Telecom Italia S.p.A. · MIL:TIT
Telecom Italia — H1 2010 Earnings Presentation
28 slides from Telecom Italia's earnings presentation, Aug 5, 2010
Slide 1: Telecom Italia 1H 2010 Results
TELECOM ITALIA GROUP 1H 2010 Results Milan, August 5th, 2010 Telecom Italia 1H 2010 Results FRANCO BERNABE’
Slide 2: Safe Harbour
TELECOM ITALIA GROUP 1H 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
Slide 3: Agenda
TELECOM ITALIA GROUP 1H 2010 Results Agenda TI Group Main Achievements Operating Performance Domestic Business TIM Brasil Financial Performance Appendix FRANCO BERNABE’ 2
Slide 4: TI Group 1H10 Key Financial Achievements
TELECOM ITALIA GROUP 1H 2010 Results TI Group 1H10 Key Financial Achievements Group Revenues Trend Reported -0.7% YoY; Organic -5.1% YoY Focus on Group EBITDA: Reported +3.4% YoY, Organic -0.2% YoY Core Markets: Cash Cost Control: Domestic Domestic Cash Cost -0.8€ BLN, -10.4% YoY & Net Income Growth
Slide 5: TI Group Improved Profitability: Reported Results vs. 2009
TELECOM ITALIA GROUP 1H 2010 Results TI Group Improved Profitability: Reported Results vs. 2009 Euro mln, % Reported Revenues Reported EBITDA +1.8 p.p. 43.4% -98 % on 41.6% Revenues -0.7% 13,321 13,223 +186 +3.4% 5,547 5,733 2Q -33 6,843 -0.5% 6,810 +99 2Q 5,547 2,808 +3.5% 5,733 2,907 -65 1Q +87 6,
Slide 6: TI Group Improved Profitability: Organic Results vs. 2009
TELECOM ITALIA GROUP 1H 2010 Results TI Group Improved Profitability: Organic Results vs. 2009 Euro mln, Organic Data, % Revenues Key Highlights -715 13,938 -5.1% 13,223 Service Revenues: - 3.7% yoy in 1H10 Handset revenues - 26.1% yoy in 1H10 7,194 -384 Improved Service Revenues Trend 2Q -5.3% 6,81
Slide 7: Group Cash Cost: % on Revenues Further Reduced
TELECOM ITALIA GROUP 1H 2010 Results Group Cash Cost: % on Revenues Further Reduced Euro mln, Organic Data, % TI Group Cash Cost Domestic Cash Cost -677 -6.7% O/w -769 -10.4% Brazil +148 10,172 9,495 7,411 6,642 CAPEX 1,993 +1.4% CAPEX 1,604 -7.3% 2,021 +28 1,487 -117 OPEX 8,179 -8.6% 7,474 -705 OPE
Slide 8: Agenda
TELECOM ITALIA GROUP 1H 2010 Results Agenda TI Group Main Achievements Operating Performance Domestic Business TIM Brasil Financial Performance Appendix FRANCO BERNABE’ 7
Slide 9: Domestic Highlights
TELECOM ITALIA GROUP 1H 2010 Results Domestic Highlights Euro mln, Organic Data, % Revenues Key Highlights Service revenues -802 -6.3% Fixed business: 10,893 -7.4% 10,091 Best quarterly performance in line losses reduction since 2005 4,312 -9.4% Strong improvement in LLU win-backs Mobile Service rev
Slide 10: Domestic Main Achievements 2010 – Progress on Cash Cost Rationalization
TELECOM ITALIA GROUP 1H 2010 Results Domestic Main Achievements 2010 – Progress on Cash Cost Rationalization Euro mln, Organic data, % Cash Cost Delta Cash Cost Δ Δ Vol. Δ 1H10 vs 1H09 ITX Driven Efficiency Handsets: -150 Target FY : - 925 Δ Abs 61% of FY10 1H10 ’10 vs Target 7,411 -198 ‘09 -144 -42
Slide 11: TI’s Way to NGN
