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					FRANCO BERNABE’
                                                                                          NOME COGNOME
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Safe Harbour

This presentation contains 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
Company with respect to 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
Company's activities and strategies.
Such forward looking statements are not guarantees of future performance and involve risks and
uncertainties, and actual results may differ materially from those in the forward looking statements as
a result of various factors.
Analysts and investors are cautioned not to place undue reliance on those forward looking
statements, which speak only as of the date of this presentation. Telecom Italia Spa 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 Spa business or acquisition strategy 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 , which set out certain factors that could cause actual results to
be materially different from the forward-looking statements contained herein.


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Agenda

 Key Messages


 Focus on Core Markets
     Domestic Highlights
    TIM Brasil Highlights


 Targets




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Key Objectives and Strategy’s Levers




                    Domestic            Enhanced
 Focus on
                                        Free Cash
   Core                                 Flow
 Markets              Brazil            Generation     A Platform to
                                                       Create Solid
                                                         Growth of
             No M&A for Geographic      Deleverage &
                                                       Shareholder
Capital           Expansion             Strengthen         Value
Discipline                              Balance
             Non-Core Asset Disposals   Sheet




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Key Objectives and Commitments – 2009-2011


                                                   ~€22.0 Bn
       Group Operating Free Cash Flow
                                               cumulative ’09 – ‘11


     Domestic Cash Cost Efficiency Plan       ~ - €2.0 Bn ’11 vs. ‘08


        Domestic Headcount Reduction          9,000 vs 2007 YE(1)


             Non-Core Asset Disposals             Up to €3.0 Bn


         Strong Focus on Deleveraging      Net Debt/Ebitda 2011 ~ 2.3X

(1) Including 5,000 announced in June 08


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Key Objectives and Strategy’s Levers – Core Markets




                            Reverse Revenue Trend
                           Cash Cost Rationalization
              Domestic                                    Enhanced
                         Enhanced Regulatory Dialogue
 Focus on                                                 Free Cash
                             Customer Satisfaction
   Core                                                   Flow
 Markets                 Mobile Broadband Challenger      Generation
               Brazil
                         Promote Fixed-Mobile Migration




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Operating Free Cash Flow is our priority

                                                Reverse the
                                               Revenues trend
Revenues
                                                   CAGR: >2.0%
                                                    (Organic)

          Opex
                                                                                Cum. ‘09-’11
                                           Cash Costs Efficiency               Operating Free
                                          % on Revenues: - ~5pp                  Cash Flow:
                                               (2011 vs 2008)
                                                                                 € ~22 bn

        Capex
Working Capital
                                                                        ~25%
Operating FCF*

                       2008                 2009                 2010   2011
* OPFCF on Revenues based on Group Reported Data


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Reverse Revenue Trends

        Group Revenues Trend                                        ….value growth

                                                      TI Domestic Revenues

2008
                                                                             BroadBand Connectivity:
                                                                                                                            CAGR
                                                          “Innovative                  Fixed and Mobile Broadband
                                                                                       Mobile VAS                          ‘08 – ‘11
                                                          Revenues”          Adjacent Businesses:
                                                                                       IPTV/Digital Home/ICT               ~ +18%
                                                                                                                           ~ +18%
                                                                                       On line adv. / Service Exposure
Domestic                                                                                               “Innovative
                                                                                       Vertical Application

                 Group
                  Group                                                                                Revenues”
              Cagr Organic
              Cagr Organic                                                           Mobile voice
                                                          “Traditional
                ’08-’11                                                              Narrow Band
                 ’08-’11                                  Revenues”
                 >2.0%                                                               Fixed voice
                  >2.0%                                                                                                     ~ -4%
                                                                                                                            ~ -4%
                                                                                     Traditional Fixed Data
Int’l
& Other

                                               2007          2008        2009                   2010                2011

2011                           Innovative on
                               Revenue (%)     14%
                                               14%           17%
                                                             17%                                                   28%
                                                                                                                   28%


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Domestic Cash Cost Efficiency Plan

       Organic Domestic Cash Costs                   Efficiency by Year

                                                                                55%        Opex
                                                                 30%
                                          60%         25%                       45%        Capex
     2008                                 40%
                                         2009         2010       2011         CUM ’09-’11

                                                          Initiatives
                                                                                            (€ Bn)
  GROWTH
                   <+1.0 Bn           1 Network Operations                                     0.5
 ENABLER
                                      2 Sales & Distribution                                0.4

