Premium Call Girls Bangalore Call Girls Service Just Call 🍑👄6378878445 🍑👄 Top...
3Q 2018 Results
1. TIM Group
3Q 2018 Results
November 9th, 2018
Amos Genish
Piergiorgio Peluso
2. 1
3Q’18 Results
Safe Harbour
This presentation contains statements that constitute forward
looking statements regarding the intent, belief or current
expectations of future growth in the different business lines and
the global business, financial results and other aspects of the
activities and situation relating to the TIM 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.
The financial and operating data have been extracted or derived,
with the exception of some data, from the TIM Group Interim
Management Report at 30 September 2018 which have been
prepared in accordance with the International Financial
Reporting Standards issued by IASB and endorsed by the EU
(IFRS) and are unaudited.
The first nine months of 2018 results include the effects arising from the
adoption, starting from 1 January 2018, of the new standards IFRS 9
(Financial Instruments) and IFRS 15 (Revenue from Contracts with
Customers). To enable the year-on-year comparison of the economic and
financial performance for the first nine months of 2018 and 3Q2018 , this
presentation shows “comparable” statement of financial position figures
and “comparable” income statement figures, prepared in accordance
with the previous accounting standards applied (IAS 39, IAS 18, IAS 11,
and relative Interpretation).
4. 3
3Q’18 Results
1,006 1,221
Organic data (1), €mln
3Q’18 Main Results
Resilient top line, cash flow growth
(1) Excluding exchange rate fluctuations & non recurring items
(2) 3Q’17 Domestic Organic Ebitda excludes 28 mln € of liability reversals. This one off item impacted 2Q’17 by 39 mln € and 4Q’17 by 46 mln €. No further YoY impact from this item after 4Q’18
(3) Excluding 630 mln € GSM Licences in 3Q’17
3,553 3,518
1,821 1,764
845 872
-1.0%
Group Domestic Brazil
Stable group revenues: Italy
meeting well all challenges,
Brazil confirming steady
growth
Stable group clean EBITDA:
improvement on Domestic,
positive high single-digit
performance in Brazil
Strong growth in EBITDA
less CAPEX
Group net debt down by
more than €1bn YoY
SERVICE
REVENUES
EBITDA (2)
-0.3%
+3.3%
+8.7%
EBITDA-CAPEX (3)
4,391 4,380
3Q’18 3Q’17 3Q’18 3Q’17 3Q’18
NET DEBT
3Q’17
330 357
-1.4% -3.1%2,149 2,119
1,793 -1.6%Net
one offs -0.1%
26,228
25,190
3Q'17
3Q'18 -1,038
25,308
25,190
FY'17
3Q'18 -118
+21.4%
+18.0%
108 161
+47.1%
Net
one offs2,121
900 1,062
5. 4
3Q’18 Results
3Q’18 Domestic
Domestic transformation is building value
Best in Class
Customer Engagement
Leadership
Positioning
Agile
Organization
Cash-Flow
Generation
DigiTIM
pillars
Consumer:
Building
Sustainable
Premium
Main 3Q Domestic Achievements
Unlimited mobile data for value customers
strengthening convergence
New consumer app (with self care messaging)
Smart-life suite IoTIM
Improved mobile customer journey
Accelerated fiber migration
Optimized B2B sales model
More-for-more business portfolio
Massive adoption of cyber-security services
Business:
Implementing
IT Company
Model
Network simplification: decommissioning started
Keeping the pace on network automation
Intelligence: progress in big data & API exposure
Increased technician productivity
Pervasive FTTx approach
Increased digital experience in assistance
▪ +1.2m retail FTTx lines
▪ +3pp ICT / total business revenues
(from ~18% to ~21%)
▪ +394k ICT clients (from 135k to
529k), 43% penetration
▪ Pilot project on 7 central offices
▪ 34 IT systems shut down
▪ >40 network functions virtualized
▪ >100 APIs already implemented
▪ +8 big data use cases
▪ Productivity: +1.8 jobs/day per
technician (1)
▪ +1.1 mln wholesale FTTx lines
▪ + 23% wholesale non-regulated
revenues
Operational Improvements
9M '17 9M '18
+14%
Strong growth
in Domestic
EBITDA-CAPEX
Financial Results
(KPIs, D YoY)
Shaping
Convergent
Digital
Platform
Reinforcing
Best Italian
Infrastructure
2,725
3,110
(1) Completed gross jobs per day (from 3.4 to 5.2)
Commercial
Technology
Access
6. 5
3Q’18 Results
3Q’18 Domestic Wireline
Improving service revenues and ARPU
2,498 2,492
2,632 2,607
3Q'17 3Q'18
Wireline Revenues
Service
Organic data, € mln
33.4 35.5+6.3% YoY
+11.8% YoY
Consumer
Broadband
ARPU
Positive ARPU effect
from repricing(1),
while more-for-
more approach
limits churn
Premium Position
Consumer
Business
Launched new IoT
app and services
(e.g. TIM Security,
Smart Home,
iHealth)
IoTIM
~1.6mln customers.
