Telecom Italia Rsp

Investor Presentation • Mar 2, 2022

3 MARCH 2022 FY '21 RESULTS AND 2022-'24 PLAN

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 FY '21, Q4 '21 and for 2022-'24 Plan of the TIM Group are the same as those adopted in the TIM Group Annual Audited Consolidated Financial Statements as of 31 December 2020, to which reference can be made, except for the amendments to the standards issued by IASB and adopted starting from 1 January, 2021.

Please note that as of today, the audit work by our independent auditors (E&Y) on the FY '21 results have 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 adjusted After Lease ("EBITDA-AL"), calculated by adjusting the Organic EBITDA, net of non-recurring items, of the amounts related to the accounting treatment of lease contracts according to IFRS 16;

* Adjusted Net Financial Debt After Lease, calculated by excluding from the adjusted net financial debt the net liabilities related to the accounting treatment of lease contracts according to IFRS 16;

* Equity Free Cash Flow After Lease, calculated by excluding from the Equity Free Cash Flow the amounts related to lease payments.

Such alternative performance measures are unaudited.

Q4 AND FY '21 RESULTS

FOCUS ON TIM BRASIL

2022-2024 GROUP STRATEGIC PLAN

CLOSING REMARKS

FY '21 RESULTS AND 2022-'24 PLAN 3

Q4 AND FY '21 RESULTS

FOCUS ON TIM BRASIL

2022-2024 GROUP STRATEGIC PLAN

CLOSING REMARKS

FY '21 RESULTS AND 2022-'24 PLAN 4

2021 a very good year in Brazil and several achievements in Italy as well

New tiered offer portfolio launched	Premium price, segmented offer		Churn reduced in fixed and mobile	Fixed 15.6% 13.5% 2020 2021	Mobile 18.6% 14.7% 2020 2021
Cloud and ICT growing double-digit	ICT revenues +23% 2020 2021	Cloud revenues +20% 2020 2021	Bad debt reduced Quality improved	Bad debt -30% 2020 2021	CSI fixed +4% 2020 2021
Ultrabroadband coverage largely improved	FTTx 90% 85% technical units Q4 '20 Q4 '21	~94% of active lines	Increased digital payments	Fixed +7pp 2020 2021	Mobile +4pp 2020 2021
Created FiberCop	1st EU telco to adopt co-investment (1) model	FTTH roll-out 2021 3.8x 2020 FTTH lines +108% YoY	Achieved targets and strategic goals in Brazil	▪ ▪ ▪ Created FiberCo ▪ Oi deal approved	All financial targets achieved Successful 5G tender

Group: net debt reduced by €1bn, €5.7bn in 3 years (2)

2021 ESG achievements fully on track with guidance. Ambitions raised

		▪ Reached 100% of renewable energy for Data Centers	2021 targets all achieved
Transforming processes to be green Innovating through sustainability		▪ Decarbonized C0 emissions of TIM Group websites 2 ▪ Submitted to SBTI scope 1, 2 and 3 emission targets	ESG Plan Targets	Target '21-'23 (1)		Closing '21
	▪ Developed circular economy initiatives on furnishing, PCs and devices	Carbon neutrality (Scope 1+2)	2030		On track
		▪ Started the Eco rating project to measure the environmental impact of smartphones	Indirect emissions	0	2025	-32%
		▪ Purchases of goods and services increasingly based on sustainability criteria	Eco-efficiency	+50%		+90%
		Renewable energy (2) % on total energy	100%		33%
		▪ Noovle became the first Benefit Company of TIM Group ▪ Launched "TIM Challenge for Circular economy" for startups	Employee engagement	+19pp		+20pp
		& scaleups ▪ B2B portfolio dedicated to sustainability	Hours of training for reskilling and upskilling	6.4m hrs		4.9m
Rising the level of employees' motivation	▪	Churn of young employees	<15%	2023	3.2%
		Overperformance on employees' engagement thanks to caring actions during pandemic, improved work-life balance, agile organization and effective corporate networking via	New VC fund size	€ 60m			Allocated
	internal communication and collaboration tools ▪ Employees' engagement on sustainability through	IoT and Security service revenues	+20% CAGR		+33%
	gamification projects	Green smartphone	>15%	2024	2.9%

Achieved Over achieved

A few things played out differently vs expectations, particularly in Q4…

Revenues related items

Vouchers

Vouchers and NRRP delays brought more competition and price pressure

• 2nd phase consumer vouchers delayed to '22
• PNRR delays
• ARPU pressure from vouchers delay

