Telecom Italia 1Q 2013 Results - Franco Bernabè, Piergiorgio Peluso
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Slides Telecom Italia 1Q 2013 Results - Franco Bernabè, Piergiorgio Peluso

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    Telecom Italia 1Q 2013 Results - Franco Bernabè, Piergiorgio Peluso Telecom Italia 1Q 2013 Results - Franco Bernabè, Piergiorgio Peluso Presentation Transcript

    • TELECOM ITALIA GROUP 1Q 2013 Results Milan, May 9th, 2013 Telecom Italia Group 1Q 2013 Results FRANCO BERNABE’ - PIERGIORGIO PELUSO
    • 1FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results Safe Harbour These presentations contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this presentation 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, financial results 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 a result of various factors. Consequently, Telecom Italia S.p.A. makes no representation, whether expressed or implied, as to the conformity of the actual results with those projected in the forward looking statement. Forward-looking information is based on certain key assumptions which we believe to be reasonable as of the date hereof, 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 the date of this presentation. Telecom Italia S.p.A. undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telecom Italia S.p.A. business or acquisition strategy or planned capital expenditures or to reflect the occurrence of unanticipated events. Analysts and investors are encouraged to consult the Company's 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. Some data for the first quarter 2012, used in comparisons, included into this presentation have been restated as a result of the early adoption, starting from the first half 2012, of the revised version of IAS 19 (Employee Benefits) and the reclassification of Matrix (company that was disposed of on October 31, 2012) from the Business Unit Domestic–Core Domestic to the Business Unit Other Activities.
    • 2FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results TI Group 1Q13 Results and Core Markets Performance Italy Brazil Argentina Financial Position Strategic Update Wrap-up Appendix Agenda
    • 3FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results CAPEX EBITDA - CAPEX EBITDA Contribution to YoY change Revenues Contribution to YoY change 0.0% 3.3% -6.5% 7.023 6.796 1Q12 1Q13 906 878 1Q12 1Q13 1.979 1.821 1Q12 1Q13 2,885 2,699 1Q12 1Q13 -0.3% 1.5% -7.6% Euro mln, Organic data, % TI Group Main Results -227 M€ -3.2% -28 M€ -3.1% 12.9%12.9% % on Revenues -158 M€ -8.0% 26.8%-1.4 pp28.2% % on Revenues Domestic Other B.U. LatAm 41.1% 39.7% -1.4 pp -186 M€ -6.4% % on Revenues Domestic Other B.U. LatAm -6.4%-3.2%
    • 4FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results Revenues EBITDA EBITDA-CAPEX Weight on TI Group 39.8% 27.2% TI Group 1Q13 6,796 2,699 1,821 -3.2% -6.4% -8.0% 1Q13 1,786 463 285 +5.4% +4.4% +19.8% 26.3% 17.2% ~16% Brazil 1Q13 917 271 159 +18.3% +9.2% +10.6 % 13.5% 10.0% ~9% Argentina 1Q13 4,024 2,000 1,422 D% yoy -10.1% -9.8% -12.9% 58.9% 74.1% ~78% Domestic TI Group Core Markets Performance Euro mln, Organic data D% yoy D% yoy D% yoy
    • 5FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results 2.218 2.000 1Q12 1Q13 Highlights Domestic 4.477 4.024 1Q12 1Q13 -453 M€ -10.1% -218 M€ -9.8% % on Total Revenues 49.7%+0.2 pp49.5% Dual-speed Top Line:  Mobile Service Revenues: negative impact due to regulated prices combined with a harsh competition;  Core Fixed: in line with last year trend, mainly due to ICT services (+9.4% YoY) and Broadband services (+1.5% YoY). EBITDA margin: outstanding level at ~50%. Networks: confirming our UBB deployment to leverage on our distinctive and unique infrastructure. Convergence Approach: Multiple-Play offers to expand the integration of voice, data, images, information, entertainment, multimedia and communication services. Euro mln, Organic data, % Revenues EBITDA
