Telecom Italia S.p.A. (TIIAY) Q4 2022 Earnings Call Transcript

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Telecom Italia S.p.A. (OTCPK:TIIAY) Q4 2022 Earnings Conference Call February 15, 2023 5:00 AM ET

Company Participants

Manuela Carra - Head-Investor Relations

Pietro Labriola - Chief Executive Officer

Adrian Calaza - Chief Financial Officer

Elio Schiavo - Chief Enterprise & Innovative Solutions Officer

Conference Call Participants

Giorgio Tavolini - Intermonte

David Wright - Bank of America

Fabio Pavan - Mediobanca

Luigi Minerva - HSBC

Domenico Ghilotti - Equita

Mathieu Robilliard - Barclays

Sam McHugh - BNP

James Ratzer - New Street Research

Andrea Devita - Banca Akros


Ladies and gentlemen, bully morning, and invited to Telecom Italia Full Year 2022 Preliminary Results and 2023-2025 Plan Conference Call. Manuela Carra, Head of Investor Relations, will present nan event.

Manuela Carra

Ladies and gentlemen, bully morning, and invited to TIM's afloat twelvemonth results and strategical scheme presentation. I'm present pinch our CEO, Pietro Labriola; and our CFO, Adrian Calaza, and nan remainder of nan guidance team. Pietro will supply an overview of past year's main achievements, while Adrian will exemplify nan financial results. Pietro will past outline nan 2023-2025 strategical scheme update. A Q&A convention will follow. Pointing retired to you our safe harbor disclaimer connected Page 2, fto maine manus it complete to Pietro. Pietro, nan level is yours.

Pietro Labriola

Thank you, Manuela. Good morning, everyone. After 12 months of difficult work, I'm pleased to coming our results and 3 twelvemonth scheme update. This will beryllium our attraction today. While I understand location is simply a batch of liking connected nan caller developments related to nett costs disposal, you will forgive america if today, we will not make immoderate comments connected this taxable and hold for February 24, erstwhile nan Board will convene to measure and specify adjacent steps connected nan connection arrived.

So let's start. Looking astatine nan institution now compared to nan business past year, I judge that we person much unrecorded than shadows successful beforehand of us, and that nan early of TIM will beryllium amended than its caller past. But earlier talking astir it, let's screen 2022 highlights first. Let's spell to Slide 4. I want to commencement by rewinding nan tape complete nan past 12 months. A twelvemonth ago, ostentation did not exist. Risk free complaint was still successful antagonistic territory. And Italian system astatine nan Wind successful its sales.

However, from February 2022, a series of unpredictable events began, which made this script overmuch much complex. The warfare successful Ukraine caused power prices to rise, triggering an inflationary spiral to which nan marketplace and this point were nary longer used. A crisp summation successful liking rates follow. In March, investors' assurance successful squad reached an all-time low. Since then, nan spotlights person been connected nan imaginable waste of NetCo, specifications of which were provided only during nan Capital Market Day successful July.

But different event, difficult to predict, nan autumn of nan authorities successful July, created further uncertainty. Despite nan highly challenging context, we person continued to activity difficult to amended nan operational capacity and to laic nan instauration for a semipermanent structural turnaround.

Let's springiness immoderate example. We renewed nan guidance team, completed nan integration of Oi successful Brazil. Own nan tenders for nan National Strategic Hub and nan NRRP, signed a commercialized statement pinch Open Fiber successful achromatic areas, launched a caller connection campaign, updated our EBITDA 2022 guidance, sold indirect liking successful INWIT, revised statement pinch Zoom, signed a caller labour agreement, launched nan 10 gigabit commercialized service, participated successful nan nationalist consultation of 2023 wholesale rates, group up nan process to make TIM Enterprise ineligible entity, met 2022 NRRP milestones and FiberCop rollout targets, and I tin proceed for hours. But acknowledgment to these work, nan capacity some successful Brazil and successful Italy has sequentially improved quarter-by-quarter. And today, we tin yet coming results supra nan afloat twelvemonth guidance connected each metrics.

Before moving to nan adjacent slide, I person 1 further message. Today, we judge TIM is much reliable than it was 1 twelvemonth ago. And we want to proceed regaining investor confidence. The successful placement of nan enslaved successful January pinch nan request 2.5 times nan offer, [indiscernible] that nan marketplace is starting to judge successful our company. For each of us, this is simply a very important result, but we support pushing.

Let's move to Slide 5. Building nan caller squad is simply a agelong journey. 2022 has been nan first step. Now we request to transportation connected what we started. We are convinced that nan action we person implemented truthful acold are working. Therefore, 2023-2025 scheme will beryllium successful afloat continuity pinch nan strategical pillars we outlined astatine nan Capital Market Day, thing not accustomed for our institution successful nan past.

The first rule is to negociate each of nan 4 entities independently pinch its ain group of priorities arsenic they run successful chopped markets and look different competitory dynamics. For TIM consumer, nan extremity is to execute apical statement stabilization and past restart maturation done high-quality positioning, but ever keeping an oculus connected nan profitability. TIM Enterprise is simply a marketplace leader successful a ample and increasing ICT market. The privilege is to adopt an integrated operating exemplary to summation efficiency.

NetCo is undergoing a displacement to next-generation entree exertion connected a ground of a clear return connected finance and not astatine immoderate cost. TIM Brazil will proceed nan maturation communicative arsenic nan next-generation telco, but ever expanding nan rate generation. Driving ratio and productivity is nan 2nd priority. We will heavy dive connected this successful nan 1 of nan adjacent slides. Revamping TIM's domiciled successful nan manufacture is simply a 3rd pillar. On this, we person a batch to opportunity arsenic I will show you shortly.

Capturing caller maturation opportunities is nan 4th priority. Needless to say, nan ambition for TIM Enterprise is to proceed to turn faster than nan market. However, we spot opportunities besides successful nan different segment. Last but not least, nan delaying scheme let america to prosecute strategical options to structurally deleverage nan group to beryllium fresh for a marketplace consolidation that whitethorn happen, while keeping a strict financial discipline. Delayering is so our 5th privilege and astir apt nan astir important successful nan short-term.

Slide 6. Let maine now springiness a high-level update connected each of nan 4 entities. And successful nan pursuing slides, we will dive connected 2022 KPIs and financials. For TIM Consumer, nan volume-to-value strategy is ongoing. New measures to summation nan rationality of nan marketplace had been taken by america and by astir of our competitors. At TIM, we person started to selectively reprice nan customer base, and much recently, we person introduced a CPI-linked system successful nan unit contract. The fees value revision will beryllium connected April 1, 2024, pinch reference to nan ostentation recorded successful 2023. This is thing that could beryllium imaginable conscionable 1 twelvemonth ago.

The migration from copper to fibre is besides ongoing pinch TIM having now nan highest marketplace stock successful FTTH. One twelvemonth ago, it was wholly nan opposite. In nan meanwhile, we are restructuring our costs base. 2022 saw TIM Enterprise strengthening its leadership. Service gross grew 10.6% year-over-year, 2 times much than nan market, and this was nan existent challenge. On cloud, which is nan main maturation driver, it is worthy mentioning that nan National Strategic Hub entered nan implementation shape successful Q4, arsenic we signed nan first contracts and started to accrue revenues.

In nan meantime, we are pushing connected innovative ICT services and precocious connectivity. NetCo's FTTH rollout is connected way astatine 32% sum of method units astatine nan twelvemonth end. TIM Brazil is over-delivering connected maturation targets, benefiting from nan marketplace consolidation. The attraction is connected strengthening nan halfway and going beyond connectivity pinch B2B and IoT verticals, a caller business for integer services.

In 2022, TIM Consumer full revenues declined 9% year-over-year, and work revenues were down 7% year-over-year. We spot a amended trajectory successful Q4. Q4 wide antagonistic nett adds were astir 25% little compared to nan aforesaid 4th of 2021. In mobile, mobile number portability inclination is steadily improving and statement losses are besides down year-over-year. Churn improved connected a afloat twelvemonth basis, some successful fixed and mobile, notwithstanding price-ups.

TIM Enterprise full revenues accrued 8% year-over-year and work gross 11%, a maturation doubly nan market. The capacity is driven by Cloud, Security and Internet of Things, which much than compensate for nan humble simplification successful nan different business line. In afloat twelvemonth 2022, ICT services generated 58% of full revenues compared to 56% successful 2021.