                                      3 Organization &                               0.3
                                         Supporting Process

EFFICIENCY              ~ -- 2.0 Bn
                        ~ 2.0 Bn                                               0.2
                                      4 IT

                                      5 Customer Operations                    0.2

                                      6 Delivery & Assurance                         0.3
     2011
                                      7 Building &                      0.1
                                         Energy Management




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Domestic Headcount Reduction

Headcount (‘000)



   64.1         ~ -2.0
                ~85%         ~ -3.0                                                 ~ 9,000
                ~15%          ~60%                                                HEADCOUNT
                                                                                   REDUCTION
                              ~40%          ~ -2.0      ~ -2.0
                                                                                 ~ 14% vs 2007
                                            ~70%         100%      ~55.1
                                            ~30%




                 Plan 2009 - 2011

                 Plan 2009 - 2011
                 Redundancy Program 2008 – 2010
                 Agreed with Unions (5,000 Employees)

Year end 2007   2008          2009          2010        2011     Year end 2011


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Enhanced Regulatory Dialogue

 Strategic Objectives                Achievements ‘08                           Key Targets ’09-’11
                            •TI undertakings draft proposal on key
                                                                        •Reach monthly rental fee in line with EU
                             access markets (Oct. 29th)
                                                                         average (costing criteria, inflation
 Protect existing access    •2009 LLU monthly rental fee increase:       recovery)
                             reference Offer to AGCOM (Oct. 23th)
   infrastructure value                                                 •Preserve retail minus pricing on naked
                            •2009 PSTN monthly rental fee increase:      bitstream differentiated by customer
                             (+1,26 €/month) request to AGCOM (Oct.      typology (C/B)
                             30th)

                            •Bill for public funding to support BB      •Avoid “significant” access obligations on
Create a clear and stable
                             development (800 mln€ + 200 mln€ ‘07-       NGN deployment in competitive
    contest for new          ’13)                                        geographic areas
     infrastructure         •Bill for simplification of authorization   •Introduce forward looking pricing criteria
      deployment             process and sharing of public               to balance NGN investment incentivation
                             infrastructures for NGN deployment          and allowing risk sharing
                            •“Glide path” for mobile and fixed
                                                                        •Achieve symmetry with fixed OLO’s
                             termination tariffs
   Obtain more market                                                    termination rates
                            •Improved capability to deal with the
 simmetry conditions for                                                •Review retail price replicability: Price tests
                             requests for customers migration
           TI                                                            rules and obligations
                            •New data protection and privacy
                             regulation (ie: commercial databases)




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Non-Core Asset Disposals


                            Review of Assets Portfolio

           Strategic Criteria                               Financial Criteria

  Consolidation / growth opportunities
                                                   Prioritisation of usage of Telecom Italia
  Market attractiveness / Competitive
                                                   cash flow
  scenario


  Domestic and Brazil are core strategic markets

  Assets not meeting the above criteria will be considered for disposal
           European Broadband
           TI Sparkle
           Cuba
  Recently completed the sale of Alice France for an Enterprise Value of € 0.8 bn

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Agenda

  Key Messages


  Focus on Core Markets
      Domestic Highlights
      TIM Brasil Highlights


 Targets




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Domestic Highlights


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                                                   Reverse Revenue Trends

                                                           Group Revenues Trend                                                     ….value growth

                                                                                                                    TI Domestic Revenues

                                                   2008
                                                                                                                                           BroadBand Connectivity:                        CAGR


Rebalanced Revenue Mix Enhancing Domestic Growth
                                                                                                                        “Innovative                  Fixed and Mobile Broadband
                                                                                                                                                     Mobile VAS                          ‘08 – ‘11
                                                                                                                        Revenues”          Adjacent Businesses:
                                                                                                                                                     IPTV/Digital Home/ICT               ~ +18%
                                                                                                                                                     On line adv. / Service Exposure
                                                   Domestic                                                                                                          “Innovative
                                                                                                                                                     Vertical Application


                                                                      Group                                                                                          Revenues”
                                                                   Cagr Organic                                                                      Mobile voice
                                                                                                                        “Traditional
                                                                     ’08-’11                                                                         Narrow Band
                                                                                                                        Revenues”
                                                                                                                                                     Fixed voice
                                                                      >2.0%                                                                                                               ~ -4%
                                                                                                                                                     Traditional Fixed Data
                                                   Int’l
                                                   & Other

