Telecom Italia Rsp

Earnings Release • Jul 24, 2018

Disclaimer

2Q18 and 1H18 financial and operating data have been extracted or derived, with the exception of some data, from the TIM Group Half-year Condensed Consolidated Financial Statements as of and for the six months ended 30 June 2018 which has been prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board and endorsed by the European Union (designated as IFRS).

Please note that the limited review by the external auditors (PwC) on the TIM Group Half-year Condensed Consolidated Financial Statements at 30 June 2018 has not yet been completed.

The accounting policies and consolidation principles adopted in the preparation of the TIM Group Half-year Condensed Consolidated Financial Statements as of and for the six months ended 30 June 2018 are the same as those adopted in the TIM Group annual Audited Consolidated Financial Statements as of 31 December 2017, to which reference can be made, except for the adoption of the new accounting principles (IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers) adopted starting from 1 January 2018.

As a result of this, the 2Q18 and 1H18 financial results are defined as "2Q18 and 1H18 new principles" and, for comparison purposes, are also presented in accordance with the prior IFRS on revenues (IAS 18, IAS 11 and related Interpretations) and financial instruments (IAS 39) defined as "2Q18 and 1H18 old principle (comparable)".

UNAUDITED FIGURES Key financial data by Business Unit

€ mln

REVENUES 2Q17 1H17 9M17 FY17 2Q18 1H18 2Q18 1H18 Domestic 3,847 7,494 11,312 15,354 3,809 7,518 3,773 7,454 Brasile 1,112 2,293 3,389 4,502 970 2,007 968 2,001 Other activities & Elim. (6) (15) (22) (28) (9) (13) (9) (14) TI Group 4,953 9,772 14,679 19,828 4,770 9,512 4,732 9,441 EBITDA Reported Domestic 1,740 3,361 5,055 6,171 1,667 3,200 1,599 3,068 Brasile 390 762 1,170 1,635 362 727 351 704 Other activities & Elim. (6) (9) (12) (16) (4) (9) (4) (9) TI Group 2,124 4,114 6,213 7,790 2,025 3,918 1,946 3,763 EBITDA Margin Reported Domestic 45.2% 44.8% 44.7% 40.2% 43.8% 42.6% 42.4% 41.2% Brasile 35.1% 33.2% 34.5% 36.3% 37.3% 36.2% 36.3% 35.2% TI Group 42.9% 42.1% 42.3% 39.3% 42.5% 41.2% 41.1% 39.9% EBIT Reported Domestic 898 1,685 2,507 2,772 806 1,484 763 1,402 Brazil 113 194 340 535 121 254 121 252 Other activities & Elim. (5) (8) (13) (16) (5) (10) (4) (10) TI Group 1,006 1,871 2,834 3,291 922 1,728 880 1,644 EBIT Margin Reported Domestic 23.3% 22.5% 22.2% 18.1% 21.2% 19.7% 20.2% 18.8% Brasile 10.2% 8.5% 10.0% 11.9% 12.5% 12.7% 12.5% 12.6% TI Group 20.3% 19.1% 19.3% 16.6% 19.3% 18.2% 18.6% 17.4% CAPEX Domestic 995 1,626 3,177 4,551 740 1,273 705 1,212 Brasile 230 430 704 1,150 240 402 231 385 Elim & Adj - - (1) - 1 - TI Group 1,225 2,056 3,881 5,701 981 1,675 937 1,597 CAPEX ON SALES (%) Domestic 25.9% 21.7% 28.1% 29.6% 19.4% 16.9% 18.7% 16.3% Brasile 20.7% 18.8% 20.8% 25.5% 24.7% 20.0% 23.9% 19.2% TI Group 24.7% 21.0% 26.4% 28.8% 20.6% 17.6% 19.8% 16.9% Old principles (comparable) New principles

