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Rio de Janeiro, February 24th 2010TIM PARTICIPAÇÕES S.A. | Investors Relations
4Q09 ResultsPresentation
1
TIM PARTICIPAÇÕES S.A. | Investors Relations
In the following slides we will present the financial statement analysis. For the sake of simplicity, all
comparisons refer to TIM operations, excluding the effects of Intelig’s Dec/09 operations. As for the
Balance Sheet, the analysis includes Intelig.
In the following slides we will present the financial statement analysis. For the sake of simplicity, all
comparisons refer to TIM operations, excluding the effects of Intelig’s Dec/09 operations. As for the
Balance Sheet, the analysis includes Intelig.
Additional Disclaimer to the Presentation
2
TIM PARTICIPAÇÕES S.A. | Investors Relations
Agenda
Repositioning Track
4Q 2009 Results
Perspectives for 2010-2012
3
TIM PARTICIPAÇÕES S.A. | Investors Relations
Post-paid Base
Jan-08 Jan-09 Abr-09 Aug-09 Dec-09
-0.4 -0.3
After 15 months, discontinuation of the post-paid base erosion
+0.3
6.56.3
6.8
6.26.4
Pre-paid Base
Jan-09 Mar-09 Aug-09 Dec-09
-0.2 +4.8
Reversal of Pre-paid clients loss after repricing/promo
29.9
34.7
30.1
32.9FROM REPOSITIO-
NING TO GROWTH
TIM Brasil: Repositioning TrackMM lines, EoP
Penetration Usage Data
TRACK
2008“Difficulties”
20102009“Repositioning”
2010-2012“Growth”
Clients lossInertia in 2009 of -R$ 1 Bln QoQ Acceleration
•Uncompetitive offer: repricing and
promo stop
•Loss of Brand attributes
•Little innovation
•Loss of quality
•Offers innovation: “breaking the rules”
•Quality Recovery
•Efficiency Plan: Savings >R$1 Billion;
(~R$800 Mln on the financials)
•Intelig Acquisition
3 Waves of Development
•Main growth drivers:
• Penetration
• F-M substitution
• Internet
•Need to build own infra-structure / Intelig
integration
•‘Back to growth’ with profitability and cash
3 Waves of Development
4
TIM PARTICIPAÇÕES S.A. | Investors Relations
• Customer Base: 41.1 MM(+1.5 MM vs. 3Q)
• ARPU leader: R$27 (vs. R$26.5 in 3Q)
• Service Revenues: +5.4% QoQ,due to outgoing traffic (+13% QoQ)
• Trend Inversion of Service Revenues YoY drop
• Infinity: ~18 million
• EBITDA: R$ 960 MM, +26% QoQ
• EBITDA Margin: 28.2% (+542 bps QoQ)
• Operating FCF: R$ 1.1 Bln 4Q; R$ 0.7 Bln Full Year
• Net Income: R$ 330 MM, +29% 2009FY vs. 2008FY
• Intelig Acquisition: completed
Deve
lopm
ent
Deve
lopm
ent
Quality
Quality
ProfitabilityProfitability
• Network Quality (AnatelRanking) : 100% in December, with MOU ~ 100 minutes
• Bad debt represents 2.5% of Service Revenues: -37%YoY
• Reduction of Interconnection and subsidy costs weight.
EBITDA Margin
Anatel Quality
1Q 2Q 3Q Oct Nov DecService Revenues
Q4 2009: Visible Signs of Turnaround
January:100%
+4.0% +5.0% +5.4%
R$ MM
1Q 2Q 3Q 4Q
2,9363,248
3,0832,823
1Q 2Q 3Q 4Q
97.3%100.0%99.5%
94.0%93.4%97.3%
1
28.2%
20.2%22.7%22.3%
0
5
TIM PARTICIPAÇÕES S.A. | Investors Relations
ARPU
OutgoingVoice
+9%
R$
Positive elasticity
CB
MM clients
18 MM Infinity
+3.8%+4.7%+4.8%
Service Revenues
R$ MM
+4.0% +5.0% +5.4%
YoY -0.5% -1.2% -1.0% +0.3%
KPI’s Improvements QoQ: Subscriber Base, traffic, ARPU and Revenues
TIM: breaking the rules
• Infinity: from “charge per minute” to “charge per call”
• Liberty: Unlimited talk to all TIM community
• ‘Chip Avulso’: without penalty
• SIM unlock handset
MOU
Outgoing
Total
>40%
Minutesoct nov dec
2
3
4
5
6
7
8
9
1 0
1 1
1 2
Q1 Q2 Q3 Q4
Charge per call
Charge perminute
39.9 40.341.1
41.1
36.137.8
39.6
33
34
35
36
37
38
39
40
41
42
Q1 Q2 Q3 Q4
27.026.526.626.0
5
10
15
20
25
30
Q1 Q2 Q3 Q4
9990
7370
40
50
60
70
80
90
100
110
Q1 Q2 Q3 Q4
3,2483,0832,9362,823
2500
2700
2900
3100
3300
3500
3700
Q1 Q2 Q3 Q4
6
TIM PARTICIPAÇÕES S.A. | Investors Relations
Reinforcement of Brand Positioning
Best deals Cheaper cost per Minute
29
34
