Telecom Italia Group

TELECOM ITALIA GROUPdbAccess TMT ConferenceLondon, September 3rd, 2014

Marco Patuano

dbAccess TMT Conference 2Marco Patuano

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 ofdevelopments and changes in 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 Telecom Italia Group. Such forward looking statements are not guarantees offuture performance and involve risks and uncertainties, and actual results may differ materially from those projected or implied in the forward lookingstatements as a result of various factors. Consequently, Telecom Italia makes no representation, whether expressed or implied, as to the conformity of theactual results with those projected in the forward looking statements. Forward-looking information is based on certain key assumptions which we believe to bereasonable as of the date hereof, but forward looking information by its nature involves risks and uncertainties, which are outside our control, and couldsignificantly affect expected results. Analysts and investors are cautioned not to place undue reliance on those forward looking statements, which speak onlyas of the date of this presentation. Telecom Italia undertakes no obligation to release publicly the results of any revisions to these forward looking statementswhich may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telecom Italia business oracquisition strategy or planned capital expenditures or to reflect the occurrence of unanticipated events. Analysts and investors should consult the Company'sAnnual 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 Commissionwhich may identify factors that affect the forward looking statements included herein.

The accounting policies adopted in the preparation of the Half-Year Condensed Consolidated Financial Statements as of and for the six months ended 30June 2014 have been applied on a basis consistent with those adopted in the Annual Consolidated Financial Statements at 31 December 2013, to whichreference should be made, except for the new standards and interpretations adopted by the Telecom Italia Group starting from 1 January 2014 which had noeffects on the Half-Year Condensed Consolidated Financial Statements as of and for the six months ended 30 June 2014. Please note that the limited reviewon the Telecom Italia Group Half-Year Condensed Consolidated Financial Statements at 30 June 2014 has not yet been completed.

Following the classification, starting from the fourth quarter 2013, of the Sofora - Telecom Argentina group as a disposal group (Discontinued operations/Non-current assets held for sale) the consolidated financial statements data of prior periods (including the first half 2013) have been restated accordingly andtherefore the Sofora - Telecom Argentina group is no longer separately presented as a business unit.

Furthermore:

•starting from the First Quarter 2014, Organic change in Revenues, EBITDA and EBIT are determined excluding, where applicable, only the effects of thechange in the scope of consolidation and exchange differences and therefore don’t take into account, as in the past, non-organic income and expenses,including those non-recurring;

•starting from the Interim Report at 31 March 2014, the Domestic business unit includes the Olivetti group, in addition to Core Domestic and InternationalWholesale. This different presentation reflects the commercial and business placement of the Olivetti group and the process of integrating its products andservices with those offered by Telecom Italia in the domestic market. In the past, the results of the Olivetti group were included in the “Olivetti” business unit;

as a result, the data for prior periods under comparison have been restated, accordingly.

dbAccess TMT Conference 3Marco Patuano

Service Revenues4,871 mln €

• Organic Performance at -7.1% YoY vs -6.5% in 1Q’14 reflects:• Domestic trend stabilization with a consistent improvement in mobile service

revenues. Good acquisition trend in Fixed & Mobile UBB;• Slight erosion in TIM Brasil figures impacted by full MTR drag in 2Q Solid growth

in Mobile Generated Revenues

• Organic improvement to -4.8%YoY vs -5.7% in 1Q’14 driven by:• +0.8pp in 2Q in Domestic operations (+2.5pp net of subsidy);• Continued Sound performance of TIM Brasil

Ebitda2,145 mln €

InnovativeCapex

~250 mln €

• Constant progression in this key area: • Italy: 83 municipalities covered with fiber, 60.5% population reached by LTE,

TIM recognized by AGCOM as best network in Italy for speed and security in data transmission;

• Brazil: 66 cities covered by mobile BB project (+13 cities vs 1Q’14)

OpFCFgeneration

1,058 mln €• Strong Performance in 2Q’14: +11% YoY

• Reduction of 0.2 bln € vs 1Q’14 & -1.5 bln € vs 2Q’13Net debt 27,36 bln €

2Q’14 Group Highlights: In Line with Plan

dbAccess TMT Conference 4Marco Patuano

Innovative revenues on total (1)M

obile

BB

CB

Fibe

rCB

net

add

s

6.853  7.166 8.023  8.444  8.677  9.151 

0% 1% 2%4% 5%

7%

1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14

MBB Users % LTE on MBB Users

+4,3+10,9

+29,8

+58,1

0,10,2

0,5

>1.0

3Q'13 4Q'13 1Q'14 2Q'14

Fiber CB Avg daily acquisition ('000)

