Results Presentation 1Q10. TIM PARTICIPAÇÕES S.A. Investor Relations. Rio de Janeiro, May 3 rd 2010

Transcription

1 Results Presentation Q Rio de Janeiro, May 3 rd 2 TIM PARTICIPAÇÕES S.A. Investor Relations

2 Disclaimer. Q2 Presentation and Earnings Release are presented in BR GAAP (without any accounting changes). Operational data are presented for TIM stand alone basis in order to allow better comparison. In addition, growth for net service revenues and EBITDA margin (pag. 2) are also presented in IFRS (following Telecom Italia accounting report rule) Agenda year later: a Better Company (TIM Only) Q 2 Economics & Financials (TIM+Intelig) 2 Goal: Strengthening the Foundations

3 Q snapshot: more Revenues, higher Profitability Customer Base Net Service Revenues %, Mln lines, EoP Customer Base Post-paid Pre-paid % +6.9% % R$ Mln +6.2% in IFRS* TIM 2, % 2, Voice 28 Mobile +2% YoY Market share (# lines) 23.5% 23.6% TIM + Intelig 2, % 3,46 25 EBITDA EBITDA Margin R$, Mln TIM % % TIM 2.% +57 bps 25.8% ~29% in IFRS* 4 2 TIM + Intelig TIM + Intelig % 8 9.5% +53 bps 24.8% ~28% in IFRS* * IFRS figure according to controlling shr. report 2

4 TIM PARTICIPAÇÕES S.A. Investor Relations One year later: a Better Company Quality of Service Sales Productivity Improvement Network Drop calls % dropped calls..79 Q 9 Q Traffic Out Bln of Minutes X2 Q 9 Q Q KPIs Net Adds Post Mln Q Q Caring CSI Customer Satisfaction Index IDA Caring Performance Index (Anatel) Ranking Anatel Quality 93.4% Customer Base 99.8% Mln % in March Net Adds Pre Mln.. Q 9 Q 6 Q 9 Q Q 9 Q Q 9 Q Q 9 Q Breaking the Rules Market Research Nov/Dec 29* Player Player pp +3pp +3pp pp vs. previous wave # in Innovation Innovation Efficiency # Costs #4 (as % of Revenues) +57 bps in Margin Q 9 Q Q 9 Q % on services revenues Cost Control Commercial costs and -4 bps Bad Debt Q 9 Q Industrial costs and ITX -7 bps Q 9 Q Player pp Personnel and G&A costs -5 bps Q 9 Q * % of respondents which indicated the operator as innovative company Data refers to TIM only 3

5 TIM PARTICIPAÇÕES S.A. Investor Relations Quality of Service (/2) : Network Reliability Radio transmission 2G (Capacity) Drop Call # TRX Activated 352 x 3,852 % dropped calls..79 % of network quality in March CAPEX Mln R$ 567 Outgoing Traffic (bln min) Q 9 Q x 3G Roll-out 94 3X 3G Coverage # Node-B Activated 93 x5,2 city per day antenna per hour (2G / 3G / Radio Microwaves) # Cities % Population >2x EoY 9 Apr % 32% EoY'9 Apr Data refers to TIM only 4

6 Quality of Service (2/2) : Caring enhancement Lead time Caring Performance Index Service Level Lead time (in seconds) before answered by an attendant -36% Anatel Index, % pp # Call / Customer Average call per customer Customer Satisfaction Index Market Research 7.52 Efficiency -42% % Data refers to TIM only 5

7 + % - Improved Sales Productivity Post Paid Business Productivity +6% Key Success Factors Coverage Mln Net Adds Post Paid.2 % Port IN / Port Out %: In=Out Q 29 vs. Q 2 Productivity Q 9 vs Q Capillarity Q 9 vs Q MNP Post Paid Gain Loss 56% - % + Post Paid Consumer Productivity # agents -.4 Q 9 Q 32% Q 9 Q + % - +72% - % + # point of sales Quality Mln Value Net Adds Pre Paid. R$/Gross Adds SAC SAC and SAC/ARPU 4 Value Pre Paid Consumer Productivity -25% 78 + % - +6% Alternative channels Traditional +93% channels - % + # point of sales Data refers to TIM only Efficiency. Q 9 Q Volume Q 9 Q SAC/ARPU Efficiency 6

