TIM Aktie

Ladies and gentlemen, good afternoon, and welcome to TIM First Quarter 2026 Results Presentation. Paolo Lesbo, Head of Investor Relations, will introduce the event.

Good afternoon, ladies and gentlemen, and thank you for joining the TIM's First Quarter 2026 Results Presentation. I am pleased to be here with the CEO, Pietro Labriola, the CFO, Piergiorgio Peluso; and the rest of the management team. Today, we will present the highlights of the first quarter and review the main operating and financial results. As usual, we will conclude with a Q&A session. Please refer to the safe harbor statement, including in the annex for details on the reporting perimeter.

Before we begin, I would like to briefly highlight one aspect of today's call that reflects a broader transformation journey underway within the TIM group. This session, including the Q&A is supported by AI leveraging the digital twins of our CEO and CFO. This solution is part of a wider set of initiatives through which TIM is leveraging artificial intelligence to enhance internal processes, operational efficiency and the quality of communication with our stakeholders. We will outline these initiatives in more details during the presentation. With that, let me hand over to our Q1 2026 results. Pietro, the floor is yours.

Thank you, Paolo, and good afternoon, everyone. Let me start with the most relevant messages for this quarter. First, our Q1 results were fully in line with what we expected. As already guided, domestic performance reflects the MVNO transition and expected the impact already embedded in our 2026 targets. The underlying trajectory is unchanged. We are on track versus the path we set out guidance confirmed with full focus on execution.

Turning to infrastructure. As part of our ongoing efforts to optimize TIM's cost base, we have launched a set of initiatives aimed at updating our tower strategy. I will come back on this topic later in the presentation, also providing additional disclosure following a specific request by the Italian companies and Stock Exchange Commission. On capital structure, the share capital reduction process faced no opposition from creditors and the savings shares conversion will therefore be completed as planned by the end of May.

Finally, regarding Poste Italiane's full voluntary public tender and exchange offer, the TIM Board of Directors has appointed financial and legal advisers. The Board has initiated a structured and fully governed process to assess the offer in the best interest of the company and all shareholders. The fairness opinion will be delivered in due course based on complete information and rigorous analysis in line with market practice.

Let me start with an overview of our results. As usual, we disclosed performance at group, domestic and Brazil levels. For the domestic perimeter, we present revenues and EBITDA after lease on a year-on-year basis both including and excluding the MVNO business. This allows you to clearly distinguish between the overall performance and the underlying business trends. The difference is material, and it is entirely explained by the MVNO phasing. Compared with Q1 last year, MVNO transition accounted for EUR 54 million lower revenues and almost EUR 50 million lower EBITDA after lease, while the underlying business performance remains very solid.

Starting with the group. Revenues increased by 1.4% year-on-year to EUR 3.3 billion. Excluding the MVNO impact, growth reached 3.1% supported by continued commercial momentum across our core businesses. EBITDA after lease decreased by 2.7% to EUR 0.8 billion. Once again, this reduction was entirely driven by the MVNO transition. Excluding MVNO, the underlying business delivered a 4.1% year-on-year growth reflecting operating leverage and tight cost control. CapEx remained disciplined at 12.5% of revenues amounting to EUR 0.4 billion, fully in line with our investment framework.

As a result, EBITDA after lease minus CapEx increased by over 5% to EUR 0.4 billion. Cash generation reflected the usual seasonality of working capital absorption at the beginning of the year as well as the reversal of the advanced payments from public administrations received last December. Accordingly, equity free cash flow was negative by EUR 0.4 billion. Piergiorgio will provide more details on the cash flow dynamic later in the presentation.

Net debt after lease stood at EUR 7.3 billion, with a leverage ratio of 1.99x. From a geographical perspective, performance was solid across both of our markets. At domestic level, despite continued competitive intensity, the underlying business remained resilient. Total revenues stood at EUR 2.2 billion, down 0.9% year-on-year while service revenues were flat. Excluding MVNO impact, the underlying business recorded growth of 1.5% in total revenues and 3% in service revenues. EBITDA after lease stood at EUR 0.4 billion, down 8.2% year-on-year. Excluding MVNO, performance was robust with growth of 4.5%. CapEx was soft at EUR 0.2 billion or approximately 9% of revenues.

As a result, EBITDA after lease minus CapEx increased by 4.1%, reaching EUR 0.2 billion. In Brazil, market conditions remain rational and TIM Brazil continued delivering robust growth. Let me walk you through how the MVNO phasing and the expected EBITDA after lease acceleration are already fully embedded in our plan. Starting on the left-hand side of the slide, you can see the evolution of MVNO revenues. As anticipated, the impact is front loaded in the first half of the year with a pronounced decline in Q1 and a more moderate reduction in Q2 As we move through the year, the MVNO headwind progressively face with Q3 and Q4 showing a much more normalized trend.

In the second half, MVNO revenues reached a stable run rate of approximately EUR 45 million per quarter, in line with last year, effectively closing the gap. Turning to the right-hand side, this dynamic is directly reflected in our domestic EBITDA after lease trajectory. We expect a clear acceleration in the second half of the year with EBITDA contribution increasing from around 19% in Q1 to approximately 29% to 31% in Q4. This acceleration is driven by 4 key factors: first, the contribution from our consumer price initiatives; second, favorable seasonality in the Enterprise segment, particularly in the fourth quarter. Third, the continued execution of our cost transformation program, with the majority of benefits materializing towards the end of the year. And finally, the stabilization of MVNO revenues in the second half.

Overall, this profile underpins our confidence in confirming full year guidance with a clearly back-end loaded EBITDA after lease trajectory.

Turning to TIM Consumer. Let me first remind you that MVNO revenues are included in the wholesale and other line of business. As a result, the full impact of the MVNO phasing is reflected in TIM's consumer trends. Total revenues and service revenues declined by 3% and 1.8%, respectively. On a normalized basis, excluding the MVNO impact, the same metrics showed year-on-year growth of 0.6% for total revenues and 2.2% for service revenues. As already seen in the fourth quarter of last year, retail performance remained resilient, delivering a 0.4% year-on-year growth. Back book repricing continues to be a key driver of TIM Consumer's top line stabilization. This marks the fifth consecutive year in which our strategy has been firmly focused on value rather than volume, a necessary approach in a highly competitive market such as Italy. Compared to previous years, we have brought forward the timing of price increases with more than 4 million wireline and mobile customers already repriced in the first quarter. This will allow us to anticipate the benefit in terms of incremental revenues over the course of the year.

The impact of these actions was visible across all key KPIs. Wireline ARPU increased by 5.4% year-on-year. Mobile ARPU rose by 1%. Churn remains firmly under control despite multiple pricing actions implemented over time. Customer KPIs were stable on a sequential basis with wireline and mobile line losses of approximately $50,000 and $100,000, respectively. Notably, we continue to see an accelerating contribution from SWA, while mobile number profitability remains broadly neutral, a further indication of strengthened customer retention and competitive position.

Finally, turning to our customer platform, TIM vision service revenues continued to grow steadily, increasing by almost 4% year-on-year. TIM vision represents the most comprehensive content aggregation platform in the Italian market, now including also HBO. The sustained top line momentum confirms the strategic soundness of this positioning.

Let me now introduce a new chapter in our consumer strategy, namely the launch of in premium. We are launching in premium now because we can finally combine network platforms and AI to deliver a materially better experience. This is not a rebranding exercise. It's about higher quality more services and more simplicity with pricing discipline aligned to the value we deliver. We are witnessing an unprecedented increase in bandwidth demand, driven by 3 structural trends the rapid adoption of generative AI applications, the acceleration of high-quality video consumption with 4K and 8K streaming becoming increasing mainstream and a growing need for seamless multi-device connectivity.

Together, these trends are reshaping customer expectations and require a step change in network performance, reliability and quality of service. In this context, TIM is uniquely positioned to lead the transition. Our unmatched fiber footprint, combined with our nationwide 5G infrastructure enables us to deliver superior connectivity and positions TIM as the best place operator in Italy to capture this evolving demand. Building on these strengths, we are launching in premium, a new high-performance connectivity proposition designed to serve the most demanding customer segments and digital use cases.

We have identified 5 key target groups. First, sports and live event [indiscernible] who require congestion resilience connectivity to share and engage in real time even in highly crowded environments. Second, influencers and content creators who depend on reliable multi-platform streaming, cloud-based content production and real-time interaction with their audiences. Third, streaming and gaming families with growing expectations for uninterrupted 4K content and high-quality cloud gaming experiences. Fourth, students and AI power users increasingly relying on advanced digital tools, collaboration platforms and immersive technologies such as virtual reality. And finally, smart workers who depend on cloud applications, real-time collaboration and increasingly virtual reality enabled workflows. TIM premium is designed to address these needs through a combination of best-in-class network performance value-added services and enhanced security features.

In summary, TIM premium represents a key step in our strategy to move further up the value chain in the consumer segment, monetize network superiority and respond to the evolving digital lifestyle of our customers. Just as we have been committed to a volume-to-value strategy, we firmly believe that telecom operators must also take the lead in educating the market that higher levels of service quality and performance need to be adequately priced even more so in a highly competitive market, such as Italy. TIM Premium is a concrete step in this direction.

Turning to TIM Enterprise. Q1 marked the 15th consecutive quarter of growth with both total and service revenues increasing at mid-single-digit pace, further confirming the structural momentum of the business. The integration of our infrastructure assets with advanced cloud, IoT and cybersecurity capabilities continues to underpin TIM Enterprise's competitive edge and to translate into tangible results. Cloud was once again the clear growth engine, expanding by 15% year-on-year and representing 44% of TIM Enterprise service revenues. Connectivity delivered modest growth, supported by the positive one-off impact related to the Winter Olympic Games. Other IT services declined by 7% reflecting a deliberate reshaping of our portfolio to phase out low-margin activities and focus on higher-value solutions.

Finally, the National Strategic hub, Europe's first concrete implementation of a sovereign cloud initiative delivered revenue growth of 50% year-on-year. This provides TIM with a clear structural head start in a strategically critical segment with long-term relevance.

Turning to digital sovereignty. Last December, we launched a CEO-led strategic initiative aimed at positioning TIM as the player of reference in this space in Italy, building on the capabilities developed within the national strategic hub, our objective is to expand sovereign technology solutions beyond the public sector to strategic private enterprises managing critical data.

This initiative is grounded in 3 key pillars. First, we continue to invest in integrated proprietary network and cloud infrastructures. Our focus is on secured scalable and fully controlled platforms capable of supporting niche and critical services while ensuring the highest standards of reliability, resilience and data protection. Second, we are strengthening our positioning in sovereign cloud and AI. In this context, we are developing a sovereign AI platform designed to support independent software vendors, start-ups and developers, enabling them to run high-performance workloads in a secure and compliant environment. We see this as a key enabler of the next wave of enterprise digital transformation.

Third, we act as a trusted partner for hyperscalers. By combining our proprietary infrastructure with leading global technologies, TIM positions itself as the guarantee of sovereign allowing Italian enterprises to benefit from innovation while retaining full control over their data. Our unique positioning is supported by tangible assets and capabilities. We operate 60 data centers fully integrated with our proprietary network backbone. We have built deep expertise in sovereign cloud platforms already serving over 650 public sector customers.

Our organization is further supported by more than 2,000 certifications in key competencies and a dedicated sales in pre and post sales force of around 1,600 professionals. Looking ahead, we plan to invest approximately $500 million between 2026 and 2028 to further strengthen our sovereign infrastructure, platforms and capabilities. In summary, TIM Enterprise is uniquely positioned to capture the growing demand for secure and sovereign digital solutions and to play a leading role in shaping Italy's digital future. To conclude on the domestic perimeter, let me explain how we are leveraging agentic AI to improve service quality, while driving leaner and more efficient operations. We are moving at full speed with a clear focus on 3 priority areas. First, in customer care, we are leveraging generating AI to significantly improve response times and the quality of interactions. Second, in back office, we are using AI to materially increase productivity while reducing manual errors. And third, we are enhancing agility by building an agentic layer that allows us to bypass legacy IT constraints.

To enable this scale, we are building what we refer to as an industrial-grade AI environment. This includes establishing centralized data governance, strengthening data quality and upgrading our cloud and machine learning operation capabilities. In parallel, we are developing a common data platform with reusable APIs, allowing us to scale use cases quickly across the organization. We are also taking a pragmatic approach, starting with pilots and then rapidly scaling what proves effective. Equally important is people's empowerment. We have established robust AI governance and security policies to ensure safe and controlled access to internal knowledge. At the same time, we are equipping employees across functions with AI licenses and have launched a company-wide AI literacy program supported by targeted training initiatives. Adoption is closely monitored through usage and productivity KPIs.

All these initiatives are expected to translate into tangible performance improvements with go-live targeted in the second half of 2027. Specifically, we expect around 50% of inbound calls to be managed by AI agents, 70% automation of back-office activities and a 50% reduction in customer issue resolution time. Overall, these initiatives will be a key contributor to the efficiency gain embedded in our cost transformation plan.

Before moving to TIM Brazil, let us now show a short video to further illustrate the AI-driven opportunities we are pursuing.

[Presentation]

Let me be clear. This is not AI as a buzzword. This is AI at scale, embedded in our network, our operations and our customer journeys. And it's a real level for better service, faster execution and structural efficiency.

Moving to Brazil. Results once again confirms strong execution and disciplined management. Market conditions remain healthy and rational and in Brazil continued to deliver profitable growth, reaffirming its position as the most efficient operator in the country. Top line growth was in the mid-single-digit range, driven by mobile service revenues and supported by a growing contribution from the wireline segment. Monetization of the customer base remained a clear priority, underpinned by successful upselling from prepaid to postpaid, resulting in the highest ARPU in the market. Strong operational execution translated into mid-single-digit EBITDA after lease growth above inflation.

The combination of EBITDA after lease growth and disciplined CapEx delivered high single-digit growth in cash generation. These results clearly demonstrate that the operational discipline and value-oriented approach that have driven success in Brazil are the same principles guiding the ongoing transformation of our domestic business. With that, I will now hand over to Piergiorgio for a detailed review of the financial results.

Thank you, Pietro, and good afternoon, everyone. Let me start with a few comments on group OpEx and CapEx. In the first quarter, group OpEx increased by 2.7% or EUR 62 million. Approximately 80% of the growth was attributable to Brazil where half of the growth was linked to revenue-driven costs, while the remainder was driven by the V8 acquisition and higher operating expenses. In Italy, the increase in OpEx was modest and entirely driven by revenue-related components, namely higher cost of goods sold associated with ICT revenue growth. These were partly offset by lower industrial costs including savings in network operations and energy.

OpEx related to FiberCop MSA were flat year-on-year and accounted for 24% of domestic OpEx. Given the current geopolitical environment, I would also like to reassure the market that our energy costs remain well under control. In Italy, we have hedged approximately 80% of 2026 energy consumption and approximately 50% for 2027. This applies to consumption that we manage directly, representing approximately 60% of total consumption. FiberCop, which accounts for around 40% of total energy consumption, manages its own independent hedging strategy.

In Brazil, more than 80% of the electricity is generated by hydropower, meaning that energy costs are primarily influenced by weather conditions rather than by gas and oil price dynamics. Group CapEx amounted to EUR 0.4 billion, corresponding to 12.5% of revenues. CapEx in Brazil increased slightly year-on-year, while domestic CapEx was particularly soft decreasing by 18% year-on-year as a reflection of lower IT spending due to the timing realignment of major software license renewals, continued IT spending optimization and lower customer-driven investments.

Approximately 20% of CapEx was customer-driven, while over 50% was allocated to infrastructure investments, including mobile networks. The IP backbone and data centers, where we continue to expand capacity to support the growing demand for cloud services. Moving to financials. The first quarter reflected the expected seasonal working capital absorption, mainly driven by the payment of the significant CapEx recorded in the fourth quarter of each year.

The cash dynamic was also impacted by the reversal of advanced payments from public administrations that were originally due in the first quarter as were collected in December. Financial charges were EUR 30 million lower than last year, thanks to the optimization initiatives implemented in 2025, while cash taxes arose mainly in Brazil. As a result, equity free cash flow was negative by approximately EUR 0.4 billion.

In Q1, we launched a new pre-retirement scheme. Compared with the schemes implemented by TIM after 2021, this new program delivers higher cost savings with a better cash out profile, benefiting from recent changes in the regulatory framework. Under this program, approximately 1,000 employees will enter preretirement by the end of this year, up to 5 years ahead of the statutory pension. TIM, will pay approximately 70% of salary over the 2027 to 2031 period, with severance indemnity paid in 2 installments.

We expect annual cost savings of approximately EUR 60 million once the program is fully implemented. From a cash perspective, the scheme was cash neutral in the first quarter as we booked a one-off provision of approximately EUR 0.2 billion in the income statement, with a corresponding increase in working capital liabilities below equity free cash flow. We recorded EUR 30 million in dividends paid to TIM Brasil minorities and EUR 30 million related to the acquisition of a small B2B business in Brazil. Net debt after lease closed at EUR 7.3 billion with leverage at 1.99x.

Finally, regarding the concession fee, we expect to cash in approximately 50% of the amount in the coming weeks with the remaining 50% spread between the third and fourth quarters. A breakdown of net working capital is included in the appendix. With that, I will now hand back to Pietro.

Thank you, Piergiorgio. Let me now turn to our ongoing corporate actions aimed at delivering a leaner, more efficient and remuneration supportive capital structure. Starting with the savings shares conversion, the reduction of share capital from EUR 11 billion to EUR 6 billion has been completed without any opposition from creditors. This allows us to proceed with the final steps of the savings share conversion. The voluntary conversion period will run from May 6 to May 19, with the outcome announced on May 20. This will be followed by the execution of the mandatory conversion of the subsequent day, which will also represent the last trading day for savings shares.

Moving to the 10:1 reverse stock split of ordinary shares, execution is planned for June. I remind that this is a purely technical adjustment with no impact on total share capital or on shareholders' proportional ownership. At the same time, it will allow TIM shares to exit any stock territory, enhancing liquidity and potentially broadening the investor base by improving overall investability. Finally, on the share buyback, the program approved at the last Annual General Meeting authorizes purchases of up to EUR 0.4 billion, corresponding to a maximum of $700 million ordinary shares or 70 million ordinary shares post reverse split, representing approximately 3.3% of share capital.

The execution of the program remains subject to the completion of the [indiscernible] disposal, which we expect by the end of the second quarter. Overall, these actions are fully aligned with our strategy to optimize capital structure and enhance shareholder returns. Let me walk you through our tower strategy, which is a key lever in optimizing our infrastructure cost base. To recap, we are progressing on 3 main fronts. Firstly, on [indiscernible] hand, sharing Fastweb, we have reached a preliminary agreement to enable mobile access across approximately 50,500 existing sites. This will support a faster and more capital-efficient 5G rollout, particularly in lower density areas, while preserving full commercial and technological independence.

Importantly, this approach allows us to avoid unnecessary duplication of infrastructure and deliver midterm cost and CapEx efficiencies. Secondly, we have signed a nonbinding agreement to establish a tower joint venture with Fastweb. The joint venture is expected to develop and manage around 6,000 new mobile sites and will be equally owned by the partners. We also see potential to bring in third-party investors over time to further optimize the financial structure. The model will be open access, creating additional optionality and value.

Finally, regarding our MSA with INWIT, we have served notice of termination effective August 2030. However, following the notice of termination served by Fastweb, TIM termination notice would be effective upon the original expiry date of 31st of March 2028. In case it is established, whether by controlling or by agreement between the parties that the change of control occurred in December 2020. Overall, these initiatives strengthen our industrial flexibility, accelerate 5G deployment and support a structurally lower cost base over the medium to long term. upon request of the Italian stock market authority. Let me now go deeper into how we will execute this strategy and the path toward a potential exit from INWIT. We are structuring our approach around 3 complementary pillars.

Firstly, leveraging existing third-party towers. The market currently offers around 30,000 towers excluding INWIT and we plan to utilize approximately 8,500 of these sites, less than 30% of the total available. This provides significant flexibility and avoids the need for incremental capital deployment. Secondly, new towers built by third parties. We are already seeing strong market interest in developing around 6,000 towers with a feasible rollout of roughly 500 sites per year shared across operators. Importantly, about 80% of existing INWIT sites already hosts both TIM and Fastweb, making these new sites highly attractive for tower companies given the built-in double tenancy. Thirdly, Towers developed through the new joint venture. This adds a further 6,000 sites over the next 12 years with full flexibility to adjust the rollout pace depending on market conditions. Supporting these pillars, we benefit from a number of structural enablers. From a geographic standpoint, a large portion of our sites are located in smaller towns, which simplifies site acquisition and deployment.

The [indiscernible] sharing agreement further streamlines migration by reducing complexity. On the regulatory side, the increase in electromagnetic limits from 6 to 15 volts per meter create additional capacity while remaining well below European thresholds. Operationally, we expect to internalize key activities such as design and permitting by 2029, and we can leverage AI to accelerate network planning and deployment.

Putting all of this together, we see a clear and achievable path to a full exit from INWIT in approximately 10 years while maintaining operational continuity and enhancing long-term efficiency. Let's now move to the closing remarks.

To wrap up, Q1 2026 came in fully in line with our expectations, which allows us to confirm our full year guidance. We are continuing to strengthen our leadership in AI and digital sovereignty in Italy with TIM Enterprise clearly positioned as the reference player. The results delivered so far provide tangible evidence of the progress we are making along the strategic path. With TIM Premium, we are redefining our consumer proposition around performance and translating network excellence into differentiation. In parallel, we have defined a new clear and realistic tower strategy. It gives us flexibility and control while preserving value and it embeds significant OpEx and CapEx savings to the satisfactory agreement with [indiscernible] not be reached. Finally, we are about to complete the savings share conversion process. This was a long-standing overhang that this management team has been able to resolve after decades in a way that is satisfactory for all shareholders.

Let me close on a positive and pragmatic note. For years, M&A was seen as the main lever for Telcos. It mattered, but it was not enough. Today, the opportunity set is changing. Cloud and digital sovereignty are moving from nice-to-have to must-have. New services increasingly require a sure performance, not just best effort. And AI is reshaping business models across industries, driving demand for low latency, secure data processing and predictable connectivity.

This is where telcos can be central again, not by talking about it, but by building networks engineer for performance, platforms designed for trust and capabilities that make AI usable at scale. One final point for European policy makers. This opportunity is real, but it is also fragile. It would take very little to destroy value again. uncertainty, outdated rules and a framework that discourages long-term investment. Europe needs a pro-investment agenda. Clear rules, predictable enforcement and genuine reciprocity across the entire digital ecosystem. Same responsibilities, same contributions, same accountability for those who build the networks and for those who use them.

If we want a stronger Europe and stronger nations, we must act with vision and courage now. And as I said, we must do our part with discipline, speed and execution. For the first time in years, the future is genuinely in our hands. Let's not miss it. With that, we are now ready to take your questions also with the support of our digital twins.

[Operator Instructions]

The first question comes from Mr. Giorgio Tavolini with Intermonte.

Thanks for taking my two questions. The first one is on the MVNO segment. In 2025, segment generated EUR 210 million in revenues. In 2026, you expected the trend to stabilize at around EUR 45 million per quarter in the second half of the year. So I was wondering if this state revenues could be approximately EUR 180 million per year.

Giorgio, you are touching on a crucial aspect of our wholesale dynamics. That is a very important point about the phasing of our wholesale revenues. We are currently managing a planned transition in our virtual network operator partnerships. The first half of 2026 reflects the exit of certain older contracts, while Post officially began migrating its customer base to our network in the first quarter. This is a temporary dynamic that we already anticipated in our guidance. Everything is moving according to the trajectory we set out earlier this year. We expect these revenues to stabilize and build significant momentum throughout the second half. This will lead to a normalized run rate as the new contract reaches full scale. Our focus remains on high margin service revenue rather than just chasing volume. This stabilization is a key part of our domestic performance for the full year. I hope that it was clear.

My second question is on the repricing campaign. You announced that in Q1 we involved more than 4 million in consumer lines. So what impact could we expect on financial KPIs in the coming quarter? And if you confirm around EUR 100 million revenues incrementally?

Thank you, Giorgio. This is an important theme for our consumer strategy. Excellent question on our strategy for value extraction in the consumer segment. We have deliberately brought forward the timing of our price increases this year. This maneuver allows us to capture the benefits of incremental revenues much earlier in the cycle. Our strategy remains firmly focused on prioritizing value over volume. This is a necessary approach in a highly competitive market like Italy. The results we are seeing confirm the soundness of this direction. Despite these actions, our customer loyalty metrics remains very stable in churn is firmly under control. we are translating our network excellence into a clear and differentiated consumer proposition.

We expect this proactive approach to support our top line stabilization throughout the coming quarters. Everything is under control as we continue to execute our value-driven strategy. I hope that answers your question.

The next question comes from Mr. Paul Sidney with Berenberg.

I had two, please. Firstly, on domestic consumer, ARPU up 4% year-on-year from mobile at 5% for fixed. Are we generally seeing recent Italian price increases really sticking. I know on [indiscernible] call earlier, had a different market, but they're really struggling to make these price increases stick. They're getting promoted away. Are we looking at a different dynamic in Italy because of the differences in ARPUs, the different starting positions. And does that allow for even more price increases going forward. I know it's so close to your heart, Pietro, from the last call.

And second question, very big picture and maybe it's too big a question, but events in the Italian market over the past 24 months have really kept investors very busy and analysts as well, but a huge amount potential mobile consolidation, fixed consolidation, tower disputes, the postpaid base. Do you think, Pietro, there's a scenario that exists where all the players can win and we can unlock the investment, the infrastructure investment we need and apologies if that's a very sort of high-level question.

Thank you, Paul. About the first question, I will leave Andrea to elaborate on top of that. But first of all, what's happened is that in the last 4 years, we were the first mover in the approach of price increase with our strategy of -- from volume to value. And it means that Andrea and the consumer team was really good in the approach of the [indiscernible] to try to avoid that. The price increase could become just a new bleeding or more than bleeding the strategy. On top of that, for the future, the good is that what we define as priority or premium connectivity strategy will give us a further boost because today, it's more complex to think that we can continue like we are doing today forever. You must start to increase the price to the customer because they are going to add better quality. And so there will be willingness to pay much higher. It will mean that we'll be able to increase price with a further lower level of churn. Then I will answer to your second question, but I will leave Andrea to talk about that.

Thank you, Pietro. Thank you, Paul. So what is the difference that we see versus other markets. Certainly, we worked hard to exploit several levers to reduce churn. Hence, during the last 4 years, and this is the fifth consecutive year, as Pietro highlighted, we were to enhance 3 practices to reduce broadband churn, convergence migration to FTTH, so better technology mix and quite prominently also the use of content and in vision as a churn reduction tool.

And by the way, an ARPU increase tool. So this is maybe a difference versus other markets where other competitors are playing also because the TV market in Italy is quite unlike some other European markets. On mobile, also, we have refined and we commented this in previous calls, we have refined the repricing practices to act in a more segmented and careful way to prevent churn effect.

After all, what we learned during the last years is that the market of mobile is evolving with a number of rotation and possibilities that are reducing, and this is also unlike other markets. We are, I have to say, positive that other players in Italy will follow our example. We have been quite vocal in favor of back book price after, and we are actually positive that other competitors are now following the lead.

Paul, about the second question, I think that we have to find a new equilibrium among all the players of the telco ecosystem because the truth is that until today, inside this, let me say, value chain beyond the, let me say, players that were paying the check was the telco because if [indiscernible] who was investing in infrastructure, had very, very, very good return on investment. The software company that was delivering software were aiming very good, good, good return on investment. The other vendor, good return on investment, but also sometimes the employee because we are obliged to adapt our salary to the inflation. So until your pocket is big enough to continue to sustain all the value chain there's no problem. But at least in Europe, the telecom market, mainly in some countries, is no more able to pay the bill for everybody. So now what is happening? I think that everybody understanding that the game is over for everybody if we are unable to rebalance through all the value chain, the different elements.

And it means also that also the regulator had to do something. My opinion -- my personal opinion is that this is now well understood. If you look at what is happening in the rest of Europe, for example, in France, in terms of market consolidation, what's happened in U.K. in terms of market consolidation. What is happening at the EU level when we talk in the D&A about a kind of review of the net totality to allow the tech player to use the 5G frequencies, differentiating the quality of the service. We pay the 5G frequencies because of that, while today, the regulation do not allow always to do that.

So I'm very confident that this time, the things will change, and there will be not a winner and a loser. Everybody will win, but some time, someone that was over-winning will have to do a step back. I hope that it was clear.

The next question comes from Mr. David Wright with Bank of America.

Hopefully, you guys can hear me and thank you for the AI twin presentation. I will give you some feedback on that separately. So I actually have a super quick question for Piergiorgio. You said annual cost savings of EUR 60 million from the refinement theme. So I'm assuming that means EUR 60 million less OpEx, EUR 60 million more EBITDA. And then 70% of that, so let's call it whatever, EUR 42 million or so of working capital outflow. Is that the way it works? So EUR 60 million less OpEx [indiscernible] EBITDA of EUR 42 million?

Yes, David, it's correct. As you said, the amount -- the total amount has been provisioned in our accounts. So you will have also in our EBITDA reported and in our net working capital, we have the full amount. And in the next years, you will have the use of this provision, as you know, consistent with the payment of the [ preparation ] plan. As you had in the past. So the mechanism is exactly the same. It is slightly different from the optical [indiscernible], but the mechanism is exactly the same. In terms of impact on EBITDA is exactly what you said, correct.

Okay. Very good. And then a couple of other questions. Pietro. So first of all, can you just remind us just [indiscernible] press reports of your earn-out protection around Italian consolidation. I understand the protection rooms until the end of this year, like 31st of December. And it could be triggered upon just an MOU, if I'm right, it doesn't need to be any kind of deal completion. And then if you could just remind me the mechanism. I remember it was a high percentage of potential synergies. That's question one. And then if you don't mind a little hypothetical and maybe you just can't answer this, but [indiscernible] have set a 2/3s acceptance level for a TI bid, which could theoretically leave a 1/3 minority listing.

Now under that circumstance, what I don't understand is how synergies could be allocated. And I wonder if you know how that would be done. So for instance, if there are EUR 500 million cost synergies, of course, they're in the consolidated Topco. But how much of that in theory, could be allocated to the TI standalone accounts, if that makes sense? That was my second question. And just very finally, reports of [indiscernible] suing you guys on the Dison deal, if there is anything you can say.

Thank you, David. I know I already imaged your comment about my digital twin. It was so polite with [indiscernible] level of anger. So we will try to improve that. Now -- I'm joking, but in any case, for us, was very important in this moment that is so important for the company to show to all the shareholders that were not crossing finger, we are continuing to work in the interest of all the shareholders to continue to improve the number of the company. AI is an important lever for us to continue to achieve the number that we put in this year plan, but also for the next years. So it was very important to show that we continue to deliver what we promise.

Now let me go through the 3 questions. The first one is related to the earn-out. It's quite easy. We can have the earn-out if there will be a close yield. So not subject to approval, but it's something that is at the last stage by the 31st of December. [indiscernible] clear, as we tried to explain also in the past that if they are doing, they will try to do a full merger. It's quite difficult to imagine that the full merger will have a closing. A full merge between [indiscernible] and FiberCop. FiberCop by the end of this year, looking also at all the process at the EU level. While if they sign a commercial agreement that will allow them to exploit industrial synergies, we will have an amount up to 75% of the industrial synergy that FiberCop will reach.

This is in a nutshell what is happening. We were reading on the press that we are talking about a commercial agreement. So let's say the wind or have someone say, stay tuned, and we see the next step about the post synergy. It's quite difficult for me to answer. I was also hearing the post call that ended less than 1 year ago. And also in that -- sorry, an hour ago. But if you take a look at the list of the synergy that they put a good part of that, but again, is the first reading based on what was told less than 1 year ago, It's difficult that can be considered in -- without a full [indiscernible] because when they talk about the reuse of the redundancy of the employee in activity of post, it's quite difficult to me that it could be possible as 2 separate company with rated party committees, so on and so forth.

But again, I think that Poste will give more details also when they will release the final prospective for Mativo. And as I mentioned, the Board will do its own work and then will be also the market that will evaluate the offer.

Related to Sky, a joke, I saw, and this is an advertising spot, that Sky has renewed the copyright for the Formula One. I love [indiscernible] until 2022. So sometimes, they will need some more money to finance that because this is the only way to think about that. But to give you some details, someone is thinking that at this time, we had an issue of anti-competition approach. Just to highlight to you, the agreement with [indiscernible] was giving us the exclusivity of the bundle.

