Telecom Italia S.p.A. · MIL:TIT
Telecom Italia — Q2 2018 Earnings Presentation
29 slides from Telecom Italia's earnings presentation, Jul 25, 2018
Slide 1: TIM Group 2Q'18 Results
TIM Group 2Q’18 Results July 25th, 2018 Amos Genish Piergiorgio Peluso
Slide 2: Safe Harbour
Safe Harbour This presentation contains statements that constitute forward Such forward looking statements are not guarantees of future looking statements regarding the intent, belief or current performance and involve risks and uncertainties, and actual results expectations of future growth in the
Slide 3: 2Q'18 Results Agenda
2Q’18 Results 1 Highlights and Main Trends 2 Financial Update 3 DigiTIM Progression 4 Closing Remarks 2Q’18 Results 2
Slide 4: 2Q'18 Main Results: Positive Group Revenues Performance, Solid CF Generation
2Q’18 Main Results: Positive Group Revenues Performance, Solid CF Generation Organic data(1), €mln Group Domestic Brazil Highlights 4,359 +0.8% 4,392 Positive Group Service 3,493 3,480 SERVICE -0.4% revenues and double digit 872 +5.7% 921 EBITDA-CAPEX growth. REVENUES 2Q'17 2Q'18 2Q'17 2Q'18 2Q'17 2
Slide 5: 2Q'18 TIM Group Service Revenues Breakdown
2Q’18 TIM Group Service Revenues Breakdown Organic data(1), €mln, % YoY Group Domestic Brazil By Technology By Business Segment By Technology Mobile -0.2% Sparkle Inwit/others Mobile Total Serv. Revs.(2) (Retail +0.5%) -1.8% ~3% +7.4% +5.7 % 4,392 +0.8% Nat. WHS ~9% 31% 95% +2.1% ~12% Domestic -3% O
Slide 6: Domestic Mobile: Growth in Lines and Value
Domestic Mobile: Growth in Lines and Value Revenues & ARPU Customer Base Organic data, €mln, ARPU €/month k, Rounded numbers TOTAL CB 31,036 +1.9% 31,629 Mobile Revenues 1,301 +1.6% 1,322 ACTIVE CB 27,366 +2.7% 28,117 NOT HUMAN(3) 7,841 +8.4% 8,496 Product 156 +15.1% 180 HUMAN 19,525 +0.5% 19,621 1,
Slide 7: Domestic Fixed: Premium Positioning, Resilient Performance, UBB Growth
Domestic Fixed: Premium Positioning, Resilient Performance, UBB Growth Revenues & ARPU Fixed Accesses Organic data, €mln, ARPU €/month k, Rounded numbers, ∆ QoQ Total 2,700 -2.4% 2,635 Total Accesses 19,350 -69 19,281 Product 192 -21.9% 150 BB Accesses(2) Service 2,508 -0.9% 2,485 15,006 +46 15,052
Slide 8: TIM Brasil: Continued Solid Performance
TIM Brasil: Continued Solid Performance Organic Performance, R$mln, Rounded numbers Net Service Revenues Total Net Revs. +5.8% Highlights 4.0 R$ 4.2 Bln 3.6 +5.0% 3.8 +5.7% YoY ▪ Strong growth in a weaker MSR TIM Live Revs. macro R$ 3.8 Bln R$ 0.09 Bln ▪ Double digit mobile and +5.7 % +41.0 % fixed
Slide 9: 2Q'18 Results Agenda
2Q’18 Results 1 Highlights and Main Trends 2 Financial Update 3 DigiTIM Progression 4 Closing Remarks 2Q’18 Results 8
Slide 10: Domestic Ebitda Affected by Operational Delays, Regulatory Impacts and One-offs
Domestic Ebitda Affected by Operational Delays, Regulatory Impacts, Non-linear items and One-offs 2Q’18 2H’18 Operational Delays ▪ Solidarity labour agreement delay -19.5 mln € New Solidarity Agreement was implemented from June ’18, 19th Regulatory Impacts ▪ WHL Bitstream ‘17 Retroactive Prices -12.
