Alex Pierre Bolis - Telecom Italia SpA Giuseppe Recchi - Telecom Italia SpA Flavio Cattaneo - Telecom Italia SpA Stefano de Angelis - Telecom Italia SpA Piergiorgio Peluso - Telecom Italia SpA

Dhananjay Mirchandani - Sanford C. Bernstein Ltd. Stéphane Beyazian - Raymond James Financial International Ltd. Julio Arciniegas - RBC Europe Ltd. Matteo Bertelè - Fidentiis Jerry Dellis - Jefferies International Ltd. Stefano Lustig - Equita SIM SpA Mandeep Singh - Redburn (Europe) Ltd. James Edmund Ratzer - New Street Research LLP Will Milner - Arete Research Services LLP Carola Bardelli - Deutsche Bank SpA Alex Pierre Bolis - Telecom Italia SpA: Ladies and gentlemen, Alex Bolis speaking, Head of TI Investor Relations. I welcome you to Telecom Italia's Presentation of Preliminary Full Year 2016 Results and of its new plan for 2017-2019. The call would be introduced by our Chairman, Giuseppe Recchi and will be then conducted by our Group Chief Executive Officer, Flavio Cattaneo, by TIM Brasil CEO Stefano De Angelis; and by our Group CFO, Piergiorgio Peluso. At this end of these sessions, we'll be taking questions. I wish to remind you of our Safe Harbor disclaimer and hand it over now to Giuseppe. Giuseppe Recchi - Telecom Italia SpA: Thank you, Alex, and welcome to all of you. In the last year, we achieved very important result for our group. There is a common factor across all of them that we'd like mention, which is transformation. First of all, I would like to underline that since the current board of directors was appointed, it has strongly focused on improving the execution of the business plan and on pushing the management to reach the target set in the budget, but I recall precisely, the moment during the presentation of Telecom Italia Strategic Plan in London, when one of you attending the meeting made a comment that since the last nine years you have been following Telecom Italia Group, the story telling about the strategic plan was to be negative on the first year, reaching flat on the second year to finally turning to positive growth by the third year. A nice plan, I would say, just having the problem that every year it look always like the first year. This had to change. Now just because any plan without execution is just a wish list, but because our reputation as managers is based on delivering what we promise to shareholders. With the arrival of Flavio, we set new ambitius targets including a three-year domestic efficiency plan of €1.6 billion; a BRL 1.5 billion one for Brazil and a growing domestic EBITDA already for year one after many years of negative performance. During the first road show, I thought there was some skepticans. We're talking of a very significant efficiency plan, while planning to improve our quality of service in our top-line with the support of new services and an increase of the pace of ultra broadband coverage, both in Italy and in Brazil. Quarter-after-quarter we delivered and we created value for our shareholders, and in a year that proved to be not easy, we reached nine months, the targets set by the previous plan for year three. And this, please allow me to say, proving wrong also several opinions in our own country and the fruits of our work would be showing more and more. The upgrade to ultra broadband of our networks has never been faster. In Italy today, our fiber coverage reach is 60% of the country, which means about 14.5 million households. We have implemented one of the fastest growing coverage rate in all Europe. 4G coverage stands at more than 96%. In Brazil, 4G urban coverage of year 2016 has moved up to 74%, reaching 1,255 cities. All of TI is under transformation. It's not only a matter of revenues, cost and networks. It is also about creating a new corporate identity and culture based on straightforward response to our customer needs and serving them better than any other player in our countries of references. We're also spreading through our company the sense of urgency which is necessary to build a solid reliability along with a new legacy of pride across all management and employees, for the several goals still in front of us. With that same clarity and conviction that led us to radically change course 10 months ago, today, I want to convey the message that we're entirely confident that the developments we have set in motion over the last 10 months are the right action to start to completely address and overcome the next challenges. And we can say so, as our vision is strongly supported by the last three quarter results. Let me now turn the floor to Flavio, that will take you through the main results of 2016 and will give you an outline of the new plan. Flavio Cattaneo - Telecom Italia SpA: Thank you, Giuseppe, and hello to everyone. Indeed after the first quarter of 2016, a strong transformation started in TI. The company has developed new strengths, reflected in the solid improvement of its main result. This turnaround in our operating and financial profile is allowing us to face external challenges. This is how we have reacted. We are ready to respond to Iliad's entry, counterattacking with second brand strategy on the cost conscious segment, while TIM is accelerating on convergence and quality. We have preempted and strongly limited future well say competition for an Enel Open Fiber by increasing our FTTC coverage target to 80% in 2017 and to 95% by the end of the plan. Extending our FTTH, will allow plans to 50 cities, equivalent to more than 20% of the Italian household. Our new full equivalent model has been received positively by both, the antitrust and the regulators improving inter-operator environment and reducing mitigation risks. Open Access and wholesale have already completed the transformation of 40 out of 75 key processes. Our transformation goes very deep, as it involve the corporate culture, the mindset, the processes, the quality and the attitude of the whole group. We delivered strong results in the last three quarters in choppy waters, while political turbulence, sector performance and our €1.2 billion mandatory conversion impacted our stock, but this didn't distract us from our work. We have people who sail with any sea and always bring the ship into harbor. So today we can introduce more ambitious goals that in the next three years will take us to totally turn around TI. For this, we aren't waiting for any external help, but are banking on our internal resources and our growing capacity to deliver. We have called this plan a transforming company to represent our vision of the need to create a long-lasting and forward looking growth. We are upgrading our NGAN-wide driving and we will drive faster with the team fit to win new challenges and grasp new opportunities. We are combining the strength and size of a large incumbent with a new and unique industrial region and an attacking attitude that introduce changes to the usual telco scenario. Racing and competing is never easy. Some support you while others oppose you, but determination drives achievement and this is the case for the people of TI. Now before telling you about our many new plan action, let's start the way we are used to, a review of what we have already done. The combined turnaround in our Italian and Brazilian operation is working. On slide five, you can see how our new course of action has taken Q4 group revenues performance into positive territory to plus 0.8% year-on-year. Group EBITDA is now into its third consecutive positive quarterly performance. On a full year basis, it stand at plus 2.4%. Total turnaround from the minus 7.5% year-on-year recorded in the first quarter. Net cash flow enjoys a quite substantial €1.6 billion contribution in the Q4 2016 and rises by about €2.2 billion in the full year. Net of the mandatory conversion effect, these results shows year-on-year increase of about €1.5 billion. Net debt has been substantially reduced to €25.1 billion. Our financial position is managed in a very sound way. 71% of our gross debt is fixed defending our interest cost over time. Average debt maturity is eight years and our current liquidity position is €12.5 billion, covering our financing risk until 2020. This protect us against any turbulence in the capital market. As you can see, our strive for operation and the financial improvement is very clear. On slide six, we break down group main result into domestic and Brazil. Total domestic revenues reversed the trend moving from minus 2.3% in the Q1 to plus 2.7% in Q4. They have stabilized on a full year basis, which supported this change with the new offers delivering, for instance, on off-peak mobile network usage and adjacent market enabling product like TVs to locate and up-sell. In the meantime and in the last three quarters, our domestic NGN coverage increased from 45% to 60% and our 4G went from 92% to 96%. Only one number to give you the pace. 120,000 of new premises connected with fiber optic. While these results were being secured in the last three quarters, total domestic cash costs were reduced by about €600 million. This is equal to the amount of the total efficiencies that were announced in three-year plan in the last February. On the back of these positive results, we're pleased to highlight that we have beaten our low-single-digit domestic organic EBITDA growth target for last year with a plus 4.5% full year performance. In Italy in only nine months, EBITDA organic performance was totally reshaped from minus 5.2% at the end of March of 2016 to plus 8.4% in the last quarter showing an improvement of 13.6 percentage point. In Brazil, the EBITDA trend turned positive for the first quarter later than domestic as its efficiency plan was implemented from June 2016. It is now its second consecutive quarter of positive organic performance at the plus 2.8% year-on-year with a very respectable 17.8 percentage point improvement since Q1. Total revenues on TIM Brasil jumped from minus 15.3% to minus 1.7% from the first quarter to the last quarter improving by 13.6 percentage point. In the same period, our Brazilian urban 4G coverage increased from 60% to 74% and the 3G one from 82% to 89%. It is quite an impressive ride and we'll continue as we are seeing from a positive start of the year. On slide seven, we review the main feature of our fourth quarter domestic performance. Our mobile service revenue were up 3.1% year-on-year supported by