WIND Telecomunicazioni
First Half 2014 Results
August 7, 2014
H1 2014 Highlights
• WIND continues to outperform the market with total revenue of €2,290 million, declining by
8.2% YoY
Revenues
• Mobile service revenue down 10.9% YoY, as a result of the rolling cannibalization effect of
2013 price competition, MTR cut and the material decline in SMS revenue
• Mobile internet revenue confirms double digit growth, up 21.1%
EBITDA
• EBITDA at €865 million, declining by 7.6% YoY, with pressure on revenue partially
compensated by cost efficiency measures
• EBITDA margin increases 0.3 p.p. to 37.8% thanks to cost efficiency measures
Op. FCF
(EBITDA – CAPEX)
NFI
Debt
Optimization
• Continued strong Op. FCF generation of approximately €1.12 billion in H1 2014 LTM
• Net Financial Indebtedness at €10,544 million vs. €9,145 million as of December 2013,
increase mainly due to WAHF PIK notes refinancing
• Net debt / EBITDA at 5.6x
• Successful refinancing of approximately €8 billion of notes shifting the first material maturity to
2019 and reducing the average cost of debt by 3 p.p. providing significant interest savings of
~€300 million per year
2
Difficult Environment and Weak Market…
GDP Growth*
Highlights
1.2
0.6
0.2
2012
2013
2014E
1.0
• Family consumption index still negative
2015E
• Unemployment remains the biggest concern with
-1.9
-2.4
youth component steadily above 40%
-1.9
-2.4
ECB
CSC
improving trend
12.8
12.5
12.2
• Italian TLC market value contraction in H1 2014
expected to continue also in H2 but with an
Unemployment Trend*
• Main operators maintain a more benign approach
to promotions leading to:
12.6
• lower gross additions with negative net
10.7
ECB
2012
• GDP expected to return to mild growth in 2014
2013
2014E
CSC
2015E
additions for main players
• churn reduction
* Source: ECB (May ‘14), CSC (Jun ‘14)
3
…but WIND Strengthens its Market Position…
Mobile Market Share (SIM)*
Fixed Broadband Market Share**
~ 28% in
consumer
segment
22.8%
9.9%
32.4%
23.3%
10.3%
31.7%
24.3%
10.6%
31.0%
24.5%
11.0%
30.1%
34.9%
34.7%
34.1%
34.3%
2011
2012
2013
H1 2014
* Source: Internal estimates; excluding MVNO
** Source: Internal estimates
Player 4
15.8%
16.3%
16.0%
15.8%
6.4%
6.1%
6.3%
6.2%
Others
11.8%
13.1%
14.2%
14.5%
Player 3
13.1%
12.6%
12.8%
13.1%
Player 4
52.9%
51.9%
50.6%
50.4%
Player 1
2011
2012
2013
H1 2014
Player 2
Player 1
4
…in Core Areas of its Proposition…
Best Customer Relationship
•
•
Leading Reputation
Maintain leadership in mobile customer satisfaction
Consistent outperformer on NPS
•
WIND Infostrada classified as the most appreciated
telecoms operator in Italy in terms of customer experience
by a primary customer satisfaction research observatory
in July
•
WIND is the only telecoms operator ranked
in the top twenty leading Italian companies by reputation*
Player 1
Player 2
Player 4
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Positioning
•
Enhancing the focus on mobile data and digital services
•
Smart “value for money” proposition: clear, transparent and simple offer
•
Renewing the “All Inclusive” proposition
•
More than ~ 65% of mobile customers on bundle offerings
* Source: Italy Rep. Track May 2014 issued by Italian Reputation Institute
5
…Evolving to the Digital World…
WIND Digital
•
Self Care Areas Access increase 127%
vs. H1 2013
•
Digital top ups +74% vs. H1 2013
•
WIND Digital innovative offering with
customer interaction exclusively
through digital channels (sale, selfcare, top-ups, etc)
Social Approach
• WIND leader in Italy as the fastest* company on
answering customers via Facebook and Twitter
My WIND App
•
My WIND App for smart-phones and tablets downloaded
more than 5 million times
Google Play
•
Revenue share model with Google play:
•
WIND the only operator in Italy with
carrier billing active with
approximately 3 million downloads
YoY
•
Roll out for Windows phone©
customers started in June
* Sources: Blogmeter and Socialbakers
6
…and Investing on Network Performance and Quality
Mobile Network
• GSM network completed: 99.86% population
coverage with GPRS/EDGE nationwide coverage
CAPEX*
(€mln / %)
16.7%
15.8%
LTM
CAPEX / revenue*
• HSPA+ network developed: 96.65% population
coverage at 21 Mbps and 42 Mbps in major Italian
cities
• LTE available in Rome, Milan, Bologna, Turin,
Padua, Bari, Naples and main airports.
