Telecom Italia Update and Focus on UBB · Operating Systems on TIM ‘s Network - The Android...
Transcript of Telecom Italia Update and Focus on UBB · Operating Systems on TIM ‘s Network - The Android...
0MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
TELECOM ITALIA GROUP
Telecom Italia Update and Focus on UBBBofA - Merrill Lynch Global Telco and Media Conference Wednesday, 30 May 2012, London
MARCO PATUANO – Chief Operating Officer
1MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
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.
2MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
Agenda
Group Overview
Domestic Progress Report
Focus on UBB
3MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
Revenues EBITDA
42.0% 40.1%% on Revenues -1.9 p.p.
Revenues Trend YoY EBITDA-CAPEX
Euro mln, Organic data, %
27.2%-2.1 p.p.29.3%
+15 M€+0.5%
-43 M€-2.1%
TI Group Key Results
+373 M€+5.3%7,019
7,392
1Q11 1Q12
2,055 2,012
1Q11 1Q12
2,951 2,966
1Q11 1Q12
-0,2%
2.1%
3.7%
5.0%5.3%
1Q11 2Q11 3Q11 4Q11 1Q12
% on Revenues
4MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
Revenues
EBITDA
EBITDA-CAPEX
Weight on TI Group
38.2%
26.7%
Euro mln, Organic Data
TI Group
1Q12
7,392
2,966
2,012
Δ% yoy
+5.3%
+0.5%
-2.1%
1Q12
1,928
505
271
Δ% yoy
+19.1%
+13.5%
-14.6%
26.0%
17.0%
~14%
Brazil
1Q12
901
289
168
Δ% yoy
+24.0%
+16.6%
+5.1 %
12.2%
9.7%
~8%
Argentina
1Q12
4,486
2,196
1,607
Δ% yoy
-2.4%
-3.4%
-0.2%
60.4%
74.0%
~80%
Domestic
TI Group Key Results by Core Markets
5MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
** excluding Latam spectrum licences
TI Group – FY 2012 Key Guidance
Revenues
Ebitda
Capexcum ’12-’14
NFP Adj.**
NFP Adj. 2012-’14
Stable
Broadly Stable
>15 € bln
∼ 27.5 € bln
FY 2012: ∼ 27.5 € bln
FY 2013: ∼ 25 € bln
From FY 2014: < 2x Net Debt/Ebitda***
Organic Data*
TI Group – 2012-14 Plan Key Guidance **Ebitda-Capexcum ’12-’14
>22 € bln
Organic Data*
*exchange rates 2011 (R$/€ 2.33; ARS/€5.74), excluding impact from non-organic items
*** reported figure
Telecom Italia Group – FY 2012 and 2012-14 Plan Key Guidance
6MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
Agenda
Group Overview
Domestic Progress Report
Focus on UBB
7MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
Domestic Results: Trend still improvingEuro mln, Organic data, %
4,595 4,486-109 M€
-2.4%
-1.7%
-2.9%Wireline
Mobile
Total Domestic Revenues Domestic Service Revenues
EBITDA
-78 M€-3.4%
49.5% 49.0%-0.5 p.p.% on Revenues
2,2742,196
EBITDA-Capex
1,611 1,607
35.8%+0.7 p.p.% on Revenues 35.1%
-4 M€-0.2%
8MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
Tariff simplificationprocess begins
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
Tota
lS
ervi
ces
Retail Service Revenues Trend – YoY % change
Dom
estic
Equi
pmen
t
Spar
kle
Gro
up*
*Gross of Elim. & Adj.
9MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
‘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
88%87%87%
7,194 7,125 7,092 -0.6%
+0.3%
BB Service Revenues Highlights% YoY
TotalMarket 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 Customer Base
Increasing BB penetration (+1.5 p.p.) on fixed CB, confirming the low value of TI’s line losses
10MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
Euro mln, Organic Data
Mobile Revenues: 1Q12 Results at a Glance
Total Mobile Revenues
Mobile Service Revenues Trend – YoY % change
Handset revenues
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
11MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
Community Users (*)
Growth
Continues
Consumer Mobile - The Value of the Options
* TIMx, TIM Young and Tutto Compreso Ricaricabile
Apr-12
5.5 mln
2Q11
4.4 mln
1Q11
4.1 mln
3Q11
4.6 mln
Increasing Loyalty
Avg €/month
∆ Outgoing ARPU exAnte/exPost activation
Neutralizing CB cannibalization
+1.4 mln
Churn rate
-8p.p.
12MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
Domestic Mobile – Surfing the Data WaveIncreasing Smartphone Penetration in All Segments
Smartphones increasingly Service-driven
Bri
ngin
g In
nova
tion
to t
he
Mas
s M
arke
t Operating Systems on TIM ‘s Network - The Android Growth
Dou
blin
g sm
artp
hone
pene
trat
ion
on
CB
Furt
her
roo
m fo
r gr
owth
Smartphone Penetration on Customer Base
~1,3 mln
May 2012 Dealer Convention
Of which >75% Smartphones
Data Bundle users and Renewal Rate
Number of Data connections by Device (*)
+~20%
2.2mln1.9mln
Renewal rate 79%87%
+1,9X
* Peak of traffic on the average day of the second week of each month
Dec’11 Jan’12 Feb’12 Mar’12 Apr’12
13MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
Agenda
Group Overview
Domestic Progress Report
Focus on UBB
14MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
14
Capex Allocation
Strengthen the Network for a Technological Leadership
UltraBB Roadmap
CustomerService& TrafficDriven
Network Development
Network Maintainance
Acceleration
Decrease
HSPDA 42 Mbps LTE
NGAN Roll-out
Mobile Coverage
Optimize Network Investment to maintain excellent quality in TLC services
Increase the effort in Network Development and Innovation to confirm Technological Leadership and grant the Best Experience on the Net
2014100 Cities (including all
main ones) covered throughFTTH&Cab Technology
~¼ of Housing unitspassed with >30 Mb/s
Speed
2014More than 40% of
population covered by LTE
Optimization
Network Capex
2012-2014 Plan
15MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
Mobile Technological Evolution while Protecting Profitability
Increasing speed availability
Strengthening HSDPA and LTE introduction
Maximum speed(kbps) 2009 2010 2011 2012 2013
3,6 7,2 14,442
84100
2014 January2012
June2012
Roadmap 42MB coverage
The advantages of 42MB
With PREMIUM offers Customers have an effective perception of Higher Speed
Fiber Bakhauling Dual Carrier NetworkPriority
Offer based on the Value of the Customer
Mass Market
Premium Customers
Speed
Up to 14,4 Mbps
Up to 42 Mbps
100 Mbps
Network
HSDPA
HSDPA/LTE
Priority
NO
YES
Quality (everywhere/every time)
Pricing
SpeedQualityPriority
15
2012-2014 Plan
16MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
Ultra Broadband in MotionUltra Broadband in Motion
42 Mbps coverage in progress in 50cities
Ongoing trials extended to Turin, Milan, Rome and Naples
100- cities FTTCab Plan begins, with 30 of them to be connected in 2012 / 1H2013. Retail commercial launch expected in 4Q
Reference Offer for wholesale NGAN Access Services submitted to Agcom in March. Final approval expected by September
Fixed Mobile
Maintaining a fixed & mobile coordinated approach
17MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
The Context
Low ICT culture Low e-Goverment level
European Digital Agenda Main Objectives:
Percentage of users that have never used a PC E-Government IndexGlobal Rank
#38
#15
#10
#9
#4
Low Broadband Penetration
Broadband penetration (as % of tot. accesses)
Source: Eurostat 2011Source: ONU «E-Government Survey» 2010Source: Eurostat 2010
Demand status in Italy:
> 30 Mb/s2020
> 2 Mb/s
50% 100%0%
2013
100 Mb/s
Basic BB
Ultra BB
18MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
Specific advantages for TI from FTTC
Improved performances
Lower Average Length of Local Loop guarantees
highest speed for a FTTC solution
No impact on legacy services (no switch-off)
Capex optimization
Utilization of a relevant portion of existing TI’s
Access Network
Fix and Mobile UBB Synergy
Leveraging on past investments
Ducts/Passages already existing in large part
km0 2 4 6 8 10 12 14
100
90
80
70
6050
40
30
20
10
0
Italy
United Kingdom
Japan
France
Germany
U.S.A.