35
29
+4pp
+3pp
-5pp
-7pp
Coverage
‘Chip Avulso’
21
37
23
23
+11pp
-1pp
-8pp
-5pp
Coverage Innovation
17
38
44
22
32
34
28
25
+10pp
0pp
-7pp
-3pp
+3pp
+3pp
+1pp
-3pp
Share of investments TV, %
15% 16%
31%
24% 19%
17%
30%32%
25%
31%
26% 28% 28%
25%
15%
18%
2006 2007 2008 Jan-Nov ‘09
‘Mundo Azul’
Liberty
Clear and direct communication of offers
Brand Credibility
Investments in Advertising
Communication Waves
Player1
Player2
Player3
Player1
Player2
Player3
Player1
Player2
Player3
7
TIM PARTICIPAÇÕES S.A. | Investors Relations
Increase in Traffic Volume Network quality improvement (Anatel ranking)
MM of total minutes (excluding visitors)
2008
2009
YoY -16.1% -19.1% +0.5% +28.9%
% achieved goals in TIM’s network quality
MOU
Traffic reduction after repricing
Network Quality: 100% of Anatel’s targets achieved
100% of Anatel’s Goals in December (confirmed in Jan.’10)
70 73 90 99
11,956
7,5858,068
10,458
10,4119,045
9,973
9,273
6000
7000
8000
9000
10000
11000
12000
13000
Q1 Q2 Q3 Q4
oct nov dec
97.8% 97.3%100.0%
1
1
1
1
1
1
1
1
99.5%
94.0%
98.2%
93.4%
85.5%
90.8%
1
1
1
1
1
3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
8
TIM PARTICIPAÇÕES S.A. | Investors Relations
Agenda
Repositioning Track
4Q 2009 Results
Perspectives for 2010-2012
9
TIM PARTICIPAÇÕES S.A. | Investors Relations
Main Financials Results
Efficiency Plan: R$0.8 Bln in savings, R$ 0.6Bln of which were reinvested in the Re-Launch Plan (“Self-financing”):
+ R$0.6Bln (+23.4% YoY): advertising, commissions and customer care
- R$0.4 Bln (-8.8% YoY): Network and Interconnection Costs
- R$0.3Bln (-43.6% YoY) : Bad Debt
- R$0.1Bln (-9.3% YoY) : Personnel and G&A
EBITDA: R$959 million in 4Q09 (+26% QoQ) and a 28.2% margin in the quarter; EBITDA FY2009 of R$3,063 million
(+5.6% YoY) and a 23.5% margin (+140 bps vs. 2008)
Net Profit: R$232 million in 2009 (+29% YoY)
Operational Free Cash Flow: positive in R$1,109 million in 4Q09; R$692 million in FY2009
Net Financial Position: R$1,684 million (-R$860 million vs. 3Q) including Intelig
10
TIM PARTICIPAÇÕES S.A. | Investors Relations
EBITDA & MarginInvestment on Re-
launching Plan
Quality of traffic (on-nettization); structural
rethinking
Quality of customer base; billing and credit
management
Lean structure
Structural Improvement of Profitability
Selling expenses
Interconnection& Network
Bad Debt4.8% 3.6% 3.2% 2.5%
9.6%6.8%
4.6% 4.0%
1Q 2Q 3Q 4Q
Personnel and
G&A Costs 9.3% 8.6% 8.0% 7.4%
10.1% 9.3% 8.2% 8.7%
1Q 2Q 3Q 4Q
20092008
609 736 759959
1Q09 2Q09 3Q09 4Q09
Efficiency Plan for the Business Re-launch
R$ Million, % Margin
%.Net Service Revenues
+R$630MM+23.4%
% YoY, Delta (R$MM)
-R$372MM –8.8%
-R$327MM-43.6%
-R$102MM-9.3%
22.3%
28.2%22.7%
20.2%
21.1% 22.4% 23.0% 21.9%
25.1% 28.2% 28.3% 27.9%
1Q 2Q 3Q 4Q
34.9% 31.4% 31.3% 30.8%
36.8% 36.1% 34.6% 32.4%
1Q 2Q 3Q 4Q
2008
R$ Million, % Margin
2,899 3,063
2009
22.1% 23.5%
11
TIM PARTICIPAÇÕES S.A. | Investors Relations
Net Result – 4Q09
2Q09 3Q09 4Q09
(144)(15)
61 330
1Q09(620,9)
(55,3) 47,8
330,0
958,5
337,6
Y/Y variation due to lower impact of tax
benefits (R$104Mn vs. R$160Mn)
2008
180 232
2009
+29%Net Profit –2009FY Dividends:
Proposal ofR$ 0,125 per PN in
distribution
-32% 2009 vs. 2008 to R$252Mn
R$ Million
EBITDA 4Q09
Depreciation & Amortization EBIT Net Financial
ExpensesTaxes and
OthersNet Profit
12
TIM PARTICIPAÇÕES S.A. | Investors Relations
Gross DebtR$ 4.2 billion (of which 67% on long term)~28% of debt is denominated in foreign currency (100% hedged)
Average Annual Cost 9.7% in 4Q09 vs.13.2% in 4T08 and 9.7% in 3Q09
956
(996)1,149
1,109
2,544249
1,109
1,684- R$ 116 Mn of Intelig acquisition
effect
Operational FCF & Net Financial Position– 4Q09(TIM + Intelig Dec/09)
Net Financial PositionFree Operational Cash Flow R$ Millions R$ Millions
Oper. OCF 4Q093Q09 Non-Oper.
