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Note 37 – Earnings per share For purposes of the calculation of diluted earnings per share, account was only taken of the potential ordinary shares relating to the equity compensation plans of the employees for whom, at December 31, 2011, the market and non-market performance conditions were satisfied. In 2010, the additional dividends to which the savings shareholders were conventionally entitled (at an unvarying amount of 0.011 euros per share) were allocated entirely to the loss from continuing operations. Basic and diluted earnings per share 2011 2010 Profit (loss) for the year attributable to owners of the Parent (4,726) 3,121 Less: additional dividends for the savings shares (0.011 euros per share) - (66) (millions of euros) (4,726) 3,055 Average number of ordinary and savings shares (millions) 19,290 19,266 Basic and diluted earnings per share – Ordinary shares (0.24) 0.16 Plus: additional dividends per savings share - 0.01 Basic and diluted earnings per share – Savings shares (euros) (0.24) 0.17 Basic and diluted earnings per share from continuing operations Profit (loss) from continuing operations (4,713) 3,128 Less: additional dividends for the savings shares - (66) (millions of euros) (4,713) 3,062 Average number of ordinary and savings shares (millions) 19,290 19,266 Basic and diluted earnings per share from continuing operations — Ordinary shares (0.24) 0.16 Plus: additional dividends per savings share - 0.01 Basic and diluted earnings per share from continuing operations — Savings shares (euros) (0.24) 0.17 Basic and diluted earnings per share from Discontinued operations/Non-current assets held for sale Profit (loss) from Discontinued operations/Non-current assets held for sale (millions of euros) (13) (7) Average number of ordinary and savings shares (millions) 19,290 19,266 Basic and diluted earnings per share from Discontinued operations/ Non-current assets held for sale - Ordinary shares (euros) - - Basic and diluted earnings per share from Discontinued operations/ Non-current assets held for sale - Savings shares (euros) - - 2011 2010 Average number of ordinary shares (*) 13,264,375,078 13,239,883,276 Average number of savings shares 6,026,120,661 6,026,120,661 Total 19,290,495,739 19,266,003,937 (*) The number only takes into account the potential ordinary shares relating to the equity compensation plans of the employees for whom the market and non-market performance conditions were satisfied. Telecom Italia Group Consolidated Financial Statements Note 37 – Earnings per share 264
Future potential changes in share capital The following table shows the future potential changes in share capital on the basis of the options and rights granted under equity compensation plans still outstanding at December 31, 2011: Additional capital increases not yet approved (ordinary shares) Resolution by the shareholders’ meeting held on April 8, 2009 “Long Term Incentive Plan 2010-2015” (capital increase in cash) (*) “Long Term Incentive Plan 2010-2015” (bonus capital increase) (**) “Long Term Incentive Plan 2011” (capital increase in cash for Selected Management) (°) “Long Term Incentive Plan 2011” (bonus capital increase for Selected Management) (°°) “Long Term Incentive Plan 2011” (bonus capital increase for Top Management) (°°°) Total additional capital increases not yet approved (ordinary shares) Number of maximum shares issuable Par value (thousands of euros) Paid-in capital (thousands of euros) Subscription price per share (euro) 1,600,000,000 880,000 n.d. n.d. n.d. 4,118 n.d. n.d. n.d. 4,118 - - n.d. 4,747 n.d. n.d. n.d. 4,747 - - n.d. 3,256 - - 900,986 (*) A number of ordinary shares may be issued subscribable for a total maximum equivalent amount (including paid-in capital) equal to 4,118,175 euros, with the subscription price to be determined by the board of directors. (**) A number of ordinary shares may be issued for the number needed to grant a bonus share for every share subscribed, up to a maximum amount equal to 4,118,175 euros. (°) A number of ordinary shares may be issued subscribable for a total maximum equivalent amount (including paid-in capital) equal to 4,747,125 euros, with the subscription price to be determined by the board of directors. (°°) A number of ordinary shares may be issued for the number needed to grant a bonus share for every share subscribed, up to a maximum amount equal to 4,747,125 euros. (°°°) A number of ordinary shares may be issued as a bonus grant for a maximum amount equal to 3,256,200 euros, with the subscription price to be determined by the board of directors. With regard to additional capital increases not yet approved, the shareholders’ meeting held on April 12, 2011 granted the directors the right for five years from April 12, 2011 to increase share capital to service the “Long Term Incentive Plan 2011”, approved by the same shareholders’ meeting, as follows: • in cash through the issue of new ordinary shares of par value 0.55 euros each, with normal dividend rights, for a maximum amount of 5,000,000 euros, with the exclusion of the pre-emptive right pursuant to art. 2441, paragraph 8, of the Italian Civil Code and art. 134, paragraph 2 of Legislative Decree 58/1998, reserved for a part of the employees (defined as “Selected Management”), beneficiaries of the “Long Term Incentive Plan 2011”, who in due time will be identified by the board of directors of the Company, and, therefore, subsequently (ii) for a maximum amount of 5,000,000 euros through the appropriation of a corresponding maximum amount of profits or reserves in accordance with art. 2349 of the Italian Civil Code, with the issue of ordinary shares in the number needed to grant a bonus share for every share subscribed in cash as above, within the dates, according to the conditions and in keeping with the manner provided by the “Long Term Incentive Plan 2011”; • for a maximum amount of 5,500,000 euros through the appropriation of a corresponding maximum amount of profits or profit reserves pursuant to art. 2349 of the Italian Civil Code, with the issue of ordinary shares reserved for a part of the employees (defined as “Top Management”), beneficiaries of the “Long Term Incentive Plan 2011”, who in due time will be identified by the board of directors of the Company, within the dates, according to the conditions and in keeping with the manner provided by the “Long Term Incentive Plan 2011”. As regards the share capital increase in cash, the board of directors shall fix the share issue price (including paid-in capital) in conformity with the provisions of the “Long Term Incentive Plan 2011” and shall also fix the period for its subscription, establishing that, if the approved capital increase is not fully Telecom Italia Group Consolidated Financial Statements Note 37 – Earnings per share 265
