tim 4 q09 webcast eng 1

Rio de Janeiro, February 24th 2010

TIM PARTICIPAÇÕES S.A. | Investors Relations

4Q09 ResultsPresentation


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 PresentationAdditional Disclaimer to the PresentationAdditional Disclaimer to the PresentationAdditional Disclaimer to the Presentation

1


AgendaAgendaAgendaAgenda

� Repositioning TrackRepositioning TrackRepositioning TrackRepositioning Track

� 4Q 2009 Results

2

� 4Q 2009 Results

� Perspectives for 2010-2012


PostPostPostPost----paid Basepaid Basepaid Basepaid Base

Jan-08 Jan-09 Abr-09 Aug-09 Dec-09

----0.40.40.40.4 ----0.30.30.30.3

After 15 months, discontinuation of the post-paid base erosion

+0.3+0.3+0.3+0.3

6.56.3

6.8

6.26.4

PrePrePrePre----paid Basepaid Basepaid Basepaid Base

Jan-09 Mar-09 Aug-09 Dec-09

----0.20.20.20.2 +4.8+4.8+4.8+4.8

Reversal of Pre-paid clients loss after repricing/promo

29.9

34.7

30.1

32.9FROM FROM FROM FROM

REPOSITIOREPOSITIOREPOSITIOREPOSITIO----

NING TO NING TO NING TO NING TO

GROWTHGROWTHGROWTHGROWTH

TIM Brasil: Repositioning TrackTIM Brasil: Repositioning TrackTIM Brasil: Repositioning TrackTIM Brasil: Repositioning Track

MM lines, EoP

PenetrationPenetrationPenetrationPenetration UsageUsageUsageUsage DataDataDataData

3 Waves of Development3 Waves of Development3 Waves of Development3 Waves of Development

3

Jan-08 Jan-09 Abr-09 Aug-09 Dec-09 Jan-09 Mar-09 Aug-09 Dec-09

TRACKTRACKTRACKTRACK

2008200820082008“Difficulties”“Difficulties”“Difficulties”“Difficulties”

20102010201020102009200920092009“Repositioning”“Repositioning”“Repositioning”“Repositioning”

2010201020102010----2012201220122012“Growth”“Growth”“Growth”“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


• 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)

• Network Quality (Anatel Ranking)

: 100% in December, with MOU ~

100 minutes

• Bad debt represents 2.5% of

Service Revenues: -37%YoY

• Reduction of Interconnection

and subsidy costs weight.

Q4 2009: Visible Signs of TurnaroundQ4 2009: Visible Signs of TurnaroundQ4 2009: Visible Signs of TurnaroundQ4 2009: Visible Signs of Turnaround

4

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

and subsidy costs weight.

EBITDA MarginEBITDA MarginEBITDA MarginEBITDA Margin

Anatel QualityAnatel QualityAnatel QualityAnatel Quality

1Q 2Q 3Q Oct Nov DecService RevenuesService RevenuesService RevenuesService Revenues

January:100%

+4.0%+4.0%+4.0%+4.0% +5.0%+5.0%+5.0%+5.0% +5.4%+5.4%+5.4%+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


ARPUARPUARPUARPU

OutgoingVoice

+9%+9%+9%+9%

R$

CBCBCBCB

MM clients

+3.8%+3.8%+3.8%+3.8%+4.7%+4.7%+4.7%+4.7%+4.8%+4.8%+4.8%+4.8%

KPI’s Improvements QoQ: Subscriber Base, traffic, ARPU and RevenuesKPI’s Improvements QoQ: Subscriber Base, traffic, ARPU and RevenuesKPI’s Improvements QoQ: Subscriber Base, traffic, ARPU and RevenuesKPI’s Improvements QoQ: Subscriber Base, traffic, ARPU and Revenues

