TELECOM ITALIA GROUPTelecom Italia GroupInvestor Meetings – Paris, July 3-4 2012Franco Bernabè – Chairman and Group CEO   ...
TELECOM ITALIA GROUPSafe HarbourThese presentations contain statements that constitute forward-looking statements within t...
TELECOM ITALIA GROUPAgenda                  Telecom Italia Group Overview                  1Q12 Results                  F...
TELECOM ITALIA GROUP     FY2011 Group Key Figures       Weight in TI         Group                                 Euro ml...
TELECOM ITALIA GROUPTopline Breakdown Across Core Markets                                                      Domestic € ...
TELECOM ITALIA GROUP      TI’s Domestic Market: the Growing Importance of Innovation               Domestic Retail Revenue...
TELECOM ITALIA GROUP2012-14 – TI Strategic Priorities                       Italy – Proactively Manage                    ...
TELECOM ITALIA GROUPTelecom Italia Group – FY 2012 and 2012-14 Plan Key Guidance                       Organic Data*      ...
TELECOM ITALIA GROUPAgenda                  Telecom Italia Group Overview                  1Q12 Results                  F...
TELECOM ITALIA GROUPTI Group Key ResultsEuro mln, Organic data, %                                Revenues                 ...
TELECOM ITALIA GROUPDomestic Results: Trend still improvingEuro mln, Organic data, %                    Total Domestic Rev...
TELECOM ITALIA GROUPMobile Revenues: 1Q12 Results at a GlanceEuro mln, Organic Data                         Total Mobile R...
TELECOM ITALIA GROUPDomestic Mobile – Surfing the Data Wave          Increasing Smartphone Penetration in All Segments    ...
TELECOM ITALIA GROUP   LatAm: Revenues and EBITDA 1Q12 YoY Trend            Euro mln, Organic Data                        ...
TELECOM ITALIA GROUP     Market Leaders In Our Footprint                               (March 2012)                       ...
TELECOM ITALIA GROUPAgenda                  Telecom Italia Group Overview                  1Q12 Results                  F...
TELECOM ITALIA GROUP  UBB Networks allow TI to further tap growing BB demand:  Mobile BB is complementary to Fixed BB     ...
TELECOM ITALIA GROUP                                                                        2012-2014 PlanStrengthen the N...
TELECOM ITALIA GROUPTI’s Convergent Approach to Fixed and Mobile UBB                                     The Value of our ...
TELECOM ITALIA GROUPTI’s 2-step strategy on NGAN                   New Light                                              ...
TELECOM ITALIA GROUP   TI Fixed UBB Plan: 2012-2014 and beyond                2012 - 1H13                                 ...
TELECOM ITALIA GROUPAgenda                  Telecom Italia Group Overview                  1Q12 Results                  F...
TELECOM ITALIA GROUPRobust Liquidity Margin and Well-Distributed Debt Maturities  Euro mln                              Bo...
TELECOM ITALIA GROUP2011-2013 Deleverage Targets Confirmed   Cash Flow Generation (EBITDA- Capex)                         ...
TELECOM ITALIA GROUPAgenda                  Telecom Italia Group Overview                  1Q12 Results                  F...
TELECOM ITALIA GROUPSustainability at TI: Key Actions and ResultsTI is part of all main global and European sustainability...
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Investor Meetings - Paris - Franco Bernabe' presentation (July, 3 - 4 2012)

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Investor Meetings - Paris - Franco Bernabe' presentation (July, 3 - 4 2012)

  1. 1. TELECOM ITALIA GROUPTelecom Italia GroupInvestor Meetings – Paris, July 3-4 2012Franco Bernabè – Chairman and Group CEO 0
  2. 2. TELECOM ITALIA GROUPSafe 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. 1
  3. 3. TELECOM ITALIA GROUPAgenda Telecom Italia Group Overview 1Q12 Results Focus on UBB Financial Position and Group Targets Sustainability at TI 2
  4. 4. TELECOM ITALIA GROUP FY2011 Group Key Figures Weight in TI Group Euro mln, Organic Data TI Group Domestic Brazil Argentina FY 11 Δ% yoy FY 11 Δ% yoy FY 11 Δ% yoy FY 11 Δ% yoy 35% Revenues* 29,958 +2.7% 19,033 -4.8% 7,343 +18.2% 3,220 +26.5% EBITDA 12,339 Flat 9,351 -3.9% 1,998 +10.7% 1,035 +24.1% 25% EBITDA-CAPEX 7,467 -0.4% 6,374 -3.7% 708 +20.7% 479 +23.3 % 85% Cash Generation Engine of Growth for the Group for the Group* Revenues based on net contributions 3
