Time Warner – Company Profile & Equity Research Report by landell

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									    Time Warner
    Time Warner Inc.                                                Industry View:                  ATTRACTIVE                                                N. Landell-Mills CFA
    Latest Results:           Q1 2013                               Company Rating:                LOW MED. HIGH                           Indigo Equity Research Limited
    Country:                     USA                                      Risk                      -      ## -                          www.indigo-equity-research.com
    Sector:                     Media                                     Quality                   -      ## -
    RIC (Ticker):              TWX.N                                      Valuation                 -      ## -                                                           06 May 2013



                                                                                                                                        Share Price - Last 10 Years

    Snapshot of Q1 2013 - Positive Q2 outlook                                                                              80

                                                                                                                           70

          Mixed Q1 2013 Results - Weak revenues but higher margins                                                         60

                                                                                                                           50




                                                                                                                    USD
                                                                                                                           40

                                                                                                                           30

                                                                                                                           20

                              This is the abbreviated version of equity research                                           10
                              reports that can be purchased on our website.                                                  0
                              www.indigo-equity-research.com




                                                                                                                                 2003

                                                                                                                                        2004

                                                                                                                                               2005

                                                                                                                                                       2006

                                                                                                                                                                2007

                                                                                                                                                                        2008

                                                                                                                                                                                2009

                                                                                                                                                                                         2010

                                                                                                                                                                                                   2011

                                                                                                                                                                                                           2012

                                                                                                                                                                                                                   2013
                                                                                                                            TWX                 TWX (incl. Divs)                          S&P 500 rebased
                              Independent, buy-side, fundamental, financial analysis.
                                                                                                                   Fundamental Valuation
                                                                                                                                                                 Bear                  Base                   Bull
                                                                                                                   Valuation                     ($)                   See the full report
                                                                                                                   Potential Return
                                                                                                                   Capital Structure                                           Per Share                  Total
                                                                                                                                                                                       ($)                ($ Bn)
                                                                                                                   Share Price                                                          60.4
                                                                                                                   Number of Shares                   (bn)                                                        1.0
                                                                                                                   Market Capitalization                                                                      57.8
                                                                                                                   Net Cash / (Debt)                                                   -17.7                 -16.9
                                                                                                                   Enterprise Value (EV)                                                78.1                  74.7
    Significant recent events & news flow                                                                          Net Debt / Market Cap.                                                                         29%
      - See the full report                                                                                        Main Shareholder:                                                                              --
      -                                                                                                                                                                        Consensus Estimates
                                                                                                                   Financial Results                              2012                 2013e                2014e
                                                                                                                   y/e 31 Dec                                  ($ Bn)                  ($ Bn)              ($ Bn)
    Investment thesis - Looking good for now                                                                       Revenue                                        28.7                  29.6                  31.0
                                                                                                                   EBIT*                                               6.2                   6.6                  7.2
                                                                                                                   Net Income*                                         3.3                   3.4                  3.8
                                                                                                                   Capital                                        29.9                  29.7                  30.0
                                                                                                                   Total Assets                                   68.3                  67.7                  68.3
                              This is the abbreviated version of equity research                                   FCF                                                 2.8                   1.7                  3.2
                              reports that can be purchased on our website.                                        EPS                                            3.09                  3.60                  4.02
                              www.indigo-equity-research.com                                                       DPS                                            1.04                  1.13                  1.21
                                                                                                                   BV Per Share                                 30.60                  31.09                31.39
                              Independent, buy-side, fundamental, financial analysis.                              Efficiency Analysis                            2012                 2013e                2014e
                                                                                                                   EBIT Margin*                                21.6 %              22.2 %                  23.4 %
                                                                                                                   Net Income Margin*                          11.5 %                  11.6 %              12.4 %
                                                                                                                   Asset Turnover                              42.1 %              43.8 %                  45.4 %
                                                                                                                   Net Gearing                                228.6 %            227.8 %                  227.4 %
                                                                                                                   ROE*                                        11.1 %                  11.6 %              12.8 %
                                                                                                                   Net Gearing = Net Assets / Share Capital & Reserves
                                                                                                                   Growth Analysis                                2012                 2013e                2014e
                                                                                                                   Revenue                                      -0.8 %                 3.2 %                 4.4 %
    SWOT analysis                                                                                                  EBIT*                                         4.3 %                 6.0 %                 9.9 %
                                                                                                                   Net Income*                                   9.2 %                 3.7 %               11.7 %
    Strengths                                              Weaknesses                                              Valuation Ratios                               2012                 2013e                2014e
      -                                                     -                                                      P / Sales                                           2.0                   1.9                  1.9
      - See the full report                                 - See the full report                                  EV / EBITDA                                     11.6                 10.1                      9.3
      -                                                     -                                                      P / EBIT*                                           9.3                   8.8                  8.0
      -                                                     -                                                      PE*                                            17.4                  16.8                  15.0
                                                                                                                   PEG*                                                0.9                   2.9                  1.3
    Opportunities                                          Threats                                                 P / BV                                              1.9                   1.9                  1.9
     -                                                      -                                                      P / FCF                                        20.6                  33.4                  18.1
     - See the full report                                  - See the full report                                  Dividend Yield                                1.7 %                 1.7 %                 1.7 %
     -                                                      -                                                      Pay-Out Ratio                               33.6 %              31.4 %                  30.1 %
     -                                                      -                                                      Net Debt / EBITDA                                   2.6                   2.3                  2.2
                                                                                                                   Valuation Ratios are based on the current share price.
                                                                                                                   * = Excluding Unusual Items
Page 1 of 5                                     CONFIDENTIAL             For illustration purposes only.                                Sources: Time Warner, Indigo Equity Research
                           Time Warner                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   06 May 2013


                                                                                                                                                                                                     Q1 2013 - Changes Since Last Year (YoY)

                                                       YoY Change in Revenue by Division

                       8
                                                                                                                                                                                                                                                                                                                                                      Revenues by Division - Q1 2013
                                                                                                              Networks


                                                                                                                                 Film
                                                                         Revenue - 2012 Q1




                                                                                                                                                                  Publishing


                                                                                                                                                                                        Inter-segment




                                                                                                                                                                                                                                                   Revenue - 2013 Q1
                                                                                                                                                                                                                                                                                                                                               --     Networks Revenue rose $93 m (+3%) to $3.7 bn.
                       6
                                                                                                                                                                                                                                                                                                                                               --     Film Revenue fell $103 m (-4%) to $2.7 bn.
                                                                                                                                                                                                                                                                                                                                               --     Publishing Revenue fell $36 m (-5%) to $0.7 bn.
            USD (bn)




                       4                                                                                                                                                                                                                                                                                                                       --     Inter-segment Revenue improved $6 m to -$174 m.
                                                                                                                                                                                                                                                                                                                                               --     Q1 Total Revenue fell $40 m (-1%) to $6.9 bn.

                       2                                                                                                                                                                                                                                                                                                                              Notes
                                                                                                                                                                                                                                                                                                                                               --     No Unusual Items arose in 2013 Q1.
                                                                                                                                                                                                                                                                                                                                               --     Unusual Items are detailed in the full (Company Profile) equity report.
                       0
                                                                                                            3%                   -4%                      -5%                                                                                     -1%                                                                                          --     Growth rates and changes in margins are stated on a YoY basis.
                                                                                                                                                                                                                                                                                                                                               --     Earnings are compared to prior period earnings* (ex-Unusual Items).
                            2013 Q1                                                                                      Revenues by Division                                                                                                     Growth (%)




                                                YoY Change in EBIT* and Margins (%)
                 2.0                                                                                                                                                                                                                                                                                                                                  EBIT
                                                                                                                                                                                                                                                                                                                                               --     Networks EBIT rose $125 m (+11%) to $1.3 bn. Margin rose 2.6% to 34.3%.
                 1.5                                                                                                                                                                                                                                                                                                                           --     Film EBIT rose $49 m (+23%) to $263 m. Margin rose 2.1% to 9.8%.
                                                                                                                                                                                                                                                                                                                                               --     Publishing EBIT deteriorated $5 m to -$9 m. Margin fell 0.7% to -1.2%.
                                                                                                             Film


                                                                                                                                 Publishing


                                                                                                                                                              Corporate Costs


                                                                                                                                                                                        EBIT *


                                                                                                                                                                                                                        Unusual Items




                                                                                                                                                                                                                                                                                              EBIT - 2013 Q1
 USD (bn)




                                                                         Networks




                                                                                                                                                                                                                                                                                                                                               --     Q1 Total* EBIT rose $163 m (+13%) to $1.4 bn. Margin rose 2.5% to 20.3%.
                              EBIT* - 2012 Q1




                 1.0
                                                                                                                                                                                                                                                                                                                                               --     No Unusual Items arose in Q1 at the EBIT level.
                                                                                                                                                                                                                                                                                                                                               --     Q1 Total EBIT rose $163 m (+13%) to $1.4 bn. Margin rose 2.5% to 20.3%.
                 0.5


                 0.0
                                                                        2.6%                          2.1%                                                                            2.5%                                                                                                2.5%

                  2013 Q1                                                      YoY Growth                                                        EBIT                                                     Change in Margin (%)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        *
                                                                                                                                                                                                                    OPEX = Operating Expenses                                                                                     * = excludes Unusual Items.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  # Shares = Share Repurchases / (Issues)

                                                                                             YoY Change in Net Income                                                                                                                                                                                                                                                                                                     YoY Change in EPS
                 1.0                                                                                                                                                                                                                                                                                                                           1.00


                 0.8                                                                              14% 13%                                                               10%                                                                                                                                                                    0.80                                                          13%                                      19%                                                         28%                             28%
                                                                                                                                                                                                          23%                                                          23%                                                                                                                                                                                                        23%
                                                                                                                                                                                                                                                                                                                                                                                                                                Other & Interest

                                                                                                                                                                                                                                                                                                                                                                                                                                                         Pre-Tax Profit

                                                                                                                                                                                                                                                                                                                                                                                                                                                                          Tax*
                                                                                                                                               Other & Interest

                                                                                                                                                                                Tax




                                                                                                                                                                                                                                                                                                                                                                                                             EBIT*




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             # Shares




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Unusual Items

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   EPS - 2013 Q1
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  EPS*
                                                                                                                         EBIT*
                                                                                                  Margin Change °°




