Wind TreFirst Half 2018 Results

1 August 2018

2

Regulation

Integrate

Other

Optimize

Differentiate

H1 2018 highlights

• Persistent and intense competition in both mobile and fixed markets

• Pricing pressure led by new entrant, main operators reacting with second brands and dedicated offers

• Solar monthly billing cycle applied since April per legal mandate

• 5G rules issued by authorities; auction scheduled to take place in September 2018

• Integration planning well advanced with cumulative synergies achieved at 245M€ as of the end of June,

corresponding to an annual run-rate of OPEX synergies of 284M€ out of 490M€ final target

• More than 40% reduction in interest expense YoY, resulting in annualized savings of 270M€

External environment

Internal progress

• Strategy confirmed in mobile: rational, targeted acquisition strategy focused on value

• Strategic progress in fixed-line: acceleration on fixed-mobile convergence and strong FTTx growth

• Radio consolidation re-started with ZTE and Ericsson as partners

• Several internal projects ongoing to streamline, simplify and merge operational processes

• U.S. denial order on ZTE, though now lifted after three months, has slowed Wind Tre’s network consolidation

and modernization process

Market

3

Strategy update

Building an healthier Customer Base

Main value driver

• Dedicated M4M & M4S ATL & One2One offers

• Tailored campaigns for subscribers renewal on tied customer base to increase loyalty

• Push on upselling opportunities with dedicated fixed/mobile convergent offers

• Strengthen partnership with smartphone vendors to increase tied customers

Customer Value

Management

empowered

Offer

improvement

and portfolio

completion

• Push on tied offers on both brands

• Accelerate FTTx customer base growth through dedicated local campaigns and POS

productivity increase

• Reinforce convergent offer launching a dedicated hard bundle

• Focus on business segment both on commercial offer and sales channels, increasing

market share once network consolidation is advanced

Main actions

4

Network update

Mobile radio

• ~35% of mobile radio access network target already consolidated & modernized,

including Rome, Milan and Bologna

• Network performance in consolidated areas comparable to the best in Country

• Introduced Ericsson as 2nd radio supplier

• U.S. Department of Commerce lifted Denial Order on ZTE; operations have re-

started after three months stop

Core network

• Core network consolidation & transformation to TelcoCloud kicked off

• Network Function Virtualization infrastructure implementation planned for 2019

IT

• Consolidation progressing according to plan, delivering expected synergies

5

Network & IT

Commercial

SG&A & HR

Synergies

1. CAPEX synergies are calculated as difference between Wind Tre CAPEX at the end of the plan and the sum of 2016 CAPEX of Wind and H3G on a stand-alone basis

OPEX

CAPEX

490M€Annual run-rate

OPEX synergies

Annual run-rate CAPEX synergies1 210M€

Finance

Expense700M€

total synergies

270M€annual interest savings

on top of

167

49078

FY 2017 H1 2018 FY 2018E FY 2019E Run-rate

~90%(M€, %)

PlanAchieved

~60%Achieved as % of

run-rate100%

Cumulative 245M€

Network & IT

Annual Run-rate 284M€

• 40.4% saving YoY (137M€) in H1 2018

6

Financial highlights H1 2018

Total Revenue

-10.1% vs H1 2017

2,771M€

995M€

516M€

-4.1% vs H1 2017

1,901M€

-8.8% vs H1 2017

Mobile TLC revenues

Fixed TLC revenues

EBITDA1

EBITDA1 Margin

35.9%

Op. Cash Flow(EBITDA1 – CAPEX)

535M€

+0.2% vs H1 2017

FY 2017: 9,695M€

Net Debt2

9,576M€

Leverage ratio2

FY 2017: 4.4x

4.5x

Note: H1 2018 financial data are reported in accordance with IFRS 15. H1 2018 figures based on IAS 18 are used for “like-for-like comparison purposes” (where needed). For further details please refer to back-up slides

1. H1 2018 EBITDA before approx. 60M€ of one-off integration costs. H1 2017 EBITDA before approx. 140M€ of one-off integration costs

2. Leverage ratio calculated on H1 2018 LTM EBITDA, under IAS 18, before one-off integration costs of approx. 186M€. FY 2017 EBITDA before one-off integration costs of approx. 266M€.