Let's move to Slide 8. In 2022, NetCo full revenues declined 4% year-over-year, and besides work gross were down 4% year-over-year. The FTTH rollout is progressing and reached 32% sum of method units astatine nan extremity of nan twelvemonth pinch a gait which is 4 times faster than astatine nan opening of nan year. On nan rollout, each nan targets person been reached, including nan ones envisaged by FiberCop. TIM Brazil full revenues and work gross accrued 19% year-over-year. There are respective drivers. To sanction conscionable a few, I punctual nan ongoing migration of Oi's 16 cardinal mobile customers and nan rationality of nan marketplace pinch each players pricing up. On top, TIM Brazil 5G sum arrived successful each authorities capitals pinch a number of antennas that is higher than its peers combined. This create caller commercialized opportunities.

Let's now move to Slide 9 for a attraction connected costs transformation. The translator scheme is connected track. In 2022, pinch a somewhat amended than nan EUR300 cardinal OpEx redeeming of which astir EUR100 cardinal of labour costs and much than EUR200 cardinal of outer OpEx. In 2023, we will raise nan barroom pinch EUR1.1 cardinal target redeeming versus nan inertial plan. Here, you spot nan divided betwixt OpEx connected nan 1 manus and rate costs and CapEx connected nan other. The erstwhile will magnitude to EUR0.7 billion, of which astir 50% is secured, besides acknowledgment to nan description statement we signed past summer.

The extremity crippled is to rethink nan full operating exemplary to execute a much sustainable costs building pinch astir EUR1.5 cardinal rate costs savings successful 2024 vis-a-vis 2021 addressable baseline. I want to accent that nan group CapEx letter cover will stay level astatine astir EUR4 cardinal per twelvemonth successful 2023-2025, of which astir EUR3.1 cardinal astatine home level. Hence, we corroborate that we will sorb nan other CapEx related to nan NRRP arsenic we expect astatine nan Capital Market Day.

Let's move to Slide 10. In nan past 12 months, we person been very vocal to summation nan consciousness of policymakers and nan wide nationalist connected circumstantial issues nan manufacture is facing successful Italy. Just a fewer information points. Italy pinch a organization of 60 cardinal has 5 MNOs, nan U.S. pinch a organization of 330 cardinal has 3 MNOs, and Brazil pinch 200 cardinal has three. In nan past 3 years, telecommunication finance person been 2 times, 3 times higher than those of utilities. EUR22 cardinal for TFCs, EUR10 cardinal for electricity, and EUR7 cardinal for gas. And TIM successful position of CapEx is nan 2nd spender successful Italy, sloppy of nan industry.

We must person nan correct superior remuneration recovering inflation. This is simply a must. In nan past 10 years, information depletion has accrued from 16 gigabit to 191 gigabit per period per broadband line. The apical 5 OTTs make much than 50% of nan information postulation without remunerating nan infrastructures. I could transportation connected reminding that nan costs of 5G spectrum successful Italy has been 1 of nan highest successful nan world that nan electromagnetic limits are 10 times much stringent than successful nan different ample European marketplace aliases that, historically, telecommunication are nan only inferior to show a deflationary value trend.

My connection is that nan knowing of this rumor coming is much higher than before, and nan authorities is actively addressing astir of them. Potential measures span from nan inflation-based revision of 2023 wholesale copper and fibre tariffs to nan simplification of VAT, which presently stands astatine 22% arsenic per luxury equipment to nan hold to TLC usability of nan fiscal use assigned to energy-intensive companies and to nan merchandise of limitation of mobile initials. The chat is ongoing. Each of this measurement has reached a different level of maturity. Nonetheless, it is reassuring to spot specified agelong needed attention. We dream thing will happen.

Slide 11. In parallel pinch nan activity we are doing connected nan operation, we are besides making advancement on nan way of worth generation. In nan slide, we item nan main accomplishment for 2022, some successful position of financial discipline, translator and delayering of nan 4 entities. Among these, I conscionable want to constituent retired nan continuous betterment of our liquidity position pinch nan placement of nan EUR850 cardinal enslaved successful January and a caller financing from EIB, which we expect to finalize successful nan first portion of nan year.

Let's move to Chart 12. In this slide, you'll find nan 2022 ESG mean achievements pinch a attraction connected nan 4 entities. ESG is simply a cardinal privilege for nan group and will thrust -- will vessel nan business successful coming years. The ESG scheme characterizes nan activities of each business area. More successful details. With NetCo, our main extremity is to create infrastructure that connection power saving, little CO2 emissions, usage renewable power and beforehand nan digitalization of nan state to nan closure of nan integer divide.

For consumer, we strive for a value of work and physicalization of ESG making it much distinguishable done merchandise and services pinch debased biology effect for sustainable lifestyle. We besides purpose a touch constituent that connection information exemplary successful nan usage of resources and nan renewed commercialized identities that embodies nan worth of inclusion and sustainability. For Enterprise, nan extremity is to thief changing business and nationalist management to get simpler and accessible services for citizens and pinch a little biology impact.

HR is responsible for strengthening each aspects of a sustainable moving environment. We launched a caller smart moving model. Our workplaces stay adjacent connected Friday, bringing important results astatine nan aforesaid clip for nan group wellness and nan environment. We are besides committed to bridging nan gender spread and to skilling and upskilling labor done intensive training campaigns.

Then location are important actions that impact nan sustainability control. We've put successful spot a short and medium-term inducement argumentation connected ESG to focalize nan guidance connected nan sustainability transformation. We person implemented an ESG level that will harvester information pinch task to make integer nan expertise to show nan advancement of ESG project, enabling nan task and ESG impact. We are besides creating a sustainability capacity study that is easier to publication and attraction connected finance to make group understand we are doing successful position of project.

In 2022, we put connected way complete 40 projects to support nan accomplishment of our ESG targets. We've invested successful a strategical business pinch ENI opens to toggle shape our proviso concatenation into sustainable one. On nan infrastructure side, we person carried retired ratio involution that person allowed america to sorb nan expanding power depletion of information center, and acknowledgment to which we person issued power ratio certificate for complete EUR3.8 million. We accrued nan usage of renewable power successful Italy till astir 46%, and successful Brazil 100%.

We person fixed a awesome impulse to nan recycling and resale of merchandise and worldly pinch nan valorization for down EUR2 cardinal of revenues and important simplification of nan West is, acknowledgment to nan monitoring done nan target of a information system ratio.

Let maine now manus it complete to Adrian for 2022 financial results. Thank you, Adrian.

Adrian Calaza

Thank you, Pietro, and bully morning, everyone. In Slide 14, you person a summary of our ain main group financials. As you tin see, each nan metrics were amended than nan guidance pinch work revenues and EBITDA trends improving sequentially successful Q4 versus Q3 arsenic expected. In particular, group work revenues were affirmative astatine positive 3.6% year-on-year successful Q4 from 3.0% successful Q3.

In nan afloat twelvemonth 2022, group work revenues stood astatine 1.3% year-on-year, beating nan debased single-digit alteration 2022 guidance group astatine nan opening of nan year. Group EBITDA turned retired affirmative astatine positive 2.7% year-on-year successful Q4 from minus 6.5% successful Q3. In nan afloat twelvemonth 2022, group EBITDA stood astatine minus 6.7% year-on-year, reaching nan precocious portion of our precocious single-digit alteration 2022 guidance that we revised upwards successful August.

Domestic afloat twelvemonth EBITDA would person posted a minus 4.6% nett of nan non-repeatable items of 2021. CapEx was besides amended than guidance astatine astir EUR4.0 cardinal pinch home a touch amended astir EUR3.1 billion. As Pietro mentioned, we worked difficult during this twelvemonth to amended our results compared to our ain projections. And we did it contempt nan very different macro situation we encountered versus nan expectations astatine nan opening of nan year.

Equity free rate travel is astir zero successful nan year, besides amended than our ain expectations. I punctual you that equity free rate travel was negatively affected by nan DAZN one-off costs of EUR300 million. Net indebtedness aft lease accrued during nan year, arsenic anticipated, chiefly for 2022 circumstantial one-off payments, successful particular, nan EUR1.2 cardinal costs related to nan Oi acquisition, and nan EUR2.2 cardinal rate retired for nan 5G licenses, EUR1.7 cardinal successful Italy, and EUR0.5 successful Brazil. On nan affirmative side, we cashed successful EUR1.2 cardinal for INWIT liking disposal.

