Alex Bolis – Head of Investor Relations Marco Patuano – Chief Executive Officer Piergiorgio Peluso – Chief Financial Officer

Nick Brown – Goldman Sachs Nick Delfas – Redburn Stephane Beyazian – Raymond James James Britton – Nomura Luigi Minerva – HSBC Justin Funnell – Credit Suisse James Ratzer – New Street Research Fabio Pavan – Mediobanca Andrea Randone – Intermonte Giovanni Montalti – UBS

Good morning, ladies and gentlemen. Alex Bolis speaking. Welcome to today’s Telecom Italia’s Call, in which we will present our third quarter 2015 results; our open access enhanced reorganization; and our savings share conversion plan, which was announced last evening. Our Chief Executive Officer, Marco Patuano, will guide you through these highlights, and through the main trends of a quarter of continued domestic improvements. He will also comment on the performance of our Brazilian operations. Our CFO, Piergiorgio Peluso, will be briefing you on our Group’s key financial figures; on the evolution of our efficiency plan and OpEx; as well as giving you further details of our savings share conversion plan. Rodrigo Abreu, the CEO of TIM Brasil, is participating via teleconference, and will stay with us during the Q&A session that will follow the presentation. Our Chairman, Guiseppe Recchi, is also here with us today. Please note, slide number 3, which states our disclaimer policy. Marco the floor is yours.

