Rai Way

Investor Presentation • Jul 30, 2019

1H2019 Results Presentation

FORWARD LOOKING STATEMENTS

This presentation contains forward-looking statements regarding future events and the future results of Rai Way that are based on current expectations, estimates, forecasts, and projections about the industries in which Rai Way operates, as well as the beliefs and assumptions of Rai Way's management. In particular, certain statements with regard to management objectives, trends in results, margins, costs, rate of return and competition tend to be forward-looking in nature. Words such as "expects", "anticipates", "targets", "goals", "projects", "intends", "plans", "believes", "seeks" and "estimates", variations of such words and similar expressions, are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Therefore, Rai Way's actual results may differ materially and adversely from those expressed or implied in any forward-looking statements. They are neither statements of historical fact nor guarantees of future performance. Rai Way therefore cautions against relying on any of these forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, economic conditions globally, the impact of competition, political, economic and regulatory developments in Italy. Any forward-looking statements made by or on behalf of Rai Way speak only as of the date they are made. Rai Way undertakes no obligation to update any forward-looking statements to reflect any changes in Rai Way's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

• Aldo Mancino, Chief Executive Officer
• Adalberto Pellegrino, Chief Financial Officer

• Giancarlo Benucci, Head of Corporate Development & IR

• 1H2019 positive on all metrics even considering una tantum component on new services recorded in 2018:

• o Top-line growth supported by CPI and Third Parties
• o Adjusted EBITDA solidly growing at +2,8% with profitability above 59%
• o Further improvement in Net Income, up 5,9%
• Update on refarming process
• o Roadmap released: transitory period and process deadline confirmed
• Negotiations with RAI on new network configuration ongoing
• Double digit growth in activity with Third Party customers different from MNOs
• 2019 outlook confirmed

1H2019 Financial Highlights

% YoY growth

Mln Eur; %

1) Starting from 1 January 2019 the new IFRS-16 accounting standard was applied. Pro-forma economic data for 2018 simulate the application of the aforementioned accounting principle from 1 January 2018.

2) 1H2019 capex figure excluding capex related to IFRS-16 application, equal to € 0,3m

3) Cash conversion= (Adj. EBITDA – Maintenance Capex) / Adj. EBITDA

30 July 2019

Core Revenues

Mln Eur; %

Revenues from Third Parties rose 1,8% (+0,8% excluding noncore items) with pressure from MNOs more than offset by double-digit growth on other customers driven by:

• Tower hosting services to broadcasters and FWAPs
• Transmission services

1H19 Revenues from RAI up 1,2% (+2,0% excluding impact from una tantum components):

• Indexation to CPI on fixed-consideration
• Excluding una tantum, contribution from New Services progressively up supported by release of radio links and extension of DAB+ network

6

% YoY growth

Mln Eur; %

1) Starting from 1 January 2019 the new IFRS-16 accounting standard was applied. Pro-forma economic and financial data for 2018 simulate the application of the aforementioned accounting principle from 1 January 2018.

7 30 July 2019 1H2019 Results Presentation

Eur Mln, %	2Q 2018	2Q2018 PF(1)	2Q 2019	% YoY	1H 2018	1H2018 PF(1)	1H 2019	% YoY
Core Revenues	54,9	54,9	55,4	0,8%	109,0	109,0	110,4	1,3%
Other Revenues & income	0,0	0,0	0,0		0,0	0,0	0,1
Adj. EBITDA % margin	29,5 53,7%	31,8 57,9%	32,8 59,2%	3,0%	59,2 54,3%	63,8 58,6%	65,6 59,4%	2,8%
Non recurring costs	0,0	0,0	0,0		-0,3	-0,3	0,0
EBITDA % margin	29,5 53,7%	31,8 57,9%	32,8 59,2%	3,0%	58,9 54,1%	63,6 58,3%	65,6 59,4%	3,2%
D&A(2)	-8,2	-10,4	-9,0	-13,4%	-16,2	-20,6	-19,4	-5,8%
Operating Profit (EBIT)	21,4	21,4	23,8	11,0%	42,8	43,0	46,2	7,5%
Net financial income (expenses)	-0,3	-0,6	-0,3	-54,7%	-0,7	-1,2	-0,6	-45,2%
Profit before Income taxes	21,0	20,9	23,5	12,8%	42,1	41,9	45,6	9,0%
Income Taxes % tax rate	-5,0 23,6%	-4,9 23,6%	-6,6 28,1%	34,4%	-11,1 26,5%	-11,1 26,5%	-13,0 28,5%	17,5%
Net Income	16,1	15,9	16,9	6,1%	30,9	30,8	32,6	5,9%

