Infrastrutture Wireless Italiane S.p.a. · MIL:INW
Infrastrutture Wireless Italiane — Q3 2020 Earnings Presentation
42 slides from Infrastrutture Wireless Italiane's earnings presentation, Nov 5, 2020
Slide 1: Q3 Financial Results – Business Plan 21-23 Update
Q3 Financial Results Business Plan 21-23 Update ‘Enabling digital growth’ 05 November 2020
Slide 2: Safe Harbor
Safe Harbor This presentation contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements mentioned repeatedly in this presentation and include statements regarding the intent, belief or current expectati
Slide 3: Agenda
Agenda 01 Q3 update 02 Business Plan highlights 03 Market dynamics 04 Strategic pillars 05 Financial targets 06 Closing remarks 3
Slide 4: Agenda
Agenda 01 Q3 update 02 Business Plan highlights 03 Market dynamics 04 Strategic pillars 05 Financial targets 06 Closing remarks 4
Slide 5: Q3 highlights: the acceleration has started
Q3 highlights: the acceleration has started Improving New New Financials Hospitalities Small Cells/DAS +2% +510 +600 Q3 Revenue Organic YoY New tenants RUs New Costs Two Successful Agreements Optimization Bonds • Small cells pilot in main cities with TIM +800 €1.75 bn renegotiations / notes issued •
Slide 6: Q3 KPIs: step change across the business
Q3 KPIs: step change across the business New PoP Anchors [net] New PoP Others New PoP Total 510 350 350 210 300 150 150 150 150 100 100 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Tenancy Ratio New Small cells / DAS [# RU] New Renegotiatio
Slide 7: Q3: better financials, guidance improved
Q3: better financials, guidance improved (€m) Q2 2020 Q3 2020 Anchors MSA 161.3 163.4 OLOs and others 21.1 20.6 New services 2.1 2.1 Total Revenue 184.4 +0.9% 186.1 Q3 organic revenue YoY growth vs Proforma ‘19 +1.9% Opex 12.9 13.3 EBITDA 171.6 +0.7% 172.8 EBITDA margin 93% 93% D&A 99.1 95.2 Interes
Slide 8: Q3: strong cash conversion; enhanced remuneration
Q3: strong cash conversion; enhanced remuneration RFCF build-up (Q3 2020) [€m] 172.8 -0.6 -11.9 56% margin -1.3 on EBITDA 97.4 -47.8 -13.8 Year-End ‘20 Guidance improved Old Update • RFCF 260-265 >265 EBITDA Rec. Delta Cash Lease Financial RFCF rec Q3 CAPEX NWC Taxes Payments charges Q3 Net Financia
Slide 9: Agenda
Agenda 01 Q3 update 02 Business Plan highlights 03 Market dynamics 04 Strategic pillars 05 Financial targets 06 Closing remarks 9
Slide 10: Strong growth and RFCF conversion
Strong growth and RFCF conversion Guidance Growth €m Guidance PF Guidance Guidance 2020-2023 Margin (%)1 2020 2021 2023 [CAGR 1 on mid-point] Revenue 750 785-795 920-960 +7.8% EBITDA 680 715-725 840-880 +8.1% 91% 91% 91% EBITDAaL 470 510-520 650-690 +12.5% 63% 65% 71% 3102 355-365 560-6003 +23.2% RF
Slide 11: 2021-23: €1.4 bn RFCF devoted to growth & remuneration
2021-23: €1.4 bn RFCF devoted to growth & remuneration Capital allocation Growth Capex Goodwill tax scheme Shareholders remuneration €0.5 bn €0.3 bn €0.9 bn Cash-out in 2021 to Cum cash-out 2021-23, Cumulative 2021-23 deliver >€160m NPV DPS €0.30 on 2020, in 5 years +7.5% onwards Deleveraging Furthe
Slide 12: Agenda
Agenda 01 Q3 update 02 Business Plan highlights 03 Market dynamics 04 Strategic pillars 05 Financial targets 06 Closing remarks 12
Slide 13: Massive demand for connectivity served by 5G ecosystem
Massive demand for connectivity served by 5G ecosystem 5G Mobile macro-sites densification Low Earth Orbit satellite ultra-broadband Optic fiber solution via satellites Widespread deployment High-density venues Private networks Transport Tailored infrastructures enterprise FWA connectivity ultra-bro
Slide 14: Towers evolving from passive to digital infrastructure
Towers evolving from passive to digital infrastructure Towers key distinctive features Towers host Towers guarantee Towers are well- connectivity secure space, with distributed antennas as presence of power across urban Connected well as fiber Equipped and cooling User-Proximate and rural areas 0 Eq
Slide 15: INWIT's distinctive assets
INWIT’s distinctive assets Best-quality assets thanks to first mover advantage DAS projects Train station University 22k+ Stadium 48% market share Hotel Portrait Milano 5.5k Venezia Mestre Station Hospital Urban 43% of towers; Rural 57% One tower every 3km 5.1k Building / HQ / Hotel / Shopping mall
Slide 16: INWIT benefiting from tech and investment momentum
INWIT benefiting from tech and investment momentum Market growth drivers ▪ Infrastructure investments to speed up digitalization in Italy Industry will benefit from €40bn Next Generation EU funds ▪ 5G ultrabroadband networks roll-out acceleration ▪ Small cells complementing 5G (massive capacity and
Slide 17: Agenda
Agenda 01 Q3 update 02 Business Plan highlights 03 Market dynamics 04 Strategic pillars 05 Financial targets 06 Closing remarks 17
Slide 18: Strong and sustainable growth driven by pillars
Strong and sustainable growth driven by 4 pillars Business Plan 21-23 growth framework and ambitions to 2026 GROWTH PILLARS 1 2 3 4 PARTNER SERVE SCALE PILOT ANCHORS 5G OTHER PARTIES SMALL CELLS INNOVATIVE EVOLUTION DEMAND & DAS SERVICES 5 SUSTAINABLE BUSINESS ENABLERS 6 DIGITAL OPERATIONS 7 RESOURC
Slide 19: Partner anchor tenants 5G evolution
1 Partner anchor tenants 5G evolution ▪ MSA with tier-1 anchor clients supporting their transition towards the 5G ecosystem MSA ▪ 8 years terms, renewable for further periods of 8 years with an «all or nothing» mechanism FIXED FEE CONTRACTUALIZED PLANNED SERVICES ▪ CPI linked, with floor at 0% Contr
Slide 20: Serve Other Parties demand as neutral host
2 Serve Other Parties demand as neutral host MNOs FWAs ▪ Inwit is a neutral host with commercial relationship with all ▪ High demand for FWAs to complement 5G and Fiber networks in players in the market low density areas Remedies (MNOs + FWAs) New PoPs other parties (MNOs, FWAs , OTMO) – incl. remed
Slide 21: Small Cells/DAS: commercial focus to develop business at scale over time
3 Small Cells/DAS: commercial focus to develop business at scale over time DAS Small Cells Repeaters mainly indoor mainly outdoor denser coverage on high-footfalls massive capacity and ultra low latency Public Administration Entertainment, Art & Infrastructure Utilities Retail Focused Healthcare Aca
Slide 22: Pilot innovative services for future growth
4 Pilot innovative services for future growth IoT Edge collecting Drones Applications Applications Applications Third-party Gateway Hosting Third-party equipment Hosting and Recharge Partnership with utilities Hosting Infrastructure stations Edge Edge Nodes collecting Navigation platform for Data co
Slide 23: ESG: building a sustainable business
5 ESG: building a sustainable business New Sustainability Plan – Main activities and targets at 2023 GOVERNANCE PEOPLE ENVIRONMENT INNOVATION COMMUNITY • Sustainability goals in • Policy D&I: 50% of women • Carbon neutral by 2025 • Lead on micro-coverage • 1+ projects per year to MBO and LTI candida
Slide 24: Summarizing KPIs: growth across the board
Summarizing KPIs: growth across the board New PoP Anchors New PoP Others New PoP Total New PoP Anchors New PoP Others New Pop Total 6k-7k 25k-28k 1.8k 12.8k 11.0k 4k-5k 12-15k 19k-21k 8k-10k 20-23 24-26 Total 20-23 24-26 Total 20-23 24-26 Total New Renegotiations Tenancy Ratio1 New Small cells / DAS
Slide 25: Agenda
Agenda 01 Q3 update 02 Business Plan highlights 03 Market dynamics 04 Strategic pillars 05 Financial targets 06 Closing remarks 25
Slide 26: Best-in-class organic growth: >7% CAGR
Best-in-class organic growth: >7% CAGR Total Revenue1 Revenue build-up by product1 CAGR 1,100+ +€190m 861 940 940 750 790 750 Euro Mln Euro Mln PF20 FY21 FY22 FY23 ... FY26 PF20 PoP PoP SC / DAS / Backhauling FY23 Anchors Other parties Repeaters and new services • €100m of total growth committed via
Slide 27: Strong improvement of EBITDAaL, above 70% margin
Strong improvement of EBITDAaL, above 70% margin EBITDA and EBITDA margin1 EBITDAaL and EBITDAaL margin1 CAGR CAGR 1.200 180% 1.200 1,000+ 90% 160% 860 800+ 1.000 1.000 85% 140% 720 80% 680 670 800 800 120% 75% 515 c. 75% 470 600 100% 600 70% 71% 400 91% 91% 91% 91% 80% 400 65% 60% 66% 63% Euro Mln
Slide 28: Investment: €0.6 bn plan to sustain strong growth
