Telecom Italia S.p.A. · MIL:TIT

Telecom Italia — 9M 2010 Earnings Presentation

29 slides from Telecom Italia's earnings presentation, Nov 4, 2010

  1. Slide 1: Telecom Italia 9M 2010 Results

    TELECOM ITALIA GROUP 9M 2010 Results Milan, November 4th, 2010 Telecom Italia 9M 2010 Results MARCO PATUANO

  2. Slide 2: Safe Harbour

    TELECOM ITALIA GROUP 9M 2010 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 re

  3. Slide 3: Agenda

    TELECOM ITALIA GROUP 9M 2010 Results Agenda  3Q 2010 Results at a Glance Market & Revenues Trend: Fixed Business Mobile Business  Progress on Cash Cost Rationalization  Appendix MARCO PATUANO 2

  4. Slide 4: Domestic Market - 3Q 2010 Results at a Glance

    TELECOM ITALIA GROUP 9M 2010 Results Domestic Market - 3Q 2010 Results at a Glance Continous improvement in domestic fixed KPI Further decline in line losses and stable market share in BB (55.7%) Another strong set of mobile KPIs despite fiercer competition Confirming CB growth, churn decline and fu

  5. Slide 5: Domestic Market - 3Q 2010 Results at a Glance

    TELECOM ITALIA GROUP 9M 2010 Results Domestic Market - 3Q 2010 Results at a Glance Euro mln, Organic Data, % Domestic Revenues by Customer Segment Domestic 5,354 -7.7% TI Sparkle & Nat. 4,941 Wholesale 939 -2.0% 920 Top 868 -4.5% 829 Business 894 -4.3% 856 2,763 -12.5% 2,419 Consumer Elim, Adj & Oth

  6. Slide 6: Agenda

    TELECOM ITALIA GROUP 9M 2010 Results Agenda  3Q 2010 Results at a Glance Market & Revenues Trend: Fixed Business Mobile Business  Progress on Cash Cost Rationalization  Appendix MARCO PATUANO 5

  7. Slide 7: Domestic Fixed: TI Access Performance

    TELECOM ITALIA GROUP 9M 2010 Results Domestic Fixed: TI Access Performance Telecom Italia Retail Access Evolution & Line Losses Key Highlights ‘000 16,358 16,097 15,901 15,741 15,584  Confirming a very sound market share in TI Access fixed accesses: ~70% in 3Q10 3Q09 4Q09 1Q10 2Q10 3Q10  Improveme

  8. Slide 8: Domestic Fixed: Line Losses Reduction Key Drivers

    TELECOM ITALIA GROUP 9M 2010 Results Domestic Fixed: Line Losses Reduction Key Drivers Improved Customer Satisfaction Lower Churn Customer Satisfaction Index - Fixed Cumulative Churn % Offering +1.1% +3.8% YoY ~13.6 ~66.3 ~65.2 ~11.2 BB ~10.0 ~8.2 Voice 3Q09 3Q10 9M09 9M10 Secure Access Value Bundli

  9. Slide 9: Domestic Fixed: Focus on Broadband

    TELECOM ITALIA GROUP 9M 2010 Results Domestic Fixed: Focus on Broadband TI Retail Broadband Accesses Key Highlights ‘000 +3.8%  Progressive stabilization on market share +52  Improved TI net adds trend reflecting both higher gross adds and lower churn: symmetry on TI retail accesses 6,921 7,000 7,

  10. Slide 10: Domestic Fixed: Focus on ICT

    TELECOM ITALIA GROUP 9M 2010 Results Domestic Fixed: Focus on ICT Telecom Italia ICT Revenues Key Highlights Euro mln -4.9%  Launch of “La Nuvola Italiana” brand, voted to Service Revenues new IT Cloud Computing offering for Top 566 -2.2% 538 Clients: 30 mln € revenues in less than 2 3Q 191 -5.2% 1

  11. Slide 11: Domestic Wireline Revenues

    TELECOM ITALIA GROUP 9M 2010 Results Domestic Wireline Revenues Euro mln, Organic data, % 3Q09 3Q10 ∆% YoY Total 3,575 3,458 (3.3) Services 3,449 3,332 (3.4) o/w Voice 1,615 1,471 (8.9) BB Services o/w Internet 407 413 +1.5 +5.1% o/w Business Data 308 297 (3.6) o/w Wholesale 1,018 1,044 +2.6 Nationa

