TELECOM ITALIA GROUP Telecom Italia Telecom Italia Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011 MARCO MARCO PATU PATUANO ANO
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. MARCO PATUANO 2
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 MARCO PATUANO 3
TELECOM ITALIA GROUP Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011 Italian TLC Market Evolution and Competitive Scenario Italian TLC Market Evolution and Competitive Scenario Domestic M Dom stic Market by T rket by Technolo chnology Competitiv Com etitive Scenario e Scenario Bln € 46,9 46,9 47,3 47,3 Me Media In Increa creasing ng Over ICT ICT the Top (“OTT”) Stab Stable le Media IT Telcos Player TLC TLC Players Products Decrea De creasing ng Sl Slightly Handsets Mobile Increa In creasing ng Vendors Fixed De Decrea creasing ng MARCO PATUANO 4
TELECOM ITALIA GROUP Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011 Fixed and Mobile BB: Consumer Market Evolution Fixed and Mobile BB: Consumer Market Evolution ~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) 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 * Source: Between – Broadband Report July 2010, Company data MARCO PATUANO 5
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 MARCO PATUANO 6
TELECOM ITALIA GROUP Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011 Mobile: Traditional Core Services Mobile: Traditional Core Services Actions Actions KPIs KP Is Objectives Objectives (mln SIM) Customer Ba stomer Base se GROWT GR OWTH � Mantain competitive pressure on gross adds, with ~33% Stable M/S limited use of promotional offers ~35 � Moving towards MNP break-even ~32 31 VALUE VALU Strengthen the Strengthen the � Offers segmentation: Lock-in offers for High Value Customer B Custom er Base se 2010 2010 2011 2011 2013 2013 customers, continuous push on Community � Push on bundle offers (000) MNP B MN P Bala lanc nce � Price per minute stabilization 2010 2010 2011 2011 2013 2013 SATISFACTION SATISFA TION = � Improve Customer Satisfaction and reduce the gap vs. best competitor ~(0.4) (0.9) VALUE VALU � Different promos for different clusters of €/month customers approached on a 1:1 basis ARPU ARPU CR CRM to Protect M to Protect � Maintain focus on loyalty and up-selling Slight with particular focus on High Value customers Value Value Decrease 19.7 � Win-back valuable customers LOCK-IN LOCK-IN � Lock-in offers with Smartphone at favourable 2010 2010 2011 2011 2013 2013 conditions � Customer Pre-retention Unit for High Value customers MARCO PATUANO 7
TELECOM ITALIA GROUP Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011 Mobile Broadband Consumer: Catching Growth Opportunities Mobile Broadband Consumer: Catching Growth Opportunities Actions Actions KP KPIs Is Objectives Objectives Big Screen Big Screen Gros Gross Ad Adds (mln (mln) Protect Leadership Protect Leade ship BIG BIG � Maintain leadership in a 4 Players market SCREEN SCREEN � Offers based on QoS (Priority) for Premium customers Web Us Web User ers (mln) s (mln) Market penetration Market p ation (*) � Push cross selling activities for ADSL Ben Benchm hmar ark consumers ~9% ~9% ~7% ~7% � CRM plan to contrast inactivity/churn Market Mar et ~ 36% ~ 37% Sh Share Hand Ha ndset sets sell-in and sell-in and T TIMx Smartp Smartpho hone (mln) ne (mln) Fully Expl Fu y Exploit Growth Opportu t Growth Opportunities ities ~1.4 SMALL SMALL ~1.0 >40% � Strong presence in the handsets market TIM TIMx Sm Smartphon hone SCREEN SCREEN � Keep subsidies under control ~+20% � Continuous push on “Tutto Compreso” with % S % Smartphon hone >50% ~30% >+80% Market p Market penetration ation (*) Smartphones Benchm Ben hmar ark � Upselling on Customer Base Small Screen Small Screen Active Users (mln) tive Users (mln) ~18% ~18% � New markets opportunities: Tablet, e-readers ~16% ~16% � Apps as Mobile Internet: boost on TIMStore (synergy with TEF) *Source: COCOM Report MARCO PATUANO 8
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 MARCO PATUANO 9
TELECOM ITALIA GROUP Citi: 11th Annual European & Emerging Markets Telecoms Conference London, 22 March 2011 Fixed: Continued Access Value Protection Fixed: Continued Access Value Protection Actions Actions KPIs KP Is Objectives Objectives ACQU QUISITIONS ISITIONS � Push on win-back Push on win-back Total Acc Accesses sses (mln) � Advertising: rtising: continuous presence with mix on 16.1 15.4 >14 media channels differentiated depending on customer segments � Distrib Distribution c tion channels nels: : re-balancing acquisition 2009 2009 2010 2010 2013 2013 mix with stronger contribution from Push channels and renewed focus on shops Market 71.4% 68.4% ~64% Share Protect Protec t VALUE VALUE Access Access � Greater ef Greater efficienc encies on loyalty es on loyalty with focus on Line ne Losses Losses Ev Evol olut ution (mln) High-End customers � Increase penetration of flat/bundle offers 2009 2009 2010 2010 2011 2011 2013 2013 VALUE PROPOSITION VA LUE PROPOSITION -0.4 � Quality <0.6 -0.7 � Innovation -1.3 MARCO PATUANO 10
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