Telecom Italia S.p.A.

Ladies and gentlemen, good morning, and welcome to TIM first quarter 2025 results presentation. I'm here with the CEO, Pietro Labriola; the CFO, Adrian Calaza; and the rest of the management team.

Today, we present the highlights of the first quarter and review the main operating and financial results. At the end, there will be the usual Q&A session.

I point out that Sparkle is treated as a discontinued operation as indicated in the guidance provided in February. Therefore, it is excluded from this set of results unless otherwise stated, and so it will in coming quarters.

Please refer to the safe harbor disclaimer in the appendix for the definition of the results perimeter. Now I hand the stage over to Pietro.

Pietro, the floor is yours.

Thank you, Paolo. Good morning, everyone.

Let me start with what I believe are the most relevant messages for this quarter. First of all, since our February call, Poste Italiane agreed to acquire a 15% stake from Vivendi.

Once completed, Poste will become TIM's largest shareholder, holding 24.8% of ordinary shares. This marks a fundamental step towards greater governance alignment and long-term industrial stability.

More on this in the next slide. The competitive environment in Q1 saw the domestic consumer market broadly stable with some early signs of improvement following faster Vodafone deal, the enterprise market growing as expected and Brazil remaining rational and profitable.

Our results were fully in line with the budget, confirming that we are on track. We have also extended our revolving credit facility to 2030 and reduced its size from EUR 4 billion to EUR 3 billion, reflecting the stronger profile of TIM post NetCo.

Lastly, the hearing for the 98th concession fee is set for May 27 earlier than expected, potentially anticipating any profit and loss effect. Slide 3.

As you know, Poste has agreed to acquire a 15% stake from Vivendi. Once completed, they will hold 24.8% of ordinary shares and 17.8% of total capital.

Completion is expected by midyear, subject to antitrust clearance. Poste has publicly stated this is a long-term strategic investment and that it intends to support the consolidation of the Italian telco sector, something many of you in the market have long advocated for.

We strongly welcome Poste as our main shareholder. From an industrial perspective, there are multiple opportunities.

First, Poste Mobile. We are at an advanced stage of negotiation to grant access to TIM's network.

Migration is expected to start in Q1 2026. This was a key assumption in our 2025-2027 plan and derisks our outlook significantly.

Beyond mobile, we are jointly evaluating partnership in areas such as payment, energy, media, digital content and IoT. Lastly, TIM Enterprise could become a key ICT partner for Poste, historically one of the largest IT spenders in Italy, where our share has been limited.

We expect to be able to provide additional information on the potential value of these initiatives later in the year. Slide 4.

Q1 was a quarter of good execution, strong operational delivery and solid fundamentals. Results were on track, both at group and domestic level.

Our growth is best-in-class versus European peers and is a function of a more stable consumer operation and high single-digit growth in the Enterprise division with cloud services driving the performance. As usual, Brazil is a strong contributor.

For the group, revenues were up 2.7%. EBITDA after lease increased 5.4%.

CapEx was EUR 0.5 billion, representing 14% of revenues and EBITDA after lease minus CapEx was up 24% at EUR 0.4 billion. Due to the usual seasonality of working capital absorption at the beginning of the year, equity free cash flow was negative by around EUR 0.2 billion, a sharp structural change versus last year when NetCo was still consolidated.

Adrian will provide more details on the cash flow dynamic. Net debt after lease was EUR 7.5 billion with 2.05x leverage ratio, slightly up versus EUR 7.3 billion in December.

At domestic level, revenues increased 1.6%. EBITDA after lease was up 4%.

CapEx was EUR 0.2 billion or 10.7% of revenues and EBITDA after lease minus CapEx was up 27% at EUR 0.2 billion. Slide 5.

TIM Consumer performed well in Q1 with total and service revenue stable year-on-year. This is the fourth consecutive year of price adjustments across wireline and mobile customer base.

In Q1, we informed over 1 million consumer wireline and 0.7 million mobile customers of new pricing effective from Q2 and additional actions are planned in the coming months. The benefits are evident.

Wireline ARPU continues to grow. Mobile remains broadly stable.

Meanwhile, churn is marginally declining, a remarkable result considering multiple rounds of price adjustments introduced over time. Our customer base continued to show strong stickiness driven by the quality of TIM services and the increasing integration of our platform into users' digital habits.

The good performance on churn also suggests that the market remains highly competitive, but is somewhat cooling down. In Q1, some competitors increased the street price of their wireline and mobile offers, and we hope to see more in coming months.

Wireline net adds improved sequentially, and we strengthened our leadership in the FTTH market, reaching a solid 27% share and 1.7 million active lines, well ahead of competitors. Mobile net adds improved as well.

