Telecom Italia - FORM 6-K

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: FORM 20-F x FORM 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information

to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. YES ¨ NO x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

The present document has been translated from the document issued and filed in Italy, from the Italian into the English language solely for the convenience of international readers. Despite all the efforts devoted to this translation, certain errors, omissions or approximations may subsist. Telecom Italia, its representatives and employees decline all responsibility in this regard.

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the United States Private Securities Litigation Reform Act of 1995

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements, which reflect management's current views with respect to certain future events, trends and financial performance. Actual results may differ materially from those projected or implied in the forward-looking statements. Such forward-looking information is based on certain key assumptions which we believe to be reasonable but forward-looking information by its nature involves risks and uncertainties, which are outside of our control, that could significantly affect expected results of future events.

The following important factors could cause actual results to differ materially from those projected or implied in any forward-looking statements:

- our ability to successfully implement our strategy over the 2011-2013 period;

- our ability to successfully achieve our debt reduction targets;

- the continuing impact of increased competition in a liberalized market, including competition from established domestic competitors and global and regional alliances formed by other telecommunications operators in our core Italian domestic fixed-line and wireless markets;

- the impact of the global recession in the principal markets in which we operate;

- our ability to utilize our relationship with Telefónica to attain synergies primarily in areas such as network, IT, purchasing and international mobile roaming;

- our ability to introduce new services to stimulate increased usage of our fixed and wireless networks to offset declines in the traditional fixed-line voice business due to the continuing impact of regulatory required price reductions, market share loss, pricing pressures generally and shifts in usage patterns;

- our ability to successfully implement our internet and broadband strategy both in Italy and abroad;

- the impact of regulatory decisions and changes in the regulatory environment in Italy and other countries in which we operate;

- the impact of economic development generally on our international business and on our foreign investments and capital expenditures;

- our services are technology-intensive and the development of new technologies could render such services non-competitive;

- the impact of political developments in Italy and other countries in which we operate;

- the impact of fluctuations in currency exchange and interest rates;

- our ability to build up our business in adjacent markets and in international markets (particularly in Brazil), due to our specialist and technical resources;

- our ability to achieve the expected return on the investments and capital expenditures we have made and continue to make (such as those in Brazil);

- the amount and timing of any future impairment charges for our licenses, goodwill or other assets; and

- the outcome of litigation, disputes and investigations in which we are involved or may become involved.

The foregoing factors should not be construed as exhaustive. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. We undertake no obligation to release publicly the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof, including, without limitation, changes in our business or acquisition strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events.

Current financial assets and liquidity margin

The Telecom Italia Group’s available liquidity margin, calculated as the sum of Cash and cash equivalents and current Securities other than investments, amounts to 6,797 million euros at March 31, 2011 (6,842 million euros at December 31, 2010) which, together with its unused committed credit lines for 7.8 billion euros, allows the Group to amply meet its repayment obligations over the next 24 months.

In particular:

•

Cash and cash equivalents amount to 5,487 million euros (5,526 million euros at December 31, 2010). The different technical forms of investing available cash at March 31, 2011, which include euro commercial paper for 410 million euros, can be analyzed as follows:

–

Maturities: investments have a maximum maturity of three months;

–

Counterpart risk: investments by European companies are made with leading banking, financial and industrial institutions with high-credit-quality and at least an A- rating. Investments by companies in South America are made with leading local counterparts;

–

Country risk: investments are made mainly in major European financial markets.

•

Securities other than investments amount to 1,310 million euros (1,316 million euros at December 31, 2010). Such forms of investment represent alternatives to the investment of liquidity with the aim of raising the yield. These mainly consist of 1,155 million euros of Italian treasury bonds purchased by Telecom Italia S.p.A. (with A ratings by S&P’s) and 152 million euros of bonds issued by counterparts with a rating of at least BBB+ with different maturities, but all with an active market, that is, readily convertible into cash.

Covenants and negative pledges relating to outstanding positions at March 31, 2011

With reference to loans received by Telecom Italia S.p.A. from the European Investment Bank (EIB), an amount of 1,056 million euros (out of a total of 2,668 million euros at March 31, 2011) is not secured by bank guarantees but there are covenants which cover the following:

•

in the event the company becomes the target of a merger, demerger or contribution of a business segment outside the Group, or sells, disposes or transfers assets or business segments (with the exception of certain acts of disposal expressly envisaged), it shall immediately inform EIB which shall have the right to ask for guarantees to be provided or changes to be made to the loan contract. The same clause applies to two loan contracts signed between the EIB and Telecom Italia S.p.A. on July 17, 2006 and on November 30, 2007 for a total principal amount of 332,200,000.00 euros, in which the EIB also has the right to rescind from the contract under ex. art. 1456 of the Italian Civil Code (demanding repayment of the loan and payment of an indemnity) should Telecom Italia S.p.A. cease to hold, directly or indirect, more than 50% of the voting rights in the ordinary shareholders’ meeting of HanseNet Telekommunication GmbH Germany or, in any case, a number of shares such as to represent more than 50% of its share capital. Following the sale of HanseNet on February 16, 2010, the Group decided to voluntarily repay the loan of 182,200,000.00 euros stipulated on November 30, 2007, of which 40,000,000.00 euros had already been repaid on June 18, 2010 while the remaining 142,200,000.00 euros was repaid on September 30, 2010. The loan of 150,000,000.00 euros will remain outstanding until its natural due date of July 2014;

•

for all loans not secured by collateral, if the Company’s rating of unsubordinated and unsecured medium/long-term debt is lower than BBB for Standard & Poor’s, Baa2 for Moody’s and BBB for Fitch Ratings, the company shall immediately inform the EIB which shall have the right to ask for suitable guarantees to be provided, indicating a date for setting up these guarantees. After that date and if Telecom Italia S.p.A. fails to provide the guarantees, the EIB shall have the right to demand immediate repayment of the amount disbursed. The current ratings did not require new guarantees or repayments of loans.

The syndicated bank lines of Telecom Italia S.p.A. do not contain financial covenants (e.g. ratios such as Debt/EBITDA, EBITDA/Interest etc.) which would oblige the Company to automatically repay the outstanding loan if the covenants are not observed. Mechanisms are provided for adjusting the cost of funding in relation to Telecom Italia’s credit rating, with a spread added to the Euribor of between a minimum of 0.0875% and a maximum of 0.2625% for the line expiring in 2014 and a minimum of 0.90% and a maximum of 2.50% for the line expiring in 2013.

The two syndicated bank lines contain the usual other types of covenants, including the commitment not to use the company’s assets as collateral for loans (negative pledges), 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 are also found in the export credit loan agreements.

