Infrastrutture Wireless Italiane SpA

MIL:INW

Earnings Call Transcript 2022-Q3

[Operator]

Good afternoon. This is the chorus call conference operator. Welcome, and thank you for joining the INWIT Q3 2020 Financial Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Fabio Fine, Head of Investor Relations. Please go ahead, sir.

[Fabio Ruffini, executive]

Good evening, everyone. Thank you for taking the time to join us. With me today is Diego Galli, INWIT General Manager. Before we begin, please allow me to draw your attention to the safe harbor statement on Page 2. Following some prepared remarks, we will be happy to take your questions. Over to you, Diego.

[Diego Galli, executive]

Thank you, Fabio. Welcome, everyone. It's a pleasure to speak with you today in my capacity as the General Manager. Over the past 20 years, I had the opportunity to be part of an important industrial project, the first tower spinoff in Europe with a business model enabling protection from macro volatility due to strong sales and highly visible and diversified organic growth.

INWIT is an enabler of digitalization, and we are confident about the opportunity set side of us. Mobile data consumption continues to grow, creating capacity needs. 5G rollout is expanding a technological leap that means more sites, more points of presence, more dedicated coverage for indoor and outdoor. We are infrastructure partners to customers seeking efficiency in network deployment through sharing economics will allow savings in costs and CapEx to operators. 

In the current context, this can be an opportunity, and it is confirmed, for example, by the demand, we are seeing for new sites. Growth in digital infrastructure is evident, and we are well-positioned to capture it. Quite a few variables have changed since our business plan presentation in November 20, both macro industry specific. Overall, the context remains positive with supportive demand. As part of our regular cycle of planning, we intend to provide a strategic update to market in the first quarter of 2023. There is a clear opportunity to further develop our partnership role with operators and to drive another step-up in new services.

The execution of the business plan will be supported by a renewed Board, as we can see on Slide 4. Since 2015, our business has evolved in a significant way, and we did with shareholder and corporate governance. Following the AGM in October, we made a further step toward best practices. Today, our Board is composed by a majority of independent directors and includes represented from the asset management industry in industrial players and infrastructure funds. To this, we had a business model with a diversified price base, 2 Tier 1 anchors, and the role of neutral in the market with unchanged commitment to the execution of the business plan. The main results of Goodsall are on Page 5. 

The trajectory of financial input was solid. I would single out plus 9% organic revenue at this level for the third consecutive quarter, double-digit growth in EBITDA with margin expansion, plus 27% free cash flow with leverage down to 5.4x. The delivery has become less volatile, we delivered more than 100 sites as expected despite the summer months. This is a function of the improved internal high-delivery process and progressively shorter permit timing. I would also like the 16% growth in all points of presence. New sites in new PoPs are expected to pick up in Q4 based on the current pipeline. Q3 was also a very good quarter in terms of lease cost efficiency despite the effect of inflation, and the growing perimeter lease renegotiation buyout transactions are up to 700 and allow us to be almost at the target we set ourselves for the year. 

The main component of our revenues are laid out in the next 3 pages, beginning Vianor tenants on Slide 6. Anchor Point of prices are up 7%, stable as compared with Q2. Over the past year, we added more than 2,400 points of presence driven by MSA commitments and the need of Timanodafone to roll out 5G in the most efficient way. Demand for new sites continue to be solid. On the common grid front, the past 2 quarters discounted some operational strategic. We consider this to be temporary. And based on the visibility we have today, we expect to see a better number starting already from Q4. Anchor MSCs are an important part of our growth story, both in terms of commitment and preferred supplier role. They are winning partnerships with our clients, benefiting from the sharing economics. Turning to our other clients on Page 7. Boto present by other clients continues to be up strongly, plus 16% year-on-year. This is one of the highest growth rates in the industry. The result added 1,700 new tenants over the past year. 

