Infrastrutture Wireless Italiane S.p.A. (INW) Earnings Call Transcript & Summary

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the INWIT Full Year 2023 Results Presentation. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Fabio Ruffini, Head of Investor Relations of INWIT. Please go ahead, sir.

Good morning, everyone. Thank you for joining us. With me today is Diego Galli, INWIT's General Manager; and Emilia Trudu, Chief Financial Officer. Before we begin, please allow me to draw your attention to the safe harbor statement on Page 2. Following a brief presentation of selected pages from the quarterly results and the 2024, '26 business plan, we will be happy to take your questions. We kindly ask you then to limit yourself to one question at a time. Over to you, Diego.

Thank you, Fabio, and everyone, for attending the call. Today we review a solid set of results in line with guidance and the scenario and assumptions underpinning 2026 targets, which confirm INWIT growth trajectory. During 2023, we recorded significant improvement in the new site rollout doubling year-over-year, New Services revenues growing 50% and continued lease cost efficiency. As for the external scenario, mobile technology trends continue to advance. Towers are confirmed as a future-proof note of digital infrastructure, an enabler of the hyperconnected society. However, in the short term, the telecom industry in Italy continues to face challenges. Landmark transactions have been announced or could take place soon, potentially resulting in better returns for operators. Discretionary investments in mobile connectivity are being postponed, and there is a latent demand waiting to be served. 2024 will be important in this regard. INWIT continues to grow and be resilient despite the significant transition taking place with most of our clients. Our confidence in the future is based on best quality assets and the shared infrastructure business model. INWIT strives to be one of the fastest-growing list of tower companies in organic terms with high single-digit revenue growth, EBITDA margins pointing to more than 76%, a CapEx plan with 2-digit returns, expanding our return on capital, a compelling and growing shareholder remuneration and optionality from balance sheet deployment. We continue to be driven by a simple industrial approach and the ambition to expand our portfolio of assets. Let's now look at the quarterly results on Page 5. Q4 results show continued execution in all main industrial indicators. In particular, 315 new sites, bringing the full year total to more than 900, more than 1,000 new PoPs, mainly with Anchors, 500 real estate transactions or more than 1,800 in the year. Quarterly results supported the achievement of 2023 guidance. Revenues were up 13%, including about 7% from inflation, 17% EBITDA growth with 3 percentage point margin expansion. Recurring free cash flow at EUR 612 million, with leverage down to 4.8x or 4.6x when excluding the impact of the buyback. During the year, we made progress on a number of other fronts. Commercial wins, strengthening our lead in the indoor coverage market, DAS, Distributed Antenna Systems, the completion of the first tranche of the share buyback and further progress in sustainability with recognition from top rating agencies. Let's now skip a few pages and move to Slide 9 to discuss New Services. This line of business includes primarily indoor coverage solution with DAS technology and highway tunnel connectivity. Quarterly revenues reached EUR 16 million, nearly doubling year-on-year, better than expected. On a full year basis, the business reached nearly EUR 50 million revenues with 450 locations covered. New Services are in addition to the business profile of INWIT, a new source of growth in client that's business profile oriented, a new source of growth in client that's able to attract significant interest from operators. The pipeline includes more possibilities in the form of large connectivity projects involving different technology to enable smart city applications. The recently announced Fiera Milan exhibition center agreement is an example of this trend. The model is managed digital infrastructure across macro sites, DAS, small cell and fiber for mobile, fixed service access, and IoT clients. I will now hand it over to Emilia to review the quarterly financials.

