Domestic Business Outlook

Domestic Business Outlook OSCAR CICCHETTI

OSCAR CICCHETTI MARKET OVERVIEW 2008-2010 Safe Harbour This presentation contains 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 Company with respect to 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 Company's activities and strategies. 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 and investors 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 , which set out certain factors that could cause actual results to be materially different from the forward-looking statements contained herein. 1

OSCAR CICCHETTI MARKET OVERVIEW 2008-2010 Consolidate and Transform Domestic Business: Focus on Share of Wallet CAGR ‘07-’10 Bln€ Grow in digital content TI Group 2007 Advertising and 13.8 14.8 +7% distribution and web Market Share 11.3 12.1 12.9 2.0 new media Digital content* Estimate ~ 2% Increase market share TI Group 2007 ICT Services 14.2 14.5 14.8 15.1 15.8 +3% through integrated Market Share TLC/IT Services Estimate ~ 7%** TI Group 2007 Telecom Focus on Value 36.1 35.7 36.0 36.3 36.7 +1% Market Share Services*** Market Share Estimate ~ 55% 2006 2007 2008 2009 2010 * Includes total advertising mkt, Pay TV and digital content on PC. Excludes RAI Service Fee ** On addressable market *** Includes equipment 2

OSCAR CICCHETTI MARKET OVERVIEW 2008-2010 Consolidate and Transform Domestic Business: Focus on Share of Wallet Bln€ Addressable market Grow in digital content TI Group 2007 14.8 distribution and web 2.0 Market Share Advertising and 12.9 13.8 new media Estimate ~ 2% 11.3 12.1 Digital Content* Increase market share TI Group 2007 14.2 14.5 14.8 15.1 15.8 through integrated Market Share ICT Services TLC/IT Services Estimate ~ 7%** TI Group 2007 Telecom 36.1 35.7 36.0 36.3 36.7 Focus on Value Market Share Services*** Market Share Estimate ~ 55% 2006 2007 2008 2009 2010 * Includes total advertising mkt, Pay TV and digital content on PC. Excludes RAI Service Fee ** On addressable market *** Includes equipment 3

OSCAR CICCHETTI MARKET OVERVIEW 2008-2010 Telecom Services Traditional Services Value Traffic Volumes Bln€ CAGR ‘07-’10 Bln minutes CAGR ‘07-’10 203 210 +4% 23 196 22.1 21.6 21.2 20.7 186 -2% 174 Fixed Access 4.4 4.4 4.3 4.2 4 -3% 95 108 120 132 +12% Mobile 79 Mobile Traffic 12.9 12.4 12.4 12.6 Fixed VoIP 4 12.7 +1% 11 24 35 44 +59% Fixed trad. 91 Fixed 80 64 Traffic 5.7 5.3 4.9 4.4 4 -9% 48 34 -25% 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Retail voice is commoditizing and value is contracting: % mobility Decline of fixed voice driven by mobile substitution premium 252 209 195 186 179 Mobile voice traffic shows a positive elasticity (2007 excluded due to Mobile traffic exceeded fixed line traffic in 2007 regulatory discontinuities) Fixed: migration to mobile and VoIP Decrease of fixed access driven by a mix evolving towards xDSL and by Mobile: growth pushed by bundles and homezone offers causing mobile substitution a reduction in the “mobility premium”, facilitating migration Source: internal estimates based on OVUM, Gartner, IDC, Assinform and Sirmi data 4

OSCAR CICCHETTI MARKET OVERVIEW 2008-2010 Telecom Services Broadband Market Value BB Customers Bn€ CAGR ‘07-’10 Bn minutes CAGR ‘07-’10 30.1 +34% 5.2 +20% 4.4 23.9 +79% 15.5 3.6 1.9 +40% 17.9 10.8 3.0 1.4 2.2 1.0 12.8 6.3 0.7 10.3 Mobile 2.7 Browsing* 0.3 Mobile Broadband 1.9 14.6 +13% 3.0 3.3 +13% 13.1 2.6 10.1 11.6 1.9 2.3 Fixed 8.4 Broadband* Broadband 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Strong growth of the Internet market driven by fixed % Fixed BB /fixed 37 45 52 59 67 broadband and mobile browsing accesses Broadband penetration is driven by a growing demand of % Mobile BB /SIM 2 3 7 11 16 bandwidth and fixed/mobile over IP services (VoIP, Contents, Social Networking services, Gaming On Line, % 2P-3P/Fixed BB 12 29 44 63 82 “Punto LAN”, IP Centrex, ...) Source: internal estimates based on OVUM, Gartner, IDC, Assinform and Sirmi data * Broadband VAS included (eg. security package, anti-spamming, mobile mailing, …) 5

OSCAR CICCHETTI MARKET OVERVIEW 2008-2010 Telecom Services Messaging and VAS CAGR ‘07-’10 Bln€ 4.8 5.0 +5% 4.6 4.3 4.1 1.6 1.7 +9% Mobile Interactive 1.5 1.2 1.3 VAS*** 2.4 2.5 2.6 +4% Messaging ** 2.2 2.3 Fixed VAS* 0.7 0.7 0.7 0.7 0.7 +0% 2006 2007 2008 2009 2010 Messaging and Fixed VAS markets are significant in term of revenues but substantially mature Mobile Interactive VAS drive growth Source: internal estimates based on OVUM, Gartner, IDC, Assinform and Sirmi data *Premium Services, Voice VAS ** SMS, MMS, Instant Messaging ***Voice VAS, Premium Services, Content ,WAP, Mobile TV and B2B Services 6

OSCAR CICCHETTI MARKET OVERVIEW 2008-2010 Consolidate and Transform Domestic Business: Focus on Share of Wallet Bln€ Addressable market Grow in digital content TI Grupo 2007 14.8 distribution and web 2.0 Market Share Advertising and 12.9 13.8 11.3 12.1 new media Estimate ~ 2% Digital Content* Increase market share TI Group 2007 14.2 14.5 14.8 15.1 15.8 through integrated Market Share ICT Services TLC/IT Services Estimate ~ 7%** TI Group 2007 Telecom Focus on Value 36.1 35.7 36.0 36.3 36.7 Market Share Services*** Market Share Estimate ~ 55% 2006 2007 2008 2009 2010 * Includes total advertising mkt, Pay TV and digital content on PC. Excludes RAI Service Fee ** On addressable market *** Includes equipment 7

OSCAR CICCHETTI MARKET OVERVIEW 2008-2010 ICT Services Italy West Europe Addressable Market CAGR CAGR Bn€ 2007-10 2007-10 14.8 15.1 15.8 3% +5% 14.5 14.2 2.7 2.8 2.9 3% 2.7 Business Process 2.6 Outsourcing 3.5 3.5 3.6 1% 3.4 Professional Services 3.4 8.8 9.2 3% +5% 8.2 8.4 8.6 3.1 3.2 3.4 2.9 3.0 4% Application Services Addressable Infrastructure 4.8 4.9 5.2 3% 4.6 4.7 Services Network Services 0.6 0.6 0.7 0.7 0.7 1% 2006 2007 2008 2009 2010 ICT market is attractive in terms of size and growth Virtualization, “SW as a service” and Service Oriented Architecture increase telco opportunities Source: Assinform, IDC & AT Kearney Analisys 8

