Enrico Parazzini - CFO Riccardo Ruggiero - CEO

Damien Maltarp - Cazenove Robert Grindle - Dresdner Kleinwort Wasserstein Micaela Ferruta - Intermonte SIM SpA Mark Cardwell - Sanford C. Bernstein Laurent Sierra - Redburn Partners James Ratzer - New Street Research Guillaume Tastet - Oddo & Cie Equities Simon Weeden - Goldman Sachs Inc. Stefano Lustig - Euromobiliare James Rivett - Citigroup Global Markets Inc Oriana Cardani - Centrobanca SpA James Britton - Lehman Brothers' European Telecoms Research Nicolas Didio - Exane BNP Paribas

Ladies and gentlemen, we would like to welcome everybody to Telecom Italia Group First Half 2007 Preliminary Results Conference Call. Today with us we have, Mr. Enrico Parazzini, the Group CFO, who will be commenting financial results, and Mr. Riccardo Ruggiero, Telecom Italia's CEO, for the usual analysis on operating performance. We would like to inform you that this event is being recorded, and all participants will be in listen-only mode during the company's presentation. After Telecom Italia's remarks are completed, there will be a question-and-answer session for 45 minutes. At the end of the conference call, Telecom Italia Investor Relations team is available to answer any additional queries you may have. We have a simultaneous webcast that may be accessed through the company website, www.telecomitalia.com. The slide presentation may be downloaded from that website as well. Please feel free to view it during the conference call. Now, I will turn over to Mr. Enrico Parazzini. Enrico Parazzini - Chief Financial Officer: Thank you. Good afternoon to everybody. Let's start with the chart number two of presentation, on TI Group key financial results. Results achieved by the group in the first half of 2007 are overrode in line with the targets announced on March 9, 2007, during the annual meeting with the financial community. More specifically, the first half resulted in a growth in revenue of 0.9% reported. Thanks to the strong performance of international operations that I have said, the year-on-year decline in the reported Domestic business as anticipated in forecast and plan. And affect by regulatory discontinuance in the mobile business, then initial rate cut that occurred on July 6th, termination of the recharge cost in March 2007 and the self-regulation of International Roaming tariff. Excluding changes in consolidation area and the exchange rate impact, the organic growth of revenue is 0.2% plus. You may see further details on that, on chart 11 in the appendix that are... that is our usual chart that presents the major differences in the consolidation area. The most difficult of that is the acquisition of American Online Germany [AOL Germany] that... for that we need to adjust the revenue to '06 and then, the effect of the changed rate impact that there is a devaluation of reais... real, that implies an adjustment in revenue to '06. And this explains the increase in the organic figures of 0.2%. This is just for our official reporting organic. Then we have to inform you that considering the €240 million revenue impact coming of the AGCOM deliberation that has changed the treatment of third party premium service, otherwise known as non-geographic numbers, excluding the third party sales from our first quarter... first half towards this figure [ph], the year-on-year growth would have been plus 1.7%. On the Group EBITDA margin results, a 40.8% in first half, with a corresponding organic margin of 41.6%. You will see also for EBITDA in chart nine of the appendix, the usual reconciliation of reported to '06 with the organic 2006, this in addition to the change in consolidation and positive impact that practically offset one to the other. There is the effect of 2006 restructuring cost in Brazil reorganization. Then we see a decline in absolute value and the change in the margin from 42.9% to 41.6% and 40.8% reported. You may see also that from the slide that on the right of our... of this chart there is the second quarter key operating trends, that were notably better than in the first quarter. Then Mr. Ruggiero will detail more these trends in his presentation, but there we will see that first half revenue growth was 0.9% and in the second quarter was 1.2%. While the change in the EBA margin was less 1.7 percentage point in the first half, and only 1.2 in the second quarter. So generally speaking there is a positive trend in the second quarter as compared to the first one. Moving to EBIT, then the comparison year-on-year is less 8.7% reported, also less 5.4% organic. Here again in chart 10 in the appendix, you see more detail. There are no additional considerations in the significant changes 2006 versus to 2007 as what I said in the EBITDA, just because the difference between EBITDA and EBIT is just related to the depreciation. Then coming down, we have to anticipate that in financial charges we had a better performance in the first quarter to 2007 as compared to 2006, mainly because of positive reduction in financial charges. That... and also, we have a positive effect... a non-recurring positive effect in fiscal accrual for... with all the tax accounted in previous year that then after recourse to the European court has been cancelled and then compensated in July. So, this leads to a positive effect and impact on net income. Then as a result of that, we expect more than in line with 2006. 2006 we reported 1469, we've spent about 1504, first half 2007. So we recover at the bottom line, the performance. CapEx; then on CapEx of course we'll report better in the later presentation, is growing by €258 million as compared to the first half of 2006 according to our plans of reinforcement in our technological presence. And again the debt is at €49.2 billion, €1.9 billion lower than the same period one year ago. I remind you that during the first half of 2007, we paid €2.8 billion for dividend and in addition, we had the acquisition of AOL for €669 million. So except for that, we will have as compared to the ending period 2006, a reduction into that. Thanks to the positive effect of the cash flow in the first half. Then moving to chart three, we have some more detail about the representation... our representation. We have divided our slide in four pieces. First one is a group level comparison of revenue and EBITDA, reported data and organic data. I don't have anything to add this portion than I had up to now. Then we have a focus on the Domestic area. European BroadBand and the TIM Brasil. Domestic area was affected as you may know, by the effect of the Bersani Decree for €163 million. Then the effect of the fixed-mobile tariff change for about €195 million, and then the so called 'ready effect' for other €20 million. So, in total €0.5 billion reduction in our revenues, that of course affects of the comparison with the previous year, plus of course the adjustment for their non-geographical numbers. This of course affected that also the EBITDA for about €200 million and the reduction in organic EBITDA margin by 1.6 percentage point as compared to the previous year. On the other side of the bottom of the page we see the European BroadBand performance that reported increase by 63%. Thanks to the contribution of AOL Germany acquired this year. On a comparable basis, the increase in revenue was close to 20%, and the improvement in EBITDA more than doubled from 5.9% to 12.9%. TIM Brasil continues its good performance with an increase in revenue by more than 45% and EBITDA margin moving from 21% to 25%. It's easy to appreciate that the weight of the international revenues to the consolidated figures is approximately 20% and is a good improvement as compared to the previous year, mobile [ph] versus a growth of our international contribution to the result of the Group. On chart four, a brief comparison to our target. As I said before, the result of the first half are inline with the target we communicated with the markets on March 9th. Revenue growth we see plus 1% or 2%. We have an organic growth of 0.2%. We have to remind that they are only non-geographic numbers. It's analytical [ph] effect that move the comparison to plus 1.7%. The EBITDA margin 2.5% reduction of 1.3 percentage point organic and EBIT was less 1.4%. Than in chart five, we have a situation of the net financial position. From the 37.3 at the end of the year, we have to take into account the acquisition of AOL, as I said before €669 million, plus the pay dividend €2.8 billion. Small contribution of let's say €42 million, this is more than disposal is the dividend from... it takes and other minor companies, and then the contribution of the free cash flow, thanks to EBITDA performance and that's reduced by CapEx and the net generation of cash of €1.6 billion. In chart six, just to remind that in our first half reported figures we have not reflected of course, the transaction we made in the first half of July, more precisely, the sale of Oger Telecom for €462 million effect on the net financial position. The sale of Solpart, our 48% stake in Brazil Telecom for €354 million net effect on our financial position. Then a partial disposal of the minority share in Capitalia that we had with a positive effect of €37 million on the net financial position. That equal about 50% to our stake in Capitalia. We will go on in the second part of the year. We don't sell it in one shot, just in order to optimize the market price and optimize the proceeds from this disposal. In total, €853 million positive effect on net financial position, versus a total year plan of about €1 billion. So, we are close to reach our plan. We are executing the plan we committed. We have just to complete the Capitalia disposal, and then later on the disposal of Mediobanca that we have forecasted in our plan. Of course, connected to this effect in net financial position, we'd also account in July for the plus in the P&L for the profit that we have... we gained from this disposal. Now I completed... ended my financial presentation. And I hand over to Riccardo Ruggiero for the analysis of Telecom Italia operating performance, after which we shall be available to answering to your questions. Thank you very much. Riccardo Ruggiero - Chief Executive Officer: Good afternoon, ladies and gentlemen. My presentation will start on highlighting the business performance of the first half, and comparing them with the target that we have announced at the market at the TI Analyst Meeting in March. So at group level, revenue grew 1.7%, excluding the non-geographic number, which is in line with target; targets were plus 1%, plus 2%. EBITDA margin reduced by 1.3% above target expectation which we were forecasting minus 2.5%. The Domestic revenues minus 3.6%, excluding the non-geographic numbers in line with target, fixed revenue minus 4.4%. On fixed revenue, this is of course excluding non-geographic numbers. We will see in the presentation on the second Q, we have here reduction on international sale revenue, which accounts for more than €120 million, excluding that we would be in target near 2.5% of revenue reduction. Mobile domestic, minus 1.3%, better than target, EBITDA margin, minus 1.6%, in line of target. European BroadBand revenue, while... particularly EBITDA margin in line with target, if we take particularly into account to the second Q, which we performed with an EBITDA margin of 14.8%. TIM Brasil, better than target with revenue increase 18.1% excluding billing keep and EBITDA margin 25.2% better than target. Going in the slide three, we see that if we exclude the discontinuities that we have in this first half on revenue side, non-geographic numbers which account €230 million out of the €508 million, Bersani which accounts €163 million out of the €508 million, fixed-mobile which accounts €95 million, and the self-regulation on International Roaming, so the rating effect which is €20 million. We would have had a growth of 3.5% in revenue, and we see that second Q would have been 3.1% in growth in revenue. So, if we net this discontinuity. But I think that the most positive trend we see around the EBITDA in which the 193... sorry the €191 million of reduction in EBITDA is due €163 million Bersani and €28 million fixed-mobile. If we net this effect, we would have been more or less flat in the quarter. But... sorry in the half; but with the very positive trend in the second Q with... going from minus 2.5% first Q and rebounding it in the second Q with plus 2.7%. So net of this discontinuity, the company is performing well in all its business, Domestic and International. Going on the highlights of the performance on fix, I think that going on the bottom, the best news is the reverse trend that we have on data business. This has been... and in particularly the focus that we wanted to deliver on Top Client segment and ICT, the information communication technology market. You see that the trend we were negative, almost 20% 4Q on '05, first Q of '07 we have improved and now we are showing in second Q a minus zero... sorry a plus 0.5%. We confirmed this trend on the second Q... sorry on the second half of this year. So we will maintain this positive trend. So we have reversed one of our top goal of this year, which was redressing the situation on Top Client. This is also mainly due to ICT development, we will see with the increasing revenue of 21% in the second Q compared to second Q of '06. Another positive trend is that the market voice traffic volumes for the first time is... also did rebound positively with minus 3%. This is due to the high penetration of flat offers. We have increased reaching to almost 34% of penetration and on... also on the broadband, the value strategy together with volume strategy, also applied to the broadband and the voice market, has given good results with not only good numbers in terms of acquisitions we will see it later on, but with constant migration of our portfolio on flat reaching 58%, and also with a good mix with 924,000 customers which are dual play and triple play. Triple play is about 60,000 in the half, and this means that 15% of our current broadband customer base is using dual play, triple play packages. On mobile; a very positive value-added service revenue. This has been driven by our progressive UMTS expansion, in which we've reached 15% of our lines, and of course the boost of HSDPA which has brought our value-added service revenue in second Q reaching 20.5% compared to 10.8% in