This document has been translated into English for …

1 This document has been translated into English for the convenience of the readers. In the event of discrepancy, the Italian language version prevails. Dear Shareholders,2017 was a watershed year for TIM. It was a year which saw the election of a new Board, a new Executive Chairman and a new CEO. It was a year during which our focus turned from recovery to growth and the foundations were laid for the DigiTIM strategy, which was unveiled in March 2018 alongside the 2017 economic climate was certainly easier. Having put the difficult years of severe economic crisis behind it, Italy gained ground. GDP grew , over the year, and although growth still lags behind Europe overall (where GDP growth averaged ), Italy s key economic indicators allow us to look to the future with confidence.

2 Growth in investment is accelerating ( ), domestic consumption has grown , and the unemployment rate fell slightly, to around We are still far from the solidity of 2007, but the recovery is now Brazil too, the country s economy changed direction decisively in 2017. After the deep economic, political and social upheaval experienced in 2016, GDP last year was up an encouraging , and is expected to grow further during 2018. But 2017 was above all an extraordinary year for TIM, a record one on many to the positive performance of all its business units, revenues reached billion euros, up on 2016 in organic terms, and Ebitda grew to billion euros excluding non-recurring charges. In comparison to both our domestic competitors and our European peer group, our top and bottom line growth rates were the best in the market, with further acceleration seen in the fourth quarter.

3 The adjusted net financial debt of the group at the year-end was billion euros (compared to billion euros at the end of 2016), with a 920 million euro reduction in the fourth quarter. As a result our net debt to Ebitda ratio came down again, with further progress expected in 2018. We have also accelerated our investments, at billion euros, billion of which were in the domestic market, to equip the country with the faster network infrastructure and more advanced platforms needed to enable everyone s digital future. Our efforts have meant that the level of fixed ultrabroadband coverage has increased from 60% to 77% of the population, while TIM s 4G network now reaches over 98% of Brasil also recorded a really solid performance, with Ebitda growth of (net of exchange differences), and ARPU higher.

4 In addition, Sparkle stabilised its revenues and INWIT confirmed its positive performance and its steady growth in Financial Reportas at December 31, 2017 Letter to ShareholdersIdal 38%al62%di utentia banda largadall 8%al 14%di utenti a bandaultra-largaThese and many other indicators are evidence of the progress TIM has made in its management and { G njNJNj ) develop plans for the next stage of our evolution and growth, giving life to a new TIM: more innovative, more digital, more 2018-2020 strategic plan that we presented is the culmination of this. It is a plan that can radically reposition TIM, transforming it into DigiTIM.}

5 It is based on a vision of our industry s future which rightly acknowledges the threats we face from global technology and media giants, but which is also { compete while balancing the interests of all TIM s stakeholders. A company which will be both an Italian champion and a European telco by the leadership of the TIM network ) ) relationship between the company and its customers will be transformed, becoming a true digital journey, personalised and multichannel. Thanks to the use of big data and advanced analytics we will be { excellence, transparency and simplicity Growth from 238th to 178th positionin the Brand Finance Global rankingin the Brand Finance Global ranking1 j1G was also given the accolade of the most successful Italian brand among the top 500 companies in the world, with an NJ place rise in the Brand Finance Global 2018, which ranks the 500 most valuable brands in the Financial Reportas at December 31.}}

6 2017 Letter to ShareholdersIIDigiTIM pillarsBest in class customer digital engagement throughagilecustomer journey redesignLeadership positioning by sustainingpremium customer base andcapturing new growth opportunities in andoutside the coreAcceleration of cash-flow generationto strengthenbalance sheet and increase total shareholder returnAgile organization, performance based and data driven cultureFor the Consumer market, we will be focussing on fibre and on converging offers: fixed and mobile telephony and content (films, TV series, videos, music, games) - much of which will be original and exclusive, through partnerships with the biggest national and international players. In the Business market, we expect revenue from ICT and cloud services to drive growth along, with significant increases in fibre customers.

7 From Brazil we expect another three exceptional years. We will be moving more and more from pre to post-paid service, and TIM Brasil will become a premium brand through the quality of its network and service will be a fundamental lever for the whole plan. We recently signed agreements with the major technology players to accelerate the availability of 5G, a real game-changer which will project mobile telephony into the new digital era, and the Internet of Things, which is increasingly referred to as the Intelligence of Things, emphasising its application potential. We will be focussing on Robotics and Artificial Intelligence, play a leading role in Industry and facilitate the DigiTIM transformation process, the company organisation will become slimmer, more agile and flexible, and strongly results-oriented.

8 A new business culture is evolving, with more dynamic and simple process management across all business units. And to ensure that we achieve the aims of the strategic plan, we have created a dedicated Transformation the development of the DigiTIM plan, the second half of the year saw us begin the exploratory phases of the project to achieve the voluntary separation of the fixed access network. This is a historic step for TIM that will create the most advanced network separation model in Europe. We are convinced that this project will encourage the regulatory framework to evolve, with simpler and more predictable rules, permitting fairer competition and creating value for all stakeholders in the was an intense year that produced extraordinary operating results, of which we are proud of, and which are the fruit of the tenacious work and tireless commitment of the management team and of all TIM s are facing the future with confidence and optimism, firmly convinced that our bold and ambitious strategy will allow us to build on the strength of these operating results and to be even more competitive.

9 We still have a lot of work to do, but we are confident that we have mapped out a clear and credible path to maximize value de PuyfontaineAmos GenishAnnual Financial Reportas at December 31, 2017 Letter to ShareholdersIII2017 AnnualReportCONTENTS REPORT ON OPERATIONS TIM Group _____ 4 Key Operating and Financial Data - TIM Group_____ 9 Financial and Operating Highlights of the Business Units of the TIM Group_____ 23 Main Commercial Developments _____ 35 Main changes in the regulatory framework_____ 38 Competition _____ 43 Consolidated Financial Position and Cash Flows Performance _____ 46 Consolidated Financial Statements TIM Group _____ 54 Social and environmental impact of operations and their economic aspects _____ 62 Research and development _____ 67 Consolidated non-financial statement _____ 72 Events subsequent to December 31.

10 2017 _____ 73 Business Outlook for the Year 2018 _____ 73 Main risks and uncertainties _____ 74 Information for Investors _____ 77 Related party transactions and direction and coordination activity _____ 80 Alternative Performance Measures _____ 82 TIM 85 Review of Key Operating and Financial Data - TIM _____ 85 Financial Statements TIM _____ 97 Reconciliation of Consolidated Equity _____ 103 Corporate Boards at December 31, 2017 _____ 104 Macro-Organization Chart at December 31, 2017 _____ 106 TIM GROUP CONSOLIDATED FINANCIAL STATEMENTS _____ 108 Contents _____ 111 Consolidated Statements of Financial Position _____ 112 Separate Consolidated Income Statements _____ 114 Consolidated Statements of Comprehensive Income _____ 115 Consolidated Statements of Changes in Equity _____ 116 Consolidated Statements of Cash Flows _____ 117 Notes to the Consolidated Financial Statements _____ 119 Certification of the Consolidated Financial Statements pursuant to Article 81-ter of the Consob Regulation 11971 dated May 14, 1999.