TELECOM ITALIA GROUP1Q 2012 ResultsMilan, May 10th, 2012          Telecom Italia          1Q 2012 Results          MARCO P...
TELECOM ITALIA GROUP1Q 2012 ResultsSafe HarbourThese presentations contain statements that constitute forward-looking stat...
TELECOM ITALIA GROUP1Q 2012 ResultsAgenda           Domestic 1Q12 Progress Report          Fixed Business          Mobi...
TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Results: Trend still improvingEuro mln, Organic data, %                    Tot...
TELECOM ITALIA GROUP1Q 2012 ResultsAgenda           Domestic 1Q12 Progress Report           Fixed Business           Mo...
TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Fixed: Revenue DynamicsEuro mln, Organic Data, %                        Total ...
TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Fixed: TI Access Performance                              Telecom Italia Acces...
TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Fixed: Focus on Broadband            TI Retail Broadband Accesses             ...
TELECOM ITALIA GROUP1Q 2012 ResultsAgenda           Domestic 1Q12 Progress Report           Fixed Business           Mo...
TELECOM ITALIA GROUP1Q 2012 ResultsMobile Revenues: 1Q12 Results at a GlanceEuro mln, Organic Data                        ...
TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Mobile: Customer Base TrendEuro mln, Organic Data                             ...
TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Mobile – Defending Value of our Customer Base More Value from Options – Consum...
TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Mobile – Focus on Mobile VAS Consumer         VAS Consumer Revenues Trend     ...
TELECOM ITALIA GROUP                              1Q 2012 Results                              SME Segment: TI-Microsoft P...
TELECOM ITALIA GROUP1Q 2012 ResultsUltra Broadband in Motion                 Fixed                       Mobile           ...
TELECOM ITALIA GROUP1Q 2012 ResultsAgenda           Domestic 1Q11 Progress Report           Fixed Business           Mo...
TELECOM ITALIA GROUP1Q 2012 ResultsFocus on 1Q12 Domestic EBITDAEuro mln, Organic Data, %                                 ...
TELECOM ITALIA GROUP1Q 2012 ResultsDomestic 1Q12 Takeaways                         Access Market reduction continues and r...
TELECOM ITALIA GROUP1Q 2012 ResultsAgenda           Domestic 1Q12 Progress Report           Fixed Business           Mo...
TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Wireline RevenuesEuro mln, Organic Data, %                                    ...
TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Mobile RevenuesEuro mln, Organic Data, %                                      ...
TELECOM ITALIA GROUP    1Q 2012 ResultsProgress on Domestic Efficiency PlanEuro mln, Organic Data, %                      ...
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Telecom Italia 1Q 2012 Results - Operations - Marco Patuano (10/05/2012)

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Telecom Italia 1Q 2012 Results - Operations - Marco Patuano (10/05/2012)

  1. 1. TELECOM ITALIA GROUP1Q 2012 ResultsMilan, May 10th, 2012 Telecom Italia 1Q 2012 Results MARCO PATUANO
  2. 2. 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. MARCO PATUANO 1
  3. 3. TELECOM ITALIA GROUP1Q 2012 ResultsAgenda  Domestic 1Q12 Progress Report Fixed Business Mobile Business Cash Cost Rationalization & Operating Model Appendix MARCO PATUANO 2
