Telecom Italia Rsp

Investor Presentation • Feb 23, 2021

TIM GROUP

FY '20 RESULTS AND 2021-23 PLAN Beyond Connectivity

24 February 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 FY20, Q4'20 and for 2021-2023 Plan of the TIM Group are the same as those adopted in the TIM Group Annual Audited Consolidated Financial Statements as of 31 December 2019, to which reference can be made, except for the amendments to the standards issued by IASB and adopted starting from January 1, 2020.

As of today, the audit work by our independent auditors on the FY20 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.

Agenda

• Promised, delivered
• 2020 achievements
• Solid Q4 financials
• What next? A better macro and telco outlook
• TIM ready to ride all opportunities in connectivity and beyond in Italy and Brazil
• Financial and ESG Guidance. Closing remarks
• Q&A

3

PROMISED, DELIVERED

Promised, delivered…

Foundations of transformation set in 2019

Customer base stabilization reached in Q4

	2019 plan: "Deliver & Delever"	2020 plan: "Operations TIMe"
Equity Free Cash Flow generation	▪ € 1.6bn in '20 and € 1.5bn in '19(1) ▪ Reinstated dividends on ordinary shares	Stabilized customer base	▪ Fixed CB growing in Q4 '20 for the first time since 2001 ▪ Mobile MNP stabilized
Debt reduction	€4.7bn debt reduction(1) ▪ in 2 years	Improving pricing	▪ Upper end mobile since Q1 '19, low end since Q1 '21 ▪ Fixed acquisition prices on healthy trend
Stabilized governance	▪ Positive dynamics in board ▪ Exiting BOD proposed its slate for next 3 years	environment	▪ OPEX(3) -15% in '19-20
Developed Brazil	mobile assets with Vivo and Claro(2) ▪ Acquisition of Oi ▪ Strengthened the core ▪ Network sharing partnership with Vivo	Cost cutting	Addressable costs(3) -9.5% YoY ▪ in '20
		TIM Vision	▪ Richest content platform in Italy: partnerships with Netflix, Disney+, DAZN, NowTV
Created optionality for value creation	▪ Inwit-Vodafone towers merger ▪ Co-investing in FiberCop with KKR and Fastweb ▪ Google partnership, cloud/data centers carve out	ESG plan executed	▪ Ecoefficiency hikes monetized (white certificates) ▪ Inaugural Sustainability Bond issued

5

…and created optionality by developing, sharing and monetizing infrastructure

2 years of evolutionary revolution for TIM's key infrastructures…

…and more specialized "factories" to create optionality are being developed

The new plan raises the bar: "beyond connectivity" towards growth

7

2020 ACHIEVEMENTS

Stabilized the core: service revenues and EBITDA flattened YoY in Q4 2020

penetration still below Europe

9

"Fix the fixed" delivered results: line losses turned positive in Q4 for the first time since 2001. Convergence helping mobile as well

Change in customers habits inverted fixed-to-mobile substitution trend… …and Telcos will play an even bigger role in the "after COVID" reconstruction

Leaner organization/processes for better engagement and CSI with lower costs

2020 addressable cost base -9.5%: 3-year target reached in 1 year

2020 addressable baseline			Key OPEX variation drivers		3-year plan's target reached in 1 year
Commercial	€ bn 1.3	Delta YoY (14.2%)	▪ VAS content -34% YoY mainly for CSP cleanup ▪	P&L view € bn	-10% 3-year plan's	target (1)
Industrial	1.0	(4.5%)	Commissioning -3% YoY for increased web sales ▪ Caring -5% YoY for process digitization		-9.5%
G&A	0.3	(12.5%)	▪ Bad debt -31% YoY for improved process ▪ Energy costs -11% YoY: lower energy prices and volumes
Labour	1.9	(6.6%)	▪ Real estate -24% YoY for rightsized office space
Tot. addressable baseline	4.6*	(9.5%) * ~63% of total 2020 OPEX baseline	▪ Lower headcount: -2.6k YoY (after -2.7k last year, o/w 3.6k exits) plus 1k hirings

