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

Ladies and gentlemen, good afternoon, and welcome to Telecom Italia Q4 2019 Financial Results and 2020-2022 Plan Conference Call. Mrs. Carola Bardelli, Head of Investor Relations, will introduce the event.

Ladies and gentlemen, good afternoon, and a very warm welcome to our Capital Market Day. As you know, it is going to be a virtual CMD. Our CEO, Luigi Gubitosi, will provide an update on what we delivered so far, and he will illustrate our 2020-2022 plan; Pietro Labriola, TIM Brasil CEO, will speak about achievements and goals in Brazil; and our CFO, Giovanni Ronca, will explain Q4 results. A Q&A session will follow, and we invite you to dial in the numbers we provided for the conference call at the end of the presentation. Pointing out to you to our safe harbor disclaimer on Page 2, let me kick off the meeting with a short video. [Presentation]

Thank you, Carola, and good afternoon, everyone. Let me say I'm really sorry that we didn't have the chance to meet in person: first of all, obviously, for the reason; and secondly, because we have very strong messages to give you. If we want to see the glass half full, let me say that the current events show telecoms are key to save lives, time, money and to make this world more sustainable and safe. As you saw from the introductory video, we took an holistic approach in 2019. Everything has paid off. We simply delivered what we promised. We executed the plan. We also added new material strategic initiatives. After many years of talking, we finally sold Persidera. We embarked a major network sharing adventure with Vodafone, which will allow us to speed up 5G rollout and reduce debt by EUR 1.4 billion by the first half of 2020. We have given you momentum, the discussion with Open Fiber. We have identified a path to unlock value on the fixed network in partnership with KKR, with potentially EUR 1.8 billion cash proceeds from KKR. We've initiated a major cooperating journey with Google Cloud and the carve-out of data centers. In Brazil, we're partnering with Telefonica to build on our mobile assets, paving the way to consolidation of Brazilian mobile market. More importantly, we executed not only in organic initiatives, but also the organic part of our plan. We have generated EUR 1.7 billion of equity free cash flow that led us to reach half of our 3-year debt reduction target in just 1 year. I'd like to repeat it. EUR 1.7 billion in 1 year is quite remarkable considering past results of the company. One of the greatest concern investor had last year faded away. Our governance now show very positive dynamics. The work is working very well under the chairmanship of Salvatore Rossi. We do revamp the domestic business, we started indeed. We led the market to rationality in the upper segment of the mobile market. At the year-end, we launched a convergent offer for a fixed customer base, and we improved so much the TIM Vision offering that we were selected by a partner -- as a partner of choice by Disney+ for their entrance in the Italian market. There is still a lot of improvement in the operation to be made, yes. And 2020 will indeed be the year of operation. With a view of further optimize working capital, we partnered with Santander Consumer Bank in a joint venture that will also enable new business opportunities in financial adjacent markets. Being ahead of our plan in terms of deleverage means that we are also ahead in our journey to go back to normality. What does that mean? In an interview for the Financial Times last year, I said that my goal was to -- at TIM being a normal company, one that rewards its investors. Now if you look at our net debt at the end of 2019, it is already much lower than planned. If you then consider the potential cash in from approved strategic initiative, we would land to a level below the target we had for a 3-year plan, one that we announced last year: EUR 20 billion on an after-lease basis. If we also add the EUR 1.8 billion that we could derive from the potential transaction of KKR, then the debt would fall just above EUR 18 billion. And speaking on after-lease basis because starting from next quarter, we will start to give results on after-lease basis only, in line with our peers. And the good news is that we see our equity free cash flow sustainable, hence we are upgrading today our guidance on equity free cash flow from EUR 3.5 billion cumulated organic equity free cash flow in 3 years to EUR 4.5 billion to EUR 5 billion range in the 3 years ending 2022. This is including impact -- in with the consolidation in equity free cash flow. It would equate to EUR 5 billion to EUR 5.5 billion based on all the accounting standards and before INWIT deconsolidation. So we will propose our shareholders to reinstate dividend payment on ordinary shares already on 2019 results. To achieve these results, we defined an additional set of initiatives that we'll illustrate today. We will transform our revenue model. We will accelerate on cost cutting. We'll keep evolving our organization, engaging our people and building an ecosystem of financial and industrial partnerships. We will be doing all this not at the expense, but for the benefit of the communities we live and work in, and we'll be measuring ourselves also against these ESG targets. Well, let's get into the details of our distribute dividend plan. Slide 6 show you that we met -- or we overdelivered on our guidance. EBITDA was in line -- on equity free cash flow, we've actually exceeded the 2019 guidance, reaching EUR 1.7 billion. And we reduced net debt by EUR 1.4 billion versus initial target of EUR 1 billion. 2019 free cash flow has been the highest in the last 6 years. Net debt has fallen for the first time since 2016. And back then, it was due to -- for extraordinary transaction. How did we achieve this? And first of all, we've been resetting the commercial conduct of the company, something that was feared by our predecessors, to put revenues and EBITDA at risk, hence dangerous for performance metric and for the stock. I believe it will prove quite the opposite since we're now less driven by shortcuts. We're putting the customer at the center. We want happy clients and loyal clients, hence the decision not to increase prices in fixed, for example. And we're also building a sustainable company that deserves the trust of its client and its employees. This action has also produced results in the short term since we have seen an improvement of important KPIs and a much, much higher cash generation. Another concrete set of action relates to our operating model and the transformation of the company, a long journey that has started and is already impacting our P&L. TIM today is leaner, more digital than it was last year and way less than it will be next year. Our third pillar is a sort of revolution for the industry that, in TIM, we started a year ago. We're building an ecosystem of financial industrial partners that are going to benefit our top line, CapEx and net working capital. To put what we've achieved in context, on Slide 10, as you know very well, the market overall has been under pressure and did EUR 1.2 billion in 2019 after a similar amount in 2018. In this context, TIM has led the return to rational commercial behaviors on pricing, at least in the upper segment of the market, with a more segmented offering. We recognize that our customers are willing to pay a premium for our services. Indeed, competition in the higher and lower, and we saw lower overall mobile number portability volumes. The low end of the market, however, remained very competitive, which as you know, we believe, is unsustainable in the medium term. When moving to the ecosystem of our partners, let me start with some fun. In less than 1 year, we transformed TIM Vision from just another platform to the richest content provider in Italy. This was possible because we shift our model towards a clear aggregation approach, and we were able to sign partnership with world-class content producer. TIM now has such a wide portfolio of sports entertainment that it makes our convergent offer a must have. This is key to the loyalty to our bundled offers and brand name. That is so much true that Disney chose us to enter the Italian market as exclusive telco/MVPD for 3 years from launch for bundling. One year ago that would have been impossible. Now we went as far as beating strongly established players, and we'll be launching the new offering in 2 weeks from now. As you can see on Slide 13, we're also proud to be on the forefront of the new wave of initiatives involving infrastructure funds, with 3 major operations on towers, fiber and data centers. This deal has one common goal: optimize invested capital and enhancing our asset value while maintaining control of core business infrastructures. On this point, I want to be clear. This is a clear path for value creation. It is a unique opportunity deriving from a low interest rate environment worldwide, with a consequent appetite for infra funds and infra assets. Our partners are the best in the world, and we are committed to long-term control of our assets. Let's see what's happening on towers. We finally received, last Friday, the green light from the European antitrust authorities. So we'll be executing according to our road map, to share mobile network with Vodafone. It is important to say that the go-ahead is both on active and on passive network sharing. So according to our agreement, we will maintain joint control of INWIT with Vodafone, with 25% each, and are willing to sell the extra stake. In fact, as you know, we intend to sell a 12.4% stake each, that along with extraordinary dividend and net consolidation of INWIT, that will generate EUR 1.4 billion deleverage, in line with announced target. On fiber, I should simply say that the time has come to go to the next level of the game. We will be proactively driving the evolution of the access network in this country, also thanks to the partnership under discussion with KKR. They will be providing the financial strength to pursue a dual-track approach with 2 complementary options. The first one is a merger with Open Fiber, which as you know, has been an objective of ours for quite some time that has the government support and on which we'll be making all reasonable efforts to execute. This is for the benefit of our shareholders, of our stakeholders and of the entire country. This deal make a lot of sense. The minority invested by KKR in our secondary network theoretically make a lot of sense also on a stand-alone basis. However, we see it as a preparatory work for the potential merger with Open Fiber. What are we doing? We are creating a company that will own TIM's secondary network in black and grey areas, both the copper secondary network and the fiber secondary network. The newco will provide fiber and copper access to TIM and other OLOs with a plan to cover over 13 million households by 2026. Of course, it is open for other investors to join, operators or institutions. How is KKR getting involved? It offered to acquire approximately 40% of newco, with a cash-in for TIM of almost EUR 2 billion based on an equity value of EUR 4.2 billion and an enterprise value of EUR 7.5 billion. The chart on Page 16 shows very clear the perimeter is defined as passive secondary network, so from the cabinet excluded to the client socket. Some analyst thought the data centers are the new towers. We totally agree, and we know we're in the context of a healthy and growing market, where TIM's strong position and unique assets are securing us a leadership stance. However, we want to go one step further, and we have chosen Google as a partner to accelerate the development and improvement of our capabilities in terms of assets, technologies and competencies. We have signed a long-term contract that sets these goals and operational rules for this cooperation, including go-to-market training and infrastructure. Italy is the first country where Google is not relying on its own data center. We'll carve out the business in the second half of 2020. Both TIM and Google commitment to this operation is material for the number of resources, training, data center space and ambition and the pipeline that we designed to meet the most complex needs and to adopt best-in-class technologies. As I say, the next step will be to set up a new legal entity and an infra fund will inject equity in exchange for a minority stake. TIM will maintain majority, even in the potential second step there may be any deal similar to INWIT. In any case, we expect visibility on the value of this asset to emerge over the coming months as multiples in the sector are in the high teens, as you very well know. Our plan is to generate, by 2024, EUR 1 billion of revenues and EUR 400 million of EBITDA. Last but not least, I want to stress our partnership with Google gives us access to their innovation and with beneficial for our capability to innovate and launch the product also in the Consumer segment. Google is indeed the most innovative company in the world. Crossing the ocean, I'm very proud with what Pietro Labriola and his team did in Brazil, accelerating growth on all fronts. We are now at the turning point there. After many years of scenario analysis, we will jointly bid with Telefónica for Oi mobile assets. We believe consolidation will receive institutional support. The acquisition will be financed locally, with no impact -- deleverage impact. Synergies will be huge and generated from year one, making the deal accretive. Let's talk about our plan for 2022. We see there's an evolution of last year's plan in another new way. It is a plan that takes into account the context of the Italian market and its competitive environment that we expect will remain challenging. With that in mind, we will continue to capture all potential opportunities. We take additional steps towards market rationality and continue to seek socially responsible, sustainable cash flows. And we are set to exploit the benefits of having an ESG conduct. We will grow the set of partnership with world-class champions in infrastructure funds, explore innovative technological paradigms to pursue additional cost reduction and business opportunities. As I mentioned, the sustainability of our cash flow is leading us to upgrade our guidance on equity free cash flow. We're now targeting EUR 4.5 billion to EUR 5 billion cumulated over the period 2020-2022, versus EUR 3.5 billion in the previous plan. This guidance is already taking into account of the consolidation of INWIT cash flows and is on after-lease basis. On the top end of this range, this is EUR 1 billion above consensus. On net debt, our new guidance for 2022 is EUR 20 billion, EUR 0.5 billion better than the previous guidance, and it would be EUR 19 billion if we include the expected proceed for the INWIT transaction. As you can see, cash flow is sustainable, higher than previously planned and large enough to enable us to distribute dividends. This is why our Board decided to propose to reinstate distribution of dividends for the ordinary shares already on 2019 net profit, something that has not happened since 2012. We are proposing to distribute EUR 0.01 per ordinary share, with a payout of 18% on the equity free cash flow. On 2020, 2021, we will pay at least EUR 0.01 with a clear aim of distributing 20%, 25% of the equity free cash flow, subject to executing deleverage plans up to the point where we distribute 1.65% per share, which will restate the statutory difference between ordinary share and savings shares. No change proposed on savings share, which we'll continue to pay EUR 0.0275 throughout the period. Slide 23 shows very clearly the equity free cash flow will generate -- will allow us to pay dividends to the ordinary and still at EUR 3.5 billion to EUR 4 billion for deleveraging, which is, in any case, more than expected in the original plan. I also want to say that in the longer term, so beyond this plan, I intend to pay 50% of yearly equity free cash flow to shareholders as soon as debt would have decreased as expected. Entering the specifics of our plans. In the consumer market, we'll focus more and more on retaining our clients rather than acquiring new ones. Convergence will be the key driver of retention. And as we said, we now have the tools to successfully pushing it. Importantly, we don't need to discount. We are simply enriching our offering with addition products by partners with best-in-class providers. We're implementing smart, data-driven CRM, digitizing more and more our touch points and continuing the simplification of our portfolio processes and organization. By 2022, we expect to stop losing lines in fixed through a much higher convergent customer base and to increase ARPU in a more-for-more concept, both in fixed and in mobile. Convergence. Why now, you may ask? Because we now have the services and the IT systems that enable us to do something, which is a much more than the cumulated discount of single offers. We have launched on the market Unica, that is the platform offering designed to convince our customers to stay with its compelling features and sets of services, not just for pricing. We're providing for the whole family the best mobile, unlimited; the best fixed, fiber; the best content offering, with TIM Vision. And going forward, we keep enriching our smart home and smart light services, entering with Tier 1 partners in the so-called adjacent markets that are expected to enjoy material growth in the next few years. Again, you might have heard many times talking about convergence. But one thing is talking, another one is delivering. And this is what we want to do, deliver compelling sticky convergence. For the Business segment, we are enforcing what we planned last year because we see that we're going in the right direction. We're moving to a solution provider positioning in B2B adjacent market. TIM is uniquely positioned to reinforce a one-stop shop offering for the Italian business. In this area, the acceleration will come from a radical upgrade to our portfolio and first-class partnerships. The portfolio evolution will transform TIM from a pure telecom infrastructure provider to what we call enterprise-enabled by 2022. The size of this opportunity is clearly indicated in Slide 27. I already gave you an idea of what we'll achieve through the Google partnership. This is a massive transformation, and our organization and processes will evolve accordingly. We will develop an integrated ecosystems of our own factories, i.e., Olivetti in IoT, Telsy in cyber services, with our partner strength. TIM will hold on its role facing the customers and providing core telecom solutions. Wholesale has performed extremely well in 2019 and we will continue to do so. We are going to accelerate immigration to our ultrabroadband, which will allow us to maintain the growth of VULA lines above ULL losses. We will also continue developing and marketing nonregulated services so to increase our revenue share in this space. We will also continue the digitization of processes that enables improvement of quality of service and efficiency. As I mentioned earlier, we plan to accelerate cost cutting through action already in place that are producing better results and a certain radical review of the operating model. As we've been reporting throughout 2019, a good part of the planned cost reduction is already secured by action in place, like the planned exit of personnel that explain about half of the planned cost cutting and the bad debt reduction, further to the creation of the JV with Santander Consumer Bank, in addition to the strong fall in commercial costs related to the mentioned change in commercial conduct, with focus on retention rather than acquisition. The target is to reduce addressable cost base cost on 2019 by 10% versus 8% in the previous plan. We delivered the planned EUR 200 million CapEx reduction doing more, spending less in CapEx, which remained stable throughout the plan. Importantly, we're spending less on network maintenance and more on growth and on transforming our network to make it cheaper to run. We will keep developing our networks, reducing digital divide. Our fiber already covers 81% of the country, with speeds in between 50 megabit per seconds and 100 mega. And as already declared, our goal is to reach 40% coverage with FTTH by 2023 while accelerating 5G coverage, thanks to the partnership with Vodafone. On top of this, we see the FWA solution increasingly important, and we target to reach 1 million active lines by 2022. In a nutshell, I strongly believe that TIM has an unbeatable combination of networks. That is what makes this company strong, unique and irreplaceable. This slide shows you we're setting the scene for a new wave of productive and responsible innovation that will come from both our labs and our cooperation and partnership with global players and university. We've been investing EUR 50 million to EUR 60 million in our venture capital fund that we expect to benefit both telco-related innovation as well as the new opportunities in adjacent market. Making our innovation more effective will translate in a more sustainable country because as telecom operators, we are enablers and drivers of lower emissions, of more efficient processes and of a better life balance. Talking about sustainability. We've shown in this slide that sustainability is embedded in our plan and is now being implemented as a metric in our remuneration schemes. We now read and steer our actions, also looking at ESG goals and therefore, plan to increase energy efficiency and reduce energy costs and emissions so to be carbon-neutral in 10 years with intermediate goals: improve CSI with specific targets to be reached by year-end; engage, reskill our people, make sure that young talents are happy to stay with us. All this will be measured through an internal survey where we are targeting a material improvement. Invest in innovation, since, as I just said, it enables sustainable behaviors in our customers. All of this, by the way, will enable access to cheaper financing. In the shorter term, we have a number of projects and activities that have a positive impact on ESG goals as well as on our company financial value. Typical examples are our strong commitments on improving CSI and our investment on cloud and decommissioning. We're also working on people and competencies, with mass education program up to Digital Renaissance Operation that aims of teaching digital skills to 1 million Italian citizens. In addition to putting ESG as part of our MBO and long-term incentive scheme, we're pushing adoption down to our supply chain. Now let me hand it to Pietro, who will go through TIM Brasil plan for 2022. Thank you.

