Alex Bolis - IR Amos Genish - CEO Piergiorgio Peluso - CFO

Nick Delfas - Redburn Dhananjay Mirchandani - Bernstein Julio Arciniegas - Royal Bank of Canada Georgios Ierodiaconou - Citi Jakob Bluestone - Credit Suisse Andrea Randone - Intermonte Mathieu Robilliard - Barclays Giovanni Montalti - UBS Nicolas Didio - Berenberg Domenico Ghilotti - Equita James Ratzer - New Street Research Will Milner - Arete Research Jerry Dellis - Jefferies Andrew Lee - Goldman Sachs Fred Mendes - Bradesco Banco

[Starts Abruptly] speaking from IR. Welcome to the TIM Group Second Quarter '18 Results Call. Our CEO, Amos Genish will lead the presentation together with our CFO, Piergiorgio Peluso. A Q&A session will follow. Draw once again your attention on our Safe Harbor disclaimer on Page 1, and hand it over to Amos.

Hi, everyone, and thank you, Alex. Sorry for the slight delay, some technical issues we had here. We're very pleased to have you on the second quarter '18 results call. Before going through a detailed analysis of the quarter, let me start with an overview of the group main results. As you can see on slide 3, service revenues at the group level were positive and broadly flat at the domestic level where, despite challenging market conditions, our operations showed resilience. We had a slight decrease in EBITDA at the group level, incorporating certain adverse year-over-year comparison effects, which are related to domestic. However, our domestic EBITDA year-over-year performance is stable, if we normalize it for the [indiscernible] of our Solidarity agreements with the workforce, the various regulatory impacts, certain non-linear items and one-offs. Our Brazilian operations continues with their excellent performance. Not less importantly, I would like to call everyone's attention to our continued solid performance on CapEx optimization due to its smart allocation and to more efficient procurement, which indicates that we are on track to meet the CapEx guidance for our plan. The combination for our resilient operating performance and of our discipline on investments supported double-digit positive performance of EBITDA less CapEx both at the group and domestic level and a robust growth of operational free cash flow. At the same time, net debt was reduced by a significant amount compared to the end of Q1. So we can define this quarter as a stable one despite market regulatory headwinds with our operation KPIs showing generally a positive trend. With this in mind, let's move now to Page 4 for more details of our service revenues performance, which at domestic level was positive at the retail service revenues level for both mobile and fixed. Most main business units posted a positive year-over-year growth. Our domestic consumer was impacted negatively by the 28-days billing rollback along with the rest of the market. Sparkle performance was affected by adverse year-over-year comparison from IP contracts in US, which will improve in second half. Brazil posted again solid results supported by its successful upselling strategy. On mobile, both ARPU and postpaid customer base were up supporting increase of 5.7% year-over-year in service revenues. Also fixed was up by mid-single digit. Now to slide 5, where we deep dive in domestic mobile. Operation KPIs continues to be strong, most importantly on the right side we can see how human line grew by 0.5%. Quarter-on-quarter, Mobile Broadband base is expanding as well at a healthy quarterly rate of 2.1%. In mobile number portability, TIM has again performed as best-in-class among MNOs scoring a positive balance despite the entry of the new operator at the end of May. Also Human ARPU continues to grow reaching EUR16. Let's now move to fixed with slide 6 where excluding international wholesale, we point out to a positive year-over-year performance of retail service revenues. Consumer ARPU continues to remain stable, while Broadband ARPU posted a solid growth of 4.8% year-over-year, reaching EUR26.1. Migration of customer base to fiber moved on with a strong pace of about new 600,000 lines, split evenly between retail and wholesale. However, we continue to be impacted by line losses in retail, which is one of the effects of the 28-days billing rollback as the related free of charge or opt out of one month's window increased the normal trend, not to mention the media generated negative echo. On slide 7, TIM Brasil, as you already know, has posted a solid quarter on service revenues, scoring a plus 5.8% year-over-year net growth. We highlight organic EBITDA, which was up double-digit year-over-year as well as the other main positive indicators. At this point, I will ask Piergiorgio to update us on the OpEx, CapEx and debt performance.

Thank you, Amos, and good afternoon to everyone. First of all, on page 9, we provide you with the table that summarizes all the elements that have been impacting our second Q'18 domestic EBITDA performance and some comments on the evolution in the second half. Their description is quite self-explanatory and mainly refers to facts that are already quite widely quantified and disclosed as the delay in Solidarity, values, well-defined regulations related to [indiscernible] and vendor rebates contributions in 2017. There is one further element that was described in our 2017 financial statement that appears at the end of the table, liability reversal, which refer to the one-off rebasing of past liabilities performed in 2017. They have contributed to the overall quarterly total of EUR38.6 million and will affect a year-on-year comparison still in the third and fourth quarter for respective similar amounts. These liability reversal items will then end their negative comparison effect at the end of this year. Let's now move on slide 9 to domestic OpEx. Addressable cost base was managed successfully with commercial after-support sales while on industrial front, we've got good results by freeing office space, reducing related energy cost and through improvement in wholesale operations. G&A and IT performance was supported by our zero-based budget approach. Performance in labor was very effective as it scored net savings in the quarter overcoming the Solidarity delay. Finally, as you can see, our sale of receivables generated some credit cost. Total year-on-year cost increased in the second quarter by EUR46 million including the non-addressable component and vendor rebate effect. We highlight that the company's acting to manage bad debt and credit [indiscernible] initiative and we remind how in 2017 a vendor rebate followed a nonlinear partner now discontinued by new procurement practices. On a purely addressable basis, costs were down by EUR26 million. Slide 10 represents domestic CapEx year-on-year performance for the quarter. Its reduction is mainly due to the approaching of the end of FTTC cycle as the fixed reduction component was down EUR174 million and the residual, EUR183 million were mainly dedicated to FTTH. Mobile access investment made a temporary slowdown as we are in the process of shifting to virtualized radio access network, VRAN technology. And we'll catch up later in the year with it spending less for more. As you can see, our network delivered in the last year traffic growth of 53% on mobile and 44% on fixed. More CapEx allocation that will ensure optimization and privatization of further investment were needed, will continue to support our technology leadership. With Slide 11, we give you a full representation of our quarterly debt performance year-to-date. Main components of this quarter's operational free cash flow are made visible along with all the elements that follow with it in shaping the important debt reduction of EUR396 million for the quarter or EUR167 million for the first half of 2018. I will now pass it back to Amos for him to complete the presentation and thank you for your attention.