And now 2 details. The first one if you were a win, Vodafone, faster, Sky customer, you could buy, in any case, the [indiscernible] offer on the data. So we were not closing the market. The second, also having the exclusivity for the bundle, I have to remember to everybody that in 2021, this company was vertically integrated. And at a regulatory level, we were obliged to the exempt analysis of the price that will not allow us to do anything in dumping. So we are unable to subsidize the connectivity with the content and vice versa. So it's really complex to understand -- the reason for that, then here, we have also Agostino Nuzzolo, our Chief Legal Department that we like to talk about these things in the right place because we don't like to live in a constant big brother where -- because I've seen that in the last period, a lot of people talked about litigation as they were in a big brother. We are also say what we think and do what we say. This is what we did in the last 4 years, and we'll continue to do that.

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

I have two, please. You had planned to CMD for late this year. Do you still intend to give me term guidance? And when could that be in -- presumably benefits from working with [indiscernible]. Would have also been part of your plans? How are these now affected given the offer to TI shareholders? And then secondly, we've seen a 10% improvement in the Brazilian real this year and the currency is also just over 10% better than the FX you assumed in your guidance, if the FX stays where it is, how does this affect your group free cash flow versus what you guided for?

On the second question, I will leave to Piergiorgio to answer.

Okay. Thank you. As you know, yes, we -- compared to our guidance, we are seeing a material improvement of the effects. So we are in the process of updating our forecast, and this is probably something that Pietro will comment in relation to the questions, of course, in the forecast process, we will evaluate all the market conditions. In terms of impact of the cash flows, I can only say that -- so let me say in different way. In terms of hedging, we are using a dynamic hedging process. So we are covering the tail of the distribution. So we -- and this is something that we have done in the beginning of the year in order to protect us from additional devaluation and this is something that we are slightly changing in order to, let's say, have the all benefit of depreciation.

In terms of impact on our cash flows in the first quarter just to complete the point on FX in our net working capital, we have, of course, the impact of depreciation in relation to the debt in Brazilian Real should that is going to be partially compensated by the improvement on the cash flows. And of course, going forward in the next months, this component will be, of course, bigger and we would expect to have an impact on -- a positive impact on cash flows on the full year.

Kevin, about the first question by the second quarter results, we will present the market an update of our plan because it will allow everybody to have all the elements to do all the evaluation about the public tender offer.

The next question comes from Mr. James Ratzer with New Street.

Yes. I have two, please. So the first one was just coming back to the offer from Poste and I just like to kind of always wind the clock forward by a couple of months from now or 3 months and the prospectus is published. The deal goes live. I'm trying to work through what happens at that point because presumably then the Board will like review where the implied also prices from Poste based on positive share price. And presumably, it's the prices above the Board's view of intrinsic value, they will recommend the offer to shareholders, but I'm interested in what happens if the offer is below what they think the intrinsic value is. What happens then? Will the Board formerly tell shareholders they're rejecting the offer.

I'm just trying to kind of work through what happens there because I'd imagine the Board is going to be putting forward quite a compelling case to what the intrinsic value is given this is effectively an unsolicited hostile takeover offer. So just interested to work through the scenario here on what happens with the intrinsic value and if the Board were to reject the offer.

And then the second question is just -- I'd love to hear more about an update on your SWA strategy. That's seen good momentum and growth despite the fact that fiber in the market is continuing to be deployed to more locations. So I mean, are you seeing any evidence that SWA customers disconnect and go back to fiber? Or are you now starting to pick up more FWA customers in fiber areas be interested to get an update on your strategy there.

Thank you, James. About the Poste offer, it's important to remember to everybody that a public tender offer is well defined in terms of [indiscernible] rules and procedure by Italian regulation. So in a nutshell, we will follow the timeline that will release by post jointly with all different regulatory institution. Then at the end, the Board has the obligation to give an advice that is not an obligation towards the shareholder. It is, let me say, kind of digital advice yes or no, fair or not fair. We have the chance also to prepare ourselves studying all the different answers, the different board in Italy gave to this kind of public tender offer. And then this stage will be for the shareholders that will evaluate to accept or not independently by the Board advice about the [indiscernible] strategy [indiscernible] to Andrea?

Thank you, Pietro. Thank you, James. So update on FWA, how do we see -- first of all, the market in Italy is remixing technology or if you want some technologies are growing in infusion and some others are actually reducing. And quite obviously, the most prominent growing technology that is constantly growing ever since the last like basically 5 years. An SWA is growing as well, thanks to the implementation of 5G technologies by several players.

TIM has been the latest operator joining the club of those offerings SWA 5G. We just started at the beginning of 2025. And the outcomes have been very encouraging. The share of SWA 5G acquisition has increased quite a bit. It is now over 20% of the acquisition are going to SWA 5G. So that is coming from basically single-digit share of SWA 4G that goes up to the end of 2024. So you can understand that now this is representing an important element of our offer.

Let me be precise on a couple of things. We do not offer SWA as a subscription in areas where there is good FTTH coverage and service and where there is FTTH service and where this is available. We do offer FTTH because we see that the quality of service, level of churn, in general customer satisfaction is better. But SWA represents a very valid optionality in all those areas where there is no FTTH coverage and where also the quality of FTTH, for instance, is not very good. So we see that people -- our customers adopt SWA and the level of satisfaction is actually quite high.

And despite the fact that we are just offering this since the 5 quarters, practically, we are improving level of service and level of satisfaction. So we do see an opportunity as a complementary technology to FTTH, and we do intend to use it as such. I hope that answers your question.

Yes. I'm just wondering if I could go back to the first question. I mean do you see is there any possible route by which you can then get Poste to increase the offer that they're making to TI shareholders? Or is that essentially could only happen, it becomes clear that shareholders in August are not going to meet the required threshold for them.

James, it's too early to give any kind of answer because just to give you an idea, just an hour ago, for the first time, we have a further detail about the synergy that is also a further important element in the evaluation process. We like to understand the value of the stock of poses answer today is too early and unfair.

The next question comes from Mr. Ajay Soni with JPMorgan.

I've got two. First is on in premium. I wanted to know what portion of your existing client base do you think you can target with this offer and what would be the price premium for the software to the tariffs? And the second question is around CapEx relating to TIM Enterprise. So you've announced an [indiscernible] envelope over the next 3 years. Do you see this being a risk to your midterm guidance of 11% capital intensity maybe continue to invest in the TIM Enterprise offering?

About the first question, I will [ let Andrea, but just like ] something. What will drive the request for a better is not a push activity, will be a full activity driven by the need of the customer to have a better quality. If you have a son that used to play with cloud gaming, you very well know that your son is playing with you if the latency and the link is not good enough. We have to remember to [indiscernible] that the service that we are delivering to you today is a kind of best step for service. And so we'll move to premium.

And the last example, we were in the stadium of [indiscernible] during the inauguration of the winter Olympic Games. And we gave a better quality kind of premium taste of our solution to all our customers. Now in the future, we are going to ask them to pay to have a very good quality during a public event in crowded situation. And my question is, when you are there and you pay the coffee 3x the price that you pay usually, the sandwich 4x the price you pay usually or whatever from 3 to 4x of what you pay usually. Why for a premium connectivity you shouldn't have to pay more. But I'll leave Andrea to give more details.

Thank you, Pietro. Thank you, Ajay. So TIM [indiscernible] is something that we are very very eager to launch very soon. We are working actually with our technology team, our CTO, [indiscernible], may further comment on that. I want to highlight a couple of things. First of all, the need for this service comes from mainly 2 factors. The mobile traffic and as well as the broadband traffic, but the most impressive growth has been on mobile has grown tremendously in Italy during the last 15 years. Recently, a competitor highlighted that the growth was more than 100x in the last 15 years. But very importantly, since 2017, the traffic multiplied almost 10x. That is due to also competition, enlargement of allowance And this, of course, has enabled completely different patterns of usage in the mobile use. So what we've done, and we've done this -- so the usage increase is a factor.

And then the technologies as Pietro highlighted very well are changing AI is driving new pattern of usage. Now I also want to highlight that we have already done a lot of things, mainly more [indiscernible] during the last 4 years, we completely changed the mix of customers on 5G. We enabled already priority service.

This we commented maybe some quarters ago, and we already have millions of customers that are paying for a premium quality on 4G. What we intend to launch is a further step in technology with higher level of price and higher level of quality and priority. Now we may imagine a gap of, let me say, some euros in the order of magnitude of EUR 3 to EUR 5. But over time, we will have to see, of course, how the market evolves. We believe that this, as the previous premium service that we launched some years ago, we trigger very interesting revenues, but most importantly, we'll be distinctive for TIM quality. I hope that answers your question.

That's great. And just on the enterprise CapEx would be great.

Yes. I will leave to [indiscernible].

As you probably remember, in last October, we -- during our TIM Enterprise [ unboxing ], we said that we would have invested EUR 1 billion in in the planned horizon -- Horizon in the 3 years of plan. And we actually recently announced that EUR 500 million, which are part of this EUR 1 billion will be dedicated to the development of our infrastructure. As you know, our capabilities to intercept the cloud growth in this country, our unique positioning on infrastructure because we have 16 data centers and 1 in construction and our unique positioning in the public administration.

I want to remember you that we are only [indiscernible] telco B2B in Europe, generating more than 50% of our total revenues on the public domain. This actually recommended us to concentrate our efforts on redirecting part of our CapEx investment on our infrastructure, which was originally already part of the plan, but we now feel that we need to make an additional effort on that side because these will not only help us to defend our positioning on a component that today represents more than 44% of our total revenues, but more importantly, to intercept the sovereignty cloud let's say, need that is rising in our country and fortunately, across the entire Europe.

And we do consider that for the sum of the assets that I've just described, so our capability and acceptive demand and the infrastructure and our positioning on the public administration being also part of the nationals will put TIM Enterprise in a good spot in order to intercept most of the EUR 4.2 billion that Gartner says will be generated by sovereignty cloud during the next 4 to 5 years.

The last question comes from Mr. Domenico Ghilotti with Equita.

Very two quick questions. The first is on the MSA revenues that I saw were up in the quarter. So I'm trying to understand what is driving this increase and if it is sustainable. And second is a clarification on the energy cost that was mentioned before, in particular in the part related to the MSA. So with FiberCop, trying to understand if it is the pass-through. So who is at the end taking the risk of energy cost. Is this a FiberCop? Or if it is your own risk because it is a pass-through.

So about the energy costs, what is happening. It's true that it's passed through. But in the agreement, we have the possibility to ask to the counterpart to build hedging activity. So we -- it's a that we drive the hedging strategy. This is for the not-regulated party because for the regulated party, we follow the traditional regulated approach. About the MSA revenues, what is happening that there was a seasonality related to the consumption, some component of the contract. I hope that was clear.

Yes, sure.

This was the last question. I want to thank you, everybody, and we will see you on the -- in the next few months, as we told at the beginning by the second quarter result or during the second quarter results, we will update our plan '26 to '28 to put everybody in a more trustable position to do all the valuation related to the public tender offer. Thank you, and see you soon.

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

Ladies and gentlemen, good morning, and welcome to TIM preliminary 2025 Results and 2026 Update Presentation. Paolo Lesbo, Head of Investor Relations, will introduce the event.

Ladies and gentlemen, good morning, and welcome to TIM Full Year 2025 Preliminary Results and 2026 Update Presentation. I am pleased to be here with the CEO, Pietro Labriola; the CFO, Piergiorgio Peluso; and the rest of the management team.

We will start with Pietro, who will outline the key messages and strategic highlights of today's presentation. We will then review our 2025 operating and financial performance before addressing selected topics that are particularly relevant to understanding the evolution of the group. Finally, we will provide an update on our 2026 targets and priorities going forward.

As usual, we will conclude with a Q&A session. Please refer to the safe harbor statement included in the annex for details on the reporting perimeter. With that, I will now hand over to Pietro. Pietro, the floor is yours.

Thank you, Paolo, and good morning, everyone. 2025 marked another key milestone in our journey to make TIM a normal company, operational discipline, strategically consistent and financially predictable. We delivered on our guidance for the fourth consecutive year, reinforcing our track record of execution and credibility with the market.

At the beginning of the year, process investment in TIM strengthened our shareholder base, enhancing governance stability and providing full alignment behind the group's strategic direction. We also reached a positive outcome in the 20-plus year long legal dispute regarding the 1998 concession fee, fully in line with our expectation and removing a longstanding source of uncertainty.

TIM shareholders recently approved a significant overhaul of our capital structure. This will simplify our equity and increase strategic and financial flexibility going forward. Importantly, the 2026 guidance and growth trajectory presented last year are confirmed.

Looking ahead, we plan to host a Capital Market Day in the second half after the summer once we have full visibility on several key developments, including the outcome of the savings share conversion, the expected approval of the rent sharing agreement with Fastweb plus Vodafone and the definition of the full synergy perimeter with Poste.

Let's start with the full year results. In 2025, group delivered solid growth across all key financial metrics, confirming the strength of our operational execution and financial discipline. Revenues increased by 2.7% to EUR 13.7 billion, supported by continued commercial momentum across our core businesses.

EBITDA after lease grew by 6.5% to EUR 3.7 billion, reflecting operating leverage and tight cost control. CapEx remained disciplined at below 14% of revenues amounting to EUR 1.9 billion fully consistent with our investment framework. As a result, EBITDA after lease minus CapEx increased by 17% to EUR 1.8 billion translating into stronger cash generation.

Equity free cash flow after lease reached EUR 0.7 billion, further reinforcing our deleveraging profile. Net debt after lease stood at EUR 7.9 billion with leverage at 1.86x in line with our targets and capital structure objectives.

Geographically, performance was strong in both our markets. In Italy, despite continued competitive intensity, we reported a resilient and improving financial profile. Revenues increased by 1.9% to EUR 9.5 billion. EBITDA after lease reached EUR 2 billion, up 5.1% year-on-year. CapEx on revenues was just above 12%. EBITDA after lease minus CapEx increased by 18%, reaching EUR 0.8 billion.

In Brazil, the market environment remains rational, allowing us to continue delivering sustainable growth and profitable expansion. Overall, the year confirms that the post NetCo team is structurally stronger, more cash generative and better positioned to deliver sustainable value creation. For the fourth consecutive year, both group and domestic results were fully in line with guidance across all metrics and unprecedented achievement in TIM's recent history and a clear testament to the consistency of our execution.

In the next slides, I will focus on EBITDA after lease, equity free cash flow and leverage, outlining the key operational and financial drivers behind this performance.

Starting with EBITDA after lease, full year growth was fully in line with our guidance at both group and domestic level. In Italy, the year-on-year acceleration progressed as expected. The improvement was sorted by initial comparison base and by positive drivers materializing in Q4.

Notably, the full contribution from the back book price adjustments and the typical seasonality of the enterprise business. At group level, Italy and Brazil contributed almost heavily to EBITDA growth. Revenues accelerated at a faster pace than operating costs, resulting in operating leverage and a 1 percentage point margin expansion year-on-year.

On segment profitability, we are currently revising the cost allocation framework between TIM Consumer and TIM Enterprise to better reflect their economics. The objective is to provide a more precise representation of the underlying profitability of each business, even considering the mutual intercompany contribution.

Given that this work is ongoing and to avoid unnecessary comparability noise, we prefer to disclose segment profitability metrics based on the revised allocation framework at the upcoming Capital Market Day.

Cash generation in the year was robust and fully supportive of the reduction in net debt after lease. Equity free cash flow amounted to EUR 0.7 billion, materially above target. The outperformance was driven by 2 distinct components. First, the underlying core performance generated approximately EUR 0.55 billion, around 10% above target.

This was primarily supported by stronger operating free cash flow in line with the trajectory we had anticipated in previous earnings calls. Second, in addition, EUR 0.2 billion derived from nonrepeatable items. This included the early collection at year-end of certain public administration receivables originally due in 2026. This timing effect will reverse in 2026. The positive cash impact related to the stock split and stock grouping at TIM Brasil.

Turning to net debt after lease shown on the right-hand side of the slide, the reduction was in line if anything, slightly better than expected. The main drivers were 3, the first one. The stronger equity free cash flow just discussed. The second approximately EUR 0.1 billion cash proceeds from the divestment of 2 financial assets completed in Q4. Third, the distribution by TIM Brasil of earnings totaling BRL 2.2 billion in December 2025. This represented an advance of shareholder remuneration originally due in 2026 and resulted in an additional dividend leakage to TIM Brasil minorities of approximately EUR 0.1 billion. Overall, total dividend leakage to TIM Brasil minorities in 2025 amounted to EUR 0.3 billion. As a result, net debt after lease at year-end stood at EUR 6.9 billion with leverage at 1.86x fully consistent with our deleveraging path and capital structure objectives.

Turning to TIM Consumer. In the fourth quarter, total revenues and service revenue declined by 2.3%, primarily reflecting a lower contribution from wholesale. The MVNO business experienced volatility with Fastweb and CoopVoce exiting. Retail performance remained stable.

For the full year, total revenues amounted to EUR 6 billion, down 0.9% year-on-year, while service revenue were broadly stable, a meaningful outcome in a still competitive environment. A key driver of this stability was our repricing campaign.

In 2025, we implemented price increases across more than 8 million fixed and mobile consumer lines. The impact was visible across all KPIs. Wireline ARPU increased by 5.1% year-on-year. Mobile ARPU was up 0.4%. Churn remained firmly under control despite multiple pricing action over time. This performance confirms the effectiveness of our volume-to-value strategy launched in 2022.

Notably, similar pricing initiatives have recently been announced by other market players starting in 2026, reinforcing the sustainability of this approach. On the commercial front, wireline net adds improved in the full year with almost 25% fewer line losses compared to 2024, supported by the growing contribution of FTTH and 5G FWA. In mobile, net adds were broadly stable versus 2024. More importantly, number portability was neutral again in Q4, confirming the stabilization trend seen in previous quarters.

During the quarter, we disconnected approximately 400,000 SIMs that had been inactive for more than 12 months with no impact on ARPU or service revenues. Finally, on our customer platform, TIM Vision service revenue continued to grow steadily, up almost 5% year-on-year. With the recent addition of HBO Max and Paramount Plus, TIM Vision now represents the most comprehensive content aggregation platform in the Italian market.

The sustained top line momentum validates the strategic rationale of this positioning.

Turning to TIM Enterprise, Q4 marked the 14th consecutive quarter of growth, with both total and service revenue increasing at double-digit rate, confirming the structural momentum of the business.

For the full year, total revenues increased by 7% year-on-year to EUR 3.5 billion, while service revenue grew 9%, reflecting a favorable mix shift toward higher value-added services. Our strategic focus on ICT and digital platforms continues to deliver tangible results. Cloud was the clear growth engine, expanding by 24% year-on-year and representing more than 40% of TIM Enterprise service revenue in 2025. Connectivity evolved as expected, with a moderate overall decline.

Within the mix, fixed connectivity remains stable, while mobile was affected by phaseout of a large public administration contract that we consciously decided not to renew in line with our disciplined approach to margin protection and avoidance of low-return tenders.

Other IT services grew by 4%, supported by strong demand in cybersecurity and IoT. The integration of our infrastructure assets with advanced cloud, IoT and cybersecurity capability underpins TIM Enterprise competitive edge and market differentiation. Our ambition is clear: to leverage this foundation becomes Italy leading provider of sovereign digital services.

In this context, the National Strategic Hub stands as Europe's first concrete example of a sovereign cloud initiative. TIM Enterprise revenues generated within this framework have doubled over the past 12 months, giving us a structural head start in a strategically critical segment.

Moving to Brazil. Results once again confirm strong execution and disciplined management. The market remained healthy and rational and TIM Brasil continued to deliver profitable growth, reaffirming its position as the most efficient operator in the country. For the full year, top line growth was in the mid-single digits, driven by mobile service revenues.

Monetization of the customer base remains a key priority, supported by successful upselling from prepaid to postpaid, resulting in the highest ARPU in the market. Efficient operational execution drove high single-digit EBITDA after its growth and margin expansion. Operating expenses remain below inflation while EBITDA after lease up nearly 9% year-on-year. The combination of EBITDA after lease growth and disciplined CapEx translated into double-digit growth in cash generation. These results demonstrate that the operational discipline and value-oriented approach that have driven success in Brazil are the same principle guiding the transformation of our domestic business. Across both markets, the formula is consistent, focused efficiency and value creation and the results speak for themselves.

I will now hand over to Piergiorgio for a detailed review of the financial results.

Thank you, Pietro, and good morning, everyone. Let me start with a few comments on group CapEx and OpEx. Group OpEx rose modestly in 2025. Around 2/3 of the year-on-year growth was attributable to the domestic perimeter with the remaining 1/3 related to TIM Brasil, where cost growth remained well below inflation, confirming continued cost discipline.

In Italy, the slight increase in OpEx was primarily driven by revenue-related components, namely higher cost of goods sold linked to ICT revenue growth as well as higher G&A and labor cost. These effects were partially offset by lower industrial costs, including savings in network operations and energy.

OpEx related to FiberCop MSA reduced 11% year-on-year. Group CapEx declined 1.7% year-on-year to EUR 1.9 billion, with Brazil stable and Italy down 2.6%. CapEx intensity stood at around 14% of revenues. In Italy, about 25% of CapEx was customer-driven while 50% was allocated to infrastructure investment, including mobile network, IP backbone and data center, where we are expanding capacity to meet the surge in cloud demand.

In Italy, our transformation plan continues to enforce strict OpEx and CapEx discipline. As a reminder, progress is tracked against the inertial OpEx and CapEx trajectory that is the cost baseline we would have incurred without the plan. Domestic transformation plan delivered to EUR 266 million in cash cost reduction versus inertia plan achieving 130% of the full year target.

In previous earnings calls, we indicated that cash generation would accelerate in Q4 and that the group was on track to achieve and potentially exceed full year guidance. This is exactly what happened. Equity free cash flow came in materially above target, as already outlined by Pietro.

In addition, Q4 included some nonrepeatable items below the equity free cash flow line. As a result, group net debt after lease decreased by EUR 0.4 billion over the last 12 months from EUR 7.3 billion to EUR 6.9 billion. This slide summarizes the main moving parts.

Starting with equity free cash flow of EUR 0.7 billion resulting from EUR 2.0 billion of EBITDA after lease minus CapEx. This reported figures include the positive profit and loss impact of the concession fee and the negative profit and loss effect related to the reversal of wireline contract cost following the reassessment of deferral period implemented at year-end. I will address both items in the next slide.

EUR 0.7 billion net working capital absorption. This figure includes both the concession fee and the reversal of wireline contract cost, but with the opposite cash effect compared to the profit and loss, resulting in a neutral net cash impact.

Working capital also reflects cash out items such as preretirements and the final installment to DAZN. Excluding these extraordinary components, the change in underlying net working capital would have been broadly at breakeven. A detailed breakdown is provided in the annex.

Below equity free cash flow, the main items were EUR 0.3 billion of dividend leakage related to TIM Brasil minorities, EUR 0.1 billion for the buyback in Brazil, EUR 0.1 billion of cash proceeds from the disposal of 2 financial assets completed in Q4. The resulting net debt after lease at year-end stood at EUR 6.9 billion with a leverage at 1.86x.

Before moving to the 2026 update, I would like to address a few special topics that require attention. Please feel free to raise any clarification point during the Q&A session, should anything require further detail.

The first topic relates to the '98 concession fee. As you know, last December, the Italian Court of Cassation ruled in favor of TIM, bringing to a close of a more than 20-year legal dispute and triggering approximately EUR 1 billion not appealable compensation.

From an accounting perspective, this amount was recognized as other income within 2025 reported EBITDA. However, it was not reflected in the year-end net financial position. As previously communicated, in July, we anticipated the expected cash in through a factoring transaction. The related proceeds were temporarily recorded as financial debt and from an accounting standpoint with no impact on the net financial position.

This liability will unwind in 2026 upon receipt of the payment from the Italian Government. The 1998 concession fee leads to the next special topic on Slide 16. On the 28th of January, ordinary and savings shareholders approved the 2 key resolutions aimed at simplifying our capital structure and increasing strategic flexibility.

The first resolution concerning the reduction of share capital from almost EUR 12 billion to EUR 6 billion. This will not alter total value of net equity or economic substance. Rather, it will realign the equity structure and restore available reserve, thereby enhancing financial flexibility, including the potential for future shareholder remuneration. The figures shown in the slide refer to year-end 2024 and will be updated in March following the approval of the 2025 financial statement. The second resolution relates to the conversion of savings shares, a long anticipated step towards simplifying TIM capital structure.

Moving to a single class of shares will improve stock liquidity and index relevance while eliminating preferential rights attached to saving shares and fully align the interest of all shareholders. Going forward, TIM's capital structure will be leaner, more efficient and more remuneration supportive.

This slide outlines the time line for the conversion process. I will not go through each individual step. In summary, assuming no position from creditors to the share capital reduction, a scenario we do not expect, the conversion is anticipated to be completed by the end of May. The last special topic concerns the reassessment of the deferral period for the one-off cost related to wireline contracts introduced at year-end 2025.

Let me start with industrial rationale. Following the disposal of the wireline access network in 2024 and the progressive implementation of our customer platform strategy, our business model has evolved. Customers are no longer identified by a single fixed line but by a broader ecosystem of services, connectivity, entertainment, energy, insurance and more.

Consistently, our cost structure has shift from an infrastructure-based model to a more variable and service-driven structure. This new operating context require the reassessment of the deferral period of wireline one-off contract cost. There is no change for variable cost, which will be -- continue to be expensed in the profit and loss on an annual basis as long as the line remains active.

Starting the 1st of January 2026, one-off cost will be no longer deferred over 8 years previously aligned with the average customer useful life, but over 4 years, reflecting the economic payback period. These one-off costs mainly include the subscriber acquisition and provisioning costs incurred at contract inception. Most importantly, this accounting change has no cash impact. The cash out associated with this cost is and will continue to be fully recognized in the year of activation.

With the adoption of the revised deferral period, we aligned the previously deferred cost to the new 4-year amortization period. This led to a nonrecurring charge of approximately EUR 0.6 billion recognized in 2025 reported EBITDA.

Starting from the 1st of January 2026, one-off activation cost will be amortized over 4 years with 1/4 of the amount recognized in the profit and loss each year. Overall, the net impact on EBITDA is expected to be broadly neutral over time. The initial headwind resulting from the shorter amortization period of new activation will be offset by the tailwind from lower residual deferred costs still to be released to the profit and loss. As I want to reiterate, this reassessment as 0 cash impact.

Its rational is industrial and economic. Future efficiency in one-off cost will be reflected more rapidly in the profit and loss, improving the alignment between EBITDA performance and cash generation and enhancing the transparency of underlying profitability. A simplified illustrative example of new versus old treatment is provided in the annex.

Before moving to the 2026 update, let me briefly recap the key messages on these special topics. The 1998 concession fee enhances our financial flexibility. In the short term, it will support the financing of the savings shares conversion. The positive impact on the net financial position will materialize in 2026 upon cash received.

The new capital structure will be leaner, more efficient and better positioned to support shareholder remuneration, thanks to the restoration of the distributable reserve. The conversion to a single class of shares will eliminate preferential rights, fully aligned shareholder interest, improved stock liquidity and increased index relevance.

The revised deferral period of wireline contract one-off cost has no cash impact and will improve the alignment between EBITDA and cash generation, increasing transparency on underlying profitability. One additional update yesterday, the Board of Directors approved a 10-for-1 reverse stock split. Subject to approval at the shareholders' meeting to be held on April 15, this measure is expected to reduce share price volatility and broaden the potential investor base.

With that, I hand back to Pietro for the 2026 update.

Thank you, Piergiorgio. Before we move into 2026 outlook in detail, let me reiterate the key points. The strategic framework presented last year is fully confirmed. You will see some refinements in business assumptions, but the direction of the travel remains unchanged.

To ensure full clarity, these slides summarize the main assumption underpinning our 2026 guidance. Starting with Italy. Equity free cash flow will include around EUR 1 billion related to the concession fee with a corresponding reduction in year-end net debt. We are assuming no material contribution from Poste synergies in 2026. I will elaborate further on this on Slide 26.

The MVNO segment will remain somewhat volatile during the year. PosteMobile will progressively migrate inbound, reaching full contribution in Q4, while Fastweb and CoopVoce will complete their outbound migration in the first half. No material impact is assumed from the RAN sharing agreement with Fastweb and Vodafone, subject to expected approval by the National Regulatory Authority. Value of services provided to FiberCop will progressively scale down during 2026. Our guidance assumes 0 contribution from the NetCo earnout.

We assume completion of the Sparkle disposal in Q2, reflecting timing in the authorization process. We are not concerned. This is merely a matter of time. In terms of shareholder remuneration, our assumptions are: a cash-out of approximately EUR 0.7 billion in May representing the cash component of the savings share conversion. The declaration of a dividend of approximately EUR 0.5 billion for fiscal year 2026 payable in 2027.

The launch of a share buyback after Sparkle disposal closing for an amount equal to 50% of the transaction proceeds.

Turning to Brazil. We assume cash-out of approximately EUR 0.2 billion related to the acquisition of the remaining 51% stake in I-Systems. On shareholder remuneration, TIM Brasil has maintained a trajectory of sequential improvements. Let's now review the priorities for our 3 entities. For each, the strategic focus outlined last year remains confirmed.

TIM Consumer, we expect a stable retail top line and the reduction in MVNO as previously explained. Profitability will be supported by disciplined cost control. CapEx will remain focused on 5G deployment and the customer platform. TIM Enterprise. Growth above market is expected to continue. Our priorities include further margin improvement through cost efficiency and optimize mix versus by mix.

Investments will focus on data center and AI capabilities progressively position TIM Enterprise as the Italian champion in sovereign cloud. TIM Brasil, the focus is on delivering EBITDA growth above inflation. Will still strengthen the mobile value proposition, deploy targeted offers and expand ancillary revenues while maintaining selective broadband investment and accelerating B2B connectivity, IoT and ICT services.

Across the group, our ESG agenda remains a structural pillar of long-term value creation, fully embedded in our industrial strategy rather than treated as a parallel initiative. In 2026, we will focus on 3 clear priorities. First, on the environmental front, we'll present our environmental transition plan setting up a structural pathway to decarbonization with defined milestone and accountability. At the same time, we will address execution challenge, increasing transparency and control over remission that historically sit outside direct telco boundaries, particularly Scope 3 and supply-related emission by strengthening tracking engagement and governance mechanisms across the value chain.

Second, on the social dimension, we'll continue to advance gender balance across all levels of the organization. Our objective is not incremental improvement, but measurable progress in leadership and critical roles, reflecting a deeper and lasting culture shift.

And finally, on governance. In strong alignment with TIM Enterprise's strategic positioning, we will reinforce our commitment to digital sovereignty. This means enhancing secure, resilient and trusted digital infrastructure and services, contributing to a more robust and strategically autonomous digital ecosystem.

Let me now turn to one of the most important structural shift shaping our industry. The evolution from cloud adoption to cloud governance. For years, cloud was primarily about efficiency, about scale, speed and cost optimization. Enterprises migrated workloads to global hyperscaler to gain flexibility and reduce infrastructure complexity.

Adoption saw the scale challenge. Today, the conversation has fundamental change. Cloud is no longer just about computing power. It is about control, control over data, operation and technology. We are witnessing a clear transition from the old model '21. Previously, business drivers were scale and speed. Today, they are controlling resilience.

Customer priorities are shifting from pure cost efficiency to risk mitigation. Architecture are moving from global centralized hyperscale model to jurisdiction aware distributed designs. Most importantly, companies and public administrations are rethinking control over their data, moving from vendor concentration toward multilayer sovereignty.

In short, adoption solved scale. Governance now addresses risk. This shift is particularly relevant in Europe and in regulated industries, including public administration, finance, health care, and critical infrastructure, where data sovereignty, compliance and operational resilience are strategic imperatives. This is exactly where TIM is uniquely positioned. We are not just a connectivity provider. We operate critical national infrastructure, understand regulatory framework, manage secure network at scale and already serve the most sensitive segments of the economy by leveraging our existing sovereign infrastructure, combining secure data -- secure data center, advanced cloud capabilities, edge computing and trusted partnership we are building a compelling sovereign cloud proposition. And this is not theoretical.

It is already translating into commercial momentum and long-term contracts, strengthening the quality and resilience of our revenue base.