Thank you, Diego, and good morning, everyone. INWIT financials showed a steady growth path over the course of 2023 compared by the last quarter of the year. Beginning with the P&L, we recorded 12% revenue growth with Anchors and New Services more than compensating a reduction in OLOs and others. In line with previous quarters, the OLOs trend reflects lower other revenues such as technical services, installation, and maintenance, which more than offset the continued underlying tenancy growth. Seasonality of maintenance and service costs resulted in OpEx in DAS materially in the quarter. However, the INWIT trend was just below 10%. Indeed EBITDA margins were slightly up year-on-year to 91.6%, higher than the quarterly figure at 91.5%. Below the EBITDA line, taxes and interest developed in line with expectations. Financial charges reflect a higher gross debt balance in the rate environment with cost of debt moving from 2.5% in Q3 to 2.6%. Taxes stayed at low levels, benefiting from the tax schemes in place. We are pleased to see continued EBITDAaL margin expansion, reaching 72.3% in the quarter, up nearly 1 percentage point year-on-year. As I will detail later, this is largely due to our ongoing lease efficiency actions. Moving to the cash flow on Page 11. Recurring free cash flow for the year reached nearly EUR 612 million, above the guidance high end of range at EUR 605 million. This performance was mainly driven by growth in EBITDA after lease, strong net working capital, and very limited taxes due to the tax scheme. Below the recurring line, we recorded higher CapEx in line with our industrial activity and a cash advance from next-generation new program to bring 5G in market [indiscernible] areas. This is a program where INWIT is leading a consortium with TIM and Vodafone and 90% of the investments are subsidized. The leverage was down to 4.7x based on annualized quarterly EBITDA of 4.8x based on 2023 full year EBITDA. When excluding the impact of the buyback, these figures could be 4.6x, about half leverage service less than year-end 2022, where leverage based on reported EBITDA was 5.2x. INWIT debt structure continues to be efficient with more than 75% of debt being fixed. Our funding needs for 2024 will require a little amount of additional financing to cover part of our investment plan and shareholder remuneration in line with expectations. The first refinancing need will be the EUR 1 billion 2026 bonds. This is thanks to the recent agreement to extend to 2027, the EUR 500 million term loan originally due in 2025. With this, I hand it back to Diego. Thank you.