TELECOM ITALIA GROUP 1H 2010 Results TI’s Way to NGN BLACK AREAS GREY AREAS WHITE AREAS WHERE 13 Main Italian Cities Further 125 Cities ~ 8.000 Municipalities (minor cities and suburban areas) (rural areas) 2010: started in Milan and Rome By 2012: ~0 TI’S TARGETS (Household) By 2012: ~1.3 mln By 201
Slide 12: Agenda
TELECOM ITALIA GROUP 1H 2010 Results Agenda TI Group Main Achievements Operating Performance Domestic Business TIM Brasil Financial Performance Appendix FRANCO BERNABE’ 11
Slide 13: TIM Brasil: Continued KPIs Improvement
TELECOM ITALIA GROUP 1H 2010 Results TIM Brasil: Continued KPIs Improvement Customer Base Outgoing MOU %, Mln lines, EoP Minutes/line/month Market share (# lines) 23.7% 24.0% 100 44.4 90 On-net traffic steering: Customer 37.8 +17% 80 Base 6.9 +81% 6.2 70 Reduced ITX costs +12% 60 Post-paid 50 F-M su
Slide 14: TIM Brasil: Organic Main Results
TELECOM ITALIA GROUP 1H 2010 Results TIM Brasil: Organic Main Results Euro mln, Organic data, % Revenues Key Highlights Service revenues +5.8% +2.1% Customer base increase with the successful 2.814 2.875 “Talking More” strategy +1.3% IIQ Service revenues Chip-only strategy confirmed, resulting in +6
Slide 15: Agenda
TELECOM ITALIA GROUP 1H 2010 Results Agenda TI Group Main Achievements Operating Performance Domestic Business TIM Brasil Financial Performance Appendix FRANCO BERNABE’ 14
Slide 16: Operating Free Cash Flow Trend Reversed in Q2
TELECOM ITALIA GROUP 1H 2010 Results Operating Free Cash Flow Trend Reversed in Q2 Euro mln, Reported Data Operating FCF 2Q10 vs 2Q09 +58 1,340 1,398 Operating FCF 1H10 vs 1H09 -92 2,244 2,152 2Q 09 2Q 10 July 2010 Sparkle case settled with a net payment of Net Cash Flow 1H10 vs 1H09 €418 Mln.* +703
Slide 17: Net Debt Dynamics: Deleverage in Line with Targets
TELECOM ITALIA GROUP 1H 2010 Results Net Debt Dynamics: Deleverage in Line with Targets Euro mln, Reported Data Cash Taxes Impact on Net Debt ► +1,177 Cash Financial Expenses Euro bln ► (279) Financial Accruals -1.9 Cash Taxes 1.3 33,949 (2,152) (176) -0.6 0.7 +1,060 +898 33,579 and TIS settlement*
Slide 18: Net Income Evolution: Continued Double Digit Growth
TELECOM ITALIA GROUP 1H 2010 Results Net Income Evolution: Continued Double Digit Growth Euro mln, Reported Data ► EBITDA +186 ► Depreciation & Amortization (46) ► Writedowns of non +43 current assets ► Gains on disposal of non +13 current assets +126 (35) +17 (52) 1.211 +196 959 % on Revenues 7.2%
Slide 19: Agenda
TELECOM ITALIA GROUP 1H 2010 Results Agenda TI Group Main Achievements Operating Performance Domestic Business TIM Brasil Financial Performance Appendix FRANCO BERNABE’ 18
Slide 20: Cost Control: a Group-Wide Commitment
TELECOM ITALIA GROUP 1H 2010 Results Cost Control: a Group-Wide Commitment Organic OPEX 2010 EBITDA Margin Euro mln, Organic data, % Δ abs. vs. Δ %. vs. Δ %. 1Q10 vs. 2009 2009 1Q09 1H09 1H10 48.9% 46.7% +2.2 p.p. Domestic 5,155 -652 -11.2% -10.8% 28.6% TIM 24.6% +4.1 p.p. Brasil 2,052 -71 -3.3% -3.
