TIM Group: Interim Report on Operations to 31 March 2017 approved by Board of Directors

05/03/2017 - 06:22 PM

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  • GROUP TURNOVER CONTINUES TO GROW: IN THE FIRST QUARTER, CONSOLIDATED REVENUES TOTALLED 4.8 BILLION EUROS, +8.5%, COMPARED TO THE SAME PERIOD OF 2016. BEST CONSOLIDATED RESULT SINCE 2012

  • GROUP EBITDA FOR THE QUARTER WAS 2 BILLION EUROS, (+16.2% COMPARED TO THE SAME QUARTER OF 2016)

  • THE DOMESTIC BUSINESS UNIT CONTINUES TO GROW: TURNOVER +2.8%; EBITDA +11%

  • TURNOVER FROM DOMESTIC SERVICES ALREADY STABLE, ON A NORMALISED BASIS

  • CATTANEO: “I EXPECT REVENUES FROM DOMESTIC SERVICES TO RETURN TO GROWTH IN THE NEXT QUARTER.
    ACCELERATING ON ULTRABROADBAND, RENEWING OUR COMMERCIAL STRATEGY AND MANAGING COSTS WITH DISCIPLINE, WE HAVE, WITHIN A YEAR, RETURNED ALL THE PRINCIPAL PARAMETERS TO GROWTH, IN BOTH ITALY AND BRAZIL."

  • IN BRAZIL, THE RECOVERY TREND IS POSITIVE, WITH GROWTH IN BOTH TURNOVER (+2.5%) AND IN EBITDA (+12.6%) AFTER 13 QUARTERS OF DECLINE

  • THE ADJUSTED NET FINANCIAL DEBT OF THE GROUP TOTALLED 25,235 MILLION EUROS, 1.9 BILLION EURO LESS THAN THE TOTAL AT THE END OF THE FIRST QUARTER OF 2016; NET OF THE EFFECTS OF THE CONVERTIBLE BOND, THE REDUCTION WAS 604 MILLION EUROS

  • THANKS TO GREATER SELECTIVITY, AND A MORE EFFICIENT ALLOCATION OF RESOURCES, CAPEX TOTALLED 831 MILLION EUROS. WITH THESE INVESTMENTS, THE GROUP ACHIEVED CURRENT UBB POPULATION COVERAGE OF AROUND 65% IN THE FIXED SECTOR AND 97% IN THE MOBILE SECTOR

  • RECCHI: “THIS IS THE END OF A THREE YEAR PERIOD OF WORK BY THE BOARD, IN WHICH WE STARTED A MAJOR TRANSFORMATION OF THE COMPANY, AND THE RESULTS ARE SHOWING WE WERE RIGHT."

 

The results of the first quarter of 2017 will be illustrated to the financial community during a conference call scheduled for 3 May at 6.30 p.m. (CET). Journalists may listen in to the presentation, without asking questions, by calling 0633168. The presentation slides will be available at telecomitalia.com/1Q2017/eng.

TIM draws up and publishes the Interim Reports on Operations for the first and third quarters of each year on a voluntary basis. The TIM Group’s Interim Report on Operations to 31 March 2017 also includes the condensed consolidated Financial Statements to 31 March 2017 prepared in accordance with the IFRS accounting standards issued by the IASB and endorsed by the EU and, in particular, with IAS 34 Interim Financial Reporting. The condensed consolidated Financial Statements to 31 March 2017 are not audited.

The accounting policies and consolidation principles adopted in preparing the Condensed Consolidated Financial Statements as of 31 March 2017 are consistent with those adopted in the TIM Group Consolidated Financial Statements as of 31 December 2016, to which reference may be made. It should be noted that no new accounting standards or interpretations endorsed by the EU came into force from 1 January 2017.

In addition to the conventional IFRS financial performance indicators, TIM Group uses certain alternative performance indicators in order to give a clearer picture of the general performance and financial position of the company. Specifically, the alternative performance indicators refer to: EBITDA; EBIT; organic change in revenues, in EBITDA and EBIT; EBITDA margin and EBIT margin; net financial debt carrying amount and adjusted net financial debt. The meaning and content of these measures are explained in the annexes.

Note that this Press Release and in particular the paragraph on the "Outlook for the 2017 financial year", contains forward-looking statements about the Group’s intentions, beliefs and current expectations with regard to its financial results and other aspects of the Group's operations and strategies. Readers of this Press Release should not place undue reliance on such forward-looking statements, as final results may differ significantly from those contained in the above-mentioned forecasts owing to a number of factors, the majority of which are beyond the Group’s control.

