1. TELECOM ITALIA GROUP1Q 2012 ResultsMilan, May 10th, 2012
Telecom Italia 1Q 2012 Results FRANCO BERNABE
2. TELECOM ITALIA GROUP1Q 2012 ResultsSafe 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 Companys
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. FRANCO BERNABE 1
3. TELECOM ITALIA GROUP1Q 2012 ResultsAgenda TI Group 1Q12
Results Telecom Italia Core Markets Results Italy Brazil Argentina
Wrap-up Appendix FRANCO BERNABE 2
4. TELECOM ITALIA GROUP1Q 2012 ResultsTI Group Key ResultsEuro
mln, Organic data, % Revenues EBITDA % on 42.0% Revenues -1.9 p.p.
40.1% +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 1Q12 1Q11 2Q11 3Q11 4Q11 1Q12 FRANCO BERNABE 3
5. TELECOM ITALIA GROUP1Q 2012 ResultsTI Group Key Results by
Core MarketsEuro mln, Organic Data Weight on TI Group TI Group
Domestic Brazil Argentina 1Q12 % yoy 1Q12 % yoy 1Q12 % yoy 1Q12 %
yoyRevenues 7,392 +5.3% 4,486 -2.4% 1,928 +19.1% 901 +24.0% 60.4%
26.0% 12.2% 38.2%EBITDA 2,966 +0.5% 2,196 -3.4% 505 +13.5% 289
+16.6% 74.0% 17.0% 9.7% 26.7%EBITDA-CAPEX 2,012 -2.1% 1,607 -0.2%
271 -14.6% 168 +5.1 % ~80% ~14% ~8% FRANCO BERNABE 4
6. TELECOM ITALIA GROUP1Q 2012 ResultsTl Media: Corporate
Re-organization leading to Disposal Current Structure Post
Re-organization 77.7% 77.7% TI Media MTV Italia Broadcasting (51%)
NewCo (100%) MTV Adv. 51% 100% (100%) FRANCO BERNABE 5
8. TELECOM ITALIA GROUP 1Q 2012 Results Free Cash Flow
Generation: in line with Targets Operating Free Cash Flow Guidance
OFCF FY12EEuro mln, Reported Data Euro bln FY2011 1Q12 FY2012E +319
7,392 StableRevenues 7,073 TI Group 7.0* ~7.0* 0.6 4,144 4,429 Opex
-285 Breakdown Domestic 5.8* 1.2 Capex 901 -53 954 WC 952 - 431
1,383 OFCF 1,076 - 450 626 Brazil 0.7 1Q11 1Q12 -0.5 Brazil: -
0.3bln (capex acceleration for network upgrades and increased
cashout from TLC fees) Argentina Domestic: - 0.1bln (increased VAT
payment) 0.6 0.05 Argentina: stable TI Media: -0.04bln * Excluding
spectrum acquisitions FRANCO BERNABE 7
9. TELECOM ITALIA GROUP1Q 2012 ResultsNet Income Evolution Euro
mln +57 (+10.4%) Brazil (34) Argentina (9) Argentina (76) Domestic
(18) Brazil (43) T.I. Media +5 +15 (61) 720 +114 (114) 103 652 606
549 Equity +1 Income from inv. (17) Net Fin. Charges +31 Net Income
1Q11 Minorities Income ante Min Minorities Net Income Income/(Loss)
ante 1Q11 & Disc. Ops. 1Q11 Net Interest & 1Q12 1Q12 EBIT
Taxes Min & Disc. Ops. Net Income 1Q12 /Equity FRANCO BERNABE
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10. TELECOM ITALIA GROUP1Q 2012 ResultsAgenda TI Group 1Q12
Results Telecom Italia Core Markets Results Italy Brazil Argentina
Wrap-up Appendix FRANCO BERNABE 9
11. TELECOM ITALIA GROUP 1Q 2012 Results Italy: Continued
Resilience in a Weak Macro Context Real GDP trend Consumer Spending
0.0% 0.0% -2.5% -2.5% -5.0% -5.0% 4Q11A 1Q12A 2Q12E 3Q12E 4Q12E
4Q11A 1Q12A 2Q12E 3Q12E 4Q12E Source: Research Dep. Intesa Sanpaolo
Source: Research Dep. Intesa Sanpaolo Wireless Wireline 96.5% 71.1%
