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Edited Transcript of ATL.MI earnings conference call or presentation 10-Mar-17 4:45pm GMT

Thomson Reuters StreetEvents

Q4 2016 Atlantia SpA Earnings Call

Rome Mar 10, 2017 (Thomson StreetEvents) -- Edited Transcript of Atlantia SpA earnings conference call or presentation Friday, March 10, 2017 at 4:45:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Massimo Sonego

Atlantia SpA - Head of Corporate Finance and Investor Relations

* Marco Troncone

ADR - Director of Planning

* Giovanni Castellucci

Atlantia SpA - CEO

* Giancarlo Guenzi

Atlantia SpA - CFO

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Conference Call Participants

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* Nicola Pessina

Mediobanca - Analyst

* Enrico Bartoli

MainFirst - Analyst

* Thomas van der Meij

Kempen & Co - Analyst

* Elodie Rall

JP Morgan. - Analyst

* Stefano Gamberini

Equita SIM SpA - Analyst

* Marcin Wojtal

Bank of America. - Analyst

* Vittorio Carelli

Banco Santander - Analyst

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Presentation

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Operator [1]

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Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Atlantia Full Year 2016 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. (Operator Instructions) At this time, I would like to turn the conference over to the Atlantia's management. Please go ahead gentlemen.

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Massimo Sonego, Atlantia SpA - Head of Corporate Finance and Investor Relations [2]

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Good afternoon, everybody. I'm here with the management of Atlantia, Mr. Castellucci, Chief Executive Officer; Mr. Guenzi, Chief Financial Officer and this is Massimo Sonego. I will drive you quickly through results. I'll try to be very synthetic and then we'll go straight to Q&A session in order to answer to your questions as more detail as we can. Starting from the presentation, on page 2, we have a quick summary. We think, we're very happy about the results of 2016. We had a strong growth in EBITDA plus 7% and a strong growth in net income plus 10%. I'm referring to like-for-like numbers because we had some one-off in 2016. In particular, the EBITDA plus 7% is the result of several components. First of all, the organic growth in the motorway Italian business plus 7%, a plus 7.5% in the overseas business and a strong increase about 14% on a like-for-like basis of the EBITDA of Aeroporti di Roma. Actually we had a one-off with Pavimental that basically is account for approximately minus EUR60 million impact due to the new rebate applied by the Ministry on the price list, if you strip out this effect that actually means a lower amount of CapEx for Autostrade, so will be recouped in the next year because of the saving in amortization next year, so it will be recoup in the P&L in the next years. The total increase in EBITDA is plus 7%. Same for net income, actually if you strip out the one-off, the net income would have grown by more than 30% and the main impact was the 2015, EUR166 million one-off due to the bond buyback that we accelerate in 2016. If you strip out this effect, then increase in net income is plus 10% and this is after the increase in dividends we are paying, because we are paying through the usual payout an increase in dividend compared to last year equivalent to plus 10%. Net-debt decreased as a multiple of EBITDA it was 3.3 times, now it is 3.1 times. Let I point out that the acquisition of Aeroports de la Cote d'Azur actually is reflected only on December 31 because it is consolidated only in the balance sheet while it will contribute full in the P&L starting from January 1, 2017. We mark the increase in CapEx, we spent EUR1.4 billion as a result of the completion of some works in Italy in particular you know that in 2015, we completed the famous Variante di Valico saw the doubling of the Bologna-Florence stretch. While actually in 2016, we completed the opening of the new Pier and commercial regarding the airport of Fiumicino. So this is explaining why we had an increase more in the airport size rather than a slowdown in CapEx in the Italian Motorway. Moving quickly to page 3, now, you know that the Group is organized along four main business platform and Italian motorways still remain the big chunk of Atlantia business accounts for approximately 68% and is basically and empowering Italian business, but if you take into account that we have international motorway business and a big portion of reported business is international or GDP -- global GDP related. In the end, we can say that 25% of the EBITDA of the Group is driven by foreign travelers or business, while 75% still remains in [it]. We think that the new platform -- organization by platforms has some benefit. First of all, we made a clear allocation of that in each platform on basis in structure that will be fully non-recourse in few years, when the guarantee from the parent company will follow in 2026. This will allow also some faster upstream of cash because we are bringing foreign subsidiaries under the Data Controller Atlantia. And as you know, we are also in a process to select potential new planners in some platform and having split the business in several platform, so we can identify the best partner for each one.

