TELE CELULAR SUL PARTICIPAÇÕES S.A. ANNOUNCES FOURTH QUARTER AND FULL-YEAR 2001 RESULTS

Transcription

1 Contact Paulo Roberto Cruz Cozza Chief Financial Officer and Director of Investor Relations Joana Dark Fonseca Serafim Investor Relations (41) Rafael J. Caron Bósio Investor Relations (41) Website TELE CELULAR SUL PARTICIPAÇÕES S.A. ANNOUNCES FOURTH QUARTER AND FULL-YEAR 2001 RESULTS Curitiba, March 01, 2002 Tele Celular Sul Participações S.A. (BOVESPA: TCLS3 and TCLS4; NYSE: TSU), the holding Company of Telepar Celular S.A., Telesc Celular S.A. and CTMR Celular S.A., leading providers of cellular telecommunication services in Southern Brazil, announces its results for the fourth quarter and full-year Highlights Consolidation of the network quality, reaching a significantly higher competitive level. Creation of a Business Unit, catering to the corporate segment (TIM Business), with a dedicated infrastructure: trained consultants, a separate Customer Relations Center and an independent Web site. Evolution of the Service Center to a CRC - Centro de Relacionamento com o Cliente, (Customer Relations Center) offering specific mobile communication products, services and solutions according to the customer's needs. Investment in the protection of the high-value customer base, by creating a special segmentation strategy. TIM brand consolidation: it is now the Top of Mind across Southern Brazil. Rollout of the TIMnet services. 1

2 Management Comments Tele Celular Sul not only grew in 2001, but also ensured business profitability. The operating income as measured by EBITDA grew by 47% over the preceding year, reaching R$ million. Net profit was R$ 59.9 million, having quadrupled over 2000, resulting from a 14% increase in total gross revenues and from a decrease in bad debt, administrative and marketing expenses. This is material evidence of our constant efforts to combine growth with innovation and profitability." Alvaro P. de Moraes Filho Chief Executive Officer 4Q01 4Q00 3Q Gross Handset Revenue 58, Gross Service Revenue 235, , , , ,438 Gross Operating Revenue 293, , ,667 1,056, ,082 Total Net Revenue 227, , , , ,887 EBITDA 78,962 67,393 84, , ,727 EBITDA Margin 35% 38% 43% 40% 31% EBITDA Margin (without handset sales) 44% 41% 49% 46% 34% Net Income 16,851 8,246 10,878 59,889 15,368 Net Income per 1,000 shares R$ Net Income per ADR (10,000 PN shares) Market Share Tele Celular Sul closed 2001 with a market share estimated at 66%, maintaining its competitive leadership in its region. The total penetration rate in the concession area was approximately 16%. By year-end 2001, the Company had 1.6 million customers, of which 62% were prepaid service users. During the year, 88,000 customers were removed from the total base, in order to keep the effects of bad debt to an absolute minimum. The Company covers 232 municipalities and over 1,700 km of roads. The carrier services are available to 78% of the inhabitants in its area, which means approximately 11.6 million people. 2

3 Operating Revenue In R$ Thousand 4Q01 4Q00 3Q Net Services Revenue 177,96 165,07 173, , , Net Handsets Revenue 49,372 12,228 22,866 91,074 73,966 Total Net Revenue 227,33 177,30 196, , ,887 Total Net Revenue posted in 2001 was R$ million, representing a 10% growth - or 18%, after the deduction of the effects of bad debt - over the preceding year. In the fourth quarter 2001, Net Revenue totaled R$ million, 28% above the 4th quarter/2000. The 4Q01 showed a 116% increase in Revenue from the Sale of Handsets Net Revenues from the sale of handsets amounted to R$ 91.0 million. In August 2001 the Company started selling handsets directly to the dealers; until then that activity had been outsourced. This fact explains the significant increment over the preceding year, and particularly in the 4 th quarter/2001 over the 3 rd quarter The net ARPU - Average Revenue Per User remained practically stable at R$ 39.0 in The decrease from 2000 mirrors the marked growth of prepaid services. The MOU - Minutes of Use per customer reached 115 by year-end over 123 in 2001; the reduction stems from the increased number of prepaid users in the total customer base. In the 4 th quarter/2001 the MOU was 118, and the increment over the 3 rd quarter/01 is owed to the greater use by visitors, particularly in December, because of the holiday season. Gross Revenue Composition Total Gross Operating Revenue 2001 Total Gross Operating Revenue 2000 R$ 1,056.3 million R$ million Other 8.2 Handset Sales Interconnection Handset Sales Interconnection Monthly Fee Usage Other Monthly Fee Usage 3

