Slides Telecom Italia 1Q 2013 Results - Operations - Marco Patuano

1. TELECOM ITALIA GROUP
1Q 2013 Results
Milan, May 9th, 2013
Telecom Italia
1Q 2013 Results
MARCO PATUANO

2. 1MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 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 first quarter 2012, used in comparisons, included into this presentation have been restated as
a result of the early adoption, starting from the first half 2012, of the revised version of IAS 19 (Employee
Benefits) and the reclassification of Matrix (company that was disposed of on October 31, 2012) from the
Business Unit Domestic–Core Domestic to the Business Unit Other Activities.

3. 2MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
Agenda
 Domestic 1Q13 Progress Report
Mobile Business
Fixed Business
Appendix

4. 3MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
Structurally Evolving in a Changing Environment
CurrentSituation
Economy Regulation Highlights
1 2 3
Actions
Operating PerformanceRegulated Prices
Focus on «Willingness to
Pay» Areas
New Labour Contract
Agreement
BoD to assess for final kick-off
decision on our Structural
Separation Plan by May 23rd
Proceed thereafter to enact our
Structural Separation Plan,
targeting a new Regulatory
framework for our Fixed Access
Network Company and TI‟s Retail
Operations
Defend Market Share
Confirm Value and Quality
approaches
Distinctive deployment of Next
Generation Networks
Confidence Indexes
100,8
96,3
85,3
97,2
82,1
73,7
Mar-2011 Mar-2012 Mar-2013
Consumer Confidence Corporate Confidence*
* Services Sector
TraditionalInnovative
Fixed
Mobile
Fixed Internet
Business Data & ICT
Mobile InternetULLBitstreamMTR
AGCOM
proposal
AGCOM
decision
AGCOM
decision

5. 4MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
Domestic 1Q13 Top Line
Euro mln, Organic data, %
Domestic Revenues
Core Domestic Revenues 1Q13 vs 1Q12 Bridge Highlights
Core Domestic Revenues Trend – D% YoY
4.244 3.832
347
283
1Q12 1Q13
-18.4%
-9.7%
Sparkle
Core
-453 M€
-10.1%4,477
4,024
-3,2%
-4,6%
-7,9%
-8,9%
-9,7%
-4,2%
-3,9%
-6,4%
-7,5%
-6,7%
1Q12 2Q12 3Q12 4Q12 1Q13
Core Core Normalized
Operating
+8,8% +9,0%
-9,5% -10,9% -18,4%
SparkleCore
-3.0pp-6.7pp
Dual Speed in Domestic Revenues Trends:
Improving Core Domestic Revenues on a
Normalized basis
Double-digit drop in Sparkle Trend as per the new
rationalization process on low-margin contracts,
supporting however EBITDA contribution
Significant Regulatory & Other exceptional elements
impacts on 1Q13 Results
-3,6pp
-9,7pp
-3,1pp
-2,2pp
-0,8pp
Mobile Fixed Regulatory
Calendar &
Other
Total Core
Domestic

6. 5MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
D Capex
1Q12 1Q13
Euro mln, Organic Data
Outstanding Ebitda Margin Confirmed
(489)
D EBITDA DWC
-218M€
-9.8%
% on Total
Revenues
49.7%+0.2 p.p.49.5%
2,218
2,000
Ebitda
Capex Highlights
Domestic OpFCF
1Q12 1Q13
1,167
678
(242)
+8 (255)
1 2
3
1
2
3
Euro mln, Reported Data
1Q12 1Q13
586 578
-8M€
-1.4%
Confirm investments rirght-sizing increasing YoY Innovative
Capex share
Reversal effect of suppliers payment deferral related to
134/2012 Law
EBITDA performance held back by key actions enacted
only from April onwards (such as Solidarity Contract,
Fixed Price Simplification)