Slide 21: Revenues Evolution
TELECOM ITALIA GROUP 1H 2010 Results Revenues Evolution Euro mln Brazil +496 Domestic +1 13,321 +120 +497 0 13,938 (802) +61 +16 (13) 13,223 0 13,223 +23 Brazil +122 Media (3) Elim. +1 Organic Variation 1H10 -715 (-5.1%) 1H09 Change in Exchange (*) Other non 1H09 Domestic Mobile Media Olivetti Other
Slide 22: EBITDA Evolution
TELECOM ITALIA GROUP 1H 2010 Results EBITDA Evolution Euro mln Brazil +9 Agreement and Litigation (41) Media +1 Agreement with Embratel (TIM Brasil) (22) Litigation (4) Olivetti (1) Other (14) Other (12) +126 +77 5,759 (150) +132 (3) 5,749 5,547 +9 +14 (3) (16) 5,733 Brazil +126 Organic Variation 41
Slide 23: EBIT Evolution
TELECOM ITALIA GROUP 1H 2010 Results EBIT Evolution SAP-RMCA impact related to Reorganization (48) Agreement and Litigation (41) Agreement with Embratel (TIM Brasil) (22) Other (26) Litigation (4) Brazil (16) Other (12) Media +2 Olivetti (1) +100 +13 (3) (1) 2,897 (16) 2,881 +137 2,822 (34) 2,685 (1
Slide 24: Operating Free Cash Flow Trend Reversed in 2Q
TELECOM ITALIA GROUP 1H 2010 Results Operating Free Cash Flow Trend Reversed in 2Q Euro mln, Reported Data Impact on OFCF Operating Cash Flow – 1H 2010 Operating Cash Flow – 2Q 2010 13,321 -98 13,223 Revenues 6,843 -33 6,810 (7,774) +284 (7,490) Opex (4,035) +132 (3,903) (1,922) -99 (2,021) Capex (9
Slide 25: Even and Back-Loaded Maturities
TELECOM ITALIA GROUP 1H 2010 Results Even and Back-Loaded Maturities Euro mln Bonds Loans (of which long-term rent, financial and operating lease payable € 1,729) Drawn bank facility € 4.9 bln 15,215 38,238(1) Group Liquidity Position 1,500 + 13.267 € 7.75 bln Undrawn Portion of 13,267 Facilities =
Slide 26: TI Group 1H10 Results – P&L
TELECOM ITALIA GROUP 1H 2010 Results TI Group 1H10 Results – P&L Euro mln 1 Quarter 2 Quarter 1 Half 2010 2009 Δ Abs Δ% 2010 2009 Δ Abs Δ% 2010 2009 Δ Abs Δ% REVENUES 6.413 6.478 (65) (1,0) 6.810 6.843 (33) (0,5) 13.223 13.321 (98) (0,7) Other Operating Income 53 45 8 17,8 51 70 (19) (27,1) 104 115
Slide 27: TI Group - Main Results by BU – Reported Figures
TELECOM ITALIA GROUP 1H 2010 Results TI Group - Main Results by BU – Reported Figures Euro mln I Quarter II Quarter I Half 2010 2009 Δ Abs Δ% 2010 2009 Δ Abs Δ% 2010 2009 Δ Abs Δ% REVENUES Domestic 4.974 5.357 -383 (7,1) 5.117 5.535 -418 (7,5) 10.091 10.892 -801 (7,4) Wireline Domestic 3.498 3.677 -
Slide 28: TI Group - Main Results by BU – Organic Figures
TELECOM ITALIA GROUP 1H 2010 Results TI Group - Main Results by BU – Organic Figures Euro mln I Quarter II Quarter I Half 2010 2009 Δ Abs Δ% 2010 2009 Δ Abs Δ% 2010 2009 Δ Abs Δ% REVENUES Domestic 4.974 5.354 -380 (7,1) 5.117 5.539 -422 (7,5) 10.091 10.893 -802 (7,4) Wireline Domestic 3.498 3.674 -1