MAIN VARIATIONS TO THE TELECOM ITALIA GROUP CONSOLIDATION SCOPE

The following changes in consolidation scope occurred in the first three months of 2017:

 

The following changes to the consolidation scope occurred during 2016:

  • TIMVISION S.r.l. (Domestic Business Unit): established on 28 December 2016;
  • Noverca S.r.l. (Domestic Business Unit): TIM S.p.A. acquired 100% of the company on 28 October 2016;
  • Flash Fiber S.r.l. (Domestic Business Unit): established on 28 July 2016;
  • Sofora - Telecom Argentina Group: classified under Discontinued operations  (discontinued operations/non-current assets held for sale) was sold on 8 March 2016;
  • Revi Immobili S.r.l., Gestione Due S.r.l. and Gestione Immobili S.r.l. (Domestic Business Unit): on 11 January 2016 INWIT S.p.A. acquired 100% of these companies, which were subsequently merged by incorporation.

Milan, 3 May 2017 – The Board of Directors of TIM met today, chaired by Giuseppe Recchi, to approve the Interim Report on Operations to 31 March 2017.

The results of the first quarter of 2017 confirm the validity of the transformation actions started by the management, which have brought significant recovery on the domestic market and in Brazil.

At Group level, TIM closes the first three months of the year with a further improvement on the already positive previous months; it should be noted, in particular, that revenues totalled 4.82 billion euros, an 8.5 percentage point increase on the figure for the first quarter of 2016, and EBITDA totalled 2 billion euros, a 15.6 percentage point increase over the last 12 months, in organic terms, excluding the effect of non-recurring charges.

The Domestic business unit registered EBITDA of 1.62 billion euros (+11% compared to Q1 2016). In organic terms, and excluding the effect of non-recurring charges, the progressive growth over the last 12 months is 12.8 percentage points, supported by better than expected revenues (+5.1 pp compared to Q1 2016) and efficiencies. Note, too, a further increase in the positive trend shown in the previous quarters in both the Fixed segment - where there was a new recovery in line losses and a progressive increase in UBB customers (+230 thousand during the quarter) - and in the Mobile segment, with growth in terms of service revenues (+2.2% compared to Q1 2016) and of customers, with LTE customers accounting for 68% of the total number of mobile internet users (62% at the end of 2016).

In Brazil, the quarter saw a return to growth in both total revenues (+2.5%, 18 percentage points higher in the last 12 months) and service revenues (+3.5%, compared to the -0.7% registered in Q4 2016 and the -4.3% of FY 2016).

“With this quarterly report, we end a three year period of work by the Board of Directors, during which, we are certain, we started a major transformation of the company, and the results are proving us right”, commented Executive Chairman Giuseppe Recchi.

“The acceleration on the new generation networks in Italy and Brazil enables the transformation of the business”, stated Chief Executive Officer Flavio Cattaneo. “We have restored the plus signs to all parameters in both markets. On the domestic market, the increase in fibre and 4G customers is accompanied, net of normalisations, by stabilisation of service revenues already in this quarter, and I expect that revenues from domestic services will grow again in the next quarter".

 

***

 

TIM GROUP RESULTS

Revenues in the first quarter of 2017 totalled 4,819 million euros, 8.5% higher than in the first three months of 2016 (4,440 million euros). The 379 million euro rise is attributable primarily to the Brazil Business Unit, for 284 million euros, and for 99 million euros to the Domestic Business Unit.

In terms of organic change, calculated by excluding the effect of changes in exchange rates and consolidation scope, consolidated revenues were up 2.6% (+121 million euros).

Revenues by operating segment, were as follows:

(million euros)

Q1 2017

Q1 2016

Changes

 

 

% of total

 

% of total

absolute

%

% organic

 

 

 

 

 

 

 

 

Domestic

3,647

75.7

3,548

79.9

99

2.8

2.7

       Core Domestic

3,395

70.5

3,310

74.5

85

2.6

2.6

       International Wholesale

310

6.4

311

7.0

(1)

(0.3)

(1.3)

Brazil

1,181

24.5

897

20.2

284

31.7

2.5

Other Assets

6

0.1

(6)

 

 

Adjustments and eliminations

(9)

(0.2)

(11)

(0.2)

2

 

 

Consolidated Total

4,819

100.0

4,440

100.0

379

8.5

2.6

EBITDA in the first quarter of 2017 totalled 1,990 million euros (1,712 million euros in Q1 2016), 278 million euros (+16.2%) higher than in the first quarter of 2016, with a margin of 41.3% (38.6% in Q1 2016, 2.7 percentage points up).

