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  • 1. Results2Q08 August 7th, 2008

2. TIM PARTICIPAES S.A. Investor RelationsOpening remarksInnovative and Reliable brand: Living beyond TechnologyFirst position in Top of mindFirst position in brand AwarenessChoose as the best website in sustainability among the Brazilian telcosBest service provider IP NGN Infrastructure of the year Cisco (2008)Most innovative application of customer care 2008 excellence award (TM forum) Note: 1 - Synovate Institute (Jun/08); 2- Management e Excellence; Revista Razo Contbil and IBRI2 3. HighlightsMarket OverviewOperational ReviewFinancial Performances2H08 perspectives 4. TIM PARTICIPAES S.A.Investor Relations2Q08 Highlights An improving quarterActions Quarterly performance1% growth QoQ to R$29.8 despite marketNew pre-paid promotion (TIM 10x, focus onoverall dropon-net bonus and ARPM)ARPUThe highest ARPU growth among peersFocus on post-paid quality (high-endcustomer and better mix)Supported by MOU performance (+7%YoY andQoQ). 3G launch (May 1st);TIM web sale grew by 2x QoQ Up 21% QoQ and 49% YoY; leveraged by 3G VASIncrease content partnership (revenue share 10% of net service revenue (vs 7% 2Q07)agreement) Telesales channel total remodeled;Sharp improvement QoQ: -25%;Stricter credit policy; 6.8% of net service revenue (down from 9.6% BAD DEBTCommission based on quality ofin 1Q08).acquisitions.Pre-paid offer focus on profitability 19% higher than 1Q08 to R$637 Mn;(on-net driven);EBITDA2pp recovering in EBITDA margin QoQ, despiteReducing leased lines cost throughpartial spill-over of 1Q08 planStrict control over discretionary costs4 5. HighlightsMarket OverviewOperational ReviewFinancial Performances2H08 perspectives 6. TIM PARTICIPAES S.A. Investor Relations Telecom Industry OverviewMobileFixedBroadband Mn lines Mn lines16%69%14%64% 66%74%59% 70% 71%71% 10%56%7%% Penetration per% Penetration pertotal population total householdsMarket growth remains strongTIM geared to capture opportunities:(purchase power improvement from low classes) Alternative player to fixed line monopoly, after the numberMarket net additions fueled by: portability takes place;Handset subsidies; Benefit from strong growth in broadband and PC sales;Aggressive on-net promotions; Strengthening convergent strategy.Naked SIM-Card sales. 6 Source: Anatel and internal estimates* 7. TIM PARTICIPAES S.A. Investor Relations TIM Performance Subscriber Base (Mn) Market Share Performance23.1% 32.533.8First 29.2 31.327.5Player* Thirdplayer 2Q073Q074Q071Q082Q08Pre-paid segment grew by 26% YoY helped by TIMMarket share fairly stable in the coming quarters; 10x promotion;Focus on customer's share of wallet.Subscriber mix remained above national peers (post-paid stood at 20.2% vs. peers 18.6%); Churn drop from 9.7% in 2Q07 to 8.4% in 2Q08Includes Vivo and Telemig Celular 7Source: ANATEL and companys data. 8. HighlightsMarket OverviewOperational ReviewFinancial Performances2H08 perspectives 9. TIM PARTICIPAES S.A.Investor Relations Roadmap to a Convergent Company...20062007 2008 2008...MOBILEStrengthening our mobile business+ Capturing opportunities on TIM fixed Number fixed voice services throughFIXED license portabilitynumber portabilityTIM Casa TIM Casa Flex +TIM 3G Competing on broadbandINTERNETlicense market with mobility concept TIM WebTIM Web Broadband + Empowered partnership in Partnership in Pay TV offersPay TV =Convergent Company Increase customer's share of wallet through bundle offers9 10. TIM PARTICIPAES S.A. Investor RelationsThird generation launchPositioning &Roll-out / Launching AdvantagespartnershipsPush on cross selling offers;Already in main metropolitanSPEED: Upgrade to 1Mbpsand 7Mbps; Convergent offers through areas;wireless network;SIMPLICITY: All TIM Chip areEased by our national coverage;TIM + : First notebook3G ready; Buy & Play concept;with TIM Chip on-board; Launch of unlimited TIM Web MOBILITY: Wireless internetTIM + : TIM mobile data plans (1Mbps or 7.2Mbps);anywhere;broadband to UOL customer's base;ACCESSIBILITY: Any 3GTIM Web limited data plans:TIM + : Pay-TV +device and computers. Broadband + Mobile. Automatic upgrade to (1Mbps); 10 11. TIM PARTICIPAES S.A. Investor Relations VAS Strategy: Aiming Innovation and ProfitabilityVAS revenue: R$397 million (21% QoQ and 49% YoY);10% of total gross service revenue (7% - 2Q07; 8% - 1Q08)TIM web broadband sales increased by 2x QoQ (w/ incremental ARPU).VAS 3G+New facilitiesContent OfferInnovative ServicesMobile internet browsing Google toolsTV channels TIM auction: a whitelabel reversal auction TIM TV UOL MobileOrkut WAP (1st in Brazil) RingBack tones TIM Music StoreSony-BMG contentGPS navigation serviceYouTube Mobilein exclusivity at TIM TIM Video Call Music Store Yellow pages serviceWindows mobile for TIMsmart-phone portfolio 11 12. HighlightsMarket OverviewOperational ReviewFinancial Performances2H08 perspectives 13. TIM PARTICIPAES S.A.Investor RelationsNet Revenue