3q11 presentation
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Results Presentation3rd quarter | TIM Participações S.A.
0Rio de Janeiro, 31st October 2011
Agenda
3Q11: Main AchievementsQ
3Q11: Financial Results
Conclusions & Outlook
1
Q3 Main Achieviments
Growth Acceleration
Net Revenues +18.9% YoY(confirming Q2 +19.5%)
Customer Base: +26.1% YoY(confirming Q2; Post-paid accelerating)
Voice Outgoing: +21% YoY1 Growth AccelerationNet Services Revenues +13.7% YoY(accelerating vs. Q2 +11.8%)
(confirming Q2 )
Data: +47.6% YoY(accelerating vs. Q2 +33% )
1
#2: volume and valueARPU stabilized (QoQ) Internet users >2 2 mln daily
Solid KPIs2Incremental Market Share 36.8%ARPM stabilizedSmartphone penetration at 19 5%Internet users >2.2 mln daily
EBITDA: +11.3 YoY (+18.7%
Smartphone penetration at 19.5%
SAC/ARPU: 1.7x (vs 2 3 3Q10)
Profitability Normalized)EBIT: +83% YoY (513 mln)Net Income: +116% YoY (317 mln)
3SAC/ARPU: 1.7x (vs. 2.3 3Q10)
Bad Debt: 0.95% (vs. 1.34% 3Q10)
Subscriber retention cost increased
Strengthening the Capex :R$ 0.84 billion in 3Q114
AES Deal: closedAuCap R$ 1.7 Bln: fully funded to
2
foundations R$ 1.9 billion YTD (Sept) support business growth
Able to combine growth and profitability
R$ mln, IFRS
9MYoY1Q11 2Q11 3Q11 9M11YoY 3Q11C t B 9MYoY
+26%
1Q11
52.8
2Q11
55.5
3Q11
59.2
9M11
59.2
26.1%
Customer Base (Mln)
QCustomer Base
(MKT Share)
+17.5%
+11.6%
3,752
3,463
4,252
3,744
4,371
3,887
12,375
11,09413 7%
18.9%Revenues
ServiceRevenues
Revenues
Service
+11.1%
+103 0%
1,033
350
1,138
529
1,152
513
3,323
1 39211.3%
13.7% Revenues
EBITDA
EBIT
ServiceRevenues
EBITDANormalized:
3Q11 +18 7% +103.0%
+169.1%
350
213
529
350
513
317
1,392
880
11.3% EBIT
Net Income
EBITDA
EBIT
3Q11: +18.7%
83%
EBITDA -CAPEX
+17.0%736 421 314 1,471
EBIT
Net Income 116%
3
Net Debt 1,671 1,998 1,458 -29.9%1,458-10,0% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0%
3 waves of growth
3.7123 130
16
Mln users Min, Billion minutes, Gross Revenue R$ Bln %, Gross Mobile Revenue, R$ Mln
+46% +5%
% YoY % YoY % YoY
Customer Base Voice Data
39.646.9
59.21.8
2.590
123
10.516.9
22.4 12 13
16
3 4
MoU
Net Adds
565
834
% Data/Service
+46% +5%+300 Bps
TotalTraffic
+33%
3.42.82.5
Revenues(Voice Out)
CustomerBase
496565
Data Revenues
+26% +47.6%+21%
Traffic
+19% +14% +14%
3Q09 3Q10 3Q11 3Q113Q103Q09 3Q113Q103Q09
+% Q3 YoYRevenues
Total Revenues
R$ Mln
3,466 3,677
4,371
3 4183,887
+18.9%
+% Q3 YoY
+6%
% YoY
Service Revenues
3,213 3,418
+13.7%DataTotal TrafficCustomer
Base
+26% +33% +48%
+6%
4
3Q113Q103Q09
+26% +33% +48%
CommunityExpansion
FMS(Voice)
Internet for everybodyStrategy
Customer Base: Community Expansion
