Rai Way — Investor Presentation 2016

Mar 21, 2016

2015FY Results Presentation

Rome, 21st March 2016

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.

Rai Way Participants

• •Stefano Ciccotti, Chief Executive Officer
• •Adalberto Pellegrino, Chief Financial Officer
• •Giancarlo Benucci, Head of Investor Relations

2015: delivering on IPO promises

Commercial activity

• •Finalization of first contracts for new services to RAI
• •Recovery of one lost broadcasting customer
• •Last Telco contract renewed
• •Test of first B2B broadband LTE services

Efficiency

•Reduced cost base

• oEnergy contract renewal
• o Rationalization of maintenance and travel expenses
• • Redesign of organizational model
• oVoluntary layoff program launched
• •Maintenance capex optimization on track

Long term commitment

•²⁰¹⁹ targets disclosed

Financials

• • Core Revenues at € 212,3m; adjusted EBITDA margin at 51,5%; Cash conversion up at 83,5%
• • Dividend proposal of 14,32 €cent/share (pay-out ratio of 100% of Net Income), with ^a dividend yield¹ of 3,0%

2015FY Financial Highlights

i i l i h l i h t F H n a n c a g g s
Eur M ln, %	4 Q 2 0 4 1	4 Q 2 0 1 5	% Yo Y	2 0 4 F Y 1 P F	2 0 F Y 1 5	% Yo Y
Co Re re ve nu es	5 2, 2	5 4, 1	3, 6 %	2 0 7, 4	2 1 2, 3	2, 4 %
O t he Re r ve nu es	0, 9	( 0, 0 )		3, 9	0, 5
A d j te d E B I T D A us % in m ar g	2 4, 7 4 3 % 7,	2 6, 9 4 9, 8 %	9, 1 %	1 0 5, 1 0, % 5 7	1 0 9, 4 % 5 1, 5	4, 1 %
Ne t Inc om e	6, 7	8, 8	3 4 % 1,	3 3, 6	3 8, 9	6, 0 % 1
(1) Ca p ex	9, 6	1 6, 1		2 1, 0	3 0, 1
M in te a na nc e	9, 6	9, 0		2 1, 0	1 8, 1
% on c or e r ev en ue s	% 1 8, 4	% 1 6, 6		% 1 0, 1	% 8, 5
lop De t ve me n	0, 0	7, 1		0, 0	2, 1 1
(2) Ca h c io s on ve rs n	6 1, 1 %	6 6, 6 %		8 0, 0 %	8 3, 5 %
				2 0 1 4 Y E	2 0 1 5 Y E
(3) t b t Ne De Ne t D eb t / A d j. EBI TD A				6 5, 5 0, 6 2x	4 6 1, 0, 3 8x

In 2014FY, Pro Forma figures assume the impact of the new service contracts with RAI as effective from ¹st January ²⁰¹⁴

• •²⁰¹⁵ Core revenues at € 212,3m, up 2,4% vs. ²⁰¹⁴
• •²⁰¹⁵ Adjusted EBITDA at € 109,4m, with EBITDA margin of 51,5% (vs. 50,7% in 2014)
• •²⁰¹⁵ Net Income at € 38,9m, up 16,0% vs. ²⁰¹⁴
• •Investments at € 30,1m, including € 12,1m of development capex
• •²⁰¹⁵ Cash conversion at 83,5%
• •Net Debt at € 41,6m, with Net Debt / Adj. EBITDA at 0,38x

(1) 2014FY Capex includes investments in tangible and intangible assets and financial lease cash-out, representing network capex according to the old service agreemen^t with RAI (being treated as ^a financial lease)

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

(3) 2014FY PF Net debt consists of the Net Financial Position (determined in compliance with paragrap^{h 127} of the recommendations contained in the document prepared by ESMA, no. ³¹⁹ of 2013, implementing Regulation 2004/809/EC) excluding the current financial receivables relating to the financial leasing with RAI

Revenues from RAI

Eur Mln; %

• •Revenues from RAI driven by the step-up in the fixed consideration included in the service contract and first contribution from new initiatives
• •Main contributors to revenues from New services include Upgrade of contribution network and Transmission services for Expo

