Infrastrutture Wireless Italiane SpA

MIL:INW

Earnings Call Transcript 2022-Q2

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the INWIT First Half 2022 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Fabio Ruffini, Head of Investor Relations of INWIT. Please go ahead, sir.

[Fabio Ruffini, executive]

Good evening, everyone. Thank you for taking the time to join us for INWIT's Second Quarter 2022 Results Conference Call. With me today are Giovanni Ferigo, our Chief Executive Officer; and Diego Galli, our Chief Financial Officer. Before we begin, please allow me to draw your attention to the safe harbor statement on Page 2. Following our presentation, we'll be happy to take your questions. Over to you, Giovanni.

[Giovanni Ferigo, executive]

Thank you, Fabio, and welcome, everyone. Today's presentation is focused on a few messages: rebound of KPIs, more than doubling new sites versus Q1; step-up in OLOs; continued execution of financial targets with high single-digit organic revenue growth; margin expansion and confirming 2022 guidance; a stronger successor with the 2 new commercial agreements for hundreds of new sites have been valued for the long term; the net positive impact of inflation on financials and on business plan targets; the confirmation of the structural positive trend in the wireless infrastructure industry; and INWIT assets, macro and micro grid well positioned to capture this growth. A quarter of solid progress, which confirms our role of the main wireless infrastructure company in the Italian market. The key results of the quarter are displayed on Page 4.

Beginning with industrial KPIs, we delivered the rebound we discussed last time when we spoke. New sites and OLOs more than doubled versus Q1. We have an improved internal site delivery process, and there is a positive demand for fixed assets and optimal. This trend will continue in the coming quarters. Demand for new sites in the Italian market is very strong.

Regarding financial, we started the year strongly in Q1 and Q2 confirmed this strength. Consistency across quarters is an important feature of our business model. From the best organic revenue growth [indiscernible] industry, at plus 9% with 50% EBITDAaL growth, margin expansion and solid cash flow generation. This is supported by lease cost efficiency with more than 650 renegotiations and buyout.

The next 3 pages focus on the main component of our revenues, beginning with Anchor on Page 5. Anchor PoPs are up 7% year-on-year. This is driven by MSA commitments and the investor needs to improve governance and roll out 5G in the most efficient way, that is through the partnership with INWIT. We added 2,500 new ports over the past year and are satisfied about the pickup in your size. We delivered 120 new sites, a sign that the changes we made internally are working. We expect higher site delivery in the coming quarters and 500 sites in 2022.

PoPs growth was lower, mainly due to lower new sites build activity in Q1. MSA commitment continuing driving our P&L, and we expect an improvement in Anchor PoPs in the second half of the year based on the current pipeline.

Turning to our clients on Page 6. PoPs by other clients were up strongly year-on-year, plus 15%, confirming the quality of our assets and INWIT role and [indiscernible], one of the best results in the industry and a record quarter for INWIT, 540 new tenants nearly double versus Q1. Fixed wireless assets and OTMO clients have supported the results with MNOs still focused on town below 55,000 population where the remedies don't apply. This is a diversified client base, placing equipment and sensors on our tower for a limited incremental cost and low electromagnetic field spectrum.

The commercial effort on the OTMO category is being effective. We addressed the strong demand from motility and security companies, adding services to the tower, which is becoming more and more a digital asset. Having delivered a solid Q2, our focus now shifts to making sure we keep a high run rate in the coming quarters.

Moving to new services on Page 7. This is a very dynamic part of our business where DAS and Repeaters work in synergy with our macro sites. Market demand is driven by coverage needs of transportation infrastructure and indoor location with a variety of different customers and application verticals, corporate headquarters, entertainment venues, hospitals, industrial sites and public administration buildings. So far, in 2022, the health care verticals have been the most interesting.

There are more than 3,000 locations in Italy, which will need to be covered by 2026, and we target about 1/3 of the market. Going forward, we expect a further pickup in new services, which will grow at rates above INWIT average in the coming years, also supported by NextGenerationEU.

