Rai Way

Investor Presentation • Mar 13, 2020

2020-2023 Industrial Plan: «Broadening horizons»

FY 2019 results and 2020-23 Industrial Plan Conference Call | 13th march 2020

DISCLAIMER

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.

Considering the uncertainties related to the current extraordinary health emergency and, in particular, to its duration and intensity and to the effectiveness of the containment measures, the scenarios and targets included in the 2020- 2023 Industrial Plan as well as the outlook for 2020 do not include any impact deriving from the spread of COVID-19

Rai Way participants

• Aldo Mancino, Chief Executive Officer

• Adalberto Pellegrino, Chief Financial Officer

• Giancarlo Benucci, Head of Corporate Development & IR

2015-19 Industrial Plan target for 2019

Fifth year of sequential growth

2019 RESULTS

Target on recurring cash generation excedeed

Key messages on 2019

➢ Agreement with RAI on refarming finalized, with full process de-risking

• o Definition of upgrade investments and remuneration and Service Contract renewal for the second seven-year period (until 30 June 2028) provides high visibility on revenues and cash flow
• ➢ Results in line with expectations, recording the highest recurring cash generation ever exceeding the target of the 2015-19 Industrial Plan
  • o EBITDA improvement supported by CPI-link, New Services for Rai and cost control
  • o Further improvement in Net Income, up 6,4% YoY
  • o Development capex to support future growth
  • o 23,29 €/cent dividend proposed to the AGM, equal to 100% pay-out and 5,7% dividend yield(1)
• ➢ 2020 guidance reflects initial contribution from growth initiatives, driving further EBITDA improvement

2019FY Financial Highlights

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) 2019 capex figure excluding capex related to IFRS-16 application, equal to € 1,2m

3) Cash conversion= (Adj. EBITDA – Maintenance Capex) / Adj. EBITDA. 2019 figures before IFRS-16 impact

Core revenues

Mln Eur; %

% YoY growth

• Revenues from Third Parties broadly in line with prior year figure
• Good performance on Transmission services and Hosting of TV&radio broadcasters, FWAPs and corporates offset pressure from MNOs

Revenues from RAI up 1,9%, reflecting:

• Indexation to CPI on fixed-consideration
• € 1m higher contribution from New Services driven by release of 3.6-3.8 GHz radio links frequencies and extension of DAB+ network
• First recurring contribution from refarming project (related to MUX coverage extension)

Opex (excluding one-offs)

Mln Eur; %

% YoY growth

Excluding capitalization, personnel costs up by approx. 3% following new hirings as part of the early-retirement plan implemented in previous years and renewal of collective agreement

Excluding non-core items, other operating costs increased by 1,5% vs 2018PF driven by higher maintenance and energy price and savings on local taxes

– 4Q comparison influenced by the low level recorded in 2018

P&L

Eur Mln, %	4Q 2018	4Q2018 PF(1)	4Q 2019	% YoY	2018 FY	2018FY PF(1)	2019 FY	% YoY
Core Revenues	54,5	54,5	55,7	2,2%	217,7	217,7	221,4	1,7%
Other Revenues & income	0,1	0,1	0,9		0,1	0,1	0,9
Adj. EBITDA % margin	27,7 50,8%	30,0 55,1%	30,6 55,0%	2,0%	118,3 54,3%	127,7 58,7%	131,2 59,3%	2,7%
Non recurring costs	-0,7	-0,7	0,0		-1,2	-1,2	-0,1
EBITDA % margin	26,9 49,4%	29,3 53,8%	30,6 55,0%	4,5%	117,1 53,8%	126,6 58,1%	131,1 59,2%	3,6%
D&A(2)	-9,0	-11,2	-10,9	-2,7%	-33,3	-42,4	-41,0	-3,4%
Operating Profit (EBIT)	18,0	18,1	19,7	9,0%	83,8	84,1	90,1	7,1%
Net financial income (expenses)	-0,2	-0,4	-0,2	-37,6%	-1,2	-1,9	-1,3	-32,8%
Profit before Income taxes	17,7	17,7	19,4	10,0%	82,5	82,3	88,8	8,0%
Income Taxes % tax rate	-5,2 29,3%	-5,2 29,4%	-5,8 29,6%	11,0%	-22,8 27,6%	-22,7 27,6%	-25,5 28,7%	12,0%
Net Income	12,6	12,5	13,7	9,5%	59,7	59,5	63,4	6,4%

