Q2 ‘20 Results: Lighter debt, improving KPIs, on the path towards the Single Network for Italy

TIM GROUP

Q2 '20 Results

Lighter debt, improving KPIs, on the path towards the Single Network for Italy

5 August 2020

Disclaimer

This presentation contains statements that constitute forward looking statements regarding the intent, belief or current expectations of future growth in the different business lines and the global business, financial results and other aspects of the activities and situation relating to the TIM 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.

The financial results of the TIM Group are prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board and endorsed by the EU (designated as "IFRS").

The accounting policies and consolidation principles adopted in the preparation of the financial results for Q2 '20 and H1 '20 of the TIM Group are the same as those adopted in the TIM Group Annual Audited Consolidated Financial Statements as of 31 December 2019, to which reference can be made, except for the amendments to the standards issued by IASB and adopted starting from January 1, 2020.

Please note that the limited review by the external auditors (E&Y) on the TIM Group Half-year Condensed Consolidated Financial Statements at 30 June 2020 has not yet been completed.

Alternative Performance Measures

The TIM Group, in addition to the conventional financial performance measures established by IFRS, uses certain alternative performance measures for the purposes of enabling a better understanding of the performance of operations and the financial position of the TIM Group. In particular, such alternative performance measures include: EBITDA, EBIT, Organic change and impact of non-recurring items on revenue, EBITDA and EBIT; EBITDA margin and EBIT margin; net financial debt (carrying and adjusted amount) and Equity Free Cash Flow. Moreover, following the adoption of IFRS 16, the TIM Group uses the following additional alternative performance indicators:

• EBITDA adjusted After Lease ("EBITDA-AL"), calculated by adjusting the Organic EBITDA, net of non-recurring items, of the amounts related to the accounting treatment of lease contracts according to IFRS 16 (applied starting from 2019);
• Adjusted Net Financial Debt After Lease, calculated by excluding from the adjusted net financial debt the liabilities related to the accounting treatment of lease contracts according to IFRS 16 (applied starting from 2019).
• Equity Free Cash Flow After Lease, calculated by excluding from the Equity Free Cash Flow the amounts related to lease payments.

Such alternative performance measures are unaudited.

Q2 '20 Results	2

"Operations TIMe": engaging employees, improving CSI and KPIs

Culture,

engagement

and organization

Domestic

Brazil

Cash generation

What happened in Q2

• Customer Satisfaction Index/Net Promoter Score growing
• New employee shareholding plan launched
• Early retirement plan continues at full speed
• Positive mobile net adds
• Strongly improved fixed KPIs point to H2 FSR YoY better vs. H1
• Enhanced UBB rural coverage and take up
• More digital sales channels and direct payments
• Enhanced OPEX saving offset COVID-19 impact on revenues
• Strong growth in cash generation
• Organic cash generation continues
• Net Debt record level decrease
• EFCF guidance confirmed, debt reduction improved

KPIs

CSI (1) +3% mobile, +2% fixed

CSI wholesale +1%

2.8k exits in H1 / 3.4k planned in FY(2)

Mobile calling net adds +87k ~zero Consumer line losses +1.2m UBB HHs, +0.5m FTTx lines Fixed Web sales +138% YoY Direct payment 75% of gross adds

EBITDA +1.0% YoY

EBITDA-CAPEX+29% YoY

Eq FCF AL € 336m in Q2

Net Debt AL -€0.6bn QoQ

(1) CSI - Customer Satisfaction Index - Q2 '20 vs. Q4 '19	Q2 '20 Results
(2) 2.4k exits accounted plus 0.4k other exits already agreed in H1	3

Service portfolio enriched; TIM TV now a key differentiating factor

TIM-Google WiFi calling

Smart

working

First integration of

digital assistant

with legacy F-M networks in EU

New, dedicated bundles introduced:

Netflix and Sports

Launched convergence in the B2B segment

New convergent VPBX solutions

NowTv & Dazn (sport) 29.99 €/month

	RELAUNCHED IN JUNE
Mondo Netflix	12.99 €/month
	LAUNCHED IN MAY
Mondo Disney+	3.00 €/month
	TIM EXCLUSIVE

