Slides Telecom Italia Group 9M 2014 Results

TELECOM ITALIA GROUP
9M 2014 Results
Rome, November 7th, 2014
Telecom Italia Group
9M 2014 Results
Marco Patuano
Piergiorgio Peluso
Safe Harbour
This presentation contains 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 developments and changes
in 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 Telecom Italia 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 makes no representation, whether expressed or implied, as to the conformity of the actual results with those projected in the forward looking
statements. 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 and investors are
cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation. Telecom Italia 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 business or acquisition strategy or planned capital expenditures or to reflect the occurrence
of unanticipated events. Analysts and investors should 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 which may identify factors that affect the forward looking statements included herein.
The accounting policies and consolidation principles adopted in the preparation of the Condensed Consolidated Financial Statements as of and for the nine months
ended 30 September 2014 have been applied on a basis consistent with those adopted in the Annual Consolidated Financial Statements at 31 December 2013, to
which reference should be made, except for the new standards and interpretations adopted by the Telecom Italia Group starting from 1 January 2014 which had no
effects on the Condensed Consolidated Financial Statements as of and for the nine months ended 30 September 2014. The Telecom Italia Group Condensed
Consolidated Financial Statements at 30 September 2014 have not undergone an external audit/review.
Following the classification, starting from the fourth quarter 2013, of the Sofora - Telecom Argentina group as a disposal group (Discontinued operations/Non-current
assets held for sale) the consolidated financial statements data of prior periods (including the nine months ended 30 September 2013) have been restated
accordingly and therefore the Sofora - Telecom Argentina group is no longer separately presented as a business unit.
Furthermore:
• starting from 2014, Organic changes in Revenues, EBITDA and EBIT are determined excluding, where applicable, only the effects of the changes in the scope of
consolidation and exchange differences and therefore don’t take into account, as in the past, non-organic income and expenses, including those non-recurring;
• starting from 2014, the Domestic business unit includes the Olivetti group, in addition to Core Domestic and International Wholesale. This different presentation
reflects the commercial and business placement of the Olivetti group and the process of integrating its products and services with those offered by Telecom Italia in
the domestic market. Therefore, the Olivetti group is no longer separately presented as a business unit;
as a result, the data for prior periods under comparison have been restated, accordingly.
In this presentation reference is also made to a normalization called “Domestic Underlying Ebitda trend”, which is based on the Adjusted (for one-offs and
discontinuities) Reported Domestic Ebitda. This representation is provided as additional information to our Reported Ebitda that represents Operating profit before
depreciation and amortization, capital gains (losses) and impairment reversals (losses) on non-current assets.
9M 2014 Results
Marco Patuano - Piergiorgio Peluso
2
Agenda
•
TI 3Q’14 Results
•
Financial Update
•
Take-Aways
•
Appendix
9M 2014 Results
Marco Patuano
3
3Q’14 Group Highlights
Service
Revenues
•
4,943 mln €
(2Q’14: 4,871 mln €)
•
Ebitda
2,243 mln €
(2Q’14: 2,145 mln €)
