International Business Outlook

Telecom Italia International STEFANO MAZZITELLI

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL 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

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL Agenda Telecom Italia International portfolio Telecom Italia International strategy South America European Broadband International Wholesale 2

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL Telecom Italia International Portfolio European Broadband HanseNet (Germany) TI France BBNed (The Netherlands) ETECSA Cuba (Fixed and Mobile) Int’l Wholesale Services Entel Bolivia (Fixed and Mobile) Telecom Argentina (Fixed and Mobile) TIM Brasil (Mobile) Telecom Italia international footprint consistent with TLC market growth macro trends: Latin America Mobile with expected 2006-2010 CAGR of +10% European BB with expected 2006-2010 CAGR of +16% 3

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL TI International Portfolio: Financial performance International portfolio is a key driver of growth, contributing substantially to TI’s Group performance and value w/o TI France Revenues € bln 2006* 2007* 2005 ** 2007 >30 % 6.35 Revenues 5.07 Bln € 6.75 Bln € 6.35 Bln € EBITDA 1.11 Bln € 1.55 Bln € 1.60 Bln € 2007 2010 EBITDA margin 22% 23% 25% EBITDA 2007 2006 Margin CAPEX 1.19 Bln € 1.39 Bln € 1.24 Bln € % Op. Cash Flow** -0.17 Bln € 0.10 Bln € 0.28 Bln € >3 pp 25% 2007 2010 *TI France, HanseNet, BBNed, TIM Brasil, Entel Bolivia ** based on TI stake (50% Entel Bolivia; 69.7% TIM Brasil) 4

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL International Market scenario European Broadband and Latin America Mobile are TI’s areas of strategic presence and focus, and key growth areas for the TLC market Mobile in Emerging Markets represents an additional opportunity for growth 5

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL South America: Market Scenario Argentina Brasil Bolivia CAGR Mobile Lines Mobile Lines 162.0 Mobile Lines +10% mln mln 121.0 mln CAGR 45.6 37.8 +7% CAGR 4.5 3.6 +8% 2007 2010 2007 2010 2007 2010 Penetration % Pop. 92% 111% Penetration % Pop. 63% 82% Penetration % Pop. 38% 45% Source: Internal estimates BB Access BB Access CAGR 13.4 mln mln +21% CAGR Mobile is a consolidated 4.4 +21% 7.6 area of strategic growth in 2.5 Latin America Broadband represents the 2007 2010 2007 2010 Penetration % HH 25% 41% Penetration % HH 15% 20% fast growing opportunity in Source: Pyramid Research, Economist Intelligence Unit Source: Internal estimates forthcoming years 6

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL Telecom Argentina Reported data by Not consolidated Telecom Argentina Δ ’07 vs ‘06 Held by: Telecom Italia and Telecom Italia International 9M 2006 9M ** 20052007 3Q (mln P$, local GAAP) abs % through Nortel Inversora/Sofora 13.97% Revenues 5,242 6,515 1,273 24% OPBDA* 1,730 2,252 522 30% OPBDA margin 33% 35% +2 pp CAPEX 755 981 226 30% Mobile Subscribers Argentina Broadband Customers .000 .000 +32% +81% Revenue 10,161 9,881 677 increase mainly 8,425 9,310 602 7,675 526 fueled by the 457 Mobile and BB 375 businesses 3Q '06 4Q '06 1Q '07 2Q '07 3Q '07 3Q '06 4Q '06 1Q '07 2Q '07 3Q '07 *OPBDA = Operating Profit Before Depreciation & Amortization 7