Key BU financial data by Quarter

€ mln

					Old principles (comparable)
REVENUES	1Q17	2Q17	3Q17	4Q17	1Q18	2Q18
Domestic	3,647	3,847	3,818	4,042	3,709	3,809
Brasile	1,181	1,112	1,096	1,113	1,037	970
Other activities & Elim.	(9)	(6)	(7)	(6)	(4)	(9)
TI Group	4,819	4,953	4,907	5,149	4,742	4,770
EBITDA Reported
Domestic	1,621	1,740	1,694	1,116	1,533	1,667
Brasile	372	390	408	465	365	362
Other activities & Elim.	(3)	(6)	(3)	(4)	(5)	(4)
TI Group	1,990	2,124	2,099	1,577	1,893	2,025
EBITDA Margin Reported
Domestic	44.4%	45.2%	44.4%	27.6%	41.3%	43.8%
Brasile	31.5%	35.1%	37.2%	41.8%	35.2%	37.3%
TI Group	41.3%	42.9%	42.8%	30.6%	39.9%	42.5%
EBIT Reported
Domestic	787	898	822	265	678	806
Brasile	81	113	146	195	133	121
Other activities & Elim.	(3)	(5)	(5)	(3)	(5)	(5)
TI Group	865	1,006	963	457	806	922
EBIT Margin Reported
Domestic	21.6%	23.3%	21.5%	6.6%	18.3%	21.2%
Brasile	6.9%	10.2%	13.3%	17.5%	12.8%	12.5%
TI Group	17.9%	20.3%	19.6%	8.9%	17.0%	19.3%
CAPEX
Domestic	631	995	1,551	1,374	533	740
Brasile	200	230	274	446	162	240
Elim & Adj		0	0	0	(1)	(1)
TI Group	831	1,225	1,825	1,820	694	981
CAPEX ON SALES (%)
Domestic	17.3%	25.9%	40.6%	34.0%	14.4%	19.4%
Brasile	16.9%	20.7%	25.0%	40.1%	15.6%	24.7%
TI Group	17.2%	24.7%	37.2%	35.3%	14.6%	20.6%

UNAUDITED FIGURES

P&L Group

€ mln

			Old principles (comparable)		New principles
	2Q17	1H17	2Q18	1H18	2Q18	1H18
REVENUES	4,953	9,772	4,770	9,512	4,732	9,441
Other Income	139	217	87	144	87	144
TOTAL OPERATING REVENUES AND OTHER INCOME	5,092	9,989	4,857	9,656	4,819	9,585
Acquisition of goods and services	(2,075)	(4,136)	(1,953)	(3,922)	(1,984)	(3,980)
Employee benefits expenses	(770)	(1,530)	(736)	(1,509)	(746)	(1,526)
Other operating expenses	(303)	(576)	(293)	(652)	(293)	(661)
Internally generated assests and Others	180	367	150	345	150	345
EBITDA	2,124	4,114	2,025	3,918	1,946	3,763
EBITDA Margin	42.9%	42.1%	42.5%	41.2%	41.1%	39.9%
Depreciation and amortization	(1,120)	(2,249)	(1,104)	(2,193)	(1,067)	(2,122)
Gains (losses) on disposals of non-current assets	2	6	1	3	1	3
Impairment reversals (losses) on non-current assets	-	-	-	-	-	-
EBIT	1,006	1,871	922	1,728	880	1,644
EBIT Margin	20.3%	19.1%	19.3%	18.2%	18.6%	17.4%
Income (loss) equity invest. valued equity method	(20)	(20)	-	8	-	8
Net Financial Income / (Expenses)	(356)	(740)	(361)	(715)	(361)	(718)
Profit (loss) before tax from continuing operations	630	1,111	561	1,021	519	934
Income tax expense	(201)	(457)	(154)	(328)	(142)	(305)
Profit (loss) from continuing operations	429	654	407	693	377	629
Profit (loss) from Discontinued operations/Non-current assets held for sale	-	-	-	-	-	-
Profit (loss) for the year	429	654	407	693	377	629
Attributable to:
Owners of the Parent	396	596	368	618	338	554
Non-controlling interests	33	58	39	75	39	75