-8.5% vs H1 2017

on a like-for-like basis

+60 bps vs H1 2017

on a like-for-like basis

7

Total – Revenue & EBITDA

2,624 2,417 2,418

377 319 319

82

34 34

3,083 2,770 2,771

H1 2017 H1 2018 IAS 18 H1 2018 IFRS 15

CPEOther

Total

Service

revenue

-10.1%

-15.5%

-7.9%

• 10.1% total revenue decline (-313M€) mainly due to:

➢ 7.9% service revenue decrease (-206M€) concentrated in

mobile consumer segment

➢ 15.5% CPE1 revenue decrease (-58M€) due to lower

handset sales offset by increased volumes coming from the

fixed-line equipment sales

➢ 48M€ other revenue decline mainly coming from the fixed-

line segment

Revenue (M€) Highlights

33.7% 34.4%35.9%

Note: H1 2018 financial data are reported in accordance with IFRS 15. H1 2018 figures based on IAS 18 are used for “like-for-like comparison purposes” (where needed). For further details please refer to back-up slides

1. CPE = Customer Premises Equipment

2. H1 2018 EBITDA before approx. 60M€ of one-off integration costs. H1 2017 EBITDA before approx. 140M€ of one-off integration costs

+60bps

1,040 952 995

H1 2017 H1 2018 IAS 18 H1 2018 IFRS 15

-8.5%

EBITDA1 and Margin (M€, %)

(Like-for-like comparison)

• 8.5% EBITDA2 decline on a like-for-like basis (-88M€) due to

pressure on top line, partially offset by synergies and cost

efficiencies

• 60bps EBITDA2 margin increase on a like-for-like basis

(Like-for-like comparison)

8

Mobile – Revenue & EBITDA

2,085 1,901 1,901

365 262 262

42

28 28

2,492 2,191 2,191

H1 2017 H1 2018 IAS 18 H1 2018 IFRS 15

-8.8%

Other

Total

Service

revenue

-12.1%

CPE

Revenue (M€) Highlights

Note: H1 2018 financial data are reported in accordance with IFRS 15. H1 2018 figures based on IAS 18 are used for “like-for-like comparison purposes” (where needed). For further details please refer to back-up slides

1. EBITDA before integration costs

857 786 829

H1 2017 H1 2018 IAS 18 H1 2018 IFRS 15

34.4%35.9%

37.8%

-8.3%

+150bps

EBITDA1 and Margin (M€, %)

(Like-for-like comparison)

• 8.3% EBITDA1 decline on a like-for-like basis (-71M€) due to

top line pressure, not completely offset by synergies and cost

cutting initiatives

• 150bps EBITDA1 margin increase on a like-for-like basis

(Like-for-like comparison)• 12.1% mobile revenue decrease (-301M€), mainly due to:

➢ 8.8% service revenue decrease (-184M€) as a result of

highly competitive market impacting both customer base

and ARPU

➢ 28.3% low-margin CPE revenue decline (-104M€) due to

lower handset sales coupled with a tighter credit policy,

introduced from second half of 2017, aimed to increase

the quality of the customer base

9

Mobile performance

ARPU (€/month)

Customer base (M)

• Reduction in mobile customer base due to highly competitive

market characterized by:

➢ dedicated offers

➢ overall mobile number portability balance worsening with

aggressive new market entrant

• Network consolidation delay negatively impacting Wind Tre’s

ability to compete and retain customers in non consolidated

areas

• Mobile internet users, at 19.3 million, representing 67% of the

customer base

30.3 28.6

H1 2017 H1 2018

Highlights

-5.3%

11.1 10.6

H1 2017 H1 2018

-4.1%

• ARPU decrease to 10.6 €/month (-4.1%) impacted by lower

pay-per-use and extra bundle revenue due to increased data

allowance, attributable to both monthly billing requirements

and market competition

• Data ARPU at 5.7€/month, stable YoY

10

Fixed-line – Revenue and EBITDA

EBITDA1 and Margin (M€, %)

Revenue (M€)

183 166

H1 2017 H1 2018

30.9%

28.6%

-9.4%

-230bps

• 2.0% decline in fixed-line revenue (-12M€) due to:

➢ 4.1% decline in service revenue (-22M€) as a consequence

of the replacement of old ADSL customers with new FTTx

subscribers at lower ARPU

➢ decrease in other revenue (-35M€) mainly related to one-off

adjustment on regulated tariffs registered in H1 2017

These drivers were partially offset by:

➢ higher CPE revenue (+45M€), derived from the new

modem/router selling proposition introduced in Q4 2017

539 516

12 57 41 6

591 579

H1 2017 H1 2018

-4.1%

-2.0%

Other

Total

Service

revenue

1. EBITDA before integration costs

Highlights

CPE

• 9.4% EBITDA1 decline (-17M€) mainly impacted by other

revenue decline

• 230 bps EBITDA1 margin decrease at 28.6%

11

Fixed-line performance

Customer base (M)

• Direct fixed-line customer base slightly increasing (+1.1%)

to 2.55 million thanks to continued strong progress on FTTx

acquisitions

• FTTx customers at approx. 26% of direct subscriber base

tripled year over year

0.21 0.16

2.52 2.55

2.73 2.71

H1 2017 H1 2018

+1.1%

Indirect

Direct

Total

Highlights

ARPU (€/month)