4 Operating Costs and Expenses In R$ thousands 4Q01 4Q00 3Q Cost of Services and Sale of Handsets 125, , , , ,366 Cost of Services 80,057 88,068 70, , ,436 Cost of Handset Sales 45,107 16,018 31, , ,930 Selling Expenses 49,408 33,273 45, , ,941 General and Administrative Expenses 19,387 11,747 15,127 67,780 48,349 TOTAL 193, , , , ,656 Bad Debt Expenses 2,883 1,773 6,481 18,335 59,051 The Company resumed the sale of handsets to dealers. The operating costs and expenses (marketing, General & Administrative expenses) totaled R$ million, representing a 2% increase over This increase derived basically from three factors: a) expansion of the customer base; b) increase in depreciation expenses, in view of the accelerated investment of recent periods; and c) a rise in costs related to the sale of handsets, due to the expansion in mobile equipment. Operating Costs and Expenses, after the deduction of depreciation and handset costs, showed a 6% reduction over the year 2000, confirming the greater control over operating expenses. 70% decrease in bad debt in 2001 SAC of R$161.0 in 2001 In 2001, the bad debt expenses totaled R$ 18.3 million, versus R$ 59.1 million in 2000, representing 2% and 6% of the total gross revenue, respectively. The average Subscriber Acquisition Cost (SAC) in 2001 was R$161.0; the increase over 2000 (R$ 136.0) reflects mainly the impact of the real devaluation against the dollar on handset prices, as well as the highly competitive scenario. In the 4 th quarter 2001, the SAC was reduced to R$ Depreciation and Amortization expenses in 2001 were R$ million (including the amortization of the premium, amounting to R$ 26.9 million), representing a 28% increase year-over-year. 4

5 EBITDA EBITDA of R$ million in 2001 EBITDA reached R$ million, representing a 47% increase over The EBITDA margin was 40% over the total net revenue or 46% without the sale of handsets - versus the 31% and 34% margins posted in 2000, respectively % 41% 43% 50% 38% 80 35% % 84, % % 20 10% 0 0% 4Q00 1Q01 2Q01 3Q01 4Q01 EBITDA R$ Million EBITDA Margin (%) % % % 40% 0% EBITDA EBITDA Margin (%) R$ Million 8 30% 20% 10% Net Profit Net Income (Loss) -R$ thousand Net Income (Loss) per 1,000 shares R$ 4Q01 4Q00 3Q ,851 8,246 10,878 59,889 15, Increased profitability in 2001 Net profit was R$ 59.9 million, having quadrupled over This resulted from the 14% increase in total gross revenues, coupled with the decrease in bad debt, administrative and marketing expenses. Investment and Funding Tele Celular Sul recorded R$ 16.9 million in Net Profit during the 4 th quarter, 55% higher than in 3Q01. During 2001, Tele Celular Sul invested R$ million, through its controlled companies, in expanding and modernizing its mobile phone network, and in developing IT systems and TIMnet.com, the company providing content for the mobile Internet. The investment program was mostly funded with cash generation. At the end of 2001, the net indebtedness was R$ million, versus R$ million in Of the total debt, R$ 59.8 million represents loans in dollars, which are totally covered by hedging operations, to protect them from exchange rate variations. Additionally, a specific portion of the BNDES loan, amounting to R$ 15.8 million, is subject to an interest rate linked to the Bank's "basket of currencies", including the dollar. There is no hedging instrument available in the market for this specific case. 5