OSCAR CICCHETTI MARKET OVERVIEW 2008-2010 Consolidate and Transform Domestic Business: Focus on Share of Wallet Bn€ Addressable Market Grow in digital content TI Group 2007 14.8 distribution and web 2.0 Market Share Advertising and 12.9 13.8 11.3 12.1 new media Estimate ~ 2% Digital Content* Increase market share TI Group 2007 15.1 15.8 ICT Services 14.2 14.5 14.8 through integrated Market Share TLC/IT Services Estimate ~ 7%** TI Group 2007 Telecom 36.7 Focus on Value 36.1 35.7 36.0 36.3 Market Share Services*** Market Share Estimate ~ 55% 2006 2007 2008 2009 2010 * Includes total advertising mkt, Pay TV and digital content on PC. Excludes RAI Service Fee ** On addressable market *** Includes equipment 9

OSCAR CICCHETTI MARKET OVERVIEW 2008-2010 Advertising and Digital Content Addressable Market (*) Bn€ CAGR ‘07-’10 14.8 +7% 13.8 12.9 12.1 11.3 +5% 10-15% 2X-3X Addressable 5% 2006 2007 2008 2009 2010 Addressable market mainly relates to on line advertising, digital content over Internet and IPTV Strong growth of addressable market is enabled by web 2.0 Telco capabilities such as profiling, presence, localization,… Source: internal estimates on Nielsen, IAB, Merril Lynch, Ovum, Jupiter, PWC, Company Data * Excluding TI Media 10

“Surf the Internet wave” LUCA LUCIANI

LUCA LUCIANI “SURF THE INTERNET WAVE” Safe Harbour This presentation contains 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 Company with respect to 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 Company's activities and strategies. 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 and investors 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 , which set out certain factors that could cause actual results to be materially different from the forward-looking statements contained herein. 1

LUCA LUCIANI “SURF THE INTERNET WAVE” Agenda Achievements 2007 Sources of growth Outlook 2008 and conclusions 2

LUCA LUCIANI “SURF THE INTERNET WAVE” Commitment vs delivery What we said What we did Stable in volumes 40.3% market share (vs. 40.4% YA) Market Focus on value Leadership defended on key segments: Consumer: Revenue Share 45.5% (+0.5 pts YoY) share SoHo: Market Share 51.5% (+1,8 pts YoY) SME: Market Share 52.0% (+0.3 pts YoY) Revenues: - 2/ - 3 % - 2.3% on Mobile Revenues (excluding H3G litigation) - 1.9% Service Revenues Retail (+4.8% normalized) Revenue Outgoing traffic growth: +8 / +10% Outgoing traffic growth: +13.9% growth Price reduction: -10% Price reduction: -6.3% (net of Bersani) 20% VAS on Service Revenues 21% VAS on Service Revenues Mobile Internet: +95% F-M termination cut (10 €cent as of July): No elasticity in incoming: Fixed-Mobile calls dropped by Price impact: -162 mln euro -12% with additional -90 mln euro on top of price cut Volume impact: +90 mln euro Regulation International roaming tariff cut (30 €cent as Low elasticity from Reding cut: -88 mln euro impact pressure of Sept.): impact -60 Mln euro* Bersani Decree: Declining elasticity (0.4 in IVQ vs 0.6 in IIQ): Net revenues impact: -350/ 400 mln euro Net revenues impact: -404 mln euro (630 gross) (630 gross) *Retail and Wholesale 3

LUCA LUCIANI “SURF THE INTERNET WAVE” Defended market share in a competitive environment Italian market - Number of lines TIM – Number of lines mln lines, % mln lines, % Penetration 137% 155% Market Share 40.4% 40.3% 90.2 80.4 36.3 32.4 +12.1% +12.0% Customer Customer Base Base 2006 2007 2006 2007 >22% postpaid Gross Adds 26.7 27.6 Gross Adds 10.6 10.8 Net Adds 8.9 9.8 Net Adds 3.9 3.9 4

LUCA LUCIANI “SURF THE INTERNET WAVE” Defended leadership on most valuable market segments Δ YoY (%) % on lines Customer Base % of lines on % on Retail Revenue Growth ARPU* Churn* Market Share** Customer base Revenues Reported Normalized Enterprise 5% 8% 1.6X 0.6X 61.4% -1.5pp +9.2% +11.7% 52.0% +0.3pp SME Business 7% 15% 2.1X 1.0X +12.8% +15.5% SoHo 51.5% +1.8pp High value 19% 54% 2.3X 0,4X Consumer 41.1% -0.4pp -5.4% +1.3% Mass market 69% 23% 0.5X 1.2X Revenue Share: 45.5 (+ 0.5% YoY) Source: Internal analysis based on CRA Research, GFK-Eurisko surveys NB: Excluding inactive lines, immigrants and kids < 11 for Consumer * TIM average = 1X ** Enterprise Market Share: July ’07 vs. July ‘06 5

LUCA LUCIANI “SURF THE INTERNET WAVE” Key Results 2007: Domestic Mobile Revenue evolution Mobile Revenues Retail Service Revenues mln euro, % mln euro, % Guidance: -2/-3% +4,1% +4.8% -2.3% -1.9% Total 10.210 9.978* 654 10.632 Wholesale 480 -5.2% 455 Total 8.919 8.749 594 9.344 Handsets 812 774 Other 38 36 -4.7% VAS 1.642 +17.0% 1.921 Roaming 374 -8.1% 344 23.4% of Total Recharge Fees 682 -81% 129 Revenues in IVQ’07 Retail Service 8.919 -1.9% 8.749 Voice 6.183 +2.2% 6.319 2006 2007 Disconti- 2007 2006 2007 Disconti- 2007 organic nuities normalized nuities normalized Mobile Discontinuities (654) Retail Discontinuities (594) F-M tariff cut (162) F-M tariff cut (162) DL Bersani (404) DL Bersani (404) Reding (88) Reding (29) * Excluding H3G arbitration on Incoming Voice (-56 mln € IVQ07) 6

LUCA LUCIANI “SURF THE INTERNET WAVE” Outgoing voice, driver of growth Revenues Retail Outgoing Voice Incoming Voice +1.6% +6.7% Bersani Decree reduced 4.394 4.466 4.764 -14.3% mobility price premium -9.4% Revenues 2.002 1.716 (mln euro) 1.555 No elasticity on incoming from Fixed-Mobile termination cut 2005 2006 2007 2005 2006 2007 +5.8% +13.9% -12,4% F-M Focus on on-net tariff plan 27.9 31.7 26.3 +4.2% -0.2% based on community (like TIM Volumes 13.9 14.5 14.4 Tribù) (bln of minutes) Postpaid flat rate packages 2005 2006 2007 2005 2006 2007 reduced mobility price 16.7 16.0 premium and moved volumes 15.0 14.4 11.9 on Mobile network 10.8 Price -3.9% -6.3% (€/cent) -17.7% -9.2% Outgoing Voice increasing 2005 2006 2007 2005 2006 2007 Incoming Voice dropping Elasticity >0 Elasticity=0 7

LUCA LUCIANI “SURF THE INTERNET WAVE” VAS driver of growth: push advanced devices to foster Mobile Internet 23.4% of Total Revenues Dimensioni diVAS Revenues Valore Dimensioni di Valore Interactive VAS in IVQ’07 mln euro +17% mln euro +10% 1.928 869 1.649 7 +21% +42% 1.497 7 Content & 5 285 Other Other wholesale +42% 869 612 Interactive +21% 612 507 507 +22% 232 -5% 244 Mobile Messaging 985 +5% 1.030 +2% 1.052 463 Internet +55% 238 +95% 153 2005 2006 2007E 142 121 Premium 110 VAS/ Service Revenues 16% 18% 21% 2005 2006 2007E Browsing growth by segment Handset volume 8,8 % mln Units 7,4 0,8 3.5G +203% +120% 5,8 0,3 3,1 3G +82% +24% 2,2 +40% Browsing +95% 1,8 +55% +23% 4,9 -1% 4,9 2G 4,0 54% in Consumer Business Enterprise 2005 2006 2007E IVQ’07 % 3/3.5G 35% 44% 8

