Telecom Italia Rsp

Investor Presentation • Nov 9, 2022

Disclaimer

This presentation contains statements that constitute forward looking statements regarding the intent, belief or current expectations of future growth in the different business lines and the global business, financial results and other aspects of the activities and situation relating to the TIM Group. Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those projected or implied in the forward-looking statements as a result of various factors.

The financial results of the TIM Group are prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board and endorsed by the EU (designated as "IFRS").

The accounting policies and consolidation principles adopted in the preparation of the financial results for Q3 '22 and 9M '22 of the TIM Group are the same as those adopted in the TIM Group Annual Audited Consolidated Financial Statements as of December 31st , 2021, to which reference can be made, except for the amendments to the standards issued by IASB and adopted starting from January 1 st , 2022.

Please note that the financial results for Q3 '22 and 9M '22 of the TIM Group are unaudited.

Alternative Performance Measures

The TIM Group, in addition to the conventional financial performance measures established by IFRS, uses certain alternative performance measures for the purposes of enabling a better understanding of the performance of operations and the financial position of the TIM Group. In particular, such alternative performance measures include: EBITDA, EBIT, Organic change and impact of non-recurring items on revenue, EBITDA and EBIT; EBITDA margin and EBIT margin; net financial debt (carrying and adjusted amount) and Equity Free Cash Flow. Moreover, following the adoption of IFRS 16, the TIM Group uses the following additional alternative performance indicators: EBITDA After Lease ("EBITDA-AL"), Adjusted Net Financial Debt After Lease and Equity Free Cash Flow After Lease. Such alternative performance measures are unaudited.

As described in the 2021 TIM Group Consolidated Financial Statements, 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 purchases of materials and services. In connection with the foregoing, the economic data of the first nine months and of the third quarter of 2021, has been recalculated.

* * *

Financial and operating results #²

Highlights TIM Group

Improving trends, both on financials & KPIs	▪ Group Revenues back to growth YoY Service Revenues: 2nd ▪ quarter of consecutive growth, more than half of the YoY trend improvement vs Q2 related to Domestic performance ▪ Group EBITDA AL better trend YoY despite Domestic OPEX increase for though comps ▪ Domestic FSR trend improved further, ARPU higher YoY, churn at lowest level of last 5y ▪ Domestic MSR trend better YoY, human negative net adds reduced to 1/6 vs Q2, with better MNP trend YoY and churn at new record low	FSR MSR -2,2% -3,9% -4,1% -3,9% -5,0% -5,8% Q1 '22 Q2 Q3
Transformation Plan execution	▪ Implementation fully on track with the plan: ~90% of '22 target achieved ▪ ~50% of '23 OPEX reduction target already secured ▪ Multiple achievements towards improved operating models and cost structure	~€ 270m OPEX savings in 9M '22 vs. inertial scenario
Energy	▪ Energy costs for 2022 are almost all hedged, '23 hedged at ~75% ▪ Self-generated green energy: 6 GWh/year in '22, further expanding in following years ▪ Many initiatives ongoing for higher efficiency and sustainability	~75% hedged in '23 including pass-through on colocation
Debt financing & liquidity position	▪ Sound liquidity position, further strengthened by SACE financing and Inwit sale proceeds already cashed-in ▪ (1) 2024 maturities fully covered ▪ No major impact from interest rates increase	~65% L-T debt at fixed rate (1)

First 9 months of market in a nutshell TIM Group

Domestic Consumer	▪ Clear signs of market rationality on prices, both on fixed and mobile ▪ Migration to fiber slowing down, with broadband lines penetration stable at ~93% of total fixed lines ▪ Mobile number portability market cooling down	Market MNP k lines -21% YoY -10% -6% -5% change 2.250 2.190 Q4 '21 Q1 '22 Q2 Q3
Domestic Corporate	▪ Cloud migration accelerating both on private and PA segment ▪ Connectivity broadly stable YoY	Cloud market trend Connectivity market €bn (1) €bn (2) >20% 3,8 3,8 '20 '21 '22e H1 '21 H1 '22
Domestic Wholesale	▪ FTTC growing YoY, representing ~56% of total access lines	BB/UBB market, technology mix (3) 9% 9% 9% FWA 14% 15% 16% FTTH 55% 55% 56% FTTC 22% 20% 19% DSL Q4 '21 Q1 '22 Q2
Brazil	▪ Market consolidation in progress, more rational competitive environment ▪ ICMS tax reduction fueling customers spending power and creating additional demand	ICMS tax reduction 18% on revenues on avg. (from 27%)

