Dear Shareholders,
In terms of the health emergency, 2021 was another complex year.
Nonetheless, for Italy and, in general, most of the global economy, it was
a year of relaunching and restarting. In the last 12 months, Italy recorded
GDP growth of 6.6%. Also in Brazil, the economic growth recorded in 2021
should come to slightly less than 5%.
In a scenario where both the intensity of the use of digital instruments
and their widespread adoption remained at very high levels, the central
nature of the entire sector and, specifically, our Group in the country’s
economic and social life continued to increase.
In 2021 our Group achieved several significant results: churn decreased in
the fixed and mobile businesses; charges connected with bad debt
decreased by 30%; customer satisfaction grew by 30% in the fixed
business; the number of digital payments made by customers increased;
revenues deriving from ICT and Cloud sales increased by over 20% and,
lastly, all the ESG objectives were in line with the targets set.
Nonetheless, 2021 was a particularly difficult year for the entire sector,
and
the harsh
competition
that has marked
the
Italian
telecommunications services market for some time now once again took
the form of an additional generalized decrease in the prices of fixed and
mobile network services. In general, at domestic level, the Group’s EBITDA
decreased, specifically due to several factors: the agreement with DAZN,
which did not produce the expected revenue growth for the customer
(ARPU) or concretely support the growth of acquisitions, and the
reduction in costs which was not large enough to offset the trend in
revenues.
In general, in a framework where the revenues deriving from the sales of
services were lower than expected, this was offset by an investment plan
which, instead, to handle the increased digital requirements of individuals
and businesses, had to remain at high levels.
The misalignment triggered between revenues and investments, in
addition to giving rise to the results achieved in 2021, highlights the
differences between the services market, which has to handle harsh
competition, and the infrastructure market, which requires long-term
investments.
In addition, the series of provisions issued over the years on the equality
of treatment have sharply impacted and decreased the benefits from
vertical integration. Faced with the harsh restrictions and limitations
deriving
from those provisions, and an ever-increasing
level of
competition on the Italian telecommunications market meant that
neither greater room to maneuver at the commercial level nor a greater
stability or predictability of returns on investments required to develop
and manage network structure materialized.
Starting with these considerations, the plan presented to the financial
community on March 3, 2022 envisages the creation of separate business
entities, one focused on the provision and sale of services to (business
and residential) end customers and the other on more strictly
infrastructural operations (network development and maintenance and
provision of wholesale services to other operators). The plan defines a
development model in line with the characteristics of each segment, to
guarantee the utmost flexibility and specificity of the actions that will be
implemented to best enhance the potential in terms of innovation,
profitability and value creation, respectively.
Projects to monetize assets or network assets or activities, though on a
smaller, more circumscribed scale, have intensified in the last few years,
both in Italy (think of Inwit and, more recently FiberCop) and at European
and
international
level, especially due to the
interest shown by
infrastructural funds. Some examples are the operation in France, with
the SFR FTTH project (2018) or the one in Portugal, with Altice Portugal
FTTH (2020) or also those in South America - Infraco in Chile (2021),
FiBrasil in Brazil (2021), and Colombia FiberCo in Colombia (2021). The
creation of entities fully dedicated to creating network infrastructure aims
to improve market efficiency, making it more sound and sustainable, to
benefit consumers and the entire sector.
The motivations and logic underlying the restructuring/reorganization
project currently being analyzed (as well as our co-investment proposal
recently judged compliant with European regulations by AGCOM), are,
thus, not an isolated case, but, rather, part of a context that seems to be
evolving in this direction.
Our new business plan also aims to strengthen and expand the public
administration and large companies segment, further enhancing the
values of our assets and our skills in creating specific, integrated
commercial
propositions with
regard
to
the
offer
of
Cloud, IoT and Cybersecurity services.
With regard to the opportunities provided by the financial resources
made available by the Next Generation EU fund, the reorganization
intending to result in two separate structures, each focused on its own
business will enable us to provide the best contribution and be more
competitive both regarding projects for the provision of digital services
and the creation of infrastructural works. At the same time, we will also
reap greater benefits from the incentives for adopting ICT technologies
set out in the National Recovery and Resilience Plan (PNRR).
The feasibility and definition of the separation project set out in the plan
will be finalized by the summer.
As regards the Brazilian operations, our competitive edge was heightened
by enriching and increasing the value of our commercial offering, which
led to a strengthening in terms of the increase in the customer base as
well as in terms of average revenues per user. The latter, in particular,
saw greater growth than that of our competitors. The approval by the
Brazilian authorities of the operation through which TIM Brasil acquired a
significant share of the assets of the OI group will result in an increase in
the customer base, which, in turn, will enable us to increase our
economies of scale and scope. Additional stimulus and growth will be
provided by the launch of 5G and an additional increase in the value of
the customer base through dedicated partnerships that involve the
banking and entertainment sectors.
In almost a century of history, the TIM Group has been through several
restructurings and, irrespective of the form that we will take following the
restructuring operation being analyzed, it is certain that TIM will continue
to constitute a wealth of technology, professionalism and infrastructure
at the service of Italy’s economic and social development.
Significant challenges are awaiting us in the near future. We are
convinced that with the support of all our stakeholders, we will be able to
handle them and transform them
into concrete opportunities for
development and growth.
CONTENTS
REPORT ON OPERATIONS ...................................................
8
TIM Group ...........................................................................................................
8
Key Operating and Financial Data - TIM Group .....................................................................................
11
Financial and Operating Highlights of the Business Units of the TIM Group .....................................
33
Main Commercial Developments ............................................................................................................
41
Main changes in the regulatory framework ...........................................................................................
46
Competition ................................................................................................................................................
60
Consolidated Financial Position and Cash Flows Performance ...................................................
63
Consolidated Data – Tables of detail ......................................................................................................
71
After Lease indicators ...............................................................................................................................
78
Sustainability aspects ................................................................................................................................
79
Research and Development .....................................................................................................................
82
Consolidated Non-Financial Statement .................................................................................................
89
Events subsequent to December 31, 2021 .............................................................................................
90
Business Outlook for the year 2022 .........................................................................................................
90
Main risks and uncertainties .....................................................................................................................
92
Information for Investors ..........................................................................................................................
99
Related-Party Transactions ......................................................................................................................
101
Alternative Performance Measures .........................................................................................................
102
TIM S.p.A............................................................................................................. 105
Review of Key Operating and Financial Data - TIM S.p.A. ....................................................................
105
Tables of detail – TIM S.p.A. ......................................................................................................................
124
After Lease Indicators - TIM S.p.A............................................................................................................
130
Reconciliation of Consolidated Equity .....................................................................................................
131
Corporate Boards .......................................................................................................................................
132
Macro-Organization Chart ........................................................................................................................
134
TIM GROUP CONSOLIDATED FINANCIAL STATEMENTS 136
137
138
140
141
142
143
145
Contents ......................................................................................................................................................
Consolidated Statements of Financial Position .....................................................................................
Separate Consolidated Income Statement ............................................................................................
Consolidated Statements of Comprehensive Income ..........................................................................
Consolidated Statements of Changes in Equity ....................................................................................
Consolidated Statements of Cash Flows ................................................................................................
Notes to the consolidated financial statements ...................................................................................
TIM S.p.A. SEPARATE FINANCIAL STATEMENTS ............... 281
282
283
285
286
287
288
290
Contents .......................................................................................................................................................
Statements of Financial Position ..............................................................................................................
Separate Income Statements ...................................................................................................................
Statements of Comprehensive Income ...................................................................................................
Statements of Changes in Equity .............................................................................................................
Statements of Cash Flows .........................................................................................................................
Notes to the Separate Financial Statements of TIM S.p.A. ...................................................................
OTHER INFORMATION .......................................................... 423
424
438
443
463
Report of the Board of Statutory Auditors ...................................................................................................
Motions for Resolutions ..............................................................................................................................
Glossary ........................................................................................................................................................
Useful information ......................................................................................................................................
This document has been translated into English for the convenience of the readers.
In the event of discrepancy, the Italian language version prevails.
BOARD OF DIRECTORS
Since January 21, 2022, the following have made up the TIM S.p.A. Board of Directors:
Chairman
Chief Executive Officer and General Manager
Directors
Salvatore Rossi
Pietro Labriola
Paolo Boccardelli (independent)
Paola Bonomo (independent)
Franck Cadoret
Paola Camagni (independent)
Maurizio Carli (independent)
Luca De Meo (independent)
Cristiana Falcone (independent)
Federico Ferro Luzzi (independent)
Giovanni Gorno Tempini
Marella Moretti (independent)
Ilaria Romagnoli (independent)
Arnaud Roy de Puyfontaine
Secretary to the Board
Paola Sapienza (Lead Independent Director)
Agostino Nuzzolo
BOARD OF STATUTORY AUDITORS
Chairman
Standing Auditors
Francesco Fallacara
Alternate Auditors
Angelo Rocco Bonissoni
Francesca di Donato
Anna Doro
Massimo Gambini
Ilaria Antonella Belluco
Laura Fiordelisi
Franco Maurizio Lagro
Paolo Prandi
Independent Auditors
EY S.p.A.
Annual Financial Report
at December 31, 2021
The Board of Directors and the Board of Statutory Auditors
of TIM S.p.A.
8
Report on Operations of the
TIM Group
Key Operating and Financial Data – TIM Group
10
KEY OPERATING AND FINANCIAL DATA - TIM
GROUP
Consolidated operating and financial data (*)
(1)
(1)
(million euros)
Revenues
EBITDA
EBIT before goodwill impairment loss
Goodwill impairment loss
EBIT
Profit (loss) before tax from continuing operations
Profit (loss) from continuing operations
Profit (loss) from Discontinued operations/Non-current
assets held for sale
Profit (loss) for the year
Profit (loss) for the year attributable to owners of the Parent
Capital Expenditures & spectrum
2021
15,316
5,080
591
(4,120)
(3,529)
(4,515)
(8,400)
—
(8,400)
(8,652)
4,630
2020
15,805
6,739
2,104
—
2,104
1,397
7,352
—
7,352
7,224
3,409
2019
17,974
8,151
3,175
—
3,175
1,739
1,226
16
1,242
916
3,784
2018
18,940
7,403
3,151
(2,590)
561
(777)
(1,152)
—
(1,152)
(1,411)
6,408
2017
19,828
7,790
3,291
—
3,291
1,777
1,287
—
1,287
1,121
5,701
Consolidated financial position data(*)
(million euros)
Total Assets
Total Equity
- attributable to owners of the Parent
- attributable to non-controlling interests
Total Liabilities
Total Equity and Liabilities
Share capital
Net financial debt carrying amount
Adjusted Net Financial Debt
Adjusted net invested capital
Debt ratio (Adjusted net financial debt/Adjusted net
invested capital)
Consolidated profit ratios(*)
EBITDA / Revenues
EBIT / Revenues (ROS)
Adjusted net financial debt/EBITDA
(1)
(1)
(2)
(1)
(1)
(1)
12/31/2021
12/31/2020
12/31/2019
12/31/2018
12/31/2017
69,187
22,039
17,414
4,625
47,148
69,187
11,614
22,416
22,187
44,226
73,234
28,840
26,215
2,625
44,394
73,234
11,588
23,714
23,326
52,166
70,104
22,626
20,280
2,346
47,478
70,104
11,587
28,246
27,668
50,294
65,619
21,747
19,528
2,219
43,872
65,619
11,587
25,995
25,270
47,017
68,783
23,783
21,557
2,226
45,000
68,783
11,587
26,091
25,308
49,091
50.2%
44.7%
55.0%
53.7%
51.6%
2021
33.2%
(23.0%)
4.4
2020
42.6%
13.3%
3.5
2019
45.3%
17.7%
3.4
2018
39.1%
3.0%
3.4
2017
39.3%
16.6%
3.2
(*) As of January 1, 2019, the TIM Group has adopted the new IFRS 16 (Leases) with the modified retrospective method (without the restatement of
comparative financial information of previous years). In addition, effective from January 1, 2018, the TIM Group has adopted: The new IFRS 9
(Financial Instruments) retrospectively - making use of the specific exemptions provided for by the same standard and without restating the
previous periods under comparison - and the new IFRS 15 (Revenue from contracts with customers) using the modified retrospective method.
Consequently, operating and financial data of previous years have not been restated.
(1) Details are provided under "Alternative Performance Measures".
(2) Adjusted net invested capital = Total equity + Adjusted net financial debt.
Report on Operations of the
TIM Group
Key Operating and Financial Data – TIM Group
11
Headcount, number in the Group at year end (1)
(number)
12/31/2021
12/31/2020
12/31/2019
12/31/2018
12/31/2017
Headcount (excluding headcount relating to Discontinued
operations/Non-current assets held for sale
Headcount relating to Discontinued operations/Non-current
assets held for sale
51,929
52,347
55,198
57,901
59,429
—
—
—
—
—
Headcount, average number in the Group (1)
(equivalent number)
2021
2020
2019
2018
2017
Headcount (excluding headcount relating to Discontinued
operations/Non-current assets held for sale
Headcount relating to Discontinued operations/Non-current
assets held for sale
47,942
49,099
51,917
54,423
54,946
—
—
—
—
—
Financial performance measures
TIM S.p.A.
(euros)
Share prices (December average)
- Ordinary
- Savings
Dividends per share
- Ordinary
- Savings
Pay Out Ratio
Market capitalization (in million euros)
Market to Book Value
Dividend Yield (based on December average)
- Ordinary
- Savings
TIM Group
(euros)
Basic earnings per share - ordinary shares
Basic earnings per share – savings shares
Diluted earnings per share - ordinary shares
Diluted earnings per share – savings shares
(1) Includes employees with temp work contracts.
(2)
(2) (*)
(**)
(2) (***)
2021
0.45
0.42
—
—
—
9,387
0.57
—
—
2021
(0.40)
(0.40)
(0.40)
(0.40)
2020
0.39
0.42
0.0100
0.0275
24%
8,458
0.34
2.60%
6.49%
2020
0.34
0.35
0.33
0.34
2019
0.56
0.55
0.0100
0.0275
35%
11,762
0.65
1.80%
5.04%
2019
0.04
0.05
0.04
0.05
(2) For the year 2021, the ratio was calculated on the basis of the proposed resolutions submitted to the Shareholders' Meeting of April 7, 2022. For
all periods, the reference index was assumed to be the Parent’s Earnings, calculated by excluding non-recurring items (as detailed in the Note
“Significant non-recurring events and transactions” in the Separate Financial Statements of TIM S.p.A. at December 31, 2021).
(*) Dividends paid in the following year/Profit for the year.
(**) Capitalization/Equity of TIM S.p.A..
(***) Dividends per share/Share prices.
Report on Operations of the
TIM Group
Key Operating and Financial Data – TIM Group
12
Highlights of 2021
In the fourth quarter, double digit growth of the ICT business continued on the one hand and on the other the
competition led various market operators to continue to leverage the price and discounts, thereby reducing the
operating performance.
The company also redefined its top management structure in the quarter and embarked on an in-depth
organizational and strategic review.
Net financial debt at December 31, 2021 stood at 22.2 billion euros (17.6 billion euros on an after lease basis) a
drop of 1.1 billion euros compared to the last financial year (1 billion euros on an after lease basis).
In terms of strategic initiatives, the main changes are:
■ National Strategic Hub: the Government has published the call for tenders and selected the project
submitted by TIM together with CDP Equity, Leonardo and Sogei to create the National Strategic Hub
(NSH) as a reference. If it wins (the announcement is expected in the first six months), the new company
would provide Cloud services and infrastructure to the Public Administration, acquiring them mainly from
industrial partners.
■ Fiber Network: work to develop the FTTH network of the new company FiberCop continues, increasing the
FTTH coverage of property units by 36% in the last year. As a result the TIM Group brought broadband to
around 94% of fixed lines. The set of agreements between TIM, KKR and Fastweb relating to the
establishment of the company FiberCop has been definitively approved by the Italian Competition
Authority with the acceptance of the undertakings presented by the Parties.
■ Noovle: revenues up by 20% YoY, in line with the plan objectives, thanks to development of the cloud and
data centers business in partnership with Google Cloud and the main sector operators.
■ Magnifica was launched at the end of October. It is the highest performing ultrabroadband offer portfolio
on the Italian market with speeds of up to 10 Gbps in download thanks to TIM’s fiber.
■
In Brazil, local authorities (Anatel and Cade) have given the go-ahead to the project for TIM Brasil, Claro
and Vivo to acquire Oi’s mobile business.
■ As regards Sustainability, the company has respected all the year’s targets, in both Italy and Brazil,
increasing the weight of renewable energy on the Group’s total electricity consumption by 36% YoY,
improving domestic energy eco-efficiency by a further 25% and bringing the increase to over 90%
compared to 2019. Employee engagement in Italy, +20% since 2019, has already surpassed the objective
set for 2023.
Performance in the fourth quarter 2021
The churn rate continued to improve in both the fixed (3.5%, -0.5pp YoY) and mobile (3.6%, -0.6pp YoY)
segments, stabilizing at the lowest level in the last 14 years.
In the mobile segment, the performance of the lines overall (30.5 million) and of the average revenue per
customer (ARPU) was stable, with respect to a moment of partial return to market rationality, also visible in
the slowdown of customer flows between operators (market mobile number portability -21% YoY).
In the fixed segment, the lines performance slowed in the quarter (-82 thousand compared to the previous
quarter) also due to the end of the first phase of the voucher program and the delayed launch of the second
phase; however customer satisfaction improved by 4.1 percentage points. The average revenues (ARPU) of
consumer customers dropped due to increasing competitive pressure.
The ultrabroadband segment exceeded 10 million lines (retail and wholesale) for the first time, with an
increase in the quarter of 300 thousand lines (compared with the previous quarter).
Innovative services’ strong revenue growth continued, with cloud recording a 17% YoY increase in the quarter
(+20% YoY in the twelve months) and total ICT revenues up by 21% YoY in the quarter (+23% YoY in the year).
Overall, the Domestic Business Unit record revenues from services down by 4.5% YoY in the quarter (-3.8% YoY
in the year), partly offset by the good performance of TIM Brasil, with revenues from services up by 4.0% YoY in
the quarter and 5.0% in the year.
Group revenues in the quarter stood at 4.0 billion euros down by -4.4% YoY (15.3 billion euros down by 1.9%
YoY in the twelve months), while revenues from services amounted to 3.6 billion euros down by 2.8% YoY
(13.9 billion euros down by 2.1% YoY in the twelve months).
The Group’s organic EBITDA in the quarter stood at 1.4 billion euros down by -21.9% YoY (6.2 billion euros, -
9.6% YoY in the twelve months), that of the Domestic Business Unit at 1.0 billion euros down by -28.5% YoY
(4.9 billion euros, -12.8% YoY in the twelve months) and that of TIM Brasil at 0.4 billion euros up by 3.4% YoY
(1.4 billion euros, +4.7% YoY in the twelve months). The drop in the domestic margin was for the most part
linked, in addition to the aforementioned revenue trend, to the impact of the football business on the
company’s performances, higher start-up costs for new digital businesses and other provisions for commercial
risks.
The Group’s EBITDA After Lease stood at 1.2 billion euros, down by -25.7% YoY (5.4 billion euros, -11.6% YoY in
the twelve months), while at domestic level it was 0.9 billion euros with a drop of -31.5% YoY (4.4 billion euros,
-14.2% in the twelve months).
At Group level, the investments stood at 1.3 billion euros with a reduction of -3.8% YoY excluding licenses (3.8
billion euros up by 14.1% YoY in the twelve months excluding licenses).
Report on Operations of the
TIM Group
Key Operating and Financial Data – TIM Group
13
The net result attributable to the Owners of the Parent was negative for 8.6 billion euros (-8.7 billion euros in
the year). This result was also impacted by the impairment of domestic goodwill for 4.1 billion euros and the
writing off, for 3.8 billion euros, by the Parent Company TIM S.p.A., of the deferred tax assets.
In detail, the impairment of domestic goodwill was carried out with reference to the flows of the 2022-2024
Industrial Plan and the projections up to 2026 for the domestic market in its current conditions and using a
discount rate updated to the financial market conditions as at December 31, 2021. The new Industrial Plan is
based on the results of the 2021 final accounting, reflects realistic expectations on future developments and
outlines all the actions to create value for the shareholders. The write-off of deferred tax assets is linked to the
extension to 50 years of the period of tax asset absorption introduced by Art. 160 of the 2022 Budget Law (Law
234/2021) and the changed assessment of the time frame for recoverability of deferred tax assets of TIM S.p.A.
Report on Operations of the
TIM Group
Key Operating and Financial Data – TIM Group
14
Financial highlights
(million euros)
Revenues
EBITDA
EBITDA Margin
EBIT
EBIT Margin
4th Quarter
2021
(a)
3,976
731
18.4%
(4,469)
—
4th Quarter
2020
(b)
4,148
1,621
39.1%
477
11.5%
(1)
(1)
(1)
(1)
Profit (loss) for the period attributable to owners
of the Parent
Capital Expenditures & spectrum
(8,642)
1,910
6,046
1,403
% Change
(a-b)
(4.1)
(54.9)
(20.7) pp
—
—
—
36.1
Adjusted net financial debt
(1) Details are provided under "Alternative Performance Measures".
(1)
Organic results (1)
(million euros)
4th Quarter
2021
2020 % Change
2021
(a)
15,316
5,080
33.2%
(3,529)
(23.0%)
(b)
15,805
6,739
42.6%
2,104
13.3%
(8,652)
4,630
12/31/2021
7,224
3,409
12/31/2020
(a)
22,187
(b)
23,326
(a-b)
(3.1)
(24.6)
(9.4) pp
—
(36.3) pp
—
35.8
Change
Amount
(a-b)
(1,139)
TOTAL REVENUES
Domestic
Brazil
Other operations, adjustments and eliminations
SERVICE REVENUES
Domestic
o/w Wireline
o/w Mobile
Brazil
Other operations, adjustments and eliminations
EBITDA
Domestic
Brazil
Other operations, adjustments and eliminations
EBITDA After Lease
Domestic
Brazil
Other operations, adjustments and eliminations
CAPEX (net of TLC licenses)
Domestic
Brazil
(1)
4th Quarter
2020
comparable
(b)
4,166
3,435
741
(10)
3,686
2,993
2,275
851
703
(10)
1,770
1,397
374
(1)
1,575
1,271
305
(1)
1,399
1,168
231
% Change
2021
2020 % Change
comparable
(b)
15,615
12,933
2,715
(33)
14,214
11,627
8,777
3,394
2,620
(33)
6,882
5,583
1,306
(7)
6,110
5,080
1,037
(7)
3,354
2,742
612
(a)
15,321
12,510
2,840
(29)
13,911
11,188
8,574
3,152
2,752
(29)
6,223
4,867
1,368
(12)
5,404
4,358
1,058
(12)
3,826
3,137
689
(1.9)
(3.3)
4.6
—
(2.1)
(3.8)
(2.3)
(7.1)
5.0
—
(9.6)
(12.8)
4.7
—
(11.6)
(14.2)
2.0
—
14.1
14.4
12.6
(4.4)
(6.0)
2.6
—
(2.8)
(4.5)
(3.7)
(7.1)
4.0
—
(21.9)
(28.5)
3.4
—
(25.7)
(31.5)
—
—
(3.8)
(1.8)
(14.3)
(a)
3,981
3,229
761
(9)
3,581
2,857
2,189
791
733
(9)
1,382
999
388
(5)
1,171
871
305
(5)
1,346
1,147
199
The organic results exclude non-recurring items and the comparable base is calculated net of the foreign currency translation and the change
in the scope of consolidation.
(million euros)
Equity Free Cash Flow
Equity Free Cash Flow After Lease
Adjusted Net Financial Debt (2)
Net Financial Debt After Lease(2)
4th Quarter
2021
(a)
172
34
4th Quarter
2020
(b)
748
622
% Change
(77.0)
—
2021
(a)
632
62
22,187
17,573
2020 % Change
(b)
2,414
1,615
23,326
18,594
(73.8)
(96.2)
(4.9)
(5.5)
(2)
Adjusted net financial debt. The change in the fair value of derivatives and related financial liabilities/assets is adjusted by the booked Net
Financial Debt with no monetary effect.
Report on Operations of the
TIM Group
Key Operating and Financial Data – TIM Group
15
TIM’s contribution to the digital and sustainable transformation
for people, businesses and organizations
The health emergency caused by the COVID-19 outbreak has underpinned the essential value of connectivity
and digital solutions in emergency situations to cope with generalized social distancing, the interruption of the
provision of in-person services, a stop to mobility and the interruption of school and education services.
Because of social distancing, Italians have discovered that digital connectivity is the key to transforming the
way they work, limiting travel to a minimum and ensuring compliance with the most rigorous safety
standards.
In 2021, TIM continued to support citizens, businesses and institutions during the lock-downs and reopening
phases, implementing a wide-ranging plan.
Infrastructure
At December 31, 2021, 94% of fixed lines connected to the TIM network are reached by ultrabroadband1.
In 2021, growth continued of FTTH activations, which now reach approximately 24% of property units2.
In addition, TIM’s ultrabroadband coverage reaches approximately 75% of the white areas3 where, at
December 31, 2021, approximately 1 million ultrabroadband lines have been activated.
TIM’s 4G network covers more than 99% of the national population.
In 2021, the volume of data handled on TIM’s mobile ultrabroadband network grew by 35% compared with the
previous year.
Opensignal, the independent global standard for measuring the user experience of mobile networks, has
acknowledged TIM’s 5G network as the fastest in Europe in download. In Milan, TIM’s 5G has reached over
90% coverage and the service is available in 48 municipalities. TIM has also entered the world’s top 30 for
having enabled an improvement in the switch from the 4G to the 5G network in terms of download and upload
speeds in the spread of videos and gaming experience.
Thanks to its fiber network, Sparkle, the TIM Group global operator connects Europe, Africa, the Americas and
Asia offering transmission capacity of up to 100 Gbit/s for the bandwidth managed and 400 Gbit/s for IP
transmission.
Data Centers
Noovle, the TIM Group’s cloud company, has 17 data centers developed according to the highest security,
protection, operativeness and energy efficiency standards, which in 2021 handled 72.8 Pbyte of data volume. It
has been a benefit company since July 2021. It designs, builds and manages data centers according to eco-
sustainability criteria - certified on the basis of international standards (LEED Gold), in addition to adopting
circular economy models for the regeneration of servers and devices so as to lengthen the life cycle and use
energy from renewable sources.
Sparkle manages a network of data centers in the Mediterranean basin (one in Italy, four in Greece and one in
Turkey), in the hallmark of energy efficiency and environmental sustainability, which has allowed the
company to obtain the main industry ISO certifications.
Sustainability Bonds
In January 2021, TIM placed its first 8-year one-billion-euro sustainability bond with a coupon of 1.625%, set to
increase the Group’s energy efficiency and finance green and social projects, including those for the
transformation of the copper network into fiber.
Digital services for the production system
The TIM Group offers smart services for companies and the public administration, which contribute towards
the well-being of society and environmental protection.
Cloud: maximum efficiency and security in data management; energy savings and
reduction of CO2 emissions.
■ Focus on core business: the cloud enables customers to focus on their core business, aware that, for their
data, they can rely on the maximum power of calculation and security and, at the same time, savings.
■ New scenarios: the cloud is a transformation technology that enables new social and organizational
scenarios (consider smart working, smart city, smart agriculture and scientific research projects).
■ More economic and entrepreneurial inclusivity: thanks to the modularity of costs, small and medium-sized
enterprises can benefit from this technology without needing to make major initial investments; start-ups
can focus on the development of their digital solution, making IT investments subordinate to the success
obtained.
Smart working: more efficient organization of work; reduction of traffic; less CO2 and
pollutant gases in the atmosphere
Customers can make their organization more efficient, as well as more resilient, i.e. able to react and adapt in
the event of difficulty. In addition, carbon dioxide emissions are reduced because the use of means of transport
1 Thanks to FTTC and FTTH technology.
2 FTTH coverage refers to what are termed the “Technical property units” (UIT), which represent 24.3 million property units throughout national
territory for which, over time, TIM has activated a retail or wholesale telephone, broadband or ultrabroadband line.
3 The white areas are areas without ultrabroadband (UBB) networks (connectivity), where private investors do not intend to invest in the next three
years.
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and the energy consumption connected with office management also declines. For workers, the stress linked
to the home-work commute reduces and the personal organizational flexibility (work-life balance) increases.
Cybersecurity: protection of the corporate computer systems; resilience for the digital
economy
The world of industrial production and that of services are increasingly hinged on digital infrastructures and
the public sector is gradually adjusting accordingly. Computer security is the basis of the digital social-
economic model because it guarantees its reliability. The companies that adopt cybersecurity solutions
suitable to their characteristics ensure the operative continuity of their business and avoid the financial and
reputational costs linked to cyber attacks; at the same time, they generate the trust necessary in all operators
for economic development.
Smart industry: greater productivity for factories; lesser environmental impact
Reduction of failures, reduction of dead time and therefore increased productivity, but also reduction in energy
consumption. Predictive maintenance lengthens the life cycle of machinery, preventing the problem of early
disposal. Monitoring using sensors increases the efficiency of energy consumption and reduces the consequent
carbon dioxide emissions.
Smart agriculture: more plentiful, less costly harvests; protection of natural resources
■ Support to agricultural companies and consortia in a vast range of everyday activities: more plentiful
harvests, optimization of operations in the field, savings on resources used (water, phytopharmaceuticals,
etc.), monitoring of agricultural machines and tracing of chain activities. All this thanks to technologies
such as apps, field sensors and drones, which allow businesses to develop an increasingly sustainable
agricultural model.
■
It protects natural resources and green areas thanks to solutions that monitor the health of soil and plants.
Smart City: More efficient public administration; simpler life for citizens
■ Extensive product portfolio for the analysis of movements and mobility, the digitization of public transport
and waste collection, for sustainable mobility, for interactive tourism, for monitoring atmospheric pollution
and for video analysis for the purpose of territorial control and safety.
■ Projects developed for digital governance and a more effective control of urban phenomena in the cities of
Rome, Venice, Parma, Ivrea and Novara.
Digital health: efficiency of the health system; staying close to those needing
treatment
Remote medicine solutions for the remote monitoring of patients, with a consequent reduction in moves to
health care facilities; more efficient assistance for reduced mobility patients; greater patient awareness of their
health.
Venture capital
Satispay, WeSchool and Webidoo
In 2021, TIM - through TIM Ventures, its corporate venture capital vehicle - invested more than 22 million euros.
UV T-Growth fund
In 2021, TIM Ventures subscribed a total commitment of 60 million euros over a ten-year time-frame; of these,
in 2021, approximately 12 million euros were invested in high-tech emerging realities.
Open innovation
TIM Challenge for Circular Economy
Launch of the challenge to search for innovative circular economy solutions developed by start-ups, SMEs and
scale-ups.
Olivetti IoT Challenge
Launch of the challenge to identify the best entrepreneurial realities of the Internet of Things.
AWorld
Collaboration with the start-up AWorld for an awareness-raising initiative and engagement of TIM employees
on sustainable living topics.
Development of the Italians’ digital skills
TIM is an active member of the “Digital Republic” initiative promoted by the Ministry for Technological
Innovation and the Digital Transition, the strategy of which is based on four themed axes to which it
contributes.
Education and Further Training
■ New digital teachers, an e-learning course on the teaching methods envisaged by Integrated Digital
Teaching in collaboration with WeSchool, which involved 6,000 teachers.
■ Cycle of Digital Citizenship webinars, with the Publishing Group La Scuola SEI, which involved 6,600
teachers.
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■ Parents on the network/Advice for social children, a talk held by Riccardo Luna with 111,000 views.
■ Scuola di Internet per tutti “STEM Edition”, a training program for 3,700 students.
■ KidsVille, a course created to educate good citizens, for 1,700 children.
Active workforce
■ Digital skills PA: in 2021, an e-learning course was started for PA employees, which, starting January 2022,
will be available on the “Syllabus” training platform of the public sector for 3 million public employees.
■ Webinar on the digital transformation for SMEs and professionals with 5,000 participations.
Specialist ICT skills
■
In 2021, the partnership was launched with 42Roma Luiss, a special free coding school, enriched by TIM
with meetings and workshops on digital skills for innovation.
Citizens
■ Scuola di Internet per Tutti: in 2021, 970 courses were started with 45,800 participations in the individual
modules and more than 15,000 participants, carried out with the collaboration of 120 TIM employees.
■ Digital consumers, conscious and safe: a training course intended for citizens and consumers in
collaboration with the Consumer Associations (Adiconsum, Adoc, Altroconsumo, Cittadinanzattiva,
Codacons, Federconsumatori and U.Di.Con.), which involved 4,000 participants.
■ Dire, Fare, Digitale!: a 4W4I event during which tools were presented for the best experience with digital
and to reduce the distance between connected and disconnected, with 6,600 people connected.
■ Storie di Risorgimento Digitale: a documentary-series created by TIM and RAI Play and launched on
December 7, 2021, which is structured with 8 episodes on the new opportunities made possible by
smartphones.
Brazil
Connectivity
TIM Brasil has the public commitment to extend 4G connectivity to all municipalities of Brazil by 2023 and, in
the fourth quarter of 2021, was one of the main winners of the 5G auction, which will allow the company to
explore new applications and innovative solutions.
Agricultural food
TIM Brasil is working on the improvement of 4G mobile coverage in rural areas and also provides other digital
services for the industry, such as a smart platform for agricultural companies, to improve their production
efficiency and monitoring and automation solutions.
Digital Services
TIM Brasil has created the first IoT Marketplace in Brazil, presenting solutions for smart cities, smart industry
and smart farms. In addition, in 2021, TIM Brasil signed a partnership with C6 Digital Bank and it has an
agreement currently being prepared to explore remote medicine and e-health opportunities.
Digital Skills
TIM Brasil undertakes to train more than 5,000 employees on digital skills by 2023. The partnership with the
Cogna Group offers exclusive benefits for customers, such as the “knowledge bonus”, discounts on on-line
degree courses and free access to more than 400 courses and TIM Tec, open platform developed by the TIM
Institute, which offers more than 30 courses about technology, information, innovation and communication,
free to all.
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Non-recurring events
In the years 2021 and 2020, the TIM Group recognized non-recurring net operating expenses connected to
events and transactions that by their nature do not occur on an ongoing basis in the normal course of
operations and which have been shown because their amount is significant. Non-recurring charges include,
among others, any goodwill impairment changes, provisions for regulatory disputes and potential liabilities
related to them, liabilities with customers and/or suppliers, and provisions for onerous contracts, charges
associated with corporate reorganization/restructuring and prior-year adjustments.
In detail:
(million euros)
Non-recurring expenses/(income)
Revenues
Revenue adjustments
Other income
Other operating provisions absorption
Recovery of operating expenses
Acquisition of goods and services and Change in inventories
Expenses related to agreements and the development of non-recurring projects
Employee benefits expenses
Charges connected to corporate reorganization/restructuring and other costs
Other operating expenses
Sundry expenses and provisions
Impact on Operating profit (loss) before depreciation and amortization, capital
gains (losses) and impairment reversals (losses) on non-current assets (EBITDA)
Goodwill impairment loss Domestic CGU
Impact on EBIT - Operating profit (loss)
Specifically, non-recurring events for the year 2021 included:
2021
2020
5
—
(13)
49
367
735
1,143
4,120
5,263
39
(1)
—
58
74
148
318
—
318
■ 4,120 million euros for the impairment loss on Goodwill attributed to the Domestic Cash Generating Unit
(CGU). The impairment test, carried out when drawing up the 2021 Financial Statements, was performed
by referring to the flows of the 2022 - 2024 Industrial Plan and the projections up to 2026 of the CGU in its
current conditions, and using a discount rate updated to the financial market conditions as at December
31, 2021. The new Industrial Plan is based on the results of the 2021 final accounting, reflects realistic
expectations on future developments and outlines all the actions to create value for the shareholders. The
impairment loss seen during the year is entirely due to goodwill;
■ 735 million euros in other operating expenses, mainly referring to provisions made for disputes,
transactions, regulatory sanctions and related potential liabilities as well as expenses connected with the
COVID-19 emergency for provisions made as a consequence of the worsening of the expected credit losses
of Corporate customers, connected with the expected evolution of the pandemic.
Other operating expenses - Sundry expenses and provisions include 548 million euros for the posting of a
Contractual Risk Provision for Onerous Contracts (IAS 37) relating to ongoing relations with some
counterparties for the offer of multimedia content.
In particular, they include the accrual of the Net Present Value of the negative margin connected with
some partnerships, including the one in place between TIM and DAZN for the offer in Italy on the
TIMVISION platform of DAZN content, including all matches of the Serie A football championship for the
seasons 2021-22, 2022-23 and 2023-24.
In greater detail, as part of the definition of the 2022-2024 Strategic Plan, the business plan hypotheses
have been updated for the current football season and the next two, pointing out that the total margins of
the project, including TIM’s contractual commitments towards DAZN in terms of fees, for lack of remedy
by DAZN of certain breaches already disputed, is very much negative.
Use of said Provision throughout the contractual term will make it possible to offset the negative item of
the margin (EBITDA), thereby obtaining null EBIT (organic or operative margin) for the DAZN offer contents
sale business.
With specific regard to the Contractual Risk Provision for Onerous Contracts relating to content, the
financial reports for future years and throughout the life of the contract will indicate:
•
•
•
the amount used of the Provision for risks covering the negative margin;
the amount of the total organic margins (organic EBITDA) that would have been recorded without
using said Provision;
the financial outlay connected with the payments due to counterparties.
■ 367 million
euros
business
reorganization/restructuring processes following the application of art. 4 of Law no. 92 of June 28, 2012, as
defined in the trade union agreements signed between the some of the Group companies, including the
Parent Company TIM S.p.A. and the trade unions;
expenses mainly
connected with
employee
benefit
in
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■ 49 million euros for expenses related to agreements and the development of non-recurring projects, as
well as costs for purchases relating to supplies that became necessary for the management of the health
emergency;
■ 8 million euros in net income for adjustments to revenues and the recovery of operating expenses.
In 2020, the TIM Group recorded net non-recurring charges for a total of 318 million euros, net of the change in
scope for 5 million euros and the exchange effect (1 million euros), mainly relative to:
■ 39 million euros in adjustments to revenues, of which 38 million in discounts as a result of TIM S.p.A.
customer support measures in relation to the COVID-19 pandemic;
■ 58 million euros in expenses related to agreements and the development of non-recurring projects, as well
as costs for purchases relating to supplies that became necessary for the management of the health
emergency;
■ 74 million euros
in employee benefits expenses primarily associated with
corporate
reorganization/restructuring processes and other costs;
■ 148 million euros of other operating expenses mainly in relation to provisions and expenses connected with
the management of credits deriving from the worsening of the macroeconomic context following the
COVID-19 emergency, costs for regulatory sanctions, as well as expenses related to agreements and the
development of non-recurring projects.
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Non-financial performance
The new styles adopted for living, working and learning as a result of the pandemic have increased awareness
that the path to sustainable development also involves the use of ICT products and services, enabling factors
for inclusive development. Digital infrastructures, which are increasingly necessary on a capillary level
throughout the entire territory, to guarantee all the advantages and opportunities they offer, must be flanked
by digital training, necessary in both the public (schools and Public Administration) and private (families and
businesses) sectors to foster a truly inclusive development. TIM is strongly committed on all these fronts, with
a leading role.
At the start of 2021, the Group aligned its funding sources with the Strategic Plan which places ESG objectives
at the center of its development strategy, placing TIM's first Sustainability Bond for a billion euros.
During the year, TIM went beyond the objectives of the previous Sustainability Plan, with a target of zero
Scope-2 emissions by 2025, compared to the previous -70%. The year also saw TIM take on the guidelines of
the Science Based Target Initiative: in July, the Group sent its letter of commitment in which it expressed its
ambition to contribute, through near-term targets and related actions, to holding global warming to below 1.5
°C; in November, the targets relating to Scope 1 and 2 and Scope 3 emissions were submitted, validation of
which is expected by SBTi in the first half of 2022.
The goal of Carbon Neutrality by 2030 for which TIM remains firm, deploying the most suitable actions to
achieve this goal, based on a cross-functional analysis that takes shape in the energy transition matrix. The
commitment to carbon neutrality does not only concern internal processes but also the tools that TIM makes
available to its customers thanks to the offer of energy monitoring and control solutions and the cloud offer
that can optimize the use of servers.
In 2021, TIM not only confirmed its presence on the main sustainability indexes and ratings, including a clear
improvement in the Bloomberg Gender Equality Index, but also increased the number, entering the new Borsa
Italiana MIB ESG index, made up of the 40 blue chip companies listed in Italy that adopt the best social,
environmental and governance practices. This is confirmation for TIM, which is already part of the Nasdaq
Sustainable Bond Network, the sustainable finance platform managed by Nasdaq, that brings together
investors, issuers, investment banks and specialized organizations.
The Plan’s objectives, where possible with reference to 2021, were all achieved, with the excellent performance
of the domestic “Engagement” cluster, which improved by 20 points compared to 2019, exceeding the growth
target expected. The Sustainability Plan places great emphasis on TIM’s people, with a recruitment and
training program to better meet the challenges of the Information and Communications Technology sector, as
well as an incentive plan with ESG objectives.
Finally, sustainability governance was further strengthened by setting up a Board Sustainability Committee
chaired by the Chairman of the Group and assigned the task, amongst others, of speeding up implementation
of environmental, social and governance (ESG) commitments, included in the Strategic Plan.
The Sustainability Report allows for an in-depth analysis of the achievement of the annual targets and the
progress of the multi-year targets into which the Sustainability Plan is grouped, highlighting the contribution to
the United Nations 2030 Agenda Sustainable Development Goals.
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Introduction
The TIM Group and TIM S.p.A. Consolidated Financial Statements for the year 2021 and the comparative figures
for the previous year have been prepared in compliance with the IFRS issued by the International Accounting
Standards Board and endorsed by the European Union ( "IFRS").
The accounting policies and consolidation principles adopted are consistent with those applied for the TIM Group
Consolidated Financial Statements and the TIM S.p.A. Separate Financial Statements at December 31, 2020,
except for the amendments to the standards issued by IASB and adopted starting from January 1, 2021.
TIM Group, in addition to the conventional financial performance measures established by the IFRS, uses
certain alternative performance measures in order to present a better understanding of the trend of
operations and financial condition. Specifically, these alternative performance measures refer to: EBITDA; EBIT;
organic change and impact of non-recurring items on revenues, EBITDA and EBIT; EBITDA margin and EBIT
margin; and net financial debt carrying amount and adjusted net financial debt; Equity Free Cash Flow. Following
the adoption of IFRS 16, the TIM Group also presents the following additional alternative performance measures:
■ EBITDA adjusted After Lease (“EBITDA-AL”), calculated by adjusting the Organic EBITDA, net of the non-
recurring items, from the amounts connected with the accounting treatment of the lease contracts
according to IFRS 16;
■ Adjusted net financial debt After Lease, calculated by excluding from the adjusted net financial debt the
net liabilities related to the accounting reatment of lease contracts according to IFRS 16;
■ Equity Free Cash Flow After Lease, calculated by excluding from the Equity Free Cash Flow the amounts
related to lease payments.
In line with the ESMA guidance on alternative performance measures (Guidelines ESMA/2015/1415), the meaning
and contents of such are explained in the Chapter on “Alternative performance measures” and the analytical
detail of the amounts of the reclassifications introduced and of the methods for determining indicators is
provided.
Lastly, the section entitled "Business Outlook for the year 2022" contains forward-looking statements in relation
to the Group's intentions, beliefs or current expectations regarding financial performance and other aspects of
the Group's operations and strategies. Readers of this Annual Financial Report are reminded not to place undue
reliance on forward-looking statements; in fact, actual results may differ significantly from forecasts owing to
risks and uncertainties depending on numerous factors, the majority of which are beyond the scope of the
Group’s control. Please refer to the "Main risks and uncertainties" section for more information. It provides a
detailed description of the major risks pertaining to the TIM Group business activity which can, even considerably,
affect its ability to meet the set goals.
Main changes in the scope of consolidation of the TIM Group
The following were the main corporate transactions implemented during 2021:
■ Noovle S.p.A. (Domestic Business Unit): starting January 1, 2021, the conferral is effective to Noovle S.p.A. of
the TIM S.p.A. business unit comprising the assets and liabilities and employees involved in the supply of
services for the Cloud and Edge Computing and the rent of spaces, including virtual, also offered through a
dedicated network of data centers;
■ FiberCop S.p.A.; Flash Fiber S.r.l. (Domestic Business Unit): starting March 31, 2021, the conferral is effective
to FiberCop S.p.A. of the TIM S.p.A. business unit comprising the goods, assets and liabilities and legal
relations organized functionally for the supply of passive fiber or copper access services, used by TIM, and
at the service of other authorized operators (OAOs), by means of the secondary network (the “last mile”).
At the same time, the purchase was completed by Teemo Bidco, an indirect subsidiary of KKR Global
Infrastructure Investors III L.P., of 37.5% of FiberCop from TIM and Fastweb has subscribed FiberCop shares
corresponding to 4.5% of the company’s capital, through the conferral of the stake held in Flash Fiber,
which was simultaneously incorporated into FiberCop;
■ TIM Tank S.r.l. (Other activities): on April 1, 2021, it was merged into Telecom Italia Ventures S.r.l. with
accounting and tax effects backdated to January 1, 2021;
■ Telecom Italia Trust Technologies S.r.l. (Domestic Business Unit): starting April 1, 2021, the investment in the
company was conferred by TIM S.p.A. to Olivetti S.p.A.;
■ TIM S.p.A. (Domestic Business Unit): on June 30, 2021, the purchase of the BT Italia Business Unit was
to public administration customers and small and medium
completed, offering services
business/enterprise (SMB/SME) customers. The purchase also includes support for customers of the SMB
Business Unit, supplied by Atlanet, the BT Contact Center of Palermo;
■ TIM Servizi Digitali S.p.A. (Domestic Business Unit): company established on July 30, 2021; the company’s
corporate purpose is the development and maintenance of plants for the supply of telecommunications
services; to this end, we note that in September 2021, the company stipulated a rental contract with Sittel
S.p.A.
the “construction”, “delivery” and “assurance” of
telecommunications networks and plants;
for a business unit consisting of
■ Panama Digital Gateway S.A. (Domestic Business Unit): company established in July 2021 for the
construction of a digital hub that seeks to offer a reference hub for the whole of Central America, the
region of the Andes and the Caribbean;
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■ Staer Sistemi S.r.l. (Domestic Business Unit): company acquired by Olivetti S.p.A. on September 30, 2021.
The company’s corporate purpose is the carrying out of activities connected with the production and
marketing of electronic systems and programs and activities connected with energy efficiency plants;
■
I-Systems S.A. - formerly FiberCo Soluções de Infraestrutura S.A. (Brazil Business Unit): starting November
2021, following completion of the agreement between TIM S.A. and IHS Fiber Brasil - Cessão de
Infraestruturas Ltda. ("IHS Brasil"), IHS Brasil holds 51% of the share capital of FiberCo, with the remaining
49% is held by TIM S.A.. FiberCo is the company established by TIM S.A. for the segregation of its network
assets and the provision of infrastructure services. Starting from the operation, FiberCo has been renamed
I-Systems and is accounted for by the TIM Group using the equity method;
■ Olivetti Payments Solutions S.p.A. (Domestic Business Unit): company established on 1 December 2021; its
business purpose is the management of equity investments, study and research activities, commercial,
industrial, financial movable and real estate activities.
The following should also be noted:
■ TIMFin S.p.A.: on January 14, 2021, it was registered with the Register of Financial Intermediaries pursuant
to Art. 106 of the CLB.
During 2020, the main changes in the scope of consolidation were as follows:
■
Infrastrutture Wireless Italiane S.p.A. (INWIT) (Domestic Business Unit): on March 31, 2020 the merger by
incorporation of Vodafone Towers S.r.l. into INWIT S.p.A. was completed. The transaction, which enabled
the creation of Italy's leading tower operator, entailed the dilution of the TIM Group's stake in the capital of
INWIT from 60% to 37.5%; therefore, as of March 31, 2020, the equity investment in INWIT S.p.A. is
accounted for using the equity method. Starting from the Consolidated Financial Statements as at
December 31, 2019 and until the completion of the aforementioned merger INWIT S.p.A. was presented as
an "Asset held for sale"; therefore, TIM Group consolidated economic data and cash flows for 2020 include
data of INWIT S.p.a. for the first quarter of 2020, net of amortization and depreciation for the period, as
required by IFRS 5. Also note that during 2020, additional stock packets were transferred, corresponding to
7.3% of INWIT share capital. At December 31, 2021, TIM Group’s investment held in INWIT was 30.2%;
■ Noovle S.r.l. (Domestic Business Unit): on May 21, 2020, TIM S.p.A. finalized the acquisition of 100% of the
quotas in Noovle S.r.l., an Italian ICT consulting and system integration company, specialized in supplying
cloud solutions and projects and one of Google Cloud's leading partners on the Italian market;
■ Daphne 3 S.p.A. (Domestic Business Unit): company established on July 24, 2020; the corporate purpose is
the acquisition, holding, management and disposal of equity investments in INWIT - Infrastrutture
Wireless Italiane S.p.A.;
■ TIM My Broker S.r.l. (Domestic Business Unit): company established on August 4, 2020; the corporate
purpose is mainly insurance intermediation activities pursuant to art. 106 of Legislative Decree no. 209 of
September 7, 2005 as subsequently amended and supplemented.
■ Noovle S.p.A. (Domestic Business Unit): company established on October 9, 2020; the corporate purpose is
primarily the planning, design, implementation, commissioning and management of Data Center
infrastructure implementation and collocation services;
■ FiberCop S.p.A.(Domestic Business Unit): company incorporated on November 2, 2020; the corporate
purpose is the design, building, purchase, management, maintenance and sale of infrastructures,
networks, cabled access services easement to end customer facilities offered to telecommunications
industry operators across Italy;
■ FiberCo Soluções de Infraestrutura Ltda (Brazil Business Unit): telecommunications services company
established on December 21, 2020.
The following should also be noted:
■ TIM Participações S.A. (Brazil Business Unit): merger by incorporation into TIM S.A. became effective as of
September 2020;
■ TN Fiber S.r.l. (Domestic Business Unit): was merged into TIM S.p.A. on September 30, 2020, with tax effects
backdated to January 1, 2020;
■ TIM Vision S.r.l. (Domestic Business Unit): was merged into TIM S.p.A. on October 1, 2020, with accounting
and tax effects backdated to January 1, 2020;
■ H.R. Services S.r.l. (Domestic Business Unit): was merged into TIM S.p.A. on December 31, 2020, with
accounting and tax effects backdated to January 1, 2020;
■ TIMFin S.p.A.: on November 3, 2020, the Bank of Italy authorized TIMFin to carry out the business of
granting loans to the public pursuant to articles 106 et seq. of the CLB. Registration in the Register of
Financial Intermediaries is subject to the fulfillment of certain operational requirements.
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Main corporate actions
Establishment of FiberCop S.p.A.
Starting March 31, 2021, the conferral is effective to FiberCop S.p.A. of the TIM S.p.A. business unit comprising
the goods, assets and liabilities and legal relations organized functionally for the supply of passive fiber or
copper access services, used by TIM, and at the service of other authorized operators (OAOs), by means of the
secondary network (the “last mile”).
At the same time, the purchase was completed by Teemo Bidco, an indirect subsidiary of KKR Global
Infrastructure Investors III L.P., of 37.5% of FiberCop from TIM and Fastweb has subscribed FiberCop shares
corresponding to 4.5% of the company’s capital, through the conferral of the stake held in Flash Fiber, which
was simultaneously incorporated into FiberCop.
The transaction
The establishment of FiberCop S.p.A. (hereinafter also “FiberCop” or the “Company”) is part of the project to
expand optical fiber coverage throughout Italy; it aims to play a key role in bridging the digital divide in Italy,
and accelerating customer transition from copper to fiber. Specifically:
■
the company’s purpose is the design, construct and manage infrastructure for the provision of wired
access to the end users’ premises to telecommunications operators;
■ FiberCop operates in accordance with the co-investment model and is the first in Europe to apply the new
European Electronic Communications Code nationwide;
■ FiberCop has a network asset that already offers UBB connections to around 94% of fixed lines thanks to
FTTC and FTTH technology, and will continue to develop FTTH coverage, with connection speeds of over 1
Gigabit. The objective is to reach 75% of the housing units in gray and black areas by 2025.
The company was established on November 2, 2020 with share capital fully paid in by the single shareholder
TIM.
On March 31, 2021, following the co-investment agreements between TIM, KKR Infrastructure L.P. (hereinafter
also “KKR”) and Fastweb S.p.A. (hereinafter “Fastweb”), KKR finalized its entry into FiberCop’s capital through
Teemo Bidco Sarl (37.5%) and Fastweb (4.5%).
In particular, on March 31, 2021 the following transactions were finalized:
■ Conferral of TIM’s secondary network (from the street cabinet to customers’ homes);
■ Conferral of Fastweb’s shareholding in Flash Fiber S.r.l. (hereinafter “Flash Fiber”), a company owned by
TIM (80%) and Fastweb (20%);
■ Merger of Flash Fiber into FiberCop, backdating the accounting and tax effects to January 1, 2021, which
resulted in the contribution of the fiber optic network previously developed in 29 cities;
■ Purchase by Teemo Bidco Sarl of 37.5% of FiberCop from TIM.
In detail, the FiberCop shareholders’ meeting, passed resolution on March 24, 2021 to approve the paid capital
increase, with a first tranche reserved for TIM totaling 4,643 million euros (8.95 million euros of which to be
allocated to share capital) to be released through the contribution in kind of the business unit relating to the
“secondary network”, and a second tranche reserved for the company Fastweb totaling 210 million euros (1
million euros of which to be allocated to share capital) to be released through the conferral of the 20% stake in
Flash Fiber’s share capital.
At the same time, the merger by incorporation of Flash Fiber into FiberCop involved the elimination of the full
shareholdings, valued at 460 million euros against the merged company equity of 290 million euros at March
31, 2021, and the recognition of a negative merger reserve of 170 million euros (18 million euros for the TIM
portion and 152 million euros for the Fastweb portion).
Following these transactions, the share capital of FiberCop S.p.A. broke down as follows at December 31, 2021:
TIM S.p.A. 58%; Teemo Bidco Sarl 37.5%; Fastweb S.p.A. 4.5%.
The Master Service Agreement
To regulate the commercial relationship between TIM and FiberCop and ensure continuity of operations and
consolidation of its processes, TIM and FiberCop signed a number of agreements, including: the Master Service
Agreement which governs the provision of services provided to TIM and FiberCop and vice versa; the IRU
Master Agreement which governs FiberCop’s grant to TIM of the right to use all of the installation or fiber optic
infrastructure that has come under FiberCop’s ownership; the Transitional Services Agreement with TIM which
entrusts TIM with the management and development of the IT systems during FiberCop’s start-up phase; as
well as agreements for the provision of necessary general services by TIM for the company to operate. In
addition to the agreement entered into with TIM, FiberCop signed the Master Service Agreement with Fastweb
to regulate the provision of services by both parties as part of the network development project.
Obligations underlying the Contractual Commitments
The Master Service Agreement stipulated between TIM and FiberCop regulates the supply of reciprocal services
within the secondary network infrastructure development project on Italian territory.
Under the scope of the Master Service Agreement, both parties have made certain commitments: TIM has
made commitments to FiberCop on an annual basis in terms of minimum purchases of services and migration
of the customer base from copper to fiber optic and the development of the horizontal FTTH network; FiberCop
Report on Operations of the
TIM Group
Key Operating and Financial Data – TIM Group
25
has made commitments to purchase the primary network and the construction and maintenance services
from TIM.
In connection with these commitments, the agreements envisage penalties applicable to either party if they
should not be respected, and rights in the favor of Teemo BidCo, as minority shareholder, to protect against
any failure by TIM to execute the contractual commitments made; this is all in line with standard market
practice.
These penalties charged to the parties and rights of the minority shareholder are assessed when drafting the
financial statements and subject to reconsideration at each accounting end date.
Establishment of Noovle S.p.A.
Starting January 1, 2021, the conferral is effective to Noovle S.p.A. of the TIM S.p.A. business unit comprising
the assets and liabilities and employees involved in the supply of services for the Cloud and Edge Computing
business and the rent of spaces, including virtual, also offered through a dedicated network of data centers.
The transaction
With the aim of extending its leadership in cloud services, seizing the business opportunities presented by the
market and maximizing efficiency and effectiveness, particularly in terms of overall security, TIM has decided
to concentrate its assets and skills in the cloud area, that were previously spread among several of TIM's
departments, into a single company. Also in business terms, the transaction is the outcome of a collaboration
agreement with Google Cloud (a partnership signed in the first quarter of 2020) for the creation of innovative
public, private and hybrid cloud services to enrich TIM's offer of technological services.
The transaction ensures a strong focus on that sector and favors an acceleration of cloud sales on the market
as well as an effective and efficient management of the partial migration of the computational workloads of
TIM's IT to the public cloud, guaranteeing the optimization of infrastructure and operations.
The transaction also allows the further development of skills in the cloud area and the achievement of major
sustainability objectives.
Operation structure
The transaction took the form of a contribution in kind, pursuant to Art. 2343 ter, second paragraph, letter b) of
the Italian Civil Code, of a TIM business complex to Noovle S.p.A., a company set up and wholly controlled by
TIM S.p.A. for this purpose and subject to its management and coordination.
The conferral involved the assignment to the transferee company of a business unit consisting of assets,
liabilities, contracts of purchase and sale, employees and anything else intended for and attributable to the
provision i) of services relating to the cloud business, including ICT services to be supplied to TIM itself, and ii)
the rental of spaces, including virtual ones, also offered through a dedicated network of data centers.
Agreements with TIM signed under the scope of the conferral
With a view to ensuring the homogeneous management of the commercial relationship with TIM and to
guaranteeing continuity of operations and consolidation of its processes, early 2021, Noovle signed various
agreements with the parent company, in particular:
■
the two Master Service Agreements, signed on February 19, 2021, regulate on the one hand, the Services
supplied by Noovle to the TIM client (including Site Management Services, Proximity services, Assurance;
Security Management, Architecture & Engineering Services, Operating Governance Services, Demand
Management, Infrastructure and Project Delivery, System Development & Management, COE – Centers of
Excellence, Offering, Supply and Conditioning Services, Systems Management/Discovery Operations) and,
on the other, the Services supplied by TIM in connection with the operative needs of Noovle, also in order
to assure consistency with the Group’s processes;
■ under the scope of the carve out, Noovle was also conferred the specific project agreements of the TIM-
Google partnership. The specified collaboration agreement with Google Cloud, signed by TIM in February
2020, is in fact structured into a main agreement and specific project contracts.
Report on Operations of the
TIM Group
Key Operating and Financial Data – TIM Group
26
Consolidated operating performance
Revenues
Total TIM Group revenues for the year 2021 amounted to 15,316 million euros, -3.1% compared to the year
2020 (15,805 million euros); the organic change was -1.9%.
The breakdown of total revenues for the year 2021 by operating segment in comparison with 2020 is as
follows:
(million euros)
Changes
2020
2021
Domestic
Brazil
Other Operations
Adjustments and eliminations
Consolidated Total
% weight
% weight absolute
12,505
2,840
—
(29)
15,316
81.6
18.5
—
(0.1)
100.0
12,905
2,933
—
(33)
15,805
81.7
18.6
—
(0.3)
100.0
(400)
(93)
—
4
(489)
%
% organic
excluding non-
recurring
(3.1)
(3.2)
(3.3)
4.6
(3.1)
(1.9)
The organic change in the Group’s consolidated revenues is calculated by excluding the negative effect of
exchange rate changes1 (-226 million euros), the changes in the scope of consolidation (INWIT) (-3 million
euros) as well as non-recurring items. More specifically, 2021 was affected by adjustments for non-recurring
income totaling -5 million euros. 2020 was affected by adjustments of non-recurring revenues for -39 million
euros, as a result of the commercial initiatives of TIM S.p.A. to support customers in dealing with the COVID-19
emergencies.
Revenues for the fourth quarter of 2021 totaled 3,976 million euros (4,148 million euros in the fourth quarter of
2020).
EBITDA
TIM Group EBITDA for the year 2021 came to 5,080 million euros (6,739 million euros in the year 2020, -9.6%
in organic terms).
The breakdown of EBITDA and the EBITDA margin broken down by operating segment for 2021 compared with
2020, are as follows:
(million euros)
2021
2020
Changes
% weight
% weight absolute
%
Domestic
% of Revenues
Brazil
% of Revenues
Other Operations
Adjustments and eliminations
Consolidated Total
3,730
29.8
1,362
48.0
(12)
—
5,080
73.4
26.8
(0.2)
—
100.0
5,339
41.4
1,407
48.0
(9)
2
6,739
79.2
(1,609)
20.9
(45)
(0.1)
—
100.0
(3)
(2)
(1,659)
% organic
excluding non-
recurring
(12.8)
(4.3) pp
4.7
0.1 pp
(30.1)
(11.6) pp
(3.2)
0.0 pp
(24.6)
(9.6)
Organic EBITDA - net of the non-recurring items amounted to 6,223 million euros; the EBITDA margin was
40.6% (6,882 million euros in 2020, with an EBITDA margin of 44.1%).
In 2021 EBITDA, which includes an improvement of deferred contract costs linked to the reduction of churn,
suffered net non-recurring charges for a total of 1,143 million euros, of which 25 million euros attributable to
the COVID-19 emergency in Italy.
In 2020, the TIM Group recorded non-recurring charges for a total of 318 million euros (net of the change in
scope and the exchange effect for a total of 6 million euros), of which 108 million euros were attributable to
the COVID-19 emergency in Italy.
For further details, in addition to that reported in the “Non-recurring events” chapter of this report on
operations, see the Note "Significant non-recurring events and transactions" in the Consolidated Financial
Statements as at December 31, 2021 of the TIM Group.
1The average exchange rates used for the translation into euro (expressed in terms of units of local currency per 1 euro) were 6.35936 in 2021 and
5.88806 in 2020 for the Brazilian real. For the US dollar, the average exchange rates used were 1.18285 in 2021 and 1.14179 in 2020. The effect of the
change in exchange rates is calculated by applying the foreign currency translation rates used for the current period to the period under
comparison.
Report on Operations of the
TIM Group
Key Operating and Financial Data – TIM Group
27
Organic EBITDA, net of the non-recurring items, is calculated as follows:
(million euros)
2021
EBITDA
Foreign currency financial statements translation effect
Changes in the scope of consolidation
Non-recurring expenses/(income)
Effect of translating non-recurring expenses/(income) in
currency
ORGANIC EBITDA - excluding non-recurring items
% of Revenues
5,080
1,143
6,223
40.6
2020
6,739
(106)
(69)
319
(1)
6,882
44.1
Changes
absolute
(1,659)
106
69
824
1
(659)
%
(24.6)
(9.6)
(3.5) pp
Exchange rate fluctuations mainly related to the Brazil Business Unit.
The EBITDA of the fourth quarter of 2021 totaled 731 million euros (1,621 million euros in the fourth quarter of
2020).
Organic EBITDA net of the non-recurring items in the fourth quarter of 2021 totaled 1,382 million euros (1,770
million euros in the fourth quarter of 2020).
EBITDA was particularly impacted by the change in the line items analyzed below:
2021
1,266
■ Acquisition of goods and services (6,550 million euros; 6,173 million euros in 2020):
(million euros)
Acquisition of goods
Revenues due to other TLC operators and costs for telecommunications
network access services
Commercial and advertising costs
Professional and consulting services
Power, maintenance and outsourced services
Lease and rental costs
Other
Total acquisition of goods and services
% of Revenues
1,383
1,186
253
1,103
603
756
6,550
42.8
2020
1,203
1,314
1,192
216
1,060
436
752
6,173
39.1
Changes
63
69
(6)
37
43
167
4
377
3.7 pp
The increase mainly refers to the Domestic Business Unit for 405 million euros and is due to the greater
purchases of goods for resale, sales expenses taking into account the improvement of deferred contract costs
linked to the reduction of churn, leased asset costs, particularly for software license rental and greater hosting
charges on non-strategic sites connected with the Master Service Agreement (MSA) stipulated between TIM
S.p.A. and INWIT, with effect from March 31, 2020.
■ Employee benefits expenses (2,941 million euros; 2,639 million euros in 2020):
(million euros)
Employee benefits expenses - Italy
Ordinary employee expenses and costs
Restructuring and other expenses
Employee benefits expenses – Outside Italy
Ordinary employee expenses and costs
Restructuring and other expenses
Total employee benefits expenses
% of Revenues
2021
2,679
2,312
367
262
262
—
2,941
19.2
2020
2,377
2,303
74
262
262
—
2,639
16.7
Changes
302
9
293
—
—
—
302
2.5 pp
The net increase of 302 million euros was mainly driven by:
•
•
•
the increase of 293 million euros in the Italian component of “restructuring and other expenses” as a
consequence of the application of the trade union agreements signed by the Parent company with the
trade unions on March 08, 2021 and on April 23, 2021 and the agreements signed respectively on
March 15, 2021 by the company Olivetti on April 27, 2021 by the company Noovle S.p.A. and on May 06,
2021 by the company Telecom Italia Sparkle;
the increase of 9 million euros of the Italian component of ordinary employee expenses, mainly due to
the balance of savings consequent to the reduction in the average salaried workforce (amounting to a
total of -1,313 average employees, of whom an average of -184 deriving from the application of the
Expansion Contract) and the expenses related to the renewal of the National Collective Bargaining
Agreement;
the substantive lack of change in the foreign component mainly related to the balance of the impact
of the exchange rate change and the local salary dynamics of the Brazil Business Unit.
Report on Operations of the
TIM Group
Key Operating and Financial Data – TIM Group
28
■ Other income (272 million euros; 211 million euros in 2020):
(million euros)
Late payment fees charged for telephone services
2021
39
2020
46
Changes
(7)
Recovery of employee benefit expenses, purchases and services
rendered
Capital and operating grants
Damages, penalties and recoveries connected with litigation
Estimate revisions and other adjustments
Special training income
Other
Total
In 2021, "Special training income” included 61 million euros (13 million euros in 2020) in repayments valued for
the hours of training delivered (more than 3 million hours, involving approximately 37,000 employees),
correlated with the activities tied to the training project financed through the Fondo Nuove Competenze (New
Skills Fund - the Ministerial fund aimed at increasing innovative skills in companies).
12
28
27
71
67
28
272
14
34
24
59
13
21
211
(6)
3
12
54
7
61
(2)
For the parent company, this project began in December 2020 and drew to a close in May 2021 (repayments
for approximately 60 million euros in 2021; approximately 13 million euros in 2020), whilst for the companies
Olivetti and Telecom Italia Sparkle, it ended on December 31, 2021 (repayments for approximately 1 million
euros in 2021).
Changes
■ Other operating expenses (1,502 million euros; 961 million euros in 2020):
(million euros)
Write-downs and expenses in connection with credit management
Provision charges
TLC operating fees and charges
Indirect duties and taxes
Penalties, settlement compensation and administrative fines
Association dues and fees, donations, scholarships and traineeships
Other
Total
The increase essentially refers to the Domestic Business Unit (+572 million euros) and includes a non-recurring
item of 735 million euros, mainly referring to disputes, transactions, expenses connected with regulatory
sanctions and expenses related to agreements and the development of non-recurring projects, as well as
provisions and expenses connected with credit management in connection with the COVID-19 emergency (20
million euros) following the worsening of the expected credit loss of corporate customers tied to the expected
evolution of the pandemic.
For further details, in addition to that reported in the “Non-recurring events” chapter of this Report on
Operations, see the Note "Significant non-recurring events and transactions" in the Consolidated Financial
Statements as at December 31, 2021 of the TIM Group.
2021
305
704
189
99
127
12
66
1,502
2020
423
43
199
96
120
12
68
961
(118)
661
(10)
3
7
—
(2)
541
With reference to the “impairment and expenses connected with credit management”, the reduction on 2020
(-118 million euros) is the consequence of the consolidation of the Parent Company’s program to optimize
processes started in 2020, aimed at increasing the efficiency of credit management, all round, intervening on
the whole process involving the customer. More specifically, reference is made to the acceptance,
management and collection of debt through to the assessment model of the new commercial offers.
The non-recurring items of the year 2020 of 148 million euros mainly relating to provisions and charges of the
Domestic Business Unit related to credit management in relation to the COVID-19 emergency (46 million
euros) as well as disputes and regulatory fines and expenses connected with agreements and the
development of non-recurring projects.
Depreciation and amortization
In 2021 the item amounts to 4,490 million euros (4,616 million euros in 2020) and breaks down as follows:
(million euros)
Amortization of intangible assets with a finite useful life
Depreciation of tangible assets
Amortization of rights of use assets
Total
2021
1,511
2,284
695
4,490
2020
1,627
2,301
688
4,616
(116)
(17)
7
(126)
Changes
In particular, in 2021, the Parent Company TIM S.p.A. proceeded to revise the useful life of the IT software
applications; in actual fact, following the start of the Digital Enterprise project and consequent verification of
the effective and prospective duration of the systems impacted, the amortization period of assets used in fixed
Report on Operations of the
TIM Group
Key Operating and Financial Data – TIM Group
29
and mobile IT software development was revised, taking it from 3 to 6 years, with an impact of lesser period
amortization for approximately 115 million euros.
Furthermore, depreciation of tangible assets included the estimated acceleration of depreciation as a
consequence of both the switch-off of 3G in Italy, expected for June 2022 (equal to approximately 23 million
euros) and the switch-off of part of the copper access network in Italy, hypothesized for end 2030 (equal to 31
million euros).
Net impairment losses on non-current assets
These amounted to 4,120 million euros in 2021 (8 million euros in 2020).
In accordance with IAS 36, goodwill is not subject to amortization, but is tested for impairment on at least an
annual basis, when preparing the company’s consolidated financial statements.
With reference to the Domestic Cash Generating Unit (CGU), the impairment test, conducted during the
preparation of the 2021 Annual Financial Report, took as a reference the flows of the new 2022-2024 Industrial
Plan - which, based on the results of the 2021 final accounting, reflects realistic aspects on future
developments and outlines all the actions to create value for shareholders - on the basis of the projections up
to 2026, assuming the use of domestic market assets in continuity with the conditions as at December 31, 2021
and using a discount rate updated to the financial market conditions as at December 31, 2021.
The configuration of the recoverable amount is the Fair Value estimated on the basis of the income approach,
which has highlighted a value reduction of 4,120 million euros of goodwill attributed to the Domestic Cash
Generating Unit.
Impairment testing of the Brazil Cash Generating Unit did not reveal any reduction in the value of goodwill
allocated to it. The valuation was based on the Market Cap of TIM Brasil as at December 31, 2021 and
highlighted a positive difference between the book value of the CGU and Fair Value.
Further details are provided in the Note “Goodwill” to the Consolidated Financial Statements at December 31,
2021 of the TIM Group.
EBIT
TIM Group EBIT for 2021 came to -3,529 million euros (+2,104 million euros in 2020).
Organic EBIT, net of the non-recurring items, amounted to 1,734 million euros (2,313 million euros in 2020),
with an EBIT margin of 11.3% (14.8% in 2020).
2021 EBIT is impacted negatively by net non-recurring charges, including the impairment loss on goodwill
attributed to the Domestic Cash Generating Unit (4,120 million euros), for 5,263 million euros.
Organic EBIT, net of the non-recurring items, is calculated as follows:
(million euros)
EBIT
Foreign currency financial statements translation effect
Changes in the scope of consolidation
Non-recurring expenses/(income)
Effect of translating non-recurring expenses/(income) in
currency
ORGANIC EBIT - excluding non-recurring items
2021
(3,529)
5,263
1,734
2020
2,104
(36)
(73)
319
(1)
2,313
%
—
Changes
absolute
(5,633)
36
73
4,944
1
(579)
(25.0)
The EBIT of the fourth quarter of 2021 totaled -4,469 million euros (+477 million euros in the fourth quarter of
2020).
Organic EBIT net of the non-recurring items in the fourth quarter of 2021 totaled 302 million euros (617 million
euros in the fourth quarter of 2020).
Other income (expenses) from investments
The item is positive for 126 million euros and mainly included the net capital gain (119 million euros)
recognized following the dilution from 100% to 49% of the equity investment of the Brazilian subsidiary TIM
S.A. in I-Systems S.A. (formerly FiberCo Soluções de Infraestrutura S.A.), a company established by TIM S.A. for
the segregation of its network assets and the provision of infrastructure services, following the completion of
the agreement between TIM S.A. and IHS Fiber Brasil - Cessão de Infraestruturas Ltda. (IHS Brasil). See the
section “Financial and Operating Highlights of the Business Units of the TIM Group – Brazil Business Unit” of
the Report on Operations for more details.
Report on Operations of the
TIM Group
Key Operating and Financial Data – TIM Group
30
Finance income (expenses), net
Finance income (expenses), net was negative and amounted to 1,150 million euros (-1,179 million euros in
2020): the improvement was mainly driven by lower finance expenses, connected to the reduction in the
Group’s average debt exposure, only partly offset by the positive effects of the change of some non-monetary
items, of a currency and accounting nature.
Income tax expense
In 2021, the flow has a negative balance for a total of 3,885 million euros (positive for 5,955 million euros in
2020). Tax expense mainly relates to the partial writing off of the deferred tax assets entered in 2020 in
exchange for the tax recognition of higher values booked in accordance with Decree Law 104/2020 Art. 110,
subsections 8 and 8 bis; this write-off is due to the extension to 50 years of the period of tax asset absorption,
introduced by Art. 160 of the 2022 Budget Law (Law 234/2021) and the changed assessment of the time frame
for recoverability of deferred tax assets of TIM S.p.A. Further details are provided in the Note “Income tax
expense (current and deferred)” to the Consolidated Financial Statements at December 31, 2021 of the TIM
Group.
Profit (loss) for the year
This item breaks down as follows:
(million euros)
Profit (loss) for the year
Attributable to:
Owners of the Parent:
Profit (loss) from continuing operations
Profit (loss) from Discontinued operations/Non-current assets held
for sale
Profit (loss) for the year attributable to owners of the Parent
Non-controlling interests:
Profit (loss) from continuing operations
Profit (loss) from Discontinued operations/Non-current assets held
for sale
Profit (loss) for the year attributable to Non-controlling interest
2021
(8,400)
(8,652)
—
(8,652)
252
—
252
2020
7,352
7,224
—
7,224
128
—
128
Net profit attributable to Owners of the Parent for 2021, recorded a loss of -8,652 million euros (+7,224
million euros in 2020), excluding the impact of non-recurring items the net profit for 2021 is positive for +40
million euros (+1,173 million euros in 2020).
For more details on non-recurring items, see the Note "Non-recurring events and transactions" in the
Consolidated Financial Statements as at December 31, 2021 of the TIM Group.
Report on Operations of the
TIM Group
Key Operating and Financial Data – TIM Group
31
FINANCIAL AND OPERATING HIGHLIGHTS OF
THE BUSINESS UNITS OF THE TIM GROUP
Domestic
(million euros)
2020
2021
Changes
(a-b)
Revenues
EBITDA
% of Revenues
EBIT
% of Revenues
Headcount at year end (number) (°)
(a)
12,505
3,730
29.8
(3,990)
(31.9)
42,591
(b)
absolute
%
organic %
excluding non-
recurring
12,905
5,339
41.4
1,635
12.7
42,925
(400)
(1,609)
(5,625)
(334)
(3.1)
(30.1)
(11.6) pp
(44.6) pp
(0.8)
(3.3)
(12.8)
(4.3) pp
(32.5)
(4.4) pp
(°) Includes 16 agency contract workers at December 31, 2021 (14 at December 31, 2020)
(million euros)
4th Quarter
2021
4th Quarter
2020
Changes
(a-b)
(a)
(b)
absolute
%
3,224
351
10.9
(4,621)
—
3,433
1,258
36.6
323
9.4
(209)
(907)
(4,944)
(6.1)
(72.1)
(25.7) pp
Revenues
EBITDA
% of Revenues
EBIT
% of Revenues
Fixed
Total TIM Retail accesses (thousands
of which NGN (1)
Total TIM Wholesale accesses (thousands)
of which NGN
Active broadband accesses of TIM Retail (thousands)
Consumer ARPU (€/month) (2)
Broadband ARPU (€/month) (3)
12/31/2021
8,647
5,186
7,729
4,819
7,733
30.1
33.4
12/31/2020
8,791
4,432
7,974
4,220
7,635
33.0
31.3
(1) ultrabroadband access in FTTx and FWA mode, also including “data only” lines and GBE (Gigabit Ethernet).
(2) Revenues from organic Consumer retail services in proportion to the average Consumer accesses.
(3) Revenues from organic broadband and ICT services in proportion to the average TIM retail accesses.
organic %
excluding
non-
recurring
(6.0)
(28.5)
(9.8) pp
(68.1)
(8.8) pp
12/31/2019
9,166
3,670
8,051
3,309
7,592
34.9
27.7
Mobile
Lines at period end (thousands)
of which Human
Churn rate (%) (4)
Broadband users (thousands) (5)
Retail ARPU (€/month) (6)
Human ARPU (€/month) (7)
12/31/2021
30,466
19,054
14.7
12,783
7.5
11.7
12/31/2020
30,170
19,795
18.6
12,818
8.0
12.1
12/31/2019
30,895
21,003
20.4
12,823
8.7
12.6
(4) Percentage of total lines that ceased in the period compared to the average number of total lines.
(5) Mobile lines using data services.
(6) Revenues from organic retail services (visitors and MVNO not included) compared to the total average number of lines.
(7) Revenues from organic retail services (visitors and MVNO not included) compared to the average number of human lines.
Report on Operations of
the TIM Group
Financial and Operating Highlights of the Business Units of the TIM
Group
Domestic Business Unit
33
Revenues
Domestic Business Unit revenues amounted to 12,505 million euros, changing by -400 million euros (-3.1%)
compared to 2020. In organic terms, they reduce by 423 million euros (-3.3% in 2020); in particular, revenues in
2021 were affected by non-recurring adjustments for 5 million euros, while revenues in 2020 were affected by
non-recurring items for 39 million euros mainly referring to adjustments of revenues connected to TIM S.p.A.’s
commercial initiatives to support customers in facing the COVID-19 emergency.
Revenues from stand-alone services come to 11,183 million euros (-422 million euros compared to 2020, -3.6%)
and suffer the impact of the competition on the customer base and a reduction in ARPU levels; in organic
terms, net of the above-specified non-recurring items, they drop by 439 million euros compared to 2020 (-
3.8%).
In detail:
■
■
revenues from stand-alone Fixed market services amounted to 8,574 million euros in organic terms, with
a change compared to 2020 of -2.3% mainly due to the decrease in ARPU levels in the Consumer segment,
which is also reflected in the trend of revenues from broadband services (-93 million euros compared to
2020, -4.0%), partly offset by the growth in revenues from ICT solutions (+242 million euros compared to
2020, +22.9%);
revenues from stand-alone Mobile market services came to 3,152 million euros in organic terms (-242
million euros vs 2020, -7.1%), mainly due to ARPU levels and the reduction in the customer base connected
with Human lines.
Revenues for Handset and Bundle & Handset, including the change in work in progress, are equal, in organic
terms, to 1,322 million euros in 2021, with an increase of 16 million euros compared to 2020, for the most part
attributable to the Fixed segment.
Details of revenues achieved in 2021 for the Domestic Business Unit are presented in the following table,
broken down by market/business segment and compared to 2020.
(million euros)
4th Quarter
2021
4th Quarter
2020
2021
2020
% Change
(a)
(b)
(c)
(d)
(a/b)
(c/d)
Revenues
Consumer
Business
Wholesale National Market
Wholesale International Market
Other
3,224
1,326
1,136
462
289
11
3,433
1,525
1,105
510
262
31
12,505
5,419
4,117
1,946
1,008
15
(6.1)
(13.0)
2.9
(9.4)
10.3
(3.1)
(8.1)
0.7
2.1
4.3
12,905
5,897
4,087
1,906
966
49
organic
excluding
non-
recurring
(a/b)
(6.0)
(13.0)
2.9
(8.5)
9.9
organic
excluding
non-
recurring
(c/d)
(3.3)
(8.3)
—
2.4
5.2
As regards the market segments of the Domestic Business Unit, note the following changes compared to
2020:
■ Consumer: the segment consists of all Fixed and Mobile voice and Internet services and products managed
and developed for individuals and families and of public telephony; customer care, operating credit
support, loyalty and retention activities, sales within its remit, and administrative management of
customers; includes the company TIM Retail, which coordinates the activities of flagship stores. In organic
terms, net of the aforesaid non-recurring items, the revenues of the Consumer segment totaled 5,419
million euros (-488 million euros, -8.3%) and show a trend, compared to 2020, affected by the challenging
competition and greater discipline in commercial processes. The trend seen in total revenues also applied
to revenues from stand-alone services, which amounted to 4,726 million euros, changing by -454 million
euros compared to 2020 (-8.8%). In particular:
•
revenues from Mobile stand-alone services totaled, in organic terms, 2,161 million euros (-182 million
euros, -7.8% compared to 2020). The impact of the competitive dynamic remains, albeit with a lesser
reduction of the customer base calling; revenues from roaming and incoming traffic are down due to
the progressive reduction of interconnection tariffs;
revenues from Fixed stand-alone services totaled, in organic terms, 2,600 million euros (-270 million
euros, -9.4% compared to 2020), primarily due to lower ARPU levels and the smaller Customer Base,
which declined gradually over the course of 2021. The growth of broadband customers is highlighted,
in particular ultrabroadband.
•
Revenues for Handsets and Bundles & Handsets in the Consumer segment amounted to 693 million
euros, -34 million euros compared to 2020 (-4.6%). The decrease is mainly due to lesser sales volumes of
modems on fixed lines.
■ Business: the segment consists of voice, data, and Internet services and products, and ICT solutions
managed and developed for small and medium-size enterprises (SMEs), Small Offices/Home Offices
(SOHOs), Top customers, the Public Sector, Large Accounts, and Enterprises in the Fixed and Mobile
telecommunications markets. The following companies are included: Olivetti, TI Trust Technologies, Telsy
and the Noovle Group. In organic terms, net of the aforesaid non-recurring items, revenues for the
Report on Operations of
the TIM Group
Financial and Operating Highlights of the Business Units of the TIM
Group
Domestic Business Unit
34
Business segment amounted to 4,117 million euros (in line with 2020, of which -0.7% for revenues from the
stand-alone services component). In particular:
•
total Mobile market revenues showed a negative organic performance compared to 2020 (-0.5%),
linked to the revenues from stand-alone services component (-4.4%) and the ARPU trend;
total Fixed revenues in organic terms improved slightly by +6 million euros compared to 2020 (+0.2%),
due to the revenues from services component (+0.4%) thanks to the increase in revenues from ICT
services.
•
■ Wholesale National Market: the segment consists of the management and development of the portfolio
of regulated and unregulated wholesale services for Fixed-line and Mobile telecommunications operators
in the domestic market. The following companies are included: TI San Marino and Telefonia Mobile
Sammarinese. The Wholesale National Market segment revenues in 2021 came to 1,946 million euros, up
by +40 million euros (+2.1%) compared to 2020, with a positive performance mainly driven by the growth
in accesses in the ultrabroadband segment.
■ Wholesale International Market: includes the activities of the Telecom Italia Sparkle group, which
operates in the market for international voice, data and Internet services for fixed and mobile
telecommunications operators, ISPs/ASPs (Wholesale market) and multinational companies through its
own networks in the European, Mediterranean and South American markets. Revenues for the Wholesale
International Market segment for 2021 totaled 1,008 million euros, up by 42 million euros (+4.3%) on the
2020 figure.
■ Other: includes:
• Other Operations units: covering technological
innovation and development, engineering,
construction and operating processes for network infrastructures, IT, systems and properties; and the
company FiberCop S.p.A.;
• Staff & Other: services provided by the Staff Departments and other support activities carried out by
minor companies.
EBITDA
EBITDA for 2021 of the Domestic Business Unit amounted to 3,730 million euros (-1,609 million euros in 2020,
-30.1%).
Organic EBITDA, net of the non-recurring items, amounted to 4,867 million euros (-716 million euros
compared to 2020, -12.8%), with an EBITDA margin of 38.9% (-4.3 percentage points compared to 2020). In
particular, in 2021 EBITDA reflected a total impact of 1,137 million euros referring to non-recurring items, of
which 26 million euros related to the COVID-19 emergency in Italy. Moreover, non-recurring expenses include
charges connected with corporate reorganization/restructuring processes, provisions for disputes, transactions,
regulatory sanctions and potential liabilities associated thereto, provisions for onerous contracts and expenses
related to agreements and the development of non-recurring projects.
Organic EBITDA, net of the non-recurring items, is calculated as follows:
(million euros)
2021
2020
Changes
EBITDA
Foreign currency financial statements translation effect
Changes in the scope of consolidation
Non-recurring expenses (Income)
ORGANIC EBITDA, excluding Non-recurring items
3,730
—
—
1,137
4,867
absolute
%
5,339
(1)
(69)
314
5,583
(1,609)
1
69
823
(716)
(30.1)
(12.8)
EBITDA in the fourth quarter of 2021 was 351 million euros, (-907 million euros compared with 2020, -72.1%).
Regarding the dynamics for the main items, the following are worthy of note:
(million euros)
Acquisition of goods and services
Employee benefits expenses
Other operating expenses
2021
5,534
2,703
1,211
2020
5,129
2,401
639
Changes
405
302
572
Report on Operations of
the TIM Group
Financial and Operating Highlights of the Business Units of the TIM
Group
Domestic Business Unit
35
In particular:
■ Other income amounted to 259 million euros with an increase of 59 million euros compared to 2020:
(million euros)
Late payment fees charged for telephone services
Recovery of employee benefit expenses, purchases and
services rendered
Capital and operating grants
Damages, penalties and recoveries connected with litigation
Estimate revisions and other adjustments
Special training income
Other income
Total
2021
29
13
26
26
73
67
25
259
2020
Changes
40
14
32
24
59
13
18
200
(11)
(1)
(6)
2
14
54
7
59
■ Acquisition of goods and services amounted to 5,534 million euros with an increase of 405 million euros
compared to 2020:
(million euros)
Acquisition of goods
Revenues due to other TLC operators and interconnection
costs
Commercial and advertising costs
Professional and consulting services
Power, maintenance and outsourced services
Lease and rental costs
Other
Total acquisition of goods and services
% of Revenues
2021
1,154
1,258
856
162
943
459
702
5,534
44.3
2020
1,063
1,191
868
128
889
301
689
5,129
39.7
Changes
91
67
(12)
34
54
158
13
405
4.6
The increase of 405 million euros is mainly due to the greater purchases of goods for resale, sales expenses,
taking into account the improvement in deferred contract costs linked to the reduction of the churn rate,
leased asset costs, particularly for software license rental and greater hosting charges on non-strategic sites
connected with the MSA INWIT contract, which started in April 2020.
■ Employee benefits expenses amounted to 2,703 million euros with an increase of 302 million euros
compared to 2020.
■ Other operating expenses amounted to 1,211 million euros with an increase of 572 million euros compared
to 2020:
(million euros)
Write-downs and expenses in connection with credit
management
Provision charges
TLC operating fees and charges
Indirect duties and taxes
Penalties, settlement compensation and administrative fines
Association dues and fees, donations, scholarships and
traineeships
Sundry expenses
Total
2021
219
676
43
82
127
11
53
1,211
2020
Changes
329
6
44
79
120
11
50
639
(110)
670
(1)
3
7
—
3
572
Other operating expenses for 2021 include non-recurring items for 735 million euros, mainly referring to
disputes, transactions, expenses connected with regulatory sanctions and expenses related to agreements
and the development of non-recurring projects, as well as provisions and expenses connected with credit
management in connection with the COVID-19 emergency (20 million euros) following the worsening of the
expected credit loss of corporate customers connected with the expected evolution of the pandemic.
Report on Operations of
the TIM Group
Financial and Operating Highlights of the Business Units of the TIM
Group
Domestic Business Unit
36
Note that “Write-downs and expenses in connection with credit management” shows a reduction of 110
million euros compared with 2020, which is the consequence of the consolidation of the program to optimize
processes started in 2020, aimed at increasing the efficiency of credit management, all round, intervening on
the whole process involving the customer. More specifically, reference is made to the acceptance,
management and collection of debt through to the assessment model of the new commercial offers.
The non-recurring items of 2020, amounting to 148 million euros, mainly referred to regulatory disputes and
related liabilities and to liabilities with customers and/or suppliers.
EBIT
Domestic Business Unit EBIT for 2021 was negative for 3,990 million euros (-5,625 million euros compared to
2020), with an EBIT margin of -31.9% (-44.6 percentage points compared to 2020).
Organic EBIT, net of the non-recurring items, amounted to 1,267 million euros (-609 million euros in 2020, -
32.5%), with an EBIT margin of 10.1% (14.5% in 2020).
In 2021 EBIT was negatively impacted by net non-recurring charges totaling 5,257 million euros (314 million
euros in 2020), including the impairment of 4,120 million euros of goodwill attributed to the Domestic Cash
Generating Unit.
Organic EBIT, net of the non-recurring items, is calculated as follows:
(million euros)
EBIT
Changes in the scope of consolidation
Non-recurring expenses (Income)
ORGANIC EBIT, excluding Non-recurring items
2021
2020
Changes
absolute
%
(3,990)
—
5,257
1,267
1,635
(73)
314
1,876
(5,625)
73
4,943
(609)
(32.5)
EBIT in the fourth quarter of 2021 was -4,621 million euros, (-4,944 million euros compared with 2020).
Report on Operations of
the TIM Group
Financial and Operating Highlights of the Business Units of the TIM
Group
Domestic Business Unit
37
Brazil
(million euros)
2021
2020
(million Brazilian reais)
2021
2020
Revenues
EBITDA
% of Revenues
EBIT
% of Revenues
Headcount at year end (number)
(a)
2,840
1,362
48.0
473
16.7
(b)
2,933
1,407
48.0
476
16.2
(c)
18,058
8,661
48.0
3,010
16.7
9,325
(d)
17,268
8,282
48.0
2,801
16.2
9,409
Changes
absolute
%
(c-d)
790
379
209
(84)
(c-d)/d
4.6
4.6
0.0pp
7.5
0.5pp
(0.9)
% organic
excluding
non-
recurring
4.6
4.7
0.1pp
7.7
0.5pp
The average exchange rates used for the translation into euro (expressed in terms of units of Real per 1 euro) were 6.35936 for 2021 and 5.88806 for
2020.
(million euros)
(million Brazilian reais)
4th Quarter
2021
4th Quarter
2020
4th Quarter
2021
4th Quarter
2020
(a)
761
385
50.6
158
20.8
(b)
725
364
49.9
156
20.8
(c)
4,799
2,429
50.6
999
20.8
(d)
4,678
2,336
49.9
974
20.8
% organic
excluding
non-
recurring
2.6
3.4
0.4pp
1.3
(0.3)pp
Changes
absolute
%
(c-d)
121
93
25
2021
52,066
104.9
26.4
(c-d)/d
2.6
4.0
0.7 pp
2.6
0.0pp
2020
51,433
122.7
24.9
Revenues
EBITDA
% of Revenues
EBIT
% of Revenues
Lines at period end (thousands) (*)
MOU (minutes/month) (**)
ARPU (reais)
(*) Includes corporate lines.
(**) Net of visitors.
The Brazil Business Unit (TIM Brasil group) provides mobile services using UMTS, GSM and LTE technologies.
Moreover, the Tim Brasil group offers fiber optic data transmission using full IP technology, such as DWDM and
MPLS and residential broadband services.
Offer for the purchase of the OI group mobile business
In December 2020, TIM announced that the offer presented by TIM S.A. (the operating company of the TIM
Brasil Group) together with Telefônica Brasil S.A. (VIVO) and Claro S.A., had been awarded the contract in the
competitive sale process for the purchase of the Oi group’s mobile business. The transaction is subject to the
fulfillment of certain conditions precedent provided for in the agreements and the authorizations of the
competent Authorities. Closing is expected during the early months of 2022.
The total value of the transaction amounts to 16.5 billion reais, which is summed with the consideration
offered to the Oi Group, of approximately 819 million reais, as net present value (NPV) for the Take-or-Pay
Data Transmission Capacity Contracts. TIM Brasil will participate in the transaction with an investment of
approximately 7.3 billion reais, to be paid at closing, and 476 million reais relating to TIM Brasil’s share of the
net present value (NPV) of the contracts. Given the low debt and the favorable market conditions, TIM S.A.
believes it can finance the acquisition through cash and the local debt market. However, in the event of any
changes in market conditions, TIM S.A. will evaluate all available options.
The purchase plan provides for TIM Brasil, Telefônica Brasil and Claro to divide up Oi’s mobile assets and, in
particular, its customers, radio frequencies and mobile access infrastructure.
More specifically, TIM Brasil will be allocated:
■ approximately 14.5 million customers (corresponding to 40% of UPI Ativos Móveis’ total customer base),
according to Anatel’s data of April 2020. The allocation took into consideration criteria that favor
competition among the operators present in the Brazilian market;
Report on Operations of
the TIM Group
Financial and Operating Highlights of the Business Units of the TIM
Group
Brazil Business Unit
38
■ approximately 49 MHz as a national average weighted by population (54% of UPI Ativos Móveis radio
frequencies). The division of frequencies strictly respects the spectrum limits per group established by
Anatel;
■ approximately 7.2 thousand mobile access sites (corresponding to 49% of total UPI Ativos Móveis sites).
On February 09, 2022, the offer presented by TIM S.A. together with Telefônica Brasil S.A. (VIVO) and Claro S.A.,
was approved by the antitrust authority CADE (Conselho Administrativo de Defesa Economica).
The decision follows the pronunciation of the reglementary Authority Anatel (Agência Nacional de
Telecomunicações), which on February 1, 2022, had expressed itself in favor of the transfer of control of Oi’s
mobile assets.
The closing of the deal, which will define a new infrastructure structure for the Telco market in Brazil, still
depends on the fulfillment of specific conditions foreseen in the Sale and Purchase Agreement. The operation,
with which TIM Brasil will acquire the most relevant share of the assets of the Oi Group, is expected to bring
significant benefits to the Brazilian TLC sector, maintaining a high degree of competition and ensuring the
necessary investments for the development of the country’s digital advancement.
The transaction, as of its completion, will add value not only to its Brazilian subsidiary but to the whole TIM
Group and its shareholders as it will accelerate its growth and increase operating efficiency through relevant
synergies. Furthermore, positive effects are also expected for customers, as the transaction is likely to improve
the users’ experience and the quality of services offered. Finally, the transaction is expected to benefit the
entire telecommunications sector in Brazil, which will be strengthened in its investment capacity, technological
innovation, as well as its competitiveness.
Agreement with IHS for shareholding in FiberCo
In November 2021, once the regulatory authorization process had been completed, the agreement was
stipulated between TIM S.A. and IHS Fiber Brasil - Cessão de Infraestruturas Ltda. (“IHS Brasil”), in order to
acquire an equity stake in FiberCo Soluções de Infraestrutura S.A. ("FiberCo"), a company established by TIM
S.A. for the segregation of network assets and the provision of infrastructure services.
Following the operation closing, IHS Brasil holds 51% of the share capital of FiberCo, with the remaining 49% is
held by TIM S.A.. At the same time, FiberCo was renamed I-Systems.
Shareholder relations are governed by a shareholders' agreement.
The operation was worth 1.68 billion reais, divided up into a primary component of 0.58 billion reais, for the
treasury of I-Systems, and a secondary component of 1.10 billion reais, paid to TIM S.A.. The enterprise value of
I-Systems was established at 2.71 billion reais and the equity value, after the contribution of the primary
component, was set at 3.29 billion reais. The operation also considers possible additional earnings deriving
from an earn-out component.
In addition, under the scope of the Operation, TIM and I-Systems have stipulated an agreement to develop the
Fiber-to-the-Site (FTTS) infrastructure to connect TIM sites in the areas in which FiberCo will be developing the
new infrastructure granting access to fiber optic broadband.
Revenues
Revenues for 2021 of the Brazil Business Unit (TIM Brasil group) amounted to 18,058 million reais (17,268
million reais in 2020, +4,6%), speeding up on the levels recorded from the third quarter of 2020.
The acceleration has been driven by service revenues (17,497 million reais vs 16,665 million reais in 2020,
+5.0%) with mobile service revenues growing +4.7% on 2020. This performance is mainly related to the
continuous recovery of the pre-paid and post-paid segments. Revenues from fixed services have grown by
8.8% compared to the previous year, determined above all by the growth rate of TIM Live.
Revenues from product sales totaled 561 million reais (603 million reais in 2020).
Revenues in Q4 2021 totaled 4,799 million reais, increased by 2.6% on the fourth quarter of 2020 (4,678 million
reais).
The mobile ARPU for 2021 was 26.4 reais, up from the figure recorded in 2020 (24.9 reais) thanks to general
repositioning in the post-paid segment and new commercial initiatives intended to promote the use of data
and average expenditure per customer.
Total mobile lines in place at December 31, 2021 amounted to 52.1 million, +0.7 million compared to
December 31, 2020 (51.4 million). This variation was mainly driven by the postpaid segment (+1.0 million),
partially offset by the performance in the prepaid segment (-0.3 million), in part due to the consolidation
underway in the market for second SIM cards. Post-paid customers represented 43.9% of the customer base as
of December 31, 2021, 1.5 percentage points higher than at December 2020 (42.4%).
The TIM Live BroadBand business recorded net positive growth in 2021 in the customer base of 40 thousand
users, +6.1% on December 31, 2020. In addition, the customer base continues to be concentrated on high-
speed connections, with more than 50% exceeding 100Mbps.
Report on Operations of
the TIM Group
Financial and Operating Highlights of the Business Units of the TIM
Group
Brazil Business Unit
39
EBITDA
EBITDA in 2021 was 8,661 million reais (8,282 million reais in 2020, +4.6%) and the margin on revenues was
stable at 48.0%.
EBITDA in 2021 reflects the non-recurring charges of 36 million reais (27 million euros in 2020), mainly related
to the development of non-recurring projects.
Organic EBITDA, net of the non-recurring items, increased by 4.7% and was calculated as follows:
(million Brazilian reais)
2020
2021
Changes
EBITDA
Non-recurring expenses/(income)
ORGANIC EBITDA - excluding non-recurring items
8,661
36
8,697
8,282
27
8,309
The increase of EBITDA is due to the increase in revenue and cost control efficiency.
The relative margin on revenues, in organic terms, comes to 48.2% (48.1% in 2020).
absolute
379
9
388
%
4.6
4.7
EBITDA for the fourth quarter of 2021, amounted to 2,429 million reais, up 4.0% compared to the fourth
quarter of 2020 (2,336 million reais).
Net of non-recurring charges, the margin on revenues for the fourth quarter of 2021 was 50.9% (50.5% in the
fourth quarter of 2020).
The changes in the main cost items are shown below:
(million euros)
2021
(a)
1,037
237
282
7
2020
(b)
1,070
236
318
(8)
(million Brazilian reais)
2021
(c)
6,592
1,506
1,798
44
Acquisition of goods and
services
Employee benefits expenses
Other operating expenses
Change in inventories
EBIT
2020 Changes
(d)
(c-d)
6,298
1,392
1,874
(43)
294
114
(76)
87
EBIT for 2021 was 3,010 million reais (2,801 million reais in 2020 +7.5%).
Organic EBIT, net of the non-recurring items, in 2021 amounted to 3,046 million reais (2,828 million reais in
2020), with a margin on revenues of 16.9% (16.4% in 2020).
Organic EBIT, net of the non-recurring items, is calculated as follows:
2021
(million Brazilian reais)
EBIT
Non-recurring expenses/(income)
ORGANIC EBIT - excluding non-recurring items
3,010
36
3,046
2020
Changes
absolute
209
9
218
2,801
27
2,828
%
7.5
7.7
The EBIT of the first quarter of 2021 totaled 999 million reais (974 million reais in the fourth quarter of 2020).
Net of non-recurring charges, the margin on revenues for the fourth quarter of 2021 was 21.1% (21.4% in the
fourth quarter of 2020).
Report on Operations of
the TIM Group
Financial and Operating Highlights of the Business Units of the TIM
Group
Brazil Business Unit
40
MAIN COMMERCIAL DEVELOPMENTS
Domestic
Consumer
TIM is driving the country’s digital revolution, continuing to invest in innovation through the development of
fixed and mobile ultrabroadband networks, platforms and highly customized quality services to satisfy
customer needs for the home, education, work and leisure. TIM is increasingly committed to spreading a digital
culture, offering innovative, flexible and convergent products that boast not only the best fixed and mobile
connectivity but also a complete range of multimedia content, with films, TV series, sport, music, video games
and major events, delivered through decoders, smart TVs, the Web and mobile apps, as well as smart home
solutions and services.
As part of its convergence development, TIM has continued to pursue its TIM Unica offer, which encompasses
fixed, mobile, content and smart home and introduces a series of benefits for the family network. The
cornerstone becomes the home’s Fiber connection and the possibility for the customer to charge all the
family’s SIMs to the fixed line’s bill as a single payment instrument, thus enjoying unlimited GB for all the
smartphones of the components. The domiciliation of the bill, the common means of payment, the clarity and
transparency of the monthly expense for family communications make TIM Unica a priority tool for retention
and churn rate reduction. The advantages for customers joining the TIM Unica world are enriched over time: in
2021, the restriction of co-holding was overcome between the fixed line and the first mobile line, the
commercial promotions dedicated to the family network were extended, including new segments (over 60),
free access to the TIM My Health insurance/health care policies, new geo-localized promotions and, in
December, a contest for customers registered with TIM Party, with top-of-the-range mobile products up for
grabs.
In 2021, TIM was confirmed as leader in the innovation and development of new generation networks and
services, launching, by way of experimentation, the Magnifica offer, which offers ultrabroadband FTTH fiber
optic connections on an XGS-PON network with speeds of up to 10Gbps in download and 2Gbps in upload.
Thanks to the technological solution TS+, present in the Executive and Magnifica offers, TIM guarantees a
powerful, stable, secure connection throughout the home, thanks to the WiFi6 combined with the certification
of TIM technicians, the “WiFi Plus” service and the “Safe Web Plus” service, also extended to all family SIMs.
Magnifica also includes dedicated assistance with priority access to the 187 customer service and TIM stores.
As part of the roll-out of Fiber in Italy, TIM has continued to offer its customers the offer dedicated to the
broadband plan, using the funds made available by the government for low-income families (Phase 1 was
completed early November), through the TIM Super Voucher offer, which envisages a 500-euro bonus for
connectivity and the purchase of a product, PC or tablet exclusively on the market offered by TIM.
TIM has continued to preside the market also with FWA technology, with the TIM Super FWA offer, with
strengthened connection performance for the basic version up to 40 Megabyte download and 4 Megabyte
upload, even in areas (e.g. White Areas) without Fiber coverage. In 2021, the offer was enhanced to also
include the Super speed option up to 100 Megabytes download and 50 Megabytes upload (available according
to specific coverage ad only in Modem Outdoor mode) and the TIM FWA Rechargeable Limited Edition offer
was launched, with 6 months’ browsing included, aimed at meeting the needs of specific market segments,
such as second homes, smart working, students and ethnic groups.
Again with a view to taking ultrabroadband connections to the more remote, isolated areas of the country, in
2021, TIM signed a multi-year agreement with Eutelsat, world leaders in the satellite sector, for the exclusive
marketing for Italy of satellite UBB connections. After an initial trial phase, starting October, the TIM Super SAT
offer, later renamed Premium SAT, was launched for private customers, enabling a connection with speeds of
up to 100 Mbps download and 5 Mbps upload and envisaging the supply of a satellite terminal with home
installation by a specialized engineer.
Throughout 2021, TIM continued to support the adoption of new fiber technology with offers for ADSL
customers already covered by the FTTCab and FTTH service to upgrade to the new technology without
additional costs and leveraging on new offer content different to that of the market and, in particular, on the
TIM Per TE Casa offer, dedicated to the Customer Base.
The important drive on content through close strategic partnerships with major players in entertainment and
with players holding sports and football rights, in particular Serie A TIM and UEFA Champions League, plays a
decisive role in supporting TIM’s positioning. The assignment of Serie A TIM rights for the three years 2021-
2024, has led to a discontinuity of market and technology in Italy: DAZN has acquired the rights to broadcast
the Serie A TIM matches (of which 7 out of 10 exclusive), laying the foundation for an all-streaming use as
compared with the previous situation, wherein Sky was the clear leader, distributing contents by satellite and
digital terrestrial television.
TIM has signed an exclusive distribution agreement with DAZN, thereby becoming its key technological
partner, to guarantee optimal vision of the championship on the broadband network, with the possibility of
marketing football offers and, at the same time, optimizing the TIMVISION brand.
TIMVISION is today the main aggregator of sports and entertainment content with the most complete and
competitive offer on the Italian television market, also thanks to its partnerships with the main operators of the
national and international market and a great many original new productions. The proprietary offer has been
strengthened through the expansion of the entertainment catalog with Discovery+ contents (January 2021)
and the major sports events shown by Eurosport Player and, thanks to the agreement signed with Sony
Pictures, the cinema section has added more than 80 films, many of which available for the first time on
television; TV series are shown exclusively along with a great many original new productions (e.g. Fantacalcio).
The commercial strategy has thus focused on the bundle offers between the proprietary TIMVISION offer and
the partners’ services, always including the TIMVISION Box decoder as the main device on which to guarantee
the best user experience for our customers. To best support the new offers, a new TIMVISION Box has been
launched, an Android TV 10 operating system, compatible with standard latest-generation DVB-T2 digital
Report on Operations of the
TIM Group
Commercial Developments
41
terrestrial, WiFi6, Bluetooth remote control with contents search by voice control, 4K and many other
advanced multimedia functions.
Alongside the offers already available with the services of the partners Disney+ and Netflix, in July 2021, the
new TIMVISION Calcio e Sport offer was launched, offering, as a single package, all the entertainment of
TIMVISION and the best sports contents with all Serie A TIM on DAZN, 104 UEFA Champions League matches
per season on Infinity+ and thousands of films, TV series and cartoons, thanks to a multi-year agreement for
the non-exclusive distribution of the Mediaset Infinity app (included for 12 months).
Customers interested in having a complete offer of all contents have been offered TIMVISION Gold, which
combines the new Calcio e Sport (Football and Sport) package with unlimited entertainment for all tastes,
including series and films for adults, on Disney+ and original series, films, cartoons and much more besides, on
Netflix. TIMVISION Box is always included in the new offers.
December 2021 saw the unveiling to the market of the TIMVISION Box Atmosphere, Premium version of the
TIMVISION Box, developed in collaboration with Sagemcom. The new decoder presents 4K HDR, Audio by Bang
& Olufsen and integrated Dolby Atmos, for an even more immersive, engaging viewing and listening
experience.
In November 2021, we strengthened the TIM Gaming offer, proposing the sale of Microsoft Console Games.
TIMMUSIC completes the Entertainment offers, on sale in bundles with the mobile offers TIM YOUNG and TIM
SUPER and with certain data offers and on fixed target, in stand-alone mode. The service is also an
opportunity to engage TIMVISION customers who find the application pre-installed on the TIMVISION Box.
In 2021, the partnership with Google continued, spreading awareness of the voice assistant products for the
smart home. In addition to the launch of second-generation voice assistants in July 2021, at the start of the
year, use of TIMVISION services was also integrated through the Google Nest Hub products, with the
introduction of second screen in hands-free mode of TIM contents.
For Mobile, in 2021 TIM continued to support the development of ultrabroadband, consolidating 4G/4.5G and
developing 5G. On a national level, 4G technology has now reached more than 7,800 municipalities, covering
over 99% of the population, while the spread of 4.5G (LTE Advanced technology) has continued in the major
Italian cities, enabling data connection speeds of up to 700 Megabits per second to be achieved.
TIM’s technological leadership was confirmed with the further development of the 5G network, already
available in the major Italian cities with speeds of up to 2 Gigabytes per second; 5G is fundamental for the
innovation of mobile services that can revolutionize the lives of citizens, consumers and businesses alike,
steering the country towards a dimension in which everything is smarter and more connected: from public
safety to transport, from environmental monitoring to health, tourism and culture, and even applications for
media, education and virtual reality.
Technological leadership means a competitive edge for TIM, which is fundamental for making its mark in a
highly competitive market. Exploiting the distinctive quality of the network, TIM has been able to continue its
“value” strategy, maintaining a premium position on the market, confirmed by some important “firsts”
achieved by the TIM network, certified by Ookla and Opelsignal.
TIM’s smartphone portfolio has also expanded further to 5G technology, in 2021 making up more than two
thirds of references, thanks to the introduction of 5G on all high and medium range products and the
achievement of public price points lower than 200 euros.
In addition, in order to guarantee a distinctive position, TIM has launched and consolidated new digital
services, such as: TIM PEC, SPID, cloud service in a partnership with Google, TIM One Number, Smart mobility
and TIM MyBroker.
Another essential aspect of its business strategy was customer retention, with the focus on limiting churn
rates and stabilizing customer spending. From this standpoint, new offers have been launched with content
benefits and discounted fees for customers choosing direct debit or credit card debit as their payment method
and upselling, cross selling and churn prevention actions continued, increasingly personalized thanks to the
use of Big Data Analytics. In addition, the TIM Party loyalty program, accessible on line only and intended for
all fixed and mobile TIM customers, has been enhanced with new initiatives, such as the Party della Domenica
and the Party Collection, a badge collection program with a final prize draw.
For the whole of 2021, TIM has continued its great commitment alongside schools to support distance learning
during the Coronavirus emergency, continuing with the “E-learning Card” dedicated to all mobile customers,
in order to offer teachers and students the possibility of browsing without traffic limits on the main distance
learning platforms without using up their data.
Thanks to the partnership between TIM and Santander Consumer Bank S.p.A. for the offer of a consumer credit
platform dedicated to TIM's customers (through the Joint Venture TIMFin), TIM has successfully optimized its
management of working capital and improved its credit risk management. Starting May 2021, TIM Mobile
customers can buy products with payments by installments simply by activating a loan with TIMFin, as well as
being able to access personalized, transparent financial and insurance solutions.
TIM confirms its attention paid to the environmental impact with various initiatives, such as the sale of
regenerated smartphones, enriched this year with the inclusion on the price list of new models (iPhone),
exclusively Class A +, to guarantee the end customer top quality (only original spare parts) but minimizing
accessories and packaging materials, as well as marketing “half card” SIMs (half the normal SIM card) and
using recycled plastic for card carriers, thereby saving approximately 14 tons of plastic a year. Finally, the “TIM
Next” loyalty program continues, offering customers the chance to replace their smartphones with a new
model, at the same time encouraging the collection and recycling of used smartphones, which are thus
inserted into a correct regeneration cycle.
Small Medium Business
On the Small Medium Business segment, TIM has strengthened its strategy of developing value, purchase
volumes and customer base loyalty, through the following actions implemented in 2021:
Report on Operations of the
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Commercial Developments
42
■ Launch of the new Magnifica portfolio aimed at both consolidating TIM’s technological leadership and
creating an offer grading that optimizes market demands. The range of professional connectivity offers,
both Internet and MPLS, has increased, with a specific focus on reducing the digital divide in companies;
■ Relaunch of the positioning in the SMB sector with the new marketing campaign centered on quality,
assistance and convergent offers enriched with the inclusion of ICT services designed to meet the specific
vertical needs of Horeca, Retail and Professionals, to complete the BB offer;
■ Strengthening of the commercial strategy, focusing on TIM Unica Business as the driving force of value
and loyalty;
■ Push on the driver of innovation, exploiting the quality of the TIM network, optimizing the “firsts” in
coverage and 5G speed recognized by Ookla and OpenSignal on the mobile and the spread of FTTH
technology for fixed lines;
■ Expansion of the ICT offer through advanced connectivity solutions (VoIP) and partnerships with major
market players, such as Microsoft: with Teams combined with VoIP trunking solutions dedicated to the
medium segment;
■ Development of upselling on customer base of core services (additional giga) and evolution of
segmentation with evolved analytics (personas) to start the growth path on IT services;
■ Completion of the TIM Comunica portfolio with solutions also intended for low-range customers, such
as TIM Comunica Senza Limiti, which can supply VoIP in an OTT logic, as well as high-range professional
connectivity, also combining with Microsoft Teams;
■ Launch of SAT with guaranteed bandwidth and Fiber To The Office with a dedicated bandwidth
compatible with the TIM Comunica portfolio;
■ Reinforcement of commercial oversight of the most valuable customers with an increase in the number
of customers managed in the caring portfolio and development of a dedicated caring model;
■ Consolidation of the stores channel as a commercial Touch Point for VAT-registered small traders;
■ Development of specific contents for the TIM Business digital channel in order to increase the acquisitions
of solutions for fixed, mobile and ICT offer for the Soho market. Development of on-line services dedicated
to customers on apps and the web;
■ Greater attention to administrative and commercial management actions for customers with bad debt,
with the support of predictive analytics and dedicated campaigns.
As regards the ICT offer, consolidation continued of the four areas that cover the main needs of the
segment, starting from Information Security, Smart Working, Internet Presence and the Cloud, intended as
computing capacity as well as storage, data backup and the adoption of SaaS solutions, through an analysis
of the extensive ICT offer portfolio, with a selection of the best solutions on which to focus commercial drives,
a simplification of the sales process and a focus of the communication activity.
In addition, with the internal factories Olivetti, Noovle and Telsy, a review of the services portfolio was
initiated to adapt them to the needs of the segment, with particular reference to the IoT offers, first and
foremost for solutions in line with requirements to access 4.0 incentives (Way Agritrack offer), to the cloud and
to the development of professional services designed for SMB customers through to the identification of
security solutions with which to extend the portfolio.
There are a great many commercial actions driving the technological upgrade: in addition to strengthening
campaigns on customer base, local crashes have been implemented in Apulia and Friuli Venezia Giulia, as
well as specific campaigns on industrial districts.
In order to improve customer satisfaction, the plan to improve the customer experience has been
strengthened, in particular on billing, with the development of new functions and on direct debt with improved
processes and commercial benefits for those opting for this payment method; technical assistance, with the
use of hybrid routers for long faults and new management for high value customers; commercial assistance
with new customer segmentation in order to guarantee a level of service consistent with the needs and value
of the customers.
In 2021, there was a further drive on the development of the digital channels dedicated to small and medium
business customers, through:
■ Strengthening information areas and contents with the development of a digital content strategy on the
offer and ICT services through blogs and social networks to increase interest and traffic towards offers and
generate leads for the SME sales channel.
■
Improving the e-commerce function available to customers through the evolution of on-line purchasing
processes of the TIM Business website.
■ Strengthening of Self-caring and Self-provisioning services available to customers, with the May 2021
release of the new TIM Business customer area, accessible from PCs and smartphones. As regards human
commercial channels, in 2021 the optimization and consolidation of agencies on core acquisitions
continued. The overseeing and development of higher value customers has been directed more
productively and growth of the store channel has continued. Commissioning policies were directed
toward higher quality activations, the promotion of convergence and new IT services.
In 2021, TIM acquired the Italian business units of BT, which offer services to the public administration and
Small & Medium Businesses (SMBs): as regards the SMB world, TIM has successfully incorporated the CB,
guaranteeing complete continuity of supply and billing of active connectivity, telephone and ICT services and
dedicated specific customer care to SMB customers switching from BT to TIM.
Report on Operations of the
TIM Group
Commercial Developments
43
Enterprise
Again for 2021, TIM confirms its leadership role on the market of private enterprises and the public
administration and continues to focus on the ICT market, through the extension of the portfolio of services
offered with an increasing drive on the needs of vertical sectors and the reorganization of internal business
units (Noovle, Telsy, Olivetti) to better oversee the cloud, cyber security and Internet of Things (IoT) markets.
In addition, in order to direct the ever more diversified market needs, in 2021, the sales team was reorganized
according to a model focused on managing the main industries and goods sectors, through dedicated
organizational departments with specialized vertical skills able to support private and public customers in the
evolution of their business processes. In this way, the Group assures the capacity to best oversee both the fixed
connectivity, mobile and 5G components and the horizontal cloud, security and IoT solutions and platforms, as
well as vertical end-to-end projects for smart cities, the industrial manufacturing and agricultural industrial
world, retail or finance & insurance.
2021 saw the consolidation and deployment of the strategic partnership with Google, also through the
creation of Noovle S.p.A., which positions itself as the first Italian cloud enabler, thanks to the conferral of the
TIM Group data centers to it, and the skills in the professional services of the cloud company Noovle s.r.l.,
acquired in 2020. The project is based on the integration of two leaders of their respective markets (Google and
TIM) and on the natural complementary nature of the two companies in terms of assets and competences,
with a route that also involves the development of 6 new highly-efficient, environmentally-sustainable data
centers, an unprecedented investment on the part of Google in our country, thanks to which customers will
benefit from low latency and high performance cloud services and data.
Thanks to Noovle S.p.A., TIM has the very best infrastructure, skills and platforms to create innovative public,
private and hybrid cloud services for the benefit of businesses and public administrations.
One of the first results achieved by the partnership is the signing of a strategic agreement with the Intesa
Sanpaolo Group on which basis the Bank will migrate a significant portion of its computer system to Google’s
cloud services, which will meet the highest international safety and information confidentiality standards,
based on TIM’s Italian data centers in Milan and Turin. The partnership has made it possible to stipulate other
important commercial agreements with major Italian (such as, for example, A2A) and international (like the
OCRE - Open Clouds for Research Environments project) operators, through Telecom Italia Sparkle.
The inorganic leverage has also been used by TIM to foster the positioning on the traditional market, with
favorable authorizations of AGCM (the Italian Competition Authority), AGCOM and Consip and the closing, on
June 30, 2021, of the acquisition of the private small and medium business and public administration branches
of BT Italia, upon completion of a process started with the December 2020 signing. The operation has allowed
TIM to become the leading player on the national and international fixed connectivity data market for central
and local public administrations, through the SPC connectivity and S-RIPA agreement, and the reference
interlocutor for major administrations, such as the Ministry of Justice.
As regards the market, the continued health emergency
in 2021 has confirmed the need and
appropriateness of speeding up the digitization of the processes for both private customers and the public
administrations, not only as a management tool of business continuity during the emergency, but also as
leverage to transform the organizational and production models, with a consequent growing demand for
connectivity and above all for digital services by the companies, accompanied by the progressive finalization by
the government of tools and funds to facilitate the process.
In this area, TIM immediately focused the opportunity offered by the PNRR, both in terms of support to
investments to speed up the spread of digital technologies and as regards the stimulation of demand, in
respect of technology towards digitization and sustainability, starting from the Transition 4.0 programs and the
mechanization of the agriculture sector, with the programs already in the field and, also thanks to training,
development and dissemination, including through the 5 MED Industry 4.0 competence centers (CIM 4.0,
SMACT, BiREX, Cyber 4.0, Meditech) and other public-private partnership initiatives such as the Federated
Innovation @MIND or Riccagioia Foundation, in which TIM is the lead player for innovating in vertical sectors
through ICT technology.
Under the same part of the PNRR, thanks to the better technologies and competences and the partnership
with important national champions, TIM has earned itself a leading role in the creation of the National
Strategic Hub (NSH), through a public-private partnership proposal that has led the MITD to choose it as
reference base for a competition that will take place in 2022.
Finally, 2021 saw a growing adoption by the market of innovative solutions aimed at improving the quality
of life of employees and citizens and the main business processes, from the supply chain to logistics. The
main projects include the Venice smart control room, the first major example of the implementation of a
smart city model that integrates field technologies with artificial intelligence at the service of the management
of a city and the development of the first private 5G networks for companies, which find the first cases of
application of 5G technology to the factory and production context in BI-REX and Exor International.
With regards to 5G, TIM has also started trials of a solution dedicated to smart mobility, tested at the TIM
Innovation Lab in Rome, which is based on the use of an autonomous-drive shuttle produced by Navya,
integrated with the applications of the Smart Mobility and Smart City platforms and TIM’s latest generation
5G network technology. The strategic nature of smart mobility is confirmed by an additional development
project started in 2021, with the BreBeMi motorway and other industrial automotive and energy partners,
relating to the trials supported by 5G of an innovative dynamic charging system for electric vehicles while on
the move.
The competence of the TIM Group on the whole scope of ICT services for businesses and public administrations
has led to major commercial successes also on the area of cyber security, such as the award to TIM, as
representative of a temporary association of companies with other prestigious specialist partners, of three
tenders for the supply of professional cyber security services and solutions to the central and peripheral public
administrations.
TIM is confirmed once again as a lead technological player for businesses and the country system, not only
for the offer of advanced technological solutions on all segments, but also for its capacity to adopt innovative
Report on Operations of the
TIM Group
Commercial Developments 44
cooperation models that can make the most of the opportunities offered up by digital transformation and
synergies with companies and entities of other strategic sectors for the country’s economy. In this respect, the
route constructed with the Archaeological Park of Pompeii and the Ministry for Culture is particularly
important, having led to the stipulation of a partnership agreement in October 2021, under the scope of which
TIM coordinated the event celebrating the fiftieth anniversary of the live concert by Pink Floyd in Pompeii,
developing a single worldwide multimedia event streamed live from the amphitheater of Pompeii.
Brazil
In 2021, we continued to develop and execute our Volume-to-Value strategy, transforming the profile of our
mobile customer base by leveraging plan upgrades and segment migration initiatives. Consequently, the
company was able to sustain a solid ARPU growth in mobile despite the macroeconomic challenges. On the
fixed, our focus remained on residential broadband through FTTH, which led to the creation of a infrastructure
vehicle to accelerate the roll-out of our fiber coverage. Additionally, our non-core initiatives, both in IoT and
digital services, grew in number of partnerships and contribution to our results.
■ Marketing and brand positioning: we consolidated the credibility of our brand, and maintained our
position of the best and wider 4G coverage while reinforcing the innovation attribute through the launch of
5G pilots. We started to recover the brand association with music theme using our mobile offers and
sponsorships. In December 2021, the most important sponsorship under this new strategy was announced,
the 2022 edition of the Rock in Rio festival. We also developed many initiatives to solidify our institutional
positioning as a ESG leader among the Brazilian companies.
■ Mobile offers: To accelerate growth beyond connectivity we continue scale up partnerships leveraging our
user base and key assets to expand new businesses. For the prepaid segment, we develop differentiated
offers, giving more benefits to customers with high recharge value and we consolidated TIM+Vantagens, a
benefits program to retain our customers through prizes such as Internet bonuses, discounts with partners,
smartphones and other prizes. Reinforcing our music theme engagement we became the only Brazilian
telecommunications company to offer prepaid customers a free and ad-free music streaming service:
DeezerGo. And finally, on the post-paid segment, we maintained our effort to consolidate our position as
an innovator, by developing “TIM Black” to have a broader portfolio of entertainment services using OTT
partnerships and premium care services, such as TIM Concierge.
■ Customer Experience we are constantly working to improve our customer experience and satisfaction
through the use of technology. In this regard, the evolution of AI solutions and our digital channels are key.
In the 2021 Satisfaction and Quality survey of Anatel (National Telecommunication Agency) TIM Brasil
received the best evaluations by customers, driving the company to the first place in the mobile services
ranking. The quality of our network was also recognized by Ookla Speedtest ranking, as TIM was appointed
the best video and video conference experience while having the highest 4G availability.
■ Sales channels: we maintained our focus on channel productivity, segmentation, and quality of sales.
During 2021, we remodeled our digital channels while reorganizing our structure to increase focus on e-
commerce and in-app purchases.
■ Residential market: the focus on investing in FTTH (Fiber To The Home) expansion continued, with high-
speed offers and optimal connection stability. We created an infrastructure vehicle to accelerate the
expansion and development of our fiber coverage. We segregated our last-mile network and created a
neutral player in a partnership with IHS Towers. This company will provide FTTH infrastructure to TIM Brasil
as an anchor customer and to other operators. In this transaction, TIM Brasil sold 51% of the company to
IHS under a valuation of 2.7 billion Reais, with a secondary component of 1.1 billion Reais.
■ Corporate: we consolidated our “Leaders with Leaders” strategy in agribusiness and launched the first IoT
marketplace for B2B in Brazil by promoting IoT solutions through partnerships. In addition, we launched
the FCA partnership for connected cars and for industry and mining we are developing a private LTE
solution for business-critical use case management. In 2021, reinforcing the partnership with Embrapa, the
main agent of innovation and research in agribusiness in Brazil and the world, TIM became partner of
Embrapa in the development of the newest innovation hub dedicated to agribusiness.
Report on Operations of the
TIM Group
Commercial Developments
45
MAIN CHANGES IN THE REGULATORY
FRAMEWORK
Domestic
In this section we report the main changes in the regulatory framework in 2021 in the Domestic region.
As regards the Antitrust proceedings, as well as the proceedings regarding the 28-day invoicing, see the Note
“Disputes and pending legal actions, other information, commitments and guarantees” in the TIM Group
Consolidated Financial Statements at December 31, 2021.
European regulations
European Commission Delegated Regulation on fixed and mobile termination of voice
calls
On April 22, 2021, Delegated Regulation (EU) 2021/654 of December 18, 2020 concerning the setting of
maximum voice termination rates (fixed and mobile) at EU level, as required by the new Code, was published
in the Official EU Journal. European caps (EU maximum prices) on termination rates are applied to operators
providing fixed and mobile termination services (replacing the prices set by national regulators) from July 1,
2021.
The maximum EU fixed termination price is 0.07 eurocents/min.
The maximum EU mobile termination price is 0.2 eurocents/min.
In order to allow for a gradual transition of the price of mobile termination to the European cap, a three-year
glide path is applied with the following values for Italy: 0.67 eurocents/min in 2021, 0.55 eurocents/min in 2022
and 0.40 eurocents/min in 2023, landing at 0.2 eurocents/min in 2024.
Under certain conditions, which should in principle guarantee price reciprocity, these caps also apply to the
termination of calls originating outside the EU.
Intra-European roaming regulation
Following the proposal made by the European Commission on the new roaming regulation of February 2021,
on December 08, 2021 a political agreement was reached by the European institutions on the new rules that
will extend the benefits of roaming at national tariffs to European travelers within the European Union through
to 2032 and introduce additional consumer protection and advantages:
■ quality of service: roaming providers will be obliged to offer the same quality of service in roaming as is
available nationally, if the same conditions are available on the network in the destination country;
■ better access to and free emergency services;
■ greater transparency regarding costs of added-value services;
■ greater transparency regarding the costs of roaming on non-terrestrial mobile networks (ships and
aircraft).
In addition, a further reduction is envisaged of the wholesale maximums to guarantee sustainability for
operators:
voice €cent/min
SMS €cent/SMS
data €cent/GB
2022
2023
2024
2025
2026
2027
2.2
0.4
2
2.2
0.4
1.8
2.2
0.4
1.55
1.9
0.3
1.3
1.9
0.3
1.1
1.9
0.3
1
The European Commission should also assess the measures relating to intra-EU communication (calls and
SMSs from one’s own country to another Member State) and verify if, and to what extent, the maximums
should be reduced to protect consumers after 2024.
Once the final formal steps have been completed for adoption of the regulation by the European Parliament
and Council, the new rules will come into force on July 1, 2022.
2030 Policy Program “Path to the Digital Decade”
On March 09, 2021, the European Commission adopted Communication COM(2021) 118 final setting out the
following digital objectives through to 2030 (the “Digital Compass” Communication) :
■ A digitally skilled population and highly skilled digital professionals:
•
•
20 million employed ICT specialists within the EU, with convergence between women and men (i.e. an
increase in the number of women employed in the industry);
80% of the adult population with at least basic digital skills.
■ Secure and performant sustainable digital infrastructures:
•
•
all European households will be covered by a Gigabit network, with all populated areas covered by 5G;
the production of cutting-edge and sustainable semiconductors in Europe including processors is at
least 20% of world production in value;
Report on Operations of the
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Main changes in the regulatory framework
46
•
•
10,000 climate neutral highly secure edge nodes are deployed in the EU, distributed in a way that will
guarantee access to data services with low latency (few milliseconds) wherever businesses are
located;
by 2025, Europe will have its first computer with quantum acceleration paving the way for Europe to be
at the cutting edge of quantum capabilities by 2030.
■ Digital transformation of business:
•
75% of European enterprises have taken up cloud computing services, big data and artificial
intelligence;
• more than 90% of European SMEs reach at least a basic level of digital intensity;
•
Europe will grow the pipeline of its innovative scale ups and improve their access to finance, leading to
doubling the number of unicorns (start-ups worth 1 billion dollars) in Europe.
■ Digitalization of public services:
•
•
•
100% online provision of key public services available for European citizens and businesses;
100% of European citizens have access to medical records (e-records);
80% of citizens will use a digital ID solution (eID).
On September 15, 2021, the European Commission published the legislative proposal regarding the 2030 Policy
Program “Path to the Digital Decade”, which confirms the targets of the Digital Compass Communication and
provides for an annual cooperation mechanism with the Member States, which consists of:
■ a structured, transparent, shared monitoring system based on the Digital Economy and Society Index
(DESI) to measure progress made towards each of the 2030 objectives (including KPIs);
■ an annual report on the status of the digital decade, in which the Commission will assess progress and
recommend actions;
■ strategic multi-annual roadmaps on the digital decade for each Member State, in which to indicate the
policies adopted or planned and the measures implemented in support of the 2030 objectives;
■ an annual structured framework to discuss and manage the areas with insufficient progress through
recommendations and commitments shared between the Commission and the Member States;
■ a mechanism by which to support the implementation of multi-country projects.
Wholesale fixed-line markets
Fixed network access market analysis
The final provision published on August 8, 2019 defines the obligations and economic conditions for wholesale
access services for the period 2018-2021.
The main decisions relate to:
■
■
repeal of TIM’s qualification as an operator with Significant Market Power (SPM) in the access market –
and, consequently, repeal of all ex-ante regulatory obligations – in the municipality of Milan and
confirmation of SPM operator qualification for the rest of the National territory;
repeal of the obligation to guide the cost of bitstream copper and fiber service prices in 26 municipalities
considered “contestable” (list extended to 43 municipalities by resolution no. 385/21/CONS starting 2022);
the possibility to apply, in the same municipalities, different VULA prices from the national average value
set by the Authority starting from 2021, if certain conditions defined by the Authority are met, with
resolution no. 12/21/CONS;
■ gradual increase in the full unbundling price (ULL) and bitstream price on copper in the 2019-2021 period;
■ sub loop unbundling (SLU) price stability in the 2019-2021 period;
■ gradual decrease in fiber access prices (VULA FTTC and FTTH) and price differentiation of the bandwidth,
starting in 2021, depending on whether the access line is on a copper or NGA network;
■
repeal of the current prior AGCom notification obligations and verification of ex-ante "replicability" for
flagship offers with speeds greater than or equal to 100 Mbit/s and, in other cases, reduction of prior
notification period from 30 to 20 days;
■ definition of the process and timing for the decommissioning of TIM exchanges;
■ possibility of using vectoring in FTTC cabinets where alternative operators have not requested sub loop
unbundling (SLU) lines;
■ elimination of current asymmetries in procedures to change TIM network operator between processes to
return to TIM and changing from TIM to alternative operators.
In November 2020, AGCom concluded the preliminary reliability assessment of TIM’s voluntary separation
project for the creation of FiberCop (the Newco, controlled by TIM and in which KKR Infrastructure Fund and
Fastweb have an investment, which on March 31, 2021 had acquired the secondary copper and fiber access
network held by TIM and Flash Fiber).
With Resolution no. 637/20/CONS, published in December 2020, the Authority initiated the procedure relating
to the coordinated analysis of the markets for fixed network access services pursuant to article 50-ter of the
Code and, at the same time, launched the public consultation on the project for the voluntary separation of
Report on Operations of the
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Main changes in the regulatory framework
47
TIM’s fixed access network, the results of which were published in October 2021, with resolution no.
253/21/CONS.
Once the first phase of consultation on the FiberCop Project is complete, AGCom shall continue its coordinated
analysis with more available elements, with reference to the regulatory framework (transposition of the new
European Electronic Communications Code at national level and adoption of the new Recommendation on
Relevant Markets), the initial feedback received from interested parties on the project’s general impact on
TIM’s fixed network access markets and TIM’s notification of the Authority on January 29, 2021 of a co-
investment offer for the development of a new fiber network in accordance with articles 76 and 79 of the New
European Electronic Communications Code (EECC) so that conformity with said Art. 76 for the purpose of the
deregulation of the new fiber infrastructure, is assessed.
This offer was subsequently amended and supplemented by TIM in March, April and most recently in
December 2021, in light of the indications provided by the Authority in the “Preliminary conclusions” sent to
TIM upon completion of the market test launched by resolution no. 110/21/CONS.
The co-investment project is open to any supplier of electronic communication services or networks and it is
the first case of European co-investment on a national scale and application of the new Code.
More specifically, the project will make it possible, by April 2026, to reach a total of 9.7 million UITs (Technical
Property Units), out of the 13.9 million present in 2,549 municipalities.
On January 11, 2022, AGCom published resolution 1/22/CONS, launching the public consultation, which ended
on February 9, 2022, on the regulatory treatment of FiberCop’s fiber network concerned by the co-investment
offer.
The resolution under consultation provides for the approval of the co-investment commitments that are made
binding for a period of 10 years in accordance with Art. 76 of the new European Electronic Communications
Code (EECC). More specifically, TIM will be bound to these commitments and not subjected to any additional
regulatory obligation on the secondary fiber network in all municipalities in which at least one co-investment
agreement has been stipulated between an alternative operator and FiberCop with reference to the following
services:
■ semi-GPON access;
■ access to the installation and dark fiber infrastructures on the secondary network;
■ access to the vertical segment for termination in fiber;
■ any other access service that only applies to the secondary network concerned by the co-investment.
By resolution no. 412/21/CONS (December 2021), the Authority extended the deadline for the proceedings
started by resolution no. 637/20/CONS by 90 days, considering the fact that the provisions of the offer of co-
investment, the related assessment by the authority as to its conformity with the provisions of Article 76 EECC
and the level of adhesion to it by alternative operators in the various territorial contexts of the country, should
be duly considered by the authority in the coordinated analysis that, on the basis of a provisional analysis of
future market developments, will establish the level of competitiveness of the markets in question and the
related regulations to be imposed.
Infratel Tenders for the subsidizing of ultrabroadband networks
The Italian Strategy for ultrabroadband - “Towards the Gigabit Society”, approved on May 25, 2021 by the
Inter-Ministerial Committee for the Digital Transition (CITD), defines the action necessary to achieve the digital
transformation objectives indicated by the European Commission in 2016 and 2021 - respectively with the
Communication on Connectivity for a European Digital Single Market (the “Gigabit Society”) and the
Communication on the Digital Decade (the “Digital compass”), whereby it presented the vision, objectives and
procedures for achieving the digital transformation of Europe by 2030.
These European digital transformation objectives develop around 4 cornerstones: (1) digital competences; (2)
the digitization of public services; (3) the digital transformation of businesses; (4) the development of secure,
sustainable digital infrastructures. As regards the latter, one of the objectives set by the European Commission
is to allow all EU families, by 2030, to benefit from Gigabit connectivity and ensure that all inhabited areas are
covered by 5G networks.
The Italian national recovery and resilience plan (PNRR) approved by the government on April 29, 2021
allocates 27% of resources to the digital transition, of which 6.7 billion euros for strategic ultrabroadband
projects, continuing on from the strategy launched by the government back in 2015.
In addition to aiming to complete the plan to cover white areas and the measures in support of the demand
already launched (“vouchers”), the strategy also includes five additional public intervention plans to cover the
geographic areas in which the offer of extremely high-speed digital services and infrastructures by market
operators is absent or insufficient, set to be completed in the next few years.
The PNRR allocates 6.7 billion euros for ultrabroadband projects, distributed over the following plans:
■
■
■
■
■
“Italia a 1 Giga” plan (3.86 billion euros);
“Italia 5G” plan (2.02 billion euros);
• No 4G/5G Areas (1 billion euros);
•
•
5G corridors (0.6 billion euros);
5G-ready suburban roads (0.42 billion euros).
“Sanità Connessa” (Connected Healthcare) plan (0.50 billion euros);
“Scuola Connessa” (Connected School) plan (0.26 billion euros);
“Isole minori” (Minor Islands) plan (0.06 billion euros).
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Through these measures, the government intends to bring forward to 2026 - and therefore a good 4 years -
the 1 Gbit/s connectivity objectives for everyone and full 5G coverage of the populated areas fixed by the new
European Digital Compass Strategy for 2030.
“Italia a 1 Giga” plan (3.86 billion euros)
The “Italia a 1 Giga” plan seeks to guarantee fixed 1 GB download and at least 200 Mbit/s in upload coverage in
the gray and black areas where, until 2026, the plans of private operators cannot guarantee “reliable”
connections with at least 100 Mbit/s in download.
In this context, in April 2021, Infratel Italia (the in-house company of the MED) started mapping UBB fixed
coverage plans for 2021-2026 by all private operators, including FWA coverage on a total of 21.3 million gray
and black addresses, as shown by the previous mapping.
The results of the fixed mapping were published on August 06, 2021.
Identifying coverage of 300 Mbit/s as the threshold for intervention, approximately 6.2 million road addresses
lacking 300 Mbit/s coverage, have been identified as subject to intervention.
Following a public consultation on how to intervene, for the disbursement of public finance, bandwidths will be
used with regional or multi-regional based incentive models.
In the same streaming of the “Italia a 1 Giga” Plan, on October 13, 2021, Infratel launched a complementary
consultation that was completed on November 15, 2021, in relation to the update of the mapping of fixed UBB
coverage of the “White areas” of the 2016 UBB Plan, which includes a total of 11.8 million addresses:
■
■
the addresses of the UBB bandwidths awarded to the public concession-holder Open Fiber S.p.A.;
the addresses corresponding to approximately 450,000 property units situated in remote areas (referred to
as “scattered houses”), not included in the previous public intervention plans.
The purpose of the mapping is to identify the addresses present in said areas, which have been excluded from
the public intervention and which will not be reached in the next 5 years (9/30/2021 - 9/30/2026) by private
investments able to guarantee a download connection speed of at least 300 Mbit/s at peak times.
On the basis of the coverage plans declared by Open Fiber and private operators, 1.6 million addresses have
been identified not covered by 300 Mbit/s by 2026, which will be publicly financed for the completion of the
“Italia a 1 Giga” plan.
The “Italia a 1 Giga” plan was notified to the European Commission on November 8, 2021 and approved on
January 27, 2022.
On January 15, 2022, Infratel published the "Italia a 1 Giga" tender for the concession of public grants for the
financing of investment projects to develop new telecommunications infrastructures and the related access
devices able to supply services with a capacity of at least 1 Gbit/s in download and 200 Mbit/s in upload; the
deadline is set for March 16, 2022.
The addresses involved in the tender (approximately 6.9 million) have been divided up into 15 lots. Operators
can be awarded up to 8 lots.
The public grant will cover up to 70% of the expenses incurred, while at least 30% will be paid by the
beneficiary.
“Italia 5G” plan (2.02 billion euros)
The “Italia 5G” Plan envisages 5G coverage with 150 Mbit/s in download and at least 50 Mbit/s in upload in the
following areas:
■ European 5G corridors (2,645 km) -> 420 million euros;
■ Suburban roads prepared for 5G (10,000 km) -> 600 million euros;
■ No 5G/4G areas -> 1 billion euros.
To identify the areas to be financed, Infratel has mapped the 2021-2026 4G and 5G mobile coverage plans of
private operators, including the sites’ fiber backhauling connections.
Upon completion of the consultation, the following have been identified as subject to public intervention:
■ 13,200 mobile radio sites, which comprise approximately 18,600 BTSs (base transceiver stations) on which
to implement fiber backhauling;
■ 15% of the national territory where,however, only 1.6% of the population lives, but with important
terrestrial road and rail transport routes to be covered in 5G.
These results have been submitted for public consultation through to December 15, 2021. The result of the
public consultation will be communicated to the European Commission together with the methods of
intervention and investor frameworks.
Tenders should be held in the second half of 2022, mainly through a public incentive model.
"Sanità Connessa” Plan
The “Sanità Connessa” plan aims to supply connectivity with symmetrical speed starting from 1 Gbit/s and up
to 10Gbit/s to approximately 12,280 health care structures throughout the country.
To implement the Plan, on January 28, 2022 Infratel called a tender for the supply of ultrabroadband
connectivity services at public health care structures throughout Italian territory, including the supply and
installation of access networks and operation and maintenance services, with a deadline of March 15, 2022.
The tender envisages an allocation of 387 million euros and is divided up into 8 territorial lots; any individual
subject can be awarded up to 4 lots.
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"Scuola Connessa” Plan
The “Scuola Connessa” Plan aims to complete the 2020-2023 School Plan launched by the government on May
05, 2020, with which the supply of ultrabroadband connection was envisaged of up to 1 Gbit/¨s with 100 Mbit/s
guaranteed to 35,000 school buildings (approximately 78% of the total), i.e. all buildings of the middle and
secondary schools throughout the country and, in the “white areas”, also the connection of all primary and
nursery schools.
The 2020-2023 School Plan was run by Infratel that, from September to December 2020, organized a public
consultation and posted a tender notice with public funding of 274 million euros divided up into 7 geographic
lots (with a limit of two lots that can be awarded by the same bidder, who can submit bids for all lots).
On February 24, 2021, the tenders on the individual lots were awarded as follows:
■ 4 lots to Fastweb comprising the following regions: Liguria, Piedmont, Lazio, Sardinia, Campania, Basilicata,
Calabria and Sicily;
■ 2 lots to TIM comprising the following regions: Tuscany, Veneto, Marches, Abruzzo, Molise and Apulia;
■ 1 lot to Intred S.p.A.; Lombardy.
The new “Scuola Connessa” Plan aims to complete the public intervention that has already been launched,
including the remaining 9,900 buildings, which will be supplied with connectivity at 1Gbit/s with related
technical assistance for 5 years.
To implement the Plan, on January 28, 2022 Infratel called a tender for the supply of ultrabroadband Internet
connectivity services at schools throughout Italian territory, including the supply and installation of access
networks and operation and maintenance services, with a deadline of March 15, 2022.
The tender is divided up into 8 territorial lots; any individual subject can be awarded up to 4 lots.
“Isole minori” (Minor Islands) plan (0.06 billion euros)
The “Isole minori” Plan aims to provide adequate connectivity to 18 minor islands that today have no fiber
optic connection with the continent. More specifically, the islands will be equipped with optic backhaul, which
will allow ultrabroadband connectivity to develop. Optic backhaul will be accessible to all operators through
Submarine Backhaul Access Points identified according to the criterion of least distance from the neutral
delivery point (NDP), if present on the island, and from the point of arrival of the undersea cable.
The total budget is 60.5 million euros.
The measure will be implemented through direct intervention. The new network will be entirely financed and
owned by the state and will be managed by one or more operators chosen on the basis of a competitive
selection process that is open, transparent and non-discriminatory.
The tender to identify the economic operators to which the design, supply and installation of the undersea
optic fiber cables is to be entrusted for the development of the “Isole minori” Plan, was launched on November
18, 2021 and drew to a close on December 22, 2021. The tender did not meet quorum requirements; Infratel
amended and re-proposed it on February 11, 2022, with a deadline of March 18, 2022.
Voucher Plan
The aim of the Plan, again launched on May 05, 2020, with a total allocation of more than 1 billion euros, is to
promote and offer incentive for the demand for ultrabroadband connectivity services (NGA and VHCN) in all
areas of the country, in order to increase the number of families and businesses that use digital services with
high-speed networks of at least 30 Mbit/s.
The measure is divided up into two phases.
The first, launched on November 09, 2020, with a budget of 200 million euros, in the favor of families with ISEE
income of less than 20,000 euros, to whom a contribution of 500 euros is allocated (200 euros for connectivity
and 300 euros for tablet or PC on free loan for use), met the need to address, during the early stages of the
COVID-19 pandemic, the effects of the health emergency and guarantee suitable connection services to
ensure continuity of the families’ school and working activities. The first stage ended on November 09, 2021, a
year after it started, as per the implementing decree. This measure has proven to be not much of an incentive:
of the entire amount set aside of 200 million euros, no more than 93 million euros have been assigned.
210,000 bonuses have been assigned as compared to the 400,000 available.
The second phase to be launched in the early months of 2022, approved by the European Commission last
December 15, 2021, provides for an allocation of approximately 609 million euros to be allocated to businesses.
The MISE Decree of December 23, 2021 setting out the “Phase 2 voucher plan for interventions to support the
demand for connectivity of micro, small and medium enterprises” was published in the Official Journal on
February 9 2022. Net of the amount attributed to communication costs and expenses accompanying the
measures and the reimbursement of direct and indirect costs linked to the activity, the amount set aside for
the disbursement of the vouchers is approximately 590 million euros.
The Plan for businesses shall run until the resources allocated run out, in any case no more than 24 months
after Infratel’s launch of the intervention.
Companies can request just one voucher to guarantee an increase in connection speed, from 30 Mbit/s to
more than 1Gbit/s, varying from a minimum of 300 euros to a maximum of 2,500 euros, according to the
guaranteed download speed and contract term.
Infratel is preparing the Technical Plan and Operating Manual setting out a description of the intervention, the
admission criteria for the disbursement of vouchers to companies, the implementing procedures and the
related economic framework.
The measure is expected to be launched in March 2022.
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Wholesale mobile network markets
Mobile termination market analysis
On January 22, 2019, AGCom published its final decision on mobile network termination market analysis
(resolution no. 599/18/CONS). In particular, AGCom established symmetric tariffs for all MNO and full MVNO
operators for the period 2018-2021 (0.98 euro cents in 2018, 0.90 euro cents in 2019, 0.76 euro cents in 2020,
0.67 euro cents in 2021) and confirmed the absence of an obligation to check the termination prices for calls
originating outside the European Economic Area (EEA); however, SMP operators cannot adopt termination
rates that are higher than those applied to Italian operators by operators in non-EEA countries where rates are
regulated.
As specified above, in accordance with Delegated Regulation (EU) 2021/654 of the Commission, a progressive
reduction is expected in mobile termination prices in three years, so as to allow for a gradual transition
towards the target price of 0.2 cents/min. in 2024: 0.67 cents/min until end 2021, 0.55 cents/min in 2022 and
0.4 cents/min in 2023.
Retail fixed-line markets
Universal Service
Net cost
Following ruling no. 4616/2015, published on October 2, 2015, in which the Council of State canceled decision
no. 1/08/CIR of AGCom on the retroactive application of the new methodological criteria for calculating the net
cost of the universal service (USO) relating to the 2004-2007 years, the Authority began the public consultation
of the net cost of the total years 2004-2007 with resolution 89/18/CIR, published on July 3, 2018, and
subsequent resolution no. 62/19/CIR, published on May 7, 2019. On September 11, 2019, the Authority published
the final resolution concerning the Net Cost of Use for 2004-2007 (resolution no. 103/19/CIR) in which it
recognized the existence of an unfair charge for TIM of a total of 113.4 million euros to be shared between all
fixed-line and mobile operators. The share payable by the OAOs amounts to approximately 26.6 million euros,
calculated net of installments already paid by the same operators, following the 2004 and 2005 procedures
approved “illo tempore”. In relation to past disputes, following ruling no. 3388/15 of the Council of State,
published on July 7, 2015, on September 11, 2019, the Authority launched the public consultation procedure
(resolution no. 102/19/CIR) for an in-depth fixed-mobile substitutability analysis, in line with the path outlined
for the 2004-2007 years. In this context, ruling no. 6881 of October 8, 2019, in which the Council of State
authorized the return of the shares paid by Vodafone to TIM, for the contested years (1999-2000 and 2002-
2003). In light of the above-mentioned Council of State ruling, which completely reversed the Lazio TAR rulings
no. 6458, 6459, 6461 and 6463 of May 23, 2018, in execution of which the public consultation pursuant to
resolution no. 102/19/CIR was started, the Authority revoked the aforementioned resolution with decision
190/19/CIR.
On July 21, 2020, AGCom launched the public consultation relating to the review of the inequity of the net cost
of the universal service 1999-2009. The extension of the time period subject to renewal until 2009 was
necessary following the ruling no. 2542/2020 with which the TAR accepted Vodafone's appeal, in terms of
fixed-mobile substitutability. The opinions on the years 2004-2007, renewed by AGCom with resolution
103/19/CIR, and on which the TAR has not yet expressed an opinion also hang on the same issue. In
compliance with judgment 6881 passed by the Council of State, in its Resolution 263/20/CIR, the Authority
defined a new approach to demonstrate the lawfulness of the participation of mobile operators at the net USO
cost for the years in question. AGCom's view expressed in the consultation is to recognize prima facie the
unfairness of the charge for the years 2002-2009. For the previous years 1999-2000, however, the Authority did
not recognize the existence of an unfair charge for TIM.
On March 29, 2021, with the publication of resolution no. 18/21/CIR, AGCom confirmed the obligation of mobile
operators to participate in the USO contribution mechanism for the years 2001-2009, in line with the guidance
expressed by the same Authority during public consultation. Following the objection to the resolution by Wind
and Vodafone, the Ministry of Economic Development suspended the obligation for payment by the operators.
Discussion of the use of the resolution in question took place during the public hearing of January 11, 2022. A
decision is expected during the first half of this year.
Following conclusion of the audit of the Net Cost of the years 2010, 2011, 2012 and 2013, carried out by the
auditor BDO Italia S.p.A., the authority started the public consultation procedure (resolution 92/21/CIR) on
September 14, 2021. The deadline was November 13, 2021.
Guidelines for voluntary withdrawal
With resolution no. 487/18/CONS, the Authority regulated the ways operators must manage dissolution and
transfer methods for user contracts.
TIM challenged the resolution regarding the provisions that limit the right to fully recover the costs in case of
withdrawal (discounts from promotions, product installments). The administrative judge dismissed TIM’s
appeal, as the guidelines would not be directly damaging. TIM once again appealed against Resolution no.
487/18/CONS as a prerequisite for Resolution no. 591/20/CONS by which AGCom ordered TIM to pay an
administrative fine for violation of Resolution no. 487/18/CONS regarding withdrawal.
Freedom to choose modems
With resolution no. 348/18/CONS, the Authority ratified the principle of user freedom to choose modems for
Internet access.
TIM challenged the resolution in relation to the transitional provisions for customers who have an internet offer
combined with a modem for a fee (sale and rental) in the months preceding the entry into force of resolution
no. 348/18/CONS (December 1, 2018). At end 2018, these transitional provisions were suspended whilst
awaiting scheduling of the hearing at the Regional Administrative Court of Lazio, set for October 23, 2019. On
January 28, 2020, the Regional Administrative Court rejected TIM’s petition in first instance; it has therefore
submitted an appeal.
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In May 2020, TIM notified its customers who had signed up for an Internet access and installment modem
purchase offer before December 1, 2019, that they had the option to sign up for an equivalent Internet offer
without a modem and an allowance for the remaining installments. By signing up for the equivalent offer, the
residual debt in installments on the customer’s bill for the purchase of the modem would not be due, this did
not entail any additional charges for the customer or implied changes to the financial and contractual terms
and conditions for using the active services on the line.
On August 02, 2021, the Council of State definitively rejected TIM’s appeal.
Retail mobile network markets
Premium Services
In February 2021, with resolution no. 10/21/CONS, AGCom adopted new measures relative to the
implementation of digital services with contents in subscription from mobile network. In particular, default
barring has been envisaged on the SIMs, namely an inhibition to purchase these services, which can be
removed by prior express decision of the customer, and a customer consent acquisition process for individual
purchases, through the entry of a temporary password (an "OTP”). This resolution has been appealed against
by TIM before the Regional Administrative Court.
Authority fees
AGCom contribution fee
On January 31, 2022, AGCom issued resolutions no. 376/21/CONS and 377/21/CONS relating to the payment of
the AGCom contribution fee for the year 2022 (calculated on the 2020 financial statements figures). The
guidelines for calculating the contribution fee are unchanged compared to the guidelines for calculating the
2021 contribution fee. For 2022, AGCom has confirmed the rate of 1.30 per thousand for electronic
communications market at 1.90 per thousand for “media” services. On the basis of this rate, TIM paid around
15.677 million euros under reserve.
Privacy and personal data protection
General Data Protection Regulation (GDPR) and Legislative Decree 101/2018
On May 25, 2018, the General Data Protection Regulation (Regulation (EU) no. 2016/679 – “GDPR”) came into
force.
Furthermore, on September 19, 2018, Legislative Decree no. 101 of August 10, 2018 entered into force, which
brought the Code regarding the protection of personal data (Legislative Decree June 30, 2003, no. 196) in line
with the provisions of the GDPR – EU Regulation 2016/679.
To ensure compliance of personal data processing with the GDPR within Group companies, TIM has carried out
the activities provided in the adaptation plan.
Of the main changes, the following is noted:
■
■
the appointment of a Data Protection Officer and establishment of related contact points for individuals
with questions relating to the processing of their personal data;
the “System of rules for the application of legislation on personal data protection in the Telecom Italia
Group” policy is kept constantly up-to-date and available on the corporate intranet. The policy for the
exercise by data subjects of privacy rights has also been updated, as has the procedure for the
management of data breaches and the manual for drafting the Privacy Impact Assessment; in 2020, the
update to the System of rules involved, among other things, the issue of processing employee data in
relation to the COVID-19 epidemic;
■
the updating of the numerous policy notice texts on personal data processing, provided by TIM and the
other Group companies to different types of Data Subjects (e.g. customers, employees, visitors).
A specific training project was put in place to raise awareness in the various company departments and
illustrate the policies and procedures issued for applying the legislation on personal data processing. This
training was provided during 2019. In 2020 training was provided to the Sales Departments and sales network
partners in relation to the issue of commercial contacting. In addition, starting end 2020 and through to June
2021, specific training sessions have been held for TIM Customer Care resources and customer care service
suppliers, focused on the topics of interest, such as the dispatch of customer requests relative to the exercise
of privacy rights and commercial contactability. In addition, training has been delivered to the HR Management
Department on rules for the correct processing of requests to exercise rights in accordance with the GDPR,
made by TIM employees or former employees.
COVID-19 emergency
Under the scope of the COVID-19 emergency, TIM constantly monitors the evolution of the rules, regulations
and opinions given and adopted by the government and the Data Protection Authority in relation to the
processing of personal data of employees in a working context.
In this context, TIM adopts all the initiatives necessary to comply with said provisions.
Spectrum
In July 2020, with resolution 338/20/CONS, AGCom adopted a decision in favor of renewing for eight years until
2029 the rights to use of the TIM, Vodafone, Iliad and Wind/H3G FDD spectrum in the 2100 MHz band
(2x15MHz for TIM and Vodafone, 2x10 MHz for Iliad, 2X5 MHz for Wind/H3G and 2x15 MHz for Wind/H3G,
already extended). For the purpose of the renewal, in April 2021, TIM had paid approximately 240 million euros.
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On January 17, 2022, the Court of Auditors registered the Ministerial Decree of extension, consequently notified
to the MNOs concerned on February 4, 2022.
On December 31, 2021, AGCom published resolution no. 426/21/CONS in which it expresses a positive opinion
on authorizing the extension through to December 31, 2029 of the rights to use frequencies in 28 GHz
bandwidth for fixed use, expiring end 2022. The MED will need to calculate the extension contribution on the
basis of the original assignment value, in proportion to the quantity of bandwidth and duration, reassessed on
the basis of the ISTAT rate and increased by 30%. In this bandwidth, TIM owns 2x112 MHz, for which it will be
submitting a request for extension.
On October 21, 2021, AGCom published a public consultation (resolution no. 315/21/CONS) relative to the
request to renew the rights to use TIM’s frequencies in the 3.4-3.6 GHz bandwidth (2X21 MHz in 9 regions of
southern Italy), which expire in 2023 and the exchange of a block of 21 MHz with Linkem. This exchange would
allow TIM to have 20 MHz nationally in this tender. The initial opinion of AGCom put for consultation is not in
favor of renewing the authorization for TIM, but only of the exchange of frequencies between TIM and Linkem
until 2023; we are still awaiting the final decision.
Regulatory measures for COVID-19
Based on the government "Cura Italia" decree, on March 18, 2020, AGCom adopted a first package of
measures aimed at guaranteeing telecommunication services; this package takes into account the current
health emergency situation and growth in the consumption of services and network traffic.
Two of the four permanent technical working groups set up by AGCom concern:
■
improvement and security of telecommunication networks and services; and
■ protection and facilitation of the use of digital services by consumers.
In implementation of the Decree, which allows AGCom to derogate from some regulatory conditions to better
deal with public interest issues during the current health emergency period, AGCom has defined measures to
improve the conditions of TIM's offer of regulated network services, by providing:
■ a temporary reduction in the regulated wholesale costs of the Ethernet band for copper and fiber access;
■
the maximum commitment for the accelerated supply of transport equipment and VLANs necessary for
increasing the bandwidth and for following up the early opening of new NGA cabinets.
In addition, TIM must make its infrastructure available throughout Italy, responding to consumer requests
without discrimination in relation to the country's technology and geographical areas.
AGCom has also asked all operators to make all possible efforts to contribute to the management of the state
of emergency, indicating actions deemed relevant such as:
■
trying to guarantee an increase in the average bandwidth per customer on the fixed network of at least
30% in the shortest possible time, where technically possible;
■ making every effort, in the absence of coverage with an NGA fixed network and at the request of the
condominium or the legal person responsible for the office, to activate, without any increase in costs until
June 30, 2020, every possible access solution;
■
recommend to final consumers that they use mainly fixed-line access at home (including wi-fi) so as not to
overload the mobile network.
In relation to network adjustments, TIM has significantly increased bandwidth capacity both towards the Big
Internet and on national nodes, improved mobile coverage and is increasing the coverage of the UBB fixed
network.
In relation to the commercial offer for alternative operators, TIM has made price reductions available for the
Ethernet band on the copper and fiber network, is managing requests for bandwidth increase received by the
Other Authorized Operators (AOA) with a high priority and has allowed free and direct access to the TIM data
network through public peering.
Finally, to counter the spread of COVID-19, TIM has defined an operating procedure for safely carrying out
technical network works.
On the other hand, operators voluntarily proposed different measures to their customers. In particular, TIM has
proposed free voice calls, free Gigabits and many other voluntary initiatives in support of remote working and
distance learning.
Considering the persistence of the current state of emergency deriving from the global attempt to contain the
COVID-19 pandemic, TIM has asked the Italian Authorities to assess, in compliance with the provisions of Art.
82 of the “Cura Italia” decree and in accordance with the guidelines set out in Resolution No. 131/20/CONS, an
initiative that provides for the enabling of ADSL, at no cost to the user, for access lines on which TIM’s “Voice”
offer is active. Following consultation with the market and consumer protection associations, by means of
Resolution no. 384/20/CONS AGCom approved TIM’s initiative, albeit subject to compliance with a number of
precautions and clarifications regarding both transparency vis-à-vis the end user and competitive aspects.
New benefits for disabled consumers
With Resolution no. 290/21/CONS, the Italian Communications Authority (AGCom) defined the new regulation
for users with disabilities.
This resolution extends the current beneficiaries of electronic communication services, extending the special
tariffs of fixed and mobile network services, currently only granted to the blind and deaf, to also include
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disabled users with major limitations to walking. To this end, an experimental phase of application of the
measures is envisaged, expected to last twelve months, but which may be extended, to obtain information
about the new beneficiaries and the effectiveness of the measures adopted. The new beneficiaries can submit
requests to adhere within a 90-day time frame running from January 1 to April 1, 2022, with benefits set to
start on April 30, 2022.
TIM, which has always paid close attention to the needs of disabled users, has decided to apply the benefits of
the mobile offer to disabled users with major limitations to their walking, four months early, and therefore
from January 1, 2022.
Extension of the Golden Power rule to 5G technology services
Law Decree Law March 25, 2019, no. 22 and Law Decree July 11, 2019, no. 64
Decree Law no. 22 of March 25, 2019 (converted, with amendments, by Italian Law no. 41 of May 20, 2019)
introduced into Decree Law no. 21 of March 15, 2012 (converted with amendments by Italian Law no. 56 of May
11, 2012), Article 1-bis, which regulates the exercise of the special powers inherent to the broadband electronic
telecommunication networks using 5G technology.
In particular, the following are subject to special powers:
■
■
■
the agreement of contracts or agreements for the purchase of goods or services relating to the design,
construction, maintenance and management of 5G service networks;
the acquisition of high-tech components necessary for implementation or management;
factors indicating the existence of vulnerabilities that could compromise the integrity and security of
networks and the data sent on them.
In particular, the agreement of contracts and acquisition of high intensity components from subjects outside
the European Union, carry an obligation to notify the Prime Minister to allow a timely exercise of the veto
power.
Failure to comply with this notification obligation carries a pecuniary administrative fine equal to twice the
value of the transaction and in any event not less than 1 percent of the turnover of the last financial year.
On September 21, 2019, Decree Law no. 105 was published (converted, with amendments, by Italian Law no.
133 of November 18, 2019), setting out “Urgent provisions on the cybernetic national security perimeter”,
which has extended the scope of application of rules on the special powers that can be exercised by the
Government in the strategic sectors, liaising with the implementation of Regulation (EU) 2019/452 on the
control of foreign investments in the European Union.
Most of the implementing measures defined in said Decree Law call for the issue of the following provisions:
■ Decree of the President of the Council of Ministers (DPCM) regarding the regulation for the definition of the
terms and criteria by which to identify the subjects included in the cybernetic security perimeter and
criteria to be used to prepare the list of networks, sensitive information systems. The DPCM came into
force on November 05, 2020;
■ Administrative deed of the President of the Council of Ministers identifying the subjects included in the
scope. Issued in December 2020;
■ Decree of the President of the Council of Ministers (DPCM) regarding the definition of the procedures for
notifying “incidents” impacting the systems to the CSIRT (Computer Security Incident Response Team) and
the measures necessary to guarantee high security levels. The Decree was published in the Official Journal
on June 11, 2021 and came into force on June 26, 2021;
■ Decree of the President of the Republic (DPR) regarding the definition of the notification process to the
CVCN (National Assessment and Certification Center) of the critical infrastructure other than 5G and for 5G
devices supplied by European vendors: the regulation was published in the Official Journal on April 23, 2021
and came into force on May 8, 2021;
■ Definition of the type of verifications and tests on hardware and software that can be carried out both
under the scope of Golden Power and CVCN. The Regulation came into force on April 23, 2021;
■ Decree of the President of the Council of Ministers (DPCM) whereby the categories of goods and services to
be notified to the CVCN are identified. The Decree was published in the Official Journal on August 19, 2021
and came into force on May 09, 2021;
■ Decree of the President of the Council of Ministers (DPCM) whereby the criteria are defined that the CVCN
needs to use to identify the laboratories accredited to perform security/vulnerability tests. Not yet issued.
Law Decree no. 23 of April 8, 2020 (adopted with amendments by law no. 40 of June 5, 2020) substantially
amended the general Golden Power regulation: also in relation to the communications sector, the obligation to
notify of participations by foreign entity companies, including those outside the European Union, has been
extended, in cases where the transaction is likely to determine the control over the company in which the
equity investment was purchased.
On December 23, 2020, Decree no. 180 of the Presidency of the Council of Ministers was adopted, containing
the new regulations for the identification of assets of strategic importance in the energy, transport and
communications sectors, subject to the exercise of government powers under the Golden Power.
The measure confirms what has already been established by the previous regulations on telecommunications
and amends some provisions relating to other sectors of strategic importance to Italy.
Urgent measures for simplification and digital innovation
As regards the measures to speed up the country’s infrastructure process, in continuity with Decree Law no. 76
of 2020, the “Simplifications Decree Law”, Decree Law no. 77/2021, setting out the “Governance of the National
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Recovery and Resilience Plan and first measures to strengthen the administrative structures and speed up and
streamline the procedures”, like the previous one, sets out important simplification measures to speed up
completion of both the 5G networks and networks in optic fiber and ultra-broadband. The Decree was
definitively approved, with amendments, by Law no. 108 of July 29, 2021.
Amendment of the regulation of the Consolidated Law for the supply of
audiovisual media services
Legislative Decree no. 208 of November 08, 2021 setting out the “Implementation of Directive (EU) 2018/1808
of the European Parliament and of the Council of November 14, 2018 amending Directive 2010/13/EU on the
coordination of certain provisions laid down by law, regulation or administrative action in Member States
concerning the provision of audiovisual media services (Audiovisual Media Services Directive) in view of
changing market realities”, has been published in the Official Journal.
The new aspects mainly regard the obligations assigned to suppliers of audiovisual media services and the
sanction system for violations.
The decree came into force on December 25, 2021.
Review of the sanctioning power of AGCM (the Italian Competition
Authority)
Legislative Decree no. 185 of November 08, 2021, setting out the “Implementation of Directive (EU) 2019/1 of
the European Parliament and of the Council of December 11, 2018, to empower the competition authorities of
the Member States to be more effective enforcers and to ensure the proper functioning of the internal market”
has been published in the Official Journal. The decree aims to strengthen the sanctioning power assigned to
the Competition Authority in compliance with the indications given by the European Community legislator.
The decree came into force on December 14, 2021.
Amendment of regulations governing copyright
Legislative Decree no. 181 of November 08, 2021, setting out the “Implementation of Directive (EU) 2019/789 of
the European Parliament and of the Council of April 17, 2019, laying down rules on the exercise of copyright
and related rights applicable to certain online transmissions of broadcasting organizations and retransmissions
of television and radio programs, and amending Council Directive 93/83/EEC” has been published in the Official
Journal.
The transposition decree aims to allow for a more widespread broadcasting of television and radio programs
originating in other Member States, throughout the Member States, to the benefit of users of the entire
European Union, facilitating the granting of copyright licenses and related rights for works and other protected
material contained in the transmissions of certain types of radio and television programs.
The decree came into force on December 14, 2021.
2021 annual draft law for the market and competition
The Council of Minsters of November 04, 2021 approved the 2021 annual draft law for the market and
competition.
The draft law has the following aims:
■
■
■
to promote the development of competition, also with a view to guaranteeing access to the markets of
small enterprises;
to remove the legislative and administrative regulatory obstacles to the opening of the markets;
to guarantee consumer protection.
With specific reference to the provisions, introduced by the text, relative to the competition, development of
digital infrastructures and telecommunication services, the following are pointed out:
■
fiber optic network developments (art. 20): an obligation to coordination between infrastructure
managers and operators in the event of civil engineering works;
■ block and activation of premium services and acquisition of evidence of consent (art. 21): greater
consumer/user protection is offered for the supply of digital contents provided both through SMS and MMS
and data connection, with debiting against telephone credit or billing, offered both by third parties and
directly by the operators;
■ procedures for the development of new generation infrastructures (art. 19): in the event of refusal to
access, detailed reasons for the refusal must be given (also attaching photographic/technical
documentation). For the other provisions, no substantial changes are highlighted with respect to that
provided for to date.
