Telecom Italia S.p.a. · MIL:TIT
Telecom Italia — Investor Day (March 2024)
71 slides from Telecom Italia's investor day presentation, Mar 7, 2024
Slide 1: Free to Run
Capital Market Day 07 March 2024 FREE TO RUN
Slide 2: Agenda
Capital Market Day 2024 Agenda Driving the Telco Evolution 01 02 TIM Consumer 03 TIM Enterprise 04 Technology & Network Strategy 05 Transformation and Cost Efficiency 06 TIM Brasil 07 ESG 08 Execution Plan, New Reporting, Financial Policy 09 Closing Remarks
Slide 3: Driving the Telco Evolution
Capital Market Day 2024 Driving the Telco Evolution Pietro Labriola – CEO
Slide 4: Delivering the transformation announced in 2022
TIM Group Capital Market Day 2024 Delivering the transformation announced in 2022… ✓ ✓ ✓ Delayering Deleveraging Delivering organic plan execution Overcome vertically Unprecedented Strong performance integrated business model deleverage both on Domestic (NetCo disposal) leverage aligned and Brazil S
Slide 5: Unprecedented opportunity to unlock value
TIM Group Capital Market Day 2024 … and now presenting an unprecedented opportunity to unlock value for all stakeholders TIM CONSUMER ▪ Less regulated - pricing autonomy, faster time to-market Fit to Win ▪ Flexibility to shape commercial offering TIM ENTERPRISE ▪ Focused strategy - implement TIM ent
Slide 6: The heart of TIM strategy
TIM Group Capital Market Day 2024 The heart of Unique Assets TIM strategy… People, infrastructure, brand, know-how Technology Customer Platform Client-centric strategy ESG driven Sustainable financial structure Long term-minded financial policy 6
Slide 7: Bolted in each Entity
TIM Group Capital Market Day 2024 …bolted in each Entity TIM CONSUMER TIM ENTERPRISE TIM BRASIL Turnaround completion of core business Sustainable growth fueled by ICT Capturing upsides from beyond connectivity Evolution from "Pure Telco" towards a Operating model evolution Core business growth “Cus
Slide 8: A stronger company, committed to growth
TIM Group Capital Market Day 2024 A stronger company, committed to growth Organic data(1), € bn, including Sparkle (2) 2023 pro-forma (3) 2026 targets Revenues 14.4 ~15.7 EBITDA After Lease 3.5 ~4.4 EBITDA AL minus CAPEX 1.3 ~2.2 (4) Leverage 3.8x 1.6-1.7x (5) as is @ target Opportunity for sharehol
Slide 9: TIM Consumer
Capital Market Day 2024 TIM Consumer Andrea Rossini – Chief Consumer, Small & Medium Markets Officer
Slide 10: From turnaround to growth
TIM Consumer Capital Market Day 2024 From turnaround to growth 2022-23 2024-26 “Turnaround” strategy Revenue stabilization while Evolution towards focused on fixing the core further addressing cost structure “Customer Platform” model Top-line trend recovery YoY trend ARPU Consumer Annualized sales +
Slide 11: Completing the turnaround while setting foundations for the Customer Platform
TIM Consumer Capital Market Day 2024 Completing the turnaround while setting the foundations for the "Customer Platform" Continue Turnaround & scale up Customer Turnaround & Platform Restructuring 2nd price war 2024-‘26 Market stabilization 2022-‘23 1st price war 2018-‘21 2015-‘17 Revenue stabilizat
Slide 12: Turnaround strategy showing steady results
TIM Consumer Capital Market Day 2024 Turnaround strategy showing steady results Organic figures From double digit negative growth… … to low-single digit negative growth Negative low-single digit Service revenues YoY growth % Negative double digit Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2022 2023 12
Slide 13: Stabilizing the core while focusing on Customer Platform
TIM Consumer Capital Market Day 2024 Stabilizing the core while focusing on “Customer Platform” Organic figures 2023 2024 2025 2026 93% ~89% x% Revenue mix Connectivity - - = Service revenues Beyond ~11% connectivity 7% ++ ++ ++ Total = + + Gross margin = + + 13
Slide 14: Customer base valorization and stabilization
TIM Consumer Capital Market Day 2024 TIM will continue to pursue CB valorization and stabilization also through the “Customer Platform” strategy 2023 2026 + Fixed ARPU CB valorization in continuity Consumer + through repricing and up-selling Mobile (1) Customer Base stabilization leveraging Fixed +
Slide 15: Offering covering high potential market segments
