazil, the market is affected by a macroeconomic environment that continues to deteriorate, resulting in
shrinking domestic demand, rising inflation, and a sharp depreciation of the Brazilian Real. Should key
macroeconomic indicators continue to worsen, we may not be able to achieve our strategic objectives, which are
linked to improvements in domestic demand.
Telecommunications operators generally have faced challenging markets in recent years, principally as a result of
factors such as a decline in voice traffic and significant pricing pressures resulting from increased competition
among the operators.
Continuing uncertainty about global economic conditions poses a significant risk as consumer and business
customers 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.
Our strategy includes transitioning from a traditional telecommunications company to digital telecommunications
& platform company: This strategy will require a broad review of Telecom Italia’s processes and operating model
and consideration of external variables related to this transition. Realization times related to the transition may be
greater than expected, resulting in lower and / or delayed cost savings.
Risks associated with Telecom Italia’s ownership chain
As of the date hereof, the largest single shareholder in the Company is Vivendi S.A. (“Vivendi”), which holds,
directly and indirectly, a stake of approximately 24.90% of ordinary share capital. With a holding of this size,
Vivendi can exercise significant influence over matters subject to a vote of the ordinary shareholders of the
Company, such as nominations to the Board of Directors (the “Board”).
Competition Risks
Alternative infrastructure operators in Italy could pose a threat to us, particularly in the medium to
long term.
The network development by Alt Net (“Alternative network operators”) on a standalone basis or through their
partnership with the OLOs could adversely impact our businesses, assets and goodwill and, as a consequence, our
economic and financial performance. In particular, the risks we face are:
Š increasing competition in the National Wholesale Market, with potential losses with respect to our customer
base and revenues.
Š in geographical areas already affected by competition, a further loss of retail market share and, as a
consequence, a loss of revenues;
Š loss of retail market share in areas where competitors have not historically focused.
Strong competition in Italy or other countries where we operate may further 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.
Competition has become even more acute in recent years with the entry of international operators, that compete
directly with us in the Italian market.
Moreover, convergence has enabled lateral competition from Information Technology (or IT), over-the-top (or
OTT), 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.
The emergence of alternative infrastructure operators could pose a threat to us, particularly in the long term.
7

In 2015, price competition for traditional services in our core Italian market experienced a slowdown as
compared to the prior two years. However, price competition in our principal lines of business has led, and could
lead, to:
Š further price and margin erosion for our traditional products and services;
Š a continuing loss of market share in our core markets; and
Š loss of existing or prospective customers and greater difficulty in retaining existing customers.
In addition, competition on innovative products and services in our Italian domestic fixed-line, mobile telephony
and broadband businesses, has led, and could lead to:
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/or
Š difficulties in reducing debt and funding strategic and technological investments if we cannot generate
sufficient profits and cash flows.
Although we continue to take steps to realize additional efficiencies and to rebalance our 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.
Continuing rapid changes in technologies could increase competition, reduce usage of traditional
services or require us to make substantial additional investments.
We, like other operators, 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,
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 SMS
which have historically been a source of significant revenues for fixed and mobile network operators such as
Telecom Italia. With the growing share of smartphones, tablets and computers in Italy, as well as in Brazil, our
principal international market, an increasing number of customers are using OTT applications services instead of
traditional voice and 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.
In the long term, if non-traditional voice and messaging data 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 average revenue per user (“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.
We may be adversely affected if we fail to successfully implement our Internet and broadband/fiber
strategy.
The continuing development of Internet and broadband services constitutes a strategic objective for us. We aim
to increase the use of our networks in Italy and abroad to offset the continuing decline of traditional voice
services. Our ability to successfully implement this strategy may be negatively affected if:
Š broadband coverage does not grow as we expect;
Š competition grows to include players from adjacent markets or technological developments introducing new
platforms for Internet access and/or Internet distribution;
8

Š we are unable to provide broadband/fiber connections superior to those of our competitors; 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 Information Technology-Telecommunication (“IT-TLC”) convergence by
addressing the ICT market, offering network and infrastructure management, as well as application management.
In particular, as the market for cloud service continues to grow, the ICT market becomes a key element of our
strategy.
We expect to experience increasing competition in this market as additional competitors (mainly
telecommunications operators through acquisition and partnership with IT operators) also enter this market. If
we fail to develop our market share or compete effectively, our revenues could be negatively affected.
Our business may be adversely affected if we fail to successfully implement our strategy with respect
to “next generation networks” strategy.
One of our goals is to accelerate the roll-out of a new telecommunications network capable of providing
customers with ultra-broadband connections, generally referred to as a next generation network (“NGN”).
However, implementation of ultra-broadband technologies is dependent on a number of factors, some of which
are outside of our control, including the following:
Š obtaining the necessary regulatory permissions and authorizations, and winning the relevant contracts for
installation of NGN lines;
Š our ability to apply innovative techniques in excavating for and laying fiber optic cables.
In areas not provided for under our development plan or where implementation of the ultra-broadband plan is
conditioned upon the grant of public funds, in addition to those listed above, the following factor should be
considered:
Š the allocation of public funds at a local level;
Š the fulfilment of the technical and economic conditions contained in the “Agreement on the methods of
access to the cabinets of Telecom Italia”, signed by us, Fastweb and Infratel;
Š the fulfilment of the technical and economic conditions related to the EuroSUD (a European funding
telematic counter) tenders awarded to us; and
Š the launch of the tenders for the grant of public funds in a time frame that is consistent with our projected
timetable.
If we fail to achieve our objectives for the implementation of ultra-broadband coverage in a timely manner or at
all, we may lose market share to our competitors in this strategically important segment, which may have adverse
effects on the Group’s business, financial condition and results of operations.
We are subject to risks associated with political developments in countries where we operate.
Changes in political conditions in Italy and in other countries where we have made significant investments
(particularly in countries where the political situation is less predictable than in Western Europe) may have an
adverse effect upon our business, financial condition, results of operations and cash flows.
The Italian State is in a position to exert certain powers with respect to us.
In 2012, regulations relating to the special powers regarding strategic assets in the energy, transport and
communications sectors were published and became effective (Law Decree n. 21 of March 15, 2012, adopted with
modifications by Law n. 56 of May 11, 2012).
9

Following enactment of such regulation, art. 3 of Presidential Decree n. 85 of March 25, 2014 identified the
following as strategic assets in the communications sector:
(1) dedicated networks and access to a public network for final customers in connection with metropolitan
networks, service routers and long-distance networks;
(2) assets used for the provision of access for final customers to services that fall within the obligations of
universal service and broadband and ultra-broadband services;
(3) dedicated elements, even if not in exclusive use, for connectivity (phone, data, video), security, control and
management concerning fixed telecommunication access networks.
Presidential Decree n. 86 of March 25, 2014 sets out the procedures for handling of special powers in the
communications sector.
As a result, the rules presently in force provide for:
Š the power of the Italian Government to impose conditions and possibly to oppose the purchase, under
certain conditions, by non-EU entities, of controlling shareholdings in companies which hold the
aforementioned type of assets. Until the end of the 15-day period from the notice of the purchase, within
which conditions may be imposed, or the power to oppose the initiative exercised, the voting rights (and any
rights other than the property rights) connected to shares whose sale entails the transfer of control, will be
suspended. The same rights will be suspended in the case of any non-compliance with or breach of the
conditions imposed on the purchaser, for the whole of the period in which the non-compliance or breach
persists. Any resolutions adopted with the determining vote of said shares or holdings, as well as the
resolutions or acts adopted that breach or do not comply with the conditions imposed, will be null and void;
Š a power of veto by the Italian Government (including in the form of imposition of prescriptions or
conditions) over any resolution, act or transaction that has the effect of modifying the ownership, control or
availability of said strategic assets or changing their destination, 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. Resolutions or acts adopted breaching said prescriptions
shall be null and void. The Government may also order the company and any other party to restore the
antecedent situation at their own expense.
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.
OPERATIONAL RISKS
We face numerous risks in both the efficiency and effectiveness of resources allocation. Operational risks related
to our business, include those resulting from inadequate internal and external processes, fraud, employee errors,
failure to document transactions properly, loss or disclosure of critical or commercial sensitive data or personal
identification information and systems failures. These events could result in direct or indirect losses and adverse
legal and regulatory proceedings, and could harm our reputation and operational effectiveness.
We have in place risk management procedures 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.
System and network failures could result in reduced user traffic and reduced revenue and could harm
our reputation. In addition, our operations and reputation could be materially negatively affected by
cyber-security threats or our failure to comply with data protection legislation.
Our success largely depends on the continued and uninterrupted performance of our IT, network systems and of
certain hardware and datacenters that we manage for our clients. Our technical infrastructure (including our
10

network infrastructure for fixed-line and mobile telecommunications services) is vulnerable to damage or
interruption from technology failures, power loss, floods, windstorms, fires, terrorism, intentional wrongdoing,
human error and similar events. Unanticipated problems at our facilities, system failures, hardware and software
failures, computer viruses and hacker attacks, as well as terrorist attacks against our infrastructure, which remains
a target, 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,
reduce our customer base and harm our reputation.
In addition, our operations involve the processing and storage of large amounts of customer data on a daily basis
and require an uninterrupted, accurate, permanently available, real-time and safe transmission and storage of
customer and other data in compliance with applicable laws and regulations. The proper functioning of, including
prevention of unauthorized access to, our networks, systems, computers, applications and data, such as customer
accounting, network control, data hosting, cloud computing and other information technology systems is critical
to our operations. We may be held liable for the loss, release, disclosure or inappropriate modification of the
customer data stored on our equipment or carried by our networks. IT system failure, interruption of service
availability, industrial espionage, cyber-attack or data leakage, in particular relating to customer data, could
seriously limit our ability to service our clients, result in significant compensation costs for which indemnification
or insurance coverage may be only partially available, result in a breach of laws and regulations under which we
operate or lead to fines and could cause long-term damage to our business and 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
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.
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 we are
currently a party or which could develop in the future. We are also the subject of a number of investigations by
11

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.
If we, or another Group company, lose any of the legal proceedings to which we are a party, and are ordered to
pay amounts greater than what we have recognized to cover potential liabilities, we may face adverse effects with
respect to our and/or our Group’s operations, financial position, income statement and cash flows.
The final outcomes of those proceedings are generally uncertain. As of December 31, 2015, we had, on a
consolidated basis, recognized potential liabilities of 595 million euros. In recognizing these liabilities, we took
into consideration the risks connected with each dispute and the relevant accounting standards, which require
reserves to be recognized where liabilities are probable and can be estimated reliably. The provisions represent an
estimate of the financial risk connected with the particular proceedings, in line with the relevant accounting
standards. Nonetheless, we may be obligated to meet liabilities linked to unsuccessful outcomes for proceedings
that were not taken into consideration when calculating those reserves and the provisions made may not be
sufficient to fully meet such obligations through use of our reserves. Such a development could have adverse
effects on our business, financial position, results of operations and cash flows.
Risks associated with the internet usage by our customers could cause us losses and adversely affect
our reputation.
Pursuant to applicable Italian regulation, we, as a host and provider of data transmission services, are required to
inform competent authorities without delay of any alleged illegal or illicit activity of which we are aware by our
customers. We must also provide the authorities with any information we have identifying such customers. Any
failure to comply with this obligation could cause us to become involved in civil liability proceedings or could lead
to an unfavorable public perception of our brand and services. Any such event could result in direct or indirect
losses or legal and/or regulatory proceedings directed against us and could materially harm our reputation.
We are exposed to the risk of labor disputes, in particular as a result of our plan to restructure our
labor costs.
We are currently undertaking a restructuring of portions of our workforce in an effort to better align increased
standards of service and expanded expertise with greater efficiency in our personnel costs. To that end, on
September 7, 2015, we entered into a union agreement that provides for a number of different measures to
enable us to manage our workforce in line with our business plan. These measures include employment support
schemes (e.g., the introduction of reduced hours and wages), known as “contratti di solidarietà”, voluntary
relocation, early retirement measures and re-training.
In addition, on September 21, 2015 and October 27, 2015, we entered into agreements that provide for voluntary
relocation and employment support schemes.
Relations between us and our workers/trade unions are not usually adversarial and strikes or protests involving a
majority of workers are not common, but such occurrences carry a moderate risk of disruptions in work and/or
reduced service. Generally, such occurrences would negatively impact customers.
FINANCIAL RISKS
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.
As of December 31, 2015, our consolidated gross financial debt was 37,090 million euros, compared to
37,054 million euros on December 31, 2014. Our consolidated net financial debt was 28,475 million euros as of
December 31, 2015, compared to 28,021 million euros on December 31, 2014. Our high leverage continues to be
12

a factor in our strategic decisions as it has been 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, although we are taking steps to raise additional capital to
support critical investment.
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, Standard & Poor’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 taking ratings into account for determining interest expense, or on its
relative cost to us, downgrades could adversely impact our ability to refinance existing debt and could increase
costs related to refinancing existing debt and managing our derivatives portfolio.
Factors which are beyond our control such as deterioration in performance of 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, continuing weakness in general economic conditions at
the sovereign level could have a significant effect on our ability to reduce our debt and refinance existing debt
through further access to the financial markets. Because debt reduction is one of our strategic objectives, failure
to reduce debt could be viewed negatively and could adversely affect our credit ratings.
The management and 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 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.
Fluctuations in currency exchange and interest rates and the performance of the equity markets in
general may adversely affect our results.
In the past, we have made substantial international investments, significantly expanding our operations outside of
the Euro zone, particularly in Latin America.
Our non-current operating assets are located as follows:
Š Italy: as of December 31, 2015 and December 31, 2014, respectively, 46,117 million euros (87.9 percent of
total non-current operating assets) and 44,110 million euros (85.3 percent of total non-current operating
assets); and
Š Outside of Italy: as of December 31, 2015 and December 31, 2014, respectively, 6,357 million euros
(12.1 percent of total non-current operating assets) and 7,618 million euros (14.7 percent of total
non-current operating assets). Non-current operating assets outside of Italy are primarily denominated in
Brazilian Real.
We generally hedge our foreign exchange exposure but do not cover conversion risk relating to our foreign
subsidiaries. According to our policies, the hedging of the foreign exchange exposure related to the financial
liabilities is mandatory. Movements in exchange rates of the Euro relative to other currencies (particularly the
Brazilian Real) may adversely affect our consolidated results. 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.
13

Furthermore, as of December 31, 2015 and December 31, 2014, 30 and 40 percent, respectively, of our
consolidated gross debt was subject to the accrual of interest at floating rates, net of derivative instruments
hedging such risks. As of December 31, 2015, and December 31, 2014, we had derivative contracts in place for
the management of our interest rate risk, including interest rate swaps, for notional amounts of 3,689 million
euros and 5,320 million euros, respectively. Any changes in interest rates that have not been adequately hedged
by derivative contracts may result in increased financial liabilities in connection with our floating rate debt, which
may have adverse effects on the results of our operations and cash flows.
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.
We may also be exposed to financial risks such as those related to the performance of the equity markets in
general, and, more specifically, risks related to the performance of the share price of Group companies.
COMPLIANCE RISKS
Because 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, 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 require us to provide fixed line public
voice telecommunications services in non-profitable areas. As a member of the EU, Italy has adapted its
regulatory framework for electronic communications services to the framework established by the EU Parliament
and Council.
Pursuant to this regulatory framework, the Italian regulator in charge of supervising the telecommunications,
radio and television broadcasting sectors (Autorità per le Garanzie nelle Comunicazioni—“AGCom”) is required
to identify operators with “Significant Market Power” (“SMP”) in the relevant markets subject to regulation. On
the basis of market analyses proceedings (“Market Analyses”), AGCom imposes on Telecom Italia the remedies
necessary to safeguard competition. Current remedies are mainly focused on the regulation of Telecom Italia’s
wholesale business, while the regulation of retail markets has been largely withdrawn, with the exception of price
tests on retail access offers (for telephone, broadband and ultra-broadband access).
Within this regulatory framework, the main risks we face include:
Š lack of predictability concerning both the timing of the regulatory proceedings and their outcome;
Š AGCom decisions with retroactive effects (e.g., review of prices of past years following an administrative
judgment); and
Š underestimation by AGCom of the permitted regulatory return on capital invested.
A new “round” of Market Analyses should be conducted by AGCom every three years, in order to cope with the
evolutions of market conditions and technology developments and set the rules for the subsequent three-year
period. Meeting this schedule by AGCom is necessary to provide proper regulatory certainty and predictability.
However, the regulatory review process is not always carried out following the required schedule. For example,
the third round of Market Analyses for the access markets was expected to be concluded at the beginning of 2013,
in order to set the rules for the period 2013-2015. However, the third round was concluded in December 2015,
producing a ruling for the period 2014-2017. This approach created a high level of uncertainty for market
operators and this uncertainty led to uncertainties about the “willingness to invest”.
In addition, in the interconnection market, AGCom launched the third round of Market Analyses for fixed
termination rates in April 2015 and as of April 8, 2016 the market analysis process is still in progress.
Regulatory uncertainty and regulatory changes imposed on us not only can adversely impact our revenues, but
can also make it difficult to make important investment decisions. Regulation is a key factor in evaluating the
likelihood of return on investments and therefore in deciding where to invest.
14

Moreover, rules and economic conditions are also uncertain and unstable due to a high level of disputes among
operators that challenge AGCom decisions before Administrative Courts.
For example, the Council of State (Consiglio di Stato) published a number of judgments on fixed and mobile
termination rates, as well as on wholesale access prices following complaints by some alternative operators.
According to these judgments, AGCom has conducted a review of already established decisions that were
considered to be closed (e.g., 2010-2012 access charges, leading to a change in the regulation and in prices, with
retroactive effects).
Also, the Italian Antitrust Authority (Autorità Garante per la Concorrenza ed il Mercato—“AGCM”) may intervene
in our business, setting fines and/or imposing changes in our service provision operating processes and in our
offers. For example, on March 27, 2013, AGCM initiated a proceeding about an alleged anti-competitive
agreement among the companies providing network maintenance services to us, possibly aimed at artificially
raising the underlying costs. Subsequently, AGCM extended the proceeding to us in order to determine whether
we were involved in the agreement. We proposed a number of undertakings in order to make clear the
correctness of our behavior. These proposed commitments included, inter alia, providing information,
implementing of new procedures and certain additional measures. However, AGCM did not accept these
undertakings. AGCM made its final decision on December 16, 2015 and imposed a fine of approximately
21.5 million euros on us. We appealed the decision to the Administrative Tribunal of Lazio (TAR) on February 22,
2016.
In December 2015, we began implementation of a new model that includes a number of structural changes in the
provision of our bottleneck access services (on both copper and fiber networks), aimed at meeting the
requirements and recommendations stated by AGCom, AGCM, our Supervisory Board (Organo di Vigilanza per la
Parità di Accesso) and the Supreme Administrative Court (Consiglio di Stato) (the “New Equivalence Model”).
The New Equivalence Model will improve the current equality of access guarantees by means of a greater
symmetry in organization, processes, information systems and databases for the provision of bottleneck access
services in order to decrease future regulatory and competition risks.
Our Brazilian Business Unit also is subject to extensive regulation. 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 Brazil as well as taking decisions that can have an adverse
effect on our results, including setting, and in particular, reducing the mobile termination rates we can charge. As
a result, the decisions of regulators or the implementation of new regulations in Brazil 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.
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 in Italy, Brazil and our other international markets. 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 we are 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 we operate.
For further information regarding the matters discussed above and other aspects of the regulatory environments
in which our businesses operate, see “Item 4. Information on the Telecom Italia Group—Item 4.3. Regulation”.
We operate under authorizations granted by government authorities.
Many of our activities require authorizations from governmental authorities both in Italy and abroad. 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
15

interpretation, modification or termination by these authorities. Although authorization renewal is not usually
guaranteed, most authorizations do address the renewal process and terms that may be affected by political and
regulatory factors.
Many of these authorizations are revocable for public interest reasons. In addition, our current authorizations to
provide networks and services require that we satisfy certain obligations, including minimum specified quality
levels, 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 (e.g. in the assignment of spectrum right of use) 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 if the authorizations
include onerous conditions, it could have a material adverse effect on our business, financial condition and results
of operations.
In Brazil we operate under authorizations granted by the competent authorities. 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.
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 radio 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.
We face the risk that our organizational policies and procedures embodied in the organizational
model prepared pursuant to Legislative Decree 231/2001 may fail to prevent certain officers and
employees from engaging in unlawful conduct, for which we would be jointly liable.
We have put in place an organizational model pursuant to Legislative Decree 231/2001, in order to create a
system of rules capable of preventing certain forms of unlawful conduct by senior management, executives and
employees generally that might result in liabilities for us. The organizational model has been adopted by us and
our Italian subsidiaries.
The organizational model is continuously reviewed and must be kept updated to reflect changes in operations and
in the regulatory environment. We have established a 231 steering committee to prepare and consider proposals
for changes to the model, for submission to the Board for approval.
Notwithstanding the existence of this model or any updates that we may make to it, there can be no assurances
that the model will function as designed, or that it will be considered adequate by any relevant legal authority. If
the model is inadequate or deemed to be so, and we were held liable for acts committed by our senior
management, executives and employees or are found otherwise non-compliant with the requirements of the
legislation, we may be ordered to pay a fine, our authorizations, licenses or concessions may be suspended or
revoked, and we may be prohibited from conducting business, contracting with the Italian public administration,
or advertising goods and services. Such developments would have adverse effects on our business, results of
operations, financial condition and cash flows.
16

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.$ 1.0859, 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, 2015.
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 2011 to 2015 and for the beginning of 2016 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
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4875 1.2926 1.3931 1.2973
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3463 1.2062 1.2859 1.3186
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3816 1.2774 1.3281 1.3779
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3927 1.2101 1.3297 1.2101
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2015 1.0524 1.1096 1.0859
2016 (through April 8, 2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1430 1.0743 1.1067 1.1406
Monthly Rates High Low Average(1) At Period end
October 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1437 1.0963 1.1228 1.1042
November 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1026 1.0562 1.0727 1.0562
December 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1025 1.0573 1.0889 1.0859
January 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0964 1.0743 1.0855 1.0832
February 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1362 1.0868 1.1092 1.0868
March 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1390 1.0845 1.1134 1.1390
April 2016 (through April 8, 2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1430 1.1374 1.1394 1.1406
(1) Average of the rates for each month in the relevant period.
The Ordinary Shares (the “Ordinary Shares”) and Savings Shares (the “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”.
17

Item 3. Key Information Selected Financial And Statistical Information
3.3 SELECTED FINANCIAL AND STATISTICAL INFORMATION
The selected financial data set forth below are consolidated financial data of the Telecom Italia Group as of and
for each of the years ended December 31, 2015, 2014, 2013, 2012 and 2011, 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 by the independent auditor PricewaterhouseCoopers S.p.A.
In 2015, the Group applied the accounting policies on a basis consistent with those of the previous years, except
for the new standards and interpretations adopted by the Group since January 1, 2015, described in the “Note—
Accounting Polices” of the Notes to the Consolidated Financial Statements included elsewhere herein.
18

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,
2015(*) 2015(*) 2014(*) 2013(*) 2012(*)(**) 2011(*)(**)
(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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,412 19,718 21,573 23,407 25,759 26,772
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . 3,215 2,961 4,530 2,718 1,709 (1,190)
Profit (loss) before tax from continuing
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485 447 2,347 532 (293) (3,253)
Profit (loss) from continuing operations . . . 50 46 1,419 (579) (1,379) (4,676)
Profit (loss) from Discontinued operations/
Non-current assets held for sale . . . . . . . . . . . . 663 611 541 341 102 310
Profit (loss) for the year . . . . . . . . . . . . . . . . . . . 713 657 1,960 (238) (1,277) (4,366)
Profit (loss) for the year attributable to
Owners of the Parent(2) . . . . . . . . . . . . . . . . (78) (72) 1,350 (674) (1,627) (4,811)
Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . 5,643 5,197 4,984 4,400 4,639 5,556
Financial Ratios:
Operating profit (loss)/Revenues
(ROS)(%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.0% 15.0% 21.0% 11.6% 6.6% n.s.
Ratio of earnings to fixed charges(3) . . . . . . . . 1.17 1.17 2.18 1.27 0.84 (0.53)
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) . . . . 61,553 61,553 59,285 59,527 62,758 63,137
Employees relating to the consolidated
companies considered as Discontinued
operations/Non-current assets held for
sale (average number) . . . . . . . . . . . . . . . . . . 15,465 15,465 15,652 15,815 15,806 15,232
Basic and Diluted earnings per Share
(EPS)(4):
Ordinary Share . . . . . . . . . . . . . . . . . . . . . . . . . 0.00 0.00 0.06 (0.03) (0.08) (0.25)
Savings Share . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00 0.00 0.07 (0.03) (0.08) (0.25)
Dividends:
per Ordinary Share(5) . . . . . . . . . . . . . . . . . . . . . — — — — 0.020 0.043
per Saving Share(5) . . . . . . . . . . . . . . . . . . . . . . 0.0299 0.0275 0.0275 0.0275 0.031 0.054
19

As of December 31,
2015 2015 2014 2013 2012 2011
(millions of
U.S. dollars,
except
employees)(1) (millions of euros, except employees)
Consolidated Statement of Financial
Position Data:
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,351 71,232 71,551 70,220 77,555 83,886
Equity:
Equity attributable to owners of the Parent . . 19,123 17,610 18,145 17,061 19,378 22,790
Non-controlling interests . . . . . . . . . . . . . . . . . . . . 4,043 3,723 3,554 3,125 3,634 3,904
Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,166 21,333 21,699 20,186 23,012 26,694
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,185 49,899 49,852 50,034 54,543 57,192
Total Equity and liabilities . . . . . . . . . . . . . . . . . . . 77,351 71,232 71,551 70,220 77,555 83,886
Share capital(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,565 10,650 10,634 10,604 10,604 10,604
Net financial debt(7) . . . . . . . . . . . . . . . . . . . . . . . . . 30,921 28,475 28,021 27,942 29,053 30,819
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,867 65,867 66,025 65,623 83,184 84,154
Employees relating to the consolidated
companies considered as Discontinued
operations/Non-current assets held for
sale (number at year-end) . . . . . . . . . . . . . . . . . 16,228 16,228 16,420 16,575 — —
As of December 31,
2015 2014 2013 2012 2011
(thousands)
Statistical Data:
Domestic (Italy) Business Unit
Physical accesses(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,209 19,704 20,378 21,153 21,712
Of which physical accesses (retail) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,742 12,480 13,210 13,978 14,652
Broadband accesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,890 8,750 8,740 8,967 9,089
Of which retail broadband accesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,023 6,921 6,915 7,020 7,125
Mobile lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,007 30,350 31,221 32,159 32,227
Brazil Business Unit
Mobile lines(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,234 75,721 73,431 70,376 60,083
(*) On November 13, 2013, Telecom Italia accepted the offer of Fintech Group to acquire the entire controlling interest of Telecom Italia
Group in the Sofora—Telecom Argentina group. The agreements made in connection with this transaction were subsequently modified in
October 2014. As a result and in accordance with IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations), starting with
the fourth quarter of 2013, the Sofora—Telecom Argentina group has been treated as Discontinued operations/Non-current assets held
for sale. On March 8, 2016, the Telecom Italia Group completed the sale of Sofora—Telecom Argentina group (for further details please
see the Note “Events Subsequent to December 31, 2015” of the Notes to the Consolidated Financial Statements included elsewhere in
this Annual Report). The 2012 and 2011 comparative data have been appropriately restated.
(**) Starting from 2012, the Telecom Italia Group early adopted and retrospectively applied revised IAS 19 (Employee Benefits); therefore,
the comparative figures for 2011 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 for certain reclassifications under “Equity”.
(1) For the convenience of the reader, Euro amounts for 2015 have been converted into U.S. dollars using the Euro/Dollar Exchange Rate in
effect on December 31, 2015, of €1.00 = 1.0859 U.S.$.
20

(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 339 million euros in 2012 and 3,226 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;
– 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. This component is estimated to equal 1/3 of rental
expense, which is considered a reasonable approximation of the interest factor.
(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, including the Telecom Italia shares
related to the Mandatory Convertible Bonds issued by Telecom Italia Finance S.A. in November 2013 and 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 0.55 euros per share above dividends paid on the Ordinary Shares.
For the purpose of these calculations, the weighted average number of:
– Ordinary Shares was:
Š 14,889,773,009 for the year ended December 31, 2015 (such number includes the ordinary shares expected to be issued
by Telecom Italia upon the conversion of the mandatory convertible bonds issued by Telecom Italia Finance S.A.);
Š 13,277,621,082 for the year ended December 31, 2012; and
Š 13,264,375,078 for the year ended December 31, 2011.
– Savings Shares was:
Š 6,026,677,674 for the year ended December 31, 2015;
Š 6,026,120,661 for the years ended December 31, 2014, 2013, 2012 and 2011.
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 May 25, 2016, Telecom Italia’s dividend coupons for the year
ended December 31, 2015, will be clipped on June 20, 2016, and will be payable from June 22, 2016.
(6) Share capital represents share capital issued net of the accounting par value of treasury shares; accounting par value is the ratio of total
share capital and the number of issued 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,
2015—5.2.3 Non-GAAP Financial Measures”.
(8) Excludes full-infrastructured OLOs and FWA-Fixed Wireless Access.
(9) Starting from 2014, data also includes company lines (active SIM cards used by the TIM Brasil group and its employees). The comparative
data for the prior years have been appropriately restated.
21

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.
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. No ordinary share dividend is being paid for the year ended
December 31, 2015.
Dividends on Ordinary Shares Dividends on Savings Shares
Euros per
Share
U.S. Dollars
per Share(1)
(millions of
euros)
Euros per
Share
U.S. Dollars
per Share(1)
(millions of
euros)
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0430 0.0563 575.30 0.0540 0.0707 325.41
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0200 0.0260 267.59 0.0310 0.0403 186.81
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 0.0275 0.0377 165.72
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 0.0275 0.0299 165.72
2015(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 0.0275 0.0314 165.76
(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, 2015, Euro amounts have been translated into U.S. dollars using the Noon Buying Rate in effect on April 8, 2016.
(2) Subject to approval at the Annual Shareholders’ Meeting to be held on May 25, 2016. Telecom Italia’s dividend coupons for its Savings
Shares for the year ended December 31, 2015, will be clipped on June 20, 2016, and will be payable from June 22, 2016.
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.
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”.
22

Item 3. Key Information Dividends
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”.
23

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 name of the company is Telecom Italia S.p.A. and it is also known commercially under the brand “Tim”.
Shareholders at the Annual Shareholders Meeting to take place on May 25, 2016 will be proposed an amendment
to the company’s bylaws, so that the company be also and alternatively named “TIM S.p.A.”.
Telecom Italia is a joint-stock company established under Italian law on October 29, 1908, with registered offices
in Milan at Via Gaetano Negri 1. The telephone number is +39 (02) 85951. The company is recorded in the Milan
Companies Register at number 00488410010, R.E.A. (Repertorio Economico Amministrativo) at number 1580695
and R.A.E.E. (Rifiuti di Apparecchiature Elettriche ed Elettroniche) register at 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.
After the effectiveness of the demerger of Telco S.p.A. (previously the largest shareholder of Telecom Italia and
whose investors were Assicurazioni Generali S.p.A., Intesa Sanpaolo S.p.A., Mediobanca S.p.A. and Telefónica
S.A.) on June 24, 2015, Vivendi S.A. (“Vivendi”), an integrated media and content group based in France,
increased its ownership stake in Telecom Italia to 14.9% of Ordinary Shares, becoming our largest shareholder. In
the following months, Vivendi has increased its shareholding in the Company and, as of October 22, 2015, Vivendi
held, directly and indirectly, 20.03% of the ordinary share capital of Telecom Italia.
At the Shareholders’ Meeting held on December 15, 2015, Vivendi’s proposal to enlarge the Board of Directors of
Telecom Italia from 13 to 17 members was approved, and four new Directors presented by Vivendi were
appointed.
In December 2015 and February 2016, Vivendi further increased its shareholding in Telecom Italia, and, as of
April 8, 2016, it holds, directly and indirectly, 24.90% of Ordinary Shares. Vivendi does not hold Savings Shares (or
Savings Share ADSs). Vivendi does not have different voting rights in meetings of ordinary shareholders of
Telecom Italia.
See “Item 7. Major Shareholders and Related-Party Transactions” for a description of the existing shareholder
arrangements.
4.1.2 DEVELOPMENT
On February 16, 2016, Telecom Italia presented its 2016–2018 Plan. The 2016-2018 Plan sets out the primary
strategic objectives of the Telecom Italia Group over the next three years as well as a number of strategic
priorities to achieve these objectives.
For more details, please see “4.1.7 Updated Strategy”.
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 and Brazil) and according to the specific
businesses for the other segments.
The principal changes in the scope of consolidation in 2015 are as follows:
Š INWIT S.p.A.—Business Unit Domestic: was established in January 2015 and in June 2015, the initial
public offering for the ordinary shares of INWIT S.p.A. on the Electronic Stock Exchange organized and
managed by Borsa Italiana S.p.A. was successfully completed;
24

Š Alfabook S.r.l.—Business Unit Domestic: on July 1, 2015 Telecom Italia Digital Solutions S.p.A. acquired
100% of the Alfabook S.r.l., which consequently entered the Group’s scope of consolidation;
Š TIM Real Estate S.r.l.—Business Unit Domestic: was established in November 2015.
With the exception of the INWIT initial public offering, these changes did not have a significant impact on the
Consolidated Financial Statements of the Telecom Italia Group at and for the year ended December 31, 2015.
The principal changes in the scope of consolidation in 2014 were as follows:
Š Telecom Italia Ventures S.r.l. – Domestic Business Unit: was established in July 2014;
Š Rete A—Media Business Unit: on June 30, 2014, Persidera S.p.A. (formerly called Telecom Italia Media
Broadcasting S.r.l.) acquired 100% of the company Rete A; as a result Rete A entered the Group’s scope of
consolidation and was consolidated on a line-by-line basis. The merger of Rete A by absorption into Persidera
was completed on December 1, 2014;
Š TIMB2 S.r.l.—Media Business Unit: was established in May 2014;
Š Trentino NGN S.r.l.—Domestic Business Unit: on February 28, 2014 the Telecom Italia Group acquired
the controlling stake in the company Trentino NGN; consequently such company is now part of the Group’s
scope of consolidation.
These changes did not have a significant impact on the Consolidated Financial Statements of the Telecom Italia
Group as at and for the year ended December 31, 2014.
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, 2015—5.2.2. Business Segment” and “Note—Scope of Consolidation” 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).
The Telecom Italia Sparkle group develops fiber optic networks for wholesale in Europe, the Mediterranean and
South America.
INWIT S.p.A. was formed in 2015. The company operates in the electronic communications infrastructure sector,
specifically relating to infrastructure for housing radio transmission equipment for mobile telephone networks, for
Telecom Italia and other operators.
Olivetti operates in the area of office products and services for information technology (“IT”). It carries out
solution provider activities to automate processes and business activities for small and medium-size enterprises,
large corporations and vertical markets.
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 Italy and it is one of the three operators that acquired a 800MHz spectrum in 2011 to provide 4G
Service in Italy.
At December 31, 2015 the Telecom Italia Group had approximately 11.7 million physical accesses (retail) in Italy,
a decrease of 0.7 million compared to December 31, 2014, within a market context characterized by a continuing
trend of customers replacing fixed lines with mobile, resulting in a continuing fall in fixed line accesses.
The Wholesale customer portfolio in Italy was approximately 7.5 million accesses for telephone services at
December 31, 2015 (an increase of 0.2 million accesses as compared to December 31, 2014).
25

The broadband portfolio in Italy was 8.9 million accesses at December 31, 2015 (consisting of approximately
7.0 million retail accesses and 1.9 million wholesale accesses), substantially stable compared to December 31,
2014 (8.8 million accesses).
In addition, the Telecom Italia Group had approximately 30.0 million mobile telephone lines in Italy at
December 31, 2015, a decrease of approximately 0.3 million compared to December 31, 2014.
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, GSM and LTE technologies. With the acquisitions of
700MHz and 2.5GHz radiofrequencies, the focus is on speeding up the development of 3G and 4G networks.
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.
At December 31, 2015, the Telecom Italia Group had 66.2 million mobile telephone lines in Brazil (75.7 million at
December 31, 2014).
4.1.4 DISPOSALS AND ACQUISITIONS OF SIGNIFICANT EQUITY INVESTMENTS IN 2015
For a description of disposals and acquisitions of significant equity investments in 2015 please see “Note —Scope
of consolidation” and “Note—Investments” of the Notes to the Consolidated Financial Statements included
elsewhere in this Annual Report.
4.1.5 RECENT DEVELOPMENTS DURING 2016
For a description of recent developments please see “Item 8. Financial Information—8.2 Legal Proceedings” and
“Note—Events Subsequent to December 31, 2015” of the Notes to the Consolidated Financial Statements
included elsewhere in this Annual Report.
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, 2015:
TIM Brasil Serviços e
Participações S.A.
- Tim Participações S.A.
- Intelig Telecomu-
nicações Ltda
- Tim Celular S.A.
Persidera S.p.A. (**)
Telecom Italia Group
Domestic (Italy)
Olivetti
Brazil Media
Core Domestic
(*)
International
Wholesale
Telecom Italia
Sparkle group:
Olivetti S.p.A.
- Telecom Italia Sparkle
S.p.A.
- Lan Med Nautilus group
Consumer
Business
National Wholesale
Other (INWIT and
support structures)
26

(*) Main subsidiaries: Telecom Italia S.p.A., INWIT S.p.A., Telenergia S.p.A., Telecontact Center S.p.A., TI Digital Solutions S.p.A. (merged
into Olivetti S.p.A. on January 1, 2016), HR Services S.r.l. and TI Information Technology S.r.l.
(**) The merger of Telecom Italia Media S.p.A. into Telecom Italia S.p.A. was completed on September 30, 2015.
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) 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, 2015—5.2.5 Business unit financial data”.
4.1.7 UPDATED STRATEGY
Strategic Priorities and Objectives for the 2016–2018 Plan
On February 16, 2016, Telecom Italia presented its updated 2016–2018 three-year strategic plan (the “Plan”),
which, following up on the previous strategic plan, provides for an acceleration of investments over the Plan
period, with the primary aim of ensuring long-term growth for the Group.
The Plan includes the following strategic priorities over the next three years:
Domestic (Italian) market
The main strategic priorities in the Domestic (Italian) Market are:
Š acceleration of investments, mainly those relating to innovative networks and services. Telecom Italia
intends to increase coverage of the country with next generation networks and aims to reach, by the end of
2018, 84% of the population with fiber optics and 98% of the population with the LTE (4G) mobile network,
asserting its position as an infrastructure development and digitization leader in the country;
platform company, an enabler of the country’s digital life: a business model based on innovative
infrastructure and excellent customer service, increasingly aimed at disseminating premium services and
digital content within a customizable platform, accessible anywhere and on any device;
Š in the Mobile segment, in a competitive context characterized by greater attention to quality and a constant
increase in the use of data, Telecom Italia will aim to accelerate the penetration of smart devices and to
market bundle offers that generate a higher ARPU;
Š in the Fixed segment, the Group plans to minimize the decrease of its customer base, mainly through the
acceleration in the adoption of fiber optics;
Š convergence continues to be central to the Group’s growth and innovative investments strategy. Using its
network infrastructure, the Group aims to offer premium services to customers via an integrated platform;
Š strengthening the position in multimedia entertainment, which includes activities, among others, in the field
of video, music, gaming and publishing;
Š thanks to its ICT and cloud services, Telecom Italia also intends to continue helping Italian businesses
enable their digital transformation process, with a differentiated approach depending on customer base
characteristics, aiming to achieve a distinctive positioning in the vertical markets which our management
deems to be of major interest;
Š the Plan is also characterized by strong financial discipline, supported by efforts to increase efficiency, the
sale of a share in Inwit, the increase in equity resulting from redemption of the Mandatory Convertible
Bonds, as well as completion of the sale of Telecom Argentina, which occurred on March 8, 2016 (for further
details, please see the Note “Events Subsequent to December 31, 2015” of the Notes to the Consolidated
Financial Statements included elsewhere in this Annual Report).
27

Brazil
The main strategic priorities in the Brazilian Market are:
Š strengthen Telecom Italia’s market position by leveraging network quality, innovation and customer
experience;
Š protect value of prepaid customer base, shifting focus from lines market share to share of total revenue;
Š increase share of mid/high-value customers;
Š shore up the corporate customer base;
Š sustain network investment through the adoption of a prioritized approach and focus on 4G;
Š focus on efficiency.
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”.
28

4.1.8 THE ORGANIZATIONAL STRUCTURE
Following the resignation as Chief Executive Officer of Mr. Marco Patuano, the Telecom Italia Board of Directors
announced that the Company and Marco Patuano reached an agreement to terminate Mr Patuano’s relationship as
an employee and Director effective March 22, 2016. In line with the succession plan previously adopted, the
Board of Directors conferred CEO powers to the Executive Chairman Giuseppe Recchi on an interim basis. On
March 30, 2016, the Board of Directors of Telecom Italia, chaired by Giuseppe Recchi, and in agreement with the
considerations of the Nomination and Remuneration Committee—appointed Flavio Cattaneo as Chief Executive
Officer, giving him executive powers.
For further details, please see Note “Events subsequent to December 31, 2015” of the Notes to the Consolidated
Financial Statements included elsewhere herein.
The following diagram highlights the organizational structure of the Telecom Italia Group as of March 30, 2016:
BOARD OF DIRECTORS
R. MAZZILLI
COMPLIANCE
DEPARTMENT
V. CAVALLO
AUDIT
DEPARTMENT
S. PONZONI
IT & SECURITY
COMPLIANCE
CHAIRMAN
GIUSEPPE RECCHI
CORPORATE SHARED
VALUE
M. LOGLI
TELECOM ITALIA FOUNDATION
Chairman Office
•
•
LEGAL AFFAIRS
A. CUSIMANO
INSTITUTIONAL
COMMUNICATION
I. DOMPE’
PUBLIC AFFAIRS
F. BRESCIA
BRAND STRATEGY &
MEDIA
a.i. G. RECCHI
CHIEF EXECUTIVE
OFFICER
FLAVIO CATTANEO
QUALITY
P. ALFIERO C. MORANDINI
REGULATORY AFFAIRS
AND EQUIVALENCE
•HR SERVICES
M. DI LORETO
PEOPLE VALUEBUSINESS SUPPORT
OFFICE
P. VANTELLINI
ADMNISTRATION,
FINANCE AND
CONTROL
P. PELUSO
R. ABREU
PRESIDÊNCIA
TIM
PARTICIPAÇÕES
M. DI MAURO
STRATEGY
& INNOVATION
• TIM VENTURES •
S. CIURLI
TI SAN MARINO
WHOLESALE
• INWIT
G.R. OPILIO
TECHNOLOGY
• TELECOM
ITALIA SPARKLE
• OLIVETTI
S. BATTIFERRI
ICT SOLUTIONS &
SERVICE PLATFORMS
• PERSIDERA
S. DE ANGELIS
CONSUMER & SMALL
ENTERPRISE MARKET
29

Units
4.2 BUSINESS UNITS
4.2.1 Domestic
Since 2014, the operations of Olivetti group have been consolidated under the Domestic Business Unit. This
presentation reflects the commercial and business placement of the Olivetti group and the process of integrating
its products and services with those offered by Telecom Italia in the Italian market.
The Domestic Business Unit operates as the consolidated market leader in providing voice and data services on
fixed and mobile networks for final retail 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).
INWIT S.p.A. was formed in 2015. The company operates in the electronic communications infrastructure
business, specifically relating to infrastructure for housing radio transmission equipment for mobile telephone
networks for Telecom Italia and other operators.
Olivetti operates in the area of 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 Domestic Business Unit is organized as follows as of December 31, 2015:
INTERNATIONAL WHOLESALECORE DOMESTIC (*)
• Consumer
• Business
• National Wholesale
• Other (support structure)
• Telecom Italia Sparkle group:
• Telecom Italia Sparkle S.p.A.
• Lan Med Nautilus group
OLIVETTI
• Olivetti group:
• Olivetti S.p.A.
DOMESTIC
(*) Main subsidiaries: Telecom Italia S.p.A., INWIT S.p.A., Telenergia S.p.A., Telecontact Center S.p.A., TI Digital Solutions S.p.A. (merged
into Olivetti S.p.A. on January 1, 2016), HR Services S.r.l. and TI Information Technology S.r.l.
The principal operating and financial data of the Domestic Business Unit are reported according to the following
three Cash-generating units (“CGU”):
Š Core Domestic: includes all telecommunications activities inherent to the Italian market. The sales market
segments defined on the basis of the “customer centric” organizational model are as follows:
Š Consumer: comprises the aggregate of voice and Internet services and products managed and
developed for persons and families in the Fixed and Mobile telecommunications markets and also public
telephony;
Š Business: the segment consists of voice, data, and Internet services and products, and ICT solutions
managed and developed for small and medium-size enterprises (SMEs), Small Offices/Home Offices
(SOHOs), Top customers, the Public Sector, Large Accounts, and Enterprises in the Fixed and Mobile
telecommunications markets;
Š 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 domestic
market;
30

Units
Š Other (INWIT S.p.A. and Support Structures): includes:
Š INWIT S.p.A.: since April 2015, the company has been operating within the Operations area in the
electronic communications infrastructure sector, specifically relating to infrastructure for housing
radio transmission equipment for mobile telephone networks for Telecom Italia and other
operators;
Š Other Operations: covering technological innovation and processes of development, engineering,
building and operation of network infrastructures, real estate properties and plant engineering,
delivery processes, and assurance for customer services; development of the information
technology strategy, guidelines and plan; customer care, operating credit, loyalty and retention
activities, sales within its remit, and administrative management of customers;
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.
The organizational change initiated within Telecom Italia in November 2015, involving the establishment of
the Wholesale Function through the progressive integration of the Open Access and National Wholesale
Services Functions, is in the process of being implemented.
Š International Wholesale—Telecom Italia Sparkle group: 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.
Š Olivetti: operates in the sector of office products and services for IT. It carries out solution provider
activities to automate processes and business activities for small and medium-size enterprises, large
corporations and vertical markets. Following approval of the restructuring plan of the Olivetti group on
May 11, 2015 the business lines for which the plan contemplates a process leading to their disposal through
divestment or termination have been included under Other Operations, beginning on January 1, 2015.
❖ MARKETING CHANNELS AND DISTRIBUTION
At December 31, 2015, as a result of the customer-centric approach, Telecom Italia utilized the following sales
structure 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 managed by several channels focused on volume and value acquisitions, including:
Š the “Push” Channel consisting of an outbound telephone channel called “Telesales” with a network of
23 partners having a total of approximately 3,500 operators and the “Agent” channel with 100 Direct
Agents and a network of 60 partners with approximately 1,000 sales agents;
Š the “Pull” channel: consisting of the retail network of shops, dealers and large retailers, amounting to a
total of approximately 5,300 retail points of sale (at December 31, 2015). Points of sale are
geographically widespread and they are of different types: direct (flagship stores and 4G mall stores);
franchisee; monobrand; multibrand; organized and specialized large-scale distribution.
In addition to these partners, distribution also is done through the “Public Telephone” channel, consisting of
15 technical partners in order to provide maintenance and other related services.
Š Business
Business customers are managed by a single Sales Unit which includes both a direct and indirect sales
channel. The Sales Channel is organized in five different segments. One is dedicated to Top Customers,
31

Units
which includes the most important Private and Public Sector companies and is managed only through the
direct sales channel. The remaining four manage Strategic, Large, Medium and Small customers at the
regional level and include both the indirect and direct sales channels.
Š Indirect Sales Channel
The business distribution channels are made up of:
Š “BP—Business Partner” channel (approximately 72): a network focused on standard offers (Small
market) with about 1,500 agents;
Š “ISP—Ict sales partner” channel (approximately 82): a network organized geographically focused
on VAS and ICT products with 220 agents;
Š Outbound Call Center: 9 partners focused on specific canvass and customer loyalty activities;
Š Senior Agent: 114 Agents focused on medium enterprise customers;
Š Shops: some specific shops (approximately 2,500) offering business products and assistance.
Š Direct Sales Channel
At the end of 2015 around 720 sales staff had a dedicated portfolio to manage and develop, supported
by pre sales and post sales teams. The main activities include:
Š offering the whole range of services (fixed and mobile voice and data, ICT services and products);
Š promoting and managing a 360 degree relationship with the customer, providing support and
assistance.
Š National Wholesale Services
The National Wholesale Services (“NWS”) division manages relationships with approximately 380 other
telecommunications 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 the 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; they are organized
into two Commercial Local Areas for the North, Centre and South of Italy;
Š contracts definition and disputes solution through specialized personnel;
Š billing, credit and administrative activities, revenue integrity control;
Š caring and business process re-engineering.
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.
32

Units
❖ 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,
2015 2014 2013
DOMESTIC FIXED
Physical accesses (thousand)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,209 19,704 20,378
Of which retail physical accesses (thousand) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,742 12,480 13,210
Broadband accesses in Italy at year-end (thousand)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,890 8,750 8,740
Of which retail broadband accesses (thousand) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,023 6,921 6,915
Network infrastructure in Italy:
access network in copper (millions of km—pair, distribution and connection) . . . . 115.6 115.2 114.9
access and carrier network in optical fiber (millions of km—fiber) . . . . . . . . . . . . . . . 10.4 8.3 6.7
Total traffic:
Minutes of traffic on fixed-line network (billions): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76.9 84.2 91.2
Domestic traffic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.5 68.9 75.8
International traffic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.4 15.3 15.4
Broadband traffic (PBytes)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,126 3,161 2,533
DOMESTIC MOBILE
Number of lines at year-end (thousand) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,007 30,350 31,221
Change in lines (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.1) (2.8) (2.9)
Churn rate (%)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.4 24.2 30.4
Total traffic:
Outgoing retail traffic (billions of minutes) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.6 42.7 41.0
Incoming and outgoing retail traffic (billions of minutes) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66.1 62.7 57.5
Mobile browsing volumes (PBytes)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182.6 133.9 98.1
Average monthly revenues per line(6) (euro) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1 12.1 13.1
(1) Excludes full-infrastructured OLOs and FWA-Fixed Wireless Access.
(2) Excludes OLO LLU and NAKED, satellite, full-infrastructured and FWA Fixed Wireless Access.
(3) DownStream and UpStream traffic volumes.
(4) The data refers to total lines. The churn rate represents the number of mobile customers who discontinued service during the period
expressed as a percentage of the average number of customers.
(5) National traffic excluding roaming.
(6) 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.
❖ MAIN CHANGES IN THE REGULATORY FRAMEWORK
For the main regulatory events which occurred in 2015 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
In 2015, the Italian telecommunications market continued the trend, which started in the second half of 2014, of
a slowdown in the competitive pressure that had been characterized by a significant use of pricing as a lever. As a
consequence, there has been a slowdown of the ongoing decline in the traditional service components,
particularly voice traffic.
The key element in the evolution of the market continues to be the increased penetration of broadband and ultra-
broadband, particularly mobile, facilitated also by the greater spread of next-generation handsets.
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The competition in the TLC market continues to be characterized by the following trends: the TLC market has
opened the field to competition from non-traditional operators (in particular Over the Top companies (“OTTs”)
and producers of electronic and consumer devices); on the other hand, telecommunication operators have the
opportunity to develop new “over the network” services (mainly in the IT and Media fields).
Therefore, for telecommunications operators, in addition to facing competition from other traditional operators in
the sector, including mobile virtual operators (“MVOs”), which has the greatest impact on market trends, there
has also been increased competition from OTTs and device producers that operate entirely in the digital world.
As a result, the business models of legacy telecommunications operators have had to change to meet the
challenges posed by new entrants and to exploit new opportunities:
Š in Media, with the Web becoming increasingly important as a complementary distribution, broadcasters are
increasingly under pressure from OTTs and from telecommunications and consumer electronics companies;
Š in the IT market, the decline of traditional revenues is driving various players toward cloud computing, with
the goal of protecting market share in their core businesses. Telecommunications operators are expected to
strengthen in this sector, including through partnerships;
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, breaking the relationship between
customers and TLC operators;
Š OTTs have, for some time now, been leading the transformation of the methods of use of TLC 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 different levels of evolution:
Š the development of innovative services in the IT market, specifically in cloud services;
Š the development of new Digital Services, particularly referring to Entertainment (e.g., TV over IP), Smart
Home, Digital Advertising, Mobile Payments and Digital Identity.
Competition in Fixed-Line Telecommunications
The fixed-line telecommunications market continues to see a significant decline in access and voice revenues due
to the reduction in the number of accesses and rates and to the progressive shift of voice traffic to mobile.
Additionally, data transmission revenues have continued to decline. On the other hand, broadband revenue has
grown. In recent years, operators have been primarily focused on increasing broadband penetration and on voice
business protection through the introduction of bundled voice, broadband and services deals, in a highly
competitive environment that has created 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 also offering mobile services, including as MVOs.
Competition 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, BT Italia and Tiscali, that
have different business models focused on different segments of the market.
In 2015, 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 applications and social network
chat). This shift has been facilitated by the use of the Internet, the spread of broadband, personal computers and
other connected devices and the enhanced quality of service.
At December 31, 2015, fixed accesses in Italy numbered approximately 20.2 million (including full-infrastructured
OLOs and FWA-Fixed Wireless Access), a decline from 2014. The competition in the access market has led to a
gradual reduction in Telecom Italia’s market share.
In the broadband market, at December 31, 2015, fixed broadband customers in Italy reached a penetration rate
on fixed accesses of about 74%.
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The spread of broadband services is driven not only by the penetration of personal computers and of other
connected devices (e.g., Smart TV), but also by the growing demand for speed and access to new IP-based
services (Content—particularly Video, social networking services, Voice over IP, etc.).
Competition in Mobile Telecommunications
The mobile market, saturated and mature in its traditional component of voice services, has continued to
experience a decline in the number of lines. This development may be associated with a rationing by customers of
second and third SIM cards. As of December 31, 2015, mobile lines in Italy numbered about 92.7 million, down by
about 1.7% compared to 2014. However, penetration rates remain high at about 152% of the population).
The decreasing trend in revenues from components of traditional services such as voice and messaging continues,
due to the competition among TLC operators and to the growing expansion of “communication apps”. However,
in 2015, this trend has recorded a progressive improvement compared to 2013 and the first half of 2014. Mobile
broadband continues to grow and, though it is unable to offset the drop in revenues from traditional services,
represents the main strategic and business opportunity for the mobile TLC industry, also due to the launch of LTE
ultra-broadband.
In 2015, the growth in mobile broadband customers continued, thanks to the development of the small screen
component, with a high penetration rate on mobile lines, mainly due to the increasing spread of smartphones.
Alongside innovative services that have already been introduced 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 Internet of Things (the network of physical
objects—devices, vehicles, buildings and other items—embedded with electronics, software, sensors, and
network connectivity that enables these objects to collect and exchange data) and mobile payment.
Competition in the Italian mobile telecommunications market is mainly characterized by the presence of
Telecom Italia and of the other operators who own their networks (Vodafone, Wind, H3G). Moreover, in August
2015, VimpelCom and CK Hutchinson announced an agreement for a joint venture between Wind and 3 Italia,
subject to the required regulatory approvals.
In addition to these operators, the field also includes MVOs, among which PosteMobile is the most important
player. These operators continue to enjoy significant growth rates as compared to network 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, GSM and LTE technologies. With the acquisitions of
700MHz and 2.5GHz radiofrequencies, the focus is on speeding up the development of 3G and 4G networks.
Moreover, with the acquisitions of Intelig Telecomunicações in 2009 and of Tim Fiber RJ and Tim Fiber SP in 2011
(now merged into Tim Celular S.A.), the portfolio of services was expanded by offering fiber optic data
transmission using full IP technology such as DWDM and MPLS and offering residential broadband services.
BRAZIL
• Tim Brasil Serviços e Participações S.A.
• Tim Participações S.A.
• Intelig Telecomunicações Ltda
• Tim Celular S.A.
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The Tim Brasil group’s services cover an area which includes around 95% of Brazil’s urban population. Tim Brasil
group has approximately 66.2 million mobile lines which cover each of the Brazilian states and the Federal
District. As of December 31, 2015, the market combined penetration reached approximately 126% of the Brazilian
population and its combined market share totaled approximately 25.7%.
Since the Tim Brasil group began operating in the Brazilian market, its intention has been to provide its customers
with innovative services based on a state-of-the-art technology. This goal has been reached with the provision of
services through a robust 3G network in addition to a fast growing state-of-the-art Fourth Generation
(4G) network.
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,
2015 2014 2013
Number of lines at year-end (thousands)(*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,234 75,721 73,431
MOU (minutes/months)(**) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119.5 135.8 147.7
ARPU (Reais) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.7 17.7 18.6
(*) Estimates. Data includes company lines (active SIM cards used by the TIM Brasil group and its employees). The comparative data for
prior year have been appropriately restated.
(**) Net of visitors.
❖ MARKETING
With the rapid change in the profile of consumption of telecommunications services by Brazilian users, TIM Brasil
continued its efforts to innovate its offerings for all customer segments (Prepaid, Control and Postpaid) effectively
eliminating different rates for calls within and outside the TIM Brasil network. This effort is intended to increase
the convenience of the company’s voice and data bundles in all segments. TIM Brasil took this step in order to
reduce the usage of multiple SIM cards per user. This change aims to help TIM Brasil protect and increase the
value of the prepaid customer base, where the company continues to be a leader, and grow its base of postpaid
customers by providing more complete voice and data offers at reasonable prices, which could stimulate usage
growth.
Although still preliminary, the first results of TIM Brasil’s new offers are very encouraging in terms of attracting
new clients, generating new gross additions, increasing ARPU and meeting projected margin targets. These new
offers are helping to improve the results of Mobile Number Portability relative to all other operators, across
customer segments, beginning from the launch month of the new portfolio.
❖ DISTRIBUTION
As of December 31, 2015, we had more than 13.1 thousand points of sales through premium shops and dealers
(exclusive or multi-brand) and consolidated partnerships with large retail chains. This figure includes 182 of TIM
Brasil’s own stores. In addition to these retail stores, TIM Brasil customers have access to prepaid phone services
through supermarkets, newsstands, and other small retailers, totaling more than 328,000 points of sale
throughout Brazil.
For the corporate market, TIM Brasil has more than 465 third-party business partners focused on serving small
and medium-size companies and a direct sales force team of 95 employees focused on large companies.
In order to serve the customer base of over 66.2 million customers, TIM Brasil maintains 16 customer care
centers comprising around 14 thousand customer service representatives. Moreover, TIM Brasil has continuously
invested in alternative customer service channels, developing solutions based on interactive voice response and
self-service and mobile applications for iOS and Android.
For the main regulatory developments which occurred in 2015 that may have an economic impact on the Brazil
Business Unit, please see “Item 4. Information On The Telecom Italia Group—4.3 Regulation”.
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Units
❖ COMPETITION
At the end of 2015, the Brazilian mobile market reached 257.8 million lines, 22.9 million lines (or 8.2%) lower than
at the end of 2014, and a penetration rate of 125.7% of the population (138% in 2014). Consequently the churn
rate in 2015 was 59.1% (49.6% in 2014).
* * *
Agreement for the sale of telecommunications towers
On November 21, 2014, TIM Brasil agreed to enter into a sale and leaseback transaction with American Tower do
Brasil Cessão de Infraestruturas Ltda., or American Tower, pursuant to which TIM Brasil will sell to American
Tower a maximum of 6,481 of its telecommunications towers for a total price of approximately 3 billion reais, and
will lease back portions of those towers pursuant to a Master Lease Agreement, or MLA.
As of December 31, 2015, three tranches were transferred on: April 29, September 30 and December 16, 2015.
A total of 5,483 towers (84.6% of the total) were transferred, and 2,498 million reais was received in cash. For
further details please see “—4.6 Description of Property, Plant and Equipment”.
4.2.3 MEDIA
Media operates through Persidera in the management of Digital Multiplexes, as well as in the provision of
accessory services and digital signal broadcasting platforms to third parties.
Acquisition of control of Rete A S.p.A.
On June 30, 2014, Telecom Italia Media (TI Media) and Gruppo Editoriale L’Espresso (Espresso group) completed
the business combination of the digital terrestrial network operator businesses controlled by Persidera S.p.A. (new
name of Telecom Italia Media Broadcasting S.r.l.) and Rete A S.p.A. (Rete A), respectively.
The merger of Rete A into Persidera was completed on December 1, 2014.
The merger of Telecom Italia Media S.p.A. into Telecom Italia S.p.A. was completed at the close of business on
September 30, 2015, effective retroactively on January 1, 2015 for accounting and tax purposes.
As of December 31, 2015, the Business Unit was organized as follows:
MEDIA
• Persidera S.p.A. (formerly TI Media
Broadcasting S.r.l.)
At December 31, 2015, the three Digital Multiplexes of Persidera S.p.A. had reached a population coverage of
95.8% of the Italian population. The coverage of the two Digital Multiplexes of the former Rete A was 93.4% and
93.7%, respectively.
For the main regulatory events which occurred in 2015 that may have an economic impact on Media Business
Unit, please see “Item 4. Information On The Telecom Italia Group—4.3 Regulation”.
4.2.4 Discontinued Operations/Non-Current assets Held For Sale (Sofora—Telecom Argentina
group)
On March 8, 2016, the Telecom Italia Group completed the sale of Sofora—Telecom Argentina group (for further
details please see the Note “Events Subsequent to December 31, 2015” of the Notes to the Consolidated Financial
Statements included elsewhere in this Annual Report).
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As of December 31, 2015, the Sofora-Telecom Argentina group was organized as follows (the main companies are
indicated):
SOFORA - TELECOM ARGENTINA GROUP
• Sofora TelecomunicacionesS.A.(Sofora) (*)
• Nortel Inversora S.A.(*)
• Telecom Argentina S.A.
• MicrosistemasS.A.(**)
• Telecom Argentina USA, Inc.
• Telecom Personal S.A.
• Núcleo S.A. (Paraguay)
• Personal Envíos (Paraguay)
(*) Holding companies.
(**) Non-operating companies. The company’s general ordinary and extraordinary shareholder’s meeting held
on April 21, 2015 (second tranche) approved the amendment of its corporate purpose. The company is
currently analyzing new business opportunities to be developed.
The operations in Argentina were carried out in two major areas. Voice, data and Internet services (provided
through Telecom Argentina) and mobile services (provided through Personal). In Paraguay, there was only a
mobile operation (through Núcleo and its subsidiary Personal Envíos).
4.2.5 COMPETITION
We face competition in all of our businesses.
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”.
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Item 4. Information On The Telecom Italia Group Regulation
4.3 REGULATION
4.3.1 THE EU REGULATORY FRAMEWORK
Telecom Italia’s operations within the European Union (“EU”) are subject to the EU framework on electronic
communications regulation, which includes directives, regulations, recommendations and communications. As a
Member State of the EU, Italy is required to transpose directives issued by the EU into national legislation. The
regulations adopted by the European Commission (“EC”) have general application and are binding and directly
applicable in each Member State without the need of further national implementation. Recommendations and
communications, on the other hand, are not legally binding although they have to be taken into account by each
Member State.
The European Commission (“EC”) began liberalizing the telecommunications market in the late 1980s and early
1990s. In Italy, as well as in all the main EU Member States, liberalization opened up competition for public voice
telephony and public network infrastructure in 1998. National Regulatory Authorities (“NRAs”), independent
bodies tasked with regulating and supervising the telecommunications sector and compliance with the EU
framework, were created. In Italy, this body is known as the Autorità Garante per le Comunicazioni (“AGCom”).
The growing convergence between telecommunications, broadcasting and information technology led to a first
revision and consolidation of the EU Regulatory Framework in 2002. Five Directives (the directives “Framework”,
“Access and Interconnection”, “Authorization”, “Universal Service and Users’ Rights” “Privacy and Data
Protection”), regulating all forms of fixed and wireless telecommunications, data transmission and broadcasting
were adopted.
This legal framework was revised a second time in 2007, with the aim of defining a more consistent framework for
the sector. The revision of the framework implemented in 2007 established a set of rules composed by the “Better
Regulation Directive” (Directive 2009/140/EC, amending the “Framework”, “Access” and “Authorization”
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) and by Regulation
no. 1211/2009, establishing the Body of European Regulators for Electronic Communications (“BEREC”), a body
with consultative tasks. The new EU telecommunication rules were adopted on December 18, 2009, to be
transposed into national laws by May 25, 2011.
The revised directives were transposed into the Italian legal framework by means of the “Legge Comunitaria
2010”; the Italian Government was delegated to adopt the measures to transpose the revised directives. The
Legislative Decrees of May 28, 2012 (nos. 69 and 70) transposing the EU 2009 regulatory framework entered into
force on June 1, 2012.
A Recommendation on “relevant product and service markets susceptible of ex ante regulation” completes this
set of legal instruments with the definition of a list of relevant markets. The Recommendation “identifies those
product and service markets whose characteristics may be such as to justify the imposition of regulatory
obligations set out in specific directives” (EC explanatory note of October 9, 2014). The Recommendation
currently in effect (no. 2014/710/UE) was published on October 9, 2014, following updates in 2003 and 2007.
The number of relevant markets subject to ex ante regulation has been reduced over time from 18 to 4, following
the growth of the competition in the whole sector (see “Market Analyses”).
The EC adopted in 2010 a Communication, the “Digital Agenda for Europe” (the “DAE”), fixing the long-term
strategies of the EU for Broadband distribution and development. The DAE sets a list of objectives in terms of
Broadband coverage, service availability and degree of utilization by customers to be reached in 2013 and 2020.
In parallel the EC undertook many interventions on the regulation aimed at removing any regulatory obstacle to
reach the goals of DAE.
In September 2013, the EC published a Recommendation “on consistent non-discrimination obligations and
costing methodologies to promote competition and enhance the broadband investment environment” (no.
2013/5761). The Recommendation recommends to impose the Equivalence of Input (“EoI”) for the application of
the regulatory remedy of non-discrimination and defines the criteria to lift price regulation of New Generation
Access Network (“NGAN”) wholesale services when the following conditions are satisfied: (a) application of the
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principle of the EoI, (b) ability to technically and economically replicate retail offers and (c) presence of
significant competitive constraints exerted by the legacy copper access network or by alternative networks.
The appropriate level of return on capital to be included in regulated wholesale prices for operators investing in
new high-speed networks is of fundamental importance to reach the objectives of the Digital Agenda. The EC
wants to grant operators regulatory consistency and predictability to incentivize efficient investment and
innovation.
The principle of cost recovery to be utilized by the NRA must respect the principle that prices will “ensure that
operators can cover efficiently incurred costs and receive an appropriate return on invested capital”
(Recommendation no. 2013/5761).
During 2013, the EC also began revising the regulatory context concerning: harmonization of the radio spectrum,
rights of end users, net neutrality and intra-EU mobile roaming (the “Telecom Single Market Regulation” or “TSM
Regulation”). After lengthy negotiations among the European Institutions and reduction of its scope, the TSM
Regulation was approved in November 2015, covering intra-EU international roaming and Net Neutrality (see
below).
The TSM Regulation, approved in November 2015, introduces new rules on intra-EU roaming by amending the
roaming Regulation no. 531/2012 (the so-called “Roaming III Regulation”), which entered into force on July 1,
2012.
On May 6, 2015 the EC presented the Digital Single Market (DSM) Strategy for Europe.
The DSM Strategy sets out 16 key actions under 3 pillars which the EC will deliver by the end of 2016:
1. Better access to digital goods and services across Europe for consumers and businesses: breaking down of
barriers to EU cross-border e-Commerce (e.g., differences in contract law among Member States, unjustified
geo-blocking, high tariffs for cross-border parcel delivery, copyright rules and different VAT regimes);
2. Creating the right conditions and a level playing field for advanced digital networks and innovative services
to flourish: promotion of high-speed, secure and trustworthy infrastructure and content services, supported
by appropriate regulatory conditions for investment, fair competition and a level playing field;
3. Maximizing the growth potential of the digital economy: promotion of investment in ICT infrastructure and
technology, such as Cloud computing and Big Data, and research and innovation to boost industrial
competiveness, better public services, inclusiveness and skills.
The review of the regulatory framework for electronic communications is one of the 16 actions of the DSM
Strategy and a key element for creating the right conditions for digital networks and services to flourish (second
pillar of the Strategy).
The EC carried out a public consultation from September 11 to December 7, 2015. The public consultation
focused on the original instruments for the regulatory framework (i.e., Framework Directive, Access Directive,
Authorization Directive, Universal Service Directive), including the BEREC Regulation. The e-Privacy Directive (to
be reviewed after the General Data Protection Regulation is adopted), the EU Roaming Regulation and the
Broadband Cost Reduction Directive are not included.
The consultation covers all three main pillars of the framework, namely:
(a) the network pillar, intended to ensure a consistent and predictable regulatory environment that is supportive
for infrastructure investments in both fixed and wireless networks;
(b) the service pillar, intended to foster a modern regulatory regime for electronic communication services in a
world of diverse online services, and
(c) the governance pillar, intended to ensure that markets are regulated in a consistent manner across the EU,
including with respect to access to spectrum.
The review will be preceded by a Regulatory Fitness and Performance Program (REFIT) evaluation aimed at
assessing whether the current regulatory framework is “fit for purpose”.
40

