Telecom Italia S.p.A. (TIT.MI) Earnings Call Transcript & Summary

Good afternoon, everybody, and welcome to this exclusive TIM Enterprise event. I am Paolo Lesbo, Head of Investor Relations, and I am pleased to introduce this event together with our CEO, Pietro Labriola; the Head of TIM Enterprise, Elio Schiavo; and the rest of the management team. Starting from the agenda on Page 2. Here is what we have planned for you today. Pietro will kick off in Chapter 1, framing out this event and explaining what are the objectives we would like to achieve. From Chapter 2 to Chapter 5, Elio will take you through a comprehensive journey into TIM Enterprise, explaining the fundamentals and the competitive advantage in the context of the Italian market, sharing our key asset portfolio and cutting-edge value proposition and explaining our view of the future. We will close with Pietro's remarks, and then we will open the floor for your questions. This session, together with Q&A, will take up to 2 hours, so we should wrap up at around 4:00. Without further ado, I hand over to Pietro Labriola. Pietro, the stage is yours.

Thank you. Thank you, Paolo. As you have understood, we are entering the luxury business. This is an exclusive event. Thank you for everybody to be here today. I think that this was necessary, to try to better understand what TIM Enterprise really is. So I will try to drive you through a better understanding of the position of TIM Enterprise inside our group. Still today, we continue to face a situation in which people think that our group is a consumer group. We can say that TIM Brasil is consumer. Domestic TIM Consumer is consumer, but TIM Enterprise is not a consumer. And it's important to understand the weight of TIM Enterprise inside our group, 24% of total revenues and 35% of domestic revenues. During the Capital Market Day, we explained that we have 3 different kind of business model with 3 different level of maturity. TIM Brasil, we did a comparison. If you think to the metrics of BCG, Boston Consulting Group, TIM Brasil can be considered a cash cow, BRL 5 billion of dividend per year and an EBITDA margin of 50%. TIM Consumer, sorry to this word, is a dog in the BCG metric. It's a dog where we are performing better than other telco player in Europe, flattish on the revenue, and we are growing in terms of EBITDA, while TIM Enterprise is our star. A star that bright in the European landscape because our performance can look strange. If you look in all the different KPI, we are overperforming all the other players and the most on an organic basis. So we can go through some of the KPI, but Elio will give you more details about that. What is important is to try to explain why there is this unique position of TIM Enterprise compared to all the other player. For me, it's very, very clear that this is a strange animal. In your day-by-day activity, try to define the model, the Excel file to build and try to forecast the value of TIM Enterprise is not easy. It's not easy. Why? In the Consumer segment, I will share with you my number. I give my commercial KPI, my ARPU, but you will be able to check whatever we will say. Why? Usually, the national watchdog share every quarter, the number of the lines of the fixed. They will share the number of mobile number portability on mobile. We have several study of prices trackers that show you the trend of the ARPU. And so for, it's quite easier compared to TIM Enterprise to try to build the business model and try to understand the trend of revenue and cost. Also, the trend on a quarterly basis, it's much easier to understand because you don't have a huge deviation among the quarters. Here, fasten the seat belt because this is a business that we have to try to understand on a yearly basis. When we are talking about 35,000 customers and sometimes a contract with some of these customers can have a value of EUR 20 million, EUR 50 million. And you send the invoice for the payment, the 31st of March or the 1st of April. The number on a quarterly basis can change. So it's much more important to look at this business on a multiyear basis, try to understand, as Elio will try to explain, on the booking of the order. But the today main objectives are, first of all, what makes our value proposition unique in Italy and sometimes in Europe. I will try to spoil something for each of these 4 points. My point of view, what makes our value proposition unique in Italy and Europe? The fact that we have more than 1,500 salespeople. When you ask me why you are better than Microsoft, Google, Oracle in Italy, we have 1,500 [indiscernible] and salespeople that are working with the main 35,000 company since ever. We know the customer. We know exactly in their plan, in their 3-year plan, what they will do. This is not the consumer where you decide today to change for tomorrow. If you plan to change your network, your data center, your cloud, it's a journey of 5 years sometimes. So this is one of the main asset that makes our difference compared to everybody in Italy and sometimes in Europe. How our business model generate sustainable value? The fact that we have also some assets. Generally speaking, for all our company, after the sale of the network, we have people that were calling us a pure reseller. Sorry, but you have to remember that we continue to be on the consumer, the most Italian infrastructure player with the widest backbone. On TIM Enterprise, we are the player with 8 Tier 4 data center. Having the data center, having the ownership of some of the platform with which we supply the service, cloud, security, IoT, means that we have a competitive advantage, and we are able to have a margin that is better of some of our competitor, which are the key drivers behind TIM Enterprise growth performance. And on that, it's quite easy. It's not me, it's not Elio. It's not Adrian or the rest of the team that is driving the growth of the cloud. You can open the newspaper, and you are reading about AI. May AI work without cloud? No, sorry, it doesn't work. The main hyperscaler, the main software developer in the world are migrating everything in the cloud. So when Elio and his team has to go and talk with the Chief Information Officer of a large bank, he doesn't have to explain why they have to migrate in the cloud. You know why? Because Oracle already were there and say the next Oracle database will be only in the cloud. Microsoft already was there and say, Office 365 will be in the cloud. Sebit will be in the cloud. So it's not me, it's not Elio and our company that is driving the process of the migration in the cloud. As the main global player, it's a global trend. We are here to bring all these requests and needs and transform them that in an opportunity. And the last, the opportunity supporting the future growth trajectory. Here, we have an opportunity that is still not completely included in our plan. The geopolitical situation is putting on the table something that was impossible to think 3 or 4 years ago. The most you will proceed, the most you will need, sovereign cloud. What is sovereign cloud? The fact that the Italian company that are in the strategic for the national economy for the security cannot have all the information inside the cloud that is accessible to the national security of other countries. So it will mean that the cloud for some of this company will need to be a local cloud with a local player. But Elio will give you more details about that, and I will try to do the final remarks trying to connecting dots. Thank you to everybody, and I'll leave to Elio.

