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Meeting with investors of february 2013
 

Meeting with investors of february 2013

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    Meeting with investors of february 2013 Meeting with investors of february 2013 Presentation Transcript

    • TIM Brasil - Meeting with Investors TIM BrasilSeptember, 2012 - Meeting with Investors February, 2013
    • Knowing TIM Better Shareholders Structure TIM: A Huge Brazilian Company  Presence in Brazil since 1998 TIM Brasil Serv. e Part. S.A. Minoritários  Unique Telco company listed on the Novo Mercado:ON: 67% (1.611.969.946) ON: 33% (805.662.701) .100% Tag Along and equal dividend rights . One single class of shares . Independent Board members TIM Participações S.A. . A more strict disclosure policy 100% 100%  ~ 11,000 direct employees  + 21,000 indirect jobs TIM Celular S.A. Intelig  +400,000 Points of Sales (Top-up and SIM cards)  + 130 own stores  > 70 million costumers. The 2nd player.  11 Customer Care Centers with 14,000 consultants Highest level of  ~ 11,500 antennas in 3,383 cities, covering +94% urban Requirement of protection for Corporate population Governance minority Demand for transparency and shareholders  Exclusive attendance of 391 municipalities and 1.64 Legal disclosures million customers Requirements  Payment of R$7.3 billion in taxes and contributions in 2011  Investment: R$3.8 billion in 2012 Brazilian Law “Nível” 1 “Nível” 2 “Lei das S.A” 3
    • Strategy 4+
    • Macro-Economic Fundamentals Remain Solid Families Income is increasing continually Brazilian families consumption is growing every year Average Real Salary (R$) Families consumption on Brazilian GDP demand side - %YoY growth 8 2.000 6,9 1.900 7 6,1 5,7 1.800 6 5,2 1.700 4,8 5 4,4 4,1 4,3 1.600 4 3,0 1.500 1.400 3 1.300 2 Lowest 1.200 1 Growth 1.100 - 1.000 2006a 2007a 2008a 2009a 2010a 2011a 2012e 2013e 2014e Family Indebtness will probably drop Unemployment rate is reaching a low record constantly % debt service/families income Unemployment Rate(%) 30 13,0 12,4 12,0 11,5 25 22,4 19,1 19,2 20,3 19,5 20 20,2 11,0 9,9 10,0 20 17,8 10,0 9,3 Peak 9,0 7,9 8,1 15 8,0 6,7 10 7,0 6,0 6,0 5,5 4,8 5 5,0 4,2 4,0 - 3,0Source: Credit Suisse, BaCen and IBGE 5
    • Mobile Business in Brazil is driving sector growth A huge market…. …with demographic bonus … and still low Voice and Data usage Serv.Rev. US$ Bln; Mln subs; 2011 Mln of people MoU (minutes); Data as a % of Serv. Rev.; 2011 173 2002 2009 2014 Minutes of Use %Data Serv. Rev. Service 108 898 Revenue 82 Class 37 A/B 14.5 20 29.1 4o 55% - 50,00 100,00 150,00 200,00 250,00 300,00 C 350,00 400,00 67.5 450,00 500,00 95 118 452 38% 986 339 31% D 46.1 44.5 32.1 19%Subscriber 894 116 Base E 46.6 28.9 16.8 332 246 4o Above From US$891 From US$558 From zero US$3.843 to US$3.843 to US$891 to US$558 - 200,00 400,00 600,00 800,00 1.000,00 1.200,00 Brazil: GDP vs. Telecom Revenues Growth ARPM Fixed vs. Mobile % Growth YoY R$ Mobile 25% 20% 15% 10% TIM 5% Mobile Market 50% mobile 0% GDP** discount Fixed -5% -10% Wireline -15% Market* 2006 2007 2008 2009 2010 2011 2012 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 **BaCen estimates for 3Q12Source: Company estimates; BofA ML Global Wireless Matrix 3Q12; Teleco; IBGE; Bloomberg; Credit Suisse * Wireline Market is composed by incumbents only 6