                                                                                                             2007            2008          2009               2010                2011

                                                   2011
                                                                                             Innovative on
                                                                                             Revenue (%)     14%             17%                                                  28%



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                                                   Domestic Cash Cost Efficiency Plan

                                                              Organic Domestic Cash Costs                                                 Efficiency by Year

                                                                                                                                                                              55%        Opex
                                                                                                                                                             30%
                                                                                                                                60%        25%                                45%        Capex
                                                            2008                                                                40%




Reduce Domestic Cash Costs
                                                                                                                               2009        2010              2011          CUM ’09-’11

                                                                                                                                                  Initiatives
                                                                                                                                                                                          (€ Bn)
                                                      GROWTH
                                                                                  <+1.0 Bn                               1 Network Operations                                                0.5
                                                      ENABLER
                                                                                                                         2    Sales & Distribution                                        0.4

                                                                                                                         3 Organization &                                          0.3
                                                                                                                              Supporting Process

                                                   EFFICIENCY                          ~ - 2.0 Bn                                                                           0.2
                                                                                                                         4 IT

                                                                                                                         5 Customer Operations                              0.2

                                                                                                                         6 Delivery & Assurance                                    0.3
                                                            2011                                                              Building &
                                                                                                                         7                                           0.1
                                                                                                                              Energy Management




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 Customer Centric Approach


A New Convergent Customer             Brand Platform     Key Operating
     Centric approach                                       Drivers


  Top Client
   (F-M-ICT)                                             Segmentation
     19%
   Business                                                                Implementation
   (F-M-ICT)                                                                 of customer
     21%                                                     Offering           centric
                                                       Services/Packages     organization
  Consumer                                                                  from January
  (F-M-IPTV)                                             Capabilities            2009
     60%                                                    Caring
                                                           Systems
                                                        Sales Channels


  Breakdown of 2008 Domestic Retail
  Revenues



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Reverse Revenue Trend on Domestic Market

           Objectives                                                        Actions                                                          KPIs
                                                                                                                           TI line losses per year
  1      Increase the Loyalty                   Improve customer retention activities to reduce churn on
                                                                                                                           (MM)           2008E      2009     2011

           of Our Customer                      both PSTN/BB (QoS, caring)
                                                                                                                                                               -0.7
                   Base                         Migrate customers towards IP solutions                                                               -1.5
                                                                                                                                       ~ -1.9
                                                                                                                           TI Fixed BB Access                  8.2
  2                                                                                                                        (MM)
                                                                                                                                           6.7        7.2
                                                Leverage on growing PC/ ”Networked” Device penetration
             Promote Fixed
                                                Innovative offer for “low penetrated” consumers, SME and                                  2008E      2009     2011
               Broadband                        microbusiness segments                                                     Fixed BB consumer ARPU       (1)
                                                                                                                           (€/month)                          16.3
          Penetration in Italy                                                                                                ARPU        12.7
                                                Increase “Premium” and Fiber customer base                                     ’08
                                                                                                                              +6.5%
                                                                                                                              vs ‘07      2008E               2011

                                                Flat offerings managing Mobile BB Premium price                            Interactive VAS Rev / Service Rev (2)
  3      Foster the Growth of
                                                “Pure” Mobile BB promotions in Digital Divide Areas                                       13%
                                                                                                                                                              21%
           Mobile BB and
                                                Strengthen interactive services development through
         Interactive Services
                                                offering enrichment                                                                       2008E                2011

                                                Develop new innovative convergent offerings                                Potential Convergent BB TI customers
  4         Promote Strong
                                                        Seamless experience for premium consumer
                                                                                                                           (mln households)
                                                                                                                                           0.6
                                                                                                                                                               2.2
            Convergent BB                                                                                                   08-11 CAGR
                                                        customers
                 Demand                                                                                                        ~54%
                                                        Bundle for business customers (cross selling)                                     2008E                2011
(1)   Includes Entry Level customers (avg ARPU 5.4€/month). Voice IPTV & Content excluded   (2)   Mobile Advertising Revenues included, messaging excluded



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Rebalanced Revenue Mix Enhancing Domestic Growth

