Telecom Italia 9M 2009 Results FRANCO BERNABE TELECOM ITALIA GROUP - PowerPoint PPT Presentation

TELECOM ITALIA GROUP 9M 2009 Results Milan, November 5 th , 2009 Telecom Italia 9M 2009 Results FRANCO BERNABE’

TELECOM ITALIA GROUP 9M 2009 Results Safe Harbour 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. Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward looking statements as a result of various factors. 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 Spa 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 Spa business or acquisition strategy 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. 1 FRANCO BERNABE’

TELECOM ITALIA GROUP 9M 2009 Results Agen Agenda da � TI Group Main Achievements TI Group Main Achievements � Focus on Domestic Business � Focus on TIM Brasil � Focus on HanseNet � Wrap Up � Appendix 2 FRANCO BERNABE’

TELECOM ITALIA GROUP 9M 2009 Results TI Group 9M 09 Progress Report TI Group 9M 09 Progress Report Im Improv proved C ed Cash Flow G Flow Generation neration Restated with HanseN Res ated with HanseNet et +515M€, +15% Yo +515M€, +15% YoY +581 M€, +18% YoY +581 M€, +18% YoY Im Improv proved Operating Profitability: ed Operating Profitability: Focus on Focus on Res Restated with HanseN ated with HanseNet et Ebitda 8.6BN€ Ebitda 8.6BN€ - Stable YoY (Ebi table YoY (Ebitda tda M Margin + argin +1.8 .8 p.p. YoY p.p. YoY) Core Core Eb Ebitda da 8.8B 8.8BN€ N€ - Sta table YoY le YoY (Ebitda tda %+1.8 p.p. YoY) +1.8 p.p. YoY) Markets: Markets: Strong C Strong Cas ash Cost Control: Cost Control: Do Domestic Cash Cash Cost -1,146M€, -7.3% Y Cost -1,146M€, -7.3% YoY & Improv proved Dom ed Domestic Ebitda estic Ebitda tr tren end: d: Brazil Brazil -0.4% 3Q; -0.7% 2Q; -4.4% 1Q -0.4% 3Q; -0.7% 2Q; -4.4% 1Q Brazil Defending Pr Brazil Defending Profitability: ofitability: Ebitda 880M€ Ebitda 8 - Ebitda Margin 24 Ebitda M argin 24.3% (+2 .3% (+2.3 p.p. YoY p.p. YoY) Disposal of non-core Dispos al of non-core assets: ts: Hans Ha nseNet expected eNet expected cash in ~9 ca in ~900M 0M€ Fi Fina nancia ncial l Discipline Discipline Reduced A duced Averag erage Cost of Debt: e Cost of Debt: 5.5% vs. 6% at YE08 5.5% vs. 6% at YE08 Figures con onsid sidering ng HanseNet HanseNet classif classified ed as as Discontinu Discontinued ed Op Operations erations Restated stated Figu gures include H de HanseNet nseNet consol consolidated idated line by by line lin 3 FRANCO BERNABE’

TELECOM ITALIA GROUP 9M 2009 Results Improved Operating Free Cash Flow Improved Operating Free Cash Flow Euro mln, Reported data Operating Operati FCF CF % OFCF on Reve % OFCF on Re venu nues es +515 +515 3,932 3,932 3,417 3,417 19.5% 19. 5% Resta Re state ted +3.6 p.p. +3.6 p p. 3, 3,872 872 Resta Re state ted 3, 3,291 291 15.9% 15. 9% 9M 08 9M 09 9M 08 9M 09 Figures considering HanseNet classified as Discontinued Operations; Restated Figures include HanseNet consolidated line by line 4 FRANCO BERNABE’

TELECOM ITALIA GROUP 9M 2009 Results TI Group Improved TI Group Improved Profitability: Organic Profitability: Organic Results Results vs. 2008 vs. 2008 Revenues Revenues Revenues Revenues – Restated estated with ith HanseNet anseNet Euro mln, % -972M€ -972M€ -925M€ -925M€ 21,963 -4 -4.4% .4% -4 -4.4% .4% 20,991 21,119 20,194 IIIQ -418, -5.6% IIIQ -404, -5.6% IIQ -284, -3.8% IIQ -268, -3.7% IQ -270, -3.8% IQ -253, -3.7% 9M 08 9M 09 9M 08 9M 09 EBITDA EBITDA EBITDA – BITDA – Restated with Han estated with HanseNet seNet 42.7% 42.7% 42.0% 42.0% +1.8 p.p. +1.8 p.p. 40.9% 40.9% % on 40.2% 40.2% % on Revenues Revenues -32M€ -32M€ -21M€ -21M€ 8,646 8,646 -0.4% -0 .4% 8,614 8,614 8,831 8,831 -0 -0.2% .2% 8,810 8,810 -12, -0.4% IIIQ IIIQ -9, -0.3% IIQ +49, +1.8% IIQ +58, +2.0% IQ -69, -2.4% -70, -2.4% IQ 9M 08 9M 09 9M 08 9M 09 Figures considering HanseNet classified as Discontinued Operations; Restated Figures include HanseNet consolidated line by line 5 FRANCO BERNABE’