    • 6FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results 443 463 1Q12 1Q13 Highlights Brazil % on Total Revenues Top Line: positive performance mainly due to re-acceleration in the net mobile service revenues trend (+3.2% YoY in 4Q12, +4.0% YoY in 1Q13). Effective cost control aimed at supporting marginality: SAC/ARPU ratio declining (-15.1% YoY) and bad debt under control (1% of gross revenues). Commercial Strategy: focus on innovation and unique market positioning. In the month of March, TIM totalled over 50% of market net adds. Network: infrastructure evolution to foster voice demand and to support Mobile Data. Quality & Transparency: renewed commitment to quality, to strengthen regulatory & institutional dialogue and to improve customer relationships. Euro mln, Organic data Revenues EBITDA 1.694 1.786 1Q12 1Q13 +92M€ +5.4% +20 M€ +4.4% 25.9%-0.3 pp26.2%
    • 7FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results 248 271 1Q12 1Q13 Highlights Argentina Top Line double-digit growth, offsetting limited nominal price adjustments:  Mobile: consolidating leading position in revenue share, +13% YoY ARPU for better postpaid/prepaid mix and consistent VAS revenue expansion;  Fixed: +20% YoY ARPU BB thanks to enhancing value proposition and compelling BB offers. EBITDA: strengthening cost control to manage impact of labour-related cost increases. Capex Plan focused on quality of service and on improving customer experience through:  Network evolution: speeding-up roll-out process to upgrade capacity and increase effectiveness of the available spectrum (refarming);  Network innovation: FTTCab deployment to ensure best BB experience. Euro mln, Organic data, % Revenues EBITDA 775 917 1Q12 1Q13 +142M€ +18.3% +23 M€ +9.2% 29.6%-2.5 pp32.1% % on Total Revenues
    • 8PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results TI Group 1Q13 Results and Core Markets Performance Italy Brazil Argentina Financial Position Strategic Update Wrap-up Appendix Agenda
    • 9PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results D vs. 12 2011YE 30,414 30,312 1Q12 Euro mln, Reported Data EBITDA CAPEX D WC & Others Operating FCF (2,672) +878 +1,657 (137) +493 1Q13 Net Debt Evolution affected by One-Offs & Seasonalities 28,274 2012YE Adjusted (10) (16) (26) Disposals +438 (31) +407 Cash Financial Expenses/ Financial Accruals +153 +96 +249 Cash Taxes/Other Impacts 28,767 1Q13 Adjusted (626) +489 (137) Operating FCF (102)
    • 10PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results Operating Free Cash Flow 1Q13 vs 1Q12 YE NFP Bridge: Apr-Dec 2013 vs 2012 Progressive FCF Generation will allow the achievement of 2013 Debt Target Euro mln, Reported Data Revenues Opex Δ WC OFCF 7,392 6,796 - 264 +295 626 (1,393) (1,657) Capex (954 ) (878) 4,419 4,124 1Q12 1Q13 Euro bln -596 +76 137 - 489 2012 30.3 1Q12 28.3 FY122.0 Net Cash Flow 1Q13 2013 28.8 <27 FY13E 2.0 ~1.9 Δ Apr-Dec 2013 NCF YoY Breakdown (~)  Operating: -0.2 €bln EBITDA less Capex  One-Offs: -0.3 €bln from 4Q12 suppliers payment deferral Expected Net Cash Flow  OFCF - 0.2 €bln  Brazil spectrum payments - 0.2 €bln  M&A (Matrix, La7) - 0.2 €bln  Dividends (Group) +0.4 €bln  Taxes +0.2 €bln  FX & other - 0.1 €bln - 0.1 €bln
    • 11PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results Bonds Drawn bank facility Robust Liquidity, Well-Distributed Debt Maturities 7.20 € bln Group Liquidity Position + 6.70 € bln Undrawn Portion of Facility/Committed = 13.90 € bln Group Liquidity Margin Euro mln Loans (of which long-term rent, financial and operating lease payable € 1,317) (1) € 35.732 mln is the nominal amount of outstanding medium-long term debt. By adding IAS adjustments (€ 899 mln) and current liabilities (€ 592 mln), the gross debt figure of € 37.222 mln is reached. N.B. Debt maturities are net of € 856 mln (face value) of repurchased own bonds (of which € 641 mln related to bonds due in the next 24 mounths).