MOUMOUMOUMOU

Outgoing

Total

>40%>40%>40%>40%

Minutesoct nov dec

39.9 40.341.1

41.1

36.137.8

39.6

33

34

35

36

37

38

39

40

41

42 27.026.526.626.0

5

10

15

20

25

30

9990

7370

40

50

60

70

80

90

100

110

5

Positive elasticity18 MM 18 MM 18 MM 18 MM

InfinityInfinityInfinityInfinity

Service RevenuesService RevenuesService RevenuesService Revenues

R$ MM

+4.0%+4.0%+4.0%+4.0% +5.0%+5.0%+5.0%+5.0% +5.4%+5.4%+5.4%+5.4%

YoY -0.5% -1.2% -1.0% +0.3%

TIM: breaking the rulesTIM: breaking the rulesTIM: breaking the rulesTIM: breaking the rules

• InfinityInfinityInfinityInfinity: from “charge per

minute” to “charge per

call”

• LibertyLibertyLibertyLiberty: Unlimited talk to

all TIM community

• ‘Chip Avulso’‘Chip Avulso’‘Chip Avulso’‘Chip Avulso’: without

penalty

• SIM unlock handsetSIM unlock handsetSIM unlock handsetSIM unlock handset

2

3

4

5

6

7

8

9

10

11

12

Q1Q1Q1Q1 Q2Q2Q2Q2 Q3Q3Q3Q3 Q4Q4Q4Q4

Charge per Charge per Charge per Charge per

callcallcallcall

Charge perCharge perCharge perCharge per

minuteminuteminuteminute

Q1Q1Q1Q1 Q2Q2Q2Q2 Q3Q3Q3Q3 Q4Q4Q4Q4 Q1Q1Q1Q1 Q2Q2Q2Q2 Q3Q3Q3Q3 Q4Q4Q4Q4Q1Q1Q1Q1 Q2Q2Q2Q2 Q3Q3Q3Q3 Q4Q4Q4Q4

3,2483,083

2,9362,823

2500

2700

2900

3100

3300

3500

3700



Reinforcement of Brand PositioningReinforcement of Brand PositioningReinforcement of Brand PositioningReinforcement of Brand Positioning

Best dealsBest dealsBest dealsBest deals Cheaper cost per Cheaper cost per Cheaper cost per Cheaper cost per MinuteMinuteMinuteMinute

34343434

35

29

+4pp+4pp+4pp+4pp

+3pp

-5pp

37373737

23

23

+11pp+11pp+11pp+11pp

-1pp

-8pp

Share of investments TV, %

15% 16%

31%31%31%31%

24%24%24%24% 19%19%19%19%

17%17%17%17%

30%32%

25%

31%

26%28% 28%

25%

15%

18%

Clear and direct communication of offersClear and direct communication of offersClear and direct communication of offersClear and direct communication of offersInvestments in AdvertisingInvestments in AdvertisingInvestments in AdvertisingInvestments in Advertising

Player1Player1Player1Player1





6

29 -7pp

CoverageCoverageCoverageCoverage

‘Chip Avulso’‘Chip Avulso’‘Chip Avulso’‘Chip Avulso’

21 -5pp

CoverageCoverageCoverageCoverage InnovationInnovationInnovationInnovation

17

38383838

44

22

32

34343434

28

25

+10pp+10pp+10pp+10pp

0pp

-7pp

-3pp

+3pp+3pp+3pp+3pp

+3pp

+1pp

-3pp

15% 16% 15%

2006 2007 2008 Jan-Nov ‘09

‘Mundo Azul’‘Mundo Azul’‘Mundo Azul’‘Mundo Azul’

LibertyLibertyLibertyLiberty

Brand CredibilityBrand CredibilityBrand CredibilityBrand CredibilityCommunication WavesCommunication WavesCommunication WavesCommunication Waves






Increase in Traffic VolumeIncrease in Traffic VolumeIncrease in Traffic VolumeIncrease in Traffic Volume Network quality improvement (Anatel ranking)Network quality improvement (Anatel ranking)Network quality improvement (Anatel ranking)Network quality improvement (Anatel ranking)

MM of total minutes (excluding visitors) % achieved goals in TIM’s network quality