NEW PACKAGES TO COME IN

SEPTEMBER

TIMVISION customers growing double digit

TIMVISION CB

Million registered customers

+23% YoY

1.59 1.66 1.75 1.85 1.96

Q2 '19

Q3

Q4

Q1 '20

Q2

Unique partnerships

positioning TIMVISION

as a leading content aggregator

exclusive

TIMVISION Box, enabler of full

TIMVISION experience

Q2 '20 Results	4

COVID-19 update: Italy gradually back to normality

Italy post-lockdown

Thousands	120
100
	80
	60
	40
	20
	0
	24-Feb24-Mar24-Apr	24-May24-Jun
	Total infections	Hospitalized

Source: Civil Protection website

• Zero new cases in many regions
• Major public intervention for Italian families and businesses (€ 209bn recovery fund)
• New focus and push on digital and connectivity (€ 2.7bn public funding

for vouchers and roll out)

Short-term impacts on TIM

COVID-19 impacting top line and EBITDA

YoY growth, p.p.
		Q1'20	Q2'20
Domestic
Service	-0.3	-1.7
Revenue
		Q1'20	Q2'20
Domestic		-3.7
Organic

EBITDA-1.2

COVID-19 impact (p.p)

Medium/long term

Increased demand for digital services

• Cultural step towards digital
• Inversion of fixed to mobile substitution trend
• FSR expected to benefit starting from H2

Fixed Service Revenue

Organic, YoY change

Q1 '20 Q2 Q3E Q4E

-10.1%-8.5%

Q2 '20 Results	5

Strategic initiatives update

			Cash-in
		ABB and	for TIM		Consortium
Monetized	€0.65bn	Q2	51%	49%		Total debt
dividends
mobile towers,				TIM TOWER		reduction
			FREE FLOAT	>€2bn
retaining joint control				HOLD CO
c. €1.6bn	Ardian		30.2%	Joint control	Up to 3%	vs. €1.4bn
	Q3	targeted
	consortium			Canson Capital
						owned by
		deal

Cloud services

and data centers

on the way

Develop

TIM Brasil

Data center NewCo targets

▪	Top clients onboard (eg. Intesa Sanpaolo, RCS)	€1bn	Revenues 2024
▪	Data center carve-out confirmed by October '20
€0.4bn
		EBITDA 2024

• TIM Brasil, VIVO and Claro have submitted a R$ 16.5 billion binding offer for Oi mobile business subject to certain conditions, including the Offerors selection as "stalking horse"

Q2 '20 Results	6

TIM co-investing with Fastweb & KKR towards the Italian single network

KKR extended its binding offer to 31 August		TIM's BoD strongly welcome Government's will
	to accelerate the single network project
on Government request to create a broader single network
	and mandated the CEO to interact accordingly with Authorities

• The largest passive infrastructure wholesaler in Italy, with key

FiberCop to be the		customers such as TIM and Fastweb and all main OLOs	Carve out and valuation of
carve out of TIM's	▪	FTTH connecting c.20% of technical units (1), 56% by 2025 (2),	FiberCop key step towards:
passive secondary		corresponding to 76% of Black and Grey areas	▪ Co-investment with
network	▪	FTTC connecting c. 85% of technical units (3) (>100Mbps speed
		for c. 50%, >50Mbps speed for c. 85%)	OLOs

…allowing TIM to	▪	€4.7bn equity value and €1.8bn cash proceeds for TIM through	▪	Multiples rerating
▪	Creation of Italy's single
complete fiber roll		the sale of 37.5% to KKR
		network
out while	▪ TIM to be the exclusive builder and technical supplier for
deleveraging…		FiberCop's network roll out & maintenance

		▪	TIM at 58%
…and sharing			Letter received from the Italian
benefits and risks		▪	KKR Infrastructure at 37.5% paid in cash		Government on commitment to
with strong		▪	Fastweb at 4.5% through contribution of 20% of Flash Fiber		work on the creation of a single
partners		▪	FiberCop €7.7bn enterprise value at start		network for Italy

1. By YE 2020; technical units = residential or business sites which have had a fixed line connection in the last 10 years, corresponding to c. 5m occupied premises based on ISTAT

