Strategic Outlook - 2009 Results and the 2010-2012 Strategic Plan Update (Cicchetti)

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The Telecom Italia 2009 Results and the 2010-2012 Strategic Plan Update

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<ul><li> 1. Telecom Italia Strategic Plan UpdateOSCAR CICCHETTI </li></ul> <p> 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. 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.2 OSCAR CICCHETTI 3. Network EvolutionProvider Service Provider Applications ServiceAggregation of automatic componentsServicesEcosystems of services Platform APIsEnablerService Overlays of autonomic virtualized componentsGeneral Control &amp; Management (Zero Touch) Bit Carrier IPNBPlatformOther Resources/ Fiber Networks/Optical PlatformTerminalsSubscriberAccess Aggregation Edge Core OSCAR CICCHETTI3 4. Agenda Wired Access Wireless Access Core Network Platforms Capex BreakdownOSCAR CICCHETTI 4 5. Wired Access Copper and Fiber will coexist Copper Access EvolutionFiber Access Evolution (NGAN) CapacityCapacity WDM PON 100 Gbps down, 100 Gbps up Target of 100 km ON VDSL3 xPSL xD Dynamic SpectrumXG-PON Management 10 Gbps down, 2 .5 Gbps up Target of 100 kmGPON 2.5 Gbps down, 1 .25 Gbps up Up to 60 Km More xDSL efficiency &amp; stability 200920102012year 2009 20102012 year Copper: continue innovation, increase performance Fiber: to match a symmetric Gigabit per client OSCAR CICCHETTI 5 6. Wired Access Copper Value Last mile lengthRelevant portion of TI asset 1009080Lower Average Length7060 Italy United KingdomxDSL still evolving (DSM, VDSL3) %50 Japan40 France30 Germany U.S.A.2010 0 0 2468 10 1214 km Source Internal Estimates High ProfitabilityExtention and RenewalPerformance Improvement+100k Households per year More robust xDSL technologies in the switching centers Extraordinary maintenance onmost vulnerable elements Fiber + MSAN in case of Copper pairs longer than 3 km: OSCAR CICCHETTI6 7. Wired Access Fiber Selective Development Timetable Roll-out (000)Poor Market Demand 1,400 1,300Unclear Savings 1,200 927 933Large Investments 1,000800 637 557 600 386 400 200Home Semi-Passed200Home Passed 2009 2010 2011 2012Uncertain ProfitabilityRegulatory ExpectationsMarket Focus Technical SolutionsInfrastructure BasedBusiness Customers FTTH G-PON architectureCompetition Main metropolitan areasInnovative less expensive No Retail Obligations(Rome and Milan)digging solutions Wholesale Prices Increase Wireless Backhauling OSCAR CICCHETTI7 8. Wired Access - EvolutionCopper Network ArchitectureCentral Office Street MDFResidential customers MSANBusiness customersBB Fixed Coverage* Evolution BroadBand Platform Investment 100%Capex per f.o. digged meter Capex per xDSL port 98% 63% FTTxADSL baseAll IP ADSLNGN2 xDSL(*)6%0%20092010 2011 201220092012 * Gross coverage* Copper capex not includedOSCAR CICCHETTI8 9. Agenda Wired Access Wireless Access Core Network Platforms Capex BreakdownOSCAR CICCHETTI 9 10. Wireless Access Voice &amp; Broadband2G evolution (GSM, GPRS, EDGE)3/4G (UMTS, HSPA, LTE) HSPA+ evolution: 84 Mbps DL LTE: large availability Performance Performance of terminals LTE - GSM Interworking: enhanced &amp; seamless mobility HSPA+: 42 Mbps DL LTE: voice support Extra capacity of GSMFirst handsets available voice service HSPA+: 21 e 28 Mbps DL Voice quality LTE: first data card (2G/3G/LTE)improvement and commercial releases 2009 20102012 year2009 20102012year Extended BB coverage (whole country) Selected areas for HSPA+ and LTE deployments based on macro, micro/pico and femto cells Femtocells backhauling via fixed BB connectivityOSCAR CICCHETTI10 11. Wireless Access - Evolution Mobile Network Architecture Copper Link (SHDSL)RNC nxE1Voice + Data Radio Links 2.1 GHz 0.9 GHz 2.6 GHz1.8 GHz nxE1 Voice+R99OPMEth o nxE1 ADSL/VDSLEth HSPAEth Ethernet on CopperFiber Optics Development of Radio Access CoverageBackhauling(unit) 105 600 1,700 100% 100% 1,100 60586% 1,0001,600 2,700 2,600&gt;60% 3,70012,150GSM/Edge10,350UMTS 7,550HSDPA 14.4 5,050 HSDPA 21/280%20092010 201120122009 2012 RadioFiber BondingNxE1OSCAR CICCHETTI 11 12. Wireless Access - Cash Cost Reduction3G Nodes Capex per NodeMultistandard solution 