Obbligazione Telecom Italia Spa 7.75% ( XS0906837645 ) in EUR

Emittente Telecom Italia Spa
Prezzo di mercato 100 EUR  ▼ 
Paese  Italia
Codice isin  XS0906837645 ( in EUR )
Tasso d'interesse 7.75% per anno ( pagato 1 volta l'anno)
Scadenza 20/03/2073 - Obbligazione è scaduto



Prospetto opuscolo dell'obbligazione Telecom Italia XS0906837645 in EUR 7.75%, scaduta


Importo minimo 100 000 EUR
Importo totale 750 000 000 EUR
Descrizione dettagliata Telecom Italia è una delle principali società di telecomunicazioni in Italia, operante nella telefonia fissa e mobile, nell'accesso a internet e nei servizi a valore aggiunto.

Analisi del Rimborso dell'Obbligazione Telecom Italia con ISIN XS0906837645: Scadenza e Dettagli Finanziari In un contesto finanziario dinamico, si è conclusa con successo l'operazione di rimborso relativa all'obbligazione emessa da Telecom Italia S.p.A., identificata dal codice ISIN XS0906837645. Telecom Italia S.p.A. (TIM), storico operatore di telecomunicazioni con sede in Italia, rappresenta uno dei principali attori nel panorama digitale e infrastrutturale del Paese. Con una lunga e complessa storia nel settore, l'azienda è un pilastro nell'offerta di servizi di connettività fissa e mobile, infrastrutture di rete e soluzioni tecnologiche avanzate, sia per il segmento consumer che business. La sua evoluzione è strettamente legata allo sviluppo delle telecomunicazioni in Italia, posizionandola come un emittente di rilievo nel mercato del debito. Questa specifica obbligazione, classificata come "Tipo: Obbligazione", era stata originariamente emessa in Italia e ha raggiunto la sua data di scadenza (Maturità) il 20 marzo 2073, momento in cui è stata integralmente rimborsata. Il prezzo di rimborso (corrispondente al "Prezzo attuale sul mercato" al momento della liquidazione) è stato del 100% del valore nominale, garantendo agli obbligazionisti il pieno recupero del capitale investito. L'emissione, denominata in Euro (EUR), prevedeva un Tasso di interesse fisso pari al 7.75%, pagato con una frequenza annuale (Frequenza di pagamento: 1). La "Taille totale de l'émission" ammontava a 750.000.000 Euro, con una "Taille minimale à l'achat" fissata a 100.000 Euro, rendendola accessibile a un pubblico di investitori qualificati. Il successo del rimborso di questa obbligazione conferma la regolarità delle operazioni finanziarie di Telecom Italia e il rispetto degli impegni assunti nei confronti dei propri creditori, chiudendo un capitolo importante della gestione del debito della società.