So I was saying before we go to the document, allow me to start with a few personal notes of acknowledgement because the set of contents you will see today has been prepared by a team. There is a huge team effort behind these documents. And they have experienced how demanding and difficult can be someone like me while preparing an event like this one, so I owe them sincere thanks. And I hope they will forgive me for the stressful moment that they have to endure because this has just been really -- we have done a very nice work. You will see there are a lot of contents. So to [ Huang ], [ Jacobo ], [ Antonio ], I want to thank also Paolo and the Investor Relations team that supported us. The [indiscernible] technical team running the business behind the scene and [indiscernible] is the host of this event because he's the manager of this data center. I would like also to thank you all because we know that your time is a precious commodity. And your participation, the fact that you took the time for attending this event is very much appreciated. So, as there is only one thing that I would like to tell you. I don't know if the [indiscernible] can put on the screen. So there is a timer that will start from now on. You will see these numbers changing during my presentation. At the end, I will disclose what each number means. So Pietro told you that I will walk you through 4 main items. We are, what is the market we operate in, which are our distinctive assets, why do we believe that our value proposition is unique and why the plan that we have in front of us, we believe it is sustainable. So this is the title. The first one, who we are. We are by far the largest ICT platform in Italy. This is the first distinctive element. We are the only one with an end-to-end value proposition. So as Pietro was saying, we have the infrastructure. We have 3 factories doing cloud, IoT and cybersecurity. But more importantly, we have a very large sales force with a huge capillarity across the territory, which is an asset not replicable by competitors. So this is the size of the business. As Pietro said before, there is part of the domestic business. And this is a first snapshot of how the business is made. So we have EUR 1.1 billion connectivity, EUR 1.1 billion cloud. We have EUR 200 million of cybersecurity, 1 billion -- sorry, EUR 200 million of cybersecurity, EUR 100 million of IoT and EUR 600 million of other IT, which is hardware, software, network management, device management and non-cloud licensing and so on. So we circled in some of the slides, the KPIs that you need to remember because there are a lot of content. So to facilitate your task, every time we will land on a very interesting KPI, I will underline it. So the first element that differentiates TIM Enterprise from the rest of the market and from the rest of the European peers is that our business is 50% public, 50% private, which doesn't happen to other companies, to other telcos. And more importantly, when you look at the growth of the business, the one accelerating the most is the public administration. So first peculiarity, we have a heavy weight of revenues based on a component that is growing very fast. I will tell you later on why this is happening. So what is the mission? The mission is that we are and we want to be the digital engine of this country. We put at disposal of public administration and private companies, creation and innovation. There are two words at the end of this sentence that can remind you what Pietro said at the beginning. We are always everywhere. So you can go from Sicily to the border of Switzerland, we are everywhere. The mission, I wake up every single morning thinking that we would do a good service in this country if we could make it better. So we work to enable the future of this country. And we always keep in mind, two things: quality of the products and services and customer experience. So the better those KPIs will go, the better we'll become, the more advantage the country will take. So this is how the market goes. So -- and again, back to what Pietro said, the reason why we are growing, generally speaking, is because we operate in a healthy market. So the market itself in Italy is growing at 5% [indiscernible]. What makes distinctive what we do when you move to the column on the right, most of the KPIs, with the only exception of connectivity, you will see in our case, is declining at circa 2% versus the minus 1% that the market is predicting. On all the rest of the KPIs, we are doing much, much better than the market. And we will tell you why. So this is the first element because we -- in order to explain to you in which market we operate, we thought that it was important because this comparison with European peers resonates very often in our calls, in our conversation. The reason why we are growing more than European competitors -- peers, sorry -- and the reason why we have a big opportunity because in the DESI Index that measures the level of digitalization of a country, we are in place 18. When you look at the public administration digitalization, this moves back to 24. What happens in positive in this country? When you look at the cloud adoption for large enterprise, we rank 7. Which means that there is an opportunity to tackle large enterprise because they understand the value of the cloud value proposition. We have a lot to do to help the public administration to step forward. But let's say, the opportunity, when you look at the other countries from Germany to Spain, to France -- U.K. is not in the chart because it's not European, but I mean they would be far ahead in the chart -- we run behind schedule. So we do feel the duty to support the growth of this country in terms of digitalization, but we also believe that we have a huge opportunity to take. And the reason is embedded in the structure of the country. So those are the four main items we will go through today. The first one, I guess, is a very interesting one for you because the market was predicting a deceleration of 1%. We are running at minus 2%. We will explain you later on why there is this difference. But more importantly, on the first line of this chart, there is something happening that is so desired on the consumer market and it's already happening in the B2B market, market consolidation. Because as you know, Vodafone has been taken over by Fastweb. Iliad is a nonexistent player on B2B. Wind is pretty small. So what happens is that the market on the B2B side is pretty consolidated, which is what we aim to happen also on the consumer side. So let's say, the first element where we do see an opportunity is a kind of a recovery business in an area where the market is consolidated. On the rest of the lines, let's say, we do believe that on cloud, as Pietro said, we have a unique combination because we combine professional services for cloud migration to the infrastructure, which is very, very, very large. At the end of this presentation, we will walk you through our data center, and you will understand the power of this engine. And you will see -- you will notice things that people do not think about. So when you will walk in our data center, on the floor, you will see a window, a glass on the floor. And you will see the fiber under the floor because what people do not understand is how pivotal can be the role of telco in the future for the reason Pietro was mentioning before. So to use a metaphor, think about an high-speed train where you have all the wagons. In each of them, you have a technology that can be cloud, IoT, cybersecurity, artificial intelligence, I mean, you name it. But this needs a railway and this needs to be very, very speed. So the advantage that we have that in this ecosystem, we have the train and railways. So we have everything the market needs to satisfy all the needs companies of public administration can have. Then on cyber and IoT, as you know very well, let's say, the increasing risk of cyber attacks and the fact that the devices need to be more and more connected, this represents for us an opportunity. Now before we move on to two vertical pieces of this slide, let me tell you something that Pietro has been very, very vocal during the last few months. And I think that we really have a compelling story to tell the market. And the story is that the global scene has become more and more complex. There is a higher risk of cyber attacks. You have a war on the borders of European Union, war in the Middle East. You have the policy, the trade policy that is coming from U.S. We have been shaking during the last summer. We don't understand. If you go left, we go right. So the compound of all those concerns drives, inevitably, European Union to have a digital sovereignty. So we need to own our destiny in that space. And when you take this out, when you make this choice, you need to trust someone who can help you to fix the point. And when you start connecting dots, you cannot avoid to pass to one of our dots because we have the infrastructure, the sales force, the operations and the technology, which is exactly what sovereignty of the cloud would recommend. So if you look at what Gartner says, it's a very simple piece of paper. So to be in a space where there is a sovereignty, you need to have 3 ingredients: data, technology and operations in the same territory, and we are the ones who can guarantee that. When we look at the future, which is artificial intelligence -- when looking at this slide, I was thinking about a quote, I hope I can repeat it, well, of Arthur Ashe, he's a famous tennis player. He used to say start where you are, use what you have, do what you can. So when we look at artificial intelligence, we know very well what is our starting point. We know what we can use out of the assets that we have, and we know what we can do. So here is what the market is trying to do. We will do 3 very simple things, 3. One, infrastructure. You will visit the data center. We have a huge capacity on our infrastructure side. And if there will be a demand for GPU, we will do GPU as a service only if the demand will arise. Because if we would have invested 2 years ago in GPU, we would be crying today. Because nobody has not even 1 meter, square meter full of GPU, with the only exception of NVIDIA. The second piece of this equation is we will understand, we are learning, we will understand which are the models, the platform that we can leverage on as a channel to resell them. So if there is any generative AI or predictive AI that we can leverage on, we will be the ones delivering that value proposition. And the third one is the use that we will do with artificial intelligence for optimizing costs that we have internally. We have a huge caring -- customer care operations. We manage an amount of contracts that you cannot even imagine. So there are many areas where artificial intelligence can simplify our life and can reduce our costs. So those are the 3 highways that we will go for. So which are the distinctive assets? I mean, I hope you really enjoyed the lunch because the rest of the afternoon can only get worse. So -- but you need to be patient because we have some time to spend together. I will make it quick, comprehensible, but we have a lot of content to share. So distinctive assets. So this is the $1 million chart. We have 6,500 qualified people. We have global alliances that nobody has in the country, plus 2,000-plus certifications for many of those global vendors. We have 3 factories, IoT, cyber and cloud. The 3 factories are running business cash positive, so we make money in each of them. We are -- after the separation, our competitor were -- so they were telling the market, they lost the network, they lost the network. As you will see in the slide that I will present later on, so we are the most infrastructure player still in the market, 16 data centers. We are a leading player in the PS space, and we have a very loyal customer base. So we will go one by one very quickly. So those are the people, 6,500 people. We decided to divide in 3 very simple fields, go-to-market -- and Pietro was telling you, we have more than 1,500 people in the sales, delivery, 2,200 operations, 2,200. And what is very important in the size of this workforce is the item that you can see on the right-hand side of the slide in blue. So we have radically changed the commission scheme of our people, and we measure them actually on the results that the company is looking for. So when I came on board, we used to pay salespeople for the amount of revenues they were booking. And then after 2 years, we were getting surprises of any kind. Today, the rule has changed. So the 3 items on which people are measured and are remunerated are the margin of each contract. So just to make an example, if you sell EUR 100 million of licensing or EUR 100 million of cloud migration, you get a different reward based on what you have sold. So the level of service revenues and the group EBITDA. If we reach those targets, nobody gets, not even a penny. So second bullet was on global alliances. And here, there are 3 items in this slide. On the left-hand side, I don't need to spend so much time because I guess that you know the usual suspects. When we go to the right-hand side, we have 2,000-plus certifications. But more importantly, there is one item that we didn't mention yet, which is we have an ecosystem of more than 500 partners. So the reason -- in the very first slide that Pietro presented to you, you have seen that the revenue per account is 3x higher than our peers is because our partners, in many ways, do represent also channel for us. When you go very local, when you go to Sicily, our small system integrator not only works for us for integrating the system, but in many ways, it is also our sales channel. So either they get an opportunity, we come on board, we get an opportunity, we pull them on the business. But let's say, this ecosystem of network, which is very loyal to us, makes our business more profitable and more [indiscernible] in the country. So this is the story of the factories. Noovle is on cloud and AI, Olivetti is on the IoT, Telsy is on cybersecurity. What is very interesting in this slide, you will see the circle here again. So I circled the 40%. Why? Because marginality of our factories is 40% gross margin. Marginality of the business, as you will see later on, is 35%. This means that when we have told you many times that by in-sourcing capabilities, our margin will improve is embedded in this KPI. Because if I move into our factories, the business marginality goes from 35% to 40%, so we can win. The second element, very interesting, is the share of revenues, which is 20%. And more importantly, the 2x means that 3 years ago, this 20% was 10%. So in 3 years, we doubled the sell-through toward our factories. So this is a story that you know very well about the network. So when you look at the right-hand side of this slide, which is Mobile, nothing's changed. Basically, everything stays as it was. And when you look at the left-hand side, actually, we should deliver the message clearly and loudly that there is only the passive side of the network we have sold, but the intelligent active side is on our side. Sorry, I said twice, side. But more importantly, we own and we build the customer. So there is no disadvantage apart from the fact that we got rid of the debt, and now, the company is working very, very well. So let's come to the name of the game, which is data center. Because you have heard many times about we are the red spot here. So there are many people talking about data centers. We will build data center, we will invest in data centers. So let's frame the situation as it is. We have 16 data centers. 8 of them are rating Tier 4. We have 6 LEED certifications, 5 gold, 1 platinum. The platinum, which is Pulsano, is one of the 23 data centers in the world with that certification. So it's a nice, best-in-class operation. So we have 1 big data center under construction in Acilia. And we have created a network of edge nodes, more than 20, basically to have low latency wherever in the country. So when you look at this, you can see that we cover the entire territory. All the data centers are connected and all the edge nodes are connected to the 16 data centers. So this make very distinctive, our value proposition. Now just -- because I don't know if in the walk through the data center, you'll do later on, people who will guide you, will tell you, but I don't want you to lose this KPI because this is a very important KPI. Capacity of the place where we are having this meeting today is 8 megawatts. The possible extension that you will see we have already started is up to 30 megawatts. We recently bought the field on the other side of the street that holding this location could bridge the capacity to 50 megawatts. So today, we have in place 8, 80% saturation. We are -- we can go up to 30 in the construction that you will see later on. And we could potentially go up to 50, leveraging on the field that we have bought on the other side of the street. So when you get out from this data center, you look in front of you, everything you see is our property. And this is very modular. So we will do whatever we need to satisfy customer needs going forward. And we will model if how much this should be GPU, how much this should be infrastructure as it is, but let's say, this is a very distinctive asset. Now let's move to an item that you have been hearing many times. I don't think that it is clear, what we do in this space. This is a national strategic hub in Italian is the Polo Strategico Nazionale. So this is a program that started in 2022 and is managed by 4 partners, TIM at 45% share, Leonardo, 25%, Sogei, 10%. cdp is actually a financial partner. Why this is so important and why we framed this in gray, because the 100% of revenues we generate is divided by the 80% that you have on the left because cdp doesn't provide any service to the business, but it is a financial participation. TIM, what TIM does, infrastructure, cloud migration, managed and professional service. Leonardo, cybersecurity, managed and professional services. Sogei, training, professional services. Now why we colored on gray the layer between the National Strategic Hub and the public administration because the real engine of this program is TIM, and we will explain to you why this works. So this is the start of the program. 