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

Ladies and gentlemen, good morning, and welcome to TIM's Second Quarter First Half 2026 Results Presentation. Paolo Lesbo, Head of Investor Relations, will introduce the event.

Good morning, ladies and gentlemen, and thank you for joining TIM's Second Quarter and First Half 2026 results presentation. I'm pleased to be here with the CEO, Pietro Labriola; the CFO, Piergiorgio Peluso; and the rest of the management team. Today, we will walk you through the key highlights of the quarter and review the main operating and financial results. We will also provide an overview of the high-level assumptions underlying the valuation analysis supporting the board assessment in the context of the fairness opinion process. As usual, the presentation will be followed by a Q&A session. Before we begin, please refer to the safe harbor statement included in the presentation which provides details on the reporting perimeters. Consistent with our Q1 earnings call, today's session is also supported by AI, leveraging the digital twins of our CEO and CFO. This solution is part of the broader set of initiatives through which TIM is leveraging artificial intelligence to enhance internal processes, improve operational efficiency and further strengthen the quality of our communication with stakeholders. With that, let me hand over to Pietro for the presentation. Pietro, the floor is yours.

Thank you, Paolo, and good morning, everyone. Let's start with Slide 3, which summarizes the key achievements of the quarter. If I had to describe this quarter in one word, it would be execution. Once again, it has made the difference. Quarter after quarter, we have continued to deliver on the commitments we made to the market, strengthening both our operational performance and our financial profile. This quarter was marked by solid execution across 3 key dimensions: operating performance, capital structure and shareholder value creation. Starting with operating performance, our second quarter results were fully in line with expectations, confirming the resilience of our business and most importantly, the consistency of our execution across all business segments. Based on these results, we are confirming full year 2026 guidance. This reflects the confidence we have built through disciplined execution and the visibility we have on the trajectory of our business for the remainder of the year. Moving to capital structure. During the quarter, we successfully completed 2 important initiatives, the conversion of saving shares and the reverse stock split. These were not stand-alone actions. They are part of a broader journey started 5 years ago aimed at simplifying our equity story, enhancing the efficiency of our capital structure and making TIM easier to understand easier to value and increasingly attractive for investors. Finally, on shareholder value creation. The quarter delivered several tangible milestones. First, we have fully collected the reimbursement of the 1998 concession fee, a significant achievement that further strengthens our financial position. Second, we successfully completed the first tranche of the share buyback program launched in June, demonstrating our disciplined approach to capital allocation. Third, our strategic progress and financial discipline continue to be recognized externally through the recent credit rating upgrade, confirming the growing confidence in TIM's financial solidity. Lastly, the disposal of Sparkle continues to progress, following EU clearance, we are awaiting authorization from the U.S. government, and we now expect to close the transaction in Q3. Finally, after the end of the reporting period, our Board approved the transaction with [ Poste Italiane ]. Subject to the completion of the relevant conditions, the Board believes this represents another important step in our strategy to create sustainable long-term value for all shareholders while further strengthening team's industrial positioning. We'll come back to this topic later in the presentation. Overall, this quarter confirms 1 key message. We continue to execute with discipline. We continue to deliver on our commitments, and we continue to build long-term value for all our stakeholders. Let's now look at our first half financial performance. The key message of this slide is very simple. Our results include a temporary headwind related to the MVNO transition. Once this effect is isolated, the underlying performance of the group is stronger across virtually all our key financial metrics. This is why -- throughout this presentation, we will continue to distinguish between reported and underlying performance. As you know, the MVNO transition reduced first half revenues by around EUR 80 million and EBITDA after lease by approximately EUR 84 million compared to last year. This is a temporary phasing effect rather than a reflection of the underlying health of the business. Starting from the group. Revenues increased by 2.0% year-on-year, reaching EUR 6.8 billion. Excluding the MVNO effect, revenue growth would have been 3.3% supported by continued commercial momentum across both domestic and Brazil. EBITDA after lease increased by 1.2% to EUR 1.8 billion. Adjusting for the MVNO impact underlying EBITDA after lease grew by 6.3%. To me, this is probably the most important number on this slide. It demonstrates that our operating leverage continues to improve and that the actions we have taken on pricing, commercial discipline, portfolio quality and cost transformation are translating into stronger profitability. Capital allocation also remains disciplined. CapEx amounted to EUR 0.9 billion, representing 12.6% of revenues, fully consistent with the investment framework we have communicated to the market. Cash generation also remained solid. Equity free cash flow reached EUR 0.7 billion in the first half, supported by the collection of the '98 concession fee reimbursement. Piergiorgio will come back to cash flow in greater detail later in the presentation. Net debt after lease stood at EUR 7.3 billion, corresponding to a leverage ratio of 1.4x, confirming the continued strength and stability of our balance sheet. Looking at our operating geographies both Italy and Brazil contributed positively. In domestic, revenues were broadly stable, but excluding the MVNO transition, they increased by around 2% and confirming the resilience of our commercial performance despite a still competitive market environment. Domestic EBITDA after lease grew by 7.1%, reflecting continued commercial discipline, efficiency actions and structurally improving cost base. Brazil once again delivered an excellent performance with revenue growth of 6% and EBITDA after lease growth of 5.5% and continued strong cash generation, confirming its role as one of the group's main engines of profitable growth. Overall, I believe these results confirm that the underlying business continues to accelerate, and this gives us the confidence to confirm our full year guidance. Let's now move to Slide 5. I believe this chart provides one of the clearest indications of how our business is evolving. The message is not that this quarter was particularly strong. The message is that quarter after quarter, we continue to see a tangible