Infrastrutture Wireless Italiane S.p.A.

Good morning. This is the course call conference operator. Welcome and thank you for joining the third quarter 2024 in with financial results conference call. As a reminder, all participants are in listen-only mode. After a presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Fabio Ruffini, Head of Investor Relations. Please go ahead, sir.

Good morning, everyone. Thanks for joining us. With me, there's Diego Galli, with General Manager, and Emilia Trudo, Chief Financial Officer. Please allow me to draw your attention to the safe harbor statement you see on page two. And as usual, following a brief presentation on the results, we will open the floor to Q&A. Over to you, Diego.

Thank you, and good morning, everyone. Cortex-3 results continue to build on in-width growth trajectory. All main KPIs recorded a further expansion. The structural need for digital infrastructure in Italy is confirmed. In-width is proving resilient in a transitional year for our largest clients, which has an impact on market trends. The Michigan Telco corporate transactions have been announced with the potential to improve market fundamentals and unleash additional investments. EWIT industrial execution is steady at high volume of delivery. We will have more than 900 hours in 2024, expanding the asset base at a creative return. Financials are up in the high single-digit range, with yet another quarter of EBITDA margin expansion. This implies an execution towards the low end of the guidance range for 2024, on the back of the holos market, which continues to grow at low pace, and investment in mobile generally still constrained by budget availability. Long-term growth visibility remains high based on CPI, NSA growth commitments until 2030, and operational plans with clients. From a partnership point of view, we continue on the path to reduce leverage, despite having increased dividends by €100 million and having completed that €300 million shared by BECC. In which builds balance sheet flexibility that will be used to deliver incremental value to shareholders. We plan on updating the market on this front during Q4 results. Moving to main trends of the quarter on page 4. The key figures for the quarter show 7.6% revenue growth. New service up 61% year-on-year. 9% growth in EBITDA after release, with margin up by 1 percentage point. Recurring cash flow at 159 million euro, up 3% euro over year. Net debt to EBITDA at 4.8 times, improving quarter on quarter. From industrial point of view, solid delivery with more than 200 new sites, more than 900 new POPs, for a tenancy ratio up to 2.3 times. And solid base of real estate transactions, main efficiency driver at more than 300. In brief, a resilient growth trajectory in a context of transformation for our largest clients and a confirmed structural need for better digital infrastructure in Italy. Now, I will turn it over to Emilia for a more detailed review of the results. Thank you.

Thank you, Diego, and good morning, everyone. On page five, the focus is on the development of new sites. 200 new towers in the quarter, reinforcing Inuit's position as a leading digital infrastructure player in Italy. We build new sites with a clear industrial approach. driven by our technology and operations team, and with two committed anchor tenants, a distinctive feature of our model. New sites are an answer to operators' coverage and capacity needs across three distinct built-to-suites programs. Standalone 5G in Italy is still in its early stages. Intensification is expected to support demand for new sites for the foreseeable future. A very accretive use of capital. Moving to anchor box on page six. 490 additional points of presence with STEAM and Vodafone in the quarter. This trend shows a sequential improvement quarter on quarter in line with commitments. and coherent with fully our expectations of approximately 2,000 new POPs. In terms of mix, the majority of new POPs relates to new sites. We consider this trend as solid, given the current market context. Turning to page seven, we review OLOs. 420 new POPs with clients other than Team and Vodafone, supporting an early volume growth rate of 13% for a total of nearly 15,000 POPs at the end of September. The quarterly trend on the low end of the expected run rate reflects stable MNOs, including POPs from Iliad and Win3, a soft FWA market with no tangible signs of improvement yet, and good volumes in IoT clients, particularly in smart grid applications. Next, on page eight, we review new services. In those locations, Inwood Infrastructure enhances mobile connectivity, providing a multi-tenant solution which enables advanced enterprise services and a better consumer experience. In the first quarter, revenues increased by more than 60% year-on-year, reaching more than 18 million euros. The growth was fueled by the addition of 60 new locations, served by indoor coverage solutions with dust and repeater technologies, and an increase in the tenancy ratio across the 580 locations recovered. in which is building a solid track record in a dynamic market, with the transportation vertical being particularly interesting. I have just flagged the Rome 5G project, which includes an upgrade to 5G connectivity in the subway system, together with small cells deployment, and the Milano and Fort Metro line extension. Next, we review the P&L on page nine. Revenue growth in the quarter stood at 7.6%. Anchors were up both year-on-year and quarter-on-quarter. Oil loads instead were about stable compared to Q2, with revenues just above €30 million, net effect of new POPs and lower other revenues, as previously flagged. Operational expenditures increased in line with maintenance activity levels and the support for new services. EBITDA margin was at 91.1% and is expected to improve in Q4 in line with guidance. EBITDA service improved by 9% with margin up by 1 percentage point to 72.8%, one of the highest in the sector, driven by real estate efficiency. increased by 2% to 87 million euros, reflecting the expected trends in DNA, interest, and taxes. Moving to the cash flow on page 10, recurring free cash flow was 159 million euros in the quarter for a 67% cash conversion. We recorded limited recurring capex, no cash taxes, A positive net working capital move of nearly 10 million euros and this payment and financial charges in line with expectations. Reported leverage to the 4.8 times slightly down quarter to quarter. This includes the impact of a higher ordinary dividend by 100 million euros and most of the 300 million euros shared by BEX which was completed in mid-October. Our balance sheet remains well-balanced, with 70% of debt being fixed and only actual maturities, the first significant repayment being the bond maturing in 2026. On page 11, a brief look at our business plan guidance. The update in 2024 reflects current market conditions characterized by limited investments by operators beyond commitment. This is particularly evident in the OLOs market. On 2025 onward, we should also factor in that 2024 CPI expected at approximately 1% undershot our initial assumption of 2%. Supporting in with growth profile for the long term with a high level of visibility, we have strong anchor MSAs, high industrial activity with rollout of resides, indoor coverage revenue growth, and least cost efficiencies. To grow, expand margins, invest at a creative rate, and build balance sheet flexibility. On top, There is an opportunity to grow further in case of acceleration of investments in mobile connectivity by the Italian operators. With this, I hand it back to Diego. Thank you.

