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Telecom Italia Rsp

Investor Presentation • May 15, 2015

4448_rns_2015-05-15_0ca09aa2-a904-488f-84c8-24e6dd7a1ac1.pdf

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TELECOM ITALIA GROUPInvestor Meetings - May 2015

Telecom Italia Group Company Presentation, 2015-2017 Plan Outline and 1Q15 Update

Investor Relations

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.

Some financial data have been extracted or derived from the Abbreviated Consolidated Financial Statements as of and for the three monthsended 31 March 2015 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 IFRSǁ). Such interim financial statements are unaudited.

The accounting policies adopted in the preparation of the Abbreviated Consolidated Financial Statements as of and for the three months ended 31 March 2015 have been applied on a basis consistent with those adopted in the Annual Consolidated Financial Statements at 31 December 2014, to which reference can 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 Abbreviated Consolidated Financial Statements as of and for the three months ended 31 March 2015.

Telecom Italia Performance by Markets – Full Year 2014

Organic data, € mln, %YoY

F
Y
'1
4		 G
r
o
p
u		 D
i
t
o
m
e
s
c		 B
i
l
r
a
z
T
l
t
o
a
R
e
v
e
n
u
e
s		 2
1
6
€
b
l
1
5
3
€
b
l
n
n
-5
4
%
Y
Y
6.
6
%
Y
Y
o
o
-		 6
2
€
b
l
n
2.
1
%
Y
Y
o
-
E
b
i
d
t
a		 €
b
l
8
8
n
6.
8
%
Y
Y
o
-		 €
b
l
7
0
n
9.
6
%
Y
Y
o
-		 €
b
l
1
8
n
6.
6
%
Y
Y
+
o
C Ex
lu
d
ing
c
(
1)
L
ice
ns
e		 €
b
l
4
0
n
4
%
Y
Y
-5
o		 2
8
€
b
l
n		 €
b
l
1
2
n
1.
%
Y
Y
5
+
o
a
p
e
x		 Inc
lu
d
ing
(1)
L
ice
ns
e		 5
0
€
b
l
n
(
3)
1
3.
3
%
Y
Y
+
o		 %
8.
2
Y
Y
o
-		 2
2
€
b
l
n
(
3)
6
2.
7
%
Y
Y
+
o
Ex
lu
d
ing
c
L
ice
(2)
ns
es		 2
5
8
€
b
l
n
(
1.
0
€
b
l
;
-		 F
Y
'1
3
)
n
v
s
N
D
t
e
e		 b
t
Inc
lu
d
ing
(2)
L
ice
ns
es		 2
6
6
5
€
b
l
n
(
€
)
0.
2
b
l
F
Y
'1
3
;
n
v
s
-

(1) Brazilian Spectrum & Clean-up cost

(2) Brazilian & Argentinean Spectrum

(3) Reported data

TI Group International Footprint

TI Group Shareholders Breakdown as of December 2014

  • Telecom Italia shares are listed on the Milan and New York stock exchange. Telecom Italia Media shares are quoted on the Milan Stock Exchange.
  • Included in more than 50 indices. Among which: FTSE MIB, FTSE Italia All Share , FTSE Eurotop 100 , DJ STOXX 600, DJS Telecom