          Objectives                                                  Actions                                                  KPIs
                                                                                                         TIM ARPU
  5                                          Continuous evolution of segmented approach on               (€/month)       ARPU Oct’08
                                                                                                                          month >21
                                             consumer segment
          Maintain                           Strengthen positioning on business consumers through                                          22.0
                                                                                                            VAS      20.1
      Leadership on Value                    integrated convergent solutions
                                                                                                                        5 ,1                7 ,2
                                                                                                            Voice
          in Mobile                          Personal communication services enrichment                                 15                 1 4 ,8

                                                     Instant messaging, web services, interoperability
                                                                                                                     2008E                 2011
                                                     and multi-device access
                                                                                                         TI IPTV Customers
  6          Promote IPTV
                                             Enhance customer experience                                 (MM)                              1.5
                                             Offering enhancement and segmentation                                    0.3
              Penetration
                                             Overall platform potential exploitation                                 2008E                 2011

                                             Partnership with leading system integrators                 ICT Revenues
  7           Strengthen                                                                                 (€ Bn)
                                             Strong growth of value added infrastructure services                                 2X
          Positioning with                                                                                           0.7
                                             New off-the-shelf offering for SME                             Sales
          Business Clients                                                                                  Serv.
                                             Selective acquisitions                                                  2008E                 2011

                                             Local advertising offer development                         Online Advertising Revenues (1)
  8          Develop and                                                                                 (€ MM)
                                                                                                                                           ~250
                                             Development of a multi-channel integrated Adv Platform                  ~130
       Monetize TI’s Online
                                             Innovative network profiling and behavioral targeting
      Multiplatform Audience
                                             solutions development                                                   2008E                 2011
(1) Includes web services and intercompany ads revenues



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Domestic Highlights


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                                                   Reverse Revenue Trends

                                                           Group Revenues Trend                                                     ….value growth

                                                                                                                    TI Domestic Revenues

                                                   2008
                                                                                                                                           BroadBand Connectivity:                        CAGR


Rebalanced Revenue Mix Enhancing Domestic Growth
                                                                                                                        “Innovative                  Fixed and Mobile Broadband
                                                                                                                                                     Mobile VAS                          ‘08 – ‘11
                                                                                                                        Revenues”          Adjacent Businesses:
                                                                                                                                                     IPTV/Digital Home/ICT               ~ +18%
                                                                                                                                                     On line adv. / Service Exposure
                                                   Domestic                                                                                                          “Innovative
                                                                                                                                                     Vertical Application


                                                                      Group                                                                                          Revenues”
                                                                   Cagr Organic                                                                      Mobile voice
                                                                                                                        “Traditional
                                                                     ’08-’11                                                                         Narrow Band
                                                                                                                        Revenues”
                                                                                                                                                     Fixed voice
                                                                      >2.0%                                                                                                               ~ -4%
                                                                                                                                                     Traditional Fixed Data
                                                   Int’l
                                                   & Other

                                                                                                             2007            2008          2009               2010                2011

                                                   2011
                                                                                             Innovative on
                                                                                             Revenue (%)     14%             17%                                                  28%



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                                                   Domestic Cash Cost Efficiency Plan

                                                              Organic Domestic Cash Costs                                                 Efficiency by Year

                                                                                                                                                                              55%        Opex
                                                                                                                                                             30%
                                                                                                                                60%        25%                                45%        Capex
                                                            2008                                                                40%




Reduce Domestic Cash Costs
                                                                                                                               2009        2010              2011          CUM ’09-’11

                                                                                                                                                  Initiatives
                                                                                                                                                                                          (€ Bn)
                                                      GROWTH
                                                                                  <+1.0 Bn                               1 Network Operations                                                0.5
                                                      ENABLER
                                                                                                                         2    Sales & Distribution                                        0.4

                                                                                                                         3 Organization &                                          0.3
                                                                                                                              Supporting Process

                                                   EFFICIENCY                          ~ - 2.0 Bn                                                                           0.2
                                                                                                                         4 IT

                                                                                                                         5 Customer Operations                              0.2

                                                                                                                         6 Delivery & Assurance                                    0.3
                                                            2011                                                              Building &
                                                                                                                         7                                           0.1
                                                                                                                              Energy Management




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Domestic Cash Cost Efficiency Plan

       Organic Domestic Cash Costs                   Efficiency by Year

                                                                                55%        Opex
                                                                 30%
                                          60%         25%                       45%        Capex
     2008                                 40%
                                         2009         2010       2011         CUM ’09-’11

