CO-INVESTMENT AGREEMENT

This agreement (the Co-investment Agreement) is entered into on 28 April, 2007

BY AND BETWEEN

              TELEFONICA S.A., a Spanish company with registered office at 28013, Madrid, Gran Via n. 28, Spain  (TE);

                  ASSICURAZIONI GENERALI S.p.A., an Italian company with registered office at Piazza Duca degli Abruzzi n. 2, Trieste, Italy (AG);

                  SINTONIA S.A., a Luxembourg company with registered office at 1, Place dArmes, L-1136 Luxembourg (SI);

                  INTESA SANPAOLO S.p.A., an Italian company with registered office at Piazza San Carlo n. 156, Torino, Italy (IS);

                  MEDIOBANCA S.p.A., an Italian company with registered office at Piazzetta Cuccia n. 1, Milano, Italy (MB);

(collectively the Parties and each, individually, a Party)

WHEREAS

1.             With the execution of this Co-investment Agreement the Parties wish to establish the terms and conditions for (i) their participation into Centotrenta 4/6 S.r.l., an Italian company with registered office at Galleria del Corso 2, Milan, Italy, fiscal code n. 05277610969 to be subsequently transformed and renamed Telco S.p.A., an Italian joint stock corporation (Telco or Newco), and (ii) the presentation by the Parties, also on behalf of Newco, of an offer (the Offer) for the acquisition by Newco from Pirelli & C. S.p.A. (PC) and Sintonia S.p.A. and Sintonia S.A. (together Sintonia) (the Acquisition) of 100% of the share capital of a holding company named Olimpia S.p.A. (O and such shares, the Olimpia Shares), which in turn holds a stake of 17.99% of the ordinary share capital of Telecom Italia S.p.A. (TI).

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2.             AG and MB are already shareholders of TI in which they respectively hold (i) as regards AG, approximately No. 543,40 million ordinary shares equal to 4.06% of TIs ordinary share capital; and (ii) as regards MB, approximately No. 206,46 million ordinary shares equal to 1.54% of TIs ordinary share capital.

3.             On 18 October 2006, AG and MB executed together with PC, SI and O a shareholders agreement (the Current Shareholders Agreement), attached hereto as Annex A, which, upon the sale by PC and SI of the Olimpia Shares shall cease to have any effect.

4.             Therefore, subject to PC and SI deciding to accept the Offer, the Parties wish to fund and to manage Newco in accordance with the terms and conditions of this Co-investment Agreement, the Shareholders Agreement (as defined below) and relevant attachments.

5.             A fundamental assumption of this Co-investment Agreement is that the TI and TE groups will be managed autonomously and independently, without prejudice however to the Parties rights and prerogatives resulting from this Co-investment Agreement and the Shareholders Agreement.

Now, therefore, in consideration of the foregoing, the Parties hereby,

AGREE AND COVENANT

as follows.

1.             Telco

The Parties acknowledge and agree that (i) Newco is currently a dormant company named Centrotrenta 4/6 S.r.l., having the by-laws attached hereto as Annex B, (ii) the Parties will acquire the entire share capital of Newco currently equal to Euro 10.000,00 , (iii) Newco, which is currently incorporated in the form of a societ a responsabilit limitata, shall be transformed into a societ per azioni, (iv) Newco shall adopt the new by-laws attached hereto as Annex C (the Newcos By-Laws), which, to the maximum possible extent, contains the principles of governance of Newco, while the remaining agreements among the shareholders as to the governance of Newco and O (which it has

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not been possible to insert in the Newcos By-Laws) are contained in the shareholders agreement attached as Annex D to this Co-Investment Agreement (the Shareholders Agreement).

2.             Offer

The Parties agree that the Offer shall be submitted to PC and Sintonia in the text attached hereto as Annex E.

The Parties hereby agree that (a) if the acceptance of the Offer by PC and Sintonia (the Acceptance) were not received by the Parties within the relevant acceptance period indicated in the Offer, or (b) one or more of the Parties competent corporate body were not to approve the Acquisition within the 20 Business Days period indicated in the Offer, unless the other Parties agree to proceed with the Acquisition and they agree to the adjustments to be done in the relevant documents, or (c) one or more of the necessary anti-trust or other regulatory approvals indicated in the Offer were not obtained as indicated in the Offer, then the Parties would carry out and hereby undertake to do so all the activities necessary and required to unwind the actions and transactions already executed or put in place on the basis of this Co-investment Agreement.

The Parties agree that as soon as practicable following receipt of the Acceptance, they shall complete the acquisition of Newco and shall cause the adoption of the Newcos resolutions to implement the undertaking of this Co-investment Agreement and the connected Shareholders Agreements.

3.             Funding and capitalisation of Newco

The Parties agree that, in order to carry out the acquisition of the Olimpia Shares, Newco shall be  funded as provided for in this Article 3 (and numerically illustrated in the chart attached hereto as Annex F), it being however hereby agreed and understood (xx) that the following calculations are based on the assumption that each share of Newco will have par value of Euro 1.00, (yy) that, in the event the par value of each of the Newcos share were increased or reduced, the split indicated herein between

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nominal value and share premium shall vary accordingly and (zz) that the price to be paid for the Acquisition corresponds to the price indicated in the Offer, with the consequence that, in case such a price were increased or reduced in accordance with the terms and conditions of the Offer, the following calculations shall be amended accordingly.

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