Current Market Cap (€bln)*

19.4blnOrdinary Shares 14.3 Saving Shares 5.1

Telecom Italia Performance by Markets – 1Q15 Main Financials

Organic data, € Bln, %YoY

Domestic Fixed Revenues Breakdown

(
€
ln
)
m		 4
Q
'1
4		 Y
Y
o		 F
Y
'1
4		 Y
Y
o		 1
Q
'1
5		 Y
Y
o
O
S
T
T
A
L
W
I
R
E
L
I
N
E
R
E
V
E
N
U
E		 2
3
7
7
,		 -5
5
%		 1
0
9
9
9
,		 -6
7
%		 2
6
5
7
,		 -4
1
%
S
i
R
e
r
v
c
e
e
v
e
n
u
e
s		 2
6
5
5
,		 -5
3
%		 1
0
6
7
2
,		 -7
1
%		 2
5
9
5
,		 -4
4
%
E
i
t
q
p
m
e
n
s
u		 1
1
8		 -1
0.
6
%		 3
2
7		 7.
9
%		 6
2		 9.
1
%
T
R
A
D
I
T
I
O
N
A
L
S
E
R
V
I
C
E
S		 1
2
2
6
,		 -7
6
%		 5
0
2
1
,		 -1
0.
2
%		 1
1
9
3
,		 -8
4
%
V
i
o
c
e		 1,
0
7
2		 -8
7
%		 4
4
3
2
,		 -1
0.
6
%		 1,
0
3
8		 6
-7
%
T
f
f
i
r
a
c		 3
7
5		 -8
9
%		 1,
4
6
0		 -1
7.
3
%		 3
5
3		 -6
3
%
A
c
c
e
s
s		 6
2
0		 -9
0
%		 2
6
2
5
,		 9
%
-7		 6
1
2		 -8
0
%
V
i
V
A
S
o
c
e		 3
3		 -5
4
%		 1
3
3		 -0
6
%		 3
0		 -6
7
%
&
R
l
h
t
t
r
e
n
a
o
e		 4
4		 -3
6
%		 1
8
7		 6.
9
%		 4
3		 -1
2.
1
%
B
i
D
&
O
h
t
t
u
s
n
e
s
s
a
a
e
r
s		 1
5
5		 0.
8
%		 6
7
9		 -7
3
%		 1
5
5		 -1
3.
9
%
I
N
N
O
V
A
T
I
V
E
S
E
R
V
I
C
E
S		 5
7
4		 1
5.
%		 2
1
9
9
,		 2.
6
%		 5
5
8		 4.
6
%
B
d
b
d
r
o
a
a
n		 4
1
3		 4.
9
%		 1,
6
2
2		 2.
5
%		 4
1
8		 5.
7
%
A
c
c
e
s
s		 3
8
4		 3
%
5.		 1,
0
6
5		 2.
9
%		 3
8
9		 6.
1
%
B
d
l
S
i
u
n
e
s
e
r
v
c
e
s		 1
0		 1.
5
%		 4
0		 5.
1
%		 1
0		 2.
1
%
O
h
t
r
e
s		 1
9		 -1
%
5		 7
7		 %
-5
5		 1
9		 -0
8
%
C
t
t
o
n
e
n		 5 8.
6
%		 1
9		 7.
0
%		 5 1
2.
7
%
C
S
I
T
i
e
r
c
e
v		 1
6
5		 5.
6
%		 8
5
5		 2.
9
%		 1
3
5		 1.
1
%
D
O
M
E
S
T
I
C
W
H
O
L
E
S
A
L
E		 5
4
0		 -1
4.
7
%		 2
3
1
6
,		 -1
1.
9
%		 5
6
0		 -7
7
%
T
I
S
P
A
R
K
L
E
G
R
O
U
P		 3
3
9		 4
3.
%		 1
2
4
4
,		 -1
5
%		 3
1
0		 3.
0
%
S
U
B
S
A
D
J.
d
O
T
H
E
R
a
n		 2
5
-		 2
1.
3
%		 1
0
8
-		 1
9.
5
%		 2
6
-		 1
2.
2
%
S
t
r		 i
t
o
n
g
e
s
s		 l
n
g
e
q
u		 f
I
t
a
r
e
r
o
r		 i
l
F
B
t
a
a
n		 i
B
h
t
n
e		 l
3
t
a
s
y
e		 i
a
r
s
n
-		 Q
1
1
5
T
I
O h
t
e
r
s		 f
5
8
k
l
+		 t
t
a
n
e
a		 d
d
2
4
k
s,
+		 l
F
t
t
o
a
-		 b
t
a
s
e
w
+		 5
2
K
t
t
o		 l
d
t
a
n
e
a		 d
s
%
4.
7
3.
%
5		 4.
9
%
3.
5
%		 %
4.
7
3.
6
%		 %
4.
7
3.
7
%		 4.
8
%
3.
%
5		 5.
5
%
3.
4
%		 5.
2
%
3.
3
%		 9
%
5.
3.
1
%		 6.
1
%
3.
0
%
1
2.
3
%		 2.
3
%
1		 1
2.
4
%		 2.
1
5
%		 1
2.
7
%		 1
2.
8
%		 3.
0
%
1		 2.
3
1
%		 1
2.
4
%
3.
%
1
4		 1
3.
6
%		 1
3.
8
%		 1
3.
9
%		 1
4.
1
%		 %
1
4.
1		 1
4.
3
%		 1
4.
6
%		 8
%
1
4.
1
6.
0
%		 1
5.
9
%		 1
5.
8
%		 1
5.
7
%		 1
5.
7
%		 1
5.
4
%		 1
5.
2
%		 1
5.
4
%		 1
5.
4
%
5
0.
2
%		 4
9.
8
%		 4
9.
7
%		 9.
%
4
5		 4
9.
2
%		 4
8.
9
%		 4
9.
1
%		 8.
4
7
%		 8.
2
4
%
3
1
Q
1		 2
3
Q
1		 3
3
Q
1		 3
4
Q
1		 1
Q
1
4		 2
Q
1
4		 3
Q
1
4		 4
Q
1
4		 1
Q
1
5
)
K
(
S
D
D
A
T
E
N		 T
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R
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l
t
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W
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d
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t
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t
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l
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k
t
t
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a		 (
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3
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1
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9
4
4
4
7
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5
1
6		 (
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)
1
(
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)
7
2
6
2
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3
7
(
)
3		 (
)
4
1
(
2
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)
2
4
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9
(
)
3
5
(
)
4
3		 2
3
(
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3
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8
5
9
3		 1
8
1
6
4
2
(
1
7
)
3
9
2
6
1
2
4		 6
(
2
)
7
1
0
(
1
3
)
2
5
1
0
4
5
1
0		 (
)
7
(
3
3
)
2
2
(
2
0
)
3
1
(
)
5
1
(
5
)
8		 (
)
1
1
4
4
5
6
(
1
5
)
3
8
(
)
1
9
9
3		 2
4
3
3
5
2
(
6
)
3
0
3
8
1
7
1