• 2019 Net Income up 6,4% at € 63,4m driven by:
• ˗ Underlying Adjusted EBITDA growth
• ˗ Better contribution from non recurring items (higher other revenues, lower one-off expenses, € 1,6m benefit on D&A from release of provision for risks and charges)
• ˗ Reduction of financial expenses benefitting from early repayment of term loan
• ˗ Tax rate at 28,7% (2018 positively impacted by deferred taxes)

2019 RESULTS

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) 2019FY capex figure excluding capex related to IFRS-16 application, equal to € 1,2m
• (3) P&L taxes
• (4) P&L financial charges excluding interests on the employee benefit liability

Dividend proposal

• ➢ Dividend proposal of 23,29 €cent/share (pay-out ratio of 100% of Net Income), with a dividend yield(1) of 5,7%
• ➢ Including the proposed dividend for 2019, approx. € 293 million (36% of the IPO Market Cap.) distributed to Shareholders since listing

(1) Dividend yield based on market closing price on 12/03/2020 (4,09 €/share)

(2) Dividend proposal

Guidance 2020

• ADJUSTED EBITDA

• ➢ Further organic growth of Adjusted EBITDA
  • Revenues growth driven by refarming
  • Operating costs increase related to implementation of new services (that will bring benefits in following years)

• CAPEX

• ➢ Maintenance capex on core revenues ratio expected substantially in line with the 2019 figure
• ➢ Rising Development capex, mainly related to refarming process

The outlook does NOT include potential impacts from COVID-19

2020-2023 Industrial Plan's goals: broadening horizons

STRENGTHENING OF THE CORE BUSINESS

Strengthen the Core Business through the coverage of new technologies / platforms, the offer of new services and the evolution of the operating model in terms of digital transformation:

• ✓ Improving long-term positioning in the media industry
• ✓ Introducing innovations in asset management
• ✓ Pursuing operational efficiency (on costs and maintenance capex)

EXPANSION OF THE INFRASTRUCTURE MANAGED

Pursue expansion by external lines in infrastructures ensuring:

• ✓ scale (and competitiveness in a market under progressive consolidation)
• ✓ synergies
• ✓ diversification
• ✓ optimization of capital structure

OPTIONALITIES FOR INNOVATIVE USES OF EXISTING INFRASTRUCTURE

Monitor any optionality for innovative uses of the existing infrastructure

Capital allocation strategy

2) In the limit of distributable reserves. Shares buyback proposal's details will be subject to market conditions

4) Net Debt, including IFRS-16 impact

Main market trends

Media

Towers

Telco

• Refarming process
• Evolution of consumer habits, with growing diffusion of OTT platforms
• Technological changes in the TV production chain (eg. IP, 4K)
• Development of fixed (fiber, IP) and mobile networks (5G)
• High investments and returns under pressure push telco operators to partnerships and cost optimization
• IoT services ecosystem development, with increasing needs for latency/local computing
• Progressive captive assets spin-off and evolution of TowerCo's role with expansion on adjacent businesses
• Assets consolidation

Main dynamics Opportunities for Rai Way

• DTT networks upgrade in the context of refarming, with further extension of the DAB radio network
• Role on new media distribution platforms
• Support roll-out of telco networks in rural areas and enable new services in view of 5G (eg. hospitality 5G devices, DAS, edge data centers)
• Synergies from assets consolidation

Challenges for Rai Way

• Rebalancing of distribution platforms' relative weight
• Increasingly competitive MNOs hospitality market (focus on cost optimization, site-sharing agreements, availability of assets open to the market)

Main market trends – media platforms

Market evidence

• Video contents consumption (3h 43m of global average daily viewing time in 2018¹ ) constantly increasing
• Growth driven by ondemand and mobile devices consumption (~26% of total consumption in 2018¹ ), particularly by new generations, both non DTT-based

Linear TV, however, still remains the reference platform, with a not steep rebalancing curve

