Deutsche Bank 2012 Leveraged Finance Conference

Transcription

1 Deutsche Bank 2012 Leveraged Finance Conference Phoenix - October 11 th, 2012

2 WIND in a Snapshot 2011 Revenues: 5,570 million 2011 EBITDA: 2,120 million Mobile 73% Mobile 86% Fixed-line 27% Fixed-line 14% 1.0% Revenue growth YoY 2011 EBITDA Margin: 38.1% (Mobile at 44.6%) Third largest mobile operator in Italy after the two incumbents with a market share of 23.0%* Second largest Fixed-line voice and Broadband operator in Italy Consistently outperforming the market employees* fully committed to WIND s success A full line service offering Consumer SME/SOHO Business Mobile: 21.2 mln customers* Fixed-line (voice & BB): 3.19 mln cust.* Convergent All 2011 financial data are pro-forma for the spin-off of certain assets as part of the VimpelCom - Wind Telecom transaction * As of June 30,

3 Italian Competitive Landscape Fixed / Internet Voice Broadband Mobile Broadband Mobile Voice Telecom Italia matching Wind s pricing in consumer Vodafone focused on HV postpaid, first to introduce unlimited bundles BIP Mobile new MVNO launch All operators moved towards integrated / convergent services Potential consolidation in industry (MVNO) (MVNO) The penetration of smart-phones (excl. other devices such as dongles) in WIND s customer base is approximately 21%. The smart-phone penetration on customer base in Italy is 24%. (MVNO) (MVNO) Mobile churn increase for all operators due to faster MNP process 3

4 Regulatory Scenario Italian MTR glide path ( cents) Mobile Fixed LLU Flexibility approved by Parliament in April 2012 Operators can opt to acquire corrective maintenance services also from third-party companies other than TI; Fibre lug-10 gen-11 lug-11 gen-12 lug-12 gen-13 lug-13 gen-14 TIM & Vodafone WIND H3G Expected MTR impact on WIND in 2012 is approximately million of revenues and approximately - 80/100 million of EBITDA International Roaming caps passed in the EU Parliament NGAN regulatory detailed framework under consultation Strong pressure by EU incumbents to weaken NGAN and copper rulings to facilitate new investments and to adopt hybrid solutions such as Vectoring VDSL EU commission and Italian Government interested in pushing fibre investments to fulfill Digital Agenda promises and revamp economy 4

5 Italian Macro Scenario GDP Trend Sharp GDP decline in 2009 followed by sluggish growth in 2010 and 2011, GDP expected to decline in 2012 Unemployment rate expected to increase in 2012/2013; in youth segment (15-24) is currently at 36.3% Deflationary pressure on Communications services in counter tendency vs. other sectors, trend confirmed also in E 2013E Uncertain political scenario with technical government and fragmented political parties Signs of more prudent approach to out of bundle usage Consumer Price Index Unemployment Rate Housing Transportation CPI Food Items Healthcare 10.7% as of August 2012 Communications Sources: Banca d'italia, ISTAT, Confindustria, IMF, OECD, Italian Government s Relazione previsionale e programmatica, Eurostat 5

6 WIND Strengthening its Positioning in the Market Mobile Market Share (on SIM) (1) Fixed Broadband Market Share (1) 20.9% 22.0% 22.8% 23.0% 13.2% 14.4% 15.8% 16.6% 10.0% 10.0% 9.9% 10.0% 7.5% 6.9% 6.4% 6.2% 13.2% 12.9% 11.8% 12.4% Others 34.0% 33.8% 32.4% 32.1% 9.7% 11.9% 13.1% 12.7% 35.1% 34.2% 34.9% 34.9% 56.4% 53.9% 52.9% 52.2% H H (1) Internal sources; Mobile market excluding MVNO 6

7 Key Drivers of WIND s Success Value for Money Quality of Service Simple and transparent offer Competitive pricing Community Bundle offering Ethnic segment focus Postpaid high-value consumer segment All Inclusive Network Customer Satisfaction leadership Brand Enhancement Sales and Distribution Institutional campaign Più vicini (Closer to you) to enhance the brand values of customer intimacy and being part of a community recently renewed to push on the concept of being clear, comprehensible, transparent WIND has a nationwide sales and distribution footprint Acquisition in 2011 of a minority stake in SPAL TLC (its main distributor) WIND plans to continue investment in areas where it has limited presence and high growth opportunities 5,450 60% 6,454 62% 7,350 62% 8,046 63% 7% 9% 11% 11% 24% 20% 18% 18% 10% 9% 8% 8% H POS * National Distributor Large Retail Dealer Franchising + Own shops 7

8 WIND Strategy

9 WIND Strategy Evolution onwards On Net Strategy Creating community critical mass Service Quality Growth Building reputation Brand Enhancement and Profitable Growth Good value for money Strategy Evolution Wind s strategy and positioning have evolved from price leader to value for money becoming the smart choice where the offering is always competitive: price + transparency + innovative offerings excellent brand touch points high quality network 9

10 Mobile Consumer Focus on High Value Customers and Up-selling to Existing Customers A clear, simple and transparent approach to the market based on option plans concept Leveraging off-net options (Noi Tutti family) to attract new customers from competitors Push on-net portfolio offer (Noi Wind family) to extend Wind community Extension of the All Inclusive bundle concept to prepaid 75% of customer base has at least one option plan Maintaining leadership position in the ethnic segment Post-paid CB reached 731K as of the end of June 2012 Four All Inclusive bundle offerings including Voice, SMS, Internet browsing and Smartphone Strong performance for SIM only version Loyalty program providing benefits for all customer base Core Offer Pre-paid Post-paid Customer Base (mln) H Post-paid Consumer CB (thousands) H