Coming to the main performance of each business segment. Italian motorway business, as I said marked an increase in EBITDA on a like-for-like basis of approximately 6%. This is mainly the result of tariff increases that grew up on the Autostrade network by 1%, but more importantly by a strong increase in traffic that grew by 3.2% on average in 2016. Let I tell you that year-to-date, we are seeing a traffic growth that is in line with the last quarter of 2016. So for the moment, we are not seeing a strong slowdown, so we are still moving the line -- the last quarter, so in the range of [2% 2.5%]. Of course, you have to strip out the leap year effect and we also had some snow fall. So you should strip out all this effect, the underlying traffic is still growing at a good pace.

In terms of investments, the main completion in 2016 was the completion of the A14 third lane while we completed as I said that the Bologna-Florence doubling for the main portion is Variante di Valico , and we are working on the residual portion of the Florence Interchange, northward and [southward] and basically this is the 36 kilometer of new lanes that are still missing.

On Genoa Bypass that is the last investment as part of the 2002 Master Plan to be approved. We are still actually waiting for the approval from the Ministry, only after that authorization we can start the work of these large projects. Moving to international, I would say that we are seeing results very good in Chile and Brazil where we saw an increase by 6%, by 10% in 2016 in terms of kilometers travel while unfortunately in Brazil, we are still seeing a deterioration in kilometers travelled as a consequence of the lower economic environment in that region.

All in all, basically, this is a business that has contributed EUR500 million of EBITDA to the Group. The ADR mark an increase in traffic in the range of 2% and again, I would say that this is the same increase we have seen today on a year-to-date basis. Actually if you take into consideration the leap-year effect, it is greater and all-in-all in 2016 mark an increase of EBITDA close to 14% on a like-for-like basis and this is the result of passenger growth as I mentioned, as well as [tariff] increase that in 2016 were close to double-digit.

More importantly in 2016 at the end in December, we opened the new commercial area and the new Pier new nuclear in the Extra Schengen portion of the airport. The plan is to move forward with the extension of the domestic and EU/Schengen area increasing the terminal one and adding a new pier again to increase the capacity of the airport for this portion of traffic and ideally, we would like to have to see this was completed by 2021. So we are very on track on this expansionary plan and increased quality. Quality, that as you see on page 9 is more and more perceived strong by our travellers, basically we are very proud by end of 2016 even before the opening of the new shopping mall, Fiumicino, right really at the top in terms of quality among the largest hubs in Europe. So we are very proud to have been able to turn around the airport from the last position to the top in very few years.

The last platform that became the new industrial development pillar of Atlantia is Telepass that as at the end of the reorganization, we commented before is now a direct subsidiary controlled by Atlantia. While we had an increase of payment means that includes onboard units, personal accounts and apps because now Telepass is also offering services of digital payment through iPhone and other smartphones increased by 7% and approximately [EUR11 million] payment means are active and we have a customer base of approximately 6 million users. The plan is to add more and more services, we are moving to a digital world and also Telepass is a strong and loyal system used by 6 million users. So we plan to expand the services and we just incorporate a new subsidiary that is asking for the banking license from Bank of Italy. So we will be fully allowed to provide digital payment services also in different fields. Internationally, we extended also the use of Telepass in many other European countries. So now we operate in [certain] countries, in Austria, Telepass will enter also in the Denmark market, in the Belgium market by this year, and more the idea is to extend all the services were passed in Italy also abroad. So this will become a line of the new line of business in Europe for Atlantia.