New services to RAI: main finalized contracts

Upgrade of contribution network

International distribution for RAI Com

Transmission services for Expo

HD channels

Update on potential initiatives for RAI

		i i C t b t t k d • o n r o n n e o r p g r a e u w u
	f A 2 9 s o S t 2 0 1 5 e p	R A I S t H D • p o r
		i i i f T E • r a n s m s s o n s e r v c e s o r x p o
i i F l d n a e z		t t i l d i t i b t i f C I R A I • n e r n a o n a s r u o n o r o m
t t c o n r a c s		th i i i f A t 4 t d • c q s o n o r a n s p o n e r u
		i i i f S l t t l l t b d t l t • m u c r y p o n s a e e r o a c a s n g p a o r m
	4 Q 1 5	R A I 4 H D ( t l l i t l t f ) • o n s a e e p a o r m s
		i l i b i f O 2 0 6 I t t T V t t R I 1 • n e r n a o n a c o n r u o n o r
	f 2 9 A s o S t 2 0 1 5 e p	M U X "F f " f V l l d 'A t i • r a n c o o n o o r a e o s a r e g o n
d d A v a n c e i i t t n e o a o n s		i d i f f i f ( h l 2 l ) T M U X 1 5 • y n g u p o r e q u e n c e s o r c a n n e o n y
g	4 Q 1 5	h l b d i l l i l f H D t t t t • c a n n e s r o a c a s n g o n s a e e p a o r m s
		f R A I S t 2 H D R I O 2 0 1 6 • p o r o r
		2 / 3 / 4 i f M U X t • e x e n s o n o c o v e r a g e
T b o e i d t t n e g o a e	f A 2 9 s o	D A B l l- t t M i l T i t d M i l N l h i h • + r o o u o c o v e r a n- r e s e a n a n- a p e s g w a y s
	S t 2 0 1 5 e p	S t l l i t t i b t i t k • a e e c o n r u o n n e w o r
		S d i l i k t d f i i t i D H • r a o n s p e c r u m r e e n o n

Revenues from Third parties

Eur Mln; %

• •2015FY Third Party revenues declined by 0,7%, mainly impacted by lower Network Services revenues
• •Improvement in 2H (+1,4% vs. 2H14) vs. 1H (-2,8% vs. 1H14) mainly driven by recovery of one lost broadcasting customer and non recurring impacts

Opex

Eur Mln; %

Personnel costs increased by 1,6% vs. 2014FY (or +3,0%excluding the impact of higher capitalization in 2015) driven by completion of organizational structure after IPO but with ^a progressive improvement throughout the quarters thanks to optimization of travel expenses and other non-core items •

• Other Operating costs declined by 5,8% vs. 2014FY, mainly driven by: •
• utilities, benefiting from better pricing of new energy supply contract and oil price reduction
• maintenance, thanks to efficiencies and slippage of certain activities

Adjusted EBITDA evolution

Adjusted EBITDA margin

Eur Mln; %

• •²⁰¹⁵ Adjusted EBITDA at € 109,4 ^m vs. € 105,1m in 2014, with ^a margin of 51,5% on core revenues
• •Margin expansion despite lower level of Other Revenues

