Ladies and gentlemen, good morning, and welcome to TIM Third Quarter 2024 Results Presentation. I am here with the CEO, Pietro Labriola; the CFO, Adrian Calaza; and the rest of the management team. Today, we will present the highlights of the first 9 months, followed by a review of the operating and financial results. At the end, there will be the usual Q&A session. I point out that Q3 marks the first quarter of the new TIM. Hence, we report actual results for the first time, whereas in Q1 and Q2, we reported like-for-like estimates of the financial and operating performance. Pointing out our safe harbor disclaimer on Page 2, let me hand over the stage to Pietro. Pietro, the floor is yours.

Thank you, Paolo. Good morning, everyone. Let's start from a quick recap of the first 9 months results. At group level, revenues were up 3.4%. EBITDA after lease increased 11%. CapEx was €1.3 billion, representing 12.5% of revenues and EBITDA after lease minus CapEx was €1.4 billion, up 35%. Net debt after lease reduced by over €100 million in Q3 and landed just below €8 billion. At domestic level, revenues increased 1.8%. EBITDA after lease was up 8.3%. CapEx was €0.8 billion or 10.5% of revenues and EBITDA after lease minus CapEx was up 38% at €0.7 billion. Slide 4, let's now benchmark 9 months results against full year guidance. We have a detailed slide in annex. Here, I want to point out the following messages. Group revenues and EBITDA after lease are in line or above guidance. Domestic top line and EBITDA after lease are on track, considering the acceleration we expect in Q4, driven by favorable seasonality and easy comps. Domestic EBITDA after lease is growing faster than revenues, meaning that OpEx are under control and operating leverage is emerging. TIM Brasil is delivering significant top line and EBITDA growth, translating into a robust cash generation. Net debt is reducing as planned. In Q4, we expect the trend to accelerate as it does every year. Hence, the reduction to become more material. In a nutshell, year-to-date, we are doing slightly better than guidance on group EBITDA after lease while CapEx is soft, both in Italy and in Brazil. Therefore, we have a significant advantage on EBITDA after lease minus CapEx. On this metric at year-end, we could be in line or slightly better than guidance, depending mainly on how much CapEx we will do in Q4. Keep in mind that this is a peculiar year. NetCo separation triggered a significant level of complexity with many moving parts and the new team has only been operational for 4 months. This is why we cannot be more specific on the Q4 outlook. Let's now review the performance of the 3 entities. Slide 6. For each entity, we provide an update on the competitive environment and on how our strategy is deployed, followed by a deep dive on the KPI. Starting from TIM Consumer. In the wireline market, we see telco operators behaving rationally, but we also see increasing pressure from energy players. If we combine the volume of broadband customers they are printing, it is as if a new player has entered into the market. Clearly, this situation requires a serious evaluation by the authorities. Despite this, the market was broadly stable in Q3, while it remains to be seen whether energy players become a more serious threat in coming quarters. The mobile market is still competitive on low end. The good news is that the top end is marginally more rational with record low volume in market number portability, meaning that the ARPU dilution effect of customers jumping from one operator to the other is less pronounced. In this context, TIM Consumers' volume-to-value strategy is paying off. This is the third year of back-book repricing for us. We've been able to stabilize or even increase ARPU without compromising customer satisfaction while keeping churn under control. We are also gaining traction in the customer platform with an increasing contribution from multimedia consumer and from IT services in the small and middle business segment. Let's now review the most relevant KPIs. Slide 7, year-to-date, TIM Consumer top line is flat and in line with the target embedded in our plan. In 2024, we decided to concentrate the price up in the first half in order to maximize the impact in the year. If we look at wireline in Q3, ARPU grew 8%. Net adds were marginally better than in prior quarters and churn was remarkably stable. If we look at mobile, ARPU was still down year-on-year but improved sequentially [indiscernible]. Line losses were lower than in Q2 and only half of the loss were reported in Q1. As I mentioned earlier, the customer platform strategy is gaining traction. In Consumer, service revenue from TIM Vision are up 14% with the penetration on acquisition, growing significantly in July. In the small and medium business segment, fixed services revenue from ICT are increasing 10%. Our strategy to sell our Vision services to increase after this churn is contributing to top line stabilization. Slide 8. Turning to TIM Enterprise. The competitive dynamic is relatively different compared to the consumer market. First, the enterprise market is much less crowded with a limited number of players capable to offer an integrated telecom and IT offer. This leads to a lower competitive intensity and more stable prices. If we split the market increase, the core connectivity component is broadly stable. The IT market is healthy growing as expected. Our strategy from TIM Enterprise is to grow in IT while protecting the connectivity business, which is sizable, but has already been impacted by competition and today contributes to just 50% of total revenues versus approximately 50% of the European press. In this context, TIM Enterprise outgrew the market even more in Q3 than in prior quarter, thanks to cloud, security and IoT services, where we reached a record value of contract signed. In particular, cloud is gaining a lot of traction, benefiting from National Strategic Hub, which is ramping up beyond our expectations. Slide 9. In the 9 months, total revenues increased 6% and service revenue 8%, with a further acceleration in Q3, respectively, 8% and 11%. In the mix, the decline of connectivity was limited to 2%, while IP increased above 14%, driven by cloud, security and IT. The total value of contracts signed in the 9-months increased 67% to €3.5 billion. This backlog will turn into new revenues in coming years. You understand how much visibility we have for future growth. If we zoom on cloud, service revenue increased 22%. A key driver is the National Strategic Hub, which is enabling TIM Enterprise to take the lion's share of the migration to cloud of the Italian public administration. Indeed, the order intake of National Strategic Hub more than tripled in the 9 months at a faster pace than we expected. We see robust growth in the rest of the year, also considering the positive seasonality of Q4. Slide 10. Turning to TIM Brasil, the mobile market is fundamentally healthy and rational. In the prepaid, we see some price pressure. In postpaid, last week, a digital bank announced plans to launch a competitive offer. But I would say this is part of the normal market dynamic. The wireline market remains fragmented and competitive. In this context, TIM Brasil successfully deploying its strategy to be the most preferred mobile operator, leveraging on the best network coverage and service quality, while pursuing new growth opportunities in B2B vertical. In wireline, the ambition is to grow the broadband business organically. At the same time, we monitor M&A scenarios in case we identify opportunities that are strategically relevant and value accretive. We continue to see growth of top line led by ARPU customer base increase, persistent growth in contracted revenue for B2B customer and a strong focus on margin expansion and cash generation. Slide 11. TIM Brasil reported last week, so I will not review the results in detail. I just want to highlight that the growth trajectory is aligned with guidance and remains above inflation, despite the lower performance observed in prepaid services. More importantly, TIM Brasil is outperforming peers in terms of EBITDA and cash flow margin, demonstrating strong operation and financial efficiency. The primary goal is to maximize cash generation and shareholder value. I now hand over to Adrian.