Thank you, Luigi. Good afternoon, everyone. I'm Pietro Labriola, CEO of TIM Brasil. Thanks for watching our plan update in digital format. I'm sure a good portion of the audience today is eager for more details on the nonbinding offer we announced last night for the mobile service business of Oi, jointly with Vivo, that Luigi just commented. Unfortunately, I won't be able to go through the details of this offer as it could hurt the dynamics of the trade parties' negotiation. But we are convinced that this potential transaction is extremely positive, not only for our company, but for all the mobile industry in Brazil, if we are able to agree on fair conditional terms to all parties involved. This is just the first formal step of a long process, so we will keep you informed of any significant event. Now let's move to our plan update, which will focus on TIM Brasil evolution and transformation. As I mentioned in the fourth quarter results call, we ended 2019 with solid results and on the right path to transforming TIM Brasil into a 4.0 telco operator. We implemented some adjustments with back-to-the-basic mindset while keeping the team focused on execution. We were able to adapt the company to new realities, maintaining our DNA of innovative agility and efficiency. All of this is being translated into our financial figures with consistent development in all areas. We started the year growing service revenue at 1%, but we managed to accelerate our pace and close 2019 with 3.2% versus fourth quarter of 2018. Mobile ARPU, which was an important driver in this process, closed 2019 near BRL 24, growing 5.6%, together with the growth of 21% on our fixed and ultrabroadband customer base. EBITDA growth also accelerated during the year, reaching more than 8% in the fourth quarter and closing 2019 at almost 7% year-on-year. EBITDA has been growing for the past 6 years at a compound of 6.5%, while margin reached almost 40% on pro forma basis after 5 years in a row of expansion. Cash generation was also a major highlight. EBITDA minus CapEx exceed EUR 2.9 billion in 2019, which means a 16% year-over-year growth, with EBITDA minus CapEx over revenues at almost 17%. Other deliveries are also marked here: the network was continuously evolve, supported by the implementation of innovative initiatives; network quality and customer experience has also improved; assertive offer portfolio adjustments; image recovery in all segments; and last but not least, record high employee climate survey result. As I mentioned in the beginning, in this plan update, we are working with 2 major goals: on one side, evolve areas of the business where we are already executing and delivering result; and on the other side, areas that will be transformed completely. With this in mind, we elected 5 strategic pillars for 2020-2022 plan. In infrastructure, for the initiative that will prepare us for the future by evolving our key architecture and platform, and also by transforming our network via the implementation of new technology as we were able to do in the last 5 years. In our mobile operation, as the environment is changing, the focus will be on the evolution of our from-volume-to-value approach, giving more emphasis on churn management, portfolio construction and ARPU increase tactics will be key. For our ultrabroadband services, we have 2 key aspects: one related to the organic evolution of the business focused on the quality of the service; and the second is things to accelerate the development of FTTH, transforming with contribution of the service. On the efficiency pillar, we will work to take our result to the next level with a broader set of action, both on OpEx and CapEx, but not at the expense of customer experience. On the contrary, we expect to enhance quality for our customer. As fifth pillar of our strategy, we plan to monetize better our customer base, developing new sources of revenues on 3 areas: Internet of things, mobile advertising and financial services. The development of our infrastructure is key to sustainability of our result and the future of our operation. We plan to take our IT to the next level in 24 months through architecture and platform review, larger use of cognitive system and also using big data to drive a faster next-best-action rollout, and in the meantime, to improve our ability to monetize our customer base. On the network side, we have major areas to develop, coupled with data growth by using new technology and spectrum efficiency techniques, get the network ready for 5G, expand both IoT-dedicated infrastructure and fixed broadband coverage. The expected benefits range from new business opportunities, better time-to-market, savings, process efficiency, new capability and so on. The evolution and transformation of our infrastructure will help us to further develop our positioning as the most innovative operator in Brazil while enforcing our quality of our services, both a key element to support TIM Brasil transition from volume to value in the mobile segment. As we reach a more major phase of market with the residual growth, churn management is becoming a key lever for revenue growth, and we expect to reduce our postpaid churn levels in the coming years. To do that, we will combine specific initiatives to eliminate pain points with customers, increasing customer satisfaction and use targeted lock-in tactics. This new phase of Brazilian market will require a different strategic approach, attacking all the segment to meet trust -- client true needs. Postpaid will continue to grow, but not as fast as in the past, creating an opportunity in the prepaid segment again. The final element of this transition towards value comes from ARPU uplift, generated by the ability to increase the share of wallet. For this, we will need to unlock upselling opportunity using more-for-more as a tool for price up and boosting customer knowledge capabilities. The ultrabroadband market continue to offer growth opportunity, so it's important to reconfirm our strategic interest and continue to compete in this field, but always with our financial discipline. Evolution for TIM Live needs to expand the footprint with a cherrypicking approach, improving operation in client-facing and back-office activity and maintaining our differentiated approach of ultra-broadband and OTT content. Performing well on this front will lead us to grow more than 50% compound rate in the next 3 years and more than double the customer base. To transform the size of our business, we are aiming at a strategic partnership that will help balance better the equation between sales and CapEx. Remembering that TIM Live to be representing only 3.3% of TIM revenues, contributing for 25% of 2019 year-over-year net service revenue growth, while accounting for 9.1% of the total CapEx, so the creation of the infrastructure vehicle managing mainly FTTC and FTTH combined will continue rolling out fiber, expanding TIM live services without sustaining significant additional CapEx, while unlocking additional value for the company. We already started the market sound process to find the right partner to help us take this new step to a fiber company. But in our plan figures, the effect of this transformation project is not yet included. On the efficiency pillar, we aim to enforce our leadership in profitability. To do so, we plan to take our action plan to the next level with continuous end-to-end review on how we operate while enhancing our cash mix position [Audio Gap] Core component [Audio Gap] evolution of our processes, acceleration of digital and automation initiatives, implementation of new make-or-buy models, and last but not least, the transformation brought by smart CapEx approach in all the front of this business. To move beyond the core, we will leverage our asset with strategic partnership and taking advantage of a unique window of opportunity. We will explore 3 verticals: Internet of Things, mobile advertising and financial services. IoT connection will double until 2022, and we plan to serve this wave, developing solutions to monetize and improve our B2B presence. We elected to market to focus on the process -- on this process, transportation and agriculture. Together, they sum more than $1 billion in size. As of today, we are already building a solid presence in the agro business segment through the ConectarAGRO partnership being the sole operator in the initiative and already supporting the deployment of agritech solutions. On the connected car front, in the following weeks, we are going to announce an important agreement with a car manufacturer to provide in-car connectivity and automation. Digital advertising is becoming everyday more and more mobile. Out of the BRL 24 billion estimated for the market in 2022, 80% will be delivered through mobile. We, the Brazilian operator, have a huge opportunity for gains if we manage to cooperate. TIM Brasil plans to address in 2 ways: as a publisher using the available touch point we already have; and as an adtech player, leveraging customer knowledge and ownership. Today, TIM Brasil already generates revenue spread across its operation that are advertising-originating. They sum, in 2019, close to BRL 190 million, and we see the potential to grow in this number by 35% in 2020. In these first 2 months of the year, we closed 2 new contract to show advertising pieces to our client base. Last but not least, mobile financial services. We are working on partnership with digital bank, under which we plan to combine telco and banking services in a single proposition. We expect to leverage our customer base and channel to provide services to customer who need a full banking offer. We foresee another opportunity on this vertical, more focused on giving access to banking services to the unbanked population, which was estimated in 2019 as 45 million people in Brazil, if we take into consideration credit and debit card penetration is even lower. More details of these new initiatives will be given during TIM Brasil call on the 16th of March. I'm reaching the end of my section. But before I leave, I'd like to confirm most of the guidance metrics we gave last year. We are confirming mid-single-digit as our service revenue growth; EBITDA growth in 2020, mid-single-digit as well, with margin going above 40% by 2022; CapEx bands between BRL 12 billion and BRL 12.5 billion for the 3 years; and EBITDA minus CapEx over revenues staying above 16% in 2020 and above 20% in 2022. All the metrics are still in IFRS 15 standard, but you will find the IFRS 16 equivalent in the presentation. Thanks one more, and I hope you enjoyed this new form of presentation. Thank you.

