Pirelli Broadband Access

The highlights for the year ended December 31, 2008 can be summarized as follows:

(in millions of euro)

12/31/2008

12/31/2007

Net sales

124.6

112.5

Gross operating profit

4.8

1.9

Operating profit

3.9

0.9

Earnings (losses) from investments

-

-

Operating profit incl. earnings from investments

3.9

0.9

Financial income (expenses)

(2.6)

(3.5)

Income taxes

0.7

-

Income (loss)

2.0

(2.6)

Net financial (liquidity)/debt position

(15.0)

21.5

Headcount (number at year-end)

113

94

NET SALES

Net sales in 2008 amount to Euros 124.6 million, an increase of 10.8 percent compared to Euros 112.5 million in 2007. The total change from 2007 is due to a better product mix in broadband access and IPTV and the growth in volumes which offset the erosion of prices recorded in both markets.

OPERATING PROFIT

Operating profit is Euros 3.9 million compared basically to a breakeven in 2007. The change is due for the most part to the growth of revenues and the relative margins.

NET RESULT

The net result is income of Euros 2.0 million after financial expenses of Euros 2.6 million, compared to a loss of Euros 2.6 million in the prior year.

NET FINANCIAL POSITION

The net financial position is a net liquidity position of Euros 15.0 million compared to a net debt position of Euros 21.5 million in 2007. The improvement reflects the transfer of the investment held in Alcatel Submarine Networks S.A. for Euros 44.8 million to Pirelli & C. S.p.A.

HEADCOUNT

At December 31, 2008, there are 113 employees, an increase of 19 compared to December 31, 2007, concentrated in the R&D and Commercial functions.