TIM Group

€4.7bn debt cut in 2 years. 2020 EFCF fully on track for upgraded guidance

Historical trend of Equity FCF and Net Debt

2020 ESG guidance met or beaten. On track on all L/T targets

Targets (1)

Eco-efficiency	+50%
Renewable energy on total energy (%)	+5pp/yr	2025
Indirect emissions (2)	-70%
Carbon Neutrality	(2)	2030
Employees Engagement	+14pp
Reskilled people	2,000
Churn of Young employees	<15%	2022
New VC fund size	€ 50m
IoT and Security service revenues	+20%
Green Smartphone	>15%	2024

On track on all targets

2020 actions and achievements

Increased infrastructure energy efficiency

• Optimizing fixed and mobile networks
• Transforming data centers

Sparkle data center certified for renewable energy

• Engagement over performed, 3-year target topped in one year ▪ Increased digital inclusion
• Agile & sustainable building
• Digital initiatives in response to COVID emergency
• Launched «TIM Green»
• Enabled Italian enterprises' sustainability

- Circular economy for infrastructure and workplaces

• Supported and invested in ESG startups
• Launched "TIM with Green Pea"

Inaugural Sustainability Bond issued: € 1bn, 8 year maturity, 1.625% coupon

SOLID Q4 FINANCIALS

Strong topline and EBITDA trends improvement vs. Q3, Equity FCF +57% YoY

Organic data (1), IFRS 16, € m

Service revenues and EBITDA AL trends improved both in Italy and Brazil.

Q4 domestic EBITDA AL +0.4% YoY like for like: no solidarity in Q4 '20 (vs. 4 days in Q4 '19) implies 2.1pp YoY drag.

Q4 Equity Free Cash Flow AL € 622m (+57% YoY)

Net Debt AL down €2.1bn QoQ in Q4

Fixed retail lines back to growth, one of the strongest quarters ever in retail UBB

Retail net adds back to positive in Q4

No fixed line losses in Q4, 2 years ahead of target

Vouchers helped but >75% of first €200m tranche still available plus 100% of €900m tranche

Improvement attributable to "Fix the Fixed" plan

18.1k cabinets opened to FTTx in 2020 (reaching ~91% coverage of fixed active lines)

4,063 4,220 4,127 4,407 8,190 8,627 Q3 '20 Q4 '20 +24% YoY +157 +233 in Q4 '19 +280 +103 in Q4 '19 UBB Customer Base k lines

Retail UBB net adds doubled QoQ

Positive balance btw UBB net adds and ULL losses grew YoY

Churn improved, lower disconnections from F-M substitution and delinquent clients

Wholesale Retail

1.6% 1.3% Q4 '19 Q4 '20 Churn monthly average 1.7% 1.3% FY '19 FY '20

UBB growth accelerated

FSR flat YoY: QoQ improvement across the board: both retail and wholesale

Fixed Service Revenues flat YoY in Q4

• National Wholesale +9.4% vs. +1.7% in Q3 thanks to better mix in revenues (VULA vs ULL) and OLOs' deals impact
• International Wholesale +6.9% vs. -1.8% in Q3 thanks to data business
• Retail YoY trend improving vs Q3 (-4.4% YoY vs -8.2% in Q3). Positive swing in Q4 vs. Q3 thanks to:
  • CB evolution: ~ +0.9pp
  • Consumer ARPU: ~ +0.7pp
  • ICT revenues: ~ +1.3pp with 28% YoY growth (+18% in Q3) mainly for increased cloud services

ARPU trend improving QoQ

Mobile KPIs showing improvements on all fronts

MNP balance keeps improving, TIM still the best among big 3

Further step toward customer Churn reduced YoY base stabilization: impact on MSR from CB reduction improved ~1pp QoQ (after ~2pp QoQ in Q3)

CSI +3.2% YoY in Q4

Churn reduced 1.0pp QoQ

NPS improving further QoQ and still well above large operators'

