Tim 3 Q09 Webcast Eng
Transcript of Tim 3 Q09 Webcast Eng
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TIM Participações S.AWebcasting - 3Q09 Results
October 30th, 2009
3Q09
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TIM PARTICIPAÇÕES S.A. | Investor Relations
Agenda
Highlights of Re-launch Plan L. Luciani
3rd Quarter Results C. Zezza
Perspectives for 4Q09 L. Luciani
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TIM PARTICIPAÇÕES S.A. | Investor Relations
TIM Brasil Re-launch – summary of the first 9 months
TIM reverses market share trend (net share of 27.3% in 3Q, after 29.1% in 2Q, vs. ~24% of market share)
Improving pre-paid customer base (Infinity Pre-paid: >11 million clients in 6 months)
End of post-paid base (voice) erosion,after 15 months (Infinity Post-paid and TIM Único)
Re-launch costs +R$ 0.5 Bln 9M YoYAdvertising, CRC, network quality and commissioning
Self-financing -R$ 0.7 Bln 9M YoYthrough Efficiency PlanInterconnection, Bad Debt and Personnel
ΔEBITDA +6.7% 9M YoYDespite -0.9% of revenues decrease
Brand: improve in Awareness and Top of Mind*
Quality: confirmed #2 Anatel (with MOU +30% higher than 1Q09)
Customer Satisfaction Consumer: recovery quality level in all customer segments
Subscriber’s base Self-financingPositioning
(Brand and Quality)
Achievements
Jul ‘08
7.41
Jan ’09
6.60
Jul ’09
7.47Overall
6.22 5.89 6.88Post-paid
Continuous improvement on KPIs QoQ
Sources: ABA (Associação Brasileira de Anunciantes)
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TIM PARTICIPAÇÕES S.A. | Investor Relations
TIM’s Brand: improving in Awareness and Top of Mind
Sources: Ibope Monitor, TIM Brasil - Pesquisa de imagem (Synovate – third-party survey institute) e tracking semanal de comunicação* Mensuração no RJ e SP da última semana do mês
Share of Investments
Share of Voice
30%32%
15% 16%
29%
24% 19%
17%
26%
31%
26%28% 28%
26%
15%
18%
5%
10%
15%
20%
25%
30%
35%
40%
2006 2007 2008 Jan-Aug ‘09
TV – GRP 15”+
21%
32%
25%
20%
29%
23%23%21%
17%
19%
21%
23%
25%
27%
29%
31%
33%
35%
2008 Jan-Aug ‘09
TIMPlayer 1
Player 2Player 3
Top of Mind
31%29%
28%29%29%
27%
30%
27%
22%22%21%20%
19%18%20%
22%
Oct-Nov07
May-Jun08
Oct-Nov08
Jun/09
•ABA: #1•Folha de SP: # 2
Awareness
41%
27%23%31%
44%
30%
42%
53%
34%
29% 29%
20%
32% 33%
33%34%
33%
50%
22%
31%
May/09 Jun/09 Jul/09 Aug/09 Sep/09
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TIM PARTICIPAÇÕES S.A. | Investor Relations
90.7%
97.3%
87.6%
94.0%96.4%
82,00%
84,00%
86,00%
88,00%
90,00%
92,00%
94,00%
96,00%
98,00%
100,00%
4Q08 1H09 jul/09 aug/09 sep/09
Network: Improvement of Service and Network QualityOverall Service Quality – YTD’ 2009 Overall Service Quality – Sept’ 2009
# 2
Network Service Quality (*)
Jan/09 Set/09 Delta (p.p.)
