Telecom Italia Group FY 06 Financial Results

Transcription

1 FY 06 Financial Results Milan, March 8th, 2007 Telecom Italia Group FY 06 Financial Results

2 TLCne P1 Safe Harbour These presentations contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 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. Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward looking statements as a result of various factors. 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 Spa 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 Spa business or acquisition strategy 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. 1

3 TLCne P2 TI Group -KeyFinancialResults FY 06 reported YoY reported YoY Organic* 4Q 06 reported YoY reported YoY Organic* Revenues 31, % +2.9% 8, % +2.7% Ebitda 12, % +0.9% 3, % +0.4% Ebitda margin 41.1% -0.7pp -0.9pp 37.5% +2.2pp -0.9pp Ebit 7, % -1.2% 1, % +11.3% Ebit margin 23.8% -1.3pp -1.0pp 22.2% +2.0pp +1.9pp Net Income (post minorities) Capex 3, % 5, % excluding Disc. Operations % 1, % excluding Disc. Operations Net Debt 37, bln Vs. YE 05 * Excluding changes in consolidation area, exchange rate impact and other non organic items 2

4 TLCne P3 TI Group - Revenues FY 06 vs. FY 05 Wireline Olivetti Media Elimination +85 (6) (1) +4 Brazil Wireline Olivetti +387 (1) (1) , ,386 (123) (5) 31,275 Organic Growth FY : +889 (+2.9%) 9M : +677 (+3.0%) IH : +395 (+2.6%) Change in consolid. area Exchange Rate Impact Organic Wireline TIM Italy TIM Brasil Media Olivetti Other +1,356 (+4.5%) 3

5 TLCne P4 TI Group - EBITDA FY 06 vs. FY 05 Brazil Central Function +93 (2) Restructuring costs Opportunity Receiv. Write-off vs. PA Other & Elim Restructuring Costs Fastweb arbitration OLO's transaction Brazil reorganization Other (107) (61) (24) (13) (27) 12, ,966 (239) (37) (13) 13,082 (58) (232) 12,850 Organic Growth FY : 41.8% 42.7% +116 (+0.9%) 41.8% 41.1% 9M : +103 (+1.1%) IH : +18 (+0.3%) Change in consolid. area Exchange Rate Impact Other non organic items Organic Wireline TIM Italy TIM Brasil Media Olivetti Other Organic Other non organic items +333 (+2.7%) 4

6 TLCne P5 Update on Cost Reduction Plan vs 2004 vs Investor Day 06 Target FY06 A vs Target cum Operational Costs (116) (216) (100) (332) Marketing & Sales (205) (195) (136) (400) Purchasing, G&A (66) (191) (154) (257) Personnel (51) (95) (78) (146) TOT Domestic Ops (438) (697) (467) (1,135) Central Functions (33) (230) (166) (263) TOT. OPEX (471) (927) (633) 146% (1,398) TOT. CAPEX (178) (474) (672) 71% (652) TOT. OPEX + CAPEX (649) (1,401) (1,305) 107% (2,050) 5

7 TLCne P6 Update on Central Functions Cost Reduction Plan Old Plan Savings (Investor Day 03/) Mln 938 (166) (59) (42) E vs. A Reduction Inflation Reduction (267) Actual E 2007 E 2008 E Net Savings vs (155) (203) (233) Inflation 34 (233) Actual Mln 938 (230) Cost reduction plan has been accelerated in : 219 mln savings of which: 47 mln on Personnel payroll 172 mln on Other costs (Staff & Service Costs,...) Reduction Inflation Actual Net Savings vs (219) Actual has already surpassed 2007 targets and is close to 2008 objective 6

8 TLCne P7 TI Group - EBIT FY 06 vs. FY 05 Brazil Central Function +2 (2) Restructuring costs Opportunity Receiv. Write-off vs. PA Writedown Magnum Project Other & Elim (264) +62 Magnum Project Other Real Estate Restructuring Costs Fastweb arbitration OLO's transaction TILS loss on disposal Brazil reorganization Other (107) (61) (24) (33) (13) (51) 7,499 (41) ,659 (154) (107) +196 (4) +3 (29) 7,564* (127) 7,437* Organic Growth FY : -95 (-1.2%) 9M :-292 (-4.9%) 25.1% 25.2% IH : -247 (-6.1%) 24.2% 23.8% Higher Deprec. & Amortization vs. FY +255 mln Change in consolid. area Exchange Rate Impact Other non organic items Organic Wireline TIM Italy TIM Brasil Media Olivetti Other Organic Other non organic items -62 (-0.8%) (*) Includes Depreciation revision of assets useful lives as requested by IAS/IFRS 16. The impact on EBIT is positive for 319 mln. 7

