Deutsche Bank European Leveraged Finance Conference. London - June 14, 2012

Transcription

1 Deutsche Bank European Leveraged Finance Conference London - June 14, 2012

2 WIND in a Snapshot 2011 Revenues: 5,570 million 2011 EBITDA: 2,120 million Mobile 73% Mobile 86% Fixed-line 27% 1.0% Revenue growth YoY Fixed-line 14% 2011 EBITDA Margin: 38.1% (Mobile at 44.6%) Third largest mobile operator in Italy after the two incumbents with a market share of 22.8%* and more than 21 customers* Second largest Fixed-line voice and Broadband operator in Italy with more than 3.18 million voice customers* and more than 2.21 million broadband customers* Consistently outperforming the market Employees* fully committed to WIND success A full line service offering Consumer SME/SOHO Business Mobile: 21.1 mln cutomers* Fixed-line (voice & BB): 3.18 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 the end of Q

3 Italy 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; Unemployment rate in youth segment (15-24) is currently at 35.9% -5.2 Deflationary pressure on Communications services in counter tendency vs. other sectors, trend confirmed also in E 2013E Consumer Price Index Uncertain political scenario with technical government and fragmented political parties Unemployment Rate Housing Transportation CPI Food Items Healthcare (%) Communications E 2013E Sources: Banca d'italia, ISTAT, Confindustria, IMF, OECD, Italian Government s Relazione previsionale e programmatica, Eurostat 3

4 Market Dynamics and Competitive Positioning Fixed / Internet Broadband Voice Voice Mobile Mobile Broadband (MVNO) (MVNO) (MVNO) (MVNO) Trends All operators shifting to integrated/convergent services Scale is relevant Potential consolidation in industry Mobile Low handset subsidy (excluding H3G) Mostly pre-paid Short customer pay-back period Highest margin in western Europe Fixed Low PC penetration and literacy No cable operators Ongoing debate on NGN/Fibre roll-out 4

5 WIND Strengthening its Positioning in the Market Mobile Market Share (on SIM) (1) Expected Market Evolution % 22.0% 22.8% 22.8% 10.0% 10.0% 9.9% 10.0% 34.0% 33.8% 32.4% 32.3% Fixed voice market expected to decrease Fixed data market forecast to increase 35.1% 34.2% 34.9% 34.9% Q Fixed Broadband Market Share (1) Mobile voice market declining mainly due to Mobile Termination Rate glide path (expected impact on WIND in 2012 are approximately million of revenues and 13.2% 14.4% 15.8% 16.3% 7.5% 6.9% 6.4% 6.2% 13.2% 12.9% 11.8% 12.2% 9.7% 11.9% 13.1% 12.8% Others approximately - 80/100 million of EBITDA) Mobile data expected to deliver substantial growth (LTE) 56.4% 53.9% 52.9% 52.4% Q (1) Internal sources; Mobile market excluding MVNO (2) Fixed Service Revenue excludes wholesale 5

6 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 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 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% 7,594 63% 7% 9% 11% 11% 24% 20% 18% 18% 10% 9% 8% 8% Q POS * National Distributor Large Retail Dealer Franchising + Own shops 6

7 WIND Strategy

8 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 8

9 Mobile Consumer Focus on High Value Customers and Up-selling to Existing Customers Core Offer Pre-paid A clear, simple and transparent approach to the market based on option plans concept Leverage on off-net options (Noi Tutti family) to attract new customers from competitors Push on-net portfolio offer (Noi Wind family) to extend Wind community 75% of customer base has at least one option plan Maintaining leadership position in the ethnic segment CB reached 657K as of the end of March 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 Post-paid Customer Base (mln) Q Post-paid Consumer CB (thousands) Q

10 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. F2F calls ADSL unlimited All Inclusive L Unlimited F2F calls 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 NoLimit Unlimited F2F calls ADSL pay per use Harmonization of look and feel between WIND and Infostrada brands Low Low Calling usage High Infostrada Offer Drivers Net Acquisition Consumer 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 Reached 20% of sales delivered by WIND s shops in 3 years +40% 10

11 Corporate Focus on High Value Customers and Up-selling to Existing Customers Corporate Market value Strategic Drivers Business Results Total TLC Revenues (in EUR million) 3,564 (33%) Convergence Quality of Service (i.e., dedicated support structures and SLAs) Micro & SME Revenue Growth 2011 vs % Enterprise SME Managed services (e.g., unified communication, security, energy management) WIND (5%) Market 7,273 (67%) ICT Applications Mobile app store Corporate SIMs CB Growth 2011 vs Microbusiness Collaborative CRM 22% WIND s market share in Corporate segment is below its share in Consumer segment representing a very interesting growth opportunity Cloud Services: Iaas/Saas WIND 7% Market As of the end of

