Telecom Italia – TI Group FY 2011 Preliminary Results and 2012-14 Plan Outline (Bernabè)
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Transcript of Telecom Italia – TI Group FY 2011 Preliminary Results and 2012-14 Plan Outline (Bernabè)
Telecom Italia – TI GroupFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
TELECOM ITALIA
Full-Year 2011 Preliminary Results and 2012-14 Plan OutlineFebruary 24th, 2012
FRANCO BERNABE’
1
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
These presentations contain statements that constitute forward-looking statements within the meaning of thePrivate Securities Litigation Reform Act of 1995. These statements appear in a number of places in thispresentation 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, financialresults 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 aresult of various factors.Forward-looking information is based on certain key assumptions which we believe to be reasonable as of the datehereof, 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 ofthe date of this presentation. Telecom Italia S.p.A. undertakes no obligation to release publicly the results of anyrevisions to these forward looking statements which may be made to reflect events and circumstances after thedate of this presentation, including, without limitation, changes in Telecom Italia S.p.A. business or acquisitionstrategy or planned capital expenditures or to reflect the occurrence of unanticipated events. Analysts andinvestors are encouraged to consult the Company's Annual Report on Form 20-F as well as periodic filings made onForm 6-K, which are on file with the United States Securities and Exchange Commission.It should also be noted that starting from the year 2010, Telecom Italia reclassified some taxes paid in Brazil ofnon-material amount, previously included in “Other operating expenses”, in reduction of “Revenues” and “Otherincome” in order to ensure a better comparability and intelligibility of the financial information.
Safe Harbour
2
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Agenda
TI Group 2011 Preliminary Results
Telecom Italia Plan Outline
Italy
Brazil
Argentina
Focus on Ebitda-Capex Generation
Targets
Appendix
3
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Guidance
Revenues
Ebitda
Capex
Broadly Stable YoY
Broadly Stable YoY
4.8 bln €
NFP Adj. 29.5 bln € (LTE excluded)
+2.7% YoY (29,958 mln €)
Flat (12,339 mln €)
4,872 mln €(6,095 mln €, LTE included)
29,191 mln €(30,414 mln € LTE included)
FY 2011Organic Figures
TI Group Full Year 2011 Progress Report: Targets Met
Reached
Reached
Reached
Reached
4
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Euro mln, %
3,077 2,966
3,066 3,055
3,186 3,213
3,006 3,105
FY 2010 FY 2011
Organic EBITDA
IQ
IIQ
IIIQ
IVQ
12,33912,335
-0.4%
-3.6%
+0.8%
+3.3%
+4+0.0%
7,088 7,073
7,318 7,470
7,246 7,516
7,520 7,899
FY 2010 FY 2011
Organic Revenues
-0.2%
29,172
+2.1%
29,958
+3.7%
+5.0%
+786+2.7%
IQ
IIQ
IIIQ
IVQ
TI Group 2011 Revenues and Ebitda by Quarters
Domestic
Brazil
Argentina
Other B.U.
Contribution to YoY Change Contribution to YoY Change
0.0%
Domestic
Brazil
Argentina
Other B.U.
2.7%
5
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
* Revenues based on net contributions
Euro mln, Organic Data
TI Group
FY 11 % yoy FY 11 % yoy
Brazil
FY 11 % yoy
Argentina
FY 11 % yoy
Revenues 35%29,958 +2.7% 7,343 +18.2% 3,220 +26.5%19,033 -4.8%
EBITDA-CAPEX 7,467 -0.4% 708 +20.7% 479 +23.3 %6,374 -3.7%
85%
Domestic
EBITDA 25%12,339 Flat 1,998 +10.7% 1,035 +24.1%9,351 -3.9%
Cash Generation
for the Group
Engine of Growth
for the Group
Weight in TI Group
Combining a Sound Cash Generation with a Solid Growth
6
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Normalized Operating Free Cash Flow
Normalized data:(1) TIS settlement - July 2010 -(2) LTE - October 2011-
6,213 5,767
389 1,223
FY 2010 FY 2011
+3886,602
6,990
Adj.