Thank you, Alex. Good morning, ladies and gentlemen. Let me start giving you an overview of the recent highlights. Our third quarter 2015 domestic set of numbers reflect positive results on a number of fronts, mobile service revenues living up to improving expectations; good acquisition on fixed Broadband; positive reception of our flat billing; fixed voice customer now show a better usage; low opt outs; and stable churn. Fast coverage progression in 4G and fiber coverage. EBITDA moving in line with our expectation, which you know are aimed at delivering its year-on-year stabilization in 2016. In Brazil, we see very important opportunities, even in this complex macro context. While defending EBITDA with a robust cost-cutting program, we are working on the revenue front with the introduction of a new offer portfolio that is fitted to a low MTR environment. At the same time, we have covered 278 cities with 4G at the end of October, reaching about 50% of urban population, while we have now more than 80% run on 3G. Let me now spend a few words on an important reorganization we announced yesterday. To serve even better growth opportunities for the whole market, we have decided to bring together our open access and wholesale departments, creating open access enhanced. I will give you some more details of this restructuring the rest of my presentation. At last, savings share conversion. You will surely remember that I shared with you many times the consideration that our dual class of share structure was entirely anachronistic. There has been an ample evidence of other Italian corporates in the recent past moving away with success from these equity partition. We were thinking to implement such transaction at some future time in relation with further evidence of our 2016 domestic EBITDA reaching stabilization. But the strong market price increase of the last couple of weeks opened what we think to be a remarkable window of value for all shareholders, as well as for the Company. Our operations are in line with the course we expect, and 2016 domestic EBITDA stabilization is our key goal. So, in this context, our Board approved, unanimously, the transaction, wishing to secure this opportunity we had been monitoring for years. It is time, at this point, to look into the domestic results. On slide 5, we point out to our continued quarter-on-quarter progression we posted this year, both in total and in service revenues, landing, at the end of September, at minus 1.4% and minus 1.5% year on year, respectively; fully on track with our plans. We are seeing the benefits of increased penetration of LTE and fiber, both of which are enjoying a strong commercial traction. Let me give you only a few figures. We have reached 1.6 million fast broadband customers, and 3.5 million 4G users. Consistently, in this quarter, ending September 30, we have scored good mobile revenues and high fixed acquisitions, as we will further detail. Our handset sales were up 34%, 85% of which are smartphones, and totaling about 1.3 during the period; in which, according to GFK, we gained 6 point of market share year-on-year, qualifying as the leader in smartphone, 5 percentage points above the second. We are expanding on triple and quadruple pay offers with TIM Smart customer at about 900,000, and with the current video content uptake at about 10,000 clients per week. While this important acquisitive momentum continues, our nine-month domestic organic EBITDA performance, at minus 5.1% year-on-year, is that ahead 4 percentage point Our third quarter organic domestic EBITDA performance before one-offs was minus 3.8% year on year, following an upward direction. Non-recurring items in third quarter were limited to million. On slide 6, we represent both reported and underlying domestic EBITDA and evolution. Normalizing also for discontinuities, in which we also account for the temporary lack of our solidarity deal on personnel, which was there last year, and that will start again from January 2016, our underlying domestic EBITDA performance in the third quarter was minus 3.1% year on year. This confirms its 2015 trend towards negative low single-digit, while we have set a larger framework also on labor cost to support our 2016 domestic EBITDA stabilization target, as Piergiorgio will elaborate in detail in this section. Slide 7. Well, it tells you, clearly, we are getting things done fast on LTE and fiber, both on their coverage expansion and sale. On 4G, we have reached 86% of the Italian population coverage. In parallel, our mobile broadband customer base has grown in the third quarter to more than 11.2 million, of which about 31% are on LTE; a nice step of nearly 800,000 4G clients in only three months. On fiber, it’s even a more important story. TI is driving an historic opportunity to fill the gap versus European average coverage and penetration standards, on the back of the current €3 billion fiber CapEx plan. Between September 2014 and September 2015, Telecom Italia has enabled 550,000 new fiber customers: about 280, 000 retailed by us, and about 270,000 retailed by the other market participants, but still on our network. Let’s move to our mobile domestic performance for the quarter. On slide 8, we point out the continuous growth of our calling customer base; a key driver for service revenue performance, as we have monitored periodically in our meetings, since the beginning of this year. Its 77,000 growth quarter-on-quarter compares with 90,000 year on year, quite an acceleration. The combination of this positive calling performance with the progressive closing of the ARPU gap brought our third quarter 2015 mobile service revenues to minus 1.5% year-on-year, of 1% quarter-on-quarter and 5.6% year-on-year. Let’s move to the key enabler of this result, that will continue supporting our mobile performance, meaning LTE. 4G users are growing exponentially. One year ago they were 844,000. In September 2015, they reached 3.4 million; up in just one quarter by 770,000. While mobile content continues playing, essentially, a churn reduction and loyalty-enhancing role, browsing is further moving up along its double-digit progression. This performance is closing more and more the spread between traditional and innovative services, with the latter close now to 40% of the total. Slide 10, fixed broadband. The third quarter shows another good performance on fixed broadband acquisition, which beats some summer seasonality effect. This is visible from the 42,000 adds in fast broadband, driven by our positive fiber results. Net broadband lines grew by 12,000, against minus 7,000 last year. The market has become more aggressive, and a little more commercial savviness is needed. Notwithstanding this more price-conscious context, our broadband ARPU performance is €20.7 per month; up by €0.70 year-on-year. All this contributes to a nine- month fixed broadband service revenue performance of plus 5.5%. Looking at the bigger fixed picture, third quarter 2015 posted good results for fixed service revenues, which stood at minus 1.8% year-on-year; slightly improving quarter-on-quarter. This performance was backed also by a further positive contribution coming from our business segment, on which we will give you overall detail in a couple of slides. Consumer fixed voice has been historically an area of important profit contribution and represents a long-time area of challenge, which we decline in traffic and access. Our flattenization program, which we launched on 4.1 million lines, had the goal of giving back value to voice, and increased loyalty to fixed assets. What we take away from this slide is that usage, after the introduction of flat billing, is visibly narrowing the year-on-year gap, despite implicit underlying price is increasing. Churn is stable compared with full-year 2014, and the opt out ratio remained limited to around 8%. We come now to our business segment that has also in this quarter had a good performance. We share with you a new view that we have adopted since some time in our internal business reviews, and that we think represents well the four main areas of our related service revenues. We call communicate our fixed and mobile voice plus SMS, where we are improving on revenue erosion defense showing a minus 9.4% year-on-year performance; more than 3% better than last year. Connect represents fixed and mobile data transmission and IT network management; a well-established activity which operates on fiber already since a long time, and that it is also getting some benefits from our LTE expansion. A positive nine-month performance year-on-year compares well with last year’s negative one, showing a better enterprise segment environment. Compute and IT solutions represent, respectively, infrastructure as a service with cloud at the forefront, and platform and software as a service. These two areas are both enjoying a positive growth, respectively, single- and double-digit, beating last year’s performance. Business, as you can see, is a story in which we are doing better on all our lines of service. The development of innovative service is progressively embracing also the SoHo and SME segment. And we are confirming a non-disputed leadership in the top and public administration segment. TIM Brasil. Let me summarize how we stand in Brazil today. Well, the macro situation is tough, and we all know long-term investors consider it cyclical. Industry-wise, we have to face not only the usual competition; but also the growing SIM consolidation trend, which, backed by lower MTR and by significant OTT adoption, is reshaping the market. While year-to-date mobile service revenues declined 5.7% year-on-year, mainly driven by the MTR drag, mobile business generated increased year on year by 1%, supported by the strong performance of innovative services, which, in the first nine months of 2015, were up by 41% year on year. But the more important recent fact is the launch of our new offer portfolio. Our aim is moving away from the on-net community usage pattern, as we did in Europe. We want to be the only SIM for on net and off-net. We want to give the best data experience, leveraging more and more on 4G. Data packages must be rightsized, which means no frustration for excessive of throttling; no gifts for ultra-wide allowances. Voice will be available on- net and off-net at the same price, thanks to lower industrials costs from interconnection. You can see how we are delivering this concept across the whole market base; not only on the segment of our traditional strength, but also working on the metrics which appeals to all pocket sizes. We believe that this approach will enhance our data monetization at a time when our nine-month CapEx, aimed at our mobile broadband coverage plan and LTE rollout, has increased year-on-year by 25.2.%, reaching about BRL3.3 billion in the period. We will manage EBITDA with great attention during the transition into our new offer portfolio, since changes in our distribution channels in customer care and in other operational aspects are required. Efficiencies are proving a few fruitful areas of intervention on which Rodrigo and his team are already delivering well, as you have heard in their latest call. And we have much to do, in advance. Let’s move now to our game-changing move on the wholesale environment. On slide 14, we summarize our reorganization, which aligns the work of the wholesale and open access department, which will be led by Stefano Ciurli. This calls for a new model of full equivalence, under which both the other operators, as well as TI Retail, will be offered same service; same quality; same deployment and activation ratios; same timing for all regulated offers. We expect this reorganization to significantly step up our end-to-end performances for all market participants. Under this new model, everybody comes first. This is our big step towards a better inter-operator environment through improved wholesale approach and customer centricity. We think this will also mean better business for TI. Furthermore, as of November 2, we have a new Chief Regulatory and Equivalence Officer, Mr. Cristoforo Morandini, who’s here with us today. He comes from a significant experience with Ernst & Young, where he was a partner; and has a long-time experience in telecommunication, media and technology, as one of the founders of Between. This shows, once again, TI’s commitment to do whatever is in its power to ensure the best possible inter-operator environment, as well as to oversee, comply, and contribute, as appropriate, and as requested, to regulation; a key element in our sector. Piergiorgio, on to you now for your overview of the Group, and the domestic efficiencies. He will also give you the full details of the conversion plan. So, Piergiorgio, please.

