Telecom Italia Rsp

Investor Presentation • May 17, 2018

TIM Group

May 17, 2018

Piergiorgio Peluso Amos Genish

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.

TIM Group financial results are prepared in accordance with the International Financial Reporting Standards issued by IASB and endorsed by the EU (IFRS). The accounting policies and consolidation principles adopted in the preparation of the 1Q18 financial results include the effects arising from the adoption of IFRS 9 Financial Instruments and IFRS 15 Revenues from Contracts with Customers.

As a result of this and for comparison purposes, the 1Q18 financial results are also presented in accordance with the prior IFRS on revenues (IAS 18, IAS 11 and related interpretations) and financial instruments (IAS 39).

1Q'18 Results

Highlights and Main Trends

Financial Update

DigiTIM Transformation

Take-aways

Organic data(1) , figures in €mln, % YoY

Highlights

Solid Group Organic growth in Revenues and Ebitda, accelerating to double-digit in Ebitda less Capex

Positive Domestic Service Revenues performance

Organic Domestic Ebitda:

• slight and temporary impact by personnel measures re-phasing
• net of one-offs(2) , underlying trend is +1.3% YoY
• deducting Capex, YoY growth accelerates to high single-digit

Continued strong performance in Brazil, with impressive growth in first-level measure of OFCF

On Reported figures, €95mln non-recurring operating expenses were mainly in relation to provisions covering the €74.3mln fine levied on May 8, 2018 for alleged infringement of the "Golden Power" rule, which TIM is contesting and will appeal against shortly.

(1) Excluding exchange rate impact and non-recurring items

(2) Domestic Ebitda YoY one-offs: Roam-like-at-home -€10mln in 1Q'18, Change in modem sale terms -€5mln in 1Q'18, Vendor Rebates +€19mln in 1Q'17 (see annex section)

1Q'18 Results Amos Genish

Organic Performance(1) , €mln, %YoY

Total Mobile Revenues up mid-single digit

Total Fixed was slightly negative, slowed down by international wholesale and lower product sales (discontinuity in device policy)

Retail Fixed service revenues were up by 2.3% YoY

Positive top line contribution from all Business Units, except for Sparkle, impacted by relevant IRU May '17 partial renewal at lower rates.

Mobile Revenues supported by Portfolio innovation and increased 4G penetration

Consistent evolution of Fixed customer base due to the growth of TIM Live

(1) ARPU on Human lines (2) Includes M2M and Business–Segment Large Screens (for Inventory & Fleet Management etc.) 77% of Mobile BroadBand CB

1Q'18 Results Amos Genish

2,413 2,419 172 160 1Q'17 1Q'18 1,619 1,656 Service Total 2,585 Product +0.2% -0.2% 2,579 -6.9% o/w Retail +2.3% Organic data, €mln, % YoY, ARPU €/month k, Rounded numbers, ∆ QoQ Revenues & ARPU Fixed Accesses ARPU Consumer 32.8 €/month +2.7% YoY ARPU BroadBand 25.5 €/month +10.9% YoY Total Accesses

Positive Retail Service Revenues performance, net of International Wholesale drag

+87k TIM Vision customers on fixed 6.5% CB growth QoQ(1)

Key new convergent offer launched: TIM 100%

4Q'17 1Q'18 3,156 3,789 BB Accesses(2) +634 o/w UBB 14,858 +149(3) 15,006 Retail(4) 11,407 11,285 Wholesale 7,951 8,065 Total Accesses 4Q'17 1Q'18 -123 +114 delta 986 1,306 +319 Retail 2,170 2,484 +314 (4) Wholesale UBB Accesses 4Q'17 1Q'18 delta

19,358 19,350

-8

1Q'18 Results Amos Genish

(1) TIM Vision fixed customers were 1,433k in 1Q'18 vs. 1,345k in 4Q'17 (2) Internal estimate of total BB accesses enabled by TIM, excluding Full Infrastructured, Wi Max & Other non-TIM, net of market reconciliation.

