Telecom Italia SpA
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Telecom Italia SpA
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Ladies and gentlemen, good afternoon, and welcome to Telecom Italia 2020 Results and 2021-2023 Plan Presentation. Carola Bardelli, Head of Investor Relations, will introduce the event.
Ladies and gentlemen, good afternoon. This is Carola Bardelli, Head of Investor Relations. A very warm welcome to our 2020 Results and '21-'23 Plan Presentation. I'm here with our CEO, Luigi Gubitosi; and our CFO, Giovanni Ronca; Pietro Labriola, TIM Brasil CEO, is connected from Brazil. Luigi will provide an overview of last year's achievements and on the 3 years plan. Pietro will present TIM Brasil's accomplishment [ and strategy of ] fourth quarter results. A Q&A session will follow.
Pointing out to you our safe harbor disclaimer on Page 1. Let me remind you that our comments are based on IFRS 16 standards and that we are showing an after lease view, on which we base our guidance, in line with most of our peers.
So Luigi, the floor is yours.
Thank you, Carola. Good afternoon, everyone. Good morning for those of you connecting from the States. It is a pleasure for me to comment upon results I am proud of.
As some of you may remember, in my first interview for the Financial Times, I stated that my objective was to transform TIM in a normal company with motivated people, united shareholders, a cash-generating business, a company that would pay dividends out of ordinary income, with governance in line with best practice and attentive to ESG. Well, I think we did something more. We transformed TIM in a much better company, a point of reference for the entire country that in the coming years would operate in an improving macro and telco context and is ready to ride all the opportunities that in the last 2 years we created a back door, both in Italy and Brazil.
This is a very dense slide since TIM, in the last 2 years, has delivered a lot. Our first goal was cash flow generation and debt reduction. We did well above our initial targets, which allowed us to reinstate dividends on the ordinary share. Indeed, a small sign for the time being, but we are sure there will be more to come. Governance was dramatically improved, and I'm pleased to see that the current Board of Directors presented its own slate with the aim of continuing the work done so far. We are also delighted to see the CDP Chairman joining our Board. We created important optionalities for value in Italy, as we'll see in the next slide, and in Brazil, that will discuss more in-depth with Pietro.
More recently, we succeeded in stabilizing our customer base. We're seeing an improving pricing environment. We optimize and continue to work on processes and organization with an implied cost-cutting that allowed us to reach in 2020 the target we have set ourselves for 2022. We have transformed TIM Vision in the richest content platform in Italy. Last but not least, we raised the bar on our ambitions to make the world a better place, and we met both our ESG and financial guidance. In this journey, we have transformed our key infrastructure, fixed mobile data centers while increasing coverage, particularly in the so-called white areas of our country. We are progressively upgrading them to newer technologies, and we are the most advanced company in Italy in the field.
We've introduced sharing business models that optimize the return on capital employed and produce re-rating of hidden value, allowing partial monetization. More importantly, these deals have made TIM stronger in its core business with a clear business model that makes it possible to deploy the best technology at higher returns. We follow this template in the INWIT Vodafone towers merger, in the FiberCop co-investment scheme with KKR and Fastweb, in the Google alliance in cloud and data centers, in the acquisition of Oi, together with Vivo and Claro. We're now ready for the next step.
This year, we're raising the bar to generate value from what we call beyond connectivity. A new plan builds on the previous ones, and this enabled by the innovative infrastructure I described before. Lean and well organized. We're now ready to win market share in adjacent markets.
Our objective is to use convergence beyond more -- mere connectivity to strongly expand our business into a number of growth markets, while continuing to improve our traditional core basis on a daily basis. Before providing details on our plan, let me summarize 2020 achievements. The main result is undoubtedly the stabilization of our domestic core business.
Fixed service revenues were flat in Q4. Domestic service revenues were not far from flat either despite some one-off drags in mobile. Domestic EBITDA was flattened as well in Q4. As you know, in the last 2 years, we took tough decisions to repair rational telco market behavior in 2018. With stock price increases on the existing customer base, we decide to cut profitable business that were annoying customers in order to improve customer satisfaction. We implemented stricter commercial policies. In other words, we took some short-term pain on revenue and EBITDA in order to improve better sustainability in the long term. And of course, on top, we had the pandemic. The good news is that all of this is behind us now, and we are entering what we see as a better landscape in 2021 with a stronger company.
So the big news today is fixed lines have stopped folding for TIM. Yes, we went back to positive net adds in fixed. It is the first time in the last 19 years. Ultra-broadband net adds almost tripled year-over-year. Service revenue were flat year-over-year in the quarter. I'm sure most of you will recall our Fix the fixed strategy, which indeed seems to be working well. In a nutshell, we increased coverage. We now reach 91% of families with ultra-broadband after opening 18,000 cabinets in 9 months, mostly white areas, the biggest effort done by TIM historically in the field. The increased coverage is helping hundreds of thousand families to get a better connection during the pandemic and is making a big contribution to closing a digital divide gap in Italy.
We announced our convergence portfolio in the consumer space in TIM Unica. We added the fixed mobile and TV bundling, also smart home, and a certified WiFi proposition, which allow us to raise acquisition price in a more for more concept. We introduced convergence in B2B, mainly in the ICT and cloud space, reaching record high growth in rates, 28% year-over-year. And the mobile, thanks to convergence, the success in fixed is pushing also mobile where MNP stabilized.
An important driver of growth in fixed is the change in habits that has slowly started before the COVID pandemic and was strongly accelerating by the pandemic itself and is here to stay. Smart working and remote schooling lead Italians to rediscover the importance of reliable fixed connection. This is why many who would cut the fixed line to go mobile-only are going back to fixed. After many years, Italy is recording an inversion of the fixed mobile substitution trend. Of course, people are not renouncing to mobile, but they add an ultra-broadband fixed line.
And what happened so far is likely to be only the appetizer of what we expect will come when the huge amount of funds set aside by the Italian government and Europe will start to be deployed. We are speaking of a total of EUR 2.7 billion of Italian funds and EUR 46 billion from the Next Generation EU just for the portion allocated to digitalization. And of course, many other sectors will somehow require digitalization to accelerate their transformation. If you considered only a fraction of the initial EUR 200 million set aside for vouchers was used so far, you can imagine the firepower that several billions can have to stimulate the telco and digital sector at large.
The second driver of improvement is a leaner and more efficient company, thanks to the better processes in all areas. Commercial, operations, technology, administrative and [indiscernible] hugely improved. We are #1 in mobile among the big operators. Activation drop rates fell. Bad debts was down 31% year-over-year despite COVID. And you see more KPIs on the slide, but the list is long. Head count was down 11% with voluntary exits and employees taking advantage of preretirement scheme, with people engagement and satisfaction raising materially at the same time. As a result, or what I partly described in the previous slide, cost have fallen even more than our expectation. The addressable cost base was down 9.5% in 2020. So we reached 2 years in advance the target we gave ourselves for 2022.
