Alex Bolis – Investor Relations Marco Patuano – Chief Executive Officer Piergiorgio Peluso – Administration, FInance and Control

Nick Brown – Goldman Sachs Micaela Ferruta – Intermonte David Wright – Merrill Lynch Mathieu Robilliard – Barclays James Ratzer – New Street Luis Prota – Morgan Stanley Fabio Pavan – Mediobanca Giovanni Montalti – UBS James Britton – Nomura Justin Funnell – Credit Suisse Stefano Lustig – Equita

Good morning, ladies and gentlemen, and welcome to our First Quarter 2015 Results Call. Our Group Chief Executive Officer, Marco Patuano, and our Group Chief Financial Officer, Piergiorgio Peluso, will present to you an update for our Group operating and financial profile for the quarter closed on March 31. The CEO and CFO of TIM Brasil will be also participating to the Q&A session that will follow. After drawing your attention to slide 3, that you see now that states our disclaimer policy, I now give the floor to Marco.

Thank you, Alex. Good morning all of you. Our first quarter 2015 results that showed improvements in our Group operating and financial performance, in line with our plan. In Italy, more investments are securing the continuation of the positive course we set in 2014, while our LTE coverage of the country has exceeded 80%; and our NGN one is now above 32%. Convergence is making further leeway into our into our customer base, setting the grounds for our entry in quadruple play, since we started to bundle Sky Premium in April. At the same time, we are opening to N-Play, also pay-per fixed voice customers. From May 1, we introduced full flat tariffs for about 3.5 million fixed voice-only customers, giving much more value to traditional services, while encouraging the further penetration of fixed Internet. Usage shows us how data demand is growing on all our networks. In Italy, average data consumption has now exceeded, on smartphones, 1 giga, and on NGN 50 giga, per month, while overall traffic on our networks is 30% higher year-on-year. This is the case also in Brazil, where data-related usage has been posting double-digit yearly growth rates. In this key country, our first quarter’s year-on-year positive performance, on mobile business generated plus 43% organic; on postpaid segment, user base plus 6.4% year on year; and, on EBITDA, plus 1.6% organic showed strength of our evolving business model against a slower economy. Efficiencies are in line with internal expectations, and continue underwriting our network CapEx plan in both countries. The continued positive financial environment is supporting the opportunity to further accelerate the reduction of our Group cost of funding in a meaningful way. Let’s move on to take a closer look at our first quarter key growth results. Overall, organic year-on-year Group operating performance did benefit from a constantly improving trend in domestic fixed and mobile revenues and from year-on-year EBITDA growth in Brazil. Total Group organic revenues cleared EUR5.1 billion at minus 3.1% year on year against minus 3.7% in the last quarter of 2014. Always on an organic basis, domestic revenues posted a visible improvement to minus 3% year on year, from minus 5.1% in Q4 2014; while TIM Brasil, minus 3.3%, showed some erosion versus the minus 0.3% in the previous quarter, due to impact of the new mobile termination rate cut that became effective in February. In the first quarter of 2015, organic group EBITDA stood at EUR2 billion, trending year-on-year minus 8.1% in line with fourth quarter 2014. This domestic underlying performance as we will detail in a couple of slides, trended at minus 4.8% while TIM Brasil organic EBITDA was up by 1.6%. Organic Group CapEx were up by 40.6% year on year, including 2G license renewals in Italy and some initial 4G cleanup costs in Brazil. Innovative CapEx has been following a relevant acceleration, increasingly providing support to our operating performance. This new investment cycle is a very important step for our group that will be accompanied by relevant efficiencies on all our cash cost base on which we will update you. Let’s now move on to a quick on revenue, EBITDA and CapEx of our domestic operation. On Slide 5, we show first quarter 2015 total domestic revenues above EUR3.6 billion, minus 2.6% year-on-year; a quite remarkable improvement when compared to the sequence of the last quarters. Overall domestic service revenues were minus 3.3%, improving by 5.5 percentage points year-on-year. This shows a totally different pace from one year ago, when first quarter 2014 year-on-year improvement was only 1.3 percentage point. This sets the tone for further 2015 revenue progression as you can see in the lower part of the slide, this is a progressive tightening of the gap between erosion on traditional and growth of innovative. Mobile service revenues have already shown a faster momentum, and will continue trending up. Stabilization on fixed will be progressively benefiting for our N-Play strategy. In particular, video content and convergence will play a key role in turning around the game table. And, as we will show you shortly, the market reception of this new area of action has been already quite positive. Let’s move on the EBITDA. As we have already seen in the opening main financial slide, domestic EBITDA stood at EUR1.6 billion in the first quarter of the year. Let me breakup the analysis in few main points. Net of one-offs, our profitability trend improves at minus 4.8% year on year, opening 2015 more than 2 percentage point ahead of the average 2014 trend of minus 7% year-on-year. Seasonality has recurrently produced as low a start of the year. Underlying EBITDA performance picked up, as seen in 2014, in later quarters, since the higher revenues of Q2, Q3 and Q4 better absorbed fixed indirect costs. TI domestic EBITDA margin remains among the highest in Europe, driven by our continuous delivery on cash cost control, on which Piergiorgio will enter into more details. It is worth to highlight that industrial costs are flat, even if the increase in network elements there could have determined, short term, an increase in the operational complexity. Network and IT simplification programs become key drivers for a structure of reduction of the infrastructure total cost of ownership, and for a leaner and more agile operating model. Commercial costs remain under control, despite the higher commercial activity in both our main lines of business. SAC, ARPU shows a sound reduction in mobile and fixed, thanks to lower subsidies and lower per per-quarter advertising. Increases in OpEx are fully due to volume-driven areas. Reduction in real-estate costs drive down G&A expenses. The result achieved is in line with our best case. Human resources costs grew due to multi-annual salary agreement adjustment and other one-offs. Our efficiency benchmarking exercise tells us that we still have areas of improvement. The CFO will get into the details of an update of the cost saving program. Having said that, the further improvement path for domestic year-on-year EBITDA performance in 2015 is evident. The shape of the sequential year-on-year underlying EBITDA recovery curve we had in 2014 can be an indication for it. Also, our 2015 reported EBITDA will enjoy significant improvement against full-year 2014 average level. This move us towards domestic EBITDA year-on-year stabilization in 2016 for which we are fully on track. This represents a key goal for the whole company, and we are fully committed. Let’s move on to take a look to CapEx, on slide 7. It’s worthwhile mentioning that the EUR183 million year-on-year increase in the overall domestic CapEx has accommodated for EUR117 million which were spent at the end of January for the renewal of the 2G license allowing the right of use of 10 megahertz in the 900 band, and 15 megahertz in the 1800 band. The new term is 2018, for which we paid one shot in an economically advantageous way. In the lower part of the slide, we highlight the 25% year-on-year network CapEx increase that allowing for this sharp upgrade in 4G and NGN coverage. As you can see in the call out, traditional