2022, the budget when we started the program was EUR 2.6 billion. So we were aiming at generating EUR 2.6 billion revenues in -- from 2022 to 2025. Actually, the number -- the total value of the contract booked by the end of 2025 will be EUR 3.8 billion. So the size of the pie is becoming more and more, big. Third element, we have 550 plus -- actually, the exact number is 553 today, contracts signed, out of which 2020 (sic) [ 220 ] are already fully migrated to the cloud. So by the end -- so the mission to accomplish this by end of 2026, we need to have 550 public administration migrated on the cloud. So the question I got many times very often, and I would say I understand the rationale behind the question is, yes, but what happens when this gets to an end because by the end of 2026, money will not be there. And actually, you have done what you have done, but what happens till 2035. And what happens is this one. That actually, we do run 90% of all contracts. So 90% of all contracts signed by the Polo Strategico Nazionale, the National Strategic Hub, have been signed by our sales force. So we knocked that door, we visited the customer, and we have the relation with them. But more importantly, more than 60% of the total revenues are going to TIM. This already happened in 2022, 2023, 2024, and this will happen going forward. So if you do the math, you take 2025, you take EUR 3.8 billion, you divide by 10, which are the years that we have from now on until the end of the program, you can understand that the size of our 60% plus. And on top of this, which will be a recurring business, we will have the possibility to upsell those administration. Why? The space for upselling is very huge. Because even if after 2026, the public funds would stop, the budget of every single public administration is 90% higher than what they paid to the Polo Strategico Nazionale. So they have invested 10% of their budget. So we still have a room of 90% space in their own budget even without any other public support to upsell and to cross-sell, depending on the situation. So we are getting to the end to the asset. So among the assets, clearly, we have a very loyal customer base. We have a penetration of more than 8,000 companies in the country. If you look at the churn rate, I mean, you would laugh because let's say, basically, we don't lose any customer since ages. And we have 95% of loyalty of the most important companies of the country. Clearly, this is only an indicative slide. I mean, those are only some of the brands because we didn't want to get permission from hundreds of companies to display their logo. So let's have a look at the piece of meat attached to the bone here. So when you look -- so the segment around the left, the column that you have in the center is the volume, means this is our penetration in each respective segment. So when we look at the top, we are at 80% plus penetration. When you look at the large, we are at 35% penetration. When you go to the public administration, we build every single public administration, central or local. What is interesting in this, the space on the right, because when you look at the share of wallet, there is a huge room for improvement. Because while the penetration in terms of volume is very, very high, the penetration in terms of value is pretty low because for each of them, you can see the gray area is much, much bigger than the blue one. Then there is a space that we started 1.5 years ago to penetrate, which is the SMB, where our factories are basically producing products and services that the SMB channel is selling through an indirect sales force, which is a space where we can generate a catalog, which is an out-of-shelf catalog that they can sell basically very fast to many, many companies. Here, you will find other two circles because this is -- again, back to what Pietro said at the beginning, those are two areas that -- where nobody can compete with us. Because in order to go to the large segment, which means mid companies above 250 employees and the small public administration, so which are 25,000 entities across the territory, you need the [indiscernible] sales force. And this is an asset that we are -- nobody can replicate. On the right-hand side, just -- Pietro was saying before, we have a company signing contracts for EUR 20 million, EUR 50 million. We have a contract company signing contracts for EUR 400 million. So you have a bank there that signed with us a contract of EUR 400 million for 10 years, another one, EUR 125 million, 3 years, a leading transportation company, we don't tell you the name, but it's the leading transportation company, EUR 300 million in 5 years, and 1 ministry in Italy, minister paying EUR 127 million in 3 years. So we have many, many contracts which size and duration is pretty big. So this is a first breakdown of our business. So when you look 2021 and 2024, you can see two things. The first one, which is the one we have circled, is that with the same number of customers, we increased the revenue by EUR 600 million. So -- the topic we illustrated before that we can penetrate further, the same customer by upselling and cross-selling. So staying fixed, the volume, the value can increase is proven by the 4 numbers on the right-hand side of the slide because the number of customers is the same as revenues are growing very fast. The second element, which is driven by the National Strategic Hub, cloud contract duration moved from 20 months to 40 months because this is a program where, in many cases, we have 10 years contract with the customers. Then you have the weight of IT services, which moved from 52% to 64%. And then the data center capacity, which moved from 80 to 100. The expansion in Acilia will get us to 125, but we have a limited space if the opportunity will arise. So we are at the end of the asset. Now we will walk you through the unicity of our value proposition. So I will not bore you with content -- qualitative context. But let's say, in this slide, what is very interesting to our opinion is that we finally made the decision and took the action of limiting the catalog to the very single items that the market is looking for. So when I came on board, we had, I guess, 250 different products and services. Now the catalog is different Clearly, you can have different size. So this is a business, very custom made, so there is nothing that you can sell out of the shelf. But in every single line of this, we compete with many -- so you can find Fastweb or Accenture or [ engineering ] or you can name the competitor that we can find in each single line, but you will not find not even one of them which is in every single line. We are everywhere, always. So those are the big numbers for each line. So connectivity, the first number is this one, EUR 1.1 billion. This accounts for 36%, it's 1/3 of our TIM Enterprise revenues. This is the market share that we have. So in the market, we account for more than 40%. And this is our performance for the moment. So while the market was calling for a minus 1%, we are at minus 2%. I will tell you later on why. So this is a very interesting slide. And again, look at the circle on the bottom of the slide. So the performance is minus 2%. What is interesting in this slide is that when you look at the weight of the fixed component that actually is doing very well versus the mobile component, you can see that the risk is limited to a small amount of money. And that is the area where we are decelerating the most. And the reason why we have -- we registered the deceleration higher than the market is because we lost, as you know very well, 3 years ago, but we lost because we decided to lose a public bid, which is called the Consip Mobile. And during the last 3 years, clearly, having lost this contract with the public administration, we lost the number of sim that we were providing them with. What is very interesting about this hemorrhagic phenomenon is getting to an end in the sense that, let's say, this was a 3 year tenure contract. We are basically almost at the end of this contract. So we can see the effect of this going probably up to the mid of next year, but at a certain moment, we will touch the bottom, and this -- we will restart again. So this is the only reason why we have a deceleration a little bit higher than the market. But what let us feel very comfortable is that the higher component of this chart is the one that keeps the performance steady. Cloud. So cloud is the same size of the business, more or less. The relative percentage of our revenues is 37%. We have a 50% plus market share. When you look at the infrastructure, so data center megawatt, we are close to 20%. As you probably know, there are 530 megawatts installed in the country. We are at 125. So you can do the math, but actually, the share goes up with respect to the cloud migration and professional services. And this is the way the business is growing on a year-to-year basis. So here -- so this chart is a little bit complicated, but I think that the cloud is something that deserves some attention from you and some explanation from me. So as Pietro said at the beginning, there are -- there is an opportunity, which is the one on the right-hand side of the slide. But actually, we do 3 things. We do multi-cloud, which means that we power the engine of large hyperscaler. We provide customers with our cloud value proposition, which TIM Cloud. So we don't sell Google, we don't sell Amazon, we don't sell Microsoft, we don't sell Oracle. We sell our cloud. Probably, some of you who are following TIM since a while can remember Noovle Italiana. So this company started making cloud when cloud was a word that not everyone was familiar with. And then there is the third leg of this value proposition, which is the sovereign cloud. As we told you before, we believe that there is a space which will be fully incremental for us, which is the space where also large private companies, strategic ones will be forced to go on a sovereign cloud. So potentially -- and this is what we wish to happen -- the model of the National Strategic Hub could be potentially replicated also on the large enterprise business. When you look at the business that we do is one is data center, the second is cloud services, the third is licensing. And this is the size of it, the respective size of it. So we have approximately EUR 100 million, a little bit north of EUR 100 million on the infrastructure, EUR 0.5 billion on the cloud services, EUR 0.5 billion on the licensing. What is very interesting, again, you can find the two circles dotted on the right, you have in terms of margins, infrastructure with a very, very high margin, cloud service with high margin, licensing with a low margin. Now when you look at the growth, which you can put on top of the margin, actually, data center are growing with a very high margin. But what it is surprisingly do very, very well is that in the area where we have high margin on cloud services, this is growing north of 40% on a year-to-year basis. So it is clear that we are in a good space, and we can take further profit of what happens later on, then we will answer to all questions you make later on. So cybersecurity, IoT and other IT, this is the rest of the business, EUR 0.8 billion, 28% of the revenues. We have -- cumulative, we have a blended market share of circa 10%. And the reason why this component is not growing is because we are exiting the other IT side in the sense that we are getting rid of everything that marginally is not interesting for us and we were simply reselling. So the negative performance is driven by a conscious choice. While, let's say, the acceleration of cybersecurity and IoT is, as you can see, is getting much, much better than the market. Now -- this is, I guess, we got to Slide 38 to let you see something really interesting for you because -- although blah, blah, the 37 was a little bit noisy. By contrary, I guess this is what you are looking for. So on the left-hand side, you see the breakdown of the EUR 3.3 billion we have seen before, out of which EUR 3 billion in service revenues, you have sales of hardware and other items on the EUR 300 million that you sum up to the EUR 3 billion to get up to EUR 3.3 billion. And this is what happens on the right-hand side of the slide. When you look at the EUR 3.3 billion, you have EUR 2.1 billion of COGS, which brings us to a 35% gross margin, which is EUR 1.2 billion. You have then the cost of the workforce, and you have an EBITDA AL of EUR 700 million. And when you look at the CapEx, at the EUR 700 million, you need to reduce that amount by half, basically by EUR 350 million. What is very interesting about this chart is that when you look at the CapEx breakdown, you can see that out of the EUR 350 million, EUR 220 million are driven by growth. So you have a CapEx, if you have a business, you don't have a CapEx, if you don't have a business. While the EUR 130 million are mostly driven by the captive business that we generated to our team. So when you look at the right-hand side, you have basically EUR 90 million for the infrastructure, so investment that we do on basically on data centers. You have EUR 70 million that are CapEx revenue driven. And then you have EUR 60 million, which is hardware, which means device management and other hardware where we have a CapEx because we resell it. So this is basically on the CapEx. So we have seen the asset. We have seen some of the distinct elements. Now the question is, is this sustainable? Yes or not. And we believe that the plan is truly sustainable. So I think that some -- when you look at the numbers on the bottom, you can understand that at least in terms of trend, we know what we do. But more importantly, we do what we said we have done. Because 3 years ago, we told you that we would have bet on the fact that the IT component would have been much bigger. And here we are, we are at 64%. And the reason why we go -- we believe that we can go towards the 75% is because on top of connectivity, cloud, IT and cybersecurity, we will keep delivering products and services. We believe that there is an area of acceleration which will be driven by sovereignty, artificial intelligence, quantum threat intelligence because you will see later on, how much innovation there is in this company. We have been feeling very sad for so long for providing you with the perception that we were a leg of a telco business. This is a truly innovative center. You will see some of the demos later on. But let's say, we have embraced as much as innovation we could. And we are in the forefront of this sovereign conversation. So when you see how much investment we have made on the infrastructure and how much investment we will make in the next 3 years, which we -- it's about EUR 1 billion, where in the infrastructure, there will be a big fraction of it. You understand that the desire and the intention of upgrading the infrastructure was forecasting a need that is now arising, which is the digital sovereignty. So those are the areas where we will move toward. Now we will show you 5 boxes that can let you understand why we believe that it is sustainable. So first of all, the 3 strategic highways. So cloud positioning is an area where we will consolidate our value proposition, infrastructure and data center, sovereign cloud, edge cloud, we have already showed you the map. We will expand the offer of artificial intelligence solutions. And we told you that we have 3 items, we will tackle infrastructure as a channel, we will go with generative and predictive AI, and then we will adopt services that can help us to reduce and optimize cost. The third one is the more the cyber security, the cyber attacks are increasing. The more connected device you need to have in the country, the more we will take the opportunity of -- on the next generation. And everything will have always the same reasoning at the bottom. We want to in-source as much as capability as we can. I want to tell you something that Pietro is saying very often, which I think is very interesting. When you need to evaluate your trade-off between making and buying, you need to understand what are you very good at and what you're not very good at. So in the strategy going forward, we will keep buying what we have bought in the past. If we understand that the debt capacity is a capacity which will take a lot of time to close the gap. You need to make a lot of investment. So if there is someone good at providing you debt service, if you're good with the marginality you have, you stay on the buy. Where you need to move on the make, where we are all at the starting point, and we don't have -- we don't run behind schedule. So when you look at IoT, cybersecurity, artificial intelligence, quantum, threat intelligence, there is nobody in the market that is far ahead of us. So -- and in a space where we compete with the same level of capability, we want to make. We want to learn the business because we have shoulder very, very large, and they will feel the pain. So those are the 5 items we want to work through. The first one is we have EUR 600 million of professional services that today, we buy externally. So we outsource that capability. We will pick up the number that we -- let's say, it's that fits with our need. Out of the EUR 600 million, the services that we believe we need to in-source. And for the rule, we are explaining you before that when we in-source, the margin will increase, we believe that we can aim at 4% -- 3%, 4% of that box, which we believe is a reasonable efficiency to be generated. This is an area where the space for growing the margin is smaller. We believe that here, there is a 2%, 3% space because here, you have also some of the licensing software, but there are also services that are not very qualified like the ones in the EUR 600 million. So there is a space to take there where we can negotiate with suppliers, vendors, partners a better -- and we can consolidate them in order to get a better margin. And let's say, only part of those numbers are already factored in our plan. But let's say, this is a space that we can take. And then we have 3 very big top line items. The first one is we have 550 public administration attached to our business today. 90% of them, contract signed with us. Today, for that contract for the services, the National Strategic Hub is entitled. But once we have finished the migration, we can go there and we can upsell and cross-sell those public administration. The second one is the 80% untapped opportunity, which is the value versus the volume of the slide before. So when you look at the private, we have only slightly less than 20% penetration in the value in the share of wallet of all customers we deal with. So we believe that there is this untapped opportunity. And then this is what Pietro was mentioning before. We have a EUR 4 billion of contract already signed in our backlog. This means that 62% of my connectivity in 2026 is already in my pocket and 66% of my IT revenues are already in the pocket. So you have those EUR 4 billion that you can distribute in the next 3 to 5 years. But let's say, every year, we generate new contracts. But today, we have a EUR 4 billion backlog in a business generating EUR 3.3 billion revenues. So just to summarize, those are the highways strategically. Those are the areas where we can enhance capability internally. Those are the areas where we can go for top line. When you look at the numbers, those are the numbers. I hope you have enjoyed the presentation. I'm going to pause here. I thank you very much. But before we leave you, I would like to show you this table. So we started from 000. I stop here. The number are 15, 1.9, 164. So since the moment I started talking, could you please click here? No, no. The number is -- so every hour, we sign from 8 to 10 contracts, every hour. Every contract has a value of EUR 123,000, and we serve approximately 150 people per hour, customers per hour. So when you look at this, you understand how big it is. So while we were talking, and I was boring you with the presentation, this was happening. And every hour, it happens, 250 years -- 250 days a year. So I thank you very much. I left the stage to Pietro for the closing remarks, and then I will wait for your questions.

