Italgas S.p.A. (IG) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Italgas First Half 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Anna Maria Scaglia, Head of IR of Italgas. Please go ahead, madam.

Good morning, good afternoon to everyone, and thank you for joining us. I'm Anna Maria Scaglia. I'm here with Mr. Paolo Gallo, our CEO; and Mr. Gianfranco Amoroso, our CFO. We will address any questions at the end of the call. And while I leave the floor to our CEO, Mr. Gallo, I invite you all to read the disclaimer at the end of this presentation.

Good afternoon to everybody. Let me start this presentation. Let me start with the result that probably you have already seen that we published this morning and were approved yesterday afternoon by our Board of Directors. And I will comment the results and the integration of 2i Rete Gas, and then Gianfranco will help me for the financial part, and then we will open the questions. So we are on slide on Page #2. First of all, let me clarify that the first half of 2025 contains the first 6 months, what I call the old Italgas and 3 months, so the second quarter of 2i Rete Gas, considering that the acquisition of 2i Rete Gas was completed on 1st of April 2025. If you look at the number, and then we will get into the details, the gas distribution revenues grew, thanks to the -- first of all, to the RAB growth, thanks to the investment we made last year to the update of the OpEx to the RAB reevaluation factors that were introduced, both of them were introduced by the ARERA to cover mistakes and different evaluation made in the previous year. And the overall -- so our RAB growth, thanks to the investment, review of the RAB reevaluation factor and OpEx update offsetting -- completely offset even more the reduction in WACC compared to 2024. The other, let me say, 3 area of business, Greece, Water and ESCo, all of them contributed significantly to our results and they have shown better results in 2024. The other element that I would like to underline that you can see here are the cash flow. The cash flow of these 6 months was significant, EUR 740 million. The operating cash flow allowed us to cover all the CapEx, and we cover also the majority of the dividend that we paid in May. You also see that the net financial position significantly increased, and that is thanks from one side to the acquisition of 2i Rete Gas, the equity that we paid to the shareholder of 2i Rete Gas as well as the debt that we inherited from 2i Rete Gas, partially compensated by the EUR 1.02 billion capital increase that we completed successfully in June. If we move to the next page, we have underlined 2 elements, the operating and corporate major element and the regulatory highlights. First of all, let me share my satisfaction from one side and my gratitude to my colleagues, both of Italgas and 2i Rete Gas to have closed the integration, the merging in only 3 months. If you think about 90 days, it's really a short period of time. I will show you that has not been just, let me say, legal merging. It has been much more than that. The numbers that I will show you in a couple of slides will show you -- it's a demonstration that the effort that we put in order to reach this goal. But of course, the merging is not only -- is not the final objective. It's just the beginning of a much interesting and greater journey. In the meantime, we have completed the capital increase in June, as you know. Just to remind you some number, EUR 1.02 billion rights issues, EUR 98.7 was completely subscribed within the end of the period. The remaining 1.3% rights issue were sold in the market session of June 23, and it was sold within not even an hour, less than that. So the rights issue was fully subscribed with no intervention by the banks that supported us in this transaction. With that EUR 1.02 billion capital increase, we already repaid the EUR 1 billion bridge financing that was given to us by the banks. And the remaining EUR 1 billion dual-tranche bond that was issued in March was already used to pay the equity price to the 2i Rete Gas shareholder. Finally, Italgas stay on the financing. The credit rating BBB+ was confirmed by Moody's and similar rating was issued by Standard & Poor's. Regarding on the regulatory side, we have already talked about in the first quarter, the OpEx and Deflator revision that covers the past, but for which we take advantage in the first quarter already. Two other updates that are significant. On May 30, regulator announced its decision to extend by 2 years until the end of 2027, the current regulatory period with the aim to introduce in 2028, what we call in Italy ROS system, but this is the TOTEX system. As of today, we don't have details about that because we expect a public consultation as usual, either for the extension and for the TOTEX application -- for the extension before the year-end, of course, and for the TOTEX application probably at the beginning of next year. Regarding the process of disposal, we received expression of interest by July 14 as per the deadline, and we expect to receive binding offer by early September. So currently, the companies that have expressed interest in acquiring our assets have already got the assets to the data room as well as they have to go through an on-site visit to inspect assets that are subject to disposal. So just to get to the point, we -- as you see, we have achieved solid results in the first semester, and we are continuously working on the remaining 6 months of the year to fully integrate 2i Rete Gas in our organization. As you know, we will have more view about the years to come in October when we will present end of October -- when we will present our strategic plan together with the -- let me say, the 9 months results. I was telling you before that I wanted to go through in more detail about what we have done between April 1 and end of June to show you the effort that we put in order to achieve this exceptional result of merging 2 large companies in 90 days. So from an organization -- field organization point of view, you can see on the right part of the slide, the significance in terms of increase of our presence in Italy. I wanted just to remind you that the number of kilometers that we inherited from 2i Rete Gas is similar, slightly bigger than Italgas Reti. They have less final customer than us because they are more concentrated in the country side of the country itself. As you can see, the number of areas, they have increased from 3 to 5, the number of hubs from 14 to 21 and the number of technical units from 50 to 80. So that means that we significantly increased our presence in -- throughout the country. Another important thing to mention was the IT integration. You know that we are on cloud, and then I think it has been a great advantage for us to be on cloud because we were able to migrate billions of data coming from 2i Rete Gas into our cloud. In the meantime, we have ensured 100% service continuity and data protection. To arrive to this kind of technical organization, what we have done is in the 3 months' time, we have provided more than 60,000 hours of technical training because on July 1, all the 2i Rete Gas personnel have started to operate on our -- on Italgas system, so they didn't have to know how to