At this time, I would like to turn the conference over to Mr. Andrea Moretti, Head of IR of Rai Way. Please go ahead, sir.
Thank you, Operator. Good evening and welcome to everyone. During today's presentation, we will cover full year 2024 financial results, operational achievements, and we'll finally provide an outlook for 2025. As usual, today's speakers will be our CEO, Roberto Cecatto, the CFO, Adalberto Pellegrino, and Giancarlo Benucci, our Chief Corporate Development Officer. Mr. Cecatto will start with an overview of Rai Way's financial results during its first decade as a listed company on page four. Please go ahead, sir.
Thank you, Andrea, and good evening to everybody. As Rai Way went public in November 2014, we swiftly celebrated our first 10 years on the stock exchange, which marked a successful growth both for our financial and consequently for the stock price. Stripping out the accounting boost from IFRS 16, our adjusted EBITDA jumped over the period by over 66% and reached a record level of 63.3% of revenues compared to the 50.7% in 2014. Net income is up 2.7 x, going from EUR 34 million to EUR 90 million, and almost every euro was distributed over the years to our shareholders, who have already seen more than 86% of their initial investment returned through dividends. This was also followed by our strong recurring cash generation, which almost doubled, reaching EUR 118 million in 2024 from an initial level of around EUR 63 million.
You will not find it in the chart, but that translated into a 10-year total shareholder return of 160%, made of 86% increase in the share price and 73% dividend payout. We believe the room for improvement is not yet over. Let's now move to the main topics of today's presentation summarized on slide five, and specifically to our 2024 financial and operational achievements. Starting with an overview of the 2024 numbers, which will be covered in detail by Adalberto, our CFO, I would like to underline that we closed the year with results which were even better than our initial expectation. Core revenue growth has doubled the CPI rate, 1.5% versus 0.7%, thus demonstrating that our reference markets still offer room for growth. In addition, we have recorded the very first revenue from our brand new diversified assets, the Content Delivery Network and the edge data center.
As per the adjusted EBITDA, it grew by 2.9% to a record of EUR 185.6 million. We carefully manage our cost base to cope with higher energy tariffs and the planned increase in diversification startup cost. In 2024, we invested EUR 55 million, half of which in the last quarter of the year. Almost EUR 40 million were allocated to development initiatives, and we will see in a while. CapEx benefited from a record cash generation that hit EUR 118 million in terms of recurring free cash flow to equity. That will also allow us to pay out 99.8% of net income, or EUR 89.7 million, through dividends, meaning 5.7% dividend payout calculated on yesterday's closing share price. In operational terms, 2024 was primarily the year in which we launched our new four-year industrial plan, setting strategy, initiatives, and capital allocation for the coming years.
The plan provides Rai Way with a clear industrial positioning, renewing its focus on two business segments: media distribution services and digital infrastructures. It also preserves the company's distinctive characteristics, such as revenue predictability, profitability, margin protection, and the shareholder remuneration. At the same time, it addresses the levers to unlock Rai Way's full potential. You surely remember that the pillars of the plan are indeed the announcement of traditional business cash generation, the diversification that guarantees returns, growth, and sustainability, and last but not least, external growth, boosting size and capital structure optimization. To give substance to the plan, we also had shared with you the priorities for the plan execution. I believe that the ongoing activities and achievements that I am about to illustrate show that direction is the right one.
First, in order to enable and make this execution efficient, we acted early on some levels, such as the new organization, absolutely relevant tool, and then sourcing of skills, especially at the commercial level for new services. On the traditional business, starting from the media distribution segment, you might remember that back in July, we had anticipated the [U2U], the design activities, and the negotiation with Rai for the extension of DAB radio network. Today, we finally communicate the signing of the contract. As detailed on page six, it is an extensive project aiming to improve service for end users on highways and highly populated centers. By investing more than EUR 50 million between 2025 and 2026 to extend the network on additional 200 sites, Rai Way will bring the Rai DAB coverage from the current 55%, more or less 60%, to at least 85% of the population.