In organic terms there was an 11.4% increase compared to the first quarter.

EBITDA for the first quarter of 2017 reflected the negative impact of non-recurring charges for a total of 24 million euros (77 million euros in Q1 2016, at the same exchange rate). Without these, the organic change in EBITDA would have been +8.1%, with a margin of 41.8%, 2.1 percentage points higher than in the first quarter of 2016.

The positive change in EBITDA, in both absolute terms and in terms of percentage profitability on revenues, confirms the benefits obtained from the actions of the “cost recovery plan” launched in the second quarter of 2016 by the Domestic Business Unit, and in the third quarter of 2016 by the Brazil Business Unit  which, at the same exchange rates, sustain and amplify the effects of the increase in revenues mentioned above.

The following table shows a breakdown of EBITDA and EBITDA margin by business unit:

(million euros)

Q1 2017

Q1 2016

Changes

 

 

% of total

 

% of total

absolute

%

% organic

 

 

 

 

 

 

 

 

Domestic

1,621

81.5

1,461

85.3

160

11.0

10.9

Margin (%)

44.4

 

41.2

 

 

3.2 pp

3.2 pp

Brazil

372

18.7

258

15.1

114

44.2

12.6

Margin (%)

31.6

 

28.7

 

 

2.9 pp

2.9 pp

Other Assets

(4)

(0.2)

(6)

(0.4)

2

 

 

Adjustments and eliminations

1

(1)

2

 

 

Consolidated Total

1,990

100.0

1,712

100.0

278

16.2

11.4

Margin (%)

41.3

 

38.6

 

 

2.7 pp

3.3 pp

EBIT in the first quarter of 2017 totalled 865 million euros (704 million euros in Q1 2016), 161 million euros (+22.9%) higher than in the first quarter of 2016, with a margin of 17.9% (15.9% in Q1 2016, +2.0 percentage points).

Organic EBIT increased by 146 million euros (+20.3%), with a margin of 17.9% (15.3% in the first three months of 2016).

EBIT in the first quarter of 2017 reflected the negative impact of non-recurring net charges for a total of 24 million euros (76 million euros in Q1 2016  at the same exchange rate). Without these non-recurring items, organic change in EBIT would have been an increase of 94 million euros (+11.8%), with a margin of 18.4%, a rise of 1.5 percentage points.

The profits for the first quarter of 2017 attributable to the Parent Company Shareholders was 200 million euros (433 million euros in Q1 2016) with net non-recurring charges of 115 million euros. In comparable terms, i.e. excluding non-recurring items as well as, in the first quarter of 2016, the positive impact of the fair value valuation of the implicit option included in the mandatory convertible bond and, in the first quarter of 2017, an increase in non-operating risk fund provision for disputes with the tax authorities, the profits attributable to the shareholders of the Parent Company in the first quarter of 2017 was over 50 million euros higher than in the same period of last year.

Group headcount at 31 March 2017 was 60,930, including 51,006 in Italy (61,229 at 31 December 2016, including 51,125 in Italy).

Capital expenditure totalled 831 million euros, 113 million euros less than in the first  three months of 2016, and confirm the selective approach used, identifying more profitable projects, dedicated to innovation/transformation, with, at the same time, a push on UBB coverage levels and quality of service.

The investments by operating segment are as follows:

(million euros)

Q1 2017

Q1 2016

Changes

 

 

% of total

 

% of total

 

 

 

 

 

 

 

Domestic

631

75.9

778

82.4

(147)

Brazil

200

24.1

166

17.6

34

Other Assets

Adjustments and eliminations

Consolidated Total

831

100.0

944

100.0

(113)

Margin (%)

17.2

 

21.3

 

(4.1) pp

The Domestic Business Unit saw investments totalling 631 million euros,147 million euros less than in the first quarter of 2016; the reduction, even in the presence of acceleration in innovative investment on network development and new generation services (+24 million euros) was achieved thanks to careful assessment and selection of other types of investment.

The investments of the Brazil Business Unit increased by 34 million euros (including a positive foreign exchange effect of 46 million euros) compared with the first quarter of 2016; these investments were focused mainly on the evolution of the infrastructure.

