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Telecom Italia 1 H 2009 Results
 

Telecom Italia 1 H 2009 Results

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Telecom Italia 1H 2009 results

Telecom Italia 1H 2009 results

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    Telecom Italia 1 H 2009 Results Telecom Italia 1 H 2009 Results Presentation Transcript

    • TELECOM ITALIA GROUP 1H 2009 Results Milan, August 6th, 2009 Telecom Italia 1H09 Results FRANCO BERNABE’
    • TELECOM ITALIA GROUP 1H 2009 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. Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward looking statements as a result of various factors. 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 Spa 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 Spa business or acquisition strategy 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. FRANCO BERNABE’ 1
    • TELECOM ITALIA GROUP 1H 2009 Results Agenda TI Group Main Achievements Focus on Domestic Business Focus on TIM Brasil Wrap Up FRANCO BERNABE’ 2
    • TELECOM ITALIA GROUP 1H 2009 Results TI Group 1H 09 Progress Report Enhanced Regulatory Dialogue Improved Customer Satisfaction Domestic Reshaped Revenue Mix Recovered in Fixed Business Focus on Late on Consumer Mobile Performance Core Stabilize Continued Cash Cost Rationalization Markets Ebitda and Reversed Commercial Kpis Improve Brazil Free Cash Safeguarded Profitability Flow Generation Refinancing Completed Financial Discipline Reduced Average Cost of Debt FRANCO BERNABE’ 3
    • TELECOM ITALIA GROUP 1H 2009 Results Improved Operating Cash Flow Euro mln, Reported data Operating FCF %OFCF on Revenues +587 2,170 1,583 15.6% 10.7% I Half 08 I Half 09 I Half 08 I Half 09 FRANCO BERNABE’ 4
    • TELECOM ITALIA GROUP 1H 2009 Results TI Group Improved Profitability: Organic Results vs. 2008 Euro mln, % Revenues -554M€ 14,507 -3.8% 13,953 EBITDA IIQ 7,444 -284, -3.8% 7,160 41.2% +1.5 p.p. 39.7% % on IQ 7,063 -270, -3.8% 6,793 Revenues -12M€ -0.2% I Half 08 I Half 09 5,759 5,747 Opex IIQ +58, +2.0% -542M€ 8,748 -6.2% -70, -2.4% 8,206 IQ IIQ -342, -7.5% I Half 08 I Half 09 IQ -200, -4.8% I Half 08 I Half 09 FRANCO BERNABE’ 5
    • TELECOM ITALIA GROUP 1H 2009 Results Cash Cost Control: a Group-Wide Commitment Euro mln, Organic data, % Organic OPEX I Half 09 EBITDA Margin Δ abs. vs. Δ %. vs. Δ %. 1Q09 I Half ‘08 I Half ‘08 vs 1Q08 1H08 1H09 45.7% 46.8% Domestic 5,799 -403 -6.5% -4.5% +1.1 p.p. 24.2% TIM 1,743 -47 -2,6% -4.4% 20.5% +3.7 p.p. Brasil 21.0% European 484 -39 -7.5% -6.1% 18.5% +2.5 p.p. Broadband -5.3% TI Media 120 -14 -10.4% -12.5% -21.8% +16.5 p.p. Other BU & 60 -39 Eliminations 39.7% 41.2% 8,206 -542 -6.2% -4.8% +1.5 p.p. TI Group FRANCO BERNABE’ 6
    • TELECOM ITALIA GROUP 1H 2009 Results Domestic: Efficiency Program on Track Euro mln, Organic data, %, Units 8,154 7,408 -746 -9.1% Capex -343 -17.6% Strong Cash Cost-Cutting Program Opex -403 -6.5% IH08 IH09 Cash Cost on Revenues EBITDA Margin Reducing Cash Cost on Revenues 71.4% -3.4 p.p. + 1.1 p.p. 46.8% Improving Profitability 68.0% 45.7% IH08 IH09 IH08 IH09 +14% Subsidy (€/unit) 56 49 Selective Cost Control IH08 IH09 0.4 0.9 0.5 Target FY Efficiency on Track vs. FY Target opex capex total % 1H09 on FY 45% 74% 57% Target 64.1 Moving towards a Lean Headcount (’000) - 5.0 59.1 08-09 Target achieved Organization ~5.0 Jan 1, 08 July 31, 09 FRANCO BERNABE’ 7
    • TELECOM ITALIA GROUP 1H 2009 Results Agenda TI Group Main Achievements Focus on Domestic Business Focus on TIM Brasil Wrap Up FRANCO BERNABE’ 8