New partners:
Amazon and
Dazn, adding
to Netflix
TIM vision
€ / line / month
ICT
Modular approach on ICT value-
added services. Penetration on
total business customer base
materially increased
Cloud & IT services revenues
growing 12% YoY
9%
42%
29%
43%
3Q'17 3Q'18
Enterprise
SME
Wholesale
National
Double-digit growth YoY of
non-regulated service
revenues
Drag on revenues worth 41
mln €, with limited impact on
EBITDA (-4 mln €). Sparkle is
evolving from voice to data,
and is a sound low-margin
business, where scale is key
International
24.5 27.4
Equipment
Retail
Core Service (2)
(1) July repricing of 1.95 euro/month (net of VAT) on about 8 million lines
(2) Includes Domestic Wholesale and excludes Sparkle
2,183 2,211
1,663 1,682
Wireline Domestic -0,9%
-0,3%
+1.1%
+1.3%
7. 6
3Q’18 Results
3Q’18 Domestic Wireline
Healthy FTTx conversion continues
(1) Retail VoIP included
(2) VoIP excluded
Multi-play customers
increased > 40% of
consumer broadband base
Retail and wholesale customers are migrating
to fiber and FTTx adoption is growing:
▪ +12% customers upgraded to FTTx (QoQ)
▪ +2.3m total FTTx lines YoY, o/w +1.2m retail
Internet up to 1000 Mbps
Modem included
TIM VISION
Unlimited calls
Unlimited ITZ Voice F2F
(EU and North America)
Mobile: 1000 minutes and
5 Giga
TIM Connect Black
24%
40%
3Q'17 3Q'18
+16 p.p. YoY retail FTTx
penetration on total
broadband customer base
Accesses (1)
Total Accesses
on TIM
Infrastructure
Broadband FTTx
WHOLESALE
RETAIL
Line losses continued to be impacted
by repricing, increase in competitive
intensity and voice-only erosion
Line Losses
11,203 11,102
8,078 8,114
19,281 19,216
2Q'18 3Q'18
-65
+36
-101
7,547 7,561
7,505 7,553
15,052 15,114
2Q'18 3Q'18
+62
+48
+14 2,776 2,990
1,617 1,924
4,393
4,914
2Q'18 3Q'18
+521
(+12%)
+307
+214
-200 -195
3Q’182Q’18
(2)
8. 7
3Q’18 Results
3Q’18 Domestic Mobile
Limited revenue impact from a complex quarter
TIM 100% F-M
package: 600k
activations to-date
TIM Party loyalty
program: 1.5 mln
signed-up (~350k
convergent) since
launch in June.
Unlimited data for
F-M customers
Loyalty & Convergence
Consumer
Upgraded
customer app
providing new
services (e.g.
TIM Pay) and
access to
customer care
via messaging
TIM PERSONAL
Business
Portfolio
Offers simplification and
more-for-more approach and
relevant win-back deals on
enterprise customers
1,202 1,169
132 159
1,334 1,328
3Q'17 3Q'18
Service
Organic data, € mln
Handsets
-2.8%
+20.7%
flat
€ / line / month
16.4 16.0
3Q'17 3Q'18
Mobile ARPU
(on human SIMs)
-2.0%
Mobile Revenues
Solid Performance
Stable service revenues YoY
with slight improvement
QoQ.