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL Entel Bolivia Consolidated Δ ’07 vs ‘06 Reported data 2006 2007 2005 ** Held by: Telecom Italia International abs % through ICH/ETI 50% Revenues 192 Mln € 210 Mln € 18 Mln € 9% EBITDA 82 Mln € 98 Mln € 16 Mln € 20% EBITDA margin 43% 47% +4 pp Op. Cash Flow 85 Mln € 72 Mln € -13 Mln € -15% Mobile Subscribers Broadband Customers .000 +22% .000 +68% 14.1 1,756 13.5 1,603 1,665 12.3 1,553 1,443 9.7 8.4 4Q '06 1Q '07 2Q '07 3Q '07 4Q '07 4Q '06 1Q '07 2Q '07 3Q '07 4Q '07 8

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL European Broadband Market and Telecom Italia presence Net BB Lines mln 2007 2010 Adds Telecom Italia European Broadband Customer base 6,0 Germany Germany 19.2 25.0 9% EoY 2007 UK 15.9 22.3 12% 5,4 Germany France HanseNet+AOL 4th player France 15.5 20.5 10% 5,0 Italy 10.1 13.6 10% 3,5 The Netherlands ~ 2.3M BB customers Spain 8.3 3,5 BBNed: 1st challenger on Spain 11.8 12% wholesale market NL 5.7 6.3 3% 0,6 3,5 ~ 0.2M BB customers Turkey Turkey 4.2 7.7 22% Alice retail offer launched Poland 3.5 3,2 6.7 24% in August 2007 1,2 Sweden Sweden 2.9 3.8 10% Switzerland 2.1 2.9 11% 0,5 0,5 Austria 1.6 Austria 2.1 10% Hungary 1.4 1.9 10% 0,5 France Czech rep.1.3 Czech Rep. 2.2 19% 0,9 TI France: 4th player Italy Greece 1.1 2.1 26% 1,1 ~ 0.9M BB customers 0,8 TI: Market leader Rom 1.0 Romania 1.8 22% ~7.6M BB customers Ukraine 0.5 1.5 44% 1,0 (Retail + Wholesale) Germany is a strategic market for TI growth in European BB 9

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL Germany: Broadband Market evolution mln lines +6 mln lines +3 bln € CAGR ’07-’10 10% ~ 25 ~ 24 ~ 22 19 15 11 7 2004 2005 2006 2007 2008 2009 2010 BB Access on Fixed Lines (%) 18% 28% 39% 50% 57% 63% 68% German BB market will still experience a sustained growth in the next 3 years (+10%): ~6 Mln of BB access will be added With ARPU exceeding 40 € per month, this new market will be worth ~3 Bln € Penetration will reach the European average in 2010 (68% on fixed lines) 10

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL Germany: Market scenario M/S Consolidation is likely to take place in the next two ADSL customers (Mln) 3Q 2007 ADSL years The combination of customer base and infrastructure 8.1 46% is an important factor in the consolidation process Alternative Operators are pursuing different business 2.5 14% models: United Internet and Freenet are resellers and do 2.3 13% not own infrastructure Arcor and Versatel have their own network 2.2 13% HanseNet has a mixed model, balancing its own ULL infrastructure with the use of partners’ networks 1.3 7% Telefónica and QSC are network based operators focusing on wholesale market 0.6 3% Mobile operators O2 and Vodafone continue to push for convergence in the market Others 0.5 4% Increased number of regional players investing in FTTx technology 11

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL HanseNet: 2007 Performance ADSL customer base Mobile Customer base evolution ‘000 BB customers 2,349 ‘000 BB customers 329 207 929 108 548 47 EoY 2005 EoY 2006 EoY 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Alice is marketing a full quadruple play offer with Strong increase of ADSL customer base strong increase of Mobile customer base, since the (+35% organic growth Dec‘07 vs Dec ‘06) launch of MVO offer in partnership with O2 Market Share Evolution EBITDA 281 € Mln ~ 13% 145 € Mln 5.3% 6.4% 49 € Mln EoY '05 EoY '06 EoY ‘07 EoY '05 EoY '06 EoY '07 % Margin 17% 28% 26% Alice is the 4th BB player in Germany 2007 EBITDA Margin diluted by the impact of AOL integration 12