TIM 84.1% 97.3% +13.2
Player 1 100.0% 99.1% -0.9
Player 2 95.7% 96.5% +0.8
Player 3 53.8% 50.0% -3.8
MainMobileOperators
Fonte: Anatel(*) SMP Anatel 3, 5, 6, 7 e 12
86MOU 71 90
-0.2 +5.2 -0.9-7.8-5.1-1.2+2.1
% target achieved in overall service quality, TIM vs. competitors % target achieved in overall service quality, TIM vs. competitors
% target achieved in network quality , TIM vs. competitors % target achieved in TIM network quality
∆ppYTD 09vs. FY08
99.3%96.8% 95.5% 93.9% 92.6%
83.0%
90.2%
Player 1 TIM Player 6 Player 5 Player 4 Player 2 Player 3
99.2% 97.7% 95.5%90.9%
85.5% 81.8%
65.9%
Player 1 TIM Player 6 Player 4 Player 2 Player 5 Player 3
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TIM PARTICIPAÇÕES S.A. | Investor Relations
Improvement in Customer Satisfaction Metrics
Customer Care SatisfactionCustomer satisfaction Index
Δ vs lastmeasure
Rankingoct/08 may/09
#1
#1
#1
#1
+0.44
+0.36
+0.72
+0.87
* Jul/09 e Aug/09Sources: TIM Brasil - 12nd Customer Satisfaction Monitoring - may-jun/09; CRC Monthly Satisfaction Research
CRC Average satisfaction, consumer segment
#3
#2
#4
#4
Recovery client satisfaction in all segments
From 0 (dissatisfied) to 10 (maximum satisfaction)
Pre-paid
Post-paid
8.43
8.50
8.06
7.96
Overall
Pre
Post
PostHigh
-0,5
+0,7
+0,5
7.57.4
7.07.1
7.5
6,7
6,9
7,1
7,3
7,5
7,7
7,9
3Q08 4Q08 1Q09 2Q09 3Q09*
6.76.6
6.3
6.06.1
5,7
5,9
6,1
6,3
6,5
6,7
6,9
7,1
3Q08 4Q08 1Q09 2Q09 3Q09*
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TIM PARTICIPAÇÕES S.A. | Investor Relations
Customer Base: Net share stable and higher than market share
CustomerBase
Net Share (%)
Market Share (%)
1Q08 2Q08 3Q08 4Q08 2Q09 3Q091Q09
After four quarters of market share erosion…
… TIM confirmed trend reversal 2009 Monthly Net Share
Market Share
EvolutionConsistency
25%
38%
24%32%
27% 29%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Apr May Jun Jul Aug Sep
Mln Lines
Dec-08 Sep-09
Pre-paid Post-paid
Jan-08 Mar-09 Sep-09Dec-08
Mln Lines
+3.4
Jan-08 Mar-09
+0.1-0.6End of post-
paid base erosion, after
15 months
Infinity Pre-paid Growth
27.3%
23.7% 23.8%
29.1%
17.4% 18.3%
26.5%
12.1%
-10.1%
25.9%
25.0%25.4%24.2% 23.5%
29.9
33.3
29.8
25.2 6.26.3
6.8
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TIM PARTICIPAÇÕES S.A. | Investor Relations
Increasing LD market share of traffic
(+ 10pp)
Innovative and differentiate offers: New concepts leveraging on TIM Community
~60% of Gross Adds are new Business clients
>11 million clients
Infinity Pós
+40% Post-paid Gross Adds (Voice) Consumer 3Q YoY
9070
1Q09 3Q09
MOU
Leveraging onTIM Community
~40 million clients(Local and DDD)
1Q09 3Q09
% MOU on-net
+8 pp
+30%
Infinity Pré
TIM Único
Mundo Azul
Competitive advantage of
TIM’s offer
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TIM PARTICIPAÇÕES S.A. | Investor Relations
Self-financing the Re-launch plan…
Interconnection
Bad Debt
G&A
EBITDA
+0.5