Let me briefly highlight another structural shift shaping our performance and future growth, the move from volume-based to value-based connectivity. In the past, the industry competed mainly on price per gigabyte. Network were largely best effort and demand was driven primarily by video and social media. In that context, connectivity risk becoming a commodity. Today, the paradigm is shifting. Latency, symmetry, resilience and reliability are now critical.

Both consumers and enterprises increasingly demand guaranteed performance not just data volume. We are moving from price per gigabyte to price per call for quality. Application as cloud gaming, 4K live streaming, smart home security, industrial IoT, edge computing and AI workloads all require ultra low latency, jitter control, stronger uplink capacity and built-in redundancy.

Performance metrics now define value. This shift plays directly to our strengths. Investment in 5G stand-alone and network modernization are enabling ultra-high-performance connectivity, allowing us to differentiate introduced premium proposition and improve monetization. For enterprise customer, in particular, connectivity is becoming mission-critical infrastructure, supporting longer contracts, higher quality revenues and stronger margin. We are not talking about the access. We are talking about the backbone, the electronic in our network.

In 2025, we continue to enhance network quality and expand coverage, reinforcing our positioning in other segments. This message is simple. As connectivity becomes strategic, value creation increases, our high-performance network and backbone is a key enabler of sustainable growth going forward.

Before moving to the guidance, let's briefly review the strategic partnership we're developing with Poste. Conceptually, the expected synergy can be grouped into 3 main areas. MVNO contract at the full run rate, this is expected to generate high-margin revenues of approximately EUR 100 million per year, representing a clear derisking of the business plan.

TIM Consumer and TIM Enterprise initiatives, several projects are already underway with others to be launched shortly. We expect a positive impact on EBITDA after lease of approximately EUR 50 million per year at full run rate. Additional transformation project, these initiatives are still under evaluation. They have significant potential, but we need time to finalize them. We will provide further details at the upcoming Capital Market Day.

Now I leave the stage to Alberto Griselli, Chief Executive Officer of TIM Brasil to talk about the Brazilian guidance for 2026.

Thank you, Pietro. Good morning, everyone. I'm Alberto Griselli, CEO of TIM Brasil. Pietro has just outlined our results. We delivered a strong quarter and closed year with solid performance, reflecting consistent execution and discipline across the business. Importantly, 2025 marked a key milestone for TIM Brasil. Our return on invested capital exceeded the consensus cost of capital, confirming that our strategy is translating into tangible value creation.

As we move into 2026, our direction is clear. We continue to focus on value creation across mobile, B2B and broadband supported by 3 company-wide enablers, artificial intelligence, efficiency and ESG. TIM Mobile profitability remains the priority, supported by a customer-first approach. In B2B, our increasingly scalable portfolio positions us well to capture new growth opportunities. In broadband, we entered the year with a more efficient operating model and a portfolio line with disciplined expansion.

Across the company, artificial intelligence is becoming a core lever to improve productivity and decision-making, while efficiency and capital discipline remains central to protecting margins and cash generation. This brings us to our guidance, which reflects continuity and discipline.

Service revenues are expected to grow in real terms, supported by resilient mobile performance, a recovery in fixed and redevelopment of new revenue streams. EBITDA is expected to grow faster than revenues with margin expansion driven by OpEx efficiency, digitalization and the progressive materialization of artificial intelligence-related gains.

Investments will remain disciplined, guided by an efficient capital allocation framework, focused on network quality and technological evolution. We will continue to strengthen our revenue to cash conversion through a holistic approach to operational efficiency. Finally, taken together, these elements support a faster expansion of shareholder returns fully aligned with cash flow growth. Back to you, Pietro.

Thanks, Alberto. Let me walk you through our 2026 guidance at group and domestic level. Group total revenues are expected to grow by 2%, 3% with domestic growth in the range of 1% to 2%. Group EBITDA after lease is expected to increase between 5% and 6% with domestic growing at around 4%.

As already mentioned, domestic revenue and EBITDA trends incorporate the temporary volatility in the MVNO segment. PosteMobile will progressively reach full run rate during 2026, becoming a structural tailwind from 2027 onwards. CapEx on revenue is expected to remain below 14% at group level and around 12% for domestic, confirming our disciplined investment framework.

In terms of cash generation, we expect equity free cash flow after lease of around EUR 1.8 billion, excluding the net cash in from the concession fee, which will contribute below EUR 1 billion post tax and taking into account reversal of public administration invoices anticipated in Q4 2025, we are confirming the EUR 0.9 billion target announced last year despite the weaker foreign exchange rate. Leverage will remain below the maximum threshold of 1.7x that we committed to last year. I will provide further detail on this in the next slide.

Turning to shareholder remuneration for fiscal year 2026, we envisage 3 components: a dividend of approximately EUR 0.5 billion corresponding to 70% of equity free cash flow after lease, net of concession fee and dividend to TIM Brasil minorities. The payment will occur in 2027. A share buyback equal to 50% of the proceeds from the Sparkle disposal to be launched following completion of the transaction.

A cash payment of up to EUR 0.7 billion to current savings shareholders in connection with the share conversion with completion expected by the end of May.

Let's now take a final look at 2026 cash dynamics. There will be 3 main sources of cash. Equity free cash flow after lease, the cash related to the 1998 concession fee, proceeds from the Sparkle disposal. After distributing dividend to TIM Brasil minorities and executing the share buyback in Italy, part of this financial flexibility will be allocated to finance the cash component of the savings share conversion and the acquisition of a 51% stake of I-Systems in Brazil.

The 2026 year-end net debt will remain below 1.7x, a level we consider optimal for our capital structure and one that positions TIM in a best-in-class peer comparison. Additional financial flexibility may be deployed to accelerate both organic and inorganic growth.

On the ESG, this slide shows a very clear progression, strong execution against our 2025 targets and a more focused agenda for 2026. On the environmental side, we have reached 100% green energy, a significant operational milestone supporting our decarbonization pathway. In parallel, we are strengthening Scope 2 measurement capabilities laying the groundwork for a more structural rollout in 2026. On social dimension, progress is tangible. Women has reached 52.3% our target trajectory and women in leadership position increased to 33.5%, moving steadily toward our 2027 objectives. In 2026, the focus remains on sustaining this momentum both in hiring and in leadership representation.

On governance and digital transformation, Italy is delivering high operational targets, advanced digital solutions grew by 22%, exceeding the 17% target for 2025. One, digital identity services reached 34% outperforming expectations. In 2026, we aim to scale the public administration governance platform with more than 30% new customer versus full year 2025 activation, and to expand sovereign services with around 20% year-on-year growth in commercialized services.

In Brazil, we continue to invest in people and capabilities. We have already upskilled 60% of the workforce in digital competencies and plan to train at, at least 20% more employees in 2026 compared with 2025 levels.

Overall, execution remains disciplined and measurable with clear operational milestones supporting our broader ESG framework.

Let's now move to the closing remarks to wrap up. Looking back and considering TIM's reputation in the financial community in past year, it is noteworthy that we have achieved our targets for 4 consecutive years. I want to emphasize again that the new governance has brought greater stability and full support to the group strategy, enabling planning with much higher visibility than before.

The near-term outlook is clear. The 2026 trajectory is solid and fully aligned with the guidance we announced 1 year ago. Execution will continue with consistency and discipline. Guidance is confirmed. Looking beyond 2026, the best is yet to come. Details will be shared at our upcoming Capital Market Day.

With that, we are ready to take your questions after some few seconds of rest.

[Operator Instructions] The first question is from David Wright at Bank of America.

I hope you can hear me well. So I just need a little bit of help with the numbers. You talked about the exit of MVNOs, including Fastweb and then the onboarding of Poste. So I just wondered how much in euro terms of revenue are we losing in 2026 from the exiting MVNOs, how much are we gaining from Poste? I think you suggested full run rate in Q4, but if you could just balance those numbers for us a little. And I guess that's suggesting some weaker H1, stronger H2 phasing in the domestic run rate. That's question 1.

And then question 2 on the Enterprise business. The prepayment of revenues that came in, in Q4, it looks to me that's give or take sort of EUR 100 million of revenues. Is that right? And should we then expect full year '26 growth to be equally weaker? So again, we're going to get 6% '24, 9% '25. Are we going to go back down to sort of 3% levels in 2026 before we normalize again in '27. So I'm just trying to understand the phasing a little and any numbers you can give me on that would be super useful. Sorry for being a bit more technical.

Thank you, David. I think that you want me to explain what we should stated during the call because exactly what we'll have is that we'll have a weaker first half 2026 compared to the first half of 2025 and a stronger second half 2026 compared to the second half 2025. Why that?

If we look also in the Excel number that we shared with all of you, the first quarter 2025 was the highest one in terms of MVNO revenues. Then it was shading through all the 2025 and this is something quite normal. The PosteMobile phasing we started at the beginning of the second quarter 2026 and we reach a regime situation in the third quarter 2026. What it will mean?

And so it's very important to say to everybody that you will see a weak EBITDA in the first half 2026 compared to the previous year. Just for this movement, no panic, no hurry. It's a normal trend of the revenues. At the same time, you will see a first quarter of 2027, stronger in terms of comparison year-over-year because you will have in the first quarter 2027, a complete amount of the MVNO of Poste.

So everything was under control. And these are the dynamics of this component. And this explain also reading also some of the comments, a weaker EBITDA growth year-over-year at 4%, but this was mainly related to the delay of the, let me say, phase in, phase out between the MVNO contract. Overall, what is -- we're talking about a contract that is closed between EUR 80 million and EUR 100 million on a yearly basis. I hope that on this point is more clear now before to move to the second question. Is it?

Yes. That's cool.

But again, I want to stress that we want to be a transplant company or better, as you mentioned in one of your report, a more normal company, no surprise, the first quarter, the EBITDA will be weaker not because we are stupid. And the first quarter 2027 will be better, not because we are superman. Then when we move to Enterprise, what we are mentioning that is a prepayment has no impact on the competence and so on the revenue year-over-year, on the EBITDA year-over-year because it's an anticipation of payment and it allow us to explain also the trend of the equity free cash flow. We are closing better the 2025.

It's important to highlight that is not a lottery ticket, the better result of 2025 because also if we have some nonrecurring activity. I have to remember to everybody that it's quite normal that the company has a guidance and an internal budget. In TIM, I'm used to give to my team a budget and the target that is higher than the guidance because we want to put the market on a safe side without surprise.

So this result of 2025 is the result of the activity of the TIM. Then when we compare the result of 2025 towards the guidance of 2026. What's happened? In 2026, we are putting EUR 1.8 billion. Of this EUR 1.8 billion, around EUR 950 million is related to the [indiscernible] the concession fee. So it remains EUR 850 million. Our previous guidance was EUR 900 million, but we will have in the first quarter of 2026, the reverse of the anticipation that we had in the last quarter of 2025 by the public administration.

And in the meantime, if you look at the currency rate that we are using for our plan 2026 is worse than the 2025 assumption. It means that if we should compare on an equal basis, the real -- or let me say, the organic equity free cash flow -- equity free cash flow number in absolute value for 2026 should have been EUR 950 million. So in some way, is as we are declaring that we are upgrading the fact our guidance, absorbing these 2 movements. Is it more clear now, David?

Yes. Yes. That's super.

The next question is from Mathieu Robilliard of Barclays.

Hopefully, you can hear me well. I had a question first on the front book back book. I mean you've done quite a bit of price increases on fixed and mobile throughout 2025. It has had no impact, no visible impact on churn. So I guess this is probably or possibly because of the front book and back book gap continues to be quite reduced. If you can give us a bit of color into that, that would be helpful.

The second question was about NSH. So very strong growth between '24 and '25. Should we assume that this type of growth -- this magnitude of growth can continue in '26? And lastly, I mean, you're starting to have a rich company problem with leverage coming now with leverage coming down a lot in 2025, and we fast forward to 2026, it's going to be extremely low. So how should we think about capital allocation? Of course, you reinstated the dividends. But even with that, it seems you have a lot of flexibility or will have a lot of flexibility.

Okay. Thank you, Mathieu. I will leave Andrea to answer to the first question to give some more colors. But what is important that today, we are performing very well compensating the line erosion with the price. But as we put in the presentation, we think that the next challenge for all the telco in Europe in the following years will be the market consolidation and in some way, I'm answering also to last your question, we must be ready to be part of this process.

And the second to be able to ask for a premium for the better quality of our services. I want to highlight this point. This is not something that will happen in 2026. But if you look at 2027, 2028, the quality of the network will become key for the end user services. You will need more latency, you will need more uplink, but you need also a much better backbone. And we are the player in Italy today that is positioned in the best way to try to exploit this opportunity. But I leave to Andrea to give more color.

Thank you, Pietro. Thank you, Mathieu. You're right. We did quite a lot of work on the back book price up, especially during '25, we said several times that we had an impact of around EUR 100 million from the back book price up. The impact on churn was actually compensated by several items, meaning that we worked on convergence. We worked on the diffusion of TIM Vision. The TIM Vision-based increased quite a bit and this contributed to somehow stabilize the impact of price up on back book that is inherently generating some impact of churn.

The most important thing is also to notice that as regards the front book trend, we see some positive evidence from the market. So after the merger between Vodafone and Fastweb, we actually see some rationality in pricing. And we see along the second half of the year also some action on back book price up. So this is a positive outcome. The other thing is on mobile, we do see a reduction of the rotational churn in the market. And this is contributing to stabilize the churn effect. Meaning that as we said several times, the impact of Iliad in the market is decreasing and the impact of Fastweb that was acting like a disruptor until 2020, 2024 has come down. Therefore, this contributes to create a positive scenario for the stabilization of the churn effect.

About the second question, I'll leave Elio to give you some more details.

So sorry for my voice. I hope you can you hear me?

Yes.

Okay. Good. So we don't see any discontinuity in revenue generation. Actually, we feel very positive about 2026. Just to let you understand why we registered this 9%. Actually, we have a lot of seasonality in quarter 4, as we told you many times. And what happens here is that we got an extraordinary quarter 4 because, let's say, if we compare quarter 4 '25 versus '24 is EUR 144 million higher. And in the year -- in the previous year was only -- the difference was only EUR 56 million and when we look at the difference between quarter 3 and quarter 4, in 2024. It was EUR 180 million. In 2025 was EUR 310 million. But just to let you feel good about our revenue forecast for 2026. We got backlog at a level of EUR 4.2 billion of revenues that we have already secured for the years going forward.

And in 2026, the fraction of this backlog, which represents revenues already secured is above 60%. So we don't see the trajectory of our revenues to go down for no reasons.

Mathieu, and now I will take the third one. First of all, again, we are really [indiscernible] because if you look at our presentation of the last year in our Capital Market Day, we're already showing that after the cash-in of the concession fee, we should have reached a level of leverage where our target should have been 1.7 as rational, and the remaining part should be financial flexibility.

We are reaching this target in advance compared to the previous plan. And it will help us in terms of capital allocation, then I will leave to Piergiorgio to elaborate more on that, to work on the possibility that could arrive to be part of a potential market consolidation because I continue to bet on the fact that it will happen, and I completely subscribe the position of Mario Draghi at the European level, something that was also subscribed by the GSMA.

We must try and the time is now to catch the opportunity of the sovereign cloud and digital sovereignty. This is not an Italian clean. It's an European point on which everybody are putting pressure and to be a company, a team that now is considered a national champion for us it will be much easier to do that. And then there's a matter of capital allocation also on the internal project. But I'll leave to Piergiorgio to give some more colors on that.

Thanks, Pietro. Good morning to everyone. The point of the capital allocation, as you can imagine, is a crucial point that we are analyzing and working on since the -- since a few months. I would say first comment, we have already decided to execute certain transaction considering the capital allocation that has been available, thanks to the concession and to the potential sale of Sparkle. So I would say first answer to your question, Mathieu is that the acquisition in Brazil of IHS in the region of EUR 200 million plus the savings share conversion and the shareholder moderation that we are already envisaging in our current guidance is already a first answer to your point on how we look at the capital allocation in the future.

Of course, we consider dividend distribution in terms of a sustainable remuneration to the shareholder, while having or limiting buyback to certain extraordinary items in order to have, let's say, a shareholder remuneration based on the recurring profitability through dividend.

In terms of, let's say, more in general on capital allocation, I would say that we have started a work and allocating EUR 200 million of CapEx in 2026, included in our guidance in order to execute a certain transformation project, and I don't know, just to make simple example, back office automation in customer care or reduction of legacy services or platform decommissioning and supplier consolidation, digitalization of procurement.

And I mean, it could be as long as you want. But as you can imagine, with -- in this moment, there are several opportunities that we can work on. And this is the first time that the company is allocating, let's say, an important amount of money dedicated to those projects. Of course, this will have a limited impact in 2026 and it will be much more evident in 2027 and so on, but this will be more part of the presentation that we will have in the Capital Market Day already with the initial results of these projects.

The idea is I just want to anticipate one point, which is crucial. The idea is to consider, let's say, much more the profitability of Telecom Italia and the domestic business, particularly based on the cash EBIT result, let's say, net operating profit after tax compared to the cost of capital in order to identify clearly the legacy that we have in our net invested capital and clearly present to you a set of KPIs where we'll be managing and switching off all these legacy.

So this is a journey that we have started, and I think it's part of our transformation effort that we are already launching.

If I can follow up, maybe Pietro, you talked about consolidation. How could that be source of capital allocation from your point of view? It doesn't seem in Italy, you would be involved in something major, but maybe I'm wrong. Are you talking maybe about small adjusted businesses in Italy?

But about market consolidation, I don't want to speculate it on that, but the number of all the players are quite clear. So if you want to be sustainable in the market, in the medium, long run, you must look for market consolidation because there will be an optimization at network level, at all the different cost level and you could have also a more rational approach.

But I'm not saying something that is different from what you are experiencing in France, in Spain, what's happened in U.K. Europe is in the same situation. The only way to recover in terms of profitability is the market consolidation where market consolidation doesn't mean price increase, but a much better level of efficiency at all the levels. The second that is not related to the market consolidation is. Are you using AI? Well, if you are using AI, you will need a higher level of latency.

If you want to be in a stadium and been able to do something on your mobile while you have a crowded stadium with 70,000 spectators you have to pay for a premium. Just to give you an idea, we put as first chart. The first chart was the Milano Cortina sponsorship that we did. We were able to put in the hands of all the different spectators, but also all the athletes, mobile lens that we're able to navigate and serve and experience a very good network quality because of our network.

I think that this is the trend. Then we are always open to look at all the opportunity that generate value. And for us, value as Piergiorgio was explaining, is not growth on EBITDA, but cash generation because this is the main driver. I hope that was clear, Mathieu?

The next question is from Ajay Soni at JPM.

Hope you can hear me. I've just got a couple. First is on Poste synergies of EUR 50 million. So what are your time lines on this? And any costs that will be incurred to deliver these synergies? You mentioned the MSA OpEx accounts for 22% of your domestic OpEx, and that's reduced 11%. So is this just due to fewer lines? What are the moving parts here? And what are your expectations for this cost line into '26 and '27?

Thank you. About if I catch in the right way your first question is related to the synergy with Poste, if I'm not wrong. In such a case, what we show is mainly procurement synergy that will enter in 2027 and will be a regime in 2028, just because being procurement synergy, you must wait that the previous contract will end to do some joint activity or some contract, but we are working on further other activities. Some of them are transformation that we'll disclose in the second half.

About the MSA OpEx. The optimization of the MSA is not only related to the fact that you will have a reduction of the line because this is a variable component. For sure, I would like to not do a kind of saving on the cost line because they will keep for me the customer. But there are other areas, for example, we have to choose between FWA, FTTH, FTTC and the level price of each of this technology is different. With different level of CapEx, margin and cash generation. So be very clever in managing that is an opportunity.

Then in the meantime, we have also some part of the MSA that is related to the use of some services. And we are optimizing. This is not a 1-year work because you have to remember to everybody that by 2029, there will be a good part of the MSA that will completely expire, and we will have to decide if we have to renegotiate or not.

In such -- in this case, we have to highlight that we are also working on the use of AI because of some of this activity. AI could substitute that kind of activity. So it's difficult to say. Stay tuned until then to see some transformation. But it's important to show to everybody that we're a company that is not working anymore. Just for the next quarter, but for the financial sustainability of the company in the medium, long run.

Follow-up. So then it's reduced 11% this year or 2025. What are you expecting for '26 and if you have numbers for '27, that would be great.

We have in our number, a reduction of the cost that is related to 2 components, as I was mentioning to you. The one is a volume-driven approach. If we will lose further line, we'll have that. And another part that is an optimization. But in any case, I cannot disclose the number, but there will be a reduction also 2026 on 2025 and also 2027 on 2026 on the MSA cost.

The next question is from Joshua Mills at Exane.

Hopefully, you can hear me now. Sorry about that. Two questions from my side. One is just on the FY '27 numbers. So I know that you're not reiterating the free cash flow guidance today and you're waiting for the Capital Markets Day in the second half to give more detail. But just if we think about the building blocks you've laid out for 2026 and what looks to be an implied uplift to the free cash flow guidance this year when you adjust for the pull forward of the nonrepeating items. Are there any headwinds that we should think about or potential challenges yes, headwinds to free cash flow in '27 that might negatively affect the EUR 1.1 billion number that was put out previously? But am I right to infer that as you walked through this presentation and talking about opportunities and cost savings, et cetera, that the risk is probably to the upside on the EUR 1.1 billion. That's the first question.

And then secondly, I wanted to get a sense of how you're thinking about the RAN sharing deal with Swisscom. I note that in the presentation, you're referring to potential cost savings, but do you also expect there to be a network impact and improvement in network quality? And if so, how meaningful do you think that might be in the medium term?

Okay. About the first question, we don't see any kind of risk or headwind for the 2027. We delivered a better result for 2025. We are confirming the result for 2026. And so we will continue with the same path that we told also the previous year for 2027. So we don't see any risk or headwind. Related to the RAN sharing, as we told to the market about the JV, the joint venture with Vodafone Fastweb, we were saying that we see that result of the activity we started to be exploited ahead in the -- if I'm not wrong, 2029, we'll start to see some savings for the JV about that.

And in our number, what is happening is that we are considering the actual CapEx, also part of the CapEx to start that activity. So in some way, what is happening is that we are doing better than what was forecasted because in the previous plan, it was not included. Now if Elio elaborate -- want to elaborate some more on that.

Sure. Thank you, Pietro. Yes, we are expecting the approval from the AGCom that is the authority. And we start this year, this RAN sharing agreement. At the beginning, we have to invest to consolidate the network. And we expect, as Pietro mentioned, to have the running cost saving in 2029, but we started to see some results already in 2027, 2028 else longer we proceed with this kind of agreement. Remember that we are talking about to have a JV that every company will keep the asset along and we will share the energy cost and the investment for the 5G. So when you're talking about the benefits, we will be cost saving, but our CapEx avoidance as well.

But Joshua, what is important is that respecting the previous guidance when the JV was not planned, we are maintaining the same level of CapEx absorbing in that level of CapEx, the investment needed to pursue the saving that we will have from the JV. Is it clear?

Yes. Great.

The next question is from Domenico Ghilotti at Equita.

Can you hear me?

Yes.

Okay, fine. So a few questions. The first is on Sparkle. We have seen another delay. So just to get your comments, your color on what's going on there. And if you can confirm the expected proceeds that were around EUR 700 million. Second is on the decision to use the buyback as a shareholder remuneration for '26 instead of a dividend distribution based on the Sparkle proceeds. If you can elaborate on this decision given the strong rally maybe it was more interesting to give a buyback dividend. And third, on the price hikes, I wanted to know if you are planning for additional price hikes on the back book also for 2026?

Thank you, Domenico. About Sparkle, we are -- what is happening is that we are waiting for the approval mainly in 2 countries. European Union and U.S. In the U.S., there's a delay because several shutdowns that happened in the public administration in the U.S. delayed the process. At European level, we are confident that we will receive the approval by the end of April. So we are quite optimistic. What was happening that we gave a first request, then we change some of the details and we answer to the question of the European Union.

And so now we are waiting to deliver the final notification but the process is under control. About the price, as we mentioned, we think that the cash in, but we have to wait the closing of everything should be in the -- around EUR 700 million, as we always stated. Then about the buyback. So let's remember that today, and then I will leave to Piergiorgio, if you want to elaborate more on that.

Something that is related to an extraordinary activity that is the sale of Sparkle and something that is related to the natural and normal cash generation of the company. We gave a dividend policy for what is the normal cash generation of the company with the guidance that is exactly the one that we gave last year, 70% of the equity free cash flow. Instead, about the Sparkle sale, what is happening that as Piergiorgio is teaching me every day that we have to work on the capital allocation, what is better today in terms of capital allocation to buy our stake, our stake where you have to consider that we are still below the multiple of EBITDA of our peers.

We still have to show the potential synergy coming from Poste. All the market is betting on the fact that there will be a market consolidation. So in such a case, I have a rational approach to divide it by 2, the shareholder remuneration, the one that is related to the traditional flow of cash that give you a dividend policy. And the use of buyback, we think that is the best way to do the interest of all the shareholders and of the company. And about -- if Piergiorgio has nothing to say, I will leave to Andrea to talk about price hike.

Thank you, Pietro. Very quickly, Domenico. We plan to continue the price hikes. We -- as I said in the previous answer, we see an opportunity in the market, and we actually see also a positive trend that also some other operators are coming along on the back book price up. So we see an opportunity and the amount of price hikes will be broadly similar to the one in 2025. The phasing will be slightly different in the quarter. But the overall impact in here will be broadly the same.

The next question is from James Ratzer at New Street.

Hopefully you can hear me okay?

Yes, perfectly.

Great. Yes, Pietro, I have 2 please. So the first one was sorry to come back to just your guidance, which I'm pretty sure you're reiterating. But the EBITDA in 2025 was plus 4% in the domestic business. You're guiding for around 4% for 2026. So to get to the bottom of your range for EBITDA growth to 2027 at 5% to 6%, that would imply that your EBITDA growth in 2027 needs to reaccelerate back up to 6% or more. Is that what you are kind of implying with the comments today?

And then the second question was just coming back to the point that was just discussed about price hikes. You've been able to increase pricing and ARPU during a period where FiberCop's prices to you have largely been unchanged, and that's allowed you to expand your margins. I think the new AGCom rulings will allow FiberCop now to increase their wholesale pricing, which I understand that they plan to do. So does that mean you now need to raise pricing at an even faster level? Or does this imply that your margins could start to get squeezed a little bit?

Thank you, James. About the first question, you are completely right. We'll have an acceleration in 2027, but it's not just an Excel exercise. If you remember at the beginning of the call, I explained that in 2026, we'll have a first quarter in which we will have the lack of part of the revenues and EBITDA coming from the MVNO. So mathematically, when in the first quarter 2027, I will have the overall Poste MVNO, you will have an increase of EBITDA in 2027 compared to 2026.

We are talking about something close to EUR 30 million. I have to remember to everybody that today in the number of team, 1 percentage point of EBITDA means EUR 20 million of EBITDA. So just to give you a rough number, exactly the math is right, 5% in 2025, 4% in 2026 and 6% in 2027, roughly.

About the price hikes. Once FiberCop, we start to increase the price and then we have to talk about our MSA with FiberCop that allowed to keep some price flat. What will happen that everybody will receive this price increase. So my question is in front of this price increase, I will react the energy player that are the most aggressive one in the market today. Can they subsidize in the telco with the energy, the telco business, I think that this is something very interesting that will put in the market more rationality.

But we have the MSA with for certain components the price are already defined, the MSA was approved. And then for the rest, the increase of price will be for everybody. So let me say, more aggressive players, I will react to that kind of price increase. I look at that not as a threat, but an opportunity to have a more regional market. But I leave to Andrea that is responsible for that number to answer on that.

Thank you, Pietro. So in terms of the trend we see, our ARPU scale up is due to several factors, not only price hikes. Notably, we have done upselling, cross-selling action and also the TIM Vision business has contributed quite a bit. So we see an opportunity to increase revenues not only due to price hikes. As Pietro said, we do believe that the possible price increase on FiberCop and fiber in general may bring some rationality in the players. So we see an opportunity on the front book pricing trend in the market. Also, we reinforced with market consolidation, but also before market consolidation, probably some rationality may arise. I hope that's clarified.

The next question is from Giorgio Tavolini at Intermonte.

I have 3 questions from my side. The first one is on the renewal of the spectrum licensing expiring in 2029. When should we expect greater clarity on the next steps? The second one is on the cash financial charges in your free cash flow below EUR 600 million. I was wondering if there was any one-off and what is the trajectory for 2026? And the third question is on AI adoption. I guess it may create opportunity for further acceleration of your transformational plan. But at the same time, I was wondering if you see any AI disruption risk, for example, potential disintermediation in certain processes related to TIM Enterprise. For example, the consultancy activities following an increase in sourcing by clients.

So Giorgio, about renewal, our expectation and our hope is that by the beginning of the second half, we will have some more clarity. About the second question, I will leave to Piergiorgio to give you some more details. About the third one before to leave to Elio, it's important to understand that today is not only a matter of the use of AI to sell in the market. But AI could be also a further accelerator of efficiency inside of our company.

Because what is happening today is that, for example, for a company like our that for historical reason has legacies, you are not obliged today to move to new system, but you can use AI to have what they call, I don't want to see and polite, digital sleeve to facilitate some activity that until today will be expensive, timely and needed for a lot of human being be done for a very cheap cost by some AI. And it will be one of the points on which we'll bet for our transformation improvement. Then about the enterprise impact I leave to Elio to give you more color and then Piergiorgio will answer on the cash financial charges.

Thanks, Pietro. Thanks Giorgio, for the question. So we see this as a very interesting opportunities instead because as you probably know, we buy from the market about 2 billion services and products. So actually, the more AI will penetrate the market, the less we believe we will pay for the services that we are currently buying.

So let's say, on the consultancy spectrum, we are on the good side of the equation because we buy services. And so if AI will generate efficiency on that side, we will benefit from that process. More in general, we believe that for adoption of the new technology, which will cost a lot of money, you need to have a very large shoulder has it happens to TIM Enterprise. And so we believe that we will be a main actor in that space. We look at this with 2 different lens. One is how much efficiency we can generate by adopting those technologies.

On the other side, how much we can contribute to large enterprise and public administration to let them to adopt new technologies that we could buy from large players and resell to our customers. But let's say, all in all, we see a very positive trend in front of us. And as I said before, I see that the point that you mentioned, you mentioned on consultancy actually plays in our favor.

Thank you, Giorgio. On the net financial charges after lease, which is more or less in line with the cash interest that you see in the cash flow analysis. I would say there are no material difference between 2025 and 2026. It is just a fact that the Italian component is lowering in terms of average cost, while, of course, the Brazilian one is slightly increasing. And as you know, in Brazil, there is, let's say, a slight increase in leverage, given that we also have a portion of leverage in Brazil that we use it as a cash flow range for our Brazilian stake. But I would say there are no material difference. In 2026, we expect a slightly lower number in terms of cash interest.

The next question is from Fabio Pavan of Mediobanca.

Yes. A couple questions. First one is a follow-up. So we're looking at '27 targets provided you will give us some more color after the summer. My question is, should we think about the equity free cash flow target previously disclosed as the number which makes sense from '27. Second question is for -- on enterprise [indiscernible] cloud after the 24% growth we had in 2025. How are you thinking about '26 and '27 grow? And again, on this, are you still scouting some option for JVs on partnerships? This seems to be the trend for the sector. Very last question for Pietro. You mentioned noncontribution from earnouts has been assumed. Should we see this as you are not expecting any contribution or you are simply adopting a more prudent step at this stage?

Thank you, Fabio. About this question is we did all the things that we promised in 2022. So now the earnout is not included in our number, but it's something that we'll continue to pursue because we think that it's something that is still achievable. Then about '27 targets, the direction is that one. So there's no reason to change the target that we had also in the previous plan. And the second one is on Elio? I hope the answer in the meantime for the first 2?

Yes. Thanks, Pietro, and thanks, Fabio, for the questions. So Fabio, as you said, let's say, we are registering a very, very high growth on cloud. The market is running around 17%, 18%, we are above 25%. And this is mainly driven by the position that we have on public administration because as a matter of fact, the National Strategic Hub is performing much better than we were expecting at the beginning. And this is creating further acceleration on the cloud business. As Pietro said at the beginning, let's say, we do see also the opportunity of sovereignty going forward because it is clear that the more the market will go toward the theoretical disintermediation of hyperscaler, the more this business will become a make business and margins will become higher and higher. So if you look at the world, the market is foreseen for sovereignty, the growth for banks, insurance, large enterprises and public administration is twice higher than it is today.

