Telecom Italia Rsp

Earnings Release • May 3, 2017

1Q'17 Results May 3, 2017

1Q'17 Results TELECOM ITALIA GROUP

Piergiorgio Peluso Flavio Cattaneo

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 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. Consequently, TIM 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. TIM 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 TIM 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 financial and operating data have been extracted or derived, with the exception of some data, from the Condensed Consolidated Financial Statements at 31 March 2017 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 at 31 March 2017 have been applied on a basis consistent with those adopted in the Annual Consolidated Financial Statements at 31 December 2016.

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

1Q'17 TIM Group Results - Flavio Cattaneo

Financial Highlights - Piergiorgio Peluso

Take-Aways - Flavio Cattaneo

Back-up

Group 1Q'17 Highlights: The Turnaround Continues

Organic data, YoY Performance

Domestic & Brazil 1Q'17: We Got Rid of All Negative Signs

Organic data, YoY Performance

1Q'17 Domestic: Transformation Enables Better Results, KPIs and Trends 1Q'17 Domestic: Transformation Enables Better Results, KPIs and Trends

	1Q'17	KPIs	Service Revenues Trend
Mobile	 Steady YoY growth driven by superior technology and renewed commercial approach  Service revenues performance +2.2% YoY (+3.2% adjusted for 2016 leap year effect)	 ARPU up to 12.0€ vs 11.6€ in 1Q'16  LTE increasing penetration, reaching 68% of MBB  Best-in-class churn rate, confirmed at 23.6% on FY basis	Excluding leap year impact +3.2% +3.0% +2.2% +1.1% +0.7% +0.6% 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17
Fixed	• Drive and deliver convergence • Total revenues +1.7% YoY supported by: • Fast NGN coverage expansion • New enabling devices • Premium and exclusive content • New Stores approach	 Another record-low line losses performance at -55k vs -83k in 4Q'16  BB Net Adds +120K  Fiber Net Adds +230k, reaching over 1.2mln Retail NGN customers  BB ARPU up to € 23 (+7.3% YoY)  Consumer blended ARPU stable YoY at 32 euro  Total Fiber Customers now at 1.7mln (Wholesale NGN +128k in 1Q'17)	1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 -2.4% -3.0% -3.6% -4.3% -4.8% Telecom Italia Group Results – 1Q'17 6

UBB Networks: Strong Acceleration Towards Full Country Coverage

Current Figures

• ~65% households covered
• ~91k cabinets passed
• ~147k FTTH OTB installed
• 15.4mln HH passed FTTC

• 1.3mln HH connected FTTH

• ~97% LTE outdoor coverage

• ~15,000 LTE nodes
• >7,000 cities covered:
• 770 cities 4G plus, 4.5G
• in 70 cities, speed up to 300 Mbit/s
• in 3 cities, speed up to 500 Mbit/s
• TIM best performer: download average speed 38.3 Mbit/s

NGN coverage also supported by marginal Wireless Technologies Contribution Flavio Cattaneo

TIM Brasil: Operating Results Restore Top Line Growth

Customer Mix Repositioning in Progress

Leadership on 4G Coverage at 75%

#1 in Human Postpaid Net Adds

1Q17 Net Adds , '000, ex. M2M and Modem

Increasing 4G Uptake

4G users over total Customer Base (%)