TELECOM ITALIA GROUP 9M 2009 Results Cash Cost Control: a Group-Wide Commitment Cash Cost Control: a Group-Wide Commitment Orga Organic OPEX 9 Months 09 nic OPEX 9 Months 09 EBITDA Margin EBITDA Margin Euro mln, Organic data, % Δ Δ Δ abs. vs. %. vs. %. 1H09 vs 9M08 9M09 9M ‘08 9M ‘08 1H08 47.8% 47.8% 46.1% 46.1% Domestic 8,471 -775 -775 -8 -8.4% .4% -6 -6.5% .5% +1.7 p.p. +1.7 p p. 24.3% 24.3% TIM 22.0% 22.0% 2,742 -56 -56 -2 -2.0% .0% -2.6% -2 .6% +2.3 p +2.3 p.p. p. Brasil -3.7% -3 .7% TI Media -17.5% -17 5% 168 -20 -20 -10.6% -10 6% -10 -10.4% 4% +13.8 p.p. +13.8 p. Other BU & 199 -42 -42 Eliminations 42.7% 42.7% 40.9% 40.9% TI Group TI Group 11,580 11,580 -893 -893 -7.2% -7 .2% -6 -6.0% .0% +1.8 p.p. +1.8 p p. Figures considering HanseNet classified as Discontinued Operations 6 FRANCO BERNABE’

TELECOM ITALIA GROUP 9M 2009 Results Agen Agenda da � TI Group Main Achievements � Focus on Domestic Business Focus on Domestic Business � Focus on TIM Brasil � Focus on HanseNet � Wrap Up � Appendix 7 FRANCO BERNABE’

TELECOM ITALIA GROUP 9M 2009 Results Domestic – Domestic – Steady Cost Control Offsetting Revenue D teady Cost Control Offsetting Revenue Decline ecline Euro mln, Organic data, % Revenues Revenues Key Highlights Key High lights -920M€ -920M€ � Fixed business: xed business: 17,159 -5.4% -5 .4% 16,239 � stable retail service revs* (down 5% in 3Q09, in line with 2Q09) with strong growth from BB and ICT Mobile Mobile -589, -8.3% services. � small decline of total revenues performance vs. 2Q09 due to lower equipment sales in the business segment Wirel reline ne -198, -1.8% and lower contribution of wholesale � Mobil Mobile busi business: ss: Elim & � Decline of service revenues trend reflecting impact of adj 9M 08 9M 09 repricing in 3Q08 � Strong push on mobile BB reflected into strong pick- EBITDA EBITDA up of browsing revs +1.7 p.p. 47.8% 47.8% � 9M 09 EBITDA trend confirms outperforming EBITDA % on 46.1% 46.1% guidance for 2009 (9.9-10 bln euro, down YoY -3/4%) Revenues -145M€ -145M€ � EBITDA margin reached 50% in 3Q09 confirms TI as the 7,913 -1.8% -1 .8% 7,768 industry benchmark for profitability. -11, -0.4% � Effective & selective action on OPEX base IIIQ -18, -0.7% IIQ Ebitda Ebitda 2009 Target confirmed 2009 Target confirmed -116, -4.4% IQ 9.9 – 9.9 – 10.0 BN€ 10.0 BN€ 9M 08 9M 09 * Wireline service revenues net of wholesale revs (both national & intl) 8 FRANCO BERNABE’

TELECOM ITALIA GROUP 9M 2009 Results Domestic Fixed – Domestic Fixed – TI Access Performance I Access Performance ‘000 access Telecom Italia Retail Acce Telecom Italia Retail Access Ev ss Evolution & Line Losses olution & Line Losses Key Highlights Key High lights ‘000 17,776 17,352 16,972 16,621 16,358 � Lowest line losses level since third quarter TI Access 2007 through successful retention activities 3Q08 4Q08 1Q09 2Q09 3Q09 ‘000 3Q08 4Q08 1Q09 2Q09 3Q09 � Competitors increasingly relying on wholesale product such as Wholesale Line -263 Line losses Rental and Naked -355 -351 -380 -424 OLO Access Growth (TI Wholesale) OLO Access Growth (TI Wholesale) ‘000 ‘000 ‘000 ULL Naked WLR 3Q08 4Q08 1Q09 2Q09 3Q09 3Q08 4Q08 1Q09 2Q09 3Q09 3Q08 4Q08 1Q09 2Q09 3Q09 +211 +211 9 FRANCO BERNABE’