Let's now person a amended look astatine nan quarterly consequence trends successful nan coming slides. As you tin see, group work revenues grew 3.6% year-on-year successful nan 4th quarter, a touch amended than successful nan 3rd quarter, acknowledgment to a affirmative publication of Brazil aft our integration, and amended trends astatine nan home level that improved further aft nan 3rd 4th astatine minus 1.6% year-on-year versus 3.5% year-on-year connected nan erstwhile quarter. As I said, afloat twelvemonth was supra our expectations, and we are now aiming astatine stabilizing home business successful 2023 pinch group revenues increasing debased single-digit.

Group EBITDA was backmost to maturation successful nan 4th fourth pinch a affirmative 2.7% year-on-year, improving powerfully versus nan minus 6.5% successful nan 3rd quarter. The main contributor was nan home business that improved to minus 4.2% from nan minus 16.2% successful nan 3rd quarter. Full twelvemonth was successful nan precocious portion of our already revised guidance, and we now want to support nan 4th fourth guidelines besides for 2023 pinch imaginable for home EBITDA to somewhat grow.

Let's now zoom successful nan home trends starting from fixed. Slide 16, fixed work gross were somewhat down minus 0.8% year-on-year successful nan 4th quarter, improving sequentially from minus 3.9% successful Q3 pinch amended trends, particularly successful retail, acknowledgment to nan very affirmative capacity of our ICT business. At nan aforesaid time, world and nationalist wholesale person continued to amended their capacity successful nan 2nd half aft a reliable year-on-year capacity successful nan first half, impacted by non-repeatable transaction successful 2021.

In position of market, 2022 stabilized aft nan maturation successful 2020 and 2021, fueled by vouchers and COVID that supported broadband nett additions and equipment. For these reasons, unit KPIs are weaker, but pinch a important churn containment during nan year, now steadily astir 1% per month, mixed pinch nan historical debased level of delinquency. Price ups person been done successful erstwhile quarters connected our existing customer guidelines pinch churn effect beneath our expectations. Equipment was somewhat affirmative year-on-year aft a beardown deceleration knowledgeable successful erstwhile quarters owed to nan comparability pinch 2021 that was including nan support connected instrumentality from voucher scheme.

Moving to Mobile connected Slide 17. Mobile work revenues were down 1.5%, amended than nan minus 2.2% successful nan erstwhile quarter. Retail reported a antagonistic gross publication coming from nan little customer base. This has been partially compensated by nan affirmative consequence coming from nan wholesale revenues pinch higher roamers and MVNO revenues. In position of nan marketplace dynamics, MNP was akin to Q3, notwithstanding immoderate selective value increases done successful nan caller months. This resulted successful a sequentially ARPU maturation quarter-on-quarter this year, and we are reiterating this attack arsenic a bully believe besides to counterbalance nan caller inflationary unit and further actions are apt to travel successful nan adjacent months.

On Slide 18, we person specifications connected OpEx that were broadly level year-on-year successful 2022, but declining minus 2% connected a rate view. More specifically, adaptable costs were down year-on-year, chiefly for little interconnection and instrumentality sold, partially compensated by higher COGS related to ICT growth. Commercial costs were up 1%, but they would person been down, excluding nan hold of customer useful life past year.

Higher commissioning contented and VAS costs were -- person been compensated by little bad debt, customer guidance and advertising. Industrial costs were up year-on-year owed to higher power and provisioning costs. It is worthy mentioning that power costs was, successful immoderate case, nether control, acknowledgment to our hedging argumentation and measurement containment, somewhat higher versus 2021, but broadly successful statement pinch first expectations contempt nan adverse macro scenario. GNL was besides somewhat higher year-on-year owed to nan ICT revenues growth. Finally, labour costs was down 1% year-on-year driven by solidarity and little FTEs offsetting immoderate adaptable labour costs.

On Slide 19, you person specifications connected TIM Brazil. The institution reported different beardown quarter, mostly beating nan guidance connected each line, and you tin find galore specifications successful nan company's disclosure done past week. Nonetheless, it is important to item nan main achievements of this quarter. The apical statement expanded 21% year-on-year pinch EBITDA increasing astatine 17% aft nan consolidation of Oi numbers astatine nan opening of May.

Definitely, it has been a transformational twelvemonth for our Brazilian portion pinch an important milestones accomplished making it fresh to go nan next-generation telco. But astir apt nan astir important metric is nan EBITDA minus CapEx separator that stood supra 25% connected revenues, nan highest level among its peers successful LATAM. As you tin spot from nan numbers, TIM Brazil is now afloat benefiting from Oi mobile integration and posted a beardown integrated capacity focused connected customers' worth strategy that continues to guidelines off.

In Slide 20, you person specifications connected CapEx. We proceed to put heavy successful infra-broadband web deployment, FTTH and 5G. With circumstantial attraction connected web decommissioning, information centers, improvement and NRRP CapEx. These investments permitted america to beryllium connected way pinch our FTTH rollout that, arsenic mentioned, reached 32% of sum of method units, while exceeding nan mobile scheme target goals successful position of activated layers, some connected 4G and 5G.

Equity free rate travel was affirmative successful nan 4th fourth and allowed america to adjacent nan twelvemonth level. As mentioned, this was achieved, acknowledgment to an betterment connected nan operations, helped besides by nan reversal of nan DTA costs and contempt nan EUR300 cardinal costs for nan DAZN agreement. The alteration successful nett debt, arsenic commented before, was not affected by operational results.

In Slide 21, you tin find a summary of our indebtedness maturities and nan breakdown betwixt fixed and adaptable rates. As anticipated successful nan 3rd quarter, we person worked difficult successful caller weeks to enforce our liquidity position that was already strong. As you tin see, we ended nan twelvemonth pinch astir EUR9 cardinal of liquidity separator that allowed america to screen maturities until 2024.

Importantly, astatine nan extremity of March, you should spot a akin liquidity position to nan 1 shown present for nan twelvemonth extremity 2022, moreover aft nan repayment of EUR1 cardinal enslaved maturity successful January, acknowledgment to nan EUR850 cardinal enslaved issuance, a caller indebtedness from nan European Investment Bank and different financing we are moving on. It is worthy to mention that moreover successful this discourse of precocious liking rates pinch Italian BTP supra 4% from 1% astatine nan opening of 2022. Our full costs of indebtedness sits beneath 4%.

With this, I manus complete to Pietro for nan guidance of nan 2023-2025 plan.

Pietro Labriola

Thanks, Adrian. In position of plan, today, we are giving you conscionable an update pinch nan 2023 guidance and immoderate 2023-2025 scheme sky indication. The strategy remains nan aforesaid successful move continuity pinch nan topics already discussed during our Capital Market Day.

Let maine opportunity that today's affirmative news for nan guidance is that, we are now seeing home business to broadly stabilize nan apical statement for 2023, pinch home EBITDA somewhat growing. I cognize this was already embedded successful nan past year's guidance, but we are pleased to spot it coming now contempt a wholly different and worse macro environment.

Let maine make different remark here. 2022 was up of our expectations. So -- moreover if this 2023-2025 trends were already embedded successful nan past year's guidance, numbers successful absolute position will spell up. This could not beryllium important erstwhile you look astatine nan year-over-year trends, but it is highly important erstwhile you talk astir free rate travel and nett debt.

So coming to nan targets, we are now seeing, group work gross to turn debased single-digit successful 2023. Brazil increasing precocious single-digit and home broadly unchangeable aft six years of decline. We are besides seeing a akin debased single-digit maturation inclination for nan group CAGR 2022-2025. Moving to group EBITDA that is expected to turn mid-single-digit successful 2023, pinch Brazil proceed to turn debased double-digit and home increasing a touch again aft six years of decline.

Group EBITDA CAGR for 2022-2025 is expected to turn likewise astatine nan mid-single-digit pace. In position of CapEx, we are seeing group CapEx astatine astir EUR4 cardinal successful 2023 and to stay astatine this level for 2024 and 2025. Within this, home is expected to beryllium astir EUR3.1 cardinal for each year. This is astir apt nan different news for today. We were capable to accommodate CapEx related to nan NRPP task wrong our 2022 CapEx envelop level. The magnitude of EUR3.1 cardinal astatine home level is gross CapEx, earlier nan refund from NRRP, which will travel successful astir 1 twelvemonth aft nan investment. If we see nan refund by competence, 2023 CapEx will beryllium astir EUR0.5 cardinal little astatine astir EUR2.6 billion. Lastly, we are projecting cumulative equity free rate travel arsenic somewhat affirmative successful nan planned horizon.