network CapEx accounts for 15 percentage points less year-on-year on the overall network market, representing today about 50% of it. This reduction together internal efficiencies, clearly contributed to fund the remarkable 75% year-on-year increase on innovative CapEx that we would point out to. Now, let’s move to see what we derived from this for our domestic performance. As you can see, we further pushed ahead in LTE coverage where we have now exceeded 3.6 municipalities and we have already reached more than 80% of the Italian population. LTE adoption on our customer base continued growing quite materially. At the end of March, our mobile broadband users were 10.5 million reaching 35% of our total mobile clients more than 1.8 million where on 4G up by about 0.5 million from the previous quarter. In the meanwhile, also fiber moved on covering almost one-third of the country with NGN. We are now selling connection in the pace of 25,000 per month, progressively adding up to our 316,000 fiber customer we had in April. So, more coverage, more customers, and now we see more revenues. So let us move now to expand our domestic top line analysis in its two main components. Mobile. Our visible recovery is continuing. In slide 9, we remind you where we were one year ago in total mobile revenues of where in first quarter 2014 we posted minus 14.4% year-on-year. Our minus 2% year-on-year in first quarter 2015 tells you that we recovered 12.4 percentage points in one year. Service revenue analysis of our holding customer base shows that we have entered in the new phase of customer base stability, while progression on innovative services support spending. As we recently indicated, this up trend we have been strongly working for will continue. In the lower part of the slide, we see how in our domestic mobile operations browsing versus messaging has won the battle. On the back of our successful LTE leadership and the increasing quest for data and quality service from our customer base that we have been able to monetize as we show you even better in the next slide. On Slide 10, we represent the dividend that we are reaping from the appropriate reallocation of data size in the bundle that we have performed before opening LTE to mass market, in May last year, after our consumer convention. This point represents the beginning of an average phase that is continuing steadily since then. We show that in this period the average size for data in the bundle is 1.4 giga per month with an average and increasing smartphone usage of 1.6 giga per month. So, for us, LTE has been an additional income generation, and will continue to be so. On consumer, now, 17% of bundle clients that top up their monthly spend with a EUR5 reload for an additional giga. Current activation intensity in the first quarter of 2015 has moved to above an average of 250,000 per month. The total ARPU conversion for every EUR5 reload is extremely high, about 80%, proving that increased data usage does not cannibalize other services. We will continue to drive the increase of 4G bundle penetration in our total customer base, now standing at an overall 65% with SME and corporate segment at about 70% and consumer at around 61%. We are moving on to drive further bundle penetration. So as we have secured a well-funded recovery path for mobile, let’s look for some evidence in our first quarter 2015 performance of the structural repositioning of fixed, which, as announced in February, is, indeed, in progress. Moving down the revenue waterfall, shown in slide 11, we note that innovative services in the first quarter of 2015 posted a year-on-year positive performance of plus 4.6% reaching EUR558 million. In this cluster, the lion’s share of about 75% displayed by broadband services that, on the back of our flat broadband access expansion, has grown in one year by 5.7% showing constant ARPU progression. As you can see from our 24,000 net broadband client increase quarter-on-quarter, we have taken part to the largest broadband quarterly market growth over the last three years. That translated into plus 58,000 clients on flat offers, preserving our premium-pricing position. While fixed broadband continues to grow, the main challenge for us is to bridge its related service into a larger customer base, accelerating the structural win back through convergence of Internet clients who have gone mobile only, and what we call the flatization of monthly fixed voice spend, introducing a number of option associated with fixed assets ranging from the bread-and-butter more voice to Internet and video content-related services. Our full flatization campaign was introduced effective May 1st. We expect a churn reduction started to build up from the second half. Let’s take a closer look in this fixed recover territory, moving to slide 12. Here, we show some of the main actions we are deploying to progressively stabilize our overall retail fixed service. We have already commented on our good fiber take up and the positive economics of our fixed broadband, so let’s now focus for a moment on TIM Smart, on the flatization, and TIM Vision, as part of our TV strategy. TIM Smart is our flagship triple-play offer that in just over one year has built up, without making too much noise and too many discounts, about 700,000 customers, preserving, as you can see, a healthy acquisition profile, with about 50% of related clients coming from fresh fixed market. Daily acquisitions are accelerating, churn is well below mobile consumer, and overall ARPU impact is slightly accretive. The flatization program, it is a big action point for us that has raised a lot of awareness, but that we have carefully built to facilitate a more value-for-money approach from our fixed voice-only customers. The spend, at the flat rate of EUR29 per month, inclusive of the monthly rental fee, has the goal of opening new awareness to a different and more rewarding way for the customers to use the fixed access. And there is some positive early news here of the large 3.5 million customers that we are addressing already 6% has moved to the flat option before launching the massive move. It’s 2.5 times faster than what we registered in our pre-commercialization market test phase. The uptake of TIM Vision has been quite impressive, moving from 20,000 to 40,000 gross adds per quarter. We are selling this base subscription video -on-demand offer at an entry level price of EUR5 a month. It is the base of our video content offers that range up to the EUR20 per month level for TIM Sky that, as you know, we just launched at the end of April. More agreements with other content providers will come to add more alternatives and more price points within this current portfolio. The overall goal of this different end-play action is to contribute to the net reduction of fixed-line losses and the introduction of new revenue streams in a country that, both in terms of structural mobile win-back and pay TV expansion, has a lot to offer to us. Let’s take a quick look at Brasil now. As Rodrigo Abreu told you on Wednesday, we are organically upgrading our prepaid core business that has been predominantly driven by voice, by a robust network and quality turbo plan. While positive business generated revenues, as I recalled before, holds in positive territory, our data revenues in the first quarter of 2015 grew by 41% year-on-year fueled by 4G. During the same period, our control plan grew, in terms of users, by 23% driving a growing performance in postpaid. We want to transform TIM Brasil into a larger operation, where innovative and postpaid services are successfully developing a growing role. We are building a higher margin EBITDA performance which on a year-on-year basis it was up to 29.4% from 28%. Towers have generated in Brazil a cash contributor in the order of magnitude of BRL2 billion that has enabled our timing and leading opposition in 4G. We expect to clear, in the very near future, another relevant amount of cash proceeds from the IPO of our Italian towers that, again, will be swapped into innovative technology rollout. Piergiorgio over to you now.