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Giovanni Castellucci, Atlantia SpA - CEO [3]

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If I can add few words about this performance, let me say that the 2% growth in EBITDA doesn't represent the profitability potential of this business. The EBITDA in 2016 is the result of massive commercial investments and advertising cost to increase the customer base and to incentivize customers in buying more rich product, so is the result of huge upselling effort done by us in the future. Thanks to all the products and [adds-on] we are introducing in the market, we do expect that the growth rate in EBITDA will be closer to double-digit if not double-digit. So we do expect a strong growth in next few years, thanks to a deeper product portfolio, a wider customer base and a larger footprint in other countries. So the 2% doesn't represent at all the potential in next years, but we will come to you with more precise and define strategic perspectives and targets in a couple of months when all this kind of initiatives will be more mature and ready to be communicated to the market. Thank you, Mr. Sonego, if you can go ahead.

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Massimo Sonego, Atlantia SpA - Head of Corporate Finance and Investor Relations [4]

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Thank you Mr. Castellucci, good to say that. I will move quickly on the financial side, basically on page 11 where you have a summary of our debt position, in terms what is more important is that, we have been able also in 2016 to extend the liability, our indebtedness of buying back some bonds. You know that our historical cost of funding in the end is still pretty high compared to the marginal cost of [debt]. Autostrade, there's a cost of debt of 3.9% in 2016 and ADR in the range of 3.2%, while as you can see at the bottom left of the page [received] recently EUR600 million bond from Autostrade per l'Italia at 1.8% yield to maturity and 1.6% from Atlantia, because also now Atlantia is an issuer of bonds. As a consequence, you can see on page 12, we have been able to cut some somehow the financial expenses. In 2015, we spent approximately [EUR516 million] then in 2016, we spent [EUR520 million]. Of course, I'm comparing results stripping out the effect of the buyback of bonds that had an impact one-off of EUR234 million in 2015. While as I said, debt is including, now are [further showing indebtedness], but it was not yet still reflected in the P&L. I will give the floor to Mr. Castellucci for closing remarks.

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Giovanni Castellucci, Atlantia SpA - CEO [5]

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I mean, before to enter into the Q&A section, let me, I mean, share with you some closing remarks. The performance is good, is solid as you have seen. And the start of 2017 is good as well, is good in the airport traffic, in the Fiumicino traffic because of very robust load factor performance is positive in this, is positive in the Italian -- the road traffic is starting to become at least neutral in Brazil, which is quite positive, as well as I mean, in general terms, after a couple of years of very negative results. We still have and we are still working on the optionality in the CapEx plan. As we said, several times, we are the only road concession operator with significant CapEx plan with good remuneration. Is Genova is article 15 coming from the 2007 plan is Fiumicino development, is Nice as well development, which will, I mean drive tariffs in the future in the positive direction. There is a huge potential for cost of capital optimization because of potential on cost of debt reduction and the different balance between debt and capital. You know that we are quite under-levered, which is good in terms of that there is room for improvement. And we believe that the growth of this Company in the future will enable us to I mean take advantage of that opportunity. The new organization will have, I mean the advantage of being more focused and which is more important to accelerate the -- I mean upstream of dividends, dividend it will be the name of the game in the next years, and this is why we are quite, I mean, comfortable about the sustainability of the dividend policy we already communicated to you, which is about distributing 10% more every year for a good numbers of years. So everything is in the right direction. We are in control of our future and I mean, all the basics of the business are going in the right direction or at least in direction we expected them to go. Thank you very much. And I mean, we are ready to answer to your questions.

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Questions and Answers

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Operator [1]

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Excuse me this is the Chorus Call conference operator. We will now begin the question-and-answer session.

(Operator Instructions) Nicola Pessina, Mediobanca.

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Nicola Pessina, Mediobanca - Analyst [2]

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Hello, good afternoon, everyone. Thanks for taking my questions. I would ask three if possible. The first one is that if we could have an update on the potential acquisition in Mexico, you mentioned a few months ago and in particular, I'm wondering if you could explain to us what would be the minimum return you consider as [feasible] for such deal. Secondly, on Brazil, the authorities are working up new concessions or expansions but Atlantia, in my view seems not to be part of the game for the time being. So I'm wondering if there is any specific reason for this and I'm wondering also if we could have an update on Rodoanel. Finally on Italy, I'm wondering, if in the scenario of increasing rates, you plan to take further initiatives to secure the cost of debt in the foreseeable future, and if you can provide any detail on these, thanks a lot?