Italian Broadband Market – Mkt Share on Accesses

1Q15: Company data for TI Retail, Fastweb and Wind. Market estimates for other operators

Domestic Fixed

€ mln, %YoY

Fixed Revenues Breakdown

Fixed Access

Investor RelationsInvestor Meetings –May 2015 Marco Patuano

Domestic Mobile Revenues Breakdown

4
Q
'1
4		 Y
Y
o		 F
Y
'1
4		 Y
Y
o		 1
Q
'1
5		 Y
Y
o
T
O
T
A
L
W
I
R
E
L
E
S
S
R
E
V
E
N
U
E
S		 1
3
6
8
,		 5
1
%
-		 5
0
9
1
,		 8
7
%
-		 1
1
5
1
,		 2
0
%
-
H
d
t
a
n
s
e
s		 1
8
5		 1.
2
%
-		 4
8
3		 9
3
%		 9
8		 2
9
0
%
S
E
R
V
I
C
E
R
E
V
E
N
U
E
S		 1
1
8
3
,		 5
7
%
-		 4
6
0
8
,		 1
0
3
%
-		 1
0
5
3
,		 4
2
%
-
T
d
i
i
l
S
i
t
r
a
o
n
a
e
r
v
c
e
s		 6
9
5		 1
6
1
%
-		 2
8
6
1
,		 1
9
9
%
-		 6
2
1		 1
2
9
%
-
O
i
i
t
g
g
o
n
o
c
e
u
v		 5
0
1		 1
8
3
%
-		 2
0
9
8
,		 2
1.
5
%
-		 4
6
3		 1
2
6
%
-
I
i
i
g
n
c
o
m
n
v
o
c
e		 5
9		 1
5
6
%		 2
2
4		 2
4
%
-		 5
8		 1
2
3
%
M
i
g
g
e
s
s
a
n		 1
3
5		 1
8
2
%
-		 4
0
5		 1
9
%
7
-		 1
0
0		 2
4
2
%
-
I
i
S
i
t
n
n
o
v
a
v
e
e
r
v
c
e
s		 4
0
4		 1
3
1
%		 1
4
6
4
,		 1
2
1
%		 3
7
5		 1
4
4
%
B
i
g
r
o
w
s
n		 3
2
6		 1
0
9
%		 1,
1
1
7		 1
1.
%
7		 3
0
6		 1
6
0
%
I
C
t
t
t
t
n
e
r
n
e
o
n
e
n		 7
8		 2
2
9
%		 2
9
3		 1
3
8
%		 6
9		 8
1
%
W
h
l
l
S
i
o
e
s
a
e
e
r
v
c
e
s		 8
3		 2
3
0
%		 2
8
3		 1
9
%		 5
7		 1
6
%
-