  5. 5. TELECOM ITALIA GROUPTopline Breakdown Across Core Markets Domestic € Bn Retail Revenues by Technology € Bn Retail Revenues by Customer Segment 16.7 15.8 Mobile Consumer Fixed Business Top Clients Brazil ArgentinaR$ Bn Total Revenues by Technology AR$ Bn Total Revenues by Technology 17.1 18.5 16.5 0.2% TIM Fiber 14.6 5.5% Intelig Historical Mobile «pure mobile» positioning TIM Mobile Fixed 4
  6. 6. TELECOM ITALIA GROUP TI’s Domestic Market: the Growing Importance of Innovation Domestic Retail Revenues Fixed€bn €bn 16.7 • Broadband 15.8 Innovative • Web Contents • ICT (productsInnovative and services) Traditional MobileTraditional €bn • Mobile browsing (Large 7.4 & Small Screen) Innovative • Contents (premium services, donwloads, Traditional games, ringtones, Infotainment) 5
  7. 7. TELECOM ITALIA GROUP2012-14 – TI Strategic Priorities Italy – Proactively Manage for Cash Generation Complete the Deleverage Program Fully Exploit TI Enhance Brazil – Continue the Free Cash Flow Multi -Country Business Expansion Generation Businesses Sustainable Shareholders’ Argentina – Managing Remuneration Growth and Profitability 6
  8. 8. TELECOM ITALIA GROUPTelecom 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 7
  9. 9. TELECOM ITALIA GROUPAgenda Telecom Italia Group Overview 1Q12 Results Focus on UBB Financial Position and Group Targets Sustainability at TI 8
  10. 10. TELECOM ITALIA GROUPTI 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 9
  11. 11. TELECOM ITALIA GROUPDomestic 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 10
  12. 12. TELECOM ITALIA GROUPMobile 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 11
  13. 13. TELECOM ITALIA GROUPDomestic Mobile – Surfing the Data Wave Increasing Smartphone Penetration in All Segments Operating Systems on TIM ‘s Network - The Android Growth Innovation to the Smartphones increasingly Service-Driven Mass Market Bringing Data Bundle users and Renewal Rate +1,9X 87%penetration on Smartphone Penetration on Customer Base Renewal rate 79% smartphone Doubling CB Number of Data connections by Device (*) +~20% May 2012 Dealer Convention 2.2mln Further room for Of which >75% 1.9mln ~1,3 mln Smartphones growth Dec’11 Jan’12 Feb’12 Mar’12 Apr’12 * Peak of traffic on the average day of the second week of each month 12
  14. 14. TELECOM ITALIA GROUP LatAm: Revenues and EBITDA 1Q12 YoY Trend Euro mln, Organic Data Revenues EBITDA % on 27.5% -1.3p.p. 26.2% Revenues +309 M€ +19.1% 1,928 +60 M€ +13.5% 1,619 505 445 Brazil 1Q11 1Q12 1Q11 1Q12 34.1% -2.0 p.p. 32.1% +174 M€ +24.0% 901 +41 M€ +16.6% 727 289Argentina 248 1Q11 1Q12 1Q11 1Q12 13
  15. 15. TELECOM ITALIA GROUP Market Leaders In Our Footprint (March 2012) Domestic Brazil Argentina #1 position - 32.3 mln lines #2 position - 57.6 mln lines #2 position - 18.5 mln lines 34.9% 26.8% 33.6%Mobile #1 position - 14.46 mln accesses #2 position - 4.14 mln accesses Tim Brasil acquired Fixed relevant fiber infrastructure 66.2% 47% through the Intelig and AES purchases, to further profitably develop its mobile business. #1 position - 7.1 mln accesses AES now offers the opportunity #2 position - 1.56 mln accesses to enter the Fixed BB businessBroadband 52.7% 35% A Competitive and still Healthy Successful «Challenger « Customer base expansion Market where TI remains the strategy and leadership in across all segments, driven by Leading Operator growth . TIM re-gained the mobile rebranding of Personal second position during 2011. and the successful proposition of Arnet on broadband TV 14
  16. 16. TELECOM ITALIA GROUPAgenda Telecom Italia Group Overview 1Q12 Results Focus on UBB Financial Position and Group Targets Sustainability at TI 15
  17. 17. TELECOM ITALIA GROUP UBB Networks allow TI to further tap growing BB demand: Mobile BB is complementary to Fixed BB Italian Families - Broadband Penetration Italian Soho & SME - Broadband Penetration Families 23.9 24.3 24.6 24.9 25.2 25.4 (mln)% families 71% 66% 61% 52% 45% 41% 32% 29% 30% 24% 28% 22% 18% 18% 16% 7% 2% 15% 12% 8% 2% 2006 2007 2008 2009 2010 2011 FBB‐only families FBB & MBB families MBB‐only families "No‐BB" familiesSource: Between Source: <Osservatorio Banda Larga 16
  18. 18. TELECOM ITALIA GROUP 2012-2014 PlanStrengthen the Network for a Technological Leadership Capex Allocation UltraBB RoadmapNetwork Capex NGAN Roll-out 2014 Customer 100 Cities (including all Service Optimization & Traffic main ones) covered through Driven FTTH&Cab Technology ~¼ of Housing units Network Development Acceleration passed with >30 Mb/s Speed Network Decrease Mobile Coverage Maintainance 2014 Optimize Network Investment to maintain More than 40% of excellent quality in TLC services population covered by LTE Increase the effort in Network Development and Innovation to confirm Technological Leadership HSPDA and grant the Best Experience on the Net 42 Mbps LTE 17
