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2Q 2018 Results

TIM Group reported its 2Q'18 results on July 25th, 2018. Key highlights included: - Positive 0.8% year-over-year growth in group service revenues. - Solid 51.3% year-over-year growth in group operating free cash flow. - Resilient domestic service revenues despite regulatory impacts. - Continued strong performance in Brazil with impressive revenue and EBITDA growth. - Group net debt was reduced by €396 million versus 1Q'18.

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TIM Group 2Q’18 Results July 25th, 2018 Amos Genish Piergiorgio Peluso
1 2Q’18 Results 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. Safe Harbour The financial and operating data have been extracted or derived, with the exception of some data, from the TIM Group Half-year Condensed Consolidated Financial Statements at 30 June 2018 which have been prepared in accordance with the International Financial Reporting Standards issued by IASB and endorsed by the EU (IFRS). The limited review on such interim consolidated financial statements by the external auditors (PwC) has not been completed. The first half 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 2Q2018 and first half of 2018, 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).
2 2Q’18 Results 2Q’18 Results 1 2 Highlights and Main Trends 3 Financial Update DigiTIM Progression 4 Closing Remarks
3 2Q’18 Results Group Organic data(1), €mln 2Q’18 Main Results: Positive Group Revenues Performance, Solid CF Generation Domestic SERVICE REVENUES EBITDA -1.6% 597 903 OpFCF Brazil +0.8% +51.3% 3,493 3,480 2Q'17 2Q'18 -0.4% +5.7% -4.4% +12.7% 775 953 132 122+23.0% -6.0% Record Group OpFCF growth: +51% YoY Net Debt reduction of € 396 mln vs. 1Q’18Net Debt: 25,141 (2) Positive Group Service revenues and double digit EBITDA-CAPEX growth. Resilient Domestic Service Revenues despite: ▪ end of 28-day repricing cycle on fixed (started in April 2017) ▪ direct and indirect (4) effect from 28-day billing roll-back both on fixed and mobile Net of Operational delays, Regulatory impacts and non- linear items comparison (5), Stable Organic Domestic Ebitda YoY Continued strong performance in Brazil, with impressive growth in Service Revenues and Ebitda (1) Excluding exchange rate impact and non-recurring + one-off items (2) These 2Q’17 Organic Ebitda representations exclude as a one-off item 39 € million of liability reversals. Before this change, Group Organic Ebitda stands at 2,124 mln €, and its YoY performance at -3.4%; Domestic Organic Ebitda stands at 1,809 mln €, and its YoY performance at -6.4% (3) Ebitda-Capex including one-offs would have been: € 940 mln in 2Q’17 (+13.8% YoY) for the Group, € 814 mln in 2Q’17 (17.1% YoY) for Domestic (4) Mainly churn due to 30-day free opt-out window after re-pricing (5) Organic Domestic Ebitda YoY normalized comparison: -80 mln € abs.delta YoY, o/w -19 mln € Solidarity, -12 mln € 2017 Bitstream prices , -13 mln € Roam like at home, -8 mln € 28-day billing roll-back direct effect, -28 mln € Vendor Rebates (2) EBITDA-CAPEX +18.8% Highlights 901 1,070 1,770 1,693 872 921 2Q'17 2Q'18 321 362 2,085 2,051 (3) (3) 4,359 4,392 2Q'17 2Q'18
4 2Q’18 Results Organic data(1), €mln, % YoY 2Q’18 TIM Group Service Revenues Breakdown ~48% ~29% ~12% ~9% ~3% 69% 31% By Technology By Business Segment 5% 95% Fixed +5.3% Mobile +5.7 % Domestic Brazil Consumer -1.9% Business +2.2% Nat. WHS +2.1% Inwit/others +7.4% By Technology ▪ Mobile: upselling strategy continues. ARPU and postpaid customer base up ▪ Fixed: TIM Live posts solid, continued, revenue growth (1) Excluding exchange rate impact and non-recurring items (2) Net of eliminations Group Total Serv. Revs.(2) 4,392 +0.8% Domestic 3,480 -0.4% Brazil 921 +5.7% Highlights Sparkle -1.8% ▪ Mobile: Total service revenues slightly below parity due to lower Wholesale and Inwit third party contribution. Retail service revenues are positive YoY. ▪ Fixed: Total service revenues impacted by International Wholesale. Positive retail service revenues, supported by growing ARPU ▪ Business: Continued robust revenue growth, steady customer base ▪ Consumer: impacted by direct and indirect effects of 28-day billing, both on fixed and on mobile ▪ National Wholesale: more fiber and growth of non regulated components ▪ Sparkle: further impacted by YoY drag on IP contracts ▪ Inwit: continued strong organic growth Fixed -0.9% (Retail +0.3%) Mobile -0.2% (Retail +0.5%) -3% Other & Eliminations
5 2Q’18 Results 1Q'18 2Q'18 10,099 10,424 BB Users Voice & Mess. Only HUMAN 19,621 +3.2% +2.1% -2.7% 19,525 13,32413,053 6,2976,472 Domestic Mobile: Growth in Lines and Value k, Rounded numbers (1) Retail excludes WHS, Inwit third-party contribution and Other (2) ARPU Human: service revenues net of visitors (2Q’17 € mln 1,110, 2Q’18 € mln 1,109) on human lines (2Q’17 23,479k, 2Q’18 23,132k) (3) Includes M2M and Business–Segment Large Screens (for Inventory & Fleet Management etc.) Organic data, €mln, ARPU €/month NOT HUMAN(3) ACTIVE CB TOTAL CB 31,629+1.9% Revenues & ARPU Customer Base +8.4% +0.5% 28,117+2.7% 31,036 27,366 8,4967,841 1,145 1,142 156 180 2Q'17 2Q'18 1,062 1,068 -0.2% 1,301 Service Mobile Revenues Product +1.6% 1,322 +15.1% o/w Retail(1) +0.5% 15.8 16.0 2Q'17 2Q'18 ARPU Human(2) +0.8% 32 -155 -352 MNP 2Q’18 – TIM best in class among MNOs k, Rounded numbers 4G Users 78% of Mobile BB Kena second brand strategy paying off Operator 1 Operator 2 +0.8% QoQ