27.8 27.0

H1 2017 H1 2018

-2.9%

• 2.9% fixed-line ARPU decline (to 27.0 €/month), mainly due

to a highly competitive environment increasing churn of old

customers with higher ARPU coupled with new gross

additions with lower monthly fees

12

CAPEX

CAPEX (M€, %)

506

417 459

H1 2017 H1 2018 IAS 18 H1 2018 IFRS 15

17.6%19.9%

CAPEX1 on

revenue (LTM)

-17.6%

(Like-for-like comparison)

Note: H1 2018 financial data are reported in accordance with IFRS 15. H1 2018 figures based on IAS 18 are used for “like-for-like comparison purposes” (where needed). For further details please refer to back-up slides

1. H1 CAPEX on revenue (LTM) under IAS 18

• 17.6% decline in CAPEX on a like-for-like basis due to delay

in network consolidation and modernization roll-out activities

(ZTE ban)

Network KPIs

Mobile

• ~97% 4G/LTE population coverage

• ~35% sites consolidated with significant network performance

improvement

Fixed

• ~70% LLU direct coverage

• ~60% FTTx coverage

• ~36,100 km of fiber optic backbone

13

P&L Highlights

* like-for-like comparison based on 2018 and 2017 financial data both following IAS 18 standard. For further details please refer to back-up slides

H1 2017

(M€) IAS 18 IFRS 15IFRS 15

ImpactIAS 18 Change

Change

(%)Highlights

Revenue (Service rev. & CPE/HS rev.) 3,001 2,737 (0) 2,737 (264) (8.8)%

Other Revenue 82 34 - 34 (48) (58.9)%

Total Revenue 3,083 2,771 (0) 2,770 (313) (10.1)%

EBITDA before integration costs 1,040 995 (42) 952 (88) (8.5)%

Integration costs (140) (60) - (60) 80 (57.1)%

EBITDA 900 935 (42) 892 (8) (0.9)%

Depreciation & amortization (766) (718) 52 (666) 100 (13.1)%

EBIT before exceptionals 134 217 10 226 92 68.9%

Impairment/write off and revised useful life

on NTW assets to be dismissed(855) (373) - (373) 482 n.a.

Including revised useful lives (in line with roll-out plan)

related to network infrastructures to be modernized and to

be offered to Iliad (full effect spread between 2017 and

2018)

EBIT (721) (156) 10 (147) 574 n.a.

Finance income 54 51 - 51 (3) (5.6)%

Finance expenses (339) (202) - (202) 137 (40.4)% Effect of refinancing of the capital structure

Net foreign exchange gains/(losses) (2) (1) - (1) 1 (50.0)%

EBT (1,008) (308) 10 (299) 709 n.a.

Income Tax (42) (9) (3) (12) 30 n.a.2017 includes (25) M€ deferred tax assets adjustment due

to decrease of tax rate in Luxemburg

Net Result (1,050) (317) 7 (311) 739 n.a.

H1 2018H1 2018 vs. H1 2017

like-for-like*

14

Capital structure

1. H1 2018 LTM EBITDA, under IAS 18, before one-off integration costs of approx. 186M€. FY 2017 EBITDA before one-off integration costs of approx. 266M€.

2. Intercompany credit towards former WAHF: approx. 1,140M€ at year end 2017 and approx. 1,191M€ in H1 2018; Intercompany loan towards former 3 Italia S.p.A. and former H3G Italy investments S.a.r.l.: approx. 1,764M€

at year end 2017 and 1,788M€ in H1 2018

(M€)As of

Dec. 31, 2017

As of

June 30, 2018Change

June 30, 2018

on H1 2018

LTM EBITDA

Cash and Equivalents (612) (862) (250) (0.4x)

Bank Loan 2,970 2,974 4 1.4x

EUR Senior Secured Notes 2023 1,619 1,641 22 0.8x

EUR Senior Secured Floating Rate Notes 2024 2,242 2,245 3 1.1x

EUR Senior Secured Notes 2025 1,760 1,788 28 0.8x

USD Senior Secured Notes 2026 1,665 1,755 90 0.8x

Derivatives and Other 51 34 (16) 0.0x

Total External Net Debt (excluding Intercompany Loans) 9,695 9,576 (118) 4.5x

LTM EBITDA1 2,211 2,123

Total External Net Debt / LTM EBITDA1 ratio 4.4x 4.5x

Intercompany Loans2 624 597

Total Net Debt 10,319 10,173

Total Net Debt / LTM EBITDA1 ratio 4.7x 4.8x

2

4

4

2

4

15

Gross debt breakdown and maturity profile1

450

600

1,950

1,625

2,250

1,7501,700

2018 2019 2020 2021 2022 2023 2024 2025 2026

M€

Average interest rate2

~2.7%

5.00%

Term Loan A

3.125%Euribor + 2.75%2.625%

(USD 2,000 M)