OCFEBITDA Δ Working
CapitalCAPEX Oper.
OCF
R$ 860 Mn debt reduction
32.1% of Total Net Revenues
13
TIM PARTICIPAÇÕES S.A. | Investors Relations
Agenda
Repositioning Track
4Q 2009 Results
Perspectives for 2010-2012
14
TIM PARTICIPAÇÕES S.A. | Investors Relations
‘Mundo Azul’ = One national rate (local and LD)
Infinity = pay per call
Chip only = exit from handset subsidy market
SIM-unlock = free handset
TIM is Ready to Capture Brazilian Market Opportunity
Breaking Rules
“Voice is Good”
Penetration Usage DataMarket share MOU and ARPU Microbrowsing Browsing
Mobile Internet Access (microbrowsing)
Selective growth of the mobile connectivity
market (web via internet key)
Social networking
Free-net Philosophy
Liberty = unlimited on-net calls (F-M substitution)
Offers & Promo based on community
LD for Fixed: economy and simplicity with Intelig
Attack to fixed monthly fee (F-F substitution)
Integrated Solutions of Fixed,
Mobile, Voice and Data for:
- corporate segment
- consumer (selective)
Convergence
15
TIM PARTICIPAÇÕES S.A. | Investors Relations
Developing Own Infrastructure
BackboneBackhauling
Node-B
3G/HSDPAAccess
PoP PoP
2G/EdgeAccess
BTS
2G/EdgeAccess
BTS
Leasedlines
Metro
Microwaves installation
4
Backbone Integration
Connection with Intelig MAN
MAN TIM conclusion
Development of Microwaves and Backhauling - radio
Leased lines renegotiation with OLO’s
5
Key actions
1
2
3
4
5
Intelig’s backhauling ring connection/strengthening
Integrated TIM-Intelig Backbone
Development of own metro rings
1 2 3
Increase capacity of infrastructure
16
TIM PARTICIPAÇÕES S.A. | Investors Relations
* Without considering Oi’s results (not published yet)
KPI’s Size (Q4) QoQ Growth
Subscriber base
ARPU
Net Service Revenues
EBITDA
Margin EBITDA
41.1 MM(23.6% Market Share)
R$ 27.0
R$ 3,248 MM
28.2%
#3+5 MM lines vs. Q1, besides having rigorous clean-up to save Fistel
#1Stop ARPU erosion due to outgoing calls
Higher growth QoQ due to push on voice
Filling the gap vs. market leader besides the intense commercial effort
Rank*
R$ 959 MM
#2
#2
#2
In Bps
We are ready for the next step, where we’ll focus on the capture of opportunities: • Penetration: fresh market from social inclusion• F-M substitution for Voice• Selective growth for Data• “Option Value” Intelig: LD for Fixed and Convergence
+ 540
+2,630
+ 380
+ 200
+ 540
Conclusion: TIM - market’s #2 player with the greatest speed of QoQ growth
17
TIM PARTICIPAÇÕES S.A. | Investors 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
Avenida das Américas, 3434 - Bloco 016° andar – Barra da Tijuca22640-102 Rio de Janeiro, RJPhone: +55 21 4009-3742 / 4009-3446 / 4009-3751Fax: +55 21 4009-3990
Investor Relations
Avenida das Américas, 3434 - Bloco 016° andar – Barra da Tijuca22640-102 Rio de Janeiro, RJPhone: +55 21 4009-3742 / 4009-3446 / 4009-3751Fax: +55 21 4009-3990
Visit our Website
http://www.tim.com.br/ir
“Safe Harbor” Statements