Rai Way S.p.A.

Good afternoon. This is the Coruscant Conference Operator. Welcome and thank you for joining the Raiwell Forum. full year 2024 results analyst presentation. As a reminder, all participants are in 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 Mr. Andrea Moretti, Head of IR of Raiway. Please go ahead, sir.

Thank you, operator. Good evening and welcome to everyone. During today's presentation, we will cover full year 2024 financial results, operational achievements, and we'll finally provide an outlook for 2025. As usual, today's speakers will be our CEO, Roberto Cecatto, the CFO, Adalberto Pellegrino, and Giancarlo Benucci, our Chief Corporate Development Officer. Mr. Cecato will start with an overview of Railway's financial results during its first decade as a listed company on page four. Please go ahead, sir.

Thank you, Andrea, and good evening to everybody. As Railway went public in November 2014, we recently celebrated our first 10 years on the stock exchange. We marked a successful growth both for our financial and consequently for the stock price. Stripping out the accounting boost from IFR 16, our adjustment EBITDA jumped over the period by over 66% and reached a record level of 63.3% of revenues compared to the 50.7% in 2014. Net income is up 3%. 2.7 times going from 34 millions to 90 and almost every euro was distributed over the years to our shareholders who have already seen more than 86% of their initial investment returned through dividends. This was also allowed by our strong recurring cash generation, which almost doubled, reaching 118 million euros in 2024, from an initial level of around 63. You will not find it in the chart, but that translated into a 10-year total shareholder return of 160% made of 86% increase in the share price and 73 dividend payout. And we believe the room for improvement is not yet over. Let's now move to the main topics of today's presentation, summarized on slide five, and specifically to our 2024 financial and operational achievements. Starting with an overview of the 2024 numbers, which will be covered in detail by Adalberto, our CFO. I would like to underline that we closed the year with results which were even better than our initial expectation. Core revenue growth has doubled the CPI rate 1.5% versus 0.7, thus demonstrating that our reference markets still offer room for growth. In addition, we have recorded the very first revenue from our brand new diversified assets, the content delivery network and the edge data center. As per the adjusted EBITDA, it grew by 2.9% to a record of 185.6 million euros. We carefully manage our cost base to cope with higher energy tariffs, and a planned increase in diversification startup costs. In 2024, we invested 55 million euros, half of which in the last quarter of the year. Almost 40 million were allocated to development initiatives, and we will see in a while. CapEx benefited from a record cash generation that hit 118 million euros in terms of requiring free cash flow to equity. That will also allow us to pay out 99.8% of net income, or 89.7 million euros. through dividends, meaning 5.7% dividend payout calculated on yesterday's closing share price. In operational terms, 2024 was primarily the year in which we launched our new four-year industrial plan, setting strategy, initiatives, and capital allocation for the coming years. The plan provides right way with a clear industrial positioning, renewing its focus on two business segments, media distribution services and digital infrastructures. It also preserves the company distinctive characteristics such as revenue predictability, profitability, margin protection, and the shareholder remuneration. and at the same time, it addresses the levers to unlock railway's full potential. You surely remember that the pillars of the plan are indeed the announcement of traditional business cash generation, the diversification that guarantees the returns, growth, and sustainability, and last but not least, external growth, boosting sites, and capital structure optimization. To give substance to the plan, we also had shared with you the priorities for the plan execution. And I believe that the ongoing activities and achievements that I am about to illustrate show that direction is the right one. First, in order to enable and make this execution efficient, we acted early on some levels, such as the new organization, absolutely relevant tool, and the sourcing of skills, especially at the commercial level for new services. On the traditional business, starting from the media distribution segment, you might remember that back in July, we had anticipated that you to you the design activities and the negotiation we drive for the extension of DAB radio network. Today we finally communicate the signing of the contract. As detailed on page six, it is an extensive project aiming to improve service for end user on highways and highly populated centers. By investing more than 50 million euros between 2025 and 2026 to extend the network on additional 200 sites, Railway will bring the RAI DAB coverage from the current 55%, more or less 60%, to at least 85% of the population. The internal rate of return of the project on a levered basis remains in line with the industrial plan target, meaning at least 10%. Therefore confirming the usual rule of thumb that applies to new services to Rai, resulting in approximately 0.2 million euros of additional revenues per each million invested. Moreover, it's relevant to underline that this project, together with those already implemented in 2024, will allow us to cover 70% of the whole development capex dedicated to RAI, assumed in the entire business plan. Moving back again to the slide five and to the traditional business performance, In the digital infrastructure segment, we have registered a gradual but positive acceleration in tower hosting performance, in particular supported by the high single-digit growth of fixed wireless access providers and radio broadcasters, both representing the sweet spot for our towers. With reference to diversification initiatives, both the first five edge data centers and the content delivery network are now operational. With the first, albeit still limited, revenues reported during the fourth quarter of the twenty twenty four. We perform a test on the CDN with some of the leading national and international content providers and then confirm its functionality and the performance in terms of latency and backbone decongestion, benefiting especially the quality of the live streaming. We are now shifted to handling real traffic, reaching real end customers, and we are discussing with content providers future collaboration models in terms of volumes, pricing, and commitment. On the data center side, we are building up an ecosystem of resellers and the pipeline of prospects that will fuel capacity utilization in the coming months. we highlighted some data on page seven in just a few months we have engaged as partners more than 20 system integrators and vendors who see the opportunity to effort collocation in our assets as a way to strengthen their own offering we also manage marketing activities and relationship with the most relevant prospects directly we have met with more than 200 prospects, sent commercial offers in the first couple of months of 2025, representing a potential revenue backlog of almost 6 million euros. As of today, more than 500,000 euros has already been converted into signed contracts while considering further acceptance of the offers that we have presented and the new offers that will be submitted in the coming months, we expect the level of control backlog to increase materially through the year, also contributing to the 2025 revenues. Waiting for a proper take-up of low latency services, the market today, as we see, is predominantly focused on proximity. We demand mail incoming from medium and medium-small size enterprises that prefer to keep their data and servers as close as possible. In all the interactions with prospects, proximity emerges as a concrete use case. and is one of the key factors of choice. Moreover, on proximity, the competition is relatively limited, especially when viewed in conjunction with the quality of our brand-new state-of-the-art data center. At the same time, collocation choices are usually part of a broader decision process related to the evolution of IT architectures and cloud migration that clearly take a little bit of time. Nonetheless, we remain confident to be well positioned to successfully intercept this rising demand. Let me also add that the evidence that we are receiving, in particular in terms of use case, enabled by our infrastructure, currently the proximity, are suggesting us to slightly reshape our rollout plan, prioritizing the expansion of data centers in the more industrialized areas over nationwide coverage, which would become more important for low-latency use case. This could also lead to a slight rationalization of the investment over the planned period, as the capacity expansion cost less than a new data center of equal power, potentially even slightly improving the returns. We will see that while discussing the 2025 outlook after Adalberto goes into details about 2024 financials. Please, Adalberto, go on.