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Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
Meeting with investors of january 2013 (1)
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Meeting with investors of january 2013 (1)

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  • 1. TIM Brasil - Meeting with Investors TIM BrasilSeptember, 2012 - Meeting with Investors January, 2013
  • 2. 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 3,300 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: Approx. R$3 billion in 2012 (from 2009 to Brazilian Law “Nível” 1 “Nível” 2 2014, TIM expects to invest R$20.5 billion) “Lei das S.A” 2
  • 3. Strategy 3+
  • 4. Macro-Economic Fundamentals Remain Solid Families Income is increasing continually Brazilian families consumption is growing every year Average Real Salary (R$) 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 4.8 1,700 5 4.4 4.1 4.3 1,600 4 3.0 1,500 3 1,400 2 1,300 Lowest 1 1,200 Growth 1,100 - 2006a 2007a 2008a 2009a 2010a 2011a 2012e 2013e 2014e 1,000 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 17.8 9.9 10.0 20 10.0 9.3 Peak 9.0 8.1 15 7.9 8.0 10 6.7 7.0 6.0 6.0 5.5 5 4.8 5.0 4.2 - 4.0 3.0Source: Credit Suisse, BaCen and IBGE 4
  • 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 - 50.00 100.00 4o 150.00 200.00 250.00 300.00 350.00 400.00 450.00 500.00 55% C 67.5 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 4o Above From US$891 From US$558 From zero 246 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 Market* 2006 2007 2008 2009 2010 2011 2012 -15% 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 5
  • 6. Mobile Segment to Support Universalization Customers Growth - Telecom Market Transformation (Mln customers) Total Revenues- R$ Bln +114% 258.9 242.2 202.9 174.0 106 117 126 134 150.6Mobile 121.0 +11% (40%) (44%) Fixed (48%) 39.4 41.2 41.5 42.0 43.0 43.7Fixed (56%) 2007 2008 2009 2010 2011 3Q12 (60%) (56%)Mobile Mobile 64% 79% 90% 105% 124% 132% (52%)Penetration (44%) Customers Growth – Broadband 2009 2011 2014 2016 (Mln customers) 50.8 +3,658% 33.2Mobile 16.3 18.6 11.4 14.6 +86% Mobile Segment as the Growth Driver and 10.0Fixed Sector Universalization 4.1 13.8 1.4 2008 2009 2010 2011 3Q12 6
  • 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$/min) (Fixed - Residential, Mobile, D% yoy, D% yoy growth average) Fixed +18% Mobile (Residential) -6%Mobile 50% mobile discount 1Q11 3Q12 1Q11 3Q12Fixed Revenues 2006 2007 2008 2009 2010 2011 2012 (Fixed, Mobile, D% yoy, D% yoy growth average) Leading Traffic to a Sharp Increase Fixed +9% Mobile -7% (Bln Minutes) 23.8 26.4 20.1 21.8 22.6 18.4 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 1Q11 3Q12 1Q11 3Q12 EBITDA Leadership in LD Market Share (Integrated, Mobile as TIM, D% yoy, D% yoy growth average) (% Minutes) Integrated Mobile88.2% -5% +10% 66.5% 53.3% 49.8% 48.5% 48.3% 49.7% 6.7% 45.8% 47.8% 47.7% 48.1% 28.3% 42.0%jun/09 jun/10 jun/10 dec/10 jun/11 dec/11 mar/12 1Q11 3Q12 1Q11 3Q12** TIM Incumbents* * Telemar, Brasil Telecom, Telesp e Embratel. Source: Companies results and Teleco. **TIM’s Organic EBITDA 7
  • 8. 3Q12 in Few 8+
