Alex Bolis – Head, IR Franco Bernabe – Group Chairman and CEO Marco Patuano – COO Stefano de Angelis – Group Controller

Tim Boddy – Goldman Sachs Paul Marsch – Berenberg Carola Bardelli – Deutsche Bank Nick Lyle – UBS JP Davids – Barclays Tolster Akman – JP Morgan Giovanni Montalti – Credit Agricole Cheuvreux Ottavio Adorisio – Société Générale Robin Bienenstock – Sanford Bernstein Justin Funnell – Credit Suisse

Good morning, ladies and gentlemen. This is Alex Bolis, Head of TI Investor Relations. On today’s call, we will review Telecom Italia’s Group First Quarter 2012 Results. We have with us this morning Mr. Franco Bernabe, the Group Chairman and CEO; and Mr. Marco Patuano, Chief Operating Officer. As usual, this event is being recorded and all participants will be placed in a listen-only mode during the company’s presentation. After TI’s remarks are completed, we will be pleased to take your questions. You may follow us today via simultaneous webcast that may be accessed through the company’s website, www.telecomitalia.com, from which you can download or view our slide presentation during the conference call. We would like to remind you that this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those in the forward-looking statements as a result of various factors. Analysts are cautioned therefore, not to place undue reliance on those forward-looking statements, which speak only as of the date of this presentation, and are encouraged to consult the company’s periodic filings, which are on file with the United States Securities and Exchange Commission. I’ll turn now the conference over to Mr. Franco Bernabe.

Thank you. Good morning, ladies and gentlemen. Thanks for attending today’s Telecom Italia conference call, in which we will summarize the Telecom Italia group results for the first quarter of 2012. First of all, I think that Saturday’s news of local channels leaving the Telecom Italia group deserves a comment. No doubt that Luca and his team did a great job concerning TIM Brasil. On the other hand, the recent conclusion of complex and lengthy investigations regarding past management of team in Italy has generated growing noise, which did not benefit either Luca’s image as a manager of our company, and our company, so we decided to part with Luca. After his departure, TIM Brasil saw a sound and profitable operations, will continue to be led by its strong management team under the supervision of Andrea Mangoni. Back to quarterly results, the core business performed in line with the trends that were given our February call. Group revenues grew organically year-on-year by 5.3%, continuing the sequence of partially movements we delivered during 2011. On the same basis, EBITDA was up 0.5% in organic terms, confirming a margin above 40%. Group EBITDA, minus CapEx was down by 2.1% on an organic basis, minus 0.9% reported, as planned network investments in Brazil were accelerated to continue a fiber backhauling implementation in all the right place to increase our positive exposure to the mobile Internet growth wave in Brazil. In this respect, I would like to point out that there would be no changes to the planned investments for the 2012, 2014 period, and that this acceleration will be reassured in the forthcoming quarters. On slide number 4, we update our main results by core markets. Domestic operations confirmed the role of group cash generator, while Latin America activities continue driving top line growth. In the first quarter, despite the challenging macroeconomic environment in Italy, total domestic revenues were at minus 2.4% year-on-year, five percentage points better than the first quarter of 2011, and organic EBITDA decreased by 3.4% ahead of our domestic target for the full year. In Brazil, a continued top line growth close to 20% was combined with a 13.5% EBTIDA positive performance year-on-year. Voice services grew at double-digit rates while data revenues were up by more than 50%. In Argentina, operating results grew double-digit while the complex economic environment was managed effectively. Continued investment in the business were accompanied by a conservative shareholder remuneration recently approved by Telecom Argentina’s AGM at ARS807 million for 2012. Let’s now move on to an important decision that was taken yesterday by the Board of Directors concerning TI Media which is to start its disposal process. In order to best prepare the ground, a corporate reorganization process has been started which will lead to the separation of its natural business from the TV operations of La Ciete and MTV. As you know there is an important value which is attributed to TI Media’s broadcasting multiplexes. And on the other side there is an increasingly successful quality TV business which has been enjoying a significant growth in share of audience and in advertising revenues. At this point, we believe that dividing these two different businesses will allow value materialization for the disposal leveraging on different strategic options. While an important element of our disposal bond has just been added so far debt reduction in the first quarter has not benefited from a material contribution coming from M&A unlike the first quarter of 2011 when we cashed in €377 million from the disposal of Cuba. This combines with a year-on-year decrease in quarterly operating free cash flow performance, which is however only a temporary effect and will be resolved in the following quarters as we will see on the following slides. The leverage will become more visible during the second half of the year as in 2011, following forthcoming dividend payments. Our liquidity and debt maturities profile remain a protection for the group. Our liquidity margin today covers debt maturities well into 2014. Our largely unfunded €8 billion flagship bank facilities maturing in August 2014 will be to a significant extent rolled over way before its maturity. For the past quarter, our average cost of debt has actually decreased to 5.5% while more than 70% of our gross debt has a fixed rate profile to safeguard from possible future rate increases. This financial armor has allowed us to weather the storm of the past few months and will allow for maximum flexibility in accessing capital markets. As you know, deleveraging has been one of our key priorities since 2008. I wish to remark that our debt target for 2012 of around €27.5 billion will be reached. As I look closer to the free cash flow generation in the first quarter, which as you can see stood at €626 million versus €1.76 billion on the first quarter of 2011. The negative difference of €450 million incorporates about €300 million worth of discontinuities in the seasonal trend in Brazil, composed by an increasing indirect taxes for about €100 million, a reduction in payables of around €2 million aiming also at the timely delivery of network upgrades. The letter explained to the cash out of higher network CapEx booked in the last quarter 2011 aimed at accelerating the holding implementation on newly acquired AES fiber network and the fact it’s front end loaded in the year and would be reversed in the next three quarters. On a full-year basis, expected net increase from Latin America contribution to group’s operating free cash flow is positive by about €200 million year-on-year. This will more than offset a slightly negative comparison coming from domestic. And you can see on the right side of slide 7 which shows our operating free cash flow for the full year in line with 2011. On the next slide, I would only wish to draw your attention on this quarter’s net income which grew by 10.4% year-on-year to reach more than €600 million. Let’s now move to a brief overview of the results from our core markets. At home, we are facing a challenging macro environment. On a seasonally adjusted basis, the demand for increase in the first quarter was down 3.3%, cash consumption was down 2.3% and traffic volume on Italian highways was down 8.7%. In this framework, our domestic operations achieved a farther remarkable uptrend. The overall revenues performance of minus 2.4% year-on-year was positively impacted by the improved results of the mobile business with service revenues are down by 3.7% year-on-year. As for the fixed business, the trend is improving with a minus 1.7% year-on-year posted on overall service revenues and a slight increase is broadband component confirming our strategy to create value from its fixed assets. Marco Patuano will give you, as usual, a full picture of our domestic operations, so I shall not elaborate further on this area. I think underlying that I personally will continue to engage proactively with the European and national regulatory bodies for improving our position with respect to future investment in fixed ultrabroadband. In this respect, our access network will continue to remain our key asset and under our firm ownership. Also, let me underline, with respect to the LTE forthcoming rollout, that our ultrabroadband fixed and mobile plan is a balanced one. It will enhance both sides of our integrated operations, as many Italian cities will be covered in a coordinated way in order to offer the most robust technologies. Let’s now move on to the sound performance of TIM Brasil in terms of both KPIs and financials. In the first three months of the year, TIM Brazil continued to outperform the market, confirming its second position on the Brazilian market. Revenues grew in organic terms by 19.1% year on year, and this result was achieved thanks to a double-digit growth in outgoing voice revenues, a boost in data revenues that more than doubled year on year and a meaningful increase in handsets revenues. EBITDA reached €505 million, which is 13.5% increase year on year. Moving on to Argentina, despite the complex economic environment, our operations posted a strong performance in the first quarter. Revenues grew by 24% year on year, reaching €901 million, mainly on underpinned by the performance of the mobile business, which was up by more than 28% year on year. Topline growth translated into an EBITDA increase of around 17% year on year, with a minor margin dilution of two percentage points mainly due to increase of commercial efforts, coming from the introduction of mobile termination rates and the relating to the branding expenses sustained by personal. Free cash flow generation improved by more than 5% year on year. While macroeconomic pressures have continued to affect many European countries including Italy, in the first quarter, we are very satisfactory with domestic results. You have seen, we are ensuring that planned investment in Latin America and in Italy move on at an appropriate speed and in parallel, we are pursuing our leverage target for the year with concrete steps taking on this also. And of course, we have constant improvement on our domestic front. The combination of which will ensure the delivery of the necessary cash flow. We’re therefore confident that we are on the right track to reach all our targets for the year. And I’ll leave the floor to Marco Patuano for the Domestic business discussion and then we will move on to the Q&A. Thank you very much for your attention.