The internal rate of return of the project on a leverage basis remains in line with the industrial plan target, meaning at least 10%. Therefore, confirming the usual rule of thumb that applies to new services to Rai, resulting in approximately EUR 0.2 million of additional revenues per each EUR 1 million invested. Moreover, it's relevant to underline that this project, together with those already implemented in 2024, will allow us to cover 70% of the whole development CapEx dedicated to Rai assumed in the entire business plan. Moving back again to slide five and to the traditional business performance. In the digital infrastructure segment, we have registered a gradual but positive acceleration in tower hosting performance, in particular supported by the high single-digit growth of fixed wireless access providers and radio broadcasters, both representing the sweet spot for our towers.
With reference to diversification initiatives, both the first five edge data centers and the Content Delivery Network are now operational, with the first, albeit still limited, revenues reported during the fourth quarter of 2024. We performed a test on the CDN with some of the leading national and international content providers and then confirmed its functionality and the performance in terms of latency and backbone decongestion, benefiting especially the quality of the live streaming. We have now shifted to handling real traffic, reaching real end customers, and we are discussing with content providers future collaboration models in terms of volumes, pricing, and commitment. On the data center side, we are building up an ecosystem of resellers and a pipeline of prospects that will fuel capacity utilization in the coming months. We highlighted some data on page seven.
In just a few months, we have engaged as partners more than 20 system integrators and vendors who see the opportunity to offer colocation in our assets as a way to strengthen their own offering. We also manage marketing activities and relationships with the most relevant prospects directly. We have met with more than 200 prospects, sent commercial offers in the first couple of months of 2025, representing a potential revenue backlog of almost EUR 6 million. As of today, more than EUR 500,000 have already been converted into signed contracts, while considering collateral acceptance of the offers that we have presented and the new offers that will be submitted in the coming months, we expect the level of contracted backlog to increase materially through the year, also contributing to the 2025 revenues.
Waiting for appropriate take-up of low-latency services, the market today is, as we see, predominantly focused on proximity. We demand the mail incoming from medium and medium-small size enterprises that prefer to keep their data and service as close as possible. In all the interaction with prospects, proximity emerges as a concrete use case and as one of the key factors of choice. Moreover, on proximity, the competition is relatively limited, especially when viewed in conjunction with the quality of our brand new state-of-the-art data center. At the same time, colocation choices are usually part of a broader decision process related to the evolution of IT architectures and cloud migration that clearly take a little bit of time. Nonetheless, we remain confident to be well-positioned to successfully intercept this rising demand.
Let me also add that the evidence that we are receiving, in particular in terms of use cases enabled by our infrastructure, currently the proximity, is suggesting us to slightly reshape our rollout plan, prioritizing the expansion of data centers in the more industrialized areas over nationwide coverage, which would become more important for low-latency use cases. This could also lead to a slight rationalization of the investment over the planned period as the capacity expansion costs less than a new data center with equal power, potentially even slightly improving the results. We will see that while discussing the 2025 outlook after Adalberto goes into details about 2024 financials. Please, Adalberto, go on.
Thank you, Roberto. Good evening from me as well. We are now on page eight, which provides us with an overview of 2024 results, and where you may see the solid performance we had in the year already commented by Roberto. To have a better understanding of each figure, I suggest to go straight to the next slides. Slide nine on core revenue, we see the trend which grew by 1.5% above EUR 276 million. Media distribution services were up by 1.4%, reflecting a number of effects, including the 0.7% increase in Rai fixed consideration due to the CPI link. A significant amount of new business with Rai, as you can see in the chart below, new services were up by a little bit more than 10% year on year.
We have an increase in revenues from local broadcaster players, and we also had an initial small but important contribution from the commercialization of CDN services. As per the digital infrastructure revenues, they no longer relate to tower hosting only because we have the first contribution of edge data centers as well. Overall, they grew by 2.4%, but please note the strong performance of digital infrastructure in the last quarter. If we rule out what can be considered non-recurring, so basically prior year adjustment and the very last effects from refarming, underlying growth was 3.9% year on year instead of 2.4%, and + 5.8% on a quarterly basis. The same can be said about third-party revenues.
If we go back to our previous revenue breakdown, you see Rai turnover growing at a CPI plus rate, and third parties up by 4.7%, which turns into + 5.6% year on year when cleaned, and + 9.1% on a quarterly basis. A very good performance. Moving to OpEx, next slide, 10, you may appreciate once again our effort to reduce cost. Rai Way total operating expenses in 2024 are substantially in line with the previous year, EUR 92.4 million in 2024 vis-à-vis EUR 92.6 million in 2023. Personnel costs are equal to EUR 46.3 million, both in 2024 and in 2023. However, excluding non-core components, mainly capitalized personnel costs, the overall costs show an increase of about 3% year on year, as highlighted in the table below right. Operating costs, other than personnel, amounted to EUR 46.1 million, down by EUR 0.2 million compared to 2023.