Thank you, Pietro, and good morning, everyone. Let's now focus on the domestic business and review OpEx and CapEx dynamics. While revenues grew almost 2% in the first 9 months, our cost transformation initiatives allowed us to maintain OpEx broadly flat as promised. I point out that overcoming vertical integration makes our domestic cost structure more variable, hence success driven. This is particularly true with regards to fixed network costs, which we can now manage with a flexible hold-buy approach. We expect OpEx efficiency to further increase in coming quarters. In the 9 months, approximately 25% of domestic OpEx were MSA driven. As you know, in the master service agreement, there are no contractual commitments. Moving to CapEx. Q3 was at double speed, low CapEx in July and August as we were engaged in the handover activities following NetCo disposal. While in September, we accelerated. In the 9 months, the gap versus our budget is approximately €200 million, part of which we expect to recover in Q4. As Pietro said, the new perimeter has only been operational for 4 months, and the new business dynamics must be consolidated. This applied to MSA-related costs, and as I just explained. But also to CapEx for which I think we will have full visibility on the structural run rate at the end of the year. We can expect room for improvement. As mentioned, we keep OpEx and CapEx fully under control, mainly thanks to the cost transformation plan, where we have already achieved approximately €170 million savings in terms of EBITDA after lease minus CapEx, equivalent to almost 80% of the full year target. Slide 13. Group EBITDA after lease grew 11% in 9 months and margin increased by 1.8 percentage points to approximately 26%. Both Italy and Brazil contributed to the EBITDA growth. Organically, Italy contributed 42%, and in Brazil, 58%. It is clear the continuous improvement of our Brazilian assets. It is also worth mentioning that also domestic EBITDA is growing faster than revenues. So we have good operating leverage, thanks to the revenue growth and tight control of cost. This was a clear commitment that we took during the Capital Market Day, and we assure that it will be the path in the coming years on both geographies. Slide 14. Last, but not least, let's focus on net debt. Q3 marked an initial reduction to €8.0 billion at the end of September. In the box on the left-hand side, you have the components that led to equity free cash flow of almost €200 million in the quarter. As you can see, there was absorption from working capital. This was also due to the shortening from 60 to 30 days in the terms of payments to FiberCo under the new MSA agreement, an impact that was planned and expected. We expect net debt reduction to accelerate in Q4 and to reach the target leverage by the end of the year. In the waterfall on the right-hand side, you have the expected Q4 dynamic. Ordinary working capital will be positive, thanks to the favorable seasonality, which we always have in the last quarter, as you can see from the average of 2022 and 2023. Ordinary working capital and positive EBITDA after lease minus CapEx will more than offset financial charges and dividends to TIM Brasil minorities, while cash taxes will be broadly neutral. One final remark on financial charges. Following NetCo disposal, you see that materially reduced and amounted to approximately €120 million, €130 million in Q3. Here, we have some one-off optimizations and the NetCo components and the impact of the Brazilian exchange rate. Excluding these effects, the run rate would have been higher, but we already see some upside versus the €0.8 billion we initially indicated for '25 and '26. I remind you that the target leverage does not include the proceeds of Inwit stake disposal, which we expect to cash in at the end of November. And now I hand over to Pietro for the closing remarks.

Thank you, Adrian. We see 2024 as key in setting the stage for future growth. Following the successful disposal of NetCo, the new team is up and running. We reported a strong performance in 9 months, and we confirm full year guidance. We have a higher level of financial flexibility, and we expect to cash in €250 million from the Inwit stake sale at the end of November. We see room for further improvement to be confirmed at the year-end with the update of the plan. Now we can open the Q&A session. Thank you.

