WIND Telecomunicazioni
FY 2013 Results
Delivering Solid Cash Flows
March 7, 2014
Full Year 2013 Highlights
Revenues
• WIND continues to outperform the market with total revenues of €4,983 mln, declining by
8.2% YoY; excluding MTR impact, revenues remain stable (-0.9%)
• Mobile service revenues -10.7% YoY, due to intense price competition and MTR cuts
• Strong mobile internet revenues performance with double digit growth (+35.2%)
EBITDA
Op. FCF
(EBITDA – CAPEX)
NFI
• EBITDA at €1,944mln, declining by 5.8% YoY with positive impact of cost saving initiatives
partially compensating pressure on top line
• EBITDA margin grows 1.0 p.p. to 39.0% driven by cost efficiency measures, mainly in
advertising, rental and power; increase in fixed-line margin driven by LLU focus strategy
• Continued strong Op. FCF generation of €1.16 billion in 2013, stable YoY
• Net Financial Indebtedness at €9,145 million vs. €9,151 million as of December 2012;
• Net debt / EBITDA at 4.7x
2
Despite a Challenging Environment in 2013…
Italian TLC Market Evolution*
(€bln)
Total
-23.4%
36.1
34.9
Incoming
33.1
• Italian TLC market decline driven by intense mobile
30.9
price competition and MTR cuts
27.6
-81.4%
Mobile excl.
Incoming
• In the last 5 years mobile incoming revenues declined
81.4% for a total amount of approximately €3.0 billion
Fixed
• Elimination of aggressive summer promotions in
2009
2010
2011
2012
2013 E
Unemployment Trend***
September, leading to lower gross additions and
reducing churn
12.1
12.4
• GDP in 2013 expected to decline 1.9%**
10.7
• Family consumption index still negative in 2013
7.8
7.7
6.8
6.1
8.4
8.4
• Unemployment remains high with youth component
6.7
above 40%
2005
2006
2007
2008
2009
2010
2011
2012
2013E 2014E
* Source: IDC February 2014; Total Market of telecommunication services revenues excluding handsets and CPE; fixed excluding also incoming and wholesale revenues
** Source: ISTAT February 2014
*** Sources: ISTAT November 2013
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…WIND has Continued to Focus on Key Strengths…
Best Customer Relationship
• Maintain leadership in mobile customer satisfaction
• Simple and transparent tariffs structure to meet customer needs
Grow Beyond the Core
• My WIND App for smart-phones and tablets
downloaded more than three million times
• Revenue share model with Google play with over
Player 1
Player 2
1.2 million downloads since its launch in June 2013
• Approximately 32 million accesses on WIND self
Player 4
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Innovative and Attractive Pricing
•
Smart “value for money” proposition
with clear, transparent and simple offer
•
“All Inclusive” umbrella across the
board
•
Good quality network with performance
in line with customers expectation
•
Focus on mobile data and digital
services
care area
One Product & One Brand
• Continued market outperformance
• Best in class in mobile data growth
• Strong unified brand across all segments
• Innovative and attractive pricing upselling
through self-
tailored options to bolt on “All Inclusive” bundle
4
…Further Improving its Efficiency…
Cost efficiency
program
Advertising
• Optimized all P&L’s Opex cost lines
• “Network Transformation Project” delivers savings for more than €40 million in 2013
• Advertising optimization with same format and testimonial across all business segments, prepaid
and postpaid, mobile and fixed, consumer and business, provides approximately €44mln savings
on annual basis
• Dedicated internal organization to optimize rental and power costs delivers approximately €22 mln
savings through:
Real Estate
Network &
Technology
Distribution

BTS modernization
Data center consolidation
 Supplier renegotiations
 Site rental optimization

• “Build the Network” project with Huawei and Sirti in order to achieve approximately €45 million
saving on CAPEX with the same amount of equipment installed in the previous year
• Continued network sharing with the major mobile telecoms
• In-sourcing activities and maintenance optimization to maximize productivity
• Lowest SAC through efficient distribution strategy; use of more efficient pull channels for all
market segments contribute to a saving of approximately €18 mln in 2013
5
…While Continuing to Invest…
Mobile Network
•
GSM network completed: reaches 99.85% population
CAPEX*
(€mln)
16.7%
15.8%
CAPEX / Revenues*
coverage with GPRS/EDGE nationwide coverage
•
HSPA+ network developed: 96.34% population
coverage, with 21 Mbps being rolled out in all Italian
cities, 42 Mbps being deployed in largest cities
•
905
LTE in Rome, Milan and main airports hotspots
789
Fixed Network
•
2012
1,458 LLU sites: c. 60% direct population coverage in
all major Italian cities
Backbone
•
Solid fibre optic backbone of 21,647 km, supporting
both fixed and mobile businesses
2013
LTE Plans
•
LTE available in 17 largest Italian cities by the
end of 2014 utilizing 800 MHz spectrum;
•
CAPEX spend not expected to change materially
vs. previous 2-3 years
* 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 December 31
6
…Leading to Continued Outperformance in 2013
Mobile Market Share (SIM)*
Net Promoter Score Q4 2013
35.0
22.8%
23.3%
24.3%
9.9%
10.3%
10.6%
23.0
6.0
Player 4
Player 1
32.4%
31.7%
31.0%
22.0
Player 2
Player 4
Player 2
WIND vs. Market**
Revenues 2013 vs. 2012
34.9%
2011
34.7%
2012
34.1%
Mobile data
Player 1
Fixed data
34%
2013
5%
6%

Market

WIND
-1%
* Source: player 1, player 2 and player 4 internal estimates on official declaration; excluding MVNO
** Source: IDC February 2014; mobile data revenues excludes SMS P2P, CPE and other revenues; fixed data revenues excludes wholesale and CPE revenues.