Positive 3Q MNP results
9. 8
3Q’18 Results
3Q’18 Domestic Mobile
New entrant effects minimized through proactive commercial approach
€ Mln, organic data Customer Base
k, Rounded numbers
k, Rounded numbers
Total
o/w Active
o/w LTE
Human
31,629 31,994
23,132 22,738
19,621 19,299
10,424 10,417
2Q'18 3Q'18
+1,2%
78%
penetration
on mobile
broadband CB
-1.6%
-1,7%
Mobile Number Portability Trend (1)
(1) TIM+Kena
2-Tier strategy paying-off
-350
-250
-150
-50
Jul Aug Sep Oct 3Q’18
0
YTD
Loyalty &
Convergence
Core long term
positioning on high value,
diving convergence
2nd Brand
segmented approach
Resilient MNP
with reducing contribution
to new entrant
TIM share of ports-out to Iliad:
~20% in September, reduced from ~24% in
June, both well below TIM’s market share
Further improvement in October
10. 9
3Q’18 Results
1,009
904
3Q’18 TIM Brasil
Steady growth in top line and EBITDA
Organic Performance, R$mln, Rounded numbers
503 740
Double-digit mobile and fixed ultra
broadband ARPU growth
EBITDA double-digit trend
confirmed on a 9M basis
Ongoing efficiency supported
EBITDA margin expansion
Optimized CAPEX in 3Q’18 and
strong EBITDA – CAPEX
performance
Strong operational metrics and
UBB coverage expansion
confirmed: FTTH launched in 5
cities in 3Q’18
Improved consumer sentiment
expected after elections
Merger between TIM Celular and
TIM S.A. will generate relevant
operational and financial synergies,
and unlock ~R$1bn in tax loss
carry-forward from 2018
REVENUES
EBITDA
EBITDA-CAPEX
3Q’183Q’17
+8.7%
1,512 1,644
+47.1%
3,905 4,033
+4.4%
+3.3%
4,083 4,261Total
Service
Mobile
Service
Revenues
TIM Live
Revenues
CAPEX -10.4%
KPIs
Mobile ARPU
R$ 22.6
+10.3%
YoY
12 Months
Postpaid Net
Adds +2.9 Mln
(CB: 19.6 Mln)
TIM Live ARPU
R$ 77.5
+10.4%
YoY
12 Months
Fixed UBB Net
Adds +73k
(CB: 449k)
700 Mhz Cities
1,172
+256
vs YE’17
FTTH1 HH
+761k
vs YE’17
R$ 3.8 Bln
+2.9 % YoY
R$ 0.10 Bln
+35.7% YoY
(1) Addressable households ready to sell
11. 10
3Q’18 Results
Focus on 5G
5G will redefine competitive landscape, strengthening TIM position
5G spectrum leadership further enables seamless experience of TIM ultra broadband access-
agnostic service all-over Italy
Spectrum Leadership
700MHz 10MHz
3.7GHz 80MHz
26GHz 200MHz
• 4x the bandwidth of Wind and
Iliad in 3.7GHz
• Capability to stimulate/cope
with future traffic growth
• Best suited for smart industry
4.0 and FWA services
• “Deep indoor” and strong
mobile broadband QoS in rural
areas
• Strong positioning on
automotive and public safety
verticals
Lower Costs, Higher Quality,
New Services
• Lower industrial cost of data traffic
• Superior throughput, low latency and
improved capacity (n. of served devices x
square km)
• Enhanced mobile broadband to
differentiate retail offer
• Competitive advantage in new verticals
for industrial automation
• 5G pilots in 4 cities, 55 partners, 70 use
cases
Enhanced Ultra Broadband
Access
• FTTH complemented with
5G FWA on 3.7GHz and
26GHz where convenient
• FTTC complemented or
improved - hybridized with
3.7GHz 5G FWA
• 700MHz to provide high-
speed performances
everywhere
FWA @ 3.7Ghz also from already existing
mobile macro sites (~20k)
Multi-technology
ultra broadband
coverage of Italy
13. 12
3Q’18 Results
Organic data, €mln, Δ YoY
(1) Associated to sales of receivables
