Slides Telecom Italia 3Q 2012 Results – Operations – Marco Patuano

1. TELECOM ITALIA GROUP
9M 2012 Results
Milan, November 9th, 2012
Telecom Italia
9M 2012 Results
MARCO PATUANO

2. 1MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
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
and the Group.
Such forward looking statements are 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 a result of various factors. Consequently, Telecom Italia S.p.A. makes no
representation, whether expressed or implied, as to the conformity of the actual results with those
projected in the forward looking statement.
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 and uncertainties, which are
outside our control, and could significantly affect expected results.
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 S.p.A. 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
S.p.A. business or acquisition strategy or planned capital expenditures 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.
Some data for the 2011 financial year used in comparisons included into this presentation are restated as
a result of the early adoption of the revised IAS 19 (Employee Benefits) version and the reclassification of
Matrix from the Business Unit Domestic–Core Domestic to the Business Unit Other Activities

3. 2MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Agenda
Domestic 3Q12 Progress Report
Fixed Business
Mobile Business
Appendix

4. 3MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Domestic Results: 3Q12 vs 1H12 Evolution
Euro mln, Organic data, %
Domestic Service Revenues
EBITDA 3Q12 vs 1H12: EBITDA Bridge
3Q12 vs 1H12: Revenues Bridge
-7.7%
-2.9%
-7.0%
-3.3%
1H
3Q
1H
3Q
Δ-616 M€
-4.5%
-321 M€
-4.6%
% on Total
Revenues
50.0%0.0 p.p.50.0%
13,552 12,936
7,034 6,713
Mobile: -0.7pp
Fixed: -0.2pp Mobile: -1.9pp
WH&Transit: -1.2pp
Operating Performance
Δ
Revenues Efficiency
Total Revenues
FY Target
Confirmed
EBITDA
FY Target
Confirmed
-0.8 pp

5. 4MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Euro mln, Reported Data
1 32
Domestic Operating Free Cash Flow Evolution
+61 mln
% on
Revenues 28.3% 30.1%+1.8 pp
Δ EBITDA Δ Capex ΔWC
1 2 3
Cost Control Accelerating Right Spending ΔWC Improvement
(335)
1H12 (82)
3Q12 (79)
(22)
Days
Receivables
Turnover
Cash Cost
+0.2
+0.2
-0.1
€ bln
ΔWC impact
Euro mln, Organic Data

6. 5MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Source: ISTAT and Prometeia
Consumer Segment Trend – YoY% change
Service Revenues Trend by Segment: Consumer & Corporate
Corporate Segment Trend – YoY% change
Consumer Confidence
* 1Q12 & 2Q12: Data Normalized for bad weather and calendar discontinuities – 3Q12: Excluding Regulatory impact (Δ MTR and price cap Roaming UE)
Corporate Confidence
Index: 2005=100
Index: 2005=100
Δ% YoY
Italian GDP

7. 6MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Delivering Domestic Targets during an Economic Slowdown
Delivering our Targets for 2012… …while working for the Future
Traditional
Services
Innovative
Services
Traditional
Services
Innovative
Services
• Traditional Services under pressure
• Fixed Market weak, but TI holds a stable
Market Share
• Mobile BB: Small Screen Penetration up
• LTE Launched (Nov. 7th)
• Fixed UBB ready to go
• Cloud & ICT Portfolio enriched
Mantening
Tight
Expenses
Control
Commercials
•No subsidy increase
•Advertising expenses reduced but «Top of
Mind» confirmed
•Cost of caring under control while CSI
improved
Industrial
Human Resources
Well on
Track
• Bundling is the way to defend ARPU
• Leveraging on Fixed and Mobile Customer Base
• Explore Regulatory opportunities
• Best UBB experience
• Enrich connectivity
• Multi-devices approach
• Extract value from the Cloud (Consumer & Corporate)
• ICT offering upgrade
Working on non-core activities in order to further
benchmark with «best-in-class» players
Maintaining
high level of
Efficiency
Focus on:
•New technologies
•Architectural simplification
Right-Spending on:
•Day-by-day operations
•Commercial Capex
Pursue Group Synergies
Introduce
Discontinuities
Efficiencies and Right-Spending on Investments
confirmed, notwithstanding LTE & NGN
deployment