So I see [indiscernible] huge amount of information. But we are paid to manage complexity. I'm not saying that this is an easy future. Everywhere in every country, [indiscernible] this kind of business than the other. A unique business combining telco strength and IT capabilities with distinctive organic performance. I will try to explain [indiscernible]. So just to be clear last week [Foreign Language] in theory, you can buy each single technology that Elio showed to use on a singular basis. You buy something from TIM connectivity, you buy the cloud from some of the hyperscalers. You buy the security by some other one. And you say, you do the sum of the things and you will have the same kind of [ technology ]. The truth is that with this kind of technology, this is not the truth. Why? We have an important customer that bought from us the connectivity. They sign a contract with a hyperscaler for the cloud. They bought from an important U.S. company, their router, and they bought the cybersecurity. All the 5 players were supplying the service inside the SLA. When you put all these things together, they don't work. They don't work because you have to take a look to the micro of the connectivity, any kind of micro interruption do not allow the cloud to work as efficient as you would like. You have to define the parameter of the cybersecurity. And if you do something that is not exactly matching what you need on the latency and on the cloud, it doesn't work. So the possibility to have a partner that is able to manage the end-to-end, allowed the big corporation to not have the headache to try to understand where the issue is. And we are in a unique condition because in Italy, we are the only one that is able to supply all these services. You will see while the time will go that it will be very important to act like this. The second, and again, we are not the driver of the growth of the market. The growth market is a wave that we are surfing. It's not me or Elio that have to convince the customer to migrate in the cloud. It's not me or Elio that we have to convince the customer the need of cybersecurity. It's the market trend. Just to give you an idea, with quantum computing, all the algorithms that today are used to have exchange of communication through cryptography will be broken. An example, also more severe than that. If you take your WhatsApp, sometimes it will appear on your WhatsApp data. Your communication is with cryptography end-to-end, and no one can break it. With quantum computing, it will happen. So you will need quantum security. Do you know the only player in Italy today with quantum security technology, it's us, with Elio. So we are not only surfing the wave of today. We are ready to surf also the waves that are coming with security, cloud, but also with sovereignty. When Elio was showing exactly you have the public cloud and you know the truth, some of you can think that if you have a data center in Italy here, the one that Elio will show you, the data are under the Italian jurisdiction. This is what is the belief of everybody. The truth is that if they are in the hands of a hyperscaler, they are under the jurisdiction of U.S. So any time the national security of U.S. can ask detail about the information that are there. It's not me that is telling that. In the middle of September, the French and German government was at [ Brussels ] to talk about sovereignty of the cloud. They will ask that the cloud of large corporate or the public administration will need that at least the cryptography key will be owned by a national player. But this is exactly what today we do with the National Security Hub. So I'm not talking about the future. I'm talking about the present. EBITDA growth, Elio showed you what we will do. So we are continuing to understand what will be the activity that will in sourcing because it will be very important and open source in this kind of scenario where the sovereignty is becoming much -- more and more important. It will be a key element also to avoid, to have too much legacy with software owned by [ tilt ] player that can increase the price overnight by 50%. Science fiction or reality? I think that you know very well the litigation that are today in several countries about exactly this issue, the increase of price between 15% and 50% of some software. The last, the high visibility on 2025 and 2027 targets. It's important to remember that the first time we talked about TIM Enterprise was March 2022. It was a PowerPoint and at that time, there was a private equity that put based on a PowerPoint, an offer giving a value for this component around EUR 6.5 billion. I'm not here because I want to sell a stake of this company. We want to take this company for us because this is a start. But on a PowerPoint, one of the largest private equity in the world in 2022 was offering EUR 6.5 billion. Now this is no more a PowerPoint. This is a reality, and this is our future. Thank you, and we have now the Q&A. Is it right, Paolo? Thank you.