Moving to nan home entities connected Slide 24. We are providing an denotation of nan drivers down nan plan. We cannot beryllium much circumstantial present successful position of financial that successful immoderate lawsuit were already presented to you successful July past twelvemonth because, arsenic you each know, we are successful a delicate shape and confidentiality is of nan assets successful specified circumstances. Starting from TIM Consumer, nan scheme envisaged nan pursuing assumption, fixed marketplace increasing somewhat successful position of number of lines driven by fixed assets and ultra-broadband technology, [indiscernible] successful beardown reduction.

Mobile lines declining pinch non-human SIM growing, but still constricted insights and value. Our commercialized strategy will leverage connected immoderate beardown pillars among which best-in-class technology, customer work activity and connection simplification. On top, repricing will touch nan mostly of user and SME customer base, some successful fixed and mobile, arsenic good arsenic CPI-linked adjustments for caller activation and for astir 90% of fixed and mobile customers.

For enterprise, nan scheme is built connected nan pursuing trajectories, maturation supra marketplace successful statement pinch 2022 capacity astatine an expected CAGR of 6%. Here, we'll person nan further use of NSH and NRRP tenders. Improved wide separator driven by master services, reducing customization, vendor consolidation, ostentation betterment and repricing. For NetCo, nan scheme envisaged nan pursuing trajectories. In wholesale, we target to summation nan FTTH customer guidelines by almost 6 times successful 2025 versus 2022, leveraging nan caller FTTH VULA price, co-investment offers and simplifying nan migration from bequest copper to FTTH lines.

We'll proceed to upgrade nan fixed infrastructure, leveraging connected NRRP and FiberCop to maximize nan FTTH coverage, reaching 48% of method units successful 2025. In mobile, we will move towards nan afloat 5G web transformation, targeting 90% organization sum by 2025.

Let's move now to Slide 25. Let's talk astir TIM Brazil. In position of targets, we expect TIM Brazil to turn precocious single-digit successful work gross for 2023 and debased double-digit for EBITDA. CapEx are expected beneath 20% connected revenues pinch EBITDA minus CapEx increasing double-digit and shareholder remuneration to summation arsenic well. In this slide, you tin besides spot 2025 mid-term indication. Last twelvemonth has been transformational for Brazil pinch important achievement, and we judge nan institution will proceed to present precocious levels of profitability, creating worth for its shareholders.

Let's now adjacent pinch ESG target. On ESG, nan targets are successful statement pinch our strategy. We made immoderate accommodation to see nan 2022 performance, and we aligned main target worth to 2025 to guarantee a much homogeneous reading, nett of semipermanent goals. On women activity position, we corroborate nan group target and we leverage connected short, semipermanent inducement connected ESG to push transformation. On IoT & Security, we reported a 20% maturation successful revenues from work and resale. We person retimed nan extremity by entering nan unreality and choosing to attraction only connected gross from services.

At nan end, finally, I want to convey nan guidance squad and each my colleagues, some successful Italy and successful Brazil for nan results achieved that are nan consequence of a awesome teamwork. It is besides not to beryllium undervalued that these results person been reached successful a wholly different scenario. We want to support gaining marketplace spot pinch a transparent attack and by perpetually delivering connected what we promised.

Now, let's commencement nan Q&A session. Thank you.

Question-and-Answer Session


Q&A convention is now open. [Operator Instructions] First mobility comes from Mr. Giorgio Tavolini of Intermonte. Mr. Tavolini, please.

Giorgio Tavolini

Good morning, everyone. Just a mates of questions from my side. The first 1 is connected nan guidance connected nett free rate travel for a somewhat affirmative cumulative equity free rate travel that seems peculiarly conservative. I was wondering if it's related to a faster complaint of nan voluntary redundancies than expected by us. And past nan 2nd 1 is connected KPIs. What was down nan volatile KPI trends successful Q4? Was it owed to a tougher lender title aliases was it a broadside effect of nan -- nan pricing increase, which would impact nan little ARPU customers without worsening of nan mix? Many thanks.

Pietro Labriola

Thank you, Giorgio. Before turning to Adrian astir nan guidance, let's commencement pinch nan KPI. If you separate our marketplace by two, TIM Enterprise and TIM Consumer, and I will commencement -- though much and much to remark each clip distinguishing nan 2 business unit, because are 2 trends that are wholly different. And so, sorry if it takes immoderate minutes to springiness this element, but it is really important. We are going to negociate our institution and our revenues based connected a portfolio of business. Some 1 that trial a higher level of imaginable growth. I utilized to say, well, that it is for illustration a surfer pinch a batch of activity that he tin serve.

On nan different side, we person Andrea, that is managing a marketplace there, that is successful a tougher information wherever -- what we person to do is to go much businesslike and to trim nan washing instrumentality of nan alteration betwixt -- among nan operator. So successful nan lawsuit of value, we have, successful nan past quarter, an summation of income compared to nan different quarter. That is traditionally a seasonality effect that we person astatine nan extremity of nan year. We person been moving besides successful a institution that erstwhile you are astatine nan extremity of nan year, and if you person seen disposable budget, you utilized to spend, that has happened each twelvemonth successful nan company. So this is existent besides successful nan ample corporate. They expect sometimes immoderate projects.

And different important element. We complete execute compared to nan different subordinate successful this marketplace and to nan different benchmark astir Europe. Because arsenic we stated, since past twelvemonth is that, Italy is simply a complete different marketplace and our footprint successful position of penetration successful nationalist administration, penetration successful nan ample conception is -- and our main point, we person 1,500 group successful our income section that are not a liability, are an asset. And each nan main OTTs -- sorry, hyperscalers are looking for business pinch us, because successful this way, they tin summation nan speed.

So connected nan TIM Enterprise, we're overmuch much connected nan ARPU. The complete -- we had an complete capacity pinch TIM Enterprise. We do not expect that will past spell slow down, but you person to ideate that each twelvemonth successful nan 4th quarter, TIM Enterprise will complete perform. This is really important, and again, this is our inclination successful position of growth.

When we move to nan consumer, what's happened that you person besides immoderate seasonality, usually nan 3rd 4th is besides -- ever 1 of nan champion of nan year. Then location are immoderate trends that tin alteration besides based connected nan competitor applicated -- that is not constant. What I mean is not only TIM, but besides different competitors, publically stated successful their telephone pinch nan financial marketplace that nan acquisition model, arsenic is coming is not profitable.

So sometimes erstwhile they person to scope their goal, they tin velocity up. But astatine nan extremity of nan day, nan caller acquisition are not truthful profitable. And truthful past they slow down. But what we cannot expect is that, we will multiply by three, our affirmative nett debt. Today, our goal, besides for 2023, is to proceed to frost nan market, reducing for judge nan effect connected our nett adds, because of our strategies from measurement to value, but doesn't mean that we want to play nan crippled of nan volume. But we don't want to play nan crippled of nan measurement astatine immoderate cost.

Let's retrieve that not only for TIM, and this is really important, but besides for nan different player, nan nonaccomplishment of a caller -- a customer and nan customer base, substituted by a customer from nan acquisition is going to destruct value. I really apologize to you and to nan different colleagues, if I took much clip connected this question, but it was very useful not only to collapsed nan solid here, I'm joking, but besides to authorities successful a clear way, nan constituent of our strategy.

Before to time off nan shape to Adrian to talk astir nan equity free rate flow, fto maine thief you besides to publication immoderate of nan things. Because we gave retired together that is Andrea's, besides because location are immoderate events that will person an economical effect connected nan twelvemonth 1 and a affirmative financial effect connected nan twelvemonth two. The main illustration is each nan CapEx related to nan PNRR. Usually, nan proceeds that will travel from nan PNRR, 70% for nan 1 giga scheme and 90% for nan others will travel pinch 12 months of delay. So to beryllium clear, if I should put, by competence, nan level of CapEx of 2023 should beryllium little of thing adjacent to EUR0.5 cardinal and better, overmuch person to EUR600 cardinal and not EUR500 million. And nan aforesaid for nan different years.

Last but not least, again, but I time off nan shape to Adrian is that, we are improving our operations, we are improving our economics, but it's clear that connected nan financial part, we person to proceed to activity because nan level of indebtedness that we person coming is thing that we person to negociate successful a clever way, because besides nan summation of liking complaint is not helping to toggle shape immoderate we create astatine nan economical level connected nan financial part.

Adrian Calaza

Yes. Thank you, Pietro, and bully morning, everyone. Well, I won't opportunity that this guidance is conservative, astatine nan end, nan equity free rate travel is simply a consequence of each nan main lines of nan operations. And I won't -- I don't deliberation that nan guidance that we gave for work revenues aliases for EBITDA is conservative. If you inquire my colleagues, they will show you that are challenging numbers. But what I tin show you is that astir apt we've been prudent successful position of not considering effects that tin arrive. Pietro discussed nan initiatives that we are having pinch nan authorities for nan industry, not for us, successful particular. There are immoderate circumstantial positives that could arrive.

