Deutsche Bank Access Italy Conference - Marco Patuano presentation (17/05/2012)
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Deutsche Bank Access Italy Conference - Marco Patuano presentation (17/05/2012)

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Deutsche Bank Access Italy Conference - Marco Patuano presentation (17/05/2012)

Deutsche Bank Access Italy Conference - Marco Patuano presentation (17/05/2012)

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    Deutsche Bank Access Italy Conference - Marco Patuano presentation (17/05/2012) Deutsche Bank Access Italy Conference - Marco Patuano presentation (17/05/2012) Presentation Transcript

    • TELECOM ITALIA GROUP Telecom Italia Update Deutsche Bank Access Italy Conference Thursday, 17 May 2012, London MARCO PATUANO – Chief Operating Officer
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonSafe HarbourThese presentations contain statements that constitute forward-looking statements within the meaning ofthe Private Securities Litigation Reform Act of 1995. These statements appear in a number of places inthis presentation and include statements regarding the intent, belief or current expectations of thecustomer base, estimates regarding future growth in the different business lines and the global business,market share, financial results and other aspects of the activities and situation relating to the Companyand the Group.Such forward looking statements are not guarantees of future performance and involve risks anduncertainties, and actual results may differ materially from those projected or implied in the forwardlooking statements as a result of various factors. Consequently, Telecom Italia S.p.A. makes norepresentation, whether expressed or implied, as to the conformity of the actual results with thoseprojected in the forward looking statement.Forward-looking information is based on certain key assumptions which we believe to be reasonable as ofthe date hereof, but forward looking information by its nature involves risks and uncertainties, which areoutside our control, and could significantly affect expected results.Analysts are cautioned not to place undue reliance on those forward looking statements, which speak onlyas of the date of this presentation. Telecom Italia S.p.A. undertakes no obligation to release publicly theresults of any revisions to these forward looking statements which may be made to reflect events andcircumstances after the date of this presentation, including, without limitation, changes in Telecom ItaliaS.p.A. business or acquisition strategy or planned capital expenditures or to reflect the occurrence ofunanticipated events. Analysts and investors are encouraged to consult the Companys Annual Report onForm 20-F as well as periodic filings made on Form 6-K, which are on file with the United States Securitiesand Exchange Commission. MARCO PATUANO 1
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonAgenda Group Overview Domestic 1Q12 Progress Report Fixed Business Mobile Business Focus on Ultra Broadband EBITDA Generation and Cost Efficiency Progress MARCO PATUANO 2
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonTI Group Key ResultsEuro mln, Organic data, % Revenues EBITDA % on 42.0% 40.1% Revenues -1.9 p.p. +373 M€ 7,392 2,951 +15 M€ 2,966 7,019 +5.3% +0.5% 1Q11 1Q12 1Q11 1Q12 Revenues Trend YoY EBITDA-CAPEX % on 29.3% -2.1 p.p. Revenues 27.2% 5.3% 5.0% -43 M€ 3.7% 2,055 -2.1% 2,012 2.1% -0,2% 1Q11 2Q11 3Q11 4Q11 1Q12 1Q11 1Q12 MARCO PATUANO 3
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonTI Group Key Results by Core MarketsEuro mln, Organic Data Weight on TI Group TI Group Domestic Brazil Argentina 1Q12 Δ% yoy 1Q12 Δ% yoy 1Q12 Δ% yoy 1Q12 Δ% yoyRevenues 7,392 +5.3% 4,486 -2.4% 1,928 +19.1% 901 +24.0% 60.4% 26.0% 12.2% 38.2%EBITDA 2,966 +0.5% 2,196 -3.4% 505 +13.5% 289 +16.6% 74.0% 17.0% 9.7% 26.7%EBITDA-CAPEX 2,012 -2.1% 1,607 -0.2% 271 -14.6% 168 +5.1 % ~80% ~14% ~8% MARCO PATUANO 4
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonDebt Reduction Progressing as per Planned SequenceEuro mln, Reported Data 30,414 (626) 7 89 30,312 (10) 438 EBITDA (2,963) CAPEX +954 Δ WC & Others +1,383 Operating FCF (626) (102) 2011YE Operating FCF Disposals Cash Financial Expenses/ Financial Cash Taxes/Other 1Q12 Adjusted Financial Accruals Investments Impacts Adjusted 2010YE (846) 1Q11 31,468 (1,076) (377) +439 +156 +12 30,622 Δ vs. 11 +450 +367 (1) (149) +77 MARCO PATUANO 5