Notably, for the first quarter in years, we recorded a neutral number portability balance, a sign of strengthened customer retention and competitive position. This is significant considering that SIMs involved in mobile number portability have an ARPU of around EUR 12, EUR 13, whereas the SIM loss in Q1 were mostly secondary, low or no traffic lines with an average ARPU of just EUR 1, meaning they will not have materially contributed to the top line.

Soon this trend hold in coming quarters, negative net adds will have limited impact on service revenues. Slide 6.

TIM Enterprise continues to accelerate, delivering another quarter of solid growth. Total revenues rose mid-single digit to EUR 0.8 billion, with service revenues up nearly 7%.

Cloud stood out as the growth engine with service revenue up 24%. For the first time, Cloud has become our largest business line, surpassing connectivity and marking a strategic turning point that confirms our role as one of the Italy's leading ICT partner.

Our distinctive positioning, combining proprietary data center and advanced cloud capabilities continue to set us apart, especially in enabling secure and sovereign digital services for the country. Revenue from other IT services remained broadly stable, reflecting a deliberate reshaping of our portfolio to phase out low-margin activities and focus on higher-value solutions.

Connectivity in line with expectation, saw a slight decline in revenues, fully consistent with our repositioning strategy. Looking ahead, TIM Enterprise is investing in the next wave of innovation, developing proprietary solution in frontier technologies such as quantum computing and advanced cybersecurity, poised to become growth levers going forward.

Slide 7. TIM Brasil reported on Monday, so I will not review the results in detail.

Just a few comments. While the market remains healthy and rational, TIM Brasil continued to deliver a solid performance.

Top line grew mid-single digit, driven by mobile service revenue. Customer base monetization remains a core focus with upselling from prepaid to postpaid, leading to the highest ARPU in the market.

Efficient operational execution is driving a consistent EBITDA growth with margin expansion. OpEx are running below inflation and EBITDA after lease reached 36.4% of revenues with an year-on-year growth well above 6%.

TIM Brasil is outperforming peers also in terms of cash flow generation with robust operating free cash flow expanding double digit. I now hand over to Adrian.

Thank you, Pietro. Good morning, everyone.

Before diving into cash flow and debt evolution, let me share a few comments on group CapEx and domestic OpEx. Group CapEx were just under EUR 0.5 billion, almost 14% on revenues and in line with the full year target.

With Brazil almost in line with the plan, domestic CapEx were as planned, slightly soft and below 11% on revenues, particularly on the network side that will recover in coming quarters, thanks to the new radio access network contracts. Differently from 2024, we expect a more linear trend over the year.

Domestic OpEx as a percentage of revenues reduced by 50 basis points, driving a proportional increase in EBITDA margin, even absorbing lower capitalized costs compared to last year. As in the past 3 years, efficiency remains a core focus.

The transformation plan contributed with around EUR 40 million to EBITDA after lease minus CapEx in Q1, in line to reach the annual target. Equity free cash flow after lease was approximately EUR 0.2 billion negative, slightly better than our internal plan.

As usual, the first quarter presented the seasonal working capital absorption, especially considering the significant CapEx level of last year fourth quarter and a proportionally higher effect of the extraordinary working capital effects due to the final payment of the old that zone contract. It is worth noticing the sharp structural change when compared to the negative EUR 1 billion in Q1 last year when NetCo was still consolidated.

Going forward, we expect equity free cash flow to be broadly neutral already in Q2 and clearly positive in the second half of the year. And I remind you that we hedge a significant percentage of the equity free cash flow generated in Brazil.

Below equity free cash flow, we had around EUR 0.1 billion of outflow mainly related to dividends to TIM Brasil minorities. Net debt closed at EUR 7.5 billion with leverage at 2.05x organic EBITDA after lease, confirming our position as the least levered listed telco in Europe.

In the appendix, you may find a slide with all the details. Now back to Pietro for his closing remarks.

Thank you, Adrian. To wrap up, the entry of Poste Italiane strengthened our governance and opens up valuable synergies.

We will provide update once these are quantified. Q1 performance confirms that we are on track to deliver on our full year guidance, both operationally and financially.

The Sparkle disposal is expected to close in Q4, delivering an additional 0.2 leverage reduction versus the year-end target. The timing of the hearing for the 98 Concession Fee marks a potential anticipation versus what we initially expected for the resolution of this long-standing case.

I remind you that the recognition of the P&L gain will depend on the outcome of the final ruling. We remain focused on execution, cash flow and unlocking value.

With this, we are ready to take your questions. Thank you.

The first from my side is just around the potential for consolidation in the Italian market. I think both you and Pietro have been more vocal about this recently.

So has anything actually changed on the ground? Are you still talking to other parties?

And given the political oversight of any consolidation deal that would come through, what do you think the red lines would be or the important things to think about would be if you were to come forward with the proposition for a merger with another party? And do you think that those are achievable in the current context?

And then the second question is a bit shorter. Perhaps if you could just give us an update on your latest views of the competitive environment in Italy.