    • Mobile Segment to Support Universalization Customers Growth - Telecom Market Transformation (Mln customers) Total Revenues- R$ Bln 258,9 CAGR ’12-’15 +114% 242,2 129 4% 202,9 124 174,0 116 14 10 150,6 104 (12%) 28% 8 (7%) (9%)Mobile 121,0 • Mobile 6 (6%) +11% Mobile: +7% VAS 41,2 41,5 42,0 43,0 43,7 41 43 45 46 39,4 • Mobile 0% (40%) (40%) (40%) (40%)Fixed Voice • Fixed 17 18 2007 2008 2009 2010 2011 3Q12 (16%) 19 21 Data* (17%) 7% (17%) (18%)Mobile 40 Fixed: -1% 39 37Penetration 64% 79% 90% 105% 124% 132% • Fixed (38%) 35 -5% (36%) (33%) (30%) Voice Customers Growth – Broadband 2009 2012 2014 2015 (Mln customers) Market split between: 50,8 +3,658% Mobile 47 60 69 75 (45%) (52%) (56%) (58%) 33,2 57 56 55 55 Mobile Fixed (55%) (48%) (44%) (42%) 16,3 18,6 14,6 +86% 10,0 11,4 Fixed 4,1 13,8 1,4 Mobile Segment as the Growth Driver and 2008 2009 2010 2011 3Q12 Sector Universalization 7
    • FMS Secular Trend Remains on PlayFixed to Mobile Substitution… …impacting Fixed Incumbents … benefiting Mobile Segment Fixed Tariff Premium over Mobile Lines in Service ARPM (R$/min) (Fixed - Residential, Mobile, D% yoy, D% yoy growth average) Fixed +18% Mobile (Residential) -6%Mobile 50% mobile discount 1Q11 3Q12 1Q11 3Q12Fixed Revenues2006 2007 2008 2009 2010 2011 2012 (Fixed, Mobile, D% yoy, D% yoy growth average) Leading Traffic to a Sharp Increase Fixed +9% Mobile -7% (Bln Minutes) 23.8 26.4 20.1 21.8 22.6 18.4 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 1Q11 3Q12 1Q11 3Q12 EBITDA Leadership in LD Market Share (Integrated, Mobile as TIM, D% yoy, D% yoy growth average) (% Minutes) Integrated Mobile88.2% -5% +10% 66.5% 53.3% 49.8% 48.5% 48.3% 49.7% 6.7% 45.8% 47.8% 47.7% 48.1% 28.3% 42.0%jun/09 jun/10 jun/10 dec/10 jun/11 dec/11 mar/12 1Q11 3Q12 1Q11 3Q12** TIM Incumbents* * Telemar, Brasil Telecom, Telesp e Embratel. Source: Companies results and Teleco. **TIM’s Organic EBITDA 8
    • 4Q12 Results
    • Business Resilience Against a Strong Headwind Operational Improvement Users, Minutes, Unique Users, %YoY  Leader in customer base +10% +14% growth for the 10th +22% consecutive quarter 150 ~21 70.3 67.2 68.9 69.4 139 64.1 131 126 127 ~18  Leader in pre-paid  #2 in post-paid voice (ex - M2M and Dongles) 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 Customer Base – Mln Minutes of Usage Data Monthly Unique Users - Mln  Record of MoU at 150 min  Smartphone penetration Financials reached 43% of total base R$ Bln, %YoY  Increasing investment to Total Revenues Organic EBITDA Organic Net Income R$3.4 Bln (+12% YoY) ex- 19% 27% 34% licenses 13% 16% 8% 7% 8% -2%% YoY 7% 7% 6%  Organic Net Income FY12 = R$1.5 Bln (+17.4% YoY)  EBITDA – Capex = R$1.6 0.5 Bln (ex-licenses) 5.0 0.4 4.7 0.3 4.5 1.2 1.2 1.4 0.3  Proposed dividends of 4.5 1.2 ~R$743 mln (+39% YoY) 1Q12 2Q12 3Q12 4Q12 1Q12 2Q12 3Q12 4Q12 1Q12 2Q12 3Q12 4Q12 % Margin 26.2 26.7 26.3 28.4 6.1 7.5 9.0 9.2 10
