MFE-Mediaforeurope N.V. (MFEB) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Mediaset 2020 First Half Results Web/Phone Conference Call. [Operator Instructions] For your information, this conference is being recorded. Now I would like to hand the conference over to your speaker today, Mr. Simone Sole. Please go ahead, sir.

Hello, everyone. Good morning. Let me introduce immediately because we have a shortage of time today. Let me introduce immediately the speakers: Marco Giordani, CFO of Mediaset; and Matteo Cardani, Managing Director of Publitalia. We will have about 1 hour today. And so therefore, let me hand over immediately to Matteo. Sorry, to Marco, to Marco for the introduction. Sorry about that.

Yes, yes, just a few words. Good morning, and thank you for joining us today. Before starting the first half result presentation, I'd like to underline once again the strong resilience and reactivity of the Mediaset Group. We have been able to react and adjust our business as required by the extraordinary time we were going through. During the second quarter, in the middle of the lockdown period, Mediaset was able to deliver cost efficiency and cash flow generation ahead of expectations. We are now benefiting from the gradual recovery of the marketing, and our advertising revenue finally turned in the positive territory. We adopted our facility and equipped our studios to protect the health and the safety of our employees. This allowed us to carry on with activities in our studios that never stopped and to organize a strong return of our employees to the office. We were able to adjust our programming schedule to the current environment, achieving impressive audience results and maintaining our quality standards. We are now ready to start a back-to-school period based on the launch of a high-quality programming schedule and on an acceleration on the digitalization of the company activities. Now I'd like to turn the call over to Matteo to discuss the audience and advertising performance.

