• Total revenues reach €1,385 million, up 1.2% YoY, driven by 2.3% TLC service revenues growth; mobile service revenues up 4.9%
• EBITDA grows to €498 million, a 2.0% increase over Q1 09; margin at 35.9%
• Group net profit of €3 million vs net profit of €59 million recorded in Q1 09
• Net financial indebtedness at €8,411 million
• Mobile customers exceed 18.8 million, growing 9.3% YoY
• Fixed-line voice customers at 2.9 million, up 7.0% over previous year, driven by strong growth of direct customers, approaching 2.1 million
• Broadband customers increase by 18.1% to 1.71 million

WIND Telecomunicazioni S.p.A.’s Board of Directors met today to review and approve the company’s financial results for the three months ended March 31, 2010.

Q1 2010 Consolidated results

WIND continued to perform strongly in the first quarter of 2010 delivering a performance in line with the growth trends recorded throughout 2009, despite the ongoing negative economic climate in Italy. Total revenues in the three months ended March 31, 2010, reached €1.385 million growing 1.2% over the same period of the previous year driven by a solid performance in service revenues which increased by 2.3% over Q1 2009 to €1.335 million. The performance of WIND’s mobile business was particularly strong with a 4.9% growth year on year in service revenues notwithstanding the reduction in termination rates and an increasingly competitive environment. Fixed-line service revenues excluding international wholesale activities were substantially flat year on year (-0.8%); as a result of lower revenues in the International wholesale business overall fixed-line service revenues declined 2.9% over Q1 2009.
EBITDA in the first three months of 2010 reached €498 million growing 2.0% over 2009 as a result of the increase in top-line coupled with further optimisations on the costs front. The EBITDA margin in Q1 2010 grew 0.3 p.p. to 35.9%.
Over the same period EBIT grew 20.5% reaching €254 million from €211 million recorded in Q1 2009. As a result of higher interest charges, in relation to the €2.7 billion senior notes issued in July 2009, and higher impact of income taxes recorded in the period, net profit declined to €3 million from €59 million in Q1 2009.
WIND’s Operating Free Cash Flow generation in the first quarter of 2010 remained strong at €353 million which, combined with its existing cash balances, enabled the company to prepay €336 million of Tranche A1 debt maturities (due June 2011) in January 2010.
The Net financial indebtedness of WIND as of March 31, 2010 was €8,411 billion, declining versus €8,541 billion recorded as of December 31, 2009, resulting in Net Debt / EBITDA falling to 4.0x.

Operational performance

Mobile
WIND’s mobile business continued to outperform the market in the first quarter of 2010 with a 9.3% growth in its subscriber base, exceeding 18.8 million customers, driven by its simple and clear offering coupled with market leader customer service and network quality. Voice revenues continued to grow throughout the quarter notwithstanding the decrease in termination rates and roaming tariffs and an increasingly competitive market characterised by aggressive price promotions undertaken by the incumbent. This performance was driven by WIND’s relentless focus on community effects and on-net options as well as an increased presence in the high value customer segment through dedicated post-paid offerings which enabled the company to achieve a further reduction in its churn rate, now below 23% on an annualised basis. The success of WIND’s strategy was further confirmed by the 15.6% increase in voice traffic volume which reached 9.7 billion minutes. Internet and Data revenues continued to contribute significantly to the overall mobile service revenue growth with mobile Internet revenues delivering an impressive 65.4% increase over the previous year, mainly driven by strong market uptake of Internet PC dongles coupled with an increasing penetration of smartphones, and traditional data posting a high single digit increase. Mobile ARPU in Q1 2010 was €16.1, declining over €16.8 recorded in Q1 2009, as a result of the decrease in mobile termination rates and intensified competition in the market. Data ARPU as a percentage of total ARPU grew 2 p.p. to 18.2%.
During the first quarter of 2010 WIND continued to invest in its distribution network focusing mainly on the development of its proprietary footprint with the creation of a fully owned subsidiary, WIND Retail.

Fixed-line and Internet
WIND’s fixed-line performance in the first quarter of 2010 decreased slightly mainly as a result of the weak performance in international wholesale activities. Net of this impact, fixed-line and Internet service revenues were substantially stable over the previous year. The marginal decline in voice revenues, mainly attributable to the fall in traditional indirect voice services, was fully offset by an increase in Internet & Data revenues with Broadband delivering a solid 16.7% revenue growth over Q1 2009. As of March 31, 2010 Infostrada’s fixed-line voice subscriber base reached 2.9 million, up 7.0% over the same period of the previous year, driven by the ongoing success of its dual-play offerings and its segmented voice bundles. Voice traffic in the period increased 5.4% over the previous year mainly driven by a double digit increase in incoming off-net traffic. Broadband growth momentum also remained strong in the quarter with 71 thousand net additions in the three months to March 31, 2010, which brought Infostrada’s broadband subscribers to over 1.7 million (+18.1% YoY). The performance was delivered mainly thanks to the strong appeal of Infostrada’s unlimited broadband bundles, both standalone or as part of its dual-play packages, for a fixed monthly fee which enabled the company to further increase its share of flat rate customers to 91%. Fixed-line ARPU in Q1 2010 declined 6.6% over the previous year, with the decrease in Voice ARPU not fully compensated by an increase in Data ARPU, as a combined result of fixed termination rate reductions and increased promotional activities. Broadband ARPU in Q1 2010 reached €18.5, marginally down over Q1 2009, but increasing over the last three quarters of last year.
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