The text has been sent to parliament for the standard analysis procedure. As it is a draft law, the time for its
approval is medium/long.
New Electronic Communications Code
Italian Legislative Decree no. 207 of November 8, 2021 setting out the “Implementation of Directive (EU)
2018/1972 of the European Parliament and of the Council of December 11, 2018, establishing the European
Electronic Communications Code, was published in the Official Journal on December 09, 2021 and came into
force on December 24, 2021.
The new Code reviews and replaces the previous regulatory framework and introduces important new features
including, in particular, the following:
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■
to foster the copper-fiber migration of customers: the user must allow operators to perform
technological adaptation works on the access networks, aimed at improving the connection (without
changes to the economic conditions);
■ contract duration: provide for an initial contract duration of no more than 24 months and introduce at
least one commercial offer of a maximum initial duration of 12 months;
■ sanctions: far more severe, particularly as concerns violations of user protection;
■
■
right of withdrawal in the event of ius variandi: extension of the deadline to exercise the right of
withdrawal (60 days from communication of the contractual changes instead of 30 days);
right of withdrawal: it is stressed that the provisions of art. 1 of Decree Law 7/2007 (Bersani Decree Law)
remain in place but the deactivation cost should be eliminated in the event of termination/withdrawal
after contract expiry (12/24 months) and the option is introduced for the customer to return the network
terminal equipment before the agreed contract end date, at no extra cost;
■ Universal Service: a review is envisaged of the existing obligations, by the Minister, by December 21, 2022
and thereafter every 3 years;
■ Universal Service: broadband Internet access from a fixed location has been included in the universal
service. It will be up to AGCom to define, in light of national circumstances and the minimum bandwidth
available to the majority of consumers in Italy (and taking into account the report by BEREC on best
practices), what exactly is an adequate access service to broadband Internet. Internet access must in any
case be able to supply the bandwidth necessary to support at least the minimum set of services pursuant
to annex 5 of the new Code;
■ Universal Service: the mechanism has been eliminated, by AGCom resolutions, used to fix the annual
Quality of service targets that TIM, as the operator appointed to supply the universal service, was called to
respect, at risk of having to pay administrative fines.
Extension of the state of emergency due to the COVID-19 pandemic
Decree Law no. 221 of December 24, 2021 (approved definitively on February 17, 2022 and awaiting publication
in the Official Journal of the conversion law) has prolonged the state of national emergency and measures to
limit the COVID-19 epidemic until March 31, 2022.
As a result of the provision, the emergency powers have also been extended for the Head of the Civil
Protection Department, along with the structure of the Extraordinary Commissioner for the implementation
and coordination of the measures to limit and fight the epidemiological emergency.
The Decree Law came into force on December 25, 2021. Due to the worsening of the epidemiological
emergency, the Government then adopted Decree Law no. 229 of December 30, 2021, which came into force
on December 31, 2021 and Decree Law no. 1 of January 07, 2022, which came into force on January 08, 2022,
strengthening the previous measures taken to fight the pandemic.
Below is a brief summary of the main news:
■
from January 10, 2022 to March 31, 2022, the scope of application of the obligation to use a green pass, has
been extended;
■ new criteria have been defined for quarantine;
■ a rule has been passed to limit the price of FFP2 type masks;
■
the provisional vaccine obligation has been introduced, until June 15, 2022, for all residents of Italy aged
over 50 years old, with the exception of cases of ascertained danger to health in connection with specific,
documented clinical conditions;
■ starting February 15, 2022, public and private employees aged over 50 must have the “super” (or
“reinforced”) green pass to access the workplace;
■ companies (regardless of the size of the workforce) can replace workers suspended insofar as lacking a
green pass, for a period of 10 days, which can be renewed until March 31st;
■ with no age limit, the obligation for university staff to be vaccinated has been extended;
■ wherever possible, smart working is recommended;
■ new criteria have been introduced for the activation of distance learning at schools, to combine the right to
studying in person with the need to limit the spread of the virus.
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Brazil
Revision of the model for the supply of telecommunications services
In 2019 Law 13879 was approved, that came into force on October 4, 2019, establishing a new regulatory
environment for the regulation of telecommunications in Brazil. This is the most significant change in 20 years.
The new telecommunications framework allows fixed-line licensees to adapt their contracts from a concession
scheme to an authorization scheme. This transition from concession to authorization must be requested by
the licensee and requires the approval of the Anatel ("Agencia Nacional de Telecomunicações"). In return,
licensees must, among other conditions, make a commitment to investment in expanding fixed broadband
telephony services to areas with no adequate competition for these services, in order to minimize inadequacies
and inequalities between areas of Brazil.
The change also affects the roles for authorizing the use of radio frequencies, establishing subsequent
renewals (currently limited to only one) and allows the exchange of radio frequencies between operators
(secondary spectrum market).
In June 2020, Decree 10402 was published, which governs the procedure for adapting the concession to the
authorization regime, as well as the definition of the criteria for calculating investment commitments. The
Decree also established guidelines for the extension of radio frequency authorization, which will be held by
Anatel to guarantee greater security for investments in the sector.
Public policies applicable to the telecommunications sector
Decree 9612/2018 (“Connectivity Plan”) established another series of important rules, with a series of
guidelines for the adaptation of conduct terms, the onerous concession of spectrum authorization and
regulatory acts in general, including: (i) expansion of high capacity telecommunications transport networks; (ii)
increased coverage of mobile broadband access networks; and (iii) broadening the coverage of fixed
broadband access network in areas with no Internet access through this type of infrastructure. This Decree
also establishes that the network resulting from the commitments must be shared from the moment it enters
into service, except where there is adequate competition in the relative reference market.
In relation to the deadlines for the development of pipelines not compliant with current regulations,
authorizations for user licenses to radio frequencies, and the introduction of other statutory provisions
generally, planned investments (as identified by Anatel and approved by the MCTI-Ministério da Ciência,
Tecnologia e Inovações) will focus primarily on the expansion of mobile and fixed-line broadband networks
and on specific areas of the country. Telecommunications networks built under the investment plan will have
shared access.
The decree was amended by Decree 10,799/2021, which included priorities for the coverage of public policies,
including coverage of the “areas of census with public schools”; coverage of towns not served by mobile
telephone and the expansion of fixed access to broadband in places without access.
The decree also provides for the assignment of funds for the approval of projects approved by Connected Cities
and for the temporary supply of fixed or mobile broadband. In addition, it regulates the private federal
network, which can be carried out by other public or private entities or organizations and the criteria for the use
and management of the network will be defined by the Federal Government under the terms established in a
deed of the Ministry of State for Communications.
In 2020, the decree No. 10,480/2020 was published by the federal government, which regulates the antennas
law (law 13,116/2015) with the purpose of stimulating the development of the telecommunications network
infrastructure. This decree fosters development of telecom network infrastructure and is a major step towards
unlocking historical problems in the sector preventing its development (free right of way on highways and
railways, positive silence, small cells, dig once are some of the examples of such regulatory removal of
historical problems).
That same year, law 14109/2020 authorized the use of FUST ("Fundo de Universalização dos Serviços de
Telecomunicação"), including by the private sector, to expand connectivity in rural or urban areas with a low
human development Index (HDI) as well as policies for education and tech innovation of services in rural areas.
In June 15, 2021, Provisional Measure 1018/2020 was transformed into Law No. 14,173/2021, reducing charges
for satellite internet terrestrial stations and changing some of FUST application rules.
The law reduces FUST collection between 2022 and 2026, to telecommunications operators that run
universalization programs approved by the Board of Directors with their own resources. The benefit will be
valid for five years from January 1, 2022 and will be progressive: 10% in the first year; 25% in the second year;
40% in the third year; and 50% from the fourth year onwards.
In addition, the new legislation removes the obligation to share towers within a distance of less than 500
meters from each other. The elimination of this obligation is essential for the deployment of 5G in Brazil,
including to ensure the densification scenario expected for the new technology.
Revision of the Service Quality Regulation
In December 2019, Anatel approved the new Telecommunication Services Quality Regulation (RQUAL), based
on a reactive regulation. In this new model, quality is measured on the basis of three main indicators – a
Service Quality Index, a Perceived Quality Index and a User Complaints Index – and operators are classified into
five categories (A to E). Based on this reactive regulation, Anatel will be able to take measures according to
specific cases, such as consumer compensation, the adoption of an action plan or the adoption of
precautionary measures to ensure quality standard improvements.
After a joint work of Anatel, operators and the Quality Assurance Support Authority (ESAQ) to define the
objectives, criteria and reference values of indicators, recently, late November 2021, the Anatel Board of
Directors formalized the reference documents supporting this regulation: the Operating Manual and the
Reference Values; and established the operative coming into force on March 1, 2022, as well as the
dissemination of official indexes and the Quality Mark (which fosters competition on quality) at the start of
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2023, considering the results of the new indicators monitored in the second half of 2022. Until then, Anatel will
continue to monitor the old indicators, which remain similar to the new ones laid down by the new RQUAL.
Data protection
On August 14, 2018, the General Data Protection Law (Law 13,709/2018, “LGPD”) was promulgated.
In December 2018, Provisional Measure 869/2018 was converted into law 13,709 to create the National Data
Protection Authority (ANPD); the coming into effect of the law has been extended for 24 months (August
2020).
In June 2020, Law 14,010/2020 deferred the coming into force of the LGPD, only for the provisions related to
fines and penalties, to August 2021. The other provisions of the law took effect in September 2020. In addition,
Decree 10474/2020 (National Data Protection Authority) came into force in August 2020, establishing the
ANPD (Autoridade Nacional de Dados Pessoais), which is responsible for, among other things: developing
guidelines for the National Data Protection Policy; supervising companies and applying sanctions; and issuing
regulations and procedures on personal data protection.
In January, the ANPD published the two-year regulatory agenda (2021-2022), which lists the following key
points: internal regulation of the ANPD, definition of rules for the application of art. 52 et seq. of the law, data
subject rights and the notification of data breaches, amongst others.
In August 2021, articles relative to supervision and sanctions by the National Authority (ANPD) came into force.
In October 2021, the regulation (CD/ANPD no. 1 of October 2021) was approved for the supervision and
sanction administrative process, under the scope of competence of the ANPD.
Strategic Digital Transformation and the Internet of Things
In March 2018, the E-Digital Decree (9319/2018 Decree) was published, in order to identify about 100 strategic
actions to encourage competition and the country’s level of online productivity, while increasing connectivity
and digital inclusion levels. These actions seek to address the digital economy’s main strategic questions,
including connectivity infrastructure, data use and protection, the IoT and IT security.
In December 2021, the MCTI began the review and approval is expected for the first half of 2022.
The Decree on the National Plan for the Internet of Things (Decree 9854/2019) was published in June 2019, to
regulate and promote this technology in Brazil. The IoT is referred to as the “infrastructure integrating the
provision of value-added services with the ability to physically or virtually connect things using devices based
on existing information and communication technology and their evolution, with interoperability”. The Decree
lists the following topics, defining them as necessary to further support the National Plan for the Internet of
Things: (i) science, technology and innovation; (ii) international integration; (iii) education and professional
training; (iv) connectivity and interoperability infrastructure; (v) regulation, security and privacy; (vi) economic
feasibility.
In order to develop an IoT environment in the country, Law 14,108/2020 was passed. This law exempts base
stations and equipment that integrate machine-to-machine (M2M) ecosystems from FISTEL (an administrative
tax collected by Anatel) for 5 years and, in addition, extinguishes the previous license. The definition and
regulation of M2M communication systems are established by Anatel.
5G Auction
In February 2020, the Ministry of science, technology, innovations and communications published ordinance
No 418 with guidelines for the 5G auction, concerning radiofrequency bands of 700 MHz, 2.3 GHz, 3.5 GHz and
26 GHz, requiring Anatel to define technical criteria for mobile operation on 3.5 GHz in order to avoid harm
from a TVRO signal offered by satellite dishes in Band C. It also established that the auction should considered
coverage commitments to (i) mobile service on 4G technology or higher to cities, small villages and isolated
urban and rural areas with more than 600 habitants; (ii) mobile broadband on federal highways; and (iii) fiber
to the city (FTTC) on municipalities without this backhaul.
Also in February 2020, Anatel issued the public consultation No 9 in order to discuss the draft of the Public
Notice for the 5G Auction. Anatel called for bids for the 700 MHz, 2.3 GHz, 3.5 GHz and 26 GHz bands, including
another 100 MHz in the 3.5 GHz band. It was expected that the investment commitments would have enabled
more infrastructure and a higher level of services to users, such as is outlined in the structural plan for
telecommunications networks (PERT).
Regarding the possible interference caused by 5G in the reception of open satellite TV, the approved proposal
addresses the solution through a model similar to that adopted for the 700 MHz band, with the creation of a
group coordinated by Anatel and an independent third party to operationalize the solution.
In February 2021, the Anatel Board of Directors approved the public notice for the 5G Auction. After which, the
Brazilian federal court of auditors (TCU) assessed the matter, which was completed on August 25, 2021. The
auction returned for analysis to Anatel, which on September 24, 2021 approved the notice. The auction
envisaged in the second half of 2021 was held in November 2021. TIM acquired 11 lots, with a total value
offered of 1.05 billion reais, in 3 frequency bandwidths: 3.5 GHz, 2.3 GHz and 26 GHz. The bandwidths acquired
have a series of obligations that must be satisfied with financial contributions or the construction of mobile
and fixed network infrastructures. Consequently, TIM guarantees the spectrum capacity necessary to pursue
its growth nationally on the mobile market, being ready to respond to its customers’ demands and to explore
new applications and develop innovative solutions calling for high-speed connectivity and capacity.
The main commitments associated with each bandwidth are:
■ 2.3 GHz: 4G coverage in certain municipalities and areas (south and south-east regions);
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■ 3.5 GHz: 5G coverage in all municipalities with a population of at least 30,000 inhabitants + backhaul
obligations in fiber in 138 municipalities + additional contributions to a new entity (EAF) to develop the
following projects: cleaning of 3.5 GHz, development of fiber optic in Amazonia and construction of a
private network for exclusive use by the federal government;
■ 26 GHz: contributions to a new entity (EACE) to develop school connectivity projects.
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COMPETITION
Domestic
The market
In 2021, as in previous years, the Italian telecommunications market has been characterized by a strong degree
of internal competition and, similarly to 2020, has been partly impacted by the continued health emergency.
Although 2021 saw a gradual recovery from the peak of the emergency 2020 lockdown to limit the SARS-CoV-
2 pandemic, the government has maintained some restrictions to social activities such as: personal distancing,
the use of smart working wherever possible and distance learning in certain circumstances.
The intense vaccination campaign run throughout 2021 has made it possible to mitigate the effects of the
restrictions, with benefits on the consumer confidence index and the economy in general, generating a
corresponding growth in consumption and a significant increase in the gross domestic product, above 6% YoY5.
Although to a more limited extent, certain digital service consumer trends sparked by the pandemic were
confirmed in 2021: indeed, significant use of smart working in private companies and the public administration
alike was recorded, further growth in the use of most digital services, continued use of video communication
services for private and working needs and a further increase in on-line purchases of various types of goods
and services.
The effect for the telecommunications networks was, therefore, a further increase in average daily traffic by
approximately 21% on the previous year (Jan.-Sept. 2021 vs same period 2020), which led to a total of +75% in
terms of the traffic increase with respect to the pre-pandemic period (Jan.-Sept. 2019)6.
The development of broadband and ultrabroadband continues to be the main element of evolution of the
fixed market, intended to intensify also on the boost assured by the national ultrabroadband strategy
approved in May 2021 for infrastructural development in line with the objectives of the PNRR.
The Italian telecommunications market remains highly competitive, with the greatest impact of market
dynamics on voice and data connectivity services and, despite the growth in volumes and the development of
ultrabroadband, a progressive compression of total spending on TLC services.
In the new digital world, telecommunications operators also have to deal with Over The Top and device
manufacturers with completely different competitive assets and logic. To exploit new opportunities and meet
the challenges posed by the new entrants, operators are changing their traditional business model and
entering adjacent businesses such as, for example:
■ The Media & Entertainment sector in which, as a result of the growing importance of the Internet as a
complementary distribution platform, we are seeing a continuous growth of on-demand services (VOD
and SVOD), made available by platforms such as Netflix, DAZN, Prime Video and Disney+.
■ The Information Technology sector, growth of which is supported by the digital transformation of
businesses and the public sector.
For telecommunication operators, if on the one hand, a progressive decline is recorded of the traditional fixed
and mobile connectivity service component, on the other, there is constant growth seen in Information
Technology and Internet of Things components, as a result of the growing demand for digitization of
companies and the public administration.
Competition in Fixed-line Telecommunications
Overall, the fixed access market shows slight growth but with a strong dynamic between segments,
significantly shifting the customer base to technologies that allow for more advanced performance, such as
ultrabroadband lines on FTTH and FTTC technologies.
According to AGCom7, during the third quarter of 2021, total accesses remained essentially stable with respect
to the previous quarter, but up by approximately 400 thousand units YoY; FTTC lines increased by 1.1 million
YoY and by 6.5 million over the whole period; in a similar fashion, FTTH accesses grew by more than 800
thousand units and at end September exceeded 2.4 million. Although to a lesser extent, Fixed Wireless Access
lines have also grown, increasing by 239 thousand units during the year up to almost 1.7 million.
TIM maintains its leadership position in overall fixed accesses, broadband and ultrabroadband. In a competitive
context that did not really change, the main operators defended their customer base from new entrants. Sky
WIFI has not ye reached the AGCom visibility threshold.
As further confirmation of just how challenging it is to operate on the fixed market, the case of Iliad is
significant, which has continued to postpone the launch announcement on the access market, exceeding 2021
(broadband and ultrabroadband access market, last data from AGCom available IIIQ 2021: TIM share 42.2%,
followed by Vodafone with 16.5%, Fastweb with 14.9% and Wind Tre with 14.1%).
Migration to fiber is supported by the progressive coverage of ultrabroadband networks in progress nationally.
FiberCop (the infrastructure company controlled 58% by TIM and in which KKR Infrastructure has a 37.5%
investment and Fastweb 4.5%)8 operates on the basis of the co-investment model and is the first case in
Europe to apply the new European Electronic Communications Code on a national scale9. In 2021, various co-
investment agreements were signed, most recently in December with WirLab, a multi-utility company
5 In 2021, Italy’s GDP grew by 6.3% according to the ISTAT report “Prospects for the Italian economy in 2021-2022” dated December 03, 2021.
6 AGCom Press Release of December 29, 2021.
7 AGCom Press Release of December 29, 2021.
8 TIM Press Release of April 01, 2021.
9 TIM Press Release of January 29, 2021.
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operating with Internet, voice, electricity and gas services, and Springo, an Internet provider operating in the
north-east. WirLab’s adhesion follows a series of other adhesions, including Fastweb, Tiscali and Iliad10.
The development of broadband has continued to enable new over IP services, Media first and foremost, with
Pay TV - OTT, which in 2021 increased its number of subscribers significantly. Entertainment contents starred
football: similarly to as is already the case elsewhere in Europe, in Italy too, football is now migrating to
streaming technology. In March 2021, DAZN and TIM signed a distribution agreement which, by extending the
existing partnership currently in place, brought the content of the streaming service to TIMVision for the next
three years. DAZN, which was awarded the television rights for Serie A football matches for the 2021-2024
seasons, will continue to distribute matches via the Internet and has chosen TIM as its strategic partner and
telephone operator and reference pay TV for the DAZN contents offer in Italy11.
Competition in Mobile Telecommunications
The Italian mobile market is one of the largest of Europe with one of the highest penetration rates of the whole
continent. In this market, the trend continues to see a reduction in the number of “human” SIMs (SIM cards for
human communications), as a result of the rationalization of second and third cards, as well as a significant
growth of “Machine to Machine” (M2M) SIMs.
Alongside innovative services that have already caught on and are under full-scale development, as in the
case of mobile apps, there are other market environments, associated with the development of Mobile
Broadband, with major potential for growth in the medium term, such as the Internet of Things and mobile
payment.
According to AGCom, at the end of September 2021, TIM was the market leader with 28.8%, followed by
Vodafone (28.5%) and Wind Tre (24.8%), while the new entrant Iliad has 7.7%.
On the “human” SIM segment alone, Wind Tre remains the main operator, followed by TIM, Vodafone and
Iliad12.
The entrance of the new mobile operator, Iliad, in May 2018, has sparked strong competition between the
major operators, which launched second brand mobiles to offer low-cost options. TIM launched Kena Mobile;
Vodafone launched its brand Ho and, most recently, in February 2020, Wind Tre launched Very Mobile.
This competitive reaction by the infrastructured operators has slowed the growth of customers and market
share of Iliad.
Due to this intense competition and the continued state of pandemic emergency, in recent years, total
spending on mobile services has continued to reduce.
An additional increase in competition also comes from the combination of fixed and mobile offers available
from virtual operators such as, for example, PosteMobile, which launched an FTTH service in May 2021, using
the Open Fiber network.
The competition on 5G continues with the simultaneous presence of TIM, Vodafone, WindTre, Iliad and
Fastweb for mobility offers, a progressive coverage of the main cities and a greater dimension of the portfolio
of terminals enabled for the new network.
TIM and Vodafone launched their commercial 5G services back in 2Q19, whilst Wind Tre, Iliad and Fastweb did
so in 4Q20. 2021 saw a drive on increasing 5G network coverage, which also allows for the development of
services and the FWA 5G market, to complement the development of the fixed ultrabroadband network.
All operators are moving to take advantage of the various opportunities in new vertical markets (e.g. energy &
utilities, smart cities, smart manufacturing, automotive, eHealth) and provide new services, enable new
production processes and increase efficiency in optimized product management, in particular enhancing the
opportunities offered by the digitization solutions made possible by machine-to-machine mobile lines.
Brazil
In 2021, the macroeconomic scenario began recovering as compared with 2020, the year of the COVID-19
pandemic. As in many countries, in 2020, lockdown protocols have had a negative impact on the economy,
increasing uncertainty, deferring investments, reducing income and employment in a bid to prevent the loss of
human
level, putting
telecommunications companies firmly in the spotlight, offering up new possibilities and bringing people into
contact with each other, driving on advanced services like food and drug deliveries, the streaming of content
and video calls. As people get vaccinated and physical trade reopens, we see some habits return to pre-COVID-
19 levels, but some of the new behavior has continued to apply, to a certain extent, even after people were
able to return to the streets.
lives. On the other hand, the digital transformation has reached a new
The economic recovery in Brazil began in 2021 more quickly than expected, but lost some drive during the year,
with rapid growth of inflation mainly due to food and energy prices. During the year, the important
administrative or tax reforms envisaged, amongst others, were not implemented. In addition to this, the
political scenario is filled with uncertainty, with the presidential elections approaching and the political
polarization still in place. The employment rate began growing in 2021, which is a good sign for recovery
prospects. For 2022, a sharp deceleration in the growth of the GDP is expected, but inflation should return to
target levels. As interest rates have been increased in a bid to slow inflation, we expect to see investors shift
towards bank investments and a simultaneous distancing from the stock market.
Despite improving financial performance indicators, economic conditions are still challenging, with budget
deficit and rising debts (for central governments, federal states and municipalities) carrying a risk that can only
be managed with more structural reform, for which Congress's approval is needed. Approval of changes in
spending policies, which have allowed for the deferral of payment of tradeable government bonds in order to
10 TIM Financial Information at September 30, 2021.
11 TIM Press Release of March 26, 2021.
12 AGCom Press Release of December 29, 2021.
Report on Operations of the
TIM Group
Competition
61
open the budget to increase spending with the social subsidy program “Auxilio Brasil” has increased concern
over the management of public finances.
The mobile telecommunications sector has seen some rationality prevail in the market and in competition,
with service providers concentrating on the characteristics and range of services of their commercial offers,
rather than pursuing aggressive pricing policies. The operator with the most aggressive price offer is Oi, which
will leave the mobile market in 2022. Last, but by no means least, the reduction from 4 to 3 main mobile
operators and the increase in the number of infrastructure companies can lead to a better allocation of capital
and return on investments.
In the prepaid segment, the main aim of market operators was to increase the percentage use of services,
leveraging the SIM card consolidation process in progress on the market, encouraging migration towards
weekly (and monthly) or hybrid (Controle postpaid) plans, offering a range of service bundles according to the
needs of customers (unlimited voice calls or data packages). This strategy aims to improve the customer base
mix and ensure greater stability (and a reduction in the churn rate) and the growth in ARPU. Despite the
declining trend seen in recent years of the customer base, in 2021, the market segment as customer base rose
by 3.6% year-on-year at November 2021.
The postpaid mobile segment records an increase in the customer base, mainly supported by the hybrid
Controle segment (in particular by migrations of prepaid customers), although “pure” postpaid lines have also
recorded a certain degree of growth. This growth is based on offer segmentation strategies, through the
introduction of distinctive characteristics in the use of data services (e.g. unlimited use of data on specific apps
such as WhatsApp, Facebook, Twitter, Netflix, etc.) in pursuing a “More for More” policy logic that aims to
guarantee a greater stability of prices and an effective repositioning of the customer base on higher value
offers (voice + data + contents). The total market postpaid customer base (excluding M2M) had grown by
+11.7% YoY in November 2021.
Service quality is still an element of differentiation. The telecommunication suppliers that have invested more
in the development of 4G networks (coverage and capacity) and in the improvement of processes shaping
customer experiences will have a greater capacity to apply premium prices because customers increase their
expectations and assign increasing importance to the quality of data services and higher value contents. The
main mobile operators already provide 4G coverage for over 99.4% of the Brazilian population (up to
December 2021), with the three main operators offering average 4G availability in excess of 77% (according to
the January 2022 Opensignal report).
In November 2021, the 5G auction was held. As expected, the 3 main operators were awarded the blocks at
3.5GHz, 2.3GHz and 26GHz. Some smaller regional operators were also awarded some regional blocks, mainly
at 3.5GHz. The crucial aspect can be considered the price paid by Brisanet for the 3.5GHz block in the north-
east (more than 1 billion reais) and the winner of the 700MHz block, Winity, which will be a neutral mobile
network operator, an all-new approach on the Brazilian market.
The fixed broadband market recorded a growth of +11.7% on an annual basis in November 2021, mainly driven
by smaller market operators (+30.6% year on year), which tend to offer cheaper services, especially in areas
where incumbent operators have infrastructure limitations. Things are happening in terms of M&A amongst
the smaller Internet service providers (ISP), with 3 ISPs that performed an IPO to obtain the capital needed to
finance their growth strategy: Brisanet in the north-east region, Unifique in the south region and Desktop in the
state of SP (the most populated and richest state). As a result, traditional incumbent operators are suffering
sharp downturns to their customer base. The penetration rates in the population are still fairly low
(approximately 56% of homes) as compared with a great many countries, which means that there are good
medium-term growth opportunities, supported by the improvement in the macroeconomic situation.
In this context, in 2017 TIM adopted a commercial strategy to enable TIM Live to expand coverage, offering
ultrabroadband Internet services, mainly through FTTH, not only in some of the largest cities of Brazil, but also
in cities where opportunities are available for a similar high-quality service. TIM Live has a customer base of
over 683 thousand users in November 2021 (an increase of 6.5% year on year).
In order to obtain a speedier, smarter growth of the footprint, TIM sold 51% of the newco FiberCo (now I-
Systems), which will have the infrastructure for the offer of broadband in fixed fiber and will act as neutral
network operator.
Report on Operations of the
TIM Group
Competition
62
CONSOLIDATED FINANCIAL POSITION AND
CASH FLOWS PERFORMANCE
Non-current assets
■ Goodwill: this drops by 4,279 million euros, from 22,847 million euros at December 31, 2020 to 18,568
million euros at December 31, 2021, mainly due to the effect of the aforemenioned impairment of Goodwill
attributed to the Domestic Cash Generating Unit, equal to 4,120 million euros, due to the results of the
impairment test carried out at December 31, 2021. The balance is also impacted by the reduction of part of
the goodwill attributed to the Brazil cash generating unit (165 million euros) following the dilution from
100% to 49% of the equity investment in the capital of I-System S.A. (formerly FiberCo Soluções de
Infraestrutura S.A.), the company established for the segregation of the network assets of the TIM Brasil
Group and the related supply of infrastructure services. An increase is also recorded of 2 million euros
relating to the recognition of provisional goodwill connected with the acquisition by Olivetti S.p.A. of 100%
of Staer Sistemi S.r.l. completed in September 2021. In 2021, the exchange difference is positive for 4
million euros and relates to the goodwill attributed to the Brazil Cash Generating Unit1.
Further details are provided in the Note “Goodwill” to the Consolidated Financial Statements at December
31, 2021 of the TIM Group.
■
Intangible assets with a finite useful life: these increased by 407 million euros, from 6,740 million euros at
the end of 2020 to 7,147 million euros at December 31, 2021, representing the balance of the following
items:
•
•
•
capex (+ 1,886 million euros);
amortization charge for the year (-1,511 million euros);
other disposals, exchange differences and other changes (for a net positive balance of 32 million euro,
of which 13 million euro of positive exchange differences essentially relating to the Brazil Business
Unit).
■ Tangible assets: these increased by 170 million euros, from 13,141 million euros at the end of 2020 to
13,311 million euros at December 31, 2021, representing the balance of the following items:
•
capex (+2,665 million euros);
• depreciation charge for the year (-2,284 million euros);
•
other disposals, exchange differences and other changes (for a net negative balance of 211 million
euros, including 192 million euros for the deconsolidation of the Brazilian company I-Systems S.A. and
24 million euros in exchange gains).
■ Rights of use assets: these fell by 145 million euros, from 4,992 million euros at the end of 2020 to 4,847
million euros at December 31, 2021, representing the balance of the following items:
•
•
investments (+79 million euros) and increases in lease contracts (+667 million euros);
amortization charge for the year (-695 million euros);
• disposals, exchange differences and other changes (for a net negative balance of 196 million euros).
Exchange differences are positive for 15 million euros and mainly relate to the Brazil Business Unit.
Other changes mainly included the lower value of the rights of use recorded as a result of contractual
changes during the period.
■ Other non-current assets: these come to 11,244 million euros and decline on December 31, 2020 by 3,458
million euros, mainly following the partial write-off by the Parent Company TIM S.p.A. of the deferred tax
assets recognized in 2020 in respect of the tax recognition of higher values booked in accordance with
Decree Law 104/2020, art. 110, subsections 8 and 8 bis. Further details are provided in the Note “Income
tax expense (current and deferred)” to the Consolidated Financial Statements at December 31, 2021 of the
TIM Group.
1The spot exchange rate used for the translation into euro of the Brazilian real (expressed in terms of units of local currency per 1 euro) was 6.32047
at December 31, 2021 and 6.37680 at December 31, 2020.
Report on Operations of the
TIM Group
Consolidated Financial Position and Cash Flows Performance
63
Consolidated equity
Consolidated equity amounted to 22,039 million euros (28,840 million euros at December 31, 2020), of which
17,414 million euros attributable to Owners of the Parent (26,215 million euros at December 31, 2020) and 4,625
million euros attributable to non-controlling interests (2,625 million euros at December 31, 2020). In greater
detail, the changes in consolidated equity were the following:
(million euros)
At the beginning of the year
Total comprehensive income (loss) for the year
Dividends approved by:
12/31/2021
28,840
(8,110)
(373)
TIM S.p.A.
Other Group companies
FiberCop - capital increase
INWIT - deconsolidation
Daphne 3 - capital increase
Issue of equity instruments
Daphne 3 - distribution of additional paid-in capital
Other changes
At the end of the year
(318)
(55)
1,750
—
—
33
(42)
(59)
22,039
12/31/2020
22,626
5,836
(378)
(316)
(62)
—
(644)
1,334
43
—
23
28,840
Cash flows
The adjusted net financial debt amounted to 22,187 million euros, down by 1,139 million euros compared to
December 31, 2020 (23,326 million euros).
The Group’s operating free cash flow for 2021 is positive for 1,444 million euros (3,304 million euros in 2020),
i.e. 1,879 million euros (3,414 million euros in 2020), net of 435 million euros (110 million euros in 2020) related
to the acquisition of rights to use telecommunication service frequencies.
Moreover, the main transactions that had an impact on the change in adjusted net financial debt are as
follows:
Change in adjusted net financial debt
(million euros)
EBITDA
Capital expenditures on an accrual basis
Change in net operating working capital:
Change in inventories
Change in trade receivables and other net receivables
Change in trade payables
Changes of mobile licenses acquisition payable/spectrum
Other changes in operating receivables/payables
Change in provisions for employee benefits
Change in operating provisions and Other changes
Net operating free cash flow
% of Revenues
Sale of investments and other disposals flow
Share capital increases/reimbursements, including incidental
expenses
Financial investments
Dividends payment
Increases in lease contracts
Finance expenses, income taxes and other net non-operating
requirements flow
Reduction/(Increase) in adjusted net financial debt from
continuing operations
Reduction/(Increase) in net financial debt from Discontinued
operations/Non-current assets held for sale
Reduction/(Increase) in adjusted net financial debt
2021
(a)
5,080
(4,630)
733
(39)
257
584
369
(438)
(83)
344
1,444
9.4
1,935
(42)
(102)
(368)
(667)
(1,061)
1,139
—
1,139
2020
(b)
6,739
(3,409)
772
20
484
(193)
(110)
571
(628)
(170)
3,304
20.9
1,294
1,164
(25)
(390)
(1,288)
283
4,342
—
4,342
Changes
(a-b)
(1,659)
(1,221)
(39)
(59)
(227)
777
479
(1,009)
545
514
(1,860)
(11.5) pp
641
(1,206)
(77)
22
621
(1,344)
(3,203)
—
(3,203)
Report on Operations of the
TIM Group
Consolidated Financial Position and Cash Flows Performance 64
Equity Free Cash Flow
(million euros)
Reduction/(Increase) in adjusted net financial debt from
continuing operations
Impact for finance leases (new lease operations and/or renewals
and/or extensions (-)/any terminations/early extinguishing of
leases (+))
Payment of TLC licenses and for the use of frequencies
Financial impact of acquisitions and/or disposals of investments
Dividend payment and Change in Equity
Equity Free Cash Flow
2021
1,139
452
435
(1,804)
410
632
2020
Changes
4,342
(3,203)
419
110
(1,483)
(974)
2,414
33
325
(321)
1,384
(1,782)
In addition to what has already been described with reference to EBITDA, the change in adjusted net financial
debt for 2021 was particularly impacted by the following:
Capital expenditures and for mobile telephone licenses/spectrum
Capital expenditures and expenses for mobile telephone licenses/spectrum for 2021 were 4,630 million euros
(3,409 million euros in 2020).
Capex is broken down as follows by operating segment:
(million euros)
2021
2020
Change
Domestic
Brazil
Other Operations
Adjustments and eliminations
Consolidated Total
% of Revenues
In particular:
% weight
72.9
27.1
—
—
100.0
3,377
1,253
—
—
4,630
30.2
% weight
80.6
19.4
—
—
100.0
2,748
661
—
—
3,409
21.6
629
592
—
—
1,221
8.6pp
■
■
the Domestic Business Unit records capital expenditure for 3,377 million euros, +629 million euros on
2020, an increase mainly due to the development of the FTTC/FTTH networks and payment of licenses for
240 million euros to the Italian Ministry of Economic Development (MISE) for the extension of rights of use
relating to frequencies (2100 MHz);
the Brazil Business Unit posted capital expenditures in 2021 of 1,253 million euros (661 million euros for
2020). Excluding the impact of changes in exchange rates (-49 million euros), capex grew by 641 million
euros, mainly to strengthen the mobile ultrabroadband infrastructure and the development of the fixed
broadband business of TIM Live. More specifically, the auction for 5G frequencies in Brazil, which closed in
November 2021, saw the Brazil Business Unit committed to a total investment of 564 million euros for
frequencies along with the related commercial commitments to the entities established to pursue the
infrastructure projects.
Change in net operating working capital
The change in net operating working capital for 2021 reflects a positive change of 733 million euros (+772
million euros in 2020), mainly as a consequence of the change in trade payables and for mobile telephone
licenses/spectrum (+953 million euros), partly offset by the negative change
in other operating
receivables/payables (-438 million euros).
Sale of investments and other disposals flow
This is positive for 1,935 million euros and mainly includes the collection made on the sale of 37.5% of FiberCop
S.p.A. by TIM S.p.A. to the indirect subsidiary of KKR Global Infrastructure Investors III L.P. (1,759 million euros)
and the collection consequent to the sale of 51% of I-Systems (formerly FiberCo Soluções de Infraestrutura) by
TIM S.A. to IHS Fiber Brasil - Cessão de Infraestruturas Ltda. ("IHS Brasil") (172 million euros). Further details are
provided in the Note on “Investments” in the TIM Group Consolidated Financial Statements at December 31,
2021.
In 2020, the flow was positive for 1,294 million euros and mainly benefited from the deconsolidation of INWIT
S.p.A., as well as collections deriving from sales by the TIM Group of INWIT shares totaling approximately 7.3%
of the share capital.
Report on Operations of the
TIM Group
Consolidated Financial Position and Cash Flows Performance
65
Share capital increases/reimbursements, including incidental costs
In 2021, the flow is negative for 42 million euros and refers to the partial distribution of reserves of the
subsidiary Daphne 3 - in which TIM has contributed a total of 30.2% of INWIT shares - to a shareholder outside
the Group.
In 2020, the flow was positive for 1,164 million euros, mainly as a consequence of the contribution made by
shareholders outside the Group to the share capital increases of subsidiaries. More specifically, they included
the increase in capital of Daphne 3.
Increases in lease contracts
In 2021, the item came to 667 million euros (1,288 million euros in 2020) and includes the greater value of
rights of use entered following new passive lease contracts, increases in lease charges and the renegotiation of
existing lease contracts.
Financial expenses, income taxes and other net non-operating
requirements flow
In 2021, the flow has a negative balance for a total of 1,061 million euros (positive for 283 million euros in
2020). It mainly includes outflows relative to financial management components, as well as the payment of
income taxes and changes in non-operating payables and receivables.
Sales of receivables to factoring companies
It should be noted that sales without recourse of trade receivables to factoring companies completed during
2021 resulted in a positive effect on the adjusted net financial debt at December 31, 2021 amounting to 1,536
million euros (1,970 million euros at December 31, 2020).
Report on Operations of the
TIM Group
Consolidated Financial Position and Cash Flows Performance 66
Net financial debt
Net financial debt is composed as follows:
(million euros)
Non-current financial liabilities
Bonds
Amounts due to banks, other financial payables and liabilities
Non-current financial liabilities for lease contracts
Current financial liabilities (*)
Bonds
Amounts due to banks, other financial payables and liabilities
Current financial liabilities for lease contracts
Financial liabilities directly associated with Discontinued
operations/Non-current assets held for sale
Total Gross financial debt
Non-current financial assets
Securities other than investments
Non-current financial receivables arising from lease contracts
Financial receivables and other financial assets
Current financial assets
Securities other than investments
Current financial receivables arising from lease contracts
Financial receivables and other financial assets
Cash and cash equivalents
Financial assets relating to Discontinued operations/Non-
current assets held for sale
Total financial assets
Net financial debt carrying amount
Reversal of fair value measurement of derivatives and related
financial liabilities/assets
Adjusted net financial debt
Breakdown as follows:
Total adjusted gross financial debt
Total adjusted financial assets
(*) of which current portion of medium/long-term debt:
Bonds
Amounts due to banks, other financial payables and liabilities
Current financial liabilities for lease contracts
12/31/2021
(a)
12/31/2020
(b)
Changes
(a-b)
17,383
6,054
4,064
27,501
3,512
2,433
651
6,596
—
34,097
—
(45)
(2,285)
(2,330)
(2,249)
(56)
(142)
(6,904)
(9,351)
—
(11,681)
22,416
(229)
22,187
32,564
(10,377)
3,512
898
648
18,856
4,799
4,199
27,854
988
2,689
631
4,308
—
32,162
—
(43)
(2,267)
(2,310)
(1,092)
(55)
(162)
(4,829)
(6,138)
—
(8,448)
23,714
(388)
23,326
30,193
(6,867)
988
1,541
628
(1,473)
1,255
(135)
(353)
2,524
(256)
20
2,288
—
1,935
—
(2)
(18)
(20)
(1,157)
(1)
20
(2,075)
(3,213)
—
(3,233)
(1,298)
159
(1,139)
2,371
(3,510)
2,524
(643)
20
The financial risk management policies of the TIM Group are aimed at minimizing market risks, fully hedging
exchange rate risk, and optimizing interest rate exposure through appropriate diversification of the portfolio,
which is also achieved by using carefully selected derivative financial instruments. Such instruments, it should
be stressed, are not used for speculative purposes and all have an underlying, which is hedged.
In addition, to determine its exposure to interest rates, the Group sets an optimum composition for the fixed-
rate and variable-rate debt structure and uses derivative financial instruments to achieve that composition.
Taking into account the Group's operating activities, the optimum mix of medium/long-term non-current
financial liabilities has been established, on the basis of the nominal amount, at a range of 65%–85% for the
fixed-rate component and 15%–35% for the variable-rate component.
In managing market risks, the Group has adopted Guidelines for the “Management and control of financial
risk” and mainly uses IRS and CCIRS derivative financial instruments.
To provide a better representation of the true performance of Net Financial Debt, in addition to the usual
indicator (renamed “Net financial debt carrying amount”), the TIM Group reports a measure called “Adjusted
net financial debt”, which neutralizes the effects caused by the volatility of financial markets. Given that some
components of the fair value measurement of derivatives (contracts for setting the exchange and interest rate
for contractual flows) and of derivatives embedded in other financial instruments do not result in actual
monetary settlement, the Adjusted net financial debt excludes these purely accounting and non-monetary
effects (including the effects of IFRS 13 – Fair Value Measurement) from the measurement of derivatives and
related financial assets/liabilities.
Report on Operations of the
TIM Group
Consolidated Financial Position and Cash Flows Performance
67
For further details, see the “Alternative performance indicators” chapter.
Adjusted net financial debt amounted to 22,187 million euros at December 31, 2021, a decrease of 1,139
million euros compared to December 31, 2020 (23,326 million euros). The reduction in debt, brought about by
the generation of operating cash, the completion of the purchase by KKR Infrastructure of 37.5% of FiberCop
from TIM for an equivalent value of 1,759 million euros and the sale for 172 million euros in Brazil of 51% of the
company I-Systems S.A. (formerly FiberCo), owner of the secondary fiber network, has been partially limited by
the payments of dividends (368 million euros), the sanction (116 million euros) connected with the Antitrust
Case A514 (alleged abuse of a dominant market position on the wholesale access services market and for
retail services of the broadband and ultrabroadband fixed network), substitute tax on the realigned value of
assets (231 million euros), the extension of the rights of use of frequencies on the 2100 MHz bandwidth (240
million euros), the installment on the 5G license (55 million euros) and the purchase under auction of
frequencies for the implementation of 5G in Brazil (140 million euros).
For a better understanding of the information, the table below shows the various ways by which the Net
Financial Debt can be shown:
(million euros)
Net financial debt carrying amount
Reversal of fair value measurement of derivatives and related
financial liabilities/assets
Adjusted net financial debt
Leasing
Adjusted net financial debt - After Lease
12/31/2021
(a)
22,416
(229)
22,187
(4,614)
17,573
12/31/2020
(b)
23,714
(388)
23,326
(4,732)
18,594
Changes
(a-b)
(1,298)
159
(1,139)
118
(1,021)
Net financial debt carrying amount amounted to 22,416 million euros at December 31, 2021, a decrease of
1,298 million euros compared to December 31, 2020 (23,714 million euros). Reversal of the fair value
measurement of derivatives and related financial liabilities/assets recorded an annual change of 159 million
euros, substantially following the rise in Euro interest rates, which, coupled with the final calculation of interest
flows, effectively revalue the cash flow hedges. This change is adjusted by the booked Net Financial Debt with
no monetary effect.
Adjusted Net Financial Debt – After Lease (net of the impact of all leases), which is a parameter adopted by
main European peers, was equal to 17,573 million euros at December 31, 2021, down by 1,021 million euros
compared to December 31, 2020 (18,594 million euros).
Gross financial debt
Bonds
Bonds at December 31, 2021 totaled 20,895 million euros (19,844 million euros at December 31, 2020).
Repayments totaled a nominal 20,338 million euros (19,249 million euros at December 31, 2020).
The change in bonds during 2021 was as follows:
(millions of original currency)
New issues
Telecom Italia S.p.A. 1,000 million euros 1.625%
TIM S.A. 1,600 million BRL IPCA+4.1682%
Currency
Amount
Issue date
Euro
BRL
1,000
1,600
1/18/2021
6/15/2021
On January 18, 2021, TIM issued its first 8-year Sustainability Bond for an amount of 1 billion euros, coupon
1.625%.
(millions of original currency)
Repayments
Telecom Italia S.p.A. 564 million euros 4.500% (1)
Amount Repayment date
Currency
1/25/2021
Euro
564
(1) Net of buy-backs totaling 436 million euros made by the company in 2015.
With reference to Telecom Italia S.p.A. 2002–2022 bonds, reserved for subscription by employees of the Group,
the nominal amount at December 31, 2021 was 214 million euros, down by 3 million euros compared to
December 31, 2020 (217 million euros).
Note that on December 31, 2021, the "Telecom Italia S.p.A. 2002-2022 Floating Rate bonds, Open Special
series, reserved for subscription by employees of the Telecom Italia Group, in service or retired” bond was
closed and the bonds fully repaid starting January 1, 2022, in accordance with the relevant Regulation.
Report on Operations of the
TIM Group
Consolidated Financial Position and Cash Flows Performance 68
Revolving Credit Facility and Term Loan
The following table shows committed credit lines available at December 31, 2021:
(billion euros)
Sustainability-linked RCF - maturing May 2026
Revolving Credit Facility – maturing January 2023
Bridge to Bond Facility – maturing May 2021
Total
12/31/2021
Agreed
4.0
—
—
4.0
Drawn down
—
—
—
—
12/31/2020
Agreed
—
5.0
1.7
6.7
Drawn down
—
—
—
—
At December 31, 2021, TIM had bilateral Term Loans for 850 million euros with various banking counterparties
and an overdraft facility for 200 million euros, drawn down for the full amount.
On January 19, 2021, TIM entirely canceled the credit line for 1.7 billion euros, which was not used, stipulated
on May 18, 2020 as bridge to bond for subsequent issues on the bond market and an initial maturity of 12
months with an option of extension for another 12 months.
On May 13, 2021, TIM extended the Revolving Credit Facility by 5 years, reducing the amount to 4 billion euros
and making it the Group's first ever ESG-linked credit facility.
On December 23, 2021, the subsidiary FiberCop S.p.A. signed a new 5-year Term Loan for an amount of 1.5
billion euros with a pool of international banks, fully drawn down.
Maturities of financial liabilities and average cost of debt
The average maturity of non-current financial liabilities (including the current portion of medium/long-term
financial liabilities due within 12 months) was 6.53 years.
The average cost of the Group’s debt, considered as the cost for the year calculated on an annual basis and
resulting from the ratio of debt-related expenses to average exposure, stood at approximately 3.7%, while the
average cost of the Group's debt "After Lease" was equal to approximately 3.4%.
Current financial assets and liquidity margin
The TIM Group’s available liquidity margin amounted to 13,153 million euros, equal to the sum of:
■
“Cash and cash equivalents” and “Current securities other than investments” for a total of 9,153 million
euros (5,921 million euros at December 31, 2020), also including 838 million euros in repurchase
agreements expiring by April 2022;
■ Sustainability-linked Revolving Credit Facility amounting to 4,000 million euros, totally available.
This margin is sufficient to cover Group financial liabilities (current and otherwise) falling due over the next 36
months.
In particular:
Cash and cash equivalents amounted to 6,904 million euros (4,829 million euros at December 31, 2020). The
different technical forms of investing available cash can be analyzed as follows:
■ maturities: investments have a maximum maturity of three months;
■ counterparty risk: investments by the European companies are made with leading banking, financial and
industrial institutions with high credit quality. Investments by the companies in South America are made
with leading local counterparties;
■ Country risk: deposits have been made mainly in major European financial markets.
Current securities other than investments amounted to 2,249 million euros (1,092 million euros at December
31, 2020): These forms of investment represent alternatives to the investment of liquidity with the aim of
improving returns. They included a total of 840 million euros of treasury bonds held by Telecom Italia Finance
S.A., 675 million euros of bonds purchased by Telecom Italia Finance S.A. with different maturities, all with an
active market and consequently readily convertible into cash, and 734 million euros of investments in
monetary funds by the Brazil Business Unit. The purchases of the above government bonds, which, pursuant
to Consob Communication no. DEM/11070007 of August 5, 2011, represent investments in “Sovereign debt
securities”, have been made in accordance with the Guidelines for the “Management and control of financial
risk” adopted by the TIM Group.
During the fourth quarter of 2021, adjusted net financial debt came to 22,187 million euros up 23 million euros
on September 30, 2021 (22,164 million euros): the stability of the debt level derives from the attenuation of the
positive effects deriving from the operative and financial management following the assessment over the
contractual terms of finance lease liabilities. In addition, the transactions should be noted carried out in Brazil,
such as the sale of 51% of the company I-Systems S.A. (formerly FiberCo) and the acquisition under auction of
the frequencies for the implementation of 5G.
Report on Operations of the
TIM Group
Consolidated Financial Position and Cash Flows Performance 69
(million euros)
Net financial debt carrying amount
Reversal of fair value measurement of derivatives and related
financial liabilities/assets
Adjusted net financial debt
Breakdown as follows:
Total adjusted gross financial debt
Total adjusted financial assets
12/31/2021
(a)
22,416
(229)
22,187
32,564
(10,377)
9/30/2021
(b)
22,492
(328)
22,164
29,107
(6,943)
Changes
(a-b)
(76)
99
23
3,457
(3,434)
Report on Operations of the
TIM Group
Consolidated Financial Position and Cash Flows Performance
70
CONSOLIDATED DATA – TABLES OF DETAIL
To follow, the Separate Consolidated Income Statement, Consolidated Statements of Comprehensive Income,
Consolidated Statement of Financial Position, Consolidated Statement of Cash Flows as well as Other
Information of the TIM Group.
Separate Consolidated Income Statement
(million euros)
Revenues
Other income
Total operating revenues and other income
Acquisition of goods and services
Employee benefits expenses
Other operating expenses
Change in inventories
Internally generated assets
Operating profit (loss) before depreciation and
amortization, capital gains (losses) and impairment
reversals (losses) on non-current assets (EBITDA)
Depreciation and amortization
Gains/(losses) on disposals of non-current assets
Impairment reversals (losses) on non-current assets
Operating profit (loss) (EBIT)
Share of profits (losses) of associates and joint ventures
accounted for using the equity method
Other income (expenses) from investments
Finance income
Finance expenses
Profit (loss) before tax from continuing operations
Income tax expense
Profit (loss) from continuing operations
Profit (loss) from Discontinued operations/Non-current
assets held for sale
Profit/(Loss) for the year
Attributable to:
Owners of the Parent
Non-controlling interests
2021
2020
Changes
(a-b)
(a)
15,316
272
15,588
(6,550)
(2,941)
(1,502)
10
475
5,080
(4,490)
1
(4,120)
(3,529)
38
126
1,124
(2,274)
(4,515)
(3,885)
(8,400)
—
(8,400)
(8,652)
252
(b)
15,805
211
16,016
(6,173)
(2,639)
(961)
(6)
502
6,739
(4,616)
(11)
(8)
2,104
18
454
1,143
(2,322)
1,397
5,955
7,352
—
7,352
7,224
128
absolute
(489)
61
(428)
(377)
(302)
(541)
16
(27)
(1,659)
126
12
(4,112)
(5,633)
20
(328)
(19)
48
(5,912)
(9,840)
(15,752)
—
(15,752)
(15,876)
124
%
(3.1)
28.9
(2.7)
(6.1)
(11.4)
(56.3)
—
(5.4)
(24.6)
2.7
—
—
—
—
(72.2)
(1.7)
2.1
—
—
—
—
—
—
—
Report on Operations of the
TIM Group
Consolidated Data – Tables of detail
71
Consolidated Statements of Comprehensive Income
In accordance with IAS 1 (Presentation of Financial Statements), the following Consolidated Statements of
Comprehensive Income include the Profit (loss) for the year as shown in the Separate Consolidated Income
Statement and all non-owner changes in equity.
(million euros)
Profit/(Loss) for the year
Other components of the Consolidated Statements of Comprehensive
Income
Other components that will not be reclassified subsequently to
Separate Consolidated Income Statement
Financial assets measured at fair value through other comprehensive
income:
Profit (loss) from fair value adjustments
Income tax effect
2021
(8,400)
2020
7,352
(a)
7
—
7
(4)
—
(4)
(b)
Remeasurements of employee defined benefit plans (IAS19):
Actuarial gains (losses)
Income tax effect
Share of other comprehensive income (losses) of associates and joint
ventures accounted for using the equity method:
Profit (loss)
Income tax effect
Total other components that will not be reclassified subsequently to
Separate Consolidated Income Statement
Other components that will be reclassified subsequently to Separate
Consolidated Income Statement
Financial assets measured at fair value through other comprehensive
income:
Profit (loss) from fair value adjustments
Loss (profit) transferred to Separate Consolidated Income Statement
Income tax effect
Hedging instruments:
Profit (loss) from fair value adjustments
Loss (profit) transferred to Separate Consolidated Income Statement
Income tax effect
Exchange differences on translating foreign operations:
Profit (loss) on translating foreign operations
Loss (profit) on translating foreign operations transferred to Separate
Consolidated Income Statement
Income tax effect
Share of other comprehensive income (losses) of associates and joint
ventures accounted for using the equity method:
Profit (loss)
Loss (profit) transferred to Separate Consolidated Income Statement
Income tax effect
Total other components that will be reclassified subsequently to
Separate Consolidated Income Statement
Total other components of the Consolidated Statements of
Comprehensive Income
Total comprehensive income (loss) for the year
Attributable to:
Owners of the Parent
Non-controlling interests
(c)
(d)
(e=b+c+d)
(f)
(g)
(h)
(i)
(k=f+g+h+i)
(m=e+k)
(a+m)
(8)
(3)
(11)
—
—
—
(4)
28
(6)
—
22
658
(365)
(71)
222
50
—
—
50
—
—
—
—
294
290
(8,110)
(8,374)
264
6
(1)
5
—
—
—
1
5
—
—
5
(253)
373
(30)
90
(1,612)
—
—
(1,612)
—
—
—
—
(1,517)
(1,516)
5,836
6,199
(363)
Report on Operations of the
TIM Group
Consolidated Data – Tables of detail
72
Consolidated Statement of Financial Position
(million euros)
Assets
Non-current assets
Intangible assets
Goodwill
Intangible assets with a finite useful life
Tangible assets
Property, plant and equipment owned
Rights of use assets
Other non-current assets
Investments in associates and joint ventures
accounted for using the equity method
Other investments
Non-current financial receivables arising from lease
contracts
Other non-current financial assets
Miscellaneous receivables and other non-current
assets
Deferred tax assets
Total Non-current assets
Current assets
Inventories
Trade and miscellaneous receivables and other
current assets
Current income tax receivables
Current financial assets
Current financial receivables arising from lease
contracts
Securities other than investments, other financial
receivables and other current financial assets
Cash and cash equivalents
Current assets sub-total
Discontinued operations /Non-current assets held
for sale
of a financial nature
of a non-financial nature
(a)
Total Current assets
Total Assets
(b)
(b+a)
12/31/2021
(a)
12/31/2020
(b)
Changes
(a-b)
18,568
7,147
25,715
13,311
4,847
2,979
156
45
2,285
2,266
3,513
11,244
55,117
282
4,358
79
56
2,391
6,904
9,351
14,070
—
—
—
14,070
69,187
22,847
6,740
29,587
13,141
4,992
2,728
54
43
2,267
2,114
7,496
14,702
62,422
242
4,346
86
55
1,254
4,829
6,138
10,812
—
—
—
10,812
73,234
(4,279)
407
(3,872)
170
(145)
251
102
2
18
152
(3,983)
(3,458)
(7,305)
40
12
(7)
1
1,137
2,075
3,213
3,258
—
—
—
3,258
(4,047)
Report on Operations of the
TIM Group
Consolidated Data – Tables of detail
73
(million euros)
Equity and Liabilities
Equity
Equity attributable to owners of the Parent
Non-controlling interests
Total Equity
Non-current liabilities
Non-current financial liabilities for financing
contracts and others
Non-current financial liabilities for lease contracts
Employee benefits
Deferred tax liabilities
Provisions
Miscellaneous payables and other non-current
liabilities
Total Non-current liabilities
Current liabilities
Current financial liabilities for financing contracts
and others
Current financial liabilities for lease contracts
Trade and miscellaneous payables and other
current liabilities
Current income tax payables
Current liabilities sub-total
Liabilities directly associated with Discontinued
operations/Non-current assets held for sale
of a financial nature
of a non-financial nature
(c)
(d)
Total Current Liabilities
Total Liabilities
Total Equity and Liabilities
(e)
(f=d+e)
(c+f)
12/31/2021
(a)
12/31/2020
(b)
Changes
(a-b)
17,414
4,625
22,039
23,437
4,064
699
245
926
1,413
30,784
5,945
651
9,473
295
16,364
—
—
—
16,364
47,148
69,187
26,215
2,625
28,840
23,655
4,199
724
277
770
3,602
33,227
3,677
631
6,588
271
11,167
—
—
—
11,167
44,394
73,234
(8,801)
2,000
(6,801)
(218)
(135)
(25)
(32)
156
(2,189)
(2,443)
2,268
20
2,885
24
5,197
—
—
—
5,197
2,754
(4,047)
Report on Operations of the
TIM Group
Consolidated Data – Tables of detail
74
Consolidated Statements of Cash Flows
(million euros)
Cash flows from operating activities:
Profit (loss) from continuing operations
Adjustments for:
Depreciation and amortization
Impairment losses (reversals) on non-current assets (including investments)
Net change in deferred tax assets and liabilities
Losses (gains) realized on disposals of non-current assets (including
investments)
Share of profits (losses) of associates and joint ventures accounted for using
the equity method
Change in provisions for employee benefits
Change in inventories
Change in trade receivables and other net receivables
Change in trade payables
Net change in income tax receivables/payables
Net change in miscellaneous receivables/payables and other assets/liabilities
Cash flows from (used in) operating activities
Cash flows from investing activities:
Purchases of intangible, tangible and rights of use assets on a cash basis
Capital grants received
Acquisition of control of companies or other businesses, net of cash acquired
Acquisitions/disposals of other investments
Change in financial receivables and other financial assets (excluding hedging
and non-hedging derivatives under financial assets)
Proceeds from sale that result in a loss of control of subsidiaries or other
businesses, net of cash disposed of
Proceeds from sale/repayments of intangible, tangible and other non-current
assets
Cash flows from (used in) investing activities
Cash flows from financing activities:
Change in current financial liabilities and other
Proceeds from non-current financial liabilities (including current portion)
Repayments of non-current financial liabilities (including current portion)
Changes in hedging and non-hedging derivatives
Share capital proceeds/reimbursements (including subsidiaries)
Dividends paid
Changes in ownership interests in consolidated subsidiaries
Cash flows from (used in) financing activities
Cash flows from (used in) Discontinued operations/Non-current assets held for
sale
Aggregate cash flows
Net cash and cash equivalents at beginning of the year
Net foreign exchange differences on net cash and cash equivalents
Net cash and cash equivalents at end of the year
2021
2020
(8,400)
4,490
4,118
3,894
(120)
(38)
(83)
(39)
257
337
(313)
233
4,336
7,352
4,616
36
(6,538)
(441)
(18)
(628)
20
484
(231)
708
1,191
6,551
(4,013)
(3,477)
3
—
(100)
(1,183)
172
4
(5,117)
704
4,082
(3,072)
103
(42)
(368)
1,757
3,164
—
2,383
4,508
13
6,904
24
(7)
(11)
(251)
(33)
678
(3,077)
(1,461)
1,470
(2,790)
—
1,164
(390)
(2)
(2,009)
—
1,465
3,202
(159)
4,508
(a)
(b)
(c)
(d)
(e=a+b+c+d)
(f)
(g)
(h=e+f+g)
Report on Operations of the
TIM Group
Consolidated Data – Tables of detail
75
Purchases of intangible, tangible and rights of use assets
(million euros)
Purchase of intangible assets
Purchase of tangible assets
Purchase of rights of use assets
Total purchase of intangible, tangible and rights of use assets on an accrual basis
Change in payables arising from purchase of intangible, tangible and rights of use
assets
Total purchases of intangible, tangible and rights of use assets on a cash basis
Additional Cash Flow information
(million euros)
Income taxes (paid) received
Interest expense paid
Interest income received
Dividends received
Analysis of Net Cash and Cash Equivalents
(million euros)
Net cash and cash equivalents at the start of the year:
Cash and cash equivalents - from continuing operations
Bank overdrafts repayable on demand – from continuing operations
Cash and cash equivalents - from Discontinued operations/Non-current assets
held for sale
Bank overdrafts repayable on demand – from Discontinued operations/Non-
current assets held for sale
Net cash and cash equivalents at the end of the year:
Cash and cash equivalents - from continuing operations
Bank overdrafts repayable on demand – from continuing operations
Cash and cash equivalents - from Discontinued operations/Non-current assets
held for sale
Bank overdrafts repayable on demand – from Discontinued operations/Non-
current assets held for sale
2021
(1,886)
(2,665)
(746)
(5,297)
1,284
(4,013)
2021
(242)
(1,440)
437
90
2020
(1,197)
(2,138)
(1,362)
(4,697)
1,220
(3,477)
2020
223
(1,520)
448
256
2021
2020
4,829
(321)
—
—
4,508
6,904
—
—
—
6,904
3,138
(1)
65
—
3,202
4,829
(321)
—
—
4,508
The additional disclosures required by IAS 7 are provided in the Note “Net Financial Debt” to the TIM Group
Consolidated Financial Statements at December 31, 2021.
Report on Operations of the
TIM Group
Consolidated Data – Tables of detail
76
Other information
Average salaried workforce
(equivalent number)
Average salaried workforce – Italy
Average salaried workforce – Outside Italy
Total average salaried workforce (1)
2021
(a)
38,826
9,116
47,942
2020
(b)
40,140
8,959
49,099
Changes
(a-b)
(1,314)
157
(1,157)
(1)
Includes agency contract workers: average 12 employees in Italy in 2021; average 9 employees in Italy in 2020.
Headcount at year end
(number)
Headcount – Italy
Headcount – Outside Italy
Total headcount at year end (1)
12/31/2021
(a)
42,347
9,582
51,929
12/31/2020
(b)
42,680
9,667
52,347
Change
(a-b)
(333)
(85)
(418)
(1)
Includes agency contract workers: 16 employees in Italy at 31/12/2021; 14 employees in Italy at 12/31/2020.
Headcount at year end – Breakdown by Business Unit
(number)
Domestic
Brazil
Other Operations
Total
12/31/2021
(a)
42,591
9,325
13
51,929
12/31/2020
(b)
42,925
9,409
13
52,347
Change
(a-b)
(334)
(84)
—
(418)
Report on Operations of the
TIM Group
Consolidated Data – Tables of detail
77
AFTER LEASE INDICATORS
TIM Group, in addition to the conventional financial performance measures established by the IFRS, uses
certain alternative performance measures in order to present a better understanding of the trend of
operations and financial condition. Specifically, following the adoption of IFRS 16, the TIM Group presents the
following additional alternative performance measures:
EBITDA ADJUSTED AFTER LEASE - TIM GROUP
(million euros)
4th Quarter
2021
4th Quarter
2020
ORGANIC EBITDA - excluding non-recurring items
Lease payments
EBITDA adjusted After Lease (EBITDA-AL)
1,382
(211)
1,171
1,770
(195)
1,575
Changes
2021
2020
Changes
absolute
%
(388) (21.9)
(8.2)
(16)
(404) (25.7)
6,223
(819)
5,404
6,882
(772)
6,110
absolute
%
(659) (9.6)
(6.1)
(47)
(706) (11.6)
EBITDA ADJUSTED AFTER LEASE - DOMESTIC
(million euros)
4th Quarter
2021
4th Quarter
2020
ORGANIC EBITDA - excluding non-recurring items
Lease payments
EBITDA adjusted After Lease (EBITDA-AL)
999
(128)
871
1,397
(126)
1,271
Changes
2021
2020
Changes
absolute
%
(398) (28.5)
(1.6)
(400) (31.5)
(2)
4,867
(509)
4,358
5,583
(503)
5,080
absolute
%
(716) (12.8)
(1.2)
(722) (14.2)
(6)
EBITDA ADJUSTED AFTER LEASE - BRAZIL
(million euros)
4th Quarter
2021
4th Quarter
2020
ORGANIC EBITDA - excluding non-recurring items
Lease payments
EBITDA adjusted After Lease (EBITDA-AL)
388
(83)
305
ADJUSTED NET FINANCIAL DEBT AFTER LEASE - TIM GROUP
Changes
2021
2020
Changes
absolute
%
14
3.4
(14)
(20.3)
— —
374
(69)
305
1,368
(310)
1,058
absolute
62
(41)
21
1,306
(269)
1,037
%
4.7
(15.2)
2.0
(million euros)
Adjusted net financial debt
Leasing
Adjusted net financial debt - After Lease
12/31/2021
22,187
(4,614)
17,573
12/31/2020
23,326
(4,732)
18,594
Changes
(1,139)
118
(1,021)
EQUITY FREE CASH FLOW AFTER LEASE - TIM GROUP
(million euros)
Equity Free Cash Flow
Leasing
Equity Free Cash Flow After Lease
4th Quarter
2021
172
(138)
34
4th Quarter
2020
748
(126)
622
Changes
2021
2020
Changes
(576)
(12)
(588)
632
(570)
62
2,414
(799)
1,615
(1,782)
229
(1,553)
Report on Operations of the
TIM Group
After Lease indicators
78
SUSTAINABILITY ASPECTS
TIM is pursuing digital transformation as a key to social and economic development, reducing its
in the move towards
environmental
decarbonization, flanked with the challenge of using the Group's infrastructure and skills to contribute towards
the digital evolution of our company, an evolution that starts out from digital inclusion.
impact and assisting the communities
it operates
in which
The continuous search for energy efficiency, the limitation of its emissions and the increasing contribution of
renewable energy, allow TIM to strive to achieve carbon neutrality by 2030 and net zero by 2040, by improving
efficiency indicators and developing infrastructure and Data Centers to provide more and more services with
lower resource use.
Since 2020, the Group has put sustainable development right at the heart of its long-term strategy, setting
social, environmental and governance goals and integrating them with other objectives of the Industrial Plan.
The Sustainability Plan is TIM’s concrete contribution towards achieving the United Nations 2030 Agenda goals
for Sustainable Development, a commitment that is constantly recognized by the inclusion of the share in the
main ESG scoring and indexes for almost 20 years.
The update of TIM’s ESG ambitions are set out in new goals for the three-year period 2022-2024, which are
hinged on the pillars of fighting climate change and the circular economy, digital inclusion and the
strengthening of governance instruments.
The Plan’s objectives, where possible with reference to 2021, were all achieved, with the excellent performance
of the “eco-efficiency” and “engagement” clusters, with the latter improving by 20 points compared to 2019,
exceeding the growth target expected.
Materiality analysis
As envisaged by Italian Legislative Decree no. 254/2016 and in accordance with the requirements of the Global
Reporting Initiative Standards, again in 2021 TIM performed its Materiality Analysis aimed at identifying the
priority governance and social-environmental topics.
Process to identify the material topics
The analysis for the determination of the 2021 topics not only confirmed those recorded in 2020 but also led to
the change of some names and descriptions to incorporate new aspects and declinations or emerging sub-
topics.
First, the taxonomy1 to adopt in the semantic engine was updated. In addition to considering the most recent
versions of the references in sustainability and digital fields used in 20202, their number was increased, with
new sources considered to be particularly important3.
For the first time, moreover, in a bid to strengthen the entire process of structuring taxonomy, a university
technical committee was established.
Through the iterations and on the basis of occurrences4 present in the more than 200 documents analyzed,
the new tree of relevant topics has been identified:
■ Climate change
■ Cyberbullying, child pornography, online gambling
■ Human rights
■ Ethics and corporate governance
■ Digital inclusion
■
Infrastructures and emerging technologies
■ Work and the human capital
■ Equal opportunities in the company
■ Procurement policies relating to Environmental Social Governance (ESG) topics
1 Each taxonomy is made up of interrelated concepts and keywords with different correlation and significance levels. Each taxonomy was
constructed using both Italian and English terms.
2 Such as, for example, the Global Reporting Initiative Standard, ISO 26000, the Sustainable Development Goals or the DJSI - Dow Jones
Sustainability Index.
3 Such as the EU Taxonomy or the TCFD - Task Force on Climate Related Financial Disclosures.
4 Namely the number of times that a concept (or a specific term) is detected within the document by the semantic engine. They are an indication
of the significance of the topic detected in the context of the document.
Report on Operations of the
TIM Group
Sustainability aspects
79
■ Privacy and cybersecurity
■ Relations with customers
■ Environmental Social Governance (ESG) Reports
In order to obtain the significance of the material topics for the Company and external stakeholders,
consultation activities have been started: internally, through the compilation of an on line questionnaire, a
significant sample of representatives of the company management team were called to express an opinion;
externally, the standard on-line questionnaire, the answers to which were appropriately weighted, was
enriched by big data analysis5, relying on our collaborative platform6.
Results at a glance
Below is the 2021 TIM Materiality Matrix7
The key issues for the Group and its stakeholders reflect the Sustainable Development Goals which TIM
believes it can help achieve to a greater extent through its own personnel, technologies and services, adopting
business policies that promote and safeguard human rights and the environment.
Specifically, the relevant Goals are:
■ No. 3: Ensure healthy lives and promote well-being for all and at all ages;
■ No. 4: Quality education;
5 Thanks to the use of the TIM Data Room, the point of view of stakeholders on the topics was investigated, examining both their declarations given
in the related institutional sites and the discussions published on the social networks.
6 On the TIM collaborative platform, stakeholders relating to the TIM Group categories were engaged and consulted.
7 Note that the analysis of the institutional sources has revealed the value of joining some topics together that, following the effects of the COVID-
19 pandemic and under the scope of the current context, were found to be no longer different but rather one the consequence of the other. This is
why in 2021, 12 topics were identified as compared with the 17 of 2020.
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■ No. 5: Gender equality;
■ No. 7: Affordable and clean energy;
■ No. 8: Decent work and economic growth;
■ No. 9: Industry, innovation and infrastructure;
■ No. 10: Reduced inequalities;
■ No. 11: Sustainable cities and communities;
■ No. 12: Responsible consumption and production;
■ No. 13: Take urgent steps to combat climate change and its consequences;
■ No. 16: Peace, justice and strong institutions;
■ No. 17: Strengthen the means of implementation and renew the world partnership for sustainable
development.
Validation and Review
The validation of the topics and of the entire materiality analysis process was carried out by the Investor
Relations' Sustainability Planning and Performance Index Analysis department, with the support of RE2N and
TIM Data Room. The results given in the Matrix were validated by Sustainability and Control and Risks
Committees and, after approval, the Matrix was then used as a base on which to ensure the ESG construction
of the Group’s Strategic Plan, as well as the 2021 non-financial report.
The review phase is due to take place as a preparatory stage prior to the next reporting cycle, with the aim of
submitting the results of the analyses carried out, updated in the following year, to specific stakeholder
engagement activities.
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RESEARCH AND DEVELOPMENT
Approach to innovation, choice of topics, innovation governance
process
The research and development of innovative technologies and services, processes and business models,
represents a key factor in the keeping up with the profound transformations of ICT, as well as an asset acting
as a driving force for customers and the countries in which the Group operates, helping to overcome the socio-
cultural barriers that limit the opportunity to participate in the information society and enjoyment of the
relative benefits. The paragraph describes the business for TIM in Italy and TIM S.A. in Brazil.
TIM has always considered innovation to be a strategic asset and takes great care in governing individual
aspects, from its strategic role to its responsibility, objectives and policy.
In 2021, TIM continued to strengthen an innovation model that leverages the eco-system concept, which is
fundamental to nurturing a virtuous circle for scouting, incubating and planning innovative initiatives. This is
realized, on the one hand, through labs as multi-site centers open virtually and connected in a unique digital
environment to support open innovation, and on the other hand, through collaboration with Universities of
excellence, thus creating a synergy oriented to the digital transformation of society, and which certifies TIM as
a reference partner in Italy.
In line with this, the Group has taken action in several ways:
■ by continuing the action to strengthen internal innovation lines, focusing the activity of laboratories and
research groups on the fundamental trends in the evolution of fixed and mobile networks towards 5G
standards1, Open Ran and Edge Cloud, on the issues of service platforms and new operation systems;
■ by selecting, accelerating and co-creating innovative ideas, products and services from the world of
startups2 and small and medium-sized enterprises (SMEs), in line with emerging innovative trends of
interest to TIM, in order to improve the commercial offer and internal processes, and encourage the
growth of the Italian startup ecosystem through the TIM WCap acceleration program and venture capital
investments made by TIM Ventures, the corporate venture capital arm3 of TIM.
Innovation management is mainly overseen by the Innovation Standard&IPR and Portfolio department the
Chief Technology & Operation Office, and involves different stakeholders inside and outside the Company:
■ other areas of the company involved from time to time, both as internal customers for the innovation
output solution and as centers of expertise on the topic;
■
■
traditional and digital partners, for the joint go2market4 of digital services;
research centers and universities, for cooperation and joint projects. In 2021, research contracts were
initiated with five Italian universities for a total value of approximately 900,000 euros;
■ at international level, a vast set of standardization bodies, associations, alliances, telco open communities,
which play a fundamental role in the evolution of the TLC industry/sector for networks, platforms and
services, in which TIM collaborates in partnership with the main stakeholders of the sector. In 2021, despite
the continuing international crisis due to the pandemic, TIM confirmed its membership of the main
standardization bodies and associations with 30 registrations for a total commitment of around 800,000
euros, placing the emphasis on interaction, not only with associations closely linked to the world of
telecommunications, but also integrating with other industrial sectors such as the automotive sector and
industry 4.0. Participation in international bodies has enabled TIM to increase its intellectual assets, both in
terms of the acquisition of know-how and through direct contribution, aimed at promoting its industrial
strategy and intellectual property (with the approval of solutions based on TIM patents in standards);
■ at the national level there are numerous collaborative relationships with various Ministries, the European
Union, Public Bodies (e.g. the National Research Council and local authorities), for the realization of
projects financed through participation in calls for tenders and partnership initiatives. In this regard in 2021,
the collaboration that was started in 2019 continued with the Competence Industry Manufacturing 4.0,
aimed at fostering the transfer of technological skills and innovation in production processes, products and
business models, as well as the collaboration with B-REX in Bologna.
TIM's technological evolution is based on its Technology Plan, part of the Industrial Plan; specifically the
Technology Plan identifies the technological strategy in terms of guidelines, specific technologies and the
roadmap of adoption over a multi-year period. The three-year technological plan is the reference policy for the
Group and includes also the technological evolution plans of subsidiaries. The qualitative and/or quantitative
goals have been given an annual framework. They are defined so that they can be objectively measured in
compliance with quality standards (ISO 9001) and environmental standards (ISO 14001), and operational
innovation processes; in the same way as TIM processes, in general, are based on Telemanagement Forum's
reference standard E-Tom5.
Overall, in 2021 TIM committed around 1,300 people to working on technological innovation and engineering in
Italy, for an overall investment for the TIM Group of 1,016 million euros.
1 Acronym for fifth generation mobile technology and standards.
2 New companies characterized by a high degree of innovation
3 TIM Ventures is the TIM Group company that invests in "corporate venture capital".
4 It can be defined as the strategy of an organization, which utilizes internal and external resources (e.g., sales force), in order to deliver its unique
value proposition to customers and gain a competitive advantage.
5 The Business Process Framework (eTOM) can be considered an operating model framework for telecommunications service providers; the model
describes the required business processes, defines the key elements and how they should interact. eTOM is a standard maintained by the TM
Forum, an association for service providers and their suppliers in the telecommunications and entertainment industries.
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Innovative technological activities with a focus on 5G, Edge Cloud and
Open RAN
In 2021 TIM continued its commitment to innovative activities with a focus on 5G Edge Cloud and Open RAN.
Open RAN and Edge Computing technologies are considered decisive to allow 5G to fulfill its technological and
business potential. The Open Radio Access Network (O-RAN) is a concept based on the interoperability and
standardization of the elements of the 4G and 5G radio access network, including a unified interconnection
standard for open source hardware and software elements from different vendors, and the introduction of
network elements that enable more intelligence in the network according to the principles of Artificial
Intelligence and Machine Learning. Edge Computing moves traffic and service processing from a centralized
cloud to the edge of the network and closer to the customer, allowing full advantage to be taken of high speed
and low latency on the network.
TIM, a member of the O-RAN ALLIANCE since 2018, during the first half of 2021 was one of Europe’s first
operators (and the only one in Italy) to launch an Open RAN (Open Radio Access Network) development
program for the innovation of the mobile access network. This initiative will see the Group implement new
solutions on its commercial network to benefit customers and businesses thereby speeding up the deployment
of digital services.
The initiative is covered by the signing of a Memorandum of Understanding in February 2021 with the main
European operators to promote Open RAN technology with the aim of speeding up the implementation of new
generation mobile networks, in particular 5G, Cloud and Edge Computing.
In this context, TIM has launched a series of field trials and laboratory tests:
The first trial, launched in April 2021, sees Faenza as the first city in Italy to adopt this open network model,
where, thanks to the collaboration with JMA Wireless, a leader in mobile coverage activities and in the
development of Open RAN software, TIM uses a solution that decouples the components (hardware and
software) of the radio access network, according to a logic of supplier diversification, with a view to fostering a
broader industrial ecosystem. In this case, the radio node, on a 4G network, was built by combining the JMA
software baseband with the radio units supplied by Microelectronics Technology (MTI). Looking ahead, this
activity will also extend to 5G solutions.
In October, the solution was also activated in Saluzzo, in the province of Cuneo, thus creating some of the
most extensive Open RAN coverage in Europe.
In September, a solution that follows the architecture and interfaces defined in O-RAN was also activated in
Matera, thanks to the collaboration with Mavenir for the RAN components and with MTI for the 4G Radio Unit.
This solution, also developed with Dell Technologies, Intel and VMware, makes it possible to decouple the
components (hardware and software) of the radio access network, according to a logic of supplier
diversification, with a view to fostering a broader industrial ecosystem.
In addition, the first stand-alone Open RAN 5G connection (i.e. completely independent from 4G) was carried
out at the TIM Innovation Lab in Turin and will soon be activated also in the field in Matera. The result was
achieved on the 3.7 GHz frequencies of TIM's 5G network in collaboration with Mavenir for core and radio
networking capabilities, Dell Technologies and Intel for infrastructure, and VMware's Telco Cloud platform for
end-to-end control of network functions and software automation.
The development of Open RAN solutions, characterized by an open environment, allows, in line with the
objectives of TIM's 2021-2023 plan, to combine the potential of the cloud and Artificial Intelligence with the
evolution of the mobile network. This technology allows operators to reinforce security standards, improve
network performance and optimize costs in order to provide increasingly advanced digital services, such as
those related to new solutions for Industry 4.0, Smart City and autonomous driving.
TIM is also one of the world’s first operators (and the only one in Italy) to launch the “European OTIC Lab”. The
Open Test and Integration Center - OTIC Lab, in line with the standards envisaged by O-RAN ALLIANCE, the
set-up of which will be completed during the second half of the year, will be based at the TIM Group Innovation
laboratories in Turin and operate in synergy with the entire Open RAN ecosystem (manufacturers, start-ups,
system integrators, etc.) in order to try out new solutions and speed up this technology for the development of
the new pan-European architecture of the mobile network (5G, Cloud and Edge Computing).
As part of the activities carried out in TIM's OTIC laboratory, during the months of October and November TIM
hosted the third edition of the Plugfest. The focus of the Plugfest was the verification of compliance and
interoperability of some interfaces defined in O-RAN and the end2end performance testing of some solutions
implemented according to the specifications defined within the scope of O-RAN.
Other collaborations and activities with a 5G focus
The Torino City Lab initiative continues6TIM's contribution in 2021 focused mainly on the activities of the Turin
Casa delle Tecnologie7The City of Turin is in fact first in the rankings of the tender of Axis 1 of the Program in
support of emerging technologies and the four-year project presented, known as CTE Next (in which TIM is the
reference technological partner), has been awarded the MiSE (Ministry of Economic Development) loan.
Over the 4 years, many Torino City Lab initiatives will be conducted through CTE Next, which provides a series
of calls for testing and calls for innovation, for which it will catalyze the potential experiments by start-ups and
SMEs interested in carrying out activities in the territory of Turin. The project reference verticals are the classic
sectors on which the city of Turin focuses: Smart Mobility, Urban Air Mobility (drones), Industry 4.0, Innovative
Urban Services, and the gaze, as always, will be turned towards the social aspects and potential replication in
other contexts of the solutions tested. In addition to the locations for experimentation already used in Torino
6 Torino City Lab: project started in 2019 and born from the partnership between TIM and the Municipality of Turin. In this case, TIM is a TLC partner,
for the establishment of simplified trial areas for digital services to allow for strategic collaboration to continue in the dissemination phase of the
commercial 5G service.
7 Casa delle Tecnologie: project inaugurated in July 2021 from which the House of Emerging Technologies was born, which aims to characterize the
city as a large open innovation center to attract projects in the field of solutions for Smart Cities and Smart Mobility.
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City Lab (Doralab and the urban circuit of Smart Roads), the CSI Next site, the CIM 4.0, the Clik laboratories of
the Polytechnic and the laboratories of the Links Foundation (all places where TIM has set up the 5G reference
infrastructure) will be added.
Thanks to CTE Next, the activities of Torino City Lab are significantly expanded, and made more structured and
formalized, ensuring better effectiveness for the sustainable development of the territory. It should be pointed
out that in CTE Next, TIM represents the 360-degree technological reference point for both the construction of
the Casa delle Tecnologie and the innovation activities that will be carried out in it, assuming an even more
central and decisive role for the success of the initiative.
A further collaboration with the Municipality of Turin concerns the automotive trial in the context of the 5GAA
(5G Automotive Association), which also sees the participation of other mobile operators (British Telecom and
Telefónica), Cisco, Intel, Capgemini and Harman as technology providers, and Stellantis as car maker. The goal
is to ensure greater livability of city streets, increasing the safety of all road users (pedestrians, cyclists,
motorists), with the testing of Vulnerable Road User (VRU) and Intersection Movement Assist (IMA) use cases,
which are based on TIM's 5G network and Edge Computing solutions, the same technological assets that are
characteristic of CTE Next. The activity was completed in December with a demo in which in a commercial 5G
network context of private viability, the service scenarios were successfully demonstrated, applied in particular
to foreign users of British Telecom and Telefónica roaming on the TIM network.
The involvement in the initiative of 5T, the in-house company of the council, which manages mobility systems
and services in Turin and Piedmont, guarantees that the solutions designed and demonstrated in the trial are
consistent and can be integrated with the development of the traffic management platforms used in Turin.
From this standpoint, TIM and the other partners in the initiative are considering performing a second trial
phase in 2022, during which to try out these application scenario types in real traffic conditions (or at least in
controlled traffic conditions under the scope of real scenarios).
In the automotive sector, among the main applications, agreements and use scenarios of TIM's 5G
implemented in 2021, we highlight:
■ The C-ROADS Italy project, in which TIM participates as an enabler of the infrastructure dedicated to hybrid
communication, i.e. based on the interaction between cellular and proximity communication. TIM has
collaborated with project partners, in particular Autostrada del Brennero and Centro Ricerche Fiat
(Stellantis) for the implementation of pilot projects in the field. To this end, TIM ensured mobile coverage
on all stretches of the Brenner Highway and developed and made available for experimentation the
Interchange Entity, i.e. the application component of the C-ROADS platform that enables the exchange of
messages between all operators in the smart transport ecosystem world, such as highways and the
connected car.
■ The MASA - Modena Automotive Smart Area project, an 'open-air' laboratory for the testing and
certification of new technologies in autonomous driving, assisted driving and mobility, born from the
partnership between the Municipality of Modena and the University of Modena and Reggio Emilia. The
collaboration will make it possible to test increasingly advanced autonomous and connected driving
solutions and services, with the aim of developing the communication infrastructure that will be the basis
of the new mobility services using the potential offered by the most modern network technologies. In
particular, TIM will provide innovative solutions enabled by its 4G and 5G mobile radio networks, as well as
by Edge Computing technologies, which ensure better performance in terms of high bandwidth and low
latency, for automotive applications related to mobility and traffic management.
■ The agreement with ALIS for smart and sustainable mobility through the digitization of over 1,500
transport, logistics and intermodal companies. The aim is to make the mobility of goods and people
smarter and more efficient, as well as greener, thanks to digital technologies generating a positive impact
in terms of economic, social and environmental sustainability in the transport, logistics and intermodal
supply chain.
■
■
"Arena del Futuro" – the world's first collaborative innovation project for zero-emission mobility of people
and goods towards carbon neutrality together with the A35 BreBeMi-Aleatica highway, ABB, Electreon,
FIAMM Energy Technology, IVECO, IVECO Bus, Mapei, Pizzarotti, Politecnico di Milano, Prysmian, Stellantis,
Università Roma Tre and Università di Parma. The collaboration is aimed at creating the conditions for the
development of an innovative zero-emission mobility system for people and goods along highway
transport corridors by demonstrating the effectiveness and efficiency of technologies related to the
powering of electric cars, buses and commercial vehicles through dynamic non-contact inductive charging.
In December 2021, TIM presented the Autonom Shuttle by Navya, a 100% electric, self-driving shuttle that
can interface with the 5G network and the Smart Mobility and Smart City platforms. This is the Autonom
Shuttle developed by Navy, a French company that leads the industry of self-driving vehicles, dedicates to
spaces of the first and last mile, tested at the TIM Innovation Lab in Rome. The 100% electric self-driving
minibus can dialog via the 5G network using the applications of TIM’s Smart Mobility and Smart City
platforms to foster safety. The self-driving electric shuttle can carry up to 15 passengers - 11 seated and 4
standing. It reaches a maximum speed limited to 25 km/h with a nominal 22.6 kW (peak 34) electric motor.
The possible evolutions of the technology deployed by the shuttle include surveillance services.
In the Industry 4.0 sector, collaborations can be pointed to with top-level Competence Centers such as CIM 4.0
and B-REX.
Within Competence Industry Manufacturing 4.0 (CIM 4.0), the MISE Competence Center, TIM Innovation Labs
collaborate with the Polytechnic University and University of Turin, as well as with 23 other companies from
Turin for the study, testing and dissemination in SMEs of Industry 4.0 solutions, including 5G. The collaboration
that began in 2019 continued into 2021, not only on the higher education front with active participation in the
CIM Academy, but also on the technology front: TIM has brought ultra-fast XGS-PON connections to CIM: FTTH
fiber connections with XGS-PON technology, which make a bandwidth of 10 GB/second available
symmetrically, and the use of new EDGE Cloud infrastructure, technological enablers designed ad hoc to foster
the best digital performance and greatest flexibility of use.
At BI-REX, Bolognese center, the focus placed on the development areas of Big Data, Additive Manufacturing,
Robotics, finishing and metrology, the alliance between the TIM network and the technologies present in BI-
REX’s pilot line, a reference point already active for companies, research centers and SMEs throughout Italy,
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engaged in the processes of technology transfer and digital transformation, demonstrates an example of how
5G can accelerate the digitization of companies.
On BI-REX’s pilot line, TIM has made a professional push-to-talk communication platform available to ensure
greater safety for working staff on the move. This platform allows you to geolocate and follow the worker,
ensuring adequate protection even when isolated, thanks to the activation of the "man down" feature, which
detects any irregularities in the worker's posture, enabling on-site supervision.
TIM's new fifth-generation network, integrated with the Augmented and Virtual Reality solutions already
present on the pilot line, will enable timely future maintenance activities, with remote technical assistance,
thanks to constant monitoring of the operation and the alarm indicators of the connected systems, minimizing
any downtime and costs.
Collaboration between TIM and BI-REX is also concerned with the sphere of training, aimed at updating the
skills of people and companies at the center of change: the online training activities on technologies for
Industry 4.0 of the TIM Corporate Academy, will in fact complement the educational offer already provided by
BI-REX, both on site with the pilot line itself, and remotely.
In May, under the scope of the agreement between TIM and Google Cloud, stipulated in 2020, for a
technological collaboration for the creation of innovative public, private and hybrid cloud services to enrich the
range of technological services offered by TIM, TIM and Noovle have launched the development of Italy's first
“5G Cloud Network”. The solution will allow for the faster development of new digital applications in 5G,
thanks to the automation of industrial processes and the real time implementation of services thanks to EDGE
Computing, on the basis of specific needs. The project, which will enable the automation of the functions of
TIM’s 5G core network and all Cloud applications, will use the TIM Telco Cloud infrastructure, Google Cloud
solutions and Ericsson technologies.
Among the initiatives in the entertainment field, a sector over which TIM's innovation presides through all of
its components, and in support of TIM's large commitment on the commercial front, the 5G-TOURS European
project is of importance, whose various uses include use of the 5G network in remote and distributed TV
production and where TIM participates as site manager in Turin. In this context, in November Palazzo Madama
hosted the first trial of the “traveling orchestra”: more than 100 spectators present in the Great Reception Hall
were able to enjoy the musical work “The Garden of Forking Paths” by Andrea Molino in which a group of
musicians and actors traveling through the streets of the city center played in harmony with an instrumental
ensemble in the room, despite the physical distance separating them. All this has been made possible by TIM’s
5G network, which constantly guaranteed high speed and low latency so as to ensure the simultaneous
transmission of the various high-definition video flows from the video cameras to the central director.
Service Innovation initiatives
Operating activities to develop 5G technology, Open RAN and Edge Computing, as well as the enhancement of
innovative solutions linked to Quantum Communication, Metamaterials, the Corporate Technology Plan and
Digital Services carried out in partnership with companies, institutions, universities and start-ups, most of
which are part of TIM's Open Innovation ecosystem, are accompanied by structured technical communication
activities that range from the TIM Technical Bulletin editorial plan, to promotions with press releases and
events to disseminate scientific information, also at the customer's premises.
Research with Universities
In 2021, participatory research and development activities have been strongly focused on a model that ensures
an eco-system vision that pursues Open Innovation also through collaboration with some Universities of
excellence. In fact, in 2021 TIM will focus on the creation of a real "Open Innovation Ecosystem" centered on
the collaboration with some Italian universities in order to develop new Open Lab and Research Projects, as
well as through PhD contribution to internalize specialized knowledge, but also for the sharing of technological
trends, heralding new growth opportunities within an increasingly global market.
Open Innovation therefore grafts into an integrated ecosystem with the strategic European and Italian
departments comprising orders, PhDs, PoCs, the development of demo prototypes, Community Open Source,
financed projects and dissemination.
The research with the Universities for Innovation of 2021 identifies specific topics; real structured courses on
some medium/long-term topics to complete and enrich the internal know-how and construct an all-round
overview:
■ setting medium-term paths and collaborations;
■ continuity with the Framework Agreements of the previous year with 4 universities (Turin Polytechnic,
University of Catania, Secondary School Sant’Anna of Pisa and the NRC);
■
launch of an agreement with the University of Bologna on 5G for Industry with the corresponding
framework agreement on possible architectures that allow the integration of the 5G network within an
industrial plant. This will be based on the specific requirements determined by the different use cases of
Industry 4.0 and communication protocols used for industrial automation based on the evolution of the
features offered by the 5G network for Industrial IoT in the various releases of the standard. TIM, which
employs approximately 60 TIM reference technicians, 65 university researchers involved in specific
activities, envisages an economic commitment for 2021 of around 900,000 euros.
Another important step in the support for research and innovation is the path undertaken by TIM with the
financing of 30 PhDs. In particular, the Innovation department has provided the Human Resources department
with technical collaboration to propose research topics for establishing and tutoring 9-10 scholarships for the
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36th cycle and 6 additional scholarships for the 37th cycle. The universities chosen are: The Polytechnic of
Turin, the Polytechnic of Milan, the University of Milan, the University of Trento, the Scuola Superiore
Sant’Anna of Pisa, the Federico II University of Naples, the University of Catania and the Alma Mater Studiorum
of Bologna.
Collaboration has begun with the University of Modena and Reggio Emilia and the Council of Modena for the
trying out and certification of new technologies in self-driving and assisted-driving, which is triggered in the
MASA - Modena Automotive Smart Area project, where TIM joins in with its 4G/5G mobile radio and edge
computing solutions.
Funded research activities
In 2021, TIM continued to be active in participating in innovation and research initiatives funded by the
European Union and national public authorities, taking part, in particular, in international projects on issues
that are key for TIM. In the four-year period between 2018 and 2021, in the European research and innovation
programs (such as Connecting Europe Facility, Horizon 2020 and its recent evolution Horizon Europe) TIM
participated in more than 50 project proposals of which more than a third were accepted and then funded for
about 16 million euros. In this context, the activities carried out in the projects funded on the topics of 5G,
virtualization and smart mobility services, and more recently "Beyond 5G", which will lead to the definition of
the new generation of mobile systems of the near future, are those that have allowed, on the one hand, the
enrichment of expertise and, on the other hand, the acquisition and consolidation of an internationally-
recognized role.
Patents and Intellectual Property Rights8
In 2021, the Group's patent portfolio maintained a size comparable to that of previous years. The production of
new patent applications remained in line with previous years (16 patent applications filed on new inventions)
as did the new patents granted during the year. The rationalization of the patent portfolio has led to some
patents being abandoned which, with technological evolution, are no longer of any value. The Group's patent
areas relate to the entire ICT sector, with specific excellence in the mobile sector, in particular in radio access,
where TIM is among the leading TLC operators in the world.
In detail, TIM's patent portfolio at end 2021, relating to 538 patented inventions, includes over three thousand
patent applications and granted patents: the latter (granted after examination by more than 35 national
patents offices) account for approximately 90% of the total.
A significant aspect of patent activity is represented by the high number of patents resulting from
collaboration with universities and research institutes: 13% of patented inventions are the result of such
collaborations.
Also noteworthy is the participation in several patent pools9 managed by Via Licensing and Avanci on 3G, 4G
and 5G, with three patented inventions that were found to be essential to the standards. The patent pools
acquired new participants during the year (with a current total of 29 licensees for Via Licensing's LTE patent
pool and 48 licensees for the Avanci 3G+4G automotive patent pool) and granted licenses to 56 companies
(Via Licensing's LTE patent pool) and 19 car brands (Avanci's 3G+4G automotive patent pool), respectively.
TIM has equipped itself with a policy that envisages a recognition for patents when first granted and for those
that have led to an economic return. The inventors are assigned a reward that takes into account the
importance of the patents, assessed by an internal committee.
Research and Development in Brazil
The Architecture & Innovation Technology department10 is responsible for Research and Development (R&D)
activities; its main tasks are to define technological innovation for the network and information technology, to
identify evolutionary needs for new technologies and devices, converging architectonic guidelines and
strategic alliances in order to use the new business models and guarantee that the network infrastructure
evolution is in line with the corporate strategy.
In 2021, the Architecture & Innovation Technology department was made up of 52 people, including
telecommunications, electrical and electronic, IT and other specialists with professional skills and experience,
which cover all areas of network knowledge, meeting the need to innovate and support research and
development activities.
TIM Lab is the multifunction environment focused on innovation, which also plays a strategic role in supporting
credibility tests and trials, as well as PoCs (proofs of concepts), collaborating with the main suppliers and
technology partners through knowledge sharing, technological infrastructure for interoperability tests, staff
assessment and the definition of technical requirements; in synergy with the R&D department, it facilitates
innovation activities and promotes collaborations with universities and research institutes.
The TIM Lab Innovation Center in Barra da Tijuca, in the State of Rio de Janeiro, has a surface area of 650 m2
and can also be used as an innovation space open to new opportunities, guiding innovation on the Brazilian
telecommunications market and acting as national point of reference for R&D11.
8 Intellectual Property Rights.
9 It is a consortium of companies that agree to grant a single license for their patents, necessary for a given technology concerned by the standard.
10 Architecture and Innovation Technology, within the Chief Technology and Information Office (CTIO).
11 TIM Lab of TIM S.A. also collaborates with TIMLab Italy, which has more than 50 years of experience.
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To strengthen the validation capacity regarding new software, features, solutions, technologies, services and
devices, in 2020-2022, TIM S.A. has planned additional investments for over 10 million reais.
The Architecture & Innovation Technology Department has continued to work on projects and initiatives for
the evolution of the business of TIM, which can be grouped into the macro groups:
■ next generation network;
■ with positive impact on the environment and society;
■
future Internet applications;
■ Open Lab Initiatives.
Next generation network projects
The reassignment of the 1,800 MHz, 850 MHz and 2,100 MHz bands from 2G/3G to 4G, with a multilayer
distribution configuration gives TIM S.A. three important competitive advantages:
■ a reduction in costs for the LTE implementation12, the extension of the LTE coverage area and the
activation of the carrier aggregation strategy, improving the customer experience through a higher
throughput;
■
the best indoor coverage. In addition to the expansion of coverage, use of the 850/1,800/2,100 MHz
bandwidths could increase the capacity in cities already covered by the LTE bandwidth at 2.6 GHz, at
limited additional cost.
In this scenario, over 99% of current LTE terminals are compatible with the 1,800 MHz, 2,600 MHz bands and
other available bands. Therefore, the implementation of the multilayer LTE continues to be an excellent
strategy that benefits from the spread of devices.
The implementation of the 700 MHz LTE layer has continued to significantly improve coverage expansion and
indoor penetration, promoting the presence of LTE on a national level and consolidating TIM S.A.’s leadership
in LTE. 89% of TIM S.A.'s current user base of LTE devices is 700 MHz enabled (December 2021).
At the end of December 2021, 3,900 cities had 700 MHz LTE coverage, namely over 93% of the urban
population; spectrum cleaning was completed in June 2019 in all cities of Brazil, enabling a bandwidth of 700
MHz. At end 2022, the total number of cities covered by TIM S.A. with a 700 MHz bandwidth should be 4,100, as
envisaged by the Industrial Plan.
Projects entailing a reduction of energy consumption
The expansion of "RAN Sharing 4G", in partnership with other mobile operators in Brazil, aims to define the
architectural requirements, technical assumptions and specifications for the "LTE RAN sharing13" solution,
optimizing network resources and costs14At present, this is the largest agreement for RAN sharing worldwide
and it supplies 5G services to the main cities of Brazil.
The RAN sharing agreement allows TIM S.A. to promote the spread of LTE in the Brazilian campaign,
effectively sharing access and backhaul.15 At present, 4G RAN Sharing is based on three national partners,
expanding the benefits and efficiency of this technical model. The energy consumption recorded for the site,
dependent on the access technology and coverage conditions, showed a reduction of up to 10%.
In December 2019, TIM S.A. and Telefónica stipulated new sharing contracts aimed at increasing the network
cost efficiency through the following initiatives:
■ Single network: sharing of the 3G and 4G networks in cities with fewer than 30 thousand inhabitants in
which both operators provide their services. The underlying idea is to have, in the cities included in the
agreement, a single telecommunications infrastructure that is entirely shared by the operators, thereby
allowing them to switch off redundant sites and save on energy, rent and maintenance costs. This also
allows for greater efficiency in future investments thanks to the sharing of the spectrum in MOCN mode.
■ Switching off of the 2G: nationwide sharing of the 2G network using GWCN technology, enabling both
operators to switch off part (approximately 50%) of its network with the same technology, consequently
saving on energy and maintenance costs.
Next generation network projects, future Internet applications, positive
impact on the environment and society
Internet of Things - It was back in 2018 that TIM S.A. launched the very first commercial NB-IoT16 network in
South America, to develop innovative services, aware that the mass introduction of the IoT can change the
mobile telephony market considerably, because it leverages the creation of services and - amongst others - is
12 Long Term Evolution.
13 Sharing the Radio Access Network.
14 Infrastructure costs are mainly associated with the introduction of new radiating systems and other electronic components, passive site
infrastructure and transport networks; therefore, the sharing of the resources supplied by LTE RAN makes for a significant optimization of costs for
telecommunications operators.
15 In the telecommunications sector, a backhaul network or return network is the portion of a hierarchical network that includes intermediate
connections between the core network (or backbone network) and the small sub-networks at the "margins" of the same hierarchical network.
16 Narrowband Internet of Things (NB-IoT) is an LPWAN (Low Power Wide Area Network) radio technology standard developed by 3GPP to enable
communication with a wide range of cellular devices and services.
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a potential tool for agricultural uses, the connection of cars, traceability solutions and social-health care. In
2020, access to the NB-IoT network was extended.
Agrobusiness - Since 2018, together with Nokia and BR Digital, TIM S.A. has been focusing on agro-food
potential in Brazil, offering connections in rural areas (not only for business applications but also for the digital
inclusion of agrobusiness employees and residents of small towns). Since 2020, TIM has strengthened its
in relation to vertical agriculture17, with the creation of the ConnectarAgro ecosystem
position
(https://conectaragro.com.br/) which brings together TIM S.A., solution providers for the agro segment and
telecommunication solution providers.
5G -The 2020 commercial launch that involved the cities of: Bento Gonçalves (RS), Itajubá (MG) and Três
Lagoas (MS). The technology will be used to supply wireless residential broadband with FWA (Fixed Wireless
Access) technology, exploiting the old frequencies of the 2G, 3G and 4G networks through dynamic spectrum
sharing (DSS).
Connected Car - In 2021, the telemetry and connectivity solutions for Connected Car user services were
developed for Stellantis, designed to support the advanced telemetry and Stellantis assistance services for its
vehicles, as well as Wi-Fi connectivity and other added value services for car owners. These are the first full
digital services for connected cars available in Brazil.
Open Lab initiatives
TIM S.A. joined the Telecom Infra Project (TIP) in 2017, an initiative founded by Facebook, SK Telecom,
Deutsche Telekom, Nokia, Intel and other companies, which aims to create a new approach to building and
implementing the telecommunications network infrastructure. TIM S.A. transformed TIM Lab into the first TIP
Community Lab in Latin America, available to TIP members to create universal standards for solutions (initially
transport networks, Open Optical Packet Transport working group), to overcome the challenges related to
interoperability of different supplier products.
In 2018, TIM S.A. also joined a new working group within the TIP, together with Vodafone and Telefonica, called
DCSG (Disaggregated Cell Site Gateway18). This project is an opportunity to define a common set of operator
requirements and coordinate with companies that manufacture devices, which have wider and more flexible
capacities and are cheaper; in June this year, the main functions of the solution were demonstrated with the
help of Facebook, core EDGE suppliers and TIP members.
Finally, in 2020, TIM S.A. and the TIP partners completed their validation of the TSS (Total Site Solution), an
inexpensive, unrestricted 4G NodeB solution, powered by solar energy and connected by satellite to the core
TIM S.A. network, to be used in remote zones with low population density. During the year, TIM also adhered to
the OpenRAN initiative with the OpenField project, to validate OpenRAN 4G and 5G solutions focused on the
separation of hardware and software at a RAN level.
17 Above ground crops in closed large system greenhouses, which are on several height levels, air-conditioned and automated. These systems are
75% more productive than traditional field agriculture and consume about 95% less water.
18 Based on an open and unbundled architecture, the new DCSG is designed for the economic backhaul of cellular site traffic on existing mobile
networks and emerging 5G infrastructures.
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CONSOLIDATED NON-FINANCIAL STATEMENT
TIM, as a Relevant Public Interest Entity (PIE), has prepared and presented a “Consolidated non-financial
statement” as a “separate report”, as provided for by article 5 Statement positioning and disclosure regime of
Legislative Decree 254/2016, on the disclosure of non-financial information and diversity information by some
companies and some large groups. Moreover, a report (statement) issued by the appointed external auditor
pursuant to article 3, subsection 10 of Legislative Decree 254/2016 is annexed to the “Consolidated non-
financial statement”; the assignment was given to EY S.p.A..
The Consolidated Non-Financial Statement is available in the sustainability section of the website gruppotim.it.
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EVENTS SUBSEQUENT TO DECEMBER 31, 2021
See the Note "Events Subsequent to December 31, 2021" in the Consolidated and Separate Financial
Statements at December 31, 2021 of the TIM Group and TIM S.p.A., respectively.
BUSINESS OUTLOOK FOR THE YEAR 2022
The financial targets of the 2022-2024 Industrial Plan defined on the basis of the current organizational and
business model, are as follows:
■ Group revenues from services expected to rise slightly during the plan period (low single digit CAGR ‘21-‘24
growth, with 2022 low single digit decrease);
■ Group organic EBITDA expected to be stable over the plan period (CAGR ‘21-‘24 flat, with 2022 low teen
decrease);
■ Group after-lease organic EBITDA expected to decline slightly (low single digit CAGR ‘21-‘24 decrease with
2022 mid to high teens decrease: acquisition of the Oi assets impacts lease charges during the plan period
and this impact will only be absorbed after the plan time frame);
■ Group capex expected for approximately 4.0 billion euros in 2022 and approximately 3.9 billion euros in
2023 and around 3.8 billion euros in 2024;
■
Domestic capex less than 15% of revenues in the medium/long-term;
■ The Group’s net debt for 2022 will be impacted by unrepeatable payments for a total of 3.7 billion euros, in
particular for the acquisition of the spectrum in Italy and Brazil and the acquisition of Oi assets, the impact
of which on leverage will be completely absorbed by 2025.
The 2022-2024 Industrial Plan strategy outlined is hinged on the awareness that the Group is made up of a set
of assets of great value operating in an economic context that is improving but on a highly competitive market
with some of Europe’s strictest regulations.
In this scenario, TIM wishes to speed up development of the infrastructural assets (fiber in fixed and 5G in
mobile) and the growth of new business, making the most of the advantages linked to the funds made
available by the PNRR and other sources.
The new plan aims to create a new TIM with solid industrial and technological bases, which can speed up the
route towards sustainable generation of cash flow, also thanks to the overcoming of the current vertical
integration model.
In addition to the Plan targets, based on the current organizational and business model, as recalled above, a
new, optimized corporate configuration has been defined, comprising specific legal entities.
The new structure will improve visibility of the operating and financial performance of each member and will
expand the range of strategic options that TIM can exploit in the interests of all stakeholders, with the
possibility of attracting new partners and new financial investors. A very limited impact on costs necessary to
ensure the complete separation is estimated, insofar as most of the investments have already been made,
thanks to the implementation of the equivalence of input, the equivalence of output and the separation of
FiberCop.
■ ServCo: Mobile network assets, service platforms and data centers and structured into:
•
•
•
Enterprise - Commercial activities in the Enterprise market integrated by the digital companies
Noovle, Olivetti and Telsy;
In leveraging its leadership position with the Public Administration and key accounts and on a
unique, distinctive end-to-end selling proposition, TIM aims to gain share on a growing market
thanks to the drive on digital services: Cloud (at a rate of 15% per year), IoT (+10%) and Cybersecurity
(+10%). An ever more integrated “tech-company” approach, also organizationally, as a “one-stop-
shop”, will fully optimize the uniqueness of the Group’s assets and competences, also making the
most of the opportunities of the PNRR, including development of the National Strategic Hub in the
Cloud;
Consumer - Commercial activities on the retail Consumer and SME (Small and Medium Enterprise)
market
Amidst a context of growth of ultrabroadband, the plan envisages strengthening TIM’s premium
positioning and a refocus of the commercial channels on the core business and protection of the
existing customer base. It will continue to strive towards convergence, working on the improvement
of margins and the opportunities offered up by the voucher program, also in terms of technological
upgrade;
TIM Brasil
The company maintains its focus on a value strategy and will achieve further drive on growth from
the integration of Oi assets, continuing along its route to becoming a “Next Gen Telco”.
■ NetCo: Fixed network assets, the international and domestic wholesale assets of Sparkle.
TIM’s strategic priorities on the wholesale domestic market, expected to grow slightly in terms of access
lines over the plan horizon, are a major boost towards the migration of lines to FTTH technology, hinged on
co-investment associated with an ambitious coverage plan based on the co-investment model and an
extension of the portfolio of services offered.
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Starting out from 94% coverage in FTTC, the TIM Group expects to speed up the FTTH roll-out developed
by FiberCop, reaching 60% of technical property units nationwide by 2026 with an increase of around 3
percentage points compared to the previous target (without taking into account the expected effects of
taking part in the “Italia 1 Giga” tender for the public financing of new 1Gbit/s infrastructures).
In light of this acceleration in fiber coverage on the domestic market, 2022 will record a peak in investments,
followed by a progressive reduction to a level below 15% of revenues in the medium-term.
NetCo will be able to compete more effectively on the wholesale market and make the most of new
opportunities, including the greater regulatory flexibility envisaged by the Electronic Communication Code to
the benefit of wholesale “pure-players”. It is reasonable to expect that this scenario will also benefit the retail
activities of ServCo.
On the organizational front, the new model based on smart working will go hand-in-hand with a three-year
plan to manage staff that, continuing on from previous years, will apply tools that can guarantee employment
and encourage voluntary redundancies and early retirements.
The plan further strengthens TIM’s commitment to sustainability. New, more ambitious Group objectives have
been introduced on circular economy, digital growth, gender equality and ESG governance. The Company has
set itself the aim of achieving zero net emissions by 2040 and confirmed the target of carbon neutrality by
2030.
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MAIN RISKS AND UNCERTAINTIES
Risk governance is a strategic tool for value creation.
The TIM Group has adopted a Risk Management model that is constantly evolving, aligned with international
regulations and standards, to allow the identification, assessment and management of risks in a uniform way
within Group companies, highlighting potential synergies between the actors involved in the assessment of the
internal control and risk management system.
The Risk Management process is designed to identify potential events that may affect the business, to manage
risk within acceptable limits and to provide reasonable assurance regarding the achievement of corporate
objectives.
The Risk Management Model adopted by the TIM Group
■ classifies risks based on their impact into Strategic (resulting from the evolution of factors underpinning
the main assumptions used for the development of the Strategic Plan) and Operational (resulting from the
evolution of risk factors, both endogenous and exogenous, which can compromise the achievement of
business objectives);
■ assesses the risks not just individually but also in terms of the risk portfolio (correlation analyses);
■
identifies and updates the overall set of risks to which the Group is exposed through the analysis of the
Industrial Plan, the monitoring of the reference context (macroeconomic, regulatory, etc.), cyclical
monitoring with the Risk Owners, in order to intercept any changes and/or new risk scenarios, specific
analyses on the risks to which the corporate assets may be exposed.
The business outlook for 2022 could be affected by risks and uncertainties caused by a multitude of factors, the
majority of which are beyond the Group's control.
In this context, we highlight the health emergency due to the spread of COVID-19 and the recent conflict
between Russia and Ukraine. In addition, non-exhaustively, the following additional factors are mentioned: a
change in market context, entry of new potential competitors in the fixed-line and mobile sphere, the initiation
of procedures by Authorities and consequent delays in the implementation of new strategies, requirements
connected to the exercise of the Golden Power by the Government with effects to be assessed in terms of
strategic choices and timing of the Plan objectives.
Risks related to the business and industry
Risks related to competition
The telecommunications market is characterized by strong competition that may reduce market share in the
geographical areas where the TIM Group is engaged as well as erode prices and margins. Competition is
focused on innovative products and services and on the capacity to move towards higher levels of
convergence in service and expand it to the content offering, but also on the price competition in both
traditional and other services. The use of new technologies (IoT) and new knowledge and customer
management tools (Big Data) represent enabling factors in the mitigation of competition risks, however failure
to exploit these opportunities could become an additional element of risk.
In terms of infrastructural competition, also considering the establishment of the company FiberCop, which
aims to speed up the country’s fiber coverage, the development of alternative operators could represent a
threat for TIM, also beyond the Plan period.
Competitive risks in the Brazilian market lie in the rapid transition of the business model tied to traditional
services and the potential consolidation of the sector. As the consumption patterns of consumers change
(migration from voice to data services), service providers need to act swiftly in upgrading their infrastructure
and modernizing their portfolios of products and services. In this context, the TIM Brasil group could be
impacted by the need to upgrade its technologies and infrastructure rapidly and by greater competition, in the
form of aggressive sales strategies and potential business combinations in the sector. In addition, the slow
recovery from the country’s major economic crisis, the delay in the necessary structural reforms, the COVID-19
pandemic and all the restrictions imposed to fight its spread, directly affected consumption, in particular in the
prepaid segment.
Risks related to the development of fixed and mobile networks
To maintain and expand our customer portfolio in each of the markets in which the TIM Group operates, it is
necessary to maintain, update and improve existing networks in a timely manner. A reliable and high-quality
network is necessary to maintain the customer base and minimize terminations to protect the Company’s
revenues from erosion.
The maintenance and improvement of existing installations depend on the Group’s ability to:
■ deliver network development plans within the time-frames contemplated by business development plans
and with the necessary level of effectiveness/efficiency;
■ upgrade the capabilities of the networks to provide customers with services that are closer to their needs;
■
increase the geographical coverage of innovative services;
■ upgrade the structure of the systems and the networks to adapt it to new technologies;
■ sustaining the necessary level of capital expenditure in the long term.
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Cyber security risks
Cyber risk is on the increase worldwide and as such requires continual monitoring by TIM, given the sheer
amount of IT assets the company manages in terms of own TLC infrastructure and assets necessary to deliver
services to customers, some of which, considered essential, come under the scope of recent legislation
governing the National Cyber Security Perimeter.
In view of these considerations, considerable attention was paid to protecting networks from main threats (e.g.
viruses, malware, hackers, data theft). With a wide range of attackers (Cyber-Criminals, Cyber-Terrorists,
Insiders, etc.), TIM carries out activities not only to safeguard its infrastructure but also – with a strong sense of
responsibility – to protect customers' information assets and essential services, which are a priority target for
the company.
As regards prevention, TIM monitors cyber risk analyses, defining security plans for the company's IT assets, to
identify the actions necessary to mitigate cyber risk in advance and guarantee a security by design approach,
also monitoring the plans of these actions and controls on actual adoption in the field. The company has also
prepared advanced test laboratories to identify possible vulnerabilities in the hardware and software products
used in its network.
As for its response to cyber attacks, the Security Operation Center (SOC), operates 24/7, 365 days a year, in
order to manage IT security incidents and help limit their impacts. TIM has also implemented an insurance
program to cover cyber risks.
In connection with the Russia-Ukraine conflict, TIM is liaising with the National Cybersecurity Agency (ACN),
which has sent to TIM a communication relating to the “Possible impacts on national ICT infrastructures in
connection with the Ukraine situation”.
More specifically, following the evolution of the crisis and the information exchanged on a European level and
with NATO, TIM has been invited to raise the level of alert in connection with the cyber risk.
In order to prevent any impacts where similar conditions should occur to those seen in previous cases
(NotPetya, Wannacry), in addition to adopting best practices on the matter, CSIRT (the structure established at
ACN that, amongst others, issues pre-alarms and provides information to the parties concerned in respect of
cyber risks) has asked that the level of attention be raised, by way of a priority adopting certain mitigating
actions, including:
■ verification of the consistency and off-line availability of back-ups necessary to restore in particular core
business services;
■
increased monitoring and logging;
■ creation, update, maintenance and periodic operation of incident response capacity, business continuity
and resilience plans;
■ availability of key personnel;
■ particularly close attention to the cloud environments;
■ prioritizing patching;
■ monitoring service and administration accounts to detect any abnormal activities;
■ monitoring network traffic to analyze abnormal peaks;
■
increase of the capacity to protect e-mail infrastructures from spear-phishing activities.
TIM is making every effort to raise the monitoring measures and fight the cyber threat, also and
simultaneously increasing physical security measures at the most critical sites.
Business Continuity Risks
The TIM Group's success depends heavily on the ability to ensure the continuous and uninterrupted delivery of
the products and services we provide through the availability of processes and the relating supporting assets,
which are sensitive to various internal and external threats. TIM has adopted a “Business Continuity Model
System” framework in line with international standards, to analyze and prevent these risks.
TIM considers Business Continuity a fundamental factor for the protection of the Group’s Value and
Reputation, in the provision of its services and in full compliance with what is defined in customer contracts, in
sector regulations and, more generally, in consistency with reference methodologies and best practice.
TIM implements an ongoing management and governance process which, supported by the Company
Management, ensures that the necessary steps are taken to identify the impact of potential losses, that
recovery plans and strategies are practical and that continuity of services is guaranteed through training
programs, tests, exercises and periodic updating and revision activities.
TIM also carries out period risk assessments of the corporate assets with a view to assessing and mitigating the
risks of possible direct damages and/or interruptions of business, equally implementing specific insurance
programs to cover these risks.
In 2021, TIM launched the ISO 22301 certification process (Security and resilience - Business continuity
management systems) relative to the governance of its BCMS and the most important processes. This will
make it possible to both improve the continuity of services offered and provide greater guarantees in this
respect to its stakeholders.
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Fraud risks
Technological progress means that increasingly sophisticated tools and techniques, which are quick acting and
have a considerable economic impact are available for fraudulent activity.
“Conventional” phenomena such as subscription, interconnection, and commercial fraud currently generate
the highest part of revenue loss and will continue to be significant in the near future, however new types of
Internet-style fraud will gradually gain more ground (Internet spamming/phishing, service reselling, VoIP
bypass, etc.). Furthermore, some specific types of provided services (e.g. wholesale interconnection, voice or
data services) are potentially at risk of third party use for the construction of fictitious transaction schemes, tax
avoidance offenses and/or international money laundering.
The TIM Group has an established organizational model based on the governance of fraud and a separate
operational governance system for managing and combating fraud.
The procedure to combat external fraud, drawing on company processes at risk of the offenses contemplated
in Italian Legislative Decree no. 231/2001 being committed, sets out internal control mechanisms, including
instructions on how employees and Company staff/partners (including suppliers) must behave (Prevention). In
the Detection stage, potential cases of fraud are identified and after a preliminary check of the possible
grounds the cases may be subject to Investigation and Tackling. To complete the fraud management end-to-
end cycle, the results of actions taken are assessed with monitoring and any actions to improve the fraud
management process are identified.
The fight against internal fraud, implemented in compliance with the limits imposed by the recently updated
trade union agreements prohibiting distance monitoring of staff at work, is carried out through the detection
of information relating to the concentration of anomalous operations that flag-up possible cases of serious
wrongdoing.
Risks linked to the main sustainability topics
For many years now, the Group has been actively involving and systematically consulting with its stakeholders
with a view to improving the company’s environmental, social and governance (ESG) performances. The
results of engagement activities, as seen from the materiality matrix, are reflected in the Sustainability Plan,
the heart of the Group’s three-year Strategic Plan.
The plan of action in support of the ESG strategy aims to assure a concrete, significant impact on business
development, which has upheld goals of environmental protection and social inclusion.
Reducing energy consumption and combating climate change
The Group has set itself the goal of becoming carbon neutral by 2030, with an increasing focus on energy
consumption, failure to limit such will not only have a negative impact on the climate, but may result in failure
to make savings on costs. In these terms, it has been decided to bring forward the achievement of the target
on the use of renewables in electricity purchased (Scope 2) to 2025: for this year, it will be 100% use of
renewable energy for the domestic business and 90% for the Brazil business.
In 2022, the agreement signed in Italy by TIM and ERG for the supply of electricity produced from renewable
sources already covers approximately 20% of its corporate energy consumption through renewable sources,
strengthening the commitment to the pursuit of objectives and the use of renewable sources on which the
Group's strategy is hinged. The operation is also an important contribution towards the development of the
clean energy sector, in line with the CO2 emissions reduction and decarbonization objectives established by
the European Union. In addition to increasing use of renewable sources, the measures adopted by TIM to
increase the efficiency of energy consumption and the circular economy include:
■
initiatives and projects aimed at minimizing the environmental impact of the corporate business, of
customers using ICT products and the supply chain;
■ energy efficiency improvements under the scope of the plants and CED.
The continuous increase in global average temperatures is having a significant impact on natural
events/disasters.
The negative consequences linked to climate change (e.g. floods, wind storms, etc.) can also impact the
corporate assets (tangible damages) and Business Continuity (Business Interruption). To this end, TIM has
specifically assessed, mitigated and monitored risks deriving from such events, as well as taken out suitable
insurance cover.
The invasion of the Ukraine by Russia opens up even extreme economic impacts relative to energy
procurement. The Eurozone companies, which starting 2021, have addressed the sharp rise in energy bills as
compared with 2020, may be further impacted by the increased cost of energy. Before the start of the conflict,
more than 40% of natural gas imported by our country (source: Ministry of the Ecological Transition) and also
necessary for the production of electricity (thermoelectric plants) came from Russia. The electricity consumed
by TIM depends almost entirely on suppliers and with only a tiny part being self-produced, hence the TIM
Group is naturally exposed to the fluctuations of energy costs that could hinder the achievement of business
objectives in terms of reduced margins and cash flow. To mitigate these exposures, the action in progress for
2022 include TIM covering much of the need at fixed price.
Social inclusion
The digital divide is a huge obstacle to the dissemination of digitization, the growth of the country and the
correlated connectivity services, with the risk of commercial repercussions. The “Operazione Risorgimento
Digitale” initiative, which began in 2019, is the first major free school for the spread of digital skills in Italy and
the main project for inclusion that seeks to bridge the digital divide involving the country’s less urbanized
areas.
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Personnel competences and engagement
The capacity to attract and retain qualified, specialized, motivated personnel is key to the success in pursuing
the strategic goals and achieving a high level of customer experience.
TIM has launched a hiring program, searching out professional profiles that are compatible with the company
reindustrialization/reorganization plan and a program for all personnel for the adjustment of competences in
support of requalification, reskilling and upskilling processes, also regarding important insourcing of evolved
and traditional, technical-specialized core activities.
The internal climate survey carried out amongst employees in 2021 reported the important result on
satisfaction with work, which has increased by 20 percentage points in the last 3 years.
The staff engagement plan, which includes a series of actions, remains in place, including, of those already in
progress, those concerned by revision and those introduced ex-novo, which look to personal well-being,
organization and personal support, to ensure a better time working in the company and, in turn, comes under
the scope of the broader TIM Sustainability Plan.
Financial risks
The TIM Group may be exposed to financial risks, such as risks arising from fluctuations in interest rates and
exchange rates, credit risk, liquidity risk and risks related to the performance of the equity markets in general,
and – more specifically – risks related to the performance of the share price of the TIM Group companies. These
risks may adversely impact the earnings and the financial structure of the Group. Accordingly, to manage
those risks, the TIM Group has established guidelines, at central level, which must be followed for operational
management, identification of the most suitable financial instruments to meet set goals, and monitoring the
results achieved. In particular, in order to mitigate the liquidity risk, the TIM Group aims to maintain an
"adequate level of financial flexibility", in terms of cash and syndicated committed credit lines, enabling it to
cover refinancing requirements at least for the next 12-18 months.
Risks related to macro-economic factors
The TIM Group's economic and financial situation depends on the influence of numerous macroeconomic
factors such as economic growth, consumer confidence, interest rates and exchange rates in the markets
where it operates.
The global context is characterized by a post-pandemic economic recovery that is not exempt from the main
macroeconomic risks. Of these, the most important and which are already visible, are the increase in prices of
commodities, the increase in the spread, the economic sustainability of the recovery strategies to be adopted
and the slowing of production in certain strategic segments. The lack of semiconductors and the consequent
repercussions in extensive sectors such as consumer electronics and automotive may determine a direct and
indirect negative impact on our industry. Europe has recently made important decisions to reduce dependency
on Asian markets but the first results will not be seen for ten years or so.
The increase in the price of raw materials is also being reflected in other sectors. For the Eurozone, the
European Central Bank has recorded inflation of 5% at December 2021 which should reduce, in the most
positive forecasts, no earlier than late 2022 following the moderation of energy prices and the alignment of
supply/demand on national and international markets.
In Italy, the fourth quarter 2021 also expects to see economic growth, albeit at a more moderate level than in
previous quarters. Preliminary forecasts suggest growth of 0.6% on the third quarter and 6.4% on the fourth
quarter of 2020. For Italy the sustained growth in the GDP for the year just ended (+6.5%) should also be
confirmed for 2022 (+4 %). These scenarios incorporate the effects of the progressive introduction of the
interventions envisaged by the National Recovery and Resilience Plan (PNRR). The stability and effective
capacity to implement the measures planned, and the completion of the vaccine campaign are the main
elements for the social and economic recovery.
The recovery of consumption by families may be hindered by continued inflationist pressure.
The Italian government’s measures to limit the contagion and support household incomes have led to a severe
increase in public debt, which came to 155.6% of the GDP in 2020, up 21 percentage points on 2019. The latest
forecasts for 2021 show an improvement in the debt/GDP ratio by 3 percentage points at year end (152.6%).
The employment offer is still below pre-crisis levels for approximately 500 thousand people. The Italian
employment market in any case records a recovery that should result in pre-crisis levels being reached in 2023.
In February 2022, Russia launched a military operation invading the Ukrainian territory, the consequences on
the world political-economic balance are incalculable.
The European Union, together with a great many other countries, have implemented particularly harsh
financial sanctions against Russia and Belarus, and others may follow suit gradually.
For the TIM Group, in particular for Telecom Italia Sparkle, there may be fallout in terms of commercial
relations, in the collection of trade receivables and in the assets present in the country, which, however,
despite the fact that they do depend on how the conflict evolves, is not currently considered to be significant.
More generally, there may be effects also due to the increase in the prices of commodities, energy costs, the
cost of money, the reduction in the demand for international telecommunications services in the countries at
conflict, delays in the delivery of goods and increased transport costs, which may further strike the
procurement chain with impacts that are today difficult to assess.
In Brazil, in 2021, with the progress made on the vaccination plan and the gradual reopening of economic
activities, GDP growth was 4.7% (IMF).
At the start of the second half of 2021, the threat of a severe energy crisis began entering the Brazilian agenda.
The year in any case closes positively thanks to the recovery of the reserve levels in the country’s main
hydroelectric plants.
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For TIM Brasil the risk is under control, considering that most of the energy contracts are long-term and will
not be impacted by any tariff changes. In addition, TIM Brasil is taking preventive measures to reduce
structural consumption.
Risks relating to the legislative and regulatory context
Regulatory risks
The electronic communications industry is highly regulated. As such, new decisions by the Italian
Communications Authority (AGCom) may lead to changes in the regulatory framework that may affect the
expected results of the Group and the guidance announced to the market. In addition, the position of
significant market power held by TIM In the fixed-line access markets and the structure of the mobile markets
results in high levels of scrutiny from the Italian Competition Authority (AGCM) over competition in the sector.
The main elements that introduce uncertainty are:
■
lack of predictability in start-up timing and consequent final decisions in new proceedings by AGCom and
AGCM (the Italian Competition Authority);
■ AGCom decisions with retroactive effect (for example, the revision of prices applicable to past years and
the effectiveness and actual implementation of repricing policies, also following administrative rulings);
■ AGCom decisions that can influence the technological choices, with potential impact on the timing of
return on infrastructure investment;
■ any AGCM (the Italian Competition Authority) decisions that can limit TIM's competitive capacity (for
example, in terms of minimum retail prices to guarantee replicability);
■ any inadequacy in the implementation of processes and systems for the management of regulated
services, identified by AGCom or AGCM (the Italian Competition Authority);
■ any AGCom or AGCM (the Italian Competition Authority) decisions that impose constraints on the pricing
of fixed-line and mobile offers on the basis of consumer protection legislation.
Compliance risks
The TIM Group may be exposed to risks of non-compliance due to non-observance/breach of internal (self-
regulation, such as, for example, bylaws, code of ethics) and external rules (laws, regulations, new accounting
standards and Authority orders), with consequent judicial or administrative penalties, financial losses or
reputational damage.
The TIM Group aims to ensure that processes, and, therefore, the procedures and systems governing them,
and corporate conduct comply with legal requirements. The risk is associated with potential time lags in
making the processes compliant with regulatory changes or whenever non-conformances are identified and is
monitored by the dedicated internal control system.
General Data Protection Regulation (GDPR)
Compliance with Commission Regulation (EU) 2016/679 (General Data Protection Regulation, GDPR), directly
applicable as from May 25, 2018 and enacted in Italy by Legislative Decree no. 101/2018 is particularly
important. This Regulation has increased administrative fines considerably compared to the Data Protection
Act previously in effect, and in some cases fines of up to 20 million euros may be administered, or in the case
of companies, of up to 4% of their global annual turnover of the previous year, if this amount is higher than 20
million euros. Starting from the operating model already in use with pre-existing Privacy regulations, the TIM
Group extended the tools necessary to ensure compliance with the GDPR, also activating specific
organizational oversights. In particular, a steering committee was established on compliance with the GDPR,
overseen by the company’s senior management and that provides guidance in pursuing the conformity
objectives. The conformity assessments have been submitted to the committee, along with the results of the
ex-ante and ex-post controls carried out by the Compliance Department in accordance with the Group Data
Protection Officer, who operate autonomously, in accordance with segregation of duties and who take part in
the Company’s Internal Control System. The Company’s operative processes have been adapted according to
the principle of privacy-by-design, with special attention paid to the commercial, relations with customers and
technological processes, adopting the methods defined by corporate regulations dedicated to the application
of the GDPR and the provisions of the Data Protection Authority. Personal data processing is subject to
preventive Privacy Impact Assessment (PIA) according to the indications of the European Data Protection
Board (EDPB), it is censused and the related responsibilities are attributed to the suitable managerial level of
the Company’s organization, as envisaged by the Privacy Code in application of the accountability principle laid
down by the GDPR.
Health and Safety at Work
Compliance with safety at work requirements is assured in TIM through the application of current applicable
legislation starting from when the risk assessment is performed and updated from time to time, along with the
relevant document. In 2021, ISO 45001:2018 certification has also been achieved in relation to the design,
development, maintenance and management of the properties coming under the purview of the Real Estate
department.
As regards the management of the impacts of the COVID-19 pandemic, TIM immediately took all steps
necessary to fully implement the emergency provisions issued by the government and regional authorities, in
multiple tranches, to limit the virus contagion.
Weekly smart working has been extended to all professional figures able to do so, including call center
operators, and specific prevention and protection protocols defined, modulated taking into account the specific
Report on Operations of the
TIM Group
Main risks and uncertainties
96
nature of the work at hand, for all those needing to continue to work on-field (technicians, store operators and
data center operators), equipping them with suitable Personal Protection Equipment and, in line with the legal
guidance and taking into account government and health authority guidelines, in accordance with Italian
Legislative Decree no. 81/2008, a specific document has been formalized dedicated to COVID-19 and setting
out all personnel protection measures aimed at preventing contagion.
In addition, TIM has supported employees with dedicated initiatives, such as:
■ a continuous information and awareness-raising campaign intended for all personnel;
■ a health welfare campaign, of voluntary adhesion, based on serological and rapid antigen tests (from June
2020 to March 2021) aiming to verify the degree of immunity to COVID-19 by means of antibody response,
intended mainly for personnel who have continued to work in the field during the emergency and that
involved approximately 12,000 employees. In 2021, the campaign was extended to include all TIM
employees, with the collaboration of ASSILT;
■ a flu vaccine campaign, again voluntary, between end 2020 and early 2021, directed towards all TIM Group
people, which was taken up by approximately 5,000 employees; the vaccination campaign was reproposed
in November 2021, again on a voluntary basis, and this time taken up by approximately 3,800 employees;
■ psychological support from external professionals;
■ specific procedures for handling any cases of ascertained or suspected positivity to COVID-19, as well as
specific insurance cover for employees in the event of hospitalization following contagion with COVID-19;
■ criteria for interregional and international mobility for proven working needs, always within the limits set
by the schemes defined by the competent health authorities;
■
the signing of specific agreements with the Trade Unions for the safe management of a return to work,
which took place on a voluntary basis starting October 04, 2021 for approximately 3,000 employees who
chose to cease smart working 5 days a week. The partial return took place according to the criteria shared
with the trade unions in this respect:
•
•
1 day a week for the daily model and 1 week a month for the weekly model for those who agreed to
temporary smart working;
5 days a week for those who did not agree to temporary smart working.
This return has entailed the reopening of 48 properties in complete compliance with the rules designed to
prevent COVID-19 infection, specifically set out in the Site Regulations prepared for each property.
Golden Power
The "Golden Power" Decrees that give the government special powers over corporate structures in the defense
and national security sectors, as well as for activities of strategic importance in the telecommunications sector,
affect the public-private relationship, also adding value to the technological assets and services included in the
Golden Power perimeter, with content derived from the pursued institutional purpose.
In summary, the Prime Minister established that the Company is subject to the obligations pursuant to
Legislative Decree no. 21/2012 (special powers rules) on September 28, 2017, as a business that:
■ carries out “activities of strategic importance for the defense and national security system” (as per article 1
of the Decree Law) and
■ possesses networks and systems “necessary to ensure the minimum supply and operation of essential
public services” and goods and relationships “of strategic importance for the national interest” in the
communications sector (as per article 2 of the same Decree Law).
The regulatory architecture relating to TIM, consequently, involved a first phase in 2017 on the issue of the
Prime Ministerial Decrees of October 16 and November 2.
The government’s ruling was subsequently integrated with the Law of May 20, 2019, no. 41 which included
measures relating to electronic broadband communication services based on 5G technology within a wider
framework of urgent measures”.
With the aforementioned ruling of October 16, 2017, the Prime Minister exercised the special powers provided
for in article 1 of the Golden Power Decree by imposing specific provisions and conditions on TIM and the
Sparkle and Telsy subsidiaries. The measures concern corporate and organizational governance; in particular,
the Prime Minister requires the presence on the respective Boards of Directors of a Security Chief Executive
Officer - currently coinciding with the Chief Executive Officer - (who has Italian citizenship and security
authorization) and the establishment of a Security Organization unit.
With a ruling on November 2, 2017, the Prime Minister’s Office also exercised the special powers provided for in
article 2 of the Golden Power Decree, through the imposition of further requirements and conditions.
With the subsequent implementing decrees of September 5, 2019 and July 6 and August 7, 2020, the Legislator
imposed the exercise of special powers in relation to the supply of 5G technology produced outside the EU,
stating that these communication services constitute activities of strategic importance for the National
Defense and Security system.
The requirements envisaged by these decrees effectively ceased for TIM in May 2021, due to the strategic-
industrial choice made and the right of withdrawal exercised in regard to the non-European supplier previously
used for these supplies.
Again as regards Golden Power, by Decree of November 16, 2020, the President of the Council of Ministers,
following TIM’s notification of the corporate operation involving FiberCop S.p.A., exercised the special powers
imposing specific requirements. The provisions refer to the networks and plants included in the business unit
transferred, requiring the adoption of adequate development, investment and maintenance plans to ensure
Report on Operations of the
TIM Group
Main risks and uncertainties
97
their proper functioning and integrity, to guarantee continuity of universal service and satisfy the general
needs and requirements in the medium and long term, also in consideration of technological evolution and the
standards used in European networks.
National Cyber Security Perimeter
The framework of provisions regarding National Security has flanked the Golden Power regulations with those
relating to the National Cyber Security Perimeter, established by Law no. 133 of November 18, 2019, converting
Decree Law 105/2019 setting out “Urgent provisions on the national cyber security perimeter and regulating
special powers in sectors of strategic importance”.
The regulations in this area are hinged on three elements, which constitute the same number of obligations for
TIM, as strategic operator: the adoption of security measures aimed at guaranteeing high security levels for ICT
assets, the secure award of ICT supplies and the notification of security incidents.
On July 30, 2020, DPCM (Decree of the President of the Council of Ministers) no. 131 was issued, which
identifies the subjects coming under the scope of the Perimeter and defines the criteria to be applied when
compiling the list of ICT assets relative to essential services; by subsequent decrees, the procedures were
defined for the award/procurement of ICT supplies, the categories of assets coming under that scope identified
and the tasks of the CVCN - National Assessment and Certification Center - assigned and procedures
established by which to notify incidents impacting ICT assets relative to essential services, classifying them
according to their severity.
The regulatory framework on cyber security is completed by the establishment of the National Cyber Security
Agency, designed to protect national interest in the field of cybernetic space security.
Compliance with these obligations means, for TIM, an impact in organizational terms and as regards operative
processes, in line with the restrictions aiming to guarantee a high level of security of networks, information
systems and the computer services of public administrations, public and private operators and entities based
in Italy, in consideration of the fact that such elements are responsible for the performance of a service that is
essential for the maintenance of civil, social or economic activities, fundamental for the interests of the State
and the malfunctioning, interruption, even partial, or improper use of which could damage national security.
Failure by TIM to observe the regulatory obligations entails administrative fines of up to 1.8 million euros. In
addition, the use of products and services without communication or passing of tests or in breach of the
conditions envisaged may result in the application of the accessory administrative sanction of incapacity to
hold appointments of management, administration and control in legal entities and companies, for a period of
three years from the date on which the violation is ascertained. Finally, anyone providing information, data or
elements of fact that are not true, in order to hinder or impact procedures and inspections and supervision,
shall be punished by imprisonment from one to three years.
Risks relating to legal proceedings and the Regulatory
Authorities
The TIM Group has to deal with disputes and litigation with tax authorities and government agencies,
regulators, competition authorities, other telecommunications operators and other entities. The possible
impacts of such proceedings are generally uncertain. In the event of settlement unfavorable to the Group,
these issues may, individually or as whole, have an adverse effect, which may even be significant, on its
operating results, financial position and cash flows.
Report on Operations of the
TIM Group
Main risks and uncertainties
98
INFORMATION FOR INVESTORS
Share capital of TIM S.p.A. at December 31, 2021
Share Capital
Number of ordinary shares (without nominal value)
Number of savings shares (without nominal value)
Number of TIM S.p.A. ordinary treasury shares
Percentage of ordinary treasury shares held by the Group to total share capital
Market capitalization (based on December 2021 average prices)
11,677,002,855.10 euros
15,329,466,496
6,027,791,699
115,942,196
0.54%
9,387 million euros
On May 25, 2016, the Shareholders’ Meeting approved amendments to the company name, introducing the
name “TIM S.p.A.” as an alternative to “Telecom Italia S.p.A.”.
TIM S.p.A. ordinary and savings shares are listed on the Italian stock exchange (FTSE index), whereas the
ordinary shares of TIM S.A. are listed in Brazil under B3 (formerly the BM&F/Bovespa).
TIM - Telecom Italia
TIM S.A.
Code
Stock exchange
Bloomberg
Reuters
ordinary shares
IT0003497168
TIT IM
TLIT.MI
savings shares
IT0003497176 BRTIMSACNOR5
TIMS3 BZ
TITR IM
TLITn.MI
TIMS3.SA
Ordinary shares of TIM S.A. were also listed on the NYSE (New York Stock Exchange); share prices are set
through ADS (American Depositary Shares) representing 5 ordinary shares of TIM S.A.
Shareholders
Shareholder composition according to the Shareholders Book at December 31, 2021, supplemented by
communications received and other available sources of information (ordinary shares):
TIM Group 0.76%
Italian Institutional
Investors 3.62%
Other Shareholders
21.32%
Vivendi 23.75%
Foreign
Institutional
Investors 40.74%
Cassa Depositi e Prestiti
9.81%
Report on Operations of the
TIM Group
Information for Investors 99
Major Holdings in Share Capital
Taking into account the entries in the Shareholders Book, communications sent to Consob and to the
Company pursuant to Italian Legislative Decree 58 of February 24, 1998, Article 120, and other available
sources of information, the relevant holdings (above the 3% threshold) of TIM S.p.A.’s ordinary share capital
are as follows:
Holder
Percentage of ownership
Type of ownership
Vivendi S.A.
Cassa Depositi e Prestiti S.p.A.
Direct
Direct
23.75%
9.81%
Common Representatives
■ The special meeting of the savings shareholders held on May 24, 2019 renewed the appointment of Dario
Trevisan as the common representative for three financial years, up to the approval of the financial
statements for the year ended December 31, 2021. Upon completion of the shareholders’ meeting called
to approve the financial statements for the year 2021, the general category meeting will be called to renew
the common representative of savings shareholders.
■ The “Telecom Italia S.p.A. 2002-2022 Floating Rate bonds, Open Special series, reserved for subscription by
employees of the Telecom Italia Group, in service or retired” reached maturity on January 1, 2022 and was
therefore repaid by the company during that same month of January 2022.
Rating at December 31, 2021
At December 31, 2021, the three rating agencies – Standard & Poor’s, Moody’s and Fitch Ratings – rated TIM as
follows:
STANDARD & POOR'S
MOODY'S
FITCH RATINGS
Rating
BB
Ba2
BB+
Outlook
Stable
Negative
Stable
On March 08, 2022, the ratings agency Moody’s modified the rating from Ba2 to Ba3, confirming the outlook
relative to its opinion on TIM as “Negative”.
Waiver of the obligation to publish disclosure documents for
extraordinary transactions
On January 17, 2013, the Board of Directors of TIM S.p.A. resolved to exercise the option, as per article 70
paragraph 8 and article 71 paragraph 1-bis of the Consob Regulation 11971/99, to waive the obligations to
publish disclosure documents in the event of significant operations such as mergers, demergers, capital
increases by means of the transfer of assets in kind, acquisitions and disposals.
Conditions for the listing of shares of parent companies
established and regulated by the law of states outside the
European Union
TIM S.p.A. confirms the existence as at December 31, 2021 of the conditions referred to in article 15, paragraph
1, letter a), b) and c), point i) of Consob Regulation no. 20249/2017 as amended, for the listing of their shares on
regulated markets.
Report on Operations of the
TIM Group
Information for Investors 100
RELATED-PARTY TRANSACTIONS
In accordance with Article 5, subsection 8 of Consob Regulation 17221 of March 12, 2010 concerning “Related-
party transactions” as subsequently amended, no significant transactions were conducted in 2021, as defined
by Article 4, subsection 1a of the aforementioned regulation, that had a material impact on the financial
position or the performance of the TIM Group and TIM S.p.A.
In addition, there were no changes or developments with respect to the related-party transactions described in
the 2020 Report on Operations which had a significant effect on the financial position or on the performance of
the TIM Group and TIM S.p.A. in 2021.
Related-party transactions, when not dictated by specific laws, were conducted at arm's length. They were
performed in compliance with the internal procedure, which sets forth rules designed to ensure the
transparency and fairness of the transactions in accordance with Consob Regulation 17221/2010. The current
procedure is available on the website gruppotim.it, under the Group section/Governance tools channel.
For information on relationships with related parties, see the Financial Statement Statements and the
"Related-party transactions" Notes of Consolidated Financial Statements and the Separate Financial
Statements.
Report on Operations of the
TIM Group
Related-party transactions
101
ALTERNATIVE PERFORMANCE MEASURES
In this Report on Operations, in the TIM Group Consolidated Financial Statements and in the Separate Financial
Statements of the Parent, TIM S.p.A., for the year ended December 31, 2021, in addition to the conventional
financial performance measures established by IFRS, the TIM group also presents certain alternative
performance measures for a better understanding of its performance of operations and financial position. Such
measures, which are presented in the periodical financial reports (annual and interim), should, however, not be
considered as a substitute for those required by IFRS.
Specifically, following the adoption of IFRS 16, the TIM Group presents the following alternative performance
measures:
■ EBITDA adjusted After Lease (“EBITDA-AL”), calculated by adjusting the Organic EBITDA, net of the non-
recurring items, from the amounts connected with the accounting treatment of the lease contracts
according to IFRS 16. This financial measure is used by TIM as the financial target in internal presentations
(business plans) and in external presentations (to analysts and investors). It represents a useful unit of
measurement for the evaluation of the operating performance of the Group (as a whole and at the
Business Unit level) and of the Parent, TIM S.p.A., in addition to EBIT;
■ Adjusted net financial debt After Lease, calculated by excluding from the adjusted net financial debt the
net liabilities related to the accounting treatment of lease contracts according to IFRS 16. TIM believes that
the Adjusted net financial debt After Lease represents an indicator of the ability to meet its financial
obligations;
■ Equity Free Cash Flow After Lease, calculated by excluding from the Equity Free Cash Flow the amounts
related to lease payments. In particular, this measure is calculated as follows:
+
-
Equity Free Cash Flow
Principal share of lease payments
This financial measure is used by TIM as the financial target in internal presentations (business plans) and in
external presentations (to analysts and investors) and is a useful indicator of the ability to generate Free Cash
Flow.
The other alternative performance measures used are described below:
■ EBITDA: this financial measure is used by TIM as the financial target in internal presentations (business
plans) and in external presentations (to analysts and investors). It represents a useful unit of measurement
for assessing the operating performance of the Group (as a whole and at Business Unit level) and of the
Parent, TIM S.p.A., in addition to EBIT. These measures are calculated as follows:
Profit (loss) before tax from continuing operations
+ Finance expenses
- Finance income
+/- Other expenses (Income) from investments(1)
+/- Share of losses (profits) of associates and joint ventures accounted for using the equity method(2)
EBIT – Operating profit (loss)
+/- Impairment losses (reversals) on non-current assets
+/- Losses (gains) on disposals of non-current assets
+ Depreciation and amortization
EBITDA – Operating profit before depreciation and amortization, capital gains (losses) and impairment reversals
(losses) on non-current assets
(1) Expense/(income) from investments for TIM S.p.A..
(2) Line item in Group consolidated financial statements only.
■ Organic change and impact of the non-recurring items on revenues, EBITDA and EBIT: these measures
express changes (amount and/or percentage) in Revenues, EBITDA and EBIT, excluding, where applicable,
the effects of the change in the scope of consolidation, the exchange differences and the non-recurring
events and transactions. TIM believes that this method of presentation provides a more complete and
effective interpretation of the Group's operating performance (as a whole and with reference to the
Business Units) and of the Parent; it is therefore also used in the presentations to analysts and investors.
This Report on Operations provides a reconciliation between the “reported figure” and the “organic
excluding the non-recurring items” figure.
■ EBITDA margin and EBIT margin: TIM believes that these margins represent useful indicator of the ability
of the Group as a whole and at Business Unit level, and of the Parent to generate profits from its revenues.
In fact, EBITDA margin and EBIT margin measure the operating performance of an entity by analyzing the
percentage of revenues that are converted into EBITDA and EBIT, respectively. Such indicators are used by
TIM in internal presentations (business plans) and in external presentations (to analysts and investors) in
order to illustrate the results from operations also through the comparison of the operating results of the
financial year being reported with those of the previous years.
■ Net Financial Debt: TIM believes that the Net Financial Debt represents an accurate indicator of its ability
to meet its financial obligations. It is represented by Gross Financial Debt less Cash and Cash Equivalents
Report on Operations of the
TIM Group
Alternative Performance Measures
102
and other Financial Assets. The Report on Operations includes two tables showing the amounts taken
from the statements of financial position and used to calculate the Net Financial Debt of the Group and
Parent.
To provide a better representation of the true performance of Net Financial Debt, in addition to the usual
indicator (renamed “Net financial debt carrying amount”), the TIM Group reports a measure called
“Adjusted net financial debt”, which neutralizes the effects caused by the volatility of financial markets.
Given that some components of the fair value measurement of derivatives (contracts for setting the
exchange and interest rate for contractual flows) and of derivatives embedded in other financial
instruments do not result in actual monetary settlement, the Adjusted net financial debt excludes these
purely accounting and non-monetary effects (including the effects of IFRS 13 – Fair Value Measurement)
from the measurement of derivatives and related financial assets/liabilities.
Non-current financial liabilities
Current financial liabilities
Financial liabilities directly associated with Discontinued operations/Non-current assets held for sale
Gross financial debt
Non-current financial assets
Current financial assets
Financial assets relating to Discontinued operations/Non-current assets held for sale
Financial assets
Net financial debt is calculated as follows:
+
+
+
A)
+
+
+
B)
C=(A - B) Net financial debt carrying amount
D)
E=(C +
D)
Reversal of fair value measurement of derivatives and related financial liabilities/assets
Adjusted net financial debt
■ Equity Free Cash Flow (EFCF): this financial measure is used by TIM as the financial target in internal
presentations (business plans) and in external presentations (to analysts and investors); it represents the
free cash flow available for the remuneration of own capital, to repay debt and to cover any financial
investments and payments of licenses and frequencies. In particular, the indicator highlights the change in
adjusted net financial debt without considering the impacts of payment of dividends, changes in equity,
acquisitions/disposals of equity investments, outlay for the purchase of licenses and frequencies,
increases/decreases of finance lease liabilities payable (new lease operations, renewals and/or extensions,
cancellations/early extinguishing of leases).
The Equity Free Cash Flow measure is calculated as follows:
Reduction/(Increase) in adjusted net financial debt from continuing operations
Impact for finance leases (new lease operations and/or renewals and/or extensions (-)/any terminations/early
extinguishing of leases (+))
Payment of TLC licenses and for the use of frequencies
+/-
-
+/- Financial impact of acquisitions and/or disposals of investments
-
Dividend payment and Change in Equity
Equity Free Cash Flow
Report on Operations of the
TIM Group
Alternative Performance Measures
103
REVIEW OF KEY OPERATING AND FINANCIAL
DATA - TIM S.P.A.
Main changes in the corporate structure
The main changes in the corporate structure during 2021 are highlighted.
Conferral of the business unit to Noovle S.p.A.
Starting January 1, 2021, the conferral is effective to Noovle S.p.A. of the TIM S.p.A. business unit comprising
the assets and liabilities and employees involved in the supply of services for the Cloud and Edge Computing
business and the rent of spaces, including virtual, also offered through a dedicated network of data centers.
The asset values concerned by the conferral are reported:
(million euros)
Assets
Non-current assets
Intangible assets
Tangible assets
Rights of use assets
Other non-current assets
Current assets
Total assets
Liabilities
Equity
Non-current liabilities
Current liabilities
Total Liabilities and Equity
TIM S.p.A.
1/1/2021
Conferral of
Green to
Noovle S.p.A.
TIM S.p.A.
post-conferral
1/1/2021
61,804
28,551
10,335
4,096
18,822
5,546
67,350
25,008
32,717
9,625
67,350
(872)
(1,481)
(362)
(91)
1,062
782
(90)
(84)
(6)
(90)
60,932
27,070
9,973
4,005
19,884
6,328
67,260
25,008
32,633
9,619
67,260
Business rationale for the transaction
With the aim of extending its leadership in cloud services, seizing the business opportunities presented by the
market and maximizing the efficiency and effectiveness objectives, particularly in terms of overall security, TIM
has decided to concentrate its assets and skills in the cloud area that were spread among several of TIM's
departments into a single company. Also in business terms, the transaction is the outcome of a collaboration
agreement with Google Cloud (a partnership signed in the first quarter of 2020) for the creation of innovative
public, private and hybrid cloud services to enrich TIM's offer of technological services.
The transaction ensures a strong focus on that sector and favors an acceleration of cloud sales on the market
as well as an effective and efficient management of the partial migration of the computational workloads of
TIM's IT to the public cloud, guaranteeing the optimization of infrastructure and operations.
The transaction also allows the further development of skills in the cloud area and the achievement of major
sustainability objectives.
Operation structure
The transaction took the form of a contribution in kind, pursuant to Art. 2343 ter, second paragraph, letter b) of
the Italian Civil Code, of a TIM business complex to Noovle S.p.A., a company set up and wholly controlled by
TIM S.p.A. for this purpose and subject to its management and coordination.
The conferral involved the assignment to the transferee company of a business unit consisting of assets,
liabilities, contracts of purchase and sale, employees and anything else intended for and attributable to the
provision i) of services relating to the cloud business, including ICT services to be supplied to TIM itself, and ii)
the rental of spaces, including virtual ones, also offered through a dedicated network of data centers.
Agreements with TIM signed under the scope of the conferral
With a view to ensuring the homogeneous management of the commercial relationship with TIM and to
guaranteeing continuity of operations and consolidation of its processes, early 2021, Noovle signed various
agreements with the parent company, in particular:
■
the two Master Service Agreements, signed on February 19, 2021, regulate on the one hand, the Services
supplied by Noovle to the TIM client (including Site Management Services, Proximity services, Assurance;
Security Management, Architecture & Engineering Services, Operating Governance Services, Demand
Management, Infrastructure and Project Delivery, System Development & Management, COE – Centers of
Excellence, Offering, Supply and Conditioning Services, Systems Management/Discovery Operations) and,
Report on Operations of
TIM S.p.A.
Review of Key Operating and Financial Data –
TIM S.p.A.
105
on the other, the Services supplied by TIM in connection with the operative needs of Noovle, also in order
to assure consistency with the Group’s processes;
■ under the scope of the carve out, Noovle was also conferred the specific project agreements of the TIM-
Google partnership. The specified collaboration agreement with Google Cloud, signed by TIM in February
2020, is in fact structured into a main agreement and specific project contracts.
Conferral of the business unit to FiberCop S.p.A.
Starting March 31, 2021, the conferral is effective to FiberCop S.p.A. of the TIM S.p.A. business unit comprising
the goods, assets and liabilities and legal relations organized functionally for the supply of passive fiber or
copper access services, used by TIM, and at the service of other authorized operators (OAOs), by means of the
secondary network (the “last mile”).
At the same time, the purchase was completed by Teemo Bidco, an indirect subsidiary of KKR Global
Infrastructure Investors III L.P., of 37.5% of FiberCop from TIM and Fastweb has subscribed FiberCop shares
corresponding to 4.5% of the company’s capital, through the conferral of the stake held in Flash Fiber, which
was simultaneously incorporated into FiberCop.
The comprehensive effects of the conferral to TIM S.p.A. are reported, as well as the effects consequent to said
sale of the holding in FiberCop to KKR:
(million euros)
Assets
Non-current assets
Intangible assets
Tangible assets
Rights of use assets:
Conferral of rights of use assets
Activation of new rights of use to FiberCop
Other non-current assets:
Investments
Non-current financial assets
Deferred tax assets
Current assets
Total assets
Liabilities
Equity
Non-current liabilities
Non-current financial liabilities
Employee benefits
Provisions
Miscellaneous payables and other non-current
liabilities
Current liabilities
Total Liabilities and Equity
Transaction rationale
TIM S.p.A.
pre-conferral
3/31/2021
Comprehensiv
e impacts for
the conferral
of the
FiberCop
branch
Sale of equity
investment
TIM S.p.A.
post-conferral
3/31/2021
59,964
26,893
9,809
3,437
19,825
6,329
66,293
24,576
29,718
24,805
879
617
3,417
11,999
66,293
(198)
(4,670)
(2,446)
27
(130)
157
6,891
4,393
2,500
(2)
(95)
(293)
(278)
(128)
(150)
(15)
(293)
(1,762)
(1,762)
(1,741)
(21)
1,759
(3)
(3)
(3)
58,004
22,223
7,363
3,464
24,954
7,993
65,997
24,573
29,440
24,805
879
489
3,267
11,984
65,997
The establishment of FiberCop S.p.A. (hereinafter also “FiberCop” or the “Company”) is part of the project to
expand optical fiber coverage throughout Italy; it aims to play a key role in bridging the digital divide in Italy,
and accelerating customer transition from copper to fiber. Specifically:
■
the company’s purpose is the design, construct and manage infrastructure for the provision of wired
access to the end users’ premises to telecommunications operators;
■ FiberCop operates in accordance with the co-investment model and is the first in Europe to apply the new
European Electronic Communications Code nationwide;
■ FiberCop has a network asset that already offers UBB connections to around 94% of fixed lines thanks to
FTTC and FTTH technology, and will continue to develop FTTH coverage, with connection speeds of over 1
Gigabit. The objective is to reach 75% of the housing units in gray and black areas by 2025.
The company was established on November 2, 2020 with share capital fully paid in by the single shareholder
TIM.
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On March 31, 2021, following the co-investment agreements between TIM, KKR Infrastructure L.P. (hereinafter
also “KKR”) and Fastweb S.p.A. (hereinafter “Fastweb”), KKR finalized its entry into FiberCop’s capital through
Teemo Bidco Sarl (37.5%) and Fastweb (4.5%).
In particular, on March 31, 2021 the following transactions were finalized:
■ Conferral of TIM’s secondary network (from the street cabinet to customers’ homes);
■ Conferral of Fastweb’s shareholding in Flash Fiber S.r.l. (hereinafter “Flash Fiber”), a company owned by
TIM (80%) and Fastweb (20%);
■ Merger of Flash Fiber into FiberCop, backdating the accounting and tax effects to January 1, 2021, which
resulted in the contribution of the fiber optic network previously developed in 29 cities;
■ Purchase by Teemo Bidco Sarl of 37.5% of FiberCop from TIM.
In detail, the FiberCop shareholders’ meeting, passed resolution on March 24, 2021 to approve the paid capital
increase, with a first tranche reserved for TIM totaling 4,643 million euros (8.95 million euros of which to be
allocated to share capital) to be released through the contribution in kind of the business unit relating to the
“secondary network”, and a second tranche reserved for the company Fastweb totaling 210 million euros (1
million euros of which to be allocated to share capital) to be released through the conferral of the 20% stake in
Flash Fiber’s share capital.
At the same time, the merger by incorporation of Flash Fiber into FiberCop involved the elimination of the full
shareholdings, valued at 460 million euros against the merged company equity of 290 million euros at March
31, 2021, and the recognition of a negative merger reserve of 170 million euros (18 million euros for the TIM
portion and 152 million euros for the Fastweb portion).
Following these transactions, the share capital of FiberCop S.p.A. broke down as follows at December 31, 2021:
TIM S.p.A. 58%; Teemo Bidco Sarl 37.5%; Fastweb S.p.A. 4.5%.
Master Agreements
To regulate the commercial relationship between TIM and FiberCop and ensure continuity of operations and
consolidation of its processes, TIM and FiberCop signed a number of agreements, including: the Master Service
Agreement which governs the provision of services provided to TIM and FiberCop and vice versa; the IRU
Master Agreement which governs FiberCop’s grant to TIM of the right to use all of the installation or fiber optic
infrastructure that has come under FiberCop’s ownership; the Transitional Services Agreement with TIM which
entrusts TIM with the management and development of the IT systems during FiberCop’s start-up phase; as
well as agreements for the provision of necessary general services by TIM for the company to operate. In
addition to the agreement entered into with TIM, FiberCop signed the Master Service Agreement with Fastweb
to regulate the provision of services by both parties as part of the network development project.
Obligations underlying the Contractual Commitments
The Master Service Agreement stipulated between TIM and FiberCop regulates the supply of reciprocal services
within the secondary network infrastructure development project on Italian territory.
Under the scope of the Master Service Agreement, both parties have made certain commitments: TIM has
made commitments to FiberCop on an annual basis in terms of minimum purchases of services and migration
of the customer base from copper to fiber optic and the development of the horizontal FTTH network; FiberCop
has made commitments to purchase the primary network and the construction and maintenance services
from TIM.
In connection with these commitments, the agreements envisage penalties applicable to either party if they
should not be respected, and rights in the favor of Teemo BidCo, as minority shareholder, to protect against
any failure by TIM to execute the contractual commitments made; this is all in line with standard market
practice.
These penalties charged to the parties and rights of the minority shareholder are assessed when drafting the
financial statements and subject to reconsideration at each accounting end date.
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Acquisition of BT Italia business units
On June 30, 2021, the purchase of the BT Italia Business Unit came into effect, offering services to public
administration customers and small and medium business (SMB) customers. The purchase also includes
support for customers of the SMB Business Unit, supplied by Atlanet, the BT Contact Center of Palermo.
The operation, which is in line with the TIM Group’s 2021-2023 ‘Beyond Connectivity’ strategic plan, aims to
leverage its product factories to increase the range of services for the digital transformation of the public
administration and strengthen the offer of solutions dedicated to the SME market.
The operation is classified as a business combination and consequently treated in accordance with IFRS 3, in
consideration of the fact that it concerns the acquisition of business units that include an organized workforce
with the competence and experience necessary to carry out the “critical” process for the production of
outputs, as well as suitable production factors such as tangible and intangible assets, contracts with
customers and suppliers, employees, namely economic resources able to contribute towards creating
production and generating economic benefits.
Below are the comprehensive effects of the acquisition of the BT Italia business units including the Atlanet
support activities:
(million euros)
Assets
Non-current assets
Intangible assets
Tangible assets
Rights of use assets
Other non-current assets
Current assets
Total assets
Liabilities
Equity
Non-current liabilities
Non-current financial liabilities
Employee benefits
Provisions
Miscellaneous payables and other non-current liabilities
Current liabilities
Total Liabilities and Equity
TIM S.p.A.
pre-
acquisitions
6/30/2021
BT Italia
business units
TIM S.p.A.
post-
acquisitions
6/30/2021
58,840
22,338
7,263
3,388
25,851
6,004
64,844
24,669
28,944
24,818
820
384
2,922
11,231
64,844
8
—
7
—
1
26
34
—
3
—
2
1
—
31
34
58,848
22,338
7,270
3,388
25,852
6,030
64,878
24,669
28,947
24,818
822
385
2,922
11,262
64,878
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Non-recurring events
In 2021 and 2020, TIM S.p.A. recognized net non-recurring operating expenses connected with events and
transactions that by their nature do not recur as part of continuing operations, which are reported when their
amount is material. Non-recurring charges include, among others, any goodwill impairment losses, provisions
for regulatory disputes and potential liabilities related to them, liabilities with customers and/or suppliers, and
provisions for onerous contracts, charges associated with corporate reorganization/restructuring and prior-year
adjustments.
In detail:
(million euros)
Non-recurring expenses/(income)
Revenues
Revenue adjustments
Other income
Recovery of operating expenses
Acquisition of goods and services and Change in inventories
Expenses related to agreements and the development of non-recurring
projects
Employee benefits expenses
Charges connected to corporate reorganization/restructuring and other costs
Other operating expenses
Sundry expenses and other provisions
Impact on Operating profit (loss) before depreciation and amortization,
capital gains (losses) and impairment reversals (losses) on non-current assets
(EBITDA)
Goodwill Impairment loss
Impact on EBIT - Operating profit (loss)
Non-recurring events for the year 2021 include, in particular:
2021
2020
5
5
(2)
(2)
38
38
358
358
735
735
1,134
4,120
5,254
39
39
—
—
58
58
69
69
145
145
311
—
311
■ 4,120 million euros for the impairment loss on goodwill attributed to domestic activities. The impairment
test, carried out when drawing up the 2021 Financial Statements, was performed by referring to the flows
of the 2022 Industrial Plan and the projections up to 2026 of the domestic market in its current conditions,
and using a discount rate updated to the financial market conditions as at December 31, 2021. The new
2022 Industrial Plan is based on the results of the 2021 final accounting, reflects realistic expectations on
future developments and outlines all the actions to create value for the shareholders. The year showed an
impairment loss, which is attributed entirely to goodwill;
■ 735 million euros in other operating expenses, mainly referring to provisions made for disputes,
transactions, regulatory sanctions and related potential liabilities as well as expenses connected with the
COVID-19 emergency for provisions made as a consequence of the worsening of the expected credit losses
of Corporate customers, connected with the expected evolution of the pandemic.
Other operating expenses - Sundry expenses and provisions include 548 million euros for the posting of a
Contractual Risk Provision for Onerous Contracts (IAS 37) relating to ongoing relations with some
counterparties for the offer of multimedia content.
In particular, they include the accrual of the Net Present Value of the negative margin connected with
some partnerships, including the one in place between TIM and DAZN for the offer in Italy on the
TIMVISION platform of DAZN content, including all matches of the Serie A football championship for the
seasons 2021-22, 2022-23 and 2023-24.
In greater detail, as part of the definition of the 2022-2024 Strategic Plan, the business plan hypotheses
have been updated for the current football season and the next two, pointing out that the total margins of
the project, including TIM’s contractual commitments towards DAZN in terms of fees, for lack of remedy
by DAZN of certain breaches already disputed, is very much negative.
Use of the Risk Provision throughout the contractual term will make it possible to offset the negative item
of the margin (EBITDA), thereby obtaining null EBIT (organic or operative margin) for the sale of some
content connected with the DAZN football offer.
With specific regard to the Contractual Risk Provision for Onerous Contracts relating to content, the
financial reports for future years and throughout the life of the contract will indicate:
•
•
•
the amount used of the Provision for risks covering the negative margin;
the amount of the total organic margins (organic EBITDA) that would have been recorded without
using said Provision;
the financial outlay connected with the payments due to counterparties.
■ 358 million
business
reorganization/restructuring processes following the application of art. 4 of Law no. 92 of June 28, 2012, as
defined in the trade union agreements signed between the Company and the trade unions;
expenses mainly
connected with
employee
benefit
euros
in
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109
■ 38 million euros for expenses related to agreements and the development of non-recurring projects, as
well as costs for purchases relating to supplies that became necessary for the management of the health
emergency;
■ 3 million euros in revenue adjustments and other income.
Non-recurring expenses for 2020 mainly included discounts on revenues following TIM S.p.A. initiatives in
support of customers to fight the COVID-19 emergency (39 million euros), expenses connected with
agreements and the development of non-recurring projects as well as costs for purchases relative to
procurements that have been made necessary to manage the health emergency (58 million euros), employee
benefit expenses mainly connected with business reorganization/restructuring processes and other costs (69
million euros), other operating expenses for 145 million euros, mainly referring to provisions made and
expenses connected with the management of receivables deriving from the deterioration of the
macroeconomic context following the COVID-19 emergency, expenses for regulatory sanctions and expenses
related to agreements and the development of non-recurring projects.
Operating Performance
(million euros)
2021
2020
% Change
Revenues
EBITDA
EBITDA Margin
EBIT
EBIT Margin
Profit (loss) for the year
Capital expenditures
Net financial debt carrying amount
Adjusted net financial debt
Headcount at year end (number)
organic
excluding
non-
recurring
(a)
(b)
(a-b)
(1)
(1)
(1)
(1)
(1)
(1)
12,397
12,030
2,637
21.3%
(4,522)
(36.5%)
(8,314)
2,294
5,180
43.1%
1,576
13.1%
7,161
2,485
12/31/ 2021
(a)
12/31/ 2020
(b)
21,937
20,612
37,064
27,324
25,783
38,516
3.1
(49.1)
(21.8) pp
(386.9)
(49.6) pp
2.8
(31.3)
(61.2)
43.9
(7.7)
Change Amount
(a-b)
(5,387)
(5,171)
(1,452)
(1) Details are provided under “Alternative Performance Measures”.
Revenues
2021 revenues came to 12,397 million euros (12,030 million euros in 2020), with an increase of 367 million euros
or +3.1%. 2021 revenues include adjustments to non-recurring revenues for 5 million euros, while 2020
revenues included 39 million euros for non-recurring items, of which 38 million euros connected with the TIM
S.p.A. commercial initiatives in support of customers to fight the COVID-19 emergency.
Revenues from stand-alone services amounted to 10,651 million euros (-108 million euros compared to 2020,
-1.0%) and reflect the impacts of the competitive context on the customer base and a reduction in ARPU
levels. In particular, revenues from the Mobile market Stand-alone services are down (-202 million euros on the
previous year, -6.0%), while revenues from the Fixed market Stand-alone services improved (+80 million euros
compared to the previous year, +1.0%), thanks to the increase in revenues from network maintenance services
to FiberCop S.p.A., despite the worsening of the Retail segment.