Adjusted EBITDA growth: guidance vs. actual

•Out of the total overperformance, ca. € 1,3m related to non recurring effects

From Adjusted EBITDA to Net Income

			P L &
% Eur M ln,	4 Q 2 0 1 4	4 Q 2 0 1 5	% Yo Y	F Y 2 0 1 4 P F	F Y 2 0 1 5	% Yo Y
d j. A E B I T D A % in m ar g	2 4, 7 4 7, 3 %	2 6, 9 4 9, 8 %	9, % 1	0 1 5, 1 5 0, 7 %	0 9, 4 1 5 1, 5 %	4, % 1
On f f e- o	-0, 5	-1, 5		-0, 5	6 -1,
E B I T D A % in m ar g	2 4, 2 4 6, 4 %	2 5, 5 4 % 7, 1	5, 1 %	1 0 4, 6 0, 4 % 5	1 0 7, 8 0, 8 % 5	3, 1 %
(1) D & A	2, 9 -1	0, 9 -1		0, -5 5	-4 6, 0
E B I T	1 1, 3	1 4, 6	2 8, 5 %	5 4, 2	6 1, 9	1 4, 2 %
ina ia l e F nc xp en se s	-0, 6	3 -1,		-2, 0	-2, 9
Pre Ta Pro f i t x	1 0, 7	1 3, 2	2 3, 2 %	5 2, 1	5 8, 9	1 3, 1 %
Ta xe s % ta te x r a	-4, 0 3 4 % 7,	-4, 5 3 3, 8 %		-1 8, 6 3 6 % 5,	-2 0, 0 3 3, 9 %
Ne t Inc om e E P S	6, 7 0, 0 2 4 7	8, 8 0, 0 3 2 2	% 3 0, 3	3 3, 6 0, 1 2 3 4	3 8, 9 0, 1 4 3 2	% 1 6, 0

• •²⁰¹⁵ EBITDA at € 107,8m, up 3,1% vs. 2014, with ^a margin of 50,8%
• •²⁰¹⁵ EBITDA including one-off expenses of € 1,6m, mainly due to voluntary layoff incentive and OPAS-related costs
• •Declining D&A mainly resulting from:
• reduction of Capex vs. "switch-off period"
• release of bad debt fund related to trade receivables previously written-off (ca. € 1,8m)
• •Financial charges impacted by ca. € 1m noncash item related to interests on dismantling fund
• •²⁰¹⁵ Net Income at € 38,9m, up 16,0% vs. ²⁰¹⁴

Capex

14

21 March 2016

2015FY Results

Eur Mln; %

2015 maintenance capex breakdown by asset category

• •²⁰¹⁵ Capex at € 30,1m, out of which:
• -Maintenance of € 18,1m
• -Development of € 12,1m
• •Reduction of maintenance capex vs. Industrial Plan target driven by:
• Slippage of some activities to ²⁰¹⁶
• Accelerated delivery of efficiency plan
• •Broadcasting & transmission equipment (TV and radio) represents around 50% of maintenance capex

Cash Flow generation

Eur Mln; %0,62x

•²⁰¹⁵ cash generation pre-dividend payment of ca. € 57,5m

Balance Sheet

Eur Mln

• • Conservative capital structure with € 41,6mNet Debt as of December 2015:
• 0,38x Net Debt / Adj. EBITDA

2016 Outlook

•EBITDA

²⁰¹⁶ Adjusted EBITDA expected at ^∼ € 110m

•Capex

²⁰¹⁶ Maintenance capex on revenues below 10%

Q & A session

Contacts

i U t p c o m n g e v e n s
D t a e	E t v e n
2 8 / 0 4 / 2 0 1 6	i S h h l d ' M t a r e o e r s e e n g
/ 0 / 2 0 6 1 1 5 1	Q 6 l t 1 1 r e s u s
2 8 / 0 7 / 2 0 1 6	1 H 1 6 l t r e s s u
/ / 0 9 1 1 2 0 1 6	3 Q 1 6 l t r e s u s

Appendix

Detailed summary of Income Statement

( €m % ) ;	4Q 14	4Q 15	FY 14	FY 14 PF	FY 15
Co re rev en ue s	5 2. 2	5 4.1	16 7. 3	20 7. 4	21 2. 3
O the r re ve nu es	0. 9	( 0. 0 )	3. 9	3. 9	0.5
Pu ha f c b les rc se o on su ma	( 0.5 )	( 0. 6 )	( 1.7 )	( 1.7 )	( 1.5 )
Se ice ts rv co s	( 14 9 )	( 13 2 )	( 57 8 )	( 5 6. 2 )	( 5 2. 2 )
Pe l c ts rso nn e os	( 12 3 )	( 13 8 )	( 45 4 )	( 45 4 )	( 47 6 )
O the ts r c os	( 2 ) 1.	( 0 ) 1.	( 3. 3 )	( 3. 3 )	( 3.7 )
Op ex	( 28 9 )	( 28 6 )	( 10 8. 2 )	( 10 6. 6 )	( 10 0 ) 5.
ia ion iza ion De t d a rt t pre c an mo	( ) 12 .5	( ) 10 3	( ) 25 .5	( ) 5 0.1	( ) 45 4
is ion Pro v s	( 0. 4 )	( 0. 6 )	( 0. 4 )	( 0. 4 )	( 0. 6 )
t O rat ing f it Ne pe pr o	3 11	14 6	37 0	4. 2 5	61 9
ina inc Ne t F nc e om e	( ) 0. 6	( ) 1. 3	2. 0	( ) 2. 0	( ) 2. 9
f it b for inc Pro e t e e om ax es	10 .7	13 2	3 9. 0	2.1 5	8. 9 5
Inc ta om e xe s	( 4. 0 )	( 4.5 )	( 14 4 )	( 18 6 )	( 20 0 )
Pro f it for th e y ea r	6.7	8. 8	24 6	3 3. 6	3 8. 9

