vivo - apresentation of 1st quarter 2006 results
DESCRIPTION
Apresentation of 1st Quarter 2006 ResultsTRANSCRIPT
1
Vivo Participações
1Q06 Consolidated Results
May, 4 2006
2
• Corporate Restructuring successfully implemented;• Second Stage proposed for incorporation of subsidiaries.
• Quality : 95.6% Anatel’s goals achieved;• Network and Handsets authentication in progress;• Reduction in PDD.
Leadership
Capex
Technology
Finance
Development
• Leadership in cellular telephony in Brazil with 33.7% Market Share*;• More than 30 million clients;• More than 8 thousands points of sale (exclusive or not).
Corporate Governance
• Consolidation / Rationalization of IT/IS;• Coverage;• Customer Care to Corporate Segment.
• EBITDA of R$717.1 millions on 1Q06;• Positive Operating Cash Flow of R$ 435.8 millions.
Highlights
• Digital Coverage in all cities where Vivo operates;• More than 79% of covered cities have 1xRTT;• Percentage of Population served with 1xRTT = 86%.
* 43.5% in it’s authorized areas.
3
21,650 24,377
5,3085,761
1Q05 1Q06
Pre Post
Client Base Evolution+11.8% YoY
1Q05 1Q06
Corporate Client Private Client
+ 13.1%
+ 6.1%
+ 12.6%
26,958
+ 8.5%
30,138
+ 11.8%
Post
Growth Percentage
•Loyalty and Retention
•Focus on value clients
4
4,560
3,290
325
4,062
2,935
116
3,995
2,200
92
Vivo C1 C2
Retail Third Party Own Stores
8,1757,113
6,287
Leadership in Distribution & CoverageOnly Operator in 3G : 18 Cities with EV-DO
2,237
1,7521,627
Vivo C1 C2
Cities Covered
86% Pop with 1xRTT1,780 Cities with 1xRTT
Channels of distribution
5
Innovation & Technology
• Improves capacity of voice and datatransmission.
• 3G Access Technology ;
• Data Transmission of speed 2.4 Mb/sec;
• High End Activations: + 25% EV-DO;
• More than 80 thousand clients.
• High Speed Internet Access;• More than 12 options of internet access
cards and PDA’s;• Enables automated solutions to banks,
service sector and industries.
25%
75%
High + Mid End Low End
Handsets Models
50% with Digital Camera
7 EV-DO Models
1XRTT
EV-DO
Plack & PDA
TREO 650 Model
6
Fale mais por menosFale mais por menos
Customer talks to 30 million persons in Brazil for R$0.30 per minute
Features the recharge value in double to local calls
Features two packages with high minute content at promotional prices
Vivo bom de papoVivo bom de papo
1Q06 Main Marketing Actions
Recarga em dobroRecarga em dobro
7
Loyalty and RetentionFocus on Mid and High Range Clients
Incentive to retain Pre-paid client through discounts
in the exchange for a new handset keeping the
number
LOYALTYS
egm
ente
d C
han
ges
for
P
re-P
aid
Pro
gram
of
Poi
nts Points are added and can be used when handset is
exchanged. Balance of points is sent by SMS.
Ove
rlay
CD
MA
Incentive to change TDMA handsets for CDMA
based on points.
Enables mid and high range clients to acquire the
Globalmoto handset at differentiated prices.
Glo
balm
oto
Dir
ect
mai
l
Seg
men
ted
O
ffer
Mig
rati
on
Pre
-Pos
tU
pgra
de
of P
lan
s an
d P
acka
ges
Special offers to retain clients.
Inform to pre-paid clients the advantages of being a Post-Paid.
Adequate plan to profile maximizing value-for-money to client and increase customer satisfaction
RETENTION
Incentive to retain Pre-paid client through discounts
in the exchange for a new handset keeping the
number
LOYALTYS
egm
ente
d C
han
ges
for
P
re-P
aid
Pro
gram
of
Poi
nts Points are added and can be used when handset is
exchanged. Balance of points is sent by SMS.
Ove
rlay
CD
MA
Incentive to change TDMA handsets for CDMA
based on points.
Enables mid and high range clients to acquire the
Globalmoto handset at differentiated prices.
Glo
balm
oto
Dir
ect
mai
l
Seg
men
ted
O
ffer
Mig
rati
on
Pre
-Pos
tU
pgra
de
of P
lan
s an
d P
acka
ges
Special offers to retain clients.
Inform to pre-paid clients the advantages of being a Post-Paid.