[Operator Instructions] The first question comes from Mr. Giorgio Tavolini of Intermonte.

I have three questions on my side. The first one is on the domestic competition. On the fixed line segment, you mentioned that you are seeing increased competition from the energy providers. I was wondering if you're interested in striking partnerships with any providers to eventually market bundled offers with energy as Wind, Fastweb and Poste are doing. And on mobile, how do you view Iliad's request to abolish the below-the-line offers? The second question is on the recent agreement with Open Fiber. You struck this deal to lease 600,000 lines in the black areas. So beyond the economic saving or rental fee, do you see other opportunities for commercial collaboration with Open Fiber? And the third question is on the capital allocation and capital structure optimization. Today, press mentioned a letter from some funds invested in the savings shares requesting further clarification on the use of proceeds from noncore assets disposal and on the 1998 fees as well as a possible optimization of the capital structure through voluntary and market-friendly deals. So I was wondering if you can provide more insight into your priorities regarding the capital allocation, the capital structure optimization.

Thank you, Giorgio. Let's go line by line, and then I will ask also to Andrea to support me in the part related to the domestic environment. First question, are you interested to proceed in some partnerships on the energy world? Yes, sir. We forecast to do something by the end of March. Then it's clear that I would like to have a kind of fair competition. So perhaps if in the energy world, there is the RAB that allowed to have granted return on investment. I know that we have sold the NetCo, I would like to have guaranteed return on investment on the 5G. But no, I'm joking. But for sure, we are working on that. But what is important is that we are playing the game of the bundling with further services since several years. So our way to compete will be based also on the content world. As Andrea can highlight today, the convergence between FTTH, mobile and content is the main driver on which we are the only player in this play field that can compete. And just to give a number, the level of churn of the FTTH compared to the FTTC is 3 percentage points better. The penetration on FTTH mobile is 7 percentage points better. And if you consider that you have on FTTH, 19% of penetration of TIM Vision that can add -- that allow us further improvement on the channel. You understand better also, which is our strategy in the medium, long term and now we foresee not to compete in the market share, but to compete in the share wallet of our customer base to increase ARPU and reduce churn. But coming back to your question, yes, we will sell also energy, and we started to sell also the insurance. About the Iliad, the mobile request. It's clear that any player try to ask what is the most on the strategy. So if you ask me, if I agree, my answer is no, I don't agree. And I think that we are more like in the same position of all the other main players. I don't know if, Andrea, want to add something on that.

Thank you, Pietro. Thank you, Giorgio, for the question. Yes, I mean, I can only add that on energy, we are working on an early trial on the business market, which will come even earlier than Q1 '25. And we are working with a partner already in this phase. And on the position of Iliad, I can tell you a couple of things. I believe they already tried to bring this position last year successfully. I think, honestly speaking, we have to focus on the fact that Iliad that not only is having a higher churn versus the previous period, but it's also reducing massively the gross adds. So I think their position is justified by their own situation and by the fact that they lost market share in gross adds quite massively during the last quarters. So I think that their position, we don't share because we see a portability market that has declined very much. The 2024 is a year with record level -- record low level of portability, which is good news for the main players.

Then Giorgio, moving to the second question about the Open Fiber deal. We don’t – I don’t have understanding what it refers to, but let’s highlight the way in which we had the agreement with FiberCop. In our MSA, we have an exclusivity in the area where there is the coverage of FiberCop. In the other area, just to give already about – for example, the black areas, where the FTTH is supplied only by Open Fiber, we can use Open Fiber without any kind hurdles or limitation. Then it’s clear that our goal – now, we are a player exactly all the other is to try to optimize our cost base. And as you have seen also in our presentation, all the network cost will be an area where we will work in the next 2 years to deliver exactly what we promised to the market in terms of efficiency and EBITDA creation. About the capital structure. Let me try to state something in a clear way. When we had the Capital Market Day, we clearly stated that at the end of 2024, with the presentation of the plan 2025, 2027, after the first year of the new baby, the new team, let me call it in this way, we will have much more room to give details about the return to – a possible return to the remuneration of the different shareholder. What is happening there? Keeping on aside all the possible extraordinary cashing, the number that we are showing today are on track on that plan or to be ultimately clear, during our presentation, we also express that there could be room in different areas to further improve the previous plan. There are rules. I’m not giving any guidance. Then as – and again, we are delivering and we are on track for that. Then we highlighted since the beginning that there could be possible opportunity not including the plan. The first one was in that we confirm that by the end of November will be delivered. Sparkle, we are on track on the discussion. So everything is proceeding. And the last, the [indiscernible]. When all these elements or parts of that will be available, looking at the numbers, we will be able to release the best way to work on the capital structure. I hope that it was clear enough. Sorry, sorry. Adrian, remember me because I don’t know that I might forget that there are also the potential amount from Open Fiber and FiberCop deal. So again, if I may, when we thought that there could be in Sparkle, the current concession, it seems that it was too far from now. Now the things are happening. We must continue to be focused in the delivering of the existing plan, and this is what we are committed on. We are doing that and we are more than happy that we could deliver also other element that was out of the plan that easily can completely change the profile of this company.