Revenues from Handsets and Bundles & Handsets, including the change in work in progress, amounted to
1,746 million euros in 2021, up 475 million euros compared to 2020, mainly following revenues from the sale of
network infrastructure to FiberCop S.p.A..
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The sales segments show the following changes compared to 2020:
(million euros)
2021
Revenues
Consumer
Business
Wholesale
Other
In particular:
12,397
5,411
3,982
1,942
1,062
2020
Changes
12,030
5,892
3,953
1,910
275
367
(481)
29
32
787
■ Consumer: 2021 revenues of the Consumer segment totaled 5,411 million euros and decreased by 481
million euros on 2020 (-8.2%), suffering the impact of the challenging competitive context and greater
regulation of commercial processes. The trend seen in total revenues also applied to revenues from stand-
alone services, which amounted to 4,723 million euros, down by 449 million euros (-8.7% compared to the
previous year). In particular:
• Revenues for Mobile segment Stand-alone services were equal to 2,161 million euros, down 173
million euros (-7.4%) compared to 2020, mainly due to the competition;
•
revenues from Fixed Stand-alone services amounted to 2,596 million euros, down on 2020 (-275
million euros, -9.6%), mainly due to the reduction in ARPU levels and the lesser Customer Base.
Revenues for Handsets and Bundles & Handsets in the Consumer segment amounted to 688 million euros,
down 32 million euros compared to 2020 (-4.4%), and mainly reflected the lesser sales volumes of modems on
Fixed.
■ Business: revenues for the Business segment amounted to 3,982 million euros, up by 29 million euros on
2020 (+0.7%, of which +0.1% for revenues from the stand-alone services component). In particular:
•
•
total Mobile revenues in 2021 amounted to 935 million euros with an increase of 24 million euros
compared to 2020 (+2.7%), which in particular reflects the increase in Handset revenues (+35 million
euros, +69.7%), partly offset by the decrease in revenues from stand-alone services (-1.2%) following a
reduction in ARPU levels;
total Fixed revenues in 2021 came to 3,104 million euros, up 2 million euros on 2020; they are
therefore essentially in line with the previous year (+0.1%), recording an increase in revenues from
stand-alone services (+0.4%) following the performance seen in revenues from ICT services.
■ Wholesale Market: Wholesale Market segment revenues in 2021 came to 1,942 million euros, up by 32
million euros (+1.6%) compared to 2020, driven mainly by the growth in accesses in the ultrabroadband
segment.
■ Other: the Other segment records 2021 revenues of 1,062 million euros, up by 787 million euros on 2020; it
should be noted, in particular, that starting 2021, the item includes TIM revenues with respect to the
subsidiary FiberCop S.p.A. (effective from said conferral of the business unit related to the copper and fiber
access network), mainly relating to the sale of infrastructures and network maintenance services.
EBITDA
2021 EBITDA is 2,637 million euros (5,180 million euros in 2020), accounting for 21.3% of revenues, down 21.8
percentage points on the previous year (43.1%).
Organic EBITDA - net of the non-recurring items amounted to 3,771 million euros; the EBITDA margin was
30.4% (45.5% in 2020) and records a reduction of 1,720 million euros on 2020. In 2021 TIM S.p.A. recorded net
non-recurring expenses for a total of 1,134 million euros, of which 25 million euros due to the COVID-19
emergency in Italy.
Non-recurring charges include, among others, provisions for disputes, transactions and regulatory sanctions
and potential liabilities related to them, liabilities with customers and/or suppliers and provisions for onerous
contracts, as well as charges associated with corporate reorganization/restructuring. For further details, in
addition to that reported in the “Non-recurring events” chapter of this report on operations, see the Note
"Non-recurring events and transactions" in the TIM S.p.A. Separate Financial Statements as at December 31,
2021.
In 2020, TIM S.p.A. recorded non-recurring charges for a total of 311 million euros, of which 106 million euros
were attributable to the COVID-19 emergency in Italy. It was also affected by non-recurring charges connected
with corporate reorganization/restructuring processes and provisions for disputes, regulatory sanctions and
potential liabilities related to them with customers and/or suppliers and to charges related to corporate
reorganization/restructuring as well as to the adjustments to revenues from previous years.
Organic EBITDA, net of the non-recurring items, is calculated as follows:
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(million euros)
EBITDA
Non-recurring expenses (Income)
ORGANIC EBITDA - excluding Non-recurring items
The following elements also affected EBITDA:
■ Other income
(million euros)
Late payment fees charged for telephone services
Recovery of employee benefit expenses, purchases and
services rendered
Capital and operating grants
Damages, penalties and recoveries connected with litigation
Estimate revisions and other adjustments
Special training income
Other
Total
2021
2020
Changes
2,637
1,134
3,771
absolute
%
5,180
311
5,491
(2,543)
823
(1,720)
(49.1)
(31.3)
2021
2020
Changes
29
33
26
22
71
66
75
322
40
16
31
17
59
13
13
189
(11)
17
(5)
5
12
53
62
133
During 2021, "Special training income” included repayments valued for the hours of training delivered during
the year (more than 3 million hours, involving approximately 37,000 employees); these repayments are
correlated with the activities tied to the training project financed through the Fondo Nuove Competenze (New
Skills Fund - the Ministerial fund aimed at increasing innovative skills in companies), which started in December
2020 and drew to a close in May 2021.
■ Acquisition of goods and services
(million euros)
Acquisition of goods
Revenues due to other TLC operators and costs for
telecommunications network access services
Commercial and advertising costs
Professional and consulting services
Power, maintenance and outsourced services
Lease and rental costs
Other
Total acquisition of goods and services
% of Revenues
2021
1,053
707
1,130
104
1,115
413
2,237
6,759
54.5
2020
Changes
926
692
957
114
1,018
306
598
4,611
38.3
127
15
173
(10)
97
107
1,639
2,148
16.2 pp
Acquisition of goods and services increased by 2,148 million euros due to the greater purchases of goods for
resale, sales expenses taking into account the improvement of deferred contract costs linked to the reduction
of churn, leased asset costs, mainly for software license rental and other miscellaneous service costs, as well
as greater hosting charges on non-strategic sites connected with the Master Service Agreement (MSA)
stipulated between TIM S.p.A. and INWIT, with effect from March 31, 2020.
It includes a non-recurring component of 38 million euros for expenses related to agreements and the
development of non-recurring projects, as well as 4 million euros for purchases relating to supplies that
became necessary for the management of the health emergency.
The specific item “Other” mainly includes costs for external companies developing accesses on the network
under the scope of existing delivery agreements with the Group companies (such as FiberCop), as well as
facility and maintenance costs.
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■ Employee benefits expenses
(million euros)
Ordinary employee expenses and costs
Restructuring expenses and allocations to employee and other
provisions
Total employee benefits expenses
2021
2,095
358
2,453
2020
Changes
2,124
69
2,193
(29)
289
260
Employee benefits expenses increased by 260 million euros compared to 2020. The main factors that drove
this change were:
•
•
the decrease of 29 million euros of the ordinary employee costs, mainly due to the balance of savings
consequent to the reduction in the average salaried workforce (amounting to a total of -2,092 average
employees, of whom an average of -222 deriving from the application of the Expansion Contract) and
the expenses related to the renewal of the National Collective Bargaining Agreement;
the increase of 289 million euros in company restructuring costs as a consequence of the application of
Art. 4 of Italian Law no. 92 of June 28, 2012, following the trade union agreement signed between the
Company and the trade unions on March 8, 2021.
The headcount at December 31, 2021 amounted to 37,064 employees, a decrease of 1,452 compared to
December 31, 2020 (38,516).
■ Other operating expenses
(million euros)
Write-downs and expenses in connection with credit
management
Provision charges
TLC operating fees and charges
Indirect duties and taxes
Penalties, settlement compensation and administrative fines
Association dues and fees, donations, scholarships and
traineeships
Other
Total
2021
217
674
41
58
127
10
52
1,179
2020
Changes
328
1
42
53
120
10
51
605
(111)
673
(1)
5
7
—
1
574
Other operating expenses for 2021 increased by 574 million euros and include non-recurring items for 735
million euros, mainly referring to disputes, transactions, expenses connected with regulatory sanctions and
expenses related to agreements and the development of non-recurring projects, as well as provisions and
expenses connected with credit management in connection with the COVID-19 emergency (20 million euros)
following the worsening of the expected credit loss of corporate customers connected with the expected
evolution of the pandemic. For further details, in addition to that reported in the “Non-recurring events”
chapter of this report on operations, see the Note "Non-recurring events and transactions" in the TIM S.p.A.
Separate Financial Statements as at December 31, 2021.
Note that “Write-downs and expenses in connection with credit management” shows a reduction of 111
million euros compared with 2020, which is the consequence of the consolidation of the program to optimize
processes started in 2020, aimed at increasing the efficiency of credit management, all round, intervening on
the whole process involving the customer. More specifically, reference is made to the acceptance,
management and collection of debt through to the assessment model of the new commercial offers.
Non-recurring items recorded in 2020, for 145 million euros, mainly referred to provisions and expenses partly
connected with credit management in relation to the COVID-19 emergency, which has led to a worsening of
the expected credit loss of part of the customer base following deterioration of the macroeconomic context.
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Depreciation, amortization and capital expenditures
2021 depreciation and amortization came to 2,996 million euros (3,582 million euros in 2020) and are as
follows:
(million euros)
Amortization of intangible assets with a finite useful life
Depreciation of tangible assets
Amortization of rights of use assets
Total
2021
1,112
1,432
452
2,996
2020
1,290
1,750
542
3,582
Changes
(178)
(90)
(586)
(318)
The main aspects are listed below:
■ amortization of intangible assets amounted to 1,112 million euros, down 178 million euros compared to
2020. This trend is mainly due to the revision of the useful life of the IT software applications; in actual fact,
in 2021, following the start of the Digital Enterprise project and consequent verification of the effective and
prospective duration of the systems impacted, the amortization period of assets used in fixed and mobile
IT software development was revised, taking it from 3 to 6 years, with an impact of lesser period
amortization for approximately 115 million euros. In addition, there has been a reduction of 68 million
euros following the conferral to Noovle S.p.A. of software applications and systems, offset by greater
amortization for 5 million euros, mainly following the launch of projects relating to software systems,
service creation and the purchase of software licenses;
■ depreciation of proprietary tangible assets comes to 1,432 million euros and shows a reduction of 318
million euros on the previous year, determined for 285 million euros by the impact on depreciation
following 2021 conferrals (245 million euros following the conferral to FiberCop S.p.A. of the secondary
network and 40 million euros following the conferral to Noovle S.p.A. of hardware management systems
and owned buildings) and for 69 million euros by the consequent lesser investments in the various items of
expenses correlated to the secondary network (subscriber connection units, fiber optic access and
transport network, underground and overhead copper network, pole systems). The reduction has been
partially offset by the estimated acceleration of depreciation as a consequence of both the switch-off of
3G, expected for June 2022 (equal to approximately 23 million euros) and the switch-off of part of the
copper access network, hypothesized for end 2030 (equal to 16 million euros);
■ amortization of rights of use assets comes to 452 million euros, a decrease of 90 million euros on last
year, mainly following the reduction in property and base transceiver station lease contracts as well as
following the conferral to Noovle S.p.A. of leased properties and to FiberCop S.p.A. of IRU contracts.
Capex totaled 2,294 million euros (2,485 million euros in 2020), with a reduction of 191 million euros. Details
are as follows:
(million euros)
Investments in intangible assets with a finite useful life
Investments in tangible assets
Investments in rights of use assets
Total
2021
1,055
1,167
72
2,294
2020
Changes
959
1,468
58
2,485
96
(301)
14
(191)
Investments in intangible assets record a rise of 96 million euros, mainly determined by the investment to
extend the deadline for rights of use in the 2100 MHz bandwidth to December 31, 2029 (currently envisaged to
December 31, 2021; 240 million euros), partly offset by lesser investments linked to the conferral of the assets
to Noovle.
Investments in tangible assets and rights of use record an overall reduction of 287 million euros. The
reduction, connected with investments in tangible assets (-301 million euros) is due to the conferral to Fibercop
and partially offset by an increase in investments in rights of use (+14 million euros), mainly following
investments in leasehold improvements and rights of use in fiber optic.
Gains/(losses) on disposals of non-current assets
The item is negative for 43 million euros (negative for 14 million euros in 2020), mainly following the recording
of capital losses for the closure of the contract with Flash Fiber, as part of the corporate conferral of the BU to
FiberCop, thereafter merged with Flash Fiber and the consequent superseding of the previous Pay Per Use
contract.
Impairment reversals (losses) on non-current assets
This item amounted to a negative 4,120 million euros (negative for 8 million euros in 2020).
In accordance with IAS 36, goodwill is not subject to amortization, but is tested for impairment on at least an
annual basis, when preparing the company’s separate financial statements.
The impairment test, conducted during the preparation of the 2021 Annual Financial Report, took as a
reference the flows of the new 2022-2024 Industrial Plan - which, based on the results of the 2021 final
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accounting, reflects realistic aspects of future developments and outlines all the actions to create value for
shareholders - on the basis of the projections up to 2026, assuming the use of domestic market assets in
continuity with the conditions at December 31, 2021 and using a discount rate updated to the financial market
conditions at December 31, 2021.
The configuration of the recoverable amount is the Fair Value estimated on the basis of the income approach,
which has highlighted a value reduction of 4,120 million euros of goodwill attributed to the domestic activities.
Further details are provided in the Note "Goodwill" to the Separate Financial Statements as at December 31,
2021 of TIM S.p.A.
EBIT
EBIT in 2021 amounted to a negative 4,522 million euros (1,576 million euros in 2020), with an EBIT margin of -
36.5% (13.1% in 2020). EBIT in 2021 reflected the negative impact of non-recurring net charges, including the
mentioned impairment loss on goodwill (4,120 million euros), for 5,254 million euros (311 million euros in 2020).
Organic EBIT, net of the non-recurring items, amounted to 732 million euros (1,887 million euros in 2020),
with an EBIT margin of 5.9% (15.6% in 2020) and suffers not only the effect of the same dynamics already
reported for EBITDA, but also the recording of capital losses from disposals on non-current assets for a total of
43 million euros, despite benefiting from a reduction in amortization/depreciation for a total of 586 million
euros.
Further details on non-recurring items are provided in the Note “Significant non-recurring events and
transactions” of the Separate Financial Statements at December 31, 2021 of TIM S.p.A. in addition to the
information given in the chapter on “Non-recurring events” of this report on operations.
Organic EBIT, net of the non-recurring items, is calculated as follows:
(million euros)
EBIT
Non-recurring expenses (Income)
ORGANIC EBIT - excluding Non-recurring items
2021
2020
Changes
absolute
%
(4,522)
5,254
732
1,576
311
1,887
(6,098)
4,943
(1,155)
(61.2)
Income (expenses) from investments
This item, amounting to 834 million euros (551 million euros in 2020), is broken down as follows:
(million euros)
Dividends
Other income and gains on disposals of investments
Other income from investments
Losses on disposals of investments
Impairment losses on financial assets
Sundry expenses from investments
Total
In particular, we report:
2021
837
9
10
—
(7)
(15)
834
2020
Changes
331
227
—
—
(7)
—
551
506
(218)
10
—
—
(15)
283
■ dividends mainly related to the subsidiaries Telecom Italia Sparkle (400 million euros) and Telecom Italia
Finance (436 million euros). In 2020 dividends mainly referred to the subsidiary Telecom Italia Finance (75
million euros) and the associated company INWIT S.p.A. (256 million euros);
■ net capital gains (9 million euros) refer to the sale of 37.5% of the investment in the subsidiary FiberCop to
the KKR fund (gross capital gain of 17 million euros, net of accessory charges for 8 million euros). In 2020,
these referred to the dilution of TIM’s investment in INWIT S.p.A.'s capital from 60% to 37.5%, following the
merger of INWIT with Vodafone Towers;
■ other income from investments refers to the reversal to extraordinary income of several provisions relating
to investments;
■
impairment losses referred mainly to the impairment of investment in the subsidiary Telecom Italia
Ventures. In 2020 impairment losses referred mainly to the impairment of investment in the subsidiary
Olivetti;
■ sundry expenses from investments refer to the measurement of the economic value of the rights
envisaged in the Transaction Agreement in the favor of Teemo Bidco Sarl, as minority shareholder, under
the scope of the FiberCop transaction.
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Finance income (expenses), net
Finance income (expenses) show a net expense of 908 million euros (negative for 961 million euros in 2020),
which breaks down as follows:
(million euros)
Finance income
Finance expenses
Total net financial income (expenses)
2021
1,076
(1,984)
(908)
2020
Changes
1,012
(1,973)
(961)
64
(11)
53
The positive change mainly derives from the lower finance expenses connected to the reduction in interest
rate levels and income from loans granted to FiberCop and Noovle, partly attenuated by the negative effects
of changes in certain currency and accounting non-monetary items relating to the measurement of derivative
instruments at fair value.
Income tax expense
In 2021, tax expense was recorded for 3,718 million euros (income for 5,995 million euros in 2020); tax expenses
mainly relate to the partial writing off of the deferred tax assets entered in 2020 in exchange for the tax
recognition of higher values booked in accordance with Decree Law 104/2020 art. 110, subsections 8 and 8 bis;
this write-off is due to the extension to 50 years of the period of tax asset resorption, introduced by art. 160 of
the 2022 Budget Law (Law 234/2021) and the changed assessment of the time frame for recoverability of
deferred tax assets of TIM S.p.A.
Further details are provided in the Note “Income tax expense (current and deferred)” of the Separate Financial
Statements at December 31, 2021 of TIM S.p.A.
The item also benefits from the positive tax effect of the proceed from consolidation of 100 million euros for
tax losses compensated by the taxable income of other companies in the tax consolidation.
Profit (loss) for the year
The profit for the year 2021 was negative in the amount of 8,314 million euros (positive in the amount of 7,161
million euros in 2020) and was negatively affected by non-recurring net charges of 8,761 million euros.
On comparable basis, profit for the year 2021 would have amounted to around 450 million euros, a drop of
approximately 0.9 billion euros over 2020.
Further details on non-recurring items are provided in the Note “Non-recurring events and transactions” of the
Separate Financial Statements at December 31, 2021 of TIM S.p.A..
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Financial Position and Cash Flows Performance
Financial position structure
(million euros)
Assets
Non-current assets
Goodwill
Intangible assets with a finite useful life
Tangible assets
Rights of use assets
Other non-current assets
Deferred tax assets
Current assets
Inventories, trade and miscellaneous receivables and other
current assets
Current income tax receivables
Current financial assets
Liabilities
Equity
Non-current liabilities
Current liabilities
Non-current assets
12/31/2021
12/31/2020
Changes
49,623
12,961
5,278
7,223
3,320
17,477
3,364
7,852
4,096
43
3,713
57,475
16,564
27,090
13,821
57,475
61,804
23,051
5,500
10,335
4,096
11,485
7,337
5,567
3,608
39
1,920
67,371
25,008
32,717
9,646
67,371
(12,181)
(10,090)
(222)
(3,112)
(776)
5,992
(3,973)
2,285
488
4
1,793
(9,896)
(8,444)
(5,627)
4,175
(9,896)
■ Goodwill: drops by 10,090 million euros on December 31, 2020, following the impacts consequent to the
conferrals of the Green BU to Noovle (1,300 million euros), of the secondary network to FiberCop (4,670
million euros) and the mentioned impairment loss on goodwill attributed to domestic businesses (4,120
million euros);
■
Intangible assets with a finite useful life: these fell by 222 million euros, from 5,500 million euros at the
end of 2020 to 5,278 million euros at December 31, 2021, representing the balance of the following items:
•
conferral to Noovle (-181 million euros);
•
•
capex (+1,055 million euros);
amortization charge for the year (-1,112 million euros);
• disposals, reclassifications and other changes (+16 million euros).
■ Tangible assets: decreased by 3,112 million euros, representing the sum of the following:
•
•
•
conferral to Noovle (-362 million euros);
conferral to FiberCop (-2,446 million euros);
capex (+1,167 million euros);
• depreciation charge for the year (-1,432 million euros);
• disposals, reclassifications and other changes (-39 million euros); they include 7 million euros in other
tangible fixed assets deriving from the acquisition of BT Italia business units.
■ Right of use assets: decreased by 776 euros, representing the sum of the following:
•
•
•
•
conferral to Noovle (-91 million euros);
conferral to FiberCop (+27 million euros, of which -130 million euros following the attribution to the
branch of rights of use and +157 million euros for the start since the date of the conferral of TIM IRU
liabilities on portions of secondary network to FiberCop);
investments and increases in lease contracts (+325 million euros);
amortization charge for the year (-452 million euros);
• disposals, reclassifications and other changes (-585 million euros); they include the impacts associated
with the derecognition of the rights of use connected with the previous Pay per Use contract stipulated
with Flash Fiber (538 million euros) following the effectiveness of the new Master Service Agreement
(MSA) stipulated between TIM S.p.A. and FiberCop S.p.A., consequent to the conferral and merger of
FiberCop with Flash Fiber.
■ Deferred tax assets: decreased by 3,973 million euros mainly following the write-off of 50% of the deferred
tax assets entered in 2020 for 6,569 million euros, following the tax recognition of higher values booked in
accordance with Decree Law 104/2020, Art. 110, subsections 8 and 8.
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Equity
Equity amounted to 16,564 million euros, down by 8,444 million euros compared to December 31, 2020
(25,008 million euros). The changes in equity over 2021 and 2020 are detailed in the following table:
(million euros)
At the beginning of the year
Profit (loss) for the year
Dividends approved
Merger of HR Services S.r.l. into TIM S.p.A.
Broad-Based Share Ownership Plan 2020
Issue of equity instruments and other changes
Movements in the reserve for financial assets measured at fair value through other
comprehensive income and derivative hedging instruments
Movements in the reserve for remeasurements of employee defined benefit plans
(IAS 19)
At the end of the year
Cash flows
Change in net financial debt
(million euros)
EBITDA
Capital expenditures on an accrual basis
Change in net operating working capital:
Change in inventories
Change in trade receivables and other net receivables
Change in trade payables
Change in payables for mobile telephone licenses
Other changes in operating receivables/payables
Change in provisions for employee benefits
Change in operating provisions and Other changes
Net operating free cash flow
% of Revenues
Sale of investments and other disposals flow
- of which sale of 37.5% FiberCop
Share capital increases/reimbursements
Financial investments
Dividends flow
Increases in lease contracts
impact on debt for Noovle conferral
Impact on debt for FiberCop conferral
Finance expenses, income taxes and other net non-operating
requirements flow
Reduction /(Increase) in net financial debt carrying amount
2021
2,637
(2,294)
(136)
(21)
(261)
666
(55)
(465)
(83)
336
460
3.7
1,812
1,759
—
(130)
462
(253)
858
2,406
(228)
5,387
12/31/2021
12/31/2020
25,008
(8,314)
(319)
—
—
(72)
272
(11)
16,564
18,174
7,161
(317)
12
44
5
(75)
4
25,008
2020
Changes
5,180
(2,485)
591
12
217
287
(110)
185
(611)
(122)
2,553
21.2
1,822
—
8
(101)
14
(889)
—
—
552
3,959
(2,543)
191
(727)
(33)
(478)
379
55
(650)
528
458
(2,093)
(17.5)
(10)
1,759
(8)
(29)
448
636
858
2,406
(780)
1,428
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Equity Free Cash Flow
(million euros)
Reduction /(Increase) in net financial debt carrying amount
Reversal of fair value measurement of derivatives and related
financial liabilities/assets
Reduction/(Increase) in adjusted net financial debt
Impact for finance leases (new lease operations and/or
renewals and/or extensions (-)/any terminations/early
extinguishing of leases (+))
Payment of TLC licenses and for the use of frequencies
Financial impact of acquisitions and/or disposals of
investments
Dividend payment and Change in Equity
Equity Free Cash Flow
2021
5,387
(216)
5,171
171
295
(5,405)
317
549
2020
3,959
(2)
3,957
432
110
(1,403)
(1,036)
2,060
Changes
1,428
(214)
1,214
(261)
185
(4,002)
1,353
(1,511)
The reduction in net operating free cash flow in 2021 as compared with 2020 (2,093 million euros) is attributed
to the reduction recorded by the EBITDA (-2,543 million euros), the change in working capital (-727 million
euros, above all due to the other changes in operating receivables/payables, amounting to -650 million euros),
partially offset by the lesser need for investments and the change in provisions for employee benefits (+528
million euros) and the operating provisions and other changes (+458 million euros).
In addition to what has already been described with reference to EBITDA, the change in net financial debt in
2021 was particularly impacted by the following:
Capex flow
Capex totals 2,294 million euros (2,485 million euros in 2020), down 191 million euros, mainly determined by
lesser investments in tangible assets (-301 million euros), partly offset by greater investments in intangible
assets (+96 million euros) and rights of use assets (+14 million euros).
Sale of investments and other disposals flow
This is positive for 1,812 million euros and mainly refers to the sale, as described previously, of 37.5% of
FiberCop to the indirect subsidiary of KKR Global Infrastructure Investors III L.P. and the sale of tangible and
intangible fixed assets. In 2020, this was positive for 1,822 million euros and referred for 1,816 million euros to
the collection in connection with the transactions involving INWIT during the year.
Financial investments flow
This amounted to 130 million euros and referred primarily to investment account payments to cover
subscriptions of new share capital issued by the subsidiaries Olivetti (10 million euros), Telecom Italia Ventures
(33 million euros), FiberCop (63 million euros) and in the associate TIM Fin (24 million euros). In 2020, this
amounted to 101 million euros and referred primarily to investment account payments to cover subscriptions
of new share capital issued by the subsidiaries Olivetti (25 million euros), Flash Fiber (48 million euros), TIM
Tank (6 million euros), Telsy (5 million euros) and the purchase of the investment in the subsidiary Noovle Srl
and Noovle S.p.A. (13 million euros) and in the associate TIMFin (3 million euros).
Increases in lease contracts
This item, amounting to 253 million euros (889 million euros in 2020), is broken down as follows: Increases in
finance lease contracts include the higher value of user rights entered following new lease contracts payables,
increase of lease payments and renegotiations of existing contracts.
Impact for the Noovle S.p.A. conferral
The item comes to 858 million euros and relates to the positive impact on TIM debt following the conferral of
the Green branch to Noovle S.p.A.; it includes TIM financial receivables in respect of Noovle for 684 million
euros.
Impact for the FiberCop S.p.A. conferral
The item comes to 2,406 million euros and relates to the positive impact on TIM debt following the conferral of
the branch relative to the access network to FiberCop S.p.A.; it includes TIM financial receivables in respect of
FiberCop for 2,500 million euros.
Share capital increases/reimbursements, including incidental costs
There are none in 2021.
In 2020, they totaled 8 million euros and derived from the issue of ordinary shares to service the 2020 Broad-
Based Share Ownership Plan subscribed by employees of the TIM Group companies and employees of TIM
S.p.A., for the shares subscribed without using severance indemnity (bank transfer or loan).
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Finance expenses, income taxes and other net non-operating
requirements flow
Finance expenses, income taxes and other net non-operating requirements flow mainly includes the payment
of income taxes, net finance expenses, and the change in non-operating receivables and payables.
Sales of receivables to factoring companies
Sales of trade receivables to factoring companies completed during 2021 resulted in a positive effect on the
net financial debt at December 31, 2021 amounting to 1,487 million euros (1,919 million euros at December 31,
2020).
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Net financial debt
Net financial debt is composed as follows:
(million euros)
Non-current financial liabilities
Bonds
Amounts due to banks, other financial payables and liabilities
Finance lease liabilities
Current financial liabilities (1)
Bonds
Amounts due to banks, other financial payables and liabilities
Finance lease liabilities
Total Gross financial debt
Non-current financial assets
Non-current financial receivables arising from lease contracts
Financial receivables and other financial assets
Current financial assets
Securities other than investments
Current financial receivables arising from lease contracts
Financial receivables and other financial assets
Cash and cash equivalents
Total financial assets
Net financial debt carrying amount
Reversal of fair value measurement of derivatives and related
financial liabilities/assets
Adjusted net financial debt
Breakdown as follows:
Total adjusted gross financial debt
Total adjusted financial assets
(1) of which current portion of medium/long-term debt:
Bonds
Amounts due to banks, other financial payables and liabilities
Finance lease liabilities
12/31/2021
(a)
12/31/2020
(b)
Changes
(a-b)
12,506
9,371
2,743
24,620
3,384
1,661
434
5,479
30,099
(11)
(4,438)
(4,449)
—
(39)
(116)
(3,558)
(3,713)
(8,162)
21,937
(1,325)
20,612
27,753
(7,141)
3,384
1,045
432
14,506
9,934
3,506
27,946
864
2,478
463
3,805
31,751
(17)
(2,490)
(2,507)
—
(44)
(110)
(1,766)
(1,920)
(4,427)
27,324
(1,541)
25,783
28,825
(3,042)
864
1,356
456
(2,000)
(563)
(763)
(3,326)
2,520
(817)
(29)
1,674
(1,652)
6
(1,948)
(1,942)
—
5
(6)
(1,792)
(1,793)
(3,735)
(5,387)
216
(5,171)
(1,072)
(4,099)
2,520
(311)
(24)
The non-current portion of gross financial debt amounted to 24,620 million euros (27,946 million euros at the
end of 2020) and represented 82% of total gross financial debt.
In line with the Group's objectives in terms of debt composition and in accordance with the Guidelines adopted
for the "Management and control of financial risk", TIM S.p.A., in securing both third-party and intercompany
loans, uses IRS and CCIRS derivative financial instruments to hedge its liabilities.
Derivative financial instruments are designated as fair value hedges for managing exchange rate risk on
financial instruments denominated in currencies other than euro and for managing interest rate risk on fixed-
rate loans. Derivative financial instruments are designated as cash flow hedges when the objective is to fix the
exchange rate and interest rate of future variable contractual flows.
Adjusted net financial debt amounted to 20,612 million euros at December 31, 2021, a decrease of 5,171
million euros compared to December 31, 2020 (25,783 million euros). The considerable reduction in debt, as
well as the generation of operating cash, has been guaranteed by the corporate conferral of portions of debt to
the newcos FiberCop S.p.A. and Noovle S.p.A. for a total of 3,581 million euros, by the conclusion of the
purchase by KKR Infrastructure of 37.5% of FiberCop from TIM for an equivalent value of 1,759 million euros and
by the collection of dividends totaling 780 million euros (of which 379 million from Telecom Italia Finance S.A.
and 400 million from Telecom Italia Sparkle S.p.A.). The reduction of debt was helped by the payments of
dividends (318 million euros), the sanction (116 million euros) connected with the Antitrust Case A514 (alleged
abuse of a dominant market position on the wholesale access services market and for retail services of the BB
and UBB fixed network), substitute tax on the aligned value of assets (231 million euros), as well as the
extension of the rights of use of frequencies on the 2100 MHz bandwidth (240 million euros) and the
installment on the 5G license (55 million euros).
For a better understanding of the information, the table below shows the various ways by which the Net
Financial Debt can be shown:
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(million euros)
12/31/2021
12/31/2020
Changes
Net financial debt carrying amount
Reversal of fair value measurement of derivatives and related
financial liabilities/assets
Adjusted net financial debt
Leasing
Adjusted net financial debt - After Lease
21,937
(1,325)
20,612
(3,127)
17,485
27,324
(1,541)
25,783
(3,908)
21,875
(5,387)
216
(5,171)
781
(4,390)
Net financial debt carrying amount amounted to 21,937 million euros at December 31, 2021, a decrease of
5,387 million euros compared to December 31, 2020 (27,324 million euros). Reversal of fair value measurement
of derivatives and related financial liabilities/assets recorded an annual change of 216 million euros, the impact
is attributable to the rise in Euro interest rates, the positive impact of which on the value of derivatives is only
partly offset by the change in interest rates in American dollars. This valuation is adjusted in the Financial Debt
carrying amount as it has no monetary effect.
Adjusted Net Financial Debt – After Lease (net of the impact of all leases), which is a parameter adopted by
main European peers, was equal to 17,485 million euros at December 31, 2021, down by 4,390 million euros
compared to December 31, 2020 (21,875 million euros).
Gross financial debt
Bonds
Bonds at December 31, 2021 totaled 15,890 million euros (15,370 million euros at December 31, 2020). Their
nominal repayment amount was 15,538 million euros, an increase of 564 million euros compared to December
31, 2020 (14,974 million euros).
The change in bonds during 2021 was as follows:
(millions of original currency)
New issues
Telecom Italia S.p.A. 1,000 million euros 1.625%
Currency
Amount
Issue date
Euro
1,000
1/18/2021
On January 18, 2021, TIM issued its first 8-year Sustainability Bond for an amount of 1 billion euros, coupon
1.625%.
(millions of original currency)
Repayments
Telecom Italia S.p.A. 564 million euros 4.500% (1)
Repayment date
Currency
Amount
44221
Euro
564
(1)
Net of buy-backs totaling 281 million euros made by the company in 2015.
With reference to Telecom Italia S.p.A. 2002–2022 bonds, reserved for subscription by employees of the Group,
the nominal amount at December 31, 2021 was 214 million euros, down by 3 million euros compared to
December 31, 2020 (217 million euros).
Note that on December 31, 2021, the "Telecom Italia S.p.A. 2002-2022 Floating Rate bonds, Open Special
series, reserved for subscription by employees of the Telecom Italia Group, in service or retired” bond was
closed and the bonds fully repaid starting January 1, 2022, in accordance with the relevant Regulation.
Revolving Credit Facility and Term Loan
The following table shows committed credit lines available at December 31, 2021:
(billion euros)
12/31/2021
Sustainability-linked RCF - maturing May 2026
Revolving Credit Facility – maturing January 2023
Bridge to Bond Facility – maturing May 2021
Total
Agreed
4.0
—
—
4.0
Drawn down
—
—
—
—
12/31/2020
Agreed
—
5.0
1.7
6.7
Drawn down
—
—
—
—
At December 31, 2021, TIM had bilateral Term Loans for 850 million euros with various banking counterparties
and an overdraft facility for 200 million euros, drawn down for the full amount.
On January 19, 2021, TIM entirely canceled the credit line for 1.7 billion euros, which was not used, stipulated
on May 18, 2020 as bridge to bond for subsequent issues on the bond market and an initial maturity of 12
months with an option of extension for another 12 months.
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On May 13, 2021, TIM extended the Revolving Credit Facility by 5 years, reducing the amount to 4 billion euros
and making it the Group's first ever ESG-linked credit facility.
Maturities of financial liabilities
The average maturity of non-current financial liabilities (including the current portion of medium/long-term
financial liabilities due within 12 months) was 5.90 years.
Details of the maturities of financial liabilities in terms of expected nominal repayment amounts, as
contractually agreed, are provided in the Note “Non-current and current financial liabilities” of the Separate
Financial Statements of TIM S.p.A. at December 31, 2021.
Financial assets and liquidity margin
Financial assets totaled 8,162 million euros (4,427 million euros at December 31, 2020), of which 2,713 million
euros relating to financial receivables from Group companies.
Of that total, 3,713 million euros (1,920 million euros at December 31, 2020) was classified as current financial
assets.
The available liquidity margin of TIM S.p.A. amounted to 7,558 million euros, equal to the sum of:
■
“Cash and cash equivalents” and “Current securities other than investments” for a total of 3,558 million
euros (1,766 million euros at December 31, 2020);
■ Sustainability-linked Revolving Credit Facility amounting to 4,000 million euros, totally available.
This margin is amply sufficient to cover the financial liabilities due.
In particular:
Cash and cash equivalents amounted to 3,558 million euros (1,766 million euros at December 31, 2020). The
different technical forms of investing available cash can be analyzed as follows:
■ Maturities: investments have a maximum maturity of three months;
■ Counterparty risk: investments are made with leading banking and financial institutions with high-credit-
quality;
■ Country risk: deposits have been made mainly in major European financial markets.
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TABLES OF DETAIL – TIM S.p.A.
Separate Income Statements
(million euros)
2021
2020
Revenues
Other income
Total operating revenues and other income
Acquisition of goods and services
Employee benefits expenses
Other operating expenses
Change in inventories
Internally generated assets
Operating profit (loss) before depreciation and
amortization, capital gains (losses) and impairment
reversals (losses) on non-current assets (EBITDA)
Depreciation and amortization
Gains/(losses) on disposals of non-current assets
Impairment reversals (losses) on non-current assets
Operating profit (loss) (EBIT)
Income (expenses) from investments
Finance income
Finance expenses
Profit (loss) before tax
Income tax expense
Profit (loss) for the year
(a)
12,397
322
12,719
(6,759)
(2,453)
(1,179)
21
288
2,637
(2,996)
(43)
(4,120)
(4,522)
834
1,076
(1,984)
(4,596)
(3,718)
(8,314)
(b)
12,030
189
12,219
(4,611)
(2,193)
(605)
(11)
381
5,180
(3,582)
(14)
(8)
1,576
551
1,012
(1,973)
1,166
5,995
7,161
Changes
(a-b)
absolute
%
367
133
500
(2,148)
(260)
(574)
32
(93)
(2,543)
586
(29)
(4,112)
(6,098)
283
64
(11)
(5,762)
(9,713)
(15,475)
3.1
70.4
4.1
(46.6)
(11.9)
(94.9)
—
(24.4)
(49.1)
16.4
—
—
—
51.4
6.3
(0.6)
—
—
—
Report on Operations of
TIM S.p.A.
Tables of detail – TIM S.p.A. 124
Statements of Comprehensive Income
In accordance with IAS 1 (Presentation of Financial Statements), the following Statements of Comprehensive
Income include the Profit (loss) for the year as shown in the Separate Income Statements and all non-owner
changes in equity.
(million euros)
Profit (loss) for the year
Other components of the Statements of Comprehensive Income
Other components that will not be reclassified subsequently to Separate
Income Statements
Financial assets measured at fair value through other comprehensive
income:
Profit (loss) from fair value adjustments
Income tax effect
2021
(8,314)
(a)
2020
7,161
7
—
7
(4)
—
(4)
(b)
Remeasurements of employee defined benefit plans (IAS19):
Actuarial gains (losses)
Income tax effect
Share of other comprehensive income (losses) of associates and joint
ventures accounted for using the equity method:
Profit (loss)
Income tax effect
Total other components that will not be reclassified subsequently to
Separate Income Statements
Other components that will be reclassified subsequently to Separate
Income Statements
Financial assets measured at fair value through other comprehensive
income:
Profit (loss) from fair value adjustments
Loss (profit) transferred to the Separate Income Statements
Income tax effect
Hedging instruments:
Profit (loss) from fair value adjustments
Loss (profit) transferred to the Separate Income Statements
Income tax effect
Share of other comprehensive income (losses) of associates and joint
ventures accounted for using the equity method:
Profit (loss)
Loss (profit) transferred to the Separate Income Statements
Income tax effect
Total other components that will be reclassified subsequently to
Separate Income Statements
Total other components of the Statements of Comprehensive Income
Total comprehensive income (loss) for the year
(c)
(d)
(e=b+c+d)
(f)
(g)
(h)
(i= f+g+h)
(k= e+i)
(a+k)
(14)
3
(11)
—
—
—
(4)
(5)
—
1
(4)
538
(185)
(84)
269
—
—
—
—
265
261
(8,053)
6
(2)
4
—
—
—
—
4
—
(1)
3
(409)
312
23
(74)
—
—
—
—
(71)
(71)
7,090
Report on Operations of
TIM S.p.A.
Tables of detail – TIM S.p.A. 125
Statements of Financial Position
(million euros)
Assets
Non-current assets
Intangible assets
Goodwill
Intangible assets with a finite useful life
Tangible assets
Property, plant and equipment owned
Rights of use assets
Other non-current assets
Investments
Non-current financial receivables arising from lease
contracts
Other non-current financial assets
Miscellaneous receivables and other non-current assets
Deferred tax assets
Total Non-current assets
Current assets
Inventories
Trade and miscellaneous receivables and other current
assets
Current income tax receivables
Current financial assets
Current financial receivables arising from lease contracts
Securities other than investments, other financial
receivables and other current financial assets
Cash and cash equivalents
Total Current assets
Total Assets
(a)
(b)
(a+b)
12/31/2021
(a)
12/31/2020
(b)
Changes
(a-b)
12,961
5,278
18,239
7,223
3,320
11,054
11
4,438
1,974
3,364
20,841
49,623
165
3,931
43
39
116
3,558
3,713
7,852
57,475
23,051
5,500
28,551
10,335
4,096
7,245
17
2,490
1,733
7,337
18,822
61,804
144
3,464
39
44
110
1,766
1,920
5,567
67,371
(10,090)
(222)
(10,312)
(3,112)
(776)
3,809
(6)
1,948
241
(3,973)
2,019
(12,181)
21
467
4
(5)
6
1,792
1,793
2,285
(9,896)
Report on Operations of
TIM S.p.A.
Tables of detail – TIM S.p.A. 126
(million euros)
12/31/2021
(a)
12/31/2020
(b)
Changes
(a-b)
Equity and liabilities
Equity
Capital issued
less: Treasury shares
Share capital
Additional paid-in capital
Other reserves and retained earnings (accumulated losses),
including profit (loss) for the year
Total Equity
Non-current liabilities
Non-current financial liabilities for financing contracts and
others
Non-current financial liabilities for lease contracts
Employee benefits
Deferred tax liabilities
Provisions
Miscellaneous payables and other non-current liabilities
Total Non-current liabilities
Current liabilities
Current financial liabilities for financing contracts and
others
Current financial liabilities for lease contracts
Trade and miscellaneous payables and other current
liabilities
Current income tax payables
Total Current Liabilities
Total Liabilities
Total Equity and Liabilities
11,677
(63)
11,614
2,133
2,817
16,564
21,877
2,743
641
—
633
1,196
27,090
5,045
434
8,111
231
13,821
40,911
57,475
11,677
(19)
11,658
2,133
11,217
25,008
24,440
3,506
676
—
618
3,477
32,717
3,342
463
5,610
231
9,646
42,363
67,371
—
(44)
(44)
—
(8,400)
(8,444)
(2,563)
(763)
(35)
—
15
(2,281)
(5,627)
1,703
(29)
2,501
—
4,175
(1,452)
(9,896)
(c)
(d)
(e)
(f=d+e)
(c+f)
Report on Operations of
TIM S.p.A.
Tables of detail – TIM S.p.A. 127
Statements of Cash Flows
(million euros)
Cash flows from operating activities:
Profit (loss) for the year
Adjustments for:
Depreciation and amortization
Impairment losses (reversals) on non-current assets (including
investments)
Net change in deferred tax assets and liabilities
Losses (gains) realized on disposals of non-current assets (including
investments)
Change in provisions for employee benefits
Change in inventories
Change in trade receivables and other net receivables
Change in trade payables
Net change in income tax receivables/payables
Net change in miscellaneous receivables/payables and other
assets/liabilities
Cash flows from (used in) operating activities
Cash flows from investing activities:
Purchases of intangible, tangible and rights of use assets on a cash
basis
Contributions for plants received
Change in cash arising from corporate actions
Acquisitions/disposals of other investments
Change in financial receivables and other financial assets (excluding
hedging and non-hedging derivatives under financial assets)
Proceeds received from the sale of investments in subsidiaries
Proceeds from sale/repayments of intangible, tangible, rights of use
assets and other non-current assets
Cash flows from (used in) investing activities
Cash flows from financing activities:
Change in current financial liabilities and other
Proceeds from non-current financial liabilities (including current
portion)
Repayments of non-current financial liabilities (including current
portion)
Changes in hedging and non-hedging derivatives
Proceeds for increases/repayment of capital
Dividends paid
Changes in ownership interests in consolidated subsidiaries
Cash flows from (used in) financing activities
Aggregate cash flows
Net cash and cash equivalents at beginning of the year
Net cash and cash equivalents at end of the year
(a)
(b)
(c)
(d=a+b+c)
(e)
(f=d+e)
2021
2020
(8,314)
2,996
4,125
3,843
35
(83)
(21)
(261)
518
(236)
(227)
2,375
(2,201)
3
4
(130)
1,153
—
53
(1,118)
(182)
2,100
(2,600)
103
—
(318)
1,759
862
2,119
1,245
3,364
7,161
3,582
43
(6,433)
(212)
(611)
12
217
(23)
694
56
4,486
(2,285)
24
51
(101)
(62)
—
1,822
(551)
(732)
1,022
(2,809)
93
8
(317)
—
(2,735)
1,200
45
1,245
Report on Operations of
TIM S.p.A.
Tables of detail – TIM S.p.A. 128
Purchases of intangible, tangible and rights of use assets
(million euros)
Purchase of intangible assets
Purchase of tangible assets
Purchase of rights of use assets
Total purchases of intangible, tangible and rights of use assets on an
accrual basis
Change in payables arising from purchases of intangible, tangible and
rights of use assets
Total purchase of intangible, tangible and rights of use assets on a
cash basis
Additional Cash Flow Information
(million euros)
Income taxes (paid) received
Interest expense paid
Interest income received
Dividends received
Analysis of Net Cash and Cash Equivalents
(million euros)
Net cash and cash equivalents at the start of the year:
Cash and cash equivalents
Bank overdrafts repayable on demand
Net cash and cash equivalents at the end of the year:
Cash and cash equivalents
Bank overdrafts repayable on demand
2021
(1,055)
(1,167)
(325)
(2,547)
346
(2,201)
2020
(959)
(1,468)
(947)
(3,374)
1,089
(2,285)
2021
(206)
(1,296)
504
780
2020
249
(1,389)
465
331
2021
2020
1,765
(520)
1,245
3,558
(194)
3,364
829
(784)
45
1,765
(520)
1,245
The additional disclosures required by IAS 7 are provided in the Note “Net Financial Debt” in the Separate
Financial Statements of TIM S.p.A. as at December 31, 2021.
Report on Operations of
TIM S.p.A.
Tables of detail – TIM S.p.A. 129
AFTER LEASE INDICATORS - TIM S.p.A.
The Company, in addition to the conventional financial performance measures established by the IFRS, uses
certain alternative performance measures in order to present a better understanding of the trend of
operations and financial condition. In particular, following the adoption of IFRS 16, TIM presents the following
additional alternative performance indicators:
EBITDA ADJUSTED AFTER LEASE TIM S.p.A.
(million euros)
ORGANIC EBITDA - excluding Non-recurring items
Lease payments
EBITDA adjusted After Lease (EBITDA-AL)
2021
2020
Changes
3,771
(503)
3,268
absolute
%
5,491
(599)
4,892
(1,720)
96
(1,624)
(31.3)
(16.0)
(33.2)
ADJUSTED NET FINANCIAL DEBT AFTER LEASE TIM S.p.A.
(million euros)
Adjusted net financial debt
Leasing
Adjusted net financial debt - After Lease
12/31/2021
20,612
(3,127)
17,485
12/31/2020
25,783
(3,908)
21,875
Changes
(5,171)
781
(4,390)
EQUITY FREE CASH FLOW AFTER LEASE TIM S.p.A.
(million euros)
EQUITY FREE CASH FLOW
Leasing
EQUITY FREE CASH FLOW AFTER LEASE
2021
549
(388)
161
2020
Changes
2,060
(558)
1,502
(1,511)
170
(1,341)
Report on Operations of
TIM S.p.A.
After Lease Indicators - TIM S.p.A. 130
RECONCILIATION OF CONSOLIDATED EQUITY
(million euros)
Equity and Profit (Loss) for the year of TIM S.p.A.
Equity and Profit (Loss) for the year of consolidated companies,
net of the share attributable to Non-controlling interest
Consolidation adjustments on the Equity and Profit (Loss) for the
year attributable to Owners of the Parent:
elimination of carrying amount of consolidated investments
impairment losses of consolidated companies included in the
results of parent companies
elimination of goodwill recognized in Parent financial
statements
recognition of positive differences arising from purchase of
investments, of which:
- goodwill
- allocation of the purchase price to the net assets acquired
and liabilities assumed in business combinations
measurement of hedging derivatives at Group level
effect of elimination of carrying amount of Parent's shares held
by TIM (formerly Telecom Italia Finance)
intra-group dividends
change in share of losses (profits) from sale of investments
other adjustments
Equity and Profit (Loss) for the year attributable to Owners of
the Parent
Equity and Profit (Loss) for the year attributable to Non-
controlling interest
Equity and Profit (Loss) for the year in the Consolidated
Financial Statements
Profit (loss) for the year
2020
2021
7,161
(8,314)
Equity at 12/31
2021
16,564
2020
25,008
721
391
18,842
13,461
—
3
—
—
(1)
(28)
—
(1,096)
—
63
(8,652)
252
(8,400)
—
9
—
—
1
(22)
—
(558)
220
22
7,224
128
7,352
(31,760)
(22,158)
9,544
9,515
(12,961)
(23,051)
16,562
22,749
(1)
766
(78)
(44)
(23)
3
17,414
4,625
22,039
2
901
(48)
(256)
246
(154)
26,215
2,625
28,840
Report on Operations of
TIM S.p.A.
Reconciliation of Consolidated Equity
131
CORPORATE BOARDS
Board of Directors
The Ordinary Shareholders’ meeting of TIM, held on March 31, 2021, appointed a new Board of 15 Directors and
for a three-year term of office (up to the approval of the financial statements at December 31, 2023). At its
meeting on April 1, 2021, the Board of Directors confirmed Salvatore Rossi as its Chairman, and Luigi Gubitosi
as Chief Executive Officer of the Company.
During the meeting held on November 26, 2021, Luigi Gubitosi returned the delegations of Chief Executive
Officer and the appointment of General Manager. The Board of Directors has therefore decided to reorganize
the Company governance, assigning Chairman Rossi the responsibilities and delegations relative to the
Partnership & Alliances, Institutional Communications, Sustainability Projects & Sponsorship and Public Affairs
Departments and responsibility for managing TIM’s strategic assets and other assets for the national security
and defense system and appointing Pietro Labriola as the Company’s General Manager, assigning him all
powers necessary for performing actions pertinent to the activity of the company. During the same meeting,
the Board of Directors appointed Paola Sapienza as Lead Independent Director.
Thereafter, on December 17, 2021, Luigi Gubitosi resigned from TIM’s Board of Directors.
At December 31, 2021, the TIM Board of Directors had the following members:
Chairman
Directors
Salvatore Rossi
Paolo Boccardelli (independent)
Paola Bonomo (independent)
Franck Cadoret
Paola Camagni (independent)
Maurizio Carli (independent)
Luca De Meo (independent)
Cristiana Falcone (independent)
Federico Ferro Luzzi (independent)
Giovanni Gorno Tempini
Marella Moretti (independent)
Ilaria Romagnoli (independent)
Arnaud Roy de Puyfontaine
Secretary to the Board
Paola Sapienza (Lead Independent Director)
Agostino Nuzzolo
Finally, during the meeting of the Board of Directors held on January 21, 2022, Pietro Labriola was co-opted,
retaining the office of General Manager and being appointed as Chief Executive Officer, conferring on him all
powers, including those previously assigned to the Chairman Mr Rossi.
The composition of the Company’s Board of Directors is therefore:
Chairman
Chief Executive Officer and General Manager
Directors
Salvatore Rossi
Pietro Labriola
Paolo Boccardelli (independent)
Paola Bonomo (independent)
Franck Cadoret
Paola Camagni (independent)
Maurizio Carli (independent)
Luca De Meo (independent)
Cristiana Falcone (independent)
Federico Ferro Luzzi (independent)
Giovanni Gorno Tempini
Marella Moretti (independent)
Ilaria Romagnoli (independent)
Arnaud Roy de Puyfontaine
Secretary to the Board
Paola Sapienza (Lead Independent Director)
Agostino Nuzzolo
Report on Operations of TIM
S.p.A.
Corporate Boards 132
The following board committees were in place at December 31, 2021:
■ Control and Risk Committee: composed of the Directors: Federico Ferro Luzzi (Chairman), Paolo
Boccardelli, Paola Bonomo, Marella Moretti and Ilaria Romagnoli;
■ Nomination and Remuneration Committee: composed of board members: Paola Bonomo (Chairman),
Paola Camagni, Maurizio Carli, Luca De Meo and Paola Sapienza;
■ Related Parties Committee: composed of the Directors: Paolo Boccardelli (Chairman), Maurizio Carli,
Cristiana Falcone, Marella Moretti and Ilaria Romagnoli;
■ Sustainability Committee: made up of the Chairman of the Board of Directors, Salvatore Rossi and
Directors Paola Camagni, Cristiana Falcone, Federico Ferro Luzzi and Paola Sapienza.
Board of Statutory Auditors
The Ordinary Shareholders’ Meeting of March 31, 2021 appointed the Company’s Board of Statutory Auditors
for a term of office that will end with the approval of the 2023 financial statements.
The Board of Statutory Auditors of the Company is now composed as follows:
Chairman
Standing Auditors
Francesco Fallacara
Alternate Auditors
Angelo Rocco Bonissoni
Francesca di Donato
Anna Doro
Massimo Gambini
Ilaria Antonella Belluco
Laura Fiordelisi
Franco Maurizio Lagro
Paolo Prandi
Independent Auditors
The engagement for the independent auditing of the financial statements of TIM S.p.A. for the nine-year
period 2019-2027 was awarded to EY S.p.A. by the shareholders’ meeting of March 29, 2019.
Manager responsible for preparing the corporate accounting
documents
At the meeting of April 1, 2021, the Board of Directors appointed Giovanni Ronca (Head of the Group
Administration, Finance and Control Function) as the Manager responsible for preparing the financial reports of
TIM S.p.A..
On 1 March 2022, Adrian Calaza joined the TIM Group, taking on the position of Chief Financial Officer.
Adrian Calaza shall also be appointed as Manager responsible for preparing TIM S.p.A. financial reports
following the filing of the Company’s 2021 draft financial statements.
Report on Operations of TIM
S.p.A.
Corporate Boards 133
MACRO-ORGANIZATION CHART
Macro-Organization Chart at December 31, 2021
Report on Operations of TIM
S.p.A.
Macro-Organization Chart 134
Macro-Organization Chart updated at March 2, 2022
Report on Operations of TIM
S.p.A.
Macro-Organization Chart 135
CONTENTS
TIM GROUP CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Financial Position ......................................... 138
Separate Consolidated Income Statement................................................. 140
Consolidated Statements of Comprehensive Income .............................. 141
Consolidated Statements of Changes in Equity ........................................ 142
Consolidated Statements of Cash Flows .................................................... 143
Note 1 Form, content and other general information ..........................................................................
145
Note 2 Accounting policies .......................................................................................................................
147
Note 3 Scope of consolidation .................................................................................................................
161
Note 4 Goodwill ..........................................................................................................................................
164
Note 5 Intangible assets with a finite useful life ....................................................................................
166
Note 6 Tangible assets ..............................................................................................................................
168
Note 7 Rights of use assets .......................................................................................................................
170
Note 8 Investments ...................................................................................................................................
172
Note 9 Non-current and current financial assets ..................................................................................
174
Note 10 Miscellaneous receivables and other non-current assets .....................................................
176
Note 11 Income tax expense (current and deferred) ............................................................................
177
Note 12 Inventories ....................................................................................................................................
181
Note 13 Trade and miscellaneous receivables and other current assets ..........................................
182
Note 14 Equity ............................................................................................................................................
184
Note 15 Non-current and current financial liabilities ............................................................................
187
Note 16 Net financial debt ........................................................................................................................
193
Note 17 Financial risk management ........................................................................................................
195
Note 18 Derivatives ....................................................................................................................................
200
Note 19 Supplementary disclosures on financial instruments ............................................................
204
Note 20 Provisions for employee benefits ..............................................................................................
209
Note 21 Provisions ......................................................................................................................................
212
Note 22 Miscellaneous payables and other non-current liabilities .....................................................
213
Note 23 Trade and miscellaneous payables and other current liabilities ..........................................
214
Note 24 Disputes and pending legal actions, other information, commitments and guarantees
216
Note 25 Revenues ......................................................................................................................................
231
Note 26 Other income ...............................................................................................................................
231
Note 27 Acquisition of goods and services .............................................................................................
232
Note 28 Employee benefits expenses .....................................................................................................
233
Note 29 Other operating expenses .........................................................................................................
234
Note 30 Internally generated assets .......................................................................................................
234
Note 31 Depreciation and amortization .................................................................................................
235
Note 32 Gains/(losses) on disposals of non-current assets .................................................................
235
Note 33 Impairment reversals (losses) on non-current assets ............................................................
236
Note 34 Other income (expenses) from investments ..........................................................................
236
Note 35 Finance income and expenses ..................................................................................................
237
Note 36 Profit (loss) for the year .............................................................................................................
239
Note 37 Earnings per share ......................................................................................................................
240
Note 38 Segment reporting .....................................................................................................................
243
Note 39 Related-party transactions .......................................................................................................
246
Note 40 Equity compensation plans .......................................................................................................
257
Note 41 Significant non-recurring events and transactions ................................................................
261
Note 42 Positions or transactions resulting from atypical and/or unusual operations ...................
262
Note 43 Other information .......................................................................................................................
263
Note 44 Events subsequent to December 31, 2021 ..............................................................................
265
Note 45 List of companies of the TIM Group .........................................................................................
266
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
Assets
(million euros)
Non-current assets
Intangible assets
Goodwill
Intangible assets with a finite useful life
Tangible assets
Property, plant and equipment owned
Rights of use assets
Other non-current assets
Investments in associates and joint ventures accounted
for using the equity method
Other investments
Non-current financial receivables arising from lease
contracts
Other non-current financial assets
Miscellaneous receivables and other non-current assets
Deferred tax assets
Total Non-current assets
Current assets
Inventories
Trade and miscellaneous receivables and other current
assets
Current income tax receivables
Current financial assets
Current financial receivables arising from lease
contracts
Securities other than investments, other financial
receivables and other current financial assets
Cash and cash equivalents
Current assets sub-total
Discontinued operations /Non-current assets held for
sale
of a financial nature
of a non-financial nature
Total Current assets
Total Assets
(b)
(b+a)
notes 12/31/2021 of which
with
related
parties
12/31/2020 of which
with
related
parties
4)
5)
6)
7)
8)
8)
9)
9)
10)
12)
13)
11)
9)
(a)
18,568
7,147
25,715
13,311
4,847
2,979
156
45
2,285
2,266
3,513
11,244
55,117
282
4,358
79
56
2,391
6,904
9,351
14,070
—
—
—
14,070
69,187
—
—
—
—
301
—
—
1
—
—
—
—
—
—
80
—
—
—
—
—
—
—
—
—
—
22,847
6,740
29,587
13,141
4,992
2,728
54
43
2,267
2,114
7,496
14,702
62,422
242
4,346
86
55
1,254
4,829
6,138
10,812
—
—
—
10,812
73,234
—
—
—
—
347
—
—
—
—
—
—
—
—
—
61
—
—
—
—
—
—
—
—
—
—
Consolidated financial statements
of the TIM Group
Consolidated Statements of Financial Position 138
Equity and liabilities
(million euros)
notes
12/31/2021 of which
with
related
parties
12/31/2020 of which
with
related
parties
Equity
Capital issued
less: Treasury shares
Share capital
Additional paid-in capital
Other reserves and retained earnings (accumulated
losses), including profit (loss) for the year
Equity attributable to owners of the Parent
Non-controlling interests
Total Equity
Non-current liabilities
Non-current financial liabilities for financing contracts
and others
Non-current financial liabilities for lease contracts
Employee benefits
Deferred tax liabilities
Provisions
Miscellaneous payables and other non-current liabilities
Total Non-current liabilities
Current liabilities
Current financial liabilities for financing contracts and
others
Current financial liabilities for lease contracts
Trade and miscellaneous payables and other current
liabilities
Current income tax payables
Current liabilities sub-total
Liabilities directly associated with Discontinued
operations/Non-current assets held for sale
of a financial nature
of a non-financial nature
14)
15)
15)
20)
21)
22)
15)
15)
23)
11)
(d)
Total Current Liabilities
Total Liabilities
Total Equity and Liabilities
(e)
(f=d+e)
(c+f)
11,677
(63)
11,614
2,133
3,667
17,414
4,625
22,039
23,437
4,064
699
245
926
1,413
30,784
5,945
651
9,473
295
16,364
—
—
—
16,364
47,148
69,187
—
—
—
—
—
—
—
—
—
269
—
—
—
27
1
74
265
—
—
—
—
—
—
—
11,677
(89)
11,588
2,133
12,494
26,215
2,625
28,840
23,655
4,199
724
277
770
3,602
33,227
3,677
631
6,588
271
11,167
—
—
—
11,167
44,394
73,234
—
—
—
—
—
—
—
—
—
313
—
—
—
3
—
50
163
—
—
—
—
—
—
—
Consolidated financial statements
of the TIM Group
Consolidated Statements of Financial Position 139
SEPARATE CONSOLIDATED INCOME STATEMENT
of which
(million euros)
with
related
parties
94
1
of which
with
related
parties
62
12
Year
2020
Year
2021
notes
25)
Revenues
Other income
Total operating revenues and other income
Acquisition of goods and services
Employee benefits expenses
Other operating expenses
Change in inventories
Internally generated assets
Operating profit (loss) before depreciation and
amortization, capital gains (losses) and impairment
reversals (losses) on non-current assets (EBITDA)
of which: impact of non-recurring items
Depreciation and amortization
Gains/(losses) on disposals of non-current assets
Impairment reversals (losses) on non-current assets
Operating profit (loss) (EBIT)
of which: impact of non-recurring items
Share of profits (losses) of associates and joint ventures
accounted for using the equity method
Other income (expenses) from investments
Finance income
Finance expenses
Profit (loss) before tax from continuing operations
of which: impact of non-recurring items
Income tax expense
Profit (loss) from continuing operations
Profit (loss) from Discontinued operations/Non-
current assets held for sale
Profit/(Loss) for the year
of which: impact of non-recurring items
Attributable to:
Owners of the Parent
Non-controlling interests
(euros)
Earnings per share:
(Basic) Earnings per share
Ordinary Share
Savings Share
of which:
from Continuing operations attributable to Owners of the Parent
Diluted earnings per share
Ordinary Share
Savings Share
of which:
from Continuing operations attributable to Owners of the Parent
Ordinary Share
Savings Share
Ordinary Share
Savings Share
15,316
272
15,588
(6,550)
(2,941)
(1,502)
10
475
5,080
(1,143)
(4,490)
1
(4,120)
(3,529)
(5,263)
38
126
1,124
(2,274)
(4,515)
(5,144)
(3,885)
(8,400)
—
(8,400)
(8,653)
(8,652)
252
41)
41)
8)
35)
35)
41)
11)
36)
41)
37)
15,805
211
16,016
(6,173)
(2,639)
(961)
(6)
502
6,739
(324)
(4,616)
(11)
(8)
2,104
(324)
18
454
1,143
(2,322)
1,397
121
5,955
7,352
—
7,352
6,048
7,224
128
(363)
(89)
(2)
—
—
(39)
—
—
—
—
—
(15)
—
Year
2020
0.34
0.35
0.34
0.35
0.33
0.34
0.33
0.34
(497)
(108)
(3)
—
—
(50)
—
—
—
—
1
(18)
—
Year
2021
(0.40)
(0.40)
(0.40)
(0.40)
(0.40)
(0.40)
(0.40)
(0.40)
Consolidated financial statements of the
TIM Group
Separate Consolidated Income Statement 140
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
Note 14
(million euros)
Profit/(Loss) for the year
Other components of the Consolidated Statements of
Comprehensive Income
Other components that will not be reclassified subsequently to
Separate Consolidated Income Statement
Financial assets measured at fair value through other comprehensive
income:
Profit (loss) from fair value adjustments
Income tax effect
Remeasurements of employee defined benefit plans (IAS19):
Actuarial gains (losses)
Income tax effect
Share of other comprehensive income (losses) of associates and joint
ventures accounted for using the equity method:
Profit (loss)
Income tax effect
Total other components that will not be reclassified subsequently to
Separate Consolidated Income Statement
Other components that will be reclassified subsequently to Separate
Consolidated Income Statement
Financial assets measured at fair value through other comprehensive
income:
Profit (loss) from fair value adjustments
Loss (profit) transferred to Separate Consolidated Income Statement
Income tax effect
Hedging instruments:
Profit (loss) from fair value adjustments
Loss (profit) transferred to Separate Consolidated Income Statement
Income tax effect
Exchange differences on translating foreign operations:
Profit (loss) on translating foreign operations
Loss (profit) on translating foreign operations transferred to Separate
Consolidated Income Statement
Income tax effect
Share of other comprehensive income (losses) of associates and joint
ventures accounted for using the equity method:
Profit (loss)
Loss (profit) transferred to Separate Consolidated Income Statement
Income tax effect
Total other components that will be reclassified subsequently to
Separate Consolidated Income Statement
Total other components of the Consolidated Statements of
Comprehensive Income
Total comprehensive income (loss) for the year
Attributable to:
Owners of the Parent
Non-controlling interests
(a)
(b)
(c)
(d)
(e=b+c+d)
(f)
(g)
(h)
(i)
(k=f+g+h+i)
(m=e+k)
(a+m)
Year
2021
(8,400)
Year
2020
7,352
7
—
7
(8)
(3)
(11)
—
—
—
(4)
28
(6)
—
22
658
(365)
(71)
222
50
—
—
50
—
—
—
—
294
290
(8,110)
(8,374)
264
(4)
—
(4)
6
(1)
5
—
—
—
1
5
—
—
5
(253)
373
(30)
90
(1,612)
—
—
(1,612)
—
—
—
—
(1,517)
(1,516)
5,836
6,199
(363)
Consolidated financial statements of the
TIM Group
Consolidated Statements of Comprehensive Income 141
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Changes from January 1, 2020 to December 31, 2020
Equity attributable to owners of the Parent
(million euros)
Share
capital
Additional
paid-in capital Reserve for
financial
assets
measured at
fair value
through
other
comprehensi
ve income
Total Non-controlling
interests Total Equity
Reserve for
hedging
instruments
Reserve for
exchange
differences on
translating
foreign
operations
Reserve for
remeasureme
nts of
employee
defined
benefit plans
(IAS 19)
Share of
other
comprehens
ive income
(losses) of
associates
and joint
ventures
accounted
for using the
equity
method
Other
reserves and
retained
earnings
(accumulated
losses),
including
profit (loss)
for the year
Balance at
December 31,
2019
11,587
2,094
19
(440)
(1,417)
(124)
—
8,561 20,280
2,346
22,626
—
—
—
—
—
—
Changes in equity
during the year:
Dividends
approved
Total
comprehensive
income (loss) for
the year
Issue of equity
instruments
INWIT -
deconsolidation
Daphne 3 - capital
increase
Other changes
Balance at
(350)
December 31,
2020
Changes from January 1, 2021 to December 31, 2021 Note 14
11,588
—
—
—
—
—
—
—
—
2,133
90
20
39
—
—
—
—
—
—
1
1
(million euros)
Share
capital
—
(1,121)
—
—
—
—
—
5
—
—
—
—
(2,538)
(119)
—
—
—
—
—
—
—
(316)
(316)
(62)
(378)
7,224
6,199
(363)
5,836
3
—
—
9
43
—
—
9
—
(644)
1,334
14
43
(644)
1,334
23
15,481 26,215
2,625
28,840
Total
Non-controlling
interests
Total Equity
Equity attributable to owners of the Parent
Additional
paid-in capital Reserve for
financial
assets
measured at
fair value
through
other
comprehensi
ve income
Reserve for
hedging
instruments
Reserve for
exchange
differences
on
translating
foreign
operations
Reserve for
remeasureme
nts of
employee
defined
benefit plans
(IAS 19)
Share of
other
comprehens
ive income
(losses) of
associates
and joint
ventures
accounted
for using the
equity
method
Other
reserves and
retained
earnings
(accumulated
losses),
including
profit (loss)
for the year
Balance at
December 31,
2020
Changes in equity
during the year:
Dividends
approved
Total
comprehensive
income (loss) for
the year
Issue of equity
instruments
FiberCop - capital
increase
Daphne 3 -
distribution of
additional paid-in
capital
Other changes
Balance at
December 31,
2021
11,588
2,133
20
(350)
(2,538)
(119)
—
15,481 26,215
2,625
28,840
—
—
26
—
—
—
—
—
—
—
—
—
11,614
2,133
—
29
—
—
—
—
49
—
222
—
—
—
—
—
38
—
—
—
—
—
(11)
—
—
—
—
(128)
(2,500)
(130)
—
—
—
—
—
—
—
(318)
(318)
(55)
(373)
(8,652) (8,374)
7
33
(98)
(98)
—
(44)
—
(44)
264
—
1,848
(42)
(15)
(8,110)
33
1,750
(42)
(59)
6,376 17,414
4,625
22,039
Consolidated financial statements of the
TIM Group
Consolidated Statements of Changes in Equity 142
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year
(million euros)
2020
Year
2021
note
s
Cash flows from operating activities:
Profit (loss) from continuing operations
Adjustments for:
Depreciation and amortization
Impairment losses (reversals) on non-current assets (including
investments)
Net change in deferred tax assets and liabilities
Losses (gains) realized on disposals of non-current assets (including
investments)
Share of profits (losses) of associates and joint ventures accounted for
using the equity method
Change in provisions for employee benefits
Change in inventories
Change in trade receivables and other net receivables
Change in trade payables
Net change in income tax receivables/payables
Net change in miscellaneous receivables/payables and other
assets/liabilities
Cash flows from (used in) operating activities
Cash flows from investing activities:
Purchases of intangible, tangible and rights of use assets on a cash
basis
Capital grants received
Acquisition of control of companies or other businesses, net of cash
acquired
Acquisitions/disposals of other investments
Change in financial receivables and other financial assets (excluding
hedging and non-hedging derivatives under financial assets)
Proceeds from sale that result in a loss of control of subsidiaries or
other businesses, net of cash disposed of
Proceeds from sale/repayments of intangible, tangible and other non-
current assets
Cash flows from (used in) investing activities
Cash flows from financing activities:
Change in current financial liabilities and other
Proceeds from non-current financial liabilities (including current
portion)
Repayments of non-current financial liabilities (including current
portion)
Changes in hedging and non-hedging derivatives
Share capital proceeds/reimbursements (including subsidiaries)
Dividends paid(*)
Changes in ownership interests in consolidated subsidiaries
Cash flows from (used in) financing activities
Cash flows from (used in) Discontinued operations/Non-current assets
held for sale
Aggregate cash flows
Net cash and cash equivalents at beginning of the year
Net foreign exchange differences on net cash and cash equivalents
Net cash and cash equivalents at end of the year
(*) of which from related parties:
(8,400)
4,490
4,118
3,894
(120)
(38)
(83)
(39)
257
337
(313)
233
4,336
7,352
4,616
36
(6,538)
(441)
(18)
(628)
20
484
(231)
708
1,191
6,551
(4,013)
(3,477)
3
—
(100)
(1,183)
172
4
(5,117)
704
4,082
(3,072)
103
(42)
(368)
1,757
3,164
—
2,383
4,508
13
6,904
51
24
(7)
(11)
(251)
(33)
678
(3,077)
(1,461)
1,470
(2,790)
—
1,164
(390)
(2)
(2,009)
—
1,465
3,202
(159)
4,508
36
(a)
(b)
(c)
(d)
(e=a+b+c+d)
(f)
(g)
(h=e+f+g)
Consolidated financial statements of the
TIM Group
Consolidated Statements of Cash Flows 143
Purchases of intangible, tangible and rights of use assets
(million euros)
Purchase of intangible assets
Purchase of tangible assets
Purchase of rights of use assets
Total purchase of intangible, tangible and rights of use assets on an
accrual basis(*)
Change in payables arising from purchase of intangible, tangible and
rights of use assets
Total purchases of intangible, tangible and rights of use assets on a
cash basis
(*) of which from related parties:
notes
5)
6)
7)
Additional Cash Flow information
(million euros)
Income taxes (paid) received
Interest expense paid
Interest income received
Dividends received
Analysis of Net Cash and Cash Equivalents
(million euros)
Net cash and cash equivalents at the start of the year:
Cash and cash equivalents - from continuing operations
Bank overdrafts repayable on demand – from continuing operations
Cash and cash equivalents - from Discontinued operations/Non-current assets
held for sale
Bank overdrafts repayable on demand – from Discontinued operations/Non-
current assets held for sale
Net cash and cash equivalents at the end of the year:
Cash and cash equivalents - from continuing operations
Bank overdrafts repayable on demand – from continuing operations
Cash and cash equivalents - from Discontinued operations/Non-current assets
held for sale
Bank overdrafts repayable on demand – from Discontinued operations/Non-
current assets held for sale
Year
2021
(1,886)
(2,665)
(746)
(5,297)
1,284
(4,013)
23
Year
2021
(242)
(1,440)
437
90
Year
2021
4,829
(321)
—
—
4,508
6,904
—
—
—
6,904
Year
2020
(1,197)
(2,138)
(1,362)
(4,697)
1,220
(3,477)
378
Year
2020
223
(1,520)
448
256
Year
2020
3,138
(1)
65
—
3,202
4,829
(321)
—
—
4,508
The additional disclosures required by IAS 7 are provided in the Note “Net financial debt” to these consolidated
financial statements.
Consolidated financial statements of the
TIM Group
Consolidated Statements of Cash Flows 144
NOTE 1
FORM, CONTENT AND OTHER GENERAL
INFORMATION
Form and content
Telecom Italia S.p.A. (the “Parent Company”), also known in short as “TIM S.p.A.”, and its subsidiaries form the
“TIM Group” (the “Group”).
TIM is a joint-stock company (S.p.A.) organized under the laws of the Republic of Italy.
The registered offices of the Parent, TIM, are located in Milan, Italy at Via Gaetano Negri 1.
The duration of TIM S.p.A., as stated in the company’s bylaws, extends until December 31, 2100.
The TIM Group operates mainly in Europe, the Mediterranean Basin and South America.
The Group is engaged principally in the communications sector and, particularly, the fixed and mobile national
and international telecommunications sector.
The TIM Group's Consolidated Financial Statements at December 31, 2021, have been prepared on a going
concern basis (further details are provided in the Note “Accounting Policies”) and in accordance with the
recognition and measurement criteria of the International Financial Reporting Standards issued by the
International Accounting Standards Board and endorsed by the European Union (designated as “IFRS”), as
well as laws and regulations in force in Italy.
In 2021, the Group adopted accounting policies consistent with those of the previous year, except for the
changes to the accounting standards issued by the IASB and in force as of January 1, 2021. See the Note
"Accounting policies" for more details.
The consolidated financial statements have been prepared under the historical cost convention, except for
financial assets, which are measured at the fair value recognized in the other components of the
comprehensive income, financial assets measured at fair value through the income statement, and derivative
financial instruments, which have been measured at fair value. The carrying amounts of hedged assets and
liabilities have been adjusted to reflect the changes in fair value of the hedged risks (fair value hedge).
In accordance with IAS 1 (Presentation of Financial Statements) comparative information included in the
consolidated financial statements refers, unless otherwise indicated, to the previous year.
The TIM Group consolidated financial statements as at December 31, 2021 are expressed in euro (rounded to
the nearest million unless otherwise indicated).
The publication of the consolidated financial statements for the year ended December 31, 2021 of the TIM
Group was approved by resolution of the Board of Directors on March 02, 2022.
Financial statement formats
The financial statement formats adopted are consistent with those indicated in IAS 1. In particular:
■
■
the Consolidated statements of financial position have been prepared by classifying assets and liabilities
according to the "current and non-current" criterion;
the Separate Consolidated Income Statement has been prepared by classifying operating costs by nature
of expense as this form of presentation is considered more appropriate and representative of the specific
business of the Group, conforms to internal reporting, and is in line with the TIM Group's industrial sector.
In addition to EBIT or Operating profit (loss), the separate consolidated income statement includes the
alternative performance measure of EBITDA or Operating profit (loss) before depreciation and
amortization, Capital gains (losses) and Impairment reversals (losses) on non-current assets.
In particular, besides EBIT, EBITDA is used by TIM as the financial target in internal presentations (business
plans) and in external presentations (to analysts and investors), as a useful unit of measurement for the
evaluation of the operating performance of the Group (as a whole and at the Business Unit level).
Consolidated financial statements of the
TIM Group
Note 1
Form, content and other general information
145
Finance expenses
Finance income
EBIT and EBITDA are calculated as follows:
Profit (loss) before tax from continuing operations
+
-
+/- Other expenses (income) from investments
+/- Share of profits (losses) of associates and joint ventures accounted for using the equity method
EBIT – Operating profit (loss)
+/- Impairment losses (reversals) on non-current assets
+/- Losses (gains) on disposals of non-current assets
+ Depreciation and amortization
EBITDA – Operating profit before depreciation and amortization, capital gains (losses) and impairment reversals (losses)
on non-current assets
■
■
the Consolidated statements of comprehensive income include the profit or loss for the year as shown in
the Separate Consolidated Income Statement and all other non-owner changes in equity;
the Consolidated statements of cash flows have been prepared by presenting cash flows from operating
activities according to the "indirect method", as permitted by IAS 7 (Statement of Cash Flows).
Furthermore, as required by Consob Resolution 15519 of July 27, 2006, in the separate consolidated income
statement, income and expenses relating to transactions which by nature do not occur during normal
operation (non-recurring transactions) have been specifically identified and their impacts on the main
intermediate levels have been shown separately, when they are significant. Specifically, non-recurring
income/(expenses) include, for instance: income/expenses arising from the sale of properties, plant and
equipment, business segments and investments; expenses stemming from company reorganization and
streamlining processes and projects, also in connection with corporate transactions (mergers, spin-offs, etc.);
expenses resulting from litigation and regulatory fines and related liabilities; other provisions and related
reversals; costs for the settlement of disputes other than regulatory disputes; adjustments, realignments and
other non-recurring items, also relating to previous years; impairment losses on goodwill and/or other
intangible and tangible assets. Certain costs related to the COVID-19 pandemic are also identified as non-
recurring charges.
Also in reference to the above Consob Resolution, the amounts relating to balances or transactions with
related parties have been shown separately in the consolidated financial statements.
Segment reporting
An operating segment is a component of an entity:
■
that engages in business activities from which it may earn revenues and incur expenses (including
revenues and expenses relating to transactions with other components of the same entity);
■ whose operating results are regularly reviewed by the entity’s chief operating decision maker to make
decisions about resources (for the TIM Group, the Board of Directors of the Parent) to be allocated to the
segment and assess its performance; and
for which separate financial information is available.
■
In particular, the operating segments of the TIM Group are organized according to geographic location
(Domestic and Brazil) for the telecommunications business.
The term “operating segment” is considered synonymous with “Business Unit”.
The operating segments of the TIM Group are as follows:
■ Domestic: includes operations in Italy for voice and data services on fixed and mobile networks for end
customers (retail) and other operators (wholesale), the operations of the Telecom Italia Sparkle group,
which, at international level (Europe, the Mediterranean and South America), develops fiber optic networks
for wholesale customers, the operations of the company FiberCop for the supply of passive access services
to the secondary copper and fiber network, the business of Noovle S.p.A. (Cloud and Edge computing
solutions), the business of Olivetti (products and services for Information Technology) and the units
supporting the Domestic sector. See the section “Financial and Operating Highlights of the Business Units
of the TIM Group – Domestic Business Unit” of the Report on Operations for more details;
■ Brazil: includes mobile and fixed telecommunications operations in Brazil (TIM S.A.);
■ Other Operations: include the financial companies (Telecom Italia Capital S.A. and Telecom Italia Finance
S.A.) and other minor companies not strictly related to the TIM Group's core business.
Consolidated financial statements of the
TIM Group
Note 1
Form, content and other general information
146
NOTE 2
ACCOUNTING POLICIES
Going concern
The consolidated financial statements for the business year 2021 have been prepared on a going concern
basis, as there is the reasonable expectation that TIM will continue conducting its business in the foreseeable
future (and, in any event, over a period of at least twelve months).
In particular, the following factors have been taken into consideration:
■
the main risks and uncertainties (that are for the most part of an external nature) to which the Group and
the various activities of the TIM Group are exposed:
•
•
•
•
•
the changes in the general macroeconomic situation in the Italian, European and Brazilian market,
including the effects deriving from the continued state of COVID-19 health emergency, as well as the
volatility of financial markets in the Eurozone, partly following the UK’s Brexit;
variations in business conditions, also related to competition;
changes to laws and regulations (price and rate variations);
outcomes of legal disputes and proceedings with regulatory authorities, competitors and other parties;
financial risks (interest rate and/or exchange rate trends, changes in the Group’s credit rating by rating
agencies);
■
■
the optimal mix between risk capital and debt capital, as well as the policy for the remuneration of risk
capital, as described in the section "Share capital information" under the Note "Equity";
the policy for financial risk management (market risk, credit risk and liquidity risk), as described in the Note
"Financial risk management".
Based on these factors, the Management believes that, at the present time, there are no elements of
uncertainty regarding the Group’s ability to continue as a going concern.
Principles of consolidation
The consolidated financial statements include the financial statements of all subsidiaries from the date on
which control over such subsidiaries commences until the date on which control ceases.
The date of all the subsidiaries' financial statements coincides with that of the Parent company, TIM.
Control exists when the Parent company TIM S.p.A. has all the following:
■ decision-making power over the investee, which includes the ability to direct the relevant activities of the
investee, i.e. the activities that significantly affect the investee's returns;
■ entitlement to the variable profits or losses commensurate with its shareholding in the investee;
■
the ability to use its decision-making to determine the amount of the returns relating to its shareholding in
the entity.
TIM assesses whether it controls an investee if facts and circumstances indicate that there are changes in one
or more of the three control elements.
In the preparation of the consolidated financial statements, the global amounts of the assets, liabilities, costs
and revenues of the consolidated companies are recognized on a line-by-line basis, while the share of equity
and the year's result of non-controlling interest is recognized is disclosed separately under appropriate items in
the consolidated statements of financial position, in the separate consolidated income statement and in the
consolidated statements of comprehensive income.
Under IFRS 10 (Consolidated financial statements), the comprehensive loss (including the profit or loss for the
year) is attributed to the shareholders of the parent company and to non-controlling interest even when the
equity of non-controlling interest has a deficit balance.
All intragroup balances and transactions and any gains and losses arising from intragroup transactions are
eliminated in consolidation.
The carrying amount of the investment in each subsidiary is eliminated against the corresponding share of
equity in each subsidiary, after adjustment, if any, to fair value at the date of acquisition of control. At that
date, goodwill is recorded as an intangible asset, as described below, whereas any gain from a bargain
purchase (or negative goodwill) is recognized in the separate consolidated income statement.
All the assets and liabilities expressed in currencies other than euro of foreign consolidated entities that are
included in the consolidation are translated using the exchange rates in effect at the reporting date (the
current exchange rate method), while the related revenues and costs are translated at the average exchange
rates for the year. Exchange differences resulting from the application of this method are classified as equity
until the entire disposal of the investment or upon loss of control of the foreign subsidiary. Upon partial
disposal, without losing control, the proportionate share of the cumulative amount of exchange differences
related to the disposed interest is recognized as non-controlling interest equity. The cash flows of foreign
consolidated subsidiaries expressed in currencies other than euro included in the consolidated statements of
cash flows are translated into euro at the average exchange rates for the year.
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Goodwill and fair value adjustments arising from the allocation of the purchase price of a foreign entity are
recorded in the relevant foreign currency and are translated using the year-end exchange rate.
Under IFRS 10, changes in a parent's ownership interest in a subsidiary that do not result in a loss of control are
accounted for as equity transactions. In such circumstances, the carrying amounts of controlling and non-
controlling interests shall be adjusted to reflect the changes in their relative interests in the subsidiary. Any
difference between the amount by which the non-controlling interest is adjusted and the fair value of the
consideration paid or received shall be recognized directly in equity and attributed to the shareholders of the
parent company.
Under IFRS 10, the parent company in case of loss of control of a subsidiary:
■ derecognizes:
•
•
the assets (including any goodwill) and the liabilities;
the carrying amount of any non-controlling interest;
■
recognizes:
•
•
•
•
the fair value of any consideration received;
the fair value of any residual investment retained in the former subsidiary;
any gain or loss resulting from the transaction, in the separate consolidated income statement;
the reclassification to the separate consolidated income statement of the amounts previously
recognized in other comprehensive income in relation to the subsidiary.
In the consolidated financial statements, investments in associates and joint ventures are accounted for using
the equity method, as provided, respectively, by IAS 28 (Investments in Associates and Joint Ventures) and
IFRS 11 (Joint Arrangements).
Associates are enterprises in which the Group holds at least 20% of the voting rights or exercises significant
influence, but no control or joint control over their financial and operating policies.
A joint venture is a joint control arrangement whereby the parties that have joint control of the arrangement
have rights to the net assets of the entity.
Joint control is the contractually agreed sharing of control of a business that exists only when decisions about
the relevant business require the unanimous consent of the parties sharing control.
Associates and joint ventures are included in the consolidated financial statements from the date on which
significant influence or joint control commences until the date on which significant influence or joint control
ceases.
Under the equity method, on initial recognition the investment in an associate or joint venture is recognized at
cost, and the carrying amount is increased or decreased to recognize the investor's share of the profit or loss of
the investee after the date of acquisition. The investor's share of the investee's profit or loss is recognized in
the separate consolidated income statement. Dividends received from an investee reduce the carrying amount
of the investment.
Adjustments to the carrying amount may also be necessary for changes in the investee's other comprehensive
income (i.e. those arising from foreign exchange translation differences). The investor's share of those changes
is recognized in the investor's other comprehensive income.
If an investor's share of losses of an associate or a joint venture equals or exceeds its interest in the associate
or joint venture, the investor discontinues recognizing its share of further losses. After the investor's interest is
reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the
investor has incurred legal or constructive obligations or made payments on behalf of the associate or joint
venture. If the associate or joint venture subsequently reports profits, the investor resumes recognizing its
share of those profits only after its share of the profits equals the share of losses not recognized.
Any other long-term interests (some types of preference shares and long-term loans) in an associate or joint
venture are measured in accordance with IFRS 9.
Gains and losses resulting from "upstream" and "downstream" transactions between an investor (including its
consolidated subsidiaries) and its associate or joint venture are recognized in the investor's financial
statements only to the extent of unrelated investors' interests in the associate or joint venture.
The investor's share of profits and losses of the associate or joint venture arising from said transactions is
eliminated.
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Intangible assets
Goodwill
In accordance with IFRS 3 (Business Combinations), goodwill is recognized in the financial statements at the
date of acquisition of control of a business and is determined as the excess of (a) over (b), as follows:
a) the aggregate of:
▪
▪
▪
the consideration transferred (measured in accordance with IFRS 3; it is generally recognized on the
basis of the fair value at the acquisition date);
the amount of any non-controlling interest in the acquiree measured proportionally to the non-
controlling interest share of the acquiree's identifiable net assets shown at the related fair value;
in a business combination achieved in stages, the acquisition date fair value of the acquirer's previously
held equity interest in the acquiree;
b) the fair value of the identifiable assets acquired net of the identifiable liabilities assumed, measured at the
date of acquisition of control.
IFRS 3 requires, inter alia, the following:
▪
▪
incidental costs incurred in connection with a business combination to be charged to the separate
income statements;
in a business combination achieved in stages, the acquirer to remeasure its previously held equity
interest in the acquiree at its fair value at the date of acquisition of control and recognize the resulting
gain or loss, if any, in the separate income statements.
Goodwill is classified in the statement of financial position as an intangible asset with an indefinite useful life.
Goodwill initially recognized is subsequently reduced only by cumulative impairment losses (for more details,
see the section "Impairment of intangible assets, tangible assets and rights of use assets - Goodwill", below). In
case of loss of control of a subsidiary, the relative amount of goodwill is taken into account in calculating the
gain or loss on disposal.
Development costs
Costs incurred internally for the development of new products and services represent either intangible assets
(mainly costs for software development) or tangible assets. These costs are capitalized only when all the
following conditions are satisfied: i) the cost attributable to the development phase of the asset can be
measured reliably, ii) there is the intention, the availability of financial resources and the technical ability to
complete the asset and make it available for use or sale, and iii) it can be demonstrated that the asset will be
able to generate future economic benefits. Capitalized development costs comprise only incurred expenditures
that can be attributed directly to the development process for new products and services.
Capitalized development costs are amortized/depreciated systematically over the estimated product or service
life, so that the amortization method reflects the way in which the asset's future economic benefits are
expected to be consumed by the entity.
Other intangible assets with a finite useful life
Other purchased or internally-generated intangible assets with a finite useful life are recognized as assets, in
accordance with IAS 38 (Intangible Assets), when the use of the asset is likely to generate future economic
benefits and when the cost of the asset can be reliably measured.
Such assets are recorded at purchase or production cost and amortized on a straight-line basis over their
estimated useful lives; the amortization rates are reviewed annually and revised if the current estimated useful
life is different from that estimated previously. The effect of such changes is recognized prospectively in the
separate consolidated income statement.
Tangible assets
Property, plant and equipment
Property, plant and equipment are recognized at purchase or production cost. Subsequent expenditures are
capitalized only if they increase the future economic benefits embodied in the related item of property, plant
and equipment. All other expenditures are recognized in the separate consolidated income statement as
incurred.
The cost of these assets also includes the expected costs of dismantling the asset and restoring the site, if a
legal or constructive obligation exists. The corresponding liability is recognized at its present value in a
provision for risks and charges in the liabilities. The recognition in the separate consolidated income statement
of the capitalized expenditure is done over the useful life of the related tangible assets through their
depreciation.
The calculation of estimates for dismantling costs, discount rates and the dates in which such costs are
expected to be incurred is reviewed annually at each financial year-end. Changes in the above liability must be
recognized as an increase or decrease of the cost of the relative asset; the amount deducted from the cost of
the asset must not exceed its carrying amount. The excess, if any, is recorded immediately in the separate
consolidated income statement, conventionally under the line item "Depreciation".
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets.
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Depreciation rates are reviewed annually and revised if the current estimated useful life is different from that
estimated previously. The effect of such changes is recognized prospectively in the separate consolidated
income statement.
Land, including land pertaining to buildings, is not depreciated.
Rights of use assets
In accordance with IFRS 16, lease liabilities are presented through the recognition of a financial liability in the
statement of financial position consisting in the present value of future lease payments, against the
recognition of the right of use of the leased asset.
On the commencement date of the lease, the right of use is recognized at cost including: the amount of the
initial measurement of the lease liability, any lease payments made at or before the commencement date,
initial direct costs incurred for the signature of the lease and the present value of the estimated restoration
and dismantling costs set out in the lease, less any incentives.
Subsequently, the right of use is amortized over the term of the lease (or the useful life of the asset, if lower),
subject to impairment and adjusted for any remeasurement of the lease liability.
It is specified that starting January 1, 2021, the TIM Group has attracted, under the scope of application of IFRS
16, if the criteria and the requirements laid down by the standard are met, the new contract types concerning
cloud software resources and the spectrum of transmission frequencies on optic fiber carriers. This approach is
functional to the very innovative specificity of these types of contract, concerning hardware infrastructure and
optical transmission as well as technologically-advanced software services.
Capitalized borrowing costs
Under IAS 23 (Borrowing Costs), the Group capitalizes borrowing costs only if they are directly attributable to
the acquisition, construction or production of an asset that takes a substantial period of time (conventionally
more than 12 months) to get ready for its intended use or sale.
Capitalized borrowing costs are recorded in the separate consolidated income statement and deducted
directly from the "finance expense" line item to which they relate.
Impairment of intangible, tangible and rights of use assets
Goodwill
Goodwill is tested for impairment at least annually or more frequently whenever events or changes in
circumstances indicate that goodwill may be impaired, as set forth in IAS 36 (Impairment of Assets); however,
when the conditions that gave rise to an impairment loss no longer exist, the original amount of goodwill is not
reinstated.
The test is generally conducted at the end of every year, so the date of testing is the year-end closing date of
the financial statements. Goodwill acquired and allocated during the year is tested for impairment at the end
of the year in which the acquisition and allocation took place.
For the purpose of verifying its recoverability, goodwill is allocated, from the acquisition date, to each of the
cash-generating units, or groups of cash-generating units, that is expected to benefit from the combination.
If the carrying amount of the cash-generating unit (or group of cash-generating units) exceeds the recoverable
amount, an impairment loss is recognized in the separate consolidated income statement. The impairment
loss is first recognized as a deduction of the carrying amount of goodwill allocated to the cash-generating unit
(or group of cash-generating units) and only subsequently applied to the other assets of the cash-generating
unit in proportion to their carrying amount, up to the recoverable amount of the assets with a finite useful life.
The recoverable amount of a cash-generating unit (or group of cash-generating units) to which goodwill is
allocated is the higher between the fair value less costs to sell and its value in use.
The fair value net of disposal costs is estimated on the basis of the income approach, insofar as this allows for
the reflection of the benefits deriving from a new, different business structure in the future. In particular, the
fair value net of disposal costs is based on the current value of the forecast cash flow, applying a discounting
rate that reflects current market assessments of the time value of money and the risks specific to the asset.
The future cash flows are those arising from an explicit time horizon between three and five years, as well as
those extrapolated to estimate the terminal value.
In calculating the value in use, the estimated future cash flows are discounted to present value using a
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset. The future cash flows are those arising from an explicit time horizon between three and five years, as
well as those extrapolated to estimate the terminal value. The long-term growth rate used to estimate the
terminal value of the cash-generating unit (or group of cash-generating units) is assumed not to be higher
than the average long-term growth rate of the segment, country or market in which the cash-generating unit
(or group of cash-generating units) operates.
The value in use of cash-generating units denominated in foreign currency is estimated in the local currency by
discounting cash flows to present value on the basis of an appropriate rate for that currency. The present value
obtained is translated to euro at the spot rate on the date of the impairment test (in the case of the TIM Group,
the closing date of the financial statements).
Future cash flows are estimated by referring to the current operating conditions of the cash-generating unit (or
group of cash-generating units) and, therefore, do not include either benefits originating from future
restructuring for which the entity is not yet committed, or future investments for the improvement or
optimization of the cash-generating unit.
For the purpose of calculating impairment, the carrying amount of the cash-generating unit is established
based on the same criteria used to determine the recoverable amount of the cash-generating unit, excluding
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surplus assets (that is, financial assets, deferred tax assets and net non-current assets held for sale) and
includes the goodwill attributable to non-controlling interest (minority shareholders).
After conducting the goodwill impairment test for the cash-generating unit (or groups of cash-generating
units), a second level of impairment testing is carried out which includes the corporate assets which do not
generate positive cash flows and which cannot be allocated by a reasonable and consistent criterion to the
single units. At this second level, the total recoverable amount of all cash-generating units (or groups of cash-
generating units) is compared to the carrying amount of all cash-generating units (or groups of cash-
generating units), including also those cash-generating units to which no goodwill was allocated, and the
corporate assets.
Tangible and intangible assets with finite useful lives and rights of use
assets
At the end of each reporting period, the Group assesses whether there is any indication that an asset –
whether intangible or tangible with finite useful lives or a right-of-use – may be impaired. Both internal and
external sources of information are used for this purpose. Internal sources include obsolescence or physical
deterioration, and significant changes in the use of the asset and the economic performance of the asset
compared to estimated performance. External sources include the market value of the asset, any changes in
technology, markets or laws, trends in market interest rates and the cost of capital used to evaluate
investments, and an excess of the carrying amount of the net assets of the Group over market capitalization.
If there is any indication that an asset – whether tangible or intangible with finite useful lives or a right of use –
has been impaired, then its carrying amount is reduced to its recoverable amount. The recoverable amount is
the higher of an asset's fair value less costs to sell, and its value in use. In calculating the value in use, the
estimated future cash flows are discounted to present value using a discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset or right. If it is not possible to
estimate the recoverable amount, the Group estimates the recoverable amount of the cash-generating unit to
which the asset belongs. Impairment losses are recognized in the separate consolidated income statement.
When the reasons for the impairment subsequently cease to exist, the carrying value of the asset/right-of-use
or of the cash generating unit is increased up to the new estimate of the recoverable amount which, however,
cannot exceed the amount that would have been determined had no impairment loss been recognized. The
reversal of an impairment loss is recognized as income in the separate consolidated income statement.
Financial instruments
Business models for financial assets management
For the management of trade receivables, TIM Group Management has identified different business models
based on the specific nature of the receivables, the type of counterparty and collection times, this was in order
to optimize the management of working capital through the constant monitoring of the payment performance
of customers, the steering of credit collection policies, and the management of programs for the disposal of
receivables, and the activation of factoring consistent with financial planning requirements.
The business models adopted are:
■ Hold to Collect: receivables usually held to maturity, such as trade receivables due from large customers
and the OLOs for the Domestic Business Unit, and all receivables for the Brazil Business Unit; these
instruments fall within the IFRS 9 category “Assets measured at amortized cost”. These receivables can be
transferred, albeit not recurrently, if this is needed to optimize finances;
■ Hold to Collect and Sell: receivables usually traded massively and on a recurring basis, such as, for the
Domestic Business Unit, receivables due from active consumer, small and business customers held for
sale; these instruments fall under the IFRS 9 category "Financial assets measured at fair value through
other comprehensive income". As required by IFRS 9, the related reserve is reversed to the separate
consolidated income statement when disposed of or impaired.
As part of managing financial assets other than trade receivables, the TIM Group's Management identified its
business models on the basis of how the financial instruments are managed and how their cash flows are
used. This is done to ensure an adequate level of financial flexibility and to best manage, in terms of risks and
returns, the financial resources immediately available through the treasuries of Group companies and in
accordance with the strategies set forth by the Parent TIM.
The business models adopted are:
■ Hold to Collect: financial instruments used to absorb temporary cash surpluses; such instruments are low
risk and mostly held to maturity; they are measured at amortized cost;
■ Hold to Collect and Sell: monetary or debt instruments used to absorb short/medium-term cash surpluses;
such instruments are low risk and generally held to maturity, or otherwise sold to cover specific cash
requirements; they are measured at fair value through other consolidated comprehensive income;
■ Hold to Sell: monetary, debt and equity trading instruments used to dynamically manage cash surpluses
not managed under the business models identified above; such instruments are higher risk and traded
repeatedly over time; they are measured at fair value through the separate consolidated income
statement.
Other investments
Other investments (other than those in subsidiaries, associates and joint ventures) are classified as non-
current or current assets if they will be kept in the Group's portfolio for a period of more or not more than 12
months, respectively.
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Other investments are classified as “financial assets measured at fair value through consolidated profit or loss”
(FVTPL), as current assets.
At the purchase time of each investment, IFRS 9 provides for the irrevocable option to recognize these
investments in "financial assets measured at fair value through other consolidated comprehensive income"
(FVTOCI) as non-current or current assets.
The other investments classified as “financial assets measured at fair value through other comprehensive
income” are measured at fair value; changes in the fair value of these investments are recognized in a special
equity reserve under the other components of the statements of comprehensive income (Reserve for financial
assets measured at fair value through other comprehensive income), without reclassification to the separate
income statements when the financial asset is disposed of or impaired. Dividends are recognized in the
separate consolidated income statement.
Changes in the value of other investments classified as "financial assets at fair value through profit or loss" are
recognized directly in the separate consolidated income statement.
Securities other than investments
Securities other than investments, included among non-current or current assets, depending on the business
model adopted and the contractual flows envisaged, fall among financial assets measured at amortized cost,
or measured at fair value through other comprehensive income or at fair value though profit or loss.
Securities other than investments classified as current assets are those that, by decision of the directors, are
intended to be kept in the Group's portfolio for a period of not more than 12 months, and are classified:
■ as "financial assets measured at amortized cost" (AC) when held to maturity (originally more than 3
months but less than 12 months, or, although they had an original maturity of more than 12 months, they
have been bought in a period during which maturity was included between 3 and 12 months);
■ as "financial assets measured at fair value through other consolidated comprehensive income" (FVTOCI)
when held in the scope of a business model whose objective is to sell the financial asset and/or collect the
contractual cash flows. The consolidated "Reserve for financial assets measured at fair value through
other comprehensive income" is reversed to the separate consolidated income statement when the
financial asset is disposed of or impaired;
■ as “financial assets measured at fair value through consolidated profit or loss" (FVTPL) in the other cases.
Cash and cash equivalents
Cash and cash equivalents are recorded, according to their nature, at nominal value or amortized cost.
Cash equivalents are short-term and highly liquid investments that are readily convertible to known amounts
of cash, subject to an insignificant risk of change in value and their original maturity or the remaining maturity
at the date of purchase does not exceed 3 months.
Impairment of financial assets
At every closing date, assessments are made as to whether there is any objective evidence that a financial
asset or a group of financial assets has been impaired.
The impairment of financial assets is based on the expected credit loss model.
In particular:
■
■
impairment on trade receivables and on contract assets is carried out using the simplified approach that
involves estimating the loss expected over the life of the receivable at the time of initial recognition and
on subsequent measurements. For each customer segment, the estimate is principally made by
calculating the average expected uncollectibility, based on historical and statistical indicators, possibly
adjusted using forward-looking elements. For some categories of receivables characterized by specific
risk elements, specific measurements are made on individual credit positions;
the impairment of financial assets other than trade receivables is calculated on the basis of a general
model which estimates expected credit losses over the following 12 months or over the residual life of
the asset in the event of a substantial worsening of its credit risk.
Derivative financial instruments
As allowed by IFRS 9, the TIM Group decided to continue to apply the hedge accounting provisions contained in
IAS 39 instead of those of IFRS 9.
Derivatives are used by the TIM Group to manage its exposure to exchange rate and interest rate risks and to
diversify the parameters of debt, so that costs and volatility can be reduced within pre-established operational
limits.
In accordance with IAS 39, derivative financial instruments qualify for hedge accounting only when:
■ at the inception of the hedge, the hedging relationship is formally designated and documented;
■
■
■
the hedge is expected to be highly effective;
its effectiveness can be reliably measured;
the hedge is highly effective throughout the financial reporting periods for which it is designated.
All derivative financial instruments are measured at fair value in accordance with IAS 39.
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When derivative financial instruments qualify for hedge accounting, the following accounting treatment
applies:
■ Fair value hedge – Where a derivative financial instrument is designated as a hedge of the exposure to
changes in fair value of an asset or liability due to a particular risk, the gain or loss from re-measuring the
hedging instrument at fair value is recognized in the separate consolidated income statement. The gain or
loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item
and is recognized in the separate consolidated income statement.
■ Cash flow hedge – Where a derivative financial instrument is designated as a hedge of the exposure to
variability in cash flows of an asset or liability or a highly probable expected transaction, the effective
portion of any gain or loss arising from the fair value adjustment of the derivative financial instrument is
recognized directly in a specific equity reserve (Reserve for fair value adjustment of hedging derivative
instruments). The cumulative gain or loss is removed from equity and recognized in the separate
consolidated income statement during the same business years in which the hedged transaction is
recognized in the separate consolidated income statement. The gain or loss associated with the ineffective
portion of a hedge is recognized in the separate consolidated income statement immediately. If the
hedged transaction is no longer considered to be probable, the gains or losses not yet realized included in
the equity reserve are immediately recognized in the separate consolidated income statement.
For derivatives for which a hedging relationship has not been designated, changes in value compared to initial
recognition are recognized directly in the separate consolidated income statement.
Financial liabilities
Financial liabilities include financial payables, including payables for advances on assignments of receivables
where the assignment does not transfer substantially all the risks and rewards, as well as other financial
liabilities, including derivative financial instruments and liabilities in respect of assets recognized under finance
leases recognized in accordance with IFRS 16.
In accordance with IFRS 9, they also include trade and other payables.
Reverse factoring transactions are also classified under trade payables. The TIM Group has reverse factoring
agreements in place through which TIM gives its bank partners a mandate to pay its suppliers as invoices
become due. Suppliers participating in these programs have the rights to sell (without any cost for the TIM
Group) receivables due from the Group. They can exercise this right at their total discretion and incurring all
the costs to benefit from collection before the contractual due date.
Financial liabilities other than derivatives are initially recognized at fair value and subsequently measured at
amortized cost.
Financial liabilities hedged by derivative instruments designed to manage exposure to changes in the value of
liabilities (fair value hedge derivatives) are measured at fair value in accordance with the hedge accounting
principles of IAS 39: the gains and losses deriving from subsequent fair value adjustments, only as regards the
covered component, are recognized in the separate consolidated income statement and counterbalanced by
the effective portion of the gain or loss deriving from the corresponding fair value measurements of the hedge
instrument.
Financial liabilities hedged by derivative instruments designed to manage exposure to variability in cash flows
(cash flow hedge derivatives) are measured at amortized cost in accordance with the hedge accounting
principles of IAS 39.
Transfer of receivables
The TIM Group transfers receivables through factoring and securitization agreements. These transfers, in the
majority of cases, are characterized by the transfer of substantially all the risks and rewards of ownership of
the receivables to third parties, therefore meeting the requirements of IFRS 9 for derecognition. Special service
agreements, under which the purchasers grant TIM S.p.A. a mandate to oversee the collection and
management of receivables, have been entered into to maintain the relationship between the Company and
its customers.
Inventories
Inventories are measured at the lower of purchase or production cost and estimated realizable value; the cost
is determined using the weighted average cost formula for each movement, while the estimated realizable
value is determined by observing general prices at the end of the year. Provision is made for obsolete and
slow-moving inventories based on their expected future use and estimated realizable value.
Non-current assets held for sale/Discontinued operations
Non-current assets held for sale or discontinued groups whose carrying amount will mainly be recovered
through sale, rather than through ongoing use, are classified as held for sale and shown separately from other
assets and liabilities in the consolidated statements of financial position. The corresponding amounts for the
previous year are not reclassified in the consolidated statements of financial position, but are instead shown
separately in a specific column for changes in assets and liabilities in the year in which non-current assets held
for sale or discontinued groups are classified as such.
Discontinued operations are a component of an entity that has been terminated or classified as held for sale
and that:
■
represents a major business line or geographical area of operation; or
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■
■
is part of a single coordinated plan to discontinue a separate major line of business or geographical area of
operation; or
is a subsidiary acquired exclusively with a view to resale.
The results arising from Discontinued Operations – whether discontinued or classified as held for sale – are
shown separately in the separate consolidated income statement, net of tax effects. The corresponding values
for the previous periods, where present, are reclassified and reported separately in the separate consolidated
income statement, net of tax effects, for comparative purposes.
Non-current assets held for sale or discontinued groups classified as held for sale are first recognized in
compliance with the appropriate IFRS applicable to each specific asset and liability, and subsequently
measured at the lower of the carrying amount and fair value, less cost to sell.
Any subsequent impairment losses are recognized as a direct adjustment to non-current assets (or
discontinued groups) classified as held for sale, with a contraentry in the separate consolidated income
statement.
An upward revision of value is, instead, recognized for each subsequent increase in the fair value of an asset
less cost to sell, but not in excess of the previously recognized cumulative impairment loss.
As required by IFRS 5 (Non-current assets held for sale and discontinued operations), an entity shall not
depreciate (or amortize) non-current assets classified as held for sale or being part of a discontinued group.
Finance expenses and other expenses attributable to the liabilities of a discontinued group classified as held
for sale must continue to be recognized.
Employee benefits
Provision for employee severance indemnity
Employee severance indemnity, mandatory for Italian companies pursuant to Article 2120 of the Italian Civil
Code, is deferred compensation based on the employee's years of service and on the compensation earned by
the employee during the service period.
Under IAS 19 (Employee Benefits), the employee severance indemnity, so calculated, is considered a "Defined
benefit plan" and the related liability to be recognized in the statement of financial position (Provision for
employee severance indemnities) is determined by actuarial calculations.
The remeasurements of actuarial gains and losses are recognized in other components of the Consolidated
Statements of Comprehensive income. Service cost of Italian companies that employ less than 50 employees,
as well as interest expenses related to the "time value" component of the actuarial calculations (the latter
classified as Finance expenses), are recognized in the separate consolidated income statement.
Starting from January 1, 2007, the Italian Law gave employees the choice to either allocate their accruing
indemnity to supplementary pension funds or it as an obligation of the Company. Companies that employ at
least 50 employees must transfer the employee severance indemnity to the "Treasury fund" managed by
INPS, the Italian Social Security Institute. Consequently, the Group's obligation to INPS and the contributions to
supplementary pension funds take the form, under IAS 19, of "Defined contribution plans".
Equity compensation plans
The companies of the Group provide additional benefits to certain managers of the Group through equity
compensation plans (for example stock options and long-term incentive plans). The above plans are
recognized in accordance with IFRS 2 (Share-Based Payment).
In accordance with IFRS 2, such plans represent a component of the beneficiaries' compensation. Therefore,
for the plans that provide for compensation in equity instruments, the cost is represented by the fair value of
such instruments at the grant date, and is recognized in the separate consolidated income statement in
"Employee benefits expenses" over the period between the grant date and vesting date with a contra-entry to
an equity reserve denominated "Other equity instruments". Changes in the fair value subsequent to the grant
date do not affect the initial measurement. At the end of each year, adjustments are made to the estimate of
the number of rights that will vest up to expiry. The impact of the change in estimate is recorded as an
adjustment to "Other equity instruments" with a contra-entry to "Employee benefits expenses".
The portion of the plans that specifies the payment of compensation in cash is recognized in liabilities as a
contra-entry to "Employee benefits expenses"; at the end of each year said liability is measured at fair value.
Provisions
The Group records provisions for risks and charges when, having a current legal or constructive obligation to a
third party, as a result of a past event, an outflow of Group resources is likely to be required to meet that
obligation, and when the amount of the obligation can be estimated reliably. Provisions for risks and charges
also include those established in the event that the company should stipulate contracts that thereafter
became onerous, the non-discretionary costs of which necessary to fulfill the commitments made, exceeding
the economic benefits expected from such contracts.
When the effect of the time value is material and the payment date of the obligations can be reasonably
estimated, the provision is determined by discounting the given expected cash flows by taking into account the
risks associated with the obligation. The increase in the provision due to the passage of time is recognized in
the separate consolidated income statement as "Finance expenses".
Consolidated financial statements of the
TIM Group
Note 2
Accounting policies
154
Government grants
Government grants are recognized when there is a reasonable certainty that they will be received and that the
Group will satisfy all the conditions established for their granting by the government, government agencies
and equivalent local, national or international entities.
Government grants are systematically recognized in the separate income statement over the periods in which
the Group recognizes the expenses that the grants are intended to offset as costs.
Government grants related to assets received for the acquisition and/or construction of non-current tangible
assets are recorded as deferred income in the statement of financial position and systematically credited to
the separate income statement over the useful life of the systems the grants relate to.
Treasury shares
Treasury shares are recognized as a deduction from equity. In particular, the treasury shares are reported as a
deduction from the share capital issued in the amount corresponding to the "accounting par value", that is the
ratio of total share capital and the number of issued shares, while the excess cost of acquisition over the
accounting par value is presented as a deduction from "Other reserves and retained earnings (accumulated
losses), including profit (loss) for the year".
Foreign currency transactions
Transactions in foreign currencies are recorded at the foreign exchange rate prevailing at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign
exchange rate prevailing at the statement of financial position date. Exchange differences arising from the
settlement of monetary items or from their conversion at rates different from those at which they were
initially recorded during the year or at the end of the prior year are recognized in the separate consolidated
income statement.
Revenues
Revenues are the gross inflows of economic benefits during the period arising in the course of the ordinary
activities of an entity. Amounts collected on behalf of third parties, such as sales taxes, goods and services
taxes and value added taxes, are not economic benefits which flow to the entity and do not result in increases
in equity. Therefore, they are excluded from revenues.
The process underlying the recognition of revenues follows the steps set out in IFRS 15:
■
■
identification of the contract: this takes place when the parties approve the contract (with commercial
substance) and identify the respective rights and obligations: in other terms, the contract must be legally
binding, the rights to receive goods and/or services and the terms of payment can be clearly identified, and
the Group considers receipt of payment as probable;
identification of the performance obligations: the main performance obligations identified, i.e. promises
to transfer goods and services that are distinct, are services rendered (including voice and data traffic and
ICT solutions) to retail customers, services rendered to wholesale customers, and sale of products;
■ determination of the transaction price: this is the total amount contracted with the other party regarding
the entire contractual term; the Group has determined that the contractual term is the one arising from
the contractual obligations between the parties or, in lack of these obligations, it is by convention one
month;
■ allocation of the transaction price to the performance obligations: the allocation is made proportionately
to the respective stand-alone selling prices calculated based on the list prices (if present) or estimated by
applying an appropriate margin to the cost of purchase/production of the good/service.
Revenues from activating the connectivity service are not a performance obligation; they are therefore
allocated to the contractual performance obligations (typically to services).
For offerings which include the sale of devices and service contracts (bundle offerings), the Group allocates
the contractual transaction price to the performance obligations of the contract, proportionately to the
stand-alone selling prices of the single performance obligations;
■
recognition of revenues: revenues are stated net of discounts, allowances, and returns in connection with
the characteristics of the type of revenue:
• Revenues from services rendered
Revenues from services rendered are recognized in the separate income statements according to the
stage of completion of the service, that is based on actual consumption.
Traffic revenues from interconnection and roaming are reported gross of the amounts due to other
TLC operators.
Revenues for delivering information or other content are recognized on the basis of the amount
invoiced to the customer, when the service is rendered directly by the Group. In the event that the
Group is acting as agent (for example, for non-geographic numbers) only the commission received
revenue.
from
Revenues from prepaid traffic are recorded on the basis of effective consumption. Deferred revenues
for traffic already collected but not yet consumed are recorded in “Trade and miscellaneous payables
and other current liabilities” in the consolidated statements of financial position.
Revenues for services rendered are generally invoiced and collected bimonthly/monthly for retail
customers while for wholesale customers, they are invoiced on a monthly basis and due 40 or 60 days
after the date of issue, depending on whether they relate to the mobile component (40 days) or fixed
component (60 days).
recognized
provider
content
the
as
is
Consolidated financial statements of the
TIM Group
Note 2
Accounting policies
155
• Revenues from sales
Revenues from sales (telephone products and others) are recognized upon delivery when control of the
assets is transferred to the customers.
The devices sold separately from the services are invoiced at the time of delivery; collection takes place
on demand or based on installment plans (up to 48 monthly installments). The devices sold as part of
bundle offerings are invoiced at the time of delivery and usually collected in 24, 30 or 48 monthly
installments, depending on the type of offer and customer cluster. With specific reference to the
mobile products sold to consumer customers, collection is made at the time of sale through the
financial company TIMFin, which disburses the loan to the customer.
The recognition of revenues can generate the recognition of an asset or liability deriving from contracts. In
particular:
• Contract assets are the right to a consideration in exchange for goods or services that have been
transferred to the customer, when the right is conditioned on something other than the passage of
time.
• Contract liabilities are the obligation to transfer goods or services to the customer for which the Group
has received (or for which it is due) a consideration from the customer.
Contract costs (incremental costs of obtaining a contract and costs to fulfill a contract; mainly technical
activation costs and costs for sales network commissions) are deferred and recognized through separate
consolidated income statement depending on the expected term of the contractual relationship with the
customers. The TIM Group avails of the practical expedient, permitted under IFRS 15, of recognizing the
incremental costs of obtaining a contract in the consolidated income statement if the amortization period is
one year or less.
The recoverability of contract assets and deferred costs is periodically assessed.
Research and advertising costs
Research and advertising costs are directly expensed to the separate consolidated income statement in the
year in which they are incurred.
Finance income and expenses
Finance income and expenses are recognized on an accrual basis and include: interest accrued on the related
financial assets and liabilities using the effective interest rate method; changes in the fair value of derivatives
and other financial instruments measured at fair value through the income statement; gains and losses on
foreign exchange and financial instruments (including derivatives).
Dividends
Dividends received from companies other than subsidiaries, associates and joint ventures are recognized in the
separate consolidated income statement on an accrual basis, i.e. in the year in which they become receivable
following the resolution by the shareholders' meeting for the distribution of dividends of the investee
companies.
Dividends payable to third parties are reported as a change in equity in the year in which they are approved by
the shareholders' meeting.
Income tax expense (current and deferred)
Income taxes include all taxes calculated on the basis of the taxable income of the companies of the Group.
Current and deferred income taxes are calculated using all the elements and information available at the
reporting date, taking into account current laws and considering all the elements that could give rise to
uncertainties in the determination of the amounts due to the tax authorities, as provided for in IFRIC 23.
Income taxes are recognized in the separate consolidated income statement, except to the extent that they
relate to items directly charged or credited to equity, in which case the related tax effect is recognized in the
relevant equity reserves. The amount of the income tax expense relating to each item included as "Other
components of the Consolidated Statements of Comprehensive income" is indicated in the Consolidated
Statement of comprehensive income.
The provisions for taxes that could arise from the remittance of the undistributed earnings of subsidiaries are
made only where there is the actual intention to remit such earnings.
Deferred tax liabilities / assets are recognized using the "Balance sheet liability method". They are calculated
on all the temporary differences that arise between the taxable base of assets and liabilities and the related
carrying amounts in the consolidated financial statements, except for differences arising from investments in
subsidiaries that are not expected to reverse in the foreseeable future. Deferred tax assets relating to unused
tax loss carryforwards are recognized to the extent that it is probable that future taxable income will be
available against which they can be utilized. Tax assets and liabilities are offset, separately for current and
deferred taxes, when income taxes are levied by the same tax authority and when there is a legally
enforceable offsetting right. Prepaid tax assets and deferred tax liabilities are determined by adopting the tax
rates expected to be applicable in the respective jurisdictions of the countries in which the Group companies
operate, in the years in which those temporary differences are expected to be recovered or settled.
The other taxes, other than income taxes, are included in "Other operating expenses".
Consolidated financial statements of the
TIM Group
Note 2
Accounting policies
156
Earnings per share
Basic earnings per ordinary share is calculated by dividing the Group's profit attributable to ordinary shares by
the weighted average number of ordinary shares outstanding during the year, and excluding treasury shares.
Similarly, basic earnings per savings share is calculated by dividing the Group's profit attributable to savings
shares by the weighted average number of savings shares outstanding during the year.
For diluted earnings per ordinary share, the weighted average number of shares outstanding during the year is
adjusted by assuming the subscription of all the potential deriving shares - for example, by exercising rights on
shares with dilutive effects. The Group profit is also adjusted to reflect the impact of these transactions net of
the related tax effects.
Use of accounting estimates
The preparation of consolidated financial statements and related disclosure in conformity with IFRS requires
management to make estimates and assumptions based also on subjective judgments, past experience and
assumptions considered reasonable and realistic in relation to the information known at the time of the
estimate. Such estimates have an effect on the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, as well as on the amount of revenues
and costs during the year. Actual results could differ, even significantly, from those estimates owing to possible
changes in the factors considered in the determination of such estimates. Estimates are reviewed periodically.
The most significant accounting estimates that involve a high level of subjective assumptions and judgments
by directors are set out below.
Financial statements area
Accounting estimates
Goodwill impairment
Impairment of tangible and intangible
assets with finite useful lives and right
of use assets
Business combinations
The impairment test on goodwill is carried out by comparing the carrying amount
of cash-generating units and their recoverable amount. The recoverable amount of
a cash-generating unit is the higher of fair value, less costs to sell, and its value in
use. This complex valuation process entails the use of methods such as the
discounted cash flow method, which uses assumptions to estimate cash flows. The
fair value net of disposal costs is based on the current value of forecast cash flow,
calculated using a discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. The recoverable amount
depends significantly on the discount rate used in the discounted cash flow model,
as well as the expected future cash flows and the growth rate used for the
extrapolation. The key assumptions used to determine the recoverable amount for
the different cash-generating units, including a sensitivity analysis, are detailed in
the Note "Goodwill".
At the end of each reporting period, the Group assesses whether there is any
indication that an asset – whether tangible or intangible with finite useful lives or a
right-of-use – has been impaired. Both internal and external sources of information
are used for this purpose.
Identifying the impairment indicators, estimating future cash flows and calculating
the fair value of each asset requires the Management to make significant
estimates and assumptions in calculating the discount rate to be used, and the
useful life and residual value of the assets. These estimates can have a significant
impact on the fair value of the assets and on the amount of any impairment write-
down.
The recognition of business combinations requires that assets and liabilities of the
acquiree be recorded at their fair value at the control acquisition date, as well as
the possible recognition of goodwill. These values are determined through a
complex estimation process.
Provision for bad debts
Capitalization/deferment of costs
Lease liabilities and rights of use assets The value of lease liabilities and corresponding rights of use is determined by
calculating the present value of the lease payments, also bearing in mind whether
the renewal of the lease is reasonably certain.
The capitalization/deferment of internal and external costs is a process that entails
elements of estimation and valuation. Specifically, it involves the valuation of: i)
the likelihood that capitalized costs will be recovered through correlated future
revenues; and ii) the effective increase in the future economic benefits embodied in
the related asset.
Impairment on trade receivables and on contract assets is carried out using the
simplified approach that involves estimating the loss expected over the life of the
receivable at the time of initial recognition and on subsequent measurements. For
each customer segment, the estimate is principally made by calculating the
average expected uncollectibility, based on historical and statistical indicators,
possibly adjusted using forward-looking elements. For some categories of
receivables characterized by specific risk elements, specific measurements are
made on individual credit positions.
Changes in the economic conditions of the markets, technology and competitive
forces could significantly affect the estimated useful lives of tangible and
intangible non-current assets and may lead to a difference in the timing, and thus
on the amount of depreciation and amortization expense.
Depreciation and amortization
Consolidated financial statements of the
TIM Group
Note 2
Accounting policies
157
Accruals, contingent
provisions for employee benefits
liabilities and
Revenues
Contract costs (IFRS 15)
Income
deferred)
tax expense
(current and
Derivative
instruments
instruments and equity
As regards the provisions for restoration costs, the estimate of future costs to
dismantle tangible assets and restore the site is a complex process that requires
the valuation of the liabilities arising from such dismantling and restoration
obligations, which seldom are entirely defined by laws, administrative regulations
or contract clauses, and which normally are to be complied with after an interval of
several years.
The accruals related to legal, arbitration and fiscal disputes, as well as regulatory
proceedings, are the result of a complex estimation process based upon the
probability of an unfavorable outcome. Provisions for employee benefits, especially
the provision for employee severance indemnities, are calculated using actuarial
assumptions; changes in such assumptions could have a material impact on such
liabilities. Provisions made for contractual risks are also related to any contracts
that may have become onerous and are based on an articulated estimation
process that envisages the valuation of the comprehensive negative margins of
the entire contract; they therefore include the non-discretionary costs necessary to
fulfill the commitments made that exceed the economic benefits expected from
such contracts.
The recognition of revenues is influenced by estimates of the amount of discounts,
rebates and returns to be reported as a direct adjustment to revenues, as well as
the methods for defining individual product or service stand-alone selling prices
and for determining the duration of the contract when there are renewal options.
The recognition of the costs of obtaining and fulfilling contracts is influenced by the
estimated expected duration of the relationship with the customer, calculated on
the basis of the historical turnover indexes and future estimates. However, this
estimate is subject to fluctuations and could only represent customers' future
behavior in a limited way, especially if there are new commercial offers or changes
in the competitive environment.
Income tax expense (current and deferred) are calculated in each country in which
the Group operates according to a prudent interpretation of the applicable tax
laws. This process sometimes involves complex estimates to determine taxable
income and deductible and taxable temporary differences between the carrying
amounts and the taxable amounts. In particular, deferred tax assets are
recognized to the extent that future taxable income will be available against which
they can be recovered. The measurement of the recoverability of deferred tax
assets, recognized based on both unused tax loss carry-forwards to future years
and deductible temporary differences, takes into account the estimate of future
taxable income and is based on conservative tax planning.
The fair value of derivative instruments and equity instruments is determined both
using valuation models which also take into account subjective measurements
such as, for example, cash flow estimates, expected volatility of prices, etc., and on
the basis of prices existing in regulated markets or quotations provided by financial
counterparts. For further details refer to the Note "Supplementary disclosures on
financial instruments".
As per IAS 8 (Accounting Policies, Changes in Accounting Estimates and Errors) paragraph 10, in the absence of
a standard or interpretation that specifically applies to a transaction, the Management shall use its judgment
in developing and applying an accounting policy that results in consolidated financial statements that
represent faithfully the financial position, financial performance and cash flows of the Group, reflect the
economic substance of transactions, and are neutral, prudential and complete in all material aspects.
Consolidated financial statements of the
TIM Group
Note 2
Accounting policies
158
New standards and interpretations endorsed by the EU and in
force from January 1, 2021
As required by IAS 8 (Accounting Policies, Changes in Accounting Estimates and Errors), the following is a brief
description of the IFRS in force commencing as of January 1, 2021.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Reform of the interest rates
benchmark - Phase 2
On January 13, 2021, Regulation (EU) no. 2021/25 was issued, which incorporated a set of amendments to the
IFRSs relating to the reform of the interbanking rates offered (IBOR) and other interest rate benchmarks. The
amendments aim to help the entities to provide investors with useful information on the effects of the reform
on the entities’ financial statements.
The amendments integrate those issued in 2019 and focus on the effects of the financial statements when an
entity replaces the old interest rate benchmark with an alternative benchmark rate following the reform.
The changes during this final phase regard:
a. changes to contractual cash flows - an entity shall not eliminate or rectify the carrying amount of the
financial instruments following the amendments required by the reform, but must instead add the
effective interest rate to reflect the change in the alternative benchmark rate;
b. hedge accounting - an entity shall not stop booking the hedges only because the changes have been
made to the hedging documentation as required by the reform, if the hedge continues to meet the other
criteria for booking the hedge;
c. disclosure: an entity shall disclose information on the new risks deriving from the reform and on how it
manages the transition to alternative benchmark rates.
The adoption of these amendments had no effect on the consolidated financial statements at December 31,
2021.
Amendments to IFRS 16 Leases: COVID-19-related rent concessions beyond June 30,
2021
On August 30, 2021, Regulation (EU) 2021/1421 was issued, endorsing the extension by one year of the period
of application of the practical expedient of IFRS 16 Leases, to assist lessees in accounting for COVID-19-related
rent concessions.
In response to requests from interested parties, and because the COVID-19 pandemic is still at its peak, the
IASB has extended, by an additional year, this method of accounting for rental concessions that reduce only
lease payments due by June 30, 2022.
The original amendment was issued in May 2020 to allow lessees not to account for rent concessions as lease
modifications if they are a direct consequence of the COVID-19 pandemic. The amendment takes effect for
financial years starting on or after April 1, 2021.
The adoption of these amendments had no effect on the consolidated financial statements at December 31,
2021.
New Standards and Interpretations issued by the IASB but not
yet applicable
At the date of preparation of these consolidated financial statements, the IASB had issued the following new
Standards and Interpretations which have not yet come into force and have not yet been endorsed by the EU:
New Standards / Interpretations endorsed by the EU but not yet in force
Amendments to: IFRS 3 Business combinations; IAS 16 Property, Plant and equipment; IAS 37
Provisions, Contingent Liabilities and Contingent Assets; Annual cycle of improvements 2018-2020
Amendments to IAS 1 Presentation of Financial Statements: Disclosure on accounting policies
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition
of accounting estimates
New Standards and Interpretations not yet in force and not yet endorsed by the EU
Amendments to IAS 12 Income taxes: deferred tax related to assets and liabilities arising from a
single transaction
Amendments to IAS 1 Presentation of Financial Statements: classification of liabilities as current or
non-current
Mandatory
application starting
from
1/01/2022
1/01/2023
1/01/2023
1/01/2023
1/01/2023
The potential impacts on the Group consolidated financial statements from the application of these standards
and interpretations are currently being assessed.
Consolidated financial statements of the
TIM Group
Note 2
Accounting policies
159
* * *
During the fourth quarter of 2021, TIM refined some aspects of the booking of certain commercial agreements
concerning the sale of goods with deferred delivery. This refinement entailed, for the first, second and third
quarters of 2021, the redetermination of the distribution over time of revenues and acquisition of goods and
services, for the purpose of the 2020 financial statements such commercial agreements had no material
effect.
In connection with the foregoing, the economic data of the first, second and third quarters of 2021, has been
recalculated. The impacts on the items of the income statements for the quarters of 2021 deriving from these
refinements, are as follows:
(million euros)
2021
Revenues
Acquisition of goods and services
Operating profit (loss) before depreciation and amortization, capital
gains (losses) and impairment reversals (losses) on non-current assets
(EBITDA)
Operating profit (loss) (EBIT)
Profit (loss) before tax from continuing operations
Income tax expense
Profit (loss) for the period
Attributable to:
Owners of the Parent
Non-controlling interests
Cumulative net impacts on equity balances were as follows:
(million euros)
Current and non-current assets
Trade and miscellaneous receivables and other current assets
Total Assets
Equity
Equity attributable to owners of the Parent
Total Equity
Non-current and current liabilities
Deferred tax liabilities
Trade and miscellaneous payables and other current liabilities
Total Equity and Liabilities
1st Quarter
(24)
7
2nd Quarter
—
—
3rd Quarter
(39)
11
(17)
(17)
(17)
5
(12)
(12)
—
—
—
—
—
—
—
—
(28)
(28)
(28)
8
(20)
(20)
—
as at 3/31/2021 as at 6/30/2021 as at 9/30/2021
(24)
(24)
(12)
(12)
(5)
(7)
(24)
(24)
(24)
(12)
(12)
(5)
(7)
(24)
(63)
(63)
(32)
(32)
(13)
(18)
(63)
The redetermination of the distribution over time of revenues from acquisition of goods and services during the
first, second and third quarters of 2021 did not have any impact on the “Aggregate cash flows” of the TIM
Group’s statements of cash flows and, in particular, on the “Cash flows from (used in) operating activities”.
Consolidated financial statements of the
TIM Group
Note 2
Accounting policies
160
NOTE 3
SCOPE OF CONSOLIDATION
Investments in consolidated subsidiaries
Composition of the Group
TIM holds a majority of the voting rights in all the subsidiaries included in the scope of consolidation.
A complete list of consolidated subsidiaries is provided in the Note "List of companies of the TIM Group".
Scope of consolidation
The changes in the scope of consolidation at December 31, 2021 compared to December 31, 2020 are listed
below.
Entry/exit/merger of subsidiaries into/out of the scope of consolidation:
Company
Entry:
PANAMA DIGITAL GATEWAY S.A.
TIM SERVIZI DIGITALI S.p.A.
STAER SERVIZI S.r.l.
OLIVETTI PAYMENT SOLUTIONS S.p.A.
Exit:
I-SYSTEMS S.A. (formerly FIBERCO SOLUÇÕES
DE INFRAESTRUTURA S.A.)
Mergers:
FLASH FIBER S.r.l.
TIM TANK S.r.l.
NOOVLE FRANCE Sasu
NOOVLE S.r.l.
New establishment
New establishment
New acquisition
New establishment
Dilution
Business Unit
Month
Domestic
Domestic
Domestic
Domestic
July 2021
July 2021
September 2021
December 2021
Brazil
November 2021
Merged into FIBERCOP S.p.A.
Merged into TELECOM ITALIA VENTURES
S.r.l.
Merged into NOOVLE S.r.l.
Merged into NOOVLE S.p.A.
Domestic
Domestic
Domestic
Domestic
March 2021
April 2021
July 2021
October 2021
The breakdown by number of subsidiaries and associates of the TIM Group is as follows:
Companies:
subsidiaries consolidated line-by-line
joint ventures accounted for using the equity method
associates accounted for using the equity method
Total companies
Companies:
subsidiaries consolidated line-by-line
joint ventures accounted for using the equity method
associates accounted for using the equity method
Total companies
12/31/2021
Overseas
45
—
1
46
12/31/2020
Overseas
46
—
—
46
Italy
20
2
12
34
Italy
20
2
10
32
Total
65
2
13
80
Total
66
2
10
78
Further details are provided in the Note "List of companies of the TIM Group".
Consolidated financial statements of the
TIM Group
Note 3
Scope of consolidation
161
Subsidiaries with a significant non-controlling interest
At December 31, 2021, the TIM Group held investments in subsidiaries, with significant non-controlling interest,
in relation to the companies FiberCop S.p.A., Daphne3 S.p.A. and the TIM Brazil group.
The figures provided below, stated before the netting and elimination of intragroup accounts, comply with IFRS
and reflect adjustments made at the acquisition date to align the assets and liabilities acquired to their fair
value.
FiberCop S.p.A. - Domestic Business Unit
Non-controlling interest accounted at December 31, 2021 for 42.0% of the capital of FiberCop S.p.A., coinciding
with the corresponding voting rights.
FiberCop S.p.A. - financial position data
(million euros)
Non-current assets
Current assets
Total Assets
Non-current liabilities
Current liabilities
Total Liabilities
Equity
of which Non-Controlling Interests
FiberCop S.p.A. - income data
(million euros)
Revenues
Profit (loss) for the year
of which Non-Controlling Interests
FiberCop S.p.A. - financial data
12/31/2021
8,441
471
8,912
3,293
551
3,844
5,068
2,129
2021
978
321
135
12/31/2020
—
—
—
—
—
—
—
—
2020
—
—
—
Aggregate cash flows generated in 2021 amounted to 75 million euros.
Daphne 3 S.p.A. - Domestic Business Unit
Non-controlling interest accounted at December 31, 2021 for 49.0% of the capital of Daphne 3 S.p.A.,
coinciding with the corresponding voting rights.
Daphne 3 S.p.A. - financial position data
(million euros)
Non-current assets
Current assets
Total Assets
Non-current liabilities
Current liabilities
Total Liabilities
Equity
of which Non-Controlling Interests
Daphne 3 S.p.A. - income data
(million euros)
Revenues
Profit (loss) for the year
of which Non-Controlling Interests
Daphne 3 S.p.A. - financial data
12/31/2021
2,746
1
2,747
1
—
1
2,746
1,346
2021
—
86
42
12/31/2020
2,746
—
2,746
—
—
—
2,746
1,345
2020
—
—
—
Aggregate cash flows generated in 2021 amounted to 1 million euros (0.1 million euros in 2020).
Consolidated financial statements of the
TIM Group
Note 3
Scope of consolidation
162
TIM Brasil group – Brazil Business Unit
Non-controlling interest accounted at December 31, 2021 for 33.4% of the capital of TIM S.A., coinciding with
the corresponding voting rights.
Financial position data TIM Brasil group
(million euros)
Non-current assets
Current assets
Total Assets
Non-current liabilities
Current liabilities
Total Liabilities
Equity
of which Non-Controlling Interests
Income statement data TIM Brasil group
(million euros)
Revenues
Profit (loss) for the year
of which Non-Controlling Interests
Financial data of the TIM Brasil group
12/31/2021
5,787
2,476
8,263
2,159
1,751
3,910
4,353
1,345
12/31/2020
5,246
1,662
6,908
1,558
1,339
2,897
4,011
1,232
2021
2,840
455
155
2020
2,933
297
104
In 2021 aggregate cash flows generated 416 million euros, with a positive exchange rate effect of 6 million
euros.
In 2020, this was negative for 93 million euros, with a negative exchange rate of 151 million euros.
∂
Finally, with regard to the subsidiaries with significant minority interests, in line with the information provided
in the Report on Operations - “Main risks and uncertainties” section, the main risk factors that could lead, even
significantly, to restrictions on the operations of the TIM Brasil group are listed below:
■
Strategic risks (risks related to macroeconomic and political factors, as well as risks associated with
foreign exchange restrictions and competition);
■ Operational risks (risks related to business continuity and development of the fixed and mobile networks,
as well as risks associated with litigation and disputes);
■
■
Financial risks;
Regulatory and Compliance risks.
Consolidated financial statements of the
TIM Group
Note 3
Scope of consolidation
163
NOTE 4
GOODWILL
Goodwill shows the following breakdown and changes for 2020 and 2021:
(million euros)
12/31/2019
Increase
Decrease Impairments
Domestic
Brazil
Other Operations
Total
22,231
852
—
23,083
11
11
Exchange
differences
—
(247)
—
12/31/2020
22,242
605
—
22,847
—
—
(247)
(million euros)
12/31/2020
Increase
Decrease Impairments
Exchange
differences
12/31/2021
Domestic
Brazil
Other Operations
Total
22,242
605
—
22,847
2
2
(4,120)
(165)
(165)
(4,120)
4
4
18,124
444
—
18,568
In accordance with IAS 36, goodwill is not subject to amortization, but is tested for impairment on at least an
annual basis, when preparing the company’s consolidated financial statements.
In 2021, Goodwill fell by 4,279 million euros, from 22,847 million euros at the end of 2020 to 18,568 million
euros at December 31, 2021.
More specifically, goodwill for the Domestic Cash Generating Unit drops by 4,120 million euros as a result of the
impairment following testing performed at December 31, 2021.
The change for 2021 also includes:
■ with reference to the Brazil Cash Generating Unit, a decrease of 165 million euros following the
deconsolidation of I-Systems S.A. (formerly FiberCo Soluções de Infraestrutura S.A.), a company set up by
the Brazilian subsidiary TIM S.A. for the segregation of its network assets and the provision of
infrastructure services. The deconsolidation is a consequence of the completion, in November 2021, of the
agreement between TIM S.A. and IHS Fiber Brasil - Cessão de Infraestruturas Ltda. which resulted in the
dilution from 100% to 49% of TIM S.A.'s investment in I-Systems S.A.. I-Systems S.A. Is now accounted for
using the equity method. In addition, the item increased by 4 million euros due to the positive exchange
rate difference relating to the Goodwill of the Cash Generating Unit;
■ with reference to the Domestic Cash Generating Unit, an increase of 2 million euros relating to the
recognition of provisional goodwill connected with the acquisition by Olivetti S.p.A. of 100% of Staer
Sistemi S.r.l. completed in September 2021.
The gross carrying amounts of goodwill and the relative accumulated impairment losses from January 1, 2004
(date of allocation to the Cash-Generating Units – CGUs)) to December 31, 2021 and 2020 can be summarized
as follows:
(million euros)
Domestic
Brazil
Other Operations
Total
12/31/2021
Accumulated
impairment
losses
Net
carrying
amount
Gross
carrying
amount
12/31/2020
Accumulated
impairment
losses
(20,565)
(147)
—
(20,712)
18,124
444
—
18,568
38,687
751
—
39,438
(16,445)
(146)
—
(16,591)
Gross
carrying
amount
38,689
591
—
39,280
Net
carrying
amount
22,242
605
—
22,847
The figures for the Brazil CGU are stated in euros, converted at the spot exchange rate at the closing date of
the financial statements; the carrying amount of goodwill for the CGU corresponds, at December 31, 2021, to
2,803 million reais (3,854 million reais at December 31, 2020).
The impairment test was carried out on two levels. At a first level, the recoverable amount of the assets
attributed to the individual CGUs to which goodwill is allocated was estimated; at a second level, the Group’s
activities were considered as a whole.
Consolidated financial statements of the
TIM Group
Note 4
Goodwill
164
The cash generating units (or groups of units) to which goodwill is allocated are as follows:
Segment
Domestic
Brazil
Cash-Generating Units (or groups of units)
Domestic
Brazil
According to the applicable accounting rules, the “recoverable value” of the CGUs was equal to the higher of
“fair value net of disposal costs” and “value in use”.
At December 31, 2020, the value configuration used to determine the recoverable amount of the Domestic
CGU was the value in use. The value configuration instead used to determine the recoverable amount at
December 31, 2021 of the Domestic CGU is the fair value estimated on the basis of the income approach,
insofar as this is considered able to best maximize the value of the Group’s activities (the “market participant
perspective”), also reflecting interventions on costs in view of a potential future new, different business
structure.
For the Brazil CGU, the value configured used is the fair value on the basis of market capitalization at the end
of the period.
The values are expressed in local currency, and hence in EUR for the Domestic CGUs and BRL for the Brazil
CGU. For the Brazil CGU, the recoverable amount of the assets was denominated in the functional currency
and subsequently translated at the spot exchange rate at the reporting date.
For the Domestic CGU, the estimate of fair value on the basis of the income approach was prepared in
compliance with IAS 36, valuation principles and best practice, with reference to the flows of the 2022-2024
Industrial Plan, which is based on the final results of 2021: (i) it reflects realistic expectations regarding future
evolutions; (ii) it brings into play careful cost cutting actions as preparation for the future business structure; (iii)
it maintains the perspective of use of assets of the domestic market continuing on with the same conditions as
at 12.31.2021. The expected cash flows reported in the 2022-2024 Industrial Plan approved by the Board of
Directors have been critically analyzed and, with the support of expert and industrial appraisers, the average
representativity has been assessed. Expected average cash flows for the 2022-2024 Industrial Plan were
extrapolated for an additional two years, for which future cash flows were explicitly forecast for a period of five
years (2022-2026). The extrapolation of data for 2025-2026 was necessary in order to intercept market,
competition and industrial trends that will become manifest beyond the time horizon of the Industrial Plan to
be captured. It is specified that where inputs are present that cannot be observed, the fair value thus
determined is assigned as level 3 of the fair value hierarchy, as envisaged by IFRS 13 - Fair value measurement.
As regards the estimate of the terminal value, the sustainable long-term cash flow was assumed to be the
extrapolation of the estimated cash flow at 2026, adjusted as necessary to take into consideration a suitable
level of long-term capital expenditure, normalized by the effects tied to the development of innovative
technology projects in place during the plan years. Furthermore, with specific reference to the incremental
share of the value deriving from 5G license use and therefore from the development of new and innovative
business areas, a measurement model has been adopted that takes into account the net incremental flows for
a defined period of time which is based on the duration of the license. This approach is consistent with the
need to include in the configuration of value, on one hand the outflows deriving from the payment of the
license and the capex to support its development (as per the Industrial Plan), and on the other the positive net
flows from the incremental business component of the license acquisition that will develop over a broad period
of time and over the five years of explicit forecast.
The cost of capital used to discount the future cash flows in the estimates of fair value for the Domestic CGU:
■ was estimated using the Capital Asset Pricing Model (CAPM), which is one of the generally accepted
application criteria referred to in IAS 36;
■
reflects current market estimates of the time value of money and the specific risks associated with the
asset groups; includes appropriate yield premiums for country risk;
■ was calculated using comparative market parameters to estimate the “Beta coefficient” and the
weighting coefficient of the equity and debt capital components;
For the Domestic CGU it was as follows:
■
■
■
the weighted average cost of capital (WACC rate) used to discount the future cash flows and the
equivalent rate before tax;
the growth rate used to estimate the residual value after the explicit forecast period (the G-Rate),
expressed in nominal terms and related to the cash flows in their functional currency;
details are provided of the implicit capitalization rates resulting from the difference between the cost of
capital, after tax, and the G-Rate.
Consolidated financial statements of the
TIM Group
Note 4
Goodwill
165
Principal parameters for the estimates of fair value
WACC
WACC before tax
Growth rate beyond the explicit period (g)
Capitalization rate after tax (WACC-g)
Capitalization rate before tax (WACC-g)
Capex/Revenues, perpetual
Domestic
5.12 %
6.71 %
0.35 %
4.77 %
6.36 %
15.75 %
The growth rate in the terminal value “g” of the Domestic CGU was estimated taking into account the
expected evolution of demand for the various business areas, overseen in terms of investments and
competences also by the subsidiaries Noovle and FiberCop. The growth rate thus estimated falls within the
range of growth rates applied by analysts who monitor TIM shares.
The phase of capital expenditure, competitive positioning and the technological infrastructure operated was
taken into account in estimating the level of investment needed to sustain the perpetual development of cash
flows after the explicit forecast period.
The recoverable amount determined on the basis of the Fair Value estimated on the basis of the income
approach, highlighted a value reduction of 4,120 million euros of goodwill attributed to the Domestic Cash
Generating Unit.
The difference between the recoverable amounts and the net carrying amounts of the CGUs considered
totaled:
(million euros)
Difference between recoverable and net carrying amounts
Domestic
-4,120
Brazil
+527
Therefore, in light of the foregoing, in 2021, impairment was seen in the amount of -4,120 million euros relative
to the Domestic CGU, while the goodwill values booked in relation to the Brazil CGU are confirmed, showing a
positive difference of +527 million euros between the book value and the fair value calculated on the basis of
market cap at December 31, 2021.
Relative to the Domestic CGU, a structural deterioration of the relevant parameters and notably the WACC
may call for further impairment.
With regard to the Brazil CGU, the change in the price per share, compared to the reference quotation
considered for the purposes of the financial statements, which would make the recoverable value equal to the
carrying amount is equal to -10.5%.
The second level impairment test, net of the impairment recorded on the Domestic CGU, revealed a
recoverable amount that exceeded the book value of the Group’s business as a whole, thereby not showing
any further need for impairment.
NOTE 5
INTANGIBLE ASSETS WITH A FINITE USEFUL
LIFE
This item increased by 407 million euros compared to December 31, 2020. The breakdown and movements are
as follows:
(million euros)
12/31/2019 Investments
12/31/2020
Disposals
Depreciation
and
amortization
Impairment
(losses) /
reversals
Exchange
differences
Other
changes
Industrial patents
and intellectual
property rights
Concessions, licenses,
trademarks and
similar rights
Other intangible
assets
Work in progress and
advance payments
Total
2,100
649
(1,152)
(195)
387
1,789
4,398
3
1,166
7,667
6
542
1,197
(473)
(2)
(1,627)
—
(1)
(1)
(288)
(1)
(12)
(496)
2
4
(393)
—
3,645
4
1,302
6,740
Consolidated financial statements of the
TIM Group
Note 4
Goodwill
166
(million euros)
12/31/2020 Investments
Depreciation
and
amortization
Impairment
(losses) /
reversals
Disposals
Exchange
differences
Other
changes
12/31/2021
Industrial patents
and intellectual
property rights
Concessions, licenses,
trademarks and
similar rights
Other intangible
assets
Work in progress and
advance payments
Total
1,789
3,645
4
1,302
6,740
731
191
1
963
1,886
(1,043)
(466)
(2)
4
6
(1,511)
—
(3)
(3)
3
13
(430)
22
452
1,933
3,376
3
1,835
7,147
Investments in 2021 amounted to 1,886 million euros (1,197 million euros in 2020) and included 216 million
euros in internally generated assets (231 million euros in 2020). Further details are provided in the Note
“Internally generated assets”.
Industrial patent rights and intellectual property rights as of December 31, 2021 are essentially represented
by application and plant operation software purchased outright and with user licenses, they are amortized
over a period of between 2 and 6 years and mainly refer to TIM S.p.A. (1,280 million euros), the Brazil Business
Unit (392 million euros) and Noovle S.p.A. (163 million euros).
In 2021, for the Parent Company TIM S.p.A., the launch of the Digital Enterprise project demonstrated the need
to verify the actual and future duration of the systems impacted. Therefore, IT applications were analyzed and
it was verified that their actual lifecycle amounts to around 6 years. Thus, the amortization period was revised
for both fixed and mobile IT software development assets, increasing it from 3 to 6 years. In 2021, this had an
impact of around 115 million euros in lesser amortization. In 2022 and 2023 the estimated impact, calculated
on the stock of assets at December 31, 2021, amounts to around 69 million euros and around 2 million euros,
respectively in lesser amortization.
Concessions, licenses, trademarks and similar rights at December 31, 2021 mainly refer to the residual cost of
telephone licenses and similar rights (2,620 million euros for TIM S.p.A. and 716 million euros for the Brazil
Business Unit). Compared to December 31, 2020, this item showed a decrease of 269 million euros mainly due
to amortization for the year (466 million euros) partially offset by investments for the year (191 million euros)
essentially related to the recognition of the value of the 2.3 MHz and 26 GHz frequencies that the TIM Brasil
group was awarded in November 2021 and thanks to which it will be able to offer 4G and 5G mobile services.
The assignment of the rights to use these frequencies also entailed commercial commitments toward a new
entity (EACE- Entidade Administradora da Conectividade de Escolas) which will be responsible for the
development of some connectivity projects for Brazilian schools.
The residual amount of telephone licenses and similar rights in operation at December 31, 2021 (3,336 million
euros) and their useful lives are detailed below:
Type
Useful life
Maturity
Residual amount at
12/31/2021
Amortization
expense for 2021
TIM S.p.A.:
UMTS
UMTS 2100 MHz
WiMax
LTE 1800 MHz
LTE 800 MHz
LTE 2600 MHz
1452-1492 MHz band
900 and 1800 MHz band
3600-3800 MHz band (5G)
26.5-27.5 GHz band (5G)
TIM Brasil group:
GSM and 3G (UMTS)
4G (LTE - 700 MHz)
5G (2.3 GHz and 26 GHz)
(million euros)
(years)
(million euros)
—
—
1
68
480
53
132
438
1,420
28
34
494
188
18
12
15
18
17
17
14
11
19
19
15
15
20
12/31/2021
12/31/2021
05/31/2023
12/31/2029
12/31/2029
12/31/2029
12/31/2029
12/31/2029
12/31/2037
12/31/2037
From 2023 to 2031
2030
2041
134
7
1
9
60
7
16
55
89
2
20
62
—
Work in progress and advance payments mainly relate to:
■
the Parent Company in the amount of 1,375 million euros, including 680 million euros relating to the rights
to use the 694-790 MHz (5G) frequencies held by TIM S.p.A. not yet operating and 240 million euros
relating to the extension, to December 31, 2029, of the expiry date of the rights to use the 2100 MHz
frequency, originally scheduled for December 31, 2021;
Consolidated financial statements of the
TIM Group
Note 5
Intangible assets with a finite useful life
167
■
the Brazil Business Unit for 406 million euros, of which 379 million euros relating to the recognition of the
value of the 3.5 GHz frequencies that the TIM Brasil group was awarded in November 2021 and thanks to
which it will be able to implement mobile services with 5G technology. The allocation of the rights to use
these frequencies also entailed commercial commitments toward Empresa Administradora da Faixa
(EAF), which will be responsible for the development of infrastructure projects.
The item also includes work in progress mainly related to software developments and investments for the
digital evolution of Network Infrastructures.
Depreciation and impairment losses have been recorded in the income statement as components of EBIT.
The gross carrying amount, accumulated impairment losses and accumulated amortization at December 31,
2021 and December 31, 2020 can be summarized as follows:
(million euros)
12/31/2020
Gross
carrying
amount
Accumulated
impairment
losses
Accumulated
amortization
Net
carrying
amount
Industrial patents and intellectual property rights
Concessions, licenses, trademarks and similar rights
Other intangible assets
Work in progress and advance payments
Total intangible assets with a finite useful life
10,852
8,100
460
1,302
20,714
—
—
—
—
—
—
3)
5)
6)
1,789
3,645
4
1,302
6,740
(9,06
(4,45
(45
(13,97
4)
(million euros)
12/31/2021
Gross
carrying
amount
Accumulated
impairment
losses
Accumulated
amortization
Net
carrying
amount
Industrial patents and intellectual property rights
Concessions, licenses, trademarks and similar rights
Other intangible assets
Work in progress and advance payments
Total intangible assets with a finite useful life
11,605
8,304
464
1,835
22,208
(9,67
(4,92
(46
2)
8)
1)
—
—
—
—
—
—
(15,06
1)
1,933
3,376
3
1,835
7,147
With regard to the gross carrying amounts of intangible assets with a finite useful life, in 2021, disposals of 442
million euros were made by the Parent Company, relating to intellectual property rights, fully amortized, which
mainly concerned releases that were obsolete following the introduction of the new ERP S4HANA software
system.
NOTE 6
TANGIBLE ASSETS
Property, plant and equipment owned
This item increased by 170 million euros compared to December 31, 2020. The breakdown and movements are
as follows:
(million euros)
12/31/2019 Investments
Depreciation
and
amortization
Impairment
(losses) /
reversals
Disposals
Exchange
differences
Other
changes
12/31/2020
Land
Buildings (civil and
industrial)
Plant and
equipment
Manufacturing and
distribution
equipment
Other
Construction in
progress and
advance payments
Total
226
577
9
18
11,974
1,491
26
350
4
102
(35)
(2,115)
(11)
(140)
(3)
(1)
(7)
(3)
(5)
229
577
23
(623)
486
11,206
(1)
(36)
3
34
22
309
858
14,011
514
2,138
(2,301)
(8)
(8)
(2)
(14)
(34)
(701)
(530)
16
798
13,141
Consolidated financial statements of the
TIM Group
Note 5
Intangible assets with a finite useful life
168
(million euros)
12/31/2020 Investments
Depreciation
and
amortization
Impairment
(losses) /
reversals
Disposals
Exchange
differences
Other
changes
12/31/2021
Land
Buildings (civil and
industrial)
Plant and
equipment
Manufacturing and
distribution
equipment
Other
Construction in
progress and
advance payments
Total
229
577
2
23
(35)
1
32
232
597
11,206
1,885
(2,095)
(30)
21
267
11,254
22
309
4
121
(9)
(145)
798
13,141
630
2,665
0
(2,284)
—
(30)
2
81
19
367
(588)
(205)
842
13,311
1
2
24
Land comprises both built-up land and available land and is not subject to depreciation. The figure at
December 31, 2021 refers primarily to TIM S.p.A. (187 million euros) and Noovle (32 million euros).
Buildings (civil and industrial) mainly includes buildings for industrial use hosting telephone exchanges, or for
office use and light constructions. The balance at December 31, 2021 is mainly attributable to TIM S.p.A. (438
million euros) and Noovle S.p.A. (131 million euros).
item Plant and machinery
infrastructure used for the provision of
The
telecommunications services (transport and distribution of voice/data traffic). The figure at December 31, 2021
is mainly attributable to TIM S.p.A. (5,911 million euros), to FiberCop S.p.A. (3,469 million euros) and to the
Brazil Business Unit (1,501 million euros).
includes the technological
Manufacturing and distribution equipment consists of instruments and equipment used for the operation and
maintenance of plant and equipment and refers mainly to TIM S.p.A..
The item Other mainly consists of hardware for the functioning of the Data Center and for work stations,
furniture and fixtures and, to a minimal extent, transport vehicles and office machines.
Tangible assets in progress and advance payments refer to the internal and external costs incurred for the
acquisition and internal production of tangible assets, which are not yet in use.
2021 investments include 259 million euros of internally generated assets (271 million euros in 2020); further
details are provided in the Note “Internally generated assets”.
Depreciation, impairment losses and reversals have been recorded in the income statement as components of
EBIT.
Depreciation for the years 2021 and 2020 was calculated on a straight-line basis over the estimated useful lives
of the assets according to the following minimum and maximum rates:
Buildings (civil and industrial)
Plant and equipment
Manufacturing and distribution equipment
Other
2% - 5.55%
3% - 50%
20%
10% - 50%
Furthermore, in 2021 depreciation included the estimated acceleration of depreciation as a consequence of
both the switch-off of 3G in Italy, expected for June 2022 (equal to approximately 23 million euros) and the
switch-off of part of the copper access network in Italy, hypothesized for end 2030 (equal to 31 million euros).
Other changes included 192 million euros relating to the deconsolidation of the Brazilian company I-Systems
S.A. (formerly FiberCo Soluções de Infraestrutura S.A.).
The gross carrying amount, accumulated impairment losses and accumulated depreciation at December 31,
2021 and December 31, 2020 can be summarized as follows:
(million euros)
Land
Buildings (civil and industrial)
Plant and equipment
Manufacturing and distribution equipment
Other
Construction in progress and advance payments
Total
12/31/2020
Gross
carrying
amount
232
1,907
69,814
324
3,152
806
76,235
Accumulated
impairment
losses
(3)
—
(12)
(1)
(2)
(8)
(26)
Accumulated
depreciation
(1,330)
(58,596)
(301)
(2,841)
(63,068)
Net
carrying
amount
229
577
11,206
22
309
798
13,141
Consolidated financial statements of the
TIM Group
Note 6
Tangible assets
169
(million euros)
Land
Buildings (civil and industrial)
Plant and equipment
Manufacturing and distribution equipment
Other
Construction in progress and advance payments
Total
12/31/2021
Accumulated
impairment
losses
Accumulated
depreciation
(3)
—
(12)
(1)
(2)
(2)
(20)
(1,363)
(59,269)
(310)
(2,936)
(63,878)
Gross
carrying
amount
235
1,960
70,535
330
3,305
844
77,209
Net
carrying
amount
232
597
11,254
19
367
842
13,311
With regard to the gross carrying amounts of tangible assets, it is worth mentioning that in 2021, the Parent
Company TIM S.p.A. carried out disposals for a total value of 535 million euros, mainly in relation to fully
depreciated assets. The assets most affected were: access networks (155 million euros), switching systems
(148 million euros), UMTS transmission plants and network transmission devices (71 million euros),
underground fiber optic (57 million euros), office furniture, furnishings and machines (42 million euros) and
rented terminals (31 million euros).
NOTE 7
RIGHTS OF USE ASSETS
The item decreased by 145 million euros compared to December 31, 2020. The breakdown and movements are
as follows:
(million euros)
12/31/2019 Investments Increases in
lease
contracts
Depreciation
and
amortization
Disposals
Exchange
differences
Other
changes
12/31/2020
Property
Plant and equipment
Other tangible assets
Construction in
progress and advance
payments
Total
3,398
1,901
151
44
5,494
12
30
32
74
869
396
23
(397)
(252)
(112)
(234)
(39)
(4)
(129)
(335)
(2)
1,288
(688)
(350)
(466)
(730)
403
(8)
(25)
(360)
2,911
1,909
121
51
4,992
(million euros)
12/31/2020 Investments Increases in
lease
contracts
Depreciation
and
amortization
Disposals
Exchange
differences
Other
changes
12/31/2021
Property
Plant and equipment
Other tangible assets
Construction in
progress and advance
payments
Intangible assets
Total
2,911
1,909
121
51
4,992
35
25
19
79
298
328
35
2
4
667
(343)
(314)
(37)
(1)
(695)
4
11
(14)
(5)
(2)
(43)
(107)
2
(42)
(21)
15
(190)
2,848
1,847
119
30
3
4,847
2021 capital expenditures mainly refer to the Domestic Business Unit and are essentially related to the
acquisition of IRU transmission capacity and improvements and incremental expenses incurred on leased
property and non-property assets.
The increases in finance leasing contracts in 2021, equal to 667 million euros, refer in particular to the Brazil
Business Unit (441 million euros) and the Domestic Business Unit (226 million euros).
These increases include the higher value of the rights of use recorded as a result of new leases, increases of
lease payments and renegotiations of agreements existing both land and buildings for office use and industrial
relationship over time, to infrastructure sites for the mobile telephone network infrastructure and network.
Amortization and impairment losses have been recorded in the income statement as components of EBIT.
Consolidated financial statements of the
TIM Group
Note 6
Tangible assets
170
The disposals are representative of the carrying amount of the assets from lease agreements that terminated
early.
Other changes included, inter alia, transfers to operating activities and the lower value of the rights of use
recorded as a result of contractual changes during the year. In 2021 they mainly refer to the Brazil Business
Unit.
The item Property includes buildings and land under passive leases and the related building adaptations,
essentially attributable to the Parent Company (2,415 million euros) and the Brazil Business Unit (324 million
euros) and Noovle S.p.A. (89 million euros).
The item Plant and equipment mainly includes rights of use on infrastructures for telecommunications
services. These refer to the Brazil Business Unit (928 million euros), the Parent (610 million euros), the Telecom
Italia Sparkle group (184 million euros) and FiberCop S.p.A. (124 million euros). This includes, inter alia, the
recognition of the value of the telecommunications towers sold by the TIM Brasil group to American Tower do
Brasil and subsequently repurchased in the form of a finance lease.
The item Other tangible assets mainly comprises the leases on motor vehicles. In addition, the right of use for
the lease of the business unit relating to all the assets organized for the full performance of the "construction",
"delivery" and "assurance" activities for telecommunications networks and equipment, deriving from the
contract entered into between TIM Servizi Digitali S.p.A. and Sittel S.p.A., is recorded herein for an amount of 17
million euros. The corresponding financial lease liability for the obligation to comply with the contractual
payments is recorded against the right of use.
The item Intangible assets includes the recording as lease, starting 2021, of a Software as a Service (SaaS)
contract, in exchange for which TIM S.p.A. has acquired the right to make exclusive use of software licenses
residing on partitions of third party hardware platforms dedicated exclusively to the Company.
The gross carrying amount, accumulated impairment losses and accumulated depreciation at December 31,
2021 and December 31, 2020 can be summarized as follows:
(million euros)
Property
Plant and equipment
Other
Construction in progress and advance payments
Total
(million euros)
Property
Plant and equipment
Other
Construction in progress and advance payments
Intangible assets
Total
Gross
carrying
amount
5,075
3,047
267
51
8,440
12/31/2020
Accumulated
impairment
losses
Accumulated
depreciation
(13)
(271)
(2,151)
(867)
(146)
(284)
(3,164)
12/31/2021
Gross
carrying
amount
5,327
3,304
291
30
4
8,956
Accumulated
impairment
losses
(13)
(277)
—
(290)
Accumulated
depreciation
(2,466)
(1,180)
(172)
(1)
(3,819)
Net
carrying
amount
2,911
1,909
121
51
4,992
Net
carrying
amount
2,848
1,847
119
30
3
4,847
Impairment losses on “Plant and equipment”, mainly relating to prior years, refers to the Indefeasible Rights of
Use (IRU) for the transmission capacity and cables for international connections acquired by the Telecom Italia
Sparkle group.
With reference to the gross values of rights of use of third party assets, in 2021 the Parent Company TIM S.p.A.
carried out disposals for a total value of 650 million euros, relating to rights of use of IRU fiber (607 million
euros), leased properties (25 million euros), leased vehicles (9 million euros), base transceiver stations (7 million
euros) and leasehold improvements (2 million euros).
Consolidated financial statements of the
TIM Group
Note 7
Rights of use assets
171
NOTE 8
INVESTMENTS
Investments in associates and joint ventures accounted for
using the equity method
Investments in associates and joint ventures accounted for using the equity method are reported below in
detail.
(million euros)
I-Systems S.A.
Satispay S.p.A.
NordCom S.p.A.
W.A.Y. S.r.l.
QTI S.r.l
Tiglio I S.r.l.
Other
Total Associates
INWIT S.p.A.
TIMFin S.p.A.
Total Joint Ventures
Total investments accounted for using the equity method
12/31/2021
253
20
6
4
2
—
3
288
2,669
22
2,691
2,979
12/31/2020
—
—
5
4
—
1
3
13
2,713
2
2,715
2,728
(b)
(a+b)
(a)
The changes in this item are broken down as follows:
(million euros)
12/31/2019 Investments
Disposals and
reimbursements
of capital
Valuation
using equity
method
Other
changes
12/31/2020
NordCom S.p.A.
W.A.Y. S.r.l.
Tiglio I S.r.l.
Other
Total Associates
INWIT S.p.A.
TIMFin S.p.A.
Total Joint Ventures
Total investments accounted for
using the equity method
5
3
1
2
11
—
—
—
11
1
1
3
3
4
1
—
1
(238)
(1)
(239)
(23
8)
—
3,610
3,610
3,610
(659)
(659)
(659)
5
4
1
3
13
2,713
2
2,715
2,728
(million euros)
12/31/2020 Investments
Disposals and
reimbursements
of capital
Valuation
using equity
method
Other
changes
12/31/2021
I-Systems S.A.
Satispay S.p.A.
NordCom S.p.A.
W.A.Y. S.r.l.
QTI S.r.l
Tiglio I S.r.l.
Other
Total Associates
INWIT S.p.A.
TIMFin S.p.A.
Total Joint Ventures
Total investments accounted for
using the equity method
5
4
1
3
13
2,713
2
2,715
2,728
20
2
1
23
24
24
47
(2)
1
(1)
(1)
—
(1)
(1)
(44)
(4)
(48)
(49)
255
(1)
254
—
—
254
253
20
6
4
2
—
3
288
2,669
22
2,691
2,979
The “other changes” for 2021 mainly include the carrying amount of the investment in I-Systems S.A. (formerly
FiberCo Soluções de Infraestrutura S.A.) following the deconsolidation of the company.
Consolidated financial statements of the
TIM Group
Note 8
Investments
172
In November 2021, once the regulatory authorization process had been completed, the agreement was
finalized between TIM S.A. (Brazil Business Unit) and IHS Fiber Brasil - Cessão de Infraestruturas Ltda. (“IHS
Brasil”), in order to acquire an equity stake in FiberCo Soluções de Infraestrutura S.A. ("FiberCo"), a company
established by TIM S.A. for the segregation of network assets and the provision of infrastructure services. The
closing of the transaction resulted in the dilution from 100% to 49% of TIM S.A.'s investment in I-Systems,
which is now accounted for by the TIM Group using the equity method.
Shareholder relations are governed by a shareholders' agreement.
The operation was worth 1.68 billion reais, divided up into a primary component of 0.58 billion reais, for the
treasury of I-Systems, and a secondary component of 1.10 billion reais, paid to TIM S.A.. The enterprise value of
I-Systems was established at 2.71 billion reais and the equity value, after the contribution of the primary
component, was set at 3.29 billion reais. The operation also considers possible additional earnings deriving
from an earn-out component.
In addition, under the scope of the Operation, TIM S.A. and I-Systems have stipulated an agreement to develop
the Fiber-to-the-Site (FTTS) infrastructure to connect TIM sites in the areas in which FiberCo will be developing
the new infrastructure granting access to fiber optic broadband.
The "Investments" for 2021 include both the acquisition of the stake in Satispay by TI Ventures S.r.l. in March
2021, and the payments, by TIM S.p.A., to TIMFin S.p.A.
In 2021, “valuation using the equity method” of the investment in INWIT includes:
■
■
the portion pertaining to the positive economic result of the investee including, the greater amortization
charge, at consolidated level, of the assets to which part of the greater value deriving from the corporate
integration transaction of Vodafone Towers S.r.l. in INWIT (43 million euros) has been allocated;
the reduction in the carrying amount of the equity investment for dividends received in the year (87 million
euros).
Following a series of operations carried out last year, at present, TIM holds a 30.2% share in INWIT S.p.A.
indirectly, through a holding company called Daphne 3, controlled with a 51% stake. The associate in the
holding company is a consortium of institutional investors led by Ardian. The holding company has taken over
from TIM - in the shareholders' agreement already stipulated between TIM and Vodafone Europe, by virtue of
which, joint control is exercised over INWIT.
Essential information on the shareholders' agreements (i) between TIM and Vodafone (now Daphne 3/Central
Tower Holding Company) and (ii) between TIM and Ardian can be consulted on the INWIT website (inwit.it).
The list of investments accounted for using the equity method is presented in the Note "List of companies of
the TIM Group".
Investments in associates accounted for using the equity method of the TIM Group are not material either
individually or in aggregate form.
Investments in structured entities
The TIM Group does not hold investments in structured entities.
Other investments
Other investments refer to the following:
(million euros)
Other changes
12/31/2020
12/31/2019 Investments Disposals and
reimbursements
of capital
Valuation at
fair value
Fin.Priv. S.r.l.
Northgate CommsTech
Innovations Partners L.P.
Other
Total
21
19
12
52
6
1
7
(5)
—
—
(5)
—
16
25
13
54
(million euros)
12/31/2020 Investments
Disposals and
reimbursements
of capital
Valuation at
fair value
Other
changes
12/31/2021
Fin.Priv. S.r.l.