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FY 2013 Operational
Performance
Strong Mobile Commercial Performance
Customer Base
ARPU
(mln)
+3.0%
(€)
22.3
21.6
14.4
-14.5%
3.9
+9.6%
12.3
10.4
2012
2013
2012
4.3
Data
8.0
Voice
2013
Gross Adds
(mln)
8.1
+7.6%
8.7
• WIND’s customer base up 3.0% YoY driven by the
significant growth of gross additions in first part of the
year, despite competitive environment
• Data ARPU increases 9.6% reaching 35.2% of total
ARPU; voice ARPU declines as a result of the intense
price competition coupled with the MTR cuts
• Voice traffic continues to grow double digit as a
result of increasing penetration of “All Inclusive”
bundles
2012
2013
9
Impressive Mobile Internet Performance
Mobile Internet CB*
Internet & Data Revenues
('000)
(€ mln)
+49.7%
+14.2%
5,541
+35.2%
127
8,296
-5
21
1,150
1,007
2012
2013
• Internet and Data revenues confirm to be future
540
proof with double digit growth driven by
increase in data users penetration via “All
Inclusive” bundles and specific data offerings
coupled with increase in penetration of
smartphones
2012
Mobile
Internet
Traditional
Data
Content
2013
* Mobile Internet includes consumer customers that have performed at least one mobile Internet event in the previous month
10
Fixed-Line Performance Delivering on LLU Strategy
Voice Subscribers
('000)
3,110
-4.7%
2,963
• Fixed voice subscribers decrease by 4.7% as a
result of strategy focused on LLU and pull
-2.0%
2,466
2,415
Direct
channels, in order to switch acquisition from
quantity to quality and generate a positive
645
-15.0%
2012
548
Indirect
growth in EBITDA and margin
2013
ARPU
(€)
31.2
-1.7%
30.7
• Fixed-line ARPU declines marginally with the
voice component decrease partially offset by the
double digit growth in data ARPU driven by
broadband
2012
2013
11
Solid Fixed Broadband Performance
Broadband Subscribers
(‘000)
2,210
-0.9%
92.9%
Broadband ARPU
(€)
2,191
92.9%
1,848
2012
Q1 2013
Q2 2013
20.4
20.5
Q3 2013
Q4 2013
19.1
Q4 2012
2013
Dual-play Subscribers
(‘000)
20.2
Flat
Pay x use
2012
20.2
+1.0%
1,866
2013
Strategic Highlights
• Fixed Broadband customer base stable, in line with
the strategy focused on acquisition of higher value LLU
customers and increasing utilization of inbound sales
channels
• BB ARPU increases as a result of growing penetration
of customers with a dual play bundles driven by
convergence options between fixed and mobile both
covered by the common “All Inclusive” umbrella
12
FY 2013 Financial
Performance
Revenues and EBITDA – Total
Total Revenues
(€mln)
5,427
• Total revenues decline 8.2% with service revenues
-8.2%
4,983
374
406
Other
revenues +
CPE
down 9.4% mainly due to the aggressive price
competition coupled with double MTR cuts. Excluding
-9.4%
MTR impact total revenues are stable (-0.9%)
5,053
4,577
TLC service
revenues
• From September promotional pressure reduced but
cannibalization effect on customer base remains an
2012
2013
issue
EBITDA / Margin
(€mln/%)
39.0%
38.0%
2,063
• EBITDA declines 5.8% YoY with positive impact
coming from the optimization in all P&L cost lines
-5.8%
1,944
partially compensating pressure on top line
• EBITDA margin at 39.0% up 1.0 percentage point
versus 2012
2012
2013
14
Revenues and EBITDA – Mobile
Total Revenues
(€mln)
3,958
-7.8%
281
3,648
366
• Total mobile revenues in 2013 decline 7.8% as a
Other rev. +
CPE
combined result of:
 Strong performance in mobile Internet & data
3,677
-10.7%
3,282
TLC service
rev.