MSR more than halved YoY decline vs. Q3; discontinuities to fade-off in 2021

ARPU increasing 0.1% YoY excluding 4.4pp of one offs of which:

• 2.8pp CSP cleaning (+1.9pp QoQ),
• 1.5pp Roaming (flat QoQ)
• 0.1pp Consip contract at lower prices (+0.6pp QoQ)

Addressable cost base -7.4% YoY in Q4

• Labour -4% YoY for FTE reduction (-2.4k YoY). Fall would be 9% net of ~€27m drag due to no solidarity in Q4 vs. 4 days of solidarity in Q4 '19
• G&A -18% YoY thanks to lower indirect personnel and consulting, lower fleet management and civil building costs
• Industrial: lower energy costs (-6% YoY). Higher industrial building due to mobile sites co-sharing
• Commercial -6% for lower commissioning and bad debt partly offset by advertising
• CoGS increase related to ICT revenue growth
• Equipment down due to Covid-19
• Interconnection increase for higher international and retail traffic volumes

CAPEX: lower YoY despite push on FTTx

Group CAPEX flat YoY

Accelerated expansion in white areas (~10k new cabinets opened in FY) offset by improved efficiencies

Brazilian CAPEX increased in Q4 to catch up plans affected by COVID in previous quarters

Group Operating Working Capital outflow improving €534m YoY

Brazilian tax benefits and FX more than offsetting domestic negative one offs(1) (€209m)

€373m YoY improvement excluding YoY swing in non recurring items

Deleverage: €4,342m debt cut in 2020 (-€3,299m YoY After Lease view)

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

FY Net Income grew €6.3bn YoY, +€0.4bn net of tax asset value realignment

Reported data, € m, Rounded numbers

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

WHAT NEXT? A BETTER MACRO AND TELCO OUTLOOK

Macro context: 2021 GDP growth swing YoY expected one of the largest in modern history. EU recovery fund set to boost economy and telco sector

1.2% 3.8% 2.4% 2.3% 2022 -8.9% 3.5% 2020 2021 2023 Including Next Generation EU contribution GDP expected to grow in 2021-23 (1) Italy GDP growth YoY % +2.5pp expected GDP impact from Next Generation EU over 2021-23 vs. base scenario Health € 19.7bn Green revolution € 69.8bn Education € 28.5bn Social € 27.6bn Digitalization € 46.3bn Infrastructure € 32bn Transition 4.0 € 18.8bn UBB, 5G & satellites € 4.2bn Supply chain & internationalization € 2.0bn SMEs digitalization € 0.8bn PA modernization € 1.5bn PA digitalization € 8.0bn Justice € 2.3bn Microprocessors € 0.8bn Culture & Tourism € 8.0bn Next Generation EU fueling economic recovery and digitization: € 209bn funds allocated to Italy On top of >€ 150bn allocated by the Government for liquidity and solvency measures

Telco context: new reasons to close the penetration gaps vs. Europe and grow

Fixed market growth expected to become structural New habits and needs bring mobile-only BB users back to fixed, closing >10pp gap vs. other EU Countries

1) Source: AGCOM, internal elaborations on Analysis Masons' estimates 2) Overall market growth rate (CAGR '19-22)

TIM READY TO RIDE ALL OPPORTUNITIES IN CONNECTIVITY AND BEYOND

- ITALY -

2021-23 TIM Strategic plan TIM Group

plan 2021-23 "Beyond Connectivity"

Unique commercial proposition

Connectivity quality leader provider in Italy

Integrated platform to develop new digital services through an ecosystem of tech partners

Best technological infrastructure

Further UBB deployment & technological upgrading

Further improve operational excellence

Improved KPIs and reduced cost structure

Leaner organizational model

Superior capabilities and efficiency

Central role of ESG objectives

The growth engine: TIM and its specialized "factories" exploiting adjacent markets with tech partners for digital transformation (and optionality)