Two important new commercial agreements on Page 8. With the quarterly results, we are also proud to share 2 important agreements which will reinforce our asset base and long-term potential. First, Open Fiber an important client to INWIT, where the partnership is reinforced by a new contract for the building of sites in remote areas. This add visibility to our overall growth targets. Then the 5G NextGenerationEU tender, where we led a consortium with Team Vodafone to win all 6 available lots. The aim of the tender is to support 5G adoption in a market failure area through new sites where the investments are subsidized for 90%. This goes in the direction of confirming our expectation for NextGenerationEU, positive for the industry, but mostly wind and indirect strong per impact rather than transformational in the short term.

The 2 new commercial agreements with large customers, affirming INWIT as a key digital infrastructure player in Italy and supporting the reduction of digital divide.

Let's now turn to the financial. Diego, over to you.

[Diego Galli, executive]

Thank you Giovanni, good evening everybody. The financial performance of the second quarter built on the progress made in Q1 confirm the growth trend for the full year. While in 2021, we were focused on stepping up the pace of growth, now we expect to maintain this cruising speed. In terms of growth drivers, Anchor revenues were driven by MSA commitments and new PoPs on existing and new sites. Almost our other revenues are up because of new hubs and services like design, installation and maintenance. New services more than doubled also due to the highway tunnel investment made in 2021.

As a reminder, the current positive inflation impact on the P&L is related to the 1.9% average Italian CPI of 2021. EBITDAaL margin is in line with the plan at 91% in most of our efforts on cost efficiency, revolve around ground leases, where with about 650 sites renegotiations and buyout in the quarter, we continue to make tangible progress. EBITDAaL growth continued to outpace revenue growth, plus 13% year-on-year with margins up from 66% to 68%.

Now cash flow on Slide 10. Recurring cash flow generation in the second quarter was robust at more than EUR 101 million, up 11% year-on-year. We convert margins into cash at a structurally high level due to double-digit EBITDA growth, limited recurring CapEx and a neutral net working capital cycle. In the quarter, we note the presence of cash taxes, about EUR 24 million. This is a large proportion of the total tax cash out for the year, which is confirmed at about EUR 30 million. Then slightly negative net working capital, neutralizing the positive move in Q1 and growth CapEx, mainly for new sites and acquisition, including the impact of inflation. EUR 14 million cash out for the second tax scheme approved in 2021 and the normalization of one-off cash movement in Q1 as expected.

Considering the phasing of tax cash out and net working capital, we confirm the cash flow target for 2022. Net debt stood at EUR 4.3 billion, up quarter-on-quarter, essentially to allow for dividend payments of EUR 305 million. Leverage stood at 5.6x, and we will delever material by year-end when we will be at approximately 5.2x. We progressively create balance sheet flexibility at a leverage start the year, optionality to push on growth or to increase shareholder remuneration.

After the merger in which the debt profile has been optimized with no maturities before 2025 and fixed component up 80%. In summary, we delivered a positive set of Q2 results, with growing margins and profitability and expect this growth to accelerate further in the next year, also thanks to a positive external environment. Giovanni, all clear.

[Giovanni Ferigo, executive]

The strength of INWIT and MSA is evident in the current environment of elevated inflation and it implies an upside to guidance. INWIT revenues are all inflation linked with the MSA heavy and zero floor and no cap. Despite OpEx and ground is also being impacted, 1% inflation means more than EUR 5 million EBITDAaL. The market, operational and industrial drivers of our business plan are confirmed. Assuming 2022 inflation from 2% to 6.5% means going above the top end of guidance for our 2023 revenues, EBITDA and EBITDAaL.

Due to the interest cost of variable debt after recurring free cash flow level, we will achieve the top end of the range, or EUR 600 million in 2023. The benefit of 2022 inflation will not be temporary, they will add to the prime rate. The 2026 business plan will also benefit from it. Recurring free cash flow, higher inflation means a 2026 target of more than EUR 700 million.

