CONNECTING INNOVATION STAR Conference, London 7th October, 2016

1

Agenda

Retelit Overview Market Outlook Strategy and Business Plan Financials Highlights Contacts

2

Leading Player in Telco and ICT 

Retelit is a leading Italian provider of data services and infrastructure for the telecommunications market



Listed on Milan Stock Exchange since 2000 and from 26th September part of the STAR segment



Retelit's network owns over 9,300 km* of infrastructure (ducts and fiber cables) along the main Italian roads, 9 metropolitan networks (MANs) in the largest Italian cities and over 200 town centers covered



Integrated with a pan-European ring and 14 Data Centers, to provide new generation Cloud and ultra broadband fiber based services

*Equivalent of approx 192,000 km of fiber optic cables, of which 60,000 km located within MAN areas

Quality & Certifications

Pan European Network 9 Metropolitan Networks

UNI CEI ISO/IEC 9001:2008 Retelit, E-VIA

UNI CEI ISO/IEC 27001:2006 Retelit, E-VIA

UNI CEI ISO/IEC 14001:2006 Retelit, E-VIA

ALLA/NALLA Telecom Metro Ethernet Forum Services for NATO, U.S. 2.0 Certification DoD, DISA/DITCO

Capabilities

14 Data Centers 3

Integrated Offer: Infrastructure Based Services Infrastructure: Network & Data Centers ITALIAN BACKBONE & ACCESS NETWORK

DATA CENTERS

PAN EUROPEAN NETWORK

4

PREMIUM DATA CENTERS (TIER 3 Best Practice)

10

Milan City DC 1 Milan East DC 2 Bologna Rome

+9,300km Optical fiber along Italy and 9 metropolitan area networks (MANs) in Milan, Rome, Turin, Bologna, Reggio Emilia, Treviso, Naples and Bari

LOCAL DATA CENTERS Bari Brescia Genova Modena Napoli

Savona Torino Treviso Verona Viterbo

International POPs: London, Frankfurt, Marseille (on going)

Services

Telco Infrastructure Services

Cloud and Data Center Services

Data Transmission Services

Managed Network Services

 Dark Fiber



 Ethernet first mile

 Optical VPN

 SDH / WDM connectivity

 Ethernet / VPLS Ethernet

 Fiber Ethernet connectivity

 MPLS IP VPN

 Ducts  Wavelength  SDN & OTN Solution  International Backbone

   

Infrastructure as a service Housing/Co-location Cloud Storage Virtual Data Center Security & ICT Support Storage as a service Data Backup & Disaster Recovery Application as a service

New focus on Cloud Infrastructure (IaaS) Based on New Technology Hyperconvergence

 Internet Connectivity  VAS Router  DDOS Mitigation

4

Broad Spectrum Market Segments & Clients Retelit designs and delivers infrastructure based services maximizing its ultra broadband fiber data transmission network, data center (e.g. cloud) based services to three main market segments:

01

National Wholesale

02

Carriers and Service Providers

International Wholesale

Business

03

Carriers, OTT and Service Providers

Corporate and Public Sector

Main Customers

Revenues 1H2016 by segment

100.0%

100.0%

46.8%

50.0% 0.0%

Wholesale National

100.0%

42.8%

50.0% 0.0%

Wholesale International

10.4%

50.0% 0.0%

Business

5

More than 16 years in the Telco/ICT businesses  1999



Rights-of-way agreement with ANAS (State Roads) covering 48,000 km National TLC license Construction of fiber backbone 8 MANs in major cities, Data Centers IPO, Network Investments

START-UP

2000

BUILT

  

2003

FOCUS

 

Repositioning in Market as Carriers’ Carrier Financial Restructuring

2005 2007

EXECUTE

   

Leading Carriers’ Carrier in Italy Increase Customer base: National and International Carriers, ISPs Execution of Major TLC Projects, International Defence Strong Financial Performance

2008

WIMAX



Bid for the tender offer of WiMAX licenses launched by the Italian Ministry of Communications, winning the license for northern and central Italy

2011

WIMAX



Business Unit rented to Linkem (sold in 2013)

GROW



Re-focus on Broadband and ICT services for the wholesale market

REFOCUS

 

Increase international network coverage, add new services Extension to selected enterprise market and public sector

2012 2014

2015

INNOVATE

 New BoD brings further ICT competences to enrich services offer targeting Corporate and PA

2016

STAR SEGMENT

 Listed on STAR segment on the Italian Stock Exchange 6

Corporate Governance Board of Directors (Tenure: in office until approval of financial results for 2017)

Dario Pardi

Chairman

Valentino Bravi

Vice Chairman

Federico Protto CEO

Laura Guazzoni Independent Member

Stefano Borghi

Carla Sora

Independent Member

Laura Rovizzi

Independent Member

Tina Magnotti

Independent Member

Board Member

Nicolò Locatelli Board Member

Shareholders

8.35%

9.77%

Market

Bousval s.a.

14.37%

Selin SpA

Board of Auditors (Tenure: in office until approval of financial results for 2017)

Regular auditors

Sostitute auditors

Fabio Monti

Luca Zoani

Chairman

Paolo Lorenzo Mandelli

Pietro Biagio Monterisi

Valentina Lamanna

Others

67.51%

Price (October 5th, 2016): € 0.81 Market Cap (October 5th, 2016): € 133.1 mln

Average Daily Volume**: 497,719

Independent Auditors (Tenure: until 2020)

Deloitte & Touche

STAR Segment Notes: * Shareholders’ Agreement signed on December 2014 among HBC, Selin SpA, La Società Privata, Alberto Pretto, Luca Pretto, Laura Ziggiotto ** Last three months

7

New Management Team since 2015

Chairman Dario Pardi Born in Genoa in 1952, Pardi has held key international positions as Vice President and Regional Manager of Storagetek and Cabletron, and in Italy in leading companies such as Bull HN, Nixdorf Siemens and Hewlett-Packard. At Hitachi Data Systems starting 2007, Dario Pardi was Vice President for the Benelux area and Southern Region of the same Japanese multinational and Vice President EMEA Growth and Sales Transformation. In April 2013, he became EMEA Vice President Global Markets and president of HDS Italia, a position he held until December 2014. Pardi was chosen to hold the office of Chairman in the new board of Retelit by virtue of the consolidated experience in IT and telecommunications. He is also Chairman of the Board of TAS S.p.A.

Chief Executive Officer Federico Protto

Chief Financial Officer Fabio Bortolotti

Protto, born in Milan in 1967, MBA from Bocconi University, and Master in Information Technology, comes from T-Systems International GmbH (Deutsche Telekom Group) where he held various positions starting 2002 in the telecommunications business for the B2B segment, and in 2010 was named COO, Telecommunications Services International head of International Telecommunications Business in 25 countries. Protto has gained over 20 years of experience in the TLC sector, having also held management positions at Verizon Business as Service Delivery Director for South Europe and Access Network Director for the whole EMEA region and at Telecom Italia, where he held the role of Head of Technical Service for the release of services for the business market.

Fabio Bortolotti has more than 20 years of experience in finance, a field in which he has served in a variety of positions at Italian and international investment banking and consulting firms. Bortolotti, 48 years of age, with a degree in Economics from the University of Bergamo and an MBA from SDA Bocconi, started his career at Price Waterhouse in Milan, and then moved to London, where he worked in corporate finance and M&A for ING Barings, Merrill Lynch and Jasper Capital Group. He has served as CFO at Mediterranean Oil & Gas, a company listed on the AIM market in London, and at CDS Holding. In 2010 he founded Omnipro, a financing consulting boutique focused on small and medium enterprises, where he is leaving the position of Managing Partner.

8

Agenda

Retelit Overview Market Outlook Strategy and Business Plan Financials Highlights Contacts

9

Wholesale: National and International Markets Market Drivers Wholesale Market Market Circuits and Wholesale Fiber €mln

830



Slow growth expected for National and International Wholesale Markets: • Evolution of next-generation networks NGAN • Increase in traffic demand, which will offset the decrease in prices

800 Total International Wholesale Market

CAGR +1.2%

•

Total estimated Market around € 80 mln in 2015

•

This estimate covers all major operators OTT, System Integrators and the international carriers who do not have their infrastructure in Italy.