Cash flow from Group operations is positive by 361 million euros (25 million euros in Q1 2016).

Adjusted net financial debt totalled 25,235 million euros at 31 March 2017, an increase of 116 million euros from the total at 31 December 2016 (25,119 million euros) and reflects the payment of 257 million euros by the Brazil Business Unit to the consortium that is undertaking the clean-up of the 700 MHz spectrum, the use rights of which were acquired by the Business Unit in 2014. Without this expenditure, adjusted net financial debt would have shown an improvement of 141 million euros, as an effect of the positive trend in operations, positive for 618 million euros, which would have more than offset the needs of financial operations.

Since 31 March 2016, adjusted Net Financial Debt has fallen by 1.9 billion euros; excluding the beneficial effect of the conversion of the Mandatory Convertible Bond, the reduction is 604 million euros.

The net financial debt carrying amount at 31 March 2017 totalled 25,923 million euros, 32 million euros less than at 31 December 2016 (25,955 million euros).

The liquidity margin available to the TIM Group at 31 March 2017 was 12,530 million euros, equivalent to the sum of "Cash and cash equivalents" and "Securities other than investments" for a total of 5,530 million euros (5,483 million euros at 31 December 2016) and unused committed lines of credit for a total of 7,000 million euros. This margin covers the financial liabilities of the Group falling due for at least the next 24 months.

 

BUSINESS UNIT RESULTS

DOMESTIC

Revenues for the first quarter of 2017 totalled 3,647 million euros, 99 million euros more than in the first quarter of 2016 (+2.8%), confirming the improvement trend observed over the previous the year (Q4 2016 +2.5%, Q3 +1.0%; Q2 -1.2%, Q1 -2.3%). Service revenues showed the same dynamic, totalling 3,342 million euros, substantially in line with the same period in 2016 (-10 million euros, -0.3%; 0.0% with the same calendar, i.e. after normalising the extra day of the 2016 leap year).

In detail:

  • Fixed market service revenues totalled 2,424 million euros, a contraction of 59 million euros compared to the first quarter of 2016 (-2.4%) with a constant recovery trend already evident in the three previous quarters (-3.0% in Q4 2016, -3.6% in Q3, -4.8% in Q2). The contraction is wholly correlated with the fall in revenues from voice services (-100 million euros, due to the fall in traditional accesses), as well as the reduction in regulated prices for some wholesale services (-24 million euros). Partially offsetting these effects, there was steady growth in revenues from innovative services for data connectivity (+46 million euros, +10.4%, led by the growth in broadband and ultrabroadband customers) and from ICT solutions (+16 million euros, +11.3%).
  • Mobile market service revenues totalled 1,083 million euros, with an increase of 24 million euros compared to the same period last year (+2.2%, +3.2% with the same calendar). This confirms a stably positive and constantly improving performance, which started in the previous quarters (+3.0 in Q4 2016, +1.1% in Q3, +0.7% in Q2, +0.6% in Q1).

Revenues from product sales, including changes to work in progress, totalled 305 million euros in the first quarter of 2017, 109 million euros more than in the first quarter of 2016. This performance is driven by sales of smartphones and connected devices (smart TVs, modems, set-top boxes, etc.).

The Domestic Business Unit operates separately in two different reference environments, and an analysis of these revenues is provided below:

 
Core Domestic Revenues

Core Domestic revenues totalled 3,395 million euros, an increase of 2.6% (3,310 million euros in Q1 2016).
The performance of the individual market segments is as follows:

  • Consumer: the revenues of the Consumer segment in the first quarter of 2017 totalled 1,820 million euros, with an increase of 62 million euros (+3.5%) compared to the same period in 2016; this confirmed the recovery trend already underway in 2016. In particular:
    • Mobile revenues totalled 888 million euros with a dynamic of growth compared to the first quarter of 2016 (+33 million euros, +3.9%), with an increase of 24 million euros (+3.2% compared to Q1 2016) in service revenues.  The improvement trend already observed over the course of 2016 was therefore confirmed (Q4 2016: +3.2%; Q3: +1,7%) due to the progressive stabilisation of market share and the constant growth in mobile internet and digital services, which supported ARPU levels;
    • Fixed revenues totalled 923 million euros, an increase of 31 million euros compared to the first quarter of 2016 (+3.5%), an improvement from the last quarter of 2016 (+2.0%) thanks to the positive trend in the Broadband and Ultrabroadband customer base and the good sales performance of connected devices, which offset the loss of voice-only accesses.
  • Business: the revenues of the Business segment totalled 1,120 million euros, an increase of 37 million euros compared to the first quarter of 2016 (+3.4%). In detail:
    • revenues from Mobile services fell by 3 million euros (-1.0% compared to Q1 2016); in particular, the decline in traditional mobile services continued (-9.3% of the voice and messaging component, compared to Q1 2016), caused by the trend for customers to reposition on bundle formulations with a lower overall ARPU, and the migration of Government customers to the new Consip offer (the unit prices of which have been lowered), not entirely offset by the positive performance of the new digital services (+8.8% compared to 2016);
    • Fixed revenues rose by 37 million euros (+4,6% compared with the first quarter of 2016) thanks to the constant growth in ICT revenues (+28,8%) which more than compensated for the fall in prices and revenues on traditional services, and the effects of the technological shift to VoIP systems.
  • Wholesale: the Wholesale segment posted revenues of 419 million euros in the first quarter of 2017, a fall of 14 million euros (-3.2%) from the total in the same period of 2016.  The impact on revenues is entirely attributable to the reduction in regulated prices, which caused a 24 million euro shortfall, only partially offset by the contribution made by growth in the figures in NGN, SULL, and Co-location services.
International Wholesale – Telecom Italia Sparkle Group Revenues

The revenues of  International Wholesale - Telecom Italia Sparkle Group in the first quarter of 2017 totalled to 310 million euros, substantially in line with the first quarter of 2016 (-1 million euros, -0.3%). This result may be attributed to a fall in revenues from IP/Data services (-2 million euros, -3.4%) and growth in revenues from Voice services (+1 million euros, +0.6%).

***

The EBITDA of the Domestic Business Unit in the first quarter of 2017 totalled 1,621 million euros, a 160 million euro increase compared to the first quarter of 2016 (+11%), with an EBITDA margin of 44.4%, (+3.2  percentage points compared to the same period of the previous year). In organic terms, the increase was 10.9%.

The first quarter of 2017 reflected the negative impact of non-recurring charges totalling 24 million euros (67 million euros in the same period of the previous year) for redundancy costs and dispute settlements. Without these charges, the organic change in EBITDA would have been 7.6%, with a margin of 45.1%, an increase of 2.0 percentage points on the first quarter of 2016.

The trend in EBITDA benefits not only from the improvement in the commercial results and in revenue dynamics, but also from the positive impacts of the cost transformation and business process simplification programme that gained traction from the second quarter of 2016. The first quarter of 2017 in particular saw more “market driven” than “process driven” costs, for the first time, confirming the customer orientation and importance attributed to the commercial levers. 

EBIT for the Domestic Business Unit in the first quarter of 2017 was 787 million euros (662 million euros in the corresponding period of 2016), an increase of 125 million euros (+18.9%), with an EBIT margin of 21.6 % (18.7% in Q1 2016). The trend in EBIT reflects, primarily, the improvement in EBITDA detailed above. In organic terms, the increase was 18.7%.

EBIT for the first quarter of 2017 reflected the negative impact of non-recurring charges for a total of 24 million euros (67 million euros in Q1 2016). Without these, the organic change in EBIT would have been 11.1%, with a margin of 22.2%.

The headcount, of 51,163 employees, fell by 117 employees compared to 31 December 2016.

 

BRAZIL (average real/euro exchange rate 3.34707)

The revenues of the Tim Brasil group in the first quarter of 2017 totalled 3,951 million reais, an increase of 97 million reais (+2.5%) compared to the same period of the previous year. Revenues from services reached 3,744 million reais, with an increase of 126 million reais compared to the 3,618 million reais of the first quarter of 2016 (+3.5%). These results confirm the steady improvement in the trend compared to 2016, emphasising the return in the quarter to positive growth in both total revenues (+2.5% compared to -1.7% in Q4 2016 and the -8.9% of FY 2016) and services revenues (+3.5% compared to the -0.7% of Q4 2016 and the -4.3% of FY 2016).

Mobile ARPU (Average Revenue Per User) for the first quarter of 2017 was 19,0 reais a significant improvement over the 17.2 reais of the first quarter of 2016 (+10.5%), as a result of a general repositioning onto the post-paid segment and new commercial initiatives, based on a “more-for-more” approach, intended to increase the use of data and the average spend per customer.

