Telecom Italia Telecom Italia Citi: 11th Annual European & - - PowerPoint PPT Presentation

Telecom Italia Telecom Italia

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011

MARCO MARCO PATU PATUANO ANO TELECOM ITALIA GROUP

2 MARCO PATUANO TELECOM ITALIA GROUP

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011

Safe Harbour 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. 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.

3 MARCO PATUANO TELECOM ITALIA GROUP

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011

Agen Agenda da

Telecom Italia Domestic Plan Telecom Italia Domestic Plan

Mobile Business Fixed Business Innovative Services Focus on 2011 Domestic EBITDA

4 MARCO PATUANO TELECOM ITALIA GROUP

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011 In Increa creasing ng Stab Stable le De Decrea creasing ng Sl Slightly In Increa creasing ng De Decrea creasing ng

Dom Domestic M stic Market by T rket by Technolo chnology Com Competitiv etitive Scenario e Scenario

Italian TLC Market Evolution and Competitive Scenario Italian TLC Market Evolution and Competitive Scenario

Me Media ICT ICT TLC TLC

Products Mobile Fixed

46,9 46,9 47,3 47,3

Bln €

Handsets Vendors Over the Top (“OTT”) Telcos IT Players Media Player

5 MARCO PATUANO TELECOM ITALIA GROUP

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011

A fres A fresh market s h market still to be tapped ill to be tapped Mobile BB is complementary to Fixed BB Mobile BB is complementary to Fixed BB

~25. ~25.2 Ml Mln H n Househ useholds: ~12.0 Ml ~12.0 Mln Broad n Broadband nd (Fixed and/or Mobile) (Fixed and/or Mobile)

* Source: Between – Broadband Report July 2010, Company data

Fixed and Mobile BB: Consumer Market Evolution Fixed and Mobile BB: Consumer Market Evolution

6 MARCO PATUANO TELECOM ITALIA GROUP

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011

Agen Agenda da

Telecom Italia Domestic Plan Telecom Italia Domestic Plan Mobile Business Mobile Business

Fixed Business Innovative Services Focus on 2011 Domestic EBITDA

7 MARCO PATUANO TELECOM ITALIA GROUP

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011

GR GROWT OWTH Mantain competitive pressure on gross adds, with limited use of promotional offers Moving towards MNP break-even VALU VALUE Offers segmentation: Lock-in offers for High Value customers, continuous push on Community Push on bundle offers Price per minute stabilization SATISFA SATISFACTION TION Improve Customer Satisfaction and reduce the gap vs. best competitor VALU VALUE Different promos for different clusters of customers approached on a 1:1 basis Maintain focus on loyalty and up-selling with particular focus on High Value customers Win-back valuable customers LOCK-IN LOCK-IN Lock-in offers with Smartphone at favourable conditions Customer Pre-retention Unit for High Value customers

ARPU ARPU

€/month Slight Decrease

Mobile: Traditional Core Services Mobile: Traditional Core Services

Objectives Objectives Actions Actions KP KPIs Is CR CRM to Protect M to Protect Value Value Strengthen the Strengthen the Custom Customer B er Base se

19.7

2010 2010 2011 2011 2013 2013

(mln SIM) M/S

Customer Ba stomer Base se

2010 2010 2011 2011 2013 2013 31 ~32 ~35

Stable ~33%

MN MNP B P Bala lanc nce

(000)

=

2010 2010 2011 2011 2013 2013

(0.9) ~(0.4)

8 MARCO PATUANO TELECOM ITALIA GROUP

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011

Protect Leade Protect Leadership ship Maintain leadership in a 4 Players market Offers based on QoS (Priority) for Premium customers Push cross selling activities for ADSL consumers CRM plan to contrast inactivity/churn Fu Fully Expl y Exploit Growth Opportu t Growth Opportunities ities Strong presence in the handsets market Keep subsidies under control Continuous push on “Tutto Compreso” with Smartphones Upselling on Customer Base New markets opportunities: Tablet, e-readers Apps as Mobile Internet: boost on TIMStore (synergy with TEF)

Ha Hand ndset sets sell-in and sell-in and T TIMx Smartp Smartpho hone (mln) ne (mln)

~30% >50%

~+20% % S % Smartphon hone TIM TIMx Sm Smartphon hone

~1.0

>40%

>+80%

Web Us Web User ers (mln) s (mln)

Mar Market et Sh Share

~ 36% ~ 37%

Big Screen Big Screen Gros Gross Ad Adds (mln (mln) ~1.4

Mobile Broadband Consumer: Catching Growth Opportunities Mobile Broadband Consumer: Catching Growth Opportunities

Objectives Objectives Actions Actions KP KPIs Is

Small Screen Small Screen Active Users (mln) tive Users (mln) ~9% ~9% ~7% ~7% ~18% ~18% ~16% ~16% Market p Market penetration ation (*) Ben Benchm hmar ark

BIG BIG SCREEN SCREEN

Market p Market penetration ation (*) Ben Benchm hmar ark

SMALL SMALL SCREEN SCREEN

*Source: COCOM Report

9 MARCO PATUANO TELECOM ITALIA GROUP

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011

Agen Agenda da

Telecom Italia Domestic Plan Telecom Italia Domestic Plan

Mobile Business

Fixed Business Fixed Business

Innovative Services Focus on 2011 Domestic EBITDA

10 MARCO PATUANO TELECOM ITALIA GROUP

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011

ACQU QUISITIONS ISITIONS Push on win-back Push on win-back Advertising: rtising: continuous presence with mix on media channels differentiated depending on customer segments Distrib Distribution c tion channels nels: : re-balancing acquisition mix with stronger contribution from Push channels and renewed focus on shops VALUE VALUE Greater ef Greater efficienc encies on loyalty es on loyalty with focus on High-End customers Increase penetration of flat/bundle offers VA VALUE PROPOSITION LUE PROPOSITION Quality Innovation

