Telecom Italia 1Q 2012 Results · CRM activity on existing CB 14% 12% 86% 88%. TELECOM ITALIA GROUP...
Transcript of Telecom Italia 1Q 2012 Results · CRM activity on existing CB 14% 12% 86% 88%. TELECOM ITALIA GROUP...
TELECOM ITALIA GROUP
1Q 2012 ResultsMilan, May 10th, 2012
Telecom Italia 1Q 2012 Results
MARCO PATUANO
TELECOM ITALIA GROUP1Q 2012 Results
1MARCO PATUANO
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 regarding the intent, belief or current expectations of the customer base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the activities and situation relating to the Company and the Group. Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those projected or implied in the forward looking statements as a result of various factors. Consequently, Telecom Italia S.p.A. makes no representation, whether expressed or implied, as to the conformity of the actual results with those projected in the forward looking statement.Forward-looking information is based on certain key assumptions which we believe to be reasonable as of the date hereof, but forward looking information by its nature involves risks and uncertainties, which are outside our control, and could significantly affect expected results.Analysts are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation. Telecom Italia S.p.A. undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telecom Italia S.p.A. business or acquisition strategy or planned capital expenditures or to reflect the occurrence of unanticipated events. Analysts and investors are encouraged to consult the Company's Annual Report on Form 20-F as well as periodic filings made on Form 6-K, which are on file with the United States Securities and Exchange Commission.
TELECOM ITALIA GROUP1Q 2012 Results
2MARCO PATUANO
Agenda
Domestic 1Q12 Progress Report
Fixed BusinessMobile Business
Cash Cost Rationalization & Operating Model
Appendix
TELECOM ITALIA GROUP1Q 2012 Results
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Domestic Results: Trend still improvingEuro mln, Organic data, %
3,330 3,235
1,679 1,650
1Q11 1Q12
4,595 4,486-109 M€
-2.4%
-1.7%
-2.9%Wireline
Mobile
Total Domestic Revenues Domestic Service Revenues
-7.6%
-6.2%
-3.7%-3.2%
-2.3%
1Q11 2Q11 3Q11 4Q11 1Q12
1Q11 1Q12
EBITDA
-78 M€-3.4%
49.5% 49.0%-0.5 p.p.% on Revenues
2,2742,196
1Q11 1Q12
EBITDA-Capex
1,611 1,607
35.8%+0.7 p.p.% on Revenues 35.1%
-4 M€-0.2%
TELECOM ITALIA GROUP1Q 2012 Results
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Agenda
Domestic 1Q12 Progress Report
Fixed BusinessMobile Business
Cash Cost Rationalization & Operating Model
Appendix
TELECOM ITALIA GROUP1Q 2012 Results
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Tariff simplificationprocess begins
-6.3% -6.0%
-3.8% -4.0% -3.8%
1Q11 2Q11 3Q11 4Q11 1Q12
+5.0%
-1.0% -1.1%
1Q11 4Q11 1Q12
-4.5% -2.8% -2.9%
1Q11 4Q11 1Q12
1Q11 1Q12
Euro mln, Organic Data, %
Domestic Fixed: Revenue Dynamics
3,330 -2.9%
Wholesale Revenues Trend – YoY % change
Total Fixed Revenues Fixed Revenues Trend – YoY % change
3,235
-4.9%-1.9% -1.7%
Tota
lS
ervi
ces
Retail Service Revenues Trend – YoY % change
Dom
estic
+9.8%-15.3%
-38.6%Equi
pmen
t
Spa
rkle
Gro
up*
-18.5%
+5.5% +8.8%
*Gross of Elim. & Adj.