Strong and substantially stable audience² , confirms DTT as the medium with the highest reach

10 mln average daily audience²

85% TV advertising revenues on DTT³

Broadcasters' advertising collection highly focused on the traditional platform

Peculiarity of the Italian market, mainly Free-To-Air⁴

1 Source: Ampere Analysis

2 Despite improved broadband coverage and the growing popularity of OTT platforms, Management analysis on Auditel data

3 Expected CAGR 2018-2023 +0,3%, sources: PWC - Entertainment & Media Outlook in Italy 2019-2023, Nielsen

4 Penetration in terms of "prevailing" platform. Source: IHS Markit

MAIN MARKET TRENDS

Main market trends – media platforms

The rebalancing will continue ...

... but in the long term it is foreseeable a coexistence of platforms with a hybrid approach, based on the polarization fruition - type of content

TV set remains the preferred available) Linear and on-demand fruition will be complementary depending on the content type

DTT remains the most efficient solution for delivering linear content to a wide audience

Obligations of universality and coverage¹ of the public service

99% news and generalistic contents

95% other contents

device (when INDUSTRIAL PLAN 2020-2023 INITIATIVES

2020-2023 Industrial Plan's key initiatives

STRENGTHENING OF THE CORE BUSINESS

EXPANSION OF THE INFRASTRUCTURE MANAGED

OPTIONALITIES FOR INNOVATIVE USES OF EXISTING INFRASTRUCTURE

Leadership in the media / broadcasting value chain

Protection of the tower business

Digital & Agile Transformation and evolution of the asset management system

Enabling factors Enhanced connectivity:

▪ Sites (FttT)

▪ Backbone

Leadership in the media/broadcasting value chain

Extension of broadcasting services on traditional platforms and evolution towards content distribution on OTT/IP platforms

RAI broadcasting platforms

• Refarming DTT
• DAB radio network
• Satellite network

3 rd parties broadcasting platforms

• Refarming DTT
• DAB radio network

New platforms (Rai and 3rd parties)

• Content Delivery Network (CDN)
• Multiplatform contribution (IP, 5G)

Activities mainly configured as technology and services business on third party infrastructures

STRENGTHEN THE CORE BUSINESS - BROADCASTING

RAI broadcasting platforms – Development of services

Refarming DAB coverage extension Satellite offer development

• DTH broadcasting reconfiguration with transponder and head-end transition in DVB-S / DVB-S2
• The new configuration will allow to receive new channels, even in 4k, from satellite

Reference context Roadmap

• Release of all frequencies currently in use by local operators
• Awarding of two MUXes (I and II level) for the diffusion of local networks to network operators through tenders and subsequent selection of FMSAs through beauty contest
• New configuration makes the local TV market potentially more sustainable (no network duplication, affordable transmission capacity) yet with high differentiation in the regions' attractiveness

Approach

▪ Prioritization of geographical areas by size/market risk

System of connected servers to provide multimedia

contents, reducing traffic and improving QoS¹ and QoE² for Content Service Providers and end users

CDN Basic architecture

Holds the multimedia contents to be displayed to users 1

Rai Way perimeter

Sort traffic between multiple CDNs for effective traffic management 2

Store Web contents close to users 3

Opportunities for Rai Way

Extend the positioning in the distribution of video contents on IP platforms, implementing a "local" CDN (greater capillarity of the servers), carrier-neutral (through Italian ISPs), ensuring high QoS and QoE

Leveraging on Rai Way fiber backbone infrastructure, video expertise, relationship with broadcasters and presence on the territory

Enabling new B2B content transmission services

Value proposition:

quality of service and carrier-neutrality for content providers, backbone decongestion for ISPs

Multiplatform contribution - Rai Way Wi-Fi Hot Spot for the Olympic Stadium in Rome

Wireless extension of the Rai Way contribution network with guaranteed reliability and video quality thanks to dedicated frequencies (not sharing cellular data network)

Protection of the tower business widening range of services

IMPROVED VALUE PROPOSITION OF THE TRADITIONAL OFFER

• Improved pricing competitiveness vs. contract duration extension
• Offer widening with services enabled by new networks' architectures and growing latency/local processing requirements