What I tin show you is that, location are very small downside risk. There could beryllium much upside consequence going forward. So -- and retrieve ever that nan equity for rate travel is effective by immoderate effects that are not connected full control, you person nan effect of nan speech complaint of our assets successful Brazil that tin spell up aliases down. There are different variables that we request to understand erstwhile we spot nan improvement of nan equity for rate flow.

Then peculiarly effects arsenic nan 1 that you were commenting successful position of nan exits that we tin person successful position of labour cost. Yes, these could beryllium an effect. We person immoderate different circumstantial effects. Remember that we still person nan costs for nan DAZN agreement. We person nan CapEx, arsenic Pietro augmented, this twelvemonth for nan NRRP projects and nan proceeds will travel only adjacent year. So again, but we deliberation that nan somewhat affirmative is someway challenging, again, prudent successful position of nan effects that are considered. Hopefully, we tin do amended than that.

Giorgio Tavolini

Many thanks, Adrian and Pietro.

Pietro Labriola

Thank you, Giorgio.


Next mobility comes from Mr. David Wright of Bank of America. Mr. Wright, please.

David Wright

Yes. Thank you truthful much. I'm a small confused connected these CapEx rebates and to what grade your guidance does presume them, doesn't presume them, conscionable possibly I'm a small down nan curve of my colleagues there, but conscionable to understand what -- what is successful nan guidance and what is not?

And past conscionable separately, if I very quickly representation nan statement numbers based connected your guidance -- sorry, your guidance, I'm still seeing a very levered equilibrium expanse moreover by 2025, is simply a deal, a NetCo woody aliases moreover an Enterprise deal, do you consciousness for illustration that is really rather basal to really free TI Group from this leverage challenge?

And I cognize you can't remark connected NetCo, I understand. But immoderate updates connected enterprise, I deliberation you person had stated liking successful nan past, what you're reasoning there? So nan CapEx question, nan indebtedness and endeavor question.

Adrian Calaza

Hi David, I'll reply nan first 1 successful position of CapEx. The guidance that we gave are, these are nan gross CapEx. So, it's truthful what we request to do successful position of deployment successful definite position of ID connected each broadside of nan business. Then nan proceeds you will person it nan pursuing twelvemonth and hence successful wrong nan equity free rate flow, but not considering nan CapEx. CapEx, arsenic you cognize is nan assets that you get for nan Company. So, successful those EUR4 billion, nan proceeds are not considered. If you want to spot a net, you should do EUR4 cardinal little nan -- nan proceeds that will get successful 2024. So, thing astir EUR550 million. But what you spot present are nan gross CapEx.

Pietro Labriola

But conscionable to beryllium clear, and I really admit nan truth that you asked us, truthful it's amended to explain to everybody. Both CapEx and proceeds are successful our numbers. Then arsenic Adrian explained, nan CapEx are nan gross CapEx, truthful nan CapEx of 2023 includes nan CapEx that we walk connected nan PNRR connected nan equity free rate travel of 2024, you person nan refund, -- nan proceed that will refund nan 70% of this CapEx. And nan aforesaid will beryllium 2024 CapEx, our gross and successful 2025, successful nan equity free rate flow, you will spot nan proceed. This is not owed to us, but this is nan system of nan refund of nan PNRR. I dream that now is much clear earlier to move to nan 2nd question

David Wright

So, nan existent nett rebate you deliberation crossed nan planned play could beryllium astir EUR0.5 billion. Is that correct?

Pietro Labriola


David Wright

EUR0.5 cardinal per year, right?

Adrian Calaza

Per year, yes.

Pietro Labriola

Per year.

David Wright

Okay, truthful past nan equity free rate flow?

Adrian Calaza

Sorry, sorry, David. David, sorry, sorry. It's EUR550 cardinal per twelvemonth starting successful 2024. So, you won't person proceeds starting successful 2023.

David Wright

Okay. So, nan equity free rate travel guidance includes EUR1 cardinal rebate. Is that correct?

Adrian Calaza


David Wright

Okay. Can I inquire and because if you're guiding to mid-single-digit EBITDA growth, EBITDA-AL growth, past that's going to present EUR500 million, EUR600 cardinal and you've sewage an further -- you're past delivering an further benignant of EUR1.5 cardinal of CapEx rebate. I'm conscionable trying to understand where, what's disappearing earlier we get to equity free rate travel guidance of somewhat positive.

Adrian Calaza

Clearly you person nan effects that I commented successful nan first -- successful nan first question. You person again each nan effect of our someway labour expenses related to nan layoffs. You person nan evidently wrong nan equity free rate flow, you person nan financial expenses arsenic you tin assume. There will beryllium a different business considering this -- this liking complaint levels and immoderate circumstantial points. We deliberation that we person a very transparent disclosure connected equity free rate travel successful 2022 that you tin presume nan improvement of these effects. So, again it's -- it's a matter of improving. Then, if you comparison these level of equity and free rate travel pinch nan 1 someway embedded successful nan erstwhile plan, we are importantly better. We are -- we are reasoning that these tin -- tin further amended probably, we request to spot nan evolution. What we deliberation is that it's important to nan betterment that we're having successful nan business, past evidently nan equity figures will germinate successful nan aforesaid level.

David Wright

Okay. That is clear. Thank you. And possibly conscionable a speedy mobility connected leverage and Enterprise?

Pietro Labriola

Sorry, David, tin you repeat?

David Wright

Yes, that's clear. Thank you. And past my 2nd mobility and I apologize to my colleagues for taking nan time. Just connected nan absolute of leverage remains very precocious complete nan period. What -- pinch very small rate travel deleverage and immoderate EBITDA growth, but fundamentally a leverage ratio measurement complete 3 times, what is -- you can't remark connected NetCo, but what is nan latest commentary connected a imaginable divestment of Enterprise? Thank you.

Pietro Labriola

Hi David, but I deliberation that we authorities this is nan opening that to person an effective deleverage of nan company, it's clear that immoderate bonzer operation, which will thief for sure. And it's not only a matter of nan leverage, it's besides a matter of strategical option, arsenic I intelligibly stated. This is simply a marketplace that will person a consolidation and to beryllium fresh for this consolidation, we must person a amended leverage condition. So this is portion of what we are discussing. Then it's clear that each nan auction that we mentioned during nan Capital Market Day are connected nan table. We are trying to attack them successful nan astir superior way. We are trying to debar chat and speech connected nan press, astatine slightest successful our possibility, but this is thing that we are confirming since nan opening of 2022.

If we person nan clip instrumentality and we travel backmost successful 2022 successful March, we told precisely that. Now what we told successful 2022 that you person to activity to amended nan operation, that we person to activity to effort to trim successful a important measurement nan indebtedness if we want to person an business and strategical option. One twelvemonth later, we are here, we are not changing what we told 1 twelvemonth ago, and this is an objection successful nan communicative of our company. We are improving our operational KPI. Not everything tin beryllium transformed connected nan financial owed to besides nan alteration of nan environment, if you remember, successful March of 2022, we were facing a complete different scenario.

But contempt that, we were capable to execute our guidance, complete perform, we are continuing to amended nan number, we person a clear knowing astir nan situation. We tin proceed to activity to amended nan operations, but it's clear that if we want to alteration nan floor plan of our institution astatine a definite point, an important deleverage has to beryllium done. About nan authorities to lick nan nett endeavor aliases whatever, we proceed to corroborate our attack that we defined nan 7 of July connected nan Capital Market Day. But I'm not going to disclose specifications because we are successful nan mediate of immoderate negotiation, because it's not maine that state nan truth that KKR put an connection connected nan table. So I deliberation that it's superior for each nan marketplace to not remark that.

David Wright

Thank you truthful much.


Next mobility comes from Mr. Fabio Pavan from Mediobanca. Mr. Pavan, please.

Fabio Pavan

Yes, hello. Thank you for -- for taking my 2 questions. First constituent I would for illustration to talk is simply a follow-up connected what Pietro you conscionable person said, you are referring assemblage consolidation arsenic different CEOs of nan companies progressive successful this space. Do you deliberation thing whitethorn hap already successful nan mid-term, wrong opportunity short-term? And 2nd point, it seems to maine your ambition is to play progressive domiciled successful this imaginable project. Thank you.

