Meeting with investors of january 2013 (1)
36
TIM Brasil - Meeting with Investors September, 2012 TIM Brasil - Meeting with Investors January, 2013
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Transcript of Meeting with investors of january 2013 (1)
TIM Brasil - Meeting with Investors September, 2012 TIM Brasil - Meeting with Investors
January, 2013
Knowing TIM Better
Shareholders Structure
TIM: A Huge Brazilian Company
Presence in Brazil since 1998
Unique Telco company listed on the Novo Mercado:
.100% Tag Along and equal dividend rights
. One single class of shares
. Independent Board members
. A more strict disclosure policy
~ 11,000 direct employees
+ 21,000 indirect jobs
+400,000 Points of Sales (Top-up and SIM cards)
+ 130 own stores
> 70 million costumers. The 2nd player.
11 Customer Care Centers with 14,000 consultants
~ 11,500 antennas in 3,300 cities, covering +94% urban
population
Exclusive attendance of 391 municipalities and 1.64
million customers
Payment of R$7.3 billion in taxes and contributions in
2011
Investment: Approx. R$3 billion in 2012 (from 2009 to
2014, TIM expects to invest R$20.5 billion)
TIM Celular S.A. Intelig
TIM Brasil Serv. e Part. S.A. Minoritários
TIM Participações S.A.
ON: 33% (805.662.701) ON: 67% (1.611.969.946)
100% 100%
Brazilian Law
“Lei das S.A”
“Nível” 1 “Nível” 2
Legal
Requirements
Demand for
transparency and
disclosures
Highest level of
Corporate
Governance
Requirement of
protection for
minority
shareholders
2
3+
Strategy
Macro-Economic Fundamentals Remain Solid
Source: Credit Suisse, BaCen and IBGE 4
Brazilian families consumption is growing every year
Families consumption on Brazilian GDP demand side - %YoY growth
Unemployment rate is reaching a low record constantly
Unemployment Rate(%)
12.4
11.5
9.9 10.0 9.3
7.9 8.1
6.7 6.0
5.5 4.8
4.2
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
Families Income is increasing continually
Average Real Salary (R$)
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
Family Indebtness will probably drop
% debt service/families income
19.1 17.8
19.2 20.3 19.5 20 22.4
20.2
-
5
10
15
20
25
30
Peak
5.2
6.1 5.7
4.4
6.9
4.1
3.0
4.3 4.8
-
1
2
3
4
5
6
7
8
2006a 2007a 2008a 2009a 2010a 2011a 2012e 2013e 2014e
Lowest
Growth
37
82
108
173
- 50.00 100.00 150.00 200.00 250.00 300.00 350.00 400.00 450.00 500.00
50% mobile
discount
55%
38% 31%
19%
898
452 339
116
… and still low Voice and Data usage
MoU (minutes); Data as a % of Serv. Rev.; 2011
Mobile Business in Brazil is driving sector growth
Source: Company estimates; BofA ML Global Wireless Matrix 3Q12; Teleco; IBGE; Bloomberg; Credit Suisse
…with demographic bonus
Mln of people
Brazil: GDP vs. Telecom Revenues Growth
% Growth YoY
5
ARPM Fixed vs. Mobile
R$
Above US$3.843
28.9
44.5
95
From US$891 to US$3.843
From US$558 to US$891
From zero to US$558
32.1
118
29.1
46.6
46.1
67.5
A/B
C
D
E
2002 2009 2014
14.5 20
16.8
Class
Minutes of Use %Data Serv. Rev.
A huge market….
Serv.Rev. US$ Bln; Mln subs; 2011
246
332
894
986
- 200.00 400.00 600.00 800.00 1,000.00 1,200.00
4o
4o
Service
Revenue
Subscriber
Base
* Wireline Market is composed by incumbents only
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
TIM
Mobile Market
Wireline
Market*
GDP**
**BaCen estimates for 3Q12
2006 2007 2008 2009 2010 2011 2012
Mobile
Fixed
121.0
150.6 174.0
202.9
242.2 258.9
39.4 41.2 41.5 42.0 43.0 43.7
2007 2008 2009 2010 2011 3Q12
Mobile
Penetration
Mobile Segment to Support Universalization
Mobile
Fixed
64% 79% 90% 105% 124% 132%
Customers Growth - Telecom
(Mln customers)
Mobile
Fixed
(44%) (52%)
(56%) (60%)
(56%)
(48%)
(44%) (40%)
2009 2011 2014 2016
106 117 126 134
Market Transformation
Total Revenues- R$ Bln
Mobile Segment as the Growth Driver and
Sector Universalization
+114%
+11%
Customers Growth – Broadband
(Mln customers)
Mobile
Fixed
6
1.4 4.1
14.6
33.2
50.8
10.0 11.4
13.8
16.3 18.6
2008 2009 2010 2011 3Q12
+3,658%
+86%
FMS Secular Trend Remains on Play
2Q12 1Q12 4Q11 3Q11 2Q11
Fixed Tariff Premium over Mobile
ARPM (R$/min)
Leading Traffic to a Sharp Increase
(Bln Minutes)
Leadership in LD Market Share
(% Minutes)
Lines in Service
(Fixed - Residential, Mobile, D% yoy, D% yoy growth average)
Revenues
(Fixed, Mobile, D% yoy, D% yoy growth average)
6.7% 28.3% 42.0%
49.8%
47.8% 47.7% 48.1%
88.2% 66.5%
53.3%
45.8%
48.5% 48.3% 49.7%
jun/11 dec/10 dec/11 jun/10 mar/12 jun/09
Incumbents* TIM
* Telemar, Brasil Telecom, Telesp e Embratel.