    • Guidance: Check Point % 2011 2012 Guidance R$ billion Achievement Total Net 17.1 18.8 18.8 100% Revenues (+10%) Organic EBITDA 4.7 5.1 5.1 100% (+10%) Organic Capex 3.0 3.4 3.0 113% Tough Year Underscored by Solid Business Foundation • Resilience of customer base growth • Macroeconomic slowdown Net Service Revenue Evolution and usage (especially data) • Regulatory scrutiny 2.7% • ARPU sequentially improving • Image damage 1.7% 1.8% 13.1% • Good cost control (ITX / network • Increased competition 6.9% costs up 9% while traffic +34%) • Intelig’s business performance Intelig’s • More investments in infrastructure below expectations 2011 YoY MTR Macro 2012 YoY Net Service Impact Business Competition Net Service Revs Impact Regulatory Revs Impact 11
    • The only company to gain market share Total Market Share Growth (% of total lines) D YoY #1 Pre-paid 30.1% 30.2% 30.1% 29.7% 29.8% 29.5% 29.5% 29.5% 29.5% 29.6% 29.7% 27.6% 28.3% +63 Bps 29.1% Vivo -45 Bps 221 28.0% 27.2% -78 Bps 640 26.8% 26.9% 26.8% 26.9% 26.5% bps bps 26.0% 25.4%25.3% 25.5% 25.4% 25.6% 24.1% 24.7% +67 Bps 25.4% +42 Bps 24.9% 20.1% 19.5% -53 Bps 23.7%24.0% 25.1% 25.1% 25.5% 25.3% 24.9% 24.6% 24.5% 24.5% 24.6% Claro +0 Bps 2011 2012 20.4% 20.1% #2 Voice Post-paid 19.5% 19.4% 19.7% 19.1% 18.8% 18.8% 18.5% 18.7% 18.7% 18.8% Oi +3 Bps 38.2% 38.4% +21 Bps 22.0% 23.2% +121 Bps The only mobile operator which -282 Bps 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 grew in 2012 23.9% 21.0% 15.3% 16.7% +143 BpsSource: Anatel 2Q12 4Q12 Sales Force Focus on Efficiency Bad Debt Trend (Points of sale EoP) (R$; months) (as % of Gross Revenues) 2010 67 SAC/ 1.5 Own 1.3 1.4 ARPU 2011 81 +96% Stores 2012 131 1.04% 36 0.92% 28 27 0.71% SAC 3Q12 298k +9% Mass -21% -5% Channel 4Q12 QoQ 326k 4Q10 4Q11 4Q12 4Q10 4Q11 4Q12 12
    • Customer Base Evolution Voice post-paid Base Analysis (ex-M2M and broadband) (Million lines) Customer Base Growth (% YoY) 10.5 10.7 D% YoY 10.4 10.2 10.4 10.3 +15% 9.9 10.0 9.8 9.4 9.5 9.7 10.7 9.3 +15.5% Total post- 8.3 8.4 8.7 +25% paid 10.3 base 10.0 9.7 Voice post- 4Q12: 519k Net addspost-paid paid base 34% Net share (#2) 9.3 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Source: Anatel 4Q11 1Q12 2Q12 3Q12 4Q12 +75 Bps Voice Growth (MOU) (Minutes; %YoY; Top Up) post- 14.5% 14.4% 14.5% 14.8% 15.3%paid Mix % YoY +1.7% +0.2% +0.2% +6.7% +14.5% +8.8% 59.1 59.6 Top Up Volume 58.9 57.6 210pre-paid 150 139 183 +15% 54.8 131 126 127 4Q11 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12Source: Anatel 13
    • Data as Key Driver for GrowthProducts Net Revenues Handset Sales Market Share Smart/Web phone Penetration(R$ Million) (% of handset revenues from Jan/12 to Nov/12) (% over total base of lines) +56.4% 1.6x 706 Operators 43.1% 7% 39.1% 622 35.2% 563 54% 25% 31.1% 451 453 46% 30% 26.6% Open Market 38% 4Q11 1Q12 2Q12 3Q12 4Q12 P1 TIM P3 P4 Sales of web/smartphones represented 65% Source: Company estimates 4Q11 1Q12 2Q12 3Q12 4Q12VAS Gross Revenues SMS unique users growth Data users(R$ Million; % of Gross Mobile Services Revenues) (Million Montlhy unique users) (Million monthly unique users) 19.6% 20.5% 18.1% 18.7% +21.5%16.7% +24.6% >21 ~18 +29.7% 1,243 1,132 1,000 1,031 958 4Q11 1Q12 2Q12 3Q12 4Q12 3G coverage (% of urban 66% 72% 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 pop.) 14