LUCA LUCIANI “SURF THE INTERNET WAVE” Sources of growth: step 1 – improve the Customer Satisfaction From mobile to personal From fixed to Broadband From internet portal to communication environment Community 1 Improve Customer Satisfaction 2 The Broadband seamless experience Brand Fixed & Mobile broadband to improve customer loyalty Transformation Offering Create value trough FMS & BB penetration Customer Care/ Go-to-market 3 Increase share of wallet Increase customers share of wallet (moving vs. contiguous markets) Expansion Full knowledge of customer behaviors in the IP world (context awareness) 10

LUCA LUCIANI “SURF THE INTERNET WAVE” Improve customer satisfaction Customer Satisfaction* Fixed Mobile Telecom ‘06 Telecom ‘07 Telecom ‘06 Telecom ‘07 Strengthen brand positioning: 60% 70% 80% 75% 80% 85% New TIM → Personal format Alice Mobile → Internet Brand Tribù → Teens MTV Mobile → Youth Leverage segmented approach: an attractive offer for each customer segment Offering transparency/ simplicity MTV Mobile to attack youth segment Improve customer service (119) Relationship From Retention to Loyalty and Pre-Retention Re-orienting Sales Channels to CRM approach Develop “Ø defect policy” products roadmap/ Reliability & superior customer experience Technical End to End product/ testing before launch Quality Improve user interface * Percentage of satisfied customers 11

LUCA LUCIANI “SURF THE INTERNET WAVE” Strengthen brand positioning TIM Brand Positioning DISTINCTIVENESS and Ambition and Relationship are key IMPORTANCE success factors of 2008 TIM Brand TH strategy PA IP SH D ER LEA Strategy leverages : Discontinuity: new format to capture client attention Emotion: emotions drive actions, Strength reason drives conclusions More value to the customer ION PATH EROS Launch new format Standing AWARENESS and March 2008 AFFILIATION Source: Young & Rubicam 12

LUCA LUCIANI “SURF THE INTERNET WAVE” Maintain segmented offering - + Value Volume + - BUSINESS ELITE YOUNG FAMILY Bundle “All you can Bundled plans Messaging Family/ Friends Needs eat” networking Flat tariffs Convenience on Flat tariffs community Youth Teens Second brand Offers NEW Others Others Others Others Market 32,5% 42,0% Share 51,7% 51,4%* (IVQ’07) * MS on Consumer postpaid customers 13

LUCA LUCIANI “SURF THE INTERNET WAVE” Reinforce customer relationship Customer service Loyalty and Pre-retention Retention Re-engineering of Call Centers leveraging multichannel contact: Human touch: critical needs IVRs: services and offer activation Relaunch loyalty program In 2008 focus effort on high- WEB: self caring Expected Customers YE: 9 mln value customers with Target 2008 successful rates H-E Customers: Increase volume of MNP - ASR 90% - SL 75% throughput - Back-Office <2 days Handsets upgrade program to Customer Care “on the field” lock-in best customers (1 mln) Caring The ultimate shop experience: Shop Pre-retention Loyalty Up-selling 14

LUCA LUCIANI “SURF THE INTERNET WAVE” Sources of growth: step 2 – the Broadband seamless experience From mobile to personal From fixed to Broadband From internet portal to communication environment Community 1 Improve Customer Satisfaction 2 The Broadband seamless experience Brand Fixed & Mobile broadband to improve customer loyalty Transformation Offering Create value trough FMS & BB penetration Customer Care/ Go-to-market 3 Increase share of wallet Increase customers share of wallet (moving vs. contiguous markets) Expansion Full knowledge of customer behaviors in the IP world (context awareness) 15

LUCA LUCIANI “SURF THE INTERNET WAVE” Broadband development and Fixed-Mobile substitution Fixed-Mobile Substitution Broadband development Percentages on traffic volumes Fixed Traffic Mobile Broadband Fixed Broadband Mobile Traffic 35 Fixed 2007 60% 30 15.5 Mobile > Fixed Penetretion 25 driven growth 50% 20 15 2.7 14.6 40% 10 10.1 Mobile 5 30% 2005 2007 2010 2005 2007 2010 % ARPU driven Mobile 41 51 63 growth of total % Mobility price 265 209 179 premium* * Mobile price per minute/ Fixed price per minute 16

LUCA LUCIANI “SURF THE INTERNET WAVE” How to create value from convergence Preserve High-End customers Offering strategy Control Wireline “Service Sensitive” customers Control churn of Low-end churners customer vs mobile only Focus on Fixed and Mobile Broadband solutions penetration Increase voice value thanks to Focus on IPTV (3Play) and advanced Leverage Voice mobile price premium digital contents “price up” “Price Sensitive” customers Accelerate mobile broadband development trough convergent Naked ADSL Broadband offers Home Zone Mobile development Avoid price competition between fixed and mobile Broadband 17

LUCA LUCIANI “SURF THE INTERNET WAVE” TI offering roadmap Advanced Customer attitude “Pure Mobile” fixed operator “Service Sensitive” “Price Sensitive” Premium contents Self generated 3 play Mobile TV Digital interactive TV contents (BB/Voice- (Set Box DVBH /PC Voip/IPTV) Card) TUTTO INCLUSO 2 play (BB/Voice-Voip) SEMPRE TIM ADSL Naked (Femtocelle) 1 play (Voice) Loyalty program extended to other communities 18

LUCA LUCIANI “SURF THE INTERNET WAVE” Reshaping the Italian Consumer Market mln household 1 play (Voice) 2 play (BB/Voice-Voip) 3 play (BB/Voice-Voip/IPTV/DVBH) 2007 (100%: 22,7 mln TLC households) 2010 (100%: 23,6 mln TLC households) 5.5 16.6 0.6 6.4 13.7 3.5 0.4 3 Play 3 Play 0.3 0.1 0.8 0.4 0.6 1.5 1.4 6.9 7.6 2 Play 2 Play 5.2 7.8 Increase of 11.9 Broadband 4.9 2.9 0.6 access 9.3 Increase of 5.3 Increase of 1 Play Pure Mobile Convergent 1 Play customers customers 14.5 10.2 Mobile Fixed Convergent Mobile Fixed Convergent Only Only 19

LUCA LUCIANI “SURF THE INTERNET WAVE” Sources of growth: step 3 – increase the share of wallet From mobile to personal From fixed to Broadband From internet portal to communication environment Community 1 Improve Customer Satisfaction 2 The Broadband seamless experience Brand Fixed & Mobile broadband to improve customer loyalty Transformation Offering Create value trough FMS & BB penetration Customer Care/ Go-to-market 3 Increase share of wallet Increase customers share of wallet (moving vs. contiguous markets) Expansion Full knowledge of customers behaviors in the IP world (context awareness) 20