I know you've raised some prices. I think, we heard earlier from Swisscom, they raised prices as well, but a view of the broader landscape would be helpful.

Thank you, Joshua. About the consolidation, I think that you are experiencing in this period of time at European level, a complete different approach because we are having a lot of situation in which through the renewal of the frequencies or through discussion related to the market consolidation, it seems that everybody have understood that the sustainability of this industry is coming through some of these steps.

So we are very -- we say welcome to all the activity that we allow through the renewal of the frequencies that is something that we are asking in Italy to or the merge between the different player and the consolidation, the possibility to give a sustainability to this market. Then it's clear that we are in favor of a consolidation in Italy.

We never had that Iliad could be a possible deal with -- a possible deal to do something. But at the same time, it will not be for us a nightmare, a case of a consolidation, for example, between Wind Tre and Iliad.

Then, if you look also at the amount of frequencies and all these kind of things, I think that in any case, we will continue to pursue the possibility of the deal with Iliad, but also a deal with Wind Tre will not be negligible. In the meantime, we still continue to work on our number because the most important thing today is to continue to deliver our number.

Then about the competitive scenario on the consumer, I will leave the stage to Andrea to give some more details.

Thank you, Pietro. Thank you, Joshua, for the question.

The competitive environment has shown some changes in Q1. We see, in particular, not only the front book price up from Fastweb on the mobile and from Vodafone on the broadband, but also notably a continued trend of softening in the portability number of Iliad that are broadly in line with Q4 2025 that has been the lowest number of net adds in the history of Iliad.

We also see, which is very relevant for the dilution effect, a general reduction in the volume of churn in the mobile number -- in the mobile market. Therefore, we have positive effects projected coming from the reduction of dilution in ARPU from portability.

On the broadband side, we also show a decline in fixed churn year-over-year with improvement of net adds in our trends.

But Joshua, what is important is also the statement of Fastweb, Vodafone this morning when they declare that they are looking for a value strategy. I have to remember to everybody that it was 2022 when in our plan, we told that our strategy was from volume to value.

4 years later, our numbers are showing that the results are good and the other players starting to follow us. And this is very important because the level of price in Italy are very cheap and low.

I hope that has worked. Yes, just Pietro, if you could just clarify this Concession Fee process.

You said the hearing is due May 27. So what could be the outcome there?

When would you potentially receive the cash? And would you be free to use that as you wanted?

Or would there still be restrictions being able to use working capital, et cetera? So if you could just confirm that process for us.

And then, I guess just beyond that, a question for the wider industry right now is how the increased spending on defense nationally is presenting an opportunity to the telcos. And I think in general, the answer is yes, but you have the added advantage of your strong government relationship, but also the data center ownership.

So I wondered if you could give us any indication of that opportunity, the timing, maybe even quantifying if that's possible.

Thank you, David. Let's start from the most complex question that is not the Concession Fee, I'm joking.

So about the situation today in the market and the increase of defense expenditure. I think that our company is the company, as you were mentioning, that is best positioned to get some further increased advantages, because when we talk about defense, we have to start -- we have to remember that we are talking also about cybersecurity and we are one of the leader in Italy in terms of cybersecurity.

This is also another important element, because in the portfolio of the services that is managing in TIM Enterprise, Security is one of the platform that is owned by us. And it means that, with that kind of services, we can have an increase of margin.

But what is important is also the point that you highlighted is that everybody now are discovering the importance of the sovereign cloud. And we are the player that today is most advanced in the country to manage this kind of challenge.

So we are working with Elio and Eugenio in these things, because it is something that we didn't have in our plan. It could be a potential upside also in the medium, long term because we are not here to make a company great in the next 2, 3 years, but to give a perspective to our company in the medium, long term.

About the hearing, the 27th of May, we will have the hearing on the Concession Fee. We expect that there will be a judgment on that, could be in terms of number of hearings, we think that it will be just one.

So we don't have to have further step to go through. And we don't think that it will take years to have a decision, but we are waiting for the answer.

Let's say, in an optimistic way. It was 2 months ago that was undetermined the data of the hearing.

Now we have a hearing that is the 27th of May that will allow us to further accelerate all our strategy in the case of positive results.

A couple of questions. The first is on the domestic EBITDA.

You have started at around 4%, guidance at 5%, 6% for the full year. So if you can help us understand, say, the phasing of your EBITDA growth at domestic level.

And second is a comment on the equity free cash flow. Adrian in his speech before was mentioning that Q1 was rather better than initially expected.

So I'm trying to understand if you see some upside for the full year. And in case, what are the areas that could provide this upside on the equity free cash flow?

And the last question is on the next general meeting. So if you can -- in the past, you mentioned that you could consider also a reduction of the share capital.

So I wonder if you are looking for that for the next general meeting.

Okay. Thank you, Domenico.

