Transcript
Page 1: TI Strategic Outlook - Briefing - 2009 Results & 2010- 2012 Strategic Plan Update (Mangoni)

ANDREA MANGONI

Telecom Italia Group Strategic Plan Update

Page 2: TI Strategic Outlook - Briefing - 2009 Results & 2010- 2012 Strategic Plan Update (Mangoni)

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

Page 3: TI Strategic Outlook - Briefing - 2009 Results & 2010- 2012 Strategic Plan Update (Mangoni)

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

Page 4: TI Strategic Outlook - Briefing - 2009 Results & 2010- 2012 Strategic Plan Update (Mangoni)

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

Page 5: TI Strategic Outlook - Briefing - 2009 Results & 2010- 2012 Strategic Plan Update (Mangoni)

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

Page 6: TI Strategic Outlook - Briefing - 2009 Results & 2010- 2012 Strategic Plan Update (Mangoni)

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

Page 7: TI Strategic Outlook - Briefing - 2009 Results & 2010- 2012 Strategic Plan Update (Mangoni)

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

Page 8: TI Strategic Outlook - Briefing - 2009 Results & 2010- 2012 Strategic Plan Update (Mangoni)

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)

Page 9: TI Strategic Outlook - Briefing - 2009 Results & 2010- 2012 Strategic Plan Update (Mangoni)

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


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