Telecom Italia 1H 2007 Business Performance

Transcription

1 Milan, September 7, 2007 Telecom Italia 1H 2007 Business Performance RICCARDO RUGGIERO

2 TLCne P1 Agenda IH 2007 business performance: Domestic European BroadBand TIM Brasil Appendix 1

3 TLCne P2 1H 07 Results on the way to FY2007 targets Mln, % 1H 2007 Δ % YoY Organic 2007 Organic Target TI Group Excl. NNG* Revenues +0.2% +1.7% +1%/+2% % EBITDA Margin -1.3 pp -2.5/-2.0 pp Domestic Revenues Fixed Mobile -5.3% -7.0% -1.3% Excl. NNG* -3.6% -4.4% -3.5%/-2.5% -3.5%/-2.5% -3.0%/-2.0% % EBITDA Margin -1.6pp -2.0/-1.5 pp European BroadBand (reported values) Revenues (abs) ~0,7 Bln % EBITDA Margin (abs) 12.7% ~1,6 Bln >14% 14.8% in 2Q07 TIM Brasil Excl. Bill & Keep Revenues % EBITDA Margin (abs) +35.9% 25.2% +18.1% >15% ~23% >10% Target FY 2007 Net of Bill&Keep * Excluding change in accounting for Non Geographic Numbers (-230 mln in 2006); In accordance with AGCOM deliberation 417/06/CONS, starting January 1st 2007, Telecom Italia invoices services rendered by OLO on NNG while does not assume credit risks. These services, since January 1st are thus no longer recorded for as revenues and costs in Telecom Italia accounts 2

4 Mln, % Organic Growth TI Group growth performance net of market discontinuities* Organic Growth net of discontinuities* TLCne P3 +3.5% Revenues Growth TI Group +1.1% 83 IQ % IIQ +0.2% 26 IH +3.9% +3.1% Discontinuities -508 IQ IIQ 534 IH +2.7% EBITDA Growth TI Group % IQ % IIQ % IH % Discontinuities -191 IQ IIQ +0.1% 5 IH * NNG (-119mln in 1Q07 and -111 mln in 2Q07 on Revenues; no impacy on EBITDA), Bersani Decree (-30mln in 1Q07 and -133mln in 2Q07 on Revenues and EBITDA), Self regulation on Visitros Traffic (-8mln in 1Q07 and -12 mln in 2Q07 on Revenues; no impact on EBITDA ) and F2M Cut (-47mln in 1Q07 and -48mln in 2Q07 on Revenues; -17mln in 1Q07 and -11mln in 2Q07 on EBITDA) 3

5 TLCne P4 Agenda IH 2007 business performance: Domestic European BroadBand TIM Brasil Appendix 4

6 Domestic Business Highlights TLCne P5 Wireline: improvement in high profitability business performance Successful Value strategy on BroadBand Voice traffic stabilization thanks to higher penetration of flat offer Trend inversion on Data business as a result of renewed focus on Top Clients segment and ICT (+21.3% in 2Q07) Mobile: value strategy in progress High teen growth on VAS revenues driven by innovative services Elasticity effect increasingly visible Quality of customers improves % Flat on Alice CB BB VOIP CB Market Voice Traffic volumes (YoY %) Business Data revenues (YoY %) VAS Revenues (YoY %) Outgoing Traffic Volumes (YoY %) % Post-paid on total acquisitions 4Q '06 1Q '07 2Q '07 50% 53% 58% % -4.0% -3.0% -19.4% -11.4% 0.5% 4Q '06 1Q '07 2Q '07 9.8% 10.8% 20.5% 1.8% 2.3% 9.5% 19% 22% 31% * Net of Discontinuities (Bersani Decree, Reding, F2M cut) 5

