ROME -- The Telecom Italia Board of Directors, chaired by Gabriele Galateri di Genola, today examined and approved the Group’s First Half Financial Report at 30 June 2009.

“In the first six months of 2009 we started the Group’s restructuring process, in line with the Industrial Plan 2009-11, that lays down a structural change in revenue composition and marketing processes as well as the implementation of efficiency and cost control programmes for containing cash costs”, Mr. Franco Bernabè, CEO of Telecom Italia stated. “Such measures, together with a strict financial discipline, offset the preassure on revenues, generating an operating cash flow of €2.2 billion, approximately €600 million higher compared with the same period in 2008”.

“These initiatives – added Mr. Bernabè – have allowed us to maintain an organic EBITDA basically stable and to confirm profitability targets; moreover, an EBITDA margin of about 41% is a result that places the Telecom Italia Group amongst the top performers in the sector. In addition, the effectiveness of our financial management coupled with a successful operating performance have generated an increase in Pre-tax Profit of €192 million, +13.8% compared with the same period in 2008, to approximately €1.6 billion”.

TELECOM ITALIA GROUP

Variation in consolidation perimeter during 1H: commencing 1 May 2009, Telecom Media News S.p.A. has been excluded from the consolidation perimeter following the sale of 60% of its shares by Telecom Italia Media S.p.A..

Main variations in 2008 were as follows:

- exit of Entel Bolivia commencing 2008 Q2, consequent to the Bolivia Government’s Decree of nationalisation dated 1 May 2008. The stake has now been entered under Current Assets;

- exit of the “Pay-per-View” business branch commencing 1 December 2008, consequent to its sale by Telecom Italia Media S.p.A..

Revenues in the first half of 2009 amounted to €13,953 million, down 5.8% or €856 million compared to €14,809 million posted during the same period in 2008. In terms of organic variation, the reduction in consolidated revenues was -3.8% (- €554 million).

In detail, the organic variation in revenues is calculated by excluding: