Diapositiva 1

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TI SPARKLE New Players, New Services New
Wholesale Challenges
Francesco Armato TI Sparkle, Senior Vice
President, South and Central America RegionCEO,
Latin American Nautilus
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AGENDA
BACKGROUND

• Company Background
• Telecom Italia International
• TI Sparkle International Core Network Operator
• Network
• Credentials
• Company Key Figures
• Presence Worldwide
• New Players, New Services, New products
• New customer needs
• New scenario
• Evolution of the fixed and mobile retail network
  offers
• New drivers the post convergence
• New challenges
• TI Sparkle Challenge / Our Answer

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Telecom Italia a Top Company leader in ICT

• TOP ICT company leader in innovation
• Operations in Europe, South America and the
  Mediterranean
• Over 27 million fixed lines in Italy and
  internationally
• 57.8 million mobile lines, 32.4 of which in Italy
  
• 8.7 million broadband access in Europe, 6.8 of
  which in Italy
• Number of employees 83.209
• Revenues 31.3 Billion Euros (29.9 in 2005)
• EBITDA 12.9 Billion Euros (12.5 in 2005)
• Industrial Investments 5.1 Billion Euros ( 5.2
  in 2005)

Key areas of growth come from International
activities
Results at December 31, 2006
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BACKGROUND
TELECOM ITALIA INTERNATIONAL FOOTPRINT
Global Services Offering
Key operations in European Broadband (France,
Germany and NL), Brazilian mobile and
International Services (TI Sparkle)
Asset held for sale
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INTERNATIONAL CORE NETWORK OPERATOR
TELECOM ITALIA SPARKLE

• Wholly owned subsidiary of Telecom Italia with
  the objective of developing TI Groups
  international business.
• Full international service provider, offering a
  complete range of solutions spanning Voice, IP,
  Bandwidth and Managed Data services for
  fixed-line and mobile operators, ISPs and
  multinational corporations.
• TIS, through its Consulting Services Team, makes
  available to international operators Telecom
  Italia technological commercial Know-How and
  ability to innovate
• TIS means networks, technological platforms and a
  worldwide commercial presence, in order to
  provide the best cost, top performance services
  to the main players of the international
  telecommunications market.

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TI Sparkle overview
Key Figures

• Leading global service provider, offering Voice,
  IP and Data solutions for fixed-line and mobile
  operators, ISPs and multinational corporations
  (MNCs)
• Wholly owned subsidiary of Telecom Italia created
  in 2003 with the objective of developing the
  international wholesale and MNCs business and of
  supporting TI Group business units for the
  provisioning of international Services

Company Data
(M)
2004
2005
2006
1H07
Revenues
1,801
2,044
2,296
1,004
277
307
147
EBITDA
214
14
margin
13
15
12
EBIT
189
214
104
128
(Minutes Bn)
Voice traffic
12.9
13.7
13,7
7,8
(Gbps)
IP/Data traffic
488
824
955
158
( Circuits)
2.248
MNCs
2.810
3.020
1.625
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OUR CREDENTIALS
OUR CREDENTIALS

• Wholesale Business Top 1 in Europe (Ovum), with
  300.000 Km fiber networks in 4 continents
• Wholesale Mobile Leader in signaling, roaming
  and hubbing services
• 475 GSM Roaming Agreements,
• 240 GPRS Roaming Agreements,
• 50 3G Roaming Agreements
• 150 CAMEL Roaming Agreements
• 165 SMS Interworking Agreements,
• 175 MMS Hub destinations,
• Signalling connectivity to 700 MNOs
• Wholesale Voice Top 1 in Europe (Ovum) and Top 3
  worldwide (Telegeography), 500 direct voice I/C
  (80 with MNOs)
• Wholesale IPData Seabone among the fastest IP
  backbone in the world and ranked TOP 10
  worldwide, 2 in Europe, 1 in the Mediterranean
  (Renesys)
• Multinational Customers services Top 1 in Italy
  (SIRMI) and emerging player in the global market

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Europe TI Sparkle positioning in the Market

• Alice - the leading European BB brand outside
  domestic market thanks to a European plug play
  integrated triple-play approach

Seabone is already the unique provider for the
fastest growing Broadband European community
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TI Sparkle Cross Border Network
Americas
Asia
Europe
Warsaw
Prague
Singapore
Chicago
Palo Alto
Ashburn
SMW-3, 4
Atlanta
Los Angeles
Dallas
Athens
Mediterranean
LIMA
12 new IP/MBW/MNCs PoPs in 2007
Il Cairo

