RETELIT Connecting innovation · 2019. 2. 25. · Business Progression driving Profitability 15% 40% 38% 7% 45% Business National Wholesale International Wholesale AAE-1 7,185 19,206

RETELIT Connecting innovationIT Day 2019 – BANCA IMI

February 25, 2019

Agenda

Retelit Overview

2019-2023 Strategic Plan

9M 2018 Financial Results

RETELIT | IT Day 2019 2

Retelit: A Renewed Credibility Onto the International Markets

ITALIAN PROPRIETARY

FIBER NETWORK

▪ Proprietary Network of Optical fibre extending over 12,500 Km (270,000 km of Fiber Optic Cables, thereof 89,000 km in MANs)

▪ 9 Metropolitan Networks and 15 Data Centers▪ 200 Connected cities – over 3,765 Connected sites

INTERNATIONAL GATEWAY

▪ Pan European Network and Mediterranean Ring▪ AAE-1 Consortium: 25,000 km of subsea cable system from

Italy to Hong Kong via Singapore▪ 150 Gbps wavelengths on TEA4 (Siberian route) and SMW5

(submarine Europe to Asia)

PROVEN MANAGEMENT TRACK RECORD

▪ 2015-2017 Results consistently better than Guidance ▪ Performed strong growth on an annual basis and high EBITDA

margin (41% in 2017)▪ Committed management, with good track record in the sector

and business oriented

HIGH REVENUES VISIBILITY AND

STRONG PROFITABILITY

ACTIVE PLAYER IN THE CURRENT TELCO CONSOLIDATION

▪ Solid long term revenue streams based on recurrent contracts, representing more than 80% of Total Revenues

▪ Diversified revenues mix: focus on Business activity with improved marginality

▪ Strong cash generation

▪ Around €100 m of additional financial resources potentially available for inorganic growth

▪ Opportunity to execute buy-side M&A in a fragmented market▪ Potential synergies as % of revenues are higher in TMT sectors

3RETELIT | IT Day 2019

Internet Hub for Southern Italy and Central Mediterranean

▪ An increasingly capillary fiber-optic network, on both national and international stages, with new routes from Europe to Asia

▪ AAE-1 technological upgrade process started with planned transition to 200 Gbps in 2019

A system of international partnerships

▪ BICS (Belgacom International Carrier Services) to extend the European Backhaul

▪ Primary Asian carrier: 1.1 Tbps of submarine capacity sold for 20 years plus future backhaul services

▪ Open Hub Med (OHM), the Sicilian consortium

▪ Remote peering and the Internet eXchange

Note: * AAE-1 members: China Unicom, CIL (HyalRoute), Djibouti Telecom, Etisalat, GT5L, Mobily, Omantel,

Ooredoo, OTEG, PCCW, PTCL, Reliance Jio, Telecom Egypt, TeleYemen, TOT, Viettel, VNPT,

and VTC

AAE-1 – A modern day silk road building a technological

bridge between the West and the East via Bari, Retelit’s

Italian landing station:

25kKm of submarine cable

system

19Terminal Stations

40%World

population connected

along this route40tbpsKm of submarine cable

system

5.5%Retelit’s

Participation


Focus on Wholesale and Business

Wholesale

▪ Wholesale of infrastructure and connectivity

▪ 84% YE 2017 revenues

Business

▪ Sales of TLCand ICT servicesto medium and large corporates

▪ 16% YE 2017 Revenues

Revenue growthMain customersProducts/Projects

Innovation in Telco and Data Center services:▪ Connectivity solutions with SD-

WAN technology ▪ Cyber Security, Managed Firewall,

DDoS Mitigation▪ Application Performance

Monitoring▪ Hyper convergent Virtual Data

Center▪ Hybrid Cloud

Forefront platforms development:

▪ backbone Dense WavelengthDivision Multiplexing (DWDM) / Optical Transport Network (OTN)

▪ 200Gbps platform backbone/local▪ Landing Station interconnection▪ IP transit▪ Carrier Ethernet▪ GIS (Geographic Information

System)

1

3

6

10

2014 2015 2016 2017

36 3842

53

2014 2015 2016 2017


Stock and Governance

62.82%Market

9.99%Axxion S.A.

