Infrastrutture Wireless Italiane S.p.A.

with second quarter 20 financial results conference call. Emanuela Martinelli, head of finance and investor relations, will introduce the event.

Ladies and gentlemen, good morning. Welcome to the second quarter 2020 results presentation and thank you for attending our conference call. Our CEO, Mr. Giovanni Ferigo, and our CFO, Mr. Diego Galli, will provide you an update on our business and operative activities and will go in details to our second quarter operating and financial performance. As usual, the presentation will be followed by a Q&A session. You can book it by pressing star one. Now, you can take note of our disclaimer policy. They should now be visible on slide two. Let me highlight that the reported data refer to the financial statement at June 30, 2020. Now, I leave the floor to Mr. Giovanni Ferigo, who will guide you through the presentation. Giovanni, over to you.

Thank you, Emanuela. Good morning, everybody. I'm pleased to share with you the results of the first quarter of the new Inuit with the full consolidation of Vodafone Tower. Let's start from slide 4, which includes the main figures of the new Inuit and clearly shows the change of perimeter. As already stated in the past, The former two companies were pretty similar one to the other, and you may appreciate from this slide that the new Inwid has now doubled its size. Revenue is up to 184 million euros, showing an 83% increase year-over-year and 92% if comparing recurring revenues. We believe that the ground lease is an essential part of our business. Therefore, we consider the Additional Alternative Performance Indicator that represent the EBTDA minus the ground lease cost, basically coming back to EBTDA pre-IFRS 16. The EBITDA shows a sound of 102% growth year over year, or 118% growth if comparing the recurring EBITDA. Moving over the recurring free cash flow, we reach 80 million euros. increasing by 32.5% year over year. If normalized by the payment of the taxes timing, the increase is 60%. Finally, the tenancy ratio is at 1.83. That turns out from 1.96 of Inuit standalone and 1.68 of Vodafone Tower. So lower than in the past, but still at the best practice level of the industry. Going to slide number five, please. As a result of the merger, Inuit doubled the number of sites and now manages more than 22,000 sites and more than 40,000 tenants, being the leading tower in Italy with market share higher than 50%. Inuit has the best asset quality coming from the heritage of industry developments. whereby Tim was incumbent and Vodafone the first challenger in the market. And they both designed the network selecting the best location thanks to the first mover advantage and to build the best network in the country. The merger with Vodafone Tower is the completion of a sharing journey between Tim and Vodafone, which started 10 years ago. A journey between two natural partners, twin companies with the same scale and obsession of network quality. The tenancy ratio is 1.83, that is significantly higher than competitors. The ratio, as well as the revenues per size, are lower than before, as they are impacted by the relatively lower hospitalities on Vodafone towers. I think it's interesting to note that Inuit was more focused on increasing hospitalities, while Vodafone was more focused on optimizing costs. Now, the new Inuit has the opportunity to implement both approaches to optimize the return from both sides. In the period, we built 70 new sites. Also, we renegotiated 283 contracts as part of a broader program. with a dedicated team led by the same person who led the rental optimization program in Vodafone Tower, and now is in Inuit reporting directly to me. Moving to slide number six, you may see the two components of our 40,500 tenancies. The first component is related to our two anchor tenants, Tim and Vodafone. All previously existing hosting contracts on macro sites outside the previous MSAs have been included in the new MSAs. This is a very important issue. So there is a total of 32,000 POP under the new MSAs, which compares with the previous 11,000 in the Inuit standalone. The contract has eight-year terms, renewable for further periods of eight years, with an all-or-nothing mechanism. The MSAs are 100% CPI-linked, with floor at 0%, thus naturally hedged against deflation. The second important component is related to the rule of neutral host. We serve all the key players in the Italian market with 8,500 hospitalities. That is significantly higher than Inuit standalone and represents about 21% of the total number of POPs. In the period, we added 250 new tenants from fixed-air water access and MNOs operators, which represent an organic growth of about 3% versus 4Q 2019. Volumes in the quarter are driven by the increasing demand for fixed-wall access, which kept on growing in the recent quarters. It's important technology that contributes significantly to bring high-speed internet, in particular in rural areas. We will talk later about the expectation for the ramp of the new hospitality from both anchor tenants and other operators based on a robust order book and delivery plans. Now, going to slide seven, I would like to recap our progress on new business development. First, related to small cell dust. In H1, we built 300 remote units, reaching 3,700 built units, which takes to a 32% growth year over year. We claim to be market leader in remote units, securing attractive location in advance of commercialization. The understanding of the business by the location owners can lead to catch an enlarged number of locations and bring to the high number of DAS needed to support the 4G network and to densify the 5G one. Secondly, related to the backhauling, we built additional 250 links reaching more than 1,000, exactly 1,150, which takes to 64% growth year over year. This is consistent with our aim to be one stop shop for our clients and their 5G rollout. Now, I hand over to Diego to comment on the following slides. Please, Diego.