1Q'17 TIM Group Results - Flavio Cattaneo

Financial Highlights - Piergiorgio Peluso

Take-Aways - Flavio Cattaneo

Back-up

Domestic Opex Efficiency Pushing On

€mln, % YoY

Up in OpFCF Generation

€mln, Reported, % YoY

* Organic: before non-recurring items and excluding exchange rate fluctuations

Net Financial Position Evolution

€mln, (+) cash absorbed, (-) cash generated

1Q'17 TIM Group Results - Flavio Cattaneo

Financial Highlights - Piergiorgio Peluso

Take-Aways - Flavio Cattaneo

Back-up

After 1 Year of Work, TIM is on a Different Course

• More Fiber and LTE adoption, less line losses, more lock-in with enabling devices
• Strong trend inversion in main Group figures: best Domestic results ever, Brazil turned from a drag to a growth engine
• Positive outlook for Domestic Service Revenues: parity reached in 1Q'17, further improvements expected
• More Investments, Heads and Arms on Core Business
• Ahead on Cash Cost Efficiency: in 1Q'17 >30% of FY target already achieved
• Re-deployment of workforce: as of April, 2,364 employees re-assigned via Job Center
• Acted on complexity, simplifying processes and systems
• Moving from defense to attack mode
• "The Customer does not wait"
• Results are ahead of schedule
• Focus on Bottom line: TIM Group back to profit in FY'16 by 1.8 bln euro vs 70 mln euro loss in FY'15
• Organic NCF in 1Q'17 is +576 mln euro vs 1Q'16

1Q'17 TIM Group Results - Flavio Cattaneo

Financial Highlights - Piergiorgio Peluso

Take-Aways - Flavio Cattaneo

Back-up

1Q'17 - TI Group Results Overview

Group

• Revenues: € 4.8 bln
• EBITDA* : € 2.0 bln
• Revenues: € 3.6 bln
• EBITDA* : € 1.6 bln
• Revenues: € 1.2 bln
• EBITDA* : € 0.4 bln
• Revenues: € 86.4 mln

• EBITDA* : € 44.3 mln

• Capex: € 0.8 bln

• Net Debt: € 25.2 bln
• NGN: ~65% Households covered to-date
• 4G: ~97% of Population in >7k Cities
• 4G: 1,322 Cities with 75% of urban population covered
• 3G: 2,878 Cities with 89% of urban population covered
• Tenancy Ratio: 1.75x
• EBITDA Growth: +14% YoY

Inwit

Brazil

Domestic

Group 1Q'17: Organic Revenues and EBITDA

Organic*, €mln, % YoY

EBITDA Breakdown

Telecom Italia Group Results – 1Q'17 Flavio Cattaneo – Piergiorgio Peluso

Group 1Q'17: Capex and Net Debt

€mln, % YoY

• Group Capex reduction due to different dynamics:
• Capex cycle starting to normalize after historical peak levels. Confirmed the strong focus on infrastructure (~80% of the total Capex)
• More investment in Italy mainly driven by

Adjusted Net Debt Net Debt Highlights

• Net Debt evolution in 1Q'17 vs YE'16 (+116 mln euro) was affected by the 4G licence clean-up payment in Brazil for 257 mln euro
• Excluding this factor, Net Debt would have reduced by 141 mln euro, due to the strong performance in Operating Cash Flow

Mobile and Fixed Performance

000, €mln, % YoY

Mobile and Fixed Dashboard

000, €mln, % YoY

Domestic Mobile in Detail

000, €mln, % YoY

Mobile BB Customer Base

Telecom Italia Group Results – 1Q'17 Flavio Cattaneo – Piergiorgio Peluso

Domestic Fixed in Detail

000, €mln, % YoY

Fixed BB ARPU

23.0

€/month

TIM Brasil: 1Q'17 Results

R\$mln, % YoY

Focus on Mobile Service Revenues YoY

Mobile Service Revenues back to positive growth

1Q'17 Domestic: Focus on Investments

€mln

111 87

1Q'16 1Q'17

143 106 96 6 IT Real Estate Other Capex

210 190 Traditional

Domestic Capex Highlights

218 242

Innovative

1Q'16 1Q'17

• The YoY Domestic Capex reduction was driven by:
• More innovative network Capex, mainly related to NGN development
• Sound reduction in non core Capex, such as on Real Estate

Commercial & Others

56% of Network Capex

Maturities and Liquidity Margin

€mln

(1) 30,949 €mln is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (1,298 €mln) and current financial liabilities (549 €mln), the gross debt figure of 32,796 €mln is reached. . (2) Committed Bank lines are undrawn

Telecom Italia Group Results – 1Q'17 Flavio Cattaneo – Piergiorgio Peluso

Well Diversified and Hedged Debt

Maturities and Risk Management

Average m/l term maturity: 7.89 years (bond only 8.29 years)

Fixed rate portion on gross debt approximately 70.2%

Around 39% of outstanding bonds (nominal amount) denominated in USD and GBP and is fully hedged

Cost of debt: ~5.0 %

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 1,816 €mln (of which 268 €mln on bonds)

• the impact on Financial Assets is equal to 1,128 €mln.