6 Recent Events Redesign of service plans and rate adjustment On February 1, 2002, Tele Celular Sul adjusted its rates upward by 6.9% in Paraná and 4.5% in Santa Catarina. The different percentages mirror different taxation schemes in the two States. Together with the increase, the Company launched several changes to the plans, increasing usage-related benefits to customers. A wide publicity campaign was also launched to stimulate usage. In the same period, the interconnection charge (TU-M) was also increased from R$ per minute to R$ (both net of taxes). The increase is based on the inflation over the period from October 2000 to December This release contains forecasts and/or forward-looking statements. Those expectations are based on a number of assumptions. Those expectations are subject to the risks and uncertainties inherent to projections and/ forward-looking statements. The results may differ materially from the expectations expressed in the forecasts and/or forward-looking statements if one or more of those assumptions and expectations prove to be imprecise or unrealized. 6

7 Highlights 1Q01 2Q01 3Q01 4Q01 4Q Total Subscribers 1,486,673 1,508,071 1,534,566 1,603,913 1,416,484 1,603,913 1,416,484 Postpaid 736, , , , , , ,478 Prepaid 750, , , , , , ,006 Estimated population in the region (million) 14,7 14,8 14,8 14,8 14,7 14,8 14,7 Municipalities Served Estimated Total Penetration 14% 14% 15% 16% 13% 16% 13% Market share 73% 71% 68% 66% 75% 66% 75% ARPU Total 1 R$42 R$38 R$37 R$38 R$42 R$39 R$45 MOU Total SAC R$200 R$172 R$181 R$110 R$127 R$161 R$136 Capex (million) R$30 R$37 R$35 R$54 R$ R$204 Net Addition 70,189 21,398 26,495 69, , , ,218 Churn 2 3% 3% 3% 3% 5% 12% 16% Churn (including clean up) 2-6% 5% 4% - 17% - Disconnections (Clean up) - 39,949 34,176 13,815-87,940 - Point of sales Total Staff 3 1,286 1,286 1,243 1,178 1,178 1,178 1,175 Notes: (1) Average revenue per subscriber (2) Calculated over the average subscriber base. (3) Full time employees EBITDA Calculation In R$ thousand 4Q01 4Q00 3Q Net Operating Revenue 227, , , , ,887 Operating profit (loss) 16,585 6,006 14,357 76,203 4,805 Depreciation 46,914 41,475 44, , ,726 Premium amortization 6,744 6,732 6,745 26,961 14,292 Financial revenue (22,098) (8,800) (15,460) (61,638) (27,645) Financial expenses 30,817 21,980 34, ,043 85,549 EBITDA 78,962 67,393 84, , ,727 EBITDA Margin (%) 35% 38% 43% 40% 31% Operating Revenue In R$ thousand 4Q01 4Q00 3Q Handsets Sales 58,373 14,213 34, ,026 85,644 Usage 106, ,378 95, , ,722 Monthly Fees 44,952 42,996 45, , ,075 Interconnection 80,530 70,767 74, , ,394 Others 3,711 1, ,163 3,247 Gross Operating Revenue 293, , ,667 1,056, ,082 Taxes and Other Deductions (66,369) (56,954) (55,432) (264,917) (209,195) Net Operating Revenue 227, , , , ,887 Net Operating Revenue from Services 177, , , , ,921 Net Operating Revenue from Sales 49,372 12,228 22,866 91,074 73,966 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 7

8 TELE CELULAR SUL PARTICIPAÇÕES S.A. Balance Sheet at December 31 In thousands of reais Assets Parent Company Consolidated Current assets Cash and banks 1, ,462 8,008 Marketable securities 9, ,397 89,001 Trade accounts receivable 148, ,638 Inventories 21,856 12,365 Deferred and recoverable taxes 6,422 4,069 53,197 47,184 Interest over shareholders' capital receivable 17,664 7,878 Dividends receivable 859 2,489 Accounts receivable from sale of assets 10,660 Other 832 1,553 12,423 1, ,719 16, , ,175 Non current assets Subsidiaries 3,176 27,928 Deferred and recoverable taxes Deferred and recoverable taxes , ,909 Judicial deposits 10,908 10,683 Other 14 1,889 1,762 3,964 28, , ,354 Permanent assets Investments 810, ,837 28,707 16,273 Property, plant and equipment , ,165 Deferred charges 67,649 36, , , , ,024 T o t a l 851, ,812 1,502,179 1,461,553 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 8

