Ladies and gentlemen, good morning, and welcome to Telecom Italia Q1 '22 Results Conference Call. Manuela Carra, Head of Investor Relations, will introduce the event.

Ladies and gentlemen, good morning, and welcome to our Q1 2022 results presentation. I'm here with our CEO, Pietro Labriola, our CFO, Adrian Calaza, and the rest of our management team. Pietro will provide an overview of last quarter's main achievements, and Adrian will illustrate our financial results. A Q&A session will follow after the presentation. Alberto Griselli and Camille Faria, connected from Brazil, will participate to the Q&A session as well. Pointing out to you our safe harbor disclaimer on Page 2, let me hand it over to Pietro. Pietro, the floor is yours.

Thank you, Manuela. Good morning, everyone. Q1 represents the midpoint between our March full year results and our Capital Market that will be held on July 7. Back in March, we provided a summary of the main trends along with 2022 guidance based on the current configuration. Let me say that Q1 is in line and confirms those trends. We also gave you some color on the direction of travel we want to follow for the future, with a new vision that goes beyond vertical integration. More details will follow in July. I can tell you that we are working hard on this, and we will continue to work hard in the coming weeks to deliver a new vision that, in our view, should create a higher shareholders' value. Let's start from Slide 4 with the main highlights of the quarter. Executive team and new organization is now completed. We pursued a sound mix between internal resources valued and moved in key positions and few selected hirings of highly skilled sector eternal managers in order to quickly optimize consumer and enterprise segments. On the business side, while the new vision is work-in-progress, the action plan is ongoing. On the consumer, the transformation process is in place. We need to reposition the segment, especially on the go-to-market with new offers and communication campaign to come in the next weeks. On the enterprise, we are well positioned. Yet, we need to focus on operational processes optimization and accountability. In the meanwhile, government's NRRP initiatives are ongoing, and we have submitted our proposal for the tenders that are mainly infrastructure projects. I remind you that, the majority of required investment would be absorbed in our CapEx guidance. I also want to give you a bit of color on this. From what we saw in the press, it seems that just 2 operators participated to the Italia 1 Giga tender, and one is TIM, underlining how difficult it is for an Italian integrated telco player to build a future-proof infrastructure with the long-term return while surviving in this competitive market. Things need to change. As we mentioned, bringing revenues not always 100% under our control. We firstly put under control the cost side. Transformational plan has started and we are on track to secure 2022 target. The transformation plan will mostly help achieving 2023, 2024 cost savings and indeed 2024 target as we raised from 15% to 20% of the addressable baseline. But we'll not forget to work on and improve the other cost lines as well. On the network side, things are going smoothly. FTTH rollout is on track, and we reported strong wholesale KPIs in Q1. Ultra broadband coverage reached approximately 94% of families and ultra broadband pickup improved by 4 percentage points year-over-year, reaching 47% of technical households. All in all, Q1 results brought to a positive Q1 equity free cash flow after lease at €123 million, thanks to positive operational performance and with payments for DAZN, partially compensated by positive exchange rate. On extraordinary transaction, a couple of points. Oi deal closed on 20 of April with all the approval received and final green light obtained. This is a transformational deal for TIM Brasil