Thanks, Emilia. A few more words from my side highlighting the distinctive features of InWit in an evolving industry context. We can count on the best tower assets, which continue to expand. a deep industrial expertise evident in our rollout capabilities, real estate track record, and commercial capabilities in developing new services, strong MSAs, and a clear capital allocation framework. In terms of execution, I'm satisfied with the progress in new sites, new service revenue growth, and least cost efficiency, which is best in class. Discretionary investments in mobile infrastructure have been at the minimum over the past few years and cannot be postponed forever. It is rational to expect 2024 to be the low point of this trend. Digital infrastructure in Italy lags materially behind the European standard and there is the potential to unleash higher investments. In which it is very well positioned in this context, and we look forward to updating you on our midterm ambition in the 2025 Capital Market Day. On March 4, among other topics, we will provide financial targets to 2030 and an update on capital allocation. With this, I thank you, and we are now ready for the Q&A session.

Thank you. This is the Coruscant Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. In interest of time, we kindly ask you to limit yourself to one question at a time. The first question is from Roshan Rangit of Deutsche Bank.

Oh, great. Thank you for the questions. Morning, everyone. Diego, you mentioned 2024 being the low point of growth. And whilst we recognize the commitments that you have from your two anchor customers, what can you say to us to suggest that it will pick up in 2025? You highlight the need for investment. but also the kind of budgetary constraints. So, you know, you previously said 24, 2000 anchor ads, pop ads. Is there a number you could give us for 25? You know, what numbers should we be looking to for 25? In fact, if I just quickly ask on the lease costs, lease costs were down 3% year on year. I think it's the first time we've seen the lease costs down after a few quarters. That is despite you kind of having a low number for the site negotiations. So is there anything else going on there, or is this now the benefits of having negotiated previous sites with the kind of inflation environment stepping down?

Thank you. Good morning.

Yeah, clearly we have the commitments with our anchor tenants which are developing well. They are basically around new sites and new tenants on new sites and also some on indoor cover solution. The commitments are progressing well. We've got visibility on the progress and the development of the revenue profile up to, actually up to 2030. And these commitments, as I said, are underpinned by operational plan, basically around the macro sites and new towers. And this is the context where actually the commitment satisfies the minimum need of investments when it's clear that in the market and in the industry there is need to additional investments to provide the better connectivity, 5G, and to satisfy the need of a digital economy, digital society. So clearly stronger and, as usual, visibility on commitment and commitment growth profile. And in the context where The investments so far have been at the bare minimum, and we have gone through, and the operators have been going through a transitional year. Our key customers are both in a particular year, and that's why we think it's rational and it's our sensibility to think that the trend will improve. Again, for industry and market need for better digital services, as well as the specific situation our two key customers are going through.