A series of agreements in which Telecom Italia is a party provides for communication of a change in control:

•

Multi-currency revolving credit facility (8,000,000,000 euros). The agreement was signed between Telecom Italia and a syndicate of banks on August 1, 2005 and subsequently modified. In the event of a change in control, Telecom Italia shall inform the agent within five business days and the agent, on behalf of the lending banks, shall negotiate, in good faith, how to continue the relationship. None of the parties shall be obliged to continue such negotiations beyond the term of 30 days, at the end of which, in the absence of an agreement, the credit facility shall cease to be effective and Telecom Italia shall be held to repay any sum disbursed (currently equal to 1,500,000,000 euros) to the same. Conventionally, no change of control is held to exist in the event control, pursuant to art. 2359 of the Italian Civil Code, is acquired (i) by shareholders who at the date of signing the agreement held, directly or indirectly, more than 13% of the voting rights in the shareholders’ meeting, or (ii) by the investors (Telefónica S.A., Assicurazioni Generali S.p.A., Intesa Sanpaolo S.p.A. and Mediobanca S.p.A.) which had signed a shareholders’ agreement on April 28, 2007 regarding the Telecom Italia shares, or (iii) by a combination of parties belonging to the two categories.

•

Revolving credit facility (1,250,000,000 euros). The agreement was signed between Telecom Italia and a syndicate of banks on February 12, 2010 and envisages a discipline similar to that contained in the August 1, 2005 credit facility agreement, even though it was updated to take into account the October 28, 2009 modifications to the April 28, 2007 shareholders’ agreement. Therefore, no change of control is held to exist in the event control, pursuant to art. 2359 of the Italian Civil Code, is acquired, directly or indirectly (through subsidiaries) by the investors Telefónica S.A., Assicurazioni Generali S.p.A., Intesa Sanpaolo S.p.A. and Mediobanca S.p.A.), with the provisions described above remaining unchanged.

•

Revolving credit facility (200,000,000 euros). The agreement was signed between Telecom Italia and Unicredit S.p.A. on December 20, 2010 and envisages a discipline basically identical to that of the February 12, 2010 credit facility. The amount disbursed is currently 120,000,000 euros.

•

Bonds. The regulations covering the bonds issued under the Telecom Italia EMTN Programme by both Olivetti and Telecom Italia and the bonds denominated in U.S. dollars typically provide that, in the event of mergers or transfer of all or substantially all of the assets of the issuing company or the guarantor, the incorporating or transferee company shall assume all of the obligations of the merged or transferor company. Non-fulfillment of the obligation, for which a solution is not found, is an event of default.

•

Contracts with the European Investment Bank (EIB). The contracts signed by Telecom Italia with the EIB, for a total maximum amount of approximately 2.7 billion euros, carries the obligation of promptly informing the bank about changes regarding the bylaws or the allocation of share capital among the shareholders which can bring about a change in control. Failure to communicate this information to the bank shall result in the termination of the contract. The contract shall also be terminated when a shareholder, which, at the date of signing the contract does not hold at least 2% of the share capital, comes to hold more than 50% of the voting rights in the ordinary shareholders’ meeting or, in any case, a number of shares such that it represents more than 50% of the share capital, whenever, in the bank’s reasonable opinion, this fact could cause a detriment to the bank or could compromise the execution of the loan project.

•

Export Credit Agreement (residual nominal amount of 63 million euros). The contract was signed in 2004 by Telecom Italia and Société Générale and provides for the repayment of the loan in 2013. It is provided that, in the event of a change in control and subsequent failure to reach an agreement with the lender bank, Telecom Italia shall reimburse the outstanding loan on the first date on which payment of interest shall be due.

•

Finally, in the documentation of the loans granted to certain companies of the Tim Brasil group, the companies must generally respect certain financial ratios (e.g. capitalization ratios, ratios for servicing debt and debt ratios) as well as the usual other pledge clauses, under pain of a request for the early repayment of the loan.

Finally, it should be pointed out that, at March 31, 2011, no covenant, negative pledge clause or other clause relating to the above-described debt position, has in any way been breached or violated.

Pending disputes, legal actions and other information

The most important arbitration cases and legal or fiscal disputes in which the Telecom Italia Group is involved at March 31, 2011 are described below.

The Telecom Italia Group has posted liabilities totalling 170 million euros for those disputes described below for which there is a risk of losing the case.

a) Potential liabilities

Telecom Italia Sparkle – Relations with I-Globe, Planetarium, Acumen, Accrue Telemedia and Diadem: investigation by the Rome Public Prosecutor’s Office

On 23 February 2010, the Guardia di Finanza (Finance Police), authorised by the Rome Public Prosecutor’s Office, served the following documents on Telecom Italia Sparkle:

•

an order setting the date of the hearing in chambers on the "request for application of the suspension from trading activities […] to be replaced by the appointment of a receiver" pursuant to legislative decree No. 231/2001;

•

an order for the preventive seizure of a total of approximately 298 million euros (corresponding to the"unlawfully accrued VAT credit for those tax years in which the alleged unlawful activities took place").

The alleged offences of some ex-directors, ex-employees and employees of Telecom Italia Sparkle were transnational conspiracy, tax evasion in league with others/third parties, transnational money laundering, reinvestment of unlawful revenues and false registration of ownership of assets. The offences of transnational conspiracy, transnational money laundering and reinvestment of unlawful revenues also constitute underlying or predicate offences of the administrative liability of the organisation, pursuant to legislative decree No. 231/2001.

Telecom Italia Sparkle therefore set in motion a series of initiatives involving, in particular:

•

the precautionary suspension of employees involved in the proceedings, and the termination of the employment of those employees on remand;

•

appointment of an independent professional (Prof. Paolo Ferro-Luzzi) to, among other things, verify that the organisational tools specified in legislative decree No. 231/2001 have been adopted and actually implemented, and to verify the company’s consequent commitment to implementing any improvements recommended by the consultant;

•

the purchase of a guarantee bond for approximately 72 million euros payable to the Judicial Authorities involved in the event of confiscation – pursuant to article 19 of legislative decree No. 231/2001 – of this sum as the profits of the alleged offences, with an irrevocable judgement.

•

the purchase of a guarantee bond for approximately 123 million euros payable to the Tax Authorities, representing the difference between the amount already subject to precautionary seizure, as VAT deducted in tax years 2005, 2006 and 2007 (approximately 298 million euros) and the estimated maximum sum that might be payable by Telecom Italia Sparkle to settle its tax affairs in the event of assessment or settlement procedures agreed with the Agenzia delle Entrate (Italian Revenue Agency).

•

the adoption of a series of internal measures that incorporated the final suggestions formulated by Prof. Ferro-Luzzi on the governance of the company, its organisation and control arrangements, operations, and the “Model 231”.

In the light of these initiatives, and after revocation of the request to appoint a legal administrator by the Rome Prosecutor’s Office, the judge in the preliminary investigation (the GIP) declared that there are “no grounds to proceed”.

