TELECOM ITALIA GROUP 9M 2009 Results Milan, November 5 h , 2009 - PowerPoint PPT Presentation

TELECOM ITALIA GROUP 9M 2009 Results Milan, November 5 h , 2009 Telecom Italia 9M 2009 Financial Results MARCO PATUANO

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 MARCO PATUANO

TELECOM ITALIA GROUP 9M 2009 Results TI Group 9M 09 Financial Progress Report TI Group 9M 09 Financial Progress Report Stable EBITDA and Im Stable EBITDA and Improv proved ed Operating Profitability: Operating Profitability: Ebitda 8.6BN€ Ebitda 8.6BN€ -0.4% YoY (Ebitda Margi -0.4% YoY (Ebitda Margin +1.8 p.p. YoY) +1.8 p.p. YoY) Improv proved Dom ed Domestic Ebitda estic Ebitda tr tren end: d: Focus on Focus on -0.4% 3Q; -0.7% 2Q; -4.4% 1Q -0.4% 3Q; -0.7% 2Q; -4.4% 1Q Core Core 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 & Brazil Defending Brazil Defending Pr Profitability: ofitability: Brazil Brazil Ebitda 8 Ebitda 880M€ - Ebitda Margin 24 Ebitda M argin 24.3% (+2 .3% (+2.3 p.p. YoY p.p. YoY) Improv Im proved C ed Cash Flow G Flow Generation neration +515M€, +15% Yo +515M€, +15% YoY Disposal of non-core Dispos al of non-core assets: ts: Hans Ha nseNet expected ca eNet expected cash in ~9 in ~900M 0M€ Fina Fi 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 Operations Op erations 2 MARCO PATUANO

TELECOM ITALIA GROUP 9M 2009 Results Improved Operating Free Cash Flow Improved Operating Free Cash Flow Euro mln, Reported data Operati Operating FCF CF 25.0% +5.6 p.p. +5.6 p.p. +515 +515 19.4% +5.5 p.p. +5.5 p.p. % OFCF 13.9% on Revenues 3,932 1Q09 1Q09 2Q09 2Q09 3Q09 3Q09 3,417 2,979 2,808 2,739 EBITDA EBITDA 19.5% +3.6 p.p. +3.6 p.p. 1,076 968 Capex Cap 954 15.9% 215 500 WC Change WC Change 881 & Other & Other % OFCF on 1,688 1,340 Revenues OFCF OFCF 904 9M 08 9M 09 1Q09 2Q09 3Q09 3 MARCO PATUANO

TELECOM ITALIA GROUP 9M 2009 Results Group Cash Cost Control to im Group Cash Cost Control to improve Operating Cash Flow prove Operating Cash Flow Euro mln, Organic data, % TI Group Cash Cost TI Group Cash Cost Domestic Cash Domestic Cash Cost Cost Of which: -1,003 -8.4% -1,003 -8.4% Domestic -775 -1,146 -7.3% -1,146 -7.3% Brazil -56 11,892 15,724 10,889 14,578 CAPEX -8.6% -7.8% CAPEX (*) -253 -228 OPEX -775 OPEX -8.4% -893 -7.2% 9M 08 9M 09 9M 08 9M 09 I Half (*) 10,600 -878 -8.3% -878 -8.3% 9,722 I Half 8,154 -746 -9.1% -746 -9.1% 7,408 TI Group Cash Cost on R TI Group C Cost on Revenues nues (%) (%) Domestic Cash Cost on Revenues (%) Domestic Cash Cost on Rev nues (%) 74.5% 74.5% 69.3% 69.3% 72.2% 72.2% - 2.3 p.p. .3 p.p. 67.1% 67.1% - 2.2 p.p. .2 p.p. 9M 08 9M 09 9M 08 9M 09 (*) 477M€ Brazilian license Fee in 2008 excluded 4 MARCO PATUANO

TELECOM ITALIA GROUP 9M 2009 Results Domestic Efficiency on track Domestic Efficiency on track 9M 09 09 Efficie Efficiency ncy Progr Program Efficiency 9M 09 Effi ciency 9M 09 Euro Mln, Organic Data o/w o/w Ope Opex opex capex 640 640 640 640 363 363 277 277 Total Total 9, 9,246 246 2,646 2, 646 9M ‘08 Network 1 193 193 17 17 Operations 363 363 Sales & 2 127 127 127 127 Distribution -363 growth Organization & 3 109 109 109 109 Support process capex Information opex Total 4 62 62 11 11 efficiency -640 Technology % 9M 09 o % 9M 09 on F FY Target Target Customer 52 52 52 52 5 Operations 71% 79% 74% Delivery 8, 8,471 471 2,418 2, 418 9M ‘09 78 78 6 30 30 & Assurance Buildings and 19 19 18 18 7 Energy Mng 5 MARCO PATUANO