Thank you, Pietro. Good afternoon, everyone. Luigi has illustrated our great performance on cash generation and debt reduction in 2019. Let me focus on Q4 now. Debt reduction has been a record high also in Q4 with almost EUR 500 million deleverage. This is the result of organic cash generation plus the sale of Persidera with organic equity free cash flow of EUR 491 million in Q4 and EUR 1.7 billion in the whole 2019, 3x last year's result. Group service revenues, sequentially better than in Q3, are down 2.7% year-on-year, excluding the Sparkle discontinuity. EBITDA, also on an improving path compared to previous quarters, is down 1.6% year-on-year, and EBITDA minus CapEx, substantially flat. On mobile, TIM has been, again in Q4, the best performer in mobile number profitability and is on an improving trend versus Q3. Importantly, we were able to maintain the improving path in year-on-year performance for mobile service revenues, which fell 3.8% in Q4 versus minus of 7.2% in Q3. And this is in spite of the decision to be more disciplined with content service providers, a 1.4 percentage points drag on the year-on-year performance. It was one of the several difficult decisions we needed to take in order to make our business more socially responsible, sustainable and to make our client happier and more loyal. It could imply a couple of percentage points drag on 2020 mobile service revenue, but we think it was the right thing to do. ARPU improved year-on-year performance versus previous quarter as well despite the drag. Equipment revenues are impacted by the decision to stop selling zero- or negative-margin handsets with implied benefits on EBITDA. Looking at wireline. The fix-the-fixed initiative started to have an impact in Q4, with line losses on an improving trend, broadband net adds in healthy positive territory and migration from ADSL to fiber improving quarter-on-quarter. Also, churn rate is better year-on-year. On the wholesale, VULA net adds continued to remain above ULL losses, and the full year VULA net adds remained well above 1 million, which is massively above what our competitors did. Looking at fixed service revenues in Q4. Sparkle strategic repositioning explains 4.6 percentage points of year-on-year decline on top of 2 factors: move from service to equipment explaining 1.8 fall year-on-year; reduced washing machine effect, implying lower activation fees with negative impact on revenues and EBITDA, but very positive on cash flow. Additionally, consumer was affected by the decision not to increase prices in 2019, while Q4 2018 benefited from 2 price increases. And national wholesale is affected by the comparison with a very strong Q4 in 2018. ICT service keep growing double digits. Cost cutting has continued to accelerate, with OpEx down 12% and the so-called addressable cost down 5.4% or 7.4% on a cash view. Commercial costs were positively impacted by the reduced washing machine effect and lower bad debt. The decrease in network and industrial building costs more than offset the drag from energy prices. Labor benefited from FTE reduction equal to 2,700 exits in 2019. Additionally, interconnection and equipment continued benefiting from the new strategy for both Sparkle and handsets. For example, equipment margin, plus EUR 35 million in Q4, more than EUR 90 million in the last 9 months. CapEx reduction is 1.8% year-on-year, leading to a full year reduction of 5%, in line with guidance, both in Italy and Brazil. Working capital also improving in 2019 with a materially positive change of EUR 740 million in domestic driven by 5 factors: lower inventories; VAT impact from split payment; change from billing in advance to billing in arrears in Q1 '18; higher trade payables due to better cost management; lower trade receivables benefiting from improved cash conversion. The higher absorption in Brazil is mainly due to the positive impact on P&L of the tax provisions that will have a cash effect in the following years. The partnership for consumer credit that we called TIMFin would be a big help in improving net working capital further in 2020. It is in execution phase after signature of the commercial agreement, as planned and anticipated. The scope is to set up a joint venture to develop and distribute durable loans and other products to finance our customers when they buy our devices. At the same time, the new entity will have the flexibility and goal to offer personal loans and insurance products with an upselling approach. One of the key benefits of this partnership is risk reduction, thanks to the experience and sophisticated tools of Santander Consumer Bank in this field. We are aiming at reducing bad debt by around EUR 50 million, in addition to deleveraging by around EUR 500 million by 2020. The plan is to set up the joint venture in the second half of 2020. This slide shows how we achieved the net debt fall in Q4 that Luigi commented earlier. Lower financial charges and cash taxes were a big help in 2018, and we envisage no reversal in coming years. No major news from last quarter on our liquidity margin and cost of debt, which was down 40 basis points in 1 year. Looking at our results with the after lease view, on which we provided our guidance, we see that the EBITDA shows better performance year-on-year versus the IFRS 9/15, both at group level, from 1.6% to minus 1%; and domestic, from minus 4.7% to minus 3.9%. Let me also remind you that in 2020, we are definitely moving to IFRS 16 after lease. And that from Q1, we will also be deconsolidating both Persidera and INWIT. This chart summarizes the major impacts of these changes. Now let me hand back to Luigi for guidance and closing remarks.