803 800

Total National Wholesale Market

2014

2015

2018E

Source: Retelit estimates on Bain, AGCOM, Italian Telco figures

2015

•

Total estimated market around € 720 mln in 2015

•

This estimate covers all major TLC operators for fiber connectivity with customer acquisitions and infrastructure in Italy.

10

Business: Market Outlook • Major growth expected from the Ethernet segment

• Data Centre Services market represents around 25% of which Iaas e Saas constitute the major growth drivers – expected CAGR 2015-2018 of around 5%

TLC Business Market

IT Business Market

€bln

€bln

Retelit Market: Data Services expected to growth at a higher speed: +3% CAGR

9.5

CAGR +1.2%

5.2

5.0

5.0

2.6

2.7

2.9

2.4

2.3

2.3

Hardware, Software and Equipment on site 8.9 8.8

2.1 2014

2014

2015 Voice Services

CAGR +2.5%

2015

2018E

2018E Data Services

Source: Retelit estimates on Bain, AGCOM, Italian Telco figures

Retelit Market doesn’t include Hardware, Software and Equipment on site

11

Italian Government Ultrabrodband: Strategic Plan € 7 bln of public funding available via 3 public tenders

100 % Citizens

85

% Citizens

30 Mbps

100 Mbps

Possible models i.

Capital contribution to private investment (bids start from 70% public, 30% private) ii. Direct intervention by Infratel and management by a wholesale operator selected via public tender iii. Public-Private Partnerships

Ultrabroadband Strategic Plan targets by 2020 On 6th of August 2015 CIPE has approved the operative program for the Ultra-Broadband Plan allocating resources for a total of € 4.9 bln: • € 2.2 bln immediately available • € 1.3 bln subject to further resolution by CIPE • € 1.4 bln subject to new regulatory measures Further € 2.1 bln from FESR and FEASR, European funds for regional/rural development

STRATEGY

What does it all means for Retelit? Accelerated wholesale opportunities and increased visibility in case of award of one or more public tenders 12

Ultrabroadband: Tenders Process INFRATEL ULTRABROADBAND TENDERS FOR CLUSTERS C&D

First tender offers due by mid-October for white areas in the regions of Abruzzo/Molise, Emilia Romagna, Lombardy, Tuscany and Veneto. Second tender (more than € 1.25 bln) details issued on 8th August for Piedmont, Valle d’Aosta, Liguria, Friuli, Trento, Marche, Umbria, Lazio, Campania, Basilicata and Sicilia.

1° Phase (€1.4 bn)

Concession to build and operate a passive ultrabroadband infrastructure.

•

The award criteria will be based on the most economically advantageous bid on the basis of the best quality / price (and not “minimum price”)

•

The subsidiary e-Via S.p.A. has submitted the application, acting within the scope of a Temporary Grouping of Companies to be established together with Eolo and EDS Infrastrutture, and has pre-qualified to take part in the first tender

•

The following companies have also pre-qualified: Enel Open Fiber, Estra (Infracom group), Fastweb, Metroweb Sviluppo and Telecom Italia

•

Invitation letters for the offer received on 9th August. Deadline for submission of offers is 17th October 2016

•

Tender results with award of concessions likely to be known by year end

RETELIT POSITIONING Local or national backhaul vs. other networks and internet exchange • Dark fiber • Capacity

• Implementation, management, marketing and maintenance of infrastructure concession owned by Infratel though direct action, with transfer for consideration of rights of use to the requesting operators  Profits from the benefits provided by Infratel auction

 Improvement of company visibility at all levels

 Consolidating the position of e-Via within the National Wholesale market

 Synergies with backhaul existing e-via network

services on the

13

Agenda

Retelit Overview Market Outlook Strategy and Business Plan Financials Highlights Contacts