12.82%Fiber 4.0 S.p.A.

14.37%Bousval S.A.

BOARD OF DIRECTORS SHAREHOLDER

Dario Pardi Chairman

Federico Protto CEO

Gianluca Ferrari Director

Faisel Gergab Director

Paola Bruno Independent Director

Gianbeppi Fortis Independent Director

Patrizia Mantoan Independent Director

Marina Rubini Independent Director

Luca Cividini Director

Price (February 19, 2019): €1.465

Market Cap (February 19, 2019): €240.65 m

Average Daily Volume*: 549,204.6

STAR SEGMENT

6

Note: *Last three months

RETELIT | IT Day 2019

0

50

100

150

200

250

300

350

400

01/01/2016 01/07/2016 01/01/2017 01/07/2017 01/01/2018 01/07/2018 01/01/2019

RETELIT FTSEMIB FTSE STAR

Agenda

Retelit Overview




Macro Trends in the Telco Industry


The Italian Telco industry is expanding (CAGR ‘18-’23: +17%)

Acceleration of new generation network development programs: TIM announced it plans to cover 95% of Italy and OpenFiber announced its plans to extend its proprietary network technology.

Increase of data traffic and an average connection speed (5G tender process)

New Players entering the Italian market (OTT and Mobile Operators such as Iliad)

Increase of ICT Infrastructure Services Operators

▪

▪▪▪

▪

The International Wholesale market is expected to grow significantly (CAGR ’18-’23: +17%)

Volume: The growth rate of the demand for Broadband is continuously increasing

Price: The unit price of transmission capacity is in continuously decreasing on the main international routes),but less so than the expansion of volumes.

▪

▪

▪

The Business market is driven by new market trends thanks to digitalization and the digital conversion

Rise of Big Data and Data analytics as main trends as well as Cloud Computing

New technological trends include Cyber Security – increasingly central for Businesses and the Public Sector

An Expected IoT take off thanks to the arrival of 5G technology and the consolidation of technology such as NetworkFunction Virtualization (NFV)

Mobile communications and the introduction of 5G: enablers for Industry 4.0

▪

▪

▪▪

▪

19.5118.44

17.22

15.62

12.67

0.611.16

2.12

3.89

6.55

0

5

10

15

20

Set -14 Set -15 Set -16 Set - 17 Set -18

Copper FTTC & FTTH

Italian TLC Market - FTTC&FTTH Infrastructures ConstantlyGrowing


CAGR ‘14 – ’18 FTTC&FTTH: 168.4%

• The copper accesses plummeted by 18.9% YoY and 35% from September2014 to September 2018

• The services based on FTTC technologies have grown by 70%

• Increase in FTTH access by 50%

The weight of FTTC and FTTH lines on totalaccess went from less than 2.5% to more than32%

Source: AGCOM

Million of Lines

0.85

1.74

3.39

5.79

0.30.31 0.38

0.50.76

0.61

1.16

2.12

3.89

6.55

0

1

2

3

4

5

6

7

Set -14 Set -15 Set -16 Set - 17 Set -18

FTTC FTTH FTTC & FTTH

Fiber Coverage Million of Lines

Size Matters - A Consolidating TLC Market Scenario


• In recent years, there has been a strong concentration among operators both nationally and internationally

• The TLC sector in first place for synergies created by M&A, thanks to the tendency of the sector and the entry of investment andstructural funds