Let's turn now to ESG, an integral part of the way we do business. INWIT assets connect more and more people to high-speed networks and allow for infrastructure to be shared by operators, reducing the use of resources and creating efficiency in the industry. We are, therefore, structurally sustainable. We set ambitious targets in our sustainability plan, the Tier-1 being carbon neutrality by 2024 and have been making cost and progress.

In the first 6 months of the year, we added ESG KPI to our revolving credit facility extension. We were included in Bloomberg Gender Equality Index. Our initial reduction targets were approved by science-based target initiatives, continued covering hospitals, railroads and underdeveloped areas also with the agreement with Open Fiber and 5G NextGenerationEU tender.

More recently, we join to the FTSE4Good Index after a material improving of our rating. Going forward, we will continue to update you on our progress on a semiannual basis as we optimize the use of energy and develop innovative technology.

A few final remarks on Page 13. The results of the first 6 months demonstrate that there is a material growth opportunity for wireless infrastructure operator, and that we are on track to deliver on our targets. Based on the superior quality of our assets and the long-term partnership with the key operators in Italy, we expect to continue growing at top level in the industry in organic terms, progressively generating balance sheet flexibility, which is an update optionality.

Towers are among the few user proximate connected and [indiscernible] assets and there are new opportunities to provides value-added infrastructure services in the context of strong demand and growing investments in digitalization.

Thank you, everyone. And now we are ready for the Q&A session.

[Operator]

[Operator Instructions] The first question is from Fabio Pavan of Mediobanca.

[Fabio Pavan, analyst]

Thank you for taking my question, since we have to leave it to one. Looking at the update you provided on Open Fiber and the National Recovery Plan. My question is for sure, this is an accelerator for your business, and this will allow you to meet the targets which you have raised tonight.

But I was wondering if it's fair to argue that in the midterm, both the Angolan 5G national recovery plan and in particular, the business you are making with Open Fiber could allow you to capture more business that so far is not visible in these 2 agreements?

[Giovanni Ferigo, executive]

Thank you, Fabio. Okay. This very, very important agreement for us is a pillar for a long term of our business growth because let me say we will collaborate with, let me say, open harbor to be -- to cover the actions, let me say, tender of their white areas in Italy.

In the midterm, okay, we are working in the designing, the location of the sites. And let me say jointly to the [indiscernible] area is an important role that the company is bringing for the digitalization of the country, not only for the quality of the asset but of the quality of our engineers to design and let me say, to locate the new sites for the customer needs. Okay. This is the scenario. Diego?

[Diego Galli, executive]

Yes. And so integrated, as you said, Fabio, is the project, the fiber project is part is embedded in our plan. But overall, we are expanding our -- the perimeter of our infrastructure. Both projects allow us to have invest in a stronger, bigger infrastructure. So we are building on top of the current one that, as you know, is already the best in the country, and we keep on spending. So for me, I would say, long term, considering also that the recovery fund invest timing is about 10 years.

For the long term, this puts in within a strong position and acquisition of -- for sure strengths in areas where the demand for digitalization is getting higher and higher, but reported by the government initiatives. So overall, yes, we would say that for the long term, this adds strength and opportunities for the year. Thank you.

[Operator]

The next question is from Simon Coles of Barclays.

[Simon Coles, analyst]

So clearly, we're seeing the inflation is going to be a benefit in '23. I was just wondering, and I think you get asked this quite a lot on the lease side, is this making negotiations tougher or easier? I would I'm just wondering maybe with the cost of living crisis is actually making it easier to buy out land leases in your discussions. So just any color on how that's progressing, given how successful you've been so far.

[Diego Galli, executive]

Hi Simon. Yes, it's an interesting point. Let me say that so far, we have not seen any significant change on the ground leases coming from the changed inflation scenario. On one side, clearly assets such as land are becoming more interesting. On the other side there are the small land owners, which are more under pressure from a financial point of view. So -- but in most cases, these are not significant trend at the moment.

