Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline...

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FRANCO BERTONE Telecom Italia Conference Call FullYear 2011 Preliminary Results and 201214 Plan Outline Telecom Italia – Telecom Argentina FullYear 2011 Preliminary Results and 201214 Plan Outline

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Full‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

Transcript of Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline...

Page 1: Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline (Bertone)

FRANCO BERTONE

Telecom Italia Conference CallFull‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

Telecom Italia – Telecom ArgentinaFull‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

Page 2: Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline (Bertone)

FRANCO BERTONE

Telecom Italia Conference CallFull‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

Safe HarbourThese presentations contain statements that constitute forward‐looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995. These statements appear in a number of places in this presentation and includestatements regarding the intent, belief or current expectations of the customer base, estimates regarding future growthin the different business lines and the global business, market share, financial results and other aspects of the activitiesand situation relating to the Company and the Group.Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, andactual results may differ materially from those projected or implied in the forward looking statements as a result ofvarious factors. As a result thereof, Telecom Italia S.p.A. makes no representation, whether express or implied, as to theconformity 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 datehereof, but forward looking information by its nature involves risks and uncertainties, which are outside our control, andcould significantly affect expected results.Analysts are cautioned not to place undue reliance on those forward looking statements, which speak only as of the dateof this presentation. Telecom Italia S.p.A. undertakes no obligation to release publicly the results of any revisions tothese forward looking statements which may be made to reflect events and circumstances after the date of thispresentation, including, without limitation, changes in Telecom Italia S.p.A. business or acquisition strategy or plannedcapital expenditures or to reflect the occurrence of unanticipated events. Analysts and investors are encouraged toconsult the Company's Annual Report on Form 20‐F as well as periodic filings made on Form 6‐K, which are on file withthe United States Securities and Exchange Commission.

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Page 3: Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline (Bertone)

FRANCO BERTONE

Telecom Italia Conference CallFull‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

Agenda

2

BU Argentina 2011 Results (IFRS)

Telecom Argentina Plan

Take-Aways

Page 4: Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline (Bertone)

FRANCO BERTONE

Telecom Italia Conference CallFull‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

2011 Main Results

3

2,324

+201M€+24.1%

+674M€+26.5%

1,824

722896

0FY10 FY11

3,2202,546

4Q

9M613 759

221276

FY10 FY11

1,035834

4Q

9M

EBITDARevenues

+24.1%

+27.4%

+24.8%

+23.8%

Strong operating performance in 2011 fostered revenues and profits

#1 Revenue share & #2 Market share in Mobile

Bundling fixed voice +ADSL +mobile internet

Flat pricing & bundling add value to fixed clients

Paraguayan unit back on a growth track

Solid financial position

Key Highlights OFCF-CAPEX-NFP (FY10 vs. FY11)

578

OFCF CAPEX NFP(cash)

OFCF CAPEX

582

FY11FY10

556

417493

86

Organic € mln Organic € mln

Reported € mln

NFP(cash)

+19.2%excl. PPA

Page 5: Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline (Bertone)

FRANCO BERTONE

Telecom Italia Conference CallFull‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

4

2011 HighlightsMobile Customers(1)

KPI’s Service Revenues & VAS(1)(3)

12.6

14.5

16.3 16.9 17.4 17.8 18.2

2008 2009 1Q11 2Q11 3Q11 4Q11e

MarketShare(2)

mln, %

29.4%30.6%

32.1% 32.9% 33.2%33.5% 33.6%

2010

Outstanding performance in postpaid segment

~ 2/3 net adds where post-paid in 4Q11

Smartphone leadership retained

~57% share of YoY net adds

16% ARPU growth YoY

3G devices represent 17% of base

VAS reached 50% of service revenues in 4Q11

Brand restyling timed to introduction MNP

103 101 102 99125

222 299322

4141

44

51

2008 2009 2010 2011

MOU SMS ARPU (pesos)

+34% +46%+55%

+17%+24%

+30%Bln, ARS

1.7 2.3 3.45.3

4.14.5

5.1

5.75.8

6.88.5

11.0

2008 2009 2010 2011VAS revenues Non-VAS revenues

+10%+13%

+13%

(1) Argentinean Operation only (2) Estimated data not available for 4Q2011 (3) Net of Intercompany

VAS includes: SMS, MMS, SMS revenue sharing, Contents, Mobile internet & othersFigures are in Argentina GAAP, with no material difference in terms of growth under IFRS for 2009, 2010 and 2011.

Mobile Business

Page 6: Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline (Bertone)

FRANCO BERTONE

Telecom Italia Conference CallFull‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

5

2011 HighlightsFixed & BB Access

BB ARPU & Churn BB/Fixed Lines

Fixed Business

FixedVoice

Fixed BB

MarketShare (1)

Total Lines in market (In millions)

1.031.21 1.38 1.41 1.46 1.51 1.55

4.01 4.06 4.11 4.11 4.12 4.13 4.14

47% 47% 47% 47% 47% 47% 47%

2008 2009 2010 1Q11 2Q11 3Q11 4Q11e

Launch of Video Streaming services

Bundling & new serviced reduces churn to a record low

Regulated services down 3 p.p. to 41% of fixed revenues

Fixed ARBU up 7% despite frozen tariffs

Internet & Data revenues rose 28% & 23% YoY respectively(Arg GAAP)