the first, in particularly good revenue we will see on the messaging... traditional messaging growth but also in particularly Interactive Services, which grew two digits in this first half and in particularly on the second Q. Outgoing traffic volumes; the elasticity on... mainly due to Bersani, we see that we had an average of 9.5% volume increase in the second Q compared to 2.3% in the first, which has dragged our revenue and another highlight is the quality of our customer, a 31% of our gross acquisition have been postpaid, in particularly very positive has been also the take up and the growth on the business segments in which, we've reached more than 4 million customers in total, in this first half of '07. Going in page six, rapidly as we were saying the... how the revenues and in particular excluding the non-geographic numbers, on the Domestic and on the Mobile have been affected. I think that mainly the... if we take the €679 million of revenue loss, we exclude the extraordinary regulatory impact which are of course the non-geographic, which is 230 Bersani fixed-mobile and ready, you... we would have, let me a say a loss of around €165 million, €170 million. EBITDA margin still very high comparable to other peers. We've 47.2%, 29.4% EBIT margins, and CapEx, 15.6%, €102 million mainly due to the international expansion. Breaking up EBITDA, on the Domestic side, we are around 49% on mobile and around 44% on fixed, on the Domestic, so keeping good EBITDA margins on the two businesses. Moving on the performance, if we go to the Domestic side on the revenue analysis; on the voice... so we... the voice went down 7.1%, if we exclude termination cut, which account 46%. Then we will see in the following charts what are the other elements of voice, in particularly, how traffic and access have moved, internet grew 6.5% plus 44 million. Broadband went up two-digit, 10% in line with Q1. We had more erosion on dial-up, first Q, second Q compared to first Q. The business data minus 5.5%, but as I was saying the business data moved from 11.9% in first Q to plus 0.5% in the second Q. The wholesale business 1.4% of increase, mainly due to the Domestic wholesale, the International wholesale dropped €130 million because of cancellation of... also their non geographic audio-text business, with of course very marginal business in terms of EBITDA, but which has affected our overall revenue. Going on the following slide, voice revenue; as we see we had the drop on traffic of minus 7.5% excluding termination cut, if we exclude the volume, so the 3% of volumes, out of which 46% have been fixed-mobile also because of the Bersani, we can add an additional 78 million, 79 million which is due to volume. So out of the €198 million, two-third of these...of this drop is due to structural elements of fixed- mobile in volumes, and particularly, fixed-mobile volumes again, in which we had the drop of...out of 78 million which is the calculation of volumes, about 50 million on fixed-mobile. Access to 3.7%, we have the same trend that we had in first Q. So we didn't have any acceleration on drop of access lines. Value-added services more or less in line on absolute terms compared to last year, and the handset business which is minus €92 million compared... it's minus 24%, compared to last year. So if we look our core voice business, we maintain the same traffic trend. We are discounting in particularly, some volume descent on fixed-mobile. We did it, in particularly, in this... in the first two months of the second Q. Now it's more stabilizing. The access is more or less in line with previous quarters. If we go on some highlights, as I was saying, traffic trend has been better than on the previous quarter. So it's the first time since, sixth quarter that we are on out of the four, reaching 3% of drop. Market share on traffic are stable. The retention campaign moved well with 286 customers which we have been able to retain, out of which 65% are business. Flat and semi-flat offers grew 151,000 reaching 33... almost 35... sorry, 33.4%, moving from 31.5%. All these elements of the retention campaign moving into flat offers have helped to keep, not only of course our market share trends stable, but in particularly, have helped us in having less difficult trend on overall volume... domestic voice trend. If we go on more detail on the Internet, as I was saying broadband is still growing; also... not only because of volumes but because of value. So the interesting mix that we have been able... and migration of broadband customer from free to flat, this has helped and supported us to keep two-digit growth on revenue in broadband. Narrowband, in which, we had minus 27% in particular, with minus 30% of drop on narrowband in the second Q. Going on the portfolio, we maintain ... we have maintained a positive trend in terms of acquisition. We have a higher broadband acquisition than in first Q... sorry first half of '06, with 433,000 compared to 378,000. So basically, did perform in this first half of '07 like the second half of '06, which is the best period of the year. So positive... we maintain around 65%, 66% of overall market share in retail. We have 45% quarter market share, compared to 41% in first Q. But again, what is more important apart keeping market share is, the value and so the migration and the mixed portfolio that we have announced. Total customers including European, 10.5 million. On the following page, again what we were saying, so the revenue two-digit growth has been possible because of the flat offer development and the mix of portfolio. So 15.2% are dual-play/triple-play package and 58% is the penetration of flat on free. This has been again one of our priority this year, in order to really implement month-by-month, quarter-by-quarter, value and volume strategy on broadband. Moving on to next slide on data; as I was anticipating, moving from 11.4% of loss to a positive in second Q, 0.5%. This is mainly due to ICT development with 14.5% of increase, 23.9% in second Q. So a very good performance. But also on the broadband data, which we moved from 2.6% increase, reaching 8.2% of increase of broadband data on second Q. 8% which has been because of our capacity to keep our grip on the Top Client and having good satisfaction on new contracts. Traditional data is more or less in line with pervious quarters. We did improve a bit also in lease line... with which ... in which we had a much less drop in lease lines on the second Q compared to the first Q. I confirm you that this trend is going to be the same trend in the second part of year. So a positive rebound on the Top Client business data revenue and relatively margins. On the ... moving on, mobile performance. Again, here we see the total revenue drop minus 2.3% compared to minus 0.2%. This mainly due to the total impact of Bersani on the second Q. Service revenue minus 1.3%, but if we exclude the discontinuity which are Bersani fixed-mobile costs, we have an impressive trend on the second Q reaching plus 6.5% in growth of service revenue. So it's the best quarter in term of growth, since probably '05. So, a very positive trend taking into account the discontinuity that we had, in particularly, Bersani. The reason we see it on the following page. So basically, we had €182 million of this continuity in the quarter. Bersani €133 million. The gross value of Bersani would have been €180 million. So we did offset their... in this part, we have the elasticity effect that you have seen. The self-regulation on international visitor €12 million, and fixed-mobile cut €37 million. We did recover with 57% of voice outgoing and incoming. This is volume-driven by new customer mix, in particularly business... very good business performances, big, big jump on value-added service, €79 million and visitor and other €16 million. So apart the elasticity that we have been able to manage on Bersani, we have positive trends, on the macrobusiness service trends, which are value-added service, voice and visitors. So really, we have been able to manage very quickly and very efficiently the... have a discontinuity that we had at the end of '06, beginning of '07. Here we see the trends; outgoing traffic net Bersani plus 3.9% moving from plus 3.7% first Q to plus 4.1% in the second Q. So this outgoing voice has been one of the best on this quarter. Incoming minus 7.8%, value-added service 15.5%, which is on second Q, 20.5% as we were saying; visitor and others minus 13%, and the handset business minus 12.8%. So net of discontinuity 3.8% increase on the half. If we go on some highlights on mobiles, so market share trend is stable. UMTS customer base 15% moving from 13% to the end of the year, with 5.1 million customers. We had 1.8 million net adds, which confirmed the stable market share but again here, we were concentrated more not only on volumes, but on value and we reached 30% of gross adds, which were postpaid, 1 million UMTS customer. So moving on the following slide; the postpaid acquisition in particularly on the business. In the second Q, we reached 30.5%, moving from 21% in the first Q and 18% on the last Q of '06. In particularly, we see the impressive trends that we had on business, and particularly SME and SOHO. We have reached in the month of June more than 105,000 new lines on business, in particularly on the performance in beginning of '05, mid of '05 the business trend was around 25,000 lines per month. So we have almost done four times, while we were doing three years ago on the business. On the traffic performance, again Q on Q plus 1.6%; first Q plus 6.3% as we were saying 9.5% has been the trend, and flat pricing net of Bersani, which accounted 13.9%. On page 22, you'll see in particularly, the VAS trend, in which we have posted 6.9% of messaging. This is not only because of the promotion, but also of all the messaging that we have introduced on the new handsets, the mail and these kind of services with 9.1% in second Q, the Interactive VAS with 38.6% second Q, compared to 21%, so doubling because of web-browsing which accounts almost 50% of Interactive VAS. Revenue traffic on web-browsing increased 300% on a half-on-half '06-'07. Moving on the cost side; on the cost we had an increase of 1.6%. Interconnection cost went down 4.8%, €104 million, because of the different mix. Marketing and sales costs increased €140 million. Here we have basically €69 million, which is products, €23 million which is DBVH content and other content which is €27 million. So, out of this 8.5%, half of it is content fixed and mobile, then we have some billing costs increase because of post-utilization [ph]. On industrial costs, we have mainly the increase which is power, which is €24 million. So 4% out of this 4.4% is an increase cost on the power. Instead we had good reduce in industrial costs, in particular in IT, with minus €24 million, and still on the industrial parts in particular, on the network. G&A when down 8.4%, minus €32 million, personnel minus 4.8% which is minus €82 million and other costs which basically are 112 increase, which is €150 million. The main is litigation, other credits and debts, which accounts for about €100 million out of the €150 million. So going... so moving on the European BroadBand operation; again, I was highlighting that out of the 12.7% of EBITDA margin second Q was better than target or in any case, in line with 14.8%. The revenue increase was €140 million and mainly due to the German growth, but on only... on the following slide, we see the performance of the different countries. We have €35 million of revenue increase in France. We have reduced by half EBITDA margin moving from minus 43% to minus 21%, Hansenet plus AOL 238% of increase, 24.5% EBITDA margins, so in line with the first Q, and BBNED basically flattish revenue minus €5 million and EBITDA 27.8%. On the Broadband customer portfolio; 3.2 million customers, mainly the increase in France, Germany. The... in any case, the overall customer portfolio is about 4.3 million customers, if we consider also the online traditional customer portfolio, in particularly, still present in France and partially in Germany. Some highlights on business; on Germany, some quality highlights. So, gross acquisition grew 46%. In particular, we had our good success launch of Alice Mobile offer, with 108,000 MVNO reached at June '07. We started commercialization of MVNO at the end of April, and totally on-track on AOL integration process. On France, we had 26% increase on acquisition... in customer's acquisition. Almost 8% of out total broadband customer base is IPTV and we have been focusing on improving quality which is key and we have improved 4 points in percentage moving from 78% to 82% on customer satisfaction in the last six months. Moving on Brasil; top performance on Brasil continues, value segment growth 27.5 million customers at June '07, plus 2 million net adds in the first half, reaching 25.8% market share. Client mix postpaid 22 % on total, 1.4 percentage confirming leadership in service revenue, and reinforcing the leadership on the business segments. Top mobile operator in Brazil, leading average client satisfaction, and the largest voice & data coverage. On innovation, we launched TIM Web access solution, Mais Completo, our convergent mobile and fixed and internet package, which is really moving very well. So we have very good trends there, and our continued VAS; Value-Added Service innovation. Profitability; strong revenue growth, 35.9% organic. More than 80% net billing keep confirmed premium ARPU Q-on-Q growth, and very solid EBITDA margin expansion 25.2% plus 4.7 percentage points year-on-year, and confirming positive net income. If we move on the results, I would move on page 34 and 35; last two pages which are more quality... sorry 34. We see that we keep very strong position in terms of customer portfolio, but in particular, we are continuing reducing the gap and keeping reducing this gap in terms of our position, compared to the first player Vivo, and this... third player Claro, and at the same time, working on value with postpaid customer base, which has reached 22% on total customer base, 6 million customers. So also here in Brazil, like in many of... in any operation that we operate, domestic and international, we pursue constantly value and volume strategy in all the lines of business that we manage. So thank you, and we are ready for your Q&A. Question And Answer