Good morning. We are on slide 8, where we show the revenue numbers. So the first quarter revenues account for 184.4 million euros, which means 92% year-on-year growth on recurring revenue basis. This number shows an organic plus 0.5% growth quarter on quarter, and on year-on-year basis, it is around 1% based on the proforma PNL used for the prospectus. We can analyze the revenues looking at the three different components. The first component is related to the revenues from the MSA with TIM and Vodafone. This component is up to $161.3 million and shows an increase up to 147%. reflecting the change of perimeter, but also the shift of revenues from other operators to MSA, which now accounts for 87.5% of total revenue. For the same reason, from this quarter, the revenues related to other operators only includes revenues from hospitalities arising from operators different from TIM and Vodafone. The amount is €21.1 million in the quarter. Thirdly, revenues from new services amounted to €2.1 million. Before the merger, in this revenue line, we included also the revenue from team hospitalities on new sites built after 2015. With the merger, also these hospitalities have been included in the MSA. Therefore, on this line, only the revenues from a small sale, DAS and backhauling are included. In our view, these numbers show the potential that we see and that we have to grow revenue from new services through new location, shortening the time from build to invoicing and increasing tenancies. We have limited details on the year-on-year growth by segment. Clearly, this will be the focus going forward. Indicatively, we may say that the main source of growth was coming from third parties, including fixed wireless access. In terms of guidance for the year end, we expect revenues in the range of 660 to 665 million euros. on reported basis, meaning that in this number, the first quarter of Vodafone Tower is not included. The first quarter of Vodafone Tower is only included in our pro forma revenue that is expected in the area of 750 million euros. I would like to move now to slide nine, where we can see the profitability indicators. EBITDA grew by 93% year-on-year and EBITDA grew by more than 100% year-on-year. I think what is important to highlight in this slide is the EBITDA margin that is up to 93% and the EBITDA margin that is up 64%. This number is comparable with the pre-IFRS 16 EBITDA margin that for Inuit standalone was around 57%. In our view, this level of margin reflects the efficient management of lease cost made by Inuit and even more by Vodafone Towers. Despite this level of profitability, we still believe that there are opportunities in the optimization of rental costs and, as Giovanni said, we have a dedicated function on it. In the period, we have finalized 283 renegotiation of rental contracts. In terms of guidance, we expect ERN EBITDA in the range of 410-415 million euros. As we said, we see EBITDA as the key profitability indicator for the business and the industry, and this is the reason why we gave and we are giving guidance on it. If we refer to the traditional EBITDA, we may indicate as well that the year-end is expected in the area of €595 million to €600 million on reported basis. On this page, I would like also to comment on the DNA depreciation and amortization that is at 99 million euros, reflecting the impact of 25 amortizations from intangible assets. During the purchase price allocation process that has been finalized, 810 million euros have been allocated to intangible assets. And as I said, this generates in the quarter 25 million amortization. That let me remind that clearly there is no cash impact. So moving to cash and moving to slide 10. where we can see the recurring free cash flow at 79.5 million. This shows an increase year-on-year of 32%. In the quarter, there was a payment of a pro-rata tax, and this creates a discontinuity compared to last year, when the pro-rata tax was paid in Q3. When removing this impact, the normalized recurring free cash flow would show a 70% year-on-year growth. Again, what is, in my view, important to highlight on these slides is the level of cash conversion that shows 43% of revenues. On these slides, I would like also to take the opportunity to talk about the goodwill tax scheme. The Company Board of Directors has approved the access to the Goodwill Amortization Scheme for a target value of 2 billion, considering also a range of plus minus 20%. The final number will be decided after the financial year results and in the board that will approve the accounts for the full year. The submission deadline is June 2021. But let me explain a little bit better how the scheme works, assuming this target of 2 billion euro. The scheme requires an upfront payment of 16%. This would mean 320 million. The scheme then allows the amortization of the goodwill of 2 billion, meaning 400 million each. The tax benefit would be 28.4% of the 400 million, meaning around 110 million euros cash benefit per year. Therefore, we do expect an internal rate of return higher than 22% and an NPV of 150 million euros. I would move now to page 11, where we can see the balance sheet. And in the balance sheet, you can see the goodwill of 6.1 billion and the impact of the purchase price allocation, which allocated, as we said, 810 million to intangible assets. Also, 263 million were allocated to tangible assets. The total net debt at the end of the period stands at 3,976,000,000. And this is composed by 2.8 billion pure financial debt and 1.1 billion related to the IFRS 16 contribution. The net debt on EBITDA ratio is 5.8, considering the annualized reported EBITDA of Q2 2020. Before leaving the floor again to Giovanni, I would like also to talk about the successful access to the capital market. As beginning of July, we launched our inaugural bond of 1 billion euros with a maturity of 2026 at a coupon rate of 1875. And we achieved an oversubscription that was over for time and very diversified and the demand was really high. So we are very pleased from the result of the inaugural bond issuance and that has also allowed us to extend the overall maturity of our debt to 4.5 years. I would hand over now to Giovanni.