PROSPECTUS DATED 19 MARCH, 2013
TELECOM ITALIA S.p.A.
(incorporated with limited liability under the laws of the Republic of Italy)
750,000,000 Capital Securities due 2073
Issue price: 99.499 per cent.
The 750,000,000 Capital Securities due 2073 (the Securities) will be issued by Telecom Italia S.p.A. (the
Issuer or Telecom Italia) on 20 March, 2013 (the Issue Date).
The Securities will bear interest on their principal amount (a) from (and including) the Issue Date to (but
excluding) the First Reset Date, at the rate of 7.750 per cent. per annum and (b) from (and including) the
First Reset Date to (but excluding) the Maturity Date, at, in respect of each Reset Period, the relevant EUR 5
year Swap Rate plus (A) in respect of the Reset Period commencing on the First Reset Date, 6.949 per cent.
per annum, (B) in respect of the Reset Periods commencing on 20 March, 2023, 20 March, 2028 and 20
March, 2033, 7.199 per cent. per annum. and (C) in respect of any other Reset Period, 7.949 per cent. per
annum. Interest on the Securities will be payable annually in arrear on 20 March in each year (each an
Interest Payment Date).
Payments of interest on the Securities may be deferred at the option of the Issuer in certain
circumstances, as set out in Condition 4 of "Terms and Conditions of the Securities".
Unless previously redeemed by the Issuer as provided below, the Securities will be redeemed on 20 March,
2073 at their principal amount, together with interest accrued to, but excluding, such date and any Arrears of
Interest (as defined in "Terms and Conditions of the Securities"). The Issuer may redeem all, but not some
only, of the Securities on any Reset Date, at their principal amount together with any interest accrued to, but
excluding, the relevant date of redemption and any Arrears of Interest. The Issuer may also redeem all, but
not some only, of the Securities at the applicable Early Redemption Price at any time upon the occurrence of
a Withholding Tax Event, a Tax Deductibility Event or a Rating Methodology Event (each as defined in
"Terms and Conditions of the Securities"). In the event that at least 80 per cent. of the aggregate principal
amount of the Securities issued on the Issue Date has been purchased by the Issuer or a Subsidiary (as
defined in "Terms and Conditions of the Securities") and cancelled, the Issuer may elect to redeem all, but
not some only, of the outstanding Securities at the applicable Early Redemption Price. See "Terms and
Conditions of the Securities ­ Redemption and Purchase").
Application has been made to the Commission de Surveillance du Secteur Financier (the CSSF) in its
capacity as competent authority under the Luxembourg Act dated 10 July, 2005 (the Luxembourg Act) on
prospectuses for securities to approve this document as a prospectus. The CSSF assumes no responsibility
for the economic and financial soundness of the transactions contemplated by this Prospectus or the quality
or solvency of the Issuer in accordance with Article 7(7) of the Luxembourg Act. Application has also been
made to the Luxembourg Stock Exchange for the listing of the Securities on the Official List of the
Luxembourg Stock Exchange and admission to trading on the Luxembourg Stock Exchange's regulated
market. This Prospectus (together with any documents incorporated by reference herein) is available on the
Luxembourg Stock Exchange website (www.bourse.lu).
Subject to and as set out in "Terms and Conditions of the Securities -- Taxation", the Issuer shall not be
liable to pay any Additional Amounts to holders of the Securities in relation to any withholding or deduction
required pursuant to Italian Legislative Decree No. 239 of 1 April, 1996 (as the same may be amended or
supplemented from time to time) where the Securities are held by a Securityholder resident for tax purposes
in a country which does not allow for a satisfactory exchange of information with Italy and otherwise in the
circumstances described in "Terms and Conditions of the Securities -- Taxation".
The Securities are expected to be rated "Ba2" by Moody's Investors Service España, S.A. (Moody's), "BB+,
CreditWatch negative" by Standard & Poor's Credit Market Services France S.A.S. (S&P) and "BB+" by
Fitch Ratings Limited (Fitch). Each of Moody's, S&P and Fitch is established in the European Union and is
registered under Regulation (EC) No. 1060/2009 (as amended) (the CRA Regulation). As such each of


Moody's, S&P and Fitch is included in the list of credit rating agencies published by the European Securities
and Markets Authority on its website (at http://www.esma.europa.eu/page/List-registered-and-certified-
CRAs) in accordance with the CRA Regulation. A rating is not a recommendation to buy, sell or hold
securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating
agency.
The Securities will initially be represented by a temporary global security (the Temporary Global
Security), without interest coupons, which will be deposited on or about the Issue Date with a common
depositary for Euroclear Bank SA/NV (Euroclear) and Clearstream Banking, société anonyme
(Clearstream, Luxembourg). Interests in the Temporary Global Security will be exchangeable for interests
in a permanent global security (the Permanent Global Security and, together with the Temporary Global
Security, the Global Securities), without interest coupons, on or after 30 April, 2013 (the Exchange Date),
upon certification as to non-U.S. beneficial ownership. Interests in the Permanent Global Security will be
exchangeable for definitive Securities only in certain limited circumstances - see "Summary of Provisions
relating to the Securities while represented by the Global Securities".
An investment in the Securities involves certain risks. Prospective investors should have regard to the
factors described under the heading "Risk Factors" on page 7.
Structuring Advisers to the Issuer and Global Co-ordinators
BARCLAYS
J.P. MORGAN
Joint Bookrunners
BANCA IMI
BARCLAYS
BNP PARIBAS
J.P. MORGAN
MEDIOBANCA
Other Joint Bookrunners
CITIGROUP
CRÉDIT AGRICOLE CIB
GOLDMAN SACHS INTERNATIONAL
SOCIÉTÉ GÉNÉRALE CORPORATE &
INVESTMENT BANKING
The date of this Prospectus is 19 March, 2013


