Rai Way

Investor Presentation • Mar 9, 2017

2016FY Results Presentation

Rome, 9th March 2017

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 Corporate Development & IR

2016 in a nutshell

4 9 March 2017 2016FY Results

New services to RAI: matching client's needs

5 9 March 2017 2016FY Results

Update on main new initiatives for RAI

Finalized contracts	As of 29 Sept 2015*	• Contribution network upgrade • RAI Sport HD • Transmission services for Expo • International distribution for RAI Com	Target unlevered IRR of at least 10% confirmed
	New 2015	• Acquisition of 4th transponder • Simulcrypt on satellite broadcasting platform • RAI4 HD (on satellite platforms) • International TV contribution for RIO 2016
	New 2016	• RAI Sport 2 HD for RIO 2016 • Additional HD channels broadcasting on satellite platforms (full HD offer) • MUX "Francofono" for Valle d'Aosta region • Tidying up of frequencies for MUX1 (channel 25 only) • Satellite contribution network (bandwidth provisioning) • Transmission services for Euro Cup 2016
Advanced negotiations	As of 29 Sept 2015*	• MUX "Francofono" for Valle d'Aosta region  finalized • Tidying up of frequencies for MUX1 (channel 25 only)
	New 2015	• Additional HD channels broadcasting on satellite platforms  finalized • RAI Sport 2 HD for RIO 2016  finalized
	New 2016	• Head-end / CDN development • SDH radio link spectrum redefinition (release 3,6-3,8 GHz band)  finalized • MUX 2/3/4 extension of coverage • Satellite contribution network (bandwidth provisioning)  finalized • Tidying up of frequencies for MUX1 in Lombardia, Campania, Abruzzo and Basilicata
To be negotiated	As of 29 Sept 2015*	• MUX 2/3/4 extension of coverage  in negotiation • DAB+ roll-out to cover Milan-Trieste and Milan-Naples highways • Satellite contribution network (bandwidth provisioning)  finalized • SDH radio link spectrum redefinition (release 3,6-3,8 GHz band) finalized

Agreement with Norba Group: mix of commercial and M&A activity

• Long-term agreement for the operation and maintenance of the TV and radio broadcasting network of the Norba Group signed in March 2017 -
• Norba Group, leader in the multi-media communication sector in the South of Italy, is the largest macro-regional operator in terms of audience -
• Service Contract to provide network operation and maintenance to Norba Group up to 2032
• Acquisition of 30 broadcasting sites
• Network maintenance activity on additional 41 sites
• EV paid: ca. € 8,8m
• EBITDA contribution: ca. € 1,1m pro-forma post-synergies (including ca. € 0,5m passive hosting cost reduction for Rai Way)
• Implied multiple: 8,0x
• Deal in line with Industrial Plan drivers (increase number of managed MUX, participate market consolidation) and financial targets -

Efficiencies

8 9 March 2017 2016FY Results

2016FY Financial Highlights

Mln Eur; %

Dividend proposal of 15,37 €cent/share (pay-out ratio of 100% of Net Income), with a dividend yield⁴ of 3,4%

9 March 2017 (1) 2015 "Core Revenues" breakdown adjusted to reflect the reallocation of 28k Eur from "Revenues from Third Parties" to "Revenues from Rai" (2)"Adjusted EBITDA" in 2015 adjusted to reflect the reallocation, starting from 1st of January 2016, of "Reimbursement of expenses" and "Reversal of provisions", previously reported as "Other revenues", to Operating expenses and Provisions respectively. These adjustments are neutral at EBIT level (3) Cash conversion= (Adj. EBITDA – Maintenance Capex) / Adj. EBITDA

(4) Dividend yield based on market closing price of 08/03/2017 (4,506 €/share)

9

% YoY growth

Revenues from RAI

Eur Mln; %

• No benefit from CPI
• Revenues from RAI up 1,7% driven by new initiatives:
• Main contributors to revenues from New services include:
  • Upgrade of contribution network
  • MUX "Francofono"
  • Int'l distribution for Rai Com
• One-off projects' contribution of approx. € 1m, mainly related to cyclical events (European Football Cup and Rio Olympic games)

Revenues from Third parties

Eur Mln; %

• Increasing volumes with FWAPs and broadcasters offsetting sites optimization operated by mobile operators and downscaling of one PA customer occurred in 2015

Opex

Eur Mln; %

FY Opex (excluding one-offs)

• Excluding the impact of lower capitalization and different allocation of travel costs(2) , personnel costs declined 0,7% vs. 2015 driven by voluntary layoff program and optimization of non core items •
• Other Operating costs increased by 1,0% vs. 2015, mainly driven by maintenance activity back at normal level •
• Adjusted by the lower level of prior years adjustments vs. 2015, Other Operating costs down by 0,8% thanks to efficiencies on utilities and services rendered by RAI offsetting costs related to new services