Thank you, Diego. In this second part of the presentation, we want to take a look forward and mention some growth engines. Let's start from the dust. This is a business in which we do believe strongly and from these pictures you can appreciate some of our last realizations in specific clusters such as hospitals, universities, company headquarters, museums and so on. Among the new projects, I'd like to mention the two important examples, the LUIS University in Rome and the luxury Hotel Lungarno Collection in Milan, of the Ferragamo family. The business is not yet at scale, but we see increasing interest and we are investing on valuable locations, as we believe in the potential of the business, particularly as part of the digitalization of the country. We have strengthened the organization and we have now a sales force in place to follow immediately after deployment of our targeted locations. Moving to slide 13. Let's turn now to the short-term plans of our new tenants. Clearly, in the last few quarters, there has been a transition and we experienced a limited level of activity. We are now ready to ramp up the volume with a step up in the level of activity. In the quarter, Tim and Vodafone made significant progress on the definition of the common grid. The design of the common grid supporting the 5G rollout is a complex process, which involves detailed network planning by cluster to achieve 5G coverage quality. compliance with license obligations and efficiency. So, this is an important step for us as it enables the increase of tenants on our grid as part of the operator network densification. This process is going to bring the start of synergies and will continue in the following quarters as expected by the business plan. Linked to this, there is another component of our cooperation plans that is related to antitrust remedies. As shown at the bottom of the page, the transparency register will be set up in October, on the 5th of October, and will receive the sites available for other operators on municipalities with more than 35,000 inhabitants. The antitrust procedure envisages that 1. Every month INWIT makes available the list of sites Two, the time frame to choose the site is one month and the new entrant MNOs, Iliad and Fastweb, will have the prevention right toward the other operator at friend, fair, reasonable and not discriminatory conditions. Third, if no request from them arrives, the site will be allocated to the first operator requiring availability on the same site. This is part of European antitrust remedies whereas 4,000 sites will be made available on 8 years of which. 3,000 on the first four years and 900 by September 2021. This means 75 possible tenant sites for months. This will grant us the increasing volumes on important and more remunerative locations. Finally, as you can see in the middle of the page, on municipalities with less than 35,000 inhabitants, we matched the order book with the availability of the sites. There is a strong order book and a significant number of new tenants will come in the next quarter. We will deliver a ramp up in volume in Q3, followed ramp up in revenues in Q4. We expect to deliver additional 1,000 tenants by the end of this year, 2020. Going to slide number 14. Finally, let me spend a few words on some strategic priorities which will be discussed more into detail as part of the business plan update in November. Presently, INWIT is working on different plans. The build of one single integrated team the strengthening of the vendors' ecosystem and the digitalization of our systems and processes. Innovation is and will be even more a key aspect of our business. We are focused on exploring and assessing following projects. Edge collecting, data hosting, drones, reloading data processing on the tower, smart city solution, green solution. Another important focus is development of our sustainability framework. At the moment, we have set up an ESG board committee in agreement with the United Nations Sustainable Development Goals objectives. countries 5g enabled electricity reduction diversity and inclusion diego please over to you for the important closing remark