operate. So can you imagine in 3 months, 60,000 hours of technical training. It's a huge effort. And I'm proud to say that this huge effort was supported by the use -- by extensive use of artificial intelligence in order to have a more quick and more effective training activity. Work is not yet completed. The majority has been done, but work is not yet completed. We still have task to be completed to be refined in the coming months. And that is the reason why we created 25 working groups, working teams coming from both organizations in order to analyze processes, activities and get the best out of the 2 companies. So we are trying really to leverage the competence and the skills of the 2 different companies in order to make the best and again, improve the quality of the service and improve the results. As well, we started the plan to fully digitize 2i Rete Gas network because that represents, as you know, the core part of our integration plan. Let's move into more details of the integration of 2i Rete Gas, because, again, I want to mention that 100% of the 2i Rete Gas population was involved in the 60,000 hours of training that I mentioned before. And if you make just a division, this equal more than 30 hours of training per person done in 3 months. And as I said, we used extensive AI as the way to generate tutorials for the field operation as well as to provide training focused on specific procedure or task. We also launched artificial intelligence chatbot that is supporting us -- that support the operator in the field in real time to respond to inquire doubts or problem. And last but not least, we selected and trained more than 140 people in the field that are acting as a focal point in order to support the people in the operation. If we just look at the IT effort that was made during these 3 months, we are able, as I said, to process a massive data migration. We are talking about billions of data. We analyze more than 100 processes and subprocesses and manage 140 application model and more than 400 interface to ensure service continuity. Regarding smart meters, we were able to migrate all the data and to integrate narrowband IoT with radio frequency technology that is used by 2i Rete Gas. So now we have, let me say, 3 different technology that we are able to manage with the same platform that is the GPRS, the old one that is going to be discontinued very soon by the telco. That's the reason why we have launched the new Nimbus smart meter that will replace progressively this GPRS system. Narrowband IoT and radio frequency technology are now under the same umbrella. I think that's it for the focus on the 2i Rete Gas integration. I think you can appreciate the effort that both teams have done in the 3 months and the exceptional results that we were able to achieve in only 90 days. Let's talk about, as usual, about the environmental performance. You will see in the page -- in the following page always the evidence of 2i Rete Gas. It's probably the first and the last time that you will see this difference because, as you know, from July 1, there is no more 2i Rete Gas. There are only one Italgas Reti. So we will not be able to show you anymore this difference. So if we start from environmental performance. As you can see, the like-for-like basis was up by 1.5% in terms of energy consumption, 1.2% in terms of energy consumption versus last year. The increase of gas and fuel consumption was mainly related to lower winter temperature, leading to higher consumption of gas preheating because there has been an increase of volume dispatched by the network. This was partially offset by the increased efficiency of our plant. And in fact, if we look at the specific consumption, the specific consumption went down from 1.02 to 0.94 cubic meters per 1,000 of cubic meters dispatched. Electricity consumption was lower than last year due to a higher use of auto produce electricity and increased efficiency. Finally, if we look at the vehicle consumption, vehicle consumption was slightly higher than last year, mainly due to the number of kilometers traveled for leak detection and that is one reason. The second reason was that there are new areas in Greece, methanized where we brought our new infrastructure, and that's the reason of additional kilometers traveled. On top of this, on the like-for-like, we added the 2i Rete Gas and as well as Acqua Campania that was not in the same perimeter of last year. If we look at the other part of the energy consumption that is the CO2 emissions, that is on Page 7. The main driver of the increase in the like-for-like perimeter, the main driver is the gas leaks. The reason is driven by 2 elements. The first one is that we have inspected a significant amount of network in respect of last year, nearly 28% more. We have already inspected nearly 100,000 kilometers. So we have already passed the number of our kilometers. So we are already in the second round of inspecting our network. But what is the good result is that the emissions per kilometer inspected went down by more than 7%. So that means that we inspected more kilometers, but the emission specific per kilometer are lower than last year. And that is the main driver. On top of that, we added the 2i Rete Gas and the Acqua Campania CO2 emissions. Let's move now to the number. I will go through some of the pages, then I will pass the floor to Gianfranco. Again, revenues. Revenues were up significantly. The main contributor, as you can expect, is the 3 months of 2i Rete Gas. But what also is important to look at is the fact that the RAB growth, as I anticipated before, the RAB growth as well as the new reevaluation factor of the RAB as well as the OpEx update that covers previous, I must say, I would call probably mistake, not in a positive sense that is covering the past not recognition in terms of inflation -- mainly in terms of inflation. So the total amount offset -- more than offset the reduction in WACC from 5.6% to 5.9 percentage. And then on top of that, there is, as you can see, the additional contribution of the water and on the energy efficiency. I'm very proud about the energy efficiency recover from 2024 that has been the lowest year after that [indiscernible] all of us expected because of the end of the Superbonus. So overall, these adjusted revenues increased by nearly 30% in the period compared by the previous semester in 2024. Now look about the cost, that is the next page on Page 9. Of course, as you can see on the right side of the chart, there is the cost recorded in the second quarter by 2i Rete Gas. But what is nice to see again for another time is the fact that on a like-for-like basis, we were able to record efficiency by nearly 2%. And then similar to what we have seen in the revenues, there is more cost in Acqua Campania because we had more revenues. There is more cost in the energy efficiency we have seen more revenues in the energy efficiency. The good part of the energy efficiency is that we have an EBITDA margin in the energy efficiency that is around 16%. Remember that our target is to reach 18%. So we are close to the target. We significantly increased the result in respect to 2024. Now I will let the floor to Gianfranco. I spent half an hour. So I think it's time to rest a little bit waiting for your questions.