In May 2010 the Guardia di Finanza communicated a “note of findings” to Telecom Italia, stating:

•

that the VAT on the services attributable to the fraud mentioned above, deducted in the 2005, 2006 and 2007 tax years, totalling approximately 298 million euros, was not deductible;

•

that the costs of the aforementioned operations was not deductible for the purposes of corporation tax and regional tax (IRES and IRAP), with an estimated total expense of approximately 429 million euros, plus fines and interest.

Subsequently, in July 2010, the Lazio regional office of the Agenzia delle Entrate, taking note of the findings raised by the Guardia di Finanza, served three notices of assessment on Telecom Italia Sparkle, notifying the company of the non-deductibility of VAT totalling approximately 298 million euros, as mentioned above, plus interest and fines.

In July Telecom Italia Sparkle paid a proportion of the fines (25% of the sum imposed), the whole of the VAT considered to be non-deductible, plus the interest, for a total of 418 million euros. After the payment, the bank guarantee for approximately 123 million euros, which had been issued in favour of the tax authorities, lapsed.

Moreover, in August 2010, Telecom Italia Sparkle’s application for the preventive seizure ordered by the Rome Prosecutor’s Office in February 2010 to be revoked was granted. In consequence, the assets seized were released, apart from a sum of 10 million euros which remains under seizure for guarantees connected to the criminal proceedings currently underway.

Finally, granting the application made in August 2010 by the Rome Prosecutor’s Office, the judge in the preliminary investigation ordered the immediate trial of the defendants currently subject to precautionary measures. In particular, the application requested the immediate trial of the ex-chief executive officer and two ex-employees.

In relation to this trial, Telecom Italia Sparkle made an application to bring a civil action against all the defendants. The Court ruled this application inadmissible in its hearing on December 18, 2010, since it considered such an action incompatible with the company’s position as a subject of investigation pursuant to legislative decree No. 231/2001.

Given the complexity of the episode, and the fact that the investigations are continuing, and that in consequence it is not yet possible to have full knowledge of all the acts of the proceedings, at present the company cannot formulate definitive predictions of their outcome, without prejudice to the defence that Telecom Italia Sparkle will pursue with the maximum vigour to demonstrate its non-involvement in the matters at issue. Regarding the effects of a conviction under legislative decree No. 231/2001, in addition to the administrative fines (which would be relatively small) and any interdiction, the profits of the crime would be confiscated, and in the current formulation of the charge by the public prosecutors and without prejudice to the defence considerations that will be developed in relation to this, would total approximately 72 million euros (a sum already guaranteed by the bond mentioned above and already set aside in the 2009 consolidated financial statements).

So far as the residual fiscal risk is concerned, the Agenzia delle Entrate has not, so far, issued notices of assessment in relation to the allegation of the Guardia di Finanza relating to direct taxation. In this respect, Telecom Italia Sparkle – also based on the opinion of authoritative professionals – believes that if this too should happen, the risk of losing such a case is only possible, not probable. As a result, no provision to cover the fiscal risk for direct taxation has been made.

Application for committal for trial of Telecom Italia S.p.A. for an administrative offence pursuant to Legislative Decree No. 231/2001.

In December 2008 Telecom Italia received notification of the application for its committal for trial for the administrative offence specified in articles 21 and 25, subsections 2 and 4, of legislative decree No. 231/2001 in relation to the affairs that have involved some ex-employees and ex-collaborators of the Company charged – among other things – with offences involving corruption of public officials, with the object of acquiring information from confidential files.

Before the preliminary hearing, Telecom Italia submitted a motion for the application of plea bargaining pursuant to article 63 of legislative decree No. 231/2001, after having made provision, as employer, for financial reparation to be offered to those employees and ex-employees on whom illegal dossiers were compiled (and) whose names appeared on the request for committal for trial (incurring total costs of 1.8 million euros for this purpose) and after having reached a settlement with the government departments, the only parties taking civil action against the Company, of all claims for compensation related to the facts that are the object of the criminal proceedings (against payment of the sum of 750 thousand euros). In a judgement pronounced on May 28, 2010, the Judge accepted that the fines of 400 thousand euros that the Company had agreed to pay were adequate: after this judgement, Telecom Italia was definitively no longer a defendant in the criminal trial. At the same time, the Judge approved the motion for settlement of the proceedings presented by many other defendants, including ex-employees of the Group.

In a judgement on the same date, the charges of unlawful appropriation of the assets of Telecom Italia and its subsidiary Telecom Italia Latam, which had been admitted to the trial as civil parties precisely in relation to these offences, were declared to be without foundation. Both companies are challenging this judgement, and have appealed to the Court of Cassation. Until the aforementioned judgement that there is no case to answer has been made final, Telecom Italia still benefits from the conservative seizure of the assets of one of the defendants, worth over 15 million euros.

Thus at the end of the preliminary hearing phase, subsidiaries Telecom Italia Latam and Telecom Italia Audit and Compliance Services remained civil parties in the trial for damages deriving from actions other than unlawful appropriation, while the Company remained part of the criminal proceedings as the entity with civil liability, pursuant to article 2049 of the Italian Civil Code, for the actions of the three ex-employee defendants committed for trial. In this capacity, Telecom Italia has been served with conservative seizure orders for approximately 6 million euros in favour of the civil parties in the proceedings against the ex-employee defendants; all of these orders were, however, subsequently revoked by the Milan Review Court, with an order dated September 2010. Challenging this last judgement, appeal is pending with the Court of Cassation filed by the civil parties.

The trial phase of the proceedings opened in September before the Milan Court of Assizes. In the first hearings, some of the civil parties asked that their involvement be extended to include the crimes of conspiracy and corruption. The judge for the preliminary hearing had not allowed them to become civil parties in the proceedings relating to these charges, while Telecom Italia has submitted a request to become a civil party to the proceedings relating to all the alleged crimes of those defendants named in the order that they be committed to trial, including the crimes of corruption and conspiracy.

In the hearing on 26 January last (alias 2011), the Court granted the motions to become a civil party submitted by Telecom Italia and by the other civil parties.

In relation to the details of the requests for the company to pay/indemnify third parties, it should be noted that, given the current state and on the basis of the estimation factors available, it is likely that the company could lose such proceedings; only in relation to a single case, given the estimation factors available and the progress of the current proceedings, a positive outcome is unlikely and hence provision has been made for a moderate sum in the risk fund”

FASTWEB

•

Through judgement No. 750/2011 Milan Appeal Court declared its lack of jurisdiction, in favour of that of the Milan Court, to decide the action brought by Fastweb in October 2007, for the presumed abusive nature of the Telecom Italia winback strategy in the domestic and non-domestic fixed line telephone service supply markets and in the broadband access retail services, with a request for damages totalling approximately 1,070 million euros. The action was based on the order of May 16, 2006 by the Milan Appeal Court, granting an urgent appeal by Fastweb that prevented Telecom Italia from continuing certain allegedly abusive behaviour. Fastweb later gave timely summary of the judgement before the Milan Civil Court.