The total number of lines as of 31 March 2017 was 61,868 thousand, and corresponds to a market share of 25.5% (26% as of 31 December 2016). The reduction in line numbers in the quarter (-1,550 thousand) is wholly attributable to the pre-paid segment (-1,995 thousand) and was only partially offset by the growth in the post-paid segment (+445 thousand). The weight of the post-paid customer segment grew to 25% of the total customer base at 31 March 2017, compared to the 20% of a year ago. In addition, in this quarter TIM was market leader for net acquisitions in the human post-paid segment (i.e., excluding data only SIMs and machine-to-machine SIMs).

Revenues from product sales totalled 207 million reais (236 million reais in Q1 2016, -12.3%), reflecting a sales policy less focussed on the sale of handsets, as well as the impact of the Brazilian macroeconomic crisis on family spending decisions.

EBITDA totalled 1,247 million reais, 140 million reais more than the first quarter of 2016 (+12.6%). The growth in EBITDA is attributable both to the revenue trend and to the benefits obtained from the efficiency projects on the operational costs structure that started in the second half of 2016, confirming the positive and improving trend, compared to the +5.8% recorded in the fourth quarter of 2016.

The EBITDA margin was 31.6%, up 2.9 percentage points on the first quarter of 2016.

It should also be noted that personnel costs for the first quarter of 2016 also included non-recurring charges for redundancy costs totalling 33 million reais. Excluding the impact of the non-recurring charges, the EBITDA of the first quarter of 2017 showed a positive change (+9.4%) compared to the first quarter of 2016, and an improvement on the performance achieved in the fourth quarter of 2016 (+2.1%).

EBIT totalled 272 million reais, 62 million reais more than in the first quarter of 2016. This result benefited from the greater contribution of EBITDA, which was offset by higher depreciation and amortisation (+79 million reais).

The headcount stood at 9,674 employees (9,849 at 31 December 2016).

 

***

 

EVENTS SUBSEQUENT TO 31 MARCH 2017

There have been no events of any impact since 31 March 2017.

OUTLOOK FOR THE 2017 FINANCIAL YEAR

As envisaged in the 2017-2019 Plan, TIM will continue its transformation process. This is characterised by strong financial discipline to support development, aimed at both creating more room for core investment (Fibre and mobile UltraBroadband), eliminating non-productive cash costs, and at maximising the return on investments. The aim is to ensure structural growth in turnover and EBITA and to affirm TIM as the reference point of the market in terms of technological leadership, network quality and Fixed and Mobile service excellence. The distinguishing elements of this approach are innovation, convergence, exclusive content and being close to our Customers.

In the Domestic Fixed segment, TIM expects to further reduce the fall in customer numbers - with line losses zeroed by the end of 2018 - thanks to the acceleration in the availability and adoption of fibre. TIM NGN will cover around 95% of Italian homes in 2018, and 99% in 2019. The commercial strategy will also play a key role, aimed at retaining and developing customers through, for example, the supply of devices and home appliances connected to the domestic network – the Internet of Things – which can be paid for directly in the phone bill.

In the Domestic Mobile segment, in a competitive context that will be increasingly polarised and segmented, TIM will leverage the capillary nature of its 4G network (which it is expected will cover more than 99% of the population in 2019) and on the availability of converging services and quality content - particularly in the high-end market, which is characterised by ever increasing data consumption. The second “no-frills” brand, Kena, (launched in April) will enable the company to compete in the more price-sensitive segments.

Operations will be characterised by maximum selectivity in investment selection, and by actions to recover efficiency through structural cost optimisation programmes. At the same time, the transformation and simplification of the organisation and processes - combined with commercial developments and the expected growth in turnover - will guarantee low single digit growth in EBITDA for the Group, and will generate the cash needed to reduce the ratio of adjusted net financial debt to reported EBITDA, which is expected to be below 2.7 in 2018.

In Brazil the Plan is to continue with the relaunch of TIM Brasil, repositioning the subsidiary based on the quality of its offer and its network, to compete successfully in the post-paid segment while also returning to solid profitability. In particular, there will be a  further boost to the creation of UBB mobile infrastructure – by the end of the Plan, 95% of the population will have access to 4G with coverage in approximately 3,600 towns  - and to the development of convergent offers thanks in part to agreements with the main producers of premium content.

 

***

 

The manager in charge of preparing the corporate accounting documents, Piergiorgio Peluso, hereby declares, pursuant to subsection 2, art.154 bis of Italy’s Consolidated Law on Finance, that the accounting information contained herein corresponds to the company’s documentation, accounting books and records.

 

Milan, 3 May 2017