Thank you, Paolo. I'm now moving to Slide 10. where maybe the key takeaway of this page is that the change in the perimeter drove growth in EBITDA and EBIT, but still, the constant perimeter reported a remarkable growth. So the EBITDA achieved a 27.8% increase at the level of adjusted EBITDA with all business contributing to the positive performance. Of course, as expected, gas distribution, both Italy and Greece were the main contributor to the growth, thanks also to the consolidation of 2i Rete Gas for 1 quarter. Out of the EUR 178.8 million growth that we are showing more than 90% is explained by the transaction -- by the acquisition of 2i Rete Gas, while the remaining is due to the growth of the underlying distribution business, both in Italy and Greece. On top of that, the additional month of consolidation of Acqua Campania and the growth of the ESCo, as explained by Paolo, drive to most of the EUR 7.5 million to our EBITDA for the 2 activities together. If you look at the breakdown by business area, you will appreciate that the great majority of EBITDA adjusted is related to the Italian distribution. Enaon contributed for EUR 70 million, while more than EUR 22 million came from ESCo and Water business together. If we now look on adjusted EBIT on the right side, the increase was almost 39%, reaching a level of EUR 558 million in the quarter -- in the 6 months, mainly driven by the EBITDA increase of EUR 186 million that I have already explained and then higher D&A for EUR 30 million, mainly related to the consolidation of 2i Rete Gas. On a constant perimeter, there were no positive impact of the termination of Rome concession has been partially offset by the carryover of the CapEx executed during the previous quarters. Now moving on Slide 11. The most important thing is that net profit adjusted reported a growth of double digit, reaching a level of EUR 316 million, which is an increase of 31% versus last year. This was mainly driven by the operating performance with the EBIT that we have already seen of up to EUR 156 million, partially offset by the increase of adjusted net financial expenses of EUR 44 million. This amount includes, first, the cost of the debt related to the acquisition of 2i Rete Gas considerations of the transaction. That has to be splitted among the bond that we issued in the first quarter of EUR 1 billion and the bridge financing of EUR 1 billion that was drawn at the closing and was reimbursed entirely with the rights issue. Second element is the cost of 2i Rete Gas consolidation, let's say, the consolidation of 2i Rete Gas indebtedness. Third, the interest related to the higher cost of new bond issued during 2024. So the carryover of the 2024 bond issued. During the second quarter, the capital increase of EUR 1 billion was completed, as you know, at the end of June, while the acquisition was closed on April 1. This implies that during the quarter, there was a peak of EUR 1 billion higher net financial indebtedness compared to the level reported at the end of June. The other minor element is the contribution from equity investment that was marginally lower around EUR 1.4 million compared to last year. And finally, higher adjusted taxes for EUR 32.5 million due to the higher taxable income and consequently, a tax rate of 28% that is marginally above last year level of 27.5% also due to the higher quarter or net profit generated in Italy versus last year. Remember that in Greece, the tax rate is marginally lower and higher interest expense nondeductible for IRRAP par position. Moving quickly to Page 12 because it's just a recap of the results adjusted in the semester with the growth rate that we have already commented previously. While on the following Page 13, you can see the impact on the nonrecurring item. So the first is the EUR 54 million of adjustment in the revenues in line with what we have reported in the first quarter, related to the positive impact of Resolution 87 concerning the allowed OpEx for the period 2024 rectified by ARERA. In addition, the new one are the EUR 21.7 million of nonrecurring costs related to the acquisition and the integration of 2i Rete Gas, including also cost reported in the net financial expenses and the related positive tax impact. Now about the technical investment, so our CapEx. As you can see, we have reported EUR 495 million CapEx during the period that are EUR 141 million or 40% higher than last year. Out of this EUR 141 million, more than EUR 100 million are related to 2i Rete Gas consolidation, mainly related to network upgrade and the digitization plan setup that is starting. And during the same period, 430 kilometers of new network were installed, of which 168 in Greece. So as I mentioned before, we have also started the preparatory work for the 2i Rete Gas upgrade -- network upgrade and digitalization. If we move to the following page, you have the cash flow that we have reported in the semester. The performance was very positive with a very solid cash flow from operation close to approaching to the level of EUR 740 million, which allowed us to cover entirely the net cash investment in the period of EUR 486 million and the majority of the dividend paid in May of EUR 330 million. Both cash flow from operation and free cash flow include the contribution of 2i Rete Gas for the 1 quarter. If you look at the working capital, positive evolution in the period is a consequence of the positive billing seasonality and the expected positive effect of Superbonus related tax credit utilization, partially offset by lower tax payable. So the increase in the net debt of EUR 4.2 billion is mainly the consequence of the price paid for 2i Rete Gas, EUR 2.71 billion and the related net financial debt of less than EUR 3.1 billion, of course, considering the capital increase proceeds of EUR 1 billion that we have completed in June. In the backup in the annex of this presentation, you can find also the details of the balance sheet where the main, let's say, discontinuity is the capital increase and the asset and liabilities for the acquisition reflected on the asset and liability side. Lastly, on Slide 18, we have now finally the debt structure combined, including also the maturities, as you can see, also the maturities of 2i Rete Gas, not only Italgas being a single company. So we closed the first semester of 2025 with a net debt of EUR 10.97 billion, including IFRS 16 or EUR 10.86 billion, excluding IFRS 16. The financial structure remains, as you can see, very consistent with the past with our target structure with 86% of debt at fixed rate that give us visibility to our cost of debt going forward. Following all the transactions that we have put in place, including the acquisition, of course, the average cost of gross debt is around 1.95%. As well as we noted that following the closing of the capital increase, Moody's and Fitch confirmed the credit rating applied to the combined rating and Standard & Poor's issued for the first time a new credit rating on Italgas at BBB+. With this point, I finish, and I open the floor to the Q&A.