    • TELECOM ITALIA GROUP 1H 2009 Results Domestic: a Revised Revenues Mix… EBITDA Margin I Half ’09 Change YoY Strategic Priority + ICT Services 18% Mobile BroadBand 12% Growth Wireline BroadBand 8% Wireline Access* 0% Outgoing Mobile Voice -3% Mobile Messaging -5% Defend & -7% Recover Wireline Business Data Outgoing Fixed Voice -13% Wireline Handsets -9% -30% Reduce Mobile Handsets Wireline Voice VAS -22% - Reposition Mobile VAS Content -29% (*) Retail and Wholesale (includes Naked Fees) FRANCO BERNABE’ 9
    • TELECOM ITALIA GROUP 1H 2009 Results …a Rationalized Handset Strategy… Distribution focused on data enabling devices to support revenues and reduce pay-back period in mobile Italian mobile handset market: share on sell-out Market share trends confirm overall units -10.5% reduction of push by all mobile operators -50% -3.9% TI’s rationalization reduces low-end handsets distributed through TIM channels -22.9% without a bundled mobile service Stop on 2G handset subsidy to finance +32.1% efficiency & growth I Half 09 TI confirms leadership in ARPU generating I Half 08 segments: Wind H3G VO TIM Fresh Mkt Smartphone: ~42% m-share Source: GFK i-Phone ~58% m- share Domestic fixed equipment revenues Euro mln Focus on ICT integrated solutions for TOP Customers 319 290 Exit from Non ARPU generating Voice equipment to focus on value rather than 16.1% volume Mark-up % Unitary mark-up and volume increase of ICT 11.3% drive overall margin uplift I Half 08 I Half 09 FRANCO BERNABE’ 10
    • TELECOM ITALIA GROUP 1H 2009 Results Domestic: FY09 EBITDA Guidance …Positively Impacting Organic Margins Euro bln -3/-4% Euro mln, % 10.3 9.9-10.0 Revenues -537 -4.7% FY08A FY09E 11,428 10,891 -287, -4.9% EBITDA IIQ 45.7% 46.8% -250, -4.5% % on IQ Revenues +1.1 p.p. I Half 08 I Half 09 -134 -2.6% Opex 5.226 5.092 -403 -18, -0.7% IIQ 6,202 -6.5% 5,799 IQ -116, -4.4% IIQ -269, -8.3% I Half 08 I Half 09 IQ -134, -4.5% I Half 08 I Half 09 FRANCO BERNABE’ 11
    • TELECOM ITALIA GROUP 1H 2009 Results Domestic: Top-Line by Technology Revenues Wireline Revenues Trend Euro mln, % Δ % 09 vs 08 -537M€ Services Total -4.7% 11,428 10,891 1Q 2Q 1Q 2Q -0 .6 -1 .2 Wireline -121, -1.6% -1 .9 -2 .0 Mobile -329, -7.1% Mobile Revenues Trend Elim & Δ % 09 vs 08 adj* I Half 08 I Half 09 Services Total 1Q 2Q 1Q 2Q -4 .9 -5 .9 -7 .1 -7 .1 * Change mainly attributable to +Δ leased lines FRANCO BERNABE’ 12
    • TELECOM ITALIA GROUP 1H 2009 Results Domestic Fixed: TI Access Performance Telecom Italia Retail Access Evolution TI Line Loss Evolution 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 TI Line Loss Evolution 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 OLO Access Growth (TI Wholesale) ULL WLR NAKED +346 265 271 223 112 105 141 162 133 83 101 110 104 122 108 41 39 77 66 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 - Level of OLO Infrastructure + €/month + - FRANCO BERNABE’ 13
    • TELECOM ITALIA GROUP 1H 2009 Results Domestic Fixed: Focus on BB Broadband Market Broadband Activations 2Q09 Total Italian BB accesses ‘000 ‘000 10,660 11,528 11,775 FRESH CHURN MARKET MARKET TI retail accesses ‘000 +16 TI <300 6,564 6,610 6,754 6,843 6,859 Free 79% 81% 76% 77% Flat (%) 75% OLO 2Q08 3Q08 4Q08 1Q09 2Q09 TI BB net adds 7% market share reflects quarter: Broadband ARPU and Service Revenues Euro million; Euro/month Backlog reduction 17.9 18.1 Asymmetry in win back for TI BB ARPU 731 +7.8% 788 - AGCOM Ruling - days to transfer end user between fixed network operators Asymmetry Symmetry IIQ +8.2% Today Tomorrow IQ +7.4% I Half 08 I Half 09 From OLO From TI TI OLO to TI to OLO FRANCO BERNABE’ 14
