Telecom Italia Group · The 2014 preliminary financial results of the Telecom Italia Group and the data of the previous years ... 4G site: +92% YoY @ 3.7k Fiber ... wider LTE LTE

Telecom Italia GroupFY 2014 Preliminary Results & 2015-2017 Plan Outline

TELECOM ITALIA GROUPFY 2014 Preliminary Results & 2015-2017 Plan OutlineLondon, February 20th, 2015

FY 2014 Preliminary Results & 2015-2017 Plan Outline 2

Giuseppe Recchi – TI Chairman Opening Overview

Marco Patuano – TI CEO FY 2014 Preliminary Results & 2015-2017 Plan Outline

Piergiorgio Peluso – TI CFO Financial Update

Rodrigo Abreu – TIM Brasil CEO 2015-2017 TIM Brasil Plan Outline

Q&A

Buffet Lunch

Agenda

FY 2014 Preliminary Results & 2015-2017 Plan Outline


TI Senior Management attending the event includes

Simone BattiferriBusiness

Franco BresciaPublic & Regulatory Affairs

Stefano CiurliNational Wholesale Services

Antonino CusimanoGeneral Counsel

Stefano De AngelisConsumer

Mario Di LoretoPeople Value

Mario Di MauroStrategy & Innovation

Pietro LabriolaBusiness Transformation & Quality

Guglielmo Noya CFO TIM Brasil

Giuseppe OpilioChief of Operations

Alessandro TalottaTelecom Italia Sparkle

Carlotta VenturaBrand Strategy & Media

Enrico ZamponePlanning & Control



Giuseppe Recchi – TI Chairman Opening Overview



Preliminary FY’14 Results & FY’15-’17 Plan Outline

Marco Patuano – TI CEO FY 2014 Preliminary Results & 2015-2017 Plan Outline

Piergiorgio Peluso – TI CFO Financial Update

Rodrigo Abreu – TIM Brasil CEO 2015-2017 TIM Brasil Plan Outline



Safe HarbourThis presentation contains statements that constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in anumber 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 differentbusiness 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 statementsare 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 aresult of various factors. Consequently, Telecom Italia makes no representation, whether expressed or implied, as to the conformity of the actual results with those projected in the forwardlooking statements.

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 anduncertainties, which are outside our control, and could significantly affect expected results. Analysts and investors are cautioned not to place undue reliance on those forward lookingstatements, which speak only as 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 or acquisition strategy orplanned capital expenditures or to reflect the occurrence of unanticipated events. Analysts and investors should consult the Company's Annual Report on Form 20-F as well as periodicfilings made on Form 6-K, which are on file with the United States Securities and Exchange Commission which may identify factors that affect the forward looking statements includedherein.

The 2014 preliminary financial results of the Telecom Italia Group and the data of the previous years provided for comparison were drafted in accordance with the International FinancialReporting Standards issued by the International Accounting Standards Board and endorsed by the European Union (designated as “IFRS”).

The accounting policies and consolidation principles adopted in the preparation of the preliminary financial results for the 2014 FY have been applied on a basis consistent with thoseadopted in the Annual Financial Statements at 31 December 2013, to which reference should be made, except for the new standards and interpretations adopted by the Telecom ItaliaGroup starting from 1 January 2014 which had no effects on the 2014 preliminary financial results. The 2014 preliminary financial results have not been verified by the independent auditors.

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 twelve months ended 31 December 2013) have been restated accordingly and therefore the Sofora - TelecomArgentina group is no longer separately presented as a business unit.

Furthermore:

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

• starting from 2014, the Domestic business unit includes the Olivetti group, in addition to Core Domestic and International Wholesale. This different presentation reflects the commercialand business placement of the Olivetti group and the process of integrating its products and services with those offered by Telecom Italia in the domestic market. Therefore, the Olivettigroup is no longer separately presented as a business unit;

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

In this presentation reference is also made to a normalization called “Domestic Underlying EBITDA trend”, which is based on the Adjusted (for one-offs and discontinuities) ReportedDomestic EBITDA. This representation is provided as additional information to our Reported EBITDA that represents Operating profit before depreciation and amortization, capital gains(losses) and impairment reversals (losses) on non-current assets.

Marco Patuano - Piergiorgio Peluso – Rodrigo Abreu

FY 2014 Preliminary Results & 2015-2017 Plan Outline 7Marco Patuano

2014 Group Main Financials and Innovative KPIs

(1) excluding one-offs: 82 €mln Sparkle provision reversal in 2014 and 84 € mln Antitrust fine in 2013; including one-offs: 190% of FY’14 target(2) Brazilian spectrum acquisition and clean-up costs=936 €Mln; (3) Latam Spectrum= 540 €Mln for Brazilian Spectrum & 344 €Mln for Argentinean Spectrum

21.6 €Bln

Revenues Ebitda

Capex Net Debt

Italy Brazil

8.8 €Bln

4.0 €Bln (-5.4% YoY) excluding Brazilian 700MHz Auction(2)

5.0 €Bln (+13.3YoY)

MBB project: 125 Cities in 2014

4G site: +92% YoY @ 3.7k

Fiber Coverage: 29%

4G coverage: >80%

Domestic Efficiency(1)

104% of FY’14 Target

Organic, €Bln, %YoY

25.8 €Bln (-1.0 €Bln YoY) excluding Latam Frequencies(3)

