2007 Results. A remarkable year. February 21, 2008

Transcription

1 2007 Results A remarkable year February 21, 2008

2 Another set of strong results Total Revenues up 6.8% over 2006 to 5,271 million, (+4.4% including Tellas in 2006) TLC service revenues growth 6.6% (5,050 million) on a comparable basis, notwithstanding impact of recharge fee abolishment in March 2007 and interconnection rate cut in July 2007 EBITDA at 1,811 million, up 9.9% on a comparable basis (+9.3% including Tellas in 2006), 34.4% margin (vs 32.8% in 2006) Strong growth in EBIT reaching to 730 million, +25.7% (+53.4% on a comparable basis) Group Net Profit of 198 million vs Net Profit of 23 mln in

3 and financial improvements Net Financial Indebtedness as of December 31, 2007 of6,440 million, down from 7,057 million as of December 31, 2006; Net debt / Normalised EBITDA down to 3.5x (4.6x including PIK at Wind Acquisition Holdings Finance level) Strong cash generation, in excess of 600 mln, enabled early repayment of 491 million of Senior Debt (tranche A1, Dec and Jun maturities) on December 10, 2007 Issuer rating upgrade by S&P to BB-, stable outlook from B+, stable outlook (all debt ratings also raised by 1 notch) 3

4 in a challenging scenario Abolishment of mobile top-up recharge fees as of March 5, 2007 Introduction of EU international roaming regulation and price caps Mobile interconnection rate cut as of July 1, 2007 Increasingly competitive market, with generalised slowdown of service revenue growth in Italian telecommunications market 4

5 Robust operational delivery Ongoing growth performance in mobile service revenues (+7.9%) and customer base increase (+6.4%) Increase in mobile ARPU, notwithstanding recharge fee abolishment and termination rate cut on July 1, % growth in fixed service revenues and 14.9% improvement in margin mainly as a result of: High value growth in fixed-line voice customer base driven by remarkable growth of direct voice subscribers (+45.7% YoY), which exceed 1.37 million Continued outperformance in Broadband with 34% subscriber growth over 2006, reaching 1.02 million customers, >77% directly connected to our network Fixed-line ARPU growing to 37.3 from 36.8 in 2006 notwithstanding pressure on prices 5

6 How did we achieve this? Continued focus on the customer leading to strong growth in customer satisfaction (better network coverage and quality, better customer care) A simple and clear product proposition coupled with an effective pricing strategy Relentless pursuit of efficiency (productivity increase, process review and improvement) Deployment of fixed-line strategy and effect of past efforts on LLU roll-out 6

7 Productivity increase Headcount Productivity (n.) (000/empl.) % %

8 Business performance

9 Mobile Customer base growth & usage driving revenues Customer base Voice Traffic (mln) 14,7 +6.4% 15,6 (Bln mins) 23, % 29,1 SMS traffic ARPU (Bln SMSs) +82.8% 7,4 () 19,1 +0.7% 19,2 2,4 2,7 Data 4,0 16,7 16,5 Voice 9

10 Mobile Addressing key areas drives value Leveraging On-net Distribution (mln / %) 49,7% 7,304 8,668 55,4% Eight flagship stores in strategic locations and over 270 franchised stores Approximately 4,600 points of sale Closing the ARPU gap Restyling of franchised outlets and dealers WIND has improved visibility and customer perception of the WIND brand Mobile Broadband & Data 35 ARPU () Commercial push on mobile music and news 30 Pricing schemes aimed at increasing usage and loyalty Commercial launch of HSDPA with coverage of sixteen major Italian cities Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 TIM Q4 07 data not available 10

11 Fixed Higher value direct voice subscriber mix Voice subscribers ('000) % Direct % Indirect Fixed-line ARPU () 36,8 +1.2% 37,3 Data 10,7 11,2 Key results Strong Direct Voice customer acquisition and activation trend throughout the year, over 103 thousand net adds in Q4 07 Direct subscribers now account for 58% of our voice customer base Stable voice ARPU through strong usage offset by price pressure, Data ARPU rising as a result of strong BB growth and content & portal revenues ('000) Direct Voice net adds trend Voice 26,1 26, Q1 07 Q2 07 Q3 07 Q