Hi, Roshan. Concerning the risk efficiencies, actually, these are a strategic driver of our EBITDA after-loss improvement over the business plan. We continue to execute either through land buyout and renegotiations, and we are reaping benefit of it.

Thank you. That's helpful. Diego, if I may push you a little bit, how many kind of anchor pots should we be thinking about then? Should we see an acceleration from the 2,000 for 2024 when we're looking at the number for 2025?

Yeah, we have a plan of around 5,000 new POPs over the three years, 24 to 26, and we are well on track with that.

Okay, thank you. Welcome.

The next question is from Maurice Patrick Barclays.

Yeah, morning, guys. Thank you for taking the question. A question on the OLO growth, please. I mean, in your slides, you helpfully show the number of OLO pops and revenues. You know, you say in the slides about how FWO is soft and you talk about some of the smart grid being positive. But can I just, and in the text, you also talk about why the revenues are down 6% being lower project and install work? But can I just check we're not seeing negative as in disconnections from FWA? Is it more FWA is flat and it's just the mix is all the net ads are coming from smart grids, for example, rather than FWA actually reversing going negative? Can I check that, please?

Thank you, Maurice. Yeah, the OLO is a combination of different elements. growth engines related to the fact that we continue to do business with Iliad and we do a few hundreds of new tenants which are the most valuable. This is a growth engine together with basically the additional tenants, the high volume but also low value additional tenants in mostly the IoT business. These growth trends are offset by some negatives basically around the discretionary services which actually are going down, and that's particularly visible in this last quarter. And then, actually, fixed-release access is basically at this stage almost neutral in the sense that we, the development plan with open fiber are slow. And overall, the fixed-value success market is still soft, so it's not adding a particular positive contribution. So this, what you're seeing in the quarter, I mean, in the last few quarters, is the result of the balance of these three components.

Thank you for that. If I could just maybe just ask as a follow-up to that. When you think about the next couple of years and the growth in the OLO, I mean, do you The things like the EMF, the radiation law changes, does that maybe change how you think about the growth potential in OLO from other POPs? Do you see this kind of strong growth out there for identification, or is that demand still there? Just your thoughts in terms of the next couple of years for the OLO side would be helpful. Thank you.

Yeah, we think there are the conditions to improve and to do better on the OLOs. So this is what we think we are working on, considering that fix-on-the-success is technology which is relevant to complement the fiber deployment, considering that the EMF can help also on the most valuable mobile tenants. So, yes, we think there is room for improvement. The question is when this improvement will be triggered. But for sure there is room and need for a better trend. That's great. Thank you. You're welcome.

The next question is from Andrew Lee of Goldman Sachs.

Good morning, everyone. So thanks for your help, Diego, and team, in terms of helping us understand the kind of phasing and your confidence in the network-operated demand coming back. I just wanted to follow up on your what's driving that confidence in terms of the commitments you're seeing from the network operators. So just to give us confidence that this is just a timing stroke phasing issue you're facing in terms of this, the demand driving revenue, and that there's not maybe some underlying slacking of demand for whatever reason. And then just as a follow-up question, Could you just help us understand how confident you are in the timing of the re-acceleration in demand, specifically pertinent to your 2026 guidance? Give us a sense of your confidence that this is going to be coming back in the coming quarters and therefore not posing any risk to your 2026 outlook. Thank you.

Thanks, Andrew. Yeah, no, I think we need to, from my side, to share, you know, that on the commitment side, commitments are, and the commitment profile is solid, is progressing very well. As I said, it's underpinned by the new sites rollout mostly. And that's a material contribution to our growth. And if we think to the next couple of years, what is the committed growth is at this stage more than 50% of the overall growth. Then there is an additional significant bit for which we have a clear line of sight based on programs already visible with clients. But there is then the third layer of basically 20, 25%, which is at this stage more discretion and related to the discretion spent of the operators, our anchor tenants, as well as the other customers. So this is where we think 2024 has been particularly soft for different reasons. We discussed about fixed service access, but in general, an era of transition for almost all of our key customers. And if we consider the transitional year and the structural need for better digital infrastructure in Italy, we think that the growth and the committed growth with our anchor tenants can be strongly complemented and complemented and topped up by the additional growth levers as we have done so far. Let me take the opportunity to mention how new services have been growing. And we reported this for the 60% year-on-year growth. And this is a constant trend which has brought the new service revenue line basically doubling in two years. And we think that this trend will continue over the next years. So actually different growth levers committed well on track. Discretion was spent with the opportunity to be better than what we have seen in 2024.

