The Telecom Italia securities referred to herein that will be issued in connection with the merger described herein have not been, and are not intended to be, registered under the U.S. Securities Act of 1933 (the Securities Act) and may not be offered or sold, directly or indirectly, into the United States except pursuant to an applicable exemption. The Telecom Italia securities are intended to be made available within the United States in connection with the merger pursuant to an exemption from the registration requirements of the Securities Act.
BOARD APPROVES 2005-2007 GROUP STRATEGIC TARGETS
FOLLOWING TELECOM ITALIA-TIM MERGER AND INTERNET SECTOR RESTRUCTURING
AVERAGE ANNUAL REVENUE GROWTH SEEN BETWEEN 4% AND 6%, OPERATING RESULT BETWEEN 7% AND 9%
TELECOM ITALIA-TIM MERGER EXPECTED TO GENERATE SYNERGIES WORTH 1.5 BILLION EURO
END 2007 NET FINANCIAL DEBT SEEN IN LINE WITH END 2004 LEVEL (CIRCA 33 BILLION EURO BASED ON IAS/IFRS STANDARDS
The Board of Directors of Telecom Italia met today, under the Chairmanship of Marco Tronchetti Provera, to approve the Group's strategic targets.
For the period 2005-2007, taking IAS/IFRS accounting standards into consideration, average yearly growth is expected as follows:
a) revenues between 4 and 6%, adjusted for variations in the area of consolidation and exchange rates;
b) Operating result before amortizations between 6 and 8%, adjusted for variations in the scope of consolidation and exchange rates, and excluding non-recurring charges;
c) Operating result between 7 and 9%, adjusted for variations in the scope of consolidation and exchange rates, and excluding non-recurring charges.
These economic targets include part of the synergies deriving from the merger with Tim, estimated at a total of 1.5 billion euro for the period 2005-2007.
The integration of the fixed and mobile platforms will allow the Group to take advantage of rapidly evolving technological change and respond more effectively to customer demand for easier access to services and products.
On the domestic market, growth will be mainly driven by the development and distribution of innovative services linked to continually increasing availability of bandwidth (ADSL), UMTS and Digital Terrestrial Television.
The expertise and know-how developed by the Group in Italy are the basis for further value creation in international markets, where the Group intends to strengthen its already solid presence. Selective expansion in the European broadband market, in particular, will continue.
Industrial investments in the period 2005-2007 will total approximately 14 billion euro, more than 70% of which will go towards innovation and development.
At the end of 2007, net financial debt is expected to be in line with the level at the end of 2004 (approximately 33 billion euro applying IAS/IFRS standards). It is expected, therefore, that the debt increase generated by the TIM takeover will be absorbed over the period 2005-2007, mainly through cash generation including the total financial benefits deriving from the synergies.
The Telecom Group's strategic targets will be explained on Telecom Day which will take place on Tuesday 12 April.
Milan, April 7, 2005