Infrastrutture Wireless Italiane S.p.A.

Good afternoon. This is the Coruscall Conference operator. Welcome and thank you for joining the Inuit Third Quarter 2021 Financial Results Conference School. 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 school, 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. Fabio Ruffini, Head of Investor Relations. Please go ahead, sir.

Good evening, everyone. Thank you for taking the time to join us for INWIT's Third Quarter 21 results presentation. With me today are Giovanni Ferrigo, our Chief Executive Officer, and Diego Galli, our Chief Financial Officer. Before we begin, please allow me to draw your attention to the safe harbor statement on page two. We will begin with a short presentation, followed by a Q&A session. Over to you, Giovanni.

Thank you, Fabio, and welcome, everyone. Q3 results display an acceleration of all financial KPIs in line with the guidelines, which is confirmed. Expansion of industrial KPIs despite summer seasonality and the long administrative processes needed to build infrastructure in Italy, and our ability to execute on new projects, adding additional sources of growth. Just a few numbers. Hospitalities growing 10% year on year, purely in organic terms. Revenues up 6% in organic terms, Strong EBITDA growth of over 9% and margin expansion from 65% to 67%. Level reduction ahead of schedule and already hitting the year-end 21 target. Looking ahead, Q4 is expected to accelerate revenues further and pick up in terms of industrial activity with a strong increase in new sites. More in general, market demand, commercial pipeline, and a favorable external scenario allow us to look at the future with confidence. Towers are a beneficiary of digital and infrastructure investment and are key node in the digital ecosystem of the future. Let's now move to anchor KPIs on page four, please. Anchor POPs are up 9% year-on-year due to progress on the common grid and the initial benefits on the new site rollout plan. Q-Trade POPs are up more than three times year-on-year, but reflects two temporary factors. Summer seasonality due to reduced volume of activity. Lengthy approval processes in the various layers of the bureaucracy needed to develop our grid, which today don't benefit yet from the new simplification decree. There is a high level of commitment by ANCOR to continuing optimizing and developing coverage, rolling out 5G. As a result, we expect both new sites and new ports to accelerate further in Q4. For new sites, we expect to build approximately 400 by the end of the year. Keep in mind that we are already up three times year on year at more than 210. Turning to our clients on page five, Q3 recorded 300 new POPs with other science or a total of plus 11% year-on-year despite no major update in the remedies process. This is thanks to progress with MNOs in towns below 35,000 inhabitants and fixed water access demand with continuous to develop well. This is despite short-term softness in anticipation of the Italian at-one-gigabit funding. With regard to the remedies, as you know, there is a pending legal appeal against the process since November 2020. At the same time, discussion around the process continues with the involvement of all parties. We are hopeful that an agreement will be found so that we can unlock the strong demand we see for our sites. We believe the remedies are a question of when, not if. In the meantime, we are working to support our growth next year, assuming Iliad in line with this year and counting on several additional sources of growth. This scenario will be better should a solution be reached quickly. As we will discuss later on, 2021 has shown a step change in our quarterly rate of new POPs, with important positive impact also in 2022, when the full P&L potential of 2021 POPs will be realized. Let's move to new services and dust on next slide, slide six. This is another area, like new sites, where we are working to accelerate the business with an initial contribution in 2021 and a meaningful one in 2022. Revenues from new services increased by nearly three times year-on-year on the back of progressive tenancy growth on the DAS-installed base, leading up the asset operators and initial contribution in the interim period between the signing and closing of the tunnel investment projects we keep adding remote units and securing a location in key vertical ahead of the next generation european funds which have the potential to be a tailwind to advanced technology for indoor coverage our solution enable important use cases in fields like medicine, airport, and transportation apps. That demand continues to develop favorably towards larger projects. We provide a complex portfolio of assets and solutions in the context of private and public debt, which returns in line with our internal threshold and not dissimilar to macro-sites. Recent example of this, confirming our leadership in this field, are the investments dedicated to highway coverage. We are also very proud of our role in keeping the buildings hosting the G20 Summit in Rome this past weekend with our DAS solution and coverage. In summary, Q3 results So we continue now in our growth path, and they support our guidance expectation. With this, I hand over to Diego.

