Growth & Deleveraging: delivered Results

Transcription

1 Growth & Deleveraging: delivered 2006 Results April 2,

2 FY 2006, strong financial results Total Revenues reached 5,048 million, growing 4.6% over 2005 TLC service revenue growth 6.5%, notwithstanding termination rate cuts and intensifying competitive environment Normalised EBITDA growing +16.5% to 1,704 million EBITDA at 1,657 million, up 13.0% over 2005 EBIT growing +80% YoY to 580 million Net profit in the year of 23 million Net financial Indebtedness as of December 31, 2006 of7,057 million 2

3 and operational performance Double digit growth in mobile revenues (+13.4%) and +7.5% customer base increase YoY Increase in mobile ARPU, notwithstanding deflationary pressure and termination rate cut on July 1, 2006 Increase in Fixed Margin (+ 8.5%) due to Direct voice customer base growing 56% and reaching 40% of total voice CB (vs. 25% in 2005), notwithstanding decrease in Enel outsourcing contract; Total Direct customer base reaching 1 million Broadband subscribers growth trend confirmed (+26%) with uplift in ARPU driven by increasing popularity of flat tariff packages (80% of customer base) 3

4 New Group structure* Weather Investments II S.àr.l % Other Equity Investors 2.24% 100% Weather Capital S.àr.l 10% 100% Wind Wind Acquisition Acquisition Holdings Holdings Finance Finance S.p.A. S.p.A. 50% + 1 share % Weather Investments announced the purchase of TIM Hellas in February 07 * Structure as of December 31, 2006 following acquisition of 26.1% stake of Enel in Weather Investments and completion of post-closing merger between Wind Acquisition Finance S.p.A. and Wind Telecomunicazioni S.p.A. 4

5 Leading integrated fixed and mobile network National coverage Bolzano S.Massenza Cordignano Chiasso (CH) Sondrio Belluno Trento Udine Varese Lecco Cimego Como Sandrigo Gorizia Verbania Gorlago Ala Treviso Pordenone Aosta Bergamo Salgareda Padriciano Biella Nave Dugale Bovis. Vicenza Divaccia (SL) Montestrutto Turb. Verona Milano PortogruaroTrieste Ivrea Brescia Novara Lodi Padova Venezia Vercelli Nogarole Rondissone Tavazz. Cremona Chivasso Tortona Villabona Rovigo Pavia Dolo Torino Alessandria Mantova Piacenza Piossasco Castelnuovo Ferrara Asti Reggio E. Parma Vignole B. Colunga Claviere (FR) Magliano A. Modena Bologna Cuneo Ravenna Genova Savona Massa Forlì Rimini Vado L. La Spezia Pistoia Prato Camporosso Lucca Pesaro Campochiesa Martignone Pisa Imperia Marg. Firenze Ancona Arezzo Broc Carros (FR) Livorno Calenz. Serra S.Q. P. Caiano Siena Macerata Perugia S. Vincenzo P. Speranza Suvereto Foligno Ascoli P. Porto d Ascoli Grosseto Orvieto Orte Teramo Terni Viterbo Villanova Pescara Albinia Rieti L Aquila S.Lucia Chieti Campomarino Civitavecchia Cerveteri Valmontone Larino ROMA Frosinone Isernia Foggia Ceprano Campobasso Barletta Latina Formia Caserta Bari Garigliano Benevento Olbia S.Maria C.V. Andria Avellino S.Sofia Gioia del Colle Pozzuoli Montecorvino Matera Napoli Brindisi Sassari Salerno Potenza Nuoro Lecce Alghero Rutino Taranto Otranto Metaponto Rotonda Galatina Sapri Oristano Laino B. Sibari Diamante Cagliari Paola Cosenza Scandale Crotone Lamezia Feroleto A. Catanzaro Vibo Valentia Rizziconi Rosarno Messina Palermo Gioiosa Marea Trapani Cefalù Reggio C. Caracoli T.I. Marsala Enna Caltanisetta Sciacca Catania Agrigento Ragusa Siracusa Gela Aethos (GR) Mobile network GSM 900/1800: 99.43% population coverage GPRS / EDGE coverage UMTS: All regional capitals and all provincial capitals Fixed network 751 ULL sites, 36.6% direct population coverage Over 800 ULL sites by mid 2007;> 40% direct population coverage Nationwide indirect coverage Backbone 3,142km of fibre optic MANs in 39 cities Over 19,000 km fibre optic backbone