Organic Performance, R\$mln, Rounded numbers

Highlights

• Consistent Service Revenues Expansion
• Solid Customer Base Growth on Mobile Postpaid and Fixed Broadband
• Excellent Performance in Operating Profitability
• Network Evolution Supporting Robust Operating Momentum

Increased cash generation supported a new resolution to pay 230 mlnR\$ of Interest on Capital (IoC) in August

1Q'18 Results

Highlights and Main Trends

Financial Update

DigiTIM Transformation

Organic data, €mln, % YoY

Highlights

Strong OPEX discipline applied on the entire Addressable Base

Commissioning and Customer Care YoY increase to:

• attract new customers
• consolidate the existing ones
• grow LTE penetration and fiber adoption

Industrial costs slightly down notwithstanding larger provisioning volumes on network

Addressable Opex Base YoY growth shows major improvement in efficiency program

(1) Including €3mln change in modem sale terms impact in 1Q'17 and 1Q'18

(2) Includes mainly Interconnection, among which there is €2mln of Roam-like-at-home impact in 1Q'18 . Also +€19mln Vendor rebates in 1Q'17 are included in «Other». Piergiorgio Peluso

1Q'18 Results

Organic data, €mln, % YoY

Highlights

Capital allocation based on updated strategic priorities and IRR evaluation

Cash Flow Generation improved with continued focus on customer needs

-€85 mln on Fixed and Mobile Network following a more selective and focused coverage plan

-€33 mln on IT supported by careful streamlining of running costs

€mln; (-) = Cash generated, (+) = Cash absorbed

1Q'18 Results

Highlights and Main Trends

Financial Update

DigiTIM Transformation

Best in class customer engagement through digital and agile customer journey redesign

Leadership positioning by sustaining premium customer base and capturing new growth opportunities in and outside the core

Acceleration of cash-flow generation to strengthen balance sheet and increase total shareholder return

Agile organization, performance based and data driven culture

Value share of initiatives		Strategic pillars	Area	Transformational actions implemented	Main KPIs progress (Q1 2018 vs. Q4 2017)
implemented in Q1 vs. 2018 Transformation plan				• B2C: Released first wave of new simplified, flexible Fixed and Mobile portfolio	+2.7% ARPU Fixed1 +0.5% ARPU Mobile1 st in Customer Service Index Mobile 1
		Leadership		• B2C: Executed fiber migration acceleration plan	+15% new lines
Q1	27%			• B2C: 2nd brand Kena revamped to address new customer segments	+38% new customers
		positioning and best in	Commercial	• B2C: Revised FMC convergent offer	+4% TIM Vision customers
		class customer		• B2B: Reviewed SME Fixed and Mobile portfolio	+4.4% SME ARPU Fixed2 +3.6% SME ARPU Mobile2
Q2		engagement		• B2B: Executed fiber migration acceleration plan	+12% active fiber lines
				• B2B: Launched multi-Cloud and hybrid services for SME	+2% SME Cloud customers
			Wholesale Infrastructures N & S	• Revised commercial approach to improve sales effectiveness	+32% UBB active lines
Q3				• First release of new end-to-end delivery process	-12% delivery time3
		Accelerated cash flow		• Completed first wave of contract renegotiations and vendor consolidation	7% of planned savings achieved
			Opex efficiency	• First release of real estate streamlining and consolidation	10% of release plan executed4
Q4		generation	Capex efficiency	• Optimized Capex spent via "same for less" and "smart investment" approach	7% of planned saving achieved
		Agile	Digital &	• Optimized online acquisition with Smart targeting	+87% Fixed online activations +43% Mobile online activations
			Advanced Analytics (AA)	• Set up of dedicated Digital & Advanced Analytics center of excellence (CoE)	+40 FTE on CoE
Total	27% 100%			• Launched pilots on Transformational Advanced Analytics use cases	+3 use cases
		organization	People, Culture	• Launched Agile rooms to develop digital channels and streamline processes	+7 new Agile rooms
			& Organization	• First release of reviewed organizational structure to improve accountability	3 simplified and streamlined BUs

