Download - TI Strategic Outlook - Briefing - 2009 Results & 2010- 2012 Strategic Plan Update (Mangoni)
ANDREA MANGONI
Telecom Italia Group Strategic Plan Update
1ANDREA MANGONI
These presentations contain statements that constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this
presentation and include statements regarding the intent, belief or current expectations of the customer base,
estimates regarding future growth in the different business lines and the global business, market share, financial
results and other aspects of the activities and situation relating to the Company and the Group.
Such forward looking statements are not guarantees of future performance and involve risks and uncertainties,
and actual results may differ materially from those projected or implied in the forward looking statements as a
result of various factors.
Forward-looking information is based on certain key assumptions which we believe to be reasonable as of the
date hereof, but forward looking information by its nature involves risks and uncertainties, which are outside our
control, and could significantly affect expected results.
Analysts are cautioned not to place undue reliance on those forward looking statements, which speak only as of
the date of this presentation. Telecom Italia S.p.A. undertakes no obligation to release publicly the results of any
revisions to these forward looking statements which may be made to reflect events and circumstances after the
date of this presentation, including, without limitation, changes in Telecom Italia S.p.A. business or acquisition
strategy or planned capital expenditures or to reflect the occurrence of unanticipated events. Analysts and
investors are encouraged to consult the Company's Annual Report on Form 20-F as well as periodic filings made
on Form 6-K, which are on file with the United States Securities and Exchange Commission.
Safe Harbour
2ANDREA MANGONI
Key Objectives and Strategic Levers Confirmed
Brazil
Enhanced Free Cash FlowGeneration
Domestic
Capital Discipline
No M&A for Geographic Expansion
Non-Core Asset Disposals
Deleverage & Strengthen Balance Sheet
Focus on Core Markets A Platform to
Create Solid Growth of
Shareholder Value
3ANDREA MANGONI
OFCF and FCF before Dividends (2009)
Cash Flow Generation Confirmed as our Priority
3,08
OFCF
6.3
FinancialExp./Taxes
-4.6
FCFbefore
Dividends
1.7
Non recurring
taxes
1.0 2.7
NormalizedFCF
beforeDividends
OFCF and FCF before Dividends (2010-12)
Euro Bln
3,08
OFCF
21
~1
HansenetDisposal
FinancialExp./Taxes
-11
10.5
FCFbefore
Dividends
MaximumSparkleImpact
-0.5
4ANDREA MANGONI
Cash Taxes now almost Normalized
Group Tax Rate(P&L Tax Rate)
~0.6
2008 2010 20112009
~2.3
2012
Average Group Tax Rate in ’10-’12: ~36%
Last year of tax asset benefit
Average Normalized Cash Taxes for ’10-’12:
~1.3 bn
Euro Bln
5ANDREA MANGONI
Stable Financial Expenses due to Solid Financial Management
YE 2009 average cost of debt at 5.4%
Minimizing the refinancing risk remains a priority: Group’s liquidity shall cover
12/18 months of the forthcoming maturities
Markets and products will be further diversified.
Fixed rate portion on gross debt is expected to be not lower than ̴ 62%
Substantially stable Financial Expenses in the 3 year plan
6ANDREA MANGONI
€ 7.3 blnGroup Liquidity Position
+€ 7.75* bln
Undrawn Portion of Bank Facilities=
€ 15.05 bln Group Liquidity Margin
* of which € 1.25 bln signed on Feb 12, 2010.3Y tenor, no covenants, margin as a function of the rating. 25 Italian and International banks, rated at least A, participated in the facility.
2010
5.4
2011
4.9
Debt Maturities
Beyond 2012
~26.9 ~40.9
Total M/L
Term Debt
2012
3.7
Cumulated
‘10-’12
Debt Maturities
14.0
Group Liquidity Matches 2010– 2012 Maturities
1H 2H
BondsDrawn Bank Facility
486
4,172 1,206
2,356
Loans1,500
316 720
Euro Bln
7ANDREA MANGONI
Focus on Deleveraging Confirmed
Deleverage: a re-affirmed key
priority
2008-11 €5 Bln Net Debt
reduction confirmed
-5 Bln
34.5
2008
33.9
2009
~32.0
2010
~29.5
2011
<28
2012
Adjusted Net Financial Position (€ Bln)
8ANDREA MANGONI
A 2.5x/3x range for the New Plan horizon has been identified as consistent with our desired credit profile, with a comfort zone closer to 2.5x
Impact on TI’s Net Debt from Adjustments carried out by the Rating Agencies isrelatively limited (no pension funds issues and reduced operating leases)
We therefore believe that, in the context of TI Group’s operating performance as per 2010-2012 Plan, our deleverage trend is in line with our current ratings
Ti
Net
Deb
t/ E
bitd
a
2,0x
3,0x
2008 2009 2010 2011 2012
2010-12 Net Debt/Ebitda Guidance: reducing, in a 2.5x/3x range