(2) Corresponding to c. 16.5m occupied premises based on ISTAT	Q2 '20 Results	7
(3) Corresponding to c. 25m occupied premises based on ISTAT

Unlocking hidden value and rerating path through FTTH/UBB adoption/deployment

Business rationale

Key benefits

for TIM

• Lead Italy's accelerated adoption and deployment of top-quality UBB networks
• • Accelerate migration of TIM's customer base from copper to fiber
  • Equity finance the FTTH roll-out
• Co-investwith Fastweb according to EU Telecommunication Code art. 76 (regulation eased): FiberCop supplier to Fastweb for secondary network
• Close digital divide, rolling out fiber in grey areas and FTTC in white areas
• Consolidate TIM's position in the creation of the National fiber network
• Unlock hidden value
• • Multiple accretive transaction
  • Path to rerating for secondary network from shift to fiber from copper whilst retaining strong control
• Set-upa partnership with one of the world's most reputable financial investors, with relevant experience in the infrastructure and TLC space
• Strongly enhance cash generation profile after the roll-out period (2025), with CAPEX on sales <10% at regime
• Accelerate deleverage

Q2 '20 Results	8

Overview of the Transaction structure, as per KKR Infrastructure binding offer

Transaction structure		Key terms of KKR entry

Pre Transaction(1)	Step 1: Carve-out	Step 2: Partner's entry	FiberCop
						Enterprise Value
						Debt allocated
						to FiberCop
			58.0%	37.5%	4.5%	(TIM intercompany loan)
		100.0%
						FiberCop
		FiberCop S.p.A		FiberCop S.p.A		Equity Value
		80.0%(2)		100.0%		Stake acquired
20.0%	80.0%(2)					by KKR
Flash Fiber S.r.l.	Flash Fiber S.r.l.		Flash Fiber S.r.l.		Cash-in
						for TIM

• 7.7bn
• 3bn
• 4.7m

37.5%

€ 1.8bn

Unlocking rerating opportunity whilst retaining strong control

(1) Before the carve-out TN Fiber to be merged in TIM	Q2 '20 Results
(2) 20% stake in Flash Fiber owned by Fastweb to be contributed in exchange of FiberCop shares	9

FiberCop at a glance

Simplified FiberCop perimeter

Including all of TIM's passive secondary network infrastructure, both copper and fiber, from the cabinet to the home, (ducts, secondary network, sockets, etc. with cabinet excluded)

FiberCop Perimeter

					passive only
						Fiber
Backbone	Fiber	Central	Fiber	Cabinet	Home
	Office
					Copper
					Home

100% owned by

58.0%

37.5%

4.5%

FiberCop operating model very lean

• FiberCop to own TIM's secondary network infrastructure
• Complete fiber secondary network roll out in Black & Grey areas
• Provide passive access services to TIM and other OLOs
• Number of employees <100

FIBERCOP

• TIM to execute all operational activities for FiberCop, from design to network construction, maintenance and assurance
• Perform general services, from corporate affairs to treasury and procurement
• Be customer of FiberCop on equal terms vs. Fastweb and other OLOs

Q2 '20 Results	10

Financial Update

Q2 '20 Results	11

TIM Group

Q2 Highlights: Record quarterly deleverage

Organic data (1), IFRS 16, € m

Service

Revenues

		Q1 '20			Q2 '20
			% YoY			% YoY
3,702	-6.6%	3,559	-8.2%
	Brazil	+1.6%		-3.4%	Equity FCF
Domestic 2,876	-8.8%	2,919	-9.1%
After Lease

EBITDA				1,541	-8.5%	1,563	-6.4%
	Brazil			-0.5%
After Lease					+6.6%	1,309	-7.5%
	Domestic	1,239 -11.6%
		Margin	38.7%		40.9%

Net Debt		FY '19
	Q1 '20
After Lease (2)		H1 '20

21,893	-798
21,711
-616
21,095

Impact of COVID-19 on Revenues mitigated by accelerated cost cutting both in Italy and Brazil, leading to Group and domestic EBITDA trend better than Q1

