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Notice convening the shareholders' meeting

03/13/2007 - 08:00 AM

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TELECOM ITALIA S.p.A.
Registered Office in Milan, at 2 Piazza degli Affari
Corporate Headquarters in Rome, at 41 Corso d’Italia
Fully paid-up share capital €10,673,771,058.50
Tax/VAT and Milan Company Register number: 00488410010

NOTICE CONVENING THE SHAREHOLDERS’ MEETING

Holders of Telecom Italia ordinary shares are called:

  • on 14 April 2007 at 12.00 p.m. at 2 Piazza degli Affari, Milan to an extraordinary shareholders’ meeting on the first call and
  • on 15 April 2007 at the same time and place to an ordinary share­holders’ meeting on the first call and an extraordinary share­holders’ meeting on the second call and
  • on 16 April 2007 at 11.00 a.m. at 3 Via Toscana, Rozzano (Milan) to an ordinary shareholders’ meeting on the second call and an extraordinary shareholders’ meeting on the third call

to discuss and vote on the following

Agenda
Ordinary meeting

  • Financial statements for the year ended 31 December 2006 – related and consequent resolutions.
  • Appointment of the Board of Directors:
  • determination of the number of members of the Board;
  • determination of the term of office of the Board;
  • appointment of the Directors;
  • determination of the annual compensation of the members of the Board of Directors.
  • Decisions consequent on the resignation of a member of the Board of Auditors.
  • Plan for the award of free treasury shares to the top management of the Telecom Italia Group. Authorization to purchase and dispose of treasury shares subject to revocation of the existing authorization – related and consequent resolutions.
  • Decisions consequent on the completion of the audit engagement awarded to Reconta Ernst & Young S.p.A.
  • Amendments to the Meeting Regulations approved by the shareholders’ meeting on 6 May 2004.

Extraordinary meeting

  • Amendment of the following articles of the company’s bylaws: 3 (purpose); 6 (savings shares); 8 (bonds); 9 (appointment of the Board of Directors); 10 (corporate officers); 11 (meetings of the Board of Directors); 12 (powers of the Board of Directors); 13 (manager responsible for the preparation of the Company’s financial reports); 14 (information flows from the executive directors to the other directors and the members of the Board of Auditors); 15 (representation of the Company); 16 (compensation of the Board of Directors); 17 (Board of Auditors); 18 (calling of shareholders’ meetings); 19 (participation in shareholders’ meetings); 20 (conduct of shareholders’ meetings); and 21 (allocation of the profit); numbering of the paragraphs of the articles of the bylaws; and related and consequent resolutions.

In view of the composition of the Company’s shareholders, the quorum will presumably be reached and the meeting duly constituted only on 16 April 2007 at 11.00 a.m. at 3 Via Toscana, Rozzano (Milan).
Under Italian law shareholders who, separately or jointly, represent at least one fortieth of the voting share capital may request, within five days of the publication of this notice, additions to the agenda, specifying in the request the additional items they propose. Additions to the agenda may not be made, however, for matters on which the shareholders’ meeting is required by law to resolve on proposals put forward by the directors or on the basis of a plan or report the latter have prepared.
In the event of any such additions, the amended agenda will be published in the same way as this notice.

Entitlement to attend

Ordinary shareholders for whom the Company has received the notification specified by law at least two days before the date set for each shareholders’ meeting are entitled to attend the meeting.
The Company does not require shareholders to block their shares to be eligible to attend a meeting, instead they must deposit them, i.e. give the intermediary that keeps the relevant accounts instructions to make the necessary notifications to the Company at least two days before the date of the meeting. This does not prevent the subsequent withdrawal of the shares; however, if they are withdrawn, the earlier deposit ceases to be effective for the purpose of entitlement to attend the meeting.
Any requests for advance notice to perform the relevant formalities in good time or unavailability of shares to be deposited as a consequence of intermediaries’ market practices may not be imputed in any way to the Company.
Shareholders entitled to attend are invited to arrive before the time set for the start of the meeting; the registration formalities will begin at 8.30 a.m. However, to facilitate the verification of the entitlement to attend, those entitled to do so are invited:

  • to send any proxy documents in advance of the meeting, using the addresses given at the bottom of this notice;
  • to show, on the day of the meeting, a copy of the notification made to the Company that custodians are legally required to make available to them.