Thank you, Franco. Good morning all of you. And you have just heard the first quarter 2012 for the TI Domestic business. This will be a continuation in 2011 to sequential improvement trend both on fixed and mobile. In this quarter, we recorded the results of our discipline and accurate domestic repositioning work which whips to the adverse economic conditions that through our diversified approach to each market segment. This has allowed us to maximize value generation in those areas where we identified higher opportunities, bringing by the mobile browsing rates and by our value base approach on fixed customer base. This quarter also has been positively affected by the leap year effect which has benefited especially on our mobile business as fixed, has a much higher component of flat revenues. The year-on-year comparison in future quarter is expected to be less favorable mainly due to two regulatory changes: the sharp drop in MTR kicking in from July 1 and the introduction of roaming free also taking effect in second half. Facing this, it’s important to have secured in this quarter a good contribution to the delivery of our full-year targets. Let’s start from our domestic main results in slide number 3. First of all, in the upper left-hand box you can see our top line first quarter performance broken down by Mobile and Fixed, respectively standing at minus 1.7% and at minus 2.9% year-on-year, giving a total performance of minus 2.4%. I think it’s fair to say that we have come a long way since the first quarter of 2011. Focusing on service revenues in the upper right-hand box, we have represented the physical progressive improvement achieved on the over-all domestic service revenues in the last five quarters. EBITDA margin remains stable, very close to 50% while EBITDA show a year-on-year decrease of minus 3.4%, better than our full year target. Our important domestic minus – EBITDA minus CapEx measure, has been preserved and stands at more than €1.6 billion for the first quarter. Let’s move on to the next slide and to detail the Fixed business performance. I would like to focus now on service revenues. The first quarter shows a minus 1.7% composed by retail performance which has been sustained by the widespread pricing simplification move that is delivering results in terms of usage, customer satisfaction and profitability. A resilient domestic wholesale business and a growing contribution for International Wholesale business where after an important repositioning new carrier service contract have been signed. Price simplification has regarded our Consumer segment since July 2011. This move in addition to a small increase in the monthly rental fees draw the uplift in top line and profitability recorded in the second half last year. On the back of this positive elasticity as of January 1, 2012 we also streamlined our business segment offer, eliminating the distinction between peak and off-peak tariff, improving transparency and thus making the expense much clearer for the clients. Having experienced the positive drive of this simplification, as of this coming July we shall further streamline our Consumer segment offer introducing a single price per minute for local and domestic long distance fixed to fixed calls and a single price for fixed to mobile calls to all operators. We trust that this action will help us to maintain in the second half a stable trend in fixed revenues. Coming now to fixed accesses, the first quarter a number of market contraction of 150,000 units. Our line losses followed a stable trend while all else picked up on the 25% of them. The market is going through an expense trim in exercise. Some second homes are being disconnected in the Consumer segment and some business multi-lines contracts are being optimized. This is not a migration exercise it is a low-usage, low-value line rationalization process. Proving this point, fixed voice APRU is building up nicely as we can see on the lower left part of the slide. Our market share remains above 66%, offering us a very good comparison with the other European incumbents. We come now to our broadband market where we remain focused on our vendor strategy which has brought up our top line, and broadband ARPU improvement. All those appear to be prisoners of their aggressive promos, while you know well that I’ll were position is not to follow them. We intended to 40% revenues and profitability without engaging in price wars. I also wish to point out to you the positive performance of the penetration of broadband on our customer base, which stepped forward by 1.5 percentage points in the last year. Penetration of flat offers on our total broadband customer base approached 90%. This is further evidence on how we invest for customers that generate value. And at this brief review of our fixed business, let’s move onto mobile. You will agree with me that this quarter’s results on the Maxi Mobile operation are encouraging, given the current environment. Total revenue posted minus 1.7% year on year for four months, which translates into around minus 2.5% if we adjust for the leap year effect. And that contribution continued marching on, delivering not only an interesting revenue source, but acting as the key driver for our browsing growth where revenues have grown more than 30%. And the trend in service revenue is looking better. The year-on-year performance stands now at minus 3.7%, opening up the performance in business received and business generated, I wish to direct your attention to the improvement in the latter. These are generated came up from minus 10% last year to minus 1% in first quarter 2012, a remarkable improvement. I’m not commenting the incumbent side but this was mainly impacted by the reduction in the mobile termination rate and it’s almost neutral impact on TI EBITDA though the increased volumes of our healthy customer base softened the decline. Let us take a closer look to what is behind these results in the next slides. Talking about customer base. I wish to highlight that our mobile customer base has grown by another 100,000 in the first quarter of 2012, five times more than the growth it posted in the first quarter of 2011. We have moved further towards a zero net balance on MNP performance. As I told you in our February call, in this more favorable situation, we have reviewed our MNP promos aiming to a more rational competition on this front. Most specifically, we replayed our double-up bonus on recharges with a 50% discount only on the options. It does not seem a big deal, but we have actually swapped a discount applied on all traffic components with one limited only to the fee of the chosen option. As part of this MNP promos review, we also introduce restriction accumulating different promos and