What I think is important to highlight is the strength of our operational program. And as proven by Q2 where we made more than 600 actions, successful actions to reduce even on this cost. So overall, the program keeps on running and delivering benefits for the company, optimizing. And until last year, we reduced in absolute terms, the ground base cost. We will keep on reducing despite the higher volume and the somehow we will absorb the part of the inflation increase.

[Operator]

The next question is from Roshan Ranjit of Deutsche Bank.

[Roshan Ranjit, analyst]

Good to see that CPI assumption has stepped up for FY '23. I guess my question is, if I look at the midpoint of your EBITDAaL guidance range prior to this, so the EUR 650 million to EUR 690 million, if I take the midpoint, EUR 670 million.

And I think you previously said you reiterated today, 1 percentage point is greater than 5 -- has a greater than EUR 5 EBITDAaL impact. So that will mean at the midpoint, that would suggest EUR 693 million for FY '23 EBITDAaL under this new assumption.

So firstly, I guess, is that still in your eyes, a conservative view? I mean, we've still got 6 months left or 5 months left of the year? And can I just confirm that there isn't any change in the kind of volume assumptions that you have embedded into that guidance?

[Diego Galli, executive]

Thanks, Roshan. Yes, let me say, the business plan has not changed in real terms. Today, update is about the, let me say, the overlay, the impact technical impact coming from the inflation assumption update. The mechanics, the logic we have gone through is the right one, and absolutely in line with the mechanism we shared with you also in the previous quarter. So the 1 percentage point of inflation basically leads to EUR 5 million additional EBITDA run rate.

Then clearly, honestly, the inflation estimate is constantly changing. It's not yet stable, like in Italy being 6%. That's actual so far, broadly 7% the estimate for the full year, but there are still some factors mainly related to the energy crisis.

So I guess, I think the mechanical is very transparent, very clear, your reasoning is absolutely correct. And that's the reason why actually we give an indication that is really linked to the fact that the business plan is confirmed, the basic range that we disclosed is confirmed and the overlay that today has been quantified at about 6.5%, I guess will keep on changing. And again, the mechanic of the calculation can be updated basically by everyone based on the mechanism we share.

[Operator]

The next question is from Jakob Bluestone of Credit Suisse.

[Jakob Bluestone, analyst]

I had one probably a very quick question, which is, is there an update on the Iliad process that you can provide or any indication when you might do something next?

[Giovanni Ferigo, executive]

Okay. As you know, there is no news on the table. We are waiting for the final decision of the antitrust authority in [indiscernible] We are, let me say, in the -- we are working with Iliad in the municipalities under 55,000 inhabitants waiting something happen.

And I won't only underline and remember to you that October, this, let me say, procedure will have 2 years. So I think that is something really understand. But not easy to understand, and we hope that this will be solved quickly.

[Operator]

The next question is from Jerry Dellis of Jefferies.

[Jeremy Dellis, analyst]

Question is related to Anchor tenancy growth, please. I understand that the slowdown in Anchor tenancy action in second quarter was related to the lower level of site build in the first quarter. And the consensus is looking for Anchor Pop net adds of about 3,300 for the full year. Are you okay with that?

And then what flexibility ordinance tenant have to perhaps change its commitments to you? Has an Anchor tenant asked that question. And if you were to be faced with an Anchor tenant that had balance sheet constraints seeking to renegotiate its commitments and how would you respond?

[Diego Galli, executive]

Thanks, Jerry. Let me start from the second part of your question, which is related to the MSA. The MSA -- we've got the MSA with the 2 Tier-1 Anchor tenants, which are very, very strong in the sales. You may remember they are built on basically 3 components: The fixed fee, which is updated on with inflation and did not add [indiscernible] the committed revenues -- and then on top, we have the role of preferred supplier for additional opportunities.

The committed revenues, I guess, is the core of your question. And when we say committed is committed and the commitment is related to the total value generated over a specific period of time, as well as the revenue profile over the year. There is flexibility in terms of service mix, there is a little bit of flexibility over quarter, but the commitment is very clear and strong. And the operational length we have with the Anchor tenants are fully supporting the committed revenues.

