RICCARDO RUGGIERO ILLUSTRATES WIRELINE BUSINESS UNIT’S STRATEGY AND TARGETS FOR THE PERIOD 2005-2007 TO THE FINANCIAL COMMUNITY

04/12/2005 - 05:00 PM

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TARGETED AVERAGE ANNUAL ORGANIC REVENUE GROWTH BETWEEN 1% AND 2% AND EBIT GROWTH BETWEEN 2.5% AND 4% PLANNED INVESTMENTS OF €7.3 BILLION, OF WHICH AROUND €800 MILLION FOR EUROPEAN BROADBAND PROJECTS 8 MILLION BROADBAND ACCESSES EXPECTED IN ITALY BY 2007 AND 11 MILLION INNOVATIVE HANDSETS TARGETED AVERAGE ANNUAL ORGANIC REVENUE GROWTH BETWEEN 1% AND 2% AND EBIT GROWTH BETWEEN 2.5% AND 4% PLANNED INVESTMENTS OF €7.3 BILLION, OF WHICH AROUND €800 MILLION FOR EUROPEAN BROADBAND PROJECTS 8 MILLION BROADBAND ACCESSES EXPECTED IN ITALY BY 2007 AND 11 MILLION INNOVATIVE HANDSETS  

Milan, April 12, 2005 - Telecom Italia’s CEO Riccardo Ruggiero is today illustrating the
Wireline Business Unit’s targets for the period 2005-2007 to the financial community.
The expected targets, applying IAS/IFRS accounting standards, for the period 2005-2007
indicate the following organic average annual growth:
- between 1% and 2% revenue growth before changes in the consolidation area,
exchange rate impact and exceptional items;
- between 2% and 3.5% EBITDA growth, before changes in the consolidation area,
exchange rate impact and exceptional items;
- between 2.5% and 4% EBIT growth before changes in the consolidation area,
exchange rate impact and exceptional items.
The achievement of these targets will mainly focus on:
􀂃 expansion of the domestic broadband portfolio to a total of 8 million accesses by the
end of 2007;
􀂃 an increased number of customers using value-added services,,up to 60% of all
customers in Italy by the end of the three-year period;
􀂃 take-up of innovative handsets, of which 11 million are expected to be in operation by
the end of the period;
􀂃 a stronger presence in the international markets where companies belonging to Wireline
operate..
Overall investments (in Italy and internationally) are expected to total €7.3 billion over the
2005-2007 period, a 1 billion increase compared to the €6.3 billion indicated for the 2004-
2006 period. €6.5 billion will be invested in the domestic market, including about €2.1
billion for broadband and about €700 billion for new terminals.
By leveraging on the success of Broadband services achieved in the domestic market,
Wireline aims to expand into the European market where it plans to invest the remainder,
approximately €800 million.
The key 2007 objectives set for European markets are:
􀂃 2.5 million total customers;
􀂃 revenues in excess of €1 billion;
􀂃 an EBITDA margin of around 20% of revenues;
􀂃 a positive EBIT contribution.
At the end of March 2005, total Broadband accesses equaled 4,872,000 of which 4,350,000
in Italy and 522,000 in Europe. Taking narrowband accesses (188,000) into consideration,
accesses for the rest of Europe totaled 710,000, of which 305,000 in Germany, 205,000 in
France and 200,000 in Holland.