Total Mobile MarketMln of lines
Vivo TIM Claro Oi
Total Mobile Market
Mln of lines
57,7 58,960,8 62,1 63,4
65,1 67,0
56,8 59,2
50 552,2 53,4 54,7
56 2 57 5
30,14% 29,80% 29,65% 29,48% 29,48% 29,53% 29,49%
25 78%
26,04%25,47% 25,55% 25,46% 25,39% 25,46% 25,51%
25 30%
46,949,2
51,8 52,854,548,8
50,5 56,2 57,5
37,438,3 39,6
41,4 41,7 41,5 42,8
24,52% 24,91% 25,26% 25,11% 25,34% 25,78% 25,30%
19,51% 19,38% 19,28% 19,69% 19,38% 18,85% 18,84%
Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11Sep‐10 Nov‐10 Jan‐11 Mar‐11 May‐11 Jul‐11 Sep‐11
Pre-paid Mobile Market - Consistency Post-paid Mobile Market - Accelerating
Mln of lines
44.3 45.146 6
.48.5
50.6
25 3%
26.5%
27.2% Mln of lines
8.7
20.2%
20.7%
39.741.8 46.625.3%
7.2
7.721.2%
5
Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11Mkt Share
Infinity
Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11
Mkt Share
Voice Outgoing: Continues to push on FMS
Net Adds (000) YoYLiberty Net Adds (mln) Infinity
Voice Outgoing RevenuesPre-paidPost-paid
+303
+646
1Q11 17%
+1 6
+2.4
+3.1
+223303
3Q11 21%
2Q11 20%
1Q11 2Q11 3Q11
+1.6
1Q11 2Q11 3Q11
R$ centBln Minutes
1Q11 2Q11 3Q11
Total Outgoing Traffic ARPM = ARPU/MOU
24.022.0
19 125
30
1215
17 18 1820
R$ centBln Minutes
Reshaping Portfolio… …Portfolio Reshaped
(Stable)Europe Avg.:
R$ 0.2219.1 18.1
16.5 17.0 16.3
10
15
201012
~2X
( )
6
0
5
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q111Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Data growth in accelerating mode
15 7%
Mobile Data revenues Unique users monthlyMln clientsGross Mobile Revenues After Infinity Web
12.0%13.0% 12.9%
13.6% 13.8%14.6%
15.7%
Post Paid
14.82x
+47.6%
Data /Service (%)
y
Pre Paid
7.5
YoY Growth
+12.7% +13.9% +14.0%
+31.4% +32.3% +33.5%
Daily Unique users Mln clients
Sep’11Sep’10
Infinity Web (Pre-Paid)Smartphone penetration% Internet enabling handsets on total CB
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
16.0%18.5% 19.5% ~7x
Daily Unique users, Mln clients
2.2
% Internet enabling handsets on total CB
8.0%10.0%
12.0%
MarFebJanDecNoOctSepA g
0.3
MaApr Jun SepAugJul
7
Sep'10 Dec'10 Mar'11 Jun'11 Aug'11 Sep'11 MarFebJanDecNovOctSepAug MayApr
2010 2011
Jun SepAugJul
Accelerating post-paid through efficient business model
Customer Base Post-Paid
0.3 0.3 0 2 0 20.3
0.6Mln lines
Bad Debt and SAC/ARPU% Gross revenues, months
B d 2 00% 1 83%0.20.3 0.2 0.2
6,615 6,956 7,236 7,476 7,701 8,004 8,651
Net Adds
3Q09: 6,316
Bad debt
2.00% 1.83%1.34% 1.04% 0.77% 1.08% 0.95%
3.12.6
2.31 8 1 7
CB
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
+20%YoY
SAC/ARPU
1.51.8 1.6 1.7
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