This Prospectus comprises a prospectus for the purposes of Article 5.3 of Directive 2003/71/EC as amended
(the Prospectus Directive) and for the purposes of the Luxembourg Act.
The Issuer accepts responsibility for the information contained in this Prospectus. To the best of the
knowledge and belief of the Issuer (having taken all reasonable care to ensure that such is the case) the
information contained in this Prospectus is in accordance with the facts and does not omit anything likely to
affect the import of such information.
This Prospectus is to be read in conjunction with all documents which are deemed to be incorporated herein
by reference (see "Documents Incorporated by Reference"). This Prospectus should be read and construed
on the basis that such documents are so incorporated and form part of this Prospectus.
Save for the Issuer, no other party has separately verified the information contained herein. Accordingly, no
representation, warranty or undertaking, express or implied, is made and no responsibility or liability is
accepted by the Managers (as defined in "Subscription and Sale") or the Trustee (as defined in "Terms and
Conditions of the Securities") or Barclays Bank PLC and J.P. Morgan Securities plc as structuring advisers
to the Issuer (the Structuring Advisers) as to the accuracy or completeness of the information contained or
incorporated in this Prospectus or any other information provided by the Issuer in connection with the
offering of the Securities. None of the Managers, the Structuring Advisers or the Trustee accepts any
liability in relation to the information contained or incorporated by reference in this Prospectus or any other
information provided by the Issuer in connection with the offering of the Securities or their distribution.
To the fullest extent permitted by law, none of the Managers, the Structuring Advisers, the Trustee, the
Principal Paying Agent or the Agent Bank accepts any responsibility for the contents of this Prospectus or
for any other statements made or purported to be made by any Manager or any Structuring Adviser or on
their behalf or by the Trustee or on its behalf in connection with the Issuer or the issue and offering of any
Securities. Each of the Managers, the Structuring Advisers, the Trustee, the Principal Paying Agent and the
Agent Bank accordingly disclaims all and any liability whether arising in tort or contract or otherwise which
it might otherwise have in respect of this Prospectus or any such statement.
No person is or has been authorised by the Issuer or the Trustee to give any information or to make any
representation not contained in or not consistent with this Prospectus or any other information supplied in
connection with the offering of the Securities and, if given or made, such information or representation must
not be relied upon as having been authorised by the Issuer, any Manager, any Structuring Adviser or the
Trustee.
Neither this Prospectus nor any other information supplied in connection with the offering of the Securities
(a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as a
recommendation by the Issuer, any Manager, any Structuring Adviser or the Trustee that any recipient of this
Prospectus or any other information supplied in connection with the offering of the Securities should
purchase any Securities. Each investor contemplating purchasing any Securities should make its own
independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness,
of the Issuer. Neither this Prospectus nor any other information supplied in connection with the offering of
the Securities constitutes an offer or invitation by or on behalf of the Issuer, any Manager, any Structuring
Adviser or the Trustee to any person to subscribe for or to purchase any Securities.
Neither the delivery of this Prospectus nor the offering, sale or delivery of the Securities shall in any
circumstances imply that the information contained herein concerning the Issuer is correct at any time
subsequent to the date hereof or that any other information supplied in connection with the offering of the
Securities is correct as of any time subsequent to the date indicated in the document containing the same.
The Managers, the Structuring Advisers and the Trustee expressly do not undertake to review the financial
condition or affairs of the Issuer during the life of the Securities or to advise any investor in the Securities of
any information coming to their attention.
The Securities have not been and will not be registered under the United States Securities Act of 1933, as
amended (the Securities Act) and are subject to U.S. tax law requirements. Subject to certain exceptions,
3