                                                          Initiatives
                                                                                            (€ Bn)
  GROWTH
                   <+1.0 Bn           1 Network Operations                                     0.5
 ENABLER
                                      2 Sales & Distribution                                0.4

                                      3 Organization &                               0.3
                                         Supporting Process

EFFICIENCY              ~ -- 2.0 Bn
                        ~ 2.0 Bn                                               0.2
                                      4 IT

                                      5 Customer Operations                    0.2

                                      6 Delivery & Assurance                         0.3
     2011
                                      7 Building &                      0.1
                                         Energy Management




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1       Network Operations

     Objectives                               Actions                                     KPIs

                                                                                 TI Sites Shared in ‘11 (%)
Reduce non-core           TIM – Vodafone site sharing program full deployment:             23%
infrastructure costs           macro-sites for old-SRB migration
through                        new sites deployment
co-operation with other
                                                                                  ’08-’11 Savings (€ Bn)
players
                          TI Fiber Backhauling Sharing
                                                                                           -0.5
Exploit potential of
outsourcing               Evaluation of potential extension towards Network
opportunities             Sharing (single/multiple PLMN) also with other MNOs


                          Contract Optimization                                  ‘08-’11 FTE Reduction (#)

                                                                                           100




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  2         Sales and Distribution: Consumer and Business

       Objectives                                                     Actions                              KPIs

                                                                                                  ‘08-’11 Consumer Partner
 New integrated F-M                                                                                     Rationalization
 go-to market based                     Lean Customer centric organization
 on geographical
 focus
                                        New “geographical” Go to Market
 Rationalize push and                                                                               ‘08-’11 Opex Savings*
 low-end productivity                                                                                       (€ Bn)
 channels
                                                                                                            -0.4

                                                                                                 ‘08-’11 FTE Reduction** (#)
 New approach on                        F–M Integration: sales channels and offering portfolio
                                                                                                            500
 state of the art                       Lean Customer Centric organization
 processes and
                                        New Go To Market Model (“local focus”)
 integrated F-M
 offering                                     Rationalization of Business Partners
                                              Increase of exclusive channels
                                                                                                  ‘08-’11 Business Partner
 Rationalization of                                                                                    Rationalization
 Business Partners

*Including labour cost saving from efficiency program ** FTE related to efficiency Program



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  3          Organization Simplification and Rightsizing

         Objectives                                        Actions                                      KPIs
                                                                                              Managerial roles reduction
                                      Organization Rightsizing                                        (vs. 2007)
      Organization
                                                                                                         -50%
      Rightsizing
                                      Staff functions restructuring through:
                                           “shared services” activities centralization and
                                                                                              ‘08-’11 Opex Savings (€ Bn)
                                           rationalization
                                           streamlining of “address and control” activities              -0.3
      Align Staff functions
      to Best Practice of
                                      G&A costs strong reduction
      mature industries                                                                       ‘08-’11 FTE Reduction *(#)

                                      Review of HR variable compensation policies                        700




* FTE related to efficiency Program



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4       Information Technology

     Objectives                                Actions                                      Targets
                                                                                    ‘08-’11 Cash Cost Savings
                          Implement One Single Integrated Software Factory                    (€ Bn)
Align share of IT cash
                                                                                               -0.2
costs on industry Best    Rationalization of Application Platform based on:
Practice                        Customer centric E2E process re-engineering                  ‘08-’11
                                Decommissioning of services with marginal               FTE Reduction (#)
                                revenues and/or profitability
                                                                                              -100

Simplify platforms to     New sourcing model (i.e.: off-shoring) leading to
improve flexibility and   cost efficiency, flexibility and focus on internal core   ‘08-’11 Data Center Ratios
increase reliability      competences                                                          3:1

                          Virtualization of IT infrastructure (Next Generation
                          Data Centers and Next Generation Work Place)                 ‘08-’11 Server Ratio
                                                                                               6:1




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  5         Customer Care: Consumer and Business

                 Objectives                                                        Actions                                           KPIs

                                                             Enhance multi-channel “contact” model
 Improve efficiency & effectiveness
                                                             F-M integration (119 vs. 187)
 through a new E2E integrated & multi-
 channel approach                                            E2E process reengineering

