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Other information Altre informazioni Report of the Board of Statutory Auditors to the shareholders’ meeting of Telecom Italia S.p.A. pursuant to article 153 of legislative decree 58/1998 436
Report of the Board of Statutory Auditors to the shareholders’ meeting of Telecom Italia S.p.A. pursuant to article 153 of legislative decree 58/1998 Dear Shareholders, This report is made up of three separate sections: the First Section explains the activities performed by the Board of Auditors during the course of the financial year 2011 and up to today’s date, as required by Consob Notice no. DEM/1025564 of 6 April 2001 and subsequent amendments and supplements; the Second Section provides an update on the specific activities of supervision and monitoring performed by the Board of Auditors during 2011 regarding the so-called Greenfield Project, that is to say the internal analysis initiated by the top management of Telecom Italia in relation to certain allegedly illegal acts committed in previous years to the detriment of the Company, and sets out the Board of Auditors’ views of the results of this Project; the Third Section contains the report on the financial statements at 31 December 2011 of Telecom Italia Audit & Compliance Services S.c.a.r.l., a company incorporated into Telecom Italia S.p.A. with effect from 1 January 2012. ─ ● ─ First Section During the 2011 financial year the Board of Auditors performed the supervisory activities required by the applicable legislation, also taking account of the principles of conduct recommended by CNDCEC (the Italian board of chartered accountants and accounting consultants) and the Consob notices on company controls and the activities of the Board of Auditors. The Control Body has acquired the information necessary for the performance of the tasks of general supervision assigned to it by attending the meetings of the Board of Directors and board Committees (i.e. the Executive Committee, the Committee for Internal Control and Corporate Governance, the Nomination and Remuneration Committee), and by interviewing Company management, as well as by special analyses conducted directly or in joint meetings with the Committee for Internal Control and Corporate Governance. 1. On the basis of the information received and as a result of the analyses conducted by the Board of Auditors, it has become clear that the transactions carried out by the Company which have major impact on revenues, finances and assets, including transactions performed through companies in which the Company has a direct or indirect stake, are essentially made up as follows: Sofora Telecomunicaciones S.A. On 13 October 2010 the Sofora – Telecom Argentina group became part of the consolidation perimeter of the Telecom Italia Group, after the latter increased its holding from 50% to 58%. During 2011, Telecom Italia Group made further purchases of shares, increasing its holding in the Telecom Italia Argentina group from 16.2% (at 31 December 2010) to 22.7% (at 31 December 2011). These operations have not changed the Telecom Argentina Group governance rights laid down in the agreement signed by Telecom Italia Group and its partner Werthein, or the undertakings given by Telecom Italia Group to the Argentine antitrust authorities. Sale of EtecS.A. The sale of the 27% of the share capital of Cuban operator EtecS.A. held by Telecom Italia International N.V. was completed on 31 January 2011. Acquisition of control of the 4G group Other information Report of the Board of Statutory Auditors 437
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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
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The following table lists the bonds
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Nortel Inversora S.A. Preferred Ser
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Such obligation, required by nation
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Revolving Credit Facility The follo
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Note 17 - Financial risk management
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of market parameters, even though t
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In order to limit the risk of the n
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Note 18 -Derivatives Derivative fin
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Note 19 - Supplementary disclosures
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Comparison between carrying amount
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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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Note 20 - Employee benefits Employe
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The effect on the income statement,
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Note 22 - Miscellaneous payables an
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Note 24 - Contingent liabilities, o
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On December 16, 2011 Telecom Italia
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In a judgement on November 2, 2011,
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Greece -DELAN During 2009, the comp
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c) Commitments and guarantees Guara
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Note 27 - Acquisition of goods and
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Note 29 - Other operating expenses
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Note 32 - Gains (losses) on disposa
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Note 34 - Other income (expenses) f
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Finance expenses Finance expenses d
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Note 36 - Profit (loss) for the yea
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Future potential changes in share c
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Note 38 - Segment reporting a) Repo
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Headcount by Operating Segment (num
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The effects on the individual line
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Transactions with associates and jo
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Transactions with companies control
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Transactions with other related par
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(millions of euros) 12/31/2011 12/3
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In the 2011, the contributions paid
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Description of other Telecom Italia
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Calculation of fair value measureme
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Note 41 - Significant non-recurring
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Note 42 - Positions or transactions
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c) Operating leases Revenue related
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Note 44 - Events subsequent to Dece
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Name Head office Currency Share cap
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Name Head office Currency Share cap
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Certification of the Consolidated F
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Consolidated Financial Statements T
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Contents Telecom Italia S.p.A. Sepa
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Statements of Financial Position As
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Separate Income Statements (euros)
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Statements of Changes in Equity Sta
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Additional Cash Flow Information (t
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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
Page 385 and 386: Note 21 - Trade and miscellaneous p
Page 387 and 388: Note 22 - Contingent liabilities, o
Page 389 and 390: outcome is considered probable. As
Page 391 and 392: Federazione Anti Pirateria Audiovis
Page 393 and 394: offers, contractual profile changes
Page 395 and 396: Note 23 - Revenues Revenues decreas
Page 397 and 398: Note 26 - Employee benefits expense
Page 399 and 400: Note 30 - Depreciation and amortiza
Page 401 and 402: Note 34 - Finance income and Financ
Page 403 and 404: Note 35 - Related party transaction
Page 405 and 406: STATEMENT OF FINANCIAL POSITION LIN
Page 407 and 408: Transactions with subsidiaries The
Page 409 and 410: Total income (expenses) from invest
Page 411 and 412: (thousands of euros) 12/31/2011 12/
Page 413 and 414: STATEMENT OF CASH FLOWS LINE ITEMS
Page 421 and 422: Remuneration to key managers In 201
Page 423 and 424: The beneficiaries were identified i
Page 425 and 426: Parameters used to determine fair v
Page 427 and 428: Note 37 - Significant non-recurring
Page 429 and 430: Expense related Telecom Italia has
Page 431 and 432: Note 41 - List of investments in su
Page 433 and 434: Certification of the Separate Finan
Page 435: Telecom Italia S.p.A. Separate Fina
Page 439 and 440: The Board of Auditors has overseen
Page 441 and 442: amendments Agreed procedures and de
Page 443 and 444: PricewaterhouseCoopers S.p.A. commu
Page 445 and 446: On 7 July 2011, after the alignment
Page 447 and 448: met the Chairman of the Conselho Fi
Page 449 and 450: Regarding the provisions of article
Page 451 and 452: 18. No significant facts that shoul
Page 453 and 454: non-compliances imputable to the ex
Page 455 and 456: corporate bodies, and in particular
Page 457 and 458: amount equal to 2% of the par value
Page 459 and 460: curricula vitae are attached) as Di
Page 461 and 462: at least twenty-five days before th
Page 463 and 464: Authorization to increase share cap
Page 465 and 466: and this is confirmed in a report p
Page 467 and 468: 5.6 - For five years starting from
Page 469 and 470: Proposed Resolution The Shareholder
Page 471 and 472: 9.8 - In appointing directors who f
Page 473 and 474: only one slate. 17.10 - The Board o
Page 475 and 476: 17.17 - At the first renewal of the
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