Record high quarterly Net Debt reduction thanks to strong organic and inorganic cash generation (-€616mQoQ After Lease)

Equity Free Cash Flow AL of €336m. In H1 Equity FCF reaches €788m, in line with 2019 excluding FX and one-off payments

Under IFRS16, debt reduction reaches €774m and EFCF €511m in Q2

(1) Excluding exchange rate fluctuations, non recurring items and change in consolidation area	Q2 '20 Results
(2) Adjusted Net Debt	12

TIM Group

€3.8bn debt cut in 20 months

Group Net Debt After Lease

Adjusted, € bn

€1.9bn organic debt reduction		>2€bn deleverage through INWIT		Additional €1.8bn from KKR
achieved in 18 months		monetization (€1.6bn in Q3)		transaction expected by H1 2021

Q2 '20 Results	13

TIM Domestic

Mobile: calling customer base back to growth for the first time in 2 years

Customer Base

k lines, Rounded numbers

Market MNP shrunk further in Q2		Mobile Customer Satisfaction

			-20vs.
30,522	-373k in Q1	30,502
10,098	+249 vs.	10,347
			+206k in Q1
20,424	-269vs.	20,155
			-579k in Q1
Q1 '20			Q2 '20
		Human			Not Human

CSI improved. Net Promoter Score well above large operators'

Stabilization of customer base (CB) key for turnaround: CB decline explains >5pp of MSR decline in Q2

MNP market volumes (1)

Million lines

-36%-42%	-5%1% -9%
YoY

						3.6
2.6	3.3	3.0
	2.3
Q2 '19	Q3	Q4	Q1 '20	Q2

Source: intra operator database

Churn further reduced QoQ

Churn rate

%

5.4% 5.5% 5.3%

4.3%4.0%

Q2 '19

Q3

Q4

Q1 '20

Q2

CSI mobile (2)

+3%

Q4 '19

Q2 '20

«Calling» net adds

positive

Human Calling net adds QoQ

k lines

87

-474

Q1 '20

Q2

(1) Source: intra operator database	Q2 '20 Results
(2) CSI is an established methodology based on ACSI (American Customer Satisfaction Index) developed by University of Michigan's School of Business	14

TIM Domestic

Mobile revenues: ARPU growth mitigates one off drags

Mobile ARPU on an improving path		Mobile Revenues
TIM human ARPU	Organic data
1,101
€ m		939
€ / line / month		Equipment
		168

			-1.3%	-1.0%	933	-42.0%	97
		-4.4%		YoY			-5.1%
	-5.0%			Service	842
-7.7%						Underlying MSR
				830	-9.8%	752
				CSP impact	Retail	(-2.3% in Q1)
						-9.3%
		12.7	12.6	12.8	103	Wholesale
		& Other (1)	89
		-2.3% YoY	+1.6%YoY	+2.0%YoY	Q2 '19	-13.5%	Q2 '20
12.5	12.9				MSR: underlying trend -5.1% YoY entirely volume-related
	12.4	12.3	12.4
					One off items: COVID-19 impact on roaming (ca. -2.2pp) and CSP (content
Q2' 19	Q3	Q4	Q1 '20	Q2	service providers) cleanup (c. -2.5pp)
					MTR price reduction explains another -1.3pp drag and the renewal of the
ARPU almost flat YoY; +2.0% underlying (ex. 3pp CSP drag)	mobile Consip contract at lower prices another -0.9pp, both in line with Q1
~6pp drags affecting Q2 and Q3 will disappear from 2021
					Lower handsets sales due to the lockdown

(1) Wholesale & Other explain -3.2pp decline YoY (vs. -0.7pp in Q1), affected by Visitors	Q2 '20 Results
	15

TIM Domestic

Fixed KPIs strong across the board. Line losses close to zero

Total Accesses (1)

Retail line losses significant reduction QoQ

UBB strong growth despite lockdown

k lines

+20 vs.

Line losses QoQ

UBB Customer Base

(2)

+7% QoQ

16,984

17,004

k lines

k lines

+24% YoY

-233k in Q1

Consumer line losses close to zero in Q2

8,981

-60vs.