7 TLCne P6 Domestic: Main Results 1H 07 vs 1H 06 Mln, % Reported Data Organic Data 1H '07 1H '06 Abs % 1H '07 1H '06 Δ Abs Δ % -3.6% excluding change in accounting for Non Geographic Numbers* (-230 mln in 2006) Revenues 12,182 12, % 12,182 12, % of which fixed 7,983 8, % 7,983 8, % of which mobile 4,916 4, % 4,916 4, % EBITDA 5,619 6, % 5,753 6, % % on revenues 46.1% 48.2% -2.1 p.p. 47.2% 48.8% -1.6 p.p. -4.4% excluding change in accounting for Non Geographic Numbers* (-230 mln in 2006) EBIT 3,456 4, % 3,580 3, % % on revenues 28.4% 31.4% -3.0 p.p. 29.4% 31.0% -1.6p.p. CAPEX 1,895 1, % % on revenues 15.6% 13.9% 1.7p.p. * In accordance with AGCOM deliberation 417/06/CONS, starting January 1st 2007, Telecom Italia invoices services rendered by OLO on NNG while does not assume credit risks. These services, since January 1st are thus no longer recorded for as revenues and costs in Telecom Italia accounts 6

8 TLCne P7 Agenda IH 2007 business performance: Domestic Fixed business performance Mobile business performance Cost Analysis European BroadBand TIM Brasil Appendix 7

9 Domestic fixed: Revenue Analysis Mln. Reported Data -386 mln. -4.6% -4.1% (-340 mln) excluding termination cut (46 mln) TLCne P8 Subs., Adj. & Other 8, , Wholesale 1,923 1,950 Business Data Internet % +6.5% -5.5% +1.4% -12.8% -7.1% (-334 mln) excluding termination cut (46 mln) Of which -14.2% (-130 mln) on international Wholesale Voice 4,665 4,285 1H 06* Voice Internet Business Data Wholesale Subs., Adj. & Other 1H 07 * Restated figures, excluding different accounting for Non Geographic Numbers (-230 mln : -140 mln on voice and -90 mln on Internet) 8

10 TLCne P9 Domestic fixed: Voice Revenues Mln, %, Reported Data -380 mln. -8.1% 4, ,285 Handsets Voice VAS Access 2, % -3.7% -6.7% -24.7% 1, % (-152mln ) excluding F2M termination cut (46 mln) Traffic 2,022 1,824 1H 06* Traffic Access Voice VAS Handsets 1H 07 *Restated figures, excluding different accounting for Non Geographic Numbers (-140 mln : -19 mln on Traffic and -121mln on Voice VAS) 9

11 TLCne P10 Domestic fixed: Voice Traffic Performance Italian market: domestic voice traffic trend YoY % chg. in traffic volume 06 vs vs 06 1Q 2Q 3Q 4Q 1Q 2Q Retention Campaign 000, Number of lines Families Business % -5.3% -5.0% -4.4% -4.0% -3.0% Q 06 4Q 06 1Q Q 07 Telecom Italia traffic market share trend %, Total traffic monthly M/S 71.9% 71.5% Voice flat/semi-flat offers 000, Voice Flat/Semi-Flat offers New Offers F2F/F2M ,469 6,468 6, % 20.2% 26.9% Jun 05 Jun 07 Jun 06 Dec 06 Jun 07 % on total accesses 30.5.% 31.5.% 33.4% Source: Company Data, Analyst Estimates, NRA 10

12 TLCne P11 Domestic fixed: Internet Revenues Mln, %, Reported Data +44 mln. +6.5% % +10.0% Broadband Narrowband H 06* Narrowband Broadband 1H 07 * Restated figures, excluding change in accounting for Non Geographic Numbers (-90 mln on narrowband) 11

13 TLCne P12 Domestic Broadband: Portfolio Evolution Broadband Portfolio BB Retail portfolio net growth 000 Access lines 000 Access lines Dec 05 Dec 06 Jun 07 Δ Dec06 vs Dec05 Δ1H07 vs EoY Wholesale 890 1,131 1, Retail 4,817 5,639 6, Total Domestic 5,707 6,770 7,277 +1, H06 2H06 1H07 Total TI BB Portfolio (Domestic + European): 10.5 mln customers In 1H 2007 BB Retail Portfolio Growth higher than 1H