UNAUDITED FIGURES

€ mln 1H18 old 1H18 new FY17 principles principles (comparable) ASSETS NON-CURRENT ASSETS Intangible assets Goodwill 29,462 29,347 29,347 Intangible assets with a finite useful life 7,192 6,556 6,443 36,654 35,903 35,790 Tangible assets Property, plant and equipment owned 14,216 13,823 13,823 Assets held under finance leases 2,331 2,108 2,108 16,547 15,931 15,931 Other non-current assets Investments in associates and joint ventures accounted for using the equity method 17 15 15 Other investments 51 50 50 Non-current financial assets 1,768 1,405 1,405 Miscellaneous receivables and other non-current assets 2,422 2,477 2,179 Deferred tax assets 993 723 751 5,251 4,670 4,400 TOTAL NON-CURRENT ASSETS (A) 58,452 56,504 56,121 CURRENT ASSETS Inventories 290 321 321 Trade and miscellaneous receivables and other current assets 4,959 5,179 5,060 Current income tax receivables 77 56 56 Other investments Securities other than investments, financial receivables and other current financial assets 1,430 1,425 1,425 Cash and cash equivalents 3,575 2,102 2,102 Current assets sub-total 10,331 9,083 8,964 Discontinued operations/assets held for sale of a financial nature - - - of a non-financial nature - - - - - - TOTAL CURRENT ASSETS (B) 10,331 9,083 8,964 TOTAL ASSETS (A+B) 68,783 65,587 65,085	Consolidated Balance Sheet		UNAUDITED FIGURES

€ mln 1Q18 old 1Q18 new FY17 principles principles (comparable) EQUITY AND LIABILITIES EQUITY Equity attributable to equity holders of the Parent 21,557 21,484 21,340 Equity attributable to Minority Interests 2,226 2,061 2,056 TOTAL EQUITY (C) 23,783 23,545 23,396 NON-CURRENT LIABILITIES Non-current financial liabilities 28,108 24,888 24,888 Employee benefits 1,736 1,731 1,731 Deferred tax liabilities 265 265 241 Provisions 825 830 830 Miscellaneous payables and other non-current liabilities 1,678 1,572 1,334 TOTAL NON-CURRENT LIABILITIES (D) 32,612 29,286 29,024 CURRENT LIABILITIES Current financial liabilities 4,756 6,085 6,085 Trade and miscellaneous payables and other current liabilities 7,520 6,602 6,513 Current income tax payables 112 69 67 Current liabilities sub-total (E) 12,388 12,756 12,665 Liabilities directly associated with Discontinued operations/Non-current assets held for sale of a financial nature - - - of a non-financial nature - - - - - - TOTAL CURRENT LIABILITIES (E) 12,388 12,756 12,665 TOTAL LIABILITIES (F=D+E) 45,000 42,042 41,689 TOTAL EQUITY AND LIABILITIES (C+F) 68,783 65,587 65,085	Consolidated Balance Sheet		UNAUDITED FIGURES

Net Cash Flow & Net Debt Dynamics				UNAUDITED FIGURES
€ mln			Old principles (comparable)	New principles
	1Q17	1H17	1H18	1H18
EBITDA	1,990	4,114	3,918	3,763
CAPEX	(831)	(2,056)	(1,675)	(1,597)
Change in net operating working capital:	(795)	(1,130)	(1,402)	(1,325)
Change in inventories	(29)	(44)	(31)	(31)
Change in trade receivables and net amounts due from customers on construction contracts	31	(52)	(120)	(74)
Change in trade payables (*)	(697)	(692)	(1,027)	(1,027)
Capital grants received	-		2	2
Other changes in operating receivables/payables	(100)	(342)	(226)	(195)
Change in provisions for employee benefits	(7)	(7)	(23)	(23)
Change in operating provisions and Other changes	4	37	68	68
Net operating Free Cash Flow	361	958	886	886
Sale of investments and other disposals flow	2	9	14	14
Share capital increases/reimbursements, including incidental costs		6	11	11
Financial investments flow	(1)	(1)	(3)	(3)
Dividends payment		(218)	(222)	(222)
Change in finance lease contracts	(15)	(30)	(44)	(44)
Finance expenses, income taxes and other net non-operating requirements flow	(463)	(709)	(475)	(475)
Reduction/(Increase) in adjusted net financial debt from continuing operations	(116)	15	167	167
Reduction/(Increase) in net financial debt from Discontinued operations/Non-current assets held for sale	-	-	-	-
Reduction/(Increase) in adjusted net financial debt	(116)	15	167	167
OPENING NET FINANCIAL DEBT (Adjusted)	25,119	25,119	25,308	25,308
Net cash flow	(116)	15	167	167
ENDING NET FINANCIAL DEBT (Adjusted)	25,235	25,104	25,141	25,141
Adj for fair value valuation of derivatives and related underlyings	688	624	900	900
ENDING NET FINANCIAL DEBT (Reported)	25,923	25,728	26,041	26,041
(*) Includes the change in trade payables for amounts due to fixed asset suppliers

