Telecom Italia Reports Q3

MILAN, Italy -- The Board of Directors of Telecom Italia, chaired by Mr. Guido Rossi, today examined and approved the Group’s financial statements for the period ending 30 September 2006.

TELECOM ITALIA GROUP

The Telecom Italia Group’s financial results for the first nine months of 2006 and comparable earlier periods were prepared according to accounting standards issued by the International Accounting Standards Board and approved by the European Union (IFRS). The results’ statement for the period ending 30 September 2006 is not subject to auditing.

On 30 September 2006, the consolidation area presents the following key variations compared with 30 September 2005 and 31 December 2005:- entry of the Liberty Surf Group (consolidated from 1 June 2005)- exit of Entel Chile Group (sold March 2005), TIM Hellas (sold early June 2005), Finsiel Group (sold end-June 2005), TIM Perù (sold August 2005), the Buffetti group (sold January 2006) and Digitel Venezuela (sold May 2006), already treated as discontinued operations or operations in the process of being sold, as well the exit of Wirelab (sold February 2006), Ruf Gestion (sold March 2006) and Eustema (sold April 2006) and Telecom Italia Learning Services (sold July 2006).

Revenues in the first nine months of 2006 amounted to 23,104 million euro with an increase of 5.2% compared with the first nine months of 2005 (21,958 million euro). Excluding the effect of exchange rate and of variations in the consolidation area, organic growth was 3.0% (+677 million euro). Excluding the negative effect of the cuts to termination tariffs in Italy (360 million euro), revenue growth would have been 4.6%. In the third quarter of 2006, revenues amounted to 7,769 million euro, an increase of 4.6% compared with the same period in 2005 (7,430 million euro). Excluding exchange rate effects mainly linked to the Brazilian unit and variations in the consolidation area, organic growth was 3.8%.

EBITDA was 9,786 million euro and registers an increase of 0.8% compared with the first nine months of 2005. Organic growth was 1.1% (+103 million euro) and was calculated taking into account variations in the consolidation area (-47 million euro), exchange rates (84 million euro) and other items (-58 million euro) for the first nine months of 2006, company restructuring charges (92 million euro), charges connected to reorganization in the Brazil mobile activities (10 million euro), and other charges (17 million euro); in the first nine months of 2005 items not included under organic growth totalled 61 million euro and related to charges linked to transactions with Opportunity, for Brasil Telecom, to charges for transactions with clients and other charges and inflows.

Telecom Italia (TIM)