14 TLCne P13 Domestic BroadBand: Focus on Flat and VoIP Offers Flat Offers development VoIP portfolio % on Residential Portfolio 000 access lines pp +5pp % 53% 58% Dec-06 Mar-07 Jun-07 Dec-06 Mar-07 Jun-07 Domestic retail* ADSL ARPU - 12% 2Q 06 vs 4Q 05-4% 2Q 07 vs 4Q 06 % on BB access lines 6.4% 9.3% 15.2% * Including Residential, SOHO and SME s customers 13

15 TLCne P14 Domestic fixed: Business Data Revenues -11.4% in 1Q % in 2Q 07 Mln, %, Reported Data -49 mln. -5.5% ICT Equipment % -60.4% +5.6% -19.5% +14.5% BB Data mln (-13.3%) +4.9% in 1Q % in 2Q % in 1Q % in 2Q Traditional Data Leased lines H 06 Leased lines Traditional Data BB Data Equipment ICT 1H 07 14

16 TLCne P15 Agenda IH 2007 business performance: Domestic Fixed business performance Mobile business performance Costs Analysis European BroadBand TIM Brasil Appendix 15

17 TLCne P16 Domestic mobile: Revenue Trends by Quarter Total revenues Service revenues Growth % YoY 0.4% 1.7% 0.2% 3.0% -0.2% 0.9% 2.4% 0.5% -2.3% -1.1% -1.0% -1.3% Growth % YoY (Net of Discontinuities*) 5.3% 6.2% 4.5% 4.2% 2.9% 4.6% 4.0% 3.9% 5.4% 3.8% 3.8% 6.5% 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 * Bersani Decree (30 mln IQ mln 2Q 07), self-regulation on Int.l Visitors traffic (in line with European Commission guidelines: 8mln 1Q 07, 12 mln 2Q 07) and F2M termination cut (36 mln in 1Q 07, 37 mln in 2Q 07) 16

18 TLCne P17 Q2 Service Revenues trend: managing discontinuities Mln -30 mln. -1.3% 2, , Q07 total discontinuities -182mln 2Q07 Growth net of discont. +152mln (+6.5%) Bersani Decree impact 2Q 06 Self- 2Q 07 regulation on Int l Visitors F2M cut Voice (outgoing + incoming) VAS Visitors & Other 17

19 TLCne P18 Domestic mobile: Revenue Analysis Mln, % +3.8% net of discontinuities* -66 mln -1.3% Handsets Visitors and other VAS Incoming Voice 4, , % -7.8% +15.5% -5.7% -12.8% Outgoing Voice +3.9% net of Bersani mln. -0.4% Outgoing Voice Service Revenues 2,685 2,627 Substantially flat vs 06 in spite of Bersani Decree +5.1% net of discontinuities* 1H 06 Outgoing Incoming VAS Vis. & other Handsets 1H 07 Voice Voice * Bersani Decree (163 mln ), self-regulation on Int.l Visitors traffic (in line with European Commission guidelines: 20mln ) and F2M cut (73 Mln ) 18

20 TLCne P19 Domestic mobile: Customer Base Trend SIM, ,862 KPIs: +1,824 +2,042 32,450 34,312 > 1.8 mln Net Adds in 1H 07 and stable market share +2,459 30,408 Postpaid > 30% of gross adds in 2Q ,259 26,117 28,576 Around 1mln UMTS customers added and UMTS penetration reaching 15% in 1H 07 Dec '04 Jun '05 Dec '05 Jun '06 Dec '06 Jun ' % 39.4% 40.0% 40.5% 40.4% 40.3% Market Share TIM EoY (%) 2,170 3,421 4,206 5,147 UMTS* Customers 7.6% 11.3% 13.0% 15.0% UMTS penetration (%) * UMTS customers that generated traffic on TIM s 3G network in the last 90 days 19