Source: Bain Merger Integration Experience Database

1

2

3

45

6

7

Main opportunities /

threats from aggregations in

the sector

Increased possibility of technological investments

Commercial coverage of the territory

Network capillarity and services

Economies of scale by optimization of direct costs

Contractual strength and reduction of network costs

Staff synergies

Brand awareness

SECTOR - CUMULATIVE SYNERGIES OF COST AND REVENUE AS % OF REVENUES

Potential Aggregation Scenarios Overview

- +Potential Risks

Local and/or Regional Acceleration

National AccelerationTLC Complex Acceleration

• Aggregation between local and / or regional players to strengthen infra coverage and supply to accelerate the relevant industrial districts’ penetration

• Aggregations between complementary national players to extend / optimize the network and reinforce the offer in areas with little manageability

• Aggregations in the TLC Tier II market, both regional and national, to create a new Tier I player in the TLC B2B market

TLC Market

A B C

TLC System Acceleration

• Aggregations between Tier I operators) or large service companies to create a new, even more competitive reality in the national and international scenario

D

Retelit at the top of its Industry for Profitable Growth

Last periodRevenue growth1


New 2019-2023 Strategic Plan based on four major pillars

Gaining market share in the National and International Wholesale

Leveraging on the customer base segmentation and widening the service offer to increase penetration in the Business segment

Leveraging on international partnerships to drive AAE-1 Revenues

The Board of Directors on December 19, 2018 approved 2019 guidance and reviewed strategic guidelines for the subsequent period 2020-2023. The updated targets of the strategic plan will be revealed in March 2019 alongside the approval of the 2018 results.

STRONG POTENTIAL FROM ORGANIC GROWTH ACTIVE PLAYER IN THE TELCO CONSOLIDATION

Playing an active role in the consolidation of a fragmented market through M&A Execution


Organic Growth: Strong Momentum from the Business segment

▪ Oversight of important customers: 4G/5G telco mobile operators

▪ More competitiveness on products/services

▪ Strong presence in areas where significant investments are

planned (BUL, FTTN)

▪ Leverage on international presence and on cable AAE-1

Retelit’s Drivers

BUSINESS

▪ Single-digit increase in market share

▪ Retelit premium provider of infrastructure on the Eurasian route

▪ Development of upper level services and creation in Bari

▪ New Go-to-Market: a unique and integrated solution with a range

of highly reliable services;

▪ Cyber Security Control Room

▪ Application Performance Monitoring (APM – SDWAN)

▪ Cloud

▪ International Connectivity

▪ Data centers

▪ Development of partnerships for the sale of integrated solutions

▪ Expansion of direct and indirect sales structure

▪ Increase of addressable market

▪ Double-digit increase in market share

▪ 3x 2022 revenue vs. YE 2017

▪ Increase in profitability

WHOLESALE

Retelit’s Drivers

Retelit’s Objectives

Retelit’s Objectives

▪ Stable Market ▪ Wholesale : CAGR ‘18-’23: +17%▪

▪ Strong growth prospects▪ CAGR ‘18-’23: +3%

Market Trends Market Trends


Inorganic growth to accelerate the process

-

+

Local and/or regional Acceleration

National Acceleration

TLC System Acceleration

Adjacency Acceleration

• Acquisition of local and/or regional player to strengthen coverage and offer to accelerate the penetration of relevant industrial districts

• Acquisition of a complementary national players to extend/optimize the network and to strengthen the offer in areas of lower presence

• Retelit aggregating subject in the TLC Tier II) market both regional and national to create a new Tier I player in the TLC B2B market

• Acquisition of a IT player to extend the offer to adjacent companies accompanied by the strengthening of Data Center and Cloud services with possible acquisition of a DC Tier IV (CDLan)

TLC e IT System Acceleration

• Retelit aggregating subject in the TLC Tier II and IT market ( G+H Scenarios) to create a leading player at national level Tier I in the Convergent B2B Leader in the Cloud

TLC Market

IT Market

A

B

D

E

OVERVIEW OF LIKELY SCENARIOS

RESOURCES POTENTIALLY

AVAILABLE FOR M&A

€80-100 M

C


Guidance YE 2018 & 2019

Revenues

€67-71 m

EBITDA

€24-28 m

NFP (Net cash)

€37-40 m

Capex

€28-31 m

Revenues

€76-80 m

EBITDA

€29-33 m

NFP (Net cash)

€23-27 m

Capex

€22-28 m

2018 TARGETS 2019 TARGETS

2018 Guidance 2019 Guidance

▪ Economic guidance are confirmed despite the adoption of the new

accounting standards.

