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Telecom Italia 1Q 2011 Results (Patuano)
 

Telecom Italia 1Q 2011 Results (Patuano)

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

    • TELECOM ITALIA GROUP1Q 2011 ResultsMilan, May 6th, 2011 Telecom Italia 1Q 2011 Results MARCO PATUANO
    • TELECOM ITALIA GROUP1Q 2011 ResultsSafe HarbourThese presentations contain statements that constitute forward-looking statements within the meaning of thePrivate Securities Litig tiPi t S iti Litigation R f Reform A t of 1995 Th Act f 1995. These statements appear i a number of places i thi t t t in b f l 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 Group.Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, andactual results may differ materially from those projected or implied in the forward looking statements as a result ofvarious 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 of thedate 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 and investorsare encouraged to consult the Companys Annual Report on Form 20-F as well as periodic filings made on Form 6-K,which are on file with the United States Securities and Exchange Commission Commission. MARCO PATUANO 1
    • TELECOM ITALIA GROUP1Q 2011 ResultsAgenda  Domestic 1Q11 Progress Report Fixed Business Mobile Business Cash Cost Rationalization & Operating Model Appendix MARCO PATUANO 2
    • TELECOM ITALIA GROUP1Q 2011 ResultsDomestic 1Q11 Progress Report Back to line losses reduction: -206K (-187K net of backlog) vs. -233K 4Q10 BB churn: 4.3% (-0.7p.p. QoQ) BB Flat offers: 87% (+1p.p. QoQ; +3p.p. YoY) Wireline Retail monthly fee increase and tariffs simplification as of July’11 Focus on Even stronger leadership on PA (win-back Consip contract) Core Markets Customer b C t base rebuilding process on t k ( 645K Y Y) b ildi track (+645K YoY) Closing the gap between volumes and prices in outgoing traffic trend on the Consumer segment Mobile Still high macroeconomic pressure/volatility on Business and Top customers Mobile BB (Large Screen) leadership confirmed (~36% market share in 4Q10, +12 p.p. vs 2nd Competitor) Continued Cash Cost Control: -0.3€ bln (-8.3% YoY) Financial Discipline Organic OpFCF generation (Ebitda-Capex): ~1.6€ bln MARCO PATUANO 3
    • TELECOM ITALIA GROUP1Q 2011 ResultsDomestic: Organic ResultsEuro mln, Organic data, % Revenues by Technology EBITDA % on 49.5 49 5% 0.0 p.p. 49.5 49 5% -369 M€ Revenues 4,965 -7.4% 4,596 -187 M€ -12.0% 2,460 -7.6% Mobile 1,907 Retail Service Rev. 1,679 2,273 -10.9% Wireline 3,489 -4.5% 3,331 1Q10 1Q11 1Q10 1Q11 1Q10 1Q11 Cash Cost reduction Highlights % on 65.6% Revenues 65.0% - 0 6 p p. 0.6 p.p  High macroeconomic pressure/volatility on -271 M€ -8.3% Business and Top customers 3,257  Mobile Consumer segment recovery trend 2,986 752 -11.8% 663 confirmed CAPEX -89 89  Selective approach to the Int’l Wholesale Contracts 2,505 2,323 OPEX -7.3% -182  Strong focus on cash cost reduction 1Q10 1Q10 1Q11 1Q11 MARCO PATUANO 4
    • TELECOM ITALIA GROUP1Q 2011 ResultsAgenda  Domestic 1Q11 Progress Report Fixed Business Mobile Business Cash Cost Rationalization & Operating Model Appendix MARCO PATUANO 5
