• Total revenues reach 2,892 million Euros, growing 2.6% YoY, driven by 3.7% increase in TLC service revenues
• EBITDA reaches 1,065 million Euros, a 2.7% increase over H1 2009; margin at 36.8%
• Group net profit of 16 million Euros
• Net financial indebtedness declines to 8,291 million Euros from 8,541 million Euros recorded as of December 31, 2009
• Mobile customers increase by 10.0% to 19.3 million
• Fixed-line voice customers grow 5.9% to over 2.9 million, direct voice customers reaching 2.1 million (+11.9% YoY)
• Broadband customers increase by 16.4% to 1.77 million

WIND Telecomunicazioni S.p.A.’s Board of Directors met today to review and approve the company’s financial results for the six months ended June 30, 2010.

H1 2010 Consolidated results
During the first six months of 2010 WIND continued to perform strongly delivering results in line with the growth trends recorded in the previous quarters, despite the ongoing negative economic climate in Italy. Total revenues in the six months ended June 30, 2010, grew 2.6% over the previous year reaching 2,892 million Euros as a result of the positive performance in service revenues which increased by 3.7% over H1 2009. The performance of WIND’s mobile business remained strong with a 6.0% growth year on year in service revenues driven by the strong subscriber growth and notwithstanding the reduction in termination rates and an increasingly competitive environment. Fixed-line service revenues in the six months ending June 30, 2010, declined marginally (-0.8%) mainly as a result of lower revenues in the International wholesale business only partially offset by the 3.1% growth in revenues in the consumer segment. EBITDA in the first six months of 2010 reached 1,065 million Euros growing 2.7% over the corresponding period of 2009 driven by the increase in top-line; the EBITDA margin recorded in H1 2010 was 36.8%, stable over the previous year.
In the semester ended June 30, 2010, WIND’s EBIT grew 17.6% reaching 572 million Euros from 487 million Euros recorded in H1 2009. Net profit in the period declined to 16 million Euros from 170 million Euros in H1 2009 as a result of higher interest charges, in relation to the 2.7 billion Euros senior notes issued in July 2009, partially non deductible.
WIND’s net financial indebtedness as of June 30, 2010 was 8,291 million Euros, declining versus 8,541 billion Euros recorded as of December 31, 2009; Net Debt / EBITDA fell to 3.9x from 4.1x at the end of 2009. The continued cash flow generation of the company enables WIND to announce the request for an anticipated debt repayment of approximately 360 million Euros.

Operational performance

Mobile
During the first six months of 2010 WIND’s mobile business continued to perform strongly with its subscriber base growing 10.0% to 19.3 million, having recorded 858 thousand net additions in the first six months of the year. WIND’s success continued to build upon a simple and clear offering and its community and on-net strategy, which resulted in WIND passing the 10 million ‘Noi’ subscriber mark as of June 30, 2010, coupled with its market leading customer service and network quality.
WIND’s increasingly visible presence in the high value mobile segment, through its dedicated ‘All Inclusive’ offerings, coupled with the above mentioned focus on community and on-net offerings, enabled the traffic generated by WIND’s customers to grow 17.3%, with both outgoing and incoming minutes increasing over the previous year, resulting in a 7.3% increase in AMOU.
The growth in WIND’s mobile customer base resulted in an increase in mobile voice revenues in the period despite the decrease in termination rates and an increasingly competitive market characterised by aggressive price promotions undertaken by our competitors.
Internet and Data revenues continued to contribute significantly to the overall mobile service revenue growth with mobile Internet revenues delivering a 57.4% increase over the previous year, mainly driven by strong market uptake of Internet PC dongles and higher penetration of smartphones, and traditional data posting a solid 8.4% increase.
Mobile ARPU in H1 2010 was 16.6 Euros, declining over 17.3 Euros recorded in H1 2009, as a result of the decrease in mobile termination rates, but displaying an improving trend over Q1 2010. Data ARPU grew to 3.1 Euros from 2.8 Euros increasing its weight as a percentage of total ARPU to 18.8%.

Fixed-line and Internet
In the first six months of 2010 WIND’s fixed-line business posted a strong performance in the consumer segment, with revenues increasing 3.1%, offset by a weaker performance in the international wholesale activities. Voice revenues in the period were stable over the previous year as a combined result of the strong growth in direct voice revenues which more than offset the decline in the traditional indirect voice revenues. Internet and Data revenues continued to deliver a solid performance, up 9.2% over the previous year, mainly driven by the ongoing growth in the Broadband business with revenues increasing 15.6% over H1 2009.
In H1 2010 Infostrada grew its voice subscriber base by 5.9% reaching more than 2.9 million customers mainly as a result of the strong trend recorded in direct voice which saw subscribers increase by 11.9% to 2.1 million. The solid underlying performance of the fixed-line voice business was further confirmed by the positive growth trend in traffic volumes, in particular in incoming minutes.
Broadband growth momentum continued to remain strong in the first semester of 2010 with subscribers increasing by 16.4% over 2009 to 1.77 million, having posted 51 thousand net additions in Q2 alone. The positive results recorded by Infostrada continued to build upon its ample offering portfolio and the ongoing success of its Broadband-only and dual-play offerings, the latter being chosen by 1.45 million subscribers (+21.5 over H1 2009). Fixed-line ARPU in H1 2010 declined 5.0% over the previous year to 34.8 Euros, mainly as a result of the decrease in Voice ARPU driven by the reduction in fixed termination rates and the increased promotional activities undertaken in the period. Broadband ARPU in H1 2010 reached 18.4 Euros, marginally down over H1 2009 as a result of the above mentioned promotional activities.

Tax audit update
In relation to the tax audit on WIND by the Italian tax authority, disclosed in our July 2009 bond prospectus and in the financial statements published thereafter, on May 31, 2010 the findings of the audit were submitted to WIND in a report (verbale di constatazione) confirming the view that withholding taxes had to be applied and proposing that the tax authorities impose a 12.5% withholding tax on the investigated interest payments, for an approximate amount of 70 million euro. The tax assessment has not yet been issued by the tax authority, and as such no payment obligation has been realized. Were the Italian tax authority to confirm that withholding tax on the relevant interest payments was due, WIND would be required to pay withholding taxes and possible interest and penalties, unless WIND contests the assessment before a tax court.