The next question comes from Mr. Domenico Ghilotti of Equita.

Two questions. The first is on the concession fees. So if you -- can you give us an update on where we are today, in particular related to the request for suspension of the payment and the potential discussion with the government on the topic? The second question is an elaboration, a follow-up on the comment that you gave on areas of opportunities, in particular, I'm focusing on the free cash flow. So without providing clearly any quantitative guidance, but what are the elements, the drivers where you see some opportunities compared to the plan or even some downside risk compared to the plan?

Thank you, Domenico. About the second question, I'll give some highlight and then I leave Adrian to talk back again. If you remember, and as you can see, we see a level of CapEx that are slightly lower than what we planned. And so this is an area on which we can continue to work, to give a better level of guidance on this area. Then about all the financial expenses, I leave Adrian to give some ideas.

Clearly, I think that you noted in terms of what we even mentioned in the speech in terms of financial expenses, particularly this quarter, the financial expenses were lower than probably the run rate. But if we consider the positives included in this €125 million that we had on financial expenses this quarter, probably the run rate should be something around €160 million, €170 million. So that's below the level that we communicated in the Capital Market Day because our bonds are doing better, interest rates are below the ones that we initially projected. So there could be some room there in order to improve. The second thing is what's coming from Brazil, that better cash flows or the company is doing better cash flows, not only in terms of the operational side, but also below the EBITDA minus CapEx. Clearly, the reason on the other side, the exchange rate effect that we are working on in terms of hedging. So again, and considering what Pietro was mentioning in terms of CapEx. Yes, probably going forward, there could be some room to improve. And you know that we are working already on our 3 years plan, and we will give more information on February of 2025. But honestly, we are probably a little bit more optimistic. It's without considering this as a guidance, but we are working on every side of the company and probably [indiscernible] and for sure, this side of the business is something that we're working on very hard.

Domenico, about the first question -- the first question that is related to the court of concession. I think that it's important to align that. While we are a listed company, so we formed a process to go through. You can consider that more or less, the same behavior will be on the government side because we have the advocacy staff, the court and the Italian government is set to proceed through formal step. What we are going to do is that we are going to ask for this execution of the payment. We don't know because the -- if the Italian government ask already for the suspension of the payment. But to give some more details related to the process step, I leave Agostino to give some more detail.

Okay. So if you wish, let's start on the appeal to the court of concession. We've been notified the appeal of the government and we are preparing our opposition, and we will have a cross claim from our side asking for additional money in terms of additional years of interest compared to the decision of the Court of Appeal and a higher revaluation rate. This will take some time. And we expect to get a decision on the court of concession end of 2025 or 2026, 1st half of 2026. As far as the decision of the Court of Appeal is concerned, it is executable, as Pietro said. So there is nothing preventing us to execute it and we'll do. It is likely that the government will oppose the execution, will ask for a suspension or probably has already presented this case. We have not been notified any suspension case from the government. In that case, again, we will oppose the regulatory opposition or suspension. And it will be the same judge. It's still the Court of Appeal that already decided in our favor that we decide a suspension. And probably the decision will come in approximately 3, 4 weeks after the notification to our company.

In this period, there’s nothing that do not allow to define a transaction between the parties. So what I think that is useful is to remember [indiscernible]. If there is a request for an execution or a request for a suspension, the Court of Appeal will be will decide something by the end of the year. And so in any case, the possibility to have discussion will be in this period of time.

The next question comes from Mr. Fabio Pavan of Mediobanca.

Yes. I have also three questions. The first one is on consumer. Thanks for the update. My question is if you are already gaining more flexibility in your commercial approach after the NetCo sale, if you tell us -- can you tell us something on this? Second question is on Enterprise. On Slide 9, you show as usual, the value of contracts. It looks like it's exceeding expectations. So when looking at 6% CAGR target, this start looking as conservative. I wanted to have a comment from you on this. And then a follow-up on the 1998 litigation. So just in order to be sure we understood properly, there is a window for a potential transaction, which may open these days and last until the end of this year. Is that correct?

Fabio, about the last question, it's related to the transaction. In theory, the transaction can happen also after the decision on the Court of Appeals that can open by the end of December. But it's clear that if this expansion is approved or not approved, one of the 2 parties will have more power in this negotiation. [indiscernible] About the consumer, yes, we are gaining more flexibility but I will leave to Andrea to follow up. And then about the enterprise, I will leave that to Elio to answer that. It's important to remember that. If we have opportunity to improve the guidance, we will be happy. Today, our approach is to be tied to the reality, to deliver the number and step by step, give eventually further improvement. But I leave it to Andrea and Elio to give some more details.

Thank you, Fabio. Yes, indeed, Pietro has highlighted, as soon as we had the confirmation, we could have some more commercial flexibility. We implemented some new practices, mainly mostly tailored offer on fixed line. As you might know, this is a practice in the Italian market that was used by other players, but was not allowed, especially converging software. And as well bundling packaging content with broadband connectivity, which is proving extremely successful in the weeks. As Pietro highlighted, part of our strategy, the so called customer platform strategy is to use content more to differentiate our offer, and we are having very good early results in the packaging of content with broadband connectivity. We will probably implement further practices starting from Q1, but early results are promising.

