2. Safe Harbour
These presentations contain statements that constitute forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements appear in a number of places in this presentation and include statements
regarding the intent, belief or current expectations of the customer base, estimates regarding future growth in the different
business lines and the global business, market share, financial results and other aspects of the activities and situation relating
to the Company and the Group.
Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual
results may differ materially from those projected or implied in the forward looking statements as a result of various factors.
Consequently, Telecom Italia S.p.A. makes no representation, whether expressed or implied, as to the conformity of the actual
results with those projected in the forward looking statements.
Forward-looking information is based on certain key assumptions which we believe to be reasonable as of the date hereof, but
forward looking information by its nature involves risks and uncertainties, which are outside our control, and could significantly
affect expected results.
Analysts are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this
presentation. Telecom Italia S.p.A. undertakes no obligation to release publicly the results of any revisions to these forward
looking statements which may be made to reflect events and circumstances after the date of this presentation, including,
without limitation, changes in Telecom Italia S.p.A. business or acquisition strategy or planned capital expenditures or to reflect
the occurrence of unanticipated events. Analysts and investors are encouraged to consult the Company's Annual Report on
Form 20-F as well as periodic filings made on Form 6-K, which are on file with the United States Securities and Exchange
Commission.
The accounting policies and consolidation principles adopted in the preparation of the Condensed Consolidated Financial
Statements as of, and for the nine months ended, 30 September 2013 have been applied on a basis consistent with those
adopted in the Annual Consolidated Financial Statements at 31 December 2012, to which reference can be made, except for
the new standards and interpretations adopted by the Group, which, other than for the prospective adoption of IFRS 13 ( Fair
Value measurement), didn’t impact on the Condensed Consolidated Financial Statements as of, and for the nine months ended,
30 September 2013.
Some data for the first quarter 2012, used in comparisons, included into this presentation have been restated as a result of the
early adoption, starting from the first half 2012, of the revised version of IAS 19 (Employee Benefits) and the reclassification of
Matrix (company that was disposed of on October 31, 2012) from the Business Unit Domestic–Core Domestic to the Business
Unit Other Activities.
2
3. Where We Are: TIM 2013 Year-to-Date Results
Financial
9M13
YoY
R$ Million
Total Revenues
14,738
7.3%
− Service
12,359
2.1%
− VAS*
3,899
23.7%
− Handset
2,379
45.2%
EBITDA
3,708
3.4%
CAPEX
2,769
+16.8%
Operational
9M13
YoY
• Consistent financial and operational
results even amidst a different macro
scenario
• Continuous growth/acceleration on
postpaid, improving customer base
mix, ARPU evolution.
• Maintaining data services at double
digit growth, underscored by
smartphone sales and innovative
offers.
• Solid improvement on Network and
Quality indicators.
• Executing Fiber-to-the-Site (FTTS)
project and 3G/4G roll-out,
guaranteeing mobile broadband
acceleration.
Postpaid (mln users)
11.9
16.4%
MOU (min)
147
12.7%
• Strong efficiency: Industry benchmark
for SAC and bad debt.
R$ 18.4
-2.0%
• Strong savings on leased lines costs,
even with traffic double digit growth.
ARPU
Reported figures for TIM Part.
*Gross Mobile Revenues
3
4. Macro Scenario: A Different Outlook
Real GDP Forecast
Inflation Forecast
(%YoY Growth; Source: BaCen)
(IPCA - %YoY Growth; Source: BaCen)
Old Scenario
New Scenario
Old Scenario
New Scenario
3.8
3.6
3.3
5.8
6.0
5.5
2.4
2.4
2.3
2.4
5.5
5.4
5.5
• Market consensus shows
now a softer growth.
5.0
2013
2014
2015
2016
2013
2014
2015
Interest Rate Forecast
• Telecom industry has
shown resilience, specially
in the mobile side, but it is
not completely immune.
FX Rate Forecast
(%Selic Target p.y. - Year average; Source: BaCen)
2016
( R$/US$ - Year average; Source: BaCen)
Market Consensus on Oct/12
Market Consensus on Oct/12
Market Consensus on Oct/13
Market Consensus on Oct/13
10.3
10.3
8.7
9.0
8.8
2014
2015
2016
8.4
10.0
2.3
2.4
2.4
2.0
2.0
2.0
2.1
2013
2014
2015
• Mobile sector will continue
to benefit from fixed-mobile
substitution, now also
strong on data.
2016
2.2
7.3
2013
4
5. Still Increasing Internet Penetration and Data Market
61.3 Mln
(40%)
1%
R$ 250
1%
R$ 200
2%
R$ 150
5%
R$ 100
32%
11.8 mln
Other
Does NOT
Possess
Internet
connection
60%
36.8 mln
R$ 80
R$ 70
Lack of
(60%)
coverage
24%
8.8 mln
R$ 50
R$ 40
R$ 30
Too
Expensive
Total Households
44%
16.2 mln
CABLE
FTTH
> R$ 250
R$ 20
R$ 10
12%
ADSL
VDSL
53% of active connection
base has currently a
speed below 2Mbps
18%
24%
39%
48%
59%
65%
MBB
40%
24.5 mln
Possess
Internet
connection
Willingness to pay (% of Households)
71%
Households which does
NOT possess
Source: CETIC 13
Market Data Revenues Growth 2016 vs. 2012:
>13 bn Reais on Mobile (+100%)
>7 bn Reais on Fixed (+35%)
5
6. The Opportunity in Brazil and TIM’s Strategic Positioning
A. Continue to Explore Voice FMS
B. Lead the Data/Internet Wave
Market
Very large voice market, although declining.