discounts. Nevertheless, in terms of churn rate, we are still the best performers on the market. Moving to slide 11. We can get now the nuts and bolts of how mobile performance was achieved particularly in our consumer segment. We have on various occasions highlighted the priority we give to the stabilization of revenues by an increased use of options and bundles. Their penetration on consumer was up 30% year-on-year. Let me now step back for a moment and take a broader view on our mobile portfolio repositioning pattern. As you know, the first wave of this process back in 2012 was conducted in a rationale that to prevent the material loss of clients. We have to act fast in order to realign our prices and we suffered a visible cannibalization effect coming from the spontaneous repositioning of our customer base on the new cheaper community offers. At that time, we were not well equipped to driving this migration with a proactive CRM approach and we paid a high toll on revenues. We have learned the lesson. And today we can say that the game is working. The blended result of spontaneous migration and CRM-driven campaigns show value generation as proven by the results of our ex-ante/ex-post analysis conducted on clients who activated options. We have also noted a lower churn as you can see on the lower left side of the slide. All together, we note how this offer approach is sustaining our business-generated ARPU and consequently benefiting revenues. As mentioned, on the business received component, we are being negatively impacted by the MTR cuts although with a progressively lower exposure. We can now spend some time on past revenue performance, which is really driving our Mobile recovery. In the first quarter, this stream grew by 7.6% while at the turn of the year, in Q4 2011 it posted a plus 5.1% performance. Specifically on consumer VAS, as you can see on slide 12, growth stood at plus 7.3%, and I think that the detail on messaging and browsing components provides interesting insight, and it shows that in our portfolio, data is not cannibalizing messaging. First of all, you can see how in absolute terms, the revenue growth posted in browsing is definitely higher than the loss experienced in messaging. As already experienced with voice, rather than protecting the level of message unit price, we are working for a large scale adoption of options, aimed at stabilizing ARPU. In the last year, we increased the client base that subscribed to specific messaging offers by 40%, while our messaging volumes have grown by 25%. Moreover, today, an increasing part of our offers combines SMS with data, to increase customer base loyalty and prevent the economic effect of any potential cannibalization. Focusing on browsing, the consumer segment posted growth solidly in excess of 20% in terms of revenues. Mobile broadband users increased considerably, both in small and large screen. These two have varying dynamics, a strong growth of more than 60% year on year for the small screen segment, outperforms the large screen ones. This was largely driven by the increased penetration of smartphones which currently represent about 70% of handsets sold. Having looked at the consumer segment, let’s now briefly comment on the business one, where we need to deal with the setbacks of the current economic scenario. The partnership signed in Italy with Microsoft may be considered as the first of its kind between a telco and a software vendor. It sets up a remarkable go to market approach based upon the excellence of the two companies. A reliable safe channel provided by Microsoft that is very well-positioned to support Italian small, medium business along the entire part that leads to a digital company. Telecom Italia on the other side is able to provide two different channels and two (inaudible) and its customers the cloud computing infrastructure with an outstanding service level and quality. Both companies will leverage on their respective customer base with new Nuvola Italiana services based on Microsoft service software and platforms. Lastly, let’s take a look at the ultrabroadband pipeline. As you know, our purchase is based on synergy between fixed and mobile. Let me update you on both. On the fixed side, in March, we’ve submitted our reference offer for the wholesale NGAN access service to AGCOM. Final approval is expected by September, October following public consultation which is also when we should launch the retail commercial offer. Ono our way there, the target is to reach an FTTC coverage of about 30 main cities within the year while the FTTH we shall start with Milan and then play it according to market demand. In terms of mobile, ultra broadband development, we kicked off the trial phase for LTE, no frequencies are yet to be made fully available. From a technical point of view, results in the four cities are better than expectation. However, I wish to remind you that our mobile ultrabroadband strategy combined LTE with HSDPA plus 42 megabits where we already are in an advanced implementation phase. The day before yesterday in our Valencia Commercial Convention, we announced the new price schemes for the 42 mega which paved the way for our ultrabroadband offering approach. This, of course, a premium one combining speed with radio priority features. Please move now to slide 16 where I would like to comment in detail the domestic EBITDA performance in this quarter, which posted minus €78 million or minus 3.4% as a result of a combination of different effects such; as the revenue dynamics I just reviewed, the positive impact of MTR reduction partially offset by the growth of international award sale interconnection costs related to the increase of traffic volumes and revenues. Third, the continued efficiency and cost control processes on marketing and commercial activity which result in a positive contribution to EBITDA despite the strong efforts in acquisition activities and smartphone penetration. And last, on fixed cost non-manageable items such as price adjustment and specific indirect taxations increases diluted the positive achievements in personnel efficiency and head count reduction programs. I would like to leave you now with a final recap of what has been a solid quarter for us. While on slide 17, you will find a few points on the market context in our main operating results. The main message to takeaway are; first, we posted a solid performance on the consumer segment both fixed and mobile. Second, a weaker trend on small, medium enterprise corporate and public administration still persists given the current adverse space. We’re addressing this issue very carefully. Altogether, we secured a sound quarter in a complex environment. Thank you all. Thank you very much for your attention and I turn to Alex Bolis.

