B.COM Unit – 4 ( CORPORATE SOCIAL RESPONSIBILITY ( CSR ).pptx
Merrill Lynch Global Telco and Media Conference - Marco Patuano presentation (30/05/2012)
1. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Telecom Italia Update and Focus on UBB
BofA - Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
MARCO PATUANO – Chief Operating Officer
MARCO PATUANO 0
2. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 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.
MARCO PATUANO 1
3. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Agenda
Group Overview
Domestic Progress Report
Focus on UBB
MARCO PATUANO 2
4. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
TI Group Key Results
Euro mln, Organic data, %
Revenues EBITDA
% on 42.0% 40.1%
Revenues -1.9 p.p.
+373 M€ 7,392 2,951 +15 M€ 2,966
7,019 +5.3% +0.5%
1Q11 1Q12 1Q11 1Q12
Revenues Trend YoY EBITDA-CAPEX
% on 29.3% -2.1 p.p.
Revenues 27.2%
5.3%
5.0%
-43 M€
3.7% 2,055 -2.1%
2,012
2.1%
-0,2%
1Q11 2Q11 3Q11 4Q11 1Q12
1Q11 1Q12
MARCO PATUANO 3
5. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
TI Group Key Results by Core Markets
Euro mln, Organic Data
Weight on
TI Group
TI Group Domestic Brazil Argentina
1Q12 Δ% yoy 1Q12 Δ% yoy 1Q12 Δ% yoy 1Q12 Δ% yoy
Revenues 7,392 +5.3% 4,486 -2.4% 1,928 +19.1% 901 +24.0%
60.4% 26.0% 12.2% 38.2%
EBITDA 2,966 +0.5% 2,196 -3.4% 505 +13.5% 289 +16.6%
74.0% 17.0% 9.7% 26.7%
EBITDA-CAPEX 2,012 -2.1% 1,607 -0.2% 271 -14.6% 168 +5.1 %
~80% ~14% ~8%
MARCO PATUANO 4
6. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Telecom Italia Group – FY 2012 and 2012-14 Plan Key Guidance
Organic Data*
TI Group – FY 2012 Key Guidance
Revenues Stable
Ebitda Broadly Stable
NFP Adj.** ∼ 27.5 € bln
Organic Data*
TI Group – 2012-14 Plan Key Guidance **
Ebitda-Capex
>22 € bln
cum ’12-’14
Capex
>15 € bln
cum ’12-’14
FY 2012: ∼ 27.5 € bln
NFP Adj. FY 2013: ∼ 25 € bln
2012-’14 From FY 2014: < 2x Net
Debt/Ebitda***
*exchange rates 2011 (R$/€ 2.33; ARS/€5.74), excluding impact from non-organic items
** excluding Latam spectrum licences
*** reported figure
MARCO PATUANO 5
7. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Agenda
Group Overview
Domestic Progress Report
Focus on UBB
MARCO PATUANO 6
8. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Domestic Results: Trend still improving
Euro mln, Organic data, %
Total Domestic Revenues Domestic Service Revenues
-109 M€
4,595 -2.4% 4,486
Mobile -1.7%
Wireline -2.9%
EBITDA EBITDA-Capex
% on 49.5% -0.5 p.p. 49.0% -4 M€
Revenues
1,611 -0.2% 1,607
2,274 -78 M€
-3.4% 2,196
% on 35.1% +0.7 p.p. 35.8%
Revenues
MARCO PATUANO 7
9. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Domestic Fixed: Revenue Dynamics
Euro mln, Organic Data, %
Total Fixed Revenues Fixed Revenues Trend – YoY % change
3,330 -2.9%
Total
3,235
Equipment
Services
Wholesale Revenues Trend – YoY % change Retail Service Revenues Trend – YoY % change
Domestic
Sparkle Group*
Tariff simplification
process begins
*Gross of Elim. & Adj.