Thank you, Emilia. Before moving to the next section, a few words on our track record. The industrial purpose of integration between INWIT and Vodafone Towers Italy can be appreciated in a few figures. Total site count is up by nearly 2,000. PoPs expanded by more than 12 Towers with tenancy ratio up from 1.9 to more than 2.2, one of the best in the industry. Margins and cash flow expanded with a material improvement in revenues and profitability, leading to a progressive expansion of return on capital employed. This is an example on our TowerCo model can be a source of efficiency for the industry with value creation for all parties involved, leveraging on sharing economics and industrial expertise. This model is the foundation of the business plan to 2026, which we can discuss beginning with targets on Page 14. INWIT's growth trajectory is confirmed. We aim to grow revenues high single digit through 2026 with a further material EBITDA margin expansion and the recurring free cash flow reaching the range between EUR 720 million and EUR 740 million. Revenue growth is underpinned by 3% growth in new sites, more than 6% growth in new PoPs and New Services reaching more than EUR 100 million in revenues or 30% CAGR. Moving to the short term. In 2024, we expect revenues between EUR 1.3 billion and EUR 1.6 billion, EBITDA margin of more than 91%. EBITDAaL margin at about 73% and the current free cash flow between EUR 620 million and EUR 640 million. The outlook for 2024 implies a resilient growth profile in an industry context, which is evolving fast. INWIT capital allocation framework is confirmed, and it is in full execution with growing dividends and the completion of the announced share buyback for EUR 300 million. The variability in guidance ranges is effectively linked to the OLO demand and the speed of growth of New Services and DAS, which in turn depends on operators' discretionary investments. The plan assumes a market with steady growth in line with today's situation, a scenario of better returns for our clients with more investments in mobile connectivity to capture the latent demand would clearly be an upside. Next, we summarize the key feature of INWIT. INWIT business model has the ability to perform in different macro and industry context on the back of secular demand trends and strong MSAs, a mix of the effectiveness and growth. On top of that, we can count on the best digital infrastructure assets in the market, which continue to expand at accretive level of returns. Strong industrial expertise by the INWIT team in technical, commercial, and real estate management, and highly visible growth path linked to improving 5G coverage and densification and backed by contractual commitments on top of inflation protection. Finally, a clear capital allocation framework, which combines growing shareholder returns, progressive balance sheet flexibility with a sustainable debt level. For a closer look at our asset quality, let's move to Slide 16. INWIT assets include towers, fiber, indoor coverage solution in buildings, roads, tunnels, metro lines, hospitals, and large campuses. We have top market share in the most valuable locations and a pervasive coverage of the market, including highway corridors and transportation hubs. Also, the next-generation EU program means we have a leading market share in white areas. Digitalization investments are growing, and we are transitioning to a hyper-connected society, where most data consumption happens in mobile devices, indoor or on the go. Also in Italy, there is a digitalization gap to cover. Finally, quality assets would allow us to capture any further opportunity that may be unlocked by the evolution of the Italian telecom industry in the core business or close addition areas. Let's now go to the volume assumptions of the plan on Page 17. INWIT organic growth is based on a simple formula, enabling the transition to 5G by way of more sites and more point of presence. We deploy new sites with an industrial approach within sites from the ground up, leveraging a trusted network of partners with close oversights by the INWIT operations team. We expect more than 2,000 new sites by 2026 or a CAGR of 3%. This is slightly better than our previous assumptions. As for point of presence, we expect a CAGR of more than 6%, which will take our tenancy ratio to about 2.5 by 2026. For Anchors, we expect new PoPs in line with commitments with a mixed shift in favor of new PoPs on new sites. For OLOs, probably due to the recognition of the slow progress in the remedy dispute and the slowdown in the fixed wallet success market. In short, as compared with the previous plan assumptions, the business plan relies more on CapEx-led growth, new sites, and DAS for indoor coverage, offsetting lower OLO tenancies, which are materially derisked. In the next page, we focus on New Services. New Services are one of the key drivers of the business plan with the weight of revenues expected to expand between 2023 and 2026, reaching more than 8% of total revenues. In absolute terms, we expect New Services to achieve more than EUR 100 million. This growth will be driven by more than 500 new locations to cover by 2026 with an average project size expected to grow up. There is a critical market need to improve mobile connectivity and to enable transactions, communication, and data applications. This is true across verticals, targeting private and public entities. We plan on building on the success stories of 2023, leveraging on our distinctive advantage from client relationship to enhance the go-to-market approach. Now back to Emilia, for review of real estate efficiency, investment, and cash flow generation.

Thank you, Diego. Lease cost efficiency has been a cornerstone of the business, an area of synergy of the integration with Vodafone Towers. We employ a clear strategy of pervasive market coverage with internal resource system specialized agencies and that's our mix of transactions based on market trends. Recently, our focus has shift in favor of more land buyout targeting land ownership above 20% in 2026. We expect there will be additional opportunities beyond that percentage. This cost efficiency will continue to drive margin expansion and our economics. Revenue per site is expected to expand with a 5% CAGR, while EBITDAaL per site at 7% CAGR. EBITDA after lease per site based on our target will be at around EUR 35,000 by 2026 as compared with EUR 28,000 today. Let us now review the investment plan on Page 20. INWIT follows an industrial model of growth driven by investments with committed or highly visible projects, accretive returns, and a long-term profile based on MSAs. Our unique set up of savings to Anchors tenants allows for a stronger profile since day 1 going up as we move to more tenants. The areas of focus of the CapEx plan are confirmed, more DAS in the coverage deployment, more land in line with recent track record, more sites. The CapEx plan is designed to maximize INWIT's ability to capture the current market opportunities. And it implies approximately EUR 150 million extra investments as compared with the previous outlook. Most of the higher CapEx is devoted to developing New Services through DAS. The rest is related essentially to more land buyout and more new sites. 2024 is expected to be fixed CapEx year with investments being slightly above 2023 before trending down in the next 3 years, about EUR 800 million of investments will grow EBITDAaL by more than EUR 220 million or more than 25%. This will drive a continuous, progressive assumption in return on capital employed. Turning to cash flow generation in the next page. INWIT ability to convert EBITDA into cash flow stays strong based on low recurring CapEx, between 2% and 3% of revenue, stable to positive net working capital each year, a balanced net financial position with 80% fixed debt. Growth in 2024 to about EUR 630 million [indiscernible] reflects continued organic growth and margin expansion. Higher tax cash out based on the taxing profile, higher interest costs, and a positive net working capital, low to a lower degree as compared with 2023. 2026 recurring free cash flow target is confirmed, and we do expect 2027 cash flow to be up year-on-year given that the termination of the main tax team will not be visible in the cash flow before 2028. Strong recurring cash flow allowed for material delivery as we see on Page 23 with Diego.

