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Telecom Italia 1H 2011 Results (Patuano)
 

Telecom Italia 1H 2011 Results (Patuano)

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    Telecom Italia 1H 2011 Results (Patuano) Telecom Italia 1H 2011 Results (Patuano) Presentation Transcript

    • TELECOM ITALIA GROUP1H 2011 ResultsMilan, August 5th, 2011 Telecom Italia 1H 2011 Results MARCO PATUANO
    • TELECOM ITALIA GROUP1H 2011 ResultsSafe HarbourThese presentations contain statements that constitute forward-looking statements within the meaning of thePrivate Securities Litigation Reform Act of 1995. These statements appear in a number of places in thispresentation and include statements regarding the intent, belief or current expectations of the customer base,estimates regarding future growth in the different business lines and the global business, market share, financialresults and other aspects of the activities and situation relating to the Company and the Group.Such forward looking statements are not guarantees of future performance and involve risks and uncertainties,and actual results may differ materially from those projected or implied in the forward looking statements as aresult of various factors.Forward-looking information is based on certain key assumptions which we believe to be reasonable as of the datehereof, but forward looking information by its nature involves risks and uncertainties, which are outside our control,and could significantly affect expected results.Analysts are cautioned not to place undue reliance on those forward looking statements, which speak only as ofthe date of this presentation. Telecom Italia S.p.A. undertakes no obligation to release publicly the results of anyrevisions to these forward looking statements which may be made to reflect events and circumstances after thedate of this presentation, including, without limitation, changes in Telecom Italia S.p.A. business or acquisitionstrategy or planned capital expenditures or to reflect the occurrence of unanticipated events. Analysts andinvestors are encouraged to consult the Companys Annual Report on Form 20-F as well as periodic filings made onForm 6-K, which are on file with the United States Securities and Exchange Commission. MARCO PATUANO 1
    • TELECOM ITALIA GROUP1H 2011 ResultsAgenda Domestic 2Q11 Progress Report Mobile Fixed Cash Cost Rationalization Appendix MARCO PATUANO 2
    • TELECOM ITALIA GROUP1H 2011 ResultsDomestic 2Q11 Progress Report Customer base rebuilding process on track (+715K YoY) Strong performance on main operating metrics Consumer outgoing prices QoQ stabilization confirmed Mobile Macroeconomic pressure/volatility still affecting Business and Top Customers Mobile BB: Small Screen strong improvement (Consumer revenues +25.6% YoY) Focus on Core Markets Improving trend in line losses reduction: -183K vs. -206K 1Q11 Slowdown in BB acquisitions due to overall weak market (+65K vs. quarterly avg ~200K) Progress on symmetry in the win-back procedures starting from current August Wireline ICT service revenues increase offsetting traditional data decline Core Domestic Wireline Service revenues (net of Sparkle) are -3.5% YoY, stabilized QoQ and significantly better than total Fixed performance (-5.1%) Financial Discipline 1H 11 Domestic Operating FCF: 2.423 mln € (+61 mln vs 1H10) MARCO PATUANO 3
    • TELECOM ITALIA GROUP1H 2011 ResultsDomestic: Organic Results (*)Euro mln, Organic data, % Revenues by Technology EBITDA % on -304 M€ 48.1% 48.7% Revenues +0.6 p.p. 5,064 -6.0% 4,760 -7.6% -117 M€ Mobile 1,966 Retail Revenues 1,817 2,435 -4.8% 2,318 -6.6% Wireline 3,542 -5.1% 3,360 2Q10 2Q11 2Q10 2Q11 Cash Cost reduction Highlights % on 66.4%  Mobile Consumer segment recovery trend confirmed Revenues 65.9% - 0.5 p.p.  Mobile Business and Top impacted by macroeconomic -227 M€ -6.7% slowdown 3,364 3,137  Fixed Access Value protection (market share ~67%) CAPEX 735 -5.4% -40 695  Continued selective approach on Int’l Wholesale Contracts OPEX 2,629 -7.1% -187 2,442  Continued strong focus on cash cost reduction and improved YoY marginality. Cash costs on revenues still below 66% 2Q10 2Q11(*) excluding closing impact of TIM Loyalty Program on 2Q10 of 35€ mln MARCO PATUANO 4