Therefore, the Net Financial Indebtedness is adjusted by 688 €mln.

N.B. The difference between total financial assets (7,561 €mln) and C&CE and marketable securities (5,530€mln) is equal to 2,031 €mln and refers to positive MTM derivatives (accrued interests and exchange rate) for 1,612 €mln, financial receivables for lease for 156 €mln, deposits beyond 3 months for 200 €mln and other credits for 63 €mln.

Telecom Italia Group Results – 1Q'17 Flavio Cattaneo – Piergiorgio Peluso

New Telecom Italia EUR 1bln 2.500% note due 2023

Format	Senior, Unsecured, Reg S Bearer
Size	EUR 1,000,000,000
Issue Date	12 January 2017
Maturity	19 July 2023
Settlement	19 January 2017
IPT	MS+255/260bps
Final Re-offer Spread	MS+237bps
Coupon	2.500%
Re-offer price / Yield	99.288%/ 2.622%

Issue Details Deal Highlights

• On Thursday 12th January, TI noted the evolution of the long-end of the curve and chose the right market window to announce a new 6.5-year benchmark transaction
• Investors showed strong appetite for TI's credit and, with an order book north of 2.5 € bln, allowed the company to revise down official guidance from the initial MS+255/260bps to MS+240 (+/-3bps), and announced that the deal would price within the range
• On the back of a very solid, granular and high-quality order book, TI was able to set a final price of MS+237bps, with a NIP in the context of 12bp
• With this transaction, TI confirmed its ability to approach bond investors, being able to place 3.75 € bln over the last 12 months with 4 different transactions

Six and a half year bond with the lowest coupon ever for a TIM Euro bond and significantly below TIM's average cost of debt

Domestic Fiber and LTE Coverage Trend

1Q'15 1H'15 9M'15 FY'15 1Q'16 1H'16 9M'16 FY'16 to-date

1Q'15 1H'15 9M'15 FY'15 1Q'16 1H'16 9M'16 FY'16 to-date

Domestic Cash Cost Efficiency Dashboard

Run rate, €bln	2015	2016	YoY	Efficiency '18-'15 May'16	D Efficiency '19-'15 Feb'17	New Efficiency '19-'15 Target
Total Opex	8.41	8.12	-0.28	-0.8	+0.4	-0.4
Volume Driven	3.26	3.36	+0.09	-0.05	+0.5
Opex net of Volume Driven	5.15	4.77	-0.38	-0.8	-0.1	-0.9
Process Driven	1.28	1.14	-0.14	-0.32	-0.2
Market Driven	1.09	1.02	-0.07	-0.23
Labour Costs	2.78	2.61	-0.16	-0.2	+0.1
Total Capex	3.90	3.71	-0.19	-0.8	-0.2	-1.0
Traditional	1.99	1.65	-0.35	-0.5	-0.2
NGN	1.70	1.92	+0.22	-0.15
Real Estate	0.20	0.14	-0.06	-0.15
Total Cash Costs	12.31	11.83	-0.48	-1.6	-0.3	-1.9

Group Cash Flow Generation and Deleverage

Cash Flow Generation Driven by Operations Combined with a Sustainable Dividend Policy

• Deleverage through Operating Cash Flow generation is a priority, supported by operational and financial discipline
• 2017-2018 Net Free Cash Flow: ~700 mln per annum on average including spectrum*
• No need for divestiture to pursue debt reduction
• Dividends payment confirmed on Savings Shares according to statutory obligations. No Dividend on Ordinary Shares paid in Plan years
• 2018 Net Debt/Ebitda confirmed below 2.7x and further improvement in 2019

For further questions please contact the IR Team