Pixelle success clients are confirmed as the main component of this growth. This segment of the market has reached about 10% of broadband connection and needs more mobile sites to add eco. We expect fetal success players to continue developing their network. The optocategory was strong as well, particularly within smart metering gateways for the utility sector. Our infrastructure services expand, and towers become more and more a note of the digital network. Moving to new services on Page 8. New services were up 40% year-on-year. This is driven by dedicated coverage projects where Daribeaters work in synergies with towers.

During 2022, the healthcare vertically is the most interesting, we covered more than 40 hospitals with a tenancy ratio of 2. There are more than 3,000 locations in Italy which need to be covered by 2026: corporate headquarter, transportation hubs, entertainment venues, hospitals, stadiums, industrial sites and public administration buildings. That solution are an answer to a clear need to have best quality connectivity indoor in the context of growing data use in location with high traffic, and to enable advanced applications, something that WiFi cannot deliver that are also evident cybersecurity advantages with us. 

And we are well positioned to capture this growth with Tier 1 and core and the leading market position. Moving forward, we expect a further pickup in new services. Moving to our P&L on Page 9. We already touched upon the driver for revenue growth, plus 9% in organic growth, with all our clients up by more than 30%. INWIT has multiple growth drivers, and they have progressively been activated. For example, we have also been successful in providing additional technical services to clients, and all prices have been very solid.

Margins continue to expand with EBITDA after lease reaching 69% when excluding one-off severance costs booked in quarter. On the cost side, we are not seeing any unusual pressure. Least cost efficiency goes on, and these costs were contained, notwithstanding the growing asset base and the inflation-linked in leasing contracts. As a reminder, our business model benefits from inflation since 1% inflation means more than EUR 5 million EBITDA after lease, and it is protected from energy costs since the arepas trough. Current impact of inflation is limited since we are applying on revenues from last year, 1.9% average figure. 

As you know, this will be a material impact from 2023 onwards. Now on cash flow on Slide 10. Recurring, free cash flow generation in the quarter was strong, more than EUR 120 million, up 26% year-on-year for a cash conversion ratio of 62%. This is a structural feature of our business model based on limited regarding CapEx and the neutral net working capital cycle, and highly secured growth CapEx below the recurring free cash flow line. In line with guidance, we expect recurring free cash flow to accelerate further in Q4. Leverage came down to 5.4x, on track to be further reduced into year-end.

We progressively create balance sheet flexibility. In the second half of 2023, we expect leverage to fall below 5x. In terms of capital allocation, we share the framework with priorities for cash deployment within a leverage corridor of 5x to 6x. The application of the framework necessarily takes into account external factors such as financing conditions and market prices. In the current context, we need to be more cautious when we look at inorganic growth, and there are options available to us, which are more organic CapEx and additional shareholder remuneration. It is fair to say that on a relative basis, to date, the attention is more on those rather than on M&A.

2022 guidance as well as the recently improved business plan guidance are confined. The figures you see on the page are based on the inflation scenario of 6.5% in '22, 1.9% in 2023. Higher inflation would mechanically adapt to our run rate. INWIT can deliver highly secured organic growth, strong margin expansion, and compelling shareholder results. This culminated more than EUR 700 million recurring cash flow in 2026. [indiscernible] 2023, we are confident INWIT growth will accelerate further as compared with 2022. MSA commitments will step up with more sites. All volumes are more visible, and optimal will continue to develop. We will further expand certain verticals in dedicated coverage. On top of this, we will benefit from 2020 to inflation, particularly on MSAs, which don't have a cap. So 2023 is set to be a year of double-digit growth with a high degree of visibility. A few final remarks on Page 12. 

