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Marco Tronchetti Provera illustrates 2004 – 2006 strategic objectives to the financial community

03/25/2004 - 12:00 PM

This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of the customer base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the activities and situation relating to the Company .
Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward looking statements as a result of various factors.
Analysts are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this press release. Telecom Italia Spa undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telecom Italia Spa business or acquisition strategy or to reflect the occurrence of unanticipated events. Analysts and investors are encouraged to consult the Company´s Annual Report on Form 20-F as well as periodic filings made on Form 6-K, which are on file with the United States Securities and Exchange Commission.

Growth in average annual revenues and gross operating profit expected to exceed 5% and 5.5% respectively 

Net financial borrowings below 30 billion euros by year-end 2004

Free cash flow from operations to exceed 31 billion euros
over the three years 2004-2006

Annual group dividend distribution to total around 2.8 billion euros

Marco Tronchetti Provera, chairman of the Telecom Italia Group, today presents to the financial community the Group's strategic objectives for the three year period 2004 – 2006.

For 2004 – 2006, on equivalent consolidation area and exchange rate terms, Telecom Italia forecasts average annual revenue growth to exceed 5%, gross operating profit growth to exceed 5.5%, operating income prior to the amortization of goodwill to increase by more than 7%, and the operating result to grow by 10%. Achievement of these will be driven by the Group's ability to bring innovation to value added services on both the mobile and fixed markets, grow the number of broadband customers and content offerings, and consolidate its market position in areas where it already operates outside Italy.

As a proportion of consolidated revenues, in 2006 gross operating profit and operating income prior to goodwill are expected to reach 47% and 30% respectively.

Industrial investments from 2004 to 2006 shall total approximately 15 billion euros. Over two thirds of this amount will go to innovative ventures, with a weighting in favour of Mobile (47% of the total) over Wireline (42%).

It is confirmed that the target is to bring down net debt to below 30 billion euros by the end of 2004.

Free cash flow from operations (gross operating result + amortization - industrial investments +/-change in working capital) over the three-year period 2004 – 2006 is forecast to exceed 31 billion euros. Calculating annual dividend payouts of around 2.8 billion euros (at consolidated level), as previously announced for 2003, and without taking into account extraordinary operations, annual net cash flow in 2005 and 2006 is expected to reach around 3.5 billion euros.