Rai Way S.p.A.

Good afternoon, this is the Coral School Conference Operator. Welcome and thank you for joining the RightWay 9 Month 2021 Results Analyst Conference Call. As a reminder, all participants are on listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during 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 Giancarlo Benucci, Chief Corporate Development Officer. Please go ahead, sir.

Thank you, operator, and good afternoon. Let me start thanking all of you for joining us today, and welcome to our nine-month 2021 results. As usual, we will start with the key facts and figures of the period, and at the end, we will welcome your questions in the usual Q&A session. So let me now hand the call over to Aldo. Please, Aldo, go ahead.

Thank you, Giancarlo, and good afternoon to everyone. From our perspective, the nine-month 2021 results are extremely positive and promising. This is not only in terms of pure numbers, but because, at last, the effects of various growth initiatives being implemented which until now had mainly impacted on investments, are starting to pay off and accelerate. Since the presentation of our plan in March 2020, the focus has been and will continue to be on the implementation of its guidance in an approach that is proving to be very valuable. At the beginning of this year, in the context of the 2020 full year's results, we recall the strengths of our business model, such as visibility, resilience, hedging against an inflationary environment. And now we recognize that we are on track to enter an above-average growth phase. Accordingly, the growth through and by development activities is starting to become tangible, and more will follow. The substantial amount of work done on the network upgrade for RAI has led to the materialization of the contractual step-up, which is starting to contribute to 2021 figures, but with its full impact in 2022. Next year, we will add to this benefit the contribution of the regional refining and the first impacts of the digital transformation of the operating model benefit that will continue into 2023. In addition, looking for beyond the plan's horizon, growth will not stop since we are confident and delivering on the new infrastructure and services we are working on. From a financial perspective, the third quarter performance has been satisfactory, bringing the nine-month results to some extent actually slightly above our expectations. In particular, When excluding the no core items mainly recorded in 2020, revenues grew by approximately 3% in the nine months, with an acceleration in the third quarter driven by this step up in the right contract effective from the 1st of July that is remunerating us for the reforming activities. Adjusted EBITDA came out by 5.2%. showing a sound improvement in profitability of 180 business points. And then Alberto will elaborate more on that in a moment. Investments accelerated during the third quarter with both development and maintenance CAPEX levels consistent with our full year guidance. And these figures do not entirely reflect the huge amount of activities and effort we are putting into the initiatives that, as I said, will contribute to our short- and medium-term performance. On the operational side, the activities related to the national refining are fully on track with the roadmap revised by the Italian Ministry of Economic Development in the first week of August. In October, as you know, we switched two rare thematic multiplexes to MPEG-4, and we are ready to switch to MPEG-4, also the main multiplex one, with a deadline yet to be defined by the government. The release of 700 megahertz frequencies will start on November 15th, so next Monday, in the Sardinia region, and this conclusion nationwide has been confirmed for June 2022, while the switch to DVB-T2 has been instead moved from June 2022 to January 2023. So all in all, since the start of the process in 2019, we have spent 85 million euros, out of which roughly 40 million was spent just in the nine months of 2021. Looking at the regional refarming, as you already know, we are entering the business of transmission capacity provider for local broadcasters. On this front, the Ministry of Economic Development has recently published, starting from the northern Italy, the ranking of content providers who will have access to the new transmission capacity in the most promising regions. as Lombardia, Piemonte, Veneto, Friuli, Venezia, Giulia are. We are waiting for the rankings, also for central and southern Italy, with Lazio, Puglia, and Sicily already awarded to our company to right away. On our part, we have started the rollout of the regional networks, while the outcome of the initial negotiation and agreements with clients suggests and almost full saturation of the capacity of our multiplex, which is a good news, considering that this business will have to support and potentially reverse the trend of third-party revenues next year. In terms of new infrastructure and services, the newly created unit is working hard on the setup of the initiatives, that will fuel the company's medium and long-term growth, so mainly beyond our current plan horizon. And about this, just to give you a bit more color, on the edge side, we aim to have data centers in a set of sites covering the most five, seven important cities distributed throughout the Italian territory, which will be ready progressively during 2023. And these will then be integrated by additional points of presence in medium cities following customers' demand. On the iPaceCare Data Center project, here we are evaluating two, three areas in Rome and Milan. These are two markets at different stage of development. As you know, Milan more advanced. Rome the next to be developed, but both commercially interesting. It's important to stress that the key consideration is the ability to obtain building permission, which is dependent on the responsiveness of municipalities and authorities. But once all the permits are in place, it's fair to say that the typical construction period is 12, 18 months to have a first capacity available with the possibility to further develop the asset according to customer demand, leveraging on the high modularity of this kind of infrastructure, obviously also in terms of investments. Lastly, looking at year-end guidance, we fully confirm the expected trends and drivers for 2021, even if in absolute terms, some of the temporary pandemic related safety measures are partially benefiting also 2021 with a smoother than expected return to the pre-COVID cost base. And now moving to slide number five, Let's now go a bit more in detail through the main highlights of the period. So financial highlights. Core revenues totaled 171.8 million euros, 2.2% up compared to 2020 on reported figures. But when excluding the no recurring impacts mainly affected the previous year, growth could be even more marked at about 3% or even above 4% in the third quarter. And it's benefiting, on the right side, from the already mentioned contractual reforming step-up, that more than offsetting the slightly negative CPI recorded in 2020 and the anticipated pressure on the third parties. Adjusted EBITDA reached 130%. and 10 million euros, more than 5 million above last year. If it's true, on the one hand, that this absolute value and, therefore, also margin benefit from few non-recurring factors, such as the continuation of certain savings deriving from pandemic safety measures, it is at the same time true that these assets were already present, even with a greater magnitude also in 2020. Therefore, the improvement of few million euros or 150, 200 basis points of marginality is in any case to be considered structural and result of higher revenues and cost control. Moving on the bottom line, net income grew by 3.8% at 52.8 million euros, with higher EBITDA more than offsetting the higher DNA. On the financial side, CAPEX in the period grew to 55.5 million euros. boosted once again by the farming project that brought development investment at 46.6 million compared to the 28 million of 2020. Maintenance capex accelerated as well, approaching 9 million in the first nine months of this year compared to the lower than usual value recorded in 2020, a trend consistent Again, with our guidance. Rising investments that, thanks to our flexibility, are, of course, entirely debt-financed, bringing net financial position to 98.1 million euros on September 30th, with solid cash conversion above 91%. And that's all on my side for the moment. I leave the floor to Adalberto to tell you more on financial performance. Please, Adalberto, the floor is yours.