to download Telecom Italia Annual Report 2011 - Company Reporting

International roaming
On July 6, 2011, the European Commission published the proposed “Roaming III” Regulation which will
come into force on July 1, 2012. The Regulation proposes the extension of the maximum CAP until 2016
for retail prices and until 2022 for wholesale prices, for calls, SMSs and intra-EU roaming data services.
The proposal was submitted for approval to the European Parliament and the Council of Ministers of the
European Union on the basis of the so-called co-decision procedure. The Regulation is expected to be
approved in the second quarter of 2012.
Long Term Evolution – LTE frequencies
On December 7, 2010, the Stability Law 2011 was approved after which AGCom and the Department of
Communications of the Ministry of Economic Development began the procedures for the assignment, by
means of auctions, of the user rights for the radio frequencies intended for electronic mobile broadband
communication services.
On June 10, 2011, AGCom published Decision 282/11/CONS containing the regulation on the
procedures for the release of the user rights for the frequencies 800, 1800, 2000 and 2600 MHz. The
Ministry of Economic Development, for its part, in the Gazzetta Ufficiale, Issue 75, of June 27, 2011,
called for bids for the assignment of the user rights for the frequencies in the same 800, 1800, 2000
and 2600 MHz bands.
The minimum auction bids for the single frequency lots were as follows:
BANDWIDTH
Minimum amount per lot
(amounts in euros)
800 – FDD 353,303,732.16
1800 – FDD 155,869,293.60
2000 – TDD 77,934,646.80
2600 – FDD 30,668,726.75
2600 – TDD 36,802,472.10
Telecom Italia was admitted by the Ministry of Economic Development to the presentation of the bids for
the use of the frequencies.
The auction began on August 31, 2011 and ended on September 29, 2011; on October 3, 2011, the
Ministry of Economic Development – Communications Department – after the outcome of the auction -
informed Telecom Italia that it had been awarded two generic blocks of 2x5 MHz each in the 800 MHz
spectrum, one generic block of 2x5MHz in the 1800 MHz spectrum and three generic blocks of 2x5MHz
each in the 2600 MHz. The total cost was 1,223 million euros, including a discount of 38 million euros,
in exchange for Telecom Italia’s commitment to build over 50% of the new networks using equipment
with eco-sustainable environmental features. Suitable guarantees were provided against this discount.
On November 3, 2011, Telecom Italia informed the Ministry that it had:
• paid 767 million euros as the fee for being awarding the above blocks of frequencies;
• set up a 5-year surety bond of 456 million euros following its request to pay the amount in
installments.
On December 15, 2011, Telecom Italia asked the Ministry to authorize the start of trials for new services
based on LTE technology in the 800, 1800 and 2600 MHz frequencies. Following the request tabled by
Telecom Italia and the other mobile operators, the Ministry set up a meeting to monitor the release of
the 800 and 2600 MHz frequencies by, respectively, the local television broadcasters and the Ministry
of Defense.
The user rights, formally awarded by the Ministry on October 3, 2011, were assigned in February 2012.
AGCom fee
AGCom carried out inspections to verify Telecom Italia’s and all the other telecommunications
companies’ compliance with their obligations to pay the AGCom fee for the years 2006, 2007, 2008,
2009 and 2010. On March 1, 2011, with Decision 99/11/CONS, the Regulator communicated to
Telecom Italia the findings of its inspections, asserting that the Company had not paid the correct
amount of the fees for AGCom’s operating costs for the years in question and listing the additional
accounting items which, in its view, should have been included in the chargeable base for the
Report on Operations The Business Units of the Telecom Italia Group – Domestic 57