Conference Call 4Q11
description
Transcript of Conference Call 4Q11
0
Additional Note
The following financial and operational information, except where otherwise indicated, is presented g p , p , p
according to the IFRS (International Financial Reporting Standards) and in Reais (R$), pursuant to
B ili C t L Brazilian Corporate Law.
The comparison analysis refers to TIM stand-alone basis, excluding the effects of TIM Fibers’
acquisitions in Nov/11 - except when otherwise indicate
1
Agenda
Main Achievements - Luca Luciani
Operational Performance - Lorenzo Lindner
éMarketing Activities - Roger Solé
Fi i l Highlight Cl di ZFinancials Highlights - Claudio Zezza
Conclusion & Outlook Luca LucianiConclusion & Outlook– Luca Luciani
2
Main Achievements
Accelerating # 2 Player in Value and Volume (26.5% of market share on # lines, +130 Bps YoY)Customer Base +25 6% YoY ending 2011 at 64 1 million linesAccelerating
GrowthCustomer Base +25.6% YoY, ending 2011 at 64.1 million linesLeader in Incremental Market Share (33%) for the 2nd consecutive yearFastest growing mobile operator: Top line: +18% YoY and Service Revenues: +13%YoY
Improving Cash and Profitability
EBITDA: R$4.6Bln FY2011 (+10.4% YoY)EBITDA Margin: 27.1%EBIT: R$2.1 Bln FY2011 (+72.1% YoY)y
Voice revenues continue to grow at double digit, both in local and long distance calls
( )EBITDA-CAPEX: R$1.6Bln FY2011
“Voice is Good” &Data Take-Up
MOU at 129 min. in 2011 (+10.8% YoY)Data revenues fast accelerating: +41.3% FY2011 and +49.2% in Q4Web/Smartphone penetration at 27% of total lines (vs. 10% Dec’10)
Streghthening N t k
Increased 2G Capacity by 43% in 1 Year (+157k TRX installed)Coverage 3G at 67% urban population: 488 cities (502 at ending of January)Roll out of own transmission: 25k long distance back bone and 12k microwaves installed
3
Network Roll-out of own transmission: 25k long distance back-bone and 12k microwaves installedCapex at R$3.0bn – Reduced commercial investments and more allocation on network
Three Years in Few: Accelerating Growth and Profitability
13 1+18% Fastest
growing
Customer Base Expansion Revenues growth
R$ billionMillion lines
3X
64.151 0
17.114 5
4.79.9
13.1
0%+5%Net Revenues
Growth YoY
growing Company
Net Adds
20102009
+56%
CustomerBase
2011
51.041.1
2011
+25%
2009
Total Net Revenues
14.5
2010
13.7
Market share EBITDA , EBIT , EBITDA-CAPEX
R$ billion% of lines
20%
34% 33%
Incremental market
share26.5%
1.2
2.1
EBIT
4.1X
Leading growth for the
2nd year
1 641 36
R$ billion% of lines
0.5
Back to #2
Market
23.6%
25.1%
2009 2010 2011
0.80 2X
1.64
EBITDA-CAPEX
1.36
4
share
2009 2010 2011 EBITDA 4.64.23.5
Two Markets, One approach: Simplicity
“Internet for All”