The right to vote can also be exercised by mail. The documentation for voting by mail will be available from 23 March 2007 at the Company’s registered office, where it can also be requested through authorized custodians. The envelope containing the ballot, a copy of the notification sent by the custodian and, where appropriate, documentation proving that the person signing the ballot is authorized to do so should be sent to the following address:
TELECOM ITALIA S.p.A.
Corporate Affairs
Piazza degli Affari, 2
20123 MILAN - ITALY
not later than forty-eight hours before the meeting.
Shareholders are reminded that voting by mail is incompatible with giving proxies and must be exercised directly by the holder of the right to vote.
The owners of ADRs listed on the New York Stock Exchange and representing ordinary shares of Telecom Italia must contact JP Morgan Chase Bank, the issuer of the above-mentioned ADRs (address of customer service: PO Box 3408, South Hackensack, NJ 07606; telephone number: +1 201 680 6630 for calls from outside the United States; 1 800 990 1135 for calls from within the United States).

Matters on the agenda

Financial statements for the year ended 31 December 2006 – related and consequent resolutions
Telecom Italia’s draft financial statements show net income for the year of € 4,143,576,591.31 which allows last year’s dividend policy to be maintained.
Shareholders are invited to approve the Company’s 2006 financial statements and the distribution of part of the net income for the year, through payment of the following dividends:

  • € 0.1400 for each ordinary share;
  • € 0.1510 for each savings share.

Subject to approval by the shareholders’ meeting, the Company will pay the above-mentioned dividends as of 26 April 2007, with 23 April 2007 as the coupon detachment date.

Appointment of the Board of Directors
The term of office of the current Board of Directors ends with the approval of the financial statements for the 2006 fiscal year.
Shareholders are therefore invited to vote separately to:

  • determine the number of Directors (from 7 to 23; currently 21);
  • establish the term of office of the new Board (up to a maximum of three fiscal years; currently equal to the legal maximum);
  • appoint the Directors using a slate voting system;
  • determine the annual compensation of the members of the Board of Directors (currently € 3 million for 21 Directors).

The Board of Directors has not put forward a slate of candidates.
Only shareholders who alone or together with other shareholders hold a total number of shares representing at least 1% of the voting share capital may submit slates, subject to their proving ownership of the number of shares needed for the presentation of slates at least two days prior to the date set for the ordinary shareholders’ meeting on the first call. Each shareholder may present or participate in the presentation of only one slate and each candidate may appear on only one slate on pain of ineligibility.
The slates must be filed at the registered office of the Company and published in at least one Italian daily newspaper with national circulation at least ten days prior to the date set for the shareholders’ meeting. Each slate must be filed together with the individual candidates’ acceptances of their candidacy and declarations in which they attest that there are no grounds for ineligibility or incompatibility. Together with the declarations, a curriculum vitae shall be filed for each candidate setting out his/her main personal and professional data and the grounds, if any, for their qualifying as independent.
It is recommended that candidates authorize the publication of their curricula vitae on the Company’s website.

Decisions consequent on the resignation of a member of the Board of Auditors
Following the resignation of Stefano Meroi, the vacancy was filled until this shareholders’ meeting by the alternate member elected from the same list, Enrico Maria Bignami.
In the case in question the slate method of voting does not apply; accordingly, the Board of Directors proposes the appointment of Enrico Maria Bignami as a member of the Board of Auditors and of Luigi Gaspari as alternate auditor until the end of the Board of Auditors’ term of office (with the approval of the financial statements for the 2008 fiscal year).
The curricula vitae of the interested parties are filed at the registered office of the Company as an appendix to the relevant report.