And this is a space where clearly we can play a very important role because we have all the assets. We have backbone colocation data centers, a very capillar large sales force, and we are part of the National Strategic Hub. So as I used to say very often in this kind of conversation, so we are likely because we grow in the market growing, but clearly, our positioning is a premium positioning. So I don't see cloud to change the trajectory.

The next question is from Andrew Lee at Goldman Sachs.

I had 2 questions. The first question was a bit of a follow-up on your expectations for Italian growth drivers. And the second one was on Italian CapEx intensity. Thanks for your help in understanding the MVNO impact in 2026, which sounds like it's suppressing the growth a little bit in 2026 in Italy. Are you anticipating the underlying trends through 2026 outside of that MVNO impact are the same, i.e., continued cloud growth versus connectivity declines? And do you expect those trends to continue into 2027 absent any consolidation? Just trying to think about what we should be thinking about for structural growth once those MVNO impacts dissolve.

And then second question, just on CapEx intensity. It's clearly been coming down. You're guiding for 12% in 2026. What we're clearly seeing is there's a little bit of a sitting on hands moment for Italian mobile operators while you wait to see how and when and whether consolidation plays out. Do you see that 12% CapEx intensity as a new kind of structural norm? Or is this just a temporary suppression in your CapEx ahead of having greater clarity on the market structure?

So about the first question, adjusted. Can you repeat. Yes. Okay. So because I didn't try to. I was forgetting the team will remember me. Now our business model is quite clear. In the Consumer segment, if you will not have the market consolidation and if you will have no opportunity to increase the price for the increase of the quality, the opportunity that we have for the first time in the last 15 years because for the first time, you have customers that are starting to use services, cloud gaming, application, AI that requests a larger quality. This is an opportunity to increase our revenues and to improve our EBITDA because it's not necessarily driven by CapEx intensity. But if it will not happen, and if you will have no market consolidation, we must be very transparent. The life of Andrea and me in the Consumer segment, but not only in Italy, in Europe will be tougher because you cannot think that you can continue forever to exchange lines erosion with price increase. But again, this is not something strange. This is the reality in which everybody today in Europe are struggling and are asking a loud voice for market consolidation. Or if you will have no market consolidation in terms of M&A, you have to work at the network level. You have to allow JV as the one that we are doing with Vodafone Fastweb because putting together part of the network will allow to have efficiency. This is something that will be needed for 2026. No, our trajectory, 2026, 2027 is already defined, but if you ask me something about '29, '30, it's clear that something in the Consumer segment have to change. When we move in the Enterprise segment, what is happening is that we are not working on AI. That is become a disruptor. We are not working on software development where AI is disrupting. What is happening is that everybody will need cloud, connectivity and cybersecurity. And these 3 components are not looking for geography scale, the backbone is in Italy, you cannot have a synergy because you are a backbone in Italy, in France and in Germany. The backbone needed today for some of these services, must be in Italy. The cloud and data center cannot be remotely in Denmark or Norway because to exploit some services you need the range of 300 kilometers. And cybersecurity system but must be national, cannot be foreigner for a matter of digital sovereignty. Why I'm mentioning that? Because while in the past was showing you the increase in the growth coming from the cloud today, the part will become sovereignty. So these are the driver of our plan. If you image at a certain time in the consumer, there will be a market consolidation. It is quite clear that everything will change and repeat. The market consolidation can come from the merge between player or for a situation which you put together the network infrastructure at the mobile level. Then about the CapEx intensity today, our CapEx intensity, as you can see, we were able to confirm the guidance absorbing in our CapEx intensity, the increase of investment for the JV. So we don't foresee in the next 2, 3 years, the need for an increase of CapEx intensity to deliver our plan.

Then if we start about new business model or something like that many or whatever. At that time, we'll do all the evaluation, having in mind that we must be market-friendly, cash-driven and not look only at the return on investment in the long term, because this sometimes was a mistake in the telco environment. If you look at our ROIC versus our WACC, the issue is that a good part of our investment was made when the ARPU was double than today and the technology was changing every 10 years. Now the ARPU is very low. So we have only opportunity for the increase. But the technology change every 1 or 2 years. So we must be very careful in new activity. That doesn't mean avoid or to put obstacle to the innovation, but be very clear in understanding the right wave that we have to serve. Hope that was clear.

Yes. That's really clear. So it sounds like do you think that at least existing operational intentions that you can maintain the CapEx intensity that you're guiding to for 2026 and then your -- the growth guidance or the underlying trends in terms of your growth in Italy, the key drivers are going to continue as they are unless we see consolidation.

Andrew, this is Andrea. We do see the following assumption. We believe that the underlying trend on the retail side will be broadly stable, net, therefore, so separated from the effect of the MVNO impact. So we do see this opportunity. Pietro clearly highlighted that there will be further opportunity, of course, if market consolidation comes and if we see an acceleration in the front book price up due to network quality differentiation.

But we do believe that the underlying trend on the consumer and SMB side will be broadly stable.

The last question is from Paul Sidney at Berenberg.

Obviously, a lot of questions have been asked already. So just a couple of big picture questions, please, on the domestic market. Firstly, in Consumer. You mentioned Iliad is less of a disruptor, Fastweb be more rational. You're clearly following a value-over-volume strategy, which is a phrase we hear time and again from operators across Europe and the U.S. value over volume. And the question is, in your view, is the telecom value -- sorry, volume game over? And then on Enterprise, your growth is substantially higher than your European peers. I know you gave huge insight to that fantastic event in Milan last year. But could you just remind us what is different to you versus your peers? Is it something you're doing differently operationally? Or is it something different about the Italian market structure?

Okay. We cannot say that our formula can be applied everywhere. When we are in the consumer and mobile ARPU that is the lowest of the world. And also on the fixed, we are among the 3 lowest in the world. The cost of acquisition gives you a breakeven in 3, 4 years. So we are not more clever than the other. But in such a game, spend money to acquire a customer, when the cost of acquisition is a breakeven of 2, 3 years, makes some sense. So it oblige everybody to move in that direction.

We declared in 2022, but the SIM declaration was made by the Chief Executive Officer of Swisscom when they acquired Vodafone. They expressly stated in Italy, there's no return on investment to play a game that is based on the volume. So this is the Italian situation and letting that I'm seeing more or less throughout Europe everybody that are starting to say that the strategy is to move from volume to value. Then in U.S. with an ARPU of $50, I don't know because it's something different compared to our ARPU. So this is the main difference in Italy.

And in some way, starting from a level of ARPU that is so low, I think that compared to other country, we have some more opportunity. I have to remember to everybody that EUR 1 that is less than a coffee in room is not in New York or in London because there the coffee has a cost of EUR 7, but each euro of increasing price means EUR 160 million of equity free cash flow. And this shows the opportunity that can come from a more rational market. When we move to the Enterprise segment, is the difference that, for example, if you compare us with some other peers, they prefer to sell the data center and to keep the last mile. Due to the regulation, we did exactly the contrary. We don't think that the last mile is a competitive advantage because when you have to offer that last mile to everybody with the same price, putting you the CapEx upfront to do that is no more a competitive advantage. We own the data center and they have to remember that we are the only player in Italy with 8 Tier 4 data center. The future services, Enterprise and Consumer will need a ray of the presence of the customer below 300- and 400-kilometer to experience that kind of service. We have in Italy, the widest backbone compared to the other players. We have, in Italy, a company 100% owned by us that is [indiscernible] in the perimeter of area -- that is a company that works on security, not only for the private market, but also for the Italian National Security. We serve the communication between the Italian Embassy and the foreign minister. These are all elements -- sorry, and we were the first one to sign agreement with some of the hyperscaler to have cloud region with -- in Italy with the cryptography in the hands of an Italian company. So these are the element that makes us different from the other player and the other country. Then in some way, the digital sovereignty that is becoming a must at the European level. If you see in France, the French government want to forbid the use of Microsoft Teams. In Denmark, they don't want to use Microsoft Office. In Germany, they don't want to use public cloud solution. In France, too. I think that it is a trend. And thanks to God we started to work on these things not now, but 4 years ago.

Just a quick follow-up. I totally agree with you on the ARPU point at EUR 10. It's just crazy when you think about a coffee or a local bread and stuff you buy every day. But is there any reason why ARPUs can't move to 15 or 20 years on mobile in Italy over time?

But I was discussing with my team and they will do to you an example. The main mistake was of the telco, because we were unable to show to everybody understand to everybody how much is important the connectivity. We cannot work in terms of strike. I cannot do a strike of 1 day without mobile because I will be in jail. But I will do exactly this example. In Milan in San Siro will cover the stadium with a much better quality. Now if you go in the San Siro Stadium, you will see a pop-up on our mobile, let's say. Do we want to serve at the right pace, you can click here. Today, I'm not asking money. But in the future, I won't cost money for that. Why the customer should clean? If you go to San Siro you pay the coke, 3 times of the price that you should pay out of San Siro. If you buy a sandwich, you will pay 3 times the price that you buy outside. If you get the coffee, you pay 3 times. Why as a tech operator, we were so stupid and idiot to not allow the customer to understand that. A coffee per month is something that you can avoid, but the quality of the network is something that is mission-critical for your personal life.

I think that the call is end. So I want to say thank you to everybody. It's important to remember to everybody that this is not the journey that we started 4 years ago is not ended, but now start a second journey because we are able to bring the company in a more normal condition, but the toughest job is starting now. So I want to say thank you to all the team. And we will follow up in the next day to our IR. And thank you to everybody for the trust and thanks to the team.

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

Ladies and gentlemen, good morning, and welcome to TIM 9 months 2025 Results Presentation. Paolo Lesbo, Head of Investor Relations, will introduce the event.

Ladies and gentlemen, good morning, and welcome to TIM 9 month 2025 Results Presentation. I am pleased to be here with the CEO, Pietro Labriola, the CFO, Adrian Calaza, and the rest of the management team.

Today, we will guide you through the highlights and review the main operating and financial results. As usual, we will close with the Q&A session. Before we begin, a brief reminder. As in previous quarters, Sparkle continues to be reported as discontinued operation, in line with the guidance provided last February. It is therefore excluded from the scope of these results, unless otherwise stated. Please also refer to the safe harbor statement in the appendix for additional details regarding the reporting perimeter.

With that, I now hand over to Pietro to start the presentation. Pietro, the floor is yours.

Thank you, Paolo, and good morning, everyone. Let me begin with the highlights of today's presentation. TIM delivered a solid operational and financial performance in Q3, both in Italy and Brazil. Year-to-date results are in line with our budget, and we remain on track to meet full year guidance. It's important to note that the shape of our performance reflects the seasonality built in the plan.

For this reason, we confirm our full year guidance. In Italy, the pricing environment in the consumer segment showed a slight improvement, with mobile front book price increases already visible in the market and some back book adjustment announced for Q4 by our competitors. Meanwhile, we have also strengthened our partnership with [ Poste Italiane ], signing the MVNO contract and launching TIM Energia powered by Poste an initiative that extends our presence into a new adherent market.

In the enterprise segment, we posted another quarter of robust growth driven by cloud. We also signed a [indiscernible] of intent with [indiscernible] establish a joint venture focused on developing proprietary solution, leveraging open source cloud and artificial intelligence. This partner position TIM and Poste as leading players in the country's digital transformation, who will share more details later in the presentation.

In Brazil, market dynamics remain highly rational and TIM Brazil delivered strong results with consistent growth and improved cash generation. In September, team successfully returned to the debt capital market for the first time since the 2023 bond issuance and the 2024 net cost separation. We issued a EUR 500 million bond that priced the lowest spread in the past 15 years for TIM and was the euro note with the lowest coupon of a sub-investment grade in the last 3 years. It received an exceptional response from investors with demand the offer, a clear sign of bringing confidence in the group's solidity.

Let me now walk you through the key figures for the group in the 9 months. Total revenues were up 2% to 3% year-on-year with service revenue growing 3%. EBITDA after lease increased 5% to 3%. CapEx stood at EUR 1.2 billion, around 12% of total revenues. As a result, EBITDA after lease minus CapEx rose 10%, reaching EUR 1.5 billion. Equity free cash flow confirmed a structural improvement versus last year when NetCo was still consolidated and progress in line with our budget.

Adrian will elaborate on cash flow in a moment. Net debt after lease remained stable at around EUR 7.5 billion with a leverage ratio below 2.1x. At domestic level, performance was equally solid. Total revenues grew 1.2% and service revenue 1.7%. EBITDA after lease increased 4.1%, showing that our operational model continues to scale effectively with cost discipline and repricing initiatives translating directly into profitability. CapEx reached EUR 0.7 billion, around 10% of total revenues. Consequently, EBITDA after lease minus CapEx was up 8%, reaching EUR 0.8 billion.

In summary, these numbers confirm that our focus on execution and value creation is paying off. Quarter-after-quarter, we are building a more efficient and profitable team, in line with our industrial plan. The detailed Q3 metrics are available in [indiscernible].

Let's take stock of where we stand against our full year targets. Our metrics are in line with guidance. In Q3, the positive drivers we had anticipated started to kick in, supporting the expected domestic EBITDA after lease growth. In fact, domestic EBITDA after lease in Q3 was EUR 30 million higher than in Q2, up 6% quarter-on-quarter.

Year-on-year growth was slightly softer at 4%, reflecting a tough comparison base. The Q3 domestic EBITDA after lease margin improved by 0.8 percentage points year-on-year and by 0.9 percentage points sequentially. Looking ahead, year-on-year growth in Q4 will be markedly stronger, benefiting from easy comps. Let me recall the main positive drivers progressively coming into play.

First, the full effect of the back book price increases implemented also in Q3; second, the usual seasonality of the enterprise business, which typically accelerates in Q4. This year, this effect would be amplified by a strong contribution from the National Strategic app. Third, additional OpEx efficiencies generated by the cost transformation program. Fourth, labor cost savings following the renewal in July of the solidarity agreement, which provides for a reduction in working hours for TIM employees until the end of 2026.

In terms of cash generation, equity free cash flow after lease was positive at EUR 50 million in Q3. This result was fully in line with our expectations. It was lower than last year, mainly due to one-off effects. Adam will provide more details on this dynamic in a moment. We expect cash generation to significantly accelerate in Q4, supported by higher EBITDA after lease and a strong contribution from net working capital, which typically benefits from favorable seasonality in the last quarter.

We remain confident of lending smoothly in line with our full year target of EUR 400 million of equity free cash flow with some potential upside. Net debt after lease at the end of September was broadly stable at around EUR 7.5 billion, just EUR 50 million higher than in Q2, reflecting the impact of the buyback and minority dividends of TIM Brazil.

Overall, our [ Tuliagadas ] is confirmed. Let's now move on to review the performance of the 3 entities. In consumer, the trend remains positive and fully aligned with the objectives of our value strategy. Year-to-date, total revenues for TIM consumers were broadly stable at EUR 4.5 billion down 0.4% year-on-year with service revenue split.

In Q3, service revenues were slightly negative at minus 0.5% year-on-year, mainly reflecting a lower contribution from MVNOs, while retail services remained stable. At the end of September, we launched Team Energia powered by Poste a significant add-on to our customer platform and the first tangible initiative of former cooperation with Poste. We are pleased with the market's positive response, especially considering that we have not yet carried out any dedicated communication campaign.

Backbook price adjustments continue in Q3, mainly in mobile. Year-to-date, we repriced around 4 million wireline and treated 4 million mobile consumer lines. The benefits are clearly visible. [indiscernible] one up increase, mobile ARPU remains stable and churn stayed under control, a remarkable outcome given the multiple price adjustment implemented over time. This validates the effectiveness of our volume-to-value strategy launched in 2022 and we know that similar action have recently been announced in the market, starting from Q4.

Wireline net adds were stable in Q3 and on a month basis, the trend improved significantly versus last year. In parallel, we continued our push of TTH and 5G fixate leases, with net debt growing 9% and more than doubling year-to-date, respectively. Mobile net debt saw a set sequential deterioration. However, the number portability bans remain neutral also in Q3, confirming the trend observed in the first half.p

As mentioned in previous earnings calls, SIM cards involved in number portability and an ARPU of around EUR 12, EUR 18 compared with about EUR 1 for the other SIMs. This means that most of the mobile lines lost year-to-date had the limited impact on service revenue.

Finally, [indiscernible] our customer platform. TIM vision service revenue continued to grow steadily, up around 5% year-to-date. In enterprise, we are pleased to report consecutive quarter of growth. The performance remains solid and fully consistent with our strategy to focus on high-value ICT services. Over the first 9 months, Total revenues grew mid-single digit to EUR 2.4 billion, with service revenue up more than 5%.

Following the unboxing event held in October, it is now even clearer why TIM Enterprise continue to stand out in the European context. Our distinctive edge come from the combination of a unique portfolio of assets and advanced capabilities in cloud, IoT and cybersecurity. This positions TIM as a leading provider of secure and sovereign digital services for the country.

Year-to-date, Cloud remains the key growth driver with service revenue up 23% year-on-year, reinforcing King's position as well as Italy's leading ICT players. Revenues from other [indiscernible] declined by 5% as growth in security [indiscernible] was offset by a contraction in the licensed businesses, reflecting our deliberate portfolio reshaping to phase out low margin activities and focus on higher value solution.

Connectivity performed as expected, showing a slight decline within the mix fixed connectivity remains stable year-on-year, while mobile declined due to the phaseout of a major public administration contract that we deliberately choose not renew. This decision is consistent with our strategy to avoid low or negative margin tenders. The value backlog contracts signed but not yet activated is expected to reach around by, up 5% versus last year.

Moving to Brazil results once again confirm strong execution and market leadership. The market remained healthy and rational and TIM Brazil continued to deliver profitable growth, reaffirming its position as the most efficient operator in the country.

Year-to-date, top line grew mid-single digit, driven by mobile service revenue. Customer base monetization remains a key focus with successful upselling from prepaid to postpaid, leading to the IS ARPU in the market. Meanwhile, 5G network expansion continued at pace with TIM maintaining its leadership in 5G coverage. Now reaching more than 1,000 cities. Efficient operational execution supported robust EBITDA growth and margin expansion.

In the 9 months, OpEx remained below inflation and EBITDA after lease exceeded 38% of revenues, up 7% year-on-year. TIM Brazil also delivered strong cash generation with EBITDA after lease minus CapEx growing double digit. These results demonstrate that the operational discipline that has driven success in Brazil are the same principle regarding the transformation of our domestic business. In both markets, the formula is the same. Focus, efficiency and value creation and the results speak for themselves.

I'll now hand over to Adrian for the detailed financial results.

Thank you, Pietro, and good morning, everyone. Before moving to cash flow and debt, let me start a few comments on CapEx and OpEx. At group level, CapEx was stable at EUR 1.2 billion in the first 9 months and EUR 0.4 billion in Q3.

Accordingly, CapEx intensity remained soft at around 11% of revenues, mainly due to phasing, but we expect CapEx to pick up in Q4, both in Italy and Brazil as it is date last year. About 25% of CapEx was customer-driven, while the majority was allocated to infrastructure investments, in particular, mobile networks IP backbone and data centers, where we continue to increase our capacity to cope the significant growth on cloud services.

Group OpEx increased modestly in the 9 months, up 0.9% year-on-year, mainly due to TIM Brazil, while domestic OpEx remained broadly flat. Notably, in Q3, domestic OpEx were down 0.7% year-on-year, thanks to lower industrial costs, including the MSA and labor costs, partially compensated by volume-driven costs. I remind you that Q3 last year was the first one with official figures following network disposal.

Therefore, we are pleased to confirm similar trends compared to the pro forma basis. In Italy, both OpEx and CapEx discipline continued to be insured by the transformation plan. As a reminder, progress is measured against initial OpEx and CapEx trajectory that is the cost base line we would have incurred without the plan. We currently have more than 80 transformation initiatives underway which have delivered over EUR 130 million of incremental benefits year-to-date.

Our efforts are focused on 4 main areas: the commissioning legacy technology consolidating ICT vendors, aligning service levels with actual customer needs and optimizing labor costs through the renewed solidarite agreement. Net debt after lease at the end of Q3 was broadly stable at EUR 7.5 billion. Let me highlight the main differences versus last year to clarify the cash flow dynamics and address the questions you might have in mind.

First, working capital. In Q3, absorption was higher than last year, mainly due to a reduction in days payable outstanding. As part of our vendor consolidation efforts, we reduced the number of suppliers in certain purchasing categories, securing better pricing conditions in exchange for a slightly shorter payment terms. This effect was concentrated in Q3 when the change was implemented and will not repeat in coming quarters.

Second, financial charges. In Q3 2024, Cash interest expenses were $27 million lower, reflecting a remarkable increase of the mark-to-market valuation of securities in our portfolio, keeping aside such 2024 one-off performance driven by the reduction in the interest rates. The financial charges are slightly down year-on-year.

Third, cash taxes and other. Last year benefited from dividends received from Inwit through Daphne also a one-off factor. And fourth, payback in Q3, we had EUR 49 million equivalent outflow related to share buyback at TIM Brazil.

As Pietro mentioned, we have good visibility on cash generation for Q4. We expect a ramp up supported by both higher EBITDA after lease and a robust contribution from the net working capital, which typically benefits from favorable quarter of the year. We remain on track to achieve or even exceed our full year target of EUR 500 million in equity free cash flow after lease with leverage below 1.9x.

To conclude, as you know, yesterday was my final day as group CFO. This almost 4 years have been an incredible journey reached with challenges, but mainly of rewarding moments of growth and transformation. Looking back and deeply proud to see the group firmly on a positive path, not just financially but above all, operationally I'm grateful to Pietro for his vision and courage and for giving me the opportunity to contribute to this journey.

My thanks to all our colleagues, both in Italy and Brazil for the unwavering commitment. To my peers in Pietro's leadership team for their patient and friendship and especially to my team for their unconditional support and extraordinary capacity. Special thanks to the financial community and our shareholders who believed in this transformation story. It was an honor to serve alongside you all, and I am confident that the group's momentum will continue with Pierre Giorgio to whom I wish every success as he takes on this role.

With that, I hand over to Piedro for the very last time.

Thank you, Adrian. Today, we are also sharing some level updates on the strategic partnership we are developing with Poste. A more detailed disclosure of the expected synergy will come next year when we update our plan.

Starting with initiatives within TIM Consumer. The immuno contract has been signed and customer migration are set to begin in Q1 2026. As mentioned earlier, TIM Energia powered by Poste is showing strong early traction, confirming the cross-selling potential we can leverage together. Additional cross-selling initiatives, targeting retail and SMB customers are currently under evaluation.

Moving to TIM Enterprise. We are exploring cost-saving opportunities through joint procurement initiatives and -- we have signed a letter of it to establish a joint venture on cloud services, focused on generative AI and open source technologies. This JV will position TIM Poste as [indiscernible] in the country's digital transformation, further strengthening enterprise positioning as a key player in sovereign initiatives. A more comprehensive update will follow next year.

Let's now move to the final slide for the closing remarks. To wrap up, our 9-month results are fully on track to meet full year targets, both operationally and financially. We confirm our guidance for the full year. We're advancing the strategic partnership with Poste to generate synergies between the 2 groups. The MVNO contract and the TIM energy powered by Poste are the first initiatives unlocking mutual benefits with more to come to further expand our respective product portfolios.

In the enterprise place both groups play a central role in Italy's digital ecosystem, team in the telecom infrastructure and cross services and posted in public digital services. Our partnership remains key to enabling secure nationally controlled digital transition. We are delivering what we said we will deliver, and we'll continue to execute with consistency and discipline. Before closing, I would like to take a moment to thank Adrian. This contribution over this year has been fundamentally transforming the company, not all in terms of financial results, but above all, in restoring the disciplined transparency and credibility that's now define [indiscernible].

Adrian, thank you for your professional and the deep commitment to the group. At the same time, I'm very pleased to welcome back Per Giorgio, returning to TIM after several years. His deep knowledge of the sector and of our company we ensure continuity and competence to essential qualities in a market where understanding the business and the technology is an imperative. The best way to predict the future is to bid it. And that's exactly what we are doing because, as I always say, in actual is not an option. With that, we are ready to take your questions.

[Operator Instructions] The first question is from Mathieu Robilliard at Barclays.

First, I wanted to thank Adrian for all the collaboration, transparency over the years and obviously, welcome here Georgia.

With that, I had a few questions. The first 1 was in terms of the Consumer division. So obviously, very impressive ARPU progression on the fix continues a bit less this year -- or this quarter rather on mobile, but the trajectory is good. Meanwhile, however, the volumes continue to be a bit depressed. So my question was a bit forward-looking, which is if we look into 2026, and we think about how this -- the top line, the service revenue can progress. Do you expect to have improving volumes to support the growth of the service revenues? Or is it still going to be based essentially on ARPU progression. And is there room for that? So that's the first question.

The second question was about the migration of the use of the open fiber network versus the one of fiber cup for fiber. If you could maybe give us a sense of how is your base progressing there? And I wanted to check kind of contract you had with Open Fiber. I understand that with fiber cup, you have no volume commitment, which gives you a lot of flexibility. I was wondering if that's the same thing with Open Fiber.

And lastly, if I may, on M&A, obviously, we've seen some press reported news that some players could engage some discussions. And I was wondering if you would welcome that kind of scenario in Italy.

Thank you, Matthias. I will answer immediately to the third question related to the M&A. I think that I must be repetitive because I'm saying to all the markets since several quarters that however, will be that we proceed with the market consolidation in Italy will be a good sign for us that can be time to manage the situation or can be another player. I think that it's really important because this is a trigger that we allow to continue and to improve the network efficiency and the efficiency on the cost base.

So I'm very happy if someone will do a first move and will proceed on that. It's important to remember when in 2022, we started to talk about these things. No 1 was believing us. When we're saying that from volume to value was the driver of the growth, no 1 was believing us. Now also looking at the result of a lot of player, not only in Italy, but also in Europe, everybody are using this claim from volume to value. And the market consolidation in Italy is no more a dream because the free step succeed, that is Vodafone faster. And I'm quite optimistic that quite soon, there would be a further step. Related to the consumer division, I will leave Andrea to elaborate more on that, having in mind that on the mobile, Andrea will explain better, we can expect also in the reduction of the volume because, as I will explain a part of the cancellation as related to seasonality phenomenon and to the past commercial approach, not a team, but of everybody.

On the fix, you were mentioning that we are proceeding. And so we are also quite optimistic on the consumer -- let me give also a more strategic outlook on the consumer market. In the past, I was always more confident in the improvement coming from the industrial cost base, market consolidation and these kind of things. And I was more worried about the possibility of a real growth of the ARPU I spent the last 10 days in an innovation trip, and I have now a more optimistic view. Why that? All I all the new functionality that you are experiencing in the market and everybody described about the future, we request mainly 3 things: low latency, higher uplink and higher throughput -- in the actual offer, we have nothing of that.

So these 3 pillars will become one of the main driver. I'm talking about medium, long term about potential ARPU increase. And in such a case, different from the customer platform will be mainly connectivity with a very high margin.

Now I'll leave Andrian to answer.

Thank you, Pietro. Thank you, Matthias, for the question. So we see a positive outlook going towards 26%, meaning that we continue to believe we can go on with the price increases. The price increases of this year proved to be successful, and we also expanded a little bit the segment in Q4. So we will continue in Q4. That will be positive, of course, on the ARPU contribution.

Equally, I have to point out that yes, on fixed, we still see some negative networks, but a large proportion of that, very large is due to the voice-only customers that are phasing out the voice fixed technology and that is actually considered in the plan. So if we look at the net broadband we are improving, and we continue to believe we will improve thanks to several factors. One is exactly what you mentioned, the improved coverage of FTTH network, thanks also to the agreement with Open Fiber. So we are growing in terms of acquisition and transformation of technology on the Open Fiber network that we are continually working on. And also, especially from last summer due to the very wide progression of WA which, for us, FWA 5G for TIM is a new technology that is also coming with very high margin.

As Pietro was pointing out, we see an improvement that you also noticed in our portability trend in the mobile market. The mobile market is somehow stabilizing, and we measure a sizable improvement of the net active customer year-over-year. that is improving. And so we think that this phenomenon will continue to increase because, as Pietro was pointing out, the market is deflating in terms of rotation and volumes, which is, of course, coming with benefits on the ARPU dilution and on the net balance effect.

Is it fine Mathieu?

Just on -- thank you so much. But just in terms of the type of contract you have with open fiber, is it a volume commitment? Or is it on a per-line basis. Just to understand if it's similar to what you have with FiberCop, I don't know if you want to disclose that.

It is an agreement that is complementary to fiber, of course, and complementary in terms of coverage we use that mostly on a per line basis but is a wholesale agreement that is complementary to [indiscernible]

But in a material open fiber as offer on the market that are per line or with a minimum commitment based keeping the price flat for the next years. So we use a mix on that based on our convenience in the different areas.

The next question is from Fabio Pavan at Mediobanca.

Yes. Before asking questions, I would love also to thank Adrian for supporting this Yes, very precious, and we will also welcome [indiscernible] Giorgio on board. When coming to the questions. First one is a follow-up on what Pietro, you just said. So there is anything that you can do in order to support sector consolidation even if you are not at the driving seat?

Second question is on Poste and the letter of intent signed on the cloud side. Could you give us some more color about how would you, let's say, approach the market? Is it going to be something targeting post the customer base is going to be a bundled offer.

Okay. Thank you, Fabio. Let's start from the second question about the JV with Poste. I believe earlier to elaborate more on that also because this was a very clever idea that elaborate and that was accepted also by the counterpart. But in case if you think in this way, we'll talk about unboxing in enterprise 1 month ago, we told to everybody that for us was very important to fill up the value chain that today we are managing through some external partner.

Now the idea is that was very well explained by Elio that we want to do that internally. We don't want to do everything internally, but we'll do that, that has a much future-proof reliability. Now I leave to [indiscernible] to talk about [indiscernible]

Thanks, Pietro, and thanks, Fabio, for the question. So we made pretty clear that in our strategy, there are 3 things that -- we need to hear about. One is the insourcing of capabilities because this will allow time Enterprise to improve margins. The second 1 is -- we have been very vocal, as you know very well, during the last few months about this opportunity of sovereign cloud and because we believe that from this country and the continent Europe more in general, they need to face they need to embrace the opportunity of creating a kind of digital independency.

And for doing this, it's clear, you need to develop open source capabilities, which is something that Poste will provide with in this -- in the creation of this joint venture. And the third point is that we need to embrace as much as possible model and model by model of artificial intelligence. So the idea is to create a structure which is fast, agile, flexible, able to attract talents and able to integrate vertical capabilities resulting potentially from M&A activities.

So -- and so the aim of this company will be to serve both post and TIM for embracing the new technologies and at the same time, to provide the market with a solution that today an end-to-end solution on new technologies that today, we don't see in the market. And as I said, the 3 areas of focus will be cloud migration and sourcing capabilities, open-source platform and artificial intelligence.

Hope I answered the question.

And what is really important that for the first time after several years, we are a newcomer. So we don't start from legacy. And this is what will have passed because just to give you an idea, if you are already a system integrator with a lot of developers, you will have to face the challenge of the AI that will have the software development. We start now from scratch. So we'll be able to explore since the beginning, the possibility to increase the productivity with the number of developers that are lower.

In the meantime, focus on open source is key in the development also of our sovereign cloud strategy because this is the area in which you have less dependence by other countries technology. It doesn't mean that this is a complete alternative to the partnership with the Ape scaler. We'll continue to partner with them because they are key also in terms of innovation. About the consumer segment. What they want to like Fabio is that, as we told during the call, the performance that we are having today on team energy powered by Poste is a multiple of what we are thinking to have without have launched yet an advertising campaign.

So this is a first test to try to understand us, our customer platform strategy can work. Let's remember, sometimes we forget that we are now the second content platform in Italy. And now we started with the energy that will pass for the increase. We are working also for further activity on the consumer side, as we mentioned, we are starting the portfolio of both companies. Poste and TIM and we are trying to understand how to exploit the channel for this activity. These are all things that will develop more in detail during our next 3-year plan presentation. About the first question that is related to the sector consolidation, it's clear that we are very supportive. It doesn't mean that we can accept anything that will transforming a weaker company in. But I think that the rationality in this market is becoming more normality -- so we are very welcome in any kind of market consolidation that will make this market more equilibrate and rationale.

The next question is from Keval Khiroya at Deutsche Bank.

I have 2 and good luck as well, Adrian, from my side. So firstly, your financial expense remain high whilst your cost of debt on newses has been falling and you highlighted the EUR 500 million bond you issued, what financial expenses assumptions have you baked into your guidance for the next 2 years? And is there any opportunity to optimize these further? And secondly, can you give us your latest expectations on the concession fee case? I think you previously expected a year-end outcome on that.

