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

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The Telecom Italia 2009 Results and the 2010-2012 Strategic Plan Update


<ul><li> 1. Telecom Italia Group Strategic Plan Update ANDREA MANGONI </li> <li> 2. Safe Harbour 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. 1 ANDREA MANGONI </li> <li> 3. Key Objectives and Strategic Levers Confirmed Domestic Enhanced Focus on Free Cash Core Flow Markets Brazil Generation A Platform to Create Solid Growth of No M&amp;A for Geographic Shareholder Deleverage &amp; Value Capital Expansion Strengthen Discipline Non-Core Asset Balance Sheet Disposals 2 ANDREA MANGONI </li> <li> 4. Cash Flow Generation Confirmed as our Priority Euro Bln OFCF and FCF before Dividends (2009) OFCF and FCF before Dividends (2010-12) 21 -0.5 ~1 10.5 6.3 -11 1.0 2.7 3,08 3,08 1.7 -4.6 OFCF Financial FCF Non Normalized OFCF Maximum Financial Hansenet FCF Exp./Taxes before recurring FCF Sparkle Exp./Taxes Disposal before Dividends taxes before Impact Dividends Dividends 3 ANDREA MANGONI </li> <li> 5. Cash Taxes now almost Normalized Euro Bln Average Normalized Cash ~2.3 Taxes for 10-12: ~1.3 bn Last year of tax asset benefit ~0.6 2008 2009 2010 2011 2012 Group Tax Rate Average Group Tax (P&amp;L Tax Rate) Rate in 10-12: ~36% 4 ANDREA MANGONI </li> <li> 6. Stable Financial Expenses due to Solid Financial Management YE 2009 average cost of debt at 5.4% Minimizing the refinancing risk remains a priority: Groups 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 5 ANDREA MANGONI </li> <li> 7. Group Liquidity Matches 2010 2012 Maturities Euro Bln 7.3 bln Group Liquidity Position *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, 7.75* bln participated in the facility. Undrawn Portion of Bank Facilities = 15.05 bln Group Liquidity Margin ~26.9 ~40.9 1H 2H Bonds 2,356 486 Drawn Bank Facility 1,500 Loans 316 720 4,172 1,206 3.7 14.0 4.9 5.4 2010 2011 2012 Cumulated Debt Maturities Total M/L 10-12 Beyond 2012 Term Debt Debt Maturities 6 ANDREA MANGONI </li> <li> 8. Focus on Deleveraging Confirmed Adjusted Net Financial Position ( Bln) -5 Bln 34.5 33.9 Deleverage: a re-affirmed key ~32.0 ~29.5</li></ul>