>100k clients

at the end of June

~+30%YoY

Investing to support the growth in data and new services

(1) net of wholesale

‘000

25% 32%

28% 32%

2Q’13 2Q’14

2Q’13 2Q’14

Mob

ile s

ervi

ceFi

xed

serv

ice

innovative traditional

innovative traditional

Italy: Innovative Investments are meeting a Growing Demand

dbAccess TMT Conference 5Marco Patuano

Italy: the Lego of our Convergent StrategyTelecom “Tutto” TIM “Smart”

Delta ARPU post vs pre launch phase

new linesexisting CB

Growth

Broadlystable Stable

Doubledigit growthm

obile

fixed

A Value-Accretive PropositionA Successful Proposition: locked-up more than 1 mln clients

~5k per day:>50% new client &

upselling only-voice

The Leaders in Connectivity and Content are together with a unique offer

Telecom Italia & Sky

• Commercial partnership for Sky Online (OTT SKY offer)

• Complete Sky Offer on Telecom Italia IPTV (Feb. 2015)

• Accessibility over mobile of SkyGO and premium sport content with «connectivity embedded”

• ~300k clients at July ’14 of which ~40% with decoder (vs ~ 15% July ’13)

• Strong reduction in churn rate: ~5% (vs >15% in July ’13)

• Relevant growth in viewing time thanks to technical improvements :

2.5x vs July ’13

Cubovision rebranded:“TIM” as one single commercial brand

dbAccess TMT Conference 6Marco Patuano

Traditional• Outgoing ARPU

stabilization• Zero MTR drag• Constant recovery in

calling CB

Innovative• Increasing smartphone

penetration• 4G uptake support• New digital entertainment

services

Serv

ice

Rev

enue

s Tr

end

Italy: Clear signs of improvement for a better 2H’14%YoY

‐14.9%‐13.3%

1Q'14 2Q'14 3Q'14 4Q14

++

Traditional

• F/M traffic erosion reduction due to bundled offers

• Access valorisation

Innovative• Constant support from BB

CB growth• Increased fiber penetration

and adoption• Continued uptrend in ICT

services

-7.3% -8.6%

1Q'14 2Q'14 2H'14

+

ARPU

CB

-7,3%

-8.6%

1Q'14vs1Q'13 2Q'14vs2Q'13

-10,4%-13,1%

+0,1%

+1,8%

-14,9%-13.3%

1Q'14vs1Q'13 2Q'14vs2Q'13

-24,1%-21,9%

+9,9%

+8,4%

Serv

ice

Rev

enue

s Tr

end2H

’14

2Q’1

4

1Q’14vs1Q’13 2Q’14vs2Q’13 1Q’14vs1Q’13 2Q’14vs2Q’13 1Q’14vs1Q’13 2Q’14vs2Q’13 1Q’14vs1Q’13 2Q’14vs2Q’13

Traditional services Innovative

servicesTraditional services

Innovativeservices

Mobile Service Revenues Fixed Service Revenues

dbAccess TMT Conference 7Marco Patuano

Brazil: Our Summer Assessment Reinforced the Importance of its Value

TIM’s Infrastructure Strategy: Data Centric Approach

Cap

acity

Cov

erag

eAv

aila

bilit

y

• Higher speed

• 4G roll out

• Mobile broadband project acceleration

• Backhauling infrastructure

• Homogeneous

• Access upgrade

• Coverage in all relevant areas

• Site densification

• Small cell / Wi-Fi

• Always available

• Fine tunning

• Fiber rings / redundance

• Resilience

Number of 3G & 4G Sites

Number of Wi-Fi & Small Cell

Number of sites with fiber (FTTS)

4Q13 2Q14

4Q13 2Q14

2Q13 2Q14

+19%

+47%

3.5x

2H’14 Network Approach

700Mhz Auction (30th September 2014)

Supports our continued development of mobile data, increasing our 4G frequencies and roll-out

Best-in-Class Network Investments to address New Customer Needs

2G

3G

3G“dense”

DensificationProject

Retaining customers with data devices

Improve quality of experience

Boost data usage

MBBProject

dbAccess TMT Conference 8Marco Patuano

+7%

+9%

-30%

-23%

-1%

+1%

-18%

-22%

mobile

• Outgoing Voice Revenues flat• SMS declining trend

Excellent take-up in data KPIs in 2Q • Smartphone & webphone penetration at 62% • Smartphones ~71% of new handset sales

\

YoY, %

+3%ex-MTR

-2,0%

+0,3%

Total ServiceRevenues

Mobile & Fixed Service Revenues

Mobile Service Revenues(1)