Thank you, Marco. Good morning, ladies and gentlemen. Let me start from an overview of our Group. Let’s start with an overview of our Group results for the first nine months of 2015, on which I wanted to point out some important figures for this period. On the service revenues, the organic performance registered a minus 3.1% year-on-year, versus minus 6.4% in the nine months 2015, as we have progressively strengthened our data monetization strategy. In Italy, we have been constantly matching improving expectations, both on fixed and mobile. The performance year-on-year of the domestic service revenues in the nine months is minus 2.2%, compared with a minus 7.9% in the same period last year. In Brazil, in a complex macro context, we continue seeing strong opportunities, enabled by our own operational and financial capacity. On EBITDA, we have improved the organic Group nine- month 2016 year-on-year trend. The year-on-year stabilization of 2016 domestic EBITDA in organic terms, therefore adding back one-off, remains our main target. We are fully committed to fulfill it. CapEx were up by 27.3% in organic terms year-on-year, showing a sizeable acceleration on the innovative component, both in Italy and in Brazil, summing up to a nine- month cumulative figure of €3.2. billion. In both countries, we are expanding the LTE services at significant speed, while rapidly increasing fiber coverage in Italy to the latest- available-figure of about 50% of the population, as Marco already told you. On the operating free cash flow, I would like to underline how in the first nine months 2015 we generated, at the domestic level, €2.1 billion with a reduction year-on-year for about €0.1 billion. Finally, on this slide, let me point out that we have reduced quarter-on-quarter our Group net financial position by €200 million of reaching about €26.8 billion. Moving to analyze the domestic efficiency area, slide number 17, nine-month 2015 process-driven costs are lower year on year by €68 million. This performance was mainly driven by our real estate project, which is enacting an important rationalization project that will continue with an accelerating trend in the next month. 70% of our real estate portfolio has already been renegotiated, and the balance will see the conclusion of the process by year end. In the meanwhile, we are making vacant a number of units for a casting-related €90 million savings per year, €10 million of which are already under our belt. Also, in G&A, we have scored important efficiencies again in the real estate and related facilities area, and in personnel overheads. Looking now at the market-driven costs, the increment of €20 million was generated by the Expo sponsorship, in absence of which we would have enjoyed a €6 million reduction. Commissioning costs moved slightly upwards, on the back of higher acquisition that, in turn, will support our data monetization plan. The nine-month efficiency amounts to €48 million. If we compare this figure to the first-half 2015 €17 million, we clearly see in progress the acceleration trend that will ensure us to meet our more than €100 million target. Slide number 18, moving now to volume-driven cost analysis. The €129 million increase is due to the increase of interconnection costs of Sparkle for €43 million; more than 50% caused by foreign exchange; and by the higher costs related to the increased sales of mobile handsets, mainly of smartphone. Moving now to nine-month 2015 cost of labor analysis, we can see a reported increase of €106 million, caused by discontinuous factors, such as the temporary lack of solidarity agreement support. Net of all the discontinuities, which are shown on the bottom-right side of the chart, labor costs would have reduced, as of September, by €56 million, year on year. Slide number 19, our continuous progress in identifying cost reduction areas brings us now to the personnel, where a few important initiatives were recently secured. renewal secured from January 2016 for three years, involving 50,000 for workers; and yielding, through reduction in monthly working hours, 2,600 full-time equivalents. Expected savings per year are more than €100 million. Early pension scheme, offered by Article 4 of the so-called Fornero Law for Telecom Italia employee base, that allows, together with the other minor employee rightsizing scheme, additional savings of building up to €150 million per year. Altogether, the net present value of these plans, running until 2022, of these parables, is more than €400 million, already netted of a provision that will likely be posted for about €400 million in the last quarter of this year. We will continue working in this important personnel- related area to continue seeking rightsizing, as well as the opportunity to utilize appropriate incentive for new hires. Slide number 20, as you already know, the Board of Telecom Italia yesterday resolved to submit for approval to a Company’s shareholders’ meeting a proposal for voluntary and mandatory conversion of the Company’s savings shares into ordinary shares, which will provide, for both, granting a right to the holders of Telecom Italia’s savings shares to convert them into ordinary shares; receiving one ordinary share in exchange for one savings share, plus a cash payment of €9.05 for each savings share, the voluntary conversion. And the mandatory conversion of the savings shares, which were not tended as a part of the voluntary conversion, into ordinary shares at a conversion rate equal to 0.87 ordinary shares for each savings share held. This overall transaction will not reduce the share capital, but will change its composition. It is expected that the conversion will become effective before the distribution date of the 2015 dividends, circumstance that has been taken into consideration in the determination of the cash payment of the voluntary conversion, and the conversion ration of the mandatory conversion. Therefore, for the year 2015, the savings shares will not be entitled to benefit for their current by-law privileges. The conversion is aimed at simplifying the capital structure of the Company, and increasing the free float, and improving the liquidity of the ordinary shares. In addition, proceeds from payments by savings shareholders to participate in the voluntary conversion will strengthen the Company’s equity structure. The voluntary and mandatory conversion are subject to the approval of the special meeting of the holders of savings shares. The savings shareholders who will not contribute to adopting the relevant resolution will have the right to withdraw. For this, proposed a settlement value of the saving share, subject to withdrawal, is equal to €0.9241 per share. The aggregate settlement value of the saving shares for which the right of withdrawal may be exercised by the holders of savings shares may not exceed €100 million, without prejudice for the result of the voluntary conversion. Regarding a tentative timetable for this transaction, all the conditions are subject to the filing procedure and approvals in Italy, and in United States. For this reason, we can’t be very detailed in the information we provide to you today. On December 15, 2015, an extraordinary shareholders’ meeting has been called, while the special meeting of the holders of saving shares will be held on December 17. After these two shareholder meetings, the period to exercise the right of withdrawal will start. And we expect the voluntary offer to take place in the two first months of next year. Thank you very much for your attention, and back to Marco now for his final comments.