Yes. Kevin, thank you for the question. As a matter of fact, financial expenses, we've been mentioning -- I think it was a couple of quarters ago and also in the plan that the run rate for 2025 was something between EUR 150 million and EUR 160 million per quarter and we are on the lower end of that number.

Last year, we had some positives that were one-off mainly coming from some mark-to-markets that we counted, but we are on track. And as a matter of fact, slightly below with what were our projections at the beginning of the year.

Going forward, clearly, this is a number that will probably go down, especially because of the net financial position and the gross debt will be reducing going forward. in terms of average interest rate of our gross debt, the domestic, it's clearly that the bonds of lowest coupons, so the ones that were issued in 2015, 2016 are maturing and the weight of the issuance that we did in '22, '23, with much higher coupons is more important.

So it's not a matter of average interest rate, but more a matter of the evolution of the gross debt, but obviously, the numbers should be reducing in the coming quarters. But again, just to mention the EUR 150 million of financial expenses of this quarter is it's slightly better than what we projected.

[indiscernible], about the concession, as you can imagine, formally, we don't have any further detail informally too. But the only thing that I can share with you and that is public is that in the process of approval of the state bars, it was put in a provision for 2026 for the payment of some litigation and was expressively mentioned that there could be also the TIM1. It doesn't mean anything. But again, you can understand.

The next question is from Javier Borrachero at Kepler.

Again, welcome to [indiscernible] and thank you very much, Adrian. [indiscernible]

So my question Pietro you is a bit of follow-up on these cash windfalls. So I mentioned the concession. Maybe on the earnouts, -- maybe you can also give us some color on where you still think that the open fiber [indiscernible] is still possible or maybe now it's too late. And on the energy one, if that is -- if you are more confident that here, you can maybe get some cash. And regarding all the proceeds from all these cash windfall, say, concession fee, earn-out, et cetera, -- what is now your view given that the share price has had a phenomenal performance year-to-date doubling.

What is now your view in terms of the use of that cash in terms of the balance between dividends and share backs based both on your own what is already guided in terms of shareholder remuneration for the next few years, but also in terms of any extra proceeds that you may get going forward?

As first of all, about the -- the first point is that the exceptional performance of the stock. If I may, it cost range the previous value because in terms of multiple, you see that we are still slightly below the average of the European telco.

So it's not strange the actual value, it's strange the value in the past. And this may just for me and Adrian the plan in place for which we are today at $0.50 is the same that was presented in April 2024 in March '24, when the stock was down 25%.

So it's just a matter of trust and execution, nothing changed. About all this proceeds, the announce on and so forth. About the earnout I'm still optimistic on the fact that we can get something. We never declare that we get all the amount. We always told that we can get something. And the deadline for the expiration is the end of 2026. But the year out is due, not only in a case of emerge, but also strategic commercial partnership that will generate synergies.

So while I can understand in some way, some worries related to a potential to merge last time for the approval. Also, if you have to remember that in the case of the [indiscernible] at European level, it took 6 months for the approval. So I'm optimistic that something will happen also because looking at what is happening also in the press, I'm optimistic that all the discussions and all the fight we bring everybody to cerational because rationality drive the return on investment also for the private equity and something will happen. It's important to remember that we have in terms of earn-out in our plan. Then in the case in which the concession fee and all these things will happen. At that time, we will evaluate what is -- it doesn't mean that we don't have a clear understanding, but the number of pieces that are moving at the same time, obliged us to have several options.

So I don't have -- we don't have in mind, just 1 option. We have several options. But everybody, all the different auction will be driven by market friendly approach. And about the plan, we stay stick to the plan. We continue to maintain the guidance about the shareholder remuneration. And so we move forward in that way.

Next question is from Giorgio Tavolini at Intermonte.

Before taking my 3 questions from my side as well, welcome back to Pierre Georgio, and thanks and good luck to Adrian. The first question is on Butch Telecom that has recently announced a EUR 1 billion collaboration with NVIDIA to build an AI factory in Germany. Do you believe TIM Enterprise could play a role in developing similar giga factories in Italy possible through joint venture with other national players beyond Poste Italiane.

I mentioned this because I saw your role in the national strategic hub and the need to ensure data sovereignty. The second question is on sector consolidation and the recent rumors about a potential winter Iliad merger. So beyond the team potentially being a passive beneficiary of the market repair. I was wondering such a merger could pave the way for a consolidation between TIM and Poste Mobile since it would ease the antitrust concern now that [indiscernible] the deal would be completely off the table. And the third question is on the recent proposal on inflation index fee increase for telco tariffs that was proposed by a political party. I was wondering if you think this measure could be reconsidered by policymakers to help restore sector profitability and return on investments. And in particular, you raised the prices for the fourth consecutive year. So is it correct that if this measure is introduced, this would extend all the players in the market, including Iliad to push their prices above the current ones.

[indiscernible], let's start from the Tier 1, then I will leave to [indiscernible] to answer to the first one. About the index, we will continue to discuss with the different stakeholder about that because I think that this is a rational approach and sooner or later, my expectation is that also on the fiber business wholesale, it will be needed a kind of inflation index. If it will happen, it's quite clear that must be reflected also in the retail price. So this is not this year, but this is something mainly in Italy. I have to remember that it happened already in U.K., if I'm not wrong in Netherlands. So this is a trend in the market. Then let's remember that we have the lowest price in Europe.

So I'm quite optimistic to that if it will not be this year, but sooner or later, it will happen. Related to the price increase, I have to remember and then I will ask Andrea to give also more color that a part of the price increase that we did was with the kind of more for more approach, not in terms of giga because Italy has packaged with a new German of Giga but about 5G. I have to say [indiscernible] our CTO because we were able to move from the last place in the ranking for the 5G quality to the first place and little allowed to Andrea also to do price up also based on the 5G. But we are still talking about what they tell the fact of marketing, not real 5G with neulatasy, that will be the next step for a further price increase and will continue also next year with this kind of approach about the sector consolidation.

We are positive about that. It's clear that any kind of further simplification of the market structure is more than welcome. So let's say the window, we don't have anticipate, but again, we have a clear idea about the possible scenario. Thanks to God, we are no more playing poker, but we are starting to play a chess game. And so every time we have to think what could be the further moves. And we have clear understanding about what could be the different further moves that we have to act on in relation to the events about Deutsche Telekom [indiscernible] then if Adrian, I want to add something about the repricing will do battle before 12 and then Adrian.

Thanks, Pietro. So thanks for the questions. First of all, let me underline that this news about the partnership between Deutsche Tel and NVIDIA confirms that the telco industry is back again to the center of the innovation process. And this depends on -- basically on the fact that infrastructure, both the network and the colocation became and will be very, very relevant going forward because as you can imagine, majority of those new technologies, we need a house where to stay and a network that can help them to move data at a very fast speed.

So -- and we are at the center of that business environment. So in the country, as you mentioned, that there are many emotions, -- we look at this in a very pragmatic way. First of all, there is nothing giga that can happen in this country without team being involved because at the very end, you need to connect to the market. We are the only 1 having bandwidth for doing it. And we are in talks with NVIDIA. And as I said, we are looking at this, trying to size how big is the effort, but more importantly, how big is the opportunity that can be taken together. Clearly, and the Deutsche Telekom is the clear example. It's very difficult for them to do this without having a big telco on board and I guess we are the ones they want to deal with. But -- so we will -- we will try to understand, as I said, very pragmatically this what will mean. And the way we will measure this is what is the length, the duration and the size of the ROI that we can extract together from this business. But let's say, we are talking to them, and we do believe that there is a good opportunity to be taken.

Before to Andrea also to elaborate something on top of what Elie told sometimes we focus too much in something that is real estate or computing capacity. But computing capacity is nothing without connectivity. Also, mask that is much more well-known than me, an elastic talk explained that is foreseen future in 3, 5 years where the computing capacity will be distributed, but for will be needed is low latency and a link. And we have the 5G frequencies and so we are the ones that can provide low latency. We don't have the ownership of the passive fiber but latency, throughput at a link come through the electronic that you put in the last mile.

And the last you must have a very wide spreaded backbone. And also on that, we are the best player. So if you add this capability, the ones that were mentioned by Elio it's clear that we continue in this kind of technological future to be the best player to get the main part of the cake.

Thank you, Pietro. Thank you, Giorgio. So this gives us the opportunity also to talk a bit more about our replacing action and strategy. as also Pietro pointed out, we did price up, but we also gave more benefits to the customer. And in particular, during the last years, also thanks to great work done by Leo Captain with the technology team. We upgraded millions -- literally millions of customers to 5G to the basic level of 5G. We did also to the basic level of 5G, we did also something that other operators have not done yet, which is forward-looking. We created a 2 level of IG, a basic level, which is optimizing use of network because as you as you know, 5G is much more efficient in terms of use of bandwidth and energy. And we created a top level of 5G, let me say, quality which we sell for premium. So this gives us an opportunity also to upgrade the ARPU going forward and optimize network efficiency.

Now as also Pietro pointed out, we are in favor since many years of a general increase of prices to the customer base. We have worked a lot because we believe that sustainability in a sector in which the usage of network is increasing, is coming with price increase. So we are in favor of price inflation. And we believe that this, especially together with consolidation in the market can be a structural solution to the sustainability of the network. So looking forward, by the way, as Pietro pointed out, also with more segmentation of service on latency, uplink use of network with AI, we can see an ARPU increase in the mobile market because demand of connectivity is always increasing.

The next question is from Domenico Ghilotti at Equita.

Well, first of all, I joined the other analysts and say goodbye to Adrian, and thanks for your support. And well, just a couple of questions remaining. One is on the Sparkle deal. If there is any update on the transaction? And then on the cash flow, can you help us understanding how was the impact of the vendor consolidation that you were mentioning? And also from the let's call it, extraordinary working capital item that you were flagging in the past for 2025.

Thank you, Domenico, about [indiscernible]. We are proceeding. We are waiting for the approval from some local authorities. I think there are 2 or 3 for which we are still waiting -- so sometimes the closing could be at the beginning of 2026 and not in the last quarter 2025. But all the things are proceeding very well, while about the cash flow, I leave to [indiscernible].

Domenico, thank you for your words. On the cash flow, yes, and this is something that we've been working for a period, and it was also meted during the enterprise A month ago, it was -- 1 of the targets was in the consolidation and obviously consolidating those vendors in some of the the main OTT is the payment terms clearly also. It has had an impact of something around between 6 and 7 days in terms of -- so it was fully absorbed in the quarter. This is a onetime effect. And going forward, we expect an improvement on enterprise margin as we projected in the plan.

In terms of extraordinary items were those that we disclosed when we presented the plan in February. Remember that there were mainly 2 effects along the year. It was the -- all the unfolding of the of the Article of[indiscernible] and the some effect on this quarter was mainly on the optical [indiscernible]. So no additional extraordinary effect rather than those. So on the first quarter, we expect the only the effects of the trout. And as you know, the fourth quarter is always the most intense positively in terms of working capital. So we are on track as we manage them and probably slightly by better. We'll see the fourth quarter is, again, the biggest in terms of cash flow generation.

The next question is from Paul Sidney at Berenberg.

Just a couple of questions for me, please, building on a couple of the questions that we've had already. Firstly, in terms of the post and cloud and AI JV LOI signing. We know very well what enterprise capabilities are in this area, but could you just expand a little bit about what capabilities Poste will bring to this in this area? And then secondly, just staying on the theme of price changes. We've seen you successfully put through price changes over the year. We've seen some very welcome recent price increases from FastWeb and mobile, Vodafone fixed wind on the [indiscernible] book as well. You mentioned the prices have landed well for TIM for yourselves. But I just wondered, has there been any adverse reaction in the wider market from the press, sort of consumer groups, the government even because obviously, when you look at these price increases on a percentage basis, they're currently pretty material. But great to get your thoughts.

About the second question, then I can leave Andrea about in practice, what we are doing is that we are increasing the price there is a right of our customer to cancel the contract if he doesn't agree about that because we are in a more severe market environment from this point of view.

So there is nothing specific and then also to be also more clear, we are not doing price increase in a blended way. Andrea has developed a very strong CVM, customer value management. And so the evaluation of the target of the customer or for the price increase is based also on the willingness to pay for an improvement of the service. with the propension to cancellations, all and so forth. So it's a traditional marketing activity that we're performing better, sometimes than the other. I can tell you that in the past, we've seen us changing the wording of the message, respecting the law can change also the level of churn that you will expire. But again, this is not a telco activity. This is a marketing activity.

So we are -- sometimes we are better than other to work on the marketing side. about the post JB, I can live well but in a nutshell, sometimes some of you are considering Post as the traditional May services. A lot of it do not know that Post has had during the last years, several and people expert in open source activity and developing. So they have also specific now out in this area, and it will help. So this is part of the contribution that they can put inside this kind of activity.

Adrian, I don't know if you want to add something?

Just to add a few information to what Pietro said. So -- this is clearly unknown as Pietro mentioned, actually, Poste has a huge open source operations -- they have almost 500 in open source engineers. And the idea is that they will contribute a few hundreds of them. So you believe 250 million, 300 million will join the joint venture. And the idea is that, that will be the hard me that will help us to create this open source platform to tackle the cloud sovereign business. So we will contribute the hybrid cloud migration capability that will contribute the open source capability both together, we will try to attract talent for developing NAI business that, as I said, will serve both TemnPost and the market.

As we mentioned during unboxing TIM enterprise, we are talking about sovereignty, digital solvency and have posted also on our side on this project is a further reinforcement of, let me say, a neutrality towards other technology and is reinforcement about the Soverinity.

The next question is from Andrea Todeskini at [indiscernible]

So first one would be on the contract that you have with the tower companies for your mobile network. I believe there -- the contract should be up for a new 1 in the first half of next year. So I was wondering if you do see some room for potential savings coming from renegotiating that contract and if there's anything you can share with us? And second question regards the equity free cash flow guidance for full year '25. So we clearly know that it's really back-end loaded in the fourth quarter. I was wondering if you could see if you have any visibility for some possible upside. So not just reaching the guidance but maybe doing a little bit better in the full year.

Andre agreed, you are the less shy person because I think that this is a question that everybody was asking, we confirm the guidance. We're optimistic that we can do also something better. But as we told also in the last call, the market to our company will never forgive any kind of underperformance. So -- we want to stay focusing delivering the guidance with the optimism that we can do better. About the towerco I have to remember to everybody the list of the main point of our cost. First one, MSA with FiberCop.

Second, cost of labor third energy for TowerCo. So in a professional and serious way, we are talking with our main partner about possibility of efficiency in the interest of both companies.

The next question is from Andrea Devita at Bank Intesa.

Yes. Thank you, Hello, everybody. So on the consumer company, -- looking at the ARPU, just wondering whether after further EUR 1.7 million price in Q4 alone. So we haven't seen yet a rebound, so flat -- so if you could expect a rebound in Q4, at least or otherwise, if it is the balance of customer customers out are [indiscernible] again. And again, on consumer, I saw that there was a 1 percentage point service revenues took out from the MVNO -- so wondering whether this would accelerate in Q4. And finally, again, a consumer, whether it is already material, the contribution. And if you could roughly quantify of adjacency and energy and so on in terms of service revenue growth contribution.

I will Andrea to elaborate on that. The only point about the MVNO that is very important that it was already included in our budget. So just to be clear that we are not surprised is something that we are forecasting and planning and that we are managing.

Thank you, Pietro. So on the ARPU, starting from your first question, indeed, you're right, mobile ARPU is basically balancing repricing, price ups with ARPU dilution that is coming from the difference between front book and back book. This is a dynamic that is in the market. And therefore, we consider that, let me say, ARPU stability or slight improvement as we show in the 9 months of 25 is what we are aiming for in the current market condition.

As I explained before, we see improvement in the market because we see a declining number of rotation in the market, the mobile number profitability balance has improved and therefore, the dilution effect on the customer base ARPU is somehow decreasing. We also, as Petro pointed out at the beginning of this presentation, with slight sign of improvement on the front book pricing by some competitors. Therefore, this compensation is probably improving going forward. that's possible to bring a rebound in the ARPU in the future quarters.

Now coming to your question on ARPU, still, of course, the effect of radiation services is more visible on fixed ARPU because in fixed ARPU, we incorporate more services and that is also a market that is giving us the opportunity to upsell customers, for instance, with content services. So that is more visible on the fixed side. As Pietro pointed out, I think the essential answer is, yes, we see a decrease, but this was planned due to the fact that, of course, Fastweb is bringing more and more traffic on their own network now that they consolidated with Vodafone. And this was in the plan. And the value of aviation market is the time being, so what we call the customer platform approach is visible mostly on devices, connected devices and TIM Vision, which is bringing actually growth to the -- as you see also in the chart, in the 9 months of thanks to the fact that we grow the customer base significantly. And we also grow the portfolio of services. Energy, we launched in October, so certain is not visible yet, but we started on a good foot.

The next question is from Ben Rickett at New Street.

I just had 2 questions, please, on fixed wireless access. So firstly, I was really interested in where you're seeing demand for your fixed wireless access product -- is that mainly in rural areas? Or do you also see demand in areas that have fiber coverage? And second question, I was estimating that about 8% of your broadband base is now on fixed wireless access. I was interested, do you have an idea how high that could go before it starts to impact the mobile network quality that your mobile subscribers experienced.

Generally speaking, it's just important to explain what we can foresee for the future about the [indiscernible] access technology. With Andrea and with Leo, we have started to see also evolution where the installation of the fixed Avanex assets will become more easy, self installable and delay of coverage will move from 3.5 to 5 kilometers. This will be an important element in our pocket to optimize the cost structure. And it's not only a matter of cost structure, sometimes, and this happened for everything in our life, if you want something, you want to buy and use.

If we have to wait as a customer, I mean too much time, and so the installation of the fiber can get more time, it becomes an issue. Why? Because people will change their mind, while mobile today in the easiest way is go in a shop, get a ship, you have a plant, you can back home and with the tethering, you are already working. This is the reason for which we done we're working also in the future to a possible solution that is an uber solution of the 2 but to Andrea because if not, we say that I speak to Mark.

Thank you, Pietro. I mean, this gives us the opportunity to actually beat the expectation of Petro because we launched that very proposition at the beginning of last week. So we launched and is an innovative proposition that is combining FWA connectivity that is immediately available to the customer out of the shop. And that when the fiber comes, then that connectivity can be either given back to TIM or it can be used for a second home.

By the way, in a nomadic way, so it can be brought as a sort of super WiFi add-on to the mobile customer. So that proposition we launched last week. It's an initial, let me say, experiment. But we believe that there is market, as Pietro pointed out for a further expansion Equally, on SWA, today, we use it complementary to fiber. So let me point out that today, we do not overlap FWA to FTTH areas. We use it also mostly complementary to FTTC because FTTC performance in many areas is actually quite good. And so customer have better service with TTC.

Today, we see most sales in areas where we do not have FTTH coverage that are not necessarily rural because Italy is a very complex market with many small towns that are not covered by FTTH. So the market is quite huge, and you can also see it from the authority data that the market of the FWA is quite big. Up to a few months ago, team did not have a wide 5G coverage available. And now thanks to the work by Leo, we have a very wide coverage of the territory with -- just to your question, what is the amount we can support before affecting mobile traffic. We believe we have a long run to go because at present, we still have a few customers on 5G, and we have capacity that is capacity that is increasing. And of course, we can find a technological solution, but maybe they want to comment more. that can actually give more capacity to the FWA.

The last question is from David Wright at Bank of America.

Yes, I think you indicated Pietro before that the causation still in consideration. It looks like that could drag into next year. That being the case, I don't think that SPA will be net income positive this year. But if you could just give us some guidance there. So is there any obligation to pay, say the share dividends in 2026 as a shift in the cash flow? And if the gas station doesn't trigger those payments this year. Do you consider the save share take out differently, there's a little bit less pressure to do so. Just your thoughts around that would be useful.

David, you can understand that all these hypotheses are price sensitive also on the value of the stock. So due to fact that we have to guess on something, I think that it's better to not go too much in detail. But what they want to reassure you and to everybody is that whatever we will do will be market friendly.

And again, we are analyzing all the possible scenario that will help corporate structure of our company, but also in the meantime or with the best market friendly approach.

Where is SPA 9 months earnings? Is that published? Have I missed that?

Yes, right, did we answer the question?

Sorry, I think I lost my connection.

No, I was telling that we tried to answer to you as best as possible based on the sensitive data that we are discussing.

Before to close the call and to leave to Parolesbo, I want again to thank you Adrian for all these years since 2015. But -- what is important to remember to everybody Taranis in the Board of TIM Brazil, and we will continue to stay on the Board of TIM Brazil also for the next year. It will help us also due to high knowledge that he has about the Brazilian country and the 1 which we work here from Italy. We will continue to help push to drive the group towards a further increase in our evaluation. Thank you, Adrian.

Okay. Thank you very much, everybody, for your participation today. We will be back beginning of next year with full year results, which we are very confident will be fully in line with yours and our expectation. Thank you, have a nice rest of the day. Bye-bye.

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

Good afternoon, everybody, and welcome to this exclusive TIM Enterprise event. I am Paolo Lesbo, Head of Investor Relations, and I am pleased to introduce this event together with our CEO, Pietro Labriola; the Head of TIM Enterprise, Elio Schiavo; and the rest of the management team.

Starting from the agenda on Page 2. Here is what we have planned for you today. Pietro will kick off in Chapter 1, framing out this event and explaining what are the objectives we would like to achieve. From Chapter 2 to Chapter 5, Elio will take you through a comprehensive journey into TIM Enterprise, explaining the fundamentals and the competitive advantage in the context of the Italian market, sharing our key asset portfolio and cutting-edge value proposition and explaining our view of the future. We will close with Pietro's remarks, and then we will open the floor for your questions. This session, together with Q&A, will take up to 2 hours, so we should wrap up at around 4:00.

Without further ado, I hand over to Pietro Labriola. Pietro, the stage is yours.

Thank you. Thank you, Paolo. As you have understood, we are entering the luxury business. This is an exclusive event. Thank you for everybody to be here today. I think that this was necessary, to try to better understand what TIM Enterprise really is. So I will try to drive you through a better understanding of the position of TIM Enterprise inside our group.

Still today, we continue to face a situation in which people think that our group is a consumer group. We can say that TIM Brasil is consumer. Domestic TIM Consumer is consumer, but TIM Enterprise is not a consumer. And it's important to understand the weight of TIM Enterprise inside our group, 24% of total revenues and 35% of domestic revenues.

During the Capital Market Day, we explained that we have 3 different kind of business model with 3 different level of maturity. TIM Brasil, we did a comparison. If you think to the metrics of BCG, Boston Consulting Group, TIM Brasil can be considered a cash cow, BRL 5 billion of dividend per year and an EBITDA margin of 50%.

TIM Consumer, sorry to this word, is a dog in the BCG metric. It's a dog where we are performing better than other telco player in Europe, flattish on the revenue, and we are growing in terms of EBITDA, while TIM Enterprise is our star. A star that bright in the European landscape because our performance can look strange. If you look in all the different KPI, we are overperforming all the other players and the most on an organic basis. So we can go through some of the KPI, but Elio will give you more details about that.

What is important is to try to explain why there is this unique position of TIM Enterprise compared to all the other player. For me, it's very, very clear that this is a strange animal. In your day-by-day activity, try to define the model, the Excel file to build and try to forecast the value of TIM Enterprise is not easy. It's not easy. Why? In the Consumer segment, I will share with you my number. I give my commercial KPI, my ARPU, but you will be able to check whatever we will say. Why? Usually, the national watchdog share every quarter, the number of the lines of the fixed. They will share the number of mobile number portability on mobile. We have several study of prices trackers that show you the trend of the ARPU. And so for, it's quite easier compared to TIM Enterprise to try to build the business model and try to understand the trend of revenue and cost. Also, the trend on a quarterly basis, it's much easier to understand because you don't have a huge deviation among the quarters.

Here, fasten the seat belt because this is a business that we have to try to understand on a yearly basis. When we are talking about 35,000 customers and sometimes a contract with some of these customers can have a value of EUR 20 million, EUR 50 million. And you send the invoice for the payment, the 31st of March or the 1st of April. The number on a quarterly basis can change. So it's much more important to look at this business on a multiyear basis, try to understand, as Elio will try to explain, on the booking of the order.

But the today main objectives are, first of all, what makes our value proposition unique in Italy and sometimes in Europe. I will try to spoil something for each of these 4 points. My point of view, what makes our value proposition unique in Italy and Europe? The fact that we have more than 1,500 salespeople. When you ask me why you are better than Microsoft, Google, Oracle in Italy, we have 1,500 [indiscernible] and salespeople that are working with the main 35,000 company since ever. We know the customer. We know exactly in their plan, in their 3-year plan, what they will do. This is not the consumer where you decide today to change for tomorrow. If you plan to change your network, your data center, your cloud, it's a journey of 5 years sometimes. So this is one of the main asset that makes our difference compared to everybody in Italy and sometimes in Europe.

How our business model generate sustainable value? The fact that we have also some assets. Generally speaking, for all our company, after the sale of the network, we have people that were calling us a pure reseller. Sorry, but you have to remember that we continue to be on the consumer, the most Italian infrastructure player with the widest backbone.

On TIM Enterprise, we are the player with 8 Tier 4 data center. Having the data center, having the ownership of some of the platform with which we supply the service, cloud, security, IoT, means that we have a competitive advantage, and we are able to have a margin that is better of some of our competitor, which are the key drivers behind TIM Enterprise growth performance.

And on that, it's quite easy. It's not me, it's not Elio. It's not Adrian or the rest of the team that is driving the growth of the cloud. You can open the newspaper, and you are reading about AI. May AI work without cloud? No, sorry, it doesn't work. The main hyperscaler, the main software developer in the world are migrating everything in the cloud.

So when Elio and his team has to go and talk with the Chief Information Officer of a large bank, he doesn't have to explain why they have to migrate in the cloud. You know why? Because Oracle already were there and say the next Oracle database will be only in the cloud. Microsoft already was there and say, Office 365 will be in the cloud. Sebit will be in the cloud. So it's not me, it's not Elio and our company that is driving the process of the migration in the cloud.

As the main global player, it's a global trend. We are here to bring all these requests and needs and transform them that in an opportunity. And the last, the opportunity supporting the future growth trajectory. Here, we have an opportunity that is still not completely included in our plan.

The geopolitical situation is putting on the table something that was impossible to think 3 or 4 years ago. The most you will proceed, the most you will need, sovereign cloud. What is sovereign cloud? The fact that the Italian company that are in the strategic for the national economy for the security cannot have all the information inside the cloud that is accessible to the national security of other countries. So it will mean that the cloud for some of this company will need to be a local cloud with a local player. But Elio will give you more details about that, and I will try to do the final remarks trying to connecting dots. Thank you to everybody, and I'll leave to Elio.

So I was saying before we go to the document, allow me to start with a few personal notes of acknowledgement because the set of contents you will see today has been prepared by a team. There is a huge team effort behind these documents. And they have experienced how demanding and difficult can be someone like me while preparing an event like this one, so I owe them sincere thanks.

And I hope they will forgive me for the stressful moment that they have to endure because this has just been really -- we have done a very nice work. You will see there are a lot of contents. So to [ Huang ], [ Jacobo ], [ Antonio ], I want to thank also Paolo and the Investor Relations team that supported us. The [indiscernible] technical team running the business behind the scene and [indiscernible] is the host of this event because he's the manager of this data center. I would like also to thank you all because we know that your time is a precious commodity. And your participation, the fact that you took the time for attending this event is very much appreciated.

So, as there is only one thing that I would like to tell you. I don't know if the [indiscernible] can put on the screen. So there is a timer that will start from now on. You will see these numbers changing during my presentation. At the end, I will disclose what each number means. So Pietro told you that I will walk you through 4 main items. We are, what is the market we operate in, which are our distinctive assets, why do we believe that our value proposition is unique and why the plan that we have in front of us, we believe it is sustainable.

So this is the title. The first one, who we are. We are by far the largest ICT platform in Italy. This is the first distinctive element. We are the only one with an end-to-end value proposition. So as Pietro was saying, we have the infrastructure. We have 3 factories doing cloud, IoT and cybersecurity. But more importantly, we have a very large sales force with a huge capillarity across the territory, which is an asset not replicable by competitors.

So this is the size of the business. As Pietro said before, there is part of the domestic business. And this is a first snapshot of how the business is made. So we have EUR 1.1 billion connectivity, EUR 1.1 billion cloud. We have EUR 200 million of cybersecurity, 1 billion -- sorry, EUR 200 million of cybersecurity, EUR 100 million of IoT and EUR 600 million of other IT, which is hardware, software, network management, device management and non-cloud licensing and so on.

So we circled in some of the slides, the KPIs that you need to remember because there are a lot of content. So to facilitate your task, every time we will land on a very interesting KPI, I will underline it. So the first element that differentiates TIM Enterprise from the rest of the market and from the rest of the European peers is that our business is 50% public, 50% private, which doesn't happen to other companies, to other telcos.

And more importantly, when you look at the growth of the business, the one accelerating the most is the public administration. So first peculiarity, we have a heavy weight of revenues based on a component that is growing very fast. I will tell you later on why this is happening.

So what is the mission? The mission is that we are and we want to be the digital engine of this country. We put at disposal of public administration and private companies, creation and innovation. There are two words at the end of this sentence that can remind you what Pietro said at the beginning. We are always everywhere. So you can go from Sicily to the border of Switzerland, we are everywhere.

The mission, I wake up every single morning thinking that we would do a good service in this country if we could make it better. So we work to enable the future of this country. And we always keep in mind, two things: quality of the products and services and customer experience. So the better those KPIs will go, the better we'll become, the more advantage the country will take.

So this is how the market goes. So -- and again, back to what Pietro said, the reason why we are growing, generally speaking, is because we operate in a healthy market. So the market itself in Italy is growing at 5% [indiscernible]. What makes distinctive what we do when you move to the column on the right, most of the KPIs, with the only exception of connectivity, you will see in our case, is declining at circa 2% versus the minus 1% that the market is predicting. On all the rest of the KPIs, we are doing much, much better than the market. And we will tell you why.

So this is the first element because we -- in order to explain to you in which market we operate, we thought that it was important because this comparison with European peers resonates very often in our calls, in our conversation. The reason why we are growing more than European competitors -- peers, sorry -- and the reason why we have a big opportunity because in the DESI Index that measures the level of digitalization of a country, we are in place 18. When you look at the public administration digitalization, this moves back to 24. What happens in positive in this country? When you look at the cloud adoption for large enterprise, we rank 7. Which means that there is an opportunity to tackle large enterprise because they understand the value of the cloud value proposition. We have a lot to do to help the public administration to step forward.

But let's say, the opportunity, when you look at the other countries from Germany to Spain, to France -- U.K. is not in the chart because it's not European, but I mean they would be far ahead in the chart -- we run behind schedule. So we do feel the duty to support the growth of this country in terms of digitalization, but we also believe that we have a huge opportunity to take. And the reason is embedded in the structure of the country.

So those are the four main items we will go through today. The first one, I guess, is a very interesting one for you because the market was predicting a deceleration of 1%. We are running at minus 2%. We will explain you later on why there is this difference. But more importantly, on the first line of this chart, there is something happening that is so desired on the consumer market and it's already happening in the B2B market, market consolidation. Because as you know, Vodafone has been taken over by Fastweb. Iliad is a nonexistent player on B2B. Wind is pretty small. So what happens is that the market on the B2B side is pretty consolidated, which is what we aim to happen also on the consumer side.

So let's say, the first element where we do see an opportunity is a kind of a recovery business in an area where the market is consolidated. On the rest of the lines, let's say, we do believe that on cloud, as Pietro said, we have a unique combination because we combine professional services for cloud migration to the infrastructure, which is very, very, very large. At the end of this presentation, we will walk you through our data center, and you will understand the power of this engine. And you will see -- you will notice things that people do not think about. So when you will walk in our data center, on the floor, you will see a window, a glass on the floor. And you will see the fiber under the floor because what people do not understand is how pivotal can be the role of telco in the future for the reason Pietro was mentioning before.

So to use a metaphor, think about an high-speed train where you have all the wagons. In each of them, you have a technology that can be cloud, IoT, cybersecurity, artificial intelligence, I mean, you name it. But this needs a railway and this needs to be very, very speed. So the advantage that we have that in this ecosystem, we have the train and railways. So we have everything the market needs to satisfy all the needs companies of public administration can have. Then on cyber and IoT, as you know very well, let's say, the increasing risk of cyber attacks and the fact that the devices need to be more and more connected, this represents for us an opportunity.