Service	Company	Ambition	Target KPIs	Factories revenue target (2)
Cloud	company	Leading Italian cloud and infrastructure provider	▪ € 1bn revenues in '24 ▪ €0.4bn EBITDA in '24 ▪ 300+ clients addressed with Google	2.2x
Cyber		Reference partner for	▪ 10-12% market share in '23	2020 2023
security		Enterprise and Government		▪ New specialized offering in most
Integrated		Leading Italian E2E business	▪ 80-100k merchants reached by '23 ▪ 10-15 smart city projects	relevant digital services
IoT		services solution provider	▪ 4-5 core Italian manufacturing value chains	▪ Integrated commercial
International wholesale		Leading E2E connectivity partner for operators, MNOs, OTTs content providers, enterprises. Building and selling infrastructure	▪ Enterprise: +200 Customers by '23 ▪ Targeting to be in Gartner MQ for Global SP(1)	approach, product development and resource allocation for TIM and its "factories"
Contents		Easiest, most complete and affordable entertainment hub in the Italian market	▪ +21pp paying clients weight on BB CB by '23	▪ Factories likely recipients of Recovery fund

Consumer: best convergent solutions for UBB & content for the household

Key strategic priorities

Quadruple Play TIM Vision enhanced offer

Digital sales channels and stores redesign KPIs expected evolution in 2020-23

Touchpoints digitization

Channel remix

Sales excellence

mobile prospects, new booking process)

segmented campaigns CVM

▪ Enlarged 4P (fixed + mobile + contents + smart home)

▪ From Push to Pull and digital

▪ "Industrialization" across all channels

new compensation

TIM's networks: the largest coverage at the highest speed, HD Video ready

Business: new offering / new channels for SME and SOHO. End-to-end IoT/Cloud solutions for Enterprise and P.A.

			Key strategic priorities for TOP	Key strategic priorities for SME	KPIs expected evolution in 2020-23
Unique one-stop-shop solution			▪ Comprehensive cloud solution package and end-to-end IoT solutions	▪ Turnkey ICT offering, jointly developed with "factories" and partners: Payments, VoIP, Cybersecurity, Cloud	Revenue share of digital services Enterprise SME +12pp +10pp
	Evolved distribution	Sales excellence & CVM	▪ Capability building program ▪ New Sales & Marketing tools: account planning, CRM, marketing campaigns	▪ Push convergence and ICT products ▪ Improve segmentation with dedicated loyalty offerings	2020 2023 2020 2023 Enterprise sales per representative +15% 2020 2023
	model	Channel remix	▪ Re-engineered salesforce channel to win in ICT	▪ New dedicated SoHo channel ▪ New incentives scheme	Faults closed in next business day SME 90% 81% 2020 2023
	Improved caring and assistance		▪ Dedicated support for high value accounts with "1-to-1" approach	▪ Redesigned caring processes and systems to sustain premium positioning	Enterprise resources 2,000 to be trained

Wholesale: UBB/solutions provider in regulated and non regulated markets

Key strategic priorities KPIs expected evolution in 2020-23

			Fiber accesses	Not regulated
National Wholesale	CB protection through UBB expansion	▪ Co-investment: commercial agreements to develop FTTH with both existing and new customers	VULA + BTS NGA, million accesses	Percent of Wholesale revenues
	and offer breadth (suits different level of infrastructure and geographical footprint)	▪ "Turn-key" offers (One-Step) to increase customer satisfaction	1.6x	+8pp
		▪ Increase competitiveness of Bitstream/NGA	2020 2023	2020 2023
			GEA	Giganet
			'000 links	'000 links
	Growth of not regulated services	▪ Strengthen TIM's offering and role as backhaul provider	+48%
		▪ Review commercial offer of High Quality Connectivity (Gea and Giganet)	2020 2023	2020 2023
		▪ Expand offering to Data Center Services
			Sparkle gross revenues
	Growth targeting new segments and geographies	▪ Core Connectivity and E2E Enterprise partner with new integrated portfolio of Security, IoT and Cloud services	% on total gross revenues 8% 16% 28% 37%	Data Enterprise Data Wholesale
		▪ Cross segment enablers: e.g. co-building partnerships with Hyperscalers/OTTs and collaboration with TIM Factories	64% 47% 2020 2023	Voice/Mobile

