Telecom Italia Rsp — Earnings Release 2016

Jul 27, 2016

TELECOM ITALIA GROUP

2Q'16 Results Milan - July 27, 2016

2Q'16 Update

Flavio Cattaneo - Piergiorgio Peluso

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, estimates regarding future growth in the different business lines and the global business, financial results and other aspects of the activities and situation 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 publicly release 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 filings made from time to time 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 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 six months ended 30 June 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). Please note that the limited review on the Telecom Italia Group Half-Year Condensed Consolidated Financial Statements at 30 June 2016 has not yet been completed.

The comparative financial information as of 31 December 2015 and for the six months period ended 30 June 2015 have been revised (segment information included) as a result of the prior years' incorrect accounting entries, already disclosed to the market, identified by the TIM Brasil's Management in connection with the recognition of service revenue from the sale of prepaid traffic. Such revision did not have any material impact on the consolidated income statement for the six month period ended 30 June 2015.

Persidera, as a result of the change in its operational mission, is included, starting from 1 January 2016, in the Domestic Business Unit.

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

Agenda

Action Plan Progress and Outlook - Flavio Cattaneo

2Q'16 Results - Piergiorgio Peluso

Take-Aways - Flavio Cattaneo

Back-up

The Best Quarterly YoY Domestic Performance Since 2009

Domestic: Solid Performance in 2Q'16

KPIs building up, Positive Outlook for 2H

Domestic: Upgrading FY'16 EBITDA Target

Italy: Ultra BroadBand Roll-Out more than on-track

TI is moving on with its fiber plan, while broadening and improving its LTE footprint

Technology	Current coverage	YE'16 Target
FttH/B up to 1Gbps	528,000 households, optical cable being deployed to and beyond the building in 14 cities	During August / September, work extended st- to all of the 30 1 wave cities. At YE, coverage increased to 900,000 households**
FttC up to 200 Mbps	• 12,529,000 households passed • Sellable in 1,250 cities	• 13,600,000 households passed • Sellable in 1,600 cities
4,000 Construction Sites in operation
LTE up to 150 Mbps*	93.7% population coverage in 6,285 cities	Coverage increased to 94.5%, reaching 6,350 cities

FTTH: a «Faster and Deeper» Combination

More Infrastructure for Wireless Expansion

No change in 2018 Capex Efficiency run rate of € 800mln

TIM Brasil 2016-'18 Plan Update: Resetting for Growth

2018 Cash Costs	Maintain	Innovative &	Faster and Wider
Efficiency Target	Focus	Differentiated	Mobile BroadBand
increased by R\$1.6bln*	on Mobile	Offers	Coverage**
Cumulated 2016-'18 cash costs savings vs previous Plan: R\$4.5bln Organization rightsizing Improve E2E processes & systems Digital penetration in key commercial processes	 Fully exploit Tim Mobile positioning  Operate in line with a more rational market, ready to seize a rebound  Effective and efficient Quality  Selective roll-out of residential wireline UBB: focus on MSAN occupancy	 Data at core of offers  Multimedia & digital service hub strategy  "Mass customization"  Data content delivery optimization platform  Pay per use vs. recurring  Bundle segmentation  Data-only plans  Improved Customer Experience as key factor in Postpaid	 Expand 4G coverage leadership (1H'16: 64%; cities: 579 1H'16 ~1.000 YE'16)  Fast upgrade of 3G coverage (1H'16: 83%; cities: 1,963 1H'16 ~3.000 YE'16)  Better use of infrastructure and spectrum  Ahead with FTTS plan

Updated 2018 Leverage projection after Group Cost Efficiency Program and no Sale of Inwit

€bln

2016 - 2018 Plan Horizon

~€2.1bln cum. 3-yr Organic FCF supported by Efficiencies and Top Line Outlook

Action Plan Progress and Outlook - Flavio Cattaneo

2Q'16 Results - Piergiorgio Peluso

Take-Aways - Flavio Cattaneo

Back-up

2Q'16 - TI Group Results Overview

• Inwit Brazil Domestic Group
• Revenues: € 4.7 bln
• EBITDA* : € 2.0 bln
• Revenues: € 3.7 bln
• EBITDA* : € 1.7 bln
• Revenues: € 1.0 bln EBITDA* : € 0.3 bln

• Business Plan enriched with > € 0.15 bln mobile infrastructure Capex in 2016-'18