2006 2007 2008 2009 2010 2011 2012
Mobile
Fixed
23.8 22.6 21.8 20.1 18.4
Source: Companies results and Teleco.
50% mobile
discount
Fixed to Mobile Substitution… …impacting Fixed Incumbents
jun/10
… benefiting Mobile Segment
EBITDA
(Integrated, Mobile as TIM, D% yoy, D% yoy growth average)
**TIM’s Organic EBITDA
1Q11 3Q12 1Q11 3Q12
-6% +18%
1Q11 3Q12 1Q11 3Q12
-7% +9%
1Q11 3Q12 1Q11 3Q12**
-5% +10%
26.4
3Q12
Fixed
(Residential)
Fixed
Integrated
Mobile
Mobile
Mobile
7
8+
3Q12 in Few
Main Highlights
Total Net Revenues
(R$ Billion)
EBITDA
(R$ Billion)
4.7
3Q11 3Q12
4.4
1.16 1.20 +3.8%
Solid data growth
(Revenues +35%
YoY)
Smart/webphone
sales pick-up
Sales resilience in
spite of sales ban
MOU at record
level of 139
Live TIM up and
running
Postpaid human at
24% YoY growth
A tough quarter, but TIM is managing to recover
MTR cut impact
Provisioning of
advertisement
credit loss (R$16
mln)
Provisioning for
administrative
procedures
established
between 2007/09
(R$26 mln)
Intelig fixed
business
performance
13.7
9M11 9M12
12.4
1.1
+8.0% +11.0%
3Q11 3Q12 9M11 9M12
19.1%
7.0% 8.0%
+7.5%
3.34
3.58 +7.3%
+8.6%
Quarter’s Highlight
12.6% 6.0% 7.5%
1Q12 2Q12 3Q12
1Q12 2Q12 3Q12
Revenue Growth
Organic EBITDA
Growth R$ 42mln
1.24 3.63 R$ 42mln
Institutional
Investor
“Best IR Team”
Frost
Sullivan
Best
Practices
Award
Abrasca
Prize of
Value
Creation
9
Reality Check: Recent Events Overshadowing Fundamentals
Sales Ban Drop Call Report Tax Issue Contingences
Impacts:
Reduction in gross
adds during the period
Small economic
impacts
Damage on image
Status:
Ban lifted on 3rd of
August
Anatel is measuring the
evolution of the plan.
Impacts:
Damage on image
Status:
Two independent
consultants firms
concluded that the rate
of dropped calls on
3/8/12 showed no
anomalies
Event:
2006 corporate
restructuring (TIM
Nordeste + TIM
Maxitel) was
questioned by Federal
Tax Bureau in 2011
Impacts:
Damage on image
Status:
Under discussion at
administrative level of
tax bureau.
There are precedents
Event:
Allegation of low
provisioning for
contingencies
Impacts:
Damage on image
Status:
No impact on financial
Accrual based on
internal and
independent external
opinion expert,
following IFRS rules.