Thank you, Piergiorgio. Time to wrap up now, so, as usual, our takeaways. In Italy, we had sequential improvement, both in mobile and fixed revenues, which continues in line with our expectations. Innovative investments drive the technological leadership of our networks. Cost control and efficiency remain a priority. In Brazil, encouraging signs from data growth, but overall negative impact of macro environment. We remain convinced of the enormous opportunities offered by the country; we consider the right time to invest in future growth. As a general outlook, the equity value is a priority for TI, as shown by past performance, and by the fairness of the terms of the present conversion. 2016 domestic EBITDA year-on-year stabilization is confirmed. Thank you very much. Back to Alex.

Thank you, Marco. We can now begin our Q&A session. As usual, to ensure maximum participation, I would kindly ask you to limit questions to only one per participant. We can start now, please.

[Operator Instructions] First question comes from Nick Brown from Goldman Sachs. Mr. Brown, please.

Can you clarify, on the 2016 EBITDA stabilization guidance, is it on a reported underlying or organic basis; as in does it include or exclude all the one-offs, including litigation? So will EBITDA actually grow in reported terms next year? That’s just a point of clarification. I do have a question on Brazil as well, if I can, after. Thanks.

Okay. Hi, Nick. Piergiorgio will take your question

Hi, Nick. No, the guidance, of course, is made on organic base and exclude the one-off items, like provision or other items. So will exclude also the potential new additional provision that we will maybe have given for – to reduce our labor cost.

[indiscernible] Thank you. Yes, just on Brazil. Would you still consider selling TIM Brasil at the right price? Why would you entertain the idea of doing anything with Oi SA at all at this time, given the problems it faces, a lot of which I’m not sure can be fixed with $4 billion? Thanks.

Marco will take this one. Thank you, Nick.

Yes, our strategy. Thank you for your question, because I use your question to give you a broader answer. The short answer is, yes, we always said that in Brazil we consider all the option that create value for shareholders. Of course, it means also we will evaluate an appropriate offer if it would be the case for TIM Brasil. For sure, the fact that the foreign exchange – the FX is not that good does not help in terms of euro value of any potential evaluation. Sorry, I use also your question because many investors asked us about what you read probably in the Oi case, in which it has been made an offer, not to us but to Oi. We are included as a side effect of this offer. Let me clearly say that we had no formal engagement, no formal offer, formal request by anybody. Whoever will make a formal approach with us, it will be properly and duly represented to the Board that will take into consideration. We are an industrial investor in a core country, but, of course, as I said you, we are open-minded to evaluate good offers. Thank you.

Thank you very much. Nick. Next question, please.

Next question comes from Mr. Nick Delfas from Redburn. Mr, Delfas, please.

Yes, thanks very much. My question is quite a simple one. Obviously, the trends are getting better in domestic mobile. Could you tell us a little bit more about how you see the pricing environment developing at the moment? And do you think the market as a whole could be flat in the first half of next year? Thanks very much.

Marco, please.