The EC will present a legislative proposal to the European Parliament and EU Council in the second half of 2016.
The new framework will have to be subsequently transposed in the national legislation, therefore new rules will
apply beyond 2020.
❖ International Roaming: current rules
The Roaming III Regulation provides for the following measures applicable to roaming services within the EU
(extended to European Economic Area countries):
1. transparency measures, such as information SMS to customers on the applied retail tariffs;
2. the adoption of retail and wholesale price caps for voice, SMS and data services;
3. the unbundling/decoupling of the roaming services from the domestic services starting from July 2014
(decoupling solution). With the decoupling solution, the customer can buy roaming services separately from
domestic services from an alternative roaming provider, which can be a Mobile Network Operator (“MNO”),
a Mobile Virtual Network Operators (“MVNO”) or a reseller; and
4. the obligation to provide wholesale roaming access to MNO/MVNO/resellers at regulated prices.
The price caps established under the Roaming III Regulation are:
at wholesale level: ROAMING III
July 1, 2012 July 1, 2013 July 1, 2014
Voice (eurocents/min) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 10 5
SMS (eurocents/sms) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2 2
DATA (eurocents/MB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 15 5
at retail level: ROAMING III
July 1, 2012 July 1, 2013 July 1, 2014
Voice out (eurocents/min) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 24 19
Voice in (eurocents/min) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 7 5
SMS (eurocents/sms) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 8 6
DATA (eurocents/MB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 45 20
In December 2012, the EC published the implementing regulation (EU n. 1203/2012), indicating Single
International mobile subscriber identity (“IMSI”—reselling of all roaming services) and Local Break Out
(“LBO”—direct access to roaming data services of the visited network) as the decoupling solutions to be
implemented by MNOs.
❖ New rules introduced by the TSM Regulation on International Roaming
The TSM Regulation provides for the abolishing of any roaming service surcharge on top of domestic service
prices for a limited traffic quantity, defined according to “fair use” rules, to be defined by the European
Commission by the end of 2016.
For intra-EU traffic exceeding the fair use limits, operators will be allowed to levy a surcharge on top of domestic
tariffs; such surcharge will be capped at the wholesale caps defined in the Roaming III Regulation.
From April 2016 (when the TSM provisions will start to apply) to June 2017, pending the review of the wholesale
market required to make the “Roam Like at Home” regime economically sustainable, operators will be allowed to
levy a surcharge on top of domestic tariffs (wholesale caps defined in the Roaming III Regulation) for all intra-EU
roaming traffic.
The TSM Regulation abolishes the decoupling obligations according to the Single IMSI model (i.e., separate
selling of roaming services from domestic mobile services) introduced by the Roaming III Regulation.
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❖ New rules introduced by the TSM Regulation on Net Neutrality
The TSM Regulation introduces new rules on Net Neutrality, which will apply starting in April 2016. In particular,
the TSM Regulation:
Š establishes the right of end-user access to distribute information and content, use and provide applications
and services and use terminal equipment of their choice and forbids internet service providers from blocking
or slowing down specific content, applications or services, except in a very limited set of circumstances;
Š allows reasonable traffic management aimed at improving the quality of the network based on objectively
different technical quality of service requirements for specific categories of traffic. However, such traffic
management must be transparent, non-discriminatory and proportionate and it must not be based on
commercial considerations;
Š allows operators to offer services, other than internet access services, that are optimized for specific content,
applications or services only if the network capacity is sufficient to provide them in addition to any internet
access services provided and the offering of such services is not to the detriment of the availability or
general quality of internet access services for end-users; and
Š allows commercial practices such as “zero rating”2, subject to monitoring by the National Regulatory
Authority.
The TSM Regulation also places additional transparency obligations on providers of internet access services in
addition to those already included in the 2009 Electronic Communications Regulatory Framework. Contracts for
internet access services must include:
1. information on how applied traffic management measures could impact the quality of internet access, end-
users’ privacy and the protection of personal data;
2. explanation as to how any volume limitation, speed and other quality of service parameters may in practice
impact internet access;
3. explanation as to how any specialized services, to which the end-user subscribes, might in practice have an
impact on the same end-user’s internet access services;
4. for fixed networks: explanation of minimum, maximum and advertised download and upload speeds of
internet access services;
5. for mobile networks: the estimated maximum and advertised download and upload speed of internet access
services; and
6. explanation of the remedies available to consumers in case of any continuous or regularly occurring
discrepancy between the actual and contractually agreed on performance of the internet access service.
4.3.2 THE ITALIAN REGULATORY FRAMEWORK
❖ The legal Basis
The legal basis for the electronic communications sector in Italy is as follows:
Š the “Electronic Communications Code” (“ECC”), which transposed into national law the EU Access,
Authorization, Framework and Universal Service directives;
Š the “Data Protection Code”;
Š 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;
2 Zero-rating (also called toll-free data or sponsored data) is the practice of mobile network operators (MNO), mobile virtual network
operators (MVNO), and Internet Service Providers (ISP) not to charge end customers for data used by specific applications or internet
services through their network, in limited or metered data plans. It allows customers to use provider-selected content sources or data
services like an app store, without worrying about bill shocks, which could otherwise occur if the same data was normally charged
according to their data plans and volume caps. This has especially become an option to market 4G networks, but has also been used in
the past for SMS or other content services.
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Š Law 36 of February 22, 2001 aimed at protecting the population from the effects of the exposure to electric,
magnetic and electromagnetic fields and the decree of the President of the Council of Ministers (Decreto del
Presidente del Consiglio dei Ministri; the “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”;
Š the “Consumer Code”;
Š Law June 18, 2009, no. 69 providing measures to simplify the procedures for the installation and
development of optical fiber networks (Article 1 “Broadband”);
Š Decree Law July 6, 2011, no. 98, enacted by Law July 15, 2011, no. 111 further simplifying the procedure for
the installation of small mobile equipment (0.5 sq. meters of radiator area) and low power equipment
(7 watt);
Š Decree Law October 18, 2012 no. 179 (enacted by Law December 17, 2012 no. 221) providing for further
broadband networks funding to cancel the digital divide, measures to accelerate the roll-out of mobile fourth
generation networks and administrative simplifications for optical fiber layout;
Š implementation Decrees for “Golden Power” rules (Law no. 56/2012) redefining the State powers for the
safeguard of national interest in the strategic sectors of energy, transports and telecommunications;
Š Legislative Decree no. 21/2014 (implementation of Directive 2011/83/UE on consumers’ rights) defining the
rules for distance contracts, with specific reference to the right of withdrawal and the acquisition of
consumer’s express consent to be bound to the contract. Furthermore the Decree attributes to the Antitrust
Authority (Autorità Garante della Concorrenza e del Mercato; the “AGCM”) the evaluation of sanctions for
unfair commercial practices;
Š Decree Law no. 145/2013 “Destinazione Italia” (enacted by Law no. 9/2014) containing measures for the
use of new techniques for the simplification of the layout of broadband and ultra-broadband
telecommunications networks;
Š Decree Law no. 91/2014 “Competitività” (enacted by Law no. 116/2014), establishing the obligation for the
Ministry of Environment to approve Guidelines for the calculation of the level of electromagnetic emissions
of mobile telephony equipment and aimed at supporting the development of LTE/4G networks. Furthermore,
the Decree establishes discounts on the costs of electricity for specific categories of business users, including
Telecom Italia;
Š Decree Law no. 133/2014 “Sblocca Italia” (enacted by Law no. 164/2014), introducing fiscal benefits in
favor of operators installing ultra-broadband networks;
Š Law no. 183/2014 (Legislative decree of the Italian “Jobs Act”) and its implementing Decree no. 148/2015,
setting forth measures to reform the labor market and safety nets in order to secure a generational turnover;
Š Decree of December 2, 2014 of the Ministry of Environment, implementing the Decree Law no. 179/2012,
setting forth certain guidelines in the area of electromagnetic emissions. Two further decrees on this matter
are expected to be published;
Š Law no. 115 of 2015 (European Law 2014), amending the contribution fees paid to AGCom by the Operators;
Š Law no. 124 of 2015 (Law on the restructuring of the Public Administration) establishing a reduction of
payments to Operators for the mandatory services of the Judicial Authority; and
Š Law no. 208/2015 (“Legge di stabilità 2016”) setting forth measures of specific interest in the
communication sector concerning: i) the creation of the “Fund for the Radio Spectrum re-organization”
within the Ministry of Economic Development (“MISE”); ii) the setting of the charges for the right of use of
the digital television frequencies applied to the local and national operators; and iii) the tender for the
frequencies 3.6—3.8 Ghz (C-band for fixed wireless and LTE).
The MISE is responsible for general policy in the electronic communications sector and AGCom is responsible for
ensuring fair competition and protecting customers in the telecom market.
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❖ The Italian regulatory framework
In July 2008, Telecom Italia proposed to AGCom several commitments related to its access network
(“Undertakings”) aimed at integrating and strengthening the non-discrimination obligations (imposed by
AGCom since 2002) amongst Telecom Italia’s own retail divisions and other operators providing wholesale access
network services.
AGCom approved Telecom Italia’s Undertakings, which are divided into 14 main “Groups” and pursue the
following goals:
Š offering additional guarantees of equal treatment amongst Telecom Italia’s commercial divisions and other
electronic communications operators (“Operators”) when they purchase 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 competitive conditions in the migration towards new generation networks.
At the beginning of 2008, Telecom Italia created its Open Access department, a separate operating unit focusing
its activities on the implementation of 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 initiatives focused
on three main areas:
Š technical-organizational domain for the solutions and for the improvement of the internal delivery processes;
Š cultural-behavioral domain providing for a Code of Conduct and for intensive training activities, carried out in
order to spread the principles of internal-external equal treatment; and
Š economic-regulatory domain regarding the service contracts and the transfer charges adopted to implement
equality of economic treatment.
The implementation of the Undertakings, their complexity and their impact on the stakeholders’ system, also
required the creation of a governance system. In particular, the following bodies were set up: an independent
supervisory body (the “Supervisory Board”); the AGCom Undertakings’ Monitoring Group for the monitoring of
the work in progress (Gruppo per il Monitoraggio degli Impegni “GMI”), 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.
As a consequence of its Undertakings, Telecom Italia set up in 2010 a New Delivery Process (“NDP”) in order to
offer additional efficiency and transparency in the equality of treatment of Alternative Network Operators
(“AltNets”) and retail customers. In particular, the new process allows for identical operating procedures in the
treatment of retail and wholesale customers where services cannot be activated due to a lack of required network
resources.
On November 5, 2015, Telecom Italia’s Board approved a “plan to introduce a new equivalence model, aimed at
further strengthening the efficiency and effectiveness of the delivery (activation) and assurance (support)
processes” for its wholesale access services.
The new equivalence model aims to put Telecom Italia’s sales divisions on equal footing, relative to one another
and other operators, in order to achieve more effective internal and external equality of treatment and greater
transparency in the management of line activation requests.
As an initial and immediate step in the process of implementing the equivalence model, Telecom Italia put in
place an organizational structure that will affect Open Access and National Wholesale Services. Pursuant to this
new organizational structure, these two functions will report hierarchically to the same manager of a newly
created Wholesale department.
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Telecom Italia intends to invest over 120 million euros to strengthen equality of access to its infrastructure. The
process is expected to be implemented within 18 to 24 months, reflecting the most recent regulatory guidelines
and providing for strong interaction among the various players in the ecosystem for the assessment of
performance.
4.3.3 MARKET ANALYSES
The EU regulatory framework (Art. 16 of the Framework Directive) obliges National Regulatory Authorities to carry
market analyses before imposing obligations on individual operators having a Significant Market Power (“SMP”)
according to the specific EU guidelines.
According to art. 14.2 of the Directive “an undertaking is deemed to have SMP when, either individually or jointly
with others, it enjoys a position equivalent to dominance, which is 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%. Market shares in excess of
50% are in themselves, except in exceptional circumstances, evidence of the existence of a dominant position.
The basis of the market analyses is the Recommendation on “relevant markets susceptible of ex ante regulation”
which identifies the “relevant markets”. The first version of the Recommendation was adopted in 2003 and
contained a list of 18 relevant markets. In 2007 the EC adopted the second version and reduced the number of
markets to 7 (both retail and wholesale markets): 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).
In October 2014, the EC adopted the third version which is currently in force and identifies only five wholesale
markets susceptible to ex-ante regulation: call termination at fixed location (market 1), call termination on mobile
networks (market 2), local access at fixed location (market 3a), central access at fixed location for mass-market
products (market 3b), high-quality access at fixed location (market 4).
The market analyses carried out by NRAs are subject to the assessment of the EC 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. Vice-versa, the EC has no veto power for what concerns the imposition of the remedies, but can
raise serious doubts following which the BEREC is requested to give an opinion. The EC, the BEREC and the NRA
then must cooperate to find a solution within three months. Neither the EC nor BEREC are able to make a binding
intervention. The NRA can decide not to amend or withdraw its decision on remedies but it must provide a
“reasoned justification”.
Following a first round (2006-2007) and a second round (2007-2010) of market analyses, a third round was
started by AGCom in 2012 (with two years of delay). As of April 8, 2016 the third round has not been completed.
In particular, the market analyses of the fixed interconnection market are still ongoing, and with respect to the
fixed access, the terminating segments of the leased lines markets and mobile call termination, the analyses were
concluded in the second half of 2015 despite the proceedings being launched in September 2012, November 2013
and February 2014, respectively.
With respect to retail markets, despite the fact that they are not included in the current list of the EU relevant
markets (Recommendation of 2014), the final AGCom decision of the market analysis on wholesale access
markets, retained some obligations, such as the notification of retail charges prior to the commercial launch and
the obligation to carry a replicability test of the retail offers (taking into account the most efficient network
architecture that could be used by AltNets to compete in a specific context).
A description of the wholesale market analyses is summarized below together with the main recent developments
regarding the electronic communications markets.
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4.3.4 WHOLESALE MARKETS
❖ Wholesale fixed access markets
In September 2012, AGCom launched the third round of market analysis on wholesale and retail access markets
(markets 1, 4 and 5 of 2007 Recommendation) to set the remedies to be applied to copper and fiber networks
(Decision 390/12/CONS). In March 2013, AGCom published Decision 238/13/CONS, covering the period from
2014 to 2016, and, on February 13, 2015, submitted for public consultation a change of Decision 238/13/CONS,
extending the covered period to 2017 (Decision 42/15/CONS).
On December 22, 2015, AGCom published the final Decision (623/15/CONS) on market analyses.
The main features relate to the following items:
Š Non-discrimination
The Decision provides for an increased level of non-discrimination. AGCom confirms the application of the
Equality of Output (“EoO”) model with certain amendments. In particular, the Decision:
Š introduces strict Service Level Agreements (“SLA”) and penalties;
Š imposes specific access obligations to allow the provision of certain ancillary services, such as line activation
and fault repair, by third parties in a competitive environment;
Š introduces a new set of quality-of-service key performance indicators and objectives (KPIs and KPOs);
Š simplifies and reduces certain differences, with respect to retail services, of the supply processes, e.g., by
giving access to the same network and customer address databases (“equivalence of network information”)
to various operators.
The decision also requires Telecom Italia to submit two options on the assurance and supply for the Local Loop
Unbundling (“LLU”) and Sub-Loop Unbundling (“SLU”). This is a completely new obligation which may entail
significant operative burdens and challenges. Specifically:
Š pursuant to the first option, Telecom Italia keeps the coordination role for the external maintenance
companies and for their relationships with the other operators;
Š pursuant to the second option, the other operators may acquire full autonomy in the contractual
relationships with external firms and, in addition, these firms may have direct access to Telecom Italia’s
network and information systems.
➢ Price control and transparency
In the final decision, access service charges are cost oriented, according to the Bottom-Up Long Run Incremental
Costs model based on Current Costs Accounting (“BU-LRIC CCA”) methodology and taking into consideration a
value of the regulated WACC of 8.77% (reduced from the former value of 9.36%).
For purposes of determining the charges for NGA services, AGCom used the BU-LRIC model as defined in the
decision n. 238/13/CONS with some methodological improvements to account for network typology, in particular
Fiber to the Curb (“FTTC”) and Fiber to the Home (“FTTH”) accesses.
AGCom did not introduce any geographic differentiation for Virtual Unbundling of the Local Access (“VULA”) in
terms of price and regulation. Moreover, Telecom Italia is now obliged to propose a Reference Offer for AGCom’s
approval every year by July 31 for each wholesale service (the deadline for the issue of the Reference Offer has
been anticipated of three months).
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The following tables show the new economic conditions:
Service 2013/14 2015 2016 2017
LLU (euro/month/line) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.68 8.61 8.61 8.61
SLU (euro/month/line) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.79 5.57 5.43 5.3
SA (euro/month/line) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.86 0.73 0.73 0.73
WLR POTS (euro/month/line) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.14 11.06 11.06 11.06
WLR ISDN (euro/month/line) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.78 13.67 13.67 13.67
Bitstream shared (euro/month/line) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.74 4.96 4.63 4.29
Bitstream naked (euro/month/line) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.14 13.59 12.8 12.46
VULA FTTC shared (30 Mbps) (euro/month/line) . . . . . . . . . . . . . . . . . . . . . . . . 13.94 7.92 7.90 7.88
VULA FTTC shared (50 Mbps) (euro/month/line) . . . . . . . . . . . . . . . . . . . . . . . . 13.94 9.73 9.68 9.63
VULA FTTC naked (30 Mbps) (euro/month/line) . . . . . . . . . . . . . . . . . . . . . . . . 20.63 13.58 13.42 13.27
VULA FTTC naked (50 Mbps) (euro/month/line) . . . . . . . . . . . . . . . . . . . . . . . . 20.63 15.38 15.20 15.02
VULA FTTH (100 Mbits/10 Mbits) (euro/month/line) . . . . . . . . . . . . . . . . . . . . 24.9 23.15 22.64 22.12
VULA FTTH (40 Mbits/40 Mbits) (euro/month/line) . . . . . . . . . . . . . . . . . . . . . 34.53 32.08 31.36 30.65
VULA FTTH (100 Mbits/100 Mbits) (euro/month/line) . . . . . . . . . . . . . . . . . . 86.49 81.37 79.57 77.77
NGA wholesale physical access Monthly fees (euro)
2013
(approved)
(*)
2014 as
2013 2015 2016 2017
Miniduct access—new infrastructures—(IRU 15 years
euro/miniduct/meter) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.60 10.60 10.1 9.61 9.11
Miniduct access—existing infrastructures—(IRU 15
years euro/miniduct/meter) . . . . . . . . . . . . . . . . . . . . . . . . . 6.44 6.44 6.36 6.29 6.21
Entries to buildings (IRU 15 years euro/miniduct) . . . . . . . 385.46 385.46 382.70 379.95 377.19
Dark fibre—primary section (IRU 15 years/fiber) . . . . . . . 3,900.35 3,900.35 3,639.97 3,379.58 3,119.20
Dark fibre—secondary section (IRU 15 years/fiber) . . . . . 1,700.91 1,700.91 1,697.32 1,693.72 1,690.13
End to End service (euro/month/line) . . . . . . . . . . . . . . . . . . 65.10 65.10 61.53 57.96 54.39
Fibre terminating segment (euro/month/line) . . . . . . . . . . 5.96 5.96 5.84 5.72 5.60
(*) AGCom approved wholesale NGA prices for the year 2013 (Decisions 68/14/CIR, 69/14/CIR and 128/14/CIR).
➢ Terminating segment of leased lines
On October 28, 2013, AGCom launched the third round of market analysis on terminating segments of leased lines
(market 6 of the 2007 Recommendation) and on November 17, 2014, the relevant public consultation was
launched, which closed on January 16, 2015. Upon conclusion of the consultation, AGCom decided to maintain
the same regulation as during the previous market analysis cycle, although with a modification of the 2015-2017
prices of Ethernet terminating lines and Plesiochronous Digital Hierarchy (“PDH”) and Synchronous Digital
Hierarchy (“SDH”) terminating lines with speed <= 155Mbit/s (more specifically, a reduction of between
RPI-6% and RPI-8.6% per annum- “RPI”—Retail Price Index). PDH/SDH terminating line prices with speed
> 155Mbit/s were set based on the pure cost orientation.
Specifically, AGCom’s decision (published on August 3, 2015) does not introduce significant changes compared to
the previous market analysis. In particular:
Š Telecom Italia is regulated in the product sub-market (A) covering the provision of dedicated capacity
between an end user and an alternative network operator’s point of presence at a TI node;
Š the other product sub-market (B) for dedicated capacity for Mobile Base Station (“BTS”) backhaul is
competitive and therefore unregulated;
Š Telecom Italia’s trunk (inter-regional) segments of leased lines were deregulated in 2010 together with retail
leased lines.
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In the same decisions AGCom confirmed the second round’s obligations and imposed a set of regulatory remedies
referring to sub-market (A) including: access to, and use of specific network facilities, transparency, including the
publication of a Reference Offer on July 31 of every year; non-discrimination, accounting separation, cost
accounting. In relation to the price control obligation, for the period 2015 – 2017, the price setting is based on a
“Network cap” mechanism only for the following baskets of sub-market A:
Š Terminating segment on PDH and speeds up to 155 Mbit/s and Terminating segment on Ethernet over SDH:
Š Access: RPI—6.0%;
Š Backhaul: RPI—8.6%.
➢ Wholesale fixed interconnection markets
With respect to the fixed call termination, origination and transit services (markets 2 and 3 of the 2007
Recommendation; market 2 has been removed from the 2014 Recommendation), AGCom withdrew its draft
decision following the serious doubts letter sent by the EC while, in November 2013, AGCom approved the cost
model to set the glide path for fixed interconnection rates for the period from July 1, 2013 to December 1, 2015.
Regulated termination rates were applied to all operators, but AGCom confirmed the asymmetrical termination
tariffs applied in 2012 until June 30, 2013.
Moreover, the final document set the interconnection fees for both Time Division Multiplexing (“TDM”) (or legacy
network) and Internet Protocol (“IP”) interconnection. Under the technological neutrality principle, a single tariff
applies, regardless of the level of interconnection on the TDM network.
The 2015 prices are entirely set on the basis of a pure BU-LRIC model assuming a full IP network.
Interconnection rates for the periods indicated are set forth in the table below:
Interconnection rates (July 2013 – 2015)
eurocents/min. (VAT not included) From July 2013 From July 2014 From July 2015
TI and AltNets Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.104 0.075 0.043
TI Call Origination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.258 0.205 0.140
TI Transit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.126 0.111 0.093
On April 20, 2015, AGCom launched a proceeding related to the third round of market analysis of the fixed voice
termination market in order to regulate fixed interconnection rates. The data-gathering activities to fill out the
AGCom qualitative-quantitative Questionnaire are completed and the related public consultation was launched on
April 4, 2016.
➢ Wholesale mobile markets
Termination on mobile networks is susceptible to ex ante regulation pursuant to the Recommendation of 2014. In
this respect, on February 11, 2014, AGCom launched the fourth round of a market analysis on mobile termination
rates and on February 9, 2015, AGCom published a public consultation focused on the following items:
Š the confirmation of the end of the price asymmetry in favor of H3G, starting from January 2014;
Š the introduction of the same obligations applicable to the traditional Mobile Network Operators (“MNOs”),
including price control, for all Full Mobile Virtual Network Operators (“MVNOs”); and
Š the introduction of a moderate annual glide path, confirming the value of 0.98 eurocents/min for 2014 for all
operators both MNOs and Full MVNOs) and proposing the mobile termination rates as follows:
Voice termination rates on mobile networks (2014-2017):
(eurocents/min)
From January 2014 From January 2015 From January 2016 From January 2017
0.98 0.96 0.94 0.92
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On September 30, 2015, AGCom published a final decision (no. 497/15/CONS). Specifically, AGCom:
Š confirmed the four MNOs (Telecom Italia, Vodafone, Wind, H3G) and, for the first time, also the 4 full MVNOs
(BT Italia, Lycamobile, Noverca, Postemobile) as having SMP;
Š fixed, for the years 2014–2017, the efficient rate of termination “not to exceed” 0.98 eurocents/min,
extending its application to MVNO in addition to mobile operators;
Š confirmed the end of the price asymmetry in favor of H3G;
Š explicitly excluded call termination rates for calls originating outside the European Economic Area (EEA) from
the scope of price regulation, leaving these rates to be negotiated among parties; and
Š set the WACC on the mobile network at the level of 10.25% (a different value than the WACC on fixed
network).
4.3.5 ACCOUNTING SEPARATION AND NETWORK COST ACCOUNTING
SMP operators are required to have a transparent accounting system of their costs and to provide AGCom on a
yearly basis 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 maintain an accounting system that separates 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 in September 2005.
Changes in the regulation on cost accounting and accounting separation follow rules set out in periodic Market
Analyses.
Through Decision 623/15/CONS on fixed access Market Analyses for the period 2015–2017, AGCom set the
average cost of capital employed (WACC) for fixed networks at 8.77% nominal pre tax. Telecom Italia asked to
review this decision because it believes that this value is too low.
Through Decision 497/15/CONS on mobile termination for the period 2015–2017, AGCom set the WACC for the
mobile network at 10.25% nominal pre tax.
The regulatory accounting report for the year 2012 was produced during 2013 and delivered to AGCom in
November 2013. The audit was completed in 2015 by the auditor appointed by AGCom.
The regulatory accounting report for the year 2013 was produced during 2014 and delivered to AGCom in March
2015. The audit was completed in 2015 by the auditor appointed by AGCom.
The regulatory accounting report for the year 2014 was produced during 2015 and delivered to AGCom in January
2016.
4.3.6 RETAIL FIXED MARKETS
❖ Retail Offers
In May 2015, Telecom Italia launched a simplification of the tariff offers:
Š the former “basic offer” for consumer customers was replaced with a flat offer that includes the line rental
and unlimited calls (option “Tutto Voce”). The basic offer was retained for customers that opt for a single per
minute charge for both national and fixed-to-mobile calls. In addition, in July 2015, the billing period was
changed from every two months to monthly billing.
Š Telecom Italia increased (i) the price of the standard offer for Business users from 22.50 euros to
24.90 euros per month and (ii) the charge of the ISDN lines, both single and multiple (Basic rate and Primary
rate access). For voice call services, the new tariff is composed of a per minute charge of 5 eurocents and a
call set-up fee of 30 eurocents.
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In August 2015, Telecom Italia launched the TIM SMART offer. This new bundled offer is characterized by a
modular structure (building blocks) that allows customers to build a package that best suits their needs by
starting with a single basic block that can be complemented with additional options. This structure is
technologically neutral, as the customer chooses the speed of access data and not the technology used. The
technology is chosen by Telecom Italia based on the coverage available at each customer’s location.
The basic block includes PSTN access and broadband access (up to 20 Mbit/s).
The basic option available are:
Š TIM SMART Casa: traffic package with unlimited calls to all fixed and mobile numbers;
Š TIM SMART Mobile: mobile subscription with a plafond of minutes and gigabytes included;
Š TIM SMART Fibra: which enables the increase of access speed up to 100/20 Mbit/s (300/20 Mbit/s in FTTH
areas).
4.3.7 QUALITY OF SERVICES
❖ The measures to test the quality of the data service on fixed networks
AGCom Decision 244/08/CSP and its modifications, namely decision 151/12/CONS introduced the following
obligations on quality measures:
Š ISP measurements: the measures of the access quality of the most common retail offers are made by an
independent body, in the geographical areas of the main towns, for each Internet Service Provider (“ISP”);
and
Š End-user measurements: allows a user to measure his own fixed broadband line performances with
dedicated software called Ne.Me.Sys. Each customer can formally certify the quality of his own fixed-line
broadband access using this software and can compare the results with the advertised performances. These
results could be used by customers to terminate the contract with the ISP without penalties or to claim QoS
parameters levels to be restored. If the results are lower than those advertised, the user may submit a
complaint to the provider which is obliged to improve the quality within 30 days. The user may terminate the
contract without penalties if a second measure confirms the parameters.
Both measurement methods employ the same Network Measurement System, based on a software agent running
on a standard Personal Computer.
❖ Drive test campaigns to test the quality of the data service on the mobile networks
Decision AGCom 154/12/CONS established that drive test campaigns must be carried out every six months in the
main towns. From 2014, 40 towns are involved (the two largest towns of each region).
During the campaigns, the parameters that characterize the quality of the data service on 3G HSDPA mobile
networks are measured: Throughput (FTP UL e HTTP DL); Duration (HTTP/HTTPS Browsing); Packet Delay;
Packed Loss, Unsuccessful Data Transmission; Jitter.
The video streaming services has been tested since 2015.
To date, the results of the second half 2013 Campaign are available whilst those of the first half 2014 Campaign
are being processed.
In 2013/2014 the data services accessible with the “internet keys” have been the subject of measurement, while
in 2015 the measurement was made on the data services on smartphones. Finally, from 2015 measurements was
extended to 4G networks.
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4.3.8 THE UNIVERSAL SERVICE
The Universal Service is a minimum set of services of a certain quality, which must be made available to all
customers, regardless of their geographical location in Italy and must be offered at a reasonable price, taking into
account specific national conditions. To date, Telecom Italia is the only operator obliged by the Code of Electronic
Communications (art. 58) to provide the Universal Service under the Universal Service Obligation (“USO”)
throughout Italy. Currently the services included in the USO are the provision of access at a fixed location and of
telephone service, the directory inquiry service and the directories, the availability of public payphones, and the
provision of specific measures for disabled users.
A Fund (The Universal service Fund), established by the Ministry of Communications, is used to finance the net
cost for the provision of Universal Service sustained by the designated operator (Telecom Italia) by means of
contributions paid by the other operators. All the main companies active in the sector, including Telecom Italia,
must contribute to this fund.
The net cost of providing the USO is calculated as the difference between the company’s cost when it is subject to
the obligation of providing the USO and the cost incurred by the same company in the absence of the obligation.
It is AGCom’s responsibility to verify the net cost of the USO provision and to assess whether this amount
represents an unfair burden for the operator. The designated operator can receive compensation only if the
burden is determined to be unfair.
AGCom assessed the net cost and authorized the funding mechanism until the year 2005 and did not recognize
any contribution for the years 2006 and 2007.
In 2008, AGCom published a decision having retroactive effect, introducing a new methodology to calculate the
net cost for the provision of USO, which led to a significant decrease of the amount to be financed.
Telecom Italia submitted the net cost calculations of the USO for the years 2008, 2009, 2010, 2011 and 2012 to
AGCom. The audit of the 2008 and 2009 net costs was completed in March 2014, but AGCom has not yet issued a
final decision.
Generally, the process of setting the USO contribution levels by the other operators is characterized by litigation
and delays. Both Telecom Italia and the other operators have appealed each of AGCom’s previous decisions.
The Council of State, with a decision published on October 2, 2015, rejected the retroactivity of the criteria
introduced by AGCom’s Decision 01/08/CIR, so the Italian NRA has been called upon to renew all the procedures
for the years 2004 to 2007, applying the net cost calculation methodologies which were in effect at the time. The
judgment of the Council of State may result in a reassessment of the net cost for the years 2004–2007.
Concerning past litigations, the Council of State, with a decision published on July 7, 2015, rejected the appeal
filed by Telecom Italia against the decision of the Administrative Court (“TAR”) regarding the contributions for
the years 1999-2000 and 2001-2003. The decision of the Council of State voided AGCom’s Decision of 2010
establishing the renewal of the procedures for the years concerned.
Following the State Council decision, Vodafone requested that Telecom Italia refund the amounts paid for 1999-
2000, 2002-2003 and subsequent periods. The Ministry of Economic Development asked Telecom Italia to settle
all economic relations, taking into account the actions taken by Vodafone.
The Ministry of Economic Development is responsible for reviewing the scope and definition of the USO every two
years and, in September 2014, together with AGCom, it opened a formal proceeding concerning the identification
of the criteria for designating one or more operators responsible for providing the universal service. The
proceeding is ongoing.
❖ Public Telephony
In 2010, AGCom established that the criteria regarding the distribution of public payphones in Italy was no longer
consistent with current social needs and removed any “quantitative” obligations for Telecom Italia (i.e. the
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obligation to install a specified number of payphones). As a consequence, Telecom Italia is authorized to remove
the unprofitable coin-boxes after a consultation with city councils and interested citizens. At the end of 2015, the
total number of public payphones was about 59,000.
4.3.9 CONTRIBUTION FEES FOR THE FUNCTIONING OF AGCOM
Telecom Italia and the other operators are obliged to pay contribution fees to fund the running costs of AGCom.
These fees are calculated on the basis of each operator’s revenues and they have given rise to a series of litigation
proceedings and appeals among Telecom Italia, AGCom and other operators. The current situation is described
below.
On March 5, 2015, Decision 567/14/CONS on the payment of the AGCom contribution for the year 2015
(calculated on the 2013 financial statement data) was issued. Notwithstanding the judgment of the TAR and the
following judgment of the Council of State, AGCom confirmed the use of the regulatory reporting as payment
calculation base and set the contribution rate at 1.15 per thousand, diverging from the rate of 2 per thousand
applied to other markets under AGCom’s supervision (e.g. media and publishing). Furthermore, the deadline for
the payment was accelerated to April 1, 2015.
Telecom Italia, under reserve, paid 17.5 million euros, calculated on a revenues basis, applying the 2015 AGCom
rate of 1.15 per thousand.
This payment for the 2015 contribution does not involve compliance by the Company with the long dispute
between Telecom Italia and AGCom.
In October, AGCom published its second report on the 2014 overview of the administrative costs and of the total
amount of the collected charges (“2014 Annual Report”) focused on the electronic communications sector. This
last report highlights that AGCom “collected” from operators of the electronic communications sector amounts
that are approximately euro 1.3 million higher than the costs incurred by AGCom in the same period.
On December 21, 2015, with Decision 691/15/CONS on the Contribution fee for the year 2014, AGCom requested
Telecom Italia to provide within 60 days (February 20, 2016) an additional payment of approximately 9.4 million
euros to integrate the amount already paid, under reserve, in 2014 (14.0 million euros); the additional payment
has been done even if it does not involve compliance by the Company with the long dispute between Telecom
Italia and AGCom.
With respect to the 2016 contribution fee, despite the judgment of the TAR and the subsequent judgment of the
Council of State, AGCom confirmed the use of the total revenues from sales and services on the 2014 income
statement as a payment basis and raised the contribution rate to 1.4 per thousand. (Decision 668/15/CONS of
December 2015). On April 1, 2016 Telecom Italia, under reserve, paid 19.8 million euros calculated on a revenue
basis, applying the 2016 AGCom rate of 1.4 per thousand.
4.3.10 BROADBAND AND DIGITAL DIVIDE
Over the last few years, the Government has introduced several measures aimed at fostering the development of
fixed and mobile broadband and ultra-broadband networks through simplified procedures to build the relevant
networks.
In this regard, of particular relevance is the recent D.Lgs. 33/2016, implementing Directive 61/20124, which
provides:
Š a lighter authorization procedure for the deployment of broadband and ultra-broadband networks;
Š simplified rules for innovative digging techniques (mini-trenches) for the deployment of optical fiber
equipment;
Š a right of access for telecommunication operators to public utilities passive infrastructures and common
parts of buildings for the installation of ultra-broadband networks;
Š creation of a public infrastructure data base.
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Article 14 of Law 221/2012 has modified the criteria to measure the electromagnetic field allowing a higher
flexibility for the installation of radio mobile equipment. The implementation of these criteria is subject to the
adoption of guidelines (s.c. “Linee Guida”). As of today, the guidelines have been published only partially, thus
limiting the scope of the legal reform.
❖ Italian Digital Agenda
In March 2015, the Italian Government issued a strategic plan for ultra-broadband deployment throughout the
country. In order to meet the European Digital Agenda goals (50% population with at least a 100 Mbps connection
and 100% population covered with at least 30 Mbps) by 2020, the Government set the following strategic target:
Š up to 85% of Italian population covered with at least 100 Mbps;
Š at least 30 Mbps guaranteed to 100% of population; and
Š at least 100 Mbps guaranteed to public sites (schools and hospitals in particular), industrial areas, the main
tourist areas and logistic hubs;
based on:
Š technological neutrality, open networks, fair access and non-discriminatory approach;
Š lowering the entry level costs;
Š infrastructure Data Base for a better use of existing infrastructure;
Š a plan structured into clusters based on different competitive NGAN (New Generation Access Network); and
Š harmonization of international electromagnetism limits.
In August 2015, the Inter-ministry Committee for Economic Programming (“CIPE”) issued the economic support
levels for the years 2014 to 2020 to achieve the strategic plan for ultra-broadband, following EU Guidelines for the
application of state aid rules in connection with the rapid deployment of broadband networks (2013/C 25/01).
On February 2016, MISE signed a Memorandum of Understanding with all Italian Regions, which provided:
Š nearly 1.5 billion euros from CIPE to build in-market failure areas (Cluster C and Cluster D), a state-operated
ultra-broadband network, by in-house company Infratel;
Š an additional 1.9 billion euros of regional funding.
Following the EU Commission’s approval on state aid rules, Infratel is expected to release a concession for
realization, operations and management of this state-operated ultra-broadband network by May 2016.
This network will be operated at wholesale level with regulated prices that will be defined by AGCom prior to the
bid.
4.3.11 PRIVACY AND DATA PROTECTION
Telecom Italia must comply with Italy’s Personal Data Protection Code (Legislative Decree June 30, 2003 n. 196),
which has been in force since 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 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.
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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.
Prior consent of the “data subject” is needed to 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
Italian communication service providers (“CSPs”) must comply with strict specific obligations that apply only to
the electronic communication sector, which are provided by a specific section of the Privacy Code that transposes
the relevant EU Directives.
Notably, with respect to data retention, 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. The data retention terms for
crime prevention and prosecution provided by the Italian Data Protection Code are: 24 months for telephony
traffic (fixed and mobile); 12 months for electronic communications traffic; and 30 days for unsuccessful call
attempts. However, over the course of 2015 and 2016, Decree no. 7/2015, on urgent antiterrorism measures, and
the subsequent Law no. 21/2016, introduced transitional rules according to which telephone and electronic
communication traffic data, as well as unsuccessful call attempts, generated after April 21, 2015 must be retained
until June 30, 2017. Such transitional provisions will cease to apply on July 1, 2017.
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 CSPs to adopt strict security
measures.
Moreover, 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 the 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 in respect of any entities (i.e.
subscriber) that have not exercised their right to object by having the respective telephone numbers entered in a
public “opt-out register”, which came into force on February 1, 2011.
Finally, CSPs must 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.
Under the Privacy Code, in case of a personal data breach, (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 other 3 days for the communication of further
details). 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 within 3 days.
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❖ Further relevant provisions
On May 8, 2014, the Data Protection Authority adopted a general provision relating to “Simplified Arrangements
to Provide Information and Obtain Consent Regarding Cookies”, requiring that concerned entities be compliant
with the simplified arrangements, pursuant to Article 122 of the Privacy Code, by June 2, 2015.
Article 122 of the Privacy Code sets out that storing information, or accessing information already stored in the
terminal equipment of subscriber/user (i.e. by cookies or similar tools such as web beacons, web bugs, clear GIFs
or others), shall only be permitted on condition that the subscriber/user has given his prior consent after being
informed by simplified arrangements. Subscriber/users’ prior consent is not necessary to install the “technical
cookies”, which are those used exclusively with a view to “carrying out the transmission of a communication on
an electronic communications network, or insofar as this is strictly necessary to the provider of an information
society service that has been explicitly requested by the contracting party or user to provide the said service”.
Telecom Italia implemented the requested measures to comply with the above mentioned provision.
4.3.12 ANTITRUST ISSUES
❖ Antitrust in Italy
➢ Legislation on competition
Telecom Italia is subject to Italian competition law, and namely the Law of October 10, 1990 no. 287 (“Provisions
aiming at protecting competition and the market”) which set up the AGCM, 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.
➢ Proceedings
During 2015 two antitrust proceedings involved Telecom Italia before AGCM:
Š Proceeding “I 761”: on December 23, 2015, AGCM notified Telecom Italia of a final decision determining
the existence of a cartel composed of Telecom Italia and six companies involved in maintenance activities of
the Telecom Italia network. Based upon these findings, AGCM imposed a 21.5 million euro administrative
fine on Telecom Italia. On February 22, 2016, Telecom Italia appealed the AGCM decision to the Regional
Administrative Court of Lazio;
Š Proceeding “A428C”: on July 17, 2015, Telecom Italia received the filing from a proceeding concerning a
possible infringement of the order contained in the A428 decision with reference to the abuse of dominant
position related to the supply of wholesale services to OLOs (KO). The proceeding is expected to conclude on
July 31, 2016.
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❖ Antitrust issues at the European level
➢ Legislation on competition
Telecom Italia is subject to the European competition law. European competition policy was developed from rules
set out in the Treaty on the Functioning of the European Union (TFEU or “Treaty”) and covers anticompetitive
practices and abuse of dominance, mergers and state aid:
Š anticompetitive practices: 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. 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 obvious example of illegal conduct infringing Article 101 is the creation of a cartel
between competitors (which may involve price-fixing and/or market sharing);
Š abuse of dominance: 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;
Š mergers: the EC is responsible for reviewing mergers if the annual turnover of the combined businesses
exceeds specified thresholds in terms of global and European sales. In such cases, the EC must be notified of
the transaction. Transactions falling below these thresholds may be reviewed by the national competition
authorities in the EU Member States; and
Š state aids: public 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 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 development of broadband networks” establish that public
funding of broadband projects is not considered state aid if one of three exemptions are used:
Š the public authority invests under the same conditions that would be applied to a private investor (Market
Economy Investor Principle—“MEIP”);
Š the public contribution is limited to the compensation of the provision of a service of general economic
interest (Services of General Economic Interest principle—“SGEI”);
Š 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 EC 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 infringe 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 EC.
As part of the overall enforcement of EU competition law, the EC 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.
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➢ Main Competition dossier before the European Commission
The main cases involving Telecom Italia and currently pending before the EC are:
Š merger 3/Wind: On February 5, 2016, CK Hutchison Holdings Ltd. (“CK Hutchison”), parent company of
Italian mobile operator 3 Italia, and VimpelCom Ltd. (“VimpelCom”), parent company of WIND, notified the
EC (the body in charge of evaluating the merger) the creation of a 50/50 joint venture that would own and
operate their telecommunications businesses in Italy. On March 30, 2016 the EC opened an in-depth
investigation to assess whether the proposed joint venture between the telecommunications activities of
Hutchison and VimpelCom in Italy is in line with the EU Merger Regulation. The EC must make a decision
prior to August 10, 2016. Over the past few months, Telecom Italia has been working with the EC in
response to formal requests for information on the matter;
Š ultra-broadband State Aids: The Italian ”strategy for Next Generation Access Network”, presented by the
Government in March 2015, aims to develop a high-speed optical access network throughout the country,
meeting the objectives of the European Digital Agenda. The amount of 2.2 billion euros of public funds have
been assigned to the Program as of October 2015. The State Aids scheme must be approved by the EC. The
discussions are currently (April 8, 2016) at the pre-notification phase.
4.3.13 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 Brasil, ANATEL developed regulations for mobile communication
services (“SMP”—Personal Mobile Services), fixed communications services (“STFC”) and data transmission and
multimedia services (“SCM”).
In 2010 virtual mobile operators were allowed to enter the market upon commercial agreements with the
established operators.
❖ 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.
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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 were introduced in 2008 while fourth
generation mobile services started in 2012.
The authorizations for fixed and mobile services give the Telecom Italia Group (which operates under the brand
name TIM Brasil) coverage of the entire country of Brazil allowing it 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.
Until 2016, 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. From 2016, the fixed interconnection rates will follow a
cost oriented approach.
In May 2012, ANATEL approved a new regulation which, from January 2014, requires the application of the “Bill
and Keep” system for local fixed termination rates, i.e., operators will take rights of tariffs generated on their
networks, and no interconnection remuneration will be owed for local calls between two different networks.
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 and it can determine a reference value
according to criterion set up by regulation. From January 2013, the reference values set by ANATEL comply with a
“glide path” which would lead to cost orientated values starting from 2016.
Interconnection agreements are subject to prior approval by ANATEL.
❖ 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 ex-ante
obligations.
The approval of the PGMC represents a milestone in the development of Brazilian regulation, which is gradually
evolving towards a model based on market analysis and the application of ex ante regulatory obligations for SMP
operators.
The decision opens the networks of operators with significant market power to unbundling and wholesale
broadband access. It also 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 SMP.
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 (e.g., Leased Lines, bitstream
unbundling) for the vertically integrated, fixed operators having SMP: Oi, Telefónica and Telmex.
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TIM Brasil was identified as having SMP in the wholesale markets of mobile termination, national roaming and the
access to ducts and trenches. The measures applied to a SMP 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 SMP: regional licensed CTBC
and Sercomtel and national licensed Nextel;
Š the obligation to offer the access to ducts and trenches.
The second analysis and definition of SMP operators was held in 2015 confirming the previous decision of 2012,
leaving the remedies imposed on TIM Brasil unchanged. The review of the markets to be regulated and the
remedies to apply to possible SMP operators are expected in 2016.
❖ Main regulatory developments
➢ Cost models’ implementation
In 2005, ANATEL issued a ruling for “Accounting Separation and Cost Accounting”. This ruling introduced the
obligation to present the Accounting Separation and Allocation Document (“Documento de Separação e Alocação
de Contas”—“DSAC”) for license holders and groups holding SMP in the fixed and/or mobile network
interconnection and wholesale leased lines markets (“Exploração Industrial De Linha Dedicada”—“EILD”).
Operators (TIM included) have been providing ANATEL with the requested information since 2006 for fixed
services and since 2008 for mobile operators.
In August 2011, ANATEL launched a project called “Modelo de Custos”, setting up a consortium of consultants in
charge of developing, within two years, the cost model for fixed and mobile networks for communications
services.
In July 2014, ANATEL published the final decision regarding the costing models to set the wholesale reference
values for the fixed and mobile access and interconnection services, as well as the maximum values for the Leased
Lines (EILD—Industrial Exploitation of the Dedicated Line).
ANATEL established that the fixed network usage charges (TU-RL) and mobile network reference values (VU-M)
will be cost oriented starting from 2016 to reach the efficient cost level in 2019. For EILD, the efficient cost level
must be reached in 2020.
➢ Mobile interconnection rate glide path
In November 2012, TIM Brasil (as well as certain other mobile operators) was identified by ANATEL as having
Significant Market Power (SMP) in the wholesale mobile termination markets. The remedies applied to SMP
mobile operators include a glide path on mobile termination rate (called VU-M, “Value to Use the Mobile
network”), based on a price cap system with a decrease of almost 50% from 2013 to 2015; current termination
charge is approximately 0.17 R$/min.
In July 2014, ANATEL published the final decision regarding the cost model and the reference values of the
mobile termination rates that will apply from 2016 to 2019 for the operators with SMP. Following the so-called
“glide path”, the reference value of the MTR will be reduced by 40% in 2016 to approximately 0.10 reais minute
and 45% in the following years: approximately 0.06 reais per minute in 2017; approximately 0.03 reais per minute
in 2018; and approximately 0.02 reais per minute in 2019.
Between operators with SMP a “full billing” scheme is applied (i.e. each operator charges the total amount of the
traffic terminated on its network). Conversely, between SMP and non SMP operators, an asymmetric scheme
applies (so called “partial bill&keep”): each operator only pays the portion of the terminated traffic on the other
network that exceeds a threshold percentage determined by the regulator with respect of the total traffic
exchanged at the interconnection. Until February 2015, this threshold was set at 80% (i.e., a non SMP operator
pays only if the terminated traffic on the SMP operator network is more than 80% of the total traffic exchanged at
the interconnection).
59

According to the previous rules, by February 2015, the “partial bill & keep” threshold between SMP and non SMP
operators would have decreased to 60% and from February 2016 the “full billing” scheme would have been
adopted. To harmonize the evolution of the values of mobile interconnection with the introduction of
cost-oriented values, in February 2015 the regulatory authority (ANATEL) postponed to 2019 the introduction of
the “full billing” scheme in the interconnection between operators with market power and without market power,
with a progressive decrease of the mentioned threshold over the next years.
➢ Allocation of the 700 MHz band
The auction for the allocation of the 700MHz band (698-806 MHz), for the provision of the fourth generation
mobile services and high speed internet was held in September 2014.
TIM Brasil, Claro (Telmex group) and Vivo (Telefonica group) were granted three of the four auctioned national
blocks of 10 + 10 MHz; the fourth block remained unsold as the fourth national operator Oi did not participate to
the bid. TIM Brasil paid 1,947 million reais.
The frequencies will be available, in every Brazilian town, only a year after the complete “switch-off” of analogue
television channels operating in the band and the transition to the digital TV whose channels will be allocated in
the lower bands. The analogue TV “switch-off” is planned to be carried out from November 2015 to November
2018.
In the States of São Paulo and Rio de Janeiro, the frequencies will be available at the end of 2018, after the
complete switch-off of analogue television in those States.
Bid winners are required to cover the costs of the implementing measures to overcome any spectrum interference
and the expenses resulting from the reallocation of Digital TV channels. The amount of these costs for each
national operator is about 297 million euros.
➢ Consultation by the Brazilian Ministry of Communications on the revision of the Legal/Regulatory
Framework
The consultation relates to a proposal to reform the General Law of Telecommunications of 1997, to account for
new market conditions, competition, technology and development of communications services. The reform would
be designed to overcome the existence of Concessionaries (Oi, Telefonica and Embratel Telmex) for the supply of
services deemed to be of a “public nature”.
Overcoming Concessions would eliminate the current obligation of Concessionaires to return to the state, at the
end of the concession, the assets used for the supply of public services. Overcoming Concessions, however, may
require identifying alternative solutions to ensure universal access.
4.3.14 BROADCASTING REGULATORY FRAMEWORK IN ITALY
Following the sale of La7 S.r.l. and MTV Italia S.r.l. and the business combination with Rete A S.p.A., the Group
operates as a national digital terrestrial network operator with Persidera S.p.A., the former Telecom Italia Media
Broadcasting S.r.l..
Persidera is a “pure” network operator, not integrated with any content provider. It offers digital terrestrial
capacity through five national terrestrial networks (5 MUXes) hosting more than 40 independent TV channels and
seven independent radio stations.
❖ Broadcasting frequencies
In response to the EU infringement procedure 2005/5086, in 2008 the Government approved the Law
no. 101/08, replacing the special licensing regime for digital terrestrial network operators with an authorization
regime compliant with EU Directives.
60

Following these modifications, all network operators’ licenses were converted into general authorizations with a
20-year duration.
The EC approved the changes introduced by Law no. 101/08, but asked for more spectrum resources to be
assigned to new entrants (the “digital dividend”). In response to these further requests, AGCom resolution
181/09/CONS set up the criteria for the complete digital conversion of the terrestrial television networks (switch-
off).
In this conversion, Telecom Italia Media Group (“TIMB”) was assimilated to RAI and Mediaset, and TIMB was
wrongly assigned only three out of the four networks managed by the Group before the switch-off, even if all
other network operators were assigned networks on a “one-to-one” basis. On June 28, 2012, MISE formally
assigned to TIMB the digital rights for three national MUXes with the duration of 20 years (December 2032).
Law no. 44/12 replaced the “beauty contest” for the digital dividend assignment, as defined by AGCom in
resolution 497/10/CONS, with an economic bid for the assignment of three national MUXes. The tender was
launched in 2014 on the basis of AGCom resolution 277/13/CONS and Cairo Group was awarded one MUX for
31.626 million euros. TIMB, incorrectly assimilated to RAI and Mediaset, was not entitled to participate in this bid.
TIMB set up a lengthy litigation on (i) the analogue-to-digital conversion criteria and (ii) against the “beauty
contest” repeals. The Regional Administrative Court of Lazio rejected the appeals and TIMB appealed before the
Council of State. The Council of State suspended the appeals and called for an intervention by the EU Court of
Justice on both proceedings.
❖ Administrative contributions and frequency rights fees
Since 2014 administrative contributions and digital frequency fees due by Persidera must follow art. 34 and art.
35 of Decree 259/03. The previous regime for analogue broadcasters, in force until 2013, included concession
fees, equal to 1% of revenues.
Law no. 115/2015 set up the values for broadcasting operators’ administrative contributions and backbone
frequency fees. Persidera has to pay approximately 250,000 euros a year.
In response to objections by the EU Commission in connection with the advantages conferred upon vertically
integrated incumbent operators RAI and Mediaset by AGCom’s criteria set forth in Resolution 494/14/CONS, Law
302/2015 (Stability Law 2016) requested MISE to define TV frequency fees on a transparent, proportionate and
non-discriminatory basis, taking into account the market value of frequencies rewarding mechanisms for non-
vertically integrated operators and for the use of innovative technologies (e.g. DVB-T2). This new framework,
which repealed AGCom resolution 494/14/CONS, is expected to reduce Persidera’s fees from 13 million euros of
resolution 494/14/CONS to a more reasonable amount.
❖ 700 MHz
On February 2, 2016, the Commission issued a proposal to coordinate the use of the 700 MHz band for mobile
services by June 2020. This proposal will have to be approved by the European Parliament and the European
Council.
The proposal sets the following goals:
Š December 31, 2017 for the conclusion of bilateral cross-border coordination.
Š June 30, 2017 for the adoption of a transitional roadmap.
With respect to the sub-700 MHz band (470-694 MHz), the proposal set a long-term priority for the distribution of
audiovisual media services to the general public, along with a flexible approach for spectrum use to allow for
different levels of digital terrestrial television (DTT) uptake in Member States.
This means allowing the use of technologies other than traditional broadcast for TV services in the UHF band (the
Decision restricts mobile services to “downlink only”). The Commission, therefore, anticipates that the discussion
at the ITU level will be postponed until 2023.
61

The proposal would have a strong impact on the entire sector of the Italian broadcast operators, whose frequency
rights will expire in 2032.
Member States will have 8 weeks to express their feedback on the proposal.
The Italian Government requested a more flexible timeline for 700 MHz band release, in line with Lamy Report,
which set the date at 2020, with two years of flexibility in order to account for the different situation of DTT
platforms in Member State.
No steps have been taken in Italy thus far to define the roadmap for the release of 700 Mhz band. Stability Law
2016 has set a fund of 276,000 euros at the MISE for conducting studies.
❖ CH 55
If technical and regulatory conditions are satisfied, as part of the agreement signed with Gruppo Editoriale
“l’Espresso”, TIM can acquire the right of use of the UHF channel 55 (742-750 MHz) assigned to MUX TIMB2. TIM
has reserved two different purchase options: (i) the purchase of the right to use the UHF channel 55 or (ii) the
purchase of the entire participation in the share capital of TIMB2 S.r.l, a company established in 2014, which
would be awarded this right of use. Both options may be exercised during the period between June 30, 2016 and
June 30, 2019. UHF channel 55 trading to TIMB2 S.r.l. would be associated with a lease agreement from TIMB2 to
Persidera in order to guarantee transmission services continuity.
The above operations will be put into effect without the need for authorization from the competent authority as
an intra-group agreement.
62