Thank you Marco. Good morning ladies and gentlemen. Let me start my financial update by giving you a focus on OpEx efficiencies. Marco has already given to you an update on domestic CapEx, while giving you our first quarter 2015 overview of domestic operations, where efficiencies are reinvested into the increase of innovative network spend insuring our material acceleration on LTE and NGN. On Slide 15, we update you now on our operating expenses efficiencies, which as you know will also contribute to the improvements of our operating profile while progressively strengthening our financial environment. We reproduce here an OpEx perimeter, which is consistent with the one we presented to you in February. We had told you that our EUR1.3 billion OpEx efficiency plan will take place in the market - and process-driven areas, and that for 2015 it is targeted to yield EUR100 million in savings. In the first quarter of the year, we have already secured EUR16 million, absolutely in line with the progression that we plan for the full year. In the market-driven box, we point out that the slight cost increase is driving by higher commercial activity on fixed broadband consumer. On process-driven, the visible reduction in G&A that Marco has already referred to has been a result of our new push on the real estate related in other facilities area. Beyond all the supporting detail that is presented here, we are constantly looking to expand areas of intervention savings. Now, on to operating free cash flow. In February, we reviewed together our full year 2014-related result that, even in a year of relevant investment in frequencies in Brasil stood at EUR3.2 billion proving, once again, the case of our strong self-financing profile. In slide 16, we wish to point out to you that our operating free cash flow performance for the first quarter 2015, spent EUR98 million higher versus the result of the first quarter of 2014, if we adjust for the EUR117 million spent in January for the 4G license renewals, and EUR422 million of lower factored receivable. Just for your reference, looking back one year, Group first quarter 2014 operating free cash flow [indiscernible], clearly indicating that our first quarter working capital is typically impacted by the cash-cost dynamics that have accrued over this year, as shown in the box on bottom of the slide. In addition to this, the usual liquidity which derived at the end of March when the proceeds of our EUR2 billion convertible issuance suggested us to reduce by EUR422 million the amount of factored commercial receivable, following a treasury optimization approach. Looking to the rest of 2015, as we had already the opportunity to comment recently, it if fair to expect that on a full-year basis working capital absorption will be well inside the amount we saw in full-year 2014, also on the back of progressive revenue stabilization and CapEx acceleration. So, the first quarter 2015 delta of about EUR1.5 billion will be significantly reduced. Let’s now move to debt position and treasury operations analysis. As we look together at slide 17, I wish to remind you that year-end 2014 net financial of EUR26.7 billion did incorporate, after spending about EUR100 million equivalent during the year on LatAm frequencies, a year-on-year reduction of about EUR100. On adjusted net financial position, as of March 31 stood at EUR27.4 billion, showing a similar year-on-year reduction of about EUR100 million not withstanding the taken during the period was increased to EUR1 billion, including the recent 2G license renewals in Italy. This points out, again, to our strong self-financing capacity, which, during the course of the new plan, will be dedicated at both an acceleration of network investment, and to continue debt reduction. Moving now to net income, the key takeaway of slide 18 is the comparison between the first 2014 profit which stood at EUR222 million in the first quarter 2015 bottom line that would have been produced without the impact of our January bond buyback, and excluding the negative mark-to-market generated by the derivatives components of our mandatory convertibles. Adding back this impact through our reported first quarter 2015 net income of EUR80 million, we reach a higher net profit figure than the one posted one year ago by around EUR100 million. We now come to a different representation of our buckets of bond maturities from 2015 to 2055, showing the amounts of the respective outstandings that we bought back a year to date. You can see how our extensive exercise did spread out until 2022 maturities, impacting an overall amount of EUR2.8 worth of debt securities, and delivering net savings of more than EUR300 million. This exercise was fueled by the issuance of a 3.25%, eight year, EUR1 billion senior and secured bond in January; and 1.125%, seven year, EUR2 convertible on our ordinary shares featuring a $1.83 EUR per share conversion price. So, with these cheap rates, we have been buying back IRRs ranging up to 3.4% while reducing our recording commercial receivable factoring by EUR422 million at the of March that even that its very low financial average cost of less than 20 basis points would have generated the spike of liquidity that is currently hardly remunerated at all. We will continue looking for further refinancing opportunities until these favorable market conditions that talk to a very strong liquidity at very low yields does last. Let me now spend a few moments on Inwit. Infrastructure Wireless Italiane is an independent Italian tower company that resulted from the carve-out of our entire tower business and has been contributed at the end of March. This carve out include civil infrastructure, such as 11,500 sites with widespread presence across the country; power units and in-cooling systems; landlord contracts and contracts with other operators all sit in the towers. Today, Inwit is the leader in the Italian power market, which is characterized by long-term predictable revenue streams and robust drivers. Telecom Italia and Inwit’s relationship is governed by a multi-year master service agreement. The contracts that takes into account the positive impact of the sharing agreement with other mobile operators in terms of new tenants and site evolution for the next years. As previously announced, Telecom Italia is undertaking the process of offering an IPO and minority stake of this asset and it will maintain a very rationale approach to be able to benefit from possible consolidation amongst the different pure telecommunication players. In our view, today it is more strategic to focus our efforts on investing in the active part of the network, but other than in the passive one, because it is more efficient in terms of capital allocation. Furthermore, by isolating this part of the business, it is possible to free value at a higher multiple than the one currently traded by CI. In terms of timing, we expect to conclude the IPO process within the summer. Thank you for your kind attention and back to Marco.

