Alex Bolis - Head, IR Amos Genish - CEO, GM & Director Piergiorgio Peluso - CFO

Mandeep Singh - Redburn Dhananjay Mirchandani - Sanford C. Bernstein & Co. Nick Delfas - Redburn Andrew Lee - Goldman Sachs Group Luis Prota - Morgan Stanley Julio Arciniegas - RBC Capital Markets Georgios Ierodiaconou - Citigroup Mathieu Robilliard - Barclays Stephane Beyazian - Raymond James David Wright - Bank of America Merrill Lynch Andrea Randone - Intermonte James Ratzer - New Street Research Jeremy Dellis - Jefferies Domenico Ghilotti - Equita

Good afternoon, ladies and gentlemen. Alex Bolis speaking, Head of TIM IR. It's a pleasure to open TI's fourth quarter '17 results and 2018-'20 plan outline call, which will be conducted by our CEO, Amos Genish and by our CFO, Piergiorgio Peluso. The presentation includes a good degree of detail in explaining the various trends of our main business units and further transparency in the financial section that Piergiorgio will comment. A Q&A session will follow. After drawing your attention on our Safe Harbor disclaimer on Page 1 of our presentation, I'm pleased to hand the call over to Amos.

Hi, everyone, and thank you, Alex. Let me just jump to Page 3 summarizing TIM financial results for 2017 and the last quarter. Slide 3, yes, as clearly been seen, is a record year for the Group and a record fourth quarter as well. On the full year, we had growth there of nearly 2% in service revenues; on EBITDA it was 4.6%, while Q4 had an even more impressive service revenues growth of 3.3%, with EBITDA up to more than 4%. We can see the domestic is growing healthy both in the full year as in Q4 and allowing us to deliver both our year-over-year EBITDA low single-digit organic growth target for 2017, as well as doing better than stable on service revenues. Brazil is continuing its impressive performance both in EBITDA and topline, also having delivered on its yearly targets. Moving to net financial position on a quarter-over-quarter basis, we reduced net debt by nearly €1 billion to €25.3 billion. As detailed in the footnote, we remind you that in Q4, we posted a €679 million provision to include personnel early exits, which do not create any upfront cash-out and would generate long-term benefits for the company. Going now to Page 4, it's a breakdown of the Group revenues between technology, business unit, domestic and Brazil. What I would like to highlight is that all business units go up in Q4 with INWIT showing impressive double digits, but even Sparkle and wholesale were up very positive of over 4% and 5% showing resilience. We all remember that in Q3, we had a comparison effect that dragged down national wholesale performance as well for the year, but in Q4, we can all see that the re-performance without those comparison effects. The two key BUs at the domestic level, consumer and business, continue to grow at about 2% rate. In Brazil, we continue seeing growth at the level of 5% and 6%, mostly in mobile, but also in fixed, which is a young business there growing at a very healthy rate. Going more deeply into the domestic business, yes, on Page 5, starting with consumer base. On the right side, we showed an impressive performance in 4G users that in 2017 grew by more than 2 million, reaching a penetration of 76%, while overall mobile broadband lines were up by more than 1 million. Human lines were stable and total active lines increasing more than 5% year-over-year to reach nearly 27 million. On the left side, you can see how all of this has been reflected into revenues both in Q4 and in the year, where they were up close to 2% with a consistent growth in ARPU. On Slide 6, we move to our domestic fixed business, where ultrabroadband is setting the pace and TIMvision is growing fast. These are the 2 key messages here. If you look on the right side, you can see our fiber retail customer grew impressively in 2017 with about 1.2 million net adds. This trend is accelerating, showing a record 400,000 fiber lines grossed in the last quarter. Broadband ARPU was up during the year, improving the 2016 performance, as well as customer fixed ARPU. On the back of all of this, you can see on the left-hand side that fixed service revenues enjoyed a 1.2% growth in Q4, improving their yearly trend. TIMvision performance expansion has been strong, reaching 1.3 million fixed customer and developing into a more and more important agents of convergence of which -- for which as we know the opportunity on our customer base is huge. We continue now on Slide 7 with domestic ultrabroadband network coverage, where we can see a strong increase. As already known by the market, domestic CapEx peaked in 2017 enabling, as we can see, a 17 percentage point fiber coverage expansion reaching now a very satisfactory coverage of nearly 80%. With our combination of FTTC and FTTH, we can attend any current and foreseeable demands of fixed ultrabroadband connection in the country with close to 90 million premises passed with fiber in more than 3,600 municipalities. Meanwhile, FTTx lines penetration on our fixed broadband customer base increased in 2017 from 14% to 29%. As you can see on LTE, we are now above a 98% population coverage increasing, yes, in densification and carrier aggregation as we cover about 1,400 cities with 4G plus and 12 main cities already with 4.5G, reaching impressive download speeds. As you've already seen, TIM 4G penetration increased in the last year from 64% to 76%. Moving now from domestic to Brazil, you know already the results, so nothing much to add. I would like to point out again on Slide 8, the 14% ARPU growth in Q4, mostly driven by net adds in postpaid of more than 1 million in Q4 and of around 3 million in 2017. In combination with the fixed ultrabroadband base growing fast, we have been able to deliver record EBITDA margin of 36.3% for the full year. I would leave now to Piergiorgio to comment on OpEx, CapEx, net debt, and cash flow.

Thank you, Amos, and good afternoon to everyone. Let's move now to OpEx, Slide 9. We show our cost efficiencies for the year from which we exclude volume driven, which as you know, are composed by interconnection and product. As you know, in 2017, there was an important increase in device sales including smart TVs and other connected household appliances, which contributed to the €423 million increase in cost of goods sold we show in this slide. This element would be playing a much lower role in 2018. On the right side, we point out how content played a minor role in the overall picture, as together with VAS, it was only a growth about 5% of the entire volume driven. Then, we move down to the actual efficiency area. We start with market-driven that in the current competitive context has been an important lever to ensure our continued service revenue performance. So, this is why they were up more than 11%. Then, we move to the real performer of the year, which is process driven. In this area, we scored a minus 27.5% reduction due to the good work done in energy, IT, G&A and real estate. Labor is represented in a separate block, which was down minus 1.8% for attrition. So altogether, 2017 domestic efficiencies were lower €243 million. Slide 10, moving to CapEx. The driver of the yearly increase was our impressive expansion in innovative networks, €320 million more -- year-on-year for NGN and €80 million more for LTE. Other CapEx components partially offset this increase, as following our ROI-driven approach, we reduced real estate and IT -- sorry, we reduced real estate and IT, commercial trend and inline supporting our ultrabroadband customer base growth. On Slide 11, we show our debt performance for the year. If we exclude spectrum and dividends, we show a sound reduction for about €1 billion, even if cash taxes were up to €1.1 billion due to the phasing of their cash payment. We had simplified the order of presentation of financial expenses by including in debt amount, also bank guarantee and factoring fees and so on previously included in other impact. The result is that total financial expenses are higher by about €300 million. Including dividend and the spectrum, both in Italy and Brazil closing net financial position was €25.3 billion. We come now to the key slide of free cash flow generation. What we have shown you is how -- from adjusted EBITDA, which is reported EBITDA excluding provisions, we arrived to equity free cash flow after subtracting CapEx ex-spectrum, change in operating working capital adjusted accordingly for provision, financial expenses as seen above, and cash taxes. We show a sound equity free cash flow for the year of €964 million for the year, about €360 million higher year-on-year. It is worthwhile noting that we exclude M&A which in 2016 has played an important role, as you remember, we [indiscernible] our stake in Telecom Argentina. Back to Amos now.

