presentation 2q10
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Results2Q102Q10
AgendaAgenda
Operating Performance
Financial PerformanceFinancial Performance
A quarter highlighted by the accelerated th f d EBITDAgrowth of revenues and EBITDA.
Attractiveness of Vivoresults in customer base growth and improves
t i
Increase in Market Share for four consecutive quarters
customer mix ...
...a more stable and active customer base
ARPU improvementd SAC d Ch active customer base,
with increasing consumption...
and SAC and Churn stabilization
...driven by growth in data services...
Data Revenue accounted for 19.4% of the net service revenue
...resulting in accelerated growth of service revenue and
Annual growth of 10.7% in the net service revenue and service revenue and
EBITDA.service revenue and 10.6% in the EBITDA
3
The attractiveness of Vivo results in the customer b th d i t i
Brand Channels Offers Quality and Coverage
base growth and improves customer mix...
The major own stores chain in the market
H ill it
Best cost-benefit ratio in the market
Complete offers with d t d i
Most valuable brand in telecom sector*
Leader in 3G coverage
Consistent l d hi i A t l’ Huge capillarity
of recharge pointsdata and voice leadership in Anatel’s
quality indicators
+19.6
8.0% 25.5%
QoQ YoY
2.7% 18.1%
46.853.9 56.0
+3.8
Post paid BlendedPre paid Post paid
* According to the Brand Finance Consultancy.
4
...a more active customer base that uses the bil h
Customers VOICE TRAFFICMOU
mobile phone even more...
rechargingVOICE TRAFFICMOU
+ 42.5% +70.1%
Million of minutes % of pre paid customer base
Minutes
-4.0% -11.1%
QoQ YoY
25 24
116 114
- 1.7%
4.4% 0.4%
QoQ YoY 18,398 18,744
+1.9%
+ 5.9 p.p.
-1.1% 69.8%91 90
27
25 24 80
2.3% 114.5%
11,022
53
2Q09 1Q10 2Q10
Outgoing Incoming Outgoing Incoming
5
...increasingly more stable, demanding less ff t t tt t d t i t
Churn of 2 6% in the quarter
efforts to attract and retain customers...
SAC Blended*- 15.5%
Churn of 2.6% in the quarter, with small variations for more than 10 quarters
QoQ YoY 8
84
7169
+2.9%
Number Portability
16 19
20 16 19
13
8 9 9 9
69
23.9% -3.4%
12.6% -26.9%
-5.1% 7.6%
-25.4% -52.3%
27 17 13
19 21
2Q09 1Q10 2Q10
11.6% 30.5%
Subsidy
Comissions
Advertising
Lending
Fistel
Mar/09 Jun/09 Sep/09 Dec/09 Mar/10
* (70% of marketing expenses + costs of distribution channels + handset subsidy + corporate lending + Fistel)/gross additions.
6
...increasing the monthly service expenditure...
ARPU – R$
- 7 4%
QoQ YoY 27.0
24.8 25.0
+ 0.8%7.4%
-5.1% -13.8%
Q Q24.8 25.0
4.7% -3.1%
Outgoig Incoming
7
...driven by growing data service d tiadoption...
o Mobile Internet market share of 40%o 4 6 million devices with access
In this context Vivo has absolute leadership
o 4.6 million devices with access to the 3G networko Increase of 44% in Data ARPU
Mobile Internet Market Share*
40%50%
Player 1
Player 2
40%
20%
30%
40%
yPlayer 3
0%
10%
*Only consider modems and data card. Data updated until Feb/10.
Fonte: Anatel e análises internas da Vivo. 8
...resulting in growth acceleration in service d EBITDA t ith t di th revenue and EBITDA, notwithstanding the
consistent cash generation.
2Q10 2Q09* Δ %
Net Service Revenue 4,129.8 3,729.4 10.7%
EBITDA 1,342.7 1,213.7 10.6%
EBITDA Margin 30.5% 30.3% 0.2 p.p.
Net Result 236.0 181.7 29.9%
Cash Flow after Investments 960.9 836.0 14.9%
* The 2009 numbers were reclassified, when applicable, according to the adoption of new accounting practices in Brazil (CPCs).