Plan for the award of free treasury shares to the top management of the Telecom Italia Group - Authorization to purchase and dispose of treasury shares subject to revocation of the existing authorization – related and consequent resolutions
The shareholders’ meeting is called upon to approve the following with a single vote:

  • an initiative for the award of free treasury shares to corporate officers, employees and collaborators (hereinafter “the Plan”), with a mandate conferred on the Board of Directors to implement it;
  • authorization to purchase up to a maximum of 25,000,000 ordinary shares of the Company (subject to revocation of the existing authorization granted by the shareholders’ meeting on 13 April 2006) for the implementation of the Plan;
  • authorization to dispose of the treasury shares acquired as specified above or in any case held by the Company by assigning them free of charge to the beneficiaries of the Plan.

The authorization to purchase has a duration equal to the maximum allowed by the applicable law. The consideration for the purchases, to be made on regulated markets, must be between a minimum and a maximum corresponding to the weighted average of the official prices of the ordinary shares recorded by Borsa Italiana S.p.A. in the last ten days of trading before the purchase date, respectively decreased and increased by 10%.
Authorization is requested for disposal free of charge of the shares purchased as specified above or in any case available to the Company by assigning them to the beneficiaries of the Plan, subject to satisfaction of the conditions laid down therein.
The Plan is aimed at the Executive Directors with direct organizational responsibility for the business results of Telecom Italia, managers reporting directly to the Executive Directors, and persons holding strategic positions within the Group and having an employment or collaboration relationship with Telecom Italia or its subsidiaries, who will be  identified by the Board of Directors.
The Plan has a duration of three years with the right to the assignment of shares maturing at the end of the period. The actual assignment of shares, up to a maximum value equal to three times the beneficiary’s fixed annual compensation, (i) depends on the continued existence of the directorship or of the employment/collaboration relationship of the beneficiary with the Company or its subsidiaries for the whole duration of the Plan (except in some specific cases of early assignment) and (ii) varies with the degree of achievement of performance objectives, identified in the Total Shareholder Return and the performance of the Telecom Italia share compared with the telecommunications sector of the Dow Jones Stoxx index.
No restrictions are foreseen on the availability of the shares assigned to the beneficiaries.

Decisions consequent on the completion of the audit engagement awarded to Reconta Ernst & Young S.p.A.
The audit report on the 2006 financial statements completes the three-year audit engagement awarded to Reconta Ernst & Young S.p.A. by the shareholders’ meeting of 6 May 2004, which technically can be extended to the audit of the 2009 financial statements.
By law the power to propose the appointment of the auditor of the Company’s financial statements lies with the Board of Auditors.
The Board of Auditors proposes the appointment of Reconta Ernst & Young S.p.A. until the audit of the 2009 financial statements and consolidated financial statements for the following annual consideration:

  • € 1,260,000 for the annual financial statements of the Company;
  • € 230,000 for the annual consolidated financial statements;
  • € 280,000 for the six month report.

Amendments to the Meeting Regulations approved by the shareholders’ meeting on 6 May 2004
Apart from some purely formal changes, the amendments to the Meeting Regulations submitted to the shareholders’ meeting for approval with a single vote mainly concern:

  • the possibility - introduced by Law 262/2005 - for shareholders to add items to the agenda of the shareholders’ meeting;
  • the simplification of postal voting, by making the procedure subject to decisions to be taken from time to time, with account also taken of new legal and technological opportunities.