	1Q17	D % yoy	2Q17	D % yoy	3Q17	D % yoy	4Q17	D % yoy	FY17	D % yoy	1Q18	D % yoy	2Q18	D % yoy
KPIs ('000)
Wireline
	11,462	-3.1%	11,429	-2.3%	11,431	-1.4%	11,407	-1.0%	11,407	-1.0%	11,285	-1.5%	11,203	-2.0%
Broadband (active retail + wholesale diretto) Mobile	9,320	5.4%	9,546	7.3%	9,738	8.8%	10,023	10.2%	10,023	10.2%	10,337	10.9%	10,599	11.0%
Total lines (1)	29,417	-1.4%	29,952	0.7%	30,285	2.5%	30,755	3.8%	30,755	3.8%	31,036	5.5%	31,629	5.6%
€ mln	1Q17	D % yoy	2Q17	D % yoy	3Q17	D % yoy	4Q17	D % yoy	FY17	D % yoy	1Q18	D % yoy	2Q18	D % yoy
REVENUES	3,647	2.8%	3,847	4.0%	3,818	0.8%	4,042	1.8%	15,354	2.3%	3,709	1.7%	3,809	-1.0%
Services	3,342	-0.3%	3,500	0.9%	3,552	0.7%	3,607	2.1%	14,000	0.9%	3,399	1.7%	3,480	-0.6%
Equipments	305	55.8%	347	50.6%	266	1.2%	435	-0.7%	1,354	20.0%	310	1.6%	329	-5.3%
Domestic Mobile Services	1,083	2.2%	1,145	2.5%	1,202	1.6%	1,225	0.5%	4,655	1.6%	1,123	3.7%	1,142	-0.2%
Traditional	496	-13.4%	512	-11.6%	519	-7.5%	526	-2.1%	2,053	-8.8%	515	3.8%	516	0.8%
Innovative	534	21.8%	558	19.8%	594	12.7%	625	8.3%	2,311	15.1%	551	3.2%	560	0.3%
Wholesale	53	10.4%	74	3.4%	90	-6.1%	74	-29.8%	291	-9.3%	57	7.9%	66	-11.2%
Domestic Wireline Services	2,424	-2.4%	2,508	0.8%	2,496	-0.1%	2,524	1.2%	9,952	-0.1%	2,419	-0.2%	2,485	-0.9%
Traditional Services	967	-9.1%	974	-7.6%	950	-7.9%	937	-12.4%	3,828	-9.3%	906	-6.3%	902	-7.3%
Innovative Services	652	10.5%	708	16.0%	713	14.2%	753	16.1%	2,825	14.3%	750	15.0%	784	10.7%
Domestic Wholesale	505	-5.9%	498	-1.5%	497	-1.1%	494	1.2%	1,994	-1.9%	491	-2.9%	489	-1.8%
TIS Group	310	-0.3%	336	-0.6%	349	-1.4%	354	1.7%	1,349	-0.1%	286	-7.7%	323	-3.9%
Subs. Adj. and Other	-11	45.1%	-7	62.5%	-14	-1.5%	-13	78.0%	-44	60.0%	-14	-31.5%	-13	-81.8%
Elimination & Other	-164	13.5%	-154	-11.8%	-147	6.6%	-143	21.8%	-607	8.9%	-143	13.3%	-147	4.0%
EBITDA	1,621	11.0%	1,740	1.0%	1,694	-6.5%	1,116	-34.5%	6,171	-7.9%	1,533	-5.4%	1,667	-4.2%
EBITDA Margin	44.4%		45.2%		44.4%		27.6%		40.2%		41.3%		43.8%
Capex	631	-18.9%	995	24.8%	1,551	88.5%	1,374	4.8%	4,551	22.7%	533	-15.5%	740	-25.6%
% on revenues	17.3%		25.9%		40.6%		34.0%		29.6%		14.4%		19.4%

