Telecom Italia Rsp — Earnings Release 2016

Nov 4, 2016

Dear Madam/Sir,

Please find attached the Telecom Italia Group press release on 3Q'16 Results, the related File with Financial Data and Key Performance Indicators.

We also provide you with a set of bullet points summarizing business and financial highlights aiming at providing a snapshot comment on TI results.

TOTAL DOMESTIC RESULTS:

Best Domestic Quarterly performance since 2007.

• Solid Performance for Domestic Revenues: 3Q'16 +1.0% YoY (+2.2 pp vs 2Q'16) supported by improving trends in core business, along with the supportive contribution from efficiencies on circuits between fixed and mobile, showing in lower elimination & others
• Service Revenues in further recovery in terms of YoY performance: 3Q'16 -0.4% YoY (+0.7pp vs 2Q'16)
• Cost program overperforming with strong improvement in efficiency and profitability with no impact on commercial and industrial levers and effort: -98 € mln YoY from 2,020 € mln in 3Q'15 to 1,922 in 3Q'16
• Organic EBITDA performance further into positive territory, improving the turnaround started in 2Q'16: 3Q'16 +7.8% YoY (2Q'16 +6.9% YoY)

DOMESTIC MOBILE:

• Mobile Service Revenues growth confirmed at +1.1% YoY 3Q'16 (2Q'16 +0.7%, 1Q'16 +0.6%)
• Total Mobile Revenues in 3Q'16: -0.2% YoY due to lower handsets sales (-12.0% YoY)
• ARPU upwards to 12.8€/month in 3Q'16 (+2.4% YoY), improving from 12.5€ in 3Q'15
• Good MNP Balance at -44k in 3Q'16 ( vs -70k in 2Q'16)
• Mobile BB users growing: +0.3 mln users in 3Q'16, now at 12.1 mln users from 11.8 mln users in 2Q'16.
• LTE penetration on MBB customers increased to ~51% (+2pp vs 2Q'16);
• LTE users increased by +408k QoQ in 3Q'16, now at 6.2 mln of users
• YE '16 target of 95% (+1.3pp vs 2Q'16) population coverage already reached in August 6.530 cities reached (>+240 QoQ).

DOMESTIC FIXED:

• Total Revenues YoY performance toward parity in 3Q'16: -0.1% YoY (+4pp vs 2Q'16). Service Revenues improving to -3.6% YoY (+1.2pp vs 2Q'16) due to a solid Broadband growth +10.2% YoY (+4pp vs 2Q'16) to 471 €mln
• Strong set of fixed KPIs due to the successful campaign launched in September including new 4-Play+proposition, supported by TV, fast broadband services and TIM Smart re-positioning:
• o Record-low line Losses at -100K in 3Q'16 (vs -134 in 2Q'16, -140k in 1Q'16 and -173k in 3Q'15)
• o BB Net Adds +37K slightly up from +35k in 2Q'16 beating seasonality effect
• ARPU Broadband steadly increased: 22.4 €/month in 3Q'16 (+8.1% YoY).

DOMESTIC EBITDA:

Positive EBITDA performance showing a significant turnaround due to top line and efficiency improvement

• Performance YTD of the Organic EBITDA +3.3% YoY already ensures the 2016 "lowsingle digit growth" target.
• Sound growth in Organic Ebitda Margin: +3.1pp YoY at 49.3% in 3Q'16
• Reported EBITDA: +7.9% YoY in 3Q'16

			2015					2016					Δ% γογ
	10	IIQ	HIQ	I Half 9M		1Q	11Q	IIIQ	I Half	9M	10	IIQ	IIIO	I Half 9M
EBITDA Organic Min€	1.612	1.627	1.732	3.239	4.971	1.528	1.739	1.867	3.267	5.134	$-5.2%$		6.9% 7.8%		$0.9\%$ 3.3%
Exchange Rate Impact		-1	0	0	$\circ$	0	0	0		0
Labour Cost	0	24	19	24	43	65		47	67	114
Other Costs & Charges		368	34	369	403		14	9	16	-25
Non Recurring Items		391	53	393	446	67	16	56	83	139
EBITDA Reported MIn€	1.610	1.236	1679	2.846 4.525		1.461	1.723	1.811		3.184 4.995	-9.3% 39.4% 7.9%			11.9% 10.4%

The following chart shows a reconciliation table between Domestic Reported and Organic EBITDA:

DOMESTIC CAPEX:

• Continued Growth on Innovative Capex YTD at 1,186 mln € (+ 209 € mln YoY), driven by a faster pace in core NGN & LTE components and additional Capex in Cloud services
• Strong focus on Infrastructure: Network and IT Capex components represent 81% of total Innovative Capex and 83% of total Traditional Capex, respectively
• 3Q'16 Domestic Capex up 32 €mln YoY at 823 €mln

