MILAN, Italy -- Telecom Italia proceeds with the efficiencies and re-organization plan announced to the financial community on 7 March 2008 with the presentation of Telecom Italia’s strategic guidelines and targets for 2008 and for the 3–year period 2008-2010.

The efficiency plan approved today entails a headcount reduction in Italy of approximately five thousand units by 2010 and a consequent reduction in costs, on completion, of approximately 300 million euro a year. This initiative will incur additional restructuring charges of approximately 250 million euro, compared with the 100 million euro already included in the 2008 Plan. They will mainly impact 2008 results and the relative targets announced in March and will be more than offset by savings expected in the next two years.

The Domestic Market Operations Division was constituted today. It will have the task of integrating management and control of the present Fixed, Mobile and Top Clients structures. The new Division will be headed by Oscar Cicchetti and reports directly to the Chief Executive Officer.

The Domestic Market Operations Division will progressively adopt a “Customer Centric” organizational model, substituting the current technology based organisation (fixed/mobile) with a model based on customer segments. The evolution of the organizational model will take place by enhancing the mobile division’s expertise in the consumer market and the fixed division’s expertise in the business market, leading progressively to a structure with three macro-areas: Consumer, Business and Top Clients. These will offer convergent products and services to their respective customer segments.

The goal of the new Division and new segmentation is to bring all company processes into ever closer alignment with the customer and their satisfaction. These typically include commercial processes like marketing, sales and customer operation, which the Division will manage directly, and technical ones such as delivery, assurance and field service, which will be governed by the producer structures. The new structure will bring cost efficiencies, as well as substantial improvement in the capacity to compete, always in accordance with the current and future regulatory framework.

Oscar Cicchetti will also continue to head International Activities, while the Strategy and National Wholesale Services functions will report directly to the Chief Executive Officer.

The Technology & Operations Division remains unchanged and is headed by Stefano Pileri.

Telecom Italia (TIM)