About the trend between the different quarters, we confirm as we told also in our press release, the target. So we don't see issue to reach our target.

Then your question help me also to state better and do, if I may, some education on our company numbers. Today, our company is no more a pure consumer company.

Our revenues and EBITDA is coming by consumer and enterprise. Consumer is the business that you were used to look to.

So it's very forecastable quarter-by-quarter, you look at the number and the things. TIM Enterprise is a business of large corporate.

We can get a contract, the 31st of March or the 1st of April. And it can change through the quarter, the trend of the number, but it doesn't change when you look at the overall year.

And then, this is the time also to show that the cloud services in our Enterprise segment reached 40%. So if I may, our TIM Enterprise is no more a telco.

It's more a cloud company. And this is also important to evaluate in the medium to long term our company.

About the next general assembly meeting, it's important to remember that we don't have a must to proceed in the reduction of the capital in this general shareholder meeting. The decision will be taken in any case by the Board the 23rd of May.

But we have time to proceed on that. The last, I leave to Adrian to talk about the equity free cash flow.

Domenico. Yes, clearly, this first quarter equity free cash flow was slightly above our projections.

It's too soon to say if we will be above the level that we guided for the full year. But honestly, also in terms of working capital evolution, it's performing better and probably we will see in the next quarters that may be some improvement in terms of financial expenses.

So again, what we can tell you now is that we confirm our guidance in terms of equity free cash flow. But anyway, yes, it has been performing better, and this gives us comfort for the rest of the year.

Thanks for taking my three questions, please. The first one is on a follow-up of Domenico question on the equity free cash flow guidance, which you are confirming despite the ForEx impact from Brazil.

So I was wondering if it could be interpreted as an upgrade indirectly, if you can address it, please. The second one is on the energy cost.

We saw the recent government support package for the sector, EUR 630 million that does not include measures for the telecom operators, which are particularly, energy cost, first of all. I was wondering if you consider -- possible that there is a package for energy cost that could be approved by 2025 and so entitling you to receive the additional earnout of EUR 400 million by year-end.

And the third one is very simply on INWIT master service agreement. I was wondering if you see room to discuss the terms of the master service agreement with INWIT or evaluate in a constructive way the activities along the lines of what Vodafone and Fastweb recently suggested.

And if you see opportunity to evaluate rent sharing especially in the low dense areas that we -- Fastweb involved upon. Thank you.

Thank you, Giorgio. Let's start from the last question that is related to INWIT.

It's clear that if you look at our profit and loss, but also below the profit and loss on the leasing, the network cost is a good part of our cost structure. So on both INWIT and FiberCop, and also Open Fiber in a constructive way, we will always look to possibility to create further efficiency in our number to have a better cash generation.

It doesn't mean that there will be any kind of fight, but there are opportunities. You mentioned also the sharing of the network.

This is for sure a trend, not only in Italy, but in several countries in the world. So this is something that we can foresee not necessarily only with Fastweb Vodafone, but also with Wind Tre or any player is interested to share with us the cost.

To be clear, in the past, antennas was a competitive tool. Today, when the coverage is quite the same through everybody, there are for sure room to do further efficiency.

About the energy earn-outs, I was always transparent. On the energy earnout, I think that the percentage that something will happen this year is very low, while I'm much more positive on the remaining earnouts.

But on the energy, I'm positive in the mid and long term. Some of you can laugh, because I'm starting to talk about mid and long term, but we are back to be a normal company.

So we don't have only to talk about quarter-on-quarter results, but as to give a long-term perspective to this company. On the energy side, I'm optimistic that something will happen in the medium term, also because it is becoming an issue for the competitiveness of the country.

Everybody are talking about AI. AI needs a high consumption of energy.

We have the data center. We offer the services.

But for sure, our country will have a level of service that will be more expensive than the other countries, not because of us, but because the cost of the raw materials. This is a discussion that we are having also in terms of association with the Italian government and also inside [indiscernible].

Then I leave the stage to Adrian to talk about equity free cash flow.

Yes. Giorgio, thank you for the question because it's important to clarify about the FX of the real against the euro.

Remember that we mentioned on our planned presentation that we've been working about hedging our cash flows coming from Brazil since probably 2022. For this year, we already hedged 75% of the full year equity free cash flow.

And if you consider that during the first quarter, the exchange rate was mostly aligned with what we projected for the budget, so something around EUR 6.18 or EUR 6.20. This 75% covers probably the following 9 months.

So we shouldn't expect any impact or negative impact coming from the FX evolution. On the other side, probably there could be some upside.

Brazil, I think that you saw the numbers, it's performing very well. We may have some positive surprises coming from -- at the cash flow level.

So honestly, we shouldn't expect any negative impact on that side. Then it's also in terms of equity free cash flow, the performance of the domestic that has been improving and should improve going forward.

