tim 3 q09 webcast eng

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TIM Participações S.AWebcasting - 3Q09 Results

October 30th, 2009

3Q09

1

TIM PARTICIPAÇÕES S.A. | Investor Relations

Agenda

Highlights of Re-launch Plan L. Luciani

3rd Quarter Results C. Zezza

Perspectives for 4Q09 L. Luciani

2


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)

3


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

4


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

5


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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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

7


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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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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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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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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Agenda




12


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)

13


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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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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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

16


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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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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Agenda




19


•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

20


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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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% +

22


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

23


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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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 / 4009-4017Fax: +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 / 4009-4017Fax: +55 21 4009-3990

Visit our Website

http://www.tim.com.br/ir

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