TIM GROUP

Q1 '21 RESULTS

A better Company in an improving Country outlook 20 May 2021

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 Q1'21 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 January 1, 2021.

The financial results for Q1'21 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 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.

OPERATIONS UPDATE

Beyond connectivity plan update. Revenues flat YoY in Q1

		What happened in Q1	KPIs
ESG		▪ CSI and NPS keep improving ▪ New "Expansion Contract" signed and active from May ▪ Inaugural sustainability bond	(1) CSI +1% QoQ, NPS +2 QoQ ~1,300 exits in H1 Lowest coupon ever 1.625%
Domestic		▪ FSR and fixed lines stable, UBB net adds strong, distribution of Serie A matches to push growth further ▪ Growth engines (TIM's Factories) on track to deliver on targets ▪ Lowest mobile churn in the last 14 years	Retail UBB net adds +119% YoY ICT revenues +30% YoY Mobile churn 3.8% in Q1
Brazil		▪ Reshape of revenue profile with customer transition to value ▪ ARPU growth in all segments and NPS improvement ▪ Acceleration of EBITDA growth	Service revenues +3.3% YoY ARPU +6.6% YoY EBITDA +4.8% YoY
Cash generation	€	▪ Organic debt reduction ongoing and €1.8bn proceeds from KKR ▪ EFCF solid performance ▪ FY 2021 guidance already neared in Q1	Net Debt AL -€ 2.0bn QoQ, -€ 5.1bn YoY EFCF AL € 307m in Q1, +57% YoY Leverage 2.7x EBITDA AL LTM(2)

"Fix the fixed" continues to deliver results with FSR stabilized and mobile churn helped by convergence

Italian football goes on fiber. TIM becoming "THE" telco distributor

Benefits for TIM: 1) New revenue stream, 2) Stronger UBB demand, 3) Additional push on convergence (TIM Unica)

Football presently distributed mainly through SKY's satellite Move to Internet will push migration from mobile-only and DSL to fiber

Italian football market (1) makes TIMVISION "THE" choice

>50% of football viewers still with no UBB

Satellite is the main distribution platform (share on paying football CB >80%)
Further opportunity from piracy prevention through stronger law enforcement and new technology: the police stopped illegal streaming for 1.5m last weekend ~€70m set-up capex expected in FY '21

Widest and unique offer in the market with all the main contents in one place

Entertainment: Disney+ (bundle exclusivity), Discovery+, Netflix, Amazon Prime Video, Mediaset, Turner, Viacom/Paramount, Chili, Youtube
Sport: DAZN, Eurosport, Now TV

4 key growth drivers for Italian telecoms from demand evolution: 1) Football on Fibre, 2) "mobile only" to fixed BB, 3) beyond connectivity, 4) public funds

(1) Million lines, source AGCOM and internal elaborations on Analysis Mason's estimates (2) Families with mobile broadband only, source Eurostat, 2019 (3) Excluding Sparkle

Public funding: a total of €235bn will boosts Italian GDP outlook ~27% of Italian Recovery & Resiliency Facility allocated to digital/telecoms

Recovery			Recovery and Resiliency Plan submitted			Italy's GDP growth
fund		€235.1bn(1) ▪	to the EU Commission. Funds increased 10% for digital			4.4% 4.2%	4.2%
Digitalization		€46.3 → 49.9bn(2)	o/w Recovery & Resiliency	Facility
Green revolution		€69.9bn	Public Administration	€ 9.8bn		-8.9%	Plan impact
Infrastructure		€31.5bn	Businesses	€ 23.9bn		'20 '21 '22	'23
Education	€33.8bn		o/w Transition 4.0 € 13.4bn o/w UBB & 5G € 6.7bn Tourism & Culture 4.0 € 6.7bn			Recovery & Resiliency Plan expected impact
Social	€29.8bn				on Italy's GDP 16pp growth in 2021-'26 (3)
Health	€20.2bn					TIM and its factories best positioned to benefit from funds allocated to telecoms and to Italy's digitalization