TIM Consumer Capital Market Day 2024 TIM aims to increase its offering covering high potential market segments Split of households’ spending Roadmap for services launch 2026 Today 2024-‘25 Telco & beyond Media, sport & culture Services 3% already at scale 4% Electronic devices Foundations of Scale u
Slide 16: Transition from Pure Telco to Customer Platform
TIM Consumer Capital Market Day 2024 In the Plan horizon, TIM will transition from a “Pure Telco” towards a “Customer Platform” strategy TIM owns distinctive assets… …which will allow beyond connectivity to scale up Brand Annualized sales, value Increase customer Top awareness in Italy loyalty, redu
Slide 17: TIM Enterprise
Capital Market Day 2024 TIM Enterprise Elio Schiavo – Chief Enterprise and Innovative Solutions Officer
Slide 18: Consistent journey of sustainable growth
TIM Enterprise Capital Market Day 2024 Consistent journey of sustainable growth 2022-‘23 2024-‘26 Overperformance vs. market Sustainable growth Operating model evolution consolidating leading position fueled by ICT revenues and key assets optimization Service revenues Gross Margin +6% vs. +5% CAGR ‘
Slide 19: Italian ICT B2B: a sizable and growing market
TIM Enterprise Capital Market Day 2024 Italian ICT B2B: a sizable and growing market Italian ICT Enterprise market (1) CAGR ‘23-‘26 €bn 5G-IoT Cloud Cybersecurity Other IT Mobile Fixed Market dynamics IoT-5G +6% CAGR Keep a constant growth of ~10% 30.3 YoY in the timeframe +5% CAGR 29.2 27.2 9% Clou
Slide 20: Higher performance vs. market average
TIM Enterprise Capital Market Day 2024 Higher performance vs. market average since 2022, when the journey started Service revenues Outperformed the market Organic data, €bn in both revenues and profitability, consolidating a leading position +5% CAGR Italian Strengthened recurring market revenues st
Slide 21: We are on the right side of the story
TIM Enterprise Capital Market Day 2024 We are on the right side of the story 2023e market value (€bn) & ‘23-‘26 growth (%) 14% CENTRAL PA 12% HEALTH Finance & Industrial SERVICES markets remain the 10% LOCAL PA most valuable ones FINANCIAL INSTITUTIONS 8% INSURANCE Public Administration Industry 6%
Slide 22: Leading the market and capitalizing on untapped opportunities
TIM Enterprise Capital Market Day 2024 Leading the market and capitalizing on untapped opportunities TIM Enterprise Others Volume Value Market share (1) # of clients (k), revised as of EoY ‘23 Average spending by client €k, ‘23 % revenues, ‘23, €bn Top ~1 13,000 13.1 Large ~21 210 4.4 Large PA ~1 4,
Slide 23: Doubling down on strategic priorities to boost growth
TIM Enterprise Capital Market Day 2024 In continuity with the past, we will double down on our strategic priorities to boost growth Sustainable growth Operating model evolution Key assets optimization Topline acceleration Shift from “buy” to “make”, More efficient operations by further expansion int
Slide 24: Ambition to consolidate ICT leadership
TIM Enterprise Capital Market Day 2024 Ambition to consolidate the ICT leadership in the country Organic figures 2023 2024 2025 2026 39% 33% x% Revenue mix Connectivity - = = Service revenues 61% 67% ICT + + + + + Total + Gross margin + ++ ++ 24
Slide 25: The recipe for sustainable growth
TIM Enterprise Capital Market Day 2024 The recipe for sustainable growth Above market top-line growth 16 data centers >€ 1bn of Cloud revenues Capabilities insourcing Leading player in the PA space with for all factories NSH (1) program taking off ~1.5k sales accounts 2x duration and >2k certificati
Slide 26: Technology & Network Strategy
Capital Market Day 2024 Technology & Network Strategy Leonardo Capdeville – Chief Technology & Innovation Officer
Slide 27: Maintaining distinctive technology assets post delayering
TIM Domestic Capital Market Day 2024 Maintaining distinctive technology assets post delayering Ecosystem of distinctive Tech Services addressing different customer segments needs Tech services Content Cloud IoT, AI & Big Data Cybersecurity Digital trust services Applications and capabilities to mana
Slide 28: Unique network-related resources
TIM Domestic Capital Market Day 2024 Leveraging unique network-related resources to offer distinctive services to its clients Mobile network Transport Network People Broader 5G+ spectrum Greatest nation-wide Highly skilled workforce for enhanced connectivity transport network 27 ExaByte in 2023 and
Slide 29: Agreements with NetCo for use of fixed network
TIM Domestic Capital Market Day 2024 Established agreements with NetCo for the use of fixed network Competitive access tariffs Lack of commitment constraints Tariffs aligned with the best price Absence of constraints on volumes or on migration offered to other market competitors from legacy services
Slide 30: Ecosystem of distinctive Tech Services
TIM Domestic Capital Market Day 2024 Ecosystem of distinctive Tech Services addressing different customer segments needs Consumer Enterprise Public Administration ▪ Wide range of movies, TV series, Football and Sport in just one subscription Content ▪ Platform working both with a set-of-box and with
Slide 31: Ambition to leverage 5G deployment
TIM Domestic Capital Market Day 2024 Ambition to leveraging on 5G deployment in 2024-‘26 Improving quality 18pp increase Higher service quality for both 5G and 4G customers and customer % of success through reduced load on the network experience in quality tests Significant deployment of Cost per GB
Slide 32: Using TIM unique assets for relevant projects
TIM Domestic Capital Market Day 2024 Already using TIM unique assets for relevant projects Public safety services by TIM: paving the way for a secure future Comprehensive ▪ Main target: coverage 5G@3.7GHz public frequencies in 11 provinces (85% of 5G coverage urban areas) 2 2 Pioneering ▪ TIM's excl
Slide 33: TIM Vision and CDN+ services
TIM Domestic Capital Market Day 2024 TIM Vision and CDN+ services by TIM - catalyst for evolution Strategic Partnerships ▪ The cornerstone of TIM Vision unique identity, offering customers a centralized access point for Italy's top video services ▪ Notable collaborations include Amazon for football
Slide 34: Transformation & Cost Efficiency
Capital Market Day 2024 Transformation & Cost Efficiency Alessandra Michelini – Head of Transformation
Slide 35: 2022-23 targets achieved, launching 2nd wave of Transformation
TIM Domestic Capital Market Day 2024 2022-‘23 targets achieved, launching 2nd wave of Transformation in 2024-‘26 As of today In the next 3 years The Transformation Ever-evolving market context Successfully achieved 2022-‘23 targets, program needs to evolve, requires TIM to launch a new Transformatio
Slide 36: New wave with additional impact by 2026
TIM Domestic Capital Market Day 2024 New wave with additional impact of €~400m by ‘26, EBITDA AL – CAPEX margin to increase ~5pp Objective of Transformation program Transformation Pillars Of which TIM Cumulative impact on EBITDA AL - CAPEX, €m Of which NetCo Wave 1 Wave 2 550 Streamline the cost bas
Slide 37: Transformation wave 1 and wave 2 benefits
TIM Domestic Capital Market Day 2024 continue to deliver and steer the 1st wave and is already Transformation will working on a new pipeline of initiatives “Running” Benefits from Wave 1 Additional benefits expected from Wave 2 of 2022-‘24 Transformation program of 2024-‘26 Transformation program vs
Slide 38: Six big bets to transform the operating model
TIM Domestic Capital Market Day 2024 2nd wave of Transformation will focus on six “big bets” to transform the operating model People Customer End-to-end Multi-product Mobile IT re-skilling care automation process review channels network plan Reload & insourcing & digitization 38
Slide 39: TIM Brasil
Capital Market Day 2024 TIM Brasil Alberto Griselli – CEO TIM Brasil
Slide 40: Improvement of macroeconomic conditions supports industry growth
TIM Brasil Capital Market Day 2024 Improvement of macroeconomic conditions supports industry growth Brazil’s encouraging macro-outlook reduces risks Brazil’s telecom sector offers great opportunities and supports sector’s positive momentum for an agile player like TIM Brasil 5 3 players Modest but s
Slide 41: TIM Brasil over-delivering the promises made to the market
TIM Brasil Capital Market Day 2024 TIM Brasil is enjoying the new environment, over-delivering the promises made to the market and outperforming LatAm peers 2023 RESULTS SHORT-TERM TARGETS (2023) (ACHIEVED) Service High single-digit +10.7% YoY ✓ Outperforming peers all around (3) Revenue (1) growth
Slide 42: Crafting the next generation TIM
TIM Brasil Capital Market Day 2024 Crafting the next generation TIM with a well-defined strategy MOBILE B2B BROADBAND EFFICIENCY Most preferred operator Shaping a new market Profitable growth Intrinsic for the business Cash cow with Exponential growth Selective approach, Strict discipline in capital
Slide 43: Brazilian mobile market healthier than ever
TIM Brasil Capital Market Day 2024 Brazilian mobile market is healthier than ever before supporting a more for more strategy New market Service Usage Price dynamics essentiality opportunity affordability High penetration with Low data usage compared Local cost of 1GB mobile Valued-based competition
Slide 44: Uniquely positioned to become the most preferred operator
TIM Brasil Capital Market Day 2024 Uniquely positioned to become the most preferred operator Best Service The best value providing the +8.1pp Best in class in all resolution rankings +43% best customer proposition in a Improving clients Improvement of Human (PROCON-SP, Digital Interactions (1) Inter
Slide 45: Shaping a new B2B market
TIM Brasil Capital Market Day 2024 Shaping a new B2B market, leveraging our pioneer stance enabling the next wave of productivity for key industries Brazil’s infrastructure Our B2B strategy focuses Examples of mapped use-cases gap offers a compelling on IoT, while upholding business opportunity trad
Slide 46: Expansion fueled by market growth potential
TIM Brasil Capital Market Day 2024 Our expansion is being fueled by the significant market growth potential to be unlocked across key verticals Our achievements Market potential to explore 16.6m ha 350m ha As pioneers, we have compelling Current planted area Total planted and reasons to persist in t
Slide 47: Potential for broadband expansion
TIM Brasil Capital Market Day 2024 noteworthy potential for broadband expansion, There is a with TIM having the best value proposition Market opportunity Best value proposition ~2% share (1) of ~R$ 40bn market Best offer with the highest speed and best streaming content ~2% share (2) of ~47m clients
Slide 48: Broadband market still fragmented and competitive
TIM Brasil Capital Market Day 2024 Broadband market still fragmented and competitive with convergence never becoming a killer application 8k Fragmented Broadband market share: market with formal regional Non-integrated Integrated players players: 63% players: 37% 3-play offer cost: Incentives for re
Slide 49: Our efficiency leadership
TIM Brasil Capital Market Day 2024 OPEX Continuous cost efficiency initiatives ~14% Digital initiatives to improve Our efficiency Digitalization initiatives % of cost being benefited customer experience while by traditional digital reducing operating costs leadership is Next generation with AI and G
Slide 50: Strong cash generation and higher returns to shareholders
TIM Brasil Capital Market Day 2024 higher returns A strong cash generation, reinforcing our financial health and cost control, enabling to shareholders and paving the way for new possibilities EBITDA AL - CAPEX evolution (1) (R$ m) Building the best value proposition to investors in LatAm 4,244 MOBI
Slide 51: Continuous evolution of shareholder remuneration
TIM Brasil Capital Market Day 2024 Setting a new shareholder Another step in remuneration floor the continuous Remuneration announced (2) per year (R$ bn) evolution of our ~12.0 shareholders remuneration (1) leading to a distribution of 2.9 ~R$ 12bn (2) in 2.0 the next 3 years 1.1 1.0 0.9 1.0 (1) In
Slide 52: Driving new possibilities - Updated plan 2024-26
TIM Brasil Capital Market Day 2024 Driving new possibilities - Updated plan (2024-‘26) GOALS SHORT-TERM TARGETS (4) MID-TERM TARGETS (4) (2024) (Until 2026) Service revenue growth Accelerating growth pace Service revenue growth: as market conditions improve Revenue (1) (CAGR ‘23-‘26): and best value
Slide 53: ESG
Capital Market Day 2024 ESG Enrica Danese – Head of Corporate Communication & Sustainability
Slide 54: A powerful ESG engine
TIM Group Capital Market Day 2024 A powerful «ESG engine» to ensure significant progress 2022 2023 2024-‘26 From sustainability ▪ Long term targets aligned to ▪ KPIs for every projects ▪ Accountability on ESG reporting best practices on E and S investments to ESG project ▪ ESG at the core of the bus
Slide 55: Our actions have material impacts