6 2Q’18 Results 33.8 33.9 24.9 26.1 2Q'17 2Q'18 ARPU 2,508 2,485 192 150 2Q'17 2Q'18 1,681 1,686 Service 2,700Total Product -0.9% -2.4% 2,635 o/w Retail +0.3% Domestic Fixed: Premium Positioning, Resilient Performance, UBB Growth (1) TIM Vision fixed customers were 1.6 mln in 2Q’18 vs. 1.4 mln in 1Q’18 (2) Internal estimate of total BB accesses enabled by TIM, excluding Full Infrastructured, Wi Max & Other non-TIM, net of market reconciliation. (3) Active, VoIP included 19,350 19,281 1Q'18 2Q'18 3,803 4,393 Total Accesses BB Accesses(2) +590 -69 o/w UBB 15,006 15,052+46 Retail(3) Wholesale Total Accesses Retail(3) Wholesale o/w UBB 11,203 8,078 2Q’18 1,617 2,776 11,284 8,065 1Q’18 1,319 2,484 delta -82 +12 298 292 -21.9% +0.5% +4.8% Consumer BroadBand k, Rounded numbers, ∆ QoQOrganic data, €mln, ARPU €/month Revenues & ARPU Fixed Accesses Retail(3) Wholesale BB Accesses 3,052 7,547 2,810 7,527 242 19 TIM Vision: +204k fixed customers, 14% QoQ CB growth (1) +3.4% QoQ +2.4% QoQ
7 2Q’18 Results TIM Brasil: Continued Solid Performance Organic Performance, R$mln, Rounded numbers 3.6 3.8 4.0 2Q'16 2Q'17 2Q'18 Net Service Revenues Capex 1.02 Bln +25.8% YoY EBITDA Margin 37.2 % (+2.3 p.p YoY) EBITDA R$ 1.6 Bln +12.7% YoY Mobile ARPU R$ 21.9 +13.0% YoY 12M Postpaid Net Adds +3.2 Mln (CB: 19.1 Mln) TIM Live Arpu R$ 72.1 +12.7% YoY +5.0% +5.7% 12M Fixed UBB Net Adds +75k (CB: 423k) 700 Mhz cities 1,131 +215 vs 4Q’17 FTTH1 HH +519 (000) vs 4Q’17 (1) Addressable households ready to sell Highlights MSR R$ 3.8 Bln +5.7 % YoY TIM Live Revs. R$ 0.09 Bln +41.0 % YoY Total Net Revs. R$ 4.2 Bln +5.8% YoY EBITDA – Capex R$ 0.5 Bln -6.0% YoY (1H18 +17.3 YoY) ▪ Strong growth in a weaker macro ▪ Double digit mobile and fixed UBB ARPU growth ▪ CAPEX phasing leaves FY outlook unchanged ▪ 2018 efficiency target achieved, supporting EBITDA margin expansion ▪ Strong operational and network metrics confirmed
8 2Q’18 Results 2Q’18 Results 1 2 Highlights and Main Trends 3 Financial Update DigiTIM Progression 4 Closing Remarks
9 2Q’18 Results Domestic Ebitda Affected by Operational Delays, Regulatory Impacts, Non-linear items and One-offs Operational Delays ▪ Solidarity labour agreement delay -19.5 mln € Regulatory Impacts ▪ WHL Bitstream ‘17 Retroactive Prices -12.3 mln € ▪ Roam-like-at-home -12.7 mln € ▪ 28-day billing roll-back direct effect (1) -7.6 mln € Non-linear items ▪ Vendor Rebates -27.7 mln € One-Offs ▪ Liability Reversals (2) -38.6 mln € Δ EBITDA YOY = -118.4 mln € (1) € 8 mln Direct Impact of 28 Days billing roll-back (+7.8% on Fixed and +8.2% on Mobile vs +8.6% 2017 Price Effect) (2) Now excluded from 2Q’17 Organic Domestic Ebitda (3) Adjusted for WHL Bitstream ‘17 Retroactive Prices, Vendor Rebates and Liability Reversals. The latter relate to the rebasing of past liabilities performed in 2017 (4) Adjusted for Solidarity, Roam-like-at-home, 28-day billing roll-back direct effect (3) (4) 1,7331,730 2Q’18 Normalized Domestic Ebitda YoY flat New Solidarity Agreement was implemented from June ’18, 19th Specific on 2Q’18 only Comparison cycle ended in June ‘18 Ongoing effect YoY delta normalizing after peak In 3Q’18 and 4Q’18 there will be similar impacts to 2Q’18. Effects will terminate YE’18 2H’18 2Q'17 2Q'18
10 2Q’18 Results Domestic OPEX: Positive Addressable Base Performance affected negatively by Other elements Organic data, €mln ▪ Rigorous Cost discipline driving positive performance on addressable baseline ▪ Sales-related Costs increased YoY supporting Commercial performance ▪ Industrial: efficiencies achieved in Real Estate (office space reduction) triggered also Energy savings. Wholesale delivery standards improved, offering better assurance ▪ Zero-base budget on G&A and IT ▪ Labour cost savings more than compensated delay in Solidarity Agreement ▪ Increase in Other due to Credit Costs, Bad Debt, Vendor Rebate Contributions (4) and Interconnection (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) 2Q’17 Organic Domestic Opex is changed to €2,070 mln (€2,031 mln plus €38.6 mln of liability reversals) (4) Accounted under «Capitalized cost & other» 2Q17 2Q18 Addressable Cost Base 1,816 -1.5% 1,790 Commercial 769 1.4% 780 Industrial 243 -4.5% 232 G&A, IT 131 -5.3% 124 Labour 673 -2.9% 654 Other 254 72 326 Interconnection 362 12 374 Credit Cost (1) 24 26 50 Bad Debt & Other 24 22 46 Capitalized Cost & Other (2) -156 11 -145 Total Opex 2,070 2.2% 2,116 (3)
11 2Q’18 Results Domestic CAPEX: Optimization and Smart Allocation support EFCF Organic data, €mln, Δ YoY 23 12 86 93 129 58 357 183 261 253 139 140 IT Mobile access Fixed access Capacity, run and maintain CPE & success based 995 740 -255 YoY -25.6% Other 2Q17 2Q18 +1 -8 -174 -71 +7 5/'17 5/'18 5/'17 5/'18 Traffic Growth Mobile Fixed +53% +44% 97% 98% 70% 80% 2Q'17 2Q'18 Coverage LTE FTTx ▪ Coverage improved in line with plan ▪ Fixed Access YoY reduction derives from having reached ~80% FTTC coverage. Fixed Access Expansion now mainly FTTH ▪ 4G access temporary reduction due to phasing towards up-and-coming VRAN technology ▪ Heavy traffic growth fully sustained ▪ Optimization in Procurement