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL International Wholesale: Strategic guidelines Enlarge structural presence in strategic markets by developing infrastructure and international services, in line with the TI profile Offer a complete set of innovative solutions to Corporate Multinational Customers and protect the high value A-end Italian Customers, through: synergies with TI assets & International Subsidiaries selective partnership agreements Consolidate the Leadership on the Global Services and Infrastructure market, with focus on fast growing Regions such as MEA, Eastern Europe and South-East Asia 13

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL Growth on MNCs Market Develop capabilities and advanced solutions for Italian and Goal European Multinational Customers DRIVERS NETWORK COVERAGE MNCs Proprietary Network TI Sparkle global capabilities Intra-Group Synergies Telecom Italia new ICT focus Telecom Italia’s Int’l Operations Synergies with Telefónica Partnership Partners to complement TI TI global presence through: geographical presence Proprietary Network (112 access POPs) Partnership agreements with Global Carriers (i.e. C&W, Verizon) and Regional Operators (i.e. CPCNet, Tunisie Telecom, Batelco, GTS) 14

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL Focus on Mediterranean infrastructure growth Internet demand EU-India (Gbps) US CAGR ’07-’11 2.009 1.598 US +52% 1.101 UK 622 373 Italy Greece UK Spain Turkey 2007 2008 2009 2010 2011 Source: Internal estimates Cyprus Lebanon Algeria Tunisia Morocco Libya Saudi Arabia Pakistan Egypt UAE TI 100% proprietary backbones India SeaMeWe 4 SeaMeWe 3 IMEWE Bilateral Cables (Tunisia, Libya, Croatia, Albania, Greece) New network infrastructure Sri Lanka Italy through Palermo and Catania is a key point of interconnection for major cable systems connecting Europe, US and South-East Asia Leadership position to capture the high traffic growth driven by large demand for new BB services in emerging markets 15

STEFANO MAZZITELLI TELECOM ITALIA INTERNATIONAL Building on current assets for future growth Consolidate presence in market where Telecom Italia can sustain a long term profitable position Monitor opportunities in emerging high growing markets and segments Consolidation of present assets Selective growth Enhance Operational High growing Monitor business performance markets and opportunities in emerging segments markets with expected Portfolio assessment and Convergence long term growth consolidation Scale Portfolio optimization Short Term Medium-Long Term 16

Telecom Italia European Broadband Project – Germany HARALD RÖSCH

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY 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

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY Agenda 2007 Results and Achievements Outlook 2008 - 2010 2

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY What we committed on vs. what we delivered Guidance What we did Revenues: ca. 1.1 bln € Revenues 1,074 bln € EBITDA: 25% of revenues – 275 EBITDA: 26% - 281 mln € Economics mln € Positive Operational Free Operational Free Cash Flow: +16 M€ Cash Flow BB 2,5 mln Broadband 2,35 mln Broadband Customers Customers Customers EOY Development of full quadruple play offer Launch of new AOL/Alice portal now among top Leading edge innovative product 50 German sites portfolio will be created Introduction of state of the art ISP services Operations Network: 60% ULL coverage Network: ULL coverage has reached 60% , reaching - 24 mln Households impacting positively on ARPU and margins Consolidation since 1st March 2007 AOL integration Completion of customer migration to TI systems Ongoing upselling of AOL customers to ULL 3

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY HanseNet: 2007 Key Financial Results Growth % Growth Reported data 2006 2007 2005 ** Main drivers of organic growth ‘07 vs ‘06 ’07 vs ‘06 BB ARPU slightly growing QoQ + 103% throughout 2007 as upselling of Revenues 528 Mln € 1,074 Mln € +546 Mln € (18% AOL customers* and introduction Organic) of options were offsetting impact of deflationary market + 94% EBITDA 145 Mln € 281 Mln € +136 Mln € (45% Growth of gross margin due to Organic) additional customers Cost savings also due to synergies EBITDA margin 28% 26% from AOL merger (>25 mln €) CAPEX 196 Mln € 344 Mln € +148 Mln € + 76% Enlargement of own ULL network Migration of AOL customers to TI Capex on revenues 37% 32% systems and network Op. Free Cash - 13 Mln € 16 Mln € Flow * Upselling from AOL to Alice products requires individual customer opt-in but doubles ARPU and multiplies margins 4x in ULL area 4