26.65 €Bln (-0.2 €Bln YoY)


AgrigentoAlessandria

AnconaApriliaArezzo

AstiBari

BeneventoBergamoBolognaBolzanoBresciaBrindisiBusto A.CagliariCarpi

CasoriaCatania

La SpeziaLatina

LegnanoLivornoLucca

MantovaMassaMatera

MessinaMilano

Modena.MonzaNapoliNovaraPadovaPalermoParmaPavia

CatanzaroCesena

Cinisello B.Como

CremonaCuneoFaenzaFano

FerraraFirenzeFoggiaForliGela

GenovaGiuglianoGrossetoGugliasco

Imola

PerugiaPesaroPescaraPiacenza

PisaPistoia

PotenzaPrato

Quartu S. ElenaRagusaRavenna

Reggio CalabriaReggio E.

RiminiRoma

SalernoSassariSavona

Sesto S.G.Siena

SiracusaTaranto

TerniTorino

Torre del GrecoTrentoTrevisoTriesteUdine

VareseVeneziaVeronaVicenza

VigevanoViterbo

TI’s New Course started in 2014: Deploying UBB and selling it

LTE Coveragewider LTE coverage in Italy

actual 2014

NGN Coverage(1)

target 2014Plan ‘13-’15

133 Municipalities covered+95 cities YoY

29% coverage

+12 pp YoY

Marco Patuano

+27pp

MBB Users Growth YoY+1.825 +1.985

+1.573 +1.627

21% 27%45%

64%

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

MBB

% of LTE

LTE CB 409 610 844 1,343

15 45 103

151

231

+30

+58

+47

+80

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

Fiber Users Growth

more than 4x the coverage of ourmain competitor

Today>80%

(1) As of Jan 30, 2015

Average daily acquisition (k)

0.5 1.0 0.8 1.3MBB CB 8,677 9,151 9,596 10,071

’000 ’000

~40% ~50%

51%

61%

74% 77%

FY'13 1Q'14 1H'14 9M'14 FY'14


1,836 1,805 1,779 1,800

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

1.099 1.138 1.189 1.183

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

3.554 3.567 3.594 3.619

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

Marco Patuano

Domestic Service Revenues trend

Abs QoQ

€ mln,’000

BB-based services and Monetization of Quality supported Domestic Top Line Improvement

3,664

+13 +27 +25

+70net of AGCOMprice revision(1)

(1) 45 €mln for adjustment access price 2010-2012

-8,8% -8,9%

-6,2%

-3,2%

-10,1% -10,5%-9,1% -9,1%

-4,4%

1Q 2Q 3Q 4Q

2014

2013

net of AGCOMprice revision(1)

YoY

Retail Fixed Service Revenues trend Mobile Service Revenues trend

-14,9%-13,3%

-7,1% -5,7%

YoY

YoY

+4.7pp

Fixed Service Revenues Trend (Retail+Wholesale)-7.4% -8.6% -7.2% -5.3%

net of AGCOM price revision(1) -3.7%

+1.4pp+2.3pp

-7,4% -8,9%-6,2%

-3,9%


-7,9%

-11,6%

-10,9%

-5,4%

-9,8% -8,5%

1H YoY 3Q YoY 4Q YoY50

4Q'13 4Q'14

Marco Patuano

Domestic Ebitda%YoY,€ mln

Domestic Ebitda trended upwards

handset subsidy

net of new handset subsidy approach

1,9101,702

-10.9%

-8.5%

-9%

-7%

-3%

1H YoY 3Q YoY 4Q YoY

Normalized for discontinuous increases in labour costs, provisions, handset subsidy and AGCOM price revision

Underlying Ebitda trend

FY’14 -7%

Reported Ebitda trend

net of new handset subsidy

approach

reported

Domestic DiscontinuitiesAdjustments for non-recurrent effects on 4Q’14 Ebitda YoYperformance are:on 4Q’14: ~+45 mln euro for AGCOM LLU 2010-2012 revision

impact ~ +10 mln euro for incentive plans & other labour costs ~+15 mln euro for other provisions

on 4Q’13: ~ -75 mln euro, of which ~ -50 mln euro for new handset

subsidy approach and ~ -25 mln euro for other


Domestic Mobile: Building Further Improvements in aPolarized Market

€ mln, %YoY

Browsing Revenues

Total Revenues Service Revenues

Highlights

Revenues2014 1,175 1,264 1,284 1,368 1,099 1,138 1,189 1,183

264 281 301 326

-14,4%

-10,0%

-5,6% -5,1%

-16,4%-17,8%

-13,6%-11,2%

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

2014

2013-14,9%

-13,3%

-7,1%-5,7%

-17,8% -18,3%

-14,8% -14,3%

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

+12,9% +11,5% +11,7%+10,9%

-4,2%

+2,4%

+11,5%

+18,2%

Revenues2014

Revenues2014

2014

2013

2014

2013

+8.6pp

double-digitgrowth for 6

months in a row

Price War Drag is going away

MTR effect has bottomed-out

Increased Bundle adoption: 63% overall (+8 p.p. YoY)

59% on Consumer Segment (+9 p.p. YoY)

-5.0%(1)