Domestic Mobile

€ mln, %YoY

Investor RelationsInvestor Meetings –May 2015

Italian Wireless Market – Customer Market Share Evolution

Italian Wireless Market – Service Revenues Growth Trend

Source: Company data for TI and Wind. Consensus expectations for Vodafone and market estimates for H3G. Historical trend for H3G is estimated since the operator provides only trend by half .

Italy: Enabling Continued 4G and Fiber Take-Up

Investor RelationsInvestor Meetings –May 2015

Creating Value through Next-Generation Networks Acceleration

Fiber Italy: We are increasing our Competitive Advantage

Benchmark on Italian BB penetration…

The Weight of Mobile BB-Only Households

BB Household Penetration in Italy is roughly in line with other main European Countries, but with a different Mix

Source: Eurostat 1Q 2014

…and on PayTV

The Italian PayTV Market is mainly concentrated on DTT & Pay-DTH, while in the other main European Countries there is a strong presence of Cable TV & IPTV

Source: Ovum elaboration as of 3Q14

LTE Italy: Pushing on Quality, Not on Price

(1) Innovative revenues = browsing+data content; traditional revenues =voice+SMS

Monetizing the Data Surge

Investor RelationsInvestor Meetings –May 2015

The TI Plan fits into the Italian Market

(1) Addressable market

A n-Play Strategy to Grow the Value of our Access

and further expand Fixed BB penetration through Video Content

Focus on Opex Efficiencies

€ mln, %YoY

Focus on Opex Efficiency - YoY

Efficiency Plan 2015-2017

TLC Brazilian Market – 1Q15 Competitive Positioning

Mobile accounts for 78% of theoverall industry access growth

TIM represents 30% of the mobile industry revenues and ~27% of its market share

Brazil: The Mobile Data Opportunity

Market Data Revenues Growth 2016 vs. 2012

13 bn Reais on Mobile (+100%)

TIM Brasil: Moving from a Resilient Core Business to Fully Grasp Data Opportunities

Tower "Asset Swap" Enables Accelerated 4G Expansion

First tranche of sale completed for a cash-in of R\$ 1.9bln, 4,176 towers sold

Sites densification

R\$/€ AoP 1Q'15: 3,22251

  • MBB: 195 cities to be covered by 2015 (vs 125 already covered in 2014)
  • Spectrum Optimization expanding to new cities (1800 MHz)

3 thousand additional small cells in the next three years

Future-Proofing our Infrastructure for Enhanced Cash Flow

(1) Including Brazil License & Clean-up costs (2) Group Ebitda-Capex

2014 Debt reduction & 2015-2017 Free Cash Flow Evolution

28

Investor Relations

1Q'15 Operating FCF

1Q'15 Net Debt Evolution

€ mln

(1) ~0.9 Bln€ Latam & ~0.1 Bln€ Italian License

Group Operating and Financial Outlook

Organic data

G
r
o
u
p		 D
i
t
o
m
e
s
c		 B
i
l
r
a
z
E
b
i
d
t
a		 i
Y
Y
G
h
t
o
r
o
w
n
2
0
1
7		 Y
Y
S
b
i
l
i
i
i
t
t
o
a
z
a
o
n
n
2
0
1
6
i
Y
Y
G
h
t
o
r
o
w
n
2
0
1
7		 C
i
d
G
h
t
t
o
n
n
u
e
r
o
w
(
)
1
C
a
p
e
x
C
'1
'1
5-
7
u
m		 1
4.
5
€
B
l
n
~		 1
0
€
B
l
n
~		 \$
1
4
R
B
l
n
>
N
D
b
A
d
j.
t
t
e
e
/
E
b
i
d
2
0
1
7
t
a		 R
d
i
T
d
e
c
n
g
o
a
r
s
u
w
(
2
)
2.
5
x