Northgate CommsTech
Innovations Partners L.P.
UV T-Growth
SECO S.p.A.
Other
Total
16
25
13
54
1
12
38
51
6
(9)
54
51
22
17
12
92
13
156
—
—
In particular, it should be noted that, during the year 2021:
■
the subsidiary Olivetti S.p.A. acquired 9.6% of the share capital of SECO S.p.A., the company specialized in
the miniaturization of computers and in the Internet of Things sector;
■ TIM S.p.A. has subscribed shares in the UV T-Growth venture capital fund for 12 million euros.
Consolidated financial statements of the
TIM Group
Note 8
Investments
173
At December 31, 2021, the TIM Group had a subscription commitment for units:
■
in the Northgate CommsTech Innovations Partners L.P. fund for 8 million USD, equal to approximately 7
million euros at the exchange rate as at December 31, 2021;
■ of the UV T-Growth fund in the amount of 48 million euros.
As permitted by IFRS 9, TIM now measures Other Investments at “fair value through other comprehensive
income (FVTOCI)”.
Further details on Financial Instruments are provided in the Note "Supplementary disclosure on financial
instruments".
NOTE 9
NON-CURRENT AND CURRENT FINANCIAL
ASSETS
Non-current and current financial assets were broken down as follows:
(million euros)
Other non-current financial assets
Securities other than investments
Receivables from employees
Hedging derivatives relating to hedged items classified as non-current
assets/liabilities of a financial nature
Non-hedging derivatives
Other financial receivables
Financial receivables for lease contracts
Total non-current financial assets
Securities other than investments, other financial receivables and other
current financial assets
Securities other than investments
Measured at amortized cost (AC)
Measured at fair value through other comprehensive income (FVTOCI)
Measured at fair value through profit or loss (FVTPL)
Financial receivables and other current financial assets
Liquid assets with banks, financial institutions and post offices (with
maturity over 3 months)
Receivables from employees
Hedging derivatives relating to hedged items classified as current
financial assets/liabilities
Non-hedging derivatives
Other short-term financial receivables
Financial receivables for lease contracts
Cash and cash equivalents
(a)
(b)
(c)
(d)
Total current financial assets
Financial assets relating to Discontinued operations/Non-current
assets held for sale
Total non-current and current financial assets
e=(b+c+d)
(f)
g=(a+e+f)
12/31/2021
12/31/2020
—
39
1,935
100
211
2,285
45
2,330
—
1,515
734
2,249
—
12
80
41
9
142
2,391
56
6,904
9,351
—
11,681
—
40
1,970
44
213
2,267
43
2,310
—
767
325
1,092
—
13
97
50
2
162
1,254
55
4,829
6,138
—
8,448
Further details on Financial Instruments are provided in the Note "Supplementary disclosure on financial
instruments".
Financial receivables for lease contracts refer to:
■
finance leases on user rights and equipment;
Consolidated financial statements of the
TIM Group
Note 8
Investments
174
■ commercial offers for TIM Consumer and Business customers involving the rental of ADSL routers;
■ agreements for the sale of network infrastructure in IRU with deferred collection over time recognized
using the financial method envisaged by IFRS 16 given the contractual term substantially close to the
economic life of the asset;
■
lease contracts for commercial products with customers. The financial receivables for lease assets are
offset by the financial debt for the corresponding leases payable.
Hedging derivatives relating to hedged items classified as non-current assets/liabilities of a financial
nature mainly refer to the mark-to-market spot valuation component of the hedging derivatives, whereas
hedging derivatives relating to hedged items classified as current assets/liabilities of a financial nature
refer to accrued income on such derivative contracts.
Non-hedging derivatives consist mainly of the mark-to-market component of the non-hedging derivatives of
the Brazil Business Unit. More specifically, they include 72 million euros in relation to the option to subscribe
shares of C6 Bank with which TIM S.A. entertains commercial relations. The figure also includes IRS derivatives
of 18 million euros belonging to fair value hedges of bond loans in euros, discontinued starting from June 2021
due to the failure of the prospective efficiency tests carried out at December 31, 2021.
Further details are provided in the Note “Derivatives”.
Other financial receivables refer 205 million euros to the loan that TIM S.p.A. is owed by Ardian (through the
financial vector Impulse I) following the transaction by means of which TIM S.p.A. conferred 30.2% of INWIT’s
shares to Daphne 3.
Securities other than investments included in current financial assets relate to:
■ 1,515 million euros of listed securities, of which 840 million euros of Italian and European treasury bonds
purchased by Telecom Italia Finance S.A. as well as 675 million euros of bonds purchased by Telecom Italia
Finance S.A. with different maturities, all with an active market and consequently readily convertible into
cash. Under IFRS 9 and consistently with the Business model, such securities are classified as financial
assets measured at fair value through other comprehensive income (FVTOCI). The purchases of the above
government bonds, which, pursuant to Consob Communication no. DEM/11070007 of August 5, 2011,
represent investments in “Sovereign debt securities”, have been made in accordance with the Guidelines
for the “Management and control of financial risk” adopted by the TIM Group;
■ 734 million euros of investments in monetary funds by the Brazil Business Unit, which, under IFRS 9, are
classified as financial assets measured at fair value through profit or loss (FVTPL).
On the basis of two securities lending agreements signed with Telecom Italia Finance S.A. on November 27,
2019 and thereafter renewed on April 28, 2020, TIM S.p.A. received on loan until February 2, 2021 (renewable
term) 98 million euros (nominal) of BTP 03/01/2023 and 150 million euros of BTP 04/15/2021; starting
December 1, 2019, TIM S.p.A loans these securities to the counterparty NatWest.
On January 27, 2021, TIM S.p.A. renewed the securities lending agreement in place with Telecom Italia Finance
S.A., which envisages the lending until February 15, 2023 of 98 million euros (nominal) of BTP 3/1/2023.
On January 29, 2021, TIM S.p.A. borrowed until October 5, 2023 (subject to renewal) 24 million euros (nominal)
in BTP 10/15/2023 and 67.5 million euros (nominal) in BTP 2/1/2026; furthermore TIM S.p.A. lent the
counterparty NatWest said securities in compliance with the agreement stipulated on December 21, 2020.
In addition, Telecom Italia Finance S.A. also has additional securities lending contracts with banking
counterparties concerning securities worth (a nominal) 171 million euros.
From an accounting standpoint, in compliance with IAS/IFRS, the assets are shown exclusively in the financial
statements of Telecom Italia Finance S.A., which retains the risks and benefits associated with the position.
Further details are provided in the Note “Accounting policies”.
Cash and cash equivalents increased by 2,075 million euros compared to December 31, 2020 and were broken
down as follows:
(million euros)
Liquid assets with banks, financial institutions and post offices
Checks, cash and other receivables and deposits for cash flexibility
Securities other than investments (due within 3 months)
Total
12/31/2021
6,092
—
812
6,904
12/31/2020
4,433
—
396
4,829
The different technical forms of use of available cash at December 31, 2021 had the following characteristics:
■ maturities: investments have a maximum maturity of three months;
■ counterparty risk: deposits have been made with leading high-credit-quality banks and financial
institutions with a rating of at least BBB according to Standard & Poor’s with regard to Europe, and with
leading local counterparts with regard to investments in South America;
■ country risk: deposits have been made mainly in major European financial markets.
Consolidated financial statements of the
TIM Group
Note 9
Non-current and current financial assets
175
Securities other than investments (due within 3 months) included 812 million euros (395 million euros at
December 31, 2020) of Brazilian bank certificates of deposit (Certificado de Depósito Bancário) held by the
Brazil Business Unit with premier local banking and financial institutions.
NOTE 10
MISCELLANEOUS RECEIVABLES AND OTHER
NON-CURRENT ASSETS
Compared to December 31, 2020, this item increased by 152 million euros and were broken down as follows:
(million euros)
12/31/2020
12/31/2021
Miscellaneous receivables (non-current)
Other non-current assets
Deferred contract costs
Other cost deferrals
Total
(a)
(b)
(a+b)
of which
Financial
Instruments
144
433
of which
Financial
Instruments
151
516
1,755
78
1,833
2,266
144
1,522
76
1,598
2,114
151
Further details on Financial Instruments are provided in the Note "Supplementary disclosure on financial
instruments".
Miscellaneous non-current receivables totaled 433 million euros (516 million euros at December 31, 2020) and
included Non-current income tax receivables of 147 million euros (64 million euros at December 31, 2020).
This item was mainly due to the Brazil Business Unit (379 million euros; 467 million euros at December 31,
2020).
More specifically, at December 31, 2021, the Brazil Business Unit has non-current receivables relating to indirect
tax for 137 million euros (296 million euros at December 31, 2020) and direct tax for 116 million euros (33
million euros at December 31, 2020), including receivables relating to the decision made by the Supreme
Federal Court (STF) on the waiver of collection of corporate income tax (IRPJ) and social contributions (CSLL)
on the monetary recalculation that uses the SELIC rate in cases of undue payment.
Non-current receivables also include receivables for court deposits of 116 million euros (126 million euros at
December 31, 2020).
Other non-current assets amounted to 1,833 million euros (1,598 million euros at December 31, 2020). They
mainly break down as follows:
■
Deferred contract costs of 1,755 million euros (1,522 million euros at December 31, 2020), mainly related
to the deferral of costs related to the activation and acquisitions of new contracts with customers.
Contract costs are deferred and recognized through separate profit or loss depending on the expected
term of the contractual relationship with the customers. In 2021, the expected duration of the
contractual relationship with customers went from 3 to 4 years for the mobile business and from 7 to 8
years for the fixed-line business, following an improvement to the churn on customers recorded in recent
years, as a result of the loyalty and retention actions and the drive on converging offers. The positive
impact at 31 December, 2021 amounted, at a consolidated level, to a total of 164 million euros; for the
years 2022 and 2023, with regard to the outstanding amount at 31 December, 2021, a positive impact of
103 million euros and 52 million euros respectively is estimated in reference entirely to the Parent
Company, gross of intragroup eliminations.
Total (non-current and current) deferred contract costs amounted to 2,297 million euros (2,139 million
euros at December 31, 2020) and break down as follows:
(million euros)
Deferred contract costs
Non-current deferred contract costs
Current deferred contract costs
Total
(million euros)
Deferred contract costs
Contract acquisition costs
Contract execution costs
Total
12/31/2021
12/31/2020
1,755
542
2,297
1,522
617
2,139
12/31/2021
12/31/2020
1,246
1,051
2,297
1,132
1,007
2,139
Consolidated financial statements of the
TIM Group
Note 9
Non-current and current financial assets
176
Changes to comprehensive deferred contract costs in 2021 are as follows:
(million euros)
12/31/2020
Increase
Contract acquisition costs
Contract execution costs
Total
1,132
1,007
2,139
390
250
640
Release to
income
statement
(278)
(206)
(484)
Exchange
differences and
other changes
2
—
2
12/31/2021
1,246
1,051
2,297
The deferred contract costs will be recognized in the income statement for future years and, in
particular, of around 555 million euros in 2022, based on the amount at December 31, 2021 without
taking into account the new deferred portions.
(million euros)
12/31/2021
year of recognition in the income statement
2026
2024
2023
2025
2022
Contract acquisition costs
Contract execution costs
Total
1,246
1,051
2,297
324
231
555
274
218
492
219
193
412
158
157
315
111
112
223
After
2026
160
140
300
■
Other deferred costs of 78 million euros, mainly attributable to the Parent and to companies of the Brazil
Business Unit and of the Telecom Italia Sparkle group.
NOTE 11
INCOME TAX EXPENSE (CURRENT AND
DEFERRED)
Current income tax receivables
Non-current and current income tax receivables at December 31, 2021 amounted to 226 million euros (150
million euros at December 31, 2020).
Specifically, they consisted of:
■ non-current income tax receivables of 147 million euros (64 million euros at December 31, 2020), relating to
the companies of the Brazil Business Unit (116 million euros) and the Parent TIM S.p.A. (31 million euros).
They include receivables of TIM S.A. relating to the decision of the Brazilian Supreme Federal Court on the
non-collection of corporate income tax and social contributions on the monetary recalculation that uses
the SELIC rate in cases of undue payment and receivables not transferred by the Parent Company relative
to tax and interest deriving from the recognized deductibility from IRES tax of the IRAP tax calculated on
labor costs, relating to years prior to 2012, following the entry into force of Italian Decree Law 16/2012;
■ current income tax receivables of 79 million euros (86 million euros at December 31, 2020), relating to the
companies of the Domestic Business Unit (51 million euros) and the Brazil Business Unit (26 million euros).
They include the IRES tax receivable for surplus payments and withholdings of 5 million euros and the IRAP
receivable for 29 million euros for surplus down payments made and for the benefit deriving from the
presentation of supplementary declarations following the ruling signed on August 3, 2020 with the
Revenue Agency for the application of the patent box benefit of the Parent Company TIM S.p.A..
Tax assets and deferred tax liabilities
The net balance of 3,268 million euros at December 31, 2021 (7,219 million euros at December 31, 2020) breaks
down as follows:
(million euros)
12/31/2020
12/31/2021
Deferred tax assets
Deferred tax liabilities
Total
3,513
(245)
3,268
7,496
(277)
7,219
Deferred tax assets at December 31, 2021 mainly referred to the Domestic Business Unit, at 3,427 million euros.
At December 31, 2020, deferred tax assets mainly referred to the Domestic Business Unit, at 7,383 million
euros.
Consolidated financial statements of the
TIM Group
Note 10
Miscellaneous receivables and other non-current assets
177
In the 2020 financial statements, the Parent Company TIM S.p.A. had benefited from the possibility of
realigning the tax values to the greater value of the assets booked, specifically the value of goodwill of 23,051
million euros, as envisaged by Decree Law 104/2020, Art. 110, subsections 8 and 8 bis. Accordingly, this
resulted, in exchange for payment of substitute tax in the amount of 3% of the realigned value (692 million
euros), in the possibility to deduct the tax amortization of the realigned value of 23,051 million euros over 18
years, starting 2021. These deductions, which would have generated benefits in terms of IRES and IRAP, have
been fully noted at December 31, 2020 amongst deferred tax assets in the amount of 6,569 million euros, in
view of the possibility of absorption through the Company’s future taxable income, also taking into account the
fact that IRES losses can be carried forward without time limits, where such may arise due to temporary
incapacity of taxable income.
The 2022 Budget Law (Law 234/2021, art. 160) amended the duration of the period during which amortization
of tax-recognized goodwill could be deducted, taking it to 50 years and this resulted in the writing off of 50% of
deferred tax assets for 3,285 million euros (of which 2,766 million euros for IRES and 519 million euros for IRAP),
which go beyond the time frame of visibility for absorption, which had been identified as 25 years in the 2020
financial statements. The remaining deferred IRAP tax assets for 540 million euros were also written-off,
mainly relating to the realigned goodwill in consideration of the changed assessment of the time frame for
recoverability of deferred tax assets, also determined on the basis of the 2022 - 2024 Industrial Plan of the
Parent Company TIM S.p.A. For the same reason, the Parent Company has not entered new deferred tax
assets for period tax losses. This write-off does not exclude for the future, the possibility of reversing this
impairment with the booking of all or part of the deferred tax assets where they should be deemed
recoverable.
In 2021, in accordance with art. 19 of Decree Law no. 73/2021, the Parent Company TIM S.p.A. also transformed
the deferred tax assets for tax losses carried forward and ACE surpluses (within the limit of 20% of the
impaired loans transferred) into tax credits in the amount of approximately 20 million euros; these receivables
were subsequently offset against VAT payable.
Deferred tax liabilities mainly refer to Telecom Italia Capital for 214 million euros (252 million euros at
December 31, 2020) and the Domestic Business Unit for 20 million euros (13 million euros at December 31,
2020).
Since the presentation of prepaid and deferred taxes in the financial statements takes into account the offsets
by legal entity when applicable, the composition of the gross amounts before offsets is presented below:
(million euros)
12/31/2020
12/31/2021
Deferred tax assets
Deferred tax liabilities
Total
3,999
(731)
3,268
7,931
(712)
7,219
Consolidated financial statements of the
TIM Group
Note 11
Income tax expense (current and deferred)
178
The temporary differences which made up this line item at December 31, 2021 and 2020, as well as the
movements during 2021, were as follows:
(million euros)
12/31/2021
12/31/2020 Recognized
in profit or
loss
Recognized in
equity
Change in scope
of consolidation
and other
changes
Deferred tax assets
Tax loss carryforwards (*)
Derivatives
Provision for bad debts
Provisions
Taxed depreciation and amortization
Tax realignment pursuant to Decree Law
104/2020 Art. 110
Other Prepaid tax assets
Total
Deferred tax liabilities
Derivatives
Business combinations - for step-up of net
assets in excess of tax basis
Accelerated depreciation and amortization
Convertible bonds
Other deferred taxes
(41)
(5)
1
106
8
(3,914)
29
(3,816)
2
(37)
(31)
(103)
4
(99)
37
—
(45)
(13)
1
2
(7)
(17)
1
52
1
100
625
126
260
96
6,569
155
7,931
(532)
(67)
(53)
—
(60)
(712)
46
517
128
368
104
2,655
181
3,999
(492)
(52)
(83)
(45)
(59)
(731)
3,268
Total
Total Deferred tax assets net of Deferred tax
liabilities
(*) For the new flow of tax losses in 2021, the Parent Company TIM S.p.A. has not entered deferred tax assets.
(3,879)
7,219
(107)
(8)
(2)
52
35
3
(63)
The expirations of deferred tax assets and deferred tax liabilities at December 31, 2021 were the following:
(million euros)
Beyond 1 year Total at 12/31/2021
.Within next
year
Deferred tax assets
Deferred tax liabilities
Total Deferred tax assets net of Deferred tax liabilities
505
(122)
383
3,494
(609)
2,885
3,999
(731)
3,268
At December 31, 2021, the TIM Group had unused tax loss carryforwards of 2,287 million euros, mainly relating
to the company Telecom Italia Finance and the Parent TIM S.p.A., with the following expiration dates:
Year of expiration
(million euros)
2022
2023
2024
2025
2026
Expiration after 2026
Without expiration
Total unused tax loss carryforwards
—
2
—
3
1
29
2,252
2,287
Unused tax loss carryforwards considered in the calculation of deferred tax assets amounted to 150 million
euros at December 31, 2021 (323 million euros at December 31, 2020) and mainly referred to the Brazil
Business Unit and the Parent TIM S.p.A.. Deferred tax assets were recognized as it was considered probable
that taxable income will be available in the future against which the tax losses can be utilized.
On the other hand, deferred tax assets relative to foreign subsidiaries of 333 million euros (354 million euros at
December 31, 2020) were not recognized on 1,325 million euros of tax loss carry-forwards since, at the
reporting date, their recoverability was not considered probable.
At December 31, 2021, deferred tax liabilities were not recognized on approximately 0.8 billion euros of tax-
suspended reserves and undistributed earnings of subsidiaries, because the TIM Group is in a position to
control the timing of the distribution of those reserves and it is probable that those accumulated earnings will
not be distributed in the foreseeable future. The contingent liabilities relating to taxes that should be
recognized, if these reserves are distributed, are in any case not significant.
Consolidated financial statements of the
TIM Group
Note 11
Income tax expense (current and deferred)
179
Current income tax payables
Current income tax payables amounted to 526 million euros (764 million euros at December 31, 2020). They
break down as follows:
(million euros)
Income taxes payable:
12/31/2020
12/31/2021
non-current
current
Total
231
295
526
493
271
764
The current portion, of 295 million euros, refers to the Domestic Business Unit (265 million euros) and the Brazil
Business Unit (30 million euros) and includes the second installment of the substitute tax pursuant to Decree
Law 104/2020, Art. 110, paragraphs 8 and 8 bis of the Parent Company (231 million euros).
The non-current portion, amounting to 231 million euros, refers to the Parent Company TIM S.p.A. and relates
to the third installment of substitute tax pursuant to Decree Law 104/2020, Art. 110, paragraphs 8 and 8 bis.
Income tax expense
The income tax expense for the years 2021 and 2020 breaks down as follows:
(million euros)
Current taxes for the year
Net difference in prior year estimates
Total current taxes
Deferred taxes
Total income tax expense on continuing operations
Income tax expense on Discontinued operations/Non-current assets held
for sale
Total income tax expense for the year
(b)
(a+b)
(a)
2021
15
(4)
11
3,874
3,885
—
3,885
2020
777
(197)
580
(6,535)
(5,955)
—
(5,955)
Deferred tax includes the write-off for 3,825 million euros, of which 2,766 million euros for IRES, equal to 50% of
the deferred tax assets entered in 2020 following the higher values booked in accordance with Decree Law
104/2020, Art. 110, subsections 8 and 8 bis and 1,059 million euros for the residual deferred IRAP tax assets
entered for the realignment of goodwill and other items.
As already specified, the write-off of deferred tax assets is due to the extension to 50 years of the period of
resorption of the realigned amount of goodwill introduced by Art. 160 of the 2022 Budget Law (Law 234/2021)
and the changed assessment of the time frame for recovery of deferred tax assets of the parent company TIM
S.p.A.
Consolidated financial statements of the
TIM Group
Note 11
Income tax expense (current and deferred)
180
The reconciliation between the theoretical tax expense, using the IRES tax rate in force in Italy (24%), and the
effective tax expense for the years ended December 31, 2021 and 2020 is as follows:
(million euros)
Profit (loss) before tax from continuing operations
Theoretical income tax from continuing operations
Income tax effect on increases (decreases) in variations
Tax losses of the year not considered recoverable
Tax losses from prior years not recoverable (recoverable) in future years
Non-deductible write-down of goodwill
IRES taxes for previous years
Prepaid IRES tax (benefit)/write-off pursuant to Decree Law 104/2020,
Art. 110 and others
Brazil: different tax rate compared to the theoretical rate in force in Italy
Brazil: investment incentives
Other net differences
Effective taxes recognized in the Income Statement, excluding IRAP and
substitute tax
Prepaid IRAP including tax (benefit)/write-off pursuant to Decree Law
104/2020, Art. 110
Substitute tax pursuant to Decree Law 104/2020 art. 110
Total effective taxes recognized in the Income Statements from
continuing operations
Effective taxes recognized in the Income Statement from Discontinued
operations/Non-current assets held for sale
Total of actual taxes to income statement
(a)
(b)
(a)+(b)
2021
(4,515)
(1,084)
2
(20)
989
(8)
2,961
48
(28)
(59)
2,801
1,084
—
3,885
—
3,885
2020
1,397
335
1
(20)
—
(299)
(5,532)
33
(28)
(137)
(5,647)
(1,000)
692
(5,955)
—
(5,955)
For the analysis of the tax burden related to the Profit (loss) before tax from continuing operations, the impact
of IRAP and substitute tax pursuant to Decree Law 104/2020, Art. 110, has been kept separate to avoid any
distorting effect, since these taxes only apply to Italian companies and are calculated on a tax base other than
pre-tax profit.
NOTE 12
INVENTORIES
The item increased compared to December 31, 2020, by 40 million euros and is broken down as follows:
(million euros)
Raw materials and supplies
Work in progress and semi-finished products
Finished goods
Deposits on stocks
Total
12/31/2021
2
5
246
29
282
12/31/2020
2
2
238
—
242
Inventories essentially consist of fixed and mobile telecommunications equipment and handsets and related
accessories, as well as office products and specialized printers.
Inventories consist of 250 million euros for the Domestic Business Unit (204 million euros at December 31,
2020), also due to a purchasing trend recorded during the year, which was higher than that of consumption, on
the Fixed segment of the Parent Company Tim S.p.A. and 32 million euros for the Brazil Business Unit (38
million euros at December 31, 2020).
The item “Deposits on stocks” refers to deposits paid by Telecom Italia Sparkle to construct transmission
systems, limited to the component for resale also through financial lease transfer contracts.
Inventories are stated net of a provision for bad debts amounting to 21 million euros (13 million euros at
December 31, 2020).
Consolidated financial statements of the
TIM Group
Note 11
Income tax expense (current and deferred)
181
NOTE 13
TRADE AND MISCELLANEOUS RECEIVABLES
AND OTHER CURRENT ASSETS
This item rose by 12 million euros compared to December 31, 2020. The figure breaks down as follows:
12/31/2020
(million euros)
12/31/2021
of which
Financial
Instruments
of which
Financial
Instruments
Trade receivables
Receivables from customers
Receivables from other telecommunications
operators
Miscellaneous receivables (current)
Receivables due from others
Other current assets
Contract assets
Deferred contract costs
Other cost deferrals
Other
Total
1,545
1,130
2,675
1,545
1,130
2,675
780
101
20
542
273
68
903
4,358
20
20
2,796
2,140
765
2,905
516
25
617
217
66
925
4,346
2,140
765
2,905
85
25
25
3,015
(a)
(b)
(c)
(a+b+c)
Further details on Financial Instruments are provided in the Note "Supplementary disclosure on financial
instruments".
The analyses of the aging of the financial instruments included in Trade and miscellaneous receivables and
other current assets at December 31, 2021 and December 31, 2020 are provided below:
(million euros)
12/31/2021 of which
non-
overdue
of which
overdue
0-90 days
of which overdue from:
181-365
days
91-180
days
More than
365 days
Trade and miscellaneous receivables
and other current assets
2,796
2,270
526
151
68
77
230
(million euros)
Trade and miscellaneous receivables
and other current assets
12/31/2020 of which
non-
overdue
2,388
3,015
0-90 days
of which
overdue
of which overdue from:
181-365
days
91-180
days
More than
365 days
627
116
133
102
276
Overdue receivables fell by 118 million euros compared to December 31, 2020. This performance is mainly a
result of, for 2021: the Domestic Business Unit companies (-178 million euros), and the Brazil Business Unit (+60
million euros, including a positive exchange effect of approximately 3 million euros).
Overdue receivables fell by 101 million euros compared to December 31, 2020. This performance is mainly a
result of, for 2021: the Parent Company (-71 million euros), and the Brazil Business Unit (-43 million euros,
including a positive exchange effect of approximately +1 million euros) and the Domestic Business Unit
companies (+13 million euros).
Trade receivables amounted to 2,675 million euros (2,905 million euros at December 31, 2020) and are stated
net of the provision for bad debts of 565 million euros (627 million euros at December 31, 2020). They included
9 million euros (13 million euros at December 31, 2020) of medium/long-term receivables, in respect of
agreements for the sale of transmission capacity under Indefeasible Rights of Use (IRU).
Trade receivables mainly related to TIM S.p.A. (1,906 million euros) and to the Brazil Business Unit (511 million
euros).
Movements in the provision for bad debts were as follows:
Consolidated financial statements of the
TIM Group
Note 13
Trade and miscellaneous receivables and other current assets
182
12/31/2020
(million euros)
At January 1
757
282
Provision charges to the income statement
Utilization and decreases
(369)
1
Change in the scope of consolidation
Exchange rate differences and other changes
(44)
At December 31
627
In particular, the provision for bad debt at December 31, 2021 suffered the provisions made in 2021 for a total
of 212 million euros, of which 20 million euros are non-recurring of the Domestic Business Unit in connection
with the COVID-19 health emergency, which resulted in a worsening of the Expected Credit Losses of
customers, consequent to the expected deterioration of the macroeconomic context. For more details, see the
Note “Non-recurring Events and Transactions”.
12/31/2021
627
212
(287)
1
12
565
Miscellaneous receivables (current) refer to other receivables amounting to 780 million euros (516 million
euros at December 31, 2020) and are net of a provision for bad debts of 46 million euros (48 million euros at
December 31, 2020). Details are as follows:
(million euros)
Advances to suppliers
Receivables from employees
Tax receivables
Receivables for grants from the government and public entities
Sundry receivables
Total
12/31/2021
270
10
268
14
218
780
12/31/2020
22
10
254
29
201
516
Tax receivables mainly relate to:
■
■
the Brazil Business Unit (240 million euros) and are related to local indirect taxes.
the Parent Company (15 million euros) essentially for credit amounts resulting from tax returns, tax credits,
as well as VAT credits on the acquisition of motor vehicles and related accessories requested for
reimbursement pursuant to Law Decree no. 258/2006 converted with amendments by Law no. 278/2006.
Receivables for grants from the government and public entities (14 million euros) referred mainly to the
ultrabroadband-UBB and broadband-BB projects. The grants are recognized to the income statement when
the related plants become ready for use.
Sundry receivables mainly included:
■ TIM S.p.A. receivables for Universal Service (52 million euros);
■ TIM S.p.A. receivables for with-recourse assignments to factoring companies (43 million euros);
■ miscellaneous receivables of TIM S.p.A. from other TLC operators (32 million euros);
■ TIM S.p.A. receivables from social security and pension institutions (13 million euros).
Other current assets included:
■ Contract assets with customers: this item includes the effect of the early recognition of revenues for those
bundle contracts (such as bundles of products and services) with individual performance obligations with a
different recognition timing, in which the goods recognized “at a point in time” are sold at a discounted
price, or for those contracts which, by providing for a discount for a period of time shorter than the
minimum contract term, require, pursuant to IFRS 15, a reallocation of the discount over the minimum
contractual term. Contract Assets at December 31, 2021 amounted to 20 million euros (25 million euros at
December 31, 2020), net of the related write-down provision of 1 million euros and drop by 5 million euros,
since the reversal to the income statement of the previously accumulated balance was substantially offset
by the need to distribute discounts granted to customers temporally over the minimum contractual term,
with particular reference to those connected with the impact of COVID-19;
■ Deferred contract costs (542 million euros, 617 million euros at December 31, 2020): these are contract
costs (mainly technical activation costs and commissions for the sales network) deferred and recognized in
the separate income statement according to the expected duration of the contractual relationship with
customers. As indicated above, in 2021 the expected duration of the contractual relationship went from 3
to 4 years for the mobile business and from 7 to 8 years for the fixed-line business, with a positive impact,
at consolidated level, totaling 164 million euros at December 31, 2021. Further details on Deferred contract
costs are provided in the Note “Miscellaneous receivables and other non-current assets”.
■ Other deferred costs mainly concern:
•
•
•
the Parent Company essentially for the deferral of costs related to rental charges and other lease and
rental costs (172 million euros), the deferral of costs for the purchase of products and services (24
million euros), deferral of after-sales expenses on application offers (23 million euros), insurance
premiums (4 million euros) and maintenance fees (3 million euros);
the Telecom Italia Sparkle group, mainly concerning the deferral of costs connected with leases for
circuits and maintenance fees (13 million euros);
the Brazil Business Unit relative to marketing activities (approximately 14 million euros), insurance
premiums (approximately 5 million euros) and maintenance contracts (approximately 5 million euros).
Consolidated financial statements of the
TIM Group
Note 13
Trade and miscellaneous receivables and other current assets
183
NOTE 14
EQUITY
Equity consisted of:
(million euros)
Equity attributable to owners of the Parent
Non-controlling interests
Total
12/31/2021
12/31/2020
17,414
4,625
22,039
26,215
2,625
28,840
The composition of Equity attributable to owners of the Parent is the following:
(million euros)
Share capital
Additional paid-in capital
Other reserves and retained earnings (accumulated losses), including profit
(loss) for the year
12/31/2021
11,614
2,133
12/31/2020
11,588
2,133
12,494
Reserve for financial assets measured at fair value through other
comprehensive income
Reserve for hedging instruments
Reserve for exchange differences on translating foreign operations
Reserve for remeasurements of employee defined benefit plans (IAS 19)
Share of other comprehensive income (losses) of associates and joint
ventures accounted for using the equity method
Sundry reserves and retained earnings (accumulated losses), including
profit (loss) for the year
49
(128)
(2,500)
(130)
—
6,376
3,667
20
(350)
(2,538)
(119)
—
15,481
Total
17,414
26,215
At December 31, 2021, the share capital was 11,614 million euros, already net of treasury shares for 63 million
euros (11,588 million euros, already net of treasury shares for 89 million euros at December 31, 2020).
The amount of treasury shares during 2021 changed as follows:
■ decrease due to the assignment of 6,715,617 ordinary shares of TIM S.p.A. to implement the 2018 Long
Term Incentive Plan;
■ decrease due to the assignment of 38,604,270 ordinary shares of TIM S.p.A. free of charge to entitled
Group employees adhering to the 2020 Broad-Based Share Ownership Plan.
For further details, refer to the Note “Equity Compensation Plans”.
It should be noted that the share capital carries a restriction on tax suspension for fiscal purposes for an
amount of 11,104 million euros, unchanged on December 31, 2020 and inclusive of 9,913 million restricted in
accordance with Decree Law 104/2020, art. 110, subsection 8.
Movements in share capital during 2021 are presented in the following tables:
Reconciliation between the number of shares outstanding at December 31, 2020 and December 31, 2021
(number of shares)
as at 12/31/2020
as at 12/31/2021
Share
assignment/issue
Ordinary shares issued
less: treasury shares
Ordinary shares outstanding
Savings shares issued and outstanding
Total TIM S.p.A. shares issued
Total TIM S.p.A. shares outstanding
(a)
(b)
(c)
(d)
(a+d)
(c+d)
15,329,466,496
(161,262,083)
15,168,204,413
6,027,791,699
21,357,258,195
21,195,996,112
—
45,319,887
45,319,887
—
—
45,319,887
15,329,466,496
(115,942,196)
15,213,524,300
6,027,791,699
21,357,258,195
21,241,315,999
% of share
capital
71.78%
28.22%
100.00%
Consolidated financial statements of the
TIM Group
Note 14
Equity
184
Reconciliation between the value of shares outstanding at December 31, 2020 and December 31, 2021
(million euros)
Ordinary shares issued
less: treasury shares
Ordinary shares outstanding
Savings shares issued and outstanding
Total TIM S.p.A. share capital issued
Total TIM S.p.A. share capital outstanding
(a)
(b)
(c)
(d)
(a+d)
(c+d)
Share capital at
12/31/2020
8,381
(89)
8,292
3,296
11,677
11,588
Change in share
capital
—
26
26
—
—
26
Share Capital
at 12/31/2021
8,381
(63)
8,318
3,296
11,677
11,614
The total value of ordinary treasury shares at December 31, 2021, amounting to 364 million euros, was
recorded as follows: the part relating to accounting par value (63 million euros) recognized as a deduction from
the share capital issued and the remaining part as a deduction from Other reserves and retained earnings
(accumulated losses), including profit (loss) for the year.
Disclosure on share capital
The ordinary and savings shares of TIM S.p.A. are listed in Italy (FTSE index).
In the shareholder resolutions passed to increase share capital against cash payments, the pre-emption right
can be excluded to the maximum extent of ten percent of the pre-existing share capital, on condition that the
issue price corresponds to the market price of the shares and that this is confirmed in a specific report issued
by the firm charged with the audit of the Company.
The Group sources itself with the capital necessary to fund its business development and operation
requirements; the sources of funds are found in a balanced mix of equity, permanently invested by the
shareholders, and debt capital, to guarantee a balanced financial structure and minimize the total cost of
capital, with a resulting advantage to all the stakeholders.
Debt capital is structured according to different maturities and currencies to ensure an adequate diversification
of the sources of funding and an efficient access to external sources of financing (taking advantage of the best
opportunities offered in the financial markets of the euro, U.S. dollar and Pound sterling areas to minimize
costs), taking care to reduce the refinancing risk.
The remuneration of equity is proposed by the board of directors to the shareholders’ meeting, during which
the annual financial statements are approved, based upon market trends and business performance, once all
the other obligations are met, including debt servicing. Therefore, to ensure an adequate remuneration of
capital, safeguard company continuity and business development, the Group constantly monitors the change
in debt levels in relation to equity, the level of net debt and the operating margin of industrial operations.
Privileges of savings shares
The privileges of TIM S.p.A. savings shares are indicated below:
■
the profit shown in the duly approved financial statements, after deducting the amount to be allocated to
the legal reserve, must be distributed to the holders of savings shares in an amount up to 5% of the 0.55
euros per share;
■ after assigning preferred dividends to the savings shares, the distribution of which is approved by the
shareholders' meeting, the remaining profit shall be allocated among all the shares, so that savings shares
are entitled to higher overall dividends than ordinary shares would be entitled to, to the extent of 2% of
0.55 euros per share;
■ when, in any one year, dividends of below 5% of the 0.55 euros per share are paid to the savings shares,
the difference is determined as an increase of the privileged dividend in the next two subsequent years;
■
■
in the case of the distribution of reserves, the savings shares have the same rights as ordinary shares.
Moreover, when there is no profit or insufficient profit is reported in the financial statements for a given
year to satisfy the aforesaid savings shares privileges, the Shareholders’ Meeting called to approve those
financial statements may choose to satisfy the dividend right and/or the higher dividend right by
distributing available reserves. The distribution of available reserves for such payments excludes the
application of the mechanism extending the right to the preferred dividend not paid through the
distribution of profits for the following two years;
the reduction of share capital as a result of losses does not affect the savings shares except for the
amount of the loss which is not covered by the portion of the share capital represented by the other
shares;
■ upon the wind-up of TIM S.p.A., the savings shares have a pre-emption right in the reimbursement of
capital up to the amount of 0.55 euros per share;
■
in the event of the cessation of trading in the Company's ordinary or savings shares, the holder of savings
shares may ask TIM S.p.A. to convert his/her shares into ordinary shares, using the method selected during
a special session of the shareholders' meeting called for that purpose within two months of being excluded
from trading.
Additional paid-in capital, amounting to 2,133 million euros, was unchanged with respect to December 31,
2020. The reserve is entirely restricted under tax suspension in accordance with Decree Law 104/2020, Art. 110,
subsection 8.
Other reserves moved through the Statements of comprehensive income comprised:
Consolidated financial statements of the
TIM Group
Note 14
Equity
185
■ The Reserve for financial assets measured at fair value through other comprehensive income, positive
for 49 million euros at December 31, 2021, increased by 29 million euros compared to the figure at
December 31, 2020. In particular, the change in 2021 includes the losses from the securities portfolio of
Telecom Italia Finance (18 million euros, of which 6 million euros were realized), the losses on the TI
Ventures securities portfolio (9 million euros), the profits recorded by Olivetti for the valuation of SECO
S.p.A. (54 million euros), the losses related to other financial assets held by the Parent Company TIM (4
million euros) and the profits related to the equity investment in Fin.Priv. S.r.l. of the Parent Company TIM
(6 million euros). This reserve is expressed net of deferred tax liabilities of 1 million euros (at December 31,
2020, it was expressed net of deferred tax liabilities of 1 million euros).
■ The Reserve for cash flow hedges had a negative balance of 128 million euros at December 31, 2021,
(negative 350 million euros at December 31, 2020). This reserve is stated net of deferred tax assets of 39
million euros (at December 31, 2020, it was stated net of deferred tax assets of 110 million euros). In
particular, this reserve includes the effective portion of gains or losses on the fair value adjustments of
derivatives designated as hedges of the exposure to volatility in the cash flows of assets or liabilities
recognized in the financial statements ("cash flow hedge").
■ The Reserve for exchange differences on translating foreign operations showed a negative balance of
2,500 million euros at December 31, 2021 (negative 2,538 million euros at December 31, 2020) and mainly
related to exchange differences resulting from the translation into euros of the financial statements of
companies belonging to the Brazil Business Unit (negative for 2,523 million euros versus negative for 2,550
million euros at December 31, 2020).
■ The Reserve for the re-measurement of defined benefits plans for employees, negative for 130 million
euros, drops by 11 million euros on December 31, 2020 following the recording of the changes in actuarial
gains (losses), net of the related tax effect.
■ The Share of other comprehensive income (losses) of associates and joint ventures accounted for using
the equity method is nil at both December 31, 2021 and December 31, 2020.
Other sundry reserves and retained earnings (accumulated losses), including profit (loss) for the year
amounted to 6,376 million euros and decreased by 9,105 million euros, as detailed below:
(million euros)
Profit (loss) for the year attributable to owners of the Parent
Dividends approved - TIM S.p.A.
Issue of equity instruments
Other changes
Change for the year in Sundry reserves and retained earnings (accumulated losses),
including profit (loss) for the year
2021
(8,652)
(318)
7
(44)
(9,105)
2020
7,224
(316)
3
9
6,920
Part of Other sundry reserves and accrued profits (losses), including profit (loss) for the year of TIM S.p.A. is
restricted under tax suspension in accordance with Decree Law 104/2020, Art. 110, subsection 8. For more
details, reference is made to the “Equity” Note of the Parent Company.
In 2021, dividends deliberated by TIM S.p.A. are 318 million euros and refer to the distribution to Shareholders
of a dividend of 0.0100 euro per ordinary share and 0.0275 euro per savings share, gross of statutory
withholding taxes. In 2020, the dividends deliberated by TIM S.p.A. were 316 million euros and referred to
ordinary shares (dividend per share of 0.0100 euros) and to savings shares (dividend per share of 0.0275 euros).
Equity attributable to non-controlling interest, amounting to 4,625 million euros, mainly refers to FiberCop
S.p.A. (1,969 million euros), to Daphne 3 S.p.A. (1,316 million euros) and the companies of the Brazil Business
Unit (1,345 million euros) and shows an increase of 2,000 million euros compared to December 31, 2020, as
detailed below:
(million euros)
Profit (loss) for the year attributable to Non-controlling interest
Group Company dividends paid to minority shareholders
Changes in the Reserve for exchange differences on translating foreign operations
FiberCop - capital increase
Daphne 3 - capital increase
Daphne 3 - distribution of additional paid-in capital
INWIT - deconsolidation
Other changes
2021
252
(55)
12
1,848
—
(42)
—
(15)
2020
128
(62)
(491)
—
1,334
(644)
14
Change for the year in Equity attributable to Non-controlling interest
2,000
279
The Group company dividends paid to minority shareholders mainly referred to the Brazil Business Unit for 55
million euros. 2020 dividends mainly referred to the Brazil Business Unit for 61 million euros.
The Reserve for exchange differences on translating foreign operations attributable to non-controlling interest
showed a negative balance of 1,155 million euros at December 31, 2021 (negative for 1,167 million euros at
December 31, 2020), relating entirely to exchange differences arising from the translation into euros of the
financial statements of the companies belonging to the Brazil Business Unit.
Future potential changes in share capital
Details of “Future potential changes in share capital” are presented in the Note “Earnings per share”.
Consolidated financial statements of the
TIM Group
Note 14
Equity
186
NOTE 15
NON-CURRENT AND CURRENT FINANCIAL
LIABILITIES
Non-current and current financial liabilities (gross financial debt) are broken down as follows:
(million euros)
Non-current financial liabilities for financing contracts and others
Financial payables (medium/long-term):
Bonds
Convertible bonds
Payables to banks
Other financial payables
Other medium/long-term financial liabilities:
Hedging derivatives relating to hedged items classified as non-current
assets/liabilities of a financial nature
Non-hedging derivatives
Other liabilities
Non-current financial liabilities for lease contracts
Total non-current financial liabilities
Current financial liabilities for financing contracts and others
Financial payables (short term):
Bonds
Convertible bonds
Payables to banks
Other financial payables
Other short-term financial liabilities:
Hedging derivatives relating to hedged items classified as current
assets/liabilities of a financial nature
Non-hedging derivatives
Other liabilities
(a)
(b)
c=(a+b)
Current financial liabilities for lease contracts
Total current financial liabilities (*)
Financial liabilities directly associated with Discontinued
operations/Non-current assets held for sale
Total Financial liabilities (Gross financial debt)
(d)
(e)
f=(d+e)
(g)
h=(c+f+g)
12/31/2021
12/31/2020
17,383
—
4,394
306
22,083
1,337
17
—
1,354
23,437
4,064
27,501
1,514
1,998
2,099
236
5,847
62
36
—
98
5,945
651
6,596
—
34,097
16,898
1,958
2,772
185
21,813
1,832
10
—
1,842
23,655
4,199
27,854
982
6
2,506
119
3,613
62
2
—
64
3,677
631
4,308
—
32,162
Further details on Financial Instruments are provided in the Note "Supplementary disclosure on financial
instruments".
Consolidated financial statements of the
TIM Group
Note 15
Non-current and current financial liabilities
187
Gross financial debt according to the original currency of the transaction is as follows:
USD
GBP
BRL
YEN
ILS
EUR
Total
12/31/2021
12/31/2020
(millions of foreign
currency)
5,789
389
12,694
20,030
51
(millions of foreign
currency)
5,899
389
8,415
20,030
54
(million euros)
5,111
463
2,008
154
14
26,347
34,097
(million euros)
4,807
433
1,320
158
14
25,430
32,162
For the exchange rates used for the conversion of amounts in foreign currency, see the Note "Other
information".
The breakdown of gross financial debt by effective interest-rate bands applicable to the original currency is
provided below, excluding the effect of any derivative hedging instruments:
(million euros)
Up to 2.5%
From 2.5% to 5%
From 5% to 7.5%
From 7.5% to 10%
Over 10%
Accruals/deferrals, MTM and derivatives
Total
12/31/2021
8,619
12,872
7,055
1,971
1,437
2,143
34,097
12/31/2020
6,047
13,497
6,692
1,906
1,317
2,703
32,162
Following the use of hedging derivative instruments, on the other hand, gross financial debt by nominal
interest rate level is:
(million euros)
12/31/2020
12/31/2021
Up to 2.5%
From 2.5% to 5%
From 5% to 7.5%
From 7.5% to 10%
Over 10%
Accruals/deferrals, MTM and derivatives
Total
15,353
9,936
3,396
1,334
1,935
2,143
34,097
15,640
8,052
3,352
1,098
1,317
2,703
32,162
The maturities of financial liabilities according to the expected nominal repayment amount, as defined by
contract, are the following:
Details of the maturities of financial liabilities – at nominal repayment amount:
(million euros)
2022
2023
2024
2025
2026 After 2026
maturing by 12/31 of the year:
Bonds
Loans and other financial liabilities
Financial lease liabilities
Total
Current financial liabilities
Total
3,098
784
616
4,498
1,536
6,034
2,446
712
557
3,715
—
3,715
3,324
977
587
4,888
—
4,888
2,000
1,075
473
3,548
—
3,548
1,750
1,570
453
3,773
—
3,773
7,720
159
1,995
9,874
—
9,874
The main components of financial liabilities are commented below.
Total
20,338
5,277
4,681
30,296
1,536
31,832
Consolidated financial statements of the
TIM Group
Note 15
Non-current and current financial liabilities
188
Bonds are broken down as follows:
(million euros)
Non-current portion
Current portion
Total carrying amount
Fair value adjustment and measurements at amortized cost
Total nominal repayment amount
12/31/2021
17,383
1,514
18,897
(559)
12/31/2020
16,898
982
17,880
(631)
18,338
17,249
Convertible bonds consist of the unsecured equity-linked bond for 2,000 million euros, with a coupon of
1.125%, issued by TIM S.p.A., convertible into newly-issued ordinary shares, maturing in 2022. This item was
broken down as follows:
(million euros)
Non-current portion
Current portion
Total carrying amount
12/31/2021
—
1,998
1,998
12/31/2020
1,958
6
1,964
Fair value adjustment and measurements at amortized cost
Total nominal repayment amount
2
2,000
36
2,000
The nominal repayment amount of bonds and convertible bonds totaled 20,338 million euros, up by 1,089
million euros compared to December 31, 2020 (19,249 million euros) as a result of new issues, repayments and
the exchange effect in 2021.
The change in bonds during 2021 was as follows:
New issues
(millions of original currency)
New issues
Telecom Italia S.p.A. 1,000 million euros 1.625%
TIM S.A. 1,600 million BRL IPCA+4.1682%
Currency
Amount
Issue date
Euro
BRL
1,000
1,600
1/18/2021
6/15/2021
On January 18, 2021, TIM issued its first 8-year Sustainability Bond for an amount of 1 billion euros, coupon
1.625%.
Repayments
(millions of original currency)
Repayments
Telecom Italia S.p.A. 564 million euros 4.500% (1)
Currency
Amount Repayment date
Euro
564
1/25/2021
(1) Net of buy-backs totaling 436 million euros made by the company in 2015.
Note that on December 31, 2021, the "Telecom Italia S.p.A. 2002-2022 Floating Rate bonds, Open Special
series, reserved for subscription by employees of the Telecom Italia Group, in service or retired” bond was
closed and the bonds fully repaid starting January 1, 2022, in accordance with the relevant Regulation.
Consolidated financial statements of the
TIM Group
Note 15
Non-current and current financial liabilities
189
The following table lists the bonds issued by companies of the TIM Group, by issuing company, expressed at
the nominal repayment amount, net of bond repurchases, and also at market value:
Currenc
y
Total
(millions)
Nominal
repaymen
t amount
(million
euros)
Coupon
Issue date Maturity
date
Issue price
(%)
Market
price at
12/31/2021
(%)
Market
value at
12/31/2021
(million
euros)
1/01/2002 1/01/2022
2/10/2010 2/10/2022
3/26/2015 3/26/2022
1/16/2015 1/16/2023
5/19/2006 5/19/2023
1/19/2017 7/19/2023
1/20/2016 1/19/2024
1/11/2019 4/11/2024
5/30/2014 5/30/2024
4/15/2019 4/15/2025
9/30/2016 9/30/2025
6/28/2018 1/28/2026
5/25/2016 5/25/2026
10/12/2017 10/12/2027
1/18/2021 1/18/2029
3/17/2005 3/17/1955
(a) 213.5
883.9
(b) 2,000
1,000
375
1,000
750
1,250
1,500
1,000
1,000
750
1,000
1,250
1,000
670
214
884
2,000
1,000
446
1,000
750
1,250
1324
1,000
1,000
750
1,000
1,250
1,000
670
15,538
6 month Euribor (base
365)
5.250%
1.125%
3.250%
5.875%
2.500%
3.625%
4.000%
5.303%
2.750%
3.000%
2.875%
3.625%
2.375%
1.625%
5.250%
Bonds issued by TIM S.p.A.
Euro
Euro
Euro
Euro
GBP
Euro
Euro
Euro
USD
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Subtotal
Bonds issued by Telecom Italia Finance S.A. and guaranteed by TIM S.p.A.
Euro
Subtotal
Bonds issued by Telecom Italia Capital S.A. and guaranteed by TIM S.p.A.
USD
USD
USD
USD
Subtotal
Bonds issued by TIM S.A.
BRL
Subtotal
Total
(a) Reserved for employees.
(b) Bond convertible into newly-issued TIM S.p.A. ordinary treasury shares.
(c) Weighted average issue price for bonds issued with multiple tranches.
883
883
883
883
3,532
253
253
20,338
1,000
1,000
1,000
1,000
IPCA+4.1682%
1,015
1,015
7.750%
1,600
1,015
6.375%
10/29/2003 11/15/2033
6.000% 10/06/2004 9/30/2034
7/18/2006 7/18/2036
7.200%
6/04/2008 6/04/2038
7.721%
1/24/2003 1/24/2033
6/15/2021 6/15/2028
100
99.295
100
99.446
99.622
99.288
99.632
99.436
100
99.320
99.806
100
100
99.185
99.074
99.667
100
100.692
100.135
103.037
104.491
102.507
104.032
104.961
105.321
102.491
103.084
102.431
105.519
98.860
92.023
106.021
(c) 109.646
133.488
99.558
99.081
99.440
100
108.519
105.270
114.336
118.017
100
100
214
890
2,003
1,031
466
1,025
780
1,312
1,395
1,025
1,031
768
1,055
1,236
920
710
15,861
1,355
1,355
958
929
1,010
1,042
3,939
253
253
21,408
The regulations and the Offering Circulars relating to the bonds of the TIM Group are available on the
corporate website gruppotim.it.
Medium/long-term amounts due to banks totaled 4,394 million euros (2,772 million euros at December 31,
2020). Short-term amounts due to banks totaled 2,099 million euros (2,506 million euros at December 31,
2020) and included 786 million euros of the current portion of medium/long-term amounts due to banks.
On December 23, 2021, the subsidiary FiberCop S.p.A. signed a new 5-year Term Loan for an amount of 1.5
billion euros with a pool of international banks, fully drawn down.
The other medium/long-term financial payables totaled 306 million euros (185 million euros at December 31,
2020), 151 million euros of which refer to the Telecom Italia Finance S.A. loan for JPY 20,000 million, maturing
in 2029. Short-term other financial payables amounted to 236 million euros (119 million euros at December 31,
2020) and included 15 million euros of the current portion of medium/long-term other financial payables.
Medium/long-term finance lease liabilities amounted to 4,064 million euros (4,199 million euros at December
31, 2020), whilst short-term lease liabilities totaled 651 million euros (631 million euros at December 31, 2020)
and included 648 million euros in the current portion of medium/long-term finance lease liabilities.
With reference to the financial lease liabilities recognized in 2021 and 2020, the following is noted:
Consolidated financial statements of the
TIM Group
Note 15
Non-current and current financial liabilities
190
(million euros)
Principal reimbursements
Cash out interest portion
Total
12/31/2021
604
263
867
12/31/2020
699
256
955
Hedging derivatives relating to items classified as non-current financial liabilities amount to 1,337 million
euros (1,832 million euros at December 31, 2020). Hedging derivatives relating to items classified as current
liabilities of a financial nature totaled 62 million euros (62 million euros at December 31, 2020).
Non-hedging derivatives classified as non-current financial liabilities came to 17 million euros (10 million euros
at December 31, 2020), while non-hedging derivatives classified under current financial liabilities amounted to
36 million euros (2 million euros at December 31, 2020). These also include the measurement of derivatives
which, although put into place for hedging purposes, do not meet the formal requirements to be considered as
such under IFRS.
Covenants and negative pledges in place at 12/31/2021
Bonds issued by the TIM Group do not contain financial covenants (e.g. ratios such as Debt/EBITDA,
EBITDA/Interest, etc.) or clauses that result in the automatic early redemption of the bonds in relation to
events other than the insolvency of the TIM Group1; furthermore, the repayment of the bonds and the
payment of interest are not covered by specific guarantees nor are there commitments provided relative to
the assumption of future guarantees, except for the full and unconditional guarantees provided by TIM S.p.A.
for the bonds issued by Telecom Italia Finance S.A. and Telecom Italia Capital S.A..
Since the bonds were placed principally with institutional investors in major world capital markets (Euromarket
and the U.S.A.), the terms which regulate the bonds are in line with market practice for similar transactions
effected on these same markets. Consequently, they carry negative pledges, such as, for example, the
commitment not to pledge the company’s assets as collateral for loans.
Regarding loans taken out by TIM S.p.A. from the European Investment Bank (EIB), on May 19, 2021, TIM
entered into a new loan for an amount of 230 million euros, in support of projects to digitize the country. In
addition, it has extended the loan signed in 2019 for an amount of 120 million euros. Therefore, at December
31, 2021 the nominal total of outstanding loans with the EIB was 1,200 million euros, all drawn down and not
backed by bank guarantee.
The three EIB loans signed on December 14, 2015, November 25, 2019 and May 19, 2021 contain the following
covenants:
■
in the event the company becomes the target of a merger, demerger or conferral of a business segment
outside the Group, or sells, disposes of or transfers assets or business segments (except in certain cases,
expressly provided for), it shall immediately inform the EIB which shall have the right to ask for guarantees
to be provided or changes to be made to the loan contract, or, only for certain loan contracts, the EIB shall
have the option to demand the immediate repayment of the loan (should the merger, demerger or
conferral of a business segment outside the Group compromise the Project execution or cause a prejudice
to EIB in its capacity as creditor);
■ TIM undertook to ensure that, for the entire duration of the loan, the total financial debt of the Group
companies other than TIM S.p.A. – except for the cases when that debt is fully and irrevocably secured by
TIM S.p.A. – is lower than 35% (thirty-five percent) of the Group's total financial debt;
■
■
“Inclusion clause", under which, in the event TIM commits to uphold financial covenants in other loan
contracts (and even more restrictive clauses,
instance, cross default clauses and
commitments restricting the sale of goods) that are not present in or are stricter than those granted to the
EIB, the EIB will have the right – if, in its reasonable opinion, it considers that such changes may have a
negative impact on TIM's financial capacity – to request the provision of guarantees or an amendment of
the loan contract in order to establish an equivalent provision in favor of the EIB;
including, for
"Network Event", under which, in the event of the disposal of the entire fixed network or of a substantial
part of it (in any case, more than half in quantitative terms) to third parties not controlled by the Company,
or in the event of disposal of the controlling interest in the company in which the network or a substantial
part of it has previously been transferred, TIM must immediately inform the EIB, which may then opt to
demand collateral or an amendment of the loan contract or choose an alternative solution.
The loan agreements of TIM S.p.A. do not contain financial covenants (e.g. ratios such as Debt/EBITDA,
EBITDA/Interest, etc.) which would oblige the Company to repay the outstanding loan if the covenants are not
observed.
The loan agreements contain the usual other types of covenants, including the commitment not to pledge the
Company’s assets as collateral for loans (negative pledge) and the commitment not to change the business
purpose or sell the assets of the Company unless specific conditions exist (e.g. the sale takes place at fair
market value). Covenants with basically the same content can be found in the export credit loan agreement.
In the Loan Agreements and the Bonds, TIM is required to provide notification of change of control.
Identification of the occurrence of a change of control and the applicable consequences – including, at the
discretion of the investors, the establishment of guarantees or the early repayment of the amount paid in cash
or as shares and the cancellation of the commitment in the absence of agreements to the contrary – are
specifically covered in the individual agreements.
In addition, the outstanding loans generally contain a commitment by TIM, whose breach is an Event of
Default, not to implement mergers, demergers or conferrals of business, involving entities outside the Group.
1 A change of control event can result in the early repayment of the convertible bond of TIM S.p.A., as further detailed below.
Consolidated financial statements of the
TIM Group
Note 15
Non-current and current financial liabilities
191
Such an Event of Default may entail, upon request of the Lender, the early redemption of the drawn amounts
and/or the annulment of the undrawn commitment.
The documentation of the loans granted to certain companies of the TIM Group contain general obligations to
comply with certain financial ratios (e.g. capitalization ratios, debt servicing ratios and debt ratios), as well as
the usual other covenants, under penalty of a request for the early repayment of the loan.
Finally, as at December 31, 2021, no covenant, negative pledge or other clause relating to the aforementioned
debt position had in any way been breached or violated.
Revolving Credit Facility
The following table shows committed credit lines available at December 31, 2021:
(billion euros)
12/31/2021
Sustainability-linked RCF - maturing May 2026
Revolving Credit Facility – maturing January 2023
Bridge to Bond Facility – maturing May 2021
Total
Agreed
4.0
—
—
4.0
Drawn down
—
—
—
—
12/31/2020
Agreed
—
5.0
1.7
6.7
Drawn down
—
—
—
—
At December 31, 2021, TIM had bilateral Term Loans for 850 million euros with various banking counterparties
and an overdraft facility for 200 million euros, drawn down for the full amount.
On January 19, 2021, TIM entirely canceled the credit line for 1.7 billion euros, which was not used, stipulated
on May 18, 2020 as bridge to bond for subsequent issues on the bond market and an initial maturity of 12
months with an option of extension for another 12 months.
On May 13, 2021, TIM extended the Revolving Credit Facility by 5 years, reducing the amount to 4 billion euros
and making it the Group's first ever ESG-linked credit facility.
On December 23, 2021, the subsidiary FiberCop S.p.A. signed a new 5-year Term Loan for an amount of 1.5
billion euros with a pool of international banks, fully drawn down.
TIM's rating at December 31, 2021
At December 31, 2021, the three rating agencies – Standard & Poor’s, Moody’s and Fitch Ratings – rated TIM as
follows:
STANDARD & POOR'S
MOODY'S
FITCH RATINGS
Rating
BB
Ba2
BB+
Outlook
Stable
Negative
Stable
On March 08, 2022, the ratings agency Moody’s modified the rating from Ba2 to Ba3, confirming the outlook
relative to its opinion on TIM as “Negative”.
Consolidated financial statements of the
TIM Group
Note 15
Non-current and current financial liabilities
192
NOTE 16
NET FINANCIAL DEBT
The table below shows the breakdown of net financial debt of the TIM Group at December 31, 2021 and
December 31, 2020, determined in accordance with the provisions of the “Guidelines on disclosure
requirements under the Prospectus Regulation” issued by the ESMA (European Securities & Markets Authority)
on March 4, 2021 (ESMA32-382-1138) and incorporated by Consob with its Note of Attention no. 5/21 dated
April 29, 2021.
This table also shows the reconciliation of the net financial debt determined according to the aforementioned
criteria indicated by the ESMA and net financial debt calculated according to the criteria of the TIM Group.
(million euros)
Liquid assets with banks, financial institutions and post offices
Other cash and cash equivalents
Securities other than investments
Liquidity
Current financial debt (including debt instruments, but excluding
the current portion of non-current financial debt)
Current portion of non-current financial debt
Current financial debt
Net current financial debt
Non-current financial debt (excluding the current part and debt
instruments)
Debt instruments
Trade payables and other non-current debt (**)
Non-current financial debt
Total net financial debt as per ESMA guidelines 32-382-1138
Trade payables and other non-current debt (**)
Non-current financial receivables arising from lease contracts
Current financial receivables arising from lease contracts
Financial receivables and other current financial assets
Other financial receivables and other non-current financial assets
Financial assets/liabilities relating to discontinued operations/non-
current assets held for sale
Subtotal
Net financial debt carrying amount (*)
Reversal of fair value measurement of derivatives and related
financial liabilities/assets
Adjusted Net Financial Debt
(a)
(b)
(c)
(d=a+b+c)
(e)
(f)
(g=e+f)
(h=g-d)
(i)
(j)
(k)
(l=i+j+k)
(m=h+l)
(n)
(p=m+n)
(q)
(r=p+q)
12/31/2021
6,092
812
2,249
9,153
12/31/2020
4,433
396
1,092
5,921
1,538
4,937
6,475
(2,678)
8,083
17,383
81
25,547
22,869
(81)
(45)
(56)
(21)
(250)
—
(453)
22,416
(229)
22,187
1,151
3,010
4,161
(1,760)
6,984
18,856
1,791
27,631
25,871
(1,791)
(43)
(55)
(15)
(253)
—
(2,157)
23,714
(388)
23,326
(*) As regards the effects of related-party transactions on net financial debt, reference should be made to the specific table included in the Note
“Related-party transactions".
(**) The value at 12/31/2021 mainly includes the payables of the Brazil Business Unit for the purchase and renewal of telecommunications licenses
(72 million euros), also including the payable due to Entidade Administradora da Conectividade de Escolas (EACE) for the development of certain
infrastructural projects in Brazil in connection with the assignment of the rights of use of frequencies for 5G services. The figure at 12/31/2020
includes the residual payable relating to the acquisition of the rights-of-use for the 5G licenses in Italy, of 1,738 million euros; at 12/31/2021, the
amount was reclassified to Miscellaneous payables and other current liabilities following the expiry scheduled for 2022.
Consolidated financial statements of the
TIM Group
Note 16
Net financial debt
193
Additional cash flow information required by IAS 7
(million euros)
Financial payables (medium/long-term):
Bonds
Convertible bonds
Payables to banks
Other financial payables
of which short-term
Medium/long-term finance lease
liabilities:
of which short-term
Other medium/long-term financial
liabilities:
Hedging derivative liabilities relating to
hedged items classified as non-current
assets/liabilities of a financial nature
Non-hedging derivative liabilities
Other liabilities
of which short-term
Short-term financial payables:
Amounts due to banks
Other financial payables
Financial liabilities directly associated
with Discontinued operations/Non-
current assets held for sale:
Total Financial liabilities (Gross
financial debt)
12/31/2020
Cash movements
Receipts
and/or issues
Payments
and/or
reimburseme
nts
Non-cash movements
Fair value
changes
Exchange
differences
Other
changes
and
reclassificati
ons
12/31/202
1
17,880
1,964
4,242
192
24,278
2,465
4,827
4,827
628
1,894
12
—
1,906
64
1,036
115
1,151
—
—
(a)
(b)
(c)
(d)
(e)
1,251
(564)
405
(79)
2,830
1
4,082
(1,895)
(9)
(2,468)
225
225
(604)
(604)
20
(4)
421
15
15
(79)
—
(97)
(3)
(398)
41
—
—
(100)
(357)
—
—
1
1
—
4
34
(17)
141
162
249
249
2
2
277
109
386
—
—
—
—
—
18,897
1,998
5,180
321
26,396
4,313
4,712
4,712
648
1,399
52
—
1,451
97
1,313
225
1,538
—
—
(f=a+b+c+d+e)
32,162
4,307
(3,072)
337
(436)
799
34,097
Hedging derivative receivables relating to
hedged items classified as current and
non-current assets/liabilities of a financial
nature
Non-hedging derivative receivables
Total
(g)
(h)
(i=f-g-h)
2,067
94
30,001
4,307
(3,072)
301
(46)
82
(340)
63
(159)
(13)
30
782
2,015
141
31,941
The value of the paid and collected interest expense reported in the Report on Operations takes into account
the movements relating to transactions in CCIRS derivatives to hedge underlying assets in both the assets
component (collections) and the liabilities component (payments) without netting the positions.
(million euros)
Interest expense paid
Interest income received
Net total
(1,440)
437
(1,003)
(1,520)
448
(1,072)
2020
2021
To consider the components of CCIRS derivatives as a single transaction, a representation is given with interest
flows in and out shown net. This approach gives the following results:
(million euros)
Interest expense paid
Interest income received
Net total
(1,104)
101
(1,003)
(1,209)
137
(1,072)
2020
2021
Consolidated financial statements of the
TIM Group
Note 16
Net financial debt
194
NOTE 17
FINANCIAL RISK MANAGEMENT
Financial risk management objectives and policies of the TIM
Group
The TIM Group is exposed to the following financial risks in the ordinary course of its business operations:
■ Market risk: stemming from changes in interest rates and exchange rates in connection with financial
assets that have been originated and financial liabilities that have been assumed;
■ Credit risk: representing the risk of non-fulfillment of obligations undertaken by the counterparty with
regard to the liquidity investments of the Group;
■ Liquidity risk: connected with the need to meet short-term financial commitments.
These financial risks are managed by:
■
■
■
■
■
the establishment, at central level, of guidelines for directing operations;
the work of an internal committee that monitors the level of exposure to market risks in accordance with
pre-established general objectives;
the identification of the most suitable financial instruments, including derivatives, to reach pre-established
objectives;
the monitoring of the results achieved;
the exclusion of the use of financial instruments for speculative purposes.
The policies for the management and the sensitivity analyses of the above financial risks by the TIM Group are
described below.
Identification of risks and analysis
The TIM Group is exposed to market risks, as a result of changes in interest rates and exchange rates, in the
markets in which it operates or has bond issues, mainly in Europe, the United States, Great Britain and Latin
America.
The financial risk management policies of the TIM Group are directed towards diversifying market risks,
hedging exchange rate risk in full and minimizing interest rate exposure by an appropriate diversification of the
portfolio, which is also achieved by using carefully selected derivative financial instruments.
The Group defines an optimum composition of its debt structure by balancing fixed and variable-rates and
uses derivative financial instruments to achieve that debt composition. In consideration of the Group's
operating activities, the optimum combination of medium/long-term non-current financial liabilities has been
identified, on the basis of the nominal amount, in the 65%-85% range for the fixed-rate component and in the
15%-35% range for the variable-rate component.
In managing market risk, the Group has adopted Guidelines on "Management and control of financial risk" and
mainly uses the following financial derivatives:
■
Interest Rate Swaps (IRS), to modify the profile of the original exposure to interest rate risks on loans and
bonds, both fixed and variable;
■ Cross Currency and Interest Rate Swaps (CCIRS) and Currency Forwards, to convert loans and bonds issued
in currencies other than euro – principally in US dollars and British pounds – to the functional currencies of
the operating companies.
Derivative financial instruments are designated as fair value hedges for managing exchange rate and interest
rate risks on instruments denominated in currencies other than euro and for managing interest rate risk on
fixed-rate loans. Derivative financial instruments are designated as cash flow hedges when the objective is to
pre-set the exchange rate of future transactions and the interest rate.
All derivative financial instruments are entered into with banking and financial counterparties with at least a
“BBB-” rating from Standard & Poor’s or an equivalent rating and a non-negative outlook. The exposure to the
various market risks can be measured by sensitivity analyses, as set forth in IFRS 7. This analysis illustrates the
effects produced by a given and assumed change in the levels of the relevant variables in the various reference
markets (exchange rates, interest rates and prices) on finance income and expenses and, at times, directly on
equity. The sensitivity analysis was performed based on the suppositions and assumptions indicated below:
■ sensitivity analyses were performed by applying reasonably likely changes in the relevant risk variables to
the amounts in the consolidated financial statements at December 31, 2021;
■ changes in value of fixed-rate financial instruments, other than derivatives, produced by changes in the
reference interest rates, generate an impact on profit only when, in accordance with IAS 39 and IFRS 9,
they are accounted for at their fair value through profit and loss. All fixed-rate instruments, which are
accounted for at amortized cost, are not subject to interest rate risk as defined by IFRS 7;
■
in the case of fair value hedge relationships, fair value changes of the underlying hedged item and of the
derivative instrument, due to changes in the reference interest rates, offset each other almost entirely in
Consolidated financial statements of the
TIM Group
Note 17
Financial risk management
195
the income statement for the year. As a result, these financial instruments are not exposed to the interest
rate risk;
■ changes in the value of designated financial instruments in a cash flow hedge relationship, produced by
changes in interest rates, generate an impact on the debt level and on equity; accordingly, they are
included in this analysis;
■
the changes in value, produced by changes in the reference interest rates, of variable-rate financial
instruments, other than derivatives, which are not part of a cash flow hedge relationship, generate an
impact on the finance income and expenses for the year; accordingly they are included in this analysis.
Exchange rate risk – Sensitivity analysis
At December 31, 2021 (and also at December 31, 2020), the exchange rate risk of the Group’s loans
denominated in currencies other than the functional currency of the consolidated financial statements was
hedged in full. Accordingly, a sensitivity analysis was not performed on the exchange rate risk.
Interest rate risk – Sensitivity analysis
The change in interest rates on the variable component of payables and liquidity may lead to higher or lower
finance income and expenses, while changes in the level of the expected interest rate affect the fair value
measurement of the Group's derivatives. In particular:
■ with regard to derivatives that convert the liabilities contracted by the Group to fixed rates (cash flow
hedging), in line with international accounting standards that regulate hedge accounting, the fair value
(mark-to-market) measurement of such instruments is set aside in a specific unavailable Equity reserve.
The combined change of the numerous market variables to which the mark-to-market calculation is
subject between the transaction inception date and the measurement date renders any assumption about
the trend of the variables of little significance. As the contract expiration date approaches, the accounting
effects described will gradually be absorbed until they cease to exist;
■
if at December 31, 2021 the interest rates in the various markets in which the TIM Group operates had been
100 basis points higher/lower compared to the actual rates, then higher/(lower) finance expenses, before
the income tax effect, would have been recognized in the consolidated income statement of -18 million
euros (36 million euros at December 31, 2020).
Refer to Note "Accounting Policies" for the potential risk generated by the reform of benchmark interest rates.
Allocation of the financial structure between fixed rate and variable
rate
As for the allocation of the financial structure between the fixed-rate component and the variable-rate
component, for both financial assets and liabilities, reference should be made to the following tables. These
tables have been prepared by taking into account the nominal repayment/investment amount (since that
amount expresses the effective interest rate exposure of the Group) and, as far as financial assets are
concerned, the intrinsic nature (financial characteristics and duration) of the transactions under consideration
rather than the stated contractual terms alone. Bearing that in mind, a transaction whose characteristics
(short or very short time frame and frequent renewal) are such that the interest rate is periodically reset on the
basis of market parameters, even though the contract does not call for re-fixing the interest rate (as in the
case of bank deposits), has been considered in the variable rate category.
Total Financial liabilities (at the nominal repayment amount)
(million euros)
Bonds
Loans and other financial liabilities
Total non-current financial liabilities
(including the current portion of
medium/long-term financial liabilities)
Total current financial liabilities
Total
Fixed Rate
12/31/2021
Variable
Rate
Total
Fixed Rate
12/31/2020
Variable
Rate
Total
19,571
5,012
767
4,946
20,338
9,958
14,698
5,402
4,551
3,836
19,249
9,238
24,583
1,264
25,847
5,713
272
5,985
30,296
1,536
31,832
20,100
602
20,702
8,387
546
8,933
28,487
1,148
29,635
Consolidated financial statements of the
TIM Group
Note 17
Financial risk management
196
Total Financial assets (at the nominal investment amount)
(million euros)
Cash and cash equivalents
Titles
Other receivables
Total
Fixed Rate
12/31/2021
Variable
Rate
Total
Fixed Rate
12/31/2020
Variable
Rate
Total
—
1,421
1,008
2,429
6,092
1,616
51
7,759
6,092
3,037
1,059
10,188
—
638
747
1,385
4,433
837
54
5,324
4,433
1,475
801
6,709
With regard to variable-rate financial instruments, the contracts provide for revisions of the relative
parameters to take place within the subsequent 12 months.
Effective interest rate
As to the effective interest rate, for the categories where that parameter can be determined, such parameter
refers to the original transaction net of the effect of any derivative hedging instruments.
The disclosure, which is provided by class of financial asset and liability, has been determined, for purposes of
calculating the weighted average, using the carrying amount adjusted by accruals, prepayments, deferrals and
fair value adjustments: this is therefore the amortized cost, net of accruals and any changes in fair value, as a
consequence of hedge accounting.
Total Financial liabilities
(million euros)
Bonds
Loans and other financial liabilities
Total
Total Financial assets
(million euros)
Cash and cash equivalents
Titles
Other receivables
Total
12/31/2021
12/31/2020
Adjusted carrying
amount
20,249
11,705
31,954
Effective interest
rate (%)
4.32
3.21
3.91
Adjusted carrying
amount
19,117
10,341
29,458
Effective interest
rate (%)
4.47
3.54
4.14
12/31/2021
12/31/2020
Adjusted carrying
amount
6,092
3,037
364
9,493
Effective interest
rate (%)
0.00
1.08
3.40
0.47
Adjusted carrying
amount
4,433
1,475
362
6,270
Effective interest
rate (%)
0.01
0.36
1.25
0.16
As for financial assets, the weighted average effective interest rate is not essentially influenced by the
existence of derivatives.
As for market risk management using derivatives, reference should be made to the Note "Derivatives".
Credit risk
Exposure to credit risk for the TIM Group consists of possible losses that could arise from the failure of either
commercial or financial counterparties to fulfill their assumed obligations. To measure this risk over time for
impairment of financial assets (trade receivables due from customers included), the introduction of IFRS 9
required switching from the incurred loss model pursuant to IAS 39 to the expected credit loss model.
Such exposure mainly stems from general economic and financial factors, the potential occurrence of specific
insolvency situations of some borrowers and other more strictly technical-commercial or administrative
factors.
TIM Group’s maximum theoretical exposure to credit risk is represented by the carrying amount of the financial
assets and trade receivables recorded in the financial statements, excluding guarantees received, described in
the Note "Disputes and pending legal actions, other information, commitments and guarantees".
Risk related to trade receivables is managed using customer scoring and analysis systems. For specific
categories of trade receivables, the Group also makes use of factoring, mainly on a "non-recourse" basis.
Provision charges for bad debts are recorded for specific credit positions that have an element of individual risk.
On credit positions that do not have such characteristics, provision charges are recorded by customer segment
according to the average uncollectibility estimated on the basis of statistics. Further details are provided in the
Note "Trade and miscellaneous receivables and other current assets".
Consolidated financial statements of the
TIM Group
Note 17
Financial risk management
197
Financial assets other than trade receivables are written down for impairment on the basis of a general model
which recognizes expected credit losses over the following 12 months, or over the residual life of the asset in
the event of a substantial worsening of its credit risk. The expected credit loss is calculated based on the
default probability and the percentage of credit that cannot be recovered in the event of a default (the loss
given default).
The model adopted to calculate the expected credit loss is based on the Bloomberg Credit Risk Model, a model
developed by Bloomberg which, starting from Merton's distance-to-default (“DD”) concept, estimates the
probability of default together with the recovery rate. At the same time, the loss given default is defined as the
non-recoverable component of the post-default financial asset.
In particular, the DD - based on balance sheet data - is enriched with a series of additional information by
country (macroeconomic, risk), business sector and individual company, as well as accounting adjustments
aimed at ensuring uniformity of the model's outputs; finally, through a non-linear function of the DD, the
default probability is obtained.
As regards the current COVID-19 pandemic, use of the Bloomberg Credit Risk Model, which, as mentioned, also
takes into account the political and economic situation of the various countries in the short and medium/long-
term (from 3 months to 5 years), ensures that all risk components are adequately reflected in the
measurement of the credit risk.
In order to improve credit risk and reduce pressure on working capital, in February 2020, the corporate joint
venture TIM-SCB JV S.p.A. was established, with an investment of 51% by Santander Consumer Bank (SCB)
and 49% by TIM. The partnership with SCB aims to develop and distribute financial products to finance the
purchase by TIM customers of products relative to the world of telecommunications and the transfer without
recourse of trade receivables.
On November 3, 2020, the new corporate entity received authorization from the Bank of Italy to grant loans to
the public in accordance with Article 106 et seq. of the Consolidated Banking Act (TUB). In the last few months
of 2020 and early 2021, various corporate steps were completed, including the change in the company name
from TIM-SCB JV S.p.A. to TIMFin S.p.A..
TIMFin started operating on February 1, 2021 and over the following months progressively expanded its areas
of operation, completing coverage of the TIM physical sales points at the service of consumer customers.
Moreover, as regards credit risk relating to the asset components which contribute to the determination of
"Net financial debt", it should be noted that the management of the Group's liquidity is guided by conservative
criteria and is principally based on the following:
■ Money market management: the investment of temporary excess cash resources;
■ Bond portfolio management: the investment of medium-term liquidity, as well as the improvement of the
average yield of the assets.
In order to mitigate the risk of the non-fulfillment of the obligations undertaken by the counterparty, deposits
of the European companies are made with leading banking and financial institutions rated no lower than
investment grade and with a non-negative outlook, and investments by the companies in South America are
made with leading local counterparties. Moreover, deposits are made generally for periods of less than three
months. With regard to other temporary investments of liquidity, there is a bond portfolio in which the
investments have a low risk level. All investments have been carried out in compliance with the Group
Guidelines on "Management and control of financial risk".
In order to minimize credit risk, the Group also pursues a diversification policy for its investments of liquidity
and allocation of its credit positions among different banking counterparties. Consequently, there are no
significant positions with any one single counterparty.
Liquidity risk
The Group pursues the objective of achieving an "adequate level of financial flexibility", which is expressed by
maintaining a current treasury margin to cover the refinancing requirements at least for the next 12 months
with irrevocable bank lines and liquidity.
At December 31, 2021, the liquidity margin available for the TIM Group is 13,153 million euros, with an increase
of 532 million euros with respect to end 2020 (12,621 million euros). The impact of the COVID-19 pandemic has
not, therefore, entailed any liquidity risk. Moreover, on January 18, 2021, TIM S.p.A. issued its first 8-year
Sustainability Bond for an amount of 1 billion euros, coupon 1.625%.
19% of gross financial debt at December 31, 2021 (nominal repayment amount) will become due in the next 12
months.
Current financial assets at December 31, 2021, together with unused committed bank lines, are sufficient to
fully cover the Group’s financial liabilities due for the next 36 months.
The following tables report the contractual cash flows, not discounted to present value, relative to gross
financial debt at nominal repayment amounts and the interest flows, determined using the terms and the
interest and exchange rates in place at December 31, 2021. The portions of principal and interest of the hedged
liabilities includes both the disbursements and the receipts of the relative hedging derivatives. Specifically, the
interest portions of "Loans and other financial liabilities" also include those relating to derivatives hedging for
both loans and bonds.
Consolidated financial statements of the
TIM Group
Note 17
Financial risk management
198
Financial liabilities – Maturities of contractually expected disbursements
maturing by 12/31 of the year:
(million euros)
Bonds
Loans and other financial liabilities (*)
Financial lease liabilities
Non-current financial liabilities
Current financial liabilities
Total
Principal
Interest portion
Principal
Interest portion
Principal
Interest portion
Principal
Interest portion
Principal
Interest portion
Principal
Interest portion
(*) These include hedging and non-hedging derivatives.
2025
2022
2023
749
712
(10)
557
141
810
784
(3)
616
155
2026
2024
3,098 2,446 3,324 2,000 1,750
626
444
515
977 1,075 1,570
(22)
(9)
(16)
453
473
587
93
109
126
4,498 3,715 4,888 3,548 3,773
515
736
1,536 — — — —
4 — — — —
6,034 3,715 4,888 3,548 3,773
515
736
880
880
966
962
615
615
After
Total
2026
7,720 20,338
6,861
3,717
5,277
159
(538)
(478)
4,681
1,995
943
319
9,874 30,296
7,266
3,558
1,536
—
4
—
9,874 31,832
7,270
3,558
Derivatives on financial liabilities – Contractually expected interest flows
(million euros)
Disbursements
Receipts
Hedging derivatives – net (receipts)
disbursements
Disbursements
Receipts
Non-Hedging derivatives – net (receipts)
disbursements
Total net receipts (disbursements)
maturing by 12/31 of the year:
2022
256
(357)
(101)
140
(105)
35
(66)
2023
250
(347)
(97)
59
(30)
29
(68)
2024
198
(272)
(74)
145
(124)
21
(53)
2025
175
(232)
(57)
46
(27)
19
(38)
2026
175
(232)
(57)
122
(109)
13
(44)
After
2026
1,423
(1,998)
(575)
—
—
Total
2,477
(3,438)
(961)
512
(395)
—
(575)
117
(844)
Market value of derivatives
In order to determine the fair value of derivatives, the TIM Group uses various valuation models.
The mark-to-market calculation is determined by the present value discounting of the interest and notional
future contractual flows using market interest rates and exchange rates.
The notional amount of IRS does not represent the amount exchanged between the parties and, therefore, is
not a measurement of credit risk exposure, which, instead, is limited to the amount of the difference between
the interest rates paid/received.
The market value of CCIRSs, on the other hand, also depends on the differential between the reference
exchange rate at the date of signing the contract and the exchange rate at the date of measurement, since
CCIRSs involve the exchange of the reference interest and principal, in the respective denomination currencies.
Options are measured according to the Black & Scholes or Binomial models and involve the use of various
measurements factors, such as: the lifetime horizon of the option, the risk-free rate of return, current price,
volatility and any cash flows (e.g. dividend) of the underlying financial instrument, and the exercise price.
Consolidated financial statements of the
TIM Group
Note 17
Financial risk management
199
NOTE 18
DERIVATIVES
For hedge accounting we continued to apply the rules established by IAS 39.
Derivative financial instruments are used by the TIM Group to hedge its exposure to foreign exchange rate
risks, to manage interest rate risk and to diversify the parameters of debt so that costs and volatility can be
reduced to within predetermined operational limits.
Derivative financial instruments existing at December 31, 2021 are principally used to manage debt positions.
They include interest rate swaps (IRSs) used to reduce the interest rate exposure of fixed-rate bank loans and
bonds, as well as cross currency and interest rate swaps (CCIRSs), currency forwards and foreign exchange
options to convert the loans/receivables secured in currencies different from the functional currencies of the
various Group companies.
IRS transactions, provide for or may entail, at specified maturity dates, the exchange of flows of interest,
calculated on the notional amount, at the agreed fixed or variable rates.
The same also applies to CCIRS transactions which, in addition to the settlement of periodic interest flows, may
provide for the exchange of principal, in the respective currencies of denomination, at maturity and possibly
spot.
Hedging: economic relationship between underlying
instrument and derivatives
Hedging relationships recorded in hedge accounting at 12/31/2021 belong to two categories: i) hedging of the
fair value of bond issues denominated in euros and ii) hedging of cash flows from income flows of bond issues
and future trade items denominated in currencies other than the Euro.
In the first case, the hedged risk is represented by the fair value of the bond attributable to euro interest rates
and is hedged by IRS. The current value of both the underlying and derivative instruments, depends on the
structure of the Euro market interest rates at the basis of the calculation of discount factors and floating
interest flows of the derivative. In particular, interest rate fluctuations translate as changes in the discount
factors of the fixed-interest expense flow on the underlying instrument; on the derivative, changes in the
discount factor of interest income will occur, as well as changes in the nominal flow of variable interest (only
partially corrected by the discounting effect). The effects induced on the derivative are opposite, in accounting
terms, to the effects on the underlying instrument.
In the second case, relating to the bond issues, the hedged risk is represented by the variability in cash flows
(and the repayment of the nominal amount) generated by exchange rates; hedging comprises combinations
of IRS and CCIRS that synthetically transform fixed rate foreign currency income flows into fixed rate euro
flows. In this case, exchange rate fluctuations will usually produce physiologically opposite effects on the
underlying instrument and on the derivative, as the receivable leg of the latter faithfully reflects the underlying
instrument, while the payable leg is denominated in euros, and is therefore insensitive to the exchange rate. As
regards the commercial forecast transactions, the risk hedged is always ascribed to the variability of the cash
flow linked to exchange rates, but the hedge is assured through an active deposit denominated in the same
currency as the items hedged; the write-backs/write-downs of the deposit in foreign currency generated by
oscillations in the exchange rate are structurally the same and opposite to the impacts produced on the
underlying items.
Hedges: determination of the hedge ratio
The types of hedging implemented by the Group require the adoption of a hedge ratio equal to 1:1, as the
types of risk hedged (interest rate and exchange rate risks) are such as to generate economic effects in the
underlying instruments that can only be offset by the same notional quantities of derivative instruments.
Hedges: potential sources of ineffectiveness
The contractualization of derivatives to hedge financial risks takes place at arm's length and aims to
completely neutralize the effects produced by such instruments.
However, in practice, both fair value hedges and cash flows hedges, although financially perfect, may not
guarantee an absolute accounting effectiveness due to the many counterparty banks involved, to the peculiar
nature of certain derivatives in terms, for example, of fixing and/or indexing of variable parameters, and to the
possible imperfect coincidence between critical terms.
The first table indicates total financial derivatives of the TIM Group at December 31, 2021 and 2020; in
compliance with standard IFRS 7, notional amounts are shown with reference to all the derivative instruments
involved in the hedges.
The following tables break down financial derivatives by type of risk for each kind of hedging, separating
financial assets and liabilities. For CCIRS, the notional amount refers to the contractual value in euros, for IRS in
a currency other than the euro, the value is indicated at the market exchange rate.
Consolidated financial statements of the
TIM Group
Note 18
Derivatives
200
Type
(million euros)
Hedged risk
Notional
amount at
12/31/2021
Notional
amount at
12/31/2020
Interest rate risk
Interest rate risk and
currency exchange rate
risk
Interest rate swaps
Cross Currency and
Interest Rate Swaps
(CCIRS)
Total Fair Value Hedge Derivatives
Interest rate swaps
Cross Currency and
Interest Rate Swaps
(CCIRS)
Total Cash Flow Hedge Derivatives
Total Non-Hedge Accounting Derivatives
Total TIM Group's Derivatives
Interest rate risk
Interest rate risk and
currency exchange rate
risk
300
—
300
4,855
5,195
10,050
2,702
13,052
4,334
—
4,334
5,594
5,042
10,636
604
15,574
Mark to Market
Spot* (Clean
Price) at
12/31/2021
3
Spot Mark-to-
Market* (Clean
Price) at
12/31/2021
192
—
3
375
173
548
60
611
—
192
421
(519)
(98)
82
176
* The Spot Mark-to-Market above represents the market valuation of the derivative, net of the accrued portion of the flow in progress.
The positions in non hedge accounting derivatives also include IRS Euros for a total notional amount of 1,834
million euros; specifically, these are fair value hedges of bond loans in euros, issued by TIM S.p.A., which
transform the fixed-rate coupon into a variable-rate one. The hedges - classified and booked as fair value
hedges starting 2013 - have been retroactively discontinued from June 30, 2021 due to the failure of the
prospective efficiency tests carried out at December 31, 2021. The test was failed due to the procedure used for
fixing in arrears the variable rate benchmark of the derivatives - defined by contract - which can generate
misalignments of fair value between the derivative and the underlying bond loan in the prospective volatility
risk reduction test in the approach to the maturity date of the hedge.
It is specified that, although formally classified as non-hedge, these derivatives substantively continue to
guarantee the desired profile of financial expenses in connection with the related bonds.
In the same item, the following are also noted:
■
the value - equal to a fair value of 15 million euros (liabilities) - of the rights envisaged in the Transaction
Agreement in the favor of Teemo Bidco Sarl, as minority shareholder, under the scope of the FiberCop
transaction
■
the value of the right held by TIM Brasil to subscribe shares of the Brazilian C6 Bank - of 72 million euros -
on the basis of a commercial agreement signed by the two companies in March 2020.
Fair value hedges
(million euros)
Accounting item
Notional
value
Carrying
amount
Change in
fair value
for the
year
a)
300
3
(190)
Hedging derivatives relating to
hedged items classified as current
financial
-
assets/liabilities
Current/non-current assets.
Hedging derivatives relating to
hedged items classified as current
-
financial
assets/liabilities
Current/non-current assets.
b)
—
a)+b)
300
Bonds
liabilities
-
Current/non-current
300
3
—
—
—
—
3
1
4
(303)
—
(190)
value
Fair
and
measurements at amortized cost
adjustment
c)
a)+b)+c)
(3)
183
(4)
Interest rate swaps
Assets
Liabilities
Cross Currency and Interest Rate
Swaps (CCIRS)
Assets
Liabilities
Derivative instruments (spot value)
Accruals
Derivative instruments (gross value)
Underlying instruments (1)
of which fair value adjustment
Ineffectiveness (2)
Fair value adjustment for hedging
settled in advance (3)
(1) Includes the amortized cost value of bonds currently hedged plus the fair value adjustment.
(2) Also considers the year’s change in derivatives and underlyings belonging to hedges closed early and discontinued in 2021.
(3) Referred to bonds no longer hedged, which are therefore not presented in the table.
(190)
Consolidated financial statements of the
TIM Group
Note 18
Derivatives
201
Cash flow hedges
(million euros)
Accounting item
Notional
value
Carrying
amount
Change in
fair value
for the year
Change in
cumulative
fair value
Interest rate swaps
Assets
Liabilities
Cross Currency and Interest Rate
Swaps (CCIRS)
Hedging
derivatives
relating to hedged items
classified
current
as
financial assets/liabilities -
Current/non-current
assets.
Hedging
derivatives
relating to hedged items
classified
current
as
financial assets/liabilities -
Current/non-current
assets.
Assets
Liabilities
Derivative instruments (spot value)
Accruals
Derivative instruments (gross
value)
of which equity reserve gains and
losses
Determination of ineffectiveness
Change in derivatives
Change in underlying instruments (4)
a)
4,855
375
(46)
1,131
(756)
(274)
228
b)
5,195
173
692
a)+b)
10,050
755
(582)
548
65
613
425
267
646
255
c)
d)
Ineffectiveness (5)
Positive
fair
value
adjustment of
financial
derivatives - non-hedging
c)+d)
Equity reserve
Equity reserve balance
of which due to the fair value of
hedging settled in advance
Reclassification to P&L
Negative reversal of the
reserve for the fair value
adjustment of hedging
derivatives (cash flow
hedges)
(167)
—
—
141
(132)
13
(4) Hypothetical derivatives used in measuring the effectiveness of cash flow hedges.
(5) The ineffectiveness, due to its nature and calculation, does not necessarily coincide with the difference in cumulative changes in the fair value
of derivatives and the underlying instrument; the effect due to the adoption of CVA/DVA is not considered.
As regards hedging of the forecast transaction - reflected only in the numbers of the equity reserve in the table
above - these are future commercial flows for 106 million USD, to be paid in 7 years, hedged by a deposit
denominated in the same currency and amount, renewed every three months.
The change in the equity reserve attributable to the effective hedging component is equal to 255 million euros.
Consolidated financial statements of the
TIM Group
Note 18
Derivatives
202
Changes in the equity cash flow
hedge reserve
(million euros)
Balance
12/31/2020
Changes
Hedging
instrument gains
/ losses
Reversal from
reclassification
Reversal from
fair value
adjustment of
hedging settled
in advance
Balance
12/31/2021
Other
(460)
(460)
Change in the effective fair
value of derivatives
Change in the CVA/DVA
Reversal for ineffectiveness 2019
Amortization in P&L of the fair
value of hedging settled in
advance
Other
Overall change
None of the parameters represented includes any income tax effect.
255
19
19
—
—
(167)
The transactions hedged by cash flow hedges will generate cash flows and produce economic effects in the
income statement in the periods indicated in the following table:
Denomination
currency
Notional amount
in denomination
currency
(millions)
Start of
period
End of
period
Rate applied
Interest
period
GBP
JPY*
JPY**
USD
USD
USD
USD
USD
375
20,000
20,000
1,000
1,500
1,000
1,000
1,000
Jan-22 May-23
Jan-22 Oct-29
Jan-22 Oct-29
Jan-22 Nov-33
Jan-22 May-24
Jan-22 Sept-34
July-36
Jan-22
Jun-38
Jan-22
Hedging of
rate in euro
Hedging of
notional
amount in
euro
(millions)
552
174
138
849
1,099
794
791
645
5.535%
5.940%
0.696%
5.994%
4.226%
4.332%
5.884%
7.470%
5.875%
Annually
5.000% Semiannuall
y
0.750% Semiannuall
y
6.375% Semiannuall
y
5.303% Semiannuall
y
6.000% Semiannuall
y
7.200% Semiannuall
y
7.721% Semiannuall
y
* Income cash flows are denominated in USD and calculated on a notional amount of USD 187.6 million.
** Hedging of the sole income cash flow following a step-up on the loan.
The method selected to test the effectiveness retrospectively and, whenever the main terms do not fully
coincide, prospectively, for cash flow hedge derivatives and fair value hedge derivatives is the Volatility Risk
Reduction (VRR) Test. This test assesses the ratio between the portfolio risk (meaning the derivative and the
item hedged) and the risk of the hedged item taken individually. In essence, the portfolio risk must be
significantly lower than the risk of the hedged item.
Consolidated financial statements of the
TIM Group
Note 18
Derivatives
203
NOTE 19
SUPPLEMENTARY DISCLOSURES ON FINANCIAL
INSTRUMENTS
Measurement at fair value
For the purposes of the comparative information between the carrying amounts and fair value of financial
instruments, required by IFRS 7, the majority of the non-current financial liabilities of the TIM Group consist of
bonds, whose fair value is directly observable in the financial markets, as they are financial instruments that
due to their size and diffusion among investors, are commonly traded on the relevant markets (see the Note
"Non-current and current financial liabilities"). For other types of financing, however, the following
assumptions have been made in determining fair value:
■
■
■
for variable-rate loans, the nominal repayment amount has been assumed;
for fixed-rate loans, the present value of future cash flows at the market interest rates of December 31,
2021 has been assumed;
the carrying amount has been used for some types of loans granted by government institutions for social
development purposes, for which fair value cannot be reliably calculated.
Lastly, for the majority of financial assets, their carrying amount is a reasonable approximation of their fair
value, since these are short-term investments that are readily convertible into cash.
The fair value measurement of the financial instruments of the Group has been classified in the three levels set
out in IFRS 7. In particular, the fair value hierarchy introduces the following levels of input:
■ Level 1: quoted prices in active markets;
■ Level 2: prices calculated using observable market inputs;
■ Level 3: prices calculated using inputs that are not based on observable market data.
The following tables contain, for assets and liabilities at December 31, 2021 and December 31, 2020 and in
accordance with the categories established by IFRS 9, the supplementary disclosures on financial instruments
required by IFRS 7 and the schedules of gains and losses. They do not include Discontinued operations/Non-
current assets held for sale and Liabilities directly associated with Discontinued operations/Non-current assets
held for sale.
Key for IFRS 9 categories
Financial assets measured at:
Amortized cost
Fair value through other comprehensive income
Fair value through profit or loss
Financial liabilities measured at:
Amortized cost
Fair value through profit or loss
Hedging Derivatives
Not applicable
Acronym
AC
FVTOCI
FVTPL
AC
FVTPL
HD
n.a.
Consolidated financial statements of the
TIM Group
Note 19
Supplementary disclosures on financial instruments
204
Carrying amount and fair value hierarchy for each category/class of financial asset/liability and comparison with
their fair value at 12/31/2021
(million euros)
categories Notes Carrying
IFRS 9
amount
at
12/31/20
21
Amortized
cost
Amounts recognized in financial
statements
Fair value
recognized in
the
statements
of
comprehensi
ve income
Fair value
through
profit or
loss
Levels of hierarchy or of
fair value
Level 1 Level 2 Level 3 Carrying
amount
under
IFRS 16
Fair Value
at
12/31/2021
ASSETS
Financial assets measured at
amortized cost
Non-current assets
Receivables from employees
Other financial receivables
Miscellaneous non-current
receivables
Current assets
Receivables from employees
Other short-term financial
receivables
Cash and cash equivalents
Trade receivables
Other current receivables
Contract assets
Financial assets measured at fair
value through other comprehensive
income
Non-current assets
Other investments
Securities other than investments
Current assets
Trade receivables
Securities other than investments
Financial assets measured at fair
value through profit or loss
Non-current assets
Non-hedging derivatives
Current assets
Securities other than investments
Non-hedging derivatives
Hedging Derivatives
Non-current assets
Hedging Derivatives
Current assets
Hedging Derivatives
Financial receivables for lease
contracts
Non-current assets
Current assets
Total
AC
10,1
15
10,115
—
—
10,115
(9)
(9)
(10)
39
11
4
(9)
12
2
14
9
(9)
(9)
(13)
(13)
(13)
6,90
4
2,6
75
1
01
2
39
211
144
12
9
6,904
2,675
101
20
FVTOCI
0
1,6
71
—
1,671
—
1,671
114
42
156
—
—
1,515
—
—
1,515
—
—
—
2,012
1,933
79
875
100
734
41
3
2
1
100
—
734
41
1,935
80
—
—
15
(8)
(9)
6
—
(13)
(9)
1,5
15
8
75
(9)
(9)
(9)
0
34
10
7
41
2,0
15
1,9
35
(9)
(9)
0
01
(9)
(9)
45
8
1
5
FVTPL
HD
n.a.
6
14,7
77
10,115
3,683
878 2,249 2,270
42
875
2,015
101
45
56
101
101
14,777
Consolidated financial statements of the
TIM Group
Note 19
Supplementary disclosures on financial instruments
205
The financial instruments belonging to hierarchy level 3 of fair value are represented by the following Other
investments recognized as Non-current assets, for which directly or indirectly observable prices on the market
are not available:
■ Northgate CommsTech Innovations Partners L.P.;
■ UV T-Growth;
■ Other minor companies.
Northgate CommsTech Innovations Partners L.P. and UV-T Growth was measured based on the latest
available Net Asset Values reported by the fund managers.
The other minor companies were measured on the basis of an analysis, deemed reliable, of their main assets
and liabilities.
The profit/(loss) recognized in Other components of the Consolidated Statements of Comprehensive Income
were recognized within the scope of the Reserve for financial assets measured at fair value through other
comprehensive income.
(million euros)
IFRS 9
categories Notes Carrying
amount
at
12/31/20
21
Amortized
cost
Amounts recognized in financial
statements
Fair value
recognized in
the
statements
of
comprehensi
ve income
Fair value
through
profit or
loss
Levels of hierarchy or of
fair value
Level 1 Level 2 Level 3 Carrying
amount
under
IFRS 16
Fair Value
at
12/31/2021
AC/HD
35,0
96
35,096
LIABILITIES
Financial liabilities measured at
amortized cost
Non-current liabilities
Financial payables (medium/long-
term)
Current liabilities
Financial payables (short-term)
Trade and miscellaneous payables
and other current liabilities
Contract liabilities
Financial liabilities measured at fair
value through profit or loss
Non-current liabilities
Non-hedging derivatives
Current liabilities
Non-hedging derivatives
Hedging Derivatives
Non-current liabilities
Hedging Derivatives
Current liabilities
Hedging Derivatives
Financial liabilities for lease
contracts
Non-current liabilities
Current liabilities
Total
(15)
(15)
(23)
(23)
22,0
83
5,8
47
7,05
6
11
0
53
(15)
(15)
17
6
(15)
(15)
3
1,3
99
1,3
37
62
(15)
(15)
4,7
15
4,0
64
6
FVTPL
HD
n.a.
51
41,2
63
22,083
5,847
7,056
110
53
17
36
—
—
—
1,399
1,337
62
2
36
1,337
62
15
—
—
—
35,096
1,399
53
— 1,437
4,715
4,064
651
4,715
15
5,542
43,071
36,077
53
1,399
Note that financial liabilities include a financial instrument for an amount of 15 million euros, belonging to
hierarchy level 3 of fair value, for which directly or indirectly observable prices on the market are not available.
This financial liability refers to the rights envisaged in the Transaction Agreement in the favor of Teemo Bidco
Sarl, as minority shareholder, under the scope of the FiberCop transaction.
The measurement of the economic value of the financial liability has been taken using a valuation model
defined internally by TIM. Through an econometric approach, the correlation has been first estimated between
the targets set at a national level and a series of macro economic and social-demographic variables. Then
taking into account the uncertainty as to how these variables will evolve and the market share of FiberCop,
through Monte Carlo simulation, a series of possible developments of the phenomenon was calculated and the
expected value of the financial liability, determined.
Consolidated financial statements of the
TIM Group
Note 19
Supplementary disclosures on financial instruments
206
Carrying amount and fair value hierarchy for each category/class of financial asset/liability and comparison with
their fair value at 12/31/2020
(million euros)
categories Notes
IFRS 9
Carrying
amount in
financial
statements
at
12/31/2020
Amortized
cost
Amounts recognized in financial
statements
Fair value
recognized in
the
statements
of
comprehensi
ve income
Fair value
through
profit or
loss
Levels of hierarchy or of
fair value
Level 1 Level 2 Level 3 Carrying
amount
under
IFRS 16
Fair Value at
12/31/2020
ASSETS
Financial assets measured at
amortized cost
Non-current assets
Receivables from employees
Other financial receivables
Miscellaneous non-current
receivables
Current assets
Receivables from employees
Other short-term financial
receivables
Cash and cash equivalents
Trade receivables
Other current receivables
Contract assets
Financial assets measured at fair
value through other
comprehensive income
Non-current assets
Other investments
Securities other than investments
Current assets
Trade receivables
Securities other than investments
Financial assets measured at fair
value through profit or loss
Non-current assets
Non-hedging derivatives
Current assets
Securities other than investments
Non-hedging derivatives
Hedging Derivatives
Non-current assets
Hedging Derivatives
Current assets
Hedging Derivatives
Financial receivables for lease
contracts
Non-current assets
Current assets
Total
FVTOCI
FVTPL
HD
n.a.
AC
8,263
8,263
—
—
8,263
(9)
(9)
(10)
(9)
(9)
(9)
(13)
(13)
(13)
(8)
(9)
(13)
(9)
(9)
(9)
(9)
(9)
(9)
(9)
(9)
40
213
151
13
2
4,829
2,905
85
25
821
54
—
767
419
44
325
50
2,067
1,970
97
98
43
55
11,668
40
213
151
13
2
4,829
2,905
85
25
—
821
—
821
54
—
—
767
16
38
—
—
767
—
—
419
44
325
50
216
192
24
44
—
325
50
1,970
97
—
—
—
1,851
1,778
73
8,263
2,672
635 1,092 2,177
38
419
2,067
98
43
55
98
98
11,668
Consolidated financial statements of the
TIM Group
Note 19
Supplementary disclosures on financial instruments
207
(million euros)
categories Notes
IFRS 9
Carrying
amount in
financial
statements
at
12/31/2020
Amortized
cost
Amounts recognized in financial
statements
Fair value
recognized in
the
statements
of
comprehensi
ve income
Fair value
through
profit or loss
Levels of hierarchy
or of fair value
Level 1
Level 2
Fair Value at
12/31/2020
Carrying
amount
under IFRS
16
LIABILITIES
Financial liabilities measured at
amortized cost
Non-current liabilities
Financial payables (medium/long-
term)
Current liabilities
Financial payables (short-term)
Trade and miscellaneous payables
and other current liabilities
Contract liabilities
Financial liabilities measured at fair
value through profit or loss
Non-current liabilities
Non-hedging derivatives
Current liabilities
Non-hedging derivatives
Hedging Derivatives
Non-current liabilities
Hedging Derivatives
Current liabilities
Hedging Derivatives
Financial liabilities for lease
contracts
Non-current liabilities
Current liabilities
Total
AC/HD
29,875
29,875
(15)
21,813
21,813
(15)
(23)
(23)
3,613
4,329
120
3,613
4,329
120
FVTPL
HD
n.a.
12
10
2
1,894
1,832
62
4,830
4,199
631
36,611
(15)
(15)
(15)
(15)
(15)
(15)
32,299
—
—
12
1,894
12
10
2
—
—
—
1,894
1,832
62
10
2
1,832
62
29,875
1,894
12
—
1,906
4,830
4,199
631
4,830
5,103
39,308
Gains and losses by IAS 9 category - Year 2021
(million euros)
Assets measured at amortized cost
Assets and liabilities measured at fair value through profit or loss
Assets measured at fair value recognized in the statements of
comprehensive income
Liabilities measured at amortized cost
Total
Gains and losses by IAS 9 category - Year 2020
(million euros)
Assets measured at amortized cost
Assets and liabilities measured at fair value through profit or loss
Assets measured at fair value recognized in the statements of
comprehensive income
Liabilities measured at amortized cost
Total
Categories
IFRS9
Net
gains/(losses)
2021
of which
interest
AC
FVTPL
FVTOCI
AC
(275)
(10)
5
(958)
(1,238)
62
870
932
IFRS 9
categories
AC
FVTPL
FVTOCI
AC
Net
gains/(losses)
2020
(441)
108
3
(967)
(1,297)
of which
interest
23
961
984
Consolidated financial statements of the
TIM Group
Note 19
Supplementary disclosures on financial instruments
208
NOTE 20
PROVISIONS FOR EMPLOYEE BENEFITS
These decreased by 64 million euros compared to December 31, 2020. The figure breaks down as follows:
(million euros)
12/31/2019
Decrease
Increases/
Present value
Exchange
differences and
other changes
Provision for employee severance
indemnities
Provisions for pension plans
Provision for termination benefit incentives
and corporate restructuring
Total other employee benefits
Total
of which:
non-current portion
current portion (*)
(a)
(b)
(a+b)
841
24
559
583
1,424
1,182
242
(*) The current portion refers only to Other provisions for employee benefits.
—
1
34
35
35
(142)
(2)
(552)
(554)
(696)
2
—
(2)
(2)
—
12/31/2020
701
23
39
62
763
724
39
(million euros)
12/31/2020
Increases/
Present value
Decrease
Exchange
differences and
other changes
12/31/2021
Provision for employee severance
indemnities
Provision for pension and other plans
Provision for termination benefit incentives
and corporate restructuring
Total other employee benefits
Total
of which:
non-current portion
current portion (*)
(a)
(b)
(a+b)
701
23
39
62
763
724
39
(*) The current portion refers only to Other provisions for employee benefits.
20
8
8
28
(48)
(2)
(44)
(46)
(94)
5
(3)
(3)
2
678
21
—
21
699
699
—
The Provision for employee severance indemnities (T.F.R.) only refers to Italian companies and decreased on
the whole by 23 million euros. The decreases of 48 million euros relating to indemnities paid during the year to
employees who terminated employment or for advances.
The increase of 20 million euros in the “Increases/Present value” column consists of the following:
(million euros)
(Positive)/negative effect of curtailment
Current service cost (*)
Finance expenses
Net actuarial (gains) losses for the year
Total
Effective return on plan assets
2020
2021
—
(1)
—
—
6
5
15
(5)
—
20
there are no assets servicing the
plan
(*) The portions intended for the INPS Treasury Fund or for the supplementary pension funds have been recorded under “Employee benefits
expenses” under “Social security expenses”. The latter account is used only for the severance indemnity expenses of companies with less than 50
employees.
The net actuarial losses recognized at December 31, 2021 amounted to 15 million euros (net actuarial gains of
5 million euros in 2020), and are essentially connected with the inflation rate forecast, which went from 0.8%
at December 31, 2020 to 1.75% at December 31, 2021; the discount rate also increased, going from the 0.34%
used at December 31, 2020 to 0.98% at December 31, 2021.
According to national law, the amount of provision for employee severance indemnities to which each
employee is entitled depends on the period of service and must be paid when the employee leaves the
company. The amount of severance indemnity due upon termination of employment is calculated on the basis
of the period of employment and the taxable compensation of each employee. This liability is adjusted
annually based on the official cost-of-living index and legally-set interest. The liability is not associated with
any vesting condition or period or any funding obligation; accordingly, there are no assets servicing the
Consolidated financial statements of the
TIM Group
Note 20
Provisions for employee benefits
209
provision. The liability is recognized net of the partial prepayments of the provision and payments of the
amounts obtained by employees for the reasons permitted by the applicable regulations.
Under the regulations introduced by Italian Legislative Decree 252/2005 and Law no. 296/2006 with which, for
companies with at least 50 employees, the severance indemnities accruing from 2007 are assigned, as elected
by the employees, to either the INPS Treasury Fund or to supplementary pension funds and take the form of a
"defined contribution plan".
However, for all companies, the revaluations of the amounts in the provision for employee severance
indemnities existing at the election date, and also the amounts accrued and not assigned to supplementary
pension plans for companies with less than 50 employees, are retained in the provision for employee
severance indemnities. In accordance with IAS 19, the provision has been recognized as a "defined benefit
plan".
In application of IAS 19, employee severance indemnities have been calculated using the "Projected Unit Credit
Method" as follows:
■
■
■
the future possible benefits which could be paid to each employee registered in the program in the event
of retirement, death, disability, resignation etc. have been projected on the basis of a series of financial
assumptions (cost-of-living increases, interest rate, increase in compensation etc.). The estimate of future
benefits includes any increases for additional service seniority, as well as the estimated increase in the
compensation level at the measurement date – only for employees of companies with less than 50
employees during the year 2006;
the average present value of future benefits has been calculated, at the measurement date, on the basis
of the annual interest rate adopted and of the probability that each benefit actually has to be paid;
the liability of each company concerned has been calculated as the average present value of future
benefits that will be generated by the existing provision at the measurement date, without considering any
future accruals (for companies with at least 50 employees during the year 2006) or by identifying the
amount of the average present value of future benefits which refer to the past service already accrued by
the employee in the company at the measurement date (for the others), i.e. adopting the "service pro-
rate".
The following assumptions have been made:
FINANCIAL ASSUMPTIONS
Inflation rate
Discount rate
Employee severance indemnities annual increase rate
Annual real wage growth:
equal to or less than 40 years of age
over 40 but equal to or less than 55 years of age
over 55 years of age
DEMOGRAPHIC ASSUMPTIONS
Probability of death
Probability of disability
Probability of resignation:
up to 40 years of age
from 41 to 50 years of age
from 51 to 59 years of age
from 60 to 64 years of age
aged 65 and over
Probability of retirement
Executives
1.75% per annum
0.98% per annum
2.81% per annum
1.0% per annum
0.5% per annum
0.0% per annum
Executives
Non-executives
1.75% per annum
0.98% per annum
2.81% per annum
1.0% per annum
0.5% per annum
0.0% per annum
Non-executives
Mortality tables
RG48 published
by Ragioneria
Generale dello Stato
Mortality tables
RG48 published
by Ragioneria
Generale dello Stato
INPS tables divided by age and
sex
INPS tables divided by age and
sex
1.00%
0.50%
0.50%
0.50%
None
100% on achievement of the AGO requirements aligned with D.L.
4/2019
2.00%
2.00%
1.00%
None
None
Probability of receiving at the beginning of the year an
advance from the provision for severance indemnities
accrued equal to 70%
The application of the above assumptions resulted in a liability for employee severance indemnities of 678
million euros at December 31, 2021 (701 million euros at December 31, 2020).
1.5%
per annum
1.5%
per annum
Reported below is a sensitivity analysis for each significant actuarial assumption adopted to calculate the
liability as at year end, showing how the liability would have been affected by changes in the relevant actuarial
assumption that were reasonably possible at that date, stated in amounts.
The weighted average duration of the obligation of the Parent amounted to 10 years.
Consolidated financial statements of the
TIM Group
Note 20
Provisions for employee benefits
210
CHANGES IN ASSUMPTIONS
Turnover rate:
+0.25 p.p.
- 0.25 p.p.
Annual inflation rate:
Annual discount rate:
+0.25 p.p.
- 0.25 p.p.
+0.25 p.p.
- 0.25 p.p.
Amounts
(million euros)
2
(2)
(12)
11
15
(16)
The Provision for pension and other plans amounted to 21 million euros at December 31, 2021 (23 million
euros at December 31, 2020) and mainly represented pension plans in place at foreign companies of the
Group.
The Provisions for incentive to take early retirement and company restructuring reduce by a total of 39
million euros, zeroing during the period, as a result of outgoings and the reclassification to debt of the amounts
not yet paid, relative to both plans already accrued during previous years and 2021 expenses, following the
application of the trade union agreements signed by the Parent Company and the trade unions on March 8,
2021 and on April 23, 2021 as well as the expenses related to the agreements signed respectively on March 15,
2021 by the company Olivetti, on April 27, 2021 by the company Noovle S.p.A. and on May 6, 2021 by the
company Telecom Italia Sparkle.
Consolidated financial statements of the
TIM Group
Note 20
Provisions for employee benefits
211
NOTE 21
PROVISIONS
These increased by 346 million euros compared to December 31, 2020. The breakdown is as follows:
(million euros)
12/31/2020
Increase
Taken to
income Used directly
Provision for taxation and tax risks
Provision for restoration costs
Provision for legal disputes
Provision for commercial risks
Provision for risks and charges on
investments and corporate-related
transactions
Other provisions
Total
of which:
non-current portion
current portion
6
15
62
657
2
2
744
—
—
—
(3)
(4)
—
(7)
(3)
(8)
(370)
(7)
—
(2)
(390)
67
274
747
29
21
4
1,142
770
372
Exchange
differences
and other
changes
3
—
2
1
(7)
—
(1)
12/31/2021
73
281
441
677
12
4
1,488
926
562
The non-current portion of provisions for risks and charges mainly relates to some of the provision for
commercial risks, the provision for legal disputes and the provision for restoration costs. More specifically, in
accordance with accounting policies, the total amount of the provision for restoration costs is calculated by re-
measuring the amounts for which a probable outlay is envisaged, based on the estimated inflation rates for
the individual due dates, and subsequently discounted to the reporting date based on the average cost of
debt, taking into account cash outflow forecasts.
The provision for taxation and tax risks increased by 6 million euros compared to December 31, 2020.
The provision for restoration costs refers to the provision for the costs expected to be incurred for the
restoration of leased properties and sites used in the mobile sector and for the dismantling of certain assets
(particularly batteries and wooden piling); it mainly refers to the parent company (149 million euros), the
company FiberCop (127 million euros) and the Brazil Business Unit (5 million euros).
The provision for legal disputes included the provision for litigation with other counterparties and employees.
The amount at December 31, 2021 included 356 million euros for the Domestic Business Unit, a reduction on
December 31, 2020 following use for transactions and legal agreements and 84 million euros for the Brazil
Business Unit.
The provision for commercial risks relates to the Domestic Business Unit and mainly the Parent Company TIM
S.p.A.. In 2021, it increased by 648 million euros, mainly following the posting of 548 million euros of
Contractual Risk Provisions for Onerous Contracts (IAS 37) relative to contracts with certain counterparties for
multimedia content offers. Further details are provided in the Note “Significant non-recurring Events and
Transactions”.
The provision for risks and charges on investments and corporate-related transactions reduces by 9 million
euros on the previous year.
Other provisions for risks and charges come to 4 million euros and are essentially attributable to the
Domestic Business Unit.
Consolidated financial statements of the
TIM Group
Note 21
Provisions
212
NOTE 22
MISCELLANEOUS PAYABLES AND OTHER NON-
CURRENT LIABILITIES
This item decreased by 2,189 million euros compared to December 31, 2020. The figure breaks down as
follows:
(million euros)
Miscellaneous payables (non-current)
Payables to social security agencies
Income tax payables (*)
Other payables
Other non-current liabilities
Deferred revenues from customer contracts (Contract liabilities)
Other deferred revenue and income
Capital grants
Total
(*) Analyzed in the Note "Income tax expense".
Miscellaneous non-current payables include:
12/31/2021
12/31/2020
452
231
7
690
88
368
267
723
1,413
501
493
1,748
2,742
106
460
294
860
3,602
(a)
(b)
(a+b)
■ Payables to social security agencies amounting to 452 million euros, mainly relating to the
aforementioned debt position with INPS for the application of the agreements signed with the trade
unions relating to the application of Article 4, paragraphs 1-7ter, of Italian Law 92 of June 28, 2012 (for
further details see the Note “Employee benefits expenses”). This debt position (non-current and current
portion) is as follows:
(million euros)
Non-current payables
Due from 2 to 5 years after the end of the reporting period
Due beyond 5 years after the end of the reporting period
Current payables
Total
12/31/2021
12/31/2020
443
9
452
258
710
494
7
501
298
799
■ other payables equal to 7 million euros at December 31, 2021. These decreased from December 31, 2020,
essentially due to the reclassification to miscellaneous current payables of 1,738 million euros relating to
the last installment to be paid by September 2022 relating to the purchase - which took place in 2018 - of
the rights-of-use for the frequencies in the 694-790 MHz, 3600-3800 MHz and 26.5-27.5 GHz bands, to be
allocated on 5G mobile communication services in Italy.
The other non-current liabilities include:
■ Deferred revenues from contracts with customers (contract liabilities) of 88 million euros (106 million
euros at December 31, 2020) which are reversed to the income statement according to the duration of the
contractual obligations between the parties, averaging 24 months; therefore, the balance as at December
31, 2021 will be reversed to the income statement generally by 2023. In particular, the item includes:
•
•
•
•
TIM S.p.A. deferred revenues for subscription charges and rent and maintenance payments (42
million euros);
TIM S.p.A. deferred revenues for network access subscription charges (25 million euros);
Deferred revenues of TIM S.p.A. for outsourcing charges (13 million euros);
Deferred revenues for activation and installation fees charged on new TIM S.p.A. customer contracts
(4 million euros): in this regard, it is noted that under IFRS 15 activation/installment revenues are
allocated to other contract obligations and recognized throughout the period of performance of the
contract, as they do not relate to separate performance obligations.
■ Other deferred revenue and income totaling 368 million euros; the item consisted of the non-current
portion (approx. 108 million euros) of the deferred gain on the sale and lease-back of telecommunication
towers by the Brazil Business Unit;this item also includes deferred revenues related to agreements for the
sale of the transmission capacity (lease operating income).
■ Capital grants of 267 million euros: the item represents the component still to be released to the income
statement based on the remaining useful life (estimated at around 18 years) of the assets that the grants
refer to and is mainly connected to the realization of the infrastructures on the ultrabroadband-UBB and
broadband-BB projects.
Consolidated financial statements of the
TIM Group
Note 22
Miscellaneous payables and other non-current liabilities
213
NOTE 23
TRADE AND MISCELLANEOUS PAYABLES AND
OTHER CURRENT LIABILITIES
Miscellaneous payables and other non-current liabilities rose by 2,885 million euros compared to December 31,
2020. The figure breaks down as follows:
(million euros)
12/31/2020
12/31/2021
of which
Financial
Instruments
of which
Financial
Instruments
Trade payables
Payables to suppliers
Payables to other telecommunication operators
Tax payables
Miscellaneous payables
Payables for employee compensation
Payables to social security agencies
Payables for TLC operating fee
Dividends approved, but not yet paid to shareholders
Other
Employee benefits (except for employee severance
indemnities) for the current portion expected to be
settled within 12 months
Provisions for risks and charges for the current
portion expected to be settled within 12 months
Other current liabilities
Liabilities from customer contracts (Contract
liabilities)
Other deferred revenue and income
Other
Total
(a)
(b)
(c)
(d)
(a+b+c+d)
4,745
416
5,161
168
176
386
165
36
1,968
—
562
3,293
757
66
28
851
9,473
4,745
416
5,161
36
1,859
1,895
110
110
7,166
3,689
444
4,133
226
166
428
80
33
263
39
372
1,381
741
86
21
848
6,588
3,689
444
4,133
33
163
196
120
120
4,449
Further details on Financial Instruments are provided in the Note "Supplementary disclosure on financial
instruments".
Trade payables amounting to 5,161 million euros (4,133 million euros at December 31, 2020), mainly refer to:
■ TIM S.p.A. (3,574 million euros); the increase on December 31, 2020 reflects the dynamics of payments
relative to bills payable;
■ Brazil Business Unit (984 million euros); the increase on December 31, 2020 is connected with the
November 2021 purchase of 5G licenses.
At December 31, 2021, trade payables due beyond 12 months totaled 73 million euros (44 at December 31,
2020) and are mainly represented by payables of the Brazil Business Unit for the purchase and renewal of
telecommunications licenses, also including the payable due to Entidade Administradora da Conectividade de
Escolas (EACE) for the development of certain infrastructural projects in Brazil in connection with the
assignment of the rights of use of frequencies for 5G services.
For more details on the acquisition of 5G licenses in Brazil, see the Note on “Intangible assets”.
Tax payables amounted to 168 million euros and mainly consisted of both the tax payables of the Brazil
Business Unit (72 million euros) and the payables of TIM S.p.A., mainly relating to the amount owed to the tax
authorities for tax payables withheld as withholding agent (61 million euros), the amount payable for the
government concession tax (5 million euros) and the VAT payable (2 million euros).
Consolidated financial statements of the
TIM Group
Note 23
Trade and miscellaneous payables and other current liabilities
214
Miscellaneous payables mainly include:
■
■
the residual payable relating to the acquisition, by TIM S.p.A., of the rights to use 5G licenses (1,738 million
euros), reclassified in 2021 from Miscellaneous payables and other non-current liabilities following the
deadline envisaged in 2022;
the current debt position towards INPS in relation to the application of the agreements signed relating to
Article 4, paragraphs 1-7ter, of Italian Law 92 of June 28, 2012, as described in the Note “Miscellaneous
payables and other non-current liabilities”.
Other current liabilities amounted to 851 million euros (848 million euros at December 31, 2020). They break
down as follows:
■ Liabilities from customer contracts (Contract liabilities), totaling 757 million euros. This item includes
liabilities to customers related to the obligations of Group companies to transfer goods and services for
which have received a price. Liabilities with customers are shown below, which generally have a maturity
within 12 months; therefore, the figure at December 31, 2021 will be paid back substantially by December
31, 2022.
In particular:
•
•
•
contract liabilities amounting to 11 million euros; the item includes bundle contracts (good and
services packages) with performance obligations with different timing for the recognition of revenues
and consequent deferral of the fees originally recognized. The decrease recognized in the year 2021 (-8
million euros) was mainly linked to the launch of commercial offers that no longer require a fixed
duration and the reversal to the income statement of the balance previously accumulated;;
customer-related items, equal to 389 million euros; the item includes trade payables following
contractual relationships, such as the payable for prepaid traffic and the subscription fees charged in
advance;
progress payments and advances equal to 63 million euros relating to trade payables following
prepayments, such as deposits made by subscribers for telephone calls;
• deferred revenues from customer contracts, equal to 294 million euros essentially include:
– Parent Company deferred revenues for rent and maintenance fees (131 million euros);
– Parent Company deferred revenues for interconnection fees (116 million euros);
– Parent Company deferred revenues on activation and installation of new contracts with customers
(7 million euros).
■ Other deferred revenue and income amounted to 66 million euros. They mainly refer to deferred
revenues from transmission capacity transfer contracts and deferred revenues from real estate leases
(lease operating income).
■ Other (28 million euros, 21 million euros at December 31, 2020): this refers to payables for advances on
work in progress on networks.
Consolidated financial statements of the
TIM Group
Note 23
Trade and miscellaneous payables and other current liabilities
215
NOTE 24
DISPUTES AND PENDING LEGAL ACTIONS,
OTHER INFORMATION, COMMITMENTS AND
GUARANTEES
A description is provided below of the most significant judicial, arbitration and tax disputes in which TIM Group
companies are involved at December 31, 2021, as well as those that came to an end during the period.
The TIM Group has posted liabilities totaling 313 million euros for those disputes described below where the risk
of losing the case has been considered probable.
It should be noted that for some disputes described below, on the basis of the information available at the
closing date of the Annual Financial Report and with particular reference to the complexity of the proceedings,
to their progress, and to elements of uncertainty of a technical-trial nature, it was not possible to make a
reliable estimate of the size and/or times of possible payments, if any. Moreover, in those cases in which
disclosure of information on a dispute could seriously jeopardize the position of TIM or its subsidiaries, only the
general nature of the dispute is described.
Lastly, as regards proceedings with the Antitrust Authority, note that based on Article 15, paragraph 1 of Law
287/1990 (“Antitrust regulations”), the Authority has the right to impose an administrative sanction calculated
on the turnover of the Group in cases of breaches considered serious.
a) Significant disputes and pending legal actions
International tax and regulatory disputes
At December 31, 2021, companies belonging to the Brazil Business Unit were involved in tax or regulatory
disputes, the outcome of which is estimated as a possible loss totaling around 16.3 billion reais (16.6 billion
reais at December 31, 2020). The main types of litigation are listed below, classified according to the tax to
which they refer.
Federal taxes
In relation to the federal level of taxation, the following disputes should be noted:
■ disallowance of the tax effects of the merger between the companies of the TIM Brasil Group;
■ denial of the SUDENE regional tax benefit, due to alleged irregularities in the management and reporting
of the benefit itself;
■ challenges regarding offsetting against previous tax losses;
■
■
■
■
further challenges regarding the tax deductibility of the amortization of goodwill;
imposition of income tax on certain types of exchange rate differences;
imposition of withholding taxes on certain types of payments to foreign entities (for example, payments
for international roaming);
further challenges regarding offsets made between taxes payable and group company credit positions.
Overall, the risk for these cases, considered to be possible, amounts to 3.1 billion reais (4.3 billion reais at
December 31, 2020).
State taxes
Within the scope of the state levy, there are numerous challenges regarding ICMS, and in particular:
■ challenges concerning the reduction of the tax base due to discounts granted to customers, as well as
challenges regarding the use of tax credits declared by group companies, with respect to the return of
loaned telephone handsets, and following the detection of contract frauds to the detriment of the
companies;
■ subjection of some fees owed to group companies and classified by them as fees for services other than
telecommunications to ICMS;
■ challenges over the use of the "PRO-DF" tax benefit originally granted by some States, and subsequently
declared unconstitutional (the challenge refers to the actual credit due to ICMS, declared by the TIM
Cellular on the basis of the aforementioned tax benefits);
■ challenges relating to the use of ICMS credits claimed by Group companies as a result of the acquisition of
tangible assets, and in relation to the supply of electricity to the companies, as well as in application of the
provisions on acting as a withholding agent;
■
fines imposed on group companies for irregularities in tax return compliance;
■ challenges of ICMS credits in relation to acting as a withholding agent, applicable when equipment is
bought and distributed in different States;
■ challenges of ICMS credits deriving from the “special credit” recognized by the company to its prepaid
customers, against subsequent top-ups.
Overall, the risk for these cases, considered to be possible, amounts to 8.8 billion reais (8.6 billion reais at
December 31, 2020).
Consolidated financial
statements of the
TIM Group
Note 24
Disputes and pending legal actions, other information, commitments
and guarantees
216
Municipal taxes
Among disputes classified with a "possible" degree of risk, there are some relating to municipal taxes for a
total amounting to around 1.2 billion reais (around 0.7 billion reais at December 31, 2020).
FUST and FUNTTEL
The main challenges about contributions to the regulatory body (Anatel), and in particular in terms of FUST
and FUNTTEL, concern whether or not interconnection revenues should be subject to these contributions.
Overall, the risk for these cases, considered to be possible, amounts to 3.2 billion reais (3 billion reais at
December 31, 2020).
Administrative offense charge pursuant to Legislative Decree 231/2001
for the so-called TIM Security Affair
In December 2008 TIM received notification of the application for its committal for trial for the administrative
offense specified in articles 21 and 25, subsections 2 and 4, of legislative decree no. 231/2001 in relation to the
affairs that involved several former employees of the Security function and former collaborators of the
Company charged – among other things – with offenses involving corruption of public officials, with the object
of acquiring information from confidential files. In May 2010 TIM definitively ceased to be a defendant in the
criminal trial, the Judge for the Preliminary Hearing having approved the motion for settlement of the
proceedings (plea bargaining) presented by the Company. In the hearing before Section One of the Milan Court
of Assizes, TIM acted in the dual role of civil party and civilly liable party. In fact, on the one hand it was
admitted as civil party against all the defendants for all charges, and on the other it was also cited as the party
with civil liability pursuant to article 2049 of the Italian Civil Code for the actions of the defendants in relation to
32 civil parties. Telecom Italia Latam and Telecom Italia Audit and Compliance Services (now incorporated into
TIM) also participated in the hearing as civil parties, having filed appearances since the Preliminary Hearing and
brought charges against the defendants for hacking. After the lengthy evidence hearings, 22 civil parties filed
claims for compensation, also against TIM as civilly liable party, for over 60 million euros (over 42 million euros
of which requested by a single civil party). The Company itself, as civil party, also summarized its conclusions
against the defendants, requesting that they be found liable for all the damages suffered as a result of the
facts of the case. In February 2013, Section 1 of the Milan Court of Assizes issued the first instance judgement,
sentencing the defendants to terms of imprisonment of between 7 years and 6 months and one year. The
Court also recognized that there had been non-pecuniary damage to some of the civil parties as a
consequence of the alleged facts, and sentenced the defendants, jointly and severally with civilly liable party
TIM, to compensate said damages, totaling 270,000 euros (in part jointly and severally with Pirelli) plus legal
fees; at the same time the Court also sentenced the defendants to pay compensation for pecuniary and non-
pecuniary damages incurred by the Company, granting it a provisional sum of 10 million euros. The judgement
also recognized the existence of non-pecuniary damage to the companies Telecom Italia Latam and Telecom
Italia Audit & Compliance Services, sentencing the defendants to pay compensation for damages on an
equitable basis of 20,000 euros for each company. In November 2013 the grounds for the judgement in the
first instance were published (which, for its part, the Company decided not to contest). At the end of the
appeal, which was brought by the convicted defendants, the judgement in the first instance was partly
reversed. The appeal judge acknowledged that the time-limit had expired on the majority of the charges and
made an order not to proceed against the defendants who had been convicted in the lower court, with the
exception of two former private investigators, who were found guilty of the offense of revealing information
which was subject to a prohibition on disclosure. As for the civil judgements, the Court revoked those made by
the judge of first instance and ruled in favor of three ministries, AGCM (the Italian Competition Authority) and
the Revenues Agency. The Court also decided to revoke the provisional sum of 10 million euros awarded to the
Company as civil party at the end of the proceedings in the court of first instance, making a generic ruling that
the defendants should pay compensatory civil damages. Finally, the appeal judge also rejected all the
demands for compensation advanced in the appeals by certain civil parties for a total of about 60 million
euros, in respect of which the Company has the role of party liable for damages. At the end of the appeal,
therefore, the civil rulings settled in the first instance were confirmed which TIM, as the party liable for
damages, had already paid to the damaged requesting parties. The three defendants brought an appeal to the
Court of Cassation against the judgement of the second instance issued by the Milan Appeal Court of Assizes.
In April 2018 the Supreme Court confirmed the convictions of the defendants and canceled the civil rulings,
referring the issue back to the civil court for a more careful assessment of the claims made, above all
concerning proof of the "quantum". It also annulled and referred the confiscation in favor of the State. The
annulment of the security measure was lastly and definitively confirmed with a ruling by the Court of
Cassation filed in January 2021.
Golden Power Case
In August 2017 the Prime Minister's office brought proceedings against TIM (as well as Vivendi) in order to
verify the fact that TIM has an obligation to notify, pursuant to the “Golden Power” law, Vivendi’s acquisition of
corporate control of TIM and the strategic assets it holds. In September 2017, the proceedings in question
concluded by affirming that this obligation did exist for TIM with effect from May 4, 2017 (the date of the
Shareholders’ Meeting that renewed TIM’s corporate boards).
As a result of this decision by the Presidency of the Council of Ministers, new and separate administrative
proceedings started for the imposition on TIM of the financial penalty laid down by the Golden Power law for
non-compliance with the aforementioned obligation to notify. These proceedings ended on May 8, 2018 with
the imposition of a financial penalty of 74.3 million euros.
The Company, is convinced that it has the legal arguments to demonstrate that it was under no obligation to
notify the control exercised over it by Vivendi, filed separate extraordinary appeals to the President of the
Republic to request the abrogation of the order of September 2017 and before the Lazio Regional
Administrative Court (TAR) against the aforementioned order of May 8, 2018, which imposed a financial
penalty, requesting its precautionary suspension. As regards the appeal to the Lazio Regional Administrative
Court (TAR) against the provision of May 8, 2018, which imposed the financial penalty, the TAR, in upholding in
July 2018 the interim petition lodged by the Company, has suspended payment of the penalty. Subsequently,
with a non-definitive ruling in May 2019, the Lazio Regional Administrative Court (TAR)R: (i) accepted TIM's
Consolidated financial
statements of the
TIM Group
Note 24
Disputes and pending legal actions, other information, commitments
and guarantees
217
request for provisional measures to suspend the fine conditional on the offer of the guarantee; (ii) granted the
suspension of the procedure to wait for the final judgment in the (injurious) case pending before the President
of the Republic regarding the notification obligation, pursuant to the Golden Power provisions; (iii) rejected the
procedural objections raised by the defendant administrations.
It should also be noted that in May 2018 a guarantee bond for 74.3 million euros was issued in favor of the
Presidency of the Council. TIM had been requested to submit such a bond for its application to Lazio TAR for
precautionary suspension of the collection of the fine imposed for alleged breach of Art. 2 of Decree Law 21 of
March 15, 2012 (the “Golden Power” law). This surety was renewed in May 2021.
Furthermore, TIM appealed before the Lazio TAR and then appealed before the Council of State against the
provision with which Consob, on September 13, 2017, affirmed Vivendi's control over TIM. In December 2020,
the Council of State issued a final judgment upholding TIM’s appeal and canceling the provision by Consob, a
significant premise to the entire subsequent proceedings of the Presidency of the Council in relation to the
obligation to Golden Power notification as described above. On June 14, 2021, Consob submitted an
extraordinary appeal to the Court of Cassation on grounds of jurisdiction; TIM filed an appearance, objecting
that the appeal is unlawful and inadmissible.
On the other hand, the Presidency of the Council of Ministers exercised the special powers prescribed in the
Golden Power law through two specific rulings in October and November 2017 with which it imposed specific
prescriptions and conditions on TIM and on the companies of the Telecom Italia Sparkle group and Telsy
Elettronica e Telecomunicazioni (now Telsy S.p.A.).
The prescriptions, according to the Administrative Authority, are essentially connected to the circumstance
that these companies, in part, perform activities that are relevant for national security and as far as TIM is
concerned to the circumstance that it also owns the infrastructure and the systems used to provide access to
end-users of services covered by the universal service obligation.
Any failure on the part of the recipients of the measures to execute said conditions and prescriptions is
penalized in the same way as failure to notify significant deeds for the purpose of the application of the so-
called Golden Power.
The companies subject to the prescriptions are required to send periodic reports to a special Monitoring
Committee established at the office of the Prime Minister in order to verify compliance with the
aforementioned prescriptions.
In December 2017 the Group sent to the Presidency of the Council of Ministers the first compliance report
outlining all the proposals and activities put in place to carry out the prescriptions. This report is then followed
by half yearly reports, as required by current legislation.
Nevertheless, also for this case TIM has already filed two extraordinary appeals to the President of the Republic
to request the cancellation (i) of the imposition of the measures pursuant to Art. 1 D.L. 21/2012 and (ii) the
imposition of measures pursuant to Art. 2 D.L. 21/2012.
As stated, the premise for exercising special powers was (erroneously, according to the Company) referred to
the de facto control resulting from the outcome of the shareholders’ meeting of May 4, 2017 and to the
direction and coordination of TIM by Vivendi. Both these circumstances no longer apply, since: at the
Shareholders' Meeting of May 4, 2018, the slate presented by the shareholders Elliott International LP, Elliott
Associates LP and The Liverpool Limited Partnership received the majority vote; the Board of Directors was re-
appointed with 13 independent directors out of a total of 15, with only 5 from the slate presented by Vivendi;
thus, Vivendi no longer has direction and coordination, nor is there de facto control.
In consequence, the Company has asked the Presidency of the Council of Ministers to repeal the two Decrees,
while, in the alternative, expressing its willingness to collaborate in the redrafting of the prescriptions applied
to TIM, to take account of the changed situation.
The Presidency of the Council of Ministers, in decrees issued on July 6, 2018, deemed that it could not further
exercise its special powers, reaffirming the validity of the two Decrees it had previously issued, and rejected the
application for their repeal.
The justification for this refusal is the purported circumstance that the new governance arrangements of the
Company are alleged to be currently characterized by extreme variability; this, it is argued, means that the
measures through which the special powers have been exercised cannot be surmounted, given the need to
protect the public interest in the security and operation of the networks.
The Company has lodged an appeal, with additional reasons and as part of the appeals already lodged,
against the Prime Minister’s decrees of October 16 and November 2, 2017, and against the Prime Minister’s
resolution of July 6, 2018, rejecting the appeal for revocation presented by the company, on the outcome of
the changed situation in corporate governance.
Antitrust Case A428
At the conclusion of case A428, in May 2013, Italian Competition Authority AGCM imposed two administrative
sanctions of 88,182,000 euros and 15,612,000 euros on TIM for abuse of its dominant position. The Company
allegedly (i) hindered or delayed activation of access services requested by OLOs through unjustified and
spurious refusals; (ii) offered its access services to final customers at economic and technical conditions that
allegedly could not be matched by competitors purchasing wholesale access services from TIM itself, only in
those geographic areas of the Country where disaggregated access services to the local network are available,
and hence where other operators can compete more effectively with the Company.
TIM appealed against the decision before the Regional Administrative Court (TAR) for Lazio, applying for
payment of the fine to be suspended. In particular, it alleged: infringement of its rights to defend itself in the
proceedings, the circumstance that the organizational choices challenged by AGCM (the Italian Competition
Authority) and allegedly at the base of the abuse of the OLO provisioning processes had been the subject of
specific rulings made by the industry regulator (AGCom), the circumstance that the comparative examination
of the internal/external provisioning processes had in fact shown better results for the OLOs than for the TIM
retail department (hence the lack of any form of inequality of treatment and/or opportunistic behavior by TIM),
Consolidated financial
statements of the
TIM Group
Note 24
Disputes and pending legal actions, other information, commitments
and guarantees
218
and (regarding the second abuse) the fact that the conduct was structurally unsuitable to reduce the margins
of the OLOs.
In May 2014, the judgement of the Lazio TAR was published, rejecting TIM's appeal and confirming the fines
imposed in the original order challenged. In September 2014 the Company appealed against this decision.
In May 2015, with the judgement no. 2497/15, the Council of State found the decision of the court of first
instance did not present the deficiencies alleged by TIM and confirmed the AGCM ruling. The company had
already proceeded to pay the fines and the accrued interest.
In a decision notified in July 2015, AGCM (the Italian Competition Authority) started proceedings for non-
compliance against TIM, to ascertain if the Company had respected the notice to comply requiring it to refrain
from undertaking behaviors analogous to those that were the object of the breach ascertained with the
concluding decision in case A428 dated May 2013.
On January 13, 2017, TIM was served notice of AGCM’s final assessment, which recognized that TIM had
complied in full with the A428 decision and, as such, the conditions for the imposition of a fine for non-
compliance were not present.
AGCM (the Italian Competition Authority) recognizes, furthermore, that TIM's behavior subsequently to the
2013 proceedings has been directed towards continuous improvement of its performance in the supply of
wholesale access services concerning not only the services which were the subject of the investigation, but
also the new super-fast broadband access services. In assessing compliance, AGCM (the Italian Competition
Authority) recognized the positive impact of the implementation, albeit not yet completed, of TIM's New
Equivalence Model (NME). The AGCM decision orders TIM to: (i) proceed with the implementation of the NME
until its completion which is expected to be by April 30, 2017; (ii) to inform the Authority about the
performance levels of the systems for providing wholesale access services and about the completion of the
corresponding internal reorganization plan by the end of May 2017. The Company quickly complied with both
orders, and AGCOM communicated its satisfaction on August 9, 2017.
Vodafone lodged an appeal with the Lazio Regional Administrative Court against the final decision in the
proceedings for non-compliance taken by AGCM (the Italian Competition Authority). TIM filed an appearance,
as in the other lawsuits filed in March 2017 by the operators CloudItalia, KPNQWest Italia and Digitel.
Vodafone (A428)
In August 2013, Vodafone, as incorporating company of operator Teletu, submitted to the Milan Court a huge
claim for damages for presumed abusive and anticompetitive behavior (founded principally on AGCM case
A428) which TIM allegedly implemented in the period 2008 - 2013. The pecuniary claim was quantified by
Vodafone as an estimated sum of between 876 million euros and 1,029 million euros.
In particular, Vodafone alleged technical boycotting activities, with refusal to activate lines requested for
Teletu customers (in the period from 2008 to the month of June 2013), together with the adoption of allegedly
abusive price policies for wholesale network access services (period from 2008 to the month of June 2013).
Furthermore, the other party complained of the presumed application of discounts to business customers
illegal and
greater than those envisaged ("margin squeezing") and the carrying out of presumed
anticompetitive win-back practices (in the period from the second half of 2012 to the month of June 2013).
TIM filed an appearance, challenging the claims made by the other party regarding the merits and the amount
and making a counterclaim. Following the August 2016 decision by the Court of Cassation which confirmed
that the Milan Court had jurisdiction to decide the dispute, the merits of the case will be decided at the hearing
in December 2016.
With writ of summons before the Milan Court served in May 28, 2015, Vodafone filed additional damages
claims, all based on the same AGCM A428 decision and referring to alleged damages suffered between July
2013 and December 2014 (and hence over a period subsequent to that of the damages claim reported above),
for a total amount of around 568.5 million euros.
The case also contains a reservation of further damages to be quantified, during the proceedings, for the
following periods, the claimant alleging that the presumed abusive conduct of TIM continued. TIM filed an
appearance, challenging the claims made by the other party regarding the merits and the amount and making
a counterclaim.
By order of October 6, 2016, the judge received Vodafone’s application for the two A428 lawsuits brought by it
to be joined. At the end of the reinstatement proceedings of December 21, the terms were established for the
preliminary briefs and a hearing was fixed for July 11, 2017 for the admission of evidence. When the first
preliminary brief was filed, following the favorable outcome for TIM of proceedings A428C (which confirmed
the absence of improper conduct by the Company under A428 after 2011), Vodafone decided nonetheless to
file further claims for 2015-2016, thus restating its total claim to be 1,812 million euros, which was also
disputed and rebutted by TIM.
The case was settled as part of a global settlement with Vodafone.
Colt Technology Services
With writ of summons before the Milan Court served in August 2015, the operator Colt Technology Services
filed a damages claim based on the A428 decision, requesting compensation for alleged damages suffered
from 2009 to 2011 as a result of purportedly inefficient and discriminatory conduct by TIM in the wholesale
service supply process. The damage claimed was quantified as 27 million euros in loss of profits for the alleged
non-acquisition of new customers, or for the alleged impossibility of supplying new services to the customers it
had already acquired; the other party also formulated a request for compensation for the damages to its
image and commercial reputation. This case follows the extrajudicial claim for approximately 23 million euros,
previously advanced by Colt in June 2015, which the Company rejected in its entirety. TIM filed an appearance,
contesting all of the plaintiff’s allegations.
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COMM 3000 S.p.A. (formerly KPNQWest Italia S.p.A.)
With writ of summons before the Rome Court, COMM 3000 S.p.A.(formerly KPNQWest Italia S.p.A.) filed a
damages claim for a total of 37 million euros in compensation for alleged anticompetitive and abusive conduct
over the period 2009–2011, in the form of technical boycotting (refusals to activate wholesale services – KOs);
the claim was based on the contents of the decision of AGCM (the Italian Competition Authority) that settled
the A428 case. TIM filed an appearance, contesting all of the plaintiff’s allegations. In the judgment with ruling
in April 2019, the Court of Rome partially received the petitions of COMM 3000 S.p.A. (formerly KPNQWest
Italia S.p.A.), sentencing TIM to pay an amount significantly lower than the amount in the counterparty's
damages claim. In June 2019, TIM appealed against the judgment. In the judgment given in April 2021, the
Court of Appeal of Rome partly upheld TIM’s appeal, reducing the amount of the compensation due to COMM
3000, which was in any case entirely covered by the relevant provision. In November 2021, TIM has appealed to
the Court of Cassation over the judgment of the Court of Appeal of Rome in.
Teleunit
With a writ of summons issued in October 2009 before the Milan Appeal Court, Teleunit asked that TIM alleged
acts of abuse of its dominant position in the premium services market be ascertained. The plaintiff quantified
its damages at a total of approximately 362 million euros. TIM filed an appearance, contesting the claims of
the other party.
After the ruling of January 2014 with which the Court of Appeal declared that it was not competent in this
matter and referred the case to the Court, Teleunit reinstated the case before the Milan Court the following
April. TIM filed an appearance in the reinstated proceedings challenging the plaintiff’s claims.
In its judgement of May 2017, the Milan Court rejected Teleunit's claim in its entirety, and ordered the company
to pay the legal costs of the case. This judgement was appealed by Teleunit, in June 2017, before the Milan
Court of Appeal. TIM filed an appeal challenging the arguments presented by the other party and asking that
the judgement in the first instance be fully confirmed. With an order in March 2018 the Milan Court of Appeal
declared Teleunit's appeal pursuant to art. 348-bis of the Italian Code of Civil Procedure to be manifestly
without foundation, and hence inadmissible. In May 2018 Teleunit appealed the judgement of the Court of
Appeal to the Court of Cassation. TIM lodged a counter-appeal seeking confirmation in full of the order being
appealed (and thus of the judgment at first instance).
MC-Link
With writ of summons before the Rome Court, MC-Link filed a damages claim for a total of 51 million euros in
compensation for alleged anticompetitive and abusive conduct over the period 2009–2012, in the form of
technical boycotting (refusals to activate wholesale services – KOs). The claim was based on the contents of
the decision of AGCM (the Italian Competition Authority) that settled the A428 case. TIM filed an appearance,
contesting all of the plaintiff’s allegations. In August 2021, the case was settled as part of a global settlement
with the opposing party.
Eutelia and Clouditalia Telecomunicazioni
With a writ of summons dated May 2020, Eutelia in Extraordinary Administration and Clouditalia
Telecomunicazioni S.p.A., purchaser of Eutelia's TLC branch, brought an action against TIM before the Court of
Rome, making claims for damages, of around 40 million euros, for damages allegedly suffered, in the period
2009-2012, following the technical boycott and margin squeeze conduct, subject of the AGCM A428 procedure.
TIM filed an appearance, contesting the claims made by the opposing party and formulating a counterclaim,
subject to quantification of the damages incurred during the proceedings.
Antitrust Case I761
With a ruling issued on July 10, 2013, AGCM (the Italian Competition Authority) extended to TIM the
investigation started in March of the same year into some firms active in the fixed network maintenance
sector. The investigation aims to establish if an agreement exists that is prohibited under article 101 of the
Treaty on the Functioning of the European Union. The proceedings were initiated after Wind filed two
complaints in which AGCM (the Italian Competition Authority) was informed that, based on an invitation to bid
for the assignment of network corrective maintenance services, it had encountered substantial uniformity of
prices offered by the aforementioned enterprises and a significant difference from the offers submitted
subsequently by other and different companies.
AGCM (the Italian Competition Authority) alleged that TIM carried out a role of coordinating the other parts of
the procedure, both during the formulation of the offers requested by Wind and in relation to the positions
represented to communications regulator AGCom.
TIM challenged these proceedings before the Administrative Court (TAR), sustaining that the ICA does not have
competence in this matter.
On July 7, 2014, AGCM (the Italian Competition Authority) notified the objective extension of the proceedings to
check if the Company, abusing its dominant position, put in place initiatives that might influence the conditions
of the offer of accessory technical services when the offers of the maintenance businesses to Wind and
Fastweb were being formulated. With the extension decision, the Authority also extended the closing date of
the investigation, originally set for July 31, 2014, to July 31, 2015. This extension was also challenged before the
Lazio Administrative Court (TAR) sustaining that the Italian Competition Authority does not have competence
in this matter.
In November 2014, for reasons of procedural economy and also convinced that it was acting legitimately, TIM
presented to the Authority a proposal of undertakings in order to resolve the competition concerns subject of
the investigation. On December 19, 2014, AGCM (the Italian Competition Authority) issued its decision finding
that the undertakings were not clearly unfounded and subsequently ordered their publication for market
testing.
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On March 25, 2015, AGCM (the Italian Competition Authority) definitively rejected the aforesaid undertakings,
considering them not suitable for removing the anticompetitive aspects investigated.
On July 21, 2015 the Communication of the Results of the Investigation was served on the parties to the
proceedings, in which the Offices of AGCM (the Italian Competition Authority) expressed their position in the
sense of (i) archiving the complaints regarding the abuse of dominant position and (ii) confirming, instead, that
there exists between TIM and the maintenance firms an agreement to coordinate the economic offers drawn
up for Wind and Fastweb, and to prevent the unbundled supply of the ancillary technical services.
On December 16, 2015, the final order was issued, confirming the conclusions of the Communication of the
Results of the Investigation, sustaining that, between 2012 and 2013, there existed an agreement that
restricted competition, and as a result imposed a fine of 21.5 million euros on the Company, paid in March
2016. The relevant market is the corrective maintenance (assurance) market and, more precisely, the market
for troubleshooting the TIM LLU lines. The purpose of the conduct maintained by the Company and the
network firms would have been to limit competition and prevent the evolution of forms of unbundled supply of
ancillary technical services.
TIM appealed the order before the Lazio Regional Administrative Court. In judgement no. 09554/2016 issued in
September 2016, the appeal was dismissed, and the Company appealed this decision to the Council of State.
On the outcome of the proceedings, with the ruling of December 2019, the Council of State, deciding in favor of
TIM, annulled the AGCM I761 provision and referred the task of conducting a new investigation to AGCM (the
Italian Competition Authority), within the limits that decided by the Council of State itself. In 2020, TIM
obtained the return of amounts paid by way of sanction.
Following analysis, in a letter dated April 2, 2021, AGCM (the Italian Competition Authority) reported that it had
archived case I761.
Vodafone (I761)
With a writ of summons before the Milan Court, Vodafone has sued TIM and some network companies,
bringing claims for compensation from the Company for around 193 million euros for damages arising from
alleged anti-competitive conduct censured in the known AGCM case I-761 (on corrective maintenance)
referring to the period from 2011 to 2017.
Vodafone contests the alleged breach of the competition rules carried out by TIM, in the wholesale markets
giving access to its fixed network (LLU lines; Bitstream; WLR), through the abuse of a dominant market
position and an unlawful agreement with the maintenance companies to maintain the monopoly on the offer
of corrective maintenance services on its network. Specifically, the restrictive agreement allegedly concerned
the coordination, by the Company, of the economic terms and conditions contained in the bids for
maintenance services prepared by the aforementioned companies for OAOs, with artificially high prices with
respect to the cost of the maintenance included in the regulated access fee, with a view to discouraging the
disaggregation of the service itself. The Company filed an appearance, contesting all of the other party’s
requests. The case was settled as part of a global settlement with Vodafone.
Antitrust Case A514
In June 2017 the Italian Competition Authority (AGCM) started proceedings A514 against TIM, to ascertain a
possible abuse of its dominant market position in breach of article 102 of the “Treaty on the Functioning of the
European Union”. The proceedings were started based on some complaints filed in May and June 2017, by
Infratel, Enel, Open Fiber, Vodafone and Wind Tre, and concerns a presumed abuse of TIM's dominant position
in the market for wholesale access services and for retail services using the broadband and ultra-broadband
fixed network. In particular, AGCM (the Italian Competition Authority) hypothesized that TIM had adopted
conduct aimed at: i) slowing and hindering the course of the Infratel tender processes so as to delay, or render
less remunerative the entry of another operator in the wholesale market; ii) preemptively securing customers
on the retail market for ultra-broadband services by means of commercial policies designed to restrict the
space of customer contendibility remaining for the competitor operators.
After the start of the proceedings, the Authority's officials carried out an inspection at some of TIM’s offices in
the month of July 2017. On November 2, 2017, TIM filed a defense brief in which, in support of the correctness
of its actions, it challenged all the arguments that the conduct it had allegedly engaged in, and which was the
subject of the case, was unlawful.
On February 14, 2018, AGCM (the Italian Competition Authority) resolved to extend the scope of the case to
investigate further behavior concerning TIM's wholesale pricing strategy on the market for wholesale access to
broadband and ultra-broadband, and the use of the confidential information of customers of the alternative
operators.
On July 5, 2018 TIM filed proposed undertakings which, if accepted by the Authority, would close the
investigation without any offense being established or sanction being administered. The undertakings were
considered as admissible by the Authority, that market tested them in August and September.
On October 30, 2018, TIM replied to observations made by third parties and modified its proposed
undertakings. With its decision notified on December 4, 2018, AGCM (the Italian Competition Authority) once
and for all rejected the proposed series of undertakings as it considered them unsuitable in light of the
objections raised.
On March 4, 2019, TIM requested AGCM (the Italian Competition Authority) for an extension of the deadline for
closing the proceedings (initially set for May 31, 2019).
On April 10, 2019, AGCM (the Italian Competition Authority) resolved to extend the deadline for conclusion of
the proceedings until September 30, 2019. On May 17, 2019, AGCM (the Italian Competition Authority) notified
TIM of the results of the investigation (CRI). In the CRI, AGCM (the Italian Competition Authority) essentially
confirmed the case for the prosecution outlined in the start-up and extension of the proceedings orders.
On June 12, 2019 AGCM (the Italian Competition Authority) extended the deadline for deposit of TIM's final
defense to September 20, 2019 and set the final hearing for September 25, 2019.
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On September 18, 2019, AGCM (the Italian Competition Authority) resolved to extend the deadline for
conclusion of the proceedings until February 28, 2020.
On March 6, 2020, TIM was notified of the decision to close the investigation: AGCM (the Italian Competition
Authority) ruled that TIM had abused its dominant position, finding that TIM had put in place an anti-
competitive strategy designed to hinder the competitive development of investment in ultrabroadband
network infrastructure.
The fine imposed on TIM for the anti-competitive offense is 116,099,937.60 euros. TIM appealed the
aforementioned fine before the Lazio Regional Administrative Court (TAR). By judgment given on February 28,
2022, the Lazio Administrative Court rejected TIM’s appeal; it now intends to bring an appeal before the Council
of State by the legal deadline.
On June 25, 2020 TIM sent AGCM (the Italian Competition Authority) the so-called compliance report as
ordered in the final provision. The hearing before the Lazio Regional Administrative Court was held on
November 3, 2021. The Company is awaiting the judgement.
In May 2021, the Company paid the fine.
Open Fiber
In March 2020, Open Fiber (OF) sued TIM before the Court of Milan, claiming damages of 1.5 billion euros for
alleged abuse of an exclusive and dominant position in relation to OF. The alleged actions consist of: (i) pre-
emptive investments in FTTC networks in white areas; (ii) initiating specious legal action to obstruct Infratel
tenders; (iii) spurious repricing of certain wholesale services; (iv) commercial lock-in offers on the retail market;
(v) false disclosure to AGCom in connection with the approval of a wholesale offer and spreading rumors about
TIM being interested in acquiring OF; (vi) discriminatory access conditions to TIM passive infrastructure. TIM
filed an appearance, contesting the arguments of OF. Enel S.p.A. intervened in the proceedings, asking that
TIM be ordered to compensate all damages suffered and being suffered by Enel and OF. During the course of
the proceedings, this amount was increased to 2.6 billion euros.
Vodafone
In January 2021, Vodafone Italia S.p.A. summonsed TIM to the Court of Milan, making a claim for damages of
approximately 100 million euros for damages allegedly suffered as a consequence of the unlawful conduct of
TIM, as sanctioned by the AGCM (the Italian Competition Authority), with the provision that concluded case
A514.
The conduct of TIM sanctioned by the Authority allegedly resulted in a slowing of the penetration of UBB
infrastructures on the market of white areas and, consequently, the delayed or failed acquisition of new
customers by Vodafone, as well as a hindrance to acquiring additional customers as a result of the alleged
binding practices over the whole of national territory. TIM will file an appearance with a series of solid legal
arguments for its own protection. The case was settled as part of a global settlement with Vodafone.
Fastweb
In February 2021, Fastweb S.p.A. summonsed TIM to the Court of Milan, making a claim for damages of
approximately 996 million euros for damages allegedly suffered as a consequence of the unlawful conduct of
TIM, as sanctioned by AGCM (the Italian Competition Authority), with the provision that concluded case A514,
as well as allegedly opportunistic suspensions of activation orders sent by Fastweb.
Fastweb complains that TIM allegedly delayed the wholesale offer of ultrabroadband services by Open Fiber in
the white areas, consequently slowing the offer of said services by Fastweb to its end customers in these
areas; binding practices were implemented in relations with the end customer, hindering access to the market
by alternative operators (including Fastweb). In addition, TIM allegedly instrumentally managed the supply
process of wholesale access services to its fixed broadband and ultrabroadband network, opportunistically
suspending the activation orders submitted by Fastweb and thereby hindering its activation of new customers.
TIM filed an appearance laying out solid arguments refuting Fastweb’s claims. In August 2021, the case was
settled as part of a settlement with Fastweb.
Antitrust Case I799
At its meeting on February 1, 2017, AGCM (the Italian Competition Authority) initiated an investigation for
possible breach of Article 101 of the TFEU (prohibition of agreements that restrict competition) against TIM
S.p.A. and Fastweb S.p.A., following the signing of an agreement aimed at setting up a cooperative joint
venture called Flash Fiber S.r.l.. TIM, in agreement with Fastweb, submitted to AGCM (the Italian Competition
Authority) some amendments to the agreements signed, in the form of proposed undertakings, aimed at
closing the investigation without any breach being ascertained and, therefore, without any fine.
On March 28, 2018, AGCM (the Italian Competition Authority) resolved to approve the undertakings, making
them binding on the Parties, and closed the case without imposing any fine.
On January 30, 2019, TIM sent the planned annual report on the provided coverage to AGCM (the Italian
Competition Authority), supplemented by a subsequent communication dated March 29, 2019. TIM
transmitted further details to AGCM (the Italian Competition Authority) in July and AGCM acknowledged it on
October 15, 2019. On January 31, 2020 TIM sent AGCM (the Italian Competition Authority) the third report on
the implementation of the undertakings given. Finally, on January 29, 2021 TIM sent AGCM (the Italian
Competition Authority) the fourth and final report on the implementation of the undertakings given.
On June 11, 2018 Open Fiber S.p.A. and Wind Tre S.p.A. filed separate appeals to the Lazio Regional
Administrative Court (TAR) against the order closing case I799 with the acceptance of the undertakings. They
allege that this order has a series of procedural and substantial defects.
Open Fiber S.p.A. also asked for the precautionary suspension of the order.
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In a ruling of March 2020, the Regional Administrative Court rejected in full the appeal by Open Fiber. A hearing
on the merits has not yet been scheduled for Wind Tre's appeal.
Vodafone
In June 2015 Vodafone issued proceedings for damages in the Milan Court for alleged abuse of a dominant
position by TIM in the bitstream “NGA” and “VULA” fiber access services market, initially claiming around 4.4
million euros, increased to a figure ranging from 30 to 48.9 million euros.
The plaintiff complained that TIM allegedly had engaged in abusive conduct by way of aggressive price offers
to win customers and by hindering Vodafone’s access to the fiber network to make it more difficult for the
party to provide ultra-broadband services to its customers.
TIM has filed an appearance, challenging the claims of the plaintiff in full and, subsequently, the revised
estimate of damages made in 2016 during the case. The case was settled as part of a global settlement with
Vodafone.
Eutelia and Voiceplus
In June 2009, Eutelia and Voiceplus asked that alleged acts of abuse by TIM of its dominant position in the
premium services market (based on the public offer of services provided through so-called Non Geographic
Numbers) be investigated. The complainants quantified their damages at a total of approximately 730 million
euros.
The case follows a precautionary procedure in which the Milan Appeal Court prohibited certain behaviors of the
Company relating to the management of some financial relations with Eutelia and Voiceplus concerning the
Non Geographic Numbers, for which TIM managed the payments from the end customers, on behalf of such
OLOs and in the light of regulatory requirements. After the ruling with which the Milan Court of Appeal
accepted TIM's objections, declaring that it was not competent in this matter and referring the case to the Civil
Court, Eutelia in extraordinary administration and Voiceplus in liquidation resubmitted the matter to the Milan
Court. The first hearing took place in the month of March 2014. TIM filed an appearance challenging the claims
of the other parties. After the collapse of Voiceplus, the Milan Court declared the case suspended, in an order
in September 2015. The case was later resumed by Voiceplus.
With a judgment issued in February 2018, the Milan Court accepted TIM's defense and rejected the plaintiffs’
claim for compensation, ordering them, jointly and severally, to pay the legal costs. In March 2018 Eutalia and
Voiceplus proposed an appeal against the judgement in the first instance.
TIM appealed against the claim, requesting confirmation in full of the judgment in the first instance. The
appeal of Eutelia and Voiceplus was fully rejected with the judgment of August 5, 2019. In December 2019
Eutelia and Voiceplus appealed to the Court of Cassation over the judgment of the Court of Appeal. TIM
notified a counterclaim asking confirmation of the ruling appealed against.
28-day billing
AGCom resolution 121/17/CONS introduced instructions on billing intervals for telephony, prescribing, for fixed
telephony, that the interval should be monthly, or multiples thereof, and, for mobile telephony, that it should
be at least four-weekly. TIM appealed Resolution 121/17/CONS to the Regional Administrative Court. The
judgment rejecting the appeal was published in February 2018. TIM appealed this judgment to the Council of
State in June 2018. On September 23, 2020, the non-definitive ruling was published whereby the Council of
State joined the appeals submitted by TIM, Vodafone, Fastweb and Wind Tre and ordered the prejudicial
deferral to the European Union Court of Justice (EUCJ) on whether or not the Authority had the power to
regulate the frequency of renewal of the commercial offers and invoicing periods, at the same time rejecting
the other grounds of appeal submitted by the operators and suspending proceedings. In February 2021, TIM
deposited the written observations on the requests for prejudicial judgment with the EUCJ. At the request of
the CJEU, the Council of State, in an order published on November 23, 2021, confirmed the referral to the Court
of Justice on the preliminary questions raised; the proceedings before the Council of State therefore remain
suspended pending the CJEU's decision.
With its Resolution 499/17/CONS, having confirmed the breach of Resolution 121/17/CONS, AGCom fined TIM
1,160,000 euros, ordering it to make provision – when the billing cycle was restored to monthly intervals or
multiples thereof – to return the amounts corresponding to the fee for the number of days that, from June 23,
2017, had not been used by the users in terms of the supply of service due to the misalignment of the four-
weekly and monthly billing cycles.
In March 2018 with resolution no. 112/18/CONS AGCom (i) revoked the preceding resolution 499/17/CONS in the
part in which TIM was ordered to repay the amounts presumably lost from June 23, 2017 onwards, with the
four-weekly billing cycle, (ii) cautioned TIM, with regard to fixed-line voice services only, against postponing the
starting date of invoices issued after the return to monthly invoicing by the same number of days as those
presumably deducted starting from June 23, 2017 with the four-weekly invoicing cycle.
Under Presidential Decree 9/18/PRES, AGCom amended the provisions of Decision 112/18/CONS requiring the
deferment of billing once the billing cycle was restored to monthly intervals, or multiples thereof, while also
ordering that the timescales for complying with the order would be identified after hearings with the operators
and the main consumer protection associations.
In July 2018, AGCom issued resolution 269/18/CONS, with which it set December 31, 2018 as the date by which
the operators had to return to their fixed network customers a number of days of service equal to those
eroded as an effect of 28-day billing, or propose to the affected customers any alternative compensatory
measures, after having notified them to AGCom. TIM has appealed all of the above resolutions.
With the judgment published in November 2018, the TAR canceled the pecuniary administrative sanction of
1.16 million euros imposed with Resolution 499/17/CONS, and confirmed the obligation of restitutio in integrum
to the fixed-line customers by December 31, 2018. TIM filed its preventive appeal before the Council of State to
suspend the execution of said decision and, with its ruling of December 20, 2018, the Council of State, in
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upholding TIM's appeal, suspended the effectiveness of the aforesaid decision for the reversal order only, until
May 21, 2019 while awaiting publication of the grounds for the judgment.
The date of the hearing to discuss the introductory appeal and additional grounds submitted in the meantime
by TIM is still to be set. On July 12, 2019 the ruling mechanisms with which the Council of State rejected the
similar appeals made by Vodafone, Wind Tre and Fastweb were published and in February 2020 the
judgments containing the grounds were published.
In September 2019, TIM also challenged resolution 221/19/CONS, before the Regional Administrative Court
(TAR), with which the sanction pursuant to Resolution 499/17/CONS, canceled by the Regional Administrative
Court of Lazio, was recalculated to the amount of 580,000.00 euros, with the maximum fine provided for by
Art. 98, paragraph 16 of the CCE in force at the time of the events applied.
In August 2019, AGCom initiated new proceedings (CONT 12/19/DTC) for failure to comply with the order to
refund the days eroded by billing every 28 days for fixed network and convergent customers, according to the
procedures established with resolutions nos. 112/18/CONS and 269/18/CONS. On conclusion of these
proceedings, by means of Resolution 75/20/CONS, the Authority found that TIM did not comply with the above
resolutions, imposing a fine of 3 million euros. The measure was challenged by TIM before the TAR in July
2020.
Moreover, since June 2019, TIM has offered its fixed network customers, active prior to March 31, 2018 and
subject to billing every 28 days, the possibility of accepting a compensatory solution, an alternative to
refunding the eroded days pursuant to AGCom resolution no. 269/18/CONS and from September 2019 it has
been accepting requests for reimbursement of eroded days. In both cases, TIM informed customers with
several messages in the bill, on the web in the main newspapers. The initiatives just described were
communicated to AGCom as part of the aforementioned penalty proceedings.
In the civil proceedings, by judgment published on October 14, 2021 the Court of Milan, under the scope of the
case on the merits brought by Associazione Movimento dei Consumatori in 2018 regarding the pricing and 28-
day renewal for fixed line and converging offers, confirmed the order given on 6/4/2018 by the same Court
upon closure of the complaint brought by TIM pursuant to Art. 669 terdecies of the Italian Code of Civil
Procedure and the measures set out therein, ordering TIM to fulfill the requests for repayment of amounts paid
as a result of customer maneuvers - including discontinued, as indeed TIM had already been doing since 2018,
at the same time also extending the period relevant to the recognition of the reimbursement through to April
1, 2017 and therefore earlier than June 23, 2017, the date on which the operators had to comply with
Resolution no. 121/17/CONS. TIM has appealed the sentence of the Court of Milan, at the same time filing an
request for suspension of its enforcement. With order of January 11, 2022, the Court of Appeal of Milan
partially accepted TIM’s request, suspending the charge in the judgment relating to the order to send a
registered letter to all discontinued consumer customers that were subject to billing every 28 days to inform
them of the possibility to obtain a refund of the additional amounts paid as a result of the maneuver.