(1) M2M included

Domestic Wireline Results - Reported Figures													UNAUDITED FIGURES
	1Q17	D % yoy	2Q17	D % yoy	3Q17	D % yoy	4Q17	D % yoy	FY17	D % yoy	1Q18	D % yoy	2Q18	D % yoy
KPIs
Physical accesses ('000) o/w NGN	11,230 1,217	-3.2% 82.3%	11,185 1,507	-2.5% 92.2%	11,137 1,754	-2.0% 102.9%	11,044 2,150	-2.1% 117.8%	11,044 2,150	-2.1% 117.8%	10,845 2,458	-3.4% 102.0%	10,644 2,744	-4.8% 82.1%
Physical accesses (Voip included) ('000)	11,462	-3.1%	11,429	-2.3%	11,431	-1.4%	11,407	-1.0%	11,407	-1.0%	11,285	-1.5%	11,203	-2.0%
OLO Access (on TI infrastructure)	7,810	3.5%	7,881	3.6%	7,892	3.8%	7,951	3.6%	7,951	3.6%	8,065	3.3%	8,078	2.5%
ULL (1)	5,657	0.4%	5,620	-1.1%	5,554	-1.8%	5,418	-4.0%	5,418	-4.0%	5,228	-7.6%	4,999	-11.0%
Virtual ULL	17	-40.2%	16	-41.7%	15	-35.0%	14	-32.5%	14	-32.5%	13	-23.4%	12	-23.1%
Wholesale Line Rental	373	-20.6%	347	-21.8%	330	-20.6%	304	-21.7%	304	-21.7%	291	-22.1%	274	-20.9%
Naked	1,282	3.3%	1,267	0.9%	1,230	-2.0%	1,228	-3.6%	1,228	-3.6%	1,228	-4.2%	1,194	-5.7%
NGN	481	182.9%	632	217.3%	763	208.4%	986	179.2%	986	179.2%	1,306	171.7%	1,598	153.0%
TI Retail Active Broadband ('000)	7,195	3.4%	7,278	4.1%	7,425	5.6%	7,510	6.1%	7,510	6.1%	7,527	4.6%	7,547	3.7%
Business	1,443	0.0%	1,446	0.4%	1,443	0.3%	1,441	0.3%	1,441	0.3%	1,426	-1.1%	1,415	-2.1%
Consumer	5,752	4.3%	5,832	5.0%	5,982	7.0%	6,068	7.6%	6,068	7.6%	6,101	6.1%	6,132	5.1%
BroadBand Accesses Wholesale (on TI infrastructure) ('000)	2,125	12.6%	2,268	19.2%	2,314	20.6%	2,513	24.7%	2,513	24.7%	2,810	32.2%	3,052	34.6%
BB Arpu (euro/mese)	23.0	7.3%	24.9	13.8%	24.5	9.5%	24.9	11.4%	24.3	10.5%	25.5	10.9%	26.1	4.8%
REVENUES(€ mln)	1Q17	D % yoy	2Q17	D % yoy	3Q17	D % yoy	4Q17	D % yoy	FY17	D % yoy	1Q18	D % yoy	2Q18	D % yoy
TOTAL	2,596	1.7%	2,700	4.7%	2,630	-0.5%	2,763	1.5%	10,689	1.8%	2,579	-0.7%	2,635	-2.4%
Services	2,424	-2.4%	2,508	0.8%	2,496	-0.1%	2,524	1.2%	9,952	-0.1%	2,419	-0.2%	2,485	-0.9%
Equipments	172	145.8%	192	114.0%	134	-6.7%	239	5.4%	737	39.0%	160	-6.9%	150	-21.9%
TRADITIONAL SERVICES	967	-9.1%	974	-7.6%	950	-7.9%	937	-12.4%	3,828	-9.3%	906	-6.3%	902	-7.3%
Voice	801	-11.1%	812	-7.1%	786	-6.1%	763	-8.1%	3,162	-8.1%	754	-5.9%	718	-11.6%
Business Data & Others trad	166	1.5%	161	-10.0%	165	-15.7%	174	-27.4%	666	-14.4%	152	-8.2%	185	14.4%
INNOVATIVE SERVICES	652	10.5%	708	16.0%	713	14.2%	753	16.1%	2,825	14.3%	750	15.0%	784	10.7%
Broadband	493	10.4%	539	17.8%	542	15.1%	558	18.0%	2,131	15.4%	577	17.0%	588	9.2%
Content	4	0.9%	8	96.5%	10	137.6%	7	70.5%	29	75.9%	6	34.6%	8	0.2%
ICT Service	155	11.3%	161	8.3%	161	7.8%	188	9.6%	665	9.2%	168	8.1%	188	16.5%
Domestic Wholesale	505	-5.9%	498	-1.5%	497	-1.1%	494	1.2%	1,994	-1.9%	491	-2.9%	489	-1.8%
TIS Group	310	-0.3%	336	-0.6%	349	-1.4%	354	1.7%	1,349	-0.1%	286	-7.7%	323	-3.9%
Subs. Adj. and Other	-11	45.1%	-7	62.5%	-14	-1.5%	-13	78.0%	-44	60.0%	-14	-31.5%	-13	-81.8%