(2) Capitalized costs are essentially those associated with delivery and activation of fixed lines, with directly related IT and Network costs, which are smoothed on an average 5-yr basis
(3) 3Q’17 Organic Domestic Opex is changed to €2,028 mln (€1,999 mln plus €28 mln of liability reversals)
Sales-related costs up YoY, supporting
commercial performance in a very competitive
environment. Caring cost sub-cluster showing
some improvement
Industrial flat YoY, supported by lower energy
costs
Rigorous cost discipline and zero-base approach
on G&A and IT, also supported by YtD real estate
space reduction of 380k sqm
Labor cost savings driven by FTE reduction of
3.2% YoY (down 1,464 YoY; domestic workforce
3Q18 44,260 vs 45,724 3Q17)
Other costs flat YoY excluding one-offs
3Q’18 Domestic
OPEX: stable YoY trend despite increased commercial activity
3Q17 3Q18
Addressable Cost Base 1,677 flat 1,680
Commercial and Caring 705 4.4% 736
Industrial 266 flat 268
G&A, IT 127 -9.4% 115
Labor 580 -3.3% 561
Other 350 -1 349
Interconnection 410 -30 380
Credit Cost (1)
23 26 49
Bad Debt & Other 30 -11 19
Capitalized Cost & Other (2)
-113 13 -100
Total Opex 2,028 flat 2,029
(3)
14. 13
3Q’18 Results
9/'17 9/'18 9/'17 9/'18
Traffic Growth
Mobile Fixed
+46% +45%
97%
>98%
70% ~80%
9/'17 9/'18
Coverage
LTE
FTTx
▪ Ultra broadband coverage extended in line with Plan
▪ Fixed access YoY reduction derived from having reached ~80% FTTx coverage, which will now continue in synergy with 5G (FWA)
▪ 4G access reduction will be rebalanced by up-and-coming VRAN technology and 5G roll-out
▪ Heavy traffic growth fully supported
▪ Procurement transformation in progress: number of suppliers and unitary costs reduced
9M’18 Domestic
Capital intensity reduced, ultra broadband coverage improved
222 211
298 193
895
420
726
701
379
413
9M'17 9M'18
-572
-22.5%
34
-25
-475
-105
-12
2,547(1)
1,975
Mobile access
Fixed access
Capacity, run and
maintain
CPE & success based
Other
IT
(1) Net of € 630 million License capex in 3Q’17
Organic data, €mln, Δ YoY
CAPEX/sales 22.5% 17.5%-5.0p.p.
15. 14
3Q’18 Results
9M’18 TIM Group
Operating free cash flow generation
(1) - € 407 mln excluding GSM Licence
(2) + € 41 mln excl. Brazilian Spectrum
Reported, €mln
Group
998 1,457
(1,334)
(2,000)
2,332
3,457
EBITDA-
CAPEX
DOWC
OpFCF
+1,125
-666
+459
9M’17 9M’18
Brazil
(86)
176
(552) (310)
466 486
9M’17 9M’18
+20
+242
+262(2)
EBITDA-
CAPEX
DOWC
OpFCF
1,083 1,306
(795)
(1,677)
1,878
2,983
9M’17 9M’18
+1,105
-882
+223(1)
Domestic
DOWC
OpFCF
EBITDA-
CAPEX
Δ operating working capital differences driven by:
▪ Roll-down effect of cash costs: 0.4bn €
▪ VAT change-in-law impact (split payment): 0.3bn €
▪ Early retirement cash-out and other: 0.2bn €
Most of these impacts are specific of 2018 only
16. 15
3Q’18 Results
Other
Impacts
NFP
FY17
NFP
9M18
NFP
1H18
Op.FCF Dividends &
Change in
Equity
Op.FCFFinancial
Expenses &
Cash Taxes
Financial
Expenses &
Cash Taxes
Other
Impacts
NFP
9M’17
9M’18 TIM Group
Net financial position* has been reduced from 3Q’17 and YE’17
+49
€mln; (-) = Cash generated, (+) = Cash absorbed, excluding call-outs
-1,038
-118
*Adjusted for mark-to-market of hedging derivatives
17. 16
3Q’18 Results* TIM also has band in 3400-3600 MHz, as well as Linkem, Aria/Tiscali and other operators (Go Internet, Mandarin, Brennercom, Eolo). For Fastweb, Aria/Tiscali spectrum
acquisition is not considered