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY Growth of Broadband customer base Residential and Business Broadband Customers EOP (000s) 2.349 Alice is clearly among top 4 broadband players in +153% Germany Broadband customer base has increased to 2,349,000 929 including 1,083,000 acquired from AOL 548 Organic growth Q4: 105,000 240 More than 50% of new 105 orders done through internet and inbound calls Q4/2003 Q4/2004 Q4/2005 Q4/2006 Q4/2007 Share of German DSL Market* 3% 5% 6% 13% * Source: HanseNet Analysis 5

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY Agenda 2007 Results and Achievements Outlook 2008 - 2010 6

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY Competitive scenario 2008 REGULATION: No significant change in regulatory scenario expected for 2008 DSL INDUSTRY: Intense competition based on triple/quadruple play offers ALTERNATIVE BB TECHNOLOGIES Further consolidation – not more than 5 national players expected – but no further price Cable companies market triple decrease play packages – currently with Stabilization of price levels at limited but growing success 29,90 €/ month for double flat Broadband access Increasing number of city carriers investing in FTTx Increasing pressure with technology triple play offers MOBILE COMPETITION O2 and Vodafone continue aggressive push in the BB market 7

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY HanseNet: Strategic Priorities in 2008 Focus on market success and operational excellence/efficiency to ensure profitable growth in a challenging market environment Market Success Operational Excellence Grow BB customer base enhancing existing Streamline operational processes and quadruple play offer technical quality to optimize customer Increase brand awareness to 75% (vs. 46 in experience and decrease costs for customer 2007) management Network Extension Profitability Further increase ULL coverage only Keep Opex (including SAC and advertising) stable through 3rd parties Balance impact of price war on ARPU Launch FTTB trial in selected areas of through push of options and upselling to ULL Hamburg products 8

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY Market success: enhancement of existing quadruple play product Fixed voice Internet Access Main offers: National fixed calls Main offers: DSL flatrate at 16 Mbs included in DSL Bundles Portal IPortal Optional int’l flatrate FttB Coverage: 100% of Germany Coverage: 100% of Germany Mobile IPTV Main offers: Optional SIM card offering Main offers: 100 basic TV channels + free calls between Alice access to video-on-demand fixed and Mobile numbers New: Mobile Other Calls at 15 New channels Internet ct/minute and features Coverage: 100% (only available for Coverage: 25% Alice DSL subscribers) 9

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY Operational Excellence: 2008 priority Key elements Reach truly excellent availability for DSL and Telephone Services Improve Quality of (99,99% on own ULL network) existing products Significantly reduce perceived difference in quality between Voip based and services telephone services and traditional technology Publish audited technical and call center performance on web Complete roll-out of decision support tool in customer service to ensure that agents provide correct and coherent information also in a highly complex environment Optimize customer- facing processes Significantly improve trouble shooting (higher first call fix rate at front office, reduced mean time to repair) Further reduce average answering times at call center Streamline and Increase degree of automation of internal processes to save cost and adapt internal reduce error rates processes 10

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY Network Development: 2008-10 ULL Network Coverage* HanseNet will not extend further ~ 70% own ULL network as development ~ 60% 70% ~ 75% ~ 75% of NGNs might reduce timeframe 60% for usage (see NL) ~41% 50% ULL coverage will be expanded to 40% 70% of households through 3rd parties. Telefónica will be 30% preferred (but not exclusive) 20% 12% supplier 10% The remaining 30% will continue 0% to be covered through DTs resale 1Q ‘05 2Q ‘07 2007 2008 2009 2010 network HanseNet will start a FTTB trial in # HH (Mln) ~5 ~ 16 ~ 24 ~ 28 ~ 30 ~ 30 an area of Hamburg where market % ULL coverage ~ 18% ~ 26% ~ 26% ~ 26% ~ 26% share on households is > 40% - through Alice network final coverage will reach 130,000 households * % on Households, HH (mln) 11