MARCO PATUANO 8
10. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Domestic Fixed: Focus on Broadband
TI Retail Broadband Accesses Broadband Retail ARPU
‘000
Total Euro/month/line
Market 13,248 13,394 13,485
+0.3%
TI retail
accesses 7,194 7,125 7,092
-0.6%
Flat (%) 87% 87% 88%
M/S 54.3% 53.2% 52.6%
BB Service Revenues Highlights
% YoY
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
MARCO PATUANO 9
11. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Mobile Revenues: 1Q12 Results at a Glance
Euro mln, Organic Data
Total Mobile Revenues
Mobile Handsets Revenues Trend – YoY % change
Normalized (*)
~-2.5%
-29
Total Mobile 1,679 -1.7% 1,650
Handset
revenues +71.1%
Mobile Service Revenues Trend – YoY % change
Service -3.7%
revenues
Normalized (*)
~-4.5%
(*) Leap year
MARCO PATUANO 10
12. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Consumer Mobile - The Value of the Options
+1.4 mln
Community
5.5 mln
Users (*)
4.6 mln
4.4 mln
Growth 4.1 mln
Continues
1Q11 2Q11 3Q11 Apr-12
Churn rate
-8p.p.
Increasing
Loyalty
∆ Outgoing ARPU exAnte/exPost activation
Avg €/month
Neutralizing CB
cannibalization
MARCO PATUANO 11
* TIMx, TIM Young and Tutto Compreso Ricaricabile
13. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Domestic Mobile – Surfing the Data Wave
Increasing Smartphone Penetration in All Segments
Operating Systems on TIM ‘s Network - The Android Growth
Innovation to the
Smartphones increasingly Service-driven
Mass Market
Bringing
Data Bundle users and Renewal Rate
+1,9X
87%
penetration on
Smartphone Penetration on Customer Base Renewal rate 79%
smartphone
Doubling
CB
Number of Data connections by Device (*)
+~20%
May 2012 Dealer Convention
2.2mln
Further room for
Of which >75% 1.9mln
~1,3 mln Smartphones
growth
Dec’11 Jan’12 Feb’12 Mar’12 Apr’12
* Peak of traffic on the average day of the second week of each month
MARCO PATUANO 12
14. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Agenda
Group Overview
Domestic Progress Report
Focus on UBB
MARCO PATUANO 13
15. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference 2012-2014 Plan
Wednesday, 30 May 2012, London
Strengthen the Network for a Technological Leadership
Capex Allocation UltraBB Roadmap
Network Capex NGAN Roll-out
2014
Customer 100 Cities (including all
Service Optimization
& Traffic
main ones) covered through
Driven FTTH&Cab Technology
~¼ of Housing units
Network
Development Acceleration passed with >30 Mb/s
Speed
Network Decrease
Mobile Coverage
Maintainance
2014
Optimize Network Investment to maintain More than 40% of
excellent quality in TLC services population covered by LTE
Increase the effort in Network Development and
Innovation to confirm Technological Leadership HSPDA
and grant the Best Experience on the Net 42 Mbps LTE
MARCO PATUANO
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16. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference 2012-2014 Plan
Wednesday, 30 May 2012, London
Mobile Technological Evolution while Protecting Profitability
Strengthening Roadmap 42MB coverage
HSDPA and LTE
Increasing speed introduction 100
84
availability 42
3,6 7,2 14,4
Maximum speed
2009 2010 2011 2012 January June
(kbps) 2013 2014
2012 2012
With PREMIUM offers Customers have
The advantages Network
Fiber Bakhauling Dual Carrier an effective perception of Higher
of 42MB Priority
Speed
Network Speed Priority
Quality
Up to
(everywhere/every
Offer based on Mass Market HSDPA 14,4 NO time)
Mbps
the Value of the Pricing
Customer
Up to 42 Speed
Premium
HSDPA/LTE Mbps YES Quality
Customers Priority
100 Mbps
MARCO PATUANO
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17. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Ultra Broadband in Motion
Fixed Mobile
42 Mbps coverage
100- cities FTTCab Plan begins,
in progress in 50
with 30 of them to be connected in
cities
2012 / 1H2013. Retail
commercial launch expected in 4Q
Reference Offer for wholesale Ongoing trials
NGAN Access Services submitted extended to Turin,
to Agcom in March. Final approval Milan, Rome and
expected by September Naples
Maintaining a fixed & mobile coordinated approach
MARCO PATUANO 16
18. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
The Context
European Digital Agenda Main Objectives:
0% 50% 100%
Basic BB 2013 > 2 Mb/s
Ultra BB 2020 100 Mb/s > 30 Mb/s
Demand status in Italy:
Low ICT culture Low e-Goverment level Low Broadband Penetration
Percentage of users that have never used a PC Global Rank E-Government Index Broadband penetration (as % of tot. accesses)
#38
#15
#10
#9
#4
Source: Eurostat 2010 Source: ONU «E-Government Survey» 2010 Source: Eurostat 2011
MARCO PATUANO 17
19. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Specific advantages for TI from FTTC
Last mile length benchmark
%
Improved performances 100
90
Lower Average Length of Local Loop guarantees 80
70
Italy
highest speed for a FTTC solution 60
United Kingdom
50
No impact on legacy services (no switch-off) 40
Japan
France
30
Germany
20
U.S.A.
