Fb pgp cc_3_q12_9_novembre

TELECOM ITALIA GROUP

9M 2012 ResultsMilan, November 9th, 2012

Telecom Italia 9M 2012 Results

FRANCO BERNABE’ - PIERGIORGIO PELUSO

1

TELECOM ITALIA GROUP9M 2012 Results

FRANCO BERNABE’

Safe HarbourThese presentations contain statements that constitute forward-looking statements within the meaning ofthe Private Securities Litigation Reform Act of 1995. These statements appear in a number of places inthis presentation and include statements regarding the intent, belief or current expectations of thecustomer 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 Companyand the Group.Such forward looking statements are not guarantees of future performance and involve risks anduncertainties, and actual results may differ materially from those projected or implied in the forwardlooking statements as a result of various factors. Consequently, Telecom Italia S.p.A. makes norepresentation, whether expressed or implied, as to the conformity of the actual results with thoseprojected in the forward looking statement.Forward-looking information is based on certain key assumptions which we believe to be reasonable as ofthe date hereof, but forward looking information by its nature involves risks and uncertainties, which areoutside our control, and could significantly affect expected results.Analysts are cautioned not to place undue reliance on those forward looking statements, which speak onlyas of the date of this presentation. Telecom Italia S.p.A. undertakes no obligation to release publicly theresults of any revisions to these forward looking statements which may be made to reflect events andcircumstances after the date of this presentation, including, without limitation, changes in Telecom ItaliaS.p.A. business or acquisition strategy or planned capital expenditures or to reflect the occurrence ofunanticipated events. Analysts and investors are encouraged to consult the Company's Annual Report onForm 20-F as well as periodic filings made on Form 6-K, which are on file with the United States Securitiesand Exchange Commission.Some data for the 2011 financial year used in comparisons included into this presentation are restated asa result of the early adoption of the revised IAS 19 (Employee Benefits) version and the reclassification ofMatrix from the Business Unit Domestic–Core Domestic to the Business Unit Other Activities

- PIERGIORGIO PELUSO

2


FRANCO BERNABE’

TI Group 9M 2012 Results

Telecom Italia Core Markets ResultsItalyBrazilArgentina

Wrap-up

Agenda


3


FRANCO BERNABE’

Euro mln, %TI Group: Revenues & EBITDA trends

7,073 7,392

7,470 7,401

7,516 7,268

9M11 9M12

Reported Revenues

+2 M€+0.0%

-69-0.9%

+319+4.5%

22,059 22,061

2Q

1Q

3Q-248-3.3%

7,019 7,392

7,340 7,410

7,368 7,268

9M11 9M12

Organic Revenues

+343 M€+1.6%

+70+1.0%

+373+5.3%

21,72722,070

-100-1.4%

2Q

1Q

3Q

2,939 2,973

3,017 2,886

3,181 3,001

9M11 9M12

Reported EBITDA

41.4% 40.2%% on Revenues -1.2p.p.

9,137 8,860

-131-4.3%

+34+1.2%

-180-5.7%

-277 M€-3.0%

2Q

1Q

3Q

2,961 2,976

2,991 2,917

3,159 3,031

9M11 9M12

Organic EBITDA% on Revenues 41.9% 40.4%-1.5p.p.

9,111 8,924

-74-2.5%

+15+0.5%

-128-4.1%

2Q

1Q

3Q

-187 M€-2.1%

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FRANCO BERNABE’

Revenues

EBITDA

Weight on TI Group*

38.0%

25.8%

Euro mln, Organic Data

TI Group

9M12

22,070

8,924

% yoy

+1.6%

-2.1%

9M12

5,595

1,477

% yoy

+11.0%

+9.2%

25.3%

16.6%

Brazil

9M12

2,804

825

% yoy

+20.0%

+8.0%

12.7%

9.2%

Argentina

9M12

13,422

6,713

% yoy

-4.7%

-4.6%

60.5%

75.2%

Domestic

TI Group Key Results by Core Markets

* Revenues based on net contributions.