14

Business Plan 2016-2020: Strategy National Wholesale

UPSIDE FROM ITALIAN GOVERNMENT ULTRABROADBAND PLAN NOT INCLUDED

International Wholesale

AAE-1 Submarine Cable

Business (Data center and Cloud) National Wholesale Fit for Service Faster and more profitable growth leveraging on current assets Infrastructure optimisation

International Wholesale Leverage AAE-1 investment Strengthen current leading position with extended international capacity Increase market share

Business Act for Service and open new path Enlarge the Customer base to Corporate Customers New Cloud offering and Business model

AAE-1 Submarine Cable Global positioning Establishing a new alternative hub to connect Europe to fast growing markets (e.g. India and Far East) International Coverage 15

National Wholesale: Fit for Service Drivers/Business Needs

Fields of Play

1.

Network Development (Backbone, Backhaul, Access and Pops)

1.

Infrastructure

2.

Services Development (Internet, VPLS., Cloud….)

2.

Data services over optical fiber

3.

Customer Driven (Access/Drop Customer)

3.

Data Center Services

Business Drivers Total National Wholesale Market



The estimated total market will be: € 720 mln  This estimate covers all major TLC operators for fiber connectivity with customer acquisitions and infrastructure in Italy  Addressable market The market on which Retelit can operate is: € 72 mln representing 10% of the estimated market Source: Retelit estimates based on Bain, AGCOM, Italian Telco figures



Continuous growth in revenues coming from transport services Higher growth rate for recently launched managed services (i.e. VPN, Internet VAS, Cloud) Remarkable impact mobile fiber backhauling projects, also allowing MAN and access network extension Increased international coverage enables enhanced peering and international cloud connectivity

RETELIT CAGR +6% * *CAGR is based on BP 2016-2020

16

International Wholesale: Match with Carriers Needs Fields of Play

Drivers/Business Needs 1.

MNCs B-End

1.

Infrastructure

2.

Customer Access (IP Transit)

2.

Data Services over optical fiber

3.

Development of international network (Backbone and Pops)

3.

Data Center Services

Business Drivers Total International Wholesale Market The estimated total market will be: € 80 mln This estimate covers all major operators OTT, System Integrators and the international Carrier who do not have their infrastructure in Italy Addressable market

The market on which Retelit can operate is: € 70 mln equal to 87% of the estimated market Source: Retelit estimates based on Bain, AGCOM, Italian Telco figures



Continuous growth in revenues coming from transport services



Higher growth rate for recently launched managed services (i.e. VPN, Internet VAS, Cloud)



Increased international coverage enables enhanced peering and international cloud connectivity



B-end of MNCs and backbone needs from International Carriers

RETELIT CAGR +2%* *CAGR is based on BP 2016-2020

17

Business: Act for Service and open new path Drivers/Business Needs 1. 2. 3. 4. 5.

Fields of Play

Disaster Recovery - BC ICT as a Service Locations Connectivity VPN to DC Internet Safety

Managed Infrastructure Services: • Virtual Data Center (IaaS) • Disaster Recovery • Managed network Services • Security Services

Business Drivers

Total Estimated Market The total estimated market will be € 4.8 bln - ICT € 2.1 bln - TLC € 2.7 bln The total number of companies is around 200,000 Addressable market € 2.3 bln around 48% based on the number of HC. The total number of companies with HC between 50 and 250 is around 70,000 Target market The Target market is € 85 mln Number of companies: 7,000 Source: Retelit estimates based on Bain, AGCOM, Italian Telco figures



Transport and internet services will keep growing in revenues



Relevant impact from VPN multi-point services, cloud services offered in bundle with connectivity and VPN to provide customers with private and Italybased cloud and network platform



Disaster Recovery – Business Continuity



Increased international coverage improve offering to Italian enterprises with multinational organization



Cloud accelerates business value across a wide variety of domains, less cost, more flexibility



More data center services: today’s data center environment isn’t there just to host servers and hardware

RETELIT CAGR +35% * *CAGR is based on BP 2016-2020

18

AAE-1 Submarine Cable: Project Overview Addressable Market:    