    • EBITDA & Efficiency EBITDA Evolution (R$ Million) 16 mln of provision on advertising credit ~400 26 mln of provision on Anatel administrative procedures established between 2007/09 +69 +91 -630 +1,067 -202 5,052 -42 5,010 4,658 27.3% 26.9% 26.7% EBITDA Margin 32.4% 32.1% 32.5% Service EBITDA Margin EBITDA Δ Services Δ Handset Δ Marketing Δ Network Δ Pers./G&A Adj. EBITDA Non- Rep. EBITDA 2011 Revenues Margin and Sales and ITX and others 2012 recurring 3Q 2012 ΔYoY +6.9% -20.9% -2.3% +13.3% +11.8% +8.5% +7.6% Handset Business and Commercial Efficiency Leased Lines, Traffic and ITX Costs (%YoY) (Compound Growth Rate - Quarterly) Traffic Handset Business 6.9% Net Product COGS +26% +35% Revenues 2011 2012 2011 2012 2011 2012 Leased ITX costs Commercial Efficiency Lines costs (ex-SMS) 0.2% Gross -0.6% -3.4% Commissioning Adds Expenses -9.3% 2011 2012 2011 2012 2011 2012 2011 2012 15
    • Net Income & Dividend From EBITDA to Net Income (R$ Million) 5,010 16 + 26 = 42.1 mln – provisions 9.1 mln – monetary adjustments for the administrative procedures -2,689 2,321 -168 -705 1,449 1,500 EBITDA Depreciation/ EBIT Net Financial Taxes and Net Income Adj. Net 2012 Amortization Result Others 2012 Income 2012 ΔYoY +7.6% +3.6% +12.6% -29.7% +29.1% +13.4% +17.4%Organic Net Income Dividend Evolution(R$ Million, CAGR) (R$ Million, CAGR, Reported Payout) +22% +39% 1,500 743 1,278 533 776 497 2010 2011 2012 2010 2011 2012 Payout 22% 42% 51% Ratio 16
    • Cash Generation 2012 Operational Free Cash Flow Net Debt (R$ Mln) (R$ Mln) R$ 378.2 Mln of 4G Licenses EBITDA: -5,010 5,010 -3,765 D WC: -579 Capex: +3,765 Dividends: +523 ~ R$ 340 Mln of Income Tax: +414 License payable Others: +295 441 -1,824 +579 1,824 +1,232 -151 EBITDA CAPEX Δ WC OFCF%YoY +7.6 +24.4 +7,342 +12.4 2011 Oper. Non-Oper 2012%Net FCF 26.7 20.1 3.1 9.7 Net FCF NetRev. Debt Debt 5.1 Bln for Organic EBITDA in 2012 1.8 Bln of Oper. Free Cash Flow in 2012 3.4 Bln on Organic CapEx in 2012 17
    • Conclusion % Households with only mobile services Fixed price premium over mobile TIM MoU Mobile (minutes) 55%FMS on Play 49% 129 136 116 83 Fixed 2009 2011 2006 2009 2011 2014 2009 2010 2011 2012 2015e Mobile Broadband Access per Social Class Data Monthly Users +600 bps +700 bps x2 x5 (Mln) >21Mobile ~18Data 20% 20% 2010Accelerating 18% 18% 14% 2011 11% 9% 4% 4Q11 1Q12 2Q12 3Q12 4Q12 A Class B Class C Class D/E Class Source: PNAD (national institute of statistics) MTR Path MTR (Mobile Termination Rate) (R$/minute) • Cut implemented • Clear path towards 2016 0.37 0.33MTR & EILD • Great contribution from mobile sector (ARPM -16%YoY) 0.25partially 0.17implemented EILD (Leased lines) • Resolution 590 released (cut up to 30%) • Needed framework to be followed by incumbents • Monopoly break 2012a 2013e 2014e 2015e 18
    • TIM Fiber Update
    • Live TIM: Up & Running MSANs Optical BackboneNetwork 2 networkConstruction 1 3 Buildings authorized Building’s connected MSANs installed 7.1 k 8.5 k 3.0 k 4.2 K 405 694 3Q12 4Q12 3Q12 4Q12 3Q12 4Q12 Capex per Client Quality of Service (R$) (Average Speed in Mbps) >700 35 37 500Quality of 20 21Service withLow Cost 1.8 0.4 Market Average Live TIM Live TIM 2012 Dec/15e (nominal) (delivered) Download Upload 20
    • Live TIM: Speeding-Up with the New OfferMarket Demand Offers(Units) (Units) Launch Promo Actual (jan13) Website Registration 160k Customer Base / Sales Msan Installation Takeup (average) weeks (000 Clients) MKT share per Week per Coverage 10 Customer Base 10% 9 Sales 8 7 6 5 5% 4 3 2 1 0% 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 may/12 jun/12 jul/12 aug/12 sep/12 oct/12 nov/12 dec/12 Week 21
    • Quality and Network