Addressable cost base to be further optimized. Some initiatives yet to unfold full potential

Example of initiatives not yet showing their full benefit

CAPEX: ~€2.9bn p.a. for strong FTTH/5G coverage expansion

Grow & Transform Capex evolution and mix

• ROI-driven mobile/fixed access development (4G and 5G, FWA, FTTx) to close digital divide
• FTTH roll out with new model delivery, assurance, deployment
• Decommissioning of legacy systems. Getting ready for 3G switch off during 2022
• Enable B2B use cases with low latency (e.g. connected cars)

5G coverage

• 2020: 10 cities (90% Milan)
• 2021: all major cities, tourist areas and industrial districts
• 2025: national coverage

Extensive FTTH roll-out plan through FiberCop 2019 '20 '21 '22 '23 '24 '25 '26 Black Areas FTTH Grey Areas FTTH FTTC FTTH Coverage @2025 56% Italy 76% Black+Grey Areas 100% Black Areas FTTH 56% FTTC 85% Black Areas Grey Areas White Areas 25% 33% 42% 51% Coverage of technical units (1)

Co-investment scheme according to EU Telecommunication Code art.76 (regulation eased)

In Jan 2021 TIM published a public offer for co-investment:

• Scope: FTTH secondary access network
• Coverage: 1,610 municipalities, reaching 76% of technical units (12.9m), in black and grey areas
• Target: operators taking volume commitments (pay per use or IRU)
• Timing: 2021-25

Strategic initiatives update

	▪ Carve-out finalized ▪ Co-investment scheme published and open to all operators
FiberCop	▪ 2021 revenues E1.2-1.3bn, EBITDA c. 0.9bn, debt/EBITDA 3.4x
	▪ EBITDA – CAPEX positive from 2025; CAPEX/sales <10% at regime
	▪ €1.8bn cash-in from KKR to buy 37.5% of FiberCop
AccessCo	▪ Enel announced disposal of its stake in OF to Macquarie
	▪ Technical due-diligence of OF and FiberCop completed, confirming our initial expectations
Develop	▪ Oi mobile business auction in December 2020 awarded to TIM Brasil, VIVO and Claro
TIM Brasil	▪ Assets allocation to TIM: ~14.5m customers, ~7.2k mobile sites, ~49 MHz frequencies
	▪ Execution pending CADE approval
Data centers	▪ Carve out of Noovle completed
carve out	▪ €0.5bn revenues and €0.2bn EBITDA generated in 2020, in line with plan
	▪ €1bn revenues and €0.4bn EBITDA targeted for 2024

TIM READY TO RIDE ALL OPPORTUNITIES IN CONNECTIVITY AND BEYOND

- BRAZIL -

TIM Brasil

TIM Brasil: Delivering growth in a more challenging macro scenario

Reported data

carveout

One of the best ranked stocks in the B3 and S&P ESG index New ESG committee

(1) Normalized (2) Last 12M IPCA as of December 2020

Better macro and telecoms outlook

	Mobile market consolidation	Acceleration in digital consumption	Wave of asset separation	Monetization of Consumer Platform	Paving the way for 5G	IoT and M2M technology
Dynamic	Moving from 5 to 4 after Nextel acquisition and from 4 to 3 after deal with Oi mobile is completed	Data demand growth for mobile and fixed, further accelerated by Covid-19	Increasing initiatives of network separation (InfraCo vs. ServCo)	Increasing numbers of digital business leveraging Telco's Consumer Platform (e.g. digital wallet, data monetization)	Preparation to launch 5G, with 5G DSS as marketing positioning, auction and vendor analysis	Exponential number of use cases in several industries (e.g. agribusiness, connected cars, utilities, health)
Implications and Opportunities	Foster more balanced competitive landscape (e.g. pairing spectrum gap)	Revenue growth on data monetization Increase pressure over network cash costs Geographical expansion of fiber	Partnership negotiation to finance network expansion and modernization	New revenue sources for telco operators leveraging new digital disruptors (e.g. fintech, data provider, OTT content)	Focus on 5G network rollout with proposed auction framework, Release 16 as catch up for the country	Expand business beyond connectivity (e.g. applications, data monetization, implementation)