▪ Investments could result lower than originally planned and therefore

potentially below the range €28 m and €31 m

▪ NFP is expected to be around the lower range level of the guidance,

net of the effect of the early adoption of IFRS 16 for €17.8 m (9M

2018)

▪ Strong Business segment growth through a unique and integrated

range of highly reliable services based on consolidated proprietary

infrastructure.

▪ Moderate growth in National and International wholesale through

the acquisition of direct competitor market shares by way of

leveraging important clients

▪ Leveraging on international partnerships and new projects to drive

AAE-1 Revenues


Agenda

Retelit Overview




▪ AAE-1 members’ Management Committee approved the go-ahead for an earlier technological upgrade of the AAE-1 cable, from the initial 100 GB to 200 GB, expected to be available from mid-2019

▪ The Italian Government exercised the Golden Power on the assumption that Retelit holds assets of strategic importance in the telecommunication sector. Retelit BoD resolved to challenge this decision in the competent legal forums

GROUP

1

FINANCIALS

3

OPERATING ACTIVITY

2

▪ Retelit chosen by an OTT Player for the provision of guaranteed broadband connectivity

▪ Retelit and Huawei join forces to support businesses with an innovative high-performing solution to support businesses on their Digital Transformation

▪ Retelit has been chosen by the San Donato healthcare Group as the exclusive supplier and partner for the development of an integrated solution to upgrade and develop its ICT systems

▪ Total Revenues €50.5 m (+ 14% vs 9M 2017)

▪ EBITDA €21.8 m (+ 37% vs 9M 2017) and EBIT €5.4 m in line with 9M 2017 with further improved EBITDA margin:43% vs 36% in 9M 2017

▪ Net Profit €3.8 m (vs €4.8 m in 9M 2017) mainly explained by AAE-1 related depreciation and financial charges

▪ NFP (net cash) to €11.9 m (vs. €33.4m at 2017), after €17.8 m of financial liabilities due to IFRS 16

9M 2018 Highlights


PROFIT & LOSS

CASH FLOW• Revenues + 14%

• EBITDA + 37%

• EBIT in line with 9M 2017

• Net profit -22%

▪ 9M 2018 NFP (Net Cash) positive at €11.9 m, down compared to € 33.4 m at YE 2017 as a

result of first ever dividends payout of €3.3 m and net of €17.8 m of financial liability

relating to IFRS 16

▪ Increase in Net Equity of €14.5 m (as of at 1 January 2018) mainly due to cumulated one-off

effect from IFRS 16 and IFRS 15 adoption

▪ Cash flow from financing reflecting senior loan repayments in the period for a total of €15.8

m

BALANCE SHEET

€000 9M 2018 YE 2017

FIXED ASSETS 192,452 173,619

NFP - net cash 11,926 33,420

NET EQUITY 161,014 146,474

€000 9M 2018 9M 2017 Cash Flow from Operating Activities 21,928 15,204

Net changes in Current Assets/Liabilities (3,910) 3,563

Net Cash flow from Operating Activities 18,019 18,767

Cash Flow from Investing Activities (13,086) (21,680)