The result of the first 3 quarters demonstrate that in 2022, we are beginning to reap the benefits of the industrial logic of today's INWIT. Italy is a market where there is the need to complete and improve mobile coverage and lags behind other European markets in terms of digitalization. In this context, INWIT has specific advantages in the form of the best assets in the market with a leading market share, strong MSAs, multiple sources of growth, clients and products, and technological expertise, which positioning it well for the future of the tower companies. Towers are evolving into a keynote of the digital ecosystem beyond the role of real estate or Asia infrastructure. And we are well positioned even in the current environment where market volatilities have elevated, and the Telecom industry is looking at efficiency in cost and CapEx. So we are confident to be able to thrive in this context with downside protection and growth opportunities and look forward to updating you on our progress. With this, I thank you, and we are now ready for the Q&A session.

[Operator]

We will now begin the question-and-answer session. [Operator Instructions] We will pause for a moment as callers join the queue. The first question from this conference call comes from Giorgio Tavolini with Intermonte.

[Giorgio Tavolini, analyst]

I was wondering if you can elaborate more on the delay or reduction in the 5G investments? And if you can comment more on the impact from the higher CPI on your uncontained tins if you can comment?

[Fabio Ruffini, executive]

Thank you, Giorgio. Yes, we are aware of the rumors about slowing the investments and the challenges that our customers have in this current environment. Though the MSA structure is, for us, it's very clear. And so it's supported by the clear framework, and we do see demand for new sites actually very strong, and it's actually more up to us to satisfy the demand as fast as possible. So we do see our customers showing a pressure in gas for new sites as well as progressing on the new tenants on existing sites. In some cases, as we said, some operational fatigue, which is more in terms of execution rather than strategic choice.

So let me also say that as we do see, our mission is really to support the anchor tenant as well as all the customers in the market, supporting their network deployment to be efficient and effective. So this is the mission of our company. So in this context, we have clearly the pressure on our customers is high, can also offer some additional opportunities for us to create additional opportunities, again, to support them to deploy in an efficient and effective manner to the network also to the optimization of OpEx and offload of CapEx. Sorry, I'm not sure I need to reply entirely on your point related to the CPI. And again, on that one, the contractual closes and the MSA is clear and straightforward, and we don't expect any contractual revision.

[Operator]

The next question is from Andrew Lee with Goldman Sachs.

[Andrew Lee, analyst]

Thanks for your comments, Jagan. It's interesting that we've had 2 tower companies in 1 day, basically step away largely from any interest in acquiring or in doing M&A within Europe on the tower front. Just wondered if you could maybe elaborate on your thinking as to why it's less attractive now? I think you mentioned financing, maybe pricing as well as an issue. And how we should therefore think about how you balance a more cautious approach to gearing, which you mentioned, and shareholder returns versus organic CapEx. I appreciate that there's multiple strands to that question. The second question was, hopefully, much shorter brief, which is just on the land leases. They were down 1% year-on-year in the second quarter, and obviously, they're flat now, as you mentioned, inflation linkage kicks in. Have we seen a full quarter impact from the inflation linkage in the land leases this quarter? Or should -- and so, therefore, how should we think about land lease trends in Q4 and into 2023?

[Diego Galli, executive]

Yes. With regards to capital allocation, the -- we confirm the overall framework. The point is about the application of the framework and the criteria we set as part of the framework. And in the current context, I can say the application of the framework has to consider the fact that the cost of debt is significantly higher. And for INWIT, actually, the M&A would be in 2023, actually financed by the additional debt. So this is one factor, or so, that would be simply more expensive than before. The second element is to -- is looking at current valuation and the valuation gap between public versus private makes the scenario more challenging than some time ago.

So the 2 considerations actually brings us to have a more cautious approach that -- I mean, clearly, we will continue to monitor and assess, but that's the lift to meet the criteria we set is clearly less. Let me also put in perspective the fact that we want -- we are -- we want to explore further opportunities for inorganic growth in soft home in organic, let me say, need or additional investments in the local market opportunities to partner further with the Anchor so to accelerate on the led buyout. So there are opportunities which are compelling, where actually is, at this stage, most of our focus. 