Costs related items

Digital companies and Football

Higher costs to fuel football launch and digital companies start ups, not fully compensated by higher revenues

included)

litigations (€0.5bn) and other impacts (COVID

…and cost cutting not enough to offset shift towards lower margins revenue mix

Organic data (1), IFRS 16, € m

Q4 domestic service revenues affected by Q4 2020 tough comps in wholesale; retail not improving enough to offset

Q4 domestic EBITDA decline further explained by:

• Impact of new law with provisions of risks on retail contracts related to installment payments (3pp)
• Football and Digital Companies startup costs (7pp)
• Lower equipment sales with the related positive margin (3pp)
• Interconnection costs (1pp)
• Labour & G&A up for indirect personnel costs, covid rebound, energy (4pp)

Fixed lines stabilized despite fading help from vouchers (none from Q3), CSI strongly improved, UBB net adds remained healthy despite "COVID indigestion"

Retail FSR improvement not enough to offset Q4 '20 tough comps in wholesale

Fixed Service Revenues -3.7% YoY, -1.2pp QoQ

• International Wholesale: +10.4% YoY (vs. 11.3% Q3)
• National Wholesale(1) -8.9% YoY (vs. -2.8% in Q3) despite very strong KPIs and regulated revenues, due to comparison with very strong Q4 '20 non-regulated revenues
• Retail(2) -4.6% YoY, +0.4pp QoQ helped by:
  • Customer base stabilization: -0.8pp drag, +0.4pp QoQ
  • ICT revenues growth: 3.1pp tailwind, + 1.4pp QoQ (+21% YoY vs +13% in Q3)
  • Consumer ARPU affected by market dynamics; business ARPU growth not enough to offset

Equipment sales -24.8% YoY as Q4 2020 benefited from equipment sold with vouchers and strong sell in of modems

(128) (142)

Q3 '21 Q4 '21

103

-98

Wholesale: VULA net adds peak

200

+5

VULA

Total Wholesale

ULL

Net adds k lines

Mobile net adds improved QoQ, churn remained record low, coolest Q4 MNP market in the last 11 years thanks to TIM's rational behaviour

Market MNP reduced significantly YoY

Human net adds improved trend YoY

Calling human net adds better YoY

Churn rate down YoY, flat QoQ

MSR on an improving path however Q4 affected by tough comps in wholesale, 2020 COVID-led pay per use and lower help from roaming vs. Q3

MSR -7.1% YoY (-4.1pp QoQ) due to:

• lower contribution from roaming, (0.5pp YoY tailwind vs. 1.8pp in Q3)
• drag from 2020 COVID-led pay per use (-1pp drag vs. 0pp)
• tough wholesale comps (-3.5pp drag vs. +0.4pp)

Customer base explaining -1.3pp YoY (+0.5pp QoQ), MTR -0.9pp (unchanged), CSP cleaning -0.5pp (+0.4pp QoQ)

Equipment -1.6% YoY vs. -12.2% in Q3

CAPEX for growth increased, NWC in line YoY

Q4 CAPEX lower YoY for different phasing during the year FY CAPEX up exclusively for higher growth CAPEX: FTTH, Cloud and football in Italy; preparation costs for Oi integration in Brazil

2021 FTTH homes passed +36% YoY. Roll out effort 3.8x 2020

Q4 Working Capital (+€0.8bn YoY) benefiting from deferred payment of 5G license in Brazil (€0.4bn) and domestic provisioning related to multimedia (€0.5bn). Net of non-recurring items, NWC in line with Q4 '20

EFCF down mainly for lower EBITDA and higher cash-taxes (Q4 '20 benefiting from the patent box)(1)

Group Operating Working Capital

Change in Net Working Capital IFRS 16, € m	Q4 '20	Q4 '21	D YoY
Change in NWC	712	1,523	+811
Non-recurring items	19	-836
Change in NWC net of non-recurring items	731	687	-44

Equity Free Cash Flow After Lease

Net debt reduced by € 1.1bn in 2021 (-€ 1.0bn After Lease view)

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

(1) Including FiberCop, FiberCo, Inwit dividends, financial investments and licences (2100 Mhz + 5G) (2) Includes Inwit deconsolidation and ordinary dividend, financial investments and 5G licence (3) Includes Inwit additional stake

P&L affected by devaluation of tax asset due to law change and goodwill impairment