Speaking of targets, I'm glad to say that we generated EUR 1.6 billion of equity free cash flow in 2020, exactly 1/3 of our EUR 4.5 billion to EUR 5 billion 3-year guidance for the 2022 plan, which, by the way, was actually upgraded versus the initial guidance we have provided in 2019 despite the COVID pandemic. On net debt, we exceeded by almost EUR 2 billion our original target. And already in 2020, we are not far from the guidance we have provided for 2021.
As you know, sustainability is embedded in our plans. We are doing a lot to improve our impact and that of our suppliers and clients. The biggest effort is in enhancing our infrastructure and efficiency, which has multiple benefits. It lowers emissions, reducing our energy cost, and it will also generate additional revenues through the monetization of white certificates. In fact, in December, the largest efficiency plan to date in Italy has been approved. Plus our P&L is already benefiting to our inaugural sustainability bond. We kept the cost of debt quite significantly with the lowest coupon ever, 1.625%. We're implementing a circular economy as an approach as well as a new organizational model, with very good results on our people engagement.
Here again, we reached in 2020 the target we have set ourselves for 2022. We're working for our country and closing the digital gap, both by expanding our network and by training the population on digital. As we speak, there is no more digital divide in Puglia, and we're closing the gap in Friuli Venezia Giulia, and Lombardy is looming on the horizon.
In summary, we achieved all the goals we had given ourselves for 2020, and we're on track on our long-term targets.
Now let me hand over to Giovanni, who will briefly illustrate our Q4 financials. I'll be back to illustrate the details of our plan. Giovanni?
Thank you, Luigi. Good afternoon, everyone. Q4 results show strong improvement versus Q3, both on top line and EBITDA trends, both in Italy and Brazil. Importantly, full year guidance was met. Domestic EBITDA actually grew on a like-for-like basis once deducted year-on-year effect of the lower number of solidarity days.
Equity free cash flow after lease grew 57% year-on-year beating expectations. Net debt after lease improved EUR 2.1 billion in the quarter, including the last round of monetization of INWIT stake. On an annual basis, debt fell EUR 3.3 billion.
Just few words on Fixed, on which Luigi already anticipated most of the good news. Retail line losses turned to positive net adds. Should we look at it as a performance peak? Probably not. In Q4, the voucher program impact was still limited. So as Luigi said, it has to be considered as the combined effect of our Fix the fixed strategy and of a structural change in customers' behavior.
For retail ultra-broadband, Q4 was the best quarter since Q2 '19, with net adds up 170% year-on-year, doubled versus previous quarter. Churn improved both quarter-on-quarter and year-on-year. In wholesale, ultra-broadband activation closed the year with record positive delta versus copper disconnections. The positive line balance was 169,000 in 2020, up 32% year-on-year.
This slide shows that the improvement in fixed service revenues was evident across the board. Let's look into it in more details. National wholesale benefited from the better mix we saw in the previous slide and from some new commercial agreements closed in Q4. International wholesale good performance is mainly related to the solid growth in the data business. Last but not least, retail showed a steep sequential improvement versus Q3 for better trends in customer base, consumer ARPU and in ICT.
Moving to mobile. All KPIs show good progresses. MNP balance kept improving with TIM remaining the best operator among large MNOs. Further steps towards customer base stabilization were taken with human net adds more than housing the decline, both quarter-on-quarter and year-on-year. Also calling human line losses held in 2020 versus 2019. Customer satisfaction improved, leading to churn reduction. And last but not least, Net Promoter Score performed, staying well above other large operators.
Moving to next slide. We see that mobile service revenues more than halved their year-on-year decline versus Q3, thanks to several factors. The main 3 are lower drag from one-offs, improving customer base trends and a more positive pricing dynamic. The 3.3 percentage point drag from one-offs is expected to continue fading off in 2021, going below 1 point. Wholesale good improvement relates to MVNO revenue growth and positive national wholesale trend.
This slide is about costs. As Luigi already mentioned, we experienced a significant 9.5% reduction in full year 2020. I can add that the addressable baseline was down 7.4% year-on-year in Q4, despite the commercial push. I won't go through all the details, but let me only just stress again the fact that labor cost in Q4 is affected by 0 solidarity days versus 4 days in Q4 2019. Net of this difference, the reduction will be 9% year-on-year, driven by lower headcount with 2,600 net exits in 2020.
Let's move to the next slide. Q4 group CapEx was flat year-on-year. In Brazil, higher CapEx was needed in Q4 to catch up with investment slowdown recorded during the pandemic. In Italy, rollout speed up in white areas was more than offset by strong deployment efficiencies. With EUR 2.7 billion domestic CapEx in full year, guidance was met. Working capital contribution improved EUR 500 million at group level, with Brazilian tax benefit exchange rate more than offsetting negative one-offs in the domestic business unit. Net one-off working capital outflow was EUR 240 million versus EUR 600 million in 2019. For your reference, this slide shows the reconciliation of IFRS 16 net debt with the after lease view.
Let's move to the next slide. Net income reached EUR 7.2 billion, including the effect of our realignment of intangible tax asset value. Excluding this effect, it would have been EUR 1.3 billion, almost 50% above 2019.
Let me now give you some more details on the tax asset realignment. In 2020, Italian law granted the possibility to realign intangible asset tax value to the book value with the upfront payment of a 3% substitute tax calculated on the redeemed amount. The net benefit for TIM is equal to EUR 5.9 billion over 18 years, including the approximately EUR 700 million substitute tax to be paid in 3 yearly installments, starting now.
Now let me hand it back to Luigi.
Thank you, Giovanni. This year is paramount to start from the macro context. We are leaving unprecedented times, which caused unprecedented reactions, the magnitude of the GDP declined last year and of the Next Generation EU Fund this year is such that 2021 GDP growth swing versus 2020 is likely to be one of the biggest in modern history.
Bank of Italy is projecting significant GDP growth from 2021, which will be boosted by the Next Generation EU that assigns to Italy as much as EUR 209 billion. This boost is expected to be around 2.5 percentage points in the planned period. As I said earlier, approximately 20% of the recovery fund is attributed to digitalization, which means over EUR 46 billion for Italy. The digital sector is set to outperform the economy. You see the buckets in the chart on the left of the slides. In a nutshell, we expect help for the telco sectors to benefit both on revenues and on the CapEx side.
Second good news for the telco market is that new habits, such as networking and PayTV OTT, led Italian to rediscover the importance of the good quality fixed connection. As I explained before, this led to the inversion of the fixed to mobile substitution trend. And you can see in the pink chart at the bottom of the slide that in Italy, the percentage of population using broadband mobile-only is over 10 points higher than the rest of Europe. The gap is partly due to a very good quality of the mobile network, but also a gap in infrastructure in the white areas, with the latter, however, quickly closing. Smart working is there to stay. TIM is an example. PayTV is more and more OTT. Cloud gaining is becoming more common. In short, we see many reasons why demand for connectivity is expected to grow.