•
Innovative
Capex
~620 mln € YTD
(Italy & Brazil)
Net debt
reduction to
•
Improving organic performance at -5.7% YoY vs -7.1% in 2Q’14 due to a different mix:
• Better domestic trend both in Fixed and Mobile underpinned by healthier competitive
environment and good acquisition results in UBB KPIs
• TIM Brasil: Positive “Business Generated” results supported by an excellent MBB take-up
Group Ebitda at 2.2 bln € in 3Q’14 (Reported -8.0% YoY, Organic -8.5% YoY)
• Performance at domestic level (Reported Ebitda -11.6% YoY) impacted by non-recurring
items; Underlying Domestic Ebitda (net of new handset subsidy approach and one-offs) -7%
YoY in 3Q’14
• Sound performance in Brazil (+6.5% YoY in 3Q’14) driven by a strong results in data
revenues, efficiency on network and reduction in interconnection costs
Focus on innovation confirmed:
• Italy: current 27% NGN coverage is above the mid-point of 2014-16 of the Original Plan target;
actual 74% LTE coverage shows strong upbeat vs FY’14 target at 60% and FY’15 target at 70%
• Brazil: 700Mhz spectrum acquired at fair price, ensuring a better coverage (Indoor and Rural)
with a much larger penetration than the 2,500 MHz band currently used for 4G services. 81
cities have been covered so far by our MBB Project (36% Urban coverage); 100 cities will be
covered by end of 2014
Lower by 0.2 bln € vs FY’13 and by 0.8 bln € vs 2Q’14. Usual 2H NFP improvement kicks in
26.57 bln €
•
Argentina
On October 24, Sale Agreement with Fintech was Amended and Restated:
• Total Sale Proceeds confirmed at US$ 960mln, which now translate into a 6x Ebitda
multiple after recent Peso devaluation
nd Tranche for US$ 215.7mln cashed in
• 2
• Cash collateral and Break-up Fee to support completion of transaction
9M 2014 Results
Marco Patuano
4
Domestic top line recovery gains momentum
€ mln
Domestic Service Revenues trend
+19
QoQ
3,895
-80
3,914
+13
-49
3,834
+27
Domestic Service Revenues improvement:
•
3,785
3,554
3,567
3,594
•
-6.2%
-9.1%
YoY -10.1%
-10.5%
1Q'13
2Q'13
-9.1%
-8.8%
-8.9%
•
3Q'13
4Q'13
1Q'14
2Q'14
YoY
2,664 -7.4%
-8.6%
1Q'14
2Q'14
3Q'14
Service revenues stabilization
at 3.6 bln € per quarter in 2014
Mobile Service Revenues
1,189 2,639 -7.2%
growing performance quarter on
quarter: +0.7% in 3Q’14 and +0.4% in
2Q’14 vs -1.0% on average in 2013
3Q'14
Fixed Service Revenues
2,715 constant topline recovery on YoY basis:
-6.2% in 3Q’14 vs -8.9% in 2Q’14 and
-8.8% in 1Q’14
Improving
performance in
fixed business
thanks to better
results in all
components
1,099 1,138 -7.1%
YoY
-14.9%
1Q'14
-13.3%
2Q'14
Sound recovery
in mobile service
revenues driven
by better results
both in Business
Generated &
Received
3Q'14
9M 2014 Results
Marco Patuano
5
Domestic Ebitda: progressing towards an improving FY trend
%YoY,€ mln
Domestic Ebitda
2,031
40
Ebitda trend
1H'14
-11.6%
1,795
net of new
handset subsidy
approach
net of new
handset subsidy
approach
-5.4%
reported
-7.9%
3Q'14
-9.8%
-9.8%
-11.6%
3Q'13
3Q'14
Ebitda Discontinuities
•
Effects on Year-on Year performance for this quarter
are:
• ~ 30 mln euro for
• incentive plans for employees &
management and
• salary discontinuous increases enabling
insourcing
• ~ 30 mln euro for regulatory termination disputes
and other provisions
• 40 mln euro for new handset subsidy approach
Underlying Ebitda trend
1H'14
3Q'14
-7%
4Q'14
+
-9%
Normalized for discontinuous increases in labour costs,
provisions & handset subsidy
9M 2014 Results
Marco Patuano
6
Translating Domestic Innovative Capex into Revenues
a
2,025
others
commercial&
others IT
106
IT
443
+102
-69
innovative
249
b
c
-63
d
- 54
-138
-11
traditional
1,792
95
195
Efficiency(1): -197 mln €
380
Innovative portion on network capex
network
9M’14
35%
+8pp YoY
37%
35%
33%
1,089
1,122
1Q'14
handset subsidy
2Q'14
3Q'14
138
