The Telecom Italia 2009 Results and the 2010-2012 Strategic Plan Update

1. Telecom Italia Group
Strategic Plan Update
ANDREA MANGONI

2. 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.
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.
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ANDREA MANGONI

3. Key Objectives and Strategic Levers Confirmed
Domestic Enhanced
Focus on
Free Cash
Core Flow
Markets Brazil Generation A Platform to
Create Solid
Growth of
No M&A for Geographic Shareholder
Deleverage & Value
Capital Expansion Strengthen
Discipline Non-Core Asset Balance
Sheet
Disposals
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ANDREA MANGONI

4. Cash Flow Generation Confirmed as our Priority
Euro Bln
OFCF and FCF before Dividends (2009) OFCF and FCF before Dividends (2010-12)
21
-0.5
~1 10.5
6.3
-11
1.0 2.7 3,08
3,08
1.7
-4.6
OFCF Financial FCF Non Normalized OFCF Maximum Financial Hansenet FCF
Exp./Taxes before recurring FCF Sparkle Exp./Taxes Disposal before
Dividends taxes before Impact Dividends
Dividends
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ANDREA MANGONI

5. Cash Taxes now almost Normalized
Euro Bln
Average
Normalized Cash
~2.3
Taxes for ’10-’12:
~1.3 bn
Last year of tax
asset benefit
~0.6
2008 2009 2010 2011 2012
Group Tax Rate Average Group Tax
(P&L Tax Rate) Rate in ’10-’12: ~36%
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ANDREA MANGONI

6. Stable Financial Expenses due to Solid Financial Management
YE 2009 average cost of debt at 5.4%
Minimizing the refinancing risk remains a priority: Group’s liquidity shall cover
12/18 months of the forthcoming maturities
Markets and products will be further diversified.
Fixed rate portion on gross debt is expected to be not lower than ̴ 62%
Substantially stable Financial Expenses in the 3 year plan
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ANDREA MANGONI

7. Group Liquidity Matches 2010– 2012 Maturities
Euro Bln
€ 7.3 bln
Group Liquidity Position *of which € 1.25 bln signed on Feb 12, 2010.
+ 3Y tenor, no covenants, margin as a function of the rating.
25 Italian and International banks, rated at least A,
€ 7.75* bln participated in the facility.
Undrawn Portion of Bank Facilities
=
€ 15.05 bln Group Liquidity Margin ~26.9 ~40.9
1H 2H
Bonds 2,356 486
Drawn Bank Facility 1,500
Loans 316 720
4,172 1,206
3.7 14.0
4.9
5.4
2010 2011 2012 Cumulated Debt Maturities Total M/L
‘10-’12 Beyond 2012 Term Debt
Debt Maturities
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ANDREA MANGONI

8. Focus on Deleveraging Confirmed
Adjusted Net Financial Position (€ Bln)
-5 Bln
34.5 33.9
 Deleverage: a re-affirmed key ~32.0
~29.5
<28
priority
 2008-11 €5 Bln Net Debt
reduction confirmed
2008 2009 2010 2011 2012
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ANDREA MANGONI

9. 2010-12 Net Debt/Ebitda Guidance:
reducing, in a 2.5x/3x range
Ti Net Debt/ Ebitda
3,0x
2,0x
2008 2009 2010 2011 2012
 A 2.5x/3x range for the New Plan horizon has been identified as consistent with our
desired credit profile, with a comfort zone closer to 2.5x
 Impact on TI’s Net Debt from Adjustments carried out by the Rating Agencies is
relatively limited (no pension funds issues and reduced operating leases)
 We therefore believe that, in the context of TI Group’s operating performance as per
2010-2012 Plan, our deleverage trend is in line with our current ratings
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ANDREA MANGONI