The overall balance between shareholder moderation and acceleration on investments will be driven against the biological approach. And I think clearly, the ability of the management to identify additional investments with compelling returns, so significantly higher than cost of capital will be clearly an important thing put for the decision. On ground leases, yes, in Q3 we have seen actually a different trajectory, and we have seen the impact of the inflation. The inflation on ground lease cost has been faster than our revenues because particularly, I may say, you may remember that in the current year, inflation is 1.9%, and this the mechanism whereby actually '22 inflation will be fully reflected by starting from 1st of January 2023. While on ground lease cost there is a progressive update on inflation based on the due date of the contract. So the impact has been faster and will be completely offset starting in January when we will see the full impact the full benefit on revenues. 

Having said that, the impact has been significant. And in Q4, actually, we do expect the stabilization of non-leased costs. So what we have seen in the last 2 quarters will stabilize in Q4. And next year, we will see clearly the 3 dynamics, not only the benefit -- the continuous benefit of the efficiency initiatives, but also the impact of the grower base and the inflation. So I think that the overall ground list cost is it will be to be assessed in combination ready-to-grow. As far as efficiency targets, we are well in line. Actually, we have been a little bit faster. And the last comment is actually to highlight probably the mix of intervention of actions of transactions will change a little bit. We have run really a lot on the retire negotiation initiatives, which will slow down a little bit in the next quarter. While gradually, we will see more upset and more buyout coming forward.

[Operator]

The next question is from Roshan Ranjit with Deutsche Bank.

[Roshan Ranjit, analyst]

I just got 2, please. Diego, going back to your comment earlier on about a pickup into Q4. I think you've previously said organic sites for the year should be around $500 -- organic like that, sorry, should be around $500 million. Are we still thinking around that figure, which implies quite a big Q4? And I guess coupled to that, previously, we were thinking the anchor would accelerate their pop apps -- and I think we saw that slightly this quarter, but it seems to be that the OLOs have now slowed down. Is there anything going on there? That would be useful to know. And the second question, just related to the previous question, you highlighted a change in the shift of buyouts versus negotiations. And I think the long-term target was around 20%, if I'm not mistaken. It's possible to update us on that number where you think percent of sites owned can now go?

[Diego Galli, executive]

Yes, starting from the first, the number of sites, yes, it's confirmed for year-end at about EUR 500 million. I was at before the quarter last quarter. We delivered 110 sites. That is actually more than the double of last year. Last year in Q3, we delivered 50 sites only. Now we did EUR 110 million that is an important step after. Last year, in Q4, we delivered EUR 170 million. So actually, there are all the conditions. We do see the pipeline to reach EUR 500 million, which would mark a positive improvement compared to last year and would be also important to enter next year where we do expect a further acceleration.

With regard to the new tenants on existing sites. Yes, on all, we are -- on Anchor, we are basically stable in about 500, 700, about 450 million. There is potential to do more. We do see the different steps of the pipeline, a good number. The process to go through the pipeline is taking a little bit longer than expected for the operation of fatigue in the execution in the operational activities. So we do think that this can go a little bit up already starting from Q4. With regards to the other customers with the Oros, fixed wireless MNOs, and utilities. 

Actually, we are -- in the second quarter, we are very close to 500.That's a good number considering that still, the contribution from MNOs is quite limited. So we need to put in the perspective that the potential business with Elia has not come through. So actually, this is a number which is mostly driven by fixed sales access, which is very interesting. And as it has been for the last quarter, but also complemented by these new end customers, which are the utilities where economics similar to pita success are picking up, and we do expect this to continue in the future. So we think it's a good run rate.

Again, we'll go better in Q4, will be higher in Q4. But the real potential and further opportunity here as discussed at the plant in the past, is the resolution of the dispute. And at that point in time, the Oros will be better in number and clearly in value. The last point is about buyouts. Yes, let me say the aspirational target of 20% is still there as we are moving gradually to that relatively, let me say, not pushing too much. It's really -- and we don't want to push let me alike that because the market is very easy to hit us. So we need to manage it carefully. But yes, we intend to do a little bit more in the next quarter.