revenues, growing 14.2%, driven by impressive
growth in mobile Internet, up 35.2%
 Decline in mobile voice revenues mainly driven
2012
2013
EBITDA / Margin
43.7%
(€mln / %)
by fierce price competition and reduction of
incoming revenues due to the MTR cuts
42.7%
-9.9%
1,731
1,559
• 2013 EBITDA declines 9.9% to €1,559 million mainly
due to the pressure on service revenues
2012
2013
15
Revenues and EBITDA – Fixed-Line
Total Revenues
(€mln)
1,469
-9.1%
93
• Fixed-line total revenues in 2013 decline 9.1% YoY
1,335
40
Other rev. +
CPE
-5.9%
1,376
1,295
TLC service rev.
mainly due to lower service revenues, down 5.9%,
driven by the LLU strategy focused on higher
value subscribers, and fixed to mobile
substitution
2012
2013
EBITDA / Margin
28.8%
22.6%
(€mln/%)
+15.8%
• EBITDA increases 15.8% YoY to €384 mln driven
by strategy focused on higher margin LLU
customers and pull channels leading to significant
332
2012
384
increase in margin
2013
16
P&L Highlights
• 2013 EBIT trend reflects the decline in
EBITDA coupled with higher D&A charges,
(€ mln)
2013
2012
Change
mainly related to intangible assets, as the
%
rights of use for the LTE frequencies were
4,829
5,262
(8.2)%
amortized from the beginning of the first
154
165
(6.8)%
quarter
Total Revenues
4,983
5,427
(8.2)%
EBITDA
1,944
2,063
(5.8)%
D&A
(1,276)
(1,147)
(11.3)%
provision for uncertain position mainly
EBIT
667
916
(27.1)%
related to interest expense
Financial Income and expenses
(999)
(875)
(14.2)%
EBT
(332)
40
n.m.
Income Tax
(149)
(164)
9.0%
€124 million in 2012, mainly due to the
Net result
(481)
(124)
n.m.
decline in EBIT coupled with higher
Revenues
Other revenues
• Increase in Financial Expenses due to a
• 2013 net loss of €481 million vs. net loss of
financial expenses, partially compensated
by lower P&L taxes
17
Capitalization
(€mln)
As of
As of
December 31, 2013
December 31, December 31,
EBITDA
2012
2013
Net Financial Indebtedness stable:
• €575 mln of bank loan maturities
Cash and Equivalents
(131)
(141)
(0.1x)
Bank Loan
2,947
2,420
1.2x
Total Bank Debt
2,817
2,279
1.2x
Senior Secured Notes 2018
3,169
3,133
1.6x
Senior Secured Notes 2019
150
0.1x
the payment of the 2013 instalment;
Senior Secured Notes 2020
400
0.2x
renegotiated interest cost
refinanced with new 2019/2020
Total Bank Loan + SSN
5,986
5,962
3.1x
Senior Notes 2017
2,827
2,779
1.4x
328
250
0.1x
Financial Receivables
(156)
(161)
(0.1x)
Derivatives and Other
167
315
0.2x
9,151
9,145
4.7x
Ministry LTE Liability
Total Net Debt
SSNs
• Ministry LTE liability decrease due to
• Derivatives and other increase
mainly due to the non-cash increase
in Intangible Assets, related to the
contract with Terna; net of the impact
of Terna NFI decreases by
approximately €140 mln
Cash Net Debt
Interest Accrued
Fees to be amortized
Derivatives MTM
EBITDA
NFI WAHF Group (vs. third parties) / EBITDA at 5.4x
9,098
185
(299)
167
8,852
217
(240)
315
1,944
18
Optimized Debt Maturity Profile
€ mln
2,678
€81 mln LTE liability to
Government due in
October was pre-paid in
May 2013
3,216
81
81
2013
2014
TLA
Senior Secured Notes 2018
Senior Secured Rate Notes 2020
2,015
425
150
81
340
2015
2016
2017
TLB
LTE Liability to Italian State
2018
2019
2020
HY 2017
Senior Secured Floating Rate Notes
Notional amounts. USD tranche has been converted at CCS EUR/USD Exchange Rate
19
Thank you
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