Telecom Italia Rsp

Investor Presentation • Mar 7, 2018

TIM Group

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 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 financial results for the FY17 and the 18-20 Industrial Plan have been applied on a basis consistent with those adopted in the 2016 Consolidated Financial Statements.

As a result of this, the Industrial Plan doesn't take into account the following IFRS: IFRS 15 Revenue from Contracts with Customers, IFRS 9 Financial Instruments and IFRS 16 Leases.

The financial results for the FY17 have not yet been verified by the independent auditors. Segment information is consistent with the prior periods under comparison.

FY'17 and 2018-'20 Plan

4Q'17 and FY Main Results

2018-'20 Plan: Key Drivers and KPI Evolution

Targets and Take-Aways

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

(2) Targets: Service Revenues stability & EBITDA YoY low single digit growth

(3) Targets: Service Revenues & EBITDA positive in all quarters (4) Adjusted

€mln, %YoY, Organic Performance(1)

increase in data usage and innovative services

Organic data, €mln, % YoY, ARPU €/month	K, Rounded	numbers, % YoY, 4Q'17 %QoQ			4Q'17 Net Adds/Losses
5,275 +1.9% 620	TOT. CB	29,617	+3.8%	30,755	+470, +1.6%
	TOT. ACTIVE	25,651	+5.2%	26,992	+405, +1.5%
Total -0.6% 4,655 +1.6% 199	NOT HUMAN(2)		+21.9%		+517, +7.5%
Product 1,225 +0.5% Services	HUMAN		flat		-112, -0.6%
4Q'17 FY'17	o/w Voice & Mess. Only	7,757	-1,084	6,674
	o/w BB Users	11,804	+1,091	12,895
Continued YoY Service Revenues growth sustained by robust increase in data usage and innovative services	4G Users	7,613	+2,132	9,745	76% of MB CB +348 QoQ
ARPU Human(1)		FY'16		FY'17

Total CB growth (+1,137k YoY) driven by M2M, Large Screen and reduction of inactive customers

BroadBand CB reaches 12,895k users (+1,091k YoY)

Active customer penetration increase: 1,342 k more calling lines,

LTE users scaling up sharply

1.3m TIM Vision customers(3) , +63% 22% of Consumer BB CB, +7p.p.

~20% of Consumer BB CB is single-bill F/M Convergent, another ~28% has also a TIM Mobile Line while paying 2 bills

(1) VoIP not included. FY'17 Line Performance including VoIP was -111k (2) M2M ARPU is ~0.7€/month in FY'17 (3) Including mobile TIM Vision customers are 1.5mln

• 111 k cabinets passed
• 281 k FTTH OTB installed
• 18.7 mln HH passed FTTC in ~ 3,600 cities speed up to 200 Mbit/s
• 2.3 mln HH connected FTTH in 30 main cities speed up to 1Gbit/s

FTTx Penetration(2)

4G Penetration(3)

• 18.6k LTE nodes

• ~7,300 cities covered in 4G
• ~1,400 cities 4Gplus speed up to 300 Mbit/s
• 12 cities 4.5G speed up to 700 Mbit/s

R\$mln, Organic Performance, ARPU in R\$, Rounded numbers

2017 Domestic OPEX

Organic data, €mln

• Remixing cost allocation: Net of Volume Driven, OPEX down €243mln. Volume Driven up €423mln YoY, driven by relevant 2017 Product Increase (inluding Smart TVs, Connected HH Appliances and Modems)
• Market Driven YoY growth to support commercial performance and quality
• Reduction in Process Driven Costs due to efficiencies in IT, Energy and G&A
• Labour Costs reduction due to FTE downsize (-1.5k YoY)

2017 Domestic CAPEX

Organic data, €mln

Domestic Capex evolution composed by:

• UBB network roll-out costs, driving the 212 Mln€ total Domestic Capex increase for the Year
• Lower Procurement costs & Transformational projects
• Steady approach in Commercial, supporting growth on UBB CB and ICT for Businesses
• IT Efficiencies and ROI-driven reallocation of resources

