Infrastrutture Wireless Italiane SpA Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rohit Modi - Citi Investment Research - Analyst : Hi. Congratulations and great set of results and thank you for the opportunity. Just a couple of questions from my side. Firstly, given the imminent environment right now in Italy. If you can give us more context around your current discussion with your Anchor tenants as well as OLOs in terms of -- also in contact with the recent comment from Fastweb regarding renegotiation of the contracts. If you can give us more color around that if you've already started discussing with them on existing contract? Secondly, what percentage of your guidance, current guidance is coming from the commitments that you already have in place and what is based on the expectations that you think in terms of connectivity requirement that you see -- that's coming from your assumptions basically, I'm just trying to understand the upside and downside on that. And thirdly, on your leverage and flexibility. On leverage, what are the factors where you will be okay to move beyond 5.1 times, 5.2 times in terms of leverage given you have already reached within your target range now? Thank you.

Question: Rohit Modi - Citi Investment Research - Analyst : Sorry, just one clarification. So your guidance is based on the commitment you had that with Vodafone, the previous Vodafone Italia and not with Fastweb as of now. That's a... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 05, 2025 / 9:00AM, INWT.MI - Q4 2024 Infrastrutture Wireless Italiane SpA Earnings Call

Question: Rohit Modi - Citi Investment Research - Analyst : Thank you.

Question: Andrew Lee - Goldman Sachs - Analyst : Okay. Morning, everyone. Okay. The question was basically trying to understand how stretch stroke conservative you've been in your 2030 guidance. Maybe I can put it into two parts. Part 1 is on your assume densification by operators for 5G within the 2030 guidance, what are you assuming in terms of the level of densification that you're expecting and when? Obviously, that's a relatively hard thing to call in terms of timing. And then what's clear in terms of your near-term guidance as you've been working all out to drive efficiencies to offset the shortfall in tenancies at the moment. Is this the maximum run rate you can achieve in terms of cost savings that you're delivering right now and you're factoring that into your longer-term guidance, too? Thank you.

Question: Andrew Lee - Goldman Sachs - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 05, 2025 / 9:00AM, INWT.MI - Q4 2024 Infrastrutture Wireless Italiane SpA Earnings Call

Question: Roshan Ranjit - Deutsche Bank - Analyst : Great, sir. Morning, everyone. Thanks for the question. Diego, you mentioned the mix of the drivers going ahead and you've adjusted your assumptions for the OLOs. Clearly, this has been a discussion point over the last 12 months. So is it possible to get a sense of the commitments that you have from the OLOs? I mean, previously, you have given a number for the quarters ahead. So we do get a sense that whilst perhaps lower than what you had previously thought, it is a pickup from the current levels. Anything you can say there will be super helpful, particularly given the mix shift towards IoT, which I guess is slightly lower pricing point? Thank you.

Question: Roshan Ranjit - Deutsche Bank - Analyst : Great. Thank you. To follow up on the point you made around the lower pricing. I mean, how feasible is it to increased pricing here? I mean are you pricing it at a relatively competitive level where you can see upside in the coming years given the demand for IoT?

Question: Roshan Ranjit - Deutsche Bank - Analyst : Okay. Thank you.

Question: Luigi Minerva - HSBC - Analyst : Yes. Good morning, everybody. Thanks for taking my question. If I may, I want to go back to slide 16 and the MSA and all the terms that you summarized there, and it's all very helpful. Now if I read your bullet points, I think the contract looks really robust and which is consistent with your messages over the years. I guess where we are struggling is reconciling that slide with the message from Swisscom that sees a renegotiating window in 2026. So I'm just trying to get to the bottom of this. Does 2026 offer Vodafone Fastweb room to renegotiate the terms? And particularly then, if I look at your change of control protection with the extension 8 plus 8, does it mean that the 8 plus 8 are reset and start from '25 or '26 or we continue with the phasing of the previous contract disregarding of the change in control? Thank you.

Question: Luigi Minerva - HSBC - Analyst : Thank you. That's it then.

Question: Maurice Patrick - Barclays Capital - Analyst : Yeah. Thanks, guys, for taking the question and the call today. Sorry to come back to the Swisscom Fastweb public comments. I was a bit surprised to see Swisscom negotiating in public. I'm sure from your perspective, you'd rather do it in private, but any comments there will be welcome. But in terms of -- you have given guidance for 2030, which -- can we assume in terms of the 2030 guidance, that assumes minimal change to the MSA structure despite the fact that it was a point of renegotiation? Any points you can give to that? So no comments from Marco Patuano of Cellnex regarding the Spanish consolidation where he effectively said with MasOrange post the deal, he broadly protection of the perimeters of the MSA maybe with some more investments. So curious if there's any thoughts in terms of what assurances you can give us that there won't be changes to the MSA given your guidance that you have given beyond that breakpoint? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 05, 2025 / 9:00AM, INWT.MI - Q4 2024 Infrastrutture Wireless Italiane SpA Earnings Call

Question: Maurice Patrick - Barclays Capital - Analyst : No, that's right. I mean, I guess, given that you've given site build to 2030, are those all agreed with the Anchors? Or is that your expectation of what they'll want?

Question: Maurice Patrick - Barclays Capital - Analyst : Great. Thank you.