Thanks, Piergiorgio, and let me just briefly wrap up on this record year with some key takeaway messages. First of all, our impressive expansion in FTTx and LET has been rewarded by mixed growth in adoption by our customers supporting LTE results. TIM Brazil, INWIT and Sparkle all contribute positively to the Group performance. After CapEx pickup in Italy and relevant LTE expansion in Brazil, we are positioned at the best-in-class level to meet customer demand for super-fast connection. And last all this supported important brand recognition, improvement in customer satisfaction index will allow us to cement our rank as number onein Italy in mobile consumer. Now, we move to the star of the conference call, yes, which is the 2018-'20 strategic plan. As you'll see in the next few minutes, we are going to present an ambitious, but also solid and well-detailed plan. On Slide 15, let me to recap the four pillars that are behind it. Our first pillar is best-in-class engagement of our customers through a digital and agile redesign of their journey. Our second pillar is to future-proof our leadership in all key markets, all key segments and all key territories, sustaining our premium customer base while seeking additional goals outside the core business. The third pillar is to accelerate Group cash flow generation to strengthen our balance sheet for the benefit of our shareholders and bondholders. And last, but not least, building an agile and performance-based organization based on simplicity and speed. On Slide 16, we articulate all the enablers that will play together to generate value. So we start with the leadership positioning for all our main 6 business unit. On Consumer, its mostly about convergency and adaption of ultrabroadband. In Business, here we have ICT and cloud driving. Wholesale is about returning to growth also with the support of non-regulated business. TIM Brasil is moving on with post-paid and residential broadband-driven growth. INWIT is strengthening its tower leadership. We have new business opportunities with the MNO's. While Sparkle, we're sustaining traditional business while expanding in new geographies. Then we have 2 important cash flow generation enablers, adding their contribution that Piergiorgio will comment more upon later, OpEx efficiency and CapEx effectiveness. Moving to agile and digital organization, it will be all based on digital end-to-end transformation, advance analytics and artificial intelligence, which will help to implement superior capabilities and to capture value opportunities. People, culture and organization will ensure to grow within the Group a culture of performance, accountability and transparency. And finally, execution, which is all about making it happen. With the help of our Transformation Office strongly enabling information-based decisions across the company while materially simplifying the processes. In the following section, Pages 17 to 21, we outline very specific action for every strategic area of the Group, which are to secure the top customers' engagement, reinforce leadership positioning and step up cash flow. So I would just go on the following page highlighting some of the key KPIs that I think worth for each one to have in mind. In Page 17, if you look on the Consumer, you can see the impressive growth of UBB growing from €1.8 million to over €5 million by 2020. LTE penetration reaching above 95%. TIMvision, the video platform will tripe itself in the base and Convergent's customer base will double by 2020, meaning customer that have Fixed/Mobile on a single bill. So clearly -- and if you see also on the digital sales, they will triple benefiting from the investments we do on the digital front-end. On Page 18, clearly, if you look on the Business, the key KPIs is how we move to increase our overall sales from IT and cloud growing by 50% in the next three years, to equal to about 25% of total revenues. On Page 19, on the Wholesale, I think the key message as we saw in the Consumer is tripling the base of fiber. Clearly, as demands would be also driven by the other OLOs for fiber that would benefit the Wholesale as well. But also a lot of the efficiencies that we are planning to implement on automation and utilization will drive better efficiency, as you can see in higher productivity in the sales force using sales force management and other tools. On Page 20, going to Tim Brasil, I think you know very well the story, but increased coverage of cities with 4G and higher digital interaction 5x more in My-TIM App., And the key messages is clearly the post-paid growing from 30% in the current base to 50% and the impressive growth we'll have in residential broadband customer base. That will again -- will drive our EBITDA that would be equal or more than 40% in 2020 and the improvement in the overall cash flow of the company. In Page 21, we will cover quickly INWIT and Sparkle. INWIT clearly more new sites and significant more number of small cells, around 10,000, but also improving the ratio of tenancy to 2.1x. That, again, will enable higher revenues for INWIT. On Sparkle, we want to increase geographic presence with more point of presence there around 25, but also move much quickly to other IP services to offset the reduction in voice traffic. On the next page, we'll go to -- with this to Piergiorgio that will cover some of the financial aspects of the plans. Please, Piergiorgio.

Thanks, Amos. On Slide 22, we start with OpEx. In this slide, we provide with the full detail of the addressable baseline for further action. As this area now represents about 80% of total domestic OpEx, with this, we clearly point out how digitalization has strongly enabled further streamlining as volume driven with the exclusion of interconnection are now in the base. On Slide 23, on CapEx, it is very straightforward. We are pointing at accumulated €9 billion spend of domestic over the next three years. You will see how -- we now represent this area with other detail, breaking down with network CapEx in 3 areas, mobile expansion, fixed expansion, that represent 3G and 4G and transport capacity, run and maintain for both fixed and mobile. IT and Customer Premise Equipment completed the representation. We then move to 2020, pointing to an important change in mix. We're taking into account the achievement in NGN coverage targets. We dedicated more reserves to mobile expansion, transport and CPE. Our capital intensity will consequently decrease from about 25% to about 19%. Back to Amos, now.