It's Paul Sidney from Berenberg. I appreciate the presentation. TIM Enterprise has 16 data centers, continues to invest. Many of your peers have sold data centers over the years due to sort of leverage concerns, you've had leverage issues over the years yourselves. But what are they missing? And what are you getting right in terms of investing in this area?

Each company has a different history. When we sold the network it was due to the fact that it wasn't a distinctive asset because in Italy, we were the only one that was -- that had the ownership of the last mile. We were obliged to offer that last mile in fiber and in copper with regulated prices to everybody. I was investing EUR 1,000, EUR 1,500 per each line with 0 delta revenue at retail and wholesale. So if you do the business case, why have to keep? Differently, in the case of data center, I have no obligation. This is an asset that will give me a competitive advantage. So again, in some other countries, sometimes the fixed network is a competitive advantage for the ex-incumbent, and they will keep. But then they sell network -- sorry, data center and antennas. So this is the first main difference. Let's remember this important point. In 2022, I was able, for the first time after several years to convince the National Italian watchdog to increase the price of wholesale. The calculation of the price was made based on a WACC that was the average of the last 5 years. We were in the middle of a war crisis, inflation, energy crisis and my cost of capital was 3x the average WACC of the last 5 years. Why have to keep the fixed network and sell the data center?

Just to complement what Pietro is saying, I think that there are 2 things that we -- are very relevant to us. The first one is this is a strong part of the equity story. So if you have the data center, you don't have the data center, this for the market becomes more or less relevant. But the second one, which is the most important one, out of the 16 assets that we own today, 8 are already fully depreciated, 8 are about to get fully depreciated in 4 to 5 years from now. From that moment in time, this is margin to the box because when you have depreciated the asset, so this is not the moment where we could take that action. That action could eventually -- we could potentially take that action if we would invest in 3 new data centers and someone would fund part of that business, we could split the benefit. But for the asset that we have today would be a little bit...