[Operator Instructions] The first question from Mr. Damien Maltarp from Cazenove. Mr. Maltarp, you may proceed with the question. Thank you. Damien Maltarp - Cazenove: Thanks very much. Just a couple of questions; at the outset, you mentioned a fiscal accrual that has been recognized in Q2, if I understood that correctly. Is it possible for you to just quantify that figure, and also just indicate what that means in terms of the full year tax guidance that you have given in the past? And the second question, on the... of the 737,000 postpaid mobile customers that you've added, is it possible for you to give us an idea of what kind of upfront sac or subsidy we should be thinking about in relation to those customers? Thanks very much. Enrico Parazzini - Chief Financial Officer: If I understand well, you put a question about the tax point. I understand well? Damien Maltarp - Cazenove: Yes. Unless, I missed it... I thought you said the reason why you had confidence in the first half net income figure was that there was a tax rule in your favor. Enrico Parazzini - Chief Financial Officer: Yes, yes. Damien Maltarp - Cazenove: I was just wondering if you could quantify how much of that is worth? Enrico Parazzini - Chief Financial Officer: In the first half of the year, we had a benefit from withholding tax we paid in 2004 according... that is related to interest in our affiliate Telecom Italia Finance withholding tax. That we repeated in the European course, because we sustained [ph] it was not payable. We...when there's appeal [ph] and as a result of that, we reversed these costs in first half of 2007 for an amount of about €100 million, 153 gross of €90 million net. and in the month of July we have compensated this from a cash standpoint. So in our P&L, for the first half of the year we should account for that and as a result of there's an improvement in net income level. And thanks to this, plus the affect of positive reduction in financial charges, net income is expected to be in line with 2006 first half. Riccardo Ruggiero - Chief Executive Officer: The answer to your second question; we, now basically the increase of postpaid in particularly on business, is not affecting any costs basically or incremental sac. The overall cost to marketing and sales, on domestic mobile is more or less flat compared to last year. You have seen on page 24, we have increase plus 0.8% marketing and sales cost, and mainly it's due to the content. And so it's not related to product or any subsidiation of products. So basically, this has brought a level of value to our revenue. There is no incremental cost because of that change in mix. Damien Maltarp - Cazenove: Okay. Thanks. Riccardo Ruggiero - Chief Executive Officer: Thank you