Antitrust Case I820
On February 19, 2018, AGCM (the Italian Competition Authority) initiated a I820 preliminary proceeding against
the companies TIM, Vodafone, Fastweb, Wind Tre and the industry association ASSTEL to investigate the
alleged existence of an agreement among the major fixed-line and mobile telephone operators to restrict
competition by coordinating their respective commercial strategies, in breach of Art. 101 of the TFUE.
The presumed coordination, according to the opening provision of the proceedings by AGCM (the Italian
Competition Authority), would take the form of implementation of the obligation introduced by Article 19-
quinquiesdecies of Legislative Decree 148/2017 (converted by Law 172/2017) which requires operators of
electronic communication services to send out monthly (or monthly multiples) bills and renewed offers for
fixed and mobile services.
On March 21, 2018, AGCM (the Italian Competition Authority) issued a provisional precautionary measure
against all the operators involved in the proceedings with which it ordered the suspension, pending the
proceedings, of the
implementation of the agreement concerning the determination of repricing
communicated to users at the time of reformulating the billing cycle in compliance with Law 172/17 and to
independently redetermine its commercial strategy. With its decision no. 27112 of April 11, 2018, AGCM (the
Italian Competition Authority) confirmed the precautionary measure.
On June 12, 2018, TIM filed an appeal with the TAR for the quashing of said measure.
On January 31, 2020, TIM was notified of the decision to close the investigation, in which AGCM (the Italian
Competition Authority) confirmed the existence of the agreement between Telecom, Vodafone, Fastweb,
WindTre, but excluding Asstel from participation in the agreement. The fine imposed on TIM for participation in
the anti-competitive agreement was 114,398,325 euros. In April 2020, TIM also challenged the sanction order.
In a ruling published on July 12, 2021, the Lazio Regional Administrative Court upheld the petition and the
grounds added and submitted by TIM, canceling the measures taken by AGCM (the Italian Competition
Authority), including that relating to the existence of the agreement and application of the sanction.
On September 11, 2021, AGCM (the Italian Competition Authority) presented a petition to the Council of State,
requesting the cancellation of the judgment given by the regional administrative court.
Antitrust Case I850
By decision given on December 15, 2020, the Italian Competition Authority (AGCM) started an investigation in
regard to the company Telecom Italia S.p.A., Fastweb S.p.A., Teemo Bidco S.r.l., FiberCop S.p.A., Tiscali Italia
S.p.A. and KKR & Co. Inc., to ascertain the existence of any breaches of article 101 of the TFEU.
More specifically, the investigation regards the contracts governing the establishment and operation of
FiberCop and the supply agreements with Fastweb and Tiscali. AGCM (the Italian Competition Authority)
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intends to verify that such agreements do not hinder competition between operators in the medium and long-
term and assure the rapid modernization of the country’s fixed telecommunications infrastructures.
On August 6, 2021, TIM submitted a proposal of undertakings to AGCM (the Italian Competition Authority) in
order to resolve the competition concerns subject of the investigation and close the proceedings without any
sanction being applied.
On September 7, 2021, AGCM (the Italian Competition Authority) judged these undertakings to not be clearly
unfounded and ruled publication on the Authority’s website from September 13, 2021; thus market testing
began and was completed by October 13, 2021, the date by which all subjects so wishing submitted their
observations to AGCM in respect of the relevant undertakings.
On December 14, 2021 AGCM (the Italian Competition Authority) extended the deadline for the conclusion of
the proceedings, initially set for December 31, 2021, to February 15, 2022.
Precisely during the meeting held on February 15, 2022, AGCM finally resolved to approve the undertakings
insofar as they were considered suitable to eliminate the alleged anti-competition aspects investigated and
made them mandatory for the parties without assessing the alleged charges and without sanctions.
Antitrust Case I857
On July 6, 2021, AGCM (the Italian Competition Authority) started an investigation in regard to TIM and DAZN
for a possible understanding reached with a view to restricting competition in connection with the agreement
for the distribution and technological support for TV rights for Serie A football in the 2021-2024 period.
The investigation also aims to verify the restrictive nature of the understanding with reference to additional
elements regarding the possible adoption by TIM of technical solutions not available for competitor
telecommunications operators and which may effectively hinder the adoption of their own technological
solutions.
The proceedings are expected to end by June 30, 2022.
At the same time, the Authority has also initiated proceedings for the potential adoption of protective
measures.
By resolution passed on July 27, 2021, AGCM (the Italian Competition Authority) closed the interim proceedings,
considering that the initiatives and amendments to the agreement proposed by TIM and DAZN in the
meantime are presently able to prevent any serious and irreparable damage to competitors while
investigations are completed.
Indeed, said measures aim, as a whole, to avoid possible discrimination in the use of the DAZN service, due to
its activation by users using Internet connection services other than those offered by TIM. In addition, the
agreement between TIM and DAZN has been amended to guarantee DAZN complete freedom in applying
discounts and promotions. TIM has also undertaken to provide DAZN with a sufficient number of white label
set-top-boxes to also guarantee DAZN customers the viewing of matches over digital terrestrial TV, in the
event of connection problems.
Finally, TIM has undertaken to supply wholesale services to OAOs interested therein to manage traffic peaks
deriving from live data transmissions, regardless of the type of contents transmitted.
On October 29, 2021 TIM submitted a proposal for undertakings to AGCM (the Italian Competition Authority)
with a view to resolving the competitive concerns that were the subject of the investigation and closing the
proceedings without the finding of any infringement and therefore without any sanction being applied.
On December 14, 2021, AGCM (the Italian Competition Authority) approved the publication of the
aforementioned proposal for undertakings on the Authority's website, as these undertakings, taken as a whole,
do not appear to be manifestly unfounded and are capable of removing the restrictions to competition
hypothesized in the measure initiating the investigation in question.
On January 5, 2022, with the aforementioned publication on the AGCM website, the so-called market test
began, which will end on February 4 next, the date by which all interested parties will be able to send the
Authority their comments on the undertakings in question.
Antitrust Case PS10888 “TIM Passepartout”
On June 15, 2021, AGCM (the Italian Competition Authority) initiated proceedings for unfair commercial
practice concerning the lack of transparency of the information provided by the TIM Passepartout payment
management platform and alleged activations of services not requested. The proceedings have been initiated
on the basis of reports made by individual consumers and should draw to a close in March 2022. On July 29,
2021, undertakings were submitted, thereafter supplemented on February 08, 2022, that, if accepted, will allow
the proceedings to close without any findings of infringement and, therefore, without any application of
sanctions. The undertakings consist of improving information aspects of the TIM Passepartout platform (active
only for Customer Base offers) and implementing a communication campaign aimed at soliciting contact from
those who do not recognize the TIM Passepartout charges in order to assess whether there are grounds for a
refund. The procedure will be completed by the end of May 2022.
Vodafone Dispute – Universal Service
In a decision published in July 2015, the Council of State rejected the appeal lodged by AGCom and TIM against
the judgment of the Lazio Administrative Court (TAR) on the financing of the universal service obligations for
the period 1999–2003. With this judgement the judge had granted the appeals by Vodafone, annulling AGCom
decisions 106, 107, 109/11/CONS on the renewal of the related proceedings, which included Vodafone among
the subjects required to contribute, for a sum of approximately 38 million euros. Essentially, the judgement
confirms that the Authority has not demonstrated the particular degree of "replaceability" between fixed and
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mobile telephony for mobile operators to be included among the subjects required to repay the cost of the
universal service, which means that AGCom needs to issue a new ruling.
TIM has filed an application with AGCom to renew the proceedings, and an appeal against the judgement of
the Court of Appeal to the Court of Cassation (which subsequently ruled that the appeal was inadmissible).
In April 2016 Vodafone appealed against the Ministry of Economic Development (MISE) and TIM to the Council
of State, for non-compliance with the judgment of the Council of State. This appeal referred to AGCom
decision 109/11/CONS (2003 yearly payment, on the basis of which Vodafone had paid the sum of
approximately 9 million euros as contribution, restitution of which was requested).
In its judgment of November 2016, the Council of State rejected the appeal, referring to the Regional
Administrative Court (TAR) the decision on the methods of compliance. In February 2017, Vodafone presented
the Lazio Regional Administrative Court with four new appeals against the Ministry of Economic Development
and TIM regarding observance of the ruling, upheld on appeal, countermanding the resolutions for the years
1999–2003 and repayment of the aforesaid amounts of around 38 million euros already paid to the Ministry of
Economic Development as a contribution.
With a judgment issued in June 2018, the TAR rejected all of Vodafone's appeals for observance, and, as
requested by TIM, expressly affirmed that AGCom must renew the proceedings, particularly with regard to the
determination of the degree of replaceability between fixed and mobile telephony. Vodafone challenged the
four judgments before the Council of State, which, with a decision of October 2019, upheld Vodafone's appeal
and confirmed the restitutory obligation of the sums in question applicable to TIM.
With resolution no. 263/20/CIR, AGCom started proceedings to renew the investigation into the iniquity of the
net cost of the universal service for 1999-2009. Vodafone has challenged this resolution before the Regional
Administrative Court. The renewal proceedings concluded with resolution 18/21/CIR, which substantively
confirmed the draft order. This resolution has only been challenged by TIM for the years 1999 and 2000, while
Vodafone, Wind and Fastweb have challenged the resolution for all years concerned. By judgments published
in February 2022, resolution 18/21/CIR was partially canceled. Assessments are currently in progress regarding
whether it is appropriate or not to submit an appeal.
Dispute relative to "Adjustments on license fees" for the years 1994-
1998
With regard to the judgements sought in previous years concerning the Ministry of Communications' request
for payment of the balance of the amounts paid in concession charges for the years 1994-1998 (for a total of
113 million euros), the Administrative Court (TAR) for Lazio rejected the Company’s appeal against the request
for adjustment of the license fee for 1994 in the amount of approximately 11 million euros, 9 million euros of
which against turnover not received due to bad debts. TIM lodged an appeal. On the outcome of proceedings,
with the ruling of December 2019, the Council of State partially accepted TIM's position, establishing the
principle, according to which, the receivables referring to 1994 not collected for reasons not attributable to the
operator, could have been deducted from the tax base for calculating the concession fee.
With two further judgements the Administrative Court (TAR) for Lazio, reiterating the reasons expressed
previously, also rejected the appeals in which the Company challenged the requests for payment of
outstanding balances of license fees for the years 1995 and 1996-1997-1998, in the amount of approximately
46 million euros. TIM has appealed before the Council of State also against these judgements.
With reference to the 1998 fee adjustment (equal to about 41 million), the Lazio TAR, by TAR order of
December 2018, suspended the judgment, raising preliminary questions with the EU Court of Justice on the
correct scope of EC Directive no. 97/13 (in the matter of general authorizations and individual licenses in the
field of telecommunications services on the basis of the currently pending litigation on the 1998 license fee,
currently pending before the Rome Court of Appeal and illustrated in a subsequent paragraph).
The referred questions were based, inter alia, on the question posed to the Court of Justice on the possible
conflict between the aforementioned EC Directive 97/13 and national law, which extended the obligation for
telecommunications license-holders to pay the license fee for 1998 (commensurate with a portion of turnover),
despite the liberalization process underway. In its judgment of March 2020, the EU Court of Justice held that
the EU regulatory system must be interpreted as not allowing national legislation to extend to 1998 the
obligation imposed on a telecommunications undertaking that was previously the concession holder (such as
TIM) to pay a fee calculated on the basis of turnover and not only the administrative costs connected with the
granting, management, control and implementation of the general authorizations and individual licenses
scheme. The Court held, inter alia, that the Council of State – having held in its judgment 7506/2009 that the
fee imposed for 1998 on TIM, the holder of an authorization existing on the date of entry into force of Directive
97/13, was due – interpreted national law in a way that was incompatible with EU law, as interpreted by the
Court in its judgment of February 21, 2008. Following the judgment of the EU Court of Justice, the opinion on
the final calculation of the 1998 charges was summarized before the Lazio Regional Administrative Court,
which, in a judgment given last February, declared TIM’s appeal as unacceptable for procedural reasons,
namely due to the prevalence of the formal ruling consisting of judgment no. 7506/09; in substantive terms, on
the other hand, the judgment of the EU Court of Justice once again ascertained the European Community
unlawful nature of the credit claim by the PA to obtain payment of the 1998 charges and, consequently, the
final balance. The company has challenged the judgment of the Lazio Regional Administrative Court.
Poste
There are some pending actions brought, at the end of the '90s, by Ing. C. Olivetti & C. S.p.A. (now TIM) against
Poste, the Italian postal service, concerning non-payment of services delivered under a series of contracts to
supply IT goods and services. The judgements issued in the lower courts established an outcome that was
partially favorable to the ex-Olivetti, and have been appealed against by Poste in individual rehearings.
In this respect, while a 2009 judgement of the Rome Appeal Court confirmed one of the outstanding payables
to TIM, another judgement by the same Court declared void one of the disputed contracts. After this
judgement, Poste had issued a writ for the return of approximately 58 million euros, opposed by TIM given that
the judgement of the Supreme Court for amendment of the above judgement is still pending.
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After the 2012 judgement of the Supreme Court that quashed and remanded the decision of the Appeal Court
on which the order was based, the Rome Court declared that the matter of issue in the enforcement
proceedings was discontinued, since the claim made by Poste had been rejected. The judgement was
resubmitted to another section of the Rome Appeal Court. In ruling no. 563 of January 25, 2019, the Rome
Court of Appeal at the time of proceedings, reversing the Company's previous unfavorable appeal, confirmed
the contract's validity and, with it, the legitimacy of TIM's view of the amount already collected, of which Poste
had requested reimbursement. This ruling was challenged by Poste with appeal filed with the Court of
Cassation, notified on July 31, 2019, which TIM challenged with relevant counter appeal.
Elinet S.p.A. Bankruptcy
In 2014, the trustees in the bankruptcy of Elinet S.p.A., and subsequently the trustees of Elitel S.r.l. and Elitel
Telecom S.p.A. (the parent, at the time, of the Elitel group) appealed the judgment by which the Court of Rome
dismissed the damages claim brought by the trustees of the Elinet-Elitel group, filing a new damages claim for
a total of 282 million euros. The Company is alleged to have exercised management and control powers over
the plaintiff, and, with it, over the Elitel group (an OLO in which TIM has never held any equity interest) through
the management of trade receivables. TIM filed an appearance, challenging the claims made by the other
party. The judgment on the appeal was handed down with ruling in July 2019, which with reference to TIM
confirmed full legality of its conduct and total non-existence of any element of management and
coordination. The receivers of Elinet S.p.A. and Elitel Telecom S.p.A. appealed to the Court of Cassation in
January 2020 to obtain the annulment of the judgment in the second instance. The receiver of Elitel S.r.l. has
not filed an appeal with the Court of Cassation and, consequently, the total claim for damages has been
reduced to 244 million euros. TIM notified a counterclaim asking confirmation of the ruling appealed against.
Brazil - Opportunity Arbitration
In May 2012, TIM and Telecom Italia International N.V. (now merged in Telecom Italia Finance) were served
with a notice of arbitration proceedings brought by the Opportunity group, claiming compensation for
damages allegedly suffered for presumed breach of a settlement agreement signed in 2005. Based on the
claimant’s allegations, the damages relate to circumstances that emerged in the criminal proceedings pending
before the Milan Court regarding, inter alia, unlawful activities engaged in by former employees of TIM.
The investigatory phase having been completed, the hearing for oral discussion took place in November 2014,
after which the parties filed their concluding arguments in preparation for the decision on the case.
In September 2015, the Board of Arbitration declared the proceedings closed, as the award was going to be
filed.
In September 2016 the ICC Court notified the parties of its judgment, based on which the Court of Arbitration
rejected all the claims made by the Opportunity group and decided that the legal costs, administrative costs
and costs for expert witnesses should be split between the parties (the “2016 Arbitration Award”).
In April 2017 the Opportunity group filed an appeal against the 2016 Arbitration Award before the Paris Court of
Appeal.
In November 2017, TIM and Telecom Italia Finance received from the Secretariat of the ICC’s International
Court of Arbitration notice of a Request for Revision of the 2016 Arbitration Award, filed by the Opportunity
group, asking for a new award. A Board of Arbitration was subsequently established.
In October 2018, TIM and Telecom Italia Finance requested proceedings with the Paris Court of Appeal to be
suspended, in the light of proceedings pending with the Court of Arbitration of the International Chamber of
Commerce to review the same 2016 Arbitration Award. In November 2018, the Paris Court of Appeal
suspended the proceedings until the decision is taken by the Court of Arbitration in the review proceedings.
As regards the proceedings to review the 2016 Arbitration Award, in October 2019 the ICC held the discussion
hearing in Paris. In August 2020, the Arbitration Court issued the award rejecting the Request for Revision
presented by the Opportunity Group (the “2020 Arbitration Award”). In December 2020, the Opportunity group
filed an appeal against the 2020 Arbitration Award before the Paris Court of Appeal. In May 2021 the
Opportunity group asked the Paris Court of Appeal to summarize the proceedings brought against the 2016
Arbitration Award.
Iliad
By summons served during the first quarter of 2020, Iliad Italia S.p.A. sued TIM before the Court of Milan for
alleged anti-competitive conduct, including through the Kena Mobile brand, which was allegedly aimed at
hindering its entry to and consolidation in the mobile phone market in Italy, seeking damages of at least 71.4
million euros.
TIM filed an appearance, fully disputing the requests of Iliad Italia S.p.A.; and, in turn, submitting a
counterclaim in accordance with Art. 2598 of the Italian Civil Code, with reference to the denigration
implemented by Iliad Italia S.p.A. in regard to TIM and formulating a symmetrical claim for compensation for
damages. In the first preliminary brief, Iliad updated its claim for damages, taking it to 242.8 million euros.
Upon lifting the reservation on the preliminary motions, the Court adjourned the hearing to May 4, 2022 for the
closing arguments.
Iliad
By writ of summons notified in September 2021, Iliad Italia S.p.A. summonsed TIM before the Court of Milan for
the alleged application to customers of unlawful contractual conditions in terms of time limits and economic
costs for withdrawal with reference to mobile and fixed telephone offers, with a consequent petition to order
TIM to compensate damages, currently quantified as 120.4 million euros. On February 1, 2022, the first hearing
was held and the terms assigned for the briefs pursuant to article 183, subsection VI of the Italian Code of Civil
Procedure.
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T-Power
By writ of summons notified in December 2021, T-Power s.r.l., former Agent for the consumer sector,
summonsed TIM before the Court of Rome to have the right acknowledged to receive payment of a total
maximum amount of approximately 85 million euros by way of commission, compensation in lieu of notice
and termination of employment, as well as compensation for damages. The first hearing is scheduled for April
27, 2022.
b) Other information
Mobile telephony - criminal proceedings
In March 2012 TIM was served notice of the conclusion of the preliminary inquiries, which showed that the
Company was being investigated by the Public Prosecutor of Milan pursuant to the Legislative Decree n.
231/2001, for the offenses of handling stolen goods and counterfeiting committed, according to the alleged
allegations, by fourteen employees of the so-called “ethnic channel”, with the participation of a number of
dealers, for the purpose of obtaining undeserved commissions from TIM.
The Company, as the injured party damaged by such conduct, had brought two legal actions in 2008 and 2009
and had proceeded to suspend the employees involved in the criminal proceedings (suspension later followed
by dismissal). It has also filed an initial statement of defense, together with a technical report by its own
expert, requesting that the proceedings against it be suspended, and that charges of aggravated fraud against
the Company be brought against the other defendants. In December 2012, the Public Prosecutor's Office filed a
request for 89 defendants and the Company itself to be committed for trial.
During the preliminary hearing, the Company was admitted as civil party to the trial and, in November 2013,
the conclusions in the interest of the civil party were filed, reaffirming TIM's total lack of involvement in the
offenses claimed.
At the end of the preliminary hearing, which took place in March 2014, the Judge for the Preliminary Hearing
committed for trial all the defendants (including TIM) who had not asked for their situation to be settled with
alternative procedures, on the grounds that “examination in a trial” was needed. In April 2016, at the end of
the first part of the trial, the Public Prosecutor asked for TIM to be sentenced to pay an administrative fine of
900 thousand euros, but decided not to ask for confiscation of any of the presumed profits of the offenses
(quantified in the committal proceedings as totaling several million euros), based on the assumption that TIM
had in any event remedied the presumed organizational inadequacies. While acknowledging the considerable
redimensioning of the accusations, the Company has reiterated its total non-involvement in the facts at issue.
In November 2016 the Court gave a verdict acquitting the Company on the grounds that there was no case to
answer. All the individuals charged were also acquitted on various grounds.
The Public Prosecutor appealed the acquittal and appealed to the Court of Cassation "per saltum”. In January
2019, the Italian Supreme Court of Cassation agreed to the appeal and therefore ordered that the documents
of the proceedings be sent to the Milan Court of Appeal.
The proceedings were assigned to Chambers IV of the Milan Court of Appeal and are awaiting scheduling of
the hearing.
Dispute concerning the license fees for 1998
TIM has issued civil proceedings against the office of the Prime Minister for compensation of the damage
caused by the Italian State through appeal judgement no.7506/09 by the Council of State that, in the view of
the Company, violates the principles of current European community law.
The main claim which the proceedings are founded on is based on community jurisprudence that recognizes
the right to assert the responsibility of the State in relation to violation of rights recognized in community law
and injured by a judgement that has become definitive, in respect of which no other remedy may be applied.
The judgement of the Council of State definitively denied TIM the right to obtain restitution of the concession
charge for 1998 (totaling 386 million euros for Telecom Italia and 143 million euros for the former TIM
Company, plus interest), already denied by the Lazio regional administrative court despite the favorable and
binding opinion of the European Court of Justice in February 2008. This judgement concerned the conflict
between EC Directive 97/13 on general authorizations and individual licenses in the telecommunications
services industry, and the national regulations that had deferred, for 1998, the obligation to pay the fee
payable by telecommunications concession holders, despite the intervening deregulation process. The
Company then proposed an alternative compensation claim, within the sphere of the same proceedings, for
tort pursuant to art. 2043 of the Italian Civil Code. 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 is subject to eligibility analysis by the
Court, which declared the inadmissibility of TIM's main claim (case for damages for manifest breach of
community law pursuant to law 117/88). However, this decision was amended in favor of the Company on
appeal. In March 2015 the Rome Court issued its judgement in the first instance, declaring the Company's
application inadmissible.
In 2015, TIM has appealed the decision, and the case is now pending the hearing specifying the nature of the
forms of order sought. The Court of Appeal has scheduled the hearing for closing arguments for April 2, 2019.
Thereafter, without any new procedural activities having taken place, the Court of Appeal incontrovertibly
deferred the hearing for closing arguments first to 2020 and then to 2021 (from when the terms for conclusion
and replies shall run, which will be followed shortly thereafter by the issue of the judgment). These deferrals
were followed by the latest, of January 15, 2021, scheduling the new hearing for January 25, 2022.
On the matters underlying the case, the following must be noted:
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■
■
■
on the considered lack of jurisdiction of the Court of Rome (concerned by the judgment of the Court of
Rome appealed by TIM) to judge the liability of the Italian government for the work of senior magistrates
(in the case in point, the Council of State), which would have led to the declared inadmissibility of the
claim in accordance with Art. 5, law no. 117/1978 (old text) - the United Chambers of the Court of
Cassation ruled with judgment no. 14842 on June 7, 2018, confirming the jurisdiction of the Court of
Rome and, therefore, the correctness of TIM’s choice to base its lawsuit in the Court of Rome;
on the unlawful nature of the conduct of the Italian government - and, therefore, on the liability of the
State-Court in accordance with Law no. 117/1998 - once again, the EU Court of Justice has ruled,
deciding on the prejudicial matter raised by the Lazio TAR in other, connected proceedings, in its
judgment given on March 4, 2020 in C-34/19, stressing that TIM was not required to pay the charges
demanded by the State for 1998 and, therefore, confirming the clear violation by the Council of State of
European Community law (also because in clear conflict with the decision already given by the EU Court
of Justice on February 21, 2008 in C-296/06, as, moreover, already ruled by the Court of Appeal of Rome,
Chambers I, in Decree of January 31, 2012, which sanctioned the procedural admissibility of TIM’s
lawsuit);
on the matter of the right to repeat the charges paid for 1998 - the Court of Cassation ruled in its
judgment no. 18603 given on September 7, 2020, rejecting the appeal brought by the Presidency of the
Council against the judgment whereby the Court of Appeal of Rome had upheld the claim for
compensation made by Vodafone (payment of charges for 1998) for the same title in separate
proceedings.
In short, the company paid the charges disputed in 1998; it promptly challenged the administrative provision
that had unfairly required said payment, before the administrative court; the administrative proceedings
before the Council of State concluded negatively in 2009 (despite the recalled opposite judgment of the
European Court of Justice); the civil proceedings of first instance concluded in March 2015 with a judgment of
rejection for grounds of admissibility (then solved in the sense indicated by the company with the referenced
judgment of Cassation in United Chambers no. 14842/18) and more than 6 years after the first instance
judgment - going from deferral to deferral - the appeal judgment (that could only uphold the mentioned
judgments of the Court of Justice and the Court of Cassation) has not yet been issued (nor, on the basis of
these repeated deferrals, can the company forecast when it will be given).
The company is examining the various scenarios and legal claims (national, European Community, etc.) that
may contribute towards defining the appeal dispute. It is considered, in fact, that the principles of the
reasonable duration of the trial, in accordance with subsection 2 of article 111 of the Constitution and in
accordance with article 6 of the European Convention on Human Rights, are violated by these events,
considering: (i) the year in which payment was made of the undue charges is 1998; (ii) the value of these
charges is approximately 529 million euros plus interest from that date; (iii) the extremely long procedural
process has not even led to an appeal judgment (started in 2015 and with an unpredictable conclusion, given
the continuous deferrals); (iv) the circumstance that the legal matter appears to be readily able to be settled,
as not one but two judgments have already been given by the EU Court of Justice declaring payment of the
charges to be incompatible with European Community legislation (judgments that have currently been ignored
by the national court).
As part of the aforementioned analyzes aimed at reaching a definition of the appeal sentence, it should be
pointed out that on January 25, 2021 the company filed a request with the Rome Court of Appeal to bring
forward the hearing (postponed, as mentioned, to January 25, 2022) in order to avoid yet another
postponement of the case, which, as we know, concerns the non-compliance with two inter partes decisions,
on the same matter, by the Court of Justice of the European Union for a clear violation of European law by the
State-Judge. With a ruling on February 8, 2021, the Rome Court of Appeal (second section specializing in
corporate matters) deemed it could grant the request for an advance ruling, setting the hearing for November
30, 2021. On that date the case was taken to decision with the assignment of the legal terms for closing
statements and replies.
Vodafone (previously TELETU)
By writ of summons of February 2012, TIM summonsed the operator TeleTu (today incorporated into
Vodafone) to the Court of Rome for having unduly impeded customers intending to return to TIM. The
damages claim has been quantified for approximately 93 million euros. By judgment of December 2020, the
Court ascertained that from July 2008 to October 2011, TELETU pursued illegal competition pursuant to art.
2598 of the Italian Civil Code in connection with requests for migration to TIM, ordering it to compensate TIM
for the amount of 1,378,000 euros plus interest and revaluation, which was paid by Vodafone. As part of a
global settlement with Vodafone, the parties have agreed to abstain from challenging this judgment.
∂
Other liabilities related to the sale of assets and shareholdings
As part of agreements for the sale of assets and companies, the TIM Group has undertaken guarantees to
indemnify the buyers for liabilities mainly connected with legal, tax, social security, and labor law issues, for an
amount normally set as a percentage of the purchase price.
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To cover such contingent liabilities, amounting to a total of around 250 million euros, provisions totaling
approximately 10 million euros have been allocated solely for those cases for which payment is considered
likely.
Furthermore, we report that in relation to the disposal of assets and investments, the TIM Group has
undertakings to pay additional indemnities under specific contractual provisions, the contingent liability of
which cannot be measured at present.
C) Commitments and guarantees
Guarantees, net of back-to-back guarantees received, amounted to 54 million euros.
The guarantees provided by third parties to Group companies, amounting to 6,894 million euros, related to
guarantees provided by banks and other financial institutions as a guarantee of the proper performance of
contractual obligations.
In particular, we report:
■
■
■
the TIM Group had six bank guarantees issued in favor of the Ministry of Economic Development for a total
of 1,922 million euros for the deferment of the payment of the amount due for the acquisition of user
rights to frequencies in the 694-790 MHz, 3600-3800 MHz and 26.5-27.5 GHz bands, which will be reserved
for 5G mobile telecommunications services in Italy. At December 31, 2021, the remaining guarantee was
1,738 million euros;
the insurance guarantees, which totaled 930 million euros, mainly refer to guarantee financing by the TIM
Group in applying legal provisions for contracts of Public Administrations and similar bodies;
the TIM Group had bank guarantees issued in favor of INPS in support of the application - by TIM and some
Group companies - of Article 4 of Italian Law 92 of June 28, 2012, for the voluntary redundancy of
employees meeting the requirements; the total amount of the guarantees issued is 1,422 million euros, of
which 1,360 million euros for TIM S.p.A. and 62 million euros for Group companies.
Lastly, in May 2018, TIM issued a surety to the Prime Minister’s Office for 74.3 million euros to secure an appeal
to the Lazio Administration Court for a provisional stay of the administrative fine levied on TIM following the
preliminary investigation connected with the penalty proceeding initiated under Article 2 of Decree Law 21 of
3/15/2012 (the “Golden Power” law).
There are also surety bonds on the telecommunication services in Brazil for 653 million euros.
d) Assets guaranteeing financial liabilities
The special rate loan contracts granted by the Brazilian Development Bank BNDES (Banco Nacional de
Desenvolvimento Econômico e Social) to TIM S.A. to a total value of 63 million euros are covered by specific
covenants. In the event of non-compliance with the covenant obligations, BNDES will have a right to the
receipts which transit on the bank accounts of the company.
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230
NOTE 25
REVENUES
These decreased by 489 million euros compared to 2020. The breakdown is as follows:
(million euros)
Equipment sales
Services
Total
2021
1,411
13,905
15,316
2020
1,402
14,403
15,805
Revenues from telecommunications services are presented gross of amounts due to other TLC operators,
equal to 1,264 million euros (1,198 million euros in 2020), included in Costs of services.
Revenues from services in 2021 include revenues for voice and data services on fixed and mobile networks for
Retail customers for 8,203 million euros and for other Wholesale operators for 2,805 million euros.
For a breakdown of revenues by operating segment/geographical area, reference should be made to the Note
“Segment Reporting”.
NOTE 26
OTHER INCOME
This item rose by 61 million euros compared to 2020. The figure breaks down as follows:
(million euros)
Late payment fees charged for telephone services
Recovery of employee benefit expenses, purchases and services rendered
Capital and operating grants
Damages, penalties and recoveries connected with litigation
Estimate revisions and other adjustments
Special training income
Other
Total
2021
39
12
28
27
71
67
28
272
2020
46
14
34
24
59
13
21
211
Consolidated financial statements of the
TIM Group
Note 25
Revenues
231
NOTE 27
ACQUISITION OF GOODS AND SERVICES
(a)
This item rose by 377 million euros compared to 2020. The figure breaks down as follows:
(million euros)
Acquisition of raw materials and goods
Costs of services:
Revenues due to other TLC operators
Costs for telecommunications network access services
Commissions, sales commissions and other selling expenses
Advertising and promotion expenses
Professional and consulting services
Utilities
Maintenance costs
Outsourcing costs for other services
Mailing and delivery expenses for telephone bills, directories and other
materials to customers
Other service expenses
2021
1,266
1,264
119
974
212
253
434
291
378
38
718
4,681
(b)
Lease and rental costs:
Rent and leases
TLC circuit subscription charges
Other lease and rental cost
Total
51
96
456
603
6,550
(c)
(a+b+c)
2020
1,203
1,198
116
996
196
216
435
277
348
46
706
4,534
51
87
298
436
6,173
In 2021, non-recurring operating costs related to procurement and miscellaneous costs of approximately 4
million euros were incurred, which were necessary to manage the health emergency related to COVID-19. For
more details, see the Note “Significant non-recurring Events and Transactions”.
In 2021, lease and rental costs included around 11 million euros in short-term lease payments of modest value
(approximately 11 million euros in 2020).
Consolidated financial statements of the
TIM Group
Note 27
Acquisition of goods and services
232
NOTE 28
EMPLOYEE BENEFITS EXPENSES
This item rose by 302 million euros compared to 2020. The figure breaks down as follows:
(million euros)
Ordinary employee expenses
Wages and salaries
Social security costs
Other employee benefits
Costs and provisions for temp work
Miscellaneous expenses for personnel and other labor-related services rendered
Charges for termination benefit incentives
Corporate restructuring expenses
Other
Total
2021
2020
1,794
651
148
2,593
—
8
336
4
348
2,941
1,804
647
146
2,597
—
1
38
3
42
2,639
(a)
(b)
(c)
(a+b+c)
Employee benefits expenses mainly related to the Domestic Business Unit for 2,703 million euros (2,401 million
euros in 2020) and to the Brazil Business Unit for 237 million euros (236 million euros in 2020).
“Company restructuring expenses” came to 336 million euros (38 million euros in 2020) and are mainly related
to the 2021 recording of the expenses connected with the application of the trade union agreements signed by
the Parent company with the trade unions on March 8, 2021 and on April 23, 2021 and the agreements signed
respectively on March 15, 2021 by the company Olivetti, on April 27, 2021 by the company Noovle S.p.A. and on
May 6, 2021 by the company Telecom Italia Sparkle.
In 2021, non-recurring costs were incurred for approximately 1 million euros, made necessary to address the
COVID-19 health emergency. For more details, see the Note “Significant non-recurring Events and
Transactions”.
The average salaried workforce, including personnel with temp work contracts, stood at 47,942 employees in
2021 (49,099 in 2020). A breakdown by category is as follows:
(number of units)
Executives
Middle managers
Workers
Blue collars
Employees on payroll
Employees with temp work contracts
Total average salaried workforce
2021
612
4,154
43,110
54
47,930
12
47,942
2020
587
4,083
44,420
—
49,090
9
49,099
Headcount in service at December 31, 2021, including personnel with temp work contracts, stood at 51,929
employees (52,347 at December 31, 2020), showing a decrease of 418 employees.
Consolidated financial statements of the
TIM Group
Note 28
Employee benefits expenses
233
NOTE 29
OTHER OPERATING EXPENSES
This item rose by 541 million euros compared to 2020. The figure breaks down as follows:
(million euros)
Write-downs and expenses in connection with credit management
Provision charges
TLC operating fees and charges
Indirect duties and taxes
Penalties, settlement compensation and administrative fines
Association dues and fees, donations, scholarships and traineeships
Other
Total
of which, included in the supplementary disclosure on financial instruments
2021
305
704
189
99
127
12
66
1,502
305
2020
423
43
199
96
120
12
68
961
423
“Provision charges” for 2021 include a non-recurring 548 million euros for the posting of a Contractual Risk
Provision for Onerous Contracts (IAS 37) relating to ongoing relations with some counterparties for the offer of
multimedia content.
In 2021, non-recurring operating costs were also incurred as a consequence of the COVID-19 emergency for a
total of 20 million euros, mainly referring to provisions and expenses connected with credit management
following the worsening of the expected credit loss of corporate customers of the Parent Company TIM S.p.A.,
connected with the expected evolution of the pandemic.
For more details, see the Note “Significant non-recurring Events and Transactions”.
Further details on Financial Instruments are provided in the Note "Supplementary disclosure on financial
instruments".
NOTE 30
INTERNALLY GENERATED ASSETS
These decreased by 27 million euros compared to 2020. The breakdown is as follows:
(million euros)
Intangible assets with a finite useful life
Tangible assets
Total
2021
216
259
475
2020
231
271
502
They mainly refer to the capitalization of labor costs relating to design, construction and testing of network
infrastructure and systems, as well as software development and development of network solutions,
applications and innovative services.
Consolidated financial statements of the
TIM Group
Note 29
Other operating expenses
234
NOTE 31
DEPRECIATION AND AMORTIZATION
These decreased by 126 million euros compared to 2020. The breakdown is as follows:
(million euros)
Amortization of intangible assets with a finite useful life
Industrial patents and intellectual property rights
Concessions, licenses, trademarks and similar rights
Other intangible assets
Depreciation of tangible assets owned
Buildings (civil and industrial)
Plant and equipment
Manufacturing and distribution equipment
Other
Amortization of rights of use assets
Property
Plant and equipment
Other tangible assets
Intangible assets
Total
2021
1,043
466
2
1,511
35
2,095
9
145
2,284
343
314
37
1
695
4,490
2020
1,152
473
2
1,627
35
2,115
11
140
2,301
397
252
39
—
688
4,616
(a)
(b)
(c)
(a+b+c)
For further details refer to the Notes "Intangible assets with a finite useful life", "Tangible assets" and "Rights
of use assets".
For a breakdown of depreciation and amortization by operating segment/geographical area, reference should
be made to the Note "Segment Reporting".
NOTE 32
GAINS/(LOSSES) ON DISPOSALS OF NON-
CURRENT ASSETS
This item was broken down as follows:
(million euros)
Gains on disposals of non-current assets:
Gains on the retirement/disposal of intangible, tangible and user rights on
rental
Losses on disposals of non-current assets:
Losses on the retirement/disposal of intangible, tangible and user rights on
rental
Total
(a)
(b)
(a-b)
2021
2020
15
15
14
14
1
29
29
40
40
(11)
Consolidated financial statements of the
TIM Group
Note 31
Depreciation and amortization
235
NOTE 33
IMPAIRMENT REVERSALS (LOSSES) ON NON-
CURRENT ASSETS
This item was broken down as follows:
(million euros)
Reversals of impairment losses on non-current assets:
on intangible assets
on tangible assets
2021
Impairment losses on non-current assets:
on intangible assets
on tangible assets
Total
—
—
—
(a)
4,120
—
4,120
(4,120)
(b)
(a-b)
2020
—
—
—
—
8
8
(8)
The impairment losses for the year 2021 amounted to 4,120 million euros and related to the goodwill
impairment loss attributed to the Domestic Cash Generating Unit.
In accordance with IAS 36, goodwill is not subject to amortization, but is tested for impairment on at least an
annual basis, when preparing the company’s consolidated financial statements.
With reference to the Domestic Cash Generating Unit (CGU), the impairment test, conducted during the
preparation of the 2021 Annual Financial Report, took as a reference the flows of the new 2022-2024 Industrial
Plan - which, based on the results of the 2021 final accounting, reflects realistic aspects on future
developments and outlines all the actions to create value for shareholders - on the basis of the projections up
to 2026, assuming the use of domestic market assets in continuity with the conditions as at December 31, 2021
and using a discount rate updated to the financial market conditions as at December 31, 2021.
The configuration of the recoverable amount is the Fair Value estimated on the basis of the income approach,
which has highlighted a value reduction of 4,120 million euros of goodwill attributed to the Domestic Cash
Generating Unit.
Impairment testing of the Brazil Cash Generating Unit did not reveal any reduction in the value of goodwill
allocated to it. The valuation was based on the Market Cap of TIM Brasil as at December 31, 2021 and
highlighted a positive difference between the book value of the CGU and Fair Value.
Further details are provided in the Note "Goodwill".
NOTE 34
OTHER INCOME (EXPENSES) FROM
INVESTMENTS
Details are as follows:
(million euros)
Dividends from Other investments
Net gains on the sale of investments in associates and joint ventures
accounted for using the equity method
Other income
Total
of which, included in the supplementary disclosure on financial instruments
In 2021, the item mainly included the net capital gain (119 million euros) recognized following the dilution from
100% to 49% of the equity investment of the Brazilian subsidiary TIM S.A. in I-Systems S.A. (formerly FiberCo
Soluções de Infraestrutura S.A.), a company established by TIM S.A. for the segregation of its network assets
and the provision of infrastructure services, following the completion of the agreement between TIM S.A. and
IHS Fiber Brasil - Cessão de Infraestruturas Ltda.
119
6
126
3
452
2
454
2
2021
1
2020
—
In 2020 the item mainly included the net capital gain recognized following the dilution from 60% to 37.5% of
the TIM Group's stake in the capital of INWIT S.p.A. as a result of the merger of INWIT with Vodafone Towers
(441 million euros) and the capital gains deriving from the sale of additional share packages equal, in total, to
7.3% of INWIT's share capital (11 million euros).
Consolidated financial statements of the
TIM Group
Note 33
Impairment reversals (losses) on non-current assets
236
NOTE 35
FINANCE INCOME AND EXPENSES
Finance income (expenses) showed a net expense of 1,150 million euros (expense of 1,179 million euros in
2020) and comprises:
(million euros)
Finance income
Finance expenses
Net finance income/(expenses)
The items break down as follows:
(million euros)
Interest expenses and miscellaneous finance expenses:
Interest expenses and other costs relating to bonds
Interest expenses to banks
Interest expenses to others
Interest expenses on financial lease liabilities
Commissions
Miscellaneous finance expenses (*)
Interest income and other finance income:
Interest income
Income from financial receivables, recorded in Non-current assets
Income from securities other than investments, recorded in Non-current
assets
Income from securities other than investments, recorded in Current assets
Miscellaneous finance income (*)
Total net finance interest/(expenses)
(a)
Other components of financial income and expense:
Net exchange gains and losses
Net result from derivatives
Net fair value adjustments to fair value hedge derivatives and underlyings
Net fair value adjustments to non-hedging derivatives
Total other components of financial income and expense
Total net financial income (expenses)
of which, included in the supplementary disclosure on net financial
instruments
(b)
(a+b)
(*) of which IFRS 9 impact:
(million euros)
Income from negative adjustment of IFRS 9 impairment reserve on financial assets
measured at FVTOCI
Expenses from positive adjustment of IFRS 9 impairment reserve on financial assets
measured at FVTOCI
Income/Expenses from IFRS 9 reserve impairment on financial assets measured at
FVTOCI
Reversal of IFRS 9 impairment reserve on financial assets measured through FVTOCI
Impairment losses on financial assets other than investments
2021
1,124
(2,274)
(1,150)
2021
(839)
(51)
(24)
(271)
(1,185)
(61)
(126)
(187)
75
8
—
20
39
142
(1,230)
39
117
(4)
(72)
80
(1,150)
(936)
2020
1,143
(2,322)
(1,179)
2020
(872)
(65)
(20)
(283)
(1,240)
(74)
(124)
(198)
55
2
—
11
27
95
(1,343)
(51)
109
3
103
164
(1,179)
(876)
2021
2020
4
(1)
3
5
—
1
(2)
(1)
1
—
Further details on Financial Instruments are provided in the Note "Supplementary disclosure on financial
instruments".
Consolidated financial statements of the
TIM Group
Note 35
Finance income and expenses
237
For greater clarity of presentation, the net effects relating to derivative financial instruments are summarized
in the following table:
(million euros)
Foreign currency conversion gains
Exchange losses
Net exchange gains and losses
Income from fair value hedge derivatives
Charges from fair value hedge derivatives
Net result from fair value hedge derivatives
Positive effect of the reversal of the Reserve for fair value adjustment of
cash flow hedge derivatives to the income statement (interest rate
component)
(a)
Negative effect of the reversal of the Reserve of cash flow hedge
derivatives to the income statement (interest rate component)
Net effect of the Reversal of the Reserve of cash flow hedge derivatives
to the income statement (interest rate component)
Income from non-hedging derivatives
Charges from non-hedging derivatives
Net result from non-hedging derivatives
Net result from derivatives
(b)
(c)
(a+b+c)
Positive fair value adjustments to fair value hedge derivatives
Negative fair value adjustments relating to financial assets and liabilities
underlying fair value hedge derivatives
Net fair value adjustments
Positive fair value adjustments to Underlying financial assets and liabilities
of fair value hedge derivatives
Negative fair value adjustments relating to fair value hedge derivatives
Net fair value adjustments
Net fair value adjustments to fair value hedge derivatives and
underlyings
Positive fair value adjustments to non-hedging derivatives
Negative fair value adjustments to non-hedging derivatives
Net fair value adjustments to non-hedging derivatives
(d)
(e)
(d+e)
(f)
(g)
(f+g)
2021
411
(372)
39
33
—
33
366
(295)
71
43
(30)
13
117
—
—
—
50
(54)
(4)
(4)
79
(151)
(72)
2020
393
(444)
(51)
47
—
47
376
(309)
67
6
(11)
(5)
109
46
(44)
2
6
(5)
1
3
174
(71)
103
Consolidated financial statements of the
TIM Group
Note 35
Finance income and expenses
238
NOTE 36
PROFIT (LOSS) FOR THE YEAR
The profit (loss) for the year can be analyzed as follows:
(million euros)
Profit (loss) for the year
Attributable to:
Owners of the Parent:
Profit (loss) from continuing operations
Profit (loss) from Discontinued operations/Non-current assets held for sale
Profit (loss) for the year attributable to owners of the Parent
Non-controlling interests:
Profit (loss) from continuing operations
Profit (loss) from Discontinued operations/Non-current assets held for sale
Profit (loss) for the year attributable to Non-controlling interest
2021
(8,400)
(8,652)
—
(8,652)
252
—
252
2020
7,352
7,224
—
7,224
128
—
128
Consolidated financial statements of the
TIM Group
Note 36
Profit (loss) for the year
239
NOTE 37
EARNINGS PER SHARE
Basic earnings per share
Profit (loss) for the year attributable to owners of the Parent
Less: additional dividends for the savings shares (0.011 euros per
share and up to capacity)
Average number of ordinary and savings shares
Basic earnings per share – Ordinary shares
Plus: additional dividends per savings share
Basic earnings per share – Savings shares
Basic earnings per share from continuing operations
Profit (loss) from continuing operations attributable to Owners of
the Parent
Less: additional dividends for the savings shares
Average number of ordinary and savings shares
Basic earnings per share from continuing operations – Ordinary
shares
Plus: additional dividends per savings share
Basic earnings per share from continuing operations – Savings
shares
Basic earnings per share from Discontinued operations/Non-
current assets held for sale
Profit (loss) from Discontinued operations/Non-current assets held
for sale
Average number of ordinary and savings shares
Basic earnings per share from Discontinued operations/Non-
current assets held for sale – Ordinary shares
Basic earnings per share from Discontinued operations/Non-
current assets held for sale – Savings shares
(million euros)
(millions)
(euros)
(euros)
(million euros)
(millions)
(euros)
(euros)
(million euros)
(millions)
(euros)
(euros)
2021
(8,652)
—
(8,652)
21,205
(0.40)
—
(0.40)
(8,652)
—
(8,652)
21,205
(0.40)
—
(0.40)
—
21,205
—
—
2020
7,224
(66)
7,158
21,080
0.34
0.01
0.35
7,224
(66)
7,158
21,080
0.34
0.01
0.35
—
21,080
—
—
Average number of ordinary shares
Average number of savings shares
Total
2021
2020
15,177,486,840 15,051,766,083
6,027,791,699
21,205,278,539 21,079,557,782
6,027,791,699
Consolidated financial statements of the
TIM Group
Note 37
Earnings per share
240
Diluted earnings per share
Profit (loss) for the year attributable to owners of the Parent
Dilution effect of stock option plans and convertible bonds (*)
Less: additional dividends for the savings shares (0.011 euros per
share and up to capacity)
Average number of ordinary and savings shares
Diluted earnings per share – Ordinary shares
Plus: additional dividends per savings share
Diluted earnings per share – Savings shares
Diluted earnings per share from continuing operations
Profit (loss) from continuing operations attributable to Owners of
the Parent
Dilution effect of stock option plans and convertible bonds (*)
Less: additional dividends for the savings shares
Average number of ordinary and savings shares
Diluted earnings per share from continuing operations – Ordinary
shares
Plus: additional dividends per savings share
Diluted earnings per share from continuing operations – Savings
shares
Diluted earnings per share from Discontinued operations/Non-
current assets held for sale
Profit (loss) from Discontinued operations/Non-current assets held
for sale
Dilution effect of stock option plans and convertible bonds
Average number of ordinary and savings shares
Diluted earnings per share from Discontinued operations/Non-
current assets held for sale – Ordinary shares
Diluted earnings per share from Discontinued operations/Non-
current assets held for sale – Savings shares
Average number of ordinary shares (*)
Average number of savings shares
Total
2021
(8,652)
—
—
(8,652)
21,205
(0.40)
—
(0.40)
(8,652)
—
—
(8,652)
21,205
(0.40)
—
(0.40)
—
—
21,205
—
2020
7,224
42
(66)
7,200
22,163
0.33
0.01
0.34
7,224
42
(66)
7,200
22,163
0.33
0.01
0.34
—
—
22,163
—
(million euros)
(millions)
(euros)
(euros)
(million euros)
(millions)
(euros)
(euros)
(million euros)
(millions)
(euros)
(euros)
—
2021
15,177,486,840
6,027,791,699
—
2020
16,134,874,545
6,027,791,699
21,205,278,539 22,162,666,244
(*) The average number of ordinary shares also includes the potential ordinary shares relating to the equity compensation plans of employees for
which the (market and non-market) performance conditions have been met, in addition to the theoretical number of shares that are issuable as a
result of the conversion of the unsecured equity-linked convertible bond. Consequently, the “Net profit (loss) for the year attributable to owners of
the Parent" and the “Profit (loss) from continuing operations attributable to owners of the Parent” were also adjusted to exclude the effects, net of
tax, related to the above-mentioned plans and to the convertible bond (+42 million euros in 2020). For what concerns 2021, these effects were not
included in the calculation of diluted earnings per share because, based on the provisions of IAS 33, they are antidilutive.
Consolidated financial statements of the
TIM Group
Note 37
Earnings per share
241
Future potential changes in share capital
The table below shows future potential changes in share capital, based on the issuance of the convertible bond
by TIM S.p.A. in March 2015, in the plans for long-term share incentives, still outstanding at December 31, 2021:
Number of
maximum
shares issuable
Share
capital
(thousand
s of euros)
Additional
paid-in
capital
(thousands of
euros)
Subscription
price per
share
(euros)
Capital increases already approved (ordinary shares)
2020-2022 Long Term Incentive Plan (free issue)
Stock Options
2015 Convertible Bond (ordinary shares)(*)
Bonds
Total
180,000,000
180,000,000
1,138,239,144 2,000,000
1,138,239,144 2,000,000
1,318,239,144 2,000,000
(*) The number of shares potentially issuable shown may be subject to adjustments.
N.A.
N.A.
Further information is provided in the Notes “Non-current and current financial liabilities” and “Equity
compensation plans”.
Consolidated financial statements of the
TIM Group
Note 37
Earnings per share
242
NOTE 38
SEGMENT REPORTING
a) Segment reporting
The operating segments of the TIM Group, organized for the telecommunications business and the relative
geographical location are as follows:
■ Domestic: includes the activities in Italy relating to voice and data services on fixed and mobile networks for
end customers (retail) and other operators (wholesale), the activities of the Telecom Italia Sparkle group which,
at international level (in Europe, the Mediterranean and South America), develops fiber optic networks for
wholesale customers, the operations of the company FiberCop S.p.A. for the provision of passive access services
on the secondary copper and fiber network, the activities of Noovle S.p.A.(Cloud and Edge Computing
solutions), the activities of Olivetti (Information Technology products and services) and support structures for
the Domestic sector;
■ Brazil: includes mobile and fixed telecommunications operations in Brazil (TIM S.A.);
■ Other Operations: include the financial companies (Telecom Italia Capital S.A. and Telecom Italia Finance S.A.)
and other minor companies not strictly related to the TIM Group's core business.
In view of the decision-making process adopted by the TIM Group, segment reporting is presented for financial
operating data.
The results of financial management, income taxes for the year, as well as gains (losses) from Discontinued
operations / Non-current assets held for sale are presented at a consolidated level.
Consolidated financial statements of the
TIM Group
Note 38
Segment reporting
243
Separate Consolidated Income Statement by Operating Segment
(million euros)
Domestic
Brazil
Other Operations Adjustments and
2021
2021
2020
12,477 12,874 2,839
1
12,505 12,905 2,840
13
259
28
2020
2,931
2
2,933
11
2,853 2,944
(1,070)
(1,037)
2021
—
—
—
—
—
(3)
2020
—
—
—
—
—
(3)
Consolidated
Total
eliminations
2021
—
(29)
(29)
—
(29)
24
—
2020
2021
2020
— 15,316 15,805
—
—
(33)
(33) 15,316 15,805
—
211
272
(33) 15,588 16,016
29
(6,173)
(1)
(6,550)
(2,639)
(2,941)
(1)
(1)
(334)
(639)
(896)
(1,211)
(2,703)
(2,401)
(5,534)
31
17
397
3,730
(3,595)
200
12,764 13,105
(5,129)
Third-party revenues
Intragroup revenues
Revenues by operating segment
Other income
Total operating revenues and other income
Acquisition of goods and services
Employee benefits expenses
of which: accruals to employee severance
indemnities
Other operating expenses
of which: write-downs and expenses in
connection with credit management and
provision charges
Change in inventories
Internally generated assets
EBITDA
Depreciation and amortization
Gains/(losses) on disposals of non-current
assets
Impairment reversals (losses) on non-current
assets
EBIT
Share of profits (losses) of associates and joint
ventures accounted for using the equity
method
Other income (expenses) from investments
Finance income
Finance expenses
Profit (loss) before tax from continuing operations
Income tax expense
Profit (loss) from continuing operations
Profit (loss) from Discontinued operations/Non-current assets held for sale
Profit/(Loss) for the year
Attributable to:
Owners of the Parent
Non-controlling interests
(13)
416
5,339
(3,677)
(3,990)
1,635
40
18
(4,120)
(19)
(8)
(5)
(237)
—
(282)
(113)
(7)
72
1,362
(895)
6
—
473
(2)
(236)
—
(318)
(132)
8
79
1,407
(939)
8
—
476
(1)
—
(8)
—
—
—
(12)
—
—
—
(12)
(1)
—
(5)
—
—
—
(9)
—
—
—
(9)
—
(1)
—
—
6
—
—
—
—
—
—
—
—
—
—
1
(1)
(1)
(1,502)
(961)
(1,009)
(466)
—
10
(1)
(6)
502
475
7
2 5,080 6,739
— (4,490)
(4,616)
—
—
2
1
(4,120)
(11)
(8)
(3,529) 2,104
—
38
126
1,124
(2,274)
(4,515)
(3,885)
(8,400)
—
(8,400)
18
454
1,143
(2,322)
1,397
5,955
7,352
—
7,352
(8,652)
252
7,224
128
Revenues by operating segment
(million euros)
Domestic
Brazil
Other Operations Adjustments and
Revenues from equipment sales - third party
Revenues from equipment sales - intragroup
Total revenues from equipment sales
Revenues from services - third party
Revenues from services - intragroup
Total revenues from services
Total third-party revenues
Total intragroup revenues
Total revenues by operating segment
2021
1,322
—
2021
88
—
88
2020
1,300
—
1,322 1,300
11,155 11,574
1
31
2,752
11,183 11,605
12,477 12,874 2,839
1
12,505 12,905 2,840
2020
102
—
102
2,751 2,829
2
2,831
2,931
2
2,933
28
28
31
2021
—
—
—
—
—
—
—
—
—
2020
—
—
—
—
—
—
—
—
—
eliminations
2021
1
—
1
(1)
Consolidated
Total
2020
2021
2020
1,402
1,411
—
—
—
—
—
1,402
1,411
— 13,905 14,403
—
—
(33)
(33) 13,905 14,403
— 15,316 15,805
—
—
(33)
(33) 15,316 15,805
(29)
(30)
—
(29)
(29)
Consolidated financial statements of the
TIM Group
Note 38
Segment reporting
244
Purchases of intangible assets, tangible assets and rights of use assets by operating segment
(million euros)
Domestic
Brazil
Other Operations Adjustments and
Purchase of intangible assets
Purchase of tangible assets
Purchase of rights of use assets
Total purchase of intangible assets, tangible
assets and rights of use assets
of which: capital expenditures
of which: increases in lease/leasing
contracts for right of use assets
Headcount by Operating Segment
(number of units)
Headcount
2021
1,204
2,095
304
2020
1,004
1,682
843
2021
682
570
442
3,603
3,377
3,529
2,748
1,694
1253
2020
193
456
519
1,168
661
226
781
441
507
2021
—
—
—
2020
—
—
—
Consolidated
Total
eliminations
2021
—
—
—
2021
2020
—
1,886
— 2,665
746
—
2020
1,197
2,138
1,362
—
—
—
—
—
—
—
—
—
—
— 4,630
5,297 4,697
3,409
—
667
1,288
Domestic
Brazil
Other Operations
Consolidated Total
12/31/2021 12/31/2020 12/31/2021 12/31/2020 12/31/2021 12/31/2020 12/31/2021 12/31/2020
52,347
42,591
42,925
51,929
9,409
9,325
13
13
Assets and liabilities by Operating Segment
(million euros)
Domestic
Brazil
Other Operations
Adjustments and
eliminations
12/31/2021 12/31/2020 12/31/2021 12/31/2020 12/31/2021 12/31/2020 12/31/2021 12/31/202
5,098
845
5,943
—
5,332
864
6,196
253
1
(37)
(36)
1
1
19
20
—
1
19
20
—
(1)
(35)
(36)
—
0
40,805 44,736
Non-current operating assets
3,794
3,755
Current operating assets
44,599 48,491
Total operating assets
Investments accounted for using
2,728
2,725
the equity method
Discontinued operations /Non-current assets held for sale
Unallocated assets
Total Assets
Total operating liabilities
10,890
Liabilities directly associated with Discontinued operations/Non-current assets held for sale
Unallocated liabilities
Equity
Total Equity and Liabilities
10,535
1,671
1,191
29
29
(81)
(82)
Consolidated Total
12/31/2021 12/31/2020
46,139 49,834
4,584
4,640
54,418
50,779
2,728
2,979
—
—
16,088
15,429
73,234
69,187
11,673
12,509
—
—
32,721
34,639
22,039 28,840
73,234
69,187
b) Reporting by geographical area
(million euros)
Italy
Overseas
Total
Revenues
Breakdown by location of
operations
2021
12,189
3,127
15,316
2020
12,638
3,167
15,805
Breakdown by location of
customers
2021
11,557
3,759
15,316
2020
12,018
3,787
15,805
(a)
(b)
(a+b)
c) Information about major customers
None of the TIM Group's customers exceeds 10% of consolidated revenues.
Non-current operating assets
Breakdown by location of
operations
12/31/2021
40,542
5,597
46,139
12/31/2020
44,477
5,357
49,834
Consolidated financial statements of the
TIM Group
Note 38
Segment reporting
245
NOTE 39
RELATED-PARTY TRANSACTIONS
The following tables show the figures relating to related-party transactions and the impact of those amounts
on the separate consolidated income statement, consolidated statements of financial position and
consolidated statements of cash flows.
Related-party transactions, when not dictated by specific laws, were conducted at arm's length. They were
performed in compliance with the internal procedure, which sets forth rules designed to ensure the
transparency and fairness of the transactions in accordance with Consob Regulation 17221/2010. The current
procedure is available on the website gruppotim.it, under the Group section/Governance Tools channel.
It should be noted that during the second half of 2021, Cassa Depositi e Prestiti and its subsidiaries were
included in the scope of related companies, on the basis of assessments in this regard performed by the TIM
S.p.A. Related Parties Committee.
The effects of the related-party transactions on the TIM Group separate consolidated income statement line
items for 2021 and 2020 are as follows:
SEPARATE CONSOLIDATED INCOME STATEMENT LINE ITEMS 2021
(million euros)
Total
Associates,
subsidiaries of
associates and
joint ventures
Other related
parties (*)
Pension funds Key managers
Total related
parties
% of financial
statement item
Revenues
Other income
Acquisition of goods and
services
Employee benefits
expenses
Other operating expenses
(a)
15,316
272
6,550
2,941
1,502
Depreciation and
amortization
Finance income
Finance expenses
4,490
1,124
2,274
31
1
355
3
50
18
31
11
142
1
74
34
(b)
62
12
497
108
3
50
1
18
(b/a)
0.4
4.4
7.6
3.7
0.2
1.1
0.1
0.8
(*) Vivendi Group and companies belonging to the group that it belongs to; Cassa Depositi e Prestiti (CDP) and its subsidiaries and other
related parties through Directors, Statutory Auditors and Key Managers.
SEPARATE CONSOLIDATED INCOME STATEMENT LINE ITEMS 2020
(million euros)
Total
Revenues
Other income
Acquisition of goods and
services
(a)
15,805
211
6,173
Associates,
subsidiaries of
associates and
joint ventures
Other related
parties (*)
90
1
250
4
113
Pension funds Key managers
Total related
parties
% of financial
statement item
(b)
94
1
363
(b/a)
0.6
0.5
5.9
2,639
961
Employee benefits
expenses
Other operating expenses
Depreciation and
0.8
amortization
0.6
Finance expenses
(*) Vivendi group and Companies belonging to the group that it belongs to; other related parties through directors, statutory auditors and key
managers.
4,616
2,322
89
2
39
15
3.4
0.2
39
15
16
73
2
Consolidated financial statements of the
TIM Group
Note 39
Related-party transactions
246
The effects of related-party transactions on the TIM Group consolidated statements of financial position line
items at December 31, 2021 and 31 December, 2020, are as follows:
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION LINE ITEMS AT 12/31/2021
(million euros)
Total
Net financial debt
Non-current financial
receivables arising from
lease contracts
Other non-current financial
assets
Non-current financial
liabilities for lease contracts
Current financial liabilities
for financing contracts and
others
(a)
(45)
(2,285)
4,064
5,945
Associates,
subsidiaries of
associates and
joint ventures
Other related
parties (*)
Pension funds
Total related
parties
% of financial
statement item
(1)
269
1
(b)
(b/a)
(1)
269
1
2.2
—
6.6
—
(1)
74
344
74
343
651
22,416
Current financial liabilities
for lease contracts
Total net financial debt
Other statement of
financial position line
items
Rights of use assets
Trade and miscellaneous
receivables and other
current assets
Miscellaneous payables
and other non-current
liabilities
Trade and miscellaneous
payables and other current
liabilities
(*) Vivendi Group and companies belonging to the group that it belongs to; Cassa Depositi e Prestiti (CDP) and its subsidiaries and other
related parties through Directors, Statutory Auditors and Key Managers.
4,358
4,847
9,473
1,413
301
265
299
182
80
60
24
23
27
56
25
2
2
11.4
1.5
6.2
1.8
1.9
2.8
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION LINE ITEMS AT 12/31/2020
(million euros)
Net financial debt
Associates,
subsidiaries of
associates and
joint ventures
Total
(a)
Other related
parties (*)
Pension funds
Total related
parties
% of financial
statement item
(b)
(b/a)
50
313
313
631
4,199
Non-current financial
liabilities for lease contracts
Current financial liabilities
for lease contracts
Other statement of
financial position line
items
Right of use assets
Trade and miscellaneous
receivables and other
current assets
Miscellaneous payables and
other non-current liabilities
Trade and miscellaneous
payables and other current
liabilities
(*) Vivendi group and Companies belonging to the group that it belongs to; other related parties through directors, statutory auditors and
key managers.
4,346
6,588
4,992
3,602
163
347
101
347
40
50
61
22
57
3
2
4
1
7.0
1.4
0.1
2.5
7.5
7.9
Consolidated financial statements of the
TIM Group
Note 39
Related-party transactions
247
The effects of the related-party transactions on the significant TIM Group consolidated statements of cash
flows line items for 2021 and 2020 are as follows:
CONSOLIDATED STATEMENT OF CASH FLOWS LINE ITEMS 2021
(million euros)
Total
(a)
Associates,
subsidiaries of
associates and
joint ventures
Other related
parties (*)
Pension funds
Total related
parties
% of financial
statement item
(b)
(b/a)
Purchases of intangible
assets, tangible assets and
right of use assets on an
accrual basis
Dividends paid
(*) Vivendi Group and companies belonging to the group that it belongs to; Cassa Depositi e Prestiti (CDP) and its subsidiaries and other
related parties through Directors, Statutory Auditors and Key Managers.
CONSOLIDATED STATEMENT OF CASH FLOWS LINE ITEMS 2020
5,297
368
23
51
15
51
8
0.4
13.9
(million euros)
Total
(a)
Associates,
subsidiaries of
associates and
joint ventures
Other related
parties (*)
Pension funds
Total related
parties
% of financial
statement item
(b)
(b/a)
Purchases of intangible
assets, tangible assets and
right of use assets on an
accrual basis
Dividends paid
(*) Vivendi group and Companies belonging to the group that it belongs to; other related parties through directors, statutory auditors and
key managers.
4,697
390
378
36
378
36
8.0
9.2
Consolidated financial statements of the
TIM Group
Note 39
Related-party transactions
248
Transactions with associates, subsidiaries of associates and
joint ventures
The most significant amounts are summarized as follows:
SEPARATE CONSOLIDATED INCOME STATEMENT LINE ITEMS
(million euros)
Revenues
INWIT S.p.A.
I-Systems S.A.
NordCom S.p.A.
TIMFin S.p.A.
Total revenues
Other income
Acquisition of goods and services
INWIT S.p.A.
I-Systems S.A.
W.A.Y. S.r.l.
Other minor companies
Total acquisition of goods and
services
Other operating expenses
Depreciation and amortization
Finance expenses
INWIT S.p.A.
TIMFin S.p.A.
Total finance expenses
2021
2020
TYPE OF CONTRACT
89
Voice and data transmission services for company use,
Desktop Management ICT services, IRU transfer of Dark
Optic Fiber and Local Infrastructure, Easy IP ADSL
services,
service, property
administrative outsourcing and electricity supply.
Services supplied by TIM S.A.
Fixed and mobile voice services, equipment, data
1
network connections and outsourcing.
leasing, maintenance
Mobile and fixed voice services, outsourced services,
fees and margins for miscellaneous costs for loans.
90
1
Recovery of seconded personnel costs, recovery of
centralized expenses.
services
Supply of services for BTS sites, power supply systems
for the supply of electricity of the hosted devices,
(alarms) and
monitoring and
security
remote
management and maintenance services,
management and monitoring of
the electricity
consumption of TIM technological infrastructures (BTS)
hosted at INWIT sites
Supply of multimedia communication services and
capacity services.
Supply, installation and technical assistance services for
geolocation equipment provided as part of offers to TIM
customers, software development.
242
6
2
250
2
39
15
Penalties for breach of contract on maintenance
management services to INWIT S.p.A.
Amortization of rights of use related to the recognition
of greater non-current assets amortized over the
residual contractual term, towards INWIT S.p.A.
interest related to financial
Finance expenses for
liabilities for rights of use.
Finance expenses for commission and miscellaneous
finance expenses.
15
42
1
1
(13)
31
1
341
5
8
1
355
3
50
15
3
18
Consolidated financial statements of the
TIM Group
Note 39
Related-party transactions
249
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION LINE ITEMS
(million euros)
Net financial debt
Non-current financial liabilities for
lease contracts
Current financial liabilities for lease
contracts
Current financial liabilities for
financing contracts and others
Other statement of financial
position line items
Right of use assets
Trade and miscellaneous
receivables and other current assets
INWIT S.p.A.
I-Systems S.A.
W.A.Y. S.r.l.
Other minor companies
Total trade and miscellaneous
receivables and other current assets
Miscellaneous payables and other
non-current liabilities
Trade and miscellaneous payables
and other current liabilities
INWIT S.p.A.
I-Systems S.A.
Movenda S.p.A.
W.A.Y. S.r.l.
TIMFin S.p.A.
12/31/2021
12/31/2020
TYPE OF CONTRACT
269
74
1
299
20
1
2
1
24
2
171
5
1
2
3
financial
liabilities related to the
Non-current
recognition of rights of use for lease liabilities with
INWIT S.p.A.
313
50
Current financial liabilities related to the recognition
of rights of use for lease liabilities with INWIT S.p.A.
Financial liabilities for expenses on the transfer of
receivables in respect of TIMFin S.p.A.
Rights of use related to the recognition of greater
non-current assets amortized over the residual
contractual term, towards INWIT S.p.A.
347
Voice and data transmission services for company
use, Desktop Management ICT services, IRU transfer
of Dark Optic Fiber and Local Infrastructure, Easy IP
ADSL service, property
leasing, maintenance
services and administrative outsourcing.
Services supplied by TIM S.A.
Deferred costs for supply of customized platforms,
application offers and fixed and mobile voice
services.
55
2
—
57
2 Deferred contractual revenues from INWIT S.p.A.
98
Supply of services for BTS sites, monitoring and
security services, management and maintenance
services.
Supply of multimedia communication services and
capacity services.
Supply and certification of SIM-cards, software
systems.
technical assistance
Supply,
services for geolocation equipment provided as part
of offers to TIM customers, software development.
Cost of the risk for loans.
installation and
1
2
Total trade and miscellaneous
payables and other current
liabilities
182
101
Consolidated financial statements of the
TIM Group
Note 39
Related-party transactions
250
CONSOLIDATED STATEMENT OF CASH FLOWS LINE ITEMS
(million euros)
Purchases of intangible assets,
tangible assets and right of use
assets on an accrual basis
2021
2020
TYPE OF CONTRACT
INWIT S.p.A.
Movenda S.p.A.
Other minor companies
Total purchase of intangible,
tangible and rights of use assets on
an accrual basis
7
1
8
Higher value of rights of use as a result of new
contracts or changes in existing lease contracts, IRU
acquisition of backhauling connections, supply of
plants, installation and related activations for the
extension of indoor radio mobile coverage relative
to TIM offerings to end customers.
376
1 Supply and development systems software.
1
378
At December 31, 2021, TIM S.p.A. had issued guarantees in favor of the joint venture Alfiere S.p.A. for 14 million
euros.
Consolidated financial statements of the
TIM Group
Note 39
Related-party transactions
251
Transactions with other related parties (through directors,
statutory auditors and key managers, as well as participants in
shareholder agreements pursuant to Article 122 of the
Consolidated Law on Finance)
Details are provided below of the transactions with:
■
■
■
Vivendi Group and the companies of the group that it belongs to;
CDP Group (Cassa Depositi e Prestiti and Group subsidiaries);
Companies
responsibilities.
related through Directors, Statutory Auditors and Key Managers with strategic
The most significant amounts are summarized as follows:
SEPARATE CONSOLIDATED INCOME STATEMENT LINE ITEMS
(million euros)
Revenues
Other Directors or through
2021
2020
TYPE OF CONTRACT
3 Fixed-line and mobile voice services and devices.
Cassa Depositi e Prestiti Group
Vivendi group
Total revenues
Other income
Acquisition of goods and services
Cassa Depositi e Prestiti Group
Havas Group
Vivendi group
Total acquisition of goods and
services
Finance income
30
1
31
11
31
107
4
142
1
supply of housing, dark
IRU transfer of rights to use dark fiber installation and
fiber
infrastructures;
maintenance and dedicated GEA/Giganet connectivity
services, fixed and mobile voice services and devices,
Microsoft
licenses, application outsourcing services,
cloud services, maintenance services and electricity
supply.
Circuit rental services and feasibility study for routing
and submarine cable interface solutions in America to
the Vivendi Group.
1
4
Reimbursement by a CDP Group company due to
Telenergia following the judgment of the Council of
State no. 5625-2021s, published on 07.30.2021.
Purchases of products for resale under the scope of TIM
offerings to end customers, TIM sales network POS
terminal fleet rental charges, costs for the use of
SWIFTNet network access infrastructures to send and
receive FIN and File messages, service relatiing to
information flows and devices through interbanking
corporate banking (CBI) and puchase of electricity.
Purchase of media space on behalf of the TIM Group
and, to a lesser extent, development and delivery of
advertising campaigns.
Purchase of musical and television digital content
(TIMmusic, TIMvision), operative management of the
Telecom Italia S.p.A. on-line store platform “TIM I Love
Games” and related developments.
109
4
113
Consolidated financial statements of the
TIM Group
Note 39
Related-party transactions
252
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION LINE ITEMS
(million euros)
Net financial debt
Financial receivables and other
current financial assets
Other statement of financial
position line items
Right of use assets
Trade and miscellaneous
receivables and other current assets
Other Directors or through
Cassa Depositi e Prestiti Group
Havas Group
Vivendi group
Total trade and miscellaneous
receivables and other current assets
Miscellaneous payables and other
non-current liabilities
Cassa Depositi e Prestiti Group
Vivendi group
Total miscellaneous payables and
other non-current liabilities
Trade and miscellaneous payables
and other current liabilities
Other Directors or through
Cassa Depositi e Prestiti Group
Havas Group
Vivendi group
Total trade and miscellaneous
payables and other current
liabilities
12/31/2021
12/31/2020
TYPE OF CONTRACT
1
2
43
13
56
23
2
25
21
37
2
60
Non-current financial receivables arising from lease
contracts for Cassa Depositi e Prestiti.
Financial leasing to Cassa Depositi e Prestiti.
3 Fixed-line and mobile voice services and devices.
Relating mainly to IRU transfer of rights to use dark
fiber installation and infrastructures; supply of housing,
dark fiber maintenance and dedicated GEA/Giganet
connectivity services, fixed and mobile voice services
and devices, Microsoft licenses, application outsourcing
services, cloud services, maintenance services
Prepaid expenses related to costs for advertising
services.
1 TV series rights.
4
Deferred subscription charges revenues.
1 Deferred income for IRU sale.
1
1
Purchases of products for resale under the scope of TIM
offerings to end customers, TIM sales network POS
terminal fleet rental charges, costs for the use of
SWIFTNet network access infrastructures to send and
receive FIN and File messages, service relative to
information flows and devices through interbanking
corporate banking (CBI) and purchase of electricity.
Purchase of media space on behalf of the TIM Group
and, to a lesser extent, development and delivery of
advertising campaigns.
Purchase of musical and television digital content
(TIMmusic, TIMvision), operative management of the
Telecom Italia S.p.A. on-line store platform “TIM I Love
Games” and related developments.
37
2
40
CONSOLIDATED STATEMENT OF CASH FLOWS LINE ITEMS
(million euros)
2021
2020
TYPE OF CONTRACT
Purchases of intangible assets,
tangible assets and right of use
assets on an accrual basis
Dividends paid
Cassa Depositi e Prestiti Group
Vivendi group
Total Dividends paid
16
15
36
51
Development of the discovery phase and MYCanal+
platform supply for the TimVision Service towards
the Vivendi Group.
Dividends paid
36 Dividends paid
36
Consolidated financial statements of the
TIM Group
Note 39
Related-party transactions
253
Transactions with pension funds
The most significant amounts are summarized as follows:
SEPARATE CONSOLIDATED INCOME STATEMENT LINE ITEMS
(million euros)
2021
2020
TYPE OF CONTRACT
Employee benefits expenses
Fontedir
Telemaco
Other pension funds
Total employee benefits expenses
9
61
4
74
Contributions to pension funds.
9
60
4
73
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION LINE ITEMS
(million euros)
12/31/2021
12/31/2020
TYPE OF CONTRACT
Trade and miscellaneous payables
and other current liabilities
Fontedir
Telemaco
Other pension funds
Total trade and miscellaneous
payables and other current
liabilities
3
20
—
23
Payables for contributions to pension funds.
3
19
22
Consolidated financial statements of the
TIM Group
Note 39
Related-party transactions
254
Remuneration to key managers
In 2021, the total remuneration recorded on an accrual basis by TIM or by Group subsidiaries in respect of key
managers amounted to 34 million euros (16 million euros for 2020). The figure breaks down as follows:
(million euros)
Short-term remuneration
Long-term remuneration
Employment termination benefit incentives
Share-based payments (*)
Total
2020
11 (3)
2021
9 (1)
16 (0)
34 (0)
18 (0)
2 (0)
3 (4)
7 (2)
(*) These refer to the fair value of the rights, accrued to December 31, under the share-based incentive plans of TIM S.p.A. and its subsidiaries (Long
Term Incentive and Plans of the subsidiaries).
(1) of which 1.2 million euros recorded by the subsidiaries;
(2) of which 1.0 million euros recorded by the subsidiaries;
(3) of which 1.0 million euros recorded by the subsidiaries;
(4) of which 0.4 million euros recorded by the subsidiaries.
Short-term remuneration is paid during the period it pertains to, at the latest within the six months following
the end of that period and, in 2021, do not include the effects of the reversal of the accruals related to the
2020 costs amounting to 0.9 million euros.
The indemnities for early termination of employment for the year 2021 also include the amount paid to Mr.
Luigi Gubitosi, amounting to 6.9 million euros.
In 2021, the contributions paid in to defined contribution plans (Assida and Fontedir) by TIM S.p.A. or by
subsidiaries of the Group on behalf of key managers, amounted to 140,000 euros (135,000 euros at December
31, 2020).
Consolidated financial statements of the
TIM Group
Note 39
Related-party transactions
255
In 2021, "Key managers", i.e. those who have the power and responsibility, directly or indirectly, for the
planning, direction and control of the operations of the TIM Group, including directors, were the following:
Directors:
Luigi Gubitosi
Pietro Labriola
Executives:
Giovanna Bellezza
Paolo Chiriotti
Simone De Rose
Michele Gamberini
Nicola Grassi
Stefano Grassi
Massimo Mancini
Giovanni Gionata Massimiliano Moglia
Carlo Nardello
Agostino Nuzzolo
Claudio Giovanni Ezio Ongaro
Federico Rigoni
Giovanni Ronca
Luciano Sale
Stefano Siragusa
(1) Managing Director and Chief Executive Officer of TIM S.p.A.
General Manager
(2) General Manager of TIM S.p.A.
Diretor Presidente TIM S.A.
(3) a.i. Head of Human Resources, Organization & Real Estate
(4) Head of Procurement
(5) a.i. Head of Procurement
(6) Chief Technology & Information Office
(7) Chief Innovation & Information Office
(8) Head of Procurement
(4) Chief Technology & Operations Office
Head of Security
(5) Chief Enterprise Market Office
(9) Chief Regulatory Affairs & Wholesale Market Office
(5) Chief Regulatory Affairs Office
(9) Chief Strategy, Business Development & Transformation Office
Head of Legal & Tax
(5) a.i. Chief Strategy & Business Development Office
(8) Chief Revenue Officer
Chief Financial Office
(10) Head of Human Resources, Organization & Real Estate
(6) Chief Operations Office
(11) Chief Technology & Operations Office
(12) Chief Revenue Officer
(13) Chief Revenue, Information & Media Office
(5) Chief Network, Operations & Wholesale Office
(1) To November 26, 2021
(2) From November 27, 2021
(3) From November 30, 2021
(4) From July 5, 2021 to December 6, 2021
(5) From December 7, 2021
(6) To April 8, 2021
(7) From April 9, 2021 to September 20, 2021
(8) To July 4, 2021
(9) To December 6, 2021
(10) To November 29, 2021
(11) From April 9, 2021 to July 4, 2021
(12) From July 05, 2021 to September 20, 2021
(13) From September 21, 2021 to December 6, 2021
On January 21, 2022 the Board of Directors co-opted Pietro Labriola, who retains the office of General
Manager, and appointed him as Chief Executive Officer, conferring on him all powers.
Consolidated financial statements of the
TIM Group
Note 39
Related-party transactions
256
NOTE 40
EQUITY COMPENSATION PLANS
Equity compensation plans in force at December 31, 2021, are used for attraction and retention purposes, and
as a long-term incentive for the managers and employees of the Group.
However, it should be noted that these plans do not have any significant effect on the economic result or on
the financial position or on cash flows at December 31, 2021.
A summary is provided below of the plans in place at December 31, 2021.
Description of stock option plans
TIM S.A. Stock Option Plans
On April 10, 2014, the General Meeting of Shareholders of TIM Participações S.A. (now incorporated into TIM
S.A.) approved the long-term incentive plan for managers in key positions in the company and its subsidiaries.
Exercise of the options is not subject to the achievement of specific performance targets, but the strike price is
adjusted upwards or downwards during each year for which the plan is in force, according to the ranking of the
Total Shareholder Return of the TIM S.A. shares with respect to a panel of peers (made up of companies in the
Telecommunications, Information Technology and Media industry).
The vesting period is 3 years (a third per year), the options can be exercised for 6 years, and the company does
not have the legal obligation to repurchase or liquidate the options in cash, or in any other form.
Year 2014
On September 29, 2014, the grantees of the options were granted the right to purchase a total of 1,687,686
shares. At December 31, 2021, there are no options that can be exercised. Out of the total attributed, 1,558,043
options have been canceled (due to withdrawal of the participants from the company or for expiry of the
exercise period), and 129,643 options have been exercised.
Year 2015
On October 16, 2015, the grantees of the options were granted the right to purchase a total of 3,355,229
shares. As of December 31, 2021, 100% of the options were considered as vested, and there are no options that
can be exercised. Of the total options granted, 1,646,080 were canceled by participants leaving the company.
All of the remaining balance (amounting to 1,709,149 options) has been exercised.
Year 2016
On November 8, 2016, the grantees of the options were granted the right to purchase a total of 3,922,204
shares.
At December 31, 2021, 100% of the options were considered as vested. Of the total options granted, 1,727,424
were canceled by participants leaving the company. Of the remaining balance (2,194,780 options), 2,082,228
options had been exercised and 112,552 could still be exercised.
Description of other compensation plans
TIM S.p.A. - Long Term Incentive Plan 2018-2020
Following approval of the 2020 financial statements, the parameter of stock performance has not reached the
minimum level for accessing the premium, while the cumulative equity free cash flow parameter (30%) has
reached an achievement level of 88.47% (between the minimum and target), thereby quantifying the number
of shares accrued by beneficiaries as 6,715,617 shares, subject to a two-year lock-up from the accrual date.
TIM S.p.A. - Long Term Incentive Plan 2020-2022
The Shareholders' Meeting of April 23, 2020 approved the launch of the new rolling and equity based long-
term incentive plan called LTI 2020-2022.
Each cycle of the plan is divided into two parties:
■ Performance Share: free allocation of Company ordinary shares, the maturity of which is subject to an
access gate linked to the value of the share and to two share and industrial performance conditions, given
below.
■ Attraction/Retention Share: free allocation of Company ordinary shares, the maturity of which is subject
to the continuity of the employment relationship with TIM or TIM Group companies.
In relation to the Performance Share component, the performance conditions are as follows:
■ access gate, represented by the value of the security, which at the end of each cycle must be equal to or
greater than the value of the security at the start of the same cycle (refer to the normal value of the share
equal to the average of the official closing prices of the Stock Exchange 30 days prior to the start and end
of the Plan cycle);
■ NFP/EBITDA ratio, with relative weighting equal to 40%;
■ Relative performance (TSR) of the ordinary share compared to a basket of Peers, with a relative weighting
of 60%.
Consolidated financial statements of the
TIM Group
Note 40
Equity compensation plans
257
A payout bonus/malus mechanism equal to 4% will be applied to both components (Performance Share and
Attraction/Retention Share), linked, in equal measure,
■
■
to the % growth of use of renewable energy out of total energy and to the reduction of indirect emissions
of CO2 (2020-2022 cycle);
to the % growth of use of renewable energy out of total energy and the increase in the female presence in
the managerial population (2021-2023 cycle).
For the CEO, 100% of the Pay Opportunity is linked to the Performance Share component. For the remaining
recipient managers, 70% of the Pay Opportunity is linked to the Performance Share and the remaining 30% to
the Attraction/Retention Shares.
2020-2022 Cycle
On May 18, 2020, the Board of Directors launched the first cycle of the new Plan, for the three-year period
2020-2022, simultaneously assigning it to the CEO. At December 31, 2021, the first incentive cycle intended for
140 resources establishes the right of beneficiaries to receive 57,388,194 shares upon reaching the target,
without prejudice to:
■
the gate condition and application of the ESG correction for performance shares;
■ application of the ESG correction and continuity of the contract of employment for attraction/retention
shares.
2021-2023 Cycle
On April 28, 2021, the Board of Directors resolved the start of the second 2021-2023 cycle of incentives of the
2020-2022 Long Term Incentive Plan, at the same time assigning it to the CEO. The second cycle, like the first,
is aimed at the Chief Executive Officer, Top Management and a selected segment of TIM Group’s
management.
At December 31, 2021, the cycle provides for the 153 recipients to be entitled to receive an award of 55,878,929
shares upon achievement of the target, subject to:
■
the gate condition and application of the ESG correction for performance shares;
■ application of the ESG correction and continuity of the contract of employment for attraction/retention
shares.
TIM S.p.A. – Broad-Based Share Ownership Plan 2020
In implementation of the resolutions passed on April 23, 2020 by the Extraordinary Shareholders' Meeting and
subsequently on May 18, 2020 by the Board of Directors of Telecom Italia S.p.A., on June 16, 2020 the
campaign to subscribe to the 2020 Diffuse Share Ownership Plan was opened, closing on October 30, 2020; the
shares were subscribed at a unit price of 0.31 euros.
To service the initiative, a maximum of 127,500,000 new shares were to be issued, to be offered for paid
subscription and, subsequently, a maximum 42,500,000 new shares, without capital increase, for the free
allocation of 1 Bonus Share for every 3 subscribed shares.
As a result of the issuance on November 27, 2020 of 126,343,913 Telecom Italia ordinary shares to the
subscribers of the discount shares, 38,604,270 ordinary shares of the Company (Bonus Share) were granted
free of charge on December 3, 2021, without a capital increase. As planned, the Bonus Shares were awarded
to those who retained their subscribed shares for the period of one year from the assignment date, subject to
continued employee status.
TIM S.A. - Long Term Incentive Plan 2018-2020
On April 19, 2018, the General Meeting of Shareholders of TIM Participações S.A. (now incorporated into TIM
S.A.) approved the long-term incentive plan for managers in key positions in the company. The plan aimed to
reward participants with shares issued by the company, subject to specific temporal and performance
conditions. The portion of shares linked to performance (70%) is granted 1/3 each year, if the performance
target is achieved; the remaining portion of shares (30%) is granted 3 years after allocation (restricted share).
The vesting period is 3 years (with annual measurement) and the company does not have the legal obligation
to repurchase or liquidate the shares in cash or in any other form.
The plan – in addition to transferring shares to beneficiaries – also includes the possibility of rewarding
participants through the settlement of the amount corresponding in cash.
Year 2018
On April 20, 2018, plan beneficiaries were granted the right to receive a total of 849,932 shares, of which
594,954 performance shares restricted to performance conditions and with gradual vesting over 3 years and
254,978 restricted shares, with a total vesting period of 3 years.
At December 31, 2021, 100% of the rights assigned were considered as vested:
■ First vesting period: in compliance with the results approved on May 29, 2019, 115,949 shares were
transferred to beneficiaries, of which 91,708 relating to the original volume accrued, 20,594 granted
according to the degree to which objectives had been achieved and 3,647 shares as a result of the
dividends distributed during the period. For participants transferred to other Group companies, as per the
Plan rules, payment in cash was considered of the amount corresponding to 3,685 shares (2,915 relative to
the original volume accrued, 654 acknowledged according to the degree to which the objectives had been
achieved and 116 due to dividends distributed during the period).
■ Second vesting period: in compliance with the results approved on June 17, 2020, 87,766 shares were
transferred to beneficiaries, of which 83,181 relating to the original volume accrued, 70 discounted
Consolidated financial statements of the
TIM Group
Note 40
Equity compensation plans
258
according to the degree to which objectives had been achieved and 4,655 shares for dividends distributed
during the period. For participants transferred to other Group companies, as per the Plan rules, payment in
cash was considered of the amount corresponding to 3,084 shares (2,915 relative to the original volume
accrued, 5 acknowledged according to the degree to which the objectives had been achieved and 164 due
to dividends distributed during the period).
■ Third vesting period: in compliance with the results approved on May 5, 2021, 252,143 shares were
transferred to beneficiaries, of which 187,039 relating to the original volume accrued, 42,854 discounted
according to the degree to which objectives had been achieved and 22,250 shares for dividends distributed
during the period. For participants transferred to other Group companies, as per the Plan rules, payment in
cash was considered of the amount corresponding to 12,500 shares (9,101 relative to the original volume
accrued, 2,305 acknowledged according to the degree to which the objectives had been achieved and
1,094 due to dividends distributed during the period).
At December 31, 2021, of the total assigned of 849,932 shares, 473,073 had been canceled due to the
beneficiaries having left the participating company, 455,858 shares had been transferred to beneficiaries
(361,928 relative to the original volume accrued, 63,378 from performance achieved and 30,552 for payment of
dividends in shares) and 19,269 shares had been valued and paid in cash (14,931 relative to the original volume
accrued, 2,964 from performance achieved and 1,374 for payment of dividends in shares), thereby completing
the 2018 concession.
Year 2019
On July 30, 2019, plan beneficiaries were granted the right to receive a total of 930,662 shares, of which
651,462 performance shares restricted to performance conditions and with gradual vesting over 3 years and
279,200 restricted shares, with a total vesting period of 3 years.
Two vesting periods ended on December 31:
■ First vesting period: in compliance with the results approved on July 29, 2020, 309,557 shares were
transferred to beneficiaries, of which 209,349 relating to the original volume accrued, 83,672 granted
according to the degree to which objectives had been achieved and 16,536 shares as a result of the
dividends distributed during the period.
■ Second vesting period: in compliance with the results approved on July 26, 2021, 309,222 shares were
transferred to beneficiaries, of which 207,859 relating to the original volume accrued, 78,111 discounted
according to the degree to which objectives had been achieved and 23,252 shares for dividends distributed
during the period.
At December 31, 2021, of the total assigned of 930,662 shares, 86,424 had been canceled due to the
beneficiaries having left the company and 618,779 shares had been transferred to beneficiaries (417,208 related
to the original volume vested, 161,783 from performance achieved and 39,788 for payment of dividends in
shares), thereby leaving a balance of 427,030 shares that could be accrued at period end.
Year 2020
On April 14, 2020, plan beneficiaries were granted the right to receive a total of 796,054 shares, of which
619,751 performance shares restricted to performance conditions and with gradual vesting over 3 years and
176,303 restricted shares, with a total vesting period of 3 years.
At December 31, 2021, of the total assigned of 796,054 shares, 70,378 shares were canceled due to
beneficiaries having left the company and 267,145 shares were transferred to beneficiaries against the result of
the first vesting period of performance shares, in accordance with the results approved on May 5, 2021
(206,578 relating to the original volume vested, 51,634 recognized based on the level of achievement of
objectives and 8,933 as a result of dividends distributed during the period), thereby leaving a balance of
519,098 shares that could be accrued at period end.
TIM S.A. - Long Term Incentive Plan 2021-2023
On March 30, 2021, the General Meeting of Shareholders of TIM S.A. approved the long-term incentive plan for
managers in key positions in the company. The plan aims to reward participants with shares issued by the
company, according to specific time (restricted shares) and performance (performance shares) conditions. The
vesting period is 3 years and the company does not have the legal obligation to repurchase or liquidate the
shares in cash or in any other form. The plan – in addition to transferring shares to beneficiaries – also includes
the possibility of rewarding participants through the settlement of the amount corresponding in cash.
Year 2021
On May 05, 2021, plan beneficiaries were granted the right to receive a total of 3,431,610 shares, of which
3,173,142 performance shares restricted to performance conditions and with gradual vesting over 3 years and
258,468 restricted shares, with a total vesting period of 3 years.
In 2021, the Special Grant was added to the traditional plan, a further extraordinary concession with the aim of
encouraging the closure of the Oi purchase operation in Brazil as well as the success of the subsequent
integration operations.
Of the total 3,431,610 shares granted, 1,151,285 relate to the traditional grant (with 892,817 performance
shares and 258,468 restricted shares) and 2,280,325 refer to the Special Grant.
As at December 31, 2021, the first vesting period has not yet finished. However, 311,876 shares were canceled
due to the participants leaving the company.
Consolidated financial statements of the
TIM Group
Note 40
Equity compensation plans
259
Calculation of fair value measurement of the granted options
and rights
Parameters used to determine the fair value – TIM S.p.A.
Plans/Parameters
Exercise
price
(euros)
Nominal
value
(euros)
(1)
Volatility
(2)
Duration Expected
dividends
(euros)
(3)
Risk-free
interest rate
(4)
LTI Plan 2018-2020 - equity component
LTI Plan 2018-2020 - equity component (two-
year CEO granting)
LTI 2018 – 2020 Plan – equity component (two-
year allocations)
LTI 2018 – 2020 Plan – equity component (two-
year allocations)
2020-2022 LTI Plan – First Cycle (2020-22)
2020-2022 LTI Plan – Second Cycle (2021-23)
Broad-Based Share Ownership Plan 2020
2020 Broad-Based Share Ownership Plan - the
Bonus Shares
-
-
-
-
-
-
-
-
0.63
0.51
0.48
0.48
0.35
0.42
0.333861
0.38
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3 years
2 years
2 years
2 years
3 years
3 years
1 year
-
-
-
-
-
0.01
0.01
0.01
-
-0.552% at
3 years
-0.594% at
2 years
-0.569% at
2 years
-0.570% at
2 years
-0.714% at
3 years
-0.720% at
3 years
-0.699% at 1
year
-
(1)
(2)
(3)
(4)
Arithmetic mean of the official prices of the Shares recognized starting from the stock market trading day prior to that of assignment until
the thirtieth previous ordinary calendar day (both included) on the Electronic Stock Exchange organized and managed by Borsa Italiana
S.p.A., calculated using only the days to which the prices taken as the basis of calculation refer as the divisor, cut off at the second decimal.
Based on the performance objectives of the plan, the TIM share volatility values were considered and, if necessary, also those of the
securities of the major companies of the telecommunications sector ("peer basket").
Dividends have been estimated on the basis of Bloomberg data.
The risk-free interest rate refers to the rate of government bonds of the Federal Republic of Germany (market benchmark for transactions in
euros) on the valuation date with a maturity consistent with the reporting period.
Parameters used for the assignments of TIM S.A.
Plans/Parameters
Share
base
price
(reais)
13.42
8.45
8.10
n.a.
n.a.
n.a.
n.a.
Nominal
value
(reais)
n.a.
n.a.
n.a.
14.41
11.28
14.40
12.95
Volatility Duration
Expected
dividends
(reais)
Risk-free
interest rate
44.60%
35.50%
36.70%
n.a.
n.a.
n.a.
n.a.
6 years
6 years
6 years
3 years
3 years
3 years
3 years
-
-
-
n.a.
n.a.
n.a.
n.a.
10.66% per
annum
16.10% per
annum
11.73% per
annum
n.a.
n.a.
n.a.
n.a.
Stock option plan 2014
Stock option plan 2015
Stock option plan 2016
2018 PS/RS Plan
2019 PS/RS Plan
2020 PS/RS Plan
2021 PS/RS Plan
The parameters are characteristic of a stock option plan, considering the use of fair value appropriate only for Stock Option Plans.
Effects on the income statement and statement of financial position
Equity compensation plans which call for payment in equity instruments are recorded at fair value (except for
the 2018 Plan of TIM S.A.) which represents the cost of such instruments at the grant date and is recorded in
the separate income statements under "Employee benefits expenses" over the period between the grant date
and the vesting period with a contra-entry to the equity reserve ("Other equity instruments"). For the portion
of the plans that provide for the payment of compensation in cash, the amount is recognized in liabilities as a
contra-entry to "Employee benefits expenses". Equity compensation plans which call for payment in equity
instruments did not have significant impacts either on the income statements or the statements of financial
position or of cash flows of the TIM Group at December 31, 2021.
Consolidated financial statements of the
TIM Group
Note 40
Equity compensation plans
260
NOTE 41
SIGNIFICANT NON-RECURRING EVENTS AND
TRANSACTIONS
The effect of 2021 non-recurring events and transactions on the equity, profit, net financial debt and cash
flows of the TIM Group is set out below in accordance with Consob Communication DEM/6064293 of July 28,
2006. The non-recurring effects on Equity and Profit (loss) for the year are shown net of tax effects.
(million euros)
Equity Profit (loss) for
the year
Net financial
debt carrying
amount
Cash flows
(*)
Carrying amount
Revenue adjustments
Other income
Acquisition of goods and services - Expenses related to
agreements and the development of non-recurring projects
and other costs
Employee benefits expenses - Charges connected to
corporate reorganization/restructuring and other costs
Other operating expenses - Expenses related to disputes and
regulatory sanctions and potential liabilities related to them,
and expenses related to disputes with former employees
and liabilities with customers and/or suppliers for other
provisions and charges
Other income (expenses) from investments
Other finance income
Miscellaneous finance expenses
Goodwill impairment loss attributed to Domestic CGU
Tax realignment pursuant to Decree Law 104/2020 Art. 110
Tax receivables Brazil Business Unit
Total non-recurring effects
Income/(Expenses) relating to Discontinued operations
Figurative amount – financial statements
(a)
22,039
(4)
11
(36)
(8,400)
(4)
11
(36)
(263)
(263)
(556)
(556)
18
1
(1)
(4,120)
(3,785)
82
(8,653)
—
30,692
18
1
(1)
(4,120)
(3,785)
82
(8,653)
—
253
(b)
(c)
(a–b-c)
(*) Cash flows refer to the increase (decrease) in Cash and cash equivalents during the year.
22,416
—
(1)
57
474
250
(1,931)
—
—
—
231
—
(920)
—
23,336
2,383
—
1
(57)
(474)
(250)
1,931
—
—
—
(231)
—
920
—
1,463
“Other operating expenses - Expenses related to disputes and regulatory sanctions and potential liabilities
related to them, and expenses related to disputes with former employees and liabilities with customers and/or
suppliers and other provisions and charges” include 548 million euros for the posting of Contractual risk
provisions for Onerous Contracts (IAS 37) relating to ongoing relations with some counterparties for the offer
of multimedia content.
In particular, they include the accrual of the Net Present Value of the negative margin connected with some
partnerships, including the one in place between TIM and DAZN for the offer in Italy on the TIMVISION platform
of DAZN content, including all matches of the Serie A football championship for the seasons 2021-22, 2022-23
and 2023-24.
In greater detail, as part of the definition of the 2022-2024 Strategic Plan, the business plan hypotheses have
been updated for the current football season and the next two, pointing out that the total margins of the
project, including TIM’s contractual commitments towards DAZN in terms of fees, for lack of remedy by DAZN
of certain breaches already disputed, is very much negative.
Use of said Provision throughout the contractual term will make it possible to offset the negative item of the
margin (EBITDA), thereby obtaining null EBIT (organic or operative margin) for the DAZN offer contents sale
business.
In financial terms, TIM is contractually obliged to pay DAZN six installments in advance (July, September,
November, January, March and May) for each year (July 1-June 30, corresponding to each championship
season), without prejudice to the fact that should the report of TIM customers with DAZN service in the two
months prior to each installment record a higher amount being due to the latter (at present, this is purely
theoretical), TIM would be required to also pay this difference.
Consolidated financial statements of the
TIM Group
Note 41
Significant non-recurring events and transactions
261
The impact of non-recurring items on the separate consolidated income statement line items is as follows:
(million euros)
Revenues:
Revenue adjustments
Other income:
Other operating provisions absorption
Recovery of operating expenses
Acquisition of goods and services, Change in inventories:
Professional expenses, consulting services and other costs
Employee benefits expenses:
Charges connected to corporate reorganization/restructuring and other costs
Other operating expenses:
Sundry expenses and other provisions
Impact on Operating profit (loss) before depreciation and amortization, capital gains
(losses) and impairment reversals (losses) on non-current assets (EBITDA)
Goodwill impairment loss Domestic CGU
Impact on EBIT - Operating profit (loss)
Other income (expenses) from investments:
Net capital gain on corporate transactions
Finance income:
Other finance income
Finance expenses:
Miscellaneous finance expenses
Impact on profit (loss) before tax from continuing operations
Tax realignment pursuant to Decree Law 104/2020 Art. 110
Income taxes on non-recurring items
Impact on Profit (loss) for the year
2021
2020
(5)
—
13
(49)
(367)
(735)
(1,143)
(4,120)
(5,263)
119
1
(1)
(5,144)
(3,785)
276
(8,653)
(39)
1
—
(64)
(74)
(148)
(324)
—
(324)
452
—
(7)
121
5,877
50
6,048
In 2021, the COVID-19 emergency meant that the TIM Group incurred non-recurring charges, gross of tax
effects, for approximately 25 million euros, of which 20 million euros allocated in connection with credit
management deriving from the expected worsening of the expected credit loss of corporate customers, due to
the expected evolution of the pandemic.
Staff costs (1 million euros) and costs relating to supplies and miscellaneous costs (4 million euros), which were
necessary to manage the health emergency, have also been recorded.
Furthermore, the figures stated mainly include both non-recurring charges connected with corporate
reorganization/restructuring processes and provisions for disputes, transactions, regulatory sanctions and
potential liabilities and expenses connected with agreements and the development of non-recurring projects.
At December 31, 2021, non-recurring income was also recorded for approximately 82 million euros in
connection with tax benefits of the Brazil Business Unit.
For more details on the tax benefits of the Brazil Business Unit and the tax realignment pursuant to Decree
Law 104/2020, refer to the Note on “Income tax expense (current and deferred)”.
NOTE 42
POSITIONS OR TRANSACTIONS RESULTING
FROM ATYPICAL AND/OR UNUSUAL
OPERATIONS
In accordance with Consob Communication DEM/6064293 of July 28, 2006, a statement is made to the effect
that in 2021 the TIM Group did not pursue any atypical and/or unusual transactions, as defined by that
Communication.
Consolidated financial statements of the
TIM Group
Note 41
Significant non-recurring events and transactions
262
NOTE 43
OTHER INFORMATION
a) Exchange rates used to translate the financial statements of
foreign operations(*)
(local currency against 1 euro)
Europe
BGN
CZK
CHF
TRY
GBP
RON
RUB
North America
USD
Latin America
Bulgarian Lev
Czech koruna
Swiss franc
Turkish lira
Pound sterling
Romanian leu
Russian ruble
U.S. dollar
VES (**)
BOB
PEN
ARS
CLP
COP
BRL
Other countries
ILS
NGN
Venezuelan bolivar –
Soberano
Bolivian Bolíviano
Peruvian nuevo sol
Argentine peso
Chilean peso
Colombian peso
Brazilian real
Israeli shekel
Nigerian Naira
Year-end exchange rates
(statements of financial position)
12/31/2021
12/31/2020
Average exchange rates for the year
(income statements and statements of
cash flows)
2021
2020
1.95580
24.85800
1.03310
15.23350
0.84028
4.94900
85.30040
1.13260
5.19230
7.83860
4.55660
116.53860
969.83000
4,628.12000
6.32047
3.51590
483.26890
1.95580
26.24200
1.08020
9.11310
0.89903
4.86830
91.46700
1.22710
1.95580
25.64620
1.08136
10.49995
0.85970
4.92118
87.18796
1.18285
1.95580
26.45640
1.07047
8.04599
0.88940
4.83817
82.66883
1.14179
1,356,945.08000
8.47930
4.44260
103.24940
872.52000
4,202.34000
6.37680
2,489,106.60692
8.16146
4.58967
112.44200
898.33180
4,430.02835
6.35936
375,274.05000
7.88964
3.99284
80.83685
902.97084
4,215.45981
5.88806
3.94470
465.68500
3.82197
482.17941
3.92462
407.22874
(*) Source: Data processed by the European Central Bank, Reuters and major Central Banks.
(**) On October 1, 2021, a new monetary scale took effect, entailing the elimination of six zeros in relation to the previous one (1,000,000Bs = 1Bs).
b) Research and development
Costs for research and development activities are represented by external costs, labor costs of dedicated staff
and depreciation and amortization. Details are as follows:
(million euros)
Research and development costs expensed during the year
Capitalized development costs
Total research and development costs (expensed and capitalized)
2021
56
1,016
1,072
2020
79
1,043
1,122
The decrease recorded in the 2021 financial year is due to the stabilization of implementation activities
connected with the new generation networks, partly offset by software developments on corporate
information systems.
In the 2021 Separate Consolidated Income Statement, a total of 907 million euros of depreciation/amortization
expense was recorded for development costs, capitalized during the year and in prior years.
Research and development activities carried out by the TIM Group are described in detail in the Report on
Operations (“Research and Development” section).
c) Leasing income
The TIM Group has entered into lease contracts on land and buildings for office and industrial use, mobile
network infrastructure sites and network infrastructure; at December 31, 2021 and at December 31, 2020, the
lease installments at nominal value still to be collected totaled:
Consolidated financial statements of the
TIM Group
Note 43
Other information
263
(million euros)
.Within next year
From 1 to 2 years after the end of the reporting period
From 2 to 3 years after the end of the reporting period
From 3 to 4 years after the end of the reporting period
From 4 to 5 years after the end of the reporting period
12/31/2021
100
36
34
34
30
29
263
12/31/2020
154
74
62
56
54
54
454
Beyond 5 years after the end of the reporting period
Total
d) Public funds
Italian Law 124/2017 requires that information on subsidies, contributions, paid assignments and economic
benefits of any kind received from Italian public administrations be provided. In this regard, the following table
shows the disbursements collected by the TIM Group in the years 2021 and 2020:
Distributing entity
Fondimpresa/Fondirigenti
Infratel
MUR (formerly MIUR)
ANPAL
Sundry income (*)
Total
(*) 2021 - MiSE, Fondimpresa/Fondirigenti, MUR (formerly MIUR)
2020 - MED; Region of Lombardy, Region of Apulia
Area of intervention
training
construction of broadband and ultrabroadband
infrastructure
research projects
New Skills Fund
Received in
2021
(million euros)
Received in
2020
(million euros)
1
3
54
1
58
24
3
1
29
e) Directors' and statutory auditors' remuneration
Total remuneration due for 2021 to the directors and statutory auditors of TIM S.p.A. for the performance of
these functions at the Parent and in other consolidated companies totaled 7.217 million euros for directors and
0.537 million euros for statutory auditors. In reference to the compensation to which the Directors are entitled,
it should be noted that the amount was calculated by considering only compensation for corporate offices (in
primis those under Article 2389, paragraphs 1 and 3 of the Italian Civil Code), thus excluding amounts relating
to any employment relationship with the companies of the Group and any non-monetary fringe benefits; for a
complete and detailed description of the compensation paid to the directors, reference should be made to the
Compensation Report, available at the Company's headquarters and on the corporate website at the following
address: gruppotim.it/assemblea.
f) Summary schedule of fees due to the audit firm and other
firms in its network
The following schedule reports the fees due to EY S.p.A. and to the other firms in the EY network for the audit
of the 2021 financial statements, and the fees referring to 2021 for other audit and review services, and for
other services besides audit rendered to the companies of the TIM Group from EY S.p.A. and other firms in the
EY network. The out-of-pocket expenses incurred for these services in 2021 are also shown.
(euros)
Audit services
Audit services with the issue of
certification
Attestation of compliance of the
Consolidated Non-Financial
Statement
Other services
Total 2021 fees due for auditing
and other services to the EY
network
Out-of-pocket expenses
Total
EY S.p.A.
Subsidiaries
TIM Group
TIM
S.p.A..
Other entities of the EY network
Subsidiaries
TIM Group
TIM
S.p.A..
2,757,343 2,085,615 4,842,958
— 1,470,204 1,470,204
80,000
—
80,000
—
65,292
65,292
72,907
—
—
—
72,907
—
—
—
19,184
—
19,184
—
Total
EY network
6,313,162
145,292
92,091
—
2,910,250 2,085,615 4,995,865
47,645
2,920,266 2,123,244 5,043,510
10,016
37,629
— 1,554,680 1,554,680
—
52,754
— 1,607,434 1,607,434
52,754
6,550,545
100,399
6,650,944
Consolidated financial statements of the
TIM Group
Note 43
Other information
264
NOTE 44
EVENTS SUBSEQUENT TO DECEMBER 31, 2021
CADE approves acquisition of Oi’s mobile business by Tim Brasil
The offer submitted by TIM S.A., Brazilian subsidiary of the TIM Group, for the acquisition of the mobile assets
of the Oi Group, together with Telefônica Brasil S.A. (VIVO) and Claro S.A., has been approved by the antitrust
Authority CADE (Conselho Administrativo de Defesa Economica).
The decision follows the pronunciation of the reglementary Authority Anatel (Agência Nacional de
Telecomunicações), which on February 1, 2022, had expressed itself in favor of the transfer of control of Oi’s
mobile assets.
The closing of the deal, which will define a new infrastructure structure for the Telco market in Brazil, still
depends on the fulfillment of specific conditions foreseen in the Sale and Purchase Agreement. The operation,
with which TIM Brasil will acquire the most relevant share of the assets of the Oi Group, is expected to bring
significant benefits to the Brazilian TLC sector, maintaining a high degree of competition and ensuring the
necessary investments for the development of the country’s digital advancement.
TIM reaffirms that the transaction, as of its completion, will add value not only to its Brazilian subsidiary but to
the whole Group and its shareholders as it will accelerate its growth and increase operating efficiency through
relevant synergies. Furthermore, positive effects are also expected for customers, as the transaction is likely to
improve the users’ experience and the quality of services offered. Finally, the transaction is expected to benefit
the entire telecommunications sector in Brazil, which will be strengthened in its investment capacity,
technological innovation, as well as its competitiveness.
TIM: Solidarity for Ukraine, unlimited data and minutes
included for customers of Ukrainian nationality
To express its solidarity with the Ukrainian population struck by the current conflict, TIM has made a series of
benefits available to its Ukrainian nationality customers in Italy, to help them communicate with friends and
family.
Starting March 1, 2022, they will have unlimited data and minutes for a week. To adhere to the initiative,
simply answer the specific informative SMS, visit a TIM store or call 119 or visit the My TIM area.
Consolidated financial statements of the
TIM Group
Note 44
Events subsequent to December 31, 2021
265
NOTE 45
LIST OF COMPANIES OF THE TIM GROUP
In accordance with Consob Communication DEM/6064293 dated July 28, 2006, the list of companies is provided
herein.
The list is divided by type of investment, consolidation method and operating segment.
The following is indicated for each company: name, head office, country and share capital in the original currency. In
addition to the percentage ownership of share capital, the percentage of voting rights in the ordinary shareholders’
meeting, if different from the percentage holding of share capital, and which companies hold the investment.
Company name
Reg. office
Currency
Share Capital
% Ownership
% of
voting
rights
Participating companies
PARENT COMPANY
TIM S.p.A.
SUBSIDIARIES CONSOLIDATED LINE-BY-LINE
DOMESTIC BU
CD FIBER S.r.l.
(design, construction, maintenance and management of
network infrastructure services and high-speed electronic
communication systems)
DAPHNE 3 S.p.A.
(assumption, holding, management and disposal of equity
investments in INWIT)
FIBERCOP S.p.A.
(infrastructures, networks, passive cabled access services to
the premises of end users to be offered to TLC operators
throughout Italy)
GLOBAL SPACE TRE S.r.l. (in liquidation)
(ICT services)
MED 1 SUBMARINE CABLES Ltd
(construction and management of the submarine cable
lev1)
NOOVLE AI S.r.l.
(ICT services)
NOOVLE INTERNATIONAL SAGL
(ICT services)
NOOVLE MALTA Ltd
(ICT services)
NOOVLE S.p.A. SOCIETA' BENEFIT
(design, implementation and management of
infrastructures and data center services)
NOOVLE SICILIA S.c.a.r.l.
(ICT services)
NOOVLE SLOVAKIA S.R.O. (in liquidation)
(ICT services)
OLIVETTI PAYMENT SOLUTIONS S.p.A.
(management of equity investments, study and research
activities, commercial, industrial, financial movable and real
estate activities)
OLIVETTI S.p.A.
(production and sale of office equipment and information
technology services)
PANAMA DIGITAL GATEWAY S.A.
(telecommunications services and data center
management)
STAER SISTEMI S.r.l.
(activities connected with the production and marketing of
electronic systems and programs and activities connected
with energy efficiency plants)
TELECOM ITALIA SAN MARINO S.p.A.
(San Marino telecommunications management)
TELECOM ITALIA SPARKLE S.p.A.
(completion and management of telecommunications
services for public and private use)
TELECOM ITALIA TRUST TECHNOLOGIES S.r.l.
(other operations related to non-classified IT services)
TELECOM ITALIA VENTURES S.r.l.
(investment holding company)
MILAN
EUR
11,677,002,855
ROME
MILAN
MILAN
ROME
RAMAT GAN
(ISRAEL)
ROVERETO
PREGASSONA
(SWITZERLAND)
GZIRA
(MALTA)
MILAN
PALERMO
BRATISLAVA
(SLOVAKIA)
MILAN
IVREA
(TURIN)
PANAMA CITY
(PANAMA)
ROME
BORGO
MAGGIORE
(SAN MARINO)
ROME
POMEZIA
(ROME)
MILAN
EUR
EUR
EUR
EUR
ILS
EUR
CHF
EUR
EUR
EUR
EUR
EUR
EUR
USD
EUR
EUR
EUR
EUR
EUR
50,000
100.0000
TIM S.p.A.
100,000
10,000,000
10,000
9,607,583
10,000
20,000
10,000
1,000,000
50,000
5,000
350,000
51.0000
58.0000
100.0000
100.0000
100.0000
100.0000
90.0000
100.0000
80.0000
85.0000
15.0000
100.0000
TIM S.p.A.
TIM S.p.A.
NOOVLE S.p.A. SOCIETA' BENEFIT
TELECOM ITALIA SPARKLE S.p.A.
NOOVLE S.p.A. SOCIETA' BENEFIT
NOOVLE S.p.A. SOCIETA' BENEFIT
NOOVLE INTERNATIONAL SAGL
TIM S.p.A.
NOOVLE S.p.A. SOCIETA' BENEFIT
NOOVLE S.p.A. SOCIETA' BENEFIT
TELECOM ITALIA FINANCE S.A.
OLIVETTI S.p.A.
11,000,000
100.0000
TIM S.p.A.
10,000
419,000
60.0000
100.0000
TELECOM ITALIA SPARKLE S.p.A.
OLIVETTI S.p.A.
1,808,000
100.0000
200,000,000
100.0000
TIM S.p.A.
TIM S.p.A.
7,000,000
100.0000
OLIVETTI S.p.A.
10,000
100.0000
TIM S.p.A.
Consolidated financial statements of the
TIM Group
Note 45
List of companies of the TIM Group
266
Company name
TELECONTACT CENTER S.p.A.
(telemarketing services)
TELEFONIA MOBILE SAMMARINESE S.p.A.
(development and management of mobile
telecommunications plants and services)
TELENERGIA S.r.l.
(import, export, purchase, sale and trade of electricity)
TELSY S.p.A.
(production, installation, maintenance, reconditioning and
sale of terminals, radio telephones, telecommunications
and electronic systems in general)
TI SPARKLE AMERICAS Inc.
(managed bandwidth services)
TI SPARKLE ARGENTINA S.A.
(managed bandwidth services)
TI SPARKLE AUSTRIA GmbH
(telecommunications services)
TI SPARKLE BELGIUM S.P.R.L. – B.V.B.A.
(telecommunications services)
TI SPARKLE BRASIL PARTIÇIPAÇÕES Ltda
(investment holding company)
TI SPARKLE BRASIL TELECOMUNICAÇÕES Ltda
(managed bandwidth services)
TI SPARKLE BULGARIA EOOD
(telecommunications)
TI SPARKLE CHILE S.p.A.
(managed bandwidth services)
TI SPARKLE COLOMBIA Ltda
(managed bandwidth services)
TI SPARKLE CZECH S.R.O.
(telecommunications services)
TI SPARKLE FRANCE S.A.S.
(installation and management of telecommunications
services for fixed network and related activities)
TI SPARKLE GERMANY GmbH
(telecommunications services)
TI SPARKLE GREECE S.A.
(telecommunications)
TI SPARKLE ISRAEL Ltd
(international wholesale telecommunication services)
TI SPARKLE NETHERLANDS B.V.
(telecommunications services)
TI SPARKLE NORTH AMERICA, Inc.
(telecommunications and promotional services)
TI SPARKLE PANAMA S.A.
(managed bandwidth services)
TI SPARKLE PERU’ S.A.
(managed bandwidth services)
TI SPARKLE PUERTO RICO LLC
(managed bandwidth services)
TI SPARKLE ROMANIA S.r.l.
(telecommunications services)
TI SPARKLE RUSSIA LLC
(telecommunications services)
TI SPARKLE SINGAPORE Pte.Ltd
(telecommunications services)
TI SPARKLE SLOVAKIA S.R.O.
(telecommunications services)
TI SPARKLE SPAIN TELECOMMUNICATIONS S.L.
(telecommunications services)
TI SPARKLE ST. CROIX LLC
(managed bandwidth services)
Reg. office
NAPLES
Currency
EUR
BORGO
MAGGIORE
(SAN MARINO)
ROME
TURIN
MIAMI
(UNITED STATES
OF AMERICA)
BUENOS AIRES
(ARGENTINA)
VIENNA
(AUSTRIA)
BRUSSELS
(BELGIUM)
RIO DE JANEIRO
(BRAZIL)
RIO DE JANEIRO
(BRAZIL)
SOFIA
(BULGARIA)
SANTIAGO
(CHILE)
BOGOTA'
(COLOMBIA)
PRAGUE
(CZECH
REPUBLIC)
PARIS
(FRANCE)
FRANKFURT
(GERMANY)
ATHENS
(GREECE)
RAMAT GAN
(ISRAEL)
AMSTERDAM
(NETHERLANDS)
NEW YORK
(UNITED STATES
OF AMERICA)
PANAMA CITY
(PANAMA)
LIMA
(PERU)
SAN JUAN
(PUERTO RICO)
BUCHAREST
(ROMANIA)
MOSCOW
(RUSSIA)
SINGAPORE
BRATISLAVA
(SLOVAKIA)
MADRID
(SPAIN)
VIRGIN ISLANDS
(UNITED STATES
OF AMERICA)
EUR
EUR
EUR
USD
ARS
EUR
EUR
BRL
BRL
BGN
CLP
COP
CZK
EUR
EUR
EUR
ILS
EUR
USD
USD
PEN
USD
RON
RUB
USD
EUR
EUR
USD
Share Capital
% Ownership
3,000,000
78,000
100.0000
51.0000
% of
voting
rights
Participating companies
TIM S.p.A.
TELECOM ITALIA SAN MARINO S.p.A.
50,000
100.0000
5,390,000
100.0000
TIM S.p.A.
TIM S.p.A.
10,000
100.0000
TELECOM ITALIA SPARKLE S.p.A.
9,998,000
2,735,000
2,200,000
71,563,866
69,337,363
100,000
5,852,430,960
12,635,774,000
6,720,000
100.0000
100.0000
99.9967
0.0033
99.9999
0.0001
99.9999
0.0001
100.0000
100.0000
99.9999
0.0001
100.0000
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TI SPARKLE UK Ltd
TELECOM ITALIA SPARKLE S.p.A.
TI SPARKLE AMERICAS Inc.
TI SPARKLE BRASIL PARTIÇIPAÇÕES Ltda
TI SPARKLE AMERICAS Inc.
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TI SPARKLE AMERICAS Inc.
TELECOM ITALIA SPARKLE S.p.A.
18,295,000
100.0000
TELECOM ITALIA SPARKLE S.p.A.
25,000
368,760
1,000
18,200
15,550,000
10,000
57,101,788
3,050,000
3,021,560
8,520,000
5,121,120
300,000
1,687,124
1,000
100.0000
100.0000
100.0000
100.0000
100.0000
100.0000
99.9999
0.0001
100.0000
100.0000
99.0000
1.0000
99.9999
0.0001
100.0000
100.0000
100.0000
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TI SPARKLE AMERICAS Inc.
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TI SPARKLE UK Ltd
TELECOM ITALIA SPARKLE S.p.A.
TI SPARKLE NORTH AMERICA, Inc.
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
Consolidated financial statements of the
TIM Group
Note 45
List of companies of the TIM Group
267
Company name
TI SPARKLE SWITZERLAND GmbH
(telecommunications services)
TI SPARKLE TURKEY TELEKOMÜNIKASYON ANONIM SIRKETI
(telecommunications services)
TI SPARKLE UK Ltd
(value-added and networking services)
TI SPARKLE VENEZUELA C.A.
(managed bandwidth services)
TIESSE S.c.p.A.
(installation and assistance for electronic, IT, telematics and
telecommunications equipment)
TIM MY BROKER S.r.l.
(Insurance brokerage)
TIM RETAIL S.r.l. (ex 4G RETAIL S.r.l.)
(sale of fixed and mobile telecommunications products and
services and all analog and digital broadcasting equipment)
TIM SERVIZI DIGITALI S.p.A.
(development and ordinary and extraordinary maintenance
of plants for the supply of telecommunications services to
end customers)
TIS LAGOS LIMITED
(telecommunications services)
BRAZIL BU
TIM BRASIL SERVIÇOS E PARTICIPAÇÕES S.A.
(investment holding company)
TIM S.A.
(telecommunications services)
OTHER OPERATIONS
OLIVETTI DEUTSCHLAND GmbH
(sale of office equipment and supplies)
OLIVETTI UK Ltd
(sale of office equipment and supplies)
TELECOM ITALIA CAPITAL S.A.
(financial company)
TELECOM ITALIA FINANCE S.A.
(financial company)
TELECOM ITALIA LATAM PARTICIPAÇÕES E GESTÃO
ADMINISTRATIVA Ltda
(telecommunications and promotional services)
TI AUDIT COMPLIANCE LATAM S.A. (in liquidation)
(internal audit services)
Reg. office
ZURICH
(SWITZERLAND)
ISTANBUL
(TURKEY)
LONDON
(UNITED
KINGDOM)
CARACAS
(VENEZUELA)
IVREA
(TURIN)
ROME
MILAN
ROME
LAGOS
(NIGERIA)
RIO DE JANEIRO
(BRAZIL)
RIO DE JANEIRO
(BRAZIL)
NURNBERG
(GERMANY)
NORTHAMPTON
(UNITED
KINGDOM)
LUXEMBOURG
LUXEMBOURG
SAO PAULO
(BRAZIL)
RIO DE JANEIRO
(BRAZIL)
Currency
CHF
TRY
EUR
VES
EUR
EUR
EUR
EUR
Share Capital
% Ownership
2,000,000
65,000,000
3,983,254
10
103,292
10,000
2,402,241
100.0000
100.0000
100.0000
100.0000
61.0000
100.0000
100.0000
% of
voting
rights
Participating companies
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
TELECOM ITALIA SPARKLE S.p.A.
OLIVETTI S.p.A.
TIM S.p.A.
TIM S.p.A.
50,000
100.0000
TIM S.p.A.
NGN
10,000,000
BRL
BRL
EUR
GBP
EUR
EUR
BRL
BRL
7,169,029,859
13,477,890,508
25,600,000
6,295,712
2,336,000
1,818,691,979
118,925,804
1,500,000
99.9999
0.0001
99.9999
0.0001
66.5882
0.0165
100.0000
100.0000
100.0000
100.0000
100.0000
69.9996
30.0004
TELECOM ITALIA SPARKLE S.p.A.
TI SPARKLE UK Ltd
TELECOM ITALIA FINANCE S.A.
TIM S.p.A.
66.5992 TIM BRASIL SERVIÇOS E PARTICIPAÇÕES S.A.
TIM S.A.
OLIVETTI S.p.A.
OLIVETTI S.p.A.
TIM S.p.A.
TIM S.p.A.
TIM S.p.A.
TIM S.p.A.
TIM BRASIL SERVIÇOS E PARTICIPAÇÕES S.A.
Consolidated financial statements of the
TIM Group
Note 45
List of companies of the TIM Group
268
Company name
Reg. office
Currency
Share Capital
% Ownership
% of
voting
rights
Participating companies
EUR
EUR
EUR
BRL
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
ROME
ROME
MILAN
MILAN
MILAN
RIO DE JANEIRO
(BRAZIL)
ROME
ASSOCIATES AND JOINT VENTURES ACCOUNTED FOR USING THE EQUITY METHOD
AREE URBANE S.r.l. (in liquidation)
(real estate management)
CONSORZIO MEDSTAR
(other services to support businesses)
INFRASTRUTTURE WIRELESS ITALIANE S.p.A.
(installation and operation of installations and infrastructure
for the management and the sale of telecommunications
services)
I-SYSTEMS S.A.
(telecommunications systems)
MOVENDA S.p.A.
(design, construction and diffusion of Internet sites,
products and computer media)
NORDCOM S.p.A.
(application service provider)
PEDIUS S.r.l.
(implementation of specialized telecommunications
applications, telecommunications services over telephone
connections, VOIP services)
QTI S.r.l.
(development, production and sale of innovative products
and services with high technological value)
SATISPAY S.p.A
(production of software not connected with publishing)
SMART STRUCTURES SOLUTIONS S.r.l.
(engineering research activities)
TIGLIO I S.r.l. (in liquidation)
(real estate management)
TIMFIN S.p.A. (formerly TIM-SCB JV S.p.A.)
(carrying out in regard to the public of the concession of
loans in any form and, notably, of any type of finance
disbursed in the form of a personal and consumer loan)
W.A.Y. S.r.l.
(development and sale of geolocation products and
systems for security and logistics)
WEBIDOO S.p.A.
(ICT services)
WESCHOOL S.r.l. (formerly OILPROJECT S.r.l.)
(research, development, marketing and patenting of all
intellectual property related to technology, information
technology and TLC)
FLORENCE
MILAN
MILAN
MILAN
MILAN
TURIN
TURIN
ROME
EUR
EUR
EUR
100,000
10,000
600,000,000
1,794,287,995
133,333
5,000,000
181
14,925
826,385
15,000
100,000
40,000,000
32.6200
50.0000
30.2000
49.0000
24.9998
42.0000
(*)
33.0000
(*)
36.0000
47.8020
49.0000
TIM S.p.A.
STAER SISTEMI S.r.l.
DAPHNE 3 S.p.A.
TIM S.A.
TELECOM ITALIA FINANCE S.A.
TIM S.p.A.
TELECOM ITALIA VENTURES S.r.l.
TELSY S.p.A.
TELECOM ITALIA VENTURES S.r.l.
STAER SISTEMI S.r.l.
TIM S.p.A.
TIM S.p.A.
136,383
39.9999
OLIVETTI S.p.A.
242,357
25,000
(*)
(*)
TELECOM ITALIA VENTURES S.r.l.
TELECOM ITALIA VENTURES S.r.l.
(*) Associate over which TIM S.p.A., directly or indirectly, exercises significant influence pursuant to IAS 28 (Investments in Associates and Joint Ventures).
Company name
Reg. office
Currency
Share Capital
% Ownership
% of
voting
rights
Participating companies
OTHER MAJOR INVESTMENTS
IBAS ITALIAN BROADCASTING ADVANCE SOLUTIONS
(consultancy services for the management of common
promotional activities and connected public relations of the
consortium members)
DAHLIA TV S.p.A. (in liquidation)
(pay-per-view services)
FIN.PRIV. S.r.l.
(financial company)
IGOON S.r.l. (in liquidation)
(carpooling scheme to share unused seating capacity in cars
in real time through a mobile App)
INNAAS S.r.l.
(design, development and sale of high-tech software and
hardware)
MIX S.r.l.
(internet service provider)
WIMAN S.r.l.
(development, management and implementation of
platforms for social-based Wi-Fi authentication)
DESENZANO DEL
GARDA
(BRESCIA)
ROME
MILAN
NAPLES
ROME
MILAN
MATTINATA
(FOGGIA)
EUR
EUR
EUR
EUR
EUR
EUR
EUR
16,000
12.5000
STAER SISTEMI S.r.l.
11,318,833
20,000
16,498
108,700
1,000,000
22,333
10.0786
14.2900
14.2805
15.2539
11.0937
14.4935
TIM S.p.A.
TIM S.p.A.
TELECOM ITALIA VENTURES S.r.l.
TELECOM ITALIA VENTURES S.r.l.
TIM S.p.A.
TELECOM ITALIA VENTURES S.r.l.
Consolidated financial statements of the
TIM Group
Note 45
List of companies of the TIM Group
269
CERTIFICATION OF THE CONSOLIDATED
FINANCIAL STATEMENTS PURSUANT TO
ARTICLE 81-TER OF THE CONSOB REGULATION
11971 DATED MAY 14, 1999, WITH AMENDMENTS
AND ADDITIONS
1. We, the undersigned, Pietro Labriola, as Chief Executive Officer, and Giovanni Ronca, as Manager
responsible for preparing TIM S.p.A. financial reports, certify, having also considered the provisions of
Article 154-bis, paragraphs 3 and 4, of Italian Legislative Decree 58 of February 24, 1998, that:
–
–
the adequacy in relation to the characteristics of the company and
the effective application of the administrative and accounting procedures used in the preparation of
the consolidated financial statements for the 2021 fiscal year.
2. TIM has adopted the Internal Control – Integrated Framework Model (2013), issued by the Committee of
Sponsoring Organizations of the Treadway Commission, as its framework for the establishment and
assessment of its internal control system, with particular reference to the internal controls for the
preparation of the financial statements.
3. The undersigned also certify that:
3.1.
the Consolidated Financial Statements at December 31, 2021:
a) have been prepared in compliance with the international accounting standards adopted by the
European Union pursuant to Regulation (EC) 1606/2002 of the European Parliament and Council
of July 19, 2002 (International Financial Reporting Standards – IFRS), as well as the legislative
and regulatory provisions in force in Italy, including, in particular, the measures enacted for the
implementation of Article 9 of Italian Legislative Decree 38 of February 28, 2005;
b) agree with the results of the accounting records and entries;
c)
provide a true and fair view of the financial condition, the results of operations and the cash
flows of the Company and its consolidated subsidiaries;
3.2. The report on operations contains a reliable operating and financial review of the Company and of
the Group, as well as a description of their exposure to the main risks and uncertainties. The Report
on Operations also contains a reliable analysis of information concerning significant related-party
transactions.
March 2, 2022
Chief Executive Officer
/ signed /
_________________________
Pietro Labriola
Manager Responsible for
Preparing the Corporate
Financial Reports
/ signed /
_______________________
Giovanni Ronca
Consolidated financial statements of the
TIM Group
Certification of the Consolidated financial statements 270
INDEPENDENT AUDITORS’ REPORT
Consolidated financial statements of the
TIM Group
Independent Auditors’ Report 271
EY S.p.A.
Via Meucci, 5
10121 Torino
Tel: +39 011 5161611
Fax: +39 011 5612554
ey.com
Independent auditor’s report pursuant to article 14 of Legislative
Decree n. 39, dated 27 January 2010 and article 10 of EU Regulation
n. 537/2014
(Translation from the original Italian text)
To the Shareholders of
TIM S.p.A.
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of TIM Group (the Group), which comprise the
consolidated statement of financial position as at December 31 ,2021, and the consolidated income
statement, the consolidated statement of comprehensive income, consolidated statement of changes
in equity and consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements give a true and fair view of the financial position
of the Group as at December 31, 2021, and of its financial performance and its cash flows for the
year then ended in accordance with International Financial Reporting Standards as adopted by the
European Union and with the regulations issued for implementing art. 9 of Legislative Decree n.
38/2005.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of TIM
S.p.A. in accordance with the regulations and standards on ethics and independence applicable to
audits of financial statements under Italian Laws. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
EY S.p.A.
Sede Legale: Via Meravigli, 12 – 20123 Milano
Sede Secondaria: Via Lombardia, 31 – 00187 Roma
Capitale Sociale Euro 2.525.000,00 i.v.
Iscritta alla S.O. del Registro delle Imprese presso la CCIAA di Milano Monza Brianza Lodi
Codice fiscale e numero di iscrizione 00434000584 - numero R.E.A. di Milano 606158 - P.IVA 00891231003
Iscritta al Registro Revisori Legali al n. 70945 Pubblicato sulla G.U. Suppl. 13 - IV Serie Speciale del 17/2/1998
Iscritta all’Albo Speciale delle società di revisione
Consob al progressivo n. 2 delibera n.10831 del 16/7/1997
A member firm of Ernst & Young Global Limited
We identified the following key audit matters:
Key Audit Matter
Impairment test of goodwill – Domestic
Audit Response
As of December 31, 2021 goodwill amounts to
Euro 18,568 million and refers for Euro 18,124
million to the Domestic cash generating unit
("CGU") and for Euro 444 million to the Brazil
CGU.
Based on the impairment test performed as of
December 31, 2021, an impairment loss of Euro
4,120 has been recorded for the Domestic CGU.
The processes and methodologies used by the
Group to evaluate and determine the
recoverable amount of each CGU, are based on
assumptions that are in some cases complex
and that, due to their nature, imply the use of
judgement by Management, in particular with
reference to the forecast of future cash flows
and to the estimate of the long-term growth and
discount rates applied to the future cash flow
forecasts.
Considering the level of judgment required and
the complexity of the assumptions applied in
estimating the recoverable amount of goodwill,
we considered this area a key audit matter.
Disclosures related to the assessment of
goodwill are reported in note 4 "Goodwill" and
in note 2 "Accounting policies" in the
paragraphs “Intangible assets - Goodwill”,"
Impairment of intangible, tangible and rights of
use assets - Goodwill" and "Use of estimates".
Our audit procedures in response to the key
audit matter included, among others:
► the assessment of the processes
implemented by the Group with reference to
the criteria and methodology of the
impairment test;
► the validation of the CGUs perimeter and the
test of the allocation of the carrying value of
the Group’s assets to each CGU;
► the assessment of the reasonableness of the
future cash flows forecasts, including
comparisons with sector data and forecasts,
utilized in the fair value determination;
► the assessment of the consistency of the
future cash flows forecasts of each CGU with
the Group business plan;
► the assessment of forecasts in light of their
historical accuracy;
► the assessment of the reasonableness of
long-term growth rates and discount rates.
The procedures referred to in the previous
points also concerned the analysis of the
assessments performed by the independent
experts appointed by the Group.
In performing our analysis, we involved our
experts in valuation techniques, who performed
an independent recalculation and carried out
sensitivity analyses on the key assumptions in
order to determine which changes in the
assumptions could materially affect the
recoverable amount.
Lastly, we reviewed the adequacy of the
disclosures provided in the notes to the
consolidated financial statements with regards
to the valuation of goodwill.
Revenue recognition
TIM Group’s revenues amounted to Euro 15,316
million as of December 31, 2021 and refer
almost entirely to the telecommunications
services rendered to retail and wholesale
customers (other telecommunications
operators).
Procedures over the accounting of revenues
required significant focus in the context of our
audit procedures due to i) a highly complex
accounting process due to the number of
commercial offers, the number of underlying
application systems and the related
reconciliation processes, ii) the presence of
certain manual phases in the revenue
recognition process, in particular for services
provided to large customers and iii) the
complexity in estimating commitments
connected to certain contracts.
The Group provides the relative disclosures in
Note 25 "Revenues" of the consolidated
financial statements.
Our audit procedures in response to the key
audit matter included, among others:
► an understanding of the processes underlying
the revenue recognition;
► the understanding and verification of the
design and operation of the relevant controls
over the revenue recognition process;
► the analysis of the application systems
supporting the revenue recognition process;
► the assessment that the accounting policy
adopted for the main commercial offers is
consistent with the provisions of the
reference accounting standard;
► the analysis, on a sample basis, of some
significant transactions relating to invoices
issued and invoices to be issued, in order to
verify that the contractual data and the
evidence supporting the actual service
rendered and / or goods transferred were
consistent with the accounting policy
adopted;
► the analysis of the valuation of certain
contracts identified as onerous contracts;
► the reconciliation of the management
accounts with the accounting records in
connection with the main balance sheet
items related to customer relations;
► the analysis of the manual journal entries.
We also required external confirmations for a
sample of customers and transactions.
Lastly, we reviewed the adequacy of the
disclosure provided in the notes to the
consolidated financial statements with regards
to the revenue recognition process.
Regulatory disputes
As of December 31, 2021, TIM Group is
involved in several regulatory disputes in
progress, many of which are characterized by
significant counterparty requests.
Our audit procedures in response to the key
audit matter included, among others:
► an understanding of the process put in place
by Management for assessing disputes,
accompanied by test of the effectiveness of
the internal controls relevant for this
process;
► inquiries with Management regarding the
main assumptions made in connection with
disputes;
► the analysis of the legal opinions prepared by
external consultants, based on which
Management has based its assessments;
► the analysis of the responses received from
external lawyers following our external
confirmations procedures.
Lastly, we reviewed the adequacy of the
disclosures provided in the notes to the
consolidated financial statements with regards
to the disputes in which the Group is involved,
based on their compliance with the international
accounting standards and their consistency with
the results of our audit procedures.
The main disputes concern (i) the 28-day billing
proceeding, in which AGCOM ordered TIM to
reimburse customers for unused service days,
(ii) the I820 proceeding, started by AGCM
against TIM and other telco operators, to
ascertain a possible conduct restricting market
competition and (iii) the A514, and the related
“follow-on” proposed by some other OLOs,
procedure in which the AGCM charged TIM with
conduct aimed at hindering the entry on the
market of a new operator.
The assessment of the disputes was carried out
by Management, as of 31 December 2021,
based on the opinion of the external lawyers, as
well as considering the latest information
available.
The estimation of the risks connected to the
disputes in which the Group is involved, requires
a high degree of judgment by the management
and, also considering the complexity of the
regulatory framework, we considered this area a
key audit matter.
Disclosures related to the assessment of the
risks relating to the regulatory disputes in which
the Group is involved is reported in note 24
"Disputes and pending legal actions, other
information, commitments and guarantees".
Fiscal disputes in Brazil
As of December 31, 2021, the TIM Group is
involved in several disputes with the Brazilian
tax authorities.
The maximum potential liability associated with
these disputes, as at December 31, 2021,
amounts to Euro 2,583. With reference to this
potential liability, the Group recognized a
provision of Euro 68 million with regards to the
risks deemed probable.
The assessment of the risk related to the tax
disputes in Brazil in which the Group is involved,
requires a high degree of judgment by the
Management and, also considering the
significance of the amounts involved, we
considered it to be a key audit matter.
Disclosures related to the assessment of the
Our audit procedures in response to the key
audit matter included, among others:
► an understanding of the process put in place
by Management for assessing disputes,
accompanied by test of the effectiveness of
the controls relevant for this process;
► inquiries with Management regarding the
main assumptions made in connection with
disputes;
► the analysis of the legal opinions prepared by
external consultants, based on which
Management has based its assessments;
► the analysis of the responses to our external
confirmations procedures received from
external lawyers, also with the involvement
of our experts in tax disputes.
Lastly, we reviewed the adequacy of the
disclosures provided in the notes to the
consolidated financial statements with regards
to the disputes in which the Group is involved,
based on their compliance with the international
accounting standards and their consistency with
the results of our audit procedures.
Our audit procedures in response to the key
audit matter included, among others:
► the assessment of the reasonableness of the
assumptions underlying the estimation of
future taxable income and the reconciliation
with the figures included in the Group's
business plan, taking into account the
regulatory changes that took place during
2021 ;
► the assessment of the reasonableness of the
accuracy of the forecasts compared with the
prior periods;
► the assessment of the Management
calculations.
Lastly, we reviewed the adequacy of the
disclosures provided in the notes to the
consolidated financial statements with regards
to the recoverability of deferred tax assets.
risks relating to the fiscal disputes in which the
Group is involved is reported in note 24
"Disputes and pending legal actions, other
information, commitments and guarantees".
Recoverability of deferred tax assets
As of December 31, 2021, deferred tax assets
amount, net of impairment, to Euro 3,513
million in the consolidated financial statements.
The recoverability analysis of the deferred tax
assets performed as of December 31, 2021, led
to an impairment loss of Euro 3,825.
Deferred tax assets refer to the temporary
deductible differences between the book and
fiscal values of assets and liabilities in the
financial statements.
The recoverability of the carrying amount of the
deferred tax assets is subject to management’s
evaluation and is based on the estimations of
the future taxable income expected in the years
in which them will be reversed.
The processes and methodologies used to
evaluate and determine the recoverable amount
of these assets, are based on assumptions that
are in some cases complex and that, due to
their nature, imply the use of judgement by
Management, in particular with reference to the
consistency of the forecasts of future taxable
income expected by the Group with those
included in the business plan.
Considering the level of judgment required and
the complexity of the assumptions applied in
estimating future taxable amount used to
determine the recoverability of the deferred tax
assets, we considered this area a key audit
matter.
Disclosures related to the assessment of
recoverability of deferred tax assets are
reported in note 2 "Accounting policies" in the
paragraphs “Income tax expense (current and
deferred)" and "Use of estimates" and in note
11 “Income tax expense (current and
deferred)".
Sale of 51% equity interest in I-System
On November 16, 2021, the Group sold the 51%
of its equity interest held in I-System, generating
a gain of Euro 119 million, which was measured
as the difference between the fair value of the
consideration received and the carrying value of
the net assets of I-System. The determination of
the carrying value of the net assets of I-System
involved identifying and measuring the assets,
the liabilities and the goodwill allocated to I-
System as of the closing date of the transaction.
Considering the level of judgment required in
defining the portion of the Brazil CGU Goodwill
to be allocated to I-System and in determining
the accounting analysis and the implications of
the loss of control, we considered this area a key
audit matter.
Disclosures related to the transaction are
reported in note 8 "Investments".
Our audit procedures in response to the key
audit matter included, among others:
► an understanding of the process put in place
by Management for selling I-System,
accompanied by tests of the effectiveness of
the controls relevant for this process;
► the analysis of the transaction agreement;
► the analysis of the accuracy of the gain
resulting from the transaction;
► the analysis of key inputs, data and
assumptions used by Management to
determine the allocation of goodwill to I-
System;
► the assessment of the Management's
application of the criteria for the loss of
control by evaluating contrary evidence;
► the analysis of the Management´s
assessment of the master service agreement
under an IFRS 16 perspective.
In performing our analysis, we involved our tax
experts to evaluate the tax impacts of the
transaction.
Lastly, we reviewed the adequacy of the
disclosures provided in the notes to the
consolidated financial statements.
Responsibilities of Directors and Those Charged with Governance for the
Consolidated Financial Statements
The Directors are responsible for the preparation of the consolidated financial statements that give a
true and fair view in accordance with International Financial Reporting Standards as adopted by the
European Union and with the regulations issued for implementing art. 9 of Legislative Decree n.
38/2005, and, within the terms provided by the law, for such internal control as they determine is
necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
The Directors are responsible for assessing the Group’s ability to continue as a going concern and,
when preparing the consolidated financial statements, for the appropriateness of the going concern
assumption, and for appropriate disclosure thereof. The Directors prepare the consolidated financial
statements on a going concern basis unless they either intend to liquidate the Parent Company TIM
S.p.A. or to cease operations, or have no realistic alternative but to do so.
The statutory audit committee (“Collegio Sindacale”) is responsible, within the terms provided by the
law, for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but it is not a guarantee that an audit conducted in accordance with International Standards on
Auditing (ISA Italia) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
As part of an audit in accordance with International Standards on Auditing (ISA Italia), we have
exercised professional judgment and maintained professional skepticism throughout the audit. In
addition:
we have identified and assessed the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error, designed and performed audit procedures
responsive to those risks, and obtained audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control;
we have obtained an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of Group’s internal control;
we have evaluated the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Directors;
we have concluded on the appropriateness of Directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to consider this matter in forming our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going
concern;
we have evaluated the overall presentation, structure and content of the consolidated
financial statements, including the disclosures, and whether the consolidated financial
statements represent the underlying transactions and events in a manner that achieves fair
presentation.
we have obtained sufficient appropriate audit evidence regarding the financial information of
the entities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit opinion.
We have communicated with those charged with governance, identified at an appropriate level as
required by ISA Italia, regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We have provided those charged with governance with a statement that we have complied with the
ethical and independence requirements applicable in Italy, and we have communicated with them all
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we have determined those
matters that were of most significance in the audit of the financial statements of the current period
and are therefore the key audit matters. We have described these matters in our auditor’s report.
Additional information pursuant to article 10 of EU Regulation n. 537/14
The shareholders of TIM S.p.A., in the general meeting held on March 29, 2019, engaged us to
perform the audits of the separate and consolidated financial statements for each of the years ending
December 31, 2019 to December 31, 2027.
We declare that we have not provided prohibited non-audit services, referred to article 5, par. 1, of EU
Regulation n. 537/2014, and that we have remained independent of the Group in conducting the
audit.
We confirm that the opinion on the consolidated financial statements included in this report is
consistent with the content of the additional report to the audit committee (Collegio Sindacale) in
their capacity as audit committee, prepared pursuant to article 11 of the EU Regulation n. 537/2014.
Report on compliance with other legal and regulatory requirements
Opinion on the compliance with Delegated Regulation (EU) 2019/815
The Directors of TIM S.p.A. are responsible for applying the provisions of the European Commission
Delegated Regulations (EU) 2019/815 for the regulatory technical standards on the specification of a
single electronic reporting format (ESEF – European Single Electronic Format) (the “Delegated
Regulation”) to the consolidated financial statements, to be included in the annual financial report.
We have performed the procedures under the auditing standard SA Italia n. 700B, in order to express
an opinion on the compliance of the consolidated financial statements with the provisions of the
Delegated Regulation.
In our opinion, the consolidated financial statements have been prepared in the XHTML and have been
marked-up, in all material aspects format in compliance with the provisions of the Delegated
Regulation.
Opinion pursuant to article 14, paragraph 2, subparagraph e), of Legislative
Decree n. 39 dated 27 January 2010 and of article 123-bis, paragraph 4, of
Legislative Decree n. 58, dated 24 February 1998
The Directors of TIM S.p.A. are responsible for the preparation of the Report on Operations and of the
Report on Corporate Governance and Ownership Structure of TIM Group as at December 31, 2021,
including their consistency with the related consolidated financial statements and their compliance
with the applicable laws and regulations.
We have performed the procedures required under audit standard SA Italia n. 720B, in order to
express an opinion on the consistency of the Report on Operations and of specific information
included in the Report on Corporate Governance and Ownership Structure as provided for by article
123-bis, paragraph 4, of Legislative Decree n. 58, dated 24 February 1998, with the consolidated
financial statements of TIM Group] as at December 31 ,2021 and on their compliance with the
applicable laws and regulations, and in order to assess whether they contain material misstatements.
In our opinion, the Report on Operations and the above mentioned specific information included in
the Report on Corporate Governance and Ownership Structure are consistent with the consolidated
financial statements of TIM Group as at December 31, 2021, and comply with the applicable laws and
regulations.
With reference to the statement required by art. 14, paragraph 2, subparagraph e), of Legislative
Decree n. 39, dated 27 January 2010, based on our knowledge and understanding of the entity and
its environment obtained through our audit, we have no matters to report.
Statement pursuant to article 4 of Consob Regulation implementing Legislative
Decree n. 254, dated 30 December 2016
The Directors of TIM S.p.A. are responsible for the preparation of the non-financial information
pursuant to Legislative Decree n. 254, dated 30 December 2016. We have verified that non-financial
information have been approved by Directors.
Pursuant to article 3, paragraph 10, of Legislative Decree n. 254, dated 30 December 2016, such
non-financial information are subject to a separate compliance report signed by us.
Turin, March 16, 2022
EY S.p.A.
Signed by: Ettore Abate, Auditor
This report, that includes the opinion on the consolidated financial statements of EIP S.p.A.
and the opinion on the TIM S.p.A.’s compliance with other legal and regulatory requirements
as applicable to our audit, has been translated into the English language solely for the
convenience of international readers. Accordingly, we express no such opinions in respect of
the English translation of the consolidated financial statements of TIM S.p.A. and XHTML
format thereof.
CONTENTS
TIM S.P.A. SEPARATE FINANCIAL STATEMENTS
Statements of Financial Position .......................................................... 283
Separate Income Statements ................................................................ 285
Statements of Comprehensive Income ............................................... 286
Statements of Changes in Equity ......................................................... 287
Statements of Cash Flows ...................................................................... 288
Note 1 Form, content and other general information ............................................................... 290
Note 2 Accounting policies ............................................................................................................ 292
Note 3 Goodwill ............................................................................................................................... 304
Note 4 Intangible assets with a finite useful life ........................................................................ 306
Note 5 Tangible assets ................................................................................................................... 309
Note 6 Rights of use assets ........................................................................................................... 312
Note 7 Investments ......................................................................................................................... 314
Note 8 Non-current and current financial assets ....................................................................... 317
Note 9 Miscellaneous receivables and other non-current assets ............................................ 319
Note 10 Income tax expense (current and deferred) ................................................................ 321
Note 11 Inventories ......................................................................................................................... 324
Note 12 Trade and miscellaneous receivables and other current assets ............................... 324
Note 13 Equity ................................................................................................................................. 327
Note 14 Non-current and current financial liabilities ................................................................. 332
Note 15 Net financial debt ............................................................................................................. 338
Note 16 Financial risk management ............................................................................................ 340
Note 17 Derivatives ......................................................................................................................... 344
Note 18 Supplementary disclosures on financial instruments ................................................. 348
Note 19 Provisions for employee benefits ................................................................................... 353
Note 20 Provisions .......................................................................................................................... 355
Note 21 Miscellaneous payables and other non-current liabilities .......................................... 356
Note 22 Trade and miscellaneous payables and other current liabilities ............................... 358
360
Note 23 Disputes and pending legal actions, other information, commitments and
guarantees .......................................................................................................................................
Note 24 Revenues ........................................................................................................................... 374
Note 25 Other income .................................................................................................................... 374
Note 26 Acquisition of raw materials and services .................................................................... 375
Note 27 Employee benefits expenses .......................................................................................... 376
Note 28 Other operating expenses .............................................................................................. 377
Note 29 Change in inventories ...................................................................................................... 377
Note 30 Internally generated assets ............................................................................................ 377
Note 31 Depreciation and amortization ...................................................................................... 378
Note 32 Gains/(losses) on disposals of non-current assets ...................................................... 379
Note 33 Impairment reversals (losses) on non-current assets ................................................. 379
Note 34 Income/(expense) from investments ............................................................................ 380
Note 35 Finance income and expenses ....................................................................................... 381
Note 36 Related-party transactions ............................................................................................. 383
Note 37 Equity compensation plans ............................................................................................. 404
Note 38 Significant non-recurring events and transactions ..................................................... 406
Note 39 Positions or transactions resulting from atypical and/or unusual operations......... 408
Note 40 Other information ............................................................................................................ 408
Note 41 Events subsequent to December 31, 2021 .................................................................... 410
Note 42 List of investments in subsidiaries, associates and joint ventures ............................ 411
STATEMENTS OF FINANCIAL POSITION
notes
12/31/2021
of which with
related parties
12/31/2020
of which with
related parties
12,960,511,068
5,278,281,754
18,238,792,822
7,223,464,580
3,320,501,325
11,053,931,924
3)
4)
5)
2) 6)
7)
7)
23,050,788,256
5,500,451,232
28,551,239,488
487,904,000
10,335,288,469
4,095,532,681
7,244,594,938
888,531,000
8)
10,912,998
1,135,000
16,870,793
(a)
8)
9)
10)
11)
12)
10)
4,437,606,952
2,669,461,000
2,489,871,187
658,163,000
1,973,923,028
3,363,514,150
20,839,888,752
49,622,647,479
165,171,260
247,500,000
1,733,641,142
7,336,789,781
18,821,767,841
61,803,828,479
143,772,151
131,043,000
3,930,749,146
774,180,000
3,464,016,413
280,258,000
42,862,793
39,809,071
Assets
(euros)
Non-current assets
Intangible assets
Goodwill
Intangible assets with a finite
useful life
Tangible assets
Property, plant and
equipment owned
Rights of use assets
Other non-current assets
Investments
Other investments
Non-current financial
receivables arising from lease
contracts
Other non-current financial
assets
Miscellaneous receivables and
other non-current assets
Deferred tax assets
Total Non-current assets
Current assets
Inventories
Trade and miscellaneous
receivables and other current
assets
Current income tax
receivables
Investments
Current financial assets
Current financial
receivables arising from
lease contracts
Securities other than
investments, other financial
receivables and other
current financial assets
Cash and cash equivalents
39,660,799
3,963,000
44,356,056
2,749,000
115,703,711
13,438,000
110,022,447
9,960,000
8)
3,558,280,626
3,713,645,136
7,852,428,335
57,475,075,814
26,437,000
1,765,441,712
1,919,820,215
5,567,417,850
67,371,246,329
92,297,000
Total Current assets
Total Assets
(b)
(a+b)
Separate Financial Statements of
TIM S.p.A.
Statements of Financial Position 283
Equity and Liabilities
(euros)
Equity
Capital issued
less: Treasury shares
Share capital
Additional paid-in capital
Legal reserve
Other reserves
Reserve for remeasurements
of employee defined benefit
plans (IAS 19)
Other
Total Other reserves
Retained earnings
(accumulated losses),
including profit (loss) for the
year
Total Equity
Non-current liabilities
Non-current financial
liabilities for financing
contracts and others
Non-current financial
liabilities for lease contracts
Employee benefits
Deferred tax liabilities
Provisions
Miscellaneous payables and
other non-current liabilities
Total Non-current liabilities
Current liabilities
Current financial liabilities for
financing contracts and
others
Current financial liabilities for
lease contracts
Trade and miscellaneous
payables and other current
liabilities
Current income tax payables
Total Current Liabilities
Total Liabilities
Total Equity and Liabilities
(e)
(f=d+e)
(c+f)
notes
12/31/2021
of which with
related parties
12/31/2020
of which with
related parties
13)
11,677,002,855
(63,390,972)
11,613,611,883
2,133,374,023
2,335,400,571
11,677,002,855
(19,234,377)
11,657,768,478
2,133,374,023
2,312,977,576
(117,166,484)
(106,381,744)
1,555,920,360
1,438,753,876
(c)
(956,760,232)
16,564,380,121
1,311,892,366
1,205,510,622
7,698,445,058
25,008,075,757
(d)
14)
21,876,291,105
5,537,738,000 24,440,361,873 5,665,036,000
14)
19)
10)
20)
21)
14)
14)
22)
10)
2,743,426,675
641,396,452
632,876,811
1,195,633,722
27,089,624,765
297,686,000
34,631,000
3,505,783,671
676,081,097
—
618,128,216
3,477,543,318
32,717,898,175
809,746,000
161,586,000
5,045,176,012
480,595,000
3,341,906,670
293,144,000
433,804,853
79,065,000
462,721,808
63,347,000
8,111,207,332
230,882,731
13,821,070,928
40,910,695,693
57,475,075,814
922,799,000
5,609,421,674
231,222,245
9,645,272,397
42,363,170,572
67,371,246,329
497,665,000
Separate Financial Statements of
TIM S.p.A.
Statements of Financial Position 284
SEPARATE INCOME STATEMENTS
(euros)
notes
Revenues
Other income
Total operating revenues and other
income
Acquisition of goods and services
Employee benefits expenses
Other operating expenses
Change in inventories
Internally generated assets
Operating profit (loss) before
depreciation and amortization,
capital gains (losses) and impairment
reversals (losses) on non-current
assets (EBITDA)
of which: impact of non-recurring items
Depreciation and amortization
Gains/(losses) on disposals of non-
current assets
Impairment reversals (losses) on non-
current assets
Operating profit (loss) (EBIT)
of which: impact of non-recurring items
Income/(expenses) from investments
Finance income
Finance expenses
Profit (loss) before tax
of which: impact of non-recurring items
Income tax expense
Profit (loss) for the year
24)
25)
26)
27)
28)
29)
30)
38)
31)
32)
33)
38)
34)
35)
35)
38)
10)
Year
2021
12,396,902,360
321,723,135
of which with
related parties
1,122,021,000
89,687,000
Year
2020
12,029,901,155
188,895,769
of which with
related parties
311,682,000
8,188,000
12,718,625,495
(6,758,756,861)
(2,452,964,944)
(1,178,698,048)
21,315,460
287,648,513
2,637,169,615
(1,133,505,000)
(2,995,759,078)
(2,424,697,000)
(96,215,000)
(3,654,000)
(75,895,000)
12,218,796,924
(4,610,694,132)
(2,192,697,306)
(605,118,222)
(11,769,401)
381,424,171
5,179,942,034
(311,004,000)
(3,581,638,098)
(1,015,398,000)
(78,483,000)
(2,489,000)
(141,558,000)
(43,307,726)
(39,953,000)
(14,850,367)
3,489,000
(4,120,130,346)
(4,522,027,535)
(5,253,505,000)
834,404,341
1,075,737,527
(1,983,730,932)
(4,595,616,599)
(5,246,014,000)
(3,718,391,399)
(8,314,007,998)
835,675,000
373,300,000
(672,113,000)
(7,738,314)
1,575,715,255
(311,004,000)
551,366,213
1,012,294,893
(1,972,897,516)
1,166,478,845
(91,116,000)
5,994,990,200
7,161,469,045
5,831,279,000
331,004,000
320,045,000
(574,275,000)
of which: impact of non-recurring items
38)
(8,761,083,000)
Separate Financial Statements of
TIM S.p.A.
Separate Income Statements 285
STATEMENTS OF COMPREHENSIVE INCOME
Note 13
(euros)
Profit (loss) for the year
Other components of the Statements of Comprehensive Income
Other components that will not be reclassified subsequently to
Separate Income Statements
Financial assets measured at fair value through other comprehensive
income:
Profit (loss) from fair value adjustments
Income tax effect
Remeasurements of employee defined benefit plans (IAS19):
Actuarial gains (losses)
Income tax effect
Share of other comprehensive income (losses) of associates and joint
ventures accounted for using the equity method:
Profit (loss)
Income tax effect
Total other components that will not be reclassified subsequently to
Separate Income Statements
Other components that will be reclassified subsequently to Separate
Income Statements
Financial assets measured at fair value through other comprehensive
income:
Profit (loss) from fair value adjustments
Loss (profit) transferred to the Separate Income Statement
Income tax effect
Hedging instruments:
Profit (loss) from fair value adjustments
Loss (profit) transferred to the Separate Income Statement
Income tax effect
Share of other comprehensive income (losses) of associates and joint
ventures accounted for using the equity method:
Profit (loss)
Loss (profit) transferred to the Separate Income Statements
Income tax effect
Year
2021
(8,314,007,998)
Year
2020
7,161,469,045
(a)
7,131,708
(71,306)
7,060,402
(14,190,447)
3,405,707
(10,784,740)
—
—
—
(b)
(c)
(d)
(4,533,712)
51,646
(4,482,066)
5,504,153
(1,320,997)
4,183,156
—
—
—
(e=b+c+d)
(3,724,338)
(298,910)
(5,203,379)
—
1,248,811
(3,954,568)
4,056,453
—
(973,549)
3,082,904
538,103,786
(185,027,966)
(84,738,197)
268,337,623
(409,582,216)
312,250,000
23,359,732
(73,972,484)
—
—
—
—
—
—
—
—
(f)
(g)
(h)
Total other components that will be reclassified subsequently to
Separate Income Statements
Total other components of the Statements of Comprehensive Income
Total comprehensive income (loss) for the year
(i= f+g+h)
(k= e+i)
(a+k)
264,383,055
260,658,717
(8,053,349,281)
(70,889,580)
(71,188,490)
7,090,280,555
Separate Financial Statements of
TIM S.p.A.
Statements of Comprehensive Income 286
STATEMENTS OF CHANGES IN EQUITY
Changes in Equity from January 1 to December 31, 2020
(euros)
Share capital
Additional paid-in
capital
Reserve for financial
assets measured
through fair value
adjustment through
other
comprehensive
income (*)
Reserve for
hedging
instruments
Reserve for
remeasurements of
employee defined
benefit plans (IAS
19) (*)
Other reserves and
retained earnings
(accumulated
losses), including
profit (loss) for the
year
Total Equity
Balance at
December 31, 2020 11,656,283,247
2,094,207,410
11,533,497
(1,139,613,769)
(110,564,900)
5,662,447,002
18,174,292,487
Changes in equity
during the year:
Dividends approved
Total
comprehensive
income (loss) for the
year
Merger by
incorporation
surplus of HR
Services S.r.l. into
TIM S.p.A.
Broad-Based Share
Ownership Plan
2020
Issue of equity
instruments
Other changes
Balance at
December 31, 2020 11,657,768,478
1,485,231
(317,443,700)
(317,443,700)
(1,399,162)
(73,972,484)
4,183,156
7,161,469,045
7,090,280,555
39,166,613
11,758,020
11,758,020
4,649,454
43,816,067
3,867,672
19,425
3,867,672
1,504,656
2,133,374,023
10,134,335
(1,213,586,253)
(106,381,744)
12,526,766,918
25,008,075,757
Changes in Equity from January 1 to December 31, 2021 – Note 13
(euros)
Share capital Additional paid-in
capital
Reserve for financial
assets measured at
fair value through
other
comprehensive
income
Reserve for
hedging
instruments
Reserve for
remeasurements of
employee defined
benefit plans (IAS
19)
Other reserves and
retained earnings
(accumulated
losses), including
profit (loss) for the
year
Total Equity
Balance at
December 31, 2020 11,657,768,478
Changes in equity
during the year:
Dividends approved
Total
comprehensive
income (loss) for the
year
Treasury shares
Other changes
Balance at
December 31, 2021
11,613,611,883
(44,156,595)
2,133,374,023
10,134,335
(1,213,586,253)
(106,381,744)
12,526,766,918
25,008,075,757
3,105,834
268,337,623
(10,784,740)
(318,774,296)
(318,774,296)
(8,314,007,998)
12,832,771
(40,248,235)
(8,053,349,281)
(31,323,824)
(40,248,235)
2,133,374,023
13,240,169
(945,248,630)
(117,166,484)
3,866,569,160
16,564,380,121
Separate Financial Statements of
TIM S.p.A.
Statements of Changes in Equity 287
STATEMENTS OF CASH FLOWS
(euros)
Cash flows from operating activities:
Profit (loss) for the year
Adjustments for:
Depreciation and amortization
Impairment losses (reversals) on non-current assets (including
investments)
Net change in deferred tax assets and liabilities
Losses (gains) realized on disposals of non-current assets
(including investments)
Change in provisions for employee benefits
Change in inventories
Change in trade receivables
Change in trade payables
Net change in income tax receivables/payables
Net change in miscellaneous receivables/payables and other
assets/liabilities
Cash flows from (used in) operating activities
Cash flows from investing activities:
Purchases of intangible, tangible and rights of use assets on a cash
basis
Contributions for plants received
Change in cash arising from corporate actions
Acquisitions/disposals of other investments
Change in financial receivables and other financial assets (excluding
hedging and non-hedging derivatives under financial assets)
notes
Year
2021
Year
2020
(8,314,007,998)
7,161,469,045
31) 2,995,759,078
3,581,638,098
4,125,301,000
3,843,396,000
43,102,000
(6,433,126,000)
34,719,000
(83,211,000)
(21,315,000)
(261,717,000)
518,520,000
(235,823,000)
(225,818,351)
(a)
2,375,802,729
(211,775,000)
(610,592,000)
11,770,000
216,587,000
(22,869,000)
693,552,000
56,594,416
4,486,350,559
(2,200,937,000)
(2,285,445,000)
7)
3,121,000
4,164,000
(130,453,000)
1,152,516,000
23,982,000
50,524,000
(101,314,000)
(61,272,000)
Proceeds received from the sale of investments in subsidiaries
—
—
Proceeds from sale/repayments of intangible, tangible, rights of use
assets and other non-current assets
Cash flows from (used in) investing activities
Cash flows from financing activities
Change in current financial liabilities and other
Proceeds from non-current financial liabilities (including current
portion)
Repayments of non-current financial liabilities (including current
portion)
Changes in hedging and non-hedging derivatives
Proceeds for increases/repayment of capital
Dividends paid (*)
Changes in ownership interests in consolidated subsidiaries
Cash flows from (used in) financing activities
Aggregate cash flows
Net cash and cash equivalents at beginning of the year
Net cash and cash equivalents at end of the year
(*) of which from related parties:
53,304,000
(1,118,285,000)
1,821,958,000
(551,567,000)
(b)
(182,389,000)
(732,399,000)
2,100,000,000
(2,600,481,000)
1,022,437,000
(2,808,685,000)
103,460,000
—
(317,662,000)
1,758,634,000
861,562,000
2,119,079,729
92,667,000
7,849,000
(317,139,000)
—
(2,735,270,000)
1,199,513,559
1,244,877,363
45,363,804
3,363,957,092
1,244,877,363
(52,762,635)
(37,686,924)
(c)
(d=a+b+c)
(e)
(f=d+e)
Separate Financial Statements of
TIM S.p.A.
Statements of Cash Flows 288
Purchases of intangible, tangible and rights of use assets
(euros)
Purchase of intangible assets
Purchase of tangible assets
Purchase of rights of use assets
Total purchase of intangible, tangible and rights of use assets on an
accrual basis (*)
Change in payables arising from purchase of intangible, tangible and rights
of use assets
Total purchase of intangible, tangible and rights of use assets on a cash
basis
(*) of which from related parties:
notes
4)
5)
6)
Year
2021
Year
2020
(1,054,406,000)
(959,315,000)
(1,167,415,000)
(324,830,000)
(1,467,357,000)
(946,769,000)
(2,546,651,000)
(3,373,441,000)
345,714,000
1,087,996,000
(2,200,937,000)
100,301,000
(2,285,445,000)
565,708,000
Additional Cash Flow information
(euros)
Income taxes (paid) received
Interest expense paid
Interest income received
Dividends received
Analysis of Net Cash and Cash Equivalents
(euros)
Net cash and cash equivalents at the start of the year:
Cash and cash equivalents
Bank overdrafts repayable on demand
Net cash and cash equivalents at the end of the year:
Cash and cash equivalents
Bank overdrafts repayable on demand
Year
2021
(206,070,000)
(1,296,135,000)
503,793,000
780,219,000
Year
2020
249,301,000
(1,389,399,000)
465,448,000
331,127,000
Year
2021
Year
2020
1,765,441,712
(520,564,349)
1,244,877,363
829,022,799
(783,658,995)
45,363,804
3,558,280,626
(194,323,534)
3,363,957,092
1,765,441,712
(520,564,349)
1,244,877,363
The additional disclosures required by IAS 7 are provided in the Note “Net financial debt” to these Separate
Financial Statements.
Separate Financial Statements of
TIM S.p.A.
Statements of Cash Flows 289
NOTE 1
FORM, CONTENT AND OTHER GENERAL
INFORMATION
Form and content
Telecom Italia, TIM in brief, is a joint-stock company (S.p.A.) organized under the laws of the Republic of Italy.
The registered offices of TIM S.p.A. are located in Milan, Italy, at Via Gaetano Negri 1.
The duration of TIM S.p.A., as stated in the company’s bylaws, extends until December 31, 2100.
TIM S.p.A. operates in Italy in the fixed and mobile telecommunications sector.
The TIM S.p.A. separate financial statements at December 31, 2021 have been prepared on a going concern
basis (further details are provided in the Note “Accounting Policies”) and in accordance with the International
Financial Reporting Standards issued by the International Accounting Standards Board and endorsed by the
European Union (designated as “IFRS”), as well as laws and regulations in force in Italy.