▪ 4G / 5G roll-out in rural areas

FttT

• o Retention / upselling of backhauling services for MNOs and attraction of new FWAP customers
• o Implementation of new services (eg. Edge Datacenter, DAS, …)
• o Possible synergies with broadcast distribution network

• o Agreements with venue owners of points of interest near Rai Way towers

• o Focus on venues with high video/broadcasting component events

• VOLUME EXPANSION

• Leverage the growth of the fixed wireless segment, also for the entry into the traditional telco market
• Opportunities with public administrations and corporates (eg. mission critical networks)

Distributed computing nodes equipped with data storage, data processing (also in real time) and connection to data centers/louds and/or other edge computers

Tower Edge Data Center is a frontier business addressing a fast growing reference market

Opportunity for Rai Way

• Infrastructural carrier-neutral operator (colocation & hosting) for MNOs and service providers
  • 1 Retention and up-selling for MNO customers, following network virtualization and introduction of low-latency 5G services
  • 2 Hosting of service providers, widening customer portfolio
• Good fit with Rai Way asset footprint, offering high coverage of Italian territory and available space
  • o Tower connectivity upgrade required
• Start from priority sites i) covering main Italian districts and ii) with MNO customers presence
• Potential extension of number of edge sites to increase coverage in case of positive market take-up

and organizations

INDUSTRIAL PLAN 2020-2023 INITIATIVES

2020-2023 Industrial Plan's key initiatives

Market share of Europe's leading broadcast tower operators

High concentration of the broadcast towers sector in the main EU countries compared to Italy

Industrial rationale

(% on total broadcast towers) ▪ Synergies on costs related to the operating model and the management and maintenance of the technical infrastructure, freeing up resources to investment in innovation and diversification

Asset consolidation

Main areas of optimization

• Increase in dimensional scale
• Expansion of customers portfolio
• Promoting a possible rationalization of the broadcasting infrastructures with consequent improvement of the landscape and environmental impact

Colocation Data Center: Italian market overview

USA

2018 Data Center spend as a % of 2018 GDP

• Cloud (mainly from global players and domestic TLC/ICT players) representing main driver of capacity demand
• Fragmented supply-side, with limited assets' number and quality (vs. demand outlook)
• Relatively early-stage italian market (both on supply and demand) may lead to temporary unbalance
• In more advanced markets, trend towards outsourcing / externalization of infrastructural component

Colocation Data Center: approach

Domestic market dynamics influence possible entry strategy

• Secure occupation and growth:
  • o Cloud providers
  • o Telco
  • o PA

• Tier-4
• Located in Industrial / financial districts
• Modular target power
• Energy and coolling efficiency

1) MAKE

• o Pre-agreement with anchor tenant
• o Opportunity to leverage on proprietary asset/land in the Rome area

2) BUY

• o Top-tier Independent asset
• o Asset spun-off from anchor tenant

Clear value proposition for customers/partner: independent, high-reliable and carrier-neutral operator; integration with Edge Data Center network to address low-latency requirements; synergies with OTT video customers

INDUSTRIAL PLAN 2020-2023 INITIATIVES

2020-2023 Industrial Plan's key initiatives

Focus on innovative services running on the existing infrastructure still not mature due to lack of technical/ regulatory standardization

Rai Way's commitment to sustainability: 2020-2023 ESG goals

2020-2023 financial highlights(1,2)

Mln Eur

% CAGR 2019-2023

Figures based on a refarming scenario with 3 MUXes managed for RAI

Core revenues

RAI - New services

Mln Eur

% CAGR 2019-2023

KEY FINANCIALS

Operating costs(1)

% CAGR 2019-2023 Mln Eur

Continuous efficiency initiatives to offset emerging costs related to new services

KEY FINANCIALS

Mln Eur

Adjusted EBITDA(1) and Net Income

Acceleration of growth in 2022-23 driven by refarming (impact on rev and opex) and digital transformation

1) Post IFRS-16

Investments

Mln Eur

Including: CDN, connectivity upgrade, new telco services (FttT, edge data center, DAS),