8,921

7,338

+219 vs.

7,870

-185k in Q1

-60

+119k in Q1

3,789

4,008

8,003

+80 vs.

8,083

-185

-48k in Q1

-217

-216

3,549

+313 vs.

3,862

-331

+240k in Q1

Q1 '20

Q2 '20

Q1 '20

Q2 '20

Q2 '19

Q3

Q4

Q1 '20

Q2

Wholesale

Retail

Consumer

Business

Wholesale

Retail

Early benefits from "fix the fixed" initiatives.

More expected in coming quarters

7k new FTTC cabinets opened in white areas contributed to increased migrations from copper to fiber (+70% QoQ) and to Wholesale performance

FTTC cabinets expected to grow >10% by YE (another 8-10k by YE)

	Churn improving thanks to lower			Wholesale UBB net adds far
	disconnections				above ULL losses
Churn					Net adds QoQ
monthly average					k lines						143
						4	17		48	13
2.0%	1.6%	1.6%				253	207		233	240	313
1.5%				(249)	(190)	(185)	(227)	(170)
			1.0%
							Q2 '19	Q3	Q4		Q1 '20	Q2
	Q2 '19 Q3	Q4	Q1 '20 Q2						UBB(2)		ULL

(1) On TIM infrastructure, retail VoIP excluded	Q2 '20 Results
(2) FTTx and Fixed Wireless Accesses (FWA)	16

TIM Domestic

FSR on an improving path with H2 expected better than H1

Fixed Service Revenues improved QoQ (-8.5% vs. -10.1% in Q1) with better CSI. Further improvement expected for H2

• Better Wholesale performance (+1.3% YoY vs. +0.6% in Q1): lines growing thanks to VULA well above ULL
• Better International Wholesale as revenue repositioning is almost done (-3.9% YoY vs. -8.8% in Q1)
• Retail revenues growth rate in line with Q1. Trend expected to improve in coming quarters thanks to:
• • Customer base (CB) YoY fall explains c. 80% of Q2 FSR YoY fall. CB fall YoY expected to halve by YE
  • ARPU uplift from new services (more for more)
  • Free services (trial & COVID-19 related) start to be paid
  • Washing machine clean up annualization

Market discipline in Q2: competitors acquisition prices on an increasing path

Organic data	Fixed Revenues
€ m
2,588	-8.6%	2,365
170	Service
152
2,418	-8.5%	Equipment
2,213
		-10.4%
1,609		1,408
	Retail
	-12.5%
	National Wholesale
560	+1.3%	567
233	Intern. Wholesale	224
-3.9%
Q2 '19		Q2 '20
Fixed pricing	Customer Satisfaction

Price benchmark						CSI fixed (1)
€/month							Retail		Wholesale
				30
			27			+2%	+1%
30	28	26	27
	TIM	Op.2	Op.3	Op.4				Q4 '19 Q2 '20		Q4 '19 Q2 '20

(1) CSI is an established methodology based on ACSI (American Customer Satisfaction Index) developed by University of Michigan's School of Business	Q2 '20 Results
	17

TIM Domestic

Cost reduction accelerating: -13% YoY

Addressable costs down 13.6% vs. -5.6% in Q1		OPEX reduction accelerated in Q2: -13.0% vs. -10.2% in Q1

OPEX
Organic data, IFRS 16, € m	Q2 '20	YoY change (1)
	1,732	-13%(-259)
Interconnection	261	-5%
Equipment	192	-31%
CoGS	142	+17%
Commercial	306	-21%
Industrial	254
	-8%
G&A & IT	85
Labour (2)		-8%
483
	-11%
Other (3)
9

• Interconnection mirrors new strategy for Sparkle
• Equipment mirrors lower handset sales following lockdown
• CoGS increase related to IT revenue growth
• Commercial costs benefit from stopped CSP services, streamlined wholesale processes and efficiencies in customer care. Lower advertising costs due to shift of sponsorships on sport events (due to COVID-19)
• Industrial costs down thanks to decrease in energy (lower prices and consumption) and industrial spaces cost
• G&A down thanks to lower civil building costs
• Labour positively impacted by Full Time Equivalent reduction (-2k YoY)

1. Net of deferred costs, on a cash view, the reduction reaches € 268m (-12.6% vs. -11.0% in Q1). Net of deferred costs, total OPEX amounts to € 1,852m in Q2 '20 and € 2,121m in Q2 '19.