-0.7
8.9 8.8
0
-0.08
+0.59
+0.13
Set-09 YTD vs. YA
-0.9%
+10.0%
+6.7%
-0.9%
( ) ( )
3.8 3.1
3.1 3.6
+6.7%
+6.7%
BRGAAP, Bln R$
ServiceRevenues
ServiceMargin*
EBITDA
More quality in:•Traffic
(on-net)•Clients•Organization
• Brand Re-shaping
• Recovery Customer Base
• Improve in Margin despite of Revenues decrease
Net Service Revenues
EBITDASet-08 YTD
Increase Commercial
Expenses
Increase Network
Costs
Gross ServiceMargin*
Efficiency e G&A EBITDASet-09 YTD
•Revenue: -0.1•Interconnection: +0.4•Bad debt: +0.3
Delta EBITDA 08 vs. 09
* Revenue – Interconnection – bad debt
Commercial Expenses
(Fixed and Variable)
Network
1.97 2.10
0
1
2
3
4
5
6
7
8
9
10
Set-08 YTD Set-09 YTD
2.10
0.59
0.05
0.41 0.10
1.97
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TIM PARTICIPAÇÕES S.A. | Investor Relations
EBITDA and Margin
R$ Mln , %, 2009
EBITDA
EBITDA Margin 20.2% 22.3% 22.7%
+21%
+3%R$ Bln, 2009
ServiceContribution*
% ServiceContribution
Service Contribution
42% 48% 49%
+19% +8%
Improve QoQ with Quality
* Service Revenues – Incoming – Interconnection
Service Revenues
R$ Bln
-0.5% -1.2% -1.0%Δ YoY
+4%
+5%
Handset Revenues
Δ YoY +21.5% +70.8% +13.0%
R$ Bln
-31%
Chip Only
~6pp higher than 2008
3.08
2.94
2.82
1Q09 2Q09 3Q09
0.250.37
0.19
1Q09 2Q09 3Q09
1.51.41.2
1Q 2Q 3Q
609
736 759
1Q 2Q 3Q
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TIM PARTICIPAÇÕES S.A. | Investor Relations
MOU and ARPU
Main Metrics Evolution
Customer Base
BRGAAP, Mln lines EoP, 2009 BRGAAP, Min/month, R$/month, 2009
Pre
Post
1Q 2Q 3Q
MOU
ARPU
Pré
Pós
QoQ trend
Total:
Pre-paid Outgoing:
Post-paid Outgoing:
Incoming:
Gross VAS Revenue
496483430
1Q 2Q 3Q
BRGAAP, Mln R$QoQ trend MOU ARPU
% VAS /ServiceRevenues
11.2% 12.0%12.3%Mix CB Pre/Post
Microbrowsing
33.331.6
29.9
6.2 6.2 6.3
1Q 2Q 3Q
70 7390
26.526.626.0
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TIM PARTICIPAÇÕES S.A. | Investor Relations
Agenda
Highlights of Re-launch Plan L. Luciani
3rd Quarter Results C. Zezza
Perspectives for 4Q09 L. Luciani
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TIM PARTICIPAÇÕES S.A. | Investor Relations
3Q09’s Main Results
Net Service Revenues: +5.0% QoQ but still -1% YoY
Total Opex: Efficiency Plan preserving margin
• Bad Debt: -30.5% YoY
• Interconnection & Network: -10.5% YoY
• Personnel and G&A: -3.3% YoY
• Commercial: +22.1% YoY
EBITDA: +3.1% QoQ to a margin of 22.7% (vs. 22.3% in 2Q09)
Net Profit: Back to positive result of R$ 61 Mn (vs. -R$15 Mn in 2Q09)
Positive Op. FCF: Maintaining 12% of net revenues (equals to R$392 Mn), while speeding up network rollout (Capex
16% of Revenues)
Net Financial Position: R$2,544 Mn, vs. R$2,900 in 2Q09 (-R$356 Mn QoQ)
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TIM PARTICIPAÇÕES S.A. | Investor Relations
Net Revenue R$ Million % Margin
Revenues and EBITDA Evolution
R$ Mln
403 483 496Gross VAS Rev.
9.5% 12.3% 12.0%% VAS/ Service Rev.