First 9 months of TIM entities in a nutshell TIM Group

	Continuity Plan	Delayering Plan
TIM Consumer	▪ KPIs improving trend YoY both on fixed and mobile ▪ CB being selectively priced up both on fixed and mobile, price indexation by '22 TIM 1st in Q2 (from 4th ▪ operator in FTTH market share in previous quarters) ▪ Content strategy: deals being renegotiated, new partnerships under evaluation
TIM Enterprise	▪ Increased value of contracts signed, strong pipeline and unique positioning ▪ NRRP/NSH initiatives supporting investments and securing new revenue streams ▪ Pricing alignment based on inflation increase by '22	Legal entity set-up process approved
NetCo	▪ Moving forward with FiberCop plan execution, FTTH roll-out on track ▪ NRRP initiatives supporting FTTH coverage expansion and take-up ▪ FTTH co-investment offer on secondary network under market test by AGCOM ▪ 2023 wholesale tariffs under public consultation, significant upside expected	MoU extended to Nov.30th, 2022 No more exclusivity obligations
TIM Brasil	▪ Accelerating growth benefitting from value strategy and OI integration ▪ ICMS reduction benefitting customers and creating additional demand ▪ 5G launch as a competitive advantage

9M '22 - TIM Consumer

Improving trends while pursuing a value strategy

(YoY change)	9M '22	Q3 '22
Tot. Revenues	-9.6%	-8.6%
o/w services	-7.4%	-6.0%

9M '22 - TIM Enterprise

Growing steadily through unique positioning in PA and Top Enterprise segment

9M '22 - NetCo	(YoY change)	9M '22	Q3 '22
Successfully upgrading the network through FiberCop	Tot. Revenues o/w services	-4.8%(1) -3.8%	-2.6% -2.7%
Customer base and coverage	FiberCop	plan execution

• current macro, competitive scenario and encourage faster migration to fiber ▪ 2022 prices unchanged vs '21 to avoid a retrospective revision
• Approval expected by Q1 '23, new prices to be applied retroactively (Jan.1st, 2023)

Upside not factored in the plan

(1) 3.2pp drag YoY on revenues (1.7pp drag YoY on Services) due to not-repeatable transactions in 9M '21 (2) On active lines

9M '22 - TIM Brasil Accelerating growth despite tough macro

(YoY change)	9M '22	Q3 '22
Tot. Revenues	+18.5%	+24.4%
o/w services	+18.4%	+24.7%

TIM Domestic

Transformation Plan – Fully on track with the implementation

90% of '22 target achieved

• ✓ 100% of labour savings
• ✓ 85% of external OPEX savings

~50% of '23 P&L OPEX reduction target secured

Digital break-through

• ✓ Kicked-off review of IT architecture and operations supporting tools
• ✓ Started rationalisation of touchpoints, launched full integration of website
• ✓ Started review of IT services operating model and reorganization
• ✓ Outlined plan to reduce humanhandled caring volumes(1) and rebalance Make or Buy mix
• ✓ Boosted "paperless" adoption

Simplify cost structure

• ✓ New delivery, assurance and creation model on fixed network
• ✓ Defined plan to boost energy selfproduction, reduce consumption and commodity price risk
• ✓ Renegotiated content-related contracts securing better commercial conditions
• ✓ Defined strategy to optimize sourcing on B2B
• ✓ Sold 10+ sites, negotiation to lease redundant building ongoing

Rightsize & talents' uplift

• ✓ Early retirement: ~0.6k exits in Sep., additional exits by year end
• ✓ "Expansion Contract": hourly reduction started for >70% of FTEs; additional reduction in Nov.
• ✓ Insourcing plan: >0.6K HCs identified, 35% started reskilling
• ✓ Voluntary exits: 130% of '22 target already achieved