The next question is from Andre Kebisek of UBS.

Hi, everyone. Good morning, and thank you for taking my question. I've got maybe a question also related to the 2020 . Andre, apologies.

We can't hear the question.

Hello?

Hi, this is Fabio. We cannot hear your question. Could you please repeat?

Excuse me, Mr. Kabasek. We cannot hear you.

Hello, sir.

Apologies. I had an issue with my headset. Apologies for this. Can I ask you a question?

Yes, please.

Hello. Yes, thank you. Sorry about that. So I wanted to follow up on the kind of target discussion around 2026. So with respect to inflation, say, you know, we're obviously tracking below in 2024. And then say this continues with inflation kind of below the embedded targets in your guidance, call it 1%. Then we're looking at a deficit of, you know, 10 to 15 million dollars. from a bit down, and obviously there will be some offset on the lease side, but just how confident are you that the 2026 guidance, where consensus is already at the very low end, I guess if we continue to track at lower inflation around current levels, how confident are you that there will be some offsetting factors or that you are able to generate new revenues that we will get to the guided range in 2026? Thank you very much.

Thanks, Andre. Inflation in 2024 has been about 1% versus the expectation of about 2%. One percentage of inflation is basically 5 million EBITDA impact. We and consensus and researchers see inflation to to be higher in 2025, and to be around the 2%, which is what we have in our plan. Let me take the opportunity to share other thoughts on 2026, because clearly we discussed so far about two headwinds that we have seen in 2024. One is inflation, and the other one is the euro. performance, the low end of 2026 guidance implies a CPI at 3% as cumulative, so 1% in 2024 and then 2%. Clearly, the development of commitments has committed the continuation of growth in new service and a slight improvement in orders. Clearly, as we said, we keep on working with our customers' operational plans to assess and develop further opportunities both in core and other businesses.

That's a very helpful color. Thank you. Thank you.

The next question is from Fabio Pavan of Mediobanca.

Yes, hi. Good morning, Diego and the team. Just a follow-up on new service revenues. Clearly, there has been an acceleration in quarterly growth in 2024. What we should expect for next year? And eventually, you were focusing on the vertical transportation. Are there any projects already ongoing you should would give us some more color on this. Thank you.

Thanks, Fabio. Yes, as I said, the new businesses have been growing well despite the overall market and context environment, as we said, and budget operators limitations. And this is happening because the market demand is huge. The quality of indoor coverage is in thousands of locations. It's not up to standards which allow to do digital transactions, payments, authentication, or the usual activities which people and companies do with mobile connectivity. So there is a huge, huge demand which is fueling our growth together with our ability to capture and develop this demand with the operators as well as with the venue owners, location owners. And I think important projects have been delivered. Let me remind the new underground, the finalization of the new underground in Milan with the 5G coverage from the airport to the city center provided by to all operators, all fall operators. We are fully engaged with the new project in Rome, Rome as a smart city, which is a blend of not only the metro, the new underground, as well as IoT, Wi-Fi, small cells, so a fully fledged digital and smart city project. So, and these are on the transportation vertical, but also interesting projects as the Milan Exhibition Center, which is actually a large campus So where we do see and we are developing opportunities in the transportation verticals as well as on the shopping malls, on hospitals, museums, and large campus, including companies and universities. So growth will continue at this pace, and we are on track to achieve more than 100 million revenues by 2026.

Thank you.

You're welcome.

The next question is from Milo Silvestre of Equitasim.

Good morning everybody. I have a question concerning capital allocation. Here if you can remind us what are the priorities between shareholder remuneration, let's say external growth or also acceleration of investments. I think about land payouts. And if you are considering investments or MADs in new verticals such as maybe edge data centers.

Ciao, ciao, Milo, and welcome. Thanks for the question. And clearly, we keep on growing a bit dull. We keep on leveraging. We are on track for the 4.1 times leverage by 2026. And we will keep on. So we are creating the financial flexibility, which will be assessed in the framework of our capital allocation framework and the leverage corridor. So the trend of our leverage creates financial flexibility, which is bigger than $1 billion, and we will use it in the most accurate manner. As I said, consistently with our capital allocation policy and with the with the intention of not remaining under leveraged. And so using the financial flexibility in the most accretive manner means assessing, as we did in 2023, the opportunities for further growth investments in business which may be closer or a little bit closer to us, as well as clearly assessing additional opportunities for shareholder remunerations. In 2023, we balanced the two, investing more in new towers and new land acquisition, as well as increasing the dividends and launching the first buyback plan. We will keep on considering the same approach, and we will share the approach in March 2023 in our capital market day.