Second mobility for you is connected digitalization. It seems to maine you're speeding up connected this pinch an perspective possibly overmuch much oriented to redeeming acknowledgment to digitalization for consumer. And digitalization for illustration a measurement to unfastened to caller gross opportunities connected Enterprise, could you elaborate a small spot connected this? Thank you.

Pietro Labriola

Thank you, Fabio. About consolidation, precisely arsenic you mentioned, it's not me, besides nan different CEO successful Italy are declaring that. And what makes maine also, nan things much funny, let's say, successful this measurement that it's besides nan past comer that is declaring that we request for a marketplace consolidation. So I deliberation that this is thing that will happen. If you inquire maine if it is successful nan short-term, it's each a matter of meaning of short-term. And if you spot successful nan 3 twelvemonth of nan plan, 2023-2025, I deliberation that thing will hap for sure. But this is my constituent of view.

And besides -- and I person ever to opportunity if not because I don't believe, but because we person ever discussed successful position of what if, it's clear that successful lawsuit of a web sale, it will beryllium a trigger and past we'll person a benignant of a domino effect, because it's clear to you that if I'm vertically integrated, it should beryllium much difficult to beryllium portion of a marketplace consolidation. I person that -- I was clear connected this stage. And what is important is that, we person to commencement to deliberation that marketplace consolidation could be, intra-market aliases inter-market betwixt market, what they mean. For illustration that going up successful nan TIM Enterprise segment, I could deliberation that could beryllium useful to do thing merged acquisition pinch immoderate different institution that tin complement our worth chain.

But sometimes also, and nan user could beryllium thing for illustration that. But earlier to fly, we person to enactment connected nan crushed and present our numbers. So I'm answering to you that this is nan view, but 2023, we person to deliver, again, our number. And we person to do that quarter-by-quarter, because we person to proceed to summation nan spot of nan marketplace connected nan truth that what we opportunity we deliver.

About digitalization, nan 2nd point, you are wholly right. We are not moving connected that only arsenic a instrumentality to trim our costs and toggle shape our costs base. And we person a translator scheme that is moving connected that. But it is very important besides connected nan gross side. Here, to beryllium clear, we person 2 different story. The Enterprise conception is nan Consumer conception of nan opening of nan 20 century. If you retrieve successful 2000, nan user was nan area pinch a batch of caller business exemplary that was coming successful nan market.

20 years later, they progressively took different direction. While connected dementor price, erstwhile we talk astir cloud, cybersecurity, IoT, smart cities, we are not discussing of a wishful thinking. We are discussing astir marketplace that coming springiness immoderate value. So what will happen? In nan Enterprise segment, we person a clear way for invention and -- this squad is moving connected that. And successful March, we will disclose besides a caller attack much businesslike to activity connected that.

On nan consumer, we person to understand which is nan way for innovation. And we person to do that carefully, because we don't want to repetition nan mistakes of a batch of telco subordinate towards nan world that was reasoning that nan contented was nan caller paradise and go dual. I dream that nan reply to your question, Fabio.

Fabio Pavan

Yes. Thank you. It's very clear.


Next mobility comes from Mr. Luigi Minerva of HSBC. Mr. Minerva, please.

Luigi Minerva

Yes, bully greeting everybody and acknowledgment for taking my questions. The first 1 is connected your superior allocations and really you spot nan assets. I mean leaving nan NetCo connected nan broadside for confidentiality reason. I conscionable wanted to perceive really you deliberation astir endeavor versus consumer? Because if I perceive nan measurement you coming astir them, it looks to maine for illustration endeavor is nan amended business that grows more, that generates amended returns, whereas user is nan challenged business. So successful principle, if you deliberation astir plus allocation, you would want to clasp afloat ownership of endeavor and possibly dispose nan portion of nan business that generates little returns aliases nary returns. So successful this context, I don't understand why each nan talks are astir disposing nan liking successful B2B, while connected nan user side, location has been nary chat aliases nary hint astir a imaginable disposal?

The 2nd mobility is connected nan Savers dividend. And I admit we don't person nan afloat accounts today, but each indicates a nonaccomplishment -- a nett nonaccomplishment successful 2022. So conscionable to clarify, does that mean fundamentally nary dividend for nan Savers besides this year?

Pietro Labriola

Thank you, Luigi. I deliberation that we did a bully job, because you did, you did a correct synthesis astir what we person to do connected nan user connected TIM Enterprise, not successful position of M&A, but successful position extremity that we person to reach. My constituent of position is that, nan user is not a bad Co, is simply a institution that was didn't person a correct denotation to amended nan costs base. So, nan first consequence that we scope successful this twelvemonth dividing nan Company successful business unit, fto maine opportunity this way, is that now it's clear to everybody that we person a clear knowing astir wherever we person to put capital, our strategy of superior allocation. It doesn't mean that I don't person to put CapEx connected nan consumer, I person to put that because sometimes it will let to maine to person a faster return connected finance successful position of redeeming connected nan cost. On nan different side, TIM Enterprise has little rumor successful word of efficiency. Also, if we person besides connected TIM Enterprise immoderate challenges successful position of efficiency. But successful position way, has overmuch opportunity successful position of Group.

So, and we person besides our strategy of TIM Cloud that we defined and successful TIM Cloud, because we person to besides effort to research nan opportunities that are coming from a worldwide position astir a much section cloud, because nan unreality started astatine thing that could beryllium everyplace and for information limit, now it's becoming thing that is becoming much and much local.

About nan M&A, I don't want to remark excessively much, because if not, we put nan attraction connected thing that is not operation. We cannot do everything astatine nan aforesaid time. I deliberation that we don't person to distract our guidance squad from present nan operation. And it's clear that we person ever an oculus to nan opportunity that travel connected nan marketplace that doesn't mean basal sale. That are nan opportunity to create and make worth for each nan shareholders. And it's clear that nan 2 strategical position of these two, fto maine say, unit entities are different, but some person clear way that we will travel successful nan pursuing months.

About nan redeeming dividend selling, to Adrian.

Adrian Calaza

Yes, you're right. The consequence of 2022 will beryllium antagonistic successful position of nett income, considering besides nan reversal of nan DTA. So, nan effect that -- that is created. Then nan determination astir nan costs of nan dividends aliases not to nan redeeming shares will beryllium taken successful March during nan -- nan Board approves nan our financial statements of 2022. Anyway, I deliberation that you cognize nan effects successful position of this nett income that we'll see, determination will beryllium taken by nan Board connected March 15th.

Luigi Minerva

Thank you, both. I admit it.


Next mobility comes from Mr. Domenico Ghilotti of Equita. Mr. Ghilotti, please.

Domenico Ghilotti

Good morning. Few questions, nan first conscionable a explanation connected what is embedded successful nan plan. So, you mentioned nan Recovery Fund, I presume that you person -- you person besides included caller wholesale tariff, conscionable to beryllium judge connected that, why you do not person a mill successful nan different imaginable initiatives from power intensive to VAT to nan electromagnetic limit?

And 2nd mobility is connected nan value strategy connected nan user co. Well, if I understand well, you are really committed to reprice to raise prices besides for nan backmost book, truthful for astir of nan customer guidelines successful mobile and fixed during 2023?

And nan 3rd question, well, I don't cognize if you tin springiness america immoderate granularity aliases immoderate denotation connected what person been and for nan 3 entities, I understand nan rumor connected NetCo successful position of profitability and CapEx. But that would beryllium useful for america to understand nan trends compared to what we person presented successful nan Capital Market Day.

Pietro Labriola

Okay. Thank you, Domenico. About nan consumer, yes, we put successful our scheme a repricing connected nan customer guidelines besides for nan caller acquisition. We do -- we do that besides based connected a different approach. If you retrieve you travel america during nan difficult quarter, we started already successful 2022 applying pinch much fto maine say, clever attack based besides connected nan propensity of nan different existent customer guidelines connected nan share, based besides connected nan guidance of nan customer to nan different measurement successful which we statement them, based besides connected nan measurement successful which we tin negociate besides nan declare of nan customer. So, aft nan research that we did during 2022, we use that besides successful 2023 while nan scale is successful shown for nan inflation, we started successful 2024. So, this is connected nan user and nan repricing strategy. But my knowing is this is thing that is already happening everyplace successful Europe and nan for -- from nan nationalist denotation of immoderate different player, they are applying these constituent too.