8. 7MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Agenda
Domestic 3Q12 Progress Report
Fixed Business
Mobile Business
Appendix

9. 8MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Euro mln, Organic Data, %
Domestic Fixed: Focus on core Service Revenue Performance
3,343 -6.2%
Total Fixed Revenues Domestic Service Revenues Trend – YoY % change
3,136
Sparkle
Core
Service
-9.5%
-4.9%
Sparkle*CoreService
*net of elim. & adj
Highlights
Elim.
Equipment
-39.7%
Core Service Revenues Trend – YoY % change
RetailDomestic
Wholesale
Core Services down to -4.9% YoY due to:
expected worse comparison effect on Consumer
worse Macro scenario on Corporate segment
unexpected retroactive reduction of WLR
Sparkle:
New round of low-margin transit contracts
discontinuation, with no impact on Ebitda
Positive support from monthly
rental fee increase

10. 9MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Domestic Fixed: TI Access Performance
Fixed Access Line Losses Trend
-187k
21,789 21,562 21,195
TIRetailWholesale
TIRetailWholesale
Voice ARPU Highlights
65.8%66.2%67.2%M/S
on total Mrk
Line Losses neither caused nor caught by OLO’s
Our competitors are continuing to increase churn
among each other
Consumer ARPU stable as the CB reduction affected
low-end clients and slow-down mainly impacted the
Corporate segment
21,382
65.9%
9M11
+190 9M12
+3
9M11
-524
9M11
-519
Consumer Retail
Flat
-1.6%
% YoY

11. 10MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
‘000
TI retail
accesses
M/S 53.9% 52.0% 51.9%
Broadband Accesses BB Lines Evolution
Domestic Fixed: Broadband Figures
Broadband Retail Highlights
Total
Markets 13,313 13,527 13,544
Italian Fixed Broadband:
Stability in TI’s Market Share.
Constant decline in OLO’s net acquisitions.
TI’s ARPU upbeat trend confirmed.
Increase in Superinternet and Flat Offers on CB
without leveraging on promos.
Euro/month/line
BB OLO
13,263
53.8%
TIRetailBBOLO
‘000
ARPU Service Revenues
Euro mln
+0.9%

12. 11MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Agenda
Domestic 3Q12 Progress Report
Fixed Business
Mobile Business
Appendix

13. 12MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Euro mln, Organic Data
Mobile Revenues: 3Q12 Results at a Glance
Total Mobile Revenues
Business
Generated
Business
Received
Handsets
Retail
Services
Total Service
Revenues
Wholesale &
others
Total Mobile
Revenues
-7.9%
-51.6%
1,624
1,419
1,727
1,502
1,790
1,584
-12.6%
-19.3%
-13.0%
+29.5%
-11.5%
% YoY
-5.9%
Excluding Roaming UE impacts
Retail Business Generated Trend – Δ YoY
Excluding Roaming
EU impacts
Handset Revenues Trend – Δ YoY
Positive effects from bad weather
and calendar discontinuities

14. 13MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
‘000
TIM’s MNP 9M12
Total SIM cards Annualized Market Churn
+0.4 mln
Domestic Mobile: Customer Base Trend
OUT/IN
Aggressive Summer Campaign
by some competitors
Launch of new TIM Portfolio offers:
More Value for Money
3Q2Q1Q
1.0 x
as of May
-102
TotalMNP
Avg Market

15. 14MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Domestic Mobile Retail: Focus on VAS
Retail VAS
TIMxSmartphone: Focus on ARPU VAS
-4.0%
+0.1% -8.4%
1 2
Messaging2
Bundles on MBB+VAS (e.g. “TIMxSmartphone”) are
the right Value Proposition for the Market: no
cannibalization effect on VAS Consumer ARPU
Negative balance between decreasing average SMS
price and steady number of SMS user
Increasing number of active smartphone users**
(+49% YoY) enables alternative messaging services
July 2011 July 2012
Without
TIMxSmartphone
With
TIMxSmartphone
Messaging
Data
0.9x
3.0x
vs ARPU 2011
-4.7%
*Excluding Roming UE Cap
Browsing1
Negative impact of Roaming EU Cap on data,
occurred by July 1st
+12.1%241
271
Browsing Revenues Normalized*
**Usage 1x per week at least
+1.6%*