[Operator]

Your next question is from Jakob Bluestone with Credit Suisse.

[Jakob Bluestone, analyst]

I just have one, please. I was just interested. I mean, when you talk about capital allocation, you mentioned M&A as well as investments and shareholder remuneration. What about debt buybacks? I think your bonds are trading at sort of $0.80 on the dollar. So buying back debt, using other sources of liquidity could delever you. Is that something you would consider? Or is that not really on the radar?

[Fabio Ruffini, executive]

Yes. Thanks, Jakob. Yes, the buyback is an option as part of the chapter of additional shareholder remuneration. I think that the -- Sorry, it was -- yes, coming to your point. Yes. So that buyback, yes. It's -- we are assessing it. We are considering it. It's not particularly convenient in these days. So it's -- yes, it's an option we are considering, but it does not appear to be convenient. And we need to consider the level of leverage because anyway, we need to consider that we will keep on deleveraging significantly and quickly. And we will be net cash positive starting by the end of 2023. That is another element to put in the equation. So as we -- I think we said already in the past, I think we are in a situation where we are in the condition to assess the different options to calibrate them. We don't have any pressure in terms of timing. What is the case that we keep on deleveraging. We are approaching the time when we will be net cash positive. And then clearly, we will monitor in the next continuously how the market conditions will evolve.

[Operator]

The next question is from Sam McHugh with BNP.

[Samuel McHugh, analyst]

2 quick questions. First on Intasco. Euribor is up about 200 bps in the last 6 months and you have about $600 million or $700 million of floating debt. I think it's about GBP 13 million to GBP 15 million of extra kind of run rate interest. I was just interested if you could kind of outline how much of that will hit the cash flow this year? Is it kind of a $2 million, $3 million, and then another GBP 10 million headwind next year, a bit of a detail on the timing of the credit facility payment? And then secondly, on the ground leases, I think you said that you're expecting to stabilize in 4Q. I was just wondering if you meant quarter-on-quarter, year-on-year P&L lease costs, or cash discuss. What specifically were you talking about?

[Diego Galli, executive]

Yes. Thanks, Sam. On interest cost, the U.S. Photon is about a couple of million in the next quarter, between EUR 23 million and about EUR 10 million in the next -- in 2023 based on the current rates. With regards to ground mess cost, yes, was stabilization quarter-on-quarter.

[Operator]

The next question is from Fabio Pavan with Mediobanca.

[Fabio Pavan, analyst]

Actually, I can make very quick one. But one is when you will be using your strategic update, you should expect also updated guidance to be shared with the community considering the Board composition exchanges, or we just instead [indiscernible]? The second question is again with, let's say, focus on the government. I was wondering if the board numbers have managed to discuss about the dentition of the European EBITDA, and is it on that front? And finally, a quick follow-up on the debt side, [indiscernible] have any need for refinance before 2025.

[Fabio Ruffini, executive]

Yes. Thanks, Fabio. Starting from the first one related to the strategic update is an update. Business plan targets are confirmed. The update will take into account the changes in the context, inflation, interest rates, the 5G recovery funds, the Open Fiber project. So the business plan is confirmed and will be updated in the context that we do see being positive. So we remain positive about the overall scenario and the role we continue to play in supporting the operators in developing their plans in an efficient and effective manner.

And yes, that's with regard to the first question. The second question on the remedies. There are no specific updates. Well, no specific update, but what just we can say is that we can -- the -- clearly, we are an actor which has limited levers that can be played. But as stated already in the past, we think that it's rational to think that a solution will be found, a solution that will balance the interest of all parties involved. With regards to the last question, which is related to the debt, yes, the first maturities by 2025. So we don't have any short unit in the short term, so no obligation in the short term.

[Operator]

The next question is from George Ierodiaconou with Citi.