Enhanced cost optimisation

• ✓ Saved ~10% of planned IT spend
• through Cost Control Committee
• ✓ Optimised credit management
• ✓ Identified actions to optimise devices logistics
• ✓ Set-up dedicated team to create an advertising ROI dashboard
• ✓ Reduced traffic unbalance vs other operators (-20% QoQ)
• ✓ Renewed Consumer acquisition channel mix - lower Cost to Acquire, push on Digital & internal Caring

Q3 '22 Results

TIM Group - Q3 '22 key financials

Organic data (1), IFRS 16, € m

Positive Group top-line, with YoY trends improving further both on Domestic and Brazil

(1) Excluding exchange rate fluctuations, non-recurring items and change in consolidation area. Group figures @ average exchange-rate 5.47 R\$/€ (2) Adjusted Net Debt After Lease

Q3 '22 Results 10 November 2022 13

TIM Group - Results at a glance

Organic data (1), IFRS 16, € m

(1) Organic data net of non-recurring items and change in consolidation area; comparable base also excluding exchange rate fluctuations. Group figures @ average exchange-rate 5.47 R\$/€ (2) Adjusted Net Debt After Lease

TIM Domestic - Fixed: FSR trend YoY improved further, ARPU higher YoY, churn at lowest level of last 5 years

Q3 '21 Q4 Q1 '22 Q2 Q3

FSR -3.9% YoY (+1.1pp QoQ) with:

• Retail -2.3pp contribution YoY on FSR (-0.5pp QoQ) for lower gross adds and customer base
• National Wholesale -0.8pp contribution YoY (+1.5pp QoQ) mainly for impact from change in regulated price and not repeatable transactions in Q3 '21
• International Wholesale -0.9pp contribution YoY (-0.2pp QoQ) for lower voice revenues with low marginality

Equipment sales -23.6% YoY (+22.0pp QoQ) for lower Consumer volumes sold

Q3 '21 Q4 Q1 '22 Q2 Q3

∆ YoY

-71

TIM Domestic - Mobile: MSR trend YoY improved, human negative net adds reduced to 1/6 vs Q2, with better MNP trend YoY and churn at new record low

TIM Domestic - OPEX +2.5% YoY mainly for tough comps due to release of labour provision in Q3 '21 (2.6pp drag YoY)

• Variable costs -4% YoY, with lower interconnection and equipment sold more than offsetting higher CoGS (related to ICT revenue growth, +22% YoY)
• Commercial costs -3% YoY (-10% excluding the extension of client useful life(3)). Higher Commissioning, Content & VAS and IDC management costs more than offset by lower Bad debt, Customer management and Advertising
• Industrial costs +12% YoY due to higher energy (~10pp drag YoY) and provisioning costs (~4pp drag YoY)(3), despite lower network maintenance costs
• G&A +2% YoY for higher office space costs due to reopenings after lockdown. IT costs (+25% YoY) related to ICT revenues growth

▪ Labour +17% YoY mainly for though comps due to the release of provision in Q3 '21 related to one-off bonuses not distributed (~13pp drag YoY) and lower solidarity days in Q3 '22 (~3pp drag YoY), despite FTE reduction

-1% YoY in 9M '22

TIM Domestic

Energy - 2022 costs almost all hedged, many efficiency initiatives ongoing

Net Energy OPEX	Energy supply
≈ '21 '22e '22bgt	▪ Energy costs for 2022 are almost all hedged ▪ Energy costs for '23 hedged at ~75% including pass-through on colocation ▪ Guarantees of Origin purchase increased, targeting 100% renewables by '25 ▪ Expected new Corporate Power Purchase Agreements, targeting +200 GWh in '23-'25 plan ▪ Photovoltaic plants: 6 GWh/year self-generated in '22, further expanding in following years	~75% hedged in 2023 including pass through on colocation
Fixed network	▪ Decommissioning plan under execution ▪ Lower energy absorption from FTTx vs copper and improved heat management processes ▪ AI, IoT sensors and near-real-time monitoring in exchange spaces
Mobile network	▪ Real-time switch-off of unused frequencies introduced in '22 in first two regions ▪ 3G switch-off ongoing (18k sites) and modernization of base transceiver stations (5k sites) ▪ Distributed energy production plan being defined to serve base radio stations	2023 consumption flat YoY thanks to ~6-7% GWh savings
Data Centers	▪ Green Data Centers with low environmental impact being developed ▪ DC modernization program ongoing, targeting a better PUE(1) vs. sector average Certification programs ongoing(2) ▪	compensating for growing DC infrastructure and network expansion
Office spaces	▪ Office spaces rationalization, large scale adoption of working from home ▪ Fixed working from home days with savings from closure of offices ▪ Reduction of waste through sustainable behaviors and temperature & light sensors