TELECOM ITALIA GROUP1Q 2012 Results
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15,145 14,652 14,457
6,952 7,060 7,105
1Q11 4Q11 1Q12
Domestic Fixed: TI Access Performance
Telecom Italia Access TI Line Losses
-150k22,098 21,712 21,562
TI R
etai
lW
hole
sale 181
9845
-206 -175 -195
1Q11 4Q11 1Q12
TI R
etai
lW
hole
sale
Stable
Voice ARPU – YoY % change Highlights
-25k -77k -150k
Reduction
66.2%66.6%67.7%M/Son total Mrk
Access Market reduction as result of stable TI’sline losses and decreasing OLO’s net adds
TI’s access market share above 66%
Line erosion driven by In Consumer, disconnections in secondhomes (low potential, voice only) In Business Segment, multi-line contractsrationalization and increasing number of Companies exiting the market
-3.8%
-3.1%
-1.1% -1.2%+0.1%
1Q11 2Q11 3Q11 4Q11 1Q12
TELECOM ITALIA GROUP1Q 2012 Results
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18.4 18.2 18.3
1Q11 4Q11 1Q12
‘000Euro/month/line
Flat (%)
TI retail accesses
M/S 54.3% 53.2% 52.6%
TI Retail Broadband Accesses Broadband Retail ARPU
Domestic Fixed: Focus on Broadband
1Q11 4Q11 1Q12
88%87%87%
7,194 7,125 7,092 -0.6%
+0.3%
BB Service Revenues Highlights% YoY
+0.3%
+0.5%
+0.8%
1Q11 4Q11 1Q12
TotalMarkets 13,248 13,394 13,485
Confirming the right direction in TI’s Value Strategy:
Continued positive BB Service Revenues trend
QoQ ARPU increase
+1.0 p.p. of Flat offers on TI’s BB CustomerBase
Increasing BB penetration (+1.5 p.p.) on fixed CB, confirming the low value of TI’s line losses
TELECOM ITALIA GROUP1Q 2012 Results
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Agenda
Domestic 1Q12 Progress Report
Fixed BusinessMobile Business
Cash Cost Rationalization & Operating Model
Appendix
TELECOM ITALIA GROUP1Q 2012 Results
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1,634 1,573
45 77
1Q11 1Q12
Euro mln, Organic Data
Mobile Revenues: 1Q12 Results at a Glance
Total Mobile Revenues
Mobile Service Revenues Trend – YoY % change
Handsetrevenues
Service revenues
1,650-29
-1.7%1,679
Normalized (*)
~-2.5%
Total Mobile
-3.7%
Normalized (*)
~-4.5%
+71.1%
(*) Leap year
Mobile Handsets Revenues Trend – YoY % change
-22.4%
+26.2%+34.0%
+96.5%+71.1%
1Q11 2Q11 3Q11 4Q11 1Q12
-11.7%
-8.7%-7.5% -7.1%
-3.7%
-10.1%
-7.0%-5.5%
-4.1%
-1.0%
1Q11 2Q11 3Q11 4Q11 1Q12
Total Mobile Service Revenues Retail Business Generated
TELECOM ITALIA GROUP1Q 2012 Results
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31,038 31,260 31,679 32,227 32,328
1Q11 2Q11 3Q11 4Q11 1Q12
Euro mln, Organic Data
‘000‘000
Balance MPN 2012
Total SIM cards Net Adds
+1,290
20
222
419
548
101
1Q11 2Q11 3Q11 4Q11 1Q12
X5
Domestic Mobile: Customer Base Trend
Highlights
Sound customer base growth in spite of weakseasonality
Progressive improvement in MNP balance, and lowerpromo agressivness
Best in class churn rate supported by CRM focus
Jan Feb Mar
TIM Operator 1 Operator 2
TELECOM ITALIA GROUP1Q 2012 Results
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Domestic Mobile – Defending Value of our Customer Base
BusinessGenerated
BusinessReceived
1Q11 1Q12
Lower exposure to MTR cuts
Options benefit Consumer Churn
More Value from Options – Consumer Segment Consumer Calling ARPU
Business Generated Consumer Revenues
w/o Options with Options
-8 p.p.