TELECOM ITALIA GROUP 9M 2009 Results Domestic EBITDA change vs Domestic EBITDA change vs 2008 2008 Euro million, %, Organic data +282 (223) (697) 7,768 7,913 (23) +69 +107 +34 +306 Handset Hand Commercial Commercial Gross M s Margin S n Services - s -357 marg margin in +59 +59 Costs: +84 Costs: +84 Commercial Margin Commercial Margin -214 -214 -14 -145M€, -1 , -1.8% .8% Ebitda Margin 46.1% 46.1% 47.8% 47.8% +1.7 p.p. .7 p.p. 9M 08 9M 09 Handset Handset Service Intercon- Content Commercial Advertising Fixed revenues costs revenues nection & Other Costs Costs 1H Cog’s (excl. ADV) 5,226 (128) +183 (409) +164 +21 +42 (24) +17 5,092 -134, -2.6% -134, -2 .6% 3Q +1 2,687 (95) +99 (288) +142 +13 +65 +52 2,676 -11 -11, -0 -0.4% .4% 6 MARCO PATUANO

TELECOM ITALIA GROUP 9M 2009 Results Non Core Assets Disposal: HanseNet Non Core Assets Disposal: HanseNet Book Value Book Value (Consolidated Consolidated Accounts) Accounts) Euro Million 1,440 610 o/w 582 Goodwill (78) 830 665 Key Poi Key Points ts 243 661 GW � Disposal of non core assets: expected cash in approx. 900 million ’03 100% ’07 100% ’03-’09 capital Equity NFP 9M09 Enterprise HNS AOL injections Book Value HNS* Value � Closing is expected in 1Q 2010 Acquisition Acquisition /losses * Intercompany loans � In consolidated accounts HanseNet is TI Group P&L TI Gr oup P&L Impact mpact considered as Discontinued Operation. Euro Million 1,440 900 � The Consolidated P&L Impact is -540 million euro 540 Enterprise Disposal GW Value Value Impairment in 3Q Consolidated accounts 7 MARCO PATUANO

TELECOM ITALIA GROUP 9M 2009 Results TI Group – TI Group – Tax Trend ax Trend Net Income Before Taxes and Disc. Ops. Net Income Before Taxes and Disc. Ops. P& P&L Taxes L Taxes Euro million Euro million No tax impact: Call Sofora: -190; Tax adj. Financial Law 08: -515 Lehman: -51 Tax Dispute : +137 969 2,676 2,257 +7.1% +7.1% +7.9% +7.9% 520 Adjusted Adjusted Adjusted Adjusted 9M08 9M09 9M08 9M09 Tax Cash Out Tax Cash Out Tax Tax Rate (%) ate (%) Euro million 1,343 Adjusted 36.2 35.9 198 88 23.0 1Q09 2Q09 3Q09 9M08 9M09 9M09 v 9M09 vs.08 .08 Δ YoY +175 +27 +1,040 +1,242 +1,242 8 MARCO PATUANO

TELECOM ITALIA GROUP 9M 2009 Results Net Income Evolution – Net Income Evolution – 3Q09 vs. 3Q08 Q09 vs. 3Q08 Euro mln HanseNet GW Writedown (540) � EBITDA (32) HanseNet Net Income (1) � Depreciation & Amortization +47 � Writedowns of non current assets +14 Gain on Liberty Surf Grp disposal +36 (541) 748 +184 (7) 626 (120) +29 499 (6) 201 +249; +249; +50% +50% Net Income Minorities Net Income Income Δ EBIT Δ Net financial Δ taxes Income Net Income Minorities Net Income 3Q 08 3Q08 from before Disc. Income /equity/etc. before Disc. from 3Q09 3Q 09 Disc. Ops Ops. Ops. Disc. Ops 3Q08 3Q 08 3Q 09 3Q09 9M 1,743 1,737 1,707 1,165 (39) +33 +148 +271 (449) (559) +17 o/w Tax adj. Financial Law 08 (-515) 9 MARCO PATUANO