LUCA LUCIANI “SURF THE INTERNET WAVE” Exploit contiguous markets: increase customer share of wallet Potential Value generated by a “digital behavior” (2010) Index 1,4-1,5 X TLC Media & Everywhere Entertainment 145 Personalize Music 8 27 10 My music My contacts Calls MMS SMS Mail Place 100 shifting Communicate Contents Control My images traffic Community Mobile 59 automation domotic m-payment Search/ Repository Fixed 41 Exchange Browse Domotics TLC Digital TV Advertising 0thers Total potential ICT (WEB+Mobile) (E-commerce agressible Network & gaming) market Internet & Commerce Community 21

LUCA LUCIANI “SURF THE INTERNET WAVE” Web & Content strategy in a convergent world Business Area 1 Niumedia as the first digital advertising house across web, mobile and TV platform Digital market (40% expected market growth) Advertising Develop integrated multiplatform local 1 digital advertising offering (leveraging on Internet & Web IPTV Mobile Local mobile location based customer knowledge) Contents 2 Synergize Media contents among TI Group content platform 2 Leverage Virgilio self generated contents to enrich mobile VAS and Digital TV portfolio 3 Front-end & web layer 3 Sell platform and solutions to external Web clients (WEB factory) Technologies Portals Leverage TI web technologies and know Digital advertising platforms how to maximize usability and experience 22

LUCA LUCIANI “SURF THE INTERNET WAVE” … to evolve from service provider to community builder Leverage on TI Group Assets … … to create the biggest Italian … catching new business internet marketplace … opportunities Braoadest Italian Networking Customer Base and Self #1 on Mobile Expression #1 on Broadband Blog & #1 on Internet Portal Communities Entertain- Addressable internet Buy ment market in Italy 2008-2010 Widest Italian Premium & communities e-commerce UGC 32 mln customer on-net TIM Internet contents 3.6 mln customers TIM Tribù Web/Mobile Advertising 1.3 mln customer Alice Voice Advertising Content Web Services 10 mln Virgilio’s unique sharing visitors/month M – Payment/ E-commerce Search P2P Deep knowledge on customer behavior The ambitious of creating the biggest Italian Virtual Community 23

LUCA LUCIANI “SURF THE INTERNET WAVE” Outlook 2008 bln euro +5% normalized of expected discontinuities (bn 0,5/0,6) Carry forward of Bersani Decree Reding National and F-M termination cut International roaming price ~10* ~9.8 Retail Services Revenues flat -2% 2007 Handsets Wholesale Voice VAS & Other 2008 Total Mobile Revenues: -2% Retail Service Revenues “flat” * Gross of H3G litigation (56 mln euro in IVQ 2007) 25

LUCA LUCIANI “SURF THE INTERNET WAVE” Targets 2008 Target 2008 Less focus on number of lines vs focus on Revenue Share Lines: 40% Market Defend key market segments (SME/ SoHo/ Postpaid Stable share/ ARPU Consumer) Slowdown ARPU dilution (vs. 21 current) ARPU: 20 € Mantain Retail Service Revenues “Flat” Revenue -2% total Mobile Revenues Total Mobile Revenues: growth Less handsets ~9.8 bn Less wholesale VAS VAS/ Service Revenues ~25% Mobile internet Mobile Broadband portfolio 2.6 mln lines 26

Capturing the Broadband Convergence Opportunity PIETRO LABRIOLA

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY AGENDA DOMESTIC FIXED 2007 Key Results Sources of Growth Conclusions 1

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY What we committed on… What we said What we did Fixed revenue Revenue -4.9% fixed revenues ‘07 vs. ’06 Target ’07: -3.5% / -2.5% vs. YE '06 Maintain customers and traffic on fixed 71.1% traffic market share (71.9% in Dec06) network Market Share 33.6% flat/semi-flat voice offers penetration Develop flat offer (31.5% in ‘06) Increase broadband penetration 6,427 mln BB retail portfolio (5.6 mln in Dec ‘06) Target ’07: Domestic BB portfolio 6.4 mln Leadership on VoIP Target ’07: 1.32 mln VoIP lines (0.35 mln in Dec ‘06) Broadband VoIP Customer Portfolio >1 mln Develop IPTV 0.08 mln customers YE ’07 (0.03 mln in Dec ‘06) due Target ’07: IPTV Portfolio 0.2 mln to slight delay on IPTV platform stabilization 2

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Domestic fixed: Revenue analysis Mln €, %, Reported Data -819 mln. € -4.9% Subs., adj. & other 16,988 -442 16,546 -679 +128 -70 -203 +5 15,727 437 437 442 Wholesale 3,989 -7.5% +9.6% -4.0% -5.1% +1.1% 3,989 3,786 Business Data 1,743 1,743 Includes -6.5% excluding 1,673 Internet 1,511 International 1,340 F2M termination Wholesale 1,468 cut (96 mln €) (-446 mln €) Voice 9,308 9,037 8,358 FY ‘06 NGN Restated Voice Internet Business Wholesale Subs., adj. FY ‘07 data & other FY ‘06 * * Excluding different accounting for Non Geographic Numbers (-271 mln € on Voice and -171 mln € on Internet). In accordance with AGCOM deliberation 417/06/CONS, starting January 1st 2007 Telecom Italia Invoices services rendered by OLO on NGN while does not assume credit risks. These services, since January 1st are thus no longer recorded for as revenues and costs in Telecom Italia accounts 3

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Domestic fixed: Voice revenue Mln €, %, Reported Data -679 mln. € -7.5% 9,037 -329 -178 -13 -159 8,358 Handsets 698 Voice VAS 370 539 -8.5% -4.3% -3.5% -22.8% 357 Access 4,116 3,938 Δ Market** -4.0% Δ Market -1.2% Δ MS -1.3% Δ MS -5.0% Δ Price/Mix -3.2% *** Δ Price/Mix +1.9% Traffic 3,853 3,524 FY ‘06* Traffic Access Voice VAS Handsets FY ‘07 * Restated figures, excluding different accounting for Non Geographic Numbers (-271 mln €: -34 mln € on Traffic and -237 mln € on Voice VAS) ** Including Payphone Services *** Of which Δ F2M termination cut -2.5% 4

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Domestic fixed: Traffic and access performance Telecom Italia voice flat offers Telecom Italia traffic and MS ‘000, Voice Flat/Semi-Flat offers bln min 90.5 84.0 6,321 6,468 6,406 2006 2007 Dec ‘05 Dec ‘06 Dec ‘07 TI Traffic 71.9% 71.1% MS Telecom Italia voice flat offers penetration Telecom Italia traditional access and MS % Voice Flat/Semi-Flat offers on Total access Mln lines 33.6% 20.5 19.2 31.5% 29.1% EoY ‘06 EoY ‘07 Dec ‘05 Dec ‘06 Dec ‘07 TI Traditional 90.3% 85.1% Access MS Source: Company Data, Analyst Estimates, NRA 5

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Domestic Fixed: Internet revenue Mln €, %, Reported Data +128 mln. € +9.6% 1,340 -25 +153 1,468 -22.9% +12.4% 1,384 Broadband 1,231 Δ Market +20.8% Δ MS -5.5% Δ Price/Mix -2.9% Narrowband 109 84 FY ‘06* Narrowband Broadband FY ‘07 * Restated figures, excluding change in accounting for Non Geographic Numbers (-171 mln € on narrowband) 6