And the third good news is that the demand for services beyond connectivity is expected to grow at a much higher growth rates, both in the B2C and the B2B space. How are we going to ride these opportunities? We want our commercial proposition to be more and more unique and based on the best and more efficient technological infrastructure. This is key to grow our more traditional business. Maintaining and growing our customer base is paramount to us. But our clients want more, a more complete offer, which require us to move in adjacent markets.
How are we doing it? We learned from past experience that moving into adjacent market requires specialization, accountability and focus. This is why we are basing our approach on vertical specialized factories. We did this in the cloud data center business, carving out a new company that we call Noovle. And this is what we are doing in IoT, cybersecurity and also international wholesale.
2020 revenues in adjacent markets are in the region of EUR 700 million, excluding Sparkle, and we plan to more than double them by 2023. Let's see it in the next slide.
These are our main growth engines. We call them factories. All of them operate in specific adjacent markets and are managed in separate business units. At the same time, their go-to-market approach is integrated with TIM sales channels in order to deliver the best competencies to all our clients.
A quick word on them. You're all familiar with Noovle, a new cloud factory, benefiting obviously
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EUR 1 billion revenues and EUR 400 million EBITDA by 2024, twice 2020 level. And so far, we're on track to get there. Telsy, a similar ambition in cybersecurity. Olivetti is our IoT factory. We target double-digit CAGR for Sparkle EBITDA as it will expand market share serving a wider set of customers, including OTTs and enterprises in more geographies. TIM Vision becoming a true national champion, with a dedicated organization and a team of experts in media and content. PayTV is indeed an increasingly important pillar of our convergence strategy and in consumer segment. We're now using big data and artificial intelligence for micro segmentation of our customers, followed by specific marketing and gearing actions. We'll obviously continue our digitalization efforts, and we are confident that
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and even grow our fixed lines, strongly increasing the ultra-broadband and convergent customer base.
We said video is one of the killer application for ultra-broadband. The concept we wanted to pass with this slide is that TIM is capable of providing today multiple contemporary video streams with customers across the entire country. 99% of the country gets a speed in between 30 and 200 megabit per second, which is enough to have 6 to 40 video streams under the same time. As you know, we'll bring this speed to over 1 giga with full FTTH coverage. But the reality is that TIM already today is ready for the next step in video habits.
Convergence is now the heart of our business offering as well. We offer end-to-end IoT cloud solutions for enterprise and public administration, including dedicated one-to-one approach for high-value accounts and a turnkey ICT offering for SMEs and SOHOs with a new dedicated sales channel. In short, connectivity and beyond for the entire Italian corporate world.
Wholesale, I'm quite proud of. 2020 was another very good year. We'll continue to enhancing our ultra-broadband offering, nonregulated services and we'll go beyond connectivity, even for our competitors. For example, we'll offer them our data center services. And for peers, we're offering cloud services, security and IoT internationally.
Although we are 2 years in advance with our OpEx plan, we'll continue to optimize cost. As an example, the main initiative plan, we will continue to use preretirement schemes with improved bad debt by another 30%. Plus, we are thinking also out of the box, and we will monetize efficiency improvements in our infrastructure by selling the so-called white certificates to less virtuous companies that are obliged to compensate buying these certificates. Part of this monetization already been approved by and is embodied in a plan. However, we expect much more to come in the future.
Not much to say on CapEx, as we already announced our plan that took over 76% of the black and gray areas with FTTH by 2025 and to reach 5G national coverage by '25, '26. And the year, the amount we plan to spend domestically remains unchanged at approximately EUR 2.9 billion. The real new news is that FiberCop co-investment proposal has been published, shaped according to the new European telecommunication code, which envisages sharing risk with co-investing operators and easing regulation. I mentioned FiberCop. So let me recap the status of our key strategic initiatives.
FiberCop carve-out was finalized, as you know. The co-investment scheme is now open to all-in operators. The company is ready to execute this plan. The target for 2021 around EUR 0.9 billion EBITDA. At the end of March, TIM will cash in EUR 1.8 billion approximately from KKR for a 37.5% stake in the company.
On the single network, some progress was made. Enel announced disposal of its stake in Open Fiber to Macquarie. And even more relevant, the technological due diligence of Open Fiber and FiberCop was completed, confirming our initial expectations. There are -- obviously, this is covered by an NDA, but there are significant synergies we should and could be achieved by merging the 2 network.
The data center carve-out is completed, EUR 0.5 billion revenues EUR and 0.2 billion EBITDA were generated in 2020, in line with our plans. So we reiterate EUR 1 billion revenues, a EUR 0.4 billion EBITDA target for 2020 for the data center business.
In Brazil, the auction was awarded to TIM Brasil, Vivo and Claro. We are confident CADE, the local authority, will green-light by Q4.
But let me leave the floor to Pietro for the Brazilian angle of the plan.
Good afternoon, everyone. I'm Pietro Labriola, CEO of TIM Brasil. Thanks for watching TI Group plan update.
2020 was marked by the COVID-19 pandemic, which imposed major challenges to society with impact on public health and the economy. To manage this situation, it was necessary a lot of focus on execution with agility in decision-making and digital coverage. As challenging as this context has been, the company proved to be anti-fragile, presented solid results at the end of 2020 and seeded a solid path for the future.
In the second half of 2020, we saw a recovery in our revenue dynamics, helping service revenue to close the year with positive growth backed by mobile, postpaid and fixed revenue. Our volume to value strategy is paying off, automatics are growing consistently and showing the ability of the company to accept value from all segments of its customer base. Additionally, a report focused on improving service quality, combined with the launch of innovative offers, helped to drive strong churn reduction.
It's also important to highlight our strong execution on the OpEx front, maintaining its evolution at a slower pace than inflation. One key element for that performance was the bad debt, which continuously improved throughout the year. As a result, we post the best LatAm profitability, reaching an EBITDA margin of 48.5%. It's worth noting we are above our guidance for 2022, once again delivering on our promises and earlier than expected. 2020 EBITDA surpassed BRL 8.3 billion, which helped to solidify a strong cash flow and consequently and healthy net debt level.
Some additional 2020 highlights. Our infrastructure is developing well. Our mobile network was awarded as having the best 4G experience once again. Our FTTH coverage grew more than 40%. And we managed to roll out 2 innovative network projects during the pandemic, the Massive MIMO in 4G and the network sharing agreement with Vivo.
On the front of special project, we signed the deal with Oi and started the process with the regulators to have the deal approved. We guaranteed the first equity stake in C6 Bank, our financial service partner. And we are evolving according to the plan on the FiberCo deal. We expect a signing by March.