[Operator Instructions] The first question is from Sarah Lester of Morgan Stanley.

I've got 2 questions today, please, and they're both related to the tenders in Italy. Just firstly, wondering if you can just please talk a little bit more about the current or the in-progress tenders and your expectations for the tender pipeline from here on. I suppose, in particular, how it relates to that EUR 1.1 billion tender CapEx guide from your strategic update last October. And then just secondly, please, wanting to also confirm that there's no prevailing antitrust issues with respect to the tenders given the backdrop of the antitrust process earlier this year that was related to the acquisition.

Regarding the -- your question, if we look at 2025, so I'm just trying to look what is happening right now because it's more difficult to have a view for the coming years. Currently, we have 5 tenders for which we have already presented the offer. Three of them were presented the offer in 2024, and they are at the, let me say, at the final stages. So we expect the final verdict very soon. Two others have been already presented the offer. And 2 others, we are going to present the offer by immediately after summertime by September, October. So the pictures for 2025 looks quite good in respect to the previous year. So at least we should expect 5 to be awarded by year-end as a minimum, maybe 2 of the 1 that we are going to present in, let me say, September, October, maybe can be awarded end of the year, maybe beginning of the year, depending which is the process of the evaluation. But we have 7 in the pipeline. That to me is a good sign. Regarding the second point of the antitrust, considering that these are competitive tenders, we don't have any problem to participate to any of them. So we can participate to all of them. And in fact, the 7 that I mentioned to you that are currently undergoing in 5 of them, we presented the offer and the remaining 2, we are going to present the offer.