that will reshape the market dynamics with the positive effects on innovation and quality, reducing CapEx needs while boosting cash flow, paving the way for higher shareholders' remuneration. TIM Brasil also did a couple of calls in the past day. So I will not go through all the details. But I will be happy to take questions on it, if any. Secondly, we signed the agreement with Ardian for the partial disposal of our INW stake. TIM will receive approximately €1.3 billion in addition to the repayment of the loan of approximately €0.2 billion. The closing of the transaction is subject to the fulfillment of certain condition present, but we are confident the deal will go through shortly. Next slide, please. If we now move to Slide 5, you can find the focus on our retail activities, starting from consumer and then enterprise in the next slide. In this slides, we briefly explain where we are and in which direction we want to go. On consumer, things need to improve. We are putting in place a transformation process in order to reposition the segment, especially on the go-to-market activities. We have identified some action that will take form in the coming weeks and months that should sustain our study. The best technology and the superior customer care are our priorities, and we need to be valorized in the market for this. On the enterprise in Slide 6. We are well positioned and we have some revenue streams that are growing nicely, for example, cloud. What we need to do on this segment is improving operational processes and accountability, adapt them to the new configuration as one company. As you can see from the slide, TIM Enterprise Co. will be among the biggest Italian companies if you take it on a standalone basis. It would be an entity with around €3 billion revenues with a market that is growing and where we are the only player providing a full offer with an end-to-end service. There is a good pipeline of contracts up for tenders in the upcoming months. Margins are healthier. And we hope to give you more details on this with our strategic update in July. I'm very happy to welcome Agios Cabo, who just joined the group to manage Enterprise Co. I'm sure he is the right person to successfully guide this division towards its new path. Next slide. Slide 7 shows a brief update on where we are regarding government initiatives on the National Recovery and Resilience Plan and National Strategic Hub. On the National Strategic Hub, TIM and CDP consortium project has been selected as the most suitable. The tender process is ongoing, and we expect to receive the final results by June. In the meanwhile, TIM's proposal has been submitted in response to major ongoing tenders, Italian 1 Giga, Phase 2 of connected schools and connected health care. On the voucher front, as you know, Phase II has been launched with voucher SMB available from the end of March. First feedback showed that the traction is still limited due to a very bureaucratical process for the information collection. All these initiatives are positive for the country, and they will bring a longer duration of contract value as additional growth catalysts, with most of these investments that will be absorbed in 2022-2024 CapEx guidance. Cash impact will be positive over the 3 years plan's horizon. Next slide. Slide 8 recaps what we are doing on the transformation plan to cut costs. As I already told you, we want to be bold, especially on what is under our control. That's why we are confirming the ambition to cut addressable cost by 20%, and we have already started to work on this. In July, we will provide further analysis and details on the full transformation plan that will help us achieve 2023 and 2024 targets. In the meanwhile, I can tell you that 2022 cost cut plan has been already identified and it is underway. Let me now hand over to Adrian, who will guide you through our financial results. Adrian, please?