Item 4. Information On The Telecom Italia Group Transactions With U.S. Sanctioned Countries
4.4 TRANSACTIONS WITH U.S. SANCTIONED COUNTRIES
In accordance with our Code of Ethics and Conduct, we seek to comply with all applicable international trade laws
including applicable sanctions and embargoes. Below we discuss our activities related to certain countries that are
targets of U.S. economic sanctions: Iran, Sudan and Syria (the “Designated Countries”).
Activities relating to the Designated Countries
The only activities we have that, to our knowledge, relate in any way to the Designated Countries are:
(i) Roaming Agreements with local mobile phone operators:
Š Taliya, KFZO-TKC (former Payam Kish), Rightel Communication, Irancell (MTN) and Mobile Company of
Iran (MCI) in Iran;
Š ZAIN SD (former Mobitel), MTN Sudan and Areeba, in Sudan; and
Š MTN Syria (former Spacetel Syria 94 and former Areeba), and Syriatel Mobile Telecom SA (“Syriatel”),
in Syria.
(ii) International Carrier Agreements for the delivery of voice and data traffic from such countries to our
networks and from our networks to such countries including in connection with our roaming agreements. To
this end, our subsidiary Telecom Italia Sparkle S.p.A. (“TI Sparkle”)—directly and through its subsidiaries—
has agreements with Telecommunication Company of Iran in Iran; Sudan TLC, Sudatel, ZAIN Sudan and
Canartel in Sudan; and Syrian TLC in Syria.
In addition TI Sparkle has an agency agreement with Cypress Corporation DFZCO (a company incorporated
in the “free zone” of the Dubai airport) that promotes the use of voice services towards Syrian Telecom
Establishment (STE), a company reportedly affiliated with the government of Syria. The agreement provides
that we pay this agent based on a fee that is a percentage of revenues we earn.
In addition, also Telecom Italia S.p.A. has entered into certain agreements for the provision of TLC services
(marine radio traffic) with Telecommunication Company of Iran (TCI) for services to Islamic Republic of Iran
Shipping Lines.
(iii) Commercial Sale and Other Agreements.
In quantitative terms, the impacts of all such agreements (roaming, international carrier, commercial sale and
other) on the Telecom Italia Group consolidated financial statement line items are as follows:
Year ended
December 31,
2015(*)
(thousands of euros)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,112
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,328
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,086
Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,269
(*) Data includes relevant information for Sofora—Telecom Argentina group that, starting with the last quarter of 2013, was classified as a
discontinued operation and therefore was no longer fully consolidated. On March 8, 2016, the Telecom Italia Group completed the sale of
the Sofora—Telecom Argentina group (for further details please see the Note “Events Subsequent to December 31, 2015” of the Notes to
the Consolidated Financial Statements included elsewhere in this Annual Report).
63

Roaming Agreements
We operate one of the largest mobile networks in Italy. Through our foreign subsidiaries, we also have large
mobile operations in Brazil (Tim Participações S.A. through its subsidiary TIM Celular S.A.). Until March 8, 2016,
we had operations in Argentina and Paraguay (Telecom Argentina S.A. through its subsidiaries Telecom Personal
S.A. and Núcleo S.A., respectively). Through roaming agreements a mobile subscriber 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:
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 competition and customer demands, Telecom Italia, Tim
Participações group and Telecom Argentina group have entered into roaming agreements with many foreign
mobile networks, so as to allow their customers to make and receive calls when travelling abroad.
Roaming agreements, including those relating to the Designated Countries, are 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 they are 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 or Paraguay), such customer may make and
receive calls using our networks or the networks of other mobile operators in Italy (or Brazil or Argentina or
Paraguay) if this foreign Network has an International Roaming Agreement with other Italian (or Brazilian or
Argentine or Paraguayan) 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.
The purpose of all of these roaming agreements is to provide our customers with coverage in areas where we do
not own networks. In order to remain competitive and maintain such coverage, we intend to continue maintaining
these agreements.
In 2015, our total revenues from roaming agreements with networks of the Designated Countries are detailed as
follows:
Year ended
December 31, 2015
Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423
Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Total revenues from roaming agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452
64

In 2015, our total charges from roaming agreements with networks of the Designated Countries are detailed as
follows:
Year ended
December 31, 2015
Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450
Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Total charges from roaming agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
As of December 31, 2015, our total receivables from roaming agreements with networks of the Designated
Countries are detailed as follows:
As of
December 31, 2015
Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 642
Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Total receivables from roaming agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 792
As of December 31, 2015, our total payables from roaming agreements with networks of the Designated Countries
are detailed as follows:
As of
December 31, 2015
Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,502
Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218
Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Total payables from roaming agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,772
The amounts of revenues, charges, receivables and payables are de minimis when compared to our consolidated
revenues, operating expenses, trade receivables and trade payables, respectively.
International Carrier Agreements with the Designated Countries
As a rule in the modern telecommunication business, when traffic from a specific network is placed with, or
transported through, our networks, we receive a fee from the incoming network. Likewise, when traffic coming
from one of our networks is placed with, or transported through, another network, we owe a fee to such network.
The purpose of these agreements is to allow the uninterrupted exchange of international traffic. Consequently, we
intend to continue maintaining these agreements.
In 2015, our total revenues from traffic from networks located in the Designated Countries to our networks are
detailed as follows:
Year ended
December 31, 2015
Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 709
Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,704
Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,206
Total revenues from traffic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,619
65

In 2015, our total charges from traffic to networks in the Designated Countries from our networks are detailed as
follows:
Year ended
December 31, 2015
Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,910
Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,704
Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,206
Total charges from traffic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,820
As of December 31, 2015, our total receivables from traffic from networks located in the Designated Countries to
our networks are detailed as follows:
As of
December 31, 2015
Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,344
Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,980
Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,563
Total receivables from traffic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,887
As of December 31, 2015, our total payables from traffic to networks in the Designated Countries from our
networks are detailed as follows:
As of
December 31, 2015
Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,645
Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,704
Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,148
Total payables from traffic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,497
Such amounts of revenues, charges, receivables and payables are de minimis with respect to our consolidated
revenues, operating expenses, trade receivables and trade payables, respectively.
Commercial Sale and Other Agreements
TI Sparkle provides institutional access to Internet by means of Seabone IP ports and data transmission capacity
through international cable systems to Syria and Sudan.
With respect to 2015, Olivetti group has receivables from Syrena Smart Technologies (a company in Syria),
totaling 96 thousand euros relating to the supply of office automation equipment.
In 2015, our total revenues from Commercial Sale and Other Agreements with the Designated Countries are
detailed as follows:
Year ended
December 31, 2015
Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,016
Total revenues from commercial sale and other agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 1,041
66

As of December 31, 2015, our total receivables from Commercial Sale and Other Agreements with the Designated
Countries are detailed as follows:
As of
December 31, 2015
Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502
Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,796
Total receivables from commercial sale and other agreements . . . . . . . . . . . . . . . . . . . . . . . . 2,311
* * *
Disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012
(ITRSHRA)
Other than the disclosure above on activities related to the Designated Countries, to our knowledge, none of our
sales of products and services are required to be disclosed pursuant to ITRSHRA Section 219.
67

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 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.
4G (fourth-generation Mobile System). Fourth-generation protocols that are designed to provide, in
addition to the usual voice and other services of 3G, mobile broadband Internet access, for example to laptops
with wireless modems, to smartphones, and to other mobile devices. Potential and current applications include
mobile web access, IP telephony, gaming services, high-definition mobile TV, video conferencing, 3D television,
and cloud computing applications.
5G (fifth-generation Mobile System). 5G indicates the fifth generation of mobile network that will be
introduced starting in 2020. At a worldwide level, the ITU Commission (International Telecommunication Union)
began to set out the first Standards on 5G future connectivity and the first field trials will be launched in 2018,
during the Olympic Winter Games .
The main elements of the 5G network will be:
Š bit-rate significantly higher than 4G (capacity up to 10 Gbit/s) to ensure greater efficiency and quality of
service, such as video download and live streaming;
Š possibility of connecting simultaneously to hundreds of thousands of objects (Internet of Things): wearable
technologies, automatic systems for traffic control, assisted driving for vehicles, home automation.
Š ultra-low latency (high-speed in data transmission in the order of milliseconds);
Š ability to connect moving vehicles at higher speeds.
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 that converts existing twisted-pair
telephone lines into high-speed digital access lines for asymmetric multimedia data transfer. ADSL can receive up
to 6 Mbps, and as much as 832 Kbps or more in both directions. This allows expanding existing access speed
capacity by a factor of 50 or more without new cabling.
AltNets (Alternative Network Operators). Companies other than the incumbent operator which operate
telecommunications systems in a national market.
Analog. An old transmission technology which is not digital, e.g., the representation of voice, video or other not
in digital form.
ATM. Asynchronous Transfer Mode is a networking technology that transfers data in packets or cells of a fixed
size.
Backbone. Portion of the telecommunication network that supports long-distance connections with the highest
traffic intensity and from which the connections for services in the local areas depart.
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Bit-stream access. Wholesale broadband access service where access is provided to the XDSL network of
Telecom Italia in addition to a corresponding transmission capacity to a third-party operator.
Bottom-up. The bottom-up approach develops a cost accounting model beginning with the expected demand
in terms of subscribers and/or traffic. It then assesses the network design and related costs based on the network
engineering model.
Broadband services. Services characterized by a transmission rate 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; high-speed 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). Control node of the 2G radio access network and interface with the MSC
switching exchange. It has the task of supervising and controlling radio resources, both during the phase when a
call or a data connection 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).
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.
CCA. In a current cost accounting (CCA) approach, the operator’s asset base is annualized based on the gross
replacement cost of the assets. CCA belongs to the family of constant annualization methodologies where the
depreciation share is stable and the cost of capital share decreases over time, resulting in decreasing annuities.
Nevertheless, unlike historical cost accounting, in current cost annualization methods the amortization is adjusted
according to variations in the price of the assets being considered due to technical progress and general variations
in price (inflation).
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.
69

Community. A group of customers who have subscribed to specific offers which include special pricing for
traffic toward other customers of the same telecommunications company.
Co-siting. Agreements to share technological sites (for Telecommunications, specifically, sites of access to the
network and passive infrastructure) by several operators in order to achieve a more efficient use of the network
infrastructure in urban and rural areas.
CPS (Carrier Pre-selection). Permits a customer to pre-select another operator as an alternative to Telecom
Italia without dialing an identifying code.
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.
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.
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.
DTT (Digital Terrestrial TV). Digital Terrestrial Television Broadcasting is a type of broadcasting technology
that provides a more effective way of transmitting television services using a digital system instead of the existing
analogue system.
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.
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.
Ethernet: Family of computer networking technologies for local area networks (LANs) and metropolitan area
networks (MANs).
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 cabling to replace traditional copper cables used in telecommunications networks either in part or
in full. The various technological solutions differ in the point of the distribution network where the fiber
70

connection is made, with respect to the end-user’s location. In the case of FTT Curb (Fiber to the Curb) the fiber
connection reaches the equipment (distribution cabinet) located on the sidewalk, from where copper connections
are run to the customer; in the case of FTTHome (Fiber to the Home), the fiber connection terminates inside the
customer premises.
FWA (Fixed Wireless Access). FWA is a variant of wireless broadband, where a radio link is used instead of
cable or fiber for the transmission of voice and data.
Gateway. A connection between the LANs and WANs of one or more suppliers. It can also mean the access
nodes to international networks of various kinds.
GGSN (Gateway GPRS Support Node). Node that acts as a gateway for data traffic between mobile networks
(2G and 3G) and the Internet network or private networks.
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.
GPRS (General Packet Radio System). System to send and receive data packets (which may contain images
and other information) over 2G cellular networks.
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 the 900MHz and 1800MHz band.
HDSL (High-bit-rate Digital Subscriber Line). Technology for business customers which allows the
provision of digital circuits over twisted pair at higher speeds and lower cost than through conventional means.
HLR (Home Location Register). Database where customer data is recorded.
Home Access Gateway—Access Gateway—Home gateway—Residential Gateway. Home networking
device that is used to concentrate voice/data/video traffic of customers for private TLC networks and to connect
devices in the home to the Internet or other WAN.
Housing. Leasing of physical space to customers managed within a data center for the installation of their own
equipment or servers.
HSDPA (High-Speed Downlink Packet Access/UMTS Hi Speed—Universal Mobile Telecommunications
System). UMTS evolution that allows broadband connections up to 3.6 Mbps.
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
identifier associated with all cellular networks. It is stored as a 64 bit field and is sent by the phone to the
network.
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.
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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 utilizes 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., voice 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.
Jitter. In electronics and telecommunications, jitter indicates the variation of one or more characteristics of a
signal, such as amplitude, frequency and phase. The causes leading to jitter must be kept at the center of the
design of electronic systems and components in which signal integrity is a strict constraint.
Lambda. Represents the single optical channel on which a signal is transmitted in fiber-optic networks.
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). Service by which alternative operators (other than Telecom Italia, the
incumbent) can lease the local loop, i.e., the wire connection between the Telecom Italia local exchange and the
customer’s premises.
Local Loop. Twisted pair of copper wires through which the telephone connection reaches users; it is the
foundation of traditional telephone lines and it is often called the “last mile”.
LRIC (Long run incremental cost). Long run incremental cost is the cost of producing a specific additional
increment of a given service in the long run (the period over which all costs are variable) assuming at least one
other increment is produced. It includes all the directly assignable variable economic costs of a specific increment
of service, which is usually less than the whole service.
LTE (Long Term Evolution). Represents the fourth generation (4G) of mobile phone systems. LTE belongs to
the 3GPP (Third Generation Partnership Project) standard and it is the latest evolution of the GSM / UMTS / HSPA
standards. 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 enables services that require high interactivity (e.g., gaming, video
conferencing). A further development of LTE, called “LTE Advanced”, is being implemented and will allow
reaching even higher bitrates of download.
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.
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.
MGW (Media GateWay). Equipment that processes voice and video traffic adapting codings between different
technologies (e.g. from circuit to packet).
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MPLS (Multi Protocol Label Switching). See IP/MPLS.
MS SPRING. A form of traffic protection mechanism for the equipment.
MSC (Mobile Switching Center). Executes functions such as controlling calls, switching traffic, taxation,
controlling network interfaces and acts as an interface with other networks.
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.
Naked DSL. A digital subscriber line without an analog or ISDN telephony service.
Network. An interconnected system 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 fiber optic or metallic
cables or point to point radio connections.
Network cap. See Price cap.
NGAN (New Generation Access Network). New generation network access that can be realized with
different technological solutions, typically fiber optic and VDSL pairs.
NGDC (Next Generation Data Center). A major rethink of the IT architecture through the physical
concentration and virtualization of servers to reduce the costs of maintenance/management and energy
consumption, and to improve efficiency.
NGN (Next Generation Network). New generation network created by Telecom Italia to meet the demands of
corporations, public administrations and citizens. The new network architecture guarantees an infrastructure
designed to cover multiple offers by increasing customization levels and bandwidth availability, removing
bandwidth limits and providing a huge capacity along with a wide selection of access systems.
NGNs (Non-Geographic Numbers). 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).
Node. Topological network junction, commonly a switching center or station.
Node B (similar to BTS in GSM). This is the Radio Base Station in UMTS technology which, via an antenna,
sends the UMTS radio signal that creates cell coverage (typically 3 cells for Node B). It also performs functions
that are strictly linked to managing the radio connection.
N-play offering. Offerings to customers which bundle two or more of the following services: fixed voice, fixed
broadband/fiber, video, mobile.
OLOs (Other Licensed Operators). Companies other than the incumbent operator that operate
telecommunications systems in a national market.
Optical fiber. Thin glass, silica or plastic wires, building the base infrastructure for data transmission. An
optical fiber cable contains several individual fibers, and each of them is capable of delivering a signal (light
impulse) at almost unlimited bandwidth. Optical fibers are usually employed for long-distance communication:
they can transfer “heavy” data loads protected from possible disturbances along the way. The driving capacity of
optical fibers is higher than the traditional cable and copper twister-pair lines.
OSS (Operations Support System). Methods and procedures (whether mechanized or not) that directly
support the daily operation of the telecommunications infrastructure.
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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.
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. Subscription 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 is needed.
PCS. Personal communications services.
Peering. An interconnection between two Autonomous Systems (administratively separate networks)
belonging to separate Internet Service Providers that allows providers to exchange traffic between their
respective networks.
Penetration. The measurement of the take-up of services. 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.
Price-cap or network cap. Under price-cap, a regulator sets a cap on the price that the regulated operator
may charge for a given service or basket of services. The cap may be set based on a top-down or bottom-up
approach and may evolve according to several economic factors. The basic formula employed to set price caps is
CPI – X, where the expected efficiency savings X are subtracted from the rate of inflation, measured by the
Consumer Price Index. This price control methodology is intended to provide incentives for efficiency savings, as
any savings above the predicted rate X can be kept by the operator and passed on to shareholders. In Europe,
price-caps are generally reviewed every three years, corresponding to the length of validity of market analysis.
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). Equipment that monitors and controls 3G
network radio resources, both during the call set-up phase and during the maintenance phase (for example,
handover between different cells). Furthermore, it handles connectivity to and from: Node B, MSC*, and other
RNC.
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Roaming. A service that enables GSM mobile users to automatically access 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 (belonging to the 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. Shared access to the user’s twisted pair with another TLC service provider by using separately
voice and non-voice band frequency spectrum. This mode allows keeping voice telephony with an operator
(Telecom Italia or others) and have ADSL on the proprietary network of the shared access operator, i.e., not
passing over the Telecom Italia network but directly through the DSLAM of the operator.
SLU (Sub Loop Unbundling). It is a type of unbundled access whereby the sub-section of the local loop from
the street cabinet to the customer’s premises is unbundled. In practice this often means that the competitor
places a small street cabinet with a DSLAM, next to a local copper aggregation cabinet of the incumbent operator
and uses a ‘tie cable’ to connect to the local loop.
Smartphone. Electronic device that combines the functions of a mobile phone and a handheld computer
equipped with a complete operating system.
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.
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. Device used to set up and route telephone calls either to the number called or to the next switch over
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 receiver.
Tablet. Portable computer with compact dimensions whose screen can be used to write or give commands with
the touch of your fingers or using a specially designed stylus.
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 channel at specific intervals and then reconstructs the pieces at the end of
the channel.
TRX. Radio transceivers located in BTS.
ULL (Unbundling of the Local Loop). See LLU.
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UMTS (Universal Mobile Telecommunications System). Third-generation mobile communication standard.
It consists of a broadband system in which data travel at a bandwidth of 2Mb/s, communication is faster, quality
is better and multimedia contents can travel over the Net.
UMTS Cell. Geographical portion of 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 PS (Packet Switched) services of UMTS technology.
Unbundling. See LLU.
Universal Service. The obligation to supply basic service at an affordable price, or at special rates solely for
subsidized users.
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 provided 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; teletext; videotext 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 speeds of up to 50 Mbps in downstream (VDSL2).
VOD (Video On Demand). TV-program offering on user’s request, with payment of a fee for each purchased
program (a movie, a soccer match, etc). Broadcast is specifically for cable and satellite TV.
VoIP (Voice Over IP). A technology that allows transmission of voice communications over an Internet
connection or another dedicated network using the Internet Protocol (IP) data networks (such as IP-based LANs,
intranets or the Internet) instead of a conventional phone line.
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). A technology that allows wireless access to
broadband telecommunications networks. It is defined by the Wi—MAX Forum, a global consortium that brings
together major companies in the field of fixed and mobile telecommunications and whose purpose is 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 wholesale resale of access to its public telephone fixed network by the
Incumbent to alternative operators (usually in conjunction with a wholesale call product such as Carrier
Preselection); in this way alternative operators can provide to customers both access and traffic services and
produce a single bill covering both services.
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.
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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, 2015 and 2014, property, plant and equipment owned and leased are detailed as follows:
As of December 31, 2015 As of December 31, 2014
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 . . . . . . . . . . . . . . . . . . . . . . . 171 16 187 1.3 131 — 131 1.0
Civil and industrial
buildings . . . . . . . . . . . . . . . . . 444 1,880 2,324 15.6 320 813 1,133 8.5
Plant and equipment . . . . . . . 10,909 284 11,193 75.3 10,912 — 10,912 81.5
Manufacturing and
distribution equipment . . . 41 — 41 0.3 40 — 40 0.3
Other . . . . . . . . . . . . . . . . . . . . . . 378 7 385 2.6 440 2 442 3.3
Construction in progress
and advance payments . . . 716 21 737 5.0 701 28 729 5.4
Total . . . . . . . . . . . . . . . . . . . . . . 12,659 2,208 14,867 100.0 12,544 843 13,387 100.0
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, 2015, 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.
At the end of 2014, Telecom Italia launched a major real estate project, aimed at restructuring the use of space
for industrial usage in a manner consistent with the evolution of next-generation networks and optimizing the
number of properties used as offices through the creation of functional “centers” that adopt a modern and more
efficient space utilization, requalifying the workplace in a way that encourages exchange, communication and
relationships between colleagues as a way of stimulating changes, dynamism and initiatives.
This real estate project provides for a path of restructuring, termination and renegotiation of contracts, to achieve
efficiency and savings, mainly through the extension of terms and lower rents.
Properties of strategic importance have been identified, in relation to their current use and to significant
investments in technology and real estate planned to support the technological evolution of the network and new
ICT services.
In particular, in 2015, the company purchased five strategic buildings and renegotiated and/or renewed
approximately 750 leases. Over half of the renegotiated property rental contracts were previously accounted for
using the operating lease method, however, as a result of the changes to the relevant contracts, they have been
recognized in the statement of financial position at December 31, 2015 using the financial method (Tangible
assets held under finance leases).
Real Estate Project
As of
December 31, 2015
Renegotiated property rental contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . approximate No. 750
Average remaining term of the renegotiated contracts . . . . . . . . . . . . . . . . . . . . . years 21
Increase in Tangible assets under lease/Financial payables for leases . . . . . . million euros 1,178
Property acquired in ownership or through buyback clause . . . . . . . . . . . . . . . . . No. 5
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We currently expect to complete the above-mentioned real estate project, in respect of the remaining medium
and small properties, with the aim to get a reduction in rental costs in the next few months.
NETWORK INFRASTRUCTURE (PLANT AND EQUIPMENT)
The Telecom Italia Group network infrastructure includes the domestic (Italian) and international fixed network,
the domestic mobile network and the Brazilian mobile network. See “-4.5 Glossary of Selected
Telecommunications Terms”, for definitions of the technical terms used in this section.
Domestic (Italian) Fixed Network
At December 31, 2015, the domestic fixed network had the following figures:
Central Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . approximately 10,380
Switching areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578
Gateway areas (TDM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Aggregation areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Copper network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115.6 millions of kilometers-pair
Fiber optic access/carrier network . . . . . . . . . . . . . . . . . . . . . . 10.4 millions of kilometers-fiber
Long Distance VC4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,420
Long Distance Lambda (λ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570 λ a 1Gbps, 69 λ at 2.5 Gbps and 916 λ at 10 Gbps
BroadBand/ADSL network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,597 Central Offices covered
Main PoP data networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Fixed Voice network. The Fixed Voice Network dedicated to serving traditional voice (TDM) consists of
607 main local switches (SGU). Concerning the OLO interconnection, local switches are divided in 33 gateway
areas.
Each local switch is physically interconnected to 2 out of 24 (12 pairs) Backbone Nodes (“BBN”).
Voice over IP (VoIP) service is guaranteed by a specific control platform dedicated to consumer and business
customers. The IP/TDM interworking is carried out in the transit layer.
In terms of cable infrastructures, the fixed network includes 115.6 million km of copper pairs, mainly in the
distribution network, and also 10.4 million km of fiber, both in access and trunk network.
Optical fiber 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.
Domestic Transport Network. The transport network uses the “SDH” (Synchronous Digital Hierarchy) or
“PTN” technology and the optical “DWDM” technology (Dense Wavelength Division Multiplexing) and is based
on optical fibers with systems from 155 Mbit/s to 10 Gbit/s. WDM systems realize point-to-point connections
multiplying by a factor from 12 to 96 the bandwidth capacity of each optical fiber, thereby increasing the total
capacity of the transport network.
The fixed long-distance transport network routes 5,420 VC-4 on the SDH Arianna, Phoenix, Phoebe, Kosmos
networks. It supports also 570 lambda at 1 Gbps, 69 at 2.5 Gbps point to point optical channels and 916 10 Gbps
point to point optical channels on the optical DWDM systems and on the “Kaleidon” network.
Kaleidon is the new national optical transport platform that allow to set up a completely photonic optical mesh
network. Kaleidon supports optical channels at 40 Gbit / s and 100 Gbit / s with protection and restoration
mechanisms at photonic level.
OPB (Optical Packet Backbone). The OPB is the IP backbone of Telecom Italia based on 32 POPs equipped
with Terarouters.
The OPB network supports:
Š Internet traffic of residential, business and Wholesale customers;
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Š VPN traffic (Virtual Private Network) of business customers;
Š Voice traffic;
Š Video traffic;
Š Mobile data traffic.
OPM (Optical Packet Metro). The OPM network is the Metro-Ethernet network at regional level for traffic
aggregation and transport up to the 32 IP POPs. The OPM network consists of 30 metro regional networks and
support traffic from mobile and fixed access nodes. The OPM provides also Gigabit Ethernet Services for business
customers (Ethernity, Hyperway, Gigabusiness and GEA on GBE optical access).
Broadband/xDSL network. The broadband access network of Telecom Italia offers hi-tech
telecommunications and multimedia applications and is based on ADSL2 DSLAM technology.
In 2015, the xDSL services for residential and business customers (retail and wholesale) covers more than 99.1%
of the population and have been extended to 7,694 towns, including S. Marino (compared to 7,556 at the end of
2014).
At the end of 2015, 9,597 local switching areas were covered by ADSL technology (compared to 9,450 at the end
of 2014).
NGAN (Next Generation Access Network). In 2015 Telecom Italia continued to deploy a “NGAN”, based on
optical fiber cables. NGAN deployment started in 2009 in Milan based on Fiber-To-The-Home (“FTTH”)
architecture. Since 2012 the deployment has been extended to the main cities with Fiber-To-The-Cabinet
(“FTTCab”) architecture using fiber to street cabinets equipped with VDSL2 cards.
In 2015, Telecom Italia continued deployment of FTTCab and initiated a project to bring FTTH to 100 cities (and
other 58 BUL1 cities), with the aim of improving ultra-broadband service to 100 Mbit/s and to more than 300
Mbit/s for FTTH.
More than 10,100,000 households had been reached by the end of 2015, mainly in the distribution areas of
approximately 2,200 central offices. The NGAN coverage in FTTH/DP/Cab is approximately 42% of reached
households at the end of 2015 (the reached households in FTTH/FTTDP are more than 1,700,000 with a coverage
of approximately 7%).
At the end of 2015, 57,400 cabinet NGAN were reached with fibre optic cables (of which 45,900 cabinets were
installed with completely active and saleable service).
Domestic (Italian) 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 (4G: fourth generation network).
On December 31, 2015 Telecom Italia domestic mobile network had the following figures:
GSM/EDGE network
Š 18,085 BTS (Base Transceiver Station) GSM radio station (18,093 BTS at the end of 2014) -0.04%;
Š 978 of them are µBTS;
Š 902,721 radio channels (893,622 at the end of 2013) +1 %;
Š 98 BSC (Base Station Controller) (98 at the end of 2014);
1 BUL is an italian acronym (Banda UltraLarga) referring to a public funding project aimed at development of ultrabroadband infrastructure
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Š GSM Core Network: Since the Circuit Switched Core Network is common to GSM and UMTS (Dual Access
architecture), its description is given below. Note also that the equipment described at end 2014 (10 TR STP
TDM, 13 MSC/GTW) have been decommissioned and their functions are performed by the equipment
described below (IP-STP, TSC, transit MGW)
UMTS/HSPA network
Š 17,245 node B UMTS radio base station (15,702 node B at the end of 2014) +9.8%;
Š 2,541,383 radio channels (2,315,945 radio channels at the end of 2014) +9.7%;
Š 144 RNC (Radio Network Controller); +16 new RNC compared to total at the end of 2014;
Š GSM/UMTS Core Network: 52 MSC-server (Mobile Switching Center/Gateway), 96 access MGW (Media
Gateway), 13 transit MGW, 4 IP STP (Signalling Transfer Point), 6 TSC-server (Transit Switching Center), 42
HLR (Home Location Register), 4 GGSN (Gateway GPRS Support Node), 30 SGSN (Serving GPRS Support
Node).
Note that decommissioning of GGSNs (-19 compared to end of 2014) is part of the ongoing convergence of Packet
Switched Core Network onto the LTE EPC (Evolved Packet Core).
In 2014 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 HSDPA at the 42 Mbit/s speed covers more than 80% 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 are used for LTE deployment to provide ultrabroadband services to mobile customers. Moreover,
on September 2015, Telecom Italia has acquired a frequency block in the 1500 MHz band, specifically devoted to
mobile ultrabroadband.
At the end of 2015, the LTE network coverage is higher than 88% of the national population.
Š 9,342 enode B (6,678 at the end of 2014) +39.9%;
Š LTE core network is undergoing a technological upgrade and currently includes: 12 SPGW (Packet Data
Network/Serving Gateway), of which 8 are new equipment and 4 are legacy, 12 MME (Mobility Management
Entity) of which 6 are new equipment and 6 are legacy, 2 monolithic HSS (Home Subscriber Server), 3 HSS
Front End and 3 CUDB (Centralized User Database) according to Data Layered Architecture .
International Fixed Network
Telecom Italia Sparkle provides connectivity services (voice, mobile data, IP and managed bandwidth) and Cloud
and Data Center services (IaaS, Disaster Recovery, enhanced colocation) to national and international wholesale
customers and to multinational corporates (MNCs) 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 LANMED NAUTILUS regional backbones.
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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 Pan European backbone (“PEB”);
Š Latin American backbone;
Š Mediterranean backbone;
Š USA backbone.
In detail:
Š Pan European Backbone. Proprietary high speed optical network built over a fiber optic backbone
spanning the main European countries: Italy, France, United Kingdom, Netherlands, Belgium, Germany,
Switzerland, Austria, Spain, Czech Republic, Slovakia and Romania. The overall length is about 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 about 36,000 km, including the Miami-New York section. The ring
connects the main cities of South and Central America to North America;
Š Mediterranean backbone. Submarine ring network with a highly reliable configuration complemented by
terrestrial fiber extensions from Istanbul and Athens to Sofia. The total length is over 10,000 km and
connects the major markets of the Mediterranean and Balkans area: Italy, Greece, Cyprus, Turkey, Israel and
Bulgaria;
Š USA backbone. Proprietary high capacity terrestrial backbone with POPs in: Newark, New York, Miami,
Jacksonville, Ashburn, Atlanta, Chicago, Palo Alto, Los Angeles and Dallas.
Telecom Italia Sparkle 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 Gbps optical
lambdas while voice services are provided by Class 4 switches. Traffic protection is implemented by MS SPRING,
SNCP, OTN, MSP 1+1 and “meshed” technologies.
In 2015, the new 100 Gbps optical backbone was deployed over the Frankfurt-Amsterdam, Kehl-Paris, Milan-
Marseille-Paris and Milan-Verona-Salzburg-Munich-Frankfurt routes, the latter being the third one available
between Milan and Frankfurt and allowing the increase of network resiliency and enabling shared protection for
managed bandwidth services.
To keep up with increasing IP and Managed Bandwidth sales in Sicily, the Italian backbone was upgraded with
100 Gbps technology and a new network layer was built to provide automatic restoration with shared protection.
Capacity upgrades were carried out on all of the major routes of the IP backbone with 100 Gbps links deployed
between Milan and Palermo, Catania, Paris and Frankfurt in order to keep links usage below 67%, in accordance
with the new network targets. In the IP core layer, new equipment was deployed in Milan and Frankfurt to further
increase capital expenditures efficiency and network scalability. In the IP edge layer, new routers were added in
the Rome, Palermo, Miami, Milan, Rome and Paris POPs. Upgrades were carried out on the IP backbone on the
transatlantic route connecting the UK to the US, on the US backbone among all of the major POPs and between
Singapore and Palermo. In 2015, several IP customers were connected at the 100 Gbps level in Milan, Palermo,
Miami, London, Frankfurt and Paris.
In Singapore, new equipment with 100 Gbps capability was deployed over the Tuas-Equinix and Equinix-Ansar
fiber optic rings.
As for mobile data and voice services, capabilities were upgraded to handle increasing signaling and voice traffic
volumes.
In Palermo the new “Sicily Hub” data center was completed to increase focus on the colocation offering and to
enable the interconnection with the new SeaMeWe-5 submarine cable scheduled for 2016.
With reference to Multinational Corporate Customers, new edge routes were deployed in Frankfurt and Milan
along with the 10 Gbps transformation of the main routes of the MNCs backbone.
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Mediterranean Backbone
In 2015, upgrades at the 100 Gbps level were completed on the submarine system linking Italy to Greece and
Israel. The new Athens-Sofia fiber was brought into service with a 100 Gbps DWDM platform. The Athens data
center was also upgraded with over 100 new cabinets available.
Latin American Backbone
In 2015 the PCCS (Pacific Caribbean Cable System) infrastructure from Puerto Rico to Jacksonville and from
Panama to Puerto Rico was brought into service complemented by the 100 Gbps fiber backhaul from Jacksonville
to Miami.
Upgrades at 100 Gbps level were completed on the SAC (South American Crossing) and TAC (Trans Andean
Crossing) systems. New edge routers were deployed in Rio de Janeiro, Buenos Aires and Santiago along with
upgrade of the major routes in the IP backbone. A new metro ring was brought into service in Sao Paulo to
connect the submarine systems with the main data centers increasing the available capacity, network
performance and resiliency.
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.
The investments of TIM Brasil group prioritized projects for (i) the expansion of its fiber optic network (ii) the
optimization of the use of the network, with adjustments to improve the signal quality in the current coverage
areas and (iii) the mapping of the main causes of interruptions and failures of the network, as well as the
necessary measures to prevent these events, ensuring call and data connection quality, for greater user access
capability.
As of December 31, 2015, TIM Brasil group had 963 mobile switches for voice capacity, 239 thousand TRXs,
12,365 of them Node B. The TIM Brasil group volume of investments allowed the Group to achieve, as of 2015,
the milestone of 411 cities covered with 4G technology, reaching 59% of the urban population of the country,
making TIM Brasil the leader in 4G coverage in terms of number of cities and percentage of the population
covered. In addition, in 2015, the TIM Brasil group added nearly 500 new cities in Brazil to its 3G coverage area
and, as of December 31, 2015, has reached approximately 70,000 kilometers of fiber optic cable networks.
In 2015, the TIM Brasil group concluded the sale of the first three blocks of telecommunications towers to
American Tower do Brasil. The transaction involved the simultaneous execution of a finance lease for the portion
of the towers used by the TIM Brasil group, recorded as a financial debt for leases.
TIM Brasil—Transfer of telecommunications towers
Towers object of the transfer agreement No. 6,481
Towers transferred in 2015 No. 5,483
2015
millions of reais millions of euros
Summary of the impacts of the transfers on 2015:
Total consideration received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,498 676
Increase in Financial payables for lease back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,245) (337)
Reduction/(increase) in net financial debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,253 339
Increase in Tangible assets under lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,245 337
Net gain through income statement, after taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 839 227
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Item 4A. Unresolved Staff Comments
Item 4A. UNRESOLVED STAFF COMMENTS
None.
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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.
In Italy, 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 (in Italy, 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.
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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 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 18 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.
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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 economic useful 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.
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.
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).
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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.
Based on the impairment test conducted as of December 31, 2015 the Core Domestic, International
Wholesale and Persidera CGUs recoverable amounts exceeded the carrying amounts. For the Brazil CGU,
an impairment loss of 240 million euros was recognized in 2015 to adjust the carrying amount to the
recoverable amount. An increase in the discount rate used in the discounted cash flow for Brazil CGU of
0.5% would result in an additional impairment of 220 million euros. Management has determined that
there are no reasonable possible changes to other key assumptions (i.e. growth rate and
Capex/Revenues ratio) that could cause an additional material impairment.
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 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, trend 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
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 including 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.
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
87

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 the 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
We have entered into several different types of derivative contracts in order to manage our 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”.
Starting from 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 are required to 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, under
IAS 19, are 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. A critical assumption to this accounting is the discount
rate. Other assumptions include factors such as expected retirement date, mortality rate and estimates of
inflation.
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
88

considered probable and can be reasonably estimated. Because of the inherent uncertainties in making such
judgments, actual losses may be different from the originally estimated amount recognized. 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 and deferred tax assets
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, except to the extent that they relate to items
directly charged or credited to equity, in which case the related effect is recognized in the relevant equity
reserves.
89

Item 5. Operating And Financial Review And Prospects Results Of Operations For The Three Years Ended December 31, 2015
5.2 RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 2015
5.2.1 SIGNIFICANT TRENDS IMPACTING OUR CORE BUSINESSES
Intense competition continues to have a significant impact on the development of the business. Key trends
affecting the core businesses are:
Domestic Business Unit
During 2015, Telecom Italia launched a major renewal plan for its identity and corporate structure aimed at
consolidating leadership and supporting future growth of the Group. The fixed-mobile convergence is the focus of
the telecommunications industry, as a result of increasing use of smartphones and the development of digital
platforms.
Since the beginning of 2016, Telecom Italia focused its commercial offerings under the brand “TIM”, which
combines the strength of Telecom Italia and the innovation of TIM for a customer quality experience through
service and digital content.
A strong emphasis was given to acceleration of the development of fixed and mobile ultra-broadband networks,
resulting in an overall capital expenditure of 3 billion euros, through which Telecom Italia/TIM has confirmed its
status as the lead player in the digitization of Italy. The diffusion of premium digital content and services with a
particular focus on the video sector is the basis of the capital expenditure program implemented. This included a
strong boost to TIMvision, the integrated platform branded by TIM, which had over 500,000 customers at the end
of 2015, due also in part to the agreements signed with major producers of international content.
In response to the progressive growth of data consumption from fixed and mobile broadband and in order to
shore up the customer base, a new portfolio of services and content, with a focus on bundled and lock-up offers,
was launched.
In order to address these underlying macro trends in our business, the main strategic priorities and objectives of
Telecom Italia in the domestic (Italian) market are as follows:
Š acceleration of investments, mainly those relating to innovative networks and services;
platform company, an enabler of the country’s digital life;
Š in the Mobile segment, Telecom Italia will aim to accelerate the penetration of smart devices and to market
bundle offers that generate a higher ARPU;
Š in the Fixed segment, the Group plans to minimize the decrease of its customer base;
Š convergence continues to be central to the Group’s growth and innovative investments strategy;
Š strengthening the position in multimedia entertainment;
Š thanks to its ICT and Cloud services, Telecom Italia also intends to continue helping Italian businesses
enable their digital transformation process;
Š maintaining strong financial discipline.
Brazil Business Unit
In Brazil, the market was affected by a further deterioration in the macroeconomic climate, which caused a
contraction in domestic demand, higher inflation and a depreciation of the reais from 3.22 reais per euro at the
end of 2014 to 4.25 reais per euro at December 31, 2015. These factors contributed to a general slowdown in
growth in the mobile market.
Against this background, the TIM Brasil group maintained its hold on market share in the Mobile segment and saw
an increase in its postpaid customer base. However, revenues fell as a result of a more rapid migration from
traditional voice-SMS services to an emerging data/internet solution and further reductions in mobile termination
90

rates (MTR), which have been ongoing since late February 2015. The negative trend in mobile revenues was partly
mitigated by a growth of Fixed revenues, particularly in the wholesale business segment of the subsidiary Intelig
and TIM Broadband Live.
To support network traffic and the advent of new technologies, high levels of investments are necessary to ensure
the scale and quality of services provided. The TIM Brasil group keeps focusing on the strategic importance of
developing a robust data infrastructure for data growth, focusing particularly on 4G technology, which provides
better quality of service and increased efficiency in network costs.
5.2.2 BUSINESS SEGMENTS
The Telecom Italia Group reports its financial results on the 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), the operations of the Olivetti (products and services for Information Technology),
the operations of INWIT S.p.A. (a company operating in the electronic communications infrastructure
business) and the units supporting the Domestic sector;
Š Brazil: includes mobile (TIM Celular) and fixed (TIM Celular and Intelig) telecommunications operations in
Brazil;
Š Media: through Persidera S.p.A. it operates in the management of Digital Multiplexes, as well as the
provision of accessory services and digital signal broadcasting platforms to third parties;
Š Other Operations: includes finance companies and other minor companies not strictly related to the core
business of the Telecom Italia Group.
Š INWIT S.p.A.—Business Unit Domestic: was established in January 2015;
Š Alfabook S.r.l.—Business Unit Domestic: on July 1, 2015 Telecom Italia Digital Solutions S.p.A.
acquired 100% of the company, which consequently entered the Group’s scope of consolidation;
Š TIM Real Estate S.r.l.—Business Unit Domestic: was established in November 2015.
Other than the INWIT initial public offering, these changes did not have a significant impact on the Consolidated
Financial Statements of the Telecom Italia Group as at and for the year ended December 31, 2015.
Š Telecom Italia Ventures—Domestic Business Unit: was established in July 2014;
Š Rete A—Media Business Unit: on June 30, 2014 Persidera S.p.A. (formerly called Telecom Italia Media
Broadcasting S.r.l.) acquired 100% of the company. As a result Rete A entered the Group’s scope of
consolidation and was consolidated on a line-by-line basis. The merger of Rete A by absorption into Persidera
was completed on December 1, 2014;
Š TIMB2 S.r.l.—Media Business Unit: was established in May 2014;
Š Trentino NGN S.r.l.—Domestic Business Unit: on February 28, 2014 the Telecom Italia Group acquired
the controlling stake in the company; consequently the company is now part of the Group’s scope of
consolidation.
These changes did not have a significant impact on the Consolidated Financial Statements of the Telecom Italia
Group as at and for the year ended December 31, 2014.
For a description of certain of these businesses, see “Item 4. Information on the Telecom Italia Group—4.2
Business Units”.
91

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.
In this Annual Report the Non-GAAP Measure used relates 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,
2015 2014 2013 2012 2011
(millions of euros)
Non-current financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,518 32,325 31,084 34,091 35,860
Current financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,224 4,686 6,119 6,150 6,091
Financial liabilities directly associated with Discontinued
operations/Non-current assets held for sale . . . . . . . . . . . . . . . 348 43 27 — —
Gross financial debt (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,090 37,054 37,230 40,241 41,951
Non-current financial assets (B) . . . . . . . . . . . . . . . . . . . . . . . . . (2,989) (2,445) (1,256) (2,496) (2,949)
Current financial assets:
Securities other than investments . . . . . . . . . . . . . . . . . . . . . . (1,488) (1,300) (1,348) (754) (1,007)
Financial receivables and other current financial
assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (352) (311) (283) (502) (462)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,559) (4,812) (5,744) (7,436) (6,714)
Total current financial assets (C) . . . . . . . . . . . . . . . . . . . . . . . . . (5,399) (6,423) (7,375) (8,692) (8,183)
Financial assets relating to Discontinued operations/
Non-current assets held for sale (D) . . . . . . . . . . . . . . . . . . (227) (165) (657) — —
Financial assets (E=B+C+D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,615) (9,033) (9,288) (11,188) (11,132)
Net financial debt (A+E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,475 28,021 27,942 29,053 30,819
92

5.2.4 OVERVIEW OF 2015 RESULTS OF OPERATIONS
In 2015, the following characterized the results in our domestic (Italian) market:
• Domestic. There was a reduction in rate of decline of domestic revenues relative to prior years. This was a
result of a slowdown in the contraction of demand for traditional services and the growth of innovative
services. In particular, our competitive positioning in the Mobile segment continued to improve, with
revenue returning to growth in the fourth quarter of 2015 relative to the fourth quarter of 2014. This was
driven by greater mobile Internet coverage and a steady hold on market share. In the Fixed segment, the
recovery in revenues was driven by a positive trend in broadband ARPU, steady growth in the number of
ADSL customers with premium bundle/flat deals, and the development of ICT services.
Lastly, in 2015, the Group initiated a restructuring process with the transfer of a set of telecommunication
towers in Italy from Telecom Italia to its subsidiary INWIT and the stock exchange listing of INWIT (for
further details, please see “-5.2.7 Results of operations of business units for the year ended December 31,
2015 compared with the year ended December 31, 2014”).
In 2015, the following characterized the results in our Brazil Business Unit:
• Brazil. The mobile Brazilian telecommunication market was characterized by a shrinking voice market and an
emerging data/internet market. TIM Brasil’s subscriber base reached 66.2 million lines at the end of 2015,
down 12.5% relative to 2014. In 3G technology, total customer base reached 37.5 million users, flat as
compared to 2014. Penetration of 4G devices increased with the 4G base reaching 7.1 million users at the
end of 2015. Overall smartphone penetration reached 68% of the customer base, a significant growth when
compared to 49% at the end of 2014. At the end of 2015, there were 31.8 million unique data users reached,
approximately 48% of total customer base.
The strong competitive movement in the market indicates that there will be greater pressure on margins due
to commercial expenses related to advertising, commissions and benefits that TIM Brasil will have to incur.
The telecommunications industry is a capital-intensive one. To support the increase in network traffic and
the development of new technologies in the coming years, high levels of investment are necessary.
In 2015, the TIM Brasil group concluded the sale of the first three blocks of telecommunications towers to
American Tower do Brasil (for further details, please see “Item 4. Information on the Telecom Italia Group –
4.6 Description of Property, Plant and Equipment”).
93

The following table sets forth our consolidated income statement for the years ended December 31, 2015, 2014
and 2013.
On November 13, 2013, Telecom Italia accepted the offer of Fintech Group to acquire the entire controlling
interest of Telecom Italia Group in the Sofora—Telecom Argentina group. The agreements were subsequently
modified in October 2014. As a result and in accordance with IFRS 5 (Non-current Assets Held for Sale and
Discontinued Operations), starting from the fourth quarter of 2013, the Sofora—Telecom Argentina group was
treated as Discontinued operations/Non-current assets held for sale. On March 8, 2016, the Telecom Italia Group
completed the sale of Sofora—Telecom Argentina group (for further details please see the Note “Events
Subsequent to December 31, 2015” of the Notes to the Consolidated Financial Statements included elsewhere in
this Annual Report).
2015 2014 2013
(millions of euros)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,718 21,573 23,407
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 401 324
Total operating revenues and other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,005 21,974 23,731
Acquisition of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,533) (9,430) (10,377)
Employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,589) (3,119) (3,087)
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,491) (1,175) (1,318)
Change in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (44) (52) 48
Internally generated assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 656 588 543
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,135) (4,284) (4,553)
Gains (losses) on disposals of non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336 29 (82)
Impairment reversals (losses) on non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (244) (1) (2,187)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,961 4,530 2,718
Share of profits (losses) of associates and joint ventures accounted for using the
equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 (5) —
Other income (expenses) from investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 16 (3)
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,756 2,400 2,003
Finance expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,281) (4,594) (4,186)
Profit (loss) before tax from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 447 2,347 532
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (401) (928) (1,111)
Profit (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 1,419 (579)
Profit (loss) from Discontinued operations/Non-current assets held for sale . . . . . . . . 611 541 341
Profit (loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 657 1,960 (238)
Attributable to:
Owners of the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (72) 1,350 (674)
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 729 610 436
94

5.2.5 BUSINESS UNIT FINANCIAL DATA
The table below sets forth revenues, operating profit (loss), capital expenditures and number of employees by
Business Units, for the periods indicated.
On November 13, 2013, Telecom Italia accepted the offer of Fintech Group to acquire the entire controlling
interest of Telecom Italia Group in the Sofora—Telecom Argentina group. The agreements were subsequently
modified in October 2014. As a result and in accordance with IFRS 5 (Non-current Assets Held for Sale and
Discontinued Operations), starting from the fourth quarter of 2013, the Sofora—Telecom Argentina group was
treated as Discontinued operations/Non-current assets held for sale. On March 8, 2016, the Telecom Italia Group
Starting from 2014, the Domestic Business Unit also includes the Olivetti group, in addition to Core Domestic and
International Wholesale. This different presentation reflects the commercial and business placement of the
Olivetti group and the process of integrating the products and services offered by the Olivetti group as
complements to those offered by Telecom Italia in the domestic market. Accordingly, the figures for 2013 have
been restated on a consistent basis.
Furthermore, following approval of the restructuring plan for the Olivetti group on May 11, 2015, the Olivetti
business lines that will be abandoned through divestment or termination in accordance with the plan have been
included under Other Operations.
Domestic Brazil Media
Other
Operations
Adjustments
and
eliminations
Consolidated
Total
(millions of euros, except number of employees)
Revenues (1) . . . . . . . . . . . . . . . . . . . . 2015
2014
2013
15,001
15,303
16,388
4,636
6,244
6,945
82
71
124
49
—
—
(50)
(45)
(50)
19,718
21,573
23,407
Operating profit (loss) . . . . . . . . . . . 2015
2014
2013
2,359
3,738
1,985
636
795
858
14
6
(132)
(52)
(12)
1
4
3
6
2,961
4,530
2,718
Capital expenditures on an
accrual basis . . . . . . . . . . . . . . . . . .
2015
2014
2013
3,900
2,783
3,031
1,289
2,195
1,349
8
6
20
—
—
—
—
—
—
5,197
4,984
4,400
Number of employees at
year-end (2) . . . . . . . . . . . . . . . . . . .
2015
2014
2013
52,644
53,076
53,377
13,042
12,841
12,140
64
89
84
117
19
22
—
—
—
65,867
66,025
65,623
(1) 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).
(2) 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.
95

5.2.6 Year Ended December 31, 2015 compared With Year Ended December 31, 2014
❖ REVENUES
Revenues declined by 1,855 million euros, or 8.6%, from 21,573 million euros in 2014 to 19,718 million euros in
2015.
The table below sets forth for the periods indicated gross revenues by Business Unit and consolidated revenues.
2015 2014 Changes
Revenues(1)
% of
Consolidated
revenues Revenues(1)
% of
Consolidated
revenues (a-b) %
(a) (b)
(millions of euros, except percentages)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,001 76.1 15,303 70.9 (302) (2.0)
Core Domestic . . . . . . . . . . . . . . . . . . . . . 13,858 70.3 14,205 65.8 (347) (2.4)
International Wholesale . . . . . . . . . . . . 1,314 6.7 1,244 5.8 70 5.6
Olivetti . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 0.9 227 1.1 (55) (24.2)
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,636 23.5 6,244 28.9 (1,608) (25.8)
Media and other operations(2) . . . . . . . . . . . 131 0.7 71 0.3 60
Adjustments and eliminations . . . . . . . . . . . (50) (0.3) (45) (0.1) (5)
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . 19,718 100.0 21,573 100.0 (1,855) (8.6)
(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, International Wholesale and Olivetti), recorded a
decline in revenues for 2015 of 302 million euros (-2.0%), compared to 2014, but with an improvement in
revenues from services (quarters 2015 compared to quarters 2014: fourth quarter -1.1%, third quarter -1.5%,
second quarter -1.7%, first quarter -3.3%). There were, however, positive signs over the course of 2015, with the
decline in revenues, as compared to 2014, becoming smaller from quarter to quarter. This development is mainly
due to an improvement in competition conditions, which permitted for an acceleration of growth for connection
and content services for broadband and ultra-broadband networks, a steady hold on market share and a steady
reduction in the declines of ARPU with respect to traditional services, mainly in the Mobile segment, which posted
a positive performance in the fourth quarter of 2015, both in terms of total revenues (+0.7%) and revenues from
services (+0.1%), as compared to the same period of 2014.
In 2015, the Brazil Business Unit generated revenues of 4,636 million euros (17,139 million reais), a decline of
1,608 million euros (2,359 million reais), or -25.8%, from 6,244 million euros in 2014 (19,498 million reais). The
decline was mainly due to a decline in revenues from services, which was caused by further reductions in mobile
termination rates and a contraction in revenues from traditional voice and SMS services. These declines were only
partially offset by an increase in revenue generated by the innovative component.
Furthermore, revenues from product sales were 475 million euros in 2015 (1,755 million reais) compared to 1,016
million euros in 2014 (3,173 million reais), a decrease of 541 million euros, or 53.2%, likely reflecting the impact
of the Brazilian macroeconomic crisis.
96

❖ OTHER INCOME
The following table sets forth other income for the years ended December 31, 2015 and 2014:
2015 2014 Changes
(a) (b) (a-b) %
Late payment fees charged for telephone services . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 64 (5) (7.8)
Recovery of employee benefit expenses, purchases and services rendered . . . 32 27 5 18.5
Capital and operating grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 26 7 26.9
Damage compensation, penalties and sundry recoveries . . . . . . . . . . . . . . . . . . . . . 25 36 (11) (30.6)
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 248 (110) (44.4)
Total other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 401 (114) (28.4)
Other Income declined by 114 million euros relative to 2014. In 2014, other income included the full release of
the remaining risk provisions, for an amount of 84 million euros, already allocated in the 2009 consolidated
financial statements, with respect to the alleged administrative offense pursuant to Legislative Decree 231/2001,
in connection with the “Telecom Italia Sparkle affair”.
❖ OPERATING EXPENSES
Our operating expenses amounted to 17,044 million euros in 2015, a decrease of 400 million euros, or 2.3%
compared to 17,444 million euros in 2014.
The components of our operating expenses include the following:
Š Acquisition of goods and services amounted to 8,533 million euros in 2015, a decrease of 897 million
euros compared to 2014 (9,430 million euros). The decline was mainly due to the Brazil Business Unit, which
experienced a decline of 1,149 million euros (including a negative exchange rate effect of 558 million euros).
The Domestic Business Unit, on the other hand, reported an increase of 215 million euros, mainly due to
higher purchases of equipment and handsets, related to the increase of product sales. In 2015, this item also
included approximately 102 million euros for special projects and agreements.
The following table sets forth the acquisition of goods and services for the years ended December 31, 2015 and
2014:
2015 2014 Changes
(a) (b) (a-b) %
Purchase of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,811 2,231 (420) (18.8)
Portion of revenues to be paid to other operators and interconnection
costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,080 2,403 (323) (13.4)
Commercial and advertising costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,399 1,473 (74) (5.0)
Power, maintenance and outsourced services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,272 1,336 (64) (4.8)
Rent and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699 742 (43) (5.8)
Other service expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,272 1,245 27 2.2
Total acquisition of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,533 9,430 (897) (9.5)
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.3 43.7
97

Š Employee benefits expenses
The following table sets forth employee benefits expenses for the years ended December 31, 2015 and 2014:
2015 2014 Changes
(a) (b) (a-b) %
Employee benefits expenses—Italian companies:
Ordinary employee expenses and costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,769 2,697 72 2.7
Corporate restructuring expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446 8 438 n.s.
Total employee benefits expenses—Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,215 2,705 510 18.9
Employee benefits expenses—Outside Italy
Ordinary employee expenses and costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374 410 (36) (8.8)
Corporate restructuring expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 4 (4)
Total employee benefits expenses—Outside Italy . . . . . . . . . . . . . . . . . . . . . . . 374 414 (40) (9.7)
Employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,589 3,119 470 15.1
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.2 14.5
Employee benefits expenses in 2015 totaled 3,589 million euros compared to 3,119 million euros in 2014, an
increase of 470 million euros. The change was due to:
— an increase of 72 million euros in the Italian component of ordinary employee expenses, mainly due to
the increased contractual minimums established in the TLC National Collective Labor Agreement signed
on February 1, 2013, which resulted in the addition of pay-scale points in April and October 2014, and
the growth in the average workforce by 1,842 employees compared to 2014. In particular, the
“Solidarity Contracts” applied by the Parent and T.I. Information Technology—which entailed a
reduction in working hours and a reduction in the average workforce—came to an end in April 2015,
resulting in an increase of 2,062 average employees compared to 2014;
— the recognition for 446 million euros of charges and provisions to Employee Benefits and other minor
items. In particular, the Parent and other Group companies signed specific agreements with the trade
unions in 2015 for the application of regulatory instruments that, from 2016 and subsequent years, will
enable the management of personnel surpluses, resulting from the streamlining processes affecting all
the companies operating in the TLC sector. These instruments will be implemented through solidarity
contracts, with voluntary early retirement (in application of Article 4, paragraphs 1-7ter of law no. 92 of
June 28, 2012, —the “Fornero law”) and through the use of mobility scheme under law no. 223/91.
These expenses consisted of 422 million euros for the Parent Telecom Italia S.p.A., 17 million euros for
the restructuring plan announced in May 2015 by Olivetti, 3 million euros for the company Telecom
Italia Information Technology, 2 million euros for HR Services, and 2 million euros for Telecom Italia
Sparkle. More details are provided in the Note “Employee benefits expenses” of the Notes to the
Consolidated Financial Statements included elsewhere in this Annual Report;
— a decrease of 40 million euros in the component outside Italy of employee benefits expenses due to the
higher increase in labor costs related to the growth in the average workforce (+426 average
employees) and local salary increases, which were more than offset by a negative exchange rate effect
of approximately 59 million euros, essentially relating to the Brazil Business Unit. In 2014, restructuring
expenses of 4 million euros were also recognized in relation to a number of foreign companies of the
Olivetti group.
98

The Group’s average salaried workforce for the periods indicated was as follows:
2015 2014 Changes
(a) (b) (a-b) %
(full time equivalent
units, except percentages)
Average salaried workforce—Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,361 47,519 1,842 3.9
Average salaried workforce—Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,192 11,766 426 3.6
Total average salaried workforce(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,553 59,285 2,268 3.8
Non-current assets held for sale (Sofora—Telecom Argentina group) . . . . . . . . 15,465 15,652 (187) (1.2)
Total Average salaried workforce—including Non-current assets
held for sale (Sofora—Telecom Argentina group)(1) . . . . . . . . . . . . . . . . 77,018 74,937 2,081 2.8
(1) Includes the average employees with temporary work contracts: 3 units in 2015 (2 in Italy and 1 outside Italy). In 2014 average
employees with temporary work contracts were 9 units (4 in Italy and 5 outside Italy).
Group’s employees at December 31, 2015 and 2014 were as follows:
As of December 31,
2015 2014 Changes
(a) (b) (a-b) %
(units, except percentages)
Employees—Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,555 52,882 (327) (0.6)
Employees—Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,312 13,143 169 1.3
Total Employees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,867 66,025 (158) (0.2)
Non-current assets held for sale (Sofora—Telecom Argentina group) . . . . . . . . . 16,228 16,420 (192) (1.2)
Total Employees—including Non-current assets held for sale
(Sofora—Telecom Argentina group)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,095 82,445 (350) (0.4)
(1) Includes employees with temporary work contracts: 3 units at December 31, 2015 and 9 units at December 31, 2014.
Š Other operating expenses
The following table sets forth other operating expenses for the years ended December 31, 2015 and 2014.
2015 2014 Changes
(a) (b) (a-b) %
Writedowns and expenses in connection with credit management . . . . . . 345 375 (30) (8.0)
Provision charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330 84 246 292.9
TLC operating fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342 449 (107) (23.8)
Indirect duties and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 118 (2) (1.7)
Penalties, compensation and administrative sanctions . . . . . . . . . . . . . . . . . . 292 68 224 329.4
Association dues and fees, donations, scholarships and traineeships . . . . 18 18 — —
Sundry expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 63 (15) (23.8)
Total other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,491 1,175 316 26.9
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 5.4
Other operating expenses were 1,491 million euros in 2015, compared to 1,175 million euros in 2014, an
increase of 316 million euros. This change was mainly due to 518 million euros for provisions and costs
connected to regulatory disputes and sanctions, and liabilities related to these disputes, charges for specific
transactions with customers and suppliers and costs related to disputes with former employees.
99

In particular:
— writedowns and expenses in connection with credit management (345 million euros; 375 million euros
in 2014) consisting of 270 million euros for the Domestic Business Unit (295 million euros in 2014) and
62 million euros for the Brazil Business Unit (80 million euros in 2014);
— provision charges (330 million euros; 84 million euros in 2014) mainly consisting of 236 million euros
for the Domestic Business Unit (6 million euros in 2014) and 86 million euros for the Brazil Business Unit
(74 million euros in 2014);
— TLC operating fees and charges (342 million euros; 449 million euros in 2014) consisting of 285 million
euros for the Brazil Business Unit (399 million euros in 2014) and 56 million euros for the Domestic
Business Unit (49 million euros in 2014).
Š Depreciation and Amortization
The following table sets forth depreciation and amortization for the years ended December 31, 2015 and
2014.
2015 2014 Changes
(a) (b) (a-b) %
Amortization of intangible assets with a finite useful life . . . . . . . . . . . . . . . . 1,788 1,854 (66) (3.6)
Depreciation of tangible assets—owned and leased . . . . . . . . . . . . . . . . . . . . . 2,347 2,430 (83) (3.4)
Total depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,135 4,284 (149) (3.5)
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.0 19.9
The reduction in depreciation and amortization of 149 million euros was mainly attributable to the Domestic
Business Unit (-85 million euros), which was affected by the revision of the useful lives of the passive
infrastructure of the Mobile Base Transceiver Stations, which resulted in an overall impact of 51 million euros of
lower depreciation, and to the Brazil Business Unit (-68 million euros, which includes the negative exchange rate
effects of 152 million euros). Net of the exchange rate effect, the depreciation and amortization of the Brazil
Business Unit would have increased by 85 million euros, resulting from the acceleration in investments in the last
18-24 months.
Further details are provided in the Note—“Tangible assets (owned and under finance leases)” of the Notes to the
Consolidated Financial Statements, included elsewhere herein.
Š Gains (losses) on disposals of non-current assets
In 2015, this item amounted to 336 million euros (29 million euros in 2014) and was mainly attributable to
the gain realized by the Brazil Business Unit of 1,211 million reais (approximately 328 million euros)
following the conclusion of the sale of the first three tranches of telecommunications towers to American
Tower do Brasil.
For further details, please see “—5.2.7 Results of Operations of Business Units for the Year Ended
December 31, 2015 Compared with the Year Ended December 31, 2014- Brazil” included elsewhere in this
Annual Report.
Š Net impairment losses on non-current assets
This item amounted to 244 million euros in 2015 (1 million euros in 2014).
The impairment losses for the year 2015 included:
Š 240 million euros with respect to goodwill of the Brazil Business Unit due to the results of the
impairment testing conducted at December 31, 2015, carried out by comparing the recoverable amount
of the Brazil Cash Generating Unit (CGU) with its carrying amount on the same date;
Š 4 million euros for other items.
100