Thank you. Great. Moving to Enterprise, and thanks for the question. I simply comment on the value of the contract signed. Clearly, we see this trending very, very well. We told you that our bet was on the market, registering a healthy growth, which is actually happening, the market is growing slowly below 5%. We are basically moving further ahead because we are north of 8% and 11% plus on the services. And as told you many, many times, we do believe that we have in this market a competitive advantage, which is based on 4 distinctive assets. The first one is that we have the largest infrastructure in the country for facing the challenge of the cloud growth, so data center plus backbone. We have a sales force, which if you sum up the 3 competitors, Wind, Fastweb and Vodafone, we have twice the number of people on sales versus the sum of the 3 competitors. We have a very, very good positioning on the public administration, which is actually accelerating due to the National Strategic Hub performance. And then we have the factories which are the assets that allows us to have an end-to-end value proposition on the ICT market. Let me just tell you what happens on the market growth. The reason why we are accelerating, and we are registering a performance which is better than the market. And you can see this also -- on the acquisition of the contracts, which have 2 elements to value, one is that the amount of the contract is significantly higher than what the market is registering. What is interesting in our case that also the duration of those contracts is getting better because the average contract for us going forward is approximate of 3 years, which is a very good value when you look at the business going forward. The reason why we are growing faster than the market is because the market is growing at 2% the enterprise and at 11% on the public sector. Being TIM Enterprise, the only company in the market having approximately 50% of the revenues on the public side. This is the reason why we are much stronger than the rest of the market. I hope I answered your question.

Next question comes from Mr. James Ratzer of New Street Research.

I have two, please. The first one actually directly follows on from the last question on Enterprise. I'd like to see if it's possible just to be a little bit more precise on how we should think about those contract increases and the National Strategic Hub increase actually feeding through into your revenues because you're showing some kind of very bullish numbers there of a 67% increase in the contracts, 3x increase in the NHS -- NSH contracts. How does that actually translate into revenues over the 3-year period, please? And then secondly, it would be really interesting to give us an update on the visibility you have on the earn-out payments you might receive. And in particular, the €400 million that relates to the energy rebate. Can you give us a timeline on developments on that part of the earn-out.

Let me start from the second question and then I leave to Elio to answer about the National Strategic Hub. About the earnout, I think that all the discussion that we are seeing about Open Fiber and FiberCop demonstrate that sooner or later. More sooner than later, there's an overall interest towards a possible merge. So when we talk about the earnout, just remember that the main part of the amount are related to this component. About the saving on the energy, you can see also that there are some discussions in this period of time about the consumption of energy also related to all the data center awards, where we are one of the main player in Italy. And so we are trying to understand is that it will allow us to open a door towards a review of the energy -- of the consideration of TIM as a high energy consumer that could allow us to recover part of that earn-out. But again, let's remember the -- some of the numbers, €250 million, INWIT; we have some number around €700 million about Sparkle; we have €1 billion on the Canon de Concesión]. We have €2.5 billion about the earn-out, Open Fiber, FiberCop and energy. You can start to put a percentage of risk on that. I think that some months ago, the percentage should be high. The most we proceed, the percentage is becoming low. So I'm quite pleased that we will have some good news. Then I leave it to Elio.

On -- can I just ask, Pietro, on the €400 million that relates to energy specifically, when do you expect to see kind of approval actually from the government to be able to get that receipt? Cause that was the one I thought you always felt you were more comfortable that you would get.

Yes, it's quite complex to give a specific date because as you can follow also on the price rise, there is a discussion in this period of time about the finance area of the Italian government. In the meantime, there are some discussion about the possibility to change the code. I don't want to go too much in detail, a telco that could define, for example, all the activity for the data center in a different way. So I think that we can have some more details by the end of January. .

So back to Enterprise. Thanks for the question. So let’s say, when you look at the chart that we presented, the chart #9. We showed you that the value of the contract signed moved from €2.1 billion to €3.5 billion. So let’s say, we are getting better in a business that was already pretty healthy. And when you look at the histogram of €3.5 billion, you can notice that we have a 43% of those revenues, which are basically for the 12 months rolling. This means that when you sum up the number, which, let’s say, I don’t need to help you, but it’s approximately €1.5 billion plus the recurring business that you have for customers that we won years ago, they are in a multiyear contract. What we can tell you that we have a number which is north of €2 billion, which is already locked for 2025. So most of the effects that you see reflected in the total value of contract signs are already embedded in our plan. There is clearly, let’s say, a cloud acceleration, particularly on the National Strategic Hub, which is getting better than what we were expecting. But what you need to take into account is that when you look at the €0.2 billion versus €0.7 billion, here, we are talking about contracts which is 10 years. So clearly, you have a significant positive effect, but you need to spread this effect in a number of years, which is pretty high. So the average duration of a contract, as I told you before, is approximately 3 years. So for all the contracts that we have signed, you have a duration that goes from 1 year on a short – on a small amount of those contracts to more than 5 years for most of them, particularly on cloud. So here, what we are registering is a strong acceleration on the cloud combined with a multiyear contract, which makes actually our value proposition like a bond because as you can imagine, the more cloud you inject in the total amount of revenues, the more you secure the business because I don’t see a bank staying with us for 7 years and at the end of the contract moving to another ICT service provider or moving into another data center. So let’s say, what it is, to my opinion, very interesting in what’s happening to our business that the shift to a multiyear contract value proposition on the cloud makes the business on the safe side.