• LTE plan: 30% of population coverage by the end
of 2014
345
309
Fixed Network and Backbone
• 1,458 LLU sites: c. 60% direct population coverage
in all major Italian cities
H1 2013
H1 2014
• Solid fiber optic backbone of 21,726 km,
supporting both fixed and mobile businesses
* CAPEX excludes LTE costs
CAPEX 2013 excludes €134mln of non-cash increase in Intangible Assets related to the contract with Terna in relation to the Right of Way of WIND’s backbone
Figures as of June 30
7
H1 2014 Operational
Performance
Maintaining Positioning in Mobile
Customer Base
Highlights
(mln)
• WIND’s customer base declines slightly (-1.9%
YoY) to 21.9 million, although at a lower rate than
22.3
-1.9%
21.9
that experienced by the overall market, leading to
an increase in market share, consumer market
H1 2013
share approaches 28%
H1 2014
• Data ARPU increases 2.7 p.p. reaching 39% of
ARPU
(€ / %)
total ARPU
38.6%
% Data on Total
33.4%
• 2Q 2014 ARPU improving trend vs. 1Q 2014
• Increasing penetration of “All Inclusive” bundles
12.4
-11.0%
11.0
drives double digit growth in both usage and
voice traffic
H1 2013
H1 2014
9
Resilient Mobile Internet Growth Performance
Mobile Internet Revenue
Highlights
(€mln)
• The increased penetration in CB of “All Inclusive”
+21.1%
222
269
bundles coupled with the take-up in smartphones
penetration leads to a double digit growth in
H1 2013
H1 2014
Internet revenue
Mobile Internet CB*
(‘000)
• In line with other mature markets H1 is affected by
+27.1%
9,667
a material decline in SMS revenue driven by
7,604
increased penetration of instant messaging apps
H1 2013
H1 2014
* Mobile Internet includes customers that have performed at least one mobile Internet event in the previous month
10
Fixed-Line Delivering on Profitability
Voice Subscribers
(‘000)
3,040
Highlights
2,902
• Fixed LLU subscribers substantially stable (-1.4%)
2,450
-1.4%
2,415
Direct (LLU)
reflecting the pull sales strategy and focus on
591
487
H1 2013
H1 2014
Indirect
acquisition of high value customers in order to
increase EBITDA margin
ARPU
(€)
• Fixed-line ARPU declines 4.4% YoY with the
31.2
-4.4%
29.8
growth in data ARPU partially compensating the
decrease in voice component
H1 2013
H1 2014
11
Fixed Broadband ARPU Growth
Broadband Subscribers
(‘000)
Broadband ARPU
(€)
21.3
2,211
-1.4%
H1 2013
20.8
2,180
H1 2014
Dual-play Subscribers
(‘000)
20.2
20.2
Q1 2013
Q2 2013
20.4
20.5
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Highlights
• Fixed Broadband customer base substantially
stable in line with the strategy focused on quality and
1,863
+0.9%
1,881
on dual-play offerings selected by 1.9 million
customers (+1% YoY)
• BB ARPU increases thanks to the increased
H1 2013
H1 2014
penetration of higher value dual play customers
12
H1 2014 Financial
Performance
Revenue and EBITDA – Total
Total Revenues
(€mln)
2,495
-8.2%
189
Highlights
2,290
216
Other rev. +
CPE
• Total revenue declines 8.2% with service revenue
2,306
-10.1%
2,074
TLC service
revenue
down 10.1% as a combined result of the rolling
cannibalization effect of 2013 price competition,
H1 2013
H1 2014
material decline in SMS revenue and the MTR cut
EBITDA / Margin
(€mln / %)
37.8%
37.5%
• EBITDA declines 7.6% YoY with positive impact
from cost savings partially compensating the
pressure on top line
-7.6%
936
865
H1 2013
H1 2014
• EBITDA margin increases 0.3 p. p. to 37.8%
14
Revenue and EBITDA – Mobile
Total Revenues
(€mln)
1,815
-8.6%
172
1,644
Highlights
1,660
194
Other rev. +
CPE
• Total mobile revenue declines 8.6% as a combined
result of:
1,465
TLC service
revenue
• Impressive growth in mobile Internet revenue,
up 21.1%
-10.9%
H1 2013
H1 2014
EBITDA / Margin
41.7%
(€mln / %)
41.5%
-8.2%
754
692
• Decline in voice revenue mainly driven by the
mentioned intense price pressure in 2013 and
MTR cut
• Q2 service revenue (-11.1%) in line vs. previous
quarter (-10.6%)
• H1 2014 EBITDA declines 8.2% to €692 million
mainly due to the service revenue decline
• EBITDA Margin increases 0.2 p.p.