10
0
0 2 4 6 8 10 12 14
km
Capex optimization -50% / -75%
Utilization of a relevant portion of existing TI’s
Access Network per line/capex
Fix and Mobile UBB Synergy
Leveraging on past investments
Ducts/Passages already existing in large part
FTTH FTTC
MARCO PATUANO 18
20. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
FTTC is frequently preferred by EU incumbents
Best incumbent’s choice European incumbents with a FTTC strategy
(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’s
Adequate match for expected demand
«FTTH ready» on a selective basis approach (market-driven)
Capex Deployment
Speed
per line timing
MARCO PATUANO FTTH FTTC 19
21. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
TI’s 2-step strategy on NGAN
Step 1: FTTCab 30 - 100 Mbps
Use of existing network
elements:
•Cable ducts
•Cabinets
•Copper sub-local loop
Step 2: FTTH 100 Mbps – 1 Gbps Deployment costs > 3x FTTCab
Use of FTTCab primary
Network
New elements
•Fiber secondary network
•Fiber deployment in the
customer’s building
•New modem in the
customer’s house
MARCO PATUANO 20
22. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
TI Fixed UBB Plan: 2012-2014 and beyond
2012-1H2013 2014 within 2020
30 cities 100 cities
About 60% cities target in Driver for NGAN Plan:
the North (i.e. Milan,
Turin, Genoa); NewCo
Density of population;
Trentino NGN for Trento
region
Moving towards
Leverage on existing
About 20% cities infrastructure (i.e. ducts
located in the Central already in place in most DAE Targets
part of the country of 100 targeted cities)
(i.e. Rome, Florence)
About 20% cities
located in the South
(i.e. Naples, Bari,
Palermo)
MARCO PATUANO 21
23. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
TI’s Convergent Approach to Fixed and Mobile UBB
The Value of our Core Asset
Network Key asset both for fixed and mobile
Access
Huge capital and time already fruitfully invested
High Capillarity
Strategic asset in the economic , social & regulatory landscape
Yesterday Today: Pervasive Ultra Broadband
NGN UBB
Fixed & Mobile Network
Fixed Network
Super
NGAN Fttx HSPA+ LTE
Internet +
MARCO PATUANO 22
24. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Thank you – Q&A
BofA - Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
MARCO PATUANO – Chief Operating Officer
MARCO PATUANO 23
25. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Robust Liquidity Margin and Well-Distributed Debt Maturities
Euro mln Bonds Loans (of which long-term rent, financial and operating lease payable € 1,497) Drawn bank facility
€ 6.16 bln 13,323 35,884 (*)
Group Liquidity Position 2,249
+
€ 7.00 bln
Undrawn Portion of 11,357
Facility/Committed
=
€ 13.16 bln
Group Liquidity Margin 2,765 1,966
2,981 1,900 25,257
2,250 865
3,032
1,768 731
6,067
1,999 1,264
2,857
5,237
250 1,211
3,335
2,479 8,378
1,790 1,652
689
Within 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Beyond 2017 Total M/L
Term Debt
(*) € 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).
MARCO PATUANO 24
26. TELECOM ITALIA GROUP
BofA Merrill Lynch Global Telco and Media Conference
Wednesday, 30 May 2012, London
Well Diversified and Hedged Debt
Total Gross Debt Net of Adjustment: Euro 37,513 mln Maturities and Risk Management
Euro mln Op. Leases and long rent Bank & EIB
1,512 5,734
Bank Facility
Average debt maturity: 7.32 years (bond
Other 4.0% 15.3% only 8.38 years)
2,248
2,498
6.7% 6.0%
Fixed rate portion on gross debt
Bonds approximately 72.4%
25,521
Around 47% of outstanding bonds (nominal
68.0%
amount) is denominated in USD, GBP and
YEN and is fully hedged
Gross debt 37,513
Financial assets (7,201)
of which C & CE and marketable securities
Cost of debt: ∼5.5%
(6,158)
- C & CE (5,492)
- Marketable securities (666)
- Italian Government Securities (527)
- Other (159)
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.
MARCO PATUANO 25