(1) Net of national roaming price reduction


-7,4%

-8,6%

-7,2%

-5,3%

-3,7%

Domestic Fixed: Hitting the Gas on Internet

Service Revenues Trend

net of AGCOMprice revision(1)

Speeding-up growth

Marco Patuano

€ mln, %YoY,

655 625 597 568

5.111 5.054 5.019 4.961

1,167 1.259 1.315 1.392

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

Fast

BB

Flat

BB

Free

BB

-58-57 -35

+77+92 +56-29-30 -28

13.027 12.828 12.656 12.480

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

-200 -171 -176

19.2 19.6 20.0 20.1

total 6,933 6,939 6,932 6,921

-0,1% +1,1%

+3,5%+4,4%

+1,7% +1,3%

+1,2%

-0,8%

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

Internet Service Revenues

BB Customer Base

ARPU BB

Fixed Access

Total Revenues -6.9% -8.3% -6.2% -5.5%

-3.9%net of AGCOMprice revision(1)

2014

2013

(1) 45 €mln for adjustment access price 2010-2012(2) Fast ADSL + Fiber (both Flat)

+292 upselling to Fast BB (2)

€/month

‘000

1Q’14 2Q’14 3Q’14 4Q’14


Agenda

Marco Patuano

FY 2014 Preliminary Results

2015-2017 Plan Outline

Financial Update

2015-2017 TIM Brasil Plan Outline

Appendix


Future-Proofing our Infrastructure for Enhanced Cash Flow

Italy BrazilNGN: ~75% coverage

in 2017LTE: >95% coverage

in 2017

(1) Including Brazil License & Clean-up costs(2) Group Ebitda-Capex

New Investments

~10 €Bln in ’15-’17of which 5 €Bln for

innovation

>14 R$Blnin ’15-’17

Business Transformation

Investment Monetization & Core Revenues

Stabilization Efficiency & Process

Transformation

Innovation

Moving Cash Flow (2) beyond Stabilization

~3.8(1)

2014 2015 2016 2017

LTE: ~80% coveragein 2017

4G Sites: >15k in 20173G Sites: >14k in 2017

Hetnet Strategy

Commercial Efficiency Evolution

Network Costs OptimizationProcess-Driven Efficiency

Single Brand& Convergence People: Change of Mix

Italy Brazil

Italy Brazil


2014 2015 2016 2017 2018onwards

2014 2015 2016 2017

Marco Patuano

Creating Value through Next-Generation Networks Acceleration

Avg Capex/RevenuesOld ‘14-’16 Plan

Avg Capex/RevenuesNew ‘15-’17 Plan

~18.5%

New ’15-’17 Plan Domestic Capex ~10€Bln

Old ’14-’16 Plan Domestic Capex ~9€Bln

Domestic Capex Plan

New ‘15-’17 PlanInnovative Capex

~5 €Bln

Old ‘14-’16 PlanInnovative Capex

~3.4 €Bln

Innovative Capex BreakdownNGN ~2.9 €Bln (+1.1 €Bln vs Old Plan)a

LTEb

IT Cloud ~0.5 €Bln (flat vs Old Plan)c

Sparkle ~0.2 €Bln (flat vs Old Plan)d

Transformation ~0.5 €Bln (+0.4 €bln vs Old Plan)e

~0.9 €Bln (flat vs Old Plan)o/w 0.5 €Blnon FttH

Peak years

Efficiency Delivers a Relevant Contribution for the funding of Innovation

~23.0%


2014 2015 2016 2017

Fiber CB on TI BB CB

~3%

Marco Patuano

Fiber Italy: We are increasing our Competitive Advantage

Fiber CB Growth

today @ 29%

>50%

~75%

2014 2015 2016 2017

New Plan

~10x

+1mlnNew ‘15-’17

CB Fiber Growth

Old ‘14-’16 CB Fiber Growth

<60%

Connection speeds faster than DAE targets: 50 Mb/s currently 100 Mb/s through Vectoring

Expected Ebitda monthly uplift from Fiber ranges 5-10 €/line coming from:

Fiber Premium;

Lower churn +ve contribution from New Services Content

Up to 1Gb/s with FttH

Fiber Coverage Plan

OldPlan


LTE Italy: Pushing on Quality, Not on Price

60%

80%

today @>80

>95%

2014 2015 2016 2017

Target reached2

years in advance

LTE Coverage Plan

36%50%

64%

2014 2015 2016 2017

innovative on business generated traditional on business generated

Revenues Mix(1)

RevenuesCagr ‘14-’17

+10%

(1) Innovative revenues = browsing+data content; traditional revenues =voice+SMS

13%

~60%

2014 2015 2016 2017

LTE Users on Mobile BB CB

+45 p.p.New

Plan

OldPlan

Geographic Coverage

~50% ~90%+40 p.p.

Indoor Coverage >80%


~14 (1)

~7

~1.5

~7

~3.5

~12

~7

Consumer HH TV HH

The TI Plan fits into the Italian Market

Mobile BB only

Fixed BB

TLC Households TV Households

~26 mln ~26 mln

Alreadyon PayTV

No PayTV

Interested in PayTVo/w KO dish 1 mln

Upgrade to Fiber &TV potential target

Rebuild the Value of the VoicePush on Convergence through

flatization to reduce churnUpgrade to BroadBand through

New Special offer & Video Content

Push on win-backs from the dongle community through F-M

Convergence & Quad-PlayTI M/S 30%

TI M/S 50%

Marco Patuano

3

2Voice only

pay-per-useVoice only

on flat optionsTI M/S 100%

1

10% <40 years & holiday homes30% 40-70 years60% >70 years

(1) Addressable market.


