Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Inwit Second Quarter 2026 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance, Luigi Minerva, Chief Strategy, M&A & Investor Relations Officer of Inwit. Please go ahead, sir.
Thank you, operator. Good morning, everyone, and thank you for joining us. With me today, I have Diego Galli, Inwit General Manager, and Emilia Trudu, Chief Financial Officer. Before we begin, please allow me to draw your attention to the safe harbor statement on page two. Following a brief presentation of the second quarter 2026 results, we will open the floor to questions.
Over to you, Diego.
Thank you, Luigi, and good morning, everyone. Q2 2026 results are very much consistent with our confirmed full year 2026 guidance, which reflects the current market context. The telco sector in Italy continues to go through a challenging phase with low returns and minimal investments. Moving to the MSA dispute, we disagree with the recent interim decisions, and we filed the appeal against both ruling. We continue to believe that the MSA early termination notices are instrumental and fall outside the legal framework of the MSAs, which are valid until 2038. Inwit runs very efficiently the best quality and largely unique network to invest while collaborating with its clients to identify shared value-for-value solutions on a fair and rational basis.
Moving to Q2 results, new sites and new PoPs reflect the current market context, while the pace of real estate transactions remains sustained. As we anticipated, revenues on a reported basis are declining year-over-year by around 1%. Revenues are negatively impacted by the absence of uncommitted revenues linked to discretionary projects. If we were to remove such discretionary project-based revenues from Q2 2025 numbers, Q2 2026 revenues would show normalized annual growth above 3%. EBITDA margins at around 72% are in line with the 2026 full-year guidance. Midpoint of our 5x to 6x leverage corridor by year-end. At the current share price, Inwit offers a dividend yield of around 8.6%, reflecting the undervaluation of our stock.
I hand it over to Emilia now for a review of KPIs and financials.
Thank you, Diego, and good morning, everyone. Operational KPIs reflect the current challenging market context. The deployment of 50 new towers in this quarter represents a slight improvement over Q1 and keeps us on track to reach our target of around 200 new towers in 2026. 380 new PoPs were added in the quarter, confirming a growing tenancy ratio now at 2.4x. We are aiming for more than 1,500 new PoPs in 2026, targeting a year-over-year continuous growth in tenancy ratio. Additionally, 400 completed real estate transactions confirm our strong track record, aiming for approximately 1,600 transactions in 2026. Year-to-date, we to the next generation EU program, Italia 5G. We completed the coverage across more than 500 sq km of the countrywide areas, actively bridging the digital divide gap that affects those areas.
We are making progress on Rome 5G smart city project, bringing 5G connectivity on the metro and digitalization to 100 public squares. The normalized 2025 total revenues base takes into account the lack of project-based, non-committed revenue components, which we have developed over time with operators capturing their discretionary spending. Such discretionary budgets have been put on hold at this stage, given the current context of subdued operator investments and stagnant commercial relationships. Adjusting for this one-off step downs, we delivered approximately 3% normalized revenues growth in Q2 2026, driven by the following components. Inflation link based on a 2025 average index of 1.4%. Anchor commitment in terms of new towers, new PoPs, and DAS deployment in line with MSA commitments. Steady OLOs growth across other MNOs and IoT.
Smart Infrastructure growth, particularly in indoor DAS across premium locations and projects in the smart city vertical. Normalized growth is structural. We expect the business to go back to growth in 2027, in line with the midterm baseline outlook. Moving to our financial highlights for the quarter. Q2 revenues reached EUR 267 million, up 1% quarter-on-quarter, and down 1% year-on-year, representing over 3% normalized revenues growth year-on-year, as we just discussed. The revenues components included for towers, anchors revenues up 2.8%, supported by inflation and MSA commitment. Conversely, OLOs and Smart Infrastructure revenues were down as a result of the lack of project-based revenues, such as work and studies, installation upgrades, and DAS, more than offsetting the underlying growing number of PoPs and DAS locations covered.