ΔY/Y ΔQ/Q
ΔY/Y ΔQ/Q
3,0832,9363,115 2,823
3Q08 1Q09 2Q09 3Q09
430
11.2%
//HandsetRevenues
Total NetRevenues
292 189 368 254
3,407 3,012 3,304 3,337
ServiceRevenues
-2.0%
-1.0%
-13.0%
+1.0%
+5.0%
-30.9%
+23.0% +2.5%
+2.5pp -0.3pp
EBITDA
1Q09 2Q09 3Q09
20.2%22.3% 22.7%
609736 759
EBITDA Margin
EBITDA
17,9% 20,0% 23,4%2008EBITDA %
1,968 2,104
20.5%21.8%
9M’099M’08
9 Months EBITDA & Margin
EBITDA & Margin
Less Commercial Efforts 2H08
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TIM PARTICIPAÇÕES S.A. | Investor Relations
R$ Mln…with consistent savings through Efficiency Plan
1Q 2Q 3Q1Q 2Q 3Q
Bad Debt Personnel and G&A CostsInterconnection & Network
R$ MlnR$ Mln
1Q 2Q 3Q
R$ Mln
Selling Expenses
1Q 2Q 3Q
Strengthening commercial efforts to re-launch the brand…
Efficiency Plan to Finance Business Re-launch
+22.1%+24.6%+18.6%
-30.5%-47.9%-50.5%-10.5%-14.1%-5.7% -3.3%-9.0%-8.7%
YoY%
YoY% YoY% YoY%
985 921 964
1,045 1,073 1,077
134106 100
272203
143
261 252 246
286 277 254YTD: -10%
YTD: -45%YTD: -7%
709829 873
598 666 715
YTD: +22%
20092008
4.6%*
3.2%*3.6%*4.8%*
* % Net Service Revenue
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TIM PARTICIPAÇÕES S.A. | Investor Relations
EBITDA 3Q
22.7%23.4%Margin %
1 - Outgoing + VAS + LD +Others – Interconnection & Network Costs2 - Other Expenses include: G&A, Personnel and Net Other Operating Expenses/Revenues
R$ Mln
798.5
192.5 (111.2)
4.843.7
(11.2)
758.8
Bad Debt OtherExpenses2
HandsetContribution
BusinessReceived
(Incoming)
BusinessGenerated(Out+VAS)1
3Q08 3Q09
Service Contribution
(158.3)
Advertising & Sales
R$ 80 Mln (+4% YoY)
+19% YoY
-11% YoY
Larger on-net Community
Chip-only approach
Higher commercial
push vs. 2H08
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TIM PARTICIPAÇÕES S.A. | Investor Relations
EBITDA 3Q09
Depreciation & Amortization EBIT Net Financial
ExpensesTaxes and
OthersNet
Result
Net Result: Back to ProfitR$ Mln
3Q08 (618.0) 180.5 (152.9) (39.6)
758.8(663.7)
95.1 (61.9) 27.660.8
798.5 (12.1)
-5.0% +7.4% -59.5% N/A N/AYoY % -47.3%
1Q09 2Q09 3Q09
61
(15)(144)
•Lower Interest Rates•3G NPV Impact•Tax Benefit (REFIS)
•Tax Reversion Provisioning•Tax Benefit (REFIS)
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TIM PARTICIPAÇÕES S.A. | Investor Relations
Gross DebtR$ 3.50 billion (of which 60% long term)~33% of total debt is denominated in foreign currency (fully hedged)
Average annual cost 9.74% in 3Q09 vs.12.54% in 3Q08 (and 10.95% in 2Q09)
Operating Free Cash Flow & Net Financial Position – 3Q09
R$ Million
Net Financial PositionR$ Million
Operating Free Cash Flow
Operating FCF
R$ Million
EBITDA ΔWork. Cap.
CAPEX Operating FCF
3Q092Q09 NonOp. FCF
(2,900)
(35)392
(2,544)
759
169
(536)
392
12% 12%
2Q09 3Q09
Capex / Sales
13%16%
2Q09 3Q09OpFCF /
Sales
R$ 356 Mln of debt reduction
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TIM PARTICIPAÇÕES S.A. | Investor Relations
Agenda
Highlights of Re-launch Plan L. Luciani
3rd Quarter Results C. Zezza
Perspectives for 4Q09 L. Luciani
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TIM PARTICIPAÇÕES S.A. | Investor Relations
•Network: 2G voice service (MOU
and quality)
•Organization: Customer
Satisfaction Management
•Operation: simplification and
automation of basic-processes
based (eg: Business)
Client-oriented for a value increase
Source: Bridge Research, Customer Satisfaction Monitoring , May-June 2009
•Post: ‘Liberty’, ‘Infinity’ and ‘Único’ Plans
•Chip only and SIM-unlocked handsets approach
•VAS / Handset Portfolio
•Improve 2G Capacity
•Backhauling and Backboning (Intelig)
•3G Roll-out
•Incremental Market Share
•Post-paid base
•% of VAS revenues
KPIs
•Customer Satisfaction
•Churn
•Preference
KPIs
•Network capacity: # TRX
•Trade-off CAPEX-OPEX (leased lines)
•3G: # Node-B
KPIs
Inno
vatio
n
Inno
vatio
n Quality
Quality
Network DevelopmentNetwork Development