Thank you, Piergiorgio. After looking in detail at the quarterly performance, let me remind you of some relevant commercial actions that we will give further, supporting our domestic performance into the second half of the year and beyond. As you know, accelerating convergency on our customer base is one of the priorities of our DigiTIM plan as can be seen in slide 14. In the second quarter, we have started to see momentum building up particularly on consumer with about 500,000 customers signing up for our new convergence TIM partly loyalty program we launched in May. We're also further reinforcing our fixed-to-mobile convergence single build, flagship offer TIM Connect while scoring very positive contribution from our mobile based soft convergency offer of TIM 100%. On the Business segments, a key initiative is the growth of IT and cloud business. As you know, our planned goal here to increase related revenues to 25% -- by 25% overall -- of the overall business revenues by 2020. We are seeing strong interest both from large clients and from SMEs for our new IT and cloud portfolio and we can say that we are -- our progress is fully on track. On slide 15, we show you some example of the advancements we are making in productivity initiatives as part of the DigiTIM transformation plans. Caring is a relevant area that has already contributed positively. We wanted to make it sort of back-office processes and soon to come, best-in-class web app to enable a digital journey to our customers. On wholesale, we are increasing field productivity and on procurements, we have been able to negotiate better terms for OpEx and CapEx. We are planning to accelerate the very relevant central office decommissioning project. We are using advanced analytics to support the success of our loyalty campaigns and more to come. We are also working on very relevant in-sourcing agenda. So while DigiTIM is only -- it's in its initial phase of bringing structural and long-term changes to our business model, we've already taken very relevant steps in the first few months that signal the transformation is going ahead. Slide 16 tells you about TIM approach to ultrabroadband. The goal is to cover particularly the whole country by 2020 with a mix of FTTC, FTTH, 4G, 5G and related Fixed Wireless Access. It is our multitechnology approach, through which we deliver speeds that meet any demands up to 1 -- and beyond 1 giga. We're currently moving ahead with FTTH and with VRAN for mobile, which is 5G ready, all within our CapEx plan that allows sufficient headrooms. Overall, TIM is best positioned to continue leading the UBB market in Italy, both in retail and in the wholesale. With the mix of technologies serving any demands and keeping our FTTx investments as flexible as possible to ensure continuous leadership in this market. And now, time to wrap up. Second quarter '18 all in has been a resilient quarter in which on domestic we faced headwinds that were more intense than expected. In particular, the 28 days billing and winding consequences became an issue for the whole sector affecting from the information we have available for the market, TIM less than others. Nevertheless, our operations have been impacted as well and we are committed to working intensively with all our team to mend the gap as soon as possible. Anyhow, considering also the regulatory decisions that affected wholesale and the temporary effects of Solidarity, overall achievements can be viewed positively given the situations. The company is also working on some extraordinary projects that will be an important catalyst for the value creations we intend to deliver. First of all, NetCo is progressing. We all hope that in the second half, we'll see the related interaction with AGCOM, the regulator accelerating to a point that we can have the project moving forward. 5G is coming. It's a game changer for the telecom sector as a whole. We are ready to bring it forward in the company timing moving inside our CapEx envelop working on mix and phasing as it could bring new stream of revenues and play a growingly important role. We're also looking at generating value from the sale of non-core assets. You are aware of the process regarding Persidera, we continue to move forward. So we confirm our commitments to the DigiTIM transformation plan, which is moving ahead well. I thank you at this point for your attention and hand it back to Alex now. Please, Alex.

Thank you, Amos. Q&A session is now open. May I remind those who wish to enlist of our recommendation to ask only one question each. Let's start, please.

[Operator Instructions] First question comes from Mr. Nick Delfas from Redburn.

So question for Amos on two things if that's all right. I mean, one issue is Enel Open Fiber which released its annual report showing only EUR8 million or EUR9 million of revenue growth in 2017. Could you give me -- give us any perspective on how the lines from Enel might be growing today from what you can see? And secondly, on Iliad, obviously they had -- they reached 1 million lines, not taking customers from you in large number, but where do you think they are today in terms of mobile number portability changes?

Thank you for your questions. About Enel Open Fiber, clearly, I don't have their internal numbers. However, I can assure you we are doing well on our wholesale divisions. Overall, lines and both the lines growing as you could see from what have been published. We're in a positive territory of continued growth. Our issue with our big clients is extremely positive and it seems we're all working on a long-term relationship, so clearly again, I believe that today and as for really in the next many years, continue addressing the needs of our clients on the wholesale business. Open Fiber is relatively new, up-and-coming, still just promising venture. And I believe that we'll need more time to see their ability to compete with TIM. So far, clearly very little effect on our wholesale businesses. With respect to Iliad, I would share that we all see the numbers being mentioned by Iliad. I will say that, our best estimate is about 60% to 65% are really MNP, mobile number portability, meaning change from our customers the rest, clearly a second line there, so any other type of lines being distributed and sold by Iliad. So relating to that MNP specifically, I can say that clearly we've been affected less than any other operators. We're losing to Iliad less than our market share percentage, which is I think good news. Second, our impression is that from the profile of customers we lost to Iliad is what we call surfers, those type of customer that are moving quickly from one operator to another, and not young as we thought initially. There are more in their 40s. And generally, they are heavy consumers of data. So they are clearly a very interesting profile of customers. Also, I think it's important to mention that we see clarity of a slowdown of the MNP with Iliad. The market and specifically us, I would say from the peak of the launch at least 1/3 -- 35 less -- and the trend is clear there is probably the big launch and the big effect in the first few weeks, but as we grow, we see the MNP decreasing in interesting rates, so we all know that, that offer is being extended only to 1.2 million, so additional 200,000. It's clearly a losing value proposition from their point of view and clearly not sustainable. So I think overall I see that we might be able to continue bewitching our original thinking about the Iliad effect on TIM, but we need to be honest with everyone, clearly much more time to understand Iliad next portfolio of products to be launching at one point and to see continues how market is reacting, not just Iliad effects, but how the market is reacting overall. There was clearly the beginning some agitation in the market and very tactical response by many operators. I think I see the market clearly moving to more calm water as things start to be I would say slowing down from Iliad point of view. But again, all of that is really an x-ray of today, things can be different in a month, 2 or 3, I'm just suggesting to wait more time I could give you only the best reflection we have on Iliad after 2 months. I hope it's helpful, Nick.

Yes, fantastic. And just on the negative side -- line losses of 200,000, but I think on Page 6 you show 82, but that's including voice over IP. When do you think the line losses might stabilize again?

I would say that it's -- when you look on the -- not on a quarterly basis but on a monthly basis, it's very interesting trends. Clearly, there was the months where March and April when we had really the 28 days in a full speed. We lost about more than 90,000 on each run of them. So in March, April and then if you look, for example, June was only 45,000 losses compared to 92,000 in April. So I think the plan seems to me again the effect of the 28 days and all the opt out and all the media around it, is start to slow down as well. Clearly, in July, we increased price again as you know at 2.5, it will improve ARPU fixed in the second half. We will have another opt out, but again, I think in a normalized basis, it seems that June already reflected a much more reasonable mass on this connections than we had in April. Again, almost less than half, or about half, of what we had at the peak of the saga of the 28 days. So again, let's see how the third quarter will evolve, but if the June -- May and June are a reflection of such trends, we might have a better second half with respect to line losses.