    • TELECOM ITALIA GROUP 1H 2009 Results Domestic Fixed: Focus on ICT Italian ICT Market Revenues Trend (*) Highlights Euro Bln -8.0% Top / Large Account segment Winning “Structured Partnership” approach with 4,6 leading IT/ICT players 4,2 Enhance value of offer through: 9.0% close interaction with client TI Market 7.1% Share on ICT valorization of network infrastructure +1.9 p.p. Revenues project/realization of nextG IT services I Half 08 I Half 09 Business segment Focus Telecom Italia ICT Revenues Strong leverage on “Impresa Semplice” brand to Euro Mln Service Revenues define TI distinctive positioning in SME segment +13.6% Enrichment of horizontal solutions: certified 330 375 +17.7% e-mail, web collaboration, desktop mgmt 239 Launch of first ICT vertical solutions tailored on 203 specific client segments I Half 08 I Half 09 I Half 08 I Half 09 (*) Source SIRMI FRANCO BERNABE’ 15
    • TELECOM ITALIA GROUP 1H 2009 Results Domestic Mobile Revenues Euro mln 1H’08 1H’09 Δ% YoY Total 4,641 4,312 (7.1) = €cent/minute Mln minutes -3.5% +0,8% 17,778 Outgoing 2,417 2,340 (3.2) (1.7) 12.0 12.1 17,152 Voice 1H 08 1H 09 1H 08 1H 09 + €cent/minute Mln minutes Incoming Traffic -11.0% -3.0% Business 862 776 (10.0) (1.8) 10.0 8.9 7,155 6,940 Received * 1H 08 1H 09 1H 08 1H 09 + Euro mln Messaging Content Browsing -7% 512 474 +12% -29% VAS 1,037 969 (6.6) (1.5) 229 296 332 162 1H 08 1H 09 1H 08 1H 09 1H 08 1HQ 09 + Mobile Handsets (mln) Sales/unit € 3.1 2.0 Handsets 325 227 (30.2) (2.1) 2G 47% 37% 112 104 3G+Laptops & 53% 63% Internet keys 1H 08 1H 09 1H 08 1H 09 (*) Incoming, Visiting and Other Revenues FRANCO BERNABE’ 16
    • TELECOM ITALIA GROUP 1H 2009 Results Mobile TOP and Business Segments KPI trend 1H 09 Main Actions 2H09 “Convergent Offering” MNP trend (‘000) Start service extension and up-selling Consip contract: of VAS to PA lines base +160K lines activated Increase Fixed-Mobile-IT convergence TOP & +72 Extension to 390K by YE Push Blackberry voice/data bundles and Large Accounts device management Strong win-back of large accounts Develop mobile remote access/ applications “Integrated Caring” Market share Intensify pre-retention actions 10-499 employees Δ YoY Customer base Push on cross selling to fixed customer base growth led by non- Develop business driven VAS: human lines Entry-level promotions SME/SOHO -0.5pp Halt of human line Segmented offers according to usage loss as of June Increase portfolio of enabling devices month ’09 Continue improving customer satisfaction TIM Competitors FRANCO BERNABE’ 17
    • TELECOM ITALIA GROUP 1H 2009 Results Mobile Consumer Segments Market Share trend 1H09 Main Actions 2H09 Δ YoY “Lock-in” Dedicated customer service for One2One caring Stable revenues trend due to Step-up 24 month lock-in with flat offering and Elite stable high value CB handset subsidy growth Increase mobile BB penetration through upselling Strong push on acquisitions leveraging on new MNP and convenient tariff plans: “Win back & MNP promotion with handsets value reimbursed in traffic to improve acquisition quality invest on Loss of cost- conscious Competitive price plan for high usage clients elasticity” Massive -0.4pp customers Develop usage through: One2One actions on-net Broader Messaging offers extended to voice-only target Push mobile BB with strong lock-in on aggressive bundle offers Upsell microbrowsing Broaden Friends&Family options to drive on-net volumes “Reclaim” Loss of cost- Launch Special tariffs for text messaging using seasonal conscious Tribù Young -1.1pp with high on net promotions (Carta Vacanze and Summer crash program) Extend concept of Young communities to attack transversal volumes communities leveraging same price architecture TIM Competitors FRANCO BERNABE’ 18
    • TELECOM ITALIA GROUP 1H 2009 Results Agenda TI Group Main Achievements Focus on Domestic Business Focus on TIM Brasil Wrap Up FRANCO BERNABE’ 19