improvement in our operating performance. Looking first at the headline figures. Group revenues accelerated from 1.4% growth in the first quarter to 2.7% in the second quarter. Even more importantly, EBITDA after lease moved from a 2.7% decline in Q1 to a 4.5% increase, confirming a meaningful improvement in profitability. The same trend is visible in our domestic business. Revenues returned to growth during the second quarter, while EBITDA after lease showed a significant recovery, reflecting the benefits of our commercial strategy and the continued focus on operational efficiency. If we exclude the temporary impact of the MVNO transition, the underlying trends become even clearer. Underlying group revenues grew by 3.5% in the second quarter while domestic revenues increased by 2.4%. On profitability, underlying group EBITDA after lease accelerated from 4.5% growth in Q1 to more than 9% in Q2, while domestic EBITDA after lease reached 8.1%. At the same time, we remain fully aware that the second half of the year will require the same level of discipline and execution that has characterized the first 6 months. The environment remains competitive, and there is still work to do to deliver on all our objectives. However, the progress achieved so far reinforces our confidence in the guidance. Let me now turn to our consumer business. The key message of this slide is straightforward. Our consumer strategy has remained consistent over the last few years. We continue to prioritize value over volume, focusing on customer quality, disciplined pricing and long-term profitability rather than pursuing an economic market share. Again, the top line performance in the first half was mainly affected by the temporary phasing of MVNO revenues. Excluding this effect, consumer revenues were broadly stable year-on-year, confirming the resilience of our retail business despite a market that remains highly competitive. This resilience is the result of consistent execution. We have continued to progress with our repricing program, which has now reached around 3.6 million fixed lines and 2.5 million mobile lines. At the same time, we recently launched TIM Priority representing the next step in the evolution of our commercial proposition. Our objective is not simply to provide connectivity but to strengthen customer relationships through higher value services, increasing customer lifetime value over time. Fixed ARPU increased by around 2% year-on-year, reaching EUR 33 per month, confirming our ability to monetize our customer base through pricing discipline, service quality and migration towards higher-value connectivity. In mobile, ARPU remained broadly stable at EUR 10.7 per month. Into this market, protecting value is more important than chasing volume. This has been a conscious choice throughout our transformation. We remain disciplined in our commercial approach focusing on the quality and profitability of our customer base rather than pursuing an economic market share. Looking at our commercial KPIs, fixed net additions slightly worsened with respect to the previous quarter. However, this was also influenced by the service quality issues experienced by our main wholesale fiber provider, which we will discuss later in the presentation. In mobile, churn remained stable at 1.5%, while fixed churn increased only marginally to 1.3%, demonstrating the resilience of our customer base despite continued competitive pressure. Finally, TIM Vision continued to perform well with revenues growing 7.1% year-on-year, confirming the strength of our content proposition ahead of the new football season. Overall, I believe this slide confirms that our consumer business is becoming increasingly resilient. Temporary factors may affect headline revenues from one quarter to another but the underlying fundamentals continue to improve. Let me now turn to TIM Enterprise. The key message of this slide is that TIM Enterprise continues to deliver consistent growth while progressively improving the quality of its business. This quarter marks our 16th consecutive quarter of growth, with both total revenues and service revenues increasing at a high single-digit pace. This is not the result of one-off factors. It reflects the consistent execution of the strategy we have been pursuing over the last few years. Connectivity remains our foundation, but value creation increasingly comes from the services that run on top of that connectivity. This is exactly the direction we have been pursuing, combining our network assets with cloud, cybersecurity, IoT and digital platforms to support our customers throughout their digital transformation. Cloud once again confirmed its role as the main growth engine. Cloud revenues increased by 18.1% year-on-year and now account for 45% of Enterprise service revenues. Connectivity revenues declined by 1.2% year-on-year. This development is fully consistent with our strategy. Our objective is not to maximize traditional connectivity revenues, but to increase the weight of higher-value digital services within our portfolio. As we have communicated, by 2027, we expect IT services to represent more than 70% of enterprise revenues, further improving the quality and profitability of the business. Other IT services declined by 4.7% year-on-year, mainly reflecting our ongoing portfolio optimization in businesses with low profitability. We continue to focus our investments and commercial efforts on those areas where we have stronger competitive advantages and higher long-term growth potential. The natural strategic hub also continued to deliver a very strong performance with revenues increasing by 50% year-on-year. This confirms the growing importance of digital sovereignty for both public institutions and large enterprises and reinforces TIM's leadership in one of the most strategic areas of Italy's digital transformation. Let me now turn to Brazil. Once again, TIM Brazil delivered a quarter of consistent and profitable growth. The business continues to perform well, supported by disciplined commercial execution, strong operational performance and healthy cash generation. However, our ambition goes beyond preserving today's performance. We have to recognize that the Brazilian market is becoming progressively more mature. This is not a concern. It is the natural evolution of a market that has already gone through a significant phase of consolidation and value creation. For this reason, our focus is increasingly shifting towards the next phase of growth. Going forward, sustaining this strong performance will increasingly depend on our ability to accelerate new revenue streams, expand our digital service portfolio and further differentiate our business beyond traditional mobile connectivity. Our objective is to build the next phase of growth by combining the strength of our core business with new sources of value creation and in line with this strategy in the quarter, we closed the acquisition of [ iSystems ] and expanded our B2B value proposition with the integration of [indiscernible]. As I often say, execution is never a destination. It is a continuous process of anticipating change before the market requires it. With that, I will now hand over to Piergiorgio for a more detailed review of the financial results.