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   EPS* §
                                                                                                                                                                                                          Net Income*

                                                                                                                                                                                                                                  Unusual Items



                                                                                                                                                                                                                                                                       Net Income - 2013 Q1
  USD (bn)




                 0.6                                                                                                                                                                                                                                                                                                                           0.60
                                                                                                                                                                                                                                                                                                                                    USD
                                                Net Income* - 2012 Q1

                                                                              Revenue Growth °°




                                                                                                                                                                                                                                                                                                                                                                               EPS* - 2012 Q1




                 0.4                                                                                                                                                                                                                                                                                                                           0.40

                 0.2                                                                                                                                                                                                                                                                                                                           0.20

                 0.0
                                                                          -1%                                                                                                                                                                                                                                                                  0.00

                       2013 Q1                                                                    YoY Growth                                                                    Net Income                                                              Growth (%)                                                                                     2013 Q1                                                             YoY Growth                                                       EPS                                               Growth (%)
                                                                                                                                                                                                                                                                                                           .                                                                                                                                                                                     Data is stated on a per share basis.
°° = Impact on EBIT                                                                                                                                                                    "Other" = Other Income & Expenses                                                                                                          § = EPS before share repurchases                                                                                                                          "Other" = Other Income & Expenses
"Other Items" includes non-cash charges.                                                                                                                                              Net CAPEX = Depreciation - CAPEX                                                                                                            Equity = Share Issues / (Repurchases)

                                                YoY Change in Free Cash Flows (FCF)                                                                                                                                                                                                                                                                                                     YoY Change in Total Cash Flows
                                                                                                                                                                                                                                                                                                                                                0.2
                 4.0
                                                                                                                                                                                                                                                                                                                                                                                   59%                                                             6%                              6%
                 3.0                                                                                                                                                                                                                                                                                                                            0.0
                                                                                                                                                                                                                                                                                                                                                          Total CF - 2012 Q1




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Total CF - 2013 Q1
                                                                                                                                                                                                                                                                                                                                                                                                                                                                          M&A
                                                                                                                                                                  Net CAPEX


                                                                                                                                                                                        Working Capital
                                                                         FCF - 2012 Q1




                                                                                                                                                                                                                                                   FCF - 2013 Q1
                                                                                                                                 Other Items




                                                                                                                                                                                                                                                                                                                                    USD (bn)




                                                                                                                                                                                                                                                                                                                                               -0.2
USD (bn)




                 2.0
                                                                                                                                                                                                                                                                                                                                                                                                                     Interest


                                                                                                                                                                                                                                                                                                                                                                                                                                                   Dividends




                                                                                                                                                                                                                                                                                                                                                                                                                 -1%
                                                                                                                                                                                                                                                                                                                                                                                         FCF (ex-Interest)




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Other


                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Cash / (Debt)
                                                                                                              Profits




                                                                                                                                                                                                                                                                                                                                               -0.4
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Equity




                 1.0


                 0.0                                                                                                                                                                                                                                                                                                                           -0.6                                                                                                                                                                 -38%

                                                                                                        24%                                                                                                                                       128%
               -1.0                                                                                                                                                                                                                                                                                                                            -0.8

                           2013 Q1                                                                        YoY Growth                                                                   FCF                                                        Growth (%)                                                                                        2013 Q1                                                  YoY Growth                                                         Total Cash Flow                                                   Growth (%)


Page 1 of 5                                                                                                                                                                                    CONFIDENTIAL                                                                                                    For illustration purposes only.                                                                                                                             Sources: Time Warner, Indigo Equity Research
                           Time Warner                                                                                                                                                                                                                                                                                         06 May 2013


                                                                                             Analysis of Financial Results - Quarterly Since 2003

                                                   Revenue & Revenue Growth                                                                                                                                                                       Revenue Growth by Division
                                                                                                                                                                                                                   30%
                   16                                                                                                                                          40%

                                                                                                                                                                                                                   20%
                   12                                                                                                                                          30%

                                                                                                                                                                                                                   10%
       USD (bn)




                       8                                                                                                                                       20%




                                                                                                                                                                           Growth
                                                                                                                                                                                                                   0%
                       4                                                                                                                                       10%




                                                                                                                                                                                                                         2003


                                                                                                                                                                                                                                        2004


                                                                                                                                                                                                                                                   2005


                                                                                                                                                                                                                                                              2006


                                                                                                                                                                                                                                                                             2007


                                                                                                                                                                                                                                                                                             2008


                                                                                                                                                                                                                                                                                                           2009


                                                                                                                                                                                                                                                                                                                             2010


                                                                                                                                                                                                                                                                                                                                           2011


                                                                                                                                                                                                                                                                                                                                                          2012


                                                                                                                                                                                                                                                                                                                                                                         2013
                       0                                                                                                                                       0%                                               -10%
                            2003

                                     2004

                                               2005

                                                          2006

                                                                        2007

                                                                                      2008

                                                                                                 2009

                                                                                                              2010

                                                                                                                           2011

                                                                                                                                         2012

                                                                                                                                                        2013


                    -4                                                                                                                                         -10%                                             -20%

                                                                                                                                                                                                                                  Networks                                               Film                                         Total **
                                   Total **                                    Discontinued                                                     Growth

                                             Growth** = Estimated revenue growth excluding discountinued activities.                                                                                     * = Excluding Unusual Items

                                                                    Profit Margins                                                                                                                                                                 EBIT Margins by Division
                   60%                                                                                                                                                                                             50%

                   50%
                                                                                                                                                                                                                   40%
                   40%
                                                                                                                                                                                                                   30%
                   30%
                                                                                                                                                                                                                   20%
                   20%

                   10%                                                                                                                                                                                             10%

                   0%                                                                                                                                                                                               0%
                            2003


                                       2004


                                                   2005


                                                                 2006


                                                                               2007


                                                                                               2008


                                                                                                             2009


                                                                                                                           2010


                                                                                                                                          2011


                                                                                                                                                          2012


                                                                                                                                                                      2013




                                                                                                                                                                                                                         2003


                                                                                                                                                                                                                                        2004


                                                                                                                                                                                                                                                  2005


                                                                                                                                                                                                                                                             2006


                                                                                                                                                                                                                                                                           2007


                                                                                                                                                                                                                                                                                          2008


                                                                                                                                                                                                                                                                                                        2009


                                                                                                                                                                                                                                                                                                                      2010


                                                                                                                                                                                                                                                                                                                                    2011


                                                                                                                                                                                                                                                                                                                                                  2012


                                                                                                                                                                                                                                                                                                                                                                 2013
                           Gross Margin                                 EBIT Margin*                                           Net Income Margin*                                                                                      Networks                                           Film                                              Total**
    * = excludes Unusual Items                                                                                                                                                                          ** = excludes Unusual & Discontinued Items.


)
                                                          EBIT & EBIT Margin
                                                                                                                                                                                                                        Key disposals:
                    4                                                                                                                                            30%                                                    Disposals include AOL (2009), Cable (2008) and Music (2002).


                    3                                                                                                                                                                                                    Key Unusual Items:
                                                                                                                                                                 20%
                                                                                                                                                                                                                   1)   In 2008, $24 bn impairment charges on AOL, Cable & Publishing.
                                                                                                                                                                                                                   2)   In Q1 2007, a $0.7 bn gain on the sale of AOL's Germany.
      USD (bn)




                    2
                                                                                                                                                                             Margin




                                                                                                                                                                 10%                                               3)   In 2005, a $1 bn gain on the disposals of shares in Google.
                    1                                                                                                                                                                                              4)   In 2005, a $3 bn charge for legal costs of AOL litigation.
                                                                                                                                                                                                                   5)   In 2002 & 2003, $54bn and $47bn (respectively) in intangible
                                                                                                                                                                 0%                                                      asset impairment charges, in relation to the AOL merger.
                   -
                           2003

                                     2004

                                               2005

                                                          2006

                                                                        2007

                                                                                      2008

                                                                                                 2009

                                                                                                              2010

                                                                                                                           2011

                                                                                                                                         2012

                                                                                                                                                        2013




                   -1                                                                                                                                            -10%                                     * = excludes Unusual Items.
                                                                                                                                                                                                          ** = excludes Unusual & Discontinued Items.
                    EBIT* §                        Discontinued                                Unusual Items                                       EBIT* § Margin                                         Most Unusual Items relate to one-off events such as asset disposals.
                                                                                                                           .
s                                                                               * = Excluding Unusual Items & Discontinued Activities

                                                           Net Income Analysis                                                                                                                                                                                      EPS* & EPS

                    4                                                                                                                                                 4                                             1.50

                    3                                                                                                                                                 3                                             1.25

                                                                                                                                                                                                                    1.00
                    2                                                                                                                                                 2
        USD (bn)




                                                                                                                                                                              USD (bn)




                                                                                                                                                                                                                    0.75
                    1                                                                                                                                                 1
                                                                                                                                                                                                             USD




                                                                                                                                                                                                                    0.50
                    0                                                                                                                                                 0
                                                                                                                                                                                                                    0.25
                           2003

                                     2004

                                                2005

                                                           2006

                                                                         2007

                                                                                        2008

                                                                                                      2009

                                                                                                                    2010

                                                                                                                                  2011

                                                                                                                                                 2012

                                                                                                                                                               2013




                   -1                                                                                                                                                 -1                                            0.00
                                                                                                                                                                                                                                2003


                                                                                                                                                                                                                                           2004


                                                                                                                                                                                                                                                      2005


                                                                                                                                                                                                                                                                    2006


                                                                                                                                                                                                                                                                                  2007


                                                                                                                                                                                                                                                                                                 2008


                                                                                                                                                                                                                                                                                                               2009


                                                                                                                                                                                                                                                                                                                             2010


                                                                                                                                                                                                                                                                                                                                           2011


                                                                                                                                                                                                                                                                                                                                                         2012


                                                                                                                                                                                                                                                                                                                                                                        2013




                   -2                                                                                                                                                 -2                                           -0.25