 Increase operating efficiency through a                     Off-shoring for “low value” activities
 balanced make vs buy mix                                                                                                    ‘08-’11 Opex Savings*
                                                             Geographical Centers restructuring
                                                                                                                                     (€ Bn)
 F-M integration
                                                                                                                                      -0.2

                                                             F-M Operations optimization:
                                                                     TeleContact Center Rightsizing                        ‘08-’11 FTE Reduction **(#)
                                                                     New CRM systems
 Reach excellence through a new E2E                                                                                               2,150 (***)
 integrated & multi-channel approach                         F-M processes integration and cross-fertilization:
                                                                     Not-human channels increase
 Increase operating efficiency                                       Certified electronic billing
 leveraging on F-M integration                                       Credit management integration
                                                                     Reduction of geographical areas (from 8 to 4)

* Including labour cost saving from efficiency program ** FTE related to efficiency Program *** Include MKT Support & DA



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  6         Delivery & Assurance

         Objectives                                        Actions                                  KPIs


                                                                                                ‘08-’11 Saving
                                                                                                    (€ bn)
                                      Internal Manpower Productivity Improvement
                                                                                                     -0.3



                                      “Ready Line” Installation Project optimization
  Lean Operations &
  Productivity
  Improvement
                                      Fault-rate reduction due to maintenance and quality
                                      improvement of access network
                                                                                            ‘08-’11 FTE Reduction *(#)
                                      Project Reload: Re-engineering of supply chain                   800
                                      processes and External Manpower renegotiation




* FTE related to efficiency Program



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7      Buildings & Energy Management

     Objectives                                Actions                                       KPIs

                         “Hybrid buildings” rationalization: compact space in       ’08-’11 Savings (€ MM)
                         Central Offices and use cleared space to reallocate
                         employees or for rent to third parties                               -0.1
Rationalize Industrial
and Office Spaces
                         Buildings maintenance costs efficiency thanks to space   ‘08-’11 Cleared buildings (#)
                         rationalization and suppliers optimization and
                         renegotiation                                                         -20
                                                                                          (-247,000 mq2)


                                                                                    ‘08-’11 Energy Savings
                         Minimize energy consumption:                                         -12.6%
Optimize energy &             elimination of “high consumption” obsolete                    (-280 GWh)
cooling consumption           equipment
                              innovative & “green” technologies introduction        ‘08-’11 “Green” energy
                              (i.e. cogeneration….)                                     incidence (∆pp)

                              new energy sources (i.e. natural gas,…)                         +5 pp




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Agenda

  Key Messages


  Focus on Core Markets
      Domestic Highlights
      TIM Brasil Highlights


 Targets




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TIM Brasil 2008 Turnaround Actions
                     Actions by TIM                       First Positive Results
                                                         First Call Resolution on Value Post Paid
                                                         Customers
                                                         (% on total calls)
                                                                                   91%
1. Improving caring processes on Heavy Users                   85%



2. Innovation Enhancement through a Convergent Offer
                                                               Apr ‘08              Oct ‘08

                                                         Trend Outgoing price per minute (Jan = 100)
3. Bad Debt Recovery
                                                         100
4. Tariffs rebalancing
                                                          85


5. Roll out capacity acceleration to support strong            Jan       May       Jul        Oct

   traffic growth                                        Bad Debt
                                                         (% on Net Service Revenues)
                                                               9.0%
6. Focus on internal processes and strict cost control
                                                                                     4.4%


                                                               1Q08                  3Q08




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         TIM Brasil – TLC Market overview

                     MOBILE AND BROADBAND ARE THE DRIVERS OF                                            MOBILE TECHNOLOGY IS THE MOST COMMON COMMUNICATION
                                 MARKET GROWTH                                                                     ENABLER IN BRAZILIAN HOUSEHOLDS
          Billion of R$                                                           ∆ abs.              % of households
                                                                      5             4
                                                 ~50%                                                                                                          10%
               BB Mobile                                             11             3
                                                                                                                                                   20%
                                    1                                                                                                                          1%
                BB Fixed            8             ~10%                                                 No phone                   28%
                                                                                                                   38%                             6%
                                                                                                                                  12%                          41%
                   Mobile          43                                50
                                                   ~5%                              7
                                                                                                                                                   40%
                                                                                                      Only Fixed   23%
                                                                                                                                  36%
                                                                                                         Fixed +
                                                   ~2%                              3                    Mobile    27%                                         48%
                     Fixed         43                                46                                                                            34%
                                                                                                                                  23%
                                                                                                     Only Mobile   11%
                                  2008                              2011
                    Lines:                                                                                         2003           2005             2008*      2011*
                                    3              ~50%                    10                   N° of Households    49.7          53.1             58.0        62.8
               BB Mobile
                                    10             ~17%                    16                              (Mln)
                BB Fixed
                  Mobile           144                                    194                                         % Households with PC         ~33%       ~60%
                                                   ~10%
                   Fixed           41                                      45
                                                    ~3%