    • Lessons Learned: Focus on Quality1 One Network for all businesses  Restructuring of the network  More StrengthManagement Change  Intelig, TIM Fiber and TIM  Great resilience Celular network to become  Clear priorities one single entity2  The least claimed Telecom carrier at consumer  Direct report to the CEO, a protection agency (Procon) Structuring new division responsible to  Delivery Anatel’s network plan Quality assure quality measures, as well as customer relation  Improved IDA (Index of caring performance) from 88 pts satisfaction in August to near 93 pts in December (2nd best)3  Launch of a comprehensive  Advertisement with the chairman and employees website, focused on  Anatel Plan disclosure Image network quality  Real coverage footprint Repair  Market campaign focused  Quality KPI’s and network improvement/incidents on transparency disclosure4 3.4 Bi  Focus on mobile 3 Bi +12% 18% of Incremental infrastructure  Incremental Top Line CapEx Investments  Enhanced 3G coverage 2012E 2012A 23
    • Consumers Complaits: Good position at Anatel andProcons IDA – Index of Attendance (last reported by Anatel) Anatel Ranking of Complaits (last reported by Anatel) (Points) (Index of Complaints under 1,000 access) 0.64 0.63 99.40 100.00 99.90 96.75 97.90 0.50 96.15 95.15 0.47 0.48 0.50 0.50 95.05 98.00 0.47 93.95 97.00 96.70 0.41 89.85 91.00 88.00 89.35 0.39 90.30 0.44 0.34 0.44 TIM 87.90 92.80 TIM 0.40 0.41 89.35 84.01 0.32 0.30 0.26 0.27 0.38 0.24 86.40 86.20 0.27 0.30 84.80 84.85 0.24 0.28 73.26 0.21 0.20 0.20 72.72 73.15 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Source: Anatel Source: Anatel Volume of claims at Consumer’s Protection Agency (Procon) Procon Demands throughout 2012 (# Quarterly claims) (Mln of clients; Thousands of Demands) Best position in 21,618 19,838 Telecom 19,245 18,558 16,013 14,737 12,567 10,687 10,510 9,344 8,882 8,913 8,229 7,693 TIM 7,591 8,745 6,229 7,166 7,648 6,533 4Q11 1Q12 2Q12 3Q12 4Q12 Source: SINDEC data base. Represents 45% of total Procons (12/31/12) Source: SINDEC published in Folha de São Paulo newspaper P1 TIM P3 P4 24
    • Network and Quality Approach 3G Coverage Anatel Plan: Network Development Anatel Plan: Quality Targets (# Cities, % Urban Population Covered) (Units TRX, Km Fiber) (Preliminary Results)% Urban Pop 80% TRX (000) SMP5 – Call CompletionCovered 72% 54% 66%  241 271 97%  95% 95% 95% 205 205 # cities 712 2012a Anatel 2013e 2014e 2012a Anatel 2013e 2014e 488 Plan Plan 210 Data Channel Elements (000) SMP7 – Drop Call 741 2010 2011 2012 2013e 2014e 2015e 406  328 517 1.7%  2.0% 2.0% 2.0% 2012a Anatel 2013e 2014e 2012a Anatel 2013e 2014e Organic Capex (ex- 4G license) Plan Plan (Capex/Sales, Mix of Investments) FTTS (Km of Fiber 000) 53 SMP8 – Data Connection Rate  47As % of Net Revs. 39  38 99% 95% 98% 98% 18.0% 18.0% 19.6% 10.7 2012a Anatel 2013e 2014e 2012a Anatel 2013e 2014e 3.4 3.0 Plan Plan 2.8 FTTS (#Sites 000) 3.3 SMP9 – Data Connection Drop Rate Infra 2.7Invest. 2.3 2.7 3.1 1.3  1.3 3%  5% 5% 5% OtherInvest. 0.5 0.3 0.2 2012a Anatel 2013e 2014e 2012a Anatel 2013e 2014e 2010 2011 2012 2013e 2014e 2015e Plan Plan 25
    • Business Outlook