Next question from Mr. Robert Grindle from Dresdner Kleinwort. Mr. Grindle, you may proceed with your question. Thank you. Robert Grindle - Dresdner Kleinwort Wasserstein: Yes. Hi, there. Just on the domestic mobile side; have the pickup of mobile base in the Q2 surprised you? I think the guidance for the full year was somewhat in line with the Q1 growth, and how is the good the Q2 performance continued into Q3? And just to follow-up on the tax question; is there anything you can tell about the full year effective tax rate as the H1 rate now seems to be a good 3 to 4 percentage points below the guidance? Thanks very much. Riccardo Ruggiero - Chief Executive Officer: Well. Of course, let's say that the value-added service trends was starting to surprise us, also at the end of Q1, and the second Q has been really performing very well. We were seeing it because of the data increase. I think that now it's a trend which is confirmed. We see it positively in the third and in the forth quarter. So, we think we can reach total value-added service revenue, which would be around 23% year end. Enrico Parazzini - Chief Financial Officer: So, with regard to tax rate approximately, for the first half. Of course, we are reporting preliminary figure. So, what I say to you is just absolutely preliminary. But this will affect the tax rate on the... the tax rate is about 40%, 43%, 44%. And these... as I said in the previous conference call, for with regard the year, the tax rate should have been above 47%. Based on tax rates accrued on the consolidated profit before taxes, as you calculated it. Of course I explained to you many times that the tax rate is not based on the consolidation; that is based on taxable income, adjusted for dividends and the other factors, plus the so called the year up taxes, which is typical Italian taxes, not --. So, the calculation is not related to the consolidation. Anyway, if you want to relate the tax accrued at a consolidated level to the profit before taxes at a consolidated level, the average effect... the average rate at the end of... for the total year is expected to be around 47%, roughly. Robert Grindle - Dresdner Kleinwort Wasserstein: Okay. That's great. Thanks very much.