12 Fixed Strong momentum in Broadband Broadband subscribers ('000) % % Flat 80% Pay x use Broadband ARPU () 19,7 +2.5% 20,2 ('000) % 2P on Direct CB % Dual-play CB +98.7% 741 Key results 52% Strong Broadband performance, with over 80 thousand net adds in Q4, supported by success of dual-play offerings Strong mix of flat rate subscribers (87%) and growing proportion of Direct BB (77% vs 52% in 06) drives ARPU growth and provides stable revenue stream 12

13 Network deployment National coverage S.Massenza Chiasso (CH) Sondrio Cordignano Trento Belluno Udine Varese Lecco Cimego Como Sandrigo Gorlago Treviso Gorizia Verbania Ala Pordenone Aosta Bergamo Salgareda Padriciano Biella Nave Dugale Bovis. Vicenza Divaccia (SL) Montestrutto Turb. Verona Portogruaro Trieste Ivrea MilanoBrescia Novara Lodi Padova Venezia Vercelli Chivasso Tortona Tavazz. Cremona Nogarole Rondissone Villabona Pavia Rovigo Torino Alessandria Mantova Dolo Piacenza Piossasco Asti Castelnuovo Ferrara Reggio E. Parma Vignole B. Colunga Claviere (FR) Magliano A. Modena Bologna Cuneo Ravenna Genova Savona Massa Forlì Rimini Vado L. La Spezia Pistoia Lucca Prato Camporosso Pesaro Campochiesa Martignone Pisa Imperia Marg. Firenze Ancona Arezzo Broc Carros (FR) Livorno Calenz. Serra S.Q. P. Caiano Siena Macerata S. Vincenzo P. Speranza Perugia Suvereto Foligno Ascoli P. Porto d Ascoli Grosseto Orvieto Orte Terni Teramo Viterbo VillanovaPescara Sassari Alghero Oristano Cagliari Olbia Nuoro Bolzano Albinia Rieti L Aquila S.Lucia Chieti Civitavecchia Campomarino Cerveteri Valmontone Larino ROMA Frosinone Isernia Ceprano Foggia Campobasso Latina Barletta Formia Caserta Bari Garigliano Benevento S.Maria C.V. Andria S.Sofia Avellino Gioia del Colle Pozzuoli Montecorvino Napoli Matera Brindisi Salerno Potenza Lecce Rutino Taranto Otranto Metaponto Rotonda Galatina Sapri Laino B. Sibari Paola Cosenza Scandale Crotone Lamezia Feroleto A. Catanzaro Vibo Valentia Rizziconi Messina Rosarno Palermo Gioiosa Marea Trapani Cefalù Caracoli T.I. Reggio C. Marsala Enna Caltanisetta Sciacca Catania Agrigento Gela Ragusa Diamante Siracusa Aethos (GR) Mobile network GSM 900/1800: 99.5% population coverage, GPRS/EDGE nationwide coverage UMTS: 51.1% population coverage HSDPA available in 16 major Italian cities Fixed network Target of 850 ULL sites, >40% direct population coverage, accomplished in 2007 Evaluating opportunity of further expansion to 50% coverage Nationwide indirect coverage Backbone 3,384km of fibre optic MANs in 39 cities 19,167 km fibre optic backbone 5 Mhz spectrum of 900 Mhz GSM frequencies obtained in December 2007 As of December 31,

14 Financial Results

15 Solid top-line and margin growth Total Revenues EBITDA* / margin (mln) ,4% (mln / %) 32,8% % ,4% * 2007 Normalized EBITDA (net of unusual items) equal to million vs 2006 Normalized EBITDA equal to million 15

16 Coupled with control on costs Revenues and EBITDA Focus on cost split Costs (% on revenues) 67,2% 65,6% Opex & Other (% on revenues) 22,5% 20,7% Commercial Costs (% on revenues) 17,0% 17,6% EBITDA Margin (% on revenues) 32,8% 34,4% Network Variable Costs (% on revenues) 27,7% 27,3% Revenue growth sustained by increased commercial push, as shown by shift of cost %age from opex to commercial costs Increase of marginality driven by better mix of revenues (higher weight of mobile revenues and higher number of Fixed Direct customers) 16