It's in March 2025, of course.

The next question is from Luigi Minerva of HSBC.

Yes, good morning everybody. Thanks for taking my question. It's a follow-up on the previous one and particularly I wanted to check when it comes to your capital allocation decisions, given that the current shareholder distribution pretty much absorbs all the free cash flow generation. whether a current rate condition, it would make sense for you to issue a bond in order to leverage up. And then at that point, I suppose, depending on the cost of funding, how will you benchmark the returns on a share buyback versus... the signaling benefits from a higher recurring dividend versus potential growth investments, as you were suggesting in the previous answer. Thank you.

Thanks, Luigi. Yes, clearly, when assessing the options, the cost of financing is an element we have considered, and we keep on clearly considering in the the different elements we consider. And on this front, let me also say that it's rational to think that the macro environment and to expect the macro environment will keep on gradually improving. Clearly, what we see and think is that the options to use capital, the balance sheet flexibility also the current macro environmental rate interest. Then making the decisions of the allocation, clearly we consider and the different tools of allocation, we consider different elements including liquidity, share price, and generally we consider the dividend policy as a structural lever, more flexible and tactical. But as I said, we consider the different element as we did in 2023, and we are going to do again for the update of the business plan we will share in March 2025.

Okay, thank you, Diego. That's helpful. And perhaps, as I have you on the line, can I ask you still a bond-related question, but with a different angle? And I just wanted to check whether the bond maturing in 2026 has any change in control clause that would limit actions from your leading shareholders, so Vantage and So just theoretically, whether a take private scenario is limited by the covenants in the 2026 bond.

Yeah, on that bond, it was issued in 2020, if I remember well. There is a put option in case of downgrade. And change of control, that's the terms.

Okay, so it wouldn't limit the actions of your shareholders. There is a put option, correct?

Yeah.

Okay, thank you so much. Thanks.

You're welcome. The next question is from Usman Ghazi of Wernberg.

Hi, everyone. Thank you for the opportunity. Just one quick one, please. In your capital allocation framework, when you're assessing opportunities that are close to core, I mean, I would just be interested in how your view is evolving on what is actually close to core, you know, if over the few months that you've been considering this, if your view has changed on that front. And just related to that, The transaction with Baldwin on the Roma project, do you have an understanding of how much that will contribute and in what timeframe, please? Thank you.

Thanks, Osman. Yeah, in terms of growth opportunities, clearly there are smaller or bigger things. The smaller are related to more land and or energy self production or dust projects. Bigger ones may be related to run as a service or edge data centers. All opportunities are around our core business, our core mission of being a shared infrastructure player which provides infrastructure as a service in the wireless and digital framework. So, as we said in the past, land, energy cell production, dust projects, eventually run as a service and edge data center. With regards, yeah, and the ROMA 5G projects is actually is an evolution of our business model. It's doing business with basically our customers, traditional customers, as well as the municipalities of Rome. And this is a project we'll contribute with double-digit revenues by 2029. So it's an interesting project which will see us involved not only for that project within the underground, but also providing committed revenues for Wi-Fi services, as well as the opportunity to preempt the small cell demand, starting also complementing the macro towers with the micro coverage through small cells. So fully-fledged project, which shows the opportunities also for the future to keep on developing similar projects and expanding a little bit our core assets and core business model around our adjacent businesses, again, with focus on shared infrastructure for our key customers, tech operators, as well as some venue owners or municipalities.

Thank you. Welcome. Welcome.

The next question is from Fernando Cordero of Banco Santander.

Hello, good morning. Thanks for taking the question. In that sense, I would like to ask about the behavior of one of your two anchor tenants. After exiting from the case of Vodafone, after exiting Spain, you have seen how the new owners of the former Vodafone operations are challenging the contract with Vantage. Vodafone has also agreed to travel the operations in Italy. How comfortable are you with your current MSA with Vodafone, or in other words, shall we understand the risk of this renegotiation of the MSA with Vodafone in Italy is under control? And just a second one, very detailed, just to understand better the performance of the ground leases. We have seen a material increase in leases cost to the OPEX, 5 million euros in the quarter. Just to understand if that is a weak classification of the ground leases into short-term contracts, or what is the reason for this increase in order to have the whole view on the performance on ground leases. Many thanks.