                             Strong growth driven by Mobile BB                                                     Mobile technology is dominant (in 2011 90% of
                             Diffusion of service (~100% penetration in 2011)                                      households) and will trigger F-M substitution
                             Fixed market growth due to increase of                                                Penetration of PCs doubles in 4 years (2007-2011)
                             competition                                                                           Favourable regulatory context
*Source: internal estimates; IBGE - Pesquisa Nacional por Amostra de Domicílios (2003 - 2007)



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TIM Brasil: Mobile Broadband is a Winning Technology in Brasil

        Superior Technology For Wider Coverage
                                                                                          … Allowing for Faster Time-to-market
                       Reach …
                                                             Last mile length
      Speed (Mbps)                                                                               # cities   % of urban population covered**
                                                             (km)             0.2
      50
                                                                                   0.4
      40                                                                                        ADSL                       ~75%
                                                       LTE (25 Mbps)               0.8
      30                                                                                  Mobile -3G
                                                                                   1.4
      20                                               HSDPA (7.2 Mbps)                       (2008)                       ~50%
      10                                                                           2.0    Mobile -3G
        0
                                                                                   >4.0     (2010*)                        ~80%
                      20           40           60         80        100
                                                 % of reachable customers


         Strategy                                                   Actions                                  Key Objectives
                                                                                                       BB Users (mln)
                                        Flexible/simple tariff plans (“no-frills”)
                                                                                                       30% Contribution to Growth on
                                        Smartphone and 3G devices - new WiFi terminals
      Push for                                                                                         Service Revenue
                                        Lower PC entry level
      mobile BB                                                                                                         ~ 2.5
                                        New specialized kits for mass market distribution
       Growth
                                        Development of IM, Social Networking, mobile                         0.5
                                        advertising
                                                                                                              '08         '11

   * Regulatory minimum coverage Source Teleco
   ** Internal estimates based on ANATEL public figures and analysts projections


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TIM Brasil: Drive Fixed - Mobile Convergence Leveraging on
Pure Mobile Position
      Untapped market of C and D Classes and                                >30% of existing fixed customers* have
          Number Portability for A and B                                  shown willingness to change fixed line provider
                         Fixed line penetration*
                                        Households of A/B/C/D in towns    Considering cities with >10K people,
        96%                                  with more than 10K people
                        84%              (equal to 80% of TIM coverage)   opportunities are:
                                                                               ~8 mln households with fixed connection
                                   59%
                                                                               (A and B classes)
                                                                               ~17MM households with no fixed line
                                                 29%
                                                                               connection (C and D classes)
                                                               0%
         A              B           C              D            E           More than R$40 Bn of revenues to exploit


     Strategy                                               Actions                                 Key Objectives
                                Innovative Offerings                                          TIM Fixo Customers (mln)
   Homezoning                            Best value for price (eg. VAS Included)              7% Market Share
       offer                             New packages for Heavy Users                                           > 3.0
     through                             Packaging TIM Fixo + Mobile BB
     TIM Fixo                                                                                        0.1
                                Distribution:
                                                                                                     '08          '11
                                         Telesales, kiosks and door to door approach
*Source: IBOPE e SD&W



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TIM Brasil Strategy – Top Line
                                          Actions                                2011 Key Objectives
                   2009 main tasks: improve quality of caring…
                                                                               Market share:
                      Increase effort on customer care for Heavy Users
                      Massive focus on post paid churn reduction                        About 24%
 Improve Quality                                                                  focus on Value Customers
   of Service      …and network coverage & performance
                      3G: ambitious network roll-out plan wiith focus on
                      cities with highest HU concentration                     Defend revenue share:
                      2G: back to industry benchmark for network quality                  #2 in
                   Focus on partnership with other operators of the new               Revenue share
                   TMT chain (content & 4-Play)
     Return to
                   Reinforce TIM cutting edge positioning on data offers for   Recovering brand
  leadership in    consumer & business segment:                                awareness
    innovation          starting I-phone sales pre-Christmas Campaign
                        further improve market leadership on SmartPhone               Leadership in
                        segment (i.e. 50% market share on Blackberry)                Brand awareness