	€0.2bn (phase 1) €0.9bn (phase 2)		Ongoing, >60% still available			TIM most active provider so far: 76%(4) of vouchers volumes
Vouchers			To be launched by the summer
Schools		€0.4bn	68% already assigned in public tender		Revenues for TIM expected from Q3
"Italia a 1 Giga" plan		€1.1bn → €3.9bn	Consultation ongoing for roll out in grey areas		Funds for grey areas 3.5x higher vs. draft. TIM's fiber at the cabinet ubiquitously in grey areas
"Italia 5G" plan		€2.0bn	Infrastructure mapping in Q2, tender in Q1 '22			Details yet to be disclosed

(1) ~27% of Recovery and Resiliency Facility (~€ 52bn out of €191.5bn RRF) is specifically allocated to digital investments. React EU and Complementary fund to further enlarge the bucket

(2) Increase versus draft edition of Recovery and Resiliency plan

(3) Source: Ministry of Economy and Finance, Banca d'Italia (4) Source: Italian Government Parliamentary audition on 13 April 2021

Net Debt AL: € 6.7bn debt cut from 2018, -€ 2.0bn in Q1 '21 Leverage at 2.7x EBITDA AL

Q1 '21 FINANCIAL & OPERATING RESULTS

Cash generation and debt reduction accelerate. Revenues stable YoY

Organic data (1), IFRS 16, € m

Q1 revenues trend improved +2.1pp QoQ (+2.4pp Domestic)

Domestic EBITDA AL +0.8% YoY like for like:

No solidarity in Q1 '21 (vs. 3 days in Q1 '20) implies 1.6pp YoY drag (3)
Telecoms sector contract renewal through one-off payments rather than salary increases implies 1.8pp YoY drag

Equity free cash flow AL € 307m (+57% YoY)

Net Debt AL reduced € 2.0bn QoQ vs. -€ 182m in Q1 '20 (-€ 5.1bn YoY vs. -€ 1.4bn in Q1 '20)

Fixed KPIs remain strong despite seasonality

Retail UBB net adds peaking despite seasonality

Wholesale trend improved QoQ VULA continues offsetting ULL losses

Retail fixed lines stable

Retail ultrabroadband net adds more than double YoY

Structural improvement thanks to "Fix the Fixed" plan plus help from vouchers (>60% of first €200m tranche still available)

CSI +1.7% QoQ in Q1, NPS +2.0 QoQ

Churn benefitting from convergence and increased direct payments (+6.9pp YoY)

UBB coverage and take up continuous growth

Fixed revenues back to YoY growth. FSR stabilized

Total Fixed Revenues +3.0% YoY in Q1 (vs. -0.3% in Q4)

Fixed Service Revenues -0.5% YoY (vs. -0.2% in Q4: 0.3pp delta explained by lower weight of ICT in Q1 vs. Q4)

National Wholesale +8.7%: better mix in revenues (VULA vs ULL)
International Wholesale +1.4%: improved voice & data service volumes
Retail YoY trend -4.8% YoY helped by:
customer base stabilization(1) -0.5pp YoY vs -5.6pp in Q4
ICT revenues growing +30% YoY

ARPU is set to improve YoY performance in H2 even before considering help from football

Equipment resumed strong growth (+58.5% in Q1 vs. -1.4% in Q4) benefiting from ICT growth, higher UBB net adds and vouchers

Convergence grew with larger adoption of TIM Unica

Direct payments increased, with benefits on churn

Mobile KPIs similar to Q4. Churn the lowest of the last 14 years

Impact on MSR from CB reduction ~ +1pp better QoQ (after ~ +1pp in Q4 and +2pp in Q3)

Churn reduced 0.4pp QoQ and 1.5pp YoY

CSI +0.5% QoQ in Q1, after +3.2% in Q4

NPS improving further QoQ and still well above large operators'

Market MNP down YoY, TIM still the best among MNOs

Churn further improved Calling human net adds reduced to approx. 1/3 YoY

Mobile service revenues affected by one offs. Improvement expected from Q2

Handset sales back to growth: +10.4% YoY

Further acceleration in addressable cost base cut: -8.9% YoY in Q1 (-7.4% in Q4)