Data
Users Total
Traffic
Customer
Base
Community
Expansion
FMS
(Voice)
Internet for
everybody
440k
HP ready
to sell
Tim Fiber
Fixed BB
Back to fundamentals
Customer
Base
(users)
69.4 Mln
Total
Traffic
(minutes)
28.7 Bln
Sep11 Sep12
Data Users
(unique)
20 Mln
Homes Passed
(households)
+2X +34% +28.3% +17%
Sep11 Sep12 Sep11 Aug12 Sep11 Aug12
10
S14 S16 S18 S20 S22 S24 S26 S28 S30 S32 S34 S36 S38 S40
Sales Growth Rebound
Sales Force
(Points of sale EoP)
Gross adds come back
Prepaid resilient growth
Postpaid acceleration on
human lines (ex-M2M)
Strong sales channel force
Efficient growth approach
Sales Ban Effect
Trendline
Gross Adds - Customer Base
(Weekly; ‘000 lines)
Back on track
~300k
115
Mass
Channel
Own
Stores
+12.6%
QoQ
+16.2%
QoQ
Focus on Efficiency
(R$; months)
55
36 34
2.3
1.8
3Q11 3Q10 3Q12
1.7
SAC/
ARPU
SAC
-34% -7%
11
9.1 9.3 9.4 9.5 9.7 9.8 9.9 10.0
10.2 10.4 10.3
10.4 10.5
Operation Remains Solid
Customer Base
(Million lines)
Total Market Share Growth
(% of total lines)
9.7 +2.7
+3.7 +4.9
+3.1 +1.7
68.9
10.0
Post
Paid
2Q11
55.5
8.0
1Q11
52.8
7.7
3Q11 4Q11 1Q12 2Q12
59.2 64.1
67.2
8.7 9.3
Net Adds (000)
Post Paid
Pre Paid
223 632 317 655 348
1,598 3,053 2,359 4,219 2,786
348
1,308
D YoY
3Q
+1.6
+8.6
+19%
+17%
D%
Oi
Claro
Vivo
3Q11 2Q11 1Q11 2Q12 4Q11
25.5%
1Q10
25.4%
2Q10
25.3% 25.4%
4Q10 3Q10
29.5% 29.5%
24.0%
25.6%
29.5% 29.5% 29.8%
26.0%
19.5%
25.1%
29.7%
26.8% 26.5%
19.4% 19.7% 19.1% 18.8% 18.8% 18.5%
30.1% 30.2% 30.1%
24.6% 25.3%
20.1%
25.5%
24.9%
20.4%
29.6%
18.7%
24.6%
26.9%
1Q12
23.7%
24.5% 25.1%
57.6 58.9 47.5 45.1
50.6 54.8
Source: Company estimates
Source: Anatel
640
bps
290
bps
Largest
Prepaid
Base
Postpaid Base Analysis (ex-M2M)
(Million lines)
1st in yearly
growth for 9
consecutive
quarters
59.1
10.3
3Q12
69.4
+0.5
261
274
29.7%
25.4%
24.5%
26.8%
18.7%
3Q12
Total
postpaid
base
Human
lines
postpaid
base
8.6 8.9 9.0 9.2 9.3
D% YoY
Sep 12 Nov 12 Nov 11 Feb 11 May 12
+15%
+22%
541k Net Adds in 3Q12
Handset Sales Market Share
(% of handset revenues 1H12)
31%
37%
26%
7% Leading the handset market.
Even being the only player with “No
Subsidies” approach.
Driving data usage growth
-280k in 3Q12 (M2M
disconnection effect)
TIM P1 P3 P4
57%
43%
Open Market
Operators
Source: Anatel
12
Consumers Complains: Good position at Anatel and Procons
IDA – Index of Attendance (last reported by Anatel)
(Points)
98.55 96.95
99.15
96.75 95.20
99.40 98.10
100.00 97.40 97.90 97.70
99.90 98.65
90.85
91.35
94.00 93.95
93.80
95.05 94.50
97.00 95.30
96.70 95.10
98.00 94.00 93.70
91.05
92.65 90.30
86.35 87.90
86.55
89.85
86.65
91.00
88.80
92.80 88.10
87.20 85.80
88.30 86.40
83.90 84.80
83.30
86.20 85.00
89.35
74.84
84.85
77.25
jul/11 aug/11 sep/11 oct/11 nov/11 dec/11 jan/12 feb/12 mar/12 apr/12 may/12 jun/12 jul/12
Volume of claims at Consumer’s Protection Agency (Procon)
(# Quarterly claims)
6,032 6,286
7,112 7,591 8,229 7,693 8,811
7,376 7,416
6,673 6,229 7,166 6,533
7,422
9,664
11,788
13,696
16,013
19,245 18,560
21,179
8,740 8,601
9,592 9,344 10,687 10,508
12,348
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Procon Demands
(% of total)
15%
18%
43%
24%
TIM
TIM
TIM
Source: SINDEC data base. Represents 45% of total Procons (17/10/12)
Source: Anatel
Source: SINDEC
TIM P1 P3 P4
13
Customer Sentiment
Preference and Rejection of customers
(%)
TIM Quality Portal
Transparency
Quality
Relevant
Innovation
• Reinforcing position of transparency
• Offer w/ no Tricks
• Clear communication
• Anatel plan on track
• Network development
• Caring effectiveness
• Unlimited
• Convenient
• Innovative
28 28 29 28
23 22 21 22 25
28 32 31 30
27
11 11 11 10
15 15 15 15 11 10 9 9 9
13
May06
Oct06
May07
Nov07
Jun08
Nov08
Jul09
Nov09
Jun10
Nov10
May11
Nov11
May12
Aug12
Preference
Rejection
∆ Pref x Rej
Player 1: 19
Player 3: 2
Player 4: -8
21 14
Anatel Plan Disclosure
Monitoring:
Real coverage
footprint
New and planned
antennas
Wi-Fi hotspots
www.tim.com.br/qualidade
• Network Improvement
• Quality KPI’s
• Network Incidents and Alerts
Source: Ipsos
Research
14
Internet Continuous Take-Up: Handset + Offer
Smart/Web phone Penetration
(% over total base of lines)
31.1%
1Q12 1Q11 3Q11
26.6%
35.2%
15.4%
2Q12 4Q11
12.6%
19.5%
2Q11
SMS unique users growth
(Daily unique users)
2Q12 1Q12 4Q11 3Q11 2Q11 1Q11
3Q12
~20
3Q11
~15
Data users
(Million monthly unique users)
59% 69%
3G
coverage
(% of urban
pop.)