Slide 11: Domestic OPEX: Positive Addressable Base Performance
Domestic OPEX: Positive Addressable Base Performance affected negatively by Other elements Organic data, €mln 2Q17 2Q18 ▪ Rigorous Cost discipline driving positive performance on addressable baseline Addressable Cost Base 1,816 -1.5% 1,790 ▪ Sales-related Costs increased YoY Commercial 769 1.4% 780
Slide 12: Domestic CAPEX: Optimization and Smart Allocation support EFCF
Domestic CAPEX: Optimization and Smart Allocation support EFCF Organic data, €mln, Δ YoY Traffic Growth 995 -255 YoY +53% +44% CPE & success based 139 -25.6% +1 740 Mobile Fixed Capacity, run and maintain 261 -8 140 5/'17 5/'18 5/'17 5/'18 Fixed access 253 357 Coverage Mobile access -174 183 IT 129
Slide 13: Relevant Debt Reduction YTD
Relevant Debt Reduction YTD €mln; (-) = Cash generated, (+) = Cash absorbed, excluding call-outs Ebitda 2,025 Capex (981) ΔOWC & Others (141) Operating FCF 903 Ebitda 1,893 Capex (694) ΔOWC & Others (1,216) (1) Operating FCF (17) -396 -167 (1) O/w € 379 mln was the impact from changed-by-law VAT Pay
Slide 14: 2Q'18 Results Agenda
2Q’18 Results What CEO asked and what we did 1 Highlights and Main Trends 2 Financial Update 3 DigiTIM Progression 4 Closing Remarks 2Q’18 Results 13
Slide 15: Key Domestic Commercial Actions
Key Domestic Commercial Actions Convergence Step-Up on Consumer • 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
Slide 16: Transformation Drives Productivity
Transformation Drives Productivity ▪ Introduced new lean way of working to Caring Automated first set of back office processes improve agents productivity WHS ▪ +9% of daily equivalent activities per Infrastructures, On-field technicians productivity technician Network & Systems Opex / Capex ▪ ~50%
Slide 17: TIM Multi-technology UBB approach
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. TIM Technological view Customers view Cabinet FTTx
Slide 18: 2Q'18 Results Agenda
2Q’18 Results What CEO asked and what we did 1 Highlights and Main Trends 2 Financial Update 3 DigiTIM Progression 4 Closing Remarks 2Q’18 Results 17
Slide 19: Closing Remarks
Closing Remarks 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 Company fully committed to Di
Slide 20: Thank You
Thank You 2Q’18 Results 19
Slide 21: For further questions please contact the IR Team
For further questions please contact the IR Team Investor Relations Contact Details Phone Contact details for all E-mail IR representatives: +39 06 36882807 Investor_relations@telecomitalia.it www.telecomitalia.com/ircontacts +39 02 85956807 IR Webpage TIM Twitter TIM Slideshare www.telecomitalia.co
Slide 22: Annex
Annex 2Q’18 Results 21
Slide 23: 1H'18 TIM Group Service Revenues Breakdown
1H’18 TIM Group Service Revenues Breakdown Organic data(1), €mln, % YoY Group Domestic Brazil By Technology By Business Segment By Technology Mobile +1.7% Sparkle Mobile (Retail +2.0%) Inwit +8.9% Total Serv. Revs.(2) -3.0% +5.9% 8,785 +1.9% Nat. WHS 9% 3% 32% 95% +1.3% 12% Domestic -3% Other & 6,87
Slide 24: Domestic UBB Networks
Domestic UBB Networks % Total Fiber Coverage(1) 2Q’18 Update • ~113 k cabinets passed Fixed • ~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 % LTE Coverage • >19.7k LTE nodes Mobile •
Slide 25: DigiTIM 2018-'20 Strategic Plan
DigiTIM 2018-’20 Strategic Plan 2Q’18 Results 24
Slide 26: TIM 2018-'20 Targets
TIM 2018-’20 Targets GOALS DRIVERS TARGETS / KPIs • Focus on value maximization via accelerated convergence and new • Domestic Service Revenues : services Over 2018-2020 Broadly Stable Plan Period Sustain • Drive digital and analytics as core differentiators (both cost and • Domestic EBITDA: Top Lin
Slide 27: Maturities and Liquidity Margin
Maturities and Liquidity Margin €mln Liquidity Margin Debt Maturities (1) 12,397 27,944 11,153 2,755 21,521 1,244 4,083 2,423 332 Covered until 2021 3,089 8,137 1,314 1,867 564 994 3,137 3,931 1,267 750 600 2,443 5,000 1,597 1,488 6,423 582 1,015 Liquidity margin Within 2018 FY 2019 FY 2020 FY 2021
Slide 28: Well Diversified and Hedged Debt
Well Diversified and Hedged Debt €mln Op. leases and long rent Banks & EIB Maturities and Risk Management 2,184 4,937 Other 7.4% 2.3% 16.8% 677 Average m/l term maturity: 7.87 years (bond only 8.02 years) Bonds Fixed rate portion on gross debt approximately 71.1% 73.5% 21,597 Around 31% of outstandi
Slide 29: TIM Group 2Q'18 – IFRS 9-15 impacts
TIM Group 2Q’18 – IFRS 9-15 impacts 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 ar
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