Next question comes from Mr. Dhananjay Mirchandani from Bernstein.

My question is on retail broadband subscriber growth, which has been poor for two successive quarters and you might have just answered that based on your previous comments. However, I mean Vodafone posted about 60,000 net adds today, wholesale broadband net adds within TIM were about 240,000. So clearly the market is growing rapidly at a pace of about 1 million net adds per year. So what are you -- could you please highlight what the key reasons for your retail underperformance is related to the broader market and what you're doing proactively to reverse this trend?

My impression, the market doesn't grow at 1 million a year. I would be surprised if this is the number. I mean, indication showing clearly much less numbers than 1 million. It's in the first 6 months, the market grew at a rate of the total broadband markets, yes, I mean, really few hundred thousand. So I think again, I would say that TIM is keeping its premium positioning and its high price compared to competitors. I mean, the only -- of course we can really increase volume in exchange for value, which is something we're not doing. We're a responsible leader, we have a premium positioning. We are selling convergence product and we're continuing to see stronger higher ARPU with respect to that positioning. But nevertheless, we led the broadband market in addition last year. This year, we've been more keeping prices at a level that they should be and doing less promotions and below the line.

I guess, the reason I was grossing up to -- can I just follow-up very briefly please?

Yes, you may Dhananjay.

Yes, so on Page 6 of your presentation, Amos, I guess collectively between the retail and the wholesale businesses, in Q2 alone, the market grew by about 260,000 to 265,000 net adds. I guess, I was effectively proportionately expanding this through the year counting in what we've already seen in Q1, that's how I get to almost 1 million net new subs in the market. So I'm a bit surprised to hear that your estimates are that the market has only grown by about 0.25 million in the first half.

I think again, you include the wholesale as the retail, so now I understood how you got to the about 1 million. But again, the numbers are -- with wholesale can reach to 1 million in the market. But as I mentioned, we are clearly growing in market share in broadband so our market share is growing in relative terms. Yes, which is important. Anyhow, as I mentioned, keeping premium positioning is clearly the key factors of us may be lagging behind in that as compared to some other operators.

Next question comes from Mr. Julio Arciniegas from Royal Bank of Canada.

Regarding human themes, I see that basically they can came this quarter positive versus declining previous quarter. This quarter, they were positive even with the Iliad launch. So can you give us some color of what the company has done in order to improve the performance of human themes and from this result of human themes , that's -- how much is driven by Kena brands?

Sure, I think it's again, we always emphasize all the time that our LTE coverage and high quality of the network is the main driver for customers opting for TIM and staying in TIM. As we have proven so far, even with the interest of newer players, in any test have been done by clients if you looks on different YouTubes, clearly showing that TIM is best-in-class. We are number 1 in customer satisfaction index in consumer mobile and I think consumer today, many of them, I mean, the majority will prefer quality versus price. Second, clearly, the Kena play important role. The fact that we launched Kena already a year ago and prepare the separation of brands, which has been premium with full-service stores and convergency, fixed and so on, help a lot to separate, but having Kena focusing on the low end and no-frills type of mobile operator having launched on time and showing no cannibalization between TIM and Kena, help a lot in the way we dealt with the entry of the new operators. I think something we did some other operators did not did at least not on the right timing and that's helped us a lot in making sure we're addressing the two type of -- the market's been evolved for a long time already between the lower end, lower ARPU, price-sensitive customers to the more premium customers that’s focusing on quality and full-service and that's the thing that help us lot during the last two months. And in general, I think being able to get small growth of 0.5%, clearly is an important -- just, I think one more information that Kena already reach about 0.5 million customers by the end of June -- 470,000 -- but about 0.5 million clients. So just being compared to Iliad, Kena doesn't make so much noises, but already have 0.5 million clients. So just again, the way that Kena was launched, the ability for us to avoid cannibalization between TIM brand and Kena, full differentiation and network quality to different stores, brands and so on help us a lot in achieving the growth we just saw now with human active customers.

If I might follow up very fast. The fact that basically with Kena, the company doesn't offer 4G services. Is this like one of the key aspects to avoid revenue cannibalization and would you go for 4G with Kena brand to basically be the same as the other brands in that segment.

Yes, we believe Kena has to evolve its products portfolio and go as well to 4G, 4G would be launched during the second half, again, with differentiation, value proposition for 4G compared to 3G. So again I think having a depth of our portfolio at Kena as well, not just at TIM, will be clearly another approach to address specific different segments of the market we are not reaching with TIM. At certain point, probably next year, we'll even add fixed -- certain fixed products to the Kena Mobile as it's becoming a relevant player in the mobile market. So clearly again Kena will evolve with the specific products offering, 4G then convergence with fixed, fixed FMC again, but always very different than what we're offering a TIM. So I think the way we are conducting the -- this brand so far was very supportive to help us to weigh segments or protect a base of customers without cannibalizing the premium customer we have with TIM.

Next one comes from Mr. Georgios Ierodiaconou from Citi.

It's around the 3-year guidance. I just wanted to clarify what is the base of EBITDA from which we should effectively expect the growth to come from? I believe under IFRS 15, the EBITDA base was just over EUR 7 billion. But my understanding is without IFRS 15 in Q1, there was 165 million lower for the domestic. Q2 looks to be around about the same, maybe slightly higher and at the same time, the liability reversal seems to be also excluded now from the guidance. Is it fair to assume that the base is probably around 400 million lower than that or, if not, can you please explain to us the moving parts? And then related to guidance just clarification, financial expenses have a very low in the first half. Was there any exception or is that something which we should expect to continue to full year?

Sorry, on the EBITDA, of course, our reference is to organic. We always are giving guidance with organic terms. The reference on Page 9 was just to give you the -- to put in a context certain nonlinear items in order to understand better the operational performance. But all our guidance is related to organic. And then if you want offline with Alex, we can give you the exact reconciliation of the difference between organic and reported and so on. And in terms of cost of debt, of course, we are working on refinancing. We've just done a very important bond and we're continuing working on the refinancing of the debt. So there's nothing extraordinary or nothing, let's say, nonlinear or nonrecurring in this number. Then, of course, if you want, we'll send this case, we can reconcile if you want.

Can I just clarify? So under IFRS 15, you expect EBITDA to be above 7 billion like the base of EBITDA for us for 2020 numbers to be above the 7 billion domestic EBITDA in 2017? Is that right?

The guidance has been given with all the IFRS principle. Of course, when we have given this guidance, there was no expectation or let's say we have not in detail had at that time any specific forecast on the new IFRS principles. So all the guidance are consistent with the old IFRS. And all the numbers that you're seeing in the presentation are with old IFRS and then, of course, you have the reconciliation between new and old IFRS, but the guidance is on the old one.