Thank you. Thank you, Giovanni, and good evening, everyone. The results of the third quarter build on the positive trajectory of Q2, deliver a further step up in revenue growth, and confirm our progress in profitability and cash flow generation. Organic revenue growth moved to plus 6% up from 1.9% one year ago and 3.2% in Q1, 4.5% in Q2 2021. In purely organic terms, plus 6% growth is one of the best performances in the industry and will improve further in Q4. Quarter after quarter, we are seeing the various sources of growth kicking in. New POPs continue to add to the top line, and further acceleration is expected in the fourth quarter. Quarter on quarter, we are up plus 2.3% in organic terms, or about 4.5 million euros. Every revenue segment is up as compared with Q2. Anchor densifies and optimizes their network with growth commitments for English. Third-party revenues benefit from the quarterly ads of the previous two quarters, New services are supported by DAS tenants and initial work on the tenants. As Giovanni mentioned, new services are up nearly three times year-on-year, sweating existing assets, both DAS and Becon and Lins. We also keep on delivering on costs. Our focus is invisible in ground leases, down 6% despite the growing asset base, pushing tower sites economics higher. main driver of the trend is our relentless focus on the market at local level, monitoring opportunities for renegotiation and, when sensible, acquisition. Therefore, EBITDA margin reached 67%, improving on a quarterly and yearly basis. Lastly, a reminder that our business model benefits from inflation. to the tune of more than €5 million every 1% increase in inflation. And it is insulated from energy cost volatility, since tower-sized electricity consumption is a pass-through in our P&L. In short, a solid set of financials with positive trends across all main indicators. The business is able to show a positive trend in financials despite some short-term volatility in next heads. given the volume of new POPs contractualized in previous quarters. We do expect 2022 will have a more stable cruising speed. Moving to cash flow slide eight, we see that cash flow generation continued to be solid in the third quarter, with cash conversion of 54%, and a further step up in the direction to achieve our 2021 target. On a nine-month basis, we generated more than 280 million recurring free cash flow on the back of growing profitability, structurally low recurring capex, and fairly neutral networking capital cycle. The cash position does not yet reflect the high-weight tunnel investment, the payment of which is split between Q4 2021 and the beginning of 2022. From the next year, we will see also the material benefit from tax schemes, further improving cash conversion. As a reminder, we approved two tax schemes. The first and the most important one is unchanged. The second, based on the recent draft of the Italian budget law, may have reduced positive impact to about one-third of the initial assumption. The IRR would remain quite positive at about 60%. Organic cash flow generation meant reduction in leverage of 0.3 times in just one quarter, down to 5.6 times at the end of September, in which can deliver by about half in leverage turn per year, creating balance sheet flexibility to the tune of more than 1 million euros by 2023. In the appendix to the presentation, you will find additional details on all financials In conclusion, Q3 recorded more than 900 new POPs and a total POP growth of 10% year-on-year. We have delivered robust revenue growth of plus 6%, more than 2% quarter-on-quarter, another tangible step in our growth trajectory. And we confirm growth in profitability with a 9% increase in EBITDA There are visible and growing sources of opportunity ahead of us in 2022, and next-generation EU funds will be a tailwind to macro-sites and dust from 2023 onwards. Giovanni will elaborate on this in the next slide. Okay. Thank you, Diego.

So Q3 shows a further step up in growth, with this industrial activity accelerating in the fourth quarter, with more new sites, in which can count on various sources of growth, and the majority of those are contractually committed or highly visible. 2021 revenue expansion was based mainly on a few elements. Common grid, fixed water access, initial buildup of new sites, and lead up in dust tenancies. continue to support 2022 when we also benefit from the carryover of the contract that we were started in 2021. Adding to this, new sources of growth will come on stream in 2022, including higher anchor commitment in MSA, improving commercial trend in fixable assets, a meaningful first-time impact from the high-weight tunnel investments and inflation that will kick in from January. For MNOs, if we assume a similar growth as 2021 in towns below 35,000 and no immediate resolution of the remedies, Inuit is able to expand revenues broadly in line with current 2022 expectations with a better scenario in case of quick remedies resolution. We are also working to accelerate delivery to get a consistent cruising speed for our operational KPIs. Inuit has the best quality assets in the market with two anchors, a nice tenancy ratio, expanding margin and cash flow generation. Counting on multiple levels of organic growth, we are best placed to capture digitalization and infrastructure investments. With Q4 results, we would like to invite you to our Capital Markets Day, which we will schedule between end of February and beginning of March 2022. With this, we thank you and we will now take your questions.