21 TLCne P20 Domestic mobile: Post paid Gross Acquisitions SIM 000, Not Human included Business Mass Market Q '06 2Q '06 3Q '06 4Q '06 1Q '07 2Q '07 % on total gross acquisitions 17.0% 20.5% 14.7% 18.6% 21.8% 30.5% 20

22 TLCne P21 Domestic mobile: Voice Traffic Performance Total Traffic Volumes* Outgoing voice Bln. Min. +6,3% Outgoing voice revenues Δ % YoY 2.3% 1.4% 3.7% net of Bersani Decree -5.6% 9.5% 4.1% net of Bersani Decree 10,4 +1,6% 10,5 10,8 11,4 Outgoing traffic volumes** Δ % YoY 1.8% 2.3% 1Q 2Q Outgoing traffic price** Δ % YoY -0.6% -0.6% Flat net of Bersani Decree 4Q 06 1Q % 2Q 07 * Incoming + Outgoing, excluding Visitors and roaming ** Roaming not included 21

23 TLCne P22 TIM Accelerates UMTS and Interactive VAS Penetration Handsets sold VAS Revenues 000, % mln UMTS +573 IH YoY Growth IQ IIQ 3,151 1,061 3,724 1,361 Interactive VAS % % 42.7% +29.5% +10.8% +21.0% +20.5% +38.6% 2,091 2,363 Messaging 61.9% 57.3% +6.9% +4.8% +9.1% % UMTS 33.7% Mobile Office Devices Sold* (000) IH 06 IH % IH 06 IH 07 % VAS/Services Revenues of which Web Browsing 17.2% 19.9% revenues growth: +47% > 20% in 2Q07 * PC Card, PDA, BlackBerry 22

24 TLCne P23 Agenda IH 2007 business performance: Domestic Fixed business performance Mobile business performance Costs Analysis European BroadBand TIM Brasil Appendix 23

25 TLCne P24 Domestic: Cost Analysis 1H 07 vs 06 Reported Data; Mln, % +126 mln. +2.0% +126mln (+4.2%) in 1Q 07 6,437 6,563 Other Domestic Opex -4.8% +8.7% +4.4% -8.4% -4.8% +124,6% 2,615 2,700 Mktg & Sales Of which Fixed: 686 Of which Mobile: 947 Of which Fixed: 834 (+21.6%) Of which Mobile: 954 (+0.8%) 1,663 1,808 Interconn. Costs* Of which Fixed: 1,855 Of which Mobile: 823 Of which Fixed: 1,688 (-9.0%) Of which Mobile: 804 (-2.3%) 2,159 2,055 IH 2006* Interconn. Mktg & Industrial G&A Personnel Other** IH 2007 Costs* Sales Costs * Restated figures, excluding different accounting for Non Geographic Numbers (-230 mln ) and reclassifing 39mln from Interconnection costs to Mktg&Sales on Domestic Fixed ** Includes Other Income, provisions, charges and capitalized costs Other Domestic OPEX 24

26 TLCne P25 Agenda IH 2007 business performance: Domestic European BroadBand TIM Brasil Appendix 25

27 TLCne P26 European BroadBand Operations: Main Results 1H 07 vs 06 Mln, % 14.8% EBITDA margin in 2Q07 Reported Data Organic Growth 1H 07 1H 06 Δ Δ % Δ Δ% Revenues % % Ebitda n.m % Ebitda margin 12.7% 3.3% +9.4pp +7.0pp Ebit % % Ebit margin -7.5% -18.3% +10.8pp +3.3pp Capex % on revenues % % 53.4% -17.1pp 26

28 TLCne P27 European BroadBand: Main Results 1H 07 vs 06 by Country Mln, %, Reported Data TI France Hansenet + AOL BBNED 1H 07 1H 06 Δ Abs Δ% 1H 07 1H 06 Δ Abs Δ% 1H 07 1H 06 Δ Abs Δ% Revenues % % % Ebitda % % % Ebitda margin -21.9% -43.2% +21.3pp 24.8% 25.2% -0.4pp 27.8% 41.5% -13.7pp Ebit % % % Ebit margin -56.3% -72.3% +16.0pp 12.6% 9.2% +3.4pp 0.0% 19.5% -19.5pp CAPEX % % % % on revenues 33.9% 69.6% -35.7pp 39.1% 48.3% -9.2.pp 11.1% 24.4% -13.3pp 27