Here again, it is important to focus on some of the details that justify this trend, which are highlighted in the table at the bottom right of the slide. Without considering non-core items, other OpEx would be up by EUR 1.1 million, but here it's important to isolate the impact from diversification initiative, which began to be tangible if we analyze the year-on-year change. In fact, the increase of EUR 1.1 million, as you see in the last column of the table, is completely attributable to the diversification initiatives. Without this impact, the other OpEx related to the traditional business are essentially stable, showing a reduction of EUR 0.1 million year-on-year compared to 2023. To better understand the overall trend, it is important to highlight a further impact due to the electricity cost, which led to an increase in related expenditure of EUR 1.7 million year-on-year.
Without considering the impact of diversification initiatives and the impact of the electricity cost, other OpEx show a strong reduction, EUR 1.7 million, confirming the company's strong focus on cost management. If we consider personnel costs and other operating costs together, the total value of the cost of the traditional business shows a reduction of EUR 0.2 million, as shown in the last row of the table. Technical note, this value is the algebraical sum of + 1.6 and - 1.7, and it is not - 0.1 just because we have taken into account all the decimals. Next slide. Revenue trends and action on costs just commented translated into an adjusted EBITDA, which was up almost 3%, reaching EUR 185.6 million, with a margin on sales that reached 67.2% from the previous 66.3%.
Differently from last year, we didn't record significant non-recurring items, so that the reported EBITDA is very close to the adjusted one, while in 2023, we accounted for over EUR 5 million of non-recurring personnel costs. D&A were higher, in coherence with the trend of our industrial plan, as they are increasing, reflecting the growing amount, the increasing amount of our development CapEx we are deploying. Anyway, at EBIT level, we recorded a further improvement, + 4.7% year-on-year. Higher financial charges are linked to the rise of interest rates, as well as from a higher amount of average debt during the year. Last, in light of a basically stable tax rate year-on-year, we have a benefit in the last quarter due to some tax benefit. Our net income came out slightly below EUR 90 million, marking an increase of 3.7% and a new record for Rai Way.
Let's now briefly discuss the net debt bridge in slide 12. In particular, you see the EUR 185 million of EBITDA recorded in 2024 has been used to fund, first, a dividend payout amounting to EUR 86.5 million, almost 100% of last year's net income, sorry, of 2023 net income. Second, EUR 54.9 million in CapEx, and consider that out of this amount, about EUR 40 million were linked to development CapEx. We had a total of EUR 42 million of cash out by taxes and financial interest. Finally, a change in networking capital with a negative impact of EUR 16 million. Overall, we have a record recurring free cash flow to equity of almost EUR 120 million.
Final slide from my side on the dividend proposal, where we may see the details of our free cash flow to equity on the left, and above all, on the right, the trend since the IPO of our dividend per share that reflects the strong growth of our net income in the last 11 years, made available for development CapEx and for the distribution of our net income as a dividend. The proposal that we have, according to the results that we have just presented, is equal to EUR 0.3340 per each share, implying a dividend yield of 5.7% at current market prices, and bringing the cumulative distribution since the IPO at approximately EUR 670 million, which confirms once again our strong focus on shareholder remuneration. Let me now turn the floor back to our CEO for the final remarks, please.
Thank you, Alberto. Go to slide 14. Before talking about 2025 expectation, once a year, we provide an update on sustainability actions in accordance with the goals set up by our new sustainability plan, 2024-2027. During the first year of the planned horizon, Rai Way showed once again its commitment to ESG by completing almost all the initiatives planned for this year, as well as achieving all environmental targets. We also improved our sustainability scores in one case and confirmed them in the others, thanks to four factors: our commitment to energy consumption efficiency, the purchase of electricity from renewable sources, the implementation of cybersecurity policies, and finally, the achievement of the Top Employer certification for the ninth consecutive year.