Thanks to you Piergiorgio, and to our finest deployment team for the excellent work done this quarter on the treasury and capital markets side. Having already shared with you some takeaways on Brasil, I would like to wrap up our presentation making a few comments on the progress of our domestic recovery involving both our consumer and our business divisions. We are witnessing a real takeoff for LTE demand, both at household, at the enterprise level, while we are getting high satisfaction scores from our customers. ARPU and data is showing that we have reached about 2.2 million 4G clients. We are seeing many positive indications that suggest a fixed turnaround has started, something we are really working very hard on from many different fronts, starting from a very robust NGN investment plan, which is being well executed. Great work, network guys, we therefore expect continued sequential improvement both in revenues and EBITDA. On the later we are seeing a material reported improvement in the second quarter. We are therefore on track and confident to deliver our key of our year-on-year domestic EBITDA stabilization in 2016. Thank you very much, ladies and gentlemen for your attention. And back to Alex for the Q&A.

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.

Ladies and gentlemen, the Q&A session is open. [Operator Instructions] The question comes from Mr. Nick Brown from Goldman Sachs. Mr. Brown, please.

Slide 6 of your presentation seems to show that the underlying domestic EBITDA trend will get better every quarter this year, but the year-on-year declines will still be at around 3% by the end of this year. Is that accurate, as it would imply about a 4% decline on average for this year? Or could it better if your bundling and pay TV strategy is successful?

As you know, we did not give a precise – a very precise target, but the report and the underlying EBITDA are progressing I think very well. And quarter after quarter as you saw last year that the following quarters are very favorable for the recovery also for pure mathematical reasons. So I’m confident, very optimistic, and I think we will deliver what the market is expecting from us.

Thanks. If I could just follow up, should we expect any more material provisions for litigation payments, or one-off compensation adjustments this year, which will impact the reported EBITDA?

Piergiorgio will take this one Nick.

No. Honestly, we are not considering other one-off – no we are not considering any other extraordinary items for the moment that we can forecast.

Okay, thanks.

Thank you very much Nick. Next question please.

Next question comes from Micaela Ferruta from Intermonte. Ms. Ferruta, please.

Yes, Micaela Ferruta from Intermonte. My question would be on the business side. I’ve seen tangible signs of improvements on the consumer side of revenue, so congratulations there. However, business appears to be a little bit lagging in mobile, as well as fixed, despite innovation, or possibly also due to innovation. Is competitive pressure increasing there? Or are you – or can you shed a little bit of color on what is happening, and how we should expect the next quarters to evolve for the business sector? Thank you.

Micaela, yes, you are right, consumer trends nowadays are better than business ones, both on the fixed and the mobile. But I think that the two dynamics are very different and, honestly, I am positive for the business as I am for the consumer, and I give you more color now. On the mobile, the price repositioning that, especially on SME, we had to do was mostly caused by a face-to-face comparison with the consumer. Consumer price went so down in the past years that the difference in terms of pricing and ARPU for small/medium enterprise was simply unsustainable. I assume that most of the re-pricing exercise has been performed. We see a good stabilization in terms of prices also on SME. Yes, there is some more commercial activity from our competitors, but we don’t see irrational moves. So, finally, when you compete is fine, when you compete with irrational players is not fine. And let me say that I don’t see many irrationalities on the market. There could be some spot, but it’s just some occasions. The fixed, well, the fixed we are doing super-well in ICT. And the convergence, we tended to have a story, or to tell a story, that is very much consumer oriented. When we say end play, we tend to say end play in the consumer with the video, with entertainment; well, the end play is happening also in the business where the element is IT. In IT, we are growing. We are growing both in infrastructure service, like hosting and housing in our data centers, and, even more, very well in cloud. In cloud, we’re growing extremely faster. And of course the magnitude of the pure cloud service is smaller, but starts to be material, because we are talking about several tens of millions per quarter. The point is that technology and IP technologies determine an erosion on fixed voice traffic because it’s converted into IP voice. And this is true all across Europe, we don’t make an exception. I think that we are working for structural improvements, and so, as we saw in the consumer, also in the business it will take a little bit more time, but we are doing the right things. Thank you, Micaela.

Thank you, Micaela. Next question please.

Next question comes from David Wright from Merrill Lynch. Mr. Wright, please.