•

In June 2010, at the Milan Court, Fastweb claimed damages of approximately 65 million euros (Fastweb also submitted a subordinate claim, quantifying the damages at 87 million euros) for presumed acts of unfair competition and misleading advertising as part of the “Impresa Semplice” advertising campaign, for the offer of integrated services to small and medium-sized enterprises. The judgement referred to a preceding opinion issued by the Jury of the IAP (Istituto di Autodisciplina Pubblicitaria), the advertising regulatory body, at the behest of Fastweb and other Operators, that this advertising campaign was indeed misleading. Telecom Italia, after rectifying some minor points raised by its competitors in these proceedings, entered an appearance contesting the claims of the other party, and submitted a counterclaim.

•

In January 2011, with its appointment of an arbitrator, Fastweb requested compensation for presumed damages totalling 146 million euros suffered after the alleged non-compliance with the provisions contained in the contract for the supply of the “unbundling of the local loop” (ULL). In particular, Fastweb complained that, in the period from July 2008 to June 2010, Telecom Italia might have refused, unlawfully, to execute approximately 30,000 requests to migrate customers to the Fastweb network. When the Arbitration Panel has been convened, the Company will present its defence, refuting the claims of the other party.

VODAFONE

The case brought by Vodafone before the Milan Court of Appeal in July 2006, for compensation for damages (initially quantified as approximately 525 million euros, and subsequently adjusted to 759 million euros) is still in progress. The case involves a presumed abuse of its dominant position by Telecom Italia, which allegedly exploited its position in the fixed telephony markets to strengthen its position in the closely connected mobile communication services market, which tended to exclude and hence damage its competitor. According to Vodafone, Telecom Italia’s abusive behaviour concerned its domestic and business customers, and is allegedly unlawful as a violation of the law on the protection of personal data.

Telecom Italia filed an appearance, contesting Vodafone’s claims and the inadmissibility of counterclaims.

ANTIPIRACY GROUP - FEDERAZIONE ANTI PIRATERIA AUDIOVISIVA (FAPAV)

In June 2010, antipiracy group Federazione Anti Pirateria Audiovisiva (FAPAV) issued proceedings against Telecom Italia in the Rome Court for compensation of the presumed damages (quantified at 320 million euros) resulting from its non-prevention of the illicit downloading of films by customers of the Company accessing certain websites. According to the claimant, Telecom Italia did not adopt the necessary technical and administrative measures to prevent the illegal use of its network. FAPAV also asked that the Company provide the Judicial Authorities with information that identifies the customers involved in the alleged unlawful activities.

These proceedings follow a precautionary procedure at the end of which the Rome Court excluded both the liability of Telecom Italia for the information it carries, and the obligation to suspend the internet access service of which Telecom Italia is merely supplier. The Court limited itself to ordering (the Company) to supply all the information in its possession on the alleged unlawful activity, apart from information that identifies the subjects involved.

Telecom Italia, which has already complied with the order, entered an appearance in this case, asking that the claims of the other party be rejected in their entirety. The Italian association of authors and publishers (SIAE) joined these proceedings to support FAPAV’s argument.

EUTELIA and VOICEPLUS

In June 2009, Eutelia and Voiceplus asked that alleged acts of abuse by Telecom Italia of its dominant position in the premium services market (based on the offer of the 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 behaviours relating to the management of the Company’s financial relations with Eutelia and Voiceplus concerning the Non Geographic Numbers for which, for regulatory reasons, Telecom Italia manages the revenues from the end customers on behalf of these OLOs.

Telecom Italia filed an appearance, asking that the demand for compensation be rejected in its entirety.

After the pause in the legal proceedings pursuant to article 43 of the Legge Fallimentare (Italian Bankruptcy Law) made after the Extraordinary Administration Procedure to which Eutelia was subjected after the declaration of insolvency, the company filed an appeal for resumption of the proceedings.

TELEUNIT

With a writ of summons issued before the Milan Appeal Court in October 2009, Teleunit asked for alleged acts of abuse by Telecom Italia of its dominant position in the premium services market to be investigated. The complainant quantified its damages at a total of approximately 362 million euros.

Telecom Italia filed an appearance, contesting the claims of the other party.

POSTE

There are some pending actions brought by Ing. C. Olivetti & C. S.p.A. (now Telecom Italia) against Poste, the Italian postal service, concerning non-payment by Poste of services rendered under a series of contracts to supply IT goods and services. The judgements issued in the lower court established an outcome that was partially favourable to the ex-Olivetti, and have been appealed by Poste in individual rehearings.

In this respect, while a judgement of the Rome Appeal Court confirmed one of the outstanding payables to Telecom Italia, another judgement of the same Court declared void one of the disputed contracts. After this judgement, Poste issued a writ for the return of approximately 58 million euros, opposed by Telecom Italia, given that the judgement of the Court of Cassation considering amendment of the above judgement is still pending.

In its opposition and appeal for suspension of execution, Telecom Italia argued that it had not been ordered to pay specific restitution at that time, and hence there was no valid right to execute the judgement. Accepting this argument, the Rome Court suspended execution.

Dispute for adjustments on concession charges for the years 1994-1998

Some disputes, in cases filed in recent years by Telecom Italia are still pending. These relate to the Company’s request that the Ministry of Communications pay adjustments to the amounts paid in charges for concessions in the years 1994-1998.

Antitrust Procedure A426 – start of preliminary phase

On May 13, 2010, AGCM, in response to a complaint by Fastweb, started a preliminary investigation of possible abuse by Telecom Italia of its dominant position. According to Fastweb, Telecom Italia behaved in an excluding way in the public tenders held in 2010 by Consip and Enel for the award of contracts for fixed telephony services and IP connectivity. In particular, according to the complainant, Telecom Italia provided none of the information of a technical-economic nature that was allegedly essential for the preparation of bids by its competitors, and provided some network services to its commercial divisions at conditions that were better than those applied to most other operators.

Fastweb complained of similar behaviour to AGCom which, in a note of May 26, 2010, rejected its claims in their entirety, finding that Telecom Italia is not obliged to provide information or network services in the tender process other than those required by the industry regulations. Since the investigation is not very advanced, a proper assessment of the alleged behaviour is premature.