(1) Including Italian GSM license extension (2) On reported EBITDA; ratio includes Mandatory Convertible equity strengthening effect for 1.3€Bln in November 2016 Note: Organic data exclude impact from change in perimeter and FX. Avg €/Reais exchange rate: 3.21

Appendix

Record-rate Refinancing Continues

(1) € 33,706 mln is the nominal amount of outstanding medium-long term debt. By adding Mandatory Convertible Bond (€ 1,300 mln), discontinued operations (€ 119 mln), IAS adjustments (€ 1,608 mln) and current financial liabilities (€ 570 mln), the gross debt figure of € 37,303 mln is reached.

Well-Diversified and Hedged Debt

T
l
G
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Maturities and Risk Management

Average m/l term maturity: 7,06 years (bond only 7,86 years)

  • Fixed-rate portion on gross debt approximately 69,9%
  • Around 40% of outstanding bonds (nominal amount) is denominated in USD, GBP and YEN and is fully hedged
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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 3,179 €/mln (of which 676 €/mln on bonds) the impact on Financial Assets is equal to 1,606 €/mln.

Therefore, the Net Financial Indebtedness is adjusted by 1.573 €/mln.

N.B. The difference between total financial assets (€ 9,656 mln) and C&CE and marketable securities (€ 7,124 mln) is equal to € 2,532 mln and refers to positive MTM derivatives (accrued interests and exchange rate) for € 2,341 mln, financial receivables for lease for € 138 mln, Argentina deposits beyond 3 months for € 0 mln and other

Successful Placement of 2€bln Equity-Linked Bond due 2022

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Following the successful placement of the 2€bln equity-linked bonds due 2022", the Board of Directors resolved to supplement the agenda of the Shareholders' Meeting of 20 May 2015 to include the proposed authorisation to convert the bonds and increase the share capital, by means of the issue of new-issue ordinary shares reserved to service the initiative, with the exclusion of preferential subscription rights.

Active Liability Management

2015 YTD Group Capital Markets Activity

  • Record-low coupon 2015 TI Bond Issues met strong investor appetite:
  • January: € 1 Bln 3.25% senior unsecured bond had the lowest coupon in TI history.
  • March: € 2 Bln 1.125% 7yr convertible bond was a new benchmark in the capital market with a 70% conversion premium (highest in EMEA since 2003) featuring a 1.50% p.a. saving vs same tenor straight senior unsecured bond.
  • Moreover, TI successfully executed to-date 2 bond buybacks worth in total € 2.8 Bln, considerably improving the yield of its liquidity.
  • TI's treasury management in 1Q'15 included lower commercial receivables factoring for 422 mln€, given the relevant liquidity of recent issuance. It is worthwhile noting that the average financial cost of such sales is 0.20%.

YTD 2015 Buybacks will deliver more than € 300 mln pre-tax savings until 2022 net of 2015 negative impact * including buyback price and derivative unwind

Inwit IPO

  • Public offer in Italy (*)
  • Free float: minority stake
  • Secondary component: 100%
  • Timing: expected within the summer

Company:

Is the largest independent operator of wireless network infrastructure in Italy; is the result of the carve-out of the entire Tower

Business.

Assets

manages about 11.500 Sites that represent ca 27% of the total number of telecom towers in Italy.

Customers

Telecom Italia is the main customer; customer portfolio includes the other MNOs and other radio operators.

Services

offers to its clients a full suite of services, including:

  • (i) integrated hosting;
  • (ii) management and maintenance of sites;
  • (iii) development of new sites;
  • (iv) design and development of turnkey radio network solutions.