[Georgios Ierodiaconou, analyst]

I've got 2 questions, please. Both follow-ups from some of the previous questions. The first one is around -- I think Diego at the beginning, talked about the relationship with the Oncor tenants. I just have 2 questions on that. Firstly, on timing, whether you plan to perhaps engage with them to come up with perhaps a new framework agreement before your update in Q1 next year? And then secondly is just to understand what kind of extra services you are looking to adding as part of any discussions you have with them?

Are we talking more about maybe I think some of the motorway, whatever other assets they had, which we acquired already from one of them? Or is it more an idea of perhaps moving into active components of the network and having a more central role within our network strategy? And my second question is just on your comment around leverage and more focus on shareholder returns and maybe acquisitions in Italy than anything else. Can I also ask whether you are at all thinking of maybe being more towards the very low end of the range, given the market conditions, rather than more in the middle? I'm just curious if it's just allocation or maybe I think you're being a bit more cautious on the actual leverage as well. Yes.

[Fabio Ruffini, executive]

Thanks, George. In terms of relationship with our Ancortenants, there is a continuous commercial discussion, relationship, there is no plan, no -- nothing about the change of the prior agreement. It's a continuous discussion about the services, which are continuously provided additional and additional opportunities. Clearly, as part of the planning cycle, our planning cycle as well as the planning cycle. This conversation will be a little bit more frequent in the next month to bring us to the plan.

But again, all this in the framework of the commitments which have been defined in the framework of our role of preferred supplier, which is clear, and keep on exploring opportunities to develop the business. And actually, this conversation go across the spectrum, you mentioned from, let me say, limited potential transfer of assets. We think that the transaction we did with Vodafone on the highway tons was a good example, and we would like to do more of those. It's a win-win approach where we can take assets and make them shared assets to benefit both the Anchor and us.

So for those, we will try to do more of those. Also for the medium long term, we are potentially thinking about extending our perimeter and spending our competences as well, the evolution of the network towards open run and the need of efficiency for the operators may help the industry to transition to a model whereby the passive infrastructure operators to do a little bit more in the value chain. So that one would be consistent. We are happy to explore and considering it for an additional opportunity.

With regards to leverage, it's let me say, we set the corridors between 5% to 6%. Clearly, in terms of there is a timing opportunity where, a timing window actually where, yes, we may be closer to 5 or at around 5 for a little bit longer than expected or originally planned, particularly thinking again about the cost of additional capital, additional financing and thinking about the fact that we will be net cash positive by the end of 2023. So there is -- there may be logical thinking where we can be closer to 5% for some quarters and then releverage when maybe the market, the debt conditions will be better, that will be complemented by positive cash generation.

[Operator]

The next question is from Luigi Minerva with HSBC.

[Luigi Minerva, analyst]

My 2 questions. The first one is a follow-up on the capital structure and the capital allocation. And thank you, Diego, for clarifying that the framework is confirmed and also the leverage corridor. I presume that one thing that is different in current market conditions is that you wouldn't releverage up to pay a dividend. -- or in a similar way when you wouldn't leverage up to fund M&A because of the debt market conditions. So eventually, I think there will come a time probably in early '23 where you would have to give clear indications whether the extra cash flow will be distributed to shareholders or used for organic growth opportunities. So I mean, the question is essentially, given the limitations from the debt market, should we expect a clear guidance in early '23, about whether the extra cash flow will go towards organic opportunities or shareholder distribution? And the second question is simpler, and it's about the electromagnetic emissions legislation. I know it's very early days with the new government. But I was just wondering whether you've heard anything from the new counterparts and governments on the topic.

[Diego Galli, executive]

Yes. Thanks, Luigi. Yes. Clearly, the capital allocation will be a topic which will be discussed and presented in the strategic update in February. I think that today, we have made, let me say, step in clarifying that. The direction and the preference in these days as the relative preference has shifted. And clearly, the relative weight relative interest for M&A is clearly more and more cautious. So that is what I would comment with regards to the first question.

