Telecom Italia Rsp

Investor Presentation • Aug 3, 2022

Q2 '22 RESULTS

4 AUGUST 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 Q2'22 and H1'22 financial and operating data have been extracted or derived, with the exception of some data, from the Half-year Condensed Consolidated Financial Statements at 30 June 2022 of the TIM Group, which has been 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 Q2'22 and H1'22 of the TIM Group are the same as those adopted in the TIM Group Annual Audited Consolidated Financial Statements as of 31 December 2021, to which reference can be made, except for the amendments to the standards issued by IASB and adopted starting from 1 January, 2022.

Please note that the limited review by the external auditors (E&Y) on the TIM Group Half-year Condensed Consolidated Financial Statements at 30 June 2022 has not yet been completed.

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 half of 2021, has been recalculated.

* * *

Financial and operating results #²

Highlights TIM Group

Improving trends, both on financials & KPIs	Improving YoY trends in Q2 both on Service Revenues and EBITDA: ▪ Service revenues growth accelerating in TIM Brasil ▪ Domestic Fixed: better FSR trend both YoY and QoQ, higher ARPU, lower churn ▪ Domestic Mobile: market cooling down, human lines trend improving with churn at lowest level of last 16 years ▪ Benefits of efficiencies on Domestic EBITDA
Cost transformation	▪ Implementation ongoing, ~€ 200m OPEX savings in H1 '22 ▪ Continued and relentless review of cost transformation projects, aiming at improving TIM structural mid-term trajectory of the cost base ▪ Further savings on cash costs identified reaching -€ 1.5bn on overall cash cost base at '24 ▪ Agreement on "Expansion Contract" for '22-'24 signed with labour unions securing ~30% of the '23 P&L OPEX reduction target
NRRP/NSH initiatives	▪ All tenders for fixed and mobile UBB assigned, TIM awarded lots in each of them ▪ to match exercised by TIM consortium(1) National Strategic Hub right ▪ The majority of NRRP(2) CAPEX impact in 2022-'24 will be absorbed thanks to TIM's Transformation Plan
Network: FTTH roll-out	▪ FTTH roll-out on track, 28% of technical units covered (+1.8pp QoQ) (coverage +3.4pp YoY to >90% of technical units(3) to >47%(4)) ▪ UBB coverage and take up increase , take up +2.8pp YoY
EFCF	▪ Equity Free Cash Flow AL slightly positive in H1 '22 ▪ Well hedged and diversified debt ▪ Sound liquidity position, further strengthened by € 2bn SACE financing cashed in at the end of July and € 1.5bn Inwit sale proceeds expected in the forthcoming days

TIM Domestic

Transformation Plan – Improving cash position vs. inertial scenario: targeting 20% of domestic addressable baseline, with extra-savings identified

2022 savings secured for an amount of ~€ 0.3bn

70% of '22 target already achieved in H1 '22

~30% of '23 P&L OPEX reduction target secured through the signing of "Expansion Contract" for '22-'24

TIM Domestic

Transformation Plan - Hinged on four pillars, towards better valorisation through improved operating models and more sustainable cost structures

Digital break-through	Simplify cost structure	Rightsize & talents' uplift	Enhanced cost optimisation
Elevate digital capabilities to become the winning digital operator and adopt a leaner operating model	Implement disruptive and transformational initiatives to review operating model, processes and better manage cost base	Right-size and re-skill workforce to support a leaner organization and ensure the best skills to seize future opportunities	Empower functions / departments to continue identifying measures to simplify and reduce costs
On track with the implementation - Key results since transformation plan's kick-off in mid-June
✓ Completed assessment on TIM digital maturity and business automation level ✓ Elaborated a plan to boost digital capabilities in Customer Care ✓ Kicked-off a digital touchpoint rationalisation program aimed at reducing websites by ~75% ✓ Defined a roadmap to review customer experience and boosted "paperless"	✓ Enhanced Real Estate plan (targeting € 100m benefits) ✓ Launched new IT operating model to upturn productivity and streamline costs (ca. -15% on spend) ✓ Detailed program to centralise back-office activities and processes (ca. 15% cost saving) ✓ Identified sales footprint optimisation actions (-21% owned street point of sales by '24)	✓ Signed early retirement agreement (ex. Art. 4) ✓ Signed new "Expansion Contract", up to 6 years from natural retirement ✓ Started insourcing plan, up to 0.7k FTEs will be re-skilled to reduce external spend ✓ Accelerated voluntary exits plan (75% of YE target already achieved)	✓ Set-up dedicated cost control committees (IT, Device, Communication) ✓ Reinforced procurement support through early engagement to improve demand management and proactively streamline costs ✓ Strengthened day-by-day performance, focus on margin (e.g. ICT COGS review)
			Q2 '22 Results

TIM Group - Q2 '22 key financials

Organic data (1), IFRS 16, € m

Improving YoY trends on revenues and EBITDA, positive Group service revenues

(1) Excluding exchange rate fluctuations, non-recurring items and change in consolidation area. Group figures @ average exchange-rate 5.56 R\$/€ (2) Adjusted Net Debt After Lease