Network Quality: 100% of Anatel’s targets achievedNetwork Quality: 100% of Anatel’s targets achievedNetwork Quality: 100% of Anatel’s targets achievedNetwork Quality: 100% of Anatel’s targets achieved

11,956

10,458

10,4119,045

9,973

9,27310000

11000

12000

13000

99.5%

94.0%

98.2%

93.4%

90.8%1

1

1

7

2008200820082008

2009200920092009

YoY -16.1% -19.1% +0.5% +28.9%

MOU

Traffic reduction after repricing

100% of Anatel’s Goals in December (confirmed in Jan.’10)100% of Anatel’s Goals in December (confirmed in Jan.’10)100% of Anatel’s Goals in December (confirmed in Jan.’10)100% of Anatel’s Goals in December (confirmed in Jan.’10)

70 73 90 99

7,585

8,068

10,4119,0459,273

6000

7000

8000

9000


oct nov dec

97.8% 97.3%100.0%

1

1

1

1

1

1

1

1

85.5%

1

1

3Q08 4Q08 1Q09 2Q09 3Q09 4Q09



� Repositioning Track

� 4Q 2009 Results4Q 2009 Results4Q 2009 Results4Q 2009 Results

8

� 4Q 2009 Results4Q 2009 Results4Q 2009 Results4Q 2009 Results

� Perspectives for 2010-2012


Main Financials Results Main Financials Results Main Financials Results 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

9

� - 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


EBITDA & MarginEBITDA & MarginEBITDA & MarginEBITDA & MarginInvestment on ReInvestment on ReInvestment on ReInvestment on Re----

launching Planlaunching Planlaunching Planlaunching Plan

Quality of traffic (onQuality of traffic (onQuality of traffic (onQuality of traffic (on----

nettization); structural nettization); structural nettization); structural nettization); structural

Selling Selling Selling Selling

expensesexpensesexpensesexpenses

InterconnectionInterconnectionInterconnectionInterconnection

609 736 759959

Efficiency Plan for the Business ReEfficiency Plan for the Business ReEfficiency Plan for the Business ReEfficiency Plan for the Business Re----launchlaunchlaunchlaunch

R$ Million, % Margin

%.Net Service Revenues

+R$630MM+R$630MM+R$630MM+R$630MM+23.4%+23.4%+23.4%+23.4%

% YoY, Delta (R$MM)

----R$372MM R$372MM R$372MM R$372MM ––––8.8%8.8%8.8%8.8%

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%

10

nettization); structural nettization); structural nettization); structural nettization); structural

rethinkingrethinkingrethinkingrethinking

Quality of customer Quality of customer Quality of customer Quality of customer

base; billing and credit base; billing and credit base; billing and credit base; billing and credit

managementmanagementmanagementmanagement

Lean structureLean structureLean structureLean structure

Structural Improvement of Structural Improvement of Structural Improvement of Structural Improvement of

ProfitabilityProfitabilityProfitabilityProfitability

InterconnectionInterconnectionInterconnectionInterconnection

& Network& Network& Network& Network

Bad DebtBad DebtBad DebtBad Debt4.8% 3.6% 3.2% 2.5%

9.6%6.8%

4.6% 4.0%

1Q 2Q 3Q 4Q

Personnel Personnel Personnel Personnel

and and and and

G&A CostsG&A CostsG&A CostsG&A Costs 9.3% 8.6% 8.0% 7.4%

10.1% 9.3%8.2% 8.7%

1Q 2Q 3Q 4Q

20092008

1Q09 2Q09 3Q09 4Q09––––8.8%8.8%8.8%8.8%

----R$327MMR$327MMR$327MMR$327MM----43.6%43.6%43.6%43.6%

----R$102MMR$102MMR$102MMR$102MM

----9.3%9.3%9.3%9.3%

31.4% 31.3% 30.8%

1Q 2Q 3Q 4Q

2008

R$ Million, % Margin

2,899 3,063

2009

22.1% 23.5%


Net Result Net Result Net Result Net Result –––– 4Q094Q094Q094Q09

2Q09 3Q09 4Q09

(144)