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY Profitability: 2008 Key elements Continue upselling to ULL products – weight of customers on DTs resale network will decrease to 30% (down from >40% EOP 2007) Keep ARPU stable Push options such as mobile (target > 600.000 subs, 8-9 Euro ARPU), IPTV (target >50.000 subs, 10 Euro ARPU), content and ISP services Gross margin will grow in absolute terms because of higher customer Grow Gross numbers although higher weight of customers on 3rd party ULL Margin* networks and higher mobile revenues could decrease the percentage level (55% in 2007) Achieve high brand awareness target with advertising budget at 2007 Keep Opex level stable** at <25% Reduce further commissions per gross add growing mainly through low revenues cost channels (web and call center) Achieve higher efficiency through operational excellence * Groos margin = revenues – variable network costs (COGS) 12

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY 2010 HanseNet: 2008 - 2010 Targets Targets Reported data 20072007 Actual 2008 Targets 2010 Targets Actual BB Customer Portfolio 2.3 2.6-2.7 ~ 3.4 (‘mln Access - EoY) Revenues 1.1 Bln € ~ 1.3 Bln € ~ 1.7 Bln € EBITDA margin 26% ~ 26% ~ 29% < 0.7 Bln € CAPEX 0.3 Bln € ~ 0.3 Bln € (cum ’08-’10) 13

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY Appendix 14

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY Alice is clearly among top 4 broadband players in Germany mln DSL customers, Q 3 2007 Market Share 8,1 46% 2,5 14% 2,3 13% 2,2 13% 1,3 7% 0,6 3% Others 0,5 4% Source: Press Releases, HanseNet Analysis 15

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY Revenues have reached 1,074 mln € Mln € 1,074 +103% 528 Revenues are 296 increasing by 161 103% and reached 102 1,074 mln € 2003 2004 2005 2006 2007 16

HARALD RÖSCH TELECOM ITALIA EUROPEAN BROADBAND PROJECT - GERMANY EBITDA reached 281 mln € Mln €, % 281 +94% EBITDA is increasing by 94% to 281 mln € 145 Cash flow positive on 49 a full year basis 18 35 2003 2004 2005 2006 2007 % EBITDA 18% 22% 17% 28% 26% on revenues Cash flow -13 -17 -76 -13 +16 17

TIM BRASIL MARIO CESAR ARAUJO

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL 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

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL Agenda 2007 results highlights The Brazilian market context 2008-10 Plan overview Targets for 2008-10 2

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL Highlights 2007 TIM Brasil is positioned as leader in value in the Brazilian mobile market, by means of its: National presence Innovation in terms of Marketing and Technology Strong brand In 2007, main results achieved were: Leadership in service revenues share (since 2006) Best value customer mix (postpaid segment) and ARPU above market average Top of Mind (four times in the last 5 years) and best preference index Positive Net Cash Flow and positive Net Income All 2007 targets achieved In 2007, TIM Brasil decided to change through: Fixed line license acquisition: entrance in fixed and internet market Launch of a new business model targeting Low ARPU 3G License acquisition 3

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL Footprint of the major players 2007ye Miln. lines Market Share Telefonica/Vivo Embratel/Claro Oi Brasil Telecom TIM Acquisition of frequency in Acquisition Telemig/ 27.0% in player set/07 completion of a Amazonia Celular Ago/07 area national coverage Mobile ~33 ~30 ~16 ~4 ~31 13,3% in player 28% 25% 13% area 4% 26% Incumbent in long distance Fixed ~12 ~1 ~14 ~8 ~32% ~3% ~37% ~21% STFC license in May 2007 4