• Optical fibre network with DWDM technology
• Integrated Architecture for Voice/IP/Multimedia
  services. Complete decommissioning of TDM
  switches achieved in Nov. 05
• Scalable POP architecture
• Automatic protection on fibre / equipment
• Surveillance and management 24h x7d basis
• 2 Network Operation Centres 2 Regional NOC

• 55.000 km/fibre Pan European Backbone
• 30.000 km Latin American Nautilus
• 8.000 km MEDiterranean Nautilus
• 3.500 km Italian Network
• 375.000 km submarines cables

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TIS Latin American Backbone

• MAC Cable System
• Cable length 10,000 km ring topology
• Capacity 16 lambda _at_ 10 Gbps

• SAC Cable System
• Cable length 20,000 km in a ring topology
• Capacity 1 fiber pair per ring, 32 lambda _at_ 10
  Gbps per fibre pair

• 2007 Achievements
• RFS additional 20 Gbit/s capacity
• Implementation of additional 60 Gbit/s started in
  June 07
• Implementation of core/edge architecture for the
  S. Paolo, Buenos Aires, Santiago del Chile PoPs

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TI Sparkle market positioning

• TOP 2 in Europe and TOP 4 for worldwide traffic
  collected on a pure international wholesale basis
  (home market excluded) - Telegeography

• Seabone ranked TOP1 in the Mediterranean, TOP3
  in Europe, TOP 14 worldwide Renesys (Sept 2007)

• Leading positioning on Signaling, Roaming and
  Hubbing solutions (450 GSM Roaming Agreements,
  Signaling to 600 MNOs)

• TOP 1 in Italy (SIRMI) and emerging player on
  global market. Business launched in 2003. Key
  customers Shell, AFP, EU Central Banks

• Focus on strategic regions, leveraging on wide TI
  Group know-how and skills

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New Players, New Services, New Products

• The retailers set the pace for the wholesalers
• The new players and products come from the
  outskirts of the telecommunications market
• Entertainment (music, TV and film contents)
• Consumer electronics
• Telecom Italia as a leading TLC operator is
  constantly looking for new areas of growth
  developing products to integrate in its offer the
  latest market demands
• Telecom Italias retail cutting-edge product
  development define TI Sparkle wholesale product
  challenges.
• Sparkle, as the wholly owned subsidiary of
  Telecom Italia with the objective of developing
  TI Groups international business, has the
  challenge to develop a product mix to extend the
  services abroad

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New Players, New Services, New products New
Customer Needs

• The evolution of the user profile

Phone alternative use

• Growth of VAS Mobile drived by Person to Person
  applications (SMS-MMS)
• Use of non TLS applications on the mobile
  terminal (Radio, Photo, MP3 player)

• Growth of broadband penetration pushed by all
  over IP services
• VoIP Only Players(Skype-like) and Web content
  players (Google Talk, ) not only in consumer but
  also in corporate market (security and equiment
  cost barriers are already broken)
• The video component appears and it will transform
  the TLC operator in a Content aggregator sooner
  or later. Not to substitute the content providers
  but to facilitate the distribution of the
  contents through all possible channels.
• Gaming and on-line music growth thanks to the
  change from off-line media devices to
  broadband-enabled media devices.

Internet Use enrichment
In this context the customer is more sensible to
easyness of use, interoperability and QoS
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New Players, New Services, New products New
Scenario

• Fixed and Mobile Netwoek operators are already
  looking for new opportunities to grow outside the
  traditional TLC services
• IPTV, Entertainment, Film, Concerts, and also ITC
  applications for Small Medium Corps.
• The barriers between the differnt TLC networks
  have dissapear thanks to solutions using high
  integration technologies.
• Migration of voice and data from traditional
  networks to a unique IP network layer.
• Introduction of FixedWirelesstechnologies (
  WiFi, WiMax, WiBro)
• Evolution towards service platforms base on
  homogeneous standards (IMS)
• Consolidation of TLC terminals with consumer
  electronics functionalities (photo, music, TV)

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Evolution of Mobile and Fixed Network Retail
Offers