12 2Q’18 Results Relevant Debt Reduction YTD €mln; (-) = Cash generated, (+) = Cash absorbed, excluding call-outs -396 -167 Ebitda 2,025 Capex (981) ΔOWC & Others (141) Operating FCF 903 Ebitda 1,893 Capex (694) ΔOWC & Others (1,216) Operating FCF (17) (1) O/w € 379 mln was the impact from changed-by-law VAT Payment. No further related drags to occur after 1Q’18 (1)
13 2Q’18 Results What CEO asked and what we did 2Q’18 Results 1 2 Highlights and Main Trends 3 Financial Update DigiTIM Progression 4 Closing Remarks
14 2Q’18 Results • More than 40% of Fixed BB Consumer customer base are both fixed and mobile TIM customers • Strong push on new convergent loyalty program (TIM Party) with strong communication plan (TV, digital…): ~ 500k customers joining since launch (May) • Fixed-to-Mobile convergence reinforced with TIM Connect offer • Mobile-to-Fixed convergence reinforced with 5GB offer (TIM 100%) • Additional digital services on wireline: Smart Home and TIM Games 2017 2020 IT & Cloud Revenues ~1.5x Grow IT & Cloud to become 25% of total Business revenues • Evolution towards “ICT company” • Public cloud and managed services expansion to further grow Large clients base • Tapping of basic IT opportunity to improve SME’s revenues mix • Fiber and VOIP migration to protect SME’s ARPU level Convergence Step-Up on Consumer More IT Services for Business Key Domestic Commercial Actions
15 2Q’18 Results Transformation Drives Productivity Caring Automated first set of back office processes ▪ Introduced new lean way of working to improve agents productivity WHS Infrastructures, Network & Systems On-field technicians productivity ▪ +9% of daily equivalent activities per technician Opex / Capex efficiencies Contract renegotiation ▪ ~50% of planned professional services renegotiation completed Integrated decommissioning Become lean, fast and agile, embracing Distributed Edge Cloud paradigm and reinforce TIM Technologic leadership ▪ Acceleration of central offices decommissioning; moving toward a full-IP network platform to significantly reduce running costs Digital & Advanced Analytics (AA) Advanced Analytics enabled campaign ▪ New wave of loyalty campaigns on Fixed and Mobile Insourcing Further reduce third party professional services costs, and leverage TIM workforce through re-skilling programs ▪ Systematic cross-BU review effort, training, re-deployment and launch of multiple waves of insourcing
16 2Q’18 Results TIM Multi-technology UBB approach TIM UBB plan is composed of a mix of technologies, fulfilling 2020 Digital Agenda and market requirements, addressing all customers needs everywhere, with a smart-capex approach: @ home, on the move, in the office. ▪ FTTC for nationwide NGAN up to 200 Mb/s (eVDSL) and 500 Mb/s (G.FAST), enables fiber 4G/5G backhauling ▪ FTTH coverage will expand rationally on our huge FTTC infrastructure base, attending any demand up to 1 Giga and beyond ▪ Mobile UBB relies on pervasive LTE coverage, enabling also FWA solutions on same spectrum ▪ FWA will further expand with 5G technologies TIM Technological view Customers view fast, reliable, anywhere FTTx Cabinet Copper Fiber Central office FTTH FWA OTB Splitter Mobile UBB4G 5G >99% OVERALL UBB PoP COVERAGE BY 2020 Virtual RAN Multi-technology Multi-frequency V-RAN 4G begins Full modernization plan for 4G/5G 2018 2021
17 2Q’18 Results What CEO asked and what we did 2Q’18 Results 1 2 Highlights and Main Trends 3 Financial Update DigiTIM Progression 4 Closing Remarks
18 2Q’18 Results Closing Remarks Company fully committed to DigiTIM Plan 2Q’18 Operational Achievements: ▪ Domestic: Premium positioning maintained, Strong KPIs Performance ▪ Effective cost management and strong increase in Group cash generation Moving on with extraordinary Projects: ▪ NetCo ▪ 5G ▪ Disposal of non-core assets
19 2Q’18 Results Thank You
20 2Q’18 Results For further questions please contact the IR Team IR Webpage www.telecomitalia.com/investors +39 06 36882807 +39 02 85956807 Phone E-mail Investor_relations@telecomitalia.it Contact details for all IR representatives: www.telecomitalia.com/ircontacts Investor Relations Contact Details TIM Slideshare www.slideshare.net/telecomitaliacorporate TIM Twitter www.twitter.com/TIMNewsroom
21 2Q’18 Results Annex