Thank you, Giovanni. Yes, this is sort of closing remarks after, actually before reaching the 100 days of the new entity that actually was born less than 100 days ago. So a few remarks. The first one is reiterating and underlying the fact that we are the market leader at scale and with the best asset quality. We have a resilient business with tier one anchor tenants and diversified client base as neutral host in the market. Thirdly, we show high margin and cash conversion. We're talking about 64% EBITDA margin, 43% cash conversion. Point number four, and probably the most important, key operational steps have been completed during the first quarter. And now we see, we confirm the strong order book and we see the operational plans in place, the activities in place to deliver a significant number of new tenancies in half two. We expect more than 1,000 new tenants in half two. Also, we are creating value with the tax scheme and the goodwill deductibility, we are talking about 150 million NPV project. Our focus is on execution, is on operational excellence in the short term combined with building a long-term sustainability. So let me reiterate the numbers we mentioned in terms of year-end guidance. Revenues in the range between $660 and $665, EBITDA between $410 and $415, and recurring free cash flow between $260 and $265. Let me also say that, as already mentioned, we will share the three-year business plan on November 5th. Thank you for your attention, and I think we may open now for Q&A.

The Q&A session is now open. You can register for your question, pressing Start, followed by 1. First question is from Jacob Bluestone from Credit Suisse. Mr. Bluestone, your question, please.

Hi, good morning. Thank you for taking the question. I have two questions, please. Firstly, just on your guidance, I mean, you mentioned that you expect an acceleration coming through around the fourth quarter once the transparency register is kind of up and running. But if I look at your guidance for EBITDA, the 470 pro forma, seems to imply about 4% like-for-like growth, which is roughly what you were growing pre-merger. So first of all, is that correct? And so does that suggest that the revenue acceleration isn't sort of big enough to lead to a substantial EBITDA acceleration? Or should we be thinking about this guidance as perhaps being a little bit conservative? The second question I had was just about the reallocation of revenues from new services into the MSA. How big was the impact of that reallocation, please? Thank you.

Yes, let me take the first one. Let me say that the acceleration of new tenants, the more than 1,000 in the second half, actually comes from three components. One is related to the transparency register. Though, as we said, the transparency register we made available at the beginning of October, since then the operational processes we started. will start. So the main components of the acceleration will be actually the common grid for Vodafone Intim and the tenants for the other operators including FIC wireless access. The key point on your question in EBITDA is a little bit the timing and the process that takes from the realization and the completion of the technical activities to the revenues and then to EBITDA. This process takes time and that's why the translation in revenues takes a little bit of time and we will see in Q4 an initial increase of revenues, clearly the visible and strong impact of the additional 1,000 will accumulate for sure at the beginning of the new fiscal year. So there is a timing effect. Okay, sorry, on your second question was related to the reallocation of new services to the... Exactly, yeah. Yeah, yes. So if we take as reference the first quarter, the same number was 7.6 million, so we are talking about the reallocation of around 6 million.

Thank you. If I can maybe just ask a quick follow-up. Are there any sort of exceptional costs that you anticipate, you know, related to get, you know, these various measures you've taken in the second half? Is there anything exceptional on the OPEX side we should be looking for later this year? Thank you.

No, no, no, no, no additional costs on OPEX. We do expect an increase on CAPEX, but no additional exceptional costs.

Thank you. That's very helpful.

Next question is from Roshan Ringit from Deutsche Bank. Mr. Ringit, your question, please.

Great morning. Thank you for the questions. Two for me. Just kind of a quick follow-up on the previous point. When should we start to see the material benefits of rationalizing the two networks coming through at the at the EBITDA level, because I think on a pro forma basis under IFRS 16, I think you're going into the flat kind of EBITDA growth year on year. So it'll be interesting to know when you are going to start kind of rationalizing those 22,000 sites. And secondly, it's possible to get a bit more detail around the incremental thousand site and how that is potentially going to be split across the two MSAs and the other operators that you are working with. Thank you.