(*) Shares offered to institutional investors outside the USA under Reg S and in the USA to QIBs under 144A

TI Merger with Telecom Italia Media

Transaction Pillars and Impact on Telecom Italia

  • Simplification will extend to the Telecom Italia Group structures
  • Elimination of costs associated with listing, in light of the limited stock liquidity
  • Enhanced flexibility to manage Persidera disposal process
  • Minority-friendly: cash withdrawal right (as per Italian Civil Code) at 6-month arithmetic average share price
  • Limited impact on TI
  • 0.1% ordinary share voting dilution if no withdrawal right exercised
  • €28 million max cash outlay if all minority shareholders exercise withdrawal right
  • Moderate EPS accretion (0.1%) / savings of ca. €2 million corporate costs

Key Terms and Milestones

  • 0.66x Telecom Italia ordinary shares for each Telecom Italia Media ordinary share
  • 0.47x Telecom Italia saving shares for each Telecom Italia Media saving share
  • Exchange ratios to be confirmed on 19th March
  • Cash withdrawal right granted to TIME shareholders (€1.06 per ordinary share and €0.60 per saving share)
  • TI to purchase any withdrawing share not pre-empted
  • Transaction to be approved in April/May 2015
  • Closing expected in July/August 2015

Persidera Merger

  • Telecom Italia and GELE to continue assessing options for a short-to-medium-term disposal of Persidera
  • The only frequency platform available to nonintegrated TV broadcasters in the digital terrestrial TV landscape in Italy
  • Business poised to grow meaningfully through 2018
  • Most contracts with TV broadcasters successfully renegotiated and in place for multiple years
  • Contractual visibility on the large majority of revenues forecast over the plan horizon
  • Call option for Telecom Italia on Channel 55 (700 MHz frequency)

TI Group Share - Capital Composition

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NGN coverages across Europe: TI is driving Italy to pick-up

Improving Macro-Economic Outlook in Italy: (1/2)

Source: Consensus Economics Inc 2015 (March 9, 2015), consensus based on a survey of 19 prominent financial and economic research institutes.

Improving Macro-Economic Outlook in Italy: GDP trend (2/2)

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2015 Annual General Meeting on May 20th

Proposed Resolutions:

  • Approval of the FY2014 financial statements
  • Distribution of only the privileged dividend to savings shares, in the amount of 2.75 euro cents per share (in line with that already announced when presenting the industrial plan).
  • Approval of the report on remuneration;
  • Appointment of the Board of Statutory Auditors for FYs 2015-2017, to be made by means of the slate voting system (and for the first time applying the gender balance rule);
  • Authorization to convert the "€2€bln equity-linked bonds due 2022" and increase the share capital.
  • Introduction of a deferral mechanism by means of the liquidation in ordinary shares of a portion of the shortterm incentive, with reference to the 2015 MBO cycle for the Top Management and a selected number of executives.
  • Granting of powers to increase the share capital to service said remuneration plan, by means of the allocation of profits for up to a maximum of 25.5mln euros, to be allocated when approving the financial statements.
  • Merger by incorporation of the subsidiary TI Media, as per separate joint press release.
  • Amendment of some statutory rules regarding the Board of Directors and Board of Statutory Auditors;

Proposed changes on TI Bylaws essentially relate to:

  • Introduction of a principle of independence (in accordance with the law and/or the Corporate Governance Code of Borsa Italiana), when renewing the Board of Directors, for at least half of the candidates and elected directors on each slate;
  • the amendment of the majority premium, when renewing the administrative body, to 2/3 of the Directors to be elected (at present, the Bylaws establish that 4/5 of the seats shall be assigned to the majority slate);
  • a change to the mechanism for convening the Board of Directors at the request of the Directors, attributing this right to 2 Directors (rather than to one fifth of the Directors in office), in a similar way to the legal provisions regarding Auditors.

Brazilian Market Outlook 2015-2017

A Close Look at Business Performance

2015-2017 Guidance

Domestic Revenues

Reported data, € Mln, %YoY

(1) Adjusted for access price 2010-2012

Domestic Ebitda: Strong Profitability further Recovering

Domestic Discontinuities

Adjustments for one-off effects in 1Q Ebitda YoY performance are:

in 1Q'15:

  • ~ +25 mln€ for salary increases and stock option plans
  • ~ +20 mln€ for accruals on Risk Provisions

in 1Q'14:

  • ~ -20 mln€ for release of labor incentive provisions
  • ~ -20 mln€ for income from energy management
  • ~ -15 mln€ for release of Risk Provisions