1 Impact calculated vs. Q1 2017 values to account for seasonality 2 Impact calculated vs. SME Customer base not included in the portfolio review

1Q'18 Results

Highlights and Main Trends

Financial Update

DigiTIM Transformation

Solid Quarterly results, driven by positive Domestic performance and strong growth in Brazil

DigiTIM Transformation underwrites Domestic Top Line and EBITDA performance for the Plan

Annex

(1) FTTC Passed

Organic data, figures in €mln, ∆ YoY

		I Quarter
	Actual 2018	Actual 2017	D abs	D %
REVENUES	3,709	3,636	+73	+2.0
One-off items Roaming Like At Home	3 (8)	16 -	(13) (8)
Change in modem sale terms Net of One-off items	11 3,706	16 3,620	(5) +86	+2.4
SERVICE REVENUES	3,399	3,331	+68	+2.0
One-off items Roaming Like At Home	(8) (8)	- -	(8) (8)
Net of One-off items	3,407	3,331	+76	+2.3
EBITDA	1,628	1,642	-14	-0.9
One-off items	(2)	33	(35)
Roaming Like At Home Change in modem sale terms Rebate	(10) 8 -	- 13 19	(10) (5) (19)
Net of One-off items	1,630	1,609	+21	+1.3

As from January 1, 2018, IFRS 9 (Financial Instruments) and IFRS 15 (Revenues from Contracts with Customers) have to be applied. In order to allow comparison of the results for the first quarter of 2018 with those for the same period of the previous year, financial statements data are also prepared under previous accounting principles.

IFRS 9

Impacts the determination of expected losses on trade receivables and other financial assets (change from the incurred loss model provided by IAS 39 to the expected credit loss model).

IFRS 15

Impacts the revenue recognition of fixed and mobile offerings as well as the recognition of relevant contractual costs, without any impacts on cash flows.

Reported data, €mln, Rounded numbers
								-9	-67
								-9	-54
								0	-12

	Domestic
eadership	$\mathbf{1}$ Consumer Sustain premium base through convergence (data and exclusive content) Extract more value from CB accelerating fiber migration and new avenues of growth Transform customer engagement through Digital journeys and new simplified portfolios	$\mathbf{2}$ Business Sustain traditional revenue base through convergence, fiber and VOIP migration Accelerate evolution towards an "ICT Company" to capture new growth opportunities (e.g., cloud, ICT on SMEs)	$\mathbf{3}$ Wholesale Sustain traditional revenues through fiber migration (e.g., NetCo) Step-change growth of non-regulated sales by radically improving customer engagement Optimize coverage to improve competitive positioning
psitioning	TIM Brasil $\overline{4}$ Win share on affluent segments (e.g., post-paid SMB) leveraging premium infrastructure and improving customer digital engagement Further deliver on fixed and mobile UBB by expanding coverage Accelerate cash generation through smart CAPEX and efficiency program	$\mathbf{5}$ Inwit densification phase	Sparkle 6) Strengthen leadership on Sustain traditional business, Italian tower market leveraging expand commercial footprint on on new mobile opportunities new geographies and and leading network accelerate data/VAS services
Cash-flow eneration	OPEX efficiency $\boldsymbol{\Omega}$ Create a lean efficient and zero-based cost structure leveraging the $\bullet$ digital transformation and data analytics	8 CAPEX effectiveness $\bullet$ infrastructure	Maximize value driven CAPEX deployment leveraging current UBB
Agile qanization	Digital 9 Enable superior customer engagement and omnichannel experience while unlocking efficiency	10 Advanced Analytics and AI Implement leading capabilities to capture ٠ value both on customer engagement (e.g., predictive CLM) and cash flow generation (e.g., predictive maintenance)	1 People, culture & organization Drive accountability, transparency and performance based culture via agile organization and high employee engagement
	$\mathbb{Z}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{R}$ $\mathbb{$