29 TLCne P28 European Broadband: Customer Base Evolution 000 BroadBand Access Broadband Portfolio 000 Access Total customer portofolio: BB+NB +140k net OLO +1,223 3, , The Netherlands The Netherlands 172 France 1, , , ,118 2,180 Germany* Germany* 3, France Total customer portfolio: 4,300,000 Dec-04 Dec-05 Dec-06 Mar-07 Jun-07 * Including AOL Customers, as of March 1 1,083 BB customers and 2,089k total customers 28

30 TLCne P29 France and Germany: Bits on Business Performance Germany On track to exploit German market growth 000 Gross Acquisitions +46% France Shift of acquisition mix towards profitable ULL offers %ULL on Monthly Total Acquisitions +26pp 64% 38% 1H06 1H07 Jun-06 Jun-07 Successful launch of Alice Mobile offer 108k MVNO Customers reached at June 07 On track onto process of AOL integration Successful launch of 3Play IPTV offer 59k IPTV Customers (8% on total BroadBand Access) reached at June 07 Improvement in Quality of Service Level About 90k AOL customers migrated to Alice offer from March 07 4pp improvement (82% from 78%) in Customer Satisfaction Index in last 6 months 29

31 TLCne P30 Agenda IH 2007 business performance: Domestic European BroadBand TIM Brasil Appendix 30

32 TLCne P31 TIM Brasil: Main Results at a Glance Customer Continuous value segment growth 27.5mln customer in June 07 (+2.1 mln net adds in 1H07) reaching 25.8% Market share Improving client mix: postpaid lines reach 22% on total (+1.4pp YoY) Confirming leadership in service revenue and reinforcing our leadership in business segment Innovation Focusing on customer total communication needs TIM Web: internet access solutions TIM Mais Completo: convergent solution (mobile + fixed + internet) Continous VAS innovation Quality Recognized TIM Brand Preferred mobile operator in Brazil* Leader in average client satisfaction** Largest voice & data coverage Profitability Solid Financial growth Strong revenue growth (+35.9% Organic growth in 1H07) Confirmed premium ARPU and QoQ growth Solid EBITDA margin expansion (25.2% EBITDA margin Reported in 1H 07, +4.7pp YoY) Positive net income * Instituto Synovate May/2007 ** Interscience May/

33 TLCne P32 TIM Brasil: Main Results 1H 07 vs 1H 06 IAS/IFRS Data Reported - Euro Data Reported - Reais Million Euro, % Million R$, % Organic Growth % 1H 07 1H 06 Δ Abs Δ % 1H 07 1H 06 Δ Abs Δ % Δ % Revenues 2,322 1, % 6,313 4,644 1, % 35.9% Ebitda % 1, % 62.7% Ebitda % 25.2% 20.5% 4.7 p.p. 25.2% 20.5% 4.7 p.p. 25.2% margin Ebit Ebit % % % p.p % % p.p % net of B&K CAPEX % on revs 11.7% 11.2% 0.5 p.p. 11.7% 11.2% 0.5 p.p. 32

34 TLCne P33 TIM Brasil: Revenue Trends by Quarter IAS/IFRS, % Reais Total revenues Service revenues 33.9% 28.0% 37.4% 34.6% 34.7% 37.3% 40.8% 40.8% Growth % YoY (Organic) 15.9% 13.8% 21.4% 15.8% Growth % YoY (Organic net of B&K)* 15.9% 13.8% 19.0% 12.7% 19.1% 17.2% 21.4% 15.8% 17.7% 18.2% 20.4% 20.1% 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 *B&K elimination from 3Q 2006; growth net of B&K calculated on a like-for-like basis 33