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 5.56 R\$/€ (2) Adjusted Net Debt After Lease

Q2 '22 Results 4 August 2022 9

TIM Domestic - Fixed: revenue trend improved, higher ARPU, lower churn

∆ YoY

Market

Net adds Fixed Revenues Organic data € m Retail (1) Nat.Wholesale (2) Int.Wholesale 257 242 542 492 1,362 1,322 2,372 2,169 Q2 '21 Q2 '22 -5.0% -5.8% -9.1% -2.9% -8.6% FSR 2,056 2,164 Equipment -45.6%

FSR -5.0% YoY (+0.8pp QoQ) with:

• Retail -1.9pp contribution YoY on FSR (+1.6pp QoQ) for lower gross adds (also due to positive voucher contribution in Q2 '21) and customer base
• National Wholesale -2.3pp contribution YoY (+0.6pp QoQ) for non-repeatable transactions in Q2 '21 and impact from regulated price
• International Wholesale -0.7pp contribution YoY (-1.0pp QoQ) for lower voice revenues

Equipment sales -45.6% YoY (-4.1pp QoQ) for tough comps (Q2 '21 boosted by vouchers), lower volumes sold mainly in Consumer and wholesale, with zero long run margin and non-cash impact

TIM Domestic - Mobile: market cooling down, human lines trend improving with churn at lowest level of last 16 years

TIM Domestic - OPEX down YoY with lower labour and volume driven costs more than offsetting increase in commercial & industrial costs

• Variable costs -6% YoY, with lower interconnection and equipment sold more than offsetting higher CoGS (related to ICT revenue growth)
• Commercial costs +16% YoY (flat excluding the extension of client useful life) (3)
• Industrial costs +5% YoY mainly due to higher provision costs, net of which would be -4% YoY (3)
• G&A flat YoY with lower professional services and indirect personnel costs offsetting slight increase in other G&A. IT costs related to ICT revenues growth
• Labour -10% YoY mainly for positive contribution from solidarity and FTE reduction

TIM Brasil - First quarter of "Next Generation TIM", growing faster while maintaining high profitability despite inflation and transitory cost dynamics Reported data, R\$ m

(1) Including company lines (2) "Beyond giga" strategy: Amazon Prime as plug-in to Control (R\$ 14,90 with 2GB internet bonus) and in Postpaid, embedded in the TIM Black plans; Prime Video content included in TIM Pré Top and TIM Beta offers (with access depending on recharge activity) (3) Control (Mar '22) and Postpaid (May '22) CB priced up

TIM Group - Net debt AL increased QoQ for licences and OI acquisition

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

(1) Includes 5G licence Brazil (+186m), financial investments (+11m) and IFRS16 & other (+411m) (2) Includes FiberCop (-1,758m), financial investments (+37m) and cash taxes & other (-7m) (3) Includes OI acquisition (+1,741m), 5G licence Brazil (+226m), licence Domestic (+57m), other financial investments (+19m), IFRS 16 & IAS (+6m) and cash taxes & other (-57m) (4) Includes financial investments (+53m), Domestic licence (+240m), IFRS 16 & IAS (+205m) and cash taxes & other (+111m)

Q2 '22 Results 4 August 2022 14

Financial and operating results

Closing remarks

• TIM continuity plan is proceeding: we promised to do better than forecasted and we are keeping this promise notwithstanding a tougher macroeconomic environment
• H1 '22 results give us the confidence to upgrade our guidance for the year:
  • Group EBITDA high single digit decrease (from low teens decrease)
  • Group EBITDA AL low teens decrease (from mid to high teens decrease)
• We achieved all our goals in terms of participation to the NRRP and NSH initiatives (1), actively contributing to the Country's digital evolution, confirming TIM strategic positioning
• The Transformation Plan is ongoing with the target increased to € 1.5bn in '24
• In Brazil integration with OI started, with positive impacts on Revenues and EBITDA already visible
• We secured our liquidity position thanks to the cash-in of SACE financing

AT THE SAME TIME

▪ We set the ground for our Discontinuity Plan in order to overcome leverage constraints

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)

(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

ESG - Q2 actions supporting Plan's targets

Reported data, €m

▪ Validated TIM Group Scope 1, 2 and 3 emission reduction
targets from SBTi (1) ▪ Obtained the ISO 14064 certification for TIM SpA that qualifies the process of reporting and monitoring of Lowering CO 2 greenhouse gas emissions of the company emissions ▪ Eco Rating project, measuring the environmental impact of smartphones, extended to the Brazilian market ▪ Started contracting process with Open-es to create an ecosystem of sustainable value chains
▪ The winner of "TIM Challenge for Circular Economy" has
for employees
▪ 4,000 trees planted thanks to Earth Day competitions and challenges to increase the sustainable behaviour of
	been named and will develop a trial for a car-pooling service employees, customers and the community