9 TELE CELULAR SUL PARTICIPAÇÕES S.A. Balance Sheet at December 31 In thousands of reais Liabilities and stockholders' equity Parent Company Consolidated Current liabilities Trade accounts payable 2,330 3,122 63,389 98,724 Loans and financings 21,987 31,348 Debentures 8,860 7,674 Salaries and social charges 10,389 6,033 13,083 9,190 Taxes and contributions payable 854 2,877 20,794 28,245 Interest on shareholders' equity payable 20,450 4,882 26,636 8,909 Dividends payable 1,755 9,626 2,184 10,313 Subsidiaries and associated companies 5,899 Other liabilities 5,247 1,085 14,548 4,735 41,025 33, , ,138 Noncurrent liabilities Loans and financings 103, ,763 Debentures 200, ,000 Taxes and contributions payable 60,727 32,367 Pension plan contributions 2,239 2,132 2,239 2,174 Provision for contingencies 40 6,095 1,517 Other ,354 2, , ,896 Minority interest 149, ,438 Shareholders' equity Capital 245, , , ,772 Capital 195, , , ,603 Revenue s 367, , , ,740 Retained earnings 276, , , , , ,081 T o t a l 851, ,812 1,502,179 1,461,553 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 9

10 TELE CELULAR SUL PARTICIPAÇÕES S.A. Income Statement Years ended December 31 In thousands of reais Parent Company Consolidated Gross revenues 1,056, ,082 Deductions from gross revenues (264,917) (209195) Net revenues 791, ,887 Cost of goods sold and services rendered (406,033) (364,468) Gross profit 385, ,419 Operating revenues (expenses) Selling (181,424) (201,150) General and administrative (2,819) (2,990) (67,780) (74,038) Equity 62,580 8,175 (1,888) Other operating income (expense), net (973) (2,027) (15,584) (14,522) 58,788 3,158 (266,676) (289,710) Operating profit before financial results 58,788 3, ,720 62,709 Financing revenues (expenses) Financial income 27,062 3,134 45,278 17,463 Financial expenses (22,717) (2,097) (72,045) (62,619) Exchange variations, net (223) 15,529 (17,638) (12,748) 4,122 16,566 (44,405) (57,904) Operating profit 62,910 19,724 74,315 4,805 Non-operating income (expenses), net (256) 2, ,507 Income before taxes and profit sharing 62,654 21,854 74,325 8,312 Income tax and social contribution 434 (4,997) 672 6,320 Employees profit sharing (3,199) (1,489) (4,129) (2,262) Minority interest (10,979) 2,998 Net income for the year 59,889 15,368 59,889 15,368 Net income per thousands shares (R$) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 10

11 TELE CELULAR SUL PARTICIPAÇÕES CELULAR S.A. - PARENT COMPANY Statement of Changes in Shareholders' Equity In Thousand of reais Paid-up capital Capital Revenue s Capital Special premium Legal Unrealized profits Special for dividends Profit for expansion Retained earnings Balances at December 31, Partial reduction of capital (100) 100. Incorporation of parent company goodwill Net income for the year Partial realization of unrealized profits (32.427) Appropriation of net income for the year:. Legal 768 (768). Interest on shareholders' equity (2.515) (2.515). Dividends (9.241) (9.241) Balances at December 31, Capital increase (9.908) (59.353). Net income for the year Realization of unrealized profits (94.228) Special for dividends (19.257). Profit for expansion ( ) Appropriation of net income for the year:. Legal (2.994). Interest on shareholders' equity (20.782) (20.782). Dividends (859) (859) Total Balances at December 31, Share value per thousands shares (R$) 2,39 11