Thank you, Marco. Thank you, everybody. Good morning. Today is the third 2020 conference call. We commented 2019 fiscal year results on March 11. We were facing initial evidence about COVID outlook. Then we had our Q1 2020 call on May 13 soon after the end of the lockdown period, and now we have our H1 2020 call at the end of summertime. Now we're following this date because we want to follow the same time segments in today's call. So we would like to analyze 2020 evolution according to 3 different phases in H1. Jan set organic trend, the COVID outbreak and lockdown period from the end of February to the beginning of May, and the first initial recovery period from the beginning of May to the end of June. And then we'd like to share some initial evidence on July, August and Q3 outlook. So let's start with a look at our earnings performance. As you see in Chart #3, our TV core business is in good health. Linear TV audience benefited for sure from the exceptional lockdown situation in March, April and beginning of May. But most interestingly, evidence is doubled-fold. On the one hand, TV has a fall after the positive exceptional peak during lockdown, experienced a positive medium, long-term positive carryover effect. The positive effect last year in May, June, July and August, so 2020 COVID year restated, to some extent, the centrality of TV in Mediaset. On the other hand, the remarkable thing is that in each of the 4 periods of the crisis, Mediaset linear TV performed better than market or on average. If we consider the consolidated H1 performance, as you can see in Chart #4, we have a further growth in audience share, 34.8% audience share, that is plus 30 basis points versus H1 2019. Then if we take a look at the following Chart #5, I want to say that as we've shared over the past months, TV for us means, for sure, television; but more and more, it means total video. So the other remarkable thing to share with you is that the good health of our linear TV audience is very well accompanied by a long-term positive structural dynamics of TV content consumption spread through digital screens and smart connected television. As you can see, there's a constant double-digit growth, both for digital screens and smart television, during all the 4 periods of 2020. So this may sound as a positive, but 2020 COVID year actually restated the centrality of linear television and, at the same time, accelerated the evolution of total video consumption. Now we move from all these indicators to advertising revenue market. I'm commenting Chart #6. And according to official advertising market published data, the consolidated H1 advertising market trend is minus 26.8%. There is high balance among media, cinema and health among -- were almost 100% impacted by lockdown restrictions. And with regards to our addressable media, it is worth noticing that generally speaking, digital had a better-than-average performance, thanks to the flexibility, immediately followed by television that benefited by double-digit increase in total volumes. Radio, on the other hand, was affected by COVID more than proportionally because the usual radio ad is to listen to radio out of home, mainly when driving, and this accounts for 2/3 of total radio consumption. Then moving to the next chart, #7. In this scenario, we comment our H1 result. Our result is minus 24.5% in H1, and this actually represents a better-than-market performance because we are minus 24.5% versus minus 26.8%. And this turns into an advertising market share of 40.5%. I don't want to elaborate too much on market share data in such a critical market situation, but we simply share with you the fact that this is a synthetic indicator of our market position resilience. Actually, we are 130 basis points better than H1 2019. And if you want, just for the sake of numbers, 40.5%, this is 100 basis points better than our higher target range when we present to you our track plan in London in January 2017. Now I move to Chart #8. As you know, our policy is not to comment on each single month. We would like to share with you the proper time framework, as I say at the beginning of the conference. So the organic trend in January, February was positive. We also -- we already commented, given the last call, the impacts on lockdown period from the end of February to the beginning of May. The depth and length of the crisis was minus 39.1%. And then the performance during the initial recovery period, the unlocking period from the 10th of May to the end of June is minus 26.9%. But the interesting thing is that the shape and the velocity of the provision of summary recovery is, to some extent, better than expected. We were actually double-digit down in May. We were single-digit down in June, and we'll come back on it at the end of the presentation, but I anticipate that July, August period has been positive. Now in order to understand the situation, we'd like to share with you also a key driver of this situation that is the economic sector dynamics and commenting Chart #9. And it's the same chart that we've shared during the last call, and it represents not our revenue trends, but it represents the retail value sales for each economic sector in H1. So it's not our dynamics, but it's the business trend of our advertising. The chart simply states -- represents the strong asymmetry of COVID impacts across economic sectors. As you know, there's a large part of the economic sector that accounts more than 70% in terms of contribution to our business that were, to some extent, saved by the first impact of COVID crisis. You see here which sectors. The other part of the economic sector that accounts for a large part of GDP but less than 30% in terms of contribution to our business, they were obliged to stop almost completely their operation, and that business was actually discontinued. So following this interpretation, in the next chart, you see the classification, the framework of analysis. And we divide the economy into 3 main sectors: the resilient sectors, so fast-moving consumer group, pharma, telco, retail, over the top; the starting sectors, automotive, finance and insurance; and those sectors that we call, let's say, still restricted, mainly leisure services, travel, Horeca and so on. The interesting thing, and that you can appreciate this in Chart #11, is the differential dynamics among these sectors. So the resilient sectors, they were doing good in January, February. In fact, thanks to the fact that the business was not discontinued in -- during lockdown. They keep -- kept on investing in advertising at a better rate compared to the average, and they contributed June recovery. And they are definitely above the line. They are positive in summertime. A crucial area is the area that we call restarting sectors. They account for 20% of our business. I'm talking about automotive sector, finance, insurance. Their business was strongly discontinued during lockdown. They were almost obliged to stop and postpone their advertising investment. So they performed worse compared to the average during lockdown. But the interesting thing that all these sectors were starting their advertising plan in May and progressively improved from month-to-month from June to July to August, thanks also to the combination of business mix to restart the business. There was an important IPO between Intesa Sanpaolo and UBI in July. The automotive state incentive started in summer and prolonged until the end of 2020. And last but not the least, the fact that at Mediaset, we had a dedicated offer to mainly target namely Champions League in August, and this positively contributed on top of the positive baseline performance. Last but not least, the restricted sectors. They account for a minor part of our business, around 10%. The interesting thing is that this slowly started to recover at the end of H1, and they are still gradually recovering in the summer. So they are still negative but definitely improving. So my conclusion with regard to sector that we're delighted almost now that we've been set a resilient lockdown. We feel that the good phases of recovery with resilient and restarting sector, and our strength is the continued relationship with all advertisers combined with a complete media offer and portfolio of advertising solutions. As a conclusion to my presentation before I hand over to Marco. I want to come back to some, let's say, economic -- macroeconomic indicators in the last 2 charts. If we take -- if we look at confidence index indicators, the monthly evolution, both for our consumers and business in Chart #12, the good news is that after a dip down during lockdown, there's been positive and, to some extent, unexpected sharp upturn in June, July and even August. And this confidence index, the interesting thing that we can appreciate in the following chart, #13, is that it is almost reflected in real consumption. So the pattern is aligned, to some extent, with confidence index and very strong EBITDA downturn during lockdown, but positive upturn signals mainly in group consumption at the beginning of summer. So as a conclusion of my presentation, I'd like to share that the combined sectors' positive COVID confidence index indicators, consumption patterns and the economic sector dynamics in advertising spending is that positive performance in July COVID period. For Mediaset, the combined performance in these 2 months is plus 10%, and that's even, say, better. Now I hand over to Marco for the second part of the presentation. Thank you.