TIM Brasil - "Next Generation TIM": accelerating growth despite tough macro

Reported data, R\$ m

Q3 '22 Results 10 November 2022 19

TIM Group - Net debt AL increased QoQ mainly for domestic 5G licence payment

€ m; (-) = Cash generated, (+) = Cash absorbed, excluding call-outs

Δ YoY mainly related to tough comparison due to positive one-off in Q3 '21 and higher debt & interest rates in Brasil

(1) Includes OI acquisition (+1,741m), licences (+412m Brazil, +57m Domestic), other financial investments (+30m), cash taxes & other (-176m) and IFRS16 & IAS (+535m) (2) Includes FiberCop (-1,758m), domestic licence (+240m), financial investments (+90m), cash taxes & other (+109m) and IFRS 16 & IAS (+200m) (3) Includes domestic licences (+1,748m), disposal and financial investments (-1,182m), cash taxes and other (-24m), IFRS and IAS (+193m)

TIM Group - Liquidity margin, after lease view

Cost of debt ~3.7%, +0.2pp QoQ, +0.4pp YoY

(1) Includes € 306m repurchase agreements expiring in November 2022 (2) € 25,136m is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€ 1,043m) and current financial liabilities (€ 984m), the gross debt figure of € 27,163m is reconciled with reported number

Financial and operating results

Closing remarks

• Financials and KPIs: improvement on all metrics and with positive outlook
• Market: consolidated signs of rationality

▪ Strategy:

• ❑ "Volume to Value" strategy in place
• ❑ Operational rebound accelerating

▪ Delayering plan:

• ❑ Implementation ongoing, release of pro-forma balance sheet in FY '22
• ❑ MoU on NetCo extended to Nov. 30th, no exclusivity obligations
• ❑ On TIM Enterprise legal entity set-up process approved

▪ Group EBITDA AL FY '22 guidance in sight

ESG - Q3 actions supporting Plan's targets

Lowering CO² emissions

E

S

▪ TIM Group has joined the "European Green Deal Coalition", the alliance formed by leading EU ICT companies aiming to harness the potential of digital solutions in the green transformation to lower CO2 emissions

• TIM has become a "Value Chain Partner" of Open-es, the system alliance to support suppliers on improving sustainability across supply chains
• Started a trial for Carpooling service for TIM employees to share costs and reduce emissions

Everyone's skills and value

▪ TIM ranked as the top TLC company worldwide for its inclusion policies and promoting diversity according to "Refinitiv Global Diversity and Inclusion Index"

(1)
(2)

(3)

TIM Group - P&L affected by Goodwill Tax Realignment Revocation

Reported data, €m

TIM Group - Goodwill Tax Realignment Revocation

Positive cash impact (€ 0.7bn) in 2022-'23

	Impact on 2020 Financial Statements (benefit: 18 years)	Impact on 2021 Financial Statements (benefit: 50 years)	Impact from revocation
Realignment of the tax value	+€ 5.9bn P&L – Positive item in income tax expenses	-€ 3.8bn P&L – Negative item in income tax expenses	-€ 2.0bn(1) (=2.7-0.7) P&L – Negative item in income tax expenses
TIM SpA intangible assets redeemed € 23.1bn	€ 6.6bn Balance Sheet – DTA	€ 2.7bn Balance Sheet – DTA	- Balance Sheet – DTA
Substitute tax (3%)	€ 0.7bn Balance Sheet – Income tax payables	€ 0.4bn Balance Sheet – Income tax payables	€ 0.4bn Balance Sheet – Income tax payables write-off
Cash out/in for substitute tax	- Balance Sheet – Cash out	€ 0.3bn Balance Sheet – Cash out	€ 0.3bn Balance Sheet – Cash in
Net equity suspended for tax purposes	€ 22.4bn Balance Sheet – Net Equity suspended	€ 22.4bn(2) Balance Sheet – Net Equity suspended	- Balance Sheet – Net Equity suspended