For further details, please see “Note—Goodwill” of the Notes to the Consolidated Financial Statements, included
elsewhere herein.
❖ OPERATING PROFIT (LOSS)
Operating profit was 2,961 million euros in 2015 (4,530 million euros in 2014), a decrease of 1,569 million
euros, or -34.6%, as a result of operating income and expenses described above.
❖ OTHER INCOME (EXPENSES) FROM INVESTMENTS
This item amounted to a positive 10 million euros in 2015 (a positive 16 million euros in 2014), essentially
reflecting the gain from the sale of the non-controlling interest in SIA S.p.A., which took place in July 10,
2015.
❖ FINANCE INCOME (EXPENSES)
Finance income (expenses) showed an increase in net expenses of 331 million euros, from 2,194 million
euros in 2014 to 2,525 million euros in 2015.
This increase was linked to the effects of the changes in certain non-monetary items—of a valuation and
accounting nature, linked in particular to derivatives—and of bond buybacks, which were offset by the
reduction in finance expenses connected to the related debt position.
In particular:
Š the negative impact of 454 million euros (174 million euros in 2014) relating to the fair value
measurement through profit and loss—performed separately to its liability component—of the
embedded option included in the mandatory convertible bond issued by Telecom Italia Finance S.A. at
the end of 2013, for 1.3 billion euros (“Guaranteed Subordinated Mandatory Convertible Bonds due
2016 convertible into ordinary shares of Telecom Italia S.p.A.”);
Š a negative effect of 379 million euros in relation to the bond buybacks carried out during 2015 by
Telecom Italia S.p.A. for a total of 3.8 billion euros. This impact resulted from the difference between
the buyback prices and the values of the liabilities at the transaction date, net of the benefits from the
termination of several hedging derivatives linked to the bonds repurchased. In 2014, the negative
impact of the buybacks carried out during the period and the exercise of the early redemption option for
a bond amounted to 62 million euros.
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
This item amounted to 401 million euros, a decrease of 527 million euros compared to 2014 (928 million
euros), mainly due to lower taxable income of the Parent and the unexpected full deductibility of labor costs
from the IRAP tax base introduced by art. 1, c. 20 of the Stability Law 2014 (law n.190/14) which resulted in
lower IRAP of approximately 60 million euros.
❖ PROFIT (LOSS) FROM DISCONTINUED OPERATIONS/NON-CURRENT ASSETS HELD FOR SALE
In 2015, the item Profit from Discontinued Operations/Non-current assets held for sale amounted to
611 million euros (541 million euros in 2014) and was mainly related to the positive contribution to the
consolidation from the Sofora—Telecom Argentina group.
For further details, please see “Note—Discontinued operations/Non-current assets held for sale”, of the
Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.
101

5.2.7 RESULTS OF OPERATIONS OF BUSINESS UNITS FOR THE YEAR ENDED DECEMBER 31, 2015 COMPARED WITH
THE YEAR ENDED DECEMBER 31, 2014
❖ DOMESTIC
The following table sets forth, certain financial and other data for the Domestic Business Unit for the years ended
December 31, 2015 and 2014.
2015 2014 Changes
(a) (b) (a-b) %
(millions of euros, except
percentages and employees)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,001 15,303 (302) (2.0)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,359 3,738 (1,379) (36.9)
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.7 24.4
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,644 53,076 (432) (0.8)
Revenues
Revenues decreased by 302 million euros from 15,303 million euros in 2014 to 15,001 million euros in 2015.
There were a number of significant indicators during the year 2015 and the last quarter, including the continued
steady recovery in revenue performance, which strengthened compared to the previous quarters, and positive
performance in the Mobile business, both in terms of total revenues (+0.7% in the fourth quarter of 2015) and
revenues from services only (+0.1% in the last quarter of 2015 compared to the same period of 2014).
This recovery in revenues was attributable to the commercial actions aimed at progressively stabilizing the
customer base—with market share up slightly in both the Mobile and Fixed-line Broadband businesses—and the
ARPU, with a growth in revenues from Fixed-line Broadband, ICT and Mobile Internet.
In more detail:
Revenues from domestic services, amounted to 14,058 million euros in 2015 and decreased by 276 million
euros (-1.9%) compared to 2014.
The quarterly trend confirmed the recovery trend already mentioned, stronger than in previous quarters: (quarters
2015 compared to quarters 2014: fourth quarter -1.1%, third quarter -1.5%, second quarter -1.7%, first quarter -
3.3%).
In detail:
— revenues from Fixed-lined services amounted to 10,372 million euros in 2015, a decrease of 300 million
euros compared to 2014 (-2.8%);
— revenues from services in the Mobile business amounted to 4,517 million euros a decrease of 91 million
euros compared to 2014 (-2.0%). The performance contributed to the improving trend with a positive
+0.1% in the fourth quarter of 2015, compared to the same period in 2014, preceded by -1.5% in the
third quarter of 2015, -2.5% in the second quarter of 2015, -4.2% in the first quarter of 2015.
Revenues from product sales, including changes to work in progress, amounted to 943 million euros in 2015 (a
decrease of 26 million euros compared to 2014) and grew by 68 million euros in the Mobile business, due to a
continued growth in demand for advanced handsets (smartphones), and declined in the Fixed-line business of the
product portfolio.
102

The following table sets forth the Domestic Business Unit’s revenues by market segment for the years ended
Š Core Domestic
2015 2014 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,858 14,205 (347) (2.4)
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,267 7,349 (82) (1.1)
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,600 4,824 (224) (4.6)
National Wholesale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,785 1,793 (8) (0.4)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206 239 (33) (13.8)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,287 3,593 (1,306) (36.3)
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5 25.3
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,741 51,849 (108) (0.2)
Š Consumer: revenues of the Consumer segment amounted to 7,267 million euros in 2015, with a decrease
of 82 million euros (-1.1%) compared to 2014, with a recovery driven, in particular, by the progressive and
structural recovery in the Mobile business, due to the steady market share and the stabilization of ARPU
levels. In particular:
Š revenues from Mobile business amounted to 3,599 million euros, and grew slightly compared to
2014 (+29 million euros, +0.8%), confirming the positive trend seen over the two consecutive quarters
(fourth quarter of 2015, +2.5%, third quarter +3.3%, second quarter -1.6%, first quarter -1.5%). Service
revenues decreased by 39 million euros (-1.2% compared to 2014), also evidencing a significant
recovery trend (fourth quarter of 2015: +1.5%; third quarter: -0.3%; second quarter: -2.1%; first
quarter: -4.3%), attributable to a slowdown of competitive pressure, the progressive stabilization of
market share and the steady growth of mobile internet and digital services to support the stabilization
of ARPU;
Š revenues from Fixed-line business amounted to 3,705 million euros, with a decrease of 112 million
euros compared to 2014 (-2.9%) and showed a slowdown in the last quarter of 2015 (-6.7%) compared
to the improvement seen from the second half of 2014, due to the actions aimed at increasing ARPU
undertaken in the last months of the year (repricing, introduction of flat tariffs and bundle
development).
Š Business: the revenues of the Business segment amounted to 4,600 million euros, a decrease of
224 million euros compared to 2014 (-4.6%). Revenues from services (4,232 million euros, -204 million euros
compared to 2014) continued the stabilization that began during 2014 (-4.7% in the fourth quarter of 2015).
Specifically:
Š Mobile services revenue fell by 66 million euros (-5.5% compared to 2014): the positive performance
of new digital services, and, in particular, of the Mobile Internet component (+38 million euros, +9%
compared to 2014) was offset by a reduction in traditional mobile services for voice calls and messaging
(-109 million euros) due to the customers repositioning towards bundle deals with lower overall ARPU;
Š Fixed-line services revenue fell by 141 million euros (-4.3% compared to 2014): despite the steady
growth in ICT service revenues (+5.7%), in particular on Cloud services (+26% compared to 2014), the
segment continued to be adversely affected by the slow economic recovery, the reduction in prices of
traditional voice and data services, and the technological shift towards VoIP systems.
Š National Wholesale: revenues for the Wholesale segment in 2015 amounted to 1,785 million euros,
essentially stable compared to 2014 (-8 million euros, or 0.4%). Indeed, the impact of the change in
regulated prices in 2015 was similar to the impact in 2014, due to the retroactive change in the wholesale
access prices for the period 2010-2012.
103

Š International Wholesale—Telecom Italia Sparkle group
2015 2014 Changes
(a) (b) (a-b) %
(millions of euros, except percentages and employees)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,314 1,244 70 5.6
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 172 (87) (50.6)
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 13.8
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . 645 641 4 0.6
Telecom Italia Sparkle group revenues for 2015 amounted to 1,314 million euros, a significant increase
compared to 2014 (+70 million euros, or 5.6%). This increase was related in particular to revenues for Voice
services (+39 million euros, +4.3%) and revenues for IP/Data services (+33 million euros, +12.8%). The
other business segments remained substantially stable (-2 million euros, -2.2%).
Š Olivetti
Following approval of the restructuring plan of the Olivetti group on May 11, 2015, in 2015, the business
lines to be abandoned through divestment or termination in accordance with the plan have no longer been
consolidated under Olivetti. Instead, these lines have been included under Other Operations.
2015 2014 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 227 (55) (24.2)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13) (34) 21 61.8
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7.6) (15.0)
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . 258 586 (328) (55.9)
In 2015, the revenues of business lines defined as “Core” (Office, Retail and Systems, and Advanced Caring)
amounted to 172 million euros.
In particular, in 2015 there was an increase in revenues in the Office segment relating to the sales of
multifunctional products under long-term rental agreements (+15 million euros compared to 2014), while
revenues from services in the Advanced Caring segment registered an increase of 6 million euros as
compared to 2014.
Operating profit
Operating profit in 2015 amounted to 2,359 million euros (3,738 million euros in 2014), a decrease of
1,379 million euros, or -36.9% compared to 2014, with an Operating profit margin of 15.7% (24.4% in 2014).
The operating profit was also impacted by the change in the following line items included under operating
expenses and shown in the table below.
2015 2014 Changes
(a) (b) (a-b) %
Acquisition of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . 6,046 5,831 215 3.7
Employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,206 2,730 476 17.4
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 999 570 429 75.3
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,205 3,290 (85) (2.6)
104

In detail:
Š acquisition of goods and services increased by 215 million euros (+3.7%) compared with 2014. In
particular:
Š higher costs for the acquisition of goods for resale (+145 million euros, of which +78 million euros for
the acquisition of Mobile handsets linked to the increase in sales volumes);
Š higher advertising costs (+25 million euros, mainly related to the sponsoring of EXPO 2015 and the
launch of the new single Brand);
Š higher commercial costs (+24 million euros);
Š higher costs for revenues due to other operators (+26 million euros);
Š lower costs for indirect operating expenses, not directly linked to commercial and industrial policies
(-117 million euros);
Š employee benefits expenses increased by 476 million euros compared to 2014, mainly due to:
Š an increase of 60 million euros in ordinary employee expenses, mainly due to the increased contractual
minimums established in the TLC National Collective Labor Agreement signed on February 1, 2013,
which resulted in the addition of pay-scale points in April and October 2014, and the growth in the
average workforce by a total of 1,692 average employees compared to 2014. In particular, the
“Solidarity Contracts” applied by the Parent and T.I. Information Technology—which entailed a
reduction in working hours and a consequent reduction in the average workforce—came to an end in
April 2015, resulting in an increase of 2,062 average employees compared to 2014;
Š the recognition of 429 million euros in charges and provisions to employee benefits, consisting of
422 million euros for the Parent Telecom Italia S.p.A., 3 million euros for Telecom Italia Information
Technology, 2 million euros for HR Services and 2 million euros for Telecom Italia Sparkle. In particular,
in 2015 the Parent signed specific agreements with the trade unions for the application of regulatory
instruments that starting in 2016 will enable the management of personnel surpluses, resulting from
the streamlining processes affecting the companies operating in the TLC sector. These instruments will
be implemented through solidarity contracts, voluntary early retirements (in application of Article 4,
paragraphs 1-7ter, of Law n. 92 of June 28, 2012, the “Fornero” law) and through the use of mobility
scheme under law n. 223/91;
Š other operating expenses, amounted to 999 million euros, an increase of 429 million euros compared to
2014. This increase was mainly due to costs totaling 512 million euros for provisions and costs connected to
regulatory disputes and sanctions, and to liabilities related to these disputes, some charges for specific
transactions with customers and suppliers and costs related to disputes with former employees.
Details of other operating expenses are shown in the table below:
2015 2014 Changes
(a) (b) (a-b) %
Impairments and expenses in connection with credit
management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270 295 (25) (8,5)
Provision charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236 6 230 n.s.
TLC operating fees and charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 49 7 14
Indirect duties and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 99 1 1,0
Sundry expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337 121 216 179
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 999 570 429 75,3
Š depreciation and amortization, amounted to 3,205 million euros in 2015, a decrease of 85 million euros
compared to 2014 (3,290 million euros), due to the revision of the useful lives of the passive infrastructure of
the Mobile Base Transceiver Stations.
105

The operating profit was also impacted by Other income which amounted to 258 million euros in 2015
(382 million euros in 2014), a decrease of 124 million euros compared to 2014. In 2014, the amount included the
entire release of the risk provision, recorded in the 2009 Consolidated Financial Statements for the alleged
administrative offense pursuant to Legislative Decree 231/2001, linked to the so-called Telecom Italia Sparkle
affair (71 million euros).
Employees
Employees were 52,644 as of December 31, 2015, a reduction of 432 units compared to December 31, 2014.
* * *
The company Infrastrutture Wireless Italiane S.p.A. (“INWIT”) was established on January 14, 2015. On April 1,
2015, the Parent Telecom Italia S.p.A. transferred to INWIT the business unit consisting of around 11,500 sites in
Italy that house the radio transmission equipment for mobile telephone networks for the Parent Company and
other operators. In June 2015, an IPO was successfully completed for ordinary shares of INWIT S.p.A. on the
Electronic Stock Exchange organized and managed by Borsa Italiana S.p.A., which was followed in July 2015 by
the exercise of the greenshoe option. This transaction did not result in a loss of control for the Telecom Italia
Group over INWIT and was therefore treated as a transaction between shareholders in accordance with the
accounting standards. Accordingly, no impacts were recognized in the consolidated income statement and the
effects of the transaction were recognized directly as an increase in Equity attributable to Owners of the Parent.
INWIT—Infrastrutture Wireless Italiane S.p.A.
As of December 31,
2015
Set of towers transferred from Telecom Italia to INWIT . . . . . . . . . . . . . . . . . . . . . . . No. 11,500
Number of shares in the IPO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . No. 239,800,000
% of capital transferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.97%
IPO unit price per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . euro 3.65
Total consideration received, net of transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . million euros 854
Increase in Equity attributable to Owners of the Parent . . . . . . . . . . . . . . . . . . . . . . . . million euros 279
Telecom Italia percentage interest in INWIT at December 31, 2015 . . . . . . . . . . . 60.03%
❖ BRAZIL
The following table sets forth certain financial and other data for the Brazil Business Unit for the years ended
2015 2014 2015 2014 Changes
(a) (b) (a-b) %
percentages and
employees)
(millions of Brazilian reais, except
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,636 6,244 17,139 19,498 (2,359) (12.1)
Operating profit . . . . . . . . . . . . . . . . . . . . . . . 636 795 2,351 2,483 (132) (5.3)
% of Revenues . . . . . . . . . . . . . . . . . . . 13.7 12.7 13.7 12.7
Employees at year-end (units) . . . . . . . . . 13,042 12,841 13,042 12,841 201 1.6
Revenues
Revenues for 2015, amounted to 17,139 million reais and decreased by 12.1% compared to 2014 (-2,359 million
reais). Service revenues totaled 15,384 million reais, a decrease of 941 million reais compared to 16,325 million
reais for 2014 (-5.8%). The decline in revenues was partly attributable to the revenues from incoming SMS and
mobile traffic (-1,005 million reais, -40.2%), due to the reduction in the mobile termination rate (MTR) and lower
volumes, as well as traditional voice and SMS outgoing traffic (-1,216 million reais, -13.4%). This was partially
offset by an increase in revenue generated by the innovative component, mobile data and VAS content
(+1,213 million reais, +35.0%). Mobile Average Revenue Per User (ARPU) amounted to 16.7 reais for 2015
compared to 17.7 reais for 2014 (-5.6%).
106

Revenues from product sales were 1,755 million reais (3,173 million reais in 2014; -44.7%), likely reflecting the
impact of the Brazilian macroeconomic crisis.
The total number of lines as of December 31, 2015 amounted to 66,234 thousand, a decrease of 9,487 thousand
compared to December 31, 2014. This corresponds to a market share of approximately 25.7% (27% at
December 31, 2014).
Operating profit
Operating profit amounted to 2,351 million reais, down 132 million reais compared to 2014. This result was
affected by goodwill impairment losses totaling 887 million reais and the positive impacts arising from the
conclusion of the sale of the first three tranches of telecommunications towers to American Tower do Brasil. More
specifically, at the time of the sales, the gains arising on the assets sold amounted to 1,211 million reais net of
transaction costs.
With regard to changes in operating costs, the following table sets forth certain expenses for the years ended
2015 2014 2015 2014 Changes
(a) (b) (a-b) %
(millions of euros)
percentages)
Acquisition of goods and services . . . . . . . . . . . . . . . . . . . . 2,444 3,593 9,037 11,222 (2,185) (19.5)
Employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . 349 379 1,289 1,183 106 9.0
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 470 598 1,736 1,865 (129) (6.9)
Change in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 11 122 33 89 269.7
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . 909 977 3,362 3,049 313 10.3
Š acquisition of goods and services amounted to 9,037 million reais in 2015 (11,222 million reais in 2014).
The 19.5% decrease compared to the previous year (-2,185 million reais) can be broken down as follows:
Š purchases relating primarily to products for resale: -1,583 million reais;
Š revenues due to other TLC operators: -826 million reais;
Š rent and lease costs: +179 million reais;
Š external service costs: +45 million reais;
Š employee benefits expenses, amounting to 1,289 million reais in 2015, up 106 million reais compared to
2014 (+9.0%). The ratio of employee benefits expenses to total revenues rose to 7.5%, up 1.4 percentage
point on 2014. The average workforce grew from 11,451 employees in 2014 to 11,931 employees in 2015;
Š other operating expenses amounted to 1,736 million reais, a decrease of 6.9% on 2014. The expenses
were broken down as follows:
2015 2014 Changes
(a) (b) (a-b) %
percentages)
Writedowns and expenses in connection with credit management . . . . . . . . . . . . . . . . 230 249 (19) (7.6)
Accruals to provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 232 88 37.9
TLC operating fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,054 1,247 (193) (15.5)
Indirect duties and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 51 — —
Sundry expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 86 (5) (5.8)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,736 1,865 (129) (6.9)
Š depreciation and amortization amounted to 3,362 million reais in 2015, an increase of 313 million reais
compared to 3,049 million reais in 2014 due to the effect of the acceleration of investments in the past two
years.
107

Employees
Employees were 13,042 at December 31, 2015, an increase of 201 units compared to December 31, 2014 (12,841
units).
* * *
In 2015, the TIM Brasil group concluded the sale of the first three tranches of telecommunications towers to
American Tower do Brasil. The transaction involved the simultaneous execution of a finance lease for the portion
of the towers used by the TIM Brasil group, recorded as a financial debt for leases. For further details please see
“Item 4. Information on the Telecom Italia Group—4.6 Description of Property, Plant and Equipment”.
❖ MEDIA
the merger of the digital terrestrial network operator businesses respectively controlled by Persidera S.p.A. (a
subsidiary of TI Media) and Rete A S.p.A.
The merger of Rete A by absorption into Persidera was completed on December 1, 2014.
The merger of Telecom Italia Media S.p.A. into Telecom Italia S.p.A. was completed on September 30, 2015,
effective retroactively, for accounting and tax purposes, as of January 1, 2015.
The table below shows the figures for the Media Business Unit which, for the first half of 2014, did not include the
results of Rete A.
2015 2014 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 71 11 15.5
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 6 8 n.s
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.1 8.5
Employees at year-end (units)(*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 89 (25) (28.1)
(*) Includes employees with temp work contracts: nil at December 31, 2015, 1 at December 31, 2014.
Revenues
Revenues amounted to 82 million euros in 2015, an increase of 11 million euros (+15.5%) compared to 71 million
euros in 2014. This change, which was partly driven by the merger of Rete A, which had not yet occurred in the
first six months of 2014, was entirely attributable to the Network Operator (Persidera).
Operating profit (loss)
Operating profit was 14 million euros in 2015 (6 million euros in 2014). This performance was mainly due to the
aforementioned increase in revenues, as well as the increase in other income, only partially offset by an increase
in operating expenses, mainly attributable to the costs from the former Rete A (operations not present in the first
six months of 2014) and by the increase of 4 million euros in depreciation and amortization.
Employees
Employees were 64 at December 31, 2015, a decrease of 25 units compared to December 31, 2014 (89 units).
108

❖ Discontinued operations/Non-current assets held for sale (Sofora—Telecom Argentina group)
The results of the Sofora—Telecom Argentina group, which have been classified under “Discontinued operations/
Non-current assets held for sale” following the agreement for the sale to Fintech entered into on November 13,
2013 and subsequently amended on October 24, 2014, are shown below. Specifically, following those agreements:
Š the first closing took place on October 29, 2014 and, as a result, 17% of the Sofora capital was sold.
Consideration was received for this closing – also including other related assets—totaling US$ 215.7 million
(around 170 million euros); this resulted in the direct and indirect economic interest in Telecom Argentina
group of the Telecom Italia group being reduced from 19.30% to 14.47%;
Š the sale of the controlling interest of 51% in the capital of Sofora was planned to occur within two and a half
years of October 29, 2014, subject to approval by the Argentine regulatory authority;
Š the guarantees of performance by Fintech were secured by a pledge of securities worth US$ 600.6 million.
On March 8, 2016, after having received the approval of Enacom, the Argentine communications regulator, the
Telecom Italia Group completed the sale of Sofora—Telecom Argentina group (for further details please see the
“Note—Events Subsequent to December 31, 2015” of the Notes to the Consolidated Financial Statements
included elsewhere in this Annual Report).
The average exchange rate used for the conversion into euro of the Argentine peso (expressed in terms of units of
local currency per 1 euro) was 10.26890 in 2015 and 10.76605 in 2014. In terms of the spot exchange rate, the
Argentine currency was subject to a significant devaluation in December 2015: the euro exchange rate for the
Argentine peso on December 31, 2015 was 14.0972 pesos per euro compared to 10.2755 pesos per euro at
December 31, 2014.
The following table sets forth certain financial and other data for the Sofora—Telecom Argentina group for the
years ended December 31, 2015 and 2014.
2015 2014 2015 2014 Changes
(a) (b) (a-b) %
(millions of Argentine pesos, except
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,943 3,097 40,495 33,341 7,154 21.5
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,035 804 10,632 8,657 1,975 22.8
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.3 26.0 26.3 26.0
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . 16,228 16,420 16,228 16,420 (192) (1.2)
Revenues
Revenues for 2015 amounted to 40,495 million pesos, increasing 7,154 million pesos (+21.5%) compared to 2014
(33,341 million pesos), mainly due to the growth in ARPU. The main source of revenues was mobile telephony,
which accounted for about 73% of the consolidated revenues of the Sofora—Telecom Argentina group, an
increase of 20.1% compared to 2014.
Operating profit
Operating profit in 2015 was 10,632 million pesos compared to 8,657 million pesos recorded in 2014. The
increase of 1,975 million pesos was mainly attributable to the aforementioned increase in revenues, partially
offset by the increase in the related costs, as described below.
With regard to the change in the main costs, the following is noted:
Š acquisition of goods and services amounted to 19,017million pesos (14,963 million pesos in 2014). The
increase of 27.1% compared to 2014 (+4,054 million pesos) was mainly due to higher external service costs
of 1,912 million pesos and greater purchases of goods of 2,025 million pesos;
Š employee benefits expenses, amounting to 7,317 million pesos, increased by 1,662 million pesos
compared to 2014 (+29.4%). The change was due to salary increases resulting from periodic revisions in
109

union agreements, primarily linked to inflation, and to the increase in provisions for termination benefit
incentives. The percentage of employee benefits expenses to total revenues was 18.1%, up 1.1 percentage
points over 2014;
Š changes in inventories totaled 1,460 million pesos and reflecting higher purchases of handsets by Telecom
Personal, mentioned above, with an increase of 62% in stock levels compared to the end of 2014;
Š other operating expenses amounted to 4,835 million pesos, increasing 797 million pesos compared to
2014, mainly as a result of the 540 million pesos increase in indirect duties and taxes;
Š net impairment losses on non-current assets of 224 million pesos in 2015, as compared to 26 million
pesos in 2014, were mainly related to work in progress and several business projects that the group decided
not to pursue.
As required by IFRS 5, the calculation of the depreciation and amortization for the Sofora—Telecom Argentina
group, which would have amounted to 4,438 million pesos in 2015 and 3,244 million pesos in 2014 (432 million
euros in 2015 and 301 million euros in 2014), was suspended effective as of the date of classification as a
Discontinued operation.
Further details are provided in the “Note—Discontinued operations/Non-current assets held for sale” of the
5.2.8 YEAR ENDED DECEMBER 31, 2014 COMPARED WITH YEAR ENDED DECEMBER 31, 2013
❖ REVENUES
Revenues amounted to 21,573 million euros in 2014, a decrease of 1,834 million euros, or 7.8%, compared to
23,407 million euros in 2013.
The table below sets forth for the periods indicated gross revenues by Business Unit and consolidated revenues.
2014 2013 Changes
Revenues(1)
% of
Consolidated
revenues Revenues(1)
% of
Consolidated
revenues (a-b) %
(a) (b)
Domestic (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,303 70.9 16,388 70.0 (1,085) (6.6)
Core Domestic . . . . . . . . . . . . . . . . . . . . . 14,205 65.8 15,269 65.2 (1,064) (7.0)
International Wholesale . . . . . . . . . . . . 1,244 5.8 1,263 5.4 (19) (1.5)
Olivetti . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 1.1 265 1.1 (38) (14.3)
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,244 28.9 6,945 29.7 (701) (10.1)
Media and Other Operations (2) (3) . . . . . . 71 0.3 124 0.5 (53) (42.7)
Adjustments and eliminations . . . . . . . . . . . (45) (0.1) (50) (0.2) 5 (10.0)
Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . 21,573 100.0 23,407 100.0 (1,834) (7.8)
(2) Starting from 2014, the Domestic Business Unit also includes the Olivetti group, in addition to Core Domestic and International
Wholesale. The comparative figures of 2013 have been adjusted accordingly.
(3) The Other Operations of the Telecom Italia Group consist of the financial companies and other minor companies not associated with the
The Domestic Business Unit (divided into Core Domestic, International Wholesale and Olivetti), recorded a decline
in revenues for 2014 of 1,085 million euros (-6.6%), compared to 2013, but with a significant improvement in the
second half of the year (quarter 2014 compared to quarter 2013: fourth quarter: -5.0%, third quarter: -5.0%,
second quarter: -8.2%, first quarter: -8.3%), despite the continuing adverse macroeconomic environment and the
negative impact of the retroactive revision by the AGCom of the copper network wholesale access prices for the
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period 2010-2012. Net of that impact, which resulted in the recognition in the last quarter of 45 million euros in
lower revenues from previous years, the performance for the fourth quarter of 2014 would have been -3.9%
compared to the same period of 2013. This improvement in performance was mainly due to a cooling of the
competitive pressure—which resulted in the progressive stabilization of the customer base and ARPU on
traditional services—accompanied by a stabilization in our market share, mainly on Mobile, and an acceleration in
the growth of broadband and ultrabroadband services.
In detail:
Š Revenues from services in 2014 amounted to 14,334 million euros, down 7.1% compared to 2013. In
particular, revenues from services in the Mobile business were 4,608 million euros, a decrease of 529 million
euros compared to 2013 (-10.3%). Revenues from Fixed-line services amounted to 10,672 million euros and
were down 819 million euros compared to 2013 (-7.1%). In particular, revenues from services in the fourth
quarter of 2014 amounted to 3,619 million euros, down 4.4% compared to the same period of 2013 (-3.2%
net of the above-mentioned retroactive revision of 2010-2012 wholesale access prices decided by AGCom).
The fourth quarter represented a recovery against the three previous quarters (-6.2% in the third
quarter, -8.9% in the second quarter, and -8.8% in the first quarter);
Š Product sales, including change in work in progress, recorded revenues of 969 million euros in 2014, up on
2013 (+8 million euros), in both the Fixed-line and Mobile business.
With respect to the Brazil Business Unit, revenues in 2014 decreased by 701 million euros, or 10.1% compared
to 2013. Revenues from services decreased in 2014, mainly due to lower revenues from incoming traffic as a
result of the reduction in the mobile termination rate. Handset revenues also declined, mainly due to a reduction
in sales volumes. The total number of lines for the Brazil Business Unit on December 31, 2014 was 75.7 million, up
3.1% compared with December 31, 2013.
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, 2014 and 2013:
2014 2013 Changes
(a) (b) (a-b) %
Late payment fees charged for telephone services . . . . . . . . . . . . . . . . . . . . . . . . 64 63 1 1.6
Recovery of employee benefit expenses, purchases and services
rendered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 28 (1) (3.6)
Capital and operating grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 27 (1) (3.7)
Damage compensations, penalties and sundry recoveries . . . . . . . . . . . . . . . . . 36 64 (28) (43.8)
Sundry income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248 142 106 74.6
Total other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401 324 77 23.8
This item increased by 77 million euros compared to 2013. The increase mainly related to the full release of the
remaining risk provisions, in an amount of 84 million euros, already allocated in the 2009 consolidated financial
statements, with respect to the Telecom Italia Sparkle affair; the interest element (a further 2 million euros) was
released into finance income.
❖ OPERATING EXPENSES
Our operating expenses amounted to 17,444 million euros in 2014, a decrease of 3,569 million euros, or 17.0%,
compared to 21,013 million euros in 2013. The decline in operating expenses was also due to the reduction of
impairment losses on non-current assets which decreased from 2,187 million euros in 2013 to 1 million euros in
2014.
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The components of our operating expenses include the following:
Š Acquisition of goods and services amounted to 9,430 million euros in 2014, a decrease of 947 million
euros compared to 2013 (10,377 million euros). The reduction was mainly due to the Brazil Business Unit, a
decrease of 670 million euros (including a negative exchange rate effect of 347 million euros), which also
reflects the reduction in prices for interconnection services, with a decline in revenues due to other TLC
operators. The Domestic Business Unit, on the other hand, reported a reduction of 223 million euros. The
decrease in acquisition of goods and services also offset the higher costs, resulting from Telecom Italia’s
new market strategy, aimed at gradually ceasing to subsidize handsets in “bundle deals”. The new
commercial strategy had an impact of 63 million euros of costs recognized in the income statement for 2014.
In 2013 the capitalized costs for subsidizing handsets (amortized over the term of the contract with the
customer, from 24 to 30 months) amounted to 188 million euros.
The following table sets forth the acquisition of goods and services for the years ended December 31, 2014 and
2013:
2014 2013 Changes
(a) (b) (a-b) %
percentages)
Purchase of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,231 2,358 (127) (5.4)
Portion of revenues to be paid to other operators and interconnection costs . . . . 2,403 2,949 (546) (18.5)
Commercial and advertising costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,473 1,565 (92) (5.9)
Power, maintenance and outsourced services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,336 1,353 (17) (1.3)
Rent and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 742 755 (13) (1.7)
Other service expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,245 1,397 (152) (10.9)
Total acquisition of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,430 10,377 (947) (9.1)
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.7 44.3
Š Employee benefits expenses
The following table sets forth employee benefits expenses for the years ended December 31, 2014 and 2013:
2014 2013 Changes
(a) (b) (a-b) %
Employee benefits expenses—Italian companies:
Ordinary employee expenses and costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,697 2,688 9 0.3
Corporate restructuring expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 19 (11) (57.9)
Total employee benefits expenses—Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,705 2,707 (2) (0.1)
Employee benefits expenses—Outside Italy
Ordinary employee expenses and costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410 380 30 7.9
Corporate restructuring expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 0 4
Total employee benefits expenses—Outside Italy . . . . . . . . . . . . . . . . . . . . . 414 380 34.0 8.9
Total employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,119 3,087 32 1.0
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5 13.2
Employee benefits expenses were 3,119 million euros in 2014 compared to 3,087 million euros in 2013, an
increase of 32 million euros. The change was due to:
Š a decrease of 2 million euros in employee benefits expenses in Italy, due to lower expenses for mobility
pursuant to Law 223/91, totaling 11 million euros, almost entirely offset by an increase in ordinary employee
expenses and costs of 9 million euros.
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The increase in ordinary employee expenses and costs was due to the net effect of the following factors:
Š the increase in the contractual minimums established in the TLC National Collective Labor Agreement
signed on February 1, 2013;
Š the recognition of the notional costs relating to the Broad-Based Share Ownership Plan and the Stock
Option Plan;
Š the reduction in the average workforce by 820 employees compared to 2013, of which an average of
530 units was a result of the application of the “Solidarity Contracts” by the Parent, Telecom Italia
Information Technology, and by Olivetti S.p.A. (in 2013, the Parent and Telecom Italia Information
Technology applied the solidarity contracts from the second quarter of 2013);
Š the exit from the scope of consolidation of the companies La7 and MTV, with a reduction of 202 units in
the average headcount.
Š With regard to the expenses for mobility pursuant to Law 223/91, a total of 8 million euros was recognized
in 2014, of which 5 million euros for the agreement signed by the Parent with trade unions on December 1,
2014 (under the framework agreement of March 27, 2013) and 3 million euros for the Olivetti S.p.A. mobility
agreement signed with trade unions on March 1, 2014. In 2013, expenses of 19 million euros were
recognized for the agreements with trade unions signed by the Parent Telecom Italia S.p.A. and the company
Advanced Caring Center;
Š the increase of 34 million euros of employee benefits expenses outside Italy. The effects of the growth in the
average workforce, which rose by an average of 780 employees, and local salary variations, were partially
offset by a negative exchange difference of around 28 million euros, essentially related to the Brazil Business
Unit. In 2014, restructuring expenses of 4 million euros were also recognized in relation to a number of
foreign companies of the Olivetti group.
The Group’s average salaried workforce for the periods indicated was as follows:
2014 2013 Changes
(a) (b) (a-b) %
(full time equivalent units, except percentages)
Average salaried workforce—Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,519 48,541 (1,022) (2.1)
Average salaried workforce—Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,766 10,986 780 7.1
Total average salaried workforce(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 59,285 59,527 (242) (0.4)
Non-current assets held for sale (Sofora-Telecom
Argentina group) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,652 15,815 (163) (1.0)
Total Average salaried workforce—including
Non-current assets held for sale (Sofora—Telecom
Argentina group)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,937 75,342 (405) (0.5)
(1) Includes the average employees with temp work contracts: 9 units in 2014 (4 in Italy and 5 outside Italy). In 2013 average employees
with temp work contracts were 20 units (19 in Italy and 1 outside Italy).
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The Group’s employees at December 31, 2014 and 2013 were as follows:
As of December 31,
2014 2013 Changes
(a) (b) (a-b) %
(units, except percentages)
Employees—Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,882 53,155 (273) (0.5)
Employees—Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,143 12,468 675 5.4
Total Employees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,025 65,623 402 0.6
Non-current assets held for sale (Sofora—Telecom Argentina
group) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,420 16,575 (155) (0.9)
Total Employees—including Non-current assets held for
sale (Sofora—Telecom Argentina) (1) . . . . . . . . . . . . . . . . . . . 82,445 82,198 247 0.3
(1) Includes employees with temporary work contracts: 9 units at December 31, 2014 and 4 units at December 31, 2013.
Š Other operating expenses
The following table sets forth other operating expenses for the years ended December 31, 2014 and 2013.
2014 2013 Changes
(a) (b) (a-b) %
Writedowns and expenses in connection with credit
management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375 380 (5) (1.3)
Provision charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 100 (16) (16.0)
Indirect duties and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 128 (10) (7.8)
TLC operating fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449 482 (33) (6.8)
Penalties, compensation and administrative sanctions . . . . . . . 68 72 (4) (5.6)
Association dues and fees, donations, scholarships and
traineeships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 22 (4) (18.2)
Sundry expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 134 (71) (53.0)
Total other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1,175 1,318 (143) (10.8)
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 5.6
Other operating expenses in 2014 were 1,175 million euros compared to 1,318 million euros in 2013, a
decrease of 143 million euros.
This decrease was primarily due to the Domestic Business Unit (-101 million euros) and the Brazil Business
Unit (-34 million euros, including a negative exchange rate effect of 51 million euros).
They included:
Š write-downs and expenses in connection with credit management (375 million euros; 380 million euros
in 2013) consisting of 295 million euros for the Domestic Business Unit (290 million euros in 2013) and
80 million euros for the Brazil Business Unit (84 million euros in 2013);
Š provision charges (84 million euros; 100 million euros in 2013) mainly consisting of 74 million euros for
the Brazil Business Unit (81 million euros in 2013) and 6 million euros for the Domestic Business Unit
(17 million euros in 2013);
Š TLC operating fees and charges (449 million euros; 482 million euros in 2013) consisting of 399 million
euros for the Brazil Business Unit (424 million euros in 2013) and 49 million euros for the Domestic
Business Unit (57 million euros in 2013);
Š sundry expenses of 63 million euros; in 2013 they amounted to 134 million euros and mainly related to
the Domestic Business Unit for the estimate of the costs, of 84 million euros, for the fine imposed by
the Italian Antitrust Authority (AGCM) at the end of the A428 proceedings.
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Š Depreciation and Amortization
The following table sets forth depreciation and amortization for the years ended December 31, 2014 and
2013.
2014 2013 Changes
(a) (b) (a-b) %
Amortization of intangible assets with a finite useful life . . . . . . 1,854 2,012 (158) (7.9)
Depreciation of tangible assets—owned and leased . . . . . . . . . . 2,430 2,541 (111) (4.4)
Total depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . 4,284 4,553 (269) (5.9)
% on Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.9 19.5
The reduction in depreciation and amortization of 269 million euros was mainly attributable to the Domestic
Business Unit (-278 million euros), essentially due to a decrease in depreciable and amortizable assets.
Š Gains (losses) on disposals of non-current assets
In 2014, this item amounted to 29 million euros. A gain of approximately 38 million euros, on the sale by
Telecom Italia S.p.A. of a property located in Milan, for a price of 75 million euros, was partially offset by net
losses of 11 million euros, mainly relating to the disposal of tangible assets by the Domestic Business Unit.
In 2013, this item showed a loss of 82 million euros, mainly relating to the realized loss, including
transaction costs, of 100 million euros from the sale of La7 S.r.l. to the Cairo Communication group on April
30, 2013. This charge was offset by net capital gains on non-current assets totaling 18 million euros, mainly
relating to the sale of a property (around 17 million euros), and the sale of the entire controlling interest
(51%) held in MTV Italia S.r.l. (3 million euros).
Š Net impairment losses on non-current assets
These amounted to 1 million euros in 2014. In 2014, Telecom Italia performed the goodwill impairment test.
The results of that testing, carried out in accordance with the specific procedure adopted by the Telecom
Italia Group, confirmed the values of goodwill allocated to the individual Cash-Generating Unit of the Group.
In 2013, this item amounted to 2,187 million euros and was essentially related to the impairment loss on
goodwill allocated to the Core Domestic Cash-Generating Unit (CGU) in the Domestic Business Unit.
Further details are provided in the “Note—Goodwill” of the Notes to the Consolidated Financial Statements
❖ OPERATING PROFIT (LOSS)
Operating profit was 4,530 million euros in 2014 (2,718 million euros in 2013, including the impact of the
above-mentioned impairment loss of 2,187 million euros on the goodwill allocated to the Core Domestic CGU).
❖ OTHER INCOME (EXPENSES) FROM INVESTMENTS
This amounted to a positive 16 million euros, essentially reflecting the remeasurement at fair value of the 41.07%
interest already held in Trentino NGN S.r.l., performed pursuant to IFRS 3, following the acquisition of control of
the company by Telecom Italia S.p.A. on February 28, 2014, at a price of 17 million euros.
❖ FINANCE INCOME (EXPENSES)
Finance income (expenses) showed net expenses of 2,194 million euros (net expenses of 2,183 million euros in
2013), an increase of 11 million euros.
This increase was linked to the net effect resulting from the change in certain non-monetary items – of a valuation
and accounting nature, linked in particular to derivatives – which was offset in part by the reduction in finance
expenses related to the debt position.
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In particular, the following is noted:
Š an increase in the balance of finance expenses linked to the changes in the valuations of several hedging
derivatives, attributable to market fluctuations linked to currency translation. These are unrealized
valuation and accounting changes which do not result in any actual monetary settlement. In 2013, a
benefit was also recognized, of around 25 million euros, following the first-time adoption of the new
IFRS 13 “Fair Value Measurement”, whereas for 2014 there was a negative impact of 72 million euros;
Š the issuance at the end of 2013, by Telecom Italia Finance S.A., of the mandatory convertible bond in an
amount of 1.3 billion euros (“Guaranteed Subordinated Mandatory Convertible Bonds due 2016
convertible into ordinary shares of Telecom Italia S.p.A.”), resulted in the accounting recognition of the
option embedded in the financial instrument separately from the related liability. In 2014, the
measurement of the option at fair value through profit or loss resulted in a negative impact on
adjustments to non-hedging derivatives of 174 million euros (in 2013 the impact was -124 million
euros).
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
This item amounted to 928 million euros, a decrease of 183 million euros from 2013 (1,111 million euros), largely
due to the smaller taxable base of the Parent Telecom Italia. The Brazil Business Unit recorded a decrease in tax
expense of 16 million euros compared to 2013. This was due to the exchange rate effect of approximately
18 million euros. Net of that effect, income tax expense would have been substantially in line with the previous
year, consistent with the trend in the taxable base expressed in local currency.
❖ PROFIT (LOSS) FROM DISCONTINUED OPERATIONS/NON-CURRENT ASSETS HELD FOR SALE
For 2014, the item Profit from Non-current assets held for sale amounted to 541 million euros (341 million euros
in 2013) and related to:
Š the positive contribution to the consolidation from the Sofora—Telecom Argentina group of 544 million
euros (378 million euros in 2013);
Š the costs related to disposals carried out in previous years and other items totaling 3 million euros
(37 million euros in 2013, of which 18 million euros relating to deferred taxes and sundry expenses
connected to the sale of the Sofora group and 19 million euros relating to disposals made in previous
years).
For further details, please see “Note—Discontinued operations/Non-current assets held for sale”, of the Notes to
the Consolidated Financial Statements included elsewhere in this Annual Report.
5.2.9 RESULTS OF OPERATIONS OF BUSINESS UNITS FOR THE YEAR ENDED DECEMBER 31, 2014 COMPARED WITH
THE YEAR ENDED DECEMBER 31, 2013
❖ DOMESTIC
Starting from 2014, the Domestic Business Unit also includes the Olivetti group, in addition to Core Domestic and
International Wholesale. This different presentation reflects the commercial and business placement of the
Olivetti group and the process of integrating the products and services offered by the Olivetti group as
complements to those offered by Telecom Italia in the domestic market. Accordingly, the figures for 2013 have
been restated on a consistent basis.
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The following table sets forth, certain financial and other data for the Domestic Business Unit for the years ended
2014 2013 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,303 16,388 (1,085) (6.6)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,738 1,985 1,753 88.3
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.4 12.1
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,076 53,377 (301) (0.6)
Revenues
Revenues decreased from 16,388 million euros in 2013 to 15,303 million euros in 2014.
In an economic scenario that continues to show structural weakness, the change in 2014 compared to 2013 was a
decrease of 6.6% (-1,085 million euros), with a decrease in the fourth quarter of -5.0% compared to the same
period of 2013 (-3.9% net of the negative impact of the retroactive revision of prices for wholesale access services
for the period 2010-2012, which resulted in the recognition in the fourth quarter of 45 million euros in lower
revenues from previous years), representing an improvement on the previous quarters of 2014 (-5.0% third
quarter, -8.2% second quarter, -8.3% first quarter) and on the entire year 2013 (-9.5%).
This trend in revenues was primarily due to the progressive stabilization in market share—mainly Mobile—and
growth in Fixed-line Broadband, ICT and Mobile Internet revenues.
The following table sets forth the Domestic Business Unit’s revenues by market segment for the years ended
Š Core Domestic
2014 2013 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,205 15,269 (1,064) (7.0)
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,349 7,970 (621) (7.8)
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,824 5,211 (387) (7.4)
National Wholesale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,793 1,897 (104) (5.5)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 191 48 25.1
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,593 1,888 1,705 90.3
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.3 12.4
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,849 51,954 (105) (0.2)
Š Consumer: revenues for the Consumer segment in 2014 amounted to 7,349 million euros, down 621 million
euros compared to 2013 (-7.8%). This performance, although still negative, reflects an improvement in the
second half of 2014. Compared to the same periods of 2013, the following performance was recorded in
2014: in the fourth quarter -5.1%; in the third quarter -5.2%; in the second quarter -9.2%; and in the first
quarter -11.7%. In particular, revenues from Mobile services fell by -398 million euros (-11.1%) compared to
2013 and -7.2% in the fourth quarter 2014 (against -6.6% in the third quarter, -13.7% in the second quarter
and -16.9% in the first quarter). This reflected the positive impact from the structural improvement in
competitive performance, the gradual stabilization of the customer base and ARPU, and the steady growth in
mobile internet. Revenues from Fixed-line services also showed signs of recovery compared to the decline
seen in the first part of the year, with a reduction of -238 million euros (-5.9%) compared to the year 2013,
and -3.4% in the fourth quarter 2014 (-6.1% in the third quarter, -7.9% in the second quarter and -6.2% in the
first quarter), owing to stable market share and the positive performance of Broadband ARPU, supported by
the increased proportion of customers with flat contracts and service upgrades (Fiber);
117

Š Business: in 2014 revenues for the Business segment amounted to 4,824 million euros, a decline of 387
million euros from 2013 (-7.4%), but an improvement on the previous periods, particularly for revenues from
services (4,436 million euros, -425 million compared to 2013, or -8.7%; -6.6% in the fourth quarter of 2014, -
7.9% in the third quarter, -10.6% in the second quarter and -9.8% in the first quarter). In the Mobile business
(-159 million euros in 2014 compared to 2013; -11.7%), despite the effective defensive actions and growth of
the customer base – which increased by 3.7% – traditional voice and messaging services continued to decline
(-183 million euros in 2014 compared to 2013), due to the repositioning of customers towards deals with
lower overall ARPU. The Fixed-line segment (-271 million euros in 2014 compared to 2013; -7.6%) continued
to feel the effects of the economic recession and the contraction in prices on traditional voice and data
services, although there were signs of recovery in the second half due in part to the steady growth in ICT
revenues (+3.5% over 2013, of which +22.0% for Cloud Services);
Š National Wholesale: revenues for the Wholesale segment in 2014 amounted to 1,793 million euros, a
decrease of 104 million euros compared to 2013 (-5.5%). The decline was mainly attributable to the
reduction in fixed-line and mobile termination rates, retroactive revision of wholesale access prices by the
Regulatory Authority for the period 2010-2012, the beginning of the migration to IP infrastructure solutions,
and the drop in prices for national roaming.
Š International Wholesale
2014 2013 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,244 1,263 (19) (1.5)
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 102 70 68.6
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8 8.1
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 641 741 (100) (13.5)
International Wholesale revenues for 2014 amounted to 1,244 million euros, a decline of 19 million euros
compared to 2013 (-1.5%). Revenues were down both for Voice services (-6 million euros, -0.6%) and for IP/Data
services (-8 million euros, -3.1%), as a result of growth in competition with a reduction in prices. The
Multinational Companies business segment also showed a slight decrease (-2 million euros, -3.1%), whereas
revenues for Mobile services were up slightly (+3 million euros, +12.2%).
Š Olivetti
2014 2013 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 265 (38) (14.3)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34) (8) (26) (325.0)
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15.0) (3.0)
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 586 682 (96) (14.1)
Revenues for the Olivetti group in 2014 amounted to 227 million euros, down 38 million euros compared to 2013
(-14.3%).
The reduction in revenues reflected the slowdown in sales outside Italy (-20 million euros), specifically
attributable to price competition for bank printers in the Chinese market, and the adverse economic situation in
the Italian market (-18 million euros).
118

Operating profit
Operating profit for 2014 was positive at 3,738 million euros (1,985 million euros in 2013), with an Operating
profit margin of 24.4% (12.1% in 2013). In particular, this performance was due to the absence of the goodwill
impairment loss for the Core Domestic Cash Generating Unit of 2,187 million euros, recognized in 2013.
The operating profit was also impacted by the change in the following line items included under operating
expenses and reflected in the table below.
2014 2013 Changes
(a) (b) (a-b) %
percentages)
Acquisition of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,831 6,054 (223) (3.7)
Employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,730 2,711 19 0.7
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570 670 (100) (14.9)
Depreciation and ammortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,290 3,568 (278) (7.8)
In detail:
Š acquisition of goods and services decreased by 223 million euros (-3.7%) compared with 2013, mainly
attributable to efficiency measures on overhead—which resulted in an overall reduction in general and
administrative expenses, with specific regard to professional and consulting services—and to commercial
cost containment, due to the cooling of competitive pressure (specifically in the Mobile business) and the
resulting easing of the effort on marketing levers (lower distribution and advertising costs);
Š employee benefits expenses increased by 19 million euros compared with 2013, mainly due to the
increase in ordinary employee expenses of 26 million euros, partially offset by the reduction in restructuring
expenses of 7 million euros. In particular:
Š ordinary employee expenses and costs increased as a result of higher expenses due to the increase in
the contractual minimums established in the TLC National Collective Labor Agreement signed on
February 1, 2013, as well as the recognition of the notional costs relating to the launch of the Broad-
Based Share Ownership Plan and the Stock Option Plan (23 million euros), which were offset by lower
expenses resulting from the reduction in the average workforce by 836 employees compared to 2013
(of which an average of 530 employees was a result of the application of the “Solidarity Contracts” by
the Parent, Telecom Italia Information Technology and Olivetti S.p.A.; in 2013 the Parent and Telecom
Italia Information Technology had applied the solidarity contracts from the second quarter of 2013);
Š a total of 12 million euros was recognized for restructuring expenses: 5 million euros for the mobility
agreement pursuant to Law 223/91 signed by the Parent with trade unions on December 1, 2014 as an
addition to the agreement of April 5, 2013; 3 million euros for the mobility pursuant to Law 223/91 that
Olivetti S.p.A. signed with trade unions on March 1, 2014; and 4 million euros for the restructuring
expenses relating to some foreign companies of the Olivetti group. In 2013, expenses of 19 million
euros were recognized for the agreements with trade unions signed by the Parent Telecom Italia S.p.A.
and the company Advanced Caring Center;
Š other operating expenses, totaling 570 million euros, fell by 100 million euros compared to the previous
year. In 2013, this item (see the item sundry expenses in the table below) included an amount of 84 million
euros recognized as the estimate of the costs related to the fine imposed by the Italian Antitrust Authority
(AGCM) at the end of the A428 proceedings.
119

Details of other operating expenses are shown in the table below:
2014 2013 Changes
(a) (b) (a-b) %
Impairments and expenses in connection with credit
management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 290 5 1.7
Provision charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 17 (11) (64.7)
TLC operating fees and charges . . . . . . . . . . . . . . . . . . . . . . 49 57 (8) (14.0)
Indirect duties and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 104 (5) (4.8)
Sundry expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 202 (81) (40.1)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570 670 (100) (14.9)
Š depreciation and amortization, totaling 3,290 million euros, fell by 278 million euros compared to the
previous year mainly due to the lower amount of depreciable assets.
The operating profit was also impacted by Other income amounted to 382 million euros in 2014 (299 million
euros in 2013), an increase of 83 million euros, mainly attributable to the entire release of the remaining risk
provisions allocated in the 2009 consolidated financial statements for the Telecom Italia Sparkle affair.
Employees
Employees were 53,076 as of December 31, 2014, a reduction of 301 units compared to December 31, 2013.
❖ BRAZIL
The following table sets forth certain financial and other data for the Brazil Business Unit for the years ended
2014 2013 2014 2013 Changes
(a) (b) (a-b) %
percentages and
employees)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,244 6,945 19,498 19,921 (423) (2.1)
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 795 858 2,483 2,460 23 0.9
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.7 12.3 12.7 12.3
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . 12,841 12,140 12,841 12,140 701 5.8
Revenues
Revenues for 2014, amounting to 19,498 million reais, were down by 2.1% compared to 2013 (-423 million reais).
Service revenues totaled 16,325 million reais, a decrease of 376 million reais compared to 16,701 million reais for
2013 (-2.3%), mainly due to lower revenues from incoming traffic as a result of the reduction of the mobile
termination rate. Revenues from product sales fell from 3,220 million reais in 2013 to 3,173 million reais in 2014
(-1.5%). This decrease was attributable to a reduction in sales volumes, which was only partially offset by an
increase in prices.
Mobile Average Revenue Per User (ARPU) amounted to 17.7 reais for 2014 compared with 18.6 reais for 2013
(-4.8%). The ARPU, as well as revenues from services, was affected by a further reduction, with effect from
February 2014, in the mobile termination rate.
The total number of lines at December 31, 2014 amounted to 75,721 thousand, 3.1% higher than on
December 31, 2013, representing a market share of approximately 27% in terms of lines.
120

Operating profit
The operating profit increased by 23 million reais (2,483 million reais in 2014 compared to 2,460 million reais in
2013), notwithstanding the decrease in revenues. This increase was mainly due to lower costs for the acquisition
of goods and services of 1,006 million reais, mainly attributable to lower revenues due to other TLC operators,
partially offset by higher depreciation and amortization charges and higher employee benefits expenses.
With regard to changes in operating costs, the following table sets forth certain expenses for the years ended
2014 2013 2014 2013 Changes
(a) (b) (a-b) %
(millions of euros) (millions of Brazilian reais, except
percentages)
Acquisition of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,593 4,263 11,222 12,228 (1,006) (8.2)
Employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379 349 1,183 1,000 183 18.3
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598 632 1,865 1,812 53 2.9
Change in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 (10) 33 (28) 61
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 977 954 3,049 2,736 313 11.4
Š acquisition of goods and services totaled 11,222 million reais in 2014 (12,228 million reais in 2013). The
8.2% decrease compared to the previous year (-1,006 million reais) can be broken down as follows:
Š revenues due to other TLC operators: -1,209 million reais;
Š purchases relating primarily to product cost: -72 million reais;
Š rent and lease costs: +30 million reais;
Š external service costs: +245 million reais;
Š employee benefits expenses, amounting to 1,183 million reais in 2014, were up 183 million reais compared
to 2013 (+18.3%). The average workforce grew from 10,657 employees in 2013 to 11,451 employees in
2014. The ratio of employee benefits expenses to total revenues rose to 6.1%, up 1 percentage point on
2013;
Š other operating expenses amounted to 1,865 million reais, an increase of 2.9% on 2013. The expenses were
broken down as follows:
2014 2013 Changes
(a) (b) (a-b) %
percentages)
Writedowns and expenses in connection with credit management . . . . 249 240 9 3.8
Accruals to provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232 234 (2) (0.9)
TLC operating fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,247 1,217 30 2.5
Indirect duties and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 57 (6) (10.5)
Sundry expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 64 22 34.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,865 1,812 53 2.9
Š depreciation and amortization amounted to 3,049 million reais in 2014, compared to 2,736 million reais in
2013, an increase of 313 million reais.
121

Employees
Employees were 12,841 at December 31, 2014, an increase of 701 people compared to December 31, 2013
(12,140 units).
❖ MEDIA
The following table below shows the results of the Media Business Unit including, from June 30, 2014, the figures
for Rete A consolidated on a line-by-line basis. In 2013, La7 S.r.l. and the MTV group were respectively sold in
April and September, 2013, and consequently exited the scope of consolidation.
2014 2013 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 124 (53) (42.7)
Operating profit (loss)(*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 (132) 138 104.5
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 (106.5)
Employees at year-end (units)(**) . . . . . . . . . . . . . . . . . . . . . . . . . . 89 84 5 6.0
(*) 2013 Operating profit (loss) of the Media Business Unit was driven down by 100 million euros resulting from the loss realized on the sale
of LA7 S.r.l. on April 30, 2013 and driven up by 3 million euros from the gain realized on the sale of MTV Italia S.r.l. on September 12,
2013.
(**) Includes employees with temp work contracts: 1 at December 31, 2014 (nil at December 31, 2013), as well as personnel of Rete A, a
company acquired at the end of June 2014 (12 employees).
the business combination of the digital terrestrial network operator businesses controlled by Persidera S.p.A. (new
name of Telecom Italia Media Broadcasting S.r.l.) and Rete A S.p.A. (Rete A), respectively.
The business combination was carried out through Gruppo Editoriale L’Espresso’s transfer of 100% of Rete A
shares to Persidera, as a subscription to a capital increase reserved to it, and subsequent merger of Rete A with
and into Persidera. As a result of the aforementioned transactions, TI Media and Gruppo Editoriale L’Espresso hold
70% and 30%, respectively, of the shares in Persidera, which in turn controlled Rete A’s entire share capital.
The merger of Rete A by absorption into Persidera was completed on December 1, 2014.
The group resulting from the transaction is the primary supplier of leading non-integrated national and foreign
television content providers operating in the Italian market.
Also in view of the uncertainty surrounding regulatory changes concerning the use of frequencies, TI Media has
retained a purchase option on user licenses (therefore excluding infrastructure and customers) for one of the five
frequencies that are owned by the combined entity.
The Telecom Italia Media Board of Directors, at the meeting of January 15, 2015, acknowledged the
developments in the Persidera valuation process and decided that the results of the process obtained to date were
not in line with expectations, and therefore, the sale of the investment held is not foreseeable at this stage.
At December 31, 2014, the three Digital Multiplexes of Persidera S.p.A. (pre-merger) had reached a population
coverage of 95.6% of the Italian population compared to 95.2% at December 31, 2013. The coverage of the two
Digital Multiplexes of the former Rete A was 93.4% and 93.7%.
122

To improve the comparability of the information, the figures for 2014 are shown below, compared against the
figures for 2013, which have been restated to exclude the results for the full year 2013 of the two companies sold
(La7 S.r.l. and MTV group).
2014 2013 Changes
(a) (b) (a-b) %
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 72 (1) (1.4)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2 4 n.s.
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 2.8
Employees at year-end (units)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 84 5 6.0
(1) Includes employees with temp work contracts: 1 at December 31, 2014 (nil at December 31, 2013), as well as personnel of Rete A, a
company acquired at the end of June 2014 (12 employees).
Revenues
Revenues amounted to 71 million euros in 2014, a decrease of 1 million euros compared to 72 million euros in
2013. The entry of Rete A into the scope of consolidation resulted in higher revenues of 9 million euros. Net of
those revenues, the reduction in sales would have been 10 million euros and was connected to the expiry, at the
end of 2013, of the contract with RTI (Mediaset Extra and Italia 2) and the termination, also at the end of 2013, of
the contract with the channel QVC.
Operating profit (loss)
Operating profit was 6 million euros in 2014 (2 million euros in 2013). This performance was mainly due to the
reduction in amortization and depreciation of 9 million euros, mainly attributable to the redefinition, during the
annual review, of the useful lives of the Network Operator frequencies—extended from December 31, 2028 to
December 31, 2032, as a result of the final allocation of the licenses for pursuit of television broadcasting
activities—and the transceivers, in line with their technological evolution. These revisions of the useful lives led to
the recognition of a total of around 11 million euros less amortization and depreciation.
Employees
Employees were 89 at December 31, 2014, an increase of 5 units compared to December 31, 2013 (84 units).
❖ Discontinued operations/Non-current assets held for sale (Sofora—Telecom Argentina group)
The results of the Sofora—Telecom Argentina group, which was classified under “Discontinued operations/Non-
current assets held for sale” following the agreement for the sale to Fintech entered into on November 13, 2013
and subsequently amended on October 24, 2014 are shown below. On March 8, 2016, the Telecom Italia Group
The average exchange rate used for the conversion into euro of the Argentine peso (expressed in terms of units of
local currency per 1 euro) was 10.76605 in 2014 and 7.27875 in 2013 and reflected the sharp depreciation of the
currency during 2014.
123