On profitability, EBITDA [audio distortion] of over 90%. EBITDA after leases stood at approximately EUR 191 million, up 0.5% quarter-on-quarter, and down 2.8% year-on-year with a 71.5% margin reflecting the structural operational efficiency of our business model, which allows us to support substantial investments. As a reminder, we closed 2025 with a return on capital employed of 8.4%. The quarterly recurring free cash flow reflects the expected phasing of financial charges and remains consistent with 2026 full-year guidance. In H1, recurring free cash flow reached EUR 300 million, down 5% year-on-year, with 63% cash conversion. This was driven by structurally low recurring CapEx, efficient taxes thanks to the goodwill tax scheme, slightly positive networking capital, and financial charges profile that reflect phasing of interest payments.
Below the recurring free cash flow line, our CapEx were just above EUR 70 million in Q2 and EUR 160 million in H1, consistent with guidance. We closed H1 with free cash flow to equity of about EUR 140 million. Leverage ratio reached 5.7x following the dividend payment in May. We expect it to go back to 5.5x by year-end, in line with our guidance. We have an efficient debt profile, out of which 80% is fixed, 20% floating. The current average cost of debt is below 3%, and the average bond maturity is above four years.
I now hand it back to Diego for the guidance and the closing section. Thank you.
Thank you, Emilia. We reiterate our 2026 targets and medium-term baseline outlook reflecting the current market environment. Even in the unrealistic scenario in which the market remains stuck over the medium term, we would still be able to have a decent organic growth at around 3% for revenue and 4% for EBITDA, an attractive stable dividend and a solid balance sheet. The baseline outlook does not include the following potential upside: normalization of the industry dynamics, densification outdoor and indoor, opportunities to expand across digital infrastructure. At the same time, the baseline outlook does not include the downside risk of MSA's actual termination, as we don't believe this is a likely or realistic outcome. Moving to the next slide, let me reiterate a few important consideration on the MSA prices and terms.
All our prices are in line with the market. They are even more attractive because the MSA fee also includes unique rights to the benefit of the anchors. Once more, a benchmark of the MSA anchor tenants fees shows that they are competitive and well below the European average. The average total fee for point of presence is around EUR 20,000. This is a combination of sales and lease back, new towers, and new PoPs. We estimate that broadly half of the fee is related to the financial component of the sales and lease back transaction, which is comparable to the interest fee on a perpetual bond, while the other half is related to the pure hosting fee. On both components, MSAs provides convenient and competitive terms. Clearly, they are intrinsically linked to the structure of the sales and lease back transaction as industry standard.
We paid around EUR 500,000 per tower with a transaction that included a large financial component with an EBITDA per tower of around EUR 25,000. Our payback period on the MSA lease and leaseback transaction is around 20 years, consistent with the necessary long duration of the MSA contracts. You know the next slide very well. Our network of about 26,000 sites is the result of 40 years of work from TIM, Vodafone, and Inwit, where we could take the benefit of first-mover advantage to build top-quality sites in the best available locations. Our network is the result of the consolidation of multiple networks, best quality locations, connected with fiber, almost 20% land-owned, optimized lease cost, best tenancy ratio. About 75% of our network is made of unique locations.
Inwit is a strategic infrastructure critical to the national security and economy. Our network is available to our towers on the all-or-nothing basis. Data traffic keeps growing. 2025 download traffic grew by 19%, and upload traffic grew by 35%. We believe that the market needs a further 10,000 towers in the next few years to cope with additional capacity in urban areas, coverage in suburban, and rail and road corridors. The ongoing spectrum renewal process can unlock a new cycle of investments. We would welcome proposals to link the spectrum renewal to current holders with future CapEx commitments to support network quality improvement and the country's digitalization. While repatriating the best network. Duplication will last decades, will delay densification, and cost billions.