A n-Play Strategy to Grow the Value of our Access

F-M for Mobile only customers

Targeted Actions for specific segments

Keeping price points rational

Enlarge Proposition of Convergent Offers

Lever on Convergence

Mobile BB

2

2014 2017

+20 p.p.

% Convergent Offers(1)

(1) % Convergent offers on Total Consumer Fixed Access

Massive Flatization

Retention of Voice Customers

Use BB as an anchor

Upgrade to TV

Defend the ValueProposition of Access

Less Erosion

Fixed

1

41%

57%

2%

2014 2017

1-Play

2-Play

3-Play

decreasing

stable

growing

3

Launchin April

Wide range of content offering: SVOD, events, etc

Premium offer with live events & on-demand

channels

Base-content enabler

Integration with linear TV

Pay tv penetration in Italy is 27%: market is dominated by Premium Pay DTT/DTH and BB TV is modest (~5%)

TV Business: Hub Approach

Video Content

Defend traditional, Drive Mobile BB – to – Fixed BB substitution and further expand Fixed BB penetration through Video Content

Change of Fixed Access Mix


Moving to a single Brand: TIM brings together our best parts

Repositioning to a single commercial brand that already enjoys best in class CSI scores on mobile (LTE-driven) and fiber

Position TIM as the official enabler of “Digital Italy”

Towards a new value proposition focused on innovation and quality

Simplifying the overall customer experience and OTN services

Meeting the increasing demand for a multiple and bundled products available anytime, anywhere, anydevice


Rightsizing

Insourcing

Use of new “Jobs Act” for workforce mix evolution

“Active Solidarity” agreement to materially increase young personnel

More Value in Our People

TI Workforce

Marco Patuano

Labor cost restructuring to combine Efficiency & HR Development

20-30

30-40

40-50

50-60

60-70

20-30

30-40

40-50

50-60

60-70

Age Curve Evolution

today

2017-2018

age

age

Mix1%40%47%9%3%

6%53%27%6%8%


~1.2 ~1.1 ~1.1

~1.6 ~1.5 ~1.4

2,7 2,7

3.1 3,1

2013 Target2014

Actual2014

2015 2016 2017

-0.2target

190% of target reached including one-offs(4)

104% of target reached excluding one-offs(4)

(4) 82 mln euro Sparkle provision reversal in 2014 and 84 mln euro Antitrust fine in 2013

8.38.6

-0.4actual

Market / Customer Driven(3)

Process / Asset Driven(2)

Personnel Costs

Volume/Revenue-Driven (1)

Addressable EfficiencyArea

Not Applicable

~20% on rev.

2013 - 2014 Plan 2015 – 2017

Allow insourcing and increase productivity

> -0.1

~ -0.3

> -0.1

‘15-’17 cum. Efficiency Target

>1 €Bln

Domestic Opex Efficiency€ bln

Marco Patuano

-20% ‘17 vs ‘14

(1) Interconnection, Cost of Equipment, Other COGs(2) Industrial costs, G&A, Real Estate, Other(3) Acquisition costs, ADV, Customer Care, Other commercial costs


Group Operating and Financial Outlook

Group Domestic Brazil

Organic data

Ebitda YoY Growth in 2017

YoY Stabilization in 2016

YoY Growth in 2017

Continued Growth

Capex(1)

Cum. ‘15-’17

Net Debt Adj./Ebitda 2017

Reducing Towards2.5x(2)

~10 €Bln >14 R$Bln

(1) Including Italian GSM license extension (2) On reported EBITDA; ratio includes Mandatory Convertible equity strengthening effect for 1.3€Bln in November 2016Note: Organic data exclude impact from change in perimeter and FX. Avg €/Reais exchange rate: 3.21

~14.5 €Bln

Marco Patuano


Agenda

Piergiorgio Peluso



Financial Update


Appendix


1.774

- 1,259

Brazil –22

6.998

-2,783

-936 +396

-1,024

Domestic3,203

EBITDA Capex Capex License WC Licenses WC excludinglicenses

OpFCF

Solid Operating FCF Generation Confirmed€ Mln

8,786(1)

3,174(1)

Group Capex(1) -4,984

Brazilian 4G Auction Cash Out-540

Group WC(1) -628

Brazilian Contribution to OpFCF

(excluding 4G auction)518 mln €

FY’14

Trade Payables

Trade Receivable

Others

-0.4

-0.2

-0.4-0.1

-0.1o/w TI Sparkle provision reversal

WC Domestic -1.0

€ Bln

(1)TI Group figures include TI Media & other subs.Piergiorgio Peluso

Domestic Contribution Brazilian Contribution Brazilian 4G Auction Cash Flow Impacts

o/w AGCM fine

o/w AGCom price revision(2) -0.1

(2) AGCOM wholesale price revision 2008/2010


2014 Opex Efficiency Target Fully Reached€ mln

Piergiorgio Peluso

8.647 +13 -113 -261 +19 8.305

FY'13 Volume RevenuesDriven

Market / CustomerDriven

Process / AssetDriven

Labour Cost FY'14

Excluding from Process Driven:82 €Mln Sparkle provision

reversal84 €Mln euro Antitrust fine

Efficiency -374 €Mln

Total Opex-342 €Mln

Efficiency -208 €Mln104% of Target

reached

Commissioning: Reduction in volume of acquisitions

Advertising: Cost optimization due to unification of format and brand

Customer Care: Productivity improvedalong with Volume growth

Operational Costs, Network & IT: purchasing savings and positive impact from process reengineering