Hi, guys. Thanks for taking question today. Just a couple of questions from me. Firstly, just on the domestic fixed service revenue reported, I think you reported a recovery versus last quarter. But if we adjust last quarter, the AGCOM fine, then, actually, Q1 deteriorated slightly in terms of the growth rate year on year versus last quarter. And I just wanted to understand the drivers behind that. What has gone better in Q1? What has gone worse in Q1? It looked like good broadband adds and ARPU, but it looked like higher line loss. What weighed Q down that meant it was a little bit worse than Q4? And then, could you just explain a little the one-off salary increases, just what they are, and just the exceptional nature of those in the report? Thank you very much.

Okay, yes, the total domestic revenues, the trend of the total domestic revenues in the fixed is mostly due in this quarter to two effects. One is the re-pricing of the monthly fee, which is positive on consumer, of course. But we have to be a bit careful because the trend very positive on the consumer. The consumer, if we split the fixed revenues between consumer and business, consumer made a sharp increase, up to less than minus 2%; and business service remained more or less in the minus 6%. So what – what we see is that this component coming from the consumer will continue to be maintained. And we assume, for the coming quarters, a recovery also on the business for a long list of actions that we are taking. Keep in mind that there is also a wholesale effect, a wholesale effect that is driven mostly by prices. It a EUR9 million that is the quarter effect of the prices on Q1, that goes also down with your margin. So I think that if you wanted to give a fixed breakdown, we have in the annexes a full detail of the fixed breakdown that can be extremely helpful in spreading these analyses. And Piergiorgio will answer the second part of question.

Thanks. Commenting in slide number 6, where we show the adjustment on the first quarter EBITDA, I have to say that in the first quarter 2015 we have I would say two components. The first one is a EUR25 million for salary increase in stock option plans. If the salary increase is an increase related to the signing of the new agreement signed in 2013, and, of course, there is no increase in the next year, so it is a one-off increase; and EUR20 million of – for accruals on a risk provision, which includes the various items, which small number. In first quarter 2014, these one-off effects include a EUR20 million for release of labor-incentive provision; EUR20 million for income energy management; and EUR15 million for release of risk provision.

I think I understand. So that salary increase, that one-off, is that cost then spread across the year, or it’s just a one-off payment on salary? I’m just a little confused. We can maybe take it offline, if it’s more complicated.

Okay, David, well, why don’t we do that, so we can move on with the other question? Thanks very much. Let’s move on for the moment and I think take the next question.

Next question comes from Mr. Mathieu Robilliard from Barclays. Mr. Robilliard, please.

Yes, good morning. Thank you very much. One question related to Metroweb. Could you articulate to us what you would see as the benefits of getting engaged with Metroweb in rolling out your network; and contrary, why you wouldn’t want to do it? And related to that, can you explain to us how your discussions with the government are progressing with regards to being able to get some of the subsidies that the Italian Government plans to give, and is actually already starting to give, for the roll out of broadband, and how those interact with Metroweb; I mean if getting Metroweb helps you in getting those subsidies, or it’s unrelated? Thank you.

Yes, Marco speaking. I think that Alex cut the very last part of the answer of the previous question, so I ask your pardon if I give you just one second – I take one second of your time and then I answer next one. Your – there was a question on salaries that asked if it was a one-off, or if it was something that – we have a sort of 0.8% salary increase that was agreed with the unions that has been recognized as compensation for the renewal of the contract, which includes several improvements in our possibility to increase the productivity. And, no, it’s not a single one-off; it’s an amount that is monthly, and it will – the full comparison effects, so the two values, will be fully comparable, starting from November – sorry October this year. So you have another two quarters. But we don’t have other adjustments, because it was the last one we agreed with the unions. So, I hope I gave you also last part of the answer. So, Metroweb. Well, Metroweb is along-lasting story. And I think we need to be very clear, because there was, I think, the possibility of having some value creation, if the conditions were the right ones. What we said, very clearly since the beginning, we are the industrial player, and we are the industrial player who owns the network, and we have a huge investment plan that we are ready to deliver. People tend to consider our investment plan we have announced until 2017 as if in 2018 Telecom Italia makes zero investments, which, of course, is not the case. So what we said is if we expand our view not to 2017 but we go on and we go to 2020, we see that our coverage, both in terms of fixed coverage, FTTC, FTTB, FTTH and mobile coverage mostly LTE and LTE Advanced, will continue improving the infrastructural situation on the country. And, of course, there will remain some areas that will be market failure, but these have to be tackled in another way, and the pure private investment will not face market failure on itself. So when we discussed with Metroweb, we said, of course, if there is a mean to accelerate in terms of time for executing the plan, having an efficient and value-accretive way to do it, we are more than ready to discuss, but it has to be clear that we are the industrial operator, so the operations have to stand in our hands. We are more than open-minded to guarantee full equivalence of input with all the players who wanted to buy from this Company, and we are ready to recognize to our co-investor the role of guarantor of these equivalence of input. And progressively, when we will proceed on the realization of the plan, we are willing to adopt a sort of regular fiber-like approach in which progressively we re-enter into the full ownership of these assets. Of course, it requires, even once we increase our market – our share, it needs that the full equivalence is maintained and, if possible, strengthened, because the role of Telecom Italia becomes more and more relevant. I think that this is absolutely rational. The discussion did not went in the direction we hoped. And we have been asked to consider different alternatives that, from one region for another region we’re not in line with these very plain vanilla exercise we were willing to do. I think that in the plain vanilla simplicity there is the possibility to make a great work. Yesterday, it has been launched, the public consultation, to understand what will be the real private investment and so to define the areas, and the amount, and the scope of the public contribution. After this public consultation, the government will issue the last and final document that will contain all the indication on what will be the governmental contribution in different areas, and under different condition of market failure. So this is, very transparently, what’s happened. Of course, I think that we have to consider that we have a real unique opportunity in which private interest meet public need, and we will continue operating as a private operator.

Thank you Marco for the very extensive answer.

Thank you.

I hope, Mathieu, that was good for you. Next question, please.