Thank you, Piergiorgio. Again, now moving quickly to technology in Page 24, I will not try to really be too techie, but I think it's worth really going through those pages on technology and IT. But we try to underline, once again, with our impressive current fiber coverage in Italy, both via 3,600 cities in FTTC and top 30 cities in FTTH, approaching 80% of premises while with the more than 90% -- 88% of LTE coverage, with 4G. So with that, we will continue to expand selectively, increasing our FTTH capacity to 100 cities by 2020 and maintaining state-of-the-art mobile capacity to meet growing demand. We will also lead in 5G, where we are going to move past experimental level into early stage phase. At the same time, we are upgrading transport to meet traffic expansion and reducing its cost of operation. Cash flow generation would benefit from a new network as a service support, while saving deriving from the decommissioning of the switching station, it will reach in 5 years 6,500 in total for our total of 10,400 will begin to bring positive results during the time of the plan. On Slide 25, yes, talking about digital and advanced analytics, that would be one of the many key enablers, but dramatic change are happening in architecture, delivery and systems. We are moving ahead with our new omnichannel CRM and billing system to enable convergence and our data analytics will be across the board with a significant number of use cases to enable us to reach our goals in terms of customers, product, channels, channel networking. And of course, all the automation and the decommissioning of IT will have the key effect on our ability to generate cash flow in this area. Moving on the right side of the slide, you can see how IT complexity would be reduced dramatically, by 50% configurability, meaning the amount of offers acquiring an IT developments will be reduced by more than 70%. Now let's go to Slide 26, people, culture and organization. As you know, TIM could be considered as a heavy and slow incumbent. To really turn the page on this, we need a very different organizational and culture, a much more agile one. I think we are getting there through our new organizational structure, it is a big step ahead in simplifications and delayering. We moving from 10 operational units to only 4. This integration sparks collaboration and efficiency, less silo and more autonomy and accountability. We are going to hire new digital talents. We are going to deal with redundancies in a proactive and comparative way with the unions. Also to incentivize perfectly, those who hold key responsibilities in the organization, a new equity-based LTI was designed in line with the best market party standards for 2018-2020 period, aligning to share performance and equity free cash flow generation. This will create a strong management engagement. Page 27 and talking about executions. Yes, to make sure that that will happen, we have created a Transformations Office whose main task is to see to-date the number of key projects get executed across TIM that can really be a quite complicated place to get around in. Let me give you a few example of what we are talking about. Convergency and fiber penetration, IT and cloud developments, digital self-scale, insourcing and so on. So really mainstream activities whose execution is a task per say, in particular it has to happen on a cross-functional basis in a large company like Telecom Italia, it really needed an office that will enable really to supervise those cross-functional cost areas a task. As of today, we are following more than 250 initiatives whose focus gets assessed on a weekly basis. Now, going to Page -- Slide 29, we come to the most important page of the presentation, where we are really pleased to announce the new guidelines for the year 2018 and '20. As for the top-line and profitability, with all the activities we have already told you about, we intend to keep domestic service revenues broadly stable vis-a-vis the many challenges that exist in the Italian market, with the EBITDA will be growing, on an organic basis, at a low single digit CAGR, enabled also by the new efficiencies that Piergiorgio had told you about already. Moving now to the Group level, we confirm the commitments to deleverage by targeting about 2.7x debt-to-EBITDA ratio by '18, further reducing thereafter in each of '19 and '20. Capital intensity is also being addressed with our domestic CapEx ratio commitments to go below 20% by the year end of 2019. Finally to equity free cash flow, where we are guiding for relevant step-up in respect to 2017 reaching about €4.5 billion cumulative in the plan three years period. Compared to the cumulative EUR1.6 billion of equity free cash flow generated in the previous three years, it represents a step change almost tripling, of course, you know the past three years, €1.6 billion to the €4.5 billion in the next coming years. Using the equity free cash flow generated in 2018 as a base, another indicator, the new target represents a 2020 CAGR of mid-to-high teens. One should recognize that it is the first time in TIM history that we are presenting a guidance for cumulative equity free cash flow, which is a strong representation of where we are heading. At the same time, as one could expect, our equity free cash flow will have a reasonable year-over-year improvement, as the strategic plan activities are being implemented. Also, I would like when comparing these objective with past reference, you need to fully consider the following guidance. Our label provision which will have a cash impact starting from this year while the relevant and permanent P&L benefits will reach their run from 2020 upwards. Second, as Piergiorgio mentioned, there has now been a transparent re-allocation into financial expenses of bank fees, commissions, guarantees and other costs that used to be not part of the overall financial expenses. The third one, also note please that in the years '15 and '16, we have relevant process from Argentina and INWIT which we exclude as M&A for that exercise of cash flow. So I hope this will give you additional elements for your comparisons as well as helping to represent the significant acceleration that our target implies for TIM equity free cash flow. Just last slides with some closing remarks. Now, it's time really to wrap up this long presentation. But I would like to highlight that DigiTIM is not a slogan for the future, but it really carries a strong set of urgency for immediate action and execution, driving end-to-end transformations across all business units, acting cross-functionality and implementing a new organization in the way of thinking that will deliver -- the delivery is being the -- our utmost priority. So with this, I will thank everyone for their attention and give back the microphones to Alex. Please.

Thank you, Amos. We'll now open for questions.

[Operator Instructions]. First question comes from Mr. Singh Mandeep from Redburn.

I really wanted to just understand a little bit more around your €4.5 billion of free cash flow guidance, can you tell us the bridge from EBITDA minus CapEx minus tax minus interest? How you get to the €4.5 billion in terms of minorities and working capital absorption, restructuring costs, the ones you've announced this morning, whether you might have any further restructuring costs over the 3-year plan. So just a bridge between EBITDA, CapEx, tax and interest to the €4.5 billion.

Okay. Thank you, I take this one. Of course, I refer to the guidance that we have just given to the market once, to your point. Of course as you see the equity free cash flow is composed, in our presentation, by EBITDA and in terms of EBITDA, you should, of course, consider the guidance both on domestic level with a low single-digit growth in Brazil in good level with continued growth just to have a guidance on how we -- you can model the net EBITDA. On CapEx, we have given a clear indication on the €9 billion in the domestic businesses. Also, in Brazil there is BRL 12 billion guidance which makes more or less depending on the values, foreign exchange, it will consider you can have a specific and clear amount of CapEx. We'll comment later net working capital because, of course, this is the most complex from outside to model. In terms of financial expenses, we discussed very much in various meetings these financial expenses, because you do remember that in the old representation, we were considering an item called other items, other components where there were mixing of all values, amount. So we've decided to represent in a clear way in the item, financial charges, financial expenses, what is related to the net financial position, which means that we have included in the financial expenses not only the direct financial charges related to the bank, loans or bonds or whatever, but also guarantees, IAS adjustment and fees and so on -- so the securitization cost in there, so everything which is related to net financial position is in this amount. It is just a reclassification. It is not an increase of financial expenses. It is just a different split of the other components in order to be more precise and explain to you the number. From now onwards, in the other impacts, you will find only the foreign exchange impact and let's say the other extraordinary items operating or -- but anyway not related to net financial position. You can see from the 2016 and 2017, the progressive reduction of net financial expenses and we are targeting in our numbers also further reduction on this number, but if you consider the evolution in '17 and '16 you have, let's say, at least a proxy of the evolution. Cash taxes, we have commented very many times in this call. The cash taxes in 2017 was affected by the way in Italy we pay taxes, considering the historical method. So you cannot consider, you should not consider the €1.1 billion of cash taxes as a proxy for the previous year. If you consider, for instance, next year, you can have a guidance or an indication of 20%, 30% reduction and then of course depending on the net profit year-by-year. Other impacts are really related to, as I said, to the foreign exchange basically and some [indiscernible] but it's nothing really, let's say, material or in the projections. Coming back to the net working capital, of course, networking capital considers various adjustment, because you need to consider first that, for instance, in 2018, we will have the reversal of the securitization done at the end of last year. So this will have an impact to next year and that explain also an impact -- the evolution of net working capital projection in 2018. Then you will have of course, an important component, which is related to the reduction of cash cost. For instance, next year we are projecting in terms of cash cost and important reduction both in terms of CapEx and in terms of OpEx, and of course, you will have any impact on net working capital related to this reduction. Personnel reduction cost, we are having in the 3 horizon, the cash component of the provision in 2017, if you consider, just to give an idea, something in the region of €200 million per year, it is not far from what we are projecting. Then we have of course other components in terms of all the litigation settlement and so on. So in 2018, we will have also another tax impact related to the payment of the VAT given that in Italy the VAT payment has just changed. So we have an impact, which will be 100% absorbed, so there will be no greater tax, just that will have any impact on net working capital. So the net working capital accumulated explains and gives you the total number in order to arrive to the guidance given to the market.