the Securities may not be offered, sold or delivered within the United States or to U.S. persons. For a further
description of certain restrictions on the offering and sale of the Securities and on distribution of this
document, see "Subscription and Sale" below.
This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy the Securities in any
jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The
distribution of this Prospectus and the offer or sale of Securities may be restricted by law in certain
jurisdictions. None of the Issuer, the Managers, the Structuring Advisers or the Trustee represents that this
Prospectus may be lawfully distributed, or that the Securities may be lawfully offered, in compliance with
any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption
available thereunder, or assumes any responsibility for facilitating any such distribution or offering. In
particular, no action has been taken by the Issuer, the Managers, the Structuring Advisers or the Trustee
which would permit a public offering of the Securities or the distribution of this Prospectus in any
jurisdiction where action for that purpose is required. Accordingly, no Securities may be offered or sold,
directly or indirectly, and neither this Prospectus nor any advertisement or other offering material may be
distributed or published in any jurisdiction, except under circumstances that will result in compliance with
any applicable laws and regulations. Persons into whose possession this Prospectus or any Securities may
come must inform themselves about, and observe, any such restrictions on the distribution of this Prospectus
and the offering and sale of Securities. In particular, there are restrictions on the distribution of this
Prospectus and the offer or sale of Securities in the United States, the United Kingdom and the Republic of
Italy.
IN CONNECTION WITH THE ISSUE OF THE SECURITIES, J.P. MORGAN SECURITIES PLC
AS STABILISING MANAGER (THE STABILISING MANAGER) (OR PERSONS ACTING ON
BEHALF OF THE STABILISING MANAGER) MAY OVER-ALLOT SECURITIES OR EFFECT
TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE
SECURITIES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL.
HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING MANAGER (OR PERSONS
ACTING ON BEHALF OF THE STABILISING MANAGER) WILL UNDERTAKE
STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE
DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF
THE SECURITIES IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST
END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE
SECURITIES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE SECURITIES.
ANY STABILISATION ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE
STABILISING MANAGER (OR PERSONS ACTING ON BEHALF OF THE STABILISING
MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.
All references in this document to euro and refer to the currency introduced at the start of the third stage of
European economic and monetary union pursuant to the Treaty establishing the European Community, as
amended.
References to the Telecom Italia Group or the Group (other than for the purposes of the "Terms and
Conditions of the Securities" where Group shall mean the Issuer and its Subsidiaries from time to time) refer
to the Issuer and its consolidated subsidiaries as they exist at the date of this Prospectus.
4


FORWARD-LOOKING STATEMENTS
This Prospectus includes "forward-looking statements" within the meaning of the securities laws of certain
applicable jurisdictions. These forward-looking statements include, but are not limited to, all statements
other than statements of historical facts contained in this Prospectus, including, without limitation, those
regarding our intentions, beliefs or current expectations concerning, among other things: our future financial
condition and performance, results of operations and liquidity; our strategy, plans, objectives, prospects,
growth, goals and targets; future developments in the markets in which we participate or are seeking to
participate; and anticipated regulatory changes in the industry in which we operate. These forward-looking
statements can be identified by the use of forward-looking terminology, including the terms "aim",
"anticipate", "believe", "continue", "could", "estimate", "expect", "forecast", "guidance", "intend", "may",
"plan", "project", "should" or "will" or, in each case, their negative, or other variations or comparable
terminology. By their nature, forward-looking statements involve known and unknown risks, uncertainties
and other factors because they relate to events and depend on circumstances that may or may not occur in the
future. We caution you that forward-looking statements are not guarantees of future performance and that
our actual financial condition, results of operations and cash flows, and the development of the industry in
which we operate, may differ materially from (and be more negative than) those made in, or suggested by,
the forward-looking statements contained in this prospectus.
Any forward-looking statements are only made as at the date of this Prospectus and, except as required by
law or the rules and regulations of any stock exchange on which the Securities are listed, we undertake no
obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
5


CONTENTS
Page
Risk Factors ................................................................................................................................................. 7
Overview.................................................................................................................................................... 24
Documents Incorporated by Reference........................................................................................................ 32
Terms and Conditions of the Securities ....................................................................................................... 37
Summary of Provisions relating to the Securities while represented by the Global Securities....................... 55
Use of Proceeds.......................................................................................................................................... 58
Description of the Issuer ............................................................................................................................. 59
Recent Developments ................................................................................................................................. 62
Taxation ..................................................................................................................................................... 63
Subscription and Sale ................................................................................................................................. 70
General Information ................................................................................................................................... 72
6