5


FRANCO BERNABE’

(1,256)

3,182 1,926

+335 2,261 (91) +94 (30) +11 2,245 (319)

1,926

Net Income9M11

GW write-down9M11

Net Incomeexcl. GW write-

down 9M11

Minorities9M11

Income anteMin & Disc.

Ops. exc. GWwrite-down

Delta EBIT excl.GW write-down

Delta Interest& Net

Income/Equity

Delta Taxes Delta NetIncome of

assetsdisposed

Income/(Loss)ante Min &Disc. Ops.

9M12

Minorities9M12

Net Income9M12

Net Income EvolutionEuro mln

Equity +15 Income from inv. (17)

o/w Cuba (17) Net Fin. Charges +96

Flat

o/w Brazil (35) Argentina (9) TI Media +16


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FRANCO BERNABE’

1,224 907

296

22

9M11 9M12

Euro mln, Reported Data

Operating Free Cash Flow Net Cash Flow

Revenues

Opex

Capex

WC

OFCF

22,061+2

(190)

(279)1,520

929

Normalized

Free Cash Flow Generation

(591)

Cuba: 398Loquendo 53Economics

Interest TA (155)

Etecsa Cuba: 38TIM Fiber: (9)HanseNet (7)

(317)

9M (383)3Q (114)2Q +1811Q (450)

22,059

+84

(383)

7


FRANCO BERNABE’

Focus on Net Debt Performance

Euro mln

Adj. Net Financial Position

29,948

30,414 30,360

29,485

9M11 FY11 1H12 9M12

(463)

(929)

(875)

8


FRANCO BERNABE’

Deleverage Plan on Track

OpFCF: ~2.5€bln (in line with 4Q11 excl. LTE) Cash Tax & Fin. Expenses: ~1.1€bln

Net CF before Disposals: ~1.4/1.5€bln

Final Delta to FY 12 Debt target will come from Disposals, as per our Plan

Net Cash Flow 4Q12E

29.5

9M12 2012

27.5

2013

25Inside 2x Net Debt/

EBITDAΔ ~2€blnin 4Q12

2014& Onwards

Euro bln Current Dividend Confirmed as Floor for ’12 - ’14

9


FRANCO BERNABE’

Recent Bond Issue / Maturities and Risk Management

On September 13, 2012 a 1 Billion euro fixed rate bond was offered to institutional investors TI benefited from a reduction of 258 basis points YoY(143bp credit and 115bp interest rate) in all-in yield vssame tenor offer in Oct. 2011Bond Details:- 5Y Maturity - Coupon 4.5% - Issue Price 99.693% - Spread vs swap rate 355 - Yield 4.57%

Average debt maturity: 7.10 years (bond-only8.05 years)

Fixed rate portion on gross debt: approximately 73.9%

About 46% of outstanding bonds (nominalamount) is denominated in USD, GBP and YEN and is fully hedged

Cost of debt: 5.4%

The figures are net of the following adjustments due to the fair value measurement of derivatives and related financial liabilities/assets:- the impact on Gross Financial Debt is equal to 2,546 Euro/mln (of which 695 €/mln bonds)- the impact on Financial Assets is equal to 2,060 Euro/mln

Therefore, Net Financial Indebtedness is adjusted by 486 Euro/mln.

