to download Telecom Italia Annual Report 2011 - Company Reporting

The compensation claimed has been quantified as approximately 529 million euros, plus legal interest
and revaluation. The Avvocatura di Stato filed an appearance and submitted a counterclaim for the
same sum. The case, as regards the main claim, is subject to eligibility analysis by the Court, which
declared the inadmissibility of Telecom Italia's main claim (case for damages for manifest breach of
community law pursuant to law 117/88). The Court's decision was however amended by the Court of
Appeal of Rome (after appeal by the Company) which declared Telecom Italia's claim admissible.
Consequently the proceedings will continue on both claims made by Telecom Italia.
The case brought by Telecom Italia to the Consiglio di Stato on January 15, 2011 for revocation of the
judgement that is the object of the proceedings is also still pending.
Mobile Telephony: investigation of Dealers
During 2011 the activities to verify and regularise the prepaid SIM cards which had been activated in
2005-2008 and not correctly associated with a customer identity document continued. The activities
performed led to a reduction of approximately 65% of the "non-compliant" sim-cards compared to the
start of the year.
A new regularization process which involves post-sales blocking of all the remaining cards was
introduced in July and continued until December 2011. Thanks to this solution, the cards subject to
post-sales blocking can no longer perform commercial operations such as top-ups, participation in
offers, contractual profile changes, etc. except after regularisation. As a result of the actions taken, by
the end of 2011 only 248 thousand sim-cards are still to be regularised,(when regularisation activities
commenced, approximately 5.5 million sim-cards were not correctly associated with an identity
document and, at the beginning of 2011, approximately 723 thousand cards were still to be
regularised).
At December 31, 2011, the investigations of the Milan Public Prosecutor into SIM cards with incorrect
user registrations, previously examined in the Greenfield Project – the results of which were illustrated in
the Annex to the 2010 Corporate Governance and Share Ownership report – and of the phenomenon
also pointed out in the Greenfield Project reported by Deloitte Financial Advisory Services on irregular
postponement of the natural expiry date (13 months after the last top-up or other chargeable post-sales
action) of approximately 2.5 million prepaid SIM cards, continued.
In addition and in relation to a different affair, on March 21, 2012 Telecom Italia was served notice of
the conclusion of the preliminary enquiries pursuant to art. 415 bis of the code of criminal procedure,
from which it emerged that the Company is currently subject to investigation by the Milan Public
Prosecutor pursuant to Legislative Decree 231/2001 for the offences of receiving stolen goods (art.
648 of the penal code) and fraud of which fourteen employees of the so-called "canale etnico" of
Telecom Italia are charged, jointly with several dealers ( to a total of 99 individuals subject to
investigation for having made fake registrations of about 109,000 sim-cards).
Within the sphere of the proceedings in question, the Company as the injured party damaged by such
conduct, had brought an action and subsequent addition in the years 2008 and 2009 providing for the
prompt suspension of the employees involved.
As the injured party Telecom Italia will be bringing a civil action .
Other Liabilities Connected With Sales Of Assets And Investments
Under the contracts for the sale of assets and companies, the Telecom Italia Group has guaranteed
compensation generally commensurate to a percentage of purchase price to buyers for liabilities
deriving mainly from legal, tax, social security and labor-related issues.
In connection with these contingent liabilities, totaling about 1,100 million euros, only for those cases in
which an outflow of resources is considered probable, an amount of 111 million euros has been accrued
in the provision for risks.
Moreover, the Telecom Italia Group is committed to provide further compensation for certain specific
contractual provisions under agreements for the sale of assets and companies, for which the contingent
liabilities cannot at present be determined.
Telecom Italia Group
Consolidated Financial Statements
Note 24 – Contingent liabilities, other information,
commitments and guarantees
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