2020 2021 2022 2023

DEVELOPMENT

digital transformation and regional refarming

KEY FINANCIALS

Cash generation

% CAGR 2019-2023

FCFE calculated deducting rents impacted by IFRS-16 to reflect actual cash generation

(1) Recurring FCFE = Adj. EBITDA – Net Financial Charges – P&L Taxes – Recurring Maintenance Capex. All figures adjusted to deduct rents impacted by IFRS-16 from the calculation of cash generation

(2) Based on Rai Way shares market closing price of 12/03/2020 (4,09 €/share)

Capital allocation

• Continuity in the dividend policy of 100% of Net Income, with possibility to convert it into a mix of dividends and buy-backs depending on market and sector conditions
• On top, implementation of an additional buy-back plan out from distributable reserves (at least € 20 Mln, equal to 7% of floating² )
• External growth in infrastructures pursuing:
  • scale (and competitiveness in a market under progressive consolidation)
  • synergies

EXTERNAL

GROWTH

• diversification
• optimization of capital structure
• Business visibility and organic evolution of financial leverage³ – kept at around 1x NFP/EBITDA during the plan period – allows availability of resources to finance external growth

(1) Based on RW share price of 4,09 and assuming distribution entirely through dividends (2) Floating does not include stakes >5%

Q&A session

Contacts

Annexes

Broadcasting - Recap on the refarming process

2019 Budget Law and the subsequent evolution of the regulatory framework by the competent authorities(1) reshaped the refarming process and the DTT network configuration:

▪ Most of the process milestones set by the 2019 Budget Law have been completed:

(1) Ministry of Economic Development (MISE), Authority for Communications (AGCOM); (2) One of them partially using also VHF frequencies (3) Transitory period anticipated to Jan 2020 – Dec 2021 for network operators using channels 50, 51, 52 and 53

Broadcasting - Evolution of consumer habits

Consumers are watching more and more video content…

• The consumption of video content (time of use) has been constantly increasing for years
• Italy follows the same trend, with an average number of minutes per day (218) close to the global average
• Growth is expected to show the same trend for the coming years as well

Video content viewing time (minutes/day)(1)

(1) Source: Ampere Analysis; based on interviews carried out in 22 main countries around the world (e.g. USA, UK, France, Italy, Germany, Brazil, Australia, etc.) through the question "how many minutes a day on average during the week do you use to watch video content and on which devices?"; the data refers to Q3 of each year shown where not otherwise specified (2) Based on 1Q 2019

⁽³⁾ Based on 3Q 2019

MAIN MARKET TRENDS

Broadcasting - Evolution of consumer habits

…global growth driven by on-demand and mobile device use…but linear TV still remains the reference platform with share >80%...

Linear vs. non-linear video consumption in Italy(1) Video consumption per device (minutes/day)(2)

(1) Source: IHS Markit; ERGO Digital Trends 2019

(2) Source: Ampere Analysis; based on interviews carried out in 22 main countries around the world (e.g. USA, UK, France, Italy, Germany, Brazil, Australia, etc.) through the question "how many minutes a day on average during the week do you use to watch video content and on which devices?"; the data refers to Q3 of each year shown where not otherwise specified

Broadcasting - Evolution of consumer habits

… supported in Italy by a high audience (despite improved broadband coverage and the growing diffusion of OTT platforms)...

• The DTT audience has shown resilience in the past years, also thanks to the wider offer of Free To Air (FTA) thematic channels and despite:
  • o Broadband coverage in Italy has reached EU levels
  • o The OTT market (e.g. Netflix, DAZN, Amazon) has also registered an explosion in Italy (+248% from 2017 to 2019)
• The DTT remains the mean with the highest reach: you watch traditional TV for less time, but you keep on watching it

(1) All services (Netflix, Amazon Prime,...)