9M'13
network network
IT
commercial&othersIT
commercial&others
IT
others
subsidy
9M'14
Growing penetration of Innovative Revenues on total(2)
Innovative Mobile Service Revenues(3)
Innovative Fixed Service Revenues(4)
35%
32%
32%
33%
2014
32%
31%
28%
24%
1Q
(1) total domestic capex efficiency=
(2) net of wholesale
2013
30%
25%
2Q
a
+
3Q
b
+
c
+
d
28%
28%
1Q
2Q
3Q
(3) Broadband & VAS Content
(4) Broadband, VAS Content & ICT
9M 2014 Results
Marco Patuano
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NGN & LTE current Coverage
NGN Coverage
LTE Coverage
>50%
>80%
Target further
upgradable
First mover
advantage to
be preserved
51%
today @
74%
+10pp vs FY’13
today @
27%
2014
2015
2014
2016
Market Fiber Lines
FY’14 target
already exceeded
2015
2016
Mobile BB CB
«Open Fiber»
launched
‘000
313
226
122
123
49
77
103 34
15 45 0.5
163
151 0.2
4Q'13
TI Retail NGN
1Q'14
>1.0
2Q'14
OLO Subloop/NGN
6,853
7,166
8,023
8,444
~1.0
3Q'14
Avg daily acquisition
0%
2%
1Q'13
2Q'13
3Q'13
9,151
9,596
Additional Giga
take-up
>50k clients
per week
October
~1.5k/day
1%
8,677
4%
5%
4Q'13
1Q'14
MBB
7%
2Q'14
9%
3Q'14
% LTE
9M 2014 Results
Marco Patuano
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Domestic Mobile
Quarterly Mobile Revenues Breakdown
Service Revenues Trend YoY
€ mln, QoQ
Total
handsets
1,175
1,284
+89
1,264
+20
+50
126
-31
95
+39
1,138
+51
1,189
76
Service
1,099
wholesale
58
+12
70
+2
72
Innovative
328
+14
342
+48
390
64
61
90
Broadband
264
281
301
Traditional
713
SMS
132
52
139
56
134
57
530
531
536
1Q'14
2Q'14
3Q'14
VAS content
Incoming
voice
Outgoing voice
•
726
+1
+5.6%
-0.5%
Innovative
+9.9%
+16.6%
+8.4%
Traditional
727
-24.1%
-21.9%
-16.7%
1Q'14
2Q'14
3Q'14
4Q'14
Mobile Service Revenues improvements due to:
•
•
•
+13
wholesale
+8.7%
Constant recovery in outgoing voice and positive support from
incoming thanks to zero MTR drag
Sound performance in Innovative revenues driven by progressive
growth in browsing and additional revenue stream from new digital
entertainment services
-7.1%
+
-13.3%
-14.9%
We confirm Mobile Service Revenues is trending towards
parity in 4Q’14
9M 2014 Results
Marco Patuano
9
Domestic Fixed
Quarterly Fixed Revenues Breakdown
Service Revenues Trend YoY
€ mln, QoQ
Total
2,771
handsets
56
Service
2,715
-19
2,718
73
National, Int’
wholesale +
Subs&others
878
Innovative
565
ICT
VAS
Broadband
2,737
-34
-51
2,664
-25
2,639
859
37 133
395
38
134
38
Traditional
1,271
Others
238
135
-7.9%
-9.3%
Innovative
583
+9
402
-40
-7.2%
861
574
+9
Wholesale
& others
79
+1.8%
+3.0%
+0.1%
410
1,231
232
-36
Traditional
1,195
229
Access
666
647
632
Outgoing voice
367
352
334
1Q'14
2Q'14
3Q'14
-10.4%
-13.1%
1Q'14
2Q'14
-10.1%
3Q'14
4Q'14
Fixed Service Retail YoY
•
1Q'14
2Q'14
3Q'14
-6.2%
-7.4%
-8.9%
•
Monthly Retail Fee
upward revision effective
November 1st to provide
further uplift in 4Q’14
Significant support from
increasing fiber take-up
+
-7.2%
-7.4%
-8.6%
9M 2014 Results
Marco Patuano
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Brazil: Usage of Mobile Data is Rapidly Expanding
“Business Generated” trend
in Q3 is supported by…
YoY, %
-4%
Business Local+Long
Generated distance
Innovative VAS revenue
growth accelerating
YoY, %
+50%
+44%
+36%
+1%
ex MTR
+8.0%
+7.8%
1Q'14
+6.5%
2Q'14
3Q'14
Mobile Service Revenues
Performance*
Business
Incoming
Received (Voice&SMS) -34%
•
YoY, %
1Q'14
2Q'14
3Q'14
Double-digit growth in data users
32
Mln users
+32%
24
+5%
Voice
+ VAS
3Q'13
Ebitda Performance
remains sound
… increased Data Penetration
3Q'13
3Q'14
YoY, %
3Q'14
Strong performance in 4G Market Share
30%
+4pp
26%
Mobile:«business generated»
revenues growing at a good pace
(+5% YoY) thanks to data
ex MTR
+3%
+1%
+1%
‐1%
July'13
‐4%
July'14
Source: ANATEL
700Mhz spectrum Acquisition
Investing in Network
infrastructure