  4. 4. TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Results: Trend still improvingEuro mln, Organic data, % Total Domestic Revenues Domestic Service Revenues -109 M€ 1Q11 2Q11 3Q11 4Q11 1Q12 4,595 -2.4% 4,486 Mobile 1,679 -1.7% 1,650 -2.3% -3.2% -3.7% Wireline 3,330 -2.9% 3,235 -6.2% -7.6% 1Q11 1Q12 EBITDA EBITDA-Capex % on 49.5% -0.5 p.p. 49.0% Revenues -4 M€ 1,611 -0.2% 1,607 2,274 -78 M€ -3.4% 2,196 % on 35.1% +0.7 p.p. 35.8% Revenues 1Q11 1Q12 1Q11 1Q12 MARCO PATUANO 3
  5. 5. TELECOM ITALIA GROUP1Q 2012 ResultsAgenda  Domestic 1Q12 Progress Report Fixed Business Mobile Business Cash Cost Rationalization & Operating Model Appendix MARCO PATUANO 4
  6. 6. TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Fixed: Revenue DynamicsEuro mln, Organic Data, % Total Fixed Revenues Fixed Revenues Trend – YoY % change 1Q11 4Q11 1Q12 3,330 -2.9% Total 3,235 -2.8% -2.9% -4.5% Equipment +9.8% -15.3% -38.6% Services -1.9% -1.7% 1Q11 1Q12 -4.9% Wholesale Revenues Trend – YoY % change Retail Service Revenues Trend – YoY % change 1Q11 4Q11 1Q12 1Q11 2Q11 3Q11 4Q11 1Q12 Domestic +5.0% -1.0% -1.1% Sparkle Group* +5.5% +8.8% -3.8% -4.0% -3.8% Tariff simplification process begins -18.5% -6.0% -6.3% *Gross of Elim. & Adj. MARCO PATUANO 5
  7. 7. TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Fixed: TI Access Performance Telecom Italia Access TI Line Losses -150k 22,098 21,712 21,562 Reduction Wholesale Wholesale 181 6,952 7,060 7,105 98 45 1Q11 -25k 4Q11 -77k 1Q12 -150k TI Retail 15,145 14,652 14,457 TI Retail -206 -175 -195 1Q11 4Q11 1Q12 M/S 67.7% 66.6% 66.2% Stableon total Mrk Voice ARPU – YoY % change Highlights  Access Market reduction as result of stable TI’s 1Q11 2Q11 3Q11 4Q11 1Q12 line losses and decreasing OLO’s net adds +0.1%  TI’s access market share above 66% -1.1% -1.2%  Line erosion driven by  In Consumer, disconnections in second -3.1% homes (low potential, voice only) -3.8%  In Business Segment, multi-line contracts rationalization and increasing number of Companies exiting the market MARCO PATUANO 6
  8. 8. TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Fixed: Focus on Broadband TI Retail Broadband Accesses Broadband Retail ARPU‘000Total Euro/month/lineMarkets 13,248 13,394 13,485 +0.3%TI retailaccesses 7,194 7,125 7,092 -0.6%Flat (%) 87% 87% 88% 18.4 18.2 18.3 1Q11 4Q11 1Q12 M/S 54.3% 53.2% 52.6% 1Q11 4Q11 1Q12 BB Service Revenues Highlights% YoY +0.8%  Confirming the right direction in TI’s Value Strategy:  Continued positive BB Service Revenues trend +0.5%  QoQ ARPU increase  +1.0 p.p. of Flat offers on TI’s BB Customer +0.3% Base  Increasing BB penetration (+1.5 p.p.) on fixed CB, confirming the low value of TI’s line losses 1Q11 4Q11 1Q12 MARCO PATUANO 7
  9. 9. TELECOM ITALIA GROUP1Q 2012 ResultsAgenda  Domestic 1Q12 Progress Report Fixed Business Mobile Business Cash Cost Rationalization & Operating Model Appendix MARCO PATUANO 8
  10. 10. TELECOM ITALIA GROUP1Q 2012 ResultsMobile Revenues: 1Q12 Results at a GlanceEuro mln, Organic Data Total Mobile Revenues Mobile Handsets Revenues Trend – YoY % change Normalized (*) 1Q11 2Q11 3Q11 4Q11 1Q12 ~-2.5% +96.5% -29 +34.0% Total Mobile +26.2% +71.1% 1,679 -1.7% 1,650 Handset revenues 45 +71.1% 77 -22.4% Mobile Service Revenues Trend – YoY % change Service 1Q11 2Q11 3Q11 4Q11 1Q12 revenues 1,634 -3.7% 1,573 -1.0% Normalized (*) -4.1% ~-4.5% -5.5% -3.7% -7.0% -10.1% -7.5% -7.1% 1Q11 1Q12 -8.7% -11.7% Total Mobile Service Revenues Retail Business Generated(*) Leap year MARCO PATUANO 9