                                                                                                                                                                                                                   -0.50
                   EBIT*                    Tax*             Other                           Interest                      Unusual                             Net Income*
                                                                                                                                                                                                                                                    EPS                                                                EPS*
                                   "Other" includes non-operating items (e.g.. income from associates).                                                                                                                                                                                                               * = Excluding Unusual Items
      Page 2 of 5                                                                                                   CONFIDENTIAL                                                      For illustration purposes only.                                                                Sources: Time Warner, Indigo Equity Research
          Time Warner                                                                                                            06 May 2013


                          Contents of the Full "Company Profile" Equity Research Report




              The full (43 page) Company Profile equity research report can be purchased from our website.
              www.indigo-equity-research.com


              Description                                                                                                Page


              Investment Thesis & SWOT Analysis                                  Page 1
                                                    ………………………………………………………………………………………………………………
              Contents                                                           Page 2
                               …………………………………………………………………………………………………………………………………………
              News Flow - Significant Recent Events                              Page 3
                                                    ………………………………………………………………………………………………………………

              Company Analysis
              Media & Entertainment Industry                                           Page 4
                                                …………………………………………………………………………………………………………………………
              Operating Divisions                                                      Page 5
                                       ………………………………………………………………………………………………………………………………………
              Strategy          …………………………………………………………………………………………………………………………………………   Page 6
              Management, Executive Compensation & Board                               Page 7
                                                              ……………………………………………………………………………………………………
              Balance Sheet & Key M&A                                                  Page 8
                                                …………………………………………………………………………………………………………………………
              Business Model - Snapshot of the last 12 Months                          Page 9
                                                              ……………………………………………………………………………………………………
              SWOT Analysis …………………………………………………………………………………………………………………………………………       Page 10
              Key Investment Issues                                                    Page 11
                                       ………………………………………………………………………………………………………………………………………

              Analysis of Financial Results - Quarterly Since 2003
              Profit & Loss Summary                                             Page 13
                                        ………………………………………………………………………………………………………………………………………
              Revenue Analysis by Service                                       Page 14
                                               …………………………………………………………………………………………………………………………
              Revenue Analysis by Division                                      Page 15
                                               …………………………………………………………………………………………………………………………
              OIBDA & EBIT Analysis                                             Page 16
                                        ………………………………………………………………………………………………………………………………………
              Cost Analysis                                                     Page 17
                               …………………………………………………………………………………………………………………………………………
              Cash Flow Analysis                                                Page 18
                                        ………………………………………………………………………………………………………………………………………
              Balance Sheet Analysis                                            Page 19
                                        ………………………………………………………………………………………………………………………………………
              Working Capital Analysis                                          Page 20
                                               …………………………………………………………………………………………………………………………
              Return Analysis                                                   Page 21
                                        ………………………………………………………………………………………………………………………………………
              Unusual Items                                                     Page 22
                               …………………………………………………………………………………………………………………………………………

              Valuation
              Share Price Performance & Valuation Multiples                           Page 24
                                                             ……………………………………………………………………………………………………
              Historical Valuation Multiples                                          Page 25
                                                 …………………………………………………………………………………………………………………………
              Fundamental Valuation of Time Warner                                    Page 26
                                                         ………………………………………………………………………………………………………………
              DCF Valuation & Sensitivity Analysis                                    Page 27
                                                         ………………………………………………………………………………………………………………

              Industry Analysis
              Media Industry Overview                                                    Page 29
                                                …………………………………………………………………………………………………………………………
              Disruptive Media Industry Trends & Drivers                                 Page 30
                                                         ……………………………………………………………………………………………………
              US Film Sales     …………………………………………………………………………………………………………………………………………     Page 31
              Content Creation v. Distribution                                           Page 32
                                                …………………………………………………………………………………………………………………………
              The Cable (Pay TV) Industry is Doomed              Special Report ……………………………………………………………
                                                                                         Page 33
                                                         ……………………………………………………………………………………………………

              Financial Tables
              Quarterly Financial Accounts                                    Page 38
                                             …………………………………………………………………………………………………………………………
              Annual Financial Accounts                                       Page 38
                                             …………………………………………………………………………………………………………………………
              Revenue Data                                                    Page 39
                                 …………………………………………………………………………………………………………………………………………
              Revenue by Division                                             Page 40
                                         ………………………………………………………………………………………………………………………………………
              OIBDA Data                                                      Page 41
                                 …………………………………………………………………………………………………………………………………………
              EBIT Data                                                       Page 42
                                 …………………………………………………………………………………………………………………………………………

              Explanations and Definitions                                          Page 43
                                                   …………………………………………………………………………………………………………………………
              Legal and Important Information                                       Page 43
                                                   …………………………………………………………………………………………………………………………




Page 3 of 5                              CONFIDENTIAL            For illustration purposes only.             Sources: Time Warner, Indigo Equity Research
            Time Warner                                                                                                                                              06 May 2013


                                                                                      Explanations




 Brief business description - Time Warner
 Time Warner is a large, US-focused media company involved in producing & distributing content for mass consumption primarily in TV, films, books and magazines.
 The company is known best for its HBO, Warner Bros. and Turner Broadcasting services as well as its magazines such as Time, Money, People and Fortune 500.

  Explanation of Company Ratings used by Indigo Equity Research Ltd:

  Industry View:              ATTRACTIVE                  Industry View = This is an assessment from an investor's perspective of the potential for the industry as a whole to generate
                                                                                profits in the future based on criteria such as: market structure (eg. number of competitors and industry
                                                                                concentration), growth prospects, maturity (stage of the industry life cycle), regulations, technology,
                                                                                disruptive forces, expected changes and speed of any changes.

  Company Rating:                                                    Risk = The risk of earnings disappointment & volatility as well as the risk of a change in the valuation ratios that
                             LOW MED. HIGH                                      impact the company's share price. This depends on items such as revenue growth, profit margin volatility,
                                                                                investor sentiment towards the company etc..... But this does not include the market risk of these elements
            Risk              ### -       -
                                                                                changing.
            Quality           -      ### -
            Valuation         -      -   ###                      Quality = The quality of the company reflects its ability to maintain or increase earnings from its competitive
                                                                                advantages, strategy, brand, management, market position, pricing power, services etc…..
                                                               Valuation = This is an absolute measure of valuation multiples of the company, based on a range of metrics (multiples)
                                                                                such as: P/Sales, PE, PEG, P/BV, P/ FCF, EV/EBITDA, EV/Sales, Div Yield …..
                                                 Comment on Ratings: These qualitative assessments of "Company Ratings" are made for each company on a relative basis
                                                                     compared to other companies with large capitalizations; but are nonetheless subjective and dependent on
                                                                     the analyst's individual opinion & analysis of the company.

  Financial definitions & abbreviations:
  FCF = Free Cash Flow                                   12m av. = 12 month average                             EV = Enterprise Value            BV = Book Value
  Op FCF = Operating Free Cash Flow                      (ie. Average for the last 12 months.)                  P = (Share) Price                Div. =   Dividend
  EBIT = Earnings Before Interest & Tax                  y/e = (financial) year end                             PE = Price / Earnings            EPS = Earnings Per Share
            (ie. Operating Income)                                                                              PEG = PE / Growth                DPS = Dividends Per Share
  EBITDA = Earnings Before Interest, Tax,
            Depreciation & Amortisation
Explanation of what constitutes an unusual or significant item: Indigo Equity Research determined what constituted "Unusual items" in this report on the basis of
assessing what items were significantly or materially separate or different to the Company's core business and activities. This a highly subjective assessment made by the
analyst on a case-by-case basis.


                                                                 Legal and Important Information

Copyright © 2013 Indigo Equity Research Limited

Analyst certification: The analyst Nicholas Landell-Mills primarily responsible for the preparation of this research report attests to the following: (1) that the views and
opinions rendered in this research report reflect the views of Indigo Equity Research Limited about the subject companies or issuers; and (2) that no part of the research
analyst’s compensation was, is, or will be directly related to the specific recommendations or views in this research report.

Disclosures: Indigo Equity Research Limited has no investment banking or share trading operations or activities. Reports are prepared at irregular intervals depending
on the analyst's judgment. Analysts, associates and members of their households may maintain a financial interest in the securities of companies in the analyst’s area of
coverage, subject to compliance with applicable regulations. Indigo Equity Research prohibits analysts, associates and members of their households from serving as an
officer, director, advisory board member or employee of any company that the analyst covers. Analysts aim to provide appropriate information on companies. Analysts do
not provide any BUY, HOLD, or SELL recommendations in their research and the research reports should not be interpreted as providing such recommendations. Indigo
Equity Research does not provide individually tailored investment advice in research reports. This report has been prepared without regard to the particular investments
and circumstances or investment objectives of the recipient. Securities and other financial instruments discussed in this report are not deposits and are not insured by any
institution. (such as the Federal Deposit Insurance Corporation). This report is not intended for distribution to, or use by any person or entity in any jurisdiction or country
where such distribution or use would be contrary to local law or regulation. These disclosures should be read in conjunction with the Disclaimer and Important Information
below.
Disclaimer and Important Information: This document has been prepared by Indigo Equity Research Limited for information and illustration purposes only. This
document is not an offer, or the solicitation of an offer, to buy or sell a security or enter into any other agreement. This document does not contain an investment
recommendation and is not a complete or comprehensive description of a company. Any projections, forecasts or estimates of potential risk or return or financial results are
only illustrative and should not be taken as limitations of the maximum possible loss or gain. The information is provided in this document at the date of preparation and is
subject to change. While this information has been obtained from sources believed to be reliable, we do not represent that it is accurate or complete and should not be
relied on as such. Indigo Equity Research Limited, its directors and employees, can accept no liability or responsibility for any direct, indirect or consequential loss arising
from use of this document or its contents. Past performance is no indication of future results. Real results may vary from forecasts. Historic price performance may be
presented in a currency other than the currency of the country in which you reside. Your actual return on this product may increase or decrease with fluctuations between
currencies and market conditions. The securities and companies discussed in this document may not be suitable for all investors. It is recommended that investors
independently evaluate each security, company or instrument discussed in this document, and consult other independent advisors. This document is directed at persons
and investment professionals and have considerable experience in matters relating to investments, and equity analysis and research. This report must not be acted on or
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Website: www.indigo-equity-research.com and contact email: info@indigo-equity-research.com.