12 Surf the Broadband Wave in Mobile and Fixed Mobile Focus on Mobile Internet ( mln) Broadband Revenues +40.1% Broadband Customers (thousands) +12.4% 4,027 4,525 Q Q Broadband Revenues ( mln) +8.5% Q Q Q Q Fixed Broadband Customers (thousands) 2, % 2,211 Q Q 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 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 Available in 2013 Option available in

14 14 Q Financial Performance

15 Revenue and EBITDA Performance Total Revenues EBITDA / Margin ( mln) -0.3% 1,351 1, Other revenues + CPE ( mln/%) 36.8% 36.2% % 487 1, % 1,281 TLC service revenues Q Q Q Q Total revenues in Q stable over Q with service revenues down 0.6% due to the mobile interconnection cut in July 11 coupled with lower pay-per-use traffic in the fixed-line driven by competitive pressure and economic slowdown. Excluding the MTR impact revenues grow 3% EBITDA declining -1.9% in Q mainly driven by a decrease in fixed EBITDA as a result of increase in commercial opex and in bad debt 15

16 Mobile Financials ( mln/%) Total Revenues ( mln) % Incoming rev % 132 TLC service rev. outgoing +2.8% Q Q EBITDA / Margin 43.7% 44.0% -0.4% Other rev. + CPE TLC service rev. stable Total mobile revenues in Q grow +0.1% over Q with stable mobile TLC service revenues: Solid performance in Internet & data revenues (+19.9%) as a result of strong growth in both mobile Internet (+40.1%) and traditional data (+13.5%) Decline in voice revenues driven mainly by reduction of incoming revenues due to 26% cut in mobile termination rate in July 2011 Underlying mobile TLC service revenues, net of incoming revenues, grow 2.8% EBITDA in Q stable at 430 million mainly driven by flat service revenues coupled with control on costs Solid 43.7% EBITDA margin Q Q

17 Fixed-line Financials Fixed Total Revenues ( mln) -1.6% % 348 Q Q Other rev. + CPE TLC service rev. Fixed-line total revenues decline 1.6% in Q driven by lower service revenues, down 1.9%, 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 ( mln/%) Fixed EBITDA / Margin 17.6% 15.8% % 57 EBITDA declines 12.1% in Q over Q as a result of increase in commercial opex, mainly tied to phasing of advertising expenditure in Q1 2012, and increase in bad debt due to lengthening of collection periods Q Q Unbundling of maintenance cost from LLU fee approved 17

18 P&L Highlights ( mln) Q Q Change % Revenue 1,313 1,322 (0.6)% Other revenue % Total Revenue 1,346 1,351 (0.3)% EBITDA (1.9)% D&A (270) (232) (16.2)% EBIT (17.8)% Financial Income and expenses (220) (194) (13.2)% EBT (3) 70 n.m. Income Tax (38) (50) 24.3% Profit/(Loss) from discontinued operations 0 5 n.m. Net result (40) 25 n.m. Q EBIT trend reflects the marginal decline in EBITDA coupled with impact of higher D&A charges in relation to the growing investments made over last 3 years Q net loss of 40 million vs. net profit of 25 million in Q1 2011; Q loss mainly driven by decline in EBIT coupled with higher financial expense and non-deductible interest costs 18

19 Capitalisation ( mln) As of December 31, 2010 As of December 31, 2011 As of March 31, 2012 Mar 31, 2012/ LTM EBITDA proforma Cash and Equivalents (406) (395) (418) (0.2x) Bank Loan 3, ,294 3, x Bridge Loan (LTE) x Total Bank Debt 2,991 3,396 3, x Senior Secured Notes ,689 2,722 2, x Total Bank Loan + SSN 5,680 6,118 6, x Senior Notes ,793 2,845 2, x Ministry LTE Liability x Financial Receivables (144) (150) (151) (0.1x) Derivatives x Total Net Debt 8,415 9,346 9, x Cash Net Debt 8,459 9,337 9,245 Interest Accrued Fees to be amortized (301) (305) (297) Derivatives MTM LTM EBITDA 2,111 NFI WAHF Group (vs. third parties) / EBITDA LTM at 4.9x 19

20 Q Refinancing Enhanced liquidity and debt maturity profile Repayment of 500m TLA amortisation over Improved liquidity profile Leverage neutral transaction Net leverage unchanged (4.4x net financial indebtedness) Reduction of gross debt without affecting the financial flexibility of the Company Reduction in average cost of debt Benefit primarily from use of cash on balance sheet to reduce the gross indebtedness (Bridge Loan and TLA) 20

21 Debt Maturity Profile Pro-forma for the effect of the refinancing occurred April 2012 mln 2,678 * ,015 2, TLA TLB HY 2017 Senior Secured Notes TAP Senior Secured Notes LTE Term Loan LTE Liability to Italian State Notional amounts * LTE Bridge Loan, expiring in October 2012, might be transformed in a 2018 Term Loan, at the option of the borrower 21

22 Thank You! Q. & A. 22