Well Diversified and Hedged Debt

3.7%5.7%

70.9%

Bonds 27,197

Total Gross Debt Net of Adjustment: Euro 38,372 mln

Gross debt Financial assets

of which C & CE and marketable securities- C & CE - Marketable securities

- Italian Government Securities- Other

38,372(8,887)

Bank Facility 1,959

Bank & EIB 5,589

Op. Leases and long rent 1,427

Other 2,200

14.6%5.1%

Euro mln

Net Financial Position 29,485

(7,385) (6,755)

(630)(447)

(183)

PIERGIORGIO PELUSO

10


FRANCO BERNABE’

Bonds Loans (of which long-term rent, financial and operating lease payable Euro 1,412 mln) Drawn bank facility

Robust Liquidity Margin and Well-Distributed Debt MaturitiesEuro mln

€ 7.39 bln Group Liquidity Position

+€ 7.45 bln

Undrawn Portion of Facility/Committed

=€ 14.84 bln

Group Liquidity Margin

PIERGIORGIO PELUSO

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(1) Euro 36,344 mln is the normal amount of outstanding medium-long term debt by adding IAS adjustments (Euro 1,301 mln) and current liabilities (Euro 726 mln), the gross debt figure of Euro 38,372 mln is reached.

N.B. Debt maturities are net of Euro 1,246 mln (face value) of repurchased own bonds (of which Euro 1,031 mln related to bonds due in the next 24 months)

,

11


FRANCO BERNABE’

Progress on TI Media Disposal

Revenues

EBIT

EBITDA

CAPEX

Net Debt

Net Income

Euro mln

Action Plan

Info memos sent to selected bidders at the endof August

Non-binding offers received at the end ofSeptember, for TI Media as a whole and for TVBusiness (La7 S.r.l**) only

Due diligence underway with admitted bidders:

Virtual Data Room started beginning ofOctober

Management Presentation concludedend of October

Focused Management meetings inprogress

Binding offers expected by the 1st week ofDecember

9M 12

161

(72)

41

(26)

224

(54)

9M 11

170

(16)*

33

27*

133

(15)

*Includes 20.5 Euro mln paid by Telecom Italia to Telecom Italia Media in 2011 as compensation for the earlyresolution of the “Competence Center” agreement.**La7 S.r.l. owns the brands La7 and La7d and holds 51% of MTV Italia S.r.l.

PIERGIORGIO PELUSO

12


FRANCO BERNABE’



Wrap-up

Agenda

13


FRANCO BERNABE’

-1.5%

-2.6%-2.9%

-2.4%

-1.6%

-0.5%

0.2%0.8%

1Q12 2Q12 3Q12E 4Q12E 1Q13E 2Q13E 3Q13E 4Q13E

Real GDP - YoY trend

Households Spending - YoY trend

Industrial Production - YoY Trend

Italy: Macro Indicators have not improved

Source: Prometeia

-5.4%

-7.8% -7.7%-5.5%

-3.1%-1.0%

0.9%2.0%

1Q12 2Q12 3Q12E 4Q12E 1Q13E 2Q13E 3Q13E 4Q13E

-2.8%-3.6% -3.9%

-3.5%

-2.5%

-1.5%-0.6%

0.2%

1Q12 2Q12 3Q12E 4Q12E 1Q13E 2Q13E 3Q13E 4Q13E

14


FRANCO BERNABE’


Still double-digit performance in Mobile Small Screen Browsing

TI Retail BB line loss evolution under control (-7k in 3Q12), with a stable Market Share at approximately 52%

Value-oriented approach on Fixed BB with a constant increase in Retail ARPU

Fixed 3Q results affected by tough comparison with last year

Mobile Top Line negatively affected by MTR cut, price cap on EU Roaming and tougher competitive environment

Sound and stable marginality in 9M at 50%

Developing Innovation

BB Achievements

Resilient Performance in Core Markets

Success of SuperInternet offer continues

LTE Services launched in Turin, Milan, Rome and Naples on Nov. 7th

Innovative F-M data bundles launched on a trial basis

Italy: Revenues & Ebitda Trend

4,586 4,477

4,753 4,580

4,739 4,365

9M11 9M12

-374-7.9%

-109 -2.4%

-173-3.6%

Revenues-656 M€

-4.7%14,078 13,422

2Q

1Q

3Q

2,283 2,218

2,291 2,206

2,460 2,289

9M11 9M12

-171-7.0%

7,034-321 M€

-4.6%

50% 50%0.0 p.p.