Cash Flow from Financing Activities* (32,326) 11,631

Total Cash Flow (27,393) 8,718

Strong Revenues and EBITDA growth vs 9M 2017

€000 9M 2018 9M 2017 REVENUES 50,459 44,272

EBITDA 21,781 15,907

EBITDA margin 43.2% 35.9%

EBIT 5,377 5,325

EBIT margin 10.7% 12.0%

EBT 3,963 5,085 EBT margin 18.2% 32.0%

NET PROFIT 3,756 4,844 Net Profit margin 7.4% 10.9%


-00

1,000

2,000

3,000

4,000

5,000

6,000

Oct '16 Nov '16 Dec '16 Jan '17 Feb '17 Mar '17 April '17 May '17 June '17 July '17 Aug '17 Sept '17 Oct '17 Nov '17 Dec '17 Jan '18 Feb '18 Mar '18 Apr '18 May '18 Jun '18 Jul '18 Aug '18 Sept '18

Recurring One off

+1% Monthly CAGR (Recurring Revenues)

+21% Cumulated growth from September 2017 of Recurring Revenues)

Enhanced Monthly Recurring Revenues Growth

Oct '16 Nov '16 Dec '16 Jan '17 Feb '17 Mar '17 April '17 May '17 June '17 July '17 Aug '17 Sept '17 Oct '17 Nov '17 Dec '17 Jan '18 Feb '18 Mar '18 Apr '18 May '18 Jun '18 Jul '18 Aug '18 Sept '18 Total '18

Recurring 3,469 3,535 3,593 3,632 3,678 3,702 3,866 3,891 3,895 4,039 4,079 4,137 4,177 4,179 4,357 4,739 4,811 4,904 4,786 4,833 4,854 4,868 4,936 5,058 43,790

One off 320 465 864 263 346 1,892 775 1,102 2,770 479 530 533 664 663 5,248 3 30 46 75 102 3,407 287 585 1,545 6,081 Total Operating

Revenues 3,789 4,000 4,457 3,895 4,025 5,594 4,641 4,993 6,664 4,519 4,609 4,669 4,841 4,842 9,605 4,742 4,841 4,951 4,862 4,935 8,262 5,155 5,521 6,603 49,871


• Operating revenues up 14.4% to €49.9 m

• Improvement of National Wholesale +17% YoY: robust momentum in 9M 2018 despite lower IRUcontracts

• Wholesale International market +17%: 9M 2018 benefited also from the AAE-1 submarine cablesystem contribution of €3.5 m

• Business segment +1.6% YoY: Over performance expected in the last quarter 2018 driven by San Donatoand other new contracts

Operating Revenues by Segment

Business Progression driving Profitability

15%

40% 38%

7%

45%

Business National Wholesale International Wholesale AAE-1

7,185

19,206 17,218

43,609

7,303

22,444 20,124

49,871

Business InternationalWholesale

NationalWholesale

Total

9M 2017 9M 2018

44,272

50,459

3,265

(2,599)

4,105

(41)

1456

Revenues9M 2017

TLC Services& M-link

IRUs andNetwork

maintanance

Sales of cables&

optical fibre

Otherproducts

OtherRevenues

Revenues9M 2018


Note: * Based on Total Contract Value (TCV) cash impact

• New orders in 9M 2018 generated a TCV of €46.8 m, +7.2% vs. 9M 2017 reflecting a successful execution of the Industrial Plan

• Overall Growth is driven by the strong Business segment performance (+67%) driven by the San Donato Group contract

• Robust growth in TLC and Cloud services

New Orders driven by Business and International Wholesale

New Orders by Segment (TCV)* New Orders by Services (TCV)*

National WH International WH Business Total Orders

15,823 14,857 12,950

43,630

12,161 13,003

21,597

46,761

9M 2017 9M 2018

Tlc Dc & Cloud IRU &Infrastructure Sales

AAE-1 WetCapacity

21,339

3,696

10,661

4,378

29,396

4,411

9,506

854

9M 2017 9M 2018


• EBITDA +37% YoY to €21.8 m mainly due to animproved Revenues mix and higher marginsgenerated by value added services and IFRS 16

• EBITDA Margin increased from 36% to 43%

• Maintenance in line with 9M 2017 due to networkdevelopment activities, despite AAE-1 submarinecable system entering in commercial services in June2017