 Concentrate on    Invest in Customer Insight and CRM capabilities             Revenues growth
   “Customer                                                                              ~8.0%
                   Selective approach by segment and geography
     Centric”                                                                          (CAGR 08-11)
    Approach       Improve customer life-cycle management




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TIM Brasil Strategy - Efficiency

                          Actions                                   Financial objective
  Commercial Efficiency                                      Commercial cash cost as % of serv.
     New commissioning model increasingly oriented on        revs.
     acquisition quality and value, leading to higher                    >2pp reduction
     efficiency of customer investments.                             in 2011 from 2008 level
     Subsidy strategy increasingly focused on high user
     segment                                                 Bad debt as % of service revs.

     Bad debt reduction to industry benchmark leveraging               From ~6% in 2008
     on new control rules/ stricter credit analysis                      to ~4% in 2011


                                                             Industrial (Network and IT) costs per
  Structural Efficiency
                                                             customer per year
       Optimize transport network infrastructure
      (partnerships vs. make or buy)                                     Slightly decrease

       Maximum exploitation of IT platforms synergies with
      Telecom Italia                                         G&A & labour cost as % of serv. revs.
       Tight G&A cost control
                                                                          ~1pp reduction
       Harvest Human Resources efficiency                             in 2011 from 2008 level




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Agenda

  Key Messages


  Focus on Core Markets
      Domestic Highlights
      TIM Brasil Highlights


 Targets




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Telecom Italia Group in 2011




   A Balanced Portfolio
                               A       A Platform to
                             Solid     Create Solid
                            Capital      Growth of
   Cash         Growth     Structure   Shareholder
 Generators     Enabler
                                           Value
  DOMESTIC        BRASIL




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TI Group 2008 estimates and 2009-2011 targets
                                                                                                               Target
                                                                                                          Target
                                                                                                                        2010-2011
            Organic Data*                                    2008 E                            2009                     Plan


                                                   bn €                           bn €                       CAGR 2008-2011
              Revenues
                                                          30.4-30.5                          Stable                  >2%

                                                   % on revenues                  bn €                       % on revenues 2011
                EBITDA
                                                           ~38.0%                            Stable                 >39%

                                                   bn €                           bn €                       % on revenues 2011
                 CAPEX
                                                              ~5.4                             ~4.8              ~13.0%-13.5%

                                                   NFP/EBITDA reported            NFP / EBITDA reported      NFP/EBITDA rep. 2011
    Net Financial Position
                                                             <3.0X                           ~ 2.9X                  ~ 2.3X




* Assuming perimeter as December 2008, 2008 exchange rates and excluding non organic items impact


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TI Domestic 2008 estimates and 2009-2011 targets
                                                                                Target

   Organic Data*                         2008 E                    2009                       Plan




                                  bn €                    bn €                       CAGR 2008-2011
     Revenues
                                           >23                   22.7- 22.8                   0.2%


                                  % on revenues           bn €                       % on revenues 2011
      EBITDA
                                          ~44%                    9.9 - 10                   ~46%
                                                                                                                 % on revenues 2011
                                                                                                          Cash
                                  bn €                    bn €                       % on revenues 2011
                                                                                                          Cost    ~67% - 68%
       CAPEX                                3.5                     ~3.3               13.0%-13.5%




* Assuming perimeter as December 2008, 2008 exchange rates and excluding non organic items impact


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TIM Brasil 2008 estimates and 2009-2011 targets

                                                                                                   Target

     Local Currency - Organic                              2008 E                         2009                 Plan



                                                                               bn Reais               CAGR 2008-2011
              Revenues
                                                              >7%                         ~ 15.3             ~ 8%


                                                   % on revenues               bn Reais               % on revenues 2011
                EBITDA
                                                         23 – 23.5%                       ~ 3.6             ~ 27.5%


                                                   bn Reais                    bn Reais               % on revenues 2011
                 CAPEX                                        ~3.7
                                                                                          ~2.8              ~ 13.5%
                                                         (~ 1.5 € bn )
* Assuming perimeter as December 2008 and excluding non organic items impact


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