Thanks, Giovanni. Our guidance is based on IFRS 16 after lease and is already deconsolidating INWIT from equity free cash flow, although not yet capturing the expected proceeds from its disposal. We are upgrading our targets for equity free cash flow from EUR 3.5 billion to EUR 4.5 billion to EUR 5 billion range, which will be EUR 5 billion to EUR 5.5 billion under old accounting standards and before deconsolidation of INWIT. Net debt is now expected below EUR 20 billion by 2021 and stable in 2022 after license payment. Including proceeds from INWIT, the number is expected below EUR 19 billion. As I anticipated, we are reinstating the dividend at EUR 0.01 per ordinary share, with the aim to distribute 20% to 25% of equity free cash flow, subject to deleverage execution. Regarding revenues and EBITDA in 2020, we'll continue the clean-up process. What we are doing now is managing the company for the long term. As I mentioned, we have not increased prices on fixed, we have disciplined content sales in mobile and we have canceled all the revenues that were at zero margin. We're also moving towards closer reconciliation with the cash flow and EBITDA. In the recent past, this was not always the case, and revenues and EBITDA were, most of the time, prioritized versus cash. In 2020, we will continue to be rational on all fronts, and these trends are reflected in our guidance. But you can see, we expect low- to mid-single-digit decline in Italy in 2020, also taking into account the deteriorating macro environment, with stabilization and growth thereafter. On Brazil, Pietro already gave you the details on the plan. Of course, we are firmly backing execution of such plan, including the transformation of the Brazil market. This year, we're also releasing guidance on ESG and including ESG targets in the metrics of our remuneration scheme. This is to show that we are really taking this matter seriously, and we mean to improve materially our performance. Before my final remarks, let me first pay a tribute to my colleagues. The world is experiencing an extraordinary moment, and they're working 24/7 to ensure integrity of our network, to make sure the network is available any time all the time. TIM is working for the country: today, in the emergency; in the long-term, for its modernization. Going back to the remarks. We overdelivered our financial guidance in 2019. And we'll do our best to continue to do so also in 2020. Equity free cash flow has been, and will continue to be, our primary metric. On dividend, we are committed to EUR 0.01 per ordinary share, with the ambition to do more, subject to deleverage execution. We are committed to improve sustainability and deliver results for all our stakeholders. 2019 was the year in which we address cash flow and deleverage. 2020 will be the year of operations. In short, we believe, today, TIM is a better company than it was 1 year ago. And we believe we'll be making the same statement next year. In 2 minutes, we'll be ready to take your questions via audio conference call. Thank you. [Presentation]

Thank you, Carola, and good afternoon, everyone. Let me say I'm really sorry that we didn't have the chance to meet in person. First of all, obviously, for the reasons...

[Operator Instructions] First question comes from Mr. Roman Arbuzov from JPMorgan. Mr. Arbuzov from JPMorgan, your question, please.

I'm sorry. Can you hear me now?

Loud and clear, Roman.

Thank you so much. I have 3 questions, please, and they all relate to the KKR potential offer that's on the table. The first one is with the offer in its current form, it's nonbinding, but assuming we actually get progress and it becomes a binding offer, would you accept it under the current conditions? That's the first one. And also related to that, obviously, is would you accept this only if there is very good progress in -- on the Open Fiber negotiations? Or would you accept it regardless of that? Secondly, would you be able to give us just a rough numbers of revenues and EBITDA for the secondary network? So for the part of the network, that's related to the KKR offer. And then the third one is thinking of KKR and, generally, private equity deals. Presumably these guys would be looking for some exit options at some point down the line. So I was just wondering if you envisage that there will be some exit clauses provided, such as a put option for them to sell back the network to you in a few years down the line. Any commentary here would be much appreciated.

Hi, Roman. Luigi Gubitosi. So you asked a number of questions. Let me see what I can answer about that. You basically say, would we accept it? I guess, I would rather do the negotiation directly rather than through you, although I'm sure you will be a formidable adviser. So if -- let's put it this way, if we have said that we are prepared to discuss it, that means that there are elements there that we like it. But between a nonbinding offer and a final offer, there's lots of term and conditions that have to be agreed upon. And so if our friends at KKR at least are going to say, "We'll -- we're delighted to negotiate with them." And I'm sure that when there's a will, there's a way. We'll find a mutually acceptable solution. But let's say I'm not going to discuss the terms with 150 people on the line, if you understand what I mean. So...

That makes sense. Maybe can I just follow-up, I mean to what extent do the negotiations depend on how the Open Fiber story develops, Luigi?

Yes. I'll be happy to elaborate. Basically, this all started with what we basically communicated to the market in the past. We -- back in August, we agreed with Enel and CDP that we would find a partner. Then in the fall, we did a selection. We invited many funds, the most relevant -- many of the most relevant in the sector, in the infrastructure sector. And we then shortlisted 4 of them. And KKR ended up being the one which we thought had the most interesting proposal. So in this respect, certain work has already been done. Then, as we were discussing, I think one of the CDP -- sorry, one of the Open Fiber shareholders then, at some point, said that they will not be interested in selling, then the conversation moved on to say, "But why don't we do that?" We were interested -- even if Open Fiber were not to be on the table, it will be interesting to start with you on the secondary network. And we thought it was a fine idea. As we speak, it seems that the government is supporting renewed talks. And in fact, the talks never stopped, really. And basically, there seems to be this additional support for a single network. So this is the year in which something has to happen. We want to move forward. We had very lengthy negotiation with Enel and CDP. And I have to say that, without entering into details, that not always -- well, I mean I think it's well-known that CDP has pushed forward for transaction. Enel has been more reluctant. So I think it's time for Enel to make up its mind and decide. Are they interested? Are they not interested? In any case, I think we have established a very valuable relationship with KKR. They -- I don't need to introduce them to the financial community. They're well-respected fund, probably one with the most expertise in fiber. And what they say to us made sense. So we're happy to consider Open Fiber together. And that remains, I think, something that makes sense for us, for Open Fiber, for Open Fiber shareholders and for the country, especially in these times where I think -- I think we're proving these very days that having a valuable network company, infrastructure and well integrated, it's something that helps in difficult time where communication is important. At the same time, as I was saying, we'll see what's the time. We are prepared to continue to be engaged in negotiation. And we always have been pursuing Open Fiber. But as you say in English, always is not forever, so we might even start in creating the vehicles. But with the preparatory work, it's the same in a sense that we have to do a carve-out of our secondary fiber -- secondary network, I mean, and to put into a company, and so that will take a few weeks anyway. So that's why we say that there is a dual track. There is a dual track but a single financial partner, i.e., KKR. Have I been clear enough? Or do you want me to elaborate on that? Oh, you were asking also if there is a put. Now there is no put. There are other exit, as you might expect, for private equity. But at the end of the exercise, we're not giving them a put.

Next question comes from Mr. Fabio Pavan from Mediobanca.

I would like to focus on the partnership with Google. I was wondering if you can tell us when the cooperation would start. And how are you going to address the market? We all know that Google in the U.S. is investing there a lot in cloud. And also, I would say the company is becoming more familiar on this -- the value creation that such a plan could generate. But what about Italy? Do you think Italy is already in a position to understand how relevant could be such a plan?

Yes. Thank you for your question, which give me opportunity to mention another great name. We are delighted that we've done this agreement with Google. And in fact, the activity, we signed a contract -- the final contract, I think, a couple of weeks ago or so. But in fact, the activity -- the marketing activity and the activity on the product has started since even -- since we've announced, really, that we were going to -- we have selected Google as our partner. And we have visited prospective clients together with the Google CEO, and we're going to continue to do so. We have established a marketing strategy, which is already being implemented. We have -- are working on the carve-out of the perimeter of the new company, which, as I think we indicated in the call is going to happen in the second part of the year. And we started the training of people. So it's really work in progress. As you know, this is one of the most exciting part of ICT in terms of growth. And it's -- there is a lot of demand for -- from the various part. I think, by the way, I'd like to make 2 more consideration. One is that if I have to look at a template of something that we did successful in this respect, it's INWIT, basically. We thought an activity that it was clearly going to be a very important part of the market. There was the growing part, we identified, carved out and developed nicely. And maybe somebody else will make question on INWIT, and I'll be able to elaborate on that. But going back to the data centers. And this is going to be the same, in a sense that this -- it's earlier on -- much earlier on in terms of maturities, growing much more than the tower business. It's less mature, but it's very much a favorite item by the most attentive analysts and investors. It's something that we'll develop. Italy does need it a lot, as many other countries. And not only for the large company, but even for small and medium enterprises and the public administration. Our public administration definitely needs a lot of -- more control on data, and data management is becoming very important. You need data centers to implement artificial intelligence, which I think is a game-changer in many industries. So it's not something that's relevant for our sector, it's relevant for the entire economy. One very important thing is that -- and we will look for other investors, for infrastructure funds and so on around the end of the year, beginning of next year, but TIM will maintain control. This is the core component of our business.