So again, we see -- if we are only confirming now the guidance for the equity free cash flow, honestly, we see only upside risk at this level.

Hopefully, you can hear me now. Apologies before.

I had two questions, please. The first one was following up on the EBITDA question.

I was looking at Enterprise and as you said, the strong growth there, but obviously, there's different trend between the different business lines. And I was wondering how the changing business mix would impact the overall margin of B2B.

I know you don't communicate on it, but if you could give color on that, because the point is connectivity certainly has the highest margin, but is declining. So other parts are growing, but IT is typically a lower-margin business.

But I guess the question in a nutshell is, should we expect kind of stable margins in the B2B business? Or could it be diluted?

And then, the second one on the synergies with Poste. You mentioned in your presentation a number of potential sources of synergies, obviously, the MVNO.

You also mentioned that Poste has a large ICT spend. Could you quantify how much they spend in a given year and so that we get a sense of potentially how much you could gain from that?

And then second, there was a press report that you could collaborate with Amazon through Postpay, notably on Cloud services. Now I understand you already have a partnership with Google under the Noovle umbrella.

So I was wondering if you could add a different partnership with Amazon, be it on cloud or on data centers? Thank you.

I will leave it to Elio to tell -- to give details and colors about the Enterprise, but I would like to say something related to Amazon. When I read the article, I was thinking to be back to the -- my young age when there was Fantasy Island.

It seems that some newspaper continue with putting on the table something that sometimes is not realistic. Then it's fair enough to say that the multi-cloud is the future strategy, but we have partnership in place with big players that are not second to other one.

So it doesn't mean that we have -- we don't have the possibility and the doors open to discuss further development, but I think that the way in which it was put it in the press is not the right one. About the synergy with Poste and the number, I think that we will be able to disclose some more details ahead in the year, because it seems that Poste become our shareholder 1 year ago.

They still are waiting for the clearance. But we are working on that also on the consumer.

So for sure, after the summer, we will have some surprise in terms of new services that we will put on the table. About the colors on the EBITDA, I leave to Elio on the EBITDA within Enterprise, I leave to Elio.

But also in this area, we are taking note about some signs of market rationality. There was a public bid to offer to the public administration at EUR 1.5, 200 giga offer, no one participated.

I think that the market is starting to understand that the business is not put revenue but generating cash.

Thanks, Matthew, for the question. Good morning, everyone.

Thank you very much, because I was getting sad because nobody was giving me the opportunity to comment about our cloud performance. So on margins, so as Pietro said, this is the first quarter where we have cloud as a first revenue stream in our business.

You can probably remember that 2 years ago, we said that by the end of 2025, we are expecting this to happen. And actually, it happened with 9 months in advance.

So we feel very proud about this. On margins, we don't see risks.

I mean, I can help you to do math about our business. As you have seen in the slide, Pietro presented at the very beginning, we divided in three buckets, our revenues: connectivity going slightly down, cloud, and the other IT that includes IoT and cyber.

Now on the other IT, so on the third line of business that includes all the other IT, so network management, device management, software, hardware, licensing IoT and cyber, we actually expect margins to go up, because we will get rid of all revenues that are heavily diluting our margins. So we will focus much less going forward to revenues that are not generating margins for our business.

When you look at the other two pockets, actually, you have connectivity. So I'll give you the math of this quarter because this is very -- it's a very good example to understand why margins are not at risk.

So we have lost EUR 10 million in absolute terms in connectivity revenues that, as you said, have good marginality, but they are going down. But we generated EUR 56 million incremental revenues on Cloud, which is a business we have said runs at 20% margin.

So actually, directionally, this is exactly where you want your business to be. So because we know that connectivity will go down, but at a very low part.

While if cloud keeps ramping up the way it's doing now at 20% margin, this will clearly offset the connectivity risk and will give us opportunity going forward for even increasing margin during the next few years. The last comment on this is on the -- so I give you an answer to a question that you didn't ask, but I think it's just to complete my answer.

When we look at this business going forward, cloud becomes more and more prominent, because when we look at the contracts that we have already signed, the amount of cloud that we have in that basket of revenues is north of 50%. So this is exactly where we wanted to happen.

So we are very happy about this.

The first one is on consolidation. Pietro, you were very clear about exploring a potential combination with Iliad.

And I was wondering if from your perspective, whether it would make sense for that combination theoretically to happen at the group level or perhaps whether it would make sense for it to happen at the operational level, so perhaps with TIM consumer directly? The second question is on the use of proceeds from the concession case and whether your preferred use remains simplifying the capital structure on the savers shares?

And in that context, how do you see the trade-off between a conversion of the savers or a share buyback?

Thank you, Luigi. About the last question that is related to the proceeds, I have to say the thing that I'm used to state every time.

It's quite clear for everybody that the capital structure of this company is for sure, not the most efficient one. And so sooner or later, this item must be addressed.