In the current industry structure, where there is separation between tower costs and service companies, we think that the spectrum renewal framework should discourage duplication of infrastructure and support stability and predictability. About MSA dispute. The interim recent decisions were not in our favor, ruling did not recognize the urgency requirement based on the assessment of the financial strength of the company. There was a view of change of control, which we disagree with. We appealed the decisions, and we remain convinced about the strength of our arguments.
In particular, change of control did happen in August 2022 when the shareholder agreement between Telecom Italia and Vodafone Group was terminated. Any different interpretation would have triggered a mandatory tender offer, which did not happen. In terms of timing, we expect the appeals to be concluded by November 2026, while the ordinary process will last for several years. We remain convinced that the situation should be addressed through fair and reasonable discussions between Inwit and its clients to identify shared value-for-value solutions. Q2 results are consistent with 2026 guidance. We reiterate both 2026 and mid-term guidance.
Inwit has the best assets. There is no rational case for duplicating the existing high-quality infrastructure. TIM and Vodafone monetize their assets, and Inwit paid in excess of EUR 10 billion in exchange for long-term contracts and proportional fees. Inwit business model and operational efficiency consistently bring a material benefit to its clients and the industry. In Italy, there is a dramatic need for investments and densification in order to increase the performance and resilience of the network, and Inwit is the best option. We remain committed to invest while collaborating with our customers to identify shared value-for-value solution on a fair and rational basis.
With this, we thank you for your attention, and we will now open the floor to Q&A.
Thank you. This is the Chorus Call conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one now. We will pause for a moment as participants are joining the queue. The first question comes from Roshan Ranjit with Deutsche Bank. Please go ahead.
Great. Morning, everyone. Thanks for the presentation. I've got two questions, please. Firstly, Diego, thanks for the detail on the appeals process. TI hearing versus the Fastweb hearing, where it seemed they gave a bit more color, perhaps going into the details of the merits or their stance on the merits of the case. Can you explain why they were able to provide more color on the TI situation versus the Fastweb situation, please? Secondly, you mentioned the spectrum framework auction. Any details there? Because I think we should be hearing in the next day or two, and the trade-off between renewals versus investment. Have you been involved in any discussions there with Agcom? Thank you.
Yeah. Clearly, on the TI and Fastweb ruling, actually, we disagree on both. Basically, the merit or the content is basically very similar. On TI, the tone was more on the urgency. On Fastweb, also on the merit and on the change of control. Honestly, from no specific reasons behind that, transparent and clear to us anyway. Yeah, in our view, there is some inconsistency, and as we know, the injunction process is a process basically which follows a brief approach from a single judge. We just appealed yesterday and the day before yesterday, and we remain convinced that the change of control did happen in 2022, and there is no space for a different interpretation because, among others, as we said, a different interpretation would have triggered a mandatory tender offer.
On the spectrum, yeah, the process is ongoing since a while. We continue. Clearly, we are a relevant part of the industry, and we are involved. Our position has been and is positive supporting. At the same time, we think that it's important that the framework is supporting the overall industry, and so telco and infra companies of the entire value chain.
Great. When should we hear on the framework? I thought it was end of July, so it should be this week we should be hearing on the details?
Yeah. The expectation is about the consultation document to come out in a few days or a few hours, let me say.
Great.
The consultation document will be available for the government to take a decision, and the consultation will be open for 60 days.
Okay, understood. Thank you for that.
Thank you.
The next question comes from Fabio Pavan with Mediobanca. Please go ahead.
Yes. Hi, good morning. Thank you for taking my two questions. First one is a follow-up on Agcom. Provided we should have consultation document in a few hours or days, then it will be up to the government of the before year-end, and do you think a decision on spectrum renewal could come also if the uncertainty on the MSAs persist? Second question is quite simple. I was just wondering if in these days or weeks, you are engaging in some form of discussions with your anchors. Thank you.
Hi, Fabio. On the timing, as we said, consultation out in few days. Eventually, will be to the government to decide. There is a scenario where there is a decision by year-end. Clearly, the industry has been under-invested for years, and all the players need visibility and predictability. The sooner, the better in terms of supporting the industry and the new cycle of investments. With regards to the, how can I say, the intersection with MSA, honestly, I think that the new investment cycle is not consistent with the current situation, and I think that any plan to improve quality and support the country digitalization is not consistent, is not compatible with the current situation on MSA and with the termination of Inwit contracts, which are fundamental.