Reported data, € m, Rounded numbers

Q4 AND FY '21 RESULTS

FOCUS ON TIM BRASIL

2022-2024 GROUP STRATEGIC PLAN

CLOSING REMARKS

FY '21 RESULTS AND 2022-'24 PLAN 16

TIM Brasil

Strong execution delivers solid results and sustainable growth

Delivering on the promises made and building sustainable growth

TIM Brasil

Q4 revenues growth on track driven by postpaid, beyond the core and TIM Live

• M-MIMO: 0.3k new sites QoQ to 2.3k
• Site modernization: +1.4k sites QoQ

14th year listed in the B3 Corporate Sustainability Index

R\$ 1.6bn in SLB Issuance: generating +ve impact while reducing funding costs

G

Revenues and EBITDA set to accelerate growth with the acquisition of OI mobile assets and consolidation from 4 to 3 players

New company, new targets: 2022-'24 guidance

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-'23 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

Q4 AND FY '21 RESULTS

FOCUS ON TIM BRASIL

2022-2024 GROUP STRATEGIC PLAN

CLOSING REMARKS

FY '21 RESULTS AND 2022-'24 PLAN 21

Setting the scene

TIM has very valuable assets… … however, it is facing tough competition and regulatory constraints…

• Wireline market is growing, however regulatory hurdles and risk of competitive pressure remain intense also due to new competitor
• Mobile is progressively improving and showing signs of stabilization
• Digital businesses are growing healthily, however with lower margins compared to core telco services
• Wholesale: ARPU is improving, however facing tough regulatory environment and infrastructure competition

Besides, incremental CAPEX is needed to support growth of new businesses and build future cash-flows

Extraordinary actions are required to improve TIM's value beyond its inertial path

TIM Domestic

TIM has a valuable set of assets in an improving Country environment

(1) Source Ipsos, research on Brand Awareness, 2021 (2) Fixed lines with a UBB connection on total fixed lines (3) Source Opensignal, 1H 2021

(4) Market share connectivity, source TIM processing data of AGCOM, Gartner and Sirmi (5) "Italia 1 Giga" €3.7bn, "Connected schools" €0.2bn, "Connected health care" €0.4bn, Cloud for PA ("NSH") €0.7bn

…but also material challenges…

Italy is the most competitive EU market following Antitrust decisions… …and has the toughest Regulation in Europe

Telecom sector prices in EU

…and opportunities that need to be financed: accelerating FTTH/5G and Digital Companies' investments to shorten path to sustainable cash flow generation

TIM Group «New Vision»

The way forward

From vertical integration to 4 separate entities The new Vision with different industrial focus and financial metrics

TIM Group «New Vision»

Strategic rationale: 4 very different entities, 3 in good shape

Potential domestic perimeter

Beyond vertical integration towards expected regulatory relief

(1) Source: TIM's elaboration based on Cullen International and National Regulatory Authorities' decisions on markets 3a and 3b of the Recommendation 2014/710/EU (2022) – prevailing regulation, exceptions apply (e.g. for TIM no obligation in Milan) (2) Considering new regime for SMP 'wholesaler-only', cost-orientation would be lifted excluding exceptional cases

ServCo

NetCo

2021 indicative financials Shareholders to get exposure to all entities

NetCo

ServCo

Wholesale: national to ride migration to FTTH, international to grow strongly

Enterprise: evolving towards Tech-company operating model in a growing market

Enterprise: set to grow market share thanks to a unique value proposition: Secured MultiCloud and Advanced ICT made simple

Enterprise: Strong cloud growth expected in PA segment, thanks to the NSH initiative and more to come from the NRRP

TIM-led consortium project selected as the most suitable for the creation of the National Strategic Hub (NSH) (1)

National Recovery & Resilience Plan - €235bn & other public funding initiatives (3)

Short-list of main public funding initiatives with telco component (total digital €50bn)

revenues)

(1) During the tender process, other players can submit proposals in line with the terms set by the TIM-led consortium, which however has a right to match

(2) Tender for the set-up of cloud infrastructure launched on January 26th (€ 0.7bn, RRF allocation € 0.9bn)