BRAZIL:

Financial Highlights:

• Total Revenues Improving Organic Performance: 3Q: -5.2% YoY (vs 2Q: -12.4% YoY and 1Q: -15.3%), driven by robust KPI trends
• Strong improvement in Service Revenue trend (3Q: -2.4% YoY; vs 2Q: -5.9% YoY and 1Q: -8.3% YoY) and Mobile Services (3Q: -3.1% 2Q: -6.7% vs 1Q: -9.2% YoY), and confirming the positive growth in Fixed Services (3Q: +10.9% YoY)
• Organic* EBITDA was up +0.5% YoY in 3Q, with a solid contribution from cost efficiencies (Organic* Opex down 7.8% YoY)
• Organic* EBITDA Margin expanded in 3Q to 33.1%, up 1.9pp YoY
• Total Capex decreasing (-3.9% YoY in 3Q'16) as a combination of better negotiations with vendors and optimisation of some projects. Capex on revenues reached 28.8% in 3Q (+0.4pp YoY) and 24.3% in 9M'16 (-0.8pp YoY).

Operational Highlights:

• Postpaid net adds at ~480k (vs. 2Q16), second consecutive quarter of positive net adds. Postpaid at 22.5% of total Customer Base (+3.5pp YoY).
• Mobile ARPU up 12% YoY in 3Q at 18.4R\$/month, third consecutive quarter of growth
• Widening in 4G coverage: 746 cities, with 66% of urban population covered
• Further expansion in 3G coverage: 2,084 cities, reached 83% of urban population.

(*) Organic, i.e. excluding non-recurring items.

GROUP NET DEBT:

Net Financial Position stood at 26.735 bln (-779 mln € vs 2Q'16)

Very best regards IR Team

3Q'16 Financial and operating data

Index click on the links below Disclaimer P&L Group FY P&L Group Q Key Financial data by BU FY Key Financial data by BU quarter Net Debt & Cashflow Balance Sheet Domestic Business Results Domestic Wireline Results Domestic Mobile Results investor_relations@telecomitalia.it TIM Brasil Results Website link: Rep&Org Telecom Italia Group

TELECOM ITALIA INVESTOR RELATIONS

Telecom Italia Investor Relations

Disclaimer

The financial and operating data, with the exception of some data, have been extracted or derived from the Condensed Consolidated Financial Statements as of and for the nine months ended 30 September 2016 which have 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). Such interim financial statements are unaudited.

The accounting policies adopted in the preparation of the Condensed Consolidated Financial Statements as of and for the nine months ended 30 September 2016 have been applied on a basis consistent with those adopted in the Annual Consolidated Financial Statements at 31 December 2015, to which reference should be made, except for the new standards and interpretations adopted by the Telecom Italia Group starting from 1 January 2016 which had no effects on the Condensed Consolidated Financial Statements as of and for the nine months ended 30 September 2016.

Within the Brazil Business Unit, TIM Brasil's Management recently identified that incorrect accounting entries were made in prior years in connection with the recognition of service revenue from the sale of prepaid traffic. Such incorrect accounting entries, resulted in the early recognition of revenues and consequently the underestimation of deferred revenue liabilities for prepaid traffic not yet consumed. The incorrect accounting entries did not have any impact either in terms of net financial position nor on cash and cash equivalents.

In light of the above, the comparative financial information as of 31 December 2015 and for the three-month and nine-month periods ended 30 September 2015 have been revised, segment information included. Furthermore, such revision did not have any material impact on the consolidated income statement of the three-month and nine-month periods ended 30 September 2015.

Segment information is consistent with the prior periods under comparison with the exception of the Media Business Unit that, starting from 1 January 2016, as a result of the change in the operational mission of Persidera, is included in the Domestic Business Unit. For prior periods under comparison the Media Business Unit was reclassified under Other activities & Eliminations.

Furthermore, the Sofora - Telecom Argentina group, which was disposed of on 8 March 2016, is classified as Discontinued operations.