  Page 4 of 5                             CONFIDENTIAL                    For illustration purposes only.                                             Sources: Time Warner, Bloomberg
                                                      10%

              2                                                                                                  10%                                       0%




                                                                                                                                                                              2001




                                                                                                                                                                                                                                                                                                   2011
                                                                                                                                                                    2000




                                                                                                                                                                                             2002

                                                                                                                                                                                                               2003

                                                                                                                                                                                                                             2004

                                                                                                                                                                                                                                           2005

                                                                                                                                                                                                                                                      2006

                                                                                                                                                                                                                                                               2007

                                                                                                                                                                                                                                                                        2008

                                                                                                                                                                                                                                                                                 2009

                                                                                                                                                                                                                                                                                          2010
              0                                                                                                  0%                                   -10%
                           2001




                                                                                                          2011
                  2000




                                    2002

                                             2003

                                                     2004

                                                             2005

                                                                     2006

                                                                            2007

                                                                                   2008

                                                                                           2009

             -2                                                                                   2010           -10%                                 -20%
             -4                                                                                                  -20%                                                          Domestic                                                            LATAM**                               Total**
                   Domestic                     LATAM                Other                Revenue                Growth**                     ** = Estimated organic revenue growth
Note: Results from Telecom Argentina are shown from Q1 2009.                                                                                  Domestic = Italian Wireless & Fixed Line
Seat Pagine Gialle was deconsolidated 2003                                                                                                    LATAM = Wireless Brazil and Telecom Argentina

                                                                                                         Domestic Revenue Analysis
Note: Internal reporting format changed in 2004 due to transition if IAS / IFRS.
                                   Domestic (Italy) Revenues by Service                                                                                                              Domestic Revenue Growth by Service
              8                                                                                                  40%                                       15%

                                                                                                                                                           10%
              6                                                                                                  30%
                                                                                                                                                           5%
  EUR (bn)




              4                                                                                                  20%
                                                                                                                          Growth




                                                                                                                                                           0%                 2001




                                                                                                                                                                                                                                                                                                   2011
                                                                                                                                                                    2000




                                                                                                                                                                                             2002

                                                                                                                                                                                                           2003

                                                                                                                                                                                                                             2004

                                                                                                                                                                                                                                           2005

                                                                                                                                                                                                                                                      2006

                                                                                                                                                                                                                                                               2007

                                                                                                                                                                                                                                                                        2008

                                                                                                                                                                                                                                                                                 2009

                                                                                                                                                                                                                                                                                         2010
              2                                                                                                  10%                                       -5%

                                                                                                                                                      -10%
              0                                                                                                  0%
                           2001




                                                                                                          2011
                  2000




                                    2002

                                             2003

                                                     2004

                                                             2005

                                                                     2006

                                                                            2007

                                                                                   2008

                                                                                           2009

                                                                                                  2010




                                                                                                                                                      -15%
             -2                                                                                                  -10%
                                                                                                                                                      -20%
                     Fixed Line                      Wireless                Inter-Segment                   Growth**                                                          Fixed Line                                                            Wireless                             Total**



                                   Italy - Fixed Line Revenue by Type                                                                                                               Italy - Wireless Revenue by Type
             5                                                                                                    25%                                       4                                                                                                                                     40%

             4                                                                                                    20%
                                                                                                                                                            3                                                                                                                                     30%
             3                                                                                                    15%
                                                                                                                                                            2                                                                                                                                     20%
 EUR (bn)




                                                                                                                                                EUR (bn)




             2                                                                                                    10%
                                                                                                                          Growth




                                                                                                                                                                                                                                                                                                           Growth
                                                                                                                                                            1                                                                                                                                     10%
             1                                                                                                    5%

             0                                                                                                    0%                                       -                                                                                                                                      0%
                  2000

                           2001

                                    2002

                                             2003

                                                     2004

                                                             2005

                                                                     2006

                                                                            2007

                                                                                   2008

                                                                                           2009

                                                                                                  2010

                                                                                                          2011




                                                                                                                                                                            2001




                                                                                                                                                                                                                                                                                         2011
                                                                                                                                                                 2000




                                                                                                                                                                                          2002

                                                                                                                                                                                                        2003

                                                                                                                                                                                                                      2004

                                                                                                                                                                                                                                    2005

                                                                                                                                                                                                                                              2006

                                                                                                                                                                                                                                                        2007

                                                                                                                                                                                                                                                                2008

                                                                                                                                                                                                                                                                         2009

                                                                                                                                                                                                                                                                                 2010




             -1                                                                                                   -5%
                                                                                                                                                           -1                                                                                                                                     -10%
             -2                                                                                                   -10%
                          Voice                                     Internet                             Business                                          -2                                                                                                                                     -20%
                          Wholesale                                 Revenues                             Growth                                                     Voice                           Data                                   Other                      Revenues                    Growth

                                                                                                                                              ** = Estimated organic revenue growth
                                   Domestic (Italy) Revenue by Type                                                                                                                       Domestic Revenue Growth by Service
              8                                                                                                  40%                                       15%

                                                                                                                                                           10%
              6                                                                                                  30%
                                                                                                                                                               5%
  EUR (bn)




              4                                                                                                  20%
                                                                                                                         Growth




                                                                                                                                                               0%
                                                                                                                                                                     2000

                                                                                                                                                                                   2001

                                                                                                                                                                                                 2002

                                                                                                                                                                                                                2003

                                                                                                                                                                                                                              2004

                                                                                                                                                                                                                                            2005

                                                                                                                                                                                                                                                       2006

                                                                                                                                                                                                                                                                2007

                                                                                                                                                                                                                                                                         2008

                                                                                                                                                                                                                                                                                  2009

                                                                                                                                                                                                                                                                                           2010

                                                                                                                                                                                                                                                                                                    2011




              2                                                                                                  10%                                        -5%

                                                                                                                                                           -10%
             -                                                                                                   0%
                            2001




                                                                                                          2011
                   2000




                                     2002

                                             2003

                                                      2004

                                                             2005

                                                                     2006

                                                                            2007

                                                                                   2008

                                                                                           2009

                                                                                                  2010




                                                                                                                                                           -15%
             -2                                                                                                  -10%
                                                                                                                                                           -20%
                   Voice                    Data              Wholesale                   Revenues                Growth                                                                  Voice                                                       Data                                Total

Page 8 of 16                                                                       CONFIDENTIAL                              For illustration purposes only.                                                                                                   Sources: Telecom Italia, Bloomberg
                  Telecom Italia                                                                                                                                                                                                                                                                                                       11 Aug 2011


                                                                                                                                                  LATAM Revenue Analysis
Detailed data not available prior to 2002.
                                                                        LATAM Revenues by Country                                                                                                                                        LATAM Revenue Growth by Country
                       4                                                                                                                                  40%                                                 80%


                       3                                                                                                                                  30%                                                 60%

                                                                                                                                                                                                              40%
   EUR (bn)




                       2                                                                                                                                  20%




                                                                                                                                                                         Growth
                                                                                                                                                                                                              20%
                       1                                                                                                                                  10%
                                                                                                                                                                                                                 0%




                                                                                                                                                                                                                        2000

                                                                                                                                                                                                                                  2001

                                                                                                                                                                                                                                             2002

                                                                                                                                                                                                                                                       2003

                                                                                                                                                                                                                                                                     2004

                                                                                                                                                                                                                                                                                   2005

                                                                                                                                                                                                                                                                                                 2006

                                                                                                                                                                                                                                                                                                               2007

                                                                                                                                                                                                                                                                                                                           2008

                                                                                                                                                                                                                                                                                                                                         2009

                                                                                                                                                                                                                                                                                                                                                        2010

                                                                                                                                                                                                                                                                                                                                                                      2011
                       0                                                                                                                                  0%
                                           2001




                                                                                                                                                   2011
                               2000




                                                         2002

                                                                       2003

                                                                                     2004

                                                                                               2005

                                                                                                        2006

                                                                                                                 2007

                                                                                                                          2008

                                                                                                                                    2009

                                                                                                                                           2010
                                                                                                                                                                                                          -20%
                      -1                                                                                                                                  -10%
                                                                                                                                                                                                          -40%
                                        Brazil                                 Argentina                           Adjustment                       Growth**
                                                                                                                                                                                                                                       Brazil                                         Argentina                                                        Total**
LATAM = Wireless Brazil and Telecom Argentina

                                                                                                                                                                Brazil Analysis
Detailed data not available prior to 2006.                                                                                                                                                     TIM = Telecom Italia Mobile

                                                      TIM Brazil Revenues & Growth (in R$)                                                                                                                                               TIM Brazil EBITDA & Margin (in R$)
                      6                                                                                                                                   60%                                                 2.0                                                                                                                                                  40%



                      4                                                                                                                                   40%                                                 1.5                                                                                                                                                  30%
                                                                                                                                                                                                 (R$ m)




                                                                                                                                                                                                                                                                                                                                                                             Margin
                                                                                                                                                                        Growth
  (R$ m)




                                                                                                                                                                                                              1.0                                                                                                                                                  20%
                      2                                                                                                                                   20%

                                                                                                                                                                                                              0.5                                                                                                                                                  10%
                      0                                                                                                                                   0%
                                          2001




                                                                                                                                                   2011
                               2000




                                                       2002

                                                                       2003

                                                                                     2004

                                                                                               2005

                                                                                                        2006

                                                                                                                 2007

                                                                                                                          2008

                                                                                                                                   2009

                                                                                                                                           2010




                                                                                                                                                                                                              0.0                                                                                                                                                  0%
                                                                                                                                                                                                                                2001




                                                                                                                                                                                                                                                                                                                                                      2011
                                                                                                                                                                                                                       2000




                                                                                                                                                                                                                                          2002

                                                                                                                                                                                                                                                    2003

                                                                                                                                                                                                                                                              2004

                                                                                                                                                                                                                                                                            2005

                                                                                                                                                                                                                                                                                      2006

                                                                                                                                                                                                                                                                                                    2007

                                                                                                                                                                                                                                                                                                                  2008

                                                                                                                                                                                                                                                                                                                            2009

                                                                                                                                                                                                                                                                                                                                         2010
                      -2                                                                                                                                  -20%
                                               Revenue (R$ m)                                                                    Revenue Growth in R$
                                               Revenue Growth (in EUR)                                                                                                                                                                     EBITDA (R$ m)                                                                 EBITDA margin



