Telecom Italia Rsp

Earnings Release • May 13, 2016

Dear Madam/Sir,

Please find attached the Telecom Italia Group press release on 1Q'16 Results and 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 REVENUES:

Domestic Revenues posted in 1Q'16 -2.3% YoY. This performance is in line with the previous quarter.

DOMESTIC MOBILE:

Another good quarter on mobile both on Total and on Service Revenues, as LTE penetration on total MBB base overcame 42%. Enabling 4G handset sales maintain a strong traction.

• Continued improvement in Mobile Service Revenues growth in 1Q'16 +0.6% YoY: +0.5pp vs 4Q'15
• Positive performance of Total Revenues: +3% YoY in 1Q'16 vs +0.7% in 4Q'15
• Calling Customer base stabilization, due to better competitive positioning: +52K (+0.2% YoY)
• ARPU improvement: 11.6 €/month in 1Q'16 (+2.5% YoY)
• Total BB users continued growing QoQ: +135k in 1Q'16, now at 11.6 mln users. LTE users increased by +563k QoQ, now at 5 mln users.

DOMESTIC FIXED:

Continued positive KPIs performance on BB: ARPU up. Fixed service revenues affected by new wholesale rates. Better line losses performance (-140k in 1Q'16 vs -165k in 4Q'15), driven by Consumer Segment.

• Fixed Revenues: - 3.9% YoY in 1Q'16 (-4.1% in 1Q'15)
• Line Losses significantly improving: -140k vs -165k in 4Q'15, -196K in 1Q'15
• Solid performance in Total BB Net Adds: +44k QoQ in 1Q'16, reaching over 7 mln users
• Positive momentum on Fiber: +134k net adds vs +104k in 4Q'15
• BB ARPU further improved due to an increased spread of flat and fiber offers: 21.5 €/month in 1Q'16 (+5.2% YoY).

DOMESTIC EBITDA:

Slight Organic EBITDA QoQ erosion ( -0.8 pp vs 4Q'15) due to wholesale price impact revision and higher volume-driven costs related to handsets. YoY performance: -5.2% YoY in 1Q'16 vs -4.4% YoY in 4Q'15.

EBITDA margin at 43.1%.

Reported EBITDA performance was impacted by 67 €mln of no recurring items, related to costs for labour restructuring program.

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

	1Q'15	1Q'16		Δ YoY
	Mln€	Mln€	abs	%
EBITDA organic	1.612	1.528	-84	-5.2%
Exchange Rate Impact	1	0	-1
Labour Costs	0	65	+65
Other Costs & Charges	1	2	+1
Non Recurring Items	2	67	+65
EBITDA reported	1.610	1.461	-149	-9.3%

DOMESTIC CAPEX:

Continued Growth on Innovative Capex (+169 € mln YoY) reaching 390 mln€, driven by a faster pace in NGN & LTE componets and additional Capex in Transformation Projects. Total Capex were 778 mln€.

BRAZIL

Financial Highlights

• Total Revenues impacted by lower handset sales, a still challenging macro and regulatory environment: 1Q'16 -15.3% YoY. Total Service Revenues in 1Q'16: -8.3% YoY.
• Mobile Service Revenues decline due to further MTR cut and Voice/SMS volume decrease: 1Q'16 -9% YoY. Excluding MTR cut, Mobile Service Revenues declined by -5% YoY.
• 1Q'16 EBITDA reported : -17.4% YoY; organic -15.0% YoY. It was impacted by:
• o traditional services and incoming revenues trend, not offset by innovative services growth,
• o more costs from higher off-net traffic and
• o higher bad debt provisions.
• Organic EBITDA margin slightly up to 29.6% in 1Q'16 (+0.1pp vs. 29.5% in 1Q'15).
• Total Capex decreasing (-23.2% YoY in 1Q'16) benefitting from efficiency gains and better negotiation process. Capex reached 18.4% on revenues (-1.9pp YoY)