9
Thus, Vivo consolidates its leadership and build the path to sustain this positionthe path to sustain this position.
Growing and more active customer base...
...generating the expected return for the investments
in 3G and...
...resulting in an EBITDA Margin over 30% for the last
5 quarters...in 3G and... 5 quarters...
+6 p.p
...and sustainable cash generation.
...supported by a quality coverage and high capacity in
2G and 3G...
R$417 MM in dividends payment in April 2010.
10
AgendaAgenda
Operating Performance
Financial PerformanceFinancial Performance
Net Service RevenueYoY Growth
%
R$ million
+ 10 7% 71 8%+ 10.7%
+ 5.1%
3 929 4,130
64.8%51.8%
71.8%
1 490
467 687 802
3,9293,729 3.4% 5.8% 10.7%
4Q 09/08 1Q 10/09 2Q 10/09Net Service Revenue Data + VAS
2Q 10/09 GrowthR$ million
1 760
1,463 1,505 1,490
1,760 1,703 1,806
2Q09 1Q10 2Q10
+71.8%
Outgoing Voice
Interconnection
Data + VAS
In order to simplify the analysis the chart does not include ‘Others”
+1.9%+2.6%
In order to simplify the analysis the chart does not include Others .
12
Data Revenue + VASR$ million
Others
QoQ YoY
Others19%
SMS+MMS40%
Vivo Internet
+ 71.8%
802
+16.8%
16 0% 121 4%
-4.8% 8.5%
Vivo Internet
41%
687
802
467
Others
16.0% 121.4%
SMS MMS
Vivo Internet
Others12%
28.1% 50.8%SMS + MMS
% Net Service Revenue
SMS+MMS35%
Vivo Internet
53%% Net Service Revenue
Data Revenue over Service Revenue reach stage comparable to more
...with internet services being th l t t f thi
13reach stage comparable to more
mature markets...the largest part of this
revenues.
13
Operating Expenses*R$ million
9001,046 1,038
+ 15%- 1%
449 433 394
- 12%- 9%
897 846954
+ 6%+ 13%
394
133154 167
+ 26%+ 9%
214244 266
+ 24%+ 9%
213267 269
+ 26%+ 1%
133
* Excluding Depreciation.
14
EBITDA EvolutionR$ million
+71.8% +1.7% +24.2% +17.4% -12.2% +14.8%+6.4%
+10.6%
2Q09 Data + VAS
Voice + others
H. R. Service Rendered
Goods Sold
Selling Expenses
Others 2Q10
Revenues Costs
15
EBITDA and MargingR$ million
QoQ YoY
5.4% 10.6%
Financial discipline maintain expenses growth under control.
EBITDA EBITDA Margin
16
EBIT and Financial Result
EBIT
R$ million
FINANCIAL RESULT
2Q09 1Q10 2Q10
EBIT FINANCIAL RESULT
+ 24.9%
(58)
(101)
Q Q Q
403 402 503
(122)(101)
2Q09 1Q10 2Q10
17
Net Result and Cash FlowR$ million
+ 29.9%
+ 23.0%
2Q102Q09
1Q10
Net Margin
18
Gross and Net DebtR$ million
Gross Debt Net Debt
- 28.5%- 29.5%
4,692.6
-14.8%
6,511.1
- 4.5%
,3,937.6
3,355.3
6,511.1
4,803.2 4,588.4
Net Debt/EBITDA of 0.62x;
C dit R ti ‘b AAA’Credit Rating: ‘brAAA’
19
CAPEXR$ million
14.9%
7.8%11.1%
595.1
489.2
328.7
% Capex/Net Revenue
20
A Successful Journey
Launching of HSUPA network
Cloning elimination
Launching of GSM network
HSUPA network
Telemig Focus on Customer Base
Beggining of operations in the Northeast region
gAcquisition
Strategic focus
Corporate Restructuring
YoY accelerated growth in Revenues
and EBITDAStrategic focus on quality
and EBITDA
Market Share increase for the 4th consecutive
tquarter
2003 2004 2005 2006 2007 2008 2009 1H10
21
Results2Q102Q10
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