Best in class allocation in 3.6-3.8 GHz available from 2018, without material cash-out impact in plan horizon
Focus on 5G
5G auction payments are back-end loaded in 2022, and will not increase group net
financial position until cash-out occurs
5G licences will expire in 2037, 2100MHz will expire in 2021, all other licences will expire in 2029
Vodafone
Wind/3
Iliad
Fastweb
800
LTE
1800
GSM/LTE
2100
UMTS
900
GSM/UMTS
1450
Band “L” (SDL)
3600-3800*
5G
700 26000
2x10 80 200 2x10 20 2x202x10 2x15 5
2x10 200 2x10 20 2x202x10 2x15 5
200 2x10 2x202x10 2x20 10
2x10 200 2x102x5 2x10
200
2600
LTE
2x15
2x15
2x20
2x10
30
80
20
20
MHz TOTAL MHz
EXCLUDING 26GHz
265
265
220
110
20212018 2019 2020
TIM
Schedule
of payments
477€ 18€ 110€
TOTAL investment in 5G
2,399€55€
680,2 million in 700 MHz
1,686 million in 3.6-3.8 GHz
33 million in 26 GHz
mln
Only 606 mln € spend in the next three years
2022
1,738€
18. 17
3Q’18 Results
Bonds Loans (of which long-term rent, financial and
operating lease payable € 2,104)
Undrawn portions of
committed bank lines
Cash & cash
equivalent
(1) € 28,421 mln is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations
(€ 766 mln) and current financial liabilities (€ 814 mln), the gross debt figure of € 30,001 mln is reached
(2) In June, July and October TIM signed € 1.4 bln of bilateral loans at an average term of 3.5 years
(1)
TIM Group
Actively managing refinincing needs to keep a strong liquidity margin
€mln
649
1,449
541
1,494
733
343
1,657
6,8665,000
582
2,447
1,267
564
3,087
2,422
11,186
21,555
3,603
8,603
1,231
3,896
1,808
2,058
3,820
2,765
12,843 28,421
Liquidity margin Within 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Beyond 2023 Total M/L Term
Debt
Liquidity margin improved by € 500 Mln QoQ, supported by new
bilateral loans(2) at a cost below TIM secondary market bond yields,
covering any cash requirement from debt renewals until 2021
Debt Maturities
Liquidity
Margin
20. 19
3Q’18 Results
Closing remarks
The Company remains committed to the strategic priorities of its plan,
which will be reviewed and enhanced
3Q’18 operational achievements:
▪ Domestic transformation leads to strong operational KPIs in a challenging context
▪ Resilient performance in Italy, growth confirmed in Brazil
5G auction financial undertakings will be met with the firmest
determination to deleverage:
▪ Debt reduction remains an utmost priority, driven by organic performance, and further
supported by the disposals of Persidera and Sparkle
22. 21
3Q’18 Results
Organic data(1), €mln, % YoY
~48%
~28%
~12%
~8%
~3%
68%
32%
By Technology By Business Segment
5%
95%
Fixed
+11.5%
Mobile
+2.9%
Domestic Brazil
Consumer
-1.3%
Business
+0.5%
Nat. WHS
+5.6%
Inwit/others
+4.3%
By Technology
▪ Mobile: despite slower prepaid
and postpaid due to macro,
growth confirmed
▪ Fixed: TIM Live double-digit
performance continues. FTTH
launched in 5 cities.
(1) Excluding exchange rate impact and non-recurring items
(2) Net of eliminations
Group
Total Service
Revenues (2)
4,380 -0.3%
Domestic
3,518 -1.0%
Brazil
872 +3.3%
Sparkle
-11.7%
▪ Mobile: Service revenues impact
from Iliad entry remained limited.
Competitive pressure trended
better at the end of the quarter.
▪ Fixed: Retail service revenues up
+1.1%.
▪ Business: continued revenue growth,
steady customer base
▪ Consumer: impacted by competitive
dynamics and still affected by 28-day
billing reversal.