Thanks, Emilia. INWIT manages structural leverage of up to 6x because of its business profile. In the short term, given cost of funding and employing a prudent approach, we believe it's up a bit, to confirm 5x to 5.5x corridor. This allow us to maximize the growth opportunity, which is confirmed as INWIT priority and execute a strong and growing shareholder remuneration policy to the best-in-class yield. The leverage profile points to about 4x leverage by 2026 as a result of continued EBITDA growth, the additional dividends and share buyback announced last year and the higher investments we just discussed. Going forward, shareholder returns will continue to improve based on our dividend policy with DPS growing 7.5% per year. At the same time, we free up balance sheet flexibility, culminating in more than EUR 1.5 billion by 2026. These can be deployed towards additional growth and/or shareholder remuneration, creating a source of optionality. Next page summarizes today's session. INWIT delivered a solid 2023. The urgency for connectivity and investments in digital infrastructure is confirmed, while the telco industry in 2024 continues to be under pressure, there is a potential for a new cycle of investments in connectivity, not captured by our targets. INWIT's strategic priorities are confirmed, resilient organic growth, fueled by a material CapEx plan of strong returns. Margin expansion supported by lease cost efficiency, compelling shareholder returns and growing balance sheet flexibility. We continue to focus on expanding INWIT's digital infrastructure asset base, standing ready to capture future market opportunities. With this, I thank you, and we are ready for the Q&A session.

[Operator Instructions] The first question is from Roshan Ranjit with Deutsche Bank.

I guess my one question would be in relation to the raised CapEx and you have presented the picture around de-risking given, I guess, the business mix shift to more New Services. You've also changed the guidance to more of a range for '26 and clearly introduced a range for '24. So my question is how confident are you at the kind of midpoint of the range given the commitments that you've already achieved? Should we, at this stage, already be looking towards the upper end of those ranges?

Hello, Roshan, thanks for the question. I think that our business model takes us to a profile where we see in 2026, more than 60% of the revenue at the midpoint of the guidance, which are contracted, and we have a clear line of sight on an additional 20%, and clearly, operational plans to take us to the midpoint of the range. So in short, 60% broadly already contracted, clear line of sight for more than 20%.

The next question is from Andrew Lee with Goldman Sachs.

I just have a question, a single question on your -- on the underlying growth in your comments through the call about the potential acceleration in the demand from operator as you put it to catch up on the late growth in their data capacity demand. So I understand that in 2024, there's been a bit of foot on the brakes of the operators, they try and work out what's going on in their marketplace. But there had also been an industry expectation for telcos across Europe that ultimately operators would need to densify more meaningfully than they have been in the 5G world and then that basically came through the kind of second phase of 5G investments, towards the latter half of the decade. So I'm just interested, like, do you still expect that acceleration in underlying growth to come? I know you're not necessarily -- you're not putting it into your guidance right now. Where do you see the underlying growth, not just in terms of phasing and the delays in 2024. But should we expect that growth to accelerate one day, whether it's by 2026 or not, that you certainly talked back into the decade? And just within the context of that question, reflecting on the Cellnex's own guidance in the mid of the medium term in terms of underlying service revenue growth, which was a little bit disappointed versus some expectations earlier in the week. It'd be great to get your thoughts on how you think the industry is progressing in terms of demand for Towers and 5G.