000 units handset sales
Handsets sold - volume
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
R$ Mln
Subsidy
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
+64%
+83%
3,507
000 units, handset sales
+49%
3,164
R$ Mln
380424 468 433
732 712ProductRevenues
Smart-phone
54%
1,915
28%
2,262
48%
1,383
19%
71%
29%
2,125286
380
115
8564 26 8 0 0
CapitalizedSubsidy
8
phone
1Q111Q10
19%
2Q112Q10 3Q113Q10
115
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Agenda
3Q11: Main AchievementsQ
3Q11: Financial Results
Conclusions & Outlook
9
EBITDA & Efficiency Drivers
32.5% 32.6%R$ Mln 3Q11 vs. 3Q10:Reported: +11 3%
Lines (Mln)
EBITDA Service Margin improvement & CB Expansion
31.1%
1,035
1,138 1,152 EBITDA
Reported: +11.3%Normalized: +18.7%
0.30
0.65
EBITDA Service Margin
2.70
3.75
Post Paid
971 1,138 1,152
64
EBITDAnormalized 1,6
2,43,10.22
Net Adds
1.82
Pre Paid
3Q112Q113Q10
R$ Mln YoY %R$ Mln
1Q11 2Q11 3Q11
Network Efficiency Bad Debt
1.34%1.04%
0.77%1.08% 0.95%
R$ Mln, YoY %
Outgoing
+21.1%
% YoYR$ Mln
Bad Debt % Gross Rev
Total Traffic (min): +32.8% YoY
-39 Bps
% YoY
2 837
3,105 3,0613,294
3,435
OutgoingRevenues
Network and ITX costs
+11.9%
Bad Debt
69 58
42
66 61 -12.4%
1,075 1,085 1,109 1,147 1,203
2,837
10
3Q10 4Q10 1Q11 2Q11 3Q113Q10 4Q10 1Q11 2Q11 3Q11
Consistent EBITDA growth
From EBITDA to Net Income (in R$ Mln)EBITDA Evolution (in R$ Mln)
Revenues MarginCosts
Positive impacted by
2011
2010
Δ
485 (598) (113)
Handset Capitalized
l
259 (275) (16)
(97)
(64)
1,152 (639)
468 (97)(67) (127)
(60)
Zero subsidy policyFX & Volume (33)
Fistel (63)
513 (61)(135)
3171,035
(60)1,152
Margin % 26.4% 11.7%
7.2%
Ebitda Services Net Commercial Network + G&A + Ebitda
Ebitda Depreciation and
Amortization
Ebit Net Financial Expenses
Taxes and Others
Net Income
Ebitda 3Q10
ServicesRevenues
Net Handset
Commercial Costs
Network +ITX
G&A + Other
Expenses
Ebitda 3Q11
ΔYoY +11.3% -15.4% +83.5% +4.4% +81.7% +116.1%ΔYoY +13.7% +7x +6.7% +11.9% +20.8% +11.3%
11
28.2% 26.4%Ebitda Margin
Service Ebitda Margin30.8% 32.6%
Cash Generation
Operational Free Cash Flow in 3Q11 Net Debt 3Q 2011
370(838)
R$ Mln R$ Mln
2,079 in 3Q10
684
1,152 684(144)1,998
1,458
3Q10
Ebitda Δ Working Capital
CAPEX Oper. FCF
•Income Tax•Financial Results
% on Net Revenues
26.4% 19.2% 15.6%
+11.3% +13.4%% YoY
2Q11 Oper FCF Non-Oper FCF 3Q11
+59.4%+4x
8,5%
12
Strengthening Infrastructure
CAPEXR$ Bn 32.319
TBR – TRX AccumulativeActivations
2011
+38%R$ Bn
1.91.7
0.51,5
2011EEoP 10EoP 09 SepAugJulJunMayAprMarFebJan Oct Nov Dec
0.3+25%
+38%
-40%
TRX - NNEActivations
Subsidy& Commercial
1 6
0.615.431
52% 48%
Rest ofBrazil
-17%
Network & IT
1.6
1.3
0.9
52%