P&L Group

	Revised					UNAUDITED FIGURES
€ mln	1Q15	1H15	9M15	1Q16	1H16	9M16
REVENUES	5,054	10,101	14,878	4,440	9,096	13,939
Other Income	53	131	206	47	107	165
TOTAL OPERATING REVENUES AND OTHER INCOME	5,107	10,232	15,084	4,487	9,203	14,104
Acquisition of goods and services	(2,171)	(4,372)	(6,340)	(1,923)	(3,783)	(5,710)
Employee benefits expenses	(833)	(1,705)	(2,433)	(848)	(1,551)	(2,303)
Other operating expenses	(265)	(888)	(1,160)	(247)	(501)	(757)
Internally generated assests and Others	195	372	471	243	358	544
EBITDA	2,033	3,639	5,622	1,712	3,726	5,878
EBITDA Margin	40.2%	36.0%	37.8%	38.6%	41.0%	42.2%
Depreciation and amortization	(1,052)	(2,130)	(3,164)	(1,009)	(2,047)	(3,116)
Impairment reversals (losses) on non-current assets				(2)	(5)	(8)
Gains (losses) on disposals of non-current assets		279	348	3	13	14
EBIT	981	1,788	2,806	704	1,687	2,768
EBIT Margin	19.4%	17.7%	18.9%	15.9%	18.5%	19.9%
Income (loss) equity invest. valued equity method	2	4	15		5	4
Net Financial Income / (Expenses)	(817)	(1,482)	(1,970)	(26)	(145)	(510)
Profit (loss) before tax from continuing operations	166	310	851	678	1,547	2,262
Income tax expense	(74)	(195)	(391)	(221)	(489)	(699)
Profit (loss) from continuing operations	92	115	460	457	1,058	1,563
Profit (loss) from Discontinued operations/Non-current assets held for sale	169	330	480	47	47	47
Profit (loss) for the year	261	445	940	504	1,105	1,610
Attributable to:
Owners of the Parent	82	33	367	433	1,018	1,495
Non-controlling interests	179	412	573	71	87	115

	Revised					UNAUDITED FIGURES
REVENUES (€ mln)	1Q15	1H15	9M15	1Q16	1H16	9M16
Domestic	3,631	7,375	11,127	3,548	7,247	11,036
o/w Wireline Domestic	2,657	5,345	7,990	2,553	5,131	7,774
o/w Mobile Domestic	1,151	2,387	3,690	1,186	2,447	3,747
Brasile	1,412	2,691	3,699	897	1,858	2,922
Other activities & Elim.	11	35	52	(5)	(9)	(19)
TI Group	5,054	10,101	14,878	4,440	9,096	13,939
EBITDA Reported (€ mln)
Domestic	1,610	2,846	4,525	1,461	3,184	4,995
Brasile	416	790	1,108	258	556	900
Other activities & Elim.	7	3	(11)	(7)	(14)	(17)
TI Group	2,033	3,639	5,622	1,712	3,726	5,878
EBITDA Margin Reported
Domestic	44.3%	38.6%	40.7%	41.2%	43.9%	45.3%
Brasile	29.5%	29.4%	30.0%	28.8%	29.9%	30.8%
TI Group	40.2%	36.0%	37.8%	38.6%	41.0%	42.2%
EBIT Reported (€ mln)
Domestic	814	1,222	2,090	662	1,581	2,575
Brasile	165	574	742	49	121	210
Other activities & Elim.	2	-8	(26)	(7)	(15)	(17)
TI Group	981	1,788	2,806	704	1,687	2,768
EBIT Margin Reported
Domestic	22.4%	16.6%	18.8%	18.7%	21.8%	23.3%
Brasile	11.7%	21.3%	20.1%	5.5%	6.5%	7.2%
TI Group	19.4%	17.7%	18.9%	15.9%	18.5%	19.9%
CAPEX (€ mln)
Domestic	676	1,506	2,297	778	1,575	2,398
Brasile	287	637	930	166	408	709
Elim & Adj	1	3	6	0	0	0
TI Group	964	2,146	3,233	944	1,983	3,107
CAPEX ON SALES (%)
Domestic	18.6%	20.4%	20.6%	21.9%	21.7%	21.7%
Brasile	20.3%	23.7%	25.1%	18.5%	22.0%	24.3%
TI Group	19.1%	21.2%	21.7%	21.3%	21.8%	22.3%