€mln

€mln

	FY17	FY16	YoY
EBITDA (1) Adjusted	8,673	8,199	474
CAPEX (ex-Spectrum)	-5,071	-4,876	-195
∆WC (2) Adjusted	-219	-467	248
OpFCF (ex-Spectrum)	3,383	2,856	527
(4) Total Financial Expenses	-1,572	-1,659	87
Cash taxes	-1,113	-218	-895(5)
(6) Other impacts	266	-371	636
EFCF (7)	964	608	356
Dividends	-235	-227	-8
Change in Equity	16	1,304 (8)	-1,288
Net Cash Flow before M&A, Spectrum & IAS 17	744	1,685	-940
M&A	21	692 (3)	-671
(9) Spectrum	-887	0	-887
IAS 17 (10)	-68	-218	150
Net Cash Flow	-189	2,159	-2,348
Opening Net Debt	25,119	27,278

4Q 2017	4Q 2016	YoY
2,460	2,168	292
-1,820	-1,769	-51
858	549	309
1,498	948	550
-413	-386	-27
-309	-101	-208
186	-107	293
963	354	609
-17	0	-17
0	1,304(8)	-1,304
946	1,658	-712
-4	4	-8
0	0	0
-22	-47	24
920	1,615	-696
26,228	26,735

(1) Reported EBITDA excluding Provisions for €883mln in 2017 and €197mln in 2016

(2) Reported ∆WC excluding Provisions for €883mln in 2017, Spectrum Clean-Up (Brazil) for €257mln in 2017 and

provisions for €197mln in 2016

(3) o/w disp. Argentina (€665mln)

(4) Financial expenses correlated to debt.

(5) In 2017 higher taxes related to 2016 final payment (€556mln) and 2017 advanced payment (€339mln)

(6) Delta FY17 vs FY16 = €636mln, o/w Exchange Rate Impact (€516mln), IAS17 Brazil (€68mln) (7) NCF before dividends, IAS17 & ex-spectrum

(8) TIM Mandatory Covertible Bond maturity covered via ord. Shares issuance for €1.3bln value (9) Spectrum Clean-Up Brazil (€257mln), GSM Licence Italy (€630mln) (10) Financial Leases

A record year, driven by ultra broadband growing penetration

Strong performance from main subsidiaries

Networks in Italy and Brazil faster and wider than ever

TIM recognized as most successful Italian brand among the top 500 in the world(1)

FY'17 and 2018-'20 Plan

4Q'17 and FY Main Results

2018-'20 Plan: Key Drivers and KPI Evolution

Targets and Take-Aways

Appendix

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

Best in class customer engagement

	Domestic
1 • • • Leadership positioning 4 • • •	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	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)		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
	TIM Brasil 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		5 Inwit • Strengthen leadership on Italian tower market leveraging on new mobile opportunities and leading network densification phase		6 Sparkle • Sustain traditional business, expand commercial footprint on new geographies and accelerate data/VAS services
Cash-flow generation	7 OPEX efficiency • Create a lean efficient and zero-based cost structure leveraging the digital transformation and data analytics		8 CAPEX effectiveness • infrastructure		Maximize value driven CAPEX deployment leveraging current UBB
Agile organization	9 Digital • Enable superior customer engagement and omnichannel experience while unlocking efficiency	10 Advanced Analytics and AI • (e.g., predictive maintenance)	Implement leading capabilities to capture value both on customer engagement (e.g., predictive CLM) and cash flow generation	11 • engagement	People, culture & organization Drive accountability, transparency and performance based culture via agile organization and high employee
	Execution 12

• Drive implementation pace and drastically streamline internal processes with end-to-end Transformation Office

• Simplified, flexible fixed and mobile portfolios
• Digitally enabled, intuitive customer journeys
• Network in Italy (1) Network leadership: Fiber, 4.5G, VoLTE, 5G early adoption in 2020
• Increased FMC convergence through additional content and mobile data benefits
• Accelerated fiber migration to improve customer engagement and reduce churn
• 2nd brand Kena to address non-premium segments and sustain TIM value
• TIM acquisition focused on segmented approach
• Enhanced customer base value management through Digital and Advanced Analytics

• New avenues of growth: Mobile-adv, SmartHome, TIM Personal

• Channel mix optimization towards digital and direct

• Digital customer management: self and AI-enabled caring 3x Digital Sales
• Lean digital and automated operations

Maintain #1 position for Best quality

Consolidate and extend to Fixed #1 position in CSI by 2019

-30% Human-operated interactions

• Large: automatization to reduce order-to-delivery time
• SME's: new digital commercial and caring engagement to improve service level
• Evolution towards "ICT company"
• Public cloud and managed services expansion to further grow Large clients base
• Tapping of basic IT opportunity to improve SME's revenues mix
• Step up on convergence, fiber and VOIP migration to protect SME's ARPU level
• Adoption of lean digital business model
• Contract management, ordering and provisioning digitalization