-446
1 2
Euro Bln
33.9
2009
34.5
31.5
2008 2010 2011
30.4
-0.6-2.5
Deleverage - Net Financial Position Adjusted
29.2
LTE
-1.05
Euro mln, Reported Data
Group Business Performance and Financial Discipline
35.9
2007
-1.3
5.5 € bln Net Debt reduction
7
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Agenda
TI Group 2011 Preliminary Results
Telecom Italia Plan Outline
Italy
Brazil
Argentina
Focus on Ebitda-Capex Generation
Targets
Appendix
8
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Fully Exploit TI
Multi -Country
Businesses
Brazil – Continue the Business Expansion
Argentina – Managing Growth and Profitability
Italy – Proactively Manage for Cash
Generation
Enhance Free Cash Flow
Generation
Sustainable Shareholders’ Remuneration
Complete the Deleverage
Program
2012-14 – TI Strategic Priorities are Confirmed
9
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Italy
Revenues Defence
Opex Efficiency
Protect the Value of Traditional Services
Improve Performance of Fixed Broadband Portfolio
Profitable Mobile Data Growth
Continuous Focus on Efficiency Improvement
Selective Network Deployment
Market-driven Approach to Exploit UBB Demand
Brazil
Exploit Growth as a Strong Mobile and Fixed BB Challenger
Capturing further Voice Increase and Opportunities from FMS
Continuous boost from Mobile Data
Deployment of TIM Fiber
ArgentinaConsolidate Mobile and Pursue Convergence
Score results from MNP introduction
Gradual Expansion of Integrated Network
2012-14 – Key Drivers
FlexibleC
apexA
llocation
10
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
ITALY
ARGENTINA
BRAZIL
Limited Market at Present
Be «FTTH-Ready»
Potential Mass Demand
Begin Deployment
2012-14 Milan and selectedareas with possible
Partnerships
2012 Greenfield2013 in Selected Areas
2012 Greenfield2013-14 São Paulo & Rio
2014 Target: 100 towns,25% of Housing Units
2011 begin Roll-Out2014 50% of Cabinets
2012: start in São Paulo & Rio2013-14 in other Selected Areas
FTTCab FTTCVDSL2
FTTCVDSL2VDSL2
FTTH/B FTTHFTTH
Flexible Capex Allocation
11
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
AgendaAgenda
TI Group 2011 Preliminary Results
Telecom Italia Plan Outline
Italy
Brazil
Argentina
Focus on Ebitda-Capex Generation
Targets
Appendix
12
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Italy: Performing also in Times of Crisis
• EBITDA-Capex. Organic: same perimeter, 2011 FX rates, excluding Latam spectrum acquisitions.
Caring & Sales Force Model Rationalization;
Additional efficiencies in industrial costs;
Personnel right-sizing
Profitability
Selective deployment of NGAN and LTE;
Efficiency on maintenance to support UBB development
Capex Optimization
Customer-driven innovation
Offer based on Customer Value
Innovation
Allows to devote all needed resources to Network Development to confirm Technological Leadership
Financial discipline
DomesticCash Generation~80% of Group(cum. 12-14)*
13
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Agenda
TI Group 2011 Preliminary Results
Telecom Italia Plan Outline
Italy
Brazil
Argentina
Focus on Ebitda-Capex Generation
Targets
Appendix
14
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Tim Brasil is the Fastest Growing TLC Player in
its Country
Proven Track record in integrating and
extracting Value from Acquisitions: Intelig
paved the way for AES
Continuing Top Line growth, doubling FCF/sales ratio
Macroeconomic context: a sound growth
Exploiting Market Opportunities
Brazil: Ensure a Self-Sustained and Efficient Growth
TLC Market (CAGR 11-14)
20142011
2.9%
GDP growth
CAGR 11-14
4.5%CAGR 2011-14 Voice BB Tot
Mobile +2% 47% 9%
Fixed -8% 16% -3%
TLC spend -3% 28%
2011 2014
FCF on sales
2x
FMS (voice)
Mobile CB expansion
Internet for all
3 Development Waves
15
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Agenda
TI Group 2011 Preliminary Results
Telecom Italia Plan Outline
Italy
Brazil
Argentina
Focus on Ebitda-Capex Generation
Targets
Appendix
16
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Strong Financial Position and Cash Generation of the Company to fund
necessary network investments
The Company is set to increase Mobile and
Fixed Customer Base, Revenues and
Profitability
Mobile for growth, Fixed for value
Macroeconomic context is continously monitored
Argentina: Carefully Manage Opportunities
Top Line Promote Mobile Data and Social
Networking
Upgrade bandwidth to deliver capability
Upselling services to boost ARPU
Develop ICT market
41%
59%
2011 2014
Voice Non-Voice
Source: Global Insight Feb. 2012
Consumer Spending Delta%
10.9
4.85.5 5.0
2011 2012 2013 2014
Unemployment Rate %
7.2
7.57.7
7.8
2011 2012 2013 2014
GDP growth %
9.3
4.04.9 5,1
2011 2012 2013 2014
17
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Agenda
TI Group 2011 Preliminary Results
Telecom Italia Plan Outline
Italy
Brazil
Argentina
Focus on Ebitda-Capex Generation
Targets
Appendix
18
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Group Operations focused on Cash Generation
Domestic Ebitda Stabilization
Strengthen Our Core Assets
Latam Ebitda Growth
Invest to Perform in Italy Enlarge
Operations and Profitability in Latam
>22Bln €* cum. ‘12-’14 Cash Generation
2012 2013 2014 2012 2013 2014
Cum. Ebitda
‘12-’14
~38 Bln €*
Cum. Capex ‘12-’14 >15 Bln €*
Stable/Slightly Growing
• Organic: same perimeter, 2011 FX rates, excluding Latam spectrum acquisitions.