(15)

61330

1Q09(620,9)

(55,3) 47,8958,5

Y/Y variation due to lower impact of tax

benefits (R$104Mn vs. R$160Mn)

-32% 2009 vs. 2008 to R$252Mn

R$ Million

11

330,0337,6

2008

180 232

2009

+29%

Net Profit Net Profit Net Profit Net Profit ––––

2009FY2009FY2009FY2009FY Dividends:Proposal of

R$ 0,125 per PN in distribution

EBITDA 4Q09

Depreciation & Amortization

EBITNet Financial

ExpensesTaxes and

OthersNet Profit


Operational FCF & Net Financial PositionOperational FCF & Net Financial PositionOperational FCF & Net Financial PositionOperational FCF & Net Financial Position–––– 4Q094Q094Q094Q09(TIM + Intelig Dec/09)(TIM + Intelig Dec/09)(TIM + Intelig Dec/09)(TIM + Intelig Dec/09)

Net Financial PositionFree Operational Cash Flow

R$ Millions R$ Millions

R$ 860 Mn debt reduction

12

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

2,544

249

1,109

1,684- R$ 116 Mn of Intelig acquisition

effect

Oper. OCF 4Q093Q09

Non-Oper. OCF

EBITDA ∆ Working Capital

CAPEX Oper.OCF

32.1% of Total Net Revenues



� Repositioning Track

� 4Q 2009 Results

13

� 4Q 2009 Results

� Perspectives for 2010Perspectives for 2010Perspectives for 2010Perspectives for 2010----2012201220122012


TIM is Ready to Capture Brazilian Market OpportunityTIM is Ready to Capture Brazilian Market OpportunityTIM is Ready to Capture Brazilian Market OpportunityTIM is Ready to Capture Brazilian Market Opportunity

“Voice is Good”“Voice is Good”“Voice is Good”“Voice is Good”

�Mobile Internet AccessMobile Internet AccessMobile Internet AccessMobile Internet Access (microbrowsing)

�Selective growth of the mobile connectivity Selective growth of the mobile connectivity Selective growth of the mobile connectivity Selective growth of the mobile connectivity

marketmarketmarketmarket (web via internet key)

�Social networkingSocial networkingSocial networkingSocial networking

FreeFreeFreeFree----net Philosophynet Philosophynet Philosophynet Philosophy

�Liberty = unlimited onLiberty = unlimited onLiberty = unlimited onLiberty = unlimited on----net calls (Fnet calls (Fnet calls (Fnet calls (F----M substitution)M substitution)M substitution)M substitution)

�Offers & Promo based on communityOffers & Promo based on communityOffers & Promo based on communityOffers & Promo based on community

�LD for Fixed: economy and simplicity with InteligLD for Fixed: economy and simplicity with InteligLD for Fixed: economy and simplicity with InteligLD for Fixed: economy and simplicity with Intelig

�Attack to fixed monthly fee (FAttack to fixed monthly fee (FAttack to fixed monthly fee (FAttack to fixed monthly fee (F----F substitution)F substitution)F substitution)F substitution)

14

�‘Mundo Azul’ = One national rate (local and LD)‘Mundo Azul’ = One national rate (local and LD)‘Mundo Azul’ = One national rate (local and LD)‘Mundo Azul’ = One national rate (local and LD)

�Infinity = pay per callInfinity = pay per callInfinity = pay per callInfinity = pay per call

�Chip only = exit from handset subsidy marketChip only = exit from handset subsidy marketChip only = exit from handset subsidy marketChip only = exit from handset subsidy market

�SIMSIMSIMSIM----unlock = free handsetunlock = free handsetunlock = free handsetunlock = free handset

Breaking RulesBreaking RulesBreaking RulesBreaking Rules

PenetrationPenetrationPenetrationPenetration UsageUsageUsageUsage DataDataDataData

Market share MOU and ARPU Microbrowsing Browsing

�Integrated Solutions of Fixed, Integrated Solutions of Fixed, Integrated Solutions of Fixed, Integrated Solutions of Fixed,