increased data usage coming from growing 4G penetration in our customer base. Our business segment performance which returned positive after many years supported by the end of constant across and by a new operational and commercial drive across all its component, innovative offers we launched in the fall and a balanced response to the discounter, while pushing on quality and convergence on the value segment. Mobile ARPU grew to €13.3 from €12.8. Net MNP was up plus 26,000 against minus 44,000 on the previous quarter. TIM churn, 22.8%, best-in-class position in Italy. On fixed, the result of our autumn campaign are visible. Total revenues were up 1.5% year-on-year against minus 3.9% of the same quarter of 2015, supported, as already mentioned, by an improving underlying service trend and the sale of (00:16:19) enabling equipment such as smart TVs. Quarterly fixed line losses improved to minus 83,000, down from minus 100,000 on the previous quarter and better by 41% from the 140,000 at the end of March. Fiber net adds scored plus 125,000, up from last quarter 82,000, confirming continuing year-on-year growth. We have now over 1 million fiber retail customers after having scored a growth of 459,000 lines during last year. Including VULA and other order or say fiber, our total fiber lines are now about 1.4 million. Fixed broadband ARPU of €22.3 showed a 5.5 percentage point growth year-on-year. Fixed service revenue trend was impacted by recent wholesale price review. Nevertheless, it remained in line with the last quarter year-on-year performance of minus 3.6%. After this review of 2015, let's now move to slide eight, we start the plan section. TIM is transforming itself from the inside, combining its leading position with a new agile and lean approach. Our new plan aims at a deep discontinuity with the past and a full turnaround with clear accountability and metrics. It implement TIMvision through a total quality approach to fully exploit the business opportunities in the coming years and to properly address risk leveraging on best infrastructures, access and transport data centers, IT and cloud. A strong and sound commercial approach, focusing on superior service, offer innovation, expansion and convergence, content and play, while upselling and locating customers, efficiency to deliver superior customer experience and reduce total cost of ownership. Re-launch of our subsidiaries, TIM Brasil as well in its progress, there are opportunities also for INWIT, Sparkle, and even Olivetti. Revenues and EBITDA rebound will drive solid cash flow generation, leverage, and value creation. On slide 9 we move to our infrastructures that represent a double competitive advantage. First, our customer will experience the quality of best technology and available network. Second, it will allow to offer a widespread convergence, to enable content and ICT delivery, creating ability to successfully compete in the long term. To achieve this, first of all, we will expand our Ultrabroadband coverage in all of Italy based on the future-proof market technology, convergence, combining in the most effective and efficient way, NGN, wireless platform, LTE and FWA and data centers. Ultra-band coverage will be driven by commercial appeal and profitability. In main cities and industrial districts, where demand and needs are strongest, we will go for FTTH and FTTB. In wider Italy, we'll deploy superfast eVDSL, made possible by the status of our fixed network moving from current 200 megabits taken to 300 megabits, and it will follow further evolution and include selected C and D areas. Our ambition is get there before the others. LTE will be always more enhanced and will be deployed everywhere to ensure an always on evolution and to complete our reach. Strong synergies will be pursued with INWIT, which is fully on track, funding enlargement of its network, adding sites, more cell, and the calling connection. And we shall further expand on our Ultrabroadband coverage with fixed wireless access offering to our customer unsurpassed quality in main additional locations. Our new target anticipate and go beyond previous plan. We'll complete the deployment of our innovative network by 2019, reaching a coverage of 95% in NGN and over 99% in LTE. This development will determine an increase of innovative CapEx in the next years, rising from around 13% at the start of 2015 to above 50% in 2019. Let's now move to slide 10. Our customer base is our major asset, a sound commercial approach is crucial to preserve and expand it. TIM will implement an attack attitude to support and enhance its premium commercial proposition and to defend market share. We have done away with incumbent and now to a looser mode switching from defense to offence. A second brand we have protecting premium position. At the same time, it will exploit opportunities in the low-end segment. TIM commercial approach will focus on the business basics, customers' need and quality, with the primary goal to increase the take-up of Ultrabroadband to support and enhance its premium positioning that TIM will leverage on lock-in mechanism to increase customer loyalty and retention, supported also by focused and selective positioning on adjacent markets, from which we have already started to see the benefit. This will allow a further push on bundles and convergence, both for families and enterprises, enlarging addressable market. We are developing a solid video strategy based on the availability of exclusive and premium content supported also by co-production initiatives. We have just announced a deal on the 2016 full catalog of Rai Cinema, the national broadcasting, securing a three-year the first and the second win of deal give us an exclusivity on 20 premium Italian movies. We are working on other exclusive opportunities to integrate the linear and on-demand content and maximizing freedom on choice. We'll grow our new tailor-made offer based on the geographical differentiation, specific tariff plans and on a deep customization for large enterprises. Supported by these actions by 2019, we expect NGN active fiber customer to grow by four times and the adoption on our mobile broadband customer base to increase to about 90%. In 2019, we also plan to reach well more than three times the current 3Play customers, voice, broadband and video, of about 1 million and to lock-in about 45% on fixed consumer customer base, about 35% of mobile CB and more than 1 million business customer. During the plan period, our fixed and retail line losses will be reduced at parity by 2018. In this assumption, we have carefully considered an impact of all possible new entrants. On slide 11, we take a look at the positive consequences of our network and commercial strategy on domestic top-line and EBITDA performance. The combination of our action and the big changes that we are introducing are indeed transforming our domestic main result over the next three years horizon. We have also taken a strong view on the role of enabling equipment. Indeed, we sold many smart TVs in one quarter. This device increased our top-line performance and stimulated broadband adoption, and we are working also on modem combined with set-top box, gaming and security devices, connected household appliances, multi-room audio component, and other connected products. They are in growing demand from Italian households, but potential demand is lowered down by price and other financial consideration. We are intercepting this huge flow with a win-win arbitrage. We transferred our purchasing capacity as incumbent to our retail customer, with enough subsidy – passing on most of the related volume discount. Customer pays us in multiyear installment in the phone bill, while professional counterparties will relieve us of any credit risk in our balance sheet. Interestingly, this addition markets are showing low-teens growth trend, while the overall dynamics of telecommunication look rather stable. So, we have decided to introduce them in our mainstream business as lock-in and growth factors. Our clients in return accept gladly to be locked into something they really like. This enable us a new stream of service revenues. On the back of our overall strategy, the market share is going to evolve positively both mobile and on fixed. The result of our domestic operation over the next three years starting from 2017 will be growing total revenues, stable service revenues, low year-on-year single digit EBITDA growth. Efficiency has been a driver of the result we scored in 2016 and will continue to be a key element of our new plan. Last May we presented an OpEx efficiency plan worth €800 million of our rate reduction. As you will remember, volume driven costs were kept flat. Now, as you can see, we are utilizing some flexibility on COGS, while increasing from €800 million to €900 million of our OpEx efficiency plan net of volume driven, because we plan an increase of volume. All we had to COGS increases total revenues. As we already said, there is no subsidy and no risk in our balance sheet. The underlying Broadband enabling equipment actually generates additional service revenues, it support our EBITDA performance. Again, this tell you what we mean by efficiency. We aren't cutting costs for the sake of some short-term effect. Instead, we are building over time flexibility for the company to achieve long-term improvements of its business profile and to create value for all stakeholders. The new business line brings additional cash cost savings and OpEx savings. We have increased our target to €900 million 2015-2019 run rate net of volume driven. Piergiorgio will give you in this section the detail of this composition. On CapEx, as our Ultrabroadband build out, we'll approach completion in 2019 total investments and will benefit from further efficiency. So adding one more year of disciplined capital allocation to the 2016-2018 plan presented last May, the run rate increased from €800 million to €1 billion. So total new domestic cash cost efficiency and up to a total of €1.9 billion up by €300 million from last May's plan. Before my conclusion, I will leave it now to Stefano to give you an overview of Brasil, and to Piergiorgio for an update on group financial performance. Please. Stefano de Angelis - Telecom Italia SpA: Thank you, Flavio. In slide 14, and - [Technical Difficulty] (00:30:38 – 00:30:58)