Next question is from Mr. Jakob Bluestone from Credit Suisse.

I was hoping you could provide a little bit more color on some of the moving parts in terms of the mobile ARPU and pricing. You obviously mentioned strong growth in Kena, presumably ARPU is lower there than on the main brand and you also, I think, had some very aggressive, below-the-line promotions during the quarter, possibly at launch. Can you maybe comment a little bit to what extent you saw any cannibalization onto some of those more aggressive price points? Just to sort of help us understand little bit what's going on with mobile ARPUs?

I think generic question, I would try to be generic as well. I think we have the numbers. I would just say that the mobile market has clearly become more competitive with the launch of Iliad, not just because of [indiscernible], but because of the reaction of different players. We, as I mentioned, we were well positioned between Kena and TIM to address the launch of Iliad that I think help us to lose less than our market share percentage. At the same time, we've been able to continue capturing other customers from different other operators. Generally speaking, I think the type of customers churning to Iliad are the specific profile that if maintained, as such, it's clearly a customer with lower ARPU than the average of other ARPU that had been mentioned in Page 5. So clearly it's a different scenario and we'll have to see how it's evolving going forward and I think we'll have 2 factors it will be -- who will have to look into them going forward is what and now really it continues the products offering portfolio and now it's evolved and to what pricing range they are planning to get and at one point, they will decide to be profitable on a stand-alone and that's all question opened that only Iliad can answer. And the second is, of course, how the market or other players is reacting to Iliad entry. My sense is that, at least on the conceptual level, it seems that all operators trying to be rational and if you look on the numbers of some operators in the market, clearly losing significant percentage in MSR, mobile services revenues, and the market becoming soft and it could I think push even more harder everyone to be more rational because there's a limit of how much you can lose on MSR per quarter. So I think I'm semi-optimistic, the second half will be more -- will reach to -- back to rationality, but it's all have to be seen and that's -- I think we'll have to wait for that for the next call of Q3 results, but again, I intend to be semi-optimistic that rationalizing will win because in the end everyone that run a business need to make money.

The next question is from Mr. Andrea Randone from Intermonte.

I have a question on wholesale prices, and in particular -- okay, in the UK, there is quite an important change in the level of prices applied by Openreach. I wonder if you can update us on what you see about the regulatory framework in Italy and what you expect the trend can be for the wholesale prices.

Thank you. I mean, first to Openreach, but I imagine just as a benchmark for what's happening in the UK. But anyhow, again, [indiscernible] in Italy, there is a market review analysis by the regulator to discuss the wholesale price for the next three years. We had a negative surprise on the bid stream, which is one product for the overall wholesale products that are being down more than expected and we mentioned it in the Q1, as one of the drag on the quarter. However, it's not a game-changer, just one specific product. More specifically, I will say that clearly, the market change dramatically in the last three years, both on the consumer side where we are positioned compared to other operators in the Broadband. I think this will be taken into account by the market regulator with respect to the wholesale. What changed in the last three years from the last market review was the entry of Open Fiber. Actually, we have a new player, competitor, the building networks, and this will -- and should support the regulator in his analysis on building or evolving the regulatory framework to be more, I would say, positive to what we've been three years ago with respect to wholesale initiative. And so, again, it's a positive that just started in June and will take few months and hopefully within few months, we'll know the regulator in our view on the wholesale price for the next coming three years. So overall, again, there will be a change, but again, we are in a positioning and defending. The wholesale prices should be at least stable going forward and one of the NetCo project is built and designed to make sure that wholesale prices will be fair and stable to allow them and support investment in the network. At the same time, as you know, we are also working on a project called Easy Fiber, which is allowing customers, as we saw Openreach announcing today, a more long-term view and volume deals. This is under review with regulator and hopefully the clients express interest in such products. Of course, was -- it makes sense as any commercial business to have such a long-term view with our clients. We'll have to wait for the regulator to his final decision, as he is still evaluating the project. But overall, I would say, we are comfortable on the wholesale business. We see, of course, certain changes in the regulatory framework, but I think this is really hopefully more positive than negative. But that's something again we'll have to wait a few more months to see the final outcome of it.

Next question comes from Mr. Mathieu Robilliard from Barclays.

I had a question with regards to the fixed business. So you highlighted that at this moment, you're not seeing a big impact from the project of Open Fiber, I guess, presumably because it seems they're secure in their financing. Is it fair to expect that they will roll out their plan and that you're going to see an impact at some point? And I'm just curious to understand how do you factor that in to your guidance or the way you think about your wholesale business? Do you think that Open Fiber rollout will basically increase the size of the market? It's clear that the Italian market is underpenetrated in terms of broadband and fixed lines. Or do you fear that you're going to be losing a bit of market share on wholesale. Basically how do you think about that?

I think again as you mentioned, there is competitors on the fixed infrastructure, is still small as I mentioned as ambitious plans, but yet to be proven, a network need to be built. As they are building, we are building extensively our FTTH coverage. So where they are in most cities, we have equal or more FTTH coverage. I think the key is what will be the take-up of FTTH in the market. Clearly, so far, is substantially lower than FTTC, the take-up, in adoption rate would take many years to build and it's a long, long journey of getting customers in Italy adopting FTTH in 1 giga. Again, I believe it's a process we will all have to follow, however again, we have, as I mentioned in my introduction, a mix of technologies to cover any demand possible. I believe the evolution of FTTH will be significant in the next coming years. It will attend any demands in any city in Italy with FTTH and that's our plans for the next 5 years. At the same time, we believe the 5G and other wireless technology, fixed wireless will be clearly addressing additional needs, but as you mentioned very well, the penetration of fiber in Italy is so low that, again, any player that build FTTH and is showing more awareness to the product is more than welcome. So again, we see and we build in our DigiTIM plan, some effects coming from Open Fiber. It is very normal. We have to be careful on that and it's built in our planning. However, we'll have to see the actual implementation of that project and how that’s actually affecting our revenues. But anyhow, so far very little going forward. We'll be ready with our infrastructure to protect our customer base.

Next one comes from Mr. Giovanni Montalti from UBS.

Just if you can share with us some more color about the strategic review that you have announced today on some of your subsidiaries. And also how these, let's say, couples with the ongoing debate among your shareholders and the board?

I think with respect to asset -- selling of non-core assets, I think we're very clear since we announced DigiTIM that there are certain non-core, non-strategic assets that at one point we divested and I think first one is ongoing, Persidera, and any other assets that will be identified as a non-core, non-strategic and the board will approve it, will be clearly communicated to the market. At this stage, the only asset that is ongoing is Persidera. We have no other assets undergoing a sale. With respect to board, shareholders, clearly, I will just prefer to different formal board announcement coming again from the board, including the one that came today from the Chairman with fully supporting the management and the plan. On my side, I can only just reiterate my long-term commitment to continue to serve as the CEO and stay for the plan supporting and ensuring delivery of the main goals. That's about it. I hope it's addressing your questions.