  11. 11. TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Mobile: Customer Base TrendEuro mln, Organic Data Total SIM cards Net Adds ‘000 ‘000 32,227 32,328 31,260 31,679 X5 31,038 548 419 +1,290 222 101 20 1Q11 2Q11 3Q11 4Q11 1Q12 1Q11 2Q11 3Q11 4Q11 1Q12 Balance MPN 2012 Highlights Jan Feb Mar  Sound customer base growth in spite of weak seasonality  Progressive improvement in MNP balance, and lower promo agressivness  Best in class churn rate supported by CRM focus TIM Operator 1 Operator 2 MARCO PATUANO 10
  12. 12. TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Mobile – Defending Value of our Customer Base More Value from Options – Consumer Segment Consumer Calling ARPU Avg  ARPU Ex-ante/Ex-post Business 14% 12% Spontaneous migration by clients Received - from pay-as-you-go profile Lower exposure to to bundle and options MTR cuts + CRM activity on existing CB Progressive Business 86% improvement on 88% Generated quarterly basis + Positive blended impact 1Q11 1Q12 Options benefit Consumer Churn Business Generated Consumer Revenues % YoY 1Q11 2Q11 3Q11 4Q11 1Q12 -1.8% -8 p.p. -3.5% -5.0% -7.2% -9.4% w/o Options with Options MARCO PATUANO 11
  13. 13. TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Mobile – Focus on Mobile VAS Consumer VAS Consumer Revenues Trend Successful strategy pushing on bundle offers aiming at messaging revenues protection and CB fidelization: % YoY  Messaging Volumes: +25% YoY  CB with Messaging Bundle Offers: +44% YoY Messaging Revenues – YoY % change 1Q11 2Q11 3Q11 4Q11 1Q122011 -1.6% -2.5% -5.2% -5.2% Marketing strategy -7.4% focused on bundling data & SMS to avoid Messaging - MBB Users cannibalization +32% 1Q11 1Q12 Continued solid growth in active VAS users and browsing revenues +7.3% Browsing ++ Browsing Revenues +21% underpinning Mobile recovery trend 1Q11 1Q12 Content  Small Screen Large Screen ~70% of Smartphone Leadership confirmed on Handsets sold on dongle: M/S ~38%2012 Solid ARPU increase: Double digit growth in +9.4% YoY users (+11.5% YoY) MARCO PATUANO 12
  14. 14. TELECOM ITALIA GROUP 1Q 2012 Results SME Segment: TI-Microsoft Partnership 1 2 3 4 5 6Basic Pillars First Sinergy Quality Mover & Distribution of Channel Portfolio Innovation Strategy Positioning Services Partner ManagementBusiness Model and Contents Partner Cloud Service Billing Ospit@ CRM/Web Server Side Suite Software Professional SME Client Cloud Partner ServicesChannel Benefits 10-15% Microsoft Partners ~2000 Redemption Expected Potential Partners MARCO PATUANO 13
  15. 15. TELECOM ITALIA GROUP1Q 2012 ResultsUltra Broadband in Motion Fixed Mobile 42 Mbps coverage  FTTC (covering 30 main cities) and in progress in 50 FTTH (in Milan) Retail commercial cities launch expected in 4Q  Reference Offer for wholesale NGAN Access Services submitted Ongoing Trials to Agcom in March, final approval extended to Turin, expected by September Milan, Rome and Naples Maintaining a fixed & mobile coordinated approach MARCO PATUANO 14
  16. 16. TELECOM ITALIA GROUP1Q 2012 ResultsAgenda  Domestic 1Q11 Progress Report Fixed Business Mobile Business Cash Cost Rationalization & Operating Model  Appendix MARCO PATUANO 15
  17. 17. TELECOM ITALIA GROUP1Q 2012 ResultsFocus on 1Q12 Domestic EBITDAEuro mln, Organic Data, % 1 2 3 4 2,274 2,196 (109) +23 (6) +29 (15) -78M€, -3,4% 1Q11 Revenues Interconn. Costs Handsets Mktg&Comm. Fixed Opex* 1Q12 costs Opex 1 3 •Robust growth on Mobile Gross Adds managed •ITZ Wholesale: -36M€ due to gross Voice through Acquisition Costs Control revenues increase •Efficiency program on Fixed Commercial Costs •Retail: +59M€ reflecting MTR cut impact turned into yoy positive contribution to margins 2 4 Personnel Cost reduction from lay-off program Push on Mobile Smartphone with limited (-3% yoy) offsets the negative impact from impact on SAC/Subsidy market prices increase in energy and real estate*** Industrial + Personnel + G&A = Fixed Opex ** Energy unitary price (including taxation) and inflation adj (ISTAT), IMU on Real Estate MARCO PATUANO 16