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Domestic fixed: Broadband portfolio evolution Broadband Portfolio VoIP portfolio ‘000 Access lines ‘000 access lines* BB Retail MS: 63.4% 1,316 1,099 924 Dec ’05 Dec ’06 Dec ’07 549 359 Retail 4,817 5,639 6,427 Dec ‘06 Mar ‘07 Jun ‘07 Sep ’07 Dec ‘07 Consumer 3,857 4,544 5,157 % on BB access 6.4% 9.3% 15.2% 17.7% 20.5% Business 960 1,095 1,270 lines * Including Consumer and Business customers Wholesale 890 1,131 1,163 Consumer Flat Offer development % Flat over Consumer BB activations 51.5% 78.6% Total TI 5,707 6,770 7,590 % on Consumer portfolio Domestic 64% 53% 58% 59% 50% Total TI BB Portfolio (Domestic + European): 11.1 mln customers Dec ‘06 Mar ‘07 Jun ‘07 Sep ‘07 Dec ‘07 7

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Domestic fixed: Broadband ARPU and revenues trend Retail Portfolio: net growth & upsell ARPU Evolution ‘000 Access lines €/month Increase due to the rebound of consumer ARPU +1% 4Q ’07 vs 4Q’06 Upsell Net Growth 20.1 19.2 18.8 18.0 17.9 17.4 18.0 387 762 697 1,759 1,406 822 788 FY ‘04 FY ‘05 FY ‘06 FY ‘07 FY ‘06 FY ‘07 4Q ‘06 1Q ‘07 2Q ‘07 3Q ‘07 4Q ‘07 Revenues YoY trend % +17.1% +12.8% +8.9% +10.5% +9.5% 4Q ‘06 1Q ‘07 2Q ‘07 3Q ‘07 4Q ‘07 8

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Domestic fixed: Business data revenues Mln €, %, Reported Data -70 mln € -4.0% 1,743 -34 -93 +28 -15 +43 1,673 -12.5% -56.7% +5.8% -6.7% +7.2% ICT 601 644 -99 mln € (-10.8%) Revenues growth mainly focused on services (higher profitability): Equipment 223 +5.5% services +1.7% equipment 208 BB Data 482 510 Traditional Data 164 71 Leased lines 273 239 FY ‘06 Leased lines Traditional Data BB Data Equipment ICT FY ‘07 9

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Redefine roles of TI assets for business transformation and revenue growth Consumer Business Improve basics Develop need-based segmentation Business Start program to improve quality of service transformation Set up channels towards integrated approach (2008) Drive convergence Develop all-IP and convergent offers Launch segment-specific convergent offers Business Reach excellence in quality of service and customer expansion satisfaction (2009) Adopt an integrated multi-channel approach, leveraging high-touch channels for high-value/ potential customers “A partner to improve your “Towards the digital family” business and fulfill all your communication needs” 11

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Consumer: Improve customer satisfaction CONSUMER Customer Satisfaction* Fixed Mobile Telecom Telecom TIM 2007 TIM 2006 2007 2006 60 70 80 60 70 80 Alice: consolidate and enrich brand Brand Virgilio: invest in brand positioning Leverage segmented approach Offering Improve customer experience through easy-to-use offers Move from focus on acquisition to Relationship customer development and loyalty Improve customer service Reliability & technical Reinforce premium market positioning quality through better product reliability * Q4 2007 vs. Q4 2006, Top 2 items Source: Company Customer Satisfaction Survey 12

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Consumer: Reinforce brand positioning CONSUMER Brand Co-leader Top of Mind (#1 Italian portal) Reach 11 mln individuals* 10 mln unique contacts (monthly) Consolidate awareness leadership (Top Use Virgilio as reference brand for web of Mind almost 4 times higher than the contents, services and social second competitor) and Brand Equity networking/community (constantly growing in the last 2 years): Mix traditional adv media to gain trust Guidelines Alice is “the broadband brand” and street marketing to capture new Enrich brand from “pure connectivity” to generations/ native digital “broadband & beyond” (contents, services, etc.): “Alice is much more than a broadband connection” * 5 Million households Source: Market Research 13

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Consumer: TI offer roadmap CONSUMER Advanced Customer attitude Pure mobile fixed operator Service-sensitive Price-sensitive 3 play Mobile TV Premium contents Digital interactive TV Self-generated (BB/Voice- (Set Box DVBH/ contents PC Card) VoIP/IPTV) 2 play (BB/Voice-VoIP) TIM ADSL naked (femtocells) 1 play Loyalty program extended to (Voice) other big communities 14

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Consumer: Value strategy based on flat rate broadband and VoIP CONSUMER Increase ARPU and improve Customer Loyalty through a Value- Based broadband strategy (‘08 Target vs. ‘07): Significant growth +25% of Flat customer base Upselling to higher-value broadband access profiles From Fixed to Broadband Environment Commercial bundling with VOIP, IPTV and products Triple Play growth +250% Broadband as the gate to customers VoIP Consumer customers +80% From “landlines” to “digital From Best effort to high QoS for demanding homes” where contents and customers (i.e.: Web2.0 and Digital Media Services) entertainment live together 4Mega to 7Mega 100% completed Accelerate broadband development through convergent offers (i.e.: Alice By TIM) to increase customer loyalty 15

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Consumer: Developing the Digital Home CONSUMER Increaes ARPU and improve Customer Loyalty by developing a Digital Home offering portfolio: Launching All-IP lines (Alice Naked) VoIP Phones TV STB Feature Phones IP Television: more content and services High definition VoD and SKY Multiscreen integration Mobile PC by Alice Advanced Search and Personal Recommendation New content provider portfolio and services (programming SMS alerts, …) Gaming Console Printer Internet VAS portfolio evolution Alice Pay Security (Total Security for PC, Magic Desktop for kids...) New branded broadband-enabled “beyond voice” products Clock Radio Video-surveillance Digital Photo Frame (linked with Virgilio Photo album) camera WiFi Digital Photo Frame Broadband Clock-Radio (internet radio + web infoservices) Occhio by Alice (home monitoring) Focus on flat “device & service” package (Alice Tutto Incluso) 16

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Business: Fixed line is the pillar for the convergent offer with a continuous shift to IP-based services BUSINESS Fixed line is key for Business customers… … and will become even more critical Growth in data transmission revenues from Business line evolution Business customers, 2006-09E CAGR Fixed extension Number of mobile 12 lines lines* 1 Millions Millions 2005 11.7 3.2 -16 2006 11.7 4.5 IP-based Traditional Overall technology (point-to-point) 2006-09 2007 11.7 5.2 growth technology growth growth Despite the increase of mobile lines, the number IP technology is expected to become the main of fixed extension lines is stable over time transmission technology Broadband-based applications are becoming a The larger bandwidth allowed by IP will push key enabler for doing business forward the development of innovative and * Multibusiness SIM numbers effective business solutions Source: Company Estimates, Analyst Estimates 17

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Business: Improve customer satisfaction BUSINESS Implementation examples Guidelines Marketing and Sales Provisioning Assurance “Plus” Priority of Specialized Customer solutions provisioning Care (by segment/ Different levels of (fee-based) according to product) service, according to customer value customer value SLA-based assurance (diversified by customer/product) Joint service Joint project Assurance Cooperation “Customer as a design management Tools (shared OSS for partner”, through the trouble ticketing, whole lifecycle Dedicated sales reps change management) 18

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Business: Market approach shift from “size-based” to “needs-based” BUSINESS Business customers are … and require a need-based segmentation/commercial approach becoming sophisticated … Emerging Business customer From… To… needs Government sector Top Simplify business complexity and achieve Large companies productivity gains Enterprise Multiple-location firms Obtain reliable and seamless (fixed + mobile) Single-location firms solutions and caring SME Professionals Exchange data securely with business partners and Nomadic customers public administration Develop a modular service Vertical shops SOHO offer to follow company evolution (from startup to Independent shops maturity) Size-based Needs-based 19