Yeah, let me take and say that the acceleration of delivery in half two will give us a very strong entry point in the new fiscal year. So we will see some acceleration of revenue in Q4. I'm just making the projection of the current year revenue. the guidance on revenue implies an acceleration. But we need to consider that out of new tenants, out of the 12 months rental, we will see the impact just for a few months, in the quarter or a few weeks actually, in half two. But this will give us a very strong entry point in the new fiscal year, and this is going to be the pace the level that will be maintained and also increased a little bit quarter after quarter. So there will be different layers. Each quarter there will be a new layer of new tenants that will add up to the previous ones. So a completely different picture compared to today where we discount the fact that in the last three quarters the level of growth was very limited. So now to move up the growth rate of 40,000 tenants with the additional volume will take a few quarters. But as I said, first signs in Q4, significant entry point, strong entry point in the new fiscal year. Sorry, the second question was related. Yes, the incremental sites is a mix. It's a mix of customers, of clients, between Vodafone team and other operators. And it's also a mix of fixed wireless access and mobile, mobile equipments. We see the demand for fixed wireless access high, is strong. the speed, the timeframe to deliver is faster, so there will be a significant component of fixed wireless access in this mix.

Okay, thank you. And just to follow up, now, apart from the remedies about the access to the 4,000 sites, are there any other restrictions set by either Tim or Vodafone as to the dismantling of the 22,000 sites? Are there any restrictions or any portions, or has it opened up for you guys to rationalise the network as you want to?

Yes, that's a very important point from our side and this is what we try to represent on slide 13 because in this quarter the focus has been on removing any potential, to perform all the operational activities that enables now to deliver additional tenants for the operators. So what Giovanni said about the common grid, what Giovanni said about the site survey and the matching of sites availability with demand, this has been the focus on Q1. Considering that we had a completely new grid, in the sense that it's a merged grid, considering that the operators have been working hard to define their common grid and considering that we did have to set up new processes and systems. Now these processes have been substantially addressed and that's why we are in the condition to say that we will deliver more than 1,000 new tenants in the next few months.

Just to complete, as we showed in the slide 13, the activity from the engineering point of view and the rollout is enough complex because, let me say, When one of our customers asks for hospitality, there is a technical feasibility timeframe. Then there is field activities inside-in with an after-to in our customer. And let me say, normally there is an average time between the request of hospitality and the sign of the contract and the invoicing, let me say, phase of about three months. Three, four months depending on the complexity of the, let me say, antennas that our customer asks us to host in our tower. Keep in mind this is not, let me say, an instantaneous shop. There is an engineering and feasibility part and there is, let me say, our interaction with the municipalities. Another good news is that the new simplification law today will support us in accelerating the rollout, cutting a lot of lost time in terms of permissions. keep in mind this one between the average time between the let me say the request of the hospitality and the invoicing let me say phase is three four months so this is explain I hope the the coup for starting interesting revenues in our site okay

Great, thank you.

Next question comes from Mr. Simon Coles from Barclays. Mr. Coles, your question, please.

Hi, guys. Thanks for taking the question. My first one is just on small cells and sort of linked to the acceleration in the prior questions. You seem to be running at a similar pace to InWit standalone, given it's still early days. That's fair enough. But I'm just wondering, when can we expect that to ramp up? Because you obviously have some pretty impressive targets out there for the number of small cells you want to deploy, and you have commitments from Vodafone and TI. Can we expect this to materially accelerate in 2021, or is it a bit more of a midterm expectation? And then the second question is just a quick one. There was talks around potentially relaxing the electromagnetic radiation law. I know there's been talks about this for a long, long time, but with COVID, potentially that might give a catalyst to actually see some change. Is there any update on that discussion? Thank you.

Ok, let me say first of all about small sales. Ok, keep in mind that we are, let me say, paying a delay in 5G macro rollout by the mobile operators. because the priority for mobile operators is to complete as soon as possible the 5G network and then they will ask to us the outdoor small cell and then I think that in 2021 we will start to see some interesting moving in this. We continue and we strongly believe in the, let me say, indoor coverage, dedicated indoor coverage. Many location owner are asking to us to habilitate from infrastructure point of view the 5G and so we are doing it. Then, just to clarify, the simplification law is not about the electromagnetic law. It's about the artistic constraints, urbanistic constraints, civil constraints, municipalities' interpretation. the, let me say, municipality's process to deliver to us the permission to build a new site or to upgrade a site to permit the hosting of new antennas. So, let me say, this will help us to save time. Today, we have to manage between nine and 12 permissions to install a new tower. Now, we cut the time about it. And so we accelerate our targets.

That's great. Thank you very much.

Next question comes from Mr. Ben Rickett from New Street Research. Mr. Rickett, your question, please.