Thank you. Everybody, we are open now to Q&A.

Ladies and gentlemen, the Q&A session is now open. (Operator Instructions) First question comes from Mr. Tim Boddy from Goldman Sachs. Mr. Boddy, please Tim Boddy – Goldman Sachs: Yes, thanks for taking my question. And obviously encouraging domestic revenue trend. I have a few short-term and a long-term question. On the short-term side, when you talk about the tariff certification in July, I presume that will ultimately net price increase because you’re saying that you’re going to see a slowdown as you lap the price increases of last July? And secondly, just on the Mobile business, it seems like the underlying trend there down 4.5, wouldn’t the lead date plus some of the weather factors and some of the VAT comparison in the quarter mean the kind of real underlying trend is a bit lower than that? And then finally, on a longer-term issue, obviously there’s been some discussion in the press around structural separation of a Fixed business coming back on the agenda, can you talk us through why you think that will be a sensible option to consider for the company? Thank you.

First part in the Fixed business of course any price simplification tends to stimulate more consumptions and also in this case we are making the whole tariff scheme much clearer and what we experienced last year is that the average price is not changing very much. What changed quite significantly is the attitude of who’s using the Fixed phone once the customer has a clear picture of what it’s going to be. Today, in Italy specially, we have so many cellphones in which local calls and long distance calls have no difference in pricing that keeping the difference in the Fixed arena, makes people a little bit uncomfortable when they have to use the long distance. So we are very much confident that these will drive usage up and so I feel that the effect will be positive, not necessarily driven by a price increase, an average increase. I think that the ARPU will grow given the usage growth. This is the first. The second, I had the problem in catching your question, so I really apologize if you can repeat. Tim Boddy – Goldman Sachs: Yeah, sure. I think the question was just the gap, when you think about the number of one-off in the quarter.

Between 1.2% and 1.5% year-on-year – on a year-on-year basis, more or less, of course, on the Mobile. VAT, of course VAT was introduced in first quarter in February. So February and March have benefited. January was still – honestly, it dented in the very last days of January. So two months out of three benefited of the VAT. On the last... Tim Boddy – Goldman Sachs: I suppose another reign?