• Optimization of service delivery and caring costs

• -15% Order-to-delivery time

• +5p.p. CSI for Medium & Large in 2020

^-10% Customer care call volumes

• Improved, faster delivery process of core services through new digital and automation tools
• Upgraded and modernized assurance process, with improved self-solution options and site information quality
• Fixed Access Network Legal Separation Plan: A Step-Change Evolution of TIM Full Equivalence Functional Separation into a one-stop shop, for maximum quality in regulated and unregulated services

• Value and demand driven deployment of fiber with smart mix

Strengthening of Equality of Access for all operators

-32p.p. claim rate

60% faster E2E FTTC delivery time

+20% Field force productivity

• Greater share of non-regulated services with streamlined process to improve delivery speed • Additional incentives to fiber migration through flexible pricing and innovative turn-key offerings

of FFTH and FTTC

• "Smarter" Service Creation Process through increased automation

• Superior Field Force productivity through automation and reward system optimization

• Continued expansion of the best fixed and mobile infrastructure (4G, Fiber) to differentiate experience

• Improve Customer engagement through increased penetration of digital interactions
• Acceleration of mobile growth targeting more affluent segments (e.g., controle, post-paid)
• Growth of Residential segment contribution to top-line
• Step-change growth in SMB segment leveraging new organization, go-to-market and value proposition
• Development of new, innovative revenue streams (e.g., IoT, mobile adv)
• Improvement of Cash Generation ability through "smart" CAPEX and Debt/Tax optimization
• Capture full digitalization efficiency potential
• "Zero-based" approach on traditional efficiency levers

>4K Cities covered by 4G (96% of Urban Population)

>2X growth of e-bill and e-pay penetration

~5X growth in My-TIM App users

Mobile CB (%)

4X growth of residential BB CB (1)

≥40% EBITDA margin in 2020 ≥20% EBITDA-CAPEX on revenues in 2020

	Strategic actions	Impact by 2020
	• Focus on winning new stakes of MNO's tower demand, leveraging on high quality portfolio • Extend leadership to next generation infrastructures (e.g., 5G, small cells)	~400 New sites ~1k Fiber Links ~10k Small cells
	• Enhance cost base through revised lease/purchase strategy	2.1x Tenancy ratio -4% Lease costs/site ~1.5k Lands owned
	• Focus on data services to monetize consumption growth and to improve market reach • Enhancement of service portfolio, focus on VAS (e.g., data center, security as a service) • Retention of core voice business	+25 IP POP 30% Capex focused on transformation
	• Delayering and decommissioning of obsolete technologies, virtualization to improve network • Review of pricing paradigm toward a scalable "pay-as-you-grow" model (vs. fixed capacity) • Organization streamlining	100% Infrastructure at 100Gb 100% Voice traffic processed by virtual nodes
		FY'17 and 2018-'20 Plan 21 Milan, March 7 2018

€mln Cost area		Addressable Domestic baseline 2017	Strategic actions	Impact by 2020
Commercial	Devices & other COGS Content & VAS Acquisition Customer management Advertising	2,030 170 360 400 160	• Optimize specifications & vendor portfolio, apply procurement excellence practices • Shift to digital channels (acquisition & top up); lower overall volumes (lower churn) • Migration toward digital self-caring (App, IVR, chat bots) • Analytics driven media mix modeling	20% Online fixed (1) acquisitions -18% Customer care calls
Industrial	Network operations Rent & Power	360 660	• Transition towards Network-as-a-Service: Decommissioning/delayering Virtualization and automation Field force productivity and data driven dispatching	Central Offices decommissioning begins -35% Energy and rental costs
G&A and Labour	G&A incl. IT Labour cost	530 2,570	• Real estate streamlining and consolidation • Contracts re-negotiation • Digitalization of work processes and automation of recurring tasks • Organization simplification and de-layering • Use of early retirements and other instruments to right size the organization	-25% Organizational units 20% Digital-enabled productivity improvement
	Addressable Baseline 2017	7,240	~80% of total OPEX(2)