(1) SULL, NGA included

														UNAUDITED FIGURES
Domestic Mobile Results -	Reported Figures
	1Q17	D % yoy	2Q17	D % yoy	3Q17	D % yoy	4Q17	D % yoy	FY17	D % yoy	1Q18	D % yoy	2Q18	D % yoy
KPIs
Total number of lines ('000) (1)	29,417	-1.4%	29,952	0.7%	30,285	2.5%	30,755	3.8%	30,755	3.8%	31,036	5.5%	31,629	5.6%
o/w Calling	25,435	-1.1%	26,036	1.7%	26,588	4.0%	26,992	5.2%	26,992	5.2%	27,366	7.6%	28,117	8.0%
o/w Human	19,275	-3.5%	19,563	-1.2%	19,681	0.2%	19,569	0.0%	19,569	0.0%	19,525	1.3%	19,621	0.3%
Churn Rate %	5.9%	0.2pp	6.9%	1.6pp	7.0%	1.1pp	6.4%	0.4pp	26.2%	3.4pp	6.5%	0.6pp	6.0%	-0.9pp
Total User Broadband (mln of users)	12.2	4.7%	12.5	6.2%	13.0	7.3%	13.2	7.9%	13.2	7.9%	13.3	9.2%	13.6	8.6%
Total User LTE (mln of users)	8.3	67.0%	9.0	56.2%	9.4	52.7%	9.7	28.0%	9.7	28.0%	10.1	21.9%	10.4	16.2%
Volumes of traffic (mln of minutes) (2)	18,183	7.3%	19,310	11.1%	19,434	12.9%	21,210	17.6%	78,138	12.3%	21,168	16.4%	21,616	11.9%
Outgoing traffic volumes (mln of minutes)	11,781	7.1%	12,627	13.1%	12,767	14.6%	14,184	21.9%	51,359	14.3%	14,080	19.5%	14,468	14.6%
Incoming traffic volumes (mln of minutes)	6,402	7.7%	6,683	7.5%	6,667	9.8%	7,026	9.6%	26,779	8.7%	7,088	10.7%	7,148	7.0%
Usage Voice (min/line/month)(3)	259	11.4%	276	14.2%	276	14.7%	303	18.6%	279	14.9%	304	17.2%	311	13.0%
Usage Data (GB/users/month)	2.3	35.3%	2.7	43.3%	3.2	63.3%	3.3	58.6%	2.9	51.3%	3.6	55.9%	4.1	51.5%
ARPU €(3)	12.0	3.2%	12.5	3.2%	12.7	-0.4%	13.0	-2.4%	12.5	0.8%	11.9	-0.7%	11.8	-5.4%
ARPU calling €(5)	13.9	3.0%	14.4	2.2%	14.5	-1.7%	14.8	-4.1%	14.4	-0.2%	13.5	-2.8%	13.4	-7.2%
REVENUES (€ mln), Reported figures	1Q17	D % yoy	2Q17	D % yoy	3Q17	D % yoy	4Q17	D % yoy	FY17	D % yoy	1Q18	D % yoy	2Q18	D % yoy
TOTAL	1,216	2.5%	1,301	3.2%	1,334	2.6%	1,424	-0.6%	5,275	1.9%	1,273	4.7%	1,322	1.6%
SERVICES	1,083	2.2%	1,145	2.5%	1,202	1.6%	1,225	0.5%	4,655	1.6%	1,123	3.7%	1,142	-0.2%
Traditional Services	496	-13.4%	512	-11.6%	519	-7.5%	526	-2.1%	2,053	-8.8%	515	3.8%	516	0.8%
Outgoing voice (4)	349	-13.7%	360	-10.7%	371	-6.2%	376	-0.9%	1,455	-8.0%	370	6.3%	374	3.9%
Incoming voice	71	5.4%	74	5.5%	75	10.1%	80	11.8%	299	8.3%	79	11.6%	80	8.7%
Messaging	76	-24.9%	79	-26.4%	73	-25.1%	71	-18.6%	299	-24.0%	65	-14.8%	62	-20.9%
Innovative Services	534	21.8%	558	19.8%	594	12.7%	625	8.3%	2,311	15.1%	551	3.2%	560	0.3%
Browsing	415	16.8%	437	15.6%	466	18.9%	497	10.2%	1,815	15.1%	432	4.0%	441	1.0%
Internet Content	119	43.1%	122	37.8%	128	-5.3%	128	1.7%	496	14.8%	119	0.4%	119	-2.4%
Wholesale Services	53	10.4%	74	3.4%	90	-6.1%	74	-29.8%	291	-9.3%	57	7.9%	66	-11.2%
HANDSETS	133	5.2%	156	8.6%	132	13.1%	199	-6.4%	620	3.4%	150	12.6%	180	15.1%