Thank you, Matteo. Entering in the financial part of the presentation, we would start usually with the group highlights, P&L highlights. And on Page 15, as you can see, I mean, the first half has been materially hit at the revenue line level with more or less EUR 300 million revenue lower than last year, with a pretty high discipline in cost that we were able to, in any case, to deliver a positive EBIT, maintaining the decrease versus last year in the almost 50% of the revenue, what we lost on the revenue line with minus EUR 150 million. And more importantly, in terms of financial position, the June end show a debt of EUR 1.2 billion level, that if it is compared to the EUR 1.35 billion at the end of last year showed a pretty important improvement made by a stronger, let's say, cash generation of around EUR 150 million. And that helped us also to finance the increase of the stake of ProSieben that moves up from almost 20% at the end of last year to almost 25% at the end of the first half. As far as, let's say, covenants and, let's say, relationship with the financing institution, the adjusted net financial position at the end of the first half 2020 was negative for EUR 575 million. I remind you that this financial position is the one that has been used to get covenant calculation, and that excludes the financial liabilities according to IFRS 16 and the financial debt arising from the ProSieben stake acquisition. As you know, because it's clearly something that we disclosed several times in the past, our covenants limits are set at 2x. And so that is showing that we have a pretty large headroom in that respect because the first half actually close to the level of 0.8x, so a pretty large headroom. In terms of facilities, I can tell you that at the end of June, we had EUR 650 million undrawn revolving facility, committed revolving facility, plus almost EUR 670 million gross of uncommitted facility. In terms of headroom versus the drawn facility, we moved up from 53% of 2019 to 48%, so increasing our headroom. We don't have any maturity until 2021. And our cost of debt is the same as forecasted, and it is below 1%. Lastly, as far as the financial part, the duration of the debt moved up by almost 10% being at the end of the first half of 2.2 years, up from 1.9 at the end of '19. So again, another, let's say, increased solidity of our, let's say, financial position. Then moving into the Italian business. Clearly, Matteo has already explained everything regarding the advertising revenue. As far as the other revenue is concerned, as you can see, I mean, we were able to achieve a similar to last year number. So in that respect, clearly, this was a pretty good performance. So COVID didn't actually eat in that respect, and frankly, we were very happy about that. That's clearly a long list of revenue in this line. We had also some line that has been affected, but we were able to compensate them through the increase of other. Another important achievement we got in the first half was the cost. As you can see, we were able to decrease cost by more than EUR 110 million compared to last year in the first half, almost a decrease of 12%. If you enter in the second quarter performance in terms of cost, you can appreciate that the reduction has been more than 22%. So again, a pretty important result. If you then want to have more insight in that number, we can tell you that reality, on a like-for-like basis in the first half, we saved more than EUR 140 million compared to last year because in 2020, as we discussed it already in the first quarter results presentation in May, we had a big blockbuster launch that clearly increased the cost line by almost EUR 10 million. And in the first quarter 2019, we had also a EUR 20 million positive effect, one-off effect resulting from the reversal of the provision linked to the discontinuation of Mediaset Premium. So on a like-for-like basis, I repeat, in the first half, we saved EUR 144 million, minus -- almost minus 15% versus last year. As far as guidance, it's impossible to give a medium-term guidance, and so we are keeping a very high flexibility. As we've said at the beginning, we are starting the back-to-school period, let's say, relying on a pretty good performance in terms of revenue. So we are back to a programming schedule that is similar to 2019 one. But as Matteo was saying, visibility is very short, and we are going to keep our flexibility at the highest level, trying to adopt as much as possible the grid and the cost line to what the revenue line could show us. Moving to below EBIT. I mean there are no major news in that respect. Clearly, compared to last year in the financial income line, we suffered from the decision of ProSieben of non-distributing dividends, and that's clearly the main reason for the differences between 2019 and 2020. As far as the rest, as we said, cost of debt is similar to last year, and so nothing really is going to change in the coming months. And also in the associate line, as you can see, the situation is pretty close to last year. Moving to investment. I mean, nothing really different from what we already said in the first quarter conference call. The second quarter, as anticipated, shows an investment line or investment amount lower by almost EUR 50 million than last year. Clearly, this is another flexibility tool we have going forward. Investment would be clearly pretty under control and will help to maintain, let's say, the cash flow under control and trying to maximize it for -- also for the remaining part of the year. Moving to Page 19. You can appreciate the free cash flow from core activity that reached a level of EUR 125 million in the first half with a remarkable improvement versus last year. That's clearly, I believe, the best example of how we manage the cash flow discipline in the first half. This will go on clearly in terms of discipline also in the remaining part of the year. The level of the adjusted net financial position is EUR 780 million almost. And that's clearly something that is also including the increasing stake happened in the first half. And as you can see, this is something that is pretty better than last year's performance. Just to complete. I mean, in the first quarter presentation, we were anticipating that our forecast for the quarter, for the second quarter, was not to burn cash, notwithstanding the fact that was the worst period in terms of, let's say, revenue effect. And actually, the performance was even better because in the second quarter, we were able to generate cash by almost EUR 16 million. This is something that, for us, it's a pretty remarkable number. Clearly, this 15 -- EUR 16 million cash generation, it's adding up to the almost EUR 110 million we have generated in the first quarter. So the total cash generation from core activity, as we said before, was more than EUR 120 million in the first half. I have completed my financial part presentation, and I hand over to the Q&A session. So let's open the Q&A session.