performanceTotal Net RevenuesOutgoing voice revenues: Growth in outgoing due to new R$ Mnpromotions dynamic - with MOU and ARPU rebound QoQ;3,0602,9933,186 Value-added services: Strong growth of 21% QoQ and49% YoY, as a result of our focus on data package offersand partnerships with strong content providers:Incoming revenues: Flat incoming revenues due toaggressive approach to on-net calls promotions for themarket as a whole and also F-M pattern change. TIMmaintains the focus on convergence in order to reduce thedependence on incoming traffic and to capture new sources Net Service RevenueNet Handsets Revenueof revenues; Leader In QoQ YoYQoQGrowth Handset revenues: 22% YoY drop explained by lower Total revenue+4.1% +6.5% handset price and naked SIM cards sales. Service revenue+6.8% +4.7% Handset revenue-22.4% +38.7%13 14. TIM PARTICIPAES S.A.Investor Relations KPIs performance (1/2) ARPU MOU R$Minutes-14% 7%+1% ARPU performance:MOU performance: 1% growth QoQ despite market overall drop and One of the highest MOU in the market;post-paid mix decline; Subscriber mix higher quality;Best ARPU among cellcos in 2Q08;YoY drop due to increase of pre-paid segment andElasticity effect driven by promotions.tariff promotions; Without incoming effect, ARPU would haveincreased by 4.1% QoQ 14 15. TIM PARTICIPAES S.A. Investor RelationsKPIs performance (2/2)SACBAD DEBT R$-25%R$ Mn +5%9.6% +2%6.8% 6.1% Bad debt / net service revenueSAC performance: Bad debt performance: Selling expenses increase amid 3G launch; Improving from 1Q results thanks to recoveryactions (e.g.: channel completely remodeled): SAC/ARPU ratio stood at 4.0x (stable QoQ); 2Q still affected by telesales distribution channel; Subsidies broadly stable, w/ focus on SIM card Expected to reach ~6% of net service revenue forsales.the FY2008 (given credit policy process revision).15 16. TIM PARTICIPAES S.A. Investor RelationsEBITDA EBITDA and EBITDA margin R$ Mn 24.3%Year-over-year drop is still reflecting higher bad debt 20.0%provision (amid telesales), and selling and network17.9%17.9expenses (amid 3G launch), slightly offset by VAS744revenues increase (+49%);637535 Quarterly gain is largely attributed to a better top line 2Q071Q08 2Q08 (fueled by VAS and usage performance) and also from the bad debt recovery and cost control.YoYQoQEBITDA-14% +19%EBITDA margin -4pp +2pp 16 17. TIM PARTICIPAES S.A.Investor RelationsR$ MlnEBITDA and EBITDA margin YoY performance Selling expenses were up 7.6% while gross adds grew by 8.7%188.8 (62.3) (46.9)51.6 (172.8)(34.9)(30.5) Subs base +23% Total traffic volume +33%743.7 636.7EBITDA Service Handsets SellingNetwork COGSBad Debt OtherEBITDA 2Q07Revenue Revenue Expenses ExpensesExpenses2Q08 Change % YoY +6.8% -22.4%+7.6%+19.2% -13.7% +20.7%+12.1% EBITDA Margin24.3%20.0% 17 18. TIM PARTICIPAES S.A. Investor Relations From EBITDA to bottom line 2Q08EBITDA DepreciationNet FinancialTaxes andEBITNet Loss R$ Mn 2Q08Amortization Expenses Others*636.7 636.7596.3 596.3 40.340.3 (59.2) (59.2) (34.1) (15.2)(34.1) Change YoY -14.4% 4.6%-76.8%-27.4%-73.9%-18* Other non-operating expenses/revenues 19. TIM PARTICIPAES S.A.Investor Relations Net financial position and FCF 2Q08 Net DebtOperating Free Cash Flow R$ MnR$ MnNon3G1Q08OpFCFOpFCF2Q08 EBITDA WkCCapex* OpFCF* Licence OpFCF201 3Glicense:(467) $1.2 Bi(2,096)Of which 637 371 $207 individend(868) (247)(3,210)(1,239)(868) Net cash flow totaled -R$1.115 billion in 2QPositive OpFCF in 2Q excluding 3G license* Excluding 3GGross DebtR$ 4.1 billion (of which 42% long term)Average annual cost11.64% in 2Q08 versus 11.66% in 2Q07 19 20. HighlightsMarket OverviewOperational ReviewFinancial Performances2H08 perspectives 21. TIM PARTICIPAES S.A. Investor Relations2H08 perspectivesKey recovery actionsVoice: Refocus on postpaid high value segments, remodeling of prepaid (started in 2Q08) and innovation of promotional dynamics to enhance ARPM; VAS: Further push on innovative services leveraging on 3G mobile broadband OFFER and enriching media content; Convergence: Capture opportunities from mobile BB and NP (as of Sept08), by offering services as alternative player to fixed. Focus on high margin customers: Deeper segmentation of acquisition, retention and loyalty strategy; Commissioning: Increase customer value linked to compensation and develop Profitability & profitability targets per channel;Operationalexcellence Bad debt: Reorganization of monitoring process with stricter rules for credit analysis (implemented in 2Q08); Efficiency: Invest in transmission capacity for cost-effective management and selective reduction/revision of outsourcing model.21 22. TIM PARTICIPAES S.A. Investor Relations 2008 guidance revisionOriginalUpdate1st Review target ReviewClients Base ~ 37 Mi unchanged unchangedMarket Share~ 26%unchanged unchangedTotal Revenue > 12%~ 9%> 7%EBITDA Margin > 23%unchanged 22.0% ~ 22.5%CAPEX~ 3.6 R$ Bi unchanged unchanged2008 guidan


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