Now before we move on to two vertical pieces of this slide, let me tell you something that Pietro has been very, very vocal during the last few months. And I think that we really have a compelling story to tell the market. And the story is that the global scene has become more and more complex. There is a higher risk of cyber attacks. You have a war on the borders of European Union, war in the Middle East. You have the policy, the trade policy that is coming from U.S. We have been shaking during the last summer. We don't understand. If you go left, we go right.

So the compound of all those concerns drives, inevitably, European Union to have a digital sovereignty. So we need to own our destiny in that space. And when you take this out, when you make this choice, you need to trust someone who can help you to fix the point. And when you start connecting dots, you cannot avoid to pass to one of our dots because we have the infrastructure, the sales force, the operations and the technology, which is exactly what sovereignty of the cloud would recommend.

So if you look at what Gartner says, it's a very simple piece of paper. So to be in a space where there is a sovereignty, you need to have 3 ingredients: data, technology and operations in the same territory, and we are the ones who can guarantee that. When we look at the future, which is artificial intelligence -- when looking at this slide, I was thinking about a quote, I hope I can repeat it, well, of Arthur Ashe, he's a famous tennis player. He used to say start where you are, use what you have, do what you can.

So when we look at artificial intelligence, we know very well what is our starting point. We know what we can use out of the assets that we have, and we know what we can do. So here is what the market is trying to do. We will do 3 very simple things, 3. One, infrastructure. You will visit the data center. We have a huge capacity on our infrastructure side. And if there will be a demand for GPU, we will do GPU as a service only if the demand will arise. Because if we would have invested 2 years ago in GPU, we would be crying today. Because nobody has not even 1 meter, square meter full of GPU, with the only exception of NVIDIA.

The second piece of this equation is we will understand, we are learning, we will understand which are the models, the platform that we can leverage on as a channel to resell them. So if there is any generative AI or predictive AI that we can leverage on, we will be the ones delivering that value proposition. And the third one is the use that we will do with artificial intelligence for optimizing costs that we have internally. We have a huge caring -- customer care operations. We manage an amount of contracts that you cannot even imagine. So there are many areas where artificial intelligence can simplify our life and can reduce our costs. So those are the 3 highways that we will go for.

So which are the distinctive assets? I mean, I hope you really enjoyed the lunch because the rest of the afternoon can only get worse. So -- but you need to be patient because we have some time to spend together. I will make it quick, comprehensible, but we have a lot of content to share.

So distinctive assets. So this is the $1 million chart. We have 6,500 qualified people. We have global alliances that nobody has in the country, plus 2,000-plus certifications for many of those global vendors. We have 3 factories, IoT, cyber and cloud. The 3 factories are running business cash positive, so we make money in each of them.

We are -- after the separation, our competitor were -- so they were telling the market, they lost the network, they lost the network. As you will see in the slide that I will present later on, so we are the most infrastructure player still in the market, 16 data centers. We are a leading player in the PS space, and we have a very loyal customer base.

So we will go one by one very quickly. So those are the people, 6,500 people. We decided to divide in 3 very simple fields, go-to-market -- and Pietro was telling you, we have more than 1,500 people in the sales, delivery, 2,200 operations, 2,200. And what is very important in the size of this workforce is the item that you can see on the right-hand side of the slide in blue. So we have radically changed the commission scheme of our people, and we measure them actually on the results that the company is looking for. So when I came on board, we used to pay salespeople for the amount of revenues they were booking.

And then after 2 years, we were getting surprises of any kind. Today, the rule has changed. So the 3 items on which people are measured and are remunerated are the margin of each contract. So just to make an example, if you sell EUR 100 million of licensing or EUR 100 million of cloud migration, you get a different reward based on what you have sold. So the level of service revenues and the group EBITDA. If we reach those targets, nobody gets, not even a penny.

So second bullet was on global alliances. And here, there are 3 items in this slide. On the left-hand side, I don't need to spend so much time because I guess that you know the usual suspects. When we go to the right-hand side, we have 2,000-plus certifications. But more importantly, there is one item that we didn't mention yet, which is we have an ecosystem of more than 500 partners. So the reason -- in the very first slide that Pietro presented to you, you have seen that the revenue per account is 3x higher than our peers is because our partners, in many ways, do represent also channel for us.

When you go very local, when you go to Sicily, our small system integrator not only works for us for integrating the system, but in many ways, it is also our sales channel. So either they get an opportunity, we come on board, we get an opportunity, we pull them on the business. But let's say, this ecosystem of network, which is very loyal to us, makes our business more profitable and more [indiscernible] in the country.

So this is the story of the factories. Noovle is on cloud and AI, Olivetti is on the IoT, Telsy is on cybersecurity. What is very interesting in this slide, you will see the circle here again. So I circled the 40%. Why? Because marginality of our factories is 40% gross margin. Marginality of the business, as you will see later on, is 35%. This means that when we have told you many times that by in-sourcing capabilities, our margin will improve is embedded in this KPI. Because if I move into our factories, the business marginality goes from 35% to 40%, so we can win.

The second element, very interesting, is the share of revenues, which is 20%. And more importantly, the 2x means that 3 years ago, this 20% was 10%. So in 3 years, we doubled the sell-through toward our factories. So this is a story that you know very well about the network. So when you look at the right-hand side of this slide, which is Mobile, nothing's changed. Basically, everything stays as it was. And when you look at the left-hand side, actually, we should deliver the message clearly and loudly that there is only the passive side of the network we have sold, but the intelligent active side is on our side. Sorry, I said twice, side. But more importantly, we own and we build the customer. So there is no disadvantage apart from the fact that we got rid of the debt, and now, the company is working very, very well.

So let's come to the name of the game, which is data center. Because you have heard many times about we are the red spot here. So there are many people talking about data centers. We will build data center, we will invest in data centers. So let's frame the situation as it is. We have 16 data centers. 8 of them are rating Tier 4. We have 6 LEED certifications, 5 gold, 1 platinum. The platinum, which is Pulsano, is one of the 23 data centers in the world with that certification. So it's a nice, best-in-class operation.

So we have 1 big data center under construction in Acilia. And we have created a network of edge nodes, more than 20, basically to have low latency wherever in the country. So when you look at this, you can see that we cover the entire territory. All the data centers are connected and all the edge nodes are connected to the 16 data centers. So this make very distinctive, our value proposition.

Now just -- because I don't know if in the walk through the data center, you'll do later on, people who will guide you, will tell you, but I don't want you to lose this KPI because this is a very important KPI. Capacity of the place where we are having this meeting today is 8 megawatts. The possible extension that you will see we have already started is up to 30 megawatts. We recently bought the field on the other side of the street that holding this location could bridge the capacity to 50 megawatts. So today, we have in place 8, 80% saturation. We are -- we can go up to 30 in the construction that you will see later on. And we could potentially go up to 50, leveraging on the field that we have bought on the other side of the street. So when you get out from this data center, you look in front of you, everything you see is our property.

And this is very modular. So we will do whatever we need to satisfy customer needs going forward. And we will model if how much this should be GPU, how much this should be infrastructure as it is, but let's say, this is a very distinctive asset.

Now let's move to an item that you have been hearing many times. I don't think that it is clear, what we do in this space. This is a national strategic hub in Italian is the Polo Strategico Nazionale. So this is a program that started in 2022 and is managed by 4 partners, TIM at 45% share, Leonardo, 25%, Sogei, 10%. cdp is actually a financial partner.

Why this is so important and why we framed this in gray, because the 100% of revenues we generate is divided by the 80% that you have on the left because cdp doesn't provide any service to the business, but it is a financial participation. TIM, what TIM does, infrastructure, cloud migration, managed and professional service. Leonardo, cybersecurity, managed and professional services. Sogei, training, professional services.

Now why we colored on gray the layer between the National Strategic Hub and the public administration because the real engine of this program is TIM, and we will explain to you why this works. So this is the start of the program. 2022, the budget when we started the program was EUR 2.6 billion. So we were aiming at generating EUR 2.6 billion revenues in -- from 2022 to 2025. Actually, the number -- the total value of the contract booked by the end of 2025 will be EUR 3.8 billion. So the size of the pie is becoming more and more, big.

Third element, we have 550 plus -- actually, the exact number is 553 today, contracts signed, out of which 2020 (sic) [ 220 ] are already fully migrated to the cloud. So by the end -- so the mission to accomplish this by end of 2026, we need to have 550 public administration migrated on the cloud. So the question I got many times very often, and I would say I understand the rationale behind the question is, yes, but what happens when this gets to an end because by the end of 2026, money will not be there. And actually, you have done what you have done, but what happens till 2035.

And what happens is this one. That actually, we do run 90% of all contracts. So 90% of all contracts signed by the Polo Strategico Nazionale, the National Strategic Hub, have been signed by our sales force. So we knocked that door, we visited the customer, and we have the relation with them. But more importantly, more than 60% of the total revenues are going to TIM. This already happened in 2022, 2023, 2024, and this will happen going forward.

So if you do the math, you take 2025, you take EUR 3.8 billion, you divide by 10, which are the years that we have from now on until the end of the program, you can understand that the size of our 60% plus. And on top of this, which will be a recurring business, we will have the possibility to upsell those administration. Why? The space for upselling is very huge. Because even if after 2026, the public funds would stop, the budget of every single public administration is 90% higher than what they paid to the Polo Strategico Nazionale. So they have invested 10% of their budget. So we still have a room of 90% space in their own budget even without any other public support to upsell and to cross-sell, depending on the situation. So we are getting to the end to the asset.

So among the assets, clearly, we have a very loyal customer base. We have a penetration of more than 8,000 companies in the country. If you look at the churn rate, I mean, you would laugh because let's say, basically, we don't lose any customer since ages. And we have 95% of loyalty of the most important companies of the country. Clearly, this is only an indicative slide. I mean, those are only some of the brands because we didn't want to get permission from hundreds of companies to display their logo.

So let's have a look at the piece of meat attached to the bone here. So when you look -- so the segment around the left, the column that you have in the center is the volume, means this is our penetration in each respective segment. So when we look at the top, we are at 80% plus penetration. When you look at the large, we are at 35% penetration. When you go to the public administration, we build every single public administration, central or local.

What is interesting in this, the space on the right, because when you look at the share of wallet, there is a huge room for improvement. Because while the penetration in terms of volume is very, very high, the penetration in terms of value is pretty low because for each of them, you can see the gray area is much, much bigger than the blue one. Then there is a space that we started 1.5 years ago to penetrate, which is the SMB, where our factories are basically producing products and services that the SMB channel is selling through an indirect sales force, which is a space where we can generate a catalog, which is an out-of-shelf catalog that they can sell basically very fast to many, many companies.

Here, you will find other two circles because this is -- again, back to what Pietro said at the beginning, those are two areas that -- where nobody can compete with us. Because in order to go to the large segment, which means mid companies above 250 employees and the small public administration, so which are 25,000 entities across the territory, you need the [indiscernible] sales force. And this is an asset that we are -- nobody can replicate.

On the right-hand side, just -- Pietro was saying before, we have a company signing contracts for EUR 20 million, EUR 50 million. We have a contract company signing contracts for EUR 400 million. So you have a bank there that signed with us a contract of EUR 400 million for 10 years, another one, EUR 125 million, 3 years, a leading transportation company, we don't tell you the name, but it's the leading transportation company, EUR 300 million in 5 years, and 1 ministry in Italy, minister paying EUR 127 million in 3 years. So we have many, many contracts which size and duration is pretty big.

So this is a first breakdown of our business. So when you look 2021 and 2024, you can see two things. The first one, which is the one we have circled, is that with the same number of customers, we increased the revenue by EUR 600 million. So -- the topic we illustrated before that we can penetrate further, the same customer by upselling and cross-selling. So staying fixed, the volume, the value can increase is proven by the 4 numbers on the right-hand side of the slide because the number of customers is the same as revenues are growing very fast.

The second element, which is driven by the National Strategic Hub, cloud contract duration moved from 20 months to 40 months because this is a program where, in many cases, we have 10 years contract with the customers. Then you have the weight of IT services, which moved from 52% to 64%. And then the data center capacity, which moved from 80 to 100. The expansion in Acilia will get us to 125, but we have a limited space if the opportunity will arise.

So we are at the end of the asset. Now we will walk you through the unicity of our value proposition. So I will not bore you with content -- qualitative context. But let's say, in this slide, what is very interesting to our opinion is that we finally made the decision and took the action of limiting the catalog to the very single items that the market is looking for.

So when I came on board, we had, I guess, 250 different products and services. Now the catalog is different Clearly, you can have different size. So this is a business, very custom made, so there is nothing that you can sell out of the shelf. But in every single line of this, we compete with many -- so you can find Fastweb or Accenture or [ engineering ] or you can name the competitor that we can find in each single line, but you will not find not even one of them which is in every single line. We are everywhere, always.

So those are the big numbers for each line. So connectivity, the first number is this one, EUR 1.1 billion. This accounts for 36%, it's 1/3 of our TIM Enterprise revenues. This is the market share that we have. So in the market, we account for more than 40%. And this is our performance for the moment. So while the market was calling for a minus 1%, we are at minus 2%. I will tell you later on why.

So this is a very interesting slide. And again, look at the circle on the bottom of the slide. So the performance is minus 2%. What is interesting in this slide is that when you look at the weight of the fixed component that actually is doing very well versus the mobile component, you can see that the risk is limited to a small amount of money. And that is the area where we are decelerating the most. And the reason why we have -- we registered the deceleration higher than the market is because we lost, as you know very well, 3 years ago, but we lost because we decided to lose a public bid, which is called the Consip Mobile. And during the last 3 years, clearly, having lost this contract with the public administration, we lost the number of sim that we were providing them with.

What is very interesting about this hemorrhagic phenomenon is getting to an end in the sense that, let's say, this was a 3 year tenure contract. We are basically almost at the end of this contract. So we can see the effect of this going probably up to the mid of next year, but at a certain moment, we will touch the bottom, and this -- we will restart again. So this is the only reason why we have a deceleration a little bit higher than the market. But what let us feel very comfortable is that the higher component of this chart is the one that keeps the performance steady.

Cloud. So cloud is the same size of the business, more or less. The relative percentage of our revenues is 37%. We have a 50% plus market share. When you look at the infrastructure, so data center megawatt, we are close to 20%. As you probably know, there are 530 megawatts installed in the country. We are at 125. So you can do the math, but actually, the share goes up with respect to the cloud migration and professional services. And this is the way the business is growing on a year-to-year basis.

So here -- so this chart is a little bit complicated, but I think that the cloud is something that deserves some attention from you and some explanation from me. So as Pietro said at the beginning, there are -- there is an opportunity, which is the one on the right-hand side of the slide. But actually, we do 3 things. We do multi-cloud, which means that we power the engine of large hyperscaler. We provide customers with our cloud value proposition, which TIM Cloud. So we don't sell Google, we don't sell Amazon, we don't sell Microsoft, we don't sell Oracle. We sell our cloud. Probably, some of you who are following TIM since a while can remember Noovle Italiana. So this company started making cloud when cloud was a word that not everyone was familiar with.

And then there is the third leg of this value proposition, which is the sovereign cloud. As we told you before, we believe that there is a space which will be fully incremental for us, which is the space where also large private companies, strategic ones will be forced to go on a sovereign cloud. So potentially -- and this is what we wish to happen -- the model of the National Strategic Hub could be potentially replicated also on the large enterprise business.

When you look at the business that we do is one is data center, the second is cloud services, the third is licensing. And this is the size of it, the respective size of it. So we have approximately EUR 100 million, a little bit north of EUR 100 million on the infrastructure, EUR 0.5 billion on the cloud services, EUR 0.5 billion on the licensing. What is very interesting, again, you can find the two circles dotted on the right, you have in terms of margins, infrastructure with a very, very high margin, cloud service with high margin, licensing with a low margin.

Now when you look at the growth, which you can put on top of the margin, actually, data center are growing with a very high margin. But what it is surprisingly do very, very well is that in the area where we have high margin on cloud services, this is growing north of 40% on a year-to-year basis. So it is clear that we are in a good space, and we can take further profit of what happens later on, then we will answer to all questions you make later on.

So cybersecurity, IoT and other IT, this is the rest of the business, EUR 0.8 billion, 28% of the revenues. We have -- cumulative, we have a blended market share of circa 10%. And the reason why this component is not growing is because we are exiting the other IT side in the sense that we are getting rid of everything that marginally is not interesting for us and we were simply reselling. So the negative performance is driven by a conscious choice. While, let's say, the acceleration of cybersecurity and IoT is, as you can see, is getting much, much better than the market.

Now -- this is, I guess, we got to Slide 38 to let you see something really interesting for you because -- although blah, blah, the 37 was a little bit noisy. By contrary, I guess this is what you are looking for. So on the left-hand side, you see the breakdown of the EUR 3.3 billion we have seen before, out of which EUR 3 billion in service revenues, you have sales of hardware and other items on the EUR 300 million that you sum up to the EUR 3 billion to get up to EUR 3.3 billion.

And this is what happens on the right-hand side of the slide. When you look at the EUR 3.3 billion, you have EUR 2.1 billion of COGS, which brings us to a 35% gross margin, which is EUR 1.2 billion. You have then the cost of the workforce, and you have an EBITDA AL of EUR 700 million. And when you look at the CapEx, at the EUR 700 million, you need to reduce that amount by half, basically by EUR 350 million. What is very interesting about this chart is that when you look at the CapEx breakdown, you can see that out of the EUR 350 million, EUR 220 million are driven by growth. So you have a CapEx, if you have a business, you don't have a CapEx, if you don't have a business. While the EUR 130 million are mostly driven by the captive business that we generated to our team.

So when you look at the right-hand side, you have basically EUR 90 million for the infrastructure, so investment that we do on basically on data centers. You have EUR 70 million that are CapEx revenue driven. And then you have EUR 60 million, which is hardware, which means device management and other hardware where we have a CapEx because we resell it. So this is basically on the CapEx.

So we have seen the asset. We have seen some of the distinct elements. Now the question is, is this sustainable? Yes or not. And we believe that the plan is truly sustainable. So I think that some -- when you look at the numbers on the bottom, you can understand that at least in terms of trend, we know what we do. But more importantly, we do what we said we have done. Because 3 years ago, we told you that we would have bet on the fact that the IT component would have been much bigger.

And here we are, we are at 64%. And the reason why we go -- we believe that we can go towards the 75% is because on top of connectivity, cloud, IT and cybersecurity, we will keep delivering products and services. We believe that there is an area of acceleration which will be driven by sovereignty, artificial intelligence, quantum threat intelligence because you will see later on, how much innovation there is in this company.

We have been feeling very sad for so long for providing you with the perception that we were a leg of a telco business. This is a truly innovative center. You will see some of the demos later on. But let's say, we have embraced as much as innovation we could. And we are in the forefront of this sovereign conversation. So when you see how much investment we have made on the infrastructure and how much investment we will make in the next 3 years, which we -- it's about EUR 1 billion, where in the infrastructure, there will be a big fraction of it. You understand that the desire and the intention of upgrading the infrastructure was forecasting a need that is now arising, which is the digital sovereignty. So those are the areas where we will move toward.

Now we will show you 5 boxes that can let you understand why we believe that it is sustainable. So first of all, the 3 strategic highways. So cloud positioning is an area where we will consolidate our value proposition, infrastructure and data center, sovereign cloud, edge cloud, we have already showed you the map. We will expand the offer of artificial intelligence solutions. And we told you that we have 3 items, we will tackle infrastructure as a channel, we will go with generative and predictive AI, and then we will adopt services that can help us to reduce and optimize cost.

The third one is the more the cyber security, the cyber attacks are increasing. The more connected device you need to have in the country, the more we will take the opportunity of -- on the next generation. And everything will have always the same reasoning at the bottom. We want to in-source as much as capability as we can.

I want to tell you something that Pietro is saying very often, which I think is very interesting. When you need to evaluate your trade-off between making and buying, you need to understand what are you very good at and what you're not very good at. So in the strategy going forward, we will keep buying what we have bought in the past. If we understand that the debt capacity is a capacity which will take a lot of time to close the gap. You need to make a lot of investment.

So if there is someone good at providing you debt service, if you're good with the marginality you have, you stay on the buy. Where you need to move on the make, where we are all at the starting point, and we don't have -- we don't run behind schedule. So when you look at IoT, cybersecurity, artificial intelligence, quantum, threat intelligence, there is nobody in the market that is far ahead of us. So -- and in a space where we compete with the same level of capability, we want to make. We want to learn the business because we have shoulder very, very large, and they will feel the pain.

So those are the 5 items we want to work through. The first one is we have EUR 600 million of professional services that today, we buy externally. So we outsource that capability. We will pick up the number that we -- let's say, it's that fits with our need. Out of the EUR 600 million, the services that we believe we need to in-source. And for the rule, we are explaining you before that when we in-source, the margin will increase, we believe that we can aim at 4% -- 3%, 4% of that box, which we believe is a reasonable efficiency to be generated.

This is an area where the space for growing the margin is smaller. We believe that here, there is a 2%, 3% space because here, you have also some of the licensing software, but there are also services that are not very qualified like the ones in the EUR 600 million. So there is a space to take there where we can negotiate with suppliers, vendors, partners a better -- and we can consolidate them in order to get a better margin. And let's say, only part of those numbers are already factored in our plan. But let's say, this is a space that we can take.

And then we have 3 very big top line items. The first one is we have 550 public administration attached to our business today. 90% of them, contract signed with us. Today, for that contract for the services, the National Strategic Hub is entitled. But once we have finished the migration, we can go there and we can upsell and cross-sell those public administration.

The second one is the 80% untapped opportunity, which is the value versus the volume of the slide before. So when you look at the private, we have only slightly less than 20% penetration in the value in the share of wallet of all customers we deal with. So we believe that there is this untapped opportunity. And then this is what Pietro was mentioning before.

We have a EUR 4 billion of contract already signed in our backlog. This means that 62% of my connectivity in 2026 is already in my pocket and 66% of my IT revenues are already in the pocket.

So you have those EUR 4 billion that you can distribute in the next 3 to 5 years. But let's say, every year, we generate new contracts. But today, we have a EUR 4 billion backlog in a business generating EUR 3.3 billion revenues.

So just to summarize, those are the highways strategically. Those are the areas where we can enhance capability internally. Those are the areas where we can go for top line. When you look at the numbers, those are the numbers. I hope you have enjoyed the presentation. I'm going to pause here. I thank you very much. But before we leave you, I would like to show you this table. So we started from 000. I stop here. The number are 15, 1.9, 164. So since the moment I started talking, could you please click here? No, no. The number is -- so every hour, we sign from 8 to 10 contracts, every hour. Every contract has a value of EUR 123,000, and we serve approximately 150 people per hour, customers per hour.

So when you look at this, you understand how big it is. So while we were talking, and I was boring you with the presentation, this was happening. And every hour, it happens, 250 years -- 250 days a year. So I thank you very much. I left the stage to Pietro for the closing remarks, and then I will wait for your questions.

So I see [indiscernible] huge amount of information. But we are paid to manage complexity. I'm not saying that this is an easy future. Everywhere in every country, [indiscernible] this kind of business than the other. A unique business combining telco strength and IT capabilities with distinctive organic performance. I will try to explain [indiscernible]. So just to be clear last week [Foreign Language] in theory, you can buy each single technology that Elio showed to use on a singular basis. You buy something from TIM connectivity, you buy the cloud from some of the hyperscalers. You buy the security by some other one.

And you say, you do the sum of the things and you will have the same kind of [ technology ]. The truth is that with this kind of technology, this is not the truth. Why? We have an important customer that bought from us the connectivity. They sign a contract with a hyperscaler for the cloud. They bought from an important U.S. company, their router, and they bought the cybersecurity. All the 5 players were supplying the service inside the SLA. When you put all these things together, they don't work. They don't work because you have to take a look to the micro of the connectivity, any kind of micro interruption do not allow the cloud to work as efficient as you would like.

You have to define the parameter of the cybersecurity. And if you do something that is not exactly matching what you need on the latency and on the cloud, it doesn't work. So the possibility to have a partner that is able to manage the end-to-end, allowed the big corporation to not have the headache to try to understand where the issue is. And we are in a unique condition because in Italy, we are the only one that is able to supply all these services. You will see while the time will go that it will be very important to act like this.

The second, and again, we are not the driver of the growth of the market. The growth market is a wave that we are surfing. It's not me or Elio that have to convince the customer to migrate in the cloud. It's not me or Elio that we have to convince the customer the need of cybersecurity. It's the market trend. Just to give you an idea, with quantum computing, all the algorithms that today are used to have exchange of communication through cryptography will be broken. An example, also more severe than that. If you take your WhatsApp, sometimes it will appear on your WhatsApp data. Your communication is with cryptography end-to-end, and no one can break it. With quantum computing, it will happen. So you will need quantum security. Do you know the only player in Italy today with quantum security technology, it's us, with Elio.

So we are not only surfing the wave of today. We are ready to surf also the waves that are coming with security, cloud, but also with sovereignty. When Elio was showing exactly you have the public cloud and you know the truth, some of you can think that if you have a data center in Italy here, the one that Elio will show you, the data are under the Italian jurisdiction. This is what is the belief of everybody. The truth is that if they are in the hands of a hyperscaler, they are under the jurisdiction of U.S. So any time the national security of U.S. can ask detail about the information that are there. It's not me that is telling that. In the middle of September, the French and German government was at [ Brussels ] to talk about sovereignty of the cloud. They will ask that the cloud of large corporate or the public administration will need that at least the cryptography key will be owned by a national player. But this is exactly what today we do with the National Security Hub.

So I'm not talking about the future. I'm talking about the present. EBITDA growth, Elio showed you what we will do. So we are continuing to understand what will be the activity that will in sourcing because it will be very important and open source in this kind of scenario where the sovereignty is becoming much -- more and more important. It will be a key element also to avoid, to have too much legacy with software owned by [ tilt ] player that can increase the price overnight by 50%. Science fiction or reality? I think that you know very well the litigation that are today in several countries about exactly this issue, the increase of price between 15% and 50% of some software.

The last, the high visibility on 2025 and 2027 targets. It's important to remember that the first time we talked about TIM Enterprise was March 2022. It was a PowerPoint and at that time, there was a private equity that put based on a PowerPoint, an offer giving a value for this component around EUR 6.5 billion. I'm not here because I want to sell a stake of this company. We want to take this company for us because this is a start. But on a PowerPoint, one of the largest private equity in the world in 2022 was offering EUR 6.5 billion. Now this is no more a PowerPoint. This is a reality, and this is our future.

Thank you, and we have now the Q&A. Is it right, Paolo? Thank you.

It's Paul Sidney from Berenberg. I appreciate the presentation. TIM Enterprise has 16 data centers, continues to invest. Many of your peers have sold data centers over the years due to sort of leverage concerns, you've had leverage issues over the years yourselves. But what are they missing? And what are you getting right in terms of investing in this area?

Each company has a different history. When we sold the network it was due to the fact that it wasn't a distinctive asset because in Italy, we were the only one that was -- that had the ownership of the last mile. We were obliged to offer that last mile in fiber and in copper with regulated prices to everybody. I was investing EUR 1,000, EUR 1,500 per each line with 0 delta revenue at retail and wholesale. So if you do the business case, why have to keep?

Differently, in the case of data center, I have no obligation. This is an asset that will give me a competitive advantage. So again, in some other countries, sometimes the fixed network is a competitive advantage for the ex-incumbent, and they will keep. But then they sell network -- sorry, data center and antennas. So this is the first main difference. Let's remember this important point. In 2022, I was able, for the first time after several years to convince the National Italian watchdog to increase the price of wholesale. The calculation of the price was made based on a WACC that was the average of the last 5 years. We were in the middle of a war crisis, inflation, energy crisis and my cost of capital was 3x the average WACC of the last 5 years. Why have to keep the fixed network and sell the data center?

Just to complement what Pietro is saying, I think that there are 2 things that we -- are very relevant to us. The first one is this is a strong part of the equity story. So if you have the data center, you don't have the data center, this for the market becomes more or less relevant. But the second one, which is the most important one, out of the 16 assets that we own today, 8 are already fully depreciated, 8 are about to get fully depreciated in 4 to 5 years from now. From that moment in time, this is margin to the box because when you have depreciated the asset, so this is not the moment where we could take that action. That action could eventually -- we could potentially take that action if we would invest in 3 new data centers and someone would fund part of that business, we could split the benefit. But for the asset that we have today would be a little bit...

And before to give, I think that it's important also to discuss for a few minutes about the data center because everybody are talking about data center, and it seems that it is something that you build overnight like that. Just to explain why it is a competitive advantage. First of all, we are talking about Tier 4 data center. It's not like [ Armani ] or some other things. Tier 4 means that you have a huge level of resilience. So large corporate banks, insurance, public administration have to migrate something in a Tier 4 data center. A Tier 4 data center cannot be built everywhere. Why? Because you have to find a place where we have no risk of earthquake. You are not Italian, and you don't know that Italy is a country that is at risk of earthquake.

You cannot be close to an airport. We are full of airports in Italy because we are quite lazy. You cannot be too much close to the coast because if you have a tsunami or something like that, you have issue. Then you have to find a place where we have 2 different power companies that are powering you on different routes. So you cannot build that everywhere. We were lucky [indiscernible] was there when we took the decision to build the first Tier 4 data center close to room. It was a long shot. Then you buy the field, infrastructure everything, build the walls and then keep the rooms. It takes time. I have a lot of people that are talking about data center, but it will take for them several years.

In the meantime, we bought the field around our data center because we have this one, we bought the field in front of us. We know that this area is already available. We have the power. So we have a real competitive advantage. Why have to sell the data center to someone that will bring its own 8%, 12% of IRR. That will be applied to me. And no more the company with the level of debt that we had in the past. Why?

The last, if you want to be really reliable, you must have the data -- at least 2 data centers with a distance among the 2 -- between the 2 of more than 500 kilometers. Italy is 1,000 kilometers. It's not U.S. or Brazil. So we are in a unique condition. We have 8 Tier 4 data centers, and we have the field around some of this data center.

The second competitor, if I'm not wrong, are 2 data centers, Tier 4. So can the other player build further data center? Sure, it will take some years. But in the meantime, we will not be here crossing finger. We migrate our customers in the cloud. The migration in the cloud is not a mobile number portability. You go in the shop, you change tomorrow money. It's a journey. One of our main customer at a bank took 5-year journey to migrate in the cloud. Do you really think that for 5% discount, they will put at risk for a further migration, will be complex.

Fabio Pavan, Mediobanca. I have many questions. Let's start from this one. You were telling us about the optionality. So my question is, what is not captured yet in the plan? It's still AI, not fully and GPUs you were mentioning.

The other question is when we look at 2030, just to name a year number, so long-term view, is it fair to say that probably cloud will represent more than 50% of the revenues of enterprise? And what about the margins over time? Could you give us a sense of cloud profitability only?

And finally, you were mentioning external growth. Is this something we should expect eventually also in the short term or you have something you are considering as an option over time?

About the opportunity not included, I have to remember to everybody that when we show this number, all of you were thinking that it wasn't possible. We are delivering the 2025 number. We'll deliver the 2026 to 2027. So if -- and we think that we can, we perform this number, we are really doing something that is out of scale in Europe. Then for sure, there are several opportunities that can come. A stronger adoption of the sovereignty in the cloud is an opportunity. In the migration towards our internal factory [ is acceleration in the margin ]. So there are several things that can further accelerate.

If we proceed with our activity with [ Poste ], one of the working team that we are developing further synergy. But today, I want to stay on the ground. Today, our plan was considered very challenging. We will move to a level of debt in terms of leverage between 1.1 and 1.3 and no one was thinking that it was possible. So I can tell you, we have a huge opportunity. I will give you the number, and none of you will factor that in their business in their model because this is true. A credit rating agency put a haircut on our number. So we stay on reality. We will deliver the number as we did in years.

So again, to complement what Pietro said, I think that, let's say, I already disclosed the number that I was not supposed to disclose. I'm going to repeat it because I already told you once. On the component cloud services, we are north of 40% I would say, in the region of 45% margin. And when you look at the EUR 1.1 billion cloud, you have EUR 0.5 billion, which is cloud services, out of which EUR 400 million are make. So this is TIM Cloud. EUR 100 million is towards hyperscalers. So this is an 80% make business that gives you the sense of the trajectory and also the marginality of that business.

