Telecom Italia Rsp

Investor Presentation • Nov 6, 2015

TELECOM ITALIA GROUP3Q'15 Results Rome, November 6th, 2015

Telecom Italia Group

3Q'15 Results

Agenda

Recent Highlights & 3Q'15 Results

Marco Patuano

Financial Update

Piergiorgio Peluso

Take-Aways

Marco Patuano

Appendix

Safe Harbour

This presentation contains statements that constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in ^a number of places in this presentation and include statements regarding the intent, belief or current expectations of estimates regarding future growth in the different business lines and the global business, financial results and other aspects of the activities and situations relating to the Telecom Italia 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. Consequently, Telecom Italia makes no representation, whether expressed or implied, as to the conformity of the actual results with those projected in the forward looking statements. Forward-looking information is based on certain key assumptions which we believe to be reasonable as of the date hereof, but forward looking information by its nature involves risks and uncertainties, which are outside our control, and could significantly affect expected results. Analysts and investors are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation. Telecom Italia undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telecom Italia business or acquisition strategy or planned capital expenditures or to reflect the occurrence of unanticipated events. Analysts and investors should consult the Company's Annual Report on Form 20-F as well as periodic filings made on Form 6-K, which are on file with the United States Securities and Exchange Commission which may identify factors that affect the forward looking statements included herein.

The accounting policies adopted in the preparation of the Condensed Consolidated Financial Statements as of and for the nine months ended 30 September 2015 have been applied on ^a basis consistent with those adopted in the Annual Consolidated Financial Statements at 31 December 2014, to which reference should be made, except for the new standards and interpretations adopted by the Telecom Italia Group starting from 1 January 2015 which had no effects on the Condensed Consolidated Financial Statements as of and for the nine months ended 30 September 2015.

Recent Highlights

Domestic Main Results

Reported data, € Mln, %YoY

Total Revenues

Service Revenues

Non-recurring items on Ebitda

		2 0 1 4			2 0 1 5
	Q 1	Q 2	Q 3	Q 1	Q 2	Q 3
T l t o a	-5	6 6 +	-5		-3 9 3	-5 3
F X f lac ion te tua t ra	-5	-5	-5
Re lea T I S is ion se p rov		7 2 +	2 +
Em loy du ion lan t p ee re c p			-1		-2 4	-1 9
Pr is ion for is ks d o he t ov r an r ts co s		-1	-1		-3 6 9	-3 4

Marco Patuano

Mobile Revenues : Delivering on Better Expectations

Reported data, %YoY

Mobile Calling CB & ARPU Mobile Service Revenues Improving Trend

Mobile Handsets Revenues Trend

Innovative Service Revenues

Fixed: BB Acquisitions Performance beats Seasonality

'000, € Mln, %YoY

BB Accesses

Net adds BB Highlights

€/monthYoY +1.9% +2.5% +4.1% +5.2% +6.0% +6.7% 19.2 19.6 ²⁰ 20.2 20.4 20.9 20.7 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15+3.7%+0.7€BB Arpu BB Service Revenues

3Q'15 Results 10Marco Patuano

Churn Stable Y-o-Y as "Tutto Voce" overcomes Launch Phase

3Q'15 Results 11Marco Patuano

Business Segment: New Breakdown on Revenues

Service Revenues, Reported data, € Mln, %YoY

Communicate

Connect

Compute IT Solutions

TIM Brasil Update

Reported data, R\$ Mln, %YoY

Traditional2,617 3,276 18.3%25.2%9M'14 9M'15Capex on Revenues+6.9pp +25.2%3,975 3,882 27.7% 29.8% 9M'14 9M'15-2.3%EBITDA Margin +2.1pp Reported EBITDA Capex 2,461 1,697 6,824 5,929 2,421 3,408 9M'14 9M'15Innovative11,707 11,034 Incoming & Wholesale+41%-13%-5.7%Mobile Service RevenuesNet of MTR-1.8%Business Generated +1.0%

New Offer Portfolio Just Launched combines Data Rightsizing with Symmetric On-Net/Off-Net Voice Allowance

Agenda

Recent Highlights & 3Q'15 Results

Marco Patuano

Financial Update

Piergiorgio Peluso

Take-Aways

Marco Patuano

Appendix

TI Group Overview

Domestic Efficiency Program

Process/ Asset Driven Costs(1)