7. 6MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
Consumer Segment Trend – YoY% change
Revenues Trend by Segment: Consumer & Business
Business Segment Trend – YoY% change
* Source: ISTAT for 2012 – Prometeia for forecasts
** Data Normalized for bad weather and calendar discontinuities; Excluding Regulatory Impact (D MTR and EU Roaming price cap)
Lower Italian 2013 GDP Forecasts*
-1,6%
-2,6% -2,6% -2,8%
-2,1%
-1,8% -1,7%
-0,5%-1,7%
-0,9%
-0,4%
+0,4%
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
New GDP Outlook 2013 Trend - as of April
Old GDP Outlook 2013 Trend - as of February
FY12
-2.4%
Impacts on Business 1Q13 Revenues Trend
Regulatory Economic Context Competition
More than 2/3
of Revenues Drop
-1,1%
-1,8%
-6,9%
-4,5%
-8,9%
-2,5%
-1,2%
-5,3%
-2,7%
-4,8%
1Q12 2Q12 3Q12 4Q12 1Q13
-6,5%
-9,6%
-11,7%
-15,3%
-13,1%
-7,5%
-8,7%
-9,7%
-13,7%
-10,5%
1Q12 2Q12 3Q12 4Q12 1Q13
Reported Trend Normalized Trend
-4.0% -2.8% -6.3% -4.4% -5.3%
-5.5% -6.5% --7.5% -9.9% -10.3%
Service Revenues Trend Normalized
Service Revenues Trend Normalized
~1/3
~1/3

8. 7MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
Agenda
 Domestic 1Q13 Progress Report
Mobile Business
Fixed Business
Appendix

9. 8MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
1.335
1,175
176
56
62
62
77
87
1Q12 1Q13
Euro mln, Organic Data
Mobile Revenues: 1Q13 Results at a Glance
Total Mobile Revenues
Business
Generated
Business
Received
Handsets
Retail
Services
Total Service
Revenues
Wholesale &
others
Total Mobile
Revenues
-12.0%
-68.2%
1,511
1,231
1,573
1,292
1,650
1,379
-18.6%
+0.2%
-17.9%
+12.2%
-16.4%
% YoY
-11.0%
Excluding UE Roaming impacts
Service Revenues Trend – D YoY
Total Revenues Trend – D YoY
-3,7%
-7,5%
-13,0%
-11,7%
-17,9%
-5.7%
-6.2%
-8.5%
-6.8%
-9.4%
1Q12 2Q12 3Q12 4Q12 1Q13
Reported Normalized
-1,7%
-5,0%
-11,5%
-9,4%
-16,4%
-3,6%
-3,8%
-7,1%
-5,0%
-8.4%
1Q12 2Q12 3Q12 4Q12 1Q13
Data Normalized for bad weather and calendar discontinuities; Excluding Regulatory Impact (D MTR and EU Roaming price cap)

10. 9MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
Mobile Domestic Market Developments and TIM’s Response
While the Market is overheating in MNP…
…TIM‟s answer is twofold:
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
+30%
+50%
Strong increase in MNP Market Volumes
Short term tactical
response
Shift and
Structural change towards a
more convergent
positioning
1
2
Defend Market Share
1
Reinforce best-in-class CB Value & Churn
2
• Super Local offers
• Increased push on low-end cluster, leveraging on prices where
they matter most (geography/demography) to customers
• Strengthen Lock-in Action
• Reward value customer base with handset substitution (24
months lock-in) and data penetration.
• Stimulate loyalty with top-up discounts
• “2-Play” convergent offers
• Progress on “n-Play” offers
Pure
price
Pure mobile Full Convergence
Op4
Op2
Op3
SUBITO IL 20% IN PIÙ
AD OGNI RICARICA
E UNO SMARTPHONE
GRATIS
1
2

11. 10MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
mln
Total SIM cards Annualized Market Churn
Domestic Mobile: Customer Base Trend
-0.3
32,3 32,2 31,9
1Q12 4Q12 1Q13
26%
29%
32%
30%
36% 36%
TIM VOD WIND
2013
2012
A tough 1Q for TIM‟s MNP – Better Outlook for 2Q
OUT/IN
Avg 2012
MNP Balance Trend
January February March April
Increased
Competition
1,2 x
1,2 x
1,6 x
1,2 x
1,5 x
1Q12 2Q12 3Q12 4Q12 1Q13