(1) 2015 Opex adjusted to reflect the reallocation, starting from 1 st of January 2016, of "Reimbursement of expenses", previously reported as "Other revenues", to Operating expenses

(2) In 2016 travel costs allocated 50,7% to Personnel and 49,3% to Other operating costs. In 2015 travel costs allocated 40,9% to Personnel and 59,1% to Other operating costs

Adjusted EBITDA evolution

Adjusted EBITDA margin

Eur Mln; %

(1)"Adjusted EBITDA" in 2015 adjusted to reflect the reallocation, starting from 1st of January 2016, of "Reimbursement of expenses" and "Reversal of provisions", previously reported as "Other revenues", to Operating expenses and Provisions respectively. These adjustments are neutral at EBIT level

P&L
Eur Mln, %	4Q 2015	4Q 2016	% YoY	FY 2015	FY 2016	% YoY
Core Revenues	54,1	53,9	-0,3%	212,3	215,2	1,4%
Other Revenues(1)	0,1	0,3		0,3	0,4
Opex (excl. one-offs)(1)	-27,1	-29,4	8,5%	-103,3	-104,4	1,0%
Adj. EBITDA(1) % margin	27,0 50,0%	24,8 46,1%	-8,2%	109,3 51,5%	111,3 51,7%	1,8%
One-offs	-1,5	-3,3		-1,6	-6,8
EBITDA(1) % margin	25,6 47,3%	21,5 40,0%	-15,8%	107,7 50,7%	104,5 48,6%	-3,0%
D&A(1,2)	-11,0	-6,7	-39,2%	-45,8	-38,9	-15,1%
EBIT	14,6	14,8	1,9%	61,9	65,6	6,0%
Net financial expenses	-1,3	-0,5	-62,7%	-2,9	-2,1	-27,2%
Pre Tax Profit	13,2	14,3	8,4%	58,9	63,5	7,6%
Taxes % tax rate	-4,5 33,8%	-5,1 35,5%	13,7%	-20,0 33,9%	-21,6 34,1%	8,2%
Net Income EPS	8,8	9,3	5,7%	38,9 0,1432	41,8 0,1537	7,4%

• One-off expenses of € 6,8m in 2016, mainly related to voluntary layoff incentive
• Incentive related to the expected layoffs in 2017 already reported in 4Q16 (€ 3,2m)
• D&A declined by € 6,9m vs. 2015 driven by:
• lower capex level vs. switch-off period
• revision of accounting policy with extension of useful life of certain assets in line with market standard (ca. € 4,8m)
• 2016 tax rate at 34,1%
• 4Q tax rate increase due to one-off impact on deferred taxes linked to 2017 reduction of IRES tax rate
• Net Income at € 41,8m, up 7,4% vs. 2015

(1)"Other revenues", "Opex", "Adjusted EBITDA", "EBITDA" and "D&A" in 2015 adjusted to reflect the reallocation, starting from 1st of January 2016, of "Reimbursement of expenses" and "Reversal of provisions", previously reported as "Other revenues", to Operating expenses and Provisions respectively. These adjustments are neutral at EBIT level (2) Including provisions

Cash Flow generation

• 2016 cash generation pre-dividend payment of € 71,1m

Net Debt/Adj. EBITDA

Balance Sheet

Eur Mln

2017 Outlook

• ADJUSTED EBITDA

2017 Adjusted EBITDA to continue in the growth trajectory of recent years

• CAPEX

2017 Maintenance capex to remain in line with long-term target

Q&A session

Contacts

Upcoming events
Date	Event
28/04/2017	Shareholders' Meeting
11/05/2017	1Q17 results
27/07/2017	1H17 results
09/11/2017	3Q17 results

Appendix

Detailed summary of Income Statement

(€m; %)	4Q15	4Q16	FY15	FY16
Core revenues	54.1	53.9	212.3	215.2
Other revenues(1)	0.1	0.3	0.3	0.4
Purchase of consumables	(0.6)	(0.5)	(1.5)	(1.3)
Service costs(1)	(13.2)	(15.2)	(52.1)	(52.9)
Personnel costs	(13.8)	(16.0)	(47.6)	(53.2)
Other costs	(1.0)	(1.0)	(3.7)	(3.6)
Opex	(28.5)	(32.7)	(104.9)	(111.1)
Depreciation and amortization	(10.3)	(6.2)	(45.4)	(38.3)
Provisions(1)	(0.7)	(0.5)	(0.5)	(0.6)
Net Operating profit	14.6	14.8	61.9	65.6
Net Finance income (expenses)	(1.3)	(0.5)	(2.9)	(2.1)
Profit before income taxes	13.2	14.3	58.9	63.5
Income taxes	(4.5)	(5.1)	(20.0)	(21.6)
Profit for the year	8.8	9.3	38.9	41.8
EBITDA	25.6	21.5	107.7	104.5
EBITDA m argin	47.3%	40.0%	50.7%	48.6%
Non recurring expenses	(1.5)	(3.3)	(1.6)	(6.8)
Adjusted EBITDA	27.0	24.8	109.3	111.3
Adjusted EBITDA m argin	50.0%	46.1%	51.5%	51.7%

