“A2A and, in general, all the multiutilities are in dialogue with Enel and with other operators on the subject of optical fiber. It is a question of understanding what spaces there are to provide a better service at a lower cost to citizens and territories. The logic goes in the direction of avoiding double excavations to install the fiber in addition to those already envisaged in the work plans of the utilities". John Valotti, Bocconian and executive chairman of A2A, makes it clear that the Lombard group intends to participate in the game on ultra-broadband but maintains a pragmatic approach on the topic of the moment, that of the new super-fast infrastructure after the presentation of the Enel plan at Palazzo Chigi. At present, it seems premature to speak of an exchange of shares: "Let's see", he says and does not go further.
In the plans of the Lombard multiutility – strong in the 2015 accounts concluded with a return to profit of 73 million after 200 million in write-downs and supported by the update of the industrial plan for the 2016-20 period – telecommunications therefore occupy a limited space. The bulk of the growth, he himself explains in this interview with FIRST online, will come from the important investment plan increased to 2,2 billion in the period and from M&A, according to some guidelines focused on smart grids, energy efficiency, environmental business, with an increasingly careful look at cost savings and a sustainability balance sheet which, he promises, “is an integral part of our business. We aim not only to make profits, as the shareholders ask us, but also to how to make them because this is not only an ethical value but also a significant factor of competitiveness. We like the idea of a quality profit”.
There are numerous challenges to be undertaken on the eve of the local elections which will make a confrontation with the new directors unavoidable, for A2A as for the other utilities controlled by local authorities. In the background there is still a trend of decreasing electricity consumption, confirmed by Terna's March data, and a decrease in energy prices. If 2015 was the year of a change of pace for A2A, on which lines are you aiming for development in a scenario that puts energy companies under stress?
“In 2015 we achieved better results than the objectives we had identified in the first industrial plan, presented at the time of our establishment, with the managing director Luca Valerio Camerano. In the last six months, the global energy scenario has considerably worsened and an update of the plan has become necessary. However we are calm and confident, on the basis of the new guidelines, that we are able to compensate on other businesses, such as the Environment, for example, or with the offer of innovative services, such as those linked to the Smart City and energy efficiency in which we want to be pioneers. Furthermore, we have launched an internal cost efficiency program, the EN&A project, which pushes us to cut every minimum waste".
The market has appreciated your indications, A2A shares have risen by 3,8% in the last month.
“The market appreciated our efforts and immediately after the presentation of the plan, the stock was up about 4%. Furthermore, most analysts estimate the target price to rise with Buy judgments. The change of governance and the exit from the dual system have contributed to improving trust and perception of the market. Lastly, it is important to underline that we have chosen ambitious objectives but proceeding with a prudential approach: we have left out of the plan some projects on which we aim but not yet completed, with an estimated impact of between 250 and 300 million on Ebitda. A sort of "life insurance" of the plan that will come into play to improve it or to make up for it in the event of partial failure".
Are you referring to the acquisitions of Linea Group and the strengthening of the partnership with Acsm-Agam, the two Lombard utilities?
“The contract was signed with Linea Group and is now being examined by the Antitrust. We plan to consolidate it as soon as the deal is concluded: it would have an impact of over 75 million on Ebitda and around 550 million on revenues, figures which for now have remained outside the perimeter of the plan. A strengthening of the partnership with Acsm-Agam is possible above all if our multi-utility model is well understood, which leaves the brand, the headquarters, the employees to the territories and puts into play the potential of an alliance with a large industrial partner such as A2A" .
Is it possible to give a value to potential acquisitions?
“If we talk about strategic operations such as those just described, they affect 100 to 150 million Ebitda out of the 250-300 we have talked about. Outside this perimeter, we will proceed with specific operations related to individual businesses. But I would like to return to the particular emphasis we have placed on sustainability in the new plan".
With what concreteness?
“We have translated our objectives into numbers: for example, for separate waste collection we want to reach an average of 70% in all the Municipalities managed. Consider that Milan is the capital of Europe with 53%. We want to give sustainability, understood as everything that returns value to the stakeholders, the same importance as the economic results which envisage a doubling of the dividend over the period of the plan thanks to the increase in profitability. Before the devaluations, inherited from the past management, the increase in profit in 2015 was 59% in one year”.
Meters and smart cities, what are you going to do on this front?
“We too will start with the gradual replacement of the meters with more advanced models. We have already implemented LED public lighting, which brings enormous savings, in Bergamo, Brescia and Milan and now we will proceed with other municipalities. And then there's a whole range of new services: intelligent parking lots, bins equipped with special sensors that facilitate the collection of full ones, poles that regulate the intensity of the light according to the passage of vehicles and people, new generation cameras for security, home automation. It is a wide range of innovative proposals”.
The plan also provides for the closure of thermoelectric plants for 3 Gigawatts. Where? And how will the areas be reused?
"The sites involved in the definitive closure plan are San Filippo del Mela and Brindisi (-1,6 GW) and will be transformed into renewable energy poles, in particular for San Filippo del Mela a combustion plant for secondary solid fuel is planned ( CSS) and solar thermodynamics, while a pole based on photovoltaics, solar thermodynamics and energy storage will be created for Brindisi. The other sites, gas-fueled CCGT plants located in Northern Italy, will see the partial closure of specific production groups and will therefore continue to produce albeit on reduced capacities (-1,4 GW)”.