▪ Labour -1% YoY for FTE reduction (-1.9k YoY). Fall would be -9% net of drag from Telecoms sector contract renewal through one-off payments rather than salary increases and drag due to no solidarity in Q1 '21 (vs. 3 days of solidarity in Q1 '20)

Solidarity starts in May for 16 months. No solidarity in H2 2020

Industrial: lower energy costs (-15% YoY) thanks to lower consumption and better prices
Commercial -21% mainly for lower bad debt (€61m, -62% YoY)
CoGS increase related to ICT revenue growth
Equipment back to growth albeit a bit less than sales growth
Interconnection slight increase for higher traffic volumes ⁵²¹

CAPEX focused on growth, NWC improved further

Group CAPEX up YoY due to:

more evenly split CAPEX during the year (COVID affected Q1 '20)
push on growth CAPEX (+42% YoY) for FTTx roll out, kick off of Dazn partnership, Google Cloud partnership and Data Centers
reduction in maintenance CAPEX (-2% YoY)

Group Operating Working Capital outflow improving €617m YoY

€255m YoY improvement excluding YoY swing in non-recurring items, benefiting from:

effective working capital management domestically
higher trade payables in Brazil

Deleverage: € 2.2bn debt cut in Q1 (-€ 2.0bn After Lease view)

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

Liquidity margin - After Lease view

Cost of debt ~3.3%, -0.1p.p. QoQ, -0.1p.p. YoY

(1) € 23,953m is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€ 480m) and current financial liabilities (€ 333m), the gross debt figure of € 24,766m is reached

²⁰ Q1 '21 RESULTS

TIM Brasil

TIM Brasil. Value strategy works: growth rates accelerate

Reported data, R\$m

(1) Excluding M2M (2) Pro-forma 2020

STRATEGIC INITIATIVES UPDATE

Strategic initiatives update

FiberCop	▪ Closing of KKR's purchase of a 37.5% stake last March. €1.8bn cash-in for TIM ▪ Co-investment scheme published and open to all operators ▪ 2021 revenues €1.2-1.3bn, EBITDA c. €0.9bn, debt/EBITDA 3.4x ▪ EBITDA–CAPEX positive from 2025; CAPEX/sales <10% at regime
AccessCo	▪ Enel announced disposal of 40% of OF to Macquarie and 10% to CDP ▪ CDP will end up with 60% of OF and will appoint CEO ▪ Single controlling shareholder simplifies ongoing dialogue
Develop TIM Brasil	▪ Oi's mobile assets integration: ~14.5m customers, ~7.2k mobile sites, ~49 MHz freq. ▪ CADE formal notification in Feb-21, analysis process initiated in Mar-21. Closing by Q4 NEWCO 51% owned by IHS(1) ▪ FiberCo 49% by TIM (with prerogative on roll-out decisions) ▪ FiberCo EV R\$2.6 bn (21x EBITDA). Closing expected in 2H 2021
Data centers carve out	▪ Carve out of Noovle completed ▪ €0.5bn revenues and €0.2bn EBITDA generated in 2020 ▪ €1bn revenues and €0.4bn EBITDA targeted for 2024 confirmed

CLOSING REMARKS

2021-'23 guidance

YoY growth rates,	Group		Domestic		(1) Brazil
IFRS 16 / After Lease	2021	2022-23	2021	2022-23	2021	2022-23
Organic Service revenues	Stable to Low single digit growth	Low single digit growth	Stable	Stable to Low single digit growth	Mid single digit growth	Mid single digit growth High single digit growth (CAGR '20-'23) with Oi
Organic EBITDA AL	Stable to Low single digit growth	Low to Mid single digit growth	Stable	Low single digit growth	Mid single digit growth	Mid single digit growth Double digit growth (CAGR '20-'23) with Oi
CAPEX			~€ 2.9 bn per year		~R\$ 13.0 bn ~R\$ 13.5 bn with Oi
Eq FCF AL	Net of ~€0.7bn Cumulated ~€ 4.0 bn tax realignment cost
Adjusted Net Debt AL	2.6x ~€ 16.5 bn (3) Net Debt AL / EBITDA AL Oi (2) excluding by 2023
Dividend	ordinary: floor of € 1 cent per share, aim to distribute 20-25% of yearly Equity FCF subject to deleverage execution savings: €2.75 cents per share throughout 2021-23