RISK FACTORS
The Issuer believes that the following factors may affect its ability to fulfil its obligations under the
Securities. All of these factors are contingencies which may or may not occur and the Issuer is not in a
position to express a view on the likelihood of any such contingency occurring.
In addition, factors which are material for the purpose of assessing the market risks associated with the
Securities are described below.
The Issuer believes that the factors described below represent the principal risks inherent in investing in the
Securities, but the inability of the Issuer to pay interest, principal or other amounts on or in connection with
the Securities may occur for other reasons which may not be considered significant risks by the Issuer based
on information currently available to it or which it may not currently be able to anticipate. Prospective
investors should also read the detailed information set out elsewhere in this Prospectus (including any
documents incorporated by reference herein) and reach their own views prior to making any investment
decision.
Factors that may affect the Issuer's ability to fulfil its obligations under the Securities
RISKS RELATED TO TELECOM ITALIA GROUP
Telecom Italia's business will be adversely affected if it is unable to successfully implement its strategic
objectives. Factors beyond its control may prevent it from successfully implementing its strategy.
On 8 February, 2013, Telecom Italia presented its updated 2013­2015 Plan, which states the following
strategic priorities for the Telecom Italia Group over the next three years:
·
continued deleveraging to reduce the Telecom Italia Group's net financial debt, coupled with
sustainable shareholder remuneration; and
·
extension and acceleration of Telecom Italia's policy of cost reductions, in order to contribute to the
financing of technological development in fixed-line telephony and mobile telephony in Italy and
mobile telephony in Brazil.
Telecom Italia's ability to implement and achieve these strategic objectives may be influenced by certain
factors, including factors outside of its control, such as:
·
regulatory decisions and changes in the regulatory environment in Italy or in the other countries in
which it operates;
·
increasing number of competitors in its principal markets which could cause Telecom Italia to lose
further market share;
·
increasing and stronger market competition in its principal markets with a consequent decline in the
prices of services;
·
increasing competition from global and local OTT (Over The Top) players (operators offering
content and services on the internet without owning a proprietary telecommunications network
infrastructure);
·
Telecom Italia's ability to strengthen its competitive position in Italy and in international markets,
particularly in Brazil and Argentina;
·
Telecom Italia's ability to develop and introduce new technologies which are attractive in its
principal markets, to manage innovation, to supply value added services and to increase the use of its
fixed and mobile networks;
7


·
the success of "disruptive" new technologies which could cause significant reductions in revenues
from fixed and mobile telephony;
·
Telecom Italia's ability to manage costs;
·
the continuing effects of the global economic crisis in the principal markets in which Telecom Italia
operates including the effects on its customers and their ability to purchase or continue to purchase
Telecom Italia's services;
·
Telecom Italia's ability to refinance existing indebtedness when due in the capital and bank markets
which remain volatile and subject to disruption;
·
Telecom Italia's ability to attract and retain highly qualified employees;
·
the effect of exchange rate fluctuations on Telecom Italia's operating revenues, margins and
financial management;
·
any difficulties which Telecom Italia may encounter in its supply and procurement processes,
including as a result of the insolvency or financial weaknesses of its suppliers;
·
should Telecom Italia make any acquisitions, any difficulties it may encounter in integrating
acquired companies or businesses; and
·
the costs which may be incurred due to unexpected events, in particular where Telecom Italia's
insurance is not sufficient to cover such costs.
As a result of these uncertainties there can be no assurance that the objectives identified by management can
effectively be attained in the manner and within the time-frames described. Furthermore, if Telecom Italia is
unable to attain its strategic priorities, its goodwill may be impaired which could result in significant write-
offs.
The global economic crisis adversely affected Telecom Italia's business in recent years and the continuing
European economic uncertainty is expected to continue in 2013. The likely reduction of private and
business consumption may have a negative impact on Telecom Italia's operating results and financial
condition.
The financial contagion which spread to Italy from the Euro-zone debt crisis has led to a new downturn in
the Italian economy, after the slight recovery in 2010 and 2011 that followed the strong gross domestic
product (GDP) decrease associated with the global economic crisis which began in late 2008. From the end
of 2011, the Italian economy has faced fiscal tightening (a mix of spending cuts and tax increases), aimed at
reinforcing the multi-year budget deficit reduction plan and balancing of the structural deficit by 2013; this
process is expected to continue under the "Fiscal Compact" rules1. This fiscal policy should guarantee
structural adjustments and sustainability in the long term, but it has contributed to the weakness in domestic
demand experienced by the Italian market during 2012, which is expected to continue for the coming years.
The telecommunications industry is considered to be less affected by negative economic trends than other
industries, because telecommunications services are seen as high productivity tools in the business segment,
and they are also becoming an increasingly important element in household expenditure patterns. However,
recessionary conditions have weighed, and may continue to weigh heavily, on the development prospects of
Telecom Italia's domestic market. In particular, the economic weakness may lead to lower


