Investor Meetings - Paris - Franco Bernabe' presentation (July, 3 - 4 2012)

TELECOM ITALIA GROUP

Telecom Italia Group
Investor Meetings – Paris, July 3-4 2012

Franco Bernabè – Chairman and Group CEO

0


Safe Harbour

These presentations contain 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 the
customer base, estimates regarding future growth in the different business lines and the global business,
market share, financial results and other aspects of the activities and situation relating to the Company
and the 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 S.p.A. makes no
representation, whether expressed or implied, as to the conformity of the actual results with those
projected in the forward looking statement.
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 are cautioned not to place undue reliance on those forward looking statements, which speak only
as of the date of this presentation. Telecom Italia S.p.A. 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
S.p.A. business or acquisition strategy or planned capital expenditures or to reflect the occurrence of
unanticipated events. Analysts and investors are encouraged to 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.

1


Agenda

Telecom Italia Group Overview

1Q12 Results

Focus on UBB

Financial Position and Group Targets

Sustainability at TI

2


FY2011 Group Key Figures
Weight in TI
Group

Euro mln, Organic Data

TI Group Domestic Brazil Argentina

FY 11 Δ% yoy FY 11 Δ% yoy FY 11 Δ% yoy FY 11 Δ% yoy

35%
Revenues* 29,958 +2.7% 19,033 -4.8% 7,343 +18.2% 3,220 +26.5%

EBITDA 12,339 Flat 9,351 -3.9% 1,998 +10.7% 1,035 +24.1% 25%

EBITDA-CAPEX 7,467 -0.4% 6,374 -3.7% 708 +20.7% 479 +23.3 %
85%

Cash Generation Engine of Growth
for the Group for the Group

* Revenues based on net contributions

3


Topline Breakdown Across Core Markets

Domestic
€ Bn Retail Revenues by Technology € Bn Retail Revenues by Customer Segment

16.7 15.8

Mobile
Consumer

Fixed Business
Top Clients

Brazil Argentina
R$ Bn Total Revenues by Technology AR$ Bn Total Revenues by Technology

17.1 18.5
16.5 0.2% TIM Fiber
14.6
5.5% Intelig
Historical Mobile
«pure mobile»
positioning TIM
Mobile
Fixed

4


TI’s Domestic Market: the Growing Importance of Innovation

Domestic Retail Revenues Fixed
€bn €bn

16.7 • Broadband
15.8 Innovative • Web Contents
• ICT (products
Innovative and services)

Traditional

Mobile
Traditional
€bn
• Mobile
browsing (Large
7.4 & Small Screen)
Innovative • Contents
(premium
services,
donwloads,
Traditional games,
ringtones,
Infotainment)

5


2012-14 – TI Strategic Priorities

Italy – Proactively Manage
for Cash Generation Complete the
Deleverage
Program
Fully Exploit TI Enhance
Brazil – Continue the Free Cash Flow
Multi -Country
Business Expansion Generation
Businesses
Sustainable
Shareholders’
Argentina – Managing
Remuneration
Growth and Profitability

6


Telecom Italia Group – FY 2012 and 2012-14 Plan Key Guidance

Organic Data*

TI Group – FY 2012 Key Guidance
Revenues Stable

Ebitda Broadly Stable

NFP Adj.** ∼ 27.5 € bln
Organic Data*

TI Group – 2012-14 Plan Key Guidance **
Ebitda-Capex
>22 € bln
cum ’12-’14
Capex
>15 € bln
cum ’12-’14
FY 2012: ∼ 27.5 € bln
NFP Adj. FY 2013: ∼ 25 € bln
2012-’14 From FY 2014: < 2x Net
Debt/Ebitda***
*exchange rates 2011 (R$/€ 2.33; ARS/€5.74), excluding impact from non-organic items
** excluding Latam spectrum licences
*** reported figure
7


Agenda


1Q12 Results

Focus on UBB



8


TI Group Key Results
Euro mln, Organic data, %

Revenues EBITDA
% on 42.0% 40.1%
Revenues -1.9 p.p.