    • 12PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results  On April 30th, 2013 TI Media has completed the sale of La7 Srl to Cairo Communication Group;  In September 2012, when TI Media spun-off the TV business, the estimated full year loss for La7 TV channel was above 100 euro mln;  In the first 4 months of 2013, La7 TV channel loss was equal to 24 euro mln (of which 17 euro mln in 1Q13);  P&L-wise, TI’s 1Q13 provision amounted to 105 euro mln; the overall stop loss at the end of April totalled 130 euro mln (100 euro mln post minorities);  Cash-wise, TI contributed 114 euro mln for the disposal. La7 Stop-Loss Euro mln Euro Mln; Organic Data Revenues OPEX EBITDA EBITDA - CAPEX 6,796 4,097 2,699 1,821 TI Group 1,786 1,323 463 285 Brazil 917 646 271 159 Argentina 4,024 2,024 2,000 1,422 Domestic 48 58 -10 -19 Media TI 1Q 2013 results TI Media EBIT evolution La7 Sale completed 1Q13 2014 2015 TI Media excl. La7 La7 La7 disposal - 17 - 105 - 3 52 71 -19 -20 Olivetti
    • 13FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results TI Group 1Q13 Results and Core Markets Performance Italy Brazil Argentina Financial Position Strategic Update Wrap-up Appendix Agenda
    • 14FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results FIBRE OPTIC – ACCESS Major Elements of TI’s Fixed Access Network Structural Separation would:  Guarantee full Equivalence of Input;  Focus on the Development of the New Fiber Network;  Continue to improve the existing Copper Network quality;  Stabilize the Regulatory Framework. COPPER UBB equipment in the local exchange (OLT) TWISTED PAIRS Main Distribution Frames USERS’ STUDS POLES CABINETS PHYSICAL ACCESSES DISTRIBUTORS CABLES BLUEPRINT 5,700,000 575,000 km Retail+WHS 22,000,000 km of fibre 724,000 km of cables 14,200 km of cables 576,000 ~33.6 m 8,900,000 151,000 10,500 102m km couple Fixed Access Network UBB Access equipment (ONU FTTC) 84 2,137 active 2,745 installed
    • 15FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results TI Group 1Q13 Results and Core Markets Performance Italy Brazil Argentina Financial Position Strategic Update Wrap-up Appendix Agenda
    • 16FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results Telecom Italia Group FY2013 Guidance Confirmed * excluding impact from non-organic items and FX. ** reported figure Organic Data* TI Group - 2013 targets Low-single digit decline YoYEBITDA < 27 € blnNFP Adj.** Stable YoYRevenues
    • 17FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results TI Group 1Q13 Results and Core Markets Performance Italy Brazil Argentina Financial Position Strategic Update Wrap-up Appendix Agenda PIERGIORGIO PELUSO
    • 18FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results TI Group - Revenues Evolution Euro mln * Average Exchange rate (Real/Euro): 2.64 in 2013, 2.32 in 2012 * * Average Exchange rate (Peso/Euro): 6.62 in 2013, 5.69 in 2012 Others & Elim. (9) 7,392 7,023 6,796 6,796(9) (360) (453) +92 +142 (10) (7) +9 area 1Q12 Change in consolid. Exchange rate impact items Other non-organic 1Q12 Organic Domestic Brazil* Argentina** Media Olivetti Other & Elim. 1Q13 Organic 1Q13 Brazil (234) Argentina (126) 0 0 items Other non-organic Organic Variation -227 (-3.2%) -596 (-8.1%) PIERGIORGIO PELUSO
    • 19FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results Others & Elim +12 Agreements and Transactions (1) Restructuring charges (21) Other net cost (5) Organic Variation -186 (-6.4%) Brazil (62) Argentina (41) 2,973 2,885 2,699 2,672 +12 (103) +3 (218) +20 +23 (4) (6) (1) (27) TI Group - EBITDA Evolution Euro mln area 1Q12 Change in consolid. Exchange rate impact 1Q12 Organic Domestic Brazil* Argentina** Media Olivetti Other & Elim. 1Q13 Organic 1Q13 items Other non-organic items Other non-organic -301 (-10.1%) PIERGIORGIO PELUSO * Average Exchange rate (Real/Euro): 2.64 in 2013, 2.32 in 2012 * * Average Exchange rate (Peso/Euro): 6.62 in 2013, 5.69 in 2012
    • 20FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results Euro mln 1,625 (48) 1,596 (187) 1,414 1,282 -343 (-21.1%) +16 +5 +1 (5) (1) Agreements and Transactions (1) Restructuring charges (21) Other net cost (5) Provision for La7 disposal (105) TI Group - EBIT Evolution +3 (132)+5 area 1Q12 Change in consolid. Exchange rate impact 1Q12 Organic Domestic Brazil* Argentina** Media Olivetti Other & Elim. 1Q13 Organic 1Q13 items Other non-organic items Other non-organic Organic Variation -182 (-11.4%) PIERGIORGIO PELUSO * Average Exchange rate (Real/Euro): 2.64 in 2013, 2.32 in 2012 * * Average Exchange rate (Peso/Euro): 6.62 in 2013, 5.69 in 2012