    • Brazil: Leveraging on Pure Mobile Competitive Advantage Voice FMS: Mobile is more convenient than Fixed… Data Going Mobile: Internet has a great potential… R$/minute, voice Mln Households; Fixed BB by speed % of connections 68 Mln  Possess < 2 Mbps 38% 66% Internet connection 25.7 Mln 50% mobile 27% Other discount 3.2 Mln  Does NOT 28% 25% Lack of Possess 62% 2.9 Mln Coverage Internet connection 41.9 Mln Intention 2006 2007 2008 2009 2010 2011 2012 48% Too to buy 5.6 Mln Expensive over next 12 months Total Households Households which does NOT possess Voice FMS: …TIM, with no legacies, can only gain on the trend Data Going Mobile …Mobile has greater price efficiency R$ billion, Net Revenue per Group (9M12) Willingness to pay, % of households Willingness to pay (% of Households) Total 25.0 22.8 20.8 13.7 3.1 > R$ 250 1% FMS R$ 250 2% R$ 200 3% UBB Fixed + Data + Focus Live TIM 9.4 R$ 150 6% Pay TV Approach 13.7 0.7 R$ 100 13% 14.1 R$ 80 20% R$ 70 26% Mobile 15.6 13.0 R$ 50 41% 9.1 6.6 R$ 40 50% 3.1 R$ 30 62% R$ 20 68% Mobile Vivo Claro Oi TIM GVT R$ 10 73% A pure mobile approach is the most suitable strategy to capture both opportunitiesSource: Company estimates; CETIC dec’11; 28
    • TIM Fiber: Plan for 2013/2015 Coverage (addressable) Thousands of Households 4x >2000 Geographic Expansion Geographic expansion for low-middle class and targeting high ~500 income neighborhood 2012 2013 2014 2015 • 2012: priority coverage in areas with high ‘A/B classes’ concentration Efficient approach MSAN port occupancy (%), Capex (R$) • 2013: chess board strategy and entering in class C Port Occupancy (%) 80 • 2014: additional coverage in Rio de Janeiro and São 60 Paulo metropolitan regions, focusing class C 40 concentration areas 20 0 2012 2013 2014 2015Coverage Capex Installation Capex Total Capexper Home Passed per Sub per Sub ~R$2k ~R$800 ~R$5k ~R$300~R$80 ~R$700 TIM Int. Bench.* TIM Int. Bench.* TIM Int. Bench.* Fiber Fiber Fiber 29
    • Business Drivers of Growth CAGR 12-15 4 Ways of Growth Revenue Growth (Total Revenues,R$ billion) High Single Digit growth 18.8 17.1 14.5 Customer MoU VAS HH ready Base Revenues to sell >90 Mln >200 min >26% ~2Mln Community FMS Internet for Tim Fiber 2010 2011 2012 2013e 2014e 2015e Expansion (Voice) everybody Ultra BB Mobile Customer Base FMS – Voice (MOU) Internet for All (Mobile Data) Million of lines Minutes of usage per line Data as % of Gross Mobile Serv. Revs. 250 >200 25% >26% > 90 200 19% 150 20% 70.3 129 15% 64.1 150 116 15% 13% 51.0 100 Double digit 10% Double digit growth growth 50 5% 0 0% 2010 2011 2012 2013e 2014e 2015e 2010 2011 2012 2013e 2014e 2015e 2010 2011 2012 2013e 2014e 2015e 30
    • 2013-2015 Guidance 2013 -2015 R$ billion 2011 2012 CAGR Guidance Total Net High Single Digit Revenues 17.1 18.8 Growth Organic EBITDA High Single Digit 4.6 5.1 Growth Organic CapEx 3.0 3.4 10.7 31
    • Appendix
    • Historical Data: Financials (R$ Thousand) 33
    • Historical Data: Operational 34
    • Historical Data: Financials (US$ Thousand) 35