Last mile length benchmark
FTTH FTTC
-50% / -75%
per l
ine/
cape
x
%
19MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
FTTC is frequently preferred by EU incumbents
Best incumbent’s choice(where network structure allows)
Vectoring technology enhances FTTC speed up to 100 Mbps in downstream and up to 15 Mbps in upstream (considerably above current market demand and existing services)
xDSL still evolving (accelerated DSL includes also: Bonding, Phanthom, G.Fast)
Advantages in Implementation: • Rapid Deployment• More Coverage• Lower Invasiveness
More value for money
Exploiting and maximizing value of existing access infrastructure (copper)
The cost for a FTTC solution is a fraction of FTTH’sAdequate match for expected demand«FTTH ready» on a selective basis approach (market-driven)
European incumbents with a FTTC strategy
Speed Capex per line
Deployment timing
FTTH FTTC
20MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
TI’s 2-step strategy on NGAN
Step 1: FTTCab
Step 2: FTTH
30 - 100 Mbps
100 Mbps – 1 Gbps
Use of existing network elements:
•Cable ducts
•Cabinets
•Copper sub-local loop
Use of FTTCab primary Network
New elements•Fiber secondary network•Fiber deployment in the customer’s building•New modem in the customer’s house
Deployment costs > 3x FTTCab
21MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
TI Fixed UBB Plan: 2012-2014 and beyond
About 60% cities target in the North (i.e. Milan, Turin, Genoa); NewCo Trentino NGN for Trento region
About 20% cities located in the Central part of the country (i.e. Rome, Florence)
About 20% cities located in the South(i.e. Naples, Bari, Palermo)
2014 within 20202012-1H201330 cities 100 cities
Moving towards
DAE Targets
Driver for NGAN Plan:
Density of population;
Leverage on existing infrastructure (i.e. ducts already in place in most of 100 targeted cities)
22MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
TI’s Convergent Approach to Fixed and Mobile UBBThe Value of our Core Asset
Acc
ess
Net
wor
k Key asset both for fixed and mobile Huge capital and time already fruitfully investedHigh CapillarityStrategic asset in the economic , social & regulatory landscape
Yesterday Today: Pervasive Ultra Broadband
UBB
Super Internet +
NGAN Fttx HSPA+ LTE
NGN
Fixed Network
Fixed & Mobile Network
23MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
TELECOM ITALIA GROUP
Thank you – Q&ABofA - Merrill Lynch Global Telco and Media Conference Wednesday, 30 May 2012, London
MARCO PATUANO – Chief Operating Officer
24MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
Bonds Loans (of which long-term rent, financial and operating lease payable € 1,497) Drawn bank facilityEuro mln
€ 6.16 bln Group Liquidity Position
+€ 7.00 bln
Undrawn Portion of Facility/Committed
=€ 13.16 bln
Group Liquidity Margin
Robust Liquidity Margin and Well-Distributed Debt Maturities
689
1,652
1,211
1,264
731
865
1,966
8,378
1,790
3,335
2,857
1,768
2,250
1,900
11,357
25,257
250
1,999
2,249
2,479
5,237
6,067
3,032
2,981
2,765
13,323 35,884 (*)
(*) € 35,884 mln is the nominal amount of oustanding medium-long term debt by adding IAS adjustments (€ 805 mln) and current liabilities (€ 824 mln), the gross debt figure of € 37,513 mln is reached.N.B. Debt maturities are net of € 646 mln (face value) of repurchased own bonds (of which € 354 mln related to bonds due in the next 24 months).
Within 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Beyond 2017 Total M/LTerm Debt
25MARCO PATUANO
TELECOM ITALIA GROUP BofA Merrill Lynch Global Telco and Media ConferenceWednesday, 30 May 2012, London
4.0%
6.7%
68.0%
Bonds
25,521
Total Gross Debt Net of Adjustment: Euro 37,513 mln
Gross debt Financial assetsof which C & CE and marketable securities
- C & CE- Marketable securities
- Italian Government Securities- Other
37,513(7,201)
Bank Facility
2,248
Bank & EIB
5,734
Op. Leases and long rent
1,512
Other
2,498
Maturities and Risk Management
Average debt maturity: 7.32 years (bond only 8.38 years)
Fixed rate portion on gross debt approximately 72.4%
Around 47% of outstanding bonds (nominal amount) is denominated in USD, GBP and YEN and is fully hedged
Cost of debt: ∼5.5%
15.3%
6.0%
Euro mln
Net Financial Position 30,312
N.B.The figures are net of the adjustment due to the fair value measurement of derivatives and related financial liabilities/assets, as follows:- the impact on Gross Financial Debt is equal to 2.545 €/mln (of which 789 €/mln on bonds);- the impact on Financial Assets is equal to 1.878 €/mln.Therefore, the Net Financial Indebtedness is adjusted by 667 €/mln.
Well Diversified and Hedged Debt
(6,158)
(159)
(527)(666)
(5,492)