The Telecom Italia 2009 Results and the 2010-2012 Strategic Plan Update

1. Telecom Italia
Strategic Plan Update
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2. 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.
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.
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3. Network Evolution
Provider
Service
Provider
Applications
Service
Aggregation of automatic components Services
Ecosystems of services
Platform APIs
Enabler
Service
Overlays of autonomic virtualized components
General Control & Management (Zero Touch)
Bit Carrier
IP
NB Platform Other
Resources/
Fiber Networks/
Optical Platform Terminals
Subscriber Access Aggregation Edge Core
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4. Agenda
 Wired Access
 Wireless Access
 Core Network
 Platforms
 Capex Breakdown
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5. Wired Access – Copper and Fiber will coexist
Copper Access Evolution Fiber Access Evolution (NGAN)
Capacity Capacity
WDM PON
 100 Gbps down, 100 Gbps up
 Target of 100 km
ON
 VDSL3
xP
SL
xD
 Dynamic Spectrum XG-PON
Management  10 Gbps down, 2 .5 Gbps up
 Target of 100 km
GPON
 2.5 Gbps down, 1 .25 Gbps up
 Up to 60 Km
 More xDSL efficiency & stability
2009 2010 2012 year 2009 2010 2012 year
 Copper: continue innovation, increase performance  Fiber: to match a symmetric Gigabit per client
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6. Wired Access – Copper Value
Last mile length
Relevant portion of TI asset
100
90
80
Lower Average Length
70
60
Italy
United Kingdom
xDSL still evolving (DSM, VDSL3)
%
50 Japan
40 France
30 Germany
U.S.A.
20
10
0
0 2 4 6 8 10 12 14
km
Source Internal Estimates
High Profitability
Extention and Renewal Performance Improvement
+100k Households per year  More robust xDSL technologies in the
switching centers
Extraordinary maintenance on
most vulnerable elements  Fiber + MSAN in case of Copper pairs
longer than 3 km:
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7. Wired Access – Fiber Selective Development
Timetable Roll-out
(‘000)
Poor Market Demand
1,400 1,300
Unclear Savings
1,200
927 933 Large Investments
1,000
800 637
557
600
386
400 200 Home Semi-Passed
200 Home Passed
2009 2010 2011 2012
Uncertain Profitability
Regulatory Expectations Market Focus Technical Solutions
Infrastructure Based Business Customers FTTH G-PON architecture
Competition Main metropolitan areas Innovative less expensive
No Retail Obligations (Rome and Milan) digging solutions
Wholesale Prices Increase Wireless Backhauling
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8. Wired Access - Evolution
Copper Network Architecture
Central Office Street
MDF
Residential
customers
MSAN
Business
customers
BB Fixed – Coverage* Evolution BroadBand Platform Investment
100% Capex per f.o. digged meter Capex per xDSL port
98%
63% FTTx
ADSL base
All IP ADSL
NGN2 xDSL(*)
6%
0% 2009 2010 2011 2012
2009 2012
* Gross coverage * Copper capex not included
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9. Agenda
 Wired Access
 Wireless Access
 Core Network
 Platforms
 Capex Breakdown
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10. Wireless Access – Voice & Broadband
2G evolution (GSM, GPRS, EDGE) 3/4G (UMTS, HSPA, LTE)
 HSPA+ evolution: 84
Mbps DL
 LTE: large availability
Performance Performance of terminals
 LTE - GSM Interworking:
enhanced & seamless
mobility
 HSPA+: 42 Mbps DL
 LTE: voice support
 Extra capacity of GSM First handsets available
voice service
 HSPA+: 21 e 28 Mbps DL
 Voice quality  LTE: first data card (2G/3G/LTE)
improvement and commercial releases
2009 2010 2012 year 2009 2010 2012 year
 Extended BB coverage (whole country)
 Selected areas for HSPA+ and LTE deployments based on macro, micro/pico and femto cells
 Femtocells backhauling via fixed BB connectivity
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11. Wireless Access - Evolution
Mobile Network Architecture
Copper Link (SHDSL)
RNC
nxE1
Voice + Data Radio Links
2.1 GHz
0.9 GHz 2.6 GHz
1.8 GHz
nxE1 Voice+R99 OPM Eth o nxE1
ADSL/VDSL
Eth
HSPA Eth
Ethernet on Copper Fiber Optics
Development of Radio Access Coverage Backhauling
(unit) 105 600 1,700
100% 100% 1,100
605
86% 1,000 1,600
2,700
2,600
>60%
3,700
12,150
GSM/Edge 10,350
UMTS 7,550
HSDPA 14.4 5,050
HSDPA 21/28
0% 2009 2010 2011 2012
2009 2012 Radio Fiber Bonding NxE1
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12. Wireless Access - Cash Cost Reduction
3G Nodes
Capex per Node Multistandard solution
13,500
13,100
12,200 12,700
11,200
HSPA+ (5,000)
LTE (250)