1
The Fiscal Compact is an intergovernmental treaty introduced as a new and stricter version of the previous Stability and Growth Pact. The
treaty entered into force on 1 January 2013 for those Member States of the European Union which had completed ratification prior to this
date. Under the Fiscal Compact, ratifying Member States are required to have enacted laws requiring their national budgets to be in
balance or in surplus within the treaty's definition within one year after the Fiscal Compact enters into force for them. The laws must also
provide for a self-correcting mechanism to prevent their breach. The treaty defines a balanced budget as a general budget deficit less than
3.0 per cent. of the GDP, and a structural deficit of less than 1.0 per cent. of GDP if the debt level is below 60 per cent. -or else it shall be
below 0.5 per cent. of GDP.
8


telecommunications spending above all in the business segment and, in this context, the competitive
environment might entail a further downward pressure on telecommunications service prices leading to a
negative impact on Telecom Italia's domestic revenues.
The continuing global economic weakness could further adversely affect Telecom Italia's businesses in its
principal markets (Italy, Brazil and Argentina) and therefore may have a negative impact on its operating
results and financial condition.
If Telecom Italia fails to successfully implement its plans to improve efficiency and optimise expenditures,
its results of operations and financial condition could be adversely affected.
Telecom Italia's leverage is such that any deterioration in cash flow can change the expectations of the
Telecom Italia Group's ability to repay its debt and the inability to reduce its debt could have a material
adverse effect on Telecom Italia's business. Continuing volatility in the international credit markets may
limit Telecom Italia' ability to refinance its financial debt.
Telecom Italia's gross financial debt was 40,918 million euros at 30 September, 2012 compared with 41,951
million euros at 31 December, 2011. Its net financial debt was 29,971 million euros at 30 September, 2012
compared with 30,819 million euros at 31 December, 2011.
Due to the competitive environment and current economic conditions, there could be deterioration in
Telecom Italia's income statement and statement of financial position measures used by investors and rating
agencies in determining its 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, S&P and Fitch,
which base their ratings on Telecom Italia's ability to repay its debt.
Although rating downgrades do not have an immediate impact on outstanding debt, except for outstanding
debt instruments that specifically contemplate ratings in order to determine interest expense, or on its relative
cost to Telecom Italia, downgrades could lead to a greater risk with respect to refinancing existing debt or
higher refinancing costs.
Factors which are beyond Telecom Italia's control such as deterioration in performance by the
telecommunications sector, unfavourable fluctuations in interest rates and/or exchange rates, further
disruptions in the capital markets, particularly debt capital markets, and, in a broader sense, deterioration in
general economic conditions also as a result of the continuing effects of the economic and financial crisis,
could have a significant effect on Telecom Italia's ability to reduce its debt, or the ability of the Telecom
Italia Group to refinance existing debt through further access to the financial markets. As a result of the
reduction of debt being a key element of the Telecom Italia Group's strategy, the failure to reduce debt could
be viewed negatively and adversely affect the credit ratings of Telecom Italia.
The management and further development of Telecom Italia's business will require it to make further capital
and other investments. Telecom Italia may therefore incur additional debt in order to finance such
investment. Telecom Italia's future results of operations may be influenced by its ability to enter into such
transactions, which in turn will be determined by market conditions and factors that are outside its control. In
addition, if such transactions increase its leverage it could adversely affect the credit ratings of Telecom
Italia.
Telecom Italia is continuously involved in disputes and litigation with regulators, competition authorities,
competitors and other parties and is the subject of a number of investigations by judicial authorities. The
ultimate outcome of such proceedings is generally uncertain. When finally concluded, they may have a
material adverse effect on Telecom Italia's results of operations and financial condition.
Telecom Italia is subject to numerous risks relating to legal, competition and regulatory proceedings in
which it is currently a party or which could develop in the future. It is also the subject of a number of
investigations by judicial authorities. Such proceedings and investigations are inherently unpredictable.
Legal, competition and regulatory proceedings and investigations in which Telecom Italia is, or may
become, involved (or settlements thereof) may have a material adverse effect on its results of operations
9