H1 2013
H1 2014
15
Revenue and EBITDA – Fixed-Line
Total Revenues
(€mln)
680
Highlights
-7.2%
631
17
22
Other rev. +
CPE
• Fixed-line total revenue decreases 7.2% YoY due
to lower service revenue, down 8.1%, mainly due
663
-8.1%
609
TLC service
revenue
to the decline in the fixed-line customer base, as a
result of the focus on higher margin LLU
H1 2013
H1 2014
customers, and due to the ongoing decline in
voice volumes resulting from fixed to mobile
EBITDA / Margin
substitution
27.4%
(€mln / %)
26.7%
• EBITDA at €173 million with 0.7 p.p. increase in
margin thanks to the strategy focused on higher
-5.0%
182
173
value customers and pull sales channels partially
offsetting the decline in service revenue
H1 2013
H1 2014
16
P&L Highlights
(€mln)
H1 2014
H1 2013
Change
%
Revenues
2,187
2,444
(10.5)%
104
52
n.m.
2,290
2,495
(8.2)%
865
936
(7.6)%
D&A
(612)
(631)
3.0%
EBIT
253
305
(17.1)%
Financial Income and expenses
(695)
(430)
(61.4)%
EBT
(442)
(126)
n.m.
39
(47)
n.m.
(403)
(173)
n.m.
Other revenues
Total Revenues
EBITDA
Income Tax
Net result
17
Capitalization
(€mln)
As of
As of June 30, June 30, 2014/
December 31,
2014
LTM EBITDA
2013
Cash and Equivalents
(141)
(84) *
(0.0x)
Bank Loan
2,420
2,519
1.3x
Senior Secured Notes 2018
3,133
3,145
1.7x
Senior Secured Notes 2019
150
150
0.1x
Senior Secured Notes 2020
400
402
0.2x
Total Bank Loan + SSN
5,962
6,132
3.3x
Senior Notes 2017
2,779
-
-
Senior Notes 2021
-
3,786
2.0x
Ministry LTE Liability
250
255
0.1x
Derivatives and Other **
154
371
0.2x
9,145
10,544
5.6x
(938)
(0.5x)
9,145
9,606
5.1x
9,013
217
(240)
154
9,338
142
(246)
371
Total Net Debt excluding Intercompany Loan
Intercompany Loan to WAHF ***
Total Net Debt
Cash Net Debt
Interest Accrued
Fees to be amortized
Derivatives MTM
LTM EBITDA
*
Cash and cash equivalents net of the amounts held in escrow in relation to repayment on July 15, 2014 of the 2017 Senior Notes not tendered
** Includes receivable from Wind Telecom until Dec 2013, set off as part of April 2014 refinancing
*** Loan to Wind Acquisition Holdings Finance S.p.A. for repayment of WAHF SA PIK Notes
1,873
18
Significant Improvement in Debt Maturity Profile
Q1 2014
(€mln)
1,261
2,678
3,216
81
81
2014
TLA
340
2016
2015
TLB
LTE Liability Italian State
81
2,015
425
150
2017
2018
Senior Secured Notes 2018
2019
Senior Secured FRN
2020
Senior Secured Notes 2020
2021
HY 2017
PIK
H1 2014 Pro-forma for April and July Refinancing
(€mln)
575
425
150
81
2014
TLA
TLB
81
2015
LTE Liability Italian State
174
81
2016
2017
New Senior Secured Notes 2020
Notional amounts. USD tranche has been converted at CCS EUR/USD Exchange Rate
2018
Senior Secured FRN
3,495
3,779
1,608
2019
Senior Secured Notes 2020
2020
New FRN 2020
2021
New Senior Notes 2021
19
Thank you
20