Thank you, Pietro, and good morning, everyone. Let me start with a few comments on group OpEx and CapEx. In the second quarter, group OpEx increased by 1.9% or EUR 44 million year-on-year. Around 65% of this increase was attributable to Brazil where OpEx rose by 4.9% year-on-year driven by inflation running at plus 4.5% over the last 12 months and by higher content costs. In Italy, OpEx growth was limited at plus 1.0% year-on-year and was entirely related to revenue-driven components, mainly higher cost of goods sold associated with ICT revenues growth. This was partly offset by lower labor and industrial costs, including savings in network operations. G&A and IT costs increased mainly reflecting higher IT-related expenses, while OpEx related to the [ FiberCop MSA ] declined by 12% year-on-year and accounted for around 20% of domestic OpEx. Given the current geopolitical environment, let me also reassure you that our energy costs remain well under control. In Italy, we have hedged around 80% of our expected energy consumption for 2026 and approximately 50% for 2027, providing good visibility and protection against potential volatility. Turning to CapEx. Group CapEx amounted to EUR 0.4 billion in the quarter, equal to 12.7% of revenues. Domestic CapEx remained consistent with our full year target with an acceleration in selected infrastructure areas, including mobile, AP backbone and data centers. In Brazil, CapEx increased slightly year-on-year, in line with the continued development of the business. Overall, OpEx trends remain under control with cost increases mainly linked to revenue growth in Brazil's commercial momentum, while CapEx continues to be managed with discipline and in line with our strategic priorities. Let's now move to cash flow and debt. In the second quarter, cash flow was positively impacted by the collection of the 1998 concession fee for an amount just below EUR 1.0 billion. This resulted in a positive working capital contribution of EUR 660 million. Excluding this effect, working capital absorption would have been $313 million, slightly lower year-on-year and consistent with the usual seasonality of the second quarter. Financial charges amounted to EUR 98 million, with a significant reduction mainly due to the optimization initiatives implemented over past quarters and to the positive one-off interest component related to the concession fee. Cash taxes were mainly related to Brazil. As a result, equity free cash flow was positive by more than EUR 1.0 billion in the quarter. Below equity free cash flow, we recorded EUR 61 million of dividends paid to TIM Brazil minorities, EUR 692 million related to savings share conversion, EUR 240 million of cash impact for the [ iSystems ] acquisition in Brazil and EUR 48 million related to the share buyback program. Net debt after lease stood at EUR 7.3 billion, broadly stable versus the previous quarter with leverage at 1.94x. Overall, the quarter confirms solid cash generation, supported by the collection of the 1998 concession fee, continued financial discipline and a stable leverage profile. With that, I will now hand back to Pietro.