Ladies and gentlemen, please stay on line. Thank you. Stefano de Angelis - Telecom Italia SpA: Can we start it again? Flavio Cattaneo - Telecom Italia SpA: Okay. Please continue. Stefano de Angelis - Telecom Italia SpA: I'll continue. In the long-term perspective, we expect to complete TIM's brand repositioning to reach a perception of high-quality to a reasonable price. In other words, the best value for money player. In this process of repositioning, I would like to convey some important messages. We will strengthen the postpaid position, while ensuring the leadership in the prepaid segment. Network quality and coverage would be a key competitive differentiator, mainly on 4G. Our offers will add digital services embedded to improve convenience, customer experience and loyalty, and we will improve our convergent portfolio in São Paulo and Rio with TIM Live 3 million households all suburban coverage and partnership with content providers, such as Sky, for pay-TV services. As presented in the results for 2016 last Friday, network development is one of the central points of the strategy. And here in slide 15, I highlight the level we want to achieve building the faster and wider mobile broadband network in Brazil. In the 4G, we aim to reach 95% of the European population and exceed the coverage of 3G, which is still an important source for user in the transition of technologies. This leap we are seeing in the 4G is made possible by the rollout of 700 megahertz frequencies, which will be added to the refarming efforts being carried out on the 1.8 gigahertz frequency. In the slide 16, and looking at the evolution of the mobile market in Brazil, we believe that bundling of voice data in digital services will become more and more relevant, especially for the postpaid customers, which should reach more than 35% of our base by 2019. The prepaid will further consolidate second SIM cards and the up-sell to postpaid controlled plans. In all, we expect that confirming our leadership in prepaid and improving our customer mix with a significant upgrade into the postpaid would bring our revenues growth above market average in the period. On the other side, our perspective for OpEx is to consolidate the efficiency plan loan launched in the first half of last year. On slide 17, I call your attention to three important points. The first is the over-execution that allow us to improve our 2018 target reaching BRL 2 billion versus BRL 1.8 billion originally told. The second point is to guarantee a continuous improvement in efficiency and achieve the total of BRL 2.3 billion at the end of 2019. And lastly, it's important to underline that our total OpEx in 2019 should be around the nominal figures reported in 2015 despite inflationary impacts and a substantial upgrade of our network and customer base. Finally, we expect that the new plan will substantially improve the profitability and cash generation as demonstrated on slide 18. The investment cycle that was necessary on the transition from 3G to 4G network will reach the final phase at 2019 reaching almost 95% of the urban population. And the CapEx that will sum around BRL 12 billion in the three years' plan will follow the descending trajectory. In the same period, we believe that EBITDA will expand bringing a substantial improvement of the cash generated by the operation. Last but not least, we present on page 19, a table with our targets for Brazilian operation, not only for the long-term as usual, but this year, we are introducing the short-term expectation which calls for a positive revenues and EBITDA in all quarters for 2017. CapEx near to BRL 4 billion, and EBITDA minus CapEx on revenues moving up to high single digit. All these short-term improvements are expected to continue in the next two years, as we can see on the long-term targets. Thank you and now I turn the floor to Mr. Piergiorgio, please. Piergiorgio Peluso - Telecom Italia SpA: Thank you very much, Stefano. Let me start with the 2016 domestic efficiencies overview, slide 21. We show you our four quarter sequence of domestic efficiencies for 2016. As you know, record performance for second quarter was supported by the non-payment of €67 million employee performance bonus for 2016. Without this element, if we net the volume driven components, OpEx efficiency performance was broadly in line throughout the last three quarters totaling €340 million. For Q4, I would like to highlight our gain in the market-driven cluster. Commercial levers were not scarified at all while efficiencies were supported by lower sponsorship and rebranding expenses. Slide 22, on the back of our strong operational improvements both in Italy and in Brazil and with the support of our efficiencies, operating free cash flow is sharply pointed upwards for the year. And on slide 22, we point out to our group level improvement worth about €900 million, up by 45% year-on-year. Its absolute value stands at €2.9 billion for 2016. In combination with the non-operating components, these impressive results translated, as you already know, into a €2.2 billion net debt reduction during the last year. On slide 23, we update our domestic cost efficiency dashboard for the new plan. I wish to highlight again our volume-driven flexibility will be more than fully compensated by a parallel increase in total revenues with no subsidies or risk in our balance sheet. As Flavio told you, the use of this flexibility will play a role for the stabilization of the domestic service revenues starting already for 2017. If we exclude the volume driven element from the new plan, OpEx efficiency increased from a 2015-2018 run rate of €800 million to a 2015-2019 run rate of €900 million. Below, you can see the contributors of this change. On one side, in 2019, level of cost will increase by about €100 million due to the end of our solidarity program. At the same time, process driven cost will be reduced by €200 million, incorporating the effect of two main factors. The job reconversion of about 4,300 employees through our job center that will allow important in-sourcing and provisioning, delivery involved with external manpower contributions of our Open Access division. Second, increased efficiency in our real estate where many contracts expire in 2019 and we will free up additional space. For your information, the total amount of square meters that will be freed by 2019 is about 3 million. The new plan also creates further €200 million of efficiency in domestic CapEx, bringing them down to €2.9 billion in 2019. This will contribute to the achievement of our less than 20% CapEx saves target at the group level. As you can see in the lower part of slide 23, as we approach completion of our Ultrabroadband coverage target, decommissioning and delayering in our traditional component increase allowing to step-up overall savings. With slide 24, we now come to our deleverage update which, as you can see, aims to ensure with even more strength and improving investment grade ratio of below 2.7 times at year-end 2018. This ratio would be further reduced in 2019. This target now includes 2017 spectrum renewal cost in Italy, which will get totally offset by year-end 2018. This will leave us with a net free cash flow generation in 2017 and 2018 of about €700 million per year, without the contribution of any disposal. No dividend payment on ordinary is considered in our new plan scenario. At the same time, statutory minimum payment on salary is confirmed. With this, I hand back you to Flavio. Flavio Cattaneo - Telecom Italia SpA: Thank you, Stefano and Piergiorgio, for your presentation. We have summarized the main element of what is truly making TI a transforming company. The turnaround we have already delivered in the last three quarters will indeed enable further material upside to our main operating and financial metrics in new plan timeframe. On slide 26, you'll find our full year guidance for Italy and TI group, which is added to the one that has been already given from Brazil. Italy, first of all, we are turning the corner on domestic revenues and EBITDA by announcing for the next three years total revenues growth, service revenue stability and year-on-year EBITDA low-single-digit growth. Second, we'll cover all of Italy with our Ultrabroadband coverage by increasing all yearly target both in NGAN and LTE, reaching respectively around 95% and 99% coverage by the end of 2019. We are confirming our target of 5 billion of NGAN customers by year-end 2018, further accelerating the growth after that. We'll stabilize line losses by 2018. We have identified further €300 million domestic cash cost efficiencies, taking the new 2015-2019 run rate to €1.9 billion. We'd be doing more for the same on domestic investment. Cumulated 2017-2019 figures stand now at about €11 billion, including the frequencies renewables and not included in the past. Autonomous roll out of our all Ultrabroadband in selected C and D areas that is included in our CapEx. Group, we'll reduce our CapEx sales ratio to below 20% by 2019. And finally we are improving our year-end 2018 leverage target of less than 2.7 times net debt-to-EBITDA by including Italian 2017 spectrum renewable and without the need of any disposal. Further debt reduction will follow. The outcome will be different. TI, we're a different TI, lean, flexible and always on top of every challenge delivering to our investors the value they deserve. Thank you all very much for your attention. And we are ready to take your questions. Alex Pierre Bolis - Telecom Italia SpA: Q&A session is open now. And may I ask each participant to keep it only to one point, so that we can open the discussion as much as possible please. We can start now.