+373 M€ 7,392 2,951 +15 M€ 2,966
7,019 +5.3% +0.5%

1Q11 1Q12 1Q11 1Q12

Revenues Trend YoY EBITDA-CAPEX
% on 29.3% -2.1 p.p.
Revenues 27.2%
5.3%
5.0%
-43 M€
3.7% 2,055 -2.1%
2,012

2.1%

-0,2%
1Q11 2Q11 3Q11 4Q11 1Q12
1Q11 1Q12

9


Domestic Results: Trend still improving
Euro mln, Organic data, %

Total Domestic Revenues Domestic Service Revenues
-109 M€
4,595 -2.4% 4,486

Mobile -1.7%

Wireline -2.9%

EBITDA EBITDA-Capex
% on 49.5% -0.5 p.p. 49.0% -4 M€
Revenues
1,611 -0.2% 1,607
2,274 -78 M€
-3.4% 2,196

% on 35.1% +0.7 p.p. 35.8%
Revenues

10


Mobile Revenues: 1Q12 Results at a Glance

Total Mobile Revenues
Mobile Handsets Revenues Trend – YoY % change

Normalized (*)
~-2.5%

-29
Total Mobile 1,679 -1.7% 1,650
Handset
revenues +71.1%

Mobile Service Revenues Trend – YoY % change

Service -3.7%
revenues
Normalized (*)
~-4.5%

(*) Leap year

11


Domestic Mobile – Surfing the Data Wave
Increasing Smartphone Penetration in All Segments

Operating Systems on TIM ‘s Network - The Android Growth
Innovation to the

Smartphones increasingly Service-Driven
Mass Market
Bringing

Data Bundle users and Renewal Rate

+1,9X

87%
penetration on

Smartphone Penetration on Customer Base Renewal rate 79%
smartphone
Doubling

CB

Number of Data connections by Device (*)

+~20%
May 2012 Dealer Convention
2.2mln
Further room for

Of which >75% 1.9mln
~1,3 mln Smartphones
growth

Dec’11 Jan’12 Feb’12 Mar’12 Apr’12

* Peak of traffic on the average day of the second week of each month

12


LatAm: Revenues and EBITDA 1Q12 YoY Trend

Revenues EBITDA
% on 27.5% -1.3p.p. 26.2%
Revenues
+309 M€
+19.1%
1,928 +60 M€
+13.5%
1,619 505
445
Brazil

1Q11 1Q12 1Q11 1Q12

34.1% -2.0 p.p. 32.1%
+174 M€
+24.0%
901 +41 M€
+16.6%
727
289
Argentina 248

1Q11 1Q12 1Q11 1Q12

13


Market Leaders In Our Footprint (March 2012)

Domestic Brazil Argentina
#1 position - 32.3 mln lines #2 position - 57.6 mln lines #2 position - 18.5 mln lines

34.9% 26.8% 33.6%
Mobile

#1 position - 14.46 mln accesses #2 position - 4.14 mln accesses

Tim Brasil acquired
Fixed relevant fiber infrastructure
66.2% 47%
through the Intelig and AES purchases,
to further profitably develop
its mobile business.
#1 position - 7.1 mln accesses AES now offers the opportunity #2 position - 1.56 mln accesses
to enter the Fixed BB business

Broadband 52.7% 35%

A Competitive and still Healthy Successful «Challenger « Customer base expansion
Market where TI remains the strategy and leadership in across all segments, driven by
Leading Operator growth . TIM re-gained the mobile rebranding of Personal
second position during 2011. and the successful proposition of
Arnet on broadband TV
14


Agenda


1Q12 Results

Focus on UBB



15


UBB Networks allow TI to further tap growing BB demand:
Mobile BB is complementary to Fixed BB

Italian Families - Broadband Penetration Italian Soho & SME - Broadband Penetration
Families
23.9 24.3 24.6 24.9 25.2 25.4
(mln)
% families
71%
66%
61%

52%
45%
41%

32%
29% 30%
24% 28%
22%

18%
18% 16%
7%
2% 15%
12%
8%
2%

2006 2007 2008 2009 2010 2011
FBB‐only families FBB & MBB families
MBB‐only families "No‐BB" families
Source: Between Source: <Osservatorio Banda Larga

16

2012-2014 Plan

Strengthen the Network for a Technological Leadership

Capex Allocation UltraBB Roadmap

Network Capex NGAN Roll-out

2014
Customer 100 Cities (including all
Service Optimization
& Traffic
main ones) covered through
Driven FTTH&Cab Technology

~¼ of Housing units
Network
Development Acceleration passed with >30 Mb/s
Speed

Network Decrease
Mobile Coverage
Maintainance

2014
Optimize Network Investment to maintain More than 40% of
excellent quality in TLC services population covered by LTE