                                                                TIM Brazil Wireless Subscribers                                                                                                                                                     Wireless ARPU - TIM Brazil
                      80                                                                                                                                  40%                                                    40                                                                                                                                                  40%

                                                                                                                                                                                                                 30                                                                                                                                                  30%
                      60                                                                                                                                  30%
    Subscribers (m)




                                                                                                                                                                                                                                                                                                                                                                                Growth / Data %
                                                                                                                                                                                                                 20                                                                                                                                                  20%
                                                                                                                                                                  Growth




                                                                                                                                                                                                       R$ (pm)




                      40                                                                                                                                  20%
                                                                                                                                                                                                                 10                                                                                                                                                  10%

                      20                                                                                                                                  10%                                                     0                                                                                                                                                  0%
                                                                                                                                                                                                                                  2001




                                                                                                                                                                                                                                                                                                                                                            2011
                                                                                                                                                                                                                         2000




                                                                                                                                                                                                                                            2002

                                                                                                                                                                                                                                                      2003

                                                                                                                                                                                                                                                                2004

                                                                                                                                                                                                                                                                              2005

                                                                                                                                                                                                                                                                                          2006

                                                                                                                                                                                                                                                                                                        2007

                                                                                                                                                                                                                                                                                                                    2008

                                                                                                                                                                                                                                                                                                                                2009

                                                                                                                                                                                                                                                                                                                                              2010




                           0                                                                                                                              0%                                                     -10                                                                                                                                                 -10%
                                               2001




                                                                                                                                                  2011
                                 2000




                                                         2002

                                                                        2003

                                                                                      2004

                                                                                               2005

                                                                                                        2006

                                                                                                                 2007

                                                                                                                          2008

                                                                                                                                   2009

                                                                                                                                           2010




                                                                                                                                                                                                                 -20                                                                                                                                                 -20%
                                               Post-Paid                                          Pre-Paid                           Subscriber Growth                                                                                 TOTAL ARPU (R$ Brazilian GAAP)                                                                           Growth



                                      Brazil Wireless Penetration & TIM Market Share                                                                                                                                                              Brazil / EUR Exchange Rate
                      120%                                                                                                                                60%                                                 3.5

                      100%                                                                                                                                50%                                                 3.0

                                                                                                                                                                                                              2.5
                                                                                                                                                                Market Share




                       80%                                                                                                                                40%
  (Penetration)




                                                                                                                                                                                                 (R$ / EUR)




                                                                                                                                                                                                              2.0
                       60%                                                                                                                                30%
                                                                                                                                                                                                              1.5
                       40%                                                                                                                                20%
                                                                                                                                                                                                              1.0
                       20%                                                                                                                                10%
                                                                                                                                                                                                              0.5
                           0%                                                                                                                             0%
                                                                                                                                                                                                              0.0
                                        2000

                                                  2001

                                                                2002

                                                                              2003

                                                                                        2004

                                                                                                 2005

                                                                                                          2006

                                                                                                                  2007

                                                                                                                          2008

                                                                                                                                   2009

                                                                                                                                           2010

                                                                                                                                                  2011




                                                                                                                                                                                                                                2001




                                                                                                                                                                                                                                                                                                                                                                   2011
                                                                                                                                                                                                                      2000




                                                                                                                                                                                                                                           2002

                                                                                                                                                                                                                                                     2003

                                                                                                                                                                                                                                                                2004

                                                                                                                                                                                                                                                                               2005

                                                                                                                                                                                                                                                                                             2006

                                                                                                                                                                                                                                                                                                           2007

                                                                                                                                                                                                                                                                                                                         2008

                                                                                                                                                                                                                                                                                                                                       2009

                                                                                                                                                                                                                                                                                                                                                     2010




                                                 Wireless Penetration                                                    TIM Brazil Market Share


Page 9 of 16                                                                                                              CONFIDENTIAL                                         For illustration purposes only.                                                                                                 Sources: Telecom Italia, Bloomberg
                   Telecom Italia                                                                                                                                                                                                                                                          11 Aug 2011


                                                                                                                          EBITDA Analysis by Division
Detailed data not available prior to 2004.
                                                                 EBITDA by Division                                                                                                                                 EBITDA Margins by Division
                   4                                                                                                               80%                                        60%

                   3                                                                                                               60%                                        50%




                                                                                                                                           EBITDA Margin
                                                                                                                                                                              40%
 EUR (bn)




                   2                                                                                                               40%
                                                                                                                                                                              30%
                   1                                                                                                               20%
                                                                                                                                                                              20%

                   0                                                                                                               0%                                         10%
                                      2001




                                                                                                                           2011
                            2000




                                               2002

                                                        2003

                                                                 2004

                                                                          2005

                                                                                  2006

                                                                                          2007

                                                                                                  2008

                                                                                                           2009

                   -1                                                                                              2010            -20%                                               0%




                                                                                                                                                                                            2000

                                                                                                                                                                                                    2001

                                                                                                                                                                                                            2002

                                                                                                                                                                                                                     2003

                                                                                                                                                                                                                              2004

                                                                                                                                                                                                                                            2005

                                                                                                                                                                                                                                                          2006

                                                                                                                                                                                                                                                                        2007

                                                                                                                                                                                                                                                                                  2008

                                                                                                                                                                                                                                                                                            2009

                                                                                                                                                                                                                                                                                                     2010

                                                                                                                                                                                                                                                                                                              2011
                                   Domestic                                 LATAM                                  Other
                                   EBITDA                                   EBITDA* Margin                                                                                                            Domestic                               LATAM                                         EBITDA* Margin
                                                                                                                                                                       * = excludes unusual items.

                                               Domestic (Italy) EBITDA & Margin                                                                                                                                      LATAM EBITDA & Margin
                   6                                                                                                                60%                                               2.0                                                                                                                    40%

                   5                                                                                                                50%
                                                                                                                                                                                      1.5                                                                                                                    30%




                                                                                                                                                                                                                                                                                                                     EBITDA Margin
                                                                                                                                             EBITDA Margin




                   4                                                                                                                40%
                                                                                                                                                                          EUR (bn)
 EUR (bn)




                   3                                                                                                                30%                                               1.0                                                                                                                    20%

                   2                                                                                                                20%
                                                                                                                                                                                      0.5                                                                                                                    10%
                   1                                                                                                                10%

                   0                                                                                                                0%                                                0.0                                                                                                                    0%
                                                                                                                                                                                             2000

                                                                                                                                                                                                     2001

                                                                                                                                                                                                            2002

                                                                                                                                                                                                                    2003

                                                                                                                                                                                                                            2004

                                                                                                                                                                                                                                     2005

                                                                                                                                                                                                                                                   2006

                                                                                                                                                                                                                                                             2007

                                                                                                                                                                                                                                                                          2008

                                                                                                                                                                                                                                                                                   2009

                                                                                                                                                                                                                                                                                             2010

                                                                                                                                                                                                                                                                                                     2011
                                      2001




                                                                                                                            2011
                            2000




                                               2002

                                                        2003

                                                                  2004

                                                                          2005

                                                                                  2006

                                                                                          2007

                                                                                                  2008

                                                                                                            2009

                                                                                                                    2010




                                                      Domestic                                    EBITDA* Margin                                                                                                   LATAM                                                EBITDA* Margin



                                                                                                                                   Operational Analysis

                                                                Wireless Subscribers                                                                                                                                   Wireless ARPU - Italy
                   100                                                                                                             50%                                                40                                                                                                                     40%

                    80                                                                                                             40%                                                30                                                                                                                     30%
 Subscribers (m)




                                                                                                                                                                                                                                                                                                                         Growth / Data %
                    60                                                                                                             30%                                                20                                                                                                                     20%
                                                                                                                                                                          EUR (pm.)
                                                                                                                                              Growth




                    40                                                                                                             20%
                                                                                                                                                                                      10                                                                                                                     10%

                    20                                                                                                             10%
                                                                                                                                                                                       0                                                                                                                     0%
                                                                                                                                                                                                     2001




                                                                                                                                                                                                                                                                                                      2011
                                                                                                                                                                                             2000




                                                                                                                                                                                                            2002

                                                                                                                                                                                                                    2003

                                                                                                                                                                                                                            2004

                                                                                                                                                                                                                                     2005

                                                                                                                                                                                                                                                   2006

                                                                                                                                                                                                                                                                 2007

                                                                                                                                                                                                                                                                           2008

                                                                                                                                                                                                                                                                                    2009

                                                                                                                                                                                                                                                                                              2010




                        0                                                                                                          0%
                                                                                                                                                                                      -10                                                                                                                    -10%
                              2000

                                        2001

                                                 2002

                                                         2003

                                                                   2004

                                                                           2005

                                                                                   2006

                                                                                           2007

                                                                                                   2008

                                                                                                           2009

                                                                                                                   2010

                                                                                                                           2011




                   -20                                                                                                             -10%
                                                                                                                                                                                      -20                                                                                                                    -20%
                                     LATAM                      Italy               Growth - Italy                    Growth - LATAM
                                                                                                                                                                                                    Voice                    Data                                   Growth                             Data %
Note: LATAM investments were sold in 2005.


                                               Domestic - Number of Fixed Lines
                    40                                                                                                              40%


                    30                                                                                                              30%
 Lines (m)




                    20                                                                                                              20%
                                                                                                                                                Growth




                                                                                                                                                                                                            This space is intentionally left blank.