(3) Average between Domestic target (27%) and TIM Brasil target (35%)

(4) Unit revenues from the resale of used materials and assets plus waste recycling per kg of waste produced. Base line 2021 0,044€/kg

TIM Group - From EBITDA to Net Income

Reported data, €m

(1) Non-Recurring Items include provisions for personnel (2021-26 layoffs ex art.4 Fornero Law), claims and litigation

Some headwinds affecting 2022 domestic EBITDA and group net debt

Q2 '22 Results 4 August 2022 23

TIM Group - Liquidity margin, after lease view

Cost of debt ~3.5%, +0.1pp QoQ, +0.3pp YoY

(1) Includes € 506m repurchase agreements o/w € 200m will expire in July, € 100m will expire in August and € 206m will expire in November 2022 (2) € 22,882m is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€ 768m) and current financial liabilities (€ 1,049m), the gross debt figure of € 24,699m is reached

TIM Group - Liquidity margin, IFRS 16 view

Cost of debt ~4.0%*, +0.2pp QoQ and +0.4pp YoY

(1) Includes € 506m repurchase agreements o/w € 200m will expire in July, € 100m will expire in August and € 206m will expire in November 2022 (2) € 28,325m is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€ 814m) and current financial liabilities (€ 1,049m), the gross debt figure of € 30,188m is reached

TIM Group - Well diversified and hedged debt

IFRS 16 view

€ m	NFP adjusted	Fair value	NFP accounting
GROSS DEBT
Bonds	17,899	198	18,097
Banks & EIB	6,194	-	6,194
Derivatives	132	633	765
Op. leases and long rent	5,489	-	5,489
Other (1)	474	-	474
TOTAL	30,188	831	31,019
FINANCIAL ASSETS
Liquidity position	3,923	-	3,923
Other	1,611	805	2,416
o/w derivatives	1,233	805	2,038
o/w active leases	104	-	104
o/w other credit (2)	274	-	274
TOTAL	5,534	805	6,339
NET FINANCIAL DEBT	24,654	26	24,680

Average m/l term maturity: 6.9 years (bond 6.8 years only)

Fixed rate portion on medium-long term debt ~75%

Around 32% of outstanding bonds (nominal amount) denominated in USD and GBP and fully hedged

The new TIM - Clearly identified domestic perimeter

		ServiceCo		NetCo
		TIM Consumer	TIM Enterprise	Wholesale
Commercial & Legal	Brands and legal entities
	Target markets	Consumer & Small Medium Enterprises	Large corporates & Public Administrations	National and International Wholesale
Access Network	Secondary & Cabinets		Selected fibers IRU (2)
	Primary	Selected fibers IRU (1)	Selected fibers IRU (2)	Ducts / mini-ducts & fibers
	Edge
	Access Electronics & Central Office HW			Distr. Frame/ DSLAMs / OLT FTTC
	Real Estate & building systems
Backbone	Junction and Backbone Fibers	Selected fibers IRU (3)	Selected fibers IRU (3)
	Backbone/Transport HW & Platforms
DC / Platforms	Service Platforms	Consumer Platforms	Enterprise Platforms
	Data Centers (Noovle)
Mobile	Mobile Network (4)		Full MVNO-like services
	Mobile Service Platforms (4)
	Frequencies

(1) For mobile backhauling (2) Preserve ServiceCo offering differentiation/ competitiveness for enterprise segments (3) May guarantee ServiceCo competitiveness (4) Minimum fiber backbone required to offer Enterprise most important products/services with autonomy

NetCo - A long-term value story standalone

(1) Including intercompany (2) "Fair and reasonable pricing", as per Art.80 of the EU Communication Code, not included (3) EBITDA After Lease slightly lower vs indicative figure published in "FY'21 Results & 2022-2024 Plan update" presentation due to change in personnel perimeter (4) CAPEX net of license. Capex contribution from National Recovery and Resilience Plan not included (5) National Recovery and Resilience Plan (6) Full Time Equivalents EoY

Q2 '22 Results 4 August 2022 28

TIM Enterprise - Strong growth ahead

▪ Steady topline growth above market (4% CAGR '21-'30), with change in revenue mix

▪ Strong marginality and cash conversion after initial carveout/business set-up, driven by scale, optimized operating model and high focus on proprietary products / expansion towards Managed and Professional services

Potential upsides not factored in plan

• Public safety tender and NRRP(4) additional opportunities
• Expanding collaboration with Cloud Service Providers
• Expansion on medium segment / reselling of proprietary off-theshelf products

TIM Consumer – A turnaround story

Included in the plan

• Commercial and operative transformation
• TIM content transformation for Consumer
• ICT offering evolution for SMB
• Active sharing agreement on mobile

Potential upsides - not included in the plan

• New regulation on power limits and 5G tender
• New ecosystem of digital services
• Further in-market consolidation and / or asset separations

For further questions please contact the IR team

(+39) 06 3688 2500

Investor\_relations@telecomitalia.it

www.gruppotim.it

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