It should also be noted that in 2021 TIM S.p.A. applied accounting standards consistent with those of the
previous year.
The separate financial statements have been prepared under the historical cost convention except for financial
assets measured at fair value through other comprehensive income, financial assets measured at fair value
through profit or loss and derivative financial instruments which have been measured at fair value. The
carrying amounts of hedged assets and liabilities have been adjusted to reflect the changes in fair value of the
hedged risks (fair value hedge).
In accordance with IAS 1 (Presentation of Financial Statements) comparative information included in the
consolidated financial statements refers, unless otherwise indicated, to the previous year.
The statements of financial position, the separate income statements, the statements of comprehensive
income, the statements of changes in equity and the statements of cash flows are presented in euros (without
cents) and the notes to these separate financial statements in millions of euros, unless otherwise indicated.
The publication of TIM S.p.A.'s separate financial statements for the year ended December 31, 2021 was
approved by resolution of the Board of Directors on March 02, 2022.
However, final approval of the TIM S.p.A. separate financial statements rests with the shareholders’ meeting.
Financial statement formats
The financial statement formats adopted are consistent with those indicated in IAS 1. In particular:
■
■
the separate statements of financial position have been prepared by classifying assets and liabilities
according to the “current and non-current” criterion;
the separate income statement has been prepared by classifying operating expenses by nature of
expense, as this form of presentation is considered more appropriate and representative of the specific
business of the Company, conforms to internal reporting and is in line with industry practice.
In addition to EBIT or Operating profit (loss), the separate income statement includes the alternative
performance measure of EBITDA or Operating profit (loss) before depreciation and amortization, Capital
gains (losses) and Impairment reversals (losses) on non-current assets.
In particular, besides EBIT, EBITDA is used by TIM as the financial target in internal presentations (business
plans) and in external presentations (to analysts and investors). It represents a useful unit of measurement
for the evaluation of the operating performance of TIM S.p.A. EBIT and EBITDA are calculated as follows:
Separate Financial Statements of
TIM S.p.A.
Note 1
Form, content and other general information
290
Finance expenses
Finance income
Profit (loss) before tax from continuing operations
+
-
+/- Income (Expenses) from investments
EBIT – Operating profit (loss)
+/- Impairment losses (reversals) on non-current assets
+/- Losses (gains) on disposals of non-current assets
+ Depreciation and amortization
EBITDA – Operating profit before depreciation and amortization, capital gains (losses) and impairment reversals (losses)
on non-current assets
■
■
the statements of comprehensive income include the profit or loss for the year as shown in the separate
income statements and all other non-owner changes in equity;
the statement of cash flows has been prepared by presenting cash flows from operating activities
according to the "indirect method", as permitted by IAS 7 (Statement of Cash Flows).
Furthermore, as required by Consob Resolution 15519 of July 27, 2006, in the separate income statement,
income and expenses relating to transactions, which by nature do not occur during normal operation (non-
recurring transactions) have been specifically identified and their impact has been shown separately, when
they are significant. Specifically, non-recurring income/(expenses) include, for instance: income/expenses
arising from the sale of properties, plant and equipment, business segments and investments; expenses
stemming from company reorganization and streamlining processes and projects, also in connection with
corporate transactions (mergers, spin-offs, etc.); expenses resulting from litigation and regulatory fines and
related liabilities; other provisions and related reversals; costs for the settlement of disputes other than
regulatory disputes; adjustments, realignments and other non-recurring items, also relating to previous years;
impairment losses on goodwill and/or other intangible and tangible assets. Certain costs related to the COVID-
19 pandemic are also identified as non-recurring charges.
Also in reference to the above Consob Resolution, the amounts relating to balances or transactions with
related parties have been shown separately in the financial statements.
Separate Financial Statements of
TIM S.p.A.
Note 1
Form, content and other general information
291
NOTE 2
ACCOUNTING POLICIES
Going concern
The separate financial statements for the year 2021 have been prepared on a going concern basis as there is
the reasonable expectation that TIM S.p.A. will continue its operational activities in the foreseeable future (and
in any event for a time horizon of at least twelve months).
In particular, the following factors have been taken into consideration:
■
the main risks and uncertainties (that are for the most part of an external nature) to which TIM is exposed:
•
•
•
•
•
the changes in the general macroeconomic situation in the Italian, European and Brazilian market,
including the effects deriving from the continued state of COVID-19 health emergency, as well as the
volatility of financial markets in the Eurozone, partly following the UK’s Brexit;
variations in business conditions, also related to competition;
changes to laws and regulations (price and rate variations);
outcomes of legal disputes and proceedings with regulatory authorities, competitors and other parties;
financial risks (interest rate and/or exchange rate trends, changes in the Group’s credit rating by rating
agencies);
■
■
the optimal mix between risk capital and debt capital, as well as the policy for the remuneration of risk
capital, as described in the section "Share capital information" under the Note "Equity";
the policy for financial risk management (market risk, credit risk and liquidity risk), as described in the Note
"Financial risk management".
Based on these factors, the Management believes that, at the present time, there are no elements of
uncertainty regarding TIM S.p.A.’s ability to continue as a going concern.
Intangible assets
Goodwill
In accordance with IFRS 3 (Business Combinations), goodwill is recognized in the financial statements at the
acquisition date (including through mergers or conferrals) of companies or business units and is calculated as
the difference between the consideration paid (measured in accordance with IFRS 3, generally determined on
the basis of the fair value at the acquisition date) and the fair value at the acquisition date of the identifiable
assets acquired net of the identifiable liabilities assumed.
Goodwill is classified in the statements of financial position as an intangible asset with an indefinite useful life,
whereas any gain from a bargain purchase or negative goodwill is recognized in the separate income
statement.
Goodwill initially recognized is subsequently reduced only by cumulative impairment losses (for more details,
see the section "Impairment of intangible assets, tangible assets and rights of use assets - Goodwill", below).
Development costs
Costs incurred internally for the development of new products and services represent either intangible assets
(mainly costs for software development) or tangible assets. These costs are capitalized only when all the
following conditions are satisfied: i) the cost attributable to the development phase of the asset can be
measured reliably, ii) there is the intention, the availability of financial resources and the technical ability to
complete the asset and make it available for use or sale, and iii) it can be demonstrated that the asset will be
able to generate future economic benefits. Capitalized development costs comprise only incurred expenditures
that can be attributed directly to the development process for new products and services.
Capitalized development costs are amortized/depreciated systematically over the estimated product or service
life, so that the depreciation/amortization method reflects the way in which the asset's future economic
benefits are expected to be consumed by the entity.
Separate Financial Statements of
TIM S.p.A.
Note 2
Accounting policies
292
Other intangible assets with a finite useful life
Other purchased or internally-generated intangible assets with a finite useful life are recognized as assets, in
accordance with IAS 38 (Intangible Assets), when the use of the asset is likely to generate future economic
benefits and when the cost of the asset can be reliably measured.
Such assets are recorded at purchase or production cost and amortized on a straight-line basis over their
estimated useful lives; the amortization rates are reviewed annually and revised if the current estimated useful
life is different from that estimated previously. The effect of such changes is recognized in the separate income
statements prospectively.
Tangible assets
Property, plant and equipment
Property, plant and equipment are recognized at purchase or production cost. Subsequent expenditures are
capitalized only if they increase the future economic benefits embodied in the related item of property, plant
and equipment. All other expenditures are expensed as incurred.
The cost of these assets also includes the expected costs of dismantling the asset and restoring the site, if a
legal or constructive obligation exists. The corresponding liability is recognized at its present value as a
provision in the statement of financial position. These capitalized costs are depreciated and charged to the
separate income statements over the useful life of the related tangible assets.
The calculation of estimates for dismantling costs, discount rates and the dates in which such costs are
expected to be incurred is reviewed annually at each financial year-end. Changes in the above liability must be
recognized as an increase or decrease of the cost of the relative asset; the amount deducted from the cost of
the asset must not exceed its carrying amount. The excess if any, should be recorded immediately in the
separate income statements, conventionally under the line item "Depreciation".
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets. Depreciation
rates are reviewed annually and revised if the current estimated useful life is different from that estimated
previously. The effect of such changes is recognized in the separate income statements prospectively.
Land, including land pertaining to buildings, is not depreciated.
Rights of use assets
In accordance with IFRS 16, lease liabilities are presented through the recognition of a financial liability in the
statement of financial position consisting in the present value of future lease payments, against the
recognition of the right of use of the leased asset.
On the commencement date of the lease, the right of use is recognized at cost including: the amount of the
initial measurement of the lease liability, any lease payments made at or before the commencement date,
initial direct costs incurred for the signature of the lease and the present value of the estimated restoration
and dismantling costs set out in the lease, less any incentives.
Subsequently, the right of use is amortized over the term of the lease (or the useful life of the asset, if lower),
subject to impairment and adjusted for any remeasurement of the lease liability.
It is specified that starting January 1, 2021, TIM has attracted, under the scope of application of IFRS 16, if the
criteria and the requirements laid down by the standard are met, the new contract types concerning cloud
software resources and the spectrum of transmission frequencies on optic fiber carriers. This approach is
functional to the very innovative specificity of these types of contract, concerning hardware infrastructure and
optical transmission as well as technologically-advanced software services.
Impairment of intangible, tangible and rights of use assets
Goodwill
Goodwill is tested for impairment at least annually or more frequently whenever events or changes in
circumstances indicate that goodwill may be impaired, as set forth in IAS 36 (Impairment of Assets); however,
when the conditions that gave rise to an impairment loss no longer exist, the original amount of goodwill is not
reinstated.
The test is generally conducted at the end of every year, so the date of testing is the year-end closing date of
the financial statements. Goodwill acquired and allocated during the year is tested for impairment at the end
of the year in which the acquisition and allocation took place.
For the purpose of verifying its recoverability, goodwill is allocated, from the acquisition date, to each of the
cash-generating units, or groups of cash-generating units, that is expected to benefit from the combination.
If the carrying amount of the cash-generating unit (or group of cash-generating units) exceeds the recoverable
amount, an impairment loss is recognized in the separate income statement. The impairment loss is first
recognized as a deduction of the carrying amount of goodwill allocated to the cash-generating unit (or group
of cash-generating units) and only subsequently applied to the other assets of the cash-generating unit in
proportion to their carrying amount, up to the recoverable amount of the assets with a finite useful life. The
recoverable amount of a cash-generating unit (or group of cash-generating units) to which goodwill is
allocated is the higher between the fair value less costs to sell and its value in use.
The fair value net of disposal costs is estimated on the basis of the income approach, insofar as this allows for
the reflection of the benefits deriving from a new, different business structure in the future. In particular, the
fair value net of disposal costs is based on the current value of the forecast cash flow, applying a discounting
rate that reflects current market assessments of the time value of money and the risks specific to the asset.
The future cash flows are those arising from an explicit time horizon between three and five years, as well as
those extrapolated to estimate the terminal value.
Separate Financial Statements of
TIM S.p.A.
Note 2
Accounting policies
293
In calculating the value in use, the estimated future cash flows are discounted to present value using a
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset. The future cash flows are those arising from an explicit time horizon between three and five years, as
well as those extrapolated to estimate the terminal value. The long-term growth rate used to estimate the
terminal value of the cash-generating unit (or group of cash-generating units) is assumed not to be higher
than the average long-term growth rate of the segment or market in which the cash-generating unit (or group
of cash-generating units) operates.
Future cash flows are estimated by referring to the current operating conditions of the cash-generating unit (or
group of cash-generating units) and, therefore, do not include either benefits originating from future
restructuring for which the entity is not yet committed, or future investments for the improvement or
optimization of the cash-generating unit.
For the purpose of calculating impairment, the carrying amount of the cash-generating unit is established
based on the same criteria used to determine the recoverable amount of the cash-generating unit, excluding
surplus assets (that is, financial assets, deferred tax assets and net non-current assets held for sale).
After conducting the goodwill impairment test for the cash-generating unit (or groups of cash-generating
units), a second level of impairment testing is carried out which includes the corporate assets which do not
generate positive cash flows and which cannot be allocated by a reasonable and consistent criterion to the
single units. At this second level, the total recoverable amount of all cash-generating units (or groups of cash-
generating units) is compared to the carrying amount of all cash-generating units (or groups of cash-
generating units), including also those cash-generating units to which no goodwill was allocated, and the
corporate assets.
Tangible and intangible assets with finite useful lives and rights of use
assets
At the end of each reporting period, the Company assesses whether there is any indication that an asset –
whether tangible or intangible with finite useful lives or a right of use – may be impaired. Both internal and
external sources of information are used for this purpose. Internal sources include obsolescence or physical
deterioration, and significant changes in the use of the asset and the economic performance of the asset
compared to estimated performance. External sources include the market value of the asset, changes in
technology, markets or laws, trend in market interest rates and the cost of capital used to evaluate
investments, and an excess of the carrying amount of the net assets of the Company over market
capitalization.
If there is any indication that an asset – whether tangible or intangible with finite useful lives or a right of use –
has been impaired, then its carrying amount is reduced to its recoverable amount. The recoverable amount is
the higher of an asset's fair value less costs to sell, and its value in use. In calculating the value in use, the
estimated future cash flows are discounted to present value using a discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset or right. Where it is not possible to
estimate the recoverable amount, the Company estimates the recoverable amount of the cash-generating
unit to which the asset belongs. Impairment losses are recognized in the separate income statement.
When the reasons for the impairment subsequently cease to exist, the carrying value of the asset/ right of use
or of the cash generating unit is increased up to the new estimate of the recoverable amount which, however,
cannot exceed the amount that would have been determined had no impairment loss been recognized. The
reversal of an impairment loss is recognized as income in the separate income statements.
Financial instruments
Business models for financial assets management
For the management of trade receivables, Company Management has identified different business models
based on the specific nature of the receivables, the type of counterparty and collection times, this was in order
to optimize the management of working capital through the constant monitoring of the payment performance
of customers, the steering of credit collection policies, and the management of programs for the disposal of
receivables,
and the activation of factoring consistent with financial planning requirements.
The business models adopted are:
■ Hold to Collect: receivables usually held to maturity, such as trade receivables due from large customers
and the OLOs; these instruments fall within IFRS 9 category “Assets measured at amortized cost”. These
receivables can be transferred, albeit not recurrently, if this is needed to optimize finances;
■ Hold to Collect and Sell: receivables usually traded massively and on a recurring basis, such as receivables
due from active consumer, small and business customers held for sale; these instruments fall under IFRS 9
category "Financial assets measured at fair value through other comprehensive income". As required by
IFRS 9, the related reserve is reversed to the separate income statements when disposed of or impaired.
As part of managing financial assets other than trade receivables, Company Management has identified its
business models on the basis of how the financial instruments are managed and how their cash flows are
used. This is done to ensure an adequate level of financial flexibility and to best manage, in terms of risks and
returns, the financial resources immediately available and in accordance with the strategies.
The Business Models adopted are the following:
■ Hold to Collect: financial instruments used to absorb temporary cash surpluses; such instruments are low
risk and mostly held to maturity; they are measured at amortized cost;
■ Hold to Collect and Sell: monetary or debt instruments used to absorb short/medium-term cash surpluses;
such instruments are low risk and generally held to maturity, or otherwise sold to cover specific cash
requirements; they are measured at fair value through other comprehensive income;
Separate Financial Statements of
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Note 2
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■ Hold to Sell: monetary, debt and equity trading instruments used to dynamically manage cash surpluses
not managed under the business models identified above; such instruments are higher risk and traded
repeatedly over time; they are measured at fair value through profit or loss.
Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures are measured at cost adjusted by impairment losses.
When there is objective evidence of an impairment, recoverability is verified by comparing the carrying amount
of the investment against its recoverable amount consisting of the greater of fair value, net of disposal costs,
and value in use.
Other investments
Other investments (other than those in subsidiaries, associates and joint ventures) are classified as non-
current or current assets if they will be kept in the Company’s portfolio for a period of more or not more than
12 months, respectively.
Other investments are classified as “financial assets measured at fair value through profit or loss” (FVTPL), as
current assets.
At the purchase time of each investment, IFRS 9 provides for the irrevocable option to recognize these
investments in "financial assets measured at fair value through other comprehensive income" (FVTOCI) as
non-current or current assets.
The other investments classified as “financial assets measured at fair value through other comprehensive
income” are measured at fair value; changes in the fair value of these investments are recognized in a special
equity reserve under the other components of the statements of comprehensive income (Reserve for financial
assets measured at fair value through other comprehensive income), without reclassification to the separate
income statement when the financial asset is disposed of or impaired. Dividends, on the other hand, are
recognized in the separate income statements.
Changes in the value of other investments classified as "financial assets at fair value through separate profit or
loss" are recognized directly in the separate income statements.
Securities other than investments
Securities other than investments, included among non-current or current assets, depending on the business
model adopted and the contractual flows envisaged, fall among financial assets measured at amortized cost,
or measured at fair value through other comprehensive income or at fair value though profit or loss.
Securities other than investments, classified as current assets, are those that, by decision of the directors, are
intended to be kept in TIM S.p.A.’s portfolio for a period of not more than 12 months, and are included:
■ as "financial assets measured at amortized cost" (AC) when held to maturity (originally more than 3
months but less than 12 months, or, although they had an original maturity of more than 12 months, they
have been bought in a period during which maturity was included between 3 and 12 months);
■ as "financial assets measured at fair value through other comprehensive income" (FVTOCI) when held in
the scope of a business model whose objective is to sell the financial asset and/or collect the contractual
flows. The "Reserve for financial assets measured at fair value through other comprehensive income" is
reversed to the separate income statements when the financial asset is disposed of or impaired;
■ as “financial assets measured at fair value through profit or loss" (FVTPL) in the other cases.
Cash and cash equivalents
Cash and cash equivalents are recorded, according to their nature, at nominal value or amortized cost.
Cash equivalents are short-term and highly liquid investments that are readily convertible to known amounts
of cash, subject to an insignificant risk of change in value and their original maturity or the remaining maturity
at the date of purchase does not exceed 3 months.
Impairment of financial assets
At every closing date, assessments are made as to whether there is any objective evidence that a financial
asset or a group of financial assets has been impaired.
The impairment of financial assets is based on the expected credit loss model.
In particular:
■
■
impairment on trade receivables and on contract assets is carried out using the simplified approach that
involves estimating the loss expected over the life of the receivable at the time of initial recognition and on
subsequent measurements. For each customer segment, the estimate is principally made by calculating
the average expected uncollectibility, based on historical and statistical indicators, possibly adjusted using
forward-looking elements. For some categories of receivables characterized by specific risk elements,
specific measurements are made on individual credit positions;
the impairment of financial assets other than trade receivables is calculated on the basis of a general
model which estimates expected credit losses over the following 12 months or over the residual life of the
asset in the event of a substantial worsening of its credit risk.
Derivative financial instruments
As allowed by IFRS 9, the Company decided to continue to apply the hedge accounting provisions contained in
IAS 39 instead of those of IFRS 9.
Separate Financial Statements of
TIM S.p.A.
Note 2
Accounting policies
295
Derivatives are used by the Company to manage its exposure to exchange rate and interest rate risks and to
diversify the parameters of debt so that costs and volatility can be reduced to within pre-established
operational limits.
In accordance with IAS 39, derivative financial instruments qualify for hedge accounting only when:
■ at the inception of the hedge, the hedging relationship is formally designated and documented;
■
■
■
the hedge is expected to be highly effective;
its effectiveness can be reliably measured;
the hedge is highly effective throughout the financial reporting periods for which it is designated.
All derivative financial instruments are measured at fair value in accordance with IAS 39.
When derivative financial instruments qualify for hedge accounting, the following accounting treatment
applies:
■ Fair value hedge – Where a derivative financial instrument is designated as a hedge of the exposure to
changes in fair value of an asset or liability due to a particular risk, the gain or loss from re-measuring the
hedging instrument at fair value is recognized in the separate income statements. The gain or loss on the
hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is
recognized in the separate income statement.
■ Cash flow hedge – Where a derivative financial instrument is designated as a hedge of the exposure to
variability in cash flows of an asset or liability or a highly probable expected transaction, the effective
portion of any gain or loss arising from the fair value adjustment of the derivative financial instrument is
recognized directly in a specific equity reserve (Reserve for fair value adjustment of hedging derivative
instruments). The cumulative gain or loss is removed from equity and recognized in the separate income
statement at the same time the hedged transaction affects the separate income statement. The gain or
loss associated with the ineffective portion of a hedge is recognized in the separate income statement
immediately. If the hedged transaction is no longer probable, the cumulative gains or losses included in the
equity reserve are immediately recognized in the separate income statement.
For derivatives for which a hedging relationship has not been designated, changes in value compared to initial
recognition are recognized directly in the separate income statement.
Financial liabilities
Financial liabilities include financial payables, including payables for advances on assignments of receivables
where the assignment does not transfer substantially all the risks and rewards, as well as other financial
liabilities, including derivative financial instruments and liabilities in respect of assets recognized under finance
leases recognized in accordance with IFRS 16.
In accordance with IFRS 9, they also include trade and other payables.
Reverse factoring transactions are also classified under trade payables. TIM has put in place reverse factoring
agreements through which TIM gives partner banks a mandate to pay its suppliers as invoices become due.
Suppliers participating in these programs have the right to sell (without any cost for TIM) receivables due from
TIM. They can exercise this right at their total discretion and incurring all the costs to benefit from collection
before the contractual due date.
Financial liabilities other than derivatives are initially recognized at fair value and subsequently measured at
amortized cost.
Financial liabilities hedged by derivative instruments designed to manage exposure to changes in fair value of
the liabilities (fair value hedge derivatives) are measured at fair value in accordance with the hedge accounting
principles of IAS 39. Gains and losses arising from re-measurement at fair value, to the extent of the hedged
component, are recognized in the separate income statement and are offset by the effective portion of the
gain or loss arising from re-measurement at fair value of the hedging instrument.
Financial liabilities hedged by derivative instruments designed to manage exposure to variability in cash flows
(cash flow hedge derivatives) are measured at amortized cost in accordance with the hedge accounting
principles of IAS 39.
Transfer of receivables
TIM S.p.A. carries out sales of receivables under factoring and securitization contracts. These transfers, in the
majority of cases, are characterized by the transfer of substantially all the risks and rewards of ownership of
the receivables to third parties, therefore meeting the requirements of IFRS 9 for derecognition. Special service
agreements, under which the purchasers grant TIM S.p.A. a mandate to oversee the collection and
management of receivables, have been entered into to maintain the relationship between the Company and
its customers.
Inventories
Inventories are measured at the lower of purchase and production cost and estimated realizable value; the
cost is determined using the weighted average cost formula for each movement, while the estimated
realizable value is determined by observing general prices at the end of the year. Provision is made for obsolete
and slow-moving inventories based on their expected future use and estimated realizable value.
Separate Financial Statements of
TIM S.p.A.
Note 2
Accounting policies
296
Non-current assets held for sale/Discontinued operations
Non-current assets held for sale or disposal groups whose carrying amount will mainly be recovered through
sale, rather than through ongoing use, are classified as held for sale and shown separately from other assets
and liabilities in the separate statements of financial position. The corresponding amounts for the previous
year are not reclassified in the statement of financial position but are instead shown separately in a specific
column in the changes in assets and liabilities in the year in which the non-current assets held for sale or the
disposal groups are classified as such.
Discontinued operations are a component of an entity that has been terminated or classified as held for sale
and that:
■
■
■
represents a major business line or geographical area of operation; or
is part of a single coordinated plan to discontinue a separate major line of business or geographical area of
operation; or
is a subsidiary acquired exclusively with a view to resale.
The results arising from Discontinued Operations – whether disposed of or classified as held for sale – are
shown separately in the separate income statement, net of tax effects. The corresponding values for the
previous periods, where present, are reclassified and reported separately in the separate income statement,
net of tax effects, for comparative purposes.
Non-current assets held for sale or discontinued groups classified as held for sale are first recognized in
compliance with the appropriate IFRS applicable to each specific asset and liability, and subsequently
measured at the lower of the carrying amount and fair value, less cost to sell.
Any subsequent impairment losses are recognized as a direct adjustment to the non-current assets or disposal
groups classified as held for sale and expensed in the separate income statement.
An upward revision of value is, instead, recognized for each subsequent increase in the fair value of an asset
less cost to sell, but not in excess of the previously recognized cumulative impairment loss.
As required by IFRS 5 (Non-current assets held for sale and discontinued operations), an entity shall not
depreciate (or amortize) non-current assets classified as held for sale or being part of a discontinued group.
Finance expenses and other expenses attributable to the liabilities of a discontinued group classified as held
for sale must continue to be recognized.
Employee benefits
Provision for employee severance indemnity
Employee severance indemnity, mandatory pursuant to Article 2120 of the Italian Civil Code, is deferred
compensation and is based on the employees’ years of service and the compensation earned by the employee
during the service period.
Under IAS 19 (Employee Benefits), the employee severance indemnity, so calculated, is considered a "Defined
benefit plan" and the related liability to be recognized in the statement of financial position (Provision for
employee severance indemnities) is determined by actuarial calculations.
The remeasurements of actuarial gains and
in other components of other
comprehensive income. The interest expenses related to the "time value" component of the actuarial
calculations (the latter classified as Finance expenses), are recognized in the separate income statement
under financial expenses.
Starting from January 1, 2007, the Italian Law gave employees the choice to either allocate their accruing
indemnity to supplementary pension funds or it as an obligation of the Company. Companies that employ at
least 50 employees must transfer the employee severance indemnity to the "Treasury fund" managed by
INPS, the Italian Social Security Institute. Consequently, the Group's obligation to INPS and the contributions to
supplementary pension funds take the form, under IAS 19, of "Defined contribution plans".
Equity compensation plans
losses are recognized
TIM S.p.A. provides additional benefits to certain managers of the Group companies through equity
compensation plans (for example: stock options and long-term incentive plans). The above plans are
recognized in accordance with IFRS 2 (Share-Based Payment).
In accordance with IFRS 2, such plans represent a component of the beneficiaries' compensation. Therefore,
for the plans that provide for compensation in equity instruments, the cost is represented by the fair value of
such instruments at the grant date, and is recognized in "Employee benefits expenses", for employees of the
Company, and in "Investments", for employees of subsidiaries, over the period between the grant date and
vesting date with a contra-entry to an equity reserve denominated "Other equity instruments". Changes in the
fair value subsequent to the grant date do not affect the initial measurement. At the end of each year,
adjustments are made to the estimate of the number of rights that will vest up to expiry. An adjustment is
made to "Other equity instruments" for the impact of the change in estimate with contra-entry to "Employee
benefits expenses" or "Investments".
For the portion of the plans that provide for the payment of compensation in cash, the amount is recognized in
liabilities as a contra-entry to "Employee benefits expenses" for employees of the Company, and in
"Investments", for employees of subsidiaries; at the end of each year such liability is measured at fair value.
Provisions
The Company records provisions for risks and charges when it has a present obligation, legal or constructive, to
a third party, as a result of a past event, when it is probable that an outflow of resources will be required to
satisfy the obligation and when the amount of the obligation can be estimated reliably. Provisions for risks and
charges also include those established in the event that the company should stipulate contracts that
thereafter became onerous as the non-discretionary costs necessary to fulfill the commitments made exceed
the economic benefits expected from such contracts.
If the effect of the time value is material, and the payment date of the obligations can be reasonably
estimated, provisions to be accrued are the present value of the expected cash flows, taking into account the
Separate Financial Statements of
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297
risks associated with the obligation. The increase in the provision due to the passage of time is recognized as
"Finance expenses".
Government grants
Government grants are recognized when there is a reasonable certainty that they will be received and that the
Company will satisfy all the conditions established for their granting by the government, government entities
and equivalent local, national or international entities.
Government grants are recognized in the separate income statement, on a straight-line basis, over the periods
in which the Company recognizes the expenses that the grants are intended to offset as costs.
Government grants related to assets received for the acquisition and/or construction of non-current tangible
assets are recorded as deferred income in the statement of financial position and systematically credited to
the separate income statement over the useful life of the systems the grants relate to.
Treasury shares
Treasury shares are recognized as a deduction from equity. In particular, the treasury shares are reported as a
deduction from the share capital issued in the amount corresponding to the "accounting par value", that is the
ratio of total share capital and the number of issued shares, while the excess cost of acquisition over the
accounting par value is presented as a deduction from "Other reserves and retained earnings (accumulated
losses), including profit (loss) for the year".
Foreign currency transactions
Transactions in foreign currencies are recorded at the foreign exchange rate prevailing at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign
exchange rate prevailing at the statement of financial position date. Exchange differences arising from the
settlement of monetary items or from their conversion at rates different from those at which they were
initially recorded during the year or at the end of the prior year, are recognized in the separate income
statements.
Revenues
Revenues are the gross inflows of economic benefits during the period arising in the course of the ordinary
activities of an entity. Amounts collected on behalf of third parties such as sales taxes, goods and services
taxes and value added taxes are not economic benefits which flow to the entity and do not result in increases
in equity. Therefore, they are excluded from revenues.
The process underlying the recognition of revenues follows the steps set out in IFRS 15:
■
■
identification of the contract: takes place when the parties approve the contract (with commercial
substance), and identify the respective rights and obligations: in other terms, the contract must be legally
binding, the rights to receive goods and/or services and the terms of payment can be clearly identified and
the Company considers receipt of payment as probable;
identification of the performance obligations: the main performance obligations identified, i.e. promises
to transfer goods and services that are distinct, are services rendered (including voice and data traffic and
ICT solutions) to retail customers, services rendered to wholesale customers, and sale of products;
■ determination of the transaction price: is the total amount contracted with the other party regarding the
entire contractual term. The Company has determined that the contractual term is the one arising from
the contractual obligations between the parties or, in lack of these obligations, it is by convention one
month;
■ allocation of the transaction price to the performance obligations: the allocation is made proportionately
to the respective stand-alone selling prices calculated based on the list prices (if present) or estimated by
applying an appropriate margin to the cost of purchase/production of the good/service.
Revenues from activating the connectivity service are not a performance obligation; they are therefore
allocated to the contractual performance obligations (typically to services).
For offerings which include the sale of devices and service contracts (bundle offerings), the Company
allocates the contractual transaction price to the performance obligations of the contract, proportionately
to the stand-alone selling prices of the single performance obligations;
■
recognition of revenues: revenues are stated net of discounts, allowances, and returns in connection with
the characteristics of the type of revenue:
• Revenues from services rendered
Revenues from services rendered are recognized in the separate income statements according to the
stage of completion of the service, that is based on actual consumption.
Traffic revenues from interconnection and roaming are reported gross of the amounts due to other
TLC operators.
Revenues for delivering information or other content are recognized on the basis of the amount
invoiced to the customer, when the service is rendered directly by the Company. In the event that the
Company is acting as agent (for example non-geographic numbers) only the commission received
from the content provider is recognized as revenue.
Revenues from prepaid traffic are recorded on the basis of effective consumption. Deferred revenues
for traffic already collected but not yet consumed are recorded in “Trade and miscellaneous payables
and other current liabilities” in the statements of financial position.
Separate Financial Statements of
TIM S.p.A.
Note 2
Accounting policies
298
Revenues for services rendered are generally invoiced and collected bimonthly/monthly for retail
customers while for wholesale customers, they are invoiced on a monthly basis and due 40 or 60 days
after the date of issue, depending on whether they relate to the mobile component (40 days) or fixed
component (60 days).
• Revenues from sales
Revenues from sales (telephone products and others) are recognized upon delivery when control of the
assets is transferred to the customers.
The devices sold separately from the services are invoiced at the time of delivery; collection takes place
on demand or based on installment plans (up to 48 monthly installments). The devices sold as part of
bundle offerings are invoiced at the time of delivery and usually collected in 24, 30 or 48 monthly
installments, depending on the type of offer and customer cluster. With specific reference to the
mobile products sold to consumer customers, collection is made at the time of sale through the
financial company TIMFin, which disburses the loan to the customer.
The recognition of revenues can generate the recognition of an asset or liability deriving from contracts. In
particular:
■ Contract assets are the right to a consideration in exchange for goods or services that have been
transferred to the customer, when the right is conditioned on something other than the passage of time.
■ Liabilities deriving from a contract are the obligation to transfer goods or services to the customer for
which the Company has received (or for which it is due) a consideration from the customer.
Contract costs (incremental costs of obtaining a contract and costs to fulfill a contract; mainly technical
activation costs and costs for sales network commissions) are deferred and recognized through separate profit
or loss depending on the expected term of the contractual relationship with the customers. TIM avails itself of
the practical expedient, provided for by IFRS 15, to recognize the incremental costs for obtaining the contract
entirely in the income statement, provided the amortization period does not exceed 12 months.
The recoverability of contract assets and deferred costs is periodically assessed.
Research and advertising costs
Research costs and advertising expenses are charged directly to the separate income statements in the year in
which they are incurred.
Finance income and expenses
Finance income and expenses are recognized on an accrual basis and include: interest accrued on the related
financial assets and liabilities using the effective interest rate method; changes in the fair value of derivatives
and other financial instruments measured at fair value through the income statement; gains and losses on
foreign exchange and financial instruments (including derivatives).
Separate Financial Statements of
TIM S.p.A.
Note 2
Accounting policies
299
Dividends
Dividends received are recognized in the separate income statement in the year in which they become
receivable following the resolution by the shareholders’ meeting for the distribution of dividends of the
investee companies.
Dividends payable are reported as a change in equity in the year in which they are approved by the
shareholders’ meeting.
Income tax expense (current and deferred)
Income tax expense includes all taxes calculated on the basis of the taxable income of the Company.
Current and deferred income taxes are calculated using all the elements and information available at the
reporting date, taking into account current laws and considering all the elements that could give rise to
uncertainties in the determination of the amounts due to the tax authorities, as provided for in IFRIC 23.
The income tax expense is recognized in the separate income statement, except to the extent that it relates to
items directly charged or credited to equity, in which case the related tax effect is recognized in the relevant
equity reserves. In the Statements of comprehensive income the amount of income tax expense relating to
each item included as "Other components of the Statements of comprehensive income" is indicated.
Deferred tax liabilities / assets are recognized using the "Balance sheet liability method". They are calculated
on all temporary differences that arise between the tax base of an asset or liability and the relevant carrying
amounts in the separate financial statements. Deferred tax assets relating to unused tax loss carryforwards
are recognized to the extent that it is probable that future taxable income will be available against which they
can be utilized. Tax assets and liabilities are offset when there is a legally enforceable right of offset. Prepaid
tax assets and deferred tax liabilities are determined by adopting the tax rates that are expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or settled.
The other taxes, other than income taxes, are included in "Other operating costs".
Use of accounting estimates
The preparation of separate financial statements and related disclosure in conformity with IFRS requires
management to make estimates and assumptions based also on subjective judgments, past experience and
assumptions considered reasonable and realistic in relation to the information known at the time of the
estimate. Such estimates have an effect on the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, as well as on the amount of revenues
and costs during the year. Actual results could differ, even significantly, from those estimates owing to possible
changes in the factors considered in the determination of such estimates. Estimates are reviewed periodically.
The most significant accounting estimates that involve a high level of subjective assumptions and judgments
by directors are set out below.
Separate Financial Statements of
TIM S.p.A.
Note 2
Accounting policies
300
Financial statements area
Goodwill impairment
Accounting estimates
The impairment test on goodwill is carried out by comparing the carrying amount of cash-generating units
and their recoverable amount. The recoverable amount of a cash-generating unit is the higher of fair value,
less costs to sell, and its value in use. This complex valuation process entails the use of methods such as the
discounted cash flow method, which uses assumptions to estimate cash flows. The fair value net of disposal
costs is based on the current value of forecast cash flow, calculated using a discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. The recoverable
amount depends significantly on the discount rate used in the discounted cash flow model, as well as the
expected future cash flows and the growth rate used for the extrapolation. The key assumptions used to
determine the recoverable amount for the different cash-generating units, including a sensitivity analysis, are
detailed in the Note "Goodwill".
Impairment of tangible and
intangible assets with finite
useful lives and rights of use
assets
At the end of each reporting period, the company assesses whether there is any indication that an asset –
whether tangible or intangible with finite useful lives or a right of use – may be impaired. Both internal and
external sources of information are used for this purpose.
Identifying the impairment indicators, estimating future cash flows and calculating the fair value of each
asset requires the Management to make significant estimates and assumptions in calculating the discount
rate to be used, and the useful life and residual value of the assets. These estimates can have a significant
impact on the fair value of the assets and on the amount of any impairment write-down.
Lease liabilities and rights of use
assets
The value of lease liabilities and corresponding rights of use is determined by calculating the present value of
the lease payments, also bearing in mind whether the renewal of the lease is reasonably certain.
Provision for bad debts
Capitalization/deferment of costs The capitalization/deferment of internal and external costs is a process that entails elements of estimation
and valuation. Specifically, it involves the valuation of: i) the likelihood that capitalized costs will be recovered
through correlated future revenues; and ii) the effective increase in the future economic benefits embodied in
the related asset.
Impairment on trade receivables and on contract assets is carried out using the simplified approach that
involves estimating the loss expected over the life of the receivable at the time of initial recognition and on
subsequent measurements. For each customer segment, the estimate is principally made by calculating the
average expected uncollectibility, based on historical and statistical indicators, possibly adjusted using
forward-looking elements. For some categories of receivables characterized by specific risk elements, specific
measurements are made on individual credit positions.
Depreciation and amortization
Accruals, contingent liabilities
and provisions for employee
benefits
Changes in the economic conditions of the markets, technology and competitive forces could significantly
affect the estimated useful lives of tangible and intangible non-current assets and may lead to a difference
in the timing, and thus on the amount of depreciation and amortization expense.
As regards the provisions for restoration costs, the estimate of future costs to dismantle tangible assets and
restore the site is a complex process that requires the valuation of the liabilities arising from such dismantling
and restoration obligations, which seldom are entirely defined by laws, administrative regulations or contract
clauses, and which normally are to be complied with after an interval of several years.
The accruals related to legal, arbitration and fiscal disputes, as well as regulatory proceedings, are the result
of a complex estimation process based upon the probability of an unfavorable outcome. Provisions for
employee benefits, especially the provision for employee severance indemnities, are calculated using
actuarial assumptions; changes in such assumptions could have a material impact on such liabilities.
Provisions made for contractual risks are also related to any contracts that may have become onerous and
are based on an articulated estimation process that envisages the valuation of the comprehensive negative
margins of the entire contract; they therefore include the non-discretionary costs necessary to fulfill the
commitments made that exceed the economic benefits expected from such contracts.
Revenues
Contract costs (IFRS 15)
Income tax expense (current and
deferred)
Derivative instruments and
equity instruments
The recognition of revenues is influenced by estimates of the amount of discounts, rebates and returns to be
reported as a direct adjustment to revenues, as well as the methods for defining individual product or service
stand-alone selling prices and for determining the duration of the contract when there are renewal options.
The recognition of the costs of obtaining and fulfilling contracts is influenced by the estimated expected
duration of the relationship with the customer, calculated on the basis of the historical turnover indexes and
future estimates. However, this estimate is subject to fluctuations and could only represent customers'
future behavior in a limited way, especially if there are new commercial offers or changes in the competitive
environment.
Income tax expense (current and deferred) are calculated according to a prudent interpretation of the tax
laws in effect. This process sometimes involves complex estimates to determine taxable income and
deductible and taxable temporary differences between the carrying amounts and the taxable amounts. In
particular, deferred tax assets are recognized to the extent that future taxable income will be available
against which they can be recovered. The measurement of the recoverability of deferred tax assets,
recognized based on both unused tax loss carry-forwards to future years and deductible temporary
differences, takes into account the estimate of future taxable income and is based on conservative tax
planning.
The fair value of derivative instruments and equity instruments is determined both using valuation models
which also take into account subjective measurements such as, for example, cash flow estimates, expected
volatility of prices, etc., and on the basis of prices existing in regulated markets or quotations provided by
financial counterparts. For further details refer to the Note "Supplementary disclosures on financial
instruments".
Separate Financial Statements of
TIM S.p.A.
Note 2
Accounting policies
301
As required by IAS 8 (Accounting Policies, Changes in Accounting Estimates and Errors), paragraph 10, in the
absence of a Standard or an Interpretation that specifically applies to a particular transaction, Management,
through careful subjective evaluation techniques, chooses the accounting methods to adopt with a view to
providing financial statements which faithfully represent the financial position, the results of operations and
the cash flows of the Company, which reflect the economic substance of the transactions, which are neutral,
prepared on a prudent basis and complete in all material respects.
New standards and interpretations endorsed by the EU and in
force from January 1, 2021
As required by IAS 8 (Accounting Policies, Changes in Accounting Estimates and Errors), the following is a brief
description of the IFRS in force commencing as of January 1, 2021.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Reform of the interest rates
benchmark - Phase 2
On January 13, 2021, Regulation (EU) no. 2021/25 was issued, which incorporated a set of amendments to the
IFRSs relating to the reform of the interbanking rates offered (IBOR) and other interest rate benchmarks. The
amendments aim to help the entities to provide investors with useful information on the effects of the reform
on the entities’ financial statements.
The amendments integrate those issued in 2019 and focus on the effects of the financial statements when an
entity replaces the old interest rate benchmark with an alternative benchmark rate following the reform.
The changes during this final phase regard:
a. changes to contractual cash flows - an entity shall not eliminate or rectify the carrying amount of the
financial instruments following the amendments required by the reform, but must instead add the
effective interest rate to reflect the change in the alternative benchmark rate;
b. hedge accounting - an entity shall not stop booking the hedges only because the changes have been
made to the hedging documentation as required by the reform, if the hedge continues to meet the other
criteria for booking the hedge;
c. disclosure: an entity shall disclose information on the new risks deriving from the reform and on how it
manages the transition to alternative benchmark rates.
The adoption of these amendments had no effect on the separate financial statements at December 31, 2021.
Amendments to IFRS 16 Leases: COVID-19-related rent concessions beyond June 30,
2021
On August 30, 2021, Regulation (EU) 2021/1421 was issued, endorsing the extension by one year of the period
of application of the practical expedient of IFRS 16 Leases, to assist lessees in accounting for COVID-19-related
rent concessions.
In response to requests from interested parties, and because the COVID-19 pandemic is still at its peak, the
IASB has extended, by an additional year, this method of accounting for rental concessions that reduce only
lease payments due by June 30, 2022.
The original amendment was issued in May 2020 to allow lessees not to account for rent concessions as lease
modifications if they are a direct consequence of the COVID-19 pandemic. The amendment takes effect for
financial years starting on or after April 1, 2021.
The adoption of these amendments had no effect on the separate financial statements at December 31, 2021.
Separate Financial Statements of
TIM S.p.A.
Note 2
Accounting policies
302
NEW STANDARDS AND INTERPRETATIONS ISSUED BY THE
IASB BUT NOT YET APPLICABLE
At the date of preparation of these separate financial statements, the IASB had issued the following new
standards / interpretations which have not yet come into force:
New Standards / Interpretations endorsed by the EU but not yet in force
Amendments to: IFRS 3 Business combinations; IAS 16 Property, Plant and equipment; IAS 37
Provisions, Contingent Liabilities and Contingent Assets; Annual cycle of improvements 2018-2020
Amendments to IAS 1 Presentation of Financial Statements: Disclosure on accounting policies
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition
of accounting estimates
New Standards and Interpretations not yet in force and not yet endorsed by the EU
Amendments to IAS 12 Income taxes: deferred tax related to assets and liabilities arising from a
single transaction
Amendments to IAS 1 Presentation of Financial Statements: classification of liabilities as current or
non-current
Mandatory application
starting from
1/01/2022
1/01/2023
1/01/2023
1/01/2023
1/01/2023
The potential impacts on the separate financial statements from application of these new standards and
interpretations are currently being assessed.
Separate Financial Statements of
TIM S.p.A.
Note 2
Accounting policies
303
NOTE 3
GOODWILL
The item at December 31, 2021 amounted to 12,961 million euros, down 10,090 million euros on December 31,
2020, and relates to the goodwill included in the domestic business segment of TIM S.p.A..
The data reflects the conferrals carried out during 2021 and, specifically:
■ conferral to Noovle S.p.A., effective January 1, 2021, of the TIM S.p.A. business unit comprising the assets
and liabilities and employees involved in the supply of services for the Cloud and Edge Computing business
and the rent of spaces, including virtual, also offered through a dedicated network of data centers.
■ conferral to FiberCop S.p.A., starting March 31, 2021, of the TIM S.p.A. business unit comprising the goods,
assets and liabilities and legal relations organized functionally for the supply of passive fiber or copper
access services, used by TIM, and at the service of other authorized operators (OAOs), by means of the
secondary network (the “last mile”).
When preparing the 2021 financial statements, TIM S.p.A. verified the recoverability of the goodwill value
shown (impairment testing) in compliance with the procedure adopted by the Company, noting a total
impairment loss of 4,120 million euros.
The table below shows the changes to Goodwill in 2021:
(million euros)
Goodwill at January 1, 2021
conferral of Green to Noovle
conferral to FiberCop
Goodwill impairment loss
Goodwill at December 31, 2021
23,051
(1,300)
(4,670)
(4,120)
12,961
In accordance with IAS 36, goodwill is not subject to amortization, but is tested for impairment on at least an
annual basis when preparing the company’s separate financial statements.
If the consolidated financial statements should reveal the need to write down the goodwill relating to a given
CGU, this write-down must be attributed, on the separate financial statements of TIM S.p.A., to the assets
relating to said CGU, which have not already been tested individually, namely goodwill and controlling
investments that are part of the same CGU.
As described in the part on Information on the balance sheet - Assets of the consolidated financial statements,
the impairment tests carried out with reference to the CGUs on the consolidated financial statements
determined the need to write down the goodwill allocated to the Domestic CGU, of which the controlling
investments held by TIM S.p.A. in Fibercop, Noovle and Telecom Italia Sparkle,are part.
On the separate financial statements of TIM S.p.A., this goodwill is partly implicitly due to the controlling
investments in Telecom Italia Sparkle , Noovle and FiberCop (following the conferral by TIM in 2021 to Noovle
and FiberCop, there has been a reduction in the goodwill in the separate financial statements of TIM for
allocation to the controlling investment and related inclusion in the respective carrying amounts) and partly to
goodwill of the Parent company.
As the estimate of the recoverable amount of the aforementioned investments exceeds the respective
carrying amount, the goodwill of the parent company has been written down by the same amount as that of
the consolidated financial statements.
The estimated recoverable value has shown a value of 4,120 million euros in the goodwill of the Domestic
CGU, consequently allocated entirely to TIM S.p.A.
Below, therefore, is an explanation of how impairment testing of the Domestic CGU is carried out for the
consolidated financial statements.
At December 31, 2020, the value configuration used to determine the recoverable amount of the Domestic
CGU was the value in use. The value configuration instead used to determine the recoverable amount at
December 31, 2021 is the fair value estimated on the basis of the income approach, insofar as this is considered
able to best maximize the value of the Group’s activities (the “market participant perspective”), also reflecting
interventions on costs in view of a potential future new, different business structure.
The estimate of fair value on the basis of the income approach was prepared in compliance with IAS 36,
valuation principles and best practice, with reference to the flows of the 2022-2024 Industrial Plan, which is
based on the final results of 2021: (i) it reflects realistic expectations regarding future evolutions; (ii) it brings
into play careful cost cutting actions as preparation for the future business structure; (iii) it maintains the
perspective of use of assets of the domestic market continuing on with the same conditions as at 12.31.2021.
The expected cash flows reported in the 2022-2024 Industrial Plan approved by the Board of Directors have
been critically analyzed and, with the support of expert and industrial appraisers, the average representativity
has been assessed. Expected average cash flows for the 2022-2024 Industrial Plan were extrapolated for an
additional two years, for which future cash flows were explicitly forecast for a period of five years (2022-2026).
The extrapolation of data for 2025-2026 was necessary in order to intercept market, competition and industrial
trends that will become manifest beyond the time horizon of the Industrial Plan to be captured. It is specified
that where inputs are present that cannot be observed, the fair value thus determined is assigned as level 3 of
the fair value hierarchy, as envisaged by IFRS 13 - Fair value measurement.
Separate Financial Statements of
TIM S.p.A.
Note 3
Goodwill
304
As regards the estimate of the terminal value, the sustainable long-term cash flow was assumed to be the
extrapolation of the estimated cash flow at 2026, adjusted as necessary to take into consideration a suitable
level of long-term capital expenditure, normalized by the effects tied to the development of innovative
technology projects in place during the plan years. Furthermore, with specific reference to the incremental
share of the value deriving from 5G license use and therefore from the development of new and innovative
business areas, a measurement model has been adopted that takes into account the net incremental flows for
a defined period of time which is based on the duration of the license. This approach is consistent with the
need to include in the configuration of value, on one hand the outflows deriving from the payment of the
license and the capex to support its development (as per the Industrial Plan), and on the other the positive net
flows from the incremental business component of the license acquisition that will develop over a broad period
of time and over the five years of explicit forecast.
The cost of capital used to discount the future cash flows in the estimates of fair value:
■ was estimated using the Capital Asset Pricing Model (CAPM), which is one of the generally accepted
■
application criteria referred to in IAS 36;
reflects current market estimates of the time value of money and the specific risks associated with the
asset groups; includes appropriate yield premiums for country risk;
■ was calculated using comparative market parameters to estimate the “Beta coefficient” and the weighting
coefficient of the equity and debt capital.
The following are provided below:
■
■
■
the weighted average cost of capital (WACC rate) used to discount the future cash flows and the
equivalent rate before tax;
the growth rate used to estimate the residual value after the explicit forecast period (the G-Rate),
expressed in nominal terms and related to the cash flows in their functional currency;
implicit capitalization rates resulting from the difference between the cost of capital, after tax, and the G-
Rate.
Principal parameters for the estimates of value in use
WACC
WACC before tax
Growth rate beyond the explicit period (g)
Capitalization rate after tax (WACC-g)
Capitalization rate before tax (WACC-g)
Capex/Revenues, perpetual
5.12 %
6.71 %
0.35 %
4.77 %
6.36 %
15.75 %
The growth rate in the terminal value “g” was estimated taking into account the expected evolution of
demand for the various business areas, overseen in terms of investments and competences also by the
subsidiaries Noovle and Fibercop. The growth rate thus estimated falls within the range of growth rates
applied by analysts who monitor TIM shares.
The phase of capital expenditure, competitive positioning and the technological infrastructure operated was
taken into account in estimating the level of investment needed to sustain the perpetual development of cash
flows after the explicit forecast period.
A structural deterioration of the relevant parameters of the domestic assets and, notably, the WACC, may call
for further impairment.
Separate Financial Statements of
TIM S.p.A.
Note 3
Goodwill
305
NOTE 4
INTANGIBLE ASSETS WITH A FINITE USEFUL
LIFE
as follows:
(million euros)
Investments Depreciation and
12/31/2019
Disposals
The item decreased by 222 million euros compared to December 31, 2020. The breakdown and movements are
amortization (Write-downs)
/Reversals
changes 12/31/2020
Other
Mergers/
Conferral of
Branches
of Business
Industrial patents and
intellectual property
rights
Concessions, licenses,
trademarks and
similar rights
Other intangible
assets
Work in progress and
advance payments
Total
3,379
1
1,089
5,818
(million euros)
12/31/2020
Industrial patents and
intellectual property
rights
Concessions, licenses,
trademarks and
similar rights
Other intangible
assets
Work in progress and
advance payments
Total
1,303
3,000
—
1,197
5,500
1,349
11
482
(910)
(379)
(1)
3
14
477
959
(1,290)
—
Conferral of
Noovle Investments Depreciation and
amortization (Write-downs)
/Reversals
371
1,303
—
3,000
—
—
(1)
(1)
(371)
—
1,197
5,500
Disposals
changes 12/31/2021
Other
(114)
514
(732)
(380)
1
540
1,055
(67)
(181)
(1,112)
—
310
1,281
1
(292)
19
(3)
(3)
2,620
2
1,375
5,278
The data reflects the conferral to Noovle S.p.A., effective January 1, 2021, of the TIM S.p.A. business unit
comprising the assets and liabilities and employees involved in the supply of services for the Cloud and Edge
Computing business and the rent of spaces, including virtual, also offered through a dedicated network of data
centers. Specifically, 181 million euros of intangible assets relating to patent rights and work in progress on
technological assets were conferred.
Industrial patents and intellectual property rights consisted of software, patents and television rights.
In 2021, the launch of the Digital Enterprise project demonstrated the need to verify the actual and future
duration of the systems impacted. Therefore, IT applications were analyzed and it was verified that their actual
lifecycle amounts to around 6 years. Thus, the amortization period was revised for both fixed and mobile IT
software development assets, increasing it from 3 to 6 years. In 2021, this had an impact of around 115 million
euros in lesser amortization. In 2022 and 2023 the estimated impact, calculated on the stock of assets at
December 31, 2021, amounts to around 69 million euros and around 2 million euros, respectively in lesser
amortization.
Regarding industrial patents and intellectual property rights, the following is specified:
■
television rights for TIM multimedia platforms are amortized over the duration of the contracts;
■ application and plant operation software, purchased outright and with user licenses, is amortized over an
expected useful life of two, three or six years;
■ patents are amortized over five years.
These decreased by 22 million euros mainly due to the impacts of the conferral to Noovle S.p.A., as well as the
amortization during the year, partially offset by the entry into operation of work in progress.
Separate Financial Statements of
TIM S.p.A.
Note 4
Intangible assets with a finite useful life
306
Concessions, licenses, trademarks and similar rights mainly related to the unamortized cost of licenses for
mobile and fixed telecommunications services. Compared to December 31, 2020, they are down by 380 million
euros, mainly due to period amortization.
The amount of telephone licenses and similar rights in operation at December 31, 2021 (2,620 million euros)
and their useful lives are detailed below:
Type
Maturity
Residual amount
at 12/31/2021
(thousands of
euros)
Useful life
(Years)
Amortization expense
for 2021
(thousands of euros)
UMTS
UMTS 2100 MHz
WiMax
LTE 1800 MHz
LTE 800 MHz
LTE 2600 MHz
L Band (1452-1492 MHz)
900 and 1800 MHz band
3600-3800 MHz band (5G)
26.5-27.5 GHz band (5G)
—
—
1,304
68,568
480,252
52,817
131,765
437,987
1,419,925
27,806
18
12
15
18
17
17
14
11
19
19
12/31/2021
12/31/2021
5/31/2023
12/31/2029
12/31/2029
12/31/2029
12/31/2029
12/31/2029
12/31/2037
12/31/2037
134,279
7,362
921
8,571
60,032
6,602
16,471
54,748
88,745
1,738
Work in progress and advance payments amounted to 1,375 million euros (1,197 million euros at December 31,
2020) and rise by 178 million euros. They include 680 million euros relating to the rights to frequencies in the
694-790 MHz bands that are not yet operational and work in progress mainly relating to software development
and investments for the digital evolution of Network Infrastructures.
They also include 240 million euros relating to the extension through to December 31, 2029 of the expiry of the
rights of use in the bandwidth of 2100 MHz, originally envisaged as December 31, 2021.
Capital expenditures for 2021 came to 1,055 million euros, up by 96 million euros compared to 2020, mainly
due to the aforementioned extension of rights of use on the bandwidth of 2100 MHz. That increase was
partially offset by lower investments linked to the conferral of assets to Noovle.
They include 146 million euros of internally generated assets (180 million euros in 2020), involving
development and evolutionary maintenance of software programs and platforms and innovative network
engineering and solution, application and service design activities.
Amortization of intangible assets amounted to 1,112 million euros and decreased by 178 million euros
compared to the amount recognized in 2020 (1,290 million euros). This performance is mainly due to the
specified revision of the useful life of the IT software applications. Amortization is recorded in the income
statement under the components of EBIT.
The gross carrying amount, accumulated impairment losses and accumulated amortization at December 31,
2021 and December 31, 2020 can be summarized as follows:
(million euros)
Gross carrying
amount
12/31/2020
Accumulated
impairment
losses
Accumulated
amortization
Net carrying
amount
Industrial patents and intellectual property rights
Concessions, licenses, trademarks and similar rights
Other intangible assets
Work in progress and advance payments
Total
7,610
6,523
56
1,197
15,386
(1)
(6,306)
(3,523)
(56)
(1)
(9,885)
1,303
3,000
—
1,197
5,500
Separate Financial Statements of
TIM S.p.A.
Note 4
Intangible assets with a finite useful life
307
(million euros)
Gross carrying
amount
12/31/2021
Accumulated
impairment
losses
Accumulated
amortization
Net carrying
amount
Industrial patents and intellectual property rights
Concessions, licenses, trademarks and similar rights
Other intangible assets
Work in progress and advance payments
Total
7,471
6,523
57
1,375
15,426
(1)
(6,189)
(3,903)
(55)
(1)
(10,147)
1,281
2,620
2
1,375
5,278
With regard to the gross carrying amounts of intangible assets with a finite useful life, in 2021, disposals of 442
million euros were made, relating to intellectual property rights, almost fully amortized, which mainly
concerned releases that were obsolete following the introduction of the new ERP S4HANA software system.
Separate Financial Statements of
TIM S.p.A.
Note 4
Intangible assets with a finite useful life
308
NOTE 5
TANGIBLE ASSETS
The item decreased by 3,112 million euros compared to December 31, 2020. The breakdown and movements
are as follows:
(million euros)
12/31/2019 Mergers/Confer
ral of Branches
of Business
Investments Depreciation and
amortization (Write-downs)/
Reversals
Disposals
Other
changes 12/31/2020
Land
Buildings (civil and
industrial)
Plant and equipment
Manufacturing and
distribution equipment
Other
Construction in progress
and advance payments
Total
226
565
8,932
25
187
656
10,591
5
9
18
981
4
56
400
1,468
5
(33)
(1,623)
(11)
(83)
(1,750)
(3)
(1)
(4)
(2)
22
369
3
23
(378)
(10)
39
232
571
8,660
21
183
668
10,335
(8)
(8)
(million euros)
12/31/2020
Conferral of
Noovle
FiberCop Investments
Conferral of
Depreciation
and
amortization
Impairment
(losses) /
reversals
Disposals
Other
changes 12/31/2021
Land
Buildings (civil and
industrial)
Plant and equipment
Manufacturing and
distribution equipment
Other
Construction in progress
and advance payments
Total
232
571
8,660
21
183
668
10,335
(30)
(122)
(48)
(2,414)
(62)
(100)
(32)
(362)
(2,446)
9
705
4
60
389
1,167
(28)
(1,338)
(9)
(57)
—
(19)
(5)
(2)
25
283
2
27
(350)
(1,432)
—
(26)
(13)
202
455
5,829
18
146
573
7,223
The data reflects the conferrals carried out during 2021 and, specifically:
■ conferral to Noovle S.p.A., effective January 1, 2021, of the TIM S.p.A. business unit comprising the assets
and liabilities and employees involved in the supply of services for the Cloud and Edge Computing business
and the rent of spaces, including virtual, also offered through a dedicated network of data centers. 362
million euros in tangible assets was conferred, relating to land, buildings (civil and industrial), technological
systems and work in progress;
■ conferral to FiberCop S.p.A., starting March 31, 2021, of the TIM S.p.A. business unit comprising the goods,
assets and liabilities and legal relations organized functionally for the supply of passive fiber or copper
access services, used by TIM, and at the service of other authorized operators (OAOs), by means of the
secondary network (the “last mile”). 2,446 million euros in tangible assets was conferred, relating to copper
network, optical fiber and aerial pole technological systems and work in progress.
Moreover, on June 30, 2021, the purchase of the BT Italia Business Unit took effect, offering services to public
administration customers and small and medium businesses/enterprises (SMB/SME). The purchase also
includes support for customers of the SMB Business Unit, supplied by Atlanet, the BT Contact Center of
Palermo. As a result of this operation, TIM acquired 7 million euros in other tangible assets relating to
equipment provided to personnel.
Land includes both built-up land (with buildings or light constructions) and other available land (on which
various building works stand that are not recorded in the land registry, such as pylons, building podia, etc.). It
should be noted that land, including land pertaining to buildings, is not depreciated. This decreased by 30
million euros compared to December 31, 2020, following the conferral to Noovle S.p.A..
The item Buildings (civil and industrial) includes buildings for industrial use hosting telephone exchanges or
offices and light constructions (small prefabricated buildings and stacked containers). The item decreased by
116 million euros compared to December 31, 2020, following the conferral to Noovle S.p.A..
item Plant and machinery represents the technical
infrastructure used for the provision of
The
telecommunications services (transport and distribution of voice/data traffic). In detail it consists of switching
and power supply systems, copper and fiber optic backbones, transmission equipment for fixed and mobile
Separate Financial Statements of
TIM S.p.A.
Note 5
Tangible assets
309
networks and traffic termination telephone systems used by the various customer segments. This item
decreased by 2,831 million euros compared to December 31, 2020, mainly as a result of the impacts of the
conferral to FiberCop S.p.A. (2,414 million euros), partially offset by the capital expenditure and exercisability
mainly relating to the underground and aerial copper network (89 million euros), access and carrier network in
fiber optics (148 million euros), LTE / UMTS core + access (75 million euros), transmission equipment including
SDH-Wdm (87 million euros), data network and switching (26 million euros), NGAN equipment (34 million
euros), power supply systems (20 million euros) and fixed and mobile commercial products for customer rental
contracts (174 million euros).
Manufacturing and distribution equipment consists of instruments and equipment used for the operation and
maintenance of plant and equipment.
The item Other mainly consists of hardware for the functioning of the data centers and for work stations,
furniture and fixtures and, to a minimal extent, transport vehicles and office machines. It decreased by 37
million euros compared to December 31, 2020, mainly as a result of the impacts of the conferral to Noovle
S.p.A. (62 million euros). Other changes included 7 million euros pertaining to the aforementioned purchase of
the BT Italia business units.
Construction in progress and advance payments decreased by 95 million euros compared to December 31,
2020, mainly due to the impacts of the conferral to Noovle S.p.A. (100 million euros) and to FiberCop S.p.A. (32
million euros). These include the internal and external costs incurred for the acquisition and internal
production of tangible assets, which are not yet in use. Other changes included the entry intro operation of
capitalizations from previous years.
Disposals amounted to 26 million euros and mainly related to the sale of Dark Fiber for network
infrastructures (installation, transmission and access), disposals with the recovery of rebate credit notes,
disposals of UMTS devices and the abandonment of sites for Base Transceiver Stations.
Capital expenditures for 2021 came to 1,167 million euros, down by 301 million euros compared to 2020. These
consist of switching and power supply systems, copper and fiber optic backbones, transmission equipment for
fixed and mobile networks and traffic termination telephone systems used by the various customer segments.
They include 141 million euros of internally generated assets (201 million euros in 2020), involving the design,
construction and testing of network infrastructure and access and transmission networks.
Depreciation of tangible assets totaled 1,432 million euros, a decrease of 318 million euros compared to 2020.
In 2021, the acceleration of depreciation has been recorded, as a consequence of both the switch-off of 3G,
expected for June 2022 (equal to approximately 23 million euros) and the switch-off of part of the copper
access network, hypothesized for end 2030 (equal to 16 million euros).
Depreciation is calculated using the straight-line method over the remaining useful lives of the assets in
accordance with the depreciation plan reviewed annually to take account of useful lives by single class of fixed
asset. The effects of any changes in the useful life are recognized in the separate income statement
prospectively.
Depreciation for the year 2021 is calculated on a straight-line basis over the estimated useful lives of the assets
according to the following minimum and maximum rates:
Buildings (civil and industrial)
Plant and equipment
Manufacturing and distribution equipment
Other
3% – 5.55%
3% - 50%
20%
11% - 33%
Separate Financial Statements of
TIM S.p.A.
Note 5
Tangible assets
310
The gross carrying amount, accumulated impairment losses and accumulated depreciation at December 31,
2021 and December 31, 2020 can be summarized as follows:
(million euros)
Land
Buildings (civil and industrial)
Plant and equipment
Manufacturing and distribution
equipment
Other
Construction in progress and
advance payments
Total
(million euros)
Land
Buildings (civil and industrial)
Plant and equipment
Manufacturing and distribution
equipment
Other
Construction in progress and
advance payments
Total
Gross carrying
amount
232
1,822
63,163
291
2,217
676
68,401
12/31/2020
Accumulated
impairment losses
Accumulated
depreciation
Net carrying amount
(13)
(3)
(8)
(24)
(1,251)
(54,490)
(270)
(2,031)
(58,042)
232
571
8,660
21
183
668
10,335
Gross carrying
amount
12/31/2021
Accumulated
impairment losses
Accumulated
depreciation
Net carrying amount
202
1,666
49,318
295
1,307
575
53,363
(1,211)
(43,480)
(277)
(1,158)
(9)
(3)
(2)
(14)
(46,126)
202
455
5,829
18
146
573
7,223
With regard to the gross carrying amounts of non-current tangible assets, in 2021 disposals were made for a
total value of 535 million euros, mainly in relation to fully depreciated assets, including: access network (155
million euros), switching systems (148 million euros), underground fiber optics (57 million euros), UMTS and
network transmission systems and equipment (71 million euros), rented terminals (31 million euros), power
supply and conditioning systems (6 million euros), HW data centers (5 million euros), civil buildings (3 million
euros) and furniture, furnishings and office machines (42 million euros).
Separate Financial Statements of
TIM S.p.A.
Note 5
Tangible assets
311
NOTE 6
RIGHTS OF USE ASSETS
as follows:
(million euros)
Investments
12/31/2019 Mergers/Conf
erral of
Branches of
Business
The item decreased by 776 million euros compared to December 31, 2020. The breakdown and movements are
Depreciation and
amortization (Write-downs)
/Reversals
Increases in
lease
contracts
Disposals
Other
changes 12/31/2020
Property
Plant and equipment
Equipment
Other
Assets in progress and
advance payments
Total
3,769
979
—
117
41
4,906
6
6
12
9
37
58
687
191
11
889
(402)
(111)
(29)
(542)
(880)
(241)
(4)
—
(1,125)
(597)
525
(2)
(22)
(96)
2,589
1,358
—
93
56
4,096
(million euros)
12/31/2020
Conferral of
Noovle
FiberCop Investments Increases in
Conferral of
lease
contracts
Depreciation
and
amortization
(Write-downs)
/Reversals Disposals
Other
changes 12/31/2021
Rights of use on
intangible assets
Rights of use
Concessions, Licenses,
Trademarks and Similar
Rights
Work in progress and
advance payments
Rights of use on
tangible assets
Property
Plant and equipment
Other
Construction in progress
and advance payments
Total
—
—
—
2,589
1,358
93
56
4,096
4,096
—
—
(90)
(1)
(91)
(91)
4
4
186
50
13
249
253
(1)
(1)
(288)
(136)
(27)
(451)
(452)
3
—
3
2,447
758
77
35
3,317
3,320
—
—
—
(14)
(542)
(2)
(558)
(558)
30
(18)
(39)
(27)
(27)
—
—
—
27
27
27
—
34
19
19
72
72
The data reflects the conferrals carried out during 2021 and, specifically:
■ conferral to Noovle S.p.A., effective January 1, 2021, of the TIM S.p.A. business unit comprising the assets
and liabilities and employees involved in the supply of services for the Cloud and Edge Computing business
and the rent of spaces, including virtual, also offered through a dedicated network of data centers. 91
million euros in rights of use was conferred, relating to contracts for real estate leases payable;
■ conferral to FiberCop S.p.A., starting March 31, 2021, of the TIM S.p.A. business unit comprising the goods,
assets and liabilities and legal relations organized functionally for the supply of passive fiber or copper
access services, used by TIM, and at the service of other authorized operators (OAOs), by means of the
secondary network (the “last mile”). 130 million euros in agreements for the purchase of network
infrastructure were conferred, and following the conferral, 157 million euros of higher rights of use were
recognized for the start, from the date of conferral, of TIM IRUs payable on portions of the secondary
network conferred to FiberCo, serving the TIM network.
The rights of use on intangible assets amounted to 3 million euros and include the recording as an IFRS 16
lease, starting 2021, of an agreement that can be qualified as “Software as a Service - SaaS”, in exchange for
which TIM has acquired the right to make exclusive use of software licenses residing on partitions of third party
hardware platforms dedicated exclusively to the Company.
The rights of use on tangible assets amounted to 3,317 million euros and decreased compared to December
31, 2020 by 779 million euros. In particular:
■
■
the item Property includes buildings and land under lease contracts and the related building adaptations.
This decreased by 142 million euros, mainly due to the aforementioned conferral to Noovle S.p.A.;
the item Plant and equipment mainly includes rights of use on infrastructures for telecommunications
services. This decreased by 600 million euros, mainly due to the derecognition of the rights of use (538
million euros) connected with the previous Pay per Use contract entered into with Flash Fiber, as a result of
the start of the new Master Service Agreement (MSA) entered into by TIM S.p.A. and FiberCop S.p.A., due
to the conferral and merger of FiberCop with Flash Fiber;
■
the item Other mainly comprises the finance leases on autovehicles.
Investments consist of the acquisition of IRU transmission capacity (27 million euros) and incremental and
improvement expenses incurred for leased property and non-property assets (45 million euros).
Separate Financial Statements of
TIM S.p.A.
Note 6
Rights of use assets
312
Increases in lease contracts include the higher value of the rights of use recorded as a result of new leases,
increases of lease payments and renegotiations of agreements existing for both land and buildings for office
use and industrial relationship over time, to infrastructure sites for the mobile telephone network infrastructure
and network.
In accordance with IFRS 16 (Leases), lease liabilities are presented through the recognition of a financial liability
in the statement of financial position at the present value of future lease payments, against the recognition of
a rights-of-use asset of the leased asset.
The item includes the recognition of the rights of use for the SaaS agreement and for new property lease
contracts with Noovle S.p.A. for the use of two data centers starting in January 2021.
The item Disposals represents the book value of the assets from property lease contracts (and related
improvements) issued in advance, net of the value of the residual financial debt. The item includes 538 million
euros associated with the specified derecognition of the rights of use connected with the previous Pay per Use
agreement entered into with Flash Fiber.
The item Other changes includes the transfers during the year and the changes related to the lower value of
rights of use recorded as a result of contractual changes during the year, mainly for lease liabilities under
IFRS16.
Depreciation and impairment losses have been recorded in the income statement as components of EBIT.
The gross carrying amount, accumulated impairment losses and accumulated depreciation at December 31,
2021 and December 31, 2020 can be summarized as follows:
(million euros)
Property
Plant and equipment
Equipment
Other
Assets in progress and advance payments
Total
Gross carrying
amount
4,652
1,672
220
56
6,600
12/31/2020
Accumulated
impairment losses
(13)
Accumulated
depreciation
(2,050)
(314)
(127)
(13)
(2,491)
Net carrying
amount
2,589
1,358
—
93
56
4,096
(million euros)
Rights of use on intangible assets
Rights of use Concessions, Licenses,
Trademarks and Similar Rights
Work in progress and advance payments
Rights of use on tangible assets
Property
Plant and equipment
Equipment
Other
Assets in progress and advance payments
Total
Gross carrying
amount
12/31/2021
Accumulated
impairment losses
Accumulated
depreciation
Net carrying
amount
4
4
4,766
1,096
224
35
6,121
6,125
(1)
(1)
(2,306)
(338)
(147)
(2,791)
(2,792)
3
—
3
2,447
758
—
77
35
3,317
3,320
—
(13)
(13)
(13)
With regard to the gross carrying amounts of rights of use of third party assets, in 2021 disposals were made
for a total value of 650 million euros. The assets most affected were: rights of use over IRU fiber (607 million
euros), improvements in third party establishments (2 million euros), rented properties (25 million euros), base
transceiver stations (7 million euros) and leased cars (9 million euros).
Separate Financial Statements of
TIM S.p.A.
Note 6
Rights of use assets
313
NOTE 7
INVESTMENTS
These increased 3,809 million euros compared to December 31, 2020 and included:
(million euros)
12/31/2021
of which Financial
Instruments
12/31/2020 of which Financial
Instruments
Subsidiaries
Associates and joint ventures
Other investments
Total
10,990
29
35
11,054
—
35
35
7,209
6
30
7,245
—
30
30
Further details on Financial Instruments are provided in the Note "Supplementary disclosures on financial
instruments".
As permitted by IFRS 9, TIM S.p.A. now measures all Other Investments at fair value through other
comprehensive income (FVTOCI).
In 2021 the main transactions with subsidiaries, associates, joint ventures and other equity investments of TIM
S.p.A. were the following:
■ Noovle S.p.A.: starting January 1, 2021, the conferral is effective to Noovle S.p.A. of the TIM S.p.A. business
unit comprising the assets and liabilities and employees involved in the supply of services for the Cloud and
Edge Computing business and the rent of spaces, including virtual, also offered through a dedicated
network of data centers;
■ FiberCop S.p.A.: starting March 31, 2021, the conferral is effective to FiberCop S.p.A. of the TIM S.p.A.
business unit comprising the goods, assets and liabilities and legal relations organized functionally for the
supply of passive fiber or copper access services, used by TIM, and at the service of other authorized
operators (OAOs), by means of the secondary network (the “last mile”). At the same time, the purchase
was completed by Teemo Bidco, an indirect subsidiary of KKR Global Infrastructure Investors III L.P., of
37.5% of FiberCop from TIM and Fastweb has subscribed FiberCop shares corresponding to 4.5% of the
company’s capital, through the conferral of the stake held in Flash Fiber, which was simultaneously
incorporated into FiberCop;
■ on June 30, 2021, the purchase of the BT Italia Business Unit was completed, offering services to public
administration customers and small and medium business/enterprise (SMB/SME) customers. The purchase
also includes support for customers of the SMB Business Unit, supplied by Atlanet, the BT Contact Center
of Palermo;
■ TIM Tank S.r.l.: on April 1, 2021, it was merged into Telecom Italia Ventures S.r.l. with accounting and tax
effects backdated to January 1, 2021;
■ Telecom Italia Trust Technologies S.r.l.: starting April 1, 2021, the investment in the company was
conferred by TIM S.p.A. to Olivetti S.p.A.;
■ TIM Servizi Digitali S.p.A.: company established on July 30, 2021; the company’s corporate purpose is the
development and maintenance of plants for the supply of telecommunications services; in September
2021, the company stipulated a rental contract with Sittel S.p.A. for a business unit consisting of the
“construction”, “delivery” and “assurance” of telecommunications networks and plants;
■ Olivetti Payments Solutions S.p.A.: company established on 1 December 2021; the company’s corporate
object is the management of equity investments, study and research activities, commercial, industrial,
financial movable and real estate activities.
Movements during 2021 for each investment and the corresponding amounts at the beginning and end of the
year are reported below. The list of investments in subsidiaries, associates and joint ventures at December 31,
2021 is presented in compliance with Article 2427 of the Italian Civil Code and reported in the Note "List of
investments in subsidiaries, associates and joint ventures".
Separate Financial Statements of
TIM S.p.A.
Note 7
Investments
314
Investments
(thousands of
euros)
Carrying
amount at
12/31/2020
Mergers/
demergers
spin-offs
of
business
units
Acquisitions/
Subscriptions/
Payments to
cover Losses
Disposals/
Reimbursem
ents
Impairment
losses/Revers
als /Adj. Fair
value
Other
changes and
reclassificatio
ns (*)
Total
changes
Carrying
amount at
12/31/2021
Investments in subsidiaries
CD FIBER S.r.l.
FLASH FIBER S.r.l.
FIBERCOP S.p.A.
DAPHNE 3 S.p.A.
OLIVETTI S.p.A.
NOOVLE S.p.A.
SOCIETA' BENEFIT
NOOVLE S.r.l.
TELECOM ITALIA
CAPITAL S.A.
TELECOM ITALIA
FINANCE S.A.
TELECOM ITALIA
LATAM PARTICIPAÇÕES
E GESTÃO
ADMINISTRATIVA
TELECOM ITALIA SAN
MARINO S.p.A.
TELECOM ITALIA
SPARKLE S.p.A.
TELECOM ITALIA
TRUST TECHNOLOGY
TELECOM ITALIA
VENTURES S.r.l.
TELECONTACT CENTER
S.p.A.
TELENERGIA S.r.l.
TELSY S.p.A.
TI AUDIT COMPLIANCE
LATAM (in liquidation)
S.A.
TIM BRASIL SERVIÇOS E
PARTICIPAÇÕES S.A.
TIM RETAIL S.r.l.
TIM MY BROKER S.r.l.
TIM SERVIZI DIGITALI
S.p.A.
TIM TANK S.r.l.
43
250,435
(250,444)
50 4,643,000
340,161
10,829
15,134
50 1,079,000
(12,743)
12,743
2,388
5,914,971
—
7,565
586,886
63,061
10,000
(1,741,125)
(43,847)
9
—
(250,435)
325 2,965,261
(43,847)
25,237
1,079,522
(12,743)
103
522
—
—
—
—
43
—
2,965,311
296,314
36,066
1,079,572
—
2,388
5,914,971
—
7,565
633
633
587,519
8,506
(15,134)
1,846
24,840
33,027
6,621
(7,078)
7
(8,506)
50,789
12,544
50
19,519
181
—
15,116
10
24,839
(24,839)
7,208,732 5,458,814
50
(50)
106,138
(1,784,972)
(507)
—
52,635
12,611
50
19,522
181
—
67
3
67
—
3
—
—
27
15,143
27
10
—
—
—
(24,839)
—
1,696 3,781,169 10,989,901
(*) The column "Other changes and reclassifications” includes 715 thousand euros of the fair value of the charges relating to the allocation of
compensation plans to employees of Companies of the Telecom Group, under the 2020 Broad-Based Share Ownership Plan.
Separate Financial Statements of
TIM S.p.A.
Note 7
Investments
315
Acquisitions/
Subscriptions/
Payments to
cover Losses
Disposals/
Reimbursem
ents
Impairment
losses/Rever
sals /Adj. Fair
value
Other
changes and
reclassificati
ons
Total
changes
Carrying
amount at
12/31/2021
(thousands of
euros)
Carrying
amount at
12/31/2020
Mergers/
demergers
spin-offs
of
business
units
Investments in associates and joint ventures
AREE URBANE (in
liquidation)
—
ASSCOM INSURANCE
BROKERS
INFRASTRUTTURE
WIRELESS ITALIANE
NORDCOM
TIGLIO I
TIGLIO II (in liquidation)
TIMFin
Consorzio EO (in
liquidation)
—
—
2,143
1,189
88
2,940
—
6,360
(1,189)
(88)
24,010
—
24,010
(1,277)
—
—
—
—
—
—
(1,189)
(88)
24,010
—
22,733
—
—
—
2,143
—
—
26,950
—
29,093
(thousands of
euros)
Carrying
amount at
12/31/2020
Mergers/
demergers
spin-offs of
business
units
Acquisitions/
Subscriptions/
Payments to
cover Losses
Disposals/
Reimbursem
ents
Impairment
losses/Revers
als /Adj. Fair
value
Other
changes and
reclassificati
ons
Total
changes
Carrying
amount at
12/31/2021
Investments in other companies
BANCA UBAE
FIN. PRIV.(**)
2,573
15,981
IST. ENCICLOPEDIA
ITALIANA G. TRECCANI
ISTITUTO EUROPEO DI
ONCOLOGIA
Other minor
investments
4,495
2,728
3,723
29,500
—
—
305
305
(347)
(347)
Total Investments
7,244,592 5,458,814
130,453
(1,786,596)
(**) Recognized investment measured at fair value through other comprehensive income (FVTOCI).
(538)
6,465
(295)
15
(168)
5,479
4,972
(538)
6,465
(295)
15
(209)
5,438
2,035
22,446
4,200
2,743
3,514
34,938
1
1
1,697 3,809,340
11,053,932
Separate Financial Statements of
TIM S.p.A.
Note 7
Investments
316
NOTE 8
NON-CURRENT AND CURRENT FINANCIAL
ASSETS
Non-current and current financial assets were broken down as follows:
(million euros)
12/31/2021
12/31/2020
Non-current financial assets
Financial receivables and other non-current financial assets
Financial receivables from subsidiaries
Financial receivables from associates and joint ventures
Financial receivables from other related parties
Receivables from employees
Hedging derivatives relating to hedged items classified as non-current
assets/liabilities of a financial nature
Non-hedging derivatives
Other financial receivables
Financial receivables for lease contracts
Total non-current financial assets
Securities other than investments, other financial receivables and
other current financial assets
Securities other than investments
Measured at amortized cost (AC)
Measured at fair value through other comprehensive income (FVTOCI)
Measured at fair value through profit or loss (FVTPL)
Financial receivables and other current financial assets
Liquid assets with banks, financial institutions and post offices (with
maturity over 3 months)
Receivables from employees
Hedging derivatives relating to hedged items classified as current
assets/liabilities of a financial nature
Non-hedging derivatives
Financial receivables from parent companies
Financial receivables from subsidiaries
Financial receivables from associates and joint ventures
Other short-term financial receivables
(a)
Financial receivables for lease contracts
Cash and cash equivalents
Total current financial assets
Total non-current and current financial assets
(b)
(c)
(d)
e=(b+c+d)
(f)=(a+e)
2,520
—
—
36
366
1,305
211
4,438
11
4,449
—
—
—
—
—
11
25
68
—
5
7
116
116
39
3,558
3,713
8,162
500
—
—
38
500
1,239
213
2,490
17
2,507
—
—
—
—
—
12
46
49
—
1
—
2
110
110
44
1,766
1,920
4,427
Further details on Financial Instruments are provided in the Note "Supplementary disclosures on financial
instruments".
Financial receivables for lease contracts (current and non-current) amounted to 50 million euros (61 million
euros at December 31, 2020) and included the following contractual relationships recognized in accordance
with the financial method envisaged by IFRS 16:
■ commercial offers for Consumer and Business customers involving the rental of ADSL routers (2 million
euros, 7 million euros at December 31, 2020);
■ agreements for the sale of network infrastructure in IRU with deferred collection over time (33 million
euros, 32 million euros at December 31, 2020) recognized using the financial method envisaged by IFRS 16
given the contractual term substantially close to the economic life of the asset;
■ contracts for the lease of commercial products to customers, for an amount of 15 million euros (21 million
euros at December 31, 2020). The financial receivables for lease assets are offset by the financial debt for
the corresponding leases payable.
Separate Financial Statements of
TIM S.p.A.
Note 8
Non-current and current financial assets
317
At December 31, 2020, financial receivables for active lease contracts also included 1 million euros for contracts
for the rental of products to TIM customers with ancillary services ("full rent formula") and leasing contracts
entered into in prior years by Teleleasing with TIM customers.
Receivables from employees (current and non-current) amounted to 47 million euros (50 million euros at
December 31, 2020) and included the remaining amount due on loans granted.
Hedging derivatives amounting to 391 million euros (546 million euros at December 31, 2020), consisted of:
■ hedged items classified as non-current assets/liabilities of a financial nature (366 million euros), mainly
pertaining to the mark-to-market spot valuation component of cash flow hedge derivative contracts (of
which 150 million euros entered into with Telecom Italia Finance S.A.) and fair value hedge derivative
contracts;
■ hedged items classified as current assets/liabilities of a financial nature (25 million euros), relating to the
accrued income component of cash flow hedges and fair value hedges.
Non-hedging derivatives amounted to 1,373 million euros (1,288 million euros at December 31, 2020) and
included the asset value of transactions that TIM S.p.A. carries out on behalf of Group companies under
centralized treasury arrangements. This item is offset by the corresponding item classified in financial liabilities.
There are also IRS derivatives of 18 million euros belonging to fair value hedges of bond loans in euros,
discontinued starting from June 2021 due to the failure of the prospective efficiency tests carried out at
December 31, 2021.
The non-hedging derivatives consisted of:
■
■
items classified under Non-current financial assets (1,305 million euros), which refer to the mark-to-market
spot valuation component of the non-hedging derivatives;
items classified as current financial assets (68 million euros), relating to the accrued income component on
non-hedging derivative contracts.
Further details are provided in the Note "Derivatives".
Other financial receivables refer 205 million euros to the loan that TIM S.p.A. is owed by Ardian (through the
financial vector Impulse I) following the transaction by means of which TIM S.p.A. conferred 30.2% of INWIT’s
shares to Daphne 3.
Cash and cash equivalents increased by 1,792 million euros compared to December 31, 2020 and were broken
down as follows:
(million euros)
Liquid assets with banks, financial institutions and post offices
Checks, cash and other receivables and deposits for cash flexibility
Receivables from subsidiaries
Total
12/31/2021
3,532
—
26
3,558
12/31/2020
1,673
—
93
1,766
The different technical forms of investing available cash can be analyzed as follows:
■ maturities: investments have a maximum maturity of three months;
■ counterparty risk: investments are made with leading banking and financial institutions with high credit
quality and with a rating of at least BBB- according to Standard & Poor’s or similar rating agencies;
■ Country risk: deposits have been made mainly in major European financial markets.
Separate Financial Statements of
TIM S.p.A.
Note 8
Non-current and current financial assets
318
NOTE 9
MISCELLANEOUS RECEIVABLES AND OTHER
NON-CURRENT ASSETS
Miscellaneous receivables and other non-current assets breaks down as follows:
(million euros)
12/31/2021 of which Financial
Instruments
12/31/2020 of which Financial
Instruments
Miscellaneous receivables (non-
current)
Miscellaneous receivables from
subsidiaries
Miscellaneous receivables from
associates
Receivables due from others
Other non-current assets
Deferred contract costs
Other cost deferrals
Total
104
—
53
157
1,787
30
1,817
1,974
(a)
(b)
(a+b)
—
—
21
21
—
—
—
21
3
—
46
49
1,643
41
1,684
1,733
—
—
16
16
—
16
Further details on Financial Instruments are provided in the Note "Supplementary disclosures on financial
instruments".
Miscellaneous receivables (non-current)
The item includes receivables due from subsidiaries for 104 million euros (3 million euros at December 31,
2020) relative to tax consolidation receivables; it also includes receivables for 31 million euros due from the tax
authority for income tax (31 million at December 31, 2020).
Other non-current assets
This item increased by 133 million euros compared to December 31, 2020 and includes:
■ Contract costs deferred for 1,787 million euros (1,643 million euros at December 31, 2020), mainly related
to the deferral of costs connected to the activation and acquisitions of new contracts with customers.
Contract costs (mainly technical activation costs and costs for sales network commissions) are deferred
and recognized through separate profit or loss depending on the expected term of the contractual
relationship with the customers. In 2021, the expected duration of the contractual relationship with
customers went from 3 to 4 years for the mobile business and from 7 to 8 years for the fixed-line business,
following an improvement to the churn on customers recorded in recent years, as a result of the loyalty
and retention actions and the drive on converging offers. The positive impact at December 31, 2021 totaled
180 million euros. Based on the amounts at December 31, 2021, positive impacts on 2022 and 2023 are
estimated at 103 million euros and 52 million euros, respectively.
Total deferred non-current and current contract costs amounted to 2,358 million euros (2,301 million euros
at December 31, 2020); the breakdown of the total deferred non-current and current contract costs at
December 31, 2021 is provided below, as well as the related changes in the period:
(million euros)
Deferred contract costs
Non-current deferred contract costs
Current deferred contract costs
Total
(million euros)
12/31/2020
Increase
12/31/2021
12/31/2020
1,787
571
2,358
1,643
658
2,301
Release to
income
statement
Other
changes
12/31/2021
Contract acquisition costs
Contract execution costs
Total deferred contract costs
1,294
1,007
2,301
408
138
546
(289)
(201)
(490)
1
1
1,414
944
2,358
Separate Financial Statements of
TIM S.p.A.
Note 9
Miscellaneous receivables and other non-current assets
319
Total deferred contract costs will be recognized in the income statement of future years of the Company
and in particular, for approximately 571 million euros, in 2022, based on the amount at December 31, 2021
without taking into account the new deferred portions. More specifically:
(million euros)
12/31/2021
year of recognition in the income statement
2022
2023
2024
2025
2026
after
2026
Deferred contract costs
Contract acquisition costs
Contract execution costs
Total
1,414
944
2,358
354
217
571
312
204
516
253
179
432
184
143
327
129
98
227
182
103
285
■ Other deferred costs of 30 million euros (41 million euros at December 31, 2020) mainly refer to costs for
leased assets.
Separate Financial Statements of
TIM S.p.A.
Note 9
Miscellaneous receivables and other non-current assets
320
NOTE 10
INCOME TAX EXPENSE (CURRENT AND
DEFERRED)
Current income tax receivables
Non-current income tax receivables (classified as Miscellaneous receivables and other non-current assets)
amounted to 31 million euros at December 31, 2021 (31 million euros at December 31, 2020); they relate to
non-assigned receivables for taxes and interest resulting from the recognized deductibility from IRES tax of the
IRAP tax calculated on labor costs, relating to years prior to 2012, following the entry into force of Italian
Decree Law 16/2012.
Current tax receivables amounted to 43 million euros, up 4 million euros compared to December 31, 2020 (39
million euros), and mainly include the IRES tax receivable for surplus payments and withholdings of 5 million
euros and the IRAP receivable of TIM for 29 million euros for surplus down payments made and for the benefit
deriving from the presentation of supplementary declarations following the ruling signed on August 3, 2020
with the Revenue Agency for the application of the patent box benefit.
Tax assets and deferred tax liabilities
The net balance is composed as follows:
(million euros)
Deferred tax assets
Deferred tax liabilities
Total
12/31/2021
3,364
—
3,364
12/31/2020
7,337
—
7,337
In the 2020 Financial Statements, TIM S.p.A. had benefited from the possibility of realigning the tax values to
the greater value of the assets booked, specifically the value of goodwill of 23,051 million euros, as envisaged
by Decree Law 104/2020, Art. 110, subsections 8 and 8 bis. Accordingly, this resulted, in exchange for payment
of substitute tax in the amount of 3% of the realigned value (692 million euros), in the possibility to deduct the
tax amortization of the realigned value of 23,051 million euros over 18 years, starting 2021. These deductions,
which would have generated benefits in terms of IRES and IRAP, have been fully noted at December 31, 2020
amongst deferred tax assets in the amount of 6,569 million euros, in view of the possibility of absorption
through the Company’s future taxable income, also taking into account the fact that IRES losses can be carried
forward without time limits, where such may arise due to temporary incapacity of taxable income.
The 2022 Budget Law (Law 234/2021, art. 160) amended the duration of the period during which amortization
of tax-recognized goodwill could be deducted, taking it to 50 years and this resulted in the writing off of 50% of
deferred tax assets for 3,285 million euros (of which 2,766 million euros for IRES and 519 million euros for IRAP),
which go beyond the time frame of visibility for absorption, which had been identified as 25 years in the 2020
financial statements. The remaining deferred IRAP tax assets for 540 million euros were also written-off,
mainly relating to the realigned goodwill in consideration of the changed assessment of the time frame for
recoverability of deferred tax assets of TIM S.p.A., also determined on the basis of the 2022 - 2024 Industrial
Plan. For the same reason, no new deferred tax assets are entered for period tax losses. This write-off does not
exclude for the future, the possibility of reversing this impairment with the booking of all or part of the deferred
tax assets where they should be deemed recoverable.
In 2021, in accordance with art. 19 of Decree Law no. 73/2021, TIM S.p.A. also transformed the deferred tax
assets for tax losses carried forward and ACE surpluses (within the limit of 20% of the impaired loans
transferred) into tax credits in the amount of approximately 20 million euros; these receivables were
subsequently offset against VAT payable.
The presentation of deferred tax assets and liabilities in the financial statements takes account of offsets to
the extent that such offsets are legally permitted. The composition of the gross amounts prior to offsetting is
presented below:
(million euros)
Deferred tax assets
Deferred tax liabilities
Total
12/31/2021
3,445
(81)
3,364
12/31/2020
7,381
(44)
7,337
Separate Financial Statements of
TIM S.p.A.
Note 10
Income tax expense (current and deferred)
321
The temporary differences which made up this line item at December 31, 2020 and 2019, as well as the
movements during 2020 were as follows:
(million euros)
12/31/2021
12/31/2020 Recognized in
profit or loss
Recognized in
equity
Other
changes
Deferred tax assets:
Provisions for pension fund integration
Law 58/92
Provisions
Provision for bad debts
Financial instruments
Taxed depreciation and amortization
Discounting of provision for employee
severance indemnities
Tax losses (*)
Tax realignment pursuant to Decree
Law 104/2020 Art. 110
Other deferred tax assets
Total
Deferred tax liabilities:
Accelerated depreciation and
amortization
Convertible Bonds
Financial instruments
Bond issue expense
Other deferred tax liabilities
Total
Total Deferred tax assets net of
Deferred tax liabilities
4
167
90
383
92
25
18
6,569
33
7,381
(4)
—
(3)
(5)
(32)
(44)
73
(3)
4
—
(3,914)
11
(3,829)
1
2
4
7
4
240
87
299
90
28
7
2,655
35
3,445
(3)
(45)
(2)
(3)
(28)
(81)
(84)
3
(6)
(11)
(81)
(9)
(26)
(45)
1
(44)
—
7,337
(3,822)
(125)
(26)
3,364
(*) For the new flow of tax losses in 2021, no deferred tax assets are entered
The expirations of deferred tax assets and deferred tax liabilities at December 31, 2021 were the following:
(million euros)
Within next
year
Beyond 1 year
year
Total
as at 12/31/2021
Deferred tax assets
Deferred tax liabilities
Total Deferred tax assets net of Deferred tax liabilities
339
(51)
288
3,106
(30)
3,076
3,445
(81)
3,364
Current income tax payables
Current tax payables come to 231 million euros at December 31, 2021 (231 million euros at December 31,
2020) and relate to the second installment of substitute tax pursuant to Decree Law 104/2020, Art. 110,
paragraphs 8 and 8 bis; non-current tax payables come to 231 million euros at December 31, 2021 (463 million
euros at December 31, 2020) and relate to the third installment of substitute tax pursuant to Decree Law
104/2020, Art. 110, paragraphs 8 and 8 bis.
Separate Financial Statements of
TIM S.p.A.
Note 10
Income tax expense (current and deferred)
322
2021
—
—
—
(100)
Income tax expense
The income tax expense for the years ended December 31, 2021 and 2020 is detailed below:
(million euros)
IRAP taxes for current year
IRES taxes for current year
Substitute tax pursuant to Decree Law 104/2020 art. 110
Expenses/(income) from tax consolidation
Current taxes of prior years
Total current taxes
Deferred income taxes
Tax realignment pursuant to Decree Law 104/2020 Art. 110 and write-off of other deferred
tax assets
Deferred taxes of prior years
Total deferred taxes
Total income tax expense for the year
The current IRES tax rate is 24%, while the effective IRAP tax rate is 4.5%.
The current tax income is represented by 100 million euros in tax consolidation benefit, plus the impact of 4
million euros for lesser tax in previous years, relative to the effects of the income tax return as compared with
the estimate prepared in the 2020 financial statements on the basis of the information available at the time.
The current tax benefits juxtaposes with the tax write-off for 3,825 million euros, of which 2,766 million euros
for IRES, equal to 50% of the deferred tax assets entered in 2020 following the tax recognition of higher values
booked in accordance with Decree Law 104/2020, Art. 110, subsections 8 and 8 bis and 1,059 million euros for
the residual amount of deferred IRAP tax assets entered for the realignment of goodwill and other items.
As already specified, the write-off of deferred tax assets is due to the extension to 50 years of the period of
resorption of the realigned amount of goodwill introduced by Art. 160 of the 2022 Budget Law (Law 234/2021)
and the changed assessment of the time frame for recovery of deferred tax assets of TIM S.p.A.
2020
62
—
692
—
(316)
438
168
(6,569)
3,825
(6)
3,822
3,718
(32)
(6,433)
(5,995)
(4)
(104)
3
The reconciliation between the theoretical tax charge, calculated on the basis of the IRES tax rate in effect at
December 31, 2021 (24%), and the effective tax charge in the separate financial statements is as follows:
(million euros)
Result before taxes
From continuing operations
Total profit (loss) before tax
Theoretical income tax
Income tax effect on increases (decreases) in variations:
dividends recognized in income
Impairment losses, gains and losses on investments
non-deductible depreciation, amortization and impairments
non-deductible costs
other items (accelerated depreciation and amortization, economic growth aid (ACE),
etc.)
Previous years’ IRES (patent box, etc.)
Prepaid IRES tax benefit/write-off pursuant to Decree Law 104/2020, Art. 110 and others
Effective income tax recognized in income statement, excluding IRAP and substitute
tax
IRAP (including patent box benefit)
Prepaid IRAP tax benefit/write-off pursuant to Decree Law 104/2020, Art. 110 and others
Substitute tax pursuant to Decree Law 104/2020 art. 110
Total of actual taxes to income statement
2021
(4,596)
(4,596)
(1,103)
(194)
24
991
6
(15)
(8)
2,961
2,662
(3)
1,059
—
3,718
2020
1,166
1,166
280
(75)
(12)
3
3
(51)
(299)
(5,532)
(5,683)
33
(1,037)
692
(5,995)
For a better understanding of the above reconciliation, the impacts of Regional Income Tax (IRAP) and
substitute tax pursuant to Law Decree 104/2020, Art. 110, have been shown separately so as to avoid any
distorting effect arising from the fact that these taxes are calculated on a different tax base to the pre-tax
profit.
Separate Financial Statements of
TIM S.p.A.
Note 10
Income tax expense (current and deferred)
323
NOTE 11
INVENTORIES
At December 31, 2021, these amounted to 165 million euros (144 million euros at December 31, 2020) and
mainly consisted of fixed and mobile telecommunications equipment and terminals and the related
accessories.
This item increased by 21 million euros compared with December 31, 2020, and was mainly attributable to a
purchasing trend during the year that was higher than that of consumption, on the Fixed segment.
In 2021, write-downs of inventories amounted to around 5 million euros.
No inventories are pledged as collateral.
NOTE 12
TRADE AND MISCELLANEOUS RECEIVABLES
AND OTHER CURRENT ASSETS
Trade and miscellaneous receivables and other current assets at December 31, 2021 breaks down as follows:
(million euros)
Trade receivables
Receivables from customers
Receivables from other telecommunications
operators
Receivables from subsidiaries
Receivables from associates and joint ventures
Receivables from other related parties
Customer collections pending credit
Miscellaneous receivables (current)
Receivables from subsidiaries
Receivables from associates and joint ventures
Receivables from other related parties
Receivables due from others
Other current assets
Contract assets
Deferred contract costs
Other cost deferrals
Other
Total
12/31/2021 of which Financial
Instruments
12/31/2020
of which
Financial
Instruments
824
1,044
658
13
20
5
2,564
5
2
—
462
469
17
571
231
79
898
3,931
(a)
(b)
(c)
(a+b+c)
824
1,044
658
13
20
5
2,564
—
—
—
77
77
17
—
—
—
17
2,658
1,423
677
163
30
3
9
2,305
8
7
—
202
217
23
658
201
60
942
3,464
1,423
677
163
30
3
9
2,305
—
—
—
78
78
23
—
23
2,406
Further details on Financial Instruments are provided in the Note "Supplementary disclosures on financial
instruments".
Separate Financial Statements of
TIM S.p.A.
Note 11
Inventories
324
The analyses of the aging of the financial instruments included in Trade and miscellaneous receivables and
other current assets at December 31, 2021 and December 31, 2020 are provided below:
(million euros)
12/31/2021
of which
non-
overdue
of which
overdue
Overdue:
0-90 days 91-180 days 181-365 days
More than
365 days
Trade and
miscellaneous
receivables and other
current assets
2,658
2,292
366
95
51
39
181
(million euros)
12/31/2020
Overdue:
of which
overdue
of which
non-
overdue
0-90 days 91-180 days 181-365 days
More than
365 days
Trade and
miscellaneous
receivables and other
current assets
2,406
1,976
430
45
83
59
243
Financial instruments included in trade and miscellaneous receivables and other current assets include Assets
deriving from contracts with customers (Contract Assets) for 17 million euros; they increased by 252 million
euros compared to December 31, 2020. In particular:
■ current net receivables: increased by 316 million euros mainly due to the impact - starting 2021 - of
transactions with FiberCop and Noovle and the dynamics seen in wholesale. This performance contrasts
with the reduction of receivables for subscribers, particularly to the greater disposals;
■ overdue net receivables: dropped by 64 million euros, mainly following the reduction in stocks of
receivables due from subscribers (due to the improved collection performance and fewer non-performing
positions) and wholesale receivables (due to settlement agreements and repricing). This trend contrasts
with the aging bracket between 0 and 90 days, the increase in receivables for miscellaneous billing and
roaming.
Trade receivables
These came to 2,564 million euros (2,305 million euros at December 31, 2020) and were net of the related
provision for bad debts of 420 million euros (496 million euros at December 31, 2020); in particular, the
provision for bad debt at December 31, 2021 was impacted by the provisions made in 2021 for a total of 124
million euros, of which 20 million euros are non-recurring in relation to the COVID-19 emergency, which
resulted in a worsening of the Expected Credit Loss of part of the customer base following deterioration of the
macroeconomic context. Further details are provided in the Note “Significant non-recurring events and
transactions” of the Separate Financial Statements at December 31, 2021 of TIM S.p.A.
Movements in the provision for bad debts were as follows:
(million euros)
At January 1
Provision charges to the income statement
Draw downs and other changes
At December 31
12/31/2021
496
124
(200)
420
12/31/2020
549
187
(240)
496
Trade receivables increased by 259 million euros compared to December 31, 2020, mainly as a result of the
changes in the receivables due from customers and subsidiaries.
Moreover, on June 30, 2021, the purchase of the BT Italia Business Unit took effect, offering services to public
administration customers and small and medium businesses/enterprises (SMB/SME). As a result of this
operation, TIM received 24 million euros in trade receivables due from the customer base in the scope of
business acquired.
In particular, we report:
■ Receivables from customers: amounted to 824 million euros and dropped by 599 million euros compared
to December 31, 2020;
■ Receivables from other operators: amounted to 1,044 million euros and rose by 367 million euros
compared to December 31, 2020;
■
receivables from consolidated subsidiaries: amounted to 658 million euros and increased by 495 million
euros compared to December 31, 2020, mainly following greater receivables due form FiberCop for delivery
activities on the secondary network (492 million euros); there are also greater receivables due for the
supply of TLC products and services to Noovle S.p.A. (88 million euros), TIM Retail (19 million euros),
Telecom Italia Sparkle (19 million euros), TIM S.A. (12 million euros), Telenergia (9 million euros), Olivetti (6
million euros) and Telecontact (3 million euros);
Separate Financial Statements of
TIM S.p.A.
Note 12
Trade and miscellaneous receivables and other current assets
325
■ Receivables from associates: amounted to 13 million euros (30 million euros at December 31, 2020) and
relate to the supply of services to INWIT, which has become an associate;
■
receivables from associates: amounted to 20 million euros (3 million euros at December 31, 2020) and
relate to the supply of services to the Cassa Depositi e Prestiti Group.
Miscellaneous receivables (current)
Amounted to 469 million euros (net of a provision for bad debts of 37 million euros) increase by 252 million
euros compared to December 31, 2020. They include:
■ Receivables from subsidiaries: these amounted to 5 million euros (8 million euros at December 31, 2020)
and mainly were related to receivables from Group companies for the tax consolidation (3 million euros);
■ Receivables from associates and joint ventures: these amounted to 2 million euros (7 million euros at
December 31, 2020) and relate to INWIT, which has become an associate;
■ Other receivables: totaled 462 million euros and break down as follows:
(million euros)
Advances to suppliers
Receivables from employees
Tax receivables
Receivables for grants from the government and public entities
Sundry receivables
Total
12/31/2021
256
8
15
14
169
462
12/31/2020
3
8
1
29
161
202
Tax receivables amounted to 15 million euros and are essentially represented by credit amounts resulting from
tax returns, tax credits, as well as VAT credits on the acquisition of motor vehicles and related accessories
requested for reimbursement pursuant to Law Decree no. 258/2006 converted with amendments by Law no.
278/2006.
Receivables for grants from the government and public entities (14 million euros) referred mainly to the
ultrabroadband-UBB and broadband-BB projects. The grants are recognized to the income statement when
the related plants become ready for use.
Sundry receivables mainly included:
receivables for with-recourse assignments to factoring companies (43 million euros);
receivables from social security and pension institutions (13 million euros);
■
■
■ miscellaneous receivables from other TLC operators (32 million euros);
■
receivables for Universal Service (52 million euros).
Other current assets
Other current assets amounted to 898 million euros and dropped by 44 million euros compared to December
31, 2020; they included:
■ Assets resulting from contracts with customers - Contract Assets (17 million euros, 23 million euros at
December 31, 2020): these refer to the advance recognition of revenues for those bundle contracts (such
as product and service packages) with the individual Performance Obligations with different timing for
their recognition, in which goods recognized "at point in time" are sold at a discounted price, or for those
contracts which, envisaging a discount for a period of time less than the minimum contract duration,
pursuant to IFRS 15 need the discount to be reallocated over the minimum contract duration. Contract
Assets - net of the related write-down provision of 1 million euros - are down by 6 million euros compared
to December 31, 2020, since the reversal to the income statement of the previously accumulated balance
was substantially offset by the need to distribute discounts granted to customers temporally over the
minimum contractual term, with particular reference to those connected with the impact of COVID-19;
■ Deferred contract costs (571 million euros, 658 million euros at December 31, 2020) and are contract costs,
technical activation costs and commissions for the sales network) deferred and recognized in the separate
income statement according to the expected duration of the contractual relationship with customers. As
indicated above, in 2021 the expected duration of the contractual relationship went from 3 to 4 years for
the mobile business and from 7 to 8 years for the fixed-line business, with a positive impact totaling 180
million euros at December 31, 2021. For additional details on the deferred contract costs and their
movement during the year, refer to the Note "Miscellaneous receivables and other non-current assets";
■ Other cost deferrals: amounted to 231 million euros and mainly related to:
•
•
•
•
•
176 million euros for the deferral of costs related to rental fees and other lease and rental cost;
24 million euros for the deferral of costs for the purchase of products and services;
23 million euros for the deferral of after-sales expenses on application offers;
4 million euros for insurance premiums;
3 million euros for maintenance fees.
■ Other (79 million euros, 60 million euros at December 31, 2020): these include approximately 19 million
euros in receivables for works from the subsidiary FiberCop. The increase compared to December 31, 2020
was mainly linked to higher receivables from network jobs for third party companies.
Separate Financial Statements of
TIM S.p.A.
Note 12
Trade and miscellaneous receivables and other current assets
326
NOTE 13
EQUITY
This item is composed as follows:
(million euros)
Capital issued
less: Treasury shares
Share capital
Additional paid-in capital
Legal reserve
Other reserves:
Merger surplus reserve
Other
Total other reserves
Retained earnings, including profit (loss) for the year
Total
12/31/2021
11,677
(63)
11,614
2,133
2,335
12/31/2020
11,677
(19)
11,658
2,133
2,313
1,734
(295)
1,439
(957)
16,564
1,734
(528)
1,206
7,698
25,008
Movements in share capital during 2021 are presented in the following tables:
Reconciliation between the number of shares outstanding at 12/31/2020 and at 12/31/2021
(number of shares)
As at 12/31/2020
Ordinary shares issued
less: treasury shares
Ordinary shares outstanding
Savings shares issued
and outstanding
Total shares issued
Total shares outstanding
(a)
(b)
(c)
(d)
(a+d)
(c+d)
15,329,466,496
(35,179,709)
15,294,286,787
6,027,791,699
21,357,258,195
21,322,078,486
Share assignment/
issue
—
(80,762,487)
(80,762,487)
—
—
(80,762,487)
As at 12/31/2021 % on Capital
15,329,466,496
(115,942,196)
15,213,524,300
6,027,791,699
21,357,258,195
21,241,315,999
71.78
28.22
100.00
Reconciliation between the value of shares outstanding at 12/31/2020 and at 12/31/2021
(thousands of euros)
Ordinary shares issued
less: treasury shares
Ordinary shares outstanding
Savings shares issued and outstanding
Total share capital issued
Total share capital outstanding
Share capital at
12/31/2020
8,381,330
(19,235)
8,362,095
3,295,673
11,677,003
11,657,768
(a)
(b)
(c)
(d)
(a+d)
(c+d)
Change in
share capital
(44,156)
(44,156)
—
(44,156)
Share Capital at
12/31/2021
8,381,330
(63,391)
8,317,939
3,295,673
11,677,003
11,613,612
The amount of treasury shares during 2021 changed as follows:
■ decrease due to the assignment of 6,715,617 ordinary TIM shares to implement the 2018-2020 Long Term
Incentive Plan;
■
increase due to the transfer of ownership to TIM of the 126,082,374 TIM ordinary shares previously owned
by Telecom Italia Finance, at the same time as payment of an extraordinary dividend partly in kind by the
subsidiary to the Parent Company;
■ decrease due to the assignment of 38,604,270 ordinary TIM shares free of charge to entitled Group
employees adhering to the 2020 Broad-Based Share Ownership Plan.
Separate Financial Statements of
TIM S.p.A.
Note 13
Equity
327
Disclosure on share capital
The ordinary and savings shares of TIM S.p.A. are listed in Italy (FTSE index).
In the shareholder resolutions passed to increase share capital against cash payments, the pre-emption right
can be excluded to the maximum extent of ten percent of the pre-existing share capital, on condition that the
issue price corresponds to the market price of the shares and that this is confirmed in a specific report issued
by the firm charged with the audit of the Company.
The Company sources itself with the capital necessary to fund its requirements for business development and
operations; the sources of funds are found in a balanced mix of equity, permanently invested by the
shareholders, and debt capital, to guarantee a balanced financial structure and minimize the total cost of
capital, with a resulting advantage to all the stakeholders.
Debt capital is structured according to different maturities and currencies to ensure an adequate diversification
of the sources of funding and an efficient access to external sources of financing (taking advantage of the best
opportunities offered in the financial markets of the euro, U.S. dollar and Pound sterling areas to minimize
costs), taking care to reduce the refinancing risk.
The remuneration of equity is proposed by the Board of Directors to the Shareholders’ Meeting, which meets to
approve the annual financial statements, based upon market trends and business performance, once all the
other obligations are met, including debt servicing. Therefore, in order to guarantee an adequate remuneration
of capital, safeguard company continuity and business development, the Company constantly monitors the
change in debt levels in relation to equity, the level of net debt and the operating margin of industrial
operations.
Privileges of savings shares
The privileges of TIM S.p.A. savings shares are indicated below:
■
the profit shown in the duly approved financial statements, after deducting the amount to be allocated to
the legal reserve, must be distributed to the holders of savings shares in an amount up to 5% of the 0.55
euros per share;
■ after assigning preferred dividends to the savings shares, the distribution of which is approved by the
shareholders' meeting, the remaining profit shall be allocated among all the shares, so that savings shares
are entitled to higher overall dividends than ordinary shares would be entitled to, to the extent of 2% of
0.55 euros per share;
■ when, in any one year, dividends of below 5% of the 0.55 euros per share are paid to the savings shares,
the difference is determined as an increase of the privileged dividend in the next two subsequent years;
■
■
in the case of the distribution of reserves, the savings shares have the same rights as ordinary shares.
Moreover, when there is no profit or insufficient profit is reported in the financial statements for a given
year to satisfy the aforesaid savings shares privileges, the Shareholders’ Meeting called to approve those
financial statements may choose to satisfy the dividend right and/or the higher dividend right by
distributing available reserves. The distribution of available reserves for such payments excludes the
application of the mechanism extending the right to the preferred dividend not paid through the
distribution of profits for the following two years;
the reduction of share capital as a result of losses does not affect the savings shares except for the
amount of the loss which is not covered by the portion of the share capital represented by the other
shares;
■ upon the wind-up of TIM S.p.A., the savings shares have a pre-emption right in the reimbursement of
capital up to the amount of 0.55 euros per share;
■
in the event of the cessation of trading in the Company's ordinary or savings shares, the holder of savings
shares may ask TIM S.p.A. to convert his/her shares into ordinary shares, using the method selected during
a special session of the shareholders' meeting called for that purpose within two months of being excluded
from trading.
It should be noted that the share capital carries a restriction on tax suspension for fiscal purposes for an
amount of 11,104 million euros, unchanged on December 31, 2020 and inclusive of 9,913 million restricted in
accordance with Decree Law 104/2020, art. 110, subsection 8.
∂
Additional paid-in capital at December 31, 2021 amounted to 2,133 million euros, showing no change on
December 31, 2020. The reserve is entirely restricted under tax suspension in accordance with Decree Law
104/2020, Art. 110, subsection 8.
The Legal reserve at December 31, 2021, was 2,335 million euros, up by 22 million euros compared to
December 31, 2020 due to the allocation of 2020 profits. This reserve is entirely restricted under tax suspension
in accordance with Decree Law 104/2020, Art. 110, subsection 8, also taking into account the restriction of 501
million in accordance with Decree Law 104/2020, Art. 110, subsection 8.
Other reserves totaled 1,439 million euros at December 31, 2021, increasing by 233 million euros compared to
December 31, 2020.
Separate Financial Statements of
TIM S.p.A.
Note 13
Equity
328
The Other reserves moved through the Statements of Comprehensive Income are broken down as follows:
■ Reserve for remeasurements of employee defined benefit plans (negative 117 million euros): the reserve
decreased by 11 million euros compared to December 31, 2020, following the recognition of employee
severance indemnity actuarial gains for the year 2021, after the net fiscal impact;
■ Reserve for fair value adjustment of hedging derivative instruments (a negative 945 million euros, up 269
million euros compared to December 31, 2020): this reserve is related to the accounting of cash flow hedge
transactions. In particular, it refers to unrealized gains and losses, net of the related tax effect, arising from
the fair value adjustment of the financial instruments designated as cash flow hedges;
■ Reserve for financial assets measured at fair value through other comprehensive income (13 million euros):
this reserve increased by 3 million euros compared to December 31, 2020.
The Other reserves also include:
■ Merger surplus reserve (1,734 million euros): this remains unchanged on December 31, 2020. The reserve is
entirely restricted under tax suspension in accordance with Decree Law 104/2020, Art. 110, subsection 8.
■ Reserve for other equity instruments: this reserve amounted to 165 million euros (down by 38 million euros
compared to December 31, 2020) and consisted of:
•
•
the amount of the convertible bond maturing 2015-2022 (142 million euros);
the amount of the 2020-2022 Long Term Incentive Plan, approved by the Shareholders' Meeting on
April 23, 2020 (23 million euros).
For further details, refer to the Note “Equity Compensation Plans”.
Note that the reserve, for 142 million euros, is restricted under tax suspension in accordance with Decree
Law 104/2020, Art. 110, subsection 8.
■ Unavailable reserve originating from the application of Article 7, paragraph 7 of Italian Legislative Decree
38/2005 (521 million euros): unchanged from December 31, 2020. This reserve is entirely restricted under
tax suspension in accordance with Decree Law 104/2020, Art. 110, subsection 8.
■ Miscellaneous reserves (68 million euros). Note that these reserves, for 58 million euros, are restricted
under tax suspension in accordance with Decree Law 104/2020, Art. 110, subsection 8.
Retained earnings (accumulated losses), including loss for the year, was negative for 957 million euros at
December 31, 2021 (positive for 7,698 million euros at December 31, 2020). The movements are connected to
the following changes:
■ decrease of 8,314 million euros referred to 2021 results;
■
■
reduction of 319 million euros as a result of the distribution of dividends referred to the 2020 financial
statements, as approved by the Shareholders’ Meeting of March 31, 2021;
reduction of 22 million euros, connected with the provision made to the legal reserve of 5% of the 2020
profit, as approved by the Shareholders’ Meeting of March 31, 2021.
Accrued profits from previous years, for 7,357 million euros, are entirely restricted under tax suspension in
accordance with Decree Law 104/2020, Art. 110, subsection 8.
The following statement provides additional disclosure on equity and is prepared pursuant to Article 2427,
number 7-bis, showing the items in equity separately according to their source, possibility of utilization and
distribution, in addition to their utilization in the three-year period 2019-2021.
Separate Financial Statements of
TIM S.p.A.
Note 13
Equity
329
Summary pursuant to Article 2427, no. 7-bis
Nature/description
Amount
at
12/31/2021
Potential
utilization
Amount
available
Summary of utilizations made
in the three-year period 2019-2021
(million euros)
Share capital
Capital reserves:
Additional Paid-in capital
Legal reserve
Reserve for other equity instruments
Other reserves
Reserve for remeasurements of defined
benefit plans
Reserve pursuant to Article 7, paragraph
7, Italian Law Decree 38/2005
Merger surplus reserve
Profit reserves:
Additional Paid-in capital
Legal reserve
Reserve pursuant to Article 34, Italian
Law 576/1975
Other reserves
Reserve for fair value adjustment of cash
flow hedges and related underlying
instruments
Reserve for available-for-sale financial
assets
Reserve for remeasurements of defined
benefit plans
Merger surplus reserve
Profits carried forward
Total
Treasury shares
Amount not distributable (1)
Residual distributable percentage
11,614
2,134
1,953
165
65
57
521
1,679
(1)
382
—
5
(945)
13
(174)
55
7,357
24,880
A,B,C
B
B
A,B,C
A,B,C
B
A,B,C
B
A,B,C
A,B,C
B
A,B,C
A,B,C
2,134
65
57
1,679
(1)
—
5
—
(174)
55
7,357
11,177
(65)
—
11,112
for loss coverage
for other
reasons
13
1,841
1,854
166
166
Key:
A = for increases in capital;
B = for loss coverage;
C = for distribution to shareholders
(1) Represents the amount not distributable as the part of additional paid-in capital needed to supplement the legal reserve to reach 1/5 of the share
capital.
Specifically,
in the three-year period 2019/2021 – for other reasons” relate to the distribution of dividends.
"Summary
amounts
column
shown
the
the
the
of
in
amounts
utilized
At December 31, 2021, the Company had tax-suspended reserves of 14,281 million euros (unchanged
compared to 12/31/2020), subject to taxation in the event of distribution, on which taxes had not been
allocated as their distribution is not foreseen. In particular, the amount of the total restriction of 22,359 million
euros satisfies the condition set by Decree Law 104/2020 art. 110, paragraph 8 in relation to the tax recognition
of higher values recorded in the financial statements (goodwill) and can be broken down as follows:
■ share capital under tax suspension for 9,913 million euros;
■ designated reserves under tax suspension for 12,446 million euros (as identified previously).
Separate Financial Statements of
TIM S.p.A.
Note 13
Equity
330
The table below shows the restrictions, pursuant to Article 109, paragraph 4, letter b) of TUIR, relating to off-
book deductions effected for income tax purposes in past years:
(million euros)
Off-book deductions at 12/31/2020
Reversal for taxation during the year
Off-book deductions at 12/31/2021
Deferred taxes
Restriction on equity at 12/31/2021
19
—
19
(4)
15
This regime imposes a restriction on all equity reserves, without distinction, for an amount equal to the off-
book deductions net of the relative deferred taxes provided. This restriction remains until such time as the
excess tax deductions and consequent taxation are recovered in the books.
More specifically, compared with the situation at December 31, 2020, deductions remain essentially
unchanged.
Therefore, taking into account the residual deductions effected in prior years and not covered by the fiscal
realignment carried out in accordance with Italian Law 244 dated December 24, 2007, the total restriction on
equity in the separate financial statements amounts to 15 million euros.
Future potential changes in share capital
The table below shows future potential changes in share capital, based on the issuance of the convertible bond
by TIM S.p.A. in March 2015, (the capital increase was carried out) and plans for long-term share incentives, still
outstanding at December 31, 2021:
Number of
maximum shares
issuable
Share capital
(thousands of
euros)
Additional
paid-in
capital
(thousands of
euros)
Subscription
price per
share
(euros)
Capital increases already approved (ordinary shares)
2020-2022 Long Term Incentive Plan (free issue)
Stock Options
2015 Convertible Bond (ordinary shares)(*)
Bonds
Total
(*) The number of shares potentially issuable shown may be subject to adjustments.
N.A.
N.A.
2,000,000
2,000,000
2,000,000
180,000,000
180,000,000
1,138,239,144
1,138,239,144
1,318,239,144
Further information is provided in the Notes “Non-current and current financial liabilities” and “Equity
compensation plans”.
Separate Financial Statements of
TIM S.p.A.
Note 13
Equity
331
NOTE 14
NON-CURRENT AND CURRENT FINANCIAL
LIABILITIES
Non-current and current financial liabilities (gross financial debt) are broken down as follows:
(million euros)
Non-current financial liabilities for financing contracts and others
Non-current financial payables:
12/31/2021
Bonds
Convertible bonds
Payables to banks
Payables to other lenders
Payables due to subsidiaries
12,506
—
2,627
25
4,078
19,236
Other non-current financial liabilities:
Hedging derivatives relating to hedged items classified as non-
current assets/liabilities of a financial nature
Non-hedging derivatives
Other liabilities
Non-current financial liabilities for lease contracts
Payables to subsidiaries
Payables to associates
Payables to third parties
Total non-current financial liabilities
Current financial liabilities for financing contracts and others
Current financial payables:
Bonds
Convertible bonds
Payables to banks
Payables to other lenders
Payables due to subsidiaries
Payables to associates
Other current financial liabilities:
Hedging derivatives relating to hedged items classified as current
assets/liabilities of a financial nature
Non-hedging derivatives
Other liabilities
Current financial liabilities for lease contracts
Payables to subsidiaries
Payables to associates
Payables to third parties
Total Current financial liabilities
Total financial liabilities (Gross Financial Debt)
(a)
(b)
c=(a+b)
(d)
(e)
f=(d+e)
g=(c+f)
1,337
1,303
1
2,641
21,877
29
268
2,446
2,743
24,620
1,386
1,998
900
225
429
1
4,939
54
52
—
106
5,045
6
73
355
434
5,479
30,099
12/31/2020
12,548
1,958
2,649
29
4,204
21,388
1,813
1,239
—
3,052
24,440
497
313
2,696
3,506
27,946
858
6
2,013
116
247
—
3,240
53
49
—
102
3,342
14
50
399
463
3,805
31,751
Further details on Financial Instruments are provided in the Note "Supplementary disclosures on financial
instruments".
Separate Financial Statements of
TIM S.p.A.
Note 14
Non-current and current financial liabilities
332
Gross financial debt according to the original currency of the transaction is as follows:
12/31/2021
(millions of foreign currency)
2,508
389
20,031
USD
GBP
YEN
EUR
12/31/2020
(millions of foreign currency)
2,507
389
20,000
12/31/2021
(million euros)
2,215
463
154
27,267
30,099
12/31/2020
(million euros)
2,043
433
158
29,117
31,751
The breakdown of gross financial debt by effective interest-rate bands applicable to the original transaction is
provided below, excluding the effect of any derivative hedging instruments:
(million euros)
Up to 2.5%
From 2.5% to 5%
From 5% to 7.5%
From 7.5% to 10%
Over 10%
Accruals/deferrals, MTM and derivatives
12/31/2021
7,692
13,236
4,196
1,727
4
3,244
30,099
12/31/2020
7,862
14,282
4,111
1,730
4
3,762
31,751
Following the use of derivative hedging instruments, on the other hand, the gross financial debt by nominal
interest rate bracket is:
(million euros)
Up to 2.5%
From 2.5% to 5%
From 5% to 7.5%
From 7.5% to 10%
Over 10%
Accruals/deferrals, MTM and derivatives
12/31/2021
10,443
10,334
4,347
1,727
4
3,244
30,099
12/31/2020
13,232
8,515
4,508
1,730
4
3,762
31,751
The maturities of financial liabilities according to the expected nominal repayment amount, as defined by
contract, are the following:
Details of the maturities of financial liabilities – at nominal repayment amount:
(million euros)
Bonds
Loans and other financial liabilities
Financial liabilities for lease contracts
Total
Current financial liabilities
Total
2022
3,098
889
402
4,389
616
5,005
maturing by 12/31 of the year:
2023
2024
2025
2026
2,446
1,294
344
4,084
—
4,084
3,324
784
368
4,476
—
4,476
2,000
1,053
356
3,409
—
3,409
1,750
52
347
2,149
—
2,149
After
2026
2,920
3,988
1,329
8,237
—
8,237
Total
15,538
8,060
3,146
26,744
616
27,360
The main components of financial liabilities are commented below.
Separate Financial Statements of
TIM S.p.A.
Note 14
Non-current and current financial liabilities
333
Bonds are broken down as follows:
(million euros)
Non-current portion
Current portion
Total carrying amount
Fair value adjustment and measurement at amortized cost
Total nominal repayment amount
12/31/2021
12,506
1,386
13,892
(354)
12/31/2020
12,548
858
13,406
(432)
13,538
12,974
Convertible bonds consist of the unsecured equity-linked bond for 2,000 million euros, with a coupon of
1.125%, issued by TIM S.p.A., convertible into newly-issued ordinary shares, maturing in 2022. This item was
broken down as follows:
(million euros)
Non-current portion
Current portion
Total carrying amount
12/31/2021
—
1,998
1,998
12/31/2020
1,958
6
1,964
Fair value adjustment and measurements at amortized cost
Total nominal repayment amount
2
2,000
36
2,000
The nominal repayment amount of bonds and convertible bonds totaled 15,538 million euros, up by 564 million
euros compared to December 31, 2020 (14,974 million euros) as a result of new issues and repayments in 2020.
The change in bonds during 2021 was as follows:
New issues
(millions of original currency)
New issues
Telecom Italia S.p.A. 1,000 million euros 1.625%
Currency
Amount
Issue date
Euro
1,000
1/18/2021
On January 18, 2021, TIM issued its first 8-year Sustainability Bond for an amount of 1 billion euros, coupon
1.625%.
Repayments
(millions of original currency)
Repayments
Telecom Italia S.p.A. 564 million euros 4.500% (1)
(1) Net of buy-backs totaling 281 million euros made by the company in 2015.
Currency Amount Repayment date
Euro
564
1/25/2021
Note that on December 31, 2021, the "Telecom Italia S.p.A. 2002-2022 Floating Rate bonds, Open Special
series, reserved for subscription by employees of the Telecom Italia Group, in service or retired” bond was
closed and the bonds fully repaid starting January 1, 2022, in accordance with the relevant Regulation.
Separate Financial Statements of
TIM S.p.A.
Note 14
Non-current and current financial liabilities
334
The following table lists the bonds issued by TIM S.p.A., expressed at the nominal repayment amount, net of
bond repurchases, and also at market value:
Currenc
y
Total
(millions)
Nominal
repayment
amount
(million
euros)
Coupon
Issue date
Maturity
date
Issue price
(%) Market price
at 12/31/21
(%)
Market value
at 12/31/21
(million
euros)
6 month Euribor (base
Bonds issued
Euro
Euro
Euro
Euro
GBP
Euro
Euro
Euro
USD
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Total
(a) Reserved for employees.
(b) Bond convertible into newly-issued TIM S.p.A. ordinary treasury shares.
214
884
2,000
1,000
446
1,000
750
1,250
1324
1,000
1,000
750
1,000
1,250
1,000
670
15,538
(a) 213.5
883.9
(b) 2,000
1,000
375
1,000
750
1,250
1,500
1,000
1,000
750
1,000
1,250
1,000
670
365) 1/01/2002 1/01/2022
5.250% 2/10/2010 2/10/2022
1.125% 3/26/2015 3/26/2022
3.250% 1/16/2015 1/16/2023
5.875% 5/19/2006 5/19/2023
2.500% 1/19/2017 7/19/2023
3.625% 1/20/2016 1/19/2024
4.000% 1/11/2019 4/11/2024
5.303% 5/30/2014 5/30/2024
2.750% 4/15/2019 4/15/2025
3.000% 9/30/2016 9/30/2025
2.875% 6/28/2018 1/28/2026
3.625% 5/25/2016 5/25/2026
2.375% 10/12/2017 10/12/2027
1.625% 1/18/2021 1/18/2029
5.250% 3/17/2005 3/17/1955
100
99.295
100
99.446
99.622
99.288
99.632
99.436
100
99.320
99.806
100
100
99.185
99.074
99.667
100
100.692
100.135
103.037
104.491
102.507
104.032
104.961
105.321
102.491
103.084
102.431
105.519
98.860
92.023
106.021
214
890
2,003
1,031
466
1,025
780
1,312
1,395
1,025
1,031
768
1,055
1,236
920
710
15,861
The regulations and/or Offering Circulars relating to the bonds described above are available on the corporate
website at the address: gruppotim.it.
Non-current payables to banks totaled 2,627 million euros (2,649 million euros at December 31, 2020). Current
payables to banks totaled 900 million euros, down by 1,113 million euros (2,013 million euros at December 31,
2020) and included 700 million euros of the current portion of non-current amounts due to banks.
Non-current payables to other lenders totaled 25 million euros (29 million euros at December 31, 2020), while
current payables totaled 225 million euros (116 million euros at December 31, 2020) and included 5 million
euros representing the current portion of non-current payables to other lenders.
Non-current payables to subsidiaries amounted to 4,078 million euros (4,204 million euros at December 31,
2020) and consisted of loans obtained from Telecom Italia Capital S.A. (2,924 million euros) and from Telecom
Italia Finance S.A. (1,154 million euros), following the issues of bonds placed by the financial companies of the
Group on the United States and Luxembourg markets.
Current payables to subsidiaries amounted to 429 million euros and increased by 182 million euros compared
to December 31, 2020 (247 million euros). Include:
■
the current portion of non-current loans to Telecom Italia Capital S.A. (200 million euros) and Telecom
Italia Finance S.A. (35 million euros);
■ current accounts as part of the treasury services regulated at market rates for a total of 194 million euros,
particularly with Telecom Italia Sparkle (57 million euros), TIM Retail S.r.l. (47 million euros), Olivetti S.p.A.
(35 million euros), Telecontact Center S.p.A. (33 million euros), FiberCop S.p.A. (13 million euros).
Non-current financial liabilities for lease contracts amounted to 2,743 million euros (3,506 million euros at
December 31, 2020). Current finance lease liabilities amounted to 434 million euros (463 million euros at
December 31, 2020) and referred for 432 million euros to the current portion of non-current finance lease
liabilities.
With reference to the finance lease liabilities recognized in 2021 and 2020 the following is noted:
(million euros)
Principal reimbursements
Cash out interest portion
Total
12/31/2021
407
127
534
12/31/2020
575
119
694
Hedging derivatives relating to items classified as non-current financial liabilities amount to 1,337 million
euros (1,813 million euros at December 31, 2020). Hedging derivatives relating to hedged items classified as
current financial liabilities amounted to 54 million euros (53 million euros at December 31, 2020).
Separate Financial Statements of
TIM S.p.A.
Note 14
Non-current and current financial liabilities
335
Non-current non-hedging derivatives amounted to 1,303 million euros (1,239 million euros at December 31,
2020). Current non-hedging derivatives amounted to 52 million euros (49 million euros at December 31, 2020).
These line items include the measurement in the liabilities of transactions which TIM S.p.A. carries out with
banking counterparties to service the companies of the Group in its exclusive role as the centralized treasury
function (cash pooling), and are offset in full by the corresponding items classified as financial assets.
Further details are provided in the Note "Derivatives".
Covenants, negative pledges and other contract clauses in
effect at December 31, 2021
Bonds issued by the TIM Group do not contain financial covenants (e.g. ratios such as Debt/EBITDA,
EBITDA/Interest, etc.) or clauses that result in the automatic early redemption of the bonds in relation to
events other than the insolvency of the TIM Group1; furthermore, the repayment of the bonds and the
payment of interest are not covered by specific guarantees nor are there commitments provided relative to
the assumption of future guarantees, except for the full and unconditional guarantees provided by TIM S.p.A.
for the bonds issued by Telecom Italia Finance S.A. and Telecom Italia Capital S.A..
Since the bonds were placed principally with institutional investors in major world capital markets (Euromarket
and the U.S.A.), the terms which regulate the bonds are in line with market practice for similar transactions
effected on these same markets. Consequently, they carry negative pledges, such as, for example, the
commitment not to pledge the company’s assets as collateral for loans.
Regarding loans taken out by TIM S.p.A. from the European Investment Bank (EIB), on May 19, 2021, TIM
entered into a new loan for an amount of 230 million euros, in support of projects to digitize the country. In
addition, it has extended the loan signed in 2019 for an amount of 120 million euros. Therefore, at December
31, 2021 the nominal total of outstanding loans with the EIB was 1,200 million euros, all drawn down and not
backed by bank guarantee.
The three EIB loans signed on December 14, 2015, November 25, 2019 and May 19, 2021 contain the following
covenants:
■
in the event the company becomes the target of a merger, demerger or conferral of a business segment
outside the Group, or sells, disposes of or transfers assets or business segments (except in certain cases,
expressly provided for), it shall immediately inform the EIB which shall have the right to ask for guarantees
to be provided or changes to be made to the loan contract, or, only for certain loan contracts, the EIB shall
have the option to demand the immediate repayment of the loan (should the merger, demerger or
conferral of a business segment outside the Group compromise the Project execution or cause a prejudice
to EIB in its capacity as creditor);
■
■ TIM undertook to ensure that, for the entire duration of the loan, the total financial debt of the Group
companies other than TIM S.p.A. – except for the cases when that debt is fully and irrevocably secured by
TIM S.p.A. – is lower than 35% (thirty-five percent) of the Group's total financial debt;
“Inclusion clause", under which, in the event TIM commits to uphold financial covenants in other loan
contracts (and even more restrictive clauses,
instance, cross default clauses and
commitments restricting the sale of goods) that are not present in or are stricter than those granted to the
EIB, the EIB will have the right – if, in its reasonable opinion, it considers that such changes may have a
negative impact on TIM's financial capacity – to request the provision of guarantees or an amendment of
the loan contract in order to establish an equivalent provision in favor of the EIB;
"Network Event", under which, in the event of the disposal of the entire fixed network or of a substantial
part of it (in any case, more than half in quantitative terms) to third parties not controlled by the Company,
or in the event of disposal of the controlling interest in the company in which the network or a substantial
part of it has previously been transferred, TIM must immediately inform the EIB, which may then opt to
demand collateral or an amendment of the loan contract or choose an alternative solution.
including, for
■
The loan agreements of TIM S.p.A. do not contain financial covenants (e.g. ratios such as Debt/EBITDA,
EBITDA/Interest, etc.) which would oblige the Company to repay the outstanding loan if the covenants are not
observed.
The loan agreements contain the usual other types of covenants, including the commitment not to pledge the
Company’s assets as collateral for loans (negative pledge) and the commitment not to change the business
purpose or sell the assets of the Company unless specific conditions exist (e.g. the sale takes place at fair
market value). Covenants with basically the same content can be found in the export credit loan agreement.
In the Loan Agreements and the Bonds, TIM is required to provide notification of change of control.
Identification of the occurrence of a change of control and the applicable consequences – including, at the
discretion of the investors, the establishment of guarantees or the early repayment of the amount paid in cash
or as shares and the cancellation of the commitment in the absence of agreements to the contrary – are
specifically covered in the individual agreements.
In addition, the outstanding loans generally contain a commitment by TIM, whose breach is an Event of
Default, not to implement mergers, demergers or conferrals of business, involving entities outside the Group.
Such an Event of Default may entail, upon request of the Lender, the early redemption of the drawn amounts
and/or the annulment of the undrawn commitment.
Finally, as at December 31, 2021, no covenant, negative pledge or other clause relating to the aforementioned
debt position had in any way been breached or violated.
1 A change of control event can result in the early repayment of the convertible bond of TIM S.p.A., as further detailed below.
Separate Financial Statements of
TIM S.p.A.
Note 14
Non-current and current financial liabilities
336
Revolving Credit Facility
The following table shows committed credit lines available at December 31, 2021:
(billion euros)
12/31/2021
Sustainability-linked RCF - maturing May 2026
Revolving Credit Facility – maturing January 2023
Bridge to Bond Facility – maturing May 2021
Total
Agreed
4.0
—
—
4.0
Drawn down
—
—
—
—
12/31/2020
Agreed
—
5.0
1.7
6.7
Drawn down
—
—
—
—
At December 31, 2021, TIM had bilateral Term Loans for 850 million euros with various banking counterparties
and an overdraft facility for 200 million euros, drawn down for the full amount.
On January 19, 2021, TIM entirely canceled the credit line for 1.7 billion euros, which was not used, stipulated
on May 18, 2020 as bridge to bond for subsequent issues on the bond market and an initial maturity of 12
months with an option of extension for another 12 months.
On May 13, 2021, TIM extended the Revolving Credit Facility by 5 years, reducing the amount to 4 billion euros
and making it the Group's first ever ESG-linked credit facility.
TIM's rating at December 31, 2021
At December 31, 2021, the three rating agencies – Standard & Poor’s, Moody’s and Fitch Ratings – rated TIM as
follows:
STANDARD & POOR'S
MOODY'S
FITCH RATINGS
relative to its opinion on TIM as “Negative”.
On March 08, 2022, the ratings agency Moody’s modified the rating from Ba2 to Ba3, confirming the outlook
Rating
BB
Ba2
BB+
Outlook
Stable
Negative
Stable
Separate Financial Statements of
TIM S.p.A.
Note 14
Non-current and current financial liabilities
337
NOTE 15
NET FINANCIAL DEBT
The table below shows the breakdown of net financial debt of the TIM Group at December 31, 2021 and
December 31, 2020, determined in accordance with the provisions of the “Guidelines on disclosure
requirements under the Prospectus Regulation” issued by the ESMA (European Securities & Markets Authority)
on March 4, 2021 (ESMA32-382-1138) and incorporated by Consob with its Note of Attention no. 5/21 dated
April 29, 2021.
This table also shows the reconciliation of the net financial debt determined according to the aforementioned
criteria indicated by the ESMA and net financial debt calculated according to the criteria of TIM S.p.A..
(million euros)
Liquid assets with banks, financial institutions and post offices
Other cash and cash equivalents
Securities other than investments
Liquidity
Current financial debt (including debt instruments, but excluding
the current portion of non-current financial debt)
Current portion of non-current financial debt
Current financial debt
Net current financial debt
Non-current financial debt (excluding the current part and debt
instruments)
Debt instruments
Trade payables and other non-current debt (**)
Non-current financial debt
(a)
(b)
(c)
(d=a+b+c)
(e)
(f)
(g=e+f)
(h=g-d)
(i)
(j)
(k)
(l=i+j+k)
12/31/2021
12/31/2020
(3,532)
(26)
—
(3,558)
618
4,768
5,386
1,828
10,443
12,506
1
22,950
(1,673)
(93)
—
(1,766)
1,129
2,581
3,710
1,944
11,701
14,506
1,739
27,946
(m=h+l)
24,778
(1)
Total net financial debt as per ESMA guidelines 32-382-1138
Trade payables and other non-current debt (**)
Non-current financial receivables arising from lease contracts
Current financial receivables arising from lease contracts
Financial receivables and other current financial assets
Other financial receivables and other non-current financial assets
Subtotal
Net financial debt carrying amount (*)
Reversal of fair value measurement of derivatives and related
financial liabilities/assets
Adjusted Net Financial Debt
(*) As regards the effects of related-party transactions on net financial debt, reference should be made to the specific table included in the Note
“Related-party transactions".
(n)
(p=m+n)
(q)
(r=p+q)
(2,767)
(2,841)
21,937
(1,325)
(751)
(2,566)
27,324
(1,541)
29,890
(1,739)
20,612
25,783
(44)
(39)
(23)
(15)
(11)
(17)
(**) The amount at 12/31/2020 includes the residual payable relating to the acquisition of the rights-of-use for the 5G licenses, equal to 1,738 million
euros. At 12/31/2021, that amount was reclassified to Miscellaneous payables and other non-current liabilities, following the expiry scheduled for
2022, as described in the Note “Miscellaneous payables and other non-current liabilities".
Separate Financial Statements of
TIM S.p.A.
Note 15
Net financial debt
338
The following additional disclosures are provided in accordance with IAS 7:
Additional cash flow information required by IAS 7
(thousands of euros)
Non-current financial payables:
Bonds
Convertible bonds
Payables to banks
Other financial payables
of which current portion
Non-current financial liabilities
for lease contracts:
of which current portion
Other non-current financial
liabilities:
Hedging derivative liabilities
relating to hedged items
classified as non-current
assets/liabilities of a financial
nature:
Non-hedging derivatives
Other liabilities
of which current portion
Current financial payables:
Amounts due to banks
Other financial payables
Hedging derivative liabilities
relating to hedged items
classified as current financial
assets/liabilities
Total Financial liabilities (Gross
financial debt)
Hedging derivative receivables
relating to hedged items
classified as current and non-
current financial assets/liabilities
Non-hedging derivative
receivables
Total
12/31/2020
Cash movements
Receipts
and/or issues
Payments
and/or
reimburseme
nts
Non-cash movements
Fair value
changes
Exchange
differences
Other
changes
and
reclassificati
ons
12/31/2021
13,406
1,964
3,853
4,283
23,506
2,118
3,962
3,962
456
1,866
1,288
—
3,154
102
809
320
—
1,129
(a)
(b)
(c)
(d)
1,000
1,100
2,100
(564)
131
(71)
(1,625)
(5)
(2,194)
63
194
(71)
96
96
(407)
(407)
—
—
(10)
34
(1)
2
25
(476)
(476)
13,892
1,998
3,327
4,343
23,560
4,324
3,175
3,175
432
—
—
(97)
195
98
(379)
(130)
(509)
1
2
1
4
—
—
(609)
97
—
—
—
—
(512)
1,391
1,355
1
2,747
106
200
417
—
617
(e=a+b+c+d)
31,751
2,196
(2,601)
292
(580)
(959)
30,099
(f)
(g)
(h=e-f-g)
546
1,288
29,917
2,196
(2,601)
97
195
—
(237)
(127)
(216)
(15)
17
(961)
391
1,373
28,335
The value of the paid and collected interest expense reported in the Report on Operations takes into account
the movements relating to transactions in CCIRS derivatives to hedge underlying assets in both the assets
component (collections) and the liabilities component (payments) without netting the positions.
(million euros)
Interest expense paid
Interest income received
Net total
2020
(1,389)
465
(924)
(1,296)
504
(792)
2021
To consider the components of CCIRS derivatives as a single transaction, a representation is given with interest
flows in and out shown net. This approach gives the following results:
(million euros)
Interest expense paid
Interest income received
Net total
2020
(1,308)
384
(924)
(1,191)
399
(792)
2021
Separate Financial Statements of
TIM S.p.A.
Note 15
Net financial debt
339
NOTE 16
FINANCIAL RISK MANAGEMENT
Financial risk management objectives and policies of TIM S.p.A.
As reported in the Note "Financial Risk Management" of the TIM Group consolidated financial statements, TIM
S.p.A. adheres to the Guidelines on "Management and control of financial risk" established for the Group.
The risk management policies of TIM S.p.A. observe the policies for the diversification of risks identified for the
Group.
An optimum fixed-rate and variable-rate debt composition is defined for the entire Group and is not
established for the individual companies.
As for the exchange rate risk on financial payables contracted by TIM S.p.A. denominated in currencies other
than euro, such risk is hedged in full.
Derivative financial instruments are designated as fair value hedges for managing exchange rate and interest
rate risk on instruments denominated in currencies other than euro and for managing interest rate risk on
fixed-rate loans in euros. Derivative financial instruments are designated as cash flow hedges when the
objective is to pre-set the exchange rate of future transactions and the interest rate.
All derivative financial instruments are entered into with leading banking and financial counterparts whose
credit ratings are constantly monitored to reduce the credit risk.
TIM S.p.A. has current account transactions with subsidiaries, as part of its treasury services which are
conducted at market rates, and multi-year loan agreements with them which are also at market rates.
Interest rate risk: sensitivity analysis
The change in interest rates on the variable component of payables and liquidity may lead to higher or lower
finance income and expenses, while the changes in the level of the expected interest rate affect the fair value
measurement of TIM S.p.A. derivatives. In particular:
■ with regard to derivatives that convert the liabilities contracted by TIM S.p.A. to fixed rates (cash flow
hedging), in line with international accounting standards that regulate hedge accounting, the fair value
(mark-to-market) measurement of such instruments is set aside in a specific unavailable Equity reserve.
The combined change of the numerous market variables to which the mark-to-market calculation is
subject between the transaction inception date and the measurement date renders any assumption about
the trend of the variables of little significance. As the contract expiration date approaches, the accounting
effects described will gradually be absorbed until they cease to exist;
■
if, at December 31, 2021, the interest rates in the various markets in which TIM S.p.A. operates had been
100 basis points higher/lower compared to the actual rates, then higher/(lower) finance expenses, before
the tax effect, would have been recognized in the income statement for -18 million euros (68 million euros
at December 31, 2020).
Refer to Note 2 "Accounting Policies" for the potential risk generated by the reform of benchmark interest
rates.
Allocation of the financial structure between fixed rate and
variable rate
As for the allocation of the financial structure between the fixed-rate component and the variable-rate
component, for both financial assets and liabilities, reference should be made to the following tables. In the
tables below we took into account the nominal repayment/investment amount (because that amount
expresses the effective interest rate exposure of the Group) and, as far as financial assets are concerned, the
intrinsic nature (financial characteristics and duration) of the transactions under consideration rather than just
the stated contractual terms alone. Bearing that in mind, a transaction whose characteristics (short or very
short time frame and frequent renewal) are such that the interest rate is periodically reset on the basis of
market parameters, even though the contract does not call for re-fixing the interest rate (such as in the case of
bank deposits, Euro Commercial Papers and receivables on sales of securities), has been considered in the
category of variable rate.
Total Financial liabilities (at the nominal repayment amount)
(million euros)
Bonds
Loans and other financial
liabilities (*)
Total
12/31/2021
Fixed rate Variable rate
Total
Fixed rate
12/31/2020
Variable rate
15,025
8,046
23,071
513
3,776
4,289
15,538
11,822
27,360
10,423
8,854
19,277
4,551
4,598
9,149
Total
14,974
13,452
28,426
(*) At 12/31/2021, current liabilities totaled 616 million euros, of which 194 million euros at variable rates (1,127 million euros at 12/31/2020, of which
521 million euros at variable rates).
Separate Financial Statements of
TIM S.p.A.
Note 16
Financial risk management
340
Total Financial assets (at the nominal investment amount)
12/31/2021
Fixed rate Variable rate
Total
Fixed rate
12/31/2020
Variable rate
(million euros)
Cash & cash equivalents
Other receivables
Total
—
828
828
3,558
2,607
6,165
3,558
3,435
6,993
—
598
598
1,765
626
2,391
Total
1,765
1,224
2,989
With regard to variable-rate financial instruments, the contracts provide for revisions of the relative
parameters to take place within the subsequent 12 months.
Effective interest rate
As to the effective interest rate, for the categories where that parameter can be determined, such parameter
refers to the original transaction net of the effect of any derivative hedging instruments. The disclosure, which
is provided by class of financial asset and liability, has been determined, for purposes of calculating the
weighted average, using the carrying amount adjusted by accruals, prepayments, deferrals and fair value
adjustments: this is therefore the amortized cost, net of accruals and any changes in fair value, as a
consequence of hedge accounting.
Total Financial liabilities
(million euros)
Bonds
Loans and other financial liabilities
Total
Total Financial assets
(million euros)
Cash & cash equivalents
Other receivables
Total
12/31/2021
12/31/2020
Adjusted carrying
amount
15,475
11,380
26,855
Effective interest
rate (%)
3.56
3.01
3.33
Adjusted carrying
amount
14,877
13,112
27,989
Effective interest
rate (%)
3.70
2.91
3.33
12/31/2021
12/31/2020
Adjusted carrying
amount
3,558
2,833
6,391
Effective interest
rate (%)
—
2.82
1.25
Adjusted carrying
amount
1,765
802
2,567
Effective interest
rate (%)
—
0.98
0.31
As for financial assets, the weighted average effective interest rate is not essentially influenced by the
existence of derivatives.
As for market risk management using derivatives, reference should be made to the Note "Derivatives".
Credit risk
Credit risk represents TIM’s exposure to possible losses arising from the failure of commercial or financial
counterparties to fulfill their obligations. To measure this risk over time for impairment of financial assets
(trade receivables due from customers included), the introduction of IFRS 9 required switching from the
incurred loss model pursuant to IAS 39 to the expected credit loss model.
Such risk stems principally from economic and financial factors, or from the possibility that a default situation
of a counterparty could arise, or from more strictly technical, commercial or administrative factors.
TIM’s maximum theoretical exposure to credit risk is represented by the carrying amount of the financial assets
and trade receivables recorded in the financial statements, excluding guarantees received, described in the
Note "Contingent liabilities, other information, commitments and guarantees".
Risk related to trade receivables is managed using customer scoring and analysis systems. For specific
categories of trade receivables, the Group also makes use of factoring, mainly on a "non-recourse" basis.
In referring to the details indicated in the Note "Trade and miscellaneous receivables and other current
assets", it should be pointed out that the provision for bad debts is raised on specific credit positions that
present peculiar risk elements. On credit positions that do not have such characteristics, provision are raised by
customer segment according to the average uncollectibility estimated on the basis of statistical indicators.
Financial assets other than trade receivables are written down for impairment on the basis of a general model
which recognizes expected credit losses over the following 12 months, or over the residual life of the asset in
the event of a substantial worsening of its credit risk. The expected credit loss is calculated based on the
default probability and the percentage of credit that cannot be recovered in the event of a default (the loss
given default).
The model adopted to calculate the expected credit loss is based on the Bloomberg Credit Risk Model, a model
developed by Bloomberg which, starting from Merton's distance-to-default (“DD”) concept, estimates the
probability of default together with the recovery rate. At the same time, the loss given default is defined as the
non-recoverable component of the post-default financial asset.
Separate Financial Statements of
TIM S.p.A.
Note 16
Financial risk management
341
In particular, the DD - based on balance sheet data - is enriched with a series of additional information by
country (macroeconomic, risk), business sector and individual company, as well as accounting adjustments
aimed at ensuring uniformity of the model's outputs; finally, through a non-linear function of the DD, the
default probability is obtained.
As regards the current COVID-19 pandemic, use of the Bloomberg Credit Risk Model, which, as mentioned, also
takes into account the political and economic situation of the various countries in the short and medium/long-
term (from 3 months to 5 years), ensures that all risk components are adequately reflected in the
measurement of the credit risk.
In order to improve credit risk and reduce pressure on working capital, in February 2020, the corporate joint
venture TIM-SCB JV S.p.A. was established, with an investment of 51% by Santander Consumer Bank (SCB)
and 49% by TIM. The partnership with SCB aims to develop and distribute financial products to finance the
purchase by TIM customers of products relative to the world of telecommunications and the transfer without
recourse of trade receivables.
On November 3, 2020, the new corporate entity received authorization from the Bank of Italy to grant loans to
the public in accordance with Article 106 et seq. of the Consolidated Banking Act (TUB). In the last few months
of 2020 and early 2021, various corporate steps were completed, including the change in the company name
from TIM-SCB JV S.p.A. to TIMFin S.p.A..
TIMFin started operating on February 1, 2021 and over the following months progressively expanded its areas
of operation, completing coverage of the TIM physical sales points at the service of consumer customers.
Moreover, again for the credit risk relating to the asset components which contribute to the determination of
Net financial debt it should be noted that, as per Group policy, the management of the liquidity of TIM S.p.A. is
guided by conservative criteria and is principally based on money market management. As part of this
management, investments are made during the year with temporary excess cash resources, which are
expected to turn around within the subsequent 12-month period.
In order to limit the risk of non-fulfillment of the obligations undertaken by the counterparty, deposits were
made with banking and financial institutions with a rating no lower than investment grade and non-negative
outlook. Moreover, the terms of deposits are shorter than three months.
As concerns the credit risk relating to the current asset components and with particular reference to the trade
receivables, the risk is managed on two levels:
■ operational management along the entire process chain, starting from the checks during acquisition and
continuing to the internal management checks of still active customers and the subsequent service
interruption stages, contractual termination and assignment to specific institutions specialized in credit
collection;
■ management of specific securitization programs rather than of non-recurring disposals, most of which
non-recourse in nature.
Liquidity risk
TIM S.p.A. pursues the Group’s objective of achieving an adequate level of financial flexibility.
Current financial assets at December 31, 2021, together with unused committed bank lines, ensure complete
coverage of debt repayment obligations for the next 18 months.
At December 31, 2021, the liquidity margin available for TIM S.p.A. is 7,558 million euros, with a decrease of 908
million euros compared with end 2020 (8,466 million euros). The impact of the COVID-19 pandemic has not
entailed any liquidity risk. Moreover, on January 18, 2021, TIM S.p.A. issued its first 8-year Sustainability Bond
for an amount of 1 billion euros, coupon 1.625%.
18% of gross financial debt at December 31, 2021 (nominal repayment amount) will become due in the next 12
months.
The following tables report the contractual cash flows, not discounted to present value, relating to gross
financial debt at nominal repayment amounts and the interest flows, determined using the terms and the
interest and exchange rates in place at December 31, 2021. The portions of principal and interest of the hedged
liabilities included both the disbursements and the receipts of the relative hedging derivatives.
Separate Financial Statements of
TIM S.p.A.
Note 16
Financial risk management
342
Financial liabilities – Maturities of contractually expected disbursements
(million euros)
Bonds
Loans and other financial liabilities
(*)
Liabilities for lease contracts
Non-current financial liabilities(*)
Current financial liabilities(**)
Total Financial liabilities
maturing by 12/31 of the year:
2023
2024
2025
2026
2022
Principal
Interest portion
Principal
3,098 2,446 3,324 2,000
196
486
428
1,053
889 1,294
309
784
1,750
139
52
Interest portion
Principal
Interest portion
Principal
Interest portion
Principal
Interest portion
Principal
Interest portion
234
402
121
230
344
108
260
356
79
255
247
347
368
64
94
4,389 4,084 4,476 3,409 2,149
458
650
841
—
—
616
—
—
—
5,005 4,084 4,476 3,409 2,149
458
650
841
535
—
—
766
—
—
535
766
Total
After
2026
2,920 15,538
2,656
1,098
7,715
3,643
3,435
2,209
3,146
1,329
652
186
7,892 26,399
6,743
3,493
616
—
—
—
7,892 27,015
6,743
3,493
(*) These include hedging derivatives, but exclude non-hedging derivatives.
(**)These exclude non-hedging derivatives.
Derivatives on financial liabilities – Contractually expected interest flows
maturing by 12/31 of the year:
(million euros)
2022
2023
2024
2025
2026
Total
97
—
97
—
121
(41)
173
(115)
179
(125)
1,432
(281)
54
268
(268)
58
269
(269)
Disbursements
Receipts
Hedging derivatives – net
(receipts) disbursements
Disbursements
Receipts
Non-Hedging derivatives – net
(receipts) disbursements
Total net disbursements
(receipts)
In order to name the Parent as the sole counterparty of the banking system, all the derivatives of the Group,
except for those relating to two banking counterparties, have been centralized under TIM S.p.A.. In the TIM
S.p.A. separate financial statements, this centralization has resulted in the presence of two non-hedging
derivatives for each centralized transaction (one with the bank and the other for the same amount and
opposite sign with the company of the Group), while the hedging relationship remains with the subsidiary and
the Group.
765
2,456
(2,456)
1,151
3,799
(3,799)
97
268
(268)
97
268
(268)
80
270
(270)
—
1,151
—
765
—
80
—
58
—
54
—
97
—
97
After
2026
765
—
The flows relating to the non-hedging derivatives that were placed under centralized management have
therefore been excluded both from the analysis by maturity of contractually expected disbursements for
financial liabilities and from the analysis by maturity of contractually expected interest flows for derivatives,
because the positions are fully netted with one another and, consequently, are not significant for the analysis
of liquidity risk.
Market value of derivatives
In order to determine the fair value of derivatives, the TIM Group uses various valuation models. The mark-to-
market calculation is determined by discounting to present value the interest and notional future contractual
flows using market interest rates and exchange rates.
The notional amount of IRS does not represent the amount exchanged between the parties and therefore
does not constitute a measurement of credit risk exposure which, instead, is limited to the amount of the
differential between the interest rates paid/received. The market value of CCIRSs, instead, also depends on the
differential between the reference exchange rate at the date of signing the contract and the exchange rate at
the date of measurement, since CCIRSs imply the exchange of the reference interest and principal, in the
respective currencies of denomination.
The options are measured according to the Black & Scholes or Binomial models and involve the use of various
measurements factors, such as: time horizon of the life of the option, risk-free rate of return, current price,
volatility and any cash flows (e.g. dividends) of the underlying instrument, and exercise price.
Separate Financial Statements of
TIM S.p.A.
Note 16
Financial risk management
343
NOTE 17
DERIVATIVES
Derivative financial instruments are used by TIM S.p.A. to hedge its exposure to foreign exchange rate and
interest rate risks and also to diversify the parameters of debt so that costs and volatility can be reduced to
within predetermined operational limits.
Derivative financial instruments at December 31, 2021 are principally used to manage debt positions. They
include interest rate swaps (IRS) to reduce interest rate exposure on fixed-rate and variable-rate bank loans
and bonds, as well as cross currency and interest rate swaps (CCIRS), and currency forwards to convert the
loans/receivables secured in different foreign currencies to the functional currency.
IRS transactions, at specified maturity dates, provide for the exchange of flows of interest with the
counterparties, calculated on the notional amount, at the agreed fixed or variable rates.
The same also applies to CCIRS transactions which, in addition to the settlement of periodic interest flows, may
provide for the exchange of principal, in the respective currencies of denomination, at maturity and possibly
spot.
In carrying out its role as the Treasury function of the Group and with the aim of centralizing all exposures with
banking counterparties in just one entity (i.e. TIM S.p.A. pooling), TIM has derivative contracts signed with banks
and mirror intercompany derivative contracts with Telecom Italia Capital S.A. and Telecom Italia Finance S.A.,
for a notional value of 4,283 million euros. The balance of asset and liability measurements of these contracts
is equal to zero.
Hedging: economic relationship between underlying
instrument and derivatives
The hedge relationships documented in hedge accounting at TIM S.p.A. belong to four categories: i) hedging of
the fair value of bond issues denominated in euro and ii) hedging of the cash flows coming from the coupon
flow of bond issues denominated in currencies other than euro, iii) hedging of the cash flows coming from the
flow of floating interest on intercompany loans denominated in euro, iv) hedging of the cash flows coming
from the flow of floating interest on intercompany loans denominated in foreign currency.
In the first case, the hedged risk is the fair value of the bond attributable to the interest rates and the hedging
derivatives are IRSs, which allow all or part of the bond coupon flow to be received against a flow of floating
interest.
The current value of both instruments, underlying and derivatives, depends on the structure of the Euro
market interest rates at the foundation of the calculation of the discount factors and flows of floating interest
of the derivative. In particular, oscillating rates will translate as changes in the discount factor of the fixed
interest expense on the underlying; on the derivative, changes in the discount factor of interest income will
occur, as well as changes in the nominal flow of variable interest (only partially corrected by the discounting
effect). The effects induced on the derivative are opposite, in accounting terms, to the effects on the
underlying instrument.
In the second case, the hedged risk is represented by the variability in cash flows (and the repayment of the
nominal amount) generated by exchange rates; hedging comprises combinations of IRS and CCIRS that
synthetically transform fixed rate foreign currency income flows into fixed rate euro flows. In this case,
exchange rate fluctuations will usually produce contrary effects on the underlying asset and on the derivative,
as the asset leg of the latter faithfully reflects the underlying asset, while the liability leg is denominated in
euro and is therefore insensitive to the exchange rate.
In the third case, the hedged risk is the variability of the cash flow against the performance of Euro market
interest rates. The hedging is done with IRSs, which allow a variable flow of interest to be collected against the
payment of a fixed rate interest flow. The current value of the underlying asset and derivatives depends on the
structure of the Euro market interest rates. The fluctuations of rates generate an impact on the nominal
amount of the flow of floating rate interest of the loan (only partially corrected by the discounting effect); on
the derivative, there are changes in the discount factors of the flow of fixed interest expense and changes in
the nominal flow of floating interest income (only partially corrected by the discounting effect). The effects
induced on the derivative are of a single and contrary nature with respect to those on the underlying asset.
In the fourth case, the hedged risk is the variability of cash flows (including the nominal amount to be repaid)
induced by the exchange rate in addition to the market interest rates in foreign currency; the hedging consists
of IRS and CCIRS derivatives which turn the floating rate in foreign currency into a Euro fixed rate. In this case,
exchange rate fluctuations (in addition to fluctuations in the interest rates in foreign currency) will produce
physiologically opposite effects on the underlying asset and on the derivative, because the asset leg of the
latter faithfully reflects the underlying asset, while the liability leg is denominated in euros and is therefore
insensitive to the exchange rate (and to the interest rates in foreign currency). The impacts caused, on the
other hand, by the Euro interest rates on the liability leg of the derivative are restricted to just discounting.
There is a final case of commercial forecast transaction coverage denominated in a currency other than the
euro; the risk hedged is always ascribed to the variability of the cash flow linked to exchange rates, but the
hedge is assured through an active deposit denominated in the same currency as the items hedged. Write-
backs/write-downs of the deposit in foreign currency generated by oscillations in the exchange rate are
structurally the same and opposite to the impacts produced on the underlying items.
Separate Financial Statements of
TIM S.p.A.
Note 17
Derivatives
344
Hedges: determination of the hedge ratio
The types of hedging implemented by the Group require the adoption of a hedge ratio equal to 1:1, as the
types of risk hedged (interest rate and exchange rate risks) are such as to generate economic effects in the
underlying instruments that can only be offset by the same notional quantities of derivative instruments.
Hedges: potential sources of ineffectiveness
The contractualization of derivatives to hedge financial risks takes place at arm's length and aims to
completely neutralize the effects produced by such instruments.
However, in practice, both fair value hedges and cash flows hedges, although financially perfect, cannot
guarantee absolute effectiveness due to the many banks involved, the particular nature of some derivatives
attributable to fixing and/or the indexing of variable parameters, and the possible imperfect correspondence of
critical terms.
The first table indicates total financial derivatives of TIM S.p.A. at December 31, 2021 and 2020; in compliance
with standard IFRS 7, notional amounts are shown with reference to all the derivative instruments involved in
the hedges.
The following tables break down financial derivatives by type of risk for each kind of hedging, separating
financial assets and liabilities. For CCIRS, the notional amount refers to the contractual value in euros, for IRS in
a currency other than the euro, the value is indicated at the market exchange rate.
Type
Hedged risk
Interest rate risk
Interest rate risk and
currency exchange rate
risk
Interest rate swaps
Cross Currency and
Interest Rate Swaps
(CCIRS)
Total Fair Value Hedge Derivatives
Interest rate swaps
Cross Currency and
Interest Rate Swaps
(CCIRS)
Total Cash Flow Hedge Derivatives
Total Non-Hedge Accounting Derivatives
Total TIM derivatives
Interest rate risk
Interest rate risk and
currency exchange rate
risk
Notional
amount at
12/31/2021
Notional
amount at
12/31/2020
Spot Mark-to-
Market (*)
(Clean Price) at
12/31/2021
(million euros)
Spot Mark-to-
Market (*) (Clean
Price) at
12/31/2020
(million euros)
(million euros)
300
(million euros)
4,334
—
300
2,206
2,673
4,879
1,834
7,013
—
4,334
2,177
2,673
4,850
—
9,184
3
—
3
(732)
(291)
(1,023)
3
(1,017)
192
—
192
(935)
(614)
(1,549)
—
(1,357)
(*) Spot Mark-to-market above represents the market measurement of the derivative net of the accrued portion of the flow in progress.
The positions in non hedge accounting derivatives also include IRS Euros for a total notional amount of 1,834
million euros; specifically, these are fair value hedges of bond loans in euros, issued by TIM S.p.A., which
transform the fixed-rate coupon into a variable-rate one. The hedges - classified and booked as fair value
hedges starting 2013 - have been retroactively discontinued from June 30, 2021 due to the failure of the
prospective efficiency tests carried out at December 31, 2021. The test was failed due to the procedure used for
fixing in arrears the variable rate benchmark of the derivatives - defined by contract - which can generate
misalignments of fair value between the derivative and the underlying bond loan in the prospective volatility
risk reduction test in the approach to the maturity date of the hedge.
It is specified that, although formally classified as non-hedge, these derivatives substantively continue to
guarantee the desired profile of financial expenses in connection with the related bonds.
In this same item, the following are also noted: the value - equal to a fair value of 15 million euros (liabilities) -
of the rights envisaged in the Transaction Agreement in the favor of Teemo Bidco Sarl, as minority
shareholder, under the scope of the FiberCop transaction.
Separate Financial Statements of
TIM S.p.A.
Note 17
Derivatives
345
Fair value hedges
(million euros)
Accounting item
Interest rate swaps
Assets
Liabilities
Hedging derivatives relating to
hedged items classified as current
financial assets/liabilities -
Current/non-current assets.
Notional
value
Carrying
amount
Change in
fair value
for the
year
a)
300
3
(190)
Cross Currency and Interest Rate
Swaps (CCIRS)
Hedging derivatives relating to
hedged items classified as current
financial assets/liabilities -
Current/non-current assets.
b)
—
Assets
Liabilities
Derivative instruments (spot value)
Accruals
Derivative instruments (gross value)
a)+b)
300
3
—
—
—
—
3
1
4
—
(190)
Underlying instruments (1)
Bonds - Current/non-current
liabilities
300
(303)
of which fair value adjustment
Fair value adjustment and
measurements at amortized cost
Ineffectiveness (2)
Fair value adjustment for hedging
settled in advance (3)
c)
a)+b)+c)
(3)
183
(4)
(190)
Includes the amortized cost value of bonds currently hedged plus the fair value adjustment.
(1)
(2) Also considers the year’s change in derivatives and underlyings belonging to hedges closed early and discontinued in 2021.
(3) Referred to bonds no longer hedged, therefore not presented in the table.
Separate Financial Statements of
TIM S.p.A.
Note 17
Derivatives
346
Cash flow hedges
(million euros)
Accounting item
Notional
value
Carrying
amount
Change in
fair value
Change in
cumulative
fair value
a)
2,206
(731)
204
Hedging derivatives relating to
hedged items classified as
current financial assets/liabilities -
Current/non-current assets.
Interest rate swaps
Assets
Liabilities
Cross Currency and Interest
Rate Swaps (CCIRS)
Assets
Liabilities
Derivative instruments (spot
value)
Accruals
Derivative instruments (gross
value)
of which equity reserve gains
and losses
Determination of
ineffectiveness
Change in derivatives
Underlying instruments (4)
Ineffectiveness (5)
Equity reserve
Equity reserve balance
Hedging derivatives relating to
hedged items classified as
current financial assets/liabilities -
Current/non-current assets.
b)
2,673
(291)
a)+b)
4,879
Positive fair value adjustment of
financial derivatives - non-
hedging
c)
d)
c)+d)
24
(755)
291
(582)
(1,022)
18
(1,004)
(1,244)
24
(24)
228
323
75
248
527
748
1
(793)
792
(16)
of which due to the fair value
of hedging settled in advance
Reclassification to P&L
Negative reversal of the reserve
for the fair value adjustment of
hedging derivatives (cash flow
hedges)
(4) Hypothetical derivatives used in measuring the effectiveness of cash flow hedges.