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Giovanni Castellucci, Atlantia SpA - CEO [3]

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I will start on [RCO] about the return target in our investment. Let me say that I mean there is no final outcome about the process. The only thing that I can say that our requirements in terms of return on capital are quite demanding, our share with our partners and I'm not sure that these will lead to a transaction because our requirements for return on capital are quite high, but we cannot say more because the process is not yet definitely completed. On Brazil, let me say that we are not yet in the position to think that is the right timing to invest more for longer duration of concessions. So we are not excited about trade-offs with government about more investments for more duration of the concession. What we are interested in is in completing the Rodoanel transaction but I mean being not total completed Rodoanel and being the contract active after the total and final completion of the infrastructure there is an intersection missing. We still have time to exercise our call option and we will take all the time necessary to exercise for the right price and the right timing. Talking about cost of debt --

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Giancarlo Guenzi, Atlantia SpA - CFO [4]

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We demonstrated in the past that we are always ready to capture any opportunity to in terms of liability management operations. So we have done -- we cannot exclude that in the future. We can avoid something like this, mainly considering that all of us are seeing an increase in interest rates, so we cannot exclude in the future of operational like if to block the cost of debt in terms of it was for starting on buyback of our bond.

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Nicola Pessina, Mediobanca - Analyst [5]

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Okay, thanks a lot.

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Operator [6]

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Enrico Bartoli, MainFirst.

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Enrico Bartoli, MainFirst - Analyst [7]

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Hi, good evening everybody. A few questions from my side as well. First of all, a question on ADR, you mentioned the start of the new regulatory period. If you can give us some details about the new parameters and the impact that you expect on 2017 EBITDA. And also, you mentioned the additional opportunities for commercial revenues, you expect this year also by this point of view, if you can provide some details about the improvement in EBITDA that can be expected for this year from the commercial activities.

Second question is related to the possible disposal of minority stake in ASPI that you mentioned during the presentation in October. If you can update us, if I remember well the binding offers were expected in the end of February. If you can provide some details on the situation where we are. And on the cost of debt, if you can please specify the average cost that you had in 2016 and what you expect for 2017? Thank you.

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Marco Troncone, ADR - Director of Planning [8]

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Okay. It's Marco Troncone from ADR. Regarding the new regulatory period, I would say that the key parameter to be highlighted is the updated remuneration of invested capital, which has been revised and set in the amount of 8.52%, which is applicable for the period 2017 and 2021. It's worth saying also that this is the base WACC, the base remuneration on top of this, there would be also an additional WACC component applicable on what we call strategic CapEx which may be leading this number through an average blended WACC around 9% in the periods.

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Giovanni Castellucci, Atlantia SpA - CEO [9]

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On the commercial performances, with the opening of the so called [Alan Carpa], which is the commercial area for Extra Schengen. What we are seeing is a very good results well above budget for car categories, duty-free and the luxury goods and quite below budget results in food. We are working with subconcessionaire in order to improve the effectiveness and the traffic in food, so we believe that at the end we can catch up on food and keep the over performance on the other categories. So the results are above expectations, which is quite good for the numbers and results of ADR. Talking about traffic, as I said, capacity is not growing, but load factor is growing quite fast, which is very positive, because any increase in load factor normally is transforming to increase of capacity few months or few seasons later. Any increase of load factor means that there is better efficiency of planes and higher prices normally. And then therefore more profitability and then more incentive to increase capacity. This is why, we see every time very -- positively an increase in load factor. This is a good premise for mid-term growth.

ASPI process, let me say that when I said, end of February it was before the referendum, before the surprise, probably not, but let me say before the result of something that was perceived by the investors as potentially disruptive, which has not been the case by the way, but this is why, we released a little bit, the timeframe of the process. Now, we are telling our investors that we do expect the final binding offer between end of March and mid of April. They are proceeding, there is interest on the asset, and we will see at the day of final binding offers, what will be the outcome. Let me say that for the time being, the expectations we had at the beginning are more or less there in the process, reflected in the preliminary offers we got. Talking about cost, the last point.