22 2Q’18 Results Organic data(1), €mln, % YoY 1H’18 TIM Group Service Revenues Breakdown 48% 29% 12% 9%3% 68% 32% By Technology Fixed -0.6% (Retail +1.3%) Mobile +1.7% (Retail +2.0%) By Business Segment 5% 95% Fixed +8.1% Mobile +5.9% Domestic Brazil Consumer -0.2% Business +3.1% Nat. WHS +1.3% By Technology ▪ Mobile: Strong growth in postpaid (now 34% of total customer base) enables double-digit ARPU growth YoY ▪ Fixed: TIM Live connections grew > 420k. Arpu up 13% (1) Excluding exchange rate impact and non-recurring items (2) Net of eliminations Group Total Serv. Revs.(2) 8,785 +1.9% Domestic 6,879 +0.8% Brazil 1,919 +6.0% Highlights Sparkle -3.0% Inwit +8.9% -3% Other & Eliminations ▪ Mobile: Positive performance with low single digit growth in the first half, due to operational improvements more than compensating regulatory and competitive challenges ▪ Fixed: Positive retail service revenues, with line losses effect offset by higher ARPU ▪ Business: Strong growth supported by unparalleled channel and service ▪ Consumer: Premium and convergent approach supports stable performance ▪ National Wholesale: Continued positive performance ▪ Sparkle: down due to drag on IP contracts ▪ Inwit: up due to traffic and tenancy growth
23 2Q’18 Results FixedMobile % LTE Coverage (1) FTTC Passed % Total Fiber Coverage(1) Domestic UBB Networks • ~113 k cabinets passed • ~325 k FTTH OTB installed • ~19.4 mln HH passed FTTC in > 3,600 cities, speed up to 200 Mbit/s • ~2.7 mln HH connected FTTH in 30 main cities, speed up to 1Gbit/s • >19.7k LTE nodes • 7,336 cities covered in 4G • 1,474 cities 4Gplus, speed up to 300 Mbit/s • 12 cities 4.5G, speed up to 700 Mbit/s 2Q’18 Update
24 2Q’18 Results DigiTIM 2018-’20 Strategic Plan
25 2Q’18 Results • Focus on value maximization via accelerated convergence and new services • Drive digital and analytics as core differentiators (both cost and revenues) • Look for growth in and outside the core (eg. Cloud, IoT, Mobile Advertising, Data Monetization) • In Italy, TIM Fixed UBB lines (Retail + WHS) to grow to ~9 million by 2020 (3x 2017 figure) DRIVERS Sustain Top Line & Profitability Relevant Step-up in 3-Years Cumulated FCF Strong Deleverage and drop in Capex Intensity TARGETS / KPIs • Group Adj. NFP/EBITDA ~2.7x in 2018, further reducing both in 2019 and 2020 (3) • Domestic Capex/Sales <20% by YE2019 • 2018-’20 Group Cumulated Equity Free Cash Flow of ~ €4.5bn (4) excluding spectrum and pre-dividend • Domestic Service Revenues : Broadly Stable • Domestic EBITDA: Low single digit 2017-’20 CAGR (1) • Brazil & Inwit: Continued Growth in Revenues and Ebitda (2) • Enhanced cash generation, supported by operational and financial discipline, will lower our Group Net Debt/Ebitda ratio by end 2018 • Domestic Capex / Sales moving back to normal intensity, having now completed catch-up phase • Selective growth investments to maximize ROI • Lower capital intensity following network rollout • Reduce costs while improving customer satisfaction through agile customer journey redesign (1) On Organic basis (2) Specific Company guidance is in the Annex section (3) Spectrum not included (4) Cumulative ’15-’17 Equity Free Cash Flow at €1.6bln, excl. M&A Over2018-2020 PlanPeriod 2018and20192020 GOALS TIM 2018-’20 Targets
26 2Q’18 Results 1,015 1,488 600 750 994 332 1,244 6,4235,000 582 2,443 1,267 564 3,089 2,423 11,153 21,521 3,137 8,137 1,597 3,931 1,867 1,314 4,083 2,755 12,397 27,944 Liquidity margin Within 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Beyond 2023 Total M/L Term Debt Bonds Loans (of which long-term rent, financial and operating lease payable € 2,147) Drawn bank facilityUndraw portions of committed C&CE (1) € 27,944 mln is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€ 745 mln) and current financial liabilities (€ 706 mln), the gross debt figure of € 29,395 mln is reached Maturities and Liquidity Margin Liquidity Margin €mln (1) Covered until 2021 Debt Maturities
27 2Q’18 Results Well Diversified and Hedged Debt Average m/l term maturity: 7.87 years (bond only 8.02 years) Fixed rate portion on gross debt approximately 71.1% Around 31% of outstanding bonds (nominal amount) denominated in USD and GBP and is fully hedged Cost of debt: ~4.5 % Gross debt € 29,395 Financial Assets € (4,254) of which C&CE and marketable securities € (3,137) - C & CE € (2,102) - Marketable securities € (1,035) - Government Securities € (456) - Other € (579) Net financial position € 25,141 16.8% 73.5% 2.3% 7.4% Maturities and Risk ManagementBanks & EIB 4,937 Other 677 Op. leases and long rent 2,184 €mln 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 1,578 €/mln (of which 204 €/mln on bonds) - the impact on Financial Assets is equal to 678 €/mln Therefore, the Net Financial Indebtedness is adjusted by 900 €/mln. N.B. The difference between total financial assets (€ 4,254 mln) and C&CE and marketable securities (€ 3,137 mln) is equal to € 1,117 mln and refers to positive MTM derivatives (accrued interests and exchange rate) for € 808 mln, financial receivables for lease for € 95 mln, deposits beyond 3 months for € 1 mln and other credits for € 213 mln. Bonds 21,597
28 2Q’18 Results TIM Group 2Q’18 – IFRS 9-15 impacts Revenues Service Revenues EBITDA 2Q’18 old IFRS ΔIFRS 15 2Q’18 new IFRS 2Q’18 old IFRS ΔIFRS 15 2Q’18 new IFRS 2Q’18 old IFRS ΔIFRS 9 - 15 2Q’18 new IFRS Reported data, € mln, Rounded numbers TIM Group 4,770 -38 4,732 4,392 -39 4,353 2,025 -79 1,946 Domestic 3,809 -36 3,773 3,480 -39 3,440 1,667 -69 1,598 Brazil 970 -2 968 921 0 922 362 -11 351 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 2Q’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.

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2Q 2018 Results

  • 1.