6 Organisational efficiency Headcount (n.) Tellas 8, , Leaner, more efficient organisation Revenue / employee increasing to 656K in 2006 from 595K in 2005 Wind Quiet and efficient process 6

7 Mobile recharge fees On January 25 th 2007 the Council of Ministers issued a legislative decree which eliminates the so-called recharge fee on pre-paid account top-ups The decree came into effect on March 5 th 2007 and was converted into law on March 30 th 2007 Wind has publicly expressed its critical view of the intervention on retail pricing, which should be left to competitive forces, but has eliminated fees on pre-paid recharges in compliance with the decree WIND is implementing a number of actions to significantly mitigate the impact of the decree on revenues and EBITDA 7

8 Mobile performance 8

9 Mobile Key highlights Strong service revenue dynamics (+13.7%) driven by high value growth in customer base: Over 1 million net adds during the year, +7.5% customer base growth ARPU increase to 19.1 despite new termination cuts on July 1 st, 2006 and overall declining ARPU trend in market (underlying 2006 ARPU w/out last termination rate cut would have been 20.3) Attractive commercial proposition, > 50% Noi penetration on customer base Distribution channel strengthened with opening of new redesigned points of sale Strong increase in quality indicators and customer satisfaction surveys 9

10 Mobile customer growth driven by offering Tariff plans & promotions Subscribers I-mode & Blackberry (mln) +7.5% 13,7 14,0 14,3 14,5 14, Q1 06 Q2 06 Q3 06 Q4 06 Data bundles and offers Roaming Wind 6 SMS International top-up 10

11 Community effect drives usage and ARPU Noi Subscribers / % of CB Voice traffic volume (mln / %) 43,2% 5,9 7,3 49,7% (Bln mins) 18, % 23,4 ARPU i-mode subscribers growth () % ,4 2,4 Data (000's) % 680* 16,4 16,7 Voice * During the course of 2006 Wind performed a clean-up of its inactive i-mode accounts 11

12 Fixed-line performance 12

13 Fixed Key highlights Value growth on voice customer base driven by: Better mix on high value direct subscribers (+56%) offsetting decrease in indirect customer base Increasing percentage of 2P on direct customers to 41% from 32% Direct customer base reaching 1 million, growth driven by: enriched product offering, increasingly centred around integrated dual-play offerings strong ULL coverage expansion in Q4 with 751 unbundled sites (36.6% direct population coverage) and introduction of virtual ULL Broadband customer base growth continuing (+26%) with increased flat offer penetration ensuring an increase in ARPU 13

14 Fixed Strong growth in direct customers Direct subscribers (1) Key results ('000) +54% Strong growth of Direct Customer base over previous year as result of highly 649 appealing product portfolio and highly successful introduction of VULL (Virtual ULL) in Q ,000 net additions in Q4 06 also driven by expansion of ULL coverage Fixed line ARPU (1) % ,9 +8% 10,7 Total ARPU slightly decreasing versus 2005 due to pressure on voice ARPU partially compensated by increase in Internet ARPU. 27,2-4% 26,1 Voice Internet (1) As of FY2006 results Wind has restated its fixed-line customer base figures to better reflect operational trends and in line with industry practise: (a) microbusiness and corporate customers are now measured in number of lines,(b) more stringent active line criteria for CPS, (c) CS active lines measured as 3 month calling vs previous 1 month. 2004, 2005 Customer base and ARPU figures have been restated accordingly. 14

15 Fixed Broadband driving Internet growth Broadband subscribers Key results ('000) % 763 Strong broadband growth continuing in Q4 06 leading to a full year growth in 2006 of +26% as a result of success of simplified product proposition (Mega, Mini, 62% 80% Flat Pay x use Free) and price-performance Growing shift towards flat pricing schemes vs pay-peruse (80% vs 62% in 2005) resulting in increase in ARPU and stabilization of revenue stream Dual Play CB Success of dual play offerings also available for customers where direct access not available (CPS voice and wholesale BB) 385 Broadband ARPU % 41% () 19,0 19,6 % 2P 32% 15