12. 11MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
Domestic Mobile Consumer: Focus on VAS
1Q YoY VAS Performance Browsing
1Q12
1Q13
Messaging
Browsing
Small ScreenMarket Share Large Screen
6,3
1Q12 1Q13
Total Users: Large + Small Screen
Mln users
Double Digit
Growth
Double digit growth both in
Revenues and Users
*% on gross adds
1Q12 1Q13
1Q12=100
 Content
55,9%
62,4%
38,1%
40,3%
1Q12 1Q13
value volume
M/S on dongle
Users
Revenues

13. 12MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
Agenda
 Domestic 1Q13 Progress Report
Mobile Business
Fixed Business
Appendix

14. 13MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
2.875 2.693
347
283
62
52
1Q12 1Q13
Euro mln, Organic Data, %
Domestic Fixed: Focus on core Service Revenue Performance
3,223 -7.7%
Total Fixed Revenues Domestic Service Revenues Trend – YoY % change
2,976
Sparkle
Core
Service
-18.4%
-6.3%
Sparkle*CoreService
*net of elim. & adj
Consumer & Business Trend - YoY % change
Elim.
Equipment
-17.3%
Core Service Revenues Trend – YoY % change
RetailDomestic
Wholesale
+8,8% +9,0%
-9,5% -10,9%
-18,4%
1Q12 2Q12 3Q12 4Q12 1Q13
-3,9% -3,6%
-5,9% -7,1% -6,2%
1Q12 2Q12 3Q12 4Q12 1Q13
-0,9% -1,2%
-2,3%
-3,8%
-6,6%
-1,5% -1,0%
-4,0% -3,5% -4,4%
-2,4%
-0,8%
-4,0%
-3,5% -3,6%
1Q12 2Q12 3Q12 4Q12 1Q13
-5,9% -6,6% -8,1% -9,2% -8,7%
-6,2% -6,2% -8,1%
-9,6% -8,4%
Reported Normalized
ConsumerBusiness 
-3,1% -2,9%
-4,9% -6,2% -6,3%
-3,5% -2,7%
-4,9%
-6,3% -5,9%
Reported Normalized

15. 14MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
Internet
Business Data & ICT
Consumer SegmentTotal Fixed Internet
o/w Internet Services
o/w BroadBand Services
Total Internet
405 mln €
+1.8%
o/w Internet Services
o/w BroadBand Services
Total Internet
401 mln €
+1.7%
395 mln €
+1.5%
268 mln €
+3.7%
265 mln €
+3.6%
260 mln €
+3.2%
D YoY D YoY
D YoY
ICTBusiness Data
Domestic Fixed: Focus on Internet & Business Data
Euro mln, Organic Data, %
-9,6%
-9,9%
-13,2%
-17,3%
-4,6%
-5,9%
-4,3%
-7,0%
-5,6%
-1,9%
1Q12 2Q12 3Q12 4Q12 1Q13
Business Data o/w Service
-9,9%
-8,8%
-16,8%
-21,2%
+0,4%-5,0%
+3,1%
-3,6%
+1,1%
+9,4%
1Q12 2Q12 3Q12 4Q12 1Q13
ICT o/w Service

16. 15MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
14.457 14.277 14.133 13.978 13.777
7.105 7.106 7.063 7.175 7.238
1Q12 2Q12 3Q12 4Q12 1Q13
Domestic Fixed: TI Access Performance
Fixed Access Line Losses Trend
-137k
21,562 21,195 21,016
TIRetailWholesale
TIRetailWholesale
Outgoing Voice KPIs OLO Access Growth
64.0%65.5%65.8%
M/S
on total Mrk
21,153
64.6%
-195
-180
-144 -155
-201
+45
+1
-43
+112
+63
1Q12 2Q12 3Q12 4Q12 1Q13
21,382
65.3%
-3,7%
-7,0%
-9,1%
-8,2%
-12,4%
-2,0%
-1,1%
-0,7%
-0,8%
+2,6%
1Q12 2Q12 3Q12 4Q12 1Q13
Volumes Price
+77
+62
+27
+79
+86
-7
+0
-24
+58
+7
-24
-61
-46
-25 -30
1Q12 2Q12 3Q12 4Q12 1Q13
ULL Naked WLR