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL Leadership with profitability IAS Subscribers Total Revenues EBITDA Net Income (mln lines) (bln R$) (bln R$ (%)) (bln R$) 14.8% 13.3 23.8% 3.2 23.0% 31.3 11.6* 25.4 2.6 Break-even 22.4,% * 24.2% 24.1%** -0.5 2006 2007 2006 2007 2006 2007 2006 2007 * Figure adjusted considering Bill & Keep elimination starting 01/01/06 **Organic Local currency excluding exceptional items, IAS Gaap 5

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL Achievement of all 2007 Targets IAS 2007 Actual 2007 Targets Customers Portfolio 31.3 ~29 (Mln SIM) M/S TIM Brasil on SIM 25.8% ~26% 22.7% with Revenues Growth - Organic* 14.8% >10% Bill&Keep vs >15% target EBITDA margin - Organic 24.2% ~23% op. Free Cash Flow Break Even 825 (mln R$) 2007 * Figure adjusted considering Bill & Keep elimination starting 01/01/06 6

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL Political and Economic Scenario Gross domestic product growth Minimum-salary increase* vs. inflation Inflation Agreement between Government and Minimum-salary increase Trade Unions to readjust the minimum- salary until 2011. Minimum-Salary (Y)= GDP growth (Y-2) + 16.7% INPC growth (Y-1) 5.2% 15.4% 4.9% 4.5% 4.4% 4.2% 8.3% 7.4% 2.9% 8.6% 7.6% 5.7% 2.3% 4.5% 4.6% 4.5% 4.3% 3.1% 2004 2005 2006 2007E 2008E 2009E 2010E 2004 2005 2006 2007 2008E 2009E 2010E PAC – investments approx. R$ 500 bln to R$ 900 bln between 2007 – 2010. Lower interest rates producing a record bank lending, powering consumer spending Positive Trade Balance since 2001 In January ‘08, Brazil became a net foreign creditor for the first time in history. Source: Brazilian Central Bank, Abinee, BNDES 8

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL Regulatory framework 2008 2009-10 Definition of cost based model by Introduction of the new cost-based model Termination rate (VU-M) Anatel of regulatory accountability. Number Portability (F+M) Commercial launch 2H/08. Full implementation (1Q/09) Fixed license since 2Q07. 3G License of frequency available 3G and Wimax: high competition on 3G License/Fixed license in 1Q/08 broadband market Value payment R$ 1.3bln for 3G Possibility of new auction of 3G frequencies (5 MHz band). Stringent obligations from 3G acquisition License of frequency available in Wi-Max License 2008 contracts Partially regulated commercially Unbundling not viable Commercially viable Permission for telecom Increase PayTV offers into Telecom market Bill 29 (PL 29) companies to provide PayTV Brazilian government stimulating national content TV content 9

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL Competitive Scenario Challenges ahead 2007 2008 Tim will no longer be the only national player A 4th operator will start in São Paulo, 35% of Brazilian GDP Mergers & Acquisitions will continue in 2008 Oi and Brasil Telecom Telemig acquisition by VIVO and Amazonia by Oi. Number portability New mobile operator rules (SMP) Launch of 3G Handset subsidy 10

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL Market Evolution CAGR 07-10 Lines (millions) Revenues (R$ bln) 162 152 10.2% 142 +7.6% Mobile* 38.0 47.3 121 100 86 Mobile Fixed (voice) 42.6 -3.6% 38.2 39 39 39 39 39 39 Fixed (voice) 0.5% 8 10 11 13 Fixed (BB) 7.6 +20.3% 13.2 4 6 20.5% Fixed (BB) 2005 2006 2007 2008E 2009E 2010E 2007 2010 Source: Internal estimate * Service revenues 11