    • TELECOM ITALIA GROUP Deutsche Bank Access Italy Conference Thursday, 17 May 2012, London Free Cash Flow Generation: in line with Targets Operating Free Cash Flow Guidance OFCF FY12EEuro mln, Reported Data Euro bln FY2011 1Q12 FY2012E +319 7,392 StableRevenues 7,073 TI Group 7.0* 0.6 ~7.0* 4,144 4,429 Opex -285 Breakdown Domestic 5.8* 1.2 Capex 901 -53 954 Δ WC 952 - 431 1,383 OFCF 1,076 - 450 626 Brazil 0.7 1Q11 1Q12 -0.5 Brazil: - 0.3bln € (capex acceleration for network upgrades and increased cashout from TLC fees) Argentina Domestic: - 0.1bln € (increased VAT payment) 0.6 0.05 Argentina: stable TI Media: -0.04bln € * Excluding spectrum acquisitions MARCO PATUANO 6
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonTelecom Italia Group – FY 2012 and 2012-14 Plan Key Guidance Organic Data* TI Group – FY 2012 Key Guidance Revenues Stable Ebitda Broadly Stable NFP Adj.** ∼ 27.5 € bln Organic Data* TI Group – 2012-14 Plan Key Guidance ** Ebitda-Capex >22 € bln cum ’12-’14 Capex >15 € bln cum ’12-’14 FY 2012: ∼ 27.5 € bln NFP Adj. FY 2013: ∼ 25 € bln 2012-’14 From FY 2014: < 2x Net Debt/Ebitda*** *exchange rates 2011 (R$/€ 2.33; ARS/€5.74), excluding impact from non-organic items ** excluding Latam spectrum licences *** reported figure MARCO PATUANO 7
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonAgenda Group Overview Domestic 1Q12 Progress Report Fixed Business Mobile Business Focus on Ultra Broadband EBITDA Generation and Cost Efficiency Progress MARCO PATUANO 8
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonDomestic Results: Trend still improvingEuro mln, Organic data, % Total Domestic Revenues Domestic Service Revenues -109 M€ 4,595 -2.4% 4,486 Mobile -1.7% Wireline -2.9% EBITDA EBITDA-Capex % on 49.5% -0.5 p.p. 49.0% -4 M€ Revenues 1,611 -0.2% 1,607 2,274 -78 M€ -3.4% 2,196 % on 35.1% +0.7 p.p. 35.8% Revenues MARCO PATUANO 9
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonAgenda Group Overview Domestic 1Q12 Progress Report Fixed Business Mobile Business Focus on Ultra Broadband EBITDA Generation and Cost Efficiency Progress MARCO PATUANO 10
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonDomestic Fixed: Revenue DynamicsEuro mln, Organic Data, % Total Fixed Revenues Fixed Revenues Trend – YoY % change 3,330 -2.9% Total 3,235 Equipment Services Wholesale Revenues Trend – YoY % change Retail Service Revenues Trend – YoY % change Domestic Sparkle Group* Tariff simplification process begins *Gross of Elim. & Adj. MARCO PATUANO 11
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonDomestic Fixed: TI Access Performance Telecom Italia Access TI Line Losses -150k 22,098 21,712 21,562 Reduction Wholesale Wholesale 1Q11 -25k 4Q11 -77k 1Q12 -150k TI Retail TI Retail M/S 67.7% 66.6% 66.2% Stable on total Mrk Voice ARPU – YoY % change Highlights Access Market reduction as result of stable TI’s line losses and decreasing OLO’s net adds TI’s access market share above 66% Line erosion driven by In Consumer, disconnections in second homes (low potential, voice only) In Business Segment, multi-line contracts rationalization and increasing number of Companies exiting the market MARCO PATUANO 12
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonDomestic Fixed: Focus on Broadband TI Retail Broadband Accesses Broadband Retail ARPU ‘000 Total Euro/month/line Markets 13,248 13,394 13,485 +0.3% TI retail accesses 7,194 7,125 7,092 -0.6% Flat (%) 87% 87% 88% M/S 54.3% 53.2% 52.6% BB Service Revenues Highlights% YoY Confirming the right direction in TI’s Value Strategy: Continued positive BB Service Revenues trend QoQ ARPU increase +1.0 p.p. of Flat offers on TI’s BB Customer Base Increasing BB penetration (+1.5 p.p.) on fixed CB, confirming the low value of TI’s line losses MARCO PATUANO 13
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonAgenda Group Overview Domestic 1Q12 Progress Report Fixed Business Mobile Business Focus on Ultra Broadband EBITDA Generation and Cost Efficiency Progress MARCO PATUANO 14
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonMobile Revenues: 1Q12 Results at a GlanceEuro mln, Organic Data Total Mobile Revenues Mobile Handsets Revenues Trend – YoY % change Normalized (*) ~-2.5% -29 Total Mobile 1,679 -1.7% 1,650 Handset revenues +71.1% Mobile Service Revenues Trend – YoY % change Service -3.7% revenues Normalized (*) ~-4.5%(*) Leap year MARCO PATUANO 15