And before to give, I think that it's important also to discuss for a few minutes about the data center because everybody are talking about data center, and it seems that it is something that you build overnight like that. Just to explain why it is a competitive advantage. First of all, we are talking about Tier 4 data center. It's not like [ Armani ] or some other things. Tier 4 means that you have a huge level of resilience. So large corporate banks, insurance, public administration have to migrate something in a Tier 4 data center. A Tier 4 data center cannot be built everywhere. Why? Because you have to find a place where we have no risk of earthquake. You are not Italian, and you don't know that Italy is a country that is at risk of earthquake. You cannot be close to an airport. We are full of airports in Italy because we are quite lazy. You cannot be too much close to the coast because if you have a tsunami or something like that, you have issue. Then you have to find a place where we have 2 different power companies that are powering you on different routes. So you cannot build that everywhere. We were lucky [indiscernible] was there when we took the decision to build the first Tier 4 data center close to room. It was a long shot. Then you buy the field, infrastructure everything, build the walls and then keep the rooms. It takes time. I have a lot of people that are talking about data center, but it will take for them several years. In the meantime, we bought the field around our data center because we have this one, we bought the field in front of us. We know that this area is already available. We have the power. So we have a real competitive advantage. Why have to sell the data center to someone that will bring its own 8%, 12% of IRR. That will be applied to me. And no more the company with the level of debt that we had in the past. Why? The last, if you want to be really reliable, you must have the data -- at least 2 data centers with a distance among the 2 -- between the 2 of more than 500 kilometers. Italy is 1,000 kilometers. It's not U.S. or Brazil. So we are in a unique condition. We have 8 Tier 4 data centers, and we have the field around some of this data center. The second competitor, if I'm not wrong, are 2 data centers, Tier 4. So can the other player build further data center? Sure, it will take some years. But in the meantime, we will not be here crossing finger. We migrate our customers in the cloud. The migration in the cloud is not a mobile number portability. You go in the shop, you change tomorrow money. It's a journey. One of our main customer at a bank took 5-year journey to migrate in the cloud. Do you really think that for 5% discount, they will put at risk for a further migration, will be complex.

Fabio Pavan, Mediobanca. I have many questions. Let's start from this one. You were telling us about the optionality. So my question is, what is not captured yet in the plan? It's still AI, not fully and GPUs you were mentioning. The other question is when we look at 2030, just to name a year number, so long-term view, is it fair to say that probably cloud will represent more than 50% of the revenues of enterprise? And what about the margins over time? Could you give us a sense of cloud profitability only? And finally, you were mentioning external growth. Is this something we should expect eventually also in the short term or you have something you are considering as an option over time?

About the opportunity not included, I have to remember to everybody that when we show this number, all of you were thinking that it wasn't possible. We are delivering the 2025 number. We'll deliver the 2026 to 2027. So if -- and we think that we can, we perform this number, we are really doing something that is out of scale in Europe. Then for sure, there are several opportunities that can come. A stronger adoption of the sovereignty in the cloud is an opportunity. In the migration towards our internal factory [ is acceleration in the margin ]. So there are several things that can further accelerate. If we proceed with our activity with [ Poste ], one of the working team that we are developing further synergy. But today, I want to stay on the ground. Today, our plan was considered very challenging. We will move to a level of debt in terms of leverage between 1.1 and 1.3 and no one was thinking that it was possible. So I can tell you, we have a huge opportunity. I will give you the number, and none of you will factor that in their business in their model because this is true. A credit rating agency put a haircut on our number. So we stay on reality. We will deliver the number as we did in years.

So again, to complement what Pietro said, I think that, let's say, I already disclosed the number that I was not supposed to disclose. I'm going to repeat it because I already told you once. On the component cloud services, we are north of 40% I would say, in the region of 45% margin. And when you look at the EUR 1.1 billion cloud, you have EUR 0.5 billion, which is cloud services, out of which EUR 400 million are make. So this is TIM Cloud. EUR 100 million is towards hyperscalers. So this is an 80% make business that gives you the sense of the trajectory and also the marginality of that business. We will get rid as much as we can of licensing when this is not paramount for us to step into the door of a customer or if we don't believe that there are services to attach to the licensing. And this, in theory, could affect a little bit the top line, but should increase the relative margin. But I think -- I mean, the guess is will cloud will be 50%? Most probably, yes, in 5 years from now, yes.

Mathieu Robilliard from Barclays. Thank you for the presentation. Focusing a lot on the data centers, I think, it's a very interesting disclosure that you've been giving in terms of the revenues. And I had a few questions around that. One is when you talk about the capacity you have, how much of that is already utilized? I guess what I'm trying to understand is what is the potential revenue 60%. So 60% enables you to generate EUR 100 million of data centers hardcore revenue and EUR 400 million of cloud services because that's what it allows to. Okay. Thank you very much. In terms of the backup of the -- you flagged that you still have a lot of points of connectivity that belong to you. How much of a competitive advantage is that? I mean, don't you have an obligation in any case to wholesale this kind of access to competitors? So I wanted to understand how much of a competitive advantage that was. And then I was very impressed by how you have changed the incentive to your employees, focusing on EBITDA. But as you show also, there's a big part of hardware and equipment, CapEx-related revenue or revenues -- CapEx-related revenues, which I guess, but thanks for explaining me is also important in determining what is the real return on this business. Is that not something maybe to -- that you will be adding in the future also as an element of judging the merits of each contract?

About the backbone, we have no obligation. Since the beginning when we sold the network, we told to everybody that we will continue to be the most infrastructure player. But sometimes in the presentation of value, it is also much more important. There are a lot of people that are talking about AI. But some of you know better than me that today, there's a competition about also the AI model. It will be everything managed at central level or more remotely. In a way or in another, edge computing will become an important element to deliver AI and low latency services. And Elio showed you that we are the only player in Italy today with several edge computing point of presence. We invested on that EUR 100 million. Everything will be ready by the beginning of 2026. So you like AI, you like cloud, you like all this kind of technology. To deliver these services, you need 5G low latency. We have it. Fiber access, we have it. Edge computing, we have it. Data center to avoid to be killed by the payment of the leasing or the building, we have it. Cloud capacity, we have it. Security, we have it. Please show me who are the other players in Italy and in Europe with a so complete end-to-end capacity to be at the frontage of the development of these services. Then the other question about the incentive.

Yes. I think you touched a very nice point because that's the reason why we changed the model because hardware, software and licensing were the pond where they were fishing to get -- we didn't make the number they were making a tons of incentives. So today, we don't discourage because we understand that resell hardware, software licensing is paramount to the development or we simply remunerate salespeople in a way which is different depending on the value that this generates for us. So if you sell EUR 100 million of 365 Microsoft licensing, you get and if you resell, but let's say, it's -- we will not exit that business because in many cases, it's a way to stay attached to the customer and to keep them loyal. But that's, let's say, we believe we found a nice way of having people on board on the model.

It's Keval Khiroya from Deutsche Bank. And I have 2 questions, both of which are on pricing. I appreciate these contracts probably all quite individual, but can you give us a sense of what's happening to pricing on new contracts for cloud and security? And secondly, when contracts come up for renewal, how easy is it to put pricing up on renewals? And can you give us a sense of how material those price rises may be?

Thank you for the question because this gives us the opportunity to underline something that I missed during my presentation. So something that is very interesting about our business model is that when you exit the space of a very large top enterprise company of very large public administration, I shouldn't say this, but let's say, often you don't find the procurement office in front of you to negotiate. So the more you go the more you enter the space of a local business, the better your margin goes because the capability for you to negotiate that contract is -- let's say, on cloud, we tell the story that everybody is telling you, which cloud is a business where to exit the business is pretty tough for a customer because when you have migrated your entire intellectual property, strategic data, critical data in a physical space like this one that we own, let's say, at the end of the contract to exit that space is very difficult. On the other hand, I have to tell you that I have personally a dream. I will turn 62 in December so I don't know if this will dream will materialize one day. But let's see, which is that a company with the size of TIM and TIM Enterprise should force the market to cloud portability. So we should get to a point one day where the easy application that you can migrate, you can move from a hyperscaler to another, simply because you wish to do it. So -- and we are the perfect -- so we can only win in a space like this because we have certifications on all vendors, and we have a space where we host hyperscalers. So for example, in this place, in this physical place, if you would move from Google to Oracle, if the application would be available for the switch, I could be the only one making this possible. So I don't know if I answered your question.

Gianmarco Bonacina from Akros. Question on your Slide 28, if you can elaborate a little bit more volume versus the average spending by customer. You showed for public administration, you have basically the whole market in terms of number of customers. But you have, if I read correctly, a very small like 10% to 20% of the average spending. So why is that? And how you plan to grow this? And also maybe who are the others in terms of here in this chart in terms of competitors?