G&A: Zero budget approach and policy review

(1) Interconnection, Cost of Equipment, Other COGs(2) Acquisition costs, ADV, Customer Care, Other commercial costs(3) Industrial costs, G&A, Real Estate, Other

(1) (2) (3)

190% of Target reached


188

1.649 1.707

663 603

346 281

186 -60 -65 +6 -188

191

FY'13 IT commercial&others IT others subsidy FY'14

33%~55%

2014 2015 2016 2017

20%24%

27% 28%

33% 34% 35% 36%

1Q 1H 9M FY

Domestic Capex Efficiency fueled more Innovation

+156 -973,0312,783

€ mln

a b c d

Innovative investment on network capex

Network

innovative traditionalEfficiency(1)= 216 €mln

(1) total domestic capex efficiency= a b c d+ + +

2013

2014

TraditionalCapex

InnovativeCapex

2015-2017 Capex Mix

Efficiency Target‘15-’17 cum.

~0.7 €Bln

2014 Capex Efficiency

Piergiorgio Peluso

handset subsidy

network

IT

commercial & other IT

others


1.404975

1.1041.112

1.617

1.617

7.8297.000 1.9701.879

2.9632.324

3.165

11.313

23.614

6.112

13.112

3.3742.854

4.0673.436

4.782

12.930 31.443

Liquiditymargin

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Beyond 2019 Total M/L TermDebt

€ 31.443 mln is the nominal amount of outstanding medium-long term debt. Adding by Mandatory Convertible Bond (€ 1.300 mln), discontinued operations (€ 28 mln), IAS adjustments (€ 1.192 mln) and current financial liabilities (€ 458 mln), the gross debt figure of € 34.421 mln is reached. N.B. Debt maturities are net of € 1.281 mln (face value) of repurchased (of which € 523 in the 2013 and € 543 in the 2014) own bonds (of which € 1.066 mln related to bonds ue within 2016).

Loans (of which long-term rent, financial and operating lease payable € 1,200) Drawn bank facilityBonds

Refinancing at record low rates € mln

2011-2015 Bond Issuance Yields

Undraw portions of committed

C&CE (escluded discontinued)

Covered until 2018

Piergiorgio Peluso

Yield on issue date

Tenor

Issue date

Highlights

5 7 5,25 6,5 3 5 8 7 7 10 8

5,198%4,769%

6,968%

6,184%

4,740% 4,570%4,134%

5,054%4,594%

3,993%

3,330%

TI’s funding costs since 2013 have significantly lowered

New record-low coupon has been printed with our January 8-yr issue @ 3.25%

ECB QE plans running until September 2016 further support favourable funding environment

This context will continue offering TI significant refinancing opportunities

Debt Maturities and liquidity Margin


2013 2014Net Debt

before Latamfrequencies

2014Net Debtincluding

Latamfrequencies

2014 2017

-1.3

Latamfrequencies

impact

2014 Debt reduction & 2015-2017 Free Cash Flow Evolution

Piergiorgio Peluso

~26.8

~+0.9

~26.65 ~26.65

Average debt reduction of ~700 €Mln per year before Mandatory Convertible (Nov. ‘16)

~25.8

~-1.0

~1.0 €Bln of deleverage before Latam frequencies

impact

Net Debt/Ebitda Ratio ~3.0x towards 2.5x in 2017

2013 - 2014 2014 – 2017

Mandatory Convertible Bond

€ Bln

DPS BoD proposal for 2014 (cash 2015)

Ordinary Shares

Saving Shares

Zero

2.75 €cent confirmed


Agenda

Rodrigo Abreu



Financial Update


Appendix


Mobile Market Revenues EvolutionMobile Net Service Revenues, %

Strategic Positioning - Internet Market Evolution

Revenue Mix

• Most households without internet access • Mobile better suited to break price barrier

9,52,6

Jan-13 Nov-14

0,34 0,300,23

0,16 0,10 0,06 0,03 0,02

2012 2013 2014 2015 2016 2017 2018 2019

1%

37%

2%

MTR Cut(R$)

Voice Incoming

Voice Outgoing

SMS

Internet 60%

• Maturing market: Customer base growth slowdown

• Consumption migrating from voice to data2010 2020

SMS Traffic Sharp Decrease(billions of SMS sent)

Voice Decline

Internet Opportunities

Mobile Internet is the growth driver and will be the largest mobile market, although Voice remains important

27%

57%

4%

12%

Revenue Mix

Rodrigo Abreu


Getting People Connected: Broadband Penetration

Data: Connectivity and Beyond

Rodrigo Abreu

Smaller gap between Brazil and developed markets Additional drivers for growth: days of use, data consumption Affordable prices

Huge gap between Brazil and developed markets Lack of infrastructure: low quality and speed Affordability issues (high prices, combos)

Entering in the Content World

Content & Usage Offer

Pure Connectivity

Offer

Connectivity

Digital Identity & Security

Proximity & MPayment

Connected Home & In Cars

RichCom

AppsSocialVideoMusic

Gaming

OTT

Telco

COOL

TRUST

QoE(1)

and Caring

105%

90%79%

72%66% 63%

90% 83%73% 73%

55%

32%

Fra UK USA Jap Rus Bra Jap USA UK Ita Fra Bra

∆: 43 p.p.