Having said that, in -- on the -- coming to the first part of your question, in terms of new sites, we discussed this in different quarters and last quarter is an example on the development of new sites. We have not been -- we not -- didn't have a steady state. There have been some blips. What is now the focus is to -- to have a steady delivery of new sites. And we are happy with this quarter, and we've got strong visibility over the next quarter. So we will see a more steady and accelerated progress on new sites that will support the acceleration of the new tenants we need in Anchor [indiscernible]

[Jeremy Dellis, analyst]

Could I just clarify that 3,300 Anchor PoPs adds for the full year then is an achievable target. I think that would require about between 800 and 900 a quarter. So the rest -- no, sorry, it would require about 1,000 a quarter in the second half.

[Diego Galli, executive]

Yes, that's fair. We don't have in the run rate and as well as in the operational plans for the next quarter this number. We will accelerate and accelerate further. And we will -- we are confirming overall the revenues for the year and the breakdown actually from different customers anyway as we did basically in the last few quarters.

Overall, in terms of KPIs, we have been a little bit behind. But despite that, we delivered on revenue and cash flow generation. And actually, we will benefit in the future from the acceleration of the KPIs. And this is related to the Anchor as you are underlying, but also honestly to ours.

We are very pleased by the current quarter, that is also a quarter which shows the results of the changes that the company has been implemented. So it's, for us, this is a quarter where we delivered exactly in line as expected, and we have a very strong visibility for the strong quarter as well. So it's a quarter which marks for us a change -- positive change for the future.

[Operator]

The next question is from David Guarino of Green Street.

[David Guarino, analyst]

Just a quick one and then a follow-up and that's for me as well. The first one is, can you talk about any changes to your IRR expectations when you're underwriting investments today? And I'm asking about, especially just in light of your current cost of capital and the general economic uncertainty?

[Diego Galli, executive]

David, overall, the -- in terms of results on the investments, we have -- we don't see any significant change. We have a policy of double-digit unlevered IRR, which is basically all the projects are evolved. The -- let me say, the key point about double-digit IRR is to Anchor 2 tenants on the site or 2 tenants on the DAS for the indoor coverage. So the -- that brings the returns comfortably higher than 10%. And that's one of the strengths we said in 2 Anchor tenants as key customers, which secured us a double-digit IRR and allow then for further upside increases further the [indiscernible] issue.

[David Guarino, analyst]

That's helpful. And then kind of a follow-up to that. On Slide 7, your new services side, can you maybe talk a little bit about the process of how you win new projects? Is that purely based on bidding? Or does it have any sort of strategic advantage when they win these deals?

And then maybe just comment on the level of competition you're seeing when you go after more or less the hospitals and the entertainment and industrial-type projects?

[Diego Galli, executive]

Actually, in terms of process, for new, let me say, DAS or indoor coverage. We have a process where by either with dry select in some specific locations and proposing them to the customers or we follow and we address the request from the Anchor tenant.

What is clearly for us a competitive advantage is that we have, as we said it to Anchor tenants, we have a preferred supplier role with the Anchor tenants. So clearly, this gives us a competitive advantage. And the development of the micro grid is what we are working on.

So to complement the macro is...

[Giovanni Ferigo, executive]

Okay. We did a very detailed study. There are 11,000 locations that need a dedicated coverage in Italy in the next -- in the plan. We chose 3,000 of this and we are -- we have -- I'm not enough sure to lead 1,000 of these locations. Okay, we continue to cover hospitals as you have probably read.

We gained the target to have covered 40 hospitals in Italy, okay? That is very, very important. We are working in the public administration because the digital side incredibly in the public administration offices too that need to improve the capacity.

And as I said many times, we target the infrastructure monitoring transport, where through the, let me say, dedicated coverage, some transitions and monitoring the quality of the infrastructure, we can play a very, very important role. For this, when we say the agreement with Open Fiber underline prove our credibility and reputation in this context, in this environment, we will be able to surprise everyone in the market in the next year.

[Operator]

The Next question is from Stefano Gamberini of Equita SIM.

