Telecom Italia 1Q 2012 Results - Franco Bernabè (10/05/2012)
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Telecom Italia 1Q 2012 Results - Franco Bernabè (10/05/2012)

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Slides Telecom Italia 1Q 2012 Results - Franco Bernabè (10/05/2012)

Slides Telecom Italia 1Q 2012 Results - Franco Bernabè (10/05/2012)

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Telecom Italia 1Q 2012 Results - Franco Bernabè (10/05/2012) Telecom Italia 1Q 2012 Results - Franco Bernabè (10/05/2012) Presentation Transcript

  • TELECOM ITALIA GROUP1Q 2012 ResultsMilan, May 10th, 2012 Telecom Italia 1Q 2012 Results FRANCO BERNABE’
  • TELECOM ITALIA GROUP1Q 2012 ResultsSafe 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. FRANCO BERNABE’ 1
  • TELECOM ITALIA GROUP1Q 2012 ResultsAgenda  TI Group 1Q12 Results  Telecom Italia Core Markets Results Italy Brazil Argentina  Wrap-up  Appendix FRANCO BERNABE’ 2
  • TELECOM ITALIA GROUP1Q 2012 ResultsTI Group Key ResultsEuro mln, Organic data, % Revenues EBITDA % on 42.0% Revenues -1.9 p.p. 40.1% +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 1Q12 1Q11 2Q11 3Q11 4Q11 1Q12 FRANCO BERNABE’ 3
  • TELECOM ITALIA GROUP1Q 2012 ResultsTI Group Key Results by Core MarketsEuro mln, Organic Data Weight on TI Group TI Group Domestic Brazil Argentina 1Q12 % yoy 1Q12 % yoy 1Q12 % yoy 1Q12 % 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% FRANCO BERNABE’ 4
  • TELECOM ITALIA GROUP1Q 2012 ResultsTl Media: Corporate Re-organization leading to Disposal Current Structure Post Re-organization 77.7% 77.7% TI Media MTV Italia Broadcasting (51%) NewCo (100%) MTV Adv. 51% 100% (100%) FRANCO BERNABE’ 5
  • TELECOM ITALIA GROUP1Q 2012 ResultsDebt Reduction Progressing as per Planned SequenceEuro mln, Reported Data 30,414 (626) 7 89 30,312 (10) 438  EBITDA (2,963)  CAPEX +954   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 vs. 11 +450 +367 (1) (149) +77 FRANCO BERNABE’ 6
  • TELECOM ITALIA GROUP 1Q 2012 Results 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* ~7.0* 0.6 4,144 4,429 Opex -285 Breakdown Domestic 5.8* 1.2 Capex 901 -53 954  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 FRANCO BERNABE’ 7
  • TELECOM ITALIA GROUP1Q 2012 ResultsNet Income Evolution Euro mln +57 (+10.4%) Brazil (34) Argentina (9) Argentina (76) Domestic (18) Brazil (43) T.I. Media +5 +15 (61) 720 +114 (114) 103 652 606 549 Equity +1 Income from inv. (17) Net Fin. Charges +31 Net Income 1Q11 Minorities Income ante Min  Minorities Net Income   Income/(Loss) ante 1Q11 & Disc. Ops. 1Q11 Net Interest & 1Q12 1Q12 EBIT Taxes Min & Disc. Ops. Net Income 1Q12 /Equity FRANCO BERNABE’ 8
  • TELECOM ITALIA GROUP1Q 2012 ResultsAgenda  TI Group 1Q12 Results  Telecom Italia Core Markets Results Italy Brazil Argentina  Wrap-up  Appendix FRANCO BERNABE’ 9