8 Innovation and Offering Post-paid Pre-paid Innovation (ranking) Market Research Nov/Dec 29* pp vs. previous wave Key Success Factors Market Research Nov/Dec 29, Customers top 5 factors in choosing an operator All you can eat community based (local and long distance) Chip-only + handset sales in 2x (unlocked) Pay per call vs. traditional pay per minute Community based local and Long Distance (Local=Long Distance) Player Player pp +3pp +3pp # Best promo Leadership Own customers advantages Best coverage Player pp Services tailored for their needs 78 Liberty / Infinity Post-Paid Customer Base, Mln lines Infinity Pre-Paid Customer Base, Mln lines. 22 Attractive: More Gross Adds Q 9 Q Q 9 Q Efficient: lower handset dependence Profitable: MARPU accretive *% of respondents which indicated the operator as innovative company 7

9 Reshaping traffic to core business MOU ARPU Minutes/line/month Total 7 Incoming 22 Outgoing % -2% +7% 8 82 R$/month Total Incoming % % 6.9 Outgoing 7.4 stable 7. Ability to maintain ARPU outgoing voice flat despite CB growth of 7% ARPU outgoing voice = 6% over total ARPU Voice Outgoing 4.6 stable 4.4 Lower MTR Exposure ARPU Contribution (MARPU) Reshape traffic profile towards core business: R$ Mn R$/month - Outgoing vs. Incoming Incoming Revenues ITX Costs Contribution >45% of EBITDA -% -5% -.3% On-net strategy <35% of EBITDA ARPU ITX, subsidy, bad debt MARPU % Slight increase 24 - On-net vs. Off-net Lower MTR exposure Improving traffic contribution (MARPU) Data refers to TIM only 8

10 Agenda year later: a Better Company (TIM Only) Q 2 Economics & Financials (TIM+Intelig) 2 Goal: Strengthening the Foundations 9

11 Q 2 Economics Revenues Mix (% on Gross Service Revenues) Efficiency Plan R$ Millions %= Mobile Outgoing Fixed VAS Incoming Net Service Revenues Net Handsets Revenues 4,8 2, ,34 58% 62% 6% % 25% 2% 6% % 3,46 24 Business Generated Business Received Chip-only strategy YoY % +6.4% +2% -% +5.4% -34% Local +9% LD +25% % on services revenues TIM TIM + Intelig Commercial costs and -4 bps Bad Debt Industrial costs and ITX Personnel and G&A costs Commercial costs and -36 bps Bad Debt Industrial costs and ITX Personnel and G&A costs -7 bps Q 9-7 bps Q 9-5 bps -4 bps R$ Millions +3.9% EBITDA 68 8 EBITDA Margin 9.5% +53 bps 24.8% 25.8% TIM only (+57 bps YoY)

12 Inverted bottom line Results: from loss to Net Income R$ Millions Net Profit 3 (667.2) (65) 89.8 (73.7) 42.6 (38.9) 3 EBITDA Depreciation & Amortization EBIT Net Financial Expenses Taxes and Others Net Profit 68.5 (672.) (53.5) (68.8) (43.) (65.2) YoY (4.9)

13 Improved Financial Results Free Operational Cash Flow Net Financial Position R$ Millions R$ Millions 8 (95) 3X CAPEX -5% Net Financial Position 4Q 9,684 Oper Cash Flow (76) EBITDA Working Capital (576) CAPEX (76) Oper. OCF 3,7 2,557 Non-Oper Cash Flow (58) 2,557 Q9* 68 (,666) (94) (,25) YoY (382) * TIM stand-alone +535 Q9* Q Gross Debt Average Annual Cost R$ 4. billion (of which 67% on long term) ~27% of debt is denominated in foreign currency (% hedged) 9.9% in vs. 2.5% in and 9.7% in 4Q 9 2