Hi, Nick. I think that the market will progressively improve. I heard, many times, that any improvement could be linked only to consolidation of the market. I don’t believe so. I think that improvements come mostly from quality improvement. So the fact that we are constantly improving the quality of our network, that Vodafone is constantly improving the quality of the network, and then the other operators are investing on 4G as well, is driving up the consumption of the customers so they require more data. The fact that we have bundled most of the customer base, reduce quite significantly the drag effect on voice. Well, I think that quality is the key driver. The short answer is, yes, I aim not only to stabilization, but to some improvement. And improvement will come mostly from what we hope to come, which is a reduction of any below-the-line offer. So we are convinced that below-the-line offer have to be pushed out of the market. Okay, Nick.

Yes. Thanks very much, indeed.

Thank you, Nick. Next question please.

Next question comes from Mr. Stephane Beyazian from Raymond James. Mr, Beyazian, please.

Thank you. Could the acquisition of Metroweb be a vehicle to build more fiber-to-the-home in Italy than you initially planned in your fiber plan? And can you share with us any estimated average cost hold backed in [indiscernible] home. Thank you.

I believe that Metroweb is almost a non- event in terms of size of the investment. We have already committed ourself on making fiber-to-the- home for the top 100 cities in Italy. We said that we will do within Q1 2018. Of course, if we evaluate there is the possibility of expanding this project to more than 100 city, it means that there will be economic value; there will be a good return on the investment; there will be a positive IRR. But today, what I would say is that in the next two, three years, having the target of pushing hard on the top of the market, this is a lot of work. So, honestly, if you ask me short term what short means, couple of years’ term, what does it mean in terms of overall CapEx, I would say that the impact is not that significant.

Thank you. Just about cost per home passed for fiber-to-the-home, or expected return, anything – any data you could share with us?

Yes, the question was, we can’t hear you too well. Your question was comments on the cost of fiber-to-the-home per household, connecting for house hold.

Yes, indeed, and potential return. Thank you.

Yes, okay, well, we are – what we see is that the cost depends very much on what we found in terms of accessibility to the single building. The access to a building can be extremely easy, or extremely difficult, because the building has ducts, or not. So it depends very much city on city. You can easily imagine that an historical city have a difficult access to the building, and in Italy it’s plenty of historical cities; and brand new buildings have an easy access. So, the cost vary quite a lot. We stand between something in the range of €200 to something in the range of €500. It depends very much per household. It depends very much the condition of each different cluster. We built, more or less, three different cluster, and the easy one is around €200; then, you have some – a bit more complexes in the range of €400. But you can reach also above €500 in historical cities in which the access is fairly complex and we have restrictions in order to put the fiber on the facade of the building. Sorry if I’ve been long, but otherwise it’s too easy.

Thank you very much. Next question please.

Next is from Mr. James Britton from Nomura. Mr. Britton, please.

Thanks very much. I’ve got a question on domestic mobile as well, please. Can you highlight how many customers now take more than 1 gigabyte bundles, and how quickly is this mix changing? Then, linked to that, as you increasingly push 4G smartphones into the market, why should we expect a pullback customer-driven costs in the fourth quarter? And how do you see this trending in the coming years?

The average user today is already above 1gigabits, average. The average usage of the 11 million customer is 1.09 gigabits, so 1.1 gigabits, which always consider that LT customers have a significantly higher usage; we are in the range of 1.5 gigabits, 1.6. gigabits, of course not considering data-only customers that are much higher. So a tablet uses something above 2.5 gigabits, an LTE router uses something in the range of 5 gigabits. Sorry, can you repeat me your second question.

Sure, it was linked to the, I guess, costs of fueling this data growth. I guess, you’re pushing more 4G smartphones with a higher subsidy into the market, but I think in the presentation you talked about a scaling back of customer-driven costs in Q4 to reach your efficiency targets. But why can you do this while still pushing up smartphone investment?

Yes. It’s quite interesting, because we have a positive margin today on handset in general, and the level of subsidy has been dramatically reduced over time. So our strategy has been to constantly review the offer we make. It’s interesting that the high end is gaining traction time over time. So what we do is we will sell in installments, but we limit the subsidization, which is true both on consumer, and even more true on the business segment, where it was mostly the rule of the game. So I would say that today I think that the push we gave in the 4G has been managed quite safely on the efficiency side.

Thank you, James for your questions. Next question, please.

Next question come from Mr. Luigi Minerva from HSBC. Mr. Minerva, please.

Yes, good morning. Thanks for taking my question. Actually, it’s one question and one clarification, if I may? The question is on the savers conversion, and whether you have consulted your key shareholders about it, and whether you believe they will support the plan in the general meeting. And the clarification is on the Brazilian guidance. I notice that you don’t talk any more about the BRL14 billion CapEx, so I just wanted to check if that is still the case? Thank you.

Thank you, Luigi. So the first question would be from Macro, the second Piergiorgio.

Okay, thank you. The short answer is, no, we did not ask to any of the shareholders. I know that probably you are referring to our largest shareholder. So, no, we haven’t had, nor myself, nor the CFO has had any contact with them. But I assume that a deal which is value creative for the Company, and for all the shareholders, will be, for sure, supported by also core shareholders. Piergiorgio, for the remaining part of the question.

Yes, Thanks. On our Brazilian plan, we confirm our commitment to the BRL15 billion CapEx plan, and there are no changes in this respect.