Highlights

  • TI Domestic 1Q'15 EBITDA margin stands at 44.3%, one of the highest among European peers
  • Notwithstanding relevant Network renovation, no increase in industrial costs
  • Commercial costs remain under control
  • Reduction in Real Estate costs drive down G&A expenses
  • One-off increases in labor costs will support Key Targets achievement

Domestic Fixed Breakdown

€ mln, QoQ

Quarterly Fixed Revenues Breakdown Service Revenues Trend YoY

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Domestic Mobile Breakdown

€ mln, QoQ

Quarterly Mobile Revenues Breakdown Service Revenues Trend YoY

TI Group – 2014 P/L by Main Business Unit

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ori
ent
ang
es		 (
52
)		 (
41
)		 (
11
)		 0 0 0
Ca
ita
lize
d in
nal
tio
ter
nst
ts
p
co
ruc
ns
cos		 58
8		 48
5		 93 0 0 10
EB
ITD
A
% o
n R
eve
nue
s		 8,
78
6
40
.7%		 6,
99
8
45
.7%		 1,
77
4
28
.4%		 25
35
.2%		 (
12
)		 1
De
cia
tio
n &
Am
iza
tio
ort
pre
n		 (
4,
28
4)		 (
3,
29
0)		 (
97
6)		 (
19
)		 0 1
Wr
ited
and
val
ion
f n
uat
t a
ts
ow
ns
re
s o
on
cur
ren
sse		 (
1)		 (
1)		 0 0 0 0
Ga
ins
/
los
of
ent
set
liza
tio
ses
no
n c
urr
as
s r
ea
n		 29 31 (
3)		 0 0 1
EB
IT
% o
n R
eve
nue
s		 4,
53
0
21
.0%		 3,
73
8
24
.4%		 79
5
12
.7%		 6
8.5
%		 12
(
)		 3
Inc
e (
los
s) e
ity
inv
est
lue
d e
ity
tho
d
om
qu
. va
qu
me		 (
5)		 (
5)		 0 0 0 0
Oth
fro
inc
e (
)
inv
est
nts
er
om
exp
ens
es
m
me		 16 40
(
)		 0 0 22
0		 16
4)
(
Ne
t F
ina
nci
al I
/
(
Exp
es)
nco
me
ens		 (
2,
19
4)		 (
2,
23
9)		 (
90
)		 (
9)		 14
5		 (
1)
Inc
e b
efo
Ta
&
Dis
Op
om
re
xes
c.
s.
% o
n R
eve
nue
s		 2,
34
7
10
.9%		 1,
45
4
9.5
%		 70
5
11
.3%		 (
3)
4.2
%)
(		 35
3		 (
16
2)
Tax
es		 (
92
8)		 (
70
2)		 (
20
8)		 0 (
19
)		 1
Inc
e b
efo
Dis
Op
om
re
c.
s.		 1,
41
9		 75
2		 49
7		 (
3)		 33
4		 (
16
1)
Ne
t in
e (
los
s) o
f a
ts d
isp
d
com
sse
ose		 54
1		 0 0 0 (
1)		 54
2
Ne
t In
(a
nte
M
ino
riti
)
co
me
es
% o
n R
eve
nue
s		 1,
96
0
9.1
%		 2
75		 49
7		 3)
(		 33
3		 38
1
Min
ori
tie
s		 (
61
0)
Ne
t In
(p
t M
ino
riti
)
co
me
os
es
% o
n R
eve
nue
s		 1,
35
0
6.3
%

(*) includes TI Finance, TI Capital, TI international and other companies not icluded in the other Business Units.

