Rai Way S.p.A.

Good afternoon. This is the Curriculum Conference Operator. Welcome and thank you for joining the RightWay First Quarter 2021 Results Analyst Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone in assistance ignore the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Giancarlo Benucci, Chief Corporate Development Officer. Please go ahead, sir.

Thank you, operator. Good afternoon, and thanks to all of you for joining us today. As per tradition, following the more extensive call held just a few weeks ago on the full year results, we will try to keep our presentation relatively short today, dedicating, as usual, the last part to your questions. So let me hand the call over to Aldo. Please, Aldo, go ahead.

Thank you, Giancarlo, and good afternoon to everyone. As usual, I will start by providing some color on the first quarter performance, while Adalberto will then bring you through the main financial details. The key message today is that 2021 started bang in line with our expectations, with adjusted EBITDA and profitability growth mainly increasing. driven by the rising revenues contribution coming from refining and strict control, cost control, as you will see more in detail in a while. On the CAPEX side, investment remains strong, in particular thanks to development activities that represent one of the drivers of our future growth. From an operational perspective, in the first quarter, while we continue to work hard on all the important initiatives included in our plan, such as the expansion of the infrastructure portfolio, mainly organically, the introduction of new video distribution services, the digital transformation, and so on, I could say that the most relevant updates for today are on the reforming front with some pieces of good news. Concerning operations, as you will recall, activities are grouped into three major projects. The national multiplexer coverage extension with the number of installation and sites to be increased from the original 400 to 1,000 with the latest T2 ready equipment. And secondly, the upgrading of the equipment installed from the original 400 size 2 T2. And the third project is the rollout of the new macro-regional UHF T2 ready multiplex with 99% population coverage, basically a replacement of the current multiplex one. While on the second and the third project activities are on track in order to roll out the completion by June 2022, The good news is that the coverage extension from 400 to 1,000 sites has also almost been completed, with only around 30 sites left, which will be finished shortly. Basically, recovering from the more gradual deployment observed in 2020, mainly in the second quarter 2020, due to the restrictions related to the pandemic, The second piece of good news is on the last regulatory step, meaning the awarding of the remaining national capacity in four lots of half multiplex each. The tender process has been officially started by the Ministry of Economic Development at the end of April, when the tender specifications were published with offers to be submitted within 30 days, so by the end of May. The rules regulating the auction and set by ARGICOM as already known and RAI has confirmed its willingness to participate in the auction and we are now supporting them in the preparation of all tender documents, in particular on the technical aspects of the networks. Considering the time needed by the Ministry to evaluate the offer and then to associate the generic right of use of capacity with a specific rate frequency, it's fair to expect the final awarding within the third quarter 2021 in line with previous indications. Let me also repeat that although we will not have the final confirmation until the outcome of the auction, our base case remains the one with three multiplex managers for RARI at the end of the reframing process. A base case is that it implies 150 million of total investments and approximately 60 million of incremental yearly revenues affecting starting from the 1st July 2021. Moreover, any extra cost potentially arising from a late confirmation and the need to complete the same activities in a shorter time would be reimbursed. Finally, at the regional level, after the positive outcome already achieved last year in Lombardy and Piedmont, Raiway has been awarded with local frequencies also in four additional areas, so Friuli Venezia Giulia, Lazio, Puglia Basilicata area and in Sicily. For those of you not familiar with the Italian regions, we are talking of a region located in a very rich Northeast area, that is Friuli, the region where Rome is located, that is Lazio, and two of the main regions in the south of Italy, that is Puglia and Sicily, one of which, that is Puglia, where we already have a strong relationship with the main local broadcaster after the acquisition of its infrastructure assets back in 2017. This shows that we have remained sticky with our selective approach, focusing on the most relevant regions with a compelling risk awarding, reward considering the decent level of expected capacity demand from local broadcasters and the investment required for the network rollout, including All the frequencies awarded so far, there are only few regions left to be assigned. In total, we will roll out local networks able to cover around 30 million people, always leveraging on our existing infrastructure. Let me also add that this outcome is fully in line with the assumption of our industrial plan. Now, before moving to numbers, let me just reaffirm as a result of the performance recorded so far our guidelines for the full year 2021 as we will see at the end of the the presentation and now let's look in more detail at our performance in the first quarter 2021 moving to slide number number five starting from core revenues core revenues reached 56.5 million euros, so 1.6% higher than the first quarter last year, as a result of higher revenues from RAI, mainly driven by the new services contribution. Then the adjusted EBITDA increased by more than 3%, at around 34.2 million euros, confirming the profitability above 60% for the full year 2020, driven by the higher top line and the slightly lower cost base. Moving to the bottom line, the net income was up roughly 5% year-on-year at 16.8 million euros, but benefiting from €1 million one-off tax relief related to COVID-19. Excluding these impacts, as already anticipated in our plan, the figures below EBITDA, including net income, are impacted by the rising DNA resulting from the development of CAPEX, mainly related to refarming, which on the other hand, will bring the full benefit on revenues from the second half 2021, as contractually defined, and on EBITDA from mid-2022 with the completion of the progressive switchover from the old to the new networks. Development CAPEX, that remains, of course, relevant also in the first quarter, amounting to €10.1 million from €7.9 million. in 2020. maintenance capex traditionally low in the first quarter amounted to 2.9 million euros recovering from the lower than usual level recorded in 2020. then they recorded net debt at march 31 amounts to 37.3 million euros with the cash conversion that remains very strong above 90%, despite the more normal level of maintenance coverage. And with this, I'll hand over to Adalberto to provide you with details on the main items of our results. Please, Adalberto, the floor is yours. Thank you, Aldo.