Ladies and gentlemen, the Q&A session is now open. First question comes from Mr. Mirchandani Dhananjay from Bernstein. Dhananjay Mirchandani - Sanford C. Bernstein Ltd.: Yes. Thank you very much for fielding my question. Iliad and Enel's market entry announcements in the first half of 2016 have undeniably impacted the valuation of the domestic business. Now, arguably you have very little control over what both actors will end up doing. Now considering the radical improvements in your domestic structural costs, how much additional flexibility did you have in your cost base to mitigate any unforeseen revenue impact from both players' actions? Thank you. Flavio Cattaneo - Telecom Italia SpA: Obviously, when we have said in our presentation, we have considered the new entrants that means that we have considered also this element that we have the flexibility to for respond in a market way in both areas. For what concern the infrastructures, that means a strong acceleration in coverage, also in C and D areas. And for Iliad, we have already started with a second brand. We have already started with the test and we have taken into consideration also this discounter new entrant. Alex Pierre Bolis - Telecom Italia SpA: Thank you very much, Dhananjay. Dhananjay Mirchandani - Sanford C. Bernstein Ltd.: Can I just very briefly follow up, if I may Alex? Alex Pierre Bolis - Telecom Italia SpA: Of course, go ahead. Dhananjay Mirchandani - Sanford C. Bernstein Ltd.: Yeah. So I understand the measures that you're putting into place to defend the revenue side. I guess my question was more focused on the cost side of the equation. And how much incremental flexibility you have on the cost side, if the impact is unforeseen on the revenue side? Flavio Cattaneo - Telecom Italia SpA: Yes, but if I sign this amount, because we think that this flexibility we need to, no, for combat these new entrants for this reason. What we have announced is sure we're rich. The other money we need for combat this situation. Alex Pierre Bolis - Telecom Italia SpA: So, if you wish, the answer, Dhananjay, is that this flexibility has been budgeted for. Flavio Cattaneo - Telecom Italia SpA: We have but it's not disclosed yet. It's not disclosed. Dhananjay Mirchandani - Sanford C. Bernstein Ltd.: Got it. Thank you very much. Thank you. Alex Pierre Bolis - Telecom Italia SpA: Thank you, Dhananjay. Next question please?