    TIM Group 2Q’18 Results July25th, 2018 Amos Genish Piergiorgio Peluso
  • 2.
    1 2Q’18 Results This presentationcontains 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. Safe Harbour The financial and operating data have been extracted or derived, with the exception of some data, from the TIM Group Half-year Condensed Consolidated Financial Statements at 30 June 2018 which have been prepared in accordance with the International Financial Reporting Standards issued by IASB and endorsed by the EU (IFRS). The limited review on such interim consolidated financial statements by the external auditors (PwC) has not been completed. The first half 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 2Q2018 and first half of 2018, 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).
  • 3.
    2 2Q’18 Results 2Q’18 Results 1 2 Highlightsand Main Trends 3 Financial Update DigiTIM Progression 4 Closing Remarks
  • 4.
    3 2Q’18 Results Group Organic data(1),€mln 2Q’18 Main Results: Positive Group Revenues Performance, Solid CF Generation Domestic SERVICE REVENUES EBITDA -1.6% 597 903 OpFCF Brazil +0.8% +51.3% 3,493 3,480 2Q'17 2Q'18 -0.4% +5.7% -4.4% +12.7% 775 953 132 122+23.0% -6.0% Record Group OpFCF growth: +51% YoY Net Debt reduction of € 396 mln vs. 1Q’18Net Debt: 25,141 (2) Positive Group Service revenues and double digit EBITDA-CAPEX growth. Resilient Domestic Service Revenues despite: ▪ end of 28-day repricing cycle on fixed (started in April 2017) ▪ direct and indirect (4) effect from 28-day billing roll-back both on fixed and mobile Net of Operational delays, Regulatory impacts and non- linear items comparison (5), Stable Organic Domestic Ebitda YoY Continued strong performance in Brazil, with impressive growth in Service Revenues and Ebitda (1) Excluding exchange rate impact and non-recurring + one-off items (2) These 2Q’17 Organic Ebitda representations exclude as a one-off item 39 € million of liability reversals. Before this change, Group Organic Ebitda stands at 2,124 mln €, and its YoY performance at -3.4%; Domestic Organic Ebitda stands at 1,809 mln €, and its YoY performance at -6.4% (3) Ebitda-Capex including one-offs would have been: € 940 mln in 2Q’17 (+13.8% YoY) for the Group, € 814 mln in 2Q’17 (17.1% YoY) for Domestic (4) Mainly churn due to 30-day free opt-out window after re-pricing (5) Organic Domestic Ebitda YoY normalized comparison: -80 mln € abs.delta YoY, o/w -19 mln € Solidarity, -12 mln € 2017 Bitstream prices , -13 mln € Roam like at home, -8 mln € 28-day billing roll-back direct effect, -28 mln € Vendor Rebates (2) EBITDA-CAPEX +18.8% Highlights 901 1,070 1,770 1,693 872 921 2Q'17 2Q'18 321 362 2,085 2,051 (3) (3) 4,359 4,392 2Q'17 2Q'18
  • 5.
    4 2Q’18 Results Organic data(1),€mln, % YoY 2Q’18 TIM Group Service Revenues Breakdown ~48% ~29% ~12% ~9% ~3% 69% 31% By Technology By Business Segment 5% 95% Fixed +5.3% Mobile +5.7 % Domestic Brazil Consumer -1.9% Business +2.2% Nat. WHS +2.1% Inwit/others +7.4% By Technology ▪ Mobile: upselling strategy continues. ARPU and postpaid customer base up ▪ Fixed: TIM Live posts solid, continued, revenue growth (1) Excluding exchange rate impact and non-recurring items (2) Net of eliminations Group Total Serv. Revs.(2) 4,392 +0.8% Domestic 3,480 -0.4% Brazil 921 +5.7% Highlights Sparkle -1.8% ▪ Mobile: Total service revenues slightly below parity due to lower Wholesale and Inwit third party contribution. Retail service revenues are positive YoY. ▪ Fixed: Total service revenues impacted by International Wholesale. Positive retail service revenues, supported by growing ARPU ▪ Business: Continued robust revenue growth, steady customer base ▪ Consumer: impacted by direct and indirect effects of 28-day billing, both on fixed and on mobile ▪ National Wholesale: more fiber and growth of non regulated components ▪ Sparkle: further impacted by YoY drag on IP contracts ▪ Inwit: continued strong organic growth Fixed -0.9% (Retail +0.3%) Mobile -0.2% (Retail +0.5%) -3% Other & Eliminations
  • 6.
    5 2Q’18 Results 1Q'18 2Q'18 10,09910,424 BB Users Voice & Mess. Only HUMAN 19,621 +3.2% +2.1% -2.7% 19,525 13,32413,053 6,2976,472 Domestic Mobile: Growth in Lines and Value k, Rounded numbers (1) Retail excludes WHS, Inwit third-party contribution and Other (2) ARPU Human: service revenues net of visitors (2Q’17 € mln 1,110, 2Q’18 € mln 1,109) on human lines (2Q’17 23,479k, 2Q’18 23,132k) (3) Includes M2M and Business–Segment Large Screens (for Inventory & Fleet Management etc.) Organic data, €mln, ARPU €/month NOT HUMAN(3) ACTIVE CB TOTAL CB 31,629+1.9% Revenues & ARPU Customer Base +8.4% +0.5% 28,117+2.7% 31,036 27,366 8,4967,841 1,145 1,142 156 180 2Q'17 2Q'18 1,062 1,068 -0.2% 1,301 Service Mobile Revenues Product +1.6% 1,322 +15.1% o/w Retail(1) +0.5% 15.8 16.0 2Q'17 2Q'18 ARPU Human(2) +0.8% 32 -155 -352 MNP 2Q’18 – TIM best in class among MNOs k, Rounded numbers 4G Users 78% of Mobile BB Kena second brand strategy paying off Operator 1 Operator 2 +0.8% QoQ
  • 7.