The second is that whatever we will do must be market-friendly toward all the categories of shareholders. Thanks to God.

Compared to 1 year ago, we are in this position that we can achieve and solve all the remaining issue of the company. So I think that we are happy problems, the ones that we have to face.

About the consolidation, we are continuing to study the value and the number, because number come first. Once we understand the detail, the number and this kind of deal and we can understand better the amount and how much will be accretive, we go more in depth about the way in which we can afford it.

Can you hear me okay?

Yes.

Great. So two questions, please.

So the first one, I would like to go back and just explore a little bit more your optimism about the potential to receive some of the earnout payments in the event of a FiberCop transaction. I mean, bigger picture, I suppose, what gives you that optimism at the moment?

And in more detail, specifically, I think the current terms suggest you would get 70% of the potential financial benefits from a deal. Would you be willing to lower that 70% level if that is essentially a trigger that's needed to get a combination done?

Because, if I was in FiberCop shoes, I would be thinking I might wait another 18 months until 2027 and not pay the earnout. So it would be great to get your thoughts on that.

And then the second point is, I think you've got kind of 1.7 million FTTH lines at the moment. Now that you've separated out the NetCo, could you kind of talk us through how many of those lines are actually with Open Fiber and how you see your FTTH mix going forward between FiberCop and Open Fiber?

Okay. I will leave to Andrea to give some more colors about the mix of FTTH between Open Fiber and FiberCop.

But let's remember that. If you consider that in Italy, we have 20 million household and that in the white and gray areas, you have with Open Fiber, 7 in theory, when we reach a regime situation, 30% will be for sure with Open Fiber because our areas in which there is only Open Fiber.

Then you will have the black areas. Part of the black areas are overlap.

And so in that black areas, the only player that we can use is FiberCop, but there is a part that is not covered by FiberCop that is covered by Open Fiber. In this way, I gave you in some way an answer to both the question, because I gave you an idea about what could be the share between the two suppliers.

But it gives you the idea about why I'm optimistic. A certain point, 30% of the line will be on the Open Fiber network in a way or another.

And so the most the deal happen between the two players, the less will be the money that will be left on the table by the two players in the overlapping activity. Now if you want some more details about the way in which our 1.7 million FTTH, I leave to Andrea to give you these details.

Yes. So before you jump to that or to Andrea, can I ask, would you be willing to change the terms of the 70% share of the earnout if that's required to get a deal done?

It's too early. Let's sit and discuss.

Okay. But it's not -- it sounds like it's not a red line for you.

I told you let's sit and discuss. I'm a pragmatic guy, but I'm also a Board and shareholder that have to follow too.

Yes. Thank you, Pietro.

Thank you, James. Just quickly.

So we started working with Open Fiber in the white areas last year. And we -- so far, we accumulated less than 10% on the base on Open Fiber.

We started working also in the black areas with Open Fiber at the beginning of 2025, which is very important for the availability of service for the customers. So this is an improvement of our competitive position and competitive performance.

Then the share of open fiber lines, as Pietro also highlighted, is slightly growing, but the majority of our current activation and the customer base is clearly on FiberCop.

It sounds like it's kind of -- it's just over 90% is with FiberCop of the 1.7 million.

That's correct. It's actually lower than 10%.

But James, I think, that it is 90-10, it permits me to explain also why the sale of the network for us is something that allowed to further exploit our market. Just to give you an idea, until we are also the owner of the network, for us, migrate customer from FTTC to FTTH in this 7 million households that is 30% of the market was a nightmare, because it should move from a 0 EBITDA impact with a loss on the EBITDA.

Now that we have sold the network, we are back to be competitive also in those areas where we are migrating the customers. So the 90-10 distribution is related to the delay with which we started, but we'll speed up that.

I had a follow-up on the consolidation questions from earlier and then a question on MVNO -- MVNO revenue, should I say. So just on the consolidation, Pietro, you're very clear in terms of a couple of different scenarios, TI with Iliad, Iliad with Wind Tre, which you said would not be a nightmare.

Just checking, but does that mean you think it's not possible to have the other potential scenario, i.e., TI combining with Wind Tre. Anything you could just help us understand in terms of the likelihood you think of TI being a key player in the consolidation?

And then any kind of further insight you have on timing? Obviously, there have been -- you've been talking about discussions for a long time now.

I wondered what do you think is hindering execution on that? And then, on MVNO revenues, those were up in the first quarter despite the loss of the co-op contract.

I just wondered why that is? Are your MVNO revenues being front-end loaded in 2025?

Are you seeing greater customer spin down into MVNOs? Just any color on what's going on there would be helpful.

Andrew, can you repeat the first question, because I was unable to catch in details. Sorry.

Yes, sure. I was just trying to understand, given you talked about two potential scenarios for consolidation in Italy, i.e., either TI and Iliad combining or Iliad and Wind Tre combining, you didn't mention a third scenario, which would be TI and Wind Tre combining.