	Revised					UNAUDITED FIGURES
REVENUES (€ mln)	1Q15	2Q15	3Q15	1Q16	2Q16	3Q16
Domestic	3,631	3,744	3,752	3,548	3,699	3,789
o/w Wireline Domestic	2,657	2,688	2,645	2,553	2,578	2,643
o/w Mobile Domestic	1,151	1,236	1,303	1,186	1,261	1,300
Brasile	1,412	1,279	1,008	897	961	1,064
Other activities & Elim.	11	24	17	(5)	(4)	(10)
TI Group	5,054	5,047	4,777	4,440	4,656	4,843
EBITDA Reported (€ mln)
Domestic	1,610	1,236	1,679	1,461	1,723	1,811
Brasile	416	374	318	258	298	344
Other activities & Elim.	7	(4)	(14)	(7)	(7)	(3)
TI Group	2,033	1,606	1,983	1,712	2,014	2,152
EBITDA Margin Reported
Domestic	44.3%	33.0%	44.7%	41.2%	46.6%	47.8%
Brasile	29.5%	29.2%	31.5%	28.8%	31.0%	32.3%
TI Group	40.2%	31.8%	41.5%	38.6%	43.3%	44.4%
EBIT Reported (€ mln)
Domestic	814	408	868	662	919	994
Brasile	165	409	168	49	72	89
Other activities & Elim.	2	(10)	(18)	(7)	(8)	(2)
TI Group	981	807	1,018	704	983	1,081
EBIT Margin Reported
Domestic	22.4%	10.9%	23.1%	18.7%	24.8%	26.2%
Brasile	11.7%	32.0%	16.7%	5.5%	7.5%	8.4%
TI Group	19.4%	16.0%	21.3%	15.9%	21.1%	22.3%
CAPEX (€ mln)
Domestic	676	830	791	778	797	823
Brasile	287	350	293	166	242	301
Elim & Adj	1	2	3	0	0	0
TI Group	964	1,182	1,087	944	1,039	1,124
CAPEX ON SALES (%)
Domestic	18.6%	22.2%	21.1%	21.9%	21.5%	21.7%
Brasile	20.3%	27.4%	29.1%	18.5%	25.2%	28.3%
TI Group	19.1%	23.4%	22.8%	21.3%	22.3%	23.2%

Net Cash Flow & Net Debt Dynamics

	Revised					UNAUDITED FIGURES
	1Q15	1H15	9M15	1Q16	1H16	9M16
(€ mln)
EBITDA	2,033	3,639	5,622	1,712	3,726	5,878
CAPEX	(964)	(2,146)	(3,233)	(944)	(1,983)	(3,107)
Change in net operating working capital:	(1,502)	(1,124)	(1,149)	(750)	(1,078)	(830)
Change in inventories	(40)	(54)	19	(87)	(40)	(71)
Change in trade receivables and net amounts due from customers on construction contracts	(345)	(128)	315	30	(130)	(31)
Change in trade payables (*)	(979)	(912)	(1,433)	(566)	(635)	(425)
Other changes in operating receivables/payables	(138)	(30)	(50)	(127)	(273)	(303)
Change in provisions for employee benefits	(6)	19	32	59	40	12
Change in operating provisions and Other changes	(16)	313	279	(52)	(34)	(45)
Net operating Free Cash Flow	(455)	701	1,551	25	671	1,908
Sale of investments and other disposals flow	3	1,379	1,554	707	732	737
Share capital increases/reimbursements, including incidental costs	186	186	186
Financial investments flow		(24)	(35)	(9)	(9)	(11)
Dividends payment	(3)	(204)	(204)		(227)	(227)
Change in finance lease contracts		(984)	(1,367)	(46)	(123)	(178)
Finance expenses, income taxes and other net non-operating requirements flow Riduzione/incremento dell'indebitamento finanziario netto delle attività cessate/attività non correnti destinate ad eccere cedute	(486)	(1,217)	(1,616)	(500)	(1,242)	(1,648)
Reduction/(Increase) in adjusted net financial debt from continuing operations	(755)	(163)	69	177	(198)	581
Reduction/(Increase) in net financial debt from Discontinued operations/Non-current assets held for sale	(24)	(178)	(222)	(38)	(38)	(38)
Reduction/(Increase) in adjusted net financial debt	(779)	(341)	(153)	139	(236)	543
OPENING NET FINANCIAL DEBT (Adjusted)	26,651	26,651	26,651	27,278	27,278	27,278
Net cash flow	(779)	(341)	(153)	139	(236)	543
ENDING NET FINANCIAL DEBT (Adjusted)	27,430	26,992	26,804	27,139	27,514	26,735
Adj for fair value valuation of derivatives and related underlyings	1,573	1,366	1,163	1,094	556	676