to strengthen
our position in
Mobile Data
Total investment of R$ 2.85bln
•
«Block 2» cost R$ 1.95bln
•
clean-up costs R$ 0.9bln
1Q'14
2Q'14
3Q'14
MBB project: «on track»
39
53
66
81
2013
1Q'14
2Q'14
3Q'14
Urban
coverage 30%
31%
32%
36%
* Mobile Service Revenues based on net contributions
9M 2014 Results
Marco Patuano
11
Agenda
•
TI 3Q’14 Results
•
Financial Update
•
Take-Aways
•
Appendix
9M 2014 Results
Piergiorgio Peluso
12
Telecom Italia 3Q’14 Group Results
€ mln, %YoY
3Q’14
€mln
Revenues
5,421
Domestic
Brazil
3,805
1,608
Ebitda
Domestic
Brazil
Capex
Domestic
Brazil
Ebitda-Capex
Domestic
Brazil
Weight(2)
70%
29%
2,243
1,795
441
80%
20%
933
615
317
66%
34%
1,310
1,180
124
90%
9%
Organic(1)
Reported
net of new
handset
subsidy
approach
YoY
YoY
-4.5%
-4.9%
-5.0%
-3.1%
-5.0%
-4.5%
n.a.
-8.0%
-8.5%
-11.6%
+8.4%
-11.6%
+6.5%
-7.0%
-9.8%
-13.2%
-12.5%
-9.3%
-19.7%
-9.3%
-18.4%
-4.0%
-5.4%
-12.8%
-
-12.8%
-
Normalized for
cost of labour,
provisions &
handset subsidy
-7%
-9.1%
-3.6%
n.a.
(1) Starting from 2014, Organic performance includes only exchange rate variations and impacts from perimeter changes
(2) Including TI Media, Other & Elimination. Olivetti is included in the Domestic perimeter
9M 2014 Results
Piergiorgio Peluso
13
9M’14 Domestic Opex Efficiency Plan to Overperform FY Target
€ mln
Volume/
RevenueDriven (1)
Market/
CustomerDriven (2)
Process/
AssetDriven (3)
Labour
Cost
Operating
Expenditures
6,383
6,040
External Opex net of COGs
-348 mln € YoY
comm./adv./ccare
2,148
bad debt/other
commercial
industrial
costs/G&A
-31
864
1,327
-102
-246
-66
762
-348
1,080
-180
2,045
-11
2,034
Market-driven
-102 mln euro
9M'14
Labour Cost YoY
+17
€ mln
+24
‐53
Solid Cost Reduction:
•
1Q'14vs'13
2Q'14vs'13
3Q'14vs13
•
Solidarity
Agreement
positive
neutral
neutral
•
Salary
Increase(4)
negative
negative
negative
Extraordinary
Compensation
Plans
total efficiency
-72
2,164
9M'13
YoY impact
other opex
•
negative
(1) Interconnection, Cost of Equipment, Other COGs
(2) Acquisition costs, ADV, Customer Care, Other commercial costs
Process-driven
-246 mln euro
Including:
• 71 mln euro
Sparkle provision
reversal
• 84 mln euro
Antitrust fine in
2013
Commissioning: volume acquisition reduction
Advertising: cost optimization supported by single
format and brand
Operating Costs for Network & IT: savings in
procurement and positive impacts of process
reengineering
G&A: zero-budget approach and policy review
(3) Industrial costs, G&A, Real Estate, Other
(4) Starting from February 1, 2014
9M 2014 Results
Piergiorgio Peluso
14
9M’14 Operating FCF Generation Remains Solid
Reported, € mln
2014 Free Cash Flow Generation
9M’14 figures
TI recurring stronger Second Half
Operating Free Cash Flow is confirmed
Group
2,640
6,588
1,676
2,272
Ebitda
Capex
 vs. 2013
-552
+397
 operating
WC&others
-29
1,228
1,058
OpFCF
-14
-184
1Q'14
2Q'14
3Q'14
4Q'14
OpFCF on Revenues
Domestic
25%
1,792
19% on
Revenues
1,338
5,296
20%
13%
2,166
Ebitda
Capex
 operating
D
WC&others
OpFCF
1Q'14
2Q'14
3Q'14
Brazil
OpFCF quarterly breakdown
1,281
Ebitda
-843
Capex
-331
107
 operating WC&others
D
OpFCF
306
292
-491
1Q'14
2Q'14
3Q'14
9M 2014 Results
Piergiorgio Peluso
15
9M’14 Net Financial Position Improvement
€ mln
FX impact
26,807
-2,272
-47
+396
+234
26,572
+241
+1,213
Mandatory
Convertible Bond
-1,657 mln €
vs 9M’13
Mandatory
Convertible Bond
-235
25,507
FY'13
Including 1.3 bln euro Mandatory Convertible Bond
OpFCF
 vs. 2013
Cash Financial
Expenses/Financial
Accruals
Taxes & other
impacts
M&A
25,272
Telecom Argentina Dividends/ Change in
(discontinued)
equity
9M'14
-190
+184
-88
-304
-89
+394
-287
FX negative
impact
9M 2014 Results
Piergiorgio Peluso
16
Towers, Frequencies and Disposals Update
Italy
Brazil
Towers
Value Extraction from Separation
remains a Priority
Argentina