Sorry, the second question was on the EMF limit. Yes, it's early days for the new government, the previous government, as you may remember, was very close with the commitment from the Digital Minister to change them to list them by the end of August, but the government didn't have enough time to bring that to a conclusion. As we all know, I think the lift would make sense, particularly in this historical phase where there is a need to accelerate investments in the recovery funds, the next generation new funds context as well. So it keeps the direction is still valid. And let me say that in other fields, we do see the government making some -- I think giving some direction, for instance, for the prevailing oil, the rate offshore drilling. We will see. We will keep on doing our job to keep this topic alive and to bring it to the attention to the government.

[Operator]

The next question is from David Guarino with Green Street.

[David Guarino, analyst]

2 questions for me also. The first one with the rising cost of materials that are needed to support your CapEx plan, I was a bit surprised to see you guys maintain your longer-term guidance. So does that mean you're reducing the amount of projects to offset those high costs? Or are you just seeing less cost pressure maybe, than we're seeing on our end? And then the second question is, you've been clear about this, I guess, for a few quarters now, but the more measured pace of lease renegotiations or buyouts, just because of the concern that the market might overheat. Could you just elaborate a bit on how that overheating scenario might play out? Does that mean landlords, they start talking to each other when and what's active in the market? I just want to try to better understand what causes the prices you might pay to actually rise.

[Diego Galli, executive]

Yes. With regards to FX, with regards to the cost of material, we have seen a spike, actually at the end of last year, beginning of this year on materials for new sites, in particular, and then it came down a little bit. We overall have an impact on CapEx in the range of 5% of the overall CapEx envelope. So we are facing some impact, but not, I would say, significant. And the overall -- the raw material prices which are relevant for us are more and more stable than a few quarters ago.

And with regards to the ground lease cost, yes, the market -- we have the benefit to be in the market where there are plenty of small landowners. But actually, on a market where here and there also came some land aggregators. And what is delicate is not bringing the market to pay higher multiples because, actually, yes, then the market becomes quite transparent. So it's really playing it in a smart when finding deals, which are -- by the way, it's strategic sites for us. And good multiples or with partners with sellers, which are, can we say, genuine partners more than how can you say, speculators, which may also then speculate on other deals. Yes, I hope I did, was it clear?

[David Guarino, analyst]

Yes. No, I think that's helpful. I appreciate it.

[Operator]

The next question is from Stefano Gamberini with Equita.

[Stefano Gamberini, analyst]

Congratulation for a new role as Managing Director of the company, and good luck. I have also 2 questions, if I may. Could you elaborate a little bit more about the new pulp from our containers? This new PoP slowdown in the last 2 quarters, you expect to pick up next year, but you have a target of 18 -- 11, sorry, 1,000 new PoPs by 2023, and this couldn't be leased, probably. Could you give us an idea considering that now revenues are up 7%, if I'm not wrong, penalties for uncoattenants will start if they do not reach a certain level of revenues, what could be right now, the level of new PoPs that should install by 2023 in order to avoid penalties in the contract you have with them?

The second question regarding in general, FWA. If I'm not wrong, the average revenue for an FWA was in the region of 3,500 is per pulp versus the USD 10,000 for the MNO was clearly, excluding Banco tenants. Is this figure still working? Or are you able to increase in the last quarters? And also, do you expect the same in forthcoming quarters the average spending or the average cost, sorry, for a new pop from FWA, thanks to a series of services or some other improvement in the contracts in order to reach the target you spent for 2023 both of revenues and EBITDA?

[Diego Galli, executive]

Yes. Thanks, Stefano. [indiscernible] -- and -- yes, with regards to the first question, yes, KPIs have been slightly below the trajectory of the previous quarters, and the targets, the plans are there. It's a question of timing. So they are taking more time to get through. In the meantime, we compensated the lower KPIs with other sources of revenues, including other services. So let me take it also from the upside point of view that when the KPIs come a little bit later, but will add up to the other sources of revenues, which we have been able to develop in the meantime.

