Telecom Italia 1Q 2012 Results - Gruppo TIM · 1Q 2012 Results FRANCO BERNABE’ Revenues EBITDA...

TELECOM ITALIA GROUP

1Q 2012 ResultsMilan, May 10th, 2012

Telecom Italia 1Q 2012 Results

FRANCO BERNABE’

1

TELECOM ITALIA GROUP1Q 2012 Results

FRANCO BERNABE’

These presentations contain statements that constitute forward-looking statements within the meaning ofthe Private Securities Litigation Reform Act of 1995. These statements appear in a number of places inthis presentation and include statements regarding the intent, belief or current expectations of thecustomer 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 Companyand the Group.Such forward looking statements are not guarantees of future performance and involve risks anduncertainties, and actual results may differ materially from those projected or implied in the forwardlooking statements as a result of various factors. Consequently, Telecom Italia S.p.A. makes norepresentation, whether expressed or implied, as to the conformity of the actual results with thoseprojected in the forward looking statement.Forward-looking information is based on certain key assumptions which we believe to be reasonable as ofthe date hereof, but forward looking information by its nature involves risks and uncertainties, which areoutside our control, and could significantly affect expected results.Analysts are cautioned not to place undue reliance on those forward looking statements, which speak onlyas of the date of this presentation. Telecom Italia S.p.A. undertakes no obligation to release publicly theresults of any revisions to these forward looking statements which may be made to reflect events andcircumstances after the date of this presentation, including, without limitation, changes in Telecom ItaliaS.p.A. business or acquisition strategy or planned capital expenditures or to reflect the occurrence ofunanticipated events. Analysts and investors are encouraged to consult the Company's Annual Report onForm 20-F as well as periodic filings made on Form 6-K, which are on file with the United States Securitiesand Exchange Commission.

Safe Harbour

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FRANCO BERNABE’

TI Group 1Q12 Results

Telecom Italia Core Markets ResultsItalyBrazilArgentina

Wrap-up Appendix

Agenda

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FRANCO BERNABE’

Revenues EBITDA

42.0% 40.1%% on Revenues -1.9 p.p.

Revenues Trend YoY EBITDA-CAPEX

Euro mln, Organic data, %

27.2%-2.1 p.p.29.3%

+15 M€+0.5%

-43 M€-2.1%

TI Group Key Results

+373 M€+5.3%7,019

7,392

1Q11 1Q12

2,055 2,012

1Q11 1Q12

2,951 2,966

1Q11 1Q12

-0,2%

2.1%

3.7%

5.0%5.3%

1Q11 2Q11 3Q11 4Q11 1Q12

% on Revenues

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FRANCO BERNABE’

Revenues

EBITDA

EBITDA-CAPEX

Weight on TI Group

38.2%

26.7%

Euro mln, Organic Data

TI Group

1Q12

7,392

2,966

2,012

% yoy

+5.3%

+0.5%

-2.1%

1Q12

1,928

505

271

% yoy

+19.1%

+13.5%

-14.6%

26.0%

17.0%

~14%

Brazil

1Q12

901

289

168

% yoy

+24.0%

+16.6%

+5.1 %

12.2%

9.7%

~8%

Argentina

1Q12

4,486

2,196

1,607

% yoy

-2.4%

-3.4%

-0.2%

60.4%

74.0%

~80%

Domestic

TI Group Key Results by Core Markets

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FRANCO BERNABE’

Tl Media: Corporate Re-organization leading to Disposal

Current Structure

TI Media Broadcasting

(100%)

MTV Italia (51%)

MTV Adv. (100%)

77.7%

Post Re-organization

NewCo

77.7%

51% 100%

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FRANCO BERNABE’

+439

(1)vs. 11

2010YE

31,468 (1,076)

+450

(377)

+367

+156

(149) +77

+12 30,622

1Q11 (846)

Euro mln, Reported Data

EBITDA CAPEX WC & Others

Operating FCF

(2,963)+954

+1,383

(626)

(102)

Debt Reduction Progressing as per Planned Sequence

30,414 30,312 (626) (10) 438 7 89

2011YEAdjusted

Operating FCF Disposals Cash Financial Expenses/Financial Accruals

FinancialInvestments

Cash Taxes/OtherImpacts

1Q12Adjusted

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FRANCO BERNABE’