Increase the effort in Network Development and
Innovation to confirm Technological Leadership HSPDA
and grant the Best Experience on the Net 42 Mbps LTE

17


TI’s Convergent Approach to Fixed and Mobile UBB
The Value of our Core Asset

Network Key asset both for fixed and mobile
Access

Huge capital and time already fruitfully invested
High Capillarity
Strategic asset in the economic , social & regulatory landscape

Yesterday Today: Pervasive Ultra Broadband

NGN UBB

Fixed & Mobile Network

Fixed Network
Super
NGAN Fttx HSPA+ LTE
Internet +

18


TI’s 2-step strategy on NGAN New Light
Cabinet
Step 1: FTTCab 30 - 100 Mbps
Use of existing
network
elements:

• Cable ducts
• Cabinets
• Copper SLL

(Possible) Step 2: FTTH 100 Mbps – 1 Gbps Deployment costs > 3x FTTCab

Use of FTTCab primary
Network

New elements
•Fiber secondary network
•Fiber deployment in the
customer’s building
•New modem in the
customer’s house

19


TI Fixed UBB Plan: 2012-2014 and beyond

2012 - 1H13 2014 within 2020
30 cities 100 cities
About 60% cities target in Driver for NGAN Plan:
the North (i.e. Milan,
Turin, Genoa); NewCo
Density of population;
Trentino NGN for Trento
region
Moving
Leverage on existing towards DAE
About 20% cities infrastructure (i.e. ducts Targets
located in the Central already in place in most
part of the country of 100 targeted cities)
(i.e. Rome, Florence)

About 20% cities
located in the South
(i.e. Naples, Bari,
Palermo)

20


Agenda


1Q12 Results

Focus on UBB



21


Robust Liquidity Margin and Well-Distributed Debt Maturities
Euro mln Bonds Loans (of which long-term rent, financial and operating lease payable € 1,497) Drawn bank facility

€ 6.16 bln 13,323 35,884 (*)
Group Liquidity Position 2,249
+
€ 7.00 bln
Undrawn Portion of 11,357
Facility/Committed
=
€ 13.16 bln
Group Liquidity Margin 2,765 1,966

2,981 1,900 25,257
2,250 865
3,032
1,768 731
6,067
1,999 1,264

2,857
5,237
250 1,211
3,335
2,479 8,378
1,790 1,652

689
Within 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Beyond 2017 Total M/L
Term Debt
(*) € 35,884 mln is the nominal amount of oustanding medium-long term debt by adding IAS adjustments (€ 805 mln) and current liabilities (€ 824 mln), the gross debt figure of € 37,513 mln is reached.
N.B. Debt maturities are net of € 646 mln (face value) of repurchased own bonds (of which € 354 mln related to bonds due in the next 24 months).

22


2011-2013 Deleverage Targets Confirmed

Cash Flow Generation (EBITDA- Capex) Net Financial Position Adjusted**
Organic Data*
Euro Bln 2012 and 2013
>22 Bln € 35.9 targets confirmed
30.4
∼27.5
∼25
Latam ~20%
Financial
-5.5 Bln € Net Debt Discipline

Domestic ~80% 2007 2011 2012 2013 2014

Cum. ‘12-’14 New Dividend Policy (as announced on Feb. 24 2012)

*Organic: same perimeter, 2011 FX rates, excluding spectrum licences acquisitions.
** Excluding Latam spectrum licences acquisitions.
23


Agenda


1Q12 Results

Focus on UBB



24


Sustainability at TI: Key Actions and Results

TI is part of all main global and European sustainability indexes

Electricity consumption and Greenhouse Gas emissions have been curbed downwards
(respectively, -6,3% and -6,2% versus 2010)

TI delivers a wide range of Green and Social telecommunications solutions for the
Public Administration and private Customers, improving their environmental footprint
and lifestyle

Relations with Trade Unions are excellent. This is key to deliver agreements which are
considered satisfactory by all involved parties (e.g the one of August 4, 2010)

A wide range of projects aimed at bridging the social digital divide are under way,
sometimes with the involvement of the Public Administration

Telecom Italia is a founding member of a joint auditing project on suppliers' production
sites in developing countries, carried out in partnership with other leading Telecom
operators. As of December 2011, 33 sites were audited involving 155,000 workers

25

Investor Meetings - Paris - Franco Bernabe' presentation (July, 3 - 4 2012)

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