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Business: Develop segment-specific offers (examples) BUSINESS Independent shops Professionals Large companies Naked ADSL/ Mobile Fixed/Mobile broadband Ultra broadband (up to fiber) with Fixed and Mobile packages Fixed/Mobile traffic high quality of service packages Convergent VPN based on IP solutions with indoor/outdoor wireless coverage (WiFi, femtocells) POS IP-enabled handset IP-enabled work stations Equipment Mobile handset Advanced mobile handset IP remote and hosted PABX (Blackberry, smartphone) Outsourced mobile applications PC with smartcard Security: anti-virus, Collaboration suite: mobile Collaboration suite: unified Applications firewall, video office solutions convergent communication (voice, and VAS surveillance Security: anti-virus, firewall, data, video) Vertical applications: centralized back up Security: disaster recovery, SOC Web cash register ICT resource management outsourcing Inventory and LAN and desktop ICT resource management order management IT remote and hosted resources management Vertical applications: Vertical applications: Local advertising clustered IT solutions, vertical application outsourcing document management “Hi-speed shop” “Professional Platforms” “Networked ICT” 20

PIETRO LABRIOLA NOT EXHAUSTIVE CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Business: 2008-2009 Offer’s roadmap BUSINESS 2008 – Business transformation 2009 – Business expansion Managed IPPBX – Corporate Wi-Fi, dual-mode handset Managed IPPBX – Business Wi-Fi, dual-mode handset All-IP Alice Business Tutto IP Wi-Fi, dual-mode handset Alice Business “Naked” Wi-Fi, dual-mode handset Convergent Office Messaging & Unified Communication Suite Integration with third-party systems Integration with All IP services Collaboration Alice Team Work Single-company Multi-company (community) Shop Alarm & Videosurveillance (with remote mobile control) Convergent Unified Payments B2B2C* SME Data Disaster recovery Virtual PC and SaaS** Applications Multichannel local advertising Web Cash Register/POS IP POS On-demand audio-video content * Includes teleticketing applications ** SaaS: Software as a Service 21

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Business: Adopt an integrated multi-channel approach BUSINESS Indepen- Vertical Nomadic Profes- Single- Multiple- Large Govern- dent shops Customers sionals location location compa- ment shops firms firms nies Sector Elements of the new Direct sales by integrated multichannel industry/geography approach Pre-sales technical support More face-to-face sales activity, including usage “Plus” Assurance /Provisioning of shops “Bronze” Agents “Silver” Agents “Gold” Agents Increased differentiation Telesales (for upselling) of sales rep skills by segment Retail shops Commercial proactivity based on customers’ “Bronze” Customer Care “Silver” Cust. Care “Gold” Cust. Care potential value B2B2C approach to Web (information + sales) “verticalized” industries 22

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Outlook 2008 – key facts F-F traffic decline in line with previous years Increased loss in F-M traffic Voice Slight acceleration of access loss, also due to WLR (wholesale line rental) startup Stabilization of market price levels Internet Increasing focus on flat offers and double-play Continuous slow-down of loss in connectivity Data Continuous expansion towards adjacent markets (e.g. ICT) Domestic: value proposition based on QoS and on selling projects related to TI network. Maintain revenue level Wholesale revenue even after regulator’s price reduction International: completion of rationalisation of international services portfolio 24

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Outlook 2008 Bln € -4.0/-4.5 % ~ 15.7 ~ 15.0 -1.9/-2.5% excluded normalized expected discontinuities (0.3/0.4 Bln €) for: Carry forward of ITZ Wholesale F2M Termination cut Repricing for NRA obligation 2007 Voice Internet Business Wholesale Subs., Adj. & 2008 Data Other 25

PIETRO LABRIOLA CAPTURING THE BROADBAND CONVERGENCE OPPORTUNITY Target 2008 Target 2008 Total domestic Fixed revenue ~ 15 Bln. € Revenue Internet revenue > +10% vs. YE’07 Retail domestic Broadband portfolio ~ 7.0 Mln. Access Broadband ARPU Broadly Stable (~ 18 €/month) Broadband Flat offer on total (Consumer + Business) > 75% growth Broadband portfolio IPTV portfolio ~ 0,3 Mln. Access VoIP penetration on Broadband lines > 30 % 26

ICT Services Becoming the market leader MAURO NANNI

MAURO NANNI ITC 2008-10 PLAN Safe Harbour This presentation contains 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 Company with respect to 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 Company's activities and strategies. 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 and investors 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 , which set out certain factors that could cause actual results to be materially different from the forward-looking statements contained herein. 1

MAURO NANNI ITC 2008-10 PLAN Agenda 2007 highlights IT market overview 2008 – 2010 business outlook & development 2

MAURO NANNI ITC 2008-10 PLAN 2007 Plan - Our commitment We said We achieved Net Centric Enabling Platforms Data Center Extension Vertical Offering e-Healthcare Infomobility Logistics Productivity/SME IT Partnership Program ~70 2007 revenues ~ 0.7 billion 0.64 3

MAURO NANNI ITC 2008-10 PLAN 2005 – 2007 Revenue Trend Market share on addressable market 6.5% 7,2% 7.6% CAGR 05-07 bln € 0.53 0.59 0.64 ~ 0.7 10% Applications 43% services Infrastructure 17% services Network 40% services 2007 FY 05 FY 06 FY 07 Previous Plan 4

MAURO NANNI ITC 2008-10 PLAN 2007 ICT Revenue breakdown by customers 0.64 Customers 0.46 bln € of total revenues (of bln € which 60% recurring fees) with 1,000 21% YoY growth Top Direct 72% Sales Force Large Accounts 20,000 20% Indirect Sales SME Channels 8% 2,000,000 F Y 07 5

MAURO NANNI ITC 2008-10 PLAN Top Clients – some new 2007 ICT customers Banking & Insurance market Public Sector Market SOA - based Applications Desktop Management Interoperability Framework ICT Outsourcing ICT Outsourcing Disaster Recovery, Security Disaster Recovery, storage E-Government Microsoft Licensing Provincia di Napoli ebanking Microsoft Office Government Open Licensing 6

MAURO NANNI ITC 2008-10 PLAN Top Clients & Ict Services - 2007 key figures * Vs 2006 bln € ~ 2.4 - 3.5% Strong growth in Mobile + 13% customer base (230K 0.38 Customers new voice lines) Consip Mobile Top 1,000 Fixed 0.77 - 11% Market price reduction Voice Mobile substitution Large No customer loss Accounts Growth in Broadband Data 0.77 - 13% (19K new lines) & Trasmission VOIP (32K new lines) SME ICT 0.46 Strong growth in + 21% customers & revenues F Y 2007 * Included in Mobile and Fixed Services presentations 7

MAURO NANNI ITC 2008-10 PLAN IT Italian and European markets % IT spending / GDP European IT market %, 2006 Business + Consumer, 2006 – B € Hw & SW sold on stand alone basis included 3.1% 3.0% Eastern Europe 2.8% 2.5% Germany 21 2.1% Western 1.9% 60 Europe - Others 1.5% 70 1.3% 1.2% 1.0% 59 UK 16 NL 20 59 ITALY UK NL F D ITALY E Croatia Poland France Hungary Romania IT spending in Italy is low compared to the other Eu countries (1.3% of GDP) … …but the market is quite large (Italy is the 4th European market) Source: Gartner, EITO, IDC, CNIPA, A.T. Kearney analisys 9