Excuse me, from the last question . Did you make concerning structure separation of the network? I would like to make a comment because we had no intention of losing control of our network. I think that the network remains and will remain our key asset. But as we did with Open Access, when we decided to engage in an organizational separation that has provided us a lot of benefits in terms of the regulatory environment in Italy, we are ready to explore any option that evolves Open Access if this creates real value for the company and for our shareholders. So there is no pressure from the outside. There is no discussion outside about possible separation. I think we are in a regulatory environment which is fair to us and it will remain fair to us long term. And the finish that we have created in the regulatory environment is precisely explained by the fact that we have always been open in considering things and the organizational solutions that make our structure more transparent but at the same time that creates benefits for our shareholders. Thank you. Tim Boddy – Goldman Sachs: Thanks. So just to follow up based on another question. Maybe it’s a simpler way of asking is, do you think Q2, before the MTR effect obviously in July, do you think Q2 will be a better or worse than that 4.5% trend in Domestic Mobile?

Of course. The MTR side, we will have a decrease of about 50% in the MTR. So it’s clear that it will have an impact on total service revenues for the mobile. But we gave you the picture of how the weight of the incoming traffic is reducing on our total ARPU exactly in order to let you put in your model the possibility of evaluating the impact. Tim Boddy – Goldman Sachs: Okay. Thanks very much.

The next question comes from the Paul Marsch from Berenberg. Mr. Marsch please. Paul Marsch – Berenberg: Yeah. (Inaudible) the MTR impact and it actually, it doesn’t happen until the 1st of July. So do you think we can see another sequential improvement in service revenues in domestic mobile into Q2? That’s my first question. The second question us you’re still leading subscribers on broadband. I just wondered what your thoughts are on the outlook here and on the ability to restart subscriber growth in broadband. And then finally, on the bank facility, I understand that your existing facility is extremely good value in terms of the cost of that facility. Should we be expecting the new facility which you referred to in your comments to significantly change? Can you give us any magnitude on the potential change in cost of that facility?

About the MTR effect, we are – for the mobile consumer, we are confident we can stay on the level that we have showed in Q1. So we are confident that we can defend our good performance we had on a normalized basis of quarter as the leap year happens in February and it is not expected it to snow in May and June. So I think that on a normalized base, we are – we are fairly confident we can keep our trend. Well broadband, fixed broadband. As I told you, our competitors, the (inaudible) are keeping this ultra aggressive strategy in terms of pricing. The price difference is very, very much important and we don’t want to follow them. So our value strategy stays in. We have a very important amount of win data from (inaudible) which is a phenomenon that is constantly improving this. So what I do expect is that in the first quarter, we highlighted the small reduction and in the further quarters, I expect an improvement in this trend but not because of our – not because of a price war, because we keep the value strategy on. And I leave there for the third part to Mr. Bernabe. Paul Marsch – Berenberg: Thanks.

Yes, on the facility, the economic value of the facility is better than current market conditions, more competitive and current market conditions, and it certainly has been – is committed by all the banks that participate to the facility. So it’s a little bit more expensive than the old one but I think it’s highly competitive, given current market conditions. It’s 250 basis points. Paul Marsch – Berenberg: Thank you.

Next question comes from Carola Bardelli from Deutsche Bank. Ms. Bardelli, please. Carola Bardelli – Deutsche Bank: Yes, good morning. I was surprised by the incoming minutes traffic actually up 4.5%, so I was wondering if this is a sustainable trend in the coming quarters in mobile, obviously, and if it’s related to quality of your lines or only to the one-off effects in Q1. And then same question on the prices, probably also the price per minute was quite resilient, so I was wondering if you could give us a little bit of an outlook on that one. And specifically on broadband, on ultrabroadband, you said that actually it would be part of the premium, could you be a little bit more precise on that and elaborate on your pricing strategy on ultrabroadband, closed mobile and fixed. And finally, a little bit of guidance on full-year net working capital absorption because there was a little bit of a spike in Q1, so if we could have a number for the full year, that would be very helpful. Thank you.

The – Marco Patuano – the incoming, well, the income is a genuine growth. It is not – of course, also in this case there are some effects for the leap year and some support but it’s a genuine effect. What is happening is that we are growing in terms active customer base. This customer base is growing in terms of usage and the growth of the usage drives an effect of if I call you it’s likely you will call me. So the incoming traffic is growing given the health of our customer base. So it is likely to project this of course spleen by the effect of the discontinuities, yes it’s fairly true. Ultrabroadband pricing, we presented two days ago the price for the 42 megabit. There is a price – the price premium is about 20%. And once we will launch LTE it will be premium. Today, we will not disclose the premium of LTE but let me say that if 42 megabit is 20% price premium versus the higher non-ultra broadband, the LTE will be price premium. Ultrabroadband and fixed is aimed to sustain ARPU so also in this case we will price up. Of course, you – today, you see a pricing for the FTTH which is extremely high. It is not really encouraging the demand. So the price will be premium but something that can be also achievable for the consumer spending. For the third part, it was the working capital and hand it to the group controller.

I will use page 25 of Mr. Franco Bernabe’s presentation to give you some color on what we expect by year-end in terms of working capital. If we start from the 2011 full-year results, just to remind you that we had an absorption from working capital and other funds of approximately €400 million. If you look at the single items that compound the change, we do not expect significant change from inventories and trade receivable. We expect the trade payables and net other receivable payable’s change to be completely related as usual in the next nine months. And then, we expect to have some benefits especially from the cash outs that we have for the lay-off in the domestic business. This may drive us to have some improvement as we stated in the conference call of the industrial brand in the working capital change on a year-on-year base.