(1) M2M included

(2) Incoming + Outgoing volumes (Visitors and Roamers volumes not included)

(3) Net of visitors

(4) Outgoing voice revenues include roaming revenues

(5) Calculated on calling lines

TIM Brasil Results - Reported Figures

Reais mln
	1Q17	Δ% yoy	2Q17	Δ% yoy	3Q17	Δ% yoy	4Q17	Δ% yoy	FY17	Δ% yoy	1Q18	Δ% yoy	2Q18	Δ% yoy
KPI's - Mobile only
Estimated Total Penetration (%)	117.2%		116.7%		115.9%		113.5%		113.5%		113.0%		112.7%
Market Share on total lines(%)	25.5%	-0.6pp	25.1%	-0.2pp	24.6%	-0.6pp	24.8%	-1.2pp	24.8%	-1.2pp	24.6%	-0.9pp	24.3%	-0.8pp
	61,868	-8.0%	60,831	-4.9%	59,390	-6.1%	58,634	-7.5%	58,634	-7.5%	57,894	-6.4%	56,554	-7.0%
	19.0	+10.5%	19.4	+13%	20.5	+11%	21.9	+14%	20.2	+12%	21.6	+13.8%	21.9	+13%
TOTAL MOU net of visitors	107	-10.1%	107	-9.7%	111	-4.6%	115	+2%	110	-6%	115	+8%	122	+15%
MAIN RESULTS (IAS/IFRS, R\$ mln)	1Q17	Δ% yoy	2Q17	Δ% yoy	3Q17	Δ% yoy	4Q17	Δ% yoy	FY17	Δ% yoy	1Q18	Δ% yoy	2Q18	Δ% yoy
REVENUES Reported	3,951	2.5%	3,943	3.2%	4,083	4.7%	4,257	5.3%	16,234	4.0%	4,139	4.8%	4,171	5.8%
of which services	3,744	3.5%	3,750	5.0%	3,905	5.9%	4,075	6.1%	15,474	5.1%	3,983	6.4%	3,964	5.7%
of which handsets	207	-12.3%	193	-22.8%	178	-15.2%	182	-9.5%	760	-15.3%	156	-24.6%	207	7.3%
EBITDA Reported	1,247	12.6%	1,377	15.8%	1,512	19.1%	1,758	13.6%	5,894	15.3%	1,456	16.8%	1,552	12.7%
EBITDA margin	31.6%	2.9 pp	34.9%	3,8 pp	37.0%	4.4pp	41.3%	3.0pp	36.3%	3.6pp	35.2%	3.6pp	37.2%	2.3pp
EBITDA Organic (net non recurring)	1,247	9.4%	1,377	15.7%	1,512	17.0%	1,758	13.6%	5,894	14.0%	1,456	16.8%	1,552	12.7%
EBITDA margin	31.6%	2.0pp	34.9%	3,7 pp	37.0%	3.9pp	41.3%	3.0pp	36.3%	3.2pp	35.2%	3.6pp	37.2%	2.3pp
Capex Reported	669	-5.8%	809	-17.0%	1,009	-10.1%	1,661	-2.0%	4,148	-7.9%	646	-3.4%	1,018	25.8%
% on revenues	16.9%	-1,5pp	20.5%	-5 pp	24.7%	-4.1pp	39.0%	-2.9pp	25.6%	-3.2pp	15.6%	-1.3pp	24.4%	3.9pp
	1Q17		1H17		9M17		FY17		FY17		1Q18		1H18
Exchange rate AVG YTD (R\$ vs. euro)	3.34707		3.44195		3.53378		3.60584		3.60584		3.99014		4.14011