16. 15MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
LTE: a Growth Opportunity, starting from Large Screens
4G Pricing Strategy…
Avg Price
Premium
…beyond Early Adoption
Avg Price Premium: LTE offers vs 3G 42MB offers
Population
Coverage
Large Screens
Italian Price Premium aligned to other operators,
notwithstanding the «early adoption» phase
Fit Data to Device:
Large Screen, Large Pack
Entry giga size to be adjusted to UBB Mobile attitude
Source: Internal Estimates
Bundles without Boundaries
Diversify offer portfolio to fit customers’
demand
Cross-check coordination in pricing vs ADSL
Quality of Services
Traffic Segmentation for a «Priority Service»
Speed availability is key to ensure a real «Ultra
Mobile Broadband Experience»
“Tailor-made” VAS Content
Exclusive VAS Content to make best use of the
strong increase of network performance
Market Approach
Coverage: Selective and Focused, aimed at
maximizing the Return on LTE Investments

17. 16MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Agenda
Domestic 3Q12 Progress Report
Fixed Business
Mobile Business
Appendix

18. 17MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Domestic Wireline Revenues
Euro mln, Organic Data, %
102
2,932
1,385
396
302
789
60
3Q11
3,343
377
(68)
Products
Domestic Core Services
Voice & Access
Internet
Business Data
National Wholesale
Other & Subs
Total
Sparkle Group
Elimination
62
2,789
1,287
396
281
763
62
3Q12
3,136
341
(56)
YoY %
(39.7)
(4.9)
(7.1)
-
(7.0)
(3.3)
n.m.
(6.2)
(9.5)
n.m.
9M12vs11
YoY %
(38.3)
(3.6)
(5.8)
1.0
(5.8)
(2.0)
n.m.
(4.0)
2.1
n.m.

19. 18MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Domestic Mobile Revenues
Euro mln, Organic Data, %
(*
) Including Visitors
(**
) Total Retail Services Revenues net of Incoming
Total
o/w Services
Wholesale (*)
Retail
o/w VAS
o/w Incoming
o/w Business Generated (**)
o/w Outgoing Voice
3Q11
1,790
1,624
103
1,687
524
176
63
1,448
924
3Q12
1,584
1,419
83
1,501
503
85
82
1,334
831
Δ % YoY
(11.5)
(12.6)
(19.3)
(11.0)
(4.0)
(51.6)
29.5
(7.9)
(10.1)
o/w Handsets
9M12vs11
YoY %
(6.2)
(7.6)
(17.7)
(5.6)
1.8
(27.0)
46.6
(4.8)
(8.4)

20. 19MARCO PATUANO
TELECOM ITALIA GROUP
9M 2012 Results
Personnel
-4G&A &
Other 376
Progress on Domestic Efficiency PlanEuro mln, Organic Data, %
Δ Abs
9M 12 YoY9M12
-174
1,982Total
Capex
1,331
793
-99
+83
6,709Total Opex*
-335
1,533
Delta Cash Cost
9M12 vs 9M11
Industrial
2,103 -116
Mktg &
Comm.
ITX
Cash Cost
EfficiencyVolume
Driven
-1749,048 -395
Intercon-
nection
Target FY : -0.5 Bn
9M11 9M12
8,691
+212
Efficiency
8,691
64.8%
+ 0.5 p.p.
-357
Total
Cash Cost
573 -24Handset
Fixed
Opex -37
-22
- 357
64.3%
% on
Revenues
FY12 Trend
Euro Bln, Organic Data
ITX
2.3
FY11 FY12 E
-0.3
Handset
Other External Cost*
Personnel Cost
1.0
FY11
Stable
FY12 E
FY11
3.4 Stable
FY12 E
FY11
3.0 -0,2
FY12 E
* Mktg&Comm.+Industrial+G&A & others
Δ Abs
3Q12 YoY
-2
-124
-28
+34
-203
-54
-29
-22
-206
-3
FY13-14
FY12
1.2x FY12
Target
>80%
FY Target
Confirmed
Confirmed
Confirmed
Improved
Total FY 12 ~9.2Bln€