The following table sets forth certain financial and other data for the Sofora-Telecom Argentina group for the
years ended December 31, 2014 and 2013.
2014 2013 2014 2013 Changes
(a) (b) (a-b) %
percentages and
employees)
(millions of Argentine pesos, except
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,097 3,749 33,341 27,286 6,055 22.2
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 804 518 8,657 3,774 4,883 129.4
% of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.0 13.8 26.0 13.8
Employees at year-end (units) . . . . . . . . . . . . . . . . . . . . . . . . 16,420 16,575 16,420 16,575 (155) (0.9)
Revenues
Revenues for 2014 amounted to 33,341 million pesos, increasing by 6,055 million pesos (+22.2%) compared to
2013 (27,286 million pesos), mainly due to the growth in the related average revenue per user (ARPU) and the
sale of handsets at a higher average price. The main source of revenues was mobile telephony, which accounted
for about 74% of the consolidated revenues of the Sofora—Telecom Argentina group, an increase of 22% on 2013.
Operating profit
Operating profit in 2014 was 8,657 million pesos compared to 3,774 million pesos recorded in 2013. The increase
of 4,883 million pesos was attributable to the aforementioned increase in revenues and the suspension of
calculation of depreciation and amortization following the classification of the investment in the Sofora—Telecom
Argentina group as Discontinued operations/Non-current assets held for sale.
With regard to the change in the main costs, the following is noted:
Š acquisition of goods and services amounted to 14,963 million pesos (12,293 million pesos in 2013). The
increase of 21.7% compared to 2013 (+2,670 million pesos) was mainly due to higher external service costs
of 1,591 million pesos and greater purchases of goods of 895 million pesos;
Š employee benefits expenses, amounting to 5,655 million pesos, increased by 1,477 million pesos
compared to 2013 (+35.4%). The change was due to salary increases resulting from periodic revisions in
union agreements, primarily linked to inflation, and to the increase in provisions for termination benefit
incentives. The percentage of employee benefits expenses to total revenues was 17.0%, up 1.7 percentage
points over 2013;
Š other operating expenses amounted to 4,038 million pesos, increasing 566 million pesos compared to
2013, mainly as a result of the 528 million pesos increase in indirect duties and taxes;
Š net impairment losses on non-current assets (26 million pesos in 2014) mainly related to work in
progress initiated in previous years and now abandoned. In 2013, this amounted to 172 million pesos and
related to several business projects and IT platforms that the group had decided to abandon.
Further details are provided in the “Note—Discontinued operations/Non-current assets held for sale” of the
124

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 Assets (non-current and current)” and “Note—Financial risk management” of the Notes to
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 12-18 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.
For additional details, reference should be made to the “Note—Financial Assets (non-current and current)” of the
The table below summarizes, for the periods indicated, the Telecom Italia Group’s cash flows.
2015 2014 2013
(millions of euros)
Cash flows from (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,070 5,197 6,741
Cash flows from (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,385) (5,710) (3,811)
Cash flows from (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (902) (273) (3,632)
Cash flows from (used in) discontinued operations/non-current assets held for
sale (*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19) (499) 127
Aggregate cash flows (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,236) (1,285) (575)
Net cash and cash equivalents at beginning of the year (**) (B) . . . . . . . . . . . 4,910 6,296 7,397
Net foreign exchange differences on net cash and cash equivalents (C) . . (458) (101) (526)
Net cash and cash equivalents at end of the year (**) (D=A+B+C) . . . . . . . 3,216 4,910 6,296
(*) For further details please see the Note “Discontinued operations/non-current assets held for sale” of the Consolidated Financial
Statements included elsewhere in this Annual Report.
(**) For further details please see the Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013 of the
Consolidated Financial Statements included elsewhere in this Annual Report.
125

Cash flows from operating activities. Cash flows from operating activities were 5,070 million euros in 2015,
5,197 million euros in 2014 and 6,741 million euros in 2013.
2015 compared to 2014
The decrease of 127 million euros in 2015 compared to 2014 was mainly attributable to:
Š a decrease in profit (loss) from continuing operations of 1,373 million euros (a profit of 46 million euros in
2015 compared to a profit of 1,419 million euros in 2014);
Š a negative effect of net change in current income tax receivables/payables equal to 351 million euros (a net
source of 4 million euros in 2015 compared to a net source of 355 million euros in 2014);
Š a negative effect of losses (gains) realized on disposals of non-current assets (including investments) of
314 million euros (a net use of 343 million euros in 2015 compared to a net use of 29 million euros in 2014);
Š a negative effect of net change in deferred tax assets and liabilities equal to 232 million euros (a net use of
45 million euros in 2015 compared to a net source of 187 million euros in 2014);
Š a negative effect of change in trade payables of 158 million euros (a net use of 483 million euros in 2015
compared to a net use of 325 million euros in 2014); and
Š a decrease in depreciation and amortization of 149 million euros (4,135 million euros in 2015 compared to
4,284 million euros in 2014).
Such decreases in cash flows were offset in part by:
Š a positive effect of net change in miscellaneous receivables/payables and other assets/liabilities of
1,232 million euros (a net source of 649 million euros in 2015 compared to a net use of 583 million euros in
2014);
Š a positive effect of change in trade receivables and net amounts due from customers on construction
contracts equal to 535 million euros (a net source of 410 million euros in 2015 compared to a net use of
125 million euros in 2014);
Š a positive effect of change in provisions for employee benefits of 448 million euros (a net source of
389 million euros in 2015 compared to a net use of 59 million euros in 2014); and
Š a positive effect of impairment losses (reversals) on non-current assets (including investments) of
240 million euros (a net source of 253 million euros in 2015 compared to a net source of 13 million euros in
2014).
The decrease of 1,544 million euros in 2014 compared to 2013 was attributable to:
Š a negative effect of impairment losses (reversals) on non-current assets (including investments) of
2,184 million euros (a net source of 13 million euros in 2014 compared to a net source of 2,197 million euros
in 2013, of which 2,187 million euros related to the impairment loss on the goodwill allocated to the
Domestic Business Unit);
Š a negative effect of change in trade receivables and net amounts due from customers on construction
contracts equal to 1,199 million euros (a net use of 125 million euros in 2014 compared to a net source of
1,074 million euros in 2013);
Š a negative effect of net change in miscellaneous receivables/payables and other assets/liabilities of
315 million euros (a net use of 583 million euros in 2014 compared to a net use of 268 million euros in
2013);
Š a decrease in depreciation and amortization of 269 million euros (4,284 million euros in 2014 compared to
4,553 million euros in 2013);
Š a negative effect of net change in deferred tax assets and liabilities equal to 160 million euros (a net source
of 187 million euros in 2014 compared to a net source of 347 million euros in 2013);
126

Š a negative effect of losses (gains) realized on disposals of non-current assets (including investments) of
111 million euros (a net use of 29 million euros in 2014 compared to a net source of 82 million euros in
2013); and
Š a negative effect of change in provisions for employee benefits of 10 million euros (a net use of 59 million
euros in 2014 compared to a net use of 49 million euros in 2013).
Such decreases in cash flows were offset in part by:
Š an improvement in profit (loss) from continuing operations of 1,998 million euros (a profit of 1,419 million
euros in 2014 compared to a loss of 579 million euros in 2013);
Š a positive effect of net change in current income tax receivables/payables equal to 459 million euros (a net
source of 355 million euros in 2014 compared to a net use of 104 million euros in 2013);
Š a positive effect of change in trade payables of 164 million euros (a net use of 325 million euros in 2014
compared to a net use of 489 million euros in 2013);
Š a positive effect of change in inventories of 78 million euros (a source of 55 million euros in 2014 compared
to a net use of 23 million euros in 2013); and
Š a positive effect of share of losses (profits) of associates and joint ventures accounted for using the equity
method of 5 million euros (a net source of 5 million euros in 2014 compared to nil in 2013).
Cash flows used in investing activities. Cash flows used in investing activities were 5,385 million euros in
2015, 5,710 million euros in 2014 and 3,811 million euros in 2013.
The decrease in cash used in investing activities in 2015 compared to 2014 of 325 million euros was due to:
Š an increase of 639 million euros in proceeds from sale/repayments of intangible, tangible and other non-
current assets (a net source of 717 million euros in 2015 compared to a net source of 78 million euros in
2014); and
Š a negative effect of change in financial receivables and other financial assets of 483 million euros (a net use
of 635 million euros in 2015 compared to a net use of 1,118 million euros in 2014);
Such effects were offset in part by:
Š an increase in capital expenditures (intangible and tangible assets on a cash basis) of 767 million euros
(5,426 million euros in 2015 compared to 4,659 million euros in 2014).
The increase in cash used in investing activities in 2014 compared to 2013 of 1,899 million euros was due to:
Š an increase in capital expenditures (intangible and tangible assets on a cash basis) of 268 million euros
(4,659 million euros in 2014 compared to 4,391 million euros in 2013);
Š a negative effect of change in financial receivables and other financial assets of 1,722 million euros (a net
use of 1,118 million euros in 2014 compared to a net source of 604 million euros in 2013);
Š a decrease of 10 million euros in proceeds from sale/repayments of intangible, tangible and other non-
current assets (a net source of 78 million euros in 2014 compared to a net source of 88 million euros in
2013);
Š an increase of acquisitions/disposals of other investments of 2 million euros (a net use of 2 million euros in
2014 compared to nil in 2013); and
Š an increase in acquisition of control of companies or other businesses, net of cash acquired of 1 million euros
(a net use of 9 million euros in 2014 compared to a net use of 8 million euros in 2013).
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Such effects were offset in part by:
Š a decrease of 104 million euros in proceeds from sale that result in a loss of control of subsidiaries or other
businesses, net of cash disposed of (nil in 2014 compared to a net use of 104 million euros in 2013).
Cash flows used in financing activities. Cash flows used in financing activities were 902 million euros in 2015,
273 million euros in 2014 and 3,632 million euros in 2013.
Cash flows used in financing activities in 2015 of 902 million euros reflected mainly the following:
Š a net use in financial liabilities and other of 1,729 million euros, as a result of the issuance of new debt (a
source of 5,054 million euros), the change in current financial liabilities and other (a net source of
408 million euros) and the repayments of non-current financial liabilities (a use of 7,191 million euros);
Š the payment of dividends of 204 million euros; and
Š the changes in ownership interests in consolidated subsidiaries of 845 million euros.
Cash flows used in financing activities in 2014 of 273 million euros reflected mainly the following:
Š a net use in financial liabilities and other of 195 million euros, as a result of the issuance of new debt (a
source of 4,377 million euros), the change in current financial liabilities and other (a net source of
1,305 million euros) and the repayments of non-current financial liabilities (a use of 5,877 million euros); and
Š the payment of dividends of 252 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, 2015 Net Financial Debt was 28,475 million euros compared to
28,021 million euros at December 31, 2014 (an increase of 454 million euros).
In our 2016-2018 Plan, we confirmed that maintaining strong financial discipline is one of our strategic priorities.
It is projected that the Group’s Net Financial Debt will benefit, among other things, from planned efforts to
increase efficiency that will take place in addition to the previously announced sale of a share of INWIT, the
1.3 billion euros increase in equity resulting from redemption of the Mandatory Convertible Bonds and the
completion of the sale of Telecom Argentina, which occurred on March 8, 2016 (for further detail, please see
“Note—Events Subsequent to December 31, 2015”).
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.
128

Net Financial Debt as of December 31, 2015, 2014 and 2013 is set forth in the following table.
As of December 31,
2015 2014 2013
(millions of euros)
Non-current financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,518 32,325 31,084
Current financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,224 4,686 6,119
Financial liabilities directly associated with Discontinued operations/Non-current
assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 43 27
Gross financial debt (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,090 37,054 37,230
Non-current financial assets (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,989) (2,445) (1,256)
Current financial asset:
Securities other than investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,488) (1,300) (1,348)
Financial receivables and other current financial assets . . . . . . . . . . . . . . . . . . . . . . . . (352) (311) (283)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,559) (4,812) (5,744)
Total current financial assets (C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,399) (6,423) (7,375)
Financial assets relating to Discontinued operations/Non-current assets
held for sale (D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (227) (165) (657)
Financial assets (E=B+C+D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,615) (9,033) (9,288)
Net financial debt (A+E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,475 28,021 27,942
The non-current portion of gross financial debt was 30,518 million euros at December 31, 2015 (32,325 million
euros at December 31, 2014 and 31,084 million euros at December 31, 2013) and corresponds to 82.3% 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 and all have an underlying, which is hedged.
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 the Guidelines for the “Management and control of financial
risk” and mainly uses Interest Rate Swaps (IRS) and Cross Currency Interest Rate Swaps (CCIRS).
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 underlying assets and
liabilities.
129

CHANGE IN NET FINANCIAL DEBT DURING 2015
The following table summarizes the main transactions which had an impact on the change in net financial debt
during 2015:
(millions of euros)
Net financial debt as of December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,021
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,197
Change in finance lease contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,523
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
Financial investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Share capital increases/decreases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (186)
Disposal of investments and other divestitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,571)
Cash flows from operating activities, net of other uses (sources) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,764)
Net change in 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454
In particular:
Š Capital expenditures on an accrual basis were 5,197 million euros in 2015, an increase of 213 million
euros compared to 2014. The breakdown is as follows:
2015 2014 Changes
(a) % of total (b) % of total (a-b)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900 75.0 2,783 55.8 1,117
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,289 24.8 2,195 44.0 (906)
Media and other activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 0.2 6 0.2 2
Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —
Total consolidated capital expenditures . . . . . . . . . . . . . . . . . . . . . 5,197 100.0 4,984 100.0 213
% on revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.4 23.1
In particular:
Š the Domestic Business Unit reported an increase of 1,117 million euros in capital expenditures in
2015. This increase is primarily due to:
Š the increase in innovative investments dedicated to the development of next-generation networks
and services (+788 million euros), which currently represent 44% of total investments (compared
to 33% in 2014);
Š the award of the user rights for the frequencies of the L band (231 million euros); and
Š the disbursement related to the extension of the GSM license for three years, amounting to
117 million euros.
Š the Brazil Business Unit reported a decline of 906 million euros in capital expenditures in 2015
(including a negative exchange rate effect of 341 million euros). These capital expenditures were mainly
aimed at the development of the industrial infrastructure and sales support platforms. The 2014 capital
expenditures included the acquisition of the user rights for the 700MHz frequency totaling 936 million
euros.
Š Change in finance lease contracts amounted to 1,523 million euros in 2015. This item mainly represents
the higher value of tangible assets under finance lease, which also reflects the associated higher financial
payments, recorded mainly as a result of contractual renegotiations that took place during 2015 as part of
the project of transformation of real estate assets by Telecom Italia S.p.A. (1,178 million euros) and of the
finance lease contract by the TIM Brasil group with respect to the telecommunications towers (1,245 million
reais, or, approximately 337 million euros).
130

Š Financial investments amounted to 51 million euros in 2015 and mainly consisted of the following:
Š 23 million euros for the acquisition of 50% of the share capital of Alfiere S.p.A., a real estate company
that owns several buildings in the EUR district of Rome that will be used by Telecom Italia in the future
as an administrative center;
Š in July 2015, 100% of the equity capital of Alfabook S.r.l. was also acquired; this transaction
represented a financial investment of 6 million euros (of which 5 million euros represented the price
and 1 million euros was related to the net financial debt acquired); and
Š in October 2015, approximately 9 million euros were paid for the withdrawal rights exercised by the
previous shareholders of Telecom Italia Media S.p.A., which was merged into Telecom Italia on
September 30, 2015.
Š Disposal of investments and other divestitures amounted to 1,571 million euros in 2015 and principally
relates to:
Š 854 million euros, net of the related transaction costs, resulting from the placement of 39.97% of the
share capital of Infrastrutture Wireless Italiane S.p.A. (INWIT), which took place in June 2015,
followed, in July 2015, by the exercise of the greenshoe option;
Š proceeds generated by the Brazil Business Unit amounting to 2,498 million reais (approximately
676 million euros) as a result of the sale of the first three tranches of telecommunications towers to
American Tower do Brasil;
Š 19 million euros from the sale of the company Teleleasing S.p.A., which took place in December 2015;
Š 9 million euros from the sale of the company SIA S.p.A., classified under Other investments, which took
place in July 2015;
Š for the remaining amount, to the disposal of assets in the normal operating cycle.
***
The following should also be taken into account with respect to net financial debt:
Š Sales of receivables to factoring companies
Sales of receivables to factoring companies completed during 2015 resulted in a positive effect on net
financial debt of 1,106 million euros as of December 31, 2015 (1,316 million euros as of December 31,
2014).
CHANGE IN NET FINANCIAL DEBT DURING 2014
The following table summarizes the main transactions which had an impact on the change in net financial debt
during 2014:
(millions of euros)
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,984
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252
Financial investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Share capital increases/decreases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14)
Disposal of investments and other divestitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
Cash flows from operating activities, net of other uses (sources) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,413)
Net change in 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
131

In particular:
Š Capital expenditures on an accrual basis were 4,984 million euros in 2014, an increase of 584 million
euros compared to 2013. The breakdown is as follows:
2014 2013 Changes
(a) % of total (b) % of total (a-b)
Domestic(*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,783 55.8 3,031 68.9 (248)
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,195 44.0 1,349 30.7 846
Media, and other activities(*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 0.2 20 0.4 (14)
Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — —
Total consolidated capital expenditures . . . . . . . . . . . . . . . . . . . . . 4,984 100.0 4,400 100.0 584
% on revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.1 18.8
(*) Starting from 2014, the Domestic Business Unit also includes the Olivetti group, in addition to Core Domestic and International
Wholesale. The comparative period has been adjusted accordingly.
In particular:
Š the Domestic Business Unit reported a decline of 248 million euros in capital expenditures in 2014.
This reduction was entirely attributable to the more traditional components of capital expenditures, and
involved the abandonment of several platforms and the simplification of various industrial processes. A
portion of these savings was targeted to the development of next generation networks (LTE and fiber,
+156 million euros);
Š the Brazil Business Unit reported an increase of 846 million euros in capital expenditures in 2014
(including a negative exchange rate effect of 110 million euros). The increase was essentially
attributable to the allocation at the end of 2014 of the user rights for the 700MHz frequency for the
development of the fourth-generation network on LTE technology, and the related incidental costs, as
well as the costs for cleaning up the frequencies (freeing up of the spectrum licensed) totaling
936 million euros.
Š Financial investments amounted to 32 million euros and mainly consisted of:
Š 9 million euros for the acquisition of control by Telecom Italia S.p.A. over the company Trentino NGN
S.r.l. as the difference between the price paid (17 million euros) and the net cash acquired (8 million
euros); and
Š 21 million euros, for the acquisition of the controlling interest in Rete A S.p.A. now merged into
Persidera S.p.A. (Media Business Unit).
Š Disposal of investments and other divestitures amounted to 238 million euros in 2014 and principally
relates to:
Š the receipt of 71 million euros, already net of the 4 million euros pledged as security, from the sale by
Telecom Italia S.p.A. of a property located in Milan; and
Š the receipt of 160 million euros from the sale to Fintech of the 17% non-controlling interest in the
Sofora capital; the amount does not include the other assets transferred at the same time as the shares,
for an amount of around 10 million euros.
***
The following should also be taken into account with respect to net financial debt:
Š Sales of receivables to factoring companies
Sales of receivables to factoring companies completed during 2014 resulted in a positive effect on net
financial debt at December 31, 2014 of 1,316 million euros (1,434 million euros at December 31, 2013). On
August 4, 2014, Telecom Italia S.p.A. sold IRES tax receivables without recourse for 303 million euros. The
132

sale of these receivables, which had arisen in 2012 pursuant to Decree Law 16/2012 and were recognized in
the 2012 financial statements, generated net proceeds and a positive impact on financial debt of 231 million
euros.
Gross Financial Debt
On a consolidated basis, at December 31, 2015, our gross financial debt amounted to 37,090 million euros
(37,054 million euros at December 31, 2014) and included non-current financial liabilities (long-term debt) of
30,518 million euros (32,325 million euros at December 31, 2014), current financial liabilities (short-term debt) of
6,224 million euros (4,686 million euros at December 31, 2014) and financial liabilities directly associated with
Discontinued operations/Non-current assets held for sale of 348 million euros (43 million euros at December 31,
2014).
As of December 31, 2015, approximately 64.6% of our gross financial debt was denominated in Euro, while the
remainder was primarily denominated in U.S. Dollars, Pound Sterling and Brazilian Reais.
The following table sets out the currency composition of our gross financial debt:
(millions of
foreign currency)
(millions of
euros)
(millions of
foreign currency)
(millions of
euros)
USD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,463 7,774 9,924 8,174
GBP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,041 2,781 2,539 3,260
BRL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,442 1,515 4,799 1,488
JPY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,036 153 19,919 137
EURO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,519 23,952
36,742 37,011
Discontinued operations/Non-current assets held for
sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 43
Total gross financial debt . . . . . . . . . . . . . . . . . . . . . . . . . . 37,090 37,054
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.
133

The following table highlights the utilization of the above mentioned EMTN Programme at the end of 2015.
As of December 31, 2015
EMTN Programme
(millions of euros)
Total amount of the program (max outstanding notes) . . . . . . . . . . . . . . . . . . . . . . (A) 20,000.00
Notes and bonds issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,802.79
Notes and bonds repaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,492.50)
Net utilization of the program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (B) 12,310.29
Remaining available amount of the program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A-B) 7,689.71
Notes and bonds
At December 31, 2015 we had notes and bonds outstanding of 23,564 million euros (26,085 million euros at
December 31, 2014). Their nominal repayment amount was 22,947 million euros, a decrease of 1,967 million
euros compared to December 31, 2014 (24,914 million euros).
Changes in bonds during 2015 were as follows:
NEW ISSUES
Currency
Amount
(millions) Issue date
NEW ISSUES
Telecom Italia S.p.A. 1,000 million euros 3.250% maturing 01/16/2023 . . . . Euro 1,000 01/16/2015
Telecom Italia S.p.A. bond convertible (*) into Ordinary Shares
2,000 million euros 1.125% maturing 03/26/2022 . . . . . . . . . . . . . . . . . . . . . . . Euro 2,000 03/26/2015
(*) On May 20, 2015, the Shareholders’ Meeting of Telecom Italia S.p.A. approved the share capital increase to service the convertion of the
unsecured equity-linked bond issue.
REPAYMENTS
Currency
Amount
(millions) Repayment date
REPAYMENTS
Telecom Italia Finance S.A. 3.550% 20,000 million JPY (1) . . . . . . . . . . . . . . . . . JPY 20,000 05/14/2015
Telecom Italia S.p.A. 4.625% 514 million euros (2) . . . . . . . . . . . . . . . . . . . . . . . . . Euro 514 06/15/2015
Telecom Italia Capital S.A. 5.250% 765 million USD (3) . . . . . . . . . . . . . . . . . . . . . USD 765 10/01/2015
Telecom Italia S.p.A. EURIBOR 3M + 0.66% 120 million euros . . . . . . . . . . . . . . Euro 120 11/23/2015
Telecom Italia S.p.A. 5.625% 500 million GBP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GBP 500 12/29/2015
(1) Early repayment of the AFLAC Private Placement maturing 05.14.2032.
(2) Net of buybacks by Telecom Italia S.p.A. of 236 million euros during 2014 and the first half of 2015.
(3) Net of buybacks by Telecom Italia S.p.A. of 635 million USD during 2013.
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BUYBACKS
On January 23, 2015, Telecom Italia S.p.A. successfully concluded a buyback offer on four bond issues maturing
between June 2015 and September 2017, buying back a total nominal amount of 810.3 million euros.
Details of the bond issues bought back are provided below:
Bond Title
Outstanding nominal
amount prior to the
Tender Offer (Euro)
Repurchased nominal
amount (Euro)
Buyback
price
Telecom Italia S.p.A.—750 million euros, maturing June
2015, coupon 4.625% (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 577,701,000 63,830,000 101.650%
Telecom Italia S.p.A.—1,000 million euros, maturing
January 2016, coupon 5.125% (2) . . . . . . . . . . . . . . . . . . . . . . . . 771,550,000 108,200,000 104.661%
January 2017, coupon 7.000% . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000,000 374,308,000 111.759%
September 2017, coupon 4.500% . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000,000 263,974,000 108.420%
(1) Net of buybacks by the Company of 172 million euros during 2014.
(2) Net of buybacks by the Company of 228 million euros during 2014.
On April 24, 2015, Telecom Italia S.p.A. successfully concluded a buyback offer on nine bond issues maturing
between January 2017 and February 2022, buying back a total nominal amount of 2,000 million euros (none of
the buybacks were accepted for the Notes maturing in September 2017 and January 2017 submitted under the
Offers).
Bond Title
Outstanding nominal
amount prior to the
Tender Offer (Euro)
Repurchased nominal
amount (Euro)
Buyback
price
Telecom Italia S.p.A.—750 million euros, maturing May
2018, coupon 4.750% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000,000 35,879,000 111.165%
Telecom Italia S.p.A.—750 million euros, maturing
December 2018, coupon 6.125% . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000,000 121,014,000 117.329%
January 2019, coupon 5.375% . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,250,000,000 307,600,000 114.949%
January 2020, coupon 4.000% . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000,000 280,529,000 111.451%
September 2020, coupon 4.875% . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000,000 452,517,000 116.484%
January 2021, coupon 4.500% . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000,000 436,361,000 114.714%
February 2022, coupon 5.250% . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,250,000,000 366,100,000 121.210%
135

On July 20, 2015 Telecom Italia S.p.A. successfully concluded a buyback offer on five bond issues maturing
between January 2017 and January 2019, buying back a total nominal amount of 467.3 million euros.
Bond Title
Outstanding nominal
amount prior to the
Tender Offer (Euro)
Repurchased nominal
amount (Euro)
Buyback
price
January 2017, coupon 7.000% (1) . . . . . . . . . . . . . . . . . . . . . . . . 625,692,000 81,141,000 109.420%
September 2017, coupon 4.500% (2) . . . . . . . . . . . . . . . . . . . . . 736,026,000 107,811,000 107.428%
Telecom Italia S.p.A.—750 million euros, maturing May
2018, coupon 4.750% (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714,121,000 12,223,000 109.477%
Telecom Italia S.p.A.—750 million euros, maturing
December 2018, coupon 6.125% (4) . . . . . . . . . . . . . . . . . . . . . . 628,986,000 47,108,000 115.395%
January 2019, coupon 5.375% (5) . . . . . . . . . . . . . . . . . . . . . . . . 942,400,000 110,000,000 112.960%
(1) Net of buybacks by the Company of 374 million euros in January 2015.
(2) Net of buybacks by the Company of 264 million euros in January 2015.
(3) Net of buybacks by the Company of 36 million euros in April 2015.
On the same date, Telecom Italia S.p.A. also successfully concluded a buyback offer on two bond issues of
Telecom Italia Capital S.A. maturing June 2018 and June 2019, buying back a total nominal amount of
563.7 million USD.
Bond Title
Outstanding nominal
amount prior to the
Tender Offer (USD)
Repurchased nominal
amount (USD)
Buyback
price
Telecom Italia Capital S.A.—1,000 million USD, maturing
June 2018, coupon 6.999% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000,000 323,356,000 111.721%
Telecom Italia Capital S.A.—1,000 million USD, maturing
June 2019, coupon 7.175% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000,000 240,320,000 114.188%
With respect to the Telecom Italia S.p.A. 2002-2022 bonds, reserved for subscription by employees of the Group,
at December 31, 2015, the amount was 200 million euros (nominal amount) and increased by 4 million euros
compared to December 31, 2014 (196 million euros).
For further details about the outstanding notes and bonds as of December 31, 2015 please see also
“Note—Financial liabilities (non-current and current)” of the Notes to the Consolidated Financial Statements
Revolving Credit Facility and Term Loan
The following table shows the composition and the drawdown of the committed credit lines available at
December 31, 2015.
As of December 31,
2015
As of December 31,
2014
Committed Drawdown Committed Drawdown
(billions of euros)
Revolving Credit Facility—expiring May 2017 . . . . . . . . . . . . . . . . . . . . 4.00 — 4.00 —
Revolving Credit Facility—expiring March 2018 . . . . . . . . . . . . . . . . . . 3.00 — 3.00 —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.00 — 7.00 —
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Telecom Italia has two syndicated Revolving Credit Facilities for amounts of 4 billion euros and 3 billion euros
expiring May 24, 2017 and March 25, 2018 respectively, both of which have not yet been drawn down.
On December 14, 2015, a number of beneficial changes were made to the economic terms of the Revolving Credit
Facilities and the terms were extended by two years. These changes became effective on January 4, 2016. The
4 billion euro facility will expire on May 24, 2019 and the 3 billion euro facility will expire on March 25, 2020.
Telecom Italia also has access to:
Š a bilateral term loan from Banca Regionale Europea expiring July 2019 for 200 million euros, drawn down for
the full amount;
Š two bilateral term loans from Cassa Depositi e Prestiti, one expiring in April 2019 for 100 million euros and
another expiring in October 2019, for 150 million euros both of which have drawn down for the full amount;
Š two bilateral term loans from Mediobanca; one for 200 million euros expiring in November 2019 and another
for 150 million euros expiring in July 2020, drawn down for the full amount;
Š a bilateral term loan from ICBC expiring in July 2020 for 120 million euros, drawn down for the full amount;
Š a bilateral term loan from Intesa Sanpaolo expiring August 2021 for 200 million euros, 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 7.75 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 5.3%.
For further details about the maturities of financial liabilities in terms of the expected nominal repayment
amounts, as contractually agreed, please see below “Contractual Obligations and Commitments”.
Current financial assets and liquidity margin
The Telecom Italia Group’s available liquidity margin amounted to 12,047 million euros at December 31, 2015
(net of 202 million euros related to Discontinued Operations/Non-current assets held for sale), corresponding to
the sum of “Cash and cash equivalents” and “Current securities other than investments”, totaling 5,047 million
euros (6,112 million euros at December 31, 2014), and the committed credit lines, mentioned above, of which a
total of 7,000 million euros had not been drawn down. This margin is sufficient to cover the Group’s Financial
Liabilities due over the next 24 months. The reduction in “Cash and cash equivalents” compared to December 31,
2014 reflected the trend in repayments/new issues, as well as the use of liquidity to repurchase Group bonds.
In particular:
Š Cash and cash equivalents amounted to 3,559 million euros (4,812 million euros at December 31, 2014). The
different technical forms of investing available cash at December 31, 2015 can be analyzed as follows:
Š Maturities: all deposits have a maximum maturity of three months;
Š Counterpart risk: deposits by the European companies are made with leading banking, financial and
industrial institutions with high credit quality. Investments by the companies in South America are
made with leading local counterparties;
Š Country risk: deposits have been made mainly in major European financial markets.
Š Securities other than investments amounted to 1,488 million euros (1,300 million euros at December 31,
2014). These forms of investment represent alternatives to the investment of liquidity with the aim of
improving returns. They consist of 256 million euros of Italian treasury bonds purchased by Telecom Italia
S.p.A. and 151 million euros of Italian treasury bonds purchased by Telecom Italia Finance S.A.; 6 million
euros of Italian Treasury Certificates (CCTs) (assigned to Telecom Italia S.p.A. as the holder of trade
receivables, as per Italian Ministry of the Economy and Finance Decree of December 3, 2012); 584 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; and 350 million euros of investments in two Belgian Sicavs by
Telecom Italia Finance S.A.. The purchases of the above government bonds and CCTs, which, pursuant to
137

Consob Communication DEM/11070007 of August 5, 2011, represent investments in “Sovereign debt
securities”, have been made in accordance with the Guidelines for the “Management and control of financial
risk” adopted by the Telecom Italia Group since August 2012, in replacement of the previous policies in
force.
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, 2015, the Telecom Italia Group had the following items that are considered to be off-balance
sheet arrangements.
Guarantees net of back-to-back guarantees received amounted to 8 million euros.
The guarantees provided by third parties to Group companies, amounting to 5,338 million euros, consisted of
guarantee for loans received (2,361 million euros) and of performance under outstanding contracts (2,977 million
euros).
Among the guarantees provided by banks and other financial institutions on behalf of Telecom Italia there 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
182 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.
As of December 31, 2015, the nominal repayment amounts of payables and the relating expiration dates were
as follows:
Amounts due as of December 31,
2016 2017 2018 2019 2020 After 2020 Total
(millions of euros)
Bonds(*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,771 2,195 1,796 2,688 1,267 11,930 21,647
Amounts due to banks, other financial payables
and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 796 958 1,104 1,806 1,276 624 6,564
Finance lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 117 97 103 95 103 1,867 2,382
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,684 3,250 3,003 4,589 2,646 14,421 30,593
Current financial liabilities . . . . . . . . . . . . . . . . . . . . . . 905 — — — — — 905
Total (Discontinued Operations
excluded) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,589 3,250 3,003 4,589 2,646 14,421 31,498
Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . 340 — — — — — 340
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,929 3,250 3,003 4,589 2,646 14,421 31,838
(*) With regard to the Mandatory Convertible Bond issued at the end of 2013, and maturing in 2016, classified under “Convertible bonds”,
the cash repayment has not been considered because its settlement will take place together with the mandatory conversion into Telecom
Italia S.p.A. ordinary shares.
138

For further details please see also “Note—Derivatives” and “Note—Other information, Operating leases” of the
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.
2015 2014 2013
(millions of euros)
Capital expenditures on tangible assets:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,446 1,782 1,732
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 784 774 766
Media and Other Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 6 7
Adjustments and eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
Total capital expenditures on tangible assets(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,238 2,562 2,505
Capital expenditures on intangible assets(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,959 2,422 1,895
Total capital expenditures(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,197 4,984 4,400
(1) Capital expenditures on tangible assets are mainly related to local and long distance networks, exchange equipment, investments in
subscribers’ equipment, radio and transmission equipment.
(2) Capital expenditures on intangible assets include expenditures for software for telecommunications systems and licenses.
(3) Intercompany capital expenditures are adjusted to eliminate intercompany profit.
The capital expenditures planned for the 2016-2018 period at the Telecom Italia Group level in Italy and in Brazil
will be:
Š 12 billion euros of investments in Italy, approximately 6.7 billion euros of which will be dedicated to
innovation (NGN, LTE, Cloud and platforms, Sparkle and Transformation);
The main areas of innovative technology development are:
Š acceleration in the development of fixed fibre optic ultra-broadband, to which 3.6 billion euros will be
allocated;
Š LTE mobile ultra-broadband, for which 1.2 billion euros are planned;
Š Telecom Italia Sparkle, for the development of international activities, in which around 400 million
euros will be invested.
Š 14 billion reais (approximately 3.3 billion euros using the rate of exchange on December 31, 2015) in
Brazil, mainly for the development of network infrastructure.
* * *
For details about market risk disclosures please see “Item 11. Quantitative And Qualitative Disclosures About
Market Risks”.
139

Item 5. Operating And Financial Review And Prospects Research, Development And Innovation
5.4 RESEARCH AND DEVELOPMENT
Telecom Italia: a strategically important group
Telecom Italia generates approximately 0.7% of the added value of Italian GDP(1). The Group provides direct
employment for around 50,000 people in Italy. This means that for every 225 private sector employees(2), one is
employed by the Telecom Italia Group. The Group’s footprint becomes even more significant when the number of
indirect employees, such as the ones working on projects connected with the activities of Telecom Italia, is taken
into consideration. A total of approximately 100,000 people, corresponding to around 1% of employees in the
entire private sector, are either directly or indirectly employed by the Group in Italy.
Telecom Italia operates the largest fixed voice and data infrastructure, covering the whole of Italy, and provides
one of Italy’s most extensive and advanced mobile network platforms.
In terms of size, presence and infrastructural and technological assets, Telecom Italia is deeply integrated with
the social, economic and production fabric of Italy, with a significant role within the country’s economy and, more
generally, the welfare of its citizens.
Telecom Italia is aware of this strategic role and works constantly to manage and update the infrastructure and
technology it provides to the country. In 2015, Telecom Italia invested approximately 3 billion euros in Italy in
innovative infrastructures, earning it a top place in the national ranking based on the volume of investments(3).
The new Group Business Plan projects further investments of 6.7 billion euros over the 2016-2018 period in
advanced technologies and infrastructure, particularly with respect to new generation networks (NGAN, Next
Generation Access Network, and LTE, Long-Term Evolution or 4G), cloud and platforms.
During 2015, there was a significant increase in the speed of investments made by Telecom Italia in Next
Generation Access Networks (NGAN). This was made possible in particular by technological innovation, which
fundamentally changed the reference scenario. Solutions that bring fiber to the line splitter cabinet and then
continue into the home using copper wires, known as FTTCab (Fiber to the Cabinet), are now considered to be
fully fledged next generation networks. By enhancing existing network infrastructure in the final access section,
FTTCab solutions reduce the investment required compared to FTTH (Fiber to the Home) solutions, by avoiding
the need to lay fiber optic cables that can reach the customer’s home. This allows next generation access
networks to be created more quickly and less expensively.
In the meantime, mobile network coverage of the whole Country with the new 4G/LTE standard, a significant
evolution in response to the growing demand for high speed data, has almost been completed. Download and
upload speeds, which are already comparable to those of fixed line broadband networks, will be able to increase
further as the performance of the devices and the availability of appropriate frequencies improve.
Having established the national fixed and mobile infrastructure in the past century and Italy’s broadband network
in the first 10 years of the new century, the challenge the Group now faces is to establish ultra-broadband
networks, a major effort on which network technicians and engineers are working every day.
The ambitious investment plan that Telecom Italia is implementing coincides with efforts by the Italian
government to devise and implement a national strategic ultra-broadband plan, which aims to achieve the
challenging objectives of the European Digital Agenda for widespread supply of infrastructure and increased
demand for digital services. Telecom Italia’s investment plan therefore is an important element in the digital
transformation of Italian society, confirming the Group’s role as a key player in the country’s modernization and
achievement of the European Digital Agenda objectives.
(1) Internal estimates of balance sheet data. A picture of the added value produced by Telecom Italia can also be found in the Mediobanca
R&S Report entitled “Leading Italian Companies 2015 at” http://www.mbres.it/it/publications/leading-italian-companies.
(2) The estimate of indirect employees is based on the results of the “Social Study 2013—The Economic Impact of BT in the United Kingdom
and Scotland”, a report prepared by Regeneris for the BT Group in 2014.
(3) Internal estimates of balance sheet data. A picture of the added value produced by Telecom Italia can also be found in the Mediobanca
R&S Report entitled “Leading Italian Companies 2015 at” http://www.mbres.it/it/publications/leading-italian-companies.
140