  12. Slide 12: Agenda

    TELECOM ITALIA GROUP 9M 2010 Results Agenda  3Q 2010 Results at a Glance Market & Revenues Trend: Fixed Business Mobile Business  Progress on Cash Cost Rationalization  Appendix MARCO PATUANO 11

  13. Slide 13: Domestic Mobile: A Snapshot on Customer Segments Performance

    TELECOM ITALIA GROUP 9M 2010 Results Domestic Mobile: A Snapshot on Customer Segments Performance Euro mln, Organic Data, % Key Highlights Top & Business  Positive Customer Base dynamics, both in the low/high-end private and in the public Service Revenues segment, thanks to the extension of the CON

  14. Slide 14: TI Strategy in the Consumer Segment

    TELECOM ITALIA GROUP 9M 2010 Results TI Strategy in the Consumer Segment 1 Speed-up Customer Base Recovery Plan vs 2008/2009 2 Accelerate TIM Community Development 3 Carefully monitoring Cannibalization and ARPU erosion 4 Reduce Silent Customers adopting new offers 5 Reduce Churn Rate 6 Increase Usa

  15. Slide 15: Speed-up Customer Base Recovery Plan

    TELECOM ITALIA GROUP 9M 2010 Results 1 Speed-up Customer Base Recovery Plan Gross Adds (‘000) Customer Base evolution (mln) YoY Change +14% ~1,800 +240k 31.9 30.9 30.4 30.5 30.6 85% Calling 3Q09 4Q09 1Q10 2Q10 3Q10 3Q09 4Q09 1Q10 2Q10 3Q10 SLOWDOWN IN CONSUMPTION COMPETITIVE SALES CHANNEL PRESSURE R

  16. Slide 16: Accelerate TIM Community Development to Lock-in CB

    TELECOM ITALIA GROUP 9M 2010 Results 2 Accelerate TIM Community Development to Lock-in CB Accelerating the push on bundled tariff plan TIMxTutti Italy users: Summer Push mln ‘000 5.1 1,145 3.1 TIMxTutti Italy Special Promo: 417 No entry cost Weekly fee 4€ =>3€ Dec '09 Oct '10 YTD Jun '10 YTD Oct '10

  17. Slide 17: Carefully monitoring Cannibalization and ARPU erosion

    TELECOM ITALIA GROUP 9M 2010 Results 3 Carefully monitoring Cannibalization and ARPU erosion Temporary increase of TIMx Cannibalization ARPU Net of Visitors (€/line/month) 100.0% ARPU DILUTION… % of TIMx users already in TIM CB 75.0% Without TIMxTutti -5.1% Italy impact 50.0% 20.7 20.3 19.7 20.6 19.

  18. Slide 18: Reduce Silent Customers, Reduce Churn & Increase Usage

    TELECOM ITALIA GROUP 9M 2010 Results 4 5 6 Reduce Silent Customers, Reduce Churn & Increase Usage Sharp increase of Calling Customers… …leading to a steady improvement in loyalty Churn Rate 8.2% 85% 6.7% 6.4% 5.2% 5.2% 81% -1.5pp 3Q09 3Q10 3Q09 4Q09 1Q10 2Q10 3Q10 Outgoing traffic Trend – YoY Change

  19. Slide 19: Improve Customer Satisfaction and Enhance Brand Awareness

    TELECOM ITALIA GROUP 9M 2010 Results 7 8 Improve Customer Satisfaction and Enhance Brand Awareness Mobile Customer Satisfaction Index Brand Awareness (spontaneous) 100 71.19 80 Offering 60 +3.3% YoY 69.51 40 20 Vodafone Wind H3G Source: STP GFK Eurisko 0 3Q09 3Q10 Apr 2010 Jun 2010 Ago 2010 Oct 2010

  20. Slide 20: Mobile: CB Repositioning Plan

    TELECOM ITALIA GROUP 9M 2010 Results Domestic Mobile: CB Repositioning Plan Consumer Calling Customers To be repositioned Selective CRM actions to reinforce loyalty Push on Tutto Compreso Offering Leverage on Handsets to lock in Up-selling/Repositioning based on CRM list Already in community off