6,713

-85-3.7%

-65-2.8%

EBITDA

2Q

1Q

3Q

% on Revenues

15


FRANCO BERNABE’



Wrap-up

Agenda

16


FRANCO BERNABE’


Brazil: Revenues & EBITDA Trends

1,619 1,928

1,695 1,805

1,726 1,862

9M11 9M12

Revenues

+555M€+11.0%

2Q

1Q

+110+7.0%

+309+19.1%

5,0405,595

3Q+136+8.0%

445 505

453 482

455 490

9M11 9M12

EBITDA

+124 M€+9.2%

+29+6.8%

+60+13.5%

1,353 1,477

26.8% -0.4 p.p. 26.4%% on Revenues

2Q

1Q

3Q+35

+7.9%

Value Creation

Revenue Growth

Size & Market

TIM net adds: 9M still #1 in spite of sales ban. Customer Base: 69.4 mln lines, +17% YoY (#1 operator in growth)

#1 in prepaid segment and closing overall gap with #1 operator

Leader in Handset market despite unique No Subsidy approach

EBITDA organic performance in progress in 3Q: +7.9%YoY

Organic trends plus TIM Fiber related cost improvements and efficiencies in 4Q, confirm commitment to FY12 guidance

Voice Outgoing Revenues supported by new acceleration in MOU, Voice Incoming affected by MTR cut (14% last March)

VAS gross revenues +34.6% YoY, driven by continued smart/web phone penetration increase (now at 39%, up from 19.5% in 3Q11)

VAS gross revenues 19.4% of total gross mobile service revenues against 15.7% in 3Q11

17


FRANCO BERNABE’



Wrap-up

Agenda

18


FRANCO BERNABE’


Argentina: Revenues & EBITDA Trends

727 901

781 922

829 981

9M11 9M12

Revenues

+467 M€+20.0%

+141+18.1%

+174+24.0%

2,3372,804

2Q

1Q

3Q+152

+18.2%

248 289

257 261

258 275

9M11 9M12

EBITDA

+62 M€+8.0%

+4+1.4%

+41+16.6%

763 825

32.7% -3.3 p.p. 29.4%

+17+6.5%

2Q

1Q

3Q

% on Revenues Value Creation Going Forward

Postpaid and Mobile VAS drive consistent growth in value KPIs: 3of 4 ports-in are high value, ARPU +12% YoY 9M

Internet +70% YoY and VAS (SMS) +29% YoY in 9M, VAS/ServiceRevenues at 52% (vs. 47% 9M11)

Broadband ARPU growth: +16% YoY in 9M, growing valuethrough bundling and video streaming

Fixed Voice ARBU +5% YoY 9M despite tariff freeze

Mobile Price positive adjustments in 4Q Room to improve cost structure and sustain margins in

inflationary environment: Leverage on positive MNP momentum to rationalize

commercial efforts (lower unitary sub/SAC&SRC) Positive wage negotiation outcome gives YoY support Infrastructure development improves interconnection cost

trend Capex freed due to cancelled spectrum auction, reassigned to

additional access network deployment

18.9 mln mobile lines with 33.3% market share, leading MNP and service revenue performance

Solid market performance in fixed BB, Accesses +7% vs Sept 11, stable at ~34%* market share among top 3 operators

Revenue Growth

Size & Market

*Estimates

19


FRANCO BERNABE’



Wrap-up

Agenda

20


FRANCO BERNABE’

** excluding Latam spectrum licences

TI Group – FY 2012 Key Guidance

Revenues

EBITDA

NFP Adj.**

Stable

Broadly Stable

27.5 € bln

Organic Data*

*exchange rates 2011 (R$/€ 2.33; ARS/€5.74), excluding impact from non-organic items

Telecom Italia Group FY 2012 Key Guidance Confirmed

21


FRANCO BERNABE’

Appendix


22


FRANCO BERNABE’