(1) 4Q2015 and 2015FY figures adjusted to reflect the reallocation, starting from 1 st of January 2016, of "Reimbursement of expenses" and "Reversal of provisions", previously reported as "Other revenues", to Operating expenses and Provisions respectively. Adjustments are neutral at Net Operating profit level

Summary of Balance Sheet

(€m)	2015FY	2016FY
Non current assets
Tangible assets	224,5	205,2
Intangible assets	1,8	2,2
Non-current financial assets	0,5	0,5
Non-current tax assets	4,5	5,0
Total non-current assets	231,3	212,8
Current assets
Inventories	1,0	0,9
Trade receivables	70,3	67,0
Other receivables and current assets	4,5	4,4
Current financial assets	0,3	0,2
Cash	78,9	81,3
Tax assets	0,5	0,3
Total current assets	155,5	154,1
TOTAL ASSETS	386,8	366,9

(€m)	2015FY	2016FY
Equity
Share capital	70,2	70,2
Legal reserves	8,1	10,1
Other reserves	37,1	37,0
Retained earnings	43,9	44,3
Total equity	159,3	161,5
Non-current liabilities
Non-current financial liabilities	90,6	60,7
Employee benefits	20,3	18,7
Provisions for risks and charges / Allowances	18,4	18,8
Other non-current liabilities	0,0	0,0
Non-current tax liabilities	0,0	0,0
Total non-current liabilities	129,3	98,2
Current liabilities
Commercial debt	37,2	41,2
Other debt and current liabilities	28,3	33,6
Current financial liabilities	30,2	30,3
Tax liabilities	2,5	2,2
Total current liabilities	98,3	107,2
TOTAL NET EQUITY AND LIABILITIES	386,8	366,9

Summary of Cash Flow Statement

(€m)	4Q2015	4Q2016	FY2015	FY2016
Earnings before taxes	13.2	14.3	58.9	63.5
Depreciation and amortization	10.3	6.2	45.4	38.3
Provisions and others	5.2	1.5	3.9	3.4
Net financial Income	0.3	0.4	1.9	1.9
Other non-monetary items	0.0	0.0	0.0	0.0
Net operating CF before change in WC	29.0	22.5	110.2	107.1
Change in inventories	(0.0)	0.0	(0.1)	0.1
Change in accounts receivable	7.5	12.7	(4.1)	3.4
Change in accounts payable	1.3	3.0	1.2	4.0
Change in other assets	0.9	0.9	(0.1)	0.1
Change in other liabilities	(8.3)	6.7	1.2	3.3
Use of funds	(1.7)	(0.3)	(1.9)	(0.9)
Payment of employee benefits	(3.6)	(1.6)	(3.2)	(4.7)
Change in tax credit/liabilities	0.9	(15.7)	(0.2)	(1.0)
Taxes paid	(1.7)	(1.7)	(14.2)	(19.1)
Net operating cash flow	24.3	26.5	88.9	92.2
Investment in tangible assets	(14.9)	(10.7)	(28.6)	(18.7)
Sale of tangible assets	0.2	0.0	0.3	0.1
Investment in intangible assets	(1.3)	(0.5)	(1.6)	(0.8)
Sale of intangible assets	0.1	0.0	0.1	0.0
Financial lease cash-out	0.0	0.0	0.0	0.0
Financial lease cash-in	0.0	0.0	0.0	0.0
Change in other non-current assets	0.0	(0.1)	0.0	(0.0)
Change in non-current financial assets	0.0	0.1	0.1	0.1
Interest received	0.0	0.0	0.1	0.0
Investing cash flow	(15.8)	(11.1)	(29.6)	(19.3)
(Decrease)/increase in long-term debt	(0.0)	(0.1)	10.0	(30.2)
(Decrease)/increase in current liabilities	(0.4)	0.0	29.9	(0.3)
Change in current financial assets	0.1	0.2	0.4	0.1
Interest paid	(0.5)	(0.1)	(1.8)	(1.2)
Dividends paid	0.0	0.0	(33.6)	(39.0)
Financing cash flow	(0.8)	(0.0)	5.0	(70.5)
Change in cash and cash equivalent	7.7	15.4	64.3	2.4
Cash and cash eq (Beg. of Period)	71.2	65.9	14.7	78.9
Cash and cash eq (End of Period)	78.9	81.3	78.9	81.3