Rai Way S.p.A.

Good afternoon, this is the conference operator. Welcome and thank you for joining the Raiway 9-month 2025 results analyst web call. All participants are in listen-only mode and after the presentation there will be a Q&A session. At this time, I would like to turn the conference over to Mr. Andrea Moretti, head of IR or Raiway. Please go ahead, sir.

Thank you, operator, and thank you all for attending our conference call. The call will be held, as usual, by our CFO, Adalberto Pellegrino, CEO, of course, Roberto Cecatto, and our Chief Corporate Development Officer, Giancarlo Benucci. Please, Mr. Cecatto, go ahead.

Thank you, Andrea. Good evening to everyone. Let's restart. In slide four... Okay. Okay. In slide 4, we summarized the main achievements of the period, both in terms of financial results and in terms of operating activities. The first nine months' financials were particularly solid, even better than our beginning of the year expectation, and showed a clear continuity with the already strong result that we posted at the end of June. Revenue grew even accelerated to basically 3% in the third quarter compared to the plus 2% recorded in the first half. Both business segments grew faster compared to the CPI link contribution. In fact, media distribution services benefited from the expansion of DAB radio coverage for RAI representing around 85% of the increase in the revenues from new services to RAI. But also the radio broadcaster also pushed the digital infra division because of the rising needs of towers to extend private operators' DAB networks. And let's not forget the initial contribution for diversification initiatives, namely data center and CDN, have though still limited as I will elaborate more in a while. Moving to profitability, adjusted EBITDA rose by 2.8%, supported by positive underlying trends in the traditional business, also helped by careful cost control and some non-core items. These non-core benefits benefited both other revenues, including government incentives on new tech projects and proceeds from land sale and mailing costs. But please note that we actually pursued them in this period in order to mitigate the temporary impact of the startup stage of the new initiatives. At the back of the CFO, we later discuss how all these moving parts impacted on the recorded ABTA level. Once again, Net income was in line with last year's after taking into account a higher level of depreciation and amortization, which is a consequence of our continuous investment activity. Speaking of which, in the nine months, we recorded almost the same amount of capex than one year before, slightly above 25 million of euros, but with a different mix. The majority is indeed represented by maintenance activities, which included some planned exceptional non-recurring activities on some big towers. There was also a seasonality effect involving certain high-level cybersecurity IP network investments. The development capex in the nine months were equal to 11 million, therefore below last year level, consistently with the guidance updated in July. In particular, the reduction compared to the expectation at the beginning of the year is the result of three main factors. The first one is the slight shift to 2026 of some investment for RAI DAB network extension, but let me say, to be fully recovered the next year, being orders already placed and installation planned. Therefore, there will not impact on subsequent years. The second phenomenon impacting our development capex is the length of the approval process for some land interested by the photovoltaic project. This is essentially leading to a one-year shift in the investment plan now expected in 26-27 instead of 25-26, and the contribution to P&L with full impact now expected in 20-28. Finally, we are planning a different phasing of the rollout of new edge data centers. We have projects, lands and expertise. It is mainly a matter of setting the right moment of construction in order to match a better level of edge demand and improve returns. Let me clarify that this is definitely not a change in the strategy. The consensus of the need for assets distributed across the territory is more relevant than ever. And this is a concept also reiterated, for example, by the government, the Italian government strategy to attract investment in the edge data center. If you see the July document of the minute. Generally speaking, so at least a European level, not just ours, edge infrastructure are currently experiencing slower uptake due to delays in one of the two areas of demand. In fact, while enterprise demand for regional capacity is present and growing, although fragmented, the demand for edge networks resulting from the spread of low latency services is proving at the moment slower. As I will explain shortly, we are improving the effectiveness of our commercial activities in the enterprise segment, primarily by identifying the right demand aggregators. Meanwhile, the need for low latency and local data processing could accelerate significantly following the rising interest for AI application and the AI cloud architecture that require a low latency inference phase. Also consider that there are several AI cloud providers that have already started rolling out their infrastructure using third-party data centers. let me say that it's only a matter of time before these two levers justify or require the addition of farther edge nodes. But at that point, we will be very quick and flexible. To conclude on financials, let me also underline the strength of our recurring free cash generation, which accounted for approximately $94 million despite the seasonality investment, bringing down the net debt compared to the end of June levels. Now we have to speak about the operational perspective. In the traditional business, the main project for our client ride, namely the station of coverage of the DAB network, is proceeding largely as planned. as evidenced by the revenue growth of new services. As already said, the approval process for some of the photovoltaic projects is taking longer than expected, but also in this case, it is a matter of time rather than feasibility or returns. Moving to diversification initiatives, we are focusing on commercial levels to enhance revenue contributions. On the edge of data center within the context outlined before, currently the target market is enterprise, driven by the off-premises relocation of service and even more, the deployment of private cloud environments. This demand is growing but fragmented. Therefore, we try to address and we are addressing it through aggregators such as private cloud operators and system integrators. The latter also through an expansion of our offering to IEA services, infrastructure as a service approach. This new approach, this different targeting is now operational is already in place and starting to show more effectiveness and fit with our partners, hopefully leading to improved results in the coming months. Furthermore, we are talking about a market with some local assets, for example, those held by private cloud operators, which in many cases are largely underutilized and could be consolidated and rationalized as a way to enhance the growth profile. Speaking regarding the CDN, In collaboration with some large clients and our technology partners, we are fine-tuning certain very sophisticated technical aspects and, above all, building a good track record of performance that will encourage customers to gradually move a larger portion of their traffic to our network. Regarding the hyperscale data center project near Rome in the Pomezia municipality, although we have hoped to arrive at this call with the final authorization, updates are not lacking. The process called Conferenza dei Servizi step ended positively as all the other administrative issues inside the administration of Pomezia Municipality. The conclusion of the process is now linked to an exemption that arises only in the last few days from an authority, the Hydrogeological Basin Authority, but we are working on it and aim to obtain it with a reasonably short timeframe. To sum up, the reviscation part is proving to be more gradual, both for market and authorization reasons, but with regard to 2025, we aim to see an initial improvement in contribution in Q4 2025. so the last part of the year. On the other hand, we have nevertheless been able to modulate the fixed cost of these initiatives according to the revenues, essentially entirely offsetting at everyday level the more gradual top-line contributions. While looking at the big picture, what I would like to stress is that we are creating a platform that combines high performance connectivity, centralized data center, distributed data center, and traffic accelerators such as CDN, together with the characteristic of sovereignty, neutrality, and quality. Let me say that this platform is among the most fitting and interesting national infrastructure to enable the next technological shift. We believe to be well positioned to cite future opportunities and certain feedback we get from market operators and potential prospects seems to confirm this. Moving now to the outlook, the results achieved in the first nine months allow us to comfortably confirm the 2025 guidance, especially referring to expected increase in adjusted EBITDA, even slightly above the July expectation, driven by the performance of the traditional business and the non-recurring benefits. Still in terms of outlook, we would also like to provide, to the extent permitted, a brief update on the status of the activities related to the possible broadcasting tower sector consolidation. As already told in the past call, the industrial analysis was substantially completed at the end of July. Since then, while we worked on, of course, on refining our internal evaluation, let me say that our parent company is still reviewing other aspects within its own responsibility, which are evidently necessary for future discussion with the counterparties. Of course, this, together with some initial procedural complexity that we told in the past calls, is leading to longer timelines And this was confirmed by the extension of the terms of the MOU announced by the shareholders. So at present, it is therefore difficult to make predictions either on timelines different from those recently updated in MOU or on the outcome. Please, Alberto, now the floor is yours.