	On a cash view, YoY changes differ in CoGS (+17%), Industrial (-5%), G&A & IT (-11%) and Labour (-12%)	Q2 '20 Results
(2)	Net of capitalized costs	18
(3)	Includes other costs/provision and other income

TIM Group

Strong efficiencies in CAPEX; NWC outflow reduced €492m YoY

CAPEX		Group Operating WC improving € 492m YoY

Organic data, € m

Net Working Capital

					IFRS 16, € m
		807	-19%					H1 '19				H1 '20		YoY
Brazil	162	-29%	655
			107				332
					Group		(599)		+492
						(1,091)
Domestic	645	-15%				(137)
549					(736)
									+23
								(759)
		Q2 '19		Q2 '20				Operating WC		Non recurring items

CAPEX down 19% YoY for COVID-19 related	Group Operating Working Capital +€ 492m YoY despite € 393m of
delays and for efficiency gains both in Italy	one-offs and non-comparable items(1) offset by a positive exchange
and Brazil	rate impact in Brazil (€ 211m) and by postponement of 2020 Fistel
	payment to August, as allowed post COVID-19 (€ 161m)

(1) SKY payment, litigations and settlements, increased payments to personnel for exits ex. art. 4 Fornero Law and for bonuses and incentives (payments delayed to H2 in 2019)	Q2 '20 Results
	19

TIM Group

Deleverage: €1,697m debt cut in 6 months (€798m After Lease)

• m; (-) = Cash generated, (+) = Cash absorbed, excluding call-outs

EBITDA	1,735							EBITDA	1,663
CAPEX	(599)	o/w:		CAPEX	(655)
ΔWC & Others	(348)	Inwit deconsolidation	461	ΔWC & Others	(251)
Operating FCF	788	Cash taxes	(26)	Operating FCF	757

o/w:
Inwit ABB	(400)
Extraordinary dividend	(214)
Inwit ordinary dividend	(42)

Lease impact

21,711

-€ 182m

-€ 616m

FY '19

Lease

FY '19

Operating

Financial

Cash Taxes

Dividends

Q1 '20

Operating

Financial

Cash Taxes

Dividends

H1 '20

Lease

H1 '20

Net Debt

impact

Net Debt

FCF

Expenses

& Other

& Change

Net Debt

FCF

Expenses

& Other

& Change

Net Debt

impact

Net Debt

After Lease

in Equity

in Equity

After Lease

	FY '18					+3,058					H1 '19
2019	25,270	(690)	346	3,632	25	25,583	(1,129)	361	297	216	28,328	(5,510)	22,818
o/w 3,553 FTA IFRS 16
vs. 2019		(98)	(51)	(4,102)	15	(1,838)	372*	(52)	(931)	92	(2,357)	634	(1,723)
							*302 ex. Inwit					o/w 1,117 Inwit
													Q2 '20 Results	20

TIM Group

Liquidity margin - After Lease view

Cost of debt ~3.4%, flat QoQ, -0.3p.p. YoY

Liquidity Margin		Debt Maturities

8.3	24.7 (1)
8.3

2.6

						3.5	2.0		20.4
11.2							0.6
				3.1	3.3
Covered until 2023
			0.2
4.5				4.3	2.4
				3.1	0.7
			2.2
6.7	0.8	1.2
0.6					4.4
	0.7	0.1	1.7
	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025	Beyond 2025	Total M/L Term
									Debt

Cash & cash equivalent

Undrawn portions of committed bank lines

Bonds

Loans

(1) € 24,732m is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€ 547m) and current	Q2 '20 Results
financial liabilities (€ 1,365m), the gross debt figure of € 26,644m is reached	21

TIM Brasil

TIM Brasil: improving EBITDA thanks to strong cost efficiencies

Reported data, R$m

Service Revenues down 3.4% YoY mainly due to COVID-19 impact causing lower gross adds and top-ups