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

Yes, thank you very much. I had two questions, please. The first one, just going back to the cost base, on slide 15 – there’s been quite a few questions on labor already, maybe I could ask one about the volume-driven side. In your presentation you gave three months ago you said that should be, roughly, 20% of sales. Now, what we’ve seen in the first quarter is that your domestic sales came down by EUR120 million, so I’d have been expecting the volume-driven cost to come down as well. Now, as you say, that’s basically gone up year on year. Does this imply you’re spending more on commercial costs going forward? Should we expect those volume-driven costs to come down later on in the year? And then the second question I have, I was just wondering if you could talk a bit about the competitive dynamics you’re seeing in the mobile market, in particular, from Vodafone in the quarter. Vodafone had indicated they were trying to, I think, be a bit more aggressive on holding on to customers, and it looks like you lost about 210,000 customers in the quarter. What changes have you seen in the competitive dynamic? Thank you.

I answer the competitive one first and Piergiorgio will answer the cost one. On the competitive dynamic, namely, on the mobile, what I want to tell you is that, yes, there has been some more activity in terms of commercial activity. And it is demonstrated, for example, that the gross adds were higher; and the MNP, in and out, were a bit higher than in terms of total activity, we saw some more dynamic. But, but I think that there is something that we have to consider when we talk about customer base and effect of the customer base. The Italian market, as you all know, is almost entirely prepaid. This prepaid market – in this prepaid market, what we consider important is the level of active customers. So the fact that there were some inactive customers that after 13 months are canceled is, of course, important because in order to make those customer, inactive customer we had some costs. But it is – also, there is a seasonality effect, because in Q1 it expires the 13 month after a Christmas campaign. So it’s normal that you have some – if you go – if you compare Q1 2014 with 2015, it’s almost the same. So what is the real important number? The real important number is that active customer base is stable. And you can see in the chart where we split the delta revenues in delta customer base and delta ARPU. These – during my last road show was something I was pointing out continuously; as you see, the minus 4.2% - minus 3.4, which is delta ARPU, and now only, let me say, 0.8 that’s active customer base. So this is the real point. Now, I leave to Piergiorgio for the first part.

Yes, thanks from the volume-driven cost, as you can see from slide 15, in general, the principle is that the ratio between the revenues and the volume-driven cost is stable and this is also the case in first quarter results. There are two exception which of course has an immediate counter-effect on our revenues, which means the equipment cost, where we have an increase, and you can see in the revenues a similar increase. And also, in the connection cost, particularly in the one related to the international wholesale of Sparkle, we have an increase of these costs, which has, as I said, an immediate reference in the revenues of Sparkle. Excluding these two exceptions, which are, of course, perfectly explained by the evolution of revenues, the ratio is stable.

Okay, thank you very much.

Thanks very much. Next question please.

Next question comes from Mr. Luis Prota from Morgan Stanley.

Yes, thank you. My question is on the towers IPO. What I would like to understand is – or the question would be whether you could give us your views on the benefits of IPO in this business relative to a sales and lease back with a towers company. How have you been addressing and comparing the benefits and the negatives? And also, I would like to understand, in terms of the leverage and net debt, whether this is one of the key reasons to favor a straight sale relative to a sale and lease back, as I understand that this would have little leverage impact for rating agencies. Finally on this one, I don’t know whether Inwit will be created with some debt, I suspect so. I don’t know whether you can give us the figures on that, and whether the portion of that debt that would belong, theoretically speaking, to the minorities would have a positive impact for rating agencies as well. Thank you.

Yes, Marco speaking. I answer the first part of the question and I will leave to Piergiorgio all the math that you asked for. Well, let me say that I strongly believe that we are just at the beginning of the game for the tower and infrastructural tower affair in Italy. As you saw, the Galata deal has been performed very well. The raise in the valuation of a towers, the IPO of railways, we saw a lot of bits and pieces. What I see in the coming future is that there is a first way – wave of value that comes from a business with a very stable, sold dividend yield. So there is a sort of financial attractiveness of this business, and this will be caught in the multiples of the IPO. If you look at the multiples of Galata differences, tax, et cetera., that are between the two different cases, you saw that these dividend yield story is very strong. But I think that will be a second wave of value creation. The second wave of value creation will come from the consolidation of this market and the consolidation of this market will be – will come. It’s a matter of time. It will come. Now, if you decide to IPO, you can participate to value creation 1, and to value creation 2. If you decided to do other way, if you’re talking about the straight sale, or if you’re talking about any other opportunities, you simply renounce to some extra value you can extract from this business in the coming future. I think that we are doing right, and trading multiples are confirming it. And now I leave to Piergiorgio for all the impact you’re asking for.

Thanks, Marco. In terms of let’s say impact on revenues, leverage, and so on, of course, I’m not in a position today to give you any formal detail, because, as you know, we are in the process of terminating with the Italian exchange authorities all the procedure. And we expect to receive the final green light by the end of May. So today, I cannot, of course give you anything. I can maybe comment a little bit on the principle because let’s say about accounting treatment, we are – the resolution of the Board that is for a sale of up to 40% which means that we will continue to consolidate the company. So we don’t expect material impact because, of course, we will consolidate other companies. In terms of the leasing, you know that there are two possibilities; operating lease and financial lease. We expect to treat these as an operating lease. The impact on net financial position will be, therefore, just the proceeds from the sale of the minority. So this will ease the only effect on our accounts, given that we will consolidate – we will be consolidating the company. In terms of leverage, I cannot give you the detail. But the principle is that we have not decided to have a significant leverage, maybe comparable to what you have in other U.S. companies, because we want to be very rational, as I said in the speech, to have – to benefit from possible consolidation among the various operators. As Marco said, we decided to have this approach, given that, for us, this would not be something that will change our ability to deleverage. In terms of credit rating, yes, of course, we have analyzed the transaction in detail. We do not expect these to have a material impact on our credit rating. I hope that it is clear, all.