Inwit infrastructure is fundamental to support in the most efficient way, not only the maintenance of current service level, but their improvement. On the engagement with the anchors, we have the process open with Telecom Italia on the, let me say assisted procedure with the law, so legally assisted procedure. While with Fastweb, there is no procedure. Our proposal was rejected by Fastweb a few months ago. That's where we are.
Thank you very much.
Thank you.
The next question comes from Paul Sidney with Berenberg. Please go ahead.
Thank you. Good morning. Just two questions from me. Big picture questions. You built 50 towers in the quarter. I'm guessing that's more than your competitors. I was just wondering, do you have a structural advantage over your competitors, in the Italian market in terms of building new sites? Second question, we know that Italy needs 10,000 new towers. There's obviously consolidation that's being speculated. In my mind, why would mobile operators want to reduce the number of sites? Do you see actually consolidation as a potential problem in terms of reducing the number of towers that are needed, or is it all part of this need for the 10,000 new towers irrespective of consolidation?
Hi, Paul. On the competitive advantage from an industrial point of view, I would say that Inwit has been, in the last years, the company building the highest number of sites and actually the market. Iliad has been building some towers, but excluding Iliad, we have been the only ones building the towers. We have consistently built the end-to-end that we call operational machine from search machine in the country. Let me say that also from a contractual point of view, we have a preferred supplier relationship with TIM and Vodafone whereby we have the right of first offer and last call on all new towers. We think that we have both an industrial and a contractual strong position.
With regard to consolidation, it may drive on the short term some loss of point of presence. Overall it could be also the way to drive the market to be more sustainable and support the investment. The overall context would be more supportive of investments. The additional towers are structurally needed because as we said, data traffic has constantly increased. Artificial intelligence adds an additional layer on top. That this is 5G is dramatically behind in Italy. Italy is behind Europe and Europe is behind the world yet. Additional point of presence are needed both for capacity reasons in urban areas and the coverage in suburban and as we said on transport corridors. Again, concluding, consolidation may drive some reduction in the short term, but overall, we have a positive view for the medium long term.
That's great. Thank you. Can I just have a quick follow-up? Does the Italian government recognize that there is the need for more towers in the 10,000 number? What's the view of the Italian government?
I think that there is an overall recognition that the industry has been under strong pressure in terms of returns, and that's not sustainable, and that has reduced investments in the last years, and there is a significant need to speed up the investments again to accelerate on 5G deployment for the benefit of social communities as well as companies and the economy. About the numbers, there may be different views, but I think that the order of magnitude is, how can I say? There is a consensus about the order of magnitude to densify the network and to cope, as I said, to cope with the additional capacity and coverage which is needed.
Great. Really appreciate your comments. Thank you very much.
Thank you.
The next question comes from Rohit Modi with Citi. Please go ahead.
Hi, thank you for taking my questions. I have two, please. One is a follow-up basically on engagement with anchors. I believe, and please correct me if I'm wrong, that you need to finalize your migration plan by 31st of March 2027 as per the MSA, if things remain as it is now. Whether you engage with them on migration after the appeal decision or you'll wait for it. Do you need to still discuss the migration plan, or that can be postponed until you get a decision from the original case?
Second question is basically in the quality of your pops, particularly in the OLO segment. If you see the pop growth in the OLO segment has been consistent, we see the revenue growth has declined over 1H . If I look at your slide, on slide 17, if you look at the chart, which is there's a growth in OLO from 2025 to 2026. I'm just wondering if you expect the higher growth coming in OLO in the second half, or if there's kind of a discretionary revenue impact that's coming in there? Thank you.