    • Regulatory Update PGMC • Access to fixed operators networks: • MTR (VU-M) billing system: Unbundling of copper networks (Backbone, Backhaul and Last Mile at Full billing between PMS* players (i.e. TIM, Claro, Oi and Vivo). regulated prices (wholesale vs. retail prices cross check). Partial bill and keep between non-PMS players (Nextel, CTBC and No unbundling of fiber networks: exclusive use of fiber networks Sercomtel) and PMS players was defined as follows: (including dark fiber) for 9 consecutive years (Regulatory Grace Period). 2013/2014: 80/20 2015: 60/40 • Infrastructure sharing: 2016: Full Billing Sharing of the passive infrastructure (duct, conduits and towers). • MTR cut path: • National Roaming: 2013: 9.5% (~R$ 0.33/min.) Charged at the lowest tariff in the market for non-PMS players (Nextel, 2014: 25% (~R$ 0.25/min.) CTBC and Sercomtel). 2015: 33% (~R$ 0.17/min.) 2016: Cost Model 4G QUALITY • 2.5 GHz: • Improvement Plan: Contract is signed, 10% paid in 4Q12, 90% to be paid in 2Q13 Focus on the improvement of customer care and network. (License value: R$ 382 mln). Suppliers are defined: Huawei, Nokia-Siemens and Ericsson. • Anatel quarterly assessment: Based on follow-up monthly meetings • Future of 700 MHz Auction : Ongoing discussion among Anatel, mobile carriers and • Indication of the integrality of the new quality rules broadcasters on digital dividend. New broadband indicators start to be informed of November/ 2012.*PMS as Significant Market Power. A player which has the power to influence a specific market. 37
    • Taxation Over Telecom in BrazilTax Composition Telecom Tax Aliquots in Brazil% of Gross Revenues % of Net Revenues 30%-40%In 2011, TIM paid R$7.3 25%-35%bln of taxes, fees and 1.5%contributions (~43% oftotal net revenues) LatAm Average 20% Mexico 15% 0.65% 3% Nicaragua Cofins ICMS Total 15% Venezuela PIS/ Fust/ PASEP FUNTEL 14% Colombia 20%Tax Relief - 1º Step: M2M Fistel and Smartphones (MP 563/2012) Ecuador 27% Tax reduction Reduction in the Increase of Peru Brazil price to Penetration 19% 40% consumer Bolivia 13% Chile Social 19% Impacts Argentina Possibility of Better 25% higher Quality investment in network Paraguay 10% Economic Impact Source: UIT, Deloitte and Acel 38
    • Shareholders Structure and Stock performance Telecom Italia 100% Stock Performance (base 100)* Telecom Italia International N.V. 140 100% 120 TIM Brasil Serv. e Part. S.A. Minorities 100ON: 67% (1,611,969,946) ON: 33% (805,662,701) 80 60 40 TIM Participações S.A. 20 0 100% 100% TIM Celular S.A. Intelig TIMP3 Ibovespa TSU *Last price as of 02/01/2012 39
    • Safe Harbor and IR Contacts Safe Harbor Statements Investor Relations Team Avenida das Américas, 3434 - Bloco 01 Statements in this presentation, as well as oral 6 andar – Barra da Tijuca 22640-102 Rio de Janeiro, RJ statements made by the management of TIM E-mail: ri@timbrasil.com.br Participações S.A. (the “Company”, or “TIM”), that Rogério Tostes are not historical fact constitute “forward looking E-mail: rtostes@timbrasil.com.br statements” that involve factors that could cause Phone: +55 21 4109-3742 the actual results of the Company to differ Vicente Ferreira E-mail: vdferreira@timbrasil.com.br materially from historical results or from any Phone: +55 21 4109-3360 results expressed or implied by such forward Leonardo Wanderley looking statements. The Company cautions users E-mail: lwanderley@timbrasil.com.br of this presentation not to place undue reliance on Phone: +55 21 4109-4017 forward looking statements, which may be based Gustavo Valente E-mail: gvalente@timbrasil.com.br on assumptions and anticipated events that do Phone: +55 21 4109-3446 not materialize. Luiza Chaves E-mail: luchaves@timbrasil.com.br Phone: +55 21 4109-3751 Visit our Website www.tim.com.br/ir 40