Next question comes from Mr. Luigi Minerva of HSBC.

I have two questions, please. The first one is on the domestic EBITDA growth, which on a headline basis is remarkable within the peer group. And I was wondering if you can go a bit deeper and explain what is driving it and how sustainable it is. Obviously, you put all the restructuring costs in the working capital. So that helps the reported figures. But nevertheless, it would be interesting to know a bit better about the -- how you're doing it essentially. And then on Enterprise, just going back, again, very strong growth. what kind of marginality the incremental business you're winning on enterprise bring? Is it accretive or dilutive versus the domestic average margin? And then often, we see -- we've seen it with your peers that this growth in enterprise brings ad hoc CapEx. And so is there a downside risk on CapEx related to that enterprise growth?

About the domestic EBITDA growth, if you remember, when we presented the Capital Market Day, our number, we told that the new target was to grow around a domestic level, 2% on the revenue we are delivering. So part of the growth on the EBITDA should be driven by the growth on the revenue. Another component was related to the efficiency transformation project that we are putting in place. Now what is happening, exactly what we thought. We are growing on the revenue, and we are able to keep the level of the OpEx flat. Let's remember that in 2022, we presented the 3-year plan talking about a transformation plan for €700 million at the beginning that was upgraded to €1.2 billion, and we delivered €1.5 billion. I think that the automatization of the process, the reduction of the number of employees, the efficiency on the call center, the efficiency on the commercial side are part of the element that are allowing us to deliver this number. Then Luigi, you know better than me, our business is a business of customer base. It's clear that we gave a 3-year plan guidance. But once you start to deliver the first year of the guidance, the possibility to achieve the second year and the third year is much higher. Why? Because if you have seen before to arrive to something close to 0, we started the journey in 2022, and I have to remember to the numbers sometimes, minus 15% EBITDA, then minus 15%, then minus 10%, then minus 7%, then minus 5%, and this is what happened on a business that is based on the customer base. The fact that we are increasing the ARPU, we are reducing the churn. And let me say, we never declare that we should increase the market share on the consumer. Because if you look at our peers, there's no one that is increasing the market share. Everybody are losing market share, but the one that is able to grow in terms of ARPU, it's us. How with the strategy to bundle the different services? We are the only one that is playing the game of the content. We will add now, as we told, energy and insurance, and it will happen. If I may have Adrian just a second because I don't understand your question related to the fact that the reported number...

Luigi, Just to clarify, the difference between the organic and the reported is mainly the agreement with the unions that we did at the beginning of the year. So all the separation costs are considered in the consideration of the net booking. So that's mainly difference. If you see the third quarter, the difference between the organic and reported in the third quarter is marginal, okay?

About the Enterprise, I leave to Elio to give some more comments about that. Sorry, but I know we see some element but let's consider that today, the amount of CapEx that are related in the Enterprise segments out of €1.3 billion of CapEx, it's not the main part. And we have just approved and it is already included in the plan, the building of an expansion of the data center for 25 giga that is water cooling to help and to give us a further competitive advantage in Italy because we'll be one of the first Tier 4 data center able to manage also AI solution.

Yes. So thanks, Pietro. Just to complement the answer that Pietro gave you. Let’s say, first on CapEx, we really don’t see a risk just – so you do know, 50% of our CapEx are infrastructure CapEx, so driven by infrastructure and 50% are revenue-driven CapEx. So basically, you have – if you have more CapEx on my side, it’s because the business is getting better and better because, let’s say, the more revenues you generate, potentially more CapEx you can have, but let’s say, it’s a nice problem to have. On the marginality of the business going forward, clearly, as we have told you many times, connectivity is a defense business and the game there is to stay basically where we are, and keep margins safe on that side. What happens to the other side of the revenues? You have cloud basically generating approximately 20% of margins or more, and I will explain you why the more. And then you have professional services, which is a space very well known. So in principle, you could argue that this could be potentially dilutive because clearly, marginality of that side is not comparable to volatility. In reality, what is the gold mine of this business that you have €3.5 billion of contracts that you have already signed. So you know exactly going forward what you have sold to customers and what you need to serve them. So that’s basically the name of the game because if we are very good at insourcing capabilities that today we are buying in outsourcing, marginality of those revenues can look significantly different. This said, let’s say, most of what we have explained to you is already included in the plan. So basically, we have already reflected the positive and the negative in the numbers that we have in our plan. Thank you.

Next question comes from Mr. Ajay Soni of JPMorgan. Mr. Soni, please.