[Operator Instructions] We are now taking our first question from the line of Julien Roch from Barclays.

My first question is on advertising for Matteo. You told us that July and August were up 10%, but that includes the benefit of the Champions League, which because of COVID was compensated in a short period of time, which you won't have last year. So could you give us an idea of the impact of the Champions League on July and August? And then any color on September? That's my first question. The second question for Marco. I understand you don't want to give a number for full year cost because you will be flexible based on revenue. But can you help us size the cost depending on the revenue? So either give us some level of cost depending on the revenue being up 0 or 10, or some operational drop-through in terms of conversion from revenue to operating profit. That's my second question. And then the third question is on the new deal you're working on, which should achieve the same benefit as before, i.e., scale and synergies. Number one, would Fininvest be happy with normal voting rights because that's the multiplier on voting rights that killed the first deal? And secondly, you quoted saying you'll be interested in taking a stake in a single network in Italy, if it's not possible by law. I can't think of any telco going into media, media going into telco that created value, but I might be wrong. So what's the rationale there? Because I don't really understand.

Okay. Thank you, Julien. I try to answer your question. So with regard to July, August performance, I confirm. So the combined performance of the 2 months is plus 10%. But the interesting thing is that even excluding the Champions League impact was, of course, additional in August, the combined performance, July and August, is a positive year-on-year, of course, single-digit positive year-on-year. With regard to our outlook for, let's say, September Q3. We have limited visibility of September. Honestly, we are working with 7, 10 days of visibility. The start of the month is a positive one, definitely. But there are many variables to take into account in the second part of the month. First of all, the effect of the back to school next Monday, the original election on the third weekend of September, so we prefer to stay cautious. However, we are confident that we could target at least parity year-on-year results in Q3. Thank you, and I hand over to Marco.