Our ESG journey continues to evolve. TIM Brasil was listed in the Standard & Poor's ESG Index, while the company also reinforced its governance with the creation of an ESG committee attached to the Board of Directors. All in all, we are delivering on our promises. We are reaching our financial targets.
Moving forward to the plan update. The main trends we foresee as a market mover in the next 3 years will have structural implication on the Brazilian operators. The consolidation of the mobile market is finally becoming a reality. We expect it to foster a more balanced competitive landscape, reducing the current spectrum gap between players. In this context, TIM Brasil will be the protagonist, consolidating most of the Oi's assets. The pandemic highlighted the importance of data connectivity. Telecom is up in the macro environment, while data traffic continues to boom. This combination could point to better monetization of data usage. Meanwhile, our ability to deliver efficiency will be essential to overcome the pressure of a network cash cost.
Worldwide, we have seen increasing initiatives of network separation, service costs and InfraCo, helping to unlock the hidden value of the infrastructure and serve other strategic goals.
Another opportunity for value creation is related to the concept of telco's consumer platform, driving companies to leverage its customer base and channels to provide additional services.
5G is another key trend, although Brazil hasn't yet auctioned its frequencies. All the players are already trying to position theirselves in this new technology. There are 2 interesting elements to watch. Brazil catch-up opportunity with Release 16 implementation and the fixed wireless assets as the first material use case. Globally, the IoT market is booming. In Brazil, some verticals are ahead such as agribusiness, but we should see a catch-up coming from other industries.
Our strategic pillars for the 2021-2023 plan represent a continuation of our path started in 2015 with no need for disruption. Our solid result confirm the consistency of our strategy. So we expect to continue strengthening the core, accelerating the transition from volume to value in mobile, capturing a larger piece of the broadband opportunity, closing the spectrum gap and capturing additional value after the acquisition of Oi assets, building the future with new growth opportunities to develop other sources of revenue and creating a real consumer platform approach. At the same time, implementing transformational projects in our infrastructure.
As enablers, we foresee boosting disruptive efficiency through digitalization, automation and new operating models while we continue our ESG journey. It is clear, TIM Brasil at the end of this process will be a different company in terms of size, positioning, asset base and mainly cash generation. We have a clear road map to capture market opportunities for the next 3 years, which can translate in great aspirations.
In mobile operations, we are confident that filling the spectrum gap will allow us to become the preferred mobile player. For the ultra-broadband, we aim to accelerate the deployment of FTTH. And we expect to further increase the role of IoT, creating a distinctive ecosystem in several industries. Consumer platform will materialize in new form of new business, following the step of C6 Bank partnership. We want to continue setting industry benchmark in terms of efficiency, scaling, digitalization and improving processes. And last, but not least, we are committed to ESG transformation that could make TIM Brasil a reference in the country.
I'm reaching the end of my section. So I'd like to share TIM Brasil's main financial dynamics. With the implementation of this plan, we expect to accelerate our growth while increasing profitability and generating significantly more cash. Following Oi assets integration, compounding growth rate could be high single digits for revenue and double-digit for EBITDA. CapEx on revenue should start falling in 2022.
As guidance we have mid-single-digit as service revenue grow in 2021 on a stand-alone basis. Combining Oi assets, high single-digit CAGR. EBITDA growth in 2021, mid-single-digit, including preparation cost to integrate Oi. Combining Oi's assets, double-digit CAGR. CapEx around BRL 13.5 billion for the 3 years, accounting for Oi's asset integration. And EBITDA plus CapEx over revenue of approximately 24% in 2021 and above 29% in 2023 after Oi assets combination. Our ESG ambition are presented today, together with the group's target. But we will have a specific session on ESG in TIM Brasil Investor Day next week, where we will discuss in more detail.
Thanks once more, and I hope you enjoyed my presentation.
Thank you, Pietro. You will not be surprised to see that our '21-'23 plan focuses again on cash generation deleverage, confirming the dividend policies announced last year. We expect to generate more or less the same amount of equity free cash flow at the midpoint of the previous EUR 4.5 billion to EUR 5 billion guidance. However, as Giovanni explained, we are spending approximately EUR 700 million over the plan period to realign our intangible assets' tax value to the book value. This will give us net of the next 3 years cash out, a EUR 5.9 billion P&L and cash benefit over the next 18 years. So our equity free cash flow guidance is EUR 4 billion, net of this cash out.
In fact, the net figure of EUR 4 billion is already in line with consensus, I understand. So no surprises over the plan period and some very good news after the plan period. We also decided to save EUR 40 million by anticipating payment of EUR 278 million for the 2,100 megahertz spectrum, which will affect 2021 net debt, not equity free cash flow, obviously.
Guidance, we have many moving parts. Deals such as Oi, that is yet to be approved by regulators. So let me give you what we are confident with, and then you can build over this base by adding Oi on our strategic initiative. We'll build on our Q4 achievements, stabilizing the domestic business and then growing both on revenues and EBITDA. We expect EBITDA to grow a bit more than revenues. Group revenues and EBITDA will benefit from Brazilian growth, which is expected mid-single-digit before accounting for the contribution of -- from our mobile assets and double-digit with Oi.
Domestic CapEx remain at EUR 2.9 billion per year, and Brazil is projected at BRL 13 billion in the 3-year period before Oi integration costs and EUR 13.5 billion, including Oi integration cost. Cumulated equity free cash flow after lease target is EUR 4 billion, net of EUR 700 million
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will be around EUR 16.5 billion by the end of 2021, including both the tax realignment cost and the anticipation of the 2,100 megahertz spectrum cost described in the previous slide as well as FiberCop proceeds. By 2023, we project the leverage ratio to fall from 3x EBITDA to 2.6x on an organic basis. We are confirming our dividend of EUR 0.0275 for the savings and a floor of EUR 0.01 on the ordinary shares.
On ESG, we are confirming the long-term targets we presented last year and improving the term objectives. We are adopting industry-specific sustainability accounting standards, anticipating taxonomy, and so beating our environmental targets for science-based validation. With this plan, we're ready to support the acceleration of Italy towards sustainable development that the new government has put in agenda as a priority.
So what are the key takeaways of today's conversation? Revenues and EBITDA were stabilized in Q4. ESG and financial guidance were delivered. We see an improving scenario for Italy and the telco sector. TIM is ready to ride all these opportunities in connectivity and beyond, both in Italy and Brazil. We are confident with the guidance we gave you. And we are all committed to creating value for our shareholders and for the entire society, making the world a better place to live in.
With that, let me thank all of my colleagues for their relentless dedication and hand over to Carola for the Q&A session.
Thank you, Luigi. Operator, we're now ready for the Q&A session.
[Operator Instructions] Next question -- first question comes from Mr. Mathieu Robilliard from Barclays.