Can I just follow-up very briefly, my question -- I mean obviously your EBITDA and CapEx is really clear, but I just want to know, does it include the Savers dividend and is it off the spectrum clean-up and is it off the minority dividend, that was really my main component?

No, I understand, but I mean, I just wanted to give a general questions on this point. The dividends are below equity free cash flow, so there is no impact on dividend. As you know, dividend will be defined on a yearly basis by the Board. This year, we have resolved to propose to the AGM the payment on savings, and I don't know -- I will not comment of course dividend in the next years, but it's below equity free cash flow and minorities are below. So this is 100% of our consolidated numbers. There are no minorities impacts here. Is it clear or do you need other points?

It's clear, but I guess there will be other people following up, because it's an important topic, but for the moment, that's good. Thank you.

Thank you very much Mandeep, next question please.

Next question comes from Mr. Dhananjay Mirchandani from Bernstein.

Thank you very much for taking this question. It's related to your 2018 to '20 strategic plan and it comes in two parts. Firstly, what gives you the confidence to be able to deliver stable domestic service revenues considering that Elliott's entry and Enel Open Fiber's progress are largely outside your control? And the second is, you provided some very welcome details on your 2017 cost baseline and structure on Page 22 of the presentation, and yet you provide no explicit structural OpEx reduction targets, why not?

I'll take the first one. Clearly we assume a negative impact of the entrance of Elliott and Open Fiber and it's all included and one might have different view on what and how much it will affect our business, but believe we've been prudent in what we assume as might the affect our business. However, clearly, we did not just had the current negative momentum of those two elements affecting our business. We had to find others in the ways of moving forward and build another -- new stream of revenue. So if you look on Page 17 on the Consumer side, I believe that the FMC convergence and additional out to build that -- build that from additional contents in mobile will be helpful as well the migration to more fiber. The second brand Canale will have a significant offset for the Elliott entry and other specific acquisitions focus on some segmented approach will be also useful to offset those effects. So in general, I think in Consumer, we are believing we have a good plan for the next three years how we can reduce the churn effects coming from new competitors, building a higher ARPU from new bundled products and higher contents within the bundles and that migrations to contents fiber convergence will have its own effect, and Canale, the second brand will be able to offset some of the effect coming from Elliott. On the Wholesale, which is the Open Fiber, we assume clearly impacts over the three years. However, if you go to the page, I believe it's 19, relating to the Wholesale, the migration to fiber, as you know fiber has a higher ARPU on the wholesale price compared to ADSL, so clearly there is an improvement on the overall revenues coming from the migration to fiber over the other OLOs as well. Also the non-regulated business will have -- it was a very slippy business, will be clearly a very important business with NetCo, overall new business plan. So clearly, we'll be more aggressive in pursuing non-regulated business with other OLOs and I think we are seeing some initial interesting demands coming from us and discussion at the higher level with the other OLOs. Third, we believe that going forward, we'll have more stable wholesale revenues vis-a-vis the net corporation. So overall, again, I think we consider those elements that will have negative impact, but we have other plans to offset some of that as we go and I believe that stable revenue is a good representation of the overall picture of the company. With respect to the second question, I will have Piergiorgio commenting, but we're not giving really a guidelines on overall OpEx reduction, but you can imagine there are clearly, clear goals internally on debt reductions and I think Page 22, Piergiorgio can maybe comment if you want anything added to that page.

Yes, sure. Thank you. No, as you said, we have decided not to give any guidance on OpEx, of course, we will -- we cannot, let's say, give you any additional details on that. In this page, we have tried to elaborate on the addressable domestic baseline in order to understand exactly the magnitude of the addressable baseline and to give you the idea that we're really reviewing every cost and trying to see how transformation could help us, how digitalization could help us in reducing this cost. Also, thanks to the Transformation Office that is strictly linked with the finance area. We are really trying to review every cost and trying to see how we could optimize. And of course, on this quarter-by-quarter, we will elaborate further.

Next question please.

Next question comes from Mr. Nick Delfas from Redburn.

Sorry for the second question, but on Brazil, fantastic results, just want to get your perspective on how you expect the dividends to minority shareholders to progress in Brazil? And secondly, very interesting point you put in the presentation about closing central offices. Roughly how many would you expect might be closed in 5 years' time and let's say at the end of 2022?

Thank you. About the Brazil dividends, unfortunately we'll not give a clear guidelines, we might do it in later stage. But as you probably saw the guidelines, cash flow generation in Brazil will really take off starting from '19 and will be really start to get an impressive level. And the level of dividends will go up compared to the current level in Brazil, clearly leveraging the internet on -- interest on capital instrument as much as we can and that will be helpful. Either we will not really, at this stage, have a clear guidelines on what will be the level of dividends in Brazil vis-a-vis the cash flow -- the acceleration of cash flow generation there. With respect to the central offices, the target in five years is 6,500 centrals and why we are not decommissioning all of them in the next three years, only 300 in the plan, is from regulatory constraints. By regulation, you have to -- when the central office hosting equipment's of another operator, you need to give an advance notice of five years. If you don't host, it's only three years. Clearly, we are hosting in most central some equipment's of the other OLOs and we took the conservative approach, we will not be able to negotiate with the OLOs or with the regulator, a shorter period. So we have some benefits. But if -- again in the five years' plan, clearly all the 6,500 will be decommissioned, and decommissioning is significant hundreds of millions of euro saving per year, which unfortunately we couldn't really catch all of them in the three years, because it's only small amounts that by regulation can be allowed to decommission unless and I really want to be optimistic we'll be able to increase it under -- as we go in the next coming years. Thank you.

Thank you very much Nick. Next question please.

Next comes from Mr. Andrew Lee from Goldman Sachs.