Free Cash Flow Generation: in line with Targets

TIGroup

* Excluding spectrum acquisitions

7.0* ~7.0*

FY2011 FY2012E

0.6

1Q12

Stable

-0.5

0.7

5.8* 1.2DomesticDomestic

BrazilBrazil

ArgentinaArgentina

Guidance OFCF FY12E

0.6

Breakdown

Euro mln, Reported Data

Operating Free Cash Flow

Revenues

Opex

Capex

WC

OFCF

7,0737,392+319

-53

- 431

- 450

-285

Brazil: - 0.3bln € (capex acceleration for network upgrades and increased cashout from TLC fees)

Domestic: - 0.1bln € (increased VAT payment) Argentina: stable TI Media: -0.04bln €

1,076 626

952 1,383

901 954

4,144 4,429

1Q11 1Q12

0.05

Euro bln

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FRANCO BERNABE’

Net Income EvolutionEuro mln

Equity +1Income from inv. (17) Net Fin. Charges +31

Brazil (34)Argentina (9)Domestic (18)

549

Net Income 1Q11 EBIT

Net Interest &

Net Income/Equity

Taxes

606

720

Minorities1Q11

103 652

Income ante Min & Disc. Ops. 1Q11

Minorities1Q12

Income/(Loss) ante Min & Disc. Ops.

1Q12

Net Income1Q12

+114 +15 (61)(114)

Argentina (76) Brazil (43) T.I. Media +5

+57 (+10.4%)

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FRANCO BERNABE’



Wrap-up Appendix

Agenda

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FRANCO BERNABE’

Real GDP trend Consumer Spending

Wireless Wireline

Source: Research Dep. Intesa Sanpaolo Source: Research Dep. Intesa Sanpaolo

Continuous recovery also supported by a more rationalcompetition and strong improvement in main KPIs.

Mobile data momentum sustained by high smartphonessales.

Confirmed the positive growth in broadband servicerevenues with a slight sequential improvement (+0.8% YoY).

TI market share on fixed accesses keeps almost stable.

Italy: Continued Resilience in a Weak Macro Context

-5.0%

-2.5%

0.0%

4Q11A 1Q12A 2Q12E 3Q12E 4Q12E-5.0%

-2.5%

0.0%

4Q11A 1Q12A 2Q12E 3Q12E 4Q12E

Service Revenues (YoY) Handset Revenues (YoY )

-4.9% -4.9%

-2.1% -1.9% -1.7%

0.3%

-1.0%

0.5% 0.5% 0.8%

1Q11 2Q11 3Q11 4Q11 1Q12

Service Revenues (YoY) Broadband Service Revenues (YoY)

-11.7%-8.7% -7.5%

-7.1%

-3.7%

-22.4%

26.2% 34.0%96.5% 71.1%

1Q11 2Q11 3Q11 4Q11 1Q12

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FRANCO BERNABE’



Wrap-up Appendix

Agenda

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FRANCO BERNABE’

Euro mln, Organic Data

Revenues

EBITDA

Brazil: Revenues and EBITDA Trend

% on Revenues

Value Creation

Revenue Growth

Size

TIM Brazil confirmed as #2 operator, with servicerevenues up 15.9% YoY

Postpaid users increased to about 10 mln (+25% YoY)

In the last three quarters, TIM Brasil confirmed its #2position without penalizing margins. Service EBITDAmargin stable YoY

Bad Debt/Gross Revenues ratio stable

Top line growth driven by community expansion and“internet for All” concept

VAS Revenues acceleration (>60% YoY) thanks tocontinued smartphone penetration increase, now at31.1% (12.6% in 1Q11)

+309 M€+19.1%

+60 M€+13.5%

27.5% 26.2%-1.3p.p.

1,619

1,928

1Q11 1Q12

445 505

1Q11 1Q12

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FRANCO BERNABE’



Wrap-up Appendix

Agenda

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FRANCO BERNABE’

Euro mln, Organic Data, %

Revenues

EBITDA

Argentina: Revenues and EBITDA Trend

Value Creation

Revenue Growth

Size

Personal: strong VAS Revenue growth still driven bySMS & InternetARPU Personal +16% YoYVAS reached 52% of service revenues

Strong Broadband growth: 1Q12 BB ARPU +16% YoY

Confirmed double-digit EBITDA Growth: +16.6% YoY

Sound organic EBITDA-CAPEX generation: +5.1% YoY

Solid cash position: around €450 million, also due tothe delay in spectrum auction

