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FastWeb Reports Q2

FastWeb: first half revenues at €814M (+14% YoY); Ebitda at €274.4M (+23% YoY)

August 8, 2008

5 Min Read

MILAN, Italy -- The Board of Directors of FASTWEB S.p.A. (Milan, MTAX: FWB), Italy's second-largest fixed telecommunications services provider, approved the first half year financial results as at 30 June 2008.

First half results were fully in line with the targets for the year. As far as EBITDA is concerned, the Company raises the full year guidance to approximately 560 million including the 30 million extraordinary item booked in the second quarter.

FASTWEB reported 135,000 new subscribers in the first six months, an 11% increase in the customer base compared to the end of 2007, a figure which indicates the Company's ability to grow more than the Italian broadband market, which expanded by an estimated 6% in the first half 2008. FASTWEB acquired 60,000 customers in the second quarter, representing a significantly higher estimated market share of new broadband connections compared to prior quarters.

First half consolidated revenues totalled 814 million euro, a 14% increase with respect to the same period 2007. If compared with the proforma figure of the first half 2007 (701 million euro net of the termination rate impact decided by Agcom on 19 December 2007), the increase was 16%.

Second quarter 2008 revenues totalled 424.7 million euro, an 18% increase compared to 360.5 million euro of the same period in 2007. Revenues increased significantly in the period April-June, even when compared to the previous quarter (+9%), continuing the trend of significant sequential growth. When compared with the second quarter 2007, the improvement was 20% with respect to the proforma figure of 353.7 million euro.

The Company benefited from the positive effects of the new organization, implemented at the beginning of the year, with three business units - Consumer (residential and micro-business), SME (small- and medium-sized enterprises), Executive (corporations and public administration) - each responsible for managing the entire industrial cycle from customer acquisition and activation to customer care. The three business units contributed 50%, 14% and 36% respectively to first half revenues.

EBITDA increased significantly to 274.4 million euro (representing 34% of consolidated revenues) in the first half 2008, a 23% increase compared to 223.8 million euro in the same period 2007 (31% of consolidated revenues). The 2008 figure includes the positive impact of a 30 million euro extraordinary item recorded in the second quarter (the cash effects of which will be evident in the third quarter) as a partial compensation in the context of the settlement of some legal and regulatory disputes between FASTWEB and Telecom Italia (see paragraph regarding the agreement with Telecom Italia).

If the impact of the above extraordinary item and of those recorded in the first half 2007 were excluded from the comparison, first half 2008 proforma EBITDA would be equal to 244.4 million euro (30% of consolidated revenues), a 20% increase compared to the proforma figure of 204.4 million euro in the same period 2007 (29% of proforma consolidated revenues).

Second quarter proforma EBITDA was 131.9 million euro with a 31% margin. As with revenues, EBITDA also recorded significant sequential growth compared to first quarter 2008 (+17.2%), confirming the very positive trend of the business in the period.

First half proforma revenues and EBITDA (net of the extraordinary component) are in line with the Company's full year targets. In particular, first half revenues represented 49% of the year-end target and proforma EBITDA represented 46% of the target, both fully in line with the trend and the seasonal nature of the business recorded in previous years.

The Company reported earnings before interest and tax (EBIT) of 75.8 million euro in the first six months 2008, compared to 38.4 million euro in the first half 2007. Amortization, depreciation and write-downs totalled 198.6 million euro. Second quarter EBIT was 63.9 million euro (33.9 million euro net of the extraordinary component).

First half consolidated net profit was 14.9 million euro, compared to a loss of 14.9 million euro in the corresponding period 2007. Second quarter 2008 consolidated net profit was 25.9 million euro, compared to the 5.8 million euro of the corresponding period 2007. Without the effect of the extraordinary component, second quarter net earnings would be at breakeven, thus in line with the target for the year.

Capex amounted to 226.3 million euro in the period January-June, down 10% compared with the previous year. More than half of the capex was related to new customer activation.

Revenues growth and the current level of capex resulted in an improved capex to sales ratio which was 28% in the first half, compared to 35% in the same period 2007, an indication that FASTWEB's business model is gradually moving towards structural cash generation.

Net financial position increased to 1,460.9 million euro at the end of June from 1,226.7 million euro at the end of March 2008, following the payment to the parent company Swisscom Italia of an amount of 246,040,000 euro in May. Such payment related to the distribution of the share premium reserve deliberated by the Shareholders on 23 March 2007 and was delayed to 2008 for the amount owed to the parent company. The payment was financed by an intercompany loan repayable in 2012.

Net cash flow in the first six months was 51.2 million euro, compared to 7.3 million euro cash flow one year ago. First half cash generation included the positive effect of the invoicing of the amount due to FASTWEB, following AGCom decision on termination rates taken in December 2007. Cash flow generation in the period would be positive even excluding this effect.

Fastweb SpA (Milan: FWB)

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