[Stefano Gamberini, analyst]

One quick regarding the deal between [indiscernible], if you have some information on that. We read on the press that the government decides to exercise its special power in terms of provision for the acquisition of the stake.

The timing seems to be quite long. I don't know if you have some comments on that, or do you see a risk this deal considering that on the other side, there was already a similar deal 2 years ago between [indiscernible] and [indiscernible]

[Giovanni Ferigo, executive]

Thank you, Stefano. We read probably as you, that the government released the Golden Power, let me say, regulation to the operation. So we are waiting for the conclusion of the agreement between [indiscernible] team. And in the same sense, we will, let me say, do the necessary steps to manage this change of control finally, Okay.

[Diego Galli, executive]

Just to clarify the [indiscernible] of release perhaps, so we read, as you did sort of green light was given. So it's just a matter of time for the next steps to happen. So firstly the closing and then obviously the excess after that.

[Operator]

The next question is from Fernando Cordero of Banco Santander.

[Fernando Cordero, analyst]

It's a follow-up on the, let's say, on the potential organic investments. And in that sense -- sorry. I would like to hear your more fresher or your fresher thoughts regarding the EUR 1 billion balance sheet leeway that you have by 2023. In that sense, even the potential outbreak given by the inflation scenario is even giving more lucidity on this potential, let's say, balance sheet leeway.

And I would like to understand how do you see the potential opportunities in the Italian markets. We -- I understand that Open Fiber could be one of these. I don't know how which stand to incremental activity in buying land, considering the current inflation scenario would make sense.

Just to understand on top of the new -- or the lease that you have already announced, how your thoughts on potential incremental organic CapEx opportunities on the market given your balance sheet leeway, particularly in 2023?

[Diego Galli, executive]

Yes, actually, as we discussed that we are very pleased. We are building the quarter by -- after quarter the financial flexibility and we are step-by-step now getting to a level of leverage, which will create this financial item.

And the priorities from our side are keep on somehow replicating the successful model implemented so far to an extent perimeter to a big, bigger footprint. So for sure, we are focused on doing more organic growth CapEx, which returns are particularly high. So as we can more land buyout, or more investment is more portfolio sites or investments such as the one we did last year on this Highway Tunnel.

Also, we are interested in potential we say M&A in Italy or in Europe, but we focus on opportunities which create industrial synergies, the chance to have industrial synergies. So again, M&A opportunities, which allow us to extend the perimeter, focusing on the core of our business and leveraging on what we are going to do, I mean increasing the value for tower, increasing the revenue per tower, increasing the margin and profit per tower.

So that's the strategic and the approach. Clearly, it's not easy to find targets in the sense that in Italy, there are not obvious targets. In Europe, we see clearly prices, particularly high as well as cases where the MSA, MLAs are not supporting the possibility to create tangible [indiscernible]

So strategy and approach is confirmed. Very happy to have the financial headroom are coming closer. And that is also said, as always said, if no tangible opportunity will be [indiscernible], we will consider also the additional shareholder remuneration.

[Operator]

The next question is from Georgios Ierodiaconou of Citi.

[Georgios Ierodiaconou, analyst]

Apologies if it's been asked at the moment while I dropped off accidentally. I just wanted to follow up on what has just been asked around your decision on capital allocation. I just wanted to maybe get an update as to your thinking in terms of the timing when you would look at this.

I think you mentioned during the presentation on the 5.2x net debt to EBITDA expectation by the end of the year. When do you expect to make a decision on the use of this headroom? Is it a full year kind of decision or could it be made during the course of next year?

And then just to clarify, just a quick one around the guidance. I'm just curious as to why your guidance for EBITDAaL above the top end of the range, yet your recurring free cash flow at the high end of the previous range. Is there some working capital or something else that is causing this difference between EBITDAaL and return on levels of cash flow?

[Diego Galli, executive]

Yes. In terms of timing, we will get to 5.2x by year-end. We are ready, and we think that our corridor of leverage between 5% to 6% is still meaningful. So we think we shouldn't be out of this corridor for a prolonged period of time, so for multiple quarters.