Consolidated Balance Sheet

	Revised			UNAUDITED FIGURES
€ mln	FY15	1Q16	1H16	9M16
ASSETS
NON-CURRENT ASSETS
Intangible assets
Goodwill	29,383	29,436	29,566	29,548
Intangible assets with a finite useful life	6,480 35,863	6,516 35,952	6,777 36,343	6,733 36,281
Tangible assets
Property, plant and equipment owned	12,659	12,816	13,211	13,233
Assets held under finance leases	2,208	2,210	2,298	2,358
	14,867	15,026	15,509	15,591
Other non-current assets Investments in associates and joint ventures accounted for using the equity method	41	41	39	39
Other investments	45	41	38	42
Securities, financial receivables and other non-current financial assets	2,989	2,766	3,129	2,960
Miscellaneous receivables and other non-current assets	1,778	1,899	2,048	2,096
Deferred tax assets	853	894	735	579
	5,706	5,641	5,989	5,716
TOTAL NON-CURRENT ASSETS (A)	56,436	56,619	57,841	57,588
CURRENT ASSETS
Inventories	254	341	294	325
Trade and miscellaneous receivables and other current assets Current income tax receivables	5,112 163	5,534 26	5,683 69	5,440 81
Other investments
Securities other than investments, financial receivables and other current financial assets	1,840	1,130	1,330	1,983
Cash and cash equivalents	3,559	2,665	2,707	4,275
Current assets sub-total	10,928	9,696	10,083	12,104
Discontinued operations/assets held for sale
of a financial nature	227	-	-	-
of a non-financial nature	3,677 3,904	- -	- -	- -
TOTAL CURRENT ASSETS (B)	14,832	9,696	10,083	12,104
TOTAL ASSETS (A+B)	71,268	66,315	67,924	69,692
EQUITY AND LIABILITIES
EQUITY Equity attributable to equity holders of the Parent	17,554	18,181	19,106	19,414
Equity attributable to Minority Interests	3,695	2,035	2,221	2,223
TOTAL EQUITY (C)	21,249	20,216	21,327	21,637
NON-CURRENT LIABILITIES
Non-current financial liabilities	30,518	30,354	31,027	31,363
Employee benefits Deferred tax liabilities	1,420 323	1,459 367	1,580 434	1,537 436
Provisions	551	551	569	643
Miscellaneous payables and other non-current liabilities	1,110	1,140	1,207	1,497
TOTAL NON-CURRENT LIABILITIES (D)	33,922	33,871	34,817	35,476
CURRENT LIABILITIES Current financial liabilities	6,224	4,440	4,209	5,266
Trade and miscellaneous payables and other current liabilities	7,882	7,701	7,445	7,183
Current income tax payables	110	87	126	130
Current liabilities sub-total (E)	14,216	12,228	11,780	12,579
Liabilities directly associated with Discontinued operations/Non-current assets held for sale
of a financial nature	348	-	-	-
of a non-financial nature	1,533	-	-	-
	1,881	-	-	-
TOTAL CURRENT LIABILITIES (E)	16,097	12,228	11,780	12,579
TOTAL LIABILITIES (F=D+E)	50,019	46,099	46,597	48,055
TOTAL EQUITY AND LIABILITIES (C+F)	71,268	66,315	67,924	69,692

				Domestic Business Results - Reported Figures
										UNAUDITED FIGURES
											Δ% yoy
12,283	-5.7%	12,080	-5.8%	11,907	-5.9%	11,602	-5.5%	11,468	-5.1%	11,368	-4.5%
8,784	0.3%	8,821	0.7%	8,839	1.1%	8,955	1.9%	8,992	1.9%	9,042	2.3%
30,140	-2.8%	30,075	-1.9%	30,023	-1.2%	29,846	-1.0%	29,742	-1.1%	29,549	-1.6%
											Δ% yoy
											1.0%
											-0.4%
											23.9%
											1.1%
											-12.2%
											16.4%
											20.7%
											-3.6%
											-10.3%
											8.1%
											-8.6%
											5.4%
											41.4%
-213	18.0%	-218	6.8%	-223	4.8%	-190	10.9%	-137	37.1%	-157	29.5%
											7.9%
											4.0%
											-1.1%
	1Q15 1Q15 3,631 3,435 196 1,053 621 375 57 2,595 1,193 558 560 310 -26 1,610 44.3% 676 18.6% 52,965	Δ% yoy Δ% yoy -2.6% -3.3% 12.3% -4.2% -12.9% 14.4% -1.6% -4.4% -8.4% 4.6% -7.7% 3.0% 12.2% -10.2% 37.1% -0.6%	2Q15 2Q15 3,744 3,505 239 1,109 622 416 71 2,614 1,185 583 549 325 -28 1,236 33.0% 830 22.2% 52,825	Δ% yoy Δ% yoy -1.6% -1.7% 1.3% -2.5% -14.3% 21.8% 2.1% -1.9% -6.2% 7.8% -6.4% 8.3% -3.3% -27.7% 21.3% -0.7%	3Q15 3Q15 3,752 3,539 213 1,170 639 453 79 2,592 1,151 577 550 336 -23 1,679 44.7% 791 21.1% 52,726	Δ% yoy Δ% yoy -1.4% -1.5% 0.7% -1.5% -12.1% 16.0% 10.0% -1.8% -6.3% 4.9% -5.6% 10.5% 15.8% -6.5% 28.6% -1.0%	1Q16 1Q16 3,548 3,352 196 1,059 573 438 48 2,483 1,064 590 537 311 -19 1,461 41.2% 778 21.9% 52,713	Δ% yoy Δ% yoy -2.3% -2.4% 0.1% 0.6% -7.7% 16.8% -15.8% -4.3% -10.8% 5.8% -4.1% 0.3% 24.7% -9.3% 15.1% -0.5%	2Q16 2Q16 3,699 3,468 231 1,117 580 466 72 2,488 1,053 610 506 338 -19 1,723 46.6% 797 21.5% 52,622	Δ% yoy Δ% yoy -1.2% -1.1% -3.4% 0.7% -6.9% 12.0% 1.1% -4.8% -11.1% 4.6% -7.8% 4.0% 32.4% 39.4% -4.0% -0.4%	3Q16 3Q16 3,789 3,526 263 1,183 561 527 96 2,499 1,032 624 503 354 -13 1,811 47.8% 823 21.7% 52,140