Next question is from Mrs. Micaela Ferruta from Intermonte SIM. Mrs. Ferruta, you may proceed with your question. Thank you Micaela Ferruta - Intermonte SIM SpA: Good afternoon. Micaela Ferruta from Intermonte SIM. I have a few questions if I may. Regarding the elasticity that you actually saw in, as far as mobile traffic is concerned. Do you expect that the over 9% year-on-year growth in traffic is sustainable or have you seen any change in the behavior of users, lately maybe in the July month? And if so, could it lead to any change in the guidance on the impact of the Bersani low or in general on the Domestic revenues and the EBITDA guidance? And second, I would ask, if you can comment on the evolution of your market shares, as far as the DSL market is concerned, and how is the competition reacting in terms of market share? And if I can ask a last comment on yesterday's statement by Mr. Carlo Buora regarding the network separation, and more specifically given that alternative operators have stated that if the authority is ready to give you an improved regulatory framework, they would not have network separation. What is you comment or... on this, would you... if there is no regulatories, would you be actually not willing to separate the network? Thank you. Riccardo Ruggiero - Chief Executive Officer: Okay. So, for you question on elasticity, I confirm you the July trend is in line with June. So, we still are at two-digit volume increase, and so, it's... but again, July is also because it's affected by promotions, you know that summer starts... it starts officially from our mobile point of view more or less end of June, beginning of July. So we are seeing the same trend with very positive on net in particularly trends. So we don't see any discontinuity there. On the reaction on all the segments that we have, on the mobile outgoing traffic is pretty much in line with what we have seen in June and in May. From what concerns year end, of course, the second half we have at the EBITDA level more impact of discontinuity. In the first half, we had €191 million, which is €163 million Bersani and €28 million fixed-mobile. In the second half, we will have €270 million of discontinuity which is €197 million Bersani, €30 million, which would be writing, so that the soft regulation value would be a bit higher, and the second half would be higher than it has been in the first, and €40 million of fixed-mobile. So take it to account this discontinuity, we are ... taking into account that we have a good first half, we are absolutely confident to meet... to match our targets. Then, if we will be able to improve it, fine, but at this stage, I think, we are very happy with what we have done in the first half. I think this gives us total confidence on our guidance, and if there would be some improvement, probably it's too early at this stage, we will see it probably at the end of third Q. For what concerns DSL market shares. I think that it's positive how we've moved from first Q and second Q, and second Q have been ... we saw bit of a drop of acquisition of some of our main competitor. There has been also a lot of migration from wholesale to full LL or share access in last quarters. The same if you take carrier selection, carrier pre-selection and unbundling. I think so this is how the trend has moved in the previous quarter. So I think that the trend that we have seen in also in July, for what concern DSL confirms that this position can be more or less maintained and also that especially July... in July we had positive month in terms of acquisition, in terms of share and the value also strategy there, moving constantly to dual play and flat is moving well us well in July. So we are confident that this trend is on-track also for the second half of year. For what concerns network separation, I think, we restate what we said also yesterday. So I think that this process is process which is... in which TI has expressed what our... what is our position. I think that it will take time. Because it is process which also take into account the position of other operators will take time, if we want to reach an agreement to execute it. And I think that because there are many technical issues to sort out, it is a process which countries... the take, when it officially started many months. So I think that is what we want to try to achieve with DNRI [ph] keeping, absolutely the door open and continuing this process. So it's very difficult to give any time frame on that. So, I think that is... what is the most realistic path that we foresee on this matter. Micaela Ferruta - Intermonte SIM SpA: If I can ask would you then say that the year-end guidance, or indication that Mr. Carlo Buora gave yesterday is a little bit optimistic, even though distance between your position and the position of alternative operators at the moment? Thank you. Riccardo Ruggiero - Chief Executive Officer: I think that it is goal, like every goal, it's a goal which we respect DNRI's put in as a goal and, we will see if there are the elements to reach this goal. I don't see... it is not a question of being too optimistic or not too optimistic. I think that is a target which has been expressed by DNRI. If there are the elements to reach it for all of us, we will be more than happy to do it. If not, we will keep discussing and the goal will be postponed. Micaela Ferruta - Intermonte SIM SpA: Thank you Riccardo Ruggiero - Chief Executive Officer: Thank you.

Next question from Mr. Mark Cardwell from Sanford Bernstein. Mr. Cardwell well you may proceed a question. Thank you. Mark Cardwell - Sanford C. Bernstein: Thank you very much. A couple of questions please. First of all on Italy with all that net adds and with the increasing percentage of contract net adds or pre... sorry postpaid net adds, amongst the total. Do you see a change in sort of the overall ARPU or do you see a change in the sustainability revenue growth? Going forward, it seems like things are going to be accelerating somewhat. Perhaps seeing it in the revenue yet and secondly on Brazil, it seems like you've been targeting higher quality customers, you have been talking about that, and we are starting to see that in the margins. Do you expect to see revenue continue or do you expect to see subscriber growth slower a little bit as you target better customers going forward? And then, finally on the fixed-line business can you just talk a little bit about what's going on in international wholesale? Riccardo Ruggiero - Chief Executive Officer: Okay, so for what concerns the postpaid. The postpaid did contribute to keep the ARPU in particularly to the boost on outgoing revenue. So I think that outgoing voice revenue and in overall the service revenue. So, I think that the three macro trends have been the of course the elasticity and the mix and in particularly, the postpaid on the residential, but in particularly, the very good performance that we had on the SME/SOHO market in terms of penetration. So these three and of course product value-added service... if we see the voice, these three in fact again the elasticity, the very strong penetration that we had on business and the mix of acquisitions have increased and boost the revenue. So, net of the discontinuity effect, we had a very good performance. What concerns Brazil is of course high quality for us has been our priority starting from mid '06 in which, the trend of growth of the overall market were less aggressive that have been in the previous year. I think the Brazilian market has faced still a growth, but we are not running after, making and beating records on line acquisition, but really working on mix, keeping high profitable customers with us moving into postpaid, increasing value-added services. So that is the trend for the following quarters. So this is really what we want to achieve. Your third question on international sale; we had the... we didn't renew some contracts, they were... it's like non-geographic numbers international. We've three or four operators. So this is why we were impacted by this revenue decline on international sale. We are... it's a discontinuity that we will have mainly this year. We are changing and seeing other source of revenue in particularly, on some transit and so it's... this particular account which we didn't renew at the end of this quarter... sorry the end of the first quarter and of course on the second Q. Mark Cardwell - Sanford C. Bernstein: Is that lower than the normal margin business that you chose not -- Riccardo Ruggiero - Chief Executive Officer: Yes, its basically its almost zero-margin business. It was just some opportunistic business that we had in '05 and '06. So it's very low margin business this is why it didn't have an effect at all on our overall EBITDA margin. Mark Cardwell - Sanford C. Bernstein: Thank you. Riccardo Ruggiero - Chief Executive Officer: Thank you.

