Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Infrastrutture Wireless Italiane SpA (IFSUF, Financial) reported an 8% revenue growth in Q2 2024, driven by inflation-linked adjustments, new services, and new site additions.
- The company achieved an 11% growth in EBITDA after lease, with a margin increase of two percentage points.
- Strong industrial delivery was noted with over 200 new sites and nearly 1,000 new PoPs, aligning with full-year targets.
- The company provided compelling shareholder remuneration through additional dividends and buybacks.
- Infrastrutture Wireless Italiane SpA (IFSUF) is well-positioned to capture structural growth opportunities in Italy's digital infrastructure market, which is currently lagging behind European standards.
Negative Points
- Net debt to EBITDA ratio increased to 4.9 times, reflecting the impact of increased shareholder remuneration.
- The FWA market remains stable at low levels of growth, with no significant acceleration expected in the near term.
- The company's leverage remains high, with a structural leverage target of up to six times, indicating potential financial risk.
- Inflation in Italy is expected to be lower than the company's base assumption, potentially impacting future revenue growth.
- The IoT revenue per unit is lower, which affects the overall revenue mix and growth potential.
Q & A Highlights
Q: My question is on the Olo progression. We saw a pickup in net adds, but it didn't translate to a big boost in revenue. How should we think about the mix going forward, and what about the pricing differential between FWA and IoT?
A: The quarter shows encouraging signs with net adds reflecting the IoT component. The IoT revenue per unit is lower, which affects the mix. We expect an acceleration in fixed wireless access finance, which hasn't yet been reflected.
Q: Regarding shareholder returns, your net debt to EBITDA is low. How are you thinking about capital allocation, especially with limited M&A opportunities?
A: We support a structural leverage up to six times. With financial flexibility of about EUR1.5 billion by 2026, our priorities are growth and shareholder remuneration. We will assess market opportunities and shareholder returns, with a decision expected by early 2025.
Q: Could we expect full-year revenues to be at the lower end of the EUR1 billion to EUR1.16 billion range? Also, what are your 2025 expectations considering CPI trends?
A: We expect revenue growth to remain consistent with the guidance range. Our base assumption for inflation is 2% per year up to 2026. The impact of inflation is relatively small and well within our guidance range.
Q: On Anchor PoPs, you mentioned phasing elements. Can you confirm if you expect to return to the 600 range in the second half?
A: Yes, we expect to return to the 600 range in the second half. The half-year is on track with 1,000 PoPs, consistent with the full-year target of 2,000.
Q: Regarding the Italian digital infrastructure market, do you sense an acceleration in 5G investments from telecom players?
A: The market recognizes the need for better infrastructure and connectivity. There is a clear demand for digitalization, and we expect investments to accelerate to close the gap with European standards.
Q: Can you comment on the exercising of the 51% option in multi-network and any updates on Iliad remedies?
A: The multi-network project is consistent with our strategy in transportation. Regarding Iliad, we continue to see decent business levels with no significant changes.
Q: Are there any changes in electromagnetic limits affecting network architectures?
A: No significant changes yet. Operators and regulators are still assessing, with no visible impact in the market.
Q: What are your expectations for the second half of the year in terms of revenue growth?
A: We expect steady and resilient growth with potential acceleration in the second half, supported by discretionary investments and new business opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