Thank you, Piergiorgio. Let me conclude by looking beyond the next quarter and sharing how we see the next phase of our journey. The first half has confirmed that our transformation delivers tangible results. More importantly, it has reinforced our confidence that we have built the right platform for the next phase of value creation. Over the next 18 months, our priority is clear. To unlock the full potential of the business we have reshaped over the past few years. We see several structural opportunities supporting this next phase. The first is our customer platform. We have significantly simplified the group and strengthen our operating model. The next step is to leverage that platform to deepen customer relationships, increased customer lifetime value and generate additional growth opportunities across our businesses. The second is the progressive evolution of the Italian mobile market, a more rational environment supports sustainable value creation for the entire industry. As I've said many times, protecting value is far more important than chasing volumes and any evolution in that direction is fully consistent with our strategy. A third opportunity comes from digital sovereignty, demand for trusted cloud, cybersecurity and strategic digital infrastructure continues to grow, and we believe TIM is uniquely positioned to play a leading role in supporting Italy's digital transformation. At the same time, there are external factors that require attention. The service quality issues experienced by our main [ OC ] fiber provider have affected commercial momentum in some areas and restoring the expected level of performance across the ecosystem remains an important priority. We also continue to monitor the impact of the [ VAT ] split payment mechanism and the evolution of energy costs in Italy. These are relevant topics, but they do not redefine our strategy. They may influence the timing of execution in specific areas, but they do not change our priorities or the long-term fundamentals of the business. If the last few years have taught us anything, it is that value creation is not about operating in ideal conditions. It is about executing consistently adapting to a changing environment and making disciplined decisions over time. That is exactly how we have managed TIM's transformation so far and that is exactly how we intend to unlock the next phase of growth and value creation for our shareholders. Let me turn to our stand-alone guidance, which we are confirming today. The key message is consistency. The projections presented here are fully aligned with the strategic and financial ambitions. We have communicated to the market over the past several years. They are based on the updated 2026 to 2030 business plans submitted to the Board in July and reflect a disciplined and realistic set of assumptions. Our delivery gives us confidence in this trajectory. In 2025, we increased revenues and EBITDA after lease, fully in line with the guidance provided, both the domestic and Brazil level. We reduced CapEx intensity to below 14% of revenues, generated around EUR 700 million of equity free cash flow after lease and improved leverage to 1.86x. This shows that TIM has already entered a phase of greater financial discipline stronger cash generation and improved balance sheet flexibility. Looking ahead, we continue to focus on profitable growth, cash generation and disciplined capital allocation, even if we remain mindful of the external environment, and of the challenges we discussed earlier. For 2026, we are targeting group revenue growth of 2% to 3%, group EBITDA after lease growth of 5% to 6% and group CapEx intensity below 14% of revenues. This should translate into approximately EUR 1.8 billion of equity free cash flow after lease. Looking at our 2027 targets, this implied group revenue growth of around 3% CAGR over the 2024 to 2027 period and group EBITDA after lease growth of 6% to 7% CAGR over the same time frame, with group CapEx intensity declining further to around 13% of revenues. Even after funding growth and transformation initiatives, we expect equity free cash flow after lease of around EUR 1.1 billion in 2027, while keeping leverage comfortably below our committed ceiling of 1.7x, even including the impact of the [ Systems ] acquisition and the extension of the split payment that regime in Italy. So overall, our stand-alone plan confirms the fundamental improvement in TIM's financial profile. Before concluding, let me spend a moment on the assumptions underpinning our stand-alone plan. As you know, the Board expressed a positive view on poster software based on a detailed assessment of the stand-alone business plan. For 2026 and 2027, that plan is fully consistent with the guidance we have already communicated to the market. For the period from 2020 to 2030 the plan is based on a number of clearly identified assumptions, which are summarized on this slide. The first point I would like to emphasize is that our plan is built on a disciplined