Excuse me, this is the Coruscall Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. To remove yourself from the question queue, please press star and 2. Please pick up the receiver when asking questions. Anyone who has a question may press star and 1 at this time. The first question from the English conference call is from Roshan Ranjit with Deutsche Bank. Please go ahead.

Oh, great. Good evening, everyone. Thanks for the question. I've got two, please. Firstly, just on the KPI, I think you did drag into this kind of material slowdown, 50 sites added in the quarter. Can you just run through the reason for that quite big slowdown? And you previously said you expect 400 sites by the end of the year. Is that still the case? So, you know, this acceleration, you're talking about quite a material acceleration on the sites for Q4. And then does that drive the, you know, you previously talked about this cruising altitude for tenants. Does that get us back up to the 1,200 tenants for Q4 as well? And lastly, second question, sorry. Just so I understand the acceleration in 2022, you talk about the OLOs improving pipeline on FWA and MNOs and better scenarios. So are you saying that in your FY22 at the moment, you're not including a resolution of the Iliad situation? And if that is resolved, We see upside to the growth. If you could just provide some detail there. Thank you.

Okay, thank you to you. Starting from the site, I confirm that within the end of the year, we will release around 400. This, let me say, today, there is a lot of sites in the final phase of acceptance. consider that the month, the summer didn't help us in these terms. And so we are assuming that in the Q4, we will deliver around 200 new sites. Okay, so I confirm this. It's only, let me say, an engineering process that is about longer in terms of subsets, We are in the path of the 400 sites to deliver.

With regard to the POPs and the 1500 cruising speed, I think that the reference point is our average, broadly average, of the last few quarters. Then, in order to achieve the 1,500, we will get to the two things. One is the acceleration of new sites, so the increase of number of new sites, starting from Q4 onwards. Second, we do expect stronger demand of fixed-file access, and Giovanni will elaborate a little bit more on this in a second. Also, the remedies resolution should be needed in order to take us up to achieve the 1,500. Even without the remedies, we will get higher than the 1,200 considering the other two elements that I did mention.

About, let me say, the 2022, we see, let me say, increasing demand in fixed water access operators. About MNO, we see a stable demand of hospitality.

Is it okay? Sorry, yeah, the first part, great. On the 2022, so you're saying MNO stable, so that isn't factoring in a resolution of Iliad. Is that right?

Yeah, correct. Yes, if it comes, it will be a better scenario. Okay, understood. Okay, thank you.

The next question is from Andrew Lee with Goldman Sachs. Please go ahead, sir.

Yeah, good evening, everyone. Just had a question on cash usage. Obviously, the revenue growth is accelerating, and as you laid out in your email, it's bringing your net debt to EBITDA faster down than consensus is expecting. And so people are trying to work out where you spend your money, and you've obviously kept flexibility for now between M&A and shareholder returns. So just wondering if you could give an update on where you stand on M&A Do you have anything in your sights that's of genuine interest and any kind of guidance you could give us as to where that billion plus is going to be spent more of versus between shared returns and acquisitions would be really helpful. Thank you.

Okay, I confirm the strategy that we shared with you until today in the sense that we are studying about the some little m&a in others and businesses for something let me say new okay could be something that we will discuss in the market day in february when we will do a meeting okay and yeah and as johnny said the the did we are consistent with what we did

last year where we keep on creating flexibility. It will achieve a material amount in 2023 and that could be used for inorganic moves or if not, there are no options with other on the table. Clearly, this is a topic we will deepen and discuss a little bit more in the next update of the strategy. Looking forward to it. Thank you.

Next question is from Simon Coles with Barclays. Please go ahead, sir.

Hi, guys. Thanks for taking the question. I just wanted to dive into the comment around two-thirds of the revenue growth next year is committed. And per your answer earlier, it sounds like some of that is just assuming that other tenants, so other MNOs or FWAs, continue at the same rate as this year. If we were to exclude those, should we think that basically half of the revenue growth expected next year is already committed? the right sort of math to be thinking about, just trying to get a better sort of grip on what you're trying to communicate with that comment.