VAS Gross Revenues
(R$ Billion; % of Gross Mobile Services Revenues)
0.83
3Q11 3Q12
1.12
3Q12
3Q12
39.0%
19.4% 15.7%
+ 370 bps
+3X
+34%
+35%
Products Net Revenues
(R$ Million)
+28%
% sales of
web/smart
phones
71% 72%
485
622
3Q11 3Q12
15
Consistent EBITDA and Net Income Growth
369
EBIT Net Financial
Result
Net Income
3Q12
Taxes and
Others
545
1,202
Depreciation/
Amortization
318
EBITDA
3Q12
-29
ΔYoY +3.8% +1.9% +6.3% -52.9% +47% +0.4%
-657
-198
1,157
EBITDA
3Q11
Adj. EBITDA
3Q12
-155
Marketing
and Sales
1,202
Pers./G&A
and others
+73
Handset
Margin
-89
Network
and ITX
+45
Services
Revenues
26.5% 26.3%
EBITDA Margin
Service EBITDA Margin 32.7% 32.0%
+214
EBITDA Evolution
(R$ Million)
From EBITDA to Net Income
(R$ Million)
-7.2% +21.9% -39.6% +13.0% +5.5% ΔYoY
1,244
Non-
recurring
Adj. Net
Income 3Q12
+16.6%
-42
25.5%
31.0%
+3.8%
Rep. EBITDA
3Q12
16 mln of provision on advertising credit
26 mln of provision on Anatel administrative procedures
established between 2007/09
+7.5%
16 + 26 = 42.1 mln – provisions
9.1 mln – monetary adjustments for the
administrative procedures
16
604 684 827
Analysis on Efficiency & Cash Position
Net Debt
(R$ Million – EBITDA trailing 12m)
OFCF
(R$ Million)
3Q12 3Q11 3Q10
2,079
1,458 1,550
3Q12 3Q11 3Q10
Net DEBT/
EBITDA 0.5x 0.3x 0.3x
Capex
(R$ Million)
DOFCF R$144mln YoY
DEBITDA-CAPEX= R$126mln
DWC R$17mln
3Q12 3Q11 3Q10
Imp
rovin
g C
as
h
Ge
ne
rati
on
Eff
icie
ncy A
pp
roa
ch
Re
ma
ins
Leased Lines, Traffic and ITX Costs
(Compound Growth Rate - Quarterly)
3Q11 3Q12
Handset Capitalized Subsidy
(R$ Million)
64
0 0
3Q10 3Q11 3Q12
Bad Debt Trend
(as % of Gross Revenues)
3Q12
1.14%
3Q11
0.95%
3Q10
1.34%
526
853 772
77%
91% 92%
% for Infrastructure
4Q11 1Q12 2Q12
ITX costs
(ex-SMS)
Traffic
Leased
Lines costs
6.4%
1.2%
0.6%
OFCF/
Net Rev. 16.4% 15.6% 17.5%
+21%
17
TIM Fiber Update
18+
Market Demand
(Units)
Quality of Service
(Mbps)
Buildings authorized
7,101
Building’s connected MSANs installed
Network
Construction
Homes Passed
Ready to Sell
1
Optical network
MSANs
Backbone
Live TIM: Up & Running
2
3
Website
Registration 120.5k
Market
Demand and
Quality of
Service
Average
Speed
1.8
35 37
0.4
20 21
MarketAverage
Live TIM(nominal)
Live TIM(delivered)
Download
Upload
Blogger Richardmax: “Live Tim, so far, is the
only one to fulfill its promises, moreover above
the promises, because the 35Mb hired tests
are always above 37, and uploads are always
spiking 20. “
2Q12 3Q12
5,700 3,026
2Q12 3Q12
2,100 405
2Q12 3Q12
214
440k
2Q12 3Q12
220k
Specialist Blogger @ http://richardmax.rmax.com.br/
19
Network Roll Out
(‘000 Households)
Live TIM: Speeding-Up with the New Offer
Sales
(Average weekly sales)
New Offer: Shaking the Broadband Market
Business Model Proving Itself
Sep/12
Before
Promo
Oct/12
~5X
~590
>100
May/12 Dec/12
~6X
Addressable
Market
(Homes passed)
After
Promo
Optical Network
MSANs ~R$2k
Coverage Capex
per Home Passed
~R$80
~R$800
Installation Capex
per Sub
~R$300
TIM
Fiber Int. Bench.*
TIM
Fiber Int. Bench.*
~R$5k
Total Capex
per Sub
~R$700
TIM
Fiber Int. Bench.*
*International Benchmarking 20
21+
Network & Quality
The Mobile Operator which Invests the Most
Capex
(R$ Bln)
2.67 2.83 3.00 2.37
0.87
1.60
20.3% 19.6% 17.6% 17.3%
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
5.5
6
2009 2010 2011 9M12
Focus on Infrastructure
(% of Organic Capex)
67% 81% 88% 94%
33% 19%
12% 6%
2009 2010 2011 9M12
Acquisitions
Organic
% Net Rev.