Adequate plan to profile maximizing value-for-money to client and increase customer satisfaction
RETENTION
8
Net Revenue
268 456 315126
140143
1,0531,018
930
1,1301,373
1,206
1Q05 4Q05 1Q06
Handset Other ServiceNetwork Usage Monthly Subscription
+ 0.6%
2,577
2,9872,594
R$ million
• Right Planning
• Campaigns to incentive the intra network usage;
• Data transmission ;
• Internet access cards; PDA’s and SMS.
9
5.8%6.3%
7.1%
1Q05 4Q05 1Q06
Data Net Revenue Data Net Rev./Service Net Rev.
Data Revenue Evolution
1Q05
4Q05
1Q06
+21%
+22%
0.5 pp
0.8 pp
R$ million
10
22%
59%
19%
WAP SMS ZAP + others
16%
71%
13%
WAP SMS ZAP + others
Data: Services BreakdownIncentive to the Use of Higher Value Added Services
Increase in WAP & ZAP
1Q05 1Q06
41%29%
11
(1.9)
(1.5) (0.9)
(2.7)
1Q05 1 - Client BaseGrowth, M ix andBusiness Days
2 - Real ARPUVariation
1Q06 2 - Real ARPUVariation
1 - Client BaseGrowth, M ix andBusiness Days
4Q05
Outgoing 15.5 (0.2) (0.4) 15.0 (1.9) (0.4) 17.3Inbound 13.3 (1.3) (1.5) 10.4 (0.7) (0.5) 11.6
-11.8% -12.4%
ARPU Blended
Outgoing
Inbound
28.8
25.4
29.0
15.5
13.3
15.0
10.4
17.3
11.6
1Q05 vs. 1Q06 1Q06 vs. 4Q05
12
(0 ,4)(2,0)
(0,9)
(9,9)
1Q05 1 - Client BaseGrowth, M ix andBusiness Days
2 - Real ARPUVariation
1Q06 2 - Real ARPUVariation
1 - Client BaseGrowth, M ix andBusiness Days
4Q05
Outgoing 52.2 (0.1) 1.1 53.2 (8.2) (0.4) 61.8Inbound 24.9 (1.9) (1.5) 21.5 (1.7) (0.5) 23.7
-3.1% -12.6%
ARPU Post-Paid
77.1 74.7
85.5
52.2
24.9
53.2
21.5
61.8
23.7
1Q05 vs. 1Q06 1Q06 vs. 4Q05
Outgoing
Inbound
13
(9 .7)
(4.6)
(2.7)(3.9)
1Q05 1 - Client BaseGrowth, M ix andBusiness Days
2 - Real M OUVariation
1Q06 2 - Real M OUVariation
1 - Client BaseGrowth, M ix andBusiness Days
4Q05
Outgoing 37.3 (0.5) (5.7) 31.0 (2.0) (1.1) 34.2Inbound 44.6 (4.1) (4.0) 36.5 (1.9) (1.6) 40.0
-17.5% - 8.9%
MOU Blended
81.9
67.5
74.1
37.3
44.6
31.0
36.5
34.2
40.0
1Q05 vs. 1Q06 1Q06 vs. 4Q05
Outgoing
Inbound
14
7.1
(6.4)(4.5)
(6.9)
1Q05 1 - Client BaseGrowth, M ix andBusiness Days
2 - Real M OUVariation
1Q06 2 - Real M OUVariation
1 - Client BaseGrowth, M ix andBusiness Days
4Q05
Outgoing 118.2 (0.4) 5.6 123.4 (4.5) (2.7) 130.6Inbound 80.5 (6.0) 1.5 76.0 (2.4) (1.8) 80.1
+0.4% -5.4%
MOU Post-Paid
198.6 199.4210.7
118.2
80.5
123.4
76.0
130.6
80.1
1Q05 vs. 1Q06 1Q06 vs. 4Q05
Outgoing
Inbound
15
*SAC Blended
SAC*Strategy focused on Retention and Acquisition of Value Clients
135125141
1Q05 1Q06 4Q05
-11.3% -7.4%
16
181
951
626
165
445
129
728
433
156
434
122
564
412
153
376
General &administrative
expenses
Sellingexpenses
Cost ofhandsets
Personnel
Cost ofservicesrendered
1Q051Q064Q05
*Depreciation is not included.
Operating Costs*Costs Grow with competitive activity
R$ million
17
161.0
260.8
88.4
1Q05 4Q05 1Q06
PDD ReductionOperating and Control Initiatives
Structure and Process Initiatives :
Authentication of third party Analog and
TDMA network;
Interception of calls posted by Vivoclients in roaming;
“Credit Scoring”;
“Customer screening”;
“Management of Consumption”.