So I know the slide by heart. So actually, what it is strange in that in positive. Another one? No, no, no. Is this one? No, a very loyal customer base is not this one. This one. So actually, what it is very strange in this slide in a positive way, but this is opposite to what happens is that when you look at the -- so as I told you before, if you have -- if we average what we bill to the public administration, with the National Strategic Hub, we are only at 10%. So if you take the Latium region, they have spent approximately 10% of their budget to migrate all the health care on the National Strategic Hub cloud. We host them in a data center close to Rome. So this is typically what you build because they have -- and that's the reason why I was saying we have 90% room for improvement. In this area, we have historically a presence that is really, really huge. And that's the reason why the weight of [indiscernible] is higher. But I mean, still you have 2/3 of the pie that you can. So out of the EUR 5 million that they spend every year on ICT, here, we bill 1.5 probably -- approximately more or less. And when you look at the top, it's the same. So we -- there, we bill EUR 1.6 million out of EUR 14.5 million. So this is typically the penetration that you have because they have, let's say, that's the percentage of spend that you can capture. When I say, on upselling in this area and in this area, we can -- there is something that -- because I didn't answer completely the question before. So what we have factored in the plan, what we don't have factored in the plan. Actually, when you look at the public administration, the upselling part on the 550-plus public administration, it is not yet factored in our plan because in the plan, we have the amount of revenues we will generate until the end of the migration, which is the plan '24, '27.

If I may, then there's also an issue that will be solved by the time. Today, you can migrate in the cloud application that can be [indiscernible]. So if you talk about applications that are used by the hyperscaler, [ Siebel ]. [ Siebel ] today, you have the old version on-premise and the new version in the cloud. And so it's easy to go and convince the customer. There are some sectors where you don't have yet the vertical application that were used during the year, by that kind of customer that was on-premise in the cloud. So the following question could be, Pietro, but if they stay on-premise forever? They cannot stay on-premise forever. Why? Because if you do not migrate in the cloud, you will be unable to interact with the other application that will be migrated in the cloud. If you want to use AI, you need a base of data. And this base of data must be in the cloud. So it's a process that you cannot stop. Someone will come earlier, someone will come -- will arrive later. But this is something that you cannot stop. And when you have to go in the cloud, you will discover also something important. Today, the company will have when they have solution on-premise, sometimes they forget about security. Once you enter in the cloud, security becomes something that we have to take care of that and will be also easier to do the upselling. So these are all elements, but it's not because Pietro or Elio are telling you. If you see this is the trend more or less everywhere in the world. Then our country also the first [ 35,000 ] companies are not the first [ 35,000 ] companies in U.S. And so we have some characteristic, the size of the company and some country-specific things that allow some of the company to continue to stay on on-premises solution, but they will migrate in the cloud in any case.

Thank you for the question. It's Ben Rickett from New Street Research. I wondered if you could talk a bit more about the extent to which your cloud revenue growth is being driven by the [ PNRR ] funding, the European funding program. And to what extent beyond 2026 when that funding drops away, how does that then impact your cloud revenue? If there was a one-off migration revenue that drops out? Or does the growth rate decline, for example?

Then I will leave to Elio to elaborate on that. But what is important that today, the National Security Hub is not only a consortium that gives some incentive through the PNRR to migrate. But the migration is, as I was trying to explain before, in the only case in Europe of sovereign cloud. Because the data of the public administration inside the National Security Hub are inside a cloud on which the cryptography key is owned by an Italian player. So when it will last, the incentive, I don't think that someone will decide, no, now it is no more important the sovereignty of the cloud. Just to give you an idea about something that can change the rules. Why is important, the cloud? Italy has the health system that is public since ever, okay? Let's see that we have to start to migrate all the data of all the ill people that have lived in Italy in the last 80 years because we have this kind of information. We bring that, we migrate in the cloud, and then we sell that to an Italian pharmaceutical company to develop and understand the consequences of [ heal ], medicine, result. This is a competitive advantage because in some other country where you don't have a public health system, you don't have all this know-how. So for the Italian country and for the public system, have the data in a sovereign cloud becomes a matter of competitiveness. And again, it's not Pietro that is selling that. It's not Italy. Let's take the information about the position of Germany and France towards European Commission about that. It was 2 weeks ago. They say that they want a sovereign cloud, can be a JV with some hyperscaler, but in any case, the ownership, the cryptography must be owned by a local player.

I think that Pietro covered everything. So let's say, my personal emotion about this is that we understand that this is something that is probably happening. We don't follow the European dream because this will take a lot of time because what it is peculiar in Europe is that every single country has his national security agency. They have their own rule, someone that is critical here is strategic in another country, is not relevant in a third one. So at some point, the European Union needs to create a rule that everybody will follow. But in the meantime, I think that in our country, this necessity will arise, and there should be someone, let's say, I don't want to be arrogant, but when you have 20% of the infrastructure, 16%, 17% of the cloud migration of the country, you drive some of the choices. So you're not the follower. So -- that's the reason why when Pietro is very vocal about cloud sovereignty, this resonates very loudly in the count because, let's say, if someone else would tell the same, probably people would not pay the same level of attention. So if we are convinced that there is something that needs to happen, we need to lobby shareholders, stakeholders in order to make it happen. And we believe we will get there. There is the last one.

Javier Borrachero from Kepler Cheuvreux. Two questions, if I may. First, I'd like to ask you about first -- well, the new Swisscom Italia, let's call it this way. And if you've noticed any change in the strategy since their merger in the B2B segment, either on the connectivity or the IT side. I mean at the time of the merger, they claim they had very complementarity assets, network, products. So just to have your view on that, particularly because in Q2, I think they were asked about one of the advantages that we're the only Italian operator with a fixed network, and that was providing them with a strong advantage on the -- at least on the B2B segment, not on the residential. And the second question is, of all these, say, products at least on the service solution platform side, not the ones that are more dependent on infrastructure, is something of that exportable? I mean, could you grow outside Italy with any of these services? I ask because there are some other incumbents, small one. I mean, Telecom Italia, for -- sorry, Telecom Austria, for example, they are now claiming they want to expand on the cloud side outside the boundary. So could you grow externally?

So about Fastweb. But when we talk about ownership of the network, they are probably referring to the last mile. For historical reason, they kept with them part of the last mile, for example, in Milan or in some other city of the country of the mother company they were born from. When we talk about backbone, we are talking about another history. Do you know why? Not because it's Pietro that is telling you that sometimes it's better of [ Christophe ] or vice versa. It's because the backbone that we have is the backbone that was used to serve in a [ capillar ] way, all the line, all the fixed line of the country from Sicily to Trentino, and they didn't have this kind of network. Today, services on the backbone to FiberCop. So when I say I have a competitive advantage on the network, I'm referring to the backbone. Then as they have some access with their ownership, we have also. If you remember, the deal of the sale of the network, we kept for us the IRU of some accesses that was backbone, but also access of enterprise customer. So this is the main difference between us and Fastweb. Then I have to try also to do some advertising for TIM because if not, I will do the Minister of Telecommunication. The other difference is that, yes, they have a good access network, a weaker backbone. They don't have edge computing, they don't have 8 Tier 4 data centers. They don't -- they are not in the PSN. They don't have a company as we have Telsy, 100% controlled by us that is specialized in security. So I must be scared about all my competitors. I don't have to undervalue anyone, but I must be confident that today, if we don't perform, it's much more for our incapacity that not because my competitors are stronger than me. The second question, abroad. I'm telling you that we have a competitive advantage because we have 1,500 employees, 8 Tier 4 data centers, the backbone, the edge computing, if I go in Austria and Telecom Austria, I'm inventing. They have 8 data centers, the last mile, it's difficult. What we will do for sure, we have some platform that are owned by us. For example, the security, quantum security, the smart city platform that our team will show you. We are trying to sell this kind of solution abroad, starting from Brazil. So I personally was in Brazil to talk with the Brazilian government to try to explain how our security solution through Telsy can be useful in Brazil, too. as quantum security is the next challenge. If in 2028, the algorithm that I was explaining before, will never work, will work no more. If you want to find a solution, you cannot wait the 2027. You have to start to discuss now because you will have a migration. And so we are going in some of the country where we have relationship or partnership. We are working on this area also in the Arabic area to try to sell this kind of solution. But today, we must be focused to deliver the enterprise, the consumer plan to [indiscernible] in Brazil a very good performance...