Next question comes from Mr. David Wright from Bank of America. Mr. David Wright, please.

Congratulations on fitting, I suspect, what was a 4-hour event into probably a 45-minute call. It was very rapid but very clear. My question was on Brazil, and perhaps one for both management teams. What could you see as possible remedies to a deal? And if it were to take place, Luigi, how do you manage the leverage of TI Group? Is it a stake sale that you would consider? Does -- do you even need to do that? Or could the synergies be so material and so soon as to offset?

Okay. On the remedies. I am reluctant to, as you know, where we discussed other issues in previous calls on Italy, regulatory aspects are never to be discussed in public. This is one of our rules because, typically, regulatory authorities don't like that to happen. And in fact, now -- I was the Chairman, former Bank of Italy Deputy Director -- Deputy Chairman. So as you can imagine, we want to respect that even more. Now jokes aside, as you know, there are 3 operators in Brazil. No one of them could buy the entire lot because Brazil look at this market state-by-state and applies on remedies state-by-state. So we thought that the most reasonable way to approach this issue was to team up with somebody that would have a sort of similar but opposite because, clearly, if Telefónica is #1 in a state, we cannot be the #1, then we're probably going to be the #2 and #3 and vice versa. So you should imagine, and I cannot enter into details of what we have agreed upon with our friends at Telefónica, that we have imagined to be jointly but then to part the assets in a way that would best reflect the regulatory environment. And this obviously has to be discussed with local authorities and so on and so forth. But we think that it makes it much easier to have a palatable deal for the authorities if we act together and we separate. And we have historically a good relationship with Telefónica and found that they are very reasonable. And this is, again, part of our strategy to network with other people. We discussed that in the previous 2 calls -- 2 questions. I answer about KKR, and I answer about Google, and now naming a third excellent company that we're very happy to have relationship with. And this can happen on various plan and excluding possibly only Brazil. But we're definitely going to pursue this without, however, changing the deleveraging strategy for TIM. What I mean is that, first of all, we'll have to assess what's the amount of money that is needed. As you know, TIM Brasil has no leverage, almost no leverage this year. We'll -- they will basically wipe out the residual debt. Therefore, there is a room there to do things locally. And I think in the community that has been described well what could happen, we will decide then if there is a need for capital increase, depending on the amount. We're talking about locally. And if we'll follow it completely or not, we will decide that over time. So at the moment -- and by the way, obviously, there is a deal if there is a match between what Oi expects to have as proceeds and what we think is a price that is reasonable for us. But we think that it makes sense for the Brazilian market. It will be a very accretive deal because we'll be basically synergic from day 1. It's from this point of view, has been studied for a very long time. We will be very ready to execute. And our team in Brazil has Pietro Labriola, can -- could easily confirm. He's very excited at the idea. So time will tell if that becomes only an exercise. So if this can actually materialize in the transaction, we would -- which will be a landmark transaction for Brazilian telecoms.

Next question comes from Mr. Khiroya from Deutsche Bank. Mr. Khiroya, please.

I've got 2 questions, please. Firstly, you talked about the need to rebase some of the revenues and EBITDA to better preserve free cash flow. And I guess, more recently, you've done things that's stopping the third-party services in mobile. And earlier, just stopping, giving away the modems to customers in fixed too that no longer paid. Have you now done most of what you need to do to flush out these revenue streams? And then secondly, just moving on to mobile. You did enjoy some price rises in 2019. Do you still think there's room to raise prices? Or do you now need to wait, to see if Iliad raises prices first?

You said Iliad raises first? Yes, okay. Yes. No, I think I understand. Okay. First of all, in terms of those revenue stream, I think, yes, it's mostly done. It will be completed in the first part of the year, anyway, on this year. So this is going to be soon a problem of the past. With regards to what happened, look, we're living in a time of unprecedented changes. I mean, what we're experiencing in the world, specifically in Italy, it's obviously unexpected. And this will somehow impact the telecoms market as well. I'm not trying to take it too much in a -- for a broader perspective, then I'll go back to Iliad prices and more to your specific question. What I mean is that, so far, we're seeing a significant increase in traffic. Today, traffic is up 70% compared to a week to 10 days ago. And just mostly in the north, where people are staying more at home, but we're seeing that happening at a pace. I'm talking fixed line. The mobile is up some 10% or so. So that's basically a lot of traffic. And what we understand is that -- and this is market rumor, which we believe is true that Iliad, so every -- let me give you another data. In terms of giga on the mobile, we heard that most customers, not only ours, in general, are increasing consumption by 1 to 1.5 giga. That basically meaning that, for people like Iliad that have to buy those giga from Wind, that's going to be a hell of a lot of extra, extra cost. So I'm wondering how long they're going to keep prices this low. Already now, I don't think they're profitable. So are they going to raise prices? I would have thought, and I think they say that, at some point, they would have raised it last year. And in fact, one of the big things that in 2019 went different from what most in the market expected, including many analysts, was that Iliad did not raise prices. I'm wondering, as much as you are, what they're going to do in 2020. So the answer is I don't know. Logic and economics would say they should. But unfortunately, logic and economics are not necessary to be the driver of most decision. So I would say that we're not expecting a raise at the moment. We're going to be delighted if they do. But our expectation for next year is no, they're going to stick to their guns, and they will not raise prices. But I guess the question is best addressed in their conference call, which should happen a few days from now.

Next question comes from Mr. James Ratzer from New Street Research.

First question I had, please, was just regarding the 2020 EBITDA guidance. I mean, clearly, we are in very kind of unique situation in times in Italy at the moment with coronavirus. I was wondering if you could say what impact you have seen that have on your business over the past few weeks, and how you're thinking about incorporating that -- impact from that into the 2020 guidance. And also, specifically, on the 2020 EBITDA guidance, could you give us a steer on how much of the decline in EBITDA is coming from the reduction of the washing machine effect, assuming that would then kind of lap out of the numbers in 2021. But if you could help to quantify the impact to that in 2020 would be very helpful. And then just a final point of clarification. I think one of the earlier questions was about the financials for the secondary network that you're thinking about selling to KKR. Could you just let us know what the revenues and EBITDA of the perimeter of that business would be.

Okay. With regards to this year. Now let's talk about the big elephant in the room, and you say the last few weeks. In reality, life has changed here since last weekend, where basically, the entire Lombardy become what is called a red zone, and then has been -- in the last few hours has been extended effectively to most of the countries -- the entire country. So before then, there was an issue, which was limited to a relatively few zone, so the impact would have been definitely minor. Now -- what's going to be likely now? And we've been more -- a bit more conservative than we would have been originally on the guidance, because we think there will be an impact. We just don't know what impact it's going to be long -- short-term and long term, simply because we don't know how this is going to last. I guess, today, nobody knows. We are encouraged, by the way, by seeing that in countries like China and South Korea that went before us into this mess, the situation, it shows some inversion. And in the very early red zone in Italy, in what is called area of Codogno, the cases are declining. So it seems like there is a cycle, which is always too long. But no, it's definitely too long, but it has a beginning, it has an end. What's going to be the impact on all this business? Well, one surprising thing is that you see when there is panic in the markets, you see everything going down at the same time, the reality is that the telecoms sector, which is not a sector that's been favored by investors in the last 18 to 24 months, it should be one of the most resilient, as I said before. But I think, for example, that we are probably the company that has the most people that are doing smart work, working from home or from remote, anyway. We have now 30,000 people or so doing it, and it's working. And we're getting companies calling us saying they would like that to consider setting back -- setting up private networks and strengthen their connection to be able to have more employees working from remote. So yes, there is -- so there's going to be some more demand for connectivity. However, we work in a country. And if the country has a deep recession, it's going to be -- it would be naive to think that we -- even if we're a more resilient sector than others we'll be completely unscathed. So I think the honest answer is it's too early to say what's going to happen because of coronavirus. We've been a bit more conservative on our guidance on EBITDA. And at the beginning of the year, I think, obviously, the effect has been very negligible. We need to see a few weeks of the present situation to understand more about what's going on in the country. But as I said, we're going to be as resilient as possible. Your second question was about -- and I don't know if I answered it on the first one.

Yes, I understand it, sir. I mean it's difficult. At this stage it should be precise. But it was -- I mean, you're saying you've seen usage, was it on the early question, mobile network up 10%, fixed network up 70%, was that correct?