Market/ Customer Driven Driven Costs(2)

Balance to FY Efficiency Target

	1 H '1 5 v 1 H '1 4 s	Q Q 3 '1 5 v 3 '1 4 s	9 M '1 5 v 9 M '1 4 s	Q Q 4 '1 5 v 4 '1 4 s te d ex p ec	F Y '1 5 v F Y '1 4 s f f ic ien E ta t cy rg e
To tal Eff ici en cy	-1 7	-3 1	-4 8	7 0 ~-	1 0 0 >- 1 0 0 >-
Pro / A et ce ss ss Dr ive n C ts os	-1 7	-5 1	-6 8	6 0 ~-
Ma rke t/ Cu sto me r ive n C Dr ts os	-	2 0 +	2 0 +	1 0 ~-	/w ~4 0 m ln € o fro Re al Es tat m e

18

Piergiorgio Peluso

Labour costdiscontinuitieson 2014

Labour Costs Evolution

Net Present Value 2015-2022: >400 mln €

Savings Shares Conversion

Main Terms & Conditions

Agenda

Recent Highlights & 3Q'15 Results

Marco Patuano

Financial Update

Piergiorgio Peluso

Take-Aways

Marco Patuano

Appendix

Take-Aways

Agenda

Recent Highlights & 3Q'15 Results

Marco Patuano

Financial Update

Piergiorgio Peluso

Take-Aways

Marco Patuano

Appendix

Domestic Mobile Breakdown

€ mln, QoQ

Domestic Fixed Breakdown

€ mln, QoQ

Quarterly Fixed Revenues Breakdown Service Revenues Trend YoY

Innovation Leads Domestic Capex

1,138 1,572 370 383 248 256 36 +434 +13 +8 +50 86 9M'14 Network IT Commercial others 9M'15ITCommercial OthersTotalNetwork€ Mln2,297 2G License: +117 Mln €+28.2%TotalInnovative +331 +27 +50 +14 +422 Traditional -13 -14 - -6 -33+505*1,792 ~50% for NGN & LTE2G License +117 +117+38.2%

*TIS & others

CB Stabilization and Competitive Dynamics

TIM MNP Balance

• As shown in the Total Market 2013 MNP trend line, ^a record-high peak was reached in July that year. The regained price leadership of TIM drove MNP back down to sustainablelevels in 2014 and 2015.
• Pockets of turbulence do however still occur, as visible from the YoY MNP resurgence of 1Q'15. The situation normalized in 2Q'15 and3Q'15, moving back towards 2014 levels.
• YtD TIM performance posted ^a positive MNP balance (+37k lines vs -232k lines in the same period of 2014), although negative balance (- 49k lines) was registered in September.

Higher Bundle Penetration Protects ARPU Performance

Constant increase of % data bundle adoption on CB

Positive support on ARPU due to:

• • nominal price increase from 19€ to 20€ 12
• • top-up days from 30 to 28 and no SMS in the bundle 23

June '14: 19€ 600 mins/SMS & 1GB 30 days; March '15: 20€ 600 mins/SMS & 1GB 30 days; June '15 20€ 1000 mins, no SMS & 2 GB 28 days (1) Excluding "call-back" service

Domestic Fixed KPIs

3Q'15 Results 29Marco Patuano - Piergiorgio Peluso

Consumer Entertainment Services further build-up

TIMmusic:

>45 mln songs listened in September (+108% YoY) +3% MoM TIMmusic usage @ 199 songs per user