12 TELE CELULAR SUL PARTICIPAÇÕES S.A. AND TELE CELULAR SUL PARTICIPAÇÕES S.A. AND SUBSIDIARIES Statement of Changes in Financial Position Years ended December 31 In thousands of reais Parent Company Consolidated Financial resources were provided by: Operations Net income for the year Items not affecting working capital Depreciation and amortization Deferred taxes amortization Exchange and monetary variations and interest on long-term receivables (1.787) (16.733) Exchange and monetary variations and interest on long-term liabilities Provision (resersal of provision) for contingencies 40 (502) (2.003) Equity result (62.580) (8.175) Net book value of property, plant and equipment sold Pension plan contributions Minority interest (2.998) Gain on investment 255 (2.130) (2.130) TIMNET non-consolidation effects (4.736) Third parties Increase of long-term liabilities Transfer from long-term receivables to current assets Total resources provided Financial resources were used for: Long-term receivables Subsidiaries Deferred and recoverable taxes Judicial deposits Other Permanent assets Investments Property, plant and equipment Deferred charges Dividends and interests over shareholders' capital Transfer from long-term liabilities to current Total resources used Increase (decrease) in working capital (4.522) Changes in working capital Working capital at the end of the year: Current assets Current liabilities (4.306) (17.310) Less working capital at the beginning of the year (17.310) (12.788) ( ) Increase (decrease) in working capital (4.522) The accompany notes are na integral part of these financial statements xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 12

13 TELE CELULAR SUL PARTICIPAÇÕES CELULAR S.A. - PARENT COMPANY Statement of Changes in Shareholders' Equity In Thousand of reais Paid-up capital Capital Revenue s Capital Special premium Legal Unrealized profits Special for dividends Profit for expansion Retained earnings Balances at December 31, ,872 16, , , ,966. Partial reduction of capital (100) 100. Incorporation of parent company goodwill 205, ,503. Net income for the year 15,368 15,368. Partial realization of unrealized profits (32427) 32,427 Appropriation of net income for the year:. Legal 768 (768). Interest on shareholders' equity (2,515) (2,515). Dividends (9,241) (9,241) Balances at December 31, , ,603 17,512 94, , ,081. Capital increase 69,261 (9,908) (59,353). Net income for the year 59,889 59,889. Realization of unrealized profits (94,228) 94,228. Special for dividends 19,257 (19,257). Profit for expansion 327,838 (327,838) Appropriation of net income for the year:. Legal 2,994 (2,994). Interest on shareholders' equity (20,782) (20,782). Dividends (859) (859) Total Balances at December 31, , ,695 20,506 19, , ,329 Share value per thousands shares (R$) 2.39 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 13

14 TELE CELULAR SUL PARTICIPAÇÕES S.A. AND TELE CELULAR SUL PARTICIPAÇÕES S.A. AND SUBSIDIARIES Statement of Changes in Financial Position Years ended December 31 In thousands of reais Parent Company Consolidated Financial resources were provided by: Operations Net income for the year 59,889 15,368 59,889 15,368 Items not affecting working capital Depreciation and amortization 1, , ,089 Deferred taxes amortization 7,217 Exchange and monetary variations and interest on long-term receivables (1,787) (16,733) Exchange and monetary variations and interest on long-term liabilities 12,519 6,475 Provision (resersal of provision) for contingencies 40 (502) 4,578 (2,003) Equity result (62,580) (8,175) 1,888 Net book value of property, plant and equipment sold Pension plan contributions Minority interest 10,979 (2998) Gain on investment 255 (2,130) (2130) TIMNET non-consolidation effects (4,736) Third parties Increase of long-term liabilities 23, ,886 Transfer from long-term receivables to current assets 26, ,175 19,093 18,597 Total resources provided 24, , , ,950 Financial resources were used for: Long-term receivables Subsidiaries 51,877 Deferred and recoverable taxes 50 19,613 32,814 Judicial deposits Other 1,168 2,156 Permanent assets Investments 10, ,863 11,100 Property, plant and equipment , ,524 Deferred charges ,615 23,786 Dividends and interests over shareholders' capital 21,641 11,756 Transfer from long-term liabilities to current 17,818 19,588 Total resources used 11, , , ,526 Increase (decrease) in working capital 13,007 (4,522) 91, ,424 Changes in working capital Working capital at the end of the year: Current assets 36,719 16, , ,175 Current liabilities 41,025 33, , ,138 (4,306) (17,310) 204, ,037 Less working capital at the beginning of the year (17,310) (12,788) 11,3037 (147,387) Increase (decrease) in working capital 13,004 (4,522) 91, ,424 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 14