  • TELECOM ITALIA GROUP 1Q 2012 Results Italy: Continued Resilience in a Weak Macro Context Real GDP trend Consumer Spending 0.0% 0.0% -2.5% -2.5% -5.0% -5.0% 4Q11A 1Q12A 2Q12E 3Q12E 4Q12E 4Q11A 1Q12A 2Q12E 3Q12E 4Q12E Source: Research Dep. Intesa Sanpaolo Source: Research Dep. Intesa Sanpaolo Wireless Wireline 96.5% 71.1% 34.0% 0.5% 0.5% 0.8% 26.2% 0.3% -1.0% -3.7% -1.9% -1.7% -2.1% -7.1% -7.5% -8.7% -11.7% -22.4% -4.9% -4.9% 1Q11 2Q11 3Q11 4Q11 1Q12 1Q11 2Q11 3Q11 4Q11 1Q12 Service Revenues (YoY) Handset Revenues (YoY ) Service Revenues (YoY) Broadband Service Revenues (YoY) Continuous recovery also supported by a more rational  Confirmed the positive growth in broadband service competition and strong improvement in main KPIs. revenues with a slight sequential improvement (+0.8% YoY). Mobile data momentum sustained by high smartphones  TI market share on fixed accesses keeps almost stable. sales. FRANCO BERNABE’ 10
  • TELECOM ITALIA GROUP1Q 2012 ResultsAgenda  TI Group 1Q12 Results  Telecom Italia Core Markets Results Italy Brazil Argentina  Wrap-up  Appendix FRANCO BERNABE’ 11
  • TELECOM ITALIA GROUP1Q 2012 ResultsBrazil: Revenues and EBITDA TrendEuro mln, Organic Data Revenues Size +309 M€  TIM Brazil confirmed as #2 operator, with service +19.1% 1,928 revenues up 15.9% YoY 1,619  Postpaid users increased to about 10 mln (+25% YoY) Revenue Growth 1Q11 1Q12  Top line growth driven by community expansion and “internet for All” concept EBITDA  VAS Revenues acceleration (>60% YoY) thanks to % on 27.5% -1.3p.p. 26.2% continued smartphone penetration increase, now at Revenues 31.1% (12.6% in 1Q11) +60 M€ +13.5% 505 Value Creation 445  In the last three quarters, TIM Brasil confirmed its #2 position without penalizing margins. Service EBITDA margin stable YoY 1Q11 1Q12  Bad Debt/Gross Revenues ratio stable FRANCO BERNABE’ 12
  • TELECOM ITALIA GROUP1Q 2012 ResultsAgenda  TI Group 1Q12 Results  Telecom Italia Core Markets Results Italy Brazil Argentina  Wrap-up  Appendix FRANCO BERNABE’ 13
  • TELECOM ITALIA GROUP1Q 2012 ResultsArgentina: Revenues and EBITDA TrendEuro mln, Organic Data, % Revenues Size +174 M€  Argentina: Personal #1 in Mobile Revenue Share +24.0% 901  Steady growth in fixed BB accesses (+1% QoQ) 727 Revenue Growth  Personal: strong VAS Revenue growth still driven by 1Q11 1Q12 SMS & Internet ARPU Personal +16% YoY EBITDA VAS reached 52% of service revenues 34.1% -2.0 p.p. 32.1%  Strong Broadband growth: 1Q12 BB ARPU +16% YoY +41 M€ +16.6% 289 248 Value Creation  Confirmed double-digit EBITDA Growth: +16.6% YoY  Sound organic EBITDA-CAPEX generation: +5.1% YoY 1Q11 1Q12  Solid cash position: around €450 million, also due to the delay in spectrum auction FRANCO BERNABE’ 14
  • TELECOM ITALIA GROUP1Q 2012 ResultsAgenda  TI Group 1Q12 Results  Telecom Italia Core Markets Results Italy Brazil Argentina  Wrap-up  Appendix FRANCO BERNABE’ 15
  • TELECOM ITALIA GROUP1Q 2012 ResultsTelecom 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 FRANCO BERNABE’ 16
  • TELECOM ITALIA GROUP1Q 2012 ResultsAgenda  TI Group 1Q12 Results  Telecom Italia Core Markets Results Italy Brazil Argentina  Wrap-up  Appendix FRANCO BERNABE’ 17