Hi, Rohit. Let me start from the second question on OLOs. Let me comment that in general, the market is quite soft. Also the lack of visibility on the frequency renewal process, as we said, in general, the low returns on investments are making the market overall soft. Specifically with OLOs, we are doing good progress with our OLO customers. The financial trend is impacted from the fact that last year we had some special projects on discretionary spend, which this year has not been repeated. Basically related to specific work orders, specific project-based activities, which are depending on the customer's availability, customer budgets are not recurring every year. There were last year, not in this quarter.
With regards back to the engagement and the repatriation plan, the MSA says that the repatriation plan, so the plan whereby anchors have to give back and free up the towers, giving it back to Inwit. The repatriation plan should be completed by a period which should not be shorter than three years. Completion in a period not shorter than three years. That is the MSA framework. We keep on not being convinced that the current contract last until 2038. We know that the legal process will continue. The ordinary process will last for years. Anyway, we are open to be engaged and to engage with the operators if they want to start sharing the repatriation plan. Yeah. Thank you.
Sorry, just clarification. You need to agree on a migration plan by 31st of March 2027, right? That's the case, or you don't have to, that's not the part of MSA contract?
Yeah.
Not the complete plan.
The repatriation plan has to be agreed between parties one year before the termination of the contract.
Okay, got it. Thank you.
Welcome.
The next question comes from Ben Rickett with New Street Research. Please go ahead.
Hi there, and thank you for the questions. I had two, please. Firstly, coming back to your discussions with the anchors, I think you said you're in talks with TIM. I just wondered if you could say anything about how productive those discussions have been so far and whether you're optimistic that a resolution can be achieved. On Fastweb, when do you expect discussions with them to start again?
A second question. I was just interested in how much this is all costing you in terms of legal fees and consulting fees. Presumably, that's embedded within the guidance, but I was just wondering if you could quantify the cost of this dispute from additional professional fees. Thank you.
Hi, Ben. Let me say, I think it's too early to be either optimistic or pessimistic. I think that the engagement with the customers is still clearly impacted by the legal processes and some uncertainties around the context. Anyway, with TIM, the legally assisted process, let me say, is moving on, I would say, slowly. Let's see. The procedure will be open until mid-September. With Fastweb, again, we are open to discuss, and we have been always open. As we said, we do appreciate discussion based on rational and fair approach. The discussion about repatriation plan, happy and open to start having those discussion, as soon as Fastweb will trigger them.
On the cost. Let me say that the costs are some millions of euros. We can estimate, yeah, some in the low, absolutely, let me say a couple of millions. A few millions. Clearly, we would have preferred to invest these couple of millions in new towers instead of legal cases. This is where we are.
That's helpful. Thank you. Out of interest, why are you not discussing with TIM and Fastweb together, given that their grievances are very similar, they had the same contract, et cetera?
Honestly, I think that at a certain point in time that could be a scenario, I don't see neither a helpful or a realistic scenario of this in this case. Yeah.
Okay. Thank you.
Welcome.
The next question comes from Milo Silvestre with Equita. Please go ahead.
Good morning, everybody. Just a quick follow-up on the last question. You mentioned as low engagement with anchors due to legal process. Is that because you are waiting for the final ruling on the interim measure?
As we said, Milo, we are open to discuss. Clearly the legal process we think should give clarity on the legal framework. This didn't happen with the recent decisions, but we remain confident that through the appeal process, the decision will help give clarity about the legal context, which may facilitate then the business discussion. Honestly, we remain focused on having scenarios where we can have discussion based on fair and rational approach. The legally assisted procedure with TIM can support this approach, and we will see with Fastweb. The current situation is not great for Inwit, of course. I think it's not great for anyone. The industry is stalled. It's impossible to plan and define the investments which are needed.
I think that the effort and willingness to get out from this situation of fair and rational approach should be from all parties.
Thank you. Regarding assisted procedure with TIM, are we discussing about the MSA or on minor, let's say, topics?
Yes. We started from more specific operational topics. These are the ones which are currently under discussion. The overall framework covers everything, but the current discussions started from more operational topics.