22,059 21,727 22,070 22,061 (8) (324) 0 (656) +555 +467 (9) (25) +11 (9)

9M11 Change inconsolid. area

Exchangerate impact

Other non-organic items

9M11Organic

Domestic Brazil* Argentina** Media Olivetti Other & Elim. 9M12Organic


9M12

Litigation & Settlement (9)

Domestic (8)Olivetti (17)Other & Elim. +17

Euro mln

+2 M€ (flat)

* Average Exchange rate (Real/Euro): 2.46 in 2012, 2.29 in 2011 * * Average Exchange rate (Peso/Euro): 5.71 in 2012, 5.75 in 2011

Organic Variation+343 M€ (+1.6%)

TI Group – Revenues Evolution

Domestic +17Brazil (355)Argentina (13)Olivetti +1


23


FRANCO BERNABE’

9,137 9,111 8,924 8,860 (1) (84) +59 (321)

+124 +62 (32) +9 (29) (64)


Exchangerate impact


9M11Organic



9M12

Litigations & Settlement (10)Restructuring charges (30)Other net charges (24)

-277 M€ (-3.0%)

Organic Variation-187 M€ (-2.1%)

41.4% 41.9% 40.4% 40.2%

Euro mln

TI Group – EBITDA Evolution

Domestic +6Brazil (94)Argentina +4


Litigations & Settlement +15Restructuring charges +2Other net charges +42


24


FRANCO BERNABE’

1,809

4,976 4,945 4,900

0 (38)

+3,205 (44) +65 (3) (35) +8 (22) (45)


Exchangerate impact


9M11Organic



9M12

GW Writedown +3,182Other net charges +23

TI Group – Ebit EvolutionEuro mln

Organic Variation-31 M€ (-0.6%)

+3,091 M€ (+170.9%)

22.4% 22.2%


22.9%Domestic +4Brazil (45)Argentina +3

Litigations & Settlement (10)Restructuring charges (30)Net capital gains +21Other net charges (26)


25


FRANCO BERNABE’

Equity +15 Income from inv. (17)

o/w Cuba (17) Net Fin. Charges +96

Net Income Evolution


+0M€ (flat)

o/w Argentina (199) Brazil (136) TI Media +16

Net Income excl. GW

write-down9M11

EBIT excl.

GW writedown

Net Interest

&Net Income

/Equity

Taxes

Minorities9M11

Income ante Min & Disc.

Ops. excl. GW write-

down

Minorities9M12

Income/(Loss)

ante Min & Disc. Ops.

9M12

Net Income9M12

Net Income

of assets disposed

Net Income 9M11

GW Writedown

9M11

1,9262,245335 2,261 (91) +94 (30)

1,926+11 (319)

(1,256)

+3,182


Euro mln

26


FRANCO BERNABE’

Free Cash Flow Generation and ΔOWC Dynamics


Operating Free Cash Flow

Revenues

Opex

Capex

WC

OFCF

22,059 22,061+2

-190

+ 84

- 383

-279

Brazil: - 227 (capex acceleration for network upgrades and increased cashout from TLC fees)

Domestic: +61 Argentina: - 145 TI Media & Other: -72

4,524 4,141

1,423 1,339

3,190 3,380

12,922 13,201

9M11 9M12

Δ Severance Indemnities,

Funds & Other

Net OtherReceivables

/Payables

TradeReceivablesInventories

Δ OWC & Other9M12

(1,339)

(94) 674

(1,460)(452) (7)

+84+30 +543* (428)* (159)* +98

Δ Operating Working Capital

TradePayables

Abs YoY

9M +843Q +242Q +4951Q (435)



* The variation includes the effect of settlement with OLO.