Thank you, Pietro, and good morning, everyone. So on Slide 10, if we look at our key financials, trends confirm our full year guidance that we are reiterating: low single-digit decreases on group service revenues and low teens decrease on EBITDA with mid- to high teens for EBITDA after lease that is affected by higher leases contract. Q1 was ahead of our projections, but the overall macro context still calls for a conservative stand on our side. Equity free cash flow generation was positive for the good performance in terms of operating free cash flow. I remind you that in Q1 differently from Q1 2021, equity free cash flow also includes the payment to DAZN for around €200 million, partially compensated by the positive move on the foreign exchange. Net debt after lease slight increase in the quarter mainly due to 5G license payments in Brazil. I remind you that we are enjoying a very sound liquidity position that covers 24 months of forthcoming maturities, and we're working on different alternatives to further reinforce it. Let's have a look at quarterly trends in the next slide. In Slide 11, you have, I hope, a useful recap of our quarterly trends. As you can see, group service revenues declined 2.5% year-on-year with domestic down 5.3% year-on-year. The trend improved versus Q4 thanks to the high contribution of Brazil with domestic impacted by tough comparisons with 2021 that enjoyed the tailwind coming from vouchers on retail and some nonrepeatable overperformance on national wholesale. Group EBITDA after lease was down 16.3% year-on-year with domestic 20.4%, impacted by Q1 2021 nonrepeating transactions and 2022 headwinds highlighted during the full year presentation. Clean of these effects, the decline for Q1 would have been half of that, of what we experienced. CapEx increased year-on-year for high growth investments mainly in FTTH with more than 400,000 households passed in the quarter, almost doubling Q1 2021. CapEx increased also for additional mobile coverage, data centers, cloud and different phasing of running IT investment versus 2021. Moving to domestic fixed in the next slide. We see that fixed revenues were down 5.8% year-on-year with around half of the contribution to the plan explained by tough comparisons versus 2021 on national wholesale, which last year benefited from nonrepeatable transaction and in this quarter was impacted by change in regulated prices. Retail was down year-on-year as well. And it is explaining the other half of the contribution to the plan of fixed service revenues. ARPU keeps increasing, driven by ICT double-digit revenue growth, with churn improving despite premium positioning and price rationality. In terms of market, Q1 this year was less active versus last year, where Q1 was helped by vouchers fueling gross adds, supporting lines and broadband net additions. For these reasons, retail KPIs were weaker. For the same reason, equipment was significantly down year-on-year in Q1 as 2021 benefited from equipment sold thanks to vouchers. I remind you that this is neutral in terms of cash. Moving to domestic mobile. Mobile service revenues were down 3.9%, improving the trend around 3 points versus the previous quarter. The negative contribution from retail revenues coming from lower customer base has been partially compensated by the positive contribution coming from wholesale revenues for higher roamers and MVNO revenues. In terms of market dynamics, mobile number portability decreased again with TIM's MNP balance affected by a small and selective price increase done on our customer base in March. We have started this -- it's a good practice also to counterbalance the recent inflationary pressure, even though we saw in April improving trends in mobile number portability. TIM's strategy remains clear in mobile as well, pursuing value versus volume. This could affect KPIs in the short term, but will benefit revenues in the long run, bringing more rationality into the market. On this regard, we are already starting to see positive moves in the market. Obviously, this will also benefit our ARPU. On Slide 14, you have details on OpEx that were broadly flat year-on-year for Q1. As you can see, we continue working hard to address our cost base in order to compensate the healthy increase in costs for ICT and cloud growth coming from the shift on our revenues mix. Variable costs were down year-on-year mainly on lower equipment, partially compensated by higher COGS related to ICT growth. Commercial costs overall stable year-on-year with higher football and cloud costs offset by lower advertising, bad debt and customer management. Industrial costs were slightly up year-on-year for high industrial spaces and energy. The last one was up just €4 million year-on-year, thanks to our hedging policy and mitigation coming from the government's measures, Decreto Sostegni. G&A was impacted by COVID rebound and higher consultancies and professional services, mostly related to public funding initiatives. IT increase is entirely related to ICT growth. Labor costs benefited from solidarity and continuous FTE reduction. Next slide. On Slide 15, we see that CapEx in the quarter were up year-on-year, with Brazil flat year-on-year and domestic up 44%. As I already said, CapEx increased year-on-year for higher growth investments mainly to accelerate ultra broadband coverage, cloud and data centers. This is in line with our full year guidance. Equity free cash flow was positive, as we have already commented. It was positive also including the payment to DAZN, partially compensated by the positive move on the foreign exchange. Excluding these effects, equity free cash flow would have been similar to last year when EBITDA boosted by nonrepeatable items that we already commented. In any case, this quarter result is attributable to the positive operating free cash flow performance, as you can see in the next slide. On Slide 16, you see that net debt after this increased €0.1 billion in the quarter, €0.5 billion on IFRS view as a result of positive operating free cash flow generation and including €0.2 billion of payments for 5G licenses in Brazil. Next slide. TIM Brasil reported another strong quarter both in operational and financial metrics, setting a strong start in a transformational year. Substantial contribution came from all revenue sources and boosted top line growth. The strategy to focus on customers' value continues to pay off and led to strong KPIs both in mobile and fixed. Last but not least, the closing of Oi deal in April is a game changer for TIM Brasil. So with this, I will hand over to Pietro to say something more on this last topic and for his final remarks.