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL Mobile residual market in lower classes and broadband penetration Mobile penetration by social class Broadband penetration by social class 83% 67% 77% 63,5% 53% 24% 28% 10,0% 5% 1% Brasil Class A Class B Class C Classes D/E Brasil Class A Class B Class C Class D MS = Minimum-salary = R$ 415.00 / month Class A > 20 MS Class B > 10 and < 20 MS Class C > 5 and < 10 MS Class D > 3 and < 5 MS Class E > 1 and < 3 MS Source: IBGE (PNAD, 2006), CGI 2006, Consumer Market Sizing Research 12

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL In 2008 TIM will continue to execute on the following strategy Market Evidence Strategic goals Guidelines Generate more value from the Postpaid: increase cross/up selling and 1 loyalty Mobile customer base Core Business 2 Prepaid: efficiency in acquisition cost Optimize services offer to increase profitability 3 Corporate: increase portfolio share Increase focus on fixed voice services, through pure 4 Convergence fixed offer, leveraging number portability. Potential market Attack the fixed-line and Compete on Broadband market with 3G/HSPA. 5 Take advantage of PCs sales boom. revenue: ~R$50bln broadband market 6 Increase customer value with mobile, data and fixed bundle offer. Low-ARPU 7 Micro-recharges: R$1; R$3 and R$5 Potential customers Grow customer base ensuring market: 60mln profitability 8 Extensive door-to-door sales channel 14

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL 3G: Wireless Broadband TIM’s convergent offers 2007 2008 2009 TIM Web, GPRS / EDGE, Speed up to200 Kbps 3G licenses Evolution of offers for speeds up to: acquisition 7.2 Mbps Total licenses cost: Competitive plans with broadband R$ 1.325 bln Encouraging use of VAS National coverage 231 cities covered 460 cities covered The PC market* in Brazil will grow +21.3% in 2008 reaching 12.9 mln units, of which 88.3% Desktops and 21.7% Laptops Brazil has the highest usage of internet per home user, 23 hours and 04 minutes per month ** As of Sept 2007 Brazilian dial up internet home users totaled 7.1 mln * IBOPE/Netratings – November 2007 ** IDC 2007 15

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL TIM Brasil targets IAS 2007 Actual 2008 Targets 2010 Targets 2010 Targets Customer Portfolio (Mln SIM) 31.3 ~37 ~43 Mkt Share on SIM 25.8% ~26% stable ~8% Revenues Growth - Organic 14.8%* > 12% (CAGR ’07-’10) EBITDA margin - Organic 24.2% > 24% ~ 29% ~ 3.0 CAPEX (Bln €) 0.9 ~1.5 (Cum. ’08-10) License 3G excluded ~1.0 ~ 2.5 (cum. 08-10) * Growth considering Bill & Keep elimination starting 01/01/06 Revenues growth reported: 22.7% 17

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL Back Up 18

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL CAPEX evolution breakdown IAS, Bln Euros 100%= 0.7 0.9 ~3.0 Administrative 2% 3% 18% Of which 17% License 3G Commercial 34% 27% 26% 22% IT 22% 17% Network 48% 38% 43% 2006 2007 2008-2010 CAPEX/Net Revenues 17,6% 17,3% 17,1% 19

MARIO CESAR ARAUJO NOME COGNOME DEL RELATORE TIM BRASIL 3G Licenses Brazil's telecoms regulator Anatel, during the 2.100MHz IV VI 3G Auction, raised a total of 5.3 bln Reais (US$2.9 bln), representing an 86.7% premium over the bid base prices I II TIM Brasil acquired 10+10 MHz for all areas, but for: VIII X Area III e IV, São Paulo Metropolitan area and North IX Region: TIM acquired 15+15 MHz VII XI Area VII, Cities of Minas Gerais State that are V considered part of “Triangulo Mineiro”: Despite not III having acquired 2.100MHz license in this small area, TIM will be able to provide 3G services based on the current 850 MHz license 20

International Business Outlook

by Luca Conti on Mar 10, 2008

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International Business Outlook — Presentation Transcript