If I may, a very quick follow-up, you were saying you had more fiber coverage than Open Fiber. Can you give us the updated number of your FTTH premises at the end of H1?

Yes, Giovanni, Alex speaking. We're talking about a number which is -- I'm sure this is not completely public number, so we have to treat this with a little caution. But in the overlap cities, I think it's fair to say that our FTTH coverage is twice as much as what Open Fiber is. And this I can tell you is not decreasing. So we are keeping at the pace and as they extend their coverage, we also step up our FTTH coverage. So I think it's a leading position that we intend to keep.

Clearly, we are not trying to really -- just comparing total accesses, because again our proposition is one-stop shop of FTTC, FTTH and we will continue to roll out FTTH whenever it is needed. I don't see at this stage if we have more or less than the Open Fiber it would make a difference. It clearly -- demand is more of the bottlenecks than the supply of access. Anyhow, again we always have an issue of comparing our access of FTTH to what they are publishing, so we'll be very cautious in comparing. I was just saying that we have significant coverage of fiber to the main cities they have the presence, which is so far making sure that we're attending to any demands coming from our clients for FTTH.

Okay, just to clarify because exactly as you were saying, it's a bit difficult to compare the numbers reported by different operators. You don't have a clear number to share with us either for your coverage or for the one of your competitors? We don't have any source or any data to refer to on this point?

Clearly, we have our numbers, but we did not share it with the market yet. And I think if we – we have no issue of sharing at one point, but you asked us to compare with Open Fiber, and I think I am not comfortable comparing my access with Open Fiber. I say, I don't understand well the number they are publishing. So clearly, it's fair not to try to compare numbers with something I'm not fully informed. So I prefer not to get into that kind of numbers comparison with a player which I fully respect without knowing fully how to compare those numbers. I will just say that we have significant coverage of FTTH still going up from the CapEx of -- of the second quarter. We have about 150 million just on FTTH on the quarter. So clearly we are investing significant amounts, most of the access is going directly to FTTH. So you can imagine the number of investment going every quarter, every year, in only FTTH coverage leveraging already an extensive fiber coverage. We're not starting from 0. We have from the central office to the cabinet, everywhere, the primary fiber. So for us, extending the fiber to the home is a much less of task than anyone else. So we have -- we don't -- we're starting from a good starting point of fiber coverage through the metal rings and that should be considered. Anyhow, the main message here is we are committed to continue our leadership in the infrastructure wholesale markets in all Italy and clearly in a position to attend if there will be more and more demands for FTTH going in Italy, which is the good news in the market, which means clearly more adoption of fiber, more adoption of FTTH, is ARPU enhancement and clearly delivering a converged maybe approach and opportunities for Telecom Italia.

Next question comes from Mr. Nicolas Didio from Berenberg.

I have two questions. The first one is regarding the working cap. If I put aside the VAT payment in Q1, it looks like the working capital -- the cash burn from the working cap is lower than the last year. You indicated earlier this year that you were expecting to unwind the securitization program so the idea would be, can you give us an idea of the working cap for 2018, excluding the VAT payment? And if the unwind of securitization will end up in H2? And the second question is coming back on Georgios' question on the EBITDA for 2017, there is a tendency to rebase the past. The vendor rebased last year were not indicated to be one-offs. So could you please tell us, what is the 2017 organic EBITDA that is the basis of your 3-year plan guidance?

With respect to the second answer, it's 7053, yes, for 2017. Okay. And for the first question, no change of course. With respect to the first question, I will give it to Piergiorgio.

Yes, thank you. Of course, our working capital is a bit complex because, as you can imagine, there are several factors influencing the net working capital particular in the first half of 2018. There are, I would say, at least 2 or 3 elements that are worth commenting at this stage. The first one is the value sale of receivable that we have, as you know, it is disclosed in the general report. You can find the detail every quarter and of course when you compare one quarter with the other, you should consider to have the components related to the new, let's say sales, but we have of course in terms of comparison, year-on-year also the reduction of the lower -- the cash-in from the credit that we already sold in the previous quarter. So in reality, on a comparison basis, you should consider the net and for instance in this first half, this component has a value in the region of EUR 200 million. So, which means that we've had a positive effect coming from the additional sales of EUR 200 million, which is the sum as I said of the new sales and the lower cash-in related to credit sold in the previous half. Then of course another component is related to the cash cost, mainly OpEx and CapEx because of course we are counting quarter and we pay basically in the following quarter. So in this case, we've also in particular in the second quarter, we had the impact of the CapEx that were included in the second quarter 2017, mainly the acceleration FTTH as you know when project cash to payer, which of course in this case in the comparison means for us lower trade payable and will turn out in the lower cash paid in the second half of 2018. And then of course, our discrete payment where in the first quarter impact was more than 350 million -- it's gone to EUR 370 million if I remember. Overall, in this first half is, let's say, is reduced to 200 million, it will be back in the region of 350 million in the second half. So these are more or less the component as you should consider in order to have a normalized EBITDA. I understand it is difficult, but of course the overall underlying elements of the net working capital are the following.

And a very quick one, if I may. The labor costs are down in Q2 by 3% despite the fact that Solidarity has been delayed. Is there any one-offs in there, considering the employee, but is this stable apparently?

Sorry, say again, I didn't understand the first time. No, labor costs -- no, no.

Labor was 3%, the number of employees is broadly stable and you have delay in Solidarity. So how do we get reduction in labor cost?

No, this is all related to variable cost so we managed to, let's say, to reduce the variable components of the cost. So there are no, let's say, extraordinary measures. It's just different actions and we will...

Is it lower bonus, what you mean?

Say it again. Lower bonus? No, no.

Is it lower bonus? What do you mean?

No, in terms of FT, there is no significant -- there is the usual attrition, but reality is much more related to variable cost.

Next question is from Mr. Domenico Ghilotti from Equita.

I have a question on the cost trend. I'm trying to understand if we should expect an acceleration in the downward trend costs are going to the second half if you could elaborate a little bit on this?

Okay. I think that the underlying trends of the cost are in line with what we have in the second -- sorry in the first half and if you look at the various component, it's clearly that we are investing in commissioning and investing in commercial cost in order to support our top line and I think that this has been really clear in the results from the first half and paying off comparables to what we have in the market. We have tried to compensate the additional cost in commissioning with the reduction in advertising and reduction in other content and in other cost and of course, we are trying to select where we want to play our battle and that's why we decided to increase commissioning. We have also a small increase on other costs related to the ICT business, but it's of course is a good cost because as we have seen that we've also an underlying increase of revenues in ICT. In the industrial cost, we are working in order to -- in this, we do not have the full impact of the various project that we're working on, the layering, the commissioning and so on. This will take of course more time, but in the short term, we are working on selected efficiencies in this area and probably -- maybe not in the second half, but for sure in the more medium term approach, we can see the impact also of the important and action that we are working and we discussed in the previous introduction, the virtualized technology VRAN, decommissioning and so on. On the other cost, I would say we already committed labor cost and in the second half, we'll have the Solidarity at full speed and in this last part of the year, we will have also the impact of Legge Fornero that is expected to begin and we will have also in that case component related to Legge Fornero. As you know, this will impact our labor cost because they've already provisioned the cost in 2017. The areas where we are working, let's say, strongly as far as costs are concern are related to bad debt and in-sourcing that are an object of specific actions and plans that we have launched in the last weeks.