Thank you very much.

Thank you, Luigi. Next one please.

Next is from Mr. Justin Funnell from Credit Suisse. Mr. Funnell, please.

.:

Okay, Justin, there is more than three questions here, but Marco will take them.

Okay. Hi Justin, how you’re doing. I take the first and the third; and I leave to Stefano De Angelis, so he directly manages the flattenization process, he will take the second. You’re absolutely right, there was – thank you for underlying the importance of the change we did in the wholesale environment. Yes, we aim to have recognized a significant improvement in the equivalence. We – honestly, I’m not that much in love with the definition if it is an equivalence of output, or an equivalence of input. I think that what matters is that we treat all the customers, including TI, using the same processes, using the same systems, using everything the same. And the aim is to improve the quality for everybody; not only for, honestly, for the OLO, but also for our retail division. So the final goal is to have an improvement. Of course, it doesn’t come for free. There’s never free food on the table. We will allocate some specific CapEx for this project. We are not talking about big numbers, but we will allocate specific numbers in order to have a specific budget to improve the overall situation. It’s a big effort. It’s a plan that takes more than one year to be fully implemented. It has to be communicated properly to all the authorities, to the OLOs at both level, national level and European level. So, yes, it’s a big change; it’s really big change. My goal is to have a peaceful environment, where everybody can do better business. So the aim is to have a larger pie to dispute. Broadband, yes you’re right, there is some more competition. Especially, on the consumer segment there is more competition. No, sorry, I wasn’t right. In the consumer and small/medium enterprises segment there is more competition. The competition is related to two different factors: one is everybody who is still trying to sell copper has to be aggressive. So, ADSL is offered fairly aggressively. And the fiber, of course, we are trying to move quite as fast as we can customer on to fiber, so there is quite a certain number of offers which include promotion, an initial promotion phase that had an impact on this; which is true for the consumer, and for small/medium enterprises, and SoHo. What I do expect, well, I think that the beginning of this environment will not change. In the first half of 2016, what we do expect is to have more or less the same competitive environment. Of course, in our case, what is coming into force is the quadruple play with the TV, and we are fairly optimistic. Now, Justin I leave it to Stefano for the flattenization. We had a specific chart on it; it’s page 11

Yes, Justin, you were asking about the trend expected for the fourth quarter, and the related impact of the flattenization. So, just to give you the most important answer, that is the expected trend, you have seen that in the third quarter we are – we have a little improvement. Basically, if you divide in to variable this improvement, looking at the in and the out that generated the net loss, you may see that we have a very strong and consistent trend in terms of new activation that is driven by the new broadband customers, moved by the fibre, moved by the convergent offer. On the negative side of the relation in terms of customer base change, we have the cancellation coming from the voice-only customers. If we take the voice-only customer, you may see that this trend has a negative impact during the third quarter. This was generated by the expected boost of cancellation coming from the day one of the flattenization program. Now, this trend, you may see that, that is recovering. So, net-net, what we expect for the fourth quarter, consistent and continuous growth in the new acquisition trend; and a start to recover on the cancellation. This means that if you take the fourth quarter 2015 figure that is in the range of 170,000 cancellations, we expect to have an improvement of some thousands of line losses

Thank you very much. Thank you

Thank you very much, Justin. Next question, please.

Next comes from Mr. David Wright from Bank of America. Mr. Wright, please.

Yes. Hi guys. A couple of questions, please. The first one is that I believe the Q3 mobile service revenue growth was boosted by the 28-day adjustment, and I guess that’s 1 1/2 months of that, if I’m right. But if you could just confirm what the monetary impact of that was. Because I think if I strip that out it really doesn’t look like mobile service revenue growth has improved too much from last quarter. We know that fixed hasn’t. And you have had to pay more in EBITDA to sort of sustain that. So that’s kind – the first half is what was the financial impact of 28 day? And what should that be in Q4? And then my second question is just on Brazil. You’ve clearly committed to be much more aggressive in Q4 in the higher value segment, which is obviously going to cost at the EBITDA line. You are running sort of quite significantly against the guidance curve now on TIM Brasil. Is that something you’ll review at the full year, after the Q4, I don’t want to say, price war, but it certainly looks like it’s getting a bit tasty?