and realistic set of assumptions. Where there is uncertainty, we have not considered potential upsides that are not under our control in line with accounting rules and Italian market regulation. This makes the plan more credible, more robust and, importantly, more achievable. Starting with towers, our assumptions fully reflect the confirmed exit from INWIT. We assume that the migration from INWIT will begin from 2030, subject to the outcome of the ongoing legal proceedings with a progressive migration towards the TIM and Fastweb joint venture and other operators. On spectrum, we assume the renewal of the current licenses in 2029 with the related cash outflows starting from that year. The final renewal mechanism will, as usual, depend on the decisions of the Italian government. On NetCo, we assume no changes to the current MSA pricing framework, a positive outcome of the ongoing fiber co litigation and no strategic combination between FiberCop and Open Fiber. To be clear, our plan does not factor in possible revisions of the MSC tariff on the negative, revisions or potential earn-out mechanisms on the positive. Regarding the partnership with Poste, our assumptions are unchanged versus the disclosure made in February. We continue to expect meaningful synergies with benefits progressively materializing from 2020 while maintaining the previously communicated impact on service revenues, particularly on MVNO amounting to approximately EUR 100 million per year and EBITDA amounting to approximately EUR 50 million per year. The plan also assumes no market consolidation in Italy. Therefore, it does not include any potential benefits from future industry rationalization. Finally, our capital allocation plan remains unchanged. We continue to target distribution to shareholders of approximately 70% of equity free cash flow after lease and after dividends to TIM Brazil minority shareholders. So overall, the stand-alone plan is built on assumptions that are prudent, consistent and credible. It doesn't depend on external upside to deliver the targets. And this is precisely what gives us confidence in the plan while preserving further value creation potential if some of these factors evolve more favorably over time. Before concluding, let me take a step back. Today, TIM is a very different company from the one we started managing a few years ago. Over this period, we have taken difficult decisions. We have simplified the group strengthen the balance sheet, we ship the portfolio and improve the quality of our businesses. Most importantly, we have consistently executed the strategy we presented to the market. The turnaround of consumer, the development of TIM Enterprise and the separation of NetCo were not isolated initiatives. They were all part of the same strategic vision. Looking beyond 2026, our priorities are clear. We will continue to expand our value proposition into adjacent sectors such as defense and mission-critical services. We will embed AI across our products and operating model, addressing the next generation of connectivity use cases, including wearables, connected vehicles and IoT and leveraging our leadership position in data centers to support Italy's growing digital infrastructure needs. These are not new strategic directions. They are the natural evolution of the transformation we have been executing over the past 5 years. We have built stronger foundations. The next phase is about accelerating growth, capturing new opportunities and continuing to create sustainable value for our shareholders by executing with the same discipline while progressively unlocking new sources of growth and value creation. Before opening the floor to your questions, let me conclude with a final thought. As you know, the Board has carefully evaluated process offer with the support of independent financial advisers. It's positive recommendation was based on 2 complementary considerations. The first is the financial fairness of the offer as confirmed by the independent opinions. The second is industrial rationale. Bringing together teams assets and capabilities with process digital platform would create meaningful strategic opportunities. And importantly, would reduce the execution risk associated with delivering our long-term objectives. At the same time, the Board reached its conclusion starting from a stand-alone business plan that confirm our guidance for 2026 and 2027 and is supported by a prudent and transparent set of assumptions for the years thereafter, which we have shared with you today. This means that the Board's assessment reflects confidence in TIM's ability to continue creating value also as a stand-alone company. Whether the company continues on a stand-alone basis, or as part of the combination with Poste, the strategic direction remains the same. The difference is not where we want to go. The difference is the speed and the execution profile with which we can get there. Thank you for your attention. We are now happy to take your questions.