Mobile, Voice and Data for:Mobile, Voice and Data for:Mobile, Voice and Data for:Mobile, Voice and Data for:

- corporate segmentcorporate segmentcorporate segmentcorporate segment

- consumer (selective)consumer (selective)consumer (selective)consumer (selective)

ConvergenceConvergenceConvergenceConvergence


Developing Own InfrastructureDeveloping Own InfrastructureDeveloping Own InfrastructureDeveloping Own Infrastructure

BackboneBackhauling

PoP PoP Leased

Metro

Backbone Integration

Connection with Intelig MAN

Key actionsKey actionsKey actionsKey actions

1

2

Intelig’s backhauling ring

connection/strengthening

Integrated TIM-Intelig

Backbone

Development of own

metro rings

1 2 3

15

Node-B

3G/HSDPAAccess

PoP PoP

2G/EdgeAccess

BTS

2G/EdgeAccess

BTS

Leasedlines

Microwaves

installation

4

Connection with Intelig MAN

MAN TIM conclusion

Development of Microwaves

and Backhauling - radio

Leased lines renegotiation

with OLO’s

52

3

4

5

Increase capacity of infrastructure


KPI’sKPI’sKPI’sKPI’s Size (Q4)Size (Q4)Size (Q4)Size (Q4) QoQ GrowthQoQ GrowthQoQ GrowthQoQ Growth

�Subscriber base

�ARPU

�Net Service Revenues

41.1 MM41.1 MM41.1 MM41.1 MM(23.6% Market Share)

R$ 27.0R$ 27.0R$ 27.0R$ 27.0

R$ 3,248 MMR$ 3,248 MMR$ 3,248 MMR$ 3,248 MM

#3� +5 MM lines vs. Q1,

besides having rigorous

clean-up to save Fistel

#1� Stop ARPU erosion due

to outgoing calls

� Higher growth QoQ due

Rank*Rank*Rank*Rank*

#2

In Bps

+ 380

+ 200

+ 540

Conclusion: TIM Conclusion: TIM Conclusion: TIM Conclusion: TIM ---- market’s #2 player with the greatest speed of QoQ growthmarket’s #2 player with the greatest speed of QoQ growthmarket’s #2 player with the greatest speed of QoQ growthmarket’s #2 player with the greatest speed of QoQ growth

16* Without considering Oi’s results (not published yet)

�EBITDA

�Margin EBITDA

R$ 3,248 MMR$ 3,248 MMR$ 3,248 MMR$ 3,248 MM

28.2%28.2%28.2%28.2%

� Higher growth QoQ due

to push on voice

� Filling the gap vs.

market leader besides

the intense commercial

effort

R$ 959 MMR$ 959 MMR$ 959 MMR$ 959 MM

#2

#2

#2

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

+ 540


Statements in this presentation, as well as oral statements made by the management of TIMParticipações S.A. (the “Company”, or “TIM”), that are not historical fact constitute “forwardlooking statements” that involve factors that could cause the actual results of the Company todiffer materially from historical results or from any results expressed or implied by such forwardlooking statements. The Company cautions users of this presentation not to place unduereliance on forward looking statements, which may be based on assumptions and anticipated

Statements in this presentation, as well as oral statements made by the management of TIMParticipações S.A. (the “Company”, or “TIM”), that are not historical fact constitute “forwardlooking statements” that involve factors that could cause the actual results of the Company todiffer materially from historical results or from any results expressed or implied by such forwardlooking statements. The Company cautions users of this presentation not to place unduereliance on forward looking statements, which may be based on assumptions and anticipated

“Safe Harbor” Statements“Safe Harbor” Statements“Safe Harbor” Statements“Safe Harbor” Statements

17

reliance on forward looking statements, which may be based on assumptions and anticipatedevents that do not materialize.reliance on forward looking statements, which may be based on assumptions and anticipatedevents 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

tim 4 q09 webcast eng 1

Documents

minutes r

savings r

interconnection costs

bad debt r

customer care r

investors relations

tim operations

tim community