We will get rid as much as we can of licensing when this is not paramount for us to step into the door of a customer or if we don't believe that there are services to attach to the licensing. And this, in theory, could affect a little bit the top line, but should increase the relative margin. But I think -- I mean, the guess is will cloud will be 50%? Most probably, yes, in 5 years from now, yes.

Mathieu Robilliard from Barclays. Thank you for the presentation. Focusing a lot on the data centers, I think, it's a very interesting disclosure that you've been giving in terms of the revenues. And I had a few questions around that. One is when you talk about the capacity you have, how much of that is already utilized? I guess what I'm trying to understand is what is the potential revenue 60%. So 60% enables you to generate EUR 100 million of data centers hardcore revenue and EUR 400 million of cloud services because that's what it allows to.

Okay. Thank you very much. In terms of the backup of the -- you flagged that you still have a lot of points of connectivity that belong to you. How much of a competitive advantage is that? I mean, don't you have an obligation in any case to wholesale this kind of access to competitors? So I wanted to understand how much of a competitive advantage that was. And then I was very impressed by how you have changed the incentive to your employees, focusing on EBITDA. But as you show also, there's a big part of hardware and equipment, CapEx-related revenue or revenues -- CapEx-related revenues, which I guess, but thanks for explaining me is also important in determining what is the real return on this business. Is that not something maybe to -- that you will be adding in the future also as an element of judging the merits of each contract?

About the backbone, we have no obligation. Since the beginning when we sold the network, we told to everybody that we will continue to be the most infrastructure player. But sometimes in the presentation of value, it is also much more important. There are a lot of people that are talking about AI. But some of you know better than me that today, there's a competition about also the AI model. It will be everything managed at central level or more remotely.

In a way or in another, edge computing will become an important element to deliver AI and low latency services. And Elio showed you that we are the only player in Italy today with several edge computing point of presence. We invested on that EUR 100 million. Everything will be ready by the beginning of 2026. So you like AI, you like cloud, you like all this kind of technology. To deliver these services, you need 5G low latency. We have it. Fiber access, we have it. Edge computing, we have it. Data center to avoid to be killed by the payment of the leasing or the building, we have it. Cloud capacity, we have it. Security, we have it. Please show me who are the other players in Italy and in Europe with a so complete end-to-end capacity to be at the frontage of the development of these services.

Then the other question about the incentive.

Yes. I think you touched a very nice point because that's the reason why we changed the model because hardware, software and licensing were the pond where they were fishing to get -- we didn't make the number they were making a tons of incentives. So today, we don't discourage because we understand that resell hardware, software licensing is paramount to the development or we simply remunerate salespeople in a way which is different depending on the value that this generates for us. So if you sell EUR 100 million of 365 Microsoft licensing, you get and if you resell, but let's say, it's -- we will not exit that business because in many cases, it's a way to stay attached to the customer and to keep them loyal. But that's, let's say, we believe we found a nice way of having people on board on the model.

It's Keval Khiroya from Deutsche Bank. And I have 2 questions, both of which are on pricing. I appreciate these contracts probably all quite individual, but can you give us a sense of what's happening to pricing on new contracts for cloud and security? And secondly, when contracts come up for renewal, how easy is it to put pricing up on renewals? And can you give us a sense of how material those price rises may be?

Thank you for the question because this gives us the opportunity to underline something that I missed during my presentation. So something that is very interesting about our business model is that when you exit the space of a very large top enterprise company of very large public administration, I shouldn't say this, but let's say, often you don't find the procurement office in front of you to negotiate. So the more you go the more you enter the space of a local business, the better your margin goes because the capability for you to negotiate that contract is -- let's say, on cloud, we tell the story that everybody is telling you, which cloud is a business where to exit the business is pretty tough for a customer because when you have migrated your entire intellectual property, strategic data, critical data in a physical space like this one that we own, let's say, at the end of the contract to exit that space is very difficult.

On the other hand, I have to tell you that I have personally a dream. I will turn 62 in December so I don't know if this will dream will materialize one day. But let's see, which is that a company with the size of TIM and TIM Enterprise should force the market to cloud portability. So we should get to a point one day where the easy application that you can migrate, you can move from a hyperscaler to another, simply because you wish to do it. So -- and we are the perfect -- so we can only win in a space like this because we have certifications on all vendors, and we have a space where we host hyperscalers. So for example, in this place, in this physical place, if you would move from Google to Oracle, if the application would be available for the switch, I could be the only one making this possible. So I don't know if I answered your question.

Gianmarco Bonacina from Akros. Question on your Slide 28, if you can elaborate a little bit more volume versus the average spending by customer. You showed for public administration, you have basically the whole market in terms of number of customers. But you have, if I read correctly, a very small like 10% to 20% of the average spending. So why is that? And how you plan to grow this? And also maybe who are the others in terms of here in this chart in terms of competitors?

So I know the slide by heart. So actually, what it is strange in that in positive. Another one? No, no, no. Is this one? No, a very loyal customer base is not this one. This one. So actually, what it is very strange in this slide in a positive way, but this is opposite to what happens is that when you look at the -- so as I told you before, if you have -- if we average what we bill to the public administration, with the National Strategic Hub, we are only at 10%. So if you take the Latium region, they have spent approximately 10% of their budget to migrate all the health care on the National Strategic Hub cloud. We host them in a data center close to Rome.

So this is typically what you build because they have -- and that's the reason why I was saying we have 90% room for improvement. In this area, we have historically a presence that is really, really huge. And that's the reason why the weight of [indiscernible] is higher. But I mean, still you have 2/3 of the pie that you can. So out of the EUR 5 million that they spend every year on ICT, here, we bill 1.5 probably -- approximately more or less.

And when you look at the top, it's the same. So we -- there, we bill EUR 1.6 million out of EUR 14.5 million. So this is typically the penetration that you have because they have, let's say, that's the percentage of spend that you can capture. When I say, on upselling in this area and in this area, we can -- there is something that -- because I didn't answer completely the question before. So what we have factored in the plan, what we don't have factored in the plan. Actually, when you look at the public administration, the upselling part on the 550-plus public administration, it is not yet factored in our plan because in the plan, we have the amount of revenues we will generate until the end of the migration, which is the plan '24, '27.

If I may, then there's also an issue that will be solved by the time. Today, you can migrate in the cloud application that can be [indiscernible]. So if you talk about applications that are used by the hyperscaler, [ Siebel ]. [ Siebel ] today, you have the old version on-premise and the new version in the cloud. And so it's easy to go and convince the customer. There are some sectors where you don't have yet the vertical application that were used during the year, by that kind of customer that was on-premise in the cloud.

So the following question could be, Pietro, but if they stay on-premise forever? They cannot stay on-premise forever. Why? Because if you do not migrate in the cloud, you will be unable to interact with the other application that will be migrated in the cloud. If you want to use AI, you need a base of data. And this base of data must be in the cloud. So it's a process that you cannot stop. Someone will come earlier, someone will come -- will arrive later. But this is something that you cannot stop. And when you have to go in the cloud, you will discover also something important. Today, the company will have when they have solution on-premise, sometimes they forget about security.

Once you enter in the cloud, security becomes something that we have to take care of that and will be also easier to do the upselling. So these are all elements, but it's not because Pietro or Elio are telling you. If you see this is the trend more or less everywhere in the world. Then our country also the first [ 35,000 ] companies are not the first [ 35,000 ] companies in U.S. And so we have some characteristic, the size of the company and some country-specific things that allow some of the company to continue to stay on on-premises solution, but they will migrate in the cloud in any case.

Thank you for the question. It's Ben Rickett from New Street Research. I wondered if you could talk a bit more about the extent to which your cloud revenue growth is being driven by the [ PNRR ] funding, the European funding program. And to what extent beyond 2026 when that funding drops away, how does that then impact your cloud revenue? If there was a one-off migration revenue that drops out? Or does the growth rate decline, for example?

Then I will leave to Elio to elaborate on that. But what is important that today, the National Security Hub is not only a consortium that gives some incentive through the PNRR to migrate. But the migration is, as I was trying to explain before, in the only case in Europe of sovereign cloud. Because the data of the public administration inside the National Security Hub are inside a cloud on which the cryptography key is owned by an Italian player. So when it will last, the incentive, I don't think that someone will decide, no, now it is no more important the sovereignty of the cloud.

Just to give you an idea about something that can change the rules. Why is important, the cloud? Italy has the health system that is public since ever, okay? Let's see that we have to start to migrate all the data of all the ill people that have lived in Italy in the last 80 years because we have this kind of information. We bring that, we migrate in the cloud, and then we sell that to an Italian pharmaceutical company to develop and understand the consequences of [ heal ], medicine, result. This is a competitive advantage because in some other country where you don't have a public health system, you don't have all this know-how. So for the Italian country and for the public system, have the data in a sovereign cloud becomes a matter of competitiveness. And again, it's not Pietro that is selling that. It's not Italy. Let's take the information about the position of Germany and France towards European Commission about that. It was 2 weeks ago. They say that they want a sovereign cloud, can be a JV with some hyperscaler, but in any case, the ownership, the cryptography must be owned by a local player.

I think that Pietro covered everything. So let's say, my personal emotion about this is that we understand that this is something that is probably happening. We don't follow the European dream because this will take a lot of time because what it is peculiar in Europe is that every single country has his national security agency. They have their own rule, someone that is critical here is strategic in another country, is not relevant in a third one.

So at some point, the European Union needs to create a rule that everybody will follow. But in the meantime, I think that in our country, this necessity will arise, and there should be someone, let's say, I don't want to be arrogant, but when you have 20% of the infrastructure, 16%, 17% of the cloud migration of the country, you drive some of the choices. So you're not the follower. So -- that's the reason why when Pietro is very vocal about cloud sovereignty, this resonates very loudly in the count because, let's say, if someone else would tell the same, probably people would not pay the same level of attention. So if we are convinced that there is something that needs to happen, we need to lobby shareholders, stakeholders in order to make it happen. And we believe we will get there. There is the last one.

Javier Borrachero from Kepler Cheuvreux. Two questions, if I may. First, I'd like to ask you about first -- well, the new Swisscom Italia, let's call it this way. And if you've noticed any change in the strategy since their merger in the B2B segment, either on the connectivity or the IT side. I mean at the time of the merger, they claim they had very complementarity assets, network, products. So just to have your view on that, particularly because in Q2, I think they were asked about one of the advantages that we're the only Italian operator with a fixed network, and that was providing them with a strong advantage on the -- at least on the B2B segment, not on the residential.

And the second question is, of all these, say, products at least on the service solution platform side, not the ones that are more dependent on infrastructure, is something of that exportable? I mean, could you grow outside Italy with any of these services? I ask because there are some other incumbents, small one. I mean, Telecom Italia, for -- sorry, Telecom Austria, for example, they are now claiming they want to expand on the cloud side outside the boundary. So could you grow externally?

So about Fastweb. But when we talk about ownership of the network, they are probably referring to the last mile. For historical reason, they kept with them part of the last mile, for example, in Milan or in some other city of the country of the mother company they were born from. When we talk about backbone, we are talking about another history. Do you know why? Not because it's Pietro that is telling you that sometimes it's better of [ Christophe ] or vice versa. It's because the backbone that we have is the backbone that was used to serve in a [ capillar ] way, all the line, all the fixed line of the country from Sicily to Trentino, and they didn't have this kind of network.

Today, services on the backbone to FiberCop. So when I say I have a competitive advantage on the network, I'm referring to the backbone. Then as they have some access with their ownership, we have also. If you remember, the deal of the sale of the network, we kept for us the IRU of some accesses that was backbone, but also access of enterprise customer. So this is the main difference between us and Fastweb. Then I have to try also to do some advertising for TIM because if not, I will do the Minister of Telecommunication.

The other difference is that, yes, they have a good access network, a weaker backbone. They don't have edge computing, they don't have 8 Tier 4 data centers. They don't -- they are not in the PSN. They don't have a company as we have Telsy, 100% controlled by us that is specialized in security. So I must be scared about all my competitors. I don't have to undervalue anyone, but I must be confident that today, if we don't perform, it's much more for our incapacity that not because my competitors are stronger than me.

The second question, abroad. I'm telling you that we have a competitive advantage because we have 1,500 employees, 8 Tier 4 data centers, the backbone, the edge computing, if I go in Austria and Telecom Austria, I'm inventing. They have 8 data centers, the last mile, it's difficult. What we will do for sure, we have some platform that are owned by us. For example, the security, quantum security, the smart city platform that our team will show you. We are trying to sell this kind of solution abroad, starting from Brazil. So I personally was in Brazil to talk with the Brazilian government to try to explain how our security solution through Telsy can be useful in Brazil, too. as quantum security is the next challenge.

If in 2028, the algorithm that I was explaining before, will never work, will work no more. If you want to find a solution, you cannot wait the 2027. You have to start to discuss now because you will have a migration. And so we are going in some of the country where we have relationship or partnership. We are working on this area also in the Arabic area to try to sell this kind of solution. But today, we must be focused to deliver the enterprise, the consumer plan to [indiscernible] in Brazil a very good performance...

It's David Wright from Bank of America. A couple of questions. When you broke down the revenues and you had data center revenues then enterprise revenues, is there an accounting breakdown there? Because I assume you sell some of the products as data centers and enterprise together. How do you get the EUR 1 billion of data center revenues? Are they -- is that billed directly to the client? Sorry, EUR 100 million, EUR 100 million and that's colo. Okay, that's clear.

And then I guess the markets reacted very well to this presentation today. And I think your comment at the end was very interesting about the CVC offer or a private equity offer, I should say. Yes, private equity. You mentioned before about what everyone has and what you guys have and what you guys have and they don't. But what a lot of data centers have is a 22x EBITDA multiple, right? And you don't -- and you probably won't, right? TI is not going to be at 22x EBITDA anytime soon, I suspect. So the question is, how do you unlock the value? How do you force the market -- put the market on its toes to value this asset as it is as opposed to part of a European telco. You've indicated that you have no desire at all to sell it. I get that. But is there another way of constructing this asset to bring more visibility that forces the market to re-rate it as it should?

So first of all, sometimes we'll forget all the process. What I mean? Three years ago, it was a PowerPoint. Today, we are here in a meeting where for the first time, we are trying to explain the details of what we are selling. Until today, for you, TIM Enterprise was a black box. So before to say that to unlock the value, I have to separate TIM Enterprise because this is the only way to generate more value, I will wait. I don't have to run, this is the first step. I'm sure that at the end of this meeting, you will have a better understanding about TIM Enterprise, but it will still continue to be difficult to understand. So it's a process that we have to go through. And if through, we could say, an organic approach, it will be not possible to unlock all the value that we can, we will evaluate what's next.

But today, it's too early to say that we have to separate TIM Enterprise to do something. Let's keep in mind that we are doing an experiment that is unique in the world. We were thinking since the beginning as good as called [ BTIM ] Enterprise. But some of the things that we are delivering, we are discovering on a daily basis because this is a fast market. So before to take some decision, it's better to consolidate, look at the number, explain very well what we are and what we will do, and then we will evaluate. But for sure, we all desire that the Elio part could be evaluated 20x EBITDA.

I -- no, I wanted to conclude on this that I think that there is a negative and a positive in this afternoon. The negative that he doesn't want to sell the stake for me. But the positive is that I honestly, I'm super happy also for the team because we finally had the opportunity to explain a little bit better what we do. And I think that today, this is a kind of -- we really unboxed. I hope that everything was clear. I don't know if there is still another I thought we had -- I was concluding but...

Giorgio Tavolini, Intermonte. Two questions, please. One is on the energy consumption of your 16 data centers portfolio. I mean, if you have any, I don't know, idea or how to optimize energy cost? And about the energy cost, how much is pass through in your standard contact with your [indiscernible]. Second question, synergies with Poste. I don't know if there are some angles for TIM Enterprise and Poste to discuss on, for example, I don't know, areas on the real estate of [ Poste Italiane ] to assess new -- the construction of facilities -- new facilities on data centers.

I think that on energy, I was reading on the press that it seems that the Italian government, so I don't disclose anything, is working to put some fiscal discount on the energy for the data center. This is an important element because then independently by TIM, have a low cost of energy for the data center is really important for the competitiveness of the country. Usually, energy on the cost of the service is 10% of the cost on average. If you have an average cost that is the double of the other European country, it means that you are giving a disadvantage to the Italian country of something close to 5% on the cost. It will drive a process in which everybody will go and will try to offer the services to Italy, from Spain or France, where the cost of energy is much lower.

I read that in Germany, the German government is trying to do a huge defiscalisation of the energy, they will put -- if I'm not wrong, I was reading this morning, EUR 20 billion to decrease the cost of energy for company and population. So energy is an important element. I was mentioning all these environmental elements. Why? Because it will be an important driver for the country. If the country as it is happening, will understand that, we will have the opportunity to reduce our cost of energy, and it will allow us also to do not for the service where the energy is a pass-through, but for the service where we compete giving an end-to-end service to be more competitive towards the other country. Let's keep in mind that today, our -- the weight of the data center energy on our overall bill is between 20% and 25%, if I'm not wrong. But it will increase by -- through the years. Why? Because we'll switch off the old technology of the network and the data center consumption will grow.

About Poste, the world is full of opportunities. We are lucky because Poste arrived and our stock, we didn't change the management. We didn't change the plan. We didn't change anything. No, but trying to be serious, that is difficult with me. Poste is an important shareholder because they have an industrial long-term view. And this is important for us because it allow also to plan something that it wasn't the only survival activity to pay the bond expiring the day after. We are in talk also about TIM Enterprise. If you image on your own before any strategic activity and you look how many licenses TIM plus Poste buy from the hyperscaler, you are starting to understand the value that we can bring. Then it's clear that they are very good, for example, in open source. Why don't -- why we couldn't use part of their capability to internalize some costs. Sometimes also to do a JV with them. But again, these are something that we are studying, and we promise to everybody that in November with the third quarter results, we will share some more details.

Very quick on the cloud, sovereign cloud. In particular, you have been talking about the opportunity and the sensitivity on the public administration side. And how relevant is it also for corporations?

It is very important also for corporation. Now the main issue is that I'm talking about sovereign cloud, but perhaps a good part of you didn't have in mind that what is in the cloud of the hyperscaler is under the U.S. jurisdiction. So there's a matter of alphabetization because I don't think that the Chief Executive Officer of a large bank will be so happy to tell to all his customers that the data can be accessed in this way. Then in other country, there is a move towards a legislation for that because perhaps it will not be only a decision left to the private company. Sometimes, the companies that are considered strategic for the country could be in the future obliged to act in a specific way.

Vivek Khanna from Deutsche Bank. I'll keep it very quick. I think you mentioned your data center capacity right now is 100 megawatts and it's going to go to 125 by 2027. Could you just give us a sense as to what is the CapEx associated per megawatt that you plan to build? And then also, I think you mentioned that -- and I might be wrong out here, that the data center capacity here is 8 megawatt, and that could go to 30 or 50 if you build in the field next door. If you go to 8 to 30, again, what are the cost per megawatt if you were to expand capacity here?

So if -- that's what we call the competitive advantage that we have because we have already that capacity installed and the advantage that we have when making the new investment is that walls are already there. Because the problem is that when you need to find the land, you need to buy the land, you need to get permission, you need to build walls, it takes the first 1.5 years, in Italy, it can take even longer. So the cost per megawatt approximately is about EUR 10 million, all included. And it takes from 14 to 18 months depending on what is the stage when you start. So if you have some of the items I was describing before.

So the reason why we believe that by beginning of 2027, we can be ready is because we have already the walls in place. For every new -- as you will see here in the visit, by the way. So this is -- what you will see today is a proxy of what will happen in Acilia in the new one, in the brand-new one. So if you need to start from scratch, this can take more than 2 years. That's the reason why we do respect competition. We are -- we listen to what the market is telling us, but we don't see anyone in the market to building 200 megawatts in the next 6 months because this physically cannot happen.

And the last, it's important to understand if all the declaration are coming from people that are doing the real estate business or people that want to use the data center because today, I can understand from the financial market, the queue of people with projects to build real estate of data center. And everybody are looking for us to sign a contract for 20 years to pay the data center. I don't see in Italy a lot of players that are raising. I want to pay the data center. I find a lot of people that want to build the walls. They want to do the business of the real estate, but also some large hyperscaler is coming to us saying, I will build a data center if you migrate in our new data center, your internal consumption. It looks strange to me, but this is the world.

Okay, Paolo. No more question?

Okay. We are at the end of this event. We thank you all for your participation in such large numbers, both here in presence and on the webcast. We hope this presentation has been informative and useful and that today, TIM Enterprise is a little bit more unboxed than it was a couple of hours ago. I remind you that we will be back on the 6th of November with Q3 results. And from all of us, have a nice rest of the day. Goodbye.

We divide into 2 groups for the tour of the data center and the demo. So the 2 groups will swap and we will do everything downstairs. Thank you.

Ladies and gentlemen, good morning, and welcome to TIM First Half 2025 Results Presentation. Paolo Lesbo, Head of Investor Relations, will introduce the event.

Ladies and gentlemen, good morning, and welcome to TIM First Half 2025 Results Presentation. I am pleased to be here with the CEO, Pietro Labriola; the CFO, Adrian Calaza, and the rest of the management team. Today, we will walk you through the highlights of the period and review the main operating and financial results. As usual, we will close with the Q&A session.

Before we begin, a quick reminder. As was the case in Q1, Sparkle is classified as a discontinued operation in line with the guidance provided last February. It is therefore excluded from the perimeter of these results unless otherwise specified. This treatment will remain consistent in the coming quarters. Please also refer to the safe harbor statement in the appendix for further details on the scope of reporting.

And with that, I will now hand over to Pietro to kick off the presentation. Pietro, the floor is yours.

Thank you, Paolo, and good morning, everyone. Let me begin with the key takeaways from today's presentation. TIM delivered a solid operational and financial performance in Q2, both in Italy and Brazil. At the halfway point of the year, we are exactly where we plan to be. Results are fully in line with our budget, and we remain firmly on track to meet full year guidance. In Italy, the competitive environment in the Consumer segment remain stable. We saw a continued improvement in mobile number portability dynamics and resilience in the Wireline business. The Enterprise segment grew in line with expectation, while Brazil maintained a rational market approach.

On the '98 concession fee, while we await the final court ruling, we have already secured almost the full amount in July through an advanced payment arrangement with 2 leading banks. Also in July, TIM Brazil successfully refinanced and extended the size of the 2023 bond lowering its cost of funding. This is in line with our broader strategy to strengthen the group's capital structure and enhance the natural hedge on our Brazilian operation by rebalancing the exposure towards the Brazilian real.

Lastly, the Board of Directors yesterday acknowledge the resignation of Adrian Calaza, Chief Financial Officer; and Eugenio Santagata Chief Public Affairs Security and International Business Officer. Adrian will remain in office until November 6 for the presentation of the third quarter results; and in the company until December 31 to ensure the necessary support for the CEO and the new CFO. Eugenio's resignation will be effective August 31. Effective October 1, Piergiorgio Peluso will return to the group as advisor to the CEO. Piergiorgio will assume the role of Chief Financial Officer immediately following the presentation of the third quarter results.

Thanks to solid execution, strong operational performance and disciplined cash management in Q2, TIM closed the first half fully on track with our plan, both at group and domestic level. TIM continued to rank among the fastest-growing telecom operators in Europe, driven by the stabilization of the consumer segment, robust enterprise growth and the strong contribution from Brazil. Let me walk you through the key figures for the group in the first half.

Total revenues grew by 2.7% year-on-year, Service revenues by 3.3%. EBITDA after lease increased by 5%. CapEx stood at EUR 0.8 billion, around 13% of total revenues. As a result, EBITDA after lease minus CapEx rose by 12%, reaching EUR 0.9 billion. Equity free cash flow was slightly negative in the first half at around EUR 0.1 billion, reflecting the usual seasonal impact of working capital. However, it turned positive in Q2, slightly higher than planned, confirming the structural improvement versus last year when NetCo was still consolidated. Adrian will cover the cash flow dynamics in more detail shortly.

Net debt after lease remains stable at EUR 7.5 billion with a leverage ratio below 2.1x. At domestic level, performance was equally solid in the first half. Total revenues grew by 1.6% and Service revenue by 2.2%. EBITDA after lease increased by 4.2%. CapEx amounted to EUR 0.5 billion, around 11% of total revenues. Consequently, EBITDA after lease minus CapEx rose by 10%, reaching EUR 0.5 billion. The detailed Q2 results are available in the annex. As usual, at the halfway point of the year, we take stock of our position versus the full year targets. Overall, results are in line with guidance, while EBITDA after lease is slightly below. Let me provide some clarity on this point.

Firstly, EBITDA itself is exactly where we expect it to be, as I mentioned earlier. Moreover, the plan envisage and acceleration of domestic EBITDA in the second half, particularly in Q4 supported by several positive drivers that will progressively come into play. First, the full effect of the price increases implemented in Q1 and Q2. Second, the seasonality of the TIM Enterprise business, which typically accelerate in Q4. This year, this effect would be amplified by a stronger contribution from the National Strategic Hub. Third, additional OpEx reduction driven by the cost transformation program.

Fourth, labor cost savings following the renewal in July of the solidarity agreement, which includes a reduction in working hours for TIM employees to the end of 2026. That said, EBITDA acceleration will not immediately translate into significant year-on-year growth. In Q3, we faced tough comparison since most of the group will be concentrated in Q4, also driven by easier comparison. Regarding cash flow dynamics, we are slightly ahead of plan. All in all, I'm pleased to say that our full year guidance is confirmed.

Let's now move on to review the performance of the 3 entities. In the first half, TIM Consumer total revenues remained stable at EUR 3 billion with Service revenue growing by 0.3% year-on-year. Revenue performance gained momentum in Q2 with Service revenue increasing by 0.7%. Price adjustments across both Wireline and mobile customer basis continued during Q2. In 6 months, we repriced 4 million Wireline and 1.7 million mobile consumer customers with a lower-than-expected impact on churn. The full effect of these price increases on incremental revenues will become fully visible in the second half.

The benefits are evident. Wireline ARPU continued to rise, while mobile ARPU increased for the first time in many quarters. At the same time, churn remains well controlled, a remarkable achievement considering the multiple price adjustment implemented over time. This confirms the validity of our volume to value strategy launched in 2022. Customers have demonstrated a willingness to accept price increases in exchange for quality services, and we are confident that competitor will eventually adopt a similar approach.

While Wireline net adds remain stable, we maintain our leadership in FTTH net addition averaging 18,000 lines per quarter over the past 12 months. Moreover, this quarter, we finally closed the gap versus competitors in terms of FTTH service coverage. Mobile net addition showed sequential improvement. More importantly, the number portability balance remain virtually neutral confirming the trend observed in Q1. It's worth noting that SIM cards acquired through number portability have an average ARPU of around EUR 12, EUR 13, while other SIMs average just about EUR 1. This means that most of the mobile line lost in the first half had a limited impact on service revenues.

We launched 5G fixed wireless access at the end of last year, and in Q2, we saw an acceleration in net addition. We expect this technology to contribute strongly going forward, having expanded service coverage to 70% of the population. A final point on our customer platform. TIM Vision customer base is growing well with double-digit year-over-year growth. Q2 marked the 12 consecutive quarter of growth for TIM Enterprise, delivering a strong 6% compound annual growth rate. In the first half, total revenues grew mid-single digit to EUR 1.6 billion, with Service revenue rising over 6%. Cloud stood out as the key growth driver with service revenue up 25%, reinforcing TIM's position as one of the Italy's leading ICT players.

Our distinctive edge lies in the combination of proprietary data center and advanced cloud capabilities setting us apart, particularly in delivering secure and sovereign digital services for the country. Revenues from other IT declined by 5% reflecting a deliberate portfolio reshaping to phaseout low-margin activities and focus on higher-value solutions. Connectivity showed an expected slight decline. With the mix, fixed connectivity grew year-on-year, while mobile connectivity declined due to the phaseout of a large contract to the public administration, which we intentionally choose not to renew. This aligns with our strategy to avoid tenders likely to generate very low or negative margins.

I'd like to draw your attention to the bottom right corner of the chart, highlighting the increasing share of revenues generated by TIM factories, namely Noovle for cloud, Telsy for cybersecurity and Olivetti for IoT. These revenues tend to be higher margin as they are primarily driven by internally services rather than external third parties. TIM enterprise performance stand out in European context. Given the strong interest of the financial community in better understanding our business model, positioning and growth opportunities, we have decided to host a dedicated event in the fourth quarter 2025.

TIM Brazil reported last Thursday, so I won't go into too many details. The markets remain healthy and rational and TIM Brazil delivered another solid performance. Top line growth was mid-single digit in H1 driven primarily by mobile service revenue. Customer base monetization remains a core focus with successful upselling from prepaid to postpaid, resulting in the highest ARPU in the market. Efficient operational execution continues to drive a consistent EBITDA growth and margin expansions. OpEx remains below inflation and EBITDA after lease reached nearly 38% of revenues with year-on-year growth of 6%. TIM Brazil is also outperforming pace on cash flow generation with robust operating free cash flow expanding at a double-digit rate.

I now hand over to Adrian for the financial results.

Thank you, Pietro. Good morning, everyone. Before diving into cash flow and debt, let me share a few comments on CapEx and OpEx. Group CapEx in Q2 was soft, both in Italy and Brazil, totaling around EUR 0.4 billion. Accordingly, overall CapEx intensity in the first half was below our full year target. This was due to phasing, mainly on mobile access, both on domestic and Brazil and data centers on the domestic business. We expect CapEx to pick up in the second half as it did in 2024.

Group OpEx in Q2 were flat year-on-year. Brazilian OpEx continued to run below inflation, while in Italy costs were fully under control, thanks to the cost transformation initiatives. It is also clear that the domestic cost structure has become more volume-driven following NetCo disposal. More details will follow in the next slide. It is worth mentioning that EBITDA after lease margin in the first half is up 0.5 percentage point when compared to the same period of last year, both at group and domestic level, proving that we continue to find efficiencies across the board.

Now a few comments on cash flow and debt. Last May, during the Q1 results call, as said, we expected broadly neutral equity free cash flow in Q2. In fact, equity free cash flow came positive at approximately EUR 0.1 billion slightly better than anticipated. While working capital absorption was in line with expectations, we benefited from better EBITDA after lease minus CapEx, together with a better evolution of taxes. Another extremely important factor is that we continued optimizing the debt structure. After lease, the gross debt declined by EUR 0.8 billion in the first half, so financial charges are decreasing, although the average cost of debt remains stable.

We have good visibility on cash generation and may slightly exceed the guidance by year-end. However, as we still have the second half ahead of us, we prefer to maintain a prudent stance. Below equity free cash flow, there was an outflow mainly related to dividends paid to TIM Brazil minorities. Net debt after lease closed at EUR 7.5 billion with leverage below 2.1x last 12 months organic EBITDA after lease, confirming TIM as the least levered listed telco in Europe. So at this stage, we are sure that we will reach our year-end target.

Let me now provide a bit more detail on domestic cash costs. Starting with OpEx, we can break it down into 2 nearly equivalent components. Revenue-driven costs are growing based on top line performance and changes in revenue mix with a higher weight of cloud and multimedia services. In the first half, they accounted for 49% of the domestic OpEx. Addressable costs, representing 51% of domestic OpEx and including labor, industrial, G&A and IT expenses. As shown in the chart, most of the savings are concentrated on industrial costs, which include the MSA. On the other hand, G&A and IT costs are up due to the journey to cloud since many activities on premises that previously impacted CapEx are now cloud-based and accounted as OpEx.

Regarding labor costs. In the first half, we absorbed higher variable components related to 2024 results and additional phasing effects. We expect a lower absolute value labor cost in the second half compared to the first half. OpEx and CapEx discipline is ensured by our transformation plan. Let me remind you that we measure progress against the initial OpEx and CapEx trajectory. That is the cost base we would have incurred without the plan. We currently have over 70 transformation initiatives underway, which delivered EUR 90 million in incremental benefits in the first half and are expected to deliver even more in the second half.

Our efforts are focused on the commissioning of legacy technology, consolidating ICT vendors, adjusting service levels to match actual customer needs and optimizing labor costs through renewed solidarity agreement. As for CapEx, around 1/3 was customer-driven while the majority was directed toward infrastructure investments, in particular, mobile network, IP backbone and data centers.

Let's now briefly touch base on financial metrics and FX. Following NetCo disposal 1 year ago, TIM financial KPIs have significantly improved. Leverage stands below 2.1x, the lowest among listed European telcos. We are targeting below 1.9x by year-end, excluding optionalities, especially the concession fee that may arrive yet this year. Interest coverage continues to improve, supported by growing EBITDA after lease minus CapEx and decline in financial expenses, thanks to a EUR 0.8 billion reduction in gross debt in the first half. Debt to equity is also trending downward.