  • TELECOM ITALIA GROUP1Q 2012 ResultsTI Group – Revenues EvolutionEuro mln +319 (+4.5%) +174 +6 (13) +6 7,392 0 7,392 7,073 (3) (51) 0 7,019 (109) +309 Domestic +2 Brazil (27) Argentina (26) Domestic Olivetti (3) (6) Organic Variation Other & Elim. +6 +373 (+5.3%) 1Q11 Change in Exchange Other non 1Q11 Domestic Brazil* Argentina** Media Olivetti Other & 1Q12 Other non 1Q12 consolid. rate impact organic Organic Elim. Organic organic area items items* Average Exchange rate (Real/Euro): 2.32 in 2012, 2.28 in 2011 * * Average Exchange rate (Peso/Euro): 5.69 in 2012, 5.49 in 2011 FRANCO BERNABE’ 18
  • TELECOM ITALIA GROUP1Q 2012 ResultsTI Group – EBITDA EvolutionEuro mln +34 (+1.2%) Agreements and Transactions +6 Agreements and Transactions (1) Other net costs +31 Other net costs (2) 2,929 0 (15) +37 2,951 (78) +60 +41 (8) 0 0 2,966 (3) 2,963 Domestic 1 Brazil (7) Argentina (9) 41.4% 42.0% Organic Variation 40.1% 41.4% +15 (+0.5%) 1Q11 Change in Exchange Other non 1Q11 Domestic Brazil* Argentina** Media Olivetti Other & 1Q12 Other non 1Q12 consolid. rate impact organic Organic Elim. Organic organic area items items* Average Exchange rate (Real/Euro): 2.32 in 2012, 2.28 in 2011 * * Average Exchange rate (Peso/Euro): 5.69 in 2012, 5.49 in 2011 FRANCO BERNABE’ 19
  • TELECOM ITALIA GROUP1Q 2012 ResultsTI Group – EBIT EvolutionEuro mln +114 (+7.6%) +56 +17 (8) +1 1,622 (3) 1,619 1,534 +22 0 1,505 0 (8) +37 Brazil (4) Argentina (4) Organic Variation 22.0% 21.4% +88 (+5.7%) 21.7% 21.2% 1Q11 Change in Exchange Other non 1Q11 Domestic Brazil* Argentina** Media Olivetti Other & 1Q12 Other non 1Q12 consolid. rate impact organic Organic Elim. Organic organic area items items* Average Exchange rate (Real/Euro): 2.32 in 2012, 2.28 in 2011 * * Average Exchange rate (Peso/Euro): 5.69 in 2012, 5.49 in 2011 FRANCO BERNABE’ 20
  • TELECOM ITALIA GROUP1Q 2012 ResultsRobust 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). FRANCO BERNABE’ 21
  • TELECOM ITALIA GROUP1Q 2012 ResultsWell Diversified and Hedged Debt Total Gross Debt Net of Adjustment: Euro 37,513 mln Maturities and Risk ManagementEuro mln Op. Leases and long rent Bank & EIB 1,512 5,734 Bank Facility Average debt maturity: 7.32 years (bond Other 4.0% 15.3% 2,248 only 8.38 years) 2,498 6.7% 6.0% Fixed rate portion on gross debt Bonds approximately 72.4% 25,521 Around 47% of outstanding bonds (nominal 68.0% amount) is denominated in USD, GBP and YEN and is fully hedged  Gross debt 37,513  Financial assets (7,201) Cost of debt: 5.5% of which C & CE and marketable securities (6,158) - C & CE (5,492) - Marketable securities (666) - Italian Government Securities (527) - Other (159) Net Financial Position 30,312N.B.The figures are net of the adjustment due to the fair value measurement of derivatives and related financial liabilities/assets, as follows: - the impact on Gross Financial Debt is equal to 2.545 €/mln (of which 789 €/mln on bonds); - the impact on Financial Assets is equal to 1.878 €/mln. Therefore, the Net Financial Indebtedness is adjusted by 667 €/mln. FRANCO BERNABE’ 22