Hi, guys. Thanks for the question. Two quick questions on tenancy growth. Firstly, on the 4,000 committed OLO tenants, Is it your expectation that you will be limited to 4,000 OLO tenants, or could the majority shareholders allow more than 4,000? And secondly, on additional TI and Vodafone tenancies, I think you're expecting several thousand POPs to be migrated from existing third-party towers onto Inuit's grid. Can you update us on the total number of tenancies you expect to be migrated and the timeframe for that? You're indicating it starts in Q4, but it would be useful to know how long that process will take. Thank you.

About the 4,000, Okay, 4,000 are the results of the antitrust authority in Europe that defined that in 8 years INGUID must do available 4,000 sites in the cities with more than 35 inhabitants. to permit to the MNO to go on with their rollout. Another important issue of this remedy is that more than 50% must be concentrated in the 76 more important cities of Italy, Rome, Milan, Naples, and so on. So this is a driver. Of these 4,000 in eight years, we have to be compliant with 3,000 in four years. And for the first year, we have to be compliant for 900 of available sites. So these are the drivers of the antitrust authority. but we can do more if we will have the possibility, if we are able to be available other sides, why not? This is the antitrust driver and we have to be compliant with them. For the second question, please Diego.

Sorry, I may need your help to be precise on the question. If I remember well, it's basically related to the availability of sites for third parties and constraints coming from a Vodafone team.

Or more generally, the number of Vodafone and TIM tendencies you expect to migrate and the timeframe for that migration.

Yes, so this is basically just the beginning. We do expect new tenants coming from Vodafone and Vodafone IT for different reasons. One is the build of the common grid. The other one is the move of Vodafone e-Team tenancy from towers that today are outside in-width grid to the in-width grid. And the third one is also new sites related to network densification. This takes to a total number across the duration of the plan, that takes to 10,500 new tenants along the duration of the plan. And most of this will happen in the first four years of the plan. So we are talking about material numbers. And what we will see in the first two quarters is the beginning of this process that will take to the overall numbers I mentioned before.

Thanks. That was really helpful. And a quick clarification on the first point. Can I just check that the majority shareholders, do they have a veto? over any OLO tenancy beyond the 4,000?

No, there is no veto. There is no veto. There is a process. There is a process whereby there is a technical verification of the space available on the sides. And the space is basically the physical space and the electromagnetic space. So that's the process, and this is the process that we went through during the last quarter for a significant number of sites. So no veto, just technical verification of the available space on the sites. By the way, as part of the plan, there is also a significant number of sites that, as part of the common grid built by Vodafone and team, will be made available, will be freed up and made available for third parties. So it's an integral part of our plan and our role of neutral host to offer tenants to third parties.

Thank you.

Next question comes from Mrs. Amyad Mayad from Citi. Mrs. Mayad, your question, please.

Hi, good morning. This is Amyad from Citi. Just a couple of questions for me. Your clients are facing pressure to replace equipment from Chinese vendors on your towers. What impact, if any, do you see on Invert? And does the additional CapEx pressure faced by the network operators discourage them to spend on network expansion and hence implies lower growth for you? And my second question is, can you update us on any expansion plans, if you have any, and in particular, any ambitions to expand internationally? Thank you.

Okay, thank you. I'd like to underline that we built passive infrastructure, and so, let me say, about the choice of the operators, we don't have any right, okay? For our coverage we use the best technology that is in the market that we share this kind of technical shoes with our customers. So let me say the Chinese issue is not in our perimeter. Secondly, about the major acquisition, I think that the question is about it. OK, now we are very concentrated in the integration and in the setup, in the final setup of the company. I want to create, to define Inuit as the best set up Towercom in Europe. We have a lot of particularities. Our shareholders are mobile operators. We are the unique in Europe. We base our growth only in organic at the moment. We have 22,000 towers. And so, let me say, the setup will be continuous to be... Okay, I'm Italian, so it's very difficult for me to say this, to build the Mercedes of Formula 1 in the Tower Co. environment. So, about Mercedes acquisition, okay. After that we create the best practice that we are developing, it will be enough easy with the plug and play scheme to go abroad. We are studying and after one year, 18 months, we will start to analyze deeply some concrete opportunity.

Great, thank you.

Next question is from Stefano Gamberini from Equita. Mr. Gamberini, your question, please.