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Annual Report 2011 Relazione interm
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Statements of Comprehensive Income
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Letter to the Shareholders To the S
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Key Operating and Financial Data -
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The trend of the key operating and
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Liquidity margin: at December 31, 2
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Consolidated Operating and Financia
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Review of Operating and Financial P
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The fixed-line area, with a contrac
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- lower expenses of 246 million eur
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Business Unit (-329 million euros)
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Income tax expense Income tax expen
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eflect the definitive fair value of
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Capital expenditures on an accrual
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Finance expenses, income taxes and
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The financial risk management polic
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On August 3, 2011, a bilateral stan
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Research and Development As for “
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Consolidated Financial Statements -
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Consolidated Statements of Financia
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Consolidated Statements of Cash Flo
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Highlights - The Business Units of
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The Business Units of the Telecom I
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International Wholesale (millions o
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compared to the same period of 2010
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In detail: (millions of euros) 2011
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Cubomusica GRATIS per 1 anno. Durin
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In particular, for the unbundling c
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International roaming On July 6, 20
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For the telecommunications operator
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Brazil The Telecom Italia Group ope
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EBIT EBIT is 2,294 million reais, i
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Argentina The Telecom Italia Group
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Mobile telephony service: Telecom P
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Again with regard to value-added se
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Revenues Revenues amount to 238 mil
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Principal changes in the regulatory
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• it erroneously attributed the m
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European sales recorded a good tren
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Review of Operating and Financial P
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The reduction of 483 million euros
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(162 million euros, on the basis of
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Equity Equity amounts to 20,537 mil
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Dividends flow Dividends paid amoun
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Bonds Bonds at December 31, 2011 to
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Financial Statements - Telecom Ital
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Statements of Financial Position (m
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Additional Cash Flow Information (m
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Corporate Boards at December 31, 20
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Macro-Organization Group at Decembe
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other sources of information, the p
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Relative performance by Tim Partici
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Related Party Transactions In accor
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the Dow Jones Sustainability World
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Economic value generated and distri
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Type of customer care customer Over
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Involvement initiatives For the fif
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Vehicles Telecom Italia S.p.A. 2011
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• cogeneration/trigeneration: 5 l
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• an increase in emissions attrib
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channels have been registered as "D
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• Network and service platform in
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• E-learning and evolved teaching
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Tim Brasil Group (units) 12.31.2011
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Development The 2010 Group performa
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Internal communication The main act
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introduced on this subject. The agr
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On August 2, 2011 the second phase
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The Risk Management department mana