Yes, on the facility, the economic value of the facility is better than current market conditions, more competitive and current market conditions, and it certainly has been – is committed by all the banks that participate to the facility. So it’s a little bit more expensive than the old one but I think it’s highly competitive, given current market conditions. It’s 250 basis points. Paul Marsch – Berenberg: Thank you.

Next question comes from Carola Bardelli from Deutsche Bank. Ms. Bardelli, please. Carola Bardelli – Deutsche Bank: Yes, good morning. I was surprised by the incoming minutes traffic actually up 4.5%, so I was wondering if this is a sustainable trend in the coming quarters in mobile, obviously, and if it’s related to quality of your lines or only to the one-off effects in Q1. And then same question on the prices, probably also the price per minute was quite resilient, so I was wondering if you could give us a little bit of an outlook on that one. And specifically on broadband, on ultrabroadband, you said that actually it would be part of the premium, could you be a little bit more precise on that and elaborate on your pricing strategy on ultrabroadband, closed mobile and fixed. And finally, a little bit of guidance on full-year net working capital absorption because there was a little bit of a spike in Q1, so if we could have a number for the full year, that would be very helpful. Thank you.

The – Marco Patuano – the incoming, well, the income is a genuine growth. It is not – of course, also in this case there are some effects for the leap year and some support but it’s a genuine effect. What is happening is that we are growing in terms active customer base. This customer base is growing in terms of usage and the growth of the usage drives an effect of if I call you it’s likely you will call me. So the incoming traffic is growing given the health of our customer base. So it is likely to project this of course spleen by the effect of the discontinuities, yes it’s fairly true. Ultrabroadband pricing, we presented two days ago the price for the 42 megabit. There is a price – the price premium is about 20%. And once we will launch LTE it will be premium. Today, we will not disclose the premium of LTE but let me say that if 42 megabit is 20% price premium versus the higher non-ultra broadband, the LTE will be price premium. Ultrabroadband and fixed is aimed to sustain ARPU so also in this case we will price up. Of course, you – today, you see a pricing for the FTTH which is extremely high. It is not really encouraging the demand. So the price will be premium but something that can be also achievable for the consumer spending. For the third part, it was the working capital and hand it to the group controller.

I will use page 25 of Mr. Franco Bernardo’s presentation to give you some color on what we expect by year-end in terms of working capital. If we start from the 2011 full-year results, just to remind you that we had an absorption from working capital and other funds of approximately €400 million. If you look at the single items that compound the change, we do not expect significant change from inventories and trade receivable. We expect the trade payables and net other receivable payable’s change to be completely related as usual in the next nine months. And then, we expect to have some benefits especially from the cash outs that we have for the lay-off in the domestic business. This may drive us to have some improvement as we stated in the conference call of the industrial brand in the working capital change on a year-on-year base. Carola Bardelli – Deutsche Bank: Okay. So improving year-on-year. And there is – half there could be a idea, a good indication?

Sorry, can you repeat that? Carola Bardelli – Deutsche Bank: I mean, reduced by half could be a good indication for the full year compare to 2011?

For the severance indemnities cash out, we expect to recover €100 million. Carola Bardelli – Deutsche Bank: Okay.

And then I think that’s another important point in the trade receivable. The trade receivable as you may see is now generating a positive impact on the quarter, on the cash flow of the quarter. We may target the benefit and improvements in the trade receivable. At this moment, we are suffering the domestic public administration and net trade receivable that as Marco presented in our road show is now standing at €1 billion. So if the government can help us, we may increase this benefit coming from the layoff, reduced payment and which the target that you are mentioning. Carola Bardelli – Deutsche Bank: Okay.

At least (inaudible) 100% from our

Thank you, Stefano. And, Carolyn, we will go now to the next question.

Next question comes from Mr. Nick Lyle from UBS. Mr. Lyle, please. Nick Lyle – UBS: Yeah, morning. I have a question on Italian Mobile first. You mentioned lower aggression on promotions. Could you just give us a quick idea of what you’re seeing in the market? Are all the other operators following changed reduction in discounts? And then secondly, in Italy the savings appear to have slowed a little bit in the first quarter. Do you think you could reaccelerate that during the year? And also could you restart the head count cost in the last nine months of the year? Thanks.

The competition attitude seems to be rational. The first important message came from Wind. Wind repriced the – some of their options on the customer base quite significantly. And it seems Wind to be in a rational attitude mode. Voda sincerely is not changing very much their approach. They are keeping the same approach they had in the recent past, which means that we are giving signals. Wind is giving signals. Vodafone is not following those signals. But we never know. Two out of three gave a signal in this sense. And Hutchison 3 is very much focused on giving Apple phones to the customer base and we will not follow them. Savings in the rest of the year, there is a part of the savings that is under our – in our hands and we would continue, both on commercial, industrial, and pick up costs. As I told you in the last conference call, even if the market is – the environment is very difficult, we are working for keeping our reduction plan in terms of labor cost and in the first quarter we did. There are some elements that today are exogenous, like energy for example. Energy is growing a lot in Italy, and some taxes or some indexed costs like rentals. So, we are working in order to reduce it working on structural actions. But as you know, structural actions cannot one quarter to the other. So everything is in our view, in our hands will happen. What comes from outside, we will do our maximum effort in order to minimize the impact. Nick Lyle – UBS: That’s great. Thank you.