OTT(1) service subscriptions, Italy

Mln of active subscriptions

MAIN MARKET TRENDS

Broadcasting - Evolution of consumer habits

… from advertising revenues…

• Considering that DTT accounts for about 85% of TV(1) advertising revenues, it is unlikely that national broadcasters will choose to move to other platforms (e.g. OTT), whose advertising revenues will remain complementary
• Advertising revenues in the FTA segment are expected to remain broadly stable between 2019 and 2023, thanks to expanding overall revenues

Broadcasting - Evolution of consumer habits

… and the peculiarity of the Italian market

% of families(2)

The Italian market is mainly Free-to-air, dominated by two main national players (RAI and Mediaset) and difficult to be eroded by other platforms, especially if "pay"

(1) If there is more than one platform in the family, it is considered to be the most widely used one

(2) % calculated on a number of households equal to 25,3 mln (Italy), 27,6 mln (UK), 128 mln (US)

(3) Includes cable, DTH and IPTV

MAIN MARKET TRENDS

Broadcasting - Evolution of consumer habits

What to expect going forward?

三次

The TV set remains the preferred device to use compared to mobile devices, when available.

Linear and on-demand use will be complementary depending on the type of content

From a technological point of view, DTT remains the most efficient solution for the transmission of linear content to a wide audience

There will be no replacement, but a

stratification of models. A slice of the audience will continue to have the TV not connected, and will continue to watch it as now. [...] In the long run I foresee a very strong polarization between live events and ondemand content

Italian TV broadcaster Senior Manager, 2019

The DTT will not disappear, but a coexistence of platforms through a hybrid approach, based on the polarization of the "way of fruition - type of content" is foreseeable

Broadcasting - Evolution of consumer habits

TV set remains the preferred mode of use over mobile devices, when available

Case study: TV series in UK

• An examination of how to enjoy episode 6 of the English TV series "Killing Eve" broadcast live on BBC1 and also made available on-demand (pre and post live broadcast) shows that in both cases, the TV set was the preferred solution for viewers.
• When available (e.g. at home), the television is the device that provides the best viewing experience even in on-demand mode. The convenience of smartphones and tablets is appreciated when you're away from home or on the move

MAIN MARKET TRENDS

Broadcasting - Evolution of consumer habits

Polarization of platforms according to content type

Case study: Fiorello on RAI Play

• On 13 November 2019, the first episode of Fiorello's show « Viva RAI Play», distributed exclusively on the RAI Play platform, recorded 84% of views in linear mode.
• In the future, it is foreseeable a polarization of fruition mode with "on-demand" preferred for nonlive and deferrable content (mainly TV series and movies) while "linear" will remain the reference mode for live and non-deferrable events (e.g. entertainment, sports and news)

Viva Rai Play: Fruition mode on OTT platform

Show on 13 November 2019 exclusively on Rai Play

Digital Television - Evolution of consumer habits

• In terms of cost and spectrum, traditional terrestrial (DTT) and satellite (DTH) broadcast technologies are efficient in delivering linear content to many viewers. Efficiency is maximised when such events are nondeferrable.
• In case of provision of non-linear and deferrable content - such as the consumption of on-demand video content whose viewing is not simultaneous and usually distributed over long periods of time - the use of Internet protocols (eg. IPTV, OTT) is the most suitable solution
• Transferring the offer of non-deferrable linear content of a traditional broadcaster (currently on DTT) entirely on an IP platform would entail prohibitive costs with current standards:
  • o For broadcasters, on the basis of a consumer pricing model
  • o For telco, in terms of strengthening its backbone

Broadcasting - Radio

FM radio remains a mainstream platform, evolving towards digital

Digital evolution is at an advanced level for domestic use...

• ~50% of Italian households have devices capable of receiving FM Radio signal
• Production/distribution of domestic FM equipment is decreasing
• Most national broadcasters transmit online and on DTT
• National and international online aggregator offerings are growing rapidly (TuneIn, FM World)

… while it is still to be implemented for mobile use

• Limited DAB car radio penetration: mandatory installation from 2020
• Slow renewal rate of the car fleet ( 37M of vehicles in Italy; 2M of new vehicles sold per year)

Broadcasting - Evolution of the TV production chain

Technological changes in the media/broadcasting supply chain

Challenges Main drivers

Introduction of new standards/forms (4K,HDR,8k)

Evolution to IP/Ethernet ecosystem

Virtualization (SDN, cloudbased applications)

▪ SDI broadcasting infrastructure no longer adapted to the bitrates required by new formats (3 Gbps vs. >12Gbps)