Investment: €0.6 bn plan to sustain strong growth CAPEX cumulative 2021-2026 CAPEX 2021-2023 indicative breakdown Others 0.5 1.1 New sites Backhauling Other 0.6 CAPEX Maintenance Maintenance CAPEX Euro Bn Small Cells / DAS Land buyout 21-23 24-26 21-26 Financial targets 28 INWIT BP 21-23 Update
Slide 29: RFCF: €1.4 bn cumulative in 3 years
RFCF: €1.4 bn cumulative in 3 years RFCF1 RFCF build-up (average 2021-23) 1 CAGR 100% 6% ~700 2% 25% 580 Impact of goodwill tax 7% scheme 60% 360 310 RFCF without impact of Euro Mln goodwill tax scheme PF20 FY21 FY22 FY23 ... FY26 EBITDA rec Cash Delta Recurring Lease Cost Financial RFCF taxes NWC C
Slide 30: Debt: rapid deleveraging to 4.6x by 2023
Debt: rapid deleveraging to 4.6x by 2023 Net Financial Debt Leverage ratio1 4.0 4.500 3.9 6 3.7 3.5 4.000 Flexibility to finance external 1.0 3.500 0.9 growth or additional remuneration 1.0 5.5 5.6 3.000 0.9 2.500 IFRS 4.6 Debt 2.000 1.500 3.4 Net Euro Bn 1.000 Financial Inwit leverage ratio Upper l
Slide 31: July 2019 Merger Plan guidance improved
July 2019 Merger Plan guidance improved 2026 targets Guidance BP Update Guidance BP Update July 2019 Nov 2020 July 2019 Nov 2020 Anchor tenants Revenue 2026 > €1 bn > €1.1 bn +12.5k +12.8k (cum new PoPs) CAGR to 2026 5-7% > 7% New sites (cum) +1.9k +2.4k SC / DAS at 2028 32.5k3 RFCF 2026 > €0.6 bn c
Slide 32: Agenda
Agenda 01 Q3 update 02 Business Plan highlights 03 Market dynamics 04 Strategic pillars 05 Financial targets 06 Closing remarks 32
Slide 33: Key facts 2021-23: Enabling digital growth
KEY FACTS 2021-23 Enabling digital growth 1. Step change in Q3 +7.8% Revenue CAGR 2. Strong position to capture 5G/digitalization opportunities €1.4 bn Cumulative RFCF 3. Focus on strong and sustainable organic growth 4. Attractive shareholders remuneration €0.9 bn Cumulative dividends 5. Consistent
Slide 34: Thank you
Thank you 34
Slide 35: Q&A session
Q&A session Q3 Financial Results Business Plan 21-23 Update Giovanni Ferigo CEO Diego Galli CFO 35
Slide 36: Agenda
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Slide 37: 5G is ready to start, pushing the growth of other techs
5G is ready to start, pushing the growth of other techs 2018 2019 2020 2021 2022 2023 2024 2025 2026 … 3GPP Release 15 – focus 1st wave of 5G roll-out on spectral efficiency macro-sites 5G In commercialization by 2022 3GPP Release 16 – focus on ultra 2nd wave of 5G roll-out reliable & low-latency ap
Slide 38: People and Knowledge: a smart organization to be best in class
6 People and Knowledge: a smart organization to be best in class in both execution and innovation ORGANIZATION MAKE OR BUY CAPABILITIES INCENTIVES • Integration finalized by Q1 2021 • Lean organization • Inject fresh resources to source • Short term Functional: digital capabilities • Best practices
Slide 39: Digital operations: three-pillar approach
7 Digital operations: three-pillar approach to drive revenue effectiveness and cost rationalization DIGITAL READINESS DIGITAL ASSET MODEL AI & AUTOMATION • E2E process digital coverage • BIM and existing assets conversion • Automatic data acquisition (Doc, CAD) − Revision of current IT systems to −
Slide 40: Resource Optimization
8 Resource Optimization Ground lease costs Interests Taxes Cost reducing by: • €1.75bn bond notes Goodwill tax scheme • Dedicated team and programs: • Bank facilities refinanced • €320m upfront payment • Land buy out • Cost of debt 1.8% • €570m cash tax benefit in 5 years • Continuous renegotiation
Slide 41: Solid and committed shareholding structure
Solid and committed shareholding structure Ownership evolution • June 2015: Inwit listed (TIM retained a 60% stake) • March 2020: completion of merger with Vodafone Towers (37.5% stake for each of Vodafone and TIM) • April 2020: Vodafone and TIM placed a 9% stake via Accelerated Bookbuilding • Octob
Slide 42: More questions? Ask Investor Relations
More questions? Ask Investor Relations Emanuela Martinelli Head of Finance & Investor Relations emanuela.martinelli@inwit.it ir@inwit.it 42
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