Commercial
and Others
Infrastructure
3.54
4.60
Infrastructure Capex
2012-2014 (Anatel Plan):
TIM: R$8.2 billion
Claro: R$6.3 billion
Vivo: R$6.2 billion
Oi: R$5.5 billion
Total Capex: R$26.2
billion
Source: Anatel and TIM 22
Mobile Operator with Robust Fixed Infrastructure
Optical Fiber at Amazonas, Pará
and Amapá, through the LT
Amazonas
Manaus
Cuiabá
Florianópolis
São Paulo
Macapá
Boa Vista
P. Velho
Salvador
Curitiba
Maceió
Recife
Fortaleza
Brasília
Rio de Janeiro
Porto Alegre
Goiânia
Belém
BHE
Aracaju
São Luis
Natal
João Pessoa
Palmas
Vitoria
Teresina
Rio Branco
Campo Grande Campos
Tucuruí
Petrolina
Maringa
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M M M
M
M M
M
M
M
M
M
M
M
M
M M
M
M
M
Backbone Backhaul
Metropolitan
Optical Ring
2G
3G 4G
Long Distance Network:
21,364 KM
27,973 KM
36,540 KM
41,308 KM
2011
2012
2013
2014
Wi-Fi na Rocinha Metro Network (FTTS – focus on the
Confederation Cup and 2014 World
Cup):
Construction of 42 metropolitan rings
by YE2014
Wi-Fi Project:
Airports;
Communities
Stadiums
Parks / Leisure Areas
Wi-Fi em Paraisópolis
23
24+
Business Outlook
Voice Capacity (‘000 TRXs)
157 205
+30%
Data Capacity (‘000 channel elements)
139
328
2011 2012 3Q12
FTTS (Fiber to the Site) (‘000 Km Fiber)
29 38
2011 2012 3Q12
Conclusions & Outlook
95%
Done in
3Q12
115%
Done in
3Q12
96%
Done in
3Q12
2011 2012
Customer Base Growth (Millions)
46.9 59.2
69.4
MOU (FMS on Play) (Minutes)
123 130
139
Data Revenues Accelerating (R$ Billion; % Gross Mob. Serv. Rev.)
0.6 0.8
1.1
TIM Fiber Network Roll-Out (‘000 Households)
3Q10 3Q11 3Q12 3Q10 3Q11 3Q12 3Q10 3Q11 3Q12 May/12 Dec/12
Quality Improvement “Commitment with Anatel”
Business Fundamentals Remain Solid
Better regulatory
environment
Tax easing
policy
13% 16%
19%
3Q12
Outlook
~590
>100
~6X Addressable
Market
(Homes passed)
2012 guidance
commitment
Innovative approach
unchanged
+136%
+31%
25
26+
Appendix
Regulatory Update
PGMC
4G QUALITY
• 2.5 GHz:
Contract is signed, 10% paid in 4Q12, 90% to be paid in 2Q13
(License value: R$ 382 mln).
Suppliers are defined: Huawei, Nokia-Siemens and Ericsson.
• Future of 700 MHz Auction :
Ongoing discussion among Anatel, mobile carriers and
broadcasters on digital dividend.
• Improvement Plan:
Focus on the improvement of customer care and network.
• Anatel quarterly assessment:
Based on follow-up monthly meetings
• Indication of the integrality of the new quality rules
New broadband indicators start to be informed of November/ 2012.
• Access to fixed operators networks:
Unbundling of copper networks (Backbone, Backhaul and Last Mile at
regulated prices (wholesale vs. retail prices cross check).
No unbundling of fiber networks: exclusive use of fiber networks
(including dark fiber) for 9 consecutive years (Regulatory Grace Period).
• Infrastructure sharing:
Sharing of the passive infrastructure (duct, conduits and towers).
• National Roaming:
Charged at the lowest tariff in the market for non-PMS players (Nextel,
CTBC and Sercomtel).
• MTR (VU-M) billing system:
Full billing between PMS* players (i.e. TIM, Claro, Oi and Vivo).
Partial bill and keep between non-PMS players (Nextel, CTBC and
Sercomtel) and PMS players was defined as follows:
2013/2014: 80/20
2015: 60/40
2016: Full Billing
• MTR cut path:
2013: 9.5% (~R$ 0.33/min.)
2014: 25% (~R$ 0.25/min.)
2015: 33% (~R$ 0.17/min.)