34.0% 0.5% 0.5% 0.8% 26.2% 0.3% -1.0% -3.7% -1.9% -1.7% -2.1% -7.1%
-7.5% -8.7% -11.7% -22.4% -4.9% -4.9% 1Q11 2Q11 3Q11 4Q11 1Q12 1Q11
2Q11 3Q11 4Q11 1Q12 Service Revenues (YoY) Handset Revenues (YoY )
Service Revenues (YoY) Broadband Service Revenues (YoY) Continuous
recovery also supported by a more rational Confirmed the positive
growth in broadband service competition and strong improvement in
main KPIs. revenues with a slight sequential improvement (+0.8%
YoY). Mobile data momentum sustained by high smartphones TI market
share on fixed accesses keeps almost stable. sales. FRANCO BERNABE
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12. TELECOM ITALIA GROUP1Q 2012 ResultsAgenda TI Group 1Q12
Results Telecom Italia Core Markets Results Italy Brazil Argentina
Wrap-up Appendix FRANCO BERNABE 11
13. TELECOM ITALIA GROUP1Q 2012 ResultsBrazil: Revenues and
EBITDA TrendEuro mln, Organic Data Revenues Size +309 M TIM Brazil
confirmed as #2 operator, with service +19.1% 1,928 revenues up
15.9% YoY 1,619 Postpaid users increased to about 10 mln (+25% YoY)
Revenue Growth 1Q11 1Q12 Top line growth driven by community
expansion and internet for All concept EBITDA VAS Revenues
acceleration (>60% YoY) thanks to % on 27.5% -1.3p.p. 26.2%
continued smartphone penetration increase, now at Revenues 31.1%
(12.6% in 1Q11) +60 M +13.5% 505 Value Creation 445 In the last
three quarters, TIM Brasil confirmed its #2 position without
penalizing margins. Service EBITDA margin stable YoY 1Q11 1Q12 Bad
Debt/Gross Revenues ratio stable FRANCO BERNABE 12
14. TELECOM ITALIA GROUP1Q 2012 ResultsAgenda TI Group 1Q12
Results Telecom Italia Core Markets Results Italy Brazil Argentina
Wrap-up Appendix FRANCO BERNABE 13
15. TELECOM ITALIA GROUP1Q 2012 ResultsArgentina: Revenues and
EBITDA TrendEuro mln, Organic Data, % Revenues Size +174 M
Argentina: Personal #1 in Mobile Revenue Share +24.0% 901 Steady
growth in fixed BB accesses (+1% QoQ) 727 Revenue Growth Personal:
strong VAS Revenue growth still driven by 1Q11 1Q12 SMS &
Internet ARPU Personal +16% YoY EBITDA VAS reached 52% of service
revenues 34.1% -2.0 p.p. 32.1% Strong Broadband growth: 1Q12 BB
ARPU +16% YoY +41 M +16.6% 289 248 Value Creation Confirmed
double-digit EBITDA Growth: +16.6% YoY Sound organic EBITDA-CAPEX
generation: +5.1% YoY 1Q11 1Q12 Solid cash position: around 450
million, also due to the delay in spectrum auction FRANCO BERNABE
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16. TELECOM ITALIA GROUP1Q 2012 ResultsAgenda TI Group 1Q12
Results Telecom Italia Core Markets Results Italy Brazil Argentina
Wrap-up Appendix FRANCO BERNABE 15
17. TELECOM ITALIA GROUP1Q 2012 ResultsTelecom 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 FRANCO BERNABE 16
18. TELECOM ITALIA GROUP1Q 2012 ResultsAgenda TI Group 1Q12
Results Telecom Italia Core Markets Results Italy Brazil Argentina
Wrap-up Appendix FRANCO BERNABE 17
19. TELECOM ITALIA GROUP1Q 2012 ResultsTI Group Revenues