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Net financial debt is calculated as
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Bundle. Commercial offer including
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HFC (Hydrofluorocarbons). Hydrofluo
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Shared Access. Methods of shared ac
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Consolidated Financial Statements a
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Note 34 - Other income (expenses) f
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Equity and Liabilities (millions of
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Consolidated Statements of Comprehe
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Consolidated Statements of Cash Flo
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Note 1 - Form, content and other ge
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• Argentina: includes fixed (Tele
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Note 2 - Accounting policies Going
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case of loss of control of a subsid
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Impairment of intangible and tangib
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• held to maturity (originally mo
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Inventories Inventories are measure
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Revenues are recognized to the exte
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Use of estimates The preparation of
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Note 3 - Business combinations Acqu
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Acquisition of control of Sofora Te
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Note 4 - Goodwill Goodwill shows th
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Core Domestic International Wholesa
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Changes in key variables needed to
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Concessions, licenses, trademarks a
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Note 6 - Tangible assets (owned and
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Gross carrying amount, accumulated
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Gross carrying amount, accumulated
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Aggregate data for 2011 and 2010, p
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Note 9 - Financial assets (non-curr
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Note 10 - Miscellaneous receivables
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The temporary differences which mak
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In addition to this effect, the inc
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Note 13 - Trade and miscellaneous r
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Note 14 - Equity Equity includes: (
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• the reduction of share capital
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• to mandate the board of directo
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Gross financial debt according to t
Page 213 and 214: The following table lists the bonds
Page 215 and 216: Nortel Inversora S.A. Preferred Ser
Page 217 and 218: Such obligation, required by nation
Page 219 and 220: Revolving Credit Facility The follo
Page 221 and 222: Note 17 - Financial risk management
Page 223 and 224: of market parameters, even though t
Page 225 and 226: In order to limit the risk of the n
Page 227 and 228: Note 18 -Derivatives Derivative fin
Page 229 and 230: Note 19 - Supplementary disclosures
Page 231 and 232: Comparison between carrying amount
Page 233 and 234: Carrying amount for each class of f
Page 235 and 236: Fair value hierarchy level for each
Page 237 and 238: Note 20 - Employee benefits Employe
Page 239 and 240: The effect on the income statement,
Page 241 and 242: Note 22 - Miscellaneous payables an
Page 243 and 244: Note 24 - Contingent liabilities, o
Page 245 and 246: On December 16, 2011 Telecom Italia
Page 247 and 248: In a judgement on November 2, 2011,
Page 249 and 250: Greece -DELAN During 2009, the comp
Page 251 and 252: c) Commitments and guarantees Guara
Page 253 and 254: Note 27 - Acquisition of goods and
Page 255 and 256: Note 29 - Other operating expenses
Page 257 and 258: Note 32 - Gains (losses) on disposa
Page 259 and 260: Note 34 - Other income (expenses) f
Page 261 and 262: Finance expenses Finance expenses d
Page 263: Note 36 - Profit (loss) for the yea
Page 267 and 268: Note 38 - Segment reporting a) Repo
Page 269 and 270: Headcount by Operating Segment (num
Page 271 and 272: The effects on the individual line
Page 273 and 274: Transactions with associates and jo
Page 275 and 276: Transactions with companies control
Page 277 and 278: Transactions with other related par
Page 279 and 280: (millions of euros) 12/31/2011 12/3
Page 281 and 282: In the 2011, the contributions paid
Page 283 and 284: Description of other Telecom Italia
Page 285 and 286: Calculation of fair value measureme
Page 287 and 288: Note 41 - Significant non-recurring
Page 289 and 290: Note 42 - Positions or transactions
Page 291 and 292: c) Operating leases Revenue related
Page 293 and 294: Note 44 - Events subsequent to Dece
Page 295 and 296: Name Head office Currency Share cap
Page 297 and 298: Name Head office Currency Share cap
Page 299 and 300: Certification of the Consolidated F
Page 301 and 302: Consolidated Financial Statements T
Page 303 and 304: Contents Telecom Italia S.p.A. Sepa
Page 305 and 306: Statements of Financial Position As
Page 307 and 308: Separate Income Statements (euros)
Page 309 and 310: Statements of Changes in Equity Sta
Page 311 and 312: Additional Cash Flow Information (t
Page 313 and 314: Profit (loss) before tax from conti
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• the capitalized costs can be me
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Intangible and tangible assets with
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Financial liabilities hedged by der
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Starting from January 1, 2007, Ital
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Finance income and expenses Finance
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• IFRIC 19 (Extinguishing Financi