About what is included successful nan plan, astir nan opportunities, you did a awesome job, because you gave nan reply to your question, yes, location are only nan wholesale value revision, one. For each nan -- for each nan different element, what we are doing is that we didn't put that because it shouldn't beryllium superior to put thing that is not defined. I don't -- I want to debar what's happening successful nan past, that astatine nan commencement of nan year, I opportunity everything good successful February, past personification declared that they will not proceed and successful March aft nan profit warning. Because this is not nether our power and but we were besides transparent to springiness you what is included and what is not included. So, connected your own, you will beryllium able, if thing of these happened to understand that location is an improvement.

About nan past mobility that was related to nan NetCo, what's happened is that, you person seen what we are doing is that we are continuing to put connected nan FTTH web building and this is 1 of nan constituent that nan full nan level of CapEx aliases gross adjacent to 25%. Then it's clear that if nan NetCo should beryllium a backstage company, it would beryllium overmuch easier to prolong that level of CapEx without a batch of chat connected that and this is 1 of nan constituent for which we started to spot that we would for illustration to commencement to springiness a abstracted number astir nan 3 entity. In a occupation perspective, our number presented successful July to nan Capital Market Day astir nan different unit, are much aliases little aligned and successful nan lawsuit of NetCo, this is somewhat better. Hope Domenico that I reply to your questions.

Domenico Ghilotti


Pietro Labriola

If this is not nan case, I'm here.

Domenico Ghilotti

No, that's fine. Thanks.

Pietro Labriola

Thank you.


Next mobility comes from Mr. Mathieu Robilliard from Barclays. Mr. Robilliard, please.

Mathieu Robilliard

Yes, bully morning. Thank you for nan presentation. I had a follow-up connected nan equity free rate flow, first. So, you did mention that nan costs of indebtedness has increased, nan truth of life and past your costs of indebtedness starts pinch 4% and past nan assurance you did precocious is 6.9%. So, I conscionable want to corroborate that your equity free rate travel guidance reflects higher financial costs, truthful it assumes that you're fundamentally going to refinance nan indebtedness alternatively of paying it down.

And still connected nan free rate flow, nan CapEx refunds you mentioned, these are guaranteed, right? I mean successful nan statement of -- of what you conscionable said, this is not thing that is up for statement and that could beryllium changed. I conscionable wanted to corroborate that was nan case.

And past lastly connected NetCo, I whitethorn person missed it, but successful position of nan revenues, truthful they're down 4% and they've been down passim nan year. Understand, location were immoderate one-off elements, possibly that helped nan revenues successful 2021, but I want to understand if location is thing structural location and we should besides expect a diminution successful 2023? Thank you.

Adrian Calaza

Yes. Hi Mathieu. On nan first 1 regarding nan equity free rate travel and nan impacts of nan financial expenses. Clearly, of course, you saw that we placed -- we issued nan enslaved successful January and astatine what liking complaint level, nan point is, you shouldn't see that that will beryllium nan costs of each nan debt. Obviously, we still are by 2022 beneath 4% of full costs connected nan group, moreover somewhat little astatine nan home level.

Going forward, evidently each indebtedness exits astatine little costs and we renew coming pinch this business and pinch these -- this level of liking rates astatine a higher cost. Remember that until 1 twelvemonth ago, nan liking rates, nan consequence free complaint was antagonistic today, it's thing what astir 150 ground points, 200 ground points. So this is nan business see this context, should this discourse amended importantly successful position of liking rates? Obviously. We'll use from that. What we are guiding coming is nan discourse that we are foreseeing for this year, for nan adjacent year.

So conscionable to synthesize, you shouldn't see that our indebtedness costs should summation astatine nan level that we issued nan bond, but then, yes progressively considering nan caller financing will spell up. And that's considered successful that guidance. Regarding nan proceeds successful nan PNRR, yes, these evidently -- these proceeds are included because we included nan CapEx that required to meet nan goals that we person for nan NRRP. So some sides are included, nan CapEx evidently astatine nan gross level and nan proceeds beneath nan CapEx level, but wrong nan equity free rate flow. Always see nan effect that nan CapEx that we do this twelvemonth 2023 will person nan proceeds connected 2024.

Domenico Ghilotti

And, convey you. Sorry, possibly I wasn't clear. I conscionable wanted to make judge that these refunds connected nan CapEx, that's a 100% guarantee. There is nary consequence that location is simply a alteration successful nan measurement nan authorities connected nan subsidies work?

Adrian Calaza

No, if we do what is required successful each of nan CapEx side, we'll person nan proceeds. It's not that we will see. It's written successful nan position of nan bids. So we are not doubting. The point is, we will do nan CapEx and past we'll person nan proceeds. It's not thing that we astir apt beryllium receiving. No, it's linked to what we do successful position of deployment some connected nan 1 giga aliases calling connected nan different elements.

Mathieu Robilliard

Very clear.

Pietro Labriola

About your 2nd mobility connected nan inclination of nan nett halfway gross 2022 towards 2021, if you retrieve successful nan -- successful March of nan past twelvemonth erstwhile we presented nan plan, and we showed that successful 2021, we had immoderate much repeatable items. Part of that was related to nan nett halfway area that are nan transaction pinch nan different orders that for 2021 are not repeatable and this is what is playing besides nan trend.

Mathieu Robilliard

And truthful erstwhile we look successful 2023, we should expect a alteration successful nan trends is what you're suggesting?

Pietro Labriola

Yes, and besides because you cognize amended than maine erstwhile you activity connected your exemplary that everything is done by [Foreign Language] and successful English, 2Q. So, it's clear that progressively, we tin suffer immoderate lines, because we are successful a competitory marketplace now we've deployed also, not deployed, not to suffer nan title complete successful fiber. In nan meantime, we person besides a reference of caller prices that will let to spell up. So, it's a equilibrium of that, and truthful you will person a caller trend.

Mathieu Robilliard

Thank you very much.

Pietro Labriola

Thank you, Mathieu.


Next mobility comes from Mr. Sam McHugh of Exane BNP Paribas. Mr. McHugh, please.

Sam McHugh

Good morning, guys. Thanks very overmuch for nan presentation. Two questions. On nan guidance again, tin you conscionable springiness america immoderate item connected what you're baking successful in position of retail, mobile and fixed value increases, arsenic a benignant of percent of nan 2023, 2024 and 2025?

And past secondly connected ICT. You saw a immense maturation successful Q4. You mentioned you started to accrue revenues from nan National Strategic Hub, really worldly is that successful Q4 and is that costs being accrued alongside nan gross arsenic well? Thanks very much.

Pietro Labriola

Thank you, Sam. And if I may, we are trying to compression successful nan grape consequence and not nan lemon, because nan citrus is excessively mini to make what we are generating, but I'm joking. About nan Enterprise, I didn't mention that we are getting money aliases revenues from nan PSN. Until today, nan number of these PSN are homeopathic, very small. What I mentioned is that we person a beardown position connected nan nationalist management wherever we proceed to waste successful astatine a bully level connected nan different bid that you won during nan twelvemonth and we want to proceed to beryllium a reference for nan nationalist administration. About nan consumer, what is it, I time off to Adrian. We don't spell into galore specifications because we're successful a competitory market. If I opportunity that they will summation nan prices by 7%, location will beryllium personification that will do nan 6% and truthful we tin springiness nan thought astir nan strategy, but we don't want to disclose nan numbers.

Adrian Calaza

Yes, so, convey you, Sam, for nan question. It's successful nan existent environment, what we already published is that we are expanding nan pricing fixed statement user by astir EUR2 and besides successful mobile we are having a pricing run that is astir nan aforesaid value. In mobile, truthful nan percent is higher successful this activity complete pricing and successful fixed it's really lower. But arsenic Pietro pointed out, it's a segmented approach, truthful we do not disclose nan item for each customer. Next twelvemonth we included nan presumption that we would person an indexation aliases related to ostentation and of course, we had to make an estimate of what is nan ostentation complaint for 2023.

Sam McHugh

Okay. Super clear. And I'm evidently lemon, though I person nan champion lemons successful nan world gets present so, astatine slightest I person bully lemons.

Pietro Labriola

Don't worry, we spell done each nan benignant of consequence that we find.


Next mobility comes from Mr. James Ratzer of New Street Research. Mr. Ratzer, please.

James Ratzer

Yes. Good morning, Pietro and Adrian. So nan mobility if imaginable conscionable to keeping connected nan taxable of Enterprise. I mean truthful nan trends successful 2022 would beryllium highly beardown and I said, we did spot that crisp acceleration successful ICT successful nan 4th quarter. I was wondering if we could conscionable walk a spot much clip knowing what's driven apps? I judge location are trends different than conscionable a National Strategic Hub.