A question on the domestic business first. So obviously we've seen much improved KPIs in the fixed business as we flagged. And you said part of that is due to the vouchers, part of that was due to an improvement in the trends. And I was wondering if we should expect that to accelerate in 2021. And if the vouchers will touch other top line or revenue items such as ICT, for example. And a follow-up to that is what happens after the vouchers have expired? I guess, it's a 1-year program. Are you counting on the fact that it will be renewed? Or could we see, at some point, the decline in volumes?
And then I have the second question with regards to Brazil. So the government or the President in Brazil discreet made some comments and some changes in utility companies, and there seems to be concern about price increases in some utilities. But I was wondering if this is something that could impact TIM Brasil ability to move its price as it wants.
Okay. Thank you for your question. You basically were asking if the trends that we experienced in Q4 were to be continued. Actually, if you look at the way the quarter went and you go back to our third quarter results, we basically told you more or less exactly what happened. Now you're asking what's the impact on the voucher on this, is this going to continue.
First of all, on the voucher, we really use it only a very relatively small amount. And we're talking about the smaller voucher program, the EUR 250 million for the lower income families. There is a bigger program of EUR 900 million, which is yet to be launched. So -- and I think these programs are not limited by time. They are limited by the amount which has been made available by the government. So I guess, the voucher is there to stay.
You see, we basically, in 2021, 2 different winds. One is a headwind, which is the state of the economy, which obviously have been impacted by the pandemics. The other wind is a strong tailwind, which is given by the fact that the government is investing some money, as you can see in the various programs. The recovery fund will arrive. And as a matter of fact, we expect the telco sectors, the digital sector at large, which for us is even more important, to -- basically to outperform the rest of the economy. So do we expect? Yes, we still expect the vouchers to play an effect next year.
Then the exact timing on when the larger program will kick in and when the European Next Generation EU Fund will occur, obviously, might vary. However, it seems from us from the first moves that the government is making that they are very determined to make it central. Together with the pandemic issue, the Next Generation EU utilization will be one of the key points. You were also making a point about Brazil and whether -- I mean, I read something about Petrobras, which I think what you make in reference, I don't see any connection with our activity or our business. Did I answer your question or there was anything else that you wanted to?
I mean, on Brazil, obviously, there's no connection between Petrobras and your company, I agree. But I think the comments made by the President were more about utility pricing in general, and obviously, that's speculated at this stage. But I was just wondering if you had heard.
Frankly, I think it will be very much wild speculation at this stage. I prefer to look at facts. And as the CEO of the majority shareholders, I look at facts, i.e. the numbers that Pietro showed us. And I was quite satisfied with it. But don't tell Pietro.
The next question comes from Mr. James Ratzer from New Street Research.
Two questions, please. So the first one, just based on the kind of strong commentary you're giving about the European recovery fund. I'm interested in the detail you give on Slide 28 where you give the breakdown of the EUR 46 billion that could go towards the digital economy in Italy, and you've broken that down into the different buckets. Could you help us to understand which parts of those buckets you think Telecom Italia could be active in? I mean, clearly, there's the UBB 5G EUR 4 billion bucket. But how much of the transition 4.0 EUR 19 billion bucket, for example, do you think Telecom Italia could participate in? So that would be really helpful.
And then secondly, I think the results and the guidance are all great. If I could just kind of niggle on one point, was around your wireline ARPUs. If I look at your retail wireline service revenues, excluding ICT, there still seems to be some ARPU pressure in that part of the business. I mean, albeit looked like it stabilized a bit quarter-on-quarter. Could you help us to understand what's happening within the wireline ARPUs? And is that quarter-on-quarter stabilization you've just seen now something more indicative for the future?
Okay. So you basically had 2 questions. Let me answer the first part with the one on the recovery fact. First of all, let me explain you what is 4.0 in the -- it used to be called Industry 4.0. So basically, these are incentives to industry, to modernize, to industrial sectors, to companies basically. Basically, on the -- invest was like this. If you were to buy, I don't know, trucks or new plant or equipment and so on, you could get tax advantages or subsidies. What will happen now is that companies are going to be incentivized to become digital.
What this will mean? Well, details are going to be provided by the government and we don't have the full details yet, but you should expect that this will encompass a number of digital services. For example, going to the cloud or buy cybersecurity or implementing a new IoT system. So all of that would indirectly benefit some of the business that we have. We definitely are going -- and the same is true for culture and tools, digitalization.
I'll give you an example, something that we're doing in a large city in Northern Italy, I would say, larger city in Northern Italy. We are putting, for example, sensor in our cabinets to provide real-time effect -- or real-time analysis of the quality of air. This is part of a city digitalization, but also benefit us indirectly because we are the provider of the service, which is available to our cabinets, which, by the way, our cabinets are a unique structure because it's 168,000, I think, roughly throughout the entire country, which have electricity and fiber connection. And so that's a very good place to analyze what's going on in a city. So smart cities is a business that, as you know, we're looking at in this [ trade ].
When you look at just this digitalization, what kind of services would they require? I would imagine they will require to connect all their offices through secure connectivity. They will require a private cloud. They will require cybersecurity. So it's all businesses in which somehow we may get involved. Of course, when you see UBB, 5G and satellite, that's us. I mean not only us. Of course, there is other guys, as you know, that are providing similar services in Italy. So it's the sector as a group. But somehow, while I see us less involved in microprocessors, for example, we -- as you know from our plan, we would like to be a partner to small and medium enterprise in making them more digital and provide them ICT services. So I would say that we will try to enter through many of those services, which is why we are quite bullish about the Next Generation EU Fund.
And I think while it's difficult to tell you precisely in advance in how many of those 46 we'll enter, I can tell you that we'll enter somehow also in some that are not exactly the 46. For example, a green revolution, which is basically the ecological component, if you'd like, the green component of the plan. But basically, this will require lots of sensors. And in turn, we require connectivity and we require artificial intelligence. It require a lot of things that the end are digital. And the same instance for infrastructure. Again, you can follow what's going on, on your motorways network from remote. Again, one might argue that sensors on a well-known bridge might avoid it, what happened in retrospect or maybe not, but it should be one better added. So I guess that this strong push towards modernization and this strong push towards a better and more digital Italy give us a very wide opportunity. I wouldn't be able to quantify you to the last digit, but I guess it's a lot. And how much it is, it will really depend on us. It depends on how good are we as to present our services. How able are we to intercept the needs, the desires and wishes of our fellow countrymen and the governmental policy. I hope that I answered some of your question.
And as always, as we move on over the next quarters, this should become clearer and clearer. And specially, what happened with the Italian subsidies that quarter-by-quarter, we were able to clarify. And on the smaller part, it has already been put up for grab, we have performed well. And I expect that we'll get our fair share, possibly more. I think you had a second question.