2016: Cost Model
*PMS as Significant Market Power. A player which has the power to influence a specific market. 27
Historical Data: Financials (R$ Thousand)
28
Description 3Q10 3Q11 4Q11 1Q12 2Q12 3Q12 3Q12 %YoY
Net Revenues 3,676,781 4,371,388 4,710,566 4,468,319 4,547,332 4,722,425 8.0%
Net Revenues on Services 3,418,253 3,886,617 4,259,425 4,015,418 3,984,174 4,100,249 5.5%
Net Revenues on Products 258,528 484,771 451,141 452,900 563,158 622,176 28.3%
Operating Expenses (2,641,685) (3,213,950) (3,393,208) (3,299,651) (3,332,903) (3,520,489) 9.5%
Personnel expenses (139,797) (158,351) (164,652) (175,997) (186,441) (170,138) 7.4%
Selling & marketing expenses (935,324) (1,010,953) (1,079,699) (1,017,959) (922,302) (938,184) -7.2%
Network & interconnection (1,075,302) (1,197,827) (1,280,617) (1,298,885) (1,309,694) (1,353,194) 13.0%
General & administrative (122,653) (110,262) (133,745) (131,808) (126,310) (152,854) 38.6%
Cost Of Goods Sold (274,594) (597,708) (544,674) (533,460) (631,464) (690,398) 15.5%
Bad Debt (69,397) (60,825) (62,451) (56,640) (62,050) (80,009) 31.5%
Other operational revenues (expenses) (24,618) (78,024) (127,370) (84,902) (94,641) (135,713) 73.9%
EBITDA 1,035,096 1,157,438 1,317,358 1,168,652 1,214,403 1,201,936 3.8%
EBITDA Margin 28.2% 26.5% 28.0% 26.2% 26.7% 25.5% 96 Bps
Adjusted EBITDA 1,035,096 1,157,438 1,317,358 1,168,652 1,214,403 1,244,066 7.5%
Adjusted EBITDA Margin 28.2% 26.5% 28.0% 26.2% 26.7% 26.3% 99 Bps
Depreciation & amortization (755,545) (644,560) (641,920) (656,629) (664,233) (656,887) 1.9%
EBIT 279,551 512,878 675,438 512,024 550,171 545,048 6.3%
Net Financial Results (58,840) (61,450) (100,817) (42,178) (63,588) (28,930) -52.9%
Income before taxes 220,711 451,429 574,621 469,845 486,583 516,118 14.3%
Income tax and social contribution (74,188) (134,796) (173,463) (193,407) (139,796) (198,088) 47.0%
Net Income 146,523 316,632 401,158 276,439 346,787 318,030 0.4%
Adjusted Net Income 146,523 316,632 401,158 276,439 346,787 369,285 16.6%
Description 2010 2011 YTD 2012
Net Revenues 14,457,450 17,085,976 13,738,075
Net Revenues on Services 13,571,626 15,353,228 12,099,841
Net Revenues on Products 885,824 1,732,748 1,638,234
Operating Expenses (10,263,854) (12,427,669) (10,153,043)
Personnel expenses (586,722) (632,828) (532,576)
Selling & marketing expenses (3,483,164) (3,933,753) (2,878,445)
Network & interconnection (4,227,042) (4,722,261) (3,961,773)
General & administrative (484,609) (502,640) (410,972)
Cost Of Goods Sold (1,026,091) (2,062,552) (1,855,321)
Bad Debt (310,498) (231,529) (198,699)
Other operational revenues (expenses) (145,728) (342,105) (315,256)
EBITDA 4,193,596 4,657,881 3,584,992
EBITDA Margin 29.0% 27.3% 26.1%
Adjusted EBITDA 4,193,596 4,658,307 3,627,122
Adjusted EBITDA Margin 29.0% 27.3% 26.4%
Depreciation & amortization (2,993,461) (2,590,865) (1,977,749)
EBIT 1,200,135 2,067,442 1,607,243
Net Financial Results (245,457) (238,857) (134,696)
Income before taxes 954,678 1,828,584 1,472,547
Income tax and social contribution 1,257,038 (547,357) (531,290)
Net Income 2,211,716 1,281,228 941,257
Adjusted Net Income 776,716 1,281,228 992,512
Historical Data: Financials (US$ Thousand)
29
Description 3Q10 3Q11 4Q11 1Q12 2Q12 3Q12 3Q12 %YoY
Net Revenues 2,101,289 2,672,520 2,615,277 2,524,263 2,315,258 2,327,699 -12.9%
Net Revenues on Services 1,953,540 2,376,148 2,364,807 2,268,409 2,028,529 2,021,026 -14.9%
Net Revenues on Products 147,749 296,373 250,470 255,855 286,730 306,673 3.5%
Operating Expenses (1,509,729) (1,964,901) (1,883,888) (1,864,054) (1,696,936) (1,735,261) -11.7%
Personnel expenses (79,895) (96,811) (91,414) (99,425) (94,926) (83,862) -13.4%
Selling & marketing expenses (534,540) (618,063) (599,442) (575,070) (469,587) (462,434) -25.2%
Network & interconnection (614,538) (732,311) (710,991) (733,772) (666,826) (666,994) -8.9%