Actually, the two-thirds are the reflection of, that do not include the new tenants with third parties and does not include the development on small-cell and DARS. And so it's basically coming from the carryover from this year, which is going to be material because in 2021, we did not benefit from any significant carryover from 2020. 2022 will be different. than in 2021, which did have a benefit in terms of revenue in the current fiscal year, less than, let me say, 50% of the full year impact. We will see the full year impact next year. We will see also the benefit of inflation, and we will see also the strong benefit of increase in the committed, strictly committed which is a significant step up reflecting the acceleration and the increase in delivery of new sites.

Okay, that's very clear. Thank you. And then just one quickly on working capital. I think you said there were some comments I didn't quite catch, but it's been neutral so far this year. Should we expect it neutral for the full year? Just trying to check there's no funnies in free cash flow in the fourth quarter. Thank you.

Yeah, broadly, we do expect in general, on average, neutral, slightly positive networking capital for Q4. We do expect positive as a reflection of some actions we are putting in place.

Great. Thank you so much.

The next question is from Sam McHugh with Exxon. Please go ahead.

Hi, guys. Just two questions. Firstly, on the MSA commitments, I think in the slides it says that the commitments in 2022 are greater than 2021. I just wanted to clarify exactly what that meant. Do you mean the incremental revenue commitments next year are greater than those in 2021, or are you just talking about the carryover that you just mentioned in terms of the extra revenues? And then secondly, on the new services, obviously a huge acceleration. Is there any benefit from the Vodafone assets already, or is that a three-time step up all organic

Thank you. Yes. So two different things on the growth for next year. One is the pure carryover of tenants that we have done in the current fiscal year, which will display full impact, full revenues for the 12 months next year. With regard to the MSA, yes, in the MSA, there is a significant step up in the committed revenues, which, again, is the reflection of the demand and the deployment plans for the operators implying and requiring additional insights. Then the third point is about... revenues. Yeah, in the quarter, we did have an impact already, an early impact from tunnels lower than 1 million. From the next quarter, we will see the full impact of tunnels. And we will see also some other initiatives, actually. So the step up of this current quarter, you know, achieving the 6 million revenues that we are very pleased with. we will continue. So we will see another step up in the next quarter as a result of the acceleration, additional focus we put on the realization of new location. But even more than that, as we said, is waiting, maximizing the revenues on the existing assets.

Okay. Very clear. Thanks very much.

The next question is from Fabio Pavan with Mediobanca. Please go ahead, sir.

Yes, good evening, and thank you for taking my two questions. The first one is on the recovery plan. I was wondering if you are starting having some visibility on the projects in the pipeline, on the timing, on how you as a company will be eventually involved in this plan. And the second one is on the remedies. I guess we appreciate that you continue to seem extremely confident on the fact that an agreement will be found. I was just wondering if you have some visibility on the timing and eventually what could be the next step that we should bear in mind. Thank you.

Thank you, Fabio. Okay, starting from remedy. I have no major updates over the past few months, no news. It's very difficult for me to share a deadline today. We know that the negotiations and the legal processes have been going. We are not a part. The parties are Vodafone team and Iliad. So we, let me say, only can, let me say, listen what is happening. We know that the next formal step will be a hearing with all the parties involved, but no date today has been set. But let me underline that we manage the time effect of the remedies in our PNL in 2021 as the results demonstrate. We are working on the various sources of growth that will permit to support the 2022 and to close the 2021 in line with our guidance. So let me say this is important. But as Diego said, if the theme of the remedies will be solved is, let me say, a happy problem for us, okay, because this permit to increase the theme of POTS of third parties. Regarding the next generation European fans, let me say that's a perfect tailwind to our business. Let me say that they improve the investment cycle in wireless infrastructure and macro sites, speeding up the development of DAS for the indoor coverage. Let me say the team are in practice, Italy 5G plan, Italy that one giga plan with the fixed wireless operator. as i think that every one of you read the the the the delivery of fast with the fixable access solution gaining the one gigabit for the final customer industry 4.0 always with us special courage trains health care, medicine, tourism, university, and so, let me say, we are ready. Which are the ways to access to the funds? Probably it will be via call for tenders, and we will take part in competitive building processes or through public-private partnership by signing an agreement with a public institution or promoting some specific project. When? That is the question. Okay. The first tenders are coming now and we are involved in the beginning of 2022. And for us, the initial benefits for our TNL, I think in the second part of 2022.