EB ITD A	24 2	25 .5	6 2. 9	10 4. 6	10 8 7.
EB ITD A m in arg	46 4 %	47 .1 %	37 6 %	5 0. 4 %	5 0. 8 %
ing No n r ec urr ex pe nse s	-0. 5	-1. 5	-0. 5	-0. 5	6 -1.
ju Ad ste d E BIT DA	24 .7	26 9	6 3. 4	10 5.1	10 9. 4
Ad ju te d E BIT DA in s m arg	47 3 %	49 8 %	37 9 %	5 0.7 %	51 .5 %

Summary of Balance Sheet

( €m )	2 0 1 4 F Y	2 0 1 5 F Y
No t a ts n c urr en sse
Ta i b le ts ng as se	2 4 3. 1	2 2 4. 5
ta i b le ts In ng as se	0. 6	8 1.
f ina ia No t l a ts n-c urr en nc sse	0. 6	0. 5
No t ta ts n-c urr en x a sse	5. 4	4. 5
ta l n t a ts To on -c urr en sse	2 4 9. 8	2 3 3 1.
Cu t a ts rre n sse
ies Inv to en r	0. 9	0 1.
Tra de iva b les re ce	6 4. 4	7 0. 3
O t he iva b les d c t a ts r re ce an urr en sse	4. 4	4. 5
Cu t f ina ia l a ts rre n nc sse	0. 7	0. 3
Ca h s	4. 1 7	8. 9 7
ts Ta x a sse	0. 3	0. 5
To ta l c t a ts urr en sse	8 5. 3	1 5 5. 5
O S S S T T A L A E T	3 3 5. 1	3 8 6. 8

( €m )	2 0 4 1 F Y	2 0 1 5 F Y
i Eq ty u
S ha i ta l re ca p	7 0. 2	7 0. 2
Le l re g a se rve s	6. 9	8. 1
O t he r re se rve s	3 7. 1	3 7. 1
ta ine d e ing Re ar n s	3 9. 6	4 3. 9
i To ta l e ty q u	1 5 3. 8	1 5 9. 3
l ia b i l i ies No t t n-c urr en
No t f ina ia l l ia b i l i t ies n-c urr en nc	8 0. 6	9 0. 6
loy be f i ts Em p ee ne	2 3 1.	2 0. 3
is ion fo is Pro ks d c ha / A l low v s r r an rg es an ce s	1 8. 6	1 8. 4
O t he t l ia b i l i t ies r n on -c urr en	0. 0	0. 0
t ta l ia b i l i t ies No n-c urr en x	0. 0	0. 0
ia i i ies To ta l n t l b l t on -c urr en	1 2 0. 5	1 2 9. 3
Cu l ia b i l i ies t t rre n
Co ia l de b t mm erc	3 6. 0	3 7. 2
O t he de b t a d c t l ia b i l i t ies r n urr en	2 1. 7	2 8. 3
Cu t f ina ia l l ia b i l i t ies rre n nc	0. 3	3 0. 2
Ta l ia b i l i t ies x	2. 9	2. 5
l c l ia b i l i ies To ta t t urr en	6 0. 8	9 8. 3
T O T A L N E T E Q U I T Y A N D L I A B I L I T I E S	3 3 5. 1	3 8 6. 8