[Operator Instructions]. The first question comes from Mr. [ Joshua Mills ] at [ Edson ].

I hope you can hear me. I had a couple of questions on the fixed line market. And then I also just wanted to discuss the ongoing INWIT and FiberCop MSA negotiations. So -- on the fixed line market, it does look like things got a bit tough for this quarter and you're explicitly calling out the deteriorating service quality of FiberCop. Could you give us some practical examples of what that deterioration looks like? And then any sense of when things will improve and when that would drop through to your better trends as well would be helpful? Or should we expect that to remain weak in the second half of the year? And then secondly, maybe we can -- the FiberCop and the war MSA negotiations together. What exactly are you looking for out of the FiberCop litigation? Is it cheaper pricing? Is it a network access or some other terms? And then on INWIT, can you just give us an update on where you are at the moment with those discussions?

Thank you, [indiscernible]. About the first question related to what you mentioned as a deterioration in the market. I will leave to Andrea to elaborate. I shouldn't define a deterioration in the market. It is clear that we are not leaning in a wonderful word, but it was never like that. But the things are proceeding. But I will leave Andrea to elaborate, and then I will answer to you about the net fiber company.

Thank you, Pietro. Thank you, Josh, for the question. Again, we don't really see a deterioration in the market. We had variance year-over-year due to several factors. The first one, which we already mentioned in the previous call is that this year, we pushed forward. So we actually pushed earlier the plan of price up. Hence, we also saw a little more disconnection related to the repricing we also had a partial effect of legacy line disconnection, especially voice line, which is physiological because the average age of our voice customer is very high around -- or actually over 84 years old. So that base is, let me say, physiologically disconnecting. And the third factor is actually some deterioration in performance, but a slight deterioration in performance in delivery and assurance by the network provider, which we are working on with the network provider, and we are hopeful and confident that this will be addressed. It had an impact, but we don't see it as a structural factor. The policy side on the fixed market is that we see some rationality in pricing. We continue to upsell, and you see it also in the ARPU trend, both with price up and with[ Envision ] and hence, the value increase is somehow compensating some loss of lines. We also are confident, of course, that in future, we may have an acceleration due to the possible combination with Poste on the fixed line.

Thank you, Andrea. To add something to Andrea, what today is if I have to define the main threat on the fixed consumer market, it could come from the energy provider, because they are starting from a position in which on their own business, they have a huge level of margin that, in some way, transfer to defend that walled garden on the telecommunication. But as Andrea was mentioning before, in this way, the potential deal with Poste is a kind of insurance on that because we could be able to compete with the same level of weapons. When we move on FiberCop and INWIT, the first point is that we are experiencing a deterioration in the level of the quality of delivery and assurance. This is not a company-specific issue related to TIM, but you can ask to the national watchdog or you can add to all our competitors because everybody are experiencing this kind of element. More on the traditional services, FTTC and PSTN line, less on FTTH. This is something that we don't want because it tarts our customer base. And the issue and we don't work to play with penalties toward the supplier we are a service provider, and we would like to have our customers to enjoy the opportunity coming from the ultra broadband. But again, this is something that is not yet structural, but must be addressed very soon. When we talk about INWIT, I think that your question is related to what is appearing on the press that -- we are in talk coming with -- from the legal end point of view. Just to be very clear, it's too early to give any kind of comment on that is a specific procedure that is defined in the litigation process. So I have nothing to comment about that. I hope that was clear, Joshua.

The next question comes from Mr. Mathieu Robilliard at Barclays.

I had 2 questions. The first one was about your decision not to give an update on your midterm guidance that was planned. And I wanted to understand if that decision was due to legal restrictions or whether it was a decision by the Board, and in that case, what motivated that decision? The second question was about broadband ARPU, still continues to grow nicely, but we do note a slowdown compared to previous quarters. It doesn't seem to be an issue with phasing of price increases because you highlighted earlier, that you actually did them early this year. So I was wondering if it was a reflection of spin down or a deterioration in the competitive environment. And lastly, if I may, the spectrum consultation that has been initiated by the Italian regulator. Is that in line in terms of what the proposals are with what you were expecting and why I understand correctly that there may be some MVNO or wholesale obligation for MNOs. Thank you very much.

Thank you, Matthias. I will leave then to Andrea to elaborate on the broadband ARPU. Let's start from spectrum regulation. What is important is that, yes, they -- was issued just a press release. So elaborate on a press release, I think that is too much. From the reading, we are quite positive on what is happening because it's going in the direction that we were asking in some way because we are asking to do something that it was less driven on a lump sum at the beginning and more on investment commitment. From the press release, it is well defined. Then there are some indication that you were asking related to commitment towards the MVNO or other player. This is something that usually happen every time that we have a discussion on the frequencies, but you know better than me. The will -- there is [indiscernible] details. So let's wait the publication of the details to be more precise on that. Coming back to the first point, and I really appreciate your question because we'll help pass to give and to clarify several aspects about our plan. If you remember, our new plan should be happened in September 2027 -- sorry, 2026. At that time, Poste when they started the public tender offer declared that should have updated their own plan for the next years in the middle of July. And based on the request of all the shareholders that would like to take a decision based on an equivalent comparison. We accelerated our plan and we move from September to the beginning of August. And if you remember, the date that we put on that -- for that plan was to try to respect the regulation and the legal time frame because today, the public tender offer in Italy is under a regulation law that gives up to 5 days to in the public tender offer, our Board opinion. Then when Poste accelerated due to the acceleration of the approval, what's happened that had received by [ Consob ], the new deadline for the public tender offer. And we were obliged to follow that, and we couldn't anticipate the plan, but also from a pragmatic standpoint of view, it's also important to understand and to set the expectation. Our plan should have been '26, '27 and '28. In this presentation, we are confirming the guidance of '26 and '27. The '28 can be elaborating in some way because it should be the '27 plus the Poste synergies that we already declared. Our plan should have been '26, '28 and we have a good part of all the information. And then we should put a chart that is quite similar to the chart that we put in the presentation that this chart [ 14 ] giving some ideas about the long-term trends. The long-term trends are well defined because are the potential discontinuity, towers and in the chart 2014, we gave this detail. Spectrum renewal because you are continue to have in our long-term plan the renewal of the frequencies in 2029, we didn't consider any kind of earn-out. About the Poste synergy, we put what we told in February 2026 to the market. We cannot consider market repair inside the plan. Just to be -- frankly speaking, just for a second, let's see me that we are not under a public tender offer. And we come to you with the [ 2026-2020 plan ] and they come with an idea that there will be a market repair and our equity free cash flow will double. I think that you will kill me because I cannot do a plan betting on the [ far ] that something happened. So -- and then the other very important point was the shareholder remuneration, and we confirm the shareholder remuneration. Now if formally, you can tell something in reality, now you have all the elements to do all your evaluation. Then again, exactly as you mentioned, we have not completely hands-free because we have to respect also the legal framework of the public tender offer in Italy. I hope that on this point, I was more clear before to leave to Andrea to elaborate about the broadband ARPU. Everything clear, Mathieu?