Argentina: Personal #1 in Mobile Revenue Share

Steady growth in fixed BB accesses (+1% QoQ)

+174 M€+24.0%

+41 M€+16.6%

727 901

1Q11 1Q12

248 289

1Q11 1Q12

32.1%-2.0 p.p.34.1%

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FRANCO BERNABE’



Wrap-up Appendix

Agenda

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FRANCO BERNABE’

** excluding Latam spectrum licences

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

Telecom Italia Group – FY 2012 and 2012-14 Plan Key Guidance

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FRANCO BERNABE’



Wrap-up Appendix

Agenda

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FRANCO BERNABE’

TI Group – Revenues EvolutionEuro mln

* Average Exchange rate (Real/Euro): 2.32 in 2012, 2.28 in 2011 * * Average Exchange rate (Peso/Euro): 5.69 in 2012, 5.49 in 2011

+319 (+4.5%)

Domestic (3)Olivetti (6)Other & Elim. +6

Organic Variation+373 (+5.3%)

7,073 7,019 7,392 7,392

(3) (51) (109) +309 +174 +6 (13) +6

1Q11 Change in consolid.

area

Exchange rate impact

Other non organic items

1Q11 Organic

Domestic Brazil* Argentina** Media Olivetti Other & Elim.

1Q12 Organic

Other non organic items

1Q12

Domestic +2Brazil (27)Argentina (26)

0 0

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FRANCO BERNABE’

+34 (+1.2%)

Euro mln

Agreements and Transactions +6Other net costs +31

TI Group – EBITDA Evolution

* Average Exchange rate (Real/Euro): 2.32 in 2012, 2.28 in 2011 * * Average Exchange rate (Peso/Euro): 5.69 in 2012, 5.49 in 2011

Agreements and Transactions (1)Other net costs (2)

Organic Variation+15 (+0.5%)

41.4% 42.0% 40.1% 41.4%

Domestic 1Brazil (7)Argentina (9)

2,929 2,951 2,966 2,963 0 (15) +37 (78) +60 +41 (8) 0 0 (3)


area


Other non organic

items

1Q11 Organic


1Q12 Organic

Other non organic

items

1Q12

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FRANCO BERNABE’

Euro mln

TI Group – EBIT Evolution

* * Average Exchange rate (Peso/Euro): 5.69 in 2012, 5.49 in 2011* Average Exchange rate (Real/Euro): 2.32 in 2012, 2.28 in 2011

22.0% 21.4% 21.7% 21.2%Organic Variation

+88 (+5.7%)

Brazil (4)Argentina (4)

1,505 1,534 1,622 1,619

0 (8) +37 +22 +56 +17 (8) 0 +1 (3)


area


Other non organicitems

1Q11 Organic


1Q12 Organic

Other non organic

items

1Q12

+114 (+7.6%)

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FRANCO BERNABE’

Bonds Loans (of which long-term rent, financial and operating lease payable € 1,497) Drawn bank facilityEuro mln

€ 6.16 blnGroup Liquidity Position

+€ 7.00 bln

Undrawn Portion of Facility/Committed

=€ 13.16 bln

Group Liquidity Margin

Robust Liquidity Margin and Well-Distributed Debt Maturities

689

1,652

1,211

1,264

731

865

1,966

8,378

1,790

3,335

2,857

1,768

2,250

1,900

11,357

25,257

250

1,999

2,249

2,479

5,237

6,067

3,032

2,981

2,765

13,323 35,884 (*)

(*) € 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).

Within 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Beyond 2017 Total M/LTerm Debt

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FRANCO BERNABE’

4.0%

6.7%

68.0%

Bonds 25,521

Total Gross Debt Net of Adjustment: Euro 37,513 mln

Gross debtFinancial assets

of which C & CE and marketable securities- C & CE- Marketable securities

- Italian Government Securities- Other

37,513(7,201)

Bank Facility2,248

Bank & EIB 5,734

Op. Leases and long rent1,512

Other2,498

Maturities and Risk Management

Average debt maturity: 7.32 years (bond only 8.38 years)

Fixed rate portion on gross debt approximately 72.4%

Around 47% of outstanding bonds (nominal amount) is denominated in USD, GBP and YEN and is fully hedged

Cost of debt: 5.5%

15.3%

6.0%

Euro mln

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.