EBITDA(1) up 1.0% YoY despite topline pressure thanks to strong execution on cost efficiencies (OPEX -12.8% YoY)

	4,063	-3.4%	3,926		MSR affected by the pandemic:
	224	12.9%	253		Prepaid down 13.0% and Postpaid
		down 1.6%
	3,839	-4.3%	3,673
		FSR +12.9% YoY driven by TIM Live
	Q2 '19		Q2 '20

Mobile		TIM Live
ARPU +0.9% YoY		Revenues +29% YoY
to 23.4 R$/month
	>600k clients milestone
Prepaid ARPU -1.4% YoY
	ARPU +7.6% YoY to 83.9 R$
Postpaid ARPU +1.2.% YoY(2)

Digital Journey Project

100+ initiatives accelerated to prioritize digital experience

TIM APP	DIGITAL SELF	CUSTOMER SERVICE	1-CLICK BUY	WEBSITE	NAKED
IMPROVEMENT	SERVICE	SCHEDULING	RECHARGE	REDESIGN	SIM

Margin	45.7% +3.6p.p.	49.3%

1,948 1.0% 1,967

Q2 '19

Q2 '20

Solid network development

FTTH coverage +77% YoY 2.8m HHs in 27 cities

New clusters : Brasília and Belo Horizonte

New initiatives launched

to increase capacity and coverage

Leadership in 4G coverage

88.2% availability

EBITDA margin (Pro-forma)(3)

31.5% 35.3% 37.6% 38.6% 42.0%

Q2'16 Q2'17 Q2'18 Q2'19 Q2'20

Beyond the core

~200k new accounts 3 weeks from launch

8x daily average

1. Normalized

(2)	Excluding M2M	Q2 '20 Results	22
(3)	Pro-forma excludes the effects of the adoption of IFRS 9, 15 and 16

TIM Group

Deleverage guidance improved for INWIT transaction, EqFCF unchanged

Estimated COVID-19 impact now reflected

YoY growth rates,

IFRS 16 / After Lease

Organic

Service revenues

Organic

EBITDA AL

CAPEX

Eq FCF AL

Adjusted

Net Debt AL

Dividend

Group

Domestic

Brasil

2020

2021-'22

2020

2021-'22

2020

2021-'22

Mid single

Low single digit

Mid to High

Stable to Low

Mid single digit

digit decrease

growth

single digit decrease

single digit growth

growth

Mid single

Low to Mid single

Mid to High

Low single digit

EBITDA-Capex

EBITDA margin

digit decrease

digit growth

single digit decrease

growth

growth confirmed

≥ 40% in '22

~€ 2.7bn in 2020

~€ 2.9bn in 2021-22

Cumulated € 4.5 - 5.0 bn

To be enhanced through inorganic actions

presently not included

<€ 18bn by 2021, stable in 2022

ordinary: floor of € 1 cent per share, aim to distribute 20-25% of yearly Equity FCF subject to deleverage execution

savings: €2.75 cents per share throughout 2020-2022

- Figures @ Avg Exchange Rate Actual 5,71 REAIS/EUR	Q2 '20 Results
	23

TIM Group

Closing remarks

Executing Operations TIMe plan and extraordinary initiatives at

full speed despite COVID-19. Debt cut €3.8bn in 20 months

FiberCop to open the way for new opportunities for TIM, its shareholders and the Country

Letter received from the Italian Government on commitment to work on the creation of the Single Network for Italy

The improvement of KPIs and CSI in both fixed and mobile are early signs of effectiveness of the turnaround started in 2019

2020-22 cumulated Equity FCF confirmed

2021 debt guidance improved €2bn, to <€18bn thanks to INWIT

transaction

Q2 '20 Results	24

Q&A

Q2 '20 Results	25

Annex

Q2 '20 Results	26

TIM Group

H1 Net Income +23% YoY

Reported data, € m, Rounded numbers

COVID-19 impact	(69)
Personnel and other	(68)

Inwit gain following the merger	448
Inwit equity share	2
Net financial expenses	(603)