                    10                                                                                                              10%


                        0                                                                                                           0%
                                        2001




                                                                                                                            2011
                              2000




                                                2002

                                                         2003

                                                                   2004

                                                                           2005

                                                                                   2006

                                                                                           2007

                                                                                                   2008

                                                                                                            2009

                                                                                                                    2010




                   -10                                                                                                              -10%
                                         Broadband Lines                                                  Fixed Lines
                                         Broadband - Growth                                               Fixed Lines - Growth

Page 10 of 16                                                                                      CONFIDENTIAL                                       For illustration purposes only.                                                                                   Sources: Telecom Italia, Bloomberg
              Telecom Italia                                                                                                                                                                                                                                                                                                                                                                                                            11 Aug 2011


                                                                                                                                                  Additional Analysis - Costs & Free Cash Flows

                             Selling, General & Admin Expenses (SG&A)                                                                                                                                                                                                                                                                Taxes & Tax Rates
              3.0                                                                                                                                                                                                       30%                                               1,000                                                                                                                                                                                     50%

              2.5                                                                                                                                                                                                       25%                                                    800                                                                                                                                                                                  40%




                                                                                                                                                                                                                                      SG&A / Sales
              2.0                                                                                                                                                                                                       20%




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          Tax Rate
                                                                                                                                                                                                                                                                EUR (m)
   EUR (bn)




                                                                                                                                                                                                                                                                               600                                                                                                                                                                                  30%
              1.5                                                                                                                                                                                                       15%
                                                                                                                                                                                                                                                                               400                                                                                                                                                                                  20%
              1.0                                                                                                                                                                                                       10%
                                                                                                                                                                                                                                                                               200                                                                                                                                                                                  10%
              0.5                                                                                                                                                                                                       5%
                                                                                                                                                                                                                                                                                  0                                                                                                                                                                                 0%
              0.0                                                                                                                                                                                                       0%




                                                                                                                                                                                                                                                                                              2001




                                                                                                                                                                                                                                                                                                                                                                                                                                                      2011
                                                                                                                                                                                                                                                                                       2000



                                                                                                                                                                                                                                                                                                                    2002

                                                                                                                                                                                                                                                                                                                              2003

                                                                                                                                                                                                                                                                                                                                         2004

                                                                                                                                                                                                                                                                                                                                                            2005

                                                                                                                                                                                                                                                                                                                                                                    2006

                                                                                                                                                                                                                                                                                                                                                                                    2007

                                                                                                                                                                                                                                                                                                                                                                                                    2008

                                                                                                                                                                                                                                                                                                                                                                                                              2009

                                                                                                                                                                                                                                                                                                                                                                                                                                        2010
                               2001




                                                                                                                                                                                                 2011
                     2000




                                                           2002

                                                                     2003

                                                                               2004

                                                                                                          2005

                                                                                                                    2006

                                                                                                                                                2007

                                                                                                                                                         2008

                                                                                                                                                                   2009

                                                                                                                                                                                       2010

                                                                                                                                                                                                                                                                                                                            Tax                                                               Tax rate (12m av.)
                                                                  SG&A                                                                                 SG&A / Sales
                                                                                                                                                                                                                                                                Q2 2011 tax rate was adjusted for unusual items.


                                                                                                              CAPEX                                                                                                                                                                                                           Free Cash Flow Analysis
              3.0                                                                                                                                                                                                              30%                                             2.5                                                                                                                                                                                                  2.5

              2.5                                                                                                                                                                                                              25%                                             2.0                                                                                                                                                                                                  2.0
                                                                                                                                                                                                                                         CAPEX / Sales




              2.0                                                                                                                                                                                                              20%                                             1.5                                                                                                                                                                                                  1.5
 EUR (bn)




              1.5                                                                                                                                                                                                              15%
                                                                                                                                                                                                                                                                   EUR (bn)




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  EUR (bn)
                                                                                                                                                                                                                                                                               1.0                                                                                                                                                                                                  1.0
              1.0                                                                                                                                                                                                              10%
                                                                                                                                                                                                                                                                               0.5                                                                                                                                                                                                  0.5
              0.5                                                                                                                                                                                                              5%
                                                                                                                                                                                                                                                                               0.0            2001                                                                                                                                                                                  0.0




                                                                                                                                                                                                                                                                                                                                                                                                                                                             2011
              0.0                                                                                                                                                                                                              0%
                                                                                                                                                                                                                                                                                      2000




                                                                                                                                                                                                                                                                                                                   2002

                                                                                                                                                                                                                                                                                                                                  2003

                                                                                                                                                                                                                                                                                                                                         2004

                                                                                                                                                                                                                                                                                                                                                             2005

                                                                                                                                                                                                                                                                                                                                                                     2006

                                                                                                                                                                                                                                                                                                                                                                                             2007

                                                                                                                                                                                                                                                                                                                                                                                                      2008

                                                                                                                                                                                                                                                                                                                                                                                                                     2009

                                                                                                                                                                                                                                                                                                                                                                                                                                           2010
                     2000

                              2001

                                                       2002

                                                                     2003

                                                                               2004

                                                                                                          2005

                                                                                                                    2006

                                                                                                                                                2007

                                                                                                                                                          2008

                                                                                                                                                                    2009

                                                                                                                                                                                        2010

                                                                                                                                                                                                  2011




                                                                                                                                                                                                                                                                               -0.5                                                                                                                                                                                                 -0.5

                                                                  CAPEX                                                                                       CAPEX / Sales                                                                                                    -1.0                                                                                                                                                                                                 -1.0



                                                                                                                                                                                                                                                 Dividends

                                                                   Dividends and Pay-Out Ratio                                                                                                                                                                                                                              Dividends and Shares in Issue
              4                                                                                                                                                                                             100%                                                               3.0                                                                                                                                                                                                  30

                                                                                                                                                                                                                                                                               2.5                                                                                                                                                                                                  25
                                                                                                                                                                                                            80%
              3




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              # Shares (bn)
                                                                                                                                                                                                                                     Pay-out Ratio




                                                                                                                                                                                                                                                                               2.0                                                                                                                                                                                                  20
 EUR (bn)




                                                                                                                                                                                                                                                                    EUR (bn)




                                                                                                                                                                                                            60%
              2                                                                                                                                                                                                                                                                1.5                                                                                                                                                                                                  15
                                                                                                                                                                                                            40%
                                                                                                                                                                                                                                                                               1.0                                                                                                                                                                                                  10
              1
                                                                                                                                                                                                            20%
                                                                                                                                                                                                                                                                               0.5                                                                                                                                                                                                  5

              0                                                                                                                                                                                             0%                                                                 0.0                                                                                                                                                                                                  0
                            2001




                                                                                                                                                                                               2011
                  2000




                                           2002

                                                                  2003

                                                                            2004

                                                                                                       2005

                                                                                                                 2006

                                                                                                                                 2007

                                                                                                                                                       2008

                                                                                                                                                                 2009

                                                                                                                                                                                     2010




                                                                                                                                                                                                                                                                                      2000

                                                                                                                                                                                                                                                                                              2001

                                                                                                                                                                                                                                                                                                                    2002

                                                                                                                                                                                                                                                                                                                                  2003

                                                                                                                                                                                                                                                                                                                                          2004

                                                                                                                                                                                                                                                                                                                                                             2005

                                                                                                                                                                                                                                                                                                                                                                      2006

                                                                                                                                                                                                                                                                                                                                                                                             2007

                                                                                                                                                                                                                                                                                                                                                                                                       2008

                                                                                                                                                                                                                                                                                                                                                                                                                        2009

                                                                                                                                                                                                                                                                                                                                                                                                                                               2010

                                                                                                                                                                                                                                                                                                                                                                                                                                                             2011




                                            Dividends                                                                                Pay-Out Ratio* (12m av.)                                                                                                                                                              Dividend                                                             # Shares in issue



                                                                                                                                                                                                  Balance Sheet Analysis

                                                                         2010 Assets by Type                                                                                                                                                                                                     2010 Liabilities & Share Capital by Type
                    60                                                                                                                                                                                                                                                                60

                    50                                                                                                                                                                                                                                                                50

                    40                                                                                                                                                                                                                                                                40
                                                                               Tangible Fixed Assets
EUR (bn)




                                                                                                                                                                                                                                                                    EUR (bn)
                                                                                                                                                                                                        Other current assets




                                                                                                                                                                                                                                                                                                                                                                                                                Long Term Liabilities
                                                                                                                           Cash & Equivalents




                                                                                                                                                                                                                                                                                                                                                                                                                                                               Capital & Reserves
                                      Intangibles Assets




                                                                                                                                                                                                                                                                                                     Current Liabilities




                    30                                                                                                                                                                                                                                                                30
                                                                                                                                                                                                                                                                                                                                          Short Term Debt




                                                                                                                                                                                                                                                                                                                                                                            Long Term Debt
                                                                                                                                                                   Working Capital




                    20                                                                                                                                                                                                                                                                20

                    10                                                                                                                                                                                                                                                                10

                     0                                                                                                                                                                                                                                                                 0

Intangible assets mostly comprises goodwill from acquisitions & mobile licenses.
Page 11 of 16                                                                                                                                            CONFIDENTIAL                                                                          For illustration purposes only.                                                                                                                      Sources: Telecom Italia, Bloomberg
    Telecom Italia                                                                                                                                                      11 Aug 2011


                                                                    Quarterly Financial Accounts

(€ m)     y/e 31 Dec
Profit & Loss                                               2009                                           2010                                         2011
                                                             Q1         Q2         Q3           Q4           Q1          Q2          Q3          Q4       Q1         Q2           Q3         Q4

Revenues                                                     6,527     6,897      6,764      6,975        6,483         6,740       6,676      7,672    7,073       7,470
  Revenue Growth                                           -10.3%      -1.0%     -7.0%      -6.8%        -0.7%         -2.3%       -1.3%      10.0%      9.1%      10.8%
Gross Margins                                               61.3%     58.6%      60.8%     57.7%        62.4%         59.3%       60.6%       58.8%    60.4%       56.7%
EBIT                                                        1,354     1,331      1,608      1,200        1,408         1,473       1,423      1,509    1,499      -1,550
  EBIT Margin                                               20.7%     19.3%      23.8%     17.2%        21.7%         21.9%       21.3%       19.7%    21.2%      -20.7%
  Tax Charge                                                  43%        38%       30%        38%          37%           34%         25%        19%      38%         34%
Net Income                                                    460        504       201        416          601           610         608      1,302       549     -2,562
 Net Income Margin                                           7.0 %     7.3 %     3.0 %      6.0 %        9.3 %         9.1 %       9.1 %     17.0 %     7.8 %    -34.3 %
EPS           (€)                                             0.02      0.03      0.01       0.02         0.03          0.03        0.03       0.07      0.03       -0.13
 EPS Growth                                                 -4.5 %  -19.7 %    -67.7 %     -3.8 %       31.2 %        21.5 %    203.7 %     213.0 %    -9.0 %   -518.5 %
EPS*          (€)                                             0.02      0.03      0.04       0.04         0.03          0.03        0.03       0.04      0.03        0.04
 EPS* Growth                                                -4.7 %  -18.7 %     21.7 %     66.5 %       38.0 %        27.7 %     -11.1 %      2.9 %     6.5 %     17.8 %
* = excludes unusual items.
Note: Other Revenues are disclosed at the EBIT level, not in Revenues.