That's really interesting. But could I just one quick follow-up? I mean you set a data center carve-out revenue target of EUR 1 billion by 2024, and that target was set before the launch of this European recovery fund. So I mean, presumably, that's one area you're quietly confident that target looks conservative?
Well, I mean, we're talking about growth above 20% and, call it, conservative. It's counterintuitive, let's put it this way. As a matter of fact, I would expect to, this year, to grow above 20%. Anyway, it's going to be double-digit and the first digit is not a 1, most likely.
There is a strong need for data centers in Italy. Everybody is saying it. One of the question I would make is what's going to be the timing for the government to implement. But there is a lot of attention, as you know. The data center and the data issue in general has been quite felt throughout Europe. And I speak with my colleagues, either [ in the same Board ] or in fellow incumbents or other operators. And the data is a big issue in -- throughout Europe. We have basically entered in a number of bodies, including GAIA-X. GAIA-X is going to be the main sector of standards in Europe, and we very much believe in this initiative. So cloud was a business that was very minor in TIM 2.5 years ago. It's now up and running, has been very well staffed. There is a -- we're building our hyperscale. And we're very excited about it. So yes, that could be a business that could surprise us on the upside.
And this is not just cloud. Obviously, we're doing edge computing. We're actually making our first experiment with quantum. I mean technology, it's a fantastic -- give us a fantastic range of opportunity if you can be quick to adapt them and commercialize. And in fact, as you have seen in our Slide 32, basically we have a target of our factories revenues to more than double in the next 3 years.
And if you're okay with that, I would tell Giovanni to answer your second question. Giovanni, please.
James, so going straight to your question. Broadband ARPU consumer is seen in a positive territory already in 2021. Broadening for a second the answer to what we do expect for 2021 in fixed service revenues. We do think that they will be overall stable. On the retail service side, the trend will improve, thanks to broadband services, to multimedia and to the IT you mentioned. From an ARPU standpoint, I think that the trend is improving as well. I mean there is a better pricing environment in acquisition prices. There is evidence of more -- for more actions. One example is the certified WiFi launch in September on our side. And the content offer is accelerating.
On top of that, you have a very good performance of Sparkle on the international sales side already visible in Q4, in particular on the data side. There are good partnerships, integrated portfolio, security, IoT, cloud. So we are pretty, pretty happy about our business. Customer base performance trend will be stable in the 3-year plan, probably thanks to a lower churn. And the broader addressable market, including the reach of FWA and thanks to the opening of the new cabinet in rural areas, is giving us comfort. This is -- was to give you flavor what we see fixed going in 2021.
Next question comes from Mr. Mandeep Singh from Redburn.
So can you just confirm, I think you said earlier on the call that you're going to get the money from KKR in the end of March? Can you just confirm that, if I heard that correctly? And then really, my main question is, obviously, we've had a change of government in Italy. All of us are very familiar with who the minister is for sort of digital, and that is one of your former biggest competitors, who never really was in favor of [indiscernible] the single network will be majority-owned by Telecom Italia. So can you just give us some perspective on how you see the political change in Italy impacting the future of the single network? Whether you think it's acceptable for you to have majority ownership? The EU seems to be against it. I'm sure Mr. Colao would be against that. So just some thoughts on the change in politics in Italy and just some clarification on the KKR money.
Okay. Your first question is KKR. Yes, should be on or about -- or around March 31. We confirm that as of today, we have no reason to say that, that would not happen. If there were to be a delay would be, which I don't envisage, by the way, at the moment, we're talking about weeks, not months. So yes, indeed, will happen. And in fact, the activity at FiberCop, let me tell you, it's already ongoing. So we think it's going to transfer the shares, but the activity has started and it actually has started well. We are progressing alongside our plan.
Your second question -- you broke at some point. But I think you were asking what do we think about if the new government might change something about the future in network, in particular, because you said we have Mr. Colao as one of the ministers. Yes, indeed, of course, I knew well Mr. Colao when he was at Vodafone and afterwards. We've been known him for a number of years, and I always considered a very good competitor. He's doing a different jobs now and is looking at the benefit of the entire country. And I respect his opinion. I had an opportunity to already have an exchange of ideas with him as well with other ministers. As you might note, we have a number of high-profile ministers in these governments, both political and technical. Frankly, I don't like, unlike some competitors, I don't like to speculate publicly about what they think or what they tell me. But at the moment, I will just tell you that no reason to believe that there is any change of plans by the government, meaning, that there is an agreement that we have with CDP, and I expect it to be honored.
I would like -- if I may say something just to make a parallel. You may recall that over the last few calls, a number of questions were made about, is that true that the European Union is going -- [ expected the deal ] -- and the potential deal. And we always refuse to comment. Unfortunately, at some point, Commissioner Vestager herself commented saying that they have not expressed yet any opinion, but there is no preclusion, while on a number of competitor generated press reports was written otherwise. So I wouldn't -- one thing I can tell you because I know I respect very much some of the ministers. They know how to be discreet and reserved. They're not going to go talk with newspapers or with agencies, the press agencies about what they do or what they're not going to do. They're going to think, act and then they will tell, vice versa. I hope I answered your question, and we'll go to next one.
Next question comes from Ms. Charlotte Perfect from Arete.
And well done on a good set of results, especially in Italy. Two questions. Firstly, on the 2.6x leverage guidance. Is that effectively the target that we should think about for the trajectory of the -- for an increase in shareholder return towards your dividend distribution policy?
And then secondly, on Oi in Brazil. On Slide 45, which is very helpful, the EBITDA margin lifts up immediately. How should we think about what effectively the business that you're acquiring there? Are you bringing over the subs and the network? Are you considering any further costs? And how should we think about that? It looks as though the EBITDA margin effectively would be higher than the 48.5% that you would incorporate, and then there will be synergies on top of that. So just the feel of the cost on the headcount that you would be effectively absorbing into TIM Brasil would be helpful. On the CapEx, it looks as though you've got integration costs going through, but some color there as well would be helpful.
Okay. Two questions, I'll answer your first, and I believe we have Pietro still connected, so he will answer directly from Brazil. So your first question was about the 2.6x target that we gave. Well, I mean, this -- it's simple because we're seeing EBITDA stabilizing and then growing. At the same time, we plan to continue generating cash at the same path that we're doing today, which has been quite satisfactory. And in fact, this is one area where we're very proud to have beaten our own expectation and the market expectation constantly. So the results will bring the ratio down, and we're going to target this ratio at the end of the plan. That should be good news in general for shareholders.
Our -- I think our dividend policy will be set based on the fact that we actually continue to achieve deleveraging. And I'd like to remind, it's now 2.5 years that we have these quarterly calls, and I'd like to reiterate once again that I'm very committed to deleverage the company. And in fact, today, we have a much stronger capitalization structure even due to the new asset we ascribed today. But in general, we remain committed to reduce this debt. And fortunately, things are going in the right way. So we think we'll be able to continue to pay dividends to our shareholders. And as we said in the past, if the deleveraging goes well, we would like to continue to revisit the objective later on and see what's doable. But for the time being, we maintain an unchanged dividend policy and we expect to get to the 2.6x in 2023.