Thanks, Adrian. TIM Brasil is entering in a new chapter of its life, and this slide explains from where the new story is starting. The transaction we do that was just closed at the end of April will generate an NPV of synergies of around -- between €16 million and €19 billion for TIM Brasil. Market dynamics will be reshaped with positive effects on innovation and quality, reducing CapEx need while boosting cash flow. This will bring to higher shareholder remuneration, as announced by TIM Brasil. Now the closing remarks. Q1 results show that we are on track to reach full year guidance. I remind you that full year guidance is reiterated. We are working to outline the group's reorganization. Enterprise segment needs to accelerate its growth in the coming years and to gain standalone relevance with the TIM Group. Consumer is in a transformation mode and repositioning process is in place and actions have been identified. On costs, transformational plan has started. We are on track to secure 2022 target, and 2024 target has been raised from 15% to 20%. Capital Market Day on July 7, 2022. With this, we have completed our presentation. Let me now hand over to the operator for the Q&A session. Thank you.

[Operator Instructions]. The first question comes from Mr. Luigi Minerva of HSBC.

It's about the status of discussions with CDP on the Open Fiber side. The guidance was for an MOU on the network mergers to be signed by the 30th of April. So that hasn't happened. So I just wanted to understand where we stand and what are the hurdles to finalize that? And also, the other open file on that side was the commercial agreement on the white areas. It would be helpful if you can likewise update us and tell us what are the hurdles to reach an agreement?

First of all, it's important to highlight that we are proceeding in defining the new scheme of the company that will be presented the 7th of July. So this is the main point. And as you remember, we always told that at the time we show how will be our new co. in terms of network and loss of vertical integration. Towards this path, as we mentioned, our preferred choice, because it's the most industrial one, is to proceed with the merger with Open Fiber. On that path, what we state is that we should find the MOU by the end of April. We have some days of delay. I'm not worried about that. And there are no specific hurdles to proceed. Then as you know, we are facing -- or we are today trying to put in place something that is unique at worldwide level. So some details need to be fixed. But I don't see any specific hurdles. Then let me say also in this way related to the agreement with Open Fiber. We have to clearly distinguish the 2 things. The agreement with Open Fiber on the white areas is a commercial agreement as we have many others, not only with Open Fiber, but also with other player, other license operator. And it has nothing to do with the MOU. Theoretically, we couldn't do the MOU but sign the Open Fiber commercial agreement or vis-a-vis. I think that this is very important, because I don't want to spend the time running back to the rumors that sometimes appears on the press. This is a commercial agreement. We are discussing with the Open Fiber. The agreement will be managed through FiberCop. In FiberCop, we have a minority shareholder. We are respecting all the governance rules inside FiberCop. So nothing specific. And in the next month, we will have other agreement like that, that perhaps never appear on the press with Vodafone, with Fastweb, with other operators. And now appears just because there's the interest on, let me say, some speculation. But the 2 things are completely separated.

Thank you, Luigi. Next question, please.

The next question comes from Mr. Mathieu Robilliard of Barclays.

I had first a question on Open Fiber. With regards to a potential deal or agreement, as you mentioned, for a single network, would that require any European Commission competition authority review process? I mean I guess this would be 2 Italian companies. So in some cases, it seems that the EC only intervenes when there is a big exposure to other EC countries, which wouldn't be the case here. So I just wanted to clarify if you would need any approval by the EC for the deal to proceed. Then I had a question about Italy in terms of the domestic trend. So we're seeing KPIs deteriorate a bit. Now I fully understand you're focusing on repositioning the brand. But can you give a bit more color on what that entails? And what attributes you believe you have to be able to defend premium prices in -- for example, it seems that -- some third-party surveys show that you do not lead in terms of mobile network quality, or at least perception. So I was wondering how you think you can defend good prices in mobile, for example. And then lastly, on the equity free cash flow. It was very strong and better than expectations. It seems that there was a positive element on the cash tax. I think at the Q4, you had indicated that cash taxes would be a negative contributor to the free cash flow. So I was wondering if something has changed or it just a phasing issue and we should indeed still expect a negative cash tax contribution for the full year?