    • TELECOM ITALIA GROUP 1H 2009 Results TIM Brasil: Reversing the Trend in Market Share and MNP Net Adds e Net Share TIM Market Share TIM ‘000 lines. % Market share % Net share% Ranking in net share 29.1% #1 #2 #1 37.7% 32.2% 24.1% % Net 2.000 17.4% 0 1,729 0 share 1.500 0 0 1,282 Apr May Jun 0 0 1.000 Net Adds 500 2400% Clean-up: 2350% ~1mln lines 0 2Q08 2Q09 2300% Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2008 2009 MNP Post Paid Customer Base TIM % MNP-in/out Mln Lines 145% 145% Consumer 113% 120% Post paid + 125% 105% 107% “Zero Balance” Corporate 85% 78% 69% 65% - 56% 55% 44% 62% 45% 40% 24% 26% 46% 25% 23% 2008 2009 22% 25% 14% Jan Feb Mar Apr May Jun Pre-paid 27.0 28.4 29.8 29.9 31.6 Post-paid 6.8 6.8 6.6 6.2 6.2 FRANCO BERNABE’ 20
    • TELECOM ITALIA GROUP 1H 2009 Results TIM Brasil: Organic Main Results Brazil: FY09 EBITDA Guidance R$ bln, % Euro mln, % +10% Revenues 3.3 ~3.6 +47M€ 2,252 +2.1% 2,299 FY08A FY09E IIQ +40, +3.4% EBITDA +3.7 p.p. 24.2% % on 20.5% IQ +7, +0.7% Revenues +94M€ +20.4% 1H08 1H09 556 Opex 462 -47M€ IIQ +50, 20.1% 1.790 -2.6% 1.743 IIQ -10, -1.1% IQ +44, +20.7% IQ -37, -4.4% 1H08 1H09 1H08 1H09 FRANCO BERNABE’ 21
    • TELECOM ITALIA GROUP 1H 2009 Results TIM Brasil: The Path Ahead Always Focusing on Profitability 1Q09 2Q09 3Q09 4Q09 New offer portfolio: Fostering usage: Commercial Push Strategy: Pure Mobile “recarga imperdível” Commercial on new offers April (Infinity prepaid. LD Infinity Organization: new Da Vinci) Dubling Node-B in 3G management team June (Infinity postpaid. Increase in market share: coverage Unico) Advertising: new format Postpaid voice(BU/CO) Push on sale channels: Push on prepaid Infinity Closing Intelig and first and higher advertising “Back-to” postpaid synergies captured presence Focus on MNP Offer (July) 4 in 1 Back to Top of Mind and Network quality Improving customer Customer Preference satisfaction New“Imperdível” “Network and Brand “Back to Sales” “Back to Talking” “Back to Growth” Recovery” Restructuring the company, recovering strong positioning, sustaining profitability and cash flow FRANCO BERNABE’ 22
    • TELECOM ITALIA GROUP 1H 2009 Results Agenda TI Group Main Achievements Focus on Domestic Business Focus on TIM Brasil Wrap up FRANCO BERNABE’ 23
    • TELECOM ITALIA GROUP 1H 2009 Results TI Group 1H 09 Progress Report Enhanced Regulatory Dialogue Improved Customer Satisfaction Domestic Reshaped Revenue Mix Recovered in Fixed Business Focus on Late on Consumer Mobile Performance Core Stabilize Continued Cash Cost Rationalization Markets Ebitda and Reversed Commercial Kpis Improve Free Cash Brazil Safeguarded Profitability Flow Generation Refinancing Completed Financial Discipline Reduced Average Cost of Debt FRANCO BERNABE’ 24
    • TELECOM ITALIA GROUP 1H 2009 Results Back-up FRANCO BERNABE’ 25
    • TELECOM ITALIA GROUP 1H 2009 Results Domestic: Revenues by Customer Segment and technology Euro million, %; Organic data Domestic Revenues* Domestic Revenues by Technology by Customer Segment 11,428 -4.7% 10,891 Total Domestic 11,428 -4.7% 10,891 TI Sparkle & 1,755 Nat. wholesale 1,851 Mobile 4,641 -7.1% 1,872 4,312 Top --3.0% 1,816 Business 2,092 --8.7% 1,911 Wireline 7,522 -1.6% 7,401 5,947 --6.8% Consumer 5,544 Elim, adj & -238 -231 I Half 08 I Half 09 others I Half 08 I Half 09 * Domestic= Core domestic + TI Sparkle Group FRANCO BERNABE’ 26