Yes, I say that we saw traffic increasing by 70%, yes. Not big traffic. Traffic. Fortunately, big traffic on fixed used to be in the later hours of the day. Now it's basically -- most of the traffic, it's in the central areas. But our fixed network has significant headroom. It's very well in this respect. On the mobile, yes, and I thought it was around 10%. But obviously, you should expect -- in the place, for example, where the traffic increased the most, I was told yesterday, I don't think today has changed, was that it was Bergamo, which is one of the center of the -- it's a nice, medium-sized city in Lombardy. Obviously, in the south, you have much less change. Then you have -- even by the way, yesterday, there was -- believe it or not, as an impact, there was the new release of Fortnite, which is incredibly popular with teenagers. And that was heavy traffic with Fortnite yesterday. So with regard to washing machine effect, basically, I would say that there's been the size of a maybe 40 or something like that percent. I will ask Carola to get back with the precise number, so that you can incorporate it in your model. I don't want to mistake it because I don't recall the number, frankly. I prefer not to guess rather than -- and give you a precise answer later on. Then you were asking about what's the perimeter, and I would -- we would rather not enter into a specific discussion about something that we have discussed with the counterparty at this stage. Suffice to say that, at this stage, we are envisaging -- and we're talking only secondary, we're not talking about now the transaction with Open Fiber. We would consolidate -- continue to consolidate this company, so it would not necessarily be relevant from the total numbers, figures. Because as I was mentioning before, KKR would be taking a minority stake, just north of 40%.

Clear. Okay. Based on the kind of, I suppose, the sub loop on bundling rate, though, I mean, at the moment, it would seem as if that kind of business might have revenues of a bit over EUR 1 billion. Does that seem reasonable?

I would say, south of EUR 1 billion. Congratulations for the well-educated guess. I think you -- well, at this point, I think we said it. Carola will look into providing everybody with some guess -- some ranges, let's put this way. But I guess, and guys correct me if -- I'm talking to my colleagues now, if I -- because some time ago by memory, I think it's -- the EBITDA -- no. I'm told I cannot talk. Sorry. I was going to give you -- as you see, and this is my investor relations people. I'm more prepared to give. I was going to tell you. But...

I'll make an educated guess of EUR 600 million?

No, that's not okay. You might want to raise that. But -- and now Carola's eyes are killing me, so I have to stop.

Next question comes from Mr. Georgios Ierodiaconou from Citi.

I have 2, mainly follow-ups on previous answers you gave, Luigi. The first one is around the timing of some of these deals. I think you spoke a bit about marketable processes and steps in the data center monetization, also to a certain degree, potentially in the case of the fiber network. Is it possible the things that are under your control? And I appreciate a resolution around Open Fiber may not be. Can you give us a bit of an indication of when to expect the different steps with the data centers, with KKR, potentially also in Brazil, just to give us a broad idea of the timing? And whether you would be able, outside of TIM Brazil, to accept the minority stake at the end of this step. So if you were to do something with Open Fiber to be a minority with the data center business to end up with a minority.

I'm sorry, what was the question about minority? Can you repeat that? You're saying, if you would end up...

Whether in the case of Italian broadband and data centers, you would be -- you would potentially consider ending with a minority position. So deconsolidating these assets at the end of the process.

Yes. And with regard to data centers, you are saying about the timing of the deal and whether we would be coming -- we would be prepared to become a minority shareholder. Well, at the time of the deal, I think we said in the call, in the earlier speech, that we're doing a carve-out by year-end. And so we will start the discussion with potential investors, let's say, in the fourth quarter of this year. If we -- maybe earlier. But to be safe, let's say, in the last quarter of this year. No, the idea is that we're going to sell minority stake as capital increase is to finance expansion, basically. And so there is -- I think there is an opportunity to have other people to provide for money to grow there. But we don't envisage that will bring us to minority. In fact, that's a core competency that we would like to develop. It's -- we -- if we wanted to sell, honestly, we would have followed it at the path. We do want to sell but the minority. And we want this to be part, we see as a -- there is a tremendous growth opportunity. And selling a minority stake allow us to get -- first of all, by the way, allow us -- you haven't seen many some of the past exercise recently. But if you do some of the past exercise on TIM, considering what we have in INWIT, considering what we have in Brazil, considering what we have in the fiber. And by the way, I think we did mention the number, EUR 7.5 billion, and that's from the cabinet onward, excluding the cabinet. So the entire network of TIM, you can make educated guesses now. No worry, Carola, I'm not even trying to say a number. I got a very bad look. So -- but what I'm saying is that then you model the data centers, and it's -- I've done it as a fun exercise, and it's a compelling argument. But no, we don't want to get minority shareholders and leave to somebody else the fund. The towers is different because that -- INWIT, I mean, because that was -- the only way to do something with Vodafone was to share control. Vodafone would have not accepted that -- we will not accept it differently. I mean, the opposite to be minority -- and I mean, to have the position, vis-à-vis, with ourself. And so we had to do something exactly on equal footing. But effectively even there, we maintain joint control. And so the industrial logic is going to be the prevailing one. This is very important. These deals are not done for financial reasons -- or rather, the financial impact, it's a very favorable multiples, as you know, in these sectors are very compelling. And I mean, on INWIT it's on the market. But if you consider that if we do a EUR 400 million EBITDA, you decide with multiple to attach. And even if you put some -- you don't trust us entirely and the circumstances and you want to put some discount, the number that comes out, it's quite nice. So it's -- eventually, this is a company that could be IPO-ed and so on. I see very much INWIT as a pattern, as I said before. You were then asking on Brazil. Would you mind repeating what -- what's your question was on Brazil, exactly?

Well, it was more around the timing there, whether by year-end.

Timing on Brazil? Yes, yes. Okay. And the reason I -- you see me hesitating for a second is that I wouldn't want to create some friction there. But let's say, we'll make a joint nonbinding offer. Then it will depend very much by the procedure there. Because as you know, Oi is a company that is under special circumstances. It's a Chapter-11-like situation, so there is a supervising judge and so on and so forth. So they led to use some procedures that are not necessarily what you would do if the company will be a privately owned one. So that -- we think it's something that may materialize in a binding offer sometime around December, and then assigning later on in the year. But I'd like to be very specific when I give timing. On this, I'm not entirely sure about the timing may be, because as I said, there is a judge. There is some procedures that make it more complicated. Not in terms of negotiation with their counterparties, but in terms of having all the procedural approvals. So let's say, if we go ahead because, again, we are at the stage of nonbinding offer, and we still have to make sure that there are terms that are acceptable to us and that our offer is acceptable to them. So at the moment, the only agreement we have is with Telefonica, which is fine being our partner. But still, we need to find an agreement with Oi. So year-end is an educated guess. Then you asked about would we accept to be the minority in FiberCop or in Open Fiber or in the combination of the 2? And the answer is no, in a sense that this is our core business. And frankly, let me be a bit arrogant. Telecom is the best company to do this job in Italy. It has the history, the tradition, the technology, the competencies and has proven to be still in this field, the undefeated and unbeaten champion, national champion. So the answer is no. Maybe we could consider some exception for the so-called white areas, where the state has an interest. But that would depend on what the -- on terms and conditions. So in general, the answer is no. Just -- I will not complicate your life by making distinction. No, I think we would -- we might have -- we might be prepared to give significant concession in terms of governance. Because frankly when we talk about monopoly, what are the typical things that are said? A, the price could be raised. Well, the price will be set anyway, chosen by an independent authority. Because as you know, we still, in most of the country, we are regulated by AGCOM on pricing. I'm saying most of the country because Milan, for example, now is an exception. That will probably be restored. So in the entire country, the price will be decided by AGCOM. Second, people say, are you actually going to do this? In the past, you didn't want to do necessarily all the investment in the fiber. And our deal with KKR is exactly based on the fact that they think that there is a lot of value creation if our mixed network, i.e.; fiber to the cabinet, which has the last mile in copper; and fiber to the home, last mile in fiber, becomes all fiber because it's a much more valuable element. So we would definitely do that. And the other things also said, okay, you may do investment in, let's say, Florence, where maybe when competitors would like that to happen in Sicily. Well, I think in this case, what you do is that you publish much more in advance what you're supposed to do in the next 3 years, for example, and so that everybody can accommodate this plan accordingly. I mean these are just examples. There can be many more -- many others. But we think it makes sense if the driver knows, let's say, is an experienced one rather than improvising other solutions.

If I could, and I really appreciate your detailed response. Can I ask a clarification on your guidance?

Sure.

The EUR 2.9 billion of CapEx, does it include some of the upgrades you are expecting to deliver with the KKR agreement on the last mile access? So the fiber upgrades, will they come on top? And if you can give us any indication on that. I appreciate it.

Okay. On the CapEx, as you know, we've given a guidance of EUR 2.9 billion per year, and this is consistent with our 2023 objective. So the answer is as consistent, yes.

And what's the investment in fiber within that?

We're not disclosing separate chunk of investments. We're just giving an aggregate. But to say, our plan is consistent with a purchase by -- potential purchase by KKR of the 40% in the fiber network. And as I said, we would reach 40% of coverage by 2023. Then, as you know, we stop into 2022 so far. So we are definitely consistent.

Next question comes from Mrs. Nicola Gifford from Goldman Sachs. Mrs. Gifford, please.

I've got one question on your equity free cash flow. You continue to beat your free cash flow guidance, and have raised your guidance for your 2020 to 2022 plan. My question is how sustainable is this going forward? And can we continue to see an improvement in working capital and a reduction in your financing costs.