Next question comes from Mr. Stéphane Beyazian from Raymond James. Mr. Beyazian, please. Stéphane Beyazian - Raymond James Financial International Ltd.: Thank you. A quick question please on the business market. There was a marked improvement, especially, in the wireless business market. Can you put a bit more color there between the sort of regulatory impact of the Consip and potentially any exceptionals there from potentially equipment sale? I guess what I'm trying to understand here is how sustainable return to growth, especially in business wireless is going forward? Thank you. Flavio Cattaneo - Telecom Italia SpA: As we have said in the presentation, we have not only increased the revenues coming from the mobile service revenues, but we have increased also the ARPU. Essentially coming from the data usage for the growing 4G coverage penetration, also for what concern the business segment, we have introduced a new commercial action, the innovative offers, a balanced responsive discount. And also let me say we have not yet taken into consideration also the VoIP that which has grown of the fixed line into the line and no included in our number. But I think and we've already announced many time, probably with the next quarter, we'll announce also the line in VoIP because for what concern the business area, are essentially in the middle between fixed and mobile. You use the mobile but in charge of the fixed lines. Stéphane Beyazian - Raymond James Financial International Ltd.: Any change in the competitive environment in the business market that also helped? Flavio Cattaneo - Telecom Italia SpA: In term of price not particularly. Actually I think there is a little bit increase of the value of the market. Regarding the consumer is more or less stable. But we've seen also in a stable market we have increased our ARPU, because for many effect also for the devices and the other effect linked to the lock-in. Stéphane Beyazian - Raymond James Financial International Ltd.: Thank you. Alex Pierre Bolis - Telecom Italia SpA: Yeah. They whole environment is kind of cooling off. So we don't envisage in the short term any particularly strong competitive environment on the business segment. Next question, please?

Next question comes from Julio Arciniegas from RBC. Mr. Arciniegas, please. Julio Arciniegas - RBC Europe Ltd.: Thank you very much for taking the question. And first of all, I wanted to congratulate for the set of results. So my question is regarding the fiber deployments. In the presentation, basically you're targeting 95% of coverage on fixed, right and doing selective investments in the some C and D. Can you give me some color of the economics on fiber in some C and D? Thank you. Flavio Cattaneo - Telecom Italia SpA: At this stage, I can't disclose completely because the first auction is not yet – there is not the conclusion of the first auction. According to the Italian law, all the participants can't discuss about it, but we have already announced to the government our intention for we're concerned the next auction to realize ourselves the coverage in FTTC and in FWA. It's clear our intention, I think that we need to use our grid with maybe the grid of the other. We realize our technology in FTTC. We believe we think even because the fact showing that the technology improve the speed, there is less noise – noisy for the customers, and we can offer an acceptable and very good quality for our customers before the others and that allow us to retain all of our customers. And also on wholesale who will be the first mover will take the majority part of the customers. All of this scenario is included in our figures. This plan included the coverage. For this, I said – believe me, this amount of CapEx is very good because including also the investment in this area, not only the spectrum. Julio Arciniegas - RBC Europe Ltd.: Yeah, may I follow up quite fast on that? So basically, you're assuming that you're going to do some part of the investments coverage with some funding from the government, right? Alex Pierre Bolis - Telecom Italia SpA: No. I think the point was precisely the opposite that we are preparing to cover, as Mr. Cattaneo said, selective parts of the C and D area, using our own grid, not depending on other people. Flavio Cattaneo - Telecom Italia SpA: Yes, absolutely. The other grid is the startle, is a state-owned grid, for what concern the area C and D. We have already our grid in copper. We upgrade our grid in FTTC and we cover in fiber, our customers. It is the normal like the other part of the Italian areas where there is not convenience we use even because we can reach immediately in this case because we participate also the renewal for the spectrum for FWA directly with LTE and the wireless instead of wireline. And today, also in this way the technology allow to reach important speed acceptable, for sure, if you compare the speed of the ADSL in this rural area. Julio Arciniegas - RBC Europe Ltd.: Okay. Alex Pierre Bolis - Telecom Italia SpA: So, it's a multi-technology coverage Mr. Cattaneo is talking about. Next question, please.