Yes, very clear. Thank you very much.

Thank you, Luis. Next question please.

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

Yes, hello, good morning. I was impressed by the numbers you shared with us about the LTE adoption in April. So I was wondering if there was some specific reason behind the strong performance, you were mentioning before 2.2 million active LTE users. And the second part of my question is if you would agree with me if I say that, probably, what Northern European data [indiscernible] is that once penetration for LTE exceeds the 15% customer base overall this is start to having a positive impact for FDO also.

On the first question – hi, Fabio, the first question, Stefano De Angelis will answer you and then take the second part.

Regarding the LTE penetration and acceleration, we are strongly focused in the portfolio of handset in the LTE products that now represent now more than 90% of our sales that were boosting in the first quarter, as you can see in the total mobile revenues growth. And we are making CRM activities in order to expand the LTE user on the customers that both in LTE device but have a bundle that includes data but doesn’t still use the option of the LTE. You have to remember that when we were into the price war we were selling the trigger without the LTE future. So now we are targeting, on a one-to-one base, these customers with dedicated proposition in order to uplift this customer to the LTE network end use.

Yes, exactly. There is a very effective cooperation between the network guys and the commercial guys, every time the network guy is viewing an LTE enabled device which has not an LTE contract, it enters in a sort of contact list, and we make a one-to-one activity, which is extremely effective. The second part is a sort of a mantra that our head of strategy is telling to the rest of the Company almost every week. So once, 4G exceeds the 15% to 20% it will boost the revenues up. I strongly believe that it is true. The LTE customer is, in general, a happier customer with more usage, with lower churn. And what we see is that, yes, there is some cannibalization on traditional revenues, but, all in all, it’s so accretive that the final result is good. So we will keep boosting and pushing, then we can argue if the turning point is 15% penetration, 20% penetration, honestly I don’t care. So what is the strategic move is push, push, push on 4G.

Thank you very much.

Thanks, Fabio. Next question please.

Next question comes from Mr. Giovanni Montalti from UBS. Mr. Montalti please.

I just wanted to know if you can share with us some thoughts about the way you look at the [indiscernible] thank you.

You cracked up, Giovanni, but we understand the question was around saving shares conversion potential…

Yes, the way you look at it, as it is an opportunity, if you agree this could create value, improve governance. Thank you.

Piergiorgio will take this one.

I am Marco, I am talking that one for Giovanni. I don’t change my mind. I think that in the capital structure, saving shares are a little bit [indiscernible] as an instrument. It’s not a high priority, because the level of inefficiency that it determines on dividend is not that high. But, as I told you, if I imagined the Company some time in the future I think that this heavy quantity of saving shares probably is not that actual as it was some years ago when this structure was created. So the real question is not what we think, the real question is when the market conditions will be appropriate, and market conditions includes several aspects. I don’t change my mind. Thank you, Giovanni

Thank you. Sorry, if I may follow up quickly. But just understand it’s a very long-lasting issue. I mean I just wanted to understand if you have discussed this in the Board, if there has been any specific reason preventing this in the past. If you think that these reasons that have prevented this operation in the past may be now off the table and, therefore, would you agree that maybe now the situation, including let’s say the internal solution of TI, the shareholder base of TI may be more supportive for this operation to materialize. What is the mood in the Board? Is there any specific concern among your shareholders? What’s the feedback they get?

We are one of the company with more Board sessions on earth, because we had to discuss so many times about alternatives for the network, as it has been asked before. The hot topic in the recent month was another one was the network. Our investments – third class investment that the government view [indiscernible] it has not been priority for the board up to now.

Thank you Giovanni.

Thank you.

Next question comes from Mr. James Britton from. Nomura. Mr. Britton, please.

Thanks very much. If I go back to slide 15 and labor costs, are we right in deducting that if you strip out what you consider the one-offs then the labor cost has increased around 3% in the first quarter? Could you just give us an idea of whether you expect that to deviate much through this year, given your intention is to introduce a new generation of employees into the Company, and that a relatively limited flexibility on headcount. If you could just talk about the labor cost direction, that would be great. Thank you.

I answer James, the second part of your question and then I turn it to Piergiorgio for the first part of your question. When the Italian government has made the Jobs Act, has approved the Jobs Act, it looked very interesting, because it had new forms of a welfare that could be, at the same time, a protection for existing workers and a way to have a new younger generation at work. The Job Act needs in order to enter into force of the so called executive decrease, which needed to be issued by the government, within the maximum date is June 10. Now, as usual, the devil is in the detail. We need to see, in this decree, how the contribution for the welfare will be allocated in order to understand if it will be possible to have the contribution of this part of the decree that allow us not only to repeat the so-called solidarity program, which is a temporary reduction of the working time of a certain number of people, and, at the same time, hiring new people, new guys with benefits on the contribution side. So to make a long story short, we are waiting for the decree in order to understand if we can confirm completely what we said, said that having a change of mix in our aging profile is something mandatory for our Company. Now, I leave to Piergiorgio.

Thanks. As you can see from the slide 14, in cost of labor we had an increase of EUR46 million, which is I would say almost explained by the extraordinary items, or the non-recurring items that we have described to you in slide number 6. As Marco explained well to you before, and particularly on the change of the salary increase. The salary increase over the last year is [indiscernible] which means that from April 2015 we will compare every month with a number which implies the similar contract, and will be homogeneous; which means that the discontinued will be limited just to the first three months. Excluding this one off item, I would say that the cost of labor is expected to be stable, or with a slight increase, but very, very slight; something in the region of 1%, 2%, maybe 1% increase, so nothing significant.

Great, thank you. That’s great.

Next question please.