Okay, well, the 28 days has been, yes, positive – the impact was positive. But please don’t over-estimate the impact since the customer base that has been impacted by the 28 days was not the whole customer base, and so the underlying trend is solid. If you look at the chart in which we have shown where the improvement comes from, the improvement comes from a customer base which is stable or slightly growing and some recovery on the ARPU. Now, if you go inside the ARPU, the major value driver is not the 28 days, but it is the high bundle penetration, and the movement of the ARPU once the customer gets the bundle. We still have, more or less, 5 million customer that have no bundle, so our strategic priority is to continue moving people on to bundles. Just to give you an idea, the average ARPU of customers with no bundle is something like 60% lower than the ARPU of a customer with an average bundle, not a super-high one. So our goal is to move people on to bundles. Of course, the 28 days have been a nice key carrier of some further improvement. It’s not a one-off; it’s something that now is included, for sure. What we will see is that once we will arrive there in a year- on-year comparison I don’t think it will be a major, major change. It’s something that is quite negligible on this. Brazil, I think that there was something wrong in the way we were approaching the market. And having been in Europe for all our history, we saw the movie two or three years before the Brazilians. Once you have the strong MTR cut what happens is that the community effect becomes more and more irrelevant. If you look at the number of SIMs that today are flooding the Brazilian market, we have more than 2 SIMs per unique users. It means that everybody, really everybody, is optimizing their voice pattern, having more than one SIM, in order to get always a good decent price. When I say a decent price for off-net calls, today, an net call cost per minute as a kilo of bread, which is simply ridiculous. What happened in Europe, that the decrease in the industrial cost of the off- net created simply a revolution on the marketing approach. No more communities, but bundles. Who has to adopt the bundle, the prepaid or the postpaid? And here, is the second lesson we learnt in Europe. Prepaid or postpaid during the time became a payment method and not a way to discriminate the value of a customer. We can have a good prepaid offer, an interesting prepaid offer, but the concept has to be the same if you want to prepay or to post-pay, because payment methodology is a payment methodology. Of course, I’m not, I don’t want to look silly. We know that there is a different value of the customer behind it, but there is not a different need. So what the customer want is the same, just in different quantities, and with different payment methodology. So, yes, we’re being a bit more aggressive. But what is more important is not the aggressiveness, is the change in paradigma. We are completely changing the paradigm. And what will happen is that, of course, we know that the market will copy the same market structure, but having the advantage of the first mover, it is important. What we do expect, yes, we do expect that the super short term, one, two quarters, we can have some pressure on rebalancing the cost structure of the commercial side. But it’s something that the team is working very hard. Rodrigo is very much convinced that we can do a great work on cost efficiency.

We can actually connect Rodrigo, I think he’s on the line, because he might be able to add just a couple of comments here.

Rodrigo are you in the line?

Just an additional comment on the actual cost of the postpaid operations. So, just highlighting, very, very quickly, four points. The first one is that the whole acquisition cost that we’re talking about, it’s to the mix of post; pre; and the hybrid approach, which we consider a postpaid user, but it’s, in reality, a user with a relatively low ARPU when compared to a traditional postpaid user. And this serves, even in the increase of postpaid users that we have been having recently, to maintain the acquisition costs and a SAC relatively small. So we have currently a SAC of 2.2 times a SAC-over-ARPU relationship, which is a best in class. And then, when we look at that, we are actually increasing not only the postpaid, but we intend to increase the higher-value customers, even on the prepaid segment. Second one is that we almost do not use handset subsidies. This has been a model we developed a long time ago. And so, when you increase significantly the postpaid as we have been doing, we did it at no increase in the OpEx expense because of subsidies, as we don’t have that as a core model. The third one is that the off-net impact, as Marco mentioned, yes, may have some impact in terms of the rebalancing. But on all of the postpaid bundles this impact was already there. So the reality is just a readjustment in the size of the core packages in terms of voices and minutes, but the impact was already there. And the fourth is that, obviously, what we’re going to push forward is the new 4G positioning. As Marco highlighted at the beginning of the call, this last month we have achieved, for the first time ever, the leadership in cities covered with 4G in Brazil; well ahead of the second player. And those are all the additional comments. Marco.

Thanks very much Rodrigo. Thank you, thank you very much. We should move on now, for the sake of time. Thanks very much for participating, Rodrigo.

Next please.

Next question comes from Mr. Giles Thorne from Jefferies. Mr. Thorne, please.

Hi, guys, thank you. I had a single question, and a clarification, too, if that’s okay. My question is really coming back to Justin’s question earlier, and how enhanced open access is changing some of the narrative around your conversations with AGCOM and with the government. And, in particular, if there are any implications for some of the competition or anticompetitive litigation you’ve been facing and the provisions you’ve taken; and also, about your involvement in Metroweb, which seems to suggest that TI could be, again, considered there. Then, the clarification is around the wording in the savings share conversion document out last night, on how you would use the proceeds from the voluntary conversion for your innovative investments. The clarification is, are you minded to increase the scope of those investments? Or is this really just about improving financial flexibility around those cash outflows? Thank you.

I take the first, and leave to Piergiorgio the second. Yes, of course, we have spoken with the authorities about the change we were going to adopt. And, of course, it is aimed specifically to reduce the level of litigations we had in the Italian market was characterized by the highest level of litigation all across Europe. I’ve never seen something like that in other countries in which, of course, there are wholesale services, as in Italy. In this sense, I would exclude the topic of the government. I think when you’ve referred to the government you are talking about probably the funds. So, yes, we discussed with both AGCOM and AGCM. And I think it’s worth to say that yesterday we also settled the litigation we had with FastWeb. It has been signed. Sorry, the terms of the signs are covered by confidentiality; but what I can tell you is that totally within the framework of what we had posted in the balance sheet, in the provisions, at Q2. The largest one, which was FastWeb, is over, and it’s signed. When you referred to the government, I wanted to interpret your question, referring to funds that the Italian Government has announced to be available for ultra-broadband. Well, we are still waiting the rules for participating to those funds. Of course, we can be interested, and we have to understand what will be the engagement rule. Piergiorgio, please, on second.