(5) The ineffectiveness, due to its nature and calculation, does not necessarily coincide with the difference in cumulative changes in the fair value of
derivatives and the underlying instrument; the effect due to the adoption of CVA/DVA is not considered.
As regards hedging of the forecast transaction - reflected only in the numbers of the equity reserve in the table
above - these are future commercial flows for 106 million USD, to be paid in 7 years, hedged by a deposit
denominated in the same currency and amount, renewed every three months.
The transactions hedged by cash flow hedges will generate cash flows and produce economic effects in the
income statement in the periods indicated in the following table:
Denomination
currency
Notional amount
in denomination
currency
(millions)
Start of
period
End of
period
Rate applied
Interest
period
GBP
YEN
USD
USD
EUR
EUR
(*) Financial asset.
375
20,000
1,000
1,500
794
791
Annually
5.875%
Jan-22 May-23
Jan-22 Oct-29
Semiannuall
6 month JPY Libor +
y
0.94625%
3 month USD Libor +
Quarterly
Jan-22 Nov-33
0.756%
Jan-22 May-24
5.303% Semiannuall
y
Jan-22 Sept-34 6 month Euribor + 0.8787% Semiannuall
y
Jan-22 July-36
Semiannuall
y
6 month Euribor +
1.45969%
Hedging
of
notional
amount in
euro
(millions)
552
174
849
1,099
794
791
Hedging of
rate in euro
5.535%
5.940%
5.994%
4.226%
4.332%
5.884%
The method selected to test the effectiveness retrospectively and, whenever the principal terms do not fully
coincide, prospectively, for Cash Flow Hedge derivatives, is the Volatility Risk Reduction (VRR) Test. This test
assesses the ratio between the portfolio risk (meaning the derivative and the item hedged) and the risk of the
hedged item taken individually. In essence, the portfolio risk must be significantly lower than the risk of the
hedged item.
Separate Financial Statements of
TIM S.p.A.
Note 17
Derivatives
347
NOTE 18
SUPPLEMENTARY DISCLOSURES ON FINANCIAL
INSTRUMENTS
Measurement at fair value
For the purposes of the comparative information between the carrying amounts and fair value of financial
instruments, required by IFRS 7, the majority of the non-current financial liabilities of TIM consist of bonds,
whose fair value is directly observable in the financial markets, as they are financial instruments that due to
their size and diffusion among investors, are commonly traded on the relevant markets (see the Note "Non-
current and current financial liabilities"). For other types of financing, however, the following assumptions have
been made in determining fair value:
■
for variable-rate loans, the nominal repayment amount has been assumed;
for fixed-rate loans: fair value has been assumed to be the present value of future cash flows using market
interest rates at December 31, 2021.
Lastly, for the majority of financial assets, their carrying amount is a reasonable approximation of their fair
value, since these are short-term investments that are readily convertible into cash.
The fair value measurement of the financial instruments of TIM is classified according to the three levels set
out in IFRS 7. In particular, the fair value hierarchy introduces the following levels of input:
■ Level 1: quoted prices in active markets;
Level 2: prices calculated using observable market inputs;
■ Level 3: prices calculated using inputs that are not based on observable market data.
The following tables contain, for assets and liabilities at December 31, 2021 and December 31, 2020 and in
accordance with the categories established by IFRS 9, the supplementary disclosures on financial instruments
required by IFRS 7 and the schedules of gains and losses.
Key for IFRS 9 categories
Financial assets measured at:
Amortized cost
Fair value through other comprehensive income
Fair value through profit or loss
Financial liabilities measured at:
Amortized cost
Fair value through profit or loss
Hedging Derivatives
Not applicable
Acronym
AC
FVTOCI
FVTPL
AC
FVTPL
HD
n.a.
Separate Financial Statements of
TIM S.p.A.
Note 18
Supplementary disclosures on financial instruments
348
Carrying amount and fair value hierarchy for each category/class of financial asset/liability and comparison
with their fair value at 12/31/2021
(million euros)
Categorie
s
IFRS 9
notes
Carrying
amount at
12/31/2021
Amortized cost
Amounts recognized in financial
statements
Fair Value
recognized in
the
statements of
comprehensiv
e income
Fair Value
recognized
in the
separate
income
statements
Levels of hierarchy or of
fair value
Level 1 Level 2 Level 3
Fair Value
at
12/31/2021
Values
recognize
d in the
Financial
statemen
ts as per
IFRS 16
ASSETS
Financial assets measured at
amortized cost
Non-current assets
Receivables from
employees
Other financial
receivables
Miscellaneous
receivables from others
(non-current)
Current assets
Receivables from
employees
Other short-term
financial receivables
Cash and cash
equivalents
Trade receivables
Miscellaneous
receivables from others
(current)
Contract assets
Financial assets measured at
fair value through other
comprehensive income
Non-current assets
Other investments
Securities other than
investments
Current assets
Trade receivables
Securities other than
investments
Financial assets measured at
fair value through profit or
loss
Non-current assets
Non-hedging derivatives
Current assets
Securities other than
investments
Non-hedging derivatives
Hedging Derivatives
Non-current assets
Hedging Derivatives
Current assets
Hedging Derivatives
Financial receivables for
lease contracts
Non-current assets
Current assets
Total
AC
9,027
9,027
—
—
9,027
8)
8)
9)
8)
8)
8)
12)
12)
12)
7)
8)
12)
8)
8)
8)
8)
8)
8)
8)
8)
FVTOCI
FVTPL
HD
n.a.
36
2,731
21
11
12
36
2,731
21
11
12
3,558
2,564
3,558
2,564
77
17
35
35
—
—
1,373
1,305
68
391
366
25
50
11
39
10,876
77
17
—
35
35
—
—
—
35
22
13
—
—
—
1,373
1,305
1,305
—
—
387
363
24
—
68
4
3
1
—
68
366
25
9,027
422
1,377
22 1,764
13
1,373
391
50
11
39
50
50
10,876
Separate Financial Statements of
TIM S.p.A.
Note 18
Supplementary disclosures on financial instruments
349
The financial instruments belonging to hierarchy level 3 of fair value are represented by the following Other
investments recognized as Non-current assets, for which directly or indirectly observable prices on the market
are not available: Banca UBAE; Istituto Europeo di Oncologia; Istituto Enciclopedia Italiana G. Treccani and
other more minor.
These equity investments were measured on the basis of an analysis, deemed reliable, of their significant
assets and liabilities.
In 2020, there were no effects on the income statement deriving from the measurement of financial
instruments at fair-value hierarchy level 3.
The profit/(loss) recognized in Other components of the Statements of Comprehensive Income were
recognized within the scope of the Reserve for financial assets measured at fair value through other
comprehensive income.
(millions of euros)
Categorie
s
IFRS 9
notes
Carrying
amount at
12/31/2021
Cost
amortized
Amounts recognized in financial
statements
Fair value
recognized in
the
statements of
comprehensiv
e income
Fair Value
recognized
in the
separate
income
statements
Levels of hierarchy or
of fair value
Level 1 Level 2 Level 3
Fair Value
at
12/31/2021
Values
recognize
d in the
financial
statemen
ts
as per
IFRS 16
30,960
AC/HD
30,298
30,298
14)
19,237
19,237
14)
4,939
4,939
22)
22)
6,015
107
6,015
107
LIABILITIES
Financial liabilities measured
at amortized cost
Non-current liabilities
Non-current financial
payables
Current liabilities
Current financial
payables
Trade and miscellaneous
payables and other
current liabilities
Contract liabilities
Financial liabilities measured
at fair value through profit or
loss
Non-current liabilities
Non-hedging derivatives
Current liabilities
Non-hedging derivatives
Hedging Derivatives
Non-current liabilities
Hedging Derivatives
Current liabilities
Hedging Derivatives
Liabilities for lease contracts
Non-current liabilities
Current liabilities
Total
FVTPL
HD
n.a.
1,355
1,303
52
1,391
1,337
54
3,177
2,743
434
36,221
14)
14)
14)
14)
14)
14)
1,355
1,303
52
—
1,391
1,337
54
15
1,288
52
1,337
54
1,355
1,391
30,298
1,391
1,355 — 2,731
3,177
2,743
434
15 3,177
3,975
37,681
Note that financial liabilities include a financial instrument for an amount of 15 million euros, belonging to
hierarchy level 3 of fair value, for which directly or indirectly observable prices on the market are not available.
This financial liability refers to the rights envisaged in the Transaction Agreement in the favor of Teemo Bidco
Sarl, as minority shareholder, under the scope of the FiberCop transaction.
The measurement of the economic value of the financial liability has been taken using a valuation model
defined internally by TIM. Through an econometric approach, the correlation has been first estimated between
the targets set at a national level and a series of macro economic and social-demographic variables. Then
taking into account the uncertainty as to how these variables will evolve and the market share of FiberCop,
through Monte Carlo simulation, a series of possible developments of the phenomenon was calculated and the
expected value of the financial liability, determined.
Separate Financial Statements of
TIM S.p.A.
Note 18
Supplementary disclosures on financial instruments
350
Carrying amount and fair value hierarchy for each category/class of financial asset/liability and comparison
with their fair value at 12/31/2020
(million euros)
notes
Categorie
s
IFRS 9
Carrying
amount in
financial
statements
at
12/31/2020
Amounts recognized in financial
statements
Amortized cost
Fair Value
recognized in
the
statements of
comprehensiv
e income
Fair Value
recognized
in the
separate
income
statements
Levels of hierarchy or of
fair value
Level 1 Level 2 Level 3
Fair Value
at
12/31/2020
Values
recognized
in the
financial
statement
s
as per
IFRS 16
ASSETS
Financial assets measured at
amortized cost
Non-current assets
Receivables from
employees
Other financial
receivables
Miscellaneous
receivables from others
(non-current)
Current assets
Receivables from
employees
Other short-term
financial receivables
Cash and cash
equivalents
Trade receivables
Miscellaneous
receivables from others
(current)
Contract assets
Financial assets measured at
fair value through other
comprehensive income
Non-current assets
Other investments
Securities other than
investments
Current assets
Trade receivables
Securities other than
investments
Financial assets measured at
fair value through profit or
loss
Non-current assets
Non-hedging derivatives
Current assets
Securities other than
investments
Non-hedging derivatives
Hedging Derivatives
Non-current assets
Hedging Derivatives
Current assets
Hedging Derivatives
Financial receivables for
lease contracts
Non-current assets
Current assets
Total
AC
4,954
4,954
—
—
4,954
8)
8)
9)
8)
8)
8)
12)
12)
12)
7)
8)
12)
8)
38
713
16
12
3
38
713
16
12
3
1,766
2,305
1,766
2,305
78
23
—
78
23
30
30
—
—
FVTOCI
30
30
—
—
—
30
16 —
14
—
FVTPL
1,288
—
—
1,288
8)
1,239
1,239
1,239
HD
n.a.
8)
8)
8)
8)
8)
8)
49
546
500
46
61
17
44
6,879
—
—
331
308
23
—
49
215
192
23
—
49
500
46
4,954
361
1,503
16 1,834
14
1,288
546
61
17
44
61
61
6,879
Separate Financial Statements of
TIM S.p.A.
Note 18
Supplementary disclosures on financial instruments
351
(millions of euros)
LIABILITIES
Financial liabilities measured
at amortized cost
Non-current liabilities
Non-current financial
payables
Current liabilities
Current financial
payables
Trade and miscellaneous
payables and other
current liabilities
Contract liabilities
Financial liabilities measured
at fair value through profit or
loss
Non-current liabilities
Non-hedging derivatives
Current liabilities
Non-hedging derivatives
Hedging Derivatives
Non-current liabilities
Hedging Derivatives
Current liabilities
Hedging Derivatives
Liabilities for lease contracts
Non-current liabilities
Current liabilities
Total
Amounts recognized in financial statements
Amortized cost
notes
Categorie
s
IFRS 9
Carrying
amount in
financial
statements
at
12/31/2020
Fair value
recognized in
the statements
of
comprehensive
income
Fair Value
taken to
separate
income
statements
Levels of
hierarchy or
of fair value
Level 1 Level 2 Carrying
amount
under
IFRS 16
Fair Value
at
12/31/2020
AC/HD
28,386
28,386
25,569
14)
21,388
21,388
14)
3,240
3,240
22)
22)
3,641
117
3,641
117
FVTPL
HD
n.a.
1,288
1,239
49
1,866
1,813
53
3,969
3,506
463
35,509
14)
14)
14)
14)
14)
14)
1,288
1,239
49
—
1,866
1,813
53
1,239
49
1,813
53
1,288
1,866
3,969
3,506
463
1,288 — 3,154 3,969
4,240
32,963
28,386
1,866
Gains and losses by IFRS 9 categories - Year 2021
(million euros)
IFRS 9 categories
Assets measured at amortized cost
Assets and liabilities measured at fair value through profit or
loss
Assets and liabilities measured at fair value recognized in
the statements of comprehensive income
Financial Liabilities at Amortized Cost
Total
AC
FVTPL
FVTOCI
AC
Gains and losses by IFRS 9 categories - Year 2020
(million euros)
IFRS 9 categories
Assets measured at amortized cost
Assets and liabilities measured at fair value through profit or
loss
Assets and liabilities measured at fair value recognized in
the statements of comprehensive income
Financial Liabilities at Amortized Cost
Total
AC
FVTPL
FVTOCI
AC
Net gains/(losses)
2021
(129)
(10)
1
(769)
(907)
Net gains/(losses)
2020
(354)
88
—
(766)
(1,032)
of which
interest
103
—
—
(683)
(580)
of which
interest
12
—
—
729
741
Separate Financial Statements of
TIM S.p.A.
Note 18
Supplementary disclosures on financial instruments
352
NOTE 19
PROVISIONS FOR EMPLOYEE BENEFITS
The item decreased by 74 million euros compared to December 31, 2020 The breakdown and movements are
as follows:
(million euros)
12/31/2020
12/31/2019
Decrease
Increase/
Discounting
Provision for employee severance indemnities
Provision for termination benefit incentives and
corporate restructuring
Total
of which:
non-current portion
current portion (*)
805
541
1,346
1,346
1,106
240
(1)
30
29
(128)
(532)
(660)
676
39
715
715
676
39
(*)
The current portion refers to the Provision for termination benefit incentives and corporate restructuring.
(million euros)
12/31/2020
Provision for employee severance indemnities
Provision for termination benefit incentives and
corporate restructuring
Total
of which:
non-current portion
current portion (*)
676
39
715
676
39
Increase/
Discounting
18
—
18
Decrease
12/31/2021
(53)
(39)
(92)
641
—
641
641
—
(*)
The current portion refers to the Provision for termination benefit incentives and corporate restructuring.
The Provision for employee severance indemnities is down 35 million euros on December 31, 2020.
"Increases/ Present value" totaled 18 million euros and break down as follows
(million euros)
(Positive)/negative effect of curtailment
Finance expenses
Net actuarial (gains) losses recognized during the year
Total expenses (income)
Effective return on plan assets
2021
2020
—
(1)
6
4
14
(6)
(1)
18
there are no assets servicing the
plan
The net actuarial losses recognized at December 31, 2021 amounted to 14 million euros (net actuarial gains of
6 million euros in 2020), and are essentially connected with the inflation rate forecast, which went from 0.8%
at December 31, 2020 to 1.75% at December 31, 2021; the discount rate also increased, going from the 0.34%
used at December 31, 2020 to 0.98% at December 31, 2021.
According to Italian law, the amount to which each employee is entitled depends on the period of service and
must be paid when the employee leaves the company. The amount of severance indemnity due upon
termination of employment is calculated on the basis of the period of employment and the taxable
compensation of each employee. This liability is adjusted annually based on the official cost-of-living index and
legally-set interest. The liability is not associated with any vesting condition or period or any funding obligation;
accordingly, there are no assets servicing the provision. The liability is recognized net of the partial
prepayments of the provision and payments of the amounts obtained by employees for the reasons permitted
by the applicable regulations.
In accordance with IAS 19, this provision has been recognized as a “Defined benefit plan”, for the amounts due
up to December 31, 2021.
Under the regulations introduced by Italian Legislative Decree 252/2005 and Law 296/2006 (the State Budget
Law 2007), the severance indemnities accruing from 2008 are assigned to either the INPS Treasury Fund or to
supplementary pension funds and take the form of a "Defined contribution plan". However, revaluations of the
provision for the employee severance indemnities at December 31, 2006, made on the basis of the official cost-
of-living index and legally-prescribed interest, are retained in the provision for employee severance
indemnities.
In application of IAS 19, the employee severance indemnities have been calculated using the "Projected Unit
Credit Method" according to which:
■
the future possible benefits which could be paid to each employee registered in the program in the event
of retirement, death, disability, resignation etc. have been projected on the basis of a series of financial
assumptions (cost-of-living increases, interest rate, increase in compensation etc.);
Separate Financial Statements of
TIM S.p.A.
Note 19
Provisions for employee benefits
353
■
■
the average present value of future benefits has been calculated, at the measurement date, on the basis
of the annual interest rate adopted and of the probability that each benefit actually has to be paid;
the liability has been calculated as the average present value of future benefits that will be generated by
the existing provision at the measurement date, without considering any future accruals.
The following assumptions have been made:
FINANCIAL ASSUMPTIONS
Inflation rate
Discount rate
Employee severance indemnities annual increase rate
Annual real wage growth:
equal to or less than 40 years of age
over 40 but equal to or less than 55 years of age
over 55 years of age
DEMOGRAPHIC ASSUMPTIONS
Probability of death
Probability of disability
Probability of resignation:
up to 40 years of age
From 41 to 50 years of age
From 51 to 59 years of age
From 60 to 64 years of age
Aged 65 and over
Probability of retirement
Probability of receiving at the beginning of the year an advance
from the provision for severance indemnities accrued equal to 70%
Executives
1.75% per annum
0.98% per annum
2.81% per annum
Non-executives
1.75% per annum
0.98% per annum
2.81% per annum
1.0% per annum
0.5% per annum
0.0% per annum
Executives
RG mortality tables
48 published
by Ragioneria
Generale dello Stato
1.0% per annum
0.5% per annum
0.0% per annum
Non-executives
RG mortality tables
48 published
by Ragioneria
Generale dello Stato
INPS tables divided by age
and sex
INPS tables divided by age
and sex
2.00%
2.00%
1.00%
None
None
1.00%
0.50%
0.50%
0.50%
None
100% on achievement of the AGO requirements aligned
with D.L. 4/2019
1.5%
per annum
1.5%
per annum
The application of the above assumptions resulted in a liability for employee severance indemnities of 641
million euros at December 31, 2021 (676 million euros at December 31, 2020).
Reported below is a sensitivity analysis for each significant actuarial assumption adopted to calculate the
liability as at year end, showing how the liability would have been affected by changes in the relevant actuarial
assumptions that were reasonably possible at that date, stated in amounts. The weighted average duration of
the obligation is 10 years.
CHANGES IN ASSUMPTIONS
Turnover rate:
+ 0.25 p.p.
0.25 p.p.
Annual inflation rate:
+ 0.25 p.p.
0.25 p.p.
Annual discount rate:
+ 0.25 p.p.
0.25 p.p.
Amounts
(million euros)
(2)
2
11
(10)
14
(15)
The Provisions for incentive to take early retirement and company restructuring reduce by a total of 39
million euros, zeroing during the period, as a result of outgoings and the reclassification to debt of the amounts
not yet paid, relative to both plans already accrued during previous years and the portion entered as expense
in 2021 (289 million euros) following application of the trade union agreements stipulated between the
Company and the trade unions on March 8, 2021 and on April 23, 2021.
Separate Financial Statements of
TIM S.p.A.
Note 19
Provisions for employee benefits
354
NOTE 20
PROVISIONS
This item increased by 212 million euros compared to December 31, 2020. The breakdown and movements are
as follows:
(million euros)
12/31/2020
Increase
Taken to
income
Used directly Reclassificatio
ns/other
changes
12/31/2021
Provision for taxation and tax
risks
Provision for restoration costs
Provision for legal disputes
Provision for commercial risks
Provision for risks and charges
on investments and corporate-
related transactions
Other provisions
Total
of which:
non-current portion
current portion
2
268
666
25
28
1
990
618
372
1
12
27
657
1
2
700
—
(3)
(4)
(7)
(1)
(3)
(341)
(6)
(1)
(352)
—
(128)
(2)
1
—
(129)
2
149
350
674
25
2
1,202
633
569
The non-current portion of provisions for risks and charges mainly relates to the provision for restoration costs
and some of the provision for legal disputes. More specifically, in accordance with accounting standards, the
total amount of the provision for restoration costs is calculated by re-measuring the amounts for which a
probable outlay is envisaged, based on the estimated inflation rates for the individual due dates, and
subsequently discounted to the reporting date based on the average cost of debt, taking into account cash
outflow forecasts.
The provision for taxation and tax risks has not changed from December 31, 2020.
The provision for restoration costs related to the provision for restoration of leased real estate and sites used
for mobile telephony and the dismantling of tangible assets (batteries, wooden poles). Decrease of 119 million
euros compared to December 31, 2020, primarily due to the conferral of the share of the provision for the pole
network fund to FiberCop.
The provision for legal disputes decreased by 316 million euros compared to December 31, 2020, mainly as a
result of uses made in 2021 for settlements and legal agreements; it includes provisions for disputes with
employees (46 million euros) and third-parties (304 million euros).
The provision for commercial risks increased by 649 million euros on December 31, 2020, mainly following the
entry of Contractual Risk Provisions for Onerous Contracts (IAS 37) relative to contracts with certain
counterparties for multimedia content offers. Further details are provided in the Note “Significant non-
recurring events and transactions” of these Separate Financial Statements at December 31, 2021.
The Provision for risks and charges on investments and corporate-related transactions decreased by 3
million euros compared to December 31, 2020.
Other provisions for risks and charges increased by 1 million euros compared to December 31, 2020.
Separate Financial Statements of
TIM S.p.A.
Note 20
Provisions
355
NOTE 21
MISCELLANEOUS PAYABLES AND OTHER NON-
CURRENT LIABILITIES
Miscellaneous payables and other non-current liabilities consisted of the following at December 31, 2021:
(million euros)
Miscellaneous payables (non-current)
Payables to social security agencies
Payables due to subsidiaries
Other payables to third parties
12/31/2021
12/31/2020
437
5
232
674
480
4
2,202
2,686
(a)
Other non-current liabilities
Deferred revenues from customer contracts (Contract liabilities)
Other deferred revenue and income
Capital grants
Total
Miscellaneous payables (non-current)
85
170
267
522
1,196
104
392
295
791
3,477
(b)
(a+b)
This item decreased by 2,012 million euros compared to December 31, 2020 and mainly includes:
■ Payables to social security agencies amounted to 437 million euros (480 million euros at December 31,
2020): related to the remaining amount due to the INPS for the application of the 2015 arrangements and
those subsequently signed in 2018 and 2019, relating to Article 4 paragraphs 1-7ter, of Italian Law 92 of
June 28, 2012 (see the Note “Employee benefits expenses” for more details).
Details are as follows:
(million euros)
Non-current payables
Due from 2 to 5 years after the end of the reporting period
Due beyond 5 years after the end of the reporting period
Current payables
Total
12/31/2021
12/31/2020
428
9
437
248
685
473
7
480
290
770
■ Payables to subsidiaries amounted to 5 million euros (4 million euros at December 31, 2020): this item
relates to the payables due for the adoption of the consolidated tax return in Italy;
■ Other payables to third parties includes 232 million euros (2,202 million euros at December 31, 2020)
relating for 231 million euros to the third installment of substitute tax to be paid in accordance with Decree
Law 104/2020, Art. 110, paragraphs 8 and 8bis. This decreased by 1,970 million euros, mainly due to the
reclassification to current payables of 1,738 million euros relating to the last installment to be paid by
September 2022 and relating to the purchase - which took place in 2018 - of the rights-of-use for the
frequencies in the 694-790 MHz, 3600-3800 MHz and 26.5-27.5 GHz bands, to be allocated on 5G mobile
communication services.
Other non-current liabilities
The item, amounting to 522 million euros, fell by 269 million euros compared to December 31, 2020 and
consisted of:
■ Deferred revenues from contracts with customers (contract liabilities) of 85 million euros (104 million
euros at December 31, 2020): the item is reversed to the income statement according to the duration of
the contractual obligations between the parties, averaging 24 months; therefore, the balance as at
December 31, 2021 will be reversed to the income statement generally by 2023. The item mainly includes:
• deferred revenues on activation and installation of new contracts with customers of 4 million euros (8
million euros at December 31, 2020): in this regard, it is noted that under IFRS 15 activation/installment
revenues are allocated to other contract obligations and recognized throughout the period of
performance of the contract, as they do not relate to separate performance obligations;
• deferred revenues for subscription charges of access to the network of 25 million euros;
• deferred revenues for subscription charges and rent and maintenance payments of 42 million;
• deferred revenues for outsourcing charges for 13 million euros.
Separate Financial Statements of
TIM S.p.A.
Note 21
Miscellaneous payables and other non-current liabilities
356
■ Other deferred revenues and income, amounting to 170 million euros (392 million euros at December 31,
2020): these refer to contract liabilities deriving from contracts for the sale of transmission capacity
(operating asset leases);
■ Capital grants of 267 million euros (295 million euros at December 31, 2020): the item represents the
component still to be released to the income statement based on the remaining useful life (estimated at
around 18 years) of the assets that the grants refer to and is mainly connected to the realization of the
infrastructures on the ultrabroadband-UBB and broadband-BB projects.
Separate Financial Statements of
TIM S.p.A.
Note 21
Miscellaneous payables and other non-current liabilities
357
NOTE 22
TRADE AND MISCELLANEOUS PAYABLES AND
OTHER CURRENT LIABILITIES
following:
Trade and miscellaneous payables and other current liabilities at December 31, 2021 consisted of the
(million euros)
12/31/2021
of which
Financial
Instruments
12/31/2020
of which
Financial
Instruments
Trade payables
Payables to suppliers
Payables to other telecommunication operators
Payables due to subsidiaries
Payables to associates and joint ventures
Payables to other subsidiaries
Miscellaneous payables
Payables due to subsidiaries
Payables to associates and joint ventures
Payables to other related parties
Tax payables
Payables to social security agencies
Payables for employee compensation
Other
Employee benefits (except for employee severance
indemnities) for the current portion expected to be
settled within 12 months
Provisions for employee benefits (except for employee
severance indemnities) for the current portion
expected to be settled within 12 months
Other current liabilities
Liabilities from customer contracts (Contract liabilities)
Other deferred revenue and income
Other
Total
(a)
(b)
(c)
(a+b+c)
3,012
346
585
177
39
4,159
92
—
21
74
332
121
1,953
—
569
3,162
735
29
26
790
8,111
3,012
346
585
177
39
4,159
—
1,856
1,856
107
107
6,122
2,687
374
280
102
35
3,478
42
—
61
109
341
118
260
39
372
1,342
711
58
21
790
5,610
2,687
374
280
102
35
3,478
—
163
163
117
117
3,758
Further details on Financial Instruments are provided in the Note "Supplementary disclosures on financial
instruments".
Trade payables
This item increased by 681 million euros compared to December 31, 2020, mainly as a result of the change in
bills payable. On June 30, 2021, the purchase of the BT Italia Business Unit took effect, offering services to
public administration customers and small and medium businesses/enterprises (SMB/SME). As a result of this
transaction, TIM acquired 8 million euros in trade payables.
In particular, we report:
■
■
■
trade payables to subsidiaries that amounted to 585 million euros: these relate to amounts due to
FiberCop (304 million euros), Noovle S.p.A. (88 million euros), Telenergia (65 million euros), Telecom Italia
Sparkle (42 million euros) for telecommunications services, TIM Retail (24 million euros), Olivetti (19 million
euros), Telecontact (18 million euros), Telecom Italia Trust Technologies (10 million euros) and Telsy (11
million euros) for supply contracts;
trade payables to associates that amounted to 177 million euros: relate to debt positions mainly due from
INWIT S.p.A. (170 million euros), which has become an associate.
trade payables to related parties that amounted to 39 million euros: relate mainly to amounts due to the
Havas group.
Separate Financial Statements of
TIM S.p.A.
Note 22
Trade and miscellaneous payables and other current liabilities
358
Miscellaneous payables
These come to 3,162 million euros, up by 1,820 million euros on December 31, 2020, mainly due to the specified
reclassification of the residual payable relating to the acquisition of rights to use 5G licenses (1,738 million
euros) from Miscellaneous payables and other non-current liabilities, following the passing of the deadline
envisaged in 2022.
TIM has also entered 22 million euros in miscellaneous payables relating to the purchase price of the BT Italia
Business Unit took effect, offering services to Public Administration customers and small and medium
businesses/enterprises (SMB/SME).
Miscellaneous payables mainly include:
■
tax payables, amounting to 74 million euros: these mainly refer to VAT payable (2 million euros),
withholding tax payable to the tax authorities as withholding agent (61 million euros) and government
concession tax payable (5 million euros);
■ payables to social security agencies: these include the short-term portion of the debt position towards
INPS in relation to the application of the 2015 and subsequent agreements signed in 2018, 2019 and 2020,
relating to Article 4, paragraphs 1-7ter, of Italian Law 92 of June 28, 2012, as described in the Note
“Miscellaneous payables and other non-current liabilities”;
■ payables to subsidiaries of 92 million euros: these mainly relate to payables to FiberCop (48 million euros),
Noovle S.p.A. (18 million euros), Telenergia (6 million euros), Telecom Italia Sparkle (8 million euros) and
Olivetti (6 million euros). These include 6 million euros for consolidated tax returns (mainly due to Telecom
Italia Sparkle, Telecontact, Telenergia, TIM Retail and Olivetti);
■ other payables mainly include the mentioned current portion of the residual payable for the acquisition of
rights to use 5G licenses, in addition to payables for government and European Union grants;
■ employee benefits and provisions.
Other current liabilities
These amount to 790 million euros and mainly include:
■ The liability arising from contracts with customers (contract liabilities), amounting to 735 million euros
(711 million euros at December 31, 2020): The item shows the liabilities from customers linked to the
Company’s obligations to transfer goods and services for which received a price. Liabilities with customers,
generally with a maturity of up to 12 months, are shown below; therefore, the figure at December 31, 2021
will be substantially reversed by December 31, 2022. In particular:
• Contract Liabilities amounting to 9 million euros (17 million euros at December 31, 2020); the item
includes bundle contracts (good and services packages) with performance obligations with different
timing for the recognition of revenues and consequent deferral of the fees originally recognized. The
decrease recognized in the year 2021 (-8 million euros) was mainly linked to the launch of commercial
offers that no longer require a fixed duration and the reversal to the income statement of the balance
previously accumulated;;
• Customer-related items of 372 million euros (351 million euros at December 31, 2020): the item
includes trade payables following contractual relationships, such as the payable for prepaid traffic and
the subscription charges charged in advance;
• Advance receipts and payments amounting to 62 million euros (80 million euros at December 31,
2020): the item includes trade payables following prepayments, such as deposits made by subscribers
for phone calls;
• Deferred revenues from contracts with customers of 291 million euros (263 million euros at
December 31, 2020): the item refers to the deferral of revenues from customers contracts and mainly
includes:
– deferred revenues on activation and installation of new contracts with customers (7 million euros);
– deferred revenues for interconnection charges (116 million euros);
– deferred revenues for rent and maintenance (131 million euros).
■ Other deferred revenues and proceeds amounted to 29 million euros (58 million euros at December 31,
2020): related for 26 million euros to deferred revenues from transmission capacity transfer contracts and
for 3 million euros to deferred revenues from real estate lease contracts (income from operating leases).
■ Other income (26 million euros, 21 million euros at December 31, 2020): this relates to payables for
advances on work in progress on networks.
Separate Financial Statements of
TIM S.p.A.
Note 22
Trade and miscellaneous payables and other current liabilities
359
NOTE 23
DISPUTES AND PENDING LEGAL ACTIONS,
OTHER INFORMATION, COMMITMENTS AND
GUARANTEES
A description is provided below of the most significant judicial, arbitration and tax disputes in which TIM S.p.A.
was involved at December 31, 2021, as well as those that came to an end during the year.
TIM S.p.A. has posted liabilities totaling 313 million euros for those disputes described below where the risk of
losing the case has been considered probable.
It should be noted that for some of the disputes described below, it was not possible to make a reliable
estimate of the size and/or times of possible payments, if any, on the basis of the information available at the
closing date of the present document, particularly in light of the complexity of the proceedings, the progress
made, and the elements of uncertainty of a technical-trial nature. Moreover, in those cases in which disclosure
of information on a dispute could seriously jeopardize the position of TIM or its subsidiaries, only the general
nature of the dispute is described.
Lastly, as regards proceedings with the Antitrust Authority, note that based on Article 15, paragraph 1 of Law
287/1990 (“Antitrust regulations”), the Authority has the right to impose an administrative sanction calculated
on the turnover of the Group in cases of breaches considered serious.
a) Significant disputes and pending legal actions
Administrative offense charge pursuant to Legislative Decree 231/2001
for the so-called TIM Security Affair
In December 2008 TIM received notification of the application for its committal for trial for the administrative
offense specified in articles 21 and 25, subsections 2 and 4, of legislative decree no. 231/2001 in relation to the
affairs that involved several former employees of the Security function and former collaborators of the
Company charged – among other things – with offenses involving corruption of public officials, with the object
of acquiring information from confidential files. In May 2010 TIM definitively ceased to be a defendant in the
criminal trial, the Judge for the Preliminary Hearing having approved the motion for settlement of the
proceedings (plea bargaining) presented by the Company. In the hearing before Section One of the Milan Court
of Assizes, TIM acted in the dual role of civil party and civilly liable party. In fact, on the one hand it was
admitted as civil party against all the defendants for all charges, and on the other it was also cited as the party
with civil liability pursuant to article 2049 of the Italian Civil Code for the actions of the defendants in relation to
32 civil parties. Telecom Italia Latam and Telecom Italia Audit and Compliance Services (now incorporated into
TIM) also participated in the hearing as civil parties, having filed appearances since the Preliminary Hearing and
brought charges against the defendants for hacking. After the lengthy evidence hearings, 22 civil parties filed
claims for compensation, also against TIM as civilly liable party, for over 60 million euros (over 42 million euros
of which requested by a single civil party). The Company itself, as civil party, also summarized its conclusions
against the defendants, requesting that they be found liable for all the damages suffered as a result of the
facts of the case. In February 2013, Section 1 of the Milan Court of Assizes issued the first instance judgement,
sentencing the defendants to terms of imprisonment of between 7 years and 6 months and one year. The
Court also recognized that there had been non-pecuniary damage to some of the civil parties as a
consequence of the alleged facts, and sentenced the defendants, jointly and severally with civilly liable party
TIM, to compensate said damages, totaling 270,000 euros (in part jointly and severally with Pirelli) plus legal
fees; at the same time the Court also sentenced the defendants to pay compensation for pecuniary and non-
pecuniary damages incurred by the Company, granting it a provisional sum of 10 million euros. The judgement
also recognized the existence of non-pecuniary damage to the companies Telecom Italia Latam and Telecom
Italia Audit & Compliance Services, sentencing the defendants to pay compensation for damages on an
equitable basis of 20,000 euros for each company. In November 2013 the grounds for the judgement in the
first instance were published (which, for its part, the Company decided not to contest). At the end of the
appeal, which was brought by the convicted defendants, the judgement in the first instance was partly
reversed. The appeal judge acknowledged that the time-limit had expired on the majority of the charges and
made an order not to proceed against the defendants who had been convicted in the lower court, with the
exception of two former private investigators, who were found guilty of the offense of revealing information
which was subject to a prohibition on disclosure. As for the civil judgements, the Court revoked those made by
the judge of first instance and ruled in favor of three ministries, AGCM (the Italian Competition Authority) and
the Revenues Agency. The Court also decided to revoke the provisional sum of 10 million euros awarded to the
Company as civil party at the end of the proceedings in the court of first instance, making a generic ruling that
the defendants should pay compensatory civil damages. Finally, the appeal judge also rejected all the
demands for compensation advanced in the appeals by certain civil parties for a total of about 60 million
euros, in respect of which the Company has the role of party liable for damages. At the end of the appeal,
therefore, the civil rulings settled in the first instance were confirmed which TIM, as the party liable for
damages, had already paid to the damaged requesting parties. The three defendants brought an appeal to the
Court of Cassation against the judgement of the second instance issued by the Milan Appeal Court of Assizes.
In April 2018 the Supreme Court confirmed the convictions of the defendants and canceled the civil rulings,
referring the issue back to the civil court for a more careful assessment of the claims made, above all
concerning proof of the "quantum". It also annulled and referred the confiscation in favor of the State. The
annulment of the security measure was lastly and definitively confirmed with a ruling by the Court of
Cassation filed in January 2021.
Separate Financial
Statements of
TIM S.p.A.
Note 23
Disputes and pending legal actions, other information, commitments
and guarantees
360
Golden Power Case
In August 2017 the Prime Minister's office brought proceedings against TIM (as well as Vivendi) in order to
verify the fact that TIM has an obligation to notify, pursuant to the “Golden Power” law, Vivendi’s acquisition of
corporate control of TIM and the strategic assets it holds. In September 2017, the proceedings in question
concluded by affirming that this obligation did exist for TIM with effect from May 4, 2017 (the date of the
Shareholders’ Meeting that renewed TIM’s corporate boards).
As a result of this decision by the Presidency of the Council of Ministers, new and separate administrative
proceedings started for the imposition on TIM of the financial penalty laid down by the Golden Power law for
non-compliance with the aforementioned obligation to notify. These proceedings ended on May 8, 2018 with
the imposition of a financial penalty of 74.3 million euros.
The Company, is convinced that it has the legal arguments to demonstrate that it was under no obligation to
notify the control exercised over it by Vivendi, filed separate extraordinary appeals to the President of the
Republic to request the abrogation of the order of September 2017 and before the Lazio Regional
Administrative Court (TAR) against the aforementioned order of May 8, 2018, which imposed a financial
penalty, requesting its precautionary suspension. As regards the appeal to the Lazio Regional Administrative
Court (TAR) against the provision of May 8, 2018, which imposed the financial penalty, the TAR, in upholding in
July 2018 the interim petition lodged by the Company, has suspended payment of the penalty. Subsequently,
with a non-definitive ruling in May 2019, the Lazio Regional Administrative Court (TAR)R: (i) accepted TIM's
request for provisional measures to suspend the fine conditional on the offer of the guarantee; (ii) granted the
suspension of the procedure to wait for the final judgment in the (injurious) case pending before the President
of the Republic regarding the notification obligation, pursuant to the Golden Power provisions; (iii) rejected the
procedural objections raised by the defendant administrations.
It should also be noted that in May 2018 a guarantee bond for 74.3 million euros was issued in favor of the
Presidency of the Council. TIM had been requested to submit such a bond for its application to Lazio TAR for
precautionary suspension of the collection of the fine imposed for alleged breach of Art. 2 of Decree Law 21 of
March 15, 2012 (the “Golden Power” law). This surety was renewed in May 2021.
Furthermore, TIM appealed before the Lazio TAR and then appealed before the Council of State against the
provision with which Consob, on September 13, 2017, affirmed Vivendi's control over TIM. In December 2020,
the Council of State issued a final judgment upholding TIM’s appeal and canceling the provision by Consob, a
significant premise to the entire subsequent proceedings of the Presidency of the Council in relation to the
obligation to Golden Power notification as described above. On June 14, 2021, Consob submitted an
extraordinary appeal to the Court of Cassation on grounds of jurisdiction; TIM filed an appearance, objecting
that the appeal is unlawful and inadmissible.
On the other hand, the Presidency of the Council of Ministers exercised the special powers prescribed in the
Golden Power law through two specific rulings in October and November 2017 with which it imposed specific
prescriptions and conditions on TIM and on the companies of the Telecom Italia Sparkle group and Telsy
Elettronica e Telecomunicazioni (now Telsy S.p.A.).
The prescriptions, according to the Administrative Authority, are essentially connected to the circumstance
that these companies, in part, perform activities that are relevant for national security and as far as TIM is
concerned to the circumstance that it also owns the infrastructure and the systems used to provide access to
end-users of services covered by the universal service obligation.
Any failure on the part of the recipients of the measures to execute said conditions and prescriptions is
penalized in the same way as failure to notify significant deeds for the purpose of the application of the so-
called Golden Power.
The companies subject to the prescriptions are required to send periodic reports to a special Monitoring
Committee established at the office of the Prime Minister in order to verify compliance with the
aforementioned prescriptions.
In December 2017 the Group sent to the Presidency of the Council of Ministers the first compliance report
outlining all the proposals and activities put in place to carry out the prescriptions. This report is then followed
by half yearly reports, as required by current legislation.
Nevertheless, also for this case TIM has already filed two extraordinary appeals to the President of the Republic
to request the cancellation (i) of the imposition of the measures pursuant to Art. 1 D.L. 21/2012 and (ii) the
imposition of measures pursuant to Art. 2 D.L. 21/2012.
As stated, the premise for exercising special powers was (erroneously, according to the Company) referred to
the de facto control resulting from the outcome of the shareholders’ meeting of May 4, 2017 and to the
direction and coordination of TIM by Vivendi. Both these circumstances no longer apply, since: at the
Shareholders' Meeting of May 4, 2018, the slate presented by the shareholders Elliott International LP, Elliott
Associates LP and The Liverpool Limited Partnership received the majority vote; the Board of Directors was re-
appointed with 13 independent directors out of a total of 15, with only 5 from the slate presented by Vivendi;
thus, Vivendi no longer has direction and coordination, nor is there de facto control.
In consequence, the Company has asked the Presidency of the Council of Ministers to repeal the two Decrees,
while, in the alternative, expressing its willingness to collaborate in the redrafting of the prescriptions applied
to TIM, to take account of the changed situation.
The Presidency of the Council of Ministers, in decrees issued on July 6, 2018, deemed that it could not further
exercise its special powers, reaffirming the validity of the two Decrees it had previously issued, and rejected the
application for their repeal.
The justification for this refusal is the purported circumstance that the new governance arrangements of the
Company are alleged to be currently characterized by extreme variability; this, it is argued, means that the
measures through which the special powers have been exercised cannot be surmounted, given the need to
protect the public interest in the security and operation of the networks.
The Company has lodged an appeal, with additional reasons and as part of the appeals already lodged,
against the Prime Minister’s decrees of October 16 and November 2, 2017, and against the Prime Minister’s
resolution of July 6, 2018, rejecting the appeal for revocation presented by the company, on the outcome of
the changed situation in corporate governance.
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Antitrust Case A428
At the conclusion of case A428, in May 2013, Italian Competition Authority AGCM imposed two administrative
sanctions of 88,182,000 euros and 15,612,000 euros on TIM for abuse of its dominant position. The Company
allegedly (i) hindered or delayed activation of access services requested by OLOs through unjustified and
spurious refusals; (ii) offered its access services to final customers at economic and technical conditions that
allegedly could not be matched by competitors purchasing wholesale access services from TIM itself, only in
those geographic areas of the Country where disaggregated access services to the local network are available,
and hence where other operators can compete more effectively with the Company.
TIM appealed against the decision before the Regional Administrative Court (TAR) for Lazio, applying for
payment of the fine to be suspended. In particular, it alleged: infringement of its rights to defend itself in the
proceedings, the circumstance that the organizational choices challenged by AGCM (the Italian Competition
Authority) and allegedly at the base of the abuse of the OLO provisioning processes had been the subject of
specific rulings made by the industry regulator (AGCom), the circumstance that the comparative examination
of the internal/external provisioning processes had in fact shown better results for the OLOs than for the TIM
retail department (hence the lack of any form of inequality of treatment and/or opportunistic behavior by TIM),
and (regarding the second abuse) the fact that the conduct was structurally unsuitable to reduce the margins
of the OLOs.
In May 2014, the judgement of the Lazio TAR was published, rejecting TIM's appeal and confirming the fines
imposed in the original order challenged. In September 2014 the Company appealed against this decision.
In May 2015, with the judgement no. 2497/15, the Council of State found the decision of the court of first
instance did not present the deficiencies alleged by TIM and confirmed the AGCM ruling. The company had
already proceeded to pay the fines and the accrued interest.
In a decision notified in July 2015, AGCM (the Italian Competition Authority) started proceedings for non-
compliance against TIM, to ascertain if the Company had respected the notice to comply requiring it to refrain
from undertaking behaviors analogous to those that were the object of the breach ascertained with the
concluding decision in case A428 dated May 2013.
On January 13, 2017, TIM was served notice of AGCM’s final assessment, which recognized that TIM had
complied in full with the A428 decision and, as such, the conditions for the imposition of a fine for non-
compliance were not present.
AGCM (the Italian Competition Authority) recognizes, furthermore, that TIM's behavior subsequently to the
2013 proceedings has been directed towards continuous improvement of its performance in the supply of
wholesale access services concerning not only the services which were the subject of the investigation, but
also the new super-fast broadband access services. In assessing compliance, AGCM (the Italian Competition
Authority) recognized the positive impact of the implementation, albeit not yet completed, of TIM's New
Equivalence Model (NME). The AGCM decision orders TIM to: (i) proceed with the implementation of the NME
until its completion which is expected to be by April 30, 2017; (ii) to inform the Authority about the
performance levels of the systems for providing wholesale access services and about the completion of the
corresponding internal reorganization plan by the end of May 2017. The Company quickly complied with both
orders, and AGCOM communicated its satisfaction on August 9, 2017.
Vodafone lodged an appeal with the Lazio Regional Administrative Court against the final decision in the
proceedings for non-compliance taken by AGCM (the Italian Competition Authority). TIM filed an appearance,
as in the other lawsuits filed in March 2017 by the operators CloudItalia, KPNQWest Italia and Digitel.
Vodafone (A428)
In August 2013, Vodafone, as incorporating company of operator Teletu, submitted to the Milan Court a huge
claim for damages for presumed abusive and anticompetitive behavior (founded principally on AGCM case
A428) which TIM allegedly implemented in the period 2008 - 2013. The pecuniary claim was quantified by
Vodafone as an estimated sum of between 876 million euros and 1,029 million euros.
In particular, Vodafone alleged technical boycotting activities, with refusal to activate lines requested for
Teletu customers (in the period from 2008 to the month of June 2013), together with the adoption of allegedly
abusive price policies for wholesale network access services (period from 2008 to the month of June 2013).
Furthermore, the other party complained of the presumed application of discounts to business customers
greater than those envisaged ("margin squeezing") and the carrying out of presumed
illegal and
anticompetitive win-back practices (in the period from the second half of 2012 to the month of June 2013).
TIM filed an appearance, challenging the claims made by the other party regarding the merits and the amount
and making a counterclaim. Following the August 2016 decision by the Court of Cassation which confirmed
that the Milan Court had jurisdiction to decide the dispute, the merits of the case will be decided at the hearing
in December 2016.
With writ of summons before the Milan Court served in May 28, 2015, Vodafone filed additional damages
claims, all based on the same AGCM A428 decision and referring to alleged damages suffered between July
2013 and December 2014 (and hence over a period subsequent to that of the damages claim reported above),
for a total amount of around 568.5 million euros.
The case also contains a reservation of further damages to be quantified, during the proceedings, for the
following periods, the claimant alleging that the presumed abusive conduct of TIM continued. TIM filed an
appearance, challenging the claims made by the other party regarding the merits and the amount and making
a counterclaim.
By order of October 6, 2016, the judge received Vodafone’s application for the two A428 lawsuits brought by it
to be joined. At the end of the reinstatement proceedings of December 21, the terms were established for the
preliminary briefs and a hearing was fixed for July 11, 2017 for the admission of evidence. When the first
preliminary brief was filed, following the favorable outcome for TIM of proceedings A428C (which confirmed
the absence of improper conduct by the Company under A428 after 2011), Vodafone decided nonetheless to
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file further claims for 2015-2016, thus restating its total claim to be 1,812 million euros, which was also
disputed and rebutted by TIM.
The case was settled as part of a global settlement with Vodafone.
Colt Technology Services
With writ of summons before the Milan Court served in August 2015, the operator Colt Technology Services
filed a damages claim based on the A428 decision, requesting compensation for alleged damages suffered
from 2009 to 2011 as a result of purportedly inefficient and discriminatory conduct by TIM in the wholesale
service supply process. The damage claimed was quantified as 27 million euros in loss of profits for the alleged
non-acquisition of new customers, or for the alleged impossibility of supplying new services to the customers it
had already acquired; the other party also formulated a request for compensation for the damages to its
image and commercial reputation. This case follows the extrajudicial claim for approximately 23 million euros,
previously advanced by Colt in June 2015, which the Company rejected in its entirety. TIM filed an appearance,
contesting all of the plaintiff’s allegations.
COMM 3000 S.p.A. (formerly KPNQWest Italia S.p.A.)
With writ of summons before the Rome Court, COMM 3000 S.p.A.(formerly KPNQWest Italia S.p.A.) filed a
damages claim for a total of 37 million euros in compensation for alleged anticompetitive and abusive conduct
over the period 2009–2011, in the form of technical boycotting (refusals to activate wholesale services – KOs);
the claim was based on the contents of the decision of AGCM (the Italian Competition Authority) that settled
the A428 case. TIM filed an appearance, contesting all of the plaintiff’s allegations. In the judgment with ruling
in April 2019, the Court of Rome partially received the petitions of COMM 3000 S.p.A. (formerly KPNQWest
Italia S.p.A.), sentencing TIM to pay an amount significantly lower than the amount in the counterparty's
damages claim. In June 2019, TIM appealed against the judgment. In the judgment given in April 2021, the
Court of Appeal of Rome partly upheld TIM’s appeal, reducing the amount of the compensation due to COMM
3000, which was in any case entirely covered by the relevant provision. In November 2021, TIM has appealed to
the Court of Cassation over the judgment of the Court of Appeal of Rome in.
TELEUNIT
With a writ of summons issued in October 2009 before the Milan Appeal Court, Teleunit asked that TIM alleged
acts of abuse of its dominant position in the premium services market be ascertained. The plaintiff quantified
its damages at a total of approximately 362 million euros. TIM filed an appearance, contesting the claims of
the other party.
After the ruling of January 2014 with which the Court of Appeal declared that it was not competent in this
matter and referred the case to the Court, Teleunit reinstated the case before the Milan Court the following
April. TIM filed an appearance in the reinstated proceedings challenging the plaintiff’s claims.
In its judgement of May 2017, the Milan Court rejected Teleunit's claim in its entirety, and ordered the company
to pay the legal costs of the case. This judgement was appealed by Teleunit, in June 2017, before the Milan
Court of Appeal. TIM filed an appeal challenging the arguments presented by the other party and asking that
the judgement in the first instance be fully confirmed. With an order in March 2018 the Milan Court of Appeal
declared Teleunit's appeal pursuant to art. 348-bis of the Italian Code of Civil Procedure to be manifestly
without foundation, and hence inadmissible. In May 2018 Teleunit appealed the judgement of the Court of
Appeal to the Court of Cassation. TIM lodged a counter-appeal seeking confirmation in full of the order being
appealed (and thus of the judgment at first instance).
MC-Link
With writ of summons before the Rome Court, MC-Link filed a damages claim for a total of 51 million euros in
compensation for alleged anticompetitive and abusive conduct over the period 2009–2012, in the form of
technical boycotting (refusals to activate wholesale services – KOs). The claim was based on the contents of
the decision of AGCM (the Italian Competition Authority) that settled the A428 case. TIM filed an appearance,
contesting all of the plaintiff’s allegations. In August 2021, the case was settled as part of a global settlement
with the opposing party.
Eutelia and Clouditalia Telecomunicazioni
With a writ of summons dated May 2020, Eutelia in Extraordinary Administration and Clouditalia
Telecomunicazioni S.p.A., purchaser of Eutelia's TLC branch, brought an action against TIM before the Court of
Rome, making claims for damages, of around 40 million euros, for damages allegedly suffered, in the period
2009-2012, following the technical boycott and margin squeeze conduct, subject of the AGCM A428 procedure.
TIM filed an appearance, contesting the claims made by the opposing party and formulating a counterclaim,
subject to quantification of the damages incurred during the proceedings.
Antitrust Case I761
With a ruling issued on July 10, 2013, AGCM (the Italian Competition Authority) extended to TIM the
investigation started in March of the same year into some firms active in the fixed network maintenance
sector. The investigation aims to establish if an agreement exists that is prohibited under article 101 of the
Treaty on the Functioning of the European Union. The proceedings were initiated after Wind filed two
complaints in which AGCM (the Italian Competition Authority) was informed that, based on an invitation to bid
for the assignment of network corrective maintenance services, it had encountered substantial uniformity of
prices offered by the aforementioned enterprises and a significant difference from the offers submitted
subsequently by other and different companies.
AGCM (the Italian Competition Authority) alleged that TIM carried out a role of coordinating the other parts of
the procedure, both during the formulation of the offers requested by Wind and in relation to the positions
represented to communications regulator AGCom.
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TIM challenged these proceedings before the Administrative Court (TAR), sustaining that the ICA does not have
competence in this matter.
On July 7, 2014, AGCM (the Italian Competition Authority) notified the objective extension of the proceedings to
check if the Company, abusing its dominant position, put in place initiatives that might influence the conditions
of the offer of accessory technical services when the offers of the maintenance businesses to Wind and
Fastweb were being formulated. With the extension decision, the Authority also extended the closing date of
the investigation, originally set for July 31, 2014, to July 31, 2015. This extension was also challenged before the
Lazio Administrative Court (TAR) sustaining that the Italian Competition Authority does not have competence
in this matter.
In November 2014, for reasons of procedural economy and also convinced that it was acting legitimately, TIM
presented to the Authority a proposal of undertakings in order to resolve the competition concerns subject of
the investigation. On December 19, 2014, AGCM (the Italian Competition Authority) issued its decision finding
that the undertakings were not clearly unfounded and subsequently ordered their publication for market
testing.
On March 25, 2015, AGCM (the Italian Competition Authority) definitively rejected the aforesaid undertakings,
considering them not suitable for removing the anticompetitive aspects investigated.
On July 21, 2015 the Communication of the Results of the Investigation was served on the parties to the
proceedings, in which the Offices of AGCM (the Italian Competition Authority) expressed their position in the
sense of (i) archiving the complaints regarding the abuse of dominant position and (ii) confirming, instead, that
there exists between TIM and the maintenance firms an agreement to coordinate the economic offers drawn
up for Wind and Fastweb, and to prevent the unbundled supply of the ancillary technical services.
On December 16, 2015, the final order was issued, confirming the conclusions of the Communication of the
Results of the Investigation, sustaining that, between 2012 and 2013, there existed an agreement that
restricted competition, and as a result imposed a fine of 21.5 million euros on the Company, paid in March
2016. The relevant market is the corrective maintenance (assurance) market and, more precisely, the market
for troubleshooting the TIM LLU lines. The purpose of the conduct maintained by the Company and the
network firms would have been to limit competition and prevent the evolution of forms of unbundled supply of
ancillary technical services.
TIM appealed the order before the Lazio Regional Administrative Court. In judgement no. 09554/2016 issued in
September 2016, the appeal was dismissed, and the Company appealed this decision to the Council of State.
On the outcome of the proceedings, with the ruling of December 2019, the Council of State, deciding in favor of
TIM, annulled the AGCM I761 provision and referred the task of conducting a new investigation to AGCM (the
Italian Competition Authority), within the limits that decided by the Council of State itself. In 2020, TIM
obtained the return of amounts paid by way of sanction.
Following analysis, in a letter dated April 2, 2021, AGCM (the Italian Competition Authority) reported that it had
archived case I761.
Vodafone (I761)
With a writ of summons before the Milan Court, Vodafone has sued TIM and some network companies,
bringing claims for compensation from the Company for around 193 million euros for damages arising from
alleged anti-competitive conduct censured in the known AGCM case I-761 (on corrective maintenance)
referring to the period from 2011 to 2017.
Vodafone contests the alleged breach of the competition rules carried out by TIM, in the wholesale markets
giving access to its fixed network (LLU lines; Bitstream; WLR), through the abuse of a dominant market
position and an unlawful agreement with the maintenance companies to maintain the monopoly on the offer
of corrective maintenance services on its network. Specifically, the restrictive agreement allegedly concerned
the coordination, by the Company, of the economic terms and conditions contained in the bids for
maintenance services prepared by the aforementioned companies for OAOs, with artificially high prices with
respect to the cost of the maintenance included in the regulated access fee, with a view to discouraging the
disaggregation of the service itself. The Company filed an appearance, contesting all of the other party’s
requests. The case was settled as part of a global settlement with Vodafone.
Antitrust Case A514
In June 2017 the Italian Competition Authority (AGCM) started proceedings A514 against TIM, to ascertain a
possible abuse of its dominant market position in breach of article 102 of the “Treaty on the Functioning of the
European Union”. The proceedings were started based on some complaints filed in May and June 2017, by
Infratel, Enel, Open Fiber, Vodafone and Wind Tre, and concerns a presumed abuse of TIM's dominant position
in the market for wholesale access services and for retail services using the broadband and ultra-broadband
fixed network. In particular, AGCM (the Italian Competition Authority) hypothesized that TIM had adopted
conduct aimed at: i) slowing and hindering the course of the Infratel tender processes so as to delay, or render
less remunerative the entry of another operator in the wholesale market; ii) preemptively securing customers
on the retail market for ultra-broadband services by means of commercial policies designed to restrict the
space of customer contendibility remaining for the competitor operators.
After the start of the proceedings, the Authority's officials carried out an inspection at some of TIM’s offices in
the month of July 2017. On November 2, 2017, TIM filed a defense brief in which, in support of the correctness
of its actions, it challenged all the arguments that the conduct it had allegedly engaged in, and which was the
subject of the case, was unlawful.
On February 14, 2018, AGCM (the Italian Competition Authority) resolved to extend the scope of the case to
investigate further behavior concerning TIM's wholesale pricing strategy on the market for wholesale access to
broadband and ultra-broadband, and the use of the confidential information of customers of the alternative
operators.
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On July 5, 2018 TIM filed proposed undertakings which, if accepted by the Authority, would close the
investigation without any offense being established or sanction being administered. The undertakings were
considered as admissible by the Authority, that market tested them in August and September.
On October 30, 2018, TIM replied to observations made by third parties and modified its proposed
undertakings. With its decision notified on December 4, 2018, AGCM (the Italian Competition Authority) once
and for all rejected the proposed series of undertakings as it considered them unsuitable in light of the
objections raised.
On March 4, 2019, TIM requested AGCM (the Italian Competition Authority) for an extension of the deadline for
closing the proceedings (initially set for May 31, 2019).
On April 10, 2019, AGCM (the Italian Competition Authority) resolved to extend the deadline for conclusion of
the proceedings until September 30, 2019. On May 17, 2019, AGCM (the Italian Competition Authority) notified
TIM of the results of the investigation (CRI). In the CRI, AGCM (the Italian Competition Authority) essentially
confirmed the case for the prosecution outlined in the start-up and extension of the proceedings orders.
On June 12, 2019 AGCM (the Italian Competition Authority) extended the deadline for deposit of TIM's final
defense to September 20, 2019 and set the final hearing for September 25, 2019.
On September 18, 2019, AGCM (the Italian Competition Authority) resolved to extend the deadline for
conclusion of the proceedings until February 28, 2020.
On March 6, 2020, TIM was notified of the decision to close the investigation: AGCM (the Italian Competition
Authority) ruled that TIM had abused its dominant position, finding that TIM had put in place an anti-
competitive strategy designed to hinder the competitive development of investment in ultrabroadband
network infrastructure.
The fine imposed on TIM for the anti-competitive offense is 116,099,937.60 euros. TIM appealed the
aforementioned fine before the Lazio Regional Administrative Court (TAR). By judgment given on February 28,
2022, the Lazio Administrative Court rejected TIM’s appeal; it now intends to bring an appeal before the Council
of State by the legal deadline.
On June 25, 2020 TIM sent AGCM (the Italian Competition Authority) the so-called compliance report as
ordered in the final provision. The hearing before the Lazio Regional Administrative Court was held on
November 3, 2021. The Company is awaiting the judgement.
In May 2021, the Company paid the fine.
Open Fiber
In March 2020, Open Fiber (OF) sued TIM before the Court of Milan, claiming damages of 1.5 billion euros for
alleged abuse of an exclusive and dominant position in relation to OF. The alleged actions consist of: (i) pre-
emptive investments in FTTC networks in white areas; (ii) initiating specious legal action to obstruct Infratel
tenders; (iii) spurious repricing of certain wholesale services; (iv) commercial lock-in offers on the retail market;
(v) false disclosure to AGCom in connection with the approval of a wholesale offer and spreading rumors about
TIM being interested in acquiring OF; (vi) discriminatory access conditions to TIM passive infrastructure. TIM
filed an appearance, contesting the arguments of OF. Enel S.p.A. intervened in the proceedings, asking that
TIM be ordered to compensate all damages suffered and being suffered by Enel and OF. During the course of
the proceedings, this amount was increased to 2.6 billion euros.
Vodafone
In January 2021, Vodafone Italia S.p.A. summonsed TIM to the Court of Milan, making a claim for damages of
approximately 100 million euros for damages allegedly suffered as a consequence of the unlawful conduct of
TIM, as sanctioned by the AGCM (the Italian Competition Authority), with the provision that concluded case
A514.
The conduct of TIM sanctioned by the Authority allegedly resulted in a slowing of the penetration of UBB
infrastructures on the market of white areas and, consequently, the delayed or failed acquisition of new
customers by Vodafone, as well as a hindrance to acquiring additional customers as a result of the alleged
binding practices over the whole of national territory. TIM will file an appearance with a series of solid legal
arguments for its own protection. The case was settled as part of a global settlement with Vodafone.
Fastweb
In February 2021, Fastweb S.p.A. summonsed TIM to the Court of Milan, making a claim for damages of
approximately 996 million euros for damages allegedly suffered as a consequence of the unlawful conduct of
TIM, as sanctioned by AGCM (the Italian Competition Authority), with the provision that concluded case A514,
as well as allegedly opportunistic suspensions of activation orders sent by Fastweb.
Fastweb complains that TIM allegedly delayed the wholesale offer of ultrabroadband services by Open Fiber in
the white areas, consequently slowing the offer of said services by Fastweb to its end customers in these
areas; binding practices were implemented in relations with the end customer, hindering access to the market
by alternative operators (including Fastweb). In addition, TIM allegedly instrumentally managed the supply
process of wholesale access services to its fixed broadband and ultrabroadband network, opportunistically
suspending the activation orders submitted by Fastweb and thereby hindering its activation of new customers.
TIM filed an appearance laying out solid arguments refuting Fastweb’s claims. In August 2021, the case was
settled as part of a settlement with Fastweb.
Antitrust Case I799
At its meeting on February 1, 2017, AGCM (the Italian Competition Authority) initiated an investigation for
possible breach of Article 101 of the TFEU (prohibition of agreements that restrict competition) against TIM
S.p.A. and Fastweb S.p.A., following the signing of an agreement aimed at setting up a cooperative joint
venture called Flash Fiber S.r.l.. TIM, in agreement with Fastweb, submitted to AGCM (the Italian Competition
Authority) some amendments to the agreements signed, in the form of proposed undertakings, aimed at
closing the investigation without any breach being ascertained and, therefore, without any fine.
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On March 28, 2018, AGCM (the Italian Competition Authority) resolved to approve the undertakings, making
them binding on the Parties, and closed the case without imposing any fine.
On January 30, 2019, TIM sent the planned annual report on the provided coverage to AGCM (the Italian
Competition Authority), supplemented by a subsequent communication dated March 29, 2019. TIM
transmitted further details to AGCM (the Italian Competition Authority) in July and AGCM acknowledged it on
October 15, 2019. On January 31, 2020 TIM sent AGCM (the Italian Competition Authority) the third report on
the implementation of the undertakings given. Finally, on January 29, 2021 TIM sent AGCM (the Italian
Competition Authority) the fourth and final report on the implementation of the undertakings given.
On June 11, 2018 Open Fiber S.p.A. and Wind Tre S.p.A. filed separate appeals to the Lazio Regional
Administrative Court (TAR) against the order closing case I799 with the acceptance of the undertakings. They
allege that this order has a series of procedural and substantial defects.
Open Fiber S.p.A. also asked for the precautionary suspension of the order.
In a ruling of March 2020, the Regional Administrative Court rejected in full the appeal by Open Fiber. A hearing
on the merits has not yet been scheduled for Wind Tre's appeal.
Vodafone
In June 2015 Vodafone issued proceedings for damages in the Milan Court for alleged abuse of a dominant
position by TIM in the bitstream “NGA” and “VULA” fiber access services market, initially claiming around 4.4
million euros, increased to a figure ranging from 30 to 48.9 million euros.
The plaintiff complained that TIM allegedly had engaged in abusive conduct by way of aggressive price offers
to win customers and by hindering Vodafone’s access to the fiber network to make it more difficult for the
party to provide ultra-broadband services to its customers.
TIM has filed an appearance, challenging the claims of the plaintiff in full and, subsequently, the revised
estimate of damages made in 2016 during the case. The case was settled as part of a global settlement with
Vodafone.
Eutelia and Voiceplus
In June 2009, Eutelia and Voiceplus asked that alleged acts of abuse by TIM of its dominant position in the
premium services market (based on the public offer of services provided through so-called Non Geographic
Numbers) be investigated. The complainants quantified their damages at a total of approximately 730 million
euros.
The case follows a precautionary procedure in which the Milan Appeal Court prohibited certain behaviors of the
Company relating to the management of some financial relations with Eutelia and Voiceplus concerning the
Non Geographic Numbers, for which TIM managed the payments from the end customers, on behalf of such
OLOs and in the light of regulatory requirements. After the ruling with which the Milan Court of Appeal
accepted TIM's objections, declaring that it was not competent in this matter and referring the case to the Civil
Court, Eutelia in extraordinary administration and Voiceplus in liquidation resubmitted the matter to the Milan
Court. The first hearing took place in the month of March 2014. TIM filed an appearance challenging the claims
of the other parties. After the collapse of Voiceplus, the Milan Court declared the case suspended, in an order
in September 2015. The case was later resumed by Voiceplus.
With a judgment issued in February 2018, the Milan Court accepted TIM's defense and rejected the plaintiffs’
claim for compensation, ordering them, jointly and severally, to pay the legal costs. In March 2018 Eutalia and
Voiceplus proposed an appeal against the judgement in the first instance.
TIM appealed against the claim, requesting confirmation in full of the judgment in the first instance. The
appeal of Eutelia and Voiceplus was fully rejected with the judgment of August 5, 2019. In December 2019
Eutelia and Voiceplus appealed to the Court of Cassation over the judgment of the Court of Appeal. TIM
notified a counterclaim asking confirmation of the ruling appealed against.
28-day billing
AGCom resolution 121/17/CONS introduced instructions on billing intervals for telephony, prescribing, for fixed
telephony, that the interval should be monthly, or multiples thereof, and, for mobile telephony, that it should
be at least four-weekly. TIM appealed Resolution 121/17/CONS to the Regional Administrative Court. The
judgment rejecting the appeal was published in February 2018. TIM appealed this judgment to the Council of
State in June 2018. On September 23, 2020, the non-definitive ruling was published whereby the Council of
State joined the appeals submitted by TIM, Vodafone, Fastweb and Wind Tre and ordered the prejudicial
deferral to the European Union Court of Justice (EUCJ) on whether or not the Authority had the power to
regulate the frequency of renewal of the commercial offers and invoicing periods, at the same time rejecting
the other grounds of appeal submitted by the operators and suspending proceedings. In February 2021, TIM
deposited the written observations on the requests for prejudicial judgment with the EUCJ. At the request of
the CJEU, the Council of State, in an order published on November 23, 2021, confirmed the referral to the Court
of Justice on the preliminary questions raised; the proceedings before the Council of State therefore remain
suspended pending the CJEU's decision.
With its Resolution 499/17/CONS, having confirmed the breach of Resolution 121/17/CONS, AGCom fined TIM
1,160,000 euros, ordering it to make provision – when the billing cycle was restored to monthly intervals or
multiples thereof – to return the amounts corresponding to the fee for the number of days that, from June 23,
2017, had not been used by the users in terms of the supply of service due to the misalignment of the four-
weekly and monthly billing cycles.
In March 2018 with resolution no. 112/18/CONS AGCom (i) revoked the preceding resolution 499/17/CONS in the
part in which TIM was ordered to repay the amounts presumably lost from June 23, 2017 onwards, with the
four-weekly billing cycle, (ii) cautioned TIM, with regard to fixed-line voice services only, against postponing the
starting date of invoices issued after the return to monthly invoicing by the same number of days as those
presumably deducted starting from June 23, 2017 with the four-weekly invoicing cycle.
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Under Presidential Decree 9/18/PRES, AGCom amended the provisions of Decision 112/18/CONS requiring the
deferment of billing once the billing cycle was restored to monthly intervals, or multiples thereof, while also
ordering that the timescales for complying with the order would be identified after hearings with the operators
and the main consumer protection associations.
In July 2018, AGCom issued resolution 269/18/CONS, with which it set December 31, 2018 as the date by which
the operators had to return to their fixed network customers a number of days of service equal to those
eroded as an effect of 28-day billing, or propose to the affected customers any alternative compensatory
measures, after having notified them to AGCom. TIM has appealed all of the above resolutions.
With the judgment published in November 2018, the TAR canceled the pecuniary administrative sanction of
1.16 million euros imposed with Resolution 499/17/CONS, and confirmed the obligation of restitutio in integrum
to the fixed-line customers by December 31, 2018. TIM filed its preventive appeal before the Council of State to
suspend the execution of said decision and, with its ruling of December 20, 2018, the Council of State, in
upholding TIM's appeal, suspended the effectiveness of the aforesaid decision for the reversal order only, until
May 21, 2019 while awaiting publication of the grounds for the judgment.
The date of the hearing to discuss the introductory appeal and additional grounds submitted in the meantime
by TIM is still to be set. On July 12, 2019 the ruling mechanisms with which the Council of State rejected the
similar appeals made by Vodafone, Wind Tre and Fastweb were published and in February 2020 the
judgments containing the grounds were published.
In September 2019, TIM also challenged resolution 221/19/CONS, before the Regional Administrative Court
(TAR), with which the sanction pursuant to Resolution 499/17/CONS, canceled by the Regional Administrative
Court of Lazio, was recalculated to the amount of 580,000.00 euros, with the maximum fine provided for by
Art. 98, paragraph 16 of the CCE in force at the time of the events applied.
In August 2019, AGCom initiated new proceedings (CONT 12/19/DTC) for failure to comply with the order to
refund the days eroded by billing every 28 days for fixed network and convergent customers, according to the
procedures established with resolutions nos. 112/18/CONS and 269/18/CONS. On conclusion of these
proceedings, by means of Resolution 75/20/CONS, the Authority found that TIM did not comply with the above
resolutions, imposing a fine of 3 million euros. The measure was challenged by TIM before the TAR in July
2020.
Moreover, since June 2019, TIM has offered its fixed network customers, active prior to March 31, 2018 and
subject to billing every 28 days, the possibility of accepting a compensatory solution, an alternative to
refunding the eroded days pursuant to AGCom resolution no. 269/18/CONS and from September 2019 it has
been accepting requests for reimbursement of eroded days. In both cases, TIM informed customers with
several messages in the bill, on the web in the main newspapers. The initiatives just described were
communicated to AGCom as part of the aforementioned penalty proceedings.
In the civil proceedings, by judgment published on October 14, 2021 the Court of Milan, under the scope of the
case on the merits brought by Associazione Movimento dei Consumatori in 2018 regarding the pricing and 28-
day renewal for fixed line and converging offers, confirmed the order given on 6/4/2018 by the same Court
upon closure of the complaint brought by TIM pursuant to Art. 669 terdecies of the Italian Code of Civil
Procedure and the measures set out therein, ordering TIM to fulfill the requests for repayment of prices paid as
a result of customer maneuvers - including discontinued, as indeed TIM had already been doing since 2018, at
the same time also extending the period relevant to the recognition of the reimbursement through to April 1,
2017 and therefore earlier than June 23, 2017, the date on which the operators will need to comply with
Resolution no. 121/17/CONS. TIM has appealed the sentence of the Court of Milan, at the same time filing an
request for suspension of its enforcement. With order of January 11, 2022, the Court of Appeal of Milan
partially accepted TIM’s request, suspending the charge in the judgment relating to the order to send a
registered letter to all discontinued consumer customers that were subject to billing every 28 days to inform
them of the possibility to obtain a refund of the additional amounts paid as a result of the maneuver.
Antitrust Case I820
On February 19, 2018, AGCM (the Italian Competition Authority) initiated a I820 preliminary proceeding against
the companies TIM, Vodafone, Fastweb, Wind Tre and the industry association ASSTEL to investigate the
alleged existence of an agreement among the major fixed-line and mobile telephone operators to restrict
competition by coordinating their respective commercial strategies, in breach of Art. 101 of the TFUE.
The presumed coordination, according to the opening provision of the proceedings by AGCM (the Italian
Competition Authority), would take the form of implementation of the obligation introduced by Article 19-
quinquiesdecies of Legislative Decree 148/2017 (converted by Law 172/2017) which requires operators of
electronic communication services to send out monthly (or monthly multiples) bills and renewed offers for
fixed and mobile services.
On March 21, 2018, AGCM (the Italian Competition Authority) issued a provisional precautionary measure
against all the operators involved in the proceedings with which it ordered the suspension, pending the
proceedings, of the
implementation of the agreement concerning the determination of repricing
communicated to users at the time of reformulating the billing cycle in compliance with Law 172/17 and to
independently redetermine its commercial strategy. With its decision no. 27112 of April 11, 2018, AGCM (the
Italian Competition Authority) confirmed the precautionary measure.
On June 12, 2018, TIM filed an appeal with the TAR for the quashing of said measure.
On January 31, 2020, TIM was notified of the decision to close the investigation, in which AGCM (the Italian
Competition Authority) confirmed the existence of the agreement between Telecom, Vodafone, Fastweb,
WindTre, but excluding Asstel from participation in the agreement. The fine imposed on TIM for participation in
the anti-competitive agreement was 114,398,325 euros. In April 2020, TIM also challenged the sanction order.
In a ruling published on July 12, 2021, the Lazio Regional Administrative Court upheld the petition and the
grounds added and submitted by TIM, canceling the measures taken by AGCM (the Italian Competition
Authority), including that relating to the existence of the agreement and application of the sanction.
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On September 11, 2021, AGCM (the Italian Competition Authority) presented a petition to the Council of State,
requesting the cancellation of the judgment given by the regional administrative court.
Antitrust Case I850
By decision given on December 15, 2020, the Italian Competition Authority (AGCM) started an investigation in
regard to the company Telecom Italia S.p.A., Fastweb S.p.A., Teemo Bidco S.r.l., FiberCop S.p.A., Tiscali Italia
S.p.A. and KKR & Co. Inc., to ascertain the existence of any breaches of article 101 of the TFEU.
More specifically, the investigation regards the contracts governing the establishment and operation of
FiberCop and the supply agreements with Fastweb and Tiscali. AGCM (the Italian Competition Authority)
intends to verify that such agreements do not hinder competition between operators in the medium and long-
term and assure the rapid modernization of the country’s fixed telecommunications infrastructures.
On August 6, 2021, TIM submitted a proposal of undertakings to AGCM (the Italian Competition Authority) in
order to resolve the competition concerns subject of the investigation and close the proceedings without any
sanction being applied.
On September 7, 2021, AGCM (the Italian Competition Authority) judged these undertakings to not be clearly
unfounded and ruled publication on the Authority’s website from September 13, 2021; thus market testing
began and was completed by October 13, 2021, the date by which all subjects so wishing submitted their
observations to AGCM in respect of the relevant undertakings.
On December 14, 2021 AGCM (the Italian Competition Authority) extended the deadline for the conclusion of
the proceedings, initially set for December 31, 2021, to February 15, 2022. Precisely during the meeting held on
February 15, 2022, AGCM finally resolved to approve the undertakings insofar as they were considered suitable
to eliminate the alleged anti-competition aspects investigated and made them mandatory for the parties
without assessing the alleged charges and without sanctions.
Antitrust Case I857
On July 6, 2021, AGCM (the Italian Competition Authority) started an investigation in regard to TIM and DAZN
for a possible understanding reached with a view to restricting competition in connection with the agreement
for the distribution and technological support for TV rights for Serie A football in the 2021-2024 period.
The investigation also aims to verify the restrictive nature of the understanding with reference to additional
elements regarding the possible adoption by TIM of technical solutions not available for competitor
telecommunications operators and which may effectively hinder the adoption of their own technological
solutions.
The proceedings are expected to end by June 30, 2022.
At the same time, the Authority has also initiated proceedings for the potential adoption of protective
measures.
By resolution passed on July 27, 2021, AGCM (the Italian Competition Authority) closed the interim proceedings,
considering that the initiatives and amendments to the agreement proposed by TIM and DAZN in the
meantime are presently able to prevent any serious and irreparable damage to competitors while
investigations are completed.
Indeed, said measures aim, as a whole, to avoid possible discrimination in the use of the DAZN service, due to
its activation by users using Internet connection services other than those offered by TIM. In addition, the
agreement between TIM and DAZN has been amended to guarantee DAZN complete freedom in applying
discounts and promotions. TIM has also undertaken to provide DAZN with a sufficient number of white label
set-top-boxes to also guarantee DAZN customers the viewing of matches over digital terrestrial TV, in the
event of connection problems.
Finally, TIM has undertaken to supply wholesale services to OAOs interested therein to manage traffic peaks
deriving from live data transmissions, regardless of the type of contents transmitted.
On October 29, 2021 TIM submitted a proposal for undertakings to AGCM (the Italian Competition Authority)
with a view to resolving the competitive concerns that were the subject of the investigation and closing the
proceedings without the finding of any infringement and therefore without any sanction being applied.
On December 14, 2021, AGCM (the Italian Competition Authority) approved the publication of the
aforementioned proposal for undertakings on the Authority's website, as these undertakings, taken as a whole,
do not appear to be manifestly unfounded and are capable of removing the restrictions to competition
hypothesized in the measure initiating the investigation in question.
On January 5, 2022, with the aforementioned publication on the AGCM (the Italian Competition Authority)
website, the so-called market test began, which will end on February 4 next, the date by which all interested
parties will be able to send the Authority their comments on the undertakings in question.
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Antitrust Case PS10888 “TIM Passepartout”
On June 15, 2021, AGCM (the Italian Competition Authority) initiated proceedings for unfair commercial
practice concerning the lack of transparency of the information provided by the TIM Passepartout payment
management platform and alleged activations of services not requested. The proceedings have been initiated
on the basis of reports made by individual consumers and should draw to a close in March 2022. On July 29,
2021, undertakings were submitted, thereafter supplemented on February 08, 2022, that, if accepted, will allow
the proceedings to close without any findings of infringement and, therefore, without any application of
sanctions. The undertakings consist of improving information aspects of the TIM Passepartout platform (active
only for Customer Base offers) and implementing a communication campaign aimed at soliciting contact from
those who do not recognize the TIM Passepartout charges in order to assess whether there are grounds for a
refund. The procedure will be completed by the end of May 2022.
Vodafone Dispute – Universal Service
In a decision published in July 2015, the Council of State rejected the appeal lodged by AGCom and TIM against
the judgment of the Lazio Administrative Court (TAR) on the financing of the universal service obligations for
the period 1999–2003. With this judgement the judge had granted the appeals by Vodafone, annulling AGCom
decisions 106, 107, 109/11/CONS on the renewal of the related proceedings, which included Vodafone among
the subjects required to contribute, for a sum of approximately 38 million euros. Essentially, the judgement
confirms that the Authority has not demonstrated the particular degree of "replaceability" between fixed and
mobile telephony for mobile operators to be included among the subjects required to repay the cost of the
universal service, which means that AGCom needs to issue a new ruling.
TIM has filed an application with AGCom to renew the proceedings, and an appeal against the judgement of
the Court of Appeal to the Court of Cassation (which subsequently ruled that the appeal was inadmissible).
In April 2016 Vodafone appealed against the Ministry of Economic Development (MISE) and TIM to the Council
of State, for non-compliance with the judgment of the Council of State. This appeal referred to AGCom
decision 109/11/CONS (2003 yearly payment, on the basis of which Vodafone had paid the sum of
approximately 9 million euros as contribution, restitution of which was requested).
In its judgment of November 2016, the Council of State rejected the appeal, referring to the Regional
Administrative Court (TAR) the decision on the methods of compliance. In February 2017, Vodafone presented
the Lazio Regional Administrative Court with four new appeals against the Ministry of Economic Development
and TIM regarding observance of the ruling, upheld on appeal, countermanding the resolutions for the years
1999–2003 and repayment of the aforesaid amounts of around 38 million euros already paid to the Ministry of
Economic Development as a contribution.
With a judgment issued in June 2018, the TAR rejected all of Vodafone's appeals for observance, and, as
requested by TIM, expressly affirmed that AGCom must renew the proceedings, particularly with regard to the
determination of the degree of replaceability between fixed and mobile telephony. Vodafone challenged the
four judgments before the Council of State, which, with a decision of October 2019, upheld Vodafone's appeal
and confirmed the restitutory obligation of the sums in question applicable to TIM.
With resolution no. 263/20/CIR, AGCom started proceedings to renew the investigation into the iniquity of the
net cost of the universal service for 1999-2009. Vodafone has challenged this resolution before the Regional
Administrative Court. The renewal proceedings concluded with resolution 18/21/CIR, which substantively
confirmed the draft order. This resolution has only been challenged by TIM for the years 1999 and 2000, while
Vodafone, Wind and Fastweb have challenged the resolution for all years concerned. By judgments published
in February 2022, resolution 18/21/CIR was partially canceled. Assessments are currently in progress regarding
whether it is appropriate or not to submit an appeal.
Dispute relative to "Adjustments on license fees" for the years 1994-
1998
With regard to the judgements sought in previous years concerning the Ministry of Communications' request
for payment of the balance of the amounts paid in concession charges for the years 1994-1998 (for a total of
113 million euros), the Administrative Court (TAR) for Lazio rejected the Company’s appeal against the request
for adjustment of the license fee for 1994 in the amount of approximately 11 million euros, 9 million euros of
which against turnover not received due to bad debts. TIM lodged an appeal. On the outcome of proceedings,
with the ruling of December 2019, the Council of State partially accepted TIM's position, establishing the
principle, according to which, the receivables referring to 1994 not collected for reasons not attributable to the
operator, could have been deducted from the tax base for calculating the concession fee.
With two further judgements the Administrative Court (TAR) for Lazio, reiterating the reasons expressed
previously, also rejected the appeals in which the Company challenged the requests for payment of
outstanding balances of license fees for the years 1995 and 1996-1997-1998, in the amount of approximately
46 million euros. TIM has appealed before the Council of State also against these judgements.
With reference to the 1998 fee adjustment (equal to about 41 million), the Lazio TAR, by TAR order of
December 2018, suspended the judgment, raising preliminary questions with the EU Court of Justice on the
correct scope of EC Directive no. 97/13 (in the matter of general authorizations and individual licenses in the
field of telecommunications services on the basis of the currently pending litigation on the 1998 license fee,
currently pending before the Rome Court of Appeal and illustrated in a subsequent paragraph).
The referred questions were based, inter alia, on the question posed to the Court of Justice on the possible
conflict between the aforementioned EC Directive 97/13 and national law, which extended the obligation for
telecommunications license-holders to pay the license fee for 1998 (commensurate with a portion of turnover),
despite the liberalization process underway. In its judgment of March 2020, the EU Court of Justice held that
the EU regulatory system must be interpreted as not allowing national legislation to extend to 1998 the
obligation imposed on a telecommunications undertaking that was previously the concession holder (such as
TIM) to pay a fee calculated on the basis of turnover and not only the administrative costs connected with the
granting, management, control and implementation of the general authorizations and individual licenses
scheme. The Court held, inter alia, that the Council of State – having held in its judgment 7506/2009 that the
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fee imposed for 1998 on TIM, the holder of an authorization existing on the date of entry into force of Directive
97/13, was due – interpreted national law in a way that was incompatible with EU law, as interpreted by the
Court in its judgment of February 21, 2008. Following the judgment of the EU Court of Justice, the opinion on
the final calculation of the 1998 charges was summarized before the Lazio Regional Administrative Court,
which, in a judgment given last February, declared TIM’s appeal as unacceptable for procedural reasons,
namely due to the prevalence of the formal ruling consisting of judgment no. 7506/09; in substantive terms, on
the other hand, the judgment of the EU Court of Justice once again ascertained the European Community
unlawful nature of the credit claim by the PA to obtain payment of the 1998 charges and, consequently, the
final balance. The company has challenged the judgment of the Lazio Regional Administrative Court.
Poste
There are some pending actions brought, at the end of the '90s, by Ing. C. Olivetti & C. S.p.A. (now TIM) against
Poste, the Italian postal service, concerning non-payment of services delivered under a series of contracts to
supply IT goods and services. The judgements issued in the lower courts established an outcome that was
partially favorable to the ex-Olivetti, and have been appealed against by Poste in individual rehearings.
In this respect, while a 2009 judgement of the Rome Appeal Court confirmed one of the outstanding payables
to TIM, another judgement by the same Court declared void one of the disputed contracts. After this
judgement, Poste had issued a writ for the return of approximately 58 million euros, opposed by TIM given that
the judgement of the Supreme Court for amendment of the above judgement is still pending.
After the 2012 judgement of the Supreme Court that quashed and remanded the decision of the Appeal Court
on which the order was based, the Rome Court declared that the matter of issue in the enforcement
proceedings was discontinued, since the claim made by Poste had been rejected. The judgement was
resubmitted to another section of the Rome Appeal Court. In ruling no. 563 of January 25, 2019, the Rome
Court of Appeal at the time of proceedings, reversing the Company's previous unfavorable appeal, confirmed
the contract's validity and, with it, the legitimacy of TIM's view of the amount already collected, of which Poste
had requested reimbursement. This ruling was challenged by Poste with appeal filed with the Court of
Cassation, notified on July 31, 2019, which TIM challenged with relevant counter appeal.
Elinet S.p.A. Bankruptcy
In 2014, the trustees in the bankruptcy of Elinet S.p.A., and subsequently the trustees of Elitel S.r.l. and Elitel
Telecom S.p.A. (the parent, at the time, of the Elitel group) appealed the judgment by which the Court of Rome
dismissed the damages claim brought by the trustees of the Elinet-Elitel group, filing a new damages claim for
a total of 282 million euros. The Company is alleged to have exercised management and control powers over
the plaintiff, and, with it, over the Elitel group (an OLO in which TIM has never held any equity interest) through
the management of trade receivables. TIM filed an appearance, challenging the claims made by the other
party. The judgment on the appeal was handed down with ruling in July 2019, which with reference to TIM
confirmed full legality of its conduct and total non-existence of any element of management and
coordination. The receivers of Elinet S.p.A. and Elitel Telecom S.p.A. appealed to the Court of Cassation in
January 2020 to obtain the annulment of the judgment in the second instance. The receiver of Elitel S.r.l. has
not filed an appeal with the Court of Cassation and, consequently, the total claim for damages has been
reduced to 244 million euros. TIM notified a counterclaim asking confirmation of the ruling appealed against.
Brazil - Opportunity Arbitration
In May 2012, TIM and Telecom Italia International N.V. (now merged in Telecom Italia Finance) were served
with a notice of arbitration proceedings brought by the Opportunity group, claiming compensation for
damages allegedly suffered for presumed breach of a settlement agreement signed in 2005. Based on the
claimant’s allegations, the damages relate to circumstances that emerged in the criminal proceedings pending
before the Milan Court regarding, inter alia, unlawful activities engaged in by former employees of TIM.
The investigatory phase having been completed, the hearing for oral discussion took place in November 2014,
after which the parties filed their concluding arguments in preparation for the decision on the case.
In September 2015, the Board of Arbitration declared the proceedings closed, as the award was going to be
filed.
In September 2016 the ICC Court notified the parties of its judgment, based on which the Court of Arbitration
rejected all the claims made by the Opportunity group and decided that the legal costs, administrative costs
and costs for expert witnesses should be split between the parties (the “2016 Arbitration Award”).
In April 2017 the Opportunity group filed an appeal against the 2016 Arbitration Award before the Paris Court of
Appeal.
In November 2017, TIM and Telecom Italia Finance received from the Secretariat of the ICC’s International
Court of Arbitration notice of a Request for Revision of the 2016 Arbitration Award, filed by the Opportunity
group, asking for a new award. A Board of Arbitration was subsequently established.
In October 2018, TIM and Telecom Italia Finance requested proceedings with the Paris Court of Appeal to be
suspended, in the light of proceedings pending with the Court of Arbitration of the International Chamber of
Commerce to review the same 2016 Arbitration Award. In November 2018, the Paris Court of Appeal
suspended the proceedings until the decision is taken by the Court of Arbitration in the review proceedings.
As regards the proceedings to review the 2016 Arbitration Award, in October 2019 the ICC held the discussion
hearing in Paris. In August 2020, the Arbitration Court issued the award rejecting the Request for Revision
presented by the Opportunity Group (the “2020 Arbitration Award”). In December 2020, the Opportunity group
filed an appeal against the 2020 Arbitration Award before the Paris Court of Appeal. In May 2021 the
Opportunity group asked the Paris Court of Appeal to summarize the proceedings brought against the 2016
Arbitration Award.
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Iliad
By summons served during the first quarter of 2020, Iliad Italia S.p.A. sued TIM before the Court of Milan for
alleged anti-competitive conduct, including through the Kena Mobile brand, which was allegedly aimed at
hindering its entry to and consolidation in the mobile phone market in Italy, seeking damages of at least 71.4
million euros.
TIM filed an appearance, fully disputing the requests of Iliad Italia S.p.A.; and, in turn, submitting a
counterclaim in accordance with Art. 2598 of the Italian Civil Code, with reference to the denigration
implemented by Iliad Italia S.p.A. in regard to TIM and formulating a symmetrical claim for compensation for
damages. In the first preliminary brief, Iliad updated its claim for damages, taking it to 242.8 million euros.
Upon lifting the reservation on the preliminary motions, the Court adjourned the hearing to May 4, 2022 for the
closing arguments.
Iliad
By writ of summons notified in September 2021, Iliad Italia S.p.A. summonsed TIM before the Court of Milan for
the alleged application to customers of unlawful contractual conditions in terms of time limits and economic
costs for withdrawal with reference to mobile and fixed telephone offers, with a consequent petition to order
TIM to compensate damages, currently quantified as 120.4 million euros. On February 1, 2022, the first hearing
was held and the terms assigned for the briefs pursuant to article 183, subsection VI of the Italian Code of Civil
Procedure.
T-Power
By writ of summons notified in December 2021, T-Power s.r.l., former Agent for the consumer sector,
summonsed TIM before the Court of Rome to have the right acknowledged to receive payment of a total
maximum amount of approximately 85 million euros by way of commission, compensation in lieu of notice
and termination of employment, as well as compensation for damages. The first hearing is scheduled for April
27, 2022.
b) Other information
Mobile telephony - criminal proceedings
In March 2012 TIM was served notice of the conclusion of the preliminary inquiries, which showed that the
Company was being investigated by the Public Prosecutor of Milan pursuant to the Legislative Decree n.
231/2001, for the offenses of handling stolen goods and counterfeiting committed, according to the alleged
allegations, by fourteen employees of the so-called “ethnic channel”, with the participation of a number of
dealers, for the purpose of obtaining undeserved commissions from TIM.
The Company, as the injured party damaged by such conduct, had brought two legal actions in 2008 and 2009
and had proceeded to suspend the employees involved in the criminal proceedings (suspension later followed
by dismissal). It has also filed an initial statement of defense, together with a technical report by its own
expert, requesting that the proceedings against it be suspended, and that charges of aggravated fraud against
the Company be brought against the other defendants. In December 2012, the Public Prosecutor's Office filed a
request for 89 defendants and the Company itself to be committed for trial.
During the preliminary hearing, the Company was admitted as civil party to the trial and, in November 2013,
the conclusions in the interest of the civil party were filed, reaffirming TIM's total lack of involvement in the
offenses claimed.
At the end of the preliminary hearing, which took place in March 2014, the Judge for the Preliminary Hearing
committed for trial all the defendants (including TIM) who had not asked for their situation to be settled with
alternative procedures, on the grounds that “examination in a trial” was needed. In April 2016, at the end of
the first part of the trial, the Public Prosecutor asked for TIM to be sentenced to pay an administrative fine of
900 thousand euros, but decided not to ask for confiscation of any of the presumed profits of the offenses
(quantified in the committal proceedings as totaling several million euros), based on the assumption that TIM
had in any event remedied the presumed organizational inadequacies. While acknowledging the considerable
redimensioning of the accusations, the Company has reiterated its total non-involvement in the facts at issue.
In November 2016 the Court gave a verdict acquitting the Company on the grounds that there was no case to
answer. All the individuals charged were also acquitted on various grounds.
The Public Prosecutor appealed the acquittal and appealed to the Court of Cassation "per saltum”. In January
2019, the Italian Supreme Court of Cassation agreed to the appeal and therefore ordered that the documents
of the proceedings be sent to the Milan Court of Appeal.
The proceedings were assigned to Chambers IV of the Milan Court of Appeal and are awaiting scheduling of
the hearing.
Dispute concerning the license fees for 1998
TIM has issued civil proceedings against the office of the Prime Minister for compensation of the damage
caused by the Italian State through appeal judgement no.7506/09 by the Council of State that, in the view of
the Company, violates the principles of current European community law.
The main claim which the proceedings are founded on is based on community jurisprudence that recognizes
the right to assert the responsibility of the State in relation to violation of rights recognized in community law
and injured by a judgement that has become definitive, in respect of which no other remedy may be applied.
The judgement of the Council of State definitively denied TIM the right to obtain restitution of the concession
charge for 1998 (totaling 386 million euros for Telecom Italia and 143 million euros for the former TIM
Company, plus interest), already denied by the Lazio regional administrative court despite the favorable and
binding opinion of the European Court of Justice in February 2008. This judgement concerned the conflict
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between EC Directive 97/13 on general authorizations and individual licenses in the telecommunications
services industry, and the national regulations that had deferred, for 1998, the obligation to pay the fee
payable by telecommunications concession holders, despite the intervening deregulation process. The
Company then proposed an alternative compensation claim, within the sphere of the same proceedings, for
tort pursuant to art. 2043 of the Italian Civil Code. 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 is subject to eligibility analysis by the
Court, which declared the inadmissibility of TIM's main claim (case for damages for manifest breach of
community law pursuant to law 117/88). However, this decision was amended in favor of the Company on
appeal. In March 2015 the Rome Court issued its judgment in the first instance, declaring the Company's
application inadmissible. In 2015, TIM appealed this decision and the judgment is pending in the closing
arguments. The Court of Appeal has scheduled the hearing for the closing arguments for April 2, 2019.
Thereafter, without any new procedural activities having taken place, the Court of Appeal incontrovertibly
deferred the hearing for closing arguments first to 2020 and then to 2021 (from when the terms for conclusion
and replies shall run, which will be followed shortly thereafter by the issue of the judgment). These deferrals
were followed by the latest, of January 15, 2021, scheduling the new hearing for January 25, 2022.
On the matters underlying the case, the following must be noted:
■ on the considered lack of jurisdiction of the Court of Rome (concerned by the judgment of the Court of
Rome appealed by TIM) to judge the liability of the Italian government for the work of senior magistrates
(in the case in point, the Council of State), which would have led to the declared inadmissibility of the claim
in accordance with Art. 5, law no. 117/1978 (old text) - the United Chambers of the Court of Cassation ruled
with judgment no. 14842 on June 7, 2018, confirming the jurisdiction of the Court of Rome and, therefore,
the correctness of TIM’s choice to base its lawsuit in the Court of Rome;
■
on the unlawful nature of the conduct of the Italian government - and, therefore, on the liability of the
State-Court in accordance with Law no. 117/1998 - once again, the EU Court of Justice has ruled, deciding
on the prejudicial matter raised by the Lazio TAR in other, connected proceedings, in its judgment given on
March 4, 2020 in C-34/19, stressing that TIM was not required to pay the charges demanded by the State
for 1998 and, therefore, confirming the clear violation by the Council of State of European Community law
(also because in clear conflict with the decision already given by the EU Court of Justice on February 21,
2008 in C-296/06, as, moreover, already ruled by the Court of Appeal of Rome, Chambers I, in Decree of
January 31, 2012, which sanctioned the procedural admissibility of TIM’s lawsuit);
■ on the matter of the right to repeat the charges paid for 1998 - the Court of Cassation ruled in its judgment
no. 18603 given on September 7, 2020, rejecting the appeal brought by the Presidency of the Council
against the judgment whereby the Court of Appeal of Rome had upheld the claim for compensation made
by Vodafone (payment of charges for 1998) for the same title in separate proceedings.
In short, the Company paid the charges disputed in 1998; it promptly challenged the administrative provision
that had unfairly required said payment, before the administrative court; the administrative proceedings
before the Council of State concluded negatively in 2009 (despite the recalled opposite judgment of the
European Court of Justice); the civil proceedings of first instance concluded in March 2015 with a judgment of
rejection for grounds of admissibility (then solved in the sense indicated by the company with the referenced
judgment of Cassation in United Chambers no. 14842/18) and more than 6 years after the first instance
judgment - going from deferral to deferral - the appeal judgment (that could only uphold the mentioned
judgments of the Court of Justice and the Court of Cassation) has not yet been issued (nor, on the basis of
these repeated deferrals, can the company forecast when it will be given).
The Company is examining the various scenarios and legal claims (national, European Community, etc.) that
may contribute towards defining the appeal dispute. It is considered, in fact, that the principles of the
reasonable duration of the trial, in accordance with subsection 2 of article 111 of the Constitution and in
accordance with article 6 of the European Convention on Human Rights, are violated by these events,
considering: (i) the year in which payment was made of the undue charges is 1998; (ii) the value of these
charges is approximately 529 million euros plus interest from that date; (iii) the extremely long procedural
process has not even led to an appeal judgment (started in 2015 and with an unpredictable conclusion, given
the continuous deferrals); (iv) the circumstance that the legal matter appears to be readily able to be settled,
as not one but two judgments have already been given by the EU Court of Justice declaring payment of the
charges to be incompatible with European Community legislation (judgments that have currently been ignored
by the national court).
As part of the aforementioned analyzes aimed at reaching a definition of the appeal sentence, it should be
pointed out that on January 25, 2021 the Company filed a request with the Rome Court of Appeal to bring
forward the hearing (postponed, as mentioned, to January 25, 2022) in order to avoid yet another
postponement of the case, which, as we know, concerns the non-compliance with two inter partes decisions,
on the same matter, by the Court of Justice of the European Union for a clear violation of European law by the
State-Judge. With a ruling on February 8, 2021, the Rome Court of Appeal (second section specializing in
corporate matters) deemed it could grant the request for an advance ruling, setting the hearing for November
30, 2021. On that date the case was taken to decision with the assignment of the legal terms for closing
statements and replies.
Vodafone (previously TELETU)
By writ of summons of February 2012, TIM summonsed the operator TeleTu (today incorporated into
Vodafone) to the Court of Rome for having unduly impeded customers intending to return to TIM. The
damages claim has been quantified for approximately 93 million euros. By judgment of December 2020, the
Court ascertained that from July 2008 to October 2011, TELETU pursued illegal competition pursuant to art.
2598 of the Italian Civil Code in connection with requests for migration to TIM, ordering it to compensate TIM
for the amount of 1,378,000 euros plus interest and revaluation, which was paid by Vodafone. As part of a
global settlement with Vodafone, the parties have agreed to abstain from challenging this judgment.
Separate Financial
Statements of
TIM S.p.A.
Note 23
Disputes and pending legal actions, other information, commitments
and guarantees
372
c) Commitments and guarantees
Personal guarantees provided, totaling 5,546 million euros, refer mainly to guarantee financing provided by TIM
on behalf of Subsidiaries (including 3,532 million euros for Telecom Italia Capital, 1,348 million euros for
Telecom Italia Finance, 281 million euros for Telecom Italia Sparkle, 128 million euros for Telenergia, 84 million
euros for FiberCop and 107 million euros for Olivetti).
Significant purchase commitments outstanding at December 31, 2021 for long-term contracts forming part of
TIM S.p.A.’s business operations, totaling around 5.4 billion euros, mainly related to the commitments
undertaken by the Company for supplies related to the operation of the telecommunications network.
The guarantees provided by third parties to Group companies, amounting to 4,362 million euros, refer for 3,493
million euros to the related to guarantees provided by banks and other financial institutions as a guarantee of
the proper performance of contractual obligations and for 869 million euros to insurance guarantees. In
particular, we report:
■
■
the insurance guarantees, which totaled 869 million euros, mainly refer to guarantee financing by TIM in
applying legal provisions for contracts of Public Administrations and similar bodies;
the Company had six bank guarantees issued in favor of the Ministry of Economic Development for a total
of 1,922 million euros for the deferment of the payment of the amount due for the acquisition of the user
rights to frequencies in the 694-790 MHz, 3600-3800 MHz and 26.5-27.5 GHz bands, which will be reserved
for 5G mobile telecommunications services. At December 31, 2021, the remaining guarantee was 1,738
million euros;
■ TIM had bank guarantees issued in favor of INPS to support the application - also for some Group
companies - of Article 4, paragraph 1, of Law 92 of June 28, 2012, to incentivize the departure of workers
meeting the necessary requirements; the total amount of guarantees is 1,422 million euros (of which 35
million euros for Telecom Italia Sparkle and 18 million euros for Olivetti).
Furthermore, in May 2018, TIM issued a surety to the Prime Minister’s Office for 74.3 million euros to secure an
appeal to the Lazio Administration Court for a provisional stay of the administrative fine levied on TIM
following the preliminary investigation connected with the penalty proceeding initiated under Article 2 of
Decree Law 21 of 3/15/2012 (the “Golden Power” law).
Separate Financial
Statements of
TIM S.p.A.
Note 23
Disputes and pending legal actions, other information, commitments
and guarantees
373
NOTE 24
REVENUES
These increased by 367 million euros compared to 2020. The breakdown is as follows:
(million euros)
Equipment sales
Services
Total
2021
1,746
10,651
12,397
2020
1,271
10,759
12,030
Revenues from services are mainly represented by voice and data services on fixed and mobile networks for
retail customers (7,713 million euros) and for other wholesale operators (2,207 million euros).
Revenues are presented gross of amounts due to other TLC operators (608 million euros), which are included
in "Costs of services".
NOTE 25
OTHER INCOME
This increased by 133 million euros and the figure breaks down as follows:
(million euros)
Late payment fees charged for telephone services
Recovery of employee benefit expenses, purchases and services rendered
Capital and operating grants
Damages, penalties and recoveries connected with litigation
Estimate revisions and other adjustments
Special training income
Other
Total
2021
29
33
26
22
71
66
75
322
2020
40
16
31
17
59
13
13
189
Separate Financial Statements of
TIM S.p.A.
Note 24
Revenues
374
NOTE 26
ACQUISITION OF RAW MATERIALS AND
SERVICES
(a)
These increased by 2,148 million euros compared to 2020. The figure breaks down as follows:
2021
(million euros)
1,053
Acquisition of raw materials and goods
Costs of services
Revenues due to other TLC operators
Costs for telecommunications network access services
Commissions, sales commissions and other selling expenses
Advertising and promotion expenses
Professional and consulting services
Utilities
Maintenance costs
Outsourcing costs for other services
Mailing and delivery expenses for telephone bills, directories and other
materials to customers
Distribution and logistics
Travel and lodging costs
Insurance
Other service expenses
608
99
993
137
104
342
360
413
30
8
5
23
2,171
5,293
(b)
Lease and rental costs
Rent and leases
Other lease and rental cost
Total
(c)
(a+b+c)
3
410
413
6,759
2020
926
591
101
827
130
114
353
277
388
33
7
6
33
519
3,379
5
301
306
4,611
In application of IFRS 16, leased asset costs mainly included lease fees for contracts relating to intangible
assets (409 million euros, mainly for software licenses and royalties).
Specifically, Other service expenses mainly includes costs due to external companies to set up network
accesses as party of the delivery agreements in place with Group companies (such as FiberCop), as well as
facility and maintenance costs.
In 2021, non-recurring operating costs were incurred in reference to procurement and various costs for
approximately 4 million euros, which became necessary for the management of the COVID-19 health
emergency, mainly due to the acquisition of personal protection equipment and thermoscanners, and costs for
environmental hygiene services. Further details are provided in the Note “Significant non-recurring events and
transactions” of the Separate Financial Statements at December 31, 2021 of TIM S.p.A.
Separate Financial Statements of
TIM S.p.A.
Acquisition of raw materials and services 375
Note 26
NOTE 27
EMPLOYEE BENEFITS EXPENSES
These decreased by 260 million euros compared to 2020. The figure breaks down as follows:
(million euros)
2021
Ordinary employee expenses
Wages and salaries
Social security costs
Employee Severance Indemnity
Other employee benefits
1,445
538
—
134
2,117
—
(a)
(b)
Costs and provisions for temp work
Miscellaneous expenses for personnel and other labor-related services
rendered
Charges for termination benefit incentives
Corporate restructuring expenses
Other
Total
—
333
3
336
2,453
(c)
(a+b+c)
2020
1,496
556
(1)
106
2,157
—
—
35
1
36
2,193
"Ordinary employee expenses" decreased by 40 million euros, mainly due to the decrease in the average
salaried workforce equal to a total of -2,192 employees on average.
“Company restructuring expenses” come to 333 million euros (35 million euros in 2020) and are mainly
related to the recording of period expenses, following the application of the trade union agreements stipulated
between the Company and the trade unions on March 8, 2021 and on April 23, 2021.
In 2021, non-recurring costs were incurred for approximately 1 million euros, made necessary to address the
COVID-19 health emergency. Further details are provided in the Note “Significant non-recurring events and
transactions” of the Separate Financial Statements at December 31, 2021 of TIM S.p.A.
The average salaried workforce stood at 34,529 employees at December 31, 2021 (36,621 at December 31,
2020). A breakdown by category is as follows:
(number of units)
Executives
Middle managers
Workers
Blue collars
Employees on payroll
Employees with temp work contracts
Total headcount
2021
456
3,255
30,818
—
34,529
—
34,529
2020
458
3,320
32,843
—
36,621
—
36,621
The headcount at December 31, 2021 amounted to 37,064 employees, a decrease of 1,452 compared to
December 31, 2020 (38,516).
Separate Financial Statements of
TIM S.p.A.
Note 27
Employee benefits expenses
376
NOTE 28
OTHER OPERATING EXPENSES
These increased by 574 million euros compared to 2020. The figure breaks down as follows:
(million euros)
Write-downs and expenses in connection with credit management
Provision charges
TLC operating fees and charges
Indirect duties and taxes
Penalties, settlement compensation and administrative fines
Association dues and fees, donations, scholarships and traineeships
Other
Total
of which, included in the supplementary disclosure on financial instruments
2021
217
674
41
58
127
10
52
1,179
217
2020
328
1
42
53
120
10
51
605
328
Further details on Financial Instruments are provided in the Note "Supplementary disclosures on financial
instruments".
In 2021, non-recurring operating costs were incurred for 20 million euros, mainly referring to provisions and
expenses connected with credit management deriving from the deterioration of the macroeconomic context
as a consequence of the COVID-19 pandemic. Further details are provided in the Note “Significant non-
recurring events and transactions” of the Separate Financial Statements at December 31, 2021 of TIM S.p.A.
NOTE 29
CHANGE IN INVENTORIES
This item came to a positive 21 million euros (negative 11 million euros at December 31, 2020), and was mainly
attributable to a purchasing trend during the year that was higher than that of consumption, on the Fixed
segment.
In 2021, write-downs of inventories amounted to around 5 million euros.
NOTE 30
INTERNALLY GENERATED ASSETS
Internally generated assets amounted to 288 million euros, down by 93 million euros on 2020. These consist
solely of capitalization of both tangible and intangible assets on the cost of labor, and, specifically:
■ 146 million euros relating to “intangible assets with a finite useful life”, mainly relating to development of
software and network solutions, applications and innovative services;
■ 142 million euros relating to the “tangible assets” connected with design, construction and testing of
network infrastructure and systems.
This performance was attributable to lower capitalization relating to both tangible assets for the installation of
access and carrier networks (-59 million euros) and to intangible assets for the development of software and
innovative services and network solutions (-34 million euros). Lower capitalization mainly derives from the
afore-mentioned conferrals to FiberCop S.p.A. and Noovle S.p.A.. Moreover, the tangible asset component was
impacted by the decrease in the average hourly cost of -1 million euros.
Separate Financial Statements of
TIM S.p.A.
Note 28
Other operating expenses
377
NOTE 31
DEPRECIATION AND AMORTIZATION
These decreased by 586 million euros compared to 2020 and was broken down as follows:
(million euros)
Amortization of intangible assets with a finite useful life
2021
Industrial patents and intellectual property rights
Concessions, licenses, trademarks and similar rights
Other intangible assets
Depreciation of tangible assets owned
Buildings (civil and industrial)
Plant and equipment
Manufacturing and distribution equipment
Other
Amortization of rights of use assets
Rights of use Concessions, Licenses, Trademarks and Similar Rights
Property
Plant and equipment
Other
Total
(a)
(b)
(c)
(a+b+c)
732
380
—
1,112
28
1,338
9
57
1,432
1
288
136
27
452
2,996
2020
910
379
1
1,290
33
1,623
11
83
1,750
—
402
111
29
542
3,582
For further details refer to the Notes "Intangible assets with a finite useful life", "Tangible assets" and "Rights
of use assets".
Separate Financial Statements of
TIM S.p.A.
Note 31
Depreciation and amortization
378
NOTE 32
GAINS/(LOSSES) ON DISPOSALS OF NON-
CURRENT ASSETS
This item was broken down as follows:
(million euros)
Gains on disposals of non-current assets
Gains on the retirement/disposal of intangible, tangible and user rights on
rental
Losses on disposals of non-current assets
Losses on the retirement/disposal of intangible, tangible and user rights on
rental
Total
(a)
(b)
(a-b)
2021
2020
7
7
50
50
(43)
30
30
44
44
(14)
NOTE 33
IMPAIRMENT REVERSALS (LOSSES) ON NON-
CURRENT ASSETS
The item is negative for 4,120 million euros (negative for 8 million euros in 2021), following the impairment of
goodwill attributed to the domestic BUs.
In accordance with IAS 36, goodwill is not subject to amortization, but is tested for impairment on at least an
annual basis, when preparing the company’s separate financial statements.
Further details are provided in the Note "Goodwill".
Separate Financial Statements of
TIM S.p.A.
Note 32
Gains/(losses) on disposals of non-current assets
379
NOTE 34
INCOME/(EXPENSES) FROM INVESTMENTS
Details are as follows:
(million euros)
Dividends
Net gains on disposals of investments
Losses on disposals of investments
Other income from investments
Impairment losses on financial assets
Sundry expenses from investments
Total
of which, included in the supplementary disclosure on financial instruments
2021
837
9
—
10
(7)
(15)
834
—
2020
331
227
—
—
(7)
—
551
1
Further details on Financial Instruments are provided in the Note "Supplementary disclosures on financial
instruments".
In particular, we report:
■ dividends mainly related to the subsidiaries Telecom Italia Sparkle (400 million euros), Telecom Italia
Finance (436 million euros). In 2020 dividends mainly referred to the subsidiary Telecom Italia Finance (75
million euros) and the associated company INWIT S.p.A. (256 million euros);
■ net capital gains (9 million euros) refer to the sale of 37.5% of the investment in the subsidiary FiberCop to
the KKR fund (gross capital gain of 17 million euros, net of accessory charges for 8 million euros). In 2020,
these referred to the dilution of TIM’s investment in INWIT S.p.A.'s capital from 60% to 37.5%, following the
merger of INWIT with Vodafone Towers;
■ other income from investments refers to the reversal to extraordinary income of several provisions relating
to investments;
■
impairment losses referred mainly to the impairment of investment in the subsidiary Telecom Italia
Ventures. In 2020 impairment losses referred mainly to the impairment of investment in the subsidiary
Olivetti.
■ sundry expenses from investments refer to the impact of the valuation of the economic value at 2021 of
the earn-in clause, envisaged in the Transaction Agreement signed by TIM and Teemo Bidco at the time of
the FiberCop transaction, on which basis - if the target total FTTH/FTTB accesses activated on FiberCop
network at December 31, 2026 should not be achieved - TIM is to transfer to Teemo Bidco, at no additional
cost, a number of shares ranging between 0% and 7.5% of the share capital of FiberCop, which in any case
does not prejudice TIM’s control over FiberCop.
Separate Financial Statements of
TIM S.p.A.
Note 34
Income/(expenses) from investments
380
NOTE 35
FINANCE INCOME AND EXPENSES
Finance income (expenses) show a net expense of 908 million euros, which breaks down as follows:
(million euros)
Finance income
Finance expenses
Total net financial income (expenses)
2021
1,076
1,984
(908)
The items break down as follows:
(million euros)
Interest expenses and miscellaneous finance expenses
Interest expenses and other costs relating to bonds
Interest expenses relating to subsidiaries
Interest expenses relating to associates
Interest expenses to banks
Financial charges on lease liabilities
Interest expenses to others
Commissions
Miscellaneous finance expenses (*)
Interest income and other finance income:
Interest income
Interest income from subsidiaries
Interest income from associates
Income from financial receivables, recorded in Non-current assets
Income from financial receivables from subsidiaries, recorded in Non-current
assets
Income from financial receivables from associates, recorded in Non-current
assets
Income from securities other than investments, recorded in Non-current
assets
Income from securities other than investments, recorded in Current assets
(*)
Miscellaneous finance income
Total net finance interest/(expenses)
Other components of financial income and expense:
Net exchange gains and losses
Net result from derivatives
(a)
Net fair value adjustments to fair value hedge derivatives and underlyings
Net fair value adjustments to non-hedging derivatives
Total other components of financial income and expense:
Total net financial income (expenses)
of which, included in the supplementary disclosure on financial instruments
(b)
(c)=(a+b)
(*) of which IFRS 9 impact:
(million euros)
Income from negative adjustment of IFRS 9 impairment reserve on
financial assets through FVTOCI
Expenses from positive adjustment of IFRS 9 impairment reserve on
financial assets through FVTOCI
Reversal of IFRS 9 impairment reserve on financial assets through
FVTOCI
Impairment losses on financial assets other than investments
2021
(525)
(158)
—
(34)
(132)
(2)
(851)
(52)
(61)
(113)
12
1
—
8
95
—
—
4
21
141
(823)
1
(57)
(4)
(25)
(85)
(908)
(691)
2021
—
—
—
—
2020
1,012
1,973
(961)
2020
(563)
(166)
—
(47)
(145)
(1)
(922)
(54)
(74)
(128)
30
3
—
2
8
—
—
4
7
54
(996)
(2)
(48)
2
83
35
(961)
(704)
2020
—
—
—
—
Further details on Financial Instruments are provided in the Note "Supplementary disclosure on financial
instruments".
Separate Financial Statements of
TIM S.p.A.
Note 35
Finance income and expenses
381
For greater clarity of presentation, the net effects relating to derivative financial instruments are summarized
in the following table:
(million euros)
Foreign currency conversion gains
Exchange losses
Net exchange gains and losses
2021
10
(9)
1
2020
8
(10)
(2)
Income from fair value hedge derivatives
Charges from fair value hedge derivatives
Net result from fair value hedge derivatives
Positive effect of the reversal of the Reserve for fair value adjustment of
cash flow hedge derivatives to the income statement (interest rate
component)
(a)
Negative effect of the reversal of the Reserve of cash flow hedge
derivatives to the income statement (interest rate component)
Net effect of the Reversal of the Reserve of cash flow hedge derivatives
to the income statement (interest rate component)
Income from non-hedging derivatives
Charges from non-hedging derivatives
Net result from non-hedging derivatives
Net result from derivatives
(b)
(c)
(a+b+c)
Positive fair value adjustments to fair value hedge derivatives
Negative fair value adjustments relating to financial assets and liabilities
underlying fair value hedge derivatives
Net fair value adjustments
Positive fair value adjustments to Underlying financial assets and liabilities
of fair value hedge derivatives
Negative fair value adjustments relating to fair value hedge derivatives
Net fair value adjustments
Net fair value adjustments to fair value hedge derivatives and
underlyings
Positive fair value adjustments to non-hedging derivatives
Negative fair value adjustments to non-hedging derivatives
Net fair value adjustments to non-hedging derivatives
(d)
(e)
(d+e)
(f)
(g)
(f+g)
33
—
33
113
(215)
(102)
276
(264)
12
(57)
—
—
—
50
(54)
(4)
(4)
453
(478)
(25)
47
—
47
118
(213)
(95)
285
(285)
—
(48)
45
(44)
1
6
(5)
1
2
449
(366)
83
Separate Financial Statements of
TIM S.p.A.
Note 35
Finance income and expenses
382
NOTE 36
RELATED-PARTY TRANSACTIONS
The following tables show the balances relating to related-party transactions and the impact of those
amounts on the separate income statement, statement of financial position and statement of cash flows of
TIM S.p.A..
Related-party transactions, when not dictated by specific laws, were conducted at arm's length. They were
performed in compliance with the internal procedure, which sets forth rules designed to ensure the
transparency and fairness of the transactions in accordance with Consob Regulation 17221/2010. The current
procedure is available on the website gruppotim.it, under the Group section/Governance System channel.
For an analysis of transactions with subsidiaries and associates of TIM S.p.A. refer to the Note “Investments”.
It should be noted that during the second half of 2021, Cassa Depositi e Prestiti and its subsidiaries were
included in the scope of related companies, on the basis of assessments in this regard performed by the TIM
S.p.A. Related Parties Committee.
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
383
The effects of related-party transactions on the line items of the separate income statements for 2021 and
2020 are as follows:
SEPARATE INCOME STATEMENT LINE ITEMS 2021
(million euros)
Total
Subsidiaries
Associates,
subsidiaries of
associates and
joint ventures
Related Parties
Pension
funds Key managers
Other
related
parties (*)
Total
related
parties
% of
financial
statement
item
Revenues
Other income
Acquisition of goods and
services
Employee benefits expenses
Other operating expenses
Depreciation and
amortization
Gains/losses on disposals of
non-current assets
Income (expenses) from
investments
Finance income
Finance expenses
(a)
12,397
322
6,759
2,453
1,179
2,996
(43)
834
1,076
1,984
1,074
88
1,996
—
—
25
(40)
836
373
654
26
1
350
—
3
50
—
—
—
18
22
—
79
—
—
—
—
—
—
—
—
—
—
64
—
—
—
—
—
—
(b)
1,122
89
2,425
96
3
75
(40)
836
373
672
—
—
—
32
—
—
—
—
—
—
(b/a)
9.1
27.6
35.9
3.9
0.3
2.5
93.0
100.2
34.7
33.9
(*) Vivendi Group and companies belonging to the group that it belongs to; Cassa Depositi e Prestiti Group and its subsidiaries; other related parties
through Directors, Statutory Auditors and Key Managers.
SEPARATE INCOME STATEMENT LINE ITEMS 2020
(million euros)
Total
Subsidiaries
Associates,
subsidiaries of
associates and
joint ventures
Related Parties
Pension
funds Key managers
Other
related
parties (*)
Total
related
parties
% of
financial
statement
item
Revenues
Other income
Acquisition of goods and
services
Employee benefits expenses
Other operating expenses
Depreciation and
amortization
Gains/losses on disposals of
non-current assets
Income (expenses) from
investments
Finance income
Finance expenses
(a)
12,030
189
4,611
2,193
605
3,582
(14)
551
1,012
1,973
248
7
688
—
—
103
3
75
320
559
60
1
249
—
2
39
—
256
—
15
3
—
78
—
—
—
—
—
—
—
—
—
—
64
—
—
—
—
—
—
(b)
311
8
1,015
78
2
142
(b/a)
2.6
4.2
22.0
3.6
0.3
4.0
3
(21.4)
331
320
574
60.1
31.6
29.1
—
—
—
14
—
—
—
—
—
—
(*) Vivendi group and Companies belonging to the group that it belongs to; other related parties through directors, statutory auditors and key
managers.
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
384
The effects of related-party transactions on the line items of the statements of financial position as at
December 31, 2021 and December 31, 2020 are as follows:
STATEMENT OF FINANCIAL POSITION LINE ITEMS AT December 31, 2021
Total
(million euros)
Related Parties
Subsidiaries
(a)
Associates,
subsidiaries of
associates and joint
ventures
Other
related
parties (*)
Pension
funds Total related
parties % of financial
statement item
(b)
(b/a)
1
—
2,670
60.0
NET FINANCIAL DEBT
Non-current financial assets
of which: Non-current financial
assets for lease contracts
Securities other than
investments (current assets)
Financial receivables and other
current financial assets
of which: Current financial assets
for lease contracts
4,449
2,669
11
—
155
39
—
—
17
4
Cash and cash equivalents
Current financial assets
Non-current financial liabilities
3,558
3,713
24,620
26
43
5,567
of which: Non-current financial
liabilities for lease contracts
Current financial liabilities
2,743
5,479
29
485
of which: Current financial
liabilities for lease contracts
Total net financial debt
OTHER STATEMENT OF
FINANCIAL POSITION LINE
ITEMS
Rights of use assets
Miscellaneous receivables and
other non-current assets
Trade and miscellaneous
receivables and other current
assets
Miscellaneous payables and
other non-current liabilities
Trade and miscellaneous
payables and other current
liabilities
434
6
21,937
3,340
3,320
1,974
3,931
1,196
189
247
737
10
—
—
—
—
—
—
—
269
269
75
73
344
299
—
17
2
1
—
—
—
—
—
—
—
—
—
(1)
—
—
20
23
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
—
17
4
26
43
5,836
298
560
79
3,683
488
247
774
35
9.1
—
11.0
10.3
0.7
1.2
23.7
10.9
10.2
18.2
16.8
14.7
12.5
19.7
2.9
11.4
8,111
681
177
44
21
923
(*) Vivendi Group and companies belonging to the group that it belongs to; Cassa Depositi e Prestiti Group and its subsidiaries; other related parties
through Directors, Statutory Auditors and Key Managers.
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
385
STATEMENT OF FINANCIAL POSITION LINE ITEMS AT December 31, 2020
(million euros)
Total
Subsidiaries
(a)
Related Parties
Associates,
subsidiaries of
associates and joint
ventures
Other
related
parties (*)
Pension
funds Total related
parties % of financial
statement item
(b)
(b/a)
—
—
658
26.2
NET FINANCIAL DEBT
Non-current financial assets
of which: Non-current financial
assets for lease contracts
Securities other than
investments (current assets)
Financial receivables and other
current financial assets
of which: Current financial assets
for lease contracts
2,507
658
17
—
154
44
—
—
13
3
Cash and cash equivalents
Current financial assets
Non-current financial liabilities
1,766
1,920
27,946
92
105
6,162
of which: Non-current financial
liabilities for lease contracts
Current financial liabilities
3,506
3,805
497
307
of which: Current financial
liabilities for lease contracts
Total net financial debt
OTHER STATEMENT OF
FINANCIAL POSITION LINE
ITEMS
Rights of use assets
Miscellaneous receivables and
other non-current assets
Trade and miscellaneous
receivables and other current
assets
Miscellaneous payables and
other non-current liabilities
Trade and miscellaneous
payables and other current
liabilities
463
14
27,324
5,706
4,096
1,733
3,464
3,477
541
131
239
159
—
—
—
—
—
—
—
313
313
50
50
363
347
—
39
2
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
13
3
92
105
6,475
810
357
64
6,069
888
131
281
161
—
—
8.4
6.8
5.2
5.5
23.2
23.1
9.4
13.8
22.2
21.7
7.6
8.1
4.6
8.9
5,610
341
101
36
20
498
(*) Vivendi group and Companies belonging to the group that it belongs to; other related parties through directors, statutory auditors and key
managers.
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
386
The effects of related-party transactions on the significant line items of the statements of cash flows for 2021
and 2020 are as follows:
STATEMENT OF CASH FLOWS LINE ITEMS 2021
(million euros)
Total
Subsidiaries
Related Parties
Other
related
parties (*)
Pension
funds
Associates,
subsidiaries of
associates and
joint ventures
(a)
Total
related
parties
% of
financial
statement
item
(b)
(b/a)
Purchases of intangible assets,
tangible assets and right of use
3.9
assets on an accrual basis
16.4
Dividends paid
(*) Vivendi Group and companies belonging to the group that it belongs to; Cassa Depositi e Prestiti Group and its subsidiaries; other related
parties through Directors, Statutory Auditors and Key Managers.
2,547
318
100
52
—
—
15
51
8
—
77
1
STATEMENT OF CASH FLOWS LINE ITEMS 2020
(million euros)
Total
Subsidiaries
Related Parties
Other
related
parties (*)
Pension
funds
Associates,
subsidiaries of
associates and
joint ventures
(a)
Total
related
parties
% of
financial
statement
item
(b)
(b/a)
Purchases of intangible assets,
tangible assets and right of use
16.8
assets on an accrual basis
11.8
Dividends paid
(*) Vivendi group and Companies belonging to the group that it belongs to; other related parties through directors, statutory auditors and key
managers.
3,374
317
566
37
188
1
378
—
—
36
—
—
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
387
Transactions with subsidiaries
The main transactions that involved the subsidiaries of TIM S.p.A. include two conferrals to Noovle S.p.A.
(January 1, 2021) and FiberCop S.p.A. (March 31, 2021), as well as the merger of Flash Fiber into FiberCop, which
took place on March 31, 2021 with retroactive effect from January 1, 2021. Further details are provided in the
Note "Investments". The most significant amounts are summarized as follows:
SEPARATE INCOME STATEMENT LINE ITEMS
(million euros)
Revenues
FiberCop S.p.A.
Flash Fiber S.r.l.
INWIT S.p.A.
Noovle S.p.A. Societa' Benefit
Olivetti S.p.A.
Telecom Italia S.Marino S.p.A.
Telecom Italia Sparkle S.p.A.
Telecom Italia Trust
Technologies S.r.l.
Telecontact S.p.A.
Telefonia Mobile Sammarinese
S.p.A.
Telenergia S.p.A.
TIM S.A.
TIM Retail S.r.l.
2021
904
—
—
18
(2)
2
47
3
3
1
2
22
73
2020
Type of contract
— Carrying out of works on behalf of FiberCop on
developments of secondary copper and fiber network,
ordinary and extraordinary maintenance services on the
secondary copper and fiber network, fee
income for
administrative services connected with the IRU transfer and
acquisition of secondary access network
installation
separation, desktop
infrastructures,
management, TSA and voice services
supply of ERP,
104 Construction of the horizontal secondary network in FTTH
mode following the joint investment arrangement of July
28, 2016 between TIM and Fastweb, voice services, data
transmission equipment and services, administrative
outsourcing
12 Voice and data transmission services for company use, IRU
assignments of dark optic fiber and local infrastructure,
Easy IP ADSL service, small cell design and production
services, property leasing, sales of mobile network TLC
products, product rental, administrative outsourcing (for the
portion relative to the first three months of 2020)
— Voice services, supply of ICT products, property leasing and
facility services
(9) Voice services, MPLS and fiber services for the national data
network, product
leasing, project
sales, property
development, administrative outsourcing and margins for
the end-to-end solutions offered by Olivetti on Jasper
platform and intermediated by TIM, under the scope of the
contract for the development, management and marketing
of machine-to-machine and Internet of Things services
2 Connection
and
telecommunications
services
(interconnection contracts for the sale of data services such
as bitstream; IRU transfer of dark fiber connections and
installation infrastructures; ULL; Shared Access; DSLAM
devices; SUBLOOP FTTC), voice services, product sales
47 Voice and data transmission services, customized services,
services relating to the interconnection between Telecom
Italia Sparkle and TIM communications networks with
particular reference to accesses and international traffic,
sale of IRU dark fiber and installation infrastructures,
property leasing, administrative outsourcing
2 Voice outsourced services,
administrative outsourcing
fixed network products,
3 Lease of properties and facility management services,
supply of fixed and mobile network and IP connectivity
telecommunications products and services, administrative
outsourcing
1 Mobile telephone and telecommunications product sales
1 Outsourcing
for
business, administrative
company
outsourcing, supply of operative assistance services
24 Roaming services, license support and provision as part of
network operations, information technology, marketing &
sales, Royalties Trademark License Agreement and TIM
Brand
60 Supply of products for sale to the public, voice and data
transmission services and ICT services for company use,
property leasing
Other minor companies
Total revenues
1
1,074
1
248
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
388
(million euros)
Other income
FiberCop S.p.A.
Noovle S.p.A. Societa' Benefit
Other minor companies
Total other income
Acquisition of goods and
services
FiberCop S.p.A.
Flash Fiber S.r.l.
INWIT S.p.A.
Noovle S.p.A. Societa' Benefit
Olivetti S.p.A.
Telecom Italia Sparkle S.p.A.
Telecom Italia Trust
Technologies S.r.l.
Telecontact S.p.A.
Telenergia S.p.A.
Telsy S.p.A.
TIM Retail S.r.l.
TIM Servizi Digitali S.p.A.
Other minor companies
Total acquisition of goods and
services
2021
2020
Type of contract
12
66
10
88
910
—
—
399
79
155
23
77
250
10
90
3
—
1,996
— Refunds of costs of services, compensation for board
— Recovery of seconded personnel costs, refunds of costs of
positions, other income
services, other income
7
7
fiber access services to operators,
— Use of the secondary access network for the supply of
IRU
copper and
(underground and
acquisition of secondary access
overhead) network
infrastructures for the
transfer for exclusive use of said infrastructures to the
operators, special commitment 2021-23 envisaged by the
MSA
installation
1 Use of the network in GPON mode for the supply of the
FTTH service
11 Supply of services for BTS sites, monitoring and security
services, management and maintenance services (for the
portion relative to the first three months of 2020)
— Operating service Minimum Commitment Charge, supply of
IT services marketed to SME customers, professional IT
services, customized TIM offer services to end customers,
supply of ICT products, charges for the collocation service of
Security systems in Noovle data center, GCP consumptions,
professional services, Azure consumptions, hosting, on-
premise services
70 Provision of Cloud Printing service and related software
maintenance, supply of customized services as part of TIM
offerings to end customers, purchase of IT services, ICT
product installation costs, after-sales support, as part of TIM
offerings to end customers, evolutionary developments of
projects and platforms, purchase of software platform
licenses, software developments, award of cloud enabling
services and cloud computing services, security, the
development of on-line services and portals and applicative
cooperation for the Public Administrations
146 Portion to be paid for telecommunications services and
data
interconnection
costs,
transmission and international line lease
telephone
services,
20 Certification Authority service for TIM and within the TIM
customer offering, archiving service according to certified
email rules for the TIM S.p.A.’s Certified Electronic Mail box,
provision of digital identity management services by means
of SPID platform and related regulatory adjustments
87 Customer Care services for TIM customers and for the Public
Administration under the Consip Agreement, back office
services relating to the billing services for customers of the
paid service provided by TIM technicians, call center and
back office services for the management of the information
of the technical and commercial front end of public
telephony
255 Power services
5 Purchase of licenses, as part of TIM offerings to end
customers, and ICT solutions security services for TIM,
maintenance services and licenses
92 Supply of services for acquisition of new customers,
information activities and post-sales support for TIM
customers, activities for the promotion of TIM's image and
distinctive brands through point-of-sale windows
— Tender contract for network works, assurance activities,
delivery, network construction
1
688
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
389
(million euros)
Employee benefits expenses
Other operating expenses
Amortization of rights of use
assets
FiberCop S.p.A.
Flash Fiber S.r.l.
INWIT S.p.A.
Noovle S.p.A. Societa' Benefit
Total amortization of rights of
use assets
Gains/(losses) on disposals of
non-current assets
Income (expenses) from
investments
Telecom Italia Finance S.A.
Telecom Italia Sparkle S.p.A.
Total income (expenses) from
investments
Finance income
FiberCop S.p.A.
Flash Fiber S.r.l.
Noovle S.p.A. Societa' Benefit
Telecom Italia Capital S.A.
Telecom Italia Finance S.A.
Telecom Italia Sparkle S.p.A.
Telenergia S.p.A.
Total finance income
Finance expenses
INWIT S.p.A.
Telecom Italia Capital S.A.
Telecom Italia Finance S.A.
Total finance expenses
2021
—
—
21
—
—
4
25
(40)
436
400
836
88
—
23
230
30
1
1
373
—
522
132
654
2020
—
—
Type of contract
— Amortization of rights of use resulting from the launch,
from the date of conferral by TIM to FiberCop of TIM IRU
liabilities on portions of secondary network to FiberCop, at
the service of the TIM network
39 Amortization of rights of use related to the recognition of
greater non-current assets amortized over the residual
contractual term
64 Amortization of rights of use related to the recognition of
greater non-current assets amortized over the residual
contractual term (for the portion relative to the first three
months of 2020)
— Amortization of rights of use related to the recognition of
greater non-current assets amortized over the residual
contractual term
103
3 Following the derecognition of the rights of use connected
with the previous Pay per Use contract entered into with
Flash Fiber, as a result of the start of the new Master
Service Agreement (MSA) entered into by TIM S.p.A. and
FiberCop S.p.A., due to the conferral and merger of
FiberCop with Flash Fiber
75 Dividends
— Dividends
75
— Interest
10 Income
— Interest
commission income
from
receivable
commission income
income on
financial
receivables,
financial
receivables and
financial commissions
income on
financial
receivables,
financial
273 Income from securities, income from derivatives, financial
commissions receivable, other financial income
36 Income from securities,
financial commissions receivable
income from derivatives, and
— Interest income on financial receivables, exchange gains
1 Interest
income on
receivables,
financial
financial
commission income
320
4 Finance expenses for interest connected with rights of use
consequent to the recognition of higher financial liabilities
(for the portion relative to the first three months of 2020)
429 Interest on financial payables, charges on derivatives,
miscellaneous finance expenses
126 Interest on financial payables, charges on derivatives,
finance
financial commissions payable, miscellaneous
expenses
559
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
390
STATEMENT OF FINANCIAL POSITION LINE ITEMS
(million euros)
Net financial debt
Non-current financial assets
FiberCop S.p.A.
Flash Fiber S.r.l.
Noovle S.p.A. Societa' Benefit
Telecom Italia Capital S.A.
Telecom Italia Finance S.A.
Telecom Italia Sparkle S.p.A.
Telsy S.p.A.
Total non-current financial
assets
Securities other than
investments (current assets)
Financial receivables and
other current financial assets
Flash Fiber S.r.l.
Staer Sistemi S.r.l.
Telecom Italia Capital S.A.
Telecom Italia Finance S.A.
Telecom Italia Sparkle S.p.A.
Total financial receivables
and other current financial
assets
Cash and cash equivalents
Flash Fiber S.r.l.
Noovle S.p.A. Societa' Benefit
Telenergia S.p.A.
TIM Servizi Digitali S.p.A.
Total Cash and cash
equivalents
Non-current financial
liabilities
Flash Fiber S.r.l.
Noovle S.p.A. Societa' Benefit
Telecom Italia Capital S.A.
Telecom Italia Finance S.A.
Other minor companies
Total Non-current financial
liabilities
12/31/2021
12/31/2020
Type of contract
1,516
—
684
—
149
316
4
2,669
—
—
4
6
2
5
17
—
11
4
11
26
—
29
4,162
1,375
1
5,567
— Loan
500 Loan
— Loan
16 Derivative assets
142 Derivative assets
— Loan
— Loan
658
—
1 Short-term financial receivables
— Short-term financial receivables
7 Derivative assets
2 Derivative assets
3 Financial receivables for the sale of network infrastructure in
IRU
13
Treasury current accounts
73
—
19
—
92
495 Non-current financial liabilities related to the recognition of
rights of use arising from lease agreement liabilities
following the adoption of IFRS 16
— Non-current financial liabilities related to the recognition of
rights of use for lease liabilities
4,217 Hedging derivatives and financial payables
1,448 Hedging derivatives and financial payables
2
6,162
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
391
(million euros)
Current financial liabilities
Daphne3 S.p.A.
FiberCop S.p.A.
Flash Fiber S.r.l.
Noovle S.p.A. Societa' Benefit
Olivetti S.p.A.
Telecom Italia Capital S.A.
Telecom Italia Finance S.A.
Telecom Italia Sparkle S.p.A.
Telecom Italia Trust
Technologies S.r.l.
Telecontact S.p.A.
Telsy S.p.A.
TIM My Broker S.r.l.
TIM Retail S.r.l.
Other minor companies
Total Current financial liabilities
12/31/2021
12/31/2020
Type of contract
1
14
—
4
35
244
41
58
4
33
1
2
47
1
485
— Payables for current account transactions
— Payables for current account transactions and financial
liabilities connected with rights of use
6 Current financial liabilities related to the recognition of rights
— Current financial liabilities related to the recognition of rights
of use for lease liabilities
of use for lease liabilities
current accounts,
23 Payables for current account transactions
51 Financial payables, derivatives
42 Financial payables, payables
for
derivatives
118 Payables for current account transactions
13 Payables for current account transactions
45 Payables for current account transactions
6 Payables for current account transactions
— Payables for current account transactions
—
3
307
(million euros)
12/31/2021
12/31/2020
Type of contract
Other statement of financial
position line items
Rights of use assets
FiberCop S.p.A.
Flash Fiber S.r.l.
Noovle S.p.A. Societa' Benefit
Telecom Italia Sparkle S.p.A.
Other minor companies
Total rights of use assets
Miscellaneous receivables and
other non-current assets
149
—
33
7
—
189
247
— Rights of use resulting from the launch, from the date of
conferral by TI to FiberCop of TIM IRU liabilities on portions of
secondary network to FiberCop, at the service of the TIM
network
532 Rights of use related to the recognition of additional non-
current assets amortized over the residual contractual term,
following the adoption of IFRS 16
— Rights of use related to the recognition of greater non-
current assets amortized over the residual contractual term
7 Rights of use for the supply of a pairing of dark fiber on the
undersea cable system Bluemed and related research and
design activities
2
541
131 Deferred contractual and other deferred costs
for
transactions with Telecontact (customer care services) and
tax
TIM Retail
consolidation
(new activations),
receivables
for
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
392
(million euros)
12/31/2021
12/31/2020
Type of contract
Trade and miscellaneous
receivables and other current
assets
FiberCop S.p.A.
Flash Fiber S.r.l.
Noovle S.p.A. Societa' Benefit
Olivetti S.p.A.
Telecom Italia Capital S.A.
Telecom Italia Finance S.A.
Telecom Italia S.Marino S.p.A.
Telecom Italia Sparkle S.p.A.
Telecom Italia Trust
Technologies S.r.l.
Telecontact S.p.A.
Telenergia S.p.A.
Telsy S.p.A.
TIM Retail S.r.l.
TIM SA
TIM Servizi Digitali S.p.A.
Other minor companies
Total trade and miscellaneous
receivables and other current
assets
511
—
91
6
1
1
1
19
4
27
9
5
48
12
1
1
737
— Carrying out of works on behalf of FiberCop on
developments of secondary copper and fiber network,
ordinary and extraordinary maintenance services on the
secondary copper and fiber network, fee
income for
administrative services connected with the IRU transfer and
acquisition of secondary access network
installation
separation, desktop
infrastructures,
supply of ERP,
management, TSA and voice services
102 Construction of the horizontal secondary network in FTTH
mode following the joint investment arrangement of July
28, 2016 between TIM and Fastweb, voice services, data
transmission equipment and services, administrative
outsourcing
— Voice services, supply of ICT products, property leasing and
facility services, recovery of seconded personnel costs,
refunds of costs of services
8 Telephone services, MPLS and fiber services for the national
leasing, project
data network, product sales, property
development, administrative outsourcing
1 Commission on the provision of surety
— Commission on the provision of surety
1 Connection
and
telecommunications
services
(interconnection contracts for the sale of data services such
as bitstream; IRU transfer of dark fiber connections and
installation infrastructures; ULL; Shared Access; DSLAM
devices; SUBLOOP FTTC), voice services, product sales
18 Voice and data transmission services, customized services,
services relating to the interconnection between Telecom
Italia Sparkle and TIM communications networks with
particular reference to accesses and international traffic,
infrastructures,
sale of
installation
property leasing, administrative outsourcing
IRU dark fiber and
3 Outsourced voice
services,
fixed network products,
administrative outsourcing, receivables for tax consolidation
33 Lease of properties and facility management services,
supply of fixed and mobile network and IP connectivity
telecommunications products and services, administrative
outsourcing, deferred contract costs, receivables for tax
consolidation
8 Outsourcing
company
outsourcing, supply of operative assistance services
administrative
business,
for
2 Deferred costs for the provision of equipment and licenses,
as part of TIM offerings to end customers, and ICT solutions
security services for TIM, maintenance services and licenses
49 Supply of products for sale to the public, voice and data
transmission services and ICT services for company use,
for tax
property
consolidation
leasing, deferred costs,
receivables
13 Roaming services, license support and provision as part of
network operations, information technology, marketing &
sales, Royalties Trademark License Agreement and TIM
Brand
network
— Supplies of materials to be used to develop the FTTH
1
239
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
393
(million euros)
12/31/2021
12/31/2020
Type of contract
Miscellaneous payables and
other non-current liabilities
Flash Fiber S.r.l.
Olivetti S.p.A.
Telecom Italia S.Marino S.p.A.
Telecom Italia Sparkle S.p.A.
Telenergia S.p.A.
Total miscellaneous payables
and other non-current liabilities
Trade and miscellaneous
payables and other current
liabilities
FiberCop S.p.A.
Flash Fiber S.r.l.
Noovle S.p.A. Societa' Benefit
Olivetti S.p.A.
Telecom Italia Sparkle S.p.A.
Telecom Italia Trust
Technologies S.r.l.
Telecontact S.p.A.
Telenergia S.p.A.
Telsy S.p.A.
—
1
1
7
1
10
352
—
106
25
53
12
21
71
11
149 Payables for tax consolidation, deferred revenues deriving
from contracts for the sale of transmission capacity
1 Payables for tax consolidation
1 Deferred revenues for connection and telecommunications
services contracts
7 Deferred revenues from interconnection contracts, payables
for tax consolidation
1 Payables for tax consolidation
159
— Use of the secondary access network for the supply of
copper and fiber access services to operators, IRU acquisition
of secondary access (underground and overhead) network
installation infrastructures for the transfer for exclusive use
of said infrastructures to the operators, special commitment
2021-23 envisaged by the MSA, payables for VAT and tax
consolidation
62 Use of network in GPON mode for the supply of the FTTH
service, deferred revenues, payables for tax consolidation
— Operating service Minimum Commitment Charge, supply of
IT services marketed to SME customers, professional IT
services, customized TIM offer services to end customers,
supply of ICT products, charges for the collocation service of
Security systems in Noovle data center, GCP consumptions,
professional services, Azure consumptions, hosting, on-
premise services, payables for VAT and tax consolidation
46 Provision of Cloud Printing service and related software
maintenance, supply of customized services as part of TIM
offerings to end customers, purchase of IT services, ICT
product installation costs, after-sales support, as part of TIM
offerings to end customers, evolutionary developments of
projects and platforms, purchase of software platform
licenses, software developments, award of cloud enabling
services and cloud computing services, security, the
development of on-line services and portals and applicative
cooperation for the Public Administrations, payables for VAT
and tax consolidation
97 Portion to be paid for telecommunications services and
interconnection costs, telephone services, data transmission
and international line lease, payables for VAT and tax
consolidation
11 Certification Authority service for TIM and within the TIM
customer offering, archiving service according to certified
email rules for the TIM S.p.A.’s Certified Electronic Mail box,
provision of digital identity management services by means
of SPID platform and related regulatory adjustments, VAT
payables
13 Customer Care services for TIM customers and for the Public
Administration under the Consip Agreement, back office
services relating to the billing services for customers of the
paid service provided by TIM technicians, call center and
back office services for the management of the information
of technical and commercial front end of the public
telephony, payables for VAT and tax consolidation
78 Energy services, payables for VAT and tax consolidation
9 Purchase of licenses, as part of TIM offerings to end
customers, and ICT solutions security services for TIM,
maintenance services and licenses, VAT payables
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
394
TIM Retail S.r.l.
26
22 Supply of services for acquisition of new customers,
information activities and post-sales support for TIM
customers, activities for the promotion of
image and
distinctive brands TIM through point-of-sale windows,
payables for tax consolidation
(million euros)
12/31/2021
12/31/2020
Type of contract
TIM Servizi Digitali S.p.A.
Other minor companies
Total trade and miscellaneous
payables and other current
liabilities
3
1
681
STATEMENT OF CASH FLOWS LINE ITEMS
— Tender contract for network works, assurance activities,
delivery, network construction
3
341
(million euros)
2021
2020
Type of contract
Purchases of intangible assets,
tangible assets and right of use
assets on an accrual basis
Flash Fiber S.r.l.
Noovle S.p.A. Societa' Benefit
Olivetti S.p.A.
Telecom Italia Sparkle S.p.A.
Telecom Italia Trust
Technologies S.r.l.
Telenergia S.p.A.
Telsy S.p.A.
Other minor companies
Total purchase of intangible,
tangible and right of use assets
on an accrual basis
Dividends paid
—
39
7
—
2
1
9
19
77
1
149 Higher value of rights of use recognized as a result of new
contracts or changes in existing lease contracts
— Higher value of rights of use recognized as a result of new
contracts or changes in existing lease contracts
11 Purchase of products for resale and lease as part of
and
development
customers,
end
offerings
for
implementation on platforms
7 Rights of use for the supply of a pairing of dark fiber on the
undersea cable system Bluemed and related research and
design activities
3 Digital Identity and Certification Authority
1 Connections for power supply of local NGAN cabinets
11 Purchase of equipment, as part of TIM offerings to end
customers, and ICT solutions security services for TIM
6
188
1 Dividends paid to the company Telecom Italia Finance S.A.
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
395
Transactions with associates, subsidiaries of associates and
joint ventures
The most significant amounts are summarized as follows:
SEPARATE INCOME STATEMENT LINE ITEMS
(million euros)
Revenues
INWIT S.p.A.
Nordcom S.p.A.
TIMFin S.p.A.
Total revenues
Other income
Acquisition of goods and
services
INWIT S.p.A.
W.A.Y. S.r.l.
Other minor companies
Total acquisition of goods and
services
Other operating expenses
Amortization of rights of use
assets
INWIT S.p.A.
Total amortization of rights of
use assets
Income (expenses) from
investments
INWIT S.p.A.
Total income (expenses) from
investments
Finance income
Finance expenses
INWIT S.p.A.
TIMFin S.p.A.
Total finance expenses
2021
38
1
(13)
26
1
341
8
1
350
3
50
50
—
—
—
15
3
18
2020
Type of contract
59 Voice and data transmission services for company use,
Desktop Management ICT services, IRU transfer of Dark
Optic Fiber and Local Infrastructure, Easy IP ADSL service,
property leasing, maintenance services and administrative
outsourcing
1 Fixed and mobile voice services, equipment, data network
connections and outsourcing
— Mobile and fixed voice services, outsourced services, fees
and margins for miscellaneous costs for loans
60
1 Recovery of seconded personnel costs, recovery of
centralized expenses
242 Supply of services for BTS sites, power supply systems for
the supply of electricity of the hosted devices, monitoring
and security services (alarms) and management and
maintenance
remote management and
the electricity consumption of TIM
monitoring of
technological infrastructures (BTS) hosted at INWIT sites
services,
6 Supply, installation and technical assistance services for
geolocation equipment provided as part of offers to TIM
customers, software development
1
249
2 Penalties
for breach of contract on maintenance
management services to INWIT S.p.A.
39 Amortization of rights of use related to the recognition of
greater non-current assets amortized over the residual
contractual term
39
256 Dividends
256
—
15 Finance expenses for interest related to financial liabilities
for rights of use
finance expenses
— Finance expenses for commission and miscellaneous
15
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
396
STATEMENT OF FINANCIAL POSITION LINE ITEMS
(million euros)
Net financial debt
Non-current financial assets
Financial receivables and other
current financial assets
Non-current financial liabilities
INWIT S.p.A.
Total Non-current financial
liabilities
Current financial liabilities
INWIT S.p.A.
TIMFin S.p.A.
Total Non-current financial
liabilities
12/31/2021
12/31/2020
Type of contract
—
—
269
269
74
1
75
—
—
313 Non-current financial liabilities related to the recognition
of rights of use for lease liabilities
313
50 Current financial liabilities related to the recognition of
rights of use for lease liabilities
— Financial liabilities for expenses on the transfer of
receivables
50
(million euros)
12/31/2021
12/31/2020
Type of contract
Other statement of financial
position line items
Rights of use assets
INWIT S.p.A.
Total rights of use assets
Miscellaneous receivables and
other non-current assets
Trade and miscellaneous
receivables and other current
assets
INWIT S.p.A.
W.A.Y. S.r.l.
Other minor companies
Total trade and miscellaneous
receivables and other current
assets
Miscellaneous payables and
other non-current liabilities
Trade and miscellaneous
payables and other current
liabilities
INWIT S.p.A.
Movenda S.p.A.
TIMFin S.p.A.
W.A.Y. S.r.l.
Total trade and miscellaneous
payables and other current
liabilities
299
299
—
15
2
—
17
2
171
1
3
2
177
347 Rights of use related to the recognition of greater non-
current assets amortized over the residual contractual
term
347
—
36 Voice and data transmission services for company use,
Desktop Management ICT services, IRU transfer of Dark
Optic Fiber and Local Infrastructure, Easy IP ADSL service,
property leasing, maintenance services and administrative
outsourcing
2 Deferred costs for the provision of customized platforms,
application offers, fixed and mobile voice services
1
39
2 Deferred subscription charge revenues from INWIT S.p.A.
98 Supply of services for BTS sites, monitoring and security
services, management and maintenance services
1 Supply and certification of SIM CARDS, software systems
— Cost of the risk for loans
2 Supply, installation and technical assistance services for
geolocation equipment provided as part of offers to TIM
customers, software development
101
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
397
STATEMENT OF CASH FLOWS LINE ITEMS
(million euros)
2021
2020
Type of contract
Purchases of intangible assets,
tangible assets and right of use
assets on an accrual basis
INWIT S.p.A.
Movenda S.p.A.
Other minor companies
Total purchase of intangible,
tangible and right of use assets
on an accrual basis
7
1
—
8
376 Higher value of rights of use as a result of new contracts or
changes in existing lease contracts, IRU acquisition of
backhauling connections, supply of plants, installation and
related activations for the extension of indoor radio mobile
coverage relative to TIM offerings to end customers
1 Supply and development of system software
1
378
TIM S.p.A. has issued guarantees on behalf of subsidiaries, associates and joint ventures for a total of 5,542
million euros, net of back-to-back guarantees received (5,001 million euros at December 31, 2020).
In particular, the following is noted: 3,532 million euros on behalf of Telecom Italia Capital S.A. (3,260 million
euros at December 31, 2020); 1,348 million euros on behalf of Telecom Italia Finance S.A. (1,424 million euros
at December 31, 2020); 281 million euros on behalf of the Sparkle group (61 million euros at December 31,
2020); 107 million euros on behalf of Olivetti S.p.A. (86 million euros at December 31, 2020); 128 million euros
on behalf of Telenergia S.p.A. (57 million euros at December 31, 2020).
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
398
Transactions with other related parties (through directors,
statutory auditors and key managers, as well as participants in
shareholder agreements pursuant to Article 122 of the
Consolidated Law on Finance)
Details are provided below of the transactions with:
■ Vivendi Group and the companies of the group that it belongs to;
■ Cassa Depositi e Prestiti Group and Group subsidiaries;
■ Related companies through Directors.
SEPARATE INCOME STATEMENT LINE ITEMS
(million euros)
Revenues
Other Directors or through
Cassa Depositi e Prestiti Group
Total revenues
Acquisition of goods and
services
Cassa Depositi e Prestiti Group
Havas Group
Vivendi group
Total acquisition of goods and
services
2021
2020
Type of contract
—
22
22
2
74
3
79
3 Fixed-line and mobile voice services and systems
— IRU transfer of rights to use dark fiber installation and
infrastructures; supply of housing, dark fiber maintenance
and dedicated GEA/Giganet connectivity services, fixed and
mobile voice services and devices, Microsoft licenses,
application outsourcing services, cloud services,
maintenance services
3
— Purchases of products for resale under the scope of TIM
offerings to end customers, TIM sales network POS terminal
fleet rental charges, costs for the use of SWIFTNet network
access infrastructures to send and receive FIN and File
messages, service relative to information flows and devices
through interbanking corporate banking (CBI)
74 Purchase of media space on behalf of TIM and
development and delivery of advertising campaigns
4 Purchase of musical and
television digital content
(TIMmusic, TIMvision), operative management of the
Telecom Italia S.p.A. on-line store platform “TIM I Love
Games” and related developments
78
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
399
STATEMENT OF FINANCIAL POSITION LINE ITEMS
(million euros)
Net financial debt
Non-current financial assets
12/31/2021
12/31/2020
Type of contract
1
— Non-current financial receivables arising from
contracts for Cassa Depositi e Prestiti
lease
(million euros)
12/31/2021
12/31/2020
Type of contract
Other statement of financial
position line items
Trade and miscellaneous
receivables and other current
assets
Other Directors or through
Cassa Depositi e Prestiti Group
Total trade and miscellaneous
receivables and other current
assets
Miscellaneous payables and
other non-current liabilities
Cassa Depositi e Prestiti Group
Total miscellaneous payables
and other non-current
liabilities
Trade and miscellaneous
payables and other current
liabilities
Cassa Depositi e Prestiti Group
Havas Group
Vivendi group
—
20
20
—
23
23
9
34
1
—
44
Other minor companies
Total trade and miscellaneous
payables and other current
liabilities
STATEMENT OF CASH FLOWS LINE ITEMS
2021
(million euros)
15
Purchase of intangible and
tangible assets on an accrual
basis
Dividends paid
Cassa Depositi e Prestiti Group
Vivendi group
Total dividends paid
3 Fixed-line and mobile voice services and systems
— IRU transfer of rights to use dark fiber installation and
infrastructures; supply of housing, dark fiber maintenance
and dedicated GEA/Giganet connectivity services, fixed
and mobile voice services and devices, Microsoft licenses,
services,
application
maintenance services
outsourcing
services,
cloud
3
—
— Deferred subscription charges revenues
—
— Purchases of products for resale under the scope of TIM
offerings to end customers, TIM sales network POS
terminal fleet rental charges, costs for the use of
SWIFTNet network access infrastructures to send and
receive FIN and File messages, service relative to
interbanking
information flows and devices through
corporate banking (CBI)
33 Purchase of media space on behalf of TIM and
development and delivery of advertising campaigns
2 Purchase of musical and television digital content
(TIMmusic, TIMvision), operative management of the
Telecom Italia S.p.A. on-line store platform “TIM I Love
Games” and related developments
1
36
2020
Type of contract
— Development of the discovery phase and MYCanal+
platform supply for the TimVision Service, mainly
towards the Vivendi Group
15
36
51
— Dividends
36 Dividends
36
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
400
Transactions with pension funds
The most significant amounts are summarized as follows:
SEPARATE INCOME STATEMENT LINE ITEMS
(million euros)
Employee benefits expenses
Fontedir
Telemaco
Total Employee benefits
expenses
2021
2020
Type of contract
8
56
64
Contributions to pension funds
8
56
64
STATEMENT OF FINANCIAL POSITION LINE ITEMS
(million euros)
12/31/2021
12/31/2020
Type of contract
Trade and miscellaneous
payables and other current
liabilities
Fontedir
Telemaco
Total trade and miscellaneous
payables and other current
liabilities
Payables for contributions to pension funds
3
18
21
2
18
20
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
401
Remuneration to key managers
In 2021, the total remuneration recorded on an accrual basis by TIM S.p.A. in respect of key managers
amounted to 32 million euros (14 million euros at December 31, 2020). The figure breaks down as follows:
(million euros)
Short-term remuneration
Long-term remuneration
Employment termination benefit incentives
Share-based payments (*)
Total
2021
8
—
18
6
32
2020
10
—
2
2
14
(*) These refer to the fair value of the rights, accrued at December 31, 2021, under the share-based incentive plans of TIM S.p.A. and its subsidiaries
(Long Term Incentive and Plans of the subsidiaries).
Short-term remuneration is paid during the reference year, and, at the latest, within the six months following
the end of that period. As at December 31, 2021, they do not include the effects of the reversal of the accruals
related to the 2020 costs amounting to approximately 900 thousand euros.
The indemnities for early termination of employment for the year 2021 also include the amount paid to Mr.
Luigi Gubitosi, amounting to 6.9 million euros.
In 2021, the contributions paid in to defined contribution plans (Assida and Fontedir) by TIM S.p.A. or by
subsidiaries of the Group on behalf of key managers, amounted to 140 thousand euros (135 thousand euros at
December 31, 2020).
With regard to the remuneration of directors and statutory auditors due for the year 2021, pursuant to Article
2427, no. 16 of the Italian Civil Code, reference should be made to the Compensation Report, available at the
Company’s
address:
and
www.telecomitalia.com/Assemblea.
Company’s website
headquarters
following
the
the
on
at
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
402
In 2021, “Key managers”, i.e. those who, directly or indirectly, have the power and responsibility for the
planning, management and control of TIM Group operations, including directors, were the following:
Directors:
Luigi Gubitosi
Pietro Labriola
Executives:
Giovanna Bellezza
Paolo Chiriotti
Simone De Rose
Michele Gamberini
Nicola Grassi
Stefano Grassi
Massimo Mancini
Giovanni Gionata
Massimiliano Moglia
Carlo Nardello
Agostino Nuzzolo
Claudio Giovanni Ezio Ongaro
Federico Rigoni
Giovanni Ronca
Luciano Sale
Stefano Siragusa
(1)
(2)
Managing Director and Chief Executive Officer of TIM S.p.A.
General Manager
General Manager of TIM S.p.A.
Diretor Presidente TIM S.A.
(3) a.i. Head of Human Resources, Organization & Real Estate
(4) Head of Procurement
(5) a.i. Head of Procurement
(6) Chief Technology & Information Office
(7) Chief Innovation & Information Office
(8) Head of Security
(4) Chief Technology & Operations Office
Head of Security
(5) Chief Enterprise Market Office
(9) Chief Regulatory Affairs & Wholesale Market Office
(5) Chief Regulatory Affairs Office
(9) Chief Strategy, Business Development & Transformation Office
Head of Legal & Tax
(5) a.i. Chief Strategy & Business Development Office
(8) Chief Revenue Officer
Chief Financial Office
(10) Head of Human Resources, Organization & Real Estate
(6) Chief Operations Office
(11) Chief Technology & Operations Office
(12) Chief Revenue Officer
(13) Chief Revenue, Information & Media Office
(5) Chief Network, Operations & Wholesale Office
(1) to November 26, 2021
(2) from November 27, 2021;
(3) from November 30, 2021:
(4) from July 5, 2021 to December 6, 2021;
(5) from December 07, 2021;
(6) to April 8, 2021;
(7) from April 9, 2021 to September 20, 2021;
(8) to July 4, 2021;
(9) to December 6, 2021;
(10) to November 29, 2021;
(11) from April 9, 2021 to July 4, 2021;
(12) from July 5, 2021 to September 20, 2021;
(13) from September 21, 2021 to December 6, 2021;
On January 21, 2022 the Board of Directors co-opted Pietro Labriola, who retains the office of General
Manager, and appointed him as Chief Executive Officer, conferring on him all powers.
Separate Financial Statements of
TIM S.p.A.
Note 36
Related-party transactions
403
NOTE 37
EQUITY COMPENSATION PLANS
Equity compensation plans in force at December 31, 2021, are used for attraction and retention purposes, and
as a long-term incentive for the managers and employees of the Group.
However, it should be noted that these plans do not have any significant effect on the economic result or on
the financial position or on cash flows at December 31, 2021.
A summary is provided below of the plans in place at December 31, 2021. For more information on the plans in
place at December 31, 2020, see the Separate Financial Statements of TIM S.p.A. at December 31, 2020.
Description of compensation plans
TIM S.p.A. - Long Term Incentive Plan 2018-2020
Following approval of the 2020 financial statements, the parameter of stock performance has not reached the
minimum level for accessing the premium, while the cumulative equity free cash flow parameter (30%) has
reached an achievement level of 88.47% (between the minimum and target), thereby quantifying the number
of shares accrued by beneficiaries as 6,715,617 shares, subject to a two-year lock-up from the accrual date.
TIM S.p.A. - Long Term Incentive Plan 2020-2022
The Shareholders' Meeting of April 23, 2020 approved the launch of the new rolling and equity based long-
term incentive plan called LTI 2020-2022.
Each cycle of the plan is divided into two parties:
■ Performance Share: free allocation of Company ordinary shares, the maturity of which is subject to an
access gate linked to the value of the share and to two share and industrial performance conditions, given
below.
■ Attraction/Retention Share: free allocation of Company ordinary shares, the maturity of which is subject
to the continuity of the employment relationship with TIM or TIM Group companies.
In relation to the Performance Share component, the performance conditions are as follows:
■ access gate, represented by the value of the security, which at the end of each cycle must be equal to or
greater than the value of the security at the start of the same cycle (refer to the normal value of the share
equal to the average of the official closing prices of the Stock Exchange 30 days prior to the start and end
of the Plan cycle);
■ NFP/EBITDA ratio, with relative weighting equal to 40%;
■ Relative performance (TSR) of the ordinary share compared to a basket of Peers, with a relative weighting
of 60%.
A payout bonus/malus mechanism equal to 4% will be applied to both components (Performance Share and
Attraction/Retention Share), linked, in equal measure,
■
■
to the % growth of use of renewable energy out of total energy and to the reduction of indirect emissions
of CO2 (2020-2022 cycle)
to the % growth of use of renewable energy out of total energy and the increase in the female presence in
the managerial population (2021-2023 cycle).
For the CEO, 100% of the pay opportunity is linked to the Performance Share component. For the remaining
recipient managers, 70% of the Pay Opportunity is linked to the Performance Share and the remaining 30% to
the Attraction/Retention Shares.
2020-2022 Cycle
On May 18, 2020, the Board of Directors launched the first cycle of the new Plan, for the three-year period
2020-2022, simultaneously assigning it to the CEO. At December 31, 2021, the first incentive cycle intended for
140 resources establishes the right of beneficiaries to receive 57,388,194 shares upon reaching the target,
without prejudice to:
■
the gate condition and application of the ESG correction for performance shares
■ application of the ESG correction and continuity of the contract of employment for attraction/retention
shares.
2021-2023 Cycle
On April 28, 2021, the Board of Directors resolved the start of the second 2021-2023 cycle of incentives of the
2020-2022 Long Term Incentive Plan, at the same time assigning it to the CEO.
The second cycle, like the first, is aimed at the Chief Executive Officer, Top Management and a selected
segment of TIM Group’s management.
Separate Financial Statements of
TIM S.p.A.
Note 37
Equity compensation plans
404
At December 31, 2021, the cycle provides for the 153 recipients to be entitled to receive an award of 55,878,929
shares upon achievement of the target, subject to:
■
the gate condition and application of the ESG correction for performance shares
■ application of the ESG correction and continuity of the contract of employment for attraction/retention
shares.
TIM S.p.A. – Broad-Based Share Ownership Plan 2020
In implementation of the resolutions passed on April 23, 2020 by the Extraordinary Shareholders' Meeting and
subsequently on May 18, 2020 by the Board of Directors of Telecom Italia S.p.A., on June 16, 2020 the
campaign to subscribe to the 2020 Diffuse Share Ownership Plan was opened, closing on October 30, 2020; the
shares were subscribed at a unit price of 0.31 euros.
To service the initiative, a maximum of 127,500,000 new shares were to be issued, to be offered for paid
subscription and, subsequently, a maximum 42,500,000 new shares, without capital increase, for the free
allocation of 1 Bonus Share for every 3 subscribed shares.
As a result of the issuance on November 27, 2020 of 126,343,913 Telecom Italia ordinary shares to the
subscribers of the discounted shares, 38,604,270 ordinary shares of the Company (Bonus Shares) were
allocated free of charge on December 3, 2021, without a capital increase. As planned, the Bonus Shares were
awarded to those who retained their subscribed shares for the period of one year from the allocation date,
subject to continued employee status.
Separate Financial Statements of
TIM S.p.A.
Note 37
Equity compensation plans
405
NOTE 38
SIGNIFICANT NON-RECURRING EVENTS AND
TRANSACTIONS
The impact of non-recurring events and transactions on equity, profit, net financial debt and cash flows is set
out below in accordance with Consob Communication DEM/6064293 dated July 28, 2006:
(million euros)
Equity Profit (loss) for
the year
Net financial
debt
Cash flows (*)
Carrying amount
Revenues - Revenue adjustments
Other income
Acquisition of goods and services - Expenses
related to agreements and the development of
non-recurring projects
Employee benefits expenses - Charges connected
to corporate reorganization/restructuring and
other costs
Other operating expenses - Expenses related to
disputes and regulatory sanctions and potential
liabilities related to them, and expenses related to
disputes with former employees and liabilities with
customers and/or suppliers for other provisions
and charges
Other operating expenses - Sundry expenses
Net gains on disposals of other investments
Goodwill Impairment loss
Miscellaneous finance expenses
Tax realignment pursuant to Decree Law 104/2020
Art. 110
Total non-recurring effects
Figurative amount
(a)
16,564
(4)
2
(29)
(8,314)
(4)
2
(29)
(256)
(256)
(465)
(465)
(91)
(12)
(91)
(12)
(4,120)
(4,120)
(1)
(1)
(3,785)
(3,785)
(b)
(a-b)
(8,761)
25,325
(8,761)
447
21,937
—
(2)
52
463
195
55
(1,760)
—
—
231
(766)
22,703
2,119
—
2
(52)
(463)
(195)
(55)
1,760
—
—
(231)
766
1,353
(*) Cash flows refer to the increase (decrease) in Cash and cash equivalents during the year.
“Other operating expenses - Expenses related to disputes and regulatory sanctions and potential liabilities
related to them, and expenses related to disputes with former employees and liabilities with customers and/or
suppliers and other provisions and charges” include 548 million euros for the posting of Contractual risk
provisions for onerous contracts (IAS 37) relative to contents.
In particular, they include the accrual of the Net Present Value of the negative margin connected with some
partnerships, including the one in place between TIM and DAZN for the offer in Italy on the TIMVISION platform
of DAZN content, including all matches of the Serie A football championship for the seasons 2021-22, 2022-23
and 2023-24.
In greater detail, as part of the definition of the 2022-2024 Strategic Plan, the business plan hypotheses have
been updated for the current football season and the next two, pointing out that the total margins of the
project, including TIM’s contractual commitments towards DAZN in terms of fees, for lack of remedy by DAZN
of certain breaches already disputed, is very much negative.
Use of said Provision throughout the contractual term will make it possible to offset the negative item of the
margin (EBITDA), thereby obtaining null EBIT (organic or operative margin) for the DAZN offer contents sale
business.