TIM Group Capital Market Day 2024 Our actions have material impacts E E S S Eco-efficiency Renewable energy Digital growth Gender gap Fixed/mobile voice and data traffic Green energy Digital impact Women over energy consumption (bit/joule) over total energy purchased (%) on society in leadership pos
Slide 56: 2024-26 targets
TIM Group Capital Market Day 2024 2024-‘26 targets KPIs Targets Timing Highlights E Renewable energy 100% 2025 ▪ Targets essentially confirmed in order to carry out our challenging roadmap Emissions from operational and energy (Scope 1 and 2) Carbon Neutrality 2030 ▪ # of targets reduced just to be
Slide 57: Our vision shapes our positioning
TIM Group Capital Market Day 2024 Our vision shapes our positioning ▪ Cultural evolution towards a more diverse and inclusive society ▪ Tackling racism, violence, harassment and bullying ▪ Increase women employability ▪ Accelerate women career development ▪ Family programs to balance male and female
Slide 58: TIM Group
TIM Group Capital Market Day 2024 58
Slide 59: Execution Plan, New Reporting, Financial Policy
Capital Market Day 2024 Execution Plan, New Reporting, Financial Policy Adrian Calaza – CFO
Slide 60: NetCo disposal - solid capital structure
TIM Group Capital Market Day 2024 NetCo disposal - Solid capital structure thanks to unprecedent deleverage from transaction KEY TERMS OF NETCO TRANSACTION Unprecedented deleverage aligning leverage to best-in-class peers NetCo EV Net Debt After Lease and leverage ratio (4) (incl. conditional items)
Slide 61: NetCo disposal - closing expected by summer
TIM Group Capital Market Day 2024 NetCo disposal - Closing expected by summer Golden power LME M&A PROCESS received Expected DISCLOSURE TIMELINE closing LME - April / May Other regulatory / corporate approvals LME Offering Memorandum Pro-forma audited figures Nov. ‘23 Jan. ‘24 Q2 ‘24 Q3 ‘24 Q1 ‘24 r
Slide 62: TIM perimeter as of today
TIM Group Capital Market Day 2024 TIM perimeter as of today From… …to new view Disclaimer TIM Group perimeter The 2024-‘26 plan is based on the following assumptions: including Domestic Group ▪ Figures are based on “pro-forma” estimate of revenues, and Brasil covering OPEX and CAPEX division between
Slide 63: Reconciling old vs. new Group figures
TIM Group Capital Market Day 2024 Reconciling old vs. new Group figures – FY ‘23 preliminary pro-forma figures Unaudited figures, organic, € bn (1) Reconciling old Group… ..with new Group view TIM TIM TIM TIM TIM TIM MSA Group Domestic Brasil Group Domestic Consumer Enterprise Sparkle Brasil NetCo e
Slide 64: Working Capital impact
TIM Group Capital Market Day 2024 Working Capital dynamics impacted by extraordinary items 2023 2024 2025 2026 € bn OFCF expected to grow overtime thanks to the positive contribution from Operating FCF proxy Domestic and Brazil EBITDA growth, (EBITDA AL – CAPEX) with CAPEX remaining flat Cash out re
Slide 65: Guidance 2024-26
TIM Group Capital Market Day 2024 Guidance 2024-‘26 Organic data (1), € bn, including Sparkle (2) TIM Group o/w TIM Domestic 2023 2024 2026 2023 2024 2026 pro-forma (3) pro-forma (3) Revenues 14.4 3-4% ~3% 10.0 2-3% ~2% growth ‘23-‘26 CAGR growth ‘23-‘26 CAGR EBITDA 8-9% ~8% 9-10% 9-10% After Lease
Slide 66: Full financial flexibility
TIM Group Capital Market Day 2024 Full financial flexibility – Solid balance sheet with flexibility to navigate unexpected complexities and for potential shareholder remuneration Capital allocation priorities and leverage in context Extraordinary TIM Brasil dividend Depending on macro-context & busi
Slide 67: Closing Remarks
Capital Market Day 2024 Closing Remarks Pietro Labriola – CEO
Slide 68: Closing remarks
TIM Group Capital Market Day 2024 Closing remarks 01 ‘Free to run’, with an unprecedented opportunity to unlock value for all stakeholders 02 Fit to win, with regulatory relief, the most distinctive digital and telco infrastructure in Italy and Brazil and a focused strategy for each Entity to captur
Slide 69: Q&A
Capital Market Day 2024 Q&A
Slide 70: Further questions
Capital Market Day 2024 Further questions please contact the IR team (+39) 06 3688 2500 Investor_relations@telecomitalia.it GruppoTIM.it
Slide 71: Disclaimer
Capital Market Day 2024 Disclaimer 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
Telecom Italia S.p.A. (TIM) — Investor Day (March 2024) on 6ix