Total Voice Traffic Volume(Billion of minutes)
Example: Infinity Web(Daily Internet unique users-Pre paid (Mln)) >15mln of
“Voice is Good”
Pushing the fixed mobile
2.7
9X62.5
86.7
2X 38.1
>15mln of unique users
per month(Pre+Pos)
fixed-mobile substitution
Dez 11Aug 10
0.3
2009 2010 2011
Voice Outgoing Gross Revenues(R$ Billion)
Gross Data Revenues +49%YoY data
Voice Revenues Data Revenues“Ride the simplicity”
+34%
13.4
11.3
10.0
(R$ Billion)
2.21.9 +67%
3.2(R$ Billion) growth in 4Q11
2009 2010 2011
10.0
2009 2010 2011
5
Leading the Voice Market with just 2 concepts: • Infinity (Pre): price per call; local and LD• Liberty (Pos): unlimited call; local and LD
Fast growing in VAS with just 2 concepts: • Infinity (Pre): unlimited browsing/messaging, per day• Liberty (Pos): unlimited browsing/messaging, per month
Network Evolution
2G CapacityTRX Total Brazil – installed in 2011Activations accumulative, 2011 Total TRX, ‘000
47,14750.000
157
11088 +43%
3G - Coverage
32%54%
67%
488
% urban population
coverage Of which TRX North and Northeast Brazil North and
010.00020.00030.00040.000 88
EoP 2010EoP 2009 EoP 2011
+25%
+43%
502 in jan’12
DecNovOctSepAugJulJunMayAprMarFebJan
# cities 57
210
Activations accumulative, 2011
57% 43%
Northeast
Rest ofBrazil
20,565
05.000
10.00015.00020.00025.000
2009 2010 2011
3G OverlayNode B – installed in 2011Activations accumulative, 2011
0
Total NodeB 6, 476
4 676
CAPEX
DecNovOctSepAugJulJunMayAprMarFebJan
1,800
0
500
1,000
1,500
2,000
DecNovOctSepAugJulJunMayAprMarFebJan
4,676
2,142
EoP 2011EoP 2010EoP 2009
+118%
+38%
As % ofNet sales
R$ Bln19.6
17.5
19.4
Radio transmission (MW)Total MW
12, 090
9,44116,000
24,800
Long Distance Fiber Backbonekm
Invest.
2.7 2.8 3.0
Invest. commercial
6
4,605
EoP 2011EoP 2010EoP 2009
+105%
+28%15.000,
201120102009
network
2010 20112009
Agenda
Main Achievements - Luca Luciani
Operational Performance - Lorenzo Lindner
éMarketing Activities - Roger Solé
Fi i l Highlight Cl di ZFinancials Highlights - Claudio Zezza
Conclusion & Outlook Luca LucianiConclusion & Outlook– Luca Luciani
7
Customer Base Evolution
2011 vs. 2010Mln lines
8,79,3
51,0 52,855,5
59,2
64,1
+2 1+2.5
+4.1+1.8
+2.7+3.7
+4.9 +13.1
+1.8
6,2 6,2 6,3 6,5 6,67,0
7,27,5 7,7
8,0
36,1 37,8 39,6 41,1 42,444,4
46,9+1.7 +1.8 +1.5 +1.3 +2.1
P
29,9 31,6 33,3 34,7 35,8 37,5 39,743,6 45,1 47,5 50,6
54,8
,
Pre
Pos
+11.2
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
Net AddsPre-paid
(000)
Net AddsPost-paid
87 1,687 1,687 1,354 1,103 1,716 2,242 3,838 1,598 3,0532,359 4,219
-393 41 86 149 150 341 280 243 223 632317 655
8
(000)
Market Share Improvements
Mln of linesMkt Share
Dec’1171 6
Total Mobile Market Post-paid Net Adds - Trailing 12 months
Mln of lines
29.5%
26.5%