Extremely clear. Thank you very much.

The next question is from George Yerodiakono with Citi. Please go ahead, sir.

George Yerodiakono Yes, good evening, and thank you for taking my questions. Just a couple of clarifications, please. I appreciate you already made a lot of comments about the 2022 guidance and how much of it is contracted. Do you have an idea about the inflation aspect of it? I mean, we're close to the end of the year. Can you perhaps give us an indication of what kind of inflation assumption you're putting in there versus what you had last year? If that's something you can share. My second question is around the use of proceeds and also other opportunities to grow. And I was wondering whether you are at all considering either in early or perhaps a bit more advanced stages or thinking of how you could expand the services you provide for your anchor tenants, perhaps even take control of some of the radio equipment that they share. Is that something you are considering? Have there been any discussions on this or is it something for the mid-term? Thanks a lot.

Good evening, yes. Let me start from inflation. The mechanism of inflation is basically that Starting on 1st of January, we apply the inflation, the average inflation of the previous year. This is the basic mechanism for the MSA. So again, 1st of January 2022, we would apply, increase the prices based on the average inflation of 2021. As a reminder, on the MSAs, The contracts are 100 percent inflation-linked with no cap and the floor at zero. With the other contracts, with the other customers, generally, they are 75% inflation-linked. So as shared, 1% inflation for us is a positive benefit of $5 million at the bid-buy level, without counting the fact that, honestly, on ground-risk costs, we have also the opportunity to offset some of the inflation.

Okay. About, let me say a few... Okay, starting from the fact that small cell and DAS are active equipment. We have, let me say, radio designing department inside the company that is perfectly, let me say, filled with the designing and maintaining the active equipment. with the arrival of the open-run architecture in the, let me say, tier 1, tier 2 in Europe today is not yet, but we are ready to manage this new infrastructure and optimizing all the, let me say, on-field infrastructure that the mobile operator will install and must manage. So, let me say, It's only a theme of time, but from a technical point of view, from a process view, from, let me say, the reading person, we are ready. Really, personally, I'm very excited to start with this new frontier of the Tower Company.

If I could ask a follow-up to my first question, is it possible to give us a bit of an indication of what the inflation rate you expect will be used for next year based on where we are today? And also give us what was used last year, just for us to get a bit of an understanding of what's the trend here. Is it, you know, 0.5? Is it 1%? Is it more than 1%? Just to get a bit of a feel.

Hi, George. This is Fabio. Can you please rephrase? Because the line was a bit not clear. So are you asking about inflation assumptions for next year or...?

Yes, whether you can be a bit more precise as to what are the kind of expectations we should have based on the fact that, you know, in less than two months, the year will be over versus what you used in 2021, just to get an idea of what is the step up we may see in 22 versus 21.

Just to confirm, Jorge, apologies. You mean specifically for inflation, right?

Yes, only for inflation. Whether the inflation we see in 2021 going into the 2022 contracts, is it 1% difference or not?

Yeah, 2020 inflation was basically zero, so there was no impact on prices in 2021. The current year inflation in 2021, which then will apply to 2022 prices, is... I think the last numbers were related to September, and it was about 1.5% average of the year. So now we will see the next couple of months will be a little bit higher than the average, but let me say broadly now 1.5%. Perfect.

Very clear. Thank you.

The next question is from Stefano Gamberini with Equitasim. Please go ahead, sir.

Good afternoon, everybody. Two questions from my side. The first deal regarding this trend of, sorry, the 2022 revenues, which is two-thirds already committed. What is the reference of this growth? Are you referring to the consensus which is around 9% or 855 million US revenues in 2022. So, the second topic is, if this figure is correct, this means that you still need 20, 25 million US to reach 2022 consensus revenues. How you can What I mean is considering the six-month period in order to, between the collection and the revenues, what is the trend in a new collection that you expect next year to reach this target? And the second question regarding the 2023 targets, you confirmed also in this case these targets, which means a further 9% growth in revenues. What are the main drivers that you see in 2023, considering the delays in M&O's new collection during 2021, considering also the low visibility on small sales from 2000 and in 2023. So what are the main drivers in your view for getting this target of growth in 2023? Many thanks.