In financial terms, TIM is contractually obliged to pay DAZN six installments in advance (July, September,
November, January, March and May) for each year (July 1-June 30, corresponding to each championship
season), without prejudice to the fact that should the report of TIM customers with DAZN service in the two
months prior to each installment record a higher amount being due to the latter (at present, this is purely
theoretical), TIM would be required to also pay this difference.
Separate Financial Statements of
TIM S.p.A.
Note 38
Significant non-recurring events and transactions
406
The impact of non-recurring items on the separate income statement line items is as follows:
(million euros)
Operating revenues and other income
Revenue adjustments
Other income
Acquisition of goods and services, Change in inventories
Professional expenses, consulting services and other costs
Employee benefits expenses
Expenses related to corporate reorganization/restructuring and other costs
Other operating expenses
Expenses related to disputes and regulatory sanctions and potential liabilities related to
them, and expenses related to disputes with former employees and liabilities with
customers and/or suppliers for other provisions and charges
Sundry expenses
Impact on Operating profit (loss) before depreciation and amortization, capital gains
(losses) and impairment reversals (losses) on non-current assets (EBITDA)
Impairment reversals (losses) on non-current assets
Goodwill impairment loss
Impairment of intangible fixed assets
Impact on EBIT - Operating profit (loss)
Other income (expenses) from investments
Other finance income (expenses)
Impact on profit (loss) before tax
Tax realignment pursuant to Decree Law 104/2020 Art. 110
Income taxes on non-recurring items
Impact on profit (loss) for the year
2021
(3)
(5)
2
(38)
(38)
(358)
(358)
(735)
(610)
(125)
(1,134)
(4,120)
(4,120)
—
(5,254)
9
(1)
(5,246)
(3,785)
270
(8,761)
2020
(39)
(39)
—
(58)
(58)
(69)
(69)
(145)
(5)
(140)
(311)
—
—
—
(311)
227
(7)
(91)
5,877
45
5,831
The COVID-19 emergency, following the spread of the SARS-CoV-2 virus and pronounced a pandemic by the
World Health Organization (WHO) on March 11, 2020, resulted in TIM S.p.A. incurring non-recurring expenses,
gross of tax effects, for a total of 25 million euros. In particular, provisions have been made in relation to the
management of receivables (20 million euros) in connection with the anticipated worsening of the expected
credit loss of corporate customers, linked to expected developments in the pandemic situation; in addition,
provisions have been made for payroll costs (1 million euros) and for supplies and miscellaneous costs (4
million euros), which were necessary to manage the health emergency, primarily for the purchase of personal
protective equipment, thermal scanners and environmental hygiene services.
Further details on the tax realignment are provided in the Note "Income tax expense (current and deferred)" in
these Financial Statements.
Separate Financial Statements of
TIM S.p.A.
Note 38
Significant non-recurring events and transactions
407
NOTE 39
POSITIONS OR TRANSACTIONS RESULTING
FROM ATYPICAL AND/OR UNUSUAL
OPERATIONS
In accordance with Consob Communication DEM/6064293 of July 28, 2006, a statement is made to the effect
that in 2021 no atypical and/or unusual transactions, as defined by that Communication, were pursued.
NOTE 40
OTHER INFORMATION
Research and Development
Costs for research and development activities are represented by external costs, labor costs of dedicated staff
and depreciation and amortization. Details are as follows:
(million euros)
2020
2021
Research and development costs expensed during the year
Capitalized development costs
Total research and development costs (expensed and capitalized)
56
963
1,019
79
991
1,070
The decrease recorded in the 2021 financial year is due to the stabilization of implementation activities
connected with the new generation networks, partly offset by software developments on corporate
information systems.
In the 2021 separate income statement, depreciation and amortization charges totaling 864 million euros were
recorded for development costs capitalized during the year and in prior years.
Research and development activities conducted by TIM S.p.A. are detailed in the Report on Operations
("Research and Development" section).
Lease income
TIM has entered into lease agreements for land and buildings for office use and industrial use, infrastructure
sites for the mobile network and network infrastructures; at December 31, 2021, the lease installments at
nominal value still to be collected totaled:
(million euros)
Within next year
From 1 to 2 years after the end of the reporting period
From 2 to 3 years after the end of the reporting period
From 3 to 4 years after the end of the reporting period
From 4 to 5 years after the end of the reporting period
Beyond 5 years after the end of the reporting period
Total
12/31/2021
115
51
49
48
45
43
351
12/31/2020
129
65
63
61
60
60
438
Separate Financial Statements of
TIM S.p.A.
Note 39
Positions or transactions resulting from atypical and/or unusual operations
408
Public Funds
Italian Law 124/2017 requires that information on subsidies, contributions, paid assignments and economic
benefits of any kind received from public administrations be provided. In relation to this, funds received are
shown in the following table:
Distributing entity
Area of intervention Received in 2021
(million euros)
Received in 2020
(million euros)
Fondimpresa/Fondirig
enti
Infratel
MUR (formerly MIUR)
ANPAL
Sundry income (*)
Total
(*) 2021 - MiSE, Fondimpresa/Fondirigenti, MUR (formerly MIUR)
training
construction of broadband and ultrabroadband infrastructure
research projects
New Skills Fund
innovation and Digital Divide
2020 - MED; Region of Lombardy, Region of Apulia
3
53
1
57
1
24
3
1
29
Summary schedule of fees due to the audit firm and other
firms in its network
The following schedule reports the fees due to EY S.p.A. for the audit of the 2021 financial statements, and the
fees referring to the year 2021 for other audit and review services, and for other services besides audit
rendered to TIM by EY and other firms in the EY network. This also includes the out-of-pocket expenses
incurred in 2021 in relation to said services.
(in euros)
Audit services:
audit of the separate financial statements
audit of the consolidated financial statements
audit of the internal control system that supervises the process of
preparation of the consolidated financial statements and limited statutory
audit of the financial disclosure as at March 31 and September 30
limited audit of the half-year consolidated financial statements
other
Audit services with the issue of certification
Attestation of compliance of the Consolidated Non-Financial Statement
Other services
Total 2021 fees due for auditing and other services to the EY network
Out-of-pocket expenses
Total
EY S.p.A.
944,756
169,104
975,135
197,457
470,891
80,000
72,907
—
2,910,250
10,016
2,920,266
TIM S.p.A.
Other firms
of the EY
network
—
—
Total EY
network
944,756
169,104
975,135
197,457
470,891
80,000
72,907
—
2,910,250
10,016
2,920,266
Separate Financial Statements of
TIM S.p.A.
Note 40
Other information
409
NOTE 41
EVENTS SUBSEQUENT TO DECEMBER 31, 2021
TIM: Solidarity for Ukraine, unlimited data and minutes
included for customers of Ukrainian nationality
To express its solidarity with the Ukrainian population struck by the current conflict, TIM has made a series of
benefits available to its Ukrainian nationality customers in Italy, to help them communicate with friends and
family.
Starting March 1, 2022, they will have unlimited data and minutes for a week. To adhere to the initiative,
simply answer the specific informative SMS, visit a TIM store or call 119 or visit the My TIM area.
Separate Financial Statements of
TIM S.p.A.
Note 41
Events subsequent to December 31, 2021
410
NOTE 42
LIST OF INVESTMENTS IN SUBSIDIARIES,
ASSOCIATES AND JOINT VENTURES
(thousands of
euros)
Reg. office
Equity
(1) (2)
Profit/
(loss) (1)
% Ownership Share of equity
(A) (3)
Share
capital
(1)
50
100
10,000
1,000
11,000
2,336
Rome Euro
Milan Euro
Milan Euro
Milan Euro
Ivrea (TO) Euro
Luxembourg Euro
Investments in subsidiaries
CD FIBER
DAPHE 3
FIBERCOP
NOOVLE S.p.A.
Societa' Benefit
OLIVETTI
TELECOM ITALIA
CAPITAL
TELECOM ITALIA
FINANCE
TELECOM ITALIA
LATAM PARTIC. E
GESTÃO ADMIN.
Luxembourg Euro 1,818,692
SanPaolo (Brazil)
R$
Euro
San Marino Euro
118,926
18,816
1,808
Rome Euro 200,000
Milan Euro
Naples Euro
Rome Euro
Turin Euro
10
3,000
50
5,390
44
2,745,936
5,067,908
1,081,213
82,491
64,757
6,111,632
(67,258)
(10,641)
9,730
260,827
52,635
38,437
9,419
27,296
—
86,305
321,239
2,868
(6,283)
15,654
80,745
(29,083)
(4,601)
1,432
(7,202)
291
723
(6,405)
3,739
100.00 %
51.00 %
58.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
Carrying
amount
(B) (4)
Difference
(B-A)
43
(1)
296,314 (1,104,113)
25,925
2,965,311
(1,641)
1,079,572
(46,425)
36,066
(62,369)
2,388
44
1,400,427
2,939,386
1,081,213
82,491
64,757
6,057,532 (3)
5,914,971
(142,561)
(10,641) (5)
9,730
—
7,565
10,641
(2,165)
348,395 (6)
587,519
239,124
52,635
38,437
9,419
27,296
52,635
12,611
50
19,522
—
(25,826)
(9,369)
(7,774)
Rio de Janeiro (Brazil)
R$
Euro
1,500
237
1,495
237
(148)
(23)
69.9996%
166
181
15
Rio de Janeiro (Brazil)
R$ 7,169,030
Euro 1,134,256
10
2,402
50
Rome Euro
Milan Euro
Rome Euro
11,101,935
1,756,505
2,138
78,473
(2,115)
632,767
100,114
2,041
1,869
(1,981)
0.00000001 %
100.00 %
100.00 %
100.00 %
—
2,138
78,473
(2,115) (5)
—
—
(2,128)
10
(63,330)
15,143
—
2,115
10,989,901 (1,189,882)
TELECOM ITALIA
SAN MARINO
TELECOM ITALIA
SPARKLE
TELECOM ITALIA
VENTURES
TELECONTACT
CENTER
TELENERGIA
TELSY
TIAUDIT
COMPLIANCE
LATAM
(in liquidation)
TIM BRASIL
SERVIÇOS E
PARTICIPAÇÕES
TIM MY BROKER
TIM RETAIL
TIM SERVIZI
DIGITALI
Separate Financial Statements of
TIM S.p.A.
Note 42
List of investments in subsidiaries, associates and joint ventures
411
(thousands of
euros)
Reg. office
Investments in associates and joint ventures
AREE URBANE (in
liquidation)
NORDCOM
TIGLIO I
TIMFIN
Milan Euro
Milan Euro
Milan Euro
Turin Euro
Share
capital
(1)
100
5,000
1,000
40,000
Equity
(1) (2)
Profit/
(losses)
(1)
Ownership
(%) Share of equity
(A) (3)
(92,175)
14,364
2,882
45,369
(1,185)
404
144
(7,650)
32.62 %
42.00 %
47.80 %
49.00 %
(30,067)
6,033
1,378
22,231
Carrying
amount
(B) (4)
Difference
(B-A)
—
2,143
—
26,950
29,093
30,067
(3,890)
(1,378)
4,719
29,519
(1) Figures taken from the latest approved financial statements. For subsidiaries, the data used are taken from the IFRS-prepared financial
statements.
(2) Includes profit (loss).
(3) Net of dividends to be paid.
(4) Includes investment account payments.
(5) Covered by the provision for losses of subsidiaries and associates.
(6) Figures taken from the consolidated financial statements.
Separate Financial Statements of
TIM S.p.A.
Note 42
List of investments in subsidiaries, associates and joint ventures
412
CERTIFICATION OF THE SEPARATE FINANCIAL
STATEMENTS PURSUANT TO ARTICLE 81-TER OF
THE CONSOB REGULATION 11971 DATED MAY
14, 1999, WITH AMENDMENTS AND ADDITIONS
1. We, the undersigned, Pietro Labriola, as Chief Executive Officer, and Giovanni Ronca, as Manager
responsible for preparing TIM S.p.A. financial reports, certify, having also considered the provisions of
Article 154-bis, paragraphs 3 and 4, of Italian Legislative Decree 58 of February 24, 1998, that:
–
–
the adequacy in relation to the characteristics of the company and
the effective application of the administrative and accounting procedures used in the preparation of
the annual financial statements for the 2021 fiscal year.
2. TIM has adopted the Internal Control – Integrated Framework Model (2013), issued by the Committee of
Sponsoring Organizations of the Treadway Commission, as its framework for the establishment and
assessment of its internal control system, with particular reference to the internal controls for the
preparation of the financial statements.
3. The undersigned also certify that:
3.1 The separate financial statements at December 31, 2021:
a)
b)
c)
are prepared in conformity with international accounting standards endorsed by the European
Union pursuant to EC Regulation 1606/2002 of the European Parliament and of the Council of July
19, 2002 (International Financial Reporting Standards – IFRS) as well as the legislation and
regulations in force in Italy with particular reference to Article 154-ter of Legislative Decree 58 of
February 24, 1998 and the measures enacted for the implementation of Article 9 of Legislative
Decree 38 of February 28, 2005;
agree with the results of the accounting records and entries;
provide a true and fair view of the financial position, financial performance and cash flows of the
Company;
3.2 The report on operations contains a reliable operating and financial review of the Company, as well as
the description of its exposure to the main risks and uncertainties. The Report on Operations also
contains a reliable analysis of information concerning significant related-party transactions.
March 2, 2022
Chief Executive Officer
/ signed /
_________________________
Pietro Labriola
Manager Responsible for
Preparing the Corporate
Financial Reports
/ signed /
_______________________
Giovanni Ronca
Separate Financial Statements of
TIM S.p.A.
Certification of the Separate Financial Statements 413
INDEPENDENT AUDITORS’ REPORT
Separate Financial Statements of
TIM S.p.A.
Independent Auditors’ Report 414
EY S.p.A.
Via Meucci, 5
10121 Torino
Tel: +39 011 5161611
Fax: +39 011 5612554
ey.com
Independent auditor’s report pursuant to article 14 of Legislative
Decree n. 39, dated 27 January 2010 and article 10 of EU Regulation
n. 537/2014
(Translation from the original Italian text)
To the Shareholders of
TIM S.p.A.
Report on the Audit of the Separate Financial Statements
Opinion
We have audited the separate financial statements of TIM S.p.A. (the Company), which comprise the
statement of financial position as at December 31,2021, and the separate income statement, the
statement of comprehensive income, statement of changes in equity and statement of cash flows for
the year then ended, and notes to the separate financial statements, including a summary of
significant accounting policies.
In our opinion, the separate financial statements give a true and fair view of the financial position of
the Company as at December 31, 2021, and of its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting Standards as adopted by the
European Union and with the regulations issued for implementing art. 9 of Legislative Decree n.
38/2005.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Separate Financial Statements section of our report. We are independent of the Company
in accordance with the regulations and standards on ethics and independence applicable to audits of
separate financial statements under Italian Laws. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the separate financial statements of the current period. These matters were addressed in
the context of our audit of the separate financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
EY S.p.A.
Sede Legale: Via Meravigli, 12 – 20123 Milano
Sede Secondaria: Via Lombardia, 31 – 00187 Roma
Capitale Sociale Euro 2.525.000,00 i.v.
Iscritta alla S.O. del Registro delle Imprese presso la CCIAA di Milano Monza Brianza Lodi
Codice fiscale e numero di iscrizione 00434000584 - numero R.E.A. di Milano 606158 - P.IVA 00891231003
Iscritta al Registro Revisori Legali al n. 70945 Pubblicato sulla G.U. Suppl. 13 - IV Serie Speciale del 17/2/1998
Iscritta all’Albo Speciale delle società di revisione
Consob al progressivo n. 2 delibera n.10831 del 16/7/1997
A member firm of Ernst & Young Global Limited
We identified the following key audit matters:
Key Audit Matter
Impairment test of goodwill
Audit Response
As of December 31, 2021 goodwill amounts
to Euro 12,961 million and refers to the
Domestic cash generating unit ("CGU").
Based on the impairment test performed as
of December 31, 2021, an impairment loss of
Euro 4,120 has been recorded for the
Domestic CGU.
The processes and methodologies used by
the Company to evaluate and determine the
recoverable amount of the Domestic CGU,
are based on assumptions that are in some
cases complex and that, due to their nature,
imply the use of judgement by Management,
in particular with reference to the forecast of
future cash flows and to the estimate of the
long-term growth and discount rates applied
to the future cash flow forecasts.
Considering the level of judgment required
and the complexity of the assumptions
applied in estimating the recoverable amount
of goodwill, we considered this area a key
audit matter.
Disclosures related to the assessment of
goodwill are reported in note 3 "Goodwill"
and in note 2 "Accounting policies" in the
paragraphs “Intangible assets - Goodwill”,"
Impairment of intangible, tangible and rights
of use assets - Goodwill" and "Use of
estimates".
Our audit procedures in response to the key
audit matter included, among others:
► the assessment of the processes
implemented by the Company with
reference to the criteria and methodology
of the impairment test;
► the validation of the CGUs perimeter and
test of the allocation of the carrying value
of the Company’s assets to each CGU;
► the assessment of the reasonableness of
the future cash flow forecasts, including
comparisons with sector data and
forecasts, utilized in the fair value
determination;
► the assessment of the consistency of the
future cash flow forecasts of the Domestic
CGU with the business plan;
► the assessment of forecasts in light of
their historical accuracy;
► the assessment of the reasonableness of
long-term growth rates and discount rates.
The procedures referred to in the previous
points also concerned the analysis of the
assessments performed by the independent
experts appointed by the Company.
In performing our analysis, we involved our
experts in valuation techniques, who
performed an independent recalculation and
carried out sensitivity analyses on the key
assumptions in order to determine which
changes in the assumptions could materially
affect the recoverable amount.
Lastly, we reviewed the adequacy of the
disclosure provided in the notes to the
separate financial statements with regards to
the valuation of goodwill.
Revenue recognition
TIM’s revenues amounted to € 12.397 million
as of December 31, 2021 and refer almost
entirely to the telecommunications services
rendered to retail and wholesale customers
(other telecommunications operators).
Procedures over the accounting of revenues
required significant focus in the context of
our audit procedures due to i) a highly
complex accounting process due to the
number of commercial offers, the number of
underlying application systems and the
related reconciliation processes, ii) the
presence of certain manual phases in the
revenue recognition process, in particular for
services provided to large customers and iii)
the complexity in estimating commitments
connected to certain contracts.
The Company provides the relative disclosure
in Note 24 "Revenues" of the separate
financial statements.
Our audit procedures in response to the key
audit matter included, among others:
► an understanding of the processes
underlying the revenue recognition;
► the understanding and verification of the
design and operation of the relevant
controls over the revenue recognition
process;
► the analysis of the application systems
supporting the revenue recognition
process;
► the assessment that the accounting policy
adopted for the main commercial offers is
consistent with the provisions of the
reference accounting standard;
► the analysis, on a sample basis, of some
significant transactions relating to invoices
issued and invoices to be issued, in order
to verify that the contractual data and the
evidence supporting the actual service
rendered and / or goods transferred were
consistent with the accounting policy
adopted;
► the analysis of the valuation of certain
contracts identified as onerous contracts;
► the reconciliation of the management
account with the accounting records in
connection with the main balance sheet
items related to customer relations;
► the analysis of the manual journal entries.
We also required external confirmations for a
sample of customers and transactions.
Lastly, we reviewed the adequacy of the
disclosure provided in the notes to the
separate financial statements with regard to
the revenue recognition process.
Regulatory disputes
As of December 31, 2021, TIM is involved in
several regulatory disputes in progress, many
Our audit procedures in response to the key
audit matter included, among others:
► an understanding of the process put in
place by Management for assessing
disputes, accompanied by test of the
effectiveness of the internal controls
relevant for this process;
► inquiries with Management regarding the
main assumptions made in connection
with disputes;
► the analysis of the legal opinions prepared
by external consultants, based on which
Management has based its assessments;
► the analysis of the letters received from
external lawyers following our external
confirmations procedures.
Lastly, we reviewed the adequacy of the
disclosure provided in the notes to the
separate financial statements with regard to
the disputes in which the Company is
involved, based on their compliance with the
international accounting standards and their
consistency with the results of our audit
procedures.
of which are characterized by significant
counterparty requests.
The main disputes concern (i) the 28-day
billing proceeding, in which AGCOM ordered
TIM to reimburse customers for unused
service days, (ii) the I820 proceeding, started
by AGCM against TIM and other telco
operators, to ascertain a possible conduct
restricting market competition and (iii) the
A514, and the related “follow-on” proposed
by some other OLOs, procedure in which the
AGCM charged TIM with conduct aimed at
hindering the entry on the market of a new
operator.
The assessment of the disputes was carried
out by Management, as of 31 December
2021, based on the opinion of the external
lawyers, as well as considering the latest
information available.
The estimation of the risks connected to the
disputes in which the Company is involved,
requires a high degree of judgment by the
management and, also considering the
complexity of the regulatory framework, we
considered this area a key audit matter.
Disclosure related to the assessment of the
risks relating to the regulatory disputes in
which the Company is involved is reported in
note 23 "Disputes and pending legal actions,
other information, commitments and
guarantees".
Recoverability of deferred tax assets
As of December 31, 2021, deferred tax
assets amount, net of impairment, to Euro
3,364 million in the separate financial
statements.
The recoverability analysis of the deferred tax
assets performed as of December 31, 2021,
led to an impairment loss of Euro 3,825.
Deferred tax assets refer to the temporary
deductible differences between the book and
fiscal values of assets and liabilities in the
financial statements.
The recoverability of the carrying amount of
Our audit procedures in response to the key
audit matter included, among others:
► the assessment of the reasonableness of
the assumptions underlying the estimation
of future taxable income and the
reconciliation with the figures included in
the Company's business plan, taking into
account the regulatory changes that took
place during 2021 ;
► the assessment of the reasonableness of
the accuracy of the forecasts compared
with the prior periods;
► the assessment of the Management
calculations.
Lastly, we reviewed the adequacy of the
disclosures provided in the notes to the
separate financial statements with regards to
the recoverability of deferred tax assets.
the deferred tax assets is subject to
management’s evaluation and is based on the
estimations of the future taxable income
expected in the years in which them will be
reversed.
The processes and methodologies used to
evaluate and determine the recoverable
amount of these assets, are based on
assumptions that are in some cases complex
and that, due to their nature, imply the use of
judgement by Management, in particular with
reference to the consistency of the forecasts
of future taxable income expected by the
Company with those included in the business
plan.
Considering the level of judgment required
and the complexity of the assumptions
applied in estimating future taxable amount
used to determine the recoverability of the
deferred tax assets, we considered this area a
key audit matter.
Disclosures related to the assessment of
recoverability of deferred tax assets are
reported in note 2 "Accounting policies" in
the paragraphs “Income tax expense (current
and deferred)" and "Use of estimates" and in
note 10 “Income tax expense (current and
deferred)".
Responsibilities of Directors and Those Charged with Governance for the Separate
Financial Statements
The Directors are responsible for the preparation of the separate financial statements that give a true
and fair view in accordance with International Financial Reporting Standards as adopted by the
European Union and with the regulations issued for implementing art. 9 of Legislative Decree n.
38/2005, and, within the terms provided by the law, for such internal control as they determine is
necessary to enable the preparation of separate financial statements that are free from material
misstatement, whether due to fraud or error.
The Directors are responsible for assessing the Company’s ability to continue as a going concern and,
when preparing the separate financial statements, for the appropriateness of the going concern
assumption, and for appropriate disclosure thereof. The Directors prepare the separate financial
statements on a going concern basis unless they either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
The statutory audit committee (“Collegio Sindacale”) is responsible, within the terms provided by the
law, for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Separate Financial Statements
Our objectives are to obtain reasonable assurance about whether the separate financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with International Standards on Auditing (ISA Italia)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these separate financial statements.
As part of an audit in accordance with International Standards on Auditing (ISA Italia), we have
exercised professional judgment and maintained professional skepticism throughout the audit. In
addition:
we have identified and assessed the risks of material misstatement of the separate financial
statements, whether due to fraud or error, designed and performed audit procedures
responsive to those risks, and obtained audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control;
we have obtained an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control;
we have evaluated the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Directors;
we have concluded on the appropriateness of Directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the separate financial
statements or, if such disclosures are inadequate, to consider this matter in forming our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Company to cease to
continue as a going concern;
we have evaluated the overall presentation, structure and content of the separate financial
statements, including the disclosures, and whether the separate financial statements represent
the underlying transactions and events in a manner that achieves fair presentation.
We have communicated with those charged with governance, identified at an appropriate level as
required by ISA Italia, regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We have provided those charged with governance with a statement that we have complied with the
ethical and independence requirements applicable in Italy, and we have communicated with them all
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we have determined those
matters that were of most significance in the audit of the separate financial statements of the current
period and are therefore the key audit matters. We have described these matters in our auditor’s
report.
Additional information pursuant to article 10 of EU Regulation n. 537/14
The shareholders of TIM S.p.A., in the general meeting held on March 29, 2019, engaged us to
perform the audits of the separate and consolidated financial statements for each of the years ending
December 31, 2019 to December 31, 2027.
We declare that we have not provided prohibited non-audit services, referred to article 5, par. 1, of EU
Regulation n. 537/2014, and that we have remained independent of the Company in conducting the
audit.
We confirm that the opinion on the separate financial statements included in this report is consistent
with the content of the additional report to the audit committee (Collegio Sindacale) in their capacity
as audit committee, prepared pursuant to article 11 of the EU Regulation n. 537/2014.
Report on compliance with other legal and regulatory requirements
Opinion on the compliance with Delegated Regulation (EU) 2019/815
The Directors of TIM S.p.A. are responsible for applying the provisions of the European Commission
Delegated Regulations (EU) 2019/815 for the regulatory technical standards on the specification of a
single electronic reporting format (ESEF – European Single Electronic Format) (the “Delegated
Regulation”) to the separate financial statements, to be included in the annual financial report.
We have performed the procedures under the auditing standard SA Italia n. 700B, in order to express
an opinion on the compliance of the separate financial statements with the provisions of the Delegated
Regulation.
In our opinion, the separate financial statements have been prepared in the XHTML format in
compliance with the provisions of the Delegated Regulation.
Opinion pursuant to article 14, paragraph 2, subparagraph e), of Legislative Decree
n. 39 dated 27 January 2010 and of article 123-bis, paragraph 4, of Legislative
Decree n. 58, dated 24 February 1998
The Directors of TIM S.p.A. are responsible for the preparation of the Report on Operations and of the
Report on Corporate Governance and Ownership Structure of TIM S.p.A. as at December 31, 2021,
including their consistency with the related separate financial statements and their compliance with
the applicable laws and regulations.
We have performed the procedures required under audit standard SA Italia n. 720B, in order to express
an opinion on the consistency of the Report on Operations and of specific information included in the
Report on Corporate Governance and Ownership Structure as provided for by article 123-bis,
paragraph 4, of Legislative Decree n. 58, dated 24 February 1998, with the separate financial
statements of TIM S.p.A. as at December 31, 2021, and on their compliance with the applicable laws
and regulations, and in order to assess whether they contain material misstatements.
In our opinion, the Report on Operations and the above mentioned specific information included in the
Report on Corporate Governance and Ownership Structure are consistent with the separate financial
statements of TIM S.p.A. as at December 31, 2021, and comply with the applicable laws and
regulations.
With reference to the statement required by art. 14, paragraph 2, subparagraph e), of Legislative
Decree n. 39, dated 27 January 2010, based on our knowledge and understanding of the entity and its
environment obtained through our audit, we have no matters to report.
Statement pursuant to article 4 of Consob Regulation implementing Legislative
Decree n. 254, dated 30 December 2016
The Directors of TIM S.p.A. are responsible for the preparation of the non-financial information
pursuant to Legislative Decree n. 254, dated 30 December 2016. We have verified that non-financial
information have been approved by Directors.
Pursuant to article 3, paragraph 10, of Legislative Decree n. 254, dated 30 December 2016, such non-
financial information are subject to a separate compliance report signed by us.
Turin, March 16, 2022
EY S.p.A.
Signed by: Ettore Abate, Auditor
This report, that includes the opinion on the TIM S.p.A.’s compliance with other legal and
regulatory requirements as applicable to our audit, has been translated into the English
language solely for the convenience of international readers. Accordingly, we express no such
opinions in respect of the English translation of the consolidated financial statements of TIM
S.p.A. and XHTML format thereof.
423
REPORT OF THE BOARD OF STATUTORY
AUDITORS TO THE SHAREHOLDERS' MEETING
PURSUANT TO ARTICLE 153 OF ITALIAN
LEGISLATIVE DECREE NO. 58/1998
Dear Shareholders,
This report (hereinafter the “Report”) provides information to the shareholders of TIM S.p.A. (hereinafter also
referred to as the Company) on the supervisory activities carried out by the Board of Statutory Auditors in the
financial year 2021 and the omissions and actions subject to censure pursuant to art. 153 of Legislative Decree
58/1998 (CLF), art. 2429 of the Italian civil code, the standards of conduct for the Board of Statutory Auditors
recommended by CNDCEC (the Italian Board of chartered accountants and accounting consultants), Consob
notices on company controls and the indications given in the Corporate Governance Code.
This Report is prepared as required by Consob Notice no. DEM/1025564 of 6 April 2001 and subsequent
amendments and supplements.
The Board of Statutory Auditors has acquired the information necessary for the performance of the tasks of
general supervision assigned to it by attending meetings of the Board of Directors and the board committees,
meetings with the Company management, meetings with the External Auditor, with the Supervisory Body and
with the corresponding control bodies of the TIM Group companies, analysis of information flows from the
competent company departments, as well as further control activities.
The Board of Statutory Auditors in office as at the date of the Report was appointed by the Shareholders'
Meeting on 31 March 2021 for the financial years 2021-2023 and will therefore expire with the Shareholders'
Meeting called to approve the financial statements as at 31 December 2023.
The Board of Statutory Auditors is made up of the Standing Auditors Francesco Fallacara (Chairman), Angelo
Rocco Bonissoni, Francesca di Donato, Anna Doro and Massimo Gambini.
First of all, the Board of Statutory Auditors recalls that, by resolution on 26 November 2021 the Board of
Directors revoked the powers granted to the previous Chief Executive Officer, Luigi Gubitosi, assigning them in
part to the Chairman of the Board of Directors and in part to the newly appointed General Manager, Pietro
Labriola, formerly Chief Executive Officer of TIM Brazil S.A. Following this resolution, the search for a new Chief
Executive Officer was started by the Nomination and Remuneration Committee with the assistance of an
external consultant.
This search was completed on 21 January 2022 by the resolution of the Board of Directors which (i) after
obtaining the approval of the Board of Statutory Auditors on the co-option resolution, co-opted Pietro Labriola,
who retained the position of General Manager (ii) appointed the said Director, Pietro Labriola, as Chief
Executive Officer of TIM, and (iii) revoked the powers granted to the Chairman, assigning them to the new
Chief Executive Officer, with the exception of the Communication power relating to the indicative non-binding
expression of interest received from Kohlberg Kravis Roberts & Co. L.P. (“KKR”).
***
The Board of Statutory Auditors also notes that, at the date of this Report, the health emergency caused by
the COVID-19 infection (so-called "COVID-19") is still ongoing.
In this regard, over the year 2021, the Board of Statutory Auditors continued to monitor the evolution of the
relative regulatory framework and the rulings issued by the competent Authorities to deal with the ongoing
epidemiological emergency, insofar as related to the supervisory activities it is responsible for with reference to
TIM. The Board has received constant information from the Company on the actions taken to safeguard the
health of its employees in compliance with the emergency regulations in force at the time. With regard to the
above, there are no items of attention to be submitted to the Shareholders' Meeting of the Company.
1. Considerations on the 2021 financial statements and on transactions undertaken by the company of
major impact on its revenues, finances and assets, and their compliance with the laws and the
company articles of association
It should be noted that TIM's financial statements have been drawn up in accordance with the IAS/IFRS
international accounting standards issued by the International Accounting Standards Board (IASB), endorsed
by the European Union, and in force as at 31 December 2021, as well as with the provisions issued in
implementation of article 9 of Legislative Decree no. 38/2005. The financial statements also include the
disclosures required by Law 124/2017 (Article 1, subsections 125-129).
The Directors' Report on Operations summarises the main risks and uncertainties and gives an account of the
business outlook.
The Company's financial statements comprise the Statement of Equity and Financial Position, the Income
Statement, the Comprehensive Income Statement, the Statement of Changes in Equity, the Cash Flow
statement and the Notes to the Financial Statements.
The financial statements are accompanied by the Directors' Report on Operations, the Report on Corporate
Governance and Share Ownership drawn up in accordance with Article 123-bis of the CLF, as well as the
Consolidated Non-financial Statement pursuant to Legislative Decree no. 254 of 30 December 2016, drawn up
by the Company in accordance with the Sustainability Reporting Standards of the Global Reporting Initiative
Other information
Report of the Board of Statutory Auditors 424
(GRI) - Comprehensive option. The financial statements are also accompanied by the Report on the
Remuneration Policy and Compensation Paid, consisting of the Remuneration Policy 2022 ("2021 Policy") and
report on compensation paid in 2021.
Tim's separate financial statements and consolidated financial statements 2021 contain the required
statements of compliance by the Chief Executive Officer and the Executive responsible for preparing the
corporate accounting documents.
The consolidated financial statements of Tim for the financial year 2021 are summarised below:
Revenues
Operating profit (EBIT)
Profit/(Loss) for the year
€ 15,316 million
- € 3,529 million
- € 8,400 million
Adjusted net financial debt as at 31 December 2021 amounted to 22,187 million euros compared to 23,326
million euros on 31 December 2020.
The parent company, Tim S.p.A., closed the year with a loss of 8,314.0 million euros (profit of 7,161 million
euros in 2020).
As indicated in the consolidated report on operations, and on the basis of the information received and as a
result of the analyses conducted, it emerged that the transactions carried out by the Company in 2021 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:
FiberCop
The project to broaden optic fibre coverage nationwide aims to make a decisive contribution to reducing the
digital divide in Italy, speeding up the process of customers switching from copper to fibre.
This operation is being carried out by FiberCop S.p.A., which was set up through the transfer of a business unit
by TIM S.p.A. (58%) and purchase of capital by KKR (via Teemo Bidco Sarl through the purchase of 37.5%) and
Fastweb (4.5% through the merger by incorporation of Flash Fiber).
Specifically, the following operations were completed on 31 March 2021:
■
■
transfer of TIM’s secondary network;
transfer of Fastweb’s equity investment in Flash Fiber S.r.l., the joint venture owned by TIM (80%) and
Fastweb (20%);
■ merger of Flash Fiber into FiberCop contributing the fibre optic network already deployed in 29 towns;
■ purchase by Teemo Bidco Sarl of 37.5% of FiberCop from TIM.
Specifically, the company's purpose is to design, build and operate infrastructure for the provision of wired
access in end-user premises to telecommunications operators, with the aim of reaching 75% of households in
the areas referred to as grey and black, by 2025.
Under the Master Service Agreement between Tim and FiberCop, which regulates the provision of mutual
services, both parties have made certain commitments: Tim, in particular, has made annual commitments to
FiberCop in terms of the minimum purchase of services and migration of the customer base from copper to
fibre optic and the implementation of the horizontal FTTH network. With regard to these commitments, the
agreements provide for penalties to be paid by each party in the event that they are not observed and rights of
Teemo BidCo, as a minority shareholder, to safeguard any failure by Tim to honour the commitments
contractually undertaken, all in line with market practices. These penalties for the parties and rights of the
minority shareholder, which were assessed during the preparation of the financial statements and are subject
to reconsideration at the end of each accounting period, have been monitored by the Board of Statutory
Auditors.
Cloud Services
The plan to extend TIM's leadership in cloud services and seize business opportunities in the market, including
in terms of overall security, by transferring all the cloud assets and expertise already present in various TIM
business functions to Noovle S.p.A.
Specifically, the operation follows on from a collaboration agreement with Google Cloud for the creation of
innovative public, private and hybrid cloud services to enrich TIM's range of technological services.
The operation is expected to accelerate cloud sales on the market, ensuring the optimisation of infrastructure
and operations, while also enabling further development of cloud expertise and achieving important
sustainability goals.
The transactions indicated above are explained in detail in the notes to the consolidated financial statements
of the TIM Group and the notes to the separate balance sheet of TIM S.p.A., as well as in the report on
operations for the year 2021.
The Board of Statutory Auditors has verified that the above transactions comply with the law, the Company
bylaws and the principles of correct administration, and has made sure that they were not manifestly
imprudent or hazardous, in conflict with the resolutions adopted by the Shareholders’ Meeting or likely to
compromise the integrity of the corporate assets.
It is also pointed out that following year end, the following significant events took place:
Other information
Report of the Board of Statutory Auditors 425
TIM S.A.
The offer submitted by TIM S.A., the Brazilian subsidiary of the TIM Group, for the purchase of the mobile
business of the Oi Group, together with Telefonica Brasil S.A. (VIVO) and Claro S.A., has been approved by the
antitrust authority CADE (Conselho Administrativo de Defesa Economica).
This decision follows the decision of the Anatel Regulatory Authority, which, on 1 February 2022, had issued a
favourable opinion on the transfer of control of Oi's mobile business.
The completion of this agreement is subject to the achievement of certain conditions set forth in the sales
contract.
Realignment of tax values
As at 31 December 2020, TIM has benefited from the possibility of realigning the tax values to the greater value
of the assets booked, specifically the value of goodwill, as envisaged by Decree Law 104/2020, Art. 110,
subsections 8 and 8 bis.
In its original formulation, from 2021 this rule would have allowed the deduction of the new value recognised
for tax purposes over 18 financial years, subject to payment of a 3% substitute tax on the realigned value.
As a result of the above, the Company legitimately recognised deferred tax assets ("DTA") of 6.6 billion euros
in the financial statements for the year ended 31 December 2020, so as to reap the benefits in terms of lower
IRES and IRAP.
As known, article 1 of Law no. 234 of 30 December 2021 amended the above-mentioned art. 110 of Legislative
Decree no. 104/2020, stipulating that "the deduction for the purposes of income tax and regional tax on
productive activities of the higher value charged ... is made, in any event, to an extent not exceeding, for each
tax period, one fiftieth of said amount", and no longer one eighteenth.
It should be borne in mind that the new provision, alternatively in derogation of the above, allows parties who
have benefited from the realignment to waive said realignment (with the right to reimbursement of the first
instalment of the substitute tax paid) or maintain the deduction over 18 years, paying a further substitute tax
to the extent of that established by article 176, subsection 2-ter, of Presidential Decree no. 917/1986 (up to a
maximum of 16%).
Due to the extension of the tax deduction period to 50 years, it became necessary to assess the recoverability
of the entire amount recorded as DTA as at 31 December 2020 in the 2021 financial statements. The Company
therefore decided to limit the recognition to deferred tax assets relating to the next 25 years only, with a write-
down of 2,766 million euros for IRES, equal to 50% of the deferred tax assets recorded in 2020, and 1,059
million euros for the remaining amount of the IRAP deferred tax assets recognised.
Back to Basic
At its meeting on 2 March 2022, the Board of Directors approved a new 2022-2024 industrial plan, prepared by
the Company with the assistance of external consultants and submitted to the financial community on 3
March 2022.
KKR Expression of interest
On 13 March 2022 the Board of Directors met to evaluate the indicative and non-binding expression of interest
sent to the Company by the US private equity fund "KKR" and unanimously resolved to issue a mandate to the
Chairman and the Chief Executive Officer to initiate a formal discussion with KKR, in addition to those already
undertaken informally in recent months by the consultants, with a view to achieving maximum value for Tim,
also with reference to any other interested parties.
Russia – Ukraine conflict
In February 2022, Russia launched a military operation on Ukrainian territory, the consequences of which on
the global political economic balance are currently unmeasurable.
The European Union and many other countries have put in place economic sanctions against Russia and
Belarus, which are particularly stringent and others may be decided later.
For the Tim Group, and in particular for Telecom Italia Sparkle S.p.A, there may be repercussions on
commercial relations, the collection of trade receivables and assets in the country, the variation of which,
although dependent on how the conflict develops, is not currently considered significant by the Company.
The invasion of Ukraine by Russia opens up economic implications which could be extreme in relation to
energy supply. The electricity consumed by Tim depends almost entirely on suppliers and the Tim Group is
therefore naturally exposed to fluctuations in energy costs that could obstruct the achievement of business
targets in terms of reducing margins and cash flows. To mitigate this exposure, among its ongoing actions for
the year 2022, Tim has hedged the bulk of its fixed-price requirements.
In relation to the Russia-Ukraine war, Tim, which is acting in coordination with the Agency for National Cyber
Security (ACN), has raised the alert level in relation to Cyber risk.
Other information
Report of the Board of Statutory Auditors 426
2. Report of any atypical and/or unusual transactions, including intra-group
The Board of Statutory Auditors found the following atypical and/or unusual third party transactions over the
financial year 2021:
▪ provision for a total of 548 million euros relating to the onerous nature of certain media content contracts,
mainly referring to the contract signed with DAZN to broadcast football matches from the Italian Serie A
Championship for the three football seasons 2021/2022 - 2022/2023 - 2023/2024; the Board of Statutory
Auditors' analyses, in agreement with the corporate bodies, led to the conclusion that, due to several
specific contractual commitments and some phenomena that have prevented the number of subscribers
envisaged in the original investment plan from being reached, the contract is not expected to reach the
"break-even" point for the three-year period and cover costs from revenues. Initial analyses carried out by
the Internal Audit department reveal inadequate information flows to the decision-making bodies and a
consequent anomaly in the decision-making processes during approval of the project;
▪ contracts for the sale of goods with deferred delivery, effective as of FY 2020. During the fourth quarter of
FY 2021, at the instigation of the Board of Statutory Auditors, TIM conducted in-depth reviews and
analyses regarding the accounting of the execution of these commercial agreements for such goods with
deferred delivery. These analyses resulted in a restatement of the time distribution of revenues and
purchases of materials and services starting from FY 2020 up to the third quarter of FY 2021. As a result of
the time reallocation, the Company has reversed revenues and related purchase costs related to the first
three quarters of FY 2021. For the year 2020, the Company considered these effects to be immaterial; the
Independent Auditor did not make any comments.
All the above operations are commented on in the Directors' Report on Operations and the related economic
and financial effects can be found in Note 2 to the 2021 Consolidated Annual Financial Report. The Board
analysed the above operations and the related agreements, bringing to the attention of the Board of Directors
the shortcomings and weaknesses in the decision-making process, the monitoring of the supply chain and the
accounting process, as well as the economic rationale and social interest of the entire operation. The above-
mentioned shortcomings and weaknesses were also reported by the Board of Statutory Auditors to Consob
pursuant to art. 149 of the CLF.
3. Assessment of the adequacy of the information provided in the directors’ report on operations
concerning atypical and/or unusual transactions, including intra-group and related party transactions.
Having received the binding opinion of the Related Parties Committee and the Board of Statutory Auditors, at
the meeting on 23 June 2021 the Board of Directors approved the updated version of the internal regulations
on the Management of Related Party Transactions, incorporating the changes made following Consob
Resolution no. 21624/2020, which came into force on 1 July 2021.
The Company's financial statements provide information on Related Party transactions and the Board of
Statutory Auditors, in carrying out its activities, has not found, at least up to the date of this report, any
atypical and/or unusual transactions carried out in FY 2021 with Related Parties (including Group companies).
However, it notes that for the operations in question there is a need to strengthen internal controls for an
increasingly improved formalization of the agreements stipulated. In this context however, the Board of
Statutory Auditors believes that the report on the Company’s transactions with related and intra-group parties,
provided in the notes to the separate financial statements of TIM S.p.A. and the consolidated financial
statements of the TIM Group, should be considered adequate.
The transactions with Directors' interests or with other Related Parties, were subjected to the transparency
procedure set out in the applicable regulations.
The Board of Statutory Auditors acknowledges that the information relating to the principal intra-group
transactions and transactions with other related parties executed in 2021, and the description of their
characteristics and related economic effects, is contained in the notes to the separate financial statements of
TIM S.p.A. and to the consolidated financial statements of the TIM Group.
It should be noted that, based on the relative assessments carried out by the Related Parties Committee
during the second half of 2021, Cassa Depositi e Prestiti and its subsidiaries were included in the scope of
related companies.
Over FY 2021, there were both intra-group and non-intra-group Related Party transactions.
Intra-group transactions analysed by the corporate bodies in 2021, the effects of which are reported in the
financial statements, are all ordinary in nature, as they essentially consist of transactions with no significant
interests of other non-intra-group Related Parties. These were regulated applying normal conditions
determined according to standard parameters, reflecting the actual use of the services and were carried out in
the interest of Group Companies, as they were aimed at optimising use of the Group's resources.
The documentation submitted to the company bodies shows that the transactions with Related Parties other
than intra-group transactions we examined are also of an ordinary nature (since they fall within the ordinary
exercise of operating activities or related financial activities) and/or concluded at conditions equivalent to
market or standard conditions and are in the interest of the Company. These transactions have been
periodically reported to us by the Company.
Intra-group transactions and Related Party transactions of an ordinary or recurring financial nature are of
marginal importance in terms of number and amount.
We attended the meetings of the Related Parties Committee, during which it expressed a favourable opinion
on some related party transactions of “lesser importance”, having assessed the Company's interest in carrying
out the transaction as well as the appropriateness and advantage of the relative conditions.
The Board of Statutory Auditors had no reason to raise objections as to whether all the transactions examined
by it during the reporting period were in the Company's interest.
Other information
Report of the Board of Statutory Auditors 427
For the sake of completeness, however, it should be noted that analyses of some contracts with Related
Parties, and/or counterparties of Related Parties, entered into in 2021 are in progress, for which the Board of
Statutory Auditors needs to examine in greater detail certain contractual characteristics and effects.
The effects of all of the above related party transactions for the year 2021 are fully reflected in the financial
statements.
We have monitored compliance with the Related Parties Procedure and the correctness of the process
followed by the Board and the relevant Committee, on the subject of qualification of Related Parties -
agreeing, inter alia, with the assessments expressed by the RPT Committee regarding the qualification of Tim's
Related Parties and we have nothing to report.
4. Remarks and proposals on the reporting references and notes contained in the report of the
independent auditor.
On 16 March 2022, the independent auditor EY S.p.A. (hereinafter also referred to as “EY”), issued the reports
pursuant to art. 14 of Legislative Decree no. 39/2010 and art. 10 of Regulation EU no. 537/2014, attesting that
the separate financial statements of TIM S.p.A. and the consolidated financial statements of the TIM Group as
at 31 December 2021 provide a truthful and correct representation of the equity and financial position, the
economic results and cash flows for the year ended as at that date, in compliance with the International
Financial Reporting Standards adopted by the European Union, as well as with the provisions issued in
implementation of Article 9 of Legislative Decree no. 38 of 28 February 2005.
In these documents, the auditing firm EY - pursuant to art. 154-ter CLF, as amended by art. 25 of Law no. 238
of 23/12/2021 - also issued its opinion on the compliance of the draft financial statements and the consolidated
financial statements, included in the annual financial report, with the provisions of the Delegated Regulation
(EU) 2019/815 of the Commission of 17 December 2018, based on the auditing standard (SA Italia 700B).
As part of its general duty to monitor compliance with the law and the Bylaws, the Board notes that the
company has complied with the provisions of the said EU Regulation No. 2019/815.
In the report on the consolidated financial statements as at 31 December 2021, the Auditor concludes as
follows "in our opinion, the consolidated financial statements provide a truthful and correct representation of the
equity and financial position of the Group as at 31 December 2021, the economic results and cash flows for the
year ended as at that date, in compliance with the International Financial Reporting Standards adopted by the
European Union, as well as with the provisions issued in implementation of Article 9 of Legislative Decree no. 38
of 28 February 2005".
In the report on the separate financial statements as at 31 December 2021, the Auditor concludes as follows
"in our opinion, the annual financial statements provide a truthful and correct representation of the equity and
financial position of the Company as at 31 December 2021, the economic results and cash flows for the year
ended as at that date, in compliance with the International Financial Reporting Standards adopted by the
European Union, as well as with the provisions issued in implementation of Article 9 of Legislative Decree no. 38
of 28 February 2005".
On 16 March 2022, EY also issued the additional Report for the Committee for Internal Control and Audit on the
results of the external audit of the accounts, which also includes the declaration on the independence of the
external auditor.
In short, the findings of the above report were as follows:
■
"In our professional opinion, having performed the relative tasks, we consider the directors' approach of
considering that there are no uncertain factors affecting the going concern assumption, such as should be
disclosed in the financial statements, consistent with the context of the company and the evidence
gathered.
■ During the course of the audit of the Company's financial statements and the Group's consolidated financial
statements for the year ended 31 December 2021, no significant shortcomings in the internal control system
for financial reporting and/or the accounting system were identified.
■
During the audit of the Company’s financial statements and of the Group’s consolidated financial
statements closed on 31 December 2021, no significant issues were identified in respect of cases of effective
or alleged non-conformity with laws and regulations or statutory provisions.”
■ As stated in Note 2 to the Consolidated Financial Statements, during the fourth quarter of FY 2021, with
reference to certain commercial agreements involving the sale of goods with deferred delivery, the Company
restated its revenues and costs for purchases of materials and services during the first, second and third
quarters of 2021 as a result of certain accounting revisions. Similar transactions in 2020 had generated non-
material economic effects.
The Board of Statutory Auditors will inform the Company's Board of Directors of the results of the external
audit, to this end sending across the additional report complete with any observations.
The independent auditor also considers that the report on operations and the information in the Report on
corporate governance and share ownership indicated in art. 123-bis, subsection 4 of the CLF are consistent
with the TIM S.p.A.’s financial statements for the period and the consolidated financial statements for the TIM
Group at 31 December 2021.
Other information
Report of the Board of Statutory Auditors 428
5. Reports on the presence of any complaints pursuant to article 2408 of the italian civil code regarding
initiatives undertaken and their outcomes
From the date of the previous report (10 March 2021) until the date of this Report (16 March 2022), one report
was received from Company shareholders, made in accordance with art. 2408, subsection 3 of the Civil Code,
more specifically on 15 March 2022. The Board will proceed with the appropriate enquiries. As at the date of
this Report, there are no items to report to the Shareholders' Meeting.
6. Report on the presence of any complaints regarding initiatives undertaken and their outcomes
A procedure is in place regulating the methods by which reports can be made to the control body. There are
instructions on the About Us section of the Company’s website (Company Bodies – Board of Statutory Auditors
– Role, tasks and responsibilities), for sending such reports - in paper or electronic format - to the Board of
Statutory Auditors of the Company.
The Company also has a Whistleblowing Procedure, updated also following the assignment of the role of
Supervisory Body to a separate body from the Board, which envisages the institution of information channels
able to guarantee the receipt, analysis and processing of reports made relating to internal control problems,
corporate information, administrative liability of the Company, fraud or in any case behavioural anomalies in
reference to TIM staff or third parties, in violation of laws and regulations and/or non-conformity with the Code
of Ethics and the Organisational Model 231, as well as with the system of rules and procedures in force in the
TIM Group, submitted by employees, members of company bodies or third parties, even anonymously.
Since the date of the previous report (10 March 2021) and up to the date of this report (16 March 2022), 13
reports (24 in the previous year) have been received, mostly regarding technical problems and shortcomings of
a commercial and administrative nature.
The Board of Statutory Auditors investigated all these reports appropriately, with the assistance of the
competent Company departments, instructing such departments where necessary to adopt appropriate
solutions, but no irregularities to be reported to the Shareholders’ Meeting emerged. The Board of Statutory
Auditors has welcomed the Company's efforts to promote initiatives aimed at developing a company culture
characterised by correct behaviour and has repeatedly indicated to the Board of Directors the importance of
focusing on correct behaviour at every stage of Company management, to such purpose promoting specific
programmes aimed at its internal structure.
7. Report on any appointments conferred on the independent auditor and the corresponding costs
In 2021, the Board of Statutory Auditors, together with the Company departments, verified and monitored the
independence of the Auditor as required by the relevant laws and regulations. Specifically, with regard to
services other than auditing (so-called "non-audit services") rendered by the Auditor to the Company. The
Company procedures, which also extend to its subsidiaries, require that each non-audit assignment be
submitted for prior assessment and binding approval by the Company's Board of Statutory Auditors.
During the 2021 financial year TIM S.p.A. appointed EY S.p.A. to undertake various tasks other than audits of
financial statements, the fees for which, before VAT and out-of pocket expenses, are summarised below:
EY S.p.A.
Issue of comfort letters connected with the renewal of the Euro Medium Term Notes Programme and
relating to the issue of the Sustainability Bond;
Review of the working papers of other independent auditors relating to INWIT S.p.A. on the
Consolidated financial report as at 30.06.2021
Verification services related to obtaining specific tax or contribution regimes:
•
relating to the statement of expenses incurred for R&D and technological innovation aimed at
obtaining tax credits for TIM S.p.A.;
for compliance approval pursuant to art. 35 of Legislative Decree no. 241 of 9 July 1997 on the tax
return of TIM S.p.A. and the domestic tax consolidation statement;
•
Other audit services (voluntary appointments):
•
•
relating to the assurance and assessment of the Non-Financial Statement (carried out according
to ISAE 3000 and ISAE 3410);
for the complete examination of the European Single Electronic Format (“ESEF”) disclosure in
reference to the consolidated financial statements of TIM S.p.A. as at 31 December 2020 (carried
out in accordance with standard ISAE 3000 (Revised))
(in euro)
80,000.00
25,000.00
90,000.00
3,000.00
76,000.00
20,000.00
Miscellaneous certification services: appointment granted in accordance with International Standard
on Assurance Engagement 3402 ("ISAE 3402") for the issue of the SOC 1 report to the client Acciaierie
d'Italia S.p.A. for the provision of services by TIM
Overall total
65,000.00
359,000.00
In addition, during the period between 1 January 2022 and the date of this Report, TIM S.p.A. conferred upon
EY S.p.A. the following additional appointments, other than audits of financial statements, the fees for which,
before VAT and out-of pocket expenses, are summarised below:
Other information
Report of the Board of Statutory Auditors 429
EY S.p.A.
Review of the working papers of other independent auditors relating to INWIT S.p.A. on the
Consolidated financial report as at 31/12/2021
Other auditing services:
•
additional audit activities relating to the technological migration of certain TIM applications and
infrastructures relating to Financial Reporting;
additional audit engagement related to the obligation, as of FY 2021, for issuers to prepare their
financial reports, in accordance with ESEF (drafting in XHTML format and "tagging" the
information included in the ESEF Disclosure using iXBRL language), as required by Directive
2013/50/EU. The Group Auditor's assurance activities are based on Auditing Standard (SA Italia)
700B
•
Total
(in euro)
45,000.00
142,000.00
20,000.00
207,000.00
In accordance with the current “Guidelines for the Conferral of Appointments on Independent Auditors”, the
conferral of the above appointments had been approved in advance by the Board of Statutory Auditors.
8. Report on any appointments conferred on parties connected by continuing relationships with the
independent auditor and the corresponding costs
During FY 2021 TIM S.p.A. did not confer any appointment on subjects bound by continuous relationships with
EY S.p.A. and/or companies belonging to the latter’s network.
9. Report on the existence of opinions issued pursuant to law during the financial year
The Board of Statutory Auditors expressed its favourable opinion, pursuant to art. 2389, subsection 3 of the
Italian Civil Code, with regard to the proposed remuneration package for the Chairman and the Chief Executive
Officer, on 16/4/2021 (Board of Statutory Auditors) - 28/4/2021 (Board of Directors).
The Board of Statutory Auditors also expressed a favourable opinion, pursuant to the Company's Corporate
Governance Principles, on the following proposals:
■ appointment of the Executive responsible for preparing the corporate accounting documents, on
01/04/2021;
■
integration of the composition of the Supervisory Board 231, with a member of the Board of Statutory
Auditors;
■ appointment and remuneration of the Head of the Audit Department, on 16/4/2021 (Board of Statutory
Auditors) - 28/4/2021 (Board of Directors);
■ activity plans of the Audit, Compliance and IT& Security Compliance departments, on 28/04/2021;
■
■
reorganization of the compliance oversight, on 28/4/2021;
reorganization of the privacy oversight, on 28/4/2021;
■ modification of the MBO score card of the Head of the Compliance Department, dated 23/6/2021;
■
remuneration of the LID, on17/12/2021.
In addition, on 1/4/2021 the Board of Statutory Auditors ascertained that its members complied with the legal
requirements; on 16/4/2021 and 22/2/2022 it verified the correct application of the criteria and procedures
adopted by the Board of Directors to ascertain the Directors' requirements.
In 2021, the Head of the "Internal Audit" department changed, taking office as of 14 June 2021, with the
favourable opinion of the Board of Statutory Auditors. Despite this situation of turnover, the Board of Statutory
Auditors was able to view and monitor the progress of the Audit plan for the year 2021.
The Head of Internal Audit attended all meetings of the Board of Statutory Auditors on a permanent basis,
ensuring a continuous exchange of information on the activities in progress, the related results and the
presence of any significant facts for the Company and its organisational structure.
The Board of Statutory Auditors has also reviewed and expressed, pursuant to the Corporate Governance
Code, a favourable opinion on the 2022 Audit Plan, and has acknowledged the structure currently in place at
the Company as to its adequacy to carry out the aforementioned 2022 Audit Plan in an orderly and appropriate
manner.
The Board of Statutory Auditors also examined the Compliance Plan, which is consistent with that of previous
years, and the adequacy of the Compliance department.
In the light of the new plans announced by the Company, the Board of Statutory Auditors intends to
constantly monitor the adequacy of the Internal Audit and Compliance departments in relation to the new
organisational structures.
10. Remuneration policies
The Board of Statutory Auditors examined the document containing the architecture of the incentive system
(MBO) 2022, which envisages "entry gates" based on principles of fairness together with group economic
Other information
Report of the Board of Statutory Auditors 430
indicators, specific department objectives (aligned with 2021) individual objectives and an extension of the ESG
objectives (from 10% in 2021 to 22% in 2022), issuing, to the extent necessary and with regard to the
remuneration of the Chief Executive Officer, a favourable opinion.
In addition, the Board of Statutory Auditors took note of the "Report on the remuneration policy and the
compensation paidprepared pursuant to art. 123-ter of the CLF, containing the terms of the remuneration
policy to be submitted to the Shareholders' Meeting called for 7 April 2022 and approved by the Board of
Directors during the meeting on 2 March 2022, verifying that the procedure adopted was consistent with
Company procedures and the relative regulations, issuing, as far as necessary, its favourable opinions to the
Board of Directors.
11. Report on the frequency and number of meetings of the Bod, Executive Committee and Board of
Statutory Auditors
In 2021, the Company’s Board of Directors held 17 meetings, at which the Board of Statutory Auditors was
always present, also in videoconference.
In FY 2021, the Control and Risk Committee met 22 times, the Nomination and Remuneration Committee met
21 times, the Related Parties Committee met 13 times, the Sustainability Committee met 4 times and the
Committee for examining the “KKR” expression of interest met 5 times.
The Board of Statutory Auditors attended the meetings of all board committees, also by videoconference,
supervising the relevant activities.
During 2021, there were 46 meetings of the Board of Statutory Auditors, 7 of which were held jointly with the
Control and Risk Committee.
In 2022 and up to the date of approval of the Report 19 meetings have been held.
The majority of the members of the Board of Statutory Auditors attended (in audio conference) the
Shareholders' Meeting held on 31 March 2021 in the manner permitted by the exceptional regulations set out
in Decree Law no. 18 of 17 March 2020.
12. Remarks on compliance with the principles of correct administration
The Board of Statutory Auditors supervised compliance with the principles of correct administration, by
attendance at the meetings of the Board of Directors and board committees, meetings with the executive
responsible for preparing the corporate accounting documents, the Head of the Audit Department, the Group
Compliance Officer, the Head of the IT & Security Compliance function and by means of interviews with the
Company management and the acquisition of information. In particular, the Board acquired information about
the TIM anti-bribery management system for the purposes of standard UNI ISO 37001, which reveals
substantive compliance with the requirements indicated by the standard.
From the start of the new term of office, the Board of Statutory Auditors has supervised the proceedings
followed in the deliberations of the Board of Directors and has ascertained that the management choices
complied to the applicable rules (substantial lawfulness), adopted in the interests of the Company, compatible
with the resources and the company's assets and adequately supported by information, analysis and audit
processes, including with recourse, when deemed necessary, to advice from committees and external
professionals.
In the course of its ordinary and six-monthly meetings with the Chairman of the Board of Directors and the
Chief Executive Officer, the Board of Statutory Auditors presented its own assessments of the Company's
governance system. In particular, it pointed out that, in relation to the activities carried out and the various
feedback received, it believes that the structure-model of Governance adopted by the Company, together with
some applications of the same, require further implementation-revision with regard to the Company’s
operational evolution so as to make it more suitable for controlling compliance with the principles of correct
and efficient administration in operational practice.
The Board of Statutory Auditors has thus indicated, inter alia, the need to ensure the completeness and timely
provision of the material supporting Board resolutions and the clarity of such material, via standardization of
the documentation. This should allow Board members to immediately identify and classify the matters to be
discussed, ensure that analysis of the various risks inherent to management choices are always present by
constantly involving the Enterprise Risk Management (ERM) department, and organisation of the meetings to
ensure an adequate level of concentration is maintained. It has also recommended monitoring of the
information flows between the Company Bodies, between the members of the same and the control
departments as well as the adoption of systems allowing continuous monitoring over time of the activities and
projects subject to resolution by the Board of Directors.
13. Remarks on the adequacy of the organisational structure
The Board of Statutory Auditors has monitored the evolution of the TIM Group’s organisational structure (also
in accordance with golden power regulations, as per the provisions of the Decrees of the President of the
Council of Ministers of 16 October 2017 and 2 November 2017), defined in accordance with, on the one hand,
the organisational and managerial autonomy of the Parent Company and its subsidiaries and, on the other,
the exercising of direction and coordination by the Company with regard to the direct or indirect subsidiaries.
More specifically, the Board of Statutory Auditors has monitored the principal changes in the organisational
structure of the TIM Group through meetings held with the Head of the Human Resources & Organisational
Development Department, the Heads of the main corporate structures and by acquiring the organisational
communications which had produced an impact on the first and second tiers that report directly to TIM's
executive directors or on the macro-organisation of the Group's companies.
Other information
Report of the Board of Statutory Auditors 431
The Board of Statutory Auditors notes that, at present, the Company's organisational structure is evolving both
as a result of the replacement of some top management tiers and a structural review and reorganisation of
the departments. In the light of the analyses carried out during the year, the Board of Statutory Auditors notes
the need to adapt and strengthen some company departments so as to ensure they are fully adequate, with
particular reference to the management control and procurement departments and the departments
responsible for corporate sustainability and drafting of the Non-Financial Statement, in the light of the
increasing obligations imposed by current legislation.
14. Remarks on the adequacy of the internal control system, in particular on the activity of the internal
control managers, and highlighting of any corrective actions undertaken and/or to be undertaken
The Board of Statutory Auditors has acknowledged the overall assessment of the internal control and risk
management system by the new Head of the Audit Department, the conclusions of which are set forth below:
" The results of the analysis can be summarised as follows:
■ considering the current organisational structure and risk profile of the company, as a whole, TIM’s Internal
Control and Risk management System is designed and structured consistently with Corporate Governance
Code recommendations, and is aligned with the main reference frameworks (i.e. «three line model» and
«CoSO framework»), though displaying areas of improvement;
■
■
the information reported in the information flows received by the second level control functions and by a
selection of other players in the ICRMS of TIM, on which the Audit Department relied for the purposes of this
report, do not highlight any critical aspects that could compromise the effectiveness of the system itself;
the audit activities conducted on specific organisation areas during the year (based on the risk-based Audit
Plan and risks pointed out by Top Management and Control Bodies) showed areas of improvement for which
action plans have been defined by management. The implementation rate for the action plans formulated
based on audit activities in the period 2019-2021 is 90% to date and is monitored continuously and TIM
Control Bodies are kept informed in the periodical Audit Department reports.
In the light of the above, the necessary areas of improvement identified are not such as to compromise the
overall adequacy of TIM's Internal Control and Risk Management System."
Although the Board of Statutory Auditors agrees with the analyses carried out by the department, it believes
that TIM's Internal Control and Risk Management System may currently be considered "mostly satisfactory",
and therefore that it has achieved a state of adequacy, although this should be completed by implementing
the improvement measures suggested by the Audit Department and the Board itself. This is the result of the
findings of the Board of Statutory Auditors in its constant monitoring of the System of Internal Controls,
analysing as the occasion arises the results of the Audit Reports, Compliance monitoring, as well as the results
of its own specific in-depth analyses, including, in the past year, the operations described in Paragraph 2 above,
which revealed, among other things, anomalies and shortcomings in terms of the correct flow of information
within the company and with the control departments.
The Board of Statutory Auditors notes, however, that following the reports made to the Company’s bodies and
offices, some corrective action was taken during the FY 2021, in particular in the reporting to the Board of
Directors and to the Board Committees and in a more integrated involvement of the ERM and ORM
Departments.
For the purposes of the opinion on the internal control system expressed above, the Board of Statutory
Auditors has also monitored the work carried out by the main players, also with reference to specific aspects,
such as special powers (“golden power”). In particular, insofar as coming under its purview, the Board of
Statutory Auditors also monitored the improvements made and action taken to mitigate risks, in some cases
requesting specific, additional strengthening of the control measures.
It is also noted that the Company has voluntarily adhered to the Cooperative Compliance regime and that the
Board has acquired the draft Report prepared by the Head of the Reporting and Fiscal Monitoring Department,
in accordance with art. 4, subsection 2 of Italian Legislative Decree no. 128/2015, the purpose of which was to
illustrate to the Board of Directors, as part of the Tax Risk Management and Control System (the so-called
Tax Control Framework) adopted by the Company, the audits carried out in 2021, the findings and remediation
measures put in place, and the activities planned for 2022. Said draft report will be finalized and subsequently
presented to the Board of Directors once the meeting between the Company and the Office of Cooperative
Compliance for formalization of the Notice of Closure of the Proceedings pursuant to point 6.1 of the Provision
of the Director of the Italian Revenues Agency Prot. no. 101573 of 26/05/2017, has been held.
The Board of Statutory Auditors has exchanged information with the corresponding control bodies of the
major Italian subsidiary companies. It also met with the Audit Committee of Telecom Italia Finance S.A..
The internal control and risk management system also includes the Organisational Model 231, designed to
prevent the commission of offences that could result in liability for the Company, pursuant to Legislative
Decree No. 231/2001. The Organisational Model 231 has been adopted by domestic subsidiaries of the Group as
well as by TIM.
The Board of Statutory Auditors acquired information from the Supervisory Body, which comprises a member
of the Board, at specific meetings as well as from an examination of the six-monthly reports prepared by the
latter, which indicate an organisational structure that could be improved in certain areas such as procurement.
The latest version of the Organisational Model 231 was approved on 10 November 2020 and transposes the
regulatory changes introduced by Legislative Decree No. 75 of 14 July 2020 (implementing the so-called PIF
Directive), which led to an expansion of the predicate offences.
With reference to the GDPR system, the Board of Statutory Auditors notes that: (i) in 2021 Tim changed its
organisational structure, (ii) a new DPO was appointed, (iii) the DPO's annual report - incorporated in the SCIGR
Report and discussed during the Control and Risk Committee meeting of 25/2/2022 - indicates the substantive
maintenance and effectiveness of the specific organisational model.
Other information
Report of the Board of Statutory Auditors 432
With reference to the cases of data breach detected, which occurred in July and August 2021 and were the
subject of notification to the Data Protection Authority, the Board of Statutory Auditors notes and
acknowledges that as at the date of this report no sanction has been issued by the former.
In 2021 TIM also launched a "Technology plan" involving the launch of a major IT transformation project, the
accounting effects of which are illustrated in the Director’s Report on operations and which led to the
deactivation of 102 applications and the activation of 33 new applications. At the same time, it has modified
the organisational structure of the IT department, which is now part of the compliance area.
In 2021, the Company continued the training programme for its departments on the protection of personal
data and the general principles of the GDPR such as data subject rights, data transfer, data breach,
governance and individual employee accountability.
The TIM Group has adopted an Enterprise Risk Management Model (ERM) which enables risks to be identified
and managed in a homogenous way within the Group companies, highlighting potential synergies between
the players involved in the assessment of the internal control and risk management system. The process is
managed by the Risk Management Steering Committee, which provides governance of the Group's risk
management, aimed at containing the level of exposure within acceptable limits and guaranteeing the
operational continuity of the business by monitoring the effectiveness of the countermeasures adopted. The
Board of Statutory Auditors has acknowledged that, at its meeting on 2 March 2022, the Board of Directors
defined the risk that was acceptable for the Group (Risk Appetite) and the acceptable levels of deviation (Risk
Tolerance) under the scope of the new Industrial Plan.
In 2021 the Compliance organisational model was subject to changes aimed at simplifying the information
flows towards the Control Bodies; in this perspective the IT & Security Compliance Policy & Design and IT &
Security Compliance Assurance departments were merged within the Compliance Department.
Also in 2021, the Board of Statutory Auditors took note of the activities carried out by Compliance, which
focused on the following areas: Definition of rules, processes and controls, Communication and training,
Monitoring.
These compliance audits, as indicated in the SCIGR report, led to the conclusion that with reference to the
specific operating contexts analysed and the initiatives undertaken by the Compliance Department, no
elements emerged in 2021 that would lead to non-compliance risk profiles exceeding levels that would affect
the adequacy of the internal control system.
Nonetheless, areas for improvement were identified in relation to the Anti-Corruption Management System,
Financial Reporting and Gap Analysis 231 both in Tim and its subsidiaries.
***
In compliance with Italian Legislative Decree no. 254/2016 (hereinafter the “Decree”), the Company has been
required to disclose non-financial information since FY 2018.
The TIM Group NFS contains a description of topics regarding: the corporate management model, corporate
governance, stakeholder engagement, the materiality matrix and risk management, the results achieved by
the Company on topics relevant to the environment, the value chain and human rights.
On 16 March 2022, the independent auditors issued a report certifying that the information provided in the NFS
complies with the requirements of the Decree and the reporting standards used, which reads as follows "based
on the work carried out, no elements have come to our attention that would lead us to believe that the Tim
Group's NFS for the financial year ending 31 December 2021 has not been prepared, in all significant aspects, in
accordance with the requirements of Articles 3 and 4 of the Decree and the GRI Standards.
Our conclusions on Tim Group's NFS do not extend to the information contained in the "European Taxonomy"
paragraph thereof, which is required by Article 8 of European Regulation 2020/852.".
The Board of Statutory Auditors has obtained regular updates on the conduct of activities prior to preparing
the NFS and has monitored observance of the provisions pursuant to the above Decree under the scope of the
duties assigned it by the system and, in particular, on the adequacy of the procedures, processes and
departments overseeing the production, reporting, measuring and representation of the results and of
information of this nature.
As part of its duty to supervise compliance with the law and the Bylaws, the Board notes that the Company, in
its NFS, has complied with the provisions of Regulation (EU) 2020/852 of 18 June 2020 on the establishment of
a framework to encourage sustainable investments.
Said Regulation requires that, as of 1 January 2022 (NFS referring to FY 2021), information be provided only on
climate change mitigation and adaptation.
15. Remarks on the adequacy of the administrative and accounting system and its ability to fairly represent
operations
For the purpose of supervising financial reporting processes, the Board of Statutory Auditors (in addition to the
above-mentioned in-depth analyses and discussions with the Auditor both with regard to the adequacy of the
internal control system and the procedures underlying the preparation of accounting data, for which it did not
receive any reports of critical aspects) has periodically met the Executive responsible for measuring accounting
and corporate data and drafting the related accounting documents, together with the accounting and risk
department. To this end, the Board of Statutory Auditors collected documents and information, including
through interviews with the various company control, compliance, legal and commercial departments, as well
as with the Supervisory Board.
In order to guarantee compliance with Italian laws, TIM operates a structured and documented model of
detection and monitoring of risks connected to financial reporting, which refers to the 2013 CoSo framework.
This model, managed with the help of a specific piece of software, regards the internal controls associated
with the risks identified on the financial reporting and the consequent assessment activities, with precise
Other information
Report of the Board of Statutory Auditors 433
attributions of responsibility, in compliance with the principle of accountability. The accounting structure and
the related procedures have been defined and organised under the responsibility of the Executive responsible
together with the pro tempore Chief Executive Officer, who have certified their adequacy and effectiveness.
The Board also acknowledged the activities carried out pursuant to Law no. 262/05 concerning the Company's
2021 individual and consolidated financial statements, which were submitted to the Board of Directors on 2
March 2021. Consequently, with regard to the administrative-accounting system of the subsidiaries, pursuant
to art. 15, subsection 1, letter c, ii) of the Market Regulations (Conditions for the listing of shares of controlling
companies and of companies registered in and regulated by the laws of States that are not members of the
European Union), the Board of Statutory Auditors has not ascertained facts and circumstances indicating that
it is not adequate to ensure that the data on equity and economic data required for the preparation of the
consolidated financial statements regularly reaches the management and auditor of the controlling company.
In the course of periodic meetings, the Executive responsible did not point out any shortcomings in the
operational and control processes that could affect the judgement of the correctness of company information.
In the course of its supervisory activities, the Board of Statutory Auditors reported certain shortcomings
regarding both the organisational structure and the correct representation of some operations, relating mainly
to the contracts referred to in paragraph 2 above, which were brought to the attention of the Board of
Directors, the control and compliance departments and the Auditor for the necessary measures both in terms
of corrective action and in-depth investigation. In this regard, the Board of Directors, at its meeting on 17
December 2021, decided to launch a specific investigation by external consultants, aimed at analysing the
reports received in depth.
The Board of Statutory Auditors also monitored the financial reporting process.
With reference to the Company’s annual financial statements and consolidated accounts for 2021, the Board
of Statutory Auditors acknowledged the statements issued by the Chief Executive Officer and the Executive
responsible for preparing the corporate accounting documents of TIM S.p.A. concerning the adequacy in
relation to the characteristics of the company and the actual application during 2021 of the administrative and
accounting procedures for the preparation of the financial statements and the consolidated financial
statements.
The Board of Statutory Auditors notes that, with reference to the goodwill impairment test, this is applied in a
consolidated and structured manner, coordinated by the Chief Financial Officer, with the intervention of
independent external experts of acknowledged professional expertise. The impairment procedure is revised
once a year and the process for impairment testing is analysed and discussed in special meetings involving the
Control and Risk Committee and Board of Statutory Auditors, that precede the Board of Directors meetings to
approve the financial reports to which the impairment test must be applied.
The Board of Statutory Auditors has checked that the impairment test procedure applied to the 2021 financial
statements was conducted consistently with the procedure approved by the Board of Directors on 21 January
2022 and with the applicable IFRS standards, and structured with various reference documents aimed at
verifying the final results.
After the impairment test process, the goodwill of the Domestic CGU was 4,120 million euros less at
31/12/2021, due to the impairment carried out.
For further details, reference is made to the explanations given in the "Goodwill" Note to the consolidated
financial statements as of 31 December 2021 of the TIM Group.
Following the events occurring after the date of approval of the 2021 financial statements by the Board of
Directors due to the war between Ukraine and Russia, the Board of Statutory Auditors carried out some in-
depth studies with both the Company departments and the Auditor regarding the possible effects on interest
rates, exchange rates, energy costs, and more generally on the economy at large.
16. Remarks on the adequacy of the instructions imparted by the company to its subsidiaries pursuant to
article 114, subsection 2 of legislative decree no. 58/1998
Pursuant to art. 2403 of the Italian Civil Code and art 149 of the CLF, the Board of Statutory Auditors believes
that the instructions imparted by TIM to its subsidiaries, pursuant to art. 114, subsection 2 of the CLF, are
adequate to comply with the disclosure obligations established by the law
■
In this respect it should be noted that the Company regulates the flow of information it receives from its
subsidiary companies on transactions of particular impact, with specific procedures
■ exchanged periodic information with the Boards of Statutory Auditors of the direct subsidiaries and verified
- pursuant to art. 15 of the Consob Market Regulations adopted by resolution no. 20249 of 28 December
2018 (the "Consob Market Regulations") - that the corporate organisation and procedures adopted allow
Tim S.p.A. to ascertain that its subsidiaries of significant importance incorporated and governed by the law
of non-EU countries have an administrative and accounting system suitable for regularly providing the
Company's management and auditor with data on equity and the financial data necessary for the
preparation of the consolidated financial statements. As at 31 December 2021, the subsidiaries of
significant importance incorporated and governed by the law of non-EU countries pursuant to article 15 of
Consob's Market Regulations are: TIM S.A. (telecommunications services - Brazil).
Other information
Report of the Board of Statutory Auditors 434
17. Relations with Supervisory Authorities
In 2021 the Board of Statutory Auditors sent a communication to Consob pursuant to art. 149, subsection 3 of
the CLF regarding certain organisational profiles observed in the administration and control area during the
supervisory activities carried out on the contracts referred to in paragraph 2 above.
In addition, in 2022 the Board of Statutory Auditors responded to a request sent by Consob, pursuant to art.
115 of the CLF, inviting the Board of Statutory Auditors to provide additional information on the content of the
aforementioned communication pursuant to art. 149, subsection 3, of the CLF.
It should be noted, moreover, that the Board of Statutory Auditors was promptly informed by the Company
with regard to the requests for information, data and documents sent by Consob, pursuant to art. 115 of the
CLF, during the year 2021 and that the requests received were promptly answered within the terms set out
and/or agreed.
18. Remarks about any relevant aspects that emerged during the meetings held with the auditors pursuant
to article 150, subsection 2 of legislative decree no. 58/1998
In 2021, the Board of Statutory Auditors held regular meetings with the external auditor (EY) during which data
and significant information was exchanged for the performance of their respective duties.
The Board of Statutory Auditors has analysed the work carried out by the independent auditor, with specific
reference to the approach and auditing strategy for FY 2021 and the definition of the audit plan, the scope of
work, the materiality and the significant risks for 2021. The key audit matters and the related corporate risks
were discussed, and the activities planned by the independent auditor were deemed adequate.
The Board of Statutory Auditors has ascertained, from information obtained from Independent Auditor EY and
from the management of the Company, that the IAS/IFRS principles, and the other legal and regulatory
provisions that apply to the preparation and presentation of the separate financial statements, the
consolidated financial statements and the accompanying report on operations, are complied with.
The exchange of information with the independent auditors covered all the main business processes and their
recognition and representation in the accounts. In this perspective, particular attention was paid to the critical
aspects emerging from the examination of the contracts indicated in paragraph 2, the accounting of the
contractual obligations following the incorporation of FiberCop SpA, the process of measuring revenues related
to contracts that provide for separate performance obligations including activation fees, certain commercial
agreements concerning the sale of goods with deferred delivery and the system of monitoring and matching
the physical and accounting consistency of some categories of fixed assets.
In this context, the Independent Auditor - with whom periodic meetings were held also regarding the
provisions of art. 150 of the CLF in order to exchange mutual information - did not report to the Board of
Statutory Auditors any reprehensible act or event or any irregularity requiring the formulation of specific
notifications pursuant to art. 155 of the CLF.
In compliance with that prescribed by art. 19 of Italian Legislative Decree no. 39/2010, the Board of Statutory
Auditors has verified and monitored the independence of the external auditor, particularly as regards the
provision of services supplied to the Company, other than auditing.
Taking into account the EY declaration of independence (contained in the Additional Report for the Committee
for Internal Control and Audit) and the additional appointments conferred by TIM and the Group companies on
EY and the companies belonging to its network, the Board of Statutory Auditors believes that conditions are
met for attesting to the independence of the independent audit firm EY.
19. Indication of the adherence or otherwise of the company to the corporate governance code of the
committee for the corporate governance of listed companies
The Company's Board of Statutory Auditors performs its functions within a governance framework that
envisages information flows within the company, the architecture of which is constantly evolving in relation to
Tim's organisational changes and which are therefore currently subject to observation, assessment and
monitoring by Internal Audit.
The Board of Statutory Auditors has taken note of the information provided in the Report on Corporate
Governance and Share Ownership approved by the Board of Directors at its meeting on 2 March 2022.
The Company adheres to the new Corporate Governance Code and adhered to the previous Corporate
Governance Code.
The Board of Statutory Auditors took part in the meetings of the Board of Directors and the Board committees
and monitored the procedures for the practical implementation of Tim's corporate governance rules,
contained in the Corporate Governance Code. In this perspective, the Board of Statutory Auditors has also
taken into account the recommendations of the Corporate Governance Code, intervening where appropriate.
In particular, the Board of Statutory Auditors, during the meeting held in the second half of 2021 with the
Chairman of the Board of Directors and the Chief Executive Officer - a meeting that it intends to hold on a
regular basis in the future - pointed out to them the need to: assure that members of the company bodies are
provided with the pre-meeting information sufficiently in advance; are provided with self-explanatory material
on the topics to be examined and discussed, organised so as to be functional to the objectives; organise board
meetings in a manner functional to the relevance of the single items to be examined; direct individual
contributions in an orderly manner; develop a model that facilitates Directors’ contributions and discussions
aimed at challenging the proposals of the executive directors, all these aspects showing margins for
improvement.
Other information
Report of the Board of Statutory Auditors 435
At the same time, the Board of Statutory Auditors acknowledges that TIM has adopted the criteria of the
Corporate Governance Code for the classification of Directors as independent. Based on the elements made
available by the interested parties pursuant to the Code and as per Consob Issuers' Regulations, or in any case
available to the Company, the assessment of the requirements was carried out during the first Board meeting
following the appointment, and subsequently, most recently on 14 February 2022. Of the current 15 Directors
in office, 10 meet the independence requirements: Directors De Meo, Bonomo, Moretti, Romagnoli, Falcone,
Sapienza, Ferro Luzzi, Camagni, Carli and Boccardelli.
On 16 February 2022, the Board of Statutory Auditors checked that the criteria and ascertainment procedures
adopted by the Board of Directors to assess the independence of its members were correctly applied, deeming
that the procedure had been implemented correctly.
The point of reference and coordination for the issues and contributions of the independent Directors and the
non-executive Directors in general is the Lead Independent Director, a role held by Paola Sapienza.
The Lead Independent Director is granted the right to use corporate structures to perform the tasks entrusted
to him and to convene special meetings of the Independent Directors to discuss issues regarding the
functioning of the Board of Directors or the management of the business.
On 16 February 2022, the Board of Statutory Auditors also checked that the requirements of integrity,
professionalism and independence were met by each Auditor, in accordance with art. 148, subsection 3 of the
CLF and the Corporate Governance Code. At the same time, it takes note of the adequacy of its composition,
also given the diversity in terms of skills, competence and experience as well as gender, which ensured an
adequate functioning of the body.
See TIM’s 2021 Report on the corporate governance and share ownership for further information on the
Corporate Governance of the Company, which the Board of Statutory Auditors evaluates positively.
20. Conclusive assessments of the supervisory activity carried out and of any omissions, misconduct or
irregularities noted during the course of this activity
The supervisory and control activities carried out by the Board of Statutory Auditors, with the exception of the
matters described in the preceding sections of this report, did not bring to light any reprehensible facts,
omissions or irregularities, nor did the Board of Statutory Auditors or the Supervisory Board receive any
indications of reprehensible facts or irregularities to be mentioned in the Report to the Shareholders' Meeting.
21. Further activities of the Board of Statutory Auditors
In carrying out its duties, the Board of Statutory Auditors has monitored, as required by Article 149 of the CLF:
■ compliance with the law and the Articles of association;
■ compliance with the principles of correct administration;
■
the procedures for the practical implementation of the corporate governance rules laid down in the codes
of conduct with which the Company, by means of public disclosures, has declared that it complies.
It should also be noted that the Directors' Report on operations includes a paragraph describing the main
features of the existing internal control and risk management system in relation to the financial reporting
process, including consolidated reporting.
The Board of Statutory Auditors takes note that:
■
■
■
the Directors' Report on operations complies with current legislation, is consistent with the resolutions
passed by the Board of Directors and the results of the financial statements, and provides adequate
information on the Company's operations during the year and on intra-group transactions. The section
containing information on Related Party transactions has been included, in compliance with IFRS
standards, in the notes to the financial statements;
the Notes comply with current legislation, indicating the criteria applied in valuing items in the financial
statements and making adjustments, and the Company's separate and consolidated financial statements
have been prepared in accordance with the structure and format required by current legislation. In
application of Consob regulations, the financial statements expressly indicate the effects of related party
transactions on equity and the financial position, the income statement and cash flows;
the Boards of Directors of the main subsidiaries include directors and/or managers of the Parent Company
who guarantee coordinated management and an adequate flow of information, also supported by suitable
accounting information.
Furthermore, it should be noted that the Board of Statutory Auditors:
■ obtained from the Directors, at least on a quarterly basis, information on the activities carried out and on
the most significant strategic, economic, financial and equity operations undertaken by the Company. The
Board of Statutory Auditors - without prejudice to the content of paragraph 2 concerning some company
transactions approved and/or carried out in 2021 - based on the available information, can reasonably
assure that the additional transactions approved and carried out in the period under review comply with
the law and the Bylaws and are not clearly imprudent, or risky, or in conflict of interest, or in contrast with
the resolutions passed by the Shareholders' Meeting, or such as to compromise the integrity of the
corporate assets;
■
received from the Supervisory Body, which the Standing Auditor Anna Doro is a member of, information on
the results of its control activities, from which it emerges that no anomalies or reprehensible events
violating the Organisational Model 231/2001 were found;
Other information
Report of the Board of Statutory Auditors 436
■ held periodic meetings with representatives of the Independent Auditors in order to exchange data and
information relevant to the performance of their duties, as required by art. 150, subsection 3 of the CLF. In
this regard, it should be noted that no significant data or information emerged that should be reported
herein;
■ obtained information from the corresponding bodies of the main subsidiaries with regard to management
and control systems and the general performance of company activities (pursuant to subsections 1 and 2
of art. 151 of the CLF).
22. Report of any proposals to be brought to the attention of the shareholders’ meeting pursuant to article
153, subsection 2 of legislative decree no. 58/98
Having acknowledged the Company's 2021 financial statements, having taken into account all of the above,
having considered the content of the reports drawn up by the Auditor, having acknowledged the certifications
issued jointly by the Chief Executive Officer and Executive responsible for preparing the corporate accounting
documents, the Board of Statutory Auditors, within its remit, finds no reasons to object to the proposal to
approve the Company's separate financial statements as at 31 December 2021 and the proposals formulated
by the Board of Directors, as set out in the Directors’ Report on operations and available at the Internet
address: www.gruppotim.it -
The Board of Statutory Auditors has acknowledged that the Shareholders' Meeting has been convened, in
connection with the COVID-19 epidemiological emergency, with procedures consistent with the exceptional
rules contained in Decree Law no. 18 of 17 March 2020.
Milan, 16 March 2022
For the Board of Statutory Auditors
The Chairman
Francesco Fallacara
Other information
Report of the Board of Statutory Auditors 437
MOTIONS FOR RESOLUTIONS
Shareholders’ meeting of TIM S.p.A.
April, 7 2022: shareholders’ meeting of TIM S.p.A. – single call
Medium
■ Financial statements as at 31 December 2021 – Approval of the financial statements documentation –
Coverage of the operating loss
■ Report on the remuneration policy and compensation paid - Approval of the first section (remuneration
policy) - Non-binding vote on the second section (2021 final balance)
■ Determinations following the termination of office of a Director - Appointment of a Director
■ 2022-2024 Stock Options Plan - Granting of options to employees, related and consequent resolutions
■ 2022-2024 Stock Option Plan - Issue of shares to service the initiative, amendment to Article 5 of the
Company Bylaws, related and consequent resolutions
■ Use of reserves to cover the loss for the year - permanent reduction excluding the obligation of subsequent
reinstatement
Financial statements as at 31 December 2021 – Approval of the
financial statements documentation – Coverage of the
operating loss
Dear Shareholders,
The 2021 draft financial statements submitted for the approval of the Shareholders’ Meeting show a net loss of
8,314,007,998 euros. The reasons for this result are described in the report on operations, to which reference
should be made.
Upon approval of the financial statements, the proposal is for the loss for the year to be covered by full use of
retained earnings (amounting to 7,357,247,766 euros) and withdrawals from reserves for the amount of
956,760,232 euros, as described below.
In view of the above, the Board of Directors submits for your approval the following:
The Shareholders’ Meeting of TIM S.p.A.,
(2) having examined the annual financial report of TIM S.p.A.;
(3) having taken note of the reports by the Board of Statutory Auditors and the independent auditors EY
S.p.A.;
resolved
■
■
to approve the 2021 financial statements of TIM S.p.A...
to cover the loss for the year of TIM S.p.A. (equal to 8,314,007,998 euros)
■
■
for 7,357,247,766 euros by withdrawal from retained earnings
for 956,760,232 euros through use of the Merger Surplus Reserve.
Report on the remuneration policy and compensation paid -
Approval of the first section (remuneration policy) - Non-
binding vote on the second section (2021 final balance)
Dear Shareholders,
the report on the remuneration policy for financial year 2022 and the remuneration paid in financial year 2021
was prepared on the basis of the applicable regulatory framework.
This document is divided into two sections:
■
■
the first illustrates the Company's policy on the remuneration of Directors, Statutory Auditors and Key
Managers with Strategic Responsibilities, and is subject to a binding resolution of the Shareholders'
Meeting, with the possibility of derogation in the event of exceptional circumstances, within the limits and
under the procedural conditions specified in the same document;
the second presents the items that make up the remuneration of the persons mentioned above, with an
analytical illustration of the 2021 remuneration; indicates how the Company considered the Shareholders'
Other information
Proposed Resolutions 438
vote of 31 March 2021 and is subject to a non-binding resolution of the Shareholders' Meeting in favour or
against.
All that said, you are called upon to express your views separately on the first and second sections of the
report, as described above. For this purpose, the Board of Directors submits the following proposals for your
approval:
Proposal 1: approval of the first section of the report on the remuneration policy and compensation paid
The Shareholders' Meeting of TIM S.p.A., having regard to applicable regulations,
resolved
the approval of the first section of the report on the remuneration policy and compensation paid by the
Company.
Proposal 2: non-binding vote on the second section of the report on the remuneration policy and
compensation paid
The Shareholders' Meeting of TIM S.p.A., having regard to applicable regulations,
resolved
in favour of the second section of the report on the remuneration policy and compensation paid by the
Company.
Determinations following the termination of office of a Director
- Appointment of a Director
Dear Shareholders,
Following the resignation of Luigi Gubitosi on 17 December 2021, the Board of Directors, at its meeting on 21
January 2022, co-opted Pietro Labriola, who will remain in office as a Director until the next Shareholders’
Meeting.
Since the slate voting mechanism does not apply to this case, as the Bylaws only require it for the renewal of
the entire board, we propose that you appoint the aforementioned Pietro Labriola (whose the curriculum vitae
is available on the Company’s website) as a Director of TIM for the remaining duration of the term of office of
the serving Board of Directors and therefore until approval of the financial statements for the year ending on
31 December 2023.
In view of the above, the Board of Directors submits for your approval the followingl’Assemblea di TIM S.p.A.,
The Shareholders’ Meeting of TIM S.p.A.,
■ given that Luigi Gubitosi’s has ceased to hold office as a Director (and the removal from office of Pietro
Labriola, who had already been co-opted by the Board of Directors to replace Luigi Gubitosi);
■ considering that the term of office of the current Board of Directors will expire with approval of the
financial statements as at 31 December 2023 (as per the Shareholders' Meeting resolution of 31 March
2021),
to appoint Pietro Labriola as Director of the Company expiring together with the Directors in office and
therefore until the approval of the financial statements at 31 December 2023.
resolved
2022-2024 Stock Options Plan - Granting of options to
employees, related and consequent resolutions
Dear Shareholders,
Pursuant to art. 114-bis of Legislative Decree 58 of 24 February 1998 (the “CLF”), the Board of Directors submits
for your approval a new remuneration tool for management, introduced into the company remuneration
policy as illustrated in the first section of the corresponding report, which is also submitted to the Shareholders’
Meeting for review.
The 2022-24 stock options plan (the "Plan") is for a part of the Group's management (including the CEO and
key managers of TIM), as identified, at its discretion, by the Board of Directors of TIM S.p.A. (the "Company") in
due course. The aim of the initiative is to focus management, with organisational positions that are decisive for
the company’s business or in any case deemed worthy of incentive and retention on the basis of management
considerations, on increasing the value of the share by assigning options (the "Options") to subscribe to or
purchase TIM ordinary shares at a price of 0.424 euros per share (the "Strike Price").
While you are invited to refer for further details to the information document drawn up according to the chart
of Issuer Regulations (adopted by Consob with resolution no. 11971 of 14 May 1999 and as subsequently
amended), the essential terms and conditions of the Plan are summarized below, whose regulations will be
defined by the Board of Directors, upon the proposal of the Nomination and Remuneration Committee, in
compliance with the terms described in the information document (the “Plan Regulations”).
The Plan will concern a maximum of 257,763,000 Options, free of charge and non-transferable, which will grant
beneficiaries, at the end of the vesting period, the right to subscribe or purchase an equal number of ordinary
TIM shares at the Strike Price of 0.424 euros, an amount corresponding to the weighted average of the official
listing price of the Company's ordinary and savings shares on the electronic stock market organised and
managed by Borsa Italiana S.p.A. in the quarter December 2021-February 2022. The number of exercisable
Other information
Proposed Resolutions 439
Options will depend on achievement of the performance parameters, identified in (i) the cumulative reported
EBITDA-CAPEX indicator over the period 2022-2024 (weight: 70%); (ii) in the percentage of women in positions
of responsibility at the end of 2024 (weight: 15%); (iii) in the ratio between renewable electricity and electricity
consumed in the 2024 financial year (weight: 15%), resulting from the targets included in the TIM 2022-2024
business plan. If the minimum threshold of each indicator should not be reached, the Options linked to it will
lapse; where this threshold is exceeded, the number of exercisable Options will vary according to the level of
performance, up to a maximum of 110% of the Options corresponding to the target.
The Board of Directors will allocate 24,000,000 Options (target allocation) to the CEO and will include, at its
discretion, the remaining beneficiaries in three different incentive tiers, related to the contribution and impact
of the role held on the company's strategic objectives. Each tier corresponds to a different number of Target
Options:
■ 6,250,000 Options for first-tier beneficiaries;
■ 3,125,000 Options for second-tier beneficiaries;
■ 520,000 Options for third-tier beneficiaries,
subject to ratione temporis reproportioning in the event of assignment after 31 August 2022 and subject to an
absolute benefit limit (in terms of potential capital gain), with a possible reduction in the number of Options,
defined when ascertaining the performance level achieved.
The Options may be exercised for two years from the date on which their maturity is ascertained (by the Board
of Directors when the 2024 financial statements are approved), without prejudice to the suspension periods
established in Plan Regulations; at the end of the exercise period, unused subscription/purchase rights shall
lapse without compensation. The Options shall also lapse without any compensation upon termination of the
grantee's employment with TIM, its subsidiaries and/or Successor Companies (meaning any company which is
the beneficiary of a demerger of TIM or the transferee of a TIM business unit and its subsidiaries) during the
vesting period (i.e. until 31 December 2024). Exceptions are cases of premature death of the beneficiary (with
the Options exercisable by the heirs) or interruption of the relationship due to (i) retirement; (ii) termination by
mutual consent; (iii) total and permanent disability, provided that the interrupting event occurs after 1 January
of the year following the assignment. In these cases, the Options will mature (without acceleration of vesting)
in a number reduced in proportion to the period elapsed since the allocation date.
In the event of extraordinary transactions involving the Company, as well as extraordinary situations not
envisaged in the Plan Regulations, the Board of Directors shall have the power to make the amendments and
additions to the Plan it deems necessary and/or appropriate to keep the essential contents of the Plan (in
substantial and economic terms) as unchanged as possible, in compliance with the objectives and purposes
pursued by the Plan.
The Plan does not benefit from the support of the special Fund to provide incentives for the employees'
shareholdings in the enterprises.
Following the exercising of the vested Options, upon payment of the Strike Price (for which no funding or other
advantages are envisaged by the Company) beneficiaries will receive ordinary TIM shares with regular dividend
entitlement, free of any restrictions on availability. To service the Plan, a maximum of 257,763,000 newly
issued ordinary shares will be issued, for a maximum dilutive effect of 1.19% with respect to total capital and
1.65% with respect to solely the ordinary shares as at 31 December 2021. Where judged appropriate by the
Board of Directors, the Options may be fulfilled through the use of treasury shares in the Company's portfolio.
The Board of Directors therefore also asks the Shareholders’ Meeting for authorisation to make the
aforementioned treasury shares available.
The Board of Directors invites you to refer to the information document for an analytical explanation of the
initiative, and submits for your approval the following proposal
The Shareholders’ Meeting of TIM S.p.A.,
■ having examined the explanatory report of the Board of Directors,
■ having examined the information document made available to the public in accordance with the
applicable regulations,
resolved
■
■
to approve the 2022-2024 Stock Options Plan, under the general terms described above and detailed in the
information document published in accordance with the applicable regulations;
to grant the Board of Directors all the powers necessary or appropriate (i) to define Plan regulations and
any other documentation accompanying the same, (ii) to implement the Plan itself, proceeding with any
activity needed to comply with the regulations in force at the time, (iii) to make any amendments and/or
additions needed to the Plan, its regulations and any other documentation, with authorisation to carry out
acts to dispose of the ordinary treasury shares held from time to time in the Company portfolio.
2022-2024 Stock Option Plan - Issue of shares to service the
initiative, amendment to Article 5 of the Company Bylaws,
related and consequent resolutions
Dear Shareholders,
the 2022-2024 Stock Options Plan (the "Plan") was submitted to the Shareholders' Meeting in the ordinary
session; for its characteristics, please refer to the information document.
Other information
Proposed Resolutions 440
To service the Plan, it is proposed to issue a maximum number of 257,763,000 new ordinary shares without
nominal value, regular entitlement, with the exclusion of option rights pursuant to Article 2441, paragraph 8, of
the Italian Civil Code, to be reserved for employees of the Company or of companies controlled by it, who are
beneficiaries of the Plan.
The issue of the new shares, which will take place during the exercise period (as defined in the information
document) in relation to the number of options actually exercised by the individual beneficiaries, may involve a
capital increase for a maximum amount of 109,291,512 euros.
In the event of the issue of new shares in the maximum number stated above, the dilution effect on TIM's
share capital as at 31 December 2021 would be 1.19% and 1.65% with respect to the ordinary share component
only.
It should be noted that a shareholder who does not participate in the approval of the share issue resolution
does not have the right of withdrawal. This resolution entails the introduction of a specific paragraph in Article
5 of the Bylaws, following the current text, which remains unchanged.
In view of the above, the Board of Directors submits for your approval the following:
The Shareholders’ Meeting of TIM S.p.A.,
■ given the approval of the 2022-2024 Stock Options Plan;
■ having examined the Board of Directors' explanatory report and the information document relating to the
2022-2024 Stock Options Plan;
■ given the statement by the Board of Statutory Auditors that the current share capital has been fully paid
in;
resolved
■
■
■
to issue a maximum of 257,763,000 ordinary shares without nominal value by the deadline of 30 June
2025, in several tranches with the same characteristics as the ordinary shares in circulation at the time,
regular dividend rights, with the exclusion of option rights pursuant to Article 2441, subsection 8, of the
Italian Civil Code, at the subscription price of 0.424 euros per share - fully allocated to share capital and
thus to approve the capital increase, in tranches, for a maximum amount of 109,291,512 euros - to be
reserved for Company employees or those of its subsidiaries who are beneficiaries of the 2022-2024 Stock
Options Plan, under the terms, conditions and procedures set forth in its regulations;
to grant the Board of Directors all the powers necessary or appropriate to execute the individual tranches
of the share issue referred to in the preceding point and therefore, up to a maximum amount of
109,291,512 euros, subject to the terms, conditions and procedures laid down in the regulations;
to amend Article 5 of the Bylaws by introducing the following paragraph to follow the current text:
"Once the 2022-2024 Stock Options Plan had been approved and in service thereof, the Shareholders'
Meeting of 7 April 2022 resolved to issue a maximum of 257,763,000 new ordinary shares without nominal
value in one or more tranches, by the deadline of 30 June 2025; at a unit price of 0.424 euros per share,
fully allocated to share capital (and so by means of a capital increase, in tranches, for a maximum amount
of 109,291,512 euros), with the same characteristics as the ordinary shares in circulation at the time,
regular dividend rights, with the exclusion of option rights pursuant to Article 2441, subsection 8, of the
Italian Civil Code, to be reserved for the beneficiaries of the 2022-2024 Stock Options Plan, in accordance
with the terms, conditions and procedures provided for in its regulations";
•
to confer on the Board of Directors – and on behalf thereof on the pro tempore legal representatives of the
Company, jointly or severally – all the powers necessary to:
•
to make the changes on a case by case basis to article 5 of the company Bylaws that are consequent
on the execution and completion of the share issue as approved above, and to that end to fulfil all
the obligations and publish all information required by the regulations;
•
to complete all the necessary formalities for the adopted resolutions to be entered in the Business
Register, accepting and introducing into said resolutions the amendments, additions or deletions of a
non-substantial nature that might be requested by the competent authorities, as well as all the
powers necessary for legal and regulatory compliance deriving from the resolutions adopted.
Use of reserves to cover the loss for the year - permanent
reduction excluding the obligation of subsequent
reinstatement
Dear Shareholders,
the Ordinary Shareholders' Meeting was asked to cover the loss for year 2021 by using retained earnings and
the merger surplus reserve for a total of 8,314,007,998 euros, equity items already subject to a tax suspension
restriction, as a result of the tax realignment of the goodwill value pursuant to Article 110, subsection 8 of
Decree-Law No. 104/2020, recognised in the financial statements as at 31 December 2020.
For all intents and purposes, the proposal is that the reduction to the reserves by withdrawal of the above
mentioned amount should be regarded as final, excluding any obligation for subsequent replenishment from
future profits. On this point, the Shareholders are called on to resolve in an extraordinary session, pursuant to
Article 13, subsection 2 of Law No. 342 of 21 November 2000, to the extent applicable.
In view of the above, the Board of Directors submits for your approval the following:
Other information
Proposed Resolutions 441
The Shareholders’ Meeting of TIM S.p.A.,
■ having regard to the resolution to cover the loss for financial year 2021 through the use of retained
earnings and other tax-suspension reserves for a total of 8,314,007,998 euros;
the permanent reduction of the corresponding equity items, excluding their subsequent reconstitution.
resolved
Other information
Proposed Resolutions 442
GLOSSARY
The following explanations are not intended as strict definitions, but to assist readers to understand certain
terms as used in this Annual Report.
2G (second-generation Mobile System)
Second-generation mobile systems using digital encoding and including GSM, D-AMPS (TDMA) and CDMA. 2G
networks are in current use all over Europe and other parts of the world. These systems support voice and
limited data communications, as well as auxiliary services such as fax and SMS.
3G (third-generation Mobile System)
Third-generation wireless system, designed to provide high data speeds, always-on data access, and greater
voice capacity. 3G networks allow the transfer of both traditional communication services (telephony,
messaging) and data (such as downloading Internet information, exchanging email, and instant messaging).
The high data speeds, measured in Mbps, are significantly higher than 2G. 3G networks technology enable
mobile video, high-speed Internet access. The standards of the 3G technology include UMTS, based on
WCDMA technology (quite often the two terms are often used interchangeably) and CDMA2000.
3GSO (Third Generation Switch Off)
Activity aimed at switching off 3G already implemented by various operators around the world. TIM will
execute it in 2022. The frequencies used can be made available to newer systems such as 5G to ensure greater
coverage and capacity while respecting electromagnetic limits.
4G (fourth-generation Mobile System)
Fourth-generation systems are designed to provide, in addition to legacy services, mobile broadband Internet
access to several kinds of devices such as laptops with wireless modems, smartphones, tablets, and other
mobile devices. Current and future applications include mobile web access, IP telephony, gaming services,
high-definition mobile video, video conferencing, Internet of Things and cloud computing applications. 4G
standards include LTE e LTE-A (LTE-Advanced). LTE offers a higher spectral efficiency in bits per Hertz and
download bandwidth up to 150 Mbit/s per cell reducing the latency time. LTE enables services that require high
interactivity (e.g. gaming, video conferencing). A further development of LTE, called “LTE Advanced,” is being
implemented and will allow reaching even higher bitrates in download.
5G (fifth-generation Mobile System)
The term 5G indicates the set of technologies whose standards define the fifth generation of mobile telephony
with a significant evolution compared to 4G / IMT-Advanced technology. Its global distribution started in 2019.
The main elements of the 5G network are:
▪ Gbit-rate significantly higher than 4G in larger spectrum bandwidth (up to tens of Gbit/s over hundreds of
MHz) to ensure greater quality of service, for innovative services such as video download and live
streaming;
▪ ultra-low latency in the order of milliseconds;
▪
possibility of connecting simultaneously hundreds of thousands of objects (Internet of Things): wearable
technologies, automatic systems for traffic control, assisted driving for vehicles, home automation;
ability to connect moving vehicles at higher speeds.
▪
5G NR (5G New Radio)
It is the new 5G Radio Access Technology (RAT). See 5G SA and NSA.
5G NSA
The non-standalone (NSA) mode refers to a 5G deployment option where NR works in cooperation with an LTE
access.
5G SA
The standalone (SA) mode refers to a 5G deployment option based only on one 5G RAT (i.e. NR or LTE) without
cooperation with another RAT), connected to a 5G Core Network.
Other information
Glossary 443
ADS (American Depositary Shares)/ ADR (American Depositary Receipt)
Instruments used for the listing on the NYSE (The New York Stock Exchange).
ADSL (Asymmetric Digital Subscriber Line)
Technology that transforms through a modem the traditional copper fixed line into a high-speed digital
connection for the transfer of multimedia data. ADSL is an asymmetrical technology used to achieve
broadband transmission.
Agile
In software engineering, the expression Agile (or agile software development) refers to a set of software
development methods that are opposed to traditional models such as cascade models (e.g. waterfall model);
Agile methods propose a less structured approach focused on the objective of delivering to the customer
quickly and frequently software that is functional and with best quality. Among the practices promoted by
agile methods, today in general referred to the Project Management of products (not exclusively software),
there are: the setup of small, poly-functional and self-organized development teams, iterative and incremental
development, adaptive planning, and the direct and continuous involvement of the customer in the product
development process.
AI (Artificial Intelligence)
Ability of a technological system to solve problems and carry out tasks and activities typical of the mind and
human behavior. In the computer science field, it is the discipline that deals with creating machines (hardware
and software) able to "act" autonomously (solve problems, perform actions, etc.).
AON (Active Optical Network)
Optical distribution network based on active equipment. Used for the first optical networks in the 2000s and
then replaced by PON.
API (Application Programming Interface)
An API is a set of procedures used to interact with other programs and expand their functionalities. APIs are
software libraries available for a given programming language that extend some functionality of the platforms
making them interoperable and open to different implementations.
ATM (Asynchronous Transfer Mode)
A network protocol through which the transfer of data is achieved using the encapsulation of fixed length (53
bytes) data units, called cells, instead of variable-length packets as is the case in packet-switched networks.
Automation
This term identifies technologies for automated equipment, systems and processes automation, reducing the
need for human intervention and simplifying network setup and maintenance activities.
Backbone
Portion of the telecommunication network that supports long-distance connections and aggregates large
amount of traffic and from which the connections for serving specific local areas depart.
Backhauling
It refers to the interface between the radio access node and the core network.
Big Data
Big data is a term used to describe the set of technologies and methods for massive data analysis. The term
indicates the ability to extrapolate, analyze and relate a huge amount of heterogeneous, structured and
unstructured data, to discover the links between different phenomena and predict the future ones.
Bit-stream access
Wholesale interconnection services which consist in the supply by a dominant telecommunications operator
(incumbent) of access transmission capacity between an end customer and an interconnection point of
another operator (OLO).
Blockchain
The Blockchain represents an innovative technology for structuring data and information with sharing on the
network; a blockchain system is like a distributed database or virtual register, structured as a chain of blocks
(hence the term blockchain) containing the transactions, and whose validation is entrusted to a consensus
mechanism distributed on all the nodes of the network participating to the chain. The main characteristics of
blockchain are the immutability of the registry, the traceability of transactions and the security based on
advanced cryptographic techniques. Blockchain technologies are currently used to support global supply
chains, financial transactions (e.g. BitCoin), accounting assets and distributed social networks.
BRAS (Broadband Access Server) - BNG (Broadband Network Gateway)
Also named BNG, it is an equipment that handles the access sessions of fixed broadband users. It
authenticates the users, terminates the logical links originated at users’ premises, produces user accounting
data, may apply policies and QoS techniques.
Broadcast
Other information
Glossary 444
Simultaneous transmission of the same information to all nodes and terminal equipment of a network.
BSC (Base Station Controller)
Control node of the 2G radio access network and interface with the MSC switching node. It has the task of
supervising and controlling radio resources, for both call or data setup and maintenance.
BSS (Business Support System)
The system used by network operators to manage business operations such as billing, sales management,
customer-service management and customer databases.
BTS (Base Transceiver Station)
Radio base station transmitting and receiving the GSM radio signal to cover an area , split in one or more cells)
by using one or more radio transceivers (TRX). BTS performs also GSM communications ciphering/deciphering.
Bundle
Commercial offer including multiple telecommunications services (voice, broadband internet, IPTV, other) by
an operator under the same commercial brand. Dual Play bundle includes fixed telecommunication services
and broadband Internet; Triple Play bundle is the “dual play bundle” integrated with IPTV; Quadruple Play
bundle is the “bundle triple play” integrated with mobile telecommunication services.
Bypass
Opposite of COLT; these are Central Offices that don’t contain active equipments for NGA customers; in long
term plans will be released, not before migrating all legacy services.
CaaS (Container as a service)
Through a Cloud CaaS (Container as a Service) offer, a consumer acquires in a flexible and dynamic way from a
Cloud Provider an environment typically based on Kubernetes technology in which it is possible to execute
containers. The CaaS environment will manage the life cycle of the container and the related scaling-up and
upgrade needs in line with the shared policies
Caching
Web contents caching (videos, HTML pages, images, etc.) is a technology that allows to reduce bandwidth
usage and content access time. A cache stores copies of documents requested by users in location closer to
the users than the originating sites, so that subsequent requests can be satisfied by the cache itself, under
appropriate conditions.
Carrier
Telecommunication services operator, providing a transport of communication services by means of its
physical telecommunication network.
Carrier Aggregation
Technology used to aggregate more radio carriers to increase the transmission speed over a wireless network.
CCA (Current Cost Accounting)
A method of accounting that values assets at their current replacement cost rather than their original cost.
CDMA (Code Division Multiple Access)
CDMA is a channel multiple access method used in radio communication. First radio systems based on CDMA
were developed by Qualcomm, and commercially introduced in 1995. It enables the simultaneous transmission
on the same channel of multiple signals, each of which is uniquely coded to distinguish it from the other
messages.
CDN (Content Delivery Network)
Content Delivery Networks), are content distribution systems (especially large multimedia contents, such as
IPTV) managed by a Service Provider for the provision of audio streaming services and video, with better
quality towards customers.
CDP (Carbon Disclosure Project)
International initiative that encourages companies to focus on the management of the risks and opportunities
emerging from climate change.
Cell
Geographical portion of territory illuminated by a radio base station.
Central Office
A building where the copper wires or optical fibers that make up the access network, reaching the customers,
originate from. It hosts equipment for telephony services (‘Stadio di Linea’ in TIM terms), broadband services
(DSLAM) and possibly ultrabroadband services (OLT). Some COs also host equipment of higher hierarchical
rank (SGU for telephony, router for data services), and those COs also collect traffic from the other COs which
are not so equipped.
Central Unit (CU)
It is a logical node hosting PDCP, RRC and SDAP protocol layers and other control functions based on a higher
layer functional split.
Channel
Other information
Glossary 445
The portion of a communications system that connects a source to one or more destinations by means of
transmission media and optical, electric, electromagnetic signals.
Closed User Group
Group of customers who can make and receive calls or messages within the group at special conditions
(restricted access, dedicated pricing).
Cloud
The term Cloud is used as an abbreviation of the concept of "Cloud Computing, i.e. a model of consumption of
processing resources (for example networks, servers, memory, applications and services) through the network;
with the Cloud, the end customer, otherwise defined as cloud consumer, is allowed to access, widespread,
easy and on-demand to a shared and configurable set of resources that can be quickly acquired and released
with minimal management or interactions with the service provider. The Cloud model is made up of five
essential features: 1) Self Service on customer request, 2) broad-network access, 3) resource sharing, 4)
elasticity/automation in resource demand, 5) certified SLAs, three service models (see also SaaS, PaaS and
IaaS) and four distribution/deployment models (private, public, hybrid and communities).
Cloud Continuum
A cloud composed by a set of point of presence spanning from central to edge locations working as a single
cloud.
Cloud native
Cloud native refers to an approach to build applications in a way that allows the full exploitation of the cloud
paradigm (see Cloud).
CNF (Cloud Native Function)
Virtualized network functionality on COTS (Commercial Off The Shelf) HW, hosted on Telco Data Center or
Public Cloud, flexible and dynamic capacity, use of Containers and Micro Services, automated LCM.
Cogeneration
Cogeneration is the combined production of electrical (or mechanical) energy and useful heat from the same
primary source. By using the same fuel for two different purposes, cogeneration aims at a more efficient use of
primary energy, with associated cost savings especially in production processes where there is a strong overlap
between the use of electricity and heating.
Cognitive Computing
Advanced artificial intelligence system in which the machines have part of the typical functions of a human
brain. Cognitive computing technologies are able to process enormous amounts of information, learn
autonomously, interact in human language and reproduce human thought models.
COLT (Central Office Long Term)
It refers to Central Offices that remain also for long term plans, connecting NGA customers with Fiber Optic.
Community
A group of people who have some interests in common and communicate via Internet (i.e. via social network).
Connected Cars
A connected car is a vehicle with an internet access and sensors for sending and receiving signals, perceiving
the surrounding environment and to get in touch with other vehicles and services.
Co-siting
Agreements to share technological sites (for Telecommunications, specifically, sites of access to the network
and passive infrastructure) by several operators in order to achieve a more efficient use of network
infrastructure in urban and rural areas.
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Glossary 446
CO2 - Carbon Dioxide
Carbon dioxide is one of the major greenhouse gases. It is linked to industrial processes and is the product of
combustion especially as the result of the use of fossil fuels.
Container
A container is an abstract unit of software that is executable and self-contained, with everything needed to
run an application: code, runtime, tools, and system libraries. Containers have defined parameters and can run
a specific program, workload, or task. Each container that runs is reproducible. Containers allow you to
decouple applications from the infrastructure of the host on which they run. This approach makes it easier to
deploy on different clouds or operating systems.
CPE (Customer Premise Equipment)
The Customer Premise Equipment
for
is an electronic device
telecommunications used on the user's side that is able to connect directly to the geographic transmission
network through appropriate interfaces. The connection between the CPE and the network can be realized on
physical carrier (optical fiber, telephone twisted pair) or on radio (wireless) carrier.
telephone, modem)
(terminal,
CPS (Carrier Pre-selection)
Within the framework of the Equal Access policy guaranteed to all operators, the CPS (Carrier Pre-Selection) is
a feature of the telephone network that allows to permanently specify the call routing to the chosen operator.
This function must be implemented by the access operators in their own plants.
C-RAN
It refers to a Centralized Cloud RAN, a paradigm addressing centralized processing, collaborative radio, real-
time cloud computing, and power efficient infrastructure. It is an architecture that aggregates Base Stations
computational resources into a central pool by enabling improved radio coordination. C-RAN exploits software-
defined networking (SDN) and Network Functions Virtualization (NFV) techniques as well as data center
processing capabilities to enable the separation of the control and data planes and to achieve high flexibility by
allowing network resource sharing in a dynamic way.
Cybersecurity
It deals with the analysis of threats, vulnerabilities and the risk associated to internet-connected systems,
including hardware, software and data, to protect them from the attempt to expose, alter, disable, destroy,
steal or gain unauthorized access or make unauthorized use of an asset.
DAS (Distributed Antenna System)
It is a network of distributed antennas connected to a signal source in order to provide wireless services in a
geographical area or indoor. The Radiofrequency signal is combined and distributed through an antenna
system.
Data Center
The Data Center is the department of a company that hosts and manages back-end IT systems and data
repositories: so, its mainframes, servers, databases, etc. In the past, this type of management and control was
in a single physical place, hence the name of data center. The development of new distributed computing
technologies has inaugurated new management criteria that see more data centers located/distributed at
both a physical and virtual level.
DCC (Digital Contact Center)
It is a set of platforms used to connect customers to most appropriate human and virtual Customer Care
agents, via different channels (voice, web, apps, mail, chat, sms) and to support agents in the interaction with
customers (e.g. Verbal Ordering, Back Office).
DDoS (Distributed Denial of Service)
A distributed denial-of-service (DDoS) is an attack to a target, such as a server, website or other network
resource, and cause a denial of service for users of the targeted resource. A flood of incoming messages,
connection requests or malformed packets to the target system forces it to slow down or even crash and shut
down, thereby denying service to users or systems.
Decommissioning
The term decommissioning means the disposal of the oldest technological solutions (legacy or obsolete) in
order to rationalize and simplify the current Telecommunication networks with the aim of optimizing
investments and improving the quality and time-to-market of services.
DevOps
In computer science, with DevOps (from the English contraction of Development and Operations) we mean an
agile method of software development that aims at communication, collaboration and integration between
developers and operations operators. DevOps
is therefore an approach to the development and
implementation of applications in a company, that has as its objective the release of the product, the testing of
the software, the evolution and maintenance (correction of bugs and minor releases) to increase reliability and
security and speed up development and release cycles.
Digital divide
The gap between people with effective access to digital and information technology and those with very
limited or no access at all. The term encompasses among other things: gaps in ownership of or regular access
to a computer, or internet access due to being located in geographical areas with no broadband connectivity.
Distributed Unit (DU)
Other information
Glossary 447
It is a logical node hosting RLC/MAC/High-PHY protocol layers based on a lower layer functional split.
DLA (Data Layered Architecture)
It is an architecture for real-time management of user data in telecoms networks (such as user profiles, etc.). It
introduces a separation between a logically centralized data storage layer, taking care of data consistency and
availability, and a front-end layer which handles requests coming from network elements.
DNS
The register containing the numeric
IP addresses (for example 123.456.789.0) associated with the
alphanumeric addresses (name.surname@dominio.com) commonly used to identify a website or e-mail
address.
DPI (Deep Packet Inspection)
It is a technology for analysis of live traffic packets which looks ‘deeply’ into packets payload, i.e. up to
application level, rather than just at IP/TCP/UDP headers level. It enables advanced traffic management.
Dsl Network (Digital Subscriber Line Network)
It is a network technology family that provides wide bandwidth digital transmission at short distances, through
the traditional twisted copper pairs from the first switching office to the end user.
DSLAM (Digital Subscriber Line Access Multiplexer)
DSLAM denotes equipment multiplier of digital access lines able to process digital signals of various clients
with xDSL lines and multipliy them in a high rate data link to the nodes of the Internet.
DTT (Digital Terrestrial TV)
Digital Terrestrial Television Broadcasting is a type of broadcasting technology that provides a more effective
way of transmitting television services (in terms of number of channels and images quality) using a digital
system.
DVB-H (Digital Video Broadcasting-Handheld)
DVB-H was a standard for the transmission of digital video optimized for mobile networks and handheld
devices such as smartphones and cellular phones.
DWDM (Dense Wavelength Division Multiplexing)
It is a technology for multiplying and transmitting at the same time optical signals with different wavelengths
in a single optical fiber in order to increase the available amount of bandwidth.
EDGE (Enhanced Data for GSM Evolution)
It is a technology that increases the speed of data transmission of the GPRS the standard from 30-40 Kbit /s to
400 Kbit / s in the best radio transmission condition.
Edge (Network Edge)
It is a segment of the network lying between access and core, wherein service functions are located (such as,
e.g. those performed by BRAS). Depending on the context, it may be quite distributed e.g. to the level of mobile
Base Station, or less distributed e.g. at the edge of the backbone.
Edge cloud.
It refers to a cloud infrastructure deployed at the network edge. An Edge Cloud architecture is used to
decentralize (processing) power to the edges (clients/devices) of the network.
EEB (Energy Efficiency in Buildings)
International initiative promoted by the WBCSD (World Business Council for Sustainable Development) for
research in energy efficiency in buildings in order to reduce the environmental impact and the energy costs.
EFFC (Extraction Full Free Cooling)
A cooling system for the reduction of consumption without the use of greenhouse gases. The EFFC is based on
the principle of free cooling (forced ventilation without the use of air-conditioning), combined with a system to
extract the hot air produced by the apparatus and further cooling (adiabatic) of incoming air obtained by
exploiting a zone with a high concentration of nebulized water.
eMBB (Enhanced Mobile Broadband)
Mobile broadband data service over LTE-A, 5G network
EMF limits (ElectroMagnetic Field limits)
Electromagnetic fields are present everywhere and are generated both by natural sources (thunderstorms,
earth magnetism) and human-made ones such as power lines, TV antennas, mobile base stations, microwave
ovens. They are known to affect human body in ways that depend on their frequency. For radiofrequency
fields, such as those produced by mobile base stations and mobile handsets, the major biological effect is
heating of the body tissues. The current view of scientific community, as outlined by World Health
Organization, is that while exposure to high levels of EMF are harmful to health, there is no evidence that
prolonged exposure to low levels of EMF might be harmful. The definition of what is meant to be a level low
enough to be harmless is left to individual Countries, however guidelines have been defined by the
International Commission on Non-Ionizing Radiation Protection (ICNIRP).
Other information
Glossary 448
Regarding Italy, the exposure limit is 20 V/m. Moreover, in homes, schools, playgrounds and places where
people may stay for longer than 4 hours per day, an 'attention value' of 6 V/m is applied and averaged over
any 24 hour period.
EMS (Environmental Management Systems)
Environmental management systems contribute to the sustainable management of production and support
processes and are a stimulus to the continual improvement of environmental performance as they are tools to
ensure effective management, prevention and the continuous reduction of the environmental impact in work
processes.
eNB (Evolved Node B)
It is the Radio Base Station in 4G technology, which implements LTE radio interface and manages its radio
resources.
EPC (Evolved Packet Core)
It is the core segment of a 4G network. It performs management of user mobility, routing of traffic (which in 4G
is only packet traffic), policy enforcement, production of accounting data, interconnection with IP networks.
EPC NSA (EPC Non Standalone)
Mobile 4G Core Network capable of supporting LTE and New Radio accesses connected in dual connectivity.
EPON (Ethernet PON)
EPON also known as Gigabit Ethernet PON or GEPON, is a type of pure optical fiber that uses a symmetrical
pattern in both downstream and upstream and can reach a maximum of 10 Gigabits per second of
transmission. IEEE standardized solution
EPS (External Power Supplies)
External power supplies of equipment.
eSIM (embedded SIM)
It represents the evolution of the SIM: it is an integrated circuit embedded directly inside a device and
consequently not extractable and not replaceable, but remotely managed through the functionality of the
device itself.
Ethernet
Family of computer networking technologies for local area networks (LANs) and metropolitan area networks
(MANs).
EuP (Energy-using Products)
The Eco-Design Directive for Energy-using Products (2005/32/EC) establishes a regulatory framework that
manufacturers of energy-using products (EuPs) must follow, from the design phase onward, to increase
energy efficiency and reduce the negative environmental impact of products.
Feeder
Carrier class IP routers that perform the function of collecting and concentrating fixed and mobile network
traffic as well as commercial one, originating from a basin of Central Office Areas. The traffic collected by the
Feeders is delivered in double homing to the Metro nodes on physically diversified routes.
FFC – Full Free Cooling
Cooling system based on the use of forced ventilation to reduce energy consumption.
Fronthaul
In the functional split of a Base Station, it refers to the interface between the Remote Unit (RU) and the
Distributed Unit (DU).
FSC (Forest Stewardship Council)
The Forest Stewardship Council is an international non-profit NGO. The FSC represents an internationally
recognized forest certification system. The purpose of certification is correct forest management and
traceability of forestry products. The FSC logo guarantees that a product has been made with raw materials
deriving from forests correctly managed according to the principles of the two main standards: forest
management and chain of custody. FSC certification is an independent, third-party scheme.
FTTx (Fiber To The x)
It is the term used to indicate any network architecture that uses fiber optic cabling in telecommunications
access networks to replace, partially or totally, traditional copper cables. The various technological solutions
differ in the point of the distribution network where the fiber connection is made, with respect to the end-
user’s location. In the case of FTTC (Fiber to the Cabinet) the fiber connection reaches the equipment
(distribution cabinet) located on the sidewalk, from where copper connections are run to the customer; in the
case of FTTB (Fiber to the Building) the fiber arrives at the base of the building to a distribution box from where
the vertical copper connection starts; in the case of FTTH (Fiber to the Home), the fiber connection terminates
inside the customer premises. In the case of FTTO (Fiber to the Office), we mean a solution towards the Office,
while FTTR (Fiber To The Room), we intend to arrive with the fiber in different rooms of the house.
FWA (Fixed Wireless Access)
Other information
Glossary 449
Fixed Wireless Access refers to a set of transmission systems developed to exploit specific frequencies of the
radio spectrum in order to provide fixed broadband connectivity services (with nominal connection speeds
equal to 1 Gbps).
Gateway
An interconnection node between networks. A Gateway node may be used to separate networks belonging to
different Domains or make functionally different networks interwork through protocol interworking.
G-FAST
G.FAST (Fast Access to Subscriber Terminal, group "G" of the ITU-T recommendations) is a DSL standard,
fourth generation on copper, adopted by ITU-T starting from 2014 that allows to reach aggregate Downstream
speeds + Up Stream of about 500 Mbit / s up to 100m and about 800-900 Mbit / s up to 50m.
It is therefore a technology with a speed higher than VDSL2 and eVDSL but, being optimized for very short
distances, it requires the network devices to be positioned even closer to the customer than the cabinets line,
or rather in distribution boxes at or at the base of buildings.
GPRS (General Packet Radio System)
Packet switched system to efficiently transmit data over 2G cellular networks.
GPON (Gigabit capable Passive Optical Network)
A passive optical network (PON) is a network architecture that brings fiber cabling to the customer's home
using a point-to-multipoint scheme, based on passive optical splitters, to serve multiple rooms with a single
optical fiber. GPON is part of a set of PON standards (defined in ITU), which differ according to the maximum
overall speed achievable within each optical shaft, a structure often shared with 64 users. In the case of GPON,
the maximum speed is about 2.5 Gbps downstream and 1.25 Gbps upstream, shared with a predetermined
number of users, which can reach up to 128. Each of the connected lines will then have a maximum nominal
speed set by the operator, for example 1 Gbps in download. The other types of GPON standards are:
▪ XG-PON 10 Gbit/s downstream and 2,5 Gbit/s upstream
▪ XGS-PON maximum speed 10 Gbit/s downstream and 10 Gbit/s upstream
▪ NG PON2 maximum speed 40 Gbit/s downstream and 10 Gbit/s in upstream .
GRX (GPRS Roaming eXchange for Mobile Operators)
The GRX service allows Mobile Operators to globally interconnect GPRS networks around the world enabling
global GPRS roaming coverage.
GRI (Global Reporting Initiative)
The Global Reporting Initiative (GRI) is a leading organization in the field of sustainability. GRI promotes
sustainability reporting as a way for organizations to become more sustainable and contribute to sustainable
development.
GSM (Global System for Mobile Communication)
A worldwide standard for digital cellular telephony working on the 900MHz and 1800MHz bands. It belongs to
the Second Generation (2G) of mobile systems.
HCFC (Hydrochlorofluorocarbons)
Chemical compounds used mainly in cooling systems to replace chlorofluorocarbons (CFCs) which were
banned by the Montreal Protocol. They have a more limited effect in depleting the ozone layer (approximately
10% of the ozone-depleting potential of CFCs).
HCP (Hyperscale Cloud Provider)
Cloud infrastructure provider able to massive scale resources on large number of servers distributed on a
global scale
HFC (Hydrofluorocarbons)
Compounds used in cooling systems. They belong to the family of greenhouse gases. They do not harm the
ozone layer.
HDSL (High-bit-rate Digital Subscriber Line)
Technology of xDSL family, standardized in 1994. It provides up to 8 Mb/s symmetrical over copper.
HLR (Home Location Register)
Database where customer data are recorded. It is part of 2G and 3G systems.
Home Access Gateway – Access Gateway – Home Gateway – Residential Gateway
Home networking device that is used to concentrate voice/data/video traffic of customers for private TLC
networks and to connect devices in the home to the Internet or other WAN.
Hybrid Cloud
A Cloud solution composed by both private and public resources
Housing
Other information
Glossary 450
Leasing of physical space to customers, which is managed within a data center for the installation of their own
equipment or servers.
HSPA (High Speed Packet Access)
Evolution of UMTS, which enables broadband mobile data both in Downstream (HSDPA) and Uplink (HSUPA),
up to 42 Mb/s and 5.76 Mb/s, respectively.
IaaS (Infrastructure as a Service)
Through a Cloud IaaS offer (Infrastructure as a Service, see also Cloud models), a consumer acquires from a
Cloud Provider in a flexible and dynamic way computing, memory, network resources and other fundamental
calculation resources, through which the customer can develop and run arbitrary software, including operating
systems and applications. The consumer does not manage or control the underlying Cloud infrastructure, but
controls operating systems, memory, applications and possibly, in a limited way, some network components
(e.g. firewalls).
ICT (Information and communication(s) technology)
Broad area concerned with information technology, telecommunications networks and services and other
aspects of managing and processing information, especially in large organizations.
IEEE (Institute of Electrical and Electronics Engineers)
An organization of professional scientists aiming at promoting technology science and research in the field of
electrical and electronics engineering and related fields. IEEE also works as a publishing house and
standardization body.
IMS (IP Multimedia Subystem)
It is the architecture for providing IP Multimedia services, i.e. voice/video/text/etc communications over IP
networks. It comprises all the network elements related to signaling and media flow handling.
IMSI (International Mobile Subscriber Identity)
The International Mobile Subscriber Identity is a unique identifier associated with a SIM card in cellular
networks.
Interconnection
Interconnection refers to the physical and logical connection among public telecommunication networks
belonging to different operators, in order to enable users of an operator to communicate with users of the
same or a different operator, or to access services provided by another operator.
Internet
Global network for networks interconnection based on a common protocol suite, i.e. TCP/IP, which is the
language by which connected equipment (hots) are able to communicate.
Other information
Glossary 451
Internet of Things
The Internet of Things refers to the extension of Internet to the world of objects (devices, equipment,
systems,..), which become recognizable and acquire intelligence thanks to the fact that they can communicate
data about themselves and access aggregate information from part of others. There are many fields of
applicability: from industrial applications (production processes), logistics and infomobility, to energy efficiency,
remote assistance and environmental protection.
IP (Internet Protocol)
A connectionless data routing protocol, used for data transmission on both public and private networks, in
particular over the Internet.
IPCC (IP Contact Center)
See DCC.
IP/MPLS (Internet Protocol/Multi Protocol Label Switching)
A packet switching protocol to optimize network behaviors of mapping Layer3 (IP) end-to-end data flow to
Layer2 traffic between adjacent network nodes.
IPTV (Internet Protocol Television)
A system that utilizes the Internet Protocol infrastructure to transmit digital television content over a network
and deliver it via a broadband Internet connection.
ISDN (Integrated Services Digital Network)
A narrowband system in which several services (e.g., voice and data) may be simultaneously transmitted end
to end in digital form.
ISPs (Internet Service Provider)
A vendor who provides access to the Internet and World Wide Web.
ITU (International Telecommunication Union)
An international organization that aims to set telecommunications standards and in the use of radio waves.
Founded in 1865 in Paris, it is one of the specialized agencies of the United Nations and its head office is in
Geneva.
Jitter
In electronics and telecommunications jitter indicates the variation of one or more characteristics of a signal
such as, amplitude, frequency, phase, transmission delay. The causes leading to jitter must be kept at the
center of the design of electronic systems and components in which signal integrity is a strict constraint.
KVAR (kilovolt–amperes reactive)
Measurement system, expressed in kilovolt, of electric current lost in an AC electrical system.
LAN (Local Area Network)
A private network that covers a local geographic area and provides telecommunications services as well as
interconnection between personal computers.
Lambda
Represents the single optical channel on which a signal is transmitted in fiber-optic networks.
Latency
The latency of a system can be defined as the time interval between the time the input arrives to the system
and the time when its output is available. In other words, latency is nothing more than a measure of the speed
of response of a system.
LCA (Life Cycle Analysis)
Analysis methodology for the evaluation and quantification of environmental impacts associated with a
product/process/activity along the entire life cycle from the extraction and acquisition of raw materials to the
end of its life.
LLU (Local Loop Unbundling)
Service by which operators other than TIM can lease the local loop, i.e., the wire connection between the TIM
local exchange and the customer’s premises.
Local Aggregator
Carrier class IP router that perform the function of collecting and concentrating fixed and mobile network
traffic as well as commercial one, for a single Central Office Area. The traffic collected by the Remote Feeders
is delivered in double homing to the Feeder nodes, possibly on physically diversified routes.
Other information
Glossary 452
Local Loop (Twisted Pair)
Twisted pair of copper wires through which the telephone connection reaches users; it is the foundation of
traditional telephone lines and it is often called the “last mile”.
LTE (Long Term Evolution)
See 4G.
Machine Learning
It is the ability of computers to learn without having been explicitly and preventively programmed.
MBB (Mobile Broadband)
Mobile broadband data service on 3G / 4G-LTE network
mMTC (Massive machine type communication)
mMTC, also known as massive machine communication (MMC) or massive Machine to Machine
communication, is a type of communication between huge number of machines over wireless networks where
data generation, information exchange and actuation takes place with minimal or no intervention from
humans.
MEMS (Micro-Electro-Mechanical Systems)
MEMS are miniaturized devices ranging in size from a few micrometers to a few millimeters, which execute
one or more monitoring, processing or actuation functions by deploying a combination of electronic,
mechanical, optical, chemical or biological components integrated on a usually silicon hybrid circuit.
Metro (M)
Carrier class IP routers that perform the function of collecting and concentrating fixed and mobile network
traffic as well as of commercial origin relating to their MAN area.
MGCP (Media Gateway Control Protocol)
An Internet Engineering Task Force (IETF) signaling protocol allowing a bridge between classic telephone
networks and Internet (i.e., IP-based) infrastructures.
MGW (Media GateWay)
Equipment that processes voice and video traffic adapting codings between different technologies (e.g. from
circuit to packet).
Microservices
In the development of modern software applications, when the term micro-services is used, a specific
architectural model for the development of a single application as a suite of small services is indicated; each
micro-service is identified as a specialized processing process (e.g. a web server, a storage application, etc.) and
is able to communicate with fast and lean mechanisms, often based on API interfaces for the description of
HTTP resources. These services provide capabilities for the development of a company's business and are
particularly suitable for the creation of software products according to agile methodologies; each micro-service
can be implemented and managed independently using fully automated implementation algorithms, thus
ensuring maximum flexibility in the development and maintenance of applications.
Midhauling
In the functional split of a Base Station, it refers to the interface between the Distributed Unit (DU) and the
Central Unit (CU).
MIMO (Multiple Input Multiple Output)
It is a set of techniques aimed to increase the overall bitrate of radio access through simultaneous
transmission of two (or more) different data signals on two (or more) colocated antennas, using the same
frequency resources. The receiving side, also equipped with two or more antennas, is able to discriminate the
different data signals by exploiting the differences in time and direction of arrival of the simultaneous signals
that are caused by multipath propagation. Actually, multipath propagation i.e. the fact that a signal from A
reaches a point B via multiple paths due to reflection and scattering from objects (such as buildings, trees) is a
natural phenomenon affecting radio communications, which used to be seen as an impairment. Conversely,
MIMO techniques exploit (using suitable signal coding) this multiplicity of paths to increase capacity.
MSC (Mobile Switching Center)
Executes functions such as controlling calls, switching traffic, billing, controlling and authentication and acts as
an interface with other networks.
Multimedia
A service involving two or more communications media (e.g., voice, video, text, etc.) and hybrid services
created through their interaction.
Other information
Glossary 453
Multicast ABR (Multicast Adaptive Bit Rate)
Technology that encodes the video multicast traffic in different streams at different bitrates, used according to
the channel conditions, allowing to optimize the use experience the use of network resources.
MVNO (Mobile Virtual Network Operator)
MVNO is a mobile communications service provider that does not own the radio spectrum or wireless network
infrastructure over which the MVNO provides services to its customers.
NaaS (Network as a Service)
The term NaaS (Network as a Service) refers to the provision of virtual network services by a Network Provider
to a third party, such as a Service Provider not equipped with geographically networked resources, or a
medium/large customer that requires basic or advanced connectivity resources on a public or shared network
infrastructure. Some examples of services that refer to the NaaS model are VPNs (Virtual Private Networks,
Dynamic Bandwidth Services (BoD, Bandwidth on Demand) and Mobile Network Virtualization. Today, the
spread of NaaS offers is increasingly supported by flexible network virtualization models and the use of
network programming and automation technologies, such as Software Defined Networking (SDN).
Naked
A digital subscriber line without an analog or ISDN telephony service. It is a line dedicated to data services.
NB IoT (NarrowBand Internet of Things)
It is a 3GPP specification enabling the Internet of Things, based on the optimization of narrowband radio access
aimed at the application of LTE technology to sensor networks: few and small messages per day, high
coverage range (e.g. to reach the counters in the basements), very high battery life (target 10 years), high
number of connections per cell (tens of thousands) and very low cost of the modules.
Net Neutrality
Net neutrality is the principle that Internet service providers should treat all data equally and not discriminate
or charge differently based on user, content, website, platform, application, type of equipment, or method of
communication.
Network
An interconnected system of elements. In a telephone network, these consist of switches connected to each
other and to customer equipment. The transmission equipment may be based on fiber optic or metallic cables
or radio connections.
Network cap
See Price cap.
Network Slicing
Network Slicing referred to 5G. Creation of multiple ad hoc logical networks segregated from each other on the
same physical network infrastructure. Each network slice is an isolated end-to-end network tailored to fulfil
different requirements requested by a particular application.
NFV (Network Function Virtualization)
The NFV paradigm allows both fixed and mobile network functions to become software applications, called
VNF (Virtual Network Function), which the operator can instantiate on commercial servers, exploiting
virtualization technologies, separating the link between hardware and software present in the current network
devices.
NGAN (New Generation Access Network)
It can be realized with different technological solutions, typically fiber optic and VDSL pairs.
NGDC (Next Generation Data Center)
A major rethink of the IT and Data Center architecture through the physical concentration and virtualization of
servers to reduce the costs of maintenance/management and energy consumption, and to improve efficiency.
Other information
Glossary 454
NGN (Next Generation Network)
New generation network created by TIM to meet the demands of corporations, public administrations and
citizens. The new network architecture guarantees an infrastructure designed to cover multiple offers by
increasing customization levels and bandwidth availability, removing bandwidth limits and providing a huge
capacity along with a wide selection of access systems.
NGNs (Non-Geographic Numbers)
Non-geographic numbers are unique as they are by definition not associated with any particular geographic
location (e.g. premium rate services, toll free, directory assistance services).
Node
Topological network junction, commonly a switching center or station.
Node B (similar to BTS in GSM)
This is the Radio Base Station in UMTS technology which, via an antenna, sends the UMTS radio signal that
creates cell coverage (typically 3 cells for Node B). It also performs functions that are strictly linked to
managing the radio connection.
Nodal Optical Center- (Centro Nodale Ottico, CNO)
It is the point of flexibility in the PON architecture and separates the primary optical network from the
secondary optical network. The CNO houses the optical divider and the splitters connected to the passive fiber
optic network.
N-play offering
Offerings to customers which bundle two or more of the following mobile and fixed services: voice, broadband
and ultrabroadband data, video and TV, mobile.
NYSE
The New York Stock Exchange.
OAO (Other Authorised Operator)
Operators other than the incumbent one that provide services to their customers exploiting the fixed access
network of the incumbent.
ODF (Optical Distribution Frame)
ODF is a frame used to provide cable interconnections between communication facilities, which can integrate
fiber splicing, fiber termination, fiber optic adapters & connectors and cable connections together in a single
unit.
OHSAS (Occupational Health and Safety Assessment Series)
International Standard that sets the requirements that a management system for the protection of workers’
health and safety must meet.
OLOs (Other Licensed Operators)
Companies other than the incumbent operator that operate telecommunications systems in a national
market.
OLT (Optical Line Termination)
Optical element of the PON network (Passive Optical Network) that acts as an interface between the PON
itself and the Backbone network. OLT is located in the central office.
ONT (Optical Network Termination)
Optical element of the PON (Passive Optical Network) network that performs the function of interface
between the access gateway at the customer's home and the OLT equipment in the Central Office. OLT is
located at the customer's site, is powered, receives and decrypts (and vice versa) the optical signal, and
converts it into an electrical signal (via an Ethernet output), suitable for the access gateway.
ONU (Optical Network Unit)
Optical element of the PON network (Passive Optical Network) which acts as an interface with the user access
device or the distribution network to users. ONU is located in the distribution cabinet.
OPC (Optical Packet Core)
It is the multiservice IP backbone for national transport (formerly named OPB, Optical Packet Backbone). It is
made up of interconnected nodes which are called OPC (formerly OPB) nodes, and of the very high capacity
connections existing between them.
OPM (Optical Packet Metro)
It is a metro-regional network that provides Ethernet and IP connectivity for fixed and mobile network traffic,
as well as for Retail or Wholesale customers. It consists of IP routers distributed on three hierarchical
aggregation levels: Remote Feeder, Feeder and Metro, interconnected in double homing by physically
diversified (where possible) double-way links.
Open Source
Other information
Glossary 455
Open Source is a computer software in which source code is released under a license in which the copyright
holder grants users the rights to study, change, and distribute the software to anyone and for any purpose.
Open-source software may be developed in a collaborative public manner.
Optical fiber
Thin glass, silica or plastic wires, building the base infrastructure for data transmission. An optical fiber cable
contains several individual fibers, and each of them is capable of delivering a signal (light impulse) at almost
unlimited bandwidth. Optical fibers are usually employed for long-distance communication: they can transfer
“heavy” data loads protected from possible disturbances along the way. The driving capacity of optical fibers
is higher than the traditional cable and copper twister-pair lines.
Optical Splitter
It is a passive element of the optical network used to create point-to-multipoint optical networks. The optical
splitter receives a single optical fiber input (OLT side) and produces N signals on N optical fibers (splitting factor
1:N). In the downstream direction (from OLT to ONT) the splitter "copies" the incoming light on the output
optical fibers, thus dividing the light power by N. In the upstream direction (from ONT to OLT) the splitter takes
care of adding the light contributions brought by the N optical fibers.
ORAN
It refers to Open RAN, an architecture for building the virtualized RAN on open hardware, with embedded AI-
powered radio control. Such an architecture is based on well-defined, standardized interfaces to enable an
open, interoperable supply chain ecosystem in full support of and complimentary to standards promoted by
3GPP and other industry standards organizations.
OSS (Operations Support System)
Methods and procedures (whether automatized or not) that directly support the daily operation of the
telecommunications infrastructure.
OTB (Optical Termination Box)
Passive optical equipment of the PON (Passive Optical Network) that plays the role of splitter of an optical fiber
entering the network, in several fibers leaving to the households or plays the role of distributor of incoming and
outgoing fibers to give flexibility to the optical network. It is installed a few meters from the households: very
often it is located in the counter room of the building, but it can also be mounted on an external wall, or buried
or inserted in a cloister.
OTN (Optical Transport Network)
It is a technology designed to enable multiplexing of digital signals for transport over WDM links, and to
achieve OAM capabilities for these signals similar to those available in SDH.
This allows a better utilization of WDM links, since it allows to fill lambdas with high rate signals (e.g. 100 Gb/s),
which may contain several lower rate signals (e.g. 10 Gb/s), rather than devoting a lambda for each lower rate
signal.
OTT (Over the Top) players
Operators offering contents and services on the Internet without owning the proprietary TLC network
infrastructure.
Outsourcing
Entrusting an external party carrying out services and business operations. For example, it can be outsourced
the planning, construction and hosting services of a telecommunications management system and,
ultimately, the management of the entire telecommunications system.
PaaS (Platform as a Service)
The PaaS (Platform as a Service) represents one of the three Cloud offer service models; through a PaaS offer
of a Cloud Provider, the consumer is given the opportunity to distribute applications created on their own, or
acquired by third parties on the cloud infrastructure, using programming languages, libraries, services and
tools supported by the supplier. The consumer does not manage or control the underlying cloud infrastructure,
including network, servers, operating systems, memory, but has control over the applications and possibly the
configurations of the environment that hosts them.
Packet-Switched Services
Telecommunications services provided by telcos and long-distance carriers that route packets of data between
local area networks (LANs) in different geographical locations to form a wide area network (WAN). Packet-
switching services are used to connect multiple LANs into a point-to-multipoint configuration, usually called a
multipoint WAN.
Pay-Per-View or PPV
A system by which the viewer pays to see a single program (such as a sporting event, film or concert) at the
moment at which it is transmitted or broadcast.
Pay TV
Subscription TV channels. To receive Pay TV or Pay-Per-View programs, a decoder must be connected to the
television set, and a conditional access system is needed.
PCS (Personal Communications Services)
Set of wireless communications functionalities, voice and/or data, which provide similar services such as
mobile ones.
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Peering
Peering is the voluntary interconnection of Internet networks, that refer to different Internet Service Providers,
which allows users to exchange traffic between different networks.
Penetration (market penetration)
It represents the number of people (or subscriber) who acquires goods / services of a particular brand or a
particular category, divided by the population where the service is available.
PNF (Physical Network Function)
Network functionality on physical HW, hosted in Telco offices, static capacity, management via Element
Manager.
Platform
It’s an execution environment that includes hardware, software, application servers and other supporting tools,
for the execution of programs.
PON
PON stands for "passive optical network" referring to the optical network composed by non-active
components in all stages between the origin (local exchange) and the external sides (subscriber or clients).
POP (Point Of Presence)
The POP is a point of access to the network (router), provided by an Internet Service Provider (ISP), able to
route traffic to end users connected to POP.
POTS (Plain Old Telephone Service)
Refers to the basic telephony service, (single-line telephones, fixed-line services and access to public voice
telephony network).
Price-cap
Identifies the maximum price limit set by a regulator at which a service /product can be sold.
PSTN (Public Switched Telephone Network)
PSTN, also known as the Public Switched Telephone Network, is the first-generation telephone network and
provides basic telephone service.
PTN (Packet Transport Network)
It is a class of equipment that implement natively both SDH and Ethernet technologies, i.e. it is able to
transport and switch separately both kinds of traffic. It is used to connect smaller, peripheral Central Offices to
larger ones, that is a use case where aside packet traffic (e.g. backhauling of broadband access and mobile
sites) also legacy circuit traffic (e.g. voice, 2G backhauling) may be found.
QKD (Quantum Key Distribution) - QKE (Quantum Key Exchange)
Quantum key distribution (QKD in acronym, from English: Quantum key distribution) is a system of quantum
mechanics to ensure secure communications. It enables two parties to produce and share a random secret key
only between themselves which they can use to encrypt and decrypt their messages. This exchange takes
place by exploiting the quantum properties of photons. An important and unique property of quantum
distribution is the ability of the two communicating users to detect the presence of a third party attempting to
obtain information about the key, due to the fact that a measurement process in a quantum system in general
disturbs the system.
RAN (Radio Access Network)
It is the part of mobile network that implements the radio technologies, comprising data transport functions
over air interface and control functions.
RAN Sharing
Is the most comprehensive form of access network sharing. It involves the sharing of all access network
equipment, including the antenna, tower and backhaul equipment. Each of the RAN access networks is
incorporated into a single network, which is then split into separate networks at the point of connection to the
core.
Reliability (or Availability) (A)
Is the probability of an object to perform a required function under certain operating conditions and at a given
instant of time
Refarming
Reassignment of frequency band of an operator of mobile networks from one technology to another for
optimization reasons (examples: UMTS900 instead of GSM900 or LTE1800 instead of GSM1800).
Remote Unit (RU)
It is a logical node hosting Low-PHY protocol layer and RF processing based on a lower layer functional split.
RNC (Radio Network Controller—counterpart of BSC in GSM)
RNC is the equipment (or node) for the control and aggregation of 3G network.
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Glossary 457
ROADM
A ROADM (Reconfigurable Optical Add-Drop Multiplexer) is a remotely reconfigurable optical multiplexer
capable of switching traffic in a WDM (Wavelength-Division Multiplexing) system. Its use in a transmission
network increases the efficiency of the transport allowing to transmit up to over 90 high bitrate channels
(today up to 200Gbit/s) on a single pair of fibers.
Roaming
Agreement among two or more Mobile Operators from different Countries, under which Users can use the
mobile network of other Operators participating in the agreement.
The roaming service is activated for example when the terminal is used overseas and enables a mobile user to
access a different network from the one to which he subscribes.
RoHS (Restriction of Hazardous Substances)
European Directive No. 95/2002 that regulates the use of hazardous substances in electrical and electronic
equipment, in order to contribute to the protection of human health and environment.
RTG (Rete Telefonica Generale)
RTG, also known as the Public Switched Telephone Network, is the first-generation telephone network and
provides basic telephone service.
SaaS (Software as a Service)
As part of the Cloud offer service models (see also Cloud entry), the SaaS (Software as a Service) model
expresses the faculty provided to the consumer to use a supplier's applications and services, operating on a
cloud infrastructure. The applications are accessible from different devices through a light interface (e.g. a thin
client), such as an email application on a browser, or from programs with a specific interface. The consumer
does not manage or control the underlying cloud infrastructure, including network, servers, operating systems,
memory, and even the capabilities of individual applications, except for limited configurations intended for
him.
SAR (Specific Absorption Rate)
SAR is a measure of the percentage of electromagnetic energy absorbed by the human body when it is
exposed to the action of an electromagnetic field at radio frequency (RF). See also EMF limits.
SDH Standard (Synchronous Digital Hierarchy)
The European standard for high-speed digital transmission.
It’s a protocol of the physical layer used for multiplexing in time division and the subsequent digital
transmission of telephony and data, in geographic networks on optical fiber, electric cable or radio link.
SDN (Software Defined Networking)
Software Defined Networking is a paradigm based on network virtualization whose aim is to transform
traditional networks into flexible and intelligent platforms to satisfy in real time the bandwidth requirements
and the dynamic nature of digital applications.
SD WAN (Software Defined WAN)
In Networking topic, the SD-WAN (Software Defined WAN) solutions are an innovation of the traditional Wide
Area Network solutions and of the Edges IP Networking, developed to offer advanced connectivity services
addressed to Business customers. SD-WAN solutions work agnostically with respect to the access technology,
the WAN transport network, they use dynamic routing of data on an application basis and in strong
integration with Multi-Cloud solutions, to link connectivity to some added-value services such as WAN
optimization, application monitoring and advanced security.
Service Exposure
The Service Exposure is an infrastructure to expose functionalities, called API (Application Programming
Interface), both to Third Parties (eg Business Partner), both for internal use.
Service Orchestration
Service orchestration means a single centralized business process that can be performed by an orchestrator
(e.g. a SW platform) that coordinates the interaction between various services and is responsible for their
invocation and composition, as well as the management of transactions between the individual services.
Service orchestration is often compared to Service Choreography, which instead makes a decentralized
approach to the composition of services, where each of the services participating in the choreography
implements a self-consistent process / workflow.
Service Provider
The Service Provider offers to the Users (Residential or Business) that subscribe his offer, a range of contents
and services.
Other information
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SGU (Local exchange interconnection level for telephone traffic)
Local Exchange for telephone traffic carriage, routing and transmission. See also Central Office.
SIP Trunking
Session Initiation Protocol (SIP) Trunking is a service offered by a communications service provider that uses
the protocol to provision voice over IP (VoIP) connectivity between an on-premises phone system and the
public switched telephone network (PSTN). SIP is used for call establishment, management and teardown.
SL (Distribution Frame level for telephone traffic)
See Central Office.
Shared Access
Shared access to the user’s twisted pair with another TLC service provider by using separately voice and non-
voice band frequency spectrum. This mode allows keeping voice telephony with an Operator (TIM or others)
and ADSL service on the proprietary network of the shared access operator (i.e. not passing over the TIM
network but directly through the DSLAM of the operator).
SLA (Service Level Agreement)
Service Level Agreements are contractual instruments through which service metrics are defined (eg quality of
service) that must be respected by a service provider (provider) towards their customers / users.
SLU (Sub Loop Unbundling)
It consists in providing access to the local sub-section of the Operator copper network, in particular the section
of the network between the user site and the distribution cabinet or an intermediate concentration point.
Small Cells
Small cells are low energy consumption access nodes to the radio spectrum. . Smaller than the antennas,
Small Cells are usually used in mobile telephony, both for the coverage of outdoor areas (squares, pedestrian
streets, etc.) and for the coverage of indoor hot spots (airports, stadiums, shopping centers, stations, hospitals,
university campuses, etc.).
SME (Small Medium Enterprise)
Market segment of small- and medium-size enterprises (from 3 to 50 employees).
SMART CITY
The term Smart City refers to an urban area that uses integrated ICT technologies to optimize resources in key
areas: mobility, communication, economy, work, environment, administration and construction. From an
infrastructural point of view, the use of available resources on the web improves economic and political
efficiency and can allow social, cultural and urban development.
Smartphone
Electronic device that combines the functions of a mobile phone and a handheld computer equipped with a
complete operating system.
SMART TV
The term Smart TV identifies the new generation of televisions which allows us to enjoy multimedia audio-
video content (movies, TV series, music videos, gaming,..) through an internet connection.
SMS (Short Message Service)
Short text messages that can be received and sent through GSM-network connected cellular phones. The
maximum text length is 160 alpha-numerical characters.
SOHO (Small Office / Home Office)
Market segment consisting of businesses that use telephone lines to connect to the Internet, as opposed to
dedicated lines, and is made up of small businesses, generally with one or two employees, and businesses
conducted out of the home.
SON (Self-Organizing Network)
It is a set of technologies and architectures that allows Operators to introduce, in the context of radio-mobile
networks, the technological enablers for the automation of network configuration, optimization and assurance
processes.
Switch
▪
▪
(Telephone switch) Synonymous of Telephone Exchange, i.e. network equipment used to set up and
route telephone calls to the number called possibly through other switches. They may also record
information for billing and control purposes;
(Network switch) Data networking equipment able to receive and forward packets using information
at layer 2 of OSI (Open Systems Interconnection) model (i.e. hardware addresses of other equipment).
Synchronous
Type of data transmission in which there is permanent synchronization between the transmitter and receiver.
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STB (Set-Top Box)
It
is a customer device able to receive TV signals from a communication network (such as
broadband/ultrabroadband access network, terrestrial broadcast, satellite broadcast, etc) and output them to
TVs and other display devices (monitors, projectors, etc.). It may include Conditional Access functions to
handle paid content.
Tablet
Portable computer with compact dimensions whose screen can be used to write or give commands with the
touch of your fingers or using a specially designed stylus.
TAL (Tele Alimentation for Remote Power Feeding)
Technique for power feeding roadside network equipment (such as ultrabroadband equipment located in
street cabinets in Fiber to the Cabinet architecture) from the local exchange.
TCO (Total Cost of Ownership)
The TCO represents the global cost of an asset (eg an IT equipment) during its life cycle. The TCO takes into
account both direct costs (hardware costs, network infrastructure, licenses) and indirect costs (management,
maintenance, energy consumption).
TDMA (Time Division Multiple Access)
A technology for digital transmission of radio signals between, for example, a mobile phone and a radio base
station. TDMA breaks signals into sequential pieces of defined length, places each piece into an information
channel at specific intervals and then reconstructs the pieces at the end of the channel.
ToIP (Telephony over IP)
The term is often used as synonymous of VoIP, however it has a wider meaning since it includes advanced
telephony services (such as video, messaging, possibly some call handling, etc) beyond the basic voice
communication.
TRX
Radio transceivers located in BTS.
UltraBroadBand
Includes all network technologies that offer connectivity from 30Mbit/s to over 1Gbit/s, referring in particular to
the peak rate and not to the average available. The definition is related to the characteristics of the fixed and
mobile access network. By increasing the capacity and the speed, Ultra Broadband technologies allow quicker
access from multiple users to the content available on the net, also on the move, and to take advantage of
high quality video up to Ultra HD and interactive gaming.
▪
Fixed ultra-broadband: includes access technologies that involve the use of optical fiber, known as FTTx.
▪ Mobile ultra-broadband: refers to the use of the HSPA mobile network (evolution of the 3G network), LTE
and its evolutions and the 5G network.
URLLC (Ultra-Reliable Low-Latency Communication)
URLLC is a set of features that provide low latency and ultra-high reliability for mission critical applications
such as industrial internet, smart grids, remote surgery and intelligent transportation systems.
UMTS (Universal Mobile Telecommunications System)
See 3G.
Unavailability (U)
is the probability of an object not being able to perform a required function under certain operating conditions
and at a given instant of time.
Unbundling
It is the service offered by the incumbent to the alternative operator which consists of the rental of the local
loop i.e. the wire connection between the local exchange and the customer’s premises, so that the alternative
operator is able to connect the twisted pair from the customer to its own equipment.
Universal Service
The obligation to supply basic service at an affordable price, or at special rates solely for subsidized users.
UPS (Uninterruptible Power Supply)
Electrical equipment that provides continuous powering to users in case of power outage.
VAS (Value-Added Services)
Value Added Services provide a higher level of functionality than the basic transmission services offered by a
telecommunications network. In PSTN and first generation mobile networks the basic service was telephony
(switched voice calls, initially analog and later digital ones) while VAS could include data and fax transmission
services, as well as call handling features such as call waiting, call forwarding, etc..
As time passed VAS based on call handling grew with further features such as toll free calling, voice virtual
private networks, etc. A new class of VAS also developed in mobile networks, including message handling
services such as SMS and MMS. In parallel, development of data networks turned data transmission services
(initially X25, then Frame Relay, ATM, Ethernet, IP) into basic services of those networks, on top of which there
may be VAS such as address translation, data virtual lines and virtual networks, traffic priority, encryption, etc..
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A further category of VAS is those based on contents of Service Providers linked to the network, beginning with
contents provided on telephony network, going on with contents delivered via SMS (news, meteo, etc) and
contents provided via browsing from mobile and fixed terminals, and arriving to video streaming contents.
VDSL (Very - high – data – rate Digital Subscriber Line)
Access technology that allows providers to give clients, by means of an apparatus installed in their homes,
access to voice and TV services on the traditional telephone line with speeds of up to 50 Mbps in downstream.
VDSL2 (Very - high – data – rate Digital Subscriber Line 2)
“2nd generation” VDSL, able to achieve downstream speed in the range of hundreds of Mbps. Actual data rate
however is largely dependent upon the distance between customer equipment and network equipment, e.g.
for distances of some hundred meters the achievable rate is about 100 Mbps. For this reason, network
equipment is typically located in street cabinets, so to be closer to customers. A VDSL2 evolution named
eVDSL (enhanced VDSL) yields achievable rates around 200 Mbps; it has been recently deployed in TIM
network.
Vectoring
Transmission technology that removes mutual interference (crosstalk) between copper lines bundled in the
same cable. Of particular interest is the use on VDSL / VDSL2 / eVDSL lines in view of the growing penetration
of ultrabroadband services, which would make interference more perceptible. In this perspective, the use of
vectoring allows to maintain the typical performances of the aforementioned technologies. The technology is
placed in the ONU apparatus where to be effective it is applied on all the lines of a cable; this means that in
case of SLU (Sub Loop Unbundling), that is the presence of ONUs of several operators serving the lines of the
same cable, a more complex implementation is required, the MOV (Multi-Operator Vectoring) that coordinates
the vectoring of the different ONUs.
Virtualization
An approach to implementation of functionality resorting only to software running on general purpose
hardware generally not dedicated, as opposed to approaches resorting also to special purpose and/or
dedicated hardware.
Virtual machine (VM)
Is an isolated, digital instance of a computer—its operating system, applications, and memory— without the
underlying hardware that allows organizations to scale compute power, test malware, and develop software.
VNF Virtual Network Function
Virtualized network functionality on HW COTS (Commercial Off The Shelf), hosted on Telco Data Center,
flexible capacity, use of Virtual Machine and manual or automatic Life Cycle Management.
VOD (Video On Demand)
TV-program offering on user’s request, with payment of a fee for each purchased program (a movie, a soccer
match, etc.). Broadcast specifically for cable and satellite TV.
VoIP (Voice Over IP)
A technology that allows transmission of voice communication over an Internet connection or another
dedicated network using the Internet Protocol (IP) data networks (such as IP-based LANs, Intranets or the
Internet) instead of a conventional phone line.
VoLTE/ViLTE (Voice over LTE / Video over LTE)
A service providing voice and video calls over IP via LTE radio access, controlled by standard ToIP architecture
named IMS (IP Multimedia Subsystem). The mated naming VoLTE/ViLTE is used since the service is essentially
the same for voice and video, differing only in the type of media streams that are set up. Since it is standard
based, it achieves interoperability among user terminals and between terminals and networks.
VoNR (Voice over New Radio)
Service that provides voice calls over IP via New Radio radio access.
VPN (Virtual Private Network)
A network designed for a business customer or government agency, using the infrastructures of a carrier and
providing customized services, and which operates in such a manner as to appear dedicated to the user
thereof.
VRAN (Virtual Radio Access Network)
It is an architecture applied in 4G/5G networks which implies a split of the Base Station between a Centralized
Unit and a Remote or Distributed Unit. The CU is typically placed in a more centralized site than antennas and
deals with baseband signal processing, so also the terminology BBU (BaseBand Unit) is used, while the Remote
Unit is left at antenna sites to provide radio coverage and is also termed RRU (Remote Radio Unit). Given this
split the CUs may be implemented as Virtual Network Functions on a suitable hardware infrastructure, from
which the ‘virtual’ title.
For the viability of the architecture a key issue is the choice of the partition of Base Station functions between
CUs and DUs, which affects the requirements on communication links CU-DU (referred to as midhaul). In the
5G development efforts this issue has been addressed by identifying split options that are candidate for
standardization.
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VULA (Virtual Unbundling Local Access)
A wholesale service provided by incumbent providers to alternative operators, where the incumbent provides –
over its broadband access network – the transport of data traffic (a ‘bitstream’) between the end customer
and an interconnection point where the alternative operator receives said traffic. In TIM’s case, the
interconnection point is located at local exchange level, aside the OLT (Optical Line Termination) i.e. the head
end of optical access network.
WAN (Wide Area Network)
A private network that covers a wide geographic area using public telecommunications services.
WEEE (Waste Electrical and Electronic Equipment)
Waste from electrical and electronic equipment which the holder intends to dispose of as it is faulty, unused or
obsolete.
White, gray and black areas
The distinction between white, gray and black areas is relevant for the assessment of state aid to support the
development of ultrabroadband networks, in terms of the compatibility of the aid with respect to Community
legislation. This classification is contained in the European Union Guidelines:
▪ white areas are areas without ultrabroadband (UBB) networks (connectivity), where private investors do
not intend to invest in the next three years;
▪ gray areas are areas in which an ultrabroadband (UBB) network (connectivity) is present or will be
developed in the next three years by a single private operator;
▪ black areas are areas in which at least two ultrabroadband (UBB) networks (connectivity) of different
operators are present or will be developed over the next three years.
Wi-Fi
Wireless technology enabling data links in a limited area, generally in some hundred meters range, with speed
up to tens of Mbps. Typical applications are in homes and offices as alternative to wired LAN, as well as in
public services for Internet access, and also to create link between devices (e.g. between a laptop and a
smartphone linked to Internet).
Wi – Max (Worldwide Interoperability for Microwave Access)
A technology that allows wireless access to broadband telecommunications networks, initially defined in order
to work on ranges up to tens of kilometers and speed in the tens of Mbps.. It was defined by the Wi—MAX
Forum, a global consortium formed in 2001 that brings together major companies in the field of fixed and
mobile telecommunications and whose purpose is to develop, test and promote the interoperability of systems
based on IEEE standards.
WDM (Wavelenght Division Multiplexing)
Technology by means of which it is possible to transport on a single optical fiber different flows of information
which correspond to distinct and separable wavelengths.
WLL (Wireless Local Loop)
The means of providing a local loop equivalent (e.g. connection from customer premises to local exchange)
without the use of wiring, resorting instead to wireless technologies.
WLR (Wholesale Line Rental)
It is a telephony only wholesale service provided by the incumbent to alternative operators, whereby the
alternative operator gets an ULL-like service without the need to physically deploy equipment at local
exchange sites. It is technically similar to Carrier PreSelection (CPS),and differs from CPS on the commercial
side since the end customer is not subscribed to the incumbent’s access service, nor billed for it; in this way
alternative operators are able to provide to customers both access and traffic services and to produce a single
bill covering both services.
WTTX (Wireless To The X)
WTTx is a 4G and 4.5G-based broadband access solution, which uses wireless to provide fiber-like broadband
access for household.
xDSL (Digital Subscriber Line)
It is a technology that makes use of standard telephone lines and it includes different categories including
ADSL (Asymmetric DSL), HDSL (High-data-rate DSL), VDSL (Very high bit rate DSL) and eVDSL (enhanced Very
high bit rate DSL). This technology uses a digital signal at very high frequencies in order to achieve high data
transfer rates.
XGS-PON
XGS-PON is an updated standard for Passive Optical Networks (PON) that can support higher speed 10 Gbps
symmetrical data transfer and is part of the family of standards known as Gigabit-capable PON, or G-PON.
Other information
Glossary 462
USEFUL INFORMATION
The 2021 Annual Financial Report is available online at gruppotim.it/report/ita and gruppotim.it/report/eng
gruppotim.it/report.
The Annual Corporate Governance Report and the Remuneration Report can be viewed by respectively
accessing: gruppotim.it/governance/il-sistema/relazione-annuale e
gruppotim.it/governance/remunerazione/relazione-remunerazione.
Information on TIM is also available at
gruppotim.it and information on products and services at tim.it.
Finally, the following numbers are available:
Free Number 800.020.220 (for calls from Italy) or +39 011 2293603 (for calls from abroad) available for
information and assistance to shareholders
+39 36881 (switchboard) or investor_relations@telecomitalia.it
gruppotim.it/it/gruppo/governance/il-sistema/relazione-annuale.html
TIM S.p.A.
Registered Office Via G. Negri n. 1 - Milan
General Administration and Secondary Office in Rome at Corso d’Italia 41
PEC (Certified Electronic Mail) box: telecomitalia@pec.telecomitalia.it
Share Capital 11,677,002,855.10 euros, fully paid up
Tax Code/VAT no. and Milan-Monza Brianza-Lodi Companies Register file no. 00488410010
Other information
Useful information 463