-7%

flat

-1%

Outgoing SMS

Outgoing Voice

Traditional

+73%

+35%

+44%

Vas Content & other VAS

Data

Innovative

1Q’14

2Q’14

fixed(2) receivedgenerated

1Q’14 partially impacted by MTR cut

2Q’14 fullyaffected by this yearMTR cut

(1) visitors&other revenues non included(2) revenues based on net contribution

Brazil: Mobile Data Demand is Rapidly Expanding

dbAccess TMT Conference 9Marco Patuano

The Market is Asking for TIM% of smartphone sales among players in 2Q14

% of smart + webphone on TIM’s base in 2Q14 % of smartphone over new sales in 2Q14

Postpaid

o Reduce churn on postpaido Attract dual SIM card users traffico Renewed focus on corporate customers

o Leveraging on “pure mobile” distinctivenesso Expanding daily tariff scheme to new regionso Simplicity / Transparency

R$ 7 weekly service package

R$ 0.75 daily offer

Prepaid

35%

50%62%

2Q12 2Q13 2Q14

39%

57%71%

2Q12 2Q13 2Q14

41%

23%

28%

9%P3

P2

P1

TIM

Managing customer base… To Infinity and beyond…

Penetration of smart + webphones drives data usage growthSource: GFK Group Source: Company Source: Company

Brazil: Building on our Commercial Strenght

dbAccess TMT Conference 10Marco Patuano

Domestic• Domestic business on track with 2014-2016 Plan

• Improving trend in mobile space paving the way to a solid 2H2014• Line losses and voice ARPU weak as expected; increasing BB ARPU and sound

fiber take-up rate leading to a better fixed revenues mix

• Continued over-performance on efficiencies with a positive impact on OpFCFEfficiency

Plan

InnovativeCapex

• The take-up of innovative services shows we must keep our focus on CAPEX for innovation

M&A • Driven by Financial Discipline

Marco Patuano

• Free Cash Flow Generation well on track and debt duly managedFCF

generation

2Q’14 Group Take-Aways

Brazil• Brazilian mobile transformation to a data driven market is underway: data revenues

almost offset MTR drag and by 2016 it will account for 40% of total revenues• Focus on development and investment ‘14-’16 Plan leveraging on TIM Brasil’s strong

position in the market.

dbAccess TMT Conference 11Marco Patuano

Appendix

dbAccess TMT Conference 12Marco Patuano

Brazilian TLC Market – Mobile Accesses Trend (‘000)75,988 76,200 76,614 77,245 78,465 79,357 79,406

71,232 72,195 72,892 73,431 73,917 74,203 74,372

66,308 66,472 67,432 68,704 68,749 68,776 68,932

49,494 49,708 50,013 50,216 50,579 51,081 51,095

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Jul‐14

Telefônica Brasil TIM Claro Oi

Pre-Paid Post-Paid

56,47055,515

54,476

53,552 53,553 53,188 52,984

60,306 60,803 60,953 61,146 61,687 61,963 62,123

52,89552,768 53,563

54,388 54,144 53,964 54,012

41,107 41,326 41,640 41,753 42,035 42,329 42,278

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Jul‐14

19.51820.685

22.13823.693

24.91226.169 26.422

10.926 11.393 11.940 12.285 12.230 12.239 12.249

13.413  13.705 13.869  14.316  14.605  14.812  14.920 

8.386  8.382  8.374  8.463  8.545  8.752  8.818 

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Jul‐14

dbAccess TMT Conference 13Marco Patuano

Brazilian TLC Market – Market Shares on Mobile Accesses (%)28,78  28,67  28,56  28,49  28,68  28,78  28,75 

26,98  27,17  27,17  27,09  27,02  26,91  26,93 

25,11  25,01  25,14  25,34  25,13  24,95  24,96 

18,74  18,71  18,64  18,52  18,49  18,53  18,50 

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Jul‐14Telefônica Brasil TIM Claro Oi

26,71  26,30  25,78 

25,31  25,24  25,06 24,97 

28,53  28,81  28,84  28,90  29,07  29,19  29,27 

25,02  25,00  25,34 

25,71  25,51  25,42  25,45 

19,45  19,58  19,70  19,73  19,81  19,94  19,92 

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Jul-14

37,06  37,83  38,89  39,81  40,59  41,25  41,33 

20,75 20,84 20,97 20,64 19,93 19,29 19,16

25,47  25,07  24,36  24,05  23,80  23,35  23,34 

15,92  15,33  14,71  14,22  13,92  13,80  13,79 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Jul-14

Pre-Paid Post-Paid