Antitrust Procedure A428 – start of preliminary phase

On June 23, 2010, AGCM, in response to a report by Fastweb, started a preliminary investigation of two possible abuses by Telecom Italia of its dominant position. Firstly, according to Wind, Telecom Italia allegedly instituted a “technical boycott”, hindering or delaying the activation of services, by means of unjustified and spurious refusals (so-called KOs). Moreover, according to both complainants, Telecom Italia allegedly applied a discriminatory price policy, offering high discounts on the price of access services to final customers only in those geographic areas of the Country in which access services disaggregated from the local network are available, and hence where other operators can offer greater competition. To substantiate their allegation, the OLOs have indicated, among other things, the invitation to tender by the Florence municipal authority awarded to Telecom Italia in 2009. In relation to this invitation to tender, AGCom, after verifying the replicability of the financial conditions of the traffic services, notified Telecom Italia on February 1, 2011 that it had archived the allegations raised at the start. On April 18, 2011 Fastweb challenged this ruling before the Lazio regional administrative court. Since the investigation is not very advanced, a proper assessment of the alleged behaviour is premature.

National tax disputes

On March 25, 2011, the Agenzia delle Entrate in Milan served, to both Telecom Italia S.p.A and the subsidiary Olivetti Multiservices S.p.A., two notices of payment relating to property payments made in March 2006 to the Raissa and Spazio Industriale Funds; concerning the above, for the alleged non-payment of mortgage and cadastral taxes these companies were, consequently, requested to pay approximately 10 million euros, including taxes and interest; it should be noted that similar notices were served in the month of December 2010 related to property payments made in December 2005 to the same funds; the alleged sum amounted to approximately 61 million euros.

As regards the payment notices served in December 2010, the companies – also supported by authoritative professional opinions – believed they had operated in full respect of the tax regulations and that, therefore, the Authorities' allegations should be considered totally without foundation; for this reason the companies challenged the notices presenting an appeal to the Milan Provincial Tax Commission; on the companies' request, the latter also granted the suspension of their enforceability. Furthermore, the companies have already presented application for self-protection and suspension to the relevant offices of the Agenzia delle Entrate.

Considering that the two new payment notices are of the same nature as those served in December 2010, challenged by the companies, the same assessment expressed above is confirmed; therefore the companies will proceed to challenge these latest notices and ask the Provincial Tax Commission to suspend them and will present the Agenzia delle Entrate with application for self-protection and suspension.

ARGENTINA

On October 13, 2010 the Secretaría de Politíca Económica (a subdivision of Argentina’s Ministry of the Economy and Public Finance) issued a Resolution by which it authorised the increase of the stake held by Telecom Italia Group in Sofora from 50% to 58% of its share capital, and accepted the commitments undertaken by Telecom Italia and the Werthein group aimed at preserving competition in relation to Telecom Argentina activities and at the same time approval of the operation to acquire 100% of the share capital of Olimpia S.p.A. by Telco S.p.A. (“the Telco Transaction”). By virtue of these Resolutions the various administrative proceedings in which the Telecom Italia Group was involved in the country are substantially closed.

Similarly, on the basis of the above and in accordance with the agreements signed by the Telecom Italia Group and the Werthein group onAugust 5 2010, various legal proceedings, pending at the competent Argentinian Courts, had already been concluded with the same partner Werthein.

BOLIVIA – ENTEL

On November 5, 2010 ETI (Euro Telecom International N.V. – a Telecom Italia Group subsidiary), the Bolivian government and Bolivian telecommunication operator Entel reached an agreement to resolve the dispute concerning the expropriation of ETI’s holding in Entel by the Bolivian government on May 1, 2008. On the basis of this agreement, ETI received the sum of 100 million dollars (71 million euros), and the parties renounced their respective claims on the ETI shareholding in Entel. The agreement also envisaged the termination of the proceedings brought by the Bolivian government in the courts of the United States (concluded) and the termination of the international arbitration proceedings brought by ETI. At present, the arbitration expenses are being paid, after which the arbitration award for termination of the proceedings will be issued.

GERMANY- AOL arbitration

In November 2008, AOL LLC and AOL Europe Sàrl (“AOL”) notified Telecom Italia Deutschland Holding GmbH (“TIDE”) and Telecom Italia S.p.A. of a request for arbitration before the International Chamber of Commerce (“ICC”) in Paris, in relation to the agreement for TIDE’s acquisition of the broadband activities of the AOL Time Warner group, signed in September 2006 and implemented in February 2007. The purpose of the request for arbitration was to obtain:

•

a declaratory ruling that the contracts for the supply of services to a specific category of customers (the so-called Bring-Your-Own-Access or “BYOA”) must not be considered to have been assigned to Telecom Italia and TIDE;

•

an order for the defendants to ensure that HanseNet, the German subsidiary of TIDE at that time, pays back to AOL the amount allegedly received from the BYOA customers, totalling approximately 2 million euros.

In February 2009, Telecom Italia and TIDE filed their defences and counterclaims, requesting that AOL, after confirmation that the BYOA customers had to be assigned by AOL, transfer them, if still possible, and in any event pay any amount improperly collected by AOL as revenues from such customers, or compensation for the damages suffered.

The Arbitration Panel issued a partial award in November 2010, in which it declared that it had jurisdictions to decide on the request for arbitration and considered that Telecom Italia and TIDE were not entitled to the transfer of the BYOA customer category, since they did not belong to the access business transferred in 2007.

The Panel reserved its right to issue one or more subsequent awards on the matters still unresolved concerning not only AOL’s request for compensation, but also the counterclaims filed by Telecom Italia and TIDE, granting time to the parties to file their defences on these aspects.

GREECE - DELAN

In 2005, Tim International N.V. (later merged by incorporation into Telecom Italia International N.V. on June 27, 2008) sold its entire shareholding in Tim Hellas.through a Stock Purchase Agreement (“SPA”) signed on April 3, 2005. Pursuant to the agreement, Tim International undertook, among other things, to indemnify the purchaser in arbitration proceedings between Tim Hellas and Delan Cellular Services S.A. (“Delan”) that began in 1998.

In July 2006, Tim Hellas (whose name had changed in the meantime to Wind Hellas) informed Tim International about the issuance of an arbitration award in the Delan case that ordered Wind Hellas to compensate Delan for damages for an amount of approximately 52 million euros including interest. Wind Hellas challenged the arbitration award as void before the Athens Appeal Court and, in October 2007, informed Tim International of cancellation of the arbitration award.

In March 2008, Wind Hellas informed Tim International that Delan (under the new name Alpha Digital Television) had challenged the appeal judgement before the Greek Supreme Court, raising objections for a defect in notification of the decision.

Tim International, as allowed by the SPA, decided to defend Wind Hellas in challenging the judgement before the Supreme Court. In September 2008, the Greek Supreme Court rejected the objection made by Delan and confirmed that the arbitration award was void.