Okay. How sustainable is? Well, obviously, if we're giving you this guidance, we think it's sustainable. And the reason is that -- yes, my associate here at your IR counterparties saying don't be conservative. No, we have debated at length about that, but we think it's feasible. And in fact, we noticed that this year, there were -- I mean, let's go back 1 year. And as you know, and especially our rating agency friends know because they see the entire plan, our target was much lower. Then as the year go by -- went by, we noticed that there were many things that we could do to improve. And especially now, we're trying to explain to all management that they have to focus on operating free cash flow. It is in their MBO and so on and so forth. So the entire organization is changing culture, and so we do think it's sustainable. Also, for example, we were discussing before, what's going to be the impact, maybe there could be some slowdown on revenues and EBITDA, yes, but -- and that's a possibility, but definitely a possibility. If that happens, also there's going to be a slowdown in investments by everybody, because today in certain areas you cannot enter, because people are -- I mean, because it's more complicated, because the country is distracted by what's going on. There's nothing you can do about it. So I don't see pressure on our CapEx guidance. I'm seeing that we're doing good success on reducing the cost of our investments. We are going to -- by the way, no one has asked that yet. But I think something I wanted to stress, I think I said it in the speech. But -- that we're going to get both the clearing by the authorities in Brazil was both on the passive, but also on the active. So we're going to get the full benefit of the transaction as we describe it to you back a year ago. So all of that makes us think -- and we have a very asserted a very tight control on working capital. And by the way, not only -- this does not apply only to EBITDA and above, but our decrease in financing cost is going to continue, because we are deleveraging. And the interest rates, as you know, are much lower. So every time we have to renew an existing financing, and basically we reduced the cost. This is happening, obviously, relatively slowly because we have very long liabilities. From a risk management point of view, we always have debt that mature in a long time. But nevertheless it's happening, and we see that year after year, we do save money. And we also have reduced, let's say, everything that we can in terms of other expenses below the EBITDA. We've been able also to optimize certain tax aspect, using -- this year, it doesn't show because Brazil, it's much higher, the tax impact. But in -- but next year, the Italian -- in Brazil, tax is around 35%, Italy is 27.5%. So effectively, we're going to have tax credit in Brazil that we can offset against taxes as they mature, so that we see that the company will continue to perform well in terms of cash flow at the present levels. At the same time, clearly, also on the operating side, we'll see an improvement. I hope I answered your question. Do you want me to clarify any aspect of it?

No, that's very clear.

Next question comes from Mr. Domenico Ghilotti from Equita.

Three questions. The first is a follow-up. So is it fair to say that deleverage in 2020, 2021 should be quite smooth excluding, let's say, the INWIT transaction or the special transaction? And second question is on the KKR deal. I wonder if there is any regulatory approval on the deal. And if you need a golden power to green light? And the third question is on the CapEx guidance. I want to understand the data center, the investment in data center are included in the guidance. So if the injection from a minority partner can be an actual deleverage or if you needed this injection to offset higher CapEx. And well, linked to this number of CapEx, is there any particular assumption in the deleverage related to spectrum payments during the plan, apart from what's already known clearly?

Okay. I answer immediately on spectrum payment, I think we have already -- we will pay whatever we committed to do on 5G, but that's -- there should be no other payments. In Brazil, they have moved at the moment to 2022. I think it will depend also on what happened on Oi. So we don't know what will happen. But in Italy, we are not estimating any other additional auctions. So -- nor we are aware of any. So don't give anyone ideas, please. With regards to your other question, move to deleverage in 2021. I don't think the word move is applicable to today's environment. But nevertheless, we'll do it. It's going to be tough, it's going to be complicated, it's going to be engaging. But we're confident. And everything we're doing here, at the end of the day, wants to cure the original capital sin of TIM that is too much leverage. So this remains our mantra. Your second question was on KKR, what are the regulatory approval, especially related to Golden Power? Now Golden Power is applicable to all strategic assets, and TIM is definitely a strategic asset of this country. I will strongly endorse this statement, as you know. Nevertheless, here, we're talking about a minority stake in the secondary network from a fund that would have no management position -- I mean, no intention to manage the business, but rather to be a passive investor. So I could imagine -- and it's coming from a friendly country and has an impactable reputation and track record of fiber and other investments. So I don't think that it should be very complicated, I mean, to clear. Of course, there will be procedures, but I will be very surprised if that were to have significant issues. Then your other question was on the CapEx, regarding to data centers. And the answer is, yes, it's included, both in terms of OpEx and CapEx. And so everything we can get from investors would -- will be a replacement. We're not expecting to finance that. In fact, we are financing, as we speak. Have I answered your questions?

Yes. Just a follow-up on the KKR. So say, the agreements of the revenue and the tariff that all the operators are paying for this kind of part of the network, should be regulated? Or is something that you are, say, discussing with KKR, and then you deal with the regulator for the regulation for the tariffs?

No, no. This part is regulated. Yes, indeed. But as I said, for everybody, nothing will change in a sense that imagine that you have -- and I'll make a comparison to a different business sector, whatever this comparison are worth. But imagine that you are in a hotel and you divide the hotel into 2 parts: The real estate company and the management company. The management company is 100% TIM. In the real estate part, you have a minority investor. And actually, that's the case, that is not only an example. It happens in many places in the world. But the majority remains TIM and is managed by TIM. So for as long as the regulators is concerned, if you have regulators, you mean AGCOM, there shouldn't be any change in anything because its counterpart is the same.

Next question comes from Mr. Sam McHugh from Exane.

Just a couple of questions. First, on the mobile business. I think if we take out wholesale, which grew a lot in Q4, you can see that the retail services are still declining 10%, slightly worse quarter-on-quarter. I know you've attributed some of that to the digital offers that are coming out. But I've also seen the data usage growth actually slowed quite considerably, I mean sort of quarter-on-quarter drop in data usage. I just wonder how you think about data allowances, obviously, now. Are they so generous that people don't really care about paying more for more data now? So how confident are you in stabilizing mobile trends, kind of even in the medium term? That's number one. Then the second one is just on the guidance in terms of domestic stabilization in 2021. I mean, I guess, a year ago, you told us it would be 2020. And in the context of Sky launching in broadband and then maybe Iliad as well, how confident should we be in the 2021 guidance as well? And then just one quick follow-up on the data traffic. I was just wondering whether those stats were week-over-week, month-over-month or year-over-year in terms of data usage growth.

I'm trying to understand better the first question, Carola, can you please explain to me? Okay. Let me answer your question. I think I've understood. You were saying, why do you think you could stabilize sales in 2020 with Sky and other issues that are on the market? And I will give you 5 reasons for why I see an improvement in our fixed. The first one is content. And we spent some time on it in the speech, but let me go back on that. Effectively, a year ago, basically, TIMVISION had a large number of clients, but was a platform with what I would call an indistinct character. At the moment, it's the richest content platform in Italy. Now take for a second a comparison between us and the incumbent platform. We both have sports, the same sports, I mean, football. As a matter of fact, we have more sports than they do because we have Eurosport, which has tennis and other -- and is a Discovery product, which is significant, which I don't think the other platform has. Then we have some of their channels. But we don't have their originals. On the other hand, they don't have Disney. They don't have Amazon. Now is that richer, the incumbent originals or Disney and Amazon? We will let the customers decide. And obviously, a platform success is made of 3 components: One is content and we have it; one is the customer experience. We have to make sure that this is superior and the best possible; and the third one is promotion. You have to make sure that people are aware that you have the best content. So we will launch Disney, as you know, in Italy as in many other countries in a few days. We think that's -- I mean, it's definitely a very powerful platform. We have a very powerful content. And we think that will help attract new customers and stabilizing existing one. The second is that we are going to open the cabinets in the wide areas that gives more than 1 million of new customers that we will not be able to access so far. And that's a positive basin where we can get new customers to move to our network. The third one is FWA. FWA is something that we wrongly overlooked. And by we, I should not only mention TIM, but I should mention all the more established operators, like, including our friends at Wind, at Vodafone, at Fastweb, that has recently discovered the beauty of mobile. Basically, we all overlooked FWA. And that's another 1.4 million customers, I think, that are available there, which were not touched. Another aspect, which is quite important in convergence, convergence is something, again, it should be the incumbent play. We did not have the systems to play it properly until late this year. And the fifth one, the fifth reason has more to do with a general observation on the Italian communication market. As you probably -- I'm sure you know there is 40% of Italian is calculated to be non-mobile-only customers. I think this situation will make many -- many reconsider about the importance of having a fixed line and to be able to work from home, to be able to watch content, to do streaming. So I think there's going to be -- these are basically the elements by which we think we're going to slow down and eventually stop the line losses on the fixed. I think you had also another question, which was Carola? Giovanni will take it.

So yes. If I understood correctly your question, it was related to Q3, Q4 '19. There is seasonality in mobile user data where you have the Q3, the summer period has a higher period of utilization of data, and this is the driver of the difference you were highlighting. The second question was related about quarter on same quarter the previous year comparison. Two factors to be highlighted in the fourth quarter '19. As we highlighted in the presentation, we decreased the number of value-added services that we were selling to the network for many reasons. And this has an impact of 1.4% in terms of decrease. The other question was related to revenues, mobile revenues only in the third quarter and fourth quarter compared to the previous quarters of the previous year, where if you recall, in fourth quarter, then we readjusted the number for the calculation of prepaid revenues. And so the comparison now works on 2 different levels of customer base.

And then on the data usage in the last week or so, you quoted those 70% on the 10% numbers. Are they year-on-year, week-on-week, month-on-month?

No, it's basically yesterday versus 2 weeks before.

Next question comes from Mr. Mathieu Robilliard from Barclays.

First, I had a question related to COVID-19 impact. I mean, you give a few elements with regards to the impact on demand, and what may happen. My question was around supply. And more specifically, can that impact your ability to invest in the network, maintain the network? Do you have enough handsets inventories? Basically, the question depends on how long this disruption can last. But I guess, if you could give us a little bit of color in terms of what could be a time frame under which you would see an impact if the disruption continues? And then I have a second question for Pietro, with regards to Brazil. So in terms of the revenue drivers, you highlighted to simplify 3 elements: ARPU in mobile, volume in residential broadband and new B2B opportunities. I was wondering if you could give a sense of the relative weights in terms of the contribution to growth. And also, what kind of macro scenario you were basing those assumptions on because as we saw in '19, mobile in Brazil is quite sensitive to the macro.