14 Agenda year later: a Better Company (TIM Only) Q 2 Economics & Financials (TIM+Intelig) 2 Goal: Strengthening the Foundations 3

15 2 priorities to complete Company Repositioning Keep the Pressure in the Voice Market Ready to Go on Data 2 Penetration: focus on weak areas FMS: - MOU intensive strategy - Tim community Penetration Usage Data 2 3 3a 3b Market rules strategy: - Internet key: selective approach - Ultimate smartphone offering Breaking the Rules (LAN house substitution): - Low cost platform devices - Innovative offering Maintain/Gain market share Focus on 3Q Priorities Network integration Business relaunch Lean Organization One back-bone Property radio backhauling Double 2G Capacity Double 3G Coverage TIM Intelig Intelig: A New Turnaround One Network Tim + Intelig Intelig Re-launch Build a Superior Network 4

16 Intelig: A New Turnaround Intelig Reason Why Capex / Opex Saving TIM: Avoid Leased Lines costs explosion due to Data growth Leased Lines costs Bln R$ Inertial Expected Intelig Option Value CAGR % ~ flat Fiber based property backhauling, directly linked to main Base Stations to support Data transfer Cumulated Saving 2-22, Bln R$.6 Opex savings.6 Capex savings.2 Total Saving Avoided costs: - Fiber optic metro rings (CAPEX) - Incremental Leased Lines (OPEX) Competitive advantage: low incremental cost (Long Distance calls and mobile Data growth) Revenues Growth Cumulated Saving 2-22, Bln R$ Network Marketing Go to market 2 Focus Backbone / MANs Integration Brand / Offering: revamping as of 2Q Intelig dedicated to fixed and convergent services commercialization Top Clients SME SoHo Consumer X 3 ~2. Residential Organization Lean approach to staff Integrated Solutions Fixed/Mobile multiple play Attack Fixed Incumbents (DDD, local voice, TIM fixo/web) ~ Business Wholesale 5

17 Build a Superior Network Network Infrastructure Key actions One single backbone (TIM - Intelig) Link to Intelig MANs Roll-out microwaves backhauling Double 3G coverage Metro BTS Access 2G/Edge Leased lines Backbone Backhauling Node-B Access 3G/HSDPA PoP PoP BTS Access 2G/Edge 3G Coverage (# antennas) 2G Capacity (# Radio transmissions) 2G Coverage (# BTS) Network targets and priorities ~6, >5,,5 ~3,5 >5, ~75 By July 2 ~2, >, >4 5 Double 2G capacity Microwaves replacing leased lines From Buy vs. Make Efficiency & reliability in Backhauling 65% To 35% 35% 65% Buy vs. Make Radio Backhauling (# Microwaves) ~, >4, 2 peak season for Network roll-out >2, Phase high-speed project in San Paulo: 4 Mbps downlink 6

18 Take Aways A better company Economics & Financials Looking forward Focus on fundamentals: Quality, Innovation and Sustainability Improved sales force productivity: +7% YoY Customer Base and inverted Net Adds trend in Post Paid (voice), with lower SAC Re-shaped traffic to core business, with better contribution and lower MTR exposure Service Revenues: +5.4% YoY (TIM only: +5.3% ) entirely on voice outgoing +2% EBITDA: +3% YoY EBITDA margin: 24.8%, +53 bps YoY (TIM only: 25.8%, +57 bps YoY) Inverted bottom line results: positive net income in Q (vs. -65 mln R$ loss YA) Better cash flow generation: +535 mln R$ vs. YA, with tripled CAPEX Consistent debt reduction: -46 mln R$ vs. YA 2 priorities to complete Company repositioning: - Push on Fixed Mobile Substitution - Enhance Data business as of H2 - Intelig network integration and business re-launch: a new turnaround - Fast roll-out of 3G Network Coverage and 2G Capacity 7