Customers value flat pricing offers

Increasing residential bandwidth offers to improve customer

experience and provide new services

57

67 7687x

2.0% 1.8% 1.4% 1.2%

2008 2009 2010 2011

ARPU (in Pesos)CHURN (monthly)

2011

37%

2010

34%

2008

26%

2009

30%

(1) Estimated, data not available for 4Q11

Page 7: Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline (Bertone)

FRANCO BERTONE

Telecom Italia Conference CallFull‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

Agenda

6

BU Argentina 2011 Results (IFRS)

Telecom Argentina Plan

Take-Aways

Page 8: Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline (Bertone)

FRANCO BERTONE

Telecom Italia Conference CallFull‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

7

Business EnvironmentMacroeconomic Context Competitive & Regulatory Framework

2008 2009 2010 2011e

6.8%

0.9%

9.2% 8.9%

GD

P G

row

th

(con

stan

t pri

ces)

Among the fastest growing economy in 2011

Private consumption driver of growth

High commodity prices sustained exports

Public spending fostered household income but reduced fiscal surplus

Growth expected to be lower but still positive

Tight fiscal and monetary policies could slowdown the economy

These measures shall probably deliver a healthier economic environment

Source: INDEC

Regulatory topics:

Implementing MNP next March

Upcoming Spectrum auction for 850&1.900 Mhzfrequencies

Expecting 1.700&2.100Mhz announcement

Launch of Video Streaming services due to legal restrictions to offer Pay TV

Competitive landscape:PenetrationMarket Share

Leaders in post-paid & Smartphone sales

Brand Restyling timed to MNP schedule

34%MOBILE 135%

35%*FIXED BROADBAND 45%

FIXED VOICE 47% 67%

Bundling and new products reduce churn

Increasing speed for new services and quality

Lines in service maintain growth

Customers value Flat Pricing

Business

* M/S on top 3 operators

Page 9: Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline (Bertone)

FRANCO BERTONE

Telecom Italia Conference CallFull‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

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ARPU

(ARS per month)

Mobile Lines

(Millions)

Action Plan

Goals Outlook (1)

16.3

18.2

44

51

2010 2011 2014

2010 2011 2014

Mobile Business: Main Goals and Action Plan

Consolidate Revenue Share

Upgrade 3G network, capacity, quality and coverage

Mobile internet massification through convenient pre-paid packaging offers

Bundled data + social network plans

Loyalty targeted customer care programs ahead of mobile number portability

(1) Argentinean Operations only

Cagr ‘11-’14~+4%

Cagr ‘11’14>+10%

Promote Mobile Data and Social Networking

Improve Customer Experience

Consolidate Leadership of Youth Segment

Page 10: Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline (Bertone)

FRANCO BERTONE

Telecom Italia Conference CallFull‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

9

Fixed Business: Main Goals and Action Plan

Action Plan

Goals Outlook (1)

Improve Value of the Household Consumer

Focus on Bundled Voice, BB+Mobile Internet, Streaming

Integrate Connectivity with Hosting and Cloud Computing

Promote Migration to Flat Pricing

Optimize Interconnection with Third Parties

1.4

1.6

2014

Cagr ‘11-’14>+5%

7687

2011

Cagr ‘11-’14>+12%

(1) Argentina Operation only

ARPU

(ARS per month)

Fixed BB Lines

(Millions)

2010 2011

2010 2014

Develop ICT market

Reduce Service Provisioning Time

Upgrade Bandwidth Delivery Capability

Page 11: Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline (Bertone)

FRANCO BERTONE

Telecom Italia Conference CallFull‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

10

CAPEX PlanCapex (ARS, in billions) Key Drivers

Capex as % of Revenues

17%

3.2

2011 2012

18%

4.0

Manage E2E Service Delivery and QualityStandards

Improve Network Capacity and FaultTolerance to enhance user experience

Deploy FTTC to upgrade Access Bandwidth

Deploy low visual impact radiobase sites tofacilitate extension of mobile accesscoverage and capacity

Extend own network reach to reduce costs ofdomestic roaming

Deploy content delivery capabilities in thecore network.

Page 12: Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline (Bertone)

FRANCO BERTONE

Telecom Italia Conference CallFull‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

11

BU Argentina 2011 Results (IFRS)

Telecom Argentina Plan

Take-Aways

Page 13: Telecom Italia – Telecom Argentina FY 2011 Preliminary Results and 2012‐14 Plan Outline (Bertone)

FRANCO BERTONE

Telecom Italia Conference CallFull‐Year 2011 Preliminary Results and 2012‐14 Plan Outline

12

Take-aways on main Telecom Argentina Trends

Revenues

2011 2012

Positivedouble digit

yoy trend

Upselling to the existing Customer Base is a major growth factor.

Customer Base growth rate shall contract to single digit.

Mobile Data and Social Networking are growth key drivers.

Ebitda Focus on cost efficiencies to mitigate cost inflation effects.

Reduce Interconnection and Domestic Roaming costs.

Improve Churn Rate to control SAC/SCR 2011 2012

Positivedouble digit

yoy trend

Capex

Focus on E2E Quality of Service.

Deploy FTTC and Content Delivery Network to upgrade access and core network bandwidth.

SAC/SRC capex impacted by MNP 2011 2014

Spending up,Capex on Sales down

Organic