I just had couple of questions around the phasing of your free cash flow. Obviously, there is quite a few questions around this for your guidance. Can you give me the run rate on your cost cutting. Your EBITDA growth guidance, I think, implies around €300 million to €400 million of fixed OpEx reduction per year. I get that the headcount savings will be back-end loaded, but with the overall OpEx savings be really spread over '18, '19, '20 or will those also be back-end loaded? And just a second question on the digitalization, when we look at other income and stability to deliver cost efficiencies from digital tech, often they are dependent on upfront investments into the back-end architecture, systems, operations, inter-network and they're also hindered by a lack of labor force flexibility, including unions. So, why are you able to deliver your digital cost reductions seemingly much faster. And then a third question if that's okay, just on the Italian fixed line market growth, you've talked to the tripling of fiber customers by 2020. I wondered if you could give us guidance by how much your Italian fixed line broadband customer base will increase commensurate with that?

I will take the second and third question, while Piergiorgio will take the first one. I'll say just second -- to your last question, we expect the overall market to grow by 1 million to 2 million, overall broadband users in the Italian market in the next -- again, there are different scenarios. I'm optimistic, I think you know Italy is catching up finally with the rest of Europe with respect to demand. So, Internet in general and most important, fast broadband connection. So, it's about -- between 1 to 2, it's a range of being very conservative or very optimistic. With respect to the cost efficiencies, I would say that clearly digitalization and analytics has a significant effect on overall, I mean any operator you will see. I think TIM Brazil, I will follow TIM Brazil because they started their journey two years before Italy, can see the significant OpEx reduction through those two enablers. So one can expect that we'll be able to benefit as well from that -- like other operators that started the journey before us, automations of the back office and processes, and clearly caring and e-sales will be dramatical in the next few years on our overall OpEx. But also, on the network side, decommissioning of the centrals and virtualize, the virtualizations part. The cloud-based network will reduce substantially maintenance run and so on and all of that has its own effect. Now, investment upfront, I believe that it's all been in the plan, because what's happening is, yes, the investments in the new generation of architectures and cloud and so on has a dramatical increase. On the other hand, we have a dramatical decrease in legacy systems and maintenance and run. So it's really the story of just 2 universe. About unions, I believe, yes, clearly that's why we have that provision and we believe that working as positive with the union -- possible we'll reach agreements on the reduction of people as we go over the plan yields and again, not easy, but can be done, should be done. With that, I'll go to Piergiorgio to answer the first one.

Yes, thank you, Amos. On the phasing, of course, as said, since we haven't given a guidance on EBITDA, so without the guidance on OpEx, it's not easy to answer to your question, but there are many, many areas that we're working on in order to obtain OpEx savings. For instance -- I'll just give you, just to give an idea, the decommissioning of our customer care also provisioning in wholesale. In all these areas, we have an important effort through digitalization that could increase our cash results in 2020. So, you should expect, of course, the full impact of these actions some more in 2019 and 2020 rather than in 2018, because of course we need time to invest in digitalization in order to obtain these results. Consider also that in 2018, we will also have at least for commissioning to compensate EBITDA in order to defend our brand, given also what will happen in our business, particularly on mobile. So, of course, we have also some -- we are taking also some providence internally, particularly on commissioning, as I said, in order to defend the brand. So you can expect, considering our cost base that is explained to you in Page 22, you can phrase and have the full impact in 2020. So, we will have more impact in 2018 and then a progressive increase on cost of labor, but we cannot comment very much, because we have negotiation ongoing with the unions and of course we have at least, two, let's say, instruments that we are discussing with them. But of course, as you know in our country you cannot disclose and it's better not to disclose anything until you signed. But we have a, let's say, important discussion with them ongoing. I can only tell you that on cost of labor, we have provision, as you know, the article 4 of Legge Fornero, which is an instrument that is working in a very simple way, because if you -- once you have defined the addressable base, you have to define, let's say, agreement with the employee and once the employee has signed, you pay 80% of the fixed salary. So you save 20% of the fixed salary and you save all the, let's say, variable salary and you save also potentially the other cost like energy or whatever, so the other [indiscernible]. In the cost of labor item in the profit and loss, you will not see from now onwards, the cost of the employee that have signed this agreement. Of course, the payment in cash will be on a yearly basis paid using the provision already done in 2017. So, this is the way how it work. So you can expect in 2018 to have, let's say, a begin of the impact of this Legge Fornero and this of course will depend on the timing of the exit of the employee. Of course, in 2018 will be limited, because we expect the exit in the second part of the year, while in 2019 and 2020 the impact will be full.

Thank you Andrew, next question please.

Next question comes from Mr. Luis Prota from Morgan Stanley.

Two questions if I may, first is on, again on the wholesale division and the growth you are expecting. You were mentioning a few drivers, but I would like you to elaborate a bit more on this growth in number of lines from 1 million to 3 million, taking into account Enel coming to the market, I know it's very limited impact so far. But in a 3-year period, it might have some impact. So which operators are you expecting to take this extra 2 million lines from, I suspect it would be Vodafone and Wind but we'd like to get your thoughts. And also on the non-regulated growth, what can you do to grow in this space? And the second question is on the 28-day billing, how are you -- are you addressing this? You are probably giving up on this one, are you going to change tariffs, increase prices? How are you dealing with these please?

Okay, on the Wholesale, we assume some effect on cities where the Open Fiber will lend services. Today, it's kind of limited 12 cities, mostly in the 4 main cities where metro work has been started like Milan and others. But the key is again, to expanding and we assumes our assumption, not other assumption, out assumption, based on our best knowledge and understanding of their business where they will be in a year or 2, three years and what will be the effect churn rate on our business. So again, we believe that the fiber migrations of our customer as well the customer of the other OLOs, which is happening also fast will, I would say, protect that base as high as possible in the next few years. Our coverage is significant, we talk about 80 million FTTC and by the end of 2020 more than 4 million or 4.5 million of fibers of the 100 cities. So clearly, we'll be able to address any demands of any OLOs for 200 mega up to 1 giga, which is clearly within the demand range or even well above the demand range we have today and we think we'll have in three years. So very comfortable about this situation and we'll try to again have a clear transformations of our OLOs from ADSL to fiber as we did to our base. The second, again, driver as I mentioned, non-regulated business. We are very shy on that, because time of delivery was long, many months, and many OLOs preferred to go to other providers of that type of services than coming to us. We are trying to change the approach dramatically, build a really more commercial approach inside, and really fight for that business as well and I think we're in a very good position and I will not get into numbers, but I think we are seeing a good response from our clients that are also our competitors to some degree at this stage for that kind of approach on a full wholesale volume discounts and more flexible pricing. Let me also note this wholesale, hopefully in few months will be a separate legal entity, which is very independent management, KPIs and so on and they will be -- been driven to get the maximum results from the assets they will be owning in that unit and we expect them to bring a much higher returns on the assets and be more aggressive in the market to generate revenue. So it's about very specific incentive for management, the separation of the legal entity, the likely framework we believe, they will be able to obtain as well as their ability to migrate as much as possible to more fiber and build a more aggressive non-regulated business. Thank you, and we have another issue on the 20 days billing, I will say, this is really a history, company already moved from 28 days to 30 days billing in all segments. And again, there is some legal procedures about the past, if there is a refund or not, that's ongoing. But the company as a whole already moved and the pricing been already adjusted as needed, based on each market, each segment, and each business. Thank you.