Operational Highlights

• Confirming #1 position in 4G coverage: 439 cities, ~7x vs. March 2015
• 4G Network evolving fast: ~60% of urban population covered with 4G.
• 4G users reached over 9 million lines, or near 14% of total subscribers
• 3G coverage expanding: 21 new cities in 1Q16, reaching 1,860 cities or 82.3% of urban population.
• Mobile ARPU reached R\$17.2/month in 1Q16, up 3.0% YoY, also driven by the success of the new portfolio

GROUP NET DEBT:

Net Financial Position stood at 27.139 bln € at 1Q'16, -0.139 bln € QoQ, due to an efficiency gain and better negotiation process in Brazil and due to more investment in Italy mainly driven by UBB Network roll-out & Transformational Projects

With our best regards,

TI Investor Relations Team

1Q'16 Financial and operating data

Index

click on the links below

Disclaimer

P&L Group Q

Key Financial data by BU quarter

Net Debt & Cashflow

Balance Sheet

Domestic Business Results

Domestic Wireline Results

TELECOM ITALIA INVESTOR RELATIONS

Domestic Mobile Results investor_relations@telecomitalia.it

TIM Brasil Results Website link:

Rep&Org Telecom Italia Group

Telecom Italia Investor Relations

Disclaimer

The financial and operating data have been extracted or derived, with the exception of some data, from the Condensed Consolidated Financial Statements as of and for the three months ended 31 March 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 three months ended 31 March 2016 have been applied on a basis consistent with those adopted in the Annual Consolidated Financial Statements at 31 December 2015, to which reference can 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 three months ended 31 March 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 period ended 31 March 2015 have been revised, segment information included. Furthermore, the Sofora - Telecom Argentina group, which was disposed of on 8 March 2016, is classified as Discontinued operations

Starting from 1 January 2016, as a result of the change in the operational mission of Persidera, the Media Business Unit was included in the Domestic Business Unit, while for prior periods under comparison it was reclassified under Other activities & Eliminations.

	Revised	UNAUDITED FIGURES
€ mln	1Q15	1Q16
REVENUES	5,054	4,440
Other Income	53	47
TOTAL OPERATING REVENUES AND OTHER INCOME	5,107	4,487
Acquisition of goods and services	(2,171)	(1,923)
Employee benefits expenses	(833)	(848)
Other operating expenses	(265)	(247)
Internally generated assests and Others	195	243
EBITDA	2,033	1,712
EBITDA Margin	40.2%	38.6%
Depreciation and amortization	(1,052)	(1,009)
Impairment reversals (losses) on non-current assets		(2)
Gains (losses) on disposals of non-current assets		3
EBIT	981	704
EBIT Margin	19.4%	15.9%
Income (loss) equity invest. valued equity method	2
Net Financial Income / (Expenses)	(817)	(26)
Profit (loss) before tax from continuing operations	166	678
Income tax expense	(74)	(221)
Profit (loss) from continuing operations	92	457
Profit (loss) from Discontinued operations/Non-current assets held for sale	169	47
Prifit (loss) for the year	261	504
Attributable to:
Owners of the Parent	82	433
Non-controlling interests	179	71

REVENUES (€ mln) Domestic	1Q15
		1Q16
	3,631	3,548
o/w Wireline Domestic	2,657	2,553
o/w Mobile Domestic	1,151	1,186
Brasile	1,412	897
Other activities & Elim.	11	(5)
TI Group	5,054	4,440
EBITDA Reported (€ mln)
Domestic	1,610	1,461
Brasile	416	258
Other activities & Elim.	7	(7)
TI Group	2,033	1,712
EBITDA Margin Reported
Domestic	44.3%	41.2%
Brasile	29.5%	28.8%
TI Group	40.2%	38.6%
EBIT Reported (€ mln)
Domestic	814	662
Brasile	165	49
Other activities & Elim.	2	(7)
TI Group	981	704
EBIT Margin Reported
Domestic	22.4%	18.7%
Brasile	11.7%	5.5%
TI Group	19.4%	15.9%
CAPEX (€ mln)
Domestic	676	778
Brasile	287	166
Elim & Adj	1	0
TI Group	964	944
CAPEX ON SALES (%)
Domestic	18.6%	21.9%
Brasile	20.3%	18.5%
TI Group	19.1%	21.3%