• Scalability vs. new technological standards
• Optimized performance (100Gbps) and costs (use of standard off-the-shelf commercial products) vs. SDI
• Sharing further performance improvements (low-latency and jitter, time sensitive) achieved in Enterprise applications
• Interoperability guaranteed by industry-standards (eg. SMPTE ST 2110)
• Compatibility with existing broadcasting standards (eg. SDI, HD-SDI, ...)
• Flexible and dynamic network configuration management
• Remote use of resources and processes to reduce time-to-market, travel and personnel costs

Towers – Main market trends

Evolution of the role of TowerCo TLC in Italy

(Das and Small Cell)

Multiplatform contribution – Transmission services

Improvement of the current positioning on the transmission services market through a diversified offer capable of meeting the needs of broadcasters Reference market needs Services Market segments Networks ▪ High quality standards for high value, high budget productions (typically entertainment content and sporting events) ▪ High flexibility and costeffectiveness for "best effort" productions (typically information content) ▪ Maximizing the value of content ▪ Enabling streaming services on DTT channel (HbbTV) ▪ Point-to-point contribution services ▪ Signal monitoring and control services Services evolution ▪ Value-added broadcast services (4k broadcasting, remote production) ▪ Mobile interconnection platforms (IP, wi-fi hotspot, 5G) ▪ Platforms for content exchange (news exchange, event repository) ▪ Signal Hybridization Platform National Broadcasters New market segments International Broadcasters Local Broadcasters Fiber optic IP Satellite Radio links

Platforms: partnerships with industry leaders

Infrastructure monitoring systems

Evolution of site management system

Software solution for monitoring the quality levels of network services...

...integrated with probes, sensors, equipment and systems for E2E management of the "site"

▪ Distributed architecture integrating sensors and technologies (e.g., IoT, Big Data, Artificial Intelligence)

• Supervision and control of equipment
• Acquisition of data from probes and sensors of different technologies that will allow monitoring of the environment, metal infrastructure...

Benefits

• Rationalisation and centralisation of control systems
• Efficiency of corrective actions (predictive maintenance)
• Improved fault detection process
• Network performance evaluation

Detailed summary of Income Statement

(€m; %)	4Q18	4Q18PF	4Q19	FY18	FY18PF	FY19
Core revenues	54,5	54,5	55,7	217,7	217,7	221,4
Other revenues and income	0,1	0,1	0,9	0,1	0,1	0,9
Purchase of consumables	(0,4)	(0,4)	(0,4)	(1,0)	(1,0)	(1,2)
Cost of services	(13,0)	(10,6)	(12,1)	(50,3)	(40,9)	(42,2)
Personnel costs	(13,2)	(13,2)	(12,6)	(46,1)	(46,1)	(45,3)
Other costs	(1,1)	(1,1)	(0,9)	(3,4)	(3,4)	(2,6)
Opex	(27,6)	(25,3)	(25,9)	(100,8)	(91,3)	(91,3)
Depreciation, amortization and write downs	(8,9)	(11,2)	(10,8)	(33,3)	(42,4)	(42,4)
Provisions	(0,1)	(0,1)	(0,1)	(0,1)	(0,1)	1,5
Operating profit (EBIT)	18,0	18,1	19,7	83,8	84,1	90,1
Net financial income (expenses)	(0,2)	(0,4)	(0,2)	(1,2)	(1,9)	(1,3)
Profit before income taxes	17,7	17,7	19,4	82,5	82,3	88,8
Income taxes	(5,2)	(5,2)	(5,8)	(22,8)	(22,7)	(25,5)
Net Income	12,6	12,5	13,7	59,7	59,5	63,4
EBITDA	26,9	29,3	30,6	117,1	126,6	131,1
EBITDA m argin	49,4%	(1,5%)	55,0%	53,8%	58,1%	59,2%
Non recurring costs	(0,7)	(0,7)	(0,0)	(1,2)	(1,2)	(0,1)
Adjusted EBITDA	27,7	30,0	30,6	118,3	127,7	131,2
Adjusted EBITDA m argin	50,8%	55,1%	55,0%	54,3%	58,7%	59,3%