∆: 19 p.p.

Fixed (% households) Mobile (% population) Developedmarkets avg: 82%Developed

markets avg: 75%

(1) Quality of experience


Small Cells

MACRO SITES 1,400 sites in 2015 3,902 sites in 15-17

SMALL CELLS 800 sites in 2015 3,477 sites in 15-17

WiFi / Femto / DAS 3,000 WiFi in 2015 >150 DAS in 2015

HetNet

% of Urban Covered Population2G3G

4G

95% 95%78% 79%

27%

86%

2013a 2014a 2015e 2016e 2017e

2014 Actual 2015 Bdg 2016 Plan 2017 Plan

1.9k3.7k

>15k

2013a 2014a 2015e 2016e 2017e

9.1k 10.4k>14k

2013a 2014a 2015e 2016e 2017e

0.7k1.5k

5k

2013a 2014a 2015e 2016e 2017e

Network Rollout

State of the art Capex Allocation: Enhance Quality to Increase Returns

New Coverage Strategy

Rodrigo Abreu

IRU + Construction SWAP until 2014SWAP @ 2015-2017

Legend

2G

3G

4G

2014a 2015e 2016e 2017e

TIM LD BackboneTechnology Capex Allocation

MBB Project Geographic Area• 1,137 cities prioritized due to business relevance, based on

IRR and Payback• MBB program is addressing >70% of TIM's business, and is

the key investment program in 2015-2017• High business concentration in few cities allows for a focused

infrastructure enhancement program

Number of 4G Sites

Number of Wifi & Small Cells

Number of 3G Sites


2014a 2017e 2014a 2017e

2014a 2015e 2016e 2017e 2014a 2015e 2016e 2017e

2014a 2015e 2016e 2017e

2014a 2017e

SAC (Subscriber Acquisition Cost)(R$)

Bad Debt (R$)

Business Growth

Network and Commercial Synergies

Network & Interconnection Savings

Rodrigo Abreu

2013a 2014a 2015e 2016e 2017e

Data Traffic Expectation

3G Data Traffic

LTE Data Traffic

(in petabytes)

Mobile Customer Base(mln customers)

73.4

75.7

2013a 2014a 2015e 2016e 2017e

Fixed Business Progress

Operational Efficiency

Network & Interconnection Cost

(R$)

Leased Lines Cost(R$)

Flat network and interconnection

cost as a percentage of total

costs

EBITDA Evolution(R$ without intercompany)

EBITDA - Capex


60k130k

>500k

2013a 2014a 2015e 2016e 2017e 2013a 2014a 2015e 2016e 2017e

2013a 2014a 2015e 2016e 2017e

Corporate Solutions as a Sustainable Business

Fixed Corporate Solutions & Live TIM Positive Trends

From option value to reality: Accelerate growth through

incremental investment Focus on keeping customer

experience leadership Introduction of new services

(Voice and Bluebox) Support the discussion on

“Banda Larga Para Todos” program

Rodrigo Abreu

Live TIM Plan: Accelerating Growth

Customer Base(thousands customers)

Investments(R$; YoY)

+3x+9x

2015-2017 Drivers: Revenue and EBITDA rebound Sales team resizing and training Customer care unification (F+M) Improvement on service level Fine tuning mobile portfolio Launch of new convergent solutions2013a 2014a 2015e 2016e 2017e

EBITDARevenues from New Sales (R$; YoY)

+9x

FIXEDFIXED

MOBILE

CONVERGEDSOLUTIONS

CONVERGEDSOLUTIONS


48% 40% 37% 35%

52% 60% 63% 65%

2014a 2015e 2016e 2017e

Innovative

Traditional

Innovative and Traditional Investments(R$; %)

MTR Impact Analysis(R$; %)

Mobile Net Revenues Analysis(R$; %)

24%

12%

31%

18%

2010 2011 2012 2013 2014 2015e 2016e 2017e-15% -11% -25%

Net Services Revenues Exposure

EBITDA Exposure

-33%MTR Cut (% YoY)

2013A 2014A 2017e

Innovative:

Traditional:

Data ContentOther

VoiceIncomingSMS

+48%

-11%

% YoY

Nearmid-single

-35% -44%

~5 bln

~9 bln

A Close Look at Business Performance

Perspectives2015-2017 Guidance

Rodrigo Abreu

18.8 19.9 19.5

2012A 2013A 2014A 2015e 2016e 2017e

Net Revenues(R$ billion)

5.0 5.2 5.5

2012A 2013A 2014A 2015e 2016e 2017e

EBITDA(R$ billion)

Others/Licenses

0.6 0.42.9

3.1 3.5

3.9

2012A 2013A 2014A 2015e 2016e 2017e

Organic3.8 3.9

6.9CAPEX(R$ billion)