                                                                     Annual Financial Accounts

(€ Bn)      y/e 31 Dec                                                                                                                                                      Consensus Estimates
Profit & Loss                                              2001       2002       2003        2004         2005         2006        2007       2008      2009       2010        2011e      2012e
Revenues                                                    32.5       31.9       31.2        29.2         30.6         31.9        31.4       29.3      27.4       27.8         29.2       29.4
 Revenue Growth                                           12.7%      -1.8%      -2.2%       -6.3%         4.7%         4.2%       -1.4%      -6.6%     -6.4%       1.4%         5.0%       0.7%
EBIT                                                        -0.2       -0.2        5.6         7.6         7.5          7.4          6.0        5.4       5.5       5.8           6.3       6.4
 EBIT Margin                                              17.1%      20.9%      22.9%       27.5%        24.6%        23.4%       19.1%      20.9%     22.1%      20.2%        21.7%      21.9%
 Tax Charge                                                  n.a.      88%        29%         47%         43%          46%          39%        23%       34%       13%           33%       35%
Net Income                                                  -3.1       -0.8        1.2         1.8         3.2          3.0          2.4        2.2       1.6       3.1           2.5       2.5
 Net Income Margin                                        -9.5%      -2.4%       3.8%        6.2%        10.5%         9.5%        7.8%       7.4%      5.8%      11.2%         8.4%       8.6%
EPS          (€)                                          -0.42      -0.09       0.07        0.11         0.18         0.16        0.13       0.11      0.08       0.16         0.13       0.13
DPS          (€)                                           0.00       0.00       0.12        0.12         0.15         0.15        0.09       0.06      0.06       0.06         0.06       0.06


Balance Sheet                                              2001        2002      2003         2004         2005        2006        2007        2008     2009       2010        2011e      2012e
Intangible & Goodwill Assets                               39.1        34.3      33.8         34.2         50.8        50.5        51.4        50.4     49.9       51.8         51.8       51.8
Tangible Fixed Assets                                      30.0        23.6      20.8         26.0         24.0        21.0        19.3        20.6     18.6       21.3         20.3       19.3
Current Assets                                             25.2        25.5      25.9         21.6         21.2        18.0        16.7        14.7     17.7       16.0         20.3       22.7
Total Assets                                               94.2        83.4      80.5         81.8         96.0        89.5        87.4        85.7     86.2       89.1         92.4       93.8
Current Liabilities                                        15.2        14.6      13.6         15.3         12.9        12.0        13.1        12.7     12.3       11.2         12.5       12.6
Long term Liabilities                                      58.2        51.1      40.8         47.7         47.9        46.0        42.3        41.1     41.0       38.5         38.5       38.5
Total Liabilities                                          81.5        71.7      64.4         65.6         70.3        63.4        62.0        60.1     60.2       56.5         57.8       57.9
Share Capital & Reserves                                   12.7        11.6      16.1         16.2         25.7        26.0        25.4        25.6     26.0       32.6         34.6       35.9
Total Liabilities & Reserves                               94.2        83.4      80.5         81.8         96.0        89.5        87.4        85.7     86.2       89.1         92.4       93.8


Cash Flow                                                   2001       2002      2003         2004         2005         2006       2007        2008     2009        2010       2011e      2012e
Op FCF                                                       5.3        8.7       9.2         10.2          9.8          9.2        8.8         8.2      5.5         6.9         7.1        8.4
Investing                                                  -10.1       -0.1      -8.2         -5.0        -17.4         -4.2       -4.4        -6.7     -4.6        -3.3        -4.3       -4.9
Financing                                                    2.2       -3.6      -1.0         -1.7          8.8         -8.0       -5.2        -2.4     -0.9        -3.9        -1.3       -1.2
Cash Flow                                                   -2.6        5.0       0.1          3.5          1.3         -3.0       -0.8        -1.0      0.3        -0.2         1.4        2.4
FCF                                                         -3.2        8.7       9.2          5.2          4.6          4.1        3.5         3.2      1.0         2.3         2.4        3.6




                                                                                Unusual Items

Notes - Unusual or significant items
Most unusual items 2000-4, relate to exceptional one-off charges and asset write-downs arising from acquisitions, restructurings or wireless licences.
     1) In Q2 2011, TI reported a € 3.1 bn goodwill write-down on its domestic operations; based mainly on the deterioration of the financial markets and rising
         interest rates as Italian demand stagnates amid the worsening global economic outlook.
     2) In Q4 2010, included a gain of € 600 m on deferred tax gains in Brazil and € 266 m of asset revaluations on the consolidation of Telecom Argentina.
     3) Q4 2009, includes a € 418 m provision for the Sparkle tax evasion case, which was later incurred in Q3 2010.
     4) In Q3 2009, a EUR 541 impairment charge was made on the proposed disposal of Hansenet (German Broadband Business).
     5) In Q4 2007, included a € 0.9 bn charge for impairment losses, elimination of re-charging fees & provisions for regulatory disputes on Domestic operations.
     6) 2000-4, numerous unusual charges & gains were recorded on asset write-downs (eg. LATAM & wireless licenses), disputes and regulatory provisions.
     7) Seat Pagine Gialle was deconsolidated 2003


            Indigo Equity Research determined what constituted "Unusual items" in this report.




Page 12 of 16                                         CONFIDENTIAL                  For illustration purposes only.                                         Sources: Telecom Italia, Bloomberg
    Telecom Italia                                                                                                                     11 Aug 2011


                                                    Revenue Data

(€ m)     y/e 31 Dec
                                 2009                                     2010                                           2011
                                   Q1      Q2         Q3          Q4       Q1           Q2           Q3          Q4       Q1        Q2          Q3         Q4


 Group Revenues
 Domestic                        5,357   5,535      5,342       5,429    4,974       5,117        4,941        5,036    4,596     4,760
 LATAM*                          1,617   1,749      1,789       1,906    1,926       2,239        2,357        2,491    2,399     2,611
 Adjustment                        166     187        196         237      195          80          118          145       78        99
 Total*                          6,527   6,897      6,764       6,975    6,483       6,740        6,676        7,672    7,073     7,470
* = Includes Argentina



Group Revenue Growth
Domestic                         -4.3%   -4.4%      -6.7%   -11.1%       -7.1%       -7.6%        -7.5%        -7.2%    -7.6%    -7.0%
LATAM**                           0.7%    3.4%      -3.6%    -5.3%        2.8%        1.3%         6.1%         9.9%    24.6%    22.0%
Total**                          -3.7%   -3.7%      -5.6%    -9.1%       -4.9%       -5.3%        -3.2%        -0.7%    -0.2%     2.1%
Total                           -10.3%   -1.0%      -7.0%    -6.8%       -0.7%       -2.3%        -1.3%        10.0%     9.1%    10.8%
** = Estimated organic growth




Domestic Revenues
Fixed Line                       3,677   3,724      3,563       3,775    3,498       3,560        3,458        3,600    3,331     3,360
Wireless                         2,059   2,253      2,184       2,101    1,907       2,001        1,914        1,870    1,679     1,817
Inter-Segment                     -379    -442       -405        -447     -431        -444         -431         -434     -414      -417
Total                            5,357   5,535      5,342       5,429    4,974       5,117        4,941        5,036    4,596     4,760



Domestic Revenue Growth
Fixed Line                       -1.8%   -0.4%      -2.2%    -2.5%       -4.9%      -4.4%        -2.9%         -4.6%    -4.8%     -5.6%
Wireless                         -7.1%   -7.0%     -10.7%   -19.2%       -7.4%     -11.2%       -12.3%        -11.0%   -12.0%     -9.2%
Total                            -4.3%   -4.4%      -6.7%   -11.1%       -7.1%      -7.6%        -7.5%         -7.2%    -7.6%     -7.0%




LATAM Revenues
Brazil                           1,013   1,183      1,233       1,324    1,323       1,552        1,623        1,701    1,646     1,853
Argentina                          613     574        563         597      612         696          740          798      753       758
Adjustment                          -9      -8         -7         -15       -9          -9           -6           -8        0         0
Total                            1,617   1,749      1,789       1,906    1,926       2,239        2,357        2,491    2,399     2,611



LATAM Revenue Growth
Brazil                          -17.2%   -9.9%     -14.1%       7.2%     30.6%     31.2%        31.6%          28.5%    24.4%    19.4%
Argentina                                                               #REF!     #REF!        #REF!          #REF!    #REF!    #REF!
Total**                          0.7%    3.4%       -3.6%       -5.3%     2.8%      1.3%         6.1%           9.9%    24.6%    22.0%
** = Estimated organic growth




Page 13 of 16                                    CONFIDENTIAL               For illustration purposes only.                 Sources: Telecom Italia, Bloomberg
    Telecom Italia                                                                                                           11 Aug 2011


                                     EBIT & EBITDA Data

(€ m)     y/e 31 Dec
                          2009                                   2010                                          2011
                           Q1      Q2         Q3          Q4      Q1           Q2           Q3          Q4      Q1        Q2          Q3         Q4




 Group EBIT
 Domestic                1,392   1,319      1,586       1,096   1,366       1,392        1,280       1,124    1,222     1,266
 LATAM*                    130     173        162         249     201         242          307         458      309       379
 Adjustment                -34     -29        -27         -19     -23         -19          -24         -73      -32       -21
 Total*                  1,488   1,463      1,721       1,326   1,544       1,615        1,563       1,509    1,499     1,624
* = Includes Argentina



 Group EBIT Margins
 Domestic                26.0%   23.8%      29.7%   20.2%       27.5%      27.2%        25.9%        22.3%    26.6%    26.6%
 LATAM*                   8.0%    9.9%       9.1%   13.1%       10.4%      10.8%        13.0%        18.4%    12.9%    14.5%
 Total*                  22.8%   21.2%      25.4%   19.0%       23.8%      24.0%        23.4%        19.7%    21.2%    21.7%
* = Includes Argentina