What is new

• Legislation changes have materially worsened the «investment» profitability
• New round of revocation analysis conducted given the significant increase in interest rates
• New Decree ruling on revocation (Sep.29th, 2022):
• ❑ Revocation as if election for realignment had never been made (hence no penalties for omitted substitute tax payments)
• ❑ Full offsetting of the substitute tax paid against other tax debts (i.e. no cap limits)

TIM Group - Liquidity margin, IFRS 16 view

Cost of debt ~4.2%*, +0.2pp QoQ and +0.5pp YoY

* Including cost of all leases

Q3 '22 Results 10 November 2022 29 (1) Includes € 306m repurchase agreements expiring in November 2022 (2) € 30,581m is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€ 1,106m) and current financial liabilities (€ 984m), the gross debt figure of € 32,671m is reconciled with reported number

TIM Group - Well diversified and hedged debt, IFRS 16 view

€ m	NFP adjusted	Fair value	NFP accounting	Gross Debt
GROSS DEBT				Derivatives
Bonds Banks & EIB Derivatives Leases and long rent Other (1)	18,329 8,015 262 5,508 557	187 - 262 - -	18,516 8,015 524 5,508 557	1,6% Banks & EIB 24,2% Bonds Op. leases 55,9% and long rent
TOTAL	32,671	449	33,120	16,6% Other
FINANCIAL ASSETS				1,7%
Liquidity position	5,261	-	5,261
Other (2) o/w derivatives o/w active leases o/w other Credit	1,906 1,728 104 74	454 454 - -	2,360 2,182 104 74	Average m/l term maturity: 6.7 years (bonds 6.6 years) Fixed rate portion on M/L term debt ~71%
TOTAL	7,167	454	7,621	~34% of outstanding bonds (nominal amount)
NET FINANCIAL DEBT	25,504	-5	25,499	denominated in USD and GBP and fully hedged

TIM Group - 2022 financial expectations based on current configuration

IFRS 16/After Lease, including OI (1)

	SHORT TERM TARGETS (2022)	UPGRADED TARGETS (2022)
Service Revenues	low single digit decrease
Organic EBITDA	low teens decrease	high single digit decrease
Organic EBITDA AL (2)	mid to high teens decrease	low teens decrease
CAPEX	Group: €4.0bn Domestic: €3.2bn
Adj. Net Debt AL	affected by € 3.7bn non-recurring payments (3)

Q3 '22 Results 10 November 2022 31 (1) Group figures @ average exchange-rate 5.56 R\$/€ (2) Oi's transaction is impacting leases account for the plan period and will be absorbed thereafter (3) 5G spectrum in Italy (€1.7bn) and Brazil (€0.4bn), Oi acquisition (€1.1bn), DAZN payment (€0.3bn) and substitute tax (€0.2bn) based on the Plan's exchange rate assumption

TIM Brasil - Guidance 2022-'24

GOALS	SHORT TERM TARGETS (2022)	LONG TERM TARGETS (2022-'24)
Revenue Sustainability	Service Revenues Growth: + Double digit YoY	Service Revenues Growth: + Double digit CAGR '21-'24	Guidance excludes: ▪ Any additional M&A activity ▪ New spectrum auctions
Profitability	EBITDA Growth: + Double digit YoY	EBITDA Growth: + Double digit CAGR '21-'24	▪ ICMS taxation changes (ruled to be effective in Q1 '24) ▪ Any other taxation or Regulatory reform
Infrastructure Development	Capex: ~R\$ 4.8bn	Capex: ~R\$ 14.0bn ∑ '22-'24 Capex on Revenues: <20% @2024	▪ Upside from Customer Platform partnerships (e.g. value created by equity stakes)
Cash Generation	EBITDA-Capex on Revenues: >24%	EBITDA-Capex on Revenues: ≥29% @2024	On like-for-like comparison, all metrics would be on track versus the old plan

For further questions please contact the IR team

(+39) 06 3688 2500

Investor\_relations@telecomitalia.it

www.gruppotim.it

www.twitter.com/TIMNewsroom

www.slideshare.net/telecomitaliacorporate