My first one just goes back to the energy players. You guys have done a really -- you've given some really strong performances in your fixed ARPU growth. So does the entrance on the energy players impact your ability to continue growing at that rate within your fixed ARPUs? So that's the first one. The second one is around the cloud growth. I know we've had a lot of questions on it. And it's obviously clear you have very good visibility with the length of your contracts. So you've obviously seen very good acceleration throughout this year. Do you expect that level of growth going into 2025 as well? Or do you expect that to tail off a little bit because it feels like you have great visibility, so you should be able to tell us how that growth is trending into 2025.

About the energy player, I leave back to Andrea to give some color.

I will start from the Enterprise side and the cloud business. So when -- to be very transparent with you and to give you the sense of direction. So first of all, when you look at how the business has been trending in the last -- in the first 3 quarters of this year, we got from 17.5% growth in quarter 1, 21.3% in quarter 2, 27.5% in quarter 3, and this will go up and up and up. If you look at the histogram of €3.5 billion, in that histogram, you have approximately €1.2 billion and something more than €1.2 billion of cloud contracts already signed. And this is getting even better when you look at the right-hand side of the slide when you look at the National Strategic Hub. Just to -- I think that we told you last time, but I'm going to repeat the concept because this is the KPI that really is trending significantly better than we were expecting. Meaning that all the partners, Leonardo, CDP, Sogei and team, which are driving the National Strategic Hub, we -- all of us, we had in our respective plans, let's say, an allocation of revenues for '23, '24, '25, which today has materialized as significantly better. And clearly, this is something that we keep trending very well because the adoption of public administration on the digitalization of their structure is increasing day by day. So the answer on the cloud side is that we are -- as I told you before, we are the only player in the country having 16 data centers. Colocation for artificial intelligence and quantum will become more and more a necessity. And we are the only ones in the market today able to serve for that need. That's the reason why we feel very positive about our cloud value proposition. Thank you.

If I may add here, also to try to give a helicopter view about what is happening in this market. I don't think that I have to explain to you that. The migration in the cloud is a market trend. It's not something that we are pushing, but if you look at the main technology provider, like in software: Oracle, SAP, Microsoft, Google, whoever, are pushing to move from on-premise to the cloud. The second, I don't have to explain to you that whatever you do in the cloud or on-premise is becoming more and more mission-critical and need for cybersecurity and security solution. So if you look at and if you do that, you need to be connected with fiber. Why we are stronger than the other? Because we are the only player that is able to tie all these 3 elements in one place. So if you are a bank, it's becoming a headache if you buy the 3 pieces on a separate situation and then you have to try to understand that if there is an issue, who of the 3 is the bottleneck. We are serving our customer based on that. But if you consider that we have 16 data centers, 4x4, we are moving towards the water cooling data center, so on and so forth, you can understand that this is a sustainable growth. Last but not least, we don't see today still the potential upside that will come from IoT and 5G because the 5G will become mainly in the corporate segment, a key element on which we can play again an important role. Then I leave it to add to Andrea.

Thank you, Pietro. Regarding the energy players, a couple of more comments. So this year, we have seen some activity from the energy player on promotional offers. We have seen, by the way, quite a high activity to actually push some energy offers, some fiber offers, especially because this year, the market had a discontinuity and some players suffered a very high churn. So some players used the fiber discounted offer as a sort of churn retainer. The market is now evolving to a more normal trend after the summer and the discontinuity in the energy market. So we see that the promotional pressure is somehow diminishing. Anyhow, the situation, it has to be said also that we are working to enter into the energy market as some other competitors have done, and they have done successfully in some telco players. So the positive thing is that we have something to gain also from the convergence of energy and connectivity. We believe that the energy players will have to temper some of the promotional activities also because some of the offers are not sustainable and they are not profitable. And according to our view, they are also not fair from the competitive point of view. So we are arguing that also with the relevant authorities. By the way, overall, we think that the marginality of the energy sale for a telco player can be of interest and can generate probably more value than the threat from the energy provider. This has to be looked into the overall strategy of the customer platform that is improving churn and cross-selling services. And of course, as Pietro said, we started with content with a pretty promising results. So we have a wider portfolio than other players can offer.

Also in the case of Andrea, let me put another comment with helicopter view. The cut what we are doing on energy, insurance content is exactly, as Andrea mentioned, the customer platform strategy. It is an important element to optimize our cost base. What it means? The main asset of a telco player, I've seen, is the capability to charge more than 20 million customers every month on a prepaid basis or on a postpaid basis. And in Italy, the penetration of credit card as a tool for a recurring payment is not so widespread. So this is an important asset. The second, we are the telco player with a lot of shops throughout the territory. Part of that are owned directly by us with some -- with a number of 1,000 employees. And the shops in a digital environment will be a competitive advantage compared to other players. The third, also if you move towards the world of the digital, a caring service will be always important, having in mind that you are not an emerging market and the average age of the Italian population is high. These are all elements that on one side are a good part of our cost base. On the other side, can become a competitive advantage and the customer platform strategy allowed to optimize this cost structure and allow us to grow in terms of revenue, keeping the cost flat. That is that. To come back to the question of Luigi Minerva, it's the way that allow us to have a growth of 8% in terms of EBITDA.

Can I just have one follow-up on the Enterprise side. And you were kind of saying that your customers will buy cloud security and connectivity from you as like a convergent package. I just wanted to focus in on the connectivity side. Obviously, it's declined a bit this quarter. Is there a specific one-off in there that's created that? Or is that just pressure you're seeing? And is that pressure comes from the mobile or the fixed side?