Thank you for the question. The first answer is very short, is yes. The answer is yes. That's the reference, of course, is the consensus. The second question is that also the remaining bit, the remaining one-third, the 30% that we have not defined as committed, yes, there is a high degree of visibility, and let me say for sure on at least half of it, though it's not supported from, let's say, contractual commitment or it's not already in the pocket. So the two-thirds that we did mention are in the pocket for different reasons, either contractually committed with the MSA, strictly committed with the MSA, or already coming from the run rate, or coming from inflation, or coming from commercial contracts signed now, such as the Tandems, which again will deploy full impact next year. Just to reiterate, also the remaining 30% has high degree of flexibility, so where there is still This does not mean that we can write these numbers today in the sense that the operational machine will provide a significant increase in volumes and delivery. And that's what takes to your third question, that is basically the growth engine which will become more relevant in the next two years is basically the construction of new sites with the additional tenants in those. You may remember from our industrial plan that we have in the plan 2,400 new sites, of which 1,800 by 2023. So that's where we will see an acceleration of delivery and acceleration of tenants and acceleration of revenues. We are also very, quite positive on the development of special coverage. So, as we mentioned, DAS are evolving to larger projects, and the example of tunnels on the highways is giving us, for sure, material impact on revenues, but also is opening, has opened a stream of opportunities, which on small cell and DAS and new services is adding boost. On MNOs, I mean, at the end, yes, this year we have not delivered, we are not delivering in line with what we would have liked. But anyway, we are talking about so far in the last quarter of 1,000 new tenants, which has brought the growth to 11% year-on-year growth. So it will stay like this and maybe it can be better. stronger demand, and it's also visible just reading the press from key operators and the media from the key operators, fixed-fire success operators. Also, then if the remedies process will improve, that will be on top to the other growth engines. Sorry for the long answer, but I hope it was helpful.

Just a quick clarification on this. You said the remedies are the second important novelty that we are waiting for. So in order to be more confident on 2022 revenue target, when we could expect an acceleration on remedies? End of this year, beginning of next year?

Yeah, so Stefano was not completely clear. I said it was the second out of the last topic. Yeah. So, in the sense that, as Giovanni, I think, explained very clearly in the presentation, we are working on a 22 scenario. Actually, the 22 scenario is based on the multiple growth engines assuming MNOs in line with this year. If the remedies process will have a quicker of the base scenario. In terms of the visibility, again, Giovanni did share a few minutes ago that it is difficult to have visibility in this moment. So as Giovanni said, we think there will be a solution. So it's not a question of if, a question of when.

So let me say, as Diego said, we are waiting, but meantime, we are, developing different sources of growth and revenues to permit to be confident in 2022 results.

Okay, thanks a lot.

The next question is from Abhilash Moapatra with Berenberg. Please go ahead.

Thank you for the question and thanks for the presentation so far. I just wanted to go back to your point around fixed wireless access, please. In the presentation, you call out, specifically call out visibility on the commercial pipeline, and you also sort of mentioned sort of releases from some of the operators in the market. I was just wondering if you could give us a bit more color here. I guess part of some additional color here. what you're seeing in terms of demand from the clients, that could be quite helpful.

Thank you. Let me say fixable access operators are, let me say, very propositive in the Italian market. As I said many times, there are four actors very important for us that are asking to us hospitalities. They announced with some very important press releases the target of the next year in terms of gaining the supervised areas of the country. And so we are ready to host them with our solution. And this is an important pillar for the 2022 results.

Thank you.

The next question is from Luigi Minerva with HSBC. Please go ahead, sir.

Yes, good evening and thanks for taking my questions. The first one is on the slowdown in the new POPs from the anchor tenants in Q3. Can you just go back and give us more details on the reasons why they've slowed down and whether we should expect the same in Q4 and what can trigger a change. Secondly, on the remedies, I'm just wondering, under what circumstances can the European Commission eventually intervene and impose a solution? And also how, whether there is a kind of ultimate date where eventually they have to intervene and impose a solution And lastly, a more general question. I was wondering what are you observing from your customers in terms of their approach to Open RAN in the Italian market? And perhaps if you can comment on how do you think Open RAN can affect your business model? Thank you.