MAURO NANNI ITC 2008-10 PLAN IT Italian market overview – Business Customers Segmentation Companies by employees Italy IT spending - n.companies x 1000 - Avg IT spending by IT Spending IT spending France Spain Italy companies (000€) % CAGR 05-06 TOP 58% 1.3% 7 4 3 >3,000 (> 250) (0.2%) (0.2%) (0.1%) Large 37 26 22 (< 250) 200 24% 1.8% (1.3%) (1.5%) (0.5%) 174 186 196 Medium 7 8% 0.7% (< 50) (6.0%) (10.8%) (4.5%) 2,684 1,502 4,149 Small/Soho <0.5 10% 0.3% (92.5%) (87.5%) (94.9%) (< 10) n. companies 2.9 Mln 1.7Mln 4.3 Mln Source: ISTAT, INE, INSEE, Assinform T.I. Market Share - qualitative 10

MAURO NANNI ITC 2008-10 PLAN IT Italian market overview – ICT Services penetration on SME TLC Based Services % of companies IT Based Services - % of companies 5.9 E-learning 1.2 6 call center 7.4 sales force 12.3 automation 2.4 8.4 extranet 15.5 supply chain 22.2 mgmt 4.8 30.4 videoconference 10.8 20.7 crm 7.4 22.9 voip 36.9 40.4 groupware 26,5 67,5 intranet 81,4 erp 57.6 33.7 broadband 79.8 93.6 68.7 web site 91.6 0 20 40 60 80 100 0 20 40 60 80 100 ICT italian SME market potential is still to be harnessed Source: 2006 Osservatorio TeDis dell’Università Internazionale di Venezia Medium 10 – 50 million euro Small 5 – 10 million euro “Le tecnologie di rete nella PMI italiana” Survey on 1900 companies 11

MAURO NANNI ITC 2008-10 PLAN IT addressable market (business customers - hw & sw “stand alone” not included) Italy West Europe Virtualization CAGR CAGR Service Oriented Architecture ICT Market 2007-10 2007-10 SW as a Service 14.8 15.1 15.8 2.6% 5.2% 14.2 14.5 bln € Business Process 2.8 2.9 3.0% 2.7 2.7 Outsourcing 2.6 Professional 3.5 3.5 3.6 1.2% 3.4 3.4 Services 8.4 8,6 8.8 9.2 3.1% 5.3% 8.2 Addressable Mkt 3.1 3.2 3.4 Application 2.9 3.0 3.6% Services Infrastructure 4.8 4.9 5.2 3.1% 4.6 4.7 Services Network Services 06 0,6 0,7 0.7 0,7 0.8% 2006 2007 2008 2009 2010 IT addressable market highly attractive in terms of size and growth Source: Assinform, IDC & AT Kearney Analisys 12

MAURO NANNI ITC 2008-10 PLAN TI market positioning Global players IT integrated/ Global/National players People Infrastructured Based Business Process Outsourcing PROFESSIONAL SERVICES APPLICATION SERVICES INFRASTRUCTURE SERVICES NETWORK SERVICES Confirmed TI positioning for 2008-2010 13

MAURO NANNI ITC 2008-10 PLAN Key drivers for the development of network-centric services Powerful networking capability is NGN 2 Software as a Service a key foundation for Enterprise 2.0 and Ebusiness 2.0 On-demand infrastructure Service Oriented OPEN SOURCE services and Architecture browser enabled applications lower the barrier Software customization Established Web Standards to access complex and customer support for distributed software ICT services as a new business driver composition, enable of IT services built complex applications on open source licensing built on fine grain and community based networked building blocks software industry Network-centric services Unified Communications Web 2.0 VIRTUALIZATION Seamless access to all Feature rich (AJAX, Flash,...) information and Flexibile abstraction of Web applications communications , hardware and software blending open both fixed and mobile, resources allow resource service exposures using any media sharing and soft tailoring (mashup) (including on-demand and pay-per-use capabilities) 14

MAURO NANNI ITC 2008-10 PLAN TI mission and strategic guidelines Become the leader in the Italian addressable market, by maintaining focus on Top & Large Accounts and by addressing SMEs market segment MISSION 2007 2008 - 2010 Partnership 70 Net Partners (Tech. & commercial) > 100 Net Partners (offering portfolio) Dedicated sales force and project management Dedicated sales force and project mgmt + Go to Market for Top Clients e Large Accounts (800 Accounts, VAR* Channel to SME Customers 700 project & mkt development) (600 VARs) ICT Engineering & design new structure Caring Dedicated Caring to Top and Large Accounts for end to end management Dedicated caring to SMEs through VARs SMEs offering launch SMEs offering development Offering eHealth launch Converging (F+M+IT) Industry Solutions Very high speed IP Backbone NGN2 development Infrastructure Service Platform deployment for SaaS 12 Data Centers Up to 30 Data Centers according to market * Value Added Resellers demand 16

MAURO NANNI ITC 2008-10 PLAN Infrastructure, Net Centric Model – Technology Enablers Next Generation Network 2 VIRTUALIZED RESOURCES Broadband access Dynamic sharing of IT Resources speed up from 20 Mbps up to 100 Mbps Productivity growth from 40% up to 80% NET CENTRIC MODEL AUTOMATIC IT RESOURCES INFRASTRUCTURE MGMT REDUNDANCY Advanced mgmt of centralized Clustered infrastructure = Business Continuity equipment Regional DC = Disaster Recovery Cost saving up to 40% Downtime from 8 hours down to 5 minutes per year 17

MAURO NANNI ITC 2008-10 PLAN Enriching our Vertical Offer Portfolio: an overview e-Healthcare Energy Management Intelligent Transportation Systems Finance 2007 offering: 2008 new offering 2007 offering: 2007 offering: My Pharma My Energy – Analysis Automotive Brokering Platform Anti fraud solutions for banking MyImage Archiving My Energy - Gas Mgmtt My Ticketing (NFC) Value Offer Appl Development & MyPatient record My Energy - Power Mgmt MyVoice Work - Enterprise Suite ICT Consulting Telerehabilitation MyMobile - WFM 118 2008 new offering Call Center Tourism ATMobile Money Transfer via SMS 2008 new offering Value Offer_CC/CRM Offer Telbios 2008 new offering Location Based Services Multimedia Banking eHealth Connecting Platform Cicerone Virtuale My Fleet Mobile Banking Booking & health visits Vehicle tracking payment 2008 new offering MyDocs eHealth SMEs MyAsset tracking 2007 offering: Wellpoint Backup Workplace MySecurity E-government Corporate Network Accelerator & Finance PC Extension e Backup 2007 offering: Public Infogovernment Sector Workplace Front Office PA SMEs 2008 new offering 2008 new offering Secure Access (eToken) Wireless Patrol PMI Archiving Municipality Link SoHo Homeland Services 18

MAURO NANNI ITC 2008-10 PLAN Enriching our Horizontal Offer Portfolio: an overview 2007 offering: Mobile Office Custom Mobile Messaging ICT Custom Mobile Device Mobile Management Push To Talk 2007 offering: 2008 new offering NetAdvertising MyLicence One Time Password Mobile Service 2008 new offering Management MyDocs Educational Services ICT ICT Homeland Security MyCompany Applications Infrastructures 2007 offering: MyCustomer MyCenter: DCS* MyCommunity services and MyNetpower MyCenter: MyHost new 2008 new offering Thin Client Advanced Recovery 19