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TIM PARTICIPAÇÕES S.A. | Investor Relations
Handset Revenue
SAC / ARPU
TIM is Innovation
Plans Business Model Handsets and VAS
“Liberty: the biggest club in Brazil” Chip only (for all post-paid plans) Unique and distinctive
• Unlimited calls
- local and DDD
- TIM to TIM
• Community with more than 40
million clients
• Free National Roaming
• Exclusivity in devices (e.g.: Windows
Phone)
• Outsourcing of VAS platforms
multiplatform applications store:
music, games, adult (ex: Qualcomm)
• Presence of TIM in applications
store of main suppliers (e.g.:
“Brasileirão 2009” in Apple Store)
Community concept (on-net)Microbrowsing
Infinity Pre Infinity Post Liberty
• Win-Win-Win:
- TIM: SAC/Bad Debt reduction,
competitive differentiation in
service vs. handset
- Sales: one more option for sales
- Client: flexibility
. Handset Benefit or
. Service Benefit
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TIM PARTICIPAÇÕES S.A. | Investor Relations
The Path of 2009
Costumer Base and Market Share
2Q09
Launch of Infinity Plans (Pre and Post-paid)
Loyalty (Handset and Monthly Fee Discounts)
Push on Sales:
- Focused on Post-paid and MNP
- Network Rationalization
- New ways to encourage Usage
MOU
3Q09
Encourage Usage:
- Infinity (Pre and Post) and launched of “Blue”Concept (Local and LD)
- Quick-win of pre-paid clients
Push on Sales and CRM action
Clients migration to new plans (Pre)
Δ Post-paid Clients and SAC/ARPU
4Q09
Focusing on Post-paid:- Liberty- Infinity e ÚnicoGo-2-Market Model: Chip Only, or traditional modelAcceleration and Network Development: - 2G Capacity - 3G CoverageIntelig
Awareness and Quality
1Q09
Brand: new format and increasing in Share of Investments
Network Quality:capacity, access, transportation (LD)
Costumers Satisfaction Recovery in all Consumer Segments
KPIs
ServiceRevenues
EBITDAMargin
++ +
R$ Mln , %, 20092.82
2.943.08
20.2%
22.3% 22.7% +
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TIM PARTICIPAÇÕES S.A. | Investor Relations
Conclusions: summary of 9 months of the Re-launch Plan
Brand re-shaping, with visibility (#1 Top of Mind), quality (#2 Anatel) e Customer Satisfaction (#1 Consumer)
Strengthening pre-paid customer base: (Infinity Pre-paid: >11 million clients in 6 months) andend of post-paid base erosion, after 15 months (Infinity Post-paid and TIM Único)
Re-launch Plan funded: Efficiency Plan neutralizes higher commercial costs
QoQ growth of main KPIs: Customer Base, MOU, ARPU, EBITDA and Margin
Positive result in bottom line, improvement of Operating Free Cash Flow and Net Debt
1
2
3
4
5
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TIM PARTICIPAÇÕES S.A. | Investor Relations
Conclusions: Priorities for the 4th quarter
Client-oriented for a value increase:
Innovation: Launch of Liberty and Chip-only (to all post-paid offers – sales and retention)
Quality: focusing on 2G Network and Customer Satisfaction Management
Network Development: Voice capacity, Backhauling/Backboning and 3G development
In Q4 we will continue our repositioning process:
Improve MOU and ARPU defending
Brand re-shaping, customer base growth with a stable market share
Efficiency to preserve margin ...
... Confirming improvements in all metrics QoQ, as showed in 3Q (Pre-paid and Post-base base, Revenue, EBITDA and Margin
1
2
3
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TIM PARTICIPAÇÕES S.A. | Investor Relations
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.
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.
Investor Relations
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Investor Relations
Avenida das Américas, 3434 - Bloco 016° andar – Barra da Tijuca22640-102 Rio de Janeiro, RJPhone: +55 21 4009-3742 / 4009-3446 / 4009-4017Fax: +55 21 4009-3990
Visit our Website
http://www.tim.com.br/ir
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