24.9%60.3
61.3 62.6 64.0 66.2
68.6 71.6
55.5 58.2 60.2
64.1
51 6 52.9 53.9 56 8
58.4 60.4
Vivo
Claro
2.9
3.5
1.81.6
2.4
51.0 52.2 53.7
51.6 55.5 56.8
39.3 40.4 41.6 41.5 42.1 43.7 45.5
Claro
Oi
1.0
0.00.5
Dec/10 Mar/11 Jun/11 Sep/11 Dec/11
18.8%
Dec/10 Feb/11 Apr/11 Jun/11 Aug/11 Oct/11 Dec/11
Net Market Share – Dec’11 Pre-paid Net Adds - Trailing 12 months
Vivo TIM Claro Oi
% of net adds
Vivo Claro Oi
Mln of lines
7.68.9
10.5
Dec’1126%43% 19% 13%
5.7
5.76.1
3.2
5.8
Vivo Claro Oi
FY2011
Dec 11
9
Dec/10 Mar/11 Jun/11 Sep/11 Dec/11
Vivo TIM Claro Oi
FY201129%33% 22% 16%
Postpaid growth: A sustainable business model
0 3
0.6 0.7Mln lines % Gross revenues,
2 00%
Customer Base Post-Paid Bad Debt and SAC/ARPU
0.20.3 0.3 0.2 0.2
0.3
6 96 7 24 7 48 7.70 8.02 8.65 9.31
Net Addition
Bad debt/Gross Rev
2.00% 1.83%1.34% 1.04% 0.77% 1.08% 0.95% 0.92%
3,12,6 2,3
CustomerBase
6.62 6.96 7.24 7.48 7.70
+24.4%YoY
SAC/ARPU
1,5 1,8 1,6 1,71,3
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q111Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
R$ Mln
Product Revenues and Capitalized SubsidyComplains/1.000 Bills
Anatel’s SMP 11 Indicator*$
380424 468 433
732 712664
GrossProductRevenues
p /
1.61
1 53
1.55
1 47
1.85
1.69
1.91
1.63 1.17 1.11
2011 Average: 1.45
286
115 8564 26 8 0 0 0
CapitalizedSubsidy
1.53 1.47
1.10
0.76
10
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11Jan'11 May'11 Sep'11 Dec’11
*Care relative to billing problems on 1,000 bills issued.
Agenda
Main Achievements - Luca Luciani
Operational Performance - Lorenzo Lindner
éMarketing Activities - Roger Solé
Fi i l Highlight Cl di ZFinancials Highlights - Claudio Zezza
Conclusion & Outlook Luca LucianiConclusion & Outlook– Luca Luciani
11
ARPU stabilized quarterly
Post-paid
ARPU +4.7% -3.9%
QoQ%+1.0%
16.5 17.0 16.4 16.7
ARPM and ARPU
StabilizedARPM
R$ cents
Post paid
ARPU Pre and Post
stable+2.8% +0.8%QoQ%
+2.7%
20.8 21.6 21.2StabilizedR$ cents
ARPU
Generated*
21.9Pre-paid
1Q11 2Q11 4Q113Q11
Mix & EffectARPU1Q11 2Q11 3Q11
Received*
4Q11
Incoming Outgoing VAS
17%
13%
CB Mix:85% Pre 15% Post~5X
-10.9% -9.5%-13.5%YoY% -5.8%
ARPU stabilized on a quarterly basis12% 12%
Post Pre
Improving customer base mix1Q11 2Q11 4Q113Q11
ARPU stabilized on a quarterly basis
ARPU dilution limited to Post vs. Pre subscriber mix
FMS on voice and data growth contrast ARPU dilution
12*Generated: Voice Out Services & VAS; Received: Incoming Services
Net adds Post-paid/Total net adds
“Voice is Good”: Fixed-Mobile Substitution Accelerates
24 1
R$ cents/min
ARPM“Voice is Good”
Bln Minutes; Minutes
19.720.6
24.1
24.122.0
19.0 18.116.5 17.0 16.4 16.7
15
20
25
30Reshaping Portfolio… …Portfolio ReshapedTotal traffic
volume
126130