• Personnel Costs increase mainly due to salesdepartment intakes

• Consulting Costs: reduction advisory costs includinglegal fees for Golden Power. Total 9M 2018 ofGolden Power fees about €0.2 m

EBITDA 9M 2018 vs. 9M 2017

Revenues & EBITDA Performance

EBITDA growth profiting from improved revenues mix

15,907

6,187

3,916

(2,726)

21

(59)(675)

(1000)

210

EBITDA9M 2017

Increase inRevenues

IFRS 16Variation

Costs ofaccess and

interconnection

Emolumentsdirectors and

auditors

Maintenance Personnelcosts

Other Costs Strategic &Management

Consulting

EBITDA9M 2018

21,781

33,410 35,219 37,296 38,966 37,167

42,104

49,592

65,374

50,459

28.0%30.4%

25.9% 26.8%21.3%

26.2%

29.4%

41.2% 43.2%

2010 2011 2012 2013 2014 2015 2016 2017 9M 2018

Total revenues % Ebitda (on revenues)


2010 2011 2012 2014 2015 2016 2017 9M 2018

57 4,710 8,234

15,707

11,526 8,095

33,420

11,926

17,840

29,766

▪ Investments amounted to €12.9 m thereof:

▪ €9.2 m investments mainly in infrastructure of fiber-optic network and backbone

▪ €3.8 m related to the investment in the AAE-1 submarine cable system and projects

▪ The company’s fiber optic infrastructure at 9M 2018 covers approx. 12,500 kilometers (equivalent to approx. 270,000 KM of fiber-optic cables, of which 89,000 located in MAN

▪ Positive NFP (Net Cash) at €11.9 m down from €33.4 m at YE 2017 mainly due to netting of €17.8 m for IFRS16 financial liability

▪ Fully drawn senior debt facilities relating for €15 m (reduced from €30 m at YE 2017) of banking pool’s facilities (Unicredit, MPSFS and Banco BPM)

NFP 1H 2018 vs. YE 2017

Historical NFP (Net Cash)

IFRS 16 application:

- 49% Housing- 43% Real Estate Assets- 7% Radiolink and Dark Fiber

Net Cash remains high

33,420

11,926

(13,086)

18,019

(3,285)

(5,302)

(17,840)

NFP DEC 2017 Capex Operatingcash flow

Dividend Debt &Other IFRS 16Variation

NFP 9M 2018


Retelit invests capital to create value, measured in recurring Revenues and EBITDA growth. Traditional Business Growth capex plus NetworkDevelopment capex grew from 66% of total capex in 2014 to 88% as of September 2018

Traditional Business:• Growth is capex is supporting medium to long-term progress to enable services for one or more customers/contracts• Network Development is capex related to short-term success-based investments• Maintenance is capex required to maintain the current operational service level (“proxy” for infrastructure obsolescence level)AAE-1:• Consortium, CLS and Backbone directly relating to AAE-1 infrastructure construction• New Service and Network Expansion is capex pertaining to add-on projects intended to enhance AAE-1 revenues potential

Traditional Business AAE-1 Submarine Cable System

Investments breakdown by B.U.

3,718

5,478

9,063 9,815

5,260 4,690

3,297

5,082

6,084 7,340

5,253

3,358 3,672 3,607 3,358

1,856 1,471 1,138

10,687

14,167

18,505 19,011

11,984

9,186

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2014 2015 2016 2017 9M 2017 9M 2018

Growth Network Development Maintenance Total

35%18%

33%

49%

25%

36%39%

31% 34%

10%

39%

51%

51% 31%

18%

56%

31%

14%

7,584

15,023

11,750

7,796

4,659

--600

1,400

- --

2,293 2,402

5,440

554 -

3,761 7,584

17,916

15,552

13,236

5,213

3,761

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2014 2015 2016 2017 9M 2017 9M 2018