  • TELECOM ITALIA GROUP1Q 2012 ResultsTI Group 1Q12 Results - P&LEuro mln – Reported Data I Quarter 2012 2011  Abs. % REVENUES 7,392 7,073 319 4.5% Other Operating Income 52 48 4 TOTAL REVENUES & OTHER INCOME 7,444 7,121 323 4.5% Total Purchases of materials and external services -3,231 -2,995 -236 Personnel -998 -990 -8 of which payroll -987 -980 -7 Other operating costs -456 -398 -58 Capitalized Cost and Others 204 191 13 EBITDA 2,963 2,929 34 1.2% % on Revenues 40.1% 41.4% Depreciation & Amortization -1,340 -1,425 85 Writedowns and revaluations of non current assets 0 1 -1 Gains/losses of non current assets realization -4 0 -4 EBIT 1,619 1,505 114 7.6% % on Revenues 21.9% 21.3% Income (loss) equity invest. valued equity method -3 -4 -29 Other income ( expenses ) from investments 0 17 15 Net Financial Income / (Expenses) -439 -470 4 Income before Taxes & Disc. Ops. 1,177 1,048 129 12.3% % on Revenues 15.9% 14.8% Taxes -457 -396 0 Income before Disc. Ops. 720 652 68 Net income (loss) of assets disposed 0 0 0 Net Income (ante Minorities) 720 652 68 % on Revenues 9.7% 9.2% Minorities -114 -103 0 Net Income (post Minorities) 606 549 57 10.4% % on Revenues 8.2% 7.8% FRANCO BERNABE’ 23
  • TELECOM ITALIA GROUP1Q 2012 ResultsTI Group 1Q12 – Main Results by BUEuro mln I Quarter I QuarterReported Organic 2012 2011  Abs. % 2012 2011  Abs. %REVENUES REVENUESDomestic 4,486 4,596 -110 (2.4) Domestic 4,486 4,595 -109 (2.4) Wireline Domestic 3,235 3,331 -96 (2.9) Wireline Domestic 3,235 3,330 -95 (2.9) Tim Domestic 1,650 1,679 -29 (1.7) Tim Domestic 1,650 1,679 -29 (1.7)Brazil 1,928 1,646 282 17.1 Brazil 1,928 1,619 309 19.1Argentina 901 753 148 19.7 Argentina 901 727 174 24.0Media 58 52 6 11.5 Media 58 52 6 11.5Olivetti 59 78 -19 (24.4) Olivetti 59 72 -13 (18.1)Other Activities 1 1 0 0.0 Other Activities 1 1 0 0.0Elim. -41 -53 12 24.5 Elim. -41 -47 6 14.9TI Group 7,392 7,073 319 4.5 TI Group 7,392 7,019 373 5.3 I Quarter I Quarter 2012 2011  Abs. % 2012 2011  Abs. %EBITDA EBITDADomestic 2,193 2,236 -43 (1.9) Domestic 2,196 2,274 -78 (3.4)Brazil 505 452 53 11.7 Brazil 505 445 60 13.5Argentina 289 257 32 12.5 Argentina 289 248 41 16.6Media -6 2 -8 - Media -6 2 -8 -Olivetti -14 -14 0 0.0 Olivetti -14 -14 0 0.0Other Activities -2 -2 0 0.0 Other Activities -2 -2 0 0.0Elim. -2 -2 0 (50.0) Elim. -2 3 -2 0 (50.0)TI Group 2,963 2,929 34 1.2 TI Group 2,966 2,951 15 0.5EBITDA MARGIN 40.1% 41.4% -1.3 pp EBITDA MARGIN 40.1% 42.0% -1.9 pp FRANCO BERNABE’ 24
  • TELECOM ITALIA GROUP 1Q 2012 Results DRAFT Focus on Working Capital Euro mln, Reported Data Operating Working Capital (impact on 1Q12 Cash Flow) Net Other  Severance OWC Trade Trade Receivables/ Indemnities, & Other Inventories Receivables Payables Payables Funds & Other 1Q12 -48 +118 -1,014 -443 +4 -1,383Changevs 1Q11 -9 -43 -198 -185 +4 -431 FRANCO BERNABE’ * Excluding spectrum acquisition 25