The next question is from Aleksandra Arsova of Equita.

So 2 questions on my end. The first one, maybe a follow-up on gas tenders. So a couple of weeks ago, there was a draft circulating on the potential amendments, changes to the regulation on gas tenders and on the bidding process. So it seems that it will be -- could be more shifted towards the economic conditions, discounts rather than towards the CapEx plan. So just maybe some qualitative thoughts on your end on how do you see these potential changes and if they actually will accelerate tenders? The second one, is maybe on the acquisition and on synergies since you were -- you seem very happy on how the integration is going on. And during the last conference call on the first quarter results, you mentioned something like EUR 10 million in synergies already -- cost synergies already achieved in 2025. So since there is this acceleration in the integration, do you believe that you can achieve more synergies and maybe reach the higher end of your '25 guidance? So this is the second one.

Regarding the comments on the -- what is called the greater criteria that review the -- some of the points. But to me, it is true. They have allocated more points, a few more points on the economic part. I think what is even more important than that is that they have introduced new area for evaluation that are linked to the innovation, to gas renewables, to digitization, all words that are very common in our company since many, many years. And they are not absolutely common to any other company. So for me, that it is even more important because that will make the difference, will increase our competitiveness because we are the only company in Italy that are able to prove that we have a fully digitized network ready to accept renewable gases like biomethane. And I mean, innovation is our trademark. So to me, apart the shift of point from one area to another that is not so relevant to me. What is relevant is the fact that finally, this criteria for evaluation has been changed in order to, let me say, get the reality in which we are living. If you look at the old way to evaluate the only innovation was the -- were like the number of smart meters as well as the cathodic protection. I mean, 12 years ago, 15 years ago, that was innovation, sure. It's not innovation anymore today. So I'm expecting this criteria, once that will be put in place, there will be more focused by all the operator how to innovate like we did it in the last years. So I'm positive, absolutely positive. The second -- I mean, the question [indiscernible] is going to accelerate new tenders? I don't think so. I mean, as you probably have read about the Ministry declaration, Mr. Picato declaration, is clearly said that the 177 ATEM framework and tenders did not work, full stop. So he said that you need to think about how to make this framework working because it has demonstrated in the last now 13 years that it didn't work at all. The second point about synergy, you said it seems that I'm pleased. I would take out seems from the statement. I'm fully pleased that the way that we were able to merge the 2 companies. I mean, 90 days is an exceptional result and is ahead of any forecast we had at the time that we presented this acquisition. So -- and regarding synergies, of course, if I'm -- if we are able to -- and we were able to merge the 2 company earlier than expected, there will be more synergy in 2025 than we expected before. And regarding the guidance, I can -- I'm quite confident that we will be in the, I would call, super high end inside that guidance will be very close to the high-end number. And the confidence is coming from the fact that at the time, the guidance was based on a later integration, later merging of 2i Rete Gas with Italgas Reti. We were able to anticipate closing and more important, the merging of the 2 companies.

The next question is from Javier Suarez of Mediobanca.

First, a follow-up on a previous question on what may happen to make the process of tendering more virtuous. So it seems clear that the government is making the statement that current system is not working. And there has been a declaration by the Energy Minister on the possibility of renewing the gas concessions in a similar way of what is being done with electricity. So the question is, which is your take on this? And if you believe that this is a rational path to take and the implications for a company like Italgas? That would be the first question. The second question is also a follow-up is on the slide, I think it's #9 on the efficiencies. So this 1.8% like-for-like efficiency gains, if you can help us to understand the origin for them from a geographical standpoint, how do -- you would split those efficiencies between the old Italian operations and the Greek operation and your latest view on extraction and synergies in the old perimeter of Italgas and the Greek operation? And also related to the previous question on the column that has to do with 2i Rete Gas, we should expect from the next quarter to come also a kind of statement on the efficiency gains from the incorporation of 2i Rete Gas, if that is an expectation that we may have. And then the third and final question is on Slide #3 on the disposal process for the -- antitrust disposal process. You are seeing as next step, the binding offer by September 5. So which is your latest expectations for the completion of the whole process?