Progressive improvement on
quarterly basis
-9.4%
-7.2%
-5.0%-3.5%
-1.8%
1Q11 2Q11 3Q11 4Q11 1Q12
% YoY
Avg ARPU Ex-ante/Ex-post
+
+
-
Positive blended impact
Spontaneous migration by clientsfrom pay-as-you-go profile
to bundle and options
CRM activity on existing CB
14% 12%
86% 88%
TELECOM ITALIA GROUP1Q 2012 Results
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Content
Domestic Mobile – Focus on Mobile VAS Consumer
Browsing
Messaging
2011
2012
VAS+7.3%
VAS Consumer Revenues Trend
% YoY
Successful strategy pushing on bundle offers aiming atmessaging revenues protection and CB fidelization: Messaging Volumes: +25% YoY CB with Messaging Bundle Offers: +44% YoY
Continued solid growth in active
users and browsing revenues
underpinning Mobile recovery trend
~70% of Smartphone on Handsets sold
Solid ARPU increase: +9.4% YoY
MBB Users
1Q11 1Q12
+32%
Browsing Revenues
1Q11 1Q12
+21%
Small Screen Large Screen
Leadership confirmedon dongle: M/S ~38%
Double digit growth in users (+11.5% YoY)
Marketing strategy focused on bundling data & SMS to avoid
cannibalization
-5.2% -7.4% -5.2%-1.6% -2.5%
1Q11 2Q11 3Q11 4Q11 1Q12
Messaging Revenues – YoY % change
-
++
TELECOM ITALIA GROUP1Q 2012 Results
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SME Segment: TI-Microsoft Partnership
Server SideSoftware
Ospit@ Suite Cloud
Partner
Partner
CRM/Web
SME Client
Cloud ServiceBilling
ProfessionalServices
Partner Management
Bus
ines
s M
odel
and
Con
tent
sB
asic
Pill
ars
Cha
nnel
Ben
efit
s
1 2 3 4 5 6
Sinergy&
Positioning
FirstMover
Strategy
DistributionChannel
Qualityof
ServicesPortfolio Innovation
~2000Potential Partners
10-15% Microsoft PartnersRedemption Expected
TELECOM ITALIA GROUP1Q 2012 Results
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Ultra Broadband in MotionUltra Broadband in Motion
42 Mbps coveragein progress in 50cities
Ongoing Trials extended to Turin, Milan, Rome and Naples
FTTC (covering 30 main cities) and FTTH (in Milan) Retail commercial launch expected in 4Q
Reference Offer for wholesaleNGAN Access Services submittedto Agcom in March, final approvalexpected by September
Fixed Mobile
Maintaining a fixed & mobile coordinated approach
TELECOM ITALIA GROUP1Q 2012 Results
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Agenda
Domestic 1Q11 Progress Report
Fixed BusinessMobile Business
Cash Cost Rationalization & Operating Model
Appendix
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2,274 2,196 (109) +23 (6) +29 (15)
1Q11 Revenues Interconn. Costs Handsetscosts
Mktg&Comm.Opex
Fixed Opex* 1Q12
Euro mln, Organic Data, %
Personnel Cost reduction from lay-off program (-3% yoy) offsets the negative impact from market prices increase in energy and real estate**
•ITZ Wholesale: -36M€ due to gross Voice revenues increase
•Retail: +59M€ reflecting MTR cut impact
Push on Mobile Smartphone with limited impact on SAC/Subsidy
•Robust growth on Mobile Gross Adds managed through Acquisition Costs Control
•Efficiency program on Fixed Commercial Costs turned into yoy positive contribution to margins
1
2
3
4
* Industrial + Personnel + G&A = Fixed Opex
Focus on 1Q12 Domestic EBITDA
2 3 41
-78M€, -3,4%