Thank you.
Welcome.
The next question comes from Ondrej Cabejsek with UBS. Please go ahead.
Yes. Good morning, everyone. Thanks for the presentation. I have a question related to the potential investment obligations or remedies related to the spectrum update that you said we're expecting very shortly. Obviously there'll be a consolidation period. There'll be, I guess, a follow-up in terms of the budgets and those two things or those several things including the Agcom, the budget, et cetera, will form, I guess, an opinion or clarity around what the associated potential investment obligations are. Presumably this will impact everyone starting 2029. I was curious from your perspective, when is a time that given, I guess, various planning considerations, permits considerations, et cetera, when is a time then from your perspective that the anchors really have to start committing to some build with respect to these obligations?
Is it kind of going into 2027 because maybe the lead time is a bit longer, say two years to achieve these? Is it maybe a year later? Any color on when there starts to be a situation that not doing anything in terms of the kind of MSA dispute starts to hurt both sides and then I guess the party on the kind of network build side more economically. Thank you.
Hi, Ondrej. Yeah, the intersection between the spectrum renewal process and the investment plans and the MSAs honestly is an interesting one. It's really the trigger is actually the decision about the spectrum renewal. I think that immediately after that, there will be the need to define the plans actually to get the spectrum renewal. I think that plans should be already been defined in order to get the renewal. That introduces an important trigger, which will quite fast then drive the need to put on the ground investments. Again, I think that the current context and situation and termination of the contract with Inwit are not consistent, compatible with plans to invest based on a spectrum renewal with commitments to improve quality.
I guess the plans that you mentioned, they're a function of what the obligations might be, right? We don't know those yet, and I'm sure you have potentially some opinion given how the state of the grid of mobile networks in Italy looks like. More practically speaking, if we're talking about an average kind of process for a new tower, which obviously, again, depends, I guess, on the area, et cetera, but speaking about averages, how long before a tower has to be in the ground do the parties involved actually start to work on the permit processes, et cetera? If you can be more specific, that would be very helpful.
Yeah. You're right, it depends on the areas. On average, the time it takes to roll out new towers takes 12-15 months. That's the kind of time horizon.
Thank you very much.
Welcome.
The next question comes from. Sorry. As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from Abhilash Mohapatra with BNP Paribas. Please go ahead.
Hi. Morning, everyone. Thanks for taking my question. My question was on slide 12. This is obviously a slide you've shown us in the past where you talk about the tower market potential, 7,000- 12,000 new towers. I guess my question is, how much of that growth do you think you can accommodate on existing Inwit sites? Therefore, I suppose the balance would involve building new towers, how much of that growth can you actually accommodate by adding on secondary tenancies on your existing portfolio?
Yeah. Actually, Abhilash, that's the need for additional point of presence in the sense of additional towers. Basically all incremental. That's the way to consider it, because as we said, there is the additional need in urban areas for capacity and which cannot be accommodated on the current towers, as well as coverage in suburban and rail and road corridors. All this requires additional towers, new towers.
Got it. That's helpful. Maybe just to follow up. I suppose, what prevents the telcos from building those towers on their own? Why would they necessarily come to Inwit for building these sites?
Yeah. Two consideration. The first one is related to the preferred supplier clause, whereby the anchor tenants are committed to have a special relationship with Inwit. Inwit has the right of making the first proposal and the last offer for all new towers built. Let me also say that Inwit is the most efficient company to do this kind of stuff. We are dedicated. We have taken the best people from TIM and Vodafone through the carve-out in the past. The teams and the people were moved to Inwit, actually. In the last years, we have kept on investing, on improving capabilities, systems, and process to deliver new towers in the quickest and most efficient way.
We think that both from a contractual point of view, but underpinned by the best capacity, industrial capacity in the country. That's the reason why we have a competitive advantage in the market.
Got it. Thank you.
You're welcome.
Ms. Trudu, gentlemen, there are no more questions registered at this time.
Thank you all.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.