Just to confirm again that the pipeline and the demand, and the overall plans are still supporting the plan target, is just a question of phasing and timing. And with regard to Pixel access, yes, the prices are still around that level, is a price which is related to the electronic space utilization. So -- and let me say that in relative terms, it's really convenient for us. Those are equipments which are quick to be installed. They take gross space. And yes, prices are holding up. And volume as well are at a high level. And we do expect volume to be high also in the next years. The only -- let me say, just the only fixed success exception to the average will be the open fiber rollout, and the Open Fiber projects were actually doing those related to new sites as well. So actually, the prices will be higher and to allow to support the proper return of -- on the investments of the new sites.

[Stefano Gamberini, analyst]

Just a quick follow-up on this topic. You said that we expect an acceleration that is still very high, FWA in forthcoming years. Does it mean at least this 500 POPs per quarter or 2,000 POPs per year as FW also in the forthcoming years?

[Diego Galli, executive]

We think that the -- on the MNOs, actually, yes, we will stay at this level with the opportunity to do more as soon as also the MNOs will contribute.

[Operator]

The next question is from Jerry Dellis with Jefferies.

[Jeremy Dellis, analyst]

First question, you mentioned earlier that inconvenient to look at buying back your debt at least at the moment. Just wanted to try to understand why that might be. I mean, is it really the case that with your debt yielding 5.5%, you just simply see better ways of investing that capital, in which case they would possibly not be any situation in the foreseeable future where you would look to buy back your debt? And then my second question was in relation to the leverage corridor. You've obviously talked about 5 to 6x in the past. I'm not exactly clear. Are you reconfirming that, that 5 to 6x leverage corridor won't change when you deliver your strategic review in Q1 next year?

[Fabio Ruffini, executive]

Thanks, Jerry. And the first question allows me to be more clear, actually, because we -- INWIT 2022, it's not generating net cash after the CapEx and dividend payments. We will be net positive by the end of 2023. So this means that repaying debt requires additional debt to finance it. And then there is the arbitrage between the 2 is not as far as we have assessed is not convenient. The second point about the corridor, yes, the policy still holds. We think that as a policy between 5 to 6x makes sense. That's the policy. Yes. So it is confirmed.

[Operator]

The next question is from Fernando Cordero with Santander.

[Fernando Cordero, analyst]

You have already discussed that the M&A approach to this tougher considering rates situation. I would like also to discuss just you're also seeing, or you are requesting, sorry, high returns for the organic growth CapEx in that sense. Historically, you have Telco, and you have discussed the 10% internal rate of return project and term rate of return for the organic growth investments. Is that 10% still valid? Are you looking for higher returns, considering the current situation?

[Fabio Ruffini, executive]

Thanks, Bernard. Actually, yes, we have a policy of minimum return of double-digit IRR, and we keep it as a low, honestly. We are not updating it. These are the investments with long time perspective, long-time horizon. And yes, we do think that having the policy of a minimum of double-digit EBITDA makes a difference.

[Operator]

The next question is a follow-up from Giorgio Tavolini with Intermonte.

[Giorgio Tavolini, analyst]

I just have a follow-up. I was wondering whether in this current environment, you are seeing particular initiatives from your clients to reduce energy consumption and the active equipment. We read about the [indiscernible]. And if so, if you see scope to collaborate with them in providing support in these initiatives? And in particular, if there is a clear relation between energy costs and the current restricted electromagnetically unit in Italy, in particular, if so, if you see this as a good point to rediscuss the electromagnetic limits in Italy.

[Diego Galli, executive]

Yes. Thanks, Giorgio. Yes, we are exploring options with the customers to support them in reducing the energy consumption. So we are trying to identify options, and we are thinking and working with them to -- on those. With regards to the EMS and Energy Link, actually, no, we are not aware -- we may follow up, but we are not aware of any direct link between the EMF limits and energy consumption.

[Operator]

There are no more questions registered at this time.

[Diego Galli, executive]

Thank you, everybody, for connecting. Goodbye.

[Operator]

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