9 TLCne P8 TI Group - Net Income FY 06 vs. FY 05 Income before Disc. Ops.: (144) TIM Hellas gain on disposal ('05) (410) TIM Perù gain on disposal ('05) (120) Other (13) 3,216 (62) +42 (124) (543) ,014 EBITDA +333 Depreciation & Amortization (255) Writedown & Revaluation +7 Lower gains on disposals of non current assets (147) Income (loss) equity invest. +28 Net Financial Income/(Expenses) +14 Equity investments +143 of which Gain on disposal: Neuf Telecom ('06) +148 AVEA ('06) +72 C-Mobil ('05) (61) Lower Financial Expenses +173 ReleasetoincomeAVEA: (302) ('06) +121 ('05) (423) FY Δ EBIT Δ Net equity Invest/financial Income Δ Taxes Δ Net Income from Disc. Ops. Δ Minorities FY 8

10 TLCne P9 TI Group - Capex FY 06 vs. FY 05 5, * , mln (-1.1%) FY 05 Domestic Wireline TIM Italy TIM Other FY 06 Wireline & European Brasil Eliminations projects 4Q 05 4Q 06 1, ,815 (*) +16 mln = +31 mln Domestic Wireline, -15 mln eliminations within Wireline segments 9

11 TLCne P10 TI Group - Net Financial Position YE 06 vs. YE 05 Telecom Italia Spa TI Media Brazil Bolivia MTV Other +2, Digitel ** AVEA Real Estate (Magnum) Neuf Telecom Real Estate disposal Buffetti Dividendo Etecsa Finsiel Other (318) (279) (296) (199) (117) (66) (41) (27) (32) EBITDA CAPEX Δ Working Capital & Other of which Licence Fee (546) Antitrust Fine +115 Operating FCF Cash taxes, Net Financial expenses, Other (12,850) +5, (6,978) +2,616 (4,362) 39,858* ,997 (23) (1,375) (4,362) 37,301 39,752 Oger (Turkey) +197 Other +9 Δ NFP: -2,557 Year End Financial Investments Dividends (*) Includes net financial position of discontinued operations (106 mln ) (**) Includes 23 mln of Net Cash Flow from Digitel Bond Conversion/ SOP Disposals OFCF/ Cash Taxes/Net Financial Exp./ Other Year End 10

12 TLCne P11 Debt structure as of December 31, Current Liabilities 413 Total gross debt: 46,456 mln (1) 11, % 25.1% Other Non Current Liabilities (*) of which approximately 4.5 bn bank facility and 2.1 bn long rent/leasing Maturities and risk management 8.0 bln liquidity position plus further 6.5 bln committed undrawn bank lines grant solid treasury margin and allow full flexibility for future funding Average bond maturity: 8.4 years Fixed rate portion on debt approximately 70% 74.0% Bonds (*) 34,395 Around 36% of outstanding bonds is denominated in USD and GBP and is fully hedged Cost of debt: approximately 5% Gross Debt 46,456 Financial Assets (9,155) (2) Net Financial Position 37,301 (1) Including 1,627 mln of IAS adj of which 701 mln on bonds (2) Liquidity Nominal Position, represented by cash and marketable securities stands at 8.0 bln (*) including the current portions of non current liabilities (maturing within 12 months) for 5,240 mln (of which bonds 4,057 mln and other 1,183 mln) 11

13 TLCne P12 Medium-long term debt Maturity Profile as of Dec. 31, Bonds Loans and Long rent and op. leasing ( 1,986) Drawn bank facility Matched by a: 8.0 bn bn = 14.5 bn Liquidity nominal position (out of 9.1 bn total Financial assets) Available from Jan under bn Facility (*) Liquidity Margin 21,757 44,367 (1) 1,500 4,500 16,912 5,462 4,608 4,268 3,345 33,693 4,239 3,000 2, ,843 4,458 3,668 3, , , Beyond 2011 Total M/L term debt (1) 44,367 mln is the nominal amount of outstanding medium-long term debt; by adding IAS adjustments ( 1,562 mln), deferred incomes AVEA ( 114 mln) and current liabilities ( 413 mln), the gross debt figure of 46,456 mln is reached. (*) As from January the facility maturing March 2007 for residual 2 bn has been cancelled and the one maturing August 2012 has, at the same time, been increased by the same amount 12

14 TLCne P13 Appendix 13

15 TLCne P14 TI Group and TI Spa Profit and Loss - FY 06 & FY 05 TI Group TI SpA * Δ Abs. Δ %. * Δ Abs. Δ %. REVENUES , ,8 Other Operating Income (72) (10,6) (17) (4,0) TOTAL REVENUES & OTHER INCOME , ,6 Total Purchases of materials and external services (14.191) (12.937) (1.254) 9,7 (9.180) (6.482) (2.698) 41,6 Personnel (3.801) (4.142) 341 (8,2) (3.004) (2.907) (97) 3,3 Other operating costs (1.543) (1.468) (75) 5,1 (751) (715) (36) 5,0 Capitalized Cost and Others , ,3 EBITDA , ,8 % on Revenues 41,1% 41,8% 46,7% 40,7% Depreciation & Amortization (5.487) (5.232) (255) 4,9 (3.934) (2.940) (994) 33,8 Writedowns and revaluations of non current assets (21) (28) 7 (25,0) (4) (8) 4 (50,0) Gains/losses of non current assets realization (147) (60,7) (152) (58,0) EBIT (62) (0,8) ,9 % on Revenues 23,8% 25,1% 29,8% 23,8% Income (loss) equity invest. valued equity method Net Financial Income / (Expenses) (1.973) (1.987) 14 (532) (1.034) 502 Income before Taxes & Disc. Ops (20) % on Revenues 17,6% 18,5% 27,5% 17,3% Taxes (2.519) (2.395) (124) (2.106) (923) (1.183) Income before Disc. Ops (144) Net income (loss) of assets disposed (543) Net Income (ante Minorities) (687) % on Revenues 9,6% 12,3% 18,2% 11,5% Minorities 11 (474) Net Income (post Minorities) (202) % on Revenues 9,6% 10,7% 18,2% 11,5% (*) Includes Depreciation revision of assets useful lives as requested by IAS/IFRS 16. The impact on EBIT is positive for 319 mln. 14