Research and development
The Telecommunications sector has undergone a rapid but major transformation in recent years, characterized by
a decline in traditional voice services and the ever-greater growth of fixed and mobile broadband and associated
services, which has contributed to the rapid digitization of consumers and business processes.
In light of these developments, Telecom Italia has launched an initiative intended to enhance its standing as a
supplier of services and platforms, and not just connectivity. This initiative contemplates two parallel lines of
action:
Š acceleration of the development of enabling platforms, namely fixed and mobile ultra-broadband, data
centers, big data and IT;
Š enhancement of connectivity with innovative digital services towards the development of a digitized society
and an automated industry (Industry 4.0).
Technological and business innovation is a central element of the Telecom Italia strategy for responding to
changes in the technological, market and competitive environments.
Investments in new generation infrastructure, both fixed and mobile, and in new services, have been
accompanied by action to support innovation across the board. Internally, Telecom Italia has strengthened
company laboratories and increased its focus on digital innovation, with a view to responding to fluctuating
demand to be met by the activities of the Innovation Centre.
The digital innovation plan is based on a paradigm of open innovation that is realized by accompanying the
internal generation of ideas and development routes with the generation of ideas and development routes coming
from outside the company. As such, Telecom Italia has reviewed and renewed its relations with universities,
financing over 100 PhDs sponsoring Master’s degree courses and chairs in market innovation. Moreover, on the
academic front, the Joint Open Labs, research laboratories that propose a new way for industry and universities to
work together, have been created. These laboratories have emerged from agreements on specified fields of
scientific and technological interest and “live” inside the university campuses (Trento, Turin, Milan, Pisa and
Catania). In the last three years, these public-private partnerships have enabled Telecom Italia to obtain 5 million
euros in European funds for research, in addition to 2 million euros received from the universities with which it
collaborates.
In addition to open innovation, the digital innovation is premised on another important cornerstone: co-
innovation, a development model that envisions the full optimization of the ecosystem of stakeholders and
strategic partners of the company as bearers of innovation in the market. Through the application of “two-sided”
models, Telecom Italia creates a common framework or platform of interaction from which two different user
groups can mutually benefit, thereby creating greater value.
Telecom Italia has expanded upon the Working Capital activities (now renamed TIM #Wcap). After its debut as a
program designed to support research and business projects, since 2013, TIM #Wcap has opened four
accelerators located in key locations in the Italian digital innovation market: Rome, Milan, Bologna and Catania.
The dozens of start-ups selected each year by these accelerators benefit from approximately 4,000 m2 in spaces
offered, and are guided by consultants and experts in their growth path, which ranges from product development
to launch in the market. Since 2009, this process has provided support to a total of 268 projects. In the last two
years, Telecom Italia has started 25 collaborations with start-ups from TIM #Wcap, which have generated
turnover for the young businesses and represent successful open innovation models for the Group. Moreover, also
in the last two years, 215 jobs have been created thanks to TIM #Wcap. This data illustrates the role of the
Telecom Italia accelerator in the development of the digital economy within Italy.
Starting with TIM #Wcap, Telecom Italia has also taken part in seed investment, launching TIM Ventures, the
Group company created with the aim of investing in options or share capital in the most innovative start-ups in
the digital, internet, mobile and green ICT sectors. In just one year of activity, TIM Ventures has already invested
in 12 start-ups and is considered to be among the most active European VC investors in 2015 (source: Venture
Pulse Q2’15—KPMG and CB Insights).
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In Italy, Telecom Italia employs approximately 1,300 individuals in engineering, technological innovation and
service activities. Investments in innovation and transformation amount to 1.7 billion euros, equal to
approximately 44% of total investments in the domestic market.
Relevant Stakeholders
The relevant stakeholders for research and development activities are:
Š the company divisions involved (e.g. Marketing and Purchasing);
Š the suppliers, for the joint development of solutions in accordance with the technical requirements of the
Telecom Italia Group;
Š the traditional (e.g., car makers) and digital (e.g., eCommerce players) partners, for the joint Go2market of
digital services;
Š research centers and universities that cooperate on joint projects. A total of 38 new cooperation agreements
with Italian universities were launched in 2015, relating to new technologies, coding algorithms, new
communication services and paradigms; the standardization bodies and discussion groups (including NGMN,
OpenIPTV Forum, OMA, 3GPP, ETSI, TM Forum, W3C, ITU-T) in which Telecom Italia is actively involved;
Š the Ministries (Ministry for Economic Development and Ministry of Education, Universities and Research), the
European Union and public authorities (e.g., the National Research Council (CNR) and local authorities) for
projects funded through participation in competitive tenders, and partnership initiatives;
Š non-governmental organizations, associations, alliances and industry forums (e.g. GSMA, m-health) which
bring together all the entities involved in the value chain of the specific market;
Š international research and development organizations (e.g. EURESCOM and Joint Technology Initiative).
Relevant Issues
The themes on which projects are developed, are identified on the basis of a Three-Year Technological Plan (the
“Plan”), the reference document for the Group, which provides guidelines for the evolution of the network,
platform and services.
Published annually, following a wide-ranging process including all the Company departments involved, the Plan
identifies the main external factors (regulations, standards, vendors, other market operators) that may influence
the Company’s strategies and highlights the emerging and cross-cutting technologies in other sectors that may be
of interest to the Group.
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The innovative services aimed at promoting digitization of important areas of activity (e.g. healthcare) include
those listed in the following paragraph.
Innovative services for the public sector
In the context of public sector services, in accordance with the Italian Digital Agenda or (“ADI”) (Agenda Digitale
Italiana) and European Directives, in 2015, Telecom Italia consolidated and streamlined its offer of Smart
Services (a range of services for energy efficiency and digital services in urban areas), Urban Security (new
services dedicated to security, the environment and optimal energy management) and Digital School. The aim is
to promote the “Smart City” model to improve quality of life by developing innovative digital services to ferry
communities towards a Smart Community model (as described in the Digital Agenda) that enables new forms of
cooperation between citizens and public authorities.
LIGHTING SUITE SMART BUILDING
NUVOLA IT
ENERGREEN
NUVOLA IT
URBAN SECURITY
NUVOLA IT
DIGITAL SCHOOL
Integrated management
of the local
infrastructural networks
and construction of the
Smart City
environments.
Enabled services:
Š planning of
electricity
consumption and
maintenance.
Energy savings are
estimated to range
from 15% for light
produced by high-
efficiency lamps,
e.g. LEDs to over
30% in the case of
light produced by
old style lamps
(e.g., sodium vapor
or incandescent).
Added to these
values is the option
of varying lighting
by switching on
and/or reducing the
intensity of
individual lamp
posts;
Š video surveillance;
Š digital
communication with
citizens and users in
general (e.g.,
tourists);
Š Wi-Fi hot spots
(broadband access).
Intelligent
management and
automation of
buildings through
specifically designed
solutions able to be
implemented on a
project basis through
the components of
the Lighting Suite
and Nuvola IT
Energreen offers.
The energy saved is
estimated at
approximately 10%,
if only the Metering
& Reporting function
is implemented, but
it can be as high as
50% for specific
efficiency projects.
Remote management
of energy
consumption,
implemented on
Telecom Italia assets
and services, for the
purpose of saving
energy.
Enabled services:
Š on-site energy
audit: on-site
analysis for
energy efficiency;
Š Metering &
Reporting;
Š Efficiency
strategy
(advanced
reporting and
Energy
Management
consulting
services);
Š Energy Cost
Management
Services;
Š Special Projects:
ad hoc efficiency
improvement
work.
Management of
participated security
and urban territory
control.
Enabled services:
Š computerized
management of
the process for
issuing fines for
traffic and other
violations for local
public
administration;
Š participated
management of
urban issues,
with reporting of
safety-related
issues, antisocial
activities and
urban decay;
Š real time
monitoring of the
urban and
natural
environment of
cities (humidity,
temperature,
noise pollution,
C02, gaseous
pollutants, etc.);
Š monitoring of
available public
parking spaces.
Integrated digital
management of
teaching and school
administration. The
offer can be configured
according to the
requirements of the
schools and includes a
range of integrated,
but modular, services,
accessible via a single
portal-showcase.
Enabled services:
Š enabling
infrastructure
(fixed internet,
Wi-Fi & security
connectivity);
Š management
services for the
school
(administrative
management,
cloud electronic
register);
Š digital teaching
services
(application
integrated with
school e-book
stores);
Š devices (for
users and for
classes).
With respect to the innovation of business, Telecom Italia aims to supplement its offer of connectivity with
innovative services that satisfy the new digital needs of the customer. Specifically, the needs that arise as a result
of the progressive digitization of services, made possible by the development of broadband and ultra-broadband
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fixed and mobile networks and of computing technology. Such needs include the use of digital payment services,
entertainment (video, gaming, reading), home automation and other services that were previously accessible only
in limited environments and circumstances.
The business innovation activities supplement traditional research and development through the development of
prototyping and experimentation options for solutions to meet new digital service demands, internally through
the Innovation Centre, and by opening up to external sources of ideas, which can help construct an open
innovation model based on a valuable network of players (Joint Open Lab, TIM Wcap, Tim Ventures, Foundry,
Partnerships, etc.).
In this context, Telecom Italia is overseeing the various areas of digital services, namely Enriched
Communication, Trusted Digital Life, Business Life, Indoor Life, Mobile Open Life, Digital Entertainment and Big
Data; below is a summary of some of the main projects that Telecom Italia has developed or is developing in
these areas:
Š Smart Green: innovation projects connected to the environment and potential partnerships with local
government offices for monitoring of air in public offices and urban areas, using networks of sensors
connected to the Telecom Italia Cloud.
Š Social Reading: shared reading application for schools, already tested in several schools throughout Italy,
that has been further developed and accompanied by a shared reading solution for Italian libraries and
licensed to specialized partners. This application makes it possible to share comments and viewpoints about
the book borrowed with others that have already read it or plan to read it. The library solution also has a
series of settings that facilitate reading even by readers with specific learning difficulties (SLDs).
Š Solutions for “good schooling”: as part of the collaboration between Telecom Italia and the Regional
Education Department of Piedmont, a training course was held for secondary school teachers to teach them
how to use the Open Source ROS (Robot Operating System) framework, which is the “standard de facto”
framework for writing “hardware-dependent” robotic applications.
Š Digital tourism 2.0: “Virgil, robot a corte” is a museum guide project designed to optimize cultural
heritage, developed by the Telecom Italia Joint Open Lab in Turin, the Regional Directorate of Cultural
Heritage for Piedmont, Museum Hub and with the collaboration of the Turin Politecnico University
Department of Architecture and Design. The project aims to provide the museum guides with a digital tool
that enables them to show visitors part of the heritage that is otherwise inaccessible for various reasons
(security, repair, inacessibility to disabled, etc.) and, above all, place this environment in the center of a
network of interconnected tourism sites thanks to the Telecom Italia data network.
Š Smart Home: developed by Telecom Italia Joint Open Lab in Milan, in collaboration with Milan Politecnico
University, this includes new technologies and services being tested for future smart spaces. In the context
of smart spaces, Internet technologies, proximity wireless connections (Bluetooth Low Energy, Wi-Fi Direct,
LTE-Direct) and smart and wearable objects (smart screens, smart glasses, smart watches, etc.) are being
studied and used to create new ways of interacting and communicating between people, objects and physical
spaces themselves. More specifically, through the EIT Digital P3S “Playful Supervised Smart Spaces” project,
a smart space has been developed for children with special therapeutic needs (e.g., suffering from autism)
and tested at two specialized centers. Through the work carried out in the Joint Open Labs, Telecom Italia is
investing in the design and testing of robotic telepresence solutions, namely robots that can be remote
controlled, thereby allowing a person to attend an event remotely and interact with those present.
Š FriendTV (Innovation Centre): the latest versions of FriendTV for smartphones and tablets, initially released
at the beginning of 2014, continued to be available in the Apple and Android application stores. FriendTV is a
guide for main television channels, closely integrated with social media, which allows users to participate in
real time by commenting on the most highly talked-about programs. The ARTES platform developed by the
Telecom Italia laboratories of Strategy & Innovation in Turin allows for the creation of augmented reality
applications very quickly, offering customization without having to resort to developers.
Š Big Data: Telecom Italia has launched an evolutionary process that includes several initiatives begun in
2015, and which resulted in the development of the first “internal” applications (aimed at improving the
customer experience), the launch of the first anonymous data for the business market (with the “Data Visual
Insights” offer of presence maps and mobility per segment of interest and reference period) and the first
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projects aiming to increase the ecosystem of partners (“TIM BD Challenge” contest), while also enhancing
internal competences (training through Master Big Data TIM). The Joint Open Labs also worked on the Big
Data project. After the success of the Mobile Territorial Lab experience (www.mobileterritoriallab.eu), the
Telecom Italia Joint Open Lab in Trento developed the LivLab project, a new instance of a living lab on
another territory, relying on the competences acquired and lessons learned. My Data Store, an example of a
personal data store that has been included among the top reference cases of the World Economic Forum
(http://www3.weforum.org/docs/WEF_IT_UnlockingValuePersonalData_CollectionUsage_Report_2013.pdf),
has been enriched by new connectors that enable transparent management of social personal data as well.
Š Working with local institutions in the Trento region, the Joint Open Lab is experimenting with advanced
solutions for citizen services based on personal data. One example is Familink, a service that shares
opportunities for families throughout Trento, intended for community-trusted hyperlocals. The service was
successfully tested by the Provincial Agency for the family, birth rate and family policies of the Autonomous
Province of Trento with the families belonging to three large parent associations operating on the territory.
One of the Open Innovation initiatives was the second Telecom Italia Big Data Challenge
(www.telecomitalia.com/bigdatachallenge), which brought together over 1,000 participants from around the
world to discuss the creation of smart city projects using large amounts of geo-referenced data.
Š Smart City App—EXPO 2015 Milan: developed “Feed the Planet, Energy for Life” for the event, beginning
with the creation of a Digital Smart City, which enabled participants to access the most innovative
technologies available and to enhance their experience during the visit. Telecom Italia has developed and
tested, according to the most modern criteria, the entire ICT chain that required the use of dedicated
resources with a high technological standard. The following are some of the main infrastructural elements
prepared for the event:
Š development of the fiber optic network running for more than 300 km in length and able to connect
more than 120 pavilions and more than 15,000 holders;
Š coverage of the entire area with a latest generation 4G mobile network with more than 50 dedicated
outdoor and indoor antennas able to serve more than 250,000 visitors at the same time (maximum peak
reached approximately 270,000);
Š management of the “Fully Cloud” event with 450 virtual servers managed in two data centers, with
almost 100 applications managed and more than 100 terabytes (TB) in dedicated storage;
Š complete digital system for information, ticket purchases and visitor entertainment (touchpoints, web,
mobile, TV);
Š capillary network of on-site devices for information and visitor entertainment (more than
100 multimedia totem poles and video walls);
Š a command control center (the EXPO Command Control Center: EC3) with the integrated management
of all technological and logistics operative services, developed according to the new Big Data paradigm;
Š a capillary Wi-Fi network consisting of approximately 1,800 indoor and outdoor hot spots.
The technological indicators, which show the extent of the event’s success, include:
Š TIM mobile networks: the entire Milan area has recorded major growth in the use of mobile
services. Data connections during the months of the event, in some key areas of the city (stations,
airports, city center) doubled, when compared with the average national year-over-year growth. On
the exhibition site alone, from May to October, 137 TB of data was downloaded, with more than
70% of traffic generated on the 4G network (LTE). Moreover, TIM customers made more than
16 million calls. A total of 5.3 million visitors connected to the TIM data network during the period.
Network quality during the event was very reliable (for 4G technology, accessibility was recorded
as being in excess of 99% in all areas of the EXPO site, both inside and outside the pavilions).
Moreover, innovative technologies were showcased. For example, the LTE Broadcast service for TV
on mobiles and innovative services, such as those based on the analysis of BIG Data and Smart
Tourism).
Š TIM fiber and Wi-Fi networks: on the entire specifically developed Internet network, fixed
network developed in Gigabit Passive Optical Network (GPON) and Gigabit Ethernet (GBE)
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technology, and mobile network, almost 1 Peta Byte of data (972 TB) was generated. Almost 285
TB was generated on the Wi-Fi network, with daily peaks of approximately 25,000 users at the
same time.
Š EXPO Digital Systems and Telecom Italia Cloud: the extensive use of the EXPO digital systems
recorded until October 2015 records more than 69 million visits to the EXPO Digital websites and
more than 317 million viewings. During the six months, there were 9.9 million interactions on the
multimedia totems.
Š Command Control & Security Centre: all Operations of the EXPO 2015 Smart City Operations
have been managed through the Command and Control Centre (EC3), designed to integrate and
correlate the reports from the more than 110 technological and Facility Management services
(cleaning, logistics, safety & security, etc.). More specifically, EC3 managed a total of more than
70,000 events, of which approximately 7,000 under the scope of Technology Service Support
services.
The new architectures developed and project solutions constitute a qualifying heritage for the development
of this decade’s digital cities.
Innovative e-health services
Telecom Italia is actively involved, either alone or in partnership with external partners, in devising and
developing healthcare services at national, regional and local level. Designed to improve the Italian health service
and the quality and effectiveness of healthcare, the services allow doctors, nurses and patients to carry out many
activities remotely.
The main electronic healthcare service applications available or being developed include:
Š value products and services for general practice, aimed at enabling new primary care models and proactive
medical services (e.g. screening campaigns managed by general practitioners);
Š legal archiving of digital diagnostic images on the network, ensuring of the authenticity and integrity of
documents;
Š management of both healthcare, administrative, logistical processes and a patient’s healthcare information
throughout the period of hospitalisation;
Š management and coordination of operational facilities dedicated to emergencies (118) and continuity of
assistance;
Š healthcare monitoring (Nuvola IT Home Doctor).
All the solutions comply with the data privacy and transaction security requirements of healthcare processes.
Specifically:
Š Nuvola IT Home Doctor: this allows patients suffering from chronic illnesses, or in post-hospital care, to
monitor their physiological parameters (body weight, blood pressure, heart rate, blood oxygen levels,
glycaemia, lung capacity, electrocardiogram, etc.) directly from their own homes or in properly equipped
facilities (medical centres, medical practices, etc.). The benefits of the service are that it improves the
patient’s quality of life while optimising costs for the healthcare organisation.
In order to enhance the functionality of the service and increase Telecom Italia’s presence in the social care
solutions sector, experimental activities are under way in various areas, such as:
Š adding new devices aimed at increasing the measurements that can be monitored (e.g. physical activity
and quality of sleep via wearable devices, blood and urine testing via Point of Care systems);
Š the use of new Internet-connected TVs to improve the usability of healthcare services using various
ways of displaying measures and accessing services;
Š prevention and wellness services aimed at providing solutions for healthy people to help them maintain,
if not improve, their health, particularly in unconventional environments such as schools or workplaces;
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Š services to support mobility in patients with severe limitations who lose their way very easily and might
find themselves in dangerous places, using tracking solutions and mechanisms for family members or
service centres to provide assistance;
Š video-communication services to support telecare and telerehabilitation activities (e.g. patients can
engage in telerehabilitation while being monitored by doctors interactively from a remote location).
Š Fisio@Home: this is an experimental motor telerehabilitation service which allows medical personnel to
remotely monitor the conditions of patients with orthopaedic or neuromotor problems. The system allows
doctors to evaluate compliance with the established program and the correctness of exercises performed.
Š Cassiel 2.0: the service provides remote assistance to elderly people, monitoring them and receiving alarm
signals in cases of emergency. The sensors located in dwellings process the data collected, to perform
behavioral analyses with a view to improving quality of life.
Š Tele-monitoring of Parkinson’s disease: as part of the development of a tele-monitoring system for
patients affected by Parkinson’s disease, Telecom Italia has filed two patent applications relating to the
upper and lower limbs. Furthermore, the option of monitoring new motor tasks was considered and, thanks
to a collaboration with the Italian Auxology Institute, an activity was launched to extend its use to the tele-
rehabilitation of neurological patients.
Š WebSensor is a prototype for remote monitoring of the progress of Parkinson’s disease developed with the
support of neurologists. A set of sensors worn on the feet and hands monitors the exercises performed by
the patient and sends the data to a processing platform that supplies parameters that can be used to assess
the status of the disease. The hand sensors, which are often uncomfortable to wear, can be replaced by an
appropriate stereoscopic (LeapMotion) camera that frames the hand and automatically extracts the exact
position of the fingers in space.
Š PAPI: is a prototype tested on 30 people aged over 65, suffering from slight cognitive function deficits, for
their remote rehabilitation. The system provides a kit of interactive games for Android tablets, designed with
neurologists to simulate the patient’s various cognitive functions. The games, tested in collaboration with
NeuroCare from Cascina (Pisa) communicate with a remote server to send data relating to the patient’s
performance and to download their settings.
Š Playful Spaces: personalized Playful Spaces is a project funded by EIT Digital (www.eitdigital.eu) for the
rehabilitation and monitoring of autistic children. Children can interact with a space or sensorised objects
that stimulate them when playing and provide the specialist with information on the state of the child. The
project is a partnership with JOL SCUBE, which works on sensorised environments, and with the Polytechnic
of Milan and SAM Foundation for scientific and medical support.
E-learning and evolved digital education
The demand for evolved educational services has undergone a profound transformation in recent years. The focus
has shifted from the simple electronic use of content to disseminating and sharing knowledge by new methods
that are more engaging for young people, based on Web 2.0 models. The solutions already integrated in the
Telecom Italia e-learning platform and the prototypes of the ones developed by analyzing the requirements of the
educational world, meet the demand for evolved services based on collaboration, communication and the
involvement of end users.
With regard to schools, at the end of 2014, Telecom Italia signed a three-year memorandum of understanding
with the Ministry of Education, University and Research (MIUR) and launched the EducaTI project with the aim of
creating an ecosystem to disseminate new educational tools and languages. The EducaTI initiative aims to
promote the use of digital technology in Italian schools, testing and promoting new learning and teaching models
with everyone who operates in the world of education.
The EducaTI project, which is one of the Group’s Sustainability initiatives, is split into four initiatives:
Š Program the future: introduces programming (coding) into Italian primary schools. Telecom Italia is the
main partner in the project developed jointly with the national inter-university consortium for information
technology (CINI—Consorzio Interuniversitario Nazionale per l’Informatica);
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Š Digital Tutors: digital training course devised and created by Telecom Italia jointly with regional education
departments (Uffici Regionali Scolastici—USR) and the Post Office Police;
Š You Teach: an annual national creative competition for upper secondary schools that stimulates the skills of
young people, encouraging them to create digital products that emphasize the positive aspects of the
Internet;
Š WithYouWeDo: crowdfunding: platform that encourages the development of education-related projects.
As regards the introduction and use of innovative tools in teaching, in 2015, the Fondazione Telecom Italia
launched three new projects:
Š Curriculum Mapping, which involves the creation of a platform to map curricula, in order to facilitate the
sharing of programs between teachers and schools in the same education network and the orderly and
integrated use of digital educational content by students. Curriculum Mapping is combined with skills-based
planning launched in Italian and European schools.
Š The “I linguaggi della contemporaneità” (Contemporary languages) project, which is intended to
reinvigorate and update the teaching of contemporary history in secondary schools, moving beyond the
combination of text book and classroom lesson to integrate narrative strategies drawn from sources
including television, cinema, theatre, photography and literature.
Š MirRobot, which consists of equipping the ITS (Biomedical Secondary School) of Mirandola, a city that was
destroyed by the 2012 earthquake, with an automation and robotics laboratory in the biomedical sector, to
offer students the opportunity to train in a growing technological sector and develop specific skills that are
useful to their inclusion in the world of work.
The year 2015 also marked the third year of the TRIS project, which contemplates the use of new technologies for
educational inclusion to the benefit of students unable to attend school normally.
Research and innovation in e-security
Telecom Italia is involved in research and innovation regarding cyber security and more generally the security of
information and networks. Activities carried out in 2015 included the following:
Š the design of a proprietary platform based on open source technologies for the collection and management
of security big data;
Š the study and development of new examination models to be used with visual analysis tools for security Big
Data;
Š the study and testing of new approaches for safety analysis and risk management on LTE networks and telco
cloud platforms;
Š implementation of various scouting and testing campaigns on innovative security solutions;
Š the pursuit of activities for the security analysis of mobile apps and mobile devices;
Š the collaboration, within the scope of 3GPP(4) SA3 SECAM(5), for the definition of the security requirements
and test methods on devices for 3GPP standard networks;
Š completion of activities in the international projects IST NEMESYS (Information Society Technologies,
enhanced Network security for seamless service provisioning in the smart Mobile EcoSYStem) project and
CIP (Competitiveness and Innovation framework Programme) Advanced Cyber Defence Center project;
Š the participation, with another 15 partners, in the works of the 5G-ENSURE consortium (5G Enablers for
Network and System Security and Resilience), in order to obtain a loan under the scope of the European
H2020 programme and study, define and test the security measures and resilience of the future 5G networks,
developing a 5G Security Architecture;
Š the development, in the context of ETSI(6), of the works of the Cybersecurity Technical Committee (TC
CYBER) focused on Cyber Security;
(4) The 3rd Generation Partnership Project.
(5) Security Assurance Methodology.
(6) European Telecommunications Standards Institute.
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Š the continuation of other monitoring and guidance activities in the area of GSMA Fraud and Security Group;
Š development of cooperation launched in 2013 with EIT (European institute of Innovation and Technology),
Digital and the Action Line Guide to Privacy, Security & Trust.
Research and development in Brazil
TIM Brasil expects to invest 14 billion reais in 2016-2018, in line with the previous 2015-2017 plan.
In December 2015, the population covered by 4G technology reached 59%, a 23% increase over the previous year.
In addition, 4G coverage grew in terms of sites. Specifically, the number of sites covered with LTE more than
doubled in 2015, reaching a total of 7,700, as compared to 3,700 at the end of 2014. At the same time, the
number of 3G sites decreased by 24%, going from 9,600 in 2014 to 7,300 in 2015. By 2018, it is expected that
approximately 20,000 sites will be reached, almost all covered by 4G technology. The investment in infrastructure
allowed the fiber optic network (both local and long distance) to be extended to 68,000 km.
At TIM Brasil, Research and Development is carried out by the Innovation & Technology Department (“I&TD”),
headed by the Chief Technology Officer. The I&TD employs 32 telecommunications, electrics and electronics
engineers, IT experts and other technicians of varying expertise, competence and experience, which cover all
network competences, pursue the innovative needs of customers and provide research and development (R&D)
support. The main responsibilities of this department are the definition of the network’s technological innovation,
the evolutionary needs for new technologies and devices and the architectural guidelines, with the development
of strategic partnerships, which allows for exploitation of new business models and guarantees the evolution of
network infrastructures according to business strategy.
In terms of infrastructure, one important result was the constitution of the Innovation Lab, which consists of a
multi-purpose test environment based in Rio de Janeiro that can guarantee the assessment/validation of
innovative services, products and technologies, certifying their functional efficiency and performance and
developing new models and configurations. The Innovation Lab plays a strategic role in providing support for the
conduct of Credibility Tests, Trials and Proofs of Concept for the validation of services in collaboration with the
main suppliers of technology and partners. The lab also enables the sharing of knowledge and the technological
infrastructures for interoperability tests, the assessment of capacity and the definition of technical requirements.
In connection with the R&D department, it facilitates innovation and promotes collaborations with universities
and research institutes.
In 2015, more than 200 projects of validation and innovation were completed. This number will increase in light
of the extensive range of innovation and R&D initiatives underway. The 2016-2018 technological plan
contemplates investments in excess of 30 million reais in this project, which also includes construction of a new
Innovation center in Guaratiba, in the state of Rio de Janeiro, a building with a surface area of 1,000 square
meters able to hold more than 60 people. This new office, which will operate as a national reference point for
research and development activities will host technicians and researchers and will be used as an open space of
innovation for new opportunities and the development of innovation for the Brazilian telecommunications market.
The building will be constructed in compliance with LEED certification standards(7) (US Green Building Council)
and its development will include the use of other sustainable solutions, such as the reuse of water, alternative
energy sources and efficient cooling solutions.
In 2014, TIM was included in the FINEP (Financiadora de Estudos e Projetos) and BNDES (Banco Nacional de
Desenvolvimento Economico e Social) Inova Telecom program, which encourages R&D and innovation for the
telecommunications market through the financing of significant projects. BNDES is the official finance
organization and will support TIM in a great many important initiatives, including the construction of the
innovation Center in the city of Rio de Janeiro, Customer Experience Management (CEM) and the Network
Analytics project.
(7) Leadership in Energy & Environmental Design.
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Relevant stakeholders
TIM Brasil develops synergies and partnerships with important stakeholders with proven experience in R&D,
including:
Š Telecom Italia Lab (TILAB);
Š Huawei, through the Joint Innovation Lab agreement. This is a joint initiative that encourages strategic
collaboration in which both companies undertake to pursue and develop shared opportunities in terms of the
expansion of the telecommunications market, the improvement of the quality of service and the increase in
network coverage. This initiative supports the study and validation of new technologies, devices and services,
such as M2M/IoT, LTE-A, NFV/SDN(8), vIMS(9), vEPC(10), Cloud BB, RF Wide Band, Cloud Computing, Smart
Cities and others;
Š ZTE, through a partnership focused on fixed access technologies, such as the development of GPON(11) and
G.fast(12) services and the exploring of new possibilities of customization for the Brazilian market;
Š Webradar, through a partnership aiming to explore shared possibilities in the field of Network Analytics, and
internet applications;
Š MCTI, CEMADEN and PSI (Planetary Skin), on activities regarding the detection of precipitation through
statistical data recorded by radio connections.
Relevant issues
The Innovation & Technology department has worked on projects aiming to ensure the evolution of the business
of TIM Brasil through the recommendation of sustainable, efficient network platforms and “disruptive” models,
including anticipating the availability of new services.
The reassignment of the 1800 MHz spectrum from 2G to 4G is bringing about three important competitive
advantages for TIM Brasil: 1) reduction of the costs for the deployment of LTE; 2) increased area of LTE coverage;
and 3) improvement of indoor coverage. In addition to the expansion of coverage, use of the 1,800 MHz
bandwidth can supply an increase in capacity to cities already covered by the LTE bandwidth at 2.6 GHz, at only a
small additional cost. Another important consideration in this scenario is that 70% of current LTE terminals are
already compatible with the bandwidths 1800 MHz and 2600 MHz, hence the implementation of LTE 1800 MHz is
proving to be a great strategy thanks to the dissemination of devices.
On October 30, 2014, TIM acquired a national block (10 + 10 MHz) in the 700 MHz bandwidth. Its use, however,
is subject to the cleaning of the spectrum (at present, it is used for the transmission of analogue TV). To this end,
in order to manage the switch-off, in Brazil the successful bidders on the auctions of the 700 MHz bandwidth have
created a new entity, the EAD (Entidade Administradora fare Processo de Redistribuição e Digitalização de Canais
de TV e RTV), in order to manage the spectrum cleaning and avoid problems with interference. TIM plays a
leading role in the group of operators, identifying opportunities to support the switch-off of analogue TV.
In 2015, three credibility tests(13) were carried out in the Innovation Lab on IMS (IP Multimedia Subsystem)(14),
solutions hinged on functional tests, the analysis of the specifications and interoperability with legacy systems.
(8) Network Functions Virtualization/Software Defined Networking.
(9) Virtual Internet Protocol Multimedia Subsystem.
(10) Virtual Evolved Packet Core.
(11) Gigabit-capable Passive Optical Networks.
(12) G.fast is a DSL standard adopted on December 05, 2014 by ITU-T (the sector of the international telecommunications union that deals
with the regulation of telephone and telegraphic telecommunications), which enables transmission speeds of between 200 Mbit/s and
500 Mbit/s. In special circumstances, speed can reach 1 Gbit/s. High speeds can be reached over very short distances (less than
250 meters).
(13) This test is particularly useful and effective for innovative and prototype products. It consists of a more in-depth assessment than that
generally provided by the vendor, using data sheets or roadmaps, and does not entail the costs of a complete test campaign.
(14) IP Multimedia Subsystem (IMS) is an architectural model for the telecommunication networks. This architecture has been designed for
the convergence of all telecommunication devices (fixed and mobile) on an infrastructure based on IP network, which can supply voice
and multimedia services.
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After the laboratory phase, a commercial field test is scheduled for the customer experience in relation to the IMS
service, 2G/3G interoperability and to obtain detailed information on the requirements needed to support the
network evolution.
With respect to Network Function Virtualisation (NFV) and Software Defined Networks (SDN), various initiatives
have been developed, such as the creation of “TIM Brasil NFV Program”, which comprises four work groups
(according to logical domains and competences of the NFV) aimed at defining technical requirements,
infrastructural projects, virtualised network functions (VNF), timetable, open laboratory specifications and the
reference architecture in compliance with the ETSI NFV standard. In this context, VAS Messaging Consolidation
was the first VNF activated in the commercial network. Preliminary studies are also underway on different
approaches for SDN, in order to enable a full orchestration and the development of the cloud environment. The
main drivers behind the adoption of these new network approaches are the reduction of CapEx/OpEx, a quicker
time-to-market, optimization and innovative actions.
Main projects
The expansion of the “sharing of the 4G RAN(15)”, in collaboration with other mobile operators in Brazil, aims to
define the architectural requirements, the hypotheses and technical specifications for the LTE RAN Sharing
solution, optimizing the network resources and costs. The costs of the infrastructures are mainly associated with
the introduction of the new radiating system and other electronic devices, passive site infrastructures and
transport networks; in this way, the sharing of resources made possible by LTE RAN is a significant optimization of
costs for the operators. In this regard, TIM Brasil has been seeking out and considering RAN Sharing solutions
since 2007. Another factor motivating this initiative was the coverage and timing linked to regulatory
requirements (numerous cities to be covered in a short space of time, with the 2.6 GHz spectrum requiring the
implementation of a great many sites). The tests were initially conducted in a controlled environment (the
Innovation Lab) and the solution was based on MOCN (Multiple Operator Core Network), standardized by the
3GPP(16). A pilot project in the field was launched during a second stage to assess other technical problems. At
present, this is the most important RAN sharing agreement to be reached worldwide and enables 4G services to
be supplied to the major cities of Brazil.
The RAN Sharing agreement allows TIM Brasil to facilitate the evolution of distribution of the LTE in territories
within Brazil, sharing access and backhaul(17) effectively and freeing up investments that could be allocated to
other strategic business projects.
Activation of energy saving options and solutions, which enables a reduction in energy consumption during low
traffic periods, has been successfully tested, and we intend to implement these options and solutions on a large
scale in 2G and 3G access levels. Average reductions in energy consumption are expected to be around 3% in the
sites involved.
The Virtual Weather Station Development partnership between TIM, CEMADEN—Centro Nacional de
Monitoramento e Alertas de Desastres Naturais—and PSI—Planetary Skin Institute—uses the capillary coverage
offered by national telecommunication networks to collect and transmit measurements of precipitations, which
enable the creation of a solid series of historic data, contributing towards studies on adaptation to climate
change, with a view to minimizing its possible negative effects.
(15) RAN = Radio Access Network.
(16) 3rd Generation Partnership Project—www.3gpp.org.
(17) This is the part of the telecommunications network that lies between the sorting points near the user access points and the backbone.
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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 in the future;
services;
in general;
continue to make in Brazil;
Š our ability to manage any business transformation plans and reduce costs;
Š the costs we may incur due to unexpected events, in particular where our insurance is not sufficient to cover
such costs.
The foregoing factors should not be construed as exhaustive. Due to such uncertainties and risks, readers are
cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date
hereof. We undertake no obligation to release publicly the result of any revisions to these forward-looking
statements which may be made to reflect events or circumstances after the date hereof, including, without
limitation, changes in our business or acquisition strategy or planned capital expenditures, or to reflect the
occurrence of unanticipated events.
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Item 6. Directors, Senior Management and Employees Directors
Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6.1 DIRECTORS
On April 16, 2014 the Shareholders’ Meeting of the Company elected the Board of Directors of Telecom Italia
which will remain in office until approval of the 2016 annual financial statements.
The Shareholders’ Meeting established the number of Directors at 13; set the overall annual remuneration for the
Board of Directors at 1,900,000 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. The same shareholders’ meeting also appointed Giuseppe Recchi as
Chairman of the Company’s board of directors. On April 18, 2014, the board of directors appointed Marco Patuano
as Chief Executive Officer of the Company.
On December 15, 2015 the Shareholders’ Meeting approved a shareholder proposal by Vivendi to increase the
number of Directors of Telecom Italia from 13 to 17 members. Four new Directors were appointed according to
the proposal presented by Vivendi: Arnaud Roy de Puyfontaine, Stéphane Roussel, Hervé Philippe and Félicité
Herzog. These new members will be in office for the remaining term of the existing Board. The Shareholders’
Meeting also approved an increase of the overall remuneration of the Board of Directors, for the current term, in
proportion to the number of Directors appointed (to 2,484,615 euros).
The Company and Mr. Marco Patuano reached an agreement to terminate Mr. Patuano’s relationship as an
employee and Director effective from March 22, 2016.
Subsequentely, on March 30, 2016, effective immediately, the Board of Directors appointed Mr. Flavio Cattaneo as
the new Chief Executive Officer of the Company.
At April 8, 2016 the Board of Directors of Telecom Italia was composed as follows:
Name Age Position Appointed
Giuseppe Recchi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Chairman/Director . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
Tarak Ben Ammar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
Davide Benello(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
Lucia Calvosa(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
Flavio Cattaneo(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Chief Executive Officer/Director . . . . . . . . . . . . . 2014
Laura Cioli(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
Francesca Cornelli(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
Arnaud Roy de Puifontaine . . . . . . . . . . . . . . . . . . . . . 51 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015
Jean Paul Fitoussi(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
Giorgina Gallo(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
Félicité Herzog(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015
Denise Kingsmill(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
Luca Marzotto(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
Hervé Philippe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015
Stéphane Roussel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015
Giorgio Valerio(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
(1) Independent Directors according to the Borsa Italiana Code. For details on the criteria applied to determine independence, see “Item 10
Additional Information—10.1 Corporate Governance”.
(2) Independent Director according to legal requirements. For details on the criteria applied to determine independence, see “Item 10
Additional Information—10.1 Corporate Governance”.
At April 8, 2016, the Secretary of the Board of Directors was the General Counsel of Telecom Italia, Antonino
Cusimano.
In 2015:
Š the Board of Directors met 13 times, with meetings generally scheduled pursuant to a calendar set forth in
advance;
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Š the Control and Risk Committee (as of April 8, 2016 composed of Lucia Calvosa—Chairman, Laura Cioli,
Francesca Cornelli, Giorgina Gallo, Félicité Herzog and Giorgio Valerio) held 16 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 April 8, 2016 composed of Davide Benello—Chairman,
Arnaud Roy de Puyfontaine, Denise Kingsmill, Luca Marzotto and Stephane Roussel) met seven 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 as of April 8, 2016.
Giuseppe Recchi: Giuseppe Recchi was born in Naples in 1964. He has been Executive Chairman of Telecom
Italia since April 2014 and Chair of the Fondazione Telecom Italia (Telecom Italia Foundation) since July 2014. He
was Chairman of the Board of Directors of Eni S.p.A. from 2011 to 2014. He is a member of the Board of Directors
of UnipolSai Assicurazioni S.p.A.. He is also a member of the General Committee of Confindustria (where he
chaired the Foreign Investment Committee); the Italian Institute of Technology; the Corporate Governance
Committee and of the Board of Assonime (Italian Joint Stock Companies). He is Chair of the B20 Task Force on
Improving Transparency and Anti-Corruption. Until 1999 he was an entrepreneur with Recchi Costruzioni
Generali, a general contractor active in 25 Countries in the construction of high-tech public infrastructure,
spending most of his professional life in the United States. In 1999 he joined General Electric, where he held
several managerial positions in the United States and Europe. He served as Director of GE Capital Structure
Finance Group and Managing Director for Industrial M&A of EMEA. Until May 2011 he was President and CEO of
GE South Europe. He was a member of the Board of Directors of Exor S.p.A.. He served in several boards among
which the European Advisory Board of Blackstone; the Advisory Board of Invest Industrial (private equity); the
Massachusetts Institute of Technology E.I. Advisory Board. He graduated in Engineering at the Polytechnic
University of Turin. He has been visiting Professor in Corporate Finance at Turin University (2004-2006).
Flavio Cattaneo: Flavio Cattaneo was born in Rho (Milan) on June 27, 1963. He has a degree in Architecture
from the Milan Politecnico and has also received specialized training in business management. Since February
2015, he has been Chief Executive Officer of NTV S.p.A., and since March 2015, he has been Chairman of Domus
Italia S.p.A. Mr. Cattaneo has been an independent Director of Generali Assicurazioni S.p.A. since December 2014
and independent Director of Telecom Italia S.p.A. since April 2014. He was appointed CEO of the Company in
March 2016. From January 2008 to April 2015, he was an Independent Director in Cementir Holding S.p.A., and
from November 2005 to May 2014, Mr. Cattaneo was CEO of Terna S.p.A. From 2008 to 2012, he served as Vice
President in charge of energy and environmental policies at UIR (Unione degli Industriali e delle Imprese di
Roma). He has held important managerial and administrative positions in various Italian companies in the
construction, radio and television, service, new technologies, public service and facilities sectors. He became head
of the former Ente Autonomo Fiera Internazionale di Milano as Extraordinary Commissioner in 1999 and went on
to oversee its stock market listing as Fiera di Milano S.p.A, serving as Chairman and CEO until 2003. Flavio
Cattaneo has been Director of many energy companies (from 1999 to 2001), including: AEM S.p.A. 01 Milan (as
Deputy Chairman), Serenissima Gas S.p.A, Triveneta Gas S.p.A, Seneca S.r.l. and Malpensa Energia S.r.l.. He was
appointed head of Italy’s public television network RAI S.p.A. in April 2003, in the position of General Manager,
which he held until August 2005. He also oversaw the merger with Rai Holding and the unbundling of accounts.
From May 2006 to November 2009 he was Chairman of Terna Participaçoes S.A., a subsidiary of Terna S.p.A.
Tarak Ben Ammar: Tarak Ben Ammar was born in Tunis (Tunisia) on June 12, 1949. Ben Ammar, whose uncle
Habib Bourguiba was Tunisia’s first independent President, over the course of four decades has been involved in
politics, finance, film and TV. His achievements include bringing George Lucas’s Star Wars and Steven Spielberg’s
Raiders of the Lost Ark to Tunisia, and producing Franco Zeffirelli’s Oscar-nominated La Traviata, as well as the
epic Emmy Award-winning TV series “The Bible”, amongst dozens of other feature films and TV series. He has
also built some of the biggest film studios in both France and the Arab world. In the business and political worlds,
Ben Ammar has served as special advisor and partner to Rupert Murdoch, HRH Prince Waleed Bin Talal and former
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Italian Prime Minister Silvio Berlusconi. He currently sits on the board of Mediobanca, Italy’s largest private
investment bank. In May 2015, he was appointed to the Board of Directors of Vivendi S.A. and its Nomination and
Remuneration Committee. In September 2015, Naguib Sawiris invited him to join the Board of Directors of
European News Channel. He is a founding shareholder and board member of The Weinstein Company and also
owns Eagle Pictures, the leading independent film distributor in Italy. In 2009, Tarak Ben Ammar officially
launched Nessma TV in Tunisia, the first privately owned, independent satellite channel that catered to audiences
in North Africa. In December 2012, Ben Ammar acquired leading Egyptian news channel ONTV. The new platform
of Nessma and ONTV reaches a combined population of 170 million across North Africa and Egypt, accounting for
more than half of the Arab world.
Davide Benello: David Benello was born in Milan on March 6, 1954. On April 16, 2014, he became a member of
the current Board of Directors of Telecom Italia S.p.A. and is Chairman of the Nomination and Remuneration
Committee. He graduated from the University of Oxford with a Master of Arts in Mathematics and from Harvard
Business School with a Master in Business Administration. He was a Second Lieutenant at Scuola Militare Alpina in
Aosta, where he was named Head Cadet. He worked at the management consulting firm McKinsey & Company,
where he is now a Director Emeritus, from 1982 to 2011. He developed in depth knowledge of the
telecommunications, insurance, and industrial sectors. He served multinational clients in almost all European
countries, in the United States, and in Asia. He had strategic and operating leadership roles at the firm, had global
roles in the election and evaluation of Partners, and was a member of the U.K. Executive Committee with
supervision over personnel and leadership of the Telecom, Media and High Tech Practice, was a leader of the
Strategy Practice in Europe and of the Mobile Commerce Strategic Initiative. He has been an independent non-
executive Director of the Board of Telekom Malaysia since 2011 and an independent non-executive Director of the
Board of Rostelecom in Russia since 2014. In 2015, he was appointed as an independent non-executive Director
of Tungsten Corporation plc and member of the Audit Committee. Since 2014, Benello has been a non-executive
Director of Orthox ltd. Since 2013, he has been a Trustee of the American Air Museum in Britain. Since 2015,
Mr. Benello has been Chairman of the Governing Body of King’s College London Maths School, a non-profit
organization.
Lucia Calvosa: Lucia Calvosa was born in Rome on June 26, 1961. She is a professor of commercial law at the
University of Pisa, where she has also previously taught Bankruptcy Law, Private Law and Banking Law. She served
as Chair the degree course in Economics and Commerce at the University of Pisa for two terms, she Chairs the
Scientific Teaching Committee of a 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 institutions, business and work at the Cattolica University in Milan. A number of her works have been
published, including three monographs: “La clausola di riscatto nella società per azioni, Milan, 1995”; “La
partecipazione eccedente e i limiti al diritto di voto, Milan, 1999”; “Fondo patrimoniale e fallimento, Milan, 2003”.
She has been asked to collaborate on the most widely used and accredited manuals of commercial disciplines
currently in circulation, as well as in numerous commentaries of company and bankruptcy law. She has been a
member of the Pisa professional association of lawyers since 1987, and of the professional association of appeal
lawyers since 1999, and has been a practicing lawyer for over twenty-five years, focusing in the areas of company
law and bankruptcy. She is a member of the Board of Directors of the Fondazione Teatro di Pisa, of the Fondazione
Arpa, of the Pisa Chamber of Commerce and of the Fondazione Pisa (formerly Fondazione Cassa di Risparmio di
Pisa). From 2008 to 2011, she was Chairman of the Cassa di Risparmio di San Miniato S.p.A., and in connection
with this post, she served as a member of the national committee of banks (Comitato delle Società Bancarie) and
served on the board of the Italian banking association, ABI (Associazione Bancaria Italiana). Since August 2011,
she has been an independent member of the Board of Directors of Telecom Italia S.p.A., as well as a member of
the Control and Risk Committee, which she has chaired since April 2014. Since November 2014, she has been an
independent member of the Board of Directors of Editoriale Il Fatto S.p.A.. Since April 2015, she has been an
independent member of the Board of Directors of Banca Monte dei Paschi di Siena S.p.A. In 2005, she was
awarded the “Ordine del Cherubino”, bestowed by the University of Pisa to those professors, who “have helped to
enhance its prestige for outstanding scientific and cultural merits and their decisive contribution to academic life
and to the functioning of the University”. In February 2010, she was awarded a UNESCO medal for “having
contributed, with the publication of Monumenta, to highlighting and raising awareness of an important episode in
Italian artistic culture in the spirit of UNESCO”. Through a Presidential Decree of the Ministry of Economy and
Finance, dated June 2, 2012, she was awarded, upon a proposal of ABI, a knighthood in the Order of Merit of the
Italian Republic. In June 2015, she was awarded the “Ambrogio Lorenzetti” prize for the good governance in
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companies, as engaged in academic and cultural activities, internationally recognized and having promoted, as a
Director, scientific rigor and independence as a value in highly complex and competitive company contexts.
Laura Cioli: Laura Cioli was born in Macerata in 1963. She holds a cum laude degree in Electronic Engineering
from Bologna University and an MBA from Bocconi University. She is a Board member of the Bocconi Alumni
Association. Laura Cioli is Chief Executive Officer at RCS Mediagroup S.p.A. and an independent Board member at
Telecom Italia S.p.A., World Duty Free and at Salini-Impregilo. In the past, Laura Cioli has served as a top
executive, leading global corporations in the service sector. She has been Chief Executive Officer of Cartasì, Chief
Operating Officer at Sky Italia (News Corporation Group), Senior Vice President at ENI Gas & Power, and
Executive Director at Vodafone Italia, holding various roles over time, including Strategy and Business
Development Director, Operations Director and Business Division Director. She has also been a Partner of Bain and
Company.
Francesca Cornelli: Francesca Cornelli was born in Milan in 1962. On April 16, 2014, she became a member of
the current Board of Directors of Telecom Italia S.p.A. and is member of the Control and Risk Committee. She is a
Professor of Finance at the London Business School. She is the Director of Private Equity at LBS, a research
institute of the London Business School. She previously held positions or taught at the Wharton School, the Fuqua
School of Business at Duke University, The London School of Economics, the Indian School of Business in
Hyderabad and the New Economic School in Moscow. Her interests include corporate governance, private equity,
privatization, bankruptcy, IPOs and innovation policy. Her latest publications concern research on short sales,
manager incentives, the impact of investments from private equity companies on the board and the importance of
increasing transparency in companies and its effects on manager incentives. She has published several papers in
major finance and economic journals and gives regular talks in major conferences and universities and
international institutions. She is director of the American Finance Association, a member of the Scientific
Committee of the Banque de France Foundation, and a Research Fellow of the Center for Economic and Policy
(CEPR). She is an editor of the Review of Financial Studies, and she has been an associate editor of the Journal of
Finance, of the Journal of Financial Intermediations and of the Review of Economic Studies. She is a member of
the board of Cofide, Swiss Re Europe, Swiss Re International and Telecom Italia. She obtained her B.A. at
University Commerciale Bocconi, in Milano, Italy, and her M.A. and Ph. D. in Economics at Harvard University.
Arnaud Roy de Puyfontaine: Arnaud Roy de Puyfontaine was born in Paris in 1964. Since December 2015, he
has been a Director of the Board of Directors of Telecom Italia S.p.A., and since February 2016, has been a
member of the appointments and remuneration committee. He is a graduate of the ESCP (1988), the Multimedia
Institute (1992) and Harvard Business School (2000). In 1989, he started his career as a consultant at Arthur
Andersen and then worked as a project manager at Rhône-Poulenc Pharma in Indonesia. In 1990, he joined Figaro
as Executive Director. In 1995, as a member of the founding team of the Emap Group in France, he headed Télé
Poche and Studio Magazine, managed the acquisition of Télé Star and Télé Star Jeux, and started up the Emap
Star Division, before becoming Chief Executive Officer of Emap France in 1998. In 1999, he was appointed
Chairman and Chief Executive Officer of Emap France, and, in 2000, joined the Executive Board of Emap Plc. He
has led several M&A deals, and from 2000 to 2005, served as chairman of EMW, the Emap/Wanadoo digital
subsidiary. In August 2006, he was appointed Chairman and Chief Executive Officer of Editions Mondadori France.
In June 2007, he became General Head of all digital business for the Mondadori Group. In April 2009,
Mr. Puyfontaine joined the US HEARST media group as Chief Executive Officer of its UK subsidiary, Hearst UK. In
2011, on behalf of the Hearst Group, he led the acquisition of 102 magazines from the Lagardère Group published
abroad, and in June 2011, was appointed Executive Vice President of Hearst Magazines International before being
appointed Managing Director of Western Europe in August 2013. In May 2012, he joined the Board of Directors of
Schibsted. He has been Chairman of ESCP Europe Alumni. From January to June of 2014, Mr. Puyfontaine was a
member of Vivendi’s Management Board and Senior Executive Vice President in charge of its media and content
operations. Since June 24, 2014, he has been Chairman of the Management Board. Current positions within the
Vivendi group include: Chairman of the Management Board of Vivendi, Member of the Supervisory Board of
Canal+ Group, Member of the Supervisory Board of StudioCanal and Chairman of the Supervisory Board of
Universal Music France. He is also an Independent Director of Kepler, an Independent Director of Schibsted Media
Group, a member of the Advisory Committee of Innit and a Director of the Melty Group.
Jean Paul Fitoussi: Jean Paul Fitoussi was born à La Goulette (Tunisia) in 1942. Mr. Fitoussi has served as a
member of the Board of Directors of Telecom Italia since May 2004 and was a member of the appointments and
remuneration committee up to February 2016. He is a Professor Emeritus at the Institut d’Etudes Politiques de
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Paris (SciencesPo) and Professor at LUISS Guido Carli University in Rome. Jean-Paul Fitoussi is also a member of
the Centre for Capitalism and Society at Columbia University. Since 2013, he is Co-Chairman of HLEG (an OECD
high-level group of experts) on “measurement of Economic Performances and Social Progress”. From 1995 to
September 2014, he was member of the Economic Commission of the Nation (France). From 1997 to 2012, he
was a member of the Council of Economic Analysis of the French Prime Minister. From 1990 to 2010, he was
President of OFCE at SciencesPo. Since 2010, he has been a member of the Oversight Council of Intesa SanPaolo,
and for the period 2013-2014, he was a member of the board of directors of Pirelli S.p.A. He has published a
number of articles in international scientific journals on inflation and unemployment theories, open-economy
theory, macroeconomic theory and policy, and European integration. He has also published numerous books and
essays on related subjects. Among his latest books are: Mismeasuring our lives, with Joseph Stiglitz and Amartya
Sen, the New Press, 2010; After the Crisis, the Way Ahead, with Edmund S. Phelps, Christopher Pissarides and al.,
Luiss University Press, 2010; Report on the State of the European Union, with Jacques Le Cacheux, Palgrave,
2010, Le théorème du lampadaire, Les liens qui Libèrent, 2013 (also published by Einaudi). Dr. Fitoussi has
contributed regularly to French and foreign newspapers and is a columnist for La Repubblica, Le Monde and
Project syndicate. From 2000 to 2009, he was an expert at the European Parliament, Commission of Monetary and
Economic Affairs. He was also a member of the UN Commission on the Reform of the International Monetary and
Financial System and Coordinator of the Commission on the Measurement of Economic Performance and Social
Progress (2008-2009). Dr. Fitoussi was awarded the Prize of the Association Française de Sciences Economiques,
and the Rossi Prize of the Académie des Sciences Morales et Politiques for his PhD work. The Association
française de sciences économiques selected his Le théorème du lampadaire as book of the year. He has been
honored as Honorary Dean of the Faculty of Economics of Strasbourg, Doctor Honoris Causa from the universities
of Buenos Aires and Très de Febrero and Professor Onorario of the University of Trento. He is an Officier de l’Ordre
National du Mérite and Officier de la légion d’honneur in France and Grand Officier de l’ordre de l’Infant Henri in
Portugal.
Félicité Herzog: Félicité Herzog was born in Boulogne-Billancourt (France) in 1968. She was appointed as an
independent member of the Board of Directors of Telecom Italia in December 2015, and since February 2016, she
has been a member of the control and risk committee. She is a graduate of the Institut d’Etudes Politiques de
Paris and of INSEAD (MBA programme). In 1992, she joined Lazard Frères in Paris, where she was a member of
the government consulting team for Gabon and Russia, advising on debt restructuring issues. She continued her
career in the mergers and acquisitions department of Lazard Frères in New York until 1996, when she joined the
mergers and acquisitions team of JP Morgan in London. In 1997, she moved to Apax Ventures, a private equity
fund in London, where she specialized in telecommunications investments in Europe. In 2000, she was hired by
Madison Dearborn Partners, a US private equity fund in London, where she supervised investments of the same
type. In 2002, she became Vice President, Mergers and Acquisitions of the Publicis Group, supervising and
implementing mergers, disposal and acquisitions in the publicity and marketing services. In 2007, she joined
Areva as Senior Vice President of Development, in charge of organizational advice, optimization of structures, cost
control and product range optimization, before being appointed as Deputy CEO of Technicatome, an Areva
subsidiary producing naval propulsion nuclear reactors. Since 2013, Ms. Herzog has been CEO of Apremont
Conseil, a strategy consulting firm and has worked as a senior adviser at Ondra Partners, a financial advisory firm,
since March 2015.
Giorgina Gallo: Giorgina Gallo was born in Turin in 1960. She was appointed as an independent member of the
Board of Directors and a member of the control and risk committee since April, 2014. Giorgina Gallo obtained a
university degree in Business Administration at the Università di Economia e Commercio (School of Management
and Economics) in Turin, specializing in marketing. She completed her managerial training at Cedep of Insead in
Fontainebleau (Paris). Her career developed within the L’Oréal Italia multinational, of which she is today Honorary
President. She started work in the marketing function, dealing with product development and brand management,
then becoming Marketing Director and later Sales Director. In 1997 she was appointed General Manager of the
leader brand, L’Oréal Paris. In 2001 she became CEO and general Manager of L’Oréal Saipo, in charge of the two
largest business units and the manufacturing plant. In 2008, she was appointed chairman and CEO of L’Oréal
Italia, the company which groups together all the Italian activities (approx. 2000 staff and 1 billion turnover). She
became very familiar with the mass market and later the luxury goods market, distribution and media sectors, and
gained experience in company reorganization. She developed international projects and over the years an
important Corporate Social Responsibility program. She has held the following positions: Deputy Chairman of
Cosmetica Italia, Deputy Chairman of CentroMarca, member of the Advisory Boards and Councils of: Federchimica
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(chemical federation), Assolombarda (Lombardy federation of industry), Unione Industriale Torino (Piemonte
federation of industry), GS1-Indicod/ECR (association of Italian FMCG industry and distribution), Upa (association
of advertising investors), Auditel. She has received the following awards: in 2005 Grande Ufficiale della Repubblica
Italiana (Order of Merit of the Italian Republic), in 2006 Chevalier de l’Ordre national du Mérite of the Republic of
France, in 2012 the Bellisario Award in the manager category. Since 2014, she has been a corporate advisor and
independent Director of the Board of Autogrill. She is also a member of the Board of the Ufficio Pio Onlus of
Compagnia S.Paolo and of Alliance française.
Denise Kingsmill: Denise Kingsmill was born in Roturoa (New Zeland) in 1947. Baroness Kingsmill was
appointed as an independent member of the Board of Directors of Telecom Italia and a member of the
appointments and remuneration committee since April 2014. Baroness Kingsmill is a member of the House of
Lords and of the European Union Financial Affairs Committee. Her career has encompassed periods as a leading
lawyer in London and as a non-executive Director on the boards of public, private, charitable, arts and UK
government boards. After an early career in the textile and fashion industry, Baroness Kingsmill became one of
London’s leading lawyers handling disputes for some of the UK’s leading FTSE companies. Baroness Kingsmill was
appointed as Deputy Chair to the Competition Commission, the UK’s antitrust regulator. She chaired more than 20
major investigations into monopolies and mergers in fields as diverse as banking, underwriting, car pricing, milk,
energy supply and cruise liners. Baroness Kingsmill has headed two Government enquiries: one into women’s pay
and employment and the other into the manner in which companies manage their Human CapitaI. Currently,
Baroness Kingsmill is a member of the supervisory board of E.ON SE, and a nonexecutive director of International
Airlines Group SA. and Chairman of Mondo. She is a member of the International Advisory Board of the Spanish
Business School, lESE. She writes a regular column for Management Today and writes and speaks on a wide range
of business and political issues. She holds a number of honorary degrees in Law and Business and was awarded
the CBE for service to Employment Law and Competition in 2000.
Luca Marzotto: Luca Marzotto was born in Rome in 1971. Since April 2014, he has been an independent
Director of the Board of Telecom Italia S.p.A., and since February 2015, has been a member of the appointments
and remuneration committee. After receiving a law degree in 1995, he began working for the Marzotto Group. In
1997, he became sales director of Marzotto Textile Department for the Asian market. His on-site experience
covers the whole textile chain, from production to management control and marketing. In 1998, he became
assistant to the CEO of Guabello S.p.A., a company specializing in the production of high-quality cashmere. From
2000, he focused on the Asian market, becoming the Director of Marzotto Japan in Tokyo, and in 2002, he was
elevated to the position of General Director of Marzotto Trading Hong Kong and took control of the entire activity
of Marzotto S.p.A. in Asia. In June 2003, he was appointed Director of Marlboro Classics, the sportswear division
of Valentino Fashion Group S.p.A. Since 2005, he has been CEO of Industrie Zignago Santa Margherita S.p.A. (now
Zignago Holding S.p.A.) and Vice President of Santa Margherita S.p.A. From 2007 to 2012, he was Director of
Banca Popolare Friuladria S.p.A., and since June 2008, he has been one of the Chairmen of Federvini. He was
Director of Valentino Fashion Group until November 2012. He is a Director of Hugo Boss AG and a member of the
Working Committee of Hugo Boss AG. From May 2011 to October 2015, he was a Director at H-Farm Ventures
S.p.A. (now H-Farm S.p.A.).
Hervé Philippe: Hervé Philippe was born in Cheillè (France) in 1958. Since December 2015, he has been a
Director of the Board of Telecom Italia S.p.A. He is a graduate of the Institut d’Études Politiques de Paris and
holds a degree in economic sciences. He began his career with Crédit National in 1982 as an account manager for
business financing in the Île-de-France region. In 1989, he joined the French market authority, the Commission
des opérations de bourse (COB), as a manager for the sector of French companies listed for trading. From 1992 to
1998, he served as Head of the Transactions and Financial Information Department. In 1998, he joined the Sagem
Group, where he held the positions of Director of Legal and Administrative Affairs at Sagem SA (1998-2000), Chief
Administrative and Financial Officer of Sfim (1999-2000), and Director of Communication at Sagem SA (2000-
2001). In 2001, he assumed the position of Chief Financial Officer and became a member of the Sagem SA
Management Board in 2003. Hervé Philippe was appointed Chief Financial Officer of the Havas Group in November
2005 and, in May 2010, was named deputy Chief Executive Officer (Directeur Général Délégué) until December 31,
2013. He has served as Vivendi’s Chief Financial Officer since January 1, 2014. Since June 24, 2014, he has been a
member of the Management Board. His current positions within the Vivendi group include: Member of the
Management Board of Vivendi, Vice-Chairman of the Supervisory Board of Canal+ Group, Member of the
Supervisory Board of StudioCanal, President of the Compagnie Financière du 42 Avenue De Friedland (SAS),
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Director and member of the Audit Committee of Dailymotion, Member of the Supervisory Board of Universal
Music France and permanent representative of Financière de Longchamp on the Board of Directors of Havas
Group. He is also a Director of Harvest, Sifraba and Jean Bal.
Stéphane Roussel: Stéphane Roussel was born in Paris in 1961. Since December 2015, he has been a Director
on the Board of Telecom Italia S.p.A., and since February 2016, he has been a member of the appointments and
remuneration committee. He is a graduate of the École des Psychologues Praticiens de Paris. He was appointed to
the Vivendi Management Board in June 2014 and has been Chief Operating Officer since November 10, 2015, after
joining the group’s management team in August 2013. Stéphane Roussel held the position of Executive Vice
President of Human Resources at Vivendi from 2009 to 2012, before being appointed Chairman and Chief
Executive Officer of SFR. From 2004-2009, he served as SFR’s Vice President of Human Resources. From 1997 to
2004, Mr. Roussel held positions within the Carrefour Group. He was first appointed Director of Human Resources
for hypermarkets in France, before becoming Director of Human Resources Development for international
business and then Director of Human Resources France for the entire Carrefour Group. From 1985 to 1997,
Stéphane Roussel worked at Xerox. Current positions within the Vivendi group include: member of the
Management Board and Chief Operating Officer of Vivendi, member of the Supervisory Board of Canal+ Group,
member of the Supervisory Board of StudioCanal, Director of Dailymotion, member of the Supervisory Board of
Universal Music France, and President of Group Vivendi Africa. Other positions and offices: Director of IMS and
member of the Board of Directors of Fondation SFR.
Giorgio Valerio: Giorgio Valerio was born in Milan in 1966. Since April 2014, he has been an Independent
non-Executive Director of Telecom Italia S.p.A., a member of the control and risk committee, and since May 2015,
the Lead Independent Director of Telecom Italia. He graduated from the University of San Francisco with a
Bachelor’s degree in Business Administration, cum laude (1989). From September 1989 to 1992, he was Paris and
London Sales manager for Securities and Financial Services to Italian Institutional Investors at Schroder
Securities Ltd. From November 1992 to March 1997, he was Manager in the M&A, Corporate Finance and Advisory
Services department at Mediobanca. From April 1997 to December 2000, he was Deputy Director for Corporate
Development and Financial Control at Holding di Partecipazioni Industriali (RCS Group). In January 2001, he was
appointed Director for Corporate Development and Financial Control in RCS Mediagroup and served until June
2003. From July 2003 to December 2005, he was Chief Executive Officer of Unidad Editorial S.A. (RCS Mediagroup
– Spain), where he was in charge of managing and developing the RCS operations in the Spanish market. From
2006 to 2010, he held various positions in RCS Mediagroup Companies (Chief Executive Officer/Managing
Director at RCS Quotidiani S.p.A and Chairman and Chief Executive Officer at RCS Digital S.p.A.). From 2011 to
2013, he was an independent non-executive Director and member of the Nomination and Remuneration
Committee at Prelios, a Company operating in the Real Estate sector. From 2012 to April 2014, he was Strategy
Advisor & non-Executive Director at Primi sui Motori, a Company listed on the Milan AIM Stock Exchange,
operating in the digital marketing & advertising sector. He has also served as an Independent non-Executive
Director at Gruppo Argenta, a leading operator of vending machines in Italy.
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Item 6. Directors, Senior Management and Employees Executive Officers
6.2 EXECUTIVE OFFICERS
As of April 8, 2016 the executive officers of Telecom Italia and their respective positions were as follows:
Name Age Position Appointed
Directors:
Giuseppe Recchi . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
Flavio Cattaneo . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
Managers:
Simone Battiferri . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Head of ICT Solutions and Service Platforms(1) . . . . 2012
Paolo Vantellini . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Head of Business Support Office . . . . . . . . . . . . . . . . . . . 2013
Antonino Cusimano . . . . . . . . . . . . . . . . . . . . . . . . 51 Head of Legal Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008
Piergiorgio Peluso . . . . . . . . . . . . . . . . . . . . . . . . . 48 Chief Financial Officer and Head of Administration
Finance and Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012
Mario Di Loreto . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Head of People Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013
Cristoforo Morandini . . . . . . . . . . . . . . . . . . . . . . . 53 Head of Regulatory Affairs . . . . . . . . . . . . . . . . . . . . . . . . . 2015
Giuseppe Roberto Opilio . . . . . . . . . . . . . . . . . . . 56 Head of Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
Stefano De Angelis . . . . . . . . . . . . . . . . . . . . . . . . 47 Head of Consumer & Small Enterprise Market(2) . . . 2014
Stefano Ciurli . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Head of Wholesale(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
Rodrigo Modesto de Abreu . . . . . . . . . . . . . . . . . 45 CEO Tim Participacoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013
1) “Head of Business” until February 12, 2016. The position was subsequently renamed “Head of ICT Solutions and Service Platforms”.
2) “Head of Consumer” until February 12, 2016. The position was subsequently renamed “Head of Consumer & Small Enterprise Market”.
3) “Head of National Wholesale Services” until November 5, 2015. The position was subsequently renamed “Head of Wholesale”.
The following are the selected biographical data of the executive officers, other than Directors (for the
biographical data of Mr. Giuseppe Recchi please see above under “—6.1 Directors”):
Simone Battiferri: Mr. Battiferri was born in Rome in 1967. Since February 12, 2016, he has been Head of ICT
Solutions & Service Platforms 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
organizational 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. In December 2011, after the merger of the Top Clients Unit with the Public Sector Unit,
he was appointed Head of Top Clients & Public Sector. In December 2012, after the merger of the Top Clients &
Public Sector Unit with the Business Unit, he was appointed Head of the new Business Unit. Olivetti and Telecom
Italia Digital Solutions (formerly Pathnet and now merged into Olivetti), among others, report to the Business
Unit. 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).
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 optimization 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
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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 and Chairman of the Board of
Directors of several Intesa Group vehicle companies. Mr. Vantellini is also member of the Board of Directors of
Olivetti S.p.A. and of Telecom Italia Information Technology; he is Chairman of Olivetti Multiservices S.p.A. and of
Telenergia S.r.l.
Antonino Cusimano: Mr. Cusimano was born in Palermo in 1964. Since September 15, 2008 he has been Head
of Legal Affairs and General Counsel of Telecom Italia, Secretary to the Board of Directors since April 18, 2014.
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.
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, and since April 18, 2014, he has been Manager Responsible
for Preparing the Company’s Financial Reports. 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., Telecom Argentina S.A. and Fondazione Telecom Italia.
* * *
In February 2016, the District Court of Milan issued an indictment against Mr. Piergiorgio Peluso, and 11 other
individuals in connection with an investigation stemming from the bankruptcy of Imco S.p.A. (“Imco”) in 2012.
The principal allegation against Mr. Peluso is that, as CEO of UniCredit Corporate Banking S.p.A. (“UniCredit”)
(the position he held before joining Telecom Italia in September 2012), approved a complex restructuring
transaction, which had, according with the hypothesis of the prosecutor, the effect to decrease the net asset value
of Imco. The trial in this matter is scheduled to begin on April 21.
Mario Di Loreto: Mr. Di Loreto was born in Rome in 1963. Since September 1, 2013, he has been Head of
People Value at Telecom Italia. The Department was renamed People Value on December 19, 2013. After a first
degree in Philosophy and a doctorate in the Philosophy of Science, Di Loreto embarked on an academic career. He
then became a Human Resources Manager, joining Air One in the start-up phase, in 1995, contributing to the
growth of its workforce to approximately 2,000 employees. In 1998 he moved to the Human Resource
Management and Development at Alitalia Team, participating in the creation and development of two low cost
carriers, Alitalia Team and Alitalia Express. In 1999 he was engaged by Starwood Hotels & Resources Inc., a listed
U.S. group operating in the medium-high range hotel sector, which in Italy owns the Ciga hotels, several
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businesses on the Costa Smeralda (hotels, golf courses, ports, shipyards), the Sheraton hotels and, since 2006,
the Méridien hotels. Mr. Di Loreto stayed with this Group until 2008, working in increasingly senior roles: Human
Resources Manager for Costa Smeralda Italia (where he structured and modernized the diversified businesses
owned by the group in the Sardinian market); Human Resources Manager, Italy until 2002; Human Resources
Manager, Italy, Malta and the Balkans (contributing to the successful repositioning of the group on the domestic
market during the complex and difficult period following September 11) until 2003. In this period, he was also
appointed Vice Chairman of AICA (Associazione Italiana delle Catene Alberghiere—the Italian Association of
Hotel Chains), part of Confindustria (the main organization representing Italian manufacturing and services
companies), which represents 1,800 hotels employing 35,000 people, responsible for Industrial Relations. He then
became Human Resources Director, Mediterranean Region, based in Belgium until 2008. In addition, from 2005 to
2007, he was part of Next Generation, a global innovation team composed of 40 managers, which worked with
CEO Starwood at the U.S. headquarters of the corporation to define the evolution of the Group’s organizational
and business models. In 2008, Mr. Di Loreto joined Barilla, as Human Resources Director for the Group
(15,000 employees in 17 countries and three regional divisions: Europe, the Americas and Asia Pacific). In this
role, which he held until the end of 2012, he also participated in the international re-organization of the subsidiary
companies to achieve cultural and business integration in line with the medium term strategies of the
organization. Mr. Di Loreto is also a member of the Board of Directors of Telecontact S.p.A. and Telecom Italia
Information Technology S.r.l.
Cristoforo Morandini was born in Varese on 3 October 1962. He is married with two children. He has been Chief
of Regulatory Affairs and Equivalence at Telecom Italia since November 2015. After graduating from the Bocconi
University in Milan with a degree in Economics and Social Sciences, Mr Morandini began his professional career in
academic research on technological innovation and internationalisation. In 1998, he participated in the founding
of Between, a consultancy company specialised in telecommunications, as the head of the strategic consultancy
and regulatory analysis area. As the creator and coordinator of the Osservatorio Banda Larga (Broadband
Observatory) he carried out research and consultancy for major public and private enterprises regarding
technology, regulations and the market for the electronic communications sector, he also took part in primary
extraordinary transactions as a technical-economic advisor. He was an EY Partner in the Telecommunications
Media and Technology sector.
Giuseppe Roberto Opilio: Mr. Opilio was born in Rome in 1958. Since February 12, 2016, he has been Head of
the Technology department at Telecom Italia, after the renaming of the Operations department. 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 appointed
Head of Customer Operations. Following the merger of TIM and Telecom Italia, he went on to run Business
Customer Operations (fixed-line/mobile integration), and later became Head of Group Quality. He won the
“Human Resources Excellence Award” (AIDP-EAPM) in 2001. In February 2008, he was appointed Manager of the
Open Access department. In April 2011, he was appointed head of Technology department at Telecom Italia. In
December 2014, he was appointed head of Operations department. Mr. Opilio is a member of the Board of
Directors of Telecom Italia Sparkle and was a director at a number of companies, including STET Hellas (Greece),
Atesia, Assida, and Telecontact.
Stefano De Angelis: Mr. De Angelis was born in Rome in 1967. Since February 12, 2016, he has been Head of
Consumer & Small Enterprise Market at Telecom Italia. From February 2013 to August 2014, he was CEO of the
Telecom Argentina Group. After obtaining his Degree in Business and Economics, he started his professional
career in 1995 with the Fiat Group, in the International Financial Control and Analysis Department. Since 1997, he
has worked for Telecom Italia, where he has held positions of increasing responsibility: Head of Management
Control and Planning—Internet and Multimedia Area, in the Group Finance & Control Department, where he dealt
with the Company’s performance in the business units and companies operating in the reference sector (Seat PG,
Tin.it, Stream, Telespazio, etc.); from 2001 he was Head of the Group Administration, Finance and Control
Department of H.M.C. S.p.A. (Group holding company that controlled the transmission licenses of the “La7” and
“MTV Italia” television channels); from 2002 he was CFO of the Consodata Group (company listed on the French
New Market), part of the Seat Pagine Gialle Group and operating in the Business Information Management sector,
where he oversaw the transition phase following acquisition of control; from November 2002 he was Head of the
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Planning & Control division of TIM Group, where he ensured the strategic planning process and the monitoring of
the company performance of the Group companies and domestic business; from 2004 he was Head of the
Administration, Finance and Control Department of TIM Brasil Group; in 2007 he was appointed Head of
Planning & Control Fixed Services, Field Services & Wholesale within the Planning & Control function; in 2008 he
was appointed Head of Group Planning & Control, part of the Planning & Control function (Administration, Finance
and Control), tasked with ensuring economic and financial levels, the consolidation and analysis of performance of
the Group and of the domestic business unit; from 2009 he was Head of Planning & Control (Administration,
Finance and Control function); from 2011 he was Head of Administration and Control within the Administration,
Finance and Control & International Development function, tasked with defining accounting principles and
financial reporting policies, drafting the financial report and carrying out planning, management control and
reporting activities both at Group and domestic business level; Since 2014 he has been Head of Consumer, which
has subsequently been renamed Consumer and Small Enterprise Market.
Stefano Ciurli: Mr. Ciurli was born in Rome, in 1962. Since November 5, 2015, he has been Head of the
Wholesale Department at Telecom Italia. After graduating in Economics and Commerce, he began his professional
career in 1987 in Sip. During his years with Telecom Italia he has had increasing responsibilities within the
Finance, Administration and Control, International, Supply Chain and Logistics, Real Estate and Energy
departments. From July 2003 to December 2005, he served as Chief Financial Officer of TIM. Since 2006, he has
been in charge of the International Support area with responsibility for business development activities and
plug&play opportunities at the international level. In August 2008, he was appointed head of the Planning &
Control department. In March 2009, he was appointed Head of the Purchasing department. In April 2011, he was
appointed Head of Supply Chain & Real Estate. In December 18, 2012, he was appointed Head of the Caring
Services division.
Rodrigo Modesto de Abreu: Mr. Abreu was born in São Paulo in 1969. Since 2013 Mr. Abreu has been Chief
Executive Officer of Tim Participacoes. 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 has worked for various companies in the sector
in Brazil and abroad. Mr. Abreu served as strategic consultant at McKinsey & Co in the United States. In Brazil, he
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. Mr. de Abreu is Diretor Presidente of Tim
Celular S.A.
163

Item 6. Directors, Senior Management and Employees Board Of Auditors
6.3 BOARD OF AUDITORS
On May 20, 2015, the Shareholders Meeting appointed the present Statutory Board of Auditors, that will remain in
office until approval of the 2017 financial statements. Based on the slates submitted by the shareholders, five
Acting auditors and four alternate Auditors have been appointed.
The Shareholders’ Meeting also appointed Auditor Roberto Capone as Chairman of the Board of Statutory
Auditors.
The following table lists the members of the Telecom Italia Board of Statutory Auditors as of April 8, 2016.
Name Position Appointed
Roberto CAPONE(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chairman 2015
Vincenzo CARIELLO(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acting Auditor 2015
Paola MAIORANA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acting Auditor 2015
Gianluca PONZELLINI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acting Auditor 2015
Ugo ROCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acting Auditor 2015
Francesco Di CARLO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alternate Auditor 2015
Gabriella CHERSICLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alternate Auditor 2015
Piera VITALI(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alternate Auditor 2015
Riccardo SCHIOPPO(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alternate Auditor 2015
(1) Elected by minority shareholders.
The positions held by the members of the Board of Statutory Auditors in other listed companies are shown below:
Roberto Capone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chairman of the Board of Auditors of Bonifiche
Ferraresi, Director of Biancamano S.p.A.
Paola Maiorana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chairman of the Board of Auditors of Moleskine
Gianluca Ponzellini . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chairman of the Board of Auditors of Banca IMI and of
De Longhi 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”.
164

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.
165

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, 2015 and 2014 was the following:
As of December 31,
2015 2014 Changes
(units)
Employees—Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,555 52,882 (327)
Employees—Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,312 13,143 169
Total Employees at payroll(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,867 66,025 (158)
Employees allocated to non-current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,228 16,420 (192)
Total Employees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,095 82,445 (350)
(1) Includes employees with temporary work contracts: 3 units as of December 31, 2015 and 9 units as of December 31, 2014.
The decrease in workforce (excluding employees allocated to Non-current assets held for sale) of 158 units
compared to December 31, 2014, is mainly the result of the following events that occurred in 2015:
Š the inclusion in the scope of consolidation of Alfabook (17 units);
Š the workforce turnover down by 169 units. The workforce turnover is detailed below by each Business Unit:
Hirings Terminations Changes
(units)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 823 1,151 (328)
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,918 3,717 201
Media, Other Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 46 (42)
Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,745 4,914 (169)
As of December 31,
2015 2014 Changes
(units)
Personnel on payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,171 44,164 7
Tim Brasil group
As of December 31,
2015 2014 Changes
(units)
Tim Brasil group—Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,042 12,841 201
6.5.2 INDUSTRIAL RELATIONS
Telecom Italia
The Telecom Italia S.p.A. system of industrial relations is based on participation, which is seen as a value to be
pursued in any discussion, not only in negotiations. The year 2015 featured several discussions and information
sessions with union representatives in accordance with the established national and local industrial relation
practices.
The 2016-2018 Strategic Plan provides for an acceleration of investments over the Plan period, in order to
increase coverage of the country with a modern, next-generation network and to reach 84% of the population with
fiber optic technology and 98% of the population with the LTE (4G) mobile network by the end of 2018.
166

Implementing the plan also requires a professional restructuring to renew the portfolio of skills available and,
wherever possible, carrying out high-value activities internally. In discussions held on aspects of the Plan
connected with employment, the parties explored a variety of possible solutions that would minimize any
traumatic impact and would be economically sustainable for Company employees. In this respect, an agreement
was reached in September 2015 that established a set of steps for implementing the Plan while safeguarding jobs.
These steps include:
Š solidarity contracts for a period of two years with a commitment to extend it for a further twelve months, in
order to allow redundancies to be minimized over the three-year period, particularly through early and
voluntary retirement using the other legal tools identified;
Š support for early retirement using the voluntary redundancy tool;
Š recourse to article 4 of the Fornero law, which allows older workers to bring forward their retirement by
immediately receiving an amount equal to the pension accrued until that date (early retirement paid for by
the Company). The Company will also continue to pay social security contributions until the actual
retirement age is reached;
Š professional retraining, in order to allow workers currently employed in areas where efficiency needs to be
improved to retrain in order to perform more valuable activities providing medium to long term stability of
employment.
The ultimate purpose of the operation is to ensure stability of employment at Telecom Italia, protect jobs and
improve competitiveness. The agreement also provides for the Company to pay the workers covered by solidarity
contracts a one-time sum as a bonus at the end of the solidarity suspension if overall implementation of the Plan
has been positive and its objectives have been achieved.
In order to lessen the financial hardship caused by the reduction in working hours under the solidarity contracts,
which is only partly offset by the INPS (Italian National Institute of Social Security) contribution, the Company
has decided to provide subsidized company loans (equal to official ECB refinancing rate currently at 0.05%), for
employees that specifically request them.
Particularly intensive discussions continued with executive employee representatives, allowing socially sustainable
instruments to be identified, in addition to the ones normally available in the Company, to assist with the
necessary right-sizing. These instruments should be not traumatic and should be able to reconcile staff turnover
administration and management restructuring requirements.
In this respect, an important agreement was signed with executive representatives that provides for the voluntary
departure of a maximum 150 executives that fulfil certain legal requirements. As a result, executives will be able
to benefit from the mutually agreed termination of their employment contract if they fulfil the minimum
requirements for retirement or early retirement within four years of termination, with the company paying out a
benefit equal to the pension workers would be entitled to receive based on existing rules and continuing to pay
INPS the contribution until the minimum requirements for a pension are fulfilled.
In full compliance with current legal provisions, Telecom Italia discussions with the relevant union
representatives regarding two separate corporate transactions resulted in agreements between the parties
involved.
In particular, the Tower department of Telecom Italia S.p.A. was transferred to Società Infrastrutture Wireless
Italiane S.p.A. (Inwit). This initiative fulfilled the objective of establishing an independent radio network
infrastructure operator that can develop and enhance the towers business involving various types of electronic
communication service operators and ICT players. As part of the procedure, specific agreements were signed on
maintaining the salary levels and contractual terms and conditions applicable to the employees affected by the
transfer.
Discussions between the Company and the unions were similarly aimed at completing the procedure for the
merger by incorporation of Telecom Italia Media S.p.A. into Telecom Italia S.p.A. This operation was intended to
simplify the Group’s structure and to ensure a more efficient management of the process of enhancing Persidera
S.p.A., also by seizing medium to long term opportunities.
167

A complex and fruitful series of discussions was held between the Company and the unions on the scope of
Telecom Italia’s involvement in EXPO 2015, as its Official Global Partner, and the associated need to oversee the
event as effectively as possible.
In this context, an agreement was signed with the unions that governed Telecom Italia’s oversight and support
operating model for EXPO and all the associated aspects, including working hours, shifts and availability of
Company staff who contributed to this event.
Brazil
Meetings were held to discuss the 2015-2016 amendments to collective agreement—ACT 2014/2016. They
began in September 2015 and ended in December 2015, when the amendments were approved unanimously
across the country. The Company held five meetings with the two national Federations (FENATTEL and FITTEL),
which together represent the country’s 27 trade unions. The negotiations related to financial aspects, including
salary increases and benefits. With regard to healthcare for children, the age limit for insurance was raised from
six years to a maximum of seven years. Finally, December 28, 29 and 30 were recognized as holidays.
168