  21. Slide 21: Mobile Broadband: Small Screen & Big Screen Right Formula

    TELECOM ITALIA GROUP 9M 2010 Results Domestic Mobile Broadband: Small Screen & Big Screen Right Formula Small Screen Big Screen  Transparent and competitive portfolio Smartphone Portfolio offering including Internet Pack: the  13 cutting-edge devices for all customer concept that changed the marke

  22. Slide 22: Domestic Mobile Revenues

    TELECOM ITALIA GROUP 9M 2010 Results Domestic Mobile Revenues Euro mln, Organic data, % 3Q09 3Q10 ∆ % YoY Total 2,184 1,914 (12.4) Services 2,072 1,867 (9.9) o/w Outgoing Voice 1,168 1,020 (12.7) Normalized o/w VAS 528 514 (2.7) of Try & Buy +2.9% o/w Business Received (*) 376 332 (11.7) Handsets 11

  23. Slide 23: Mobile: Repositioning Path and 4Q10 Action Plan

    TELECOM ITALIA GROUP 9M 2010 Results Domestic Mobile: Repositioning Path and 4Q10 Action Plan Acquisitions driven not only by price&promo but also by service, VAS and equipment 1 CB Growth Christmas Campaign to sustain seasonality and upsell/push on elasticity Accretive CRM campaign in order to i

  24. Slide 24: Agenda

    TELECOM ITALIA GROUP 9M 2010 Results Agenda  3Q 2010 Results at a Glance Market & Revenues Trend: Fixed Business Mobile Business  Progress on Cash Cost Rationalization  Appendix MARCO PATUANO 23

  25. Slide 25: Domestic: Fully Committed to FCF Generation

    TELECOM ITALIA GROUP 9M 2010 Results Domestic: Fully Committed to FCF Generation Euro mln, Organic Data, % Revenues EBITDA -1,215 % on +2.0 p.p. 49.8% 47.8% 16,247 -7.5% Revenues 15,032 -279 3Q 5,354 -413 7,761 -3.6% 7,482 -7.7% 4,941 3Q 2,675 -129 -422 -4.8% 2,546 2Q 5,539 -7.5% 5,117 2Q 2,548 -73

  26. Slide 26: Agenda

    TELECOM ITALIA GROUP 9M 2010 Results Agenda  3Q 2010 Results at a Glance Market & Revenues Trend: Fixed Business Mobile Business  Progress on Cash Cost Rationalization  Appendix MARCO PATUANO 25

  27. Slide 27: Domestic: EBITDA Analysis

    TELECOM ITALIA GROUP 9M 2010 Results Domestic: EBITDA Analysis Euro mln, Organic Data, % 1 2 3 4 7,761 -1,215 +281 +78 -11 +333 +255 7,482 -279€ mln, -3.6% 9M09 Revenues Intercon Handsets Cust. Care Advertising Fixed 9M10 -nection & Other Comm* & Acq. Cost Costs** 1 3 Increasing expenses on Advertis

  28. Slide 28: Progress on Domestic Efficiency Plan

    TELECOM ITALIA GROUP 9M 2010 Results Progress on Domestic Efficiency Plan Euro mln, Organic data, % Delta Cash Cost ∆ ∆ Vol. ∆ 9M10 vs 9M09 ITX Driven Efficiency ∆ Abs 90% of FY10 9M10 ’10 vs Target ‘09 Total Opex 7,550 -936 -255 -258 -423 ITX 2,075 -255 -255 - - Mktg & Sales 1,826 -348 - -207 -141

  29. Slide 29: Progress on Domestic Fixed 4Q10 Action Plan

    TELECOM ITALIA GROUP 9M 2010 Results Progress on Domestic Fixed 4Q10 Action Plan Consumer Main Evidence/Key Targets Broadband lines origination - Q3 ’10 v Q3 ‘09  To complete “the new portfolio stream ling ” with the launch of “TELECOM ZERO” pay-per-use voice offering 29% 30% 23% 29% 42% 37% 67% 68

Telecom Italia — 9M 2010 Earnings Presentation on 6ix