Rating agencies are progressively recognizing our enhanced credit profile even if we honestly expected some additional positive outlook at this stage, considering that we met all our guidance in the last 3 years, and we are full on track this year. Moody's upgraded team to Ba2, Fitch confirmed its BB rating and raised the outlook from stable to positive and Standard & Poor confirm its BB and stable outlook, but upgraded team business risk profile from fair to satisfactory. Above all, it is important to underline that the market is already ahead of these improvements. TIM bonds are converging towards those of investment-grade European insurers as you can see on the bottom center graph of the slide.

At the same time, with the balance sheet as solid as ever, we remain financially disciplined. We secured EUR 0.7 billion loan guaranteed by SACE. We monetized the concession fee in July through an advanced payment facility, providing low-cost liquidity for working capital needs. In Brazil, the local holding company fully owned by the TIM Group issued BRL 5.0 billion in new bonds. After repaying the 2023 issuances net proceeds of BRL 1.7 billion increase our natural hedge and enabled a new FX strategy. This strategy takes advantage of the favorable U.S. dollar real rate while maintaining U.S. dollar exposure to naturally hedge the group's dollar-denominated costs, notably those related to [indiscernible]. Today, 75% of Brazil's equity free cash flow in 2025 is hedged.

One final comment from me. As Pietro mentioned, I will remain CFO until the third quarter results are presented and then I'll work alongside the new CFO, Piergiorgio Peluso until the end of the year. Therefore, today is not my farewell. We need to be fully focused, as always, and we will have several more opportunities to meet between now and then, so please keep your appreciation pause for later.

Now I'll hand it back to Pietro for his closing remarks.

Thank you, Adrian. To wrap up. First half results are fully on track to meet full year targets, both operationally and financially. We confirm our guidance for the full year. We monetized the '98 concession fee through an advanced payment from 2 banks. The related dispute is progressing towards a resolution, which we expect by year-end. When our credit profile continues to improve, TIM bonds are already trading at a spread close to or in line with those of investment-grade companies.

Lastly, I want to thank you Eugenio Santagata for his contribution to TIM during these years of deep transformation. Piergiorgio Peluso will be the new CFO starting in November. Piergiorgio has already served as the group's CFO for several years, so his appointment ensures continuity and stability, both internally and in relation with the financial community. Adrian and Piergiorgio will work together until the end of the year. Therefore, the handover will be gradual and smooth. So we remain fully focused on execution, cash generation and unlocking value for our shareholders. There is no time to lose. We have to proceed.

With that, we are ready to take your questions.

[Operator Instructions]. The first question is from David Wright at Bank of America.

Adrian, yes, I will hold off congratulating, thanking you just yet. So a couple of questions for me, please. Very simply on the concession factoring deal. I assume that is a full recourse transaction such that any issues with the payment then you would have to return all of the cash to the banks? Or am I wrong? And if you could maybe just give us a little clarity on how we should expect concession to evolves when we could next hear from the courts, et cetera?

And then my second question was on the cash flow. It does look like CapEx a little lower, but yes, that could phase up. But the balance sheet sort of efficiencies that you guys are achieving, we could come ahead of this year's cash flow target may be, but does that affect not compound a little into the guidance down the road? Should we be thinking a similar message there that we could come ahead of the longer-term targets, but maybe you guys just remaining a little prudent right now?

David, Pietro speaking. I apologize that we are becoming a boring company. And there's nothing that the market will allow us in terms of mistakes. So we'll continue to try to gain the trust of the market being consistent and avoiding to overshooting. In the meantime, we already mentioned during the first quarter call that we are optimistic on the fact that our number could be better, but we don't won't release a guidance about that, exactly for what I mentioned to you. We don't want to do any kind of mistake in this path to recover the trust of the market.

And in any case, what is important is that we are not running a 100-meter race, we are running a marathon and we want to bring the company in 2027 exactly as we stated in the plan. Then again, I must be also optimistic and looking at our number and the operational trend, there are, for sure, room of further improvement mainly on the equity free cash flow.

I'll leave to Adrian to give some more comments.

Yes. Thank you, David. I would appreciate that in the next call. But anyway, I will complement on Pietro's comment on equity free flow, and that's our view. We are not today in a position to upgrade the guidance. I can tell you that, as we mentioned in the first quarter, we are ahead of our budget. But there are still 6 months consider that we do not have the final numbers of July, so there are still since 6 months to go. And there is -- the second half of the year is -- normally has a higher weight than the first one. So that's why we want to be cautious. But what we do know is that we are fully on track that we, for sure, will meet our guidance. And yes, we have today a small upside. So we'll see in the second half.

On the concession fee in terms of monetization. Clearly, this -- we -- the bank -- we entered into an agreements with the banks, they have today the right of the credit. The only situation that may happen that we should return the demand to the banks is if the sentence is negative for TIM. That's the only case. But we factor the full amount of this credit. It brings a significant benefit in terms of financial costs because this -- the cost of the deal is probably 200 basis points below financing the cost that we may find in the market today. So what -- it's important to highlight that this is a credit that has a value for everybody. We'll see what happens with the final centers. We still hope that this is something that may happen in the second half of the year, then Pietro can comment on that side. But the positive thing is that it has been a source of financing that has a much lower cost than the normal financing.

Next question is from Ajay Soni at JPMorgan.

Just actually a quick follow-up on the concession. You're expecting it towards the end of the year. So is that also expecting net profits in this year or do you think they're fall into 2026? On your free cash flow, I think, obviously, both taxes and financial expenses are tracking much better in H1. So what are your expectations for this for the full year? And I would assume working capital was still minus EUR 500 million for the year.

And then the last one, just on price up. So you've done quite significant amount within fixed and mobile, what is remaining for you guys to do throughout 2025? Do you have a target number, which you aim to get to for both fixed and mobile?

So about the concession fee, if the sentence will arrive in the second half everything will enter in the net profit of 2025. And so we have all the impact on our target. And for sure, we'll have all the improvement related to the guidance in such a case. About the second point on the equity free cash flow, I'll leave to Adrian to answer.

Yes. On the equity free cash flow, it's pretty much what we answered in the first question, and it's -- yes, our guidance is EUR 500 million for the full year. And as I said, for the first half, we are slightly ahead of what we projected. Hopefully, this will be also in the second part of the year, but we still need to see. In terms of financial expenses -- in terms of cash financial expenses, we ended the second quarter with EUR 140 million in the first quarter and EUR 155 million, but with some specific one-offs. Going forward, probably you can project the number of the second quarter.

And on cash taxes, yes, we had some benefits. There are some other effects that may come in the second quarter. So again, that's why we are fully confident on the guidance. Is the right time to say something more or upgrade it? No, probably we still need to work a lot on the second half of the year. And the price ups?

Andrea?

Thank you, Pietro. Yes, on price ups, we did most of the activity in the first half of the year. We have some targets that are still flowing in the third quarter. And given the positive outcome on the mobile market that you can see, I mean, there is a slight reduction in the churn, but most importantly, the volume of portability in the market has reduced year-over-year by around 10%. Therefore, our results on the repricing action have been a bit better than in the business case. So we decided to continue, and we will have also some targets in the fourth quarter to continue the activity.

The next question is from Mathieu Robilliard at Barclays.

So first, I had a question about B2B. You discussed a bit the change in mix, slightly better or lower decline in connection, which I understand is a high margin, and you've also reduced exposure to some low-margin business. So I realize you don't publish EBITDA margin on a quarterly basis. But is it fair to say that the trajectory of the EBITDA margin in B2B is progressing well so far this year?

The second question was about customer care. I think that unlike many of your peers in Italy, you have internal call centers to service customers and for marketing. And I was wondering if AI implementation could be a source of additional savings or is that already embedded in your guidance? And lastly, if I may, I think at the Q1, you had mentioned that maybe you could share some of the revenue synergies or opportunities with your main shareholder now La Poste. Is that something you intend to address a bit later in the year?

Okay, Mathieu. Let's start from the third question. For sure, by the end of the year, probably during the third quarter results, we'll give some more guideline related to commercial and industrial potential areas of synergies. About number, we will disclose everything in the call for -- in February or March, when we will present our new plan. Then about the customer care. If you look in details about the number of our customer care, we did already a huge amount of efficiency starting from 2022. We have in our plan a further reduction of the cost, but for sure, what can the AI can further help in improving the relationship with the customer?

So we can have also indirect synergy or better improvement related to the churn, customer satisfaction, so on and so forth. Just to give you an idea, today, we are starting to record all the claim of our customer on the customer care to understand the touch point of the most nervous, let me say in this way, customers to review the process. It's a way to address priority based on the return on the investment. But for sure, this is an area of huge improvement.

Then about B2B, I leave to Elio to give an highlight about the trend.

Thanks, Pietro. Thanks for the question. So the straight question to the -- straight answer to the question is EBITDA directionally getting better? The answer is yes. And this is a combination of 2 things. The first one is the one you noticed. So connectivity is trending better if you compare to quarter 1. So the deceleration is slower than it was in quarter 1. And all in all, let's say, is in line with what we were expecting at the planned level, at the budget level. But more importantly, if you look at the acceleration of the cloud, so if you compare on a year-to-year basis on the first 6 months, we lost EUR 50 million revenues in connectivity at approximately 50% margin. We won EUR 85 million on cloud at 20% margin. So if you do the math, you can understand that the combination of both KPIs makes our margins better.

The next question is from Domenico Ghilotti at Equita.

A few follow-ups. The first on the equity free cash flow. I'm trying to understand if the improvement compared to your plan is something, say, structural and then can be so translating into 2026? Or if it is more, let's say, that you are bringing forward some opportunities that we're already planning? And second follow-up is on the concession fee. So should I assume that there is no more room for a settlement with the government, that you are just waiting for the final ruling?

And just a clarification. So when you say we should give back the money to banks in case of negative ruling is -- so if you go back to the previous sort of the step 1, let's say, so if you have a negative outcome, meaning that you are restarting, let's say, the full trial? And last on the price hikes. Can you help us understanding what can be the contribution of the already executed price hikes for the second half?

Okay. Let's start from the second about the concession fee. If there are margins for some negotiation or settlement? We are here, we did whatever we have to do. We are confident that we are on the right side. So if nothing happened, we'll wait for the final sentence on which we are quite optimistic. About what's happened about the money that we received from the bank? Adrian?

Yes. On the monetization of the concession fee credit, Domenico, it's clear that if we have a negative sentence or any kind of room in that, that means that the [ credit ] is not more executable, of course, we will need to return the money to the banks. But until then, especially in the case that if the sentence is favorable, as we expect that is already settlement. So the only case is if the sentence is negative, or if the credit is not more executable.

On the equity free cash flow side, I think it was the first -- your first question. In fact, it is structural. Remember that our guidance for this year was EUR 0.5 billion. So the guidance for next year in terms of equity free cash flow, it's EUR 0.9 billion. And the guidance for the third year is EUR 1.1 billion, if I'm not wrong. So definitely, it is structured. Remember that the [indiscernible] effects or even did that's on last payment of the first agreement the one of 2021. So that's why probably in 2025, it's not at the same level of next year. So again, and I want to reiterate, it's -- the company is performing very well also in terms of cash flow. So it definitely is structural, yes.

But Domenico, to be clear, because I know that during the call, you try to evaluate also our voice to understand if we are completely assertive on the things or if we have any doubt. So you did -- you asked a question that is related to a remote scenario about the concession fee. I clearly stated that we are quite optimistic. Then if you want that we define all the possible scenario, it doesn't mean that we believe that, that other one quite optimistic then if you want that we define all the scenario. It doesn't mean that we believe that, that other one would be the scenarios to be very, very clear.

About the equity free cash flow. As Adrian mentioned, our company is in a path where we'll be back to be a normal company, generating cash and distributing dividend and we got that commitment already in the guidance. About the result for this year, we keep the guidance but we told that we are optimistic that we can do something better, but this is not the guidance. Why? Because the market do not allow us to do any kind of mistake.

About the price up. The value of the price up overall in the year is in the south of EUR 100 million. It's clear, and you know you are much better than me to do math. If we did some price up in the first quarter, some price up in the second quarter, the impact on the second quarter by definition will be higher than the impact in the first and the second quarter.

The next question is from Fabio Pavan at Mediobanca.

Two questions. The first one is a follow-up on Poste provided you will share with us some first quarter on synergies in Q3. I was wondering if you have dedicated teams already at work in terms of exploring potential synergies? And the other question is referring to sector consolidation. We have learned in this reporting season that things are apparently moving in some of Southern Europe countries. Do you think in Italy, we may also have something moving in the coming months, and I'm referring to both consumer and network operators?

Thank you, Fabio. About Poste, as I mentioned during this picture, we are working to finalize in all the details, the agreement with Poste for the MVNO. That is a kind of commercial agreement and that nothing to do in theory with the fact that they are a shareholder. The second, we are finalizing agreement to develop our customer platform strategy. And Poste is one of the main players in Italy on energy. And so we are trying to explore the possibility to move on with them with energy at the beginning of the autumn, so during the fall. And these are the things we are working on.

Then before to move on any other aspect, we will wait also for the clearance for the antitrust that was really positive, and now there is a formal step through the national watchdog. After that, we can see it and we can evaluate further synergy that can be developed. Then it's clear that we have in mind what could be the opportunity. But again, we will disclose had in the year about that. Today, we want to focus the company, the team and everybody in deliver the number that we give to the market and to surprise everybody with some better results.

About the sector consolidation, it's very useful your question because finally, we have plenty of articles talking about Spain and France. So what we are mentioning 4 years ago in 2022, that this market, European level was needed a market consolidation is no more, let me say, a dream, is something that is becoming a reality. And for sure, if something happened in France and in Spain that are not a second-tier country in Europe, they will pave the path to have also a better evaluation also in Italy. I always declare that Italy is a country in which in the consumer segment to exploit better result, a consolidation is needed.

And I repeat, we can have 2 kind of consolidation, an M&A consolidation or a network consolidation because also network consolidation, you can add important synergy that can allow us to speed up our path towards a further improvement of our guidance.

The next question is from James Ratzer at New Street.

Two questions, please. So the first one is that the EU recently launched a consultation on AI giga factories and which obviously got a lot of participants interested. And I was wondering was, a, did Telecom Italia participate in this consultation? What's your view of it? And I mean do you see a further opportunity here for you to be investing in AI giga factories? And how might this impact your growth in future?

And if, on the other hand, you're less interested in investing directly, might this bring additional competition into your cloud business in future? And secondly, I was wondering if you could give us any further updates on your views on the likelihood of getting the EUR 2.9 billion potential earnouts from a potential fiber co open fiber combination? So if you had any updates you could share on likelihoods of receiving anything from that, that would be very helpful.

Thank you, James. Before to talk about AI giga factory, I think that you missed a new trend in Europe that this goes also by the new geopolitical environment between Europe and U.S. That is the sovereignty of cloud and security. So before to move to the AI giga factory, One of the things that are happening today is that there's the attention, not only in Italy but to all Europe by all the government to understand how to keep under control in a more safer environment the data of the strategic companies.

I have to remember that the PSN is the most successful case in Europe of sovereign cloud. What it means that the cryptography key of the cloud where are stored and where are used, the data of the public administration is in the hand of an Italian entity. So they are not under the sovereignty of other government out of Italy. I think that this is a point that you have to stress and analyze because it is not like the AI giga factory something that will be future ahead. I mean when we talk about AI giga factory, we are talking about the day after tomorrow. But we have today and tomorrow that is made by cloud sovereignty and security.

I have to remember to everybody that all these wonderful supercomputing will put out of date all the algorithm by 2030 of cryptography. It means that all the large companies have to move towards quantum security. And do you know who is the market leader in Italy about that? TIM Enterprise. So -- but to answer also to your question, yes, we are part of the project for the AI giga factory, but they don't want to distract the attention of everybody for the day after tomorrow, and we have to check what is today. And just to complete about that, everybody are talking about edge computing.

Do you know which is the widest edge computing network in Italy today? TIM. So if you sum all the pieces, we have 8 Tier 4 data center. And we're the only one with that kind of infrastructure. If someone wants to replicate, they have to spend between EUR 1 billion and EUR 2 billion of CapEx to build that. We are the only player with sovereign cloud solution today. If someone wants to replicate, he's more the welcome, but it's a matter of CapEx and know-how and time.

The third, today, we are building the widest edge computing infrastructure. We are investing on that already in the plan, EUR 100 million. Please, everybody are more than welcome to do the same. And finally, this ecosystem will need a low latency network. And we have a 5G low latency network. What I mean? If you create a table in putting for each of this element who are the player, perhaps in the column, you will find some other one, but you will not find anyone that is able to stay in each of this component. I think that is an important element that we'll disclose better in the details in the second half of the year when we'll organize the TIM Enterprise Day. But the answer to your question, sorry, if I take more time, is yes, we are part of the AI giga factory.

Then if I ask also to you, can someone show me the business case of the AI? Today, the business case that they saw are working in U.S. and in U.K. Why? Because they are today based on economy and efficiency in the redundancy of people. So we are ready to proceed and to invest on whatever give us the right return on the investment.

About the earnouts, the 2.9, I must be transparent on the energy in theory is becoming -- we will have a low probability. But what is important to disclose is that in the last discussion that we had that in Italy are happening about energy, it seems that finally the data center will be considered a specific category of energy consumer. And so they could have a specific regime with a lower cost that is not reflected today in our number. While about the network, we set the window, we are trying to understand what will happen but the frequency of the article on the press about the discussion between Open Fiber and FiberCop. Let us think that the things are moving away ahead and something will happen.

In Italian language, we say [Foreign Language]. I will leave the translation to someone that is better than me in English. James, I hope that I answer to both your questions. If you need more detail, please.

The next question is from Giorgio Tavolini at Intermonte.

Three questions, please. The first one is on the domestic costs. I saw 12% decline in the industrial OpEx in the first half. So I was wondering what is driving this reduction? The second question is if you can add more clarity regarding the hedging strategy on real that is mentioned in the slide?

And the third question is regarding the network consolidation you were referring before. I was wondering if you are really interested in exploring [ RAN ] sharing opportunities to optimize the investment for 5G stand-alone, especially in light of the upcoming spectrum license renewals soon?

Thank you, Giorgio. Then I will leave also to Adrian to elaborate more on that. But if you look at our OpEx or it's better, cash cost base because we have to continue to talk about cash costs and not only about CapEx because it's important for our cash generation. It's clear that the industrial, I mean, all the network cost is the main component of our cost base. The second is the labor cost, and then we go through all the different elements also considering the commissioning. So with the transformation TIM, we are working on all of these items. Then it's clear that about, for example, the MSA with FiberCop, it's quite clear that my competitors started before then us with fixed wireless access. Why? Because until we were the owner of the network, we are trying to create value also through the network.

Now that we can trade off between a variable cost that is the cost that we have with the fixed network and the fixed wireless access that is not a solution for everything, but it's a solution that can complement our strategy. We are exploiting that, and we have lower cost. Now we are taking a look to all our network cost with more attention compared to the past because they are becoming external costs. And so we are optimizing that base. It's clear that we'll continue to work on that. You can divide that kind of cost in 2 different typology.

One that is volume driven. If we have a customer, we pay. If we don't have a customer, we don't pay. But in that are, we have also the possibility to work better between the different kind of technology, choose the one that has a total cost of ownership that is lower than the other typology, of course. Then we have all the other costs energy, colocation and so on and so forth, on which we are optimizing our component.

We look also to our net -- mobile network cost because it is an area on which in a reasonable and professional way, we will see to understand which are the possibility to have further improvement of that because also having in mind, what can happen with the renewal of the frequencies is something that we have to take under evaluation with a lot of attention. Let's consider that at EU level, EU gave a guidance to all the country to ask or to allow a renewal of the frequencies for 0 or very low cost in exchange of a commitment in terms of investment to increase the coverage of the 5G stand-alone. And this is something that we support and we are working on.

I gave some highlight then I leave to Adrian to elaborate more on the aging, and then if you want to add something about the cost.

Yes. No, nothing to complement on the cost. I think that Pietro mentioned everything. On the hedging of the Brazilian real. Giorgio, you know that we've been working since 2022 on this side and we cover the flows that were coming from Brazil normally with some financial instrument and it worked very well as a matter of fact, we have 75% of the full year cash flow of TIM Brasil already hedged. Today, clearly, this instrument is in the money, as you may have seen, but it's also worth to mention that on the first quarter, the exchange rate was mostly aligned with our projection, the spike started with -- in April with the tariff supplied by the U.S.

So we won't expect any kind of impact on the equity free cash flow coming from Brazil. As a matter of fact, the company is performing even better than what we expected. So 2025 cover. We are working today for the future, and we're working for 2026-'27. And you know that we have long position of BRL and short in U.S. dollars because part of our costs, especially those of Noovle are related to U.S. dollar-denominated contracts. And that accounts something around $100 million per year of cost. So what we are doing is to flow reals to U.S. dollar. Since today, if you see the issue of the exchange rate is not the direct exchange of the BRL-euro, but it's more a matter between the euro and the dollar.

So we will flow reals to U.S. dollar, and we will cover the position of the OpEx denominated in U.S. dollars of Noovle. So it works both sides. We think it's pretty smart movement. And that covers what we are doing today and especially after the issuance that we did in July in our holding company done in Brazil.

We will have enough funds to cover 3 years of this novel expenses in U.S. dollars. So that's how it works. Then we will see, of course, it's the worst moment to cover as when the curve is on the higher level. So we are sure that this works these days, then we'll see what happens in the coming months if euro-dollar stabilized or the Brazilian real appreciates again to the U.S. dollar, we can enter into further agreements. But for today, we think that we are covering the needs of '26 and '27.

The next question is for Andrea Devita at Bank Intesa.

Basically, it expands from your previous question of my colleague and has to do with your, let's say, broader approach towards wholesale fiber operators and FiberCop. So it's 1 year since the network separation, we have MSA and we have commitments, discussion with the Italia antitrust and commitments. So I would like to comment a bit on the past year in terms of the benefits that you experienced and the potential developments related to the current, let's say, commitment, you presented to antitrust regarding the relationship with FiberCop and was anything to be marked about Open Fiber, for example?

And lastly, I would assume that there is no impact for you coming from this EU commission investigation about potential, let's say, misleading or incorrect or incomplete information by KKR on the deals. I understand this applies to deals with other operator, if I'm not wrong?

Andrea, about the last part of your question, we have no impact of what is happening at the EU antitrust level about KKR. Then about the commitment that was taken at the antitrust level, they have no impact on us in our profit and loss in our plan are mainly related to FiberCop, so there's no particular impact on us. And what is important is that if you remember, if we get the time machine and we are back in 2024 when we were releasing the network separation, there were a lot of doubt about the fact that we have no volume commitment, no peculiar commitment differently from what's happened with the previous agreement with FiberCop.

There were a lot of doubt on the market that we could be able to optimize. Some of you was thinking that it was a kind of sales and leaseback. So 1 year later, I think that the number that we are showing and the explanation that we gave -- that we are giving to everybody showed that when we are talking that we are sure about the move and that we are doing, the right move are demonstrated. And last, but not least, I think that you read the performance of Orange in France on the wholesale, minus 9%.

Let's think about if we still be a vertically integrated player, what we are talking today? Now we are talking about a company that is becoming a benchmark in Europe that is back to generate cash flow that is running towards the confirmation for the fourth year in a row of the guidance that never happened in the history of the company, that we are optimistic that we can do better, and we have plenty of opportunity that are not factorized today. We want to keep the expectation low but we are very optimistic that we can further improve the result of the company.

The next question is from Paul Sidney at Berenberg.

I had 2, please. Firstly, on capital allocation, the strategic update, you set out your financial flexibility from the cumulative free cash flow you'll generate over the next 3 years with the return to shareholder remuneration starting from fiscal 2026 and selling out other potential uses of cash. I just wondered 6 months on with leverage heading below 2x, could you set out any further thoughts you have on how you prioritize the use of cash looking forward, including potentially raising your stake in TIM Brazil over time?

And then secondly, you mentioned in your prepared remarks around the Italian consumer being more willing to accept price increases with reassurances around quality and customer service with those 2 elements becoming much more important. Are there any data points you can give us to demonstrate this? Or is it just your observation based on the churn trend over Q2? And maybe just a little follow-on from that. Is this trend the main reason why you expect your competitors in the consumer market to raise prices going forward?

Before to leave to Andrea about the second question, I think that what's happening is that being a vertical integrated player, we were unable to do all the efficiencies that our competitor would used to do or buying from an external player the asset. So this is giving us the opportunity to further accelerate the efficiency. The second, we started the price up move in 2022. I have to remember that in the first quarter call of 2022, when we were telling to everybody that our move was to increase price, everybody were thinking that: No, it's impossible. No one was able to do that. We're doing that.

Now it's quite sure that our competitor looking at our performance at 2 possible trend. The first one that is a no way of return because it will not give any kind of financial return is to create a price war. But more than 10 years of price war had demonstrated that it's the only way to continue to burn cash and bringing the company to a Chapter 11 solution. The second one is to stay rational. If you are a listed company or you have a shareholder of specific kind, be rational, increase price, increase the quality of the service and in the meantime, try to move towards the customer platform. This last point is something that sometimes also our competitors started before than us because we have to also be fair in the discussion. They are more in lead compared to us in the price increase, but they are becoming very rational, if I look at some last merger. So I think that this is a trend with no possible return.

And I leave to Andrea to elaborate more on that.

Thank you, Pietro. Thank you, Paul, for the question. As you know, we are quite passionate on this topic. We've been actually announcing and commenting on the price ups since the last 4 years. As a matter of fact, this is the fourth year in a row that we not only implement price ups, but we study and analyze the outcome very closely. So we do have some statistical evidence because we measure the differential churn target by target segment by segment when we do the price ups in the following month. So we measure that in 2025, we have pretty solid evidence that the churn behavior of customers that are priced up on average is better than before and better than the business case that was based on the previous year.

The second element is that, as Pietro commented, we look at segment with different level of, for instance, technology. So FTTH customer respond better than lower technology or previous technology customers to price up and people that have a higher level of service, for instance, TIM Vision or Convergence respond better to price up. So that is what we modeled. And that is why we are, let me say, actively explaining also in this conference call that this is the trend that we believe that the market should follow in order to repair some of the dilution effect that are still coming from the price war from the past 10 years.

Paul, let me answer your first question in terms of capital allocation. We are executing our plan. And if we execute our plan also in '26 and in '27, we will have, for sure, a strong financial flexibility. But in terms of how we will apply it is -- the shareholder remuneration is clear. We mentioned what the shareholder remuneration will be in '26 and '27. And then we will understand if there are opportunities that can add value to the company. But that's our view. We need to execute our plan. Our target is to reach a 1.7, 1.8 at least leverage in the coming years.

And then yes, we will have 0.4x EBITDA or 0.6x if there is a final definition of the concession fee for financial flexibility. But that will be analyzed in terms of opportunities. Then on the specific point that you raised in terms of increasing our stage on TIM Brasil, I think that we are pretty happy with that question because we've been asked constantly since 2022 until already also this year, if we will be thinking of selling a Brazilian entity? And now you're asking us if we will be open to increase the position?

Honestly, we think that our actual ownership of Brazil of 66%, if there is the right weight in terms of participating in the cash flows of the company, and in terms of exposure. And then we also believe that having minorities in TIM Brasil is the right protection in terms of how we handle the company or how the stakeholders in Brazil consider the company. So for today, we are happy with the actual situation. We will see what may happen in the future. We still -- we are still very -- and we will be also in the future, we're very happy with how the company is performing. And you know that today is still a very important source of cash flows for the group. So we think that what we disclosed in the plan is pretty clear in terms of capital allocation for the future.

The last question is from Ottavio Adorisio at Bernstein.

Inevitably, it's a follow-up from previous ones. A couple of questions for Adrian. The first is on the factoring. Can you tell us how it's going to be accounted? You will be -- I think, in working capital, but we'll be feeding in equity free cash flow or not? The one you said about the cost, I appreciate that the cost is less than [indiscernible]. I guess you also have some fee to pay to the banks. Considering that it's a relatively short-term financing, considering that you would expect a resolution by the year-end. I was wondering why you do that factory now in a way for resolutions or settlement?

The second one is on the hedging. As you stand at the moment, you have a gain. Am I right to say that gain will be accounted in net interest or working capital that will feed into equity free cash flow? And if that's the case, if the real stands at the current level, how big that gain will be before the year-end or by the year-end?

And the third one is for Pietro. Pietro, when you're talking about potential consolidations, you stress that there are 2 types about operators, but then you talk about potential network consolidations. If you can elaborate a little bit in terms of how that could take place given the caveats that, of course, you have towers -- your towers, mostly your towers and managed by INWIT and the network by FiberCop. And what sort of synergies we should expect? Similar synergies then merging 2 companies or relatively smaller or significantly smaller?

Let me start with the potential consolidation to elaborate on that. Usually, when you look at the merge between 2 players in the Mobile segment, a good part of the industrial synergy are coming from a reduction of the network cost that is related to the higher level of efficiency if we put together the spectrum because from an engineering point of view, if you do the sum of 2 frequencies is not an addition, 1 plus 1, 2, but it's something amplified, so 1 plus 1 is 3. It will allow you to collect and gather more data with the lower cost. Then it's clear that you have to start to think, is it in Italy fair enough to have the three 2G network? I think that makes no more sense.

We have several opportunities that are coming also from the discussion and the regulation that can be exploited. So the rationale is: when you look at traditional merger, you will have synergy that are coming from the industrial component that is the network one, plus other ones that are related to cost of labor, commercial cost because you cannot talk of other things. So these are the main part. So a good part is the industrial part that means the network one that usually worth 60%, 70% of that kind of efficiency that you can reach not merging to company, but putting together the operation of the 2 companies to reduce the cost, also because differently from the past.

Today, the antenna is not a competitive advantage. In the past, if I had the antenna in San Pietro, just to give you an idea, I will never share this antenna with some other one because it was a kind of mono policy situation. But 30 years later, we have the coverage that is more or less the same among all the players. So this is something on which we can work. If we can talk about the possibility to extend the 5G stand-alone network also in area that have no return on investment, if you work on a stand-alone basis, this is a further opportunity. So there are several things on which we are working to have also alternative to the traditional merge activity.

Then about the hedging and the factoring, I'll leave to Adrian.

Yes. Thank you, Adorisio for your questions. On the factoring side, clearly, the accounting is still a financial liability. That's why it didn't impact in the net financial position. So we will have the credit, and we'll have the financial liability. It's kind of [indiscernible] accounting even if we've been cautious with this approach. This is already discussed also with [indiscernible]. So that's pretty much it. And that's why there is no impact yet on the net financial position that make with the final sentence.

Then on why now? Well, it's -- we booked the credit on the first quarter and we were ready to enter into this deal. At the end, it's a source of financing and it's a much cheaper financing that a normal one that we can find in the market if you consider that we will be paying something around 2.2%, 2.3% of the cost we will have on the other side also the ongoing interest of the case. So it's probably 150 basis points lower that the normal financing that we can than we can have today. And since we have some maturities in the second half of the year, in September, we should -- we will pay EUR 1 billion of the maturity -- of the second maturity 2025.

It's -- that's the reason why we are doing it now because it's much cheaper than other instruments. So -- and I think that there was third question in terms of accounting of the hedge of Brazil. Clearly, the actual hedge that we have for 2025, it's a financial instrument and is accounting and others on the equity free cash flow. So what arrives from Brazil, it's in the actual exchange rate and then the hedging instrument, if it is positive as it is today, that is in the money for the second quarter, brings the positive on the others and on the equity free cash flow.

Going forward, what we are doing, it's a little bit more structured because you know that we issued debt on a holding company in Brazil in local currency. We will, in the future, bring up dividends in U.S. dollars at a very favorable exchange rate. And Noovle sustains this cost in dollars on the P&L. So it's a mix effect that you will find at OpEx and at financial expenses. I hope I covered all your -- all of your questions?

That's fine.

Ottavio, sorry, I just had to say to all the team that they cannot go out for the holidays because reading the headline of the report in line results, but still work to do on growth and gearing. So guy, you have to stay for August in the office to guarantee the result of the year. I'm joking Ottavio clearly. But this was the last question. I want to thank you, everybody. We'll follow up in the afternoon with the virtual road show. I hope to hear you soon also after the summer holiday. Thank you to everybody.

Thank you.

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