Thank you, Luis. Let's move on to the next one please.

Next question comes from Mr. Julio Arciniegas from RBC.

I see that the new CapEx plan €9 billion for the next three years, well, there is a reduction versus that previous run rate in the previous plan 2017-'19 basically €11 billion. Hence, is this CapEx reduction driven by lower FTTx coverage somehow, because I see that for example, in the previous plan you have a target of 99% and now its 80%. And for this 20% that you're not going to cover with FTTx, are you willing to use Open Fiber network in these regions? And my second question is related to the plan to separate that network. I see that this has been approved, this plan, what are the next steps required to see this happening?

I think generally, I mean, clearly, there is a significant reductions in -- as you can see in the Page 23, in fixed expansion. That is the major driver -- I mean, one of the major driver for reduction, yes. Clearly, there is other things going on in transport and maintenance. On maintenance, that's again -- virtualization will be affecting that cost as well. And as cost of delivery will be reduced, so capitalization of that delivery of Access will be as well reduced. But overall, the major drive is, again, as we picked our coverage in 2017, we have mostly going now from March this year to the '20 is the Fiber-To-The-Home coverage with fiber joint venture we have. The other question was?

How much have you saved by basically not doing the 20% of FTTx for instance?

Could you repeat that one Julio? Sorry.

How much has the company saved already using the CapEx envelop by not going to 99% of FTTx coverage, that basically was the target that the company had in the previous plan?

Yes, I mean, this is a very different project, it's called Cassiopea. This was off balance sheet if you want, yes, and Piergiorgio can discuss it, it was never really at the time thought to be inside the company, but Piergiorgio do you want to run it?

Yes. No, I can answer at this point. Of course, as you remember well the previous coverage was different, but because as you know, we were considering of having a direct investment through Cassiopea, which was a vehicle designed in order to have a, let's say in FTTC coverage on those areas and we were combining these with the Infratel, the Enel Open Fiber in some areas. Of course in this plan, we don't have any more of these projects, so what you see in the CapEx plan is the direct investment in network owned by the company, which is consistent to the numbers that you see in 2017 and on the areas owned by the Enel Open Fiber. We will evaluate the possibility of buying from them. So the total coverage exclude, of course, the coverage obtained by the winning of the public front auction.

And regarding the next steps for that network separation, what are the next steps required to see this happening?

We'll provide the formal request of voluntary separation really in the next few days and AGCOM, the regulator here will start working on it as part of their market analysis [indiscernible] of the market analysis is to define the regulatory framework for the market that will be ending in June. So I think only at about June, after public consultation, we'll have a clear idea of what is the regulator approach to that voluntary request. So I would say, June, July we can start off with the implementation. Initial feedback from the regulator about that step seems positive.

Thank you, next question, please.

Next question is from Mr. Georgios Ierodiaconou from CD.

My first question is around network ownership. I mean we've seen in Denmark consortium acquired TDCM, part of what they were considering is a split of the network with the OpCo and then potentially separate ownership over time. And do you have an activist investor we don't know yet exactly what the plans could be, but in the event that either this investor or other investors are pushing you towards giving away ownership of the network, not just separating it from the framework perspective, but giving away the ownership, what would be your view on that? And if you would have been in favor of it, I would be interested to hear some of the reasons why you would like to keep the ownership of the network? And then my second question is following from Luis' question earlier around the 28-day billing, from what I understand, is you've already changed the back book to 30 days. I was just more interested, is the front book going to change? If it changes, is it possible for you to amend the offers in such a way that there is no price impact on the front book from the move to monthly?

Quickly, we believe the network is -- the vertical integration with the network is key to deliver value to shareholders for the next coming years. So as I said in the past, we see the network part of the overall assets of the company. About the 28 days billing, I will say that again it's -- the only billing aspects that have been resolved and nothing beyond it. So I think we are on a regular course of business with 30 days billing being changed and overall pricing, customer will pay on a yearly basis will not change. Thank you.

Thanks Georgios, may we move on please.

Next question is from Mr. Mathieu Robilliard from Barclays.

Two questions, please. First, on Brazil. We've seen Oi get out of the restructuring process and perhaps moving on to do a capital increase. And I was wondering how that changes the assessment of the competitive situation going forward there and your strategic options there? And the second question, coming back to the free cash flow. If I understand all the details you provided for net working capital movements in 2019, it suggests that '18 is going to be more negative than '19 and '20 because you reverse some of the securitization, et cetera. So you should see more growth in '19 and '20 than in '18. Is that right?

I can take the one on working capital and then, of course, leave to Amos the first one. Yes, of course, in 2018, the net working capital will have a more negative impact than what was in 2017, and we progressively see an improvement in the following year.

And if I can follow-up, can you give us a sense of what are the new financial charges representing under the new disclosure, I mean, kind of the ballpark number for '18?

No, sorry. I want to be clear on this point because there are no new financial charges. The financial charges are exactly the same that have been described and posted in -- it's just a reclassification. We just decided, following also many suggestion coming from you, to split the item other components, other items in order to be clear on what was inside and what was, let's say, pertaining to other component and we allocated to the financial charges all the cost that are related to net financial position. So if I have a guarantee or if I have a cost of -- for the factoring or if I have a VAS adjustment on the net financial position, everything which is related to net financial position goes there in that numbers, and this comes to €1.5 billion of financial expenses. And just to give you an idea, in full year '16, the same reclassification arrived to a number of €1.659 billion, which is more or less -- slightly less than €1.7 billion. And you can assume easily the same path of reduction that you're seeing from '16 to '17 also for the previous year. Honestly, we have an additional challenge on this, given the possibility of refinancing at lower rates. So we are targeting even an improvement of reduction in the following years.

Mathieu, in Brazil, I would say, the guidance we gave about TIM and TIM Brazil is based on a standalone business, which is we believe can sustain itself on a standalone as conversion in Brazil is not happening. So the mobile-only is not an issue, at least in foreseen future. And second, we started aggressively building our own fiber, covering more and more cities. Just in this year, we are launching in 3 major cities outside of SA Paulo and Rio where we have a significant presence. So that's clearly a more safe play than a consolidation game where you don't know what might be the outcome and the risk you are taking with that kind of a process. So again, no discussion or consolidation at -- big leagues consolidation is under discussion on the table. I think when all will be out of the Chapter 11, I believe by the end of this year, beginning of next year, maybe there'll be some different analysis situation, but currently, it's clearly not occupying our time.