• Evolution of Fixed Network Offer
• Triple Play, the digital convergence of voice,
  data and TV
• Broadband IPTV
• Evolution of ADSL to ADSL2, speeds up web
  surfing with downlinks up to 20Mbps plus a
  enhanced quality for IPTV.
• TI launched IPTV service Alice Home TV (two
  years ago - december 2005) , now works on adding
  more contents every day not only live contents
  (concertss, realityshows) but also TV Channels
  (Cinema channles and public broadcasters)
• Mobility also at home
• TI already offers the possibility to move in a
  broadband wired and wireless multiterminal
  environment
• Alice Home TV gives access to voice data
  networks and also to contents and VAS services

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Evolution of Movile and Fixed Network Retail
Offers

• Innovation, Segmentation and Community
• The offers suffers more and more segmentation by
  groups of customers
• At the same time within each segment new
  community services are created
• The commercial offers also leverage on pakaging
  the terminals to be used indoors and outdoors
  that will soon be substitued by UMA cellular
  terminals
• Broadband access and TV on Mobile Terminals
• WiBro (Wireless Broadcasting ) technology aims to
  wide range wireless access (its an alternative
  for. Wi-Max)
• Born in South Corea as a standard for Samsung.
• Succesfully tested for the first time by TI at
  Torino 2006 Winter Olympic Games.
• Its main difference with Wi-Max is the need of a
  licence but is a technological advantage to
  assure QoS (facilitates EMI control)
• Interference is the main problem for Wi-Fi and
  could be also for Wi-Max.
• In May 2006 TI launched the commercial offer of
  DVBH(Digital Video Broadcasting Handled)
• Also tested in Torino 2006 Winter Games, DVBH
  enables TV-watching on mobile phones
• It will also commercially available bundled with
  IPTV offers as Alice Home TV and Rosso Alice

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The New Drivers The Post Convergence

• Evolution of the fixed offerings
• Broadband and IPTV
• Telecom Italia launched Triple-Play Services on
  December 2005 (Alice Home TV)
• TV Set Top Boxes
• Fixed Full IP videotelephones
• Evolution of the mobile offerings
• Innovation, market segmentation and community
  targeted
• Broadband Wi-Bro, Wi-Max, Wi-Fi (with Dual
  Smartphones GSM-WiFi)
• Mobile TV DVBH, Wi-Fi Videophones
• New Fix-Mobile convergent services
• Mobile calls originated on selected sited with
  fixed tariffs
• Fixed-Mobile Videocalls (fixed videophones adn
  UMTS)
• Bi-Pack fixed and mobile phone bundle

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NEW CHALLENGES DELIVER THESE NEW SERVICES ABROAD

• FACT we are living in a Post-Convergence market
• New players enter the market to offer new
  services from the TLC market outskirts
• Traditional networks and services have already
  converged
• Convergent services are already in evolution
• Domestic operators need to extend their offers
  abroad as their customers demands ubiquitous
  services
• CONSEQUENCE International Wholesale Service
  Providers roles redefinition
• The new challenge is to develop a wholesale
  product set to extend these new services abroad
• TI Sparkle is prepared to follow this trends
  with its new service portfolio

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TI SPARKLE ANSWER A GLOBAL PORTFOLIO FOR
OPERATORS AND CORPORATES NEEDS

• Global termination
• Wholesale VOIP
• Prepaid cards
• Premium Services

Voice

• Global IP connectivity
• Managed Bandwidth on bilateral and proprietary
  networks
• SeaMeWe4 and Palermo Gateway
• Restoration and Protected Solutions
• Innovative security services

Consulting
Data IP

• Network, NGN, Technology
• Marketing VAS
• Management Organization

Mobile

• Voice
• Signaling, GRX
• MMS, SMS Hubbing
• Mobile VAS
• Roaming Enhanced Services

Corporate

• Managed Bandwidth, Frame Relay
• MPLS IP-VPN
• VOIP, Internet access and Multimedia
• Mobility solutions
• ICT vertical solutions
• B-end access solutions

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TI Sparkle The Post Convergence Intl. Wholesale
Carrier
Voice Wholesale
Integr. Multimedia Services for MNcs
IP Bandwidth Wholesale
Mobile Wholesale
2007 Product launch
2007 Product launch
2007 Product launch
provided by an IP based integrated multiservices
network which guarantees the requested QoS level
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Next Challenge The Virtual Home Environment

• Increase mobility of users
• Every service needs a roaming feature or an
  extension abroad
• The market is already asking not only to use
  abroad the same services but also begins to ask
  for the same QoS and same price as home
• The International Operators will need to develop
  its portfolio to provide its customers a virtual
  home environment, wherever the customers are.
• TI Sparkle is ready.