    6 2Q’18 Results 33.8 33.9 24.926.1 2Q'17 2Q'18 ARPU 2,508 2,485 192 150 2Q'17 2Q'18 1,681 1,686 Service 2,700Total Product -0.9% -2.4% 2,635 o/w Retail +0.3% Domestic Fixed: Premium Positioning, Resilient Performance, UBB Growth (1) TIM Vision fixed customers were 1.6 mln in 2Q’18 vs. 1.4 mln in 1Q’18 (2) Internal estimate of total BB accesses enabled by TIM, excluding Full Infrastructured, Wi Max & Other non-TIM, net of market reconciliation. (3) Active, VoIP included 19,350 19,281 1Q'18 2Q'18 3,803 4,393 Total Accesses BB Accesses(2) +590 -69 o/w UBB 15,006 15,052+46 Retail(3) Wholesale Total Accesses Retail(3) Wholesale o/w UBB 11,203 8,078 2Q’18 1,617 2,776 11,284 8,065 1Q’18 1,319 2,484 delta -82 +12 298 292 -21.9% +0.5% +4.8% Consumer BroadBand k, Rounded numbers, ∆ QoQOrganic data, €mln, ARPU €/month Revenues & ARPU Fixed Accesses Retail(3) Wholesale BB Accesses 3,052 7,547 2,810 7,527 242 19 TIM Vision: +204k fixed customers, 14% QoQ CB growth (1) +3.4% QoQ +2.4% QoQ
  • 8.
    7 2Q’18 Results TIM Brasil:Continued Solid Performance Organic Performance, R$mln, Rounded numbers 3.6 3.8 4.0 2Q'16 2Q'17 2Q'18 Net Service Revenues Capex 1.02 Bln +25.8% YoY EBITDA Margin 37.2 % (+2.3 p.p YoY) EBITDA R$ 1.6 Bln +12.7% YoY Mobile ARPU R$ 21.9 +13.0% YoY 12M Postpaid Net Adds +3.2 Mln (CB: 19.1 Mln) TIM Live Arpu R$ 72.1 +12.7% YoY +5.0% +5.7% 12M Fixed UBB Net Adds +75k (CB: 423k) 700 Mhz cities 1,131 +215 vs 4Q’17 FTTH1 HH +519 (000) vs 4Q’17 (1) Addressable households ready to sell Highlights MSR R$ 3.8 Bln +5.7 % YoY TIM Live Revs. R$ 0.09 Bln +41.0 % YoY Total Net Revs. R$ 4.2 Bln +5.8% YoY EBITDA – Capex R$ 0.5 Bln -6.0% YoY (1H18 +17.3 YoY) ▪ Strong growth in a weaker macro ▪ Double digit mobile and fixed UBB ARPU growth ▪ CAPEX phasing leaves FY outlook unchanged ▪ 2018 efficiency target achieved, supporting EBITDA margin expansion ▪ Strong operational and network metrics confirmed
  • 9.
    8 2Q’18 Results 2Q’18 Results 1 2 Highlightsand Main Trends 3 Financial Update DigiTIM Progression 4 Closing Remarks
  • 10.
    9 2Q’18 Results Domestic EbitdaAffected by Operational Delays, Regulatory Impacts, Non-linear items and One-offs Operational Delays ▪ Solidarity labour agreement delay -19.5 mln € Regulatory Impacts ▪ WHL Bitstream ‘17 Retroactive Prices -12.3 mln € ▪ Roam-like-at-home -12.7 mln € ▪ 28-day billing roll-back direct effect (1) -7.6 mln € Non-linear items ▪ Vendor Rebates -27.7 mln € One-Offs ▪ Liability Reversals (2) -38.6 mln € Δ EBITDA YOY = -118.4 mln € (1) € 8 mln Direct Impact of 28 Days billing roll-back (+7.8% on Fixed and +8.2% on Mobile vs +8.6% 2017 Price Effect) (2) Now excluded from 2Q’17 Organic Domestic Ebitda (3) Adjusted for WHL Bitstream ‘17 Retroactive Prices, Vendor Rebates and Liability Reversals. The latter relate to the rebasing of past liabilities performed in 2017 (4) Adjusted for Solidarity, Roam-like-at-home, 28-day billing roll-back direct effect (3) (4) 1,7331,730 2Q’18 Normalized Domestic Ebitda YoY flat New Solidarity Agreement was implemented from June ’18, 19th Specific on 2Q’18 only Comparison cycle ended in June ‘18 Ongoing effect YoY delta normalizing after peak In 3Q’18 and 4Q’18 there will be similar impacts to 2Q’18. Effects will terminate YE’18 2H’18 2Q'17 2Q'18
  • 11.
    10 2Q’18 Results Domestic OPEX:Positive Addressable Base Performance affected negatively by Other elements Organic data, €mln ▪ Rigorous Cost discipline driving positive performance on addressable baseline ▪ Sales-related Costs increased YoY supporting Commercial performance ▪ Industrial: efficiencies achieved in Real Estate (office space reduction) triggered also Energy savings. Wholesale delivery standards improved, offering better assurance ▪ Zero-base budget on G&A and IT ▪ Labour cost savings more than compensated delay in Solidarity Agreement ▪ Increase in Other due to Credit Costs, Bad Debt, Vendor Rebate Contributions (4) and Interconnection (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) 2Q’17 Organic Domestic Opex is changed to €2,070 mln (€2,031 mln plus €38.6 mln of liability reversals) (4) Accounted under «Capitalized cost & other» 2Q17 2Q18 Addressable Cost Base 1,816 -1.5% 1,790 Commercial 769 1.4% 780 Industrial 243 -4.5% 232 G&A, IT 131 -5.3% 124 Labour 673 -2.9% 654 Other 254 72 326 Interconnection 362 12 374 Credit Cost (1) 24 26 50 Bad Debt & Other 24 22 46 Capitalized Cost & Other (2) -156 11 -145 Total Opex 2,070 2.2% 2,116 (3)
  • 12.