Thank you Mathieu, next question please.

Next question comes from Mr. Stephane Beyazian from Raymond James.

Two quick ones. The first one is, can you update us on the relationship for content partnership, especially with Vivendi and what's included in the guidance from this? And the second one, I just want to be clear because we discussed working capital just there. Regarding the free cash flow guidance, can you tell me again what sort of exceptional charges could be included or actually are not included in the free cash flow guidance?

About contents, I would say that again, we had this idea of building a joint venture with Canale to enable us to bring a strong partner, not so much as the content as Canale don't have so much contents within Italy. So it's more of the partner know-how, maybe technology platform and so on to enable us a fast track into the content business. As you probably know well, this process has been delayed with its approval for various reasons, and we decided at the board level -- management and then the board level to put aside the joint venture with Canale in order to -- back to speed on building our content strategy. As you mentioned, content is key to our strategy and those delays of a few months have its own price. So we decided to move on and standalone and build strategic partnership with different contents provider or maybe even with Canale for very specific elements of core production or some rights on some catalog, but that's really on a very generic way. We are now moving forward as the Board just decided that with our team to negotiate with different contents provider to enrich our catalog, especially on the non-linear catalog, and of course, we are eyeing to see what will happen with full-blown Italy, vis-a-vis what's happened in the last tender. If there is opportunity that will be within our budget in our plan to add [indiscernible] as well. So that's clearly a moving target. We know more about the full catalog proposition we'll have in the next probably 2 to 3 months and I'll be happy to update you in the next call. Thank you. And with this, I'll give to Piergiorgio to go back to the cash flow.

Yes, on the net working capital, of course, we include in these items all the non-recurring items. Of course, I cannot tell you what is inside, what is not, but in terms of guidance of the provision, then at the end of 2017 are going to be paid cash over the plan horizon. So you could assume that over the plan horizon, the provisions will be paid in three years, and of course, we have other, let's say, litigation settlements that have been provisioned -- have been provisioned in the past. So there are no other extraordinary components that are not known to the market.

Can you just remind me, and I'm sure I'll look up, but sort of total amount of litigations we are talking about?

No, I will not tell you because the amount of litigation is not, let's say, a good proxy because you get scared, because as usual in the litigation, you ask for an incredible amount and then the component is completely different. What we have done is an assessment. Discuss it, of course, internally with likely a cash payment of this litigation. Of course, there is an uncertainty, but we do need to have a provision in the cash flows of potential litigation. But the gross amount is honestly another reference because it's completely outside the amount that we are going or willing to pay.

Thank you very much, next one please.

Next comes from Mr. David Wright from Bank of America.

I'm just going to try and frame the free cash flow question, again, just using a couple of numbers, please. It feels like there is a lot of questions around this. I think consensus has EBITDA minus CapEx of about €13.5 billion over the '18-'20 period and consensus clearly about €500 million high on domestic CapEx. So it gives about €14 billion. I think if I take your comments on tax, cash taxes being lower and interest being, let's call it, stable, there is a roundabout another sort of €7 billion to come off, you said pre-retirees €600 million dividend to minorities, cumulative is about €600 million. So that leaves about €5.8 billion. Is that kind of bridge, the €1.3 billion down to guidance, is that the kind of quantum for the working capital unwind over the period, please? And then my second question and I don't think -- I'm not sure if this detail is published and I hope I'm not crossing line a little here, but just if we could get any information on the LTIP targets and what particular targets trigger higher LTIP payments if that's possible?

No. Hi, David. I think this maybe for once we can do later on, but in principle, the component is one exactly that I have told to you before in the previous answer. So, we have the EBITDA, less CapEx, less adjusted working capital, less financial expenses, less cash taxes. And as I said, the other impacts are not meaningful. It is only related to FX. There are no impact of dividend, there are no minorities and so this is a full 100% cash flows consolidated in our numbers. I only can answer again considering the guidance that we have given to the market in terms of EBITDA, CapEx and that's it. So if you want, maybe we can -- we can maybe later with Alex try to help you in reconciling, but this is the guidance that we have given and so you need to try to really calculate using the indications that are given to you.

Okay. I mean just pushing it a little, could we possibly get it in the three-year scope, a three-year working capital online, cumulative?

Honestly no, we've decided to give only the equity for cash flow. But as I said if you -- I don't think it's so difficult, because that's why I tried to give you the guidance of using the EBITDA, which is let's say you have the guidance for the domestic, you have the guidance for Brazil and for INWIT, you can arrive to a number. On fix the guidance, it is very clear, because you have our domestic guidance plus the guidance for Brazil, it is clear. On financial expenses, I have given also guidance very clear, on cash taxes, the same. So honestly, you should only sum up.

Yes. It's just that if I take those guided numbers, I'm ending with about €7 billion of cash flow. Okay, we can take offline, that's fine. Thank you. Any possible comments on the LTIP, I'm not sure if that's appropriate.

Sure. Again, I think just as comments on free cash flow, we never gave guidelines, investor ask guidelines, giving guidelines and it's creating more confusion that it should be, maybe the seek of transparency is an issue, because it's unfortunately getting more issues, as first time we are giving any guidelines and people trying to compare the old model to what the company guidance, yes and anyhow. Just a small comment to you, very theoretical calculation as I mentioned in my call speech, I was saying that don't forget there are some effect coming from previous years like you know the labor cost, yes. So when you look on the theoretical three years, those things that you know relating to previous years coming into those three years, yes, like the securitizations effect to reflect the working capital in 2018. The labor cost was a provision, it's not in the EBITDA of '18-'20, but it was in the EBITDA of ' 17, but cash flow will be affecting and so it's not that theoretical, but I think we gave you enough elements to understand how to get to the free cash flow, equity free cash flow. About the long-term incentive, it's simple. It shows the performance, we too indicate that 70% of that will be based on the shares performance compared to the relative basket to be good with the board. And the second 30% on meeting that cumulative free cash flow over the three years' plan. So that's about it, it's -- anything more specific, I think it's in the plan and would be, yes, delivered at one point.

Okay. And is there an easy answer to -- are there any ladders just on the free cash flow. Is there a clear, sort of ladder of €5 billion, €5.5 billion, et cetera or is that not disclosed?

No, [indiscernible] comfortable to give us the guidelines. Okay, that we believe the purpose for guidelines.

David, you will have all the information on the FDI. So, we can look into detail of the FDI later.

Next comes from Mr. Andrea Randone from Intermonte.

Thank you and good afternoon, I've just a question about the spectrum costs. So you expect, because you mentioned that these costs are not included in the guidance you provided, but I wonder if you can help us in understanding your expectation for this cash-out.