35 TLCne P34 TIM Brasil: Market Performance TIM Brasil Customer Portfolio Market Share Gap vs. main competitors mln Lines Vs 1 st player Vs 3 rd player % GSM 82% 85% 87% 89% 91% 92% 94% +1.8pp +1.5pp +1.5pp +1.2pp Market Share Dec % Mar % Jun % Sep % Dec % Mar % Jun % -11.1pp -6.8pp -3.7pp -2.6pp Postpaid customers base at 1H07: 6.0K (22% of total customer base) Dec. 05 Jun. 06 Dec. 06 Jun. 07 Dec. 05 Jun. 06 Dec. 06 Jun

36 TLCne P35 Agenda IH 2007 business performance: Domestic European BroadBand TIM Brasil Appendix 35

37 TLCne P36 Domestic: Cost Analysis 1Q 07 vs 06 Reported Data; Mln, % +126 mln. +4.2% 3,030 3,156 Other Domestic OPEX 1, % +10.5% +4.3% +2.9% -0.7% +41.7% 1,352 Mktg & Sales 675 Of which Fixed: 288 Of which Mobile: 357 Of which Fixed: 368 (+27.8%) Of which Mobile: 372 (+4.2%) 746 Interconn. Costs Of which Fixed: 920 Of which Fixed: 879 (-4.5%) Of which Mobile: 388 (-4.2%) 1,051 Of which Mobile: 405 1,058 Industrial Costs 1Q 06* Interconn. Mktg & Sales G&A Personnel Other** 1Q 07 Costs Other Domestic OPEX * Restated figures, excluding change in accounting for Non Geographic Numbers (-119 mln on interconnection costs) ** Includes Other Income, provisions, charges and cost capitalization 36

38 TLCne P37 Domestic fixed: Wholesale Services Revenues Mln, % +27 mln. +1.4% ,923 1,950 International Wholesale % -14.2% 786 National Wholesale 1,007 1,164 1H06 National Wholesale International Wholesale 1H07 37

39 TLCne P38 Fixed Access lines EoY 2003 EoY 2004 EoY 2005 EoY 2006 June 2007 million access TI Wireline Retail Access '000 access OLO Access (on TI infrastructure) ULL ,117 Shared Access (ADSL)* n.a ,706 Virtual ULL n.a. n.a. n.a , * Included in TI Retail Access 38

40 TLCne P39 Domestic: Main Results Organic Trend 1H 07 Mln. 1H H 2007 Organic trend 2006 Reported (IAS) Change in Perimeter Exchange rate impact Except. items 2006 Organic 2007 Reported Except. items 2007 Organic 2007 vs 2006 Δ Abs Δ % Revenues 12, ,861 12,182 12, % Ebitda 6, ,279 5, , % Ebit 4, ,985 3, , % Real estate Projects: 123 mln Restructuring Charges: 81 mln Provisions for Antitrust fine: 20 mln 39

41 TLCne P40 TIM Brasil: Revenue Analysis IAS/IFRS; R$ Mln Handsets VAS Voice Voice revenues* 5,142 3, % 1H 06 1H 07 VAS Revenues % 1H 06 1H 07 Handset revenues % 530 1H 06 1H 07 Voice revenues net of B&k growth: +18.1% Traffic revenues growth driven by strong Customer Base increase ARPU premium confirmed leveraging on community, innovation and integrated solution offers Growth continues thanks to uptake of innovative VAS Constant update of interactive/media contents Launch of specific VAS tariff plans Lower focus on massive handset sales TIM Chip Only strategy continues to reduce subsidy in lower ARPU prepaid segment Selected push to upgrade technological mix * Excluding visitors & others 40

42 TLCne P41 TIM Brasil: Main Results 1H 07 vs 06 Organic Growth in LC IAS/IFRS - Million Reais, % 1H H 2007 Organic Growth 07 vs Reported Exceptional Items 2006 Organic 2007 Reported Exceptional Items 2007 Organic Delta ass Delta % Revenues 4,644 4,644 6,313 6,313 1, % Ebitda Ebitda % 20.5% % 1, % - 1, % % Ebit Ebit % -4.5% % % %