Let's start from the from the first question about the tender. I think the reason why the statement of the ministry was saying the system did not work is because there are too many concessions. 177 are too many. And as we know in -- we have seen in the past 12 years, the complexity of the gas tender is such that has been an obstacle in order for the municipality to run those tender. We have always said that. So any ideas about reducing the number of the concessions is welcome because it will reduce the number of tenders by definition. And probably it will change who's going to launch the tender, maybe with an entity that is more equipped to handle complex tenders like this one. Let's see what the government is thinking about. I think the declaration is important. Let's see what are the proposal that the technician of the minister will elaborate in order to find out a different framework that will help to accelerate the tenders to happen. Regarding the like-for-like synergies that probably is going to be, unfortunately, the last time that you see because, as I said, from July 1, it's going to be everything together. So we are going to compare those costs with what we promised to be the synergies to the market with 2023 and '24 numbers. Let me say that this number that is 3.6% is same perimeter as last year is both Greece and Italy. I would say that is -- the contribution is very similar in terms of absolute value between Greece and the Italian old perimeter. The reason -- even though, let me say, the 2 sides are significantly different. The reason is that Greece is accelerating in the efficiency, while we are still getting some efficiency from the Italian, thanks to the digital processes and activities. So I'm -- the fact that we are able to continue to reduce our cost is a good indicator. We will continue to do that, and we will probably say more in terms of absolute numbers once that we will work on the integrated company 2i Rete Gas and Italgas Reti. Last question, the antitrust has been just postponed by a couple of weeks because of the August time that was a request coming from a number of interested party was submitted to the antitrust. The antitrust approved that request. So we were thinking about -- I mean, if you remember, our deadline of the antitrust to complete the process of dismissal was by end of October. If you have 2 weeks, you get to mid-November. So there is not much difference in respect. So the time schedule is very strict. It's very determined by the antitrust authorization. The 2 weeks extension approved by the antitrust just moved the final date by 2 weeks. So we are now in the beginning of November. By the time, as I recall you, the binding offer will be received by early September, September 5, and then the process will continue. Antitrust will scrutiny all the binding offer and we'll make the decision if all of them are acceptable or some does not meet the criteria set inside the documents. And then we will just put the ranking of those binding offer and then we will move forward. So I think that mid-November is a reasonable date to close all the process.

The next question is from Francesco Sala of Banca Akros.

Congratulations for your results. Just 2 questions, if I may. The first one is on the cost of debt. Obviously, there was a spike in Q2 after the consolidation of 2i Rete Gas. So I wonder whether you can guide us to a number for the full year and how this -- the cost of debt is going to progress in the third and fourth quarter of the year? And the second one, if you can share with us the mark-to-market on the WACC and whether we should expect a change in 2026 according to your calculations?

Yes. I take your first question for the cost of debt. As you noted in the semester, there has been the impact of the acquisition and the new bond issued in February. You remember the EUR 1 billion split into 5 year and 9 year with the cost of debt between below 3% and around 3.4%. So this, combined with the existing indebtedness drove to the level of the first semester. For the full year, I do not expect any major changes. There will be a slight increase, maybe approaching the 2% level, driven by the normal increase of the indebtedness in the second part of the year due to the inclusion of the indebtedness of 2i Rete Gas for 2 quarters instead of 1 quarter as in the first semester, but very limited.

Regarding the WACC, of course, we monitor all the numbers about the WACC. As of today, we have not triggered the 30 basis points. But let's see, we still have another 1.5 months to cross the finger, if you want to cross the finger, one way or the other, depending on which one you like most.

The next question is from Julius Nickelsen of Bank of America.

Just 2 for me. Do you have any update on your challenge with the change on the asset beta for 2025? And do you have any time line on when we maybe know more on this? And then the second question is...

Can you repeat the first question? We didn't understand the...

Yes. Is it my audio? Or was it just my pronunciation? I'll try again. So do you have any update on your challenge with the change on the asset beta that was in the WACC for 2025? And if you have any time line on this? And then the second question was just to -- in terms of expectation, will we get any visibility on your disposals in the CMD in October, given that there will be binding offers in September? Or do we have to wait for mid-November, as you just said?

On the first one, sorry, it was both the -- I mean, it was mainly the audio because we didn't -- there was an interruption. The beta, okay, we have appealed the change of the beta because according to us, the number that was set by the regulator lowering the beta was not supported by according to us, a good rationale. As you know, it takes time. If you remember, we appealed against the 2020 or 2019 resolution, end of 2018 resolution about the OpEx, and we are talking -- we talk in the first quarter of the adjustment made by the regulator after 2 level of appeal. So it will take time. We are, let me say, confident that our appeal is quite strong, not because the regulator has not the right to review the beta because they have full -- I mean, they have the right to do it. But when they do it, they have to have a clear rationale and clear -- they have to justify why they did it very clearly. And according to us, what the explanation they brought was not according to us sufficient to explain such a reduction. Regarding the disposal, it will mainly depend by the antitrust process to review the binding offer. If they review -- if they use less time than what they have reserved for them, we will probably have a clear picture before mid of November. Otherwise, we need to wait the process to be completed. It's not -- honestly, we are -- it's not up to us to close the process. It's really their evaluation. They reserve for themselves the evaluation to say if one binding offer has met all the criteria they set for being accepted. So depending on how many we are going to receive, who are going to be the operator, what they can demonstrate to meet the criteria. So it may be a long process. That is the reason why they reserve from the self a significant amount of time. It's not the only job that they do. And so we need to also consider that. Maybe end of October is probably -- beginning of November is probably the right time that we will know that is the outcome of the disposal.