Thanks, Andrew. Yes, I think that there are macro trends, which have supported INWIT so far. And basically, these have been related to 5G and network densification and also network optimization between our -- to Anchor tenants. And this is clearly reflected in the numbers we have just seen in terms of number of new sites, of new PoPs we have delivered so far, and we have in the pipeline for the next 3 years. Despite these investments, honestly, I think that the 5G have not yet deployed the transformation that maybe we will see in the future. We mentioned in the presentation the concept of hyper-connected society, which will be coming and this requires additional investments, investments in densification, investments in improving the quality of connectivity outdoor as well as indoor. We already see today, it is embedded in our plan to hundreds of locations, which deserves better indoor coverage when, not only communications, but also economic transactions are done within buildings. So in our view, our future growth will be connected, as always, by a basic layer of inflation, an additional layer of ongoing, let me say, maintenance CapEx and involvement to take care of the new city development. But also the -- there is -- and there will be the investments to really deliver the hyper-connected society, both in the so-called smart cities as well as in rural areas. And in this context, INWIT is very well placed to capture and support these developments considering the expertise, the assets, and the contractual agreements that we do have.

And so do you feel -- still feel it is inevitable that we will get that acceleration within this decade? I mean obviously you are not factoring it to a guidance, upside down guidance, but is actually back on phasing rather than [indiscernible] the tool.

Yes, I think so. I think that if we consider that if we look at Italy, despite the industry challenges anyway, there has been a level of investment, I would expect that gradually also a more balanced and sustainable industry context will support acceleration of investments, and we do see how the, I'm going to say the companies, the business as well as the personal behaviors are evolving, and we do see, I mean, recent cases where the connectivity demand is so high for new users and habits. And so I think it's absolutely rational to think that this acceleration will happen in the decade.

The next question is from Jakob Bluestone with BNP Paribas.

I guess it's sort of a follow-up to Andrew's. In 2023, you added about 4,000 PoPs. And if I look at your guidance for '24-26, you're expecting 11,000 over the next 3 years. So just under 4,000. It doesn't look like your guidance is assuming a big slowdown in PoPs despite what is, I guess, fairly cautious commentary around the outlook. And so just maybe help us understand the 11,000 forecast. Is that basically assuming that the reacceleration occurs before '26? Is that the reason why there doesn't look like there's a big slowdown? Or am I slightly missing it? So if you can maybe just help us sort of reconcile the cautious commentary with the PoP guidance.

Yes. Thanks, Jakob. Yes, we -- clearly, in the last 3 years, we're going through an intense program of new PoPs for both the Anchor and the other customers and the OLOs. We expect this to slow down in the next 3 years as in parallel, there will be more focus on the indoor dedicated coverage solution. That's why we do see an acceleration of New Services, which will grow by CAGR of 30% in the next 3 years. This -- anyway, we will see additional 2,000 new sites because the demand of densification is still there. And overall, we have a new PoPs, total new PoPs growth of 6%. So let me say, it's still at a sustainable, sustainable level. And as I said, the 6% of new PoPs will be complemented by additional 500 indoor coverage solution broadly which implies additional remote units and additional point of coverage. But as we mentioned to you already in the past, the second part of the plan actually shows a shift -- a gradual shift from, let me say, outdoor to more indoor. So it's a gradual shift, which is reflected in our numbers.

Just to maybe follow-up and clarify. I mean you did 4,200 new PoPs in '23. And on Slide 17, you say, for example, in '24, you're going to do 2,000 Anchors and 2,000 OLOs. And I guess my question is just why is it I'm not seeing a real slowdown in the guided PoPs? Is that the mix change? Or it doesn't actually look like your PoP guidance is pointing towards the slowdown?

Yes. The new guidance is about 2,000 lower point of presence compared to the previous one. And this means that we are targeting 11,000 new point of presence in the next 3 years. So that's -- and basically, the slowdown reflects the softness in demand from the fixed as well as success segment and a little bit of the Iliad and remedies volume.