Amendment of the following articles of the company’s bylaws: 3 (purpose); 6 (savings shares); 8 (bonds); 9 (appointment of the Board of Directors); 10 (corporate officers); 11 (meetings of the Board of Directors); 12 (powers of the Board of Directors); 13 (manager responsible for the preparation of the Company’s financial reports); 14 (information flows from the executive directors to the other directors and the members of the Board of Auditors); 15 (representation of the Company); 16 (compensation of the Board of Directors); 17 (Board of Auditors); 18 (calling of shareholders’ meetings); 19 (participation in shareholders’ meetings); 20 (conduct of shareholders’ meetings); and 21 (allocation of the profit); numbering of the paragraphs of the articles of the bylaws; and related and consequent resolutions.
The extraordinary shareholders’ meeting is called on to approve, separately, article by article, a series of changes to the bylaws serving not only to adapt them to recent changes in legislative and self-regulatory texts but also to take the opportunity to update and better coordinate some provisions.
The changes to the corporate purpose (Art. 3) serve to bring the description of the mission into line with a reality that has changed considerably. They are of a formal nature and do not give withdrawal rights to shareholders who do not participate in their approval.
Ad hoc rules have been introduced on the organization of savings shareholders (Art. 6) and bondholders (Art. 8), based on the principle that the Company should bear the related costs, in different ways and with different limits according to the various categories.
As for the Board of Directors, the proposed changes (Arts 9-16) meet the need both to adapt the provisions to the new legal framework and to clarify and simplify them.
In particular, it is worth noting: the increase from 10 to 15 days in the time before the meeting for the presentation of slates of candidates for election to the Board of Directors; the introduction of a reference to the possibility of a Consob regulation setting a lower threshold for the presentation of slates (at present it is 1%); the inclusion of so-called simplified spin-offs within the scope of the Board’s powers; the increased flexibility of the procedure and time limits for calling Board meetings (the minimum notice is reduced from 24 to 12 hours); the innovations as regards corporate offices, with the possibility of appointing more than one Deputy Chairman; and the terminological clarification that all the Managing Directors can legally represent the Company. Article 13 is supplemented by two paragraphs regarding the manager responsible for the preparation of the Company’s financial reports, whose term of office is linked to that of the Board.
Turning to the Board of Auditors (Art. 17) the main changes pending the issue of the relevant Consob regulation concern: the alignment of the appointment procedure with that for the Board of Directors; the elimination of the limit on the number of positions held (no longer a matter for the bylaws having been entrusted by law to Consob); the elimination of the clause on the Board’s appointment of its Chairman; and the determination of the number of members at five.
Lastly, as regards the shareholders’ meeting (Arts. 18, 19 and 20), rules are proposed for the addition of items to the agenda at the request of shareholders, who now have to bear the cost of preparing an ad hoc report. The bylaws are supplemented by the Meeting Regulations, which are amended accordingly. As for the conduct of meetings, there are now more detailed specifications concerning the manner of calling meetings of savings shareholders and chairing the various types of shareholders’ meetings.
The changes regarding the allocation of the profit for the year (Art. 21) serve a purely formal coordinating purpose.
The shareholders’ meeting is also invited to approve the numbering of the individual paragraphs making up the bylaws.

Documentation

The reports and proposed resolutions for all the items on the agenda are available to the public at the Company’s registered office and at Borsa Italiana S.p.A. The documentation regarding the financial statements will be made available by 30 March 2007, inter alia to comply with Article 82.2 of Consob Regulation 11971/1999, as amended. The Company’s registered office will be open to the public for consultation and/or consignment of the above documentation on weekdays, Monday through Friday, from 10.00 a.m. to 13.00 p.m. and from 15.00 p.m. to 17.00 p.m. The documentation for the meeting will also be posted on the Company’s website.

Shuttle bus service to and from Rozzano

Buses will be provided to take shareholders to the meeting place on 16 April 2007 (with departures at 8.30, 9.00 and 9.30 a.m. from Telecom Italia’s registered office, at 2 Piazza degli Affari, Milan) and back after the meeting. Shareholders wishing to use the service are requested to book not later than 13 April 2007 by calling the toll-free number 800899389 or sending an e-mail to navette.assemblee@telecomitalia.it/.

Additional information

Requests for further clarifications or information may be made by:

Reports and proposed resolutions (file .pdf, 209 Kb)