Telecom Italia
Strategic Plan Update



OSCAR CICCHETTI
Safe Harbour
These presentations contain statements that constitute forward-looking statements within the meaning of the
P...
Network Evolution

Provider
Service
Provider
                                      Applications
Service



               ...
Agenda



    Wired Access

    Wireless Access

    Core Network

    Platforms

    Capex Breakdown




         OS...
Wired Access – Copper and Fiber will coexist
              Copper Access Evolution                                  Fiber ...
Wired Access – Copper Value

                       Last mile length
                                                     ...
Wired Access – Fiber Selective Development

                   Timetable Roll-out

 (‘000)
                               ...
Wired Access - Evolution

                                        Copper Network Architecture

                           ...
Agenda



    Wired Access

    Wireless Access

    Core Network

    Platforms

    Capex Breakdown




         OS...
Wireless Access – Voice & Broadband
       2G evolution (GSM, GPRS, EDGE)                                      3/4G (UMTS,...
Wireless Access - Evolution

                                                     Mobile Network Architecture

           ...
Wireless Access - Cash Cost Reduction

                                                3G Nodes

 Capex per Node          ...
Agenda



    Wired Access

    Wireless Access

    Core Network

    Platforms

    Capex Breakdown




         OS...
Core Network – Delayering toward IP over ROADM


                            IP


                            ATM         ...
Core Network - Evolution

                                                                              Core Network Evolu...
Agenda



    Wired Access

    Wireless Access

    Core Network

    Platforms

    Capex Breakdown




         OS...
IT Platforms

                                                                        Interface
                         ...
Service Platforms

 Reverse Revenues Trend                                                                  Enriched Conne...
Enabling Platforms

 Reverse Revenues Trend                                                                  Machine to Ma...
Agenda



    Wired Access

    Wireless Access

    Core Network

    Platforms

    Capex Breakdown




         OS...
Capex Breakdown
                            Focus on Network & IT
Euro Bln
    Total                 2.7

       Core Netw...
Technology - Take Aways

                  Increase coverage and throughput to support BB (Fixed/Mobile) development
     ...
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Strategic Outlook - 2009 Results and the 2010-2012 Strategic Plan Update (Cicchetti)

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

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Strategic Outlook - 2009 Results and the 2010-2012 Strategic Plan Update (Cicchetti)

  1. 1. Telecom Italia Strategic Plan Update OSCAR CICCHETTI
  2. 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. 2 OSCAR CICCHETTI
  3. 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 OSCAR CICCHETTI 3
  4. 4. Agenda  Wired Access  Wireless Access  Core Network  Platforms  Capex Breakdown OSCAR CICCHETTI 4
  5. 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 OSCAR CICCHETTI 5
  6. 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: OSCAR CICCHETTI 6
  7. 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 OSCAR CICCHETTI 7
  8. 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 OSCAR CICCHETTI 8
  9. 9. Agenda  Wired Access  Wireless Access  Core Network  Platforms  Capex Breakdown OSCAR CICCHETTI 9
  10. 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 OSCAR CICCHETTI 10
  11. 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 OSCAR CICCHETTI 11
  12. 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 OSCAR CICCHETTI 12
  13. 13. Agenda  Wired Access  Wireless Access  Core Network  Platforms  Capex Breakdown OSCAR CICCHETTI 13
  14. 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 OSCAR CICCHETTI 14
  15. 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 OSCAR CICCHETTI 15
  16. 16. Agenda  Wired Access  Wireless Access  Core Network  Platforms  Capex Breakdown OSCAR CICCHETTI 16
  17. 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 OSCAR CICCHETTI 17
  18. 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 OSCAR CICCHETTI 18
  19. 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 OSCAR CICCHETTI 19
  20. 20. Agenda  Wired Access  Wireless Access  Core Network  Platforms  Capex Breakdown OSCAR CICCHETTI 20
  21. 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 OSCAR CICCHETTI 21
  22. 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 OSCAR CICCHETTI 22

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