19
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
2011-2013 Deleverage Targets Confirmed
Cash Flow Generation (EBITDA- Capex) Net Financial Position Adjusted**
New Dividend Policy
Euro Bln
35.930.4
2007 2011 2012
27.5
-5.5 Bln € Net Debt
2013
25
2014
Latam
Domestic
Financial Discipline
2012 and 2013 targets confirmed
~20%
~80%
>22 Bln €
Cum. ‘12-’14
Organic Data*
*Organic: same perimeter, 2011 FX rates, excluding spectrum licences acquisitions.** Excluding Latam spectrum licences acquisitions.
20
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
.
a) Ensure Delivery of Debt Reduction: 2012: 27.5 € bln2013: 25.0 € bln
b) Dividend Progressionafter meeting Debt
Targets
Worsening in Italy’sEconomy and Ratings
prioritizes the De-Riskingof TI
13 Jan 2012 13 Feb 2012 27 Jan 2012
1.2
0.9
2011 2012 2013 2014
Dividend Cashout (€bln)
Floor
Previous 15% yearly growth guidance
New Dividend Policy
21
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Agenda
TI Group 2011 Preliminary Results
Telecom Italia Plan Outline
Italy
Brazil
Argentina
Focus on Ebitda-Capex Generation
Targets
Appendix
22
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
** excluding Latam spectrum licences
Telecom Italia Group – FY 2012 and 2012-14 Plan Key Guidance
TI Group – FY 2012 Key Guidance
Revenues
Ebitda
Capexcum ’12-’14
NFP Adj.**
NFP Adj. 2012-’14
Stable
Broadly Stable
>15 € bln
27.5 € bln
FY 2012: 27.5 € bln
FY 2013: 25 € bln
From FY 2014: < 2x Net Debt/Ebitda***
Organic Data*
TI Group – 2012-14 Plan Key Guidance **Ebitda-Capexcum ’12-’14 >22 € bln
Organic Data*
*exchange rates 2011 (R$/€ 2.33; ARS/€5.74), excluding impact from non-organic items
*** reported figure
23
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Agenda
TI Group 2011 Preliminary Results
Telecom Italia Plan Outline
Italy
Brazil
Argentina
Focus on Ebitda-Capex Generation
Targets
Appendix
24
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
TI Group – Main Results by BU – Reported Figures
Euro mln 9M Reported IV Quarter Reported Full Year Reported
REVENUESActual 2011
Actual 2010 Abs
Actual 2011
Actual 2010 Abs
Actual 2011
Actual 2010 Abs
Domestic 14,098 15,032 -934 (6.2) 4,935 5,036 -101 (2.0) 19,033 20,068 -1,035 (5.2)Wireline Domestic 10,040 10,516 -476 (4.5) 3,502 3,600 -98 (2.7) 13,542 14,116 -574 (4.1)Tim Domestic 5,286 5,822 -536 (9.2) 1,828 1,870 -42 (2.2) 7,114 7,692 -578 (7.5)
Brazil 5,395 4,498 897 19.9 1,948 1,701 247 14.5 7,343 6,199 1,144 18.5Argentina 2,324 0 2,324 - 896 798 98 12.3 3,220 798 2,422 303.5Media 170 177 -7 (4.0) 68 81 -13 (16.0) 238 258 -20 (7.8)Olivetti 226 259 -33 (12.7) 117 132 -15 (11.4) 343 391 -48 (12.3)Other Activities 2 64 -62 (96.9) 0 0 0 - 2 64 -62 (96.9)Elim. -156 -131 -25 -65 -76 11 -221 -207 -14
TI Group 22,059 19,899 2,160 10.9 7,899 7,672 227 3.0 29,958 27,571 2,387 8.7
9M Reported IV Quarter Reported Full Year Reported
EBITDAActual 2011
Actual 2010 Abs
Actual 2011
Actual 2010 Abs
Actual 2011
Actual 2010 Abs
Domestic 6,993 7,210 -217 (3.0) 2,250 2,183 67 3.1 9,243 9,393 -150 (1.6)Brazil 1,444 1,281 163 12.7 546 520 26 5.0 1,990 1,801 189 10.5Argentina 759 0 759 - 276 245 31 12.7 1,035 245 790 322.4Media 27 10 17 170.0 1 3 -2 (66.7) 28 13 15 115.4Olivetti -36 -24 -12 (50.0) 1 5 -4 (80.0) -35 -19 -16 (84.2)Other Activities -11 -3 -8 (266.7) -4 -18 14 77.8 -15 -21 6 28.6Elim. -1 1 -2 1 -1 2 0 0 0