Net Cash Flow & Net Debt Dynamics	Revised	UNAUDITED FIGURES
	1Q15	1Q16
(€ mln)
EBITDA	2,033	1,712
CAPEX	(964)	(944)
Change in net operating working capital:	(1,502)	(750)
Change in inventories	(40)	(87)
Change in trade receivables and net amounts due from customers on construction contracts	(345)	30
Change in trade payables (*)	(979)	(566)
Other changes in operating receivables/payables	(138)	(127)
Change in provisions for employee benefits	(6)	59
Change in operating provisions and Other changes	(16)	(52)
Net operating Free Cash Flow	(455)	25
Sale of investments and other disposals flow	3	707
Share capital increases/reimbursements, including incidental costs	186
Financial investments flow		(9)
Dividends payment	(3)
Change in finance lease contracts		(46)
Finance expenses, income taxes and other net non-operating requirements flow	(486)	(500)
Reduction/(Increase) in adjusted net financial debt from continuing operations	(755)	177
Reduction/(Increase) in net financial debt from Discontinued operations/Non-current assets held for sale	(24)	(38)
Reduction/(Increase) in adjusted net financial debt	(779)	139
OPENING NET FINANCIAL DEBT (Adjusted)	26,651	27,278
Net cash flow	(779)	139
	27,430	27,139
ENDING NET FINANCIAL DEBT (Adjusted)
Adj for fair value valuation of derivatives and related underlyings	1,573	1,094

Consolidated Balance Sheet
	Revised	UNAUDITED FIGURES
€ mln	FY15	1Q16
ASSETS NON-CURRENT ASSETS Intangible assets
Goodwill	29,383	29,436
Intangible assets with a finite useful life	6,480	6,516
Tangible assets	35,863	35,952
Property, plant and equipment owned	12,659	12,816
Assets held under finance leases	2,208	2,210
	14,867	15,026
Other non-current assets
Investments in associates and joint ventures accounted for using the equity method Other investments	41 45	41 41
Securities, financial receivables and other non-current financial assets	2,989	2,766
Miscellaneous receivables and other non-current assets	1,778	1,899
Deferred tax assets	853	894
	5,706	5,641
TOTAL NON-CURRENT ASSETS (A)	56,436	56,619
CURRENT ASSETS
Inventories Trade and miscellaneous receivables and other current assets	254 5,112	341 5,534
Current income tax receivables	163	26
Other investments
Securities other than investments, financial receivables and other current financial assets Cash and cash equivalents	1,840 3,559	1,130 2,665
Current assets sub-total	10,928	9,696
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
TOTAL ASSETS (A+B)	71,268	66,315
EQUITY AND LIABILITIES
EQUITY
Equity attributable to equity holders of the Parent	17,554	18,181
Equity attributable to Minority Interests	3,695	2,035
TOTAL EQUITY (C)	21,249	20,216
NON-CURRENT LIABILITIES
Non-current financial liabilities	30,518	30,354
Employee benefits	1,420	1,459
Deferred tax liabilities Provisions	323 551	367 551
Miscellaneous payables and other non-current liabilities	1,110	1,140
TOTAL NON-CURRENT LIABILITIES (D)	33,922	33,871
CURRENT LIABILITIES
Current financial liabilities Trade and miscellaneous payables and other current liabilities	6,224 7,882	4,440 7,701
Current income tax payables	110	87
Current liabilities sub-total (E)	14,216	12,228
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
TOTAL LIABILITIES (F=D+E)	50,019	46,099