• 1H19 Net Income up 5,9% at € 32,6m driven by:
• Further improvement in profitability, with margin up 80bp vs. 1H18PF at 59,4%
• No one-off expenses
• € 1,5m benefit on D&A from release of provision for risks and charges
• Tax rate at 28,5% (2018 positively impacted by deferred taxes)
• (1) Starting from 1 January 2019 the new IFRS-16 accounting standard was applied. Pro-forma economic and financial data for 2018 simulate the application of the aforementioned accounting principle from 1 January 2018.
• (2) Including provisions

30 July 2019 1H2019 Results Presentation

8

Cash flow generation

Mln Eur

(1) Starting from 1 January 2019 the new IFRS-16 accounting standard was applied. Pro-forma economic and financial data for 2018 simulate the application of the aforementioned accounting principle from 1 January 2018.

(2) P&L taxes

(3) P&L financial charges excluding interests on the employee benefit liability

(4) Amount based on IFRS 16 accounting standard, consistently with the reported Net Debt figures

Balance sheet

Mln Eur

10

• 2019 ADJUSTED EBITDA

Further organic growth

• 2019 CAPEX

Maintenance capex on core revenues ratio expected substantially in line with the 2018 figure, bringing the last 5-year average level at ca. 8%

Q&A Session

Appendix

Detailed summary of Income Statement

(€m; %)	2Q18	2Q18PF(1)	2Q19	1H18	1H18PF(1)	1H19
Core revenues	54,9	54,9	55,4	109,0	109,0	110,4
Other revenues and income	0,0	0,0	0,0	0,0	0,0	0,1
Purchase of consumables	(0,3)	(0,3)	(0,3)	(0,6)	(0,6)	(0,6)
Cost of services	(12,9)	(10,6)	(10,6)	(24,8)	(20,2)	(20,0)
Personnel costs	(11,3)	(11,3)	(11,1)	(23,0)	(23,0)	(23,1)
Other costs	(0,9)	(0,9)	(0,6)	(1,7)	(1,7)	(1,1)
Opex	(25,4)	(23,2)	(22,6)	(50,1)	(45,4)	(44,9)
Depreciation, amortization and write-downs	(8,2)	(10,4)	(10,5)	(16,2)	(20,6)	(20,9)
Provisions	0,0	0,0	1,5	0,0	0,0	1,5
Operating profit (EBIT)	21,4	21,4	23,8	42,8	43,0	46,2
Net financial income (expenses)	(0,3)	(0,6)	(0,3)	(0,7)	(1,2)	(0,6)
Profit before income taxes	21,0	20,9	23,5	42,1	41,9	45,6
Income taxes	(5,0)	(4,9)	(6,6)	(11,1)	(11,1)	(13,0)
Net Income	16,1	15,9	16,9	30,9	30,8	32,6
EBITDA	29,5	31,8	32,8	58,9	63,6	65,6
EBITDA m argin	53,7%	57,9%	59,2%	54,1%	58,3%	59,4%

Non recurring costs	0,0	0,0	0,0	(0,3)	(0,3)	0,0
Adjusted EBITDA	29,5	31,8	32,8	59,2	63,8	65,6
Adjusted EBITDA m argin	53,7%	57,9%	59,2%	54,3%	58,6%	59,4%

(€m)	2018FY	1H2019
Non current assets
Tangible assets	180,9	172,2
Rights of use for leasing	0,0	44,9
Intangible assets	12,9	12,7
Financial assets, holdings and other non-current assets	1,3	1,3
Deferred tax assets	3,3	3,2
Total non-current assets	198,5	234,2
Current assets
Inventories	0,9	0,9
Trade receivables	71,5	79,3
Other current receivables and assets	5,8	6,0
Current financial assets	0,1	0,2
Cash and cash equivalents	17,2	2,3
Current tax receivables	0,1	0,1
Total current assets	95,5	88,7
TOTAL ASSETS	294,0	322,8