On top of that, let me remind that the five edge data centers we completed and launched in 2024 were built according to the sustainability criteria. Go to the next slide. Now we have a look at the current year trends and the expectation. The outlook is certainly positive, with the underlying growth of our business remaining solid. While at the reported level, we expect an adjusted EBITDA not to be too different from the 2024 level. This is because it will be the result of the usual underlying healthy growth on the traditional business, but compensated by three main factors. First, a tough comparison vis-à-vis 2024 on the level of certain, let's call it, non-core items, such as other revenues, capitalized personnel, and other adjustments. In the guidance, they are assumed to be approximately EUR 1 million lower.
Second, the higher energy tariffs that, based on the current level of power futures, should account for a further headwind of around EUR 1 million. Finally, the higher derivative impact on EBITDA of the diversification initiatives, in line with the assumption on the industrial plan. Their impact should be roughly a couple of million higher than in 2024, pending the gradual increase in capacity utilization, with the typical profile for new infrastructure assets. Therefore, when neutralizing these effects, the growth of our business will remain steady and sound, in particular. In the media distribution segment, the Rai Fixed Consideration will increase as usual in line with CPI, providing for the 1.2% growth rate, while other components will grow high single digit supported by DAB coverage extension and rising CDN, the Content Delivery Network contribution.
In the digital infrastructure segment, we expect a CPI plus growth, with the plus coming from the rising contribution from data centers. On the opposite side, the increase, as I said, will be largely related to the diversification startup, while on the traditional business, the inflation will be modest and mainly due to electricity tariffs. From a different perspective, taking as a reference not the prior year, but the EBITDA progression assumed in our industrial plan, on an underlying basis, we are fully in line with the target. More specifically, a more gradual top-line evolution due to the lower CPI, the Mux 12, the DVB Mux 12, not being more tendered, and small delays in the contractualization of the new services to Rai will be compensated by strong cost control action.
On the CapEx side, maintenance CapEx level will be affected by some extraordinary non-recurring activities. Therefore, it is expected a few million euros above the normalized level of 6%-7% of sales. The development CapEx are expected in line with last year and mainly devoted to DAB rollout and diversification. Speaking of outlook, of course, beyond the organic trends, in the context of what was communicated by our major shareholders and us last December, we are working now on the industrial analysis regarding a potential aggregation with Ei Towers. I can only confirm our commitment and our constructive approach. Our objective is to pursue a result that is rational under all relevant profiles, meaning industrial positioning and future sustainability, as well for sure as shareholders' value creation.
Please forgive me if I will avoid any further comment beyond what has just been said and what was already communicated about purpose and timing in December. I assuredly understand that this is a sensitive process, also from a confidentiality profile, as it involves several actors. That said, we are now ready to answer your question. Thank you very much for your attention.
This is the Chorus Call Conference Operator. We will now begin the question and answer session. To enter the queue for questions, please click on the Q&A icon on the left side of your screen and then press the raise your hand button. Please do not mute your microphone locally, and when announced, make sure you turn on your webcam in the pop-up window. If you are on the phone instead, please press star and one on your keypad. The first question is from Fabio Pavan of Mediobanca. Please go ahead.
Y es, hello. Thank you, first of all, for the details you shared with us in the presentation on the edge data center, which I find extremely interesting. Thank you for taking my question, which refers to the second leg of this data center project, so the hyperscale. Is there any news on the timing for the permission? Is the plan on that part of your midterm ambition confirmed? Thank you very much.
Let me say thanks for the question. You know that there have been a few stop-and-go, which is absolutely, unfortunately, normal in this type of procedure in Italy, but we see the process approaching, hopefully, positive conclusion in a short time. If concluded soon by accelerating the procurement and the final design phase, we will still be able to stay within the time frame of the plan, which visits the completion of half of the first module, if you remember, more or less 5 MW, and the start of commercialization by 2027. Likely, let me say that we will have a small shift in investment between 2026 and 2027, but we are optimistic on that.
Thank you.
The next question is from Giorgio Tavolini of Intermonte. Please go ahead.
Hi, good evening. Thanks for taking my question. A follow-up from the previous one. When you talk about the shift of the investments, I mean, for this year, you are expecting a stable development CapEx in the range of EUR 40 million. This implies a significant reduction when compared to the industrial plan targets, which foresee an increase year over year. I understand this is primarily due to the delays in permits, so the hyperscale data center. Given your ongoing discussions on consolidation, I was wondering if you are also adopting some wait-and-see approach to these investments. I mean, this would be very rational considering all the implications.