A Positive Outcome for TIM
•
• Tower Division created
•
• Service Management Agreement
finalized
•
• Advisors appointed for further steps

New Agreement
Supports Disposal
700Mhz Auction
Sale Agreement renegotiated to
allow for transaction completion
Overall Cost in Line with
expectations
•
•
•
•
Awarded “Lot n.2” Fits our Existing
Spectrum Profile at best
Increased 4G Frequencies to
maintain momentum in TIM’s mobile
data strategy
Same amount granted
TI Management
Discontinued operation
New US$175mln break-up fee in place
Structure of the deal
Total Consideration US$ 960 mln
a
US$113.7mln
already cashed in in Dec’13
Towers
b
US$215.7mln
cashed in on Oct 29th, 2014
TIM Tower sale finalization soon
c
US$600.6mln
TI note issued entirely purchased by
the Buyer, providing Cash collateral
Process in its Final Stage; final
agreement expected to be signed by
year end
d
US$30mln service fee
TI Media
• Digital terrestrial network
businesses merger completion with
Gruppo Editoriale L’Espresso
•
• Sale process on track, while new
regulatory framework still
developing
•
•
Proceeds expected to finance TIM
network deployment, including 700
MHZ license costs

3G/4G Spectrum
Auction
Transaction scope involving about
6.4k TIM Towers
•
“Lot 8” awarded to TEO consisting in
30MHz for 15-year licenses on AWS
(band 1700-2100Mhz) and 20Mhz
on 700MHz
9M 2014 Results
Piergiorgio Peluso
17
Agenda
•
TI 3Q’14 Results
•
Financial Update
•
Take-Aways
•
Appendix
9M 2014 Results
Marco Patuano
18
3Q’14 Group Take-Aways
•
Domestic
Efficiency
Plan
•
•
Innovative
Capex
•
Brazil
•
M&A
•
FCF
generation
•
Upbeat 3Q’14 paves the way for further improvements in 4Q and beyond:
• Transition from price-based to quality-driven competition opens to further value generation
from Data, while polarization between High-Quality Network Operators and Other Operators
increases
• Recovery in Mobile is well ahead and has started in Fixed, whose upside is shown by both
our Retail and Wholesale take-up of Fiber offers
• Further push on convergence, offer simplification and superior quality experience for both
our Consumer and Business segments ongoing
Domestic Opex Efficiency Plan to overperform the €200mln FY’14 target, while favorably
facing 2015 step-up to €400mln. In Brazil, TIM presented a strong Opex saving in 3Q with
-8.1% YoY, mainly due to efficiency on network and lower interconnection costs
We are investing to strengthen our role of Digital Champion in Italy, where innovative
services and content create more and more demand for bandwidth and speed – not a game
for all. Network and IT transformation and delayering are a key part of the process
Also in Brazil innovative investments are being increased in order to accelerate the
implementation of new technologies for mobile data and further stimulate the commercial
take-up of 4G. TIM currently covers around 36% of the urban population with 4G, serving 45
municipalities
TIM Brasil is set to generate relevant value from its important, country-wide MBB
expansion
Opportunities will be considered only if compliant with our Group’s Financial Discipline and