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Giancarlo Guenzi, Atlantia SpA - CFO [10]

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Yes, about the cost of debt between 2016 and 2017. On the balance sheet, you can see that the cost debt for 2016 is in the range of 4.5%. We envisage for 2017 on a like-for-like basis to reduce the cost of debt in the range, in 80 basis point, 100 basis point area, considering that our (inaudible) has been done very, very good. And in, also you have considered that in 2017, we will have the impact on -- of the -- in the new perimeter of Aeroports de la Cote d'Azur.

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Operator [11]

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Vittorio Carelli, Banco Santander

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Vittorio Carelli, Banco Santander - Analyst [12]

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Good evening, all. Thank you for receiving my questions. The first one is related to the ASPI transactions and what you said about dividend, let's imagine that you perform successfully the sale of 15%, which should have meaningful impact on EPS coming from minorities there. Therefore, if you confirm a 10% percent increase in dividend, going forward, it would be quite stressful for the profit and loss let's see how the [replay] play out. So will you anyway confirm the 10% even with that amount of minorities on EPS, [hammering] the EPS, and this is the first question. The second is regarding [Mitza], on top of the price paid, have you had the (inaudible) equity in the asset and if yes, how much of it and regarding the share buyback, you launched last year. I would like to know how many shares you bought so far, and which is the average price? Thank you.

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Giovanni Castellucci, Atlantia SpA - CEO [13]

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First part of the question is, I mean is about the compatibility of disposal of 50% of ASPI with 10% growth rate in dividends in the next year. I mean, the two are compatible and I mean when we say 10% dividend growth in [ADR] is assuming a disposal of 15% in ASPI, talking about the equity we invested in Nice, let me say that our price according to what we understand was very much in line with the price of the number two bidder and most of the price has been financed via an acquisition financing. The overall debt which is nonrecourse an investment grade is above 10 times EBITDA, which is why we have been capable to secure the transaction with very good return on equity. I mean, considering the quality of the asset and being competitive on the price, thus thanks to leverage. Share buyback, I don't know what we can say, I ask our lawyers about the share buyback. Today, we have in between 9 million and 10 million of shares is a range of 1.3% of share, at the average price of [EUR21.5].

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Enrico Bartoli, MainFirst - Analyst [14]

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Okay, about the equity injection?

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Giovanni Castellucci, Atlantia SpA - CEO [15]

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Sorry, regarding Nice, the equity injection in the [vehicle] is EUR490 million.

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Massimo Sonego, Atlantia SpA - Head of Corporate Finance and Investor Relations [16]

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Sorry, this is our portion. So for 75%.

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Enrico Bartoli, MainFirst - Analyst [17]

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Okay, thank you.

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Giovanni Castellucci, Atlantia SpA - CEO [18]

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And there is the expectation to sell a 15% to a strategic partner, very present in the area, but it is too early to communicate, because we have not yet obtained the final approval from local authorities and the GSA, which is again the authority for airports in France. So we do expect to reduce a little bit our stake from 75% to 60%.

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Enrico Bartoli, MainFirst - Analyst [19]

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Okay. Thank you.

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Operator [20]

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Elodie Rall, JP Morgan.

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Elodie Rall, JP Morgan. - Analyst [21]

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Hi, good evening, everyone. Just two questions. On my side, first of all to come back on Nice airports. I was wondering if you have fine-tuned guidance there of what we should expect on EBITDA growth and revenue contribution, maybe retail performance, since you had a couple of months to look at it since the last Investor Day. And second on Genoa CapEx, I was wondering if you had an update there on the discussions that you are having with the authorities. And what will be the potential concession duration increase there? Thank you.

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Giovanni Castellucci, Atlantia SpA - CEO [22]

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The first question is about Nice, the second is about ASPI, isn't it? Genoa and therefore ASPI?

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Elodie Rall, JP Morgan. - Analyst [23]

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Yes.

