WIND Telecomunicazioni

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WIND Telecomunicazioni

Positive Momentum

Full Year 2015 Results

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FY 2015 Highlights

Revenue

• Total revenue €4,428 million, down 4.4% YoY

• Mobile service revenue declines 2.1% YoY posting a further sequential improvement in

quarterly trend (4Q15 -1.4%, 3Q15 -1.5%, 2Q15 -2.2%, 1Q15 -3.3%)

• Strong mobile internet performance confirmed with double digit revenue and customer growth

• Fixed broadband revenue up 1.1% with LLU segment increasing 2.2%

EBITDA

• EBITDA decreases 7.4% on a reported basis; on an underlying basis EBITDA increases 1.6%*

• EBITDA margin at 37.7%, the highest in the market

Op. FCF

(EBITDA – CAPEX) • Continued strong Op. FCF of €0.9 billion

NFI

• Net Financial Indebtedness at €9,899 million vs. €10,651 million as of December 31, 2014

• Net debt / EBITDA at 5.9x

WIND - 3 Italia

Merger

• 50-50% Joint Venture between WIND and H3G Italy announced in August to create a leading

convergent operator in Italy; EC filing officially notified on February 5th

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Solid Performance in Mobile Driven by Data

Highlights

• Data revenue double digit growth confirmed: +13.6% • Mobile internet customer base up 14.3% reaching 11.6

million, representing slightly more than half of WIND’s total mobile customer base enabling significant upselling opportunity

• Average monthly data usage of active customers more than 1.6 GB; 4G customers consume 1.5 times more than 3G

Mobile Internet Revenue

Mobile Internet Customer Base*

574 652 2014 2015 10.2 11.6 2014 2015 (€mln) (mln) +14.3% +13.6%

Upselling Growing Data Demand**

1.1 1.2 1.3 _1.2 1.4 1.4 1.6 1.6 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 (GB month) Basic bundle allowance 1 GB 55% on Total CB

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Further Improvement in Mobile Service Revenue Trend

Highlights

• Mobile customer base at 21.1 million decreasing 2.2% YoY in line with overall market contraction, stable

market share

• Total ARPU stable YoY at €11.3 confirming the stabilization trend witnessed during the year

• Data ARPU increases 7.4% YoY, reaching 42% of total ARPU, completely offsetting the decline in voice

Service Revenue Trend

Customer Base

21.6 21.1 2014 2015 -2.2% (mln)

ARPU

-10.6% -11.1% -9.0% -6.7% -3.3% -2.2% -1.5% -1.4% 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 11.3 11.3 2014 2015 % Data on Total 39.1% 42.0% Stable (€ / %)

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Fixed-Line Performance Driven by Dual-Play

Voice Subscribers

Dual-play Subscribers

449 ₃₅₉ 2,373 _2,395 2014 2015 Indirect Direct 2,823 (‘000)

Broadband Subscribers

Highlights

• Fixed Broadband customers grow 3.1% driven by solid performance in dual play segment up 7.0%

• High value focus leads to a +0.9% increase in direct

voice customer base (‘000) 2,191 2,259 2014 2015 +3.1% 1,911 2,045 2014 2015 +7.0% (‘000) +0.9% 2,754

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Continuous OPEX Optimization

Highlights

• Strong cost control and optimization initiatives have produced impressive OPEX savings

• Main initiatives performed in 2015 related to “new insourcing model”, solidarity contracts and productivity increase coupled with insourcing activities and efficiency in advertising and real estate

• 2015 cost base reduced by approximately €80 million vs previous year

OPEX

1,374 1,230 _1,178 1,097 2012 2013 2014 2015 (€mln) 20% OPEX reduction €277 million

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CAPEX

Developing Network to Serve Customers Needs

757 779 2014 2015 LTM CAPEX / Revenue (€mln / %) 16.3% 17.6%

Mobile Network

• LTE population coverage reaches 56%

• HSPA network fully developed: 98.5% population

coverage, with 96.8% of population at 21 Mbps and 59.4% at 42 Mbps

• GSM network completed: 99.9% population coverage with GPRS/EDGE deployed nationwide