Good morning, everybody. A few questions, if I may. First of all, regarding the 1,000 additional tenants, what is the share of Vodafone and team of this 1,000 tenants that you expect? The second regarding the EBDA EFRX 16 margin. on performance basis for the full year. You reached a level of 93% in the first, second quarter, sorry. Could we project the same level also for the full year? The third, regarding the 10,500 additional tenants from Vodafone and Tim during the plan, if I'm not wrong, these figures were 13,000, including also the new sites. Do you confirm this figure and when we could expect... Coming from new sites, very final question, sorry for that. The target you spent during the business plan was an increase of revenues and EBDA in the region of 5-7% up to 2027. Could we expect that this range could be already reached in 2021, considering that you are accelerating and you expect a strong acceleration now in 2020? 1,000 tenants means a 2% growth, more or less, of tenants. Do you expect an acceleration in the forthcoming year going in this range or not? Many thanks.

So let me start from the first. The mix, as we said, the 1,000 will be a mix of Vodafone and Thiem, will be other operators, will be fixed wireless access. The current mix is around 40% Vodafone and Thiem and 60% the rest. But let me say that we will see the results based on the final split, based on speed of execution. So we are running fast on both, and so we'll be really depending upon the speed of execution. Sorry, about your number, yes, we are absolutely confirming the numbers that we shared in the July business plan, and we are confirming them all. So there is no change to the total volume that we have already communicated. In terms of growth rate, clearly, how can I say, we will provide plenty of details in November when we will share the new TRIER plan. And I think that your approach on the exit is the right one. You're talking about volume. Clearly, there is a value component. But we do expect the tangible step up in terms of volume to accumulate across the next fiscal year. So quarter after quarter, as we said, there will be the growth impact of a four-digit in terms of number of tenants. So, how can I say, I'm not in the condition now to share a number, but clearly it's a significant change and a tangible, tangible, tangible growth. You mentioned the EBITDA margin. For sure, we expect an EBITDA margin above 90% for the full year. There is a little bit of timing and facing across the quarter. So, yes, above 90% is our expectation. Thanks a lot. Thank you.

Next question is from Giles Thorne from Jefferies. Mr. Thorne, your question, please. Thank you.

My first question was on consolidation. TowerTel is in play. Maybe it's going to Phoenix Towers. Can you confirm whether you bid for that asset or not? The second question is, and I suppose it's an extension of the previous question around geographic expansion, but you, you know, you have followed in behind Vodafone and Telecom Italia and facilitated a lot of industrial synergies, which will create, you know, has created a lot of value. But there is rather the question, what happens next? And noting the new major shareholder within your capital structure, Ardian, again, just begs the question, I mean, what is the investment thesis for Ardian? I appreciate it. It's probably their question to answer, not your question. But can you truly see yourself being still in Italy in three years' time? Let me put it like that. And then my third question is coming back to the remedy package the European Commission demanded and the 4000 sites. Remedy packages are often a function of a representation from a stakeholder or some kind of economist within the antitrust authority. I'd be interested to know if you know whether somebody wanted those 4,000 sites. Did Iliad, did Win3 put up their hand and say, I need access to 4,000 sites? Or was this something that the commission unilaterally decided? Thank you.

Okay, about some interest in other tower cause in Italy, for the moment we are not interested in. We have 22,000 towers, are the best positioned and are the best structural towers that in the country are. And so at the moment we are not interested in other tower cause. Okay, if we have the opportunity, some 10 of towers we can buy, but absolutely no in this moment any, let me say, society. okay company okay about what we will do in the next two years I said now totally concentrated in to start to set up this new very interesting machine and after we will see abroad of Italy there are we are starting to study there is some synergies that in the future we can gain based on our platform that we are building. Our platform to manage 22,000 towers are creating some best practices in managing the tower business and so we will export this, let me say, capacity, capabilities. Third, antitrust. Let me say, I don't know who asked to the commission, the sites and so on. The process has been very long. and we interact with the Commission about the the number of size the availability of size of the process but finally the there is a process where there is a let me say interest of the antitrust Commission about the market in Italy the possibility to enlarge the market to give to everyone the possibility of creating their own network and so finally the results is this the antitrust commission after let me say contacted all the wireless operators in Italy and us decided this number and the time frame and let me say very important, the quality of sites. 4,000 in eight years, but the half of this are located in the most important cities in Italy. And we have to build a lot of new sites too. So let me say this is my answer.