27


FRANCO BERNABE’

30,414 29,485 (4,141)

1,027 (32) 2,217

2011YEAdjusted

Operating FCF Dividends Disposals & Fin.Investment

Cash Fin./ Taxes &other Impacts

9M12Adjusted


Net Debt Dynamics

(929)

EBITDACAPEX WC & Others

Operating FCF

(8,860)+3,380+1,339

(4,141)

Net Debt Evolution


28


FRANCO BERNABE’

2012 2011 Abs. %

REVENUES 22,061 22,059 2 0.0Other Operating Income 169 167

TOTAL REVENUES & OTHER INCOME 22,230 22,226 4 0.0

Total Purchases of materials and external services -9,676 -9,442 -234

Personnel -2,901 -2,922 21

of which payroll -2,846 -2,866 20

Other operating costs -1.339 -1.271 -68

Change in inventories 112 135 -23

EBITDA 8,860 9,137 -277 -3.0% on Revenues 40.2% 41.4%

Depreciation & Amortization -3,967 -4,169 202

Writedowns and revaluations of non current assets -3,182 3,179

Gains/ losses of non current assets realization 10 23 -13

EBIT 4,900 1,809 3,091% on Revenues 22.2% 8.2%

Income (loss) equity invest. valued equity method -4 -19 15

Other income ( expenses ) from investments 15 -17

Net Financial Income / (Expenses) -1.400 -1.496 96

Income before Taxes & Disc. Ops. 3,494 309 3,185% on Revenues 15.8% 1.4%

Taxes -1.249 -1,219 -30

Income before Disc. Ops. 2,245 -910 3,155Net income (loss) of assets disposed 0 -11 11

Net Income (ante Minorities) 2,245 -921 3,166% on Revenues 10.2% -4.2%Minorities -319 -335 16

Net Income (post Minorities) 1,926 -1,256 3,182% on Revenues 8.7% -5.7%

9M

TI Group 9M12 – P&L

Capitalized Cost and Others 434

-3

-2

411

2

23

1.2

2.5-0.7

-0.7

5.4

17.0-5.6

-4.8

-99.9

-56.5

170.9


29


FRANCO BERNABE’

TI Group 9M12 – Main Results by BU

Reported9M

REVENUES2012 2011 Abs. %

Domestic 13,413 14,069 -656 (4.7)Wireline Domestic 9,604 10,002 -398 (4.0)Tim Domestic 4,960 5,286 -326 (6.2)

Brazil 5,595 5,395 200 3.7Argentina 2,804 2,324 480 20.7Media 161 170 -9 (5.3)Olivetti 185 226 -41 (18.1)Other Activities & Elim. -97 -125 28 -

24.5TI Group 22,061 22,059 2 0.0

Organic9M

REVENUES2012 2011 Abs. %

Domestic 13,422 14,078 -656 (4.7)Wireline Domestic 9,613 10,011 -398 (4.0)Tim Domestic 4,960 5,286 -326 (6.2)

Brazil 5,595 5,040 555 11.0Argentina 2,804 2,337 467 20.0Media 161 170 -9 (5.3)Olivetti 185 210 (11,9)-25Other Activities & Elim. -97 -108 11 -

TI Group 22,070 21,727 343 1,6

9M

EBITDA

2012 2011 Abs. %

Domestic 6,713 7,034 -321 (4.6)Brazil 1,477 1,353 124 9.2Argentina 825 763 62 8.0Media -26 6 -32 -Olivetti -28 -37 9 24.3Other Activities & Elim. -37 -8 -29 -

TI Group 8,924 9,111 -187 (2.1)EBITDA MARGIN 40.4% 41.9% -1.5 pp

9M

EBITDA

2012 2011 Abs. %

Domestic 6,696 6,953 -257 (3.7)Brazil 1,460 1,444 16 1.1Argentina 825 759 66 8.7Media -26 27 -53 -Olivetti --58 -37 -21 (56.8)Other Activities & Elim. -37 -9 -28 -

TI Group 8,860 9,137 -277 (3.0)

EBITDA MARGIN 40.2% 41.4% --1.2 pp

Euro mln


Documents

Fb pgp cc_3_q12_9_novembre