• Capex: € 1.0 bln

• Net Debt: € 27.5 bln
• NGN: 51% Households in 1,250 Cities
• 4G: 93.7% of Population in 6,285 Cities (350 4G Plus)
• 4G: 64% Coverage, 579 Cities
• 3G: 83% Coverage, 1,963 Cities
• Stepping ahead in Italian Mobile Infrastructure Leadership

2Q'16 Domestic: Revenues & EBITDA

Domestic Mobile Performance

Domestic Fixed Performance

1H'16 Domestic: Focus on Investments

€mln

• Innovative Investments (+184 €mln YoY) driven by a faster pace in core NGN & LTE components and additional Capex in Cloud Services
• 77% Innovative and 83% Traditional Capex are Network and IT, indicating strong focus on Infrastructure

Focus on Domestic Opex

1H'16 Net Debt Evolution

Agenda

Action Plan Progress and Outlook - Flavio Cattaneo

2Q'16 Results - Piergiorgio Peluso

Take-Aways - Flavio Cattaneo

Back-up

Take-Aways

Agenda

Action Plan Progress and Outlook - Flavio Cattaneo

2Q'16 Results - Piergiorgio Peluso

Take-Aways - Flavio Cattaneo

Back-up

Group 2Q'16: Organic Revenues & EBITDA

Organic*, €mln, % YoY

Group 1H'16: Capex & Net Debt

€mln, % YoY

• OpFCF and M&A more than offset Cash Financial Expenses, Cash Taxes and Dividends
• Net Debt variation vs YE'15 mainly due to exchange rate effect and non cash impact related to IAS 17 (lease-back)

* Before non-recurring items and excluding exchange rate fluctuations ** Other activities & eliminations included

OpFCF Generation in 1H'16

€mln, Reported, % YoY

Telecom Italia Group Results - 2Q'16

Maturities & Liquidity Margin

€mln

(1) € 29,931 mln is the nominal amount of outstanding medium-long term debt. By adding Mandatory Convertible Bond (€ 1,300 mln), IAS adjustments (€ 1,100 mln) and current financial liabilities (€ 589 mln), the gross debt figure of € 32,290 mln is reached

(2) Committed Bank lines are undrawn

Well Diversified and Hedged Debt

Net financial position 27,514

Maturities and Risk Management

Average m/l term maturity: 7.94 years (bond only 8.35 years)

Fixed rate portion on gross debt approximately 69.9%

Around 38% of outstanding bonds (nominal amount) denominated in USD and GBP and is fully hedged

Cost of debt: ~5.1 %

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 2,316 €/mln (of which 392 €/mln on bonds)

• the impact on Financial Assets is equal to 1,760 €/mln.

Therefore, the Net Financial Indebtedness is adjusted by 556 €/mln.

The difference between total financial assets (€ 5,406 mln) and C&CE and marketable securities (€ 3,790 mln) is equal to € 1,616 mln and refers to positive MTM derivatives (accrued interests and exchange rate) for € 1,430 mln, financial receivables for lease for € 112 mln and other credits for € 74 mln.

Telecom Italia Group Results - 2Q'16

Domestic Mobile Details

000, €mln, % YoY

Telecom Italia Group Results - 2Q'16

5,9%

4,7%

1.3%

11,775

+11.4%

Domestic Fixed Details

Domestic Fiber & LTE Coverage Trend

Domestic cost program fully on track with strong improvement in efficiency and profitability

Domestic - Cash Cost Efficiency Dashboard

Run rate @2018	Original '16-'18 Efficiency Target	Additional Efficiency '16-'18 Target	New Efficiency '16-'18 Target
Process Driven Costs	0.2 bln€	+0.12 bln€	0.32 bln€
Market Driven Costs	0.1 bln€	+0.13 bln€	0.23 bln€
Labour Costs	0.1 bln€	+0.1 bln€	0.2 bln€
Other Costs	-	+0.05 bln €	0.05 bln€
Total Opex	0.4 bln€	+0.4 bln€	0.8 bln€
Traditional	0.2 bln€	+0.3 bln€	0.5 bln€
NGN Optimization	-	+0.15 bln€	0.15 bln€
Real Estate & Other	-	+0.15 bln€	0.15 bln€
Total Capex	0.2 bln€	+0.6 bln€	0.8 bln€
Total Cash Cost Efficiency	0.6 bln€	+1.0 bln€	1.6 bln€

TIM Brasil - Cash Cost Efficiency Dashboard*

TIM Brasil: 2Q'16 Results

R\$mln, % YoY

Mobile Service Net Revenues (YoY%) show first signs of recovery

For further questions please contact the IR Team