Summary of Cash Flow Statement

( €m )	4Q 20 14	4Q 20 15	FY2 01 4	FY2 01 5
Ea rni s b efo tax ng re es	10 .7	13 .2	39 .0	58 .9
cia tio iza tio De nd ort pre n a am n	12 .5	10 .3	25 .5	45 .4
vis ion Pro nd ot he s a rs	0.4	1.9	( ) 0.0	0.7
Ne t fi ial In na nc co me	0.5	0.3	( 2.0 )	1.9
Ot he ite eta r n on -m on ry ms	0.3	0.0	0.1	0.0
Ne t o rat ing CF be for ha e i n W C pe e c ng	24 .4	25 .8	62 .6	10 6.9
Ch in inv tor ies an ge en	( 0.0 )	( 0.0 )	( 0.0 )	( 0.1 )
Ch in ts r eiv ab le an ge ac co un ec	6.2	7.5	( 14 .3)	( 4.1 )
in Ch ts ble an ge ac co un pa ya	( ) 3.8	1.3	( .0) 47	1.2
Ch in oth ets an ge er ass	0.6	0.9	( 0.2 )	( 0.1 )
Ch in oth lia bil itie an ge er s	( 8.0 )	( 8.3 )	0.9	1.2
of fu nd Use s	( 0.3 )	( ) 1.7	( 0.6 )	( 1.9 )
Pa t o f e loy be fits ym en mp ee ne	( 1.0 )	( 0.3 )	( 2.8 )	0.1
Ch in tax ed it/ lia bil itie an ge cr s	1.0	0.9	0.2	( 0.2 )
id Tax es pa	( 1.6 )	( ) 1.7	( 7.0 )	( 14 .2)
Ne t o rat ing sh flo pe ca w	17 .5	24 .3	( 8.3 )	88 .9
Inv est nt in t ibl ts me an g e a sse	( 9.4 )	( 14 .9)	( 14 .1)	( 28 .6)
Sa le of ta ibl ts ng e a sse	0.2	0.2	0.2	0.3
Inv est nt in i nta ibl ts me ng e a sse	( 0.2 )	( 1.3 )	( 0.5 )	( 1.6 )
Sa le of int ibl ts an g e a sse	0.0	0.1	0.0	0.1
1 Fin cia l le sh- t an ase ca ou	0.0	0.0	( 6.4 )	0.0
Fin cia in l le sh- an ase ca	0.0	0.0	31 .1	0.0
Ch in oth t a ts an ge er no n-c urr en sse	0.0	0.0	0.0	0.0
Ch in t fi ial set an ge no n-c urr en na nc as s	( 0.2 )	0.0	( 0.4 )	0.1
eiv Int st ed ere rec	0.0	0.0	4.1	0.1
Inv est ing sh flo ca w	( 9.6 )	( 15 .8)	14 .1	( 29 .6)
( De ) / inc in lon ter de bt cre ase rea se g- m	79 .4	( 0.0 )	79 .4	10 .0
( ) inc in c t li ilit ies De / ab cre ase rea se urr en	( .6) 71	( ) 0.4	( .2) 57	29 .9
Ch in nt fin cia l a ts an ge cu rre an sse	( 0.7 )	0.1	( 0.7 )	0.4
Int st id ere pa	( 0.3 )	( 0.5 )	( 1.4 )	( 1.8 )
Div ide nd aid s p	0.0	0.0	( .2) 11	( 33 .6)
Fin cin h fl an g c as ow	6.8	( 0.8 )	8.9	5.0
Ch in sh d c h e iva len t an ge ca an as qu	14 .7	7.7	14 .7	64 .3
(*) 2 ( of rio d) Ca sh d c ash Be Pe an eq g.	0.0	71 .2	0.0	14 .7
Ca sh d c ash ( End of rio d) Pe an eq	14 .7	78 .9	14 .7	78 .9

23

21 March 2016

2015FY Results

(1) In 2014FY, financial lease cash-out represents network capex, due to the old service agreement with RAI being treated as a financial lease

(2) Up until 9M2014, cash-pooling agreement with RAI