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Giovanni Castellucci, Atlantia SpA - CEO [24]

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So about Nice, I mean what we are seeing today is very much in line with our assumptions at the time of the offer. Traffic is doing well, the management is buying the acquisition plan, in general terms, in the highlights. So we have nothing else and more to say, more than what we already said probably in October to you -- you can ask to my colleagues to get the presentation we prepared at that time. Talking about Genoa Bypass and the concession extension, I can confirm to you that there are talks between the government and the European Commission, more precisely, the DG competition. I mean there are discussions. We believe that there are rooms for agreement that the French example is a good benchmark for everybody, but we have no control on timing, of course, because the timing will depend on the discussions and agreements between Italian government and the European community. But there are talks open and the talks are progressing. This is what we know but we are not directly, totally involved.

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Operator [25]

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Thomas van der Meij, Kempen.

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Thomas van der Meij, Kempen & Co - Analyst [26]

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Good evening gentlemen. Actually, first question I read some rumors that Macquarie is looking for an exit of Brussels Airport. You were mentioning that's potentially interested, is that true, are you looking at the asset?

Secondly, I mean you indicated that you want to reduce your stake in Nice, could you help us and give a bit of a timeline there? Will it happen this year or is that more mid-term.

And finally, I mean, you indicated that the 2% growth rate of EBITDA for Telepass is currently not reflecting the growth profile. When do you think your platform is mature? So what is like the number of years we can see double-digit growth there? Thanks.

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Giovanni Castellucci, Atlantia SpA - CEO [27]

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Talking about airport assets from Macquarie, I mean we are interested in airports, but we are interested in controlling airports, not in having financial stakes together with others in co-control, no consolidation situation. So we wonder whether there will be anything for sale with a clear path to control for us. This is why we are looking at everything including Brussels, including Copenhagen and so on. But, I mean, the probability that something will come on the market with a clear path to control for us is not so high.

Last point -- third part of the question is about Telepass, I mean I don't want to anticipate today what could be a sustainable growth rate of EBITDA. In the next years I do prefer to have another meeting or a presentation in a couple of months to explain to you what we are doing, what we have done to be dominant in the payment systems for mobility of cars and people. We believe that we have a unique combination of assets which is in a very general -- I mean, at the very general level the combination of a bank account with direct debiting which is Telepass. The plate number and the license number altogether in a unique data base.

This is something that nobody in the world has and nobody in Italy has. And we believe that these can help us to become dominant in the payment system for mobility. As an example, anytime we enter in a new market, could be the -- I mean the parking in the center of the cities, could be parking in the airports, could be tolling in free flow, toll roads in the North of Italy, we immediately get a market share which is in the range between 60% and 80%, I will not say from day one, but probably day ten, we start to be in that range.

So our solution is so strong, so efficient and so dominant that we can be really effective. This is why the 2% which is the result, as I said, of huge one time investment for up-selling to our customers is not representing the potential of that business and we will be very glad to present to you, I mean, more details and strategic directions of our business in order to make you more, I mean, aware about what we are planning to do and why we decided to make Telepass one leg of our Group.

I mean the legitimacy of being one of the four legs is because we believe that we can create a lot of growth and a lot of value there. And I mean premier results are very promising. The second part of the question, I didn't got.

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Giancarlo Guenzi, Atlantia SpA - CFO [28]

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Can you repeat the second question, I guess it was about Nice development in mid-term. Do I understand correct?

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Thomas van der Meij, Kempen & Co - Analyst [29]

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Yes, so [you didn't get] it, if you want to reduce your stake is the plan for this year or is that more mid-term?

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Giovanni Castellucci, Atlantia SpA - CEO [30]

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I mean, I believe that we can finalize in weeks if not months or months if not week, I mean it is already almost finalized, we are waiting for the approval but the contract is there already. So there are technical delays but we do not want to go below 60%. We believe that staying at 60% is right for us.

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Operator [31]

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Stefano Gamberini, Equita SIM.

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Stefano Gamberini, Equita SIM SpA - Analyst [32]

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Hi, good afternoon everybody. Three main questions; first of all regarding Aeroporti di Roma, could you help us to understand what could be the worst case regarding the Alitalia crisis for you, just to understand what could be the trend of traffic in 2017 and 2018, considering a collapse of the Italian carrier or what is the scenario that you expect for this crisis?

The second regarding ASPI and you said there was postponement for the timing of the sale of this 15%. If you can share with us what are the main concern that you found with investors right now? Is the political scenario? Is the increase of interest rates or the widening spreads that are the main concerns in this moment from the investors?

