Telecom Italia Splits Access

MILAN, Italy -- The Board of Directors of Telecom Italia, chaired by Mr. Guido Rossi, met today to examine the strategic guidelines of the Group’s re-organization following the decisions of 11 September 2006.

The decisions reached on 11 September represent the evolution – in the light of changes in the technological scenario and competitive context – of the integration, launched two years ago, of the activities of fixed-line and mobile telephony, which yielded cost savings of over 1 billion euro in 2005 and the first half of 2006, already appreciated by the board of directors.

Telecom Italia, therefore, confirms that convergence between fixed telephony, mobile telephony, broadband Internet and media content remains its strategic goal. In this framework the re-organization ensures the necessary operational flexibility without renouncing the benefits gained through fixed-mobile integration and with the intention of taking advantage, in full accord with the telecommunications regulator, of all the opportunities offered by the market.

For this reason, the company intends to launch the transformation of the access network into a New Generation Network, enabling the transmission of high-definition television programmes, movies, music and video, as well as business and public services (tele-medicine, info-mobility etc.).

The “Next Generation Network” will also involve the separation from Telecom Italia of the access network, according to a model to be jointly developed with the Authority.

The entire process of re-organization is centred on the customer; the specific goal being to improve customer satisfaction. This will also be achieved thanks to the improvement of customer care services through a targeted programme of customer relationship management. To ensure the attainment of this result, Telecom Italia intends to back this plan with all the investment necessary.

The Board of Directors also took stock of the resignation tendered by Stefano Meroi, a member of the board of statutory auditors, on the basis of considerations of opportunity given the participation of Generali Assicurazioni (where Mr. Meroi works) in the shareholder pact regarding Telecom Italia, struck with Olimpia and Mediobanca on 19 October 2006. Mr. Meroi will be replaced by the additional member of the board of auditors, indicated by the same slate as the retiring auditor, Mr. Enrico Maria Bignami, an official accounts auditor of Milan.

Telecom Italia (TIM)

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