    • TELECOM ITALIA GROUP1Q 2011 ResultsDomestic Fixed: Revenues DynamicsEuro mln, Organic Data, % Total Fixed Revenues Total Fixed Revenues – YoY % change 3,489 -4.5% 3,331 1Q10 4Q10 1Q11 -4.8% -4.6% -4.5% 1Q10 1Q11 Wholesale Revenues – YoY % change Retail Revenues – YoY % change National 8.7% 5.3% 2.6% 1Q10 4Q10 1Q11 1Q10 4Q10 1Q11 International 1Q10 4Q10 1Q11 -5.8% -5.7% -10.1% -8.1% -15.5% -21.0% MARCO PATUANO 6
    • TELECOM ITALIA GROUP1Q 2011 ResultsDomestic Fixed: TI Access Performance Telecom Italia Retail Access Evolution & Line Losses Key Highlights ‘000 15,901 15,741 15,584 15,351 15,145  Improved line losses trend (net of backlog) TI Access  Churn rate under control despite OLOs 1Q10 2Q10 3Q10 4Q10 1Q11 gg aggressiveness ‘000 1Q10 2Q10 3Q10 4Q10 1Q11  Backlog increase due to win-back daily cap from OLOs Line losses -187K*  New Opt-out regulation started from Febr’11 -160 160 -157 -196 196 -206 -233 Retail monthly fee increase and tariff simplification – Focus on Consumer €/month TO BE Avg monthly spending AS IS (July ‘11) Avg Spending Monthly fee Elasticity to tariffs Avg Spending increase simplification* Net of Backlog MARCO PATUANO 7
    • TELECOM ITALIA GROUP1Q 2011 ResultsDomestic Fixed: Focus on Broadband & ICT TI Retail Broadband Accesses Broadband ARPU ‘000 Euro/month/line +19 -0.5% 7,186 7,175 7,194 Flat on TI retail 7,134 18.5 Consumer 18.4 accesses 7,071 segment Free Flat (%) 84% 85% 86% 86% 87% 1Q10 2Q10 3Q10 4Q10 1Q11 4Q10 1Q11 Churn (%) 4.0% 5 0% 5.0% 4.3% ICT Revenues Nuvola Italiana Euro mln, % +13.3%  TOP ICT contract value increase 1 8 158 179 (+39% YoY; services +48% YoY) boosted by “Nuvola Italiana” TLC-ICT convergent services  Double-digit growth of Cloud services on total ICT Services  Enhancement of Cloud computing offer portfolio for Top 1Q10 1Q11 clients based on pay-per-use/on-demand concept (improved Market time-to-delivery and time-to-market applications) Share (%)* 10.1% 11.3%* Top sector MARCO PATUANO 8
    • TELECOM ITALIA GROUP1Q 2011 ResultsDomestic Wireline RevenuesEuro mln, Organic Data, % 1Q10 1Q11 YoY % Total 3,489 3,331 (4.5) Services 3,397 3,230 (4.9) Voice 1,551 1,420 (8.4) Flat Net of Soccer Internet 432 407 (5.8) Rights* Business Data 294 295 +0.3 Wholesale 1,035 1,015 (1.9) National 749 789 +5.3 International 286 226 (21.0) Other 85 93 n.m. Handsets 92 101 +9.8* From July’10 TI exited Soccer rights reselling business. MARCO PATUANO 9
    • TELECOM ITALIA GROUP1Q 2011 ResultsAgenda  Domestic 1Q11 Progress Report Fixed Business Mobile Business Cash Cost Rationalization & Operating Model Appendix MARCO PATUANO 10
    • TELECOM ITALIA GROUP1Q 2011 ResultsMobile Revenues: 1Q11 Results at a GlanceEuro mln, Organic Data Total Mobile Revenues Normalized (*) -8.9% -228 Total Mobile 1,907 -12% 1,679 1 679 Wholesale 72 revenues 1,835 -205 49 Total Retail -11.2% 1,630 Handset 58 revenues -22.4% 45 Mobile Retail Service Revenues Trend – YoY % change 1Q10 2Q10 3Q10 4Q10 1Q11 Service 1,778 -10.9% revenues 1,584 Normalized* Normalized * -8.8% -9.2% 9 2% -9.2% -10.6% -9.0% -10.9% 9 2% 10 6% 9 0% -8.8% 8 8% 1Q10 1Q11 *N Normalized li d by b Extraordinary Bank-Holiday (17 March) 6€ mln Data shock billing revenues eliminated from second half 2010, on the basis of AGCOM 326 principles 34€ mln MARCO PATUANO 11