During 2009, Carothers Ltd., the company acting as successor of Delan, started legal proceedings both precautionary and on the merits against Wind Hellas before the Greek courts, on grounds similar to those raised in the arbitration case. Wind Hellas in turn summoned Telecom Italia International to appear, as guarantor, allegedly on the basis of the indemnification obligations contained in the shareholding transfer agreement. This summons to appear was also extended to the precautionary proceedings, in which Carothers seeks an attachment of the assets of Wind Hellas. In the precautionary phase of the proceedings, Telecom Italia International challenged its summoning as guarantor and in August 2010 the Athens court of the first instance in fact declared the request by Wind Hellas inadmissible.

During 2010 Wind Hellas also summoned Telecom Italia International to appear as a third party in another legal proceedings started in 2006 by Wind Hellas against what was at the time Delan (now Carothers), to contest the validity of the arbitration clause in relation to the Delan arbitration, as well as to verify the absence of liability for the damages of Wind Hellas.

International tax disputes

On March 22, 2011 Tim Celular received notification of tax assessment issued by the Brazilian Federal Tax Administration, totalling 1,265 million reais (approximately 550 million euros, including fines and interest, as the result of the conclusion of tax verification for the years 2006, 2007, 2008 and 2009 for the companies Tim Nordeste Telecomunicações S.A. and Tim Nordeste S.A (previously called Maxitel), companies which were gradually incorporated in Tim Celular with the aim of rationalizing company structure in Brazil.

The assessment notice includes various adjustments; the main allegations can be summarized as follows: (i) refusal to recognize that the amortisation of the goodwill relative to the acquisition of Tele Nordeste Celular Participações S.A. (“TNC”) is tax deductible, goodwill which was originally posted by Bitel Participações S.A. (Bitel); (ii) the undue exclusion of the goodwill previously amortised by Bitel, 1B2B and TNC; (iii) the refusal to recognize the tax effects of the merger between Tim Nordeste Telecomunicações S.A. and Maxitel S.A..

The adjustments included in the assessment notice were challenged by Tim Celular, in administrative proceedings, with the presentation of its first objections on April 20, 2011. The Management, as confirmed by the opinion of two legal advisors, does not consider it probable that the Company be subject to relevant negative consequences, in relation to the above.

b) Other information

Dispute concerning the concession charge for 1998

Telecom Italia has issued proceedings against the Presidenza del Consiglio dei Ministri (the office of the Prime Minister) before the Rome Court for compensation of the damage caused by the Italian State through appeal judgement No. 7506/09 by the Consiglio di Stato (Council of State) that, in the view of the Company, violates the principles of current European community law.

The case was also brought in the light of community jurisprudence that recognises the right to assert the responsibility of the State in relation to violation of rights recognised in community law and injured by a judgement that has become definitive, in respect of which no other remedy may be applied. The aforementioned appeal judgement definitively denied the right of Telecom Italia to restitution of the concession charge for 1998 (totalling 386 million euros for Telecom Italia and 143 million euros for Tim, plus interest), already rejected by the Lazio regional administrative court despite the favourable and binding opinion of the European Court of Justice on February 23, 2008 concerning the conflict between EC Directive No. 97/13 on general authorisations and individual licences 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 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. In the meantime, on January 15, 2011, Telecom Italia notified the Consiglio di Stato of its appeal for revocation of the judgement of the Consiglio di Stato itself, object of the proceedings.

Mobile telephony: investigation of Dealers

In the first quarter of 2011 the audit of prepaid SIM cards incorrectly associated to customer ID documents continued. With reference to the activations over the 2005-2008 period, the amount of SIM cards still to be reclaimed atJanuary 1 2011, 723 thousand lines, was reduced to around 647 thousand. It should also be noted that the Milan Public Prosecutor's Office is continuing its investigation, both into the SIM cards with incorrect user registrations, already examined in the Greenfield Project – the findings were illustrated in the Appendix to the Company Report on corporate governance and share ownership 2010 – and the phenomenon, raised by Deloitte Financial Advisory Services in its report, of the irregular postponement of the natural expiry date (13 months after the last topup or other chargeable post-sales action) of approximately 2.5 million prepaid SIM cards.

As is well-known, the Deloitte report was acquired by the Milan Procurator's Office, which at the time assumed a case of aggravated fraud against person unknown, issued a search order against Telecom Italia on February 3, 2011, following which some Company offices were searched.

Subsequently indirect sources communicated that the ex-Chief Executive Officer, Riccardo Ruggiero, and the ex Manager of the Domestic Mobile Services Department, Luca Luciani, would likewise have been subject to searches as part of the same criminal proceedings and would be currently investigated for aggravated fraud or obstructing the public surveillance authorities in their duties, ex art. 2638 Italian Civil Code (this last scheduled offence, at least in the abstract, for the purposes of responsibility foreseen under legislative decree No. 231/2001). Telecom Italia, building on the commitment of the present management in terms of the reclamation of the irregular SIM cards, is giving the Judicial Authorities its full collaboration; at the same time carrying out internal verification necessary to understand the phenomena at the basis of the investigation. The Company will carefully follow, as it has always done, the course of the investigation and start any action to protect itself, in the face of possible assessment of individual responsibility of third parties or employees.

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: May 25th, 2011 TELECOM ITALIA S.p.A. BY: /s/ Riccardo Amerigo Pettazzi --------------------------------- Riccardo Amerigo Pettazzi Company Manager


(millions of euros)	1^st Quarter 2011	1^st Quarter 2010	Change %

Revenues	7,073	6,413	10.3
EBITDA ⁽¹⁾	2,929	2,826	3.6
EBIT⁽¹⁾	1,499	1,408	6.5
Profit before tax from continuing operations	1,042	961	8.4
Profit from continuing operations	648	606	6.9
Profit (loss) from Discontinued operations/Non-current assets held for sale	-	-	-
Profit for the period	648	606	6.9
Profit for the period attributable to owners of the Parent	549	601	(8.7)
Capital expenditures	901	1,042	(13.5)


(millions of euros)	3/31/2011	12/31/2010	Change

Total assets	86,967	89,131	(2,164)
Total equity	32,975	32,610	365
- attributable to owners of the Parent	29,413	28,819	594
- attributable to non-controlling interests	3,562	3,791	(229)
Total liabilities	53,992	56,521	(2,529)
Total equity and liabilities	86,967	89,131	(2,164)
Share capital	10,600	10,600	-
Accounting net financial debt⁽¹⁾	30,972	32,087	(1,115)
Adjusted net financial debt⁽¹⁾	30,622	31,468	(846)
Adjusted net invested capital⁽²⁾	63,597	64,078	(481)
Debt Ratio (Adjusted net financial debt /Adjusted net invested capital)	48.2%	49.1%	(0.9) pp