  • 9. Main Highlights Quarter’s HighlightTotal Net Revenues(R$ Billion) +11.0% Revenue Growth  Solid data growth  MTR cut impact +8.0% 19.1% (Revenues +35%  Provisioning of 8.0% 7.0% YoY) advertisement 4.7 13.7 4.4 12.4  Smart/webphone credit loss (R$16 sales pick-up mln) 1Q12 2Q12 3Q12 3Q11 3Q12 9M11 9M12  Sales resilience in  Provisioning for spite of sales ban administrativeEBITDA procedures  MOU at record established(R$ Billion) level of 139 between 2007/09 3.63 R$ 42mln Organic EBITDA  Live TIM up and (R$26 mln) 1.24 R$ 42mln +7.5% +8.6% Growth running  Intelig fixed 12.6% 6.0% 7.5%  Postpaid human at business +3.8% 1.20 3.58 24% YoY growth performance 1.16 1.1 +7.3% 3.34 1Q12 2Q12 3Q12 3Q11 3Q12 9M11 9M12 Frost Abrasca Sullivan Prize of Institutional Best Value Investor Practices Creation “Best IR Team” Award A tough quarter, but TIM is managing to recover 9
  • 10. Reality Check: Recent Events Overshadowing Fundamentals Sales Ban Drop Call Report Tax Issue ContingencesImpacts: Impacts: Event: Event: Reduction in gross  Damage on image  2006 corporate  Allegation of low adds during the period restructuring (TIM provisioning for Status: Nordeste + TIM Small economic contingencies  Two independent Maxitel) was impacts questioned by Federal Impacts: consultants firms Damage on image concluded that the rate Tax Bureau in 2011  Damage on imageStatus: of dropped calls on Impacts: Status: 3/8/12 showed no Ban lifted on 3rd of anomalies  Damage on image  No impact on financial August Status:  Accrual based on Anatel is measuring the  Under discussion at internal and evolution of the plan. administrative level of independent external tax bureau. opinion expert, following IFRS rules.  There are precedents Back to fundamentals Customer Total Data Users Homes Passed Base Traffic (unique) (households) (users) (minutes)Customer Total Data HP ready Base Traffic Users to sell +17% +28.3% +34% +2X 69.4 Mln 28.7 Bln 20 Mln 440k Community FMS Internet for Tim Fiber Sep11 Sep12 Sep11 Sep12 Sep11 Aug12 Sep11 Aug12 Expansion (Voice) everybody Fixed BB 10
  • 11. Sales Growth Rebound Gross Adds - Customer Base (Weekly; ‘000 lines) Back on track  Gross adds come back  Prepaid resilient growth Sales Ban Effect  Postpaid acceleration on S14 S16 S18 S20 S22 S24 S26 S28 S30 S32 S34 S36 S38 S40 human lines (ex-M2M) Trendline Sales Force Focus on Efficiency  Strong sales channel force (Points of sale EoP) (R$; months) SAC/ +12.6% 2.3 ARPUMass QoQ 1.8  Efficient growth approach ~300k 55 1.7Channel 36 34 +16.2% QoQ SACOwnStores 115 -34% -7% 3Q10 3Q11 3Q12 11
  • 12. Operation Remains Solid Customer Base Total Market Share Growth (Million lines) (% of total lines) +1.7 +0.5 D YoY +3.1 D% +4.9 3Q 30.1% 30.2% 30.1% 29.7% +3.7 67.2 68.9 69.4 29.5% 29.5% 29.5% 29.5% 29.8% 29.6% 29.7% Vivo +2.7 64.1 59.2 9.7 10.0 10.3 +1.6 +19% 640 290 55.5 9.3 52.8 8.7 bps 26.5% 26.8% 26.9% bps 7.7 8.0 Post 25.4% 25.3% 25.5% 25.4% 25.4% 25.5% 26.0% 26.8% 57.6 58.9 59.1 +8.6 +17% 50.6 54.8 Paid 45.1 47.5 25.1% 25.1% 25.6% 25.3% 24.9% 24.6% 24.6% Claro 24.5% 24.5% 24.0% Largest 23.7% Prepaid 20.4% 20.1% Base 19.5% 19.4% 19.7% 19.1% 18.8% 18.8% 1st in yearly 18.5% 18.7% 18.7% Oi growth for 9 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 consecutive Net Adds (000) quarters Post Paid 223 317 632 655 348 348 261 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Pre Paid 1,598 2,359 3,053 4,219 2,786 1,308 274 Source: Anatel Handset Sales Market Share Postpaid Base Analysis (ex-M2M) (% of handset revenues 1H12) (Million lines) -280k in 3Q12 (M2M D% YoY disconnection effect) 10.4 10.3 10.4 10.5 10.2 +15% Operators 7%  Leading the handset market. 9.8 9.9 10.0 9.5 9.7 9.3 9.4 57% Total 9.1 26% 31%  Even being the only player with “No 9.0 9.2 9.3 +22% postpaid 8.6 8.9 43% Subsidies” approach. base Open Market 37%  Driving data usage growth Human 541k Net Adds in 3Q12 lines postpaid P1 TIM P3 P4 base May 12 Nov 12 Nov 11 Feb 11 Sep 12Source: Company estimates Source: Anatel 12