- 38.3%
R$ million
18
EBITDA and EBITDA Margin
125.5
446.3
59.6
1Q05 4Q05 1Q06
EBIT
EBITDA EBIT
717.1
977.7
650.1
27.6%
21.8%
37.9%
1Q05 4Q05 1Q06
EBITDA EBITDA Margin
R$ million
19
4,4644,156
8,594 8,416
4Q05 1Q06
Net DebtShareholder's Equity
Gross Debt, Net Debt and GearingImprovement in Gearing. Short Term Debt is Covered.
4,464.44,156.3
4Q05 1Q06
Gross Debt (R$ million) Net Debt (R$ million)
Gearing
4Q05 1Q06
Short Term Long Term
5,482.65,652.8
69%
31%
60%
40%
4Q05 1Q06
0.48 0.53
R$ million
20
Net Financial ResultReduction in Financial Expenses
1Q05 1Q06 4Q05
(221.7) (232.4)
(186.3)
- 16.0% - 19.8%
R$ million
21
Capex
384.7543.3
92.1
66.6
216.2
85.9
84.0
118.6
103.3
1Q05 4Q05 1Q06
Network Technology Others
535.3
878.1
281.3 11%
29%
21%
1Q05 4Q05 1Q06
Total Capex % Capex/Net Revenues
Main Investments :
Network Quality/Capacity;Coverage Expansion – CDMA 1XRTT and EV-DO;Centralized systems and platforms;Corporate segment: handsets and technology.
22
Net Result
1Q05 4Q05 1Q06
R$ million
42
(263)
(179)
23
Corporate Structure
Present Proposed
TelemsCelular
TelegoiasCelular
TelematCelular
TeleronCelular
TeleacreCelular
Norte Brasil
Telecom
TCO IP Celular
BRASILCEL, NV62.35%
Mercado37.65%
VIVO PARTICIPAÇÕES S.A.
TelergipeCelular
TelebahiaCelular
Telerj Celular
TelestCelular
Celular CRT
Global TelecomCelular
Telesp Celular
Tele Centro Oeste Celular
100%
100%
BRASILCEL, NV62.35%
Mercado37.65%
VIVO PARTICIPAÇÕES S.A.
100%
GLOBAL TELECOM S.A.
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Anatel StandardsLeadership in Meeting Quality Goals
C1VIVO C3 C2C4
Source: ANATEL (March/2006)
National Ranking among SMP Controlling Companies
(All Indicators)
C1VIVO C3 C2C4
Competitive Edge
SMP Anatel Standards # 2, 3, 5, 6, 7 and 12
First Ranked Network Quality
Best Performance
25
Anatel StandardsReduction in Non-Compliance
3.8%
9.3%
12.1%
14.0%15.0%
Mar-05 Jun-05 Sep-05 Dec-05 Mar-06
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ACTIONS
VIVO Social Responsibility
Museu da Língua Portuguesa - Estação da Luz - Dedicated to all languages that have influence on the Portuguese language spoken in Brazil. A project sponsored by Vivo Institute since 2002;
Second “Caravana do Esporte”, a project sponsored by Vivo Institute. 18 less developed cities will be visited;
Inaugurated the “centro esportivo da comunidade Novo Glicério”an NGO Glicerio initiative sponsored by Instituto Vivo;
Inaugurated a “Brinquedoteca” (space with toys for kids to spend leisure time) at the pediatrics section of the Santa casa do Pará, sponsored by the Instituto Vivo.
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Final Remarks
100% Digital
Corporate Restructuring
Stronger Structure;
Advantage of Synergies;
Simplicity;
Integrated Platforms.
System Platforms
Reduction of PDD in the quarter;
Compliance to Anatel Standards;
Authentication networks and handsets in progress .
Coverage
100% Digital;
EV-DO in 18 Municipalities;
1xRTT in more than 79% of the Municipalities;
EV-DO – 3G speed of up to 2,4 Mb/sec.
Focus on Value Clients
Contract base growth;
Increase in Corporate client base;
More than 12 models of ZAP and PDA’s.
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• This presentation contains statements that constitute forward looking statements in its general meaning and within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this document and include statements regarding the intent, belief or current expectations of the customer base, estimates regarding future growth in the different business lines, market share, financial results and other aspects of the activity and situation relating to the Company. The forward looking statements in this document can be identified, in some instances, by the use of words such as "expects", "anticipates", "intends", "believes", and similar language or the negative thereof or by forward-looking nature of discussions of strategy, plans or intentions. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and actual results may differ materially from those in the forward looking statements as a result of various factors.•Analysts and investors are cautioned not to place undue reliance on those forward looking statements which speak only as of the date of this presentation.
Safe Harbor Clause Forward Looking Statements