Mathieu, related to the first question, you are referring to the MOU that is with CDP or to the commercial agreement with Open Fiber, because I didn't understand at which of the 2 you are referring. But I can answer to both of that.

I was referring to the first.

Okay. Because about the MOU, we don't have to declare because the MOU is not binding. If after the MOU that is a framework that defines a time to arrive to do the evaluation of the network and to define the possible scenario to do this merge -- that could be a merge, could be a sale -- based on that and based on the win which will be decompose the new co. and the kind of control of the new co., you will need an approval at EC level or at national level. So it's too early to say which of the 2 paths must be put in place. But we know exactly both the scenario, and we have a clear understanding about the possible time line. Relating to the domestic trend, what is important is -- you are talking about KPI deterioration. If you see, there is a market deterioration. What I mean? We have to define the market in 2 ways. The new customer -- we are discussing about the market, and then we discuss about TIM performance. About the market. The amount of new lines that were -- that appeared in the market in the first quarter are slightly below the last year also, because in the last year there was the incentivation relating to the voucher. That is something that was not possible to repeat in this first quarter. The second is what I used to call washing machine: that is the amount of customer that goes from a player to another one. For sure what occurred is that -- the washing machine mechanism is something that are TIM, because the ARPU, our customer base, is higher than the ARPU of new customers. And this is becoming more and more the same issue that also other players are facing in the market. So what's up is that -- as I stated in the call at the beginning of March, the price in the market are defined by 2 players usually: the premium one and the cheapest one. What we did in the first quarter was sustain the market with a higher level of price to see if something pull up. And we are seeing at the beginning of April some sign of rationalization. The good news is that, in any case, the level of churn on the fixed is stable. What is happening is that we are seeing some rationalization process in the meantime. And I cannot add that -- during the first quarter, we were unable to put in place all the restructuring of the consumer. It's important to remember that there was appointed CEO at the end of January. The CFO and Chief Revenue Officer for the consumer market joined us only at the end of February. And now we are in the path to restructuring. That is not only a matter of advertising. It's also a matter to review all the commissioning process, change the go-to market. Just to give you an idea on the mobile, we were used to catch customers from Vodafone or Wind at a higher price through Kena. Kena was a second brand that must be used to compete with the cheap offer of the second player and not to destroy value in the washing machine. But in the month of April, we saw, again, also on the mobile a reduction of the washing machine in terms of mobile number portability. We started to improve our number in mobile number portability with the TIM brand and not with Kena. So with a better ARPU. Then I cannot promise you that this is a 1 week journey. It's a restructuring one, and we would like to show you quarter by quarter how the things will change. And it's not just a matter to give a new draw to the advertising. It's a review of all the go-to market. And this is what we are working with Adrian. Then about -- sorry. And last but not least, because you were mentioning also how can you sustain a price increase. We did also test, because working in a better way through our CVM system -- because we did a price up in March on 1 million customers, and we receive a churn on this cluster of 5%, while the average churn on all the customer base on the mobile is between 3.5% and 3.7% based per quarter. What it means that the customer is able to accept, if you assure them a certain level of quality, also a price increase. Let's remember that also if we increase by €1, our price will continue to be among the lowest in Europe. Now I leave to Adrian -- also because -- sorry, also because we are working in terms of network quality, that is really important to sustain, we have to exploit something that sometimes can be considered a weakness, as can be the number of employees in the customer care as a strength. Because today people that accept a higher level of price would like to receive a higher level of services, sometimes potential, based on a human touch. And this is one of the leverage on which we will work. Then I leave the stage to Adrian about the equity free cash flow.