    • 21FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results Total Gross Debt Net of Adjustment: Euro 37,222 mln Maturities and Risk Management Well Diversified and Hedged Debt Euro mln  Average debt maturity: 7.09 years (bonds only: 8.08 years)  Fixed rate portion of gross debt, approximately 74.7%  Around 49% of outstanding bonds (nominal amount) is denominated in USD, GBP and YEN and is fully hedged Cost of debt: 5.3% N.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 in Gross Financial Debt is equal to 2,424 €/mln (of which 672 €/mln on bonds) - the impact on Financial Assets is equal to 1,675 €/mln Therefore, the Net Financial Indebtedness is adjusted by 749 €/mln. 3.6% 5.8% 71.0% Bonds 26,423  Gross debt  Financial assets of which C & CE and marketable securities - C & CE - Marketable securities - Italian Government Securities - Others 37,222 (8,455) Bank Facility 1,467 Bank & EIB 5,858 Op. Leases and long term rent 1,331 Other 2,143 15.7% 3.9% Net Financial Position 28,767 (7,202) (6,476) (726) (509) (217) PIERGIORGIO PELUSO
    • 22FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results 2013 2012 D Abs. REVENUES 6,796 7,392 (596) (8.1) Other Operating Income 55 52 3 TOTAL REVENUES & OTHER INCOME 6,851 7,444 (593) (8.0) Total Purchases of materials and external services (2,964) (3,231) 267 Personnel (976) (988) 12 of which payroll (940) (977) 37 Other operating costs (440) (456) 16 Capitalized Cost and Others 201 204 (3) EBITDA 2,672 2,973 (301) (10.1) % on Revenues 39.3% 40.2% Depreciation & Amortization (1,292) (1,344) 52 Write-downs and revaluations of non-current assets 7 (4) 11Gains/losses of non-current assets realization (105) 0 (105) EBIT 1,282 1,625 (343) (21.1) % on Revenues 18.9% 22.0% Income (loss) equity invest. valued equity method - -3 3 Other income ( expenses ) from investments - - - Net Financial Income / (Expenses) (491) (449) (42) Income before Taxes & Disc. Ops. 791 1,173 (382) (32.6) % on Revenues 11.6% 15.8% Taxes (343) (455) 112 Income before Disc. Ops. 448 718 (270) Net income (loss) of assets disposed 0 0 0 Net Income (ante Minorities) 448 718 (270) % on Revenues 6.6% 9.7% Minorities 84 113 (29) Net Income (post Minorities) 364 605 (241) (39.8) % on Revenues 5.4% 8.2% %D 8.3 1.2 3.5 5.8 3.9 24.6 (37.6) (37.6) (1.5) (25.7) 9.4 Euro mln – Reported Data TI Group 1Q13 Results - P&L I Quarter PIERGIORGIO PELUSO
    • 23FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results -6 I Quarter 2013 2012 D Abs. D % I Quarter 2013 2012 D Abs. D % Reported Organic REVENUES REVENUES TI Group TI Group EBITDA EBITDA TI Group TI Group EBITDA MARGIN EBITDA MARGIN TI Group 1Q13 - Main Results by BU Euro mln I Quarter 2013 2012 D Abs. D % I Quarter 2013 2012 D Abs. D % Domestic 4,024 4,477 -453 (10.1) Wireline Domestic 2,976 3,223 -247 (7.7) Tim Domestic 1,379 1,650 -271 (16.4) Brazil 1,786 1,928 142 (7.4) Argentina 917 901 16 1.8 Media 48 58 10 (17.2) Olivetti 52 59 -7 (11.9) Other Activities & Elim. -31 -31 0 - - - 4,024 4,477 -453 (10.1)Domestic Wireline Domestic 2,976 3,223 -247 (7.7) Tim Domestic 1,379 1,650 -271 (16.4) Brazil 1,786 1,694 92 5.4 Argentina 917 775 142 18.3 Media 48 58 -10 (17.2) Olivetti 52 59 -7 (11.9) Other Activities -31 -40 9 - Domestic 1,973 2,215 -242 (10.9) Brazil 463 505 -42 (8.3) Argentina 271 289 -18 (6.2) Media -10 -6 -4 (66.7) Olivetti -19 -13 -6 (46.2) Other Activities & Elim. -6 -17 11 - Domestic 2,000 2,218 -218 (9.8) Brazil 463 443 20 4.4 Argentina 271 248 23 9.2 Media -10 -6 -4 (66.7) Olivetti -19 -13 (46.2) Other Activities & Elim. -6 -5 -1 - 2,699 2,885 -186 (6.4) 39.7% 41.1% -1.4 pp 2,672 2,973 -301 (10.1) 39.3% 40.2% -0.9 pp 6,796 7,392 -596 (8.1) 6,796 7,023 -227 (3.2) PIERGIORGIO PELUSO
    • 24FRANCO BERNABE’ – PIERGIORGIO PELUSO TELECOM ITALIA GROUP 1Q 2013 Results Euro mln  Equity +3  Net Fin. Charges (42) 605 Net Income 1Q12 -241 (-39.8%) Minorities 1Q12 113 718 Income ante Min & Disc. Ops. 1Q11 D EBIT (343) D Net Interest & Net Income /Equity (39) D Taxes 112 448 Income/(Loss) ante Min & Disc. Ops. 1Q13 Minorities 1Q13 (84) 364 Net Income 1Q13 Net Income Evolution o/w  La7 Write-down (105) PIERGIORGIO PELUSO