MAURO NANNI ITC 2008-10 PLAN Commercial channels for IT: roles and synergies Go-To-Market Model Customers Channels Sales Offering Post sales Direct sales force (800 Account) Top L.A. Partners ~ 20K SME (100 ~ 1.0 mln (600 VAR) Companies) SoHo ~ 1.3 mln 20

MAURO NANNI ITC 2008-10 PLAN Revenues: short & medium term targets Market share on Addressable market 7.6% 9% 13% CAGR 07-10 ~1.2 23% 0.78 Euro bln 0.64 2007 2008 2010 TOP CLIENTS 72% 67% 55% LARGE ACCOUNTS 20% 22% 25% SMEs 8% 11% 20% 21

Media Brands in the Digital Age GIAN PAOLO TAGLIAVIA

GIAN PAOLO TAGLIAVIA MEDIA BRANDS IN THE DIGITAL AGE Safe Harbour This presentation contains 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 Company with respect to 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 Company's activities and strategies. 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 and investors 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 , which set out certain factors that could cause actual results to be materially different from the forward-looking statements contained herein. 1

GIAN PAOLO TAGLIAVIA MEDIA BRANDS IN THE DIGITAL AGE TI Media revenue trends 263.1 CAGR ’05-’07 Mln €, proforma, IAS Reported 10.1 24% 207.5 62.7 146% Total* 178.7 9.3 In a rapidly changing environment, TI News 31.5 Media has 6.7 31.5 37% DTT 10.4 succeeded in Multichannel 16.9 23.6 strengthening its & positioning in Multimedia traditional TV while Free-to-Air 160.2 5% boosting its digital 145.2 144.4 activities 2005 2006 2007 * Net of eliminations/ adjustments 2

GIAN PAOLO TAGLIAVIA MEDIA BRANDS IN THE DIGITAL AGE TV Brands outlook The digital revolution has led to two major changes in the TV environment: Multichannel Signal compression and availability of new means of distribution have paved the way for multichannel offers that platforms are luring viewers away from traditional, analogue free TV “Three screens” consumption is increasingly popular with on- Multimedia line and mobile getting more and more relevant. Traditional platforms broadcasters are only starting to exploit the business opportunity 3

GIAN PAOLO TAGLIAVIA MEDIA BRANDS IN THE DIGITAL AGE TI Media’s Multichannel and Multimedia network DTT Satellite/IPTV Multichannel Platforms Analogue TV On-line Mobile Multimedia Platforms 4

GIAN PAOLO TAGLIAVIA MEDIA BRANDS IN THE DIGITAL AGE Multichannel is changing TV consumption and revenue model Multichannel platforms are growing fast TV market revenue mix shifts towards pay-TV Italy, number of people who accessed the media during the last week, % on population Total TV market, Italy, %, bln € Media reach Media reach growth 100%= 7.3 8.2 9.1 9.7 Analogue TV -4% 93% Pay-TV Newspapers “Free press” 7% 59% 18% effect 26% 31% 34% Weekly magazines -38% 32% Public subscription 20% 18% Monthly magazines -5% 22% fee 17% 16% Radio -10% 63% Internet 6% 38% 62% 56% Satellite 13% 17% Advertising 52% 50% Multi-channel TV DTT 17% 17% 2004 2006 2008E 2010E Source: Censis (2001, 2005, 2006), PWC Global Entertainment Outlook, Screen Digest, Nielsen 5

GIAN PAOLO TAGLIAVIA MEDIA BRANDS IN THE DIGITAL AGE Brands and content must establish meaningful relationship with the audience Market outlook Strategies for broadcasters Fragmentation of content suppliers Brand building and relevant to multichannel platforms content creation Platform owners forcing rates Sub-brands segmentation and reductions on content providers network effect: clustering Audience segmentation between Differentiate revenue sources: platforms and channels affiliates + advertising 6

GIAN PAOLO TAGLIAVIA MEDIA BRANDS IN THE DIGITAL AGE Clustering and revenue differentiation are a must for TV Brands in a multichannel environment Sky channel clustering TI Media multichannel and multimedia revenues Number of channels on SKY for the largest media brands Mln € 75 CAGR ’04-’07 Weight on total More than 60% of revenues 41 total channels of the platform 31.5 15 58% 23.6 16.9 7 6 6 8.0 4 4 3 3 3 2004 2005 2006 2007 er a I X y tix om ey t Y RA or er i FO SK rn ed sn Je sp ov 6%* 9% 11% 12% tc Tu M Di Si ro sc TI Eu Di TI Media is the third content provider on SKY platform Multichannel and multimedia Excluding companies part of the News Corp, TI Media is the first revenues are more and more contributor to the bouquet relevant in TI Media Source: internal analysis on Auditel data, TI Media internal data * On pro-forma revenues 7

GIAN PAOLO TAGLIAVIA MEDIA BRANDS IN THE DIGITAL AGE Multimedia: balancing opportunities in on-line distribution Size of internet consumption is growing… …but revenues potential is not fully exploited Italy, daily hours of Italy, mln € Expected CAGR CAGR ’05-’07 consumption per user ’07-’10 TV YoY growth Internet* TV adv +1% 3.7 3.8 -3% market 3.5 4,599 4,653 +20% +48% Internet adv 510 1.5 +12% Video Adv is expected 1.4 market** 344 1.2 to be the main contributor to this growth (in USA CAGR 2006 2007 2008 2009 2010 ’07-’10E ~40%) Internet adv 7% 11% on TV adv In UK the size of the online June '05 June '06 June '07 adv market is closing the gap vs. TV: Internet adv on TV Source: Gfk group, Auditel, Nielsen, IAB, PWC Global Entertainment Outlook, Screen Digest, Global AdSpend adv is ~70% in 2007 * Internet consumption at home ** Display, e-mail and search adv (source IAB) 8

GIAN PAOLO TAGLIAVIA MEDIA BRANDS IN THE DIGITAL AGE Brand and contents in a windowing strategy In an extremely fragmented environment, consumers go for the brands and contents they already know Windowing allows content providers to maximize content value exploitation. Examples of this strategy implemented by are: 1 Satellite/IPTV 2 Analogue TV 3 On-line 1 Analogue TV 2 On-line 3 Satellite/IPTV The on-line window will become increasingly important as: Connectivity will be available to a greater percentage of the population Connectivity to TV sets develops On-line video-advertising market grows 9

GIAN PAOLO TAGLIAVIA MEDIA BRANDS IN THE DIGITAL AGE Mobile offers a great opportunity to Media Brands Mobile guarantees: full penetration will launch* MTV Mobile with :a an established new offer leveraging on its most popular brand business model with (MTV) and its relationship with a very well defined increasing revenues target audience in branded services and content + * contract details under discussion 10

GIAN PAOLO TAGLIAVIA MEDIA BRANDS IN THE DIGITAL AGE Closing remarks The digital revolution has led to two major changes in the TV environment: Multichannel platforms Multimedia platforms In a multichannel environment, market outlook requires broadcasters to build targeted content, brands and sub-brands, to differentiate source of revenues and to cluster a large number of channels on the same platform to obtain “network effect” Multimedia video consumption is becoming increasingly popular, representing a great opportunity to develop the broadcasters’ advertising business TI Media is well positioned to catch the opportunities of the Digital Age, both in multichannel platforms, as a content provider, and in multimedia platforms, with strong capabilities in cross-media advertising sales and the launch of MTV Mobile 11

Domestic Business Outlook

by Luca Conti on Mar 10, 2008

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Domestic Business Outlook — Presentation Transcript