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 16, 2014 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 2016 financial statements),
according to article 2389, first paragraph, of the Italian Civil Code up to 1.9 million euros, such amount to be
divided amongst the directors in accordance with the resolution adopted by the Board itself in connection
therewith. The Shareholders’ Meeting held on December 15, 2015, approved an increase of the overall
remuneration of the Board of Directors, in connection with the appointment of four additional Directors, up to
2,484,615 euros.
The above mentioned overall amount is distributed as follows (gross amounts on a yearly basis):
Š 110,000 euros to be paid to each director in office (excluding the Chairman of the Board and the CEO);
Š an additional 45,000 euros to be paid to each member of the Control and Risk Committee;
Š an additional 40,000 euros to be paid to each member of the Nomination and Remuneration Committee;
Š an additional 20,000 euros to be paid to the Chairman of each Control and Risk Committee and Nomination
and Remuneration Committee;
Š an additional 45,000 euros to be paid to Director Calvosa, who is 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 2015 to the
members of the Board of Directors of Telecom Italia was 5.2 million euros.
Following the renewal of the Board of Directors (Shareholders’ Meeting of April 16, 2014) the remuneration
package of the Chairman (Mr. Recchi, who is not an employee of the Company) was agreed by contract as follows:
Š fixed annual remuneration of 700,000 euros gross for his position as Chairman of the Board;
Š variable remuneration linked to annual performance objectives decided by the Board, with a target value of
200,000 euros and a range of between 50% and 150%, depending on the level of achievement of the targets
assigned;
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 Chairman by the amount required to pay the
tax applicable to taxed benefits. With specific reference to complementary welfare, provision was 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.
In the event of early termination of the office as Director in the absence of just cause, at the initiative of the
Company and/or if asked to resign by the Board of Directors, the Chairman shall have the right to receive the
fixed fees established for the office otherwise due until the end of the mandate. Moreover, unless otherwise
resolved by the Board of Directors, the Chairman shall also have the right to receive a variable amount, calculated
on the remaining value in annual amounts (or fractions of annual amounts) based on the average of the amounts
actually received, as variable short term fee, until the actual date of termination of the office as director. A similar
treatment will apply in case of resignation due to revocation, reduction or modification substantially worsening
the powers granted.
The remuneration package of the Chief Executive Officer of the Company up to March 22, 2016 (Mr. Patuano, who
was an employee of Telecom Italia) had been agreed by contract as follows:
Š fixed annual remuneration of 1.4 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;
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Auditors
Š benefits similar to those granted to Group executives (company car, accident and medical insurance,
complementary healthcare, complementary welfare).
When Mr. Patuano resigned on March 22, 2016, in line with the remuneration policy and the agreements in place,
in addition to accrued remuneration, fixed and variable (the latter subject to claw back mechanisms), Mr.Patuano
was granted an additional 1,235,000 euros gross with respect to termination of the directorship and 4,765,000
euros gross with respect to termination of the employment contract, for an overall amount of 6,000,000 euros
gross. As per the contractual regulation in force, the stock options already granted to Mr. Patuano expired, with
no economic effect.
The present Chief Executive Officer of the Company (Mr. Cattaneo, who is as well an employee of Telecom Italia),
according to his remuneration package, was named as one of the beneficiaries of the Special Award. This provides
for an annual bonus totaling a maximum of 5.5% of the difference between (i) the results achieved separately in
each of the years 2016, 2017, 2018 and 2019 and (ii) the consolidated targets for EBITDA, Opex reduction and
NFP (Net Financial Position) as defined in the 2016-2018 Industrial Plan, using for 2019 the same values as the
plan for the 2018 financial year; 4% of the aforementioned difference will be reserved for the remuneration of the
Chief Executive Officer, while the remaining maximum 1.5% will benefit other managers of the Company, to be
identified by the Chief Executive Officer. The bonus (to an overall maximum of 55,000,000 euros) will be paid in
2020, 80% in equity and 20% in cash. In the event of early termination of Mr. Cattaneo as a good leaver, he will be
paid any amounts accrued pursuant to the Special Award, if any, and the bonus he would be entitled to, according
to a linear projection to December 31, 2019 of the average bonus already accrued.
***
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Auditors
The following table lists the Directors who served during 2015 and their respective compensation as of
December 31, 2015, 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):
Column 1 Column 2 Column 3 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8
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
Giuseppe Recchi(1) Chairman 1/1 –
12/31/2015
12/31/2016 700 204 129 1,033
Marco Emilio
Angelo
Patuano(2)
Chief
Executive
Officer
1/1 –
12/31/2015
12/31/2016 1,388 1,024 41 2,453 804
Tarak Ben
Ammar(3)
Director 1/1 –
12/31/2015
12/31/2016 110 110
Davide Benello(4) Director 1/1 –
12/31/2015
12/31/2016 110 60 170
Lucia Calvosa(5) Director 1/1 –
12/31/2015
12/31/2016 155 65 220
Flavio Cattaneo(6) Director 1/1 –
12/31/2015
12/31/2016 110 9 119
Laura Cioli(7) Director 1/1 –
12/31/2015
12/31/2016 110 45 155
Francesca
Cornelli(8)
Director 1/1 –
12/31/2015
12/31/2016 110 45 155
Jean Paul
Fitoussi(9)
Director 1/1 –
12/31/2015
12/31/2016 110 40 150
Giorgina Gallo(10) Director 1/1 –
12/31/2015
12/31/2016 110 45 155
Félicité Herzog(11) Director 12/15 –
12/31/2015
12/31/2016 5 5
Denise
Kingsmill(12)
Director 1/1 –
12/31/2015
12/31/2016 110 40 150
Luca Marzotto(13) Director 1/1 –
12/31/2015
12/31/2016 110 31 141
Hervé Philippe(14) Director 12/15 –
12/31/2015
12/31/2016 5 5
Stephane
Roussel(15)
Director 12/15 –
12/31/2015
12/31/2016 5 5
Arnaud Roy de
Puifontaine(16)
Director 12/15 –
12/31/2015
12/31/2016 5 5
Giorgio Valerio(17) Director 1/1 –
12/31/2015
12/31/2016 110 45 155
Total 3,363 425 1,228 — 170 — 5,186 804 —
(1) Giuseppe Recchi—Chairman of the Board of Directors
col. 1 This amount includes the fixed compensation, pursuant to article 2389, subsection 3, of the Italian Civil Code, resolved by the
Board of Directors;
col. 3 The amount, in relation to the office as Director, refers to the bonus relating to the financial year for objectives achieved in the year
itself (euro 203,000) as well as reimbursements for clubs and associations memberships (euro 1,000);
col. 4 The amount includes payments for pension policies relating to the financial year 2014 (euro 49,000).
(2) Marco Patuano—Former Chief Executive Officer
col. 1 The amount includes the remuneration for work as employee (euro 1,383,000) and travel expenses (euro 5,000);
col. 3 The amount, relating to the office as Director, includes the bonus pertaining to the financial year for objectives achieved in the year
itself (euro 1,019,000), as well as miscellaneous/taxed reimbursements relating to the contract of employment (euro 5,000).
(3) Tarak Ben Ammar—Director
col. 1 This amount refers to the compensation received as member of the Board of Directors.
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Auditors
(4) Davide Benello—Director
col. 1 This amount refers to the compensation received as member of the Board of Directors;
col. 2 This amount refers to the compensation received as member of the Nomination and Remuneration Committee (euro 40,000) and as
Chairman of the Nomination and Remuneration Committee (euro 20,000).
(5) Lucia Calvosa—Director
col. 1 This amount refers to the compensation received as member of the Board of Directors (euro 110,000) and as link between the
Board of Directors and the corporate control departments which report directly to the Board (euro 45,000);
col. 2 This amount refers to the compensation received as member of the Control and Risk Committee (euro 45,000) and Chairman of the
Nomination and Remuneration Committee (euro 20,000).
(6) Flavio Cattaneo—Director
col. 2 This amount refers to the compensation received as member of the Nomination and Remuneration Committee for the period
01/01-03/26/2015.
(7) Laura Cioli—Director
col. 2 This amount refers to the compensation received as member of the Control and Risk Committee.
(8) Francesca Cornelli—Director
(9) Jean Paul Fitoussi—Director
col. 2 This amount refers to the compensation received as member of the Nomination and Remuneration Committee.
(10) Giorgina Gallo—Director
(11) Félicité Herzog—Director
(12) Denise Kingsmill—Director
col. 2 This amount refers to the compensation received as member of the Nomination and Remuneration Committee.
(13) Luca Marzotto—Director
col. 1 This amount refers to the compensation received as member of the Board of Directors.
col. 2 This amount refers to the compensation received as member of the Nomination and Remuneration Committee for the period
03/27-12/31/2015.
(14) Hervé Philippe—Director
(15) Stephane Roussel—Director
(16) Arnaud Roy de Puyfontaine—Director
(17) Giorgio Valerio—Director
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Auditors
Applicable Italian law requires disclosure of individual compensation in the form of stock options for members of
the Board of Directors.
The following table has 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 assigned in
previous financial years 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
Name and Position
Plan and
respective
resolution
Number of
financial
instruments
Strike
price
Possible
exercise
period
(from –
to)
Number of
financial
instruments
Strike
price
Possible
exercise
period
(from –
to)
Fair value
on
assignment
date (in
euro)
Date of
assignment
Market price
on
assignment
Number of
financial
instruments
Strike
price
Market
price
Number of
financial
instruments
Number of
financial
instruments
Marco Patuano —Chief
Executive Officer . . .
2014 Stock
Option
Plan
4/16/2014 20,106,382 €0.94
2017 /
2020 20,106,382
Following his termination on March 22, 2016, the stock options granted to the former CEO were forfeited.
For further details, please see “Note—Equity compensation plans” 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 2015 to the Company’s
executive officers (including the Chief Executive Officer) was 10.9 million euros.
There is no generalized standard practice regarding severance pay for executive officers with strategic
responsibilities.
There are no general non-competition policies for executive officers with strategic responsibilities.
The specific provisions applicable to the current Chief Executive Officer, 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 as a group.
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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.
Options assigned in previous
financial years 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
Position
Plan and
respective
resolution
Number of
financial
instruments
Strike
price
Possible
exercise
period
(from –
to)
Number of
financial
instruments
Strike
price
Possible
exercise
period
(from –
to)
Fair value
on
assignment
date (in
euro)
Date of
assignment
Market
price on
assignment
Number of
financial
instruments
Strike
price
Market
price
Number of
financial
instruments
Number of
financial
instruments
Remuneration in the company that draws up the financial statements
Executive Officers . . . . . . . . 2014 Stock
Option Plan
4/16/2014
25,839,518 € 0.94 2017 /
2020
2,227,722 € 1.01 2017 /
2020
591,089 03/02/2015 € 1.08 28,067,240
Remuneration from subsidiaries and associates
Option Plan
412,781 R$ 8.1349(1) 2014 /
2019
412,781
Option Plan
338,601 R$13.4184(1) 2015 /
2020
338,601
Option Plan
780,144 R$8.4526(1)(4) 2016 /
2021
495,862(2)(3) 10/16/2015 R$8.4526(4) 780,144
(1) The strike price can be corrected with regard to the conditions laid down in the plan.
(2) Amounts relating to local Stock Option Plans have been converted at 12/31/2015 into euros/000 at the average exchange rate in 2015
(Reais/€3.69727).
(3) Fair Value at allocation date for each option equal to 2.35 Reais.
(4) The market price (same value as the strike price) is calculated on the basis of the share price weighted by volume of trade in the 30 days
prior to September 29, 2015.
6.6.3 COMPENSATION OF MEMBERS OF THE BOARD OF AUDITORS
The General Shareholders’ Meeting of May 20, 2015 (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 2015 to the
members of the Board of Auditors was approximately 515 thousand euros.
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
Roberto CAPONE(1) . . . . . . Acting Auditor 1/1-05/20/2015 12/31/2014 47 47
Chairman 05/21-12/31/2015 12/31/2017 83 83
Vincenzo CARIELLO(2) . . . Acting Auditor 05/21-12/31/2015 12/31/2017 58 58
Paola MAIORANA(3) . . . . . Acting Auditor 05/21-12/31/2015 12/31/2017 58 58
Gianluca
PONZELLINI(4) . . . . . . . Acting Auditor 1/1-05/20/2015 12/31/2014 45 45
Acting Auditor 05/21-12/31/2015 12/31/2017 58 58
Ugo ROCK(5) . . . . . . . . . . . Acting Auditor 05/21-12/31/2015 12/31/2017 58 58
Enrico Maria
BIGNAMI(6) . . . . . . . . . . Chairman 1/1-05/20/2015 12/31/2014 63 5 68
Salvatore SPINIELLO(7) . . Acting Auditor 1/1-05/20/2015 12/31/2014 44 44
Ferdinando SUPERTI
FURGA(8) . . . . . . . . . . . . Acting Auditor 1/1-05/20/2015 12/31/2014 45 3 48
Total . . . . . . . . . . . . . . . . . 559 8 567
(1) Roberto Capone—Chairman of the Board of Statutory Auditors
This amount refers to the compensation received as Acting auditor (euro 37,000), supplemented with the attendance allowance
(euro 10,000), as per the resolution passed by the shareholders’ meeting on April 16, 2014, and as Chairman of the Board of Statutory
Auditors.
174

Auditors
(2) Vincenzo Cariello—Acting Auditor
This amount refers to the compensation received as Acting Auditor.
(3) Paola Maiorana—Acting Auditor
(4) Gianluca Ponzellini—Acting Auditor
This amount refers to the compensation received as Acting Auditor (euro 37,000), supplemented with the attendance allowance
(euro 8,000), as per the resolution passed by the shareholders’ meeting on April 16, 2014.
(5) Ugo Rock—Acting Auditor
(6) Enrico Maria Bignami—Chairman of the Board of Statutory Auditors
This amount refers to the compensation received as Chairman of the Board of Statutory Auditors (euro 52,000), supplemented with the
attendance allowance (euro 11,000), as per the resolution passed by the Shareholders’ Meeting on April 16, 2014. Other compensation
related to the accrual period (01/14-05/20/2015) for the compensation received as Chairman of the Board of Statutory Auditors of the
subsidiary INWIT S.p.A.
(7) Salvatore Spiniello—Acting Auditor
(euro 8,000), as per the resolution passed by the Shareholders’ meeting on April 16, 2014.
(8) Ferdinando Superti Furga—Acting Auditor
(euro 8,000), as per the resolution passed by the Shareholders’ meeting on April 16, 2014. Other compensations related to the accrual
period (04/16-05/20/2015) for the compensation received as Chairman of the Board of Statutory Auditors of the subsidiary Telecom
Italia Information Technology S.r.l.
175

Item 6. Directors, Senior Management and Employees Options To Purchase Securities From Registrant
6.7 OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT
At December 31, 2015, the outstanding equity compensation plans of the Telecom Italia Group are as follows.
Telecom Italia stock option plans
The Shareholders’ Meeting of the Company on April 16, 2014 approved the Stock Option Plan 2014-2016 that
was initiated following the resolution of the Board of Directors on June 26, 2014.
The beneficiaries of the Plan include the Chief Executive Officer, Top Management (including Executive Officers)
and a selected part of the Management for a total of 159 employees of the Telecom Italia Group. The Plan covers
the three-year period 2014-2016, with a maximum limit of 196 million Ordinary Shares available for issue. Each
beneficiary, upon achieving the target level of his/her performance objectives, is awarded a number of exercisable
options. Once they have vested, the rights can be exercised for a period of three years.
The exercise price was set at 0.94 euros per option (strike price). If allocations are made at a later stage, the
strike price will be the higher of the price established upon initial allocation and the average of the official market
price in the month prior to the board resolution.
Tim Participações stock option plans
In particular:
Š 2011-2013 Plan. The incentive plan for managers in key positions at Tim Participações and its subsidiaries
was evaluated on the basis of two performance objectives. The vesting period was three years (a third per
year) and the validity of the options is six years;
Š 2014-2016 Plan. The incentive plan for managers in key positions at Tim Participações and its subsidiaries
was approved by the shareholders’ meeting on April 10, 2014. The exercise of the options is not subjected to
specific performance objectives. The vesting period was three years (a third per year) and the validity of the
options is six years.
For further details, see “Note—Equity compensation plans” of the Notes to the Consolidated Financial Statements
176

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, 2015, 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
Vivendi S.A.(*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (direct/indirect) 2,887,740,223 21.39
JP Morgan Chase & Co.(**) . . . . . . . . . . . . . . . . . . . . . . (indirect) 357,649,700 2.65
People’s Bank of China . . . . . . . . . . . . . . . . . . . . . . . . . . . (direct) 279,155,990 2.07
(*) Shareholding determined following receipt of a communication from Vivendi S.A. in compliance with art. 152 octies, paragraph 7, of the
Consob Issuer’s Regulations.
(**) An additional 1.87% without voting rights.
BlackRock Inc. notified an indirect holding as of March 12, 2014, as an asset management company, of a total
number of 645,770,181 Ordinary Shares, which at December 31, 2015 was equal to 4.78% of Telecom Italia’s
Ordinary Shares.
At December 31, 2015, Telecom Italia held 37,672,014 of its own Ordinary Shares, while the subsidiary Telecom
Italia Finance S.A. held another 126,082,374 Ordinary Shares, for a total of 1.21% of capital with voting rights.
As of April 8, 2016, the above mentioned position is the following:
As of April 8, 2016
Type of
ownership
No. Ordinary
Shares
% of ordinary
share capital
Vivendi S.A.(*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (direct/indirect) 3,361,478,030 24.90
JP Morgan Chase & Co.(**) . . . . . . . . . . . . . . . . . . . . . . (indirect) 288,661,862 2.14
People’s Bank of China . . . . . . . . . . . . . . . . . . . . . . . . . . . (direct) 279,155,990 2.07
(*) Shareholding determined following receipt of communications from Vivendi S.A. in compliance with art. 152 octies, paragraph 7, of the
Consob Issuer’s Regulations.
(**) An additional 2.69% without voting rights.
BlackRock Inc.’s indirect holding of a total number of 645,770,181 Ordinary Shares (as indicated above), was at
April 8, 2016 equal to 4.78% of Telecom Italia’s Ordinary Shares.
For more details about the significant changes in the percentage of ownership held by major shareholders, 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.
Effective June 17, 2015, the shareholder agreement in place between the shareholders of Telco S.p.A. was
dissolved, as disclosed by public notices in accordance with the applicable regulations. As a result, there are no
longer any shareholder agreements relating to Telecom Italia pursuant to Article 122 of Italian Legislative Decree
58/1998.
177

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 2015 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
2014
(or at the date
of
appointment)
Number of
shares
purchased in
2015
Number of
shares sold in
2015
Number of shares
held at the end of
2015 (or as of the
date on which
individual left post, if
before)
Giuseppe RECCHI . . . . Telecom Italia S.p.A. Ordinary — 320,000 — 320,000
Marco PATUANO . . . . . Telecom Italia S.p.A. Ordinary 70,000 — — 70,000
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Savings 30,000 — — 30,000
Luca MARZOTTO . . . . . Telecom Italia S.p.A. Savings 200,798 — — 200,798
❖ BOARD OF AUDITORS
No individuals who, during 2015 or a part of that year, have held the post of statutory auditor in Telecom Italia
S.p.A. hold investments in Telecom Italia S.p.A. and in the related subsidiaries.
❖ EXECUTIVE OFFICERS
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 2015 or a part of that year, have held the post of
executive officers in Telecom Italia S.p.A.
Company
Class of
shares
Number
of shares held
at the end of
2014
(or at the date
of
appointment)
Number of
shares
purchased
in 2015
Number of
shares sold in
2015
Number of shares
held at the end of
2015 (or as of the
date on which
individual left post, if
before)
Telecom Italia S.p.A.(1) . . . . . . . . . . . . . . . Ordinary 23,553 1,104 — 24,657
Tim Participacoes . . . . . . . . . . . . . . . . . . . . . Ordinary 11,310 — — 11,310
(1) Of which 3,460 shares held indirectly.
* * *
As of April 8, 2016 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 STATE
The Italian Government is in a position to exert certain powers with respect to Telecom Italia through the
exercise of special powers.
In 2012 Decree law 21/2012, setting out “Regulations on special powers over corporate ownership in the defense
and national security sectors, as well as for activities of strategic relevance in the energy, transport and
communications sectors” was adopted and subsequently converted with amendments in law 56/2012.
The regulations for the identification of assets of strategic importance in the communications sector (Presidential
Decree no. 85/2014) was published in the Official Gazette of June 6, 2014 and identified the procedures to
activate special powers (Presidential Decree no. 86/2014).
As a result the Italian Government is now provided with:
Š the authority to impose conditions and possibly to oppose the purchase, by non-EU entities, of controlling
shareholdings in the Company. For non-EU entities, any right to purchase will be permitted solely on
condition of reciprocity with the purchaser’s home jurisdiction;
178

Š until expiration of the period for the imposition of conditions or the exercise of the power of opposition, the
voting rights attached to the shares whose transfer involves the transfer of control, are suspended. The same
rights are suspended in the event of any default or breach of conditions imposed to the buyer, throughout
the period in which the breach or violation continues. The resolutions adopted with the vote of such shares
or units, as well as the resolutions or acts adopted in violation or breach of the conditions imposed, are null;
Š veto power (even in the form of imposing requirements or conditions) at any resolution, act or transaction
which has the effect of modifying the ownership, control, or the availability of the same strategic assets or
change their use, including resolutions of merger, demerger, transfer of the registered office abroad,
transferring 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 resolutions or acts adopted in violation of these
requirements are void. The Government may also order the company and any other party at their own
expense to restore the previous situation.
179

Item 7. Major Shareholders and Related-Party Transactions Related-Party Transactions
7.2 RELATED-PARTY TRANSACTIONS
In 2015 there were no major transactions with related parties. In addition, there were no changes or
developments with respect to the related party transactions described in the 2014 Form 20-F that had a
significant effect on the financial position or on the results of the Telecom Italia Group in 2015.
Related party transactions, when not dictated by specific laws, were usually conducted with similar terms than
provided to third parties. Furthermore, the transactions were subject to an internal procedure which establishes
the procedures and timing for verification and monitoring.
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.
180

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.
181

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
182

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 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
2011.
Telematico NYSE
High Low High Low
(€) (U.S.$)
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:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.765 0.547 10.160 7.050
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.665 0.515 8.600 6.660
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.615 0.475 8.200 6.280
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.748 0.613 10.300 8.230
2014:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.875 0.712 12.010 9.550
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.000 0.821 13.410 11.280
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.936 0.807 12.550 10.710
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.954 0.763 11.710 9.730
2015:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.135 0.859 12.130 10.070
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.191 1.030 13.410 11.440
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.263 1.062 13.640 11.920
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.294 1.019 14.030 10.080
2016:
January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1423 0.9932 12.33 10.76
February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9953 0.8312 10.76 9.09
March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0434 0.9146 11.66 10.16
April (through April 8, 2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9173 0.8432 10.30 9.41
Source: Bloomberg data
At the close of business on April 8, 2016 there were 19,212,914 Ordinary Share ADSs outstanding held by 118
registered holders. One of the registered holders is the Depository Trust Company (“DTC”) which holds
19,206,719 Ordinary Share ADSs on behalf of beneficial holders.
183

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 2011.
Telematico NYSE
High Low High Low
(€) (U.S.$)
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:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.654 7.050 8.640 6.040
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.551 0.418 7.180 5.400
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.487 0.378 6.560 4.940
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.586 0.489 7.920 6.550
2014:
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.661 0.545 9.360 7.650
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.784 0.633 10.530 8.630
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.740 0.651 9.740 8.650
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.751 0.599 9.210 7.710
2015
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.904 0.683 9.830 8.000
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.943 0.833 10.620 9.210
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.998 0.867 11.000 9.740
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.098 0.850 11.567 9.710
2016
January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9190 0.8019 9.90 8.62
February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8094 0.6679 8.87 7.41
March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8409 0.7233 9.67 8.03
April (through April 8, 2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7468 0.6839 8.60 7.84
Source: Bloomberg data
At the close of business on April 8, 2016 there were 5,939,717 Savings Share ADSs outstanding held by
15 registered holders. One of the registered holders is the Depository Trust Company (“DTC”) which holds
5,936,776 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 8, 2016 the Noon Buying Rate for the Euro was U.S.$ 1.1406 = €1.00.
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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 second
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).
For the purposes of the automatic control of the regularity of trading on MTA, the following price variation limits
shall apply to contracts concluded on shares making up the FTSE MIB, effective July 1, 2013: (i) ± 5.0% (or such
other amount established by Borsa Italiana in the “Guide to the Parameters” for trading on the regulated markets
organized and managed by Borsa Italiana) with respect to the static price (the static price shall be the previous
day’s reference price, in the opening auction, or the auction price, in the continuous trading phase); and (ii)
± 3.5% (or such other amount established by Borsa Italiana in the “Guide to the Parameters”) with respect to the
dynamic price (the price of the last contract concluded during the continuous trading phase). Where the price of a
contract that is being concluded exceeds one of the price variation limits referred to above, trading in that
security will be automatically suspended and a volatility auction phase begun for a certain period of time.
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.
The FTSE MIB Index is the primary benchmark index for the Italian equity market. Capturing approximately 80%
of the domestic market capitalization, the FTSE MIB Index measures the performance of the 40 most liquid and
capitalized 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).
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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 opens 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
be settled 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).
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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
No significant change in the regulatory environment took place in 2015.
In July 2015, minor changes were approved to the Borsa Italiana Corporate Governance Code, aimed at
implementing Corporate Social Responsibility principles, enhancing internal corporate safeguards to meet legal
requirements and transparency, and incorporating some recommendations previously made by the Borsa Italiana
Corporate Governance Committee.
❖ CODE OF ETHICS AND CONDUCT
The Code of Ethics and Conduct (the “Code of Ethics”) of the Telecom Italia Group 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 last update dates back to October 3, 2013.
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 (or neglected in a single instance) 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.
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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 result in 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;
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
lastly on March 17, 2016. In addition to “related parties”, as defined by Consob regulation No. 17221 of March 12,
2010 and IAS 24, this procedure 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 organized and operates according to the principles and
criteria set out in the Italian Stock Exchange Code. It is an integral part of the general organizational 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 Giuseppe Recchi and the Chief Executive Officer Flavio Cattaneo), and to the Manager in
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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), 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 Internal Audit Manager, the Group Compliance Officer and the IT & Security Compliance Department
Manager report directly to the full Board; the role of link between the Board of Directors and said control
structures is presently assigned to non-executive Director Lucia Calvosa who is the Chairman of the Control and
Risk Committee.
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
In 2015 the Board of Directors has had 13 meetings.
As at April 8, 2016, 5 meetings have been held.
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
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 two thirds of the directors to be elected are chosen from the slate that obtains the simple 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.
At least half of the directors chosen from each slate (with rounding up) must be independent, as per applicable
requirements. If necessary, the last names elected from a slate that do not fulfil these requirements will be
replaced, in order, by the first of those not elected from the same slate who fulfil said requirements. In the
absence of a sufficient number of independent candidates in a slate to be able to make the replacements, the
Shareholders’ Meeting shall complete the board with the legal majorities, ensuring that the requirement is
fulfilled.
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All slates that present three or more candidates shall have a gender ratio of at least 1:3 among the candidates. In
case the vote on the slates does not fulfill the diversity requirement in the composition of the Board (1:3), 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.
With respect to the current composition of the Board, see above “Item 6- Directors, Senior Management and
Employees”. See also: Risks associated with Telecom Italia’s ownership chain under “Item 3. Key
Information—3.1 Risk Factors”.
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 or tenure limit requirement.
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 Nomination 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
Effective June 17, 2015, the shareholder agreement in place between the shareholders of Telco S.p.A. was
dissolved, as disclosed by public notices in accordance with the applicable regulations. As a result, there are no
longer any shareholder agreements for Telecom Italia pursuant to Article 122 of Italian Legislative Decree
58/1998.
See “Item 7. Major Shareholders and Related-Party Transactions—Item 7.1.1. The Shareholders’ Agreements”.
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 (but see above the independence quota to
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be met by candidates chosen from each single slate). 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 9, out of the 16 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, Davide Benello, Francesca Cornelli, Denise Kingsmill, Giorgina Gallo, Laura Cioli, Giorgio Valerio, Luca
Marzotto and Felicitè Herzog. In addition, Jean Paul Fitoussi qualifies as independent pursuant to the
independence requirements set forth by the Consolidated Law on Finance for the members of the Board of
Auditors. 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 Chief Executive Officer has been assigned responsibility for the overall management of the Company and the
Group (including responsibility for defining, proposing to the Board of Directors and then implementing and
developing the strategic, industrial and financial plans) and all the organizational responsibilities to ensure the
management and development of business.
At present the Chairman, in addition to legal representation of the Company, as provided for in the bylaws has a
general role of guidance and overview in the development and implementation of the Company and Group
strategy, industrial and financial plans, of the development guidelines, as well as supervision of the definition of
their organizational structures and economic and financial progress; he also represents the Company and the
Group in its external relations with the Authorities, institutions and Investors.
There are no other Telecom Italia executive directors. As of April 8, 2016 Telecom Italia’s non-executive directors
are: Lucia Calvosa, Davide Benello, Francesca Cornelli, Denise Kingsmill, Giorgina Gallo, Laura Cioli, Giorgio
Valerio, Luca Marzotto, Tarak Ben Ammar and Jean Paul Fitoussi.
On a voluntary basis, on February 6, 2014 the Board of Directors approved a Procedure for the management of
any extraordinary transaction regarding Telecom Italia’s holding in the TIM Brasil group companies (which is
available on the Company website).
The document regulates the investigation and decision-making process for any transaction that can result in the
transfer to entities outside the Telecom Italia Group of all or part of its holdings in the TIM Brasil Group, or of
assets of the related businesses or branches of business exceeding 2 billion euros (including business combination
transfers by conferment, merger or share swap). The procedure places at the center the Board of Directors of
Telecom Italia, and within this the independent Directors: the relevant transactions require the approval of the
Board, subject to the opinion of a committee consisting of all the independent directors in office who have not
declared an interest in the transaction. The independent Directors are called upon to express an opinion on the
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Company’s interest in performing the transaction and on the substantial expediency and correctness of its
conditions. In the case of a negative opinion of the committee, in order for the transaction to be completed under
the conditions proposed, it must be approved by the Board of Directors with a double majority: the majority of all
the directors attending the meeting and the majority of independent directors in office who have no interest in
the transaction, either personal or on behalf of third parties. If the transaction does not obtain specific approval
by the independent directors, the Board of Directors may by majority vote submit it to an assessment by the
ordinary shareholders’ meeting, where it will be considered as approved only if accepted by the majority of
shareholders attending the meeting who do not have an interest in the transaction, either personal or on behalf of
third parties.
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 two Committees: the Nomination and Remuneration Committee and the Control and Risk
Committee (formerly the Internal Control and Corporate Governance Committee).
With regard to the composition, 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.
Control and Risk Committee
According to the Italian Stock Exchange Code, the Committee shall:
Š evaluate together with the person responsible for the preparation of the corporate financial documents, after
hearing the external auditors and the Board of statutory auditors, the correct application of the accounting
principles and, in the case of groups, their consistency for the purpose of the preparation of the consolidated
financial statements;
Š express opinions on specific aspects relating to the identification of the main risks for the company;
Š review the periodic reports evaluating the internal control and risk management system, as well as those
reports of the internal audit function that are particularly significant;
Š monitor the independence, adequacy, efficiency and effectiveness of the internal audit function;
Š request that the internal audit function review specific operational areas, giving simultaneous notice to the
chairman of the Board of Statutory Auditors; and
Š report to the Board of Directors, at least every six months, on the occasion of the approval of the annual and
half-year financial report, on the activity carried out, as well as on the adequacy of the internal control and
risk management system.
In addition, according to Telecom Italia’s Corporate Governance Principles and Control and Risk Committee
Regulation it shall also:
Š provide high-level supervision related to corporate social responsibility, monitoring the consistency of the
actions performed with the principles laid down by the Code of Ethics of the Group and the values of
Telecom Italia;
Š monitor observance of the Company’s corporate governance rules, the evolution of rules and best practice in
the field of controls, corporate governance and corporate social responsibility, also with a view to proposing
updates to the internal practices and rules of the Company and the Group;
Š opine on qualified transactions with related parties, according to the specific procedure; and
Š perform the additional tasks that may be assigned to it by the board of directors.
On June 26, 2014 the Board of Directors Specific approved a set of rules governing the activity of the Committee.
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Nomination and Remuneration Committee
According to the Italian Stock Exchange Code, the Committee shall:
Š periodically evaluate the adequacy, overall consistency and actual application of the policy for the
remuneration of directors and key management personnel, also 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 issue 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; monitor the implementation of decisions adopted by the
Board of Directors and verify, in particular, the actual achievement of performance objectives;
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, limit to the accumulation of offices and
derogations from the prohibition of competition pursuant to Article 2390 of the Italian Civil Code; and
Š submit to the Board of Directors candidates for director’s office in case of co-optation, should the
replacement of independent directors be necessary.
In addition, according to the Company’s Corporate Governance Principles and Nomination and Remuneration
Committee Regulations it shall also:
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 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; and
Š perform other duties assigned to it by the Board of Directors.
On June 26, 2014 the Board of Directors Specific approved a set of rules governing the activity of the Committee.
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.
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In particular, in accordance with the provisions of the Corporate Governance Code of Borsa Italiana, the Head of
the Audit Department:
a) verifies, both on a continuous basis and in relation to special needs, in conformity with international
standards, the adequacy and effective functioning of the internal control and risk management system,
through an audit plan approved by the Board of Directors, based on a structured analysis and ranking of the
main risks;
b) is not responsible for any operational area and reports directly to the Board of Directors;
c) has direct access to all information useful for the performance of his or her duties;
d) drafts periodic reports containing information on his or her own activity, and on the risk management
process, as well as about compliance with the plans defined to mitigate these risks. Such periodic reports
contain an evaluation of the adequacy of the internal control and risk management system;
e) prepares timely reports on particularly significant events;
f) submits the reports referred to in points d) and e) to the Chairs of the Board of Statutory Auditors, Control
and Risk Committee and Board of Directors;
g) tests the reliability of the information systems, including the accounting system, as part of the audit plan;
and
h) reports on his or her work to the Director delegated for this purpose, the Control and risk Committee and,
through the latter, to the Board of Directors, as well as the Board of Statutory Auditors. In particular, he or
she reports on how risk is managed, as well as on compliance with established plans for risk containment,
and expresses his or her assessment on the suitability of the internal control system for achieving an
acceptable overall risk profile.
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.
To ensure a comprehensive approach to risk management, the Telecom Italia Group has implemented an
Enterprise Risk Management (ERM) process to identify, assess and manage risks. Starting from 2014 this activity
is governed by the ERM Steering Committee which is chaired and coordinated by the Head of the Administration,
Finance and Control department. The Steering Committee meets at three-monthly intervals (or in response to
specific needs), and has the object of ensuring governance of the process of managing the Group’s risks, aimed at
ensuring the operational continuity of the company’s business by monitoring the efficacy of the counter-measures
adopted.
On the basis of such a process the Board of Directors defines the nature and level of risk (Risk Appetite)
consistent with the strategic objectives of the Group within the framework of the industrial plan. The ERM model
adopted makes it possible to identify and manage risks in a homogeneous way within the Group companies,
emphasizing potential synergies between the players involved in the assessment of the internal control and risk
management system. The ERM process is designed to identify potential events that may impact on business
activity, to manage the risk within acceptable limits and to provide reasonable assurance of the achievement of
the corporate objectives.
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
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aimed at preventing offences that can result in liability for the Company. The Organizational Model also
constitutes an integral component of the reference compliance program for the application of anti-corruption
legislation such as—for example—the FCPA and the UK Bribery Act. In this context, a foreign version of the
Organizational Model has been defined for adoption by the non-Italian subsidiaries, also taking account of the
possible application of similar regulations at local level.
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 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. 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.
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 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 2015, there were 42 meetings of the Board of Statutory Auditors (14 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
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 simple 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”.
All slates that present three or more candidates shall have a gender ratio of at least 1:3 among the candidates. 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 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”.
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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.
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.
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.
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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).
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.
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
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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 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 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, additions 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.
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 22, 2013 appointed Mr. Dario
Trevisan 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 2015.
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
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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 a 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 2015, the procedures for the Preparation of the
Telecom Italia 2015 annual report for Italian purposes and Telecom Italia 2015 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.
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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 1,000.00 euros. However, with respect to some
types of cash payment, the threshold has been raised to 3,000.00 euros by the Budget Law for 2016 (Law n. 208
of December 28, 2015). 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 (i.e., individuals, non-commercial partnerships and non-commercial entities) which are resident of Italy
for tax purposes and which in the course of the fiscal year hold (or are beneficial owners, as defined for anti-
money laundering purposes, of) investments abroad or have financial activities abroad must, in certain
circumstances, disclose such investments or financial activities regardless of the value of such assets (in contrast,
for assets held up to December 31, 2012, the disclosure must be done only if such financial assets held abroad at
the end of the fiscal year exceeded 10,000.00 euros). Particularly, non-corporate residents must report on their
tax returns the level of the investments or financial activities held abroad during the tax period, regardless of the
total value of the same. This requirement applies even if the taxpayer during the tax period has totally divested
such assets. Moreover, compared with the past years, non-corporate residents are no longer (starting from the tax
returns to be filed for fiscal year 2013), required to provide details in their income tax returns about transfers to,
from, within and between foreign countries in connection with such assets during the fiscal year. No disclosure
requirements exist for investments and financial activities under management or administration entrusted to
Italian resident intermediaries and for contracts concluded through their intervention, provided that the cash
flows and the income derived from such activities and contracts have been subject to Italian withholding or
substitute tax by intermediaries themselves. 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 in respect of foreign investments, foreign assets or transfers within the EU.
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.
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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 the following activities:
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. According to Italian law, in case of an
interest of directors in the transaction to be resolved upon by the Board, there are disclosure requirements, but
abstention is not required.
Recent amendments
On May 20, 2015, the Shareholders Meeting approved the following updates to the Bylaws:
Š to fix the shareholding required in order to submit a slate at 0.5% of the voting capital;
Š to reduce the number of directors to be chosen from the slate that obtains the majority of the votes cast by
the shareholders from four fifths to two thirds of the overall composition of the Board;
Š to require the majority of the candidates of (and the directors be chosen from) each slate to be independent,
according to the law and/or Borsa Italiana Code; and
Š to prohibit Telefonica from exercising any “political rights” in Telecom Italia and its subsidiaries, so long as it
directly or indirectly owns Telecom Italia shares (such amendment having been required by Telco, at request
of Telefonica itself).
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Item 10. Additional Information Description of Capital Stock
10.4 DESCRIPTION OF CAPITAL STOCK
As of April 8, 2016, the subscribed and fully paid-up capital stock was equal to euros 10,740,236,908.50 divided
into 13,499,911,771 Ordinary Shares and 6,027,791,699 Savings Shares, all without par value.
The Extraordinary Shareholders’ Meeting of December 20, 2013, resolved to increase the share capital for cash, in
tranches, with disapplication of the preferential subscription right pursuant to art. 2441, subsection 5 of the
Italian Civil Code, for a total maximum amount, including any share premium, of 1.3 billion euros (in addition to
the value of the interest on the Bonds issued by the subsidiary company Telecom Italia Finance S.A, cited herein,
which may also be settled in shares for a maximum sum of 79,625,000 euros, as of December 31, 2015), to be
carried out in one or more tranches by the issue of ordinary shares of the Company with regular dividend
entitlement solely to enable the conversion of the bond issue called Guaranteed Subordinated Mandatory
Convertible Bonds due 2016 convertible into ordinary shares of Telecom Italia S.p.A. issued by the subsidiary
company Telecom Italia Finance S.A., in compliance with the criteria determined by the related Regulations, it
being understood that, should the capital increase referred to above not be fully subscribed on November 15,
2016, the share capital will be deemed to be increased by an amount equal to the subscriptions received.
For five years starting from April 16, 2014 the Directors may increase, for cash, the share capital to service the
“2014-2016 Stock Option Plan”, as approved by the Company’s Shareholders’ Meeting of that date, in one or
more tranches, for a maximum amount of 107,800,000 euros, by the issue of a maximum of 196,000,000 new
ordinary shares without par value, with regular dividend entitlement, with disapplication of preferential
subscription rights pursuant to art. 2441, subsection 8 and—as required—subsection 5, of the Italian Civil Code,
reserved for part of the management of Telecom Italia S.p.A. and its subsidiaries, identified in due time by the
Company’s Board of Directors. Upon exercising said mandate the Board of Directors shall set the issue price of the
shares (including any premium) in accordance with the “2014-2016 Stock Option Plan”, and it shall also set
suitable time limits for subscription of the newly issued shares, specifying that, if the increase resolved is not fully
subscribed within that time limit, the capital will be increased by an amount equal to the subscriptions received
up to such time.
The Extraordinary Shareholders’ Meeting of May 20, 2015 resolved to increase the share capital for cash for
payment, in tranches, with exclusion of the preferential subscription right pursuant to art. 2441, subsection 5 of
the Italian Civil Code, for a total maximum amount, including any share premium, of 2,000,000,000 euros (two
billion), to service the conversion of the “€2,000,000,000 1.125 per cent. Equity-Linked bonds due 2022”,
to be paid up in one or more tranches by the issue of ordinary shares of the Company with regular dividend
entitlement, for a maximum amount of 2,000,000,000 euros (two billion), exclusively for the service of the
aforementioned bonds issued by the Company, in accordance with the criteria determined by the related
Regulations, without prejudice to the fact that the final terms for subscription of the newly issued shares are
established as March 26, 2022 and that if, as of that date, the share capital increase has not been fully subscribed
it will in any case be intended as increased by an amount equal to the subscriptions collected and as of that date,
with the specific authorisation of the directors to issue the new shares as they are subscribed. No parts of shares
will be issued or delivered and no cash payment or adjustment will be made in lieu of said parts.
In 2015, the share capital increased:
Š on April 20, 2015, as a result of the issue of 178,448 ordinary shares in implementation of the final stage of
the “Long Term Incentive Plan 2010-2015” through the free assignment of bonus shares due to the
beneficiaries of the Plan;
Š on August 4, 2015 with the issue of 17,007,927 ordinary shares following the bonus share capital increase to
service the “2014 Employee Share Ownership Plan” and
Š on September 30, 2015 through the issue of 11,769,945 ordinary shares and 1,671,038 savings shares
following the merger by incorporation of Telecom Italia Media S.p.A. into Telecom Italia S.p.A.
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.
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Pursuant to Telecom Italia’s Bylaws any reduction in share capital made for the purpose of absorbing losses is
applied to the fraction of capital represented by the Ordinary Shares until they have been reduced to zero and only
then is the fraction of capital represented by 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 shares.
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
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 0.55 euros per share (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 0.55 euros per share 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
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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 fraction of capital represented by 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 0.55 euros per share. No liquidation dividend is payable to the holders of other classes of shares
until 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 fraction of capital represented by 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 program.
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 program.
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 8, 2016, Telecom Italia owns 37,672,014 of its own Ordinary Shares, while the subsidiary Telecom
Italia Finance S.A. holds another 126,082,374 Ordinary Shares, for a total of 1.21% of capital with voting rights.
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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
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 Ordinary Shares other than those limitations resulting from the
special powers of the State, which apply equally to all owners of Ordinary Shares, Italian and foreign alike.
Article 20-bis of the Company’s bylaws (which was approved by the Shareholders’ Meeting on May 20, 2015
pursuant to a proposal by Telefónica, through Telco) reads:
Transitory clause
“In conformity with the prescriptions made by Agência Nacional de Telecomunicações “ANATEL” in its ruling
dated December 22, 2014, as subsequently amended on March 12, 2015, the exercise of all the administrative
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rights (direitos políticos) of Telefónica S.A. in Telecom Italia and in its subsidiaries (including Tim Celular S.A. and
Intelig Telecomunicações Ltda.) shall be understood to be suspended, particularly with regard to:
i. the designation of members of the Board of Directors, Board of Statutory Auditors and Executive Committee or
any corporate body of such companies with equivalent powers;
ii. the exercising by Telefónica S.A. of its voting rights and veto rights in the shareholders’ meetings of Telecom
Italia and said companies or in any corporate body thereof with equivalent powers;
iii. its participation (in order to calculate quorums for the purpose of constituting such meetings and for
resolutions) in shareholders’ meetings or in any corporate body of Telecom Italia and said companies with
equivalent powers.
The aforementioned restrictions shall prevail over the other provisions of the company Bylaws of Telecom Italia
that are incompatible with them, in such a way that Telefónica S.A.is always precluded from participating,
intervening or exercising a voting right or veto, or registering its presence (in order to calculate quorums for the
purpose of constituting such meetings and for resolutions) in relation to any resolution adopted by Telecom Italia
or said companies.
The content of this article 20-bis shall have efficacy for as long as Telefónica remains a shareholder of Telecom
Italia, irrespective of the number of shares, or until the moment in which this control, object of the restriction
identified in the ANATEL case (“Ato nº 454 22 January 2015), shall cease to have efficacy”.
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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.
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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 basis, subject to
appropriate adjustments for (i) taxes withheld, (ii) such distribution being impermissible or impracticable
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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.
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
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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.
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.
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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
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
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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
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
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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.
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
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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.
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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. Therefore, this summary is
provided for general information only and it is based upon Italian tax laws in effect as of the date of this
document. Consequently, be aware that such laws may change in the course of the year. You should consult your
own tax advisors as to matters of Italian tax law. For purposes of Italian law and the Italian - US Income Tax
Convention which went into effect on January 1, 2010 (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.
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 final withholding tax at a rate of 26 percent (the rate was increased from
20 to 26 percent by Law Decree No. 66 of April 24, 2014, converted with amendments into Law No. 89 of June 23,
2014 and applies on dividends paid from July 1, 2014 onwards, even in case the relevant distribution resolution
was adopted before the above mentioned date). 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 eleven- twenty-sixth (11/26) of such 26 percent
substitute tax on their dividend income, upon providing adequate evidence (by documentation issued by the tax
authorities of their country of residence) that they have paid a corresponding final income tax in such 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, (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 percent of the gross amount of the dividend (this 15 percent rate
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may be reduced to 5 percent 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).
The withholding agent (i.e., the authorized intermediary/Depositary) may apply the Treaty, rate directly if the
recipient, as the beneficial owner of Telecom Italia Shares or ADSs provides, before the dividend is paid (in
accordance with the relevant instructions about timing and modalities generally provided for by the Depositary),
the intermediary with which the shares are deposited and which participates in the Monte Titoli system with the
following documentation:
(i) a residency certificate that must be validated by the tax authorities in the holder’s country of residence. 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; and
(ii) a declaration by the recipient 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, including a
statement that it does not have a permanent establishment in Italy to which the dividend payment is
attributable.
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 does not provide the relevant documentation in order to obtain the
reduced rate provided by the Treaty at the time the dividend is paid, the holder must pay the substitute income
tax at the rate set forth by Italian domestic law. In this case, the recipient can apply for a refund equal to the
difference between the Italian domestic rate and the Treaty rate directly from the Italian tax authorities by filing
the relevant documentation within 48 months from the date of payment. 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 Savings Shares and applicable ADSs) that: (i) entitle
the holder to exercise more than 2 percent 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 percent 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”.
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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 percent).
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.
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 favor of the spouse and of direct descendants or ascendants are subject to an inheritance and gift
tax applied at a rate of 4 percent on the value of the inheritance or the gift exceeding 1,000,000 euros (per
beneficiary);
(ii) transfers in favor of brothers and sisters are subject to an inheritance and gift tax applied at a rate of
6 percent on the value of the inheritance or the gift exceeding 100,000 euros (per beneficiary);
(iii) transfers in favor 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 percent 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 percent on the entire value of
the inheritance or the gift.
If the beneficiary of any such transfer is a disabled individual, whose handicap is recognized pursuant to Law No.
104 of February 5, 1992, the tax is applied only on the value of the assets (including the Shares) received in
excess of 1,500,000 euros at the rates illustrated above, depending on the type of relationship existing between
the deceased or donor and the beneficiary.
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
meanwhile). With respect to unlisted shares, the value is determined proportionally to the equity resulting from
the last approved balance sheet of the company.
For non-residents, Italian Inheritance and Gift tax applied only with respect to assets and rights existing in the
Italian territory. Shares in companies that have their registered office, the seat of the administration or the main
object in Italy are considered as existing in the Italian territory.
No gift tax convention is currently in place between Italy and the United States.
Registration Tax
Transfer of shares, bonds and similar securities based on contracts executed in Italy are subject to registration tax
as follows: (i) public deeds and notarized deeds are subject to a lump-sum registration tax of 200 euros at the
time of the execution; (ii) private deeds are subject to registration tax, at the same lump-sum, only in case of use
or voluntary registration. This tax is also payable where a contract executed abroad or with different formalities is
presented to an Italian registration office or an Italian court.
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Stamp taxes and duties
Stamp duties (“imposta di bollo”) are levied on certain documents, contracts and registers (e.g., bank checks,
statements of accounts, bills, written contracts, judicial acts, accountancy books), as regulated by DPR 642/1972.
The tax is usually a nominal lump sum and, in exceptional cases, it may be levied as a percentage of the value
mentioned in the document.
Any report to clients by an Italian resident intermediary with reference to financial instruments and products
(including those held abroad through an Italian resident intermediary) is subject to an annual stamp duty of 0.2
percent (0.15 percent in 2013). The rate is applied on the market value or—where no market value is
available—on the nominal value or the redemption amount of any financial product or financial instruments
(including the Telecom Italia shares or ADSs). The provision setting a minimum threshold of 34.20 euros was
abolished on December 31, 2013. For taxpayers other than individuals, this stamp duty is capped at 14,000 euros
(in 2013, the cap was 4,500 euros).
It is assumed that intermediaries send periodic communications to clients at least once a year, even if the Italian
intermediary is not required to prepare and send such communications. In this case, stamp duties must be
applied at December 31 of each year and, in any case, at the expiration of the relationship between intermediary
and client.
Tax on financial transactions
1. Shares and other equity instrument transactions
The Italian Financial Transactions TAX (“FTT”) was introduced by Law No. 228 as of December 24,
2012. Detailed regulations of such tax were provided by the Decree of the Ministry of Economy and
Finance as of February 21, 2013. In accordance with the relevant provisions, starting from March 1,
2013 the FTT is levied to:
a) transfers of ownership of shares and certain participating financial instruments which have
been issued by companies that have their registered office in Italy, regardless of the place of
residence of the parties involved and of the place where the contract has been executed; and
b) transfers of 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.
Therefore, the relevant tax criterion for applying FTT is the place of residence (i.e., the place of the
registered office) of the issuer of the shares and of the participating financial instruments. In contrast,
the place of the execution of the relevant transfers and the residence of the contractual parties involved
is not relevant in defining taxed transactions. Accordingly, transfers performed outside Italian territory
through foreign intermediaries, are also subject to tax in Italy, to the extent they refer to shares, or
participating financial instruments issued by companies registered in Italy (or securities representing
such equity investments). 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, as issuer of the shares, is
relevant.
The taxable base is the net daily balance of the transactions calculated on the same security and
executed by the same persons, or the consideration paid.
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. The
standard FTT rate is:
– 0.20 percent (exceptionally increased to 0.22 percent only for 2013) for over-the-counter
transactions; and
– 0.10 percent (exceptionally increased to 0.12 percent only for 2013) for transactions executed on
regulated markets or in multilateral trading facilities established in (i) an EU Member State, (ii) in
an EEA country that is included in the white list, or (iii) subject to certain conditions, in a non-EEA
jurisdiction that is included in the white list.
The FTT is due by the person to whom the ownership of the shares, the financial participating
instruments and the securities representing equity investments (such as ADSs) is transferred. The tax is
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either (i) applied by the financial intermediary (e.g. banks, trusts, investment companies) or the notary
directly involved in the execution of the transfer, if any, or (ii) paid directly by the transferee, by the
16th day of the month following the execution of the respective transaction. Where more than one
intermediary are involved in the execution of the transfer, the tax must be applied by the intermediary
who receives the order to execute the transaction directly from the transferee.
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; in absence of a permanent establishment in Italy, non-residents may 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 non-resident transferee.
Non-residents involved in a financial transaction are deemed to be the purchaser or the final
counterparty of the execution order, if established in a State which does not fulfill the exchange of
information requirements, i.e. a State not included in the list provided by the Directorial Decree
No. 2013/26948, released on March 1, 2013 by the Italian Tax Authorities.
The Italian Tax Authorities approved the FTT annual return form and related instructions on
December 27, 2013. The FTT return must be filed by March 31 of each year (with reference to FTT paid
over the previous year), but no return needs to be filed if the FTT paid does not exceed 50 euros. Non-
residents may file the FTT return through their Italian permanent establishment or through an
appointed tax representative. In the absence of a permanent establishment in Italy or of a tax
representative, the FTT return can be filed electronically or directly by registered mail.
It should be noted that Italian FTT could be significantly amended in the light of the possible approval
of the EU FTT Directive proposal.
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;
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.
219

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 person 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 has not been, and will not become, a passive foreign investment
company, as described below.
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
220

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 converted into U.S. dollars after 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 2015, or in previous years. 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 percent 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.
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 Revenue Service.
221

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
exchange, and we file reports and other information relating to our business, financial condition and other matters
with the Italian securities commission, the Italian stock exchange and with the regulated storage system 1Info.
You may read such reports, statements and other information, including the annual, semi-annual and quarterly
financial statements, at the website www.1Info.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.
222

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.
223

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.
224

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.
225

Direct and indirect payments made by JP Morgan Chase Bank to Telecom Italia in relation to the
Company’s ADR program
JP Morgan Chase Bank, 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 2015 the Depositary reimbursed the Company in the amount of US$710,000, all of which was used to cover
audit fees incurred in connection with the Audit of the Consolidated Financial Statements included in the 2013
and 2014 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.
226

Item 13. Defaults, Dividend Arrearages And Delinquencies
PART II
Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
227

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.
228

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 Chief Executive 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 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, 2015. 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 Chief Executive 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 Chief Executive
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 transactions
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, 2015. 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 (2013).
Based on management’s assessment, management has concluded that, as of December 31, 2015, 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, 2015. Their attestation report on internal control over financial reporting is included
herein.
229

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.
230

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 8, 2016 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 Chief Executive Officer and 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 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 Conduct in 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”.
231

Item 16C. Principal Accountant Fees And Services
Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
For the year ended December 31, 2015, 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 2015 and in 2014.
Fiscal year ended
December 31,
Type of Fees 2015 2014
Audit Fees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,737 8,938
Audit-related Fees(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 237
Tax Fees(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 95
Total(*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,013 9,270
(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.
(*) Total aggregate fees for professional services and other services rendered by PricewaterhouseCoopers don’t include 1.1 million euros
(0.9 million euros in 2014) incurred by the TIM Brasil group for the review by the PricewaterhouseCoopers Network of the service quality
imposed by the Brazilian Authority ANATEL.
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 the “Guidelines for the Appointment
of Auditors” (the “Group Procedure”) which are currently in force. 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.
232

Item 16C. Principal Accountant Fees And 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;
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 issue 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 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.
233

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, 2015, to December 31, 2015, no purchases of Ordinary 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.
234

Item 16G. Corporate Governance Differences In Telecom Italia’s Corporate Governance And
New York Stock Exchange Corporate Governance Practices
Item 16G. CORPORATE GOVERNANCE
16G.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. Presently 9 out 16 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.
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 establish 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 2015 a total of 7 such sessions were held. The Lead Independent
Director may use the Company’s support functions in performing his tasks. As of April 8, 2016 the position is held
by Giorgio Valerio. 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
are to be independent) and a Control and Risk Committee (made up of independent directors or non-executive
directors, the majority of which are to be independent).
Telecom Italia Board specifically established a Nomination and Remuneration Committee (thus combining
responsibilities and roles of the Nominating Committee and the Remuneration Committee) and a Control and Risk
Committee.
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, 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.
235

Item 16G. Corporate Governance Differences In Telecom Italia’s Corporate Governance And
On the other hand, the Nomination and Remuneration Committee (made up of non-executive directors only, a
majority of whom must be independent, one of them chosen from a minority slate), among other activities, is in
charge of submitting to the Board of Directors candidates for appointment as director in case of co-optation,
should the replacement of independent directors be necessary. In addition 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.
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 non-executive directors only, a
majority of whom are independent (one of them chosen from a minority slate). Pursuant to the Company’s
Corporate Governance Principles, the Remuneration Committee shall, among other things:
(1) oversee the succession plan for Executive Directors, and monitor the updating of the company management
replacement lists, prepared by the Executive directors;
(2) establish the procedure for the annual evaluation of the Board of Directors;
(3) propose the criteria for allocating the total annual compensation established by the Shareholders’ Meeting
for the whole Board of Directors;
(4) perform other duties assigned to it by the Board of Directors;
(5) 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;
(6) submit the Board of Directors candidates for directors offices in case of cooptation, should the replacement
of independent directors be necessary;
(7) 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;
(8) submit proposals or issue 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
November 4, 2010 and subsequently amended (available on the www.telecomitalia.com website, Governance
section—Governance System channel), in case of resolutions regarding the remuneration of directors and
executive officers with strategic responsibilities the tasks assigned to the board committee by the Telecom Italia
procedure are in this case performed by the Nomination and Remuneration 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.
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.
236

Item 16G. Corporate Governance
Item 16H. Mine Safety Disclosure
Differences In Telecom Italia’s Corporate Governance And
A Rule 303A written affirmation to this end was submitted to the NYSE on May 22, 2015. 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 under “—16B.—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, 2015.
Item 16H. MINE SAFETY DISCLOSURE
Not applicable.
237

Item 17. Financial Statements
PART III
Item 17. FINANCIAL STATEMENTS
Not applicable.
238

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, 2015 and
December 31, 2014—Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Financial Position as of December 31, 2015 and December 31, 2014—Equity
and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Separate Consolidated Income Statements for the years ended December 31, 2015, 2014 and 2013 . . . . . . . . F-5
Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Consolidated Statements of Changes in Equity for the years ended December 31, 2015, 2014 and 2013 . . . . F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013 . . . . . . . . . . . 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 the 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 11.22.2000. 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) 2014-2016 Stock Option Plan. (5)
7.1 Statement explaining computation of ratio of “Earnings to fixed charges” under IFRS.
8.1 List of Subsidiaries.(6)
12(a) Certification by the Chief Executive Officer of Telecom Italia S.p.A.
12(b) Certification by the Head of Administration, Finance and Control of Telecom Italia S.p.A.
239

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 April 15, 2015 (File No. 001-13882).
(6) Please see “Note—List of Companies of the Telecom Italia Group” of the Notes to the Consolidated Financial Statements included
elsewhere herein.
240

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/ FLAVIO CATTANEO
Name: Flavio Cattaneo
Title: Chief Executive Officer
Dated April 14, 2016
241

CONSOLIDATED FINANCIAL STATEMENT

TABLE OF CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2015 AND 2014—
ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2015 AND 2014—
EQUITY AND LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
SEPARATE CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2015, 2014
AND 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31,
2015, 2014 AND 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2015,
2014 AND 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10
NOTE 1—FORM, CONTENT AND OTHER GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-12
NOTE 2—ACCOUNTING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-13
NOTE 3—SCOPE OF CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-29
NOTE 4—BUSINESS COMBINATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-31
NOTE 5—GOODWILL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-32
NOTE 6—INTANGIBLE ASSETS WITH A FINITE USEFUL LIFE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-36
NOTE 7—TANGIBLE ASSETS (OWNED AND UNDER FINANCE LEASES) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-38
NOTE 8—INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-43
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 (CURRENT AND DEFERRED) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-47
NOTE 12—INVENTORIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-50
NOTE 13—TRADE AND MISCELLANEOUS RECEIVABLES AND OTHER CURRENT ASSETS . . . . . . . . . . . . . . . . . . F-51
NOTE 14—DISCONTINUED OPERATIONS/NON-CURRENT ASSETS HELD FOR SALE . . . . . . . . . . . . . . . . . . . . . . F-53
NOTE 15—EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-56
NOTE 16—FINANCIAL LIABILITIES (NON—CURRENT AND CURRENT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-63
NOTE 17—FINANCIAL RISK MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-72
NOTE 18—DERIVATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-77
NOTE 19—SUPPLEMENTARY DISCLOSURES ON FINANCIAL INSTRUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-79
NOTE 20—EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-85
NOTE 21—PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-89
NOTE 22—MISCELLANEOUS PAYABLES AND OTHER NON—CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . F-90
NOTE 23—TRADE AND MISCELLANEOUS PAYABLES AND OTHER CURRENT LIABILITIES . . . . . . . . . . . . . . . . . F-91
NOTE 24—CONTINGENT LIABILITIES, OTHER INFORMATION, COMMITMENTS AND GUARANTEES . . . . . . F-91
NOTE 25—REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-104
NOTE 26—OTHER INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-104
NOTE 27—ACQUISITION OF GOODS AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-105
NOTE 28—EMPLOYEE BENEFITS EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-105
NOTE 29—OTHER OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-107
NOTE 30—INTERNALLY GENERATED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-108
NOTE 31—DEPRECIATION AND AMORTIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-108
NOTE 32—GAINS (LOSSES) ON DISPOSALS OF NON—CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-109
NOTE 33—IMPAIRMENT REVERSALS (LOSSES) ON NON—CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-109
NOTE 34—OTHER INCOME (EXPENSES) FROM INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-110
NOTE 35—FINANCE INCOME AND FINANCE EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-111
NOTE 36—PROFIT (LOSS) FOR THE YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-114
NOTE 37—EARNINGS PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-115
NOTE 38—SEGMENT REPORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-117
NOTE 39—RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-122
NOTE 40—EQUITY COMPENSATION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-135
NOTE 41—OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-140
NOTE 42—EVENTS SUBSEQUENT TO DECEMBER 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-141
NOTE 43—LIST OF COMPANIES OF THE TELECOM ITALIA GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-142
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, 2015 and 2014, and the
results of their operations and their cash flows for each of the three years in the period ended December 31, 2015
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, 2015, based on criteria established in Internal Control – Integrated
Framework (2013) 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 on
Item 15.2 of the 2015 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 SpA
Milan, Italy
April 14, 2016
F-2

Consolidated Financial Statements Consolidated Statements Of Financial Position
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2015
AND 2014—ASSETS
Note
As of
December 31,
2015
As of
December 31,
2014
(millions of euros)
NON-CURRENT ASSETS
Intangible assets
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 29,383 29,943
Intangible assets with a finite useful life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 6,480 6,827
35,863 36,770
Tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Property, plant and equipment owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,659 12,544
Assets held under finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,208 843
14,867 13,387
Other non-current assets
Investments in associates and joint ventures accounted for using the equity
method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 41 36
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 45 43
Non-current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2,989 2,445
Miscellaneous receivables and other non-current assets . . . . . . . . . . . . . . . . . . . . . . 10 1,744 1,571
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 853 1,118
5,672 5,213
TOTAL NON-CURRENT ASSETS (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,402 55,370
CURRENT ASSETS
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 254 313
Trade and miscellaneous receivables and other current assets . . . . . . . . . . . . . . . . 13 5,110 5,615
Current income tax receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 163 101
Current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Securities other than investments, financial receivables and other
current financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,840 1,611
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,559 4,812
5,399 6,423
Current assets sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,926 12,452
Discontinued operations /Non-current assets held for sale . . . . . . . . . . . . 14
of a financial nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 165
of a non-financial nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,677 3,564
3,904 3,729
TOTAL CURRENT ASSETS (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,830 16,181
TOTAL ASSETS (A+B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,232 71,551
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, 2015
AND 2014—EQUITY AND LIABILITIES
Note
As of
December 31,
2015
As of
December 31,
2014
(millions of euros)
EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Share capital issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,740 10,723
Less: treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (90) (89)
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,650 10,634
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,731 1,725
Other reserves and retained earnings (accumulated losses), including profit
(loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,229 5,786
Equity attributable to owners of the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,610 18,145
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,723 3,554
TOTAL EQUITY (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,333 21,699
NON-CURRENT LIABILITIES
Non-current financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 30,518 32,325
Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 1,420 1,056
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 323 438
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 551 720
Miscellaneous payables and other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . 22 1,110 697
TOTAL NON-CURRENT LIABILITIES (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,922 35,236
CURRENT LIABILITIES
Current financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 6,224 4,686
Trade and miscellaneous payables and other current liabilities . . . . . . . . . . . . . . . . 23 7,762 8,376
Current income tax payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 110 36
Current liabilities sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,096 13,098
Liabilities directly associated with Discontinued operations/
Non-current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
of a financial nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 43
of a non-financial nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,533 1,475
1,881 1,518
TOTAL CURRENT LIABILITIES (C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,977 14,616
TOTAL LIABILITIES (D=B+C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,899 49,852
TOTAL EQUITY AND LIABILITIES (A+D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,232 71,551
F-4