and/or financial condition. Furthermore, Telecom Italia's involvement in such proceedings and
investigations may adversely affect its reputation.
The Italian Collective Action for Damages for the Protection of Consumers Law (the Collective Action
Law) was passed in December 2007 and, after undergoing substantial modifications by the Italian
Parliament, entered into force on 1 January, 2010. The Collective Action Law allows collective action
lawsuits and is similar in many respects to common law class actions. Contracts between public utilities and
consumers and the business practices of companies that provide public services (such as Telecom Italia) are
covered by the Collective Action Law. Therefore there is a risk of claims against Telecom Italia by
consumers' associations on behalf of broad classes of consumers, although no such actions have yet been
brought against Telecom Italia.
Operational risks could adversely affect Telecom Italia's reputation and its profitability.
Telecom Italia faces numerous operational risks inherent in its business, including those resulting from
inadequate internal and external processes, fraud, employee errors or misconduct, failure to comply with
applicable laws, failure to document transactions properly or systems failures. These events can result in
direct or indirect losses and adverse legal and regulatory proceedings, and harm its reputation and
operational effectiveness.
Telecom Italia has risk management practices designed to detect, manage and monitor at top level the
evolution of these operational risks, and for this purpose it has recently established a group risk management
committee.
However, there is no guarantee that these measures will be successful in effectively controlling the
operational risks that Telecom Italia faces and such failures could have a material adverse effect on its results
of operations and could harm its reputation.
Risks associated with Telecom Italia's ownership chain.
Telco S.p.A. (Telco)--a company in which interests are held by the Generali group (Generali) (30.58 per
cent.), Intesa Sanpaolo S.p.A. (Intesa Sanpaolo) (11.62 per cent.), Mediobanca S.p.A. (Mediobanca) (11.62
per cent.), and Telefónica S.A. (Telefónica) (46.18 per cent.)--is Telecom Italia's largest shareholder,
holding an interest of approximately 22.40 per cent. of the voting rights.
On 29 February, 2012, Telefónica, Intesa Sanpaolo, Mediobanca, and Generali entered into a renewal
agreement (the 2012 Shareholders Agreement) in which they agreed to enter into a new shareholders
agreement for a period of three years on the same terms and conditions set out in the original shareholders'
agreement dated as of 28 April, 2007, as subsequently amended and supplemented.
The 2012 Shareholders Agreement defines, inter alia, the criteria for drawing up the list of candidates for the
appointment of the Board of Directors of Telecom Italia:
·
Telefónica, insofar as it holds at least 30 per cent. of Telco's share capital, will be entitled to
designate two candidates; and
·
the other shareholders of Telco, as they hold the absolute majority of its share capital, have the right
to designate the other members on the list, of which three candidates would be appointed
unanimously and the others on a proportional basis.
Although Telco does not own a controlling interest in Telecom Italia's voting shares, Telco may still exert a
significant influence on all matters to be decided by a vote of shareholders, including appointment of
directors. In the shareholders' meeting held on 12 April, 2011, 12 out of 15 Board members were elected
from a list proposed by Telco, while the remaining three Directors were elected from a list proposed by a
group of asset management companies and international institutional investors. In principle, the interests of
Telco in deciding shareholder matters could be different from the interests of Telecom Italia's other ordinary
shareholders, and it is possible that certain decisions could be taken that may be influenced by the needs of
Telco.
10