17. 16MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
7.092 7.037 7.030 7.020 6.984
6.458 6.579 6.630 6.738 6.804
1Q12 2Q12 3Q12 4Q12 1Q13
‘000
TI retail
accesses
M/S 52.3% 51.5% 50.7%
Broadband Accesses* BB Lines Evolution
Domestic Fixed: Broadband Figures
Retail Broadband ARPU Growth Highlights
Total
Market
13,550 13,757 13,788
Monetizing from our Value Strategy:
Positive trend in Broadband ARPU quarter by
quarter
Further increase of flat vs free BB clients
Broadly Stable Broadband Market Share above 50%
Euro/month/line
BB OLO
13,617
51.7%
TIRetailBBOLO
‘000
13,660 +240
+121
+51
+108
+66
-33
-55
-7 -10
-36
1Q12 2Q12 3Q12 4Q12 1Q13

51.0%
18,3
18,5
18,6
18,9 18,9
1Q12 2Q12 3Q12 4Q12 1Q13
+3.5%
* AGCOM figures

18. 17MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
First Quarter 2013 Take-Aways Balance to FY2013
Domestic Take-Aways
The Italian economic environment is not improving yet
Regulatory effects from MTR and EU Price Cap affecting
Year-on-Year comparison
Challenging Competitive Mobile Market behavior
Adjusted Total Revenues 1Q13 better than 4Q12
Domestic Top Line Trend did show:
 High-single digit decline in adjusted Mobile
Revenues
Resilient performance in the Fixed Business
supported by signs of recovery in the Business
Segment
Leading position in EBITDA Margin among EU peers
confirmed
Italian Economic Indicators point to recovery signs
towards the end of the year
Better YoY comparison in Mobile performance, due to
milder MTR drag and data roaming price cap in 2H
Positive effects on Mobile KPIs starting from 2Q, with
a progressive positive contribution to financials in 2H13
Monthly fee increase, new price simplification, BB
performance and ICT further support Fixed Results
Strict, Continuous focus on Cash Costs

19. 18MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
Cash Cost Efficiency Plan
-1.3
-0.4
-0.3
-0.6
-0.5
-0.2
2013 2014 2015 Cum'12-'15
Opex Capex
€ Bln
Target
-0.6
Focus on Cash Cost Domestic Efficiency Plan
FY„13-‟15PlanHightlights
Labour Cost Industrial , Energy & Other Capex
Acceleration of Labour Cost
Efficiency starting from April, due
to «New Solidarity Contract»
signed at the end of March
Headcount reductions
Strong reduction of variable labor
costs (Performance-related pay,
etc…)
 Increased Productivity Ratio
Efficiency in Energy costs
through rational management
program
Efficiency in maintenance and
caring
Positive effect in G&A due to
optimization of Real Estate
Sale of prime location
buildings
Less outsourcing costs
Important Capex efficiency in
IT due to reduction of costs
driven by Architectural &
Market Driven Developments

20. 19MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
Agenda
 Domestic 1Q13 Progress Report
Mobile Business
Fixed Business
Appendix

21. 20MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
Domestic Fixed Revenues
Euro mln, Organic Data, %
62
2,875
1,386
394
278
759
58
1Q12
3,223
347
(61)
Products
Domestic Core Services
Voice & Access
Internet
Business Data
National Wholesale
Other & Subs
Total
Sparkle Group
Elimination
52
2,693
1,259
401
273
709
51
1Q13
2,976
283
(52)
YoY %
(17.3)
(6.3)
(9.1)
1.7
(1.9)
(6.6)
n.m.
(7.7)
(18.4)
n.m.
4Q12vs11
YoY %
(36.6)
(6.2)
(8.6)
1.9
(5.6)
(3.8)
n.m.
(8.4)
(10.9)
n.m.