(1) Includes company lines

(2) Gross of visitors

€ mln						Reported & Organic Figures (*): YoY trends				UNAUDITED FIGURES
		2Q17					2Q18			Δ% yoy reported	Δ% yoy organic *
Reported Figures (a)			Non Organic elements (b)	Non recurring items (c)	Organic figures * (d=a+b+c)	Reported figures (e)		Non recurring items (f)	Organic figures * (g=e+f)	(h=e/a-1)	(i=g/d-1)
€ mln REVENUES		Change in consolid. area	Exchange rate impact			REVENUES
Domestic	3,847		(7)		3,840	Domestic	3,809		3,809	(1.0)	(0.8)
Brasile	1,112		(195)		917	Brasile	970		970	(12.8)	5.8
Other Activities & Eliminations	(6)				(6)	Other Activities & Eliminations	(9)		(9.0)
TI Group	4,953		(202)		4,751	TI Group	4,770		4,770	(3.7)	0.4
EBITDA						EBITDA
Domestic	1,740		(2)	71	1,809	Domestic	1,667	26	1,693	(4.2)	(6.4)
Brasile	390		(69)		321	Brasile	362		362	(7.2)	12.7
Other Activities & Eliminations	(6)				(6)	Other Activities & Eliminations	(4)		(4.0)
TI Group	2,124		(71)	71	2,124	TI Group	2,025	26	2,051	(4.7)	-3.4
EBITDA Margin						EBITDA Margin
Domestic	45.2%				47.1%	Domestic	43.8%		44.4%	-1.4 pp	-2.7 pp
Brasile	35.1%				34.9%	Brasile	37.3%		37.2%	2.2 pp	2,3 pp
TI Group	42.9%				44.7%	TI Group	42.5%		43.0%	-0.4 pp	-1.7 pp
EBIT						EBIT
Domestic	898		(1)	71	968	Domestic	806	26	832	(10.2)	(14.0)
Brasile	113		(19)		94	Brasile	121		121	7.1	30.3
Other Activities & Eliminations TI Group	(5)				(5)	Other Activities & Eliminations TI Group	(5)		(5.0)
	1,006		(20)	71	1,057		922	26	948	(8.3)	(10.3)
EBIT Margin						EBIT Margin
Domestic	23.3%				25.2%	Domestic	21.2%		21.8%	-2.1 pp	-3.4 pp
Brasile TI Group	10.2% 20.3%				10.1% 22.2%	Brasile TI Group	12.5% 19.3%		12.5% 19.9%	2.3 pp -1 pp	2,4 pp -2.3 pp
Non recurring items on EBITDA Labour cost				2Q17 5	2Q18 7	Non recurring items on EBIT Labour Costs			2Q17 5	2Q18 7	7
Other Costs & Charges				66	19	Other Costs & Charges			66	19
Total				71	26	Total			71	26