Question: Milo Silvestre - Equita SIM SpA - Analyst : Two questions from my side. The first one, if you could elaborate on the commitment part for the growth on new services? The second one concerning Swisscom, if you can elaborate on what flexibility can you give to MNOs or if you see a risk pressure on the noncommitted parts in order to give some relief to MNO clients, given the still challenging environment?

Question: Fabio Pavan - Mediobanca Securities - Analyst : Yes. Hi. Good morning. Thank you for this strategy update. Provided the plan has been derisked and you told us that there would be an increased densification need. My question for you, Diego, is what is your degree of confidence that this potential revamping demand for new sites, new coverage may come already in the second part of this year or early next year? Or rather you think that first market needs to become more rational and then we may have a speed up in demand for new sites? Thank you.

Question: Fabio Pavan - Mediobanca Securities - Analyst : Thank you.

Question: Giorgio Tavolini - Intermonte - Analyst : Good morning, everyone. And thanks for taking my three questions, please. The first one is on slide 18. It highlights two missing opportunities in your business plan, I mean the RAN as a service and the edge data center. So have you engaged in discussions with Anchor tenants regarding the opportunity to manage active equipment? And what level of commitment do you perceive from your Anchors? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 05, 2025 / 9:00AM, INWT.MI - Q4 2024 Infrastrutture Wireless Italiane SpA Earnings Call And regarding the edge data centers, why you have not announced any steps in this direction as some of your peers have done so far? The second question is on ground lease optimization. You announced a push to double the land ownership to over 30% by 2030 with lease cost per site to drop below EUR6,500 per site per year by the same time frame. So what is the ballpark figure for the run rate discussed in euro million after the completion of this land buyout initiative? Because if I cross check the implied target for EBITDA and EBITDA after lease between 2026 and 2030, at the midpoint, the lease impact appears to move from EUR190 million to something like EUR175 million. So this seems a very modest reduction. And the third one is on the telco asset of railways. I was wondering if you confirm this interest. And in particular, if you see any dissynergies in terms of higher lease cost considering that these sites would be rented by INWIT given that the equipment will be remaining stalled on the railways towers? Thank you.

Question: Giorgio Tavolini - Intermonte - Analyst : Many thanks.

Question: Fernando Cordero - Banco Santander - Analyst : Hello. Good morning and thanks for taking my question and also thanks for the presentation. My question is a follow-up on the land acquisition plan, not just from the financial side but also from the strategic side. I mean, I would like to understand at which extend are you incorporating in your decisions to buy land, which of your sites are, let's say, are more strategic or generating more traffic in order to prioritize the land acquisition in those sites? And also to understand at which extent also this land acquisition plan is also to protect from the potential land aggregator risk? Thank you.

Question: Fernando Cordero - Banco Santander - Analyst : Okay, fair enough. That's fair.

Question: Ondrej Cabejsek - UBS Securities - Analyst : Hi. Good morning, everyone. Two questions for me, please, both are more or less follow-up to the first, one on just the growth opportunity. So in your presentation, you talk about the need for densification. I mean put the number at between 7,000 and 12,000 sites that Italy needs? And then in your guidance, basically take the assumption of half, which is your market share of the lower end of that, so 3,500 or 7,000. So I guess the question is, what needs to happen in the market from your perspective for your shares to actually be 6,000 over the midterm? So what has to happen for densification efforts to accelerate in Italy, would be one question. And then second question, please. Coming back to the Swisscom or Vodafone situation, but from a different angle, not talking about recontracting around prices, perhaps. So what can you do to maybe change the contract somehow in a way that would, I guess, hope Swisscom contain the impact of lease liabilities on their balance sheet, if that is even possible for example, changing the duration of some of the parts of the contract or anything like that, that would be possible, if there is any color on that? Thank you very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 05, 2025 / 9:00AM, INWT.MI - Q4 2024 Infrastrutture Wireless Italiane SpA Earnings Call

Question: Ondrej Cabejsek - UBS Securities - Analyst : Can I follow on the second part, just to be clear because this is more a technical question. Again, I'm not even sure that, that is possible, but is there a way to like change the contract that you have with Vodafone in a way that somehow reduces the impact of lease liabilities from the renegotiation on their contract, which is maybe something that Swisscom is quite concerned about? Is there a way for changes to the contract that would address that specific point?

Question: Ondrej Cabejsek - UBS Securities - Analyst : Understood. Thank you very much.

Question: Luigi Minerva - HSBC - Analyst : Yes, thank you for taking my follow up. It's about the recurrent level free cash flow for 2030. And I was wondering if you could provide the breakup in terms of cash taxes, cash interest payment and working capital? And also, I noticed in slide 34 that the cash taxes for '25 and '26 are now guided to be flat at around EUR50 million, whereas previous guidance, if I remember well, was for EUR55 million in 2025 and EUR70 million in 2026. So I was wondering what is driving this change? And yeah -- and perhaps as I have the microphone, just on the solar panel initiatives and the energy initiative, to what extent it is reliant on subsidies? And perhaps the legislation on that front is often volatile. I mean, so what is the current status in Italy? Do you think it's reliable and stable enough to justify a multiyear CapEx plan from you? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 05, 2025 / 9:00AM, INWT.MI - Q4 2024 Infrastrutture Wireless Italiane SpA Earnings Call

Question: Luigi Minerva - HSBC - Analyst : Okay. Thank you.