Fixed Network and Backbone

• 1,636 LLU sites: 64.5% direct population coverage as a result of LLU expansion plan started in 3Q15 for up to 500 new sites of which approximately 170 already opened

• Solid fiber optic backbone of 22,300 km, supporting both

fixed and mobile business

• Letter of intent with Metroweb to develop FTTH offer out of Milan in other main Italian cities

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Macroeconomic Scenario Expected to Improve in 2016

Highlights

GDP Growth*

Unemployment Trend*

12.2 12.7 12.2 11.9 11.5 12.1 12.7 12.1 11.5 11.3

2013 2014 2015E 2016E 2017E DEF ISTAT -1.9 -0.4 0.9 1.3 1.3 -1.7 -0.4 0.9 1.4 1.4

2013 2014 2015E 2016E 2017E

DEF ISTAT

• 2016 GDP growth expected to strengthen (+1.3%) after the recovery started in 2015 (+0.9%), driven by the favorable exchange rate, low energy costs and interest rates while domestic demand remains weak due to the high tax pressure

• Unemployment rate expected to improve YoY but will remain

at high level (11.9%) in particular in youth segment

• Significant improvement in Consumer Confidence index

• 2016 Mobile TLC market expected to grow low single digit YoY, fixed TLC market stable YoY

Confidence Index**

(%) (%) 92.0 82.9 95.8 101.4 118.9 81.9 _80.4 96.2 94.8 101.5 70 80 90 100 110 120

Jan. 2012 Jan. 2013 Jan. 2014 Jan. 2015 Jan. 2016

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Key Strategic Focus Areas for 2016

Commercial Proposition

•

Continue to delight customers

through coverage of all their needs and regular interaction with them

•

Continue to focus on digitally native segment

•

Simplify customer journey

Focus on Fixed and B2B

•

Improve performance in fixed-line

through expansion of LLU footprint and fibre proposition

•

Focus on B2B segment with

Fixed-Mobile convergent offerings and fibre offerings

Investments in Network

•

Focus on increasing LTE roll-out

•

Expand LLU sites footprint by 500

sites

•

Exploit agreement with Metroweb

for FTTH and other wholesale offerings for FTTC

Cost streamlining

•

Continue to increase efficiency through productivity increase and insourcing

•

Optimization of real estate costs

•

Reduction of non commercial

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Revenue Performance – Total

Total Revenue

Highlights

• Total revenue declines 4.4% driven by:

• Service revenue decrease mainly in fixed-line business partially offset by better performance in mobile service revenue posting a QoQ sequential improvement

• Lower Other revenue partially offset by an increase in handset sales, driven by the growing success of WIND’s ‘Telefono Incluso’ bundles in the mobile segment 4,166 4,008 240 125 227 296 2014 2015 4,633 (€mln) CPE TLC service revenue -4.4% -3.8% 4,428 Other rev.

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Revenue Performance – Mobile and Fixed-line

Highlights

• Mobile revenue performance driven by the QoQ service revenue further sequential improvement thanks to the strong growth in data revenue coupled with higher CPE revenue sales as a result of success of WIND’s ‘Telefono Incluso’ bundles

• Fixed revenue decrease is mainly due to lower Other revenue and weak performance in service revenue as a consequence of double digit decline in voice volumes (due to fixed to mobile substitution), lower indirect customer base and the growing preference by customers for fixed dual-play bundles offering unlimited DSL and pay per use voice for a lower monthly fee

Mobile Revenue

(€mln) 2,975 2,912 354 ₃₆₆ 2014 2015 3,328 -1.5% 3,279 -2.1% Other rev. + CPE TLC service revenue

Fixed Revenue

1,192 _1,096 113 54 2014 2015 (€mln) -11.9% -8.1% 1,305 Other rev. + CPE TLC service revenue 1,150

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EBITDA Development – Total

EBITDA

1,804 105 1,699 _1,671 37 19 1,727 EBITDA 2014 Reported Certain 2014 Transactions EBITDA 2014 Underlying EBITDA 2015 Reported Galata Impact (April-Dec. 2015) Restructuring Costs EBITDA 2015 Underlying + 1.6 % (€mln / %)