Next question from Mr. Laurent Sierra from Redburn. Mr. Sierra you may proceed with your question. Thank you. Laurent Sierra - Redburn Partners: Laurent Sierra from Redburn. Riccardo Ruggiero - Chief Executive Officer: Sorry, can you speak a bit louder, sorry. Laurent Sierra - Redburn Partners: Yes, a follow up on TIM Italy. I would like to know on ARPUs; despite the strong customer figures we saw and even if I'm adding 500,000 to the SIM cards which wasn't the case bluntly, I am still facing difficulty to meet the revenues at this stage, even if I... for example, if I use Vodafone's reported ARPU, Vodafone is also focusing on value-added customers, I am getting a revenue much higher than what you reported. I would like to know, what is your... the development of your revenue share in the market in Italy? My second question was on Brazil, I would like to know how confident you are on maintaining the second position as a wireless operator there? Riccardo Ruggiero - Chief Executive Officer: Okay. For your first question, we have the same ARPU as Vodafone, 23, which is more than 6 million customers. So this is the reason why... the reason for the value. So we have again much higher customer base with the same ARPU, so we are not diluting it. So this is the main difference between the value of our portfolio compared to other competitors. So this is basically what explains and more we able to increase this penetration, we will be... and also to increase this penetration of postpaid online acquisition. The more we will be able to keep this level of ARPU even adding lines. So this is what happened in the last two years. So we have increased lines, maintaining a strong ARPU compared to Vodafone. For what concerns, TIM; I think that the strength that we have highlights in our presentation the value and the reason why we have been able to and we are absolutely confident that we can maintain this position on the medium to long term. It's our ability also looking ahead when UMTS license will be released, our ability to introduce also their innovation, value-added services, the value of our brand, the capability to segment the offers. So it's really being leading in all these elements that we've have been able to not only to keep this position, but to shorten the gap between the first and the second play. Laurent Sierra - Redburn Partners: Thank you. Riccardo Ruggiero - Chief Executive Officer: Thank you.

Next question from Mr. James Ratzer from New Street Research. Mr. Ratzer, you may proceed with your question. Thank you. James Ratzer - New Street Research: I have two questions, please. The first one was, if I could follow up on the issue of network separation. I was wondering, in your negotiations with regulators, you were able to quantify what value you are putting on your network assets, and also what kind of return on those assets the regulator in currently asking you for its product negotiation. I was also wondering if the deal goes through, could you actually envision a scenario in which those network assets are sold to a third party? And then the second question was just regarding having Telefonica as a new shareholder in telco. I was wondering if you could talk us through what synergy do you think you could see in your domestic business from having Telefonica as a shareholder in the business? Thank you. Riccardo Ruggiero - Chief Executive Officer: Okay, so for what concerns the return on capital. The discussions that we had are starting from having as a benchmark open reach. So basically that is the... let me say that the benchmark and the starting point. Then it depends on many combinations, but that is what we are talking about. Then the value of the assets, if we take the... physical local loop, so all the copper, the fiber were existing, the poles the docks, so this what we are talking. We are talking about an asset value, which is between €15 billion and €18 billion. So this is basically the asset value that we are taking into account. For what concerns Telefonica, the synergies with Telefonica, we've said mainly are on the procurement area, can be on... in Germany. We already started with O2 on the MVNO launch. In Brazil, it might be some network sharing on UMTS. It can be on international wholesale, plus we can find some joint opportunity for growth. So basically these are the synergies that we have mainly on our list, in terms of trying to reach and have in the following months. James Ratzer - New Street Research: And can I just on the network separation, going back to that do you find and open reach style of return acceptable and, would you engage in ever selling that asset, if it's separated off? Riccardo Ruggiero - Chief Executive Officer: I think that it is something that will be taken into account. So not selling it, but basically, if we have a reasonable return, which could be again really starting from the open reach, then it depends on the different variable model. We confirmed that we've never excluded the possibility to evaluate also, at that point, structural separation. But... and possibly disposing your minority portion of it. So it would always be in any case, if we take into account that consideration, it would be in any case, always a minority. James Ratzer - New Street Research: Okay, thank you very much. Riccardo Ruggiero - Chief Executive Officer: Thank you.

Next question is from Mrs. Cristina Pereira [ph] from Standard and Poor's. Mrs. Pereira you may proceed with your question.

Hi, Cristina Pereira from Standard and Poor's Equity Research. I have two questions. The first one, during the second quarter, we saw a sequential decline both retail and fixed line losses in Italy and also unbundled lines additions. Are you expecting this trend to continue? Do you expect an improvement for domestic retail loss... in retail lines? And the second question is regarding the domestic EBITDA margin. I wonder if you can tell us which restructuring charges expect for the second half, and whether you expect similar positive evolution of the margins in the second half of the year? Riccardo Ruggiero - Chief Executive Officer: For what concerns your first question; we had on the second Q less ULL lines in the first Q. So basically, we had in the second Q, 270,000 unbundling lines compared to first Q which was 390,000. So we had a drop of ... this includes ULL plus virtual ULL. Okay, so the both ... the two combinations. This is a sign that basically, the migration between carrier selection and carrier pre-selection is over. And so the... our competitors are facing more difficulties to keep the same trend they had in fourth Q and third Q. So we had a drop of more than 110,000 unbundling line in second Q. I see a trend, which is more in line with that moving forward, taking to account that's again, we did assist in the last two quarters of heavy migration between carrier selection and carrier pre-selection into unbundling more than new line acquisition. So what concerns the margins, I think that... Enrico Parazzini - Chief Financial Officer: For what concerns your question, if I understand, why you mentioned about the restructuring costs in the EBITDA for the

Yes. Enrico Parazzini - Chief Financial Officer: For second half of the year... we basically don't have significant restructuring cost in our it EBITDA unless you refer to the one you read on page 9 in the appendix of our chart that shows the EBITDA reconciliation of reported investors organic, when you see that lines [ph] have cost 84. This is quite normal even if not organic. We expect for the second half of the year probably just a little bit less than what we have reported in the first half.

Okay.