Yes, indeed, the equity free cash flow, it's slightly ahead also of our expectations. But this comes from a better operating free cash flow at a group level, both domestic and Brazil. It's also positively impacted by the exchange rate from the real in this quarter. There is not a significant effect in terms of taxes. As a matter of fact, they were aligned to our projections. Probably what you're meaning is the positive effect that we will have regarding the deferred tax asset. But that's not the case in the first quarter. Going forward -- as you know, we didn't give a guidance in terms of equity free cash flow because we're working on different variables. What you should expect is a similar phasing with last year in terms of how the equity free cash flow will evolve. But again, yes, it is slightly ahead of our expectations, and we are working across the board in terms of equity free cash flow.

Okay. Thank you, Mathieu. Next question, please.

The next question comes from Mr. Giorgio Tavolini of Intermonte.

I was wondering if you could comment on the latest voucher scheme by the government. The government has just approved this week a large scheme without any limitation on income, so without [indiscernible] requirement. And I was wondering -- and €300 bonus. So I was wondering if you see any risk of price pressure on the pricing of the offers already in the market, which would be hopefully offset by higher demand? And the second question is on the sales split between consumer and enterprise. I was wondering if you could provide some indication on the profitability trends for Q1 for both business units considering the greater relevance looking at your next Capital Market Day looking forward?

So Giorgio, about the first question. Then I leave Adrian to give you some more color. But I think that -- it's clear that the use of the voucher to reduce too much the price can generate at the end of the period an impact. Then based on our experience, it clear that you have to manage before the end of the promotion, the expectation of the customer with all the explanation that are needed. Then it's clear that in this moment any kind of incentive that can help to incentivate the demand is, in any case, useful. Then we have to manage in a clever way these things. And due to the industry condition, today what is important to highlight is that the stress on price is not only an issue of TIM. It's an issue of all the telco players in Italy. And I think that the rationality will become a driver to all the main players. Adrian, I don't know if you want to add some details.

Yes. I think that the voucher in general can be instrumental to raising broadband penetration in Italy because we know that Italy is still underpenetrated versus other European countries. The specific decision of approving a voucher scheme without income limitation according to our view is not the optimal choice, because in reality we should focus more on the lower income customers that are typically the more underpenetrated segment. However, we will see when the final definition and processes will be put in place, what are the entitlement schemes. We believe that, in general, from the experience of the previous voucher and also the voucher on business, the voucher can also help to accelerate migration to better technology in line with what Pietro was saying working on the quality of network.

Giorgio, related to the second question, the split between consumer and corporate. It's important to realize that what I'm going to tell you is related to the corporate segment that is composed by mainly 30,000 companies and the public administration. So we not include in this corporate segment the so-called so and -- the small, medium business. It's important to remember that we have 2 different trends: corporate or consumer. The corporate has a trend where the revenues are growing. But in this group, you have sometimes a different mix of revenue because we are growing not only on connectivity, but also in several new services, services as the cloud that have a high level of marginality. But sometimes, we use also to sell to our customer service with a lower level of marginality as a kind of Trojan horse. It's important to enter in some customer with -- low margin offers can be the resale of software to then continue to grow putting new services. So corporate as a trend of revenue growth, the marginality is above 30% and there is a small change in mix between connectivity, cloud and resale. But in the future -- what's happened is that we foresee to reduce the amount of revenues coming from the resale with the internalization of some activity and the increase of the marginality. When we move to the consumer side, here the trend is different. On the consumer side, we have revenue that are decreasing. We have also a change of mix of revenue in the consumer because the content is growing. So it is affecting the level of marginality. This is the challenge that we got to try to recover the reduction of marginality through a cost-cutting activity on cost better, because it's not a cost cut. It's a transformational cost approach to recover what is missed in terms of marginality of the single services. Giorgio, if I was not clear, please interrupt me.

Okay. Thank you, Giorgio. Next question, please.