Our next question – I’m sorry. Next question comes from Mr. Davids, JP from Barclays. Mr. Davids, please. JP Davids – Barclays: Thank you. A question on TIM Brazil, as part of the recoveries through the year in terms of free cash flow, that seems like the biggest delta. Are you comfortable that can be achieved with the rollout of TIM Fiber in the third quarter and any potential working capital impact then that may have? Secondly, just in terms of management continuity, if you could give us a sense of dimension in TIM that’s less behind at TIM Brazil, what Mr. Mangoni is going to be picking up there? And then, who will fill in the CFO role at the TI Group level? Thank you.

So Mr. Stefano De Angelis will take the first one and pass it on to Mr. Bernabe for the second one.

Let me give you first a color of what’s happening in TIM Brazil and how we decided to handle the process of changing the management figure. Well, first of all, let me say that a success of a company is mad by a group of people and it’s never made by one single man despite the fact that Luca was a good communicator. But he created a very strong management team that is still in place. And that we’ll keep doing what he’s been doing so far. What we decided to do is to have Andrea Mangoni as a temporary – in a temporary supervisory role. Andrea has a very strong chief executive experience because she has been the Chief Executive of one of the largest utilities in Italy for several years and he was a very successful Chief Executive. He’s now our Chief Financial Officer. He will be managing the transition. But we are already looking at somebody that can take the role of Luca and re-launch the plan that we’re pursuing for team Brazil and that will not change. I will be myself very much involved in this transitory period but we are very confident that in three months’ time, we will go back to normal. And now I’ll pass you to the (inaudible) that will cover the second part of the question.

Yeah. Then the CapEx for the (inaudible) development are approximately R$100 million. Part of these related to the last mile activities are just included in our actual because we are just asking the services internally. The component related to the delivery activities and the CTE, it’s the other part of the story that we’ve been driven by the success of services. So this completely included in our guidance that we are confirming for team Brazil and if the success will exceed our projection, it will be more than welcome in our projection and for our future. JP Davids – Barclays: Thank you.

Next question please.

Next question comes from Mr. Tolster Akman from JPMorgan. Mr. Akman, please. Tolster Akman – JP Morgan: Good afternoon. On your mobile business, domestic mobile, I’ve seen that the mobile traffic volumes have been picking up quite attractively again after that’s been slowing down throughout 2011. Is that all down to the network effects you pointed out earlier or is that something also to do with renewed tariffs and stimulating more usage? And thank you.

We have not reviewed tariffs. We are keeping the tariffs just we are continuing in working on the penetration of the different options. I try to make it very simple. Few times ago until a couple of years ago, the team was only selling traffic on a pay-per-minute base. Today, we have at least three different ways of selling our voice, which is communities which are on-net communities, it can be you and me, it can be family, it can be all TIM customer base, it can be Latin community. Second, bundles. Small bundles, midsize bundles and now we are launching big and ultra-big bundles and then some reproduce. Now the more the options penetrate the customer base, the more the usage increases. And this is exactly what’s happening. Thank you. Tolster Akman – JP Morgan: Thank you.

Next question please.

Next question comes from Mr. Giovanni Montalti from Crédit Agricole Cheuvreux. Mr. Montalti, please. Giovanni Montalti – Credit Agricole Cheuvreux: Good afternoon, thank you for taking the question. The purpose is – talking about some internal process that TI (inaudible) and I wanted to know if you can share some comments about this with us? Thank you.

The only comment that I can share is that on the 14th of May we will be filing the 20th which will get define adherence to everything and we’ll make everybody comfortable with our figures. Giovanni Montalti – Credit Agricole Cheuvreux: Thank you.

Thank you. Next one please?

Next question comes from Mr. Ottavio Adorisio from Société Générale. Mr. Adorisio, please. Ottavio Adorisio – Société Générale: Hi, good morning, gentlemen. A couple of questions, it’s actually two follow up, the first one is from the working capital. I want to really go very focus in your plans. So there are many moving parts that you basically diving for an improvements for the full year. I believe the improvements you referring to, it’s versus last year, so the (inaudible) absorption. So, are you guiding for a lower absorption for the full year? And the second and a follow-up on this one is that most of your peers actually don’t have absorption for working capital. There will be some stage where working capital on a full-year basis will be actually positive for Telecom Italia? And on Telecom Italia media, it’s just a clarification, today we’re talking about the process to dispose all of the PV elements, are not the network elements sort of broadcasting or are you basically thinking to dispose all your media activities? Thanks.

Thank you, Fabio. The first part of the question you addressed will be taken by Stefano de Angelis, the last one by Mr. Bernabe.