Thank you, Pietro.

Andrea?

Thank you, Pietro. Thank you, Mathieu. Regarding the fixed ARPU. So we are continuing to see growth. And as you say, this is a good result given the competitiveness of the market. Here, I have to say that the overall fixed ARPU trend is affected by several factors. So let me explain a little what are the combination of factors that affect the overall ARPU. There is an effect from price up. And as we said, we continue the campaign of price up. There is an effect of upselling new services, in particular in vision that is affecting. And you see also in the chart that [ Invision ] revenues are growing more than 7% year-over-year. There is an effect from spin down. We don't notice a particular increase or spin down in the customer base. But certain -- the market and the difference between front book and back book. So the difference between ARPU and customer base of the customer base back book and the acquisition ARPU is somehow increasing. The more we increase the ARPU of the customer base, the more the distance between ARPU customer base and the front book is affecting in terms of dilution. And in a way, this is the effect of our own success because we upsell the customer and we increase with the price up, but we also increased the distance between front book and backlog. That is where Pietro's comment on consolidation and market repair is so important because the real important thing would be, in future, to have a general increase of the front book that would completely wipe out the dilution that we see in the market. I signal that we see some encouraging rationality sign from some competitors, some removal of promotion, slight increases in the front book offer, but we also see aggressiveness from the energy providers and some other players, especially the new one. So this keeps the front book with a gap to the customer base ARPU and this affects our growth. The other one thing that I want to signal is that we continue to see stability in the which is, frankly speaking, great news because also in the market, we see a positive trend of reduction of volumes. So we continue to see a reduction of portability volume, so the mobile is going, if you want, a little better than the fixed in terms of dilution effect. I hope that has been clear.

The next question comes from Mr. Paul Sidney at Berenberg.

Just 2, please, for me. Pietro, on Italian Mobile, you made it very clear in your remarks that you want to protect value over volume, which I think is great to hear in Italy. But mobile pricing remains far too low in Italy, in my opinion. And I think your opinion as well. But does the recent AGCOM announcement give TIM more confidence to both invest and perhaps raise prices more aggressively going forward? Is this a real positive development that we saw earlier in the week? And secondly, more sort of technical point, the TIM Board obviously recommended the Poste offer based on the prostate share price at the time. But does the Board see any risk that if the prostate share price was to decline materially from here that the offer could be no longer fair for Telecom Italia shareholders. And is there any mechanism to which the Board can revisit the recommendation of the offer. And I appreciate it's quite a technical question, but it would be great to get your comments.

About -- the first question about the Italian mobile market. It's a fact today, we have the lowest price in the world, not in Europe, in the world. This is the reason for which we started to launch TIM priority offer because you cannot think to increase the price without give the customer something more. This is what we did also in Brazil with the more-for-more approach. And it's clear that to have more frequencies to develop 5G stand-alone is also the opportunity to give to the customer for their services and to be able to monetize better our technical network and all the assets that we have. And we suggest you also report that was released a couple of days ago by the [ SME ] where they were trying to explain as everywhere in Europe the move from 4 operators to 3 operator is the only way for a better service to the customer. There are some examples that show that the country where we move from 4 to 3, we're able to increase the level of quality of the service to the customer without a price increase, while the country where we had a nice level of competition has experienced a progressive deterioration of the quality of the service. So again, I think that is very good, what is also the guidelines for the renewal of the frequencies because I think that it will be an important trigger towards the market consolidation. About the last question, the technical component of the offer of Poste. I think that I will leave to Piergiorgio and if you will need it to Agostino to give you all the legal advice, what is important that could be in both direction, what I mean? You could have a deterioration on one side, but you will have also a deterioration on our -- on the other side.