TOTAL EQUITY AND LIABILITIES (C+F) 71,268 66,315

Domestic Business Results - Reported Figures

											UNAUDITED FIGURES
	1Q15	Δ% yoy	2Q15	Δ% yoy	3Q15	Δ% yoy	4Q15	Δ% yoy	FY15	Δ% yoy	1Q16	Δ% yoy
KPI's ('000)
Wireline
Physical accesses	12,283	-5.7%	12,080	-5.8%	11,907	-5.9%	11,742	-5.9%	11,742	-5.9%	11,602	-5.5%
Broadband (retail+wholesale)	8,784	0.3%	8,821	0.7%	8,839	1.1%	8,890	1.6%	8,890	1.6%	8,955	1.9%
Mobile
Total lines	30,140	-2.8%	30,075	-1.9%	30,023	-1.2%	30,007	-1.1%	30,007	-1.1%	29,846	-1.0%
€ mln	1Q15	Δ% yoy	2Q15	Δ% yoy	3Q15	Δ% yoy	4Q15	Δ% yoy	FY15	Δ% yoy	1Q16	Δ% yoy
REVENUES	3,631	-2.6%	3,744	-1.6%	3,752	-1.4%	3,874	-2.3%	15,001	-2.0%	3,548	-2.3%
o/w Services	3,435	-3.3%	3,505	-1.7%	3,539	-1.5%	3,578	-1.1%	14,058	-1.9%	3,352	-2.4%
o/w Equipments	196	12.3%	239	1.3%	213	0.7%	296	-15.0%	943	-2.7%	196	0.1%
o/w Domestic Mobile Services	1,053	-4.2%	1,109	-2.5%	1,170	-1.5%	1,184	0.1%	4,517	-2.0%	1,059	0.6%
o/w Traditional	621	-12.9%	622	-14.3%	639	-12.1%	621	-10.6%	2,503	-12.5%	573	-7.7%
o/w Innovative	375	14.4%	416	21.8%	453	16.0%	484	19.9%	1,728	18.1%	438	16.8%
o/w Wholesale	57	-1.6%	71	2.1%	79	10.0%	78	-6.2%	286	0.9%	48	-15.8%
o/w Domestic Wireline Services	2,595	-4.4%	2,614	-1.9%	2,592	-1.8%	2,572	-3.1%	10,372	-2.8%	2,483	-4.3%
o/w Traditional Services	1,193	-8.4%	1,185	-6.2%	1,151	-6.3%	1,109	-9.6%	4,638	-7.6%	1,064	-10.8%
o/w Innovative Services	558	4.6%	583	7.8%	577	4.9%	596	3.8%	2,314	5.2%	590	5.8%
o/w Domestic Wholesale	560	-7.7%	549	-6.4%	550	-5.6%	546	1.2%	2,205	-4.8%	537	-4.1%
o/wTIS Group	310	3.0%	325	8.3%	336	10.5%	343	1.2%	1,314	5.6%	311	0.3%
o/w Subs. Adj. and Other	-26	12.2%	-28	-3.3%	-23	15.8%	-23	7.6%	-99	8.2%	-19	24.7%
Elimination & Other	-213	18.0%	-218	6.8%	-223	4.8%	-177	18.9%	-831	12.2%	-190	10.9%
EBITDA	1,610	-10.2%	1,236	-27.7%	1,679	-6.5%	1,042	-38.8%	5,567	-20.4%	1,461	-9.3%
EBITDA Margin	44.3%		33.0%		44.7%		26.9%		37.1%		41.2%
Capex	676	37.1%	830	21.3%	791	28.6%	1,603	61.8%	3,900	40.1%	778	15.1%
% on revenues	18.6%		22.2%		21.1%		41.4%		26.0%		21.9%
Headcount at period-end ('000)	52,965	-0.6%	52,825	-0.7%	52,726	-1.0%	52,644	-0.8%	52,644	-0.8%	52,713	-0.5%