13,500 13,10012,20012,70011,200 HSPA+ (5,000) LTE (250)20082009 2010 20112012Site Sharing (k number of sites)Mobile Petabytes137Rent per SiteCapex per PByte 9711.7 10 8.1 606.130 4.211 2008 200920102011 20122008200920102011 2012 OSCAR CICCHETTI12 13. Agenda Wired Access Wireless Access Core Network Platforms Capex BreakdownOSCAR CICCHETTI 13 14. Core Network Delayering toward IP over ROADM IP ATMIPSDHPhotonic Layer(ROADM) WDMLarge implementation of xDSL (DSLAM) IP within the accessProgressive migration of ATM and SDH to IPOSCAR CICCHETTI14 15. Core Network - EvolutionCore Network Evolution OPMPTN aggregationarea The Capacity increase IP TrafficCapex per Petabyte100Gb/s100Gbps Bit rate per channel40Gbps10Gb/s 10Gbps 3,380Peta Bytes 2.5Gbps1Gb/s2,680 622Mbps1,940100Mb/s155Mbps 1,35086010Mb/s INNOVATION610 1990 2000 2010year2007 20082009 201020112012 OSCAR CICCHETTI 15 16. Agenda Wired Access Wireless Access Core Network Platforms Capex BreakdownOSCAR CICCHETTI 16 17. IT PlatformsInterfaceStandardization 800 380 260180 Systems systems systemssystemsCentralizedManagement 2009 2012IT Systems 800 Systems 180 SystemsManaged 40,000 Thin Client 80,000 PCsWorkstation 25,000 portable PCsServer 12,000 Servers2,000 Servers + VirtualizationData Center 8 Data Centers3 Campus Data CentersArchitecture StreamliningManagement Costs ReductionOSCAR CICCHETTI17 18. Service Platforms Reverse Revenues TrendEnriched ConnectivityFlexible BandwidthEnriched P2PSelf Provisioning &amp; Self CaringBackMobile Internet to GrowthHigher Throughput Applications Quality Differentiation &amp; Platforms (1)Ultrabrowsing Experience on selected areas 7%12%Broadband (2)13% 16%Personal CommunicationAccess &amp;Enhanced Phonebook Voice (3)80% Enhanced MessagingPersonal Communities 72%Business Collaboration SuiteUnified MessagingIP VideoconferencingCollaboration Tools 2009 2012(1)ICT Services, BB Content (Adv., IPTV), Mobile VAS Content(2)Mobile BB, Fixed BB (Access)(3)Fixed: Access, Outgoing Voice, Voice VAS, Business Data, Handsets; Mobile: OutgoingVoice, Messaging, Handsets OSCAR CICCHETTI 18 19. Enabling Platforms Reverse Revenues TrendMachine to MachineSmart CitiesDigital HomeSmart CarProfiling &amp; Recommendation Back Traditional Customer Profiling to GrowthLocation on Mobile Networks Applications &amp; Platforms (1)Web Profiling 7% Network ProfilingBroadband (2) 12%13% 16%Cloud ComputingAccess &amp;Infrastructure as a Service Voice (3)80% Platform as a ServiceSoftware as a Service 72%Content DeliveryIPTVWEB and OTT TVCDN based Services 2009 2012(1)ICT Services, BB Content (Adv., IPTV), Mobile VAS Content(2)Mobile BB, Fixed BB (Access)(3)Fixed: Access, Outgoing Voice, Voice VAS, Business Data, Handsets; Mobile: OutgoingVoice, Messaging, Handsets OSCAR CICCHETTI 19 20. Agenda Wired Access Wireless Access Core Network Platforms Capex BreakdownOSCAR CICCHETTI 20 21. Capex Breakdown Focus on Network &amp; IT Euro Bln Total 2.7 Core Network 0.8 2.2 and Service Platforms0.9ITAccess Netwok 1.0&amp; OthersCapex reduction around 20% 20092010 2011 2012 among the 3 year Plan %Full support of all our business commitmentsCore Network 31% 31% and Service30%28% PlatformsIT 32% 25%24%23%Access Netwok 37% 44%46%49%&amp; Others20092010 2011 2012 OSCAR CICCHETTI 21 22. Technology - Take AwaysIncrease coverage and throughput to support BB (Fixed/Mobile) development Slightly increase in capex amount trough: Accessintroduction of multistandard mobile access nodes Network price decline in xDSL selective fiber roll out and innovative digging technologies cooperation with P. Administrations for Digital Divide and new networks roll out Delayering and strengthening to support data traffic growth and effectiveness of Core Networkservice offering Capex broadly slightly declining trough: and Service price decline in optical equipment Platforms smooth phase out of legacy platforms adoption of OTT approach in service development Integrate and empower to simplify business processes and support efficiency plan Strong reduction in capex due to: IT Platformsintegrated architecture virtualised infrastructures vendor consolidation OSCAR CICCHETTI22 </p>

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