I think your second question for Pietro. Pietro, can you answer the question, please?
Yes. Sure. Thank you. I think that to give a better answer to your question, it's important to understand the way in which the operational process for new integration will succeed. What will happen is that during 2021, we will wait for the approval of the national watchdog, CADE. That is expected could happen by the end of the year. What we will do is that during 2022, we will start the migration of the Oi customer base that will be attributed to TIM in our network.
What it means then? During 2021, we had to spend some CapEx and a small amount of OpEx to prepare our network and our operation to host the Oi customer that we get from this deal. During -- so during 2021, you will have no improvement that would be determined by the acquisition. In 2022, we will migrate the Oi customer base in the TIM network, mainly in the 3, 6 months. And by the end of the year, everything will be migrated. What it will mean? That we'll have during 2022, the -- our revenues arising from the Oi customer base in our balance sheet. What will happen is that during 2022, we will have also an improvement in terms of EBITDA because the revenues of Oi customer base will add a contribution of 60% of EBITDA because it's clear that we don't have to replicate all the OpEx to manage this customer, this customer base. I don't have to explain to you how much is important economy of scale in this kind of business.
In 2023, we will be at -- in a regime situation, and our EBITDA will further improve, going close to 50%. Why? Because we will offset also the temporary service agreement costs that include -- that we will add during 2022 that will pay to only for the interim period to continue to manage in their system their customer base. The value of this temporary service agreement is already included in the value of BRL 16.5 billion that is the value for the Oi acquisition.
All in all, so what will happen that we will start in -- we will leave 2020 with 48.5% EBITDA margin and we'll close 2023 close to 50% in terms of EBITDA. In terms of CapEx, as you can see, in terms of the increase of revenue that will be close to EUR 4 billion, what will happen is that we will -- in the 2 years. What will happen is that we'll have an increase of CapEx just of BRL 1 billion. And so as you can see also in our guidance, we will arrive at the level of EBITDA minus CapEx. That is very interesting because it's above 29%, combining the asset, that for sure is a benchmark. I hope that my answer was helpful or if you need more details, please feel free to ask.
Next question comes from Mr. Luigi Minerva from HSBC.
So the first one is on your content strategy. Now it's clear that in your next strategic sales, content will become more important. So I wanted to get some clarification about your agreement with DAZN and particularly whether -- well, there was an article referring that you would contribute to 40% of the cost of the Serie A football rights should DAZN win. So whether that number is confirmed, whether it is part of your guidance at the free cash flow level. And also I wanted to understand what degree of exclusivity you have with DAZN. So whether you will be just an anchor payment for the rights package at favorable rates or whether you will be actually the exclusive distributor for them.
And the second question is on the goodwill and the tax windfall. So the decree law was approved by the Senate in October. And I was wondering why disclosing it now. Is it just technical timing? Or if there was any other reasons? And then I just wanted to understand whether the benefit will kick off immediately in '21 or only in '24? So after you have paid the substitute tax?
Okay. Let me answer your 2 question. With regard to DAZN, that always -- I mean I don't know which articles you were referring to because there have been a number. As typically happens, there are some articles that are more accurate than others and there are others that are totally inaccurate. So let me make a general statement. DAZN is bidding for the football rights. TIM is not bidding for the football rights. We would be a technological partner and will be a distributor for DAZN. This is what I can say. So we're not contributing per se to the purchase. We're contributing as a distributor if that happens, as we are for Disney, for example.
Having said that, with regards to specific terms and condition, there is nothing in our plan because this is -- would be a thing that is not there at the moment. And as you know, we only insert in our plan what we have already signed or is extremely likely to happen. So we don't know who will be the winner.
What I can tell you is that we're pursuing a content strategy and will be active anyway. For our country, it will be a great opportunity. And I'm talking regardless who will win. If DAZN were to win because DAZN is -- has commented that they would like to bring everything over as an OTT and that would create a major migration towards OTT from the satellite platform, which is something that is already occurring in many country, i.e., satellite is becoming an older platform compared to fiber, and something that at some point will happen also in Italy. And this DAZN deal would be an accelerator. But as I told you, at the moment, we're watching it. And so nothing is in our plan.
Second question is that why...
If I may, just to clarify. There is no exclusivity on the TI side?
Just to clarify, we have an NDA on our agreement with DAZN. So when the deal -- if there was a deal to happen, then we will disclose. But at the moment, there is nothing in our business plan. And there's nothing more that I can say. And I won't release interviews on this. And so at the moment, we're only watching, and we don't comment on something in which we are not managing directly.
The -- having said that, you were talking about cash flow. If we do it, if we were to do something with DAZN, we will do it because it creates value, obviously.
Your second question, you said, why we're commenting about taxes now because we closed the year. We look at the applicable law. We looked that this was applicable. We checked with our lawyers, we asked for opinions. And then today was the date in which we disclosed our data, yesterday night at the Board. I think every other ways of doing it, of making it or disclosing it in different moments would have been inappropriate. Every quarter, we disclose our data, and we'll continue to do so. And obviously, the benefit you're asking, when does it start from. It starts from '21, but obviously, at the beginning, we'll be paying. So from the '24, we get the net benefit. And by the way, these are not -- there is no maturity date for the usage of this. So in principle, it's over 18 years. But of course, were you not to be able to use it in 1 year over the 18, that could be used the following one. It's unlimited reporting.
If that's okay, I will move to the next question or do you have any follow-up?
Next question comes from Mr. Keval Khiroya from Deutsche Bank.
I've got two questions, please. One on the single network and one on mobile. You shared your latest thoughts on the single network, but would you be able to give us your latest thoughts on potential timing with respect to the outcome, the relative valuations, the potential for the deal signing? And how long do you think the regulatory review could take? I know it's [indiscernible], but just your latest thoughts would be helpful.
And then secondly, you had an impressive performance in mobile, also on the KPIs with the human line loss less than 100,000. As it relates to 2021 and as you see the market today, do you think that sort of line loss is sustainable in '21?
Okay. So if I understand correctly, you were asking me for an update about the single network in terms of timing. Was that your question?
That's correct. Yes, please.
Well, I guess we commented this slide, let me remember, it's 39, I think. Basically, the -- actually, the major news, as long as we're concerned, was that, basically, we have completed the due diligence, the technical due diligence. Even that is covered by NDA, so I cannot comment specifically. But I think the good news is that there are huge synergies that could be created that obviously are time-sensitive. And so -- and basically, I think we -- and by the way, it also concerns a number of other expectation of ours about architecture and so on and so forth.
