MILAN -- Telecom Italia and Tiscali have signed an agreement to purchaseTiscali’s 95% stake in Liberty Surf S.A., a French company listed at Euronext in Paris.The price agreed is approximately 266 million euro, valuing 100% of Liberty Surf at 280million euro. This valuation takes into account Liberty Surf’s net cash of approximately 28million euro and corresponds to an estimated Enterprise Value of 252 million euro for100% of the company.

Once the transaction is finalized, Telecom Italia will launch a public offer for the remaining5% of Liberty Surf ‘s share capital, as required by law.

Finalization of the transaction is conditional on approval by the French antitrust authorities.Liberty Surf is a leading internet service provider in France, with a nationwide presence.Through its own network infrastructure it provides internet services to 344,000 broadbandcustomers and approximately 700,000 narrowband customers (of which 448,000 retail).

The company’s 2004 revenues totalled approximately 225 million euro.Mediobanca and Sopaf Corporate Finance were the financial advisers for Telecom Italiawhile Tiscali was represented by Rothschild.

Telecom Italia SpA