(1) M2M included

	Domestic Wireline Results - Reported Figures
											UNAUDITED FIGURES
	1Q15	Δ% yoy	2Q15	Δ% yoy	3Q15	Δ% yoy	1Q16	Δ% yoy	2Q16	Δ% yoy	3Q16	Δ% yoy
KPI's
Physical accesses ('000)	12,283	-5.7%	12,080	-5.8%	11,907	-5.9%	11,602	-5.5%	11,468	-5.1%	11,368	-4.5%
OLO Access (on TI infrastructure)	7,297	1.2%	7,375	1.6%	7,392	3.1%	7,543	3.4%	7,606	3.1%	7,600	2.8%
o/w ULL	5,460	1.2%	5,511	0.9%	5,517	2.9%	5,632	3.2%	5,680	3.1%	5,658	2.5%
o/w Virtual ULL	26	-6.5%	27	1.4%	29	16.7%	29	12.2%	28	2.7%	23	-19.4%
o/w Wholesale Line Rental	565	-14.4%	547	-13.7%	523	-14.1%	470	-16.9%	443	-19.1%	416	-20.6%
o/w Naked	1,207	7.3%	1,213	7.5%	1,218	5.4%	1,241	2.9%	1,256	3.5%	1,256	3.1%
o/w NGN	39	-	76	-	105	-	170	-	199	-	247	-
TI Retail Broadband Accesses ('000)	6,945	0.2%	6,971	0.5%	6,984	0.7%	7,067	1.8%	7,088	1.7%	7,123	2.0%
o/w Business	1,544	0.0%	1,522	-1.5%	1,505	-3.1%	1,480	-4.2%	1,472	-3.3%	1,470	-2.3%
o/w Consumer	5,401	0.2%	5,450	1.0%	5,479	1.8%	5,588	3.5%	5,616	3.1%	5,653	3.2%
o/w NGN	290	-	374	-	435	-	672	-	790	-	872	-
% flat offers on TI total portfolio (Consumer+Business)	92%	1.8pp	93%	1.9pp	93%	1.9pp	94%	1.8pp	94%	1.5pp	95%	1.4pp
BroadBand Accesses Wholesale ('000)	1,839	0.6%	1,850	1.7%	1,855	2.4%	1,888	2.6%	1,903	2.9%	1,918	3.4%
BB Arpu (euro/mese)	20.4	6.0%	20.9	6.7%	20.7	3.7%	21.5	5.2%	21.9	4.4%	22.4	8.1%
REVENUES(€ mln)	1Q15	Δ% yoy	2Q15	Δ% yoy	3Q15	Δ% yoy	1Q16	Δ% yoy	2Q16	Δ% yoy	3Q16	Δ% yoy
TOTAL	2,657	-4.1%	2,688	-1.8%	2,645	-2.7%	2,553	-3.9%	2,578	-4.1%	2,643	-0.1%
o/w Services	2,595	-4.4%	2,614	-1.9%	2,592	-1.8%	2,483	-4.3%	2,488	-4.8%	2,499	-3.6%
o/w Equipments	62	9.1%	74	1.4%	53	-32.5%	70	13.8%	90	20.7%	144	169.0%
TRADITIONAL SERVICES	1,193	-8.4%	1,185	-6.2%	1,151	-6.3%	1,064	-10.8%	1,053	-11.1%	1,032	-10.3%
o/w Voice	1,038	-7.6%	1,015	-7.1%	978	-7.3%	901	-13.2%	874	-13.9%	836	-14.4%
o/w Business Data & Others trad	155	-13.9%	170	-0.5%	173	-0.3%	163	5.3%	179	5.7%	195	12.9%
INNOVATIVE SERVICES	558	4.6%	583	7.8%	577	4.9%	590	5.8%	610	4.6%	624	8.1%
o/w Broadband	418	5.7%	430	6.8%	427	3.9%	447	6.9%	457	6.2%	471	10.2%
o/w Content	5	12.7%	5	4.8%	6	28.2%	4	-17.6%	4	-21.3%	4	-23.1%
o/w ICT Service	135	1.1%	148	10.7%	145	7.1%	139	3.2%	149	0.6%	149	3.0%
Domestic Wholesale	560	-7.7%	549	-6.4%	550	-5.6%	537	-4.1%	506	-7.8%	503	-8.6%
TIS Group	310	3.0%	325	8.3%	336	10.5%	311	0.3%	338	4.0%	354	5.4%
Subs. Adj. and Other	-26	12.2%	-28	-3.3%	-23	15.8%	-19	24.7%	-19	32.4%	-13	41.4%