Thank you. Hello, and if I may integrate just one minute on this. Yes, we see demand for the sites. It's not only a regulatory constraint. We see a strong demand across the market from all players. Also, the other point that I would like to highlight is, yes, we see plenty of opportunities in Italy. And I think the example of the Goodwill amortization is creating a 22% return on investment, 150 million MPV with very, very limited risk. Clearly, this is on top to the tangible synergies that we are committed to deliver as part of the industrial plan. So, as Giovanni said, there will be opportunities to be assessed, but we strongly believe in strong and significant value creation in the domestic market as well.

Understood. That's great. Thank you.

Next question comes from Mr. Bosco Ieda from UBS. Mr. Ieda, your question, please.

Hi, good morning. My questions have been answered. I just want to follow up on 5G investments and your clients. If you could give us some details on the deployment strategy, how much you think has been already executed is 2020 a relevant year? Is it a lot more 2021-22, which is the peak year of investment for 5G? Thank you.

Okay. After a complex, let me say, path, now the mobile operators in Italy, all the four mobile operators are starting with the macro coverage 5G rollout. They started, they are very concentrated in the most important cities, Milan, for example, Rome, Torino, Florence, and so on. They are designing the total network to be compliant to the constraints for the use of the frequencies. I believe that the next years we will see a strong push from the operators for the 5G and fixed wireless services. Really a strong push. We are, let me say, receiving a lot of requests of new sites and to reinforce the existing sites. A very interesting number. So I can confirm that the 2021 will be the 5G year.

Perfect.

Thank you.

Next question is from Giorgio Tavolini from Intermonte. Mr. Tavolini, your question, please.

Hi, good morning. Thanks for taking my question. The first one is regarding the repatriation of the Vodafone antenna to in-week size. Are you experiencing any extra costs to early terminate the hospitality contracts with the tower operator where Vodafone is currently hosted? And the second one is regarding the ground leases. I mean, do you expect any threats from the American ground consolidators that are stepping in in some European markets that could lead to potential increase in ground rental price? I mean, do you expect to continue to purchase a lot of land, or what are you doing on ground leases? Thank you.

Okay, starting from the second question. Okay, we are very concentrated, as I said in the presentation, in the reduced lease costs of the landlords and we do this through the continuously and, let me say, dramatic nightmare daily renegotiation of the contracts and, let me say, acquiring the fields. We have important numbers, we are continuing and we are fighting with these new American funds that are present now in Europe, that are buying the field with some level of costs greater than us. but we have the possibility to manage because now we have a unique interface with the landlords and then we can manage with the quantity. In the year, we are strictly convinced that we will buy more than 250 and we are using some Italian law to decrease the costs. About the first question was about the re-patriots in terms of Vodafone and Tim surely will leave the hospitality in our tower cause in other tower cause to come to us we call this rimpatriats and the number are very interesting in this we estimate something about one thousand one and one thousand five hundred okay is it okay the question the answer yes thank you very much

Next question is from Fernando Cordero from Santander. Mr. Cordero, your question, please.

Hello. Good morning. Thanks for taking my two questions, both related with the tax side. And regarding the announcement that you have already made on the wood-wheel tax scheme, I just would like to understand if this tax scheme will have any kind of impact on your net profit, or if it's just a, let's say, tax credit, in the sense that if it is going to be any impact on your dividend, considering that your dividend is based on a net profit payout of 80%. And the second question is if there is any other potential tax, let's say, initiatives that you can still have in your hands in order to optimize your current tax structure. Thank you.

So hello, yes, yes, there will be a tax benefit on on the net profit in the range of 50 million per year, starting in year 2022.

Right, OK, so it will fit into net profit consequently into into dividend.

Sorry, can you tell me again your second point? Sorry for that.

Yes, no, no, sorry. If this is going to be reflected as a lower tax rate, it would imply higher net profit consequently translated into the shareholder remuneration.

No, I don't think so. That's not been part of the discussion. The current approach is that the shareholder aims to a dividend payout of minimum 80%, and that's the reference point. Okay. Thank you.

I'm sorry, regarding the other potential tax benefits or initiatives that you can still have availability to, is there any other one that we should expect?

Yeah, not at the moment. Okay, fair enough. Thank you very much. Welcome.

The conference call is over. Thank you for calling.