The next question is from Georgios Ierodiaconou with Citi. We will move to the next question. The next question is from Fabio Pavan with Mediobanca.

Referring to your target leverage, even in this new environment with new assumptions and the increase in CapEx, you will be left in a few years' time with a good degree of financial flexibility. So my question for you, Diego is, are you scouting opportunities for inorganic growth? Do you think there could be something materializing in terms of small portfolio asset or business coming from telecom operators? Or at some point, you may also try to look to addition of new business?

So Fabio, yes, let me say that our capital allocation framework is confirmed. We are in full execution of the additional shareholder remuneration. We decided last year. Let me remind that in 2024, we will pay probably EUR 450 million dividends and the remaining EUR 160 million -- EUR 150 million of share buyback. So we will be in shareholder remuneration -- so we will be in shareholder remuneration in euros. So we are, again, framework confirmed execution on shareholder remuneration, execution on the organic plan with the numbers we have just displayed and the growth profile, which will continue. And at the same time, we build additional financial flexibility, balance sheet flexibility, which we will continue to consider and assess as we did in the past. Our priority is to fuel additional organic growth at double-digit returns. We will assess against this threshold, all the other opportunities. And if we think that the market will keep on evolving, so it's important to get the flexibility to capture potential opportunities. If not, we will be happy to consider additional shareholder remuneration.

The next question is from Georgios Ierodiaconou with Citi. The next question is from Stefano Gamberini with Equita SIM.

I'm referring mainly to the risks to reach your targets in 2026 in terms of revenues. And I'm worried about the OLOs revenues trend because in the first quarter, all those new hospitalities were up 13%, but revenue is down 7%. So what is the trend that you expect in the forthcoming years regarding the OLOs revenues growth? Because if I'm not wrong, the trend will continue in terms of colocation, double-digit levels, but the risk is that the revenues will continue this decline. And so what are the -- we can say, contingency that you have in order to offset this trend. And the same as regard the Anchor tenants revenues trend, this outperformed. And we saw that this trend should continue, but what are the risks related to the contractual commitments of the Anchor tenants? What I mean is, if I'm not wrong, these contractual commitments, and in 2026, do you see some risk in the following years as regard the trends of new colocations from the Anchor tenants?

Yes. Let me walk through the buildup of our revenues looking at 2026. The first layer is inflation, which we assumed will be factoring 5% from 2023 and then going forward, 2%. On top of that, we have committed growth. And these 2 components take us to more than 60% of 2026 target. On top of that, we have New Services, which will grow more than OLOs, so will be a significant contribution. And we do see the current trends and the results we achieved in 2023, the trajectory trend and the pipeline of opportunities that we do have. Lastly, we have OLOs, which have been the risk in this last -- in today's plan has been the risk both taking care of the softness of fixed for the success market and also the remedies and the Iliad situation for which we continue to develop business. But at the end, with the risk that one as well. So broadly, what we do see is that the consistency of plans with our Anchors and the risk of the plants with the OLOs. And this leaves us honestly with potential opportunities towards the high end of the range in the case of better demand for OLOs as well as an accelerated -- further acceleration on micro indoor coverage as far as New Services are concerned. So as I shared before, 60% of the -- more than 60% of the target contractualized, high visibility on more than 20% of the target and a clear business plan, clear views for the remaining bit.

Just if you can spend a few words about the risk you said to be in the upper side of the range. Do you see some signs right now that the situation are changing for FWA or OLOs or frankly speaking, you see more risk of worsening in the situation?

I think [indiscernible] success is -- I mean, let me say, reflected in our recent quarters and projected with a similar trend for the future. We see always an interesting opportunities in other customers such as utilities. And for the OLOs, let's see. Again, we projected derisking the plan, the recent performance. As we shared in the last year, as you are aware, there has been the recent uplift -- there will be the uplift of the EMF limits, we don't expect any. We consider it basically neutral, maybe in the medium term, there could be further opportunities there. Now, back to your question -- to your question, at the moment, we don't see yet any sign of improvement on the [indiscernible] success market. That's why we projected the most recent trends up to 2026.