if clearly generating value for our Companies and our shareholders / bondholders
Supported by all the above actions, FCF generation is key to preserve our leadership in
our Key Markets and to ensure our deleveraging goals
9M 2014 Results
Marco Patuano
19
Agenda
•
TI 3Q’14 Results
•
Financial Update
•
Take-Aways
•
Appendix
9M 2014 Results
Marco Patuano - Piergiorgio Peluso
20
Domestic Performance Dashboard
Reported data, € mln, %YoY
Total Revenues
4,007
-5.0%
Ebitda
3,805
2,031
40
-11.6%
net of new handset
subsidy approach
1,795
-9.8%
normalized for cost of
labour, provisions &
handset subsidy
-7%
3Q’13
2Q'13
3Q’14
2Q'14
on
revenues
Capex
2Q'13
3Q’13
2Q'14
3Q’14
50.7%
47.2%
Ebitda - Capex
1,353
678
-9.3%
40
net of new handset
subsidy approach
-173
1,180
615
-3.6%
2Q'13
3Q’13
2Q'14
3Q’14
2Q'13
3Q’13
2Q'14
3Q’14
9M 2014 Results
Marco Patuano - Piergiorgio Peluso
21
Brazil Performance Dashboard 3Q’14
Organic data*, € mln, %YoY
Total Revenues
1,684
Handsets
-4.5%
290
Ebitda
1,608
267
-4%
Service
1,394
+6.5%
415
441
1,341
Mobile Service
Revenues**
+1% ex-MTR
3Q'13
3Q'14
on
revenues
3Q'13
3Q'14
24.6%
27.4%
Capex
386
-18.4%
Ebitda - Capex
317
+95
9M’14
-5.5% YoY
3Q'13
124
29
3Q'14
3Q'13
3Q'14
* Excluding exchange rate
** Mobile Service Revenues based on net contributions
9M 2014 Results
Marco Patuano - Piergiorgio Peluso
22
Domestic Mobile KPIs
‘000
Mobile CB
Active CB
31,858 31,706 31,554 31,221 30,996 30,660 30,374
+2pp YoY
85%
83%
1Q'13
2Q'13
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
MNP Balance
Jan
Feb
Mar
Apr
May
June
2014
-28
-20
July
Aug
-34
-2
-92
2013
-111
-124
-107
-178
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
Sep
+16
-17
-41
2Q'13
Highlights
+75
-8
1Q'13
-1
-18
Clear signs of market stabilization
translated into:
•
better MNP balance +504k YTD
•
lower gross adds  -36% YoY in Q3
•
better churn rate  25.2%; -3.6pp YoY
-80
Cum.
+504 YoY
-197
9M 2014 Results
Marco Patuano - Piergiorgio Peluso
23
Domestic Fixed KPIs
‘000
Fixed Access
Total
OLO
Line Losses
21,016 20,788 20,536 20,378 20,238 20,085
19,823
7,238
7,233
7,164
7,169
7,211
7,258
1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14
7,167
(201)
TI retail
13,777
13,555
13,372
13,210
13,027
12,828
(222)
(183)
(163)
(182)
(200)
(171)
12,656
+18
1Q'13
2Q'13
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
+22
YoY
+12
BB ARPU
BB Access
Total
Total BB Fast
Fiber
SI+20Mb
6,984
6,933
6,892
6,915
6,933
6,939
6,932
965
1
965
1,015
1
1,014
1,050
4
1,045
1,100
15
1,084
1,167
45
1,122
1,259
103
1,155
1,315
151
6,019
5,918
5,842
5,814
5,766
5,679
5,617
€/month
20.0
1,164
19.6
Total ADSL
19.1
19.2
19.2
19.2
18.9
+3.5%
Flat ADSL
+3.5%
+3.9%
+3.6%
+1.6%
+1.8%
+2.3%
1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14
Free ADSL
761
736
711
684
655
625
597
1Q'13
2Q'13
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
ARPU BB
YoY
9M 2014 Results
Marco Patuano - Piergiorgio Peluso
24
Domestic Mobile Revenues Breakdown
Reported, € mln, %YoY
3Q’13
3Q’14
YoY
9M YoY
1,360
1,284
-5.6%
-10.0%
80
81