Yes. Okay. Thanks, Pietro and everyone. As in any exchange offer, of course, you have price component in cash and a price component in share. So the fairness are for -- based on the conditions at the date of the issuance of the fairness opinion based on the market conditions prevailing at the time. So the usual methodologies that the advisers have used are the usual one, discounted cash flow, dividend discount, comparable present value of future share price, some of the parts and so on. These, of course, are based on the conditions at that time. So should you have any variation, of course, it depends on the underlying motivation of this deviation. But there is no, let's say, a mechanism like in any exchange offer. So the mechanism is it fixed, the exchange rate has been evaluated at the time and as Pietro was saying, the market risk is going in both directions. And this is the, let's say, the usual way of how the fairness opinion is done. Then, as you said, should you have a material deviation, positive or negative, you need to analyze the underlying element. You cannot have, let's say, a simple answer to your question.

So just to clarify, the evaluation of the Board was made at the time of the launch of the offer and it remains. It's [indiscernible]. We don't -- we cannot revise our fairness opinion depending on the evaluation of the stocks during the tender offer period. So the evaluation [indiscernible] at the moment we launch will stay, and this is the only evaluation done by our Board.

Maybe an additional comment on the mobile market trend and also the possible or, let me say, likely effect of the nature on the frequency. Indeed, we mentioned several times that the nominal price front book price in the mobile market remains aggressive. So if you look at the online on the website, you see that the price of promotions is very low. But as we said several times, the impact on revenue and the sustainability in the market is due to a factor between price and volumes. And the volume of rotation in the mobile market is decreased very materially due to the difficulty of some players, namely [ Iliad ] has much less impact than we used to have because of very evident effect in customer experience. So they have less impact in the market. We believe that the frequency decision can really change the future scenario because this will involve material effect on the difference in quality, and that is why we also launched the premium service.

[indiscernible], quick follow-up. You've been a big advocate of essentially looking at location-based pricing. Is that something that's that you're looking at internally? Maybe it's a little bit early, but I think it's a fascinating topic.

What is happening is that location-based pricing, for example, it's quite complex. It's different if you live in Brazil, where we have more than 26 states and each of them is large like Italy. When you move to Italy today, for example, there is already an issue because when Andrea have to define the price for ultra broadband, the retail price, we do a price that is unique for Italy. But in reality, we have 4 or 5 different prices at the wholesale level because you have the [ Blake ], the commercial rare, the PNR black area of FiberCop. The gray area P&L of Open Fiber and then the white areas. When you talk about all these things, we are not talking about region. We are not seeing, I don't know how much are you familiar with the Italian geography, [indiscernible] towards [ Lombardia ] in the same city, [ Roma ] I can have 5 different wholesale price. And we are not talking north of Rome and south of Rome. In 3 blocks, you can have 2 or 3 different wholesale price. This is something that we have to try to address from an industrial point of view because if we want a more rational market, it's fair that [indiscernible] and infrastructure must have the right remuneration on investment. But you cannot do that without an approach, it's quite similar to the energy one. A certain point, the wholesale cost, if it is increase must be transferred to the customer. Then it's very difficult to do marketing where we have inside the 3 different blocks, 3 different set price because you cannot have the arbitrage on that, okay? So location-based price is quite complex in an environment like the Italian one. Differently, you have to differentiate the service, latency, if you want a better latency, you have to pay for a better latency. I have to remember to everybody that today, the ultra broadband and the mobile are services best effort. Contractually, it's the best effort offer if you want, a priority lane has happened in all the other businesses you have to pay for the premium priority. I hope that there was more clear, Paul.

The next question comes from Ms. [ Molly Witt ] Goldman Sachs.

I just have 2, please. Firstly, just thinking about the timing of any potential overlap with a 10-year migration away from INWIT and potentially increased investment commitment in spend you think that you can commit to increased network investment for spectrum given that it might potentially cash with any potential migration away from INWIT/ongoing negotiations with them? And second -- my second question is just on energy costs. I think a slide earlier said you're hedged for 50% next year. So just wondering what assumptions you've made for energy costs into 2027 given that you've reconfirmed guidance? And is there a risk that if the situation in the middle at least persists, you might need to revisit bottom line guidance?