2008 2009 2010 2011 2012
Site Sharing (k number of sites) Mobile Petabytes
137
Rent per Site Capex per PByte
97
11.7
10
8.1 60
6.1 30
4.2 11
2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
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13. Agenda
 Wired Access
 Wireless Access
 Core Network
 Platforms
 Capex Breakdown
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14. Core Network – Delayering toward IP over ROADM
IP
ATM IP
SDH Photonic Layer
(ROADM)
WDM
Large implementation of xDSL (DSLAM) IP within the
access
Progressive migration of ATM and SDH to IP
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15. Core Network - Evolution
Core Network Evolution
OPM
PTN
aggregation
area
The Capacity increase IP Traffic
Capex per Petabyte
100Gb/s
100Gbps
Bit rate per channel
40Gbps
10Gb/s
10Gbps
3,380
Peta Bytes
2.5Gbps
1Gb/s 2,680
622Mbps
1,940
100Mb/s 155Mbps
1,350
860
10Mb/s INNOVATION 610
1990 2000 2010 year
2007 2008 2009 2010 2011 2012
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16. Agenda
 Wired Access
 Wireless Access
 Core Network
 Platforms
 Capex Breakdown
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17. IT Platforms
Interface
Standardization
800 380 260 180
Systems systems systems systems Centralized
Management
2009 2012
IT Systems 800 Systems 180 Systems
Managed 40,000 Thin Client
80,000 PCs
Workstation 25,000 portable PCs
Server 12,000 Servers 2,000 Servers + Virtualization
Data Center 8 Data Centers 3 Campus Data Centers
Architecture Streamlining
Management Costs Reduction
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18. Service Platforms
Reverse Revenues Trend Enriched Connectivity
Flexible Bandwidth
Enriched P2P
Self Provisioning & Self Caring
Back
Mobile Internet
to Growth Higher Throughput
Applications Quality Differentiation
& Platforms (1) Ultrabrowsing Experience on selected areas
7% 12%
Broadband (2)
13%
16%
Personal Communication
Access & Enhanced Phonebook
Voice (3) 80% Enhanced Messaging
Personal Communities
72%
Business Collaboration Suite
Unified Messaging
IP Videoconferencing
Collaboration Tools
2009 2012
(1)
ICT Services, BB Content (Adv., IPTV), Mobile VAS Content
(2)
Mobile BB, Fixed BB (Access)
(3)
Fixed: Access, Outgoing Voice, Voice VAS, Business Data, Handsets; Mobile: Outgoing
Voice, Messaging, Handsets
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19. Enabling Platforms
Reverse Revenues Trend Machine to Machine
Smart Cities
Digital Home
Smart Car
Profiling & Recommendation
Back Traditional Customer Profiling
to Growth Location on Mobile Networks
Applications
& Platforms (1) Web Profiling
7% Network Profiling
Broadband (2)
12%
13%
16%
Cloud Computing
Access & Infrastructure as a Service
Voice (3) 80% Platform as a Service
Software as a Service
72%
Content Delivery
IPTV
WEB and OTT TV
CDN based Services
2009 2012
(1)
ICT Services, BB Content (Adv., IPTV), Mobile VAS Content
(2)
Mobile BB, Fixed BB (Access)
(3)
Fixed: Access, Outgoing Voice, Voice VAS, Business Data, Handsets; Mobile: Outgoing
Voice, Messaging, Handsets
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20. Agenda
 Wired Access
 Wireless Access
 Core Network
 Platforms
 Capex Breakdown
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21. Capex Breakdown
Focus on Network & IT
Euro Bln
Total 2.7
Core Network 0.8 2.2
and Service
Platforms
0.9
IT
Access Netwok 1.0
& Others Capex reduction around 20%
2009 2010 2011 2012
among the 3 year Plan
% Full support of all our business
commitments
Core Network 31% 31%
and Service 30% 28%
Platforms
IT 32% 25% 24% 23%
Access Netwok 37% 44% 46% 49%
& Others
2009 2010 2011 2012
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22. Technology - Take Aways
Increase coverage and throughput to support BB (Fixed/Mobile) development
Slightly increase in capex amount trough:
Access introduction of multistandard mobile access nodes
Network price decline in xDSL
selective fiber roll out and innovative digging technologies
cooperation with P. Administrations for Digital Divide and new networks roll out
Delayering and strengthening to support data traffic growth and effectiveness of
Core Network service offering
Capex broadly slightly declining trough:
and Service price decline in optical equipment
Platforms smooth phase out of legacy platforms
adoption of OTT approach in service development
Integrate and empower to simplify business processes and support efficiency plan
Strong reduction in capex due to:
IT Platforms integrated architecture
virtualised infrastructures
vendor consolidation
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