Continued growth

Continued growth,

improving margin

CAPEX 2015-2017:>14 R$Bln


Agenda



Financial Update


Appendix



TotalRevenues

Ebitda

Group

21.6 €bln-5.4% YoY

8.8 €bln-6.8% YoY

FY’14

Organic data, € mln, %YoY

CapexIncludingLicense(1)

ExcludingLicense(1)

5.0 €bln+13.3% YoY(3)

4.0 €bln-5.4% YoY

Net DebtIncluding

Licenses(2)

ExcludingLicenses(2)

26.65 €bln; (-0.2 €bln vs FY’13)

25.8 €bln; (-1.0 €bln vs FY’13)

(1) Brazilian Spectrum & Clean-up cost(2) Brazilian & Argentinean Spectrum(3) Reported data

Domestic Brazil

15.3 €bln-6.6% YoY

7.0 €bln-9.6% YoY

2.8 €bln-8.2% YoY

6.2€bln -2.1% YoY

1.8 €bln+6.6% YoY

2.2 €bln+62.7% YoY(3)

1.2 €bln+1.5% YoY


Telecom Italia Performance by Markets – Full Year 2014


-5,7% -4,8%

-8,5% -8,1%

1Q 2Q 3Q 4Q

-8,2% -7,4%-11,6% -11.0%

1Q 2Q 3Q 4Q+7,8% +8,0%

+6,5%+4,6%

1Q 2Q 3Q 4Q

ServiceRevenues

Ebitda

Capex

4Q’14 Group4.9 €bln-4.2% YoY

2.2 €bln-8.1% YoY

1.4 €bln+4.1% YoY

-6,5% -7,1%-5,7%

-4,2%

1Q 2Q 3Q 4Q

-5,8%-9,6%

-12,5%

+4,1%1Q 2Q 3Q 4Q

Domestic3.6 €bln-4.5% YoY

1.7 €bln-11.0% YoY

1.0 €bln-1.5% YoY

-8,7%-8,8%

-6,2% -4,5%

1Q 2Q 3Q 4Q

-14,9%-10,9% -9,3%

-1,5%

1Q 2Q 3Q 4Q

Brazil1.3 €bln -3.4% YoY

0.5 €bln+4.6% YoY

0.4 €bln+19.2% YoY

0,3% -2,0%-3,9% -3,4%

1Q 2Q 3Q 4Q

+30,4%-7,0%

-18,4%

+19,2%1Q 2Q 3Q 4Q


Telecom Italia Performance by Markets - 4Q’14Organic data, € mln, %YoY


4Q’14 Reported€ mln, %YoY

Organic(1)

Telecom Italia 4Q’14 Group Results

Weight(2)€mln YoY YoY

Capex(3)

DomesticBrazil

RevenuesDomesticBrazil

Ebitda-Capex(3)

DomesticBrazil

EbitdaDomesticBrazil

(1) Starting from 2014, Organic performance includes only exchange rate variations and impacts from perimeter changes(2) Including TI Media, Other & Elimination. Olivetti is included in the Domestic perimeter(3) Capex w/o licence

net of new handsetsubsidy approach

+3.3%-1.5%

+16.5%

+4.1%-1.5%

+19.2%

-0.4%-6.1%

-4,1%-5.0%-2.3%

-3.7%-5.1%-0.3%

n.a.

-23.8%-21.3%

-

-23.9%-21.5%

-n.a.

1,408991416

5,6013,9671,627

79071177

2,1981,702

493

-8.4%-10.9%+1.4%

-8.1%-11.0%+4.6%

-6.5%-8.5%

70%30%

71%29%

90%10%

77%22%



Service Revenues Trend YoY

Traditional

Outgoing voice

Incomingvoice

SMS

Innovative

wholesale

Service

530 531 536 501

52 56 57 59132 139 134 135

328 342 390 404

58 69 72 83

76126 95 185

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

Domestic Mobile Quarterly Mobile Revenues Breakdown

726 727

1,264 1,284

1,138 1,189

handsets

Total

+1

+48

+2

-31

+51

+20

-32

+14

+11

+90

-6

+84 1,368

1,183

695


€ mln, QoQ

713

1,175

1,099

+13

+14

+12

+50

+39

+89

Traditional

Innovative

wholesale

Service

-14.9% -13.3%

-7.1% -5,7%

+8,7% +5.5% -0.5%+22.9%

+9,9% +8,4%

+16,6%+13.1%

-24,1% -21,9%-16,7% -16.1%


367 352 334 368

666 647 632 622

238 232 230 205

395 402 410 411

37 38 38 38133 134 135 156

878 859 860 854

56 73 79 118

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

Domestic Fixed

Traditional

Innovative

Wholesale & others

Service

-7.4%-8,6%

-7,2%-5.3%

-10,4%-13,1%

-10,1%-7,5%

+0,1%+1,8%

+3,0% +4.2%

Traditional

Innovative

Service

Outgoing voice

Access

Others

National, Int’ wholesale + Subs&others

VASICT

Broadband

handsets

1,271 1,231 1,195

565 574 583

2,715 2,664 2,639

-40

+9

-51

-36

+9

-25

1,195

606

2,655

-

+23

+19


€ mln, QoQQuarterly Fixed Revenues Breakdown

-7,2% -7,9%-9,3%

-8.1%

2,771 2,737 2,718-34 -19 2,773+55Total

Service Revenues Trend YoY


-28-20 -8 -17

-41 -34

-80

-2

-1-5 -28 -5

-111 -107

-178 -197

-124

-92

+75

+16

-72

-36 -41

Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Domestic Mobile KPIs

MNP Balance

2014

2013

Highlights

Clear signs of market stabilization translated into:

better MNP balance+615k YTD

lower MNP volume -4,5 mln overall MNP transations in FY’14 vs FY’13

better churn rate 24%; -4.8pp YoY

Mobile CB Active CB

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

82% 82%

83% 84%83%

84%85% 85%

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

‘000


Cum.+615 YoY

31,858 31,706 31,554 31,221 30,996 30,660 30,374 30,350

-18


761 736 711 684 655 625 597 568

5.258 5.182 5.131 5.130 5.111 5.054 5.020 4.961

965 1.014 1.045 1.084 1.122 1.155 1.164 1.161

1 1 4 15 45 103 151 231

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

965 1,015 1,050 1,100 1,167 1,259 1,315

6,984 6,933 6,892 6,915 6,933 6,939 6,9321,392

6,921

18,919,1

19,2 19,2 19,2

19,6

20,020,1

+3.5% +3.5% +3.6%+1.6% +1.8% +2.3%

+3.9% +4.8%

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

ARPU BB YoY

(201) (222) (183) (163) (182) (200)

(171) (176)

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

€/month

Domestic Fixed KPIsFixed Access

OLO

TI retail

Line Losses

YoY

BB ARPU

Flat ADSL

Total BB FastTotal

Free ADSL

SI+20Mb

Fiber

BB Access

13.777 13.555 13.372 13.210 13.027 12.828 12.656 12.480

7.238 7.233 7.164 7.169 7.211 7.258 7.167 7.224

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


‘000

21,016 20,788 20,536 20,378 20,238 20,085 19,82319,704Total


+6,3%

-9.6%

-11.3%

-21.2%

+1.3%

-3.3%

+9,5%

-18,0%-62,8%

+19,2%

-6.5%

-7.4%

-18.1%

+3.2%

+16,4%

-0.6%

-15.5%-55,3%

wholesale(1)

Consumer+Business

services

outgoing voice

VAS

business received

handsets

(1) Including Visitors & other items (2) Total Retail Service Revenues net of Incoming

voicefees&other

-8.7%-5.1%Total

-11.6%-8.3%business generated(2)

1,442

75

1,367

1,181

1,136

615

521

45

186

57639

4Q’13

89

1279

1,094

504

537

52

185

48718

1,368

1,042

4Q’14 YoY FY’14 YoY

Domestic Mobile Revenues Breakdown


Reported, € mln, %YoY


Sparkle group

Wholesale Domestic

Retail Service

Service Wireline 2,655 2,803 -5.3% -7.1%

258 245 +5.0% -0.2%

540 633 -14.7% -11.9%

1,800 1,873 -3.9% -6.6%

voice & access 1,073 1,173 -8.5% -10.5%

internet 417 400 +4.4% +2.2%

business data 287 286 +0.3% -2.1%

other 23 14 n.m. n.m.elim. & other 60 53 n.m. n.m.

Total Wireline 2,773 2,935 -5,5% -6.7%

Products 118 132 -10.6% +7.8%

Domestic Fixed Revenues Breakdown

4Q’14 4Q’13 YoY FY’14 YoY


Reported, € mln, %YoY


25507 24467

-3,174+1,585

+893 -206 +508 +238

FY'13 OpFCF Cash Financial Expenses/Financial

Accrual

Taxes & other impacts

M&A Telecom Argentina (discontinued)

Dividends / change in equity

FY'14

FY14 Net Financial Position

26,807 26,651

-156

+1,629 -149 vs. 2013 -301 +575-153 -290

FX negative impact license

1,311

Including 1.3 bln euro Mandatory Convertible Bond& excluding 884 €Mln Cash out for Licences25,507 24,467

MandatoryConvertible Bond

Mandatory Convertible Bond & Licences Cash Out

BrazilianLicences540 mln € TA Licences

344 mln €

€ mln

Piergiorgio Peluso

-1,040


N.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 2.633 €/mln (of which 687 €/mln on bonds)- the impact on Financial Assets is equal to 1.263 €/mln.

Therefore, the Net Financial Indebtedness is adjusted by 1.370 €/mln.

Total Gross Debt net of Adjustment: Euro 34.421 mln

Maturities and Risk Management

Average m/l term maturity: 7,10 years (bond only 7,85 years)

Fixed rate portion on gross debt approximately 66,3%

Around 41% of outstanding bonds (nominal amount) is denominated in USD, GBP and YEN and is fully hedged

Well-Diversified and Hedged Debt

€ mln

Gross debt 34,421(of which 30 mln disc. Operations)

Financial assets (7,605) of which Cash & CE and marketable securities (6,112)

Cash & Cash Equivalent (4,812)Marketable securities (1,300)

Italian Government Securities (915)Other (385)

Discontinued operations (165)

Net Financial Position 26,651

Cost of debt: 5.4%

Marco Patuano - Piergiorgio Peluso

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Telecom Italia Group · The 2014 preliminary financial results of the Telecom Italia Group and the data of the previous years ... 4G site: +92% YoY @ 3.7k Fiber ... wider LTE LTE