	1^st Quarter 2011	1^st Quarter 2010	Change

EBITDA⁽¹⁾/Revenues	41.4%	44.1%	(2.7) pp
EBIT⁽¹⁾/Revenues (ROS)	21.2%	22.0%	(0.8) pp


(number)	3/31/2011	12/31/2010	Change

Headcount	84,144	84,200	(56)


(equivalent number)	1^st Quarter 2011	1^st Quarter 2010	Change

Headcount	78,104	67,299	10,805



(millions of euros)	1^st Quarter 2011	1^st Quarter 2010

Income taxes on Revenues and Other income of the companies in Brazil (PIS and COFINS)	(91)	(70)


Chairman	Gabriele Galateri di Genola
Chief Executive Officer	Franco Bernabè
Directors	César Alierta Izuel Paolo Baratta (independent) Tarak Ben Ammar Roland Berger (independent) Elio Cosimo Catania (independent) Jean Paul Fitoussi (independent) Julio Linares López Gaetano Micciché Aldo Minucci Renato Pagliaro Mauro Sentinelli Luigi Zingales (independent)
Secretary to the Board	Antonino Cusimano


Chairman and Chief Executive officer	Franco Bernabè
Deputy Chairman	Aldo Minucci
Chief Operating Officer and Managing Director	Marco Patuano
Directors	César Alierta Izuel Tarak Ben Ammar Elio Cosimo Catania (independent) Ferdinando Falco Beccalli (independent) Jean Paul Fitoussi (independent) Gabriele Galateri di Genola Julio Linares López Gaetano Micciché Renato Pagliaro Francesco Profumo (independent) Mauro Sentinelli (independent) Luigi Zingales (independent)
Secretary to the Board	Antonino Cusimano


Chairman	Enrico Maria Bignami
Acting Auditors	Gianluca Ponzellini
	Lorenzo Pozza
	Salvatore Spiniello
	Ferdinando Superti Furga
Alternate Auditors	Silvano Corbella
	Maurizio Lauri
	Vittorio Giacomo Mariani
	Ugo Rock


Share capital	10,688,746,056.45 euros
Number of ordinary shares (par value 0.55 euros each)	13,407,963,078
Number of savings shares (par value 0.55 euros each)	6,026,120,661
Number of Telecom Italia ordinary treasury shares	37,672,014
Number of Telecom Italia ordinary shares held by Telecom Italia Finance S.A.	124,544,373
Percentage of ordinary treasury shares held by the Group to total share capital	0.83%
Market capitalization (based on March 2011 average prices)	20,553 million euros


Holder	Type of ownership	% stake in ordinary share capital

Telco S.p.A.	Direct	22.40%
Findim Group S.A.	Direct	4.99%
BNP Paribas S.A.	Direct and Indirect	2.53% (*)


	Rating	Outlook

STANDARD & POOR'S	BBB	Stable
MOODY'S	Baa2	Stable
FITCH RATINGS	BBB	Stable


(millions of euros)	1^stQuarter 2011	1^st Quarter 2010	Change (a-b)
	(a)	(b)	amount	%	% organic

Revenues	7,073	6,413	660	10.3	(0.2)
EBITDA	2,929	2,826	103	3.6	(3.6)
EBITDA margin	41.4%	44.1%	(2.7)pp
Organic EBITDA margin	41.9%	43.4%	(1.5)pp
EBIT	1,499	1,408	91	6.5	1.2
EBIT margin	21.2%	22.0%	(0.8)pp
Organic EBIT margin	21.7%	21.4%	0.3 pp
Profit before tax from continuing operations	1,042	961	81	8.4
Profit from continuing operations	648	606	42	6.9
Profit (loss) from Discontinued operations/non-current assets held for sale	-	-	-	-
Profit for the period	648	606	42	6.9
Profit for the period attributable to owners of the Parent	549	601	(52)	(8.7)


(unità)	3/31/2011	12/31/2010	Change

Headcount – Italy	58,026	58,045	(19)
Headcount – Foreign	26,118	26,155	(37)
Total⁽¹⁾	84,144	84,200	(56)


(millions of original currency)	Currency	Amount	Issue date

New issues
Telecom Italia S.p.A. 1,000 million euros 5.125% maturing 1/25/2016	Euro	1,000	1/25/2011


	3/31/2011	12/31/2010	Change

Fixed-line network connections Domestic BU at period-end (thousands)	17,367	17,609	(242)
Physical accesses at period-end (Consumer + Business) (thousands)	15,145	15,351	(206)
Fixed-line network connections BU Argentina at period-end (thousands)	4,110	4,107	3
Mobile lines at period-end (thousands)	102,657	100,244	2,413
Mobile lines Domestic BU (thousands)	31,038	31,018	20
Mobile lines Brazil BU (thousands)	52,836	51,015	1,821
Mobile lines Argentina BU (thousands)	18,783	18,211	572
Broadband accesses Domestic BU at period-end (thousands)	9,131	9,058	73
of which retail broadband accesses (thousands)	7,194	7,175	19
Broadband accesses Argentina BU at period-end (thousands)	1,407	1,380	27


(millions of euros)	1^st Quarter 2011		1^st Quarter 2010		Change
		% of total		% of total	amount	%	% organic

Domestic	4,596	65.0	4,974	77.6	(378)	(7.6)	(7.4)
Core Domestic	4,396	62.2	4,714	73.5	(318)	(6.7)	(6.7)
International Wholesale	317	4.5	398	6.2	(81)	(20.4)	(18.5)
Brazil	1,646	23.3	1,323	20.6	323	24.4	13.8
Argentina	753	10.6	-	-	753	-	27.2
Media, Olivetti and Other Operations	131	1.9	151	2.4	(20)	(13.2)
Adjustments and Eliminations	(53)	(0.8)	(35)	(0.6)	(18)	(51.4)
Total consolidated revenues	7,073	100.0	6,413	100.0	660	10.3	(0.2)


(millions of euros)	1^st Quarter 2011		1^st Quarter 2010		Change
		% of total		% of total	amount	%	% organic

Domestic	2,236	76.3	2,451	86.7	(215)	(8.8)	(7.6)
EBITDA margin	48.7		49.3		(0.6) pp		0.0 pp
Brazil	452	15.4	381	13.5	71	18.6	8.6
EBITDA margin	27.5		28,8		(1.3) pp		(1.3) pp
Argentina	257	8.8	-	-	257	-	22.5
EBITDA margin	34.1		-	-			(1.4) pp
Media, Olivetti and Other Operations	(14)	(0.4)	(10)	(0.4)	(4)
Adjustments and Eliminations	(2)	(0.1)	4	0.2	(6)
Total consolidated EBITDA	2,929	100.0	2,826	100.0	103	3.6	(3.6)
EBITDA margin	41.4		44.1		(2.7) pp