LATAM EBIT
Brazil                      -5      42         48         124      65         100          167         353      184       256
Argentina                  134     132        113         126     136         142          140         105      125       123
 Total*                    130     173        162         249     201         242          307         458      309       379
* = Includes Argentina



LATAM EBIT Margins
Brazil                   -0.5%    3.6%       3.9%    9.4%        4.9%       6.4%        10.3%        20.8%    11.2%    13.8%
Argentina                21.9%   23.0%      20.1%   21.1%       22.2%      20.4%        18.9%        13.2%    16.6%    16.2%
 Total*                   8.0%    9.9%       9.1%   13.1%       10.4%      10.8%        13.0%        18.4%    12.9%    14.5%
* = Includes Argentina




Group EBITDA
Domestic                 2,523   2,515      2,665       2,180   2,451      2,469        2,290        2,183    2,236    2,311
LATAM                      426     473        488         587     573        648          663          765      709      745
Other                      -15      -3         -8           3      -6         -4           -6           -11     -16       -8
Total                    2,934   2,985      3,145       2,770   3,018      3,113        2,947        2,937    2,929    3,048



Group EBITDA Margins
Domestic                 47.1%   45.4%      49.9%   40.2%       49.3%      48.3%        46.3%        43.3%    48.7%    48.6%
LATAM*                   26.3%   27.0%      27.3%   30.8%       29.8%      28.9%        28.1%        30.7%    29.6%    28.5%
 Total*                  45.0%   43.3%      46.5%   39.7%       46.6%      46.2%        44.1%        38.3%    41.4%    40.8%
* = Includes Argentina



LATAM EBITDA
Brazil                     231     296        322         406     381         442          458         520      452       496
Argentina                  195     177        166         181     192         206          205         245      257       249
 Total*                    426     473        488         587     573         648          663         765      709       745
* = Includes Argentina



LATAM EBITDA Margins
Brazil                   22.8%   25.0%      26.1%   30.7%       28.8%      28.5%        28.2%        30.6%    27.5%    26.8%
Argentina                31.8%   30.8%      29.5%   30.3%       31.4%      29.6%        27.7%        30.7%    34.1%    32.8%
 Total*                  26.3%   27.0%      27.3%   30.8%       29.8%      28.9%        28.1%        30.7%    29.6%    28.5%
* = Includes Argentina




Page 14 of 16                            CONFIDENTIAL              For illustration purposes only.                Sources: Telecom Italia, Bloomberg
    Telecom Italia                                                                                                                               11 Aug 2011


                                                                 Operational Data

(€ m)     y/e 31 Dec
                                              2009                                         2010                                    2011
                                               Q1          Q2       Q3          Q4           Q1          Q2       Q3       Q4       Q1        Q2          Q3         Q4


Operational Data

Subscribers
Italy                                       34,163   32,630      31,921     30,856      30,393        30,545   30,632   31,018   31,038    31,260
LATAM                                       36,096   37,826      39,600     41,102      42,356        44,413   46,934   51,015   52,836    55,512
Total                                       70,259   70,456      71,521     71,958      72,749        74,958   77,566   82,033   83,874    86,772

Subscriber Growth
Italy                                        -4.9%       -8.8%    -9.5%    -11.3%       -11.0%         -6.4%    -4.0%     0.5%     2.1%     2.3%
LATAM                                        11.0%       11.9%    12.5%     12.9%        17.3%         17.4%    18.5%    24.1%    24.7%    25.0%
Total                                         2.6%        1.2%     1.5%      1.1%         3.5%          6.4%     8.5%    14.0%    15.3%    15.8%

Subscriber Net Additions
Italy                                         -634    -1,533       -709     -1,065         -463          152       87      386       20       222
LATAM                                         -306     1,730      1,774      1,502        1,254        2,057    2,521    4,081    1,821     2,676
Total                                         -940       197      1,065        437          791        2,209    2,608    4,467    1,841     2,898




Italian ARPU (EUR pm.)
Voice                                         14.3        15.4     15.4       14.9         14.3         15.2     14.2     13.4     12.1      12.8
Data                                           4.4         4.8      5.3        5.4          5.4          5.4      5.4      5.4      4.9       5.2
Total                                         18.7        20.2     20.7       20.3         19.7         20.6     19.6     18.8     17.0      18.0



Italian ARPU Growth
Voice                                        -1.1%       0.9%     -0.1%      -3.1%        0.0%         -1.7%    -7.9%    -9.6%   -15.5%   -15.6%
Data                                         -5.2%       2.0%      6.5%       0.5%       22.6%         13.1%     2.3%    -1.4%    -9.0%    -4.2%
Total                                        -2.1%       1.2%      1.5%      -2.2%        5.3%          1.8%    -5.3%    -7.4%   -13.7%   -12.6%

Data ARPU % of total ARPU                    23.7%    23.8%       25.5%     26.8%        27.6%         26.4%    27.5%    28.5%    29.1%    29.0%




Wireless market shares - Italy
TIM                                          37.9%    36.9%       36.3%     35.1%        34.3%         34.2%    34.0%    34.2%    34.1%    34.2%
Vodafone                                     33.1%    33.3%       33.2%     34.0%        34.2%         34.1%    34.1%    33.8%    33.5%    33.1%
Wind                                         19.1%    19.8%       20.4%     20.6%        21.3%         21.6%    21.8%    21.9%    22.3%    22.5%
3                                             9.9%    10.1%       10.2%     10.3%        10.2%         10.1%    10.1%    10.1%    10.0%    10.2%
Total                                       100.0%   100.0%      100.0%    100.0%       100.0%        100.0%   100.0%   100.0%   100.0%   100.0%



Change in wireless market share - Italy
TIM                                          -0.6%       -1.0%    -0.6%      -1.2%        -0.8%        -0.1%    -0.2%     0.2%    -0.1%      0.1%
Vodafone                                     -0.2%        0.2%    -0.1%       0.9%         0.2%        -0.1%     0.1%    -0.3%    -0.3%     -0.5%
Wind                                          0.4%        0.7%     0.6%       0.2%         0.7%         0.3%     0.2%     0.1%     0.4%      0.2%
3                                             0.3%        0.2%     0.1%       0.1%        -0.1%        -0.1%    -0.1%     0.0%    -0.1%      0.2%




Page 15 of 16                             CONFIDENTIAL              For illustration purposes only.                                   Sources: Telecom Italia, Bloomberg
    Telecom Italia                                                                                                                                                 11 Aug 2011


                                                                      Explanations & Definitions




Explanation of Company Ratings used by Indigo Equity Research Ltd:



Industry view:             ATTRACTIVE                    Industry view =     The industry view is an assessment from an investor's perspective of the potential for the industry
                                                                             as a whole to generate profits in the future based on criteria such as its market structure (eg. number
                                                                             of competitors and industry concentration), growth prospects, maturity (stage of the industry life
                                                                             cycle), regulations, technology, disruptive forces, expected changes, and speed of any changes.

Company Rating:
                           LOW    MED. HIGH                        Risk =Risk of earnings disappointment or volatility. This in turn depends on items such as revenue growth,
           Risk              ##    #    #                                and profit margin volatility. This is NOT a measure of the risk of a share price movement.
           Quality           #     ##   #                      Quality = Quality of the company to maintain competitive advantages and pricing power, based on criteria
           Valuation         #     #    ##                               such as management, market position, pricing power, market growth, quality of services etc…..
                                                             Valuation = Absolute measure of valuation multiples of the company, based on a range of metrics (multiples)
                                                                         such as: P/Sales, PE, PEG, P/BV, P/ FCF, EV/EBITDA, EV/Sales, Div Yield …..




Definitions:
FCF = Free Cash Flow                                              12m av. = 12 month average                      EV = Enterprise Value        BV = Book Value
Op FCF = Operating Free Cash Flow                                 (ie. Average for the last 12 months.)           P = (Share) Price            Div. = Dividend
EBIT = Earnings Before Interest & Tax                             y/e = (financial) year end                      PE = Price / Earnings        EPS = Earnings Per Share
(ie. Operating Income)                                                                                            PEG = PE / Growth            DPS = Dividends Per Share



Explanation of what constitutes an unusual or significant item.
Indigo Equity Research determined what constituted "Unusual items" in this report on the basis of assessing what items were significantly or materially separate
or different to the Company's core business and activities. This a highly subjective assessment made by the analyst on a case-by-case basis.




                                                                 Legal and Important Information


Copyright © 2011 Indigo Equity Research Limited

Analyst certification: The analyst Nicholas Landell-Mills primarily responsible for the preparation of this research report attests to the following: (1) that the views and opinions
rendered in this research report reflect the views of Indigo Equity Research Limited about the subject companies or issuers; and (2) that no part of the research analyst’s
compensation was, is, or will be directly related to the specific recommendations or views in this research report.


Disclosures: Indigo Equity Research Limited has no investment banking or share trading operations or activities. Reports are prepared at irregular intervals depending on the
analyst's judgment. Analysts, associates and members of their households may maintain a financial interest in the securities of companies in the analyst’s area of coverage, subject
to compliance with applicable regulations. Indigo Equity Research prohibits analysts, associates and members of their households from serving as an officer, director, advisory
board member or employee of any company that the analyst covers. Analysts aim to provide appropriate information on companies. Analysts do not provide any BUY, HOLD, or
SELL recommendations in their research and the research reports should not be interpreted as providing such recommendations. Indigo Equity Research does not provide
individually tailored investment advice in research reports. This report has been prepared without regard to the particular investments and circumstances or investment objectives of
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Corporation). This report is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law
or regulation. These disclosures should be read in conjunction with the Disclaimer and Important Information below.



Disclaimer and Important Information: This document has been prepared by Indigo Equity Research Limited for information and illustration purposes only. This document is not
an offer, or the solicitation of an offer, to buy or sell a security or enter into any other agreement. This document does not contain an investment recommendation and is not a
complete or comprehensive description of a company. Any projections, forecasts or estimates of potential risk or return or financial results are only illustrative and should not be
taken as limitations of the maximum possible loss or gain. The information is provided in this document at the date of preparation and is subject to change. While this information
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www.indigo-equity-research.com and contact email: info@indigo-equity-research.com.

Page 16 of 16                                         CONFIDENTIAL                  For illustration purposes only.                                     Sources: Telecom Italia, Bloomberg

								
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