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The cost of capital used for the es
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Type of license The net carrying am
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Note 5 - Tangible assets (owned and
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12/31/2010 Accumulated impairment l
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Note 6 - Investments Investments de
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(thousands of euros) Carrying amoun
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5,620 thousand euros for receivable
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Note 8 - Miscellaneous receivables
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The temporary differences which mak
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Note 10 - Inventories Inventories a
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Trade receivables amount to 4,162,0
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Note 12 - Equity Equity is composed
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Share capital carries a restriction
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The following statement provides ad
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With regard to additional capital i
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Note 13 - Financial liabilities (no
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The main components of financial li
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elating to items classified as curr
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• the loan contract signed by Tel
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Note 14 - Net financial debt As req
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Total Financial liabilities (at the
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Financial liabilities - Maturities
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Currency of denomination Notional a
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Carrying amount for each class of f
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Fair value hierarchy level for each
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Comparison between carrying amount
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Gains and losses by IAS 39 category
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Under IAS 19, employee severance in
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Note 19 - Provisions Provisions dec
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Note 21 - Trade and miscellaneous p
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Note 22 - Contingent liabilities, o
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outcome is considered probable. As
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Federazione Anti Pirateria Audiovis
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offers, contractual profile changes
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Note 23 - Revenues Revenues decreas
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Note 26 - Employee benefits expense
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Note 30 - Depreciation and amortiza
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Note 34 - Finance income and Financ
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Note 35 - Related party transaction
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STATEMENT OF FINANCIAL POSITION LIN
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Transactions with subsidiaries The
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Total income (expenses) from invest
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(thousands of euros) 12/31/2011 12/
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STATEMENT OF CASH FLOWS LINE ITEMS
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Remuneration to key managers In 201
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The beneficiaries were identified i
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Parameters used to determine fair v
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Note 37 - Significant non-recurring
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Expense related Telecom Italia has
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Note 41 - List of investments in su
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Certification of the Separate Finan
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Telecom Italia S.p.A. Separate Fina
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Report of the Board of Statutory Au
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The Board of Auditors has overseen
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amendments Agreed procedures and de
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PricewaterhouseCoopers S.p.A. commu
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On 7 July 2011, after the alignment
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met the Chairman of the Conselho Fi
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Regarding the provisions of article
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18. No significant facts that shoul
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non-compliances imputable to the ex
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corporate bodies, and in particular
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amount equal to 2% of the par value
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curricula vitae are attached) as Di
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at least twenty-five days before th
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Authorization to increase share cap
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and this is confirmed in a report p
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5.6 - For five years starting from
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Proposed Resolution The Shareholder
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9.8 - In appointing directors who f
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only one slate. 17.10 - The Board o
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17.17 - At the first renewal of the
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