+5%+9%
127 131
22.4 +8%
0
5
10
Favorable seasonality
MOU In
MOU Out
14 14 13 13
112 113 117 119
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
Post-paid Pre-paid
1Q11 2Q11 3Q11 4Q11
+3 1+4.2MoU
Liberty
MoUoutgoing
Infinity
+5% -1% +2%+3%+1%
Minutes; ‘000 Minutes; mln
+223 +317
+632+655
+1.6
+2.4
+3.1MoUoutgoing
Net Adds
Net Adds
+7%
13
1Q11 2Q11 3Q11 4Q11 1Q11 2Q11 3Q11 4Q11
Data solid take-up
Mln clients
Monthly unique users
Smartphone penetration and Infinity Web17.5+83%
% of handsets over total CB (lines); mln Pre paid users
0.6
2.7
Dec’11Jan’11
9.6
Daily internet
15%20%
27%
Post paid Pre paid
Handset sold - volume
Dec 11Jan 11a y te etunique users
8% 10%13% 15%
Sep'10 Dec'10 Mar'11 Jun'11 Sep'11 Dec'11 +64%
+83%
3,507
000 units, handset sales
+49% +10%
3 164
Smartphone/webphone
penetration
Web/Smart-
52%
1,915
28%
2,262
46%
1,383
69%
30%
2,8472,5893,164
2,125
68%
40%
14
Smart-phone
28%
1Q11
46%
1Q10
19% 30%
2Q112Q10 3Q113Q10 4Q114Q10
40%
Agenda
Main Achievements - Luca Luciani
Operational Performance - Lorenzo Lindner
éMarketing Activities - Roger Solé
Fi i l Highlight Cl di ZFinancials Highlights - Claudio Zezza
Conclusion & Outlook Luca LucianiConclusion & Outlook– Luca Luciani
15
3 waves of growth
4 14.9
DataVoiceCustomer Base
129 131
Mln users Min, Billion minutes, Gross Revenue R$ Bln %, Gross Mobile Revenue, R$ Mln
1 7%
4Q % YoY 4Q % YoY 4Q % YoY
1.5
4.1
41.1
51.0
64.111.2
13.6
16.7
99
129 131
12.0
18.924.1
MoU
Net Adds 958
642
% Data Rev./Service Rev.
+19% +1.7%+310Bps
Total
+28%
3.13.7
2.8
GrossRevenues
(Voice
Customer Base
642489
Gross Data Revenues
(mobile)
+26% +49%+18%
Traffic
+11% +31%+24%
4Q09 4Q10 4Q11
Revenues
Q411Q410Q409Out)
Q411Q410Q409
+% 4Q YoY
Total Net Revenues
R$ Mln
3,571 3,926
4,688
4,237
+19.4%
+% 4Q YoY
+10%
4Q % YoY
Net Service Revenues
3,6273,4224,237
+16.8%DataTotal Traffic
Customer Base
+26% +28% +49%
+6%
16
Q409 Q411Q410
+26% +28% +49%
Community Expansion
Fixed-Mobile substitution
(Voice)
Internet for allStrategy
EBITDA and Efficiency
Commercial Activities & OthersEBITDA
R$ Mln R$ Mln; 4Q YoY %30.4 30.6 27 8 Reported: +8.7%
Taxes Impact (net adds +19%)
Volume and change in mix (Handsets net revenue +51%)
COGS +41.8%
Fistel +22.6%27.8
EBITDAMargin %
1,30526
145
1,0861,201
Excl. Subs. +11.0%
Q409 Q411Q410
Volume and change in mix (gross adds +27%)
Other Expenses
+416.1%
Commissioning +18.5%
Past years Tax expenses
EBITDA 9401.176
Full Year (R$ Bln)FY YoY
Bad DebtTraffic Profitability
R$ Mln %R$ Mln
Expenses (one time event 70 mln R$)EBITDA 3.5 4.2 4.6EBIT 0.5 1.2 2.1
( )+10.4%+72.1%
1.04%0.77%
1.08% 0.95% 0.92%
3 105 3 0613,294 3,435
3,655
R$ Mln, %
Gross Revenues
+17.7%
4Q % YoYR$ Mln
% Bad Debt/ Gross Rev.