(3) Italian Ultra-Broadband Strategic Plan, funded by national and EU funds

(4) Tenders value may differ from original NRRP allocation

Consumer: value strategy and focus on retaining existing client base

Market context	▪ Fixed ▪ Mobile ▪ Migration	market growing, competition expected to remain intense shows signs of stabilization towards FTTH and 5G		Fixed + 2021	Market trends - 2024	lines Mobile - 2021	2024	Households Mobile only 21% 7% 7% 7.5% avg excl. ITA	33% 28%	OTT TV Subscriptions ++ 2021 2024
Strategic priorities	▪ Brand: revamp tiered premium positioning, "high-tech made in Italy" and handset financing through TIMFin ▪ Shift from acquisition to CB caring and retention ▪ Leverage new wave of vouchers			▪ Improve channel performance on core ▪ Targeted upselling actions ▪ Further push on convergence ▪ Content: improve marginality and develop options for transforming business model					Leveraging	Upsides not factored in plan unique combination of 5G, devices and unlimited plan Mobile only specifically targeted More help from Vouchers
	Lines	Fixed ARPU	Lines human	Mobile	ARPU		TIM Vision Pay customers		Direct payments	Convergence
KPIs	- 2021 2024	+ 2021 2024	- 2021 2024	- 2021	2024	2021	++ 2024	2021	++ 2024	++ 2021 2024

NetCo

SME: opportunity to leverage TIM's unique selling proposition

Market context	▪ SMB is an heterogenous segment, where TIM must defend Medium/Small and has room to grow in mobile and convergence ▪ TIM is the only integrated player in the market, offering traditional and advanced connectivity solutions plus IT/ digital products and services					Fixed + 2021	Market trends - lines Mobile + 2024 2021 2024
Strategic priorities	▪ ▪ ▪ cluster	Sustain premium positioning Protect existing CB and ARPU Data driven management for CB micro		▪ ▪ ▪ "More for more" strategy ▪	Strengthen caring and customer experience Push ICT as a "reason why" for choosing TIM Technology upgrade through vouchers		Upsides not factored in plan More help from Vouchers
	Lines	Fixed ARPU	Lines	Mobile ARPU	Direct payments	ICT penetration	Convergence
KPIs	- 2021 2024	- 2021 2024	human + 2021 2024	- 2021 2024	++ 2021 2024	++ 2021 2024	++ 2021 2024

Transformation plan to cut addressable costs by 15%, with ambition to cut >20%

NetCo

ServCo

(1) 2021 OPEX restated including €0.2bn on commissioning (benefit from churn reduction in '21 unlikely to be repeated in coming years)

(2) Updated definition of addressable cost base

(3) Impact would be -12% (ambition -16%) calculated on 2021 OPEX (non restated)

Q4 AND FY '21 RESULTS

FOCUS ON TIM BRASIL

2022-2024 GROUP STRATEGIC PLAN

CLOSING REMARKS

FY '21 RESULTS AND 2022-'24 PLAN 38

The ESG plan in a nutshell. Raising ambitions

The ESG plan is focused on relevant and impacting projects

ESG Governance levers

• Adapt processes to the environmental criteria provided by NRRP to be eligible (e.g. certifications, purchases criteria)
• Implement sustainable supply chain deploying ESG KPIs trough the procurement process

ESG pillars

• Strenghten Climate Strategy with a Net Zero goal thanks to new projects on Scope 3
• Spread Circular Economy model reducing waste and reusing materials according to the Green Deal
• Digital growth, according to Digital Compass, focused on coverage and dissemineting digital services and tools
• Strenghten Gender equality by increasing the number of women

Group targets

NEW	E Net Zero (Scope 1+2+3)	2040
	E Carbon Neutrality (Scope 1+2)	2030
NEW	E (1) Scope 3 Reduction	-47%	2030
	E Renewable energy on total energy (%)	+100%	2025
NEW	G (2) Women in leadership position	29%	2024

Human Rights commitment: update due diligence, policy & remedies

Domestic targets

managers Reorganization via voluntary staff reduction tools

(1) Scope 3 cat.1, 2 and 11

(2) Average between Domestic Scope target = 27% and Brasil Scope target =35%

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

Some headwinds affecting 2022 domestic EBITDA and group net debt

Closing remarks, guidance (including OI) and next steps

• We are living an unprecedented period for TIM, and it's time to take action
• CEO fully empowered by the BOD to develop the execution plan of the group's reorganization
• Capital Market Day upon completion of plan details before half year results
• Based on current configuration:
  • GROUP SERVICE REVENUES to grow low single digit CAGR '21-'24 (with 2022 to decrease low single digit)
  • GROUP EBITDA CAGR '21-'24 flat (with 2022 to decrease low teens) (1)
  • GROUP CAPEX at E4.0bn in 2022, E3.9bn in 2023 and E3.8bn in 2024, with Domestic CAPEX/Sales <15% in the medium-long term (2)
  • 2022 NET DEBT will be affected by spectrum payments and Oi acquisition with its impact on leverage fully absorbed by 2025
• Guidance on new TIM entities will be provided at the CMD
• Received binding offer from Ardian Infrastructures for the majority of Daphne 3 (3)
• Intention to reinstate dividends as soon as the reorganization envisaged will have brought the expected results