    11 2Q’18 Results Domestic CAPEX:Optimization and Smart Allocation support EFCF Organic data, €mln, Δ YoY 23 12 86 93 129 58 357 183 261 253 139 140 IT Mobile access Fixed access Capacity, run and maintain CPE & success based 995 740 -255 YoY -25.6% Other 2Q17 2Q18 +1 -8 -174 -71 +7 5/'17 5/'18 5/'17 5/'18 Traffic Growth Mobile Fixed +53% +44% 97% 98% 70% 80% 2Q'17 2Q'18 Coverage LTE FTTx ▪ Coverage improved in line with plan ▪ Fixed Access YoY reduction derives from having reached ~80% FTTC coverage. Fixed Access Expansion now mainly FTTH ▪ 4G access temporary reduction due to phasing towards up-and-coming VRAN technology ▪ Heavy traffic growth fully sustained ▪ Optimization in Procurement
  • 13.
    12 2Q’18 Results Relevant DebtReduction YTD €mln; (-) = Cash generated, (+) = Cash absorbed, excluding call-outs -396 -167 Ebitda 2,025 Capex (981) ΔOWC & Others (141) Operating FCF 903 Ebitda 1,893 Capex (694) ΔOWC & Others (1,216) Operating FCF (17) (1) O/w € 379 mln was the impact from changed-by-law VAT Payment. No further related drags to occur after 1Q’18 (1)
  • 14.
    13 2Q’18 Results What CEOasked and what we did 2Q’18 Results 1 2 Highlights and Main Trends 3 Financial Update DigiTIM Progression 4 Closing Remarks
  • 15.
    14 2Q’18 Results • Morethan 40% of Fixed BB Consumer customer base are both fixed and mobile TIM customers • Strong push on new convergent loyalty program (TIM Party) with strong communication plan (TV, digital…): ~ 500k customers joining since launch (May) • Fixed-to-Mobile convergence reinforced with TIM Connect offer • Mobile-to-Fixed convergence reinforced with 5GB offer (TIM 100%) • Additional digital services on wireline: Smart Home and TIM Games 2017 2020 IT & Cloud Revenues ~1.5x Grow IT & Cloud to become 25% of total Business revenues • Evolution towards “ICT company” • Public cloud and managed services expansion to further grow Large clients base • Tapping of basic IT opportunity to improve SME’s revenues mix • Fiber and VOIP migration to protect SME’s ARPU level Convergence Step-Up on Consumer More IT Services for Business Key Domestic Commercial Actions
  • 16.
    15 2Q’18 Results Transformation DrivesProductivity Caring Automated first set of back office processes ▪ Introduced new lean way of working to improve agents productivity WHS Infrastructures, Network & Systems On-field technicians productivity ▪ +9% of daily equivalent activities per technician Opex / Capex efficiencies Contract renegotiation ▪ ~50% of planned professional services renegotiation completed Integrated decommissioning Become lean, fast and agile, embracing Distributed Edge Cloud paradigm and reinforce TIM Technologic leadership ▪ Acceleration of central offices decommissioning; moving toward a full-IP network platform to significantly reduce running costs Digital & Advanced Analytics (AA) Advanced Analytics enabled campaign ▪ New wave of loyalty campaigns on Fixed and Mobile Insourcing Further reduce third party professional services costs, and leverage TIM workforce through re-skilling programs ▪ Systematic cross-BU review effort, training, re-deployment and launch of multiple waves of insourcing
  • 17.
    16 2Q’18 Results TIM Multi-technologyUBB approach TIM UBB plan is composed of a mix of technologies, fulfilling 2020 Digital Agenda and market requirements, addressing all customers needs everywhere, with a smart-capex approach: @ home, on the move, in the office. ▪ FTTC for nationwide NGAN up to 200 Mb/s (eVDSL) and 500 Mb/s (G.FAST), enables fiber 4G/5G backhauling ▪ FTTH coverage will expand rationally on our huge FTTC infrastructure base, attending any demand up to 1 Giga and beyond ▪ Mobile UBB relies on pervasive LTE coverage, enabling also FWA solutions on same spectrum ▪ FWA will further expand with 5G technologies TIM Technological view Customers view fast, reliable, anywhere FTTx Cabinet Copper Fiber Central office FTTH FWA OTB Splitter Mobile UBB4G 5G >99% OVERALL UBB PoP COVERAGE BY 2020 Virtual RAN Multi-technology Multi-frequency V-RAN 4G begins Full modernization plan for 4G/5G 2018 2021
  • 18.
    17 2Q’18 Results What CEOasked and what we did 2Q’18 Results 1 2 Highlights and Main Trends 3 Financial Update DigiTIM Progression 4 Closing Remarks
  • 19.
    18 2Q’18 Results Closing Remarks Companyfully committed to DigiTIM Plan 2Q’18 Operational Achievements: ▪ Domestic: Premium positioning maintained, Strong KPIs Performance ▪ Effective cost management and strong increase in Group cash generation Moving on with extraordinary Projects: ▪ NetCo ▪ 5G ▪ Disposal of non-core assets
  • 20.
  • 21.
    20 2Q’18 Results For furtherquestions please contact the IR Team IR Webpage www.telecomitalia.com/investors +39 06 36882807 +39 02 85956807 Phone E-mail Investor_relations@telecomitalia.it Contact details for all IR representatives: www.telecomitalia.com/ircontacts Investor Relations Contact Details TIM Slideshare www.slideshare.net/telecomitaliacorporate TIM Twitter www.twitter.com/TIMNewsroom
  • 22.
  • 23.