	Domestic Wireline Results - Reported Figures
											UNAUDITED FIGURES
	1Q15	Δ% yoy	2Q15	Δ% yoy	3Q15	Δ% yoy	4Q15	Δ% yoy	FY15	Δ% yoy	1Q16	Δ% yoy
KPI's
Physical accesses ('000)	12,283	-5.7%	12,080	-5.8%	11,907	-5.9%	11,742	-5.9%	11,742	-5.9%	11,602	-5.5%
OLO Access (on TI infrastructure)	7,297	1.2%	7,375	1.6%	7,392	3.1%	7,467	3.4%	7,467	3.4%	7,543	3.4%
o/w ULL	5,460	1.2%	5,511	0.9%	5,517	2.9%	5,573	3.1%	5,573	3.1%	5,632	3.2%
o/w Virtual ULL	26	-6.5%	27	1.4%	29	16.7%	28	17.4%	28	17.4%	29	12.2%
o/w Wholesale Line Rental	565	-14.4%	547	-13.7%	523	-14.1%	497	-15.4%	497	-15.4%	470	-16.9%
o/w Naked	1,207	7.3%	1,213	7.5%	1,218	5.4%	1,230	3.8%	1,230	3.8%	1,241	2.9%
o/w NGN	39	-	76	-	105	-	139	-	139	-	170	-
TI Retail Broadband Accesses ('000)	6,945	0.2%	6,971	0.5%	6,984	0.7%	7,023	1.5%	7,023	1.5%	7,067	1.8%
o/w Business	1,544	0.0%	1,522	-1.5%	1,505	-3.1%	1,488	-4.1%	1,488	-4.1%	1,480	-4.2%
o/w Consumer	5,401	0.2%	5,450	1.0%	5,479	1.8%	5,535	3.1%	5,535	3.1%	5,588	3.5%
o/w NGN	290	-	374	-	435	-	538	-	538	-	672	-
% flat offers on TI total portfolio (Consumer+Business)	92%	1.8pp	93%	1.9pp	93%	1.9pp	94%	1.9pp	94%	1.9pp	94%	1.8pp
BroadBand Accesses Wholesale ('000)	1,839	0.6%	1,850	1.7%	1,855	2.4%	1,867	2.1%	1,867	2.1%	1,888	2.6%
BB Arpu (euro/mese)	20.4	6.0%	20.9	6.7%	20.7	3.7%	21.2	4.9%	20.8	5.3%	21.5	5.2%
REVENUES(€ mln)	1Q15	Δ% yoy	2Q15	Δ% yoy	3Q15	Δ% yoy	4Q15	Δ% yoy	FY15	Δ% yoy	1Q16	Δ% yoy
TOTAL	2,657	-4.1%	2,688	-1.8%	2,645	-2.7%	2,664	-3.9%	10,654	-3.1%	2,553	-3.9%
o/w Services	2,595	-4.4%	2,614	-1.9%	2,592	-1.8%	2,572	-3.1%	10,372	-2.8%	2,483	-4.3%
o/w Equipments	62	9.1%	74	1.4%	53	-32.5%	92	-21.7%	282	-13.8%	70	13.8%
TRADITIONAL SERVICES	1,193	-8.4%	1,185	-6.2%	1,151	-6.3%	1,109	-9.6%	4,638	-7.6%	1,064	-10.8%
o/w Voice	1,038	-7.6%	1,015	-7.1%	978	-7.3%	944	-11.9%	3,975	-8.5%	901	-13.2%
o/w Traffic	353	-6.3%	359	-1.9%	348	1.6%	339	-9.5%	1,399	-4.1%	324	-8.4%
o/w Access	612	-8.0%	586	-9.3%	562	-10.9%	539	-13.0%	2,299	-10.3%	515	-15.9%
o/w Voice VAS	30	-6.7%	29	-12.9%	28	-18.0%	27	-17.1%	115	-13.7%	26	-15.4%
o/w Rental & other	43	-12.1%	41	-14.3%	40	-16.0%	38	-13.2%	161	-13.9%	37	-13.7%
o/w Business Data & Others trad	155	-13.9%	170	-0.5%	173	-0.3%	165	6.9%	663	-2.3%	163	5.3%
o/w Data Services	118	-6.8%	120	-4.3%	110	-9.8%	117	-4.9%	465	-6.4%	112	-4.8%
o/w Rental & other	37	-30.4%	50	10.0%	63	22.3%	48	53.1%	198	9.0%	51	37.3%
INNOVATIVE SERVICES	558	4.6%	583	7.8%	577	4.9%	596	3.8%	2,314	5.2%	590	5.8%
o/w Broadband	418	5.7%	430	6.8%	427	3.9%	437	5.8%	1,712	5.5%	447	6.9%
o/w Access	389	6.1%	403	7.7%	399	4.7%	410	6.7%	1,600	6.3%	420	7.9%
o/w Bundles Services	10	2.1%	10	-2.1%	10	0.1%	9	-5.9%	39	-1.5%	9	-5.4%
o/w Others	19	-0.8%	18	-5.0%	18	-8.8%	18	-6.6%	72	-5.4%	17	-6.4%
o/w Content	5	12.7%	5	4.8%	6	28.2%	4	-13.1%	20	7.5%	4	-17.6%
o/w ICT Service	135	1.1%	148	10.7%	145	7.1%	155	-0.9%	582	4.3%	139	3.2%
Domestic Wholesale	560	-7.7%	549	-6.4%	550	-5.6%	546	1.2%	2,205	-4.8%	537	-4.1%
TIS Group	310	3.0%	325	8.3%	336	10.5%	343	1.2%	1,314	5.6%	311	0.3%
Subs. Adj. and Other	-26	12.2%	-28	-3.3%	-23	15.8%	-23	7.6%	-99	8.2%	-19	24.7%