Are you referring to sorry bad debt and...?

And in-sourcing, we have a plan that honestly we were a bit late in the first half that's why we're trying to catch up in the second half. But we have a plan of in-sourcing external cost and this is a part that we will be splitting in all the various components, all the various items.

Okay. And just a verification, if I look at Q2 compared to the second half, clearly you will have in the second half the saving from better comparison thanks to Solidarity, I'm trying to see if you are willing to reinvest or going to reinvest this benefit compared to the first half -- if you are seeing basically the trends in the second half similar to Q2, so you don't see really Solidarity as an additional tailwind on your cost savings?

We have not given, as you know, a specific guidance on cost. So I'm not able to comment an year-end objective on OpEx. I have tried to give you, let's say, that trend of all the cost. For sure, the labor cost will benefit as I said from full Solidarity and speed and Article 4, Legge Fornero. We don't expect to have let's say extraordinary other component as far as labor cost is concerned.

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

Question is really about the outlook going forward please. I mean, slide 9, you're suggesting that if we adjust for a number of the effects on Q2, you're suggesting domestic EBITDA growth should be flat year-on-year. I mean, however to hit your guidance -- I mean, I think, you probably -- given what's happened in H1, we need to see EBITDA growth actually accelerate probably to nearer 2% year-on-year. So what do you see as the levers that can actually help drive EBITDA growth above the adjusted flat trend that you're suggesting for Q2? And how does broadband market growth fit into this? [indiscernible] agree with the number you gave of around 200,000 in H1 for the overall growth when adjusting for the ULL decline. I mean, but you did about 400,000 with what the market grew in H1 last year. So what's happening in the broadband market overall? Can that growth in the market reaccelerate from here to help support that EBITDA growth?

Thank you, James. I think, first of all, we never -- and we didn't give guidelines on EBITDA for 2018. We gave a CAGR for 2020. So I think in order for us to assess better any performance in the first six months to what will we -- where we end the transformation in 2020, we clearly -- there is a lot of time to be -- go and analyzing performance much further the timeline of the strategic plan. So that's the best I can give you on outlook for EBITDA. As we don't have guidelines, I will not try to give you a new guideline on any of that going forward. But however, again, we are still committed to the guidelines of single digit EBITDA growth by 2020 CAGR. There's nothing in our plans to show that, that's not achievable. If anything will be different, of course, we'd inform the market. There's a lot to be done to deal with the headwinds. We saw in Q2, but a lot has been done internally to accelerate the transformation plans and increase productivity, efficiency and others that will take its time to be demonstratable the time -- the rising of the plan. So that's on the guidelines. So the broadband market, I would say clearly, Italy is still behind most of you in broadband adoption or broadband adoption. That's in one end is kind of a negative factor. It's going slowly than what it should. However, in the other end, they're just showing the potential of that market going forward and we are fully believing that Italy will pick up with the rest of Europe and start to adopt more the broadband, and ISPs than it is today. So I cannot assume that Italy will not get to where most countries in Europe are and I believe the -- supply that’s becoming clearly much more available on ultra-broadband from us and again other infrastructure operators. We could see, I think, the migration to fiber, which is really impressive. We are talking about 1 -- almost 1.2 million in the first half just in TIM level between retail and wholesale. Clearly, there's a huge migration to ultra-broadband from ADSL, but I don't think that the growth will be measured only by number of customers, but also in the quality of the network speed and I think that is really happening big time in Italy those days. As we go, we might see higher growth going forward, but that's my best prediction at this stage.

Do you think there any specific issues that have caused the overall volume of growth to slow in H1 '18 versus H1 '17, I mean, is this just down to the negative press around monthly billing changes or do you think there are other potential effects?

No, I think one will consider the fact that clearly the [indiscernible]. A lot of effects -- not all of them we can quantify, but could be as well on any fixed access in general and clearly broadband was one of that. The second, which I think more of a long-term thinking, in more ways a decision for some type of customers is existent and continue to be there and that's why I mentioned multitechnology is beginning. I think that's 4.5G, again not, 4G -- 4.5G is becoming more and more deployed by us and I believe other operators as well. And it's supporting some type of customers that really feel that it's more than enough for them for their mobile broadband. Again, 5G will be another factor on top it, so clearly 5G will be another substitute technology to some type of broadband users. It's not all better. I think it's fair to have this multitechnology and diverse type of solutions for broadband usage. And that's why you can see the increase in the 4G customers in our base as well. So clearly that's a broadband adoption, it's helping ARPU and estimated by mobile or fixed. However, I think, convergency is the key thing to have a fixed broadband growth and that's why TIM has the TIMvision, has a unique product in the Italian market. I believe that it's evolving very well. As you can see, we are increasing significant number of customers, then buying and paying for TIMvision. It's a product that does more and more premium videos as well we just launched the first agreements on Free2Air TV with catch-up features something that is unique in the Italian market and we are trying to negotiate some sports rights that hopefully will be continuing enhancing the product. As much, we'll have more streaming. And IPTV, clearly we'll have more adoption of broadband. So it's something that is really early stage in Italy, but it's picking up and it could be an enhancement factor for broadband adoption in general.

Next question comes from Mr. Will Milner from Arete Research.

I just had a couple. I wonder if somebody could just give us an update the extraordinary project you mentioned on one of the slides, the network separation. I think in the earlier comments, you mentioned some conversations of outcome in second half of the year. I would just like to get some more details about the process there during the second half. And then second question is a strategic question for Amos around convergence. I mean, I think it's obviously been talked about a lot in the presentation today for the second half. I think my question to you would be, in a lot of other European markets when the incumbent operator, which had a high market share in both fixed and mobile, begins to push harder on convergence, particularly a premium priced operator. It tends to be accompanied by ARPU declines and in some cases quite severe ARPU declines. Perhaps you could just explain why you think that might not be the case in Italy and I have in the back of my mind, some of the comments you made about convergence -- kind of cheap convergence coming to Kena mobile, which also I would imagine increase the risk of ARPU declines around convergent products. So maybe you could just talk about that a bit.