 AAE-1 total capability: 40 Tbps  Current entitlement of Retelit: 5.8%  Cable laying nearly completed: 19,000 km (over 85%) as of 26th September  Twenty-One of 31 Segments laid  All shore ends completed except Yemen, HK, Thailand, India and Cambodia  Bari (Italy) CLS, CLS-Beach Route and BMH 100% ready

Telco Operators Carriers OTT CDN & Cloud Platform

25,000 km Submarine cable

Business Drivers 1

2

3

19 International members mainly incumbent Telco operators

Total expected investment € 60.4 mln (of which € 37.2 mln already paid by end of June 2016)

Ready For Provisional Acceptance (RFPA) expected end of 2016

 Market Demand for European-Asian capacity to hubs will continue to grow at rates comparable to recent years  Retelit’s AAE-1 system landing in Bari (Apulia) will offer European-Asian capacity users with a safer and more direct inland solution to reach Europeans PoPs (e.g. Milan, London and Frankfurt) than alternative cable systems landing in Sicily  Retelit will separately sell backhaul services to its investment partners in AAE-1 and to their customers

 Major revenues from IRU’s expected in 2017  Expected Cumulated revenues in 2017-2020 around € 45/50 mln with an EBITDA margin 19 expected in a range of 55% - 65%

Business Plan 2016-2020: Revenues and EBITDA Targets CAGR 12%

Revenues €mln

Ebitda 71

70

CAGR 21%

€mln

75

25

37

29

39-41 42

8

2014

27

2015

2019 Actual Results

2014

2020 BP 2015-2019

9-10

11

2015

2019

2020

BP 2016-2020

2020 TARGETS - DETAILS Revenues

EBITDA

 2020 Revenues € 75 mln, CAGR +12%

 2020 EBITDAs € 29 mln, CAGR +21%

 Better revenues mix compared to previous plan

 EBITDA Margin from 26.2% to 38% thanks to a better revenues mix

 Anticipation of IRUs for the cable  AAE-1 related cumulated revenues 2017-2020: € 45/50 mln

20

Business Plan 2016-2020: Revenues and EBITDA Revenues by Market 2015

Revenues by Market 2020E AAE-1 13%

Business 8% National Wholesale 44%

National Wholesale 33%

Business 24%

International Wholesale 48%

International Wholesale 29%

Profitability By Market  National Wholesale: EBITDA margin range 27% - 32%

Moving forward towards a more profitable revenues mix

 International Wholesale: EBITDA margin range 27% - 32%  Business: EBITDA margin range 30% - 35%  AAE-1: EBITDA margin range 55% - 65%

21

Business Plan 2016-2020: NFP and Capex Targets Cumulated Capex as from 2015

Net Financial Position €mln

75

€mln

125 114

114

57

25

34.2 30.2

11.5 1.3 2015

2019

2020 Actual Results

2015 BP 2015-2019

2019

2020

BP 2016-2020

2020 TARGETS - DETAILS Investments  5 years cumulated Capex of € 125 mln thereof approx. 50% for AAE-1 (€ 60.4 mln)

Financial Structure  2019 NFP positive for +€ 57 mln vs € 25 mln BP 2015-2019 mainly as result of:

 Better than expected 2015 NFP: + € 9 mln vs previous plan  Different Cable revenues mix in 2017: + € 18 mln for major IRUs in 2017  Different $/€ exchange ratio: + € 4 mln ($/€ from 1.3x to 1.1x)

22

Results for YE 2016 expected to be slightly better than guidance Business Drivers

 To increase penetration in the Business Market leveraging on the customer base

segmentation, the “Smart SaaS Program” and enlarging the offer of Managed Infrastructure and Datacentre Services  To grow above markets rate in the National and International Wholesale, thus getting market

shares  To improve IRUs value on total revenues  To continue activity in the AAE-1 Project: Bari Landing station completed in the first half of 2016

2016 GUIDANCE Revenues  € 44-46 mln

EBITDA  € 11-12 mln

EBIT  Around breakeven

NFP  € (9-11) mln

23

Investment Case

1

PROVEN TRACK RECORD

  

Excellent business reputation Innovative services based on its own infrastructure Committed management, with good track record in the sector and business oriented