  18. 18. TELECOM ITALIA GROUP1Q 2012 ResultsDomestic 1Q12 Takeaways Access Market reduction continues and refers to low value lines. Only 25% of TI line losses recovered by OLOs Ongoing tariff simplification process has continued, first including Business segment as of Jan. 1st,, and regarding Consumer again from July 2012, as announced Wireline Broadband: Slight increase in overall market, with OLO’s aggressive promos still continuing. TI stays on its value driven strategy Further increase in TI Broadband Services Revenues (+0.8% YoY in 1Q12 vs +0.5% YoY in 4Q11) Business and Corporate Market continues to suffer, as a consequence of Italian economic scenario Strong improvement on Mobile recovery trend, also supported by one-off events (leap year) and a more rational competition Healthy TIM Customer Base growth, driven by Consumer segment Mobile Mobile Service Revenues declined 3.7% YoY (-3.1% in Retail perimeter, and only -1% if we consider Retail Business Generated, net of MTR drag) Browsing Revenues growth (>20%) driven by small screens, sustained by a winning smartphone strategy MARCO PATUANO 17
  19. 19. TELECOM ITALIA GROUP1Q 2012 ResultsAgenda  Domestic 1Q12 Progress Report Fixed Business Mobile Business Cash Cost Rationalization & Operating Model  Appendix MARCO PATUANO 18
  20. 20. TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Wireline RevenuesEuro mln, Organic Data, % 4Q11 vs 10 1Q11 1Q12 YoY %  % YoY Total 3,330 3,235 (2.9) (2.8) Sparkle Group 319 347 8.8 5.5 Domestic Core Services 2,977 2,887 (3.0) (3.2) Voice & Access 1,420 1,356 (4.5) (6.0) Internet 407 409 0.5 (1.9) Business Data 295 278 (5.8) (4.4) National Wholesale 795 786 (1.1) (1.0) Other 60 57 n.m. n.m. Products 101 62 (38.6) (15.3) Elimination (67) (61) n.m. n.m. MARCO PATUANO 19
  21. 21. TELECOM ITALIA GROUP1Q 2012 ResultsDomestic Mobile RevenuesEuro mln, Organic Data, % 4Q11 vs 10 1Q11 1Q12  % YoY  % YoY Total 1,679 1,650 (1.7) (2.2) Wholesale (*) 75 62 (17.3) (24.4) Retail 1,604 1,588 (1.0) (1.1) o/w Services 1,559 1,511 (3.1) (6.1) o/w Business Generated (**) 1,349 1,335 (1.0) (4.1) o/w Outgoing Voice) 875 825 (5.7) (8.9) o/w VAS 474 510 7.6 5.1 o/w Incoming 209 176 (15.8) (19.5) o/w Handsets 45 77 71.1 96.5(*) Including Visitors(**) Total Retail Services Revenues net of Incoming MARCO PATUANO 20
  22. 22. TELECOM ITALIA GROUP 1Q 2012 ResultsProgress on Domestic Efficiency PlanEuro mln, Organic Data, % Cash Cost Delta Cash Cost 1Q12 vs 1Q11 Target FY : -0,5 Bn  Abs 2.984 -23 +52 -134 1Q12 ’12 vs ‘11 2.879 Total Opex* 2.290 -31 ITX 556 -23 - 105 Handset 165 +6 Efficiency Mktg & 1Q11 Intercon- Volume Efficiency 1Q 12 Comm. 442 - 29 nection Driven 134 Industrial 250 +18 Cash Cost on Revenues % Fixed Opex Personnel 757 -20 +15 Opex Capex G&A & 1Q12 64.9% Other ** 120 +17 % on FY Target ~30% ~25% ~35% - 0.7 p.p. 64.2% Total Capex 589 -74 1Q11 1Q12 Total Cash Cost 2.879 -105 * Costs related to credit management are reclassified from G&A & Other to Mktg & Sales **Includes Other Operating cost/Income and Capitalized Costs MARCO PATUANO 21

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