▪ National Wholesale: more fiber and
growth of non-regulated revenues
▪ Sparkle: reduction on low-margin
business; impact on Ebitda limited to -
4 mln € YoY
▪ Inwit: continued organic growth
Fixed -0.3%
Mobile -2.8%
-4%
Other &
Eliminations
3Q’18 TIM Group
Service revenues breakdown
23. 22
3Q’18 Results
TIM Domestic
Ultra broadband network
▪ ~113 k cabinets passed
▪ ~366 k FTTH OTB installed
▪ ~19.4 mln HH passed FTTC
▪ 2,511 cities with commercial active service, o/w:
▪ 2,395 cities FTTC
▪ 116 cities FTTH/FTTC
▪ >19.7k LTE nodes
▪ 7,367 cities LTE with commercial active
service, o/w:
▪ 1,524 with 4Gplus
▪ 12 cities with 4.5G
Fixed UBB
42%
~60%
77% 78.3% 79.8% ~80%
2015 2016 2017 1Q'18 2Q'18 3Q'18
88%
>96%
>98% >98%
2015 2016 2017 1Q'18 2Q'18 3Q'18
% FTTC passed % LTE passed
Mobile UBB
24. 23
3Q’18 Results
Average m/l term maturity:
7.67 years (bond only 7.78 years)
Fixed rate portion on gross debt
approximately 70.3%
Around 31% of outstanding bonds
(nominal amount) denominated in USD
and GBP and is fully hedged
Cost of debt: ~4.4 %
Gross debt 30,001
Financial Assets (4,811)
of which C&CE and marketable securities (3,603)
- C & CE (2,543)
- Marketable securities (1,060)
- Government Securities (551)
- Other (509)
Net financial position 25,190
Maturities and Risk Management
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 on Gross Financial Debt is equal to 1,489 €/mln (of which 169 €/mln on bonds);
- the impact on Financial Assets is equal to 552 €/mln.
Therefore, the Net Financial Indebtedness is adjusted by 937 €/mln
N.B. The difference between total financial assets (€ 4,811 mln) and C&CE and marketable securities (€ 3,603 mln) is equal to € 1,208 mln and refers to positive
MTM derivatives (accrued interests and exchange rate) for € 909 mln, financial receivables for lease for € 90 mln, deposits beyond 3 months for € 1 mln and
other credits for € 208 mln.
TIM Group
Well diversified and hedged debt
€mln
Banks & EIB
5,365Other
704
Op. leases and long rent
2,141
Bonds
21,791
17.9%
72.6%
2.4%
7.1%
25. 24
3Q’18 Results
As from January 1, 2018, IFRS 9 (Financial Instruments)
and IFRS 15 (Revenues from Contracts with
Customers) have to be applied. In order to allow
comparison of the results for 3Q’18 with those for the
same period of the previous year, financial statements
data are also prepared under previous accounting
principles.
IFRS 9 impacts the determination of expected losses
on trade receivables and other financial assets
(change from the incurred loss model provided by IAS
39 to the expected credit loss model).
IFRS 15 impacts the revenue recognition of fixed and
mobile offerings as well as the recognition of relevant
contractual costs, without any impacts on cash flows.
TIM Group
IFRS 9-15 impacts
Reported data, € mln, Rounded numbers
(1) The ongoing refinements, also on supporting IT systems, related to the process of implementation of the new accounting standards, together with the high number of new commercial offers in recent months, have
led - in the financial statements of the first nine months of 2018 - for some specific contractual cases within the fixed and mobile sectors, to the recalculation of the temporal distribution of revenues during the year.
Revenues Services Revenues EBITDA
9M '18 old
IFRS
D IFRS
15
9M '18 new
IFRS
9M '18 old
IFRS
D IFRS
15
9M '18
new IFRS
9M '18 old
IFRS
D IFRS
9 - 15
9M '18
new IFRS
TIM Group 14,217 (140) 14,077 13,165 (140) 13,025 6,030 (252) 5,778
Domestic 11,311 (129) 11,182 10,397 (141) 10,256 4,958 (219) 4,739
Brazil 2,929 (11) 2,918 2,791 1 2,792 1,084 (34) 1,050
(1)