Well Diversified and Hedged Debt

(6,158)

(159)(527)

(666)(5,492)

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FRANCO BERNABE’

TI Group 1Q12 Results - P&LEuro mln – Reported Data

2012 2011 Abs. %

REVENUES 7,392 7,073 319 4.5%Other Operating Income 52 48 4

TOTAL REVENUES & OTHER INCOME 7,444 7,121 323 4.5%

Total Purchases of materials and external services -3,231 -2,995 -236

Personnel -998 -990 -8

of which payroll -987 -980 -7

Other operating costs -456 -398 -58

Capitalized Cost and Others 204 191 13

EBITDA 2,963 2,929 34 1.2%% on Revenues 40.1% 41.4%

Depreciation & Amortization -1,340 -1,425 85

Writedowns and revaluations of non current assets 0 1 -1

Gains/losses of non current assets realization -4 0 -4

EBIT 1,619 1,505 114 7.6%% on Revenues 21.9% 21.3%

Income (loss) equity invest. valued equity method -3 -4 -29

Other income ( expenses ) from investments 0 17 15

Net Financial Income / (Expenses) -439 -470 4

Income before Taxes & Disc. Ops. 1,177 1,048 129 12.3%% on Revenues 15.9% 14.8%

Taxes -457 -396 0

Income before Disc. Ops. 720 652 68Net income (loss) of assets disposed 0 0 0

Net Income (ante Minorities) 720 652 68% on Revenues 9.7% 9.2%Minorities -114 -103 0

Net Income (post Minorities) 606 549 57 10.4%% on Revenues 8.2% 7.8%

I Quarter

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FRANCO BERNABE’

TI Group 1Q12 – Main Results by BU

ReportedI Quarter

OrganicI Quarter

REVENUES2012 2011 Abs. %

REVENUES2012 2011 Abs. %

Domestic 4,486 4,596 -110 (2.4) Domestic 4,486 4,595 -109 (2.4)Wireline Domestic 3,235 3,331 -96 (2.9) Wireline Domestic 3,235 3,330 -95 (2.9)Tim Domestic 1,650 1,679 -29 (1.7) Tim Domestic 1,650 1,679 -29 (1.7)

Brazil 1,928 1,646 282 17.1 Brazil 1,928 1,619 309 19.1Argentina 901 753 148 19.7 Argentina 901 727 174 24.0Media 58 52 6 11.5 Media 58 52 6 11.5Olivetti 59 78 -19 (24.4) Olivetti 59 72 -13 (18.1)Other Activities 1 1 0 0.0 Other Activities 1 1 0 0.0Elim. -41 -53 12 24.5 Elim. -41 -47 6 14.9TI Group 7,392 7,073 319 4.5 TI Group 7,392 7,019 373 5.3

I Quarter I Quarter

EBITDA

2012 2011 Abs. % EBITDA

2012 2011 Abs. %

Domestic 2,193 2,236 -43 (1.9) Domestic 2,196 2,274 -78 (3.4)

Brazil 505 452 53 11.7 Brazil 505 445 60 13.5

Argentina 289 257 32 12.5 Argentina 289 248 41 16.6

Media -6 2 -8 - Media -6 2 -8 -

Olivetti -14 -14 0 0.0 Olivetti -14 -14 0 0.0

Other Activities -2 -2 0 0.0 Other Activities -2 -2 0 0.0

Elim. -2 -2 0 (50.0) Elim. -23 -2 (50.0)

TI Group 2,963 2,929 34 1.2 TI Group 2,966 2,951 15 0.5

EBITDA MARGIN 40.1% 41.4% -1.3 pp EBITDA MARGIN 40.1% 42.0% -1.9 pp

0

Euro mln

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FRANCO BERNABE’

Focus on Working CapitalEuro mln, Reported Data

* Excluding spectrum acquisition

SeveranceIndemnities,

Funds & Other

Net OtherReceivables/

PayablesTrade

ReceivablesInventories

OWC & Other1Q12

-1,383

-48 +118

-1,014

-443 +4

-431-9 -43 -198 -185 +4

Operating Working Capital (impact on 1Q12 Cash Flow)

Changevs 1Q11

TradePayables

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Telecom Italia 1Q 2012 Results - Gruppo TIM · 1Q 2012 Results FRANCO BERNABE’ Revenues EBITDA...

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