  19. 19. TELECOM ITALIA GROUPTI’s Convergent Approach to Fixed and Mobile UBB The Value of our Core Asset Network Key asset both for fixed and mobile Access Huge capital and time already fruitfully invested High Capillarity Strategic asset in the economic , social & regulatory landscape Yesterday Today: Pervasive Ultra Broadband NGN UBB Fixed & Mobile Network Fixed Network Super NGAN Fttx HSPA+ LTE Internet + 18
  20. 20. TELECOM ITALIA GROUPTI’s 2-step strategy on NGAN New Light  Cabinet Step 1: FTTCab 30 - 100 Mbps Use of existing network elements: • Cable ducts • Cabinets • Copper SLL (Possible) Step 2: FTTH 100 Mbps – 1 Gbps Deployment costs > 3x FTTCab Use of FTTCab primary Network New elements •Fiber secondary network •Fiber deployment in the customer’s building •New modem in the customer’s house 19
  21. 21. TELECOM ITALIA GROUP TI Fixed UBB Plan: 2012-2014 and beyond 2012 - 1H13 2014 within 2020 30 cities 100 cities About 60% cities target in Driver for NGAN Plan: the North (i.e. Milan, Turin, Genoa); NewCo Density of population; Trentino NGN for Trento region Moving Leverage on existing towards DAE About 20% cities infrastructure (i.e. ducts Targets located in the Central already in place in most part of the country of 100 targeted cities) (i.e. Rome, Florence)About 20% citieslocated in the South(i.e. Naples, Bari,Palermo) 20
  22. 22. TELECOM ITALIA GROUPAgenda Telecom Italia Group Overview 1Q12 Results Focus on UBB Financial Position and Group Targets Sustainability at TI 21
  23. 23. TELECOM ITALIA GROUPRobust Liquidity Margin and Well-Distributed Debt Maturities Euro mln Bonds Loans (of which long-term rent, financial and operating lease payable € 1,497) Drawn bank facility € 6.16 bln 13,323 35,884 (*)Group Liquidity Position 2,249 + € 7.00 bln Undrawn Portion of 11,357 Facility/Committed = € 13.16 blnGroup Liquidity Margin 2,765 1,966 2,981 1,900 25,257 2,250 865 3,032 1,768 731 6,067 1,999 1,264 2,857 5,237 250 1,211 3,335 2,479 8,378 1,790 1,652 689 Within 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Beyond 2017 Total M/L Term Debt (*) € 35,884 mln is the nominal amount of oustanding medium-long term debt by adding IAS adjustments (€ 805 mln) and current liabilities (€ 824 mln), the gross debt figure of € 37,513 mln is reached. N.B. Debt maturities are net of € 646 mln (face value) of repurchased own bonds (of which € 354 mln related to bonds due in the next 24 months). 22
  24. 24. TELECOM ITALIA GROUP2011-2013 Deleverage Targets Confirmed Cash Flow Generation (EBITDA- Capex) Net Financial Position Adjusted** Organic Data* Euro Bln 2012 and 2013 >22 Bln € 35.9 targets confirmed 30.4 ∼27.5 ∼25 Latam ~20% Financial -5.5 Bln € Net Debt Discipline Domestic ~80% 2007 2011 2012 2013 2014 Cum. ‘12-’14 New Dividend Policy (as announced on Feb. 24 2012) *Organic: same perimeter, 2011 FX rates, excluding spectrum licences acquisitions. ** Excluding Latam spectrum licences acquisitions. 23
  25. 25. TELECOM ITALIA GROUPAgenda Telecom Italia Group Overview 1Q12 Results Focus on UBB Financial Position and Group Targets Sustainability at TI 24
  26. 26. TELECOM ITALIA GROUPSustainability at TI: Key Actions and ResultsTI is part of all main global and European sustainability indexesElectricity consumption and Greenhouse Gas emissions have been curbed downwards(respectively, -6,3% and -6,2% versus 2010)TI delivers a wide range of Green and Social telecommunications solutions for thePublic Administration and private Customers, improving their environmental footprintand lifestyleRelations with Trade Unions are excellent. This is key to deliver agreements which areconsidered satisfactory by all involved parties (e.g the one of August 4, 2010)A wide range of projects aimed at bridging the social digital divide are under way,sometimes with the involvement of the Public AdministrationTelecom Italia is a founding member of a joint auditing project on suppliers productionsites in developing countries, carried out in partnership with other leading Telecomoperators. As of December 2011, 33 sites were audited involving 155,000 workers 25
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