22. 21MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
Domestic Mobile Revenues
Euro mln, Organic Data, %
(*) Including Visitors
(**) Total Retail Service Revenues net of Incoming
Total
o/w Services
Wholesale (*)
Retail
o/w VAS
o/w Incoming
o/w Business Generated
(**)
o/w Outgoing Voice
1Q12
1,650
1,511
62
1,588
510
176
77
1,335
825
1Q13
1,379
1,231
62
1,317
470
56
87
1,175
705
D % YoY
(16.4)
(18.6)
0.2
(17.1)
(7.9)
(68.2)
12.2
(12.0)
(14.5)
Handsets
4Q12vs11
YoY %
(9.4)
(12.6)
11.1
(10.2)
(4.3)
(48.5)
12.5
(8.1)
(10.4)

23. 22MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
Progress on Domestic Efficiency PlanEuro mln, Organic Data, %
-130
-59
-
-36
-10
-16
-9
-71
D
Efficiency
D Abs
‟13 vs „12
Total Cash
Cost
Ytd „13
-207
578Total Capex - 8
581
254
-27
709
+6
-32
+25
2,024Total Opex*
-235
336
-207
-
-207
-
-
-
-
-207
D
ITX
+94
+51
-
+9
+16
-16
+34
+43
D
Vol.
Driven
Delta Cash Cost
Ytd 13 vs Ytd 12
Industrial
Personnel
Mktg &
Sales
ITX
G&A &
Other **
- 243
144
Cash Cost
EfficiencyVolume
Driven
-2072,845
-243
-130
Intercon-
nection
Target FY : - 601
Ytd 12 Ytd 13
2,602
Handsets:
-1
+ 94
Cash Cost on Revenues %
Ytd‟12 Ytd‟13
2,602
19% of FY13
Target
25% of FY13
Target
22 % of FY13
Target
63.5%
64.7%
+ 1.2 p.p.
**Includes Other Operating Cost/Income and Capitalized Costs* Costs related to credit management are reclassified from G&A & Other to Mktg & Sales

24. 23MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
TIS Wholesale Voice Revenues– Improve Profitability
247
194
1Q12 1Q13
 Wholesale Voice Business
mainly driven by bilateral
agreements
 Bilateral agreements
review to improve
profitability
 Elimination of Low margin
relationships
 Focus on Itz routes with
higher marginality
% on
Gross
Revenues
13.8%
17.0%
Euro mln, Organic data, %
Euro mln, Organic data, %
Minutes mln
Net Revenues - Voice
gen feb mar
2012 Actual 2013 Actual
Change -6.7% -15.3 % -5.5%
(YoY)
Total Traffic - Voice
24 26
1Q12 1Q13
+10%
48 48
1Q12 1Q13
Voice Gross Revenues
-22%
Euro mln
Ebitda TIS Group
+3.2 p.p.

25. 24MARCO PATUANO
TELECOM ITALIA GROUP
1Q 2013 Results
 Insourcing and capacity development
 Stamping on system
 Shift Revision
 Job conversion
 IT Access time reduction
 TI/TCC Synergies (Telecontact)
 Site reduction (-88 in 2 years)
 Quality levels in line with 4Q12
 Commercial performance on track
 Higher In-House productivity with less staff
(-390 FTE average)
 Start of new Solidarity Contract (April)
 Lower cost of external staff
 Lower labour cost
Caring Services – Progress in 1Q13
FrontEndBackOffice
Engagement
Front End
Back Office
Performance
Operators Calls Received
-5%
Costs
In-House IncidenceIn-House Growth
In-House answers
In-House processing
mln
Internal
Actions
started to
increase
production
capacity
Market
Dynamics
 Downwards trend of operators‟ busy time
marzo 2012 marzo 2013
Staff
External
Costs
-5%
-14%
Organic CS
(# resources) 12,800 12,000-800
March 2012 March 2013
~35% of FY
Target