I tried to rephrase the question from another side. If you were to reach an agreement on the combination, would the EUR 80 million investments on the hyperscale data center still be feasible despite the financial constraints of the combined entity? I mean, the second question is on the contribution of the edge data center into four. I was trying to figure out what was the contribution. I mean, just to try to put some numbers in the equation and for 2025, if we should expect a contribution in line with the revenue backlog of EUR 6 million that you mentioned in the slide seven. So roughly EUR 6 million, if it's something that we expect for 2025 to be completely transferred into revenues, or you expect an additional backlog layer of revenues from additional contracts. What could be the ballpark figure for this contribution? Thanks.
Thanks, Giorgio. Thanks for the first question that gave me the opportunity to clarify something really important for us. Our strategy, our targets that we put in our industrial plan are independent from any consolidation opportunity. The consolidation is something that makes a lot of sense on top of an industrial plan that makes sense also on a standalone basis. This delay is not related to this process that just started finally a few weeks ago. As you said about the edge data center contribution, clearly in the last quarter of this year, we had the first impact that is a few tens of thousands of euros. We have the first contracts that, thanks to the starting up of the five edge data centers that were finally ready for start, all the commercial activities.
As regards the slide that we just presented, let me clarify that the backlog is a multi-year backlog. The average duration of our contracts is more or less three years. Of course, this is not the impact that we expect in 2025 from the edge data center business. You have to consider that the majority of the values that we've included in this slide is related to commercial offers that we did. We have a percentage that we have to consider as an offer that can be finally signed. Just a percentage of this amount is going to have an impact on the revenues.
The purpose of this slide, it was just not to give a guidance on 2025 figures, but just to give a picture of the positive return, the positive impact that we are seeing from the market from the first months of activity from a commercial point of view.
Many thanks.
You're welcome.
As a reminder, if you wish to register for a question, please press Q&A on the left bar and raise your hand or press star one on your telephone. The next question is from Milo Silvestre of Equita. Please go ahead.
Good afternoon, everybody. Two questions from my side. The first one is a follow-up from the edge data center. If you could, let's say, elaborate on the 2025 figures or expectations. If you will have in mind some indication. The second one concerns CapEx. If you have, let's say, updated figures for 2026 and 2027. Thank you.
As concerning your last question, we are going not to update any guidance. The overall amount that we plan is still the one that we have in mind. As Roberto commented, we have still some uncertainty in relation to the big projects related to the hyperscale data center. We are optimistic. We are still confident to continue to keep the same guidance in terms of overall CapEx in the business plan period. As Roberto said, probably we will see a shift from 2026 or 2027. Looking at overall figures, we confirm the amount of our industrial plan. As concerning the 2025 figures, of course, here we may just confirm that 2025 seems to be clearly in line with the expectation of our industrial plan.
We will see the positive impact on our top line that is boosting the growth, as you have seen also in the last quarter of 2024, where we reached 9% growth year on year. This is a value that overall, so looking at all the revenues, could be maintained thanks to the contribution of the edge and CDN services that will give an important impact on the growth. Having said that, here we are still talking about the start-up period. As concerning the overall impact on our EBITDA, we have seen and we have commented the 2024 figures that, of course, are negative because at the very beginning, we have to manage more cost than cost that we are trying to offset with efficiencies in our traditional business.
All in all, the impact coming from the diversification in terms of EBITDA is confirmed negative, not significant in terms of absolute number, but negative in 2025 and 2026, and trying to reach the break-even in terms of EBITDA in the last year of our industrial plan.
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The next question is a follow-up from Giorgio Tavolini of Intermonte. Please go ahead.
Hi, sorry again. I understand that you are not in the position to comment on consolidation, but I wanted to ask about a very indirect question. We've read in the press about the possibility for you to monetize your tech business and to streamline your perimeter. Do you think this is a viable option at the right price or conditions, or do you see more strategic value in maintaining a presence in the tech business to support the business diversification? Thanks.
Not today. Clearly, now our focus is to work on the feasibility of the consolidation. This is clearly our priority. Of course, we know very well our assets, and we will try to do all our best to optimize the value for our shareholders, keeping in mind all the opportunity. Having said that, in our industrial plan, as you have seen, we put a lot of effort on trying new streams of revenues in order to increase the contribution in the growth of our third-party revenues. Having said that, again, it's not something on the table now. We will focus on the main project on which we are happy to work.
Very clear.