ENRICO PARAZZINI ILLUSTRATES TELECOM ITALIA MEDIA’S STRATEGIC OBJECTIVES FOR THE PERIOD 2005 – 2007 (FOLLOWING THE RESTRUCTURING OF THE INTERNET SECTOR) TO THE FINANCIAL COMMUNITY

04/12/2005 - 05:00 PM

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TI Media: expected average annual revenue growth of around 15-20% and net
positive EBITDA in 2007 – the planned investment for the period amounts to
€165 million (to be supplemented by financial resources totalling €250 million
generated from sale of internet activities)
Television: expected annual revenue growth of 25-30%, and net positive
EBITDA in 2007
Major improvements expected also for APCom and Buffetti

Milan, 12 April 2005 – Enrico Parazzini, Managing Director of Telecom Italia Media, will
today present the Group’s strategic objectives for the period 2005–2007, following the
restructuring of the internet sector.
Foreword
On April 4 2005, the Boards of Telecom Italia Media and Telecom Italia approved a
restructuring plan that envisaged concentrating all the Group’s internet assets so as to allow
TI Media to focus on its media activities and sufficient financial resources to develop its
business. Specifically, the plan entails the acquisition of Virgilio and Tin.it from TI Media
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by Telecom Italia for a price of €950 million. Using the financial resources obtained from
the sale of these assets, TI Media will: make new investments in its media business for
approximately €250 million in the period 2005-2007; buy back own shares in the first half
of 2005, within the limits permitted by law, for an amount of around €148 million;
distribute dividends in 2006, for current estimated value is €550 million. Also, before the
end of 2005, La7 Televisioni is to be merged into TI Media.
With reference to the new structure of the Telecom Italia Media Group and in line with the
new international accounting and financial reporting standards (IAS/IFRS), in the three
financial years 2005-2007 we expect the following results:
􀂃 an average annual growth in revenues of around 15-20%;
􀂃 net positive EBITDA in 2007;
􀂃 planned investments of €165 million.
As indicated above, the sale of Virgilio and Tin.it to Telecom Italia generate an additional
for approximately €250 million in financial resources, which will be channelled into further
investments.
Television (La7-MTV)
The following IAS/IFRS-compliant results are expected for 2005-2007:
􀂃 an average annual growth of 25-30% in revenues;
􀂃 net positive EBITDA in 2007.
These goals may be achieved by expanding digital terrestrial television, where both the
technology and the business models are evolving rapidly (especially after the launch of the
pay-per-view service), and by enhancing both La7 and MTV’s position in the analogue
market, where we intend to continue with our ongoing process of improvement.
Telecom Italia Media is currently one of the most active digital terrestrial operators. Its
multiplex covers 70% of the Italian population and it has already sold 560,000 prepaid cards
(for pay-per-view football broadcasts).
The company plans to extend and improve its coverage over the next three years, especially
in digital terrestrial broadcasting, and aims to enrich the content it delivers (both free-to-air
and pay-TV) as well as its interactive services. By leveraging the television skills of the
Group, the company will also be able to develop new channels (free-to-air and pay-TV) to
meet the growing demand for diversified content (music, culture, news entertainment etc).
News (APCom)
The following IAS/IFRS-compliant results are expected for 2005-2007:
􀂃 an average annual growth of 40% in revenues;
􀂃 net positive EBITDA in 2007.
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These targets may be achieved through the development of innovative and customised
multimedia content (audio/video news), the expansion of the portfolio of institutional
customers and the delivery of new services.
Office Products (Buffetti)
The following IAS/IFRS-compliant results are expected for 2005-2007:
􀂃 an average annual growth of around 5-10% in revenues;
􀂃 net EBITDA amounting to 9% of revenues in 2007 (6.4% in 2004);
􀂃 a total cash-flow of €22 million.
These results may be reached by expanding the range of products and innovative services,
consolidating the supply of traditional products, developing Buffetti-branded products with
higher profit margins, and strengthening all sales channels (direct sales and affiliated).
Preliminary results for the first quarter of 2005
Preliminary results at 31 March 2005, compared with those for the corresponding period of
2004, show that gross advertising revenues increased for both La7 and MTV. The former
rose from €19 million to €23 million (+23%) and MTV from €13.5 million to €16.2 million
(+20%). Viewers for La7 have also increased: the average audience share in the period rose
to 2.5%, an improvement of 13% compared with the corresponding period of the previous
year (2.2%). In the same period, APCom continued to enlarge its portfolio of institutional
clients (+18% year to date), and, by following a multi-channel sales strategy, Buffetti
increased sales from its direct outlets by 3%. As regards the internet business, in the first
quarter of 2005, the number of Tin.it ADSL customers rose to 319,000 (+72% compared
with the first quarter of 2004), while Virgilio registered a total of 2.3 billion page views
(+18% compared with the corresponding period of the previous year).