H1 '20

Net Income post minorities +127m YoY

		EBITDA	Non	EBITDA	Depreciation &	EBIT	Net Interest &	Taxes	Net Income	Minorities	Net Income
		Organic	recurring	Reported	Amortization		Net Income/		before		Reported
			items		& Other		Equity/ Disc.		Minorities
							Operations
H1 '19		3,779	592	4,391	(2,504)	1,887	(755)	(392)	740	(189)	551
vs. H1 '19		(264)	(729)	(993)	148	(845)	602	226	(17)	144	127

Q2 '20 Results	27

TIM Group

Liquidity margin - IFRS 16 view

Cost of debt ~3.8%*, -0.1p.p. QoQ, -0.5p.p. YoY

* Including cost of all leases

Liquidity Margin		Debt Maturities

									10.4	29.6 (1)
									8.3
								3.0	2.1	20.4
							4.0	2.0
							0.6
11.2						3.6	3.3	0.4
				4.8	2.4	0.2
4.5	Covered until 2022		0.4
				3.1	0.7				4.4
			2.9		0.5
6.7				1.2
	1.0	0.6
		0.5					4.9
	0.7	1.7	0.6
	0.1
		0.2
	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025	Beyond 2025	Total M/L Term
										Debt
		Cash & cash equivalent	Undrawn portions of committed bank lines	Bonds	Loans	Finance Leases

(1) € 29,600m is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€ 579m) and current	Q2 '20 Results
financial liabilities (€ 1,365m), the gross debt figure of € 31,544m is reached	28

TIM Group

Well diversified and hedged debt

		NFP		Fair		NFP
		adjusted		value		accounting
GROSS DEBT
Bonds	20,505	311	20,816
Banks & EIB	5,699			5,699
Op. leases and long rent	4,900			4,900
Other	440	1,714	2,154
TOTAL		31,544		2,025		33,569
FINANCIAL ASSETS
Liquidity position	4,479			4,479
Other (1)	1,094	2,042	3,136
TOTAL		5,573		2,042		7,615
NET FINANCIAL DEBT		25,971		(17)		25,954

• Refers to positive MTM derivatives (accrued interests and exchange rate) for € 944m, financial receivables for lease for € 84m and other credits for € 67m

Gross Debt

Banks & EIB
18.1%		Bonds
Op. leases		65.0%
and long rent
15.5%	Other
	1.4%

Average m/l term maturity:

7.8 years (bond 7.1 years only)

Fixed rate portion on medium-long term debt ~70%

Around 26% of outstanding bonds (nominal amount)

denominated in USD and GBP and fully hedged

Q2 '20 Results	29

TIM Group

After Lease view

EBITDA After Lease	Net Debt After Lease

€ m, organic				(-6.4%)	€ m, reported
		(-6.4%)
1,882	(212)	1,670	1,563	198	1,761				(1,723)	(2,357)
		28,328
Group						(5,510)	22,818	21,095	4,876	25,971
Q2 '19	Lease	Q2 '19	Q2 '20	Lease	Q2 '20
EBITDA	impact	EBITDA	EBITDA	impact	EBITDA	Net Debt	IFRS 16	Net Debt AL	Net Debt AL	IFRS 16	Net Debt
		AL	AL			1H '19	& IAS17	1H '19	1H '20	& IAS17	1H '20

€ m, organic

Equity Free Cash Flow After Lease

				(-7.8%)
			(-7.5%)			€ m, reported
1,558	(143)	1,415	1,309	127	1,436					(208)
Domestic					(213)		512
					720	(171)	549	336	176
Q2 '19	Lease	Q2 '19	Q2 '20	Lease	Q2 '20	EFCF	IFRS 16	EFCF AL	EFCF AL	IFRS 16	EFCF
EBITDA	impact	EBITDA-	EBITDA-	impact	EBITDA	Q2 '19	& IAS17	Q2 '19	Q2 '20	& IAS17	Q2 '20
		AL	AL

Q2 '20 Results	30

For further questions please contact the IR team

([phone] // ([phone]

[e-mail]

www.gruppotim.it

www.twitter.com/TIMNewsroom

www.slideshare.net/telecomitaliacorporate

Q2 '20 Results	31