TI Group 9,175 8,475 700 8.3 3,071 2,937 134 4.6 12,246 11,412 834 7.3
EBITDA MARGIN 41.6% 42.6% -1,0 pp 38.9% 38.3% 0.6 pp 40.9% 41.4% -0.5 pp
25
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Euro mln 9M Organic IV Quarter Organic Full Year Organic
REVENUESActual 2011
Actual 2010 Abs
Actual 2011
Actual 2010 Abs Actual 2011
Actual 2010 Abs
Domestic 14,098 14,956 -858 (5.7) 4,935 5,038 -103 (2.0) 19,033 19,994 -961 (4.8)Wireline Domestic 10,040 10,475 -435 (4.2) 3,502 3,602 -100 (2.8) 13,542 14,077 -535 (3.8)Tim Domestic 5,286 5,787 -501 (8.7) 1,828 1,870 -42 (2.2) 7,114 7,657 -543 (7.1)
Brazil 5,395 4,591 804 17.5 1,948 1,623 325 20.0 7,343 6,214 1,129 18.2Argentina 2,324 1,824 500 27.4 896 722 174 24.1 3,220 2,546 674 26.5Media 170 177 -7 (4.0) 68 81 -13 (16.0) 238 258 -20 (7.8)Olivetti 226 259 -33 (12.7) 117 132 -15 (11.4) 343 391 -48 (12.3)Other Activities 2 2 0 0.0 0 0 0 - 2 2 0 0.0Elim. -156 -157 1 -65 -76 11 -221 -233 12
TI Group 22,059 21,652 407 1.9 7,899 7,520 379 5.0 29,958 29,172 786 2.7
9M Organic IV Quarter Organic Full Year Organic
EBITDAActual 2011
Actual 2010 Abs
Actual 2011
Actual 2010 Abs Actual 2011
Actual 2010 Abs
Domestic 7,069 7,437 -368 (4.9) 2,282 2,290 -8 (0.3) 9,351 9,727 -376 (3.9)Brazil 1,447 1,308 139 10.7 551 498 53 10.5 1,998 1,806 192 10.7Argentina 759 613 146 23.8 276 221 55 24.8 1,035 834 201 24.1Media 6 10 -4 (40.0) 1 3 -2 (66.7) 7 13 -6 (46.2)Olivetti -36 -24 -12 (50.0) 2 9 -7 (77.8) -34 -15 -19 (126.7)Other Activities -11 -14 3 21.4 -4 -15 11 73.3 -15 -29 14 48.3Elim. 0 -1 1 -3 0 -3 -3 -1 -2
TI Group 9,234 9,329 -95 (1.0) 3,105 3,006 99 3.3 12,339 12,335 4 0.0
EBITDA MARGIN 41.9% 43.1% -1.2 pp 39.3% 40.0% -0.7 pp 41.2% 42.3% -1.1 pp
TI Group – Main Results by BU – Reported Figures
26
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
Bonds Loans (of which long-term rents, financia land operating leases, payable € 1,534) Drawn bank facility
Evenly distributed and Back-Loaded Maturities Euro mln
€ 7.71 bln Group Liquidity Position
+€ 7.00 bln
Undrawn Portion of Facility/Committed
=€ 14.71 bln
Group Liquidity Margin
27
TELECOM ITALIAFull-Year 2011 Preliminary Results and 2012-14 Plan Outline
3.9%
5.9%
70.2%Bonds
27,635
Total Gross Debt, Net of Adjustment: Euro 39,382
mln
Gross debt Financial assets
of which C & CE and marketable securities (7,713) - C & CE (6,714)- Marketable securities (999)
- Italian Government Securities (856)- Other (143)
39,382(8,968)
Bank Facility
2,252
Bank & EIB
5,626Op. Leases and long rent
1,549
Other
2,320
Maturities and Risk Management
Average debt maturity: 7.26 years (bond only 8.22 years)
Fixed rate portion of gross debt approximately 70%
Around 45% of outstanding bonds (nominal amount) is denominated in USD, GBP and YEN and is fully hedged
Cost of debt: 5.6%
14.3%
5.7%
Euro mln
Net Financial Position 30,414
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 2,569 €/mln (of which 738 €/mln on bonds);- the impact on Financial Assets is equal to 2,164 €/mln.
Therefore, the Net Financial Indebtedness is adjusted by 405 €/mln.
Well Diversified and Hedged Debt