Ciao, Julien. As I said, it's very difficult to go longer than a few weeks. The only thing that I can say is that I believe that we have proved to be able to adjust, let's say, the cost base with really 15 days time, and that's the consensus. And certainly, what I can say, following what Matteo said about this third quarter, clearly, if the third quarter in terms of revenue, is going to be in line -- broadly in line with last year, what I can tell you is that the same will be as in cost. So I mean, as far as the third quarter, I believe that we are going to perform more or less as last year, maybe a little bit better, but I mean, not materially different. As far as the rest, as I said, it will depend very much on what the situation will evolve. And as I said, we are now used and prepared to adjust the grid really with few days timetable. We have clearly different grid evolution plan, depending on what the revenue will look like, and we will adapt it very, very fastly. Just theoretically, if I can say that if the fourth quarter is going to be in terms of revenue the same than last year, then at that point, clearly, also the cost base will be the one that we projected at the beginning of the year. But I mean, this is just a pure theoretical, let's say, consideration and comment because, clearly, we will see. We don't know what will happen, and we will see what is going to happen really week-by-week. Moving to the other questions. Clearly, I don't want to enter in the speculation, let's say, news flow. We confirm -- the only thing that we can confirm is that we don't see any other industrial strategy than the European consolidation for broadcaster or at least we have not found anything different in this period. And frankly speaking, from outside, we don't see other, let's say, finding a new way of growing in the present, let's say, media scenario. As far as technicality is concerned, clearly, the COVID situation is not helping to set practical technical project because values are clearly up and down week-by-week. So it's very hard to project the technical, let's say, solution and technical, let's say, operation to pursue the ideal, let's say, objectives. Having said that, clearly, we are going on in working. We are going on in working both in Italy and Spain to maximize the cash flow and following clearly what the market condition in the 2 countries, not only in the tactical way, but also in the structural way. And as soon as the COVID situation will be at least a little bit more stabilized, we can think about, let's say, tactical way to pursue the, let's say, the broadcast -- the European broadcasting project that we confirm. It's for us the best growth scenario for the group. As far as the last part of your question regarding the network, I mean, that's clearly something was more in principle. Clearly, we -- our aspiration is to have a pretty stable and clear regulatory framework. Till last week, we were working in all our projects, in all our ideal, let's say, development project. We were working in a scenario that was limiting us in investing almost everywhere in Italy because our, let's say, our -- the legal framework was saying to us that we couldn't, let's say, enter in not only in telecom, but also in other media. Now clearly, last week, we learned that, that is no more the case. Fair enough. Fair enough. And that clearly, for us, a new information that we will clearly use in our development projects. As far as the network, for us, the network, the independency and the neutrality of the network is crucial. And it's as it was for the broadcasting network. It's important that there will be a complete neutrality that the network will be efficient in terms of cost and will be also, let's say, able to carry all our content in the best way to our viewer. It's important that we'll be independent. Whatever will be the way in which this independence will be reached, it's for us neutral. I mean -- but it's important that we'll be independent because clearly, our content will be carried by that network. I mean, taking your comment on investment in telecom -- profitable telecom investments. I mean, clearly, you know it better than me. But I mean, what I would like to say is that the target of having an independent, efficient and neutral platform is such for which we could also consider investments. I mean -- but I mean, the real objective is to have a neutral, independent and efficient network. So that's the rationale. As far as the rest, clearly, it's something that happened some days ago, a few weeks -- a few days ago. And so this is clearly something on which will be clear once that the situation will be clear also for us.

Our next question comes from the line of Adrien Hilaire from Bank of America.

This is Adrien from Bank of America. So I have 2 questions, please. First of all, Marco, can you tell us what is your latest position regarding Vivendi? Are you still seeking damages and penalties? Or do you see a pathway for a deal? And secondly, perhaps related to this, when you mentioned the fact that you only see pan-European consolidation as the right industrial strategy, did you mean only with free-to-air operators? Or did you also include pay-TV groups in this?