Total Traffic (min)+27.6% YoY
-12 Bps
4Q % YoY
1,085 1,109 1,147 1,203 1,287
3,105 3,061Voice Out
Network costs
+18.7%
Bad Debt 58
42
66 61 62 +7.3%
17
4Q10 1Q11 2Q11 3Q11 4Q11 4Q10 1Q11 2Q11 3Q11 4Q11
Consistent EBITDA growth
EBITDA Evolution
+1 305
R$ MlnR$ Mln
From EBITDA to Net Income
+673
+1,305Net Revenue: +762 OPEX: - 658
+1,201
-202
+1,305
-176
-280
+66
-632+696
+673
+405
-96
,
30.6% 27.8%Ebitda Margin
Service Ebitda Margin35.5% 33.0%
-172
EBIT NetFinancialExpenses
Net Income 4Q11
Taxes andOthers
Depreciation/Amortization
EBITDA4Q11
ΔYoY
Ebitda 4Q10
Ebitda 4Q11
Δ Commercial
Expenses
Δ G&A + Other
Expenses
Δ Business Received
Δ NetworkΔ Business Generated + Handsets
ΔYoY +23.6% +6.8% +19.5% +18.7% +38.0% +8.7% ΔYoY +8.7% -7.9% +30.8% +69.0% -112.0% -78.5%
R$ Mln
Dividend Net incomeR$ Mln 2 212
6 2
1,435
1,285
$
Tax creditIntelig FxGain
Tax credit
+502%
+66%
$
+161%204497
5332,212
801
18
672
2009
129
2010 2011
1,285776
2010 20112009
Organic
Cash Generation
Net Debt – TIM + Nov-Dec TIM FiberOperational Free Cash Flow – TIM + Nov-Dec TIM Fiber
R$ Mln Ebitda +1,314Δ WC +1,012 Capex - 1,150
R$ Mln
1,458
Income TAX : - 94Financial Result: - 101Others : +37
+1,175
-1,150+1,012
+1,314+1,175
-158
441
Non-Oper FCFOper. FCF3Q11Net
Debt
4Q11Net
Debt
4Q11OFCF
CAPEXΔ WC4Q11 EBITDA
1.02 bln of Cash generation in 4Q11
Debt Debt% Net Revenue
27.9% 21.5% 24.4% 25.0%
% YoY +9.4% - 12.1% +4.5% + 6.1%
19
Agenda
Main Achievements - Luca Luciani
Operational Performance - Lorenzo Lindner
éMarketing Activities - Roger Solé
Fi i l Highlight Cl di ZFinancials Highlights - Claudio Zezzaa
Conclusion & Outlook Luca LucianiConclusion & Outlook – Luca Luciani
20
2011 - Delivery on Promises
Q4 Results
Waves of Growth
+% 4Q YoY +16.8% YoYNet Serv. Rev.
DataTotal TrafficCustomer
Base
CB Expansion
+28% +49%
Community Expansion FMS (Voice) Internet for everybody
+26%
2011Guidance 2011 - 13
>25%
CB ExpansionMln lines
51.0 64.1
Total Net Serv Rev : +13%
26.5%Market
Share
Revenue
EBITDA 2011 > R$4.5bn
High Single Digit (+7/8%)
MOU increase
129 131Min/month
dec/10 dec/11Total Net Serv. Rev.: +13%
Total Net Revenues: +18%
> R$ 4.6bn
growth %
Profitability
(EBITDA)
3 Years CAPEX R$ 8.5bnSmartphone Penetrationdec/10 dec/11
~27%Smartphone, % CB
~ R$ 3.0bn in 2011CAPEX
21
OFCF: > R$ 6bn (’11-13)
10%
dec/10 dec/11
R$ 1.6bn in 2011EBITDA - CAPEX
Conclusions & Perspectives
Marketing repositioning accomplished
Fastest growing companyFastest growing company
Building a solid infrastructure
I i fil
2009-2011Conclusions Improving company profile:
− Acquisition of Intelig and Atimus
Hi h i i h i C G (N M d )
Conclusions
High commitment with superior Corporate Governance (Novo Mercado)
Brazil: big and attractive market
2012-2014
Mobile and Fixed: continuous reshaping of Telecom market (Voice FMS;
Mobile Internet take-up)
Perspectives Continuous growth pace (Customer Base, Revenues and Profitability)
Network evolution towards FTTS and advanced data architecture
22
Additional value creation: confirming the R$4.8bn from TIM Fiber