With respect to the NetCo, if that's what you're referring to in extraordinary projects that we mentioned in our presentation. I think again NetCo is an important catalyst for the regulatory framework we expect to have in the next -- in 2019 and beyond -- is addressing the institutional side mostly with respect to building better relation with the regulators' government as well as our clients on the wholesale. It's showing of full equivalence, neutrality of the network and, another thing, any concern relating to the aspect. That's clearly was an issue for the last few years. And I think we are seeing the improvement with the relation with the governments and regulators over time because it's a key subject. We're a regulated business. We're incumbents. And this was a main driver of the NetCo separation model and I think that's what paid off -- just having fair and good relation with regulators and NetCo, the different businesses we have. Now clearly once it's separated, I believe, there will be a major drive in the entity as independents to build more efficiency, productivity and other optionality that will enable this company to do transaction we might couldn't do at the TIM level. So again, I believe this is a long-term vision, but clearly, a lot could happen and should happen in '18, beginning of '19 that would be the foundation for such a process, which I believe will be a significant value enhancement going forward. So that's on that one. With respect to -- about the convergency, I think again we had some example -- better example is in Europes, clearly we mentioned to Spain. We know what's happened there when convergence starts to be playing. I think since then, many operators learn the lesson and the convergence today are not heavily discounted as happened in the past. In order to avoid the negative trends, we've been in some countries in Europe. I believe if you look now proposition of convergency, is more for more and not more for less. I think we've been able to build an approach where we really combining products and convenience of single bill, a one-stop shop for all needs including with the TIM expert, which is really a unique offering in the Italian market where we are providing a full technical field support on an ongoing basis to connect home and devices, which is really something many people need with more and more devices are being used at home. So clearly, it's a full comprehensive approach to a one-stop shop for mobile fixed contents, technical support, and I think we are not shy to price it, but it's fairly sold the customers and I think together with the loyalty plan we launched, just in May, we already have 0.5 million customers on board on the royalty plan. If you’re converged customer, you'll register to TIM party and you'll get some different type of benefits. So clearly, it's supportive of bill loyalty, you get benefits out of that but it's really for converged customers. So far we did not see and need for this kind of the product and again it's very supporting to the overall protection we're looking to have on the mobile base as to fixed based and convergency is the way to go. We just started process so we have to accelerate it more and more. I think it's another worth asking. The convergence should be a key element in our implementation in the second half to be in a much more robust and much more aggressive in converging customer to converged product. So again it's a beginning of something, but clearly not where we should be and want to be.

Can I just have one very quick follow-up to our first question? You mentioned the network separation leading to some optionality over transactions, but couldn't be considered at the TIM level. I mean, specifically there, what are you referring to? I mean, the obvious question is around the merger with Open Fiber, which is obviously being debated a lot. What is your position about that transaction?

My comments was only generic one, so let's get the generic. About Open Fiber, we just said again for the institutional side, there was a lot of discussions in Italy about one single effort to build fiber in Italy. I think it clearly makes sense from the perspective of the state and could make sense also from the business point of view. I believe that for TIM doing it stand-alone is more than a viable business, an extremely healthy business and we are comfortable in continuing leading that market. As we offer, again, we believe institutionally, TIM should be in a position willing to cooperate with Open Fiber and meeting the objective of the country of -- in 2025, we should have a much more ultra-broadband penetrations and coverage based on the EU regulations. So if that's helpful in any way, we just said it more than once, happy to collaborate with Open Fiber in any way it's needed to make sure that we're meeting the targets of the EU with respect to all the coverage and fiber penetrations. But again, this has to be from both sides and we just handed our positive attitude with respect to collaborations and so far, clearly nothing is going on and there's not any concrete initiative on anything or relating to that.

Next question comes from Mr. Jerry Dellis from Jefferies.

It's question on fiber strategy and your CapEx guidance, please. Once you are rolling out FTTH at quite a substantial rate to address the areas of overbuild risk. It is still the case, I suppose, that your 3-year guidance implies quite a material step-down in domestic CapEx, I mean, if we think about the BP situation, BP after a while decided the best way forward was perhaps to take CapEx up, set a more ambitious 3-year FTTH target at a level that allowed them to not only deploy fiber in areas of overbuild risk, but also to go beyond that and perhaps to show a better face to government and regulator and that does seem to be tentatively leading to a more constructive discussion. As you think about sort of building a more visible water-tight regulatory framework that is perhaps a bit more supportive, would there not be something to be said perhaps for sacrificing a bit on the CapEx guidance to assess a more ambitious fiber target? And if you don't do that, then what is it that relieves the bottleneck towards better regulatory visibility?

Yeah. I think we cannot compare the U.K. market and regulation scenario relative with Italy. I think, clearly BP and the market in UK was really behind with respect to ultra-broadband coverage. TIM invested EUR9 billion in 6 years to build one of the most advanced FTTC coverage in Europe, reaching almost 80%. So, I mean, no complaints about it from the regulator and if you look on the EU ranking, we jumped to significant ranking, almost from 20-something to 13 in the ranking of UBB coverage. So clearly, we are on the verge of Europe today, thanks to TIM significant investment in the last few years. So clearly, if you look on the network coverage, both in UK and Italy, it's a very different scenario and we're one of the leading countries with UBB coverage. With respect to FTTH in governments, I would say clearly again difference in UK, the governments found the solution through the creation of Infratel, which is [indiscernible] in this case, to Open Fiber's to build in the C&Ds areas in Italy where clearly, it's a markets failure areas, also subsidies, so clearly the regulator resolve the issue of the market failure, areas 2 subsidies, Infratel, Open Fiber and there's no pressure on us today as it used to be before to extend or expand our fiber coverage even to market fail areas. So I think very smartly by the Italian government and that's where Open Fiber is coming and supposed to deliver in the next coming years the coverage expected through that process. So as of today, there's nor any specific pressure from the government on accelerating CapEx. The pressure coming internally to attend the demands. And that's what I said, we will attend any demands that go beyond FTTC and acquire FTTH coverage and that's a plan -- as you can see we're investing heavily, but within the envelope, CapEx envelope we had in the plan, in the guidance and we are very comfortable that at this stage, we have no reason to change our view that the commitments we had in the guidance to go below at 20s -- 20% in 2019 is still fully, fully on board. So we have no reason to believe differently at this stage.

Last question comes from Mr. Andrew Lee from Goldman Sachs.

I had just a question around [indiscernible] Board change you had. I just wanted to know what has changed since the board changed in terms of -- and any color you could give on the active impact, your new part timers are having. And secondly what is your priority now Amos post that period of uncertainty? Is it trying to seek a solution with Enel over Open Fiber or is it executing on cost cutting and any color you could give on what's your number one priority would be really helpful.

Andrew, could you repeat the question because there was a very sort of rebounding echo?

Yes. I'll have a go. Can you hear me more clearly now?

It's better now. Sorry about that. Yes.

Okay, yeah. So it was a question on what's changed since the board changed? Any color you could give on the active impact that your new part-timers are having. And, specifically for Amos, what is your priority now? Is it trying to seek a solution with Enel over Open Fiber? Is it executing on cost cutting? What is your number one priority today apart from finishing the call?