I told you before – what I was saying is the 400 million absorption of the full-year group working capital change in 2011 and the guidance that I was giving you was of a reduction and I was trying to drive along the single item in order to explain where we expect to have this benefit. And as I told you, we are expecting to have some benefit coming from the cash out for the lay offer that is approximately 100 million in our projection. And then we may expect some benefit coming from the trade receivable as I told you. The results today are good as you may see. We have a cash generation, let’s say, in the first quarter. And I was again, told you before in the first quarter we had negative impact of approximately 70 million from a further deterioration in the receivables versus the domestic public administration, if this item will improve, we may reach the target of reducing of approximately 200 million, 300 million working capital absorption. We are strongly working on the trade receivables in all our business units, locally, in order to take the balance sheet from the revenues reduction because normally, when the revenues goes down, if you have the same days of receivables, you should have a positive impact in the trade receivable, and this may be compensated – I’m trying to answer to the second part of what we may expect for the future. If we are – if we will maintain revenues growth in return, revenues decline in Italy as today, we may expect to have a negative/positive impact because the benefit coming from the domestic may be, let’s say, invested in order to sustain the revenue growth in Latin America, with a substantial flat performance on the days of receivable. The trade payables strongly depend on the amount of CapEx. At this moment in our plan, the amount of CapEx is stable in Brazil, growing in Argentina, and stable/slightly growing in the domestic business, so the impact that we may expect on a full-year base from the payable is, let me say, broadly zero, not significant. The big items of the first quarter. The net other receivable payable is strongly affected by seasonal movement that at year-end tends to be zero. And the inventories I think that today, we have reached a level of asset sale both in the domestic business and in LatAm that is let’s say our target for the next couple of years so we should not expect significant change. On the TI Media question, we decided to go on with the reorganizational, the TI Media group because we wanted to maintain all options open. So we have no prejudice on whatever combination of assets we will sell, either each individual assets alone or the combination of all assets or the company itself. So we wanted to simply to keep all our options open. Thank you. Ottavio Adorisio – Société Générale: Thanks.

Thanks very much. I think we are about to close up. We have room for a couple more final questions.

The final question comes from Mr. Robin Bienenstock from Sanford Bernstein. Ms. Bienenstock, please. Robin Bienenstock – Sanford Bernstein: Thanks very much for letting me ask a question. I’d like to ask you what regulation on the fairness of the regulation that you talked about because TI has so far, had the most benign regulation really of Europe. But the result for basically Italy has been that you’ve got very high-price broadband. In fact, store broadband growth, very low speeds and so far, a steady reduction in investment and employment, so I’m wondering why you think that the benign regulation should continue? Thanks very much.

Well, I mean, I’ve seen that your comment is rather optimistic and I would not say the same way. I mean I think we had a fairly tough environment. But the reason – I did not say we – we never said we had benign regulation. I said that we had a fair regulation which is a different story. And I think that we have had a fair regulation simply because we were open to – we’ve been transparent and we were open to taking into consideration whatever suggestion, clear suggestion came from our competitive environment. So I think that this will continue. I mean this will continue simply because we are open, fair, transparent. And I think that this is what needs to be done in order to maintain the kind of environment that we have here in Italy. And I’m sorry to say that if you look at the unbundling numbers here in Italy, we have one of the most open markets in Europe. So – and in terms of prices, we have fairly low prices compared to many other countries. So competition has really worked in Italy and I think that the regulator has done a tough job in maintaining competition open. Thank you very much.

Okay. I guess this one was very effective. There’s one last slot for a question. So we’ll open for the very follow on.

Next question comes from Mr. Justin Funnell from Credit Suisse. Mr. Funnell, please. Justin Funnell – Credit Suisse: Thank you. A couple of questions please. The – well, it looks like things are going pretty well in mobile. I mean, you’ve got some network effects coming through with your current structure. The data is accelerating. There was a bit of seasonality in Q1 but it’s only about 1%. So there’s a bit of mystery as to why you’re not willing to say in Q2 can do better than Q1. I mean, I guess the wider space should be the economy. Are you expecting the economy headwinds to your Mobile business to get worse in Q2 and if so, why? Secondly, the big change in termination rates. Obviously, it could have some effects on pricing – on retail pricing in Mobile and Fixed line in Italy. Just wondering if you’re trying to be reasonably proactive in restructuring your tariffs as those MTRs come down?

Can I make a comment before returning it to Marco Patuano for his more specific comments. I mean, I think that it is fair to say that in the current macroeconomic environment in Europe, you have no visibility except for the next few weeks. So we are very prudent and we don’t want to engage in making forecast and this we are actively working and doing a very hard work, and Marco and all his team, he’s doing an exceptionally hard work in managing this very, very challenging environment with the appropriate reductions to deal so that they can, day after day. So I think it’s not possible neither reasonable to make any forecast at this point in time. And I’d like Marco to elaborate on this.

Yes I’ll just add a few words because the uncertainty is absolutely the key word. Just to give you an idea, the fact that the macro environment in the corporate segment is very tough as a matter of fact, and we don’t see much of the reason for improving in the next quarter. But what is important to consider is that in the second quarter, possibly between May and June, families will have to pay the new taxes on their houses. So will it impact on the consumer attitude in spending or in the consumer confidence? I think that it’s fairly to say that we have to stay prudent. Today, the consumer is performing still fairly well in our sector because if you talk with other with managers of other industries, the consumer are showing a very different attitude. So we are in an industry that we have been able to keep the consumption. But it’s not obvious that the first step of taxes will be considered. Second part of your question was on the impact of the tariffs? For sure, every time there is a hard cut in the termination rates, something in the markets in department changes because we have the new opportunities of creating new schemes that on the profitability of working. I don’t see very much happening in Q2. Q3 will be dominated by all the offers for the summer, for the summertime. So we will see in September, October, what will happen, and it will be very much driven by the overall situation. So I don’t expect further reduction in terms of prices there. Yes, I do expect some different combination in order to prepare packages with a good ARPU. The name of the game is Defend the ARPU. Thank you. Justin Funnell – Credit Suisse: Okay.

Thanks, Justin. Thanks very much to everybody. Of course at Investor Relations, we are available to take further questions. It’s time to wrap up now and to close the call. So have a good afternoon and thanks again for your attention.

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