: Next question is from Mr. Guillaume Tastet from Oddo. Mr. Tastet, you may proceed with your question. Thank you. Guillaume Tastet - Oddo & Cie Equities: Yes, thank you good afternoon. You were talking about the different mixes to explain the decrease in the interconnection growth for landline ... Riccardo Ruggiero - Chief Executive Officer: Can you speak louder please. We don't hear you? Guillaume Tastet - Oddo & Cie Equities: Yes sir. Okay, can hear me better now? Riccardo Ruggiero - Chief Executive Officer: Yes. Guillaume Tastet - Oddo & Cie Equities: Yes good. I think about the thing about different mixes to explain in the decrease in the interconnection growth at data line. I was wondering if can integrate along that and also with the mobile division, wanted to know if the decrease in the market in fixed growth was related to change in the competitive environment related to about Bersani Decree or more specifically linked to the content growth you where talking about? Thank you. Riccardo Ruggiero - Chief Executive Officer: Sorry your first question was... yes, the interconnection cost drop was because of change of mix. So basically the drop of international revenue did affect to the drop of international ... sorry of the interconnection cost. So this all mainly due to the mix that we had and other positive mix that we had on also but its little numbers on AoM termination on mobile. But mainly it is due to the international sale. Then your second question is on marketing and sales costs? Guillaume Tastet - Oddo & Cie Equities: Yes, the Mobile Division. Riccardo Ruggiero - Chief Executive Officer: Yes, so the mobile basically cost is more or less flat. The only increase we had on marketing and sales cost on mobile was on content and DBVH. So we had € 23 million of the DBVH costs, which we did not have in the first half of the last year. And content costs of more or less €15 million, which is still related to DBVH, in particularly the Major Set content costs which are linked to DBVH contract with Major Set. So these are the two costs that we did not have in the first half of last year, which are basically affecting the increase. Instead we had more benefit on the other costs on the mobile. This is the reason why basically we are round flat. Guillaume Tastet - Oddo & Cie Equities: Okay and comparing Q1 against Q2. The marketing and sales at the mobile were flat in Q2 and it was somewhere increasing by 4% in Q1? Is it because of the timeframe for payment for contents or is it an order-driven? Riccardo Ruggiero - Chief Executive Officer: No, it was particular.... the second Q cost is due to the fact that in the second Q you have June and you have the... post convention and so the terminal revenue increase and so, this is related to the differences analytic compared to the first Q that you have. But it's related basically to June. Guillaume Tastet - Oddo & Cie Equities: Okay, thank you Riccardo Ruggiero - Chief Executive Officer: Okay.

Next question from Mr. Simon Weeden from Goldman Sachs. Mr. Weeden you may proceed with your question. Thank you. Simon Weeden - Goldman Sachs Inc.: Thank you very much. And I wondered if you could elaborate a bit more on what differences here in ICT and how much of the change in the trend related to the phasing of ... I think which occurred during 2006 in other words, in the comparison period, rather than in the current period. And I also wondered what interest rate risk you see on your debt? How quickly your debt will turn over? And whether you would expect it to be replacing existing debt with higher cost debt at this stage, given the increases in bundles in the market? Riccardo Ruggiero - Chief Executive Officer: Okay, so on, for what concerns the on the ICT? Basically, this is... we did win some important contracts in the last... which are not necessary big but are several small and medium contracts. In particularly, we did develop some new offers, the end of '06 beginning of '07 on for the SME markets. So we did standardize some of our offers. And so the business segment ... the enterprise segments and the SME did benefit from that. New offer streamed is mainly web hosting, also portal. We are developing the portal business. So we do not only the technical part, but also the... we've really built entirely also from a consultancy point of view, all portal application and management for many small and medium customers. We do outsource some of their systems, in particularly, if they want to move into IP application. And so, all these standardized offers have boosts our capability on the ICT market to produce these results. So... and this is a trend that we are seeing moving, take into account what we have on the pipe, in these months for the following quarter. So, this is the main reason for the fall. So it's really moving the ICT business from the top high-end of our business customers to the medium range. So there is a lot of potential of ICT needs on the SME markets as well as on the high end business part. But there you need to standardize your offer to package it, there is much less customization. And also, there is more profitability attached to that compared to some customization that you need to do when you move in to ICT application on the high end of the market. Enrico Parazzini - Chief Financial Officer: With regards the second question about the risk in financial interest. We don't see risk in this area for the second part of the year, just because 70% of our debt as you all may know is fixed. And in the first part of this year, we have refinanced that part to our debt at an average cost that is below our average of 5.4%. In addition, in the first half of the year, as I said before, we have reached the savings in the financial charges, mainly due to this refinancing in this free private placement... refinancing that we made. That we can gain some saving that we will report in the first half of this year. So we don't expect any risk for with regard to our financial expenses. Simon Weeden - Goldman Sachs Inc.: Thanks very much.

Next question from Mr. Stefano Lustig from Euromobiliare SIM. Mr. Lustig, you may proceed with your question. Stefano Lustig - Euromobiliare: Good afternoon. I want to know if it's possible to have some comment or indication on the start of mobile vehicle operator in Italy and both for you and for the market as a whole? Riccardo Ruggiero - Chief Executive Officer: Well we can tell you the data that we know from our partnership with Cop. So they basically moved pretty much well with around 1500, 2000 lines per day. So, I think it's a good, if not strong performance, especially because Cop has a high fidilization of its customer base. So this is the numbers that we have from them. We have no number for what concerns our competitors. Stefano Lustig - Euromobiliare: Okay, thank you.

The next question is from Mr. James Rivett from Citigroup. Mr. Rivett you may proceed with your question. Thank you. James Rivett - Citigroup Global Markets Inc: Thank you. I've got two very quick questions if I can. The first is on Brazil, where you keep on outperforming the market as well as your own financial targets. How long is it until we have to wait until you take up your guidance in business or is it... because expecting a material deceleration during the second half of the year? My second question is just on the Italian ICT business. You won several big contracts over the last couple of months so. Can you tell us whether or how much of reduction in the reference price you're having to make, to win those contracts, if indeed any? Thanks very much. Riccardo Ruggiero - Chief Executive Officer: Okay for what concern Brazil, we can confirm you that... we don't see any discontinuity in trends in the second half. So I think that ... we basically renew or focus on the high-end of the market. We will launch several convergent offer and bundled on especially fix... sorry with mobile data. So I think that is basically the second half focus that we're going to have for the second part of the year. So... James Rivett - Citigroup Global Markets Inc: So... sorry to interrupt there. Does that... is the launch cost of those things going to have a material impact on second half margin? Riccardo Ruggiero - Chief Executive Officer: No, no. Basically, this is totally on our plans. So basically, we have... this were on plan and on our budget, at the beginning of the year. So this is a trend that we have basically and totally on our focus. So I think that if we keep this trend as we had up to now, probably we will have a better trend or... even significantly better trend in the year end for the Brazilian guidance. So we have basically, no surprise. We are not changing the guidance now. We are very confident that we can improve it, because till today, we are very pretty much ahead of the targets that we have announced. We will see how things will move and we are very confident in seeing how July is moving that this trend is confirmed. And so I think that probably around September, October; we will... at this point confirm that we have definitely higher trend that we forecasted for Brazil for year-end. So for what concerns ICT? The price reduction is really low, because these services are completely new services. So they are not affecting the traditional let me say, data and voice Top Client business. So the big ICT contract that we have won is to complete renew and rebuild and manage all the portals of all the public administration. Its more than 140 portals which are from the big ministries, the big institutionals, in which we had the charge the completely renew, rebuild technically from a technical point of view. So it's a real value-added contract, which has let me say no traditional transport data and voice associated. So it is... of course it has a different margin compared to these kind of businesses, but it's a pretty good project, a pretty good margin project. James Rivett - Citigroup Global Markets Inc: Thank you. Riccardo Ruggiero - Chief Executive Officer: Thank you.