The floor is back to Mr. Ruffini.

Thank you, operator. Just picking up a question from -- on behalf of Georgios Ierodiaconou from Citi, and there was a problem on the line, I think. The question is around the timeframe for INWIT to consider and communicate any additional shareholder returns.

Yes. Thanks, George or Fabio. As I said before, we are in full execution of the buyback we announced last year. So we will finalize the second part by October 20, 2024, and the current leverage profile show us some that we will be at 4.7% by the end of 2024. At this stage, we think it makes sense to retain some flexibility in the context where opportunities may come out some additional industrial opportunities may come out. Then opportunities which will be benchmarked against additional shareholder remuneration being dividends or buyback. So let's approach the end of the year, considering, as we did in the past, additional industrial opportunities against additional shareholder remuneration.

And operator, back to you.

The next question is from Luigi Minerva with HSBC.

If I may, a quick follow-up on the share buyback. I just wanted to check if you -- if there are like technical limitations for you to think of further share buyback, I'm thinking about the risk of triggering a tender offer for your leading shareholders as the free flow gets reduced through the share buyback. And my question is about in-market consolidation. So we have official statements on a possible combination between faster than Vodafone. I presume the impact on INWIT is limited, but still I wanted to give you the opportunity to elaborate on that.

I'll take the first case and then hand it over to Diego. So on the buyback, as you know, the current plants were up to EUR 300 million has been already cleared by the console and approved the whitewash procedure. So obviously, we have technical limitations in executing on that. So I think that's the authorization that the company has today by the shareholders. So any further buybacks, then we will have to follow basically a similar path of going back to the shareholder meeting. Over to Diego.

With regards to the potential consolidation of Vodafone Fastweb. Today Fastweb accounts for single-digit revenues in INWIT overall. We assess the combination as neutral to INWIT without considering the potential positive impact of, again, a more sustainable industrial context, which may open to a new cycle of investment in the industry.

The next question is from Usman Ghazi with Berenberg.

Diego, I just wanted to go back to kind of this comment that you're making that you want to retain flexibility because there could be some industrial opportunities that might arise. I mean are you -- I mean, what kind of scenarios do you kind of have in mind? Is it as a result of all of these transactions that are happening? You think that there could be kind of investment that's unlocked and therefore, you want to be prepared for that? Or is it more around the DAS situation? And on DAS, I just wanted to ask, I mean, you obviously have a very good competence of deploying these solutions. And would you consider maybe taking this business outside Italy through some strategic moves?

Thanks, Usman. Yes, I think it's -- let me take the opportunity to highlight the fact that we have the ability, based on our business model to invest good returns I think it's interesting to highlight that the additional EUR 800 million CapEx we embedded in the plan will allow us to exit 2026 with an EBITDAaL, which is higher by EUR 220 million. So this shows the strength and the potential of being with keep on investing to generate additional returns and continuous growth of scale. And the areas for investments in an evolving scenario are anyway about fundamentally scale above the core, so additional towers to land potentially active sharing potentially energy and also large dedicated areas in material programs for smart city projects. So these are the areas which are close to our core business where the combination of assets that we do have competencies that we do have, financial flexibility and commercial relationship can create a competitive advantage and good returns.

Can I perhaps follow-up? I mean, I guess your view on what is available for you to spend through your CapEx is reflected in this guidance that you have, right? So I'm just trying to understand -- and because the headroom, like you said, is like 1.5 billion. I mean that means something very material to change for you to, let's say, think about deploying another 1 billion suddenly in the next kind of few quarters. So I'm just trying to understand whether this is a realistic situation where something of that scale might come up in the time frame between now and 2026 or not?