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

My first question is related to the potential update on the negotiation with Danz for the soccer content. You mentioned that you've been paying clearly the minimum in Q1, minimum guarantees. And so I wonder if there is any update or potential time line on that. And in general, if you can give us a sense on your strategy on the content and particular TIMvision? Second question on the competitive environment. You have mentioned some price rationality. But clearly, we have one player, Iliad, on the market with very aggressive pricing, so -- who has been on the market for a few months. So if you can comment on the impact that you saw in this initial months? And last question is on the mobile ARPU. So I'm wondering -- so you're applying some repricing. And hopefully, you will have some more supportive roaming impact in the next 2 quarters. So should -- is it correct to assume that basically you should be really the bottom that we are seeing so far or still too early to say?

About the negotiation with Dazn, we are trying to finalize the negotiation. But it's clear that being a confidential one, I cannot disclose the details and how the things are going. But in any case, this is a priority for us because we have to close some point to start to be focused on the traditional operational activity. But I'm quite optimistic that it will not request too much time. Relating to the strategy on content, we are trying to understand which is the best way to proceed. What I mean is that the exclusivity that was one of the leverage that we used until today, we don't think that in the future it's something that we can continue to use. Just to give you an idea. If I have the exclusivity with Dazn or with Disney, and then the customer can subscribe Disney and Dazn, in any case, on the market subscribing the ultra broadband of Vodafone -- which is the real advantage that you have in the exclusivity when I got only the minimum commitment? In this case, for me, it's good enough to have a contract that is based on a payment based on the number of acquisition without any kind of minimum commitment, because I don't have any specific advantage from the exclusivity. But generally speaking, if we have to discuss about the business model. Today, all the competitors, but only in Italy, but also abroad that compete on the content, usually have as a target 100% of the customer base -- of the potential customer base of the potential market. Within TIMvision, we can have as a target only the 40% of the market, that is our market share on fixed. Because we have seen that it's quite difficult to reach the economy of scale if you go only on the 40% of the market. So we are elaborating based on this weakness, then TIMvision has a lot of strength that we have to exploit, because we are not saying that we want to shut down the activity. But perhaps, we can use that in a different way. Again, in the following months, we will be able to disclose more in details how we will move on. Based on competition, we see sign of rationality. Then the impact of Iliad on our customer base today is less than we were imaging. But again, you know better than me this market. I don't want to be happy now. Let's wait some months to see how things are evolving. But it's important to say that at least we see sign of rationality. Then if you ask me if I prefer sign of rationality or signs of irrationality, the answer is quite clear. Last but not least, again, I'm -- I don't remember how to say that in English scaramantico [ph], but you're Italian and you understand. So to answer to your last question. If I think that we reached the bottom, I hope so. But in any case, you highlighted very well some point, also in the comparison year-over-year. I think that the roaming will help. And living in Rome and looking at the amount of tourists that I saw in these days, I think that in the second and the third quarter roaming will help also our ARPU in the year-over-year. Sorry. The team helped me in my bad English. Superstitious for -- when I say scaramantico .

Thank you, Domenico. Next question, please.

The next question comes from Mr. Ben Rickett of New Street Research.

The first question just on the INW stake sale. I was just wondering if you can confirm whether you now have permission from Vodafone Vantage to transfer your stake to Ardian? Or whether you're confident that you will get that permission? And then second question. In the past, you've spoken about rebalancing your fixed tariffs with lower activation and equipment fees. When should we expect that change to happen? And then how significant an impact will that have on your revenue and EBITDA trend?

Ben, on the fixed question, Adrian will give you some more color.

Yes. As we mentioned, the agreement coming from Vodafone, it's condition precedent to the closing. But we are discussing with them. We're optimistic that there shouldn't be any issue. And we hope to arrive to a closing in between June and July. This is our plan. Honestly, things are -- discussions are going well. We don't see any issue coming from there.