Is that because you don't think that's possible? And then, any further color you could just give us in terms of the timing of something being announced here given discussions have been ongoing for some time would be helpful.

Very clear, Andrew, you are completely right. I will give you the answer.

Let's consider something like that, a potential deal between TI team and Wind Tre, will be very complex, because the sum of the two will exceed between 40% and 50% of the market share on the fixed and on the mobile. So also if I'm the most aggressive person towards antitrust, I cannot ask miracle.

So it's quite impossible to have the approval creating a new player with 50%. But let's remember that synergy come at the network level.

So it doesn't mean that a certain point, there could be also a trend in the market where it will be not possible to merge the customer base. There will be synergy at the level of the network, the frequencies, the network sharing that could allow to further improve the efficiency of the network.

So you are completely right. There are different scenario in Iliad, Iliad cost, but we cannot exclude a potential scenario where the synergy will come from a merge or a deal at the network level, but without any kind of financial aspect, if you create a joint venture at the network level, you don't need to put inside a private equity or a financial investor, because we don't need any more money.

About the MVNO, I think that the market is yet to start and I will leave it to Andrea. But what is important that you have to remember that sometimes TIM is the player that today has the lowest amount of data in the network coming from the MVNO.

And it explains also why we are able to have today number better than the other, because we are able to exploit better what CapEx, because the ARPU on the MVNO on the network is much lower than the ARPU of the traditional customer. The most you have the volume of data coming from traditional customer, the most you are efficient.

The most the data of the MVNO -- the data that you carry on the network are coming from the MVNO, the less you can apply industrial marginal cost as an excuse to carry on this kind of customer. Then I leave to Andrea to talk about MVNO.

Thank you, Pietro. Thank you, Andrew.

The answer on the quarter trend and on the yearly trend is that for 2025, we foresee no significant impact in the full year performance of MVNO simply for the fact that the contract with Fastweb for the MVNO is still running. So for 2025, there is no significant reduction of revenues, because Fastweb is still having a relationship with us.

I have to remind that the MVNO contracts are in a way similar to the big Enterprise contract. Therefore, the phasing between quarter is not entirely linear in this contract.

The revenues in the Q1 have come a bit better indeed. We have to see if this will be recovered in terms of phasing in the rest of the year.

It depends also on the variability of the contract itself, which is also related to quantity and performance of the MVNO in the market.

And just one quick follow-up, Pietro. Is there anything specific aside from just the different players coming to some form of resolution in terms of the consolidation discussions.

Is there anything specific or kind of immovable hurdle that's causing, I wouldn't say delay, but it means we haven't seen an announcement yet.

But I think that not I think. We are in talk with everybody, because we have to monitor what's happening in the market.

Then what is happening today is that if you remember, if we were talking 1 year ago about the market consolidation, everybody were thinking that you were crazy, because at that time, it was seeming impossible. Now it's becoming a reality, not only in Italy, but for all Europe.

And we are working.

I've got a couple. First around the domestic EBITDAAL, just a follow-up.

Because that has come in below the full year guidance. So what do you expect to change in the coming quarters to be able to meet your full year guidance for domestic EBITDAAL growth?

The second one is a quick one around interest costs. So you've had 3 quarters now where you've come in below your quarterly guidance range.

So are you still expecting EUR 650 million to EUR 700 million for the year? Or is that now expected to be a little bit better?

About the domestic EBITDA -- EBITDA after lease, what is happening is that we have also some seasonality. Just to give you an idea, for example, usually in the consumer, you have the second quarter that are stronger due to the roaming list or so on and so forth.

So there are also a matter that is not related necessarily to the cost side, but it's also related to the revenue side. In the meantime, we have a transformation plan in place that will deliver during the year the further step that will allow us to reach our yearly target.

Then you don't have to forget that, as I mentioned at the beginning, we don't have to think that TIM is a pure consumer company. And so part of the EBITDA can have some drop and up through the quarter of the year related also to the TIM Enterprise segment.

About the interest cost?

Yes. It's -- if you consider the slightly above EUR 150 million that we had in this quarter, probably then that's the normal level today.

There are no one-off effects as the one that we have in the fourth quarter of 2024. So you can do the math for the full year.

Clearly, we should expect some efficiency also at this level. Remember that we have maturities this year after the first quarter of EUR 2.6 billion.

We paid, for example, in April, the maturity of EUR 1 billion that we have. We still have an additional EUR 1 billion in terms of bonds, and we have around EUR 600 million in terms of loans of maturities.

And probably with the cash level that we have by the end of March and probably also with the monetization of the concession fee credit, we won't be accessing the market at this stance then market is always about windows and opportunities, and we'll see. But we can clearly live with what we have today.