Protec Protect t Access Access

Objectives Objectives Actions Actions KP KPIs Is

Fixed: Continued Access Value Protection Fixed: Continued Access Value Protection

(mln) Market Share

Total Acc Accesses sses

71.4% 68.4% ~64%

16.1 >14

2009 2009 2013 2013 2010 2010

15.4

2009 2009 2011 2011 2013 2013 2010 2010

(mln)

Line ne Losses Losses Ev Evol

• lut

ution

• 1.3

<0.6

• 0.4
• 0.7

11 MARCO PATUANO TELECOM ITALIA GROUP

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011 BB BB A ARPU PU ( (euro/mon month) Cu Cubo bovisio vision sal sales ( (000) Fiber A Fiber Acti tivatio vations (000 (000)

Fixed Fixed Broadband: Lever Broadband: Leveraging on In ging on Innovation novation

Objectives Objectives Actions Actions KP KPIs Is Innovativ Innovative Servi Services es Broad Band Broad Band

De Defend ma market po posi sition ion an and d ma mark rket sha share New pro New promotio

• tions

ns: no price war Offe Offer s r segm gmenta tation tion New se New servi rvices es to drive up ARPU and differentiate offering (e.g.: Pronto PC assistance) Innova Innovation ion in in access t to su support ARPU ARPU High Quality ADSL Fibe Fiber: launch in 2H 2011 De Develo lop n p new wa ways ys t to us use AD ADSL SL Cubovision Devic Cubovision Device OTTV with lower bandwidth requirements: addressable market from 40% (IPTV) to 90% (Cubo) BB lines Cu Cubo bo de de-ma

• materiali

ializa zation ion: access content with a multi-platform approach (Connected TV, Blu-Ray, pc) Hybrid devices: Hybrid devices: Tablet, smartphones (wi-fi enabled) Adj Adjacent m cent markets rkets Open the content distribution platform to Content Providers Launch of Con Conten ent Cu Cubovision bovision Suit Suite : : VOD, catch-up TV, MUSIC, gaming, betting, … Quali Quality

• f c

conten ent e ensu sure red E d E2E thanks to CDN

2011 2011 2013 2013

~ 280 In Increa crease se Stab Stable le

2011 2011 2013 2013

18 18.6 .6

2010 2010

BB C Custo stomer ers s Base (m se (mln) ln) 8. 8.0 ~ 7 ~ 7.5 7. 7.2

% Flat Offers 86 86% 89 89% >90% >90%

2011 2011 2013 2013 2010 2010

~ 120

2011 2011 2013 2013

Fiber A Fiber Acti tivatio vations (000 (000)

12 MARCO PATUANO TELECOM ITALIA GROUP

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011

Agen Agenda da

Telecom Italia Domestic Plan Telecom Italia Domestic Plan

Mobile Business Fixed Business

Innovative Services Innovative Services

Focus on 2011 Domestic EBITDA

13 MARCO PATUANO TELECOM ITALIA GROUP

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011

Develop F-M Integrated Systems (single billing, single caring) Increase line winback rate from OLO’s Push on mobile BB penetration Encourage IT services adoption rate through bundle with our best selling integrated offer Leverage on Impresa Semp Impresa Semplice distinctive branding in the SME market Improve quality

ICT Revenue ICT Revenues ( s (€mln) n)

818 +~12%

Cagr ‘10-’13

Market share on rket share on fixed a fixed acce cess (%) ss (%) Market share on mob Market share on mobile human ile human line lines (%) (%)

Business Segment: Innovative In Business Segment: Innovative Integrated Approach Confirmed tegrated Approach Confirmed

Objectives Objectives Actions Actions KP KPIs Is Evolve towa Evolve towards rds the Clo the Cloud Comput Computing ing mo mode del Defend Defend Value Value Ramp-up in mp-up in Innovativ Innovative Servi Services es Pene Penetration Further develop TLC + IT solutions of IaaS and PaaS through the E2E control of the network Develop offerings for vertical markets Go-to market partnership with system integrators w/o infrastructures Upgrade IT delivery and assurance processes to the Telco standards

14 MARCO PATUANO TELECOM ITALIA GROUP

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011

Agen Agenda da

Telecom Italia Domestic Plan Telecom Italia Domestic Plan

Mobile Business Fixed Business Innovative Services

Focus on 2011 Domestic EBITDA Focus on 2011 Domestic EBITDA

15 MARCO PATUANO TELECOM ITALIA GROUP

Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011

Euro Bln, Organic Data, %

Consolidating Efficiency Programs Results on Fixed Opex MTR reduction and symmetry glide path offsetting related Top Line decline Selective growth of Handset/Smatphone Revenues to support Mobile BB development Supporting BB and Mobile Customer Base growth

1 2 3 4

9.8

1 1 2

Revenues 2010 2011 >9.4

• 4%

Handsets costs Interconn. costs Mktg &

• Comm. Opex

Fixed Opex (*)

4 2 2 3 3 4 4

Mobile Incoming Revenues Mobile ITX Cost ∆ Price MTR Impact

OLO Mobile OLO Fixed +Int’l*

F-M Revenues Fixed ITX Cost*

Euro Mln

* net of Intercompany

(*) Industrial + Personnel + G&A = Fixed Opex

Focus on 2011 Domestic EBITDA Focus on 2011 Domestic EBITDA