High price umbrella in Fixed services.
Customer migration to higher plans / hybrid and
postpaid.
Emerging data/internet user population.
Large unserved Internet demand.
Old Fixed networks legacy + bundle requirement.
Mobile as the natural vehicle for inclusion.
Voice Revenues
Voice Revenues
Voice Revenues
Data Revenues
R$ Bln Source: TIM)
(R$ bln;
R$ Bln Source: TIM)
(R$ bln;
41.1 42.8
39.9 41.2
33.8
45.7 46.8 46.0*
Mobile
Mobile
39.7 40.4 38.4
36.4 34.1
32.3
Fixed
13.4
2.7
Strategy/
Objectives
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
FMS Customer Base Growth
Customer
Base
Expansion
15.1
16.7
17.9
8.0
4.0
5.8
19.2
20.4
21.7
Fixed
10.5
13.3
16.7
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
… Massive Mobile Internet Access
Internet and
Data
For All
C. Manage Existing Customer Base
* Excluded non recurrent and non-operational revenues (e.g.: towers sell)
6
7. Strategy: Infrastructure Evolution
Backhauling
Evolution
Increased Coverage and Access Capacity
Fiber to the site / Mobile Broadband
Project Key to Data Growth
POP MW
POP MW
BSC-RNC Site
LTE Ready.
82% urban
population
#NodeB / eNodeB
(3G + 4G)
Targeting 38 cities in 2013,+100 cities till 2016.
From 2-8 to +100 Mbps.
# new elements
95% urban
population
# BTS
(2G)
2013
2014
2015
2016
POP MW
Capex Evolution Towards Data
Macro coverage fine tuning.
POP MW POP MW
% of total Capex
Focus on IP infrastructure, caching, peering.
Fiber base
Infrastructure
2013
INTELIG
2009
ACQUISITION
FIBER TO THE
2013
AMAZON
2016
MASSIVE LD
BACKBONE
2014
LTE*
2015
3G
2016
2G
Small Cell Approach
# new elements
INTELIG 15,000KM
46,000 KM OF FIBER
BY YE13
65,000 KM OF FIBER
New Sites.
Including
Small Cell.
2012
2013e
2014e
2015e
2016e
New backbone routes- Increasing resilience.
*Includes 2.5GHz RAN Sharing.
7
8. Offer Evolution
Smartphone Sales
Smart/Web phone Penetration
Voice MOU
(% total handset sale)
(% over total base of lines)
Innovative
Offers Driving
Growth and
Differentiation
(Minutes)
42%
3Q12
30%
4Q12
46%
1Q13
46%
19%
67%
3Q13
Smartphone
13%
Webphone
150
136
52%
43%
30%
21%
>170
>75%
35%
24%
57%
2Q13
28%
22%
21%
2012
Essencial
Jul 13
2012
2016e
3Q13
2016e
Devices Sales Share
Data Users
VAS Revenue Growth
(% of Data Users in CB; million users)
(% of Mobile Services Gross Revenues; R$ Million)
>50%
34%
29%
VAS/Revs.
>40%
23%
21%
56%
46% Notebook
44%
XX%
+15%
21.3
2012
3Q13
XX%
+XX%
24.5
36% Tablets
VAS
Gross
Revs.
2016e
17% Desktop
2012
2013e
2016e
2010
2012
2014
2016
8
9. BUSINESS STABILIZATION
AND RECOVERY
INTELIG
Fixed Business Evolution
Top Line: Recovery Path
• Focus on value, selecting high margin
customers.
• Selective approach focused on high potential
verticals: Finance, ISP (data), Call Center
(voice).
2012
2013e
2014e
2015e
2016e
2014e
2015e
2016e
EBITDA: Inflection Point
• Network ready to retake sales.
• Increasing addressable market with mobile
synergy approach.
•
Optimize investment leveraging on multi
service networks.
2012
2013e
Addressable Households
Sustainable Growth Mode
TIM FIBER
000
• Leading the market share for speed above
34Mbps (ultra BB offers).
522
881
2012 3Q13
• Leveraging fiber assets in SP and RJ with
reduced investment and efficient approach.
2016
UBB Market Share RJ/SP (Aug13)
>34 Mbps download speed
• Good potential at SME segment.
GVT 7.1%
• Strong support to mobile business w/ small cell
backhauling.
OTHER5.6%
LIVE TIM
VIVO 22.0%
48.5%
NET 8.9%
OI 7.8%
9
10. TIM Part: 2014-2016 Guidance
Guidance
R$ billion
18.8
2013-2016 CAGR:
Mid Single Digit Growth
Total Net Revenues
2012
2013e
2014e
2015e
2016e
R$ billion
2013-2016 CAGR:
Mid Single Digit Growth
5.0
EBITDA
2012
2013e
2014e
2015e
2016e
R$ billion
3.8
CAPEX
Infrastructure
Total CAPEX 2014-2016:
~R$11 billion*
3.2
Others/Licenses 0.5
2012
*Does not consider 4G licenses (700Mhz).
2013e
2014e
2015e
2016e
10