I think the first question, I answered already and I think it was very well communicated about the view on the board and my commitments, so I think there's not so much to add into that. I think it's a repeated question, so I believe again, going back to the statements we mentioned earlier today and in the last few weeks, my view is that again, we all committed in moving forward, in implementing a transformational plan that requires time, efforts and collaborations and I think this is key to success of the plan. So my priority is implementing DigiTIM as a whole, not by pieces. It's not piece by piece. It's a full transformations on all aspects of the company at once from clearly changing the digital journey for our customers and I think we are in all their app -- customer app that will be launching in September will be clearly state-of-the-art and the leading app that will change dramatically the way that we're interacting with our customers and we will have a cost and efficiency factor, but clearly customer satisfaction as well. This was a huge priority on my agenda. We changed dramatically the IT systems all over in order to make sure that we have the right IT systems, modular and saving time to market and being able to launch innovative products. So clearly that's happening. Leadership on where we are. I think we are building a significant leadership bottom fix for migrations to fiber. Converged product is an evolution. Clearly, we need more migration, we need more convergence offering, more robust single bill offer. At the same time, B2B doing fantastic job as you can see the numbers going very well with much more IT and cloud and connectivity and a lot to be done on efficiency optimization. I think we are done on that. There's a lot to be done on efficiency and a lot of operational focus that will enable us with the time to reduce the overall cost of the company and running the business. At the same time, even though we optimize the CapEx a lot, I don't think we are done with it. I think the VRAN, virtual LAN 5-year ready that is really fantastic news we didn't have it in our horizon, we'll reveal the plan knowing that VRAN is coming by big, big vendors by October to December will support substantially the cost of extension of mobile 5G VRAN just again we don't have all the pricing. We have one vendor today that we are piloting cost less than half the VRAN. So clearly it's a huge game changer and on quality and efficiency, but also, so it's CapEx, OpEx related. Another big project is clearly the decommissioning. We plan it in the plan to do it in 2021, '22, '23. We hope to resolve it with the regulatory to get approval to do it earlier. If yes, it would be a case, we'll launch a big tender this year to start decommissioning of 7,000 central offices already starting from 2019 in a turnkey project by key suppliers and this is I think will be another game changer. We would like to see it start up and running. Clearly, a lot of the organizations, we had a lot of changes. We have new talents coming, less silos, building the TIM was key for me. Finally, we got what we wanted lately. We got finally Controller, Chief Procurement Officer so we're finally completing the team and I think that will have its own effects going forward. So lot of things happening in the company. I don't want to choose one priority among others, they are all priorities. But it's a full plan going forward and I think with the time, all of that will have to show actions. At the same time, we're clearly looking on extraordinary, non-operational catalyst. We mentioned some of them today that are not less important, the NetCo is one of them, but also others of selling non-strategic assets continued, deleveraging and as soon as we can to get into investment grades and dividend policy in the state. So we have all of this in the plan of the DigiTIM up to 2020. And hopefully we can every quarter show the progress of that. So hopefully that's a long answer for a short question, but that's the best I could give you.

Okay, I guess, we have one really super last one. Somebody that just registered from Brazil. And I'd be happy to take this last one.

Very last one is from Mr. Fred Mendes from Bradesco Banco.

I have two questions regarding Telecom Italia operations in Brazil. The first one is around any further visibility over the CEO change with Stefano stepping out and Sami Foguel stepping in. Do see any substantial change in terms of strategy? And the second question is regarding how much time do you Amos spend looking specifically into Telecom Italia business in Brazil over Telecom Italia's overall business. Any further information on these topics would be very helpful.

Thank you for the questions. I would say that, as been disclosed, Stefano De Angelis contract ended in June, July of this year, after 2 successful, 2 years in Brazil where he successfully turnaround the business in a very impressive way as everyone knows and are aware about and I think if you look on TIM 2 years ago and today, it's a very different company, well positioned in the postpaid market. First entry to the Broadband and fixed and clearly branding image improvement as a premium player as we're now just a prepared card or mobile operator. So we are really in a strong momentum in Brazil and a lot of that thanks to Stefano and the entire team in Brazil. They are doing a magnificent job there. As -- again Stefano asked to be coming back to Italy. We are searching for CEO for almost, I don't know, 6 months at least and it's a long process so we really review many candidates and I think Sami Foguel, the new CEO, is addressing all the specification we would like to see in CEO of a company at the stage of TIM Brasil. Sami is a fantastic and excellent leader. His 10 years at Mckinsey, built his capacity to develop a winning strategy and adapt a strategy quickly, very analytical. His operational skills are fantastic from his time at Azul, the airline Azul and at TAP as Chief Operating Officer. So clearly operation is something he also lead and execute very well. As well of course is customers I would say approach being at HSBC, Azul and others and TAP, the first thing you know about Sami is clearly have a different view than generally you'll see in the telecom sector understanding customers, billing, winning products and addressing customer satisfactions in any level to make sure that anything that exactly what needed at this time at TIM Brasil building a continuous build on Stefano job in building a winning brand, what we could like to consider the best mobile operator in Brazil. So clearly, we have the right ones. He's experienced in unions, in regulatory environments. The airline business help a lot. So it's clearly have all the 360 degrees experience and knowledge to take TIM to the next step. So very satisfied with the decision of the board in Brazil to select Sami Foguel as the new CEO. Clearly, Sami will continue to implement the strategy plan and the strategic plan that have been adopted by TIM Brasil just beginning of the year, we launched strategic industrial plan of TIM Brazil for the next 3 years and he's fully committed as we are fully committed as well here. As you know the Chairman, Joao Cox of TIM Brasil is a veteran of the telecom market in Brazil, well-respected executive. We're really pleased and happy to have him on board. He is very much supportive of Sami. So clearly, he was part of the selection process, so clearly we have very interesting team of very experienced gentlemen in the market with the regulators. Sami with a very interesting and different experience as we needed in the telecom sector specifically, but in TIM Brasil, and clearly a winning team that is working with Sami. Those days, from the Chief Operating Officer, CFO, CTIO and the rest of the TIM. So as to myself, I clearly dedicate significant time to Brazil, I'm in Brazil generally once a month, beside of course the ongoing discussion we had in the group level with the TIM. I personally physically trying to be once a month in Brazil. So clearly Brazil is very important to us. I think it's building significant value. We saw dividends going up from Brazil. We expect it to triple this year than previously to compared to last year. So it's clearly for us as a group and a critical important asset that should generate more cash going forward to reach all the shareholders including of course us at TIM level and we see it clearly strong momentum there and I'm sure Sami will continue to lead the company to that directions. I hope that address your questions.

Thank you Fred for asking. Okay, then, the call is finishing. And thank you very much for participating. It was great to have you with us and speak to you soon.

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