Highlights

• EBITDA in 2015 decreases 7.4% on a reported basis

• On an underlying basis, adjusting 2014 for the effect of certain transactions accounted in the year for approximately €105 million and adjusting 2015 for the impact of higher OPEX arising from the Galata transaction (April-Dec. 2015) and for certain restructuring costs accrued in the fourth quarter related to organizational streamlining and consequential real estate

optimization, EBITDA increases by 1.6%

• EBITDA margin 2015 at 37.7%, the highest in the market

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EBITDA and EBITDA Margin – Mobile and Fixed-line

Mobile EBITDA / Margin

(€mln / %)

1,388 _1,324

2014 2015

41.7% _40.4%

-4.6%

Fixed EBITDA / Margin

(€mln / %) 416 346 2014 2015 31.9% 30.1% -16.8%

Highlights

• Mobile EBITDA decline of 4.6% due to reduction in revenue coupled with the impact of the Galata transaction (April-Dec. 2015) and certain restructuring costs accrued in the fourth quarter

• Fixed-line EBITDA decrease is mainly due to a reduction in Other revenue, for the effect of certain transactions accounted in 2014, lower service revenue and above mentioned restructuring costs

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Key Financial Accomplishments 2015

Highlights

• Completed sale of 90% of the shares of Galata S.p.A.

to Cellnex Telecom for €693 million in cash with an EV of €770 million

• Repaid €1.1 billion of previous SFA, utilizing part of the proceeds from the Galata transaction and proceeds from an issue of SSN’s by Wind Acquisition Finance; amended and restated the remaining part with a €700 million new covenant lite term loan

• Last two tranches of LTE liability to Italian State due to in October 2015 and 2016, pre-paid on April 29th_with

cash on hand

• 50-50% Joint Venture between WIND and H3G Italy announced in August; EC filing officially notified on February 5th

Net Debt

10,651 9,899 2014 2015 (€mln) -7.1%

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P&L Highlights

P&L Full Year 2015

(€mln) 2015 2014 Change (% ) Highlights Revenue 4,304 4,393 (2.0)% Other Revenue 124 240 (48.3)% Total Revenue 4,428 4,633 (4.4)% EBITDA 1,671 1,804 (7.4)%

D&A (726) (1,231) n.m. D&A impacted by the capital gain arising from the towers transaction in 1Q 2015

EBIT 945 573 n.m.

Financial Income and

Expenses & FX (526) (1,385) n.m.

Reduction of Financial Expenses reflects interest savings resulting from 2014 and 2015 refinancing transactions; 2014 impacted by refinancing costs

EBT 419 (812) n.m.

Income Tax 9 103 n.m. Positive income tax in 2015 due to the alignment to new tax rates which will start

from 2017 on deferred tax calculation

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Capitalization

Cap Table Full Year 2015

(€mln) As of Dec 31, 2014 As of Dec 31, 2015 As of Dec 31, 2015 / EBITDA

Cash and Equivalents (203) (282) (0.2x)

Bank Loan 1,874 672 0.4x

Total Bank Debt 1,671 390 0.2x

Senior Secured Notes 2019 149 149 0.1x

Senior Secured Notes 2020 4,751 5,779 3.5x

Total Bank Loan + SSN 6,571 6,318 3.8x

Senior Notes 2021 4,086 4,366 2.6x

Ministry LTE Liability 163 -

-Derivatives and Other (169) (784) (0.5x)

Total Net Debt excluding Intercompany Loan 10,651 9,899 5.9x

Intercompany Loan to WAHF (997) (1,122) (0.7x)

Total Net Debt 9,654 8,777 5.3x

Cash Net Debt 9,822 9,514

Interest Accrued 167 167

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Full Year 2015*

775 700 3,513 150 420 575 3,779 2016 2017 2018 2019 2020 2021

Tap to SSN 2020 + FRN 2020 New Senior Credit Facility New Senior Secured Notes 2020 Senior Secured FRN

WIND Telecomunicazioni