Summary of Balance Sheet

(€m)	2018FY	2019FY
Non current assets
Tangible assets	180,9	177,6
Rights of use for leasing	0,0	36,2
Intangible assets	12,9	14,3
Financial assets, holdings and other non-current assets	1,3	1,3
Deferred tax assets	3,3	2,7
Total non-current assets	198,5	232,1
Current assets
Inventories	0,9	0,9
Trade receivables	71,5	74,8
Other current receivables and assets	5,8	5,0
Current financial assets	0,1	0,3
Cash and cash equivalents	17,2	30,2
Current tax receivables	0,1	0,1
Total current assets	95,5	111,2
TOTAL ASSETS	294,0	343,3

(€m)	2018FY	2019FY
Shareholders' Equity
Share capital	70,2	70,2
Legal reserves	14,0	14,0
Other reserves	37,1	37,1
Retained earnings	59,5	62,9
Total shareholders' equity	180,8	184,2
Non-current liabilities
Non-current financial liabilities	0,4	0,3
Non-current leasing liabilities	0,0	26,3
Employee benefits	15,1	14,4
Provisions for risks and charges	17,0	15,9
Other non-current liabilities	0,3	0,0
Deferred tax liabilities	0,0	0,0
Total non-current liabilities	32,8	56,9
Current liabilities
Trade payables	45,6	54,3
Other debt and current liabilities	33,9	34,1
Current financial liabilities	0,3	0,2
Current leasing liabilities	0,0	13,3
Current tax payables	0,6	0,4
Total current liabilities	80,4	102,3
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	294,0	343,3

Summary of Cash Flow Statement

(€m)	4Q2018	4Q2019	FY2018	FY2019
Profit before income taxes	17,7	19,4	82,5	88,8
Depreciation, amortization and write-downs	8,9	10,8	33,3	42,4
Provisions and (releases of) personnel and other funds	1,4	1,5	4,0	2,4
Net financial (income)/expenses	0,2	0,2	1,0	1,0
(Retained earnings)/Losses carried forward - Effect of IFRS adoption	0,0	0,0	(0,8)	0,0
Net operating CF before change in WC	28,2	31,9	120,0	134,7
Change in inventories	0,0	0,0	0,0	0,0
Change in trade receivables	13,1	5,5	0,2	(3,6)
Change in trade payables	7,8	8,4	7,9	8,7
Change in other assets	0,5	2,3	(0,4)	0,8
Change in other liabilities	(3,4)	(4,3)	2,7	(0,7)
Use of funds	(0,1)	(0,9)	(0,9)	(1,2)
Payment of employee benefits	(0,6)	(0,7)	(3,2)	(3,3)
Change in tax receivables and payables	0,0	(0,0)	0,3	0,2
Taxes paid	(2,3)	(2,4)	(21,6)	(24,6)
Net cash flow generated by operating activities	43,3	39,8	105,0	111,0
Investment in tangible assets	(12,5)	(20,3)	(24,0)	(32,3)
Disposals of tangible assets	0,1	0,1	0,1	0,2
Investment in intangible assets	(2,2)	(2,3)	(3,0)	(3,0)
Disposals of intangible assets	0,0	0,0	0,0	0,0
Change in other non-current assets	0,0	(0,0)	(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	0,1	0,0
Business combination	0,0	0,0	0,0	0,0
Net cash flow generated by investment activities	(14,6)	(22,5)	(27,8)	(35,1)
(Decrease)/increase in medium/long-term loans	(0,1)	(0,1)	(60,2)	(0,2)
(Decrease)/increase in current financial liabilities	(17,9)	(0,1)	(0,0)	(0,8)
(Decrease)/increase in IFRS 16 financial liabilities	0,0	(0,7)	0,0	(1,8)
Change in current financial assets	0,1	(0,1)	0,1	(0,2)
Net Interest paid	(0,2)	(0,1)	(0,7)	(0,2)
Dividends paid	0,0	0,0	(55,1)	(59,7)
Net cash flow generated by financing activities	(18,2)	(1,0)	(115,9)	(62,9)
Change in cash and cash equivalent	10,5	16,4	(38,7)	13,0
Cash and cash equivalent (beginning of period)	6,7	13,8	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)	17,2	30,2	17,2	30,2