16 Wind Financial Review 16

17 2006, a remarkable year (mln) Total Revenues % Normalised EBITDA / Margin* (mln) 30,3% 33,8% % TLC Service Revenues % EBITDA / Margin (mln) 30,4% % 32,8% * Net of unusual items 17

18 2006 P&L Highlights ( mln) Change (%) Net Revenues ,1% Other income ,0% Total Revenue ,6% Total cost (3.344) (3.364) -0,6% Normalised EBITDA ,5% Net unusual Items (46) 3 N.M. EBITDA ,1% EBIT ,4% Financial income and expense (447) (522) -14,5% EBT 134 (199) N.M. Income tax (117) (112) 5,2% Net result from continuing operations 16 (311) N.M. Net result attributable to parent 23 (331) N.M. 18

19 Increase of marginality Revenues and EBITDA Focus on cost split Costs (% on revenues) 69,6% 67,2% Opex & Other (% on revenues) 24,1% 22,5% 16,5% 17,0% Commercial Costs (% on revenues) EBITDA Margin (% on revenues) 30,4% 32,8% Network Variable Costs (% on revenues) 29,0% 27,7% Increase of revenues sustained by strong commercial push Increase of marginality driven by: Better mix of revenues (higher weight of mobile revenues and higher number of Fixed Direct customers) Overall increase of efficiency 19

20 Strong Operating Income growth and Net Profit (mln) Operating Income % 323 Strong growth in operating income driven by EBITDA growth and decrease in depreciation and amortization Net Result (mln) 23 (331) 20

21 Mobile Revenue & EBITDA growth delivered Mobile TLC Service Revenues (mln) % (mln) Mobile EBITDA / Margin* 41,0% 43,3% % Strong revenue growth, notwithstanding effect of interconnection rate cut, driven by outgoing traffic, recurring fees and internet and data revenues; stable incoming revenues EBITDA growth driven by strong increase in revenues (as result of growing customer base and higher usage), coupled with increased operational efficiency * Normalised EBITDA / Margin 21

22 Fixed-line margin improving Fixed TLC Service Revenues (mln) % (mln) Fixed EBITDA / Margin* 12,4% 14,5% % Revenue decrease mainly driven by decrease in Enel outsourcing contract. EBITDA growth and marginality improvement driven by better customer base mix. * Normalised EBITDA / Margin 22

23 Capital expenditure Capex Normalised EBITDA - Capex (mln) 16,1% 13,9% (mln) (1) -9.4% 8, ,2 Tellas 7,1 +46% 167, ,7 Common 244,4 409,5 Mobile 284,1 % of revenues (1) Excluding capitalized financing transaction costs 23

24 Capitalisation steady reduction of debt (mln) As of December 31, 2005 As of June 30, 2006 As of December 31, 2006 Dec 31, 2006/ FY2006 Normalised EBITDA Cash and Equivalents (163) (292) (138) (0,1x) Tellas & Other Net Debt * ,0x Senior Debt ,0x Total Senior Debt ,0x Second Lien ,4x Total Senior + Second Lien ,4x Senior Notes ,9x Derivatives (92) (141) (152) (0,1x) Net Debt ,1x of which Cash Net Debt** Interest Accrued Fees to be amortized (196) (175) (148) Derivatives MTM (92) (141) (152) * Includes 328 mln for Second Closing ** USD Debt valued at the exchange rate on the date of the financial statements Wind 2006 Normalised EBITDA 1,704 mln Through W.A.H.F. S.p.a. Net Debt / EBITDA is 5.1x (excl. intagroup) 24

25 Wind Debt Maturity Profile * mln Senior Second Lien High Yield Notes * Excluding Tellas 25

26 Strong revenue and margin growth in Q Revenues Normalised EBITDA* / Margin (mln) % (mln) 32,2% 29,9% % 374 Q4 05 Q4 06 Q4 05 Q