11 DSL usage Fixed Consumer Focus on High Value Customers and Up-selling to Existing Customers Infostrada Product Portfolio Only Fixed Fixed Optimization High Absolute ADSL Calls pay per use ADSL unlimited All Inclusive 120 min. calls ADSL unlimited All Inclusive L Unlimited F2F calls 30 min. vs. mobile ADSL unlimited All Inclusive XL Unlimited F2F calls 200 min. vs. mobile ADSL unlimited Infostrada products and services increasingly sold in the WIND shops delivering channel synergies Cross-selling with mobile Happy Italy Calls pay per use ADSL pay per use Happy No Limit Unlimited F2F calls ADSL pay per use Harmonization of look and feel between WIND and Infostrada brands Low Low Calling usage High Focus on direct subscribers commercial push Infostrada Offer Drivers Simple and complete portfolio consistent with value for money positioning Focus on 2P offers to leverage ADSL growing demand Single nationwide offering to exploit advertising synergies 11

12 Broadband Surfing the Wave in Mobile and Fixed Mobile Focus on Mobile Internet ( mln) Broadband Revenues +45.0% Broadband Customers (thousands) +10.3% 4,030 4,444 H H Broadband Revenues ( mln) +6.0% H H H H Fixed Broadband Customers (thousands) 2, % 2,236 H H Clear offer segmentation driven by device Smart choice for Mobile Internet browsing Simple portfolio mainly based on Unlimited offers with fair usage policy and no extra cap (first mover in the market) Stimulate WIND customer base in order to increase mobile internet penetration of users 12

13 Network Investing for Growth National Coverage Mobile network GSM network completed: reached 99.8% population coverage with GPRS/EDGE nationwide coverage HSDPA network with 93.6% population coverage at 14.4 Mbps, 21.2 Mbps available in all major Italian cities, development under way of 42.2 Mbps in 7 cities Further expansion of site sharing with main competitors Fixed network 1,449 LLU sites: c. 60% direct population coverage in all major Italian cities Backbone Solid fibre optic backbone, km, supporting both fixed and mobile businesses As of June 30,

14 The 4G/LTE Opportunity Player 800 MHz 900 MHz 1,800 MHz 2,100MHz 2,600 MHz LTE frequency will be available starting from 2013 Awarded 2 blocks in the 800 MHz range and 4 blocks in the 2,600 MHz range The combination of the acquired 4 contiguous 2,600 MHz blocks will allow WIND to exploit the LTE technology to the maximum performance Spectrum parity with the two incumbents Trials will be performed in 2012 LTE handsets still not available CAPEX not expected to change materially as a result of LTE deployment FDD slots won in Sept 2011 auction FDD/TDD slots Auctioned 14

15 15 H Financial Performance

16 Revenue and EBITDA Performance Total Revenues EBITDA / Margin ( mln) 2, % 2, Other revenues + CPE ( mln/%) 37.2% 37.1% 1, % 1,012 2, % 2,580 TLC service revenues H H H12011 H Total revenues in H decline marginally over H with service revenues down 2.1% mainly due to the mobile interconnection cut in July 2011 coupled with lower pay-per-use traffic in fixed-line resulting from competitive pressure and economic slowdown. Excluding the impact of MTR Total Revenues grow 3% EBITDA declining slightly over H with Q EBITDA stable YoY partially offsetting the decline shown in Q1. EBITDA margin remains stable YoY at a solid 37.1%, 16

17 Revenues Mobile Revenues ( mln) 2, % 1, Incoming rev % 272 TLC service rev. outgoing +1.5% H H Fixed Revenues ( mln) -1.1% % H H Other rev. + CPE TLC service rev. -1.6% Other rev. + CPE TLC service rev. Total mobile revenues in H decline marginally (-0.6%) over H as a combined effect of: Solid performance in Internet & data revenues (+19.7%) as a result of strong growth in both mobile Internet (+45.0%) and traditional data (+11.7%) Decline in voice revenues driven mainly by reduction of incoming revenues due to 26% cut in mobile termination rate in July 2011 Fixed-line total revenues decline 1.1% in H driven by lower service revenues, down 3.5%, mainly due to increased penetration of promotions in customer base and lower pay-per-use traffic and prices driven by competitive pressure and economic slowdown 17

18 Capitalisation ( mln) As of December 31, 2011 As of March 31, 2012 As of June 30, 2012 Jun 30, 2012/ LTM EBITDA proforma Cash and Equivalents (395) (418) (143) (0.2x) Bank Loan 3,294 3,315 2, x Bridge Loan (LTE) x Total Bank Debt 3,396 3,398 2, x Senior Secured Notes ,722 2,743 3, x Total Bank Loan + SSN 6,118 6,141 6, x Senior Notes ,845 2,718 2, x Ministry LTE Liability x Financial Receivables (150) (151) (153) (0.1x) Derivatives x Total Net Debt 9,346 9,285 9, x Cash Net Debt 9,337 9,245 9,418 Interest Accrued Fees to be amortized (305) (297) (321) Derivatives MTM LTM EBITDA 2,109 NFI WAHF Group (vs. third parties) / EBITDA LTM at 4.9x 18

19 Debt Maturity Profile Pro-forma for 250 mln LTE Bridge Loan repayment on September 27 th 2012 ( mln) TLA TLB HY 2017 Senior Secured Notes TAP Senior Secured Notes LTE Liability to Italian State Notional amounts 19

20 Thank You! Q & A 20