1 Consumer only 2 Not considering capitalization of OPEX

CPE and success based	+9 p.p.	• Strong growth on Fiber migration on Consumer and ICT offer on Business
Mobile expansion	+9 p.p.	• Capacity upgrade on 4G • 4.5G/5G deployment leveraging value driven analytics
Transport capacity, run and maintain	+4 p.p.	• 3x mobile and 7x fixed network capacity increase • Network-as-a-Service transformation as enabler for OPEX reduction
IT Transformation	-1 p.p.	• New CRM and billing systems completed and released in 2017 • Aggressive application decommissioning
Fixed access	-20 p.p.	• Selected improvements leveraging existing coverage (77% FTTx YE2017) to achieve 100 cities with FTTH and increasing our ~80% FTTx coverage on a demand-driven basis

• End-to-end digital customer lifecycle management
• Personalized experience with smart targeting
• New omni-channel CRM (BSS) and billing systems, based on an open service architecture
• Deployment of Advanced Analytics capabilities at scale in all LoB
• Radical middle- and back-office automation and simplification
• Digital-first self-caring capabilities, focus on App and IVR

• Aggressive IT decommissioning and simplification plans

• Deployment of Agile operating model at scale

• Setup of dedicated Digital and AA Centers of Excellence (CoE)

From website to eCommerce catalogue Single Convergent App for fixed and mobile

~20% Productivity enabled by Digital ~80% Smart phone customers never calling call center

• New organization structure simplified and delayered
• From silos to agile organization to enable fast decision making autonomy & accountably
• Introduction of new digital competences (e.g., big data, network virtualization)
• Dedicated retention & development program for Top Talents: digital learning, welfare scheme & top talent career path
• Introduction of continuous rewarding plan based on larger set of KPIs (e.g., productivity) and targeting submanagerial resources

• Reduction of labor costs leveraging early retirements and other instruments

• Implementation of a new LTI for key people at the organization. TIM LTI is designed as a share incentive plan, with KPIs aligned to share performance and to cumulated Equity FCF generation for 2018-'20.

• Plan to be approved at next AGM

• -20% Organizational units

• ~500 new "digital" talents to hire
• ~100% Share of resources involved in digital learning and/or re-skilling
• ~20% Wholesale on-field productivity increase

~4,000 exits

Strong Management engagement

A grid of 10 Workstreams, 40+ Themes(1) , 250+ Initiatives running across the Company

Transformation Office Caring Wholesale Open Access Business Consumer Wholesale Market Technology Procurement and RE Orga and Simplification Digital and Analytics Quality and CE

A solid Implementation Machine to drive Transformation

• Dedicated Transformation Office with 20+ full time resources
• 250+ initiatives articulated in 3,200+ milestones with clear responsibilities and accountability
• Control tower infrastructure for continuous monitoring of transformational KPIs and real time transparency of economic impact, through a granular reconciliation between actual benefits and targets

• Execution engine in place:

• Weekly progresses led by Top Management, focusing also on the synchronization of cross-functional enablers
• Monthly assessment of executional risks
• Central "Swat teams" dedicated to support transformational workstreams (new capabilities and methodologies)

FY'17 and 2018-'20 Plan

4Q'17 and FY Main Results

2018-'20 Plan: Key Drivers and KPI Evolution

Targets and Take-Aways

Appendix

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
(1) On Organic basis	(3) Spectrum not included	FY'17 and 2018-'20 Plan

(1) On Organic basis (2) Specific Company guidance is in the Annex section

(4) Cumulative '15-'17 Equity Free Cash Flow at €1.6bln, excl. M&A

• 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

• End-to-end transformation across all BUs, leveraging on cross-functional enablers

• New organization and way of thinking

FY'17 and 2018-'20 Plan

4Q'17 and FY Main Results

2018-'20 Plan: Key Drivers and KPI Evolution

Targets and Take-Aways

Appendix

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

FY'17 and 2018-'20 Plan Milan, March 7 2018

		SHORT TERM	LONG TERM
GOALS	DRIVERS	TARGETS / KPIs	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

FY'17 and 2018-'20 Plan Milan, March 7 2018

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

€/month, k lines

BroadBand Customer Base

BroadBand Customer Base

€mln

(1)€29,345mln is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€820mln) and current financial liabilities (€984mln), the gross debt figure of €31,149mln is reached. (2) Considered the new Revolving Credit Facility stipulated in January 2018.

€mln

Net financial position € 25,308

Maturities and Risk Management Banks & EIB

Average m/l term maturity: 7.75 years (bond only 8.07 years)

Fixed rate portion on gross debt approximately 71.3%

Around 33% of outstanding bonds (nominal amount) denominated in USD and GBP and is fully hedged

Cost of debt: ~4.8 %