 Solid, value adding, infrastructure

2

TECHINCAL CAPABILITIES

 Quality of Services from pre-sale to assurance

 Technology up-to-date 

3

POTENTIAL VALUE GROWTH

Proprietary fiber network

 ICT market growing with a good pace in selected areas (internet based services and applications)

 Partnership with major global players 

2016-2020 BP with a realistic and consistent growth

24

Agenda

Retelit Overview Market Outlook Strategy and Business Plan Financials Highlights Contacts

25

Strong Growth Recorded in Key P&L Figures PROFIT & LOSS €000 REVENUES EBITDA EBITDA MARGIN EBIT NET PROFIT

BALANCE SHEET 1H 2016 1H 2015 24,567 19,683 7,107 4,760 28.9% 24.2% 1,042 (1,067) 1,295 2,198

FY 2015 42,104 11,043 26.2% (781) 3,418

 Strong improvement of all the economic figures: • Revenues + 24.8% • EBITDA + 49.3% • EBIT turned positive  Net profit at €1.3 mln vs negative €0.5 mln H12015 restated to take into account the effect on P&L of 2016 Hedge Accounting adoption on reporting of derivative contracts (reported 1H 2015 figure € 2.2 mln)

€000

1H 2016

FIXED ASSETS NFP EQUITY

FY 2015

171,792

158,636

(3,886)

(11,526)

133,584

132,437

CASH FLOW €000 Cash Flow from Operating Activities Net changes in Current Assets/Liabilities Net Cash flow from Operating Activities Cash Flow from Investing Activities Cash Flow from Financing Activities Total Cash Flow

1H 2016 1H 2015 FY 2015 6,367 5,242 13,207 5,094 1,993 7,270 11,461

7,234

20,477

(19,720) (12,445) 11,131 2,022 2,871 (3,189)

30,229 6,569 (3,183)

26

Sustained Quarter on Quarter Growth €000 Revenues Other income TOTAL REVENUES Raw materials and external services Personnel costs Other operating costs EBITDA Asset Depreciation and amortization Other provisions EBIT

Q3 2014 8,821 29 8,850 (4,783) (1,285) (1,194) 1,588 (2,697) (608) (1,717)

Q4 2014 9,863 380 10,243 (5,625) (1,451) (1,186) 1,981 (8,523) 98 (6,444)

Q1 2015 9,501 48 9,549 (4,632) (1,413) (1,207) 2,296 (2,754) (458)

Q2 2015 9,948 186 10,134 (4,901) (1,444) (1,325) 2,464 (2,752) (320) (608)

Q3 2015 10,353 89 10,442 (5,113) (1,543) (1,246) 2,540 (2,797) (85) (343)

Q4 2015 11,932 48 11,979 (5,611) (1,695) (930) 3,742 (2,813) (302) 628

Q1 2016 12,341 61 12,402 (6,184) (1,579) (1,239) 3,401 (2,896) (89) 416

Q2 2016 11,555 610 12,165 (5,560) (1,558) (1,340) 3,706 (2,985) (96) 626

 Q2 16 Revenues: € 12.2 mln + 20% vs Q12 15 / -1.9% vs Q1 16 that was impacted by important IRU’s contracts  Q2 16 EBITDA +50.4% vs Q2 15 and / +9% vs Q1 16 despite increasing operational complexity (new Customers) and personnel (strengthen commercial and technical organizations) costs  Q4 2015 and Q1 2016 positive EBIT trend confirmed also in Q2 at € 0.6 mln, +50.7% vs Q1 2016

27

National Wholesale and Business are Leading the Growth Revenues by product

€ ‘000

• Revenues up 24.8% to € 24.6 mln 23%

• Strong momentum towards development of Business market:

TLC Services

8% IRUs - Indefeasible Right of Use and network maintanance

• 145 business clients as of today • Some € 2.8 mln new orders (Total Contract Value) generated with Business clients • Autoimport, Colnago, Firenze Fiera, Gala, Infocert and Walvoil are among our Top Clients which signed new contracts in the period

23,896

Data Center and Cloud

69%

€ ‘000

Revenues by market

Revenues 1H16 VS 1H15

€ ‘000

47% 19,683

2,617

2,074

260

178

24,567

Other Revenues

Revenues 1H2016

(245)