	Domestic Mobile Results - Reported Figures
											UNAUDITED FIGURES
	1Q15	Δ% yoy	2Q15	Δ% yoy	3Q15	Δ% yoy	1Q16	Δ% yoy	2Q16	Δ% yoy	3Q16	Δ% yoy
KPI's
Total number of lines ('000) (1)	30,140	-2.8%	30,075	-1.9%	30,023	-1.2%	29,846	-1.0%	29,742	-1.1%	29,549	-1.6%
Churn Rate %	6.4%	0.3pp	5.5%	-0.4pp	5.8%	-0.5pp	5.6%	-0.8pp	5.3%	-0.2pp	5.9%	0.1pp
Total User Broadband (mln of users)	10.5	20.8%	10.8	17.5%	11.2	16.9%	11.6	11.1%	11.8	9.5%	12.1	7.7%
Total User LTE (mln of users)	1.8	-	2.7	-	3.4	-	5.0	-	5.7	-	6.2	-
Volumes of traffic (mln of minutes) (2)	16,155	8.0%	16,630	6.6%	16,339	5.1%	16,943	4.9%	17,381	4.5%	17,213	5.3%
Usage Voce (min/line/month)(3)	214	13.0%	223	11.5%	220	8.9%	233	8.8%	241	8.2%	241	9.5%
Usage Dati (GB/users/month)	1.3	14.3%	1.4	15.1%	1.6	18.3%	1.7	28.6%	1.9	36.0%	2.0	24.7%
ARPU(3)	11.3	-1.3%	11.9	0.2%	12.5	-0.2%	11.6	2.5%	12.1	1.5%	12.8	2.4%
REVENUES (€ mln), Reported figures	1Q15	Δ% yoy	2Q15	Δ% yoy	3Q15	Δ% yoy	1Q16	Δ% yoy	2Q16	Δ% yoy	3Q16	Δ% yoy
TOTAL	1,151	-2.0%	1,236	-2.2%	1,303	1.5%	1,186	3.0%	1,261	2.0%	1,300	-0.2%
SERVICES	1,053	-4.2%	1,109	-2.5%	1,170	-1.5%	1,059	0.6%	1,117	0.7%	1,183	1.1%
Traditional Services	621	-12.9%	622	-14.3%	639	-12.1%	573	-7.7%	580	-6.9%	561	-12.2%
Innovative Services	375	14.4%	416	21.8%	453	16.0%	438	16.8%	466	12.0%	527	16.4%
o/w Browsing	306	16.0%	339	20.7%	372	23.8%	356	16.3%	377	11.4%	392	5.4%
o/w Internet Content	69	8.1%	77	27.3%	80	-10.2%	83	19.4%	88	14.3%	135	67.6%
Wholesale Services	57	-1.6%	71	2.1%	79	10.0%	48	-15.8%	72	1.1%	96	20.7%
Handsets	98	29.0%	127	0.1%	133	39.3%	127	29.5%	144	13.7%	117	-12.0%
(1) M2M included