EvolutionEuro mln +319 (+4.5%) +174 +6 (13) +6 7,392 0 7,392 7,073
(3) (51) 0 7,019 (109) +309 Domestic +2 Brazil (27) Argentina (26)
Domestic Olivetti (3) (6) Organic Variation Other & Elim. +6
+373 (+5.3%) 1Q11 Change in Exchange Other non 1Q11 Domestic
Brazil* Argentina** Media Olivetti Other & 1Q12 Other non 1Q12
consolid. rate impact organic Organic Elim. Organic organic area
items items* Average Exchange rate (Real/Euro): 2.32 in 2012, 2.28
in 2011 * * Average Exchange rate (Peso/Euro): 5.69 in 2012, 5.49
in 2011 FRANCO BERNABE 18
20. TELECOM ITALIA GROUP1Q 2012 ResultsTI Group EBITDA
EvolutionEuro mln +34 (+1.2%) Agreements and Transactions +6
Agreements and Transactions (1) Other net costs +31 Other net costs
(2) 2,929 0 (15) +37 2,951 (78) +60 +41 (8) 0 0 2,966 (3) 2,963
Domestic 1 Brazil (7) Argentina (9) 41.4% 42.0% Organic Variation
40.1% 41.4% +15 (+0.5%) 1Q11 Change in Exchange Other non 1Q11
Domestic Brazil* Argentina** Media Olivetti Other & 1Q12 Other
non 1Q12 consolid. rate impact organic Organic Elim. Organic
organic area items items* Average Exchange rate (Real/Euro): 2.32
in 2012, 2.28 in 2011 * * Average Exchange rate (Peso/Euro): 5.69
in 2012, 5.49 in 2011 FRANCO BERNABE 19
21. TELECOM ITALIA GROUP1Q 2012 ResultsTI Group EBIT
EvolutionEuro mln +114 (+7.6%) +56 +17 (8) +1 1,622 (3) 1,619 1,534
+22 0 1,505 0 (8) +37 Brazil (4) Argentina (4) Organic Variation
22.0% 21.4% +88 (+5.7%) 21.7% 21.2% 1Q11 Change in Exchange Other
non 1Q11 Domestic Brazil* Argentina** Media Olivetti Other &
1Q12 Other non 1Q12 consolid. rate impact organic Organic Elim.
Organic organic area items items* Average Exchange rate
(Real/Euro): 2.32 in 2012, 2.28 in 2011 * * Average Exchange rate
(Peso/Euro): 5.69 in 2012, 5.49 in 2011 FRANCO BERNABE 20
22. TELECOM ITALIA GROUP1Q 2012 ResultsRobust 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 blnGroup 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). FRANCO BERNABE
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23. TELECOM ITALIA GROUP1Q 2012 ResultsWell Diversified and
Hedged Debt Total Gross Debt Net of Adjustment: Euro 37,513 mln
Maturities and Risk ManagementEuro mln Op. Leases and long rent
Bank & EIB 1,512 5,734 Bank Facility Average debt maturity:
7.32 years (bond Other 4.0% 15.3% 2,248 only 8.38 years) 2,498 6.7%
6.0% Fixed rate portion on gross debt Bonds approximately 72.4%
25,521 Around 47% of outstanding bonds (nominal 68.0% amount) is
denominated in USD, GBP and YEN and is fully hedged Gross debt
37,513 Financial assets (7,201) Cost of debt: 5.5% of which C &
CE and marketable securities (6,158) - C & CE (5,492) -
Marketable securities (666) - Italian Government Securities (527) -
Other (159) Net Financial Position 30,312N.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 2.545 /mln (of which 789 /mln on
bonds); - the impact on Financial Assets is equal to 1.878 /mln.
Therefore, the Net Financial Indebtedness is adjusted by 667 /mln.