Thank you, Luigi. Okay. Slow down. Okay. It's the consequence of the height that arriving with some months of delay. As I said, within the end of the year, we will deliver around 400 new sites because the limited bureaucracy, the simplification decree finally has not been legislated and, let me say, made in progress by the municipalities. We are fighting with them. And so, within the end of the year, we think to give some good news in terms of the hospitalities for their core tenants. The second one is about the remedies. It will be the cohort of Bruxelles that will... impose the decision to the Commission. Always the concept is not a team of if, but a team of when. The time of decision of Bruxelles is out of our, let me say, provisional team or, let me say, to know something about. The third one is about Open RAN. Vodafone and Tim announced the first, let me say, appliance of this new technology. Not a noise of architecture. We are collaborating with them in Italy. And as I said, we are ready. In our, let me say, plan, we didn't consider this new, let me say, branch of revenues because, let me say, it's something that must be, let me say, touchable. At the moment, it's not. But we are ready. Our business plan is another opportunity of revenues because it's another opportunity type of contract that we will define with Anchor Tenants because there will be a team of designing, a team of maintainers, a team of installation that in this moment they are doing it. And so, let me say, another interesting opportunity in this, enlarging our competencies and our responsibilities. Finally, the Tower Cause, with the architecture will be, let me say, the lord of all the field management equipment for the mobile operator that will be, let me say, very concentrated in their multiple data center. This is after 2020.

Okay, thank you, Giovanni.

The next question is from Giorgio Tavolini with Intermonte. Please go ahead, sir.

Hi, good evening. Thanks for taking my questions. I was wondering if you could provide any update on the electronic limit revision in Italy since this topic seems completely disappeared from the political agenda. And the second one on a follow-up on the remedies, you said this is a matter more of when than if, but assuming a worst-case scenario or in addition to the remedies, would be an opportunity for you to enter a bill-to-suit program with Iliad in order to support or to accommodate their demand? And the third question is on the tax scheme. Diego was mentioning the new budget law, the draft budget law for 2022. I didn't understand completely if you expect to pay higher subsidies tax on the second scheme in order to keep the same tax benefit. So what are the main changes to the second scheme? Thank you.

Okay, starting from the electromagnetic field limits. Okay, it's more reasonable to support 5G deployment quickly and efficiently. This is some common data, okay. I have no recent update, okay. But personally, I think that it is not out of the question, but I have not visibility on the political processes. But potentially, in these days, could be something new in the competition law in Italian, that today Mr Draghi is delivering, which will follow with discussion process in the Parliament. So let me say, probably in the first half of 2022. This is the fifth. The second is about remedies.

If you have the opportunity to enter at least a suit program with Iliad externally, I mean, not completely related to the remedies, but an opportunity to speed up their demand.

Yes. Okay. Sorry. Yes. To all our customers, we propose to build the dedicated site with ILIA2. They are evaluating our proposal. They, up to date, they, let me say, deliver new sites with other, let me say, tower core, but they demonstrate interest in our proposition, and why not? We are available. to deliver new sites for every mobile or fixed-valued company in Italy. The third is about tax.

With regard to tax, the current, the original scheme was a 3% advance payment with benefit in 18 years. The current proposal is the 3% that will reduce to broadly one-third the MPD, which is our preferred, as of today, preferred scenario. The alternative one could be the upfront payment of 60%, or again, benefit in 18 years. So, I mean, we will keep on considering and looking at the final option, but for now, we would say that the 3% in 50 years is probably the best case Let me also remind that the other scheme we have in place is the 16% above payment with benefits spread in five years. That will remain, is unchanged, and will generate more than 110 million benefit on recovery for the next five years.

Thank you very much, Diego and Giovanni.

The next question is from Ben Rickett with New Street Research. Please go ahead, sir.

Hi there, and thank you for the question. Just wondering what we should expect in terms of updated guidance at the Capital Markets Day. Will you just be giving 2022 guidance, or can we expect you also to upgrade, to update your mid-term guidance looking further out? That would be helpful. Thank you.

Sorry, the spirit is a regular update as part of the normal company cycle in terms of planning and then updating the market accordingly. Probably, we will extend also the time and duration, again, as part of the normal. We will extend by one year the visibility as part of the normal cycle. And so the structure and the framework is the one that we already shared. We will go deeper and we will provide those updates considering the impact of next generation EU funds. We will cover more into details, things that we are discussing internally, such as the capital allocation. So since November 2020, I mean in February there will be So we think it's good practice, and we are keen to provide a regular update, nothing more than that.

Okay, thank you.

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