Node BActivations
North andNortheastSepAugJulJunMayAprMarFebJan Oct Nov Dec
+23%
+44%
YTD Set’11YTD Set’10YTD Set’09
3Q09 3Q10 3Q11
1.214
+74%
+21%
Subsidy& Commercial 0.2 0.1 0.1
0.4 0.4 0.8Network & IT
3Q09 3Q10 3Q11
MWActivations
1572
SepAugJulJunMayAprMarFebJan Oct Nov Dec 2011EEoP 10EoP 09
+59%
13SepAugJulJunMayAprMarFebJan Oct Nov Dec 2011EEoP 10EoP 09
+5x
Agenda
3Q11: Main AchievementsQ
3Q11: Financial Results
Conclusions & Outlook
14
Delivery on Promises
+% YoYQ3 Results
Waves of Growth
DataTotal Traffic
+33% +48%+26%
Customer Base
Guidance 2011-2013CB Expansion
+33% +48%
Community Expansion FMS (Voice) Internet for everybody
+26%
9M11
Market Share>25%
Revenue growth
CB ExpansionMln lines
46,9 59,2
Serv Rev : +11 6% (YTD)
>26%
ProfitabilityEBITDA 2011 > R$4.5 bln
g% High Single Digit
MOU increase
123 130Min/month
set/10 set/11Serv. Rev.: +11.6% (YTD)
Total Rev.: +17.5% (YTD)
R$ 3.3 billions (YTD)
CAPEX3 Years CAPEX R$ 8.5 blnSmartphone Penetration
set/10 set/11
~20%Smartphone, % CB
R$ 1.9 billion (YTD)
15
EBITDA - CAPEX> R$ 6.6 bln (’11-13)
8%20%
set/10 set/11R$ 1.5 billion (YTD)
31st October: Atimus deal closed, ready for a new phase
4 reasons behindAtimus Acqusition
Architecture: Rio de Janeiro/São Paulo
Opex & Corporate
Atimus Acqusition*
pCapex
Savings
CorporateBroadband
Mobile Data A l ti
Residencial B db d
Copper or Fiber Drop
300 Mb Acceleration Broadband64/200 ports
300 Mb
Creating value for shareholders
16
The ultimate urbanmobile network
shareholders
*EV = R$1.6 Bln / Cash out = R$ 1.5 Bln
Ready to catch the Brazilian FMS opportunity
+3 1
FMS VoiceFixed Ultra Broadband
InfinityTIM Fiber
+646
+1.6
+2.4+3.1
Wireline Brazilian Market
% Total Fixed BB Fixed Liberty
InfinityNet Adds
21 cities in metro SP/Rio8 mln householdsR$ 30 bln TLC market
+223+303
19%
>2Mbps
lines accesses”
BB Fixed Market
Net Adds
1Q11 2Q11 3Q11
550,000 corporate clients
0
ARPM (R$/min)Mobile 79%
81%21%
Voice Only Broadband
<2Mbps
>2Mbps
Negative Mobility Price Premium
0
0
0
0
( $/ )
2X
40%
FMS Data
Data Daily Unique users, Mln clients
0
0
0
2006 2007 2008 2009 2010 2011
-40%Fixed 2.2
Wireline Accesses (example incumbent A)
% YoY 3Q09 3Q10 3Q11
17
MarFebJan MayApr2011
Jun SepAugJul‐3% ‐4.8% ‐6.5%
Capital Increase & Corporate Structure
Number of Shares ‘000 Ne Corporate Str ct reNumber of Shares 000 New Corporate Structure
200CEO
2,2172,417
Before Follow-On After Follow-OnFollo
w-O
n
CFO IRO
Follow-On ‘000 Reais Number of Shares
Base 1 640 853 190 796 858Base 1,640,853Greenshoe 81,369
1,722,222 200,258,368
190,796,8589,461,510 • One single class of shares (Novo Mercado)
• Strengthening commitment with the Financial Community
18