And also, if you can give us an idea of the trend of traffic that was so good at 2%, you said is the underlying in the first part of the year. If you can spend few words, what are the main drivers? Is the heavy-traffic, the light-traffic or what are the areas that are moving well? And the very last question, if I may is, what is the level of debt that you have in ASPI right now and in the holding Company? Thanks.

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Giovanni Castellucci, Atlantia SpA - CEO [33]

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Of the question, will be Mr. [Sonego] to answer. I would start with the part regarding Alitalia. I mean, we do not have any precise scenario, because I mean, the way the company can have problems can have an impact on, I mean, the scenario of recovery for ADR. But what I can say is that, Alitalia represents not more than 31% of aviation revenues, which is quite low if compared with hubs. Normally hubs depend much more than Rome on the main carrier in the hub. The presence of Alitalia is quite limited.

Let me say as well that our experience is that, any time a carrier get out, we experienced with EasyJet in 2016, there is another carrier willing to enter and to fill the gap. This is what happened between EasyJet and Ryanair, for example. So, frankly speaking, we are not investing so much time in understanding what could be, I mean, the recovery scenario also because let me say that what I see is that Etihad and the banks are willing to support recapitalization of the company, I mean a discontinuity in the company management and operations.

So, I consider very unlikely the possibility that there will be no recovery and no recapitalization of Alitalia. This is what I see and this is what I mean the bank said, putting more money in the December, in January and in February, putting more money. And I mean without being consequential and the consequent on the next recapitalization would be totally irrational. So I would say that these probability is not something we are investing our time in understanding the implications. But I will start from what I said, Alitalia is a mere 31% of aviation revenues, which is probably the lowest presence of an hub carrier in a hub in the world.

The other part of the question is, I mean the 2% in traffic growth in -- I would say that is better in heavy traffic than in light traffic which is good and it is better in the north side of Italy than in the south side of Italy. So it's quite understandable, so nothing new, nothing strange; good news, the fact that after a very good year we still continue to have a good year.

The first part of the question was about postponement. I mean, let me say that what I said a few minutes ago was that after the referendum we decided to release the timing because we wanted investors to better understand the Italian situation, the European situation, and I mean losing some emotional involvement that in December and January was very high. This is why we laterally said to investors that I mean instead of having the final and binding offer in February, we wanted to have that between the end of March and the beginning of April.

But it is not a postponement, it is simply, I mean a releasing timing, a decision we have taken before the preliminary price indication of December to give people more time to think about and I would say that this time has been invested wisely by us because I mean timing is clarifying a lot of, I mean concerns there were in the market a couple of months ago or a month ago.

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Massimo Sonego, Atlantia SpA - Head of Corporate Finance and Investor Relations [34]

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With regard to your last question about the lateral indebtedness of Autostrade per l'Italia after the full restructuring, so including the transfer of Telepass, the transfer of the overseas assets and the dividend payment expected between April and May, the final net debt on EBITDA of the Company would be in the range of 4.5 times. So, extremely sustainable and in-line with the present one.

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Operator [35]

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Marcin Wojtal, Bank of America.

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Marcin Wojtal, Bank of America. - Analyst [36]

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Good afternoon. I have two questions; the first one is on your CapEx plans in Italy on the Genoa Bypass and the 2007 plan. I mean those are still showing in your slides as not authorized. Has there been any update on that in the last few months and when do you expect the construction on those CapEx plans to actually start?

And question number two is actually on your new structure where you have a holding Company and then you have a number of operating companies and you are mentioning in your slides, a faster upstream of cash. So can you provide some color on the dividends that all those operating companies will be paying to the Italian holding, for example ASPI. I mean, what is the dividend policy for ASPI dividends to Atlantia and also, are you receiving any dividends from the Latin American motorways and airports?