Next question comes from Justin Funnell from Credit Suisse. Mr. Funnell, please.

Thank you. Just on the flatization plan, you’ve shown us that 6% of this 3.5 million have opted in to Sofora during this program, as you communicated to customers. How are we doing on the opt-out ratio? Because your cut-off date was May 1, do you have any visibility now on how many have opted out by that time? And can you give us any feeling for what your expectations are now on how many will opt out? Thank you very much.

Well, as you know and the way we decided to approach the move to flat plans is mostly based on opt-out. The maneuver starting May 1, is based mostly on an opt-out concept, even if what we said is that all customers that have not used the voice, so that bought only the access, will be considered only in an opt-in. Now why we did the opt-in exercise before launching the maneuver of May 1? Because we were asking ourself, does the market like it, or not? We always made some commercial effort in order to try to move existing voice-only customer onto flat plans. But it was let me say a normal commercial activity. We set up for some weeks a special task force, making a stronger push. And what we saw is that making a stronger push, people who were contacted demonstrated they did like it and they moved from voice-only to something different. For example, 6% accepted to move to flat option, but also, 100,000 customers moved to broadband, which is even more interesting. Now, what we do expect, starting from May 1 in which the move is massively on an opt-out, I’m personally convinced that the customer base will like. And we want to be as much transparent as we can, so what we said to the authority, to the customer, et cetera., is I’m convinced that once the customer use it they will like. If they don’t like, in the coming months we are ready, for a period of time that we are discussing with the authority, to move them back to the original plan and to maintain their pay-per-use tariff plan if they don’t like the flat with the full usage of fixed to fixed, and fixed to mobile. I’m very positive. So the reaction we had was positive. The first start was, okay. We communicated more than once. We will continue communicating in the bill, in the site, and with the dedicated channel in our customer care. We want to be transparent. So it’s not a tricky move. It does not want to be a tricky move; it’s fully transparent with our customers.

Understand.

It was your follow on

Please. Obviously, this is a pretty pivotal program that you’ve got in place here, so the details are pretty key. Do you have a figure on the proportion of the customers that you are planning to move on an opt-out basis, which, again, was May 1, I think? How many of those have opted out prior to that May 1?

We just started. We just started. Because it’s only one week, the number is very modest. I think that the best thing we can do is to keep you updated in the next conference calls, because I think that these can be a meaningful metric that we can monitor. So I check the commitment to keep you updated, since basing on one week, I would say, almost nothing. But it’s a bit too optimistic if I would say almost nothing. So I think that in few time, even eventually in the coming conferences in which we will participate, we can update everybody on those dynamics. Do you agree, Justin.

Yes, thank you. You were saying that the line-loss trend should improve in the second half. Why not Q2, Marco? Why are you – will you already see a benefit in Q2?

Well, you know better than me, those dynamics are a bit long waves. And so we started communicating, and then we need people to get used. We are making also other things. For example, we are moving the bill from every two months to a monthly bill. So we’re making a new portfolio for broadband, a new portfolio for convergent products. We just launched the pay TV. As I said, it’s a broad and vast set of actions that we are putting in place, so I’m honestly more confident for the second half and then Q2.

Got it, thank you.

Thank you very much Justin.

Thank you, Justin. Now, let’s go for the last question.

Next question comes from Mr. Stefano Lustig from Equita. Mr. Lustig, please.

Good morning. I have a question on the Sky offer. And I imagine is really too early to comment about the commercial success. But I wonder if it’s already time to comment about the experience in collecting orders, so if the process from the call of a potential client to the delivery of the service is smooth, is in line with expectation, is harder than expectation, so to understand when the machine will be a regime; and when will be the quarter let’s say when we will have the first indication of recruitment of clients. And then, on Sky again, if you would like to comment the price scheme you proposed, which, in my opinion, have a very limited promotion – promotional attitude, which is right, in my opinion. But I wanted to know if you want to argue how you selected this kind of approach?

I answer the first and Stefano De Angelis second. Well, most of the company knows that I tended to be the chief testing officer, because I tended to use all the services we sell, and which is not the best experience for most of my colleagues, but if you don’t do so you never know what’s happening in real life. Well for the time being the true answer is, no, on the process. We don’t see major, major falls, to be honest, neither minor falls, but it’s really very, very early. We are very – we were very optimistic on the possibility to sell Sky on most of our copper lines. And I’m very curious to see, in a couple of months, if my expectation will be confirmed. Because, ultimately, if you consider the real bandwidth need, in order to have a superb HD experience is something between 7 mega and 8 mega real, if you consider that 55% of our customer base is reached with a nominal 20 mega, now that decrease the nominal 20 mega as down as you want. But I think that we are – we should be able to offer not only on the fiber, of course, I’m much more happy if the customer advised the fiber and Sky, but in case the area is not reached with fiber, I think that it’s not a major limitation, should not be a major limitation for us. And then, I leave Stefano to Stefano.

Thanks Stefano, let’s consider, if you split, first of all, the component of the Sky offer is defined by Sky. If you now take – consider that we are on page 12, where we have the TIM Smart that is very successful, just to give you an example, we have for EUR39 for 12 months the TIM Smart that includes the Sky offer. The Sky offer is set at EUR14, so it means that for 12 months we are selling the TIM Smart offer, the triple-play offer that becomes quadruple play, with Sky at EUR25 for the Telecom Italia, the TIM components. We never played the game into the telco arena with a price of EUR25. Then, if you refer to a comparison with the other telcos, we have to remind that we are playing this game by the 90s. So it’s normal for us to have a premium price, and a part of this premium price is based on the replicability obligation that we have. So it’s part of our way to stay in the market; it’s part of our history, it’s part of the regulation.

Yes, thank you very much. Excellent.

All right, so we need to wrap up now. Thanks very much everybody. Have a good afternoon and a good weekend.

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