+0.5%
+1.9%
Consumer+Business
1,280
1,203
-6.0%
-10.7%
services
1,200
1,109
-7.6%
-12.6%
1,158
1,059
-8.5%
-12.7%
658
536
-18.5%
-22.2%
voice
613
519
-15.4%
-18.7%
fees&other
44
17
-61.8%
-64.7%
500
523
+4.6%
+0.7%
business received
42
50
+18.9%
-8.9%
handsets
80
94
+18.4%
+16.9%
Total
wholesale(1)
business generated(2)
outgoing voice
VAS
(1) Including Visitors
(2) Total Retail Service Revenues net of Incoming
9M 2014 Results
Marco Patuano - Piergiorgio Peluso
25
Domestic Fixed Revenues Breakdown
Reported, € mln, %YoY
3Q’13
3Q’14
YoY
9M YoY
Total Wireline
2,898
2,718
-6.2%
-7.1%
Service Wireline
2,844
2,639
-7.2%
-7.7%
Sparkle group
339
304
-10.3%
-3.2%
Wholesale Domestic
650
595
-8.5%
-10.3%
1,899
1,781
-6.2%
-7.5%
1,178
1,056
-10.4%
-11.2%
internet
401
415
+3.5%
+1.5%
business data
279
264
-5.3%
-2.9%
other
41
46
n.m.
n.m.
(43)
(41)
n.m.
n.m.
54
79
+47.8%
+22.1%
Retail Service
voice & access
elim. & other
products
9M 2014 Results
Marco Patuano - Piergiorgio Peluso
26
Robust Liquidity Margin and Well-Distributed Debt Maturities
Liquidity Margin
€ mln
Debt Maturities
12,424
€ mln
30,657
11,160
4,492
12,305
5,305
7,000
449
449
Liquidity
margin
3,861
2,798
3,308
Within 2014
3,138
3,325
Fully Covered
until 2018
1,880
918
23,387
1,264
1,354
2,295
1,030
2,965
896
7,270
1,949
1,359
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
Beyond 2019
Total M/L
Term Debt
Undrawn Portion of
Facility/Committed
C&CE
(escluded discontinued)
Bonds
Loans (of which long-term rent, financial and
operating lease payable € 1,200)
Drawn bank facility
€ 30,657 mln is the nominal amount of outstanding medium-long term debt. Adding the Mandatory Convertible Bond (€ 1,300 mln), the discontinued operations (€ 28 mln), IAS
adjustments (€ 1,223 mln) and current financial liabilities (€ 487 mln), the gross debt figure of € 33,695 mln is reached.
N.B. Debt maturities are net of € 1,262 mln (face value) of repurchased (of which € 504 in the 2013 and € 543 in the 2014) own bonds (of which € 1,047 mln related to bonds
due within 2016).
9M 2014 Results
Marco Patuano - Piergiorgio Peluso
27
Well-Diversified and Hedged Debt
Total Gross Debt net of Adjustment:
Euro 33.695 mln
Maturities and
Risk Management
€ mln
1,176
6,026
1,270

.
.
.
28

Average debt maturity: 7.35 years
(bond only 8.05 years)
Fixed-rate portion on gross debt approximately
66.9%
.
25,195

Gross debt

(of which 30 mln disc. Operations)

Financial assets
of which Cash & CE and marketable securities

Cash & Cash Equivalent

Marketable securities

Italian Government Securities

Other

Discontinued operations
Net Financial Position

Around 40% of outstanding bonds (nominal amount)
is denominated in USD, GBP and YEN and is fully
hedged
33,695
(6,699)
(5,304)
(4,105)
(1,199)
(864)
(335)
Cost of debt:
 5.4%
(424)
26,572
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 2,455 €/mln (of which 687 €/mln on bonds)
- the impact on Financial Assets is equal to 966 €/mln.
Therefore, the Net Financial Indebtedness is adjusted by 1,489 €/mln.
9M 2014 Results
Marco Patuano - Piergiorgio Peluso
28