TI Group – 2014 Balance Sheet by Main Business Unit

2
0
1
4
F
l
l
Y
A
l
t
u
e
a
r
c
u
a
Gr
TI
ou
p		 Do
st
ic
me		 Br
ile
as		 Me
d
ia		 Ot
&
*)
he
Eli
(
r
m
Eu
ml
ro
n
Int
ib
le
As
ts
g
an
se		 3
6,
77
0		 3
2,
7
1
9		 3,
8
8
7		 17
2		 (
8
)
f w
hic
h
Go
dw
ill
o
o		 2
9,
9
4
3		 2
8,
4
4
3		 1,
47
0		 3
0		 0
Ta
ib
le
As
ts
ng
se		 1
3,
3
8
7		 1
0,
4
2
5		 2,
6
4
7		 8
1		 0
Eq
ity
Inv
tm
ts
u
es
en		 7
9		 9,
3
0
9		 0 0 (
9,
2
3
0
)
Ot
he
r L/
T I
stm
ts
nve
en		 5
8
4		 6
6		 5
1
2		 1
6		 (
1
0
)
fer
De
d
Ta
x A
ets
re
ss		 1,
1
1
8		 8
3
7		 27
6		 6 3
5
T
O
TA
L N
ET
A
S
S
ET
S		 5
1,
9
3
8		 5
3,
4
1
9		 7,
4
3
9		 27
5		 (
9,
1
9
5
)
W
O
RK
IN
G
C
AP
ITA
L
&
FU
ND
S		 4,
(
3
0
7)		 (
2,
8
5
6
)		 1,
1
(
2
3
)		 (
2
8
)		 1
(
2
0
)
Op
Ca
&
t
ing
W
kin
ita
l
Fu
nd
g
era
or
p
s		 3,
8
6
(
7
)		 2,
8
6
2)
(		 9
3
1)
(		 6 1
Op
ing
W
kin
Ca
ita
l
t
g
era
or
p		 (
1,
7
9
1)		 (
1,
0
9
8
)		 (
7
1
6
)		 15 8
To
l n
inv
ies
ta
et
tor
en		 3
1
3		 2
3
1		 8
2		 0 0
iva
To
ta
l n
et
tra
de
ts
ble
ac
co
un
rec
e		 4,
1
3
2		 3,
0
0
8		 1,
1
0
6		 3
2		 1
4)
(
Tra
de
ts
ble
ac
co
un
p
ay
a		 0
4
1)
(
5,		 2,
9
8
(
5
)		 2,
0
8
2)
(		 1
4)
(		 1
3
Ot
ing
lia
ilit
ies
he
t
nt
ts
/
b
p
r o
era
cu
rre
as
se		 1,
1
9
(
5
)		 1,
3
9
(
7
)		 17
8		 3
(
)		 9
Ot
he
t
ing
nt
ts
r o
p
era
cu
rre
as
se		 2,
4
3
4		 1,
4
77		 6
9
5		 1 0
Ot
he
t
ing
nt
lia
b
ilit
ies
r o
p
era
cu
rre		 3,
6
2
9
(
)		 3,
15
3
(
)		 4
8
1)
(		 4)
(		 9
Ot
he
Op
t
ing
A
llo
r
era
wa
nc
es		 4)
(
9
3		 (
7
0
5
)		 15
(
2
)		 (
7)		 (
7)
To
l
Se
In
de
it
ies
ta
ve
ran
ce
mn		 (
1,
0
6
1)		 (
1,
0
5
9
)		 0 (
2)		 0
No
Op
ing
W
kin
Ca
ita
l
&
Fu
nd
t
g
n
era
or
p
s		 (
5
2
1)		 6 (
2
8
2)		 (
3
4)		 (
2
1
1)
Ne
/
lia
b
ilit
ies
f D
isc
Op
t a
ets
ss
o
s.		 2,
0
8
9		 0 0 0 2,
0
8
9
NE
T I
NV
E
S
TE
D
C
AP
ITA
L		 4
9,
7
2
0		 5
0,
5
6
3		 6,
2
2
6		 2
47		 (
7,
3
1
6
)
S
ha
ho
lde
Eq
ity
re
rs
u		 2
1,
6
9
9		 17
4
8
3
,		 5,
8
3
5		 (
2
2)		 (
1,
5
9
7)
Ne
t
Fin
ia
l P
it
ion
R
ort
d
an
c
os
ep
e		 2
8,
0
2
1		 3
3,
0
8
0		 3
9
1		 2
6
9		 1
9
(
5,
7
)
Mt
M
de
riv
at
i
o		 1,
3
7
0
Ne
Fin
ia
l P
it
ion
A
d
j
t
an
c
os		 2
6,
6
5
1

(*) includes TI Finance, TI Capital, TI international and other companies not icluded in the other Business Units.

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