I mean, regarding Vivendi, again, I read a lot of speculation and rumors on news. Clearly, I don't want to enter in that kind of path. The only thing that I can say is that we always work in the best interest of all the Mediaset shareholders. We strongly believe that one of our key objective as management is to maintain a full alignment of interest of all the shareholders without really, let's say, making one prevailing on others. And in that respect, I'm sure that we can find solution with Vivendi being at 30% shareholder, always in respect of all the shareholders and, as I said, in the best interest of all the -- of the shareholder of Mediaset. If there are project ideas, development route or whatever that creates value for all the Mediaset shareholders, we will be -- we are -- we were also. But I mean, we are, and we will be available for discussion and certainly, will be certainly of help if this project will be delivered and executed. But I mean, again, I'm repeating it, we are working and we were working also in the past in the best interest of all the shareholders, and that is something that will show up a way also in the future. As far as the broadcasting, let's say -- or the European broadcasting project, I mean, if you remember when we presented to the market the MFE project, there, we clearly showed the reason and the rationale, the industrial rationale for that project. Frankly speaking, we went through many European court, as you know. But I mean, the industrial rationale has never been doubted. I mean, the industrial project has been confirmed everywhere in Europe. And frankly speaking, we -- as I said before, we are still convinced, and more and more convinced and the industrial rationale of it is present, and it is there to be captured. If this is only for free-to-air, clearly, for the biggest part, yes, because as you can remember, the main rationale was not only to save cost, but also to create opportunity in terms of revenue. And clearly, if you are working on the same business model, it's clearly easier. As far as some costs, for instance, the technological cost, this is clearly also adaptable to other business models. But as I said before, the main reason for MFE was to create opportunity of growth in a market that without scale could only be mature. Clearly, we are very transparent in saying that if somebody else is showing us other way to capture growth opportunity, we are ready to listen because clearly, we cannot pretend to say that we are the only one right in the world. If other business model representatives are, let's say, showing their projects and are, let's say, showing how we can grow in that market, we are ready to listen. And certainly, in the best interest of the Mediaset shareholders, we will certainly try to execute it.

We are now taking our next question from Richard Eary from UBS.

Just 2 questions for myself. The first one relates to the stake in ProSieben. Obviously, there is a direct equity stake, and then there are some derivative positions around that. Can you just update us in terms of -- on those derivative positions of when they're expiring? And what is the likelihood of whether you sustain those positions or not? The second question just relates to -- just on the other revenues as we go through the second half of the year. Just whether you can just update some thoughts in terms of how those other revenues may track, and particularly around the production side in terms of how production is opening up or not opening up.

As far as the first question is concerned, I mean, you know because clearly, we disclosed the way in which we built up our -- the way in which we secured our stake in ProSieben. We never disclose, let's say, the timetable of our derivatives contract termination, and we are not going to do it now. The only thing that I can say is that we are happy from the technical solution we took starting from May last year. We believe that technically speaking was the right way to approach the stake, and we confirm that it's a technicality that is allowing us, let's say, to have secured the stake on one end, but also to maintain a strong flexibility in what we can do in the future. And also looking at the present situation in Germany, I believe that this is still the best way to be on the dossier and to be exposed to ProSieben, let's say, future. But I mean in terms of technicality, we are not going to disclose the contract news. As far as the other revenue line for the second half, as we said, clearly, in that line, we have also, let's say, the revenue coming from film distribution, let's call it in this way. And that's clearly something which is very hard to make projections, as you can imagine, because that are all related to the COVID evolution. The only thing that we can say is that with some flexibility, we can target the same line than last -- than the consensus. It's still achievable. Again, as I said before, not -- I mean, just compensating one element or the other because there are, for instance, resale of content that are growing more than expected. While on the other hand, as I said, and as you can imagine, film distribution revenue are clearly not in the same line than forecasted at the beginning of the year. As I said before, we target, let's say, a number around EUR 300 million at the full year. Coming back to ProSieben, clearly, and as I said before, we are not here to reinforce speculation, and that's the main reason for which we don't want to disclose any kind of detail on our, let's say, contracts.

We are now taking our next question from the line of Ned Balderstone from Goldman Sachs.

I've got 2 questions, if I may. Firstly, on the cost savings. I was just wondering whether any of the savings you've managed to extract in the first half of the year can be considered permanent as we think about 2021. Are any of these savings, things that you'll be able to repeat next year, assuming the market normalizes? And then, secondly, just more recently in terms of current trends, as the COVID situation -- perhaps the risks around the COVID situation have increased in recent weeks, have you seen any change in behavior from advertisers in your discussions?

