Vivo Participações S.A.
July 21, 2006
Challenges • Stabilize Market Share • Promote Revenue Growth
Increase in the post-paid outgoing revenue of 15.3% in SP and 21.2% in RJ/ES
Increase in the post-paid outgoing ARPU of 4% in SP and 9% in RJ/ES
Decrease in the inbound traffic with migration F-M to M-M/ Decrease in interconnection revenue
Inactive clients write-off with effects in churn but without effects in revenues
Strong Commercial Activity Competitive market
Mother's Day/ Valentine's Day
Client Base Write-off of inactive clients
Impact in Churn
No effect on revenue
Revenues Outgoing revenues grew in relation to 2Q05
Pressure on prices with strong competition
Provision for Bad Debt(PDD) Impact of R$ 161.5 MM QoQ
Normalized PDD of R$177.2 MM or 4.7% of gross revenue
EBITDA Reduction due to non higher provisions
Normalized value: R$467.8 MM and 18.0% margin
Net Debt Manageable volume and reduction of financial costs
Advances Quality : 98% of Anatel’s goals achieved
Network completely authenticated
78% of client base centralized in a single billing system
57% of client base centralized on prepaid platforms
72% of client base centralized at the front office
Short Term Combat Fraud and Cloning
Consolidation/ Rationalization of IT/IS
Dedicated attention to Corporate Segment
Medium Term Launching of GSM’s network (overlay)
Competition and evolution in 3G
Maintenance of Leadership in 850MHz and better network
No impact of CapEx
+ 0.3% - 5.4%
28,446 28,525 30,138
30,348 total without
write-off of clients
- 8.6% 5.761
• Retention and loyalty programs;
• Focus on the value clients;
- 4.6% 24.377
22.935 23.257 • More than 78% of the clients base
integrated to the unified IT/IS
2Q05 2Q06 1Q06
Leadership in Distribution & Coverage
Only Operator in 3G
Channels of distribution Coverage
Vivo C1 C2 Vivo C1 C2
Retail Third Party Own Stores Municipalities Covered
2Q06 Main Marketing Actions
Program based on Points Mother’s Day
Soccer World Cup 2006
Change handsets using the Buy a handset and get
program based on points. the second for free.
Talk more Vivo Prepaid Recharge in Double
When buying or changing handset, the
client speaks for how long he/she
wants for only R$0.30/min in local
calls or long distance calls from Vivo to
Vivo offers the recharge value
Client speaks for free with any Vivo in bonus for local calls from
or fixed phone after the 3rd minute Vivo to Vivo to speak in double.
Loyalty and Retention
Focus Value Clients
Incentive to retain Prepaid client through discounts
Retention of clients through segmented offers
in the exchange for a new handset keeping the
such as “Right Planning” and “Vivo Smart”
Points are added and can be used when handset is
exchanged. Balance of points is sent by SMS in a Using base segmentation, to inform to prepaid
monthly basis. clients the advantages of being a Post-Paid.
Incentive to change TDMA handsets for CDMA
based on the program of points.
Maxime value-for-money to client and increase
Enables value clients to acquire the Globalmoto
handset at differentiated prices.
Service Revenue Handset Revenue
- 7.5% - 3.4%
2,184 2,262 -20.2% +31.4%
1,059 868 930
519 414 315
136 157 143
2Q05 2Q06 1Q06 2Q05 2Q06 1Q06
Other Services Network Usage Monthly Subscription Handsets
Campaigns to encourage the intra network traffic;
Data transmission ;
Internet access cards, PDA’s and SMS.
Increase in the outgoing revenues;
Drop in the inbound fixed-to-mobile traffic.
Data Revenue Evolution
Data Net Revenue Data Net Rev./Service Net Rev.
2Q05 1Q06 2Q06
WAP SMS ZAP + others
10 WAP SMS ZAP + others
Strategy focused on Acquisition of Value Clients
2Q05 2Q06 1Q06
Growth with Competitive Activity
General & 127
*Depreciation is not included.
161.0 Insolvency Clients
136.6 PDD extraordinary in the 2Q06.
2Q05 1Q06 2Q06
Structure and Process Initiatives :
Authentication of the Analog network and TDMA third party network already concluded;
Interception of calls posted by Vivo clients in roaming, is fully implemented (“screening” of clients);
“Credit Scoring” (already implemented);
Strong billing actions;
“Management of Consumption”.
*PDD = Provision for Bad Debt
Gross Debt, Net Debt and Gearing
Covered Short Term Debt
Gross Debt (R$ million) Net Debt (R$ million)
Short Term Long Term
Net Debt 1Q06 2Q06
R$ million 1Q06 2Q06
Net Financial Result
Reduction in Financial Expenses
-13.3% + 14.7%
2Q05 2Q06 1Q06
Reduction in Indicators of Non-Compliance
Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Apr-06 May-06 Jun-06
Source: ANATEL (June/2006)
VIVO Social Responsibility
Vivo has continued with its internal voluntary program with several
actions of support to visually disabled person:
Opening of Vivo Voluntary Space, located at the company’s
building in Rio de Janeiro, for recording of spoken books.
Three courses were provided for training Vivo volunteers –
audiodescription, revisers and readers.
ACTIONS Production of approximately 11,000 pages of Braile books, only
in June, which work was carried out by approximately 600
volunteers of the company.
Project Frequency Capex
Construction of a GSM/EDGE We will use the frequency of • Capex to the overlay of GSM will
network capable of upgrade to W- 850MHz and CDMA with EV-DO. be approximately R$ 1,080MM;
CDMA to be added to the network, • Capex already included in the
which will continue in full operation. Company’s plan with no impact by
the balance between investments in
CDMA and GSM;
Reasons Advantages Competitive Differentials
• Future coverage also in GSM; • Handset prices; • Higher offer of handsets and
• Digital roaming facilitated by • Short term pay-back; services to the market;
present contracts; • Improvement in the competitive
• Lower GSM’s handset cost; positioning; • Only Brazilian operator to offer
• Gain of scale; • Experience from TEM and PT in both technologies CDMA and GSM;
• Evolution to UMTS; other markets. • Its offers services that fits all
• High use of the existing market segments.
• Reduction in the price of GSM
• Recurrent Economy in Capex.
• Sustainable effort to detect and control;
• Authentication of prepaid and post-paid customer base;
Fraud and Cloning
• System’s Prevention;
• Reduction of PDD.
• Unified IT and SI platforms;
• 75% of clients already integrated;
Systems • Simplified control;
• Increased Reliability and Control.
• Structure Simplification (reduction of 14 operator to 1);
Corporate Restructuring • Synergies;
• Cost control;
• Search for Nationwide coverage;
• 100% Digital;
Coverage •1xRTT in 1,825 municipalities.
• 3G’s Competitively;
• Easier Roaming;
• Lower handsets’ costs.
Safe Harbor Clause
Forward Looking Statements
• 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.