- ACCELERATION OF INVESTMENTS IN ITALY: NEARLY 12 BILLION EUROS OVER THE COURSE OF THE PLAN; 6.7 BILLION FOR INNOVATION
- INCREASE IN COMMITMENT TO NGN AND LTE: BY THE END OF 2018, 84% OF THE POPULATION WILL HAVE ACCESS TO FIBRE OPTICS AND MORE THAN 98% TO 4G
- DOMESTIC EBITDA CONFIRMED AS STABILISING YEAR ON YEAR IN 2016 AND IMPROVED PERFORMANCE EXPECTED IN 2017 AND 2018 ADDITIONAL OPPORTUNITIES FOR IMPROVEMENT AND COST REDUCTIONS WILL BE STUDIED DURING THE PERIOD
- RATIO OF ADJUSTED NET FINANCIAL DEBT TO EBITDA REPORTED TO FALL BELOW 3X BY THE END OF 2018
- STRATEGIC FOCUS ON MULTIMEDIA ENTERTAINMENT AND ICT
The Board of Directors of Telecom Italia met yesterday under the chairmanship of Giuseppe Recchi and approved the 20162018 Three-Year Strategic Plan which, following on from last year, provides for an acceleration of investments over the Plan period, with the primary aim of ensuring long-term growth for the Group.
In particular, investments in Italy will be close to 12 billion euros, around 6.7 billion of which will be dedicated to innovation (NGN, LTE, Cloud and platforms, Sparkle and Transformation). By the end of 2018, TIM plans to increase coverage of the country with next generation networks and to reach 84% of the population with fibre optics and 98% of the population with the LTE (4G) mobile network, asserting its position as an infrastructure development and digitisation leader in the country.
The main areas of innovative technology development still are:
• acceleration in the development of fixed fibre optic ultrabroadband, to which 3.6 billion euros will be allocated;
• LTE mobile ultrabroadband, for which 1.2 billion euros are planned;
• Telecom Italia Sparkle, for the development of activities in which around 400 million euros will be invested.
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Over the course of the Plan, TIM plans to complete the transition from traditional Telco to Digital Telco & Platform Company, enabler of the country's digital life: a business model based on innovative infrastructure and an excellent customer service, increasingly aimed at disseminating premium services and digital content within a customisable platform, accessible anywhere and on any device.
In the Domestic Mobile segment in particular, in a competitive context characterised by greater attention to quality and a constant increase in the use of data, TIM will aim to accelerate the penetration of smart devices and to market bundle offers that generate a higher ARPU, even supported by exclusive agreements with device manufacturers.
LTE customers are expected to account for around 70% of Mobile Broadband customers by 2018, thanks to almost blanket coverage of the country at 75 Mbps, with peaks of 300 Mbps in the eight main cities thanks to to the use of carrier aggregation technologies.
In the Domestic Fixed segment, the Group plans to reduce the fall in customer numbers starting in 2016, tending to achieve equality by 2018. This will result from the acceleration in the spread and consequent adoption of fibre optics, where the total number of customers - retail and wholesale - should reach 5 million in 2018 (1 million more than the previous Plan for the retail component), approximately 40% of the total number of Broadband customers. In particular, 20% of the ultrabroadband coverage in 2018 will be achieved with FTTH technology, confirming TIM's commitment to ensuring the widest coverage and the best technologies.
Convergence continues to be central to the Group's growth and innovative investments strategy. Using its network infrastructure, the Group aims to offer premium services to customers via a single integrated platform. By 2018, the number of "converged" customers with high quality content is expected be around 1.5 million.
The Plan provides for the position in Multimedia Entertainment, which includes activities, among others, in the field of Video, Music, Gaming and Publishing, to be strengthened. Thanks to its ICT and Cloud services, Telecom Italia will also continue to work with Italian businesses in their digital transformation process, with a differentiated approach depending on customer base characteristics, aiming to achieve a distinctive positioning in the vertical markets deemed to be of greatest interest.
The Plan is also characterised by strong financial discipline, which will allow the Group to reduce the ratio between adjusted net financial debt and reported EBITDA at least to below 3x by 2018, despite the 2 billion euros arising solely from accounting reclassifications due to the application of certain IAS to non-cash items. This is also thanks to the efficiency recovery actions planned and those that the Board will identify, the previously announced sale of a share in Inwit, the 1.3 billion euro increase in equity resulting from redemption of the mandatory convertible bonds, as well as completion of the sale of Telecom Argentina.
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In Brazil, the Group provides for total investments within 14 billion reais, mainly for the development of network infrastructure. Actions to recover efficiency will also be important, through which TIM aims to recover over 1 billion reais by 2017.
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The Plan strategy, focused on significant infrastructure investments aimed at increasing the dissemination of innovative services, leads to the following Group objectives being defined:
- Domestic EBITDA confirmed as stabilising year-on-year in 2016 and growing in 2017 and 2018
- Growth in revenue share and EBITDA Margin expected in Brazil
- Domestic capex for the three years are close to 12 billion euros and Brazil's capex for the three years within 14 billion reais
- Ratio of adjusted net financial debt to reported EBITDA to fall below 3x in 2018
During the Plan period, further opportunities will also be identified by which to increase the economic-financial targets and recover efficiency; these will include an additional reduction in operating costs.
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The 2016-2018 Strategic Plan will be illustrated to the financial community during a presentation scheduled for today at 4.30 p.m. (Italian time). Journalists may listen to the conference call, without asking questions, by calling: +39 06 33168+39 06 33168.
The presentation slides, with an opportunity to follow the event in audio and video streaming, will be available at www.telecomitalia.com/fy2015andplan/eng.
If you cannot listen in to the conference call, a Relistening Service will be available until 23 February, that can be accessed by calling +39 06 334843+39 06 334843 and entering the code: 900018#.
Milan, 16 February 2016