I address the advertising question. As I said before, we have a limited visibility. But what I'd like to share with you is that there is a strong wheel of recovery downside of our advertiser. We experienced that, to some extent, the unexpected positively in June, July and August because their business is, to some extent, at risk. So they need to invest in order to recover what they lose during Q2. That is why we are positive. There are no major shocks in terms of the pandemic in our country. For the time being, we are quite clever in managing the situation. What we get from the fact that they really need to keep on investing till the end of the year. So in the next forthcoming weeks, I would say, from here to the beginning of October, for sure, we will get the clearer picture. But I want to remind the fact that our strength is to be in touch with all advertising sectors on a daily basis. We are set on visiting clients. So if COVID allows us, we are, let's say, cautiously confident for the next part of the year. And I hand over to Marco.

In terms of 2021, clearly, it's going to be a very challenging year in any case. The budget exercise will start in 1 month's time, so it's a little bit too early to say. But I mean, just to comment broadly, certainly, what happened in 2020 gave us some help in also projecting the future. Clearly, not all the savings can be, let's say, postponed or can be replicated in 2021. Likely, I would say, we don't want to have them. But I mean, certainly, in some cases, we also learned that we could do things differently and cheaper. So all in all, I can summarize that, certainly, we will carry some savings that we didn't expected. But I mean, broadly speaking, I cannot give numbers because the budget exercise has not been started yet. As all the company, I believe, we learned to do things differently, and this is clearly something we will not forget, and that will take savings that we're not expecting 1 year ago.

We are now taking our next question from the line of Stefano Gamberini from Equita SIM.

Three questions, if I may. The first regarding the free cash flow. Do you have a target in terms of the full year free cash flow considering the good trend in second Q? And as regards the second Q, the second part of the question regarding the change in net working capital. This was positive in 1H by EUR 248 million. So is this just a seasonal effect, or it is permanent on a full year basis? The second question is regarding the timing when we could expect some novelties on MFE project. I read on the press that probably next week, you should start some meetings with Vivendi regarding the conflict on MFE. When we could expect a new project in your target, 3 months, 6 months or 1 year? The very last question regarding your stake in EI Towers. Do you expect that with an acceleration of the single and the single TLC network, we could expect also an acceleration for tower broadcasters, and as a consequence, you can create value through EI Towers disposal, I guess?

Ciao, Stefano. Yes. Not very, let's say, easy question. I'm trying to go through them. Cash flow projection for the remaining part of the year, clearly, no idea. It's all depending on the top line and the COVID evolution. So as I said before, as we are not able to have guidance on the economic part, clearly, the financial part, it's only, let's say, the effect of the economic part. So clearly, as I said, we will try to defend the cash flow as much as possible as we did in the first half. But I mean, the size of the cash flow generation, it's clearly up to the top line and so not projectable today. As far as net working capital, I mean, that's -- if you want the effect of the lockdown in a sense because, clearly, in the first half, we cashed in the revenue of the last part of 2019 when the lockdown was not there, while cost has been stopped almost immediately. And that's clearly the result of the net working capital. So we cashed in 2019 revenue while we were not spending 2020 expenditure. So that's clearly something that, through the year, will not be the same size because of seasonality, clearly. I can say that the third quarter, for instance, will not be far from the last year one in any case, so no big effect. But I mean, that's as far as the working capital is concerned. As far as the 2 other questions, frankly, I mean, it's completely unuseful to give guidance in terms of timetable. I already said that as far as MFE, today, projecting new project is very difficult because market conditions are affected by COVID, not only in Italy, but also in Spain. And so clearly, as you can understand, the reprojecting deals also throughout Europe, it's complex without having a stabilized and stable situation. So when this will happen, I don't know. But I mean, certainly, we will be ready as soon as situation will be stable and, let's say, foreseeable. And again, also on EI Towers, I have nothing to say in the sense that we always said that consolidation in the towering business is in the best interest of everyone, and that's not changed. But I mean, the political condition and the economic conditions to that happens, it's clearly not up to us. And as soon as it will happen, we will be happy and ready to take the advantage of it.

Okay. Thank you very much for your attention. And unfortunately, we are now running out of time. We will be available for any further questions you may have, as always. Thank you. Bye-bye, everyone. Bye-bye.

This concludes the conference for today. Thank you for participating. You may all disconnect.