Basically, it's -- those synergies are available over time, and the earlier the better. Sometimes it seems like CDP and us have a similar sense of urgency. Sometimes even the sense of urgency of analyst is somewhat different. But I'm sure that with the willingness of the government and CDP of implementing this agreement and generating these benefits for the country -- because at the end of the day, yes, we do benefit, Open Fiber would benefit, but the one that would benefit the most will be the country. Then I think it will occur earlier rather than later. We -- as you know, the government has been formed right now, I mean, just in last couple of weeks, and so we're looking forward to understand what their position is going to be on these very matters. Although we -- as I said before, we do have an agreement signed and with -- and no reason to believe the position of CDP has changed on the matter.
I think you had the second question as well.
Yes. I try to...
Giovanni [indiscernible]. Is the first one is okay? Or any other comment...
Yes, that's helpful.
Your second question was about human lines. Looking at 2021, mobile human line trends is improving, halving the losses. This is mainly due to the improvement of CSI that is driving a very good performance of the business and the fact that convergence is paying off. So the strategy is a winning one. So this is the up we have for 2021.
Next question comes from Mr. Fabio Pavan from Mediobanca.
We have managed to discuss a lot about the fixed. So I was wondering if you can also provide us some update on the mobile. Can you confirm that after Iliad has managed to increase its price, the picture on competition is improving? Or do you believe still under the one part, we still have some price pressure?
I think it would be interesting to see what the Q1 ARPU is going to be for Iliad and see what effective rate which they have been selling is. We obviously do not have this element. I think we are encouraged by the fact that they have also EUR 9.99 offer. We do not have anything on the market at the moment below EUR 9.99, which is -- I think it's good to maintain discipline. Not everybody is as disciplined. But I guess the market on the mobile in terms of ARPU. And again, this is what we think. We have no certainty. We'll trend -- will be -- the ARPU will be stable to increasing.
I mean, Iliad has a tough 2020 in terms of cash burn. They are building their own network, but the cash is needed anyway. And the amount of giga that people are utilizing is increasing by 40% to 50%. So if you maintain your price stable, you are basically -- you are losing more money. And they're also getting up the share of the market. I think they're around 9% to 10%, where it would make sense for them to increase. The market, however, as you have noticed, is pretty cool on MNP, and even the Q1 is possibly even cooler. I mean, January and February, we didn't see a lot of movements, definitely not from ourselves. But in general, we think the market is relatively stable. So in summary, I think the market will be -- it's likely to go up at some point in 2021, when I think you probably should ask Iliad directly.
Giovanni, I think there was a second question as well.
Yes. I think that Fabio was asking also about the trend in 2021. So assuming that the market performed rationally, revenue stabilization is expected by the end of the year. Let me only remember you that in 2021, the 3.3 percentage point drags affecting Q4 are expected to decrease and go below 1.1 percentage points. So this will be a benefit for the year.
Next question comes from Mr. Jerry Dellis from Jefferies.
My first question was on the realignment of tax value. I understand that there are some clawback elements in the legislation. And I wondered if you could explain to us, please, what would happen to the EUR 5.9 billion of net benefit in a situation in which you were to dispose of assets, whether those are cloud assets or whether those are fixed network assets. What are the boundary conditions that would enable you to retain the tax benefit for those -- for the goodwill associated with those assets, please?
My second question has to do with the domestic mobile market. You mentioned that MNP volumes down close to 20% in the fourth quarter. Presumably, that's a close proxy for churn. Your domestic mobile margins must be relatively sensitive to the amount of churn in the market. And you talked in your outlook statement about a positive view on MNP dynamics. So the question is, what sort of assumption for market churn essentially is baked into your domestic EBITDA guidance for 2021? Any comments around that would be very helpful.
Okay. First of all, I'm not sure that you're reading about the tax is correct in the sense that we could dispose of assets. I think what we need to maintain at any time is reserve for at least the same amount. What would happen in case we were to reduce results, it would be that it will be taxable, that component will be taxable the same amount. So let's assume that we were to distribute all the capital. And then we would lose the benefit. But we could sell all the assets that we deem -- in fact, said in other words, the benefit is based on your balance sheet at the end of December 31, 2019. So that's the picture you take and then you calculate out of that. So this is crystallized and we got these benefits.
I think your -- the second question, Giovanni, do you want to?
Yes. It was -- expected churn for 2021. We do expect it lower than the one experienced in 2020.
Last question comes from Mr. Giorgio Tavolini from Intermonte.
Just a clarification on my side. Regarding your 3-year leverage guidance. I understand that it includes the EUR 1.8 billion cash in from KKR in 2021. But your guidance include also the -- any minority from the KKR and software-related to the minority protection rights and the guaranteed return on fiber cost investment.
The second question regards the saving share conversion. If you are still considering the possibility to convert your saving shares into ordinaries.
And the third one is on the FWA segment. Do you have any interest in consolidating your presence in Italy in the fixed and wireless access space by consolidating the small players such as EOLO? The press this morning was suggesting your interest in EOLO.
Okay. I'll answer your question. The first one is last -- I start from the last. The answer is no. We have a lot of respect for EOLO. I have a high opinion of its management, and I think it's -- they've done a good job. Yes, we do want to consolidate in FWA, and we're doing it organically and very successfully. So we'll continue to do FWA. I can't exclude cooperation with somebody at some point, but we definitely are not going to buy neither EOLO nor other players in FWA anytime soon. So I didn't read the specific article you're mentioning to, but otherwise, we would have denied it. Probably was busy reading other things this morning, given that we published our results yesterday. So I don't know how this rumor came up, but the answer is a straight no.
Then you were also asking the saving conversion. We have a new Board, we'll discuss it. You guys know what I think about saving conversion. We'll see what the new Board will talk about.
And by the way, as I didn't get a chance to answer a question on the Board, we're very pleased, and I think we should commend the outgoing Board, which voted unanimously to appoint a new slate of directors, although some of them were not to be reappointed. And it's -- indeed, we got a very high-quality Board with new directors coming with impressive credentials, and we look forward to working with them. And one of the items would most likely be also this one.
And you have a third question before.
Dividend policy, [ final thoughts ].
We're starting on December -- on March 31, and we're looking forward to invest in doing our network. Then we look out, things will move along. And also, what will be allowed on the credit lines, they will have to establish and then we'll take a decision. But don't hold your breath for that. Anything that's basically -- anything else we can help you with?
Congratulations for these set of results and for the new plan.
Thank you, and I would like to take the opportunity to thank everybody and for your attention. And I think we'll see you at the Q1 results. Thank you very much. Bye-bye.
Thank you from my side as well, from the whole team. And we are available in Investor Relations for any follow-up you may have. Thank you, everybody. Bye-bye.
Ladies and gentlemen, the conference is now over. Thank you for calling.