    • TELECOM ITALIA GROUP1H 2011 ResultsAgenda Domestic 2Q11 Progress Report Mobile Fixed Cash Cost Rationalization Appendix MARCO PATUANO 5
    • TELECOM ITALIA GROUP1H 2011 ResultsMobile Revenues: 2Q11 Results at a GlanceEuro mln, Organic Data Total Mobile Revenues Mobile Handset Revenues Trend – YoY % change 2Q10 3Q10 4Q10 1Q11 2Q11 26.2% -149 (*) -22.4% Total Mobile 1,966 -7.6% -39.9% 1,817 -59.6% -58.0% Wholesale 77 52 Total Retail 1,888 -123 -6.6% 65  1,765 Mobile Retail Service Revenues Trend – YoY % change Handset +26.2% 82  Service 2Q10 3Q10 4Q10 1Q11 2Q11 -7.7% 1,823  1,683  (*) -9.2% -9.0% -7.7% -10.6% -10.9% 2Q10 2Q11(*) Net of Billing Shock impact: Total Mobile Revenues -5.5% Mobile Retail Service revenues -6.6% MARCO PATUANO 6
    • TELECOM ITALIA GROUP1H 2011 ResultsDomestic Mobile: Customer Base Trend Total SIM cards Net Adds ‘000 ‘000 CB Change YoY +715 +46.0% 31,038  31,260  30,545  222 152 2Q10 3Q10 4Q10 1Q11 2Q11 2Q10 2Q11 Gross Adds MNP Performance ‘000 ‘000 Better vs Competitors +9.6% TIM is Leader RECIPIENT - TIM on Gross Adds Market Share 2,028 +43% 1,850 2Q10 2Q11 Increasing Customer Loyalty BALANCE - TIM -36% 2Q10 2Q11 2Q10 2Q11 MARCO PATUANO 7
    • TELECOM ITALIA GROUP1H 2011 ResultsDomestic Mobile – Focus on Consumer Main KPI’s Customer Base (SIM 000) Outgoing Traffic – YoY % change Outgoing Prices – YoY % change 24,614  24,707  -31% -26% 272  +22% 154  +77% QoQ Prices Stabilization yoy growth since YE’10 1Q11 2Q11 1Q10 2Q10 1Q11 2Q11 2Q10 2Q11 SMS & Mobile Browsing Highlights  Customer Base: continued improvement in our recovery Browsing SMS plan paired with calling CB growth: a healthy acquisition +23% Broadly process Small screen Users Flat users  Outgoing traffic increase partially offsetting outgoing prices reduction: another step towards rebalancing Small screen +26% Usage  Price stabilization since YE2010 revenues  Mobile Browsing : solid performance thanks to push on Prices handsets sales and internet options (offers, sales channel)  SMS revenues impacted by prices reduction, not No SMS cannibalization from Data completely compensated by usage increase MARCO PATUANO 8
    • TELECOM ITALIA GROUP1H 2011 ResultsDomestic Mobile – Focus on Consumer Mobile BB Main Highlights KPIs TIM leadership confirmed Large Screen users Internet pack uptake mln mln  Market still growing but at a High-end internet pack lower pace ~8% in 4 months +20% from launch LARGE  TIM market share leadership 2.35 confirmed (>36% 2Q11) 1.96 SCREEN 1.8x  TIM users continued increase ~0.65 ~0.35 sustained by internet pack  Arpu stable on a quarterly basis 2Q10 2Q11 2Q10 2Q11 TIM is back % Smartphone Small Screen users on Handsets sold  2Q11 Leadership among operators: mln mln TIMX Smartphone Smartphones gross adds +49% YoY  Smartphones market share ~38%; +70% YoY +8pp YoY SMALL  iPhone market share ~40% +23% 1.69 SCREEN Total H/S* ~0.6 1.37  Small screen revenues +26% YoY ~36% combining users and Arpu growth ~45% 2Q11 2Q11 2Q10 2Q11  “Daily” offer avoiding billing shock Arpu 7.0 +3% 7.2 also on Consumer segment * Source GFK survey (€/month) MARCO PATUANO 9
    • TELECOM ITALIA GROUP1H 2011 ResultsDomestic Mobile RevenuesEuro mln, Organic Data, % 2Q10 2Q11  % YoY Total 1,966 1,817 (7.6) Wholesale 77 52 (32.5) Retail 1,888 1,765 (6.6) o/w Services 1,823 1,683 (7.7) o/w Outgoing Voice 1,022 923 (9.7) o/w VAS 511 502 (1.8) o/w Business Received (*) 291 259 (11.0) Handsets 65 82 26.2(*) Incoming + Visitors & Others MARCO PATUANO 10
    • TELECOM ITALIA GROUP1H 2011 ResultsAgenda Domestic 2Q11 Progress Report Mobile Fixed Cash Cost Rationalization Appendix MARCO PATUANO 11