16 TLCne P15 TI Group and TI Spa Balance Sheet FY 06 & FY 05 TI Group TI SpA Δ Abs. Δ Abs. Intangible Assets (311) Tangible Assets (826) Financial Assets (76) (5.808) Deferred Tax Assets (1.881) (1.685) TOTAL NET ASSETS (3.094) (1.681) Working Capital (3.689) (4.373) 684 (3.359) (1.498) (1.861) Total net inventories (3) Total net trade accounts receivable Trade accounts payable (6.810) (6.836) 26 (5.048) (2.648) (2.400) Other current assets/liabilities (3.861) (3.893) 32 (3.746) (2.920) (826) Total Reserves within 12 months (691) (916) 225 (441) (616) 175 Severance Indemnities (1.262) (1.351) 89 (1.143) (1.104) (39) Other Allowances (1.115) (1.106) (9) (919) (546) (373) No fin. assets/liabilities of Disc. Ops (114) NET INVESTED CAPITAL (2.444) (3.954) Shareholders Equity Net Financial Position (2.557) (5.950) Net Financial Position of Disc. Ops (106) Net Financial Position excluding Disc. Ops (2.451) (5.950) Δ Abs. Δ Abs. INVESTMENTS Capital Expenditures (59) Financial Investments (14.728) (1.205) (16.906) TOTAL (14.787) (15.610) 15

17 TLCne P16 TI Group Break up Main Results by BU mln, reported data I Quarter II Quarter III Quarter IV Quarter Δ% Δ% Δ% Δ% REVENUES Wireline , (0,5) (2,9) TIM Italy , , , ,0 TIM Brasil , , , ,1 Media , , ,3 Olivetti (13,0) , (1,1) ,0 Other Activities, Elim. & Adj TI Group , , , ,6 I Quarter II Quarter III Quarter IV Quarter EBITDA Wireline Δ% (0,9) Δ% (3,6) Δ% (4,5) Δ% (0,1) TIM Italy (2,6) (3,7) ,4 TIM Brasil , , , ,0 Media (3,7) , , ,0 Olivetti (600,0) , Other Activities, Elim. & Adj TI Group , , , ,9 I Quarter II Quarter III Quarter IV Quarter EBIT Wireline Δ% (6,4) Δ% (9,3) Δ% (10,6) Δ% 26,0 TIM Italy (6,0) (8,8) (5,1) ,9 TIM Brasil , , Media (13,9) (22,6) (10,3) ,5 Olivetti (200,0) , ,1 Other Activities, Elim. & Adj TI Group (2,4) (6,7) (4,7) ,7 16

18 TLCne P17 Update on Opex Convergence Synergies OPEX SAVINGS Operational Costs IQ vs IH vs 9M vs vs Investor Day 8/3/ Target 12M vs. Target (%) Euro million Euro million Euro million Euro million Euro million % Network & IT infrastructure integration (61) (122) (189) (216) (100) Marketing & Sales Purchasing, G&A Commercial channels integration and rationalization of compensation policies Savings from sourcing and cost rationalization (24) (68) (138) (195) (136) (14) (42) (119) (191) (154) Personnel Personnel downsizing (to compensate for Inflation) (8) (23) (50) (95) (78) Domestic Operations (107) (255) (496) (697) (467) Central Functions (20) (121) (166) (230) (166) Total (127) (376) (662) (927) (633) 146% 17

19 TLCne P18 Update on Central Functions cost reduction plan Central Functions Cost Base 12 Months Gross Incurred Cost, Mln Personnel payroll Other costs (Staff & Service Costs,...) (938) Δ vs 12M ) (339) (47) (719) (219) (172) (1) Operating costs* (Real Estate Costs, Energy Costs,...) Reorganization Costs Non recurring costs (120) Personnel payroll + Other costs Inflation 12M 05 12M 06 Same Perimeter 06 (1) Actual (11) Actual 12M 06 Costs Reduction Plan (Δ vs 12M ) (219) (11) (23%) FY Target % Abs on FY TARGET (155) (11) TOTAL (230) (166) 139% (*) (1) Fully charged to Business Units Operating Costs include Perimeter variation (i.e. IT & TILAB, Magnum Project and TIM Base Transceiver Stations and shops) 18