The next question is from Alberto de Antonio of BNP Paribas Exane.

The first question is on regulation. After the extension of the 2 years until the end of 2027 of the current regulatory framework. Could you elaborate on -- what are the next steps that we can expect on regulation and what should we expect going forward? And the second one will be in regarding the tenders, a follow-up. If you mentioned that there are 7 in the pipeline, 5 of them -- of which you're about to or you're already presenting an offer. Could you give us a range of the sizes of these tenders? And what could be the impact in terms of RAB of them if finally you won any of them?

Regarding the first question, the 2-year extension, we will know more, as I said during my presentation by let me say, in the last quarter of the year when the regulator will issue some consultation document, tell us and tell not us, not only us, the industry, how they are going to deal with the 2 years additional regulatory period. In the meantime, as I said, we expect that after the 2 years, a TOTEX system that is called ROS in Italy will be applied to us by sure. We are the largest by far. So if they don't apply to us, they don't apply to anybody else. In the decision taken by the antitrust, there is also mention that in 2027, they will start to do some test about the application of ROS, and they will do it on us probably. But we will know that better when they will start issuing the new consultation document that we expect to happen at the beginning of 2026. So let me just to make the long story short. By year-end, they will set the rules, terms and conditions, let me say, for the next 2 years of regulatory period. And then starting in 2026, they will start testing, asking comments about the ROS to be applied to our industry in 2028. What I can tell you about the tenders, we are talking about an overall of nearly 600,000 redelivery points, out of which a little bit more than 50% are already ours. So they are, let me say, on tender, let's say, 60% are ours. The remaining 40% are of third party.

The next question is from Emanuele Oggioni of Kepler.

The first one is on the synergies with 2i Rete Gas in general, the cost cutting and efficiency plan you have included in your business plan, if I remember well, up to EUR 200 million along the plan. If you remember -- if you explain or recall us if what was the impact, the benefit expected in next year in 2026. So in the first year of the full consolidation for 12 months of the integration with 2i Rete Gas and also the existing asset base and compared with the plan after an update in -- after the first 90 days of consolidation of 2i Rete Gas to what extent there could be an upside or not compared with your current assumption included in the business plan? This is the first question. The second question is on the Greek gas network. I noticed that they improved the profitability, EBITDA from roughly EUR 60 million of EBITDA to EUR 70 million in H1. We know that you target the Greek assets to fill the gap with Italian ones. So I ask simply an update on this process. You are probably on track. But when this gap will be filled in your opinion? And finally, if I remember well, in your business plan, the third question is on the allowed WACC. In your business plan, you have included 6.1% along the plan a flat assumption. We know that currently in '25 was down, was below this threshold. But in any case, you will be able to perform better to outperform in any case to release a good set of results. But probably even not in '26, but in '27, the allowed WACC will be even lower than the current -- probably the current one. So what are your -- based on my estimates, the sensitivity is roughly for each 10 basis points, 1.5%, 2% of lower net profit, if I -- could you confirm or not?