			Domestic Mobile Results -			Reported Figures
											UNAUDITED FIGURES
	1Q15	Δ% yoy	2Q15	Δ% yoy	3Q15	Δ% yoy	4Q15	Δ% yoy	FY15	Δ% yoy	1Q16	Δ% yoy
KPI's
Total number of lines ('000) (1)	30,140	-2.8%	30,075	-1.9%	30,023	-1.2%	30,007	-1.1%	30,007	-1.1%	29,846	-1.0%
Churn Rate %	6.4%	0.3pp	5.5%	-0.4pp	5.8%	-0.5pp	5.7%	-0.1pp	23.4%	-0.7pp	5.6%	-0.8pp
Total User Broadband (mln of users)	10.5	20.8%	10.8	17.5%	11.2	16.9%	11.5	14.3%	11.5	14.3%	11.6	11.1%
Total User LTE (mln of users)	1.8	-	2.7	-	3.4	-	4.4	-	4.4	-	5.0	-
Volumes of traffic (mln of minutes) (2)	16,155	8.0%	16,630	6.6%	16,339	5.1%	16,998	2.7%	66,122	5.5%	16,943	4.9%
o/w Outgoing traffic volumes (mln of minutes) (3)	10,821	4.5%	10,983	3.3%	10,711	1.9%	11,096	-0.8%	43,611	2.2%	10,999	1.6%
o/w Incoming traffic volumes (mln of minutes)	5,335	15.7%	5,647	13.9%	5,627	11.8%	5,902	9.8%	22,512	12.7%	5,945	11.4%
Usage Voce (min/line/month)(4)	214	13.0%	223	11.5%	220	8.9%	232	6.2%	222	9.8%	233	8.8%
Usage Dati (GB/users/month)	1.3	14.3%	1.4	15.1%	1.6	18.3%	1.6	15.9%	1.5	15.9%	1.7	28.6%
ARPU(4)	11.3	-1.3%	11.9	0.2%	12.5	-0.2%	12.8	0.8%	12.1	-0.1%	11.6	2.5%
REVENUES (€ mln), Reported figures	1Q15	Δ% yoy	2Q15	Δ% yoy	3Q15	Δ% yoy	4Q15	Δ% yoy	FY15	Δ% yoy	1Q16	Δ% yoy
TOTAL	1,151	-2.0%	1,236	-2.2%	1,303	1.5%	1,378	0.7%	5,068	-0.5%	1,186	3.0%
SERVICES	1,053	-4.2%	1,109	-2.5%	1,170	-1.5%	1,184	0.1%	4,517	-2.0%	1,059	0.6%
Traditional Services	621	-12.9%	622	-14.3%	639	-12.1%	621	-10.6%	2,503	-12.5%	573	-7.7%
o/w Outgoing voice (5)	463	-12.6%	455	-14.3%	461	-14.0%	432	-13.8%	1,810	-13.7%	404	-12.8%
o/w Incoming voice	58	12.3%	62	9.9%	65	14.4%	69	16.2%	254	13.3%	67	15.7%
o/w Messaging	100	-24.2%	106	-24.0%	113	-15.6%	120	-10.6%	439	-18.6%	102	2.0%
Innovative Services	375	14.4%	416	21.8%	453	16.0%	484	19.9%	1,728	18.1%	438	16.8%
o/w Browsing	306	16.0%	339	20.7%	372	23.8%	392	20.5%	1,409	20.3%	356	16.3%
o/w Internet Content	69	8.1%	77	27.3%	80	-10.2%	92	17.4%	319	9.0%	83	19.4%
Wholesale Services	57	-1.6%	71	2.1%	79	10.0%	78	-6.2%	286	0.9%	48	-15.8%
Handsets	98	29.0%	127	0.1%	133	39.3%	194	4.8%	551	14.1%	127	29.5%