GOALS	DRIVERS	TARGETS / KPIs
Sustain Top Line & Profitability	• Focus on value maximization via accelerated convergence and new services • Drive digital and analytics as core differentiators (both cost and revenues) • Look for growth in and outside the core (eg. Cloud, IoT, Mobile Advertising, Data Monetization) • In Italy, TIM Fixed UBB lines (Retail + WHS) to grow to ~9 million by 2020 (3x 2017 figure)	• Domestic Service Revenues : Broadly Stable • Domestic EBITDA: Low single digit 2017-'20 CAGR (1) • Brazil & Inwit: Continued Growth in (2) Revenues and Ebitda	O v P e la r 2 n 0 P 1 e 8 ri - 2 o 0 d 2 0
Strong Deleverage and drop in Capex Intensity	• Enhanced cash generation, supported by operational and financial discipline, will lower our Group Net Debt/Ebitda ratio by end 2018 • Domestic Capex / Sales moving back to normal intensity, having now completed catch-up phase	• Group Adj. NFP/EBITDA ~2.7x in 2018, further reducing both in 2019 and (3) 2020 • Domestic Capex/Sales <20% by YE2019	2 0 1 8 a n d 2 0 1 9
Relevant Step-up in 3-Years Cumulated Free Cash Flow	• Selective growth investments to maximize ROI • Lower capital intensity following network rollout • Reduce costs while improving customer satisfaction through agile customer journey redesign	• 2018-'20 Group Cumulated Equity Free Cash Flow (4) of ~ €4.5bn excluding spectrum and pre-dividend	2 0 2 0

• Further improve Mobile Service Revenue Share • Expand Residential BB Revenues contribution DRIVERS • Zero Base approach on Traditional Efficiency • Capture Digitalization initiatives potencial Sustain Top Line Growth Expand Cash Generation Improve Profitability LONG TERM TARGETS / KPIs Service Revenues Growth: Mid to High Single Digit CAGR '17-'20 EBITDA Margin: ≥40% in 2020 • Smart Capex "More with less" approach • Optimize Tax Rate • Optimize Debt and Shareholders' Remuneration Ebitda-Capex on Revenues: ≥20% in 2020 Capex: ~12B R\$ in '18-'20 (~20% on Rev. in 2020) SHORT TERM TARGETS / KPIs Service Revenues Growth: 5-7% in 2018 EBITDA: Double Digit growth in 2018 Ebitda-Capex on Revenues: ≥13% in 2018 GOALS

1Q'18 Results

GOALS	DRIVERS	SHORT TERM TARGETS / KPIs	LONG TERM TARGETS / KPIs
Maintain leadership	• Maintain top-of-mind positioning on asset quality • Additional tenants on existing towers • Lead network densification phase	Tenancy Ratio: 1.9x tenants per site in 2018	Revenues Growth: Mid single Digit CAGR '17-'20
Address next generation infrastructures market	• Reinforce leadership on small cell neutral host market • Start sharing model on fiber backhauling • Prepare for "5G driven" new services	New Sites: 0,6k sites by 2018 Small Cells: 4k remote units in 2018	CAPEX: 300 mln € in 2018/20
Improve cash-flow generation	• Win stake of demand from new players and FWA • Take off of new businesses • Keep up lease cost renegotiation effort and lean organization	EBITDA: Low Teens CAGR '15-'18	Recurring FCF*: Low Teens CAGR '17-'20

Tackle Potential Consolidation Opportunities: Business developments open to M&A opportunities, supported by INWIT strong balance sheet

* EBITDA – Recurring Capex – Change in Working capital – Cash Taxes – Cash Interests

€mln

1Q'18 Results

€mln

Net financial position € 25,537

1Q'18 Results

Banks & EIB Maturities and Risk Management

Average m/l term maturity: 7.60 years (bond only 7.79 years)

Fixed rate portion on gross debt approximately 71.6%

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

Cost of debt: ~4.6 %