  • 13. Consumers Complains: Good position at Anatel and Procons IDA – Index of Attendance (last reported by Anatel) (Points) 98.55 99.15 99.40 100.00 99.90 98.65 98.10 97.40 97.90 97.70 96.95 96.75 95.20 95.05 94.50 93.70 94.00 98.00 94.00 93.95 97.00 96.70 TIM 91.05 95.30 95.10 90.85 90.30 93.80 89.85 91.00 92.65 87.90 92.80 88.10 91.35 86.35 86.55 86.65 88.80 88.30 89.35 87.20 86.40 85.80 86.20 84.80 85.00 83.90 83.30 84.85 74.84 77.25 jul/11 aug/11 sep/11 oct/11 nov/11 dec/11 jan/12 feb/12 mar/12 apr/12 may/12 jun/12 jul/12 Source: Anatel Volume of claims at Consumer’s Protection Agency (Procon) Procon Demands (# Quarterly claims) (% of total) 21,179 19,245 TIM 18,560 16,013 15% 13,696 24% 11,788 12,348 10,687 10,508 18% 9,664 9,592 9,344 8,601 8,811 8,740 7,693 7,591 8,229 7,112 7,376 TIM 43% 6,032 7,416 6,286 7,166 7,422 6,673 6,229 6,533 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Source: SINDEC data base. Represents 45% of total Procons (17/10/12) Source: SINDEC P1 TIM P3 P4 13
  • 14. Customer Sentiment • Reinforcing position of Preference and Rejection of customers transparency Transparency • Offer w/ no Tricks (%) • Clear communicationPreference ∆ Pref x Rej 32 31 30 • Anatel plan on track28 28 29 28 28 25 27 Player 1: 19 Quality • Network development 23 22 21 22 • Caring effectiveness 21Rejection 14 Player 3: 2 Relevant • Unlimited 15 15 15 15 Player 4: -8 • Convenient 1311 11 11 10 11 10 9 9 9 Innovation • InnovativeMay Oct May Nov Jun Nov Jul Nov Jun Nov May Nov May Aug Source: Ipsos06 06 07 07 08 08 09 09 10 10 11 11 12 12 Research TIM Quality Portal www.tim.com.br/qualidade  Anatel Plan Disclosure  Real coverage  Monitoring: footprint • Network Improvement  New and planned • Quality KPI’s antennas • Network Incidents and Alerts  Wi-Fi hotspots 14
  • 15. Internet Continuous Take-Up: Handset + Offer Products Net Revenues Smart/Web phone Penetration (R$ Million) (% over total base of lines) 622 39.0% +28% 35.2% 485 31.1% 26.6% 19.5% 15.4% 12.6% VAS Gross Revenues (R$ Billion; % of Gross Mobile Services Revenues) 3Q11 3Q12% sales of 72% 71% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12web/smart 1.12 +35%phones 0.83 SMS unique users growth Data users (Daily unique users) (Million monthly unique users) ~20 +34% 3Q11 3Q12 ~15 +3X 15.7% 19.4% + 370 bps 3Q11 3Q12 3G coverage 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 (% of urban 59% 69% pop.) 15
  • 16. Consistent EBITDA and Net Income Growth EBITDA Evolution (R$ Million) 16 mln of provision on advertising credit +7.5% 26 mln of provision on Anatel administrative procedures established between 2007/09 +45 +73 -155 +214 -89 1,244 -42 1,202 1,157 26.3% 26.5% EBITDA Margin 25.5% 32.0% 32.7% Service EBITDA Margin 31.0% EBITDA Services Handset Marketing Network Pers./G&A Adj. EBITDA Non- Rep. EBITDA 3Q11 Revenues Margin and Sales and ITX and others 3Q12 recurring 3Q12 ΔYoY +5.5% -39.6% -7.2% +13.0% +21.9% +3.8% From EBITDA to Net Income (R$ Million) 1,202 16 + 26 = 42.1 mln – provisions 9.1 mln – monetary adjustments for the administrative procedures -657 545 -29 -198 369 318 EBITDA Depreciation/ EBIT Net Financial Taxes and Net Income Adj. Net 3Q12 Amortization Result Others 3Q12 Income 3Q12 ΔYoY +3.8% +1.9% +6.3% -52.9% +47% +0.4% +16.6% 16