27 Q P&L Highlights ( mln) Q Q Change (%) Net Revenues ,2% Other income ,0% Total Revenue ,1% Total cost (915) (876) 4,5% Normalised EBITDA ,4% Net unusual Items (46) (33) 39,0% EBITDA ,2% EBIT ,9% Financial income and expenses (111) (145) -23,4% EBT (25) (99) N.M. Income tax (10) (82) N.M. Net result from Continuing Operations (35) (181) N.M. Net result attributable to parent (33) (198) N.M. 27

28 2007 Guidance Strong start in 2007 in both mobile and fixed-line would imply another year of strong growth Significant impact of mobile recharge fees elimination on 2007 EBITDA, all else being equal However, corrective measures are being implemented to mitigate the impact and ensure continued growth EBITDA growth expected to be positive Significant cash flow generation 2007 Capex of approximately 800 mln and further capital expenditure unit cost reduction Continued strong operational performance in mobile and fixed-line Relentless pursuit of efficiency, cost control and quality See you at the Bank Meeting in London on May 2 28

29 APPENDIX 29

30 Effects of merger between WAF and Wind In order to achieve operating and financial synergies by shortening the chain of control of the Weather Group over the Wind Telecomunicazioni SpA, a reverse merger of Wind Acquisition Finance SpA into Wind Telecomunicazioni SpA was completed on December 19, The merger is effective as of December 31, 2006, except for tax purposes and dividends participation for which the effective date of the merger is January 1, In the absence of an accounting standard guiding the accounting treatment of these operations, in application of IAS 8, the merger, that took place under common control, was accounted for by using the book values in the financial statements of the merged company. This method provides that the amounts generated as a consequence of the business combination (including goodwill) must correspond to those reported in the financial statements of the Parent Wind Acquisition Holdings Finance SpA, under which the business combination took place. The incorporation of the amounts reported in the foregoing table, as an effect of the accounting adjustments relating to the merger, involved: the realization of goodwill, equal to 4,939,551 thousand, resulting from the cancellation of the shares of the Parent Company, as the difference between the value of the surviving company recognized in the financial statements of Wind Acquisition Finance SpA (the merged company) and the value of the equity of the surviving company at January 1, This figure was partially allocated to the assets and liabilities of the group on the basis of the relative current values; the allocation related specifically to the following amounts: 91,272 thousand for the higher value attributed to the GSM license owned by the Parent Company; 1,499,100 thousand for the higher value attributed to the Wind (1,067,900 thousand), Infostrada (232,100 thousand), Libero (153,100 thousand) and Tellas (45,900 thousand) trademarks owned by the Group. 884,766 thousand fot the value attributable to the customer base as determined during the acquisition. The recognition of these higher values determined also the recognition of a deferred tax liability of 916,329 thousand. the emergence of a surplus on the exchange of shares in the amount of 3,768,336 thousand, which corresponds to the difference between the book value of the equity of Wind Acquisition Finance SpA at January 1, 2006 and the nominal value of the capital increase to finance the merger. 30

31 DISCLAIMER The following presentation is provided to you (each referred to hereafter as a Recipient ) for information purposes only and should not be relied upon by the Recipients and no liability, responsibility, or warranty of any kind is expressed, assumed or implied by Wind for the accuracy, inaccuracy, interpretation, misinterpretation, application, misapplication, use or misuse of any statement, claim, purported fact or financial amount, prediction or expectation (together referred to as Information ) and does not constitute an offer to sell shares or other securities or the solicitation of an offer to buy shares or other securities, nor shall there be any offer or sale of shares or other securities in any jurisdiction in which such offer or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. In addition, we also draw each Recipients attention to the fact that this presentation contains forward-looking statements regarding Wind and its future business. Such statements are not historical facts and may include opinions and expectations about management s confidence and strategies as well as details of management s expectations of new and existing programs, technology and market conditions. Although Wind believes its opinions and expectations are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, not all of which will be exhaustively explored in this presentation or elsewhere. Accordingly, the Recipients should not regard such statements as representations as to whether such anticipated events will occur nor that expected objectives will be achieved. The Recipients are reminded that all forward-looking statements in this presentation are made so on the date hereof and for the avoidance of doubt Wind does not undertake to update any such statement made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. For the avoidance of doubt, Wind does not accept any liability in respect of any such forwardlooking statements. 31