Next question comes from Mr. Matteo Bertelè of Fidentiis. Mr. Bertelè, please. Matteo Bertelè - Fidentiis: Yes, good morning, everybody. I have a question regarding with the strategy. If I understand well, actually given that your service in revenues in the domestic market are going to be flat in the period, and your total revenues are increasing by €0.5 million, which is also reflected in your OpEx, all the growth will come from, let's say home appliances, other devices that you are let's say purchasing using your purchasing leverage with a big volume and passing this kind of discount to the final customer. So in this way the customer will have a lock-in period of, I don't know, 48 months because it took the television with you. Let's say, what is my question is how we should treat this strategy? The sort of consumer lending, how does it work if the customer will not, let's say spend with you for 48 month for this kind of, let's say problem on this kind of lock-in period? Flavio Cattaneo - Telecom Italia SpA: First of all, let me say, as I showed the result, the equipment is a driver for increase the service revenues and not because TI intent for activity is like a store for the white goods and so on. But we need for a lock in for increase the usage – the usage essentially of data. Indeed, in the last quarter, this show to the market because presently, there is a connection between the equipment and the increase of especially the mobile in some case. And we started on in this period, also with the content our expectation will be the increase in penetration of fiber during the year. And in my opinion that is important because without this enabling devices of equipment, the growth will be not the same. This is our vision and I think the fact show that is right this vision. The second element, the customers sign a contract, the risk is off balance sheet because they pay installment to our monthly payment of our bill. But there is no risk from TI, because the finances is coverage by the external bank. And in this case, there is also an amount as a penalty in case they renounce they continued stay. This lock-in, we use also for the other element like, mobile phone, and so on. And the return, it has been not only acceptable but very good and not only in Italy. We intend to give to the customer, not only our customers, in general, to the market, the reason to stay or to start to stay with us. And this reason is not only the line or the value of the monthly payment, but it could be also other reason. One of them, content, equipments, smart home, gaming all the element at the edge of market that allow us to reach, improve our number of customers. Matteo Bertelè - Fidentiis: Okay. Thank you. Alex Pierre Bolis - Telecom Italia SpA: Let's now move on to the next question, please.

Next question comes from Mr. Jerry Dellis from Jefferies. Mr. Dellis, please. Jerry Dellis - Jefferies International Ltd.: Yes. Good afternoon. Thank you for taking my question. With your fiber targets you're targeting FTTP across our 30 main cities by the end of 2017 and 50 main cities by the end of 2019. Could you tell us, please, how many households those equate to? And then when you talk about the upgrade in VDSL to deliver 200 to 300 megabits per second, could you also indicate, please, how many households that upgrade would cover by the end of 2019? Thank you. Flavio Cattaneo - Telecom Italia SpA: About 4 million households are foreseen in the plan for FTTH in Italy. Essentially, in the part of the city where the demand is strongly for the dimension in terms of not only in download, but also in upload, the center of the city where there is office, business center, this is the main area where we intend core with the FTTH. For the residential use, we think that we have the return of our customer. The speed is sufficient, not only 300 megabits per second, but we are already in very up stage, but also 100 megabits per second or 200 megabits per second. And for the residential consumer, I don't believe the FTTH is the right solution if you compare the investment, the noise for the clients and so on. Even because when a customer have already a fiber, don't need the upgrade because this speed cover all the needs. Jerry Dellis - Jefferies International Ltd.: Thank you. So just to confirm, the 50 cities equates to 4 million households? Flavio Cattaneo - Telecom Italia SpA: 50. Jerry Dellis - Jefferies International Ltd.: Thank you. Flavio Cattaneo - Telecom Italia SpA: You're welcome. Alex Pierre Bolis - Telecom Italia SpA: Next question, please.

Next question comes from Mr. Stefano Lustig from Equita. Mr. Lustig, please. Stefano Lustig - Equita SIM SpA: Yeah. Good afternoon. And first of all congratulations for the result. And I look and I think the slide number 30, that in terms of multimedia you are anticipating the negotiations ongoing on Sport. I wonder if you want to share with us not exactly the kind of negotiation but at least the philosophy you have in looking forward to this kind of content. And more in general for multimedia, if you can tell us the reasons for the demerger of TIMvision? Thank you. Flavio Cattaneo - Telecom Italia SpA: For what concern the content, our intension is realize TIMvision or create a new quality of TIMvision with premium content in exclusivity, blockbusters and Italian product, very attractive stars and name because this support not only the penetration of TIMvision obviously, but TIMvision – it is a driver. It is a key for attract new customers. Obviously, in this way, there is also the sport and we are different negotiation but I can't disclose at this stage, but our strategy is clear. Content is an important part even though we don't pay an incredible price. I know, I think, well, this sector and there's also (01:04:34) show our ability to a dealmaker in this sector that we have paid, I think, a very unexpensive price for 20 important premium Italian movies. This is more important. The rationale for the merger – it is because in some case for reach not only the result on quality but also the result in terms of investment is better to enter also in production or co-production as a team – was according to the Italian law even because there is some financing, wasn't impossible. For this reason, we have created a company, even because we have an agile and very lean subject for redesign all these offer of TIMvision. Not only the question how many title do you have, but which title you have in your basket – in your bouquet. In this case, we need to improve, but we have already started. Alex Pierre Bolis - Telecom Italia SpA: Thank you, Stefano. Stefano Lustig - Equita SIM SpA: Thank you. Alex Pierre Bolis - Telecom Italia SpA: Move on to the next one.