Business Wholesale International

23,896

10% Revenues 1H2015

Wholesale National

43%

TLC Services & Mlink

IRUs and Network maintanance

Sales in cables & optical fibre

Other products

28

New Orders up 27% YoY € ‘000

€ ‘000

New Orders by Market*

New Orders by Services*

19,036

19,036

14,968

14,968

14,331

12,035 9,635

8,569 5,510

4,129 4,217

3,263

2,784 1,204

WH National

WH International 1H2015

Business

1H2016

889

Total Orders

Tlc

1,442

Dc & Cloud

1H2015

IRU

Total Orders

1H2016

• New orders generated in H1 for a total contract value (TCV) of € 19 mln (+27%) against a churn rate lower than business plan figures Note: * Based on Total Contract Value

29

Revenues: Steady and Recurring Growth € ’000

Recurring Una Tantum Total Operating Revenues

Jan '15 Feb '15 March '15 April '15 May '15 June '15 July '15 Aug '15 Sept '15 Oct '15 Nov '15 Dec '15 Jan '16 Feb '16 March '16 April '16 May '16 June '16 2,814 2,842 2,883 2,871 2,903 2,965 2,991 2,995 3,029 3,085 3,140 3,137 3,189 3,192 3,194 3,278 3,327 3,329 202 193 583 227 512 495 433 304 616 489 633 1,502 484 684 1,598 704 325 851 3,016 3,035 3,466 3,098 3,415 3,459 3,424 3,299 3,645 3,574 3,773 4,639 3,673 3,876 4,792 3,982 3,652 4,180

Recurring

Total 19,509 4,645 24,155

Una Tantum

3,500

+1.0%* 3,000 2,500 2,000 1,500

+8.8%*

1,000 500 -00 Jan '15

Feb '15 March '15 April '15

May '15 June '15

July '15

Aug '15

Sept '15

Oct '15

Nov '15

Dec '15

Jan '16

Feb '16 March '16 April '16

May '16 June '16

Note: * Compounded monthly growth

30

NFP: Solid Cash Positive Business Despite Investments 

Investments amounted to € 20,0 mln mainly due to:  € 8.1 mln investments mainly in infrastructure of fiber-optic network and backbone  € 11.6 mln related to the investment in the AAE-1 Project

NFP 1H16 VS 1H15 € ’000 11,461

11,131 11,526

 The current extension of the national fiber-optic network is over to 9,302 km

3,886

 Total investment for the AAE-1 project as of 30 June 2016 is € 37.2 mln (out of total expected € 60,4 mln) of which € 32.6 mln (USD 37.4 mln) related to payments to AAE-1 Consortium  Linkem ‘s credit for Wimax disposal totaled € 11 mln to be fully paid up within 2017 (including interests)

NFP 1H2015

Long term loan for total € 30 mln (€ 21 mln + additional € 9 mln) subscribed with Unicredit, MPS Financial Services and BPM – currently drawn for € 9,0 mln

Operating cash flow

CAPEX

Change of financial assets

Loans and other

NFP 1H2016

Net Financial Position

€ ‘000

19,975 15,707

 Positive NFP at € 3.9 mln vs € 11.5 mln at Dec 2015 thanks to strong operating cash generation partly offsetting new investments capex 

(10,512)

(19,720)

11,526 8,234 4,710

3,886

57 2010

2011

2012

2013

2014

2015

1H2016

31

Financial Metrics: Focus on Cash Ebitda Financial metrics are often adopted by investors and equity analysts as a surrogate for cash flow to assist them in comparing results on a consistent basis without regard to IRUs and non-cash items effects, such as depreciation and amortization, which can vary significantly depending on accounting methods or non-operating factors. This is particularly relevant for heavily infrastructure businesses as Retelit

a)

b)

€000 EBITDA -IRU annual revenue +IRU Tcv Delivery "no O&M" +KBC e GEM transactions charges TOTAL Adjustment