Yes, I'll take the first one. Obviously, we'll refer to Pietro for your second question. So you're asking what's the impact on our ability to offer. At the moment, we have no issues, including handsets. In a sense that, at the moment, the issue is -- the opposite is to make sure that customers do go into the shops. So there has been a significant slowdown in traffic into retail, any kind of retail, but food and pharmacies over the last few days. So in merchandise are not prevented from going anywhere, by the way. Having said that, I think that we're going to find is more some issues of doing the upgrades, the new sites and so on. Because in certain areas, it's more complicated to go at the moment, and because we're giving full attention to make sure that there are no -- that everything is up and running perfectly. And whenever we see a need for increasing capacity anywhere, we fix it immediately. So you might find that the investments -- and I'm not referring only to telecom, to entire sector, and I guess, to a much larger extent, an entire company, will be slowing down because priorities are changing in this very week. Now it's less than a week that we are -- and I think we are the first large company reporting to investors in this environment. So it's still a bit early to see. But I don't expect any issue in making sure. And in fact, I'm glad to say that our stress tests are working absolutely fine, so I don't expect any issues. I said before, let's see how long it lasts. But we are taking steps. And unfortunately, what's happening is also that in certain areas we have been able to accelerate things, now we're discussing with the authorities to speed up certain permits and other things that make sure that we can offer our activity more expeditiously. But the short answer is, I don't see a problem. And Pietro rather.

Ok. Thank you, Mathieu. First of all, let's discuss about macro. In our plan and assumption, we had a GDP growth for 2020 that is 2%. Now it's too early to understand that as it has happened in the last year, it will be lower. Also because, as you can imagine, due to the problem of coronavirus, there's a global issue, and so we have to wait some more time to understand better. Related to the exchange rate, for sure, we could have some impact, but not related to the issue of coronavirus but because the increase of the value of the dollar will be reflected on the end-user price for the asset. So we experienced already in January and February, a slowdown in the sales due to the increase of the price of the uncertain. Related to the plan, you asked us the mix and the contribution of the different area to the revenue growth. About mobile, that for sure we'll grow single -- low single digit. We are discussing about ARPU and volume. As we promised, we were back in the last quarter to positive net debt, and we are experiencing already in January, February, positive net debt. So we are back to positive net debt, but not at the same speed of the past. Because as we declared, we don't a see big growth rate in terms of volume. While we are continuing to grow in terms of ARPU, also because we already had, in part, by the repricing that we are putting in place has happened every year. We started in February, with our approach that is more for more, that means that we give to the customer more data in front of the price increase. Related to the peaks at the ultrabroadband, the growth will be double digit. This year, we will grow from 25 city to 40 city, and it will allow us to have a contribution of the ultrabroadband to our growth that this year was 25% of the growth of revenue and the next year will increase. Here, just to highlight that the opportunity that we compare with this process that we started, the team will be closed by the end of the year. Could the possibility to have a new bankhold to increase the coverage, could then pass to further accelerate the coverage and the growth rate of the revenues. But this is something that, as we stated, is not included in the plan. Last but not least is the IoT business. For the moment, the IoT business is not contributing in a huge amount. But if we have to define what can be -- can have TIM in the mid and long run, for sure, IoT is one of the key elements. Yes, it was announced that we signed a deal with one of the most important player in the agriculture business, and we are the leader in Brazil for IoT services in this field. Let's remember to everybody that in Brazil, the agriculture business is the -- not the fastest one in terms of GDP growth. And I think by the middle of that, we'll be able to announce also an important deal with a main car manufacturer that we use still with an exclusivity agreement for their car-connected services. Did I answer to your question, Mathieu?

Absolutely.

I think, operator, we have time for the last 2 questions, please.

Next question comes from Mr. Jerry Dellis from Jefferies.

My first question has to do with INWIT. You've obviously structured the transaction with Vodafone so that you end up with a joint control situation. And my question is how TI intends to leverage that joint control, and how through the joint control you intend to manage the operating decisions that INWIT might make, particularly in regards to the conditions for accepting new third-party tenants onto sites? And perhaps, in short, do you think that the remedy of passive access to 4,000 sites represents the true extent of sites that will be available to new third-party tenants? Or would you anticipate availability to go well beyond that, please? Second question has to do with dividend policy. Obviously, Telecom Italia is still relatively highly levered to 3.2x or so on an IFRS 16 basis. And I suppose there is some forecast risk around your EBITDA guidance. There is some concern, obviously, in the market about refinancing risk. And as I look at it, 25% of your bond debt has to be refinanced by the end of the 3-year plan. So what was sort of in your mind then when you decided to return to an ordinary dividend with last night's guidance? Why was it that you felt that, that was particularly important to instigate a dividend at this early stage, given the potential refinancing risk that might lie ahead? And then finally, very briefly, please. You mentioned earlier, it was the virus situation that some enterprise customers are calling you up and asking perhaps for the installation of private networks, and perhaps collaboration tools to operate on those private networks. So the question is how quickly does that really translate into revenues? Is this something that, in reality, it takes a long time to set up. So might it really be that, looking forward, to perhaps enterprise customers view Telecom Italia is less of a core source of cost saving and more critical infrastructure, or is it really something that's translating into revenues in the here and now?

Okay. So you made 3 questions. We have time for two. So I will answer yours and also you -- then the next guy. Sorry. Okay. So the first question was about INWIT. How do we leverage control? Well, basically, as you know, we compete fiercely with Vodafone. We'd like to think we beat them all the time. They probably think the same. But there is something we have in common. Vodafone and ourself have a similar approach to quality of network. And in fact, again, I think that we have the best quality. My colleague, Aldo Bisio, wrongly thinks the same, I mean, that they have it. But we can work together because we have the same approach to making sure that our customers have a high quality network. So in this respect, we have joint control. It means that we have set up there also the gains and we will follow. With regards to our remedies, I should be bit***** about, as usual, that the authorities have given us a very bad deal and so on and so forth. But I think they have been fair. I won't complain. I think it's a fair deal. The good thing is that they've given us the active sharing, which basically means we do have more space. So it's good for INWIT to have the ability to ramp it out. And so I don't -- I frankly, we expected that to happen to a certain extent. So I wasn't surprised about the request. And we think it's going to be very fine for INWIT. And as we are still very relevant shareholders, the company does well, we do well. So I think INWIT is a very significant success story. The company -- actually the remedies are in favor of INWIT, obviously, could be considered detrimental for each shareholders. But as I said, I have no complaints. As usual, there was a negotiation and so on. But I think it's a win-win for everybody, especially for the market. So happy about what happened. You're basically asking, why did we pay a dividend? Well, I guess -- and by the way, for everybody that remembers the call that we had a year ago, this is -- in this call, you did not make a single question about governance. I'm becoming disappointed. Basically means there is not a problem there anymore. With regard to dividends, that's another step toward being a normal company, as I said, in the past. We generated EUR 1.7 billion, basically organic. And the dividend, it's just north of EUR 100 million. So it's a relatively small amount. And all the dividends that we might envisage to give in the plan are not even using the entire extra guidance. So I don't see a problem with deleveraging. We will continue to deleverage. At the same time, we feel it was appropriate to give a signal to our shareholders that we have normalized others back to company life. And as I said, at the moment, if you look at other operators, their yield is much higher. Yes, we recognize that, and we do know that we cannot correct that in the short end, but step-by-step we want to get there. And we hope that as we're not discussing about governance, next year, we'll not discuss why are we giving a dividend. But the other aspect that you were discussing is about refinancing. We have a vast liquidity. As of year-end, we had about EUR 4 billion. And we had a EUR 5 million committed -- EUR 5 billion committed credit lines. We have a lot of access to financing company. We are deleveraging. And honestly, I find difficult to foresee any difficulty in refinancing, whatever, assuming we need to refinance because most likely, as we're reducing debt we repaid full stock. I think we have time for one more question, Carola.

Yes, the last question, please. Thank you very much.

The last question comes from Ms. Charlotte Perfect from Arete Research. I'm sorry, I think Ms. Perfect, the line dropped. Would you like to take another question or...

Yes, please. Last question, please.

We'll take Mr. Jakob Bluestone from Crédit Suisse.

I just had a short question, just sort of linked to the COVID-19 impact. I guess, one of the things that will be particularly impacted will be visitor roaming. So can you maybe just remind us what is your exposure to wholesale roaming, and how much revenue do you generate from that? And then on the flip side as well, maybe give us a little bit of a sense as well, what your sort of wholesale roaming costs are as well. I appreciate they've, obviously, come down quite a long way since the roaming changes, but presumably it's still fairly meaningful from a revenue point of view.

Yes, the impact is, I would say, immaterial. The revenues related to what you mentioned are around 1%. And obviously, they are backed by the roaming cost and I don't think that they could have any impact going forward on our accounts. Okay. I think we are done. Thank you very much for your attention. We hope it was not too long, with the presentation and all the questions we took, and we hope it was informative. As we said at the beginning, we are going through an unprecedented period of epidemic situation in Italy and in the world. So clearly, this will affect our lives and our business. And as long as it affects Telecom Italia, we'll try to keep you posted about any evolution and we'll have opportunity then to follow-up. This year, we're not going to have a physical road show because, unsurprisingly, it is not an enormous amount of people keen on having visitor from Italy these days. And so we'll be ready, however, in fact, how regulations so that we should not move around. So what we'll do is that we will have video conference with whomever would like to talk, and it's going to be also video conferences group already arranged. So whoever is interested in continuing our discussion on a one-to-one basis, on a group basis, please contact our Investor Relations department. Thank you very much for your attention.

Yes, indeed, thank you very much from my side as well, and you all know our numbers. So we are around the whole day. Thank you. Bye.

Ladies and gentlemen, the conference is over. Thank you for calling.