** Energy unitary price (including taxation) and inflation adj (ISTAT), IMU on Real Estate
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Domestic 1Q12 TakeawaysAccess Market reduction continues and refers to low value lines. Only 25% of TI line losses recovered by OLOs
Broadband: Slight increase in overall market, with OLO’s aggressive promos still continuing. TI stays on its value driven strategy
Business and Corporate Market continues to suffer, as a consequence of Italian economic scenario
Strong improvement on Mobile recovery trend, also supported by one-off events (leap year) and a more rational competition
Healthy TIM Customer Base growth, driven by Consumer segment
Browsing Revenues growth (>20%) driven by small screens, sustained by a winning smartphone strategy
Mobile Service Revenues declined 3.7% YoY (-3.1% in Retail perimeter, and only -1% if we consider Retail Business Generated, net of MTR drag)
Wireline
Mobile
Ongoing tariff simplification process has continued, first including Business segment as of Jan. 1st,, and regarding Consumer again from July 2012, as announced
Further increase in TI Broadband Services Revenues (+0.8% YoY in 1Q12 vs +0.5% YoY in 4Q11)
TELECOM ITALIA GROUP1Q 2012 Results
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Agenda
Domestic 1Q12 Progress Report
Fixed BusinessMobile Business
Cash Cost Rationalization & Operating Model
Appendix
TELECOM ITALIA GROUP1Q 2012 Results
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Domestic Wireline RevenuesEuro mln, Organic Data, %
101
2,977
1,420
407
295
795
60
1Q11
3,330
319
(67)
(38.6)
(3.0)
(4.5)
0.5
(5.8)
(1.1)
n.m.
YoY %
(2.9)
8.8
n.m.
Products
Domestic Core Services
Voice & Access
Internet
Business Data
National Wholesale
Other
Total
Sparkle Group
Elimination
62
2,887
1,356
409
278
786
57
1Q12
3,235
347
(61)
4Q11 vs 10 % YoY
(15.3)
(3.2)
(6.0)
(1.9)
(4.4)
(1.0)
n.m.
(2.8)
5.5
n.m.
TELECOM ITALIA GROUP1Q 2012 Results
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Domestic Mobile RevenuesEuro mln, Organic Data, %
(*) Including Visitors(**) Total Retail Services Revenues net of Incoming
Total
o/w Services
Wholesale (*)
Retail
o/w VAS
o/w Incoming
o/w Business Generated (**)
o/w Outgoing Voice)
1Q11
1,679
1,559
75
1,604
474
209
45
1,349
875
1Q12
1,650
1,511
62
1,588
510
176
77
1,335
825
% YoY
(1.7)
(3.1)
(17.3)
(1.0)
7.6
(15.8)
71.1
(1.0)
(5.7)
o/w Handsets
4Q11 vs 10 % YoY
(2.2)
(6.1)
(24.4)
(1.1)
5.1
(19.5)
96.5
(4.1)
(8.9)
TELECOM ITALIA GROUP1Q 2012 Results
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Progress on Domestic Efficiency PlanEuro mln, Organic Data, %
Delta Cash Cost1Q12 vs 1Q11
Cash Cost
EfficiencyVolume Driven
-232.984
- 105
-134
Intercon-nection
Target FY : -0,5 Bn
1Q11 1Q 12
2.879
+52
Cash Cost on Revenues %
1Q11 1Q12
64.9%
64.2%- 0.7 p.p.
**Includes Other Operating cost/Income and Capitalized Costs* Costs related to credit management are reclassified from G&A & Other to Mktg & Sales
Abs’12 vs ‘111Q12
-23
589Total Capex
442
250
- 29
757
+18
-20
+17
2.290Total Opex* -31
556
Industrial
Personnel
Mktg &Comm.
ITX
G&A &Other ** 120
2.879 -105TotalCash Cost
165 +6Handset Efficiency
FixedOpex
+151Q12
134
Opex Capex
% on FYTarget ~30%
-74
~25% ~35%