Hi. Thank you, Marco. In term of the – as far as the – deriving for the conversion is concerned, as you know, there are two components. The first one is the cash proceeds from the conversion, which the highest end of the voluntary take up is €572 million. Then, of course, you should add the potential dividend savings. As you know, the savings shares do have certain by-laws and privileges, which means that in case of no ordinary dividends they have a minimum dividend of €166 million; and in case of dividend on the ordinary dividend – dividend of €66 million per year. In terms of use of these potential cash, of course, this would be utilized in order to maximize our flexibility, in order to address our CapEx, and in order to address our uses during the next plan.

Thank you very much.

Thank you. Next question, please.

Next comes from Mr. James Ratzer from New Street Research. Mr. Ratzer, please.

Yes, thank you very much indeed. Most of my questions have been asked already, so it’s one question regarding the savings share conversion, please. Could you confirm, please, that all of the Board were present to vote on this proposal? And was the Board unanimous in approving the proposal that was put out last night? Thank you.

Confirm the Board was unanimous. And, yes, there was all the Board present, in person, or via video call conference. There was no one absent. Thank you.

Thanks very much.

Thanks very much. Thank you. Next one please.

Next question comes from Mr. Fabio Pavan from Mediobanca. Mr. Pavan, please.

Yes, hi. Thank you for taking my question. It’s a very simple one. We have seen, the last few days and weeks, better data coming from macro outlook in our country, in particular, in the last few days, encouraging trends for consumption. My question is do you feel that this could have an impact on your trend for domestic business? And, if any, it could be much more positive, or relevant, for the fixed line or the mobile business? Thank you very much.

I would say it would be more relevant for the business than the consumer. The trend in the consumer is fairly solid, at least in the mobile, and it’s solid – I don’t see, honestly, big, big acceleration coming from a better macro environment. Yes, maybe just something on the smartphone adoptions somebody change this smartphone because he has some bucks more in the pocket. But, honestly, I don’t think it will be really a driver. Yes, I think that there could be some more appetite for quadruple play. This can be what can be visible in 2016 with a better macro environment. So if you ask me where I do see a potential positive impact on consumer, I would say on multiple If you ask me where I do see a potential positive impact on the business segment, I would Compute and IT, using the new segmentation we gave you of our revenues. Honestly, traditional services, the communicator is almost unaffected. Connect, yes maybe that small/medium enterprise can use more the mobile broadband, but not that dramatic. Compute and IT solutions can have some nice positive effect.

Thank you very much.

Thank you Fabio. Next question, please.

Next question comes from Mr. Andrea Randone from Intermonte. Mr. Randone, please.

Thank you and good morning. I’ve got just a question about the savings share conversion proposal. You mentioned that dividend will not – the operation will be concluded before dividend distribution. I wonder if you can give us some more details about the timetable, at least a preliminary timetable; and, in particular, about the terms provided to shareholders to accept a voluntary conversion. Thank you.

Thanks, Piergiorgio will take your question.

Thank you. As I said in the speech, I cannot be more precise on the timetable, given that we need to file certain documents with the Italian and with the US authorities. We need to file a prospectus, we need to do certain legal actions, which means that today I do not have a – of course I have an idea, but we don’t have a certain date for the next steps. As I told you in the speech, we know, of course, that the ordinary – the extraordinary meetings for the ordinary shareholders will be held on December 15. As you know, in Italy there are two thresholds: a constitutive threshold, which is for each shareholder 20%. And there is a voting threshold, which means that – which is a voting threshold to get the resolution, which is two- thirds of the shareholders present at the shareholders’ meeting. So, this is the rule of the game for this EGM to be held on December 15. For the special savings meeting on December 17, the voting threshold is the simple majority of the savings shareholders present at meeting, provided that the resolution should be approved by at least 20% of all the savings shareholders’ base; which means that you have basically a constitutive threshold of the voting savings equal to the 20%. In terms of next steps after these two extraordinary meetings, we have the withdrawal right, the procedure, which will be beginning after these two special meetings. After the end of the withdrawal procedure, you have the offering period for the withdrawing shares. And we expect to have the voluntary conversion, of course subject to the authorities’ approval, in the first two months of 2016. So, this is the expected timetable. And we will, of course, fine-tune the relevant in the next phase.

Thank you very much, Mr. Peluso.

Thank you. Last question now, please.

Last next question comes from Mr. Giovanni Montalti from UBS. Mr. Montalti, please.

Hello, good morning. Thank you for taking that question. Well I think today you are proposing the saving conversion, that’s a big step in terms of improvement in corporate governance. You have done already a lot this year. I was wondering if you may consider the short steps; for example, changes in the by-laws in the voting system for the election of the Board. I wanted to know if there is any thought about this, if there has been any discussion about this. Thank you.

Giovanni, no, there has been no discussion. Thank you.

Thank you very much Giovanni, quick your question, quick answer. Yes.

Sure. No, thanks a lot. Thank you. Cheers.

So, Thanks very much everybody. Time to wrap up, and so we will keep in touch. Any follow-on questions, investor relations will be happy to take.

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