Next question comes from Mr. Singh Mandeep from Redburn. Mr. Mandeep, please. Mandeep Singh - Redburn (Europe) Ltd.: Thank you for taking the question. It's really relating to your cash flow and leverage outlook. And the sort of two moving parts I'd like to understand a bit more. So it is a sort of two-part question. One is on the CapEx. You say €11 billion. You've given us the 2018 and 2019 number. Obviously, that implies a very big number in 2017 even if you adjust for the spectrum. So, is the €11 billion like an approximate number or you're leaving yourself a little bit of headroom because it looks like it could be about €4.4 billion in 2017? That's the first part of the question. The second part of the question is really on the interest charge. I mean, you've got a lot of gross cash. Your interest charge is still quite high. Can you give us any sort of outlook for how you expect your interest cost to develop over the next few years? Thank you. Flavio Cattaneo - Telecom Italia SpA: Piergiorgio will take your question, Mandeep. Mandeep Singh - Redburn (Europe) Ltd.: Thank you. Piergiorgio Peluso - Telecom Italia SpA: Yeah hi. So, first question on the CapEx, on the €11 billion of CapEx in the domestic. So these are, of course, only limited to domestic. If we include also the Brazil, our cumulated amount is in the region of €13.5 billion. This is what we are targeting at the group level. In terms of the €11 billion, we include everything in this amount. We include also the investment that Mr. Cattaneo was referring to mainly in the previous answer of the direct investment in the C&D areas and so-called in infratel area and it includes also the spectrum. On the interest charge, this year we've not given, let's say, the reconciliation between operational free cash flow and the net financial positions. Let me maybe comment also at this point, maybe could be useful. We are showing a €2.9 billion operating free cash flow. From this, of course, you have to deduct €2 billion of M&A and mandatory convertible which is as you know mandatory convertible in the sale of Argentina. And we have a bulk of valued items of €2.3 billion of financial charges, taxes, foreign exchange and other amount arriving to a net cash flow before dividends of €2.6 billon. Then dividend for €0.2 billion of the (01:08:59), on the savings plus €200 million of year 2017 impact on domestic real estate projects in Brazil and you arrive to a net cash flow of €2.2 billion. On financial charges, you arrive in the usual amount in the region of €1.5 billion of the cash interest charges which is the sum of the interest charges net of the profit on the liquidity. And this year you will have also a positive effect of the mandatory convertible, which is slightly lower than €500 million, which means that this year we will have an accounting financial charges below €1 billion. But this is as I said there is a cash component of €1.5 billion and a non-cash component of slightly lower than €0.5 billion. Mandeep Singh - Redburn (Europe) Ltd.: Can I just please follow-up on the CapEx? Piergiorgio Peluso - Telecom Italia SpA: Yeah. Mandeep Singh - Redburn (Europe) Ltd.: Okay. So just so I'm very clear. Your three-year cumulative is at €11 billion. If I deduct the specific guidance you've given for 2018 and 2019 that leaves €5 billion in 2017. If you assume €600 million for spectrum renewal, then – just to make it clear, are you looking to spend about €4.4 billion domestically in 2017? Flavio Cattaneo - Telecom Italia SpA: So, as you know, we are not giving the number of the total amount, because we don't want to disclose the amount of spectrum. But I will say that the overall area of what you are targeting is correct. Mandeep Singh - Redburn (Europe) Ltd.: Thank you. Alex Pierre Bolis - Telecom Italia SpA: Next question?

The next question comes from Mr. Saeed Baradar (01:10:54) from Louis Capital Market. Mr. Baradar (01:10:58), please.

Thank you very much. Good afternoon, gentlemen, and first of all congratulation on turning quarterly execution into a clear longer-term positive trend here. My question goes back to content. We all agree that content is critical to incremental revenue growth and obviously customer retention. Within that context, would you say that the spinning out of TIMvision actually allows TIMvision to act in both local and cross-border content consolidation? Is this the vision and are you looking at potentially your largest shareholder providing you with further content? And within the local market, isn't Mediaset Premium potentially a good fit in terms of getting some sport products behind your entertainment content? And any more color – I know you just mentioned a few questions ago on some part of it, but any more color on the content, because I do think this is a big area now and it will be very much appreciated. Flavio Cattaneo - Telecom Italia SpA: Thank you. Essentially the content even though – I don't talk about only the Italian content, also the international content. You take into the consideration that we – in case, we are co-producer, we are for the entire life, the owner or a part of the owner of the rights. In case, we have the pre-buy of the rights, we have for certain amount of the year, but it is important to point out that we buy only for the video – the IPTV, also the fiber using. And in this case there is a possibility to divide or sharing with other broadcasting company in terms of buying or realization, the content. Obviously, the fact regarding TI would be limited in comparison with the other because the value for our sector is very, very different. You take into consideration also that the penetration in Italy of Pay TV is one-off, the less in Europe. And this is another important element because we intend offering bundled content. And the bundle is very attractive for the customers because we give to them a possibility to have many things at the same price. If they buy in with the different company mobile, fixed, fiber and IPTV or sports and so on, they pay more than the bundle offer. For this reason, we cover this sector. Regarding the cross-border, we can participate in co-production also internationally but only for what concerning our part of utilizing for our country, where we are substantially.

Thank you. Alex Pierre Bolis - Telecom Italia SpA: Thank you for your question. Flavio Cattaneo - Telecom Italia SpA: Welcome. Alex Pierre Bolis - Telecom Italia SpA: Next one please.

Next question comes from Mr. James Ratzer from New Street Research. Mr. Ratzer, please. James Edmund Ratzer - New Street Research LLP: Yes. Good afternoon. Thank you very much. Had a question specifically around your line loss target, which I'm encouraging you essentially get back to parity during 2018. Would like to get some kind of thoughts behind the drive as you are seeing on that at moment. I mean the line losses you're seeing today, is this because you are seeing customers going to mobile only or is this because you are losing lines as they go to other broadband competitors? I mean so then what gives you confidence about getting back to stability by 2018? Thank you. Flavio Cattaneo - Telecom Italia SpA: There is many element to support the reduction on line losses. One of them is the reorganization of the process, because, as you know, we have internally, let me say, a gap between the acquisition and deactivation. There are many factors. There are many factors. We have already started the reorganization. We think when we have reached this more efficient organization, we reduce this gap. This is the bottom, because with the same number we increase the customers. Secondly, the convergence, convergence support fixed line, because fiber, the content let us the opportunity to reach a new customer, because in comparison with the past, where the fixed line was using only for the voice and the ADSL was not in line with the evolution of the mobile speed. The fiber instead allowed the customer using the Wi-Fi or the content or the other things and support the increase of acquisitions. This is another important element. Another important element that support, it is the bundle offer. In this case, the difference is between what they pay, for example, with pay-TV, with satellite, the other element, and the mobile without the only-voice fixed line today is completely covered with bundle offer that at the less price offer the same thing. There is an attraction. The question is, reach as soon as possible the quality of the other competitors or the acceptable quality. And in this case, there is part of the market or today with other operator or to new customer, new market, an enlargement of the market of the fixed line, because it's completely different from the previous one where it was only voice-only. James Edmund Ratzer - New Street Research LLP: So, I mean, last year you lost about 450,000 lines. I mean, do you know how many of those were lost to your competitors and how many of those went mobile-only? Flavio Cattaneo - Telecom Italia SpA: Sorry, I didn't understand the question. Please, can you repeat? Because there was noise. James Edmund Ratzer - New Street Research LLP: Okay. Sorry. So last year you lost about 450,000 lines. I was trying to get an idea of how many of those you felt were homes that went mobile-only, and how many of those were voice lines that actually took up a broadband package with your competitor instead. Flavio Cattaneo - Telecom Italia SpA: 20% from the competitors. The remaining was market. James Edmund Ratzer - New Street Research LLP: Thank you. Alex Pierre Bolis - Telecom Italia SpA: Thank you, James. We can move on to the next one.

