Solidity

Why should we invest in a company? What guarantees do we have in a market increasingly driven by global financial developments?

Scenario

The consequences of the global economic-financial crisis and the growing production capacity of several developing countries led to a comprehensive revision of European industrial policies in recent years.

In the aftermath of the crisis, Europe has been pushing the market towards high-technology manufacturing-a fourth industrial age (Industry 4.0) characterised by the significant impact of technology throughout the production chain. Data, computing power, connectivity, and innovative skills play an increasingly important role in the economic growth and stability of Italy, bringing it into the Digital Economy. All international analyses and studies forecast that GDP growth will rise steadily in those countries that will seize the opportunities offered by digital technology.

By the numbers 1

The TLC industry accounted for

20% of Italy's GDP in 2014

5.1% of Italy’s total investments in 2014



The Digital Economy

Was worth 35 bln euros in 2014 and is expected to reach 50 bln euros by 2017

Grew by over 10 bln euros between 2010 and 2014

Over 50% of the Digital Economy referred exclusively to the IT sector

Our answers

Partner for growth

In a challenging period for the Italian and world economies, we reaffermed our role as a reliable strategic partner to promote innovation in Italy, gaining the trust of institutional as well as other entities.

In Italy, during 2015 we invested approximately 3.9 bln euros, up 1.1 bln euros from 2014, continuing to develop our infrastructure and enhance our network. In Brazil, we invested 1.3 bln euros, of which nearly 61% in innovative infrastructure.

on 2015

In the year just ended, the Corporate Reputation Index grew by 5 percentage points, reaching the highest level in more than 10 years.

plan
update
2016 · 2018

The 2016-2018 three-year plan rea rmed the Group’s commitment to innovation, in both Italy, where we will extend our bre-optic and 4G network, and Brazil, where we will bolster the 3G network and become technological leaders in 4G coverage.

discover more
in Italy
Domestic capex plan 12 bln
Innovazione

of which over 4.5 blneuros
dedicated to fibre-optic network and 4G.

in brazil total investments
Within 14 bln Reais
Innovazione

Mainly for the development of network
infrastructure 3g and 4g

In 2015, Telecom Italia Sparkle increased its revenues by 5.6%

INVESTIMENTS IN 2015

109 million euros

considerably up from 2014 (+29%)

Investimenti Investimenti

In the first 9 months of 2016 revenues have been 1,003 million euros, up 3.3% from the first 9 months of 2015.

The needs of an increasingly connected and digital Italy-as showed by the rise in data traffic in 2015: compared to 2014, +37% on our fixed-line network and +45% on our mobile network-have inspired strategic decisions focusing on investing in next-generation infrastructure as well as offering digital services.

 

We are ready to meet the growing demand for innovative digital services: on the one hand, by supporting Italian businesses in their digital transformation through ICT and Cloud services, and on the other, by tackling the transition from a conventional TLC provider to a Digital Telco & Platform Company.
In accordance with the 2016-18 Strategic Plan we will bolster our Multimedia Entertainment o ering by distributing video, music, publishing and gaming content.



STRATEGIC FOCUS ON
Multimedia
Entertainment
ICT
and Cloud


In the current market scenario, which presents great challenges as well as significant growth opportunities, we set for ourselves the following goals for the 2016-2018 three-year period:

ITALY

Low single digit organic
growth in EBITDA within 2016

EBITDA year-on-year
growth in 2017 and 2018

BRAZIL

Growing Revenue
Share

Increasing EBITDA
margin

 

We will accelerate our investments as showed above while maintaining a strong financial discipline and identifying actions to boost efficiency, so as to reduce net adjusted financial debt below 2.7 times* reported EBITDA by the end of 2018.

Strong financial
discipline



Further actions aimed
to realize efficiencies


2018 net debt/EBITDA
reported < 2.7x
by the end of 2018



*Excluding spectrum, average and YE€/Real 2018: 4.6.

Our results
After a protracted downturn, in 2015 Italy's GDP started growing again, even if only by a modest +0.8%.

What we did in 2015 reflected positively on our share price. After rising over 1 euro in late January, our ordinary shares rose by 33.2%, while our savings shares climbed 37.1%. We clearly outperformed both the European telecommunications index, which grew by 8.9% over the same period, and the Italian index, which rose 12.7%.

The Group’s market capitalisation increased from 16 billions euros at the end of 2014 to 20 billions euros at 31 December 2015.
INWIT

In 2015, we established INWIT (Infrastrutture Wireless Italiane), transferring the radio transmission equipment for mobile telephone networks, both for Telecom Italia and other operators.

In June, we successfully floated 40% of the subsidiary on the Italian stock exchange, raising 854 million euros, and started the still ongoing process to sale a further part of the stake in the company.

Telecom Italia 2015 stock performance
Telecom Italia Shares
+ 33.2%
ordinary shares
+ 37.1%
savings shares
Italian Stock Market (FTSEMib index)
+ 12.7%
In 2015, our domestic business operations once again registered growth in mobile service revenue and early signs of improvement in the historical trend of fixed-lines losses, thanks to the gradual increase in broadband customers. This represents a solid foundation to achieve further progress in 2016. We strongly supported the fixed-mobile convergence by distributing enabling devices and service bundles increasingly tied to fixed-line and mobile ultrabroadband services to customers.

Finally, in light of the favourable market conditions, we bought back nearly 3.8 billions euros worth of bonds, refinancing our debts at lower rates and longer maturities. This will lead to a significant reduction in the cost of debt.
REVENUES

19.7 bln euros

-4.6% on an organic basis compared to 2014

Organic EBITDA
(excluding non-recurring items)

8.1 bln euros

-4.5% from 2014

INVESTMENTS

5.2 bln euros

+213 million euros
from 2014

REVENUES

13.9 bln euros

  (14.9 mld in the first 9 months of 2015)

Organic EBITDA
(excluding non-recurring items)

5.9 bln euros

  (5.6 mld in the first 9 months 2015)

INVESTIMENTS

3.1 bln euros

  (3.2 mld in teh first 9 months of 2015)

Sources


  1. AGCOM based on ISTAT data, 2015 Annual Report on the activity carried out and on the work programmes, 7 July 2015;
    Mediobanca Research Department, R&S 2015 Annual Report;
    ASSTEL, SLC/CGIL, FISTEL/CISL, UILCOM/UIL - Report on the TLC industry in Italy – 2015 Edition