    • TELECOM ITALIA GROUP 1H 2009 Results Consumer: Offering Roadmap Mobile 3Q Broadband 3Q Offering Portfolio Offering Portfolio Cross Selling - homeTV con Alice Mobile sul conto Telecom 630k Target Activations Pro Pro Pro Massivo From launch Novità m m m Maxxi Internet o o o Cartavacanze MaxxiRicarica Novità Messaggi Target TIMin2 Elite 2.0 7Mb Alice Casa Alice Casa ADSL Internet Voce& QuickStart 20€ Internet 66k ALICE Tutto + Target 7Mb Young 2.0 Activations 20Mb 20€ 7Mb 10 €/mese 30h (con chiavetta) From launch DAY 25€ Incluso Target 35€ 20 €/mese 30h Etnico 23€ 20Mb (con pc) Voce 35€ 20 €/mese 100h € Voce (solo traffico) Con Canone Senza Canone Acquisitions BB Fixed + Voice MNP Alice Day New promotion “Ti rimborso il telefono”: handset value returned in traffic Increase penetration of occasional ADSL users. Entry level offering New exclusive concept for value acquisitions monthly cost of 3 € (including basic modem basic) and daily 2€ token with a focus on Large Distribution Anti Digital Divide Strengthening of cross MNP promotion TIM Welcome Home BB in areas not covered by ADSL. Wi-fi routermobile + traffic Aggressive tariffs for international calls Voice Traffico Voce no limits: without monthly fee of 25 € rtg line + limitless F-F Carta Vacanze develop voice and sms traffic Opzione chiama Mobile in Retention e Win Back TIM in2 for on-net volume development Loyalty and retention Mobile BB Launch of new Club Premium for top clients Alice Mobile Quickstart: increase mobile BB penetration among ADSL Strengthening of “competitive like” retention offerings and customers, 3 €/month (for 24 months), including 3 h of traffic, key and soft Lock in plan for top clients tariff (2€/h). On credit cards and TI account FRANCO BERNABE’ 27
    • TELECOM ITALIA GROUP 1H 2009 Results Business: Offering Roadmap Marketing Strategy II Half Voice Widening of most successful range of offerings: One Business (bulk of usable minutes on all customers’ lines with an extension to SMS) FLEX (highly modular offer with profile enrichment) MOBILE BB Widening of target market with semi-flat and consumption offerings for Browsing and Mail Strong push on the use of enabling handsets with mail and browsing services (full qwerty). Voice Release of new bundle offerings for voice-only customers Offering differentitation through SLA improvement FIXED BB Widening of 2play range of offerings and improvement of broadband performance (upload increase) Relaunch of BroadBand entry level offerings Repositioning of Flat packages RETENTION Revision of pre-retention and churn management rational, based on new predictive algorithms Completion of standard solutions and launch of vertical solutions ICT Bundling of off the shelf ICT services with broadband services and PCs CONVERGENT One customer service FRANCO BERNABE’ 28
    • TELECOM ITALIA GROUP 1H 2009 Results TIM Brasil: 2009 Action Plan: 1H09 Achievements Share of communication investment 1 Repositioning 30% 32% 31% 30% Brand Increase in the share of voice First Player 17% 29% New format to increase recall e brand linkage TIM 24% 19% 2006 2007 2008 2009 TIM Network Quality 2 Focus on 2G network quality 99.5% 100.0% Network 2G: Excellence in voice quality 3G: right on spot 84.1% Dic 08 Mar 09 Jun 09 Customer Satisfaction 3 Selectivity and multi -channel approach = = - + + - Caring Service improvement : decongestion and multi-channel approach Caring model evolution: service level vs. customer value TIM First Player Distinctivity and innovation “Infinity” Success ~2500 4 Infinity pre/ post Prepaid Infinity Base (000 lines) ~1600 New offers “Azul” (long distance = local) ~650 Recarga Imperdivel 5 TIM Unico Mar 09 Apr 09 May 09 Jun 09 “Voltamos a vender” “Back to selling” 5 Go back to growth in post-paid Gross adds Sales Channel Distribution channel rationalization Churn Commissioning based on value 1Q Apr 09 May 09 Jun 09 Bad Debt Evolution Structural re-thinking 9.6% 6 Revision of go-to-market models and supplier renegotiation 6.8% Efficiency Financing the growth and defending profitability 4.7% 4.1% 4.8% 3.6% Improving acquisition quality 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 FRANCO BERNABE’ 29