    • TELECOM ITALIA GROUP1Q 2011 ResultsDomestic Mobile: Customer Base TrendEuro mln, Organic Data Net Adds Total SIM cards ‘000 ‘000 386 31,018 31,038 152 30,393 30,545 30,632 88 20 +645 Change YoY +2.1% YoY -463 +483 1Q10 2Q10 3Q10 4Q10 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 Gross Adds Churned SIM cards ‘000 ‘000 +11.8% 1,822 -13.9% 1,630 1 630 2,093 1,802 6.4 Churn Rate % 5.5 55 1Q10 1Q11 1Q10 1Q11 1Q10 1Q11 MARCO PATUANO 12
    • TELECOM ITALIA GROUP1Q 2011 ResultsDomestic Mobile – Focus on Consumer Main KPI’s Customer Base (SIM Mln) Outgoing Prices – YoY % change Outgoing Traffic – YoY % change 2010 2011 -31% Out prices +29% 25.1 stabilized since Dec’10 24.6 24 6 24.7 24.5 24.4 24.7 24.4 4Q Q 1Q Q 2Q Q 3Q Q 4Q Q 1Q10 1Q11 1Q10 1Q11 Consumer Service Revenues Highlights YoY % change  Customer Base: closed the Gap vs 2010 1Q10 2Q10 3Q10 4Q10 1Q11  Outgoing prices and traffic: reducing the YoY gap  Outgoing Traffic: consolidate 2010 growth -10.4% Normalized*  Ch rn increase loyalty leveraging on bundle offers Churn: lo alt le eraging b ndle -10.7% -12.3% -11.6% (1Q11 6.3%; -0.9pp YoY) -13.0% -14.4%  Incoming traffic&revenues stabilized*Extraordinary Bank-Holiday (17 March) MARCO PATUANO 13
    • TELECOM ITALIA GROUP1Q 2011 ResultsDomestic Mobile – Focus on Business&Top Customer Base Highlights SIM H Human (Mln) (Ml )  Usage SME/SoHo impacted by macroeconomics 1Q11 +1.7% YoY pressure 3,170 3,161 3,186 3,189 3,218 3,214  Consip pricing list effect on top customers  Market share protection  Data Offer repositioning pushing on bundles to overcome shock-billing and increase loyalty (AGCOM Decision ex326) 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Business&Top Service Revenues Data Offer Repositioning % Change YoY Small screens Smartphone renewal every 2 years All risk insurance 1Q10 2Q10 3Q10 4Q10 1Q11 Recurring data bundles up to 2GB 1.6% Normalized* -4 9% 4.9% Large screens USB dongle -0.6% 0 6% -3.0% -3.9% Recurring data bundles up to 20 GB -11.5% Roaming data bundle 100MB Premium help desk for PC sw issues* Data shock billing revenues eliminated from second half 2010, on the basis of AGCOM 326 principles MARCO PATUANO 14
    • TELECOM ITALIA GROUP1Q 2011 ResultsMobile BB – Small Screen Large Screen Dynamics Screen-Large Main Highlights KPIs Large Screen users - Consumer (‘000) +25.8%  Market share leadership confirmed 1,853 2,332  Continued increase of 24 months Internet LARGE pack offering 1Q10 1Q11 SCREEN  Increased gross adds through the Internet Pack – gross adds (‘000) adoption of Tablets and i-Pads ~70% total +43.6% ~180 Gross Adds ~120  Increased customer loyalty 1Q10 1Q11 Small Screen users - Consumer (‘000)  Handsets mix improved: smartphone on p p 1 376 +12 1% 1 542 1,376 +12.1% 1,542 ~7% penetration total handsets sold (~+5pp vs.FY10) on voice CB  Push on Tutto Compreso with SMALL smartphone included 1Q10 1Q11 SCREEN % Smartphone on Handsets sold - Consumer  Bundles with smartphones and internet ~270K Smartphones options (~60% Tutto Compreso +128% YoY Total H/S customers with high-end smartphones ~36% ~35% have an internet option) March11 MARCO PATUANO 15