    • TELECOM ITALIA GROUP1H 2011 ResultsDomestic Fixed: Revenues DynamicsEuro mln, Organic Data, % Total Fixed Revenues Key highlights Core Domestic Service revenues (net of Sparkle Group): -3.5% YoY, stable QoQ Total Fixed 3,542 -5.1% and significantly better than total Fixed 3,360 performance (-5.1%) Products 150 133 Service Rev. 3,392 -4.9%  Service Revenues QoQ trend stabilization 3,227 YoY % -4.9% -4.9% Total Service Rev. Core Domestic Service Rev. -3.5% -3.5% Core Domestic 3,081 -3.5% 2,973 1Q11 2Q11  Strong ICT Service Revenues performance offsetting Traditional data decline YoY % Sparkle Group 8.2% Eliminations 389 325 5.9% 2Q10 2Q11 0.8% 0.0% 1Q10 2Q10 1Q11 2Q11 MARCO PATUANO 12
    • TELECOM ITALIA GROUP1H 2011 ResultsDomestic Fixed: TI Access Performance Telecom Italia Retail Access Evolution & Line Losses Key Highlights‘000 15,741 15,584 15,351 15,145 14,962  Defend a solid market share on fixed accessesTI Access  Improving line losses trend despite the 2Q10 3Q10 4Q10 1Q11 2Q11 new rules on win-back to be implemented Market Share ~ 67% on August 7 (as per Agcom’s Decision‘000 62/11/CIR)Line losses  Decline in OLOs commercial activity -160 -157 -206 -183 -233 anticipating a more rational competitive scenario 2Q10 3Q10 4Q10 1Q11 2Q11 OLO Access Growth (TI Wholesale)‘000 ‘000 ‘000 ULL Naked WLR 154 33 109 60 77 83 33 38 50 9 12 12 2 -2 -1 2Q10 3Q10 4Q10 1Q11 2Q11 2Q10 3Q10 4Q10 1Q11 2Q11 2Q10 3Q10 4Q10 1Q11 2Q11 +51 MARCO PATUANO 13
    • TELECOM ITALIA GROUP1H 2011 ResultsDomestic Fixed: Focus on Broadband TI Retail Broadband Accesses BB Net Adds ‘000 ‘000TI retail 7,194 192 172 188 213accesses 7,134 7,186 7,175 7,169 BB Market 65Free 2Q10 3Q10 4Q10 1Q11 2Q11Flat (%) 85% 86% 86% 87% 87% 63 52 19 TI 2Q10 3Q10 4Q10 1Q11 2Q11BB arpu 18.7 18.6 18.5 18.4 18.3 -11 -25(€/month) 2Q10 3Q10 4Q10 1Q11 2Q11 BB Service Revenues Key Highlights MKT BB Spending * TI BB Service Revenues  Despite OLOs aggressiveness, slowdown of overall BB Change yoy % € Mln market growth Stable Stable  Negative impact of backlog increase still due to daily cap win-back limiting OLOs workload during 2Q11 +7,6% 385 386 388 384  Macroeconomic adverse phase still affecting Business and Top market segments -1,1%  On BB, TI’s decision not to respond to aggressive -2,7% promotions by competitors at the beginning of the 1Q10 4Q10 1Q11 1Q10 1Q11 2Q10 2Q11 year proved to be the right choice(*) Source: SIRMI MARCO PATUANO 14
    • TELECOM ITALIA GROUP1H 2011 ResultsDomestic Wireline RevenuesEuro mln, Organic Data, % 2Q10 2Q11 YoY % Total 3,542 3,360 (5.1) Sparkle Group 389 325 (16.5) Domestic Core Services 3,081 2,973 (3.5) Voice 1,530 1,408 (8.0) Internet 423 409 (3.3) of which BB Business Data 297 299 0.7 (1.0%) National Wholesale 770 801 4.0 Other 61 56 n.m. Products 150 133 (11.3) Elimination (78) (71) (9.0) MARCO PATUANO 15
    • TELECOM ITALIA GROUP1H 2011 ResultsAgenda Domestic 2Q11 Progress Report Mobile Fixed Cash Cost Rationalization Appendix MARCO PATUANO 16
    • TELECOM ITALIA GROUP1H 2011 ResultsFocus on 1H11 Domestic EBITDAEuro mln, Organic Data, % 4,895 1 2 3 4 (673) 4,591 +246 (13) +57 +79 -304M€, -6.2% 1H10 Revenues Interconn. Costs Handsets costs Mktg&Comm. Fixed Opex* 1H11 * Opex 1 3 Mobile Acquisitions cost increase offset by MTR and Wholesale traffic reduction rationalized advertising, and efficiencies on other commercial costs 2 4 Selective growth of service-driven Smart- Benefits from efficiency programs on Fixed phones slightly impacting Ebitda costs* Costs and operating income related to credit management are reclassified from Fixed Opex to Marketing & Commercial Opex MARCO PATUANO 17
    • TELECOM ITALIA GROUP1H 2011 ResultsAgenda Domestic 2Q11 Progress Report Mobile Fixed Cash Cost Rationalization Appendix MARCO PATUANO 18
    • TELECOM ITALIA GROUP1H 2011 ResultsFocus on FCF GenerationEuro mln, Reported Data Domestic Operating Free Cash Flow Revenues 10,091 -735 9,356 Opex (5,171) +362 (4,809) Capex (1,487) +129 (1,358)  Working Capital (1,071) +305 (766) OFCF 2,362 +61 2,423 1H10 1H11 MARCO PATUANO 19