Consortium AAE-1 Cls and Data Center Backbone New Services & Network exp. Total

100%

41%

59%

15%

76%

84%

3%

13% 9%

89%

11%

100%


(€/1000) 2014 2015 2016 2017 9M 2017 9M 2018

EBITDA 7,920 11,043 14,576 26,904 15,907 21,781

- IRU annual revenue (3,321) (5,250) (6,259) (6,010) (5,296) (1,586)

+ IRU Tcv Delivery "no O&M" 4,494 7,846 11,657 5,305 3,262 0

+ OTC service Delivery -OTC service revenues (848)

+ KBC e GEM transactions charges 2,032 - - - - -

+ M&A Costs - - - 548 548 -

- AAE-1 Ebitda - - - (3,417) (496) (1,241)

-IFRS 16 Adjusted Opex (4,169)

TOTAL Adjustment 3,205 2,596 5,398 (3,574) (1,982) (7,844)

Cash EBITDA 11,125 13,639 19,974 23,330 13,925 13,937

Delta b) - a) 3,205 2,596 5,398 (3,574) 2,107 (7,844)

Delta % a) vs b) 40% 24% 37% -13% 19% -36%

Capex Traditional Business 10,687 14,167 18,505 19,011 11,984 9,186

Cash Ebitda - Capex Traditional 438 (528) 1,469 4,319 1,941 4,751

Cavo AAE-1 7,584 16,062 15,552 13,236 5,653 3,761

Totale Capex 18,271 30,229 34,057 32,247 17,637 12,947

+ IRU Tcv Delivery "AAE-1" - - - 26,306 5,976 82

Total Cash EBITDA 11,125 13,639 19,974 53,053 20,397 15,260

Total Cash Ebitda - Capex 2,760 2,313

DefinitionRetelit’s revenues recognition reflect new IFRS 9, 15 and 16 principles. No impacts on cash generation with 100% of IRUs or OTC cash stillcollected upfront. Consequently, the gap between cash and reported Ebitda should be larger than before with prior accounting principles

Cash EBITDA

Due to IFRS 16 adoption thatmoved opex to right-of-useassets


Owner Earnings (OE) represent the amount of cash that a “business owner” can extract from the business without affecting the business ‘operations. OE can beviewed as the true “cash profits” that a company generates for its shareholders which, due to accounting rules, frequently differ significantlyfrom reported IFRS net income

Residual OE after Growth Capex represents the true cash generated in the period

Traditional Business: Owner Earnings

Due to IFRS 16 adoption thatmoved opex to right-of-useassets

(€/1000) 2014 2015 2016 2017 9M 2017 9M 2018

Net income (7,881) 3,418 2,865 11,375 5,325 3,755

+ Depreciation and amortization 11,451 11,823 12,405 14,675 10,582 16,404

-IFRS 16 Adjusted Opex - - - - - (4,169)

+ Impairments 5,783 - - - - -

- Financial Income (derivates) - (3,191) - - - -

- Maintenance and Network Capex (6,969) (8,689) (9,442) (9,196) (6,724) (4,496)

- IRU annual revenue (3,321) (5,250) (6,259) (6,010) (5,296) (1,586)

+ IRU Tcv Delivery "no O&M" 4,494 7,846 11,657 5,305 3,262 0

+ OTC service Delivery -OTC service revenues (848)+/- Other Adjustments (One-offs items):

+ KBC e GEM transactions charges 2,032 - - - - -

- AAE-1 Result - - - (1,780) 321 (1,488)

+ M&A Costs - - - 548 548

Owners Earnings 5,589 5,957 11,226 14,917 8,018 7,572

Traditional Business (excluding AAE-1)


IR Contacts

Retelit S.p.A.Viale Francesco Restelli, 3/720124 Milan

[email protected]

www.retelit.it

NEXT EVENTS

Institutional:

March 15, 2019Retelit’s FY 2018 results

March 20-21, 2019STAR Conference, Milan

April 24, 2018Annual General Meeting (AGM), Milan

Business & Wholesale:

March 04-05, 2019Capacity Middle East, Dubai

March 13, 2019Wired Health, Milan

April 03-04, 2019IoThings, Milan


https://www.linkedin.com/company/retel

https://twitter.com/Retelit

https://www.youtube.com/channel/UC20IRCqSPROKY0rNP4uDWMw

https://www.facebook.com/Retelit/

https://www.instagram.com/_retelit/

http://www.retelit.it/

THIS DOCUMENT HAS BEEN PREPARED BY RETELIT S.P.A. (THE “COMPANY”) FOR THE SOLE PURPOSE DESCRIBED HEREIN. IN NO CASE MAY IT BE

INTERPRETED AS AN OFFER OR INVITATION TO SELL OR PURCHASE ANY SECURITY ISSUED BY THE COMPANY OR ITS SUBSIDIARIES.

THE CONTENT OF THIS DOCUMENT HAS A MERELY INFORMATIVE AND PROVISIONAL NATURE AND THE STATEMENTS CONTAINED HEREIN HAVE NOT BEEN

INDEPENDENTLY VERIFIED. NEITHER THE COMPANY NOR ANY OF ITS REPRESENTATIVES SHALL ACCEPT ANY LIABILITY WHATSOEVER (WHETHER IN

NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY FROM THE USE OF THIS DOCUMENT OR ITS CONTENTS OR OTHERWISE ARISING IN CONNECTION WITH

THIS DOCUMENT OR ANY MATERIAL DISCUSSED DURING THE PRESENTATION.

THIS DOCUMENT MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON. THE INFORMATION CONTAINED HEREIN

MAY INCLUDE FORWARD-LOOKING STATEMENTS THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS ABOUT THE COMPANY’S BELIEFS AND

EXPECTATIONS. THESE STATEMENTS ARE BASED ON CURRENT PLANS, ESTIMATES, PROJECTIONS AND PROJECTS, AND CANNOT BE INTERPRETED AS A

PROMISE OR GUARANTEE OF WHATSOEVER NATURE.

HOWEVER, FORWARD-LOOKING STATEMENTS INVOLVE INHERENT RISKS AND UNCERTAINTIES AND ARE CURRENT ONLY AT THE DATE THEY ARE MADE.

WE CAUTION YOU THAT A NUMBER OF FACTORS COULD CAUSE THE COMPANY’S ACTUAL RESULTS AND PROVISIONS TO DIFFER MATERIALLY FROM

THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENT. SUCH FACTORS INCLUDE, BUT ARE NOT LIMITED TO: TRENDS IN COMPANY’S BUSINESS,

CHANGES IN THE REGULATORY ENVIRONMENT, ITS ABILITY TO SUCCESSFULLY DIVERSIFY AND THE EXPECTED LEVEL OF FUTURE CAPITAL

EXPENDITURES. THEREFORE, YOU SHOULD NOT PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS. RETELIT DOES NOT UNDERTAKE

ANY OBLIGATION TO UPDATE FORWARD-LOOKING STATEMENTS TO REFLECT ANY CHANGES IN RETELIT’S EXPECTATIONS WITH REGARD THERETO OR

ANY CHANGES IN EVENTS.

ACCOUNTING STANDARD IFRS 9,15 AND 16

STARTING FROM 01 JANUARY 2018 IFRS 15 – REVENUE FROM CONTRACTS WITH CUSTOMERS - AND IFRS 9 – FINANCIAL INSTRUMENTS, ENTERED INTO

EFFECT. FURTHERMORE, RETELIT DECIDED TO EARLY ADOPT IFRS 16 – LEASE, FROM 01 JANUARY 2018 (INSTEAD OF 01 JANUARY 2019)

29

29

Disclaimer

RETELIT | IT Day 2019

Documents

RETELIT Connecting innovation · 2019. 2. 25. · Business Progression driving Profitability 15% 40% 38% 7% 45% Business National Wholesale International Wholesale AAE-1 7,185 19,206