So what we think is clearly, let me say, it's a reasonable prospect that the 2023 -- in the initial part of 2023 a decision will be taken. But also it depends on how and when which opportunities will come out.

But overall, yes, 2023 is clearly an important, let me say checkpoint, of the direction of our strategy. With regards to your second question, it's the result of the fact that the interest rate is -- are moving. We have 20% of our debt, which is floating, which is variable. So the number on recurring free cash flow assumes an increase of interest, of interest rates. That's why it's -- the recurring free cash flow is impacted by the result at the top of the range, not above it.

[Operator]

The next question is from Giorgio Tavolini of Intermonte.

[Giorgio Tavolini, analyst]

I was wondering if you can clarify as one aspect of the business model of behind the Open Fiber deal. You talked about double-digit IRR, which is technically possible at least with 2 tenants, generally speaking.

I was wondering if you will be able to host other fixed wireless operators equipment on these sites or only Open Fiber will be -- so these sites will be mono-tenant since Open Fiber is the only operator allowed to invest in these white areas, has been awarded the [indiscernible]

[Diego Galli, executive]

Yes, let me start on this. We -- clearly, the deal is commercially sensitive. But let me say that the field, let me say, for the economics of the deal have been tailored on the specific of the business, so far, with Open Fiber. Basically, we did new tenants on existing site and pricing has reflected the debt.

This is a different approach where our new tenants on new sites, therefore, pricing reflects different arrangements. Also the prices, or sales in the sense that will be segmented in dedicated according to the specific operational plan. So the CapEx per site will be, let me say, different from the averages we usually talk about. Having said that...

[Giovanni Ferigo, executive]

I want to add something Diego, okay. These are tailored new sites that will permit to Open Fiber to be compliant with previous tenants, but that need to cover buildings. So these sites are totally open to the other six of our assets operators. This is interesting let me say, story that we will, let me say, manage in the next years.

[Operator]

The last question is a follow up from Stefano Gamberini of Equita SIM.

[Stefano Gamberini, analyst]

Just a clarification regarding the trend of new PoPs during the second part of the year. At the beginning, you said that the crew, the speed crew that you expect to reach was in the region of 1,500 PoPs per quarter sooner or later. So this level could be reached according to you during the second part of the year, or there is to postpone to 2023. Just to understand what are the commitment from the Anchor tenants and considering that this commitment are related to the revenues. Are these revenues adjusted for inflation or not in the contract with the Anchor tenants? They are 2 questions frankly.

[Diego Galli, executive]

Yes. So let me -- absolutely the run rate of KPIs is clearly the main driver of -- the run rate of new tenants is main driver of growth of the company. And it's coming from the new payments on existing sites as well as new sites from Anchor and others.

And we basically more than 25,000 new PoPs targeted by 2026, which overall means slightly less than 1,000 sites per quarter. Clearly, the first 3 years of the plan by 2023 has a much faster run rate that actually being extremely precise is 1,350 rather than 1,500, though is clearly higher than the run rate we had so far.

And there are rates that we still target. And we will be gradually getting there. So probably we will not be the average of the half 2, but we will see higher and interesting number in the next few quarters. So we will get closer, if not to that level.

Let me take also the opportunity to say that in the last -- now, I guess, 8 quarters somehow, we have been catching up on KPIs from operational point of view. But despite the bids or some delays, we have been able to generate revenues thanks to actually managing pricing, I would say, very well, thanks to additional services [indiscernible] upsell to our customers, thanks to the growth of new businesses.

So I think that overall, the KPIs will keep on improving, and somehow that this will make the next quarter and the next years even more solid or robust than what we have achieved so far. The blips we have seen so far actually can be recovered in a couple of quarters, based on the run rate decision [indiscernible]

[Operator]

Gentlemen, there are no more questions registered at this time.

[Fabio Ruffini, executive]

Thank you, everybody, for connecting. Have a good evening.

[Giovanni Ferigo, executive]

Thank you. Bye.

[Operator]

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