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonDomestic Mobile: Customer Base TrendEuro mln, Organic Data Total SIM cards Net Adds ‘000 ‘000 X5 +1,290 Balance MPN 2012 Highlights Sound customer base growth in spite of weak seasonality Progressive improvement in MNP balance, and lower promo agressivness Best in class churn rate supported by CRM focus MARCO PATUANO 16
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonDomestic Mobile – Defending Value of our Customer Base More Value from Options – Consumer Segment Consumer Calling ARPU Avg Δ ARPU Ex-ante/Ex-post Business 14% 12% Spontaneous migration by clients Received - from pay-as-you-go profile Lower exposure to to bundle and options MTR cuts + CRM activity on existing CB Progressive Business 86% improvement on 88% Generated quarterly basis + Positive blended impact Options benefit Consumer Churn Business Generated Consumer Revenues % YoY -8 p.p. MARCO PATUANO 17
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonDomestic Mobile – Focus on Mobile VAS Consumer VAS Consumer Revenues Trend Successful strategy pushing on bundle offers aiming at messaging revenues protection and CB fidelization: % YoY Messaging Volumes: +25% YoY CB with Messaging Bundle Offers: +44% YoY Messaging Revenues – YoY % change 2011 Marketing strategy focused on bundling data & SMS to avoid Messaging - MBB Users cannibalization +32% 1Q11 1Q12 Continued solid growth in active VAS users and browsing revenues Browsing ++ Browsing Revenues +7.3% underpinning Mobile recovery trend +21% 1Q11 1Q12 Content ≈ Small Screen Large Screen ~70% of Smartphone Leadership confirmed on Handsets sold on dongle: M/S ~38% 2012 Solid ARPU increase: Double digit growth in +9.4% YoY users (+11.5% YoY) MARCO PATUANO 18
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonAgenda Group Overview Domestic 1Q12 Progress Report Fixed Business Mobile Business Focus on Ultra Broadband EBITDA Generation and Cost Efficiency Progress MARCO PATUANO 19
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonUltra Broadband in Motion Fixed Mobile 42 Mbps coverage FTTC (covering 30 main cities) and in progress in 50 FTTH (in Milan) Retail commercial cities launch expected in 4Q Reference Offer for wholesale NGAN Access Services submitted Ongoing Trials to Agcom in March, final approval extended to Turin, expected by September Milan, Rome and Naples Maintaining a fixed & mobile coordinated approach MARCO PATUANO 20
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonAgenda Group Overview Domestic 1Q12 Progress Report Fixed Business Mobile Business Focus on Ultra Broadband EBITDA Generation and Cost Efficiency Progress MARCO PATUANO 21
    • TELECOM ITALIA GROUPDeutsche Bank Access Italy ConferenceThursday, 17 May 2012, LondonFocus on 1Q12 Domestic EBITDAEuro mln, Organic Data, % 1 2 3 4 -78M€, -3,4% 1 3 •Robust growth on Mobile Gross Adds managed •ITZ Wholesale: -36M€ due to gross Voice through Acquisition Costs Control revenues increase •Efficiency program on Fixed Commercial Costs •Retail: +59M€ reflecting MTR cut impact turned into yoy positive contribution to margins 2 4 Personnel Cost reduction from lay-off program Push on Mobile Smartphone with limited (-3% yoy) offsets the negative impact from impact on SAC/Subsidy market prices increase in energy and real estate*** Industrial + Personnel + G&A = Fixed Opex ** Energy unitary price (including taxation) and inflation adj (ISTAT), IMU on Real Estate MARCO PATUANO 22
    • TELECOM ITALIA GROUP Deutsche Bank Access Italy Conference Thursday, 17 May 2012, London Progress on Domestic Efficiency PlanEuro mln, Organic Data, % Cash Cost Delta Cash Cost 1Q12 vs 1Q11 Target FY : -0,5 Bn Δ Abs 2.984 -23 +52 -134 1Q12 ’12 vs ‘11 2.879 Total Opex* 2.290 -31 ITX 556 -23 - 105 Handset 165 +6 Efficiency Mktg & 1Q11 Intercon- Volume Efficiency 1Q 12 Comm. 442 - 29 nection Driven 134 Industrial 250 +18 Cash Cost on Revenues % Fixed Opex Personnel 757 -20 +15 G&A & 1Q12 Opex Capex 64.9% Other ** 120 +17 % on FY Target ~30% ~25% ~35% - 0.7 p.p. 64.2% Total 589 -74 Capex 1Q11 1Q12 Total -105 Cash Cost 2.879 * Costs related to credit management are reclassified from G&A & Other to Mktg & Sales **Includes Other Operating cost/Income and Capitalized Costs MARCO PATUANO 23