1. Notional amounts. USD tranche has been converted at Cross Currency Swaps €/USD Exchange Rate

2. Nominal annual interest rate including hedging costs

Euribor + 2.00% Euribor + 2.00% Euribor + 2.00%

USD SSNsEUR SSNsEUR FRNsEUR SSNs

16

CEO Final remarks

• Generating good momentum and progress in fixing the basics across

our key customer touchpoints

• Network consolidation to re-start leveraging both ZTE and Ericsson;

completion expected by 2019

• Strategy pillars confirmed: value vs. volume, exiting low margin offers,

improving offer transparency, accelerating Fixed-Mobile

Convergence across the consumer and business segments, FTTx

coverage enhancement

• Addressing policy challenges with the relevant stakeholders both as

an industry as well as issues specific to Wind Tre

• New leadership team in place with a clear sense of direction, purpose

and urgency

Thank you

Q & A

Back-up

19

Revenue

From IAS 18 to IFRS 15 (1/2)

• 2018 figures: IFRS15 compliant

• 2017 figures: unchanged IAS18 compliant

In adopting IFRS15 Wind Tre opted for the

modified retrospective approach which implies: Proper disclosure of “Beginning of Period”

balances and P&L adjustments are provided in

relation to figures affected by IFRS15 adoption

• IFRS15 adoption limited to ‘direct sales channel’

• Revenue allocation with Stand-alone Selling Price

method in line with current revenue recognition

model

Bundle

offers

Activation

fees

• Activation fees will be allocated to the separate

performance obligations included in the offer

• Revenue recognized consistently with the timing of

the separate performance obligations

None

“Beginning of

Period”

adjustment

Recurrent

adjustment

None

Not

relevant

7M€

Deferred income

20

From IAS 18 to IFRS 15 (2/2)

1. H1 2018 EBITDA before approx. 60M€ of one-off integration costs; H1 2017 EBITDA before approx. 140M€ of one-off integration costs.

Customer

Acquisition

Costs

Recurrent adjustment

• Impact mainly due to commissions on

non-lock-in offers (mobile only) to be

treated as an asset

• Amortisation of these assets will be

represented below EBITDA

• Amortization period is on a straight line

basis and consistent with the relevant

average life of such customer segment

None

95M€

Asset

recognition

“Beginning of Period”

adjustment

EBITDA1 (M€)

D&A (M€)

994 952

43

H1 2018(IFRS 15)

from OPEXto CAPEX

Q1 2018(IAS 18)

H1 2018(IFRS 15)

IFRS 15variance

H1 2018(IAS 18)

( )

(1,091) (1,039)

52

21

Mobile – Focus on internet performance

Mobile internet customer base1 (M, €/month)

Mobile internet revenue (M€)

1. Mobile internet users include customers that have performed at least one mobile internet event in the previous month

719 713

H1 2017 H1 2018

-0.8%

19.3 19.3

H1 2017 H1 2018

stable

67%64%Percentage

on total CB

Highlights

Data ARPU5.7 5.7

stable

• Stable mobile internet users1 at 19.3 million, representing

67% of total customers

• Stable Data ARPU at 5.7 €/month

• Slight decrease of internet revenue (-6M€) negatively

affected by increased data allowance

22

Fixed-line – Focus on broadband performance

Broadband customer base and ARPU (M, €/month)

Broadband revenue (M€)

2.38 2.41

H1 2017 H1 2018

+1.1%

21.8 20.7

-5.1%ARPU

307 296

H1 2017 H1 2018

-3.5%

Highlights

• 3.5% fixed-line broadband revenue decline (-11M€) due to

the replacement of old ADSL customers with new FTTx

subscribers at lower ARPU

• 1.1% fixed-line broadband customer base growth driven

by acceleration on convergence and FTTx with FTTx gross

additions almost tripled vs. 2017

• 5.1% broadband ARPU decrease (reaching 20.7 €/month)

mainly due to substitution of old customers with legacy offers

and higher ARPU with new gross additions at a lower monthly

fee due to competitive environment

23

Disclaimers

Rounding

Certain numerical figures set out in this results presentation, including financial data and percentages, have been subject to

rounding adjustments and, as a result, the totals may vary slightly from the actual arithmetic totals and could differ from the

consolidated financial statements of Wind Tre.

Forward-looking statements

This document contains predictions of events and future results of Wind Tre that are based on the current expectations,

estimates and projections regarding the sector in which the company operates and on the current opinions of its

management. These elements have by their nature a component of risk and uncertainty, because they depend on future

events taking place. It should be noted that the actual results may differ significantly from those announced due to a

multiplicity of factors, including global economic conditions, the impact of competition, and political, economic and regulatory

developments in Italy.

Investor relations department ir@windtre.it

+39 02 3011 3510

+39 06 83 111