Let me say, if I would be able to respond in precisely to all your question, I will not be here, but I would go and win the lottery, honestly, because they were so precise that, okay, let me try to give you a flavor that to me is more important because it's tough. First of all, after 90 days in which we have focused ourselves on making the merging successful, so thinking more about the outcome, not being in a trouble in July 1. We understand the many things about 2i Rete Gas. We try, as I said, to get the best of the 2 companies. You recall very well about the EUR 200 million synergies. You also should remind that there are 3 pillars, around EUR 40 million about traditional synergies, EUR 80 million digitization, another EUR 80 million AI. If you want to put in a time scale, the EUR 40 million will come between, let's say, '25, '26 and '27 maximum are the traditional, the one that you collect first. Digitization will take a little bit more because you have to adapt yourself to the new processes. So it will happen -- start happening immediately, but then it will grow, it will take more time. AI probably will be at the end of the plan. So it's up to you. We tell that I think 75% are already achieved in 2028. That is our better forecast. I'm sure that in October, we will give you a more detailed view on that because after the merging, then we have another 3, 4 months of working together, and we will start collecting data and results. So we will be able to bring you more detailed forecast. Remember that we have 25 working team together that are working to harmonize everything to find out the best practice to be applied, no matter if they are coming from Italgas or 2i Rete Gas and stretching the whole organization. So I think I'm expecting the 25 working teams that are still working will provide us a better forecast for the coming years about the synergy. If I have to say the fact that we have anticipated the merging, of course, some saving will be anticipated by the fact that we have anticipated by a quarter the merging that we expected. Regarding Greece, you are right, we are on the right journey. If you do some math, you will see and you have already done it, that the EBITDA margin is about 75%. In Italy, we are above 80%. So there's still a gap. I don't think we will ever close this gap because of the size. But still, we have significant -- if you go back to 2024, the EBITDA margin in Greece were below 70%. Now we are above -- we are in the range of 75%. So we have already increased by 5 points. The EBITDA will continue to improve. As I said, Enaon should reach the EBITDA margin that we can see in Toscana Energia because Toscana Energia is -- let me say, it's a company by itself, size is very similar. So still, there are a few points to be achieved. But as I said, we are on the right path. So not this year, probably next year, we'll probably be fully satisfied by the performance of Greece for which there is not only the performance in terms of efficiency, but the number of kilometers that we laid down is significant. The expansion of the gas network in Greece is significant. We are progressing very well. We are very happy about the activity that we are doing in cooperation with the local community. I think also local community in Greece are very happy about our job and the fact that we are opening a new area where we can supply natural gas. We have imported model that we have applied in Sardinia LNG, small tank that are able to supply isolated grid. It's another advantage that we are providing to Greece based on our experience in Italy. Last question on WACC. I would not -- honestly, I will not translate. Well, if a reduction in WACC is there, there is an impact, of course, on the revenues. You know very well, we are nearly EUR 15 billion of RAB, 10 basis points is EUR 15 million. So I mean, the math is very simple. What is not according to math is our ability to continue to reduce our cost and offset eventually this element. And you have seen in the first quarter, I mean, it was a reduction of 60 basis points, and you didn't even notice the effect of that reduction because of our investment, the RAB growth, some recovery of the past coming from the regulator, our efficiency on cost result us there. And the WACC was reduced by 60 basis points applied at least in the oldest perimeter to EUR 10 billion of RAB, so EUR 60 million. So I mean, you see the numbers. We are playing a different game. It's not just a matter of math to say, okay, 10 bps, EUR 15 million, take the fiscal impact and then it's going to be EUR 10 million on the net impact on the profit. That is not the calculation. I mean you don't take into the picture our ability to continue to be more efficient, to continue to invest, to increase the RAB, to be day after day, more efficient in terms of cutting cost. That is not the math. It's a demonstration that has been for 9 years now.

The next question is from Ella Walker-Hunt of Citi.

I have 2 questions, if that's all right. So my first question is to do with the tenders. You mentioned that you expect 5 to be awarded this year. So if you did win these 5, when could we expect the cash outflow that will be associated with buying the concessions that are not yours? That's my first question. And then my second question is to do with the mandatory disposal. So more so asking if there's a chance that you don't end up disposing the redelivery points if, let's say, there's not -- there's a lack of buying interest. And if so, what would be the upside to your long-term guidance in that case?

Okay. First question, if the tenders are awarded, let's say, 5 this year, you normally takes between 6 to 9 months to get to the outflow in terms of payment of the RAB because you have to sign with the -- let me say, you have to sign a contract with the municipality. The RAB and the value of the asset should be adjusted to the latest value. So there is some, let me say, administrative and bureaucratic, if you want, activity that has to be performed. Normally, we have seen it takes between -- depending 6 months is probably the right. Sometimes we -- there is a dispute about the value, the adjusted value, and therefore, it takes maybe 3 months more in terms of 9 months. So that is -- so long story short, if those 5 tenders are awarded in the second half of 2025, the outflow will happen in either first half or, let me say, mid of next year, not earlier. We don't expect that earlier. The second question, disposal. Well, again, I don't have the probability. I really -- honestly, I don't know. What is happening if there is no interest or if the price is below the floor that we set that is not known to anyone except us and the antitrust. So there are 2 conditions for which we may not sell our assets is no interest or price that is below. In that case, we keep the asset for us. But I would like to -- so which is the impact on our plan is extremely limited. The overall disposal is 600,000 redelivery points. Total redelivery point that we have is 13 million. So we are talking about peanuts. So if some of the -- let's say, 100,000 will not be disposed, just pick a number or 200,000. It's going to change something, Honestly, not really.

So this was the last question. We, as IR, are available for any follow-up. And thank you, everyone, for attending the call.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.