2014 7,920 (3,321) 4,494 2,032 3,205

2015 11,043 (5,250) 7,846 2,596

1H 2016 7,107 (4,002) 8,993 4,991

Cash EBITDA Delta b) - a) Delta % a) vs b)

11,125 3,205 40%

13,639 2,596 24%

12,098 4,991 70%

Capex Business as is

10,687

14,167

8,272

438

(528)

3,826

Cash Ebitda - Capex

Cash EBITDA Represents the capability of a company to generate operating cash flows net of working capital effects It is defined by Retelit as reported EBITDA further adjusted to take into consideration IRU effects on the difference between billings and revenue Note that Retelit in the first year of an IRU contract recognizes to P&L only 30% of the total contract revenue whilst 100% of the cash is collected up front

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Contacts IR CONTACTS IR Manager

RETELIT ON LINE Website: http://www.retelit.it

Dario Pardi [email protected]

Linkedin: https://www.linkedin.com/company/retel

Phone +39-02-202045.1 Fax +39-02-202045.225

Twitter: https://twitter.com/Retelit

Viale Francesco Restelli, 3/7 20124 Milan

NEXT EVENTS IR Consultant Vincenza Colucci CDR Communication Srl Tel. +39 335 6909547 [email protected]

Media Consultant Angelo Brunello CDR Communication Srl Tel. +39 329 2117752 [email protected]

Institutional:

ICT:

November 9th 2016

October 2016

Retelit Q3 2016

Submarine Networks World November 2016

Capacity Europe IT Director Forum Digital Italy Summit

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Disclaimer

THIS DOCUMENT HAS BEEN PREPARED BY RETELIT S.P.A. (THE “COMPANY”) FOR THE SOLE PURPOSE DESCRIBED HEREIN. IN NO CASE MAY IT BE INTERPRETED AS AN OFFER OR INVITATION TO SELL OR PURCHASE ANY SECURITY ISSUED BY THE COMPANY OR ITS SUBSIDIARIES. THE CONTENT OF THIS DOCUMENT HAS A MERELY INFORMATIVE AND PROVISIONAL NATURE AND THE STATEMENTS CONTAINED HEREIN HAVE NOT BEEN INDEPENDENTLY VERIFIED. NEITHER THE COMPANY NOR ANY OF ITS REPRESENTATIVES SHALL ACCEPT ANY LIABILITY WHATSOEVER (WHETHER IN NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY FROM THE USE OF THIS DOCUMENT OR ITS CONTENTS OR OTHERWISE ARISING IN CONNECTION WITH THIS DOCUMENT OR ANY MATERIAL DISCUSSED DURING THE PRESENTATION. THIS DOCUMENT MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON. THE INFORMATION CONTAINED HEREIN MAY INCLUDE FORWARD-LOOKING STATEMENTS THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS ABOUT THE COMPANY’S BELIEFS AND EXPECTATIONS. THESE STATEMENTS ARE BASED ON CURRENT PLANS, ESTIMATES, PROJECTIONS AND PROJECTS, AND CANNOT BE INTERPRETED AS A PROMISE OR GUARANTEE OF WHATSOEVER NATURE. HOWEVER, FORWARD-LOOKING STATEMENTS INVOLVE INHERENT RISKS AND UNCERTAINTIES AND ARE CURRENT ONLY AT THE DATE THEY ARE MADE. WE CAUTION YOU THAT A NUMBER OF FACTORS COULD CAUSE THE COMPANY’S ACTUAL RESULTS AND PROVISIONS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENT. SUCH FACTORS INCLUDE, BUT ARE NOT LIMITED TO: TRENDS IN COMPANY’S BUSINESS, CHANGES IN THE REGULATORY ENVIRONMENT, ITS ABILITY TO SUCCESSFULLY DIVERSIFY AND THE EXPECTED LEVEL OF FUTURE CAPITAL EXPENDITURES. THEREFORE, YOU SHOULD NOT PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS. RETELIT DOES NOT UNDERTAKE ANY OBLIGATION TO UPDATE FORWARD-LOOKING STATEMENTS TO REFLECT ANY CHANGES IN RETELIT’S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGES IN EVENTS.

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