(2) Incoming+Outgoing Mobile Retail + Wholesale excluding Visitors

(3) Roaming volumes not included

(4) Net of visitors

(5) Outgoing voice revenues include roaming revenues

	Revised	UNAUDITED FIGURES
	1Q15	1Q16	Δ% yoy
KPI's - Mobile only
Estimated Total Penetration (%) (1)	139.0%	125.4%
Market Share on total lines(%) (1)	26.7%	26.1%	-0.6pp
Total Lines ('000) (1) (2)	75,749	67,269	-11.2%
TOTAL ARPU (3)	16.7	17.2	3.0%
TOTAL MOU net of visitors	120	119	-1.4%
MAIN RESULTS (IAS/IFRS, R\$ mln)	1Q15	1Q16	Δ% yoy
REVENUES Reported	4,551	3,854	-15.3%
of which services	3,944	3,618	-8.3%
of which handsets	607	236	-61.1%
EBITDA Reported	1,341	1,107	-17.4%
EBITDA margin	29.5%	28.7%	-0.8pp
Capex Reported	924	710	-23.2%
% on revenues	20.3%	18.4%	-1.9pp
	1Q15	1Q16	Δ% yoy
	3.22251	4.29753

1Q'16 Reported & Organic Figures: YoY trends

Revised UNAUDITED FIGURES

	1Q'16	Δ% yoy reported	Δ% yoy organic
Reported Figures (a)			Non Organic elements (b)	Organic figures (c=a+b)	Reported figures (d)				(d/a-1)	(d/c-1)
€ mln		Change in consolid. area	Exchange rate impact
REVENUES					REVENUES
Domestic	3,631		2	3,633	Domestic	3,548	(2.3)	(2.3)
o/w Wireline Domestic	2,657		2	2,659	o/w Wireline Domestic	2,553	(3.9)	(4.0)
o/w Mobile Domestic	1,151		0	1,151	o/w Mobile Domestic	1,186	3.0	3.0
Brasile	1,412		(353)	1,059	Brasile	897	(36.5)	(15.3)
Other Activities & Eliminations	11			11	Other Activities & Eliminations	(5)	-
TI Group	5,054		(351)	4,703	TI Group	4,440	(12.1)	(5.6)
EBITDA					EBITDA
Domestic	1,610		1	1,611	Domestic	1,461	(9.3)	(9.3)
Brasile	416		(104)	312	Brasile	258	(38.0)	(17.4)
Other Activities & Eliminations	7			7	Other Activities & Eliminations	(7)	-	-
TI Group	2,033		(103)	1,930	TI Group	1,712	(15.8)	(11.3)
EBITDA Margin					EBITDA Margin
Domestic	44.3%			44.3%	Domestic	41.2%	-3.1 pp	-3.1 pp
Brasile	29.5%			29.5%	Brasile	28.8%	-0.7 pp	-0.8pp
TI Group	40.2%			41.0%	TI Group	38.6%	-1.6 pp	-2.4 pp
EBIT					EBIT
Domestic	814		0	814	Domestic	662	(18.7)	(18.7)
Brasile	165		(41)	124	Brasile	49	(70.3)	(60.5)
Other Activities & Eliminations TI Group	2 981		(41)	2 940	Other Activities & Eliminations TI Group	(7) 704	- (28.2)	- (25.1)
EBIT Margin					EBIT Margin
Domestic	22.4%			22.4%	Domestic	18.7%	-3.7 pp	-3.7 pp
Brasile	11.7%			11.7%	Brasile	5.5%	-6.2 pp	-6.3pp
TI Group	19.4%			20.0%	TI Group	15.9%	-3.5 pp	-4.1 pp