The spectrum of 5G will be auctioned in the second half of 2018. Price, minimum price been requested for the overall spectrum is €2.5 billion and it's divided to many different spectrums and possibilities and we won't have to play to what is really important to our spectrum allocation. The biggest part of the cost is a 700 megahertz, about €1.75 billion out of the €2.5 billion, which again I will not enter to our spectrum tactics and strategy, is not that critical for Telecom Italia spectrum as we have many spectrums around 800 and so on, but the other 750 are relating to the 3.5 gigahertz and the 28 that are more relevant to real 5G, 700 is not so much 5G, they're more 4G but anyhow. Again, it has many slots and spectrums between national and regional and one will have to play to what exactly is needed. We have a 3.5G today that we expect renewal that will give us additional, total of 10 years from now. But the license is about 19 years. So one should debate if we need to bid to cover the other 9 it will not get renewal in 2029 or not, so there is a lot of that kind of things we should really work internally and come with the best optimize answer to that. But again the big part is 700, which is more 4G related in our opinion and we have plenty of that inside the team. The other 750, we have to see what exactly is critical to our spectrum strategy going forward. And again it's divided between probably 3 to 4 operators, probably 4 operators in this kind of a spectrum.

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

I have two questions please, trying to go back to the topic of the networking corporation that you've announced, you're pushing ahead with today. Could you go through precisely please what you see the benefits to pushing ahead with that as opposed to the current regulatory model that you have in place, and once the incorporation actually is complete, would you be open to doing a merger or deal with Enel OpenFiber? And the second question, please, just on the guidance but not on equity free cash flow, just on EBITDA, you've guided to 3-year low single-digit EBITDA CAGR. Just wanted to confirm that that also holds true for 2018 in the near term as well.

Okay, about that, the net -- I will say that having the network in a separate legal entity will provide best-in-class equivalents model in European market. Because Open Edge, for example, does not own the assets and that company will own the asset. It's really full, complete one-stop shop that will be able to provide, on a standalone all services with its own IT and personnel and we'll have to drive to best efficiencies and drive best output of cash flow and level best those assets including [indiscernible] business as I mentioned. So I think just that will drive clearly better relation with the regulator and other OLOs with respect to their trusting on confidentiality of the information that providing to the wholesale business today as well to the equivalents of them have been treated including taking into account sometime of their input with respect to investment and expansion and so on. So that's, in our opinion, an important benefit. The second, the fact that that asset is part of the legal entity called TIM today is a liability, because the regulators see it as an asymmetric power and lead to significant constraints in our consumer business unit to compete on equal terms with other OLOs. We expect that with time, gradually, with market analysis, the regulator, they will see that their service call should have very similar terms or equal terms to the other operators with respect to bundling, pricing and so on. So we believe that, that will happen with time but should happen as they will finalize the market analysis. On the NetCo side, I think the government will have all the incentive to make sure the wholesale prices are visible and sustainable to allow enough free cash for this company to invest and do other activities going forward. Now with respect to second question, I will not comment on M&A activity on this call. Thank you.

And also on that point would be -- with the board of the NetCo be the same as the board of TI, or do you have a separate board structure please?

Will be a separate board structure, majority with TIM; minority independents, but separate Board, different.

And now on the 2018 EBITDA question, please?

I would say, we did not give guidance for 2018, so it's guidance for three years and we will keep it that way. So we'll not push ourself to give guidance now on the call for '18, sorry for that. Thank you.

Next question comes from Mr. Jeremy Dellis from Jefferies.

First question is to do with the network separation process. You have authority now to speak to AGCOM, but is it necessary to engage with the government as well in order to make progress on this budget and could the lack of a government create some form of delay? And then just linked to this, just to clarify, the fact that TIM representatives would have a majority on the NetCo board, does that mean that, in practical terms TIM would control the CapEx budget of a separated NetCo? My second question has to do with the antitrust investigation into the TI's historic activities on UBB in the white areas. Now the fact that under your new business plan, you're undertaking not to deploy fiber into the Infratel areas, are you confident that, that could enable you to resolve this process quickly? The antitrust did indicate in a recent paper that it was looking at allegations of potential sort of wrongdoing in the past, related to the deployment of fiber into white areas and into the pricing of retail broadband packages to lock customers in. What's your view as to how easily resolvable this stuff is and if the antitrust issues are not resolved, could that get in the way of taking the NetCo project further?

I would answer very quickly on those two question. Unfortunately, we are really running out of time and I think this might deserve in the meetings when -- with IR or myself, but on the first one, I have said clearly, having the company controlled by TIM will have control on the -- say on the budget of the company, which is normal. But there are lot of details you didn't ask. Clearly, would be one of the processes that will be going on with the regulator next few months, so I cannot -- I don't want to really start negotiating with the regulator now on this call. So anyhow, I believe the company is fully controlled which mean, we will have clearly a control on the budget and what's happening in that company and again 1% full subsidiary on and that's -- no discussion there. Independent board will be mostly supervising the compliance side of the business and not the business side itself. And with respect to the antitrust, we believe that again, that NetCo operation will have an important benefit with resolving some of the antitrust cases, some or all that are pending. Thank you for the question. We will now go for the last one, I believe.

Yes, thank you very much. This would be the last one. And possibly, we should keep it shorter because we have some travel engagements and we need to really leave in a couple of minutes. Thank you. Last one, please.

Last question comes from Mr. Domenico Ghilotti from Equita.

A follow-up on the network -- on the NetCo, in particular, if you get the green light from the authority in June, let's say after the review. What is the -- let's say the timing for completing the legal separation and when could you share with us also or could you share even today with us some preliminary KPIs on the net contents of perimeter of the assets in terms of value of the asset that you're contributing and main KPIs.

Thank you with this question, I would just say in general, clearly it would take some good few months to implement and implementation probably will be in phases. The legal separation is very easy to do. But the allocations of all the IT systems and the back office and so on will take some time. So it's really something under review. We will give a clear answer to the regulator in the next few months, even earlier about the timeline of such implementations. About the second one was?

On the assets that you're contributing to the NetCo?

No, no. We will not get into details about the perimeter at this stage. With this, I would like to conclude the call. I would like to thank everyone for their participation. I think again, to summarize, we had a record Q4 and '17. I believe, the plan is really covering all the spectrum of activities a company should take in the telecom sector to be the sustainable business model. I understand there are some confusion of some people here about the equity free cash flow comparison, again, well understood. This is the company first time giving such guidelines. But I think, people will have to really look on historical reference to understand that cash flow more than anything else, which means understanding that we will go, when you take just '17 number in the mid-to-high teens, CAGR in the next coming years saw an impressive yields of cash flow. If you take the past three years, we are tripling the overall accretive free cash flow coming from our plan. So, overall again, impressive acceleration of free cash flow, any issue that people might still have on, well network -- working capital and how it's compared to past and future and what elements are in and out, we'll be more than happy to discuss off directly with us. We will be on the road the next few days, of course, we try out anytime. So with that, again, thank you and have a lovely day.

Thank you very much, everybody.