Consolidated Financial Statements Separate Consolidated Income Statements
SEPARATE CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2015, 2014
AND 2013
Note 2015 2014 2013
(millions of euros)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 19,718 21,573 23,407
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 287 401 324
Total operating revenues and other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,005 21,974 23,731
Acquisition of goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 (8,533) (9,430) (10,377)
Employee benefits expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 (3,589) (3,119) (3,087)
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 (1,491) (1,175) (1,318)
Change in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (44) (52) 48
Internally generated assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 656 588 543
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 (4,135) (4,284) (4,553)
Gains (losses) on disposals of non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 336 29 (82)
Impairment reversals (losses) on non-current assets . . . . . . . . . . . . . . . . . . . . . . . . 33 (244) (1) (2,187)
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,961 4,530 2,718
Share of profits (losses) of associates and joint ventures accounted for using
the equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1 (5) —
Other income (expenses) from investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 10 16 (3)
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 2,756 2,400 2,003
Finance expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 (5,281) (4,594) (4,186)
Profit (loss) before tax from continuing operations . . . . . . . . . . . . . . . . . . . . 447 2,347 532
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 (401) (928) (1,111)
Profit (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 1,419 (579)
Profit (loss) from Discontinued operations/Non-current assets held for
sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 611 541 341
Profit (loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 657 1,960 (238)
Attributable to:
Owners of the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (72) 1,350 (674)
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 729 610 436
2015 2014 2013
(Euros)
Basic and Diluted Earnings Per Share (EPS)(*) . . . . . . . . . . . . . . . . . . . . . . . . . 37
Ordinary Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00 0.06 (0.03)
Savings Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00 0.07 (0.03)
Of which:
From continuing operations attributable to Owners of the Parent
Ordinary Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.01) 0.06 (0.04)
Savings Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.01) 0.07 (0.04)
(*) 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,
2015, 2014 AND 2013 (see Note 15)
2015 2014 2013
(millions of euros)
Profit (loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A) 657 1,960 (238)
Other components of the Consolidated Statement of Comprehensive
Income
Other components that will not be reclassified subsequently to
Separate Consolidated Income Statement
Remeasurements of employee defined benefit plans (IAS19):
Actuarial gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 (209) (29)
Income tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) 53 7
(B) 9 (156) (22)
Share of other comprehensive income (loss) of associates
and joint ventures accounted for using the equity method:
Profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
Income tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
(C) — — —
Total other components that will not be reclassified subsequently
to Separate Consolidated Income Statement . . . . . . . . . . . . . . . . . . . D=(B+C) 9 (156) (22)
Other components that will be reclassified subsequently
to Separate Consolidated Income Statement
Available-for-sale financial assets:
Profit (loss) from fair value adjustments . . . . . . . . . . . . . . . . . . . . . . . . . (4) 74 3
Loss (profit) transferred to Separate Consolidated Income
Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (57) (23) (11)
Income tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 (15) 4
(E) (43) 36 (4)
Hedging instruments:
Profit (loss) from fair value adjustments . . . . . . . . . . . . . . . . . . . . . . . . . 1,536 767 (563)
Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (983) (871) 314
Income tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (165) 28 71
(F) 388 (76) (178)
Exchange differences on translating foreign operations:
Profit (loss) on translating foreign operations . . . . . . . . . . . . . . . . . . . . . (2,155) (225) (1,747)
Loss (profit) on translating foreign operations transferred to
Separate Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . (1) — —
(G) (2,156) (225) (1,747)
Share of other comprehensive income (loss) of associates
and joint ventures accounted for using the equity method:
Profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 1
Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
(H) — — 1
Total other components that will be reclassified subsequently to
Separate Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . (I=E+F+G+H) (1,811) (265) (1,928)
Total other components of the Consolidated Statement of
Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (K=D+I) (1,802) (421) (1,950)
Total comprehensive income (loss) for the year . . . . . . . . . . . . . . . . . . . . . . . (A+K) (1,145) 1,539 (2,188)
Attributable to:
Owners of the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (827) 1,123 (1,758)
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (318) 416 (430)
F-6

ConsolidatedFinancialStatementsConsolidatedStatementsOfChangesInEquity
CONSOLIDATEDSTATEMENTSOFCHANGESINEQUITYFORTHEYEARSENDED
DECEMBER31,2015,2014AND2013
ŠCHANGESINEQUITYIN2013(seeNote15)
Share
capital
Additional
paid-in
capital
Reservefor
available-for-
salefinancial
assets
Reservefor
hedging
instruments
Reservefor
exchange
differenceson
translating
foreign
operations
Reservefor
remeasurements
ofemployee
definedbenefit
plans(IAS19)
Shareofother
comprehensive
income(loss)of
associatesand
jointventures
accountedfor
usingtheequity
method
Sundryreserves
andretained
earnings
(accumulated
losses),including
profit(loss)for
theyear
Equityattributableto
ownersoftheParent
Non-controlling
interestsTotalEquity
(a)(b)(c)(d)(e)(f)(g)(h)(i=a+b+c+d+e+f+g+h)(l)(i+l)
(millionsofeuros)
BalanceatDecember31,2012............10,6041,70443(383)504154(1)6,75319,3783,63423,012
Changesinequityintheyearended
December31,2013:
Dividendsapproved...................(452)(452)(183)(635)
Totalcomprehensiveincome(loss)forthe
year..............................(4)(178)(881)(22)1(674)(1,758)(430)(2,188)
EffectofequitytransactionsofTIMedia...(25)(25)25—
EffectofequitytransactionsofSofora—
TelecomArgentinagroup.............(67)(67)714
Grantofequityinstruments.............111
Otherchanges........................(16)(16)8(8)
BalanceatDecember31,2013............10,6041,70439(561)(377)132—5,52017,0613,12520,186
Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements
F-7

ŠCHANGESINEQUITYIN2014(SeeNote15)
Share
capital
Additinal
paid-in
capital
Reservefor
available-for-
salefinancial
assets
Reserve
forhedging
instruments
Reservefor
exchange
differenceson
translating
foreign
operations
Reservefor
remeasurements
ofemployee
definedbenefit
plans(IAS19)
Shareofother
comprehensive
income(loss)of
associatesand
jointventures
accountedfor
usingtheequity
method
Sundryreserves
andretained
earnings
(accumulated
losses),including
profit(loss)
fortheyear
Equityattributableto
ownersofthe
Parent
Non-controlling
(millionsofeuros)
BalanceatDecember31,2013...............10,6041,70439(561)(377)132—5,52017,0613,12520,186
ChangesinequityintheyearendedDecember
31,2014
Dividendsapproved.......................(166)(166)(177)(343)
year.................................36(76)(31)(156)—1,3501,1234161,539
EffectofacquisitionofReteA...............——4040
EffectofequitytransactionsofSofora—
TelecomArgentinagroup................58106892160
Grantofequityinstruments................30211364—64
Otherchanges...........................(72)67(5)5853
BalanceatDecember31,2014...............10,6341,72575(637)(350)(96)—6,79418,1453,55421,699
F-8

ŠCHANGESINEQUITYIN2015(seeNote15)
Share
capital
Additional
paid-in
capital
Reservefor
available-for-
salefinancial
assets
Reservefor
hedging
instruments
Reservefor
exchange
differenceson
translating
foreign
operations
Reservefor
remeasurements
ofemployee
definedbenefit
plans(IAS19)
Shareofother
comprehensive
income(loss)of
associatesand
jointventures
accountedfor
usingtheequity
method
Sundryreserves
andretained
earnings
(accumulated
losses),
including
profit(loss)
fortheyear
Equityattributable
toownersofthe
Parent
Non-controlling
(millionsofeuros)
BalanceatDecember31,2014.............10,6341,72575(637)(350)(96)—6,79418,1453,55421,699
Changesinequityintheyearended
December31,2015
Dividendsapproved.....................(166)(166)(125)(291)
year...............................(43)388(1,109)9—(72)(827)(318)(1,145)
INWIT–effectofsaleofthenon-controlling
interest............................279279560839
MergerofTelecomItaliaMediaS.p.A.into
TelecomItaliaS.p.A...................76(39)(26)17(9)
ConvertibleBondissuematuring2022–
Equitycomponent....................186186186
Grantofequityinstruments..............911010
Otherchanges.........................993544
BalanceatDecember31,2015.............10,6501,73132(249)(1,459)(87)—6,99217,6103,72321,333
F-9

Consolidated Financial Statements Consolidated Statements Of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 2015, 2014 AND 2013
Note 2015 2014 2013
(millions of euros)
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 1,419 (579)
Adjustments for:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,135 4,284 4,553
Impairment losses (reversals) on non-current assets (including
investments) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253 13 2,197
Net change in deferred tax assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (45) 187 347
Losses (gains) realized on disposals of non-current assets (including
investments) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (343) (29) 82
Share of losses (profits) of associates and joint ventures accounted for using
the equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) 5 —
Change in provisions for employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389 (59) (49)
Change in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 55 (23)
Change in trade receivables and net amounts due from customers on
construction contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410 (125) 1,074
Change in trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (483) (325) (489)
Net change in current income tax receivables/payables . . . . . . . . . . . . . . . . . . . . . . . 4 355 (104)
Net change in miscellaneous receivables/payables and other
assets/liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 649 (583) (268)
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES (A) . . . . . . . . . . . . . . . . . . 5,070 5,197 6,741
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 (1,959) (2,422) (1,895)
Purchase of tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 (4,761) (2,562) (2,505)
Total purchase of intangible and tangible assets on an accrual basis . . . . . . . . . . . . . . . . (6,720) (4,984) (4,400)
Change in amounts due for purchases of intangible and tangible assets . . 1,294 325 9
Total purchase of intangible and tangible assets on a cash basis . . . . . . . . . . . . . . . . . . . . (5,426) (4,659) (4,391)
Acquisition of control of companies or other businesses, net of cash acquired . . . . . . (5) (9) (8)
Acquisitions/disposals of other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36) (2) —
Change in financial receivables and other financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . (635) (1,118) 604
Proceeds from sale that result in a loss of control of subsidiaries or other
businesses, net of cash disposed of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (104)
Proceeds from sale/repayments of intangible, tangible and other non-current
assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717 78 88
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES (B) . . . . . . . . . . . . . . . . . . . (5,385)(5,710)(3,811)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in current financial liabilities and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408 1,305 (1,785)
Proceeds from non-current financial liabilities (including current portion) . . . . . . . . . . 5,054 4,377 4,153
Repayments of non-current financial liabilities (including current portion) . . . . . . . . . . (7,191) (5,877) (5,551)
Share capital proceeds/reimbursements (including subsidiaries) . . . . . . . . . . . . . . . . . . . 186 14 9
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (204) (252) (537)
Changes in ownership interests in consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 845 160 79
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (C) . . . . . . . . . . . . . . . . . . . (902) (273)(3,632)
CASH FLOWS FROM (USED IN) DISCONTINUED OPERATIONS/NON-
CURRENT ASSETS HELD FOR SALE (D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (19) (499) 127
AGGREGATE CASH FLOWS (E=A+B+C+D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,236)(1,285) (575)
NET CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR (F) . . . . . . . 4,910 6,296 7,397
Net foreign exchange differences on net cash and cash equivalents (G) . . . . (458) (101) (526)
NET CASH AND CASH EQUIVALENTS AT END OF THE YEAR (H=E+F+G) . . . . 3,216 4,910 6,296
F-10

Consolidated Financial Statements Consolidated Statements Of Cash Flows
2015 2014 2013
(millions of euros)
ADDITIONAL CASH FLOW INFORMATION:
Income taxes (paid) received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (363) (427) (863)
Interest expense paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,145) (4,985) (4,456)
Interest income received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,632 3,301 2,729
Dividends received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5 2
ANALYSIS OF NET CASH AND CASH EQUIVALENTS:
NET CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR:
Cash and cash equivalents—from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . 4,812 5,744 6,947
Bank overdrafts repayable on demand—from continuing operations . . . . . . . . . . . . . . (19) (64) (39)
Cash and cash equivalents—from Discontinued operations/Non-current assets
held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 616 489
Bank overdrafts repayable on demand—from Discontinued operations/Non-
current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
4,910 6,296 7,397
NET CASH AND CASH EQUIVALENTS AT END OF THE YEAR:
Cash and cash equivalents—from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . 3,559 4,812 5,744
Bank overdrafts repayable on demand—from continuing operations . . . . . . . . . . . . . . (441) (19) (64)
Cash and cash equivalents—from Discontinued operations/Non-current assets
held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 117 616
Bank overdrafts repayable on demand—from Discontinued operations/Non-
current assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
3,216 4,910 6,296
F-11

Consolidated Financial Statements Notes To Consolidated Financial Statements
NOTE 1—FORM, CONTENT AND OTHER GENERAL INFORMATION
Form and content
Telecom Italia S.p.A. (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 Via Gaetano Negri 1, 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, 2015 have been
prepared on a going concern basis (for further details see Note “Accounting policies”) and in accordance with
International Financial Reporting Standards issued by the International Accounting Standards Board (designated
as “IFRS”).
In 2015, the Group has applied the accounting policies on a basis consistent with those of the previous years,
except for the new standards and interpretations adopted by the Group since January 1, 2015 and described
below.
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, 2015
was approved by resolution of the Board of Directors’ meeting held on March 17, 2016.
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 Telecom Italia
Group’s industrial sector;
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

Furthermore, according to IAS 1 (paragraphs 97 and 98), certain expense and income items that are material in
terms of nature and amount are separately disclosed in the notes to the separate consolidated income
statement. Specifically, such items include: income/expenses arising from the disposal of property, plant and
equipment, business segments and investments; expenses resulting from corporate restructuring, reorganizations
and other corporate transactions (mergers, spin-offs, etc.); expenses resulting from regulatory disputes and
penalties and associated liabilities; other provisions for risks and charges and related reversals; and impairment
losses on goodwill and/or other tangible and intangible assets.
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 and Brazil) and according to the specific
businesses for the other segments. Furthermore, please note that, since the fourth quarter of 2013, the
Sofora—Telecom Argentina group is listed under Discontinued operations.
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), the operations of Olivetti (products and services for Information
Technology), the operations of INWIT S.p.A. (a company operating in the electronic communications
infrastructure business) and the units supporting the Domestic sector;
Š Brazil: includes mobile (TIM Celular) and fixed (TIM Celular and Intelig) telecommunications
operations in Brazil;
Š Media: through Persidera S.p.A. Telecom Italia manages digital multiplexes and supplies ancillary, as
well as the provision of accessory services and digital signal broadcasting platforms to third parties;
Š Other Operations: includes finance companies and other minor companies not strictly related to the
NOTE 2—ACCOUNTING POLICIES
Going concern
The consolidated financial statements for the year ended December 31, 2015 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:
Š the main risks and uncertainties (that are for the most part of external in nature) to which the Group
and the various activities of the Telecom Italia Group are exposed:
Š macroeconomic changes in the Italian, European and South American markets (particularly the
Brazilian market), as well as the volatility of financial markets in the Eurozone generally;
Š variations in business conditions and fluctuations in the competitive environment;
Š changes to laws and regulations (price and rate variations, or decisions that may affect the
technological choices);
F-13

Š outcomes of legal disputes and proceedings with regulatory authorities, competitors and other
parties;
Š financial risks (interest rate and/or exchange rate trends, changes in credit rating by rating
agencies);
Š the optimal mix between risk capital and debt capital 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”.
Management believes that, at this time, such factors do not raise substantial doubts as to the Group’s ability to
continue as a going concern.
Principles of consolidation
The consolidated financial statements include the financial statements of all subsidiaries from the date 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 has all the following:
Š power over the investee, which includes the ability to direct the relevant activities of the investee, i.e.
the activities that significantly affect the investee’s returns;
Š exposure, or rights, to variable returns from its involvement with the investee;
Š the ability to use its power over the investee to affect the amount of the investor’s returns.
Telecom Italia assesses whether it controls an investee if facts and circumstances indicate that there are changes
in one or more of the three control elements.
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 IFRS 10 (Consolidated financial statements), 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 which are denominated in currencies other than euro are
converted at the exchange rates prevailing at the statement of financial position date (the current method);
income and expenses are converted 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.
F-14

The cash flows of foreign consolidated subsidiaries denominated in currencies other than Euro included in the
consolidated statement of cash flows are converted 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 converted using the year-end exchange rate.
Under IFRS 10, 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.
Under IFRS 10, the parent company in case of loss of control of a subsidiary:
Š derecognizes:
Š the assets (including any goodwill) and liabilities;
Š the carrying amount of any non-controlling interests;
Š recognizes:
Š the fair value of the consideration received, if any, from the transaction;
Š any investment retained in the former subsidiary at its fair value at the date when control is lost;
Š any gain or loss, resulting from the transaction, in the separate consolidated income statement;
Š the reclassification to the separate consolidated income statement, of the amounts previously
recognized in other comprehensive income in relation to the subsidiary.
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 Joint Ventures) and IFRS 11
(Joint Arrangements).
Associates are all entities in which the Group holds at least 20% of the voting rights or exercises significant
influence, but no control or joint control over the financial and operating policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights
to the net assets of the arrangement.
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions
about the relevant activities require the unanimous consent of the parties sharing control.
Associates and joint ventures are included in the consolidated financial statements from the date that significant
influence or joint control commences until the date such significant influence or joint control ceases.
Under the equity method, on initial recognition the investment in an associate or a joint venture is recognised at
cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of
the investee after the date of acquisition. The investor’s share of the investee’s profit or loss is recognised in the
investor’s income statement. Dividends received from an investee reduce the carrying amount of the investment.
Adjustments to the carrying amount may also be necessary for changes in the investee’s other comprehensive
income (i.e. those arising from foreign exchange conversion differences). The investor’s share of those changes is
recognised in the investor’s other comprehensive income.
If an investor’s share of losses of an associate or a joint venture equals or exceeds its interest in the associate or
joint venture, the investor discontinues recognising its share of further losses.
After the investor’s interest is reduced to zero, additional losses are provided for, and a liability is recognised, only
to the extent that the investor has incurred legal or constructive obligations or made payments on behalf of the
associate or joint venture. If the associate or joint venture subsequently reports profits, the investor resumes
recognising its share of those profits only after its share of the profits equals the share of losses not recognised.
F-15

Gains and losses resulting from “upstream” and “downstream” transactions between an investor (including its
consolidated subsidiaries) and its associate or joint venture are recognised in the investor’s financial statements
only to the extent of unrelated investors’ interests in the associate or joint venture.
Gains and losses arising from transactions with associates or joint ventures are eliminated to the extent of the
Group’s interest in those entities.
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 at the acquisition date fair value;
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.
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. 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 for new products and services.
Capitalized development costs are amortized systematically over the estimated product or service life so that the
amortization method reflects the way in which the asset’s future economic benefits are expected to be consumed
by the entity.
F-16

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 offerings, the Group capitalizes directly attributable subscriber acquisition costs
(currently mainly represented by commissions for the sales network) 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 a penalty.
Capitalized subscriber acquisition costs are amortized on a straight-line basis over the foreseen minimum period
of the underlying contract (between 24 and 30 months).
In all other cases, subscriber acquisition costs are recognized in the separate consolidated income statement
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 at its present value as a provision in the statement of
financial position. 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.
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.
F-17

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.
When a lease includes both land and buildings, an entity assesses the classification of each element as a finance
or an operating lease separately.
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
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.
F-18

The value in use of cash-generating units denominated in 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 converted 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, trend 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.
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.
F-19

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 (Financial instruments: recognition and measurement).
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 (Reserve for
available-for-sale financial assets) which is reversed to the separate consolidated income statement
when the financial asset is disposed of or impaired.
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.
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 described above.
F-20

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.
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.
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 hedging instruments). 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.
F-21

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 confers 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 on 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/or 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 consolidated statement of
financial position from other assets and liabilities. The corresponding statement of financial position amounts for
the previous year are not reclassified in the consolidated statement of financial position but are instead shown
separately in a specific column in the changes in assets and liabilities in the year in which the non-current assets
held for sale or the disposal groups are classified as such. An operating asset sold (Discontinued Operations) is a
component of an entity that has been disposed of 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.
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 years, 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 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
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.
As required by IFRS 5 (Non-current assets held for sale and discontinued operations), an entity shall not
depreciate (or amortize) a non-current asset while it is classified as held for sale or while it is part of a disposal
group classified as held for sale.
Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale shall
continue to be recognized.
F-22

Employee benefits
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 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.
The remeasurements of actuarial gains and losses 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”.
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.
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 treasury shares are reported as a
deduction from the share capital issued in the amount corresponding to the “accounting par value”, that is the
F-23

ratio of total share capital and the number of issued shares, while the excess cost of acquisition over the
accounting par value 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 converted 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 are the gross inflows of economic benefits during the period arising in the course of the ordinary
activities of an entity. 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 (and related costs) are deferred over the expected
duration of the relationship with the customer (in Italy, 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 consolidated 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.
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 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 bundled mobile offerings involve contracts with a minimum contractual period
between 24 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.
F-24

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.
Income Taxes (current and deferred)
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
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, including the shares relating to the
bond issued in November 2013 by Telecom Italia Finance S.A. with mandatory conversion to Telecom Italia
shares and 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.
F-25

For diluted earnings per ordinary share, the weighted average number of shares outstanding during the year 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
Impairment of 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”.
Impairment of tangible
and intangible assets
with a finite useful life
At every closing date, the Group assesses whether there are any indications of
impairment of tangible and intangible assets with a finite useful life. Both internal and
external sources of information are used for this purpose.
The identification of impairment indicators, the estimation of future cash flows and
the determination of the fair value of each asset require management to make
significant judgments including the applicable discount rate, useful life and residual
value. These estimates can have a material impact on fair value and the amount of any
write-downs.
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.
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.
F-26

Financial statement
line item/area Accounting estimates
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 (current
and deferred)
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 both
using valuation models which also take into account subjective measurements such
as, for example, cash flow estimates, expected volatility of prices, etc., or on the basis
of either prices in regulated markets or quoted prices provided by financial
counterparts. For further details please see also Note “Supplementary disclosures on
financial instruments”.
As required by IAS 8 (Accounting Policies, Changes in Accounting Estimates and Errors) par. 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, 2015
In accordance with IAS 8 (Accounting Policies, Changes in Accounting Estimates and Errors), the IFRS in force
starting from January 1, 2015 are indicated and briefly described below.
Š Annual Improvements to IFRSs 2010–2012 Cycle
In particular, with reference to these amendments please note as follows:
Š IFRS 2—Share-based payments (Definition of vesting condition): the amendment clarifies the meaning
of “vesting conditions” by separately defining “performance conditions” and “service conditions”;
Š IFRS 3—Business combinations (Accounting Recognition of “contingent consideration” in a business
combination): the amendment clarifies how any “contingent consideration” agreed within a business
combination must be classified and measured;
Š IFRS 8—Operating segments (Aggregation of operating segments and reconciliation of the total of the
reportable segments’ assets to the entity’s assets): the amendment introduces an additional financial
statement disclosure. Specifically, a brief description must be provided on how the segments have been
aggregated and the economic indicators assessed in determining that the aggregated operating
segments share similar economic characteristics;
F-27

Š IAS 24—Related party disclosures (key management personnel services): the amendment clarifies that
any company (or any member of a group such company belongs to) that provides key management
personnel services to the reporting entity or its parent is also a related party. The costs incurred for
these services require separate disclosure.
The adoption of these amendments had no impact on these consolidated financial statements at December
31, 2015.
Š Annual Improvements to IFRSs 2011–2013 Cycle
In particular, with reference to these amendments please note as follows:
Š “Amendment to IFRS 3 — Business combinations”: the amendment clarifies that in the context of
financial statements of a joint arrangement (IFRS 11), IFRS 3 does not apply to the recognition of the
formation of every type of joint arrangement;
Š “Amendment to IFRS 13—Fair value measurement”: the amendment clarifies that the exception from
the principle of measuring assets and liabilities based on net portfolio exposure also applies to all
contracts that come under the scope of IAS 39 even if they do not meet the requirements established
by IAS 32 for classification as financial assets/liabilities;
Š “Amendment to IAS 40—Investment property”.
The adoption of these amendments had no impact on these consolidated financial statements at
December 31, 2015.
Š Amendments to IAS 19: Defined Benefit Plans—Employee Contributions
These amendments are aimed at clarifying the accounting for employee contributions under a defined
benefit plan.
The adoption of these amendments had no impact on these consolidated financial statements at December
31, 2015.
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
IFRS 14 (Regulatory Deferral Accounts) January 1, 2016
Amendments to IFRS 11 (Accounting for Acquisitions of Interests in Joint Operations) January 1, 2016
Amendments to IAS 16 (Property, Plant and Equipment) and IAS 38 (Intangible Assets) January 1, 2016
Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the
Consolidation Exception January 1, 2016
Amendments to IAS 1: Disclosure Initiative January 1, 2016
Annual Improvements to IFRSs 2012–2014 Cycle January 1, 2016
Amendments to IAS 12 (Income taxes—Recognition of deferred tax assets for unrealized
losses) January 1, 2017
IFRS 9 (Financial Instruments) January 1, 2018
IFRS 15 (Revenue from Contracts with Customers), including amendments to IFRS 15 January 1, 2018
IFRS 16 (Leases) January 1, 2019
Amendments to IFRS 10 (Consolidated Financial Statements) and IAS 28 (Investments in
Associates and Joint Ventures)—Sale or contribution of assets between an investor and
its associate or joint venture
Effective date
indefinitely deferred
Amendments to IAS 7 (Statement of Cash Flows): Disclosure Initiative January 1, 2017
The impacts, if any, arising from their application on the consolidated financial statements are currently being
assessed.
F-28

NOTE 3—SCOPE OF CONSOLIDATION
Investments in consolidated subsidiaries
Composition of the Group
Telecom Italia holds a majority of the voting rights in all the subsidiaries included in the scope of consolidation.
A complete list of consolidated subsidiaries is provided in the Note “List of companies of Telecom Italia Group”.
Scope of consolidation
The changes in the scope of consolidation at December 31, 2015 compared to December 31, 2014 are listed
below.
These changes did not have any significant impacts on the Consolidated Financial Statements of the Telecom
Italia Group at December 31, 2015.
Scope of consolidation: subsidiaries entering/exiting/merged into the scope of consolidation:
Company Business Unit Month
Entry:
INWIT S.p.A. New company Domestic January 2015
ALFABOOK S.r.l. New acquisition Domestic July 2015
TIM Caring S.r.l. New company Domestic July 2015
TIM Real Estate S.r.l. New company Domestic November 2015
Exit:
Olivetti Engineering S.A. Liquidated Domestic March 2015
Olivetti France S.A.S. Liquidated Domestic May 2015
Olivetti I-Jet S.p.A. Liquidated Domestic June 2015
Telecom Italia Sparkle Hungary K.F.T. Liquidated Domestic June 2015
Merger:
Telecom Italia Media S.p.A. Merged into Telecom Italia
S.p.A. Media September 2015
The breakdown by number of Telecom Italia Group subsidiaries, associates and joint ventures at December 31,
2015, and December 31, 2014 is as follows:
Companies Italy Outside Italy Total
subsidiaries consolidated line-by-line (*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 58 84
joint ventures accounted for using the equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 — 1
associates accounted for using the equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 — 18
Total companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 58 103
(*) Including subsidiaries posted under Discontinued operations/Non-current assets held for sale.
Companies Italy Outside Italy Total
subsidiaries consolidated line-by-line (*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 61 85
joint ventures accounted for using the equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —
associates accounted for using the equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 — 16
Total companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 61 101
(*) Including subsidiaries posted under Discontinued operations/Non-current assets held for sale.
Further details are provided in the Note "List of companies of the Telecom Italia Group".
Subsidiaries with significant non-controlling interests
At December 31, 2015, Telecom Italia Group held equity investments in subsidiaries with significant
non-controlling interests in Sofora-Telecom Argentina group and TIM Brasil group.
F-29

For information on Sofora-Telecom Argentina group, see the disclosures provided in the Note “Discontinued
operations/Non-current assets held for sale”.
As concerns TIM Brasil group, the figures provided below, stated gross of the elimination of intragroup accounts,
have been prepared in accordance with IFRS and reflect adjustments made on the acquisition date to align the
assets and liabilities acquired to their fair value.
TIM Brasil group—Brazil Business Unit
Non-controlling interests held at December 31, 2015 amounted to 33.4% of the share capital of Tim Participações
(which in turn holds 100% of the share capital of the operating companies Tim Celular S.A. and Intelig
Telecomunicações Ltda.), equivalent to the corresponding share of voting rights.
Statement of Financial Position Data—TIM Brasil group
2015 2014
(millions of euros)
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,043 7,666
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,843 3,484
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,886 11,150
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,164 2,305
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,110 3,010
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,274 5,315
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,612 5,835
of which, Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,357 1,622
Income Statement Data—TIM Brasil group
2015 2014
(millions of euros)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,636 6,244
Profit (loss) for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 497
of which, Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 166
Financial Data—TIM Brasil group
In 2015, aggregate cash flows generated were a negative 186 million euros, primarily due to a negative exchange
rate effect of 424 million euros. In the absence of this negative exchange rate, cash flows would have been a
positive 238 million euros. Cash flows were driven, in part, by the sale of the first three tranches of
telecommunications towers to American Tower do Brasil (for approximately 676 million of euros). In 2014,
aggregate cash flows were a negative 12 million euros (in the presence of a positive exchange rate of 4 million
euros) and reflected, among other things, the outlay for the acquisition of the 700 MHz license (of approximately
540 million euros).
Lastly, again with reference to the TIM Brasil group, the main risk factors that could, even significantly, restrict
the operations of the TIM Brasil group are listed below:
Š strategic risks (risks related to macroeconomic and political factors, as well as risks associated with
foreign exchange restrictions and competition);
Š operational risks (risks related to business continuity and development of the fixed and mobile
networks, as well as risks associated with litigation and disputes);
Š financial risks;
Š Regulatory and Compliance risks.
F-30

NOTE 4—BUSINESS COMBINATIONS
YEAR 2015
In 2015, there were no business combinations transactions as defined in IFRS 3.
YEAR 2014
On June 30, 2014, after having received the authorizations required by the applicable regulations, the business
combination of the digital terrestrial network operator for TV transmission businesses controlled by Persidera
S.p.A.—former Telecom Italia Media Broadcasting S.r.l.—and Rete A S.p.A. (Rete A), respectively, was completed.
Rete A was merged into Persidera S.p.A. on December 1, 2014.
Telecom Italia (as a result of the merger of the subsidiary Telecom Italia Media into Telecom Italia) and Gruppo
Editoriale L’Espresso hold 70% and 30% of the shares of Persidera respectively.
Persidera is an independent network operator in Italy, with five digital multiplexes and nationwide high-coverage
infrastructure, based on next generation technologies.
The accounting effects of the business combination are summarized as follows:
Š the valuation of the consideration is 40 million euros and corresponds to the value of the capital
increase of Persidera to the seller Gruppo Editoriale L’Espresso on June 30, 2014;
Š all the Assets acquired and Liabilities assumed of the acquired company have been measured at fair
value for their recognition. In addition to the value of the Assets acquired and the Liabilities assumed,
goodwill has been recognized, amounting to 8 million euros, calculated as detailed in the following
table:
Fair Value amounts
(millions of euros)
Measurement of consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A) 40
Value of assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (B) 71
Value of liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (C) (39)
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A-B-C) 8
Rete A—values at the acquisition date
Fair Value amounts Carrying amounts
(millions of euros)
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 —
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 45
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 7
of which Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A) 79 52
Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 6
of which non-current financial liabilities . . . . . . . . . . . . . . . . . . . . . . . — —
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 27
of which current financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 21
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (B) 39 33
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A-B) 40 19
Acquisition of control of Trentino NGN S.r.l.
On February 28, 2014, Telecom Italia S.p.A. acquired control of Trentino NGN S.r.l., of which it already held
41.07%. The price paid was 17 million euros, bringing the stake in Trentino NGN S.r.l. up to 97.4%.
F-31

The ownership interest held before the acquisition of control, previously measured using the equity method, was
remeasured at fair value at the date of acquisition of control and amounted to approximately 36 million euros.
The fair value of net assets acquired corresponded to the carrying amount of the assets and the acquisition of
control did not result in the recognition of any goodwill.
In the second half of 2014, the percentage ownership further increased to 99.3%.
Fair Value
amounts
(millions
of euros)
Valuation of consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A) 17
Fair value of the ownership interest held before the acquisition of control . . . . . . . . . . . . . . . . (B) 36
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (C=A+B) 53
Net value of assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (D) 53
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (C-D) —
Trentino NGN—values at the date of acquisition of control
Fair Value
amounts
Carrying
amounts
(millions of euros)
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 36
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 17
of which Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 8
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A) 53 53
Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (B) — —
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A-B) 53 53
YEAR 2013
In 2013, there were no business combinations transactions as defined in IFRS 3.
NOTE 5—GOODWILL
Goodwill shows the following breakdown and changes during 2014 and 2015:
As of
December
31, 2013 Increase Decrease Impairments
Exchange
differences
As of
December
31, 2014
(millions of euros)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,443 28,443
Core Domestic . . . . . . . . . . . . . . . . . . . . . . . . 28,028 3 28,031
International Wholesale . . . . . . . . . . . . . . . 415 (3) 412
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,468 3 1,471
Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 8 29
Other operations . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,932 8 — — 3 29,943
F-32

As of
December 31,
2014 Increase Decrease Impairments
Exchange
differences
As of
December 31,
2015
(millions of euros)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,443 4 28,447
Core Domestic . . . . . . . . . . . . . . . . . . 28,031 4 28,035
International Wholesale . . . . . . . . 412 412
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,471 (240) (324) 907
Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 29
Other operations . . . . . . . . . . . . . . . . . . . . — —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,943 4 — (240) (324) 29,383
The decrease of 560 million euros recognized in 2015 includes:
Š an overall reduction of 564 million euros in the goodwill of the Brazil Business Unit linked to the
impairment loss of 240 million euros due to the results of the impairment testing conducted at
December 31, 2015, which compared the value in use of the Brazil Cash Generating Unit (CGU) with its
recoverable amount. This impairment loss essentially reflected the worsening of the macroeconomic
environment in which the local companies operate. The value of the goodwill allocated to the Business
Unit also reflects a reduction of 324 million euros due to exchange rate differences;
Š an increase of 4 million euros attributable to the Domestic Business Unit, due to the recognition of
goodwill as a result of the acquisition of control and subsequent consolidation of Alfabook S.r.l.. In July
2015, Telecom Italia Digital Solution S.p.A. acquired 100% of the company Alfabook S.r.l., operating in
the digital educational publishing sector, for a price of 5 million euros. An amount of provisional
goodwill was recognized with respect to that transaction, as permitted by IFRS 3. During the 12 months
following the transaction, the provisional amounts of assets and liabilities acquired may be adjusted
retroactively to reflect their fair value at the acquisition date, with a related recalculation of the value of
goodwill.
The gross carrying amounts of goodwill and the relative accumulated impairment losses from January 1, 2004
(date of allocation to the Cash Generating Units) to December 31, 2015 and 2014 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,301 (13,854) 28,447 42,251 (13,808) 28,443
Core Domestic . . . . . . . . . . . . . . . . . . . . . . . . . 41,883 (13,848) 28,035 41,833 (13,802) 28,031
International Wholesale . . . . . . . . . . . . . . . . 412 — 412 412 — 412
Olivetti . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 (6) — 6 (6) —
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,123 (216) 907 1,478 (7) 1,471
Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 (114) 29 189 (160) 29
Other operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,567 (14,184) 29,383 43,918 (13,975) 29,943
Following the merger of Telecom Italia Media S.p.A. into Telecom Italia S.p.A., on September 30, 2015, the
values, amounting to 46 million euros and relating to the year 2010, were reclassified from the Media Business
Unit to the Domestic Business Unit.
The figures for the Brazil CGU are stated in euros, converted at the spot exchange rate as of the closing date of
the financial statements; the carrying amount of goodwill for the CGU, after the impairment loss of 887 million
Brazilian reais applied during the year, corresponds to 3,854 million Brazilian reais.
Goodwill is not subject to amortization, but it is tested for impairment at least annually. Accordingly, in preparing
the 2015 Annual Report, the Telecom Italia Group conducted impairment tests on the recoverability of the
F-33

goodwill; the results showed that the recoverable amount of the assets at December 31, 2015 was higher than the
net carrying amount for the CGUs of the Domestic and Media segments, whereas an impairment loss was
identified for the Brazil CGU.
The recoverability testing was conducted at two levels: at the first level, the recoverable amount was estimated
for the assets assigned to the individual cash generating units (or groups of units) to which goodwill is allocated;
at the second level, the assets of the Group as a whole were considered.
The value used to determine the recoverable amount of all the Cash Generating Units (or groups of units) to
which goodwill has been allocated is the value in use.
With regard to the first level test, goodwill has been allocated to the following cash generating units (or groups of
units):
Segment Cash-generating units (or groups of units)
Domestic Core Domestic
International Wholesale
Brazil TIM Brasil group
Media Persidera
The estimates of the value in use are based on the forward looking financial figures drawn from the industrial plan
of the Telecom Italia Group approved by the Board of Directors. The figures of the Group’s plan, which refer to a
three-year period (2016-2018), were completed by data extrapolated for an additional two years: therefore the
explicit forecast period for the projection of the future cash flows includes five year period (2016-2020) for the
CGUs of the Domestic and Brazil segments. For the Persidera CGU, on the other hand, a forecast lifetime of up to
2032 has been adopted, based on the duration of the current portfolio of frequencies.
The forward looking figures are stated in the currency in which they were generated, and therefore in euro for the
CGUs of the Domestic and Media segments and in Brazilian reais for the Brazil CGU. For this unit, the recoverable
amount of the assets is denominated in the functional currency and subsequently converted at the spot exchange
rate on the reporting date.
The cost of capital used to discount the future cash flows in the estimate of the value in use has been determined
as follows:
Š it has been estimated using the Capital Asset Pricing Model (CAPM) model, which is one of the generally
accepted application criteria referred to in IAS 36;
Š it reflects the current market estimates of the time value of money and the specific risks of the groups
of assets; it includes appropriate yield premiums for country risk and the risk associated with the
depreciation of the currency of denomination of the cash flows;
Š it has been calculated using comparative market parameters to estimate the “Beta coefficient” and the
weighting coefficient of the equity and debt capital components.
Details are provided below, for each CGU, of the weighted average cost of capital (WACC rate) used to discount
the future cash flows, and the equivalent rate before tax.
Details are also provided of the growth rates used to estimate the residual value after the explicit forecast period
(the G-Rates), expressed in nominal terms and related to the cash flows in their functional currency. Lastly, details
are provided on the implicit capitalization rates, for each CGU, resulting from the difference between the cost of
capital, after tax, and the G-Rate.
F-34

Principal parameters for the estimates of value in use
Core
Domestic
International
Wholesale Brazil Persidera
% % % %
WACC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 6.6 13.0 9.4
WACC before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 8.6 16.5 12.7
Growth rate beyond the explicit period (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 0.5 5.2 n.a.
Capitalization rate (WACC -g ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 8.1 11.3 n.a.
Capex/Revenues, % perpetual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.0 6.0 16.0 n.a.
The growth rates of the terminal value “g” of the Domestic segment have been estimated taking into account the
expected outlook during the explicit forecast period and are consistent with the range of growth rates applied by
the analysts who monitor Telecom Italia shares. The estimate of the growth rate for the Brazil CGU also takes into
account the country’s expected rate of inflation over the long term, as estimated by market observers.
Separate parameters for the various CGUs have also been used in the estimate of the level of capital expenditure
required to sustain the perpetual generation of cash flows after the explicit forecast period, according to the
phase of capital expenditure, competitive positioning and the technological infrastructure operated.
Moreover, for the appraisal of the value in use, the Group’s plan figures were adjusted according to the expected
financial flows approach, on the basis of information reasonably available, assigning greater weight to observable
parameters and to information from external sources which are deemed important from the market operator
perspective.
The differences between the values in use and the carrying amounts for the main CGUs considered amounted to:
Core
Domestic
International
Wholesale
(millions of euros)
Difference between values in use and carrying amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +4,312 +88
For the Brazil CGU, following the impairment loss, the value in use was in line with the net carrying amounts.
For the estimate of values in use, simulations were conducted on the results with respect to changes in the
relevant rate parameters. Details are provided below for the variables needed to make the recoverable amount of
the respective CGUs equal to their net carrying amount.
Parameters that make the value in use equal to the carrying amount
Core
Domestic
International
Wholesale
% %
WACC before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6 8.8
Capitalization rate (WACC - g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 8.3
Capex/Revenues, % on TV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.0 6.0
In addition to the value used to determine the recoverable amount of all the Units (value in use), value estimates
were also made based on various methods, chosen from those generally accepted and based on the best technical
practices. In particular, reference values provided by the stock market prices of the securities of the Group’s listed
companies were used, together with multipliers and other summary indicators determined, on a comparative
basis, from the prices of similar assets traded in regulated markets or traded through discontinuous transactions
in unregulated markets.
Concerning the value testing at overall Group level, the sum of the recoverable amounts of all the CGUs
(estimated using methods consistent with the notion of value in use or fair value) was compared against the
F-35

carrying amount of the net operating assets of the consolidated financial statements, after appropriate
adjustments to take account of the Central Functions not allocated to any CGU and the Cash Generating Units of
the Group that do not bring any goodwill (Olivetti). No impairment losses were recorded at this additional level of
impairment testing.
NOTE 6—INTANGIBLE ASSETS WITH A FINITE USEFUL LIFE
Intangible assets with a finite useful life decreased by 347 million euros compared to December 31, 2014. The
breakdown and movements are as follows:
As of
December 31,
2013 Addition Amortization
Impairment
losses /
Reversals Disposals
Exchange
Differences
Capitalized
borrowing
costs
Other
changes
As of
December 31,
2014
(millions of euros)
Industrial patents and intellectual
property rights . . . . . . . . . . . . . . . 2,332 991 (1,297) (2) 199 2,223
Concessions, licenses, trademarks
and similar rights . . . . . . . . . . . . . 3,394 90 (370) (60) 26 40 3,120
Other intangible assets . . . . . . . . . . 257 63 (187) 1 134
Work in progress and advance
payments . . . . . . . . . . . . . . . . . . . 297 1,278 (1) (30) 5 (199) 1,350
Total . . . . . . . . . . . . . . . . . . . . . . . . 6,280 2,422 (1,854) — (61) (5) 5 40 6,827
As of
December 31,
2014 Addition Amortization
Impairment
losses /
Reversals Disposals
Exchange
Differences
Capitalized
borrowing
costs
Other
changes
As of
December 31,
2015
(millions of euros)
Industrial patents and intellectual
property rights . . . . . . . . . . . . . 2,223 1,010 (1,268) (1) (243) — 349 2,070
Concessions, licenses, trademarks
and similar rights . . . . . . . . . . . 3,120 204 (391) (3) (103) 2 2,829
Other intangible assets . . . . . . . . . 134 84 (129) (4) (2) 83
Work in progress and advance
payments . . . . . . . . . . . . . . . . . . 1,350 661 (3) (235) 73 (348) 1,498
Total . . . . . . . . . . . . . . . . . . . . . . . 6,827 1,959 (1,788) — (7) (585) 73 1 6,480
Additions in 2015 included 312 million euros of internally generated assets (310 million euros in 2014). Further
details are provided in the Note “Internally generated assets”.
Industrial patents and intellectual property rights at December 31, 2015 consisted mainly of application software
purchased outright and user license rights acquired, amortized over a period between 2 and 5 years. They mainly
related to Telecom Italia S.p.A. (1,207 million euros) and to the Brazil Business Unit (823 million euros).
Concessions, licenses, trademarks and similar rights at December 31, 2015 mainly related to:
Š the remaining cost of telephone licenses and similar rights (1,996 million euros for Telecom Italia S.p.A.
and 269 million euros for the Brazil Business Unit). Additions for 2015 included the renewal by the
Parent of the GSM license for a period of 3 years, namely until June 2018, for a price of 117 million
euros, already fully paid;
Š Indefeasible Rights of Use—IRU (315 million euros) mainly relating to companies of the Telecom Italia
Sparkle group (International Wholesale);
Š TV frequencies of the Media Business Unit (126 million euros). The user licenses for the frequencies
used for digital terrestrial transmission held by Persidera S.p.A. will expire in 2032.
F-36

The net carrying amount of telephone licenses and similar rights (2,265 million euros) and their useful lives are
detailed below:
Type of license
Net carrying
amount at
December 31,
2015 (millions of
euros)
Amortization period
(years)
Amortization
charge for 2015
(millions of euros)
Telecom Italia S.p.A.:
UMTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 806 18 134
UMTS 2100 MHz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 12 7
Wireless Local Loop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 15 1
WiMax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 15 1
LTE 1800 MHz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 18 9
LTE 800 MHz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 840 17 60
LTE 2600 MHz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 17 7
GSM (extension) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 3.5 31
TIM Brasil group:
GSM and 3G (UMTS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 8-15 80
4G (LTE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 15 9
Other intangible assets with a finite useful life at December 31, 2015, included 69 million euros of capitalized
subscriber acquisition costs (SAC) (63 million euros for the Parent and 6 million euros for the Brazil Business
Unit), mainly related to commissions for the sales network on consumer contracts with a set contractual term.
Subscriber acquisition costs are amortized over the underlying minimum contract period (between 24 or 30
months).
Work in progress and advance payments include the acquisition by the Parent of the user rights to the L Band
frequencies (1452-1492 MHz) for terrestrial electronic communications systems (231 million euros),
following participation in a tender for assignment of the frequencies by the Ministry of Economic Development.
The rights were officially awarded on September 14 and were definitively assigned in December 2015. Use of such
rights commenced in January 2016.
The item also includes user rights for the 700 MHz frequencies, acquired in 2014 by the TIM Brasil group for a
total of 2.9 billion reais. The assignment of the license also entailed participation in the consortium that will carry
out the cleaning up of the 700 MHz spectrum, currently used by television broadcasters. Since the assets require a
period of more than 12 months to be ready for use, in 2015, borrowing costs of 73 million euros have been
capitalized, as they are directly attributable to the acquisition. The yearly rate used for the capitalization of
borrowing costs is 13.25%. Capitalized borrowing costs in reais have been recorded as a direct reduction of the
income statement item “Finance expenses—Interest expenses to banks”.
Amortization and impairment losses are recorded in the income statement as components of the operating result.
The gross carrying amount, accumulated impairment losses and accumulated amortization at December 31, 2015
and 2014 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 . . . . . . . . . . . . . . . . 12,831 (7) (10,601) 2,223
Concessions, licenses, trademarks and similar rights . . . . . . . . . . . . . 6,498 (266) (3,112) 3,120
Other intangible assets with a finite useful life . . . . . . . . . . . . . . . . . . . 668 — (534) 134
Work in progress and advance payments . . . . . . . . . . . . . . . . . . . . . . . . . 1,352 (2) 1,350
Total intangible assets with a finite useful life . . . . . . . . . . . . . . 21,349 (275) (14,247) 6,827
F-37

Gross
carrying
amount
Accumulated
impairment
losses
Accumulated
amortization
Net
carrying
amount
(millions of euros)
Industrial patents and intellectual property rights . . . . . . . . . . . . . . . . 12,579 (7) (10,502) 2,070
Concessions, licenses, trademarks and similar rights . . . . . . . . . . . . . 6,349 (296) (3,224) 2,829
Other intangible assets with a finite useful life . . . . . . . . . . . . . . . . . . . 862 — (779) 83
Work in progress and advance payments . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 (2) 1,498
Total intangible assets with a finite useful life . . . . . . . . . . . . . . 21,290 (305) (14,505) 6,480
Patents and intellectual property rights included disposals related to abandonment or rewriting of software (for
applications and installations operation) by the Parent Company for a gross carrying amount of 690 million euros,
which generated an overall loss of a non-significant amount.
Impairment losses on “Concessions, licenses, trademarks and similar rights”, relating mainly to reporting periods
prior to 2004, refer to the Indefeasible Rights of Use (IRU) for the transmission capacity and cables for
international connections acquired by the LanMed group. The change in the amount shown for 2015 compared to
the previous year, is essentially due to the conversion into euros of accounts denominated in US dollars.
The item “Other intangible assets with a finite useful life”, includes gross disposals of 252 million euros of
Telecom Italia S.p.A. connected with Subscriber Acquisition Costs (SAC) that have been substantially amortized.
NOTE 7—TANGIBLE ASSETS (OWNED AND UNDER FINANCE LEASES)
Property, plant and equipment owned
Property, plant and equipment owned increased by 115 million euros compared to December 31, 2014. The
As of
December 31,
2013 Addition Depreciation
Impairment
losses /
Reversals Disposals
Exchange
Differences
Other
changes
As of
December 31,
2014
(millions of euros)
Land . . . . . . . . . . . . . . . . . . . . . . . . 135 (1) (3) 131
Buildings (civil and industrial) . . . . 380 8 (41) (34) 1 6 320
Plant and equipment . . . . . . . . . . . . 10,594 1,913 (2,075) (10) 9 481 10,912
Manufacturing and distribution
equipment . . . . . . . . . . . . . . . . . 41 13 (14) 40
Other . . . . . . . . . . . . . . . . . . . . . . . . 454 91 (176) (3) 74 440
Construction in progress and
advance payments . . . . . . . . . . . 695 501 (1) 3 (497) 701
Total . . . . . . . . . . . . . . . . . . . . . . . . 12,299 2,526 (2,306) (1) (51) 13 64 12,544
As of
December 31,
Impairment
losses /
Reversals Disposals
Exchange
Differences
Other
changes
As of
December 31,
2015
(millions of euros)
Land . . . . . . . . . . . . . . . . . . . . . . . . 131 25 (3) 18 171
Buildings (civil and industrial) . . . . 320 126 (38) (1) (5) 42 444
Plant and equipment (*) . . . . . . . . . 10,912 2,342 (2,018) (3) (130) (579) 385 10,909
Manufacturing and distribution
equipment . . . . . . . . . . . . . . . . . 40 16 (15) (1) 1 41
Other . . . . . . . . . . . . . . . . . . . . . . . . 440 101 (159) (4) (39) 39 378
Construction in progress and
advance payments . . . . . . . . . . . 701 578 (3) (46) (514) 716
Total . . . . . . . . . . . . . . . . . . . . . . . . 12,544 3,188 (2,230) (4) (138) (672) (29) 12,659
(*) The amounts shown in Depreciation and Other changes take account of the effects resulting from the remeasurement of the Provision for
restoration costs due to the revision of the useful life of the passive infrastructure of the Base Transceiver Stations, as detailed in the
Note “Provisions”.
Land comprises both built-up land and available land and is not subject to depreciation. The balance at December
31, 2015 mainly related to Telecom Italia S.p.A. (120 million euros).
F-38

Buildings (civil and industrial) almost exclusively includes buildings for industrial use hosting telephone exchanges
or for office use, and light constructions. The figure at the end of 2015 was mainly attributable to Telecom Italia
S.p.A. (259 million euros).
In 2015, four properties and the related land, previously leased under financial leases, were also purchased for a
total of 176 million euros. The purchase resulted in an addition of 117 million euros under the item “Buildings
(civil and industrial)” and of 23 million euros under the item “Land”. In addition, the column “Other changes”
includes 55 million euros for the reclassification of the remaining value of these properties, from assets held
under finance leases and the related improvements made.
Plant and equipment includes the aggregate of all the structures used for the operation of voice and data
telephone traffic. The figure, at December 31, 2015, was mainly attributable to Telecom Italia S.p.A. (8,385
million euros) and to companies of the Brazil Business Unit (1,934 million euros).
With regard to the depreciation of the passive infrastructure of the mobile telephone Base Transceiver Stations,
effective January 1, 2015, Telecom Italia has revised their useful life from 13 to 28 years and applied this change
on a prospective basis.
This revision was made to account for the update of the average expected duration of the leases for areas that
infrastructure is located on, as well as the value generated by such assets, particularly through the subsidiary
INWIT S.p.A., and their technical obsolescence.
In particular, the useful lives were updated on the basis of the average duration of the leases, as well as of an
appraisal by an external expert.
As a result, in 2015, 24 million euros less of depreciation expense was recognized for the period.
The lower estimated depreciation for future periods may be broken down as follows:
Š 24 million euros for the year 2016;
Š 22 million euros for the year 2017;
Š 19 million euros for the year 2018.
Manufacturing and distribution equipment consists of instruments and equipment used for the running and
maintenance of plant and equipment; the amount was essentially in line with the end of the prior year and
primarily related to Telecom Italia S.p.A..
The item Other mainly consists of hardware for the functioning of the Data Center and for work stations, furniture
and fixtures and, to a minimal extent, transport vehicles and office machines.
Construction in progress and advance payments refer to the internal and external costs incurred for the
acquisition and internal production of tangible assets, which are not yet in use.
Additions in 2015 increased by 662 million euros and included 344 million euros of internally generated assets
(278 million euros in 2014). Further details are provided in the Note “Internally generated assets”.
The increase, in addition to the impact of the above-mentioned purchase of four properties, was mainly due to
higher investments in the development of ultra-broadband networks in the Fixed-line and Mobile segments.
Depreciation, impairment losses and reversals have been recorded in the income statement as components of the
operating result.
Depreciation for the years 2015 and 2014 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%
F-39

The gross carrying amount, accumulated impairment losses and accumulated depreciation at December 31, 2015
Gross
carrying
amount
Accumulated
impairment
losses
Accumulated
depreciation
Net carrying
amount
(millions of euros)
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 (1) 131
Buildings (civil and industrial) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,388 (2) (1,066) 320
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,911 (58) (54,941) 10,912
Manufacturing and distribution equipment . . . . . . . . . . . . . . . . . . . . 283 (1) (242) 40
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,999 (2) (3,557) 440
Construction in progress and advance payments . . . . . . . . . . . . . . 702 (1) 701
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,415 (65) (59,806) 12,544
Gross
carrying
amount
Accumulated
impairment
losses
Accumulated
depreciation
Net carrying
amount
(millions of euros)
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 (2) 171
Buildings (civil and industrial) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,583 (1) (1,138) 444
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,208 (67) (55,232) 10,909
Manufacturing and distribution equipment . . . . . . . . . . . . . . . . . . . . 300 (1) (258) 41
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,751 (2) (3,371) 378
Construction in progress and advance payments . . . . . . . . . . . . . . 717 (1) — 716
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,732 (74) (59,999) 12,659
The impairment losses on “Plant and equipment”, mainly relating to years prior to 2004, are attributable to the
LanMed group. The change in the amount shown for 2015 compared to the previous year, is essentially due to the
conversion into euros of accounts denominated in US dollars.
With regard to the gross carrying amounts of tangible assets, in 2015 Telecom Italia S.p.A. carried out disposals
for a gross carrying amount of 455 million euros mainly in relation to fully depreciated assets. Disposals mainly
involved plant and equipment for around 435 million euros.
Assets held under finance leases
Assets held under finance lease increased by 1,365 million euros compared to December 31, 2014. The
As of
December 31,
Other
changes
As of
December 31,
2014
(millions of euros)
Buildings (civil and industrial) . . . . . . . . . . . . . . . . . . . . . . 883 19 (120) 31 813
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1 (4) 2
Construction in progress and advance payments . . . . 32 16 (20) 28
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 920 36 (124) 11 843
F-40

As of
December 31,
2014 Addition
Change
in
finance
lease
contracts Depreciation
Exchange
differences
Other
changes
As of
December 31,
2015
(millions of euros)
Land . . . . . . . . . . . . . . . . . . . . 16 16
Buildings (civil and
industrial) . . . . . . . . . . . . 813 39 1,162 (105) (29) 1,880
Plant and equipment . . . . — 337 (9) (43) (1) 284
Other . . . . . . . . . . . . . . . . . . . 2 1 8 (3) (1) 7
Construction in progress
and advance
payments . . . . . . . . . . . . 28 10 (17) 21
Total . . . . . . . . . . . . . . . . . . . 843 50 1,523 (117) (43) (48) 2,208
The additions consisted of improvements and incremental costs incurred for movable and immovable third-party
assets used on the basis of finance lease agreements.
The item Buildings (civil and industrial) includes buildings under long rent contracts and related building
adaptations, almost exclusively attributable to Telecom Italia S.p.A..
In late 2014, Telecom Italia launched a major real estate project, aimed at restructuring the use of industrial
space in line with the evolution of next-generation networks and optimizing the number of office/other buildings
by creating functional “hubs” that employ a modern and more efficient use of space.
The project involves a restructuring process, the closure of some properties and renegotiations of agreements
with owners, aimed at increasing efficiency and cutting costs, mainly by extending contract terms and reducing
lease payments. In particular, with respect to 2015:
Š properties of strategic importance were identified on the basis of their current and future use and
technological evolution of the network and the new ICT services. Four of these properties were purchased in
2015, while the contract for a fifth one, part of the Acilia complex in Rome, was renegotiated as described
below;
Š the renegotiation and/or termination of new contracts was completed for about 750 real estate leases. Prior
to these renegotiations, in accordance with IAS 17 (Leases), more than half of these contracts were classified
as operating leases with consequent recognition of the rent under lease and rental costs in the income
statement; the remaining contracts were defined as finance leases, and were therefore accounted for with
the recognition of Tangible Asset—Properties and the related financial debt in the statement of financial
position. The renegotiation and/or termination of new contracts resulted in the reclassification of operating
leases to finance leases and, with respect to properties with contracts that were already classified as finance
leases, in a “re-assessment” of the value of the property and the related payable. This resulted in an overall
impact on the statement of financial position, at December 31, 2015, of 1,178 million euros in terms of
higher tangible assets (Land and Buildings) and related payables for finance leases.
Also pursuant to the above-mentioned project, in August of 2015, a long-term rental agreement for part of the
Acilia complex in Rome was terminated early (extinguishing 14 million euros of remaining financial debt and
leading to the recognition of a gain of 8 million euros). Simultaneously, a new finance lease agreement,
containing a “purchase option” upon expiration of the agreement, was signed for this property with a recognition
of higher tangible assets and related liability for a total of 73 million euros (of which 16 million euros for land and
57 million euros for buildings). This sum is included in the 1,178 million euros value mentioned above.
The plant and equipment item includes the recognition of the value of the telecommunications towers sold by the
TIM Brasil group to American Tower do Brasil and subsequently leased back subject to a finance lease for 1,245
million reais (around 337 million euros).
Under the transaction, the gain for the tangible assets not yet transferred has been classified under deferred
income (1,003 million reais or approximately 271 million euros).
F-41

Other essentially comprises the capitalization of finance leases of Data Center hardware and photocopiers.
Depreciation and impairment losses are recorded in the income statement as components of the operating result.
The gross carrying amount, accumulated impairment losses and accumulated depreciation at December 31, 2015
Gross
carrying
amount
Accumulated
impairment
losses
Accumulated
depreciation
Net carrying
amount
(millions of euros)
Buildings (civil and industrial) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,141 (27) (1,301) 813
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 (89) 2
Construction in progress and advance payments . . . . . . . . . . . . . . . 28 28
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,260 (27) (1,390) 843
Gross
carrying
amount
Accumulated
impairment
losses
Accumulated
depreciation
Net carrying
amount
(millions of euros)
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 16
Buildings (civil and industrial) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,275 (27) (1,368) 1,880
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293 (9) 284
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 (22) 7
Construction in progress and advance payments . . . . . . . . . . . . . . . 21 21
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,634 (27) (1,399) 2,208
At December 31, 2015 and 2014, finance lease payments due in future years and their present value are as
follows:
As of December 31,
2015 2014
Minimum lease
payments
Present value of
minimum lease
payments
Minimum lease
payments
Present value of
minimum lease
payments
(millions of euros)
Within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270 217 216 191
From 2 to 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,033 680 879 566
Beyond 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,032 1,422 560 249
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,335 2,319 1,655 1,006
As of December 31,
2015 2014
(millions of euros)
Future net minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,335 1,655
Interest portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,016) (649)
Present value of lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,319 1,006
Financial lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,424 1,153
Financial receivables for lease contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (105) (147)
Total net finance lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,319 1,006
At December 31, 2015, the inflation adjustment to finance lease payments was 28 million euros (38 million euros
at December 31, 2014) and related to Telecom Italia S.p.A..
F-42

NOTE 8—INVESTMENTS
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES ACCOUNTED FOR USING THE EQUITY METHOD
Investments in associates and joint ventures that have been accounted for using the equity method include:
As of December 31,
2015 2014
(millions of euros)
Tiglio I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 8
NordCom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4
W.A.Y. . . . . . . . . . . . . . . . . . . .

2015 FORM 20-F

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