    22 2Q’18 Results Organic data(1),€mln, % YoY 1H’18 TIM Group Service Revenues Breakdown 48% 29% 12% 9%3% 68% 32% By Technology Fixed -0.6% (Retail +1.3%) Mobile +1.7% (Retail +2.0%) By Business Segment 5% 95% Fixed +8.1% Mobile +5.9% Domestic Brazil Consumer -0.2% Business +3.1% Nat. WHS +1.3% By Technology ▪ Mobile: Strong growth in postpaid (now 34% of total customer base) enables double-digit ARPU growth YoY ▪ Fixed: TIM Live connections grew > 420k. Arpu up 13% (1) Excluding exchange rate impact and non-recurring items (2) Net of eliminations Group Total Serv. Revs.(2) 8,785 +1.9% Domestic 6,879 +0.8% Brazil 1,919 +6.0% Highlights Sparkle -3.0% Inwit +8.9% -3% Other & Eliminations ▪ Mobile: Positive performance with low single digit growth in the first half, due to operational improvements more than compensating regulatory and competitive challenges ▪ Fixed: Positive retail service revenues, with line losses effect offset by higher ARPU ▪ Business: Strong growth supported by unparalleled channel and service ▪ Consumer: Premium and convergent approach supports stable performance ▪ National Wholesale: Continued positive performance ▪ Sparkle: down due to drag on IP contracts ▪ Inwit: up due to traffic and tenancy growth
  • 24.
    23 2Q’18 Results FixedMobile % LTECoverage (1) FTTC Passed % Total Fiber Coverage(1) Domestic UBB Networks • ~113 k cabinets passed • ~325 k FTTH OTB installed • ~19.4 mln HH passed FTTC in > 3,600 cities, speed up to 200 Mbit/s • ~2.7 mln HH connected FTTH in 30 main cities, speed up to 1Gbit/s • >19.7k LTE nodes • 7,336 cities covered in 4G • 1,474 cities 4Gplus, speed up to 300 Mbit/s • 12 cities 4.5G, speed up to 700 Mbit/s 2Q’18 Update
  • 25.
  • 26.
    25 2Q’18 Results • Focuson value maximization via accelerated convergence and new services • Drive digital and analytics as core differentiators (both cost and revenues) • Look for growth in and outside the core (eg. Cloud, IoT, Mobile Advertising, Data Monetization) • In Italy, TIM Fixed UBB lines (Retail + WHS) to grow to ~9 million by 2020 (3x 2017 figure) DRIVERS Sustain Top Line & Profitability Relevant Step-up in 3-Years Cumulated FCF Strong Deleverage and drop in Capex Intensity TARGETS / KPIs • Group Adj. NFP/EBITDA ~2.7x in 2018, further reducing both in 2019 and 2020 (3) • Domestic Capex/Sales <20% by YE2019 • 2018-’20 Group Cumulated Equity Free Cash Flow of ~ €4.5bn (4) excluding spectrum and pre-dividend • Domestic Service Revenues : Broadly Stable • Domestic EBITDA: Low single digit 2017-’20 CAGR (1) • Brazil & Inwit: Continued Growth in Revenues and Ebitda (2) • Enhanced cash generation, supported by operational and financial discipline, will lower our Group Net Debt/Ebitda ratio by end 2018 • Domestic Capex / Sales moving back to normal intensity, having now completed catch-up phase • Selective growth investments to maximize ROI • Lower capital intensity following network rollout • Reduce costs while improving customer satisfaction through agile customer journey redesign (1) On Organic basis (2) Specific Company guidance is in the Annex section (3) Spectrum not included (4) Cumulative ’15-’17 Equity Free Cash Flow at €1.6bln, excl. M&A Over2018-2020 PlanPeriod 2018and20192020 GOALS TIM 2018-’20 Targets
  • 27.
    26 2Q’18 Results 1,015 1,488 600 750 994 332 1,244 6,4235,000 582 2,443 1,267 564 3,089 2,423 11,153 21,521 3,137 8,137 1,597 3,931 1,867 1,314 4,083 2,755 12,397 27,944 Liquiditymargin Within 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Beyond 2023 Total M/L Term Debt Bonds Loans (of which long-term rent, financial and operating lease payable € 2,147) Drawn bank facilityUndraw portions of committed C&CE (1) € 27,944 mln is the nominal amount of outstanding medium-long term debt. By adding the balance of IAS adjustments and reverse fair value valuations (€ 745 mln) and current financial liabilities (€ 706 mln), the gross debt figure of € 29,395 mln is reached Maturities and Liquidity Margin Liquidity Margin €mln (1) Covered until 2021 Debt Maturities
  • 28.
    27 2Q’18 Results Well Diversifiedand Hedged Debt Average m/l term maturity: 7.87 years (bond only 8.02 years) Fixed rate portion on gross debt approximately 71.1% Around 31% of outstanding bonds (nominal amount) denominated in USD and GBP and is fully hedged Cost of debt: ~4.5 % Gross debt € 29,395 Financial Assets € (4,254) of which C&CE and marketable securities € (3,137) - C & CE € (2,102) - Marketable securities € (1,035) - Government Securities € (456) - Other € (579) Net financial position € 25,141 16.8% 73.5% 2.3% 7.4% Maturities and Risk ManagementBanks & EIB 4,937 Other 677 Op. leases and long rent 2,184 €mln 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 1,578 €/mln (of which 204 €/mln on bonds) - the impact on Financial Assets is equal to 678 €/mln Therefore, the Net Financial Indebtedness is adjusted by 900 €/mln. N.B. The difference between total financial assets (€ 4,254 mln) and C&CE and marketable securities (€ 3,137 mln) is equal to € 1,117 mln and refers to positive MTM derivatives (accrued interests and exchange rate) for € 808 mln, financial receivables for lease for € 95 mln, deposits beyond 3 months for € 1 mln and other credits for € 213 mln. Bonds 21,597
  • 29.
    28 2Q’18 Results TIM Group2Q’18 – IFRS 9-15 impacts Revenues Service Revenues EBITDA 2Q’18 old IFRS ΔIFRS 15 2Q’18 new IFRS 2Q’18 old IFRS ΔIFRS 15 2Q’18 new IFRS 2Q’18 old IFRS ΔIFRS 9 - 15 2Q’18 new IFRS Reported data, € mln, Rounded numbers TIM Group 4,770 -38 4,732 4,392 -39 4,353 2,025 -79 1,946 Domestic 3,809 -36 3,773 3,480 -39 3,440 1,667 -69 1,598 Brazil 970 -2 968 921 0 922 362 -11 351 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 2Q’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.