Yes, Usman, I briefly we mentioned this before, we are solely in full execution of last year step-up in dividends and the buyback plan. We aim to retain some flexibility approaching the end of the new year. We will keep on assessing opportunities, the add-ons, bolt-ons as well as bigger opportunities always with our criteria with this strict in financial discipline, industrial, the opportunity to create industrial value, benchmarking the opportunities against the organic returns as well as the return of additional shareholder moderation.

The next question is from Fernando Cordero with Banco Santander.

It is related with your increased CapEx envelope and particularly also willingness to be more active on by inland. In that sense, I would like to understand which is then you're seeing an increased risk from land aggregators in the Italian market. And also which extent you have already considered to, let's say, to establish a new vehicle like one of your peers have recently announced in order to manage the land that you are acquiring in that sense, just want to understand your starting in the front.

Yes. Fernando. Let me say that we are very, very -- very yet with the results progress and achievement we have been delivering in INWIT in 2020 on real estate management. We have a dedicated highly professional team, probably the most experienced team in the market, fully dedicated on that, which has allowed us to deliver significant savings so far and keeping basically flat, if not lower, lease cost, thanks to continuous process of renegotiation as well as an increasing program of land buyout. As a result of that, we have an EBITDA margin of 73% saving to 76% by 2026. So this model for us work -- has been working, and we do expect to continue to work well. Facing here and there some challenges from land aggregators but always managed in a balanced way so without creating any significant disruption in the market. We need to consider that in Italy, the market is very fragmented. So there are thousands of small land owners. And we have the organizational structure to negotiate and to take the opportunity of the specific situation, thanks to an organization where we have an internal team, which manages a network of local agencies. So actually, we will continue with our business model. We will clearly monitor what's happened in and what will happen in the market and open process or other opportunities. But for now, we are happy with the results and the plan that's in place.

The next question is from Antonella Frongillo with Intesa Sanpaolo.

It's a follow-up on a previous question on the risks on the 2026 revenue growth. You said that more than 60% is committed. Could you clarify, please, on how much of it is with on cost possibly divided between Vodafone and Telecom? And the second part of this question is on in-market consolidation. I appreciate your comment by your previous comment on that. But let me ask also if you see any risk from the in-market consolidation on the non-contracted business or at least in terms of potential delay on the contracted one?

Hello, Antonella, and happy Women's Day. Today is 8th of March. So happy Women's Day. And thanks for your questions. As far as the 2026, yes, more than 60% is committed and broadly, most of it, almost everything is with the Anchor tenants. With regards to the market consolidation, I think we need to always take into account the general comment on the quality of the assets being weak. And so the fact that we have a set of best locations in the country and the quality of contracts that we do have and the contractual and commercial relationship with our customers. So the combination of the 2 allow us to assess it to consider potential consolidation scenario neutral or neutral-positive. In the short term, I think the 2024 is a year where we have embedded in our numbers a little bit of slowdown considering the year of transition overall in the market. But I would say also that the potential consolidation in the market could bring a context where, again, the industry is more sustainable, and this opens to a new cycle of accelerated investments, which, I would say, the market and the country needs.

Is it fair to say that the 60% committed with Anchor, is it equally divided between Vodafone and Telecom?

Yes. Yes, it is.

Next question is from Graham Hunt with Jefferies.

Just one question coming back on the CapEx. Just would like to know a bit more details what's changed since the previous guidance was put out around that brought us back up to EUR 800 million. And how should we think about that? Are you getting lower returns on this investment now, given that the other guidance points throughout to 2026 haven't changed, but the CapEx has increased?

I will take the question. We are EUR 150 million CapEx more than the previous plan. And we have changed the -- we are not getting not only longer term, but change the mix between investments. So we are putting, let's say, the 2/3 of these investments are on the developers of New Services. And then we have more size and more land owned and investment on this digitalization. So we confirm the returns, the double-digit returns in line with our investment policy and -- but we changed the mix support growth.

Mr. Ruffini, gentlemen, there are no more questions registered at this time.

Thank you, everyone, for attending. Have a great day.

Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over.