General & administrative (70,096) (67,411) (74,255) (74,462) (64,310) (75,342) 11.8%
Cost Of Goods Sold (156,931) (365,419) (302,399) (301,365) (321,508) (340,299) -6.9%
Bad Debt (39,661) (37,186) (34,672) (31,997) (31,593) (39,437) 6.1%
Other operational revenues (expenses) (14,069) (47,701) (70,715) (47,963) (48,186) (66,893) 40.2%
EBITDA 591,560 707,619 731,389 660,201 618,309 592,438 -16.3%
EBITDA Margin 28.2% 26.5% 28.0% 26.2% 26.7% 25.5% 96 Bps
Adjusted EBITDA 591,560 707,619 731,389 660,201 618,309 613,204 -13.3%
Adjusted EBITDA Margin 28.2% 26.5% 28.0% 26.2% 26.7% 26.3% 99 Bps
Depreciation & amortization (431,796) (394,062) (356,390) (370,946) (338,192) (323,782) -17.8%
EBIT 159,764 313,557 374,999 289,255 280,118 268,656 -14.3%
Net Financial Results (33,627) (37,568) (55,973) (23,828) (32,375) (14,260) -62.0%
Income before taxes 126,137 275,988 319,026 265,427 247,742 254,396 -7.8%
Income tax and social contribution (42,399) (82,410) (96,305) (109,260) (71,177) (97,638) 18.5%
Net Income 83,738 193,579 222,721 156,167 176,566 156,758 -19.0%
Adjusted Net Income 83,738 193,579 222,721 156,167 176,566 182,022 -6.0%
Description 2010 2011 YTD 2012
Net Revenues 8,231,230 10,201,868 7,167,221
Net Revenues on Services 7,724,407 9,163,550 6,317,964
Net Revenues on Products 506,823 1,038,317 849,257
Operating Expenses (5,842,070) (7,422,671) (5,296,251)
Personnel expenses (333,456) (378,222) (278,212)
Selling & marketing expenses (1,982,451) (2,348,218) (1,507,091)
Network & interconnection (2,404,499) (2,819,498) (2,067,592)
General & administrative (275,650) (300,371) (214,114)
Cost Of Goods Sold (587,945) (1,235,395) (963,172)
Bad Debt (175,766) (138,555) (103,026)
Other operational revenues (expenses) (82,302) (202,411) (163,043)
EBITDA 2,389,160 2,778,941 1,870,948
EBITDA Margin 29.0% 27.2% 26.1%
Adjusted EBITDA 2,389,160 2,778,941 1,891,714
Adjusted EBITDA Margin 29.0% 27.2% 26.4%
Depreciation & amortization (1,700,012) (1,549,236) (1,032,919)
EBIT 689,148 1,229,961 838,029
Net Financial Results (139,353) (140,652) (70,463)
Income before taxes 549,795 1,089,309 767,566
Income tax and social contribution 745,372 (325,734) (278,075)
Net Income 1,295,167 763,575 489,491
Adjusted Net Income 449,352 763,575 514,755
Historical Data: Operational
30
Description 3Q10 3Q11 4Q11 1Q12 2Q12 3Q12 3Q12 %YoY
Brazilian Wireless Subscriber Base (000`s) 191,472 227,352 242,232 250,826 256,131 258,861 13.9%
Estimated Total Penetration 99.0% 116.5% 123.87% 128.00% 130.44% 131.56% 15 Bps
Municipalities Served (GSM) 3,200 3,259 3,294 3,305 3,312 3,320 1.9%
Market Share 24.52% 26.04% 26.46% 26.80% 26.89% 26.81% 3.0%
Total Lines (000's) 46,947 59,210 64,083 67,217 68,874 69,408 17.2%
Pre-paid Lines (000's) 39,711 50,559 54,778 57,564 58,873 59,146 17.0%
Post-paid Lines (000's) 7,236 8,651 9,305 9,653 10,001 10,262 18.6%
Gross Additions (000's) 7,463 10,186 11,836 9,880 9,814 8,727 -14.3%
Net Additions (000's) 2,522 3,685 4,873 3,134 1,656 534 -85.5%
Churn 11.1% 11.6% 11.7% 10.5% 12.1% 11.9% 0.3 bps
Total ARPU 23.5 21.2 21.9 19.1 18.3 18.9 -10.8%
Total MOU 123 130 131 126 127 139 6.5%
SAC 55 36 28 32 26 32 -11.1%
Handsets Sold (000's) 2,125 3,164 2,847 2,284 2,511 2,512 -20.6%
CAPEX (R$ Mln) 526 852 1,150 543 1,057 772 -9.5%
CAPEX (US$ Mln) 301 521 639 307 538 380 -27.0%
Employees 9,081 10,248 10,562 10,761 10,948 11,333 10.6%
41 51
64
2009 2010 2011 2012 2013 2014
2012-14 Drivers of Growth
Community Expansion FMS (Voice) Internet for All
90
mln lines 200 mou
Services
Revenues
Total
Revenue
13.6
2009
12.8
2014 2013 2012 2011
15.3
2010
Mobile
Fixed
13.8 14.5 17.1
Double digit
growth
Double digit
growth
25% VAS
Incidence
90
3 Ways of Growth
Revenue Growth
R$ billion
12.9 12.2 14.5
0.7 0.6
0.8
CAGR 11-14
Mobile Customer Base
Million of lines
Double digit
growth
FMS – Voice (MOU)
Minutes of usage per line