(1) Guidance based on IFRS 16 for EBITDA in Brazil (2) Including anticipation of 2100 MHz spectrum prepayment (~€0.3bn) and excluding Oi's mobile acquisition (3) Based on Organic EBITDA AL; 2.7x based on Reported EBITDA AL P/L figures @ average exchange-rate actual 5,9 REAIS/EUR

ESG guidance TIM Group

Targets(1)

Eco-efficiency	+50%
Renewable energy on total energy (%)	+5pp/yr	2025
Indirect emissions(2)	-70%
Carbon Neutrality(3)		2030
Employees engagement	+19pp
Hours of training for reskilling and upskilling	6.4m hrs
Churn of young employees	<15%	2023
New VC fund size	€ 60m
IoT and Security service revenues (CAGR)	+20%
Green Smartphone	>15%	2024

(1) "Beyond Connectivity" plan targets were upgraded vs. previous plan, baseline 2019. Domestic, except for indirect emissions and carbon neutrality (Group) (2) Scope 2, TIM Group (3) TIM Group

Group revenues stable YoY and now more sustainable
Domestic FSR and fixed lines stable, UBB growth defeating seasonality
Convergence bringing mobile churn at lowest level in 14 years
Setting the scene for domestic growth through football, FiberCop and "beyond connectivity" plan
Public funding and macro forecasts further improved post new release of Recovery plan
Cost cutting accelerated, Equity Free Cash flow generation growing
Q1 net debt close to YE 2021 target

IFRS 16 and IFRS 16 After Lease view

EBITDA After Lease

Equity Free Cash Flow After Lease

TIM Group Realignment of intangible asset tax value

Realignment of the tax value	▪ Decree-Law 104/2020 allows for realignment of intangible asset tax value to the book value ▪ 3% substitute tax to be paid on the amount redeemed ▪ Future income taxes will benefit from intangible asset tax amortization
TIM SpA intangible assets redeemed	▪ Overall tax benefit: € 5.9bn (28.5% of tax basis) net of substitute tax ▪ Benefit will occur over 18 years
Substitute tax (3%): € 0.7bn	▪ To be paid in 3 annual instalments (€ 0.2bn per year), from June 2021

Reported data, € m, Rounded numbers

Cost of debt ~3.6%*, -0.1p.p. QoQ, -0.3p.p. YoY Liquidity margin - IFRS 16 view

* Including cost of all leases

(1) € 28,600m is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€ 509m) and current financial liabilities (€ 333m), the gross debt figure of € 29,442m is reached

³³ Q1 '21 RESULTS

Well diversified and hedged debt

	NFP adjusted	Fair value	NFP accounting
GROSS DEBT
Bonds	20,078	267	20,345
Banks & EIB	4,146	-	4,146
Derivatives	197	1,451	1,648
Op. leases and long rent	4,676	-	4,676
Other	345	-	345
TOTAL	29,442	1,718	31,160
FINANCIAL ASSETS
Liquidity position	5,356	-	5,356
Other (1)	2,931	1,201	4,132
TOTAL	8,287	1,201	9,488
NET FINANCIAL DEBT	21,155	517	21,672

Average m/l term maturity: 7.0 years (bond 6.8 years only)

Fixed rate portion on medium-long term debt ~72%

Around 26% of outstanding bonds (nominal amount) denominated in USD and GBP and fully hedged

FiberCop Financials in a nutshell(1)

EBITDA to evolve to FTTH in time…

FiberCop value to grow over time thanks to switch in the mix from copper towards fiber

For further questions please contact the IR team

(+39) 06 3688 1 // (+39) 02 8595 1

Investor\[email protected]

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