17 P&L Highlights Change ( mln) amount % Revenue ,0% Other revenue ,5% Total revenue ,4% Total cost (3.459) (3.390) (69) (2,0)% EBITDA ,3% Operating Income ,7% Financial income and expense (522) (447) (76) (16,9)% Profit before tax ,2% Income tax (154) (117) (36) (31,1)% Profit from continuing operations n.m. Gain (Loss) from discontinued operations n.m. Profit for the year n.m. Minority interests (8) (7) (1) (14,3)% Group's Profit for the year n.m. 17

18 Strong EBIT performance drives Net Profit Operating income Net result (mln) 730 (mln) % +53.4% (126) WAF* 2007 Operating Income grew 25.7% over 2006 driven by EBITDA growth and lower D&A charges On a comparable basis (2006 Wind pro-forma) the YoY increase is 53.4% WAF 2007 Net Profit of 198 mln driven by strong operational and financial performance; includes net negative impact of tax assets write-off and tax rate change and positive impact of Tellas transaction. Net of these items Net Profit would have been 111 mln * Excluding Tellas 18

19 Capital expenditure Capex EBITDA - Capex (mln/%) % 749 (mln) +11.6% Common Mobile * 2007 * Excluding Tellas 19

20 Mobile healthy financial performance Mobile TLC service revenue Mobile EBITDA / margin (mln) % (mln/%) 42,4% % 42,9% Revenue growth driven by increase in outgoing and incoming traffic and consistent increase in Internet and data revenues EBITDA increasing as combined result of top line growth and continued cost control 20

21 Fixed reaps the benefits of past efforts Fixed TLC service revenue Fixed EBITDA / margin (mln) % (mln/%) 13,9% % 15,2% * * 2007 Revenue increase driven by direct Voice and Internet revenues, partially offset by indirect and narrowband EBITDA growing as a result of margin improvement driven by better customer mix and control on costs * Excluding Tellas 21

22 Capitalisation (mln) As of December 31, 2005 As of December 31, 2006 As of December 31, 2007 Dec 31, 2007/ LTM EBITDA*** Cash and Equivalents (163) (138) (195) (0,1x) Tellas & Other Net Debt * Senior Debt ,5x Total Senior Debt ,4x Second Lien ,4x Total Senior + Second Lien ,8x Senior Notes ,8x Derivatives (92) (152) (79) (0,0x) Net Debt ,5x Wind 2007 Normalised EBITDA 1,829 mln Including W.A.H.F. S.p.a. PIK loan Net Debt / EBITDA is 4.6x 22 of which Cash Net Debt** Interest Accrued Fees to be amortized (196) (148,4) (118) Derivatives MTM (92) (152) (79) * Includes 328 mln for Second Closing ** USD Debt valued at the exchange rate on the date of the financial statements *** Normalised EBITDA

23 Cash generation enables debt prepayment ,3 Dec 05 4,6 Jun 06 4,1 Dec 06 4,0 3,8 3,6 Mar 07 Jun 07 Sept 07 ( mln) Dec 07 3,5 491 million early repayment completed on Dec (Dec and June 2010 tranche A1 maturities) Total Net pre-payments since the acquisition: 1,462.5 million Net debt / EBITDA ( mln) Debt maturity profile Senior Second Lien High Yield Notes 23

24 Thank You and see you at the Bank Meeting in London in April

25 APPENDIX Q4 Financial Results

26 Q4 P&L Highlights (mln) Q4 2007* Q Wind PF w/o Tellas* Change Amount % Q Reported Revenue ,5% Other revenues ,8% 43 Total Revenues ,8% Total Cost (966) (937) (29) (3,1%) (962) EBITDA ,5% 389 EBIT ,5% 86 Financial Items (129) (135) 6 4,1% (111) EBT 28 (74) 102 n.m. (25) Taxes 70 (1) 71 n.m. (10) Profit from discountinued operations 156 (4) 160 n.m. 0 Net Result (Before Minorities) 254 (80) 334 n.m. (35) Minority interest 0 2 (2) n.m. 2 Net result 254 (78) 332 n.m. (33) * Management view 26

27 DISCLAIMER This 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 forwardlooking 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 forward-looking statements. 27