Outgoing Voice Revenues
11% 12% 14%
2009 2010 2011 2012 2013 2014
~25%
Double digit
growth
Internet for All (Mobile Data)
Data as % of Service Revenue
Data Revenues
83
116 129
~200
0
50
100
150
200
250
2009 2010 2011 2012 2013 2014
31
2014 Swap +
built out 2011
42 Cities
50%
157
271
2011 2014
64%
2014 2011
>80%
2014 2012
14 Cities
Network Continuous Evolution
53.0
24.1
28.9
TIM Fiber
TIM Fiber: a “no Capex intensive”
approach to offer Residential Ultra BB in
SP/RJ
2G (TRX Installed)
000 TRX
3G roll out
Pop %
FTTS
% of total traffic
Fiber Network
000 km
2G Managing the growth
3G Speed up the toll out in
HSPA mode
WiFi >10,000 hot spots
FTTS Deployment in Top 42 cities
FTTH ~1 Mln households by 2015
Efficiency >50,000 km in fiber optic
Network roadmap
32
New
Old
2012 2011 2010 2014 2013
17.1
14.5
14.5 15.5
1yr in advance
2.8 3.0 3.0 3.0 3.0
nd
s
CAPEX
Take-aways on main TIM Brasil trends
2012 2011 2010 2014 2013
MTR glide path (-20% real term) as of feb’12
impacts approx. 250 bp in Revenues and
EBITDA
Growth resulting from further CB, voice MOU
and internet browsing
For 2012, revenues growth at >10% YoY (vs.
R$17.1Bln in 2011)
Revenues
Network synergies from AES Integration
Continuous efficiency in Go2Market (no
subsidy, SAC/bad debt)
Absorbing MTR cut and TIM Fiber start-up
For 2012, Ebitda growth at >10% YoY (vs.
R$4.6Bln in 2011)
Ebitda
Capex
Expanding 2G capacity and 3G coverage
Accelerate FTTS in Top 42 Cities and Wi-fi
offloading
Tim Fiber start-up
CAPEX flat at 3 bln/year; R$9bn in 3 Years
excluding 4G spectrum license (R$ 382.2 mln)
Revenues (New vs Old Plan)
R$ Billion
Organic Capex
% of Revenues; R$ billion
19.6 17.5
10
15
20
33
3%
Taxation Over Telecom in Brazil
Tax Relief - 1º Step: M2M Fistel and Smartphones (MP 563/2012)
Total
30%-40%
Fust/
FUNTEL
PIS/
PASEP
1.5%
0.65%
ICMS Cofins
25%-35%
Tax reduction Reduction in the
price to
consumer
Increase of
Penetration
Social
Impacts
Economic
Impact
Possibility of
higher
investment in
network
Better
Quality
Tax Composition
% of Gross Revenues
34
In 2011, TIM paid R$7.3
bln of taxes, fees and
contributions (~43% of
total net revenues)
Mexico
15%
Argentina
25%
Bolivia
13%
Brazil
40%
Paraguay
10%
Venezuela
14%
Chile
19%
Peru
19%
Ecuador
27%
Colombia
20%
Nicaragua
15%
Source: UIT, Deloitte and Acel
LatAm Average
20%
Telecom Tax Aliquots in Brazil
% of Net Revenues
Shareholders Structure and Stock performance
Stock Performance (base 100)*
0
20
40
60
80
100
120
140
TIMP3 Ibovespa TSU
35 *Last price as of 12/31/2012
TIM Celular S.A. Intelig
100%
TIM Brasil Serv. e Part. S.A. Minorities
Telecom Italia International N.V.
Telecom Italia
100%
TIM Participações S.A.
ON: 33% (805,662,701) ON: 67% (1,611,969,946)
100% 100%
Investor Relations Team
Avenida das Américas, 3434 - Bloco 01
6° andar – Barra da Tijuca
22640-102 Rio de Janeiro, RJ
E-mail: [email protected]
Rogério Tostes
E-mail: [email protected]
Phone: +55 21 4109-3742
Vicente Ferreira
E-mail: [email protected]
Phone: +55 21 4109-3360
Leonardo Wanderley
E-mail: [email protected]
Phone: +55 21 4109-4017
Gustavo Valente
E-mail: [email protected]
Phone: +55 21 4109-3446
Luiza Chaves
E-mail: [email protected]
Phone: +55 21 4109-3751
Visit our Website
www.tim.com.br/ir
Safe Harbor and IR Contacts
Safe Harbor Statements
Statements in this presentation, as well as oral
statements made by the management of TIM
Participações S.A. (the “Company”, or “TIM”), that
are not historical fact constitute “forward looking
statements” that involve factors that could cause
the actual results of the Company to differ
materially from historical results or from any
results expressed or implied by such forward
looking statements. The Company cautions users
of this presentation not to place undue reliance on
forward looking statements, which may be based
on assumptions and anticipated events that do
not materialize.
36