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

(3) Net of visitors

	Revised							UNAUDITED FIGURES
	1Q15	2Q15	3Q15	1Q16	Δ% yoy	2Q16	Δ% yoy	3Q16	Δ% yoy
KPI's - Mobile only
Estimated Total Penetration (%) (1)	139.0%	138.2%	134.8%	125.4%		124.0%		122.2%
Market Share on total lines(%) (1)	26.7%	26.4%	26.3%	26.1%	-0.6pp	25.3%	-1.2pp	25.2%	-1.1pp
Total Lines ('000) (2)	75,749	74,600	72,573	67,269	-11.2%	63,988	-14.2%	63,247	-12.9%
TOTAL ARPU (3)	16.7	16.1	16.4	17.2	3%	17.2	7%	18.4	12%
TOTAL MOU net of visitors	120	119	119	119	-1.4%	118	-0.4%	116	-2.1%
MAIN RESULTS (IAS/IFRS, R\$ mln)	1Q15	2Q15	3Q15	1Q16	Δ% yoy	2Q16	Δ% yoy	3Q16	Δ% yoy
REVENUES Reported	4,551	4,361	4,115	3,854	-15.3%	3,820	-12.4%	3,900	-5.2%
of which services	3,944	3,792	3,782	3,618	-8.3%	3,570	-5.9%	3,690	-2.4%
of which handsets	607	569	333	236	-61.1%	250	-56.1%	210	-36.9%
EBITDA Reported	1,341	1,276	1,285	1,107	-17.4%	1,189	-6.8%	1,270	-1.2%
EBITDA margin	29.5%	29.3%	31.2%	28.7%	-0.8pp	31.1%	1.8pp	32.6%	1.4pp
Capex Reported	924	1,184	1,168	710	-23.2%	975	-17.7%	1,122	-3.9%
% on revenues	20.3%	27.1%	28.4%	18.4%	-1.9pp	25.5%	-1.6pp	28.8%	0.4pp
	1Q15	1H15	9M15	1Q16	Δ% yoy	1H16	Δ% yoy	9M16	Δ% yoy
Exchange rate AVG (R\$ vs. euro)	3.22251	3.31144	3.52233	4.29753		4.13001		3.96106

(3) Gross of visitors

					3Q'16 Reported & Organic Figures (*): YoY trends
Revised											UNAUDITED FIGURES
		3Q'15				3Q'16				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		Change in consolid. area	Exchange rate impact
REVENUES						REVENUES
Domestic	3,752				3,752	Domestic	3,789		3,789	1.0	1.0
o/w Wireline Domestic	2,645 1,303				2,645 1,303	o/w Wireline Domestic	2,643		2,643	(0.1)	(0.1)
o/w Mobile Domestic Brasile	1,008		123		1,131	o/w Mobile Domestic Brasile	1,300 1,064		1,300 1,064	(0.2) 5.6	(0.2) (5.2)
Other Activities & Eliminations	17				17	Other Activities & Eliminations	-10		(10)	-	-
TI Group	4,777		123		4,900	TI Group	4,843		4,843	1.4	(1.2)
EBITDA						EBITDA
Domestic	1,679			53	1,732	Domestic	1,811	56	1,867	7.9	7.8
Brasile	318		33		351	Brasile	344	6	351	8.2	0.5
Other Activities & Eliminations	(14)			8	(6)	Other Activities & Eliminations	(3)		(3)	-	50.0
TI Group	1,983		33	61	2,077	TI Group	2,152	62	2,214	8.5	6.6
EBITDA Margin						EBITDA Margin
Domestic	44.7%				46.2%	Domestic	47.8%		49.3%	3.1 pp	3.1 pp
Brasile	31.5%				31.2%	Brasile	32.3%		33.1%	0.8 pp	1.9 pp
TI Group	41.5%				42.4%	TI Group	44.4%		45.7%	2.9 pp	3.3 pp
EBIT						EBIT
Domestic	868			53	921	Domestic	994	56	1,050	14.5	14.0
Brasile Other Activities & Eliminations	168 (18)		31	(77) 8	122 (10)	Brasile Other Activities & Eliminations	89 (2)	6	95 (2)	(47.0) -	(20.2) 80.0
TI Group	1,018		31	(16)	1,033	TI Group	1,081	62	1,143	6.2	10.6
EBIT Margin						EBIT Margin
Domestic	23.1%				24.5%	Domestic	26.2%		27.7%	3.1 pp	3.2 pp
Brasile TI Group	16.7% 21.3%				10.8% 21.1%	Brasile TI Group	8.4% 22.3%		9.1% 23.6%	-8.3 pp 1 pp	-1.7 pp 2.5 pp

Total 61	62	Gain on Brazilian Tower ** Total	(77) (16)	0 62
Other Costs & Charges 42	9	Other Costs & Charges	42	9
Labour cost 19	53	Labour Costs	19	53
Non recurring items on EBITDA 3Q15	3Q16	Non recurring items on EBIT	3Q15	3Q16

(*) Organic excluding exchange rate fluctuations & non-recurring items

(**) Same exchange rate 3Q16