(€m)	2018FY	1H2019
Shareholders' Equity
Share capital	70,2	70,2
Legal reserves	14,0	14,0
Other reserves	37,1	37,1
Retained earnings	59,5	31,9
Total shareholders' equity	180,8	153,2
Non-current liabilities
Non-current financial liabilities	0,4	0,3
Non-current leasing liabilities	0,0	34,7
Employee benefits	15,1	14,9
Provisions for risks and charges	17,0	15,5
Other non-current liabilities	0,3	0,0
Deferred tax liabilities	0,0	0,0
Total non-current liabilities	32,8	65,5
Current liabilities
Trade payables	45,6	42,4
Other debt and current liabilities	33,9	44,8
Current financial liabilities	0,3	0,2
Current leasing liabilities	0,0	13,7
Current tax payables	0,6	3,0
Total current liabilities	80,4	104,1
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	294,0	322,8

Summary of Cash Flow Statement

(€m)	2Q2018	2Q2019	1H2018	1H2019
Profit before income taxes	21,0	23,5	42,1	45,6
Depreciation, amortization and write-downs	8,2	10,5	16,2	20,9
Provisions and (releases of) personnel and other funds	1,0	(0,7)	1,5	(0,1)
Net financial (income)/expenses	0,3	0,2	0,6	0,5
(Retained earnings)/Losses carried forward and other non monetary items	0,0	0,0	(0,8)	0,0
Net operating CF before change in WC	30,4	33,6	59,6	67,0
Change in inventories	0,0	(0,0)	0,0	0,0
Change in trade receivables	(1,4)	6,8	(2,3)	(7,9)
Change in trade payables	0,1	(3,1)	(2,9)	(3,2)
Change in other assets	0,7	(0,6)	(0,6)	(0,2)
Change in other liabilities	(2,8)	(6,2)	4,4	0,0
Use of funds	(0,7)	(0,3)	(0,7)	(0,3)
Payment of employee benefits	(1,6)	(1,4)	(2,0)	(2,0)
Change in tax receivables and payables	0,0	0,2	0,0	0,2
Taxes paid	0,0	0,0	0,0	0,0
Net cash flow generated by operating activities	24,8	29,0	55,5	53,7
Investment in tangible assets	(6,1)	(4,2)	(6,9)	(6,8)
Disposals of tangible assets	(0,0)	0,0	0,0	0,0
Investment in intangible assets	(0,4)	(0,5)	(0,5)	(0,6)
Disposals of intangible assets	0,0	0,0	0,0	0,0
Change in other non-current assets	(1,0)	0,1	(1,0)	0,1
Change in holdings	0,0	0,0	0,0	0,0
Change in non-current financial assets	0,0	(0,0)	0,0	0,0
Business combination	0,0	0,0	0,0	0,0
Net cash flow generated by investment activities	(7,4)	(4,7)	(8,2)	(7,3)
(Decrease)/increase in medium/long-term loans	(0,1)	(0,1)	(15,1)	(0,1)
(Decrease)/increase in current financial liabilities	0,1	(0,1)	(0,1)	(0,4)
(Decrease)/increase in IFRS 16 financial liabilities	0,0	0,8	0,0	(0,9)
Change in current financial assets	0,0	(0,0)	(0,2)	(0,1)
Net Interest paid	(0,0)	(0,1)	(0,3)	(0,1)
Dividends paid	(55,1)	(59,7)	(55,1)	(59,7)
Net cash flow generated by financing activities	(55,0)	(59,2)	(70,7)	(61,3)
Change in cash and cash equivalent	(37,7)	(34,9)	(23,5)	(14,9)
Cash and cash equivalent (beginning of period)	70,1	37,2	55,9	17,2
Cash and cash equivalent of newly consolidated companies (beginning of period)	0,0	0,0	0,0	0,0
Cash and cash equivalent (end of period)	32,4	2,3	32,4	2,3