+3% MoM streaming music market in Italy

Domestic Opex Overview

€ mln

Adjustments on Domestic Ebitda

	20 14			20 15				 % Y oY
	IQ	IIQ	IIIQ	9M '14	IQ	IIQ	IIIQ	9M '15	IQ	IIQ	IIIQ	9M
E B I T D A Re ort d p e	1, 7 9 2	1, 7 0 9	1, 7 9 5	5, 2 9 6	1, 6 1 0	1, 2 3 6	1, 6 7 9	4, 5 2 5	-10 .2%	-27 .7%	-6.5 %	-14 .6%
Re Or nic ga ven ues	3, 74 2	3, 81 9	3, 81 9	11 38 0 ,	3, 63 1	3, 74 4	3, 75 2	11 12 7 ,	-3.0 %	-2.0 %	-1.8 %	-2.2 %
Op Org ani ing ite et n ex c n on rec urr ms	( 1, 94 5)	( 2, 17 6)	( 2, 01 9)	( 6, 14 0)	( 2, 02 1)	( 2, 11 5)	( 2, 02 0)	( 6, 15 6)	-3.9 %	2.8 %	0.0 %	-0.3 %
E B I T D A Or ic t n g an ne on ing ite rec urr ms	1, 7 9 7	1, 6 4 3	1, 8 0 0	5, 2 4 0	1, 6 1 0	1, 6 2 9	1, 7 3 2	4, 9 7 1	-10 .4%	-0.9 %	-3.8 %	-5.1 %
o/w No n R rrin Ite g ecu ms	( 5)	66	( 5)	56	-	( 39 3)	( 53 )	( 44 6)
Exc han Rat e F luc tion ge tua	(5)	(5)	(5)	(15 )
IS p Rel e T isio nin g eas rov		72	2	74
Em plo red ion pla uct yee n			(1)	(1)		(24 )	(19 )	(43 )
s fo Pro vis ion r ris ks and oth ost er c s and ttle nts se me	-	(1)	(1)	(2)	-	(36 9)	(34 )	(40 3)
Oth Dis tin uit ies er con	60	( 41 )	( 27 )	( 8)	( 45 )	( 9)	( 38 )	( 92 )
Lab st d isco ntin uiti our co es	21	-	-	21	(23 )	(18 )	(38 )	(79 )
Oth off item er o ne- s	39	(41 )	(27 )	(29 )	(22 )	9	-	(13 )
Op Org ic u nd erl ing ex an y	( 2, 00 5)	( 2, 13 5)	( 1, 99 2)	( 6, 13 2)	( 1, 97 6)	( 2, 10 6)	( 1, 98 2)	( 6, 06 4)	1.4 %	1.3 %	0.5 %	1.1 %
E B I T D A Or ic g an Un de ly ing r	1, 7 3 7	1, 6 8 4	1, 8 2 7	5, 2 4 8	1, 6 5 5	1, 6 3 8	1, 7 7 0	5, 0 6 3	-4.8 %	-2.7 %	-3.1 %	-3.5 %

OpFCF Evolution 9M15 Group OpFCF(1)

9M OpFCF Breakdown by Business Units

Domestic OpFCF

-191 mln euro of which -16 mln on Capex and -175 mln euro on DWC

33

Net Debt Evolution

34

Debt Maturities and Liquidity Margin

€ mln

(1) € 31,376 mln is the nominal amount of outstanding medium-long term debt. By adding Mandatory Convertible Bond (€ 1,300 mln), discontinued operations (€ 358 mln), IAS adjustments (€ 1,496 mln) and current financial liabilities (€ 846 mln), the gross debt figure of € 35,376 mln is reached.

Total Gross Debt net of Adjustment: Euro 35,376 mln Well-Diversified and Hedged Debt 24.5133581.6282.299 6.57869,3% 18,6% 4,6% € mlnDiscontinued operations OtherOp. leases and long Banks & EIBBonds6,5% 1,0% Gross debt(of which € 358 mln discontinued operations) € 35,376 Financial Assets € (8,314) of which C&CE and marketable securities € (6,193) C & CE € (4,534) Marketable securities € (1,659) Government Securities € (815) - Other € (844) Discontinued operations (Financial assets) € (258) Net financial position € 26,804

Maturities and Risk Management

Average m/l term maturity: 7.22 years (bond only 7.80 years)

Fixed-rate portion on gross debt approximately 69.98%

Around 42% of outstanding bonds (nominal amount) is denominated in USD, GBP and YEN and is fully hedged

N.B. The figures are net of the adjustment due to the fair value measurement of derivatives and related financial liabilities/assets, as follows:

the impact on Gross Financial Debt is equal to 2,473 €/mln (of which 412 €/mln on bonds)

the impact on Financial Assets is equal to 1,310 €/mln.

Therefore, the Net Financial Indebtedness is adjusted by 1,163 €/mln.

N.B. The difference between total financial assets (€ 8,314 mln) and C&CE and marketable securities (€ 6,193 mln) is equal to € 2,121 mln and refers to positive MTM derivatives (accrued interests and exchange rate) for € 1,949 mln, financial receivables for lease for € 113 mln and other credits for € 59 mln.