    • TELECOM ITALIA GROUP1Q 2011 ResultsDomestic Mobile RevenuesEuro mln, Organic Data, % 1Q10 1Q11  % YoY Total T t l 1,907 1 907 1,679 1 679 (12.0) (12 0) Services 1,850 1,634 (11.7) o/w Outgoing Voice 991 876 (11.6) (11 6) Consumer Browsing +5.5% o/w VAS 510 475 (6.9) o/w Business Received / 349 283 (18.9) Handsets 58 45 (22.4) 1Q10 1Q11  % YoY Net of Total 1,907 1,679 (12.0) Discontinuities -8.9% Retail 1,835 1 835 1,630 1 630 (11.2) (11 2) Net of Discontinuities o/w Services 1,778 1,584 (10.9) -8.8% Wholesale 72 49 (32.0) (32 0) MARCO PATUANO 16
    • TELECOM ITALIA GROUP1Q 2011 ResultsAgenda  Domestic 1Q11 Progress Report Fixed Business Mobile Business Cash Cost Rationalization & Operating Model  Appendix MARCO PATUANO 17
    • TELECOM ITALIA GROUP1Q 2011 ResultsFocus on 1Q11 Domestic EBITDAEuro mln, Organic Data, % 1 2 3 4 2,460 2 460 (369) +3 +23 +32 2,273 +124 -187M€, -7,6% 1Q10 Revenues Interconn. Costs Handsets costs Mktg&Comm. Opex Fixed Opex* 1Q11 1 3 Acquisition costs offset by efficiencies on MTR and Wholesale traffic reduction customer operations 2 4 Selective growth of Smartphone/ICT Benefits from efficiency programs on Fixed Products with no impact on Ebitda costs and headcount reduction* Industrial + Personnel + G&A = Fixed Opex MARCO PATUANO 18
    • TELECOM ITALIA GROUP1Q 2011 ResultsAgenda  Domestic 1Q11 Progress Report Fixed Business Mobile Business Cash Cost Rationalization & Operating Model p g  Appendix MARCO PATUANO 19
    • TELECOM ITALIA GROUP1Q 2011 ResultsDomestic – Focus on Full -Year Year FinancialOrganic Data, Euro Bln, % Revenues Ebitda ~ -4% ~ -4% 20.0 9.8 ~19.2 Balance to >9.4 Q1 Q2 Q3 Q4 Target -3% -7,4% -7 4% -7.4% 7 Repricing Wireline Balance to 2H10 impact of TIMX Italy -7.6% Target -2.5% ICT/Cloud Roll-Out FY Guidance FY Guidance 2010 2011 2010 2011 OPEX -4% 10.3 10 3 ~9.8  Front -end loaded efficiency target to balance 1Q Balance to Target expected trend in 1H11 for Top Line  Balance to target shows further potentiality to secure -3.3% 3 3% full-year full year Ebitda target -7.3%  Benefit from further headcount reductions in 2H11 in FY Guidance accordance with Trade Union agreement signed in 2010 2011 August’10 MARCO PATUANO 20
    • TELECOM ITALIA GROUP1Q 2011 ResultsProgress on Domestic Efficiency PlanEuro mln, Organic Data, % Delta Cash Cost    1Q11 vs 1Q10 ITX Vol. Driven Efficiency Cash Cost 49% of FY10 Target Handsets: -3 Target FY : -654 3,257 -124 Total Opex 2,323 -182 -124 +56 -114 +111 111 -258 258 2,986 ITX 579 -124 -124 Mktg & -271 Sales 550 -26 +24 -50 1Q10 Intercon- Volume Efficiency 1Q11 Industrial 246 -2 +11 -13 nection Driven Personnel 779 -53 -5 -48 Cash Cost on Revenues (%) G&A & Other* 169 +23 +26 -3 65.6% - 0.6 p.p. 65.0% Total Capex 663 -89 89 +55 -144 144 40% of FY10 Target 1Q10 1Q11 *Includes Other Operating Income and Capitalized Costs Total Cash Cost -271 271 -124 124 +111 -258 258 MARCO PATUANO 21