TIM Brasil

Solid results in 2020 confirm the consistency of our strategic plan

Strategic Paths		Enhance and accelerate the transition from volume to value, to sustain mobile business growth, focusing on customer experience
	Strengthen the core	Capture ultrabroadband market growth opportunity with new financial and business models
		Fill current infrastructure gap with M&A, also fostering inorganic growth and capturing potential synergies
	Build the future	Expand new sources of value (e.g. IoT, C6, Mobile Advertising, Customer Data Monetization, Health, Education) leveraging the customer base platform through ecosystem and partnerships
		Implement transformational projects on infrastructure (e.g. 5G, ORAN, M-MIMO, cloudification)
Transformational Enablers	Boost disruptive efficiencies	Boost disruptive efficiencies through digitalization, automation and new operating models, leveraging skills and capabilities enhancement
	Strengthen sustainability	Strengthen and consolidate ESG proposition making a positive transformation

"Imagine as possibilidades": Our aspirations for 2023 reflect market opportunities and trends

TIM Brasil

Oi's assets integration could transform TIM Brasil by 2023

(1) Includes Oi assets integration, IFRS15/16, and does not include 5G related capex (e.g. spectrum license and cleaning, network capex rollout) and last mile carveout project (FiberCo) (2) Incremental due to both Oi's assets incorporation and new market dynamics

⁴⁵ FY '20 RESULTS AND 2021-23 PLAN

TIM Brasil

Market guidance 21-23 shows Revenue and EBITDA growth, and positive impact coming from M&A

GOALS	SHORT TERM TARGETS (2021)	LONG TERM TARGETS
Revenue Growth Sustainability	Service Revenues Growth: Mid single digit (YoY)	Service Revenues Growth (CAGR '20-'23): Mid single digit standalone High single digit combining Oi's assets
Improve Profitability	EBITDA Growth: Mid single digit (YoY) (Including preparation costs)	EBITDA Growth (CAGR '20-'23): Mid single digit standalone Double digit combining Oi's assets
Infrastructure Development	Capex: ~R\$ 4.4 bln (including preparation investments)	Capex (cumulated 2021-'23): ~R\$ 13.0 bln standalone ~R\$ 13.5 bln combining Oi's assets (Capex on revenues declining starting in 2022 combining Oi's assets)
Expand Cash Generation	EBITDA-Capex on Revenues: ~24% (including preparation costs and investments)	EBITDA-Capex on Revenues: ≥ 29% in 2023 combining Oi's assets

FINANCIAL AND ESG GUIDANCE CLOSING REMARKS

New plan confirms cash generation, dividend guidance and deleverage

Cumulated Equity Free Cash Flow guidance for 2021-23 similar to 2020-22 Anticipating a few payments

• €0.7bn to be spent in 2021-23 as tax realignment cost (€5.9bn tax asset net of realignment cost to be used mostly after the plan period)
• ~€0.3bn anticipation of 2100 MHz spectrum prepayment with €40m financial benefit, affecting 2021 net debt (not Equity Free Cash Flow)

Dividend distribution guidance unchanged

▪ ordinary: floor of €1 cent per share, aiming at distributing 20-25% of yearly organic Equity FCF. Payout policy above floor subject to deleverage execution 2021-23 >2023

▪ savings: €2.75 cents per share throughout 2021-23

Long term ambition: distribute 50% of yearly organic Equity Free Cash Flow

⁴⁸ FY '20 RESULTS AND 2021-23 PLAN

Guidance 2021-23: proceeds from FiberCop included, Oi's acquisition not yet reflected

