Telecom Italia Group CARLO BUORA. Executive Deputy Chairman

Transcription

1 Telecom Italia Group CARLO BUORA Executive Deputy Chairman

2 Safe Harbour This presentation contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of the Company with respect to the customer base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the Company's activities and strategies. Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward looking statements as a result of various factors. Analysts and investors are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation. Telecom Italia Spa undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telecom Italia Spa business or acquisition strategy or to reflect the occurrence of unanticipated events. Analysts and investors are encouraged to consult the Company's Annual Report on Form 20-F as well as periodic filings made on Form 6-K, which are on file with the United States Securities and Exchange Commission, which set out certain factors that could cause actual results to be materially different from the forward-looking statements contained herein. 1

3 Agenda 2006 fact sheet Telecom Italia s management team Current positioning and strategic evolution Financial priorities 2

4 Since our 2006 Investor Day In the last 12 months we have: Faced relevant structural discontinuities and market turmoil, still our customers have awarded us their loyalty, confirming our leadership in the domestic market Achieved positive results in our European broadband and Brazilian mobile Evolved our organizational model focusing on business segments and flexibility Totaled 0.9 bln opex and 0.5 bln capex savings reinvested in our retention strategy 3

5 Telecom Italia Group 2006 financial results Bln Revenues Reported EBITDA Reported EBITDA Margin 2006 Int.l % % % % 41.1% 21.9% 44.8% Growing YoY contribution from International: Revenues: +4pp reported and +3pp organic EBITDA margin: +7pp reported and + 6.4pp organic ΔYoY Rep. ΔYoY Org % + 2.9% + 2.7% + 0.9% -0.7pp -0.9pp TI Group: EBIT ~stable at 7.4 bln Net Income at 3.0 bln 4

7 TI Group new structure: units focus on business segments and operating flexibility NOME CARLO COGNOME BUORA Fixed/BB Top Client & ICT International (Brazil, European BB) Focused on specific market/customer segments Razionalization focused on support and control Group Functions Technology Integrated infrastructures and platforms management and development Field Services Customer Services end-to-end monitoring and enhancement Content Competence Center TI Media will act as Group competence center on multiplatform (IPTV, DVB-H, internet portal, DTT, Free-to-air) content 6

9 Market trend and competitive scenario Market trend Market trend Pure TLC market is slightly increasing due to the rise in and broadband market Margins erosion due to price competition and technological discontinuities Opportunities for Pure TLC Operators in adjacent diluitive markets (eg. pay-tv, ICT) TLC fragmented sector under pressure from supplier s consolidation and new global player expansion Local Regulatory Authorities future decision to influence TLC s industry evolution (i.e.: NGN, Net Neutrality) Competitors scenario Maintaining domestic core business TI Group strategic guidelines Focus on the core business Growth in innovative/adjacent markets Push on international businesses Growth in international emerging markets and in adjacent markets (eg. pay-tv, ICT) Industrial alliances to achieve scale Negotiation with Local Regulatory Authorities on network access transparency and evolution (NGN) 8

10 TI Group strategic guidelines Adjacent market development (media/content, IT services) to defend domestic market positioning Int l BB Brazil International Growth reinforcing positioning in South America and Europe (still diluitive in Group margins) ICT services Market attractiveness IPTV and Contents Market value Growth Competitive positioning Fixed and Broadband Maintaining leadership on domestic core business defending customer base and supporting profitability 9

11 Agenda 2006 fact sheet Telecom Italia s management team Current positioning and strategic evolution business International business Financial priorities 10

12 Leadership in domestic core business Defending Fixed customer base and sustaining traffic market share through retention campaigns, higher BB penetration Int l BB Brazil and full development of 2-play (Voip: >3 mln customers in 09) and 3-play (700 K clients in 09) Top client ICT IPTV and Contents Fixed and Broadband Maintaining market share shifting from a volume to a value strategy based on innovation leadership (3G-high speed) enabling interactive VAS development (>25% VAS on Service Revenues in 09) Enhancing perceived customer services quality through the development of new and premium services differentiated by customers 11

13 BB integrated infrastructure and platforms development NOME CARLO COGNOME BUORA Int l BB Brazil TI Group has planned investments in: Development of Fixed- Broadband infrastructures Enabling new market services: (innovative contents distribution, new interactive VAS, ICT services) to retain customer base and increase ARPU Top client ICT IPTV and Contents Fixed and Broadband Platforms to support content distribution ICT and convergent services Ultrabroadband networks: selected and market driven NGN2/VDSL2 network development Increasing quality of services Efficiency: Cost/Capex reduction for maintenance, provisioning and assurance Elimination of Digital Divide 12

14 Growth in adjacent markets: ICT ICT offering for Business customers Top client ICT IPTV and Contents Int l BB Brazil System initiatives (e.g. Healthcare, e- Government) P.A. Large corporate SME/SoHo SME Custom Projects leveraging on partnership Standard solutions based innovative business models Further development area Fixed and Broadband Keys drivers New ICT distribution platforms Partnerships with top Int l and national IT players Integration of TI s assets operating on IT market 13

15 Agenda 2006 fact sheet Telecom Italia s management team Current positioning and strategic evolution business International business Financial priorities 14

16 : Evolution of TI positioning 60% % International development 40% 20% 40% 20% 0% 20% 40% 60% 80% 0% 20% 40% 60% 80% Customer on emerging markets International contribution Volume 34% of customer base 48% of customer base Value 16% Group Revenues 9% Group EBITDA ~30% Group Revenues ~24% Group EBITDA 15

17 TI international strategic guidelines: European broadband Develop high potential incremental business leveraging on established presence Int l BB Brazil Germany: AOL integration to consolidate and increase market positioning, improve profitability and cash flow Top client ICT IPTV and Contents Fixed and Broadband France: industrial turnaround and achieve sustainable scale The Netherlands:rationalize 16

18 TI international strategic guidelines: south American footprint Brazil Top client ICT IPTV and Contents Int l BB Brazil Fixed and Broadband Consolidate positioning of premium mobile operator maintaining leadership in market growth, revenue share and profitability Enter in fixed/bb market leveraging on TIM Brasil brand with fixed-mobile substitution and convergent offer Argentina Telecom Argentina: assumption of consolidation as of 2009 Increasing value in a fast growing market leveraging on the implementation of a Fixed- integrated plug & play model 17

20 Financial Priorities Telecom Italia s deleveraging process is a priority Financial discipline Net Debt/EBITDA < 3x Operating free cash flow will finance: 1. Investments in organic growth 2. Interests/ Debt/ Taxes 3. Shareholders remuneration April 2007 dividend in line with the previous year: 0.14 /ordinary share and savings shares at /savings share 19