It's David Wright from Bank of America. A couple of questions. When you broke down the revenues and you had data center revenues then enterprise revenues, is there an accounting breakdown there? Because I assume you sell some of the products as data centers and enterprise together. How do you get the EUR 1 billion of data center revenues? Are they -- is that billed directly to the client? Sorry, EUR 100 million, EUR 100 million and that's colo. Okay, that's clear. And then I guess the markets reacted very well to this presentation today. And I think your comment at the end was very interesting about the CVC offer or a private equity offer, I should say. Yes, private equity. You mentioned before about what everyone has and what you guys have and what you guys have and they don't. But what a lot of data centers have is a 22x EBITDA multiple, right? And you don't -- and you probably won't, right? TI is not going to be at 22x EBITDA anytime soon, I suspect. So the question is, how do you unlock the value? How do you force the market -- put the market on its toes to value this asset as it is as opposed to part of a European telco. You've indicated that you have no desire at all to sell it. I get that. But is there another way of constructing this asset to bring more visibility that forces the market to re-rate it as it should?

So first of all, sometimes we'll forget all the process. What I mean? Three years ago, it was a PowerPoint. Today, we are here in a meeting where for the first time, we are trying to explain the details of what we are selling. Until today, for you, TIM Enterprise was a black box. So before to say that to unlock the value, I have to separate TIM Enterprise because this is the only way to generate more value, I will wait. I don't have to run, this is the first step. I'm sure that at the end of this meeting, you will have a better understanding about TIM Enterprise, but it will still continue to be difficult to understand. So it's a process that we have to go through. And if through, we could say, an organic approach, it will be not possible to unlock all the value that we can, we will evaluate what's next. But today, it's too early to say that we have to separate TIM Enterprise to do something. Let's keep in mind that we are doing an experiment that is unique in the world. We were thinking since the beginning as good as called [ BTIM ] Enterprise. But some of the things that we are delivering, we are discovering on a daily basis because this is a fast market. So before to take some decision, it's better to consolidate, look at the number, explain very well what we are and what we will do, and then we will evaluate. But for sure, we all desire that the Elio part could be evaluated 20x EBITDA.

I -- no, I wanted to conclude on this that I think that there is a negative and a positive in this afternoon. The negative that he doesn't want to sell the stake for me. But the positive is that I honestly, I'm super happy also for the team because we finally had the opportunity to explain a little bit better what we do. And I think that today, this is a kind of -- we really unboxed. I hope that everything was clear. I don't know if there is still another I thought we had -- I was concluding but...

Giorgio Tavolini, Intermonte. Two questions, please. One is on the energy consumption of your 16 data centers portfolio. I mean, if you have any, I don't know, idea or how to optimize energy cost? And about the energy cost, how much is pass through in your standard contact with your [indiscernible]. Second question, synergies with Poste. I don't know if there are some angles for TIM Enterprise and Poste to discuss on, for example, I don't know, areas on the real estate of [ Poste Italiane ] to assess new -- the construction of facilities -- new facilities on data centers.

I think that on energy, I was reading on the press that it seems that the Italian government, so I don't disclose anything, is working to put some fiscal discount on the energy for the data center. This is an important element because then independently by TIM, have a low cost of energy for the data center is really important for the competitiveness of the country. Usually, energy on the cost of the service is 10% of the cost on average. If you have an average cost that is the double of the other European country, it means that you are giving a disadvantage to the Italian country of something close to 5% on the cost. It will drive a process in which everybody will go and will try to offer the services to Italy, from Spain or France, where the cost of energy is much lower. I read that in Germany, the German government is trying to do a huge defiscalisation of the energy, they will put -- if I'm not wrong, I was reading this morning, EUR 20 billion to decrease the cost of energy for company and population. So energy is an important element. I was mentioning all these environmental elements. Why? Because it will be an important driver for the country. If the country as it is happening, will understand that, we will have the opportunity to reduce our cost of energy, and it will allow us also to do not for the service where the energy is a pass-through, but for the service where we compete giving an end-to-end service to be more competitive towards the other country. Let's keep in mind that today, our -- the weight of the data center energy on our overall bill is between 20% and 25%, if I'm not wrong. But it will increase by -- through the years. Why? Because we'll switch off the old technology of the network and the data center consumption will grow. About Poste, the world is full of opportunities. We are lucky because Poste arrived and our stock, we didn't change the management. We didn't change the plan. We didn't change anything. No, but trying to be serious, that is difficult with me. Poste is an important shareholder because they have an industrial long-term view. And this is important for us because it allow also to plan something that it wasn't the only survival activity to pay the bond expiring the day after. We are in talk also about TIM Enterprise. If you image on your own before any strategic activity and you look how many licenses TIM plus Poste buy from the hyperscaler, you are starting to understand the value that we can bring. Then it's clear that they are very good, for example, in open source. Why don't -- why we couldn't use part of their capability to internalize some costs. Sometimes also to do a JV with them. But again, these are something that we are studying, and we promise to everybody that in November with the third quarter results, we will share some more details.

Very quick on the cloud, sovereign cloud. In particular, you have been talking about the opportunity and the sensitivity on the public administration side. And how relevant is it also for corporations?

It is very important also for corporation. Now the main issue is that I'm talking about sovereign cloud, but perhaps a good part of you didn't have in mind that what is in the cloud of the hyperscaler is under the U.S. jurisdiction. So there's a matter of alphabetization because I don't think that the Chief Executive Officer of a large bank will be so happy to tell to all his customers that the data can be accessed in this way. Then in other country, there is a move towards a legislation for that because perhaps it will not be only a decision left to the private company. Sometimes, the companies that are considered strategic for the country could be in the future obliged to act in a specific way.

Vivek Khanna from Deutsche Bank. I'll keep it very quick. I think you mentioned your data center capacity right now is 100 megawatts and it's going to go to 125 by 2027. Could you just give us a sense as to what is the CapEx associated per megawatt that you plan to build? And then also, I think you mentioned that -- and I might be wrong out here, that the data center capacity here is 8 megawatt, and that could go to 30 or 50 if you build in the field next door. If you go to 8 to 30, again, what are the cost per megawatt if you were to expand capacity here?

So if -- that's what we call the competitive advantage that we have because we have already that capacity installed and the advantage that we have when making the new investment is that walls are already there. Because the problem is that when you need to find the land, you need to buy the land, you need to get permission, you need to build walls, it takes the first 1.5 years, in Italy, it can take even longer. So the cost per megawatt approximately is about EUR 10 million, all included. And it takes from 14 to 18 months depending on what is the stage when you start. So if you have some of the items I was describing before. So the reason why we believe that by beginning of 2027, we can be ready is because we have already the walls in place. For every new -- as you will see here in the visit, by the way. So this is -- what you will see today is a proxy of what will happen in Acilia in the new one, in the brand-new one. So if you need to start from scratch, this can take more than 2 years. That's the reason why we do respect competition. We are -- we listen to what the market is telling us, but we don't see anyone in the market to building 200 megawatts in the next 6 months because this physically cannot happen.

And the last, it's important to understand if all the declaration are coming from people that are doing the real estate business or people that want to use the data center because today, I can understand from the financial market, the queue of people with projects to build real estate of data center. And everybody are looking for us to sign a contract for 20 years to pay the data center. I don't see in Italy a lot of players that are raising. I want to pay the data center. I find a lot of people that want to build the walls. They want to do the business of the real estate, but also some large hyperscaler is coming to us saying, I will build a data center if you migrate in our new data center, your internal consumption. It looks strange to me, but this is the world. Okay, Paolo. No more question?

Okay. We are at the end of this event. We thank you all for your participation in such large numbers, both here in presence and on the webcast. We hope this presentation has been informative and useful and that today, TIM Enterprise is a little bit more unboxed than it was a couple of hours ago. I remind you that we will be back on the 6th of November with Q3 results. And from all of us, have a nice rest of the day. Goodbye. We divide into 2 groups for the tour of the data center and the demo. So the 2 groups will swap and we will do everything downstairs. Thank you.