Next question comes from Mr. Will Milner from Arete Research. Mr. Milner, please. Will Milner - Arete Research Services LLP: Thank you for taking the question. I had a couple of questions on some of the smaller domestic revenue line items that have improved a lot over the last few quarters. Firstly in the fixed business, it looks like other revenue in the sort of fixed traditional business, data revenue line was – you booked €117 million of revenue this quarter, and the year ago that was only €40 million. So I'm just interested in terms of what has driven that big increase and whether that's something you can hold on to going forward. And then in the mobile business, clearly the mobile wholesale revenues are over €100 million now, is up I think 36% year-over-year. And so, again, I just want – I suspect some of this is the fast with MVNO, but I just wanted to understand is that sustainable at this level or is it going to increase further going forward as some of that business is transferred over. Thanks. Alex Pierre Bolis - Telecom Italia SpA: I think this one to Piergiorgio, and this will be final question. Piergiorgio Peluso - Telecom Italia SpA: Sure. I was looking at the Excel file just to understand if I understood [Technical Difficulty] (1:20:16). Sorry, I was really taking the Excel file in order to check if I understood correctly your question. So you are looking in revenues innovative service broadband for €471 million, this is the amount you were looking at in the total revenues. I don't understand your... Will Milner - Arete Research Services LLP: Sorry, I... Piergiorgio Peluso - Telecom Italia SpA: The data revenues are related to – particularly there is an important component related to the – revenues are related to modem, a router that we are selling in the business division, and this is highly correlated also to the increase of revenues in the ICT. So I'm just wondering if you're referring to that number. Will Milner - Arete Research Services LLP: I was referring in the Excel spreadsheet to the section where you list out fixed revenues, traditional services, and you say which business, data and others, and then there is below that another others line, where the revenue is €117 million. Piergiorgio Peluso - Telecom Italia SpA: Yeah, exactly. Sorry, sorry, I – from €83 million to €124 million. Will Milner - Arete Research Services LLP: Yes. It's part of that €124 million... Piergiorgio Peluso - Telecom Italia SpA: Yeah, exactly. This is about exactly referring to this condition. These are all revenues related to modem, routers sold in the business division. There are no wholesale revenues from Fastweb and anything else. This is just pure asset revenues related to what we do in the business division. Will Milner - Arete Research Services LLP: Okay. So zero margin modems, routers, okay. Piergiorgio Peluso - Telecom Italia SpA: No, I'm not saying zero margin because of - Flavio Cattaneo - Telecom Italia SpA: Why zero? There is a margin. Piergiorgio Peluso - Telecom Italia SpA: So you have to consider and to lean closer to the ICT revenues that you have in innovative service, because these are, of course, binding in contract. Of course, there is a limited margin on the asset, but you have to look at all the other contract. And you see that consistently with this increase, we have also increase in ICT service of €149 million to €172 million. So it is not all right to say zero margin. These, of course, very much related to the migration to new technologies. Will Milner - Arete Research Services LLP: Understood. Thank you. Piergiorgio Peluso - Telecom Italia SpA: Sorry, which was the other one? Maybe if you want, we can do offline. Which was the other one? Will Milner - Arete Research Services LLP: It was on the mobile wholesale revenues. Piergiorgio Peluso - Telecom Italia SpA: Yeah, the mobile wholesale revenues, also in this case these are wholesale services, so we have here the visitors, and the consulting and hiring services for INWIT. So this explains the increase that we are having. So, also last quarter we were having from €72 million to €96 million, and from €96 million to €106 million. These are all related, as I said, very much with visitors and INWIT consulting and housing. Alex Pierre Bolis - Telecom Italia SpA: All right. If this is fine, I will move on to the last question please.

The last question comes from Ms. Carola Bardelli from Deutsche Bank. Ms. Bardelli, please? Carola Bardelli - Deutsche Bank SpA: Yes, good afternoon. Just a clarification on slide number 12, because if I look at this chart on the right on CapEx, basically what we imply is that the underlying CapEx to sales is below 25% in 2017. So, I would derive is something that would be below the €3.8 billion. So if I sum up these, I get something that is below €10 billion, something maybe in the region of €9.7 billion, €9.8 billion. So the question is, you spoke about flexibility for spectrum, but should we assume that the spectrum expenditure could be above €1 billion or is it that you are keeping probably more flexibility in the plan compared to what you currently are budgeting? And my question also relates to the other slide on page 24 where basically you are suggesting that the 2017-2018 free cash flow would be €700 million per year, including spectrum. So if we add up the €600 million – something that we thought would be around €600 million, we are getting to approximately €2 billion. So if the spectrum is to be even more, that means that the underlying free cash flow would be even more. So any further clarification on that point would be really helpful. Thank you. Alex Pierre Bolis - Telecom Italia SpA: Yes. Piergiorgio Peluso - Telecom Italia SpA: Carola, on the €700 million, this is an yearly number and includes the spectrum and, of course, this is an average of only three years. In terms of the CapEx for spectrum, as I said in previous answer, we don't disclose the number, but we have in our number – in our plan a figure before – well below the €1 billion that you were referring to. I don't know exactly the consensus for this amount. I mean, if I remember quite by heart, the number that we in the plan is not so different from what we have in the consensus. Carola Bardelli - Deutsche Bank SpA: Okay. Piergiorgio Peluso - Telecom Italia SpA: Then if you want, we can discuss offline, but as I said this is the straight answer. Carola Bardelli - Deutsche Bank SpA: Okay, very clear. Thank you. Alex Pierre Bolis - Telecom Italia SpA: Thank you Carola and thank you everybody for participating and have a good rest of the day. Flavio Cattaneo - Telecom Italia SpA: Thank you. Goodbye.

Ladies and gentlemen, the conference is over. Thank you for calling Telecom Italia.