YoY growth rates, IFRS 16 / After Lease	Group		Domestic		(1) Brazil
	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\$ 13.5 bn	~R\$ 13.0 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 proceeds from FiberCop (€1.8bn), 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 plan and guidance confirmed or raised

Incremental actions 2021-23

E Climate strategy	E Circular economy	S Digital inclusion	Eco-efficiency	+50%
Carbon free energy for infrastructures (data centers, fixed and mobile networks)	Carbon calculator tool for business clients	Reduce digital Divide and social exclusion through extensive infrastructure 5G development to push adoption green and social IoT services	Renewable energy on total energy (%)	+5pp/yr	2025
	Sustainable supply chain		Indirect emissions(2)	-70%
Science Based Targets initiative validated goals Scope 3 calculation	improvement Circular economy standards for infrastructure and workplaces Agile and sustainable buildings		Carbon Neutrality(3)		2030
Carbon offsetting		Digital initiatives in response to COVID-19 emergency, on top of "Operazione Risorgimento	Employees engagement	+19pp NEW
of CO emissions by '23 2 Renewable energy increase(4)			Hours of training for reskilling and upskilling	6.4m hrs NEW
		Digitale"	Churn of young employees	<12% NEW	2023
Promote sustainability through strategic alliances (Eco-rating, B Lab)			New VC fund size	€ 60m NEW
G	Gender equality and inclusion targets in management remuneration Implement EU Taxonomy and SASB	reporting	IoT and Security service revenues (CAGR)	+20% NEW
			Green Smartphone	>15%	2024

Targets (updated)(1)

• Revenues and EBITDA stabilized in Q4
• ESG and financial guidance delivered
• Improving macro scenario for Italy and the telco sector
• TIM ready to ride all opportunities in connectivity and beyond, both in Italy and in Brazil
• Confident with our guidance of domestic and group revenue growth
• Making the world a better place to live in

€ m, organic

IFRS 16 and IFRS 16 After Lease view

EBITDA After Lease

Equity Free Cash Flow After Lease

Liquidity margin - After Lease view

Cost of debt ~3.4%, flat QoQ, -0.2p.p. YoY

(1) Includes €1.7 bn bridge loan facility cancelled on January 19th 2021. As of January 18th 2021 TIM issued a new sustainability bond for € 1bn expiring in 2029 (2) € 23,716m is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€ 496m) and current financial liabilities (€ 1,151m), the gross debt figure of € 25,363m is reached

⁵⁵ FY '20 RESULTS AND 2021-23 PLAN

Cost of debt ~3.7%*, flat QoQ, -0.4p.p. YoY Liquidity margin - IFRS 16 view

* Including cost of all leases

(1) Includes €1.7 bn bridge loan facility cancelled on January 19th 2021. As of January 18th 2021 TIM issued a new sustainability bond for € 1bn expiring in 2029 (2) € 28,487m is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€ 555m) and current financial liabilities (€ 1,151m), the gross debt figure of € 30,193m is reached

⁵⁶ FY '20 RESULTS AND 2021-23 PLAN

Well diversified and hedged debt

	NFP adjusted	Fair value	NFP accounting
GROSS DEBT
Bonds	19,541	303	19,844
Banks & EIB	5,279		5,279
Derivatives	240	1,666	1,906
Op. leases and long rent	4,830	-	4,830
Other	303	-	303
TOTAL	30,193	1,969	32,162
FINANCIAL ASSETS
Liquidity position	5,921	-	5,921
Other (1)	946	1,581	2,527
TOTAL	6,867	1,581	8,448
NET FINANCIAL DEBT	23,326	388	23,714

Average m/l term maturity: 9.7 years (bond 6.8 years only)

Fixed rate portion on medium-long term debt ~71%

Around 25% of outstanding bonds (nominal amount) denominated in USD and GBP and fully hedged

TIM Brasil

TIM Brasil: Q4 results in a nutshell

Reported data, R\$m

For further questions please contact the IR team

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Investor\_relations@telecomitalia.it

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