Fernando, thanks for the question. We are very comfortable with the MSAs for two main reasons. One is the contractual construction, which is built around the concept of the legal terms of all or nothing, which means that our customer either will stay on the full estate, on the full infrastructure, or we'll have to exit from the full infrastructure. And I think that our infrastructure is a key asset in the country, is a key asset for differentiation and business growth. The second reason why we are comfortable is that the industrial logic and industrial value which the MSAs with Tim and Vodafone has been and keeps on creating in terms of industrial and financial value. So the concept of sharing the deals, our infrastructure, with two tenants is a model which create synergies, which create efficiencies, which have been and are shared based on the MSA between the three players involved, in with the team involved. So there are strong and solid reasons, legal and industrial, financial, to be fully comfortable about our MSAs.

Hi, Fernando. Concerning the increase in the OPEX related to one-off of all the claims on the . So is that one-off timing?

Okay. Thank you for both answers, very clear.

Thank you.

The next question is from Giorgio Tavolini of Intermonte.

Good morning everyone. I have three follow up on the major strategic initiatives. I was wondering on run as a service. um i mean uh without spoiling details of your upcoming capital market day if it's reasonable to exclude any upside or i mean any announcement on these initiatives giving that a team new business plan will be presented in middle of february and faster the vodafone deal will be closed into one so i would exclude any real news on this front. The second question is on data center. We saw many telco players that are looking to expand into data center infrastructure and regional data centers. So I'm curious if there is enough space for new entrants in this sector in Italy. what are the potential returns you may see. And the last one on the Rome 5G initiative, we recently read about a building network interest to cover other major cities in Italy. So I was wondering if you expect to replicate a similar paradigm in other cities. Thanks.

Thanks, Giorgio.

On overall sharing is... From our perspective, it is an opportunity in the industry when thinking as sharing agreements and focus on dedicated areas, and we think that makes logical sense for the medium-long term to create additional efficiency in the overall industry. With regard to the data center, we think there is an opportunity to work together with our clients, and the business model is consistent with our business model of investing in shared infrastructure, again, open and neutral to our customers. The returns are potentially consistent with the clearly with our policies and so well able our work. So it's an area which is worthwhile to consider and within the potential opportunity medium term. With regards to the smart city and potential, We are following approaches according to the specific situation. So for Rome, there was an approach as a fully fledged project. In other cities, we are following other approach. Let me mention Milan, where actually we have been investing already significantly, and we have been We have been doing the exhibition center, the new underground, and there are also other initiatives undergoing. There is a different approach which is more based on verticals. So we have the capabilities and the commercial strength to adapt and adjust the different approaches according to the different situation. For sure, what we do see is, again, the confirmation that there is need and demand for additional digital infrastructure in the country. And we are satisfying already and there is clearly, we are well-placed to do more on this front.

Thank you again. Thank you.

The next question is from Rohit Modi of Citi.

Before guidance to doing 26 guidance. I understand you have around 130 million of the lower and you have 130 million of revenue increase that translates into almost 100 million for the darling please based on the guidance. But just to understand what will be the other underlying factors given, assume you have a positive exit for 2024 working capital. If there is a phasing effect, that could have a negative impact going forward, plus you might have higher taxes. So if you can just give a bit more color on what is the bridge from 2024 to 2026. And secondly, on the new services, can you confirm the profitability on the new services similar to your core infrastructure business? Thank you.

Yeah, good morning.

Let me start from the second question on new services. The basically are driven by DAS and indoor cover solution, and the returns are consistent with our approach of double-digit return, IRR unlevered. And that clearly requires two tenants on the DAS. And so that's the kind of return. The contracts are lower than, let me say, traditional tower contracts. It's between nine to 12 contracts for standard DAS. But yeah, as I said, we achieved the double-digit return the business.

I know, well, concerning the current free cash flow for 2026, the growth will continue to be driven by EBITDA after this growth. And we fairly limited the current capex and positive networking capital, even though to a lower extent, no year-on-year. Higher taxes will according to the growing earning before taxes and the tax schemes, the freezing of the tax schemes in place, and finally by higher interest charges in line with the gross debt.

Thank you. Thank you.

Thank you. This concludes the conference call. Mr. Ruffini, I turn the call back to you for your closing remarks.

Thank you, everyone, for connecting. Have a great rest of the day.

Thank you.