1Q08 Brazilian market at a glance Market quarterly net adds Penetration (per Inhabitants) Market Overview Reversal trend of quarterly net adds in 2Q07; Prepaid net adds grew by 159% YoY in 1Q08, mainly due to: Growth concentrated in social classes C and D/E ; Naked SIM-Card sales; On-net calls promotions; Market gross addition increased around 35% YoY; Second-hand cell-phones accounted for 26% of sales in 20071 … and TIM’s ApproachMobile penetration by social class (2007) Penetration (per Households) Strong hold on market maintaining solid share performance; Leadership in gross addition (~26% in the 1Q08) fueled by: Strong national brand; Large distribution network; Push on traffic promotions; Leveraging second-hand cell-phone market by offering ‘TIM Chip only’. Capturing low income-class growth; Note: 1) According to Latin Panel survey 3
Competitively marking the market Market Share Performance Total Lines (Mn) and Penetration Rate Mobile market growth continues strong in 2008; Credit expansion and purchase power improvement; Naked SIM-Card further enhance net addition;Successful hold on positioning with resilient market share New technology/services;performance;Postpaid mix at 20.8% and above competitor’s average of18.6%; Source: ANATEL and company´s data. 4
A National wide consolidated company Innovative, Reliable and Appealing brand: “Living beyond Technology” First national consolidated operator (since 2002): Largest presence in Brazil through our network coverage (voice and data) and strong distribution channels (sales and recharge); Top of mind¹ and consumer preference¹: Brand nationally recognized as innovative company; Info-Exame magazine award (March-2008): The best wireless company in Brazil; Transparent relation with customers: Handset SIM-lock - giving customers free will. Ranking 2002 National Presence 1º Brand (Top of Mind)¹ 1º Coverage (voice and data) 2º Market shareNote: 1) Instituto Synovate - Oct-Nov/2007 6
TIM convergent offer roadmap TIM Convergent Customer Base Convergent customer base achieved around 1.5 million by the end of 1Q08TIM : Aiming the future 3G+: a new experience for the most innovative VAS services Positioning / Strategy Advantages Roll-Out / Launching A step ahead on TIM convergent offers VELOCITY: Upgrade to 1Mbps and 7Mbps; Commercial Launching: through wireless broadband; SIMPLICITY: All ‘TIM Chip’ are 3G ready; 850 Mhz - April 16th Brand empowerment through Buy & Play concept; 2.1 Ghz - May 1st innovation; MOBILITY: Wireless internet anywhere; 3G Initial coverage in key metropolitan ACCESSIBILITY: Any 3G device and Protect TIM customer base; area; computers; Deliver content to enhance usage and 3G roll-out easyly by our actual national OPPORTUNITY: Limited coverage and revenue; consolidated coverage; installation by fixed telcos. Encourage use of VAS: more quality and National 3G license for R$1.3bln; speed; More spectrum capacity; 7 Push on cross selling offers; Alternative to digital universalization.
Marketing 3G offers TIM Web Banda Larga: Wireless Broadband Solution ►TIM Web broadband : Buy & Play; Broadband ►Competitive plans: 1Mbps or 7Mbps unlimited; ►TIM Web - Automatic upgrade to 1Mbps (packages 40MB, 250MB e 1GB); ►First notebook in the market with TIM broadband access. VASStrategic Partnership New and Improved Content Offer Handset Portfolio TIM TV GOOGLE MAPS TIM GAMES TIM VIDEO CALL TIM WAP TIM STUDIO YOUTUBE UOL MOBILE TIM MUSIC STORE 8
1Q08 Main HighlightsIndicators Results Drivers Perspectives Maintaining market share focused on YoY Growth: 23.7% vs Maintaining our competitive valuable customer base (prepaid andClient competitors 23.0%; approach; postpaid);Base Post paid mix: 20.8% vs Segmented approach: Push the right Benefits from TIM national wide competitors 18.6%. customers to the right plans. consolidated Company. Data transmission and internet access: Increase 29.0% YoY; ‘TIM Web’ and ‘Nosso link’; ‘TIM Web Banda Larga’: wireless VAS Accounting for 8.4% of gross Data package offers; broadband solution speed up with 3G; service revenue. 3G content providers partnerships. Push on media content. Selective approach in promotion; Aggressiveness on traffic promotions/disc; Migration from incoming to on-net traffic; Stable incoming revenues (lower F-M traffic 6.6% YoY growth in net and the cellcos on-net strategy); Additional revenues through cross-sellingRevenues service revenues. offers: TIM Casa Flex and 3G+; Low income classes penetration. Guidance Revision: 2008 total net revenue growth as around 9% Telesales channel had its process remodeled; 9.6% of net service Aggressive campaign in telesalesBad debt revenue. distribution channel. Normalized level around 6% of net service revenue on a yearly basis. Bad Debt increase;EBITDA Margin of 17.9%. 2008 EBITDA >23%. Modest revenue increase. 10
EBITDA and EBITDA margin performanceR$ Mln Strong outgoing traffic volume, (off-net and M-F calls) and 3G deployment Selling expenses were 4.6% up from the 1Q07, while gross addition grew 22.0%. (135.8) (26.3) 176.1 (26.4) 630.4 Additional (98.7) 95.0 bad-debt 0.4 (17.9) 664.1 535.4 535.4 EBITDA Handsets Service Network Selling Bad Debt COGS Other EBITDA Normalized 1Q07 Revenue Revenue Expenses Expenses Expenses* 1Q08 EBITDA Change -14.5% +6.6% +14.9% +4.6% +57.1% -0.1% +6.8% % YoY EBITDA 21.1% 23.4% 17.9% Margin * Other Expenses include: G&A, Personnel and Net Other Operating Expenses/Revenues 11
Bad Debt Major source of bad debt increase: R$ Mn % of net service revenues Aggressive campaign in telesales channel; 9.6% Strong gross addition (since 2H07), specially in postpaid. 271.7 95.0* 3.4% Actions implemented: Telesales channel had its process completely remodeled; 6.5% Implement new rules; 173.0 176.7 6.2% Strict credit analysis; 1Q07 1Q08 Bad debt expected to come back to its historical levels: *additional bad-debt provision from Telesales channel Around 6% of net service revenues in a yearly basis. ARPU Performance SAC PerformanceR$ Main reasons to ARPU performance: R$ -5% Subsidy strategy oriented to -14% maintain competitiveness in Increase penetration in low income class 124 110 117 34.4 29.5 Indirect cost valuable customers; and strong prepaid growth (25% YoY); - Comodatun - Advertising 38% 38% 42% Focus on traffic promotion instead - Others Aggressiveness in traffic Direct cost of high subsidy; promotions/discount; - Commission - Subsidy 62% 62% 58% Acquisition cost was largely VAS promotions put into place as to - FISTEL affected by lower commission and 1Q07 1Q08 1Q07 4Q07 1Q08 safeguard positioning and for education advertising expenses;in light of recent launch of 3G+ service; Gross adds were up 22.0% YoY and selling Migration of incoming calls to on-net calls; expenses were up 4.6% YoY. SAC/ARPU: 3.8x 3.2x 4.1x 12
“Safe Harbor” StatementsStatements 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 undue relianceon forward looking statements, which may be based on assumptions and anticipated events thatdo not materialize.Investor Relations Visit our Website:Avenida das Américas, 3434 - Bloco 01 http://www.timpartri.com.br6° andar – Barra da Tijuca22640-102 Rio de Janeiro, RJPhone: +55 21 4009-3742 / 4009-3751 / 4009-3446Fax: + 55 21 4009-3990 16
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