Next question is from Mrs. Oriana Cardani from Centrobanca. Mrs. Cardani, you may proceed with your question. Thank you. Oriana Cardani - Centrobanca SpA: Yes sir, thank you. I've got two questions, if I may. In regard clarification about Mr. Buora interview reported in today's Solpart Reporter [ph]. First of all, when he speaks about €500 million potential CapEx savings in Brazil UMTS share between Telecom Italia and Telefonica; can you confirm us that he is referring to total savings on this item and not on premium savings? And the second question refers to his claim about the possibility that most shareholders can be ready to finance some serious and interesting projects, despite prior financial level. There is another room to make huge investments? Which projects can be considered by Telecom Italia as interesting? And can we assume that TI shoulders will be called to finance them? Thank you. Riccardo Ruggiero - Chief Executive Officer: Well for what concerns your first question, when we did analyze potential synergies on UMTS network sharing. We were referring about a total amount of savings of €500 million, for both parties, on a long-term period. So it's absolutely non-annual, its on a total, taking to account the total build up of the network. And again, is completely for the moment on papers. So we have to see if they are gone be feasible, where, if? So it's a number, which we shared at the beginning of the year, which is a potential number, which is, take into account, the full deployment of UMTS network on a period of three years, at least and of course these are savings which are related to us plus Telefonica. Enrico Parazzini - Chief Financial Officer: What's regard your second question about the elaboration that you are making about the interview Mr. Buora, it just mean that the should there be any interesting opportunity to create wagon grow, of course then you shareholders will be ready that way to analyze then. But this doesn't involve any extrapolation more than that that your doing. So this has ... his answer to the question, was just a normal answer that usually we can do, at this point in time not having any counter with the new shareholders as we don't know what's in their mind. If there's a real any project that we don't have on the table. So there is no ground to extrapolate on what he said. Oriana Cardani - Centrobanca SpA: Okay. Thank you Enrico Parazzini - Chief Financial Officer: Thank you.

Next question from Mr. James Britton from Lehman brothers. Mr. Britton you may proceed with the question. Thank you. James Britton - Lehman Brothers' European Telecoms Research: Thank you very much. A few questions: first of all, you cite fixed-mobile migration as one of the -- Riccardo Ruggiero - Chief Executive Officer: Sorry James, can you speak louder? I can't hear you. James Britton - Lehman Brothers' European Telecoms Research: Sure yes. Riccardo Ruggiero - Chief Executive Officer: Yes, thank you. James Britton - Lehman Brothers' European Telecoms Research: Is it better? Okay I will start again. First question is just with a query in early stat, the fixed-mobile migration is obviously a key reason for the fixed decline. This is... I think, the first time you have especially mentioned this for sometime. So I just wanted to know if there's any acceleration of the trend that ... and has that been obviously measured by your pushing of the flat rate portals. Second question on France, you have been pretty competitive with pricing of the IPG offer, your nets adds are fairly stable, relative to the last quarter. So, are you really comfortable with the progress you are making there, and also to make sense that achieved considered setting out business to really realize maximum value. And the third question is just on the three actually roaming contract. Can you just remind me when that comes up for renewal? Riccardo Ruggiero - Chief Executive Officer: Okay, so for what concerns fixed-mobile migration. Of course Bersani has affected that. But what we can tell you that is not accelerating, so it's stabilized. So we had an impact but it's not moving forward, so at least... also looking July, so it's more or less stable. What was then France progress, you know, as we said, in terms of acquisition, we moved a bit later than we expected, because we did concentrate our efforts on quality, which is extremely important in that market like in any market. We... that's why we delayed the start up of the new service launch we cannibalize for by two months. So we didn't start in March, but basically end of May, beginning of June, so this is the reason. While it's progressing fine now, we are at a trend of 1,000 and 1,500 customers today. With good quality, we have reduced significantly the churn. And so, we are pretty much happy on how we are performing. Of course on the long-term, France is not a country in which we want to probably consolidate and so we are open to consider options not now, but let's say in the future on France. Your last question, Sorry? James. James Britton - Lehman Brothers' European Telecoms Research: Yes it was just on the three of the roaming contracts. Riccardo Ruggiero - Chief Executive Officer: Okay. Let me say that we are in negotiation, it should be something that we should sort out between let's say during the third quarter. It's a complex negotiation. James Britton - Lehman Brothers' European Telecoms Research: Can you say how much share revenue generated from that contract in 2006? Riccardo Ruggiero - Chief Executive Officer: The revenue generation from that contract was about €30 million for every quarter, or €30 million per quarter. James Britton - Lehman Brothers' European Telecoms Research: Okay, thanks very much. Riccardo Ruggiero - Chief Executive Officer: Thank you.

The last question is from Mr. Nicolas Didio from Exane. Mr. Didio you may proceed with your question. Thank you. Nicolas Didio - Exane BNP Paribas: Hi good afternoon. Well my questions have been answered, all of the questions have been answered but I have a question on fiber. I understand that's the future... it could exit maybe the market but before changing your option in this country, what is your fiber strategy? Riccardo Ruggiero - Chief Executive Officer: You mean the fiber, in where? In France or -- Nicolas Didio - Exane BNP Paribas: Yes, yes I believe to be only in France. Riccardo Ruggiero - Chief Executive Officer: Well, the fiber strategy in France for us it's one of the options, in taking to account, how the Accesses technology would evolve and it is something that we will take into account. Of course it's the costs performance trade-off that we want to do. So it's something that we will take into account. We don't exclude it. So we might be considering some area, in particularly, for example in Paris. So in the Paris area, we are considering and looking on how to implement it. So it's something that of course we will take into account. Nicolas Didio - Exane BNP Paribas: And may be a last question on may be in MVNO in France? Are you discussing about that? Riccardo Ruggiero - Chief Executive Officer: Yes, we are starting MVNO in France and so we think we will come out with something within this year. Nicolas Didio - Exane BNP Paribas: Yes, okay. Thank you Riccardo Ruggiero - Chief Executive Officer: Thank you.

There are no more questions. Riccardo Ruggiero - Chief Executive Officer: Yes, thank you very much. Enrico Parazzini - Chief Financial Officer: Thank you very much. Riccardo Ruggiero - Chief Executive Officer: Bye, bye to all of you. Enrico Parazzini - Chief Financial Officer: Bye, bye now.

Ladies and gentlemen, the conference call is over. Thank you very much for your attention.