FRANCO BERNABE 22
24. TELECOM ITALIA GROUP1Q 2012 ResultsTI Group 1Q12 Results -
P&LEuro mln Reported Data I Quarter 2012 2011 Abs. % REVENUES
7,392 7,073 319 4.5% Other Operating Income 52 48 4 TOTAL REVENUES
& OTHER INCOME 7,444 7,121 323 4.5% Total Purchases of
materials and external services -3,231 -2,995 -236 Personnel -998
-990 -8 of which payroll -987 -980 -7 Other operating costs -456
-398 -58 Capitalized Cost and Others 204 191 13 EBITDA 2,963 2,929
34 1.2% % on Revenues 40.1% 41.4% Depreciation & Amortization
-1,340 -1,425 85 Writedowns and revaluations of non current assets
0 1 -1 Gains/losses of non current assets realization -4 0 -4 EBIT
1,619 1,505 114 7.6% % on Revenues 21.9% 21.3% Income (loss) equity
invest. valued equity method -3 -4 -29 Other income ( expenses )
from investments 0 17 15 Net Financial Income / (Expenses) -439
-470 4 Income before Taxes & Disc. Ops. 1,177 1,048 129 12.3% %
on Revenues 15.9% 14.8% Taxes -457 -396 0 Income before Disc. Ops.
720 652 68 Net income (loss) of assets disposed 0 0 0 Net Income
(ante Minorities) 720 652 68 % on Revenues 9.7% 9.2% Minorities
-114 -103 0 Net Income (post Minorities) 606 549 57 10.4% % on
Revenues 8.2% 7.8% FRANCO BERNABE 23
25. TELECOM ITALIA GROUP1Q 2012 ResultsTI Group 1Q12 Main
Results by BUEuro mln I Quarter I QuarterReported Organic 2012 2011
Abs. % 2012 2011 Abs. %REVENUES REVENUESDomestic 4,486 4,596 -110
(2.4) Domestic 4,486 4,595 -109 (2.4) Wireline Domestic 3,235 3,331
-96 (2.9) Wireline Domestic 3,235 3,330 -95 (2.9) Tim Domestic
1,650 1,679 -29 (1.7) Tim Domestic 1,650 1,679 -29 (1.7)Brazil
1,928 1,646 282 17.1 Brazil 1,928 1,619 309 19.1Argentina 901 753
148 19.7 Argentina 901 727 174 24.0Media 58 52 6 11.5 Media 58 52 6
11.5Olivetti 59 78 -19 (24.4) Olivetti 59 72 -13 (18.1)Other
Activities 1 1 0 0.0 Other Activities 1 1 0 0.0Elim. -41 -53 12
24.5 Elim. -41 -47 6 14.9TI Group 7,392 7,073 319 4.5 TI Group
7,392 7,019 373 5.3 I Quarter I Quarter 2012 2011 Abs. % 2012 2011
Abs. %EBITDA EBITDADomestic 2,193 2,236 -43 (1.9) Domestic 2,196
2,274 -78 (3.4)Brazil 505 452 53 11.7 Brazil 505 445 60
13.5Argentina 289 257 32 12.5 Argentina 289 248 41 16.6Media -6 2
-8 - Media -6 2 -8 -Olivetti -14 -14 0 0.0 Olivetti -14 -14 0
0.0Other Activities -2 -2 0 0.0 Other Activities -2 -2 0 0.0Elim.
-2 -2 0 (50.0) Elim. -2 3 -2 0 (50.0)TI Group 2,963 2,929 34 1.2 TI
Group 2,966 2,951 15 0.5EBITDA MARGIN 40.1% 41.4% -1.3 pp EBITDA
MARGIN 40.1% 42.0% -1.9 pp FRANCO BERNABE 24
26. TELECOM ITALIA GROUP 1Q 2012 Results DRAFT Focus on Working
Capital Euro mln, Reported Data Operating Working Capital (impact
on 1Q12 Cash Flow) Net Other Severance OWC Trade Trade Receivables/
Indemnities, & Other Inventories Receivables Payables Payables
Funds & Other 1Q12 -48 +118 -1,014 -443 +4 -1,383Changevs 1Q11
-9 -43 -198 -185 +4 -431 FRANCO BERNABE * Excluding spectrum
acquisition 25