And looking astatine your guidance, I mean, Enterprise successful 2022 grew astatine 11%. So, your guidance is suggesting 6% maturation going forward. So, I'm conscionable wondering why, moreover though nan maturation should stay high, you're expecting a slowdown from nan 2022 levels. I mean I'm reasoning pinch nan European Recovery Fund, we should beryllium seeing maturation perchance moreover accelerate from -- from existent levels.

And past could you conscionable spell backmost complete what you are saying astir nan imaginable waste process of Enterprise, did I understand from your benignant of earlier remark that nan attraction correct now is connected NetCo. So, is immoderate imaginable disposal of nan liking successful nan Enterprise business, has that been somewhat postponed astatine this stage? Thank you.

Pietro Labriola

Thank you, James. I'll commencement from nan past question. We are -- we are proceeding successful nan attack to create abstracted business portion to create optionality. So, we are creating a playing section that could let america successful lawsuit of opportunity to do what is nan champion for nan shareholder. Now, it's clear that nan attraction is connected nan NetCo because we person an connection and connected nan different part, nan attraction is connected present nan numbers and which will let maine besides to reply to your question, why you diminution connected nan number, erstwhile amended nan number of 2022.

It was little than 1 twelvemonth agone erstwhile we're talking astir this number telling that we will complete execute nan market, nary 1 was believing connected us. We person nary trust. Now, I'm very happy that nan way is that we tin proceed to complete execute connected our steps, but again, we must beryllium successful immoderate case, we person to support our feet connected nan crushed and we person to proceed to activity delivering. But besides to springiness you immoderate much color, truthful I must opportunity that it's not conscionable maine and Adrian, but we person a squad of superior professionals that are moving connected that and we are moving arsenic a team.

I time off nan shape to Elio, that tin springiness immoderate much colors astir nan number of TIM Enterprise.

Elio Schiavo

Thanks, Pietro, and acknowledgment for nan question, which is simply a very -- which is simply a very bully one. So first -- first of all, fto maine item a mates of topics. Quarter 4 is traditionally a 4th wherever we person a precocious seasonality. If you spell backmost by 1 year, successful nan 4th 4 2021 versus 2020, we turn nan business by 14%. As you tin see, during nan 2022, we registered a dependable maturation successful 4th one, 2 and three, high-single digits and successful 4th 4 location is simply a maturation of really precocious double-digits and -- and this is owed to a mates of things. One, arsenic I mentioned, nan seasonality. The 2nd 1 is an acceleration of depletion successful unreality and cyber security, owed to nan authorities and ample endeavor spending much money successful that play of clip and we besides person accelerated a batch nan licensing because arsenic you person seen successful our scheme going forward, nan transportation of master and managed services is simply a halfway plus successful our growth.

Now, connected your 2nd mobility connected nan 6% maturation going guardant was versus 11% maturation successful this year, location is simply a very beardown rationale down that number. So, we are presently increasing doubly faster than nan market, leveraging chiefly successful unreality and cyber information growth. But a reality going forward, we would for illustration besides to attraction connected marginality. And if you attraction connected margin, nan first point you request to do is to cleanable your P&L from revenues pinch very debased margin. So, location is really because if you look astatine nan EBITDA, it was from 0% to 10%, which tells you that we are going to ore our efforts connected margins pinch nan precocious marginalities keeping margins that are coming generating little margins for us. Which is nan only logic why nan apical statement is trending differently. If you look astatine absolute maturation of revenues, is really EUR200 cardinal per year. So, successful percent you person 2 effects, one, little revenues aliases debased margins, but much importantly, aforesaid magnitude of maturation connected a bigger number. Hope I was clear successful nan answer.

James Ratzer

That's clear. Thank you very much. So, 1 speedy follow-up, possibly 1 for Pietro, but nan CDC connection that you received a twelvemonth ago, is that besides now lapsed aliases is that still -- is that connection still successful beforehand of nan Board?

Pietro Labriola

No, I understood nan first portion of nan mobility related to nan CDC. I missed nan past portion astir nan Board.

Unidentified Speaker

[Foreign Language]

Pietro Labriola

Okay. Okay. Okay. Again, astir CDC, what's happened is that we measure that today, if you retrieve erstwhile we did nan plan, it was March and that play travel retired besides nan anticipation pinch CDC. TIM Enterprise was still a PowerPoint astatine that time. Because if you remember, we spot for nan first clip TIM Enterprise connected that. If I commencement to talk astir these things, while we don't person a abstracted institution aliases a amended building perimeter pinch nan equilibrium sheet, you cognize amended than maine that we person a guidance accommodation connected nan worth of nan Company. So, I don't want to destruct worth conscionable because for a matter of time, we are not successful a way. So, we will proceed erstwhile nan Board will o.k. astatine nan correct infinitesimal wherever erstwhile we are capable to maximize nan worth for each nan shareholders. We are not successful a information to waste astatine immoderate cost. So, these are nan valuation that we did connected this item. And we are proceeding connected nan -- connected nan activity to person nan perimeter of nan TIM Enterprises now is successful place. The equilibrium expanse of TIM Enterprise that successful nan lawsuit of immoderate benignant of chat is simply a starting constituent that reduced nan level of uncertainty connected nan information of nan company.

James Ratzer

Thank you, Pietro.


Next mobility comes from Mr. Andrea Devita of Banca Akros. Mr. Devita, please.

Andrea Devita

Yes, hello. Thank you for taking our 2 questions. First of all, conscionable to understand whether your equity free rate travel target for 3 years includes besides nan taxation rebate? So, I understand they will get 1 aliases 2 tranche of EUR250 million, astir apt nan past 1 [indiscernible]

Second, whether this will let to study extremity of nan twelvemonth nett indebtedness to Group level astatine slightest successful line, if not little than nan 1 astatine December 2022?

And finally, whether nan extremity of nan IRS opportunity a -- IRS of those 1 astatine nan extremity of your agreement, could let you to person a immoderate affirmative effect either astatine EBITDA aliases free rate travel level, astatine slightest from adjacent twelvemonth and whether it is included successful your guidance? Thank you.

Pietro Labriola

About nan past portion connected nan zone, it will be, we will person immoderate improvements starting from 2024, but conscionable for a portion of nan year, because nan title will extremity successful June. While successful 2025, we will person a amended impact. In our assumption, we are reasoning that will proceed to waste nan soccer, but pinch a different approach. So, we don't want to return immoderate benignant of commitment. We made a script successful which, much aliases little everybody will beryllium allowed to waste nan shot pinch a accepted OTT attack pinch nan separator for nan sale.

About nan equity free rate travel and nan level of nan tax, I time off to Adrian.

Adrian Calaza

Yes. Andrea, I don't cognize if you were referring to nan reversal of nan DTA aliases thing different. Anyway, astir nan reversal of nan DTA, it created a affirmative effect past twelvemonth erstwhile we recovered the, what we paid successful 2021. What will hap this twelvemonth that we won't beryllium paying nan information that initially was -- was projected, that it's not a affirmative effect astatine nan end. I don't cognize if this answers that portion of nan question.

Andrea Devita

Yes, yes. Because I understood that location was a affirmative rate -- rate effect this year. And nan past portion is whether, truthful conscionable for america to understand that zero free rate travel connected nan horizon, will it beryllium nan 2023, that location was let's opportunity nan arrears to that successful that trajectory?

Adrian Calaza

Well, successful position of nett financial position, you will request to understand, because location are different definitions. You cognize that we person subsidiaries that whitethorn request to salary dividends to 3rd parties specified as, arsenic you know, arsenic Brazil. So, this could create immoderate effect, but past location are immoderate different effects betwixt nan equity free rate travel and nett financial position. That's why we deliberation that we would for illustration not to -- to disclose aliases guideline nan nett financial position. Anyway it's besides arsenic you know, affected by -- by nan improvement of nan speech rate. So, going forward, what we decidedly from past year, this twelvemonth we guided nan equity free rate travel that we deliberation that it's much connected nether our control.

Andrea Devita

Okay. Thank you.


That was our past question.

Pietro Labriola

Thank you to everybody. And pinch our -- pinch our investors, we are astatine your complete disposal to spell much successful detail, because from nan telephone we understood that location are a batch of things to spell successful details. I dream that we are regaining your trust. And I want to convey you each nan Management team, but besides each nan worker that successful our Company scarify besides their wages to thief our Company to beryllium backmost astatine nan level that we deliberation we deserve. Thank you to everybody.


Ladies and gentlemen, nan convention is now over. Thank you for calling.

Editor: Naga

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