So we can expect, yes, some efficiency also in terms of financial expenses, but probably the main factor is that this EUR 150 million that we have this quarter at after lease level is probably the normal level for the level of debt that we have today.

Adrian, sorry, I give also some more colors about the EBITDA, because I don't want to be misunderstood. As you remember, when we presented our plan, we explained that the growth in the EBITDA of our company was driven by two different trends.

The first one on the consumer that is mainly related to the efficiency. The second on TIM Enterprise that is mainly related to the revenue growth, also with some efficiency.

So when you look at our number of TIM Enterprise that usually have a bump in the last quarter of the year, it's quite normal that part of the EBITDA -- of the growth in EBITDA that we will experience will arrive in the fourth quarter jointly with the revenue increase. So to avoid that there is any kind of misunderstanding.

Let's remember, -- we have to deliver EBITDA that is made by efficiency on the consumer, because consumer has a flattish revenue. And so this is the job that Andrea jointly with the team of the transformation is driving.

And on Elio side, so on the Enterprise side is made by, for sure, efficiency on which we are working, but it is driven also by the margin and the EBITDA that is coming from the delta revenue growth. If you remember and if you look at our number, the fourth quarter of TIM Enterprise usually is much higher than the first, the second and the third.

Thank you.

I have just a quick follow-up on Poste. I was wondering if you were able to give any detail about the margin of the MVNO contract and migration of Poste Mobile, if we can expect it to be higher than the usual group average due to maybe possible lower costs associated with it?

And second question regarding the other possible synergies with Poste. I know you were not able to quantify it, but would it be rational to expect the amount of synergies for TIM Enterprise to be greater in value than the value of the MVNO contract?

If you can give any details on that.

Okay. Thanks, Andrea.

Then, the first question that is related to the margin on the MVNO is something that I was trying to describe also before. In theory, if you have a network that is empty and in the mobile, usually, you don't have variable cost, but because network one is builder, it's 100% EBITDA.

And what I was trying to explain is that can be, yes, more or less 100% EBITDA. But when you have 10% on the traffic on your network that is coming from MVNO, you can consider a very high margin level, because you are going to saturate band that is not used.

When you increase that amount, it cannot be like that because at a certain point, you must put further antennas, further equipment. And so you cannot say that it's completely margin.

And this is what I was mentioning today, we are the player with the lowest amount of data coming from MVNOs in our network. This show us as the most efficient player in the market.

Then what is happening is that we are substituting the faster volume with the Poste one. So we don't foresee any specific increase in terms of CapEx.

About the synergy with Poste, we already told that we need to work also because we have to go in details, and we are not used to say something that is not possible to apply. And our story in the last 4 years was always that we deliver always what we told.

So today, we have a potential partner that will complement our customer platform strategy that we declared in 2022. At that time, it seems sometimes too bullish.

But the reality is that today, we are not only a pure telco player, because you have to remember to everybody that today, we are the second TV platform in Italy, premium TV, someone will forget. We have to add energy.

We have to add insurance, we have to add financial services, because the future of the consumer telco in Europe is to become a customer platform. And on that, I think that we are the most advanced player in Italy, also exploiting the experience of what we did in Brazil, where we launched this strategy in 2019.

Then we have also the other strategy that can come from the yellow segment that is TIM Enterprise. But to assure everybody that we are not sleeping, we have already signed an MoU with Poste to evaluate the different area of synergy.

We have created several work streams that we will disclose as soon as possible on to the market.

Just a follow-up on your financial profile. I was wondering if you consider a realistic scenario, the return on investment grade with the major rating agencies within the business plan horizon, so enabling further interest cost reduction.

Yes. Thank you for the question, Giorgio.

It's interesting discussion. No one could imagine this question just 6 months ago.

But anyway, it's interesting. just the starting point is, if you see today where our bonds are trading along the curve compared to the industry peers in Europe, below us, you will find only investment grades below us in terms of spread.

There are no even BB+ below us. And today, we are BB.

So honestly, these thing may take time, as Pietro always says, we've been a underperformance in the last -- not the last, but in 10 years. Only these last 3 years, we accomplished the guidances and especially in the plan.

So probably for the rating agency, this is an exercise that will take some time. But honestly, what I can tell you is that there are no basis today to still be a BB.

So that is probably what we are expecting for the next quarters. Then investment grade, it is something that we can see today in the coming years, yes.

On the other side, today is not something that could be impacting since I mentioned earlier that we are probably -- we probably won't be accessing to the market in these actual conditions in the coming months. It's not something that may change significantly in terms of financial expenses.

But again, I think that the market is a reality today, and our bonds are trading much better over actual rating.

Giorgio, if I may to conclude with some fun, we never give up. We are like the Inter Milan.

This was the last question. Thank you very much, everybody, for attending today.

We will be back at beginning of August for the Q2 results. Have a nice day.

Thank you.