So thanks for the question. On the connectivity, actually, if you look at how the business is trending on a quarterly basis quarter-by-quarter, quarter 2 versus quarter 3, the business is growing on the 9 months average is more or less where we were expecting the business to be. The compare versus 1 year ago has only one-off effect that doesn’t worry us when you look at the business going forward, which is a small negative spike on roaming during the summer because there is a seasonality in, let’s say, particularly in August where we used to register a small spike. We got this effect a little bit lower than 1 year ago. When you compare on a quarterly basis, the business is – we are approximately €260 million on a quarterly basis, and this is a kind of regular trend. There was something on the cloud as well. But let’s say, on the cloud – connectivity also related to the cloud. Let’s say, if – just to let you understand why this – as Pietro was saying, both on the cybersecurity side, IoT and also connectivity to a certain extent, there is an opportunity because this is like a big high-speed train and that needs a very solid rail tracks and a very good station. And guess who owns the right tracks and good station, Team Enterprise. So let’s say, they need to pass on our rail tracks and they will park their train in our station. So there is no other option for most of the customers in the market. Thank you.

Next question comes from Mr. Joshua Mills of BNP Paribas.

Two for me. One is, could you just give us an update on any back book price increases you've announced in the last couple of quarters, so we can think about phasing for next year? And then maybe some broad commentary on how you're thinking about price rises into 2025. I noted earlier, you were talking about the opportunity to keep pushing for higher prices given the quality of the network. And then secondly, on CapEx. So you're one of the few telcos that we've seen this quarter come in below the CapEx expectation for consensus. And reading your guidance for full year, you're talking about a partial recovery in Q4, but reading between the lines, it sounds like you probably won't get to the 14% CapEx sales you targeted initially for the domestic business. So my question is, why is that CapEx coming in lower? Is it just efficiency savings? Or have you found that actually the level of network investment needed on the 5G side is actually tailing off? And if so, how should we think about the CapEx guide longer term? Because you're effectively saying, on the medium-term view, you'll keep CapEx to sales broadly flat and slightly down by 2026. Is there an opportunity to be more aggressive there?

So on back book price up, so this year, we implemented a very wide repricing campaign on the fixed and broadband customer base. We have been a bit more prudent on the mobile in the first part of the year also because we noticed that one of the main players was not repricing this year probably due to a specific strategy. And so we were a bit more prudent. We started already in Q4, a campaign of back book price up on mobile. And we will definitely go on with more price up in the next year. We think this is sustainable for 2 reasons: First, we have seen overall good results this year in terms of combination of ARPU increase and NPS stability, but also because we think that the likely combination of 2 players in the market will bring up also a change in the price of policy in those players, also probably in their aggressiveness. Clearly, one of the players have been very aggressive on broadband and the other on mobile. We think that with the combination, their behavior will rationally change and will open up more opportunities.

About your second question on the CapEx, at the beginning of my speech, I told that this is an area on which we foresee opportunity for efficiency in the next new plan. It's clear that when we presented our plan, we were doing something that no one did in the world, and so there were a lot of moving pieces. So for sure, for the end of the year, we have some small delay because mainly during July and August, we were focused in the finalization of the separation. But we have room for efficiency that will be reflected in the new plan.

Got it. Maybe just a bit more specific on CapEx. Are the efficiencies you've had so far coming on the network side, so network investments? Or the efficiencies are coming from other areas of CapEx like capitalized labor costs or capitalized costs related to customers? Just trying to understand whether this is a structural change or improvement in the underlying level of investments or a reflection of the better commercial trends you talked about.

If we go in detail, we are going -- we are delivering efficiency in all the lines from IT to network. For example, the strategy to move faster towards the 5G is allowing us to have a better efficiency in terms of transport cost per giga on mobile. And we'll have a further acceleration next year on this part. We are starting also some activity on the decommissioning. Sometimes the fact that we separated the network oblige us to look with different eyes in all the elements. Then we are working on the right capital allocation. On the Enterprise segment, we are preferring, for example, to move part of the CapEx from the rental of the mobile and sector to the data center. There's no one bullet that we are shooting to improve. This is true on the CapEx and on the OpEx because if I may, now we are delivering a number below the level of CapEx that we have projected. But also on the OpEx, we are doing a great job because if we are the only telco player that is growing 8% on the EBITDA, growing 2% on the revenue, it means that we are good to work on the cost base to improve the efficiency of the company. This is not the case. This is not a single point because we are doing that since 2022. So I would like to finalize the call to avoid any kind of the misunderstanding to restate what I told before. In March 2024, we told to the market that keeping on as side, not considering any extraordinary cash-in in the new plan '25, '27, we should evaluate the possibility to come back to the shareholder remuneration. It doesn't mean that if we'll have the cash-in of extraordinary items, this could be a trigger for an acceleration on this evaluation. Thank you for everybody.

Thank you, everybody, for attending today and for this set of questions. We will be back in mid-February to present the preliminary full year results and the update plan. Thank you. Bye-bye.

Ladies and gentlemen, the conference is over. Thank you for calling.