(millions of euros)	1^st Quarter 2011	1^st Quarter 2010	Change

Amortization of intangible assets with a finite useful life	566	590	(24)
Depreciation of property, plant and equipment – owned and leased	865	822	43
Total	1,431	1,412	19


(billions of euros)	3/31/2011		12/31/2010
	Agreed	Drawn down	Agreed	Drawn down

Revolving Credit Facility – expiring February 2013	1.25	-	1.25	--
Revolving Credit Facility – expiring August 2014	8.0	1.5	8.0	1.5
Revolving Credit Facility – expiring June 2012 (renewable until December 2013)	0.2	0.12	0.2	0.12
Total	9.45	1.62	9.45	1.62


Detail of the maturities of Financial liabilities – nominal repayment amount:
	maturing by 3/31/ of the year:
(millions of euros)	2012	2013	2014	2015	2016	After 2016	Total

Bonds	4,275	3,312	2,408	2,257	3,521	11,539	27,312
Loans and other financial liabilities	881	336	1,578	2,141	1,022	2,216	8,174
Finance lease liabilities	216	145	170	147	129	816	1,623
Total	5,372	3,793	4,156	4,545	4,672	14,571	37,109
Current financial liabilities	442	-	-	-	-	-	442
Total	5,814	3,793	4,156	4,545	4,672	14,571	37,551


	3/31/2011	12/31/2010	3/31/2010

DOMESTIC FIXED
Fixed-line network connections in Italy at period-end (thousands)	17,367	17,609	18,254
Physical accesses (Consumer+Business) at period-end (thousands)	15,145	15,351	15,901
Voice pricing plans (thousands)	6,128	6,066	5,836
Broadband accesses in Italy at period-end (thousands)	9,131	9,058	8,859
of which retail accesses (thousands)	7,194	7,175	7,071
Virgilio average daily page views during period (millions)	49.3	45.5	45.2
Virgilio average daily single visitors (millions)	4.1	3.7	3.6
Network infrastructure in Italy:
access network in copper (millions of km - pair, distribution and connection)	111.7	111.7	110.5
access and carrier network in optical fiber (millions of km - fiber)	4.3	4.3	4.1
Network infrastructure abroad:
European backbone (km of fiber)	55,000	55,000	55,000
Mediterranean (km of submarine cable)	7,500	7,000	7,000
South America (km of fiber)	30,000	30,000	30,000
Total traffic:
Minutes of traffic on fixed-line network (billions)	28.3	121.5	32.5
National traffic	24.8	104.1	27.9
International traffic	3.5	17.4	4.6
DOMESTIC MOBILE
Number of lines at period-end (thousands)	31,038	31,018	30,393
of which prepaid lines (thousands) ⁽¹⁾	24,066	24,090	23,837
Change in lines (%)	0.1	0.5	(1.5)
Churn rate (%) ⁽²⁾	5.5	22.0	6.4
Total outgoing traffic per month (millions of minutes)	3,518	3,305	2,977
Total average outgoing and incoming traffic per month (millions of minutes)	4,680	4,597	4,256
Average monthly revenues per line (euro) ⁽³⁾	17.0	19.7	19.7
BRAZIL
Number of lines at period-end (thousands)	52,836	51,015	42,356
ARGENTINA (*)
Number of fixed lines at period-end (thousands)	4,110	4,107	4,058
Number of mobile lines at period-end (thousands)	18,783	18,211	16,767
Broadband accesses at period-end (thousands)	1,407	1,380	1,232
MEDIA
La7 audience share Free to Air (analog mode) (average during period, in %)	3.4	3.1	2.7
La7 audience share Free to Air (analog mode) (average of last month of period, in %)	3.4	3.3	2.8


	(millions of euros)		(millions of Brazilian reais)		Change
	1^st Quarter 2011 (a)	1^st Quarter 2010 (b)	1^st Quarter 2011 (c)	1^st Quarter 2010 (d)	Amount (c-d)	% (c-d)/d

Revenues	1,646	1,323	3,752	3,296	456	13.8
EBITDA	452	381	1,031	949	82	8.6
EBITDA margin	27.5	28.8	27.5	28.8		(1.3) pp
EBIT	184	65	418	162	256	°
EBIT margin	11.1	4.9	11.1	4.9		6.2 pp
Capital expenditures	130	277	297	689	(392)	(56.9)
Headcount at period-end (number)			9,991	(*) 10,114	(123)	(1.2)


	(millions of euros)		(millions of Argentine pesos)		Change
	1^st Quarter 2011 (a)	1^st Quarter 2010 (b)	1^st Quarter 2011 (c)	1^st Quarter 2010 (d)	Amount (c-d)	% (c-d)/d

Revenues	753	612	4,134	3,251	883	27.2
EBITDA	257	217	1,410	1,150	260	22.6
EBITDA margin	34.1	35.4	34.1	35.4		(1.3) pp
EBIT	125	142	684	756	(72)	(9.5)
EBIT margin	16.5	23.2	16.5	23.2		(6.7) pp
Capital expenditures	91	96	502	509	(7)	(1.4)
Headcount at period-end (number)(*)			15,738	15,650(**)	88	0.6


(millions of Argentine pesos)	1^stQuarter 2011 (a)	1^st Quarter 2010 (b)	Change (a-b)

Indirect duties and taxes	298	228	70
Telecommunications operating fees and charges	77	61	16
Writedowns and expenses in connection with credit management	39	31	8
Sundry expenses	10	21	(11)
Total	424	341	83


(millions of euros)	1^st Quarter 2011	1^st Quarter 2010

Acquisition of goods and services - Other operating expenses:
Sundry expenses	-	(8)
Impact on EBITDA - Operating profit before depreciation and amortization, Capital gains (losses) and Impairment reversals (losses) on non-current assets	-	(8)
Impact on EBIT – Operating profit	-	(8)
Financial income (expenses) and Other income (expenses) from investments:
Net gains on disposal of investments	17	1
Impact on profit before tax from continuing operations	17	(7)
Income taxes on non-recurring items	-	(1)
Impact on profit for the period	17	(6)


Profit before tax from continuing operations
+	Finance expenses
-	Finance income
+/-	Other expenses (income) from investments
+/-	Share of losses (profits) of associates and joint ventures accounted for using the equity method
EBIT- Operating profit
+/-	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


+	Non-current financial liabilities
+	Current financial liabilities
+	Financial liabilities directly associated with Discontinued operations/Non-current assets held for sale
a)	Gross financial debt
+	Non-current financial assets
+	Current financial assets
+	Financial assets included in Discontinued operations/Non-current assets held for sale
b)	Financial assets
c=(a - b)	Accounting net financial debt
d)	Reversal of fair value measurement of derivatives and related financial assets/liabilities
e=(c + d)	Adjusted net financial debt

Footnotes