Ben, related to the second question, based on the change on the low -- for consumer about the distribution of the revenue between the installation and the value. I think that we have to highlight 2 points. First of all, we are putting under control all the existing customer base, because also reading in some report, there were people scared about the fact that it could increase the level of churn. And this is something that we are not experiencing. We know exactly when and how to manage situation. We put in place all the activity of retention to avoid any kind of issue. But it's not -- this is something that we are not scared of. Then we have slowed down all this kind of activity based also on the fact that it was an ARPU dilution and it was destroying value also in terms of marginality. And we started the phase-out starting at the beginning of the first quarter, that by the end of the first half, they will be completely in phase-out. But due to the comparison with the previous year, the amount of the activation made in this way is marginal.

Thank you, Ben. Next question, please.

The next question comes from Mr. Keval Khiroya of Deutsche Bank.

I've got two questions, please. So firstly, can you walk us through how you think about inflationary impacts for this year and beyond on areas such as wages, energy, leases and any others? And do you see more pressure than when you gave the last full year update? And the second question. One investor topic has really been around the equity free cash flow generation of the domestic ServCo. I appreciate you're probably saying more on this after July. But is there any more you can say at this stage about how you think about the ServCo equity free cash flow generation both near term and towards the medium term as well?

About the first one, that is inflation, let me state also a point that I'm discussing with the team and I'm starting also to share with some institution and regulatory authority. When we discuss about inflation, it seems that we focus only on the cost. It doesn't mean that the cost -- the inflation pressure and the cost is not an issue. But we have to start also to discuss the possibility to put the inflation also on the price, but not only at the retail level, but also at the wholesale level. What I'm discussing and I want to pursue is to discuss with the authority the possibility to put also on the wholesale price the inflation. Because on the network side, being the main player at the wholesale level, I cannot become the only one that absorbs in their cost base all the inflation. So this is something that we are looking to solve, discussing with the authority, mainly also in the contracts that are long-term contracts. In Europe, we were used to not consider inflation so to sign long-term contract, 5 or 10 years, in terms of revenues without any adjustment on the inflation. And now with the team, we are starting to renew the contract because we have to recover the inflation on both retail and wholesale. And the wholesale could be a discontinuity compared to the past. Related to the -- sorry, about the cost, it's clear that we have some pressure in the first and the second quarter mainly on the energy. We are covered also by the Decreto Sostegni. We think that this is something that could be reiterated also in the third quarter. In the meantime, we leverage quite -- 80% of our expenditure on energy for this year. The real challenge could be for the next year. Because in this moment, try to leverage -- 2023, 2024, it's more complex because you have to do a kind of forecast imaging if the cost will go down or up, also based on the result of the war. In any case, we are monitoring the situation. We are working also on other projects that are more industrial to reduce the level of energy consumption. With Stefan we are reviewing also some equipment and network level to reduce the consumption. Because the solution is not only a financial one, leveraging, but it's also an industrial one. And the decommissioning of the network, but also a part of our real estate can help on that. Then again, we are working on our transformational cost base to guarantee a level of saving that can allow us to face also eventual risk. About labor costs. We already signed an agreement last year -- 3 years ago and with the readjustment of 1.5%. And so this is what is put in the plan, and we are covered. And on the real estate, as I mentioned, we are reviewing our strategy and perhaps we will do also some reduction of the square meter used by the company, also based on the smart working approach to further reduce the cost. About the equity free cash flow and the ServCo, I leave Adrian.

Yes. You know that we do not disclose the equity free cash flow at the different business units levels. Anyway, we will give probably some kind of proxy in our Capital Markets Day of July 7. But as you know, today, ServCo, if you do not consider the enterprise part, it's in terms of margin lower. But we are working on that side in order to address also this part of the business on the ServCo side. It will depend a lot on how we perform the network separation, because it will depend in terms of the perimeter and what level of OpEx will ServCo have. So -- but again, we will probably give some proxy on July 7 also on this side.

Thank you, Keval. Next question, please.

There are no more questions.

Okay. So thank you, everybody, and see you on the 7th of July. Bye.

The conference is over. Thank you for calling.