Deferred Tax Asset – Realignment of intangible asset tax value

	Impact on 2020 Financial Statements (benefit: 18 years)	Impact filled in 2021 Financial Statements (benefit: 50 years)
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	Write–off of IRES DTA exceeding 25y and full IRAP DTA based on future income estimates, based on 22-24 industrial plan
TIM SpA intangible assets redeemed € 23.1bn	€ 6.6bn Balance Sheet – Deferred tax assets	€ 2.7bn Balance Sheet – Deferred tax assets
Substitute tax (3%)	€ 0.7bn Balance Sheet –Income tax payables	€ 0.4bn Balance Sheet – Income tax payables	▪ First payment in 2021 (€ 261m) ▪ Next Payments due: 2 instalments in '22 and '23
Cash out 2021 for substitute tax	0 Balance Sheet – Cash out	€ 0.3bn Balance Sheet – Cash out
Net equity suspended for tax purposes	€ 22.4bn Balance Sheet – Net Equity suspended	€ 22.4 Balance Sheet – Net Equity suspended	Net equity suspended shall be reduced to €14.1bn consequent to the 2021 loss amounting to €8.3bn that will be covered using profits carried forward and reserves

A legislative proposal is currently under review providing for conversion of goodwill DTAs in tax credits. If approved, it will be included in legislation to be published by the end of March

Liquidity margin - After Lease view Cost of debt ~3.4%, +0.1pp QoQ, flat YoY

(1) Includes € 838m repurchase agreements o/w € 200m will expire in February 2022, € 558m will expire in March 2022 and € 80m will expire in April 2022 (2) € 25,615m is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€ 696m) and current financial liabilities (€ 1,538m), the gross debt figure of € 27,849m is reached

Cost of debt ~3.7%*, flat QoQ and YoY Liquidity margin - IFRS 16 view

* Including cost of all leases

(1) Includes € 838m repurchase agreements o/w € 200m will expire in February 2022, € 558m will expire in March 2022 and € 80m will expire in April 2022

(2) € 30,296m is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€ 730m) and current financial liabilities (€ 1,538m), the gross debt figure of € 32,564m is reached

FY '21 RESULTS AND 2022-'24 PLAN 46

Well diversified and hedged debt

	NFP adjusted	Fair value	NFP accounting	Gross Debt
GROSS DEBT
Bonds	20,672	223	20,895	Banks & EIB
Banks & EIB	6,493		6,493	19.9%
Derivatives	142	1,310	1,452	Bonds
Leases and long rent	4,715		4,715	Op. leases 63.5%
Other	542		542	and long rent
TOTAL	32,564	1,533	34,097	14.5%
FINANCIAL ASSETS				Other 2.1%
Liquidity position	9,153		9,153
				Average m/l term maturity: 6.5 years (bond 6.1 years only)
Other	1,224	1,304	2,528
o/w derivatives	852	1,304	2,156
o/w active leases	101		101	Fixed rate portion on medium-long term debt ~81%
o/w other credit	271		271
TOTAL	10,377	1,304	11,681	Around 26% of outstanding bonds (nominal amount) denominated in USD and GBP and fully hedged
NET FINANCIAL DEBT	22,187	229	22,416

OPEX higher mainly due to start up costs (football, cloud, ICT, digital companies)

OPEX increasing 6.6% YoY, with:

• Variable costs -1%, with lower equipment balanced by higher interconnection (Sparkle) and CoGS (ICT)
• Commercial costs up 4% YoY due to higher football and cloud set up costs, partly offset by lower commissioning and bad debt, explaining ~1pp of increase in Q4 OPEX

▪ Industrial costs flat

• G&A up for indirect personnel costs, covid rebound and energy. IT increase related to ICT sales. G&A and IT explaining ~2pp of increase in Q4 OPEX
• Labour +6% YoY for contract renewal and accrual of variable costs in Q4 vs. Q3 last year and lower capitalization, partly offset by lower FTEs and solidarity. This explaining ~2pp of increase in Q4 OPEX

For further questions please contact the IR team

(+39) 06 3688 1 // (+39) 02 85954833

Investor\_relations@telecomitalia.it

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