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Giovanni Castellucci, Atlantia SpA - CEO [37]

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Talking about the timing of authorization from the government let me say that the timing of authorization is linked more or less with the negotiations between Italian government and European community about concession extension. I would suspect that the two will come together, I mean in the first half -- could be in the first half of this year, but I have a limited visibility about the timing of negotiations between Italian government and European community. The other part of (multiple speakers)

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Giancarlo Guenzi, Atlantia SpA - CFO [38]

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Yes. In terms of dividend upstream; dividend, just to be clear the reason, we have no constrain in terms of distribution of divided between Opco and Holdco. So our policy is to remain in focus and to distribute 100% of the net income of our operating company.

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Marcin Wojtal, Bank of America. - Analyst [39]

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Okay, thank you.

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Operator [40]

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Nicola Pessina, Mediobanca.

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Nicola Pessina, Mediobanca - Analyst [41]

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Just a few follow-up questions, first of all, a clarification on traffic. I'm wondering if traffic on Italian motorways is positive or negative in the first quarter of 2017 for the time being at least, considering the challenging comparable basis.

Second, you said before that you want to be investor partner and you want to have control of the airports you eventually buy. So I'm wondering if you already have contacts with the other shareholders of Save for buying out their stake. Third on Nice, if we could have an update if any, on the regulatory review underway, and last point on SAM, if we could have an update on the situation of the concession?

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Giovanni Castellucci, Atlantia SpA - CEO [42]

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Let me say about traffic, I mean, first quarter nobody knows, because first quarter will include March and the future, I don't know, I can't tell you what the year-to-date situation. Excluding the impact of the leap year, today as I said, we are well into the positive side. We are slightly above, we can say 2%. We are 2.4% year-to-date, excluding the impact of leap year, which is quite positive after a strong 2016.

Talking about SAM, Autostrade Meridionali, no news, I will not say good news, because I mean we are continuing to keep the EBITDA, the cash flow of the company, but we don't keep the final down payment. So we are in a neutral situation, but not a bad situation.

Talking about Save. Let me say that, I mean we have a 23%, 22% of the company. For the time being, we do not see enough -- mobility of shares and stakes to imagine our, I mean intervention in the capital. What we wait is a financial investment that we believe that whatever will happen we'll be at higher prices that what we have paid. So I mean, our position is quite safe.

Yes, I mean in this, there is no regulatory review in the sense that, I mean we bought, we have, I mean highlights of the contract included the package for privatization, now we are waiting for the finalization of the details of the contract. The process is ongoing, it is not yet finished. As far as we know, I mean finished very recently for Aeroport de Paris. So, I do assume that the French administration is proceeding with a certain order from the bigger to the smaller, so now is our round and we hope to finalize the contract quite soon based on what the government put in the package for privatization.

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Operator [43]

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Enrico Bartoli, MainFirst.

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Enrico Bartoli, MainFirst - Analyst [44]

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Hi, sorry. Couple of questions as a follow-up. First of all, on external growth opportunities, you commented about the Mexican assets, can you update us on other processes, other assets in which you are involved in this moment in terms of possible disposal programs?

A second question is related to, if you can give us an indication of the impact on your tax rate from the reduction of the corporate tax rate in Italy this year? And in general, is it fair to assume that in 2017 we can expect a significant increase in EPS considering that you indicated a reduction in your cost of debt and I guess, there will be also a positive impact on taxes. Thank you.

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Giovanni Castellucci, Atlantia SpA - CEO [45]

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I cannot give to you any further information about potential transactions or deals. The only reason why you got the information about RCO and Mexican was because it was a tender, even if a private tender everybody knew about the existence of that tender. But I mean, I cannot say to you anything more about the potential initiatives.

On tax rate I ask my colleagues.

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Giancarlo Guenzi, Atlantia SpA - CFO [46]

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Tax rate cut is effective starting from 2017. So we're expecting a saving tax approximately EUR20 million plus.

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Massimo Sonego, Atlantia SpA - Head of Corporate Finance and Investor Relations [47]

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If I'm not wrong I see no more questions request. So, thank you very much. I wish you a very pleasant weekend and for any further question we can discuss later, our Investor Relation desk is available. Thank you very much.

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Giancarlo Guenzi, Atlantia SpA - CFO [48]

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Thank you very much. Bye-bye.

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Operator [49]

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Ladies and gentlemen, thank you for joining. The conference is now over, you may disconnect your telephones. Thank you.