  • 17. Analysis on Efficiency & Cash Position Handset Capitalized Subsidy Bad Debt Trend Leased Lines, Traffic and ITX Costs (R$ Million) (as % of Gross Revenues) (Compound Growth Rate - Quarterly)Efficiency Approach Remains Traffic 1.34% 64 1.14% 0.95% 6.4% Leased Lines costs 1.2% ITX costs 0 0 0.6% (ex-SMS) 3Q10 3Q11 3Q12 3Q10 3Q11 3Q12 3Q11 4Q11 1Q12 2Q12 3Q12 Capex OFCF Net Debt (R$ Million) (R$ Million) (R$ Million – EBITDA trailing 12m) % for InfrastructureImproving Cash DOFCF R$144mln YoY 91% 92% DEBITDA-CAPEX= R$126mln Generation 77% DWC R$17mln 2,079 853 +21% 827 1,458 1,550 772 684 604 526 3Q10 3Q11 3Q12 3Q10 3Q11 3Q12 3Q10 3Q11 3Q12 OFCF/ Net DEBT/ 16.4% 15.6% 17.5% 0.5x 0.3x 0.3x Net Rev. EBITDA 17
  • 18. TIM Fiber Update 18+
  • 19. Live TIM: Up & Running MSANs Homes Passed Ready to Sell Optical Backbone 440kNetwork 2 network 220kConstruction 1 3 2Q12 3Q12 Buildings authorized Building’s connected MSANs installed 5,700 7,101 2,100 3,026 214 405 2Q12 3Q12 2Q12 3Q12 2Q12 3Q12 Market Demand Quality of Service (Units) (Mbps) Download Upload 35 37 20 21Market Average 1.8 0.4Demand and SpeedQuality of Market Live TIM Live TIMService Average (nominal) (delivered) Blogger Richardmax: “Live Tim, so far, is the only one to fulfill its promises, moreover above Website the promises, because the 35Mb hired tests 120.5k Registration are always above 37, and uploads are always spiking 20. “ Specialist Blogger @ http://richardmax.rmax.com.br/ 19
  • 20. Live TIM: Speeding-Up with the New Offer New Offer: Shaking the Broadband Market Sales (Average weekly sales) After Before Promo Promo ~5X Sep/12 Oct/12 Business Model Proving Itself Coverage Capex MSANs per Home Passed Network Roll Out ~R$2k (‘000 Households) Optical Total Capex Network ~R$80 ~590 per Sub Addressable TIM ~R$5k Market Int. Bench.* Fiber (Homes passed) ~6X Installation Capex ~R$700 per Sub >100 ~R$800 TIM Int. Bench.* Fiber ~R$300 May/12 Dec/12 TIM Int. Bench.**International Benchmarking Fiber 20
  • 21. Network & Quality 21+
  • 22. The Mobile Operator which Invests the Most Capex (R$ Bln) 6 20.3% 19.6% 5.5 17.6% 17.3% % Net Rev. 5 4.60 4.5 4 3.54 1.60 3.5 0.87Acquisitions 3 2.5 2 1.5 2.67 2.83 3.00 2.37 Infrastructure Capex Organic 1 2012-2014 (Anatel Plan): 0.5 0 2009 2010 2011 9M12 TIM: R$8.2 billion Claro: R$6.3 billion Focus on Infrastructure Vivo: R$6.2 billion (% of Organic Capex) Oi: R$5.5 billion Commercial 6% and Others 12% Total Capex: R$26.2 19% 33% billion 88% 94% 81%Infrastructure 67% 2009 2010 2011 9M12Source: Anatel and TIM 22
  • 23. Mobile Operator with Robust Fixed Infrastructure Backhaul Backbone Wi-Fi na RocinhaMetro Network (FTTS – focus on the Long Distance Network:Confederation Cup and 2014 WorldCup): 2011 21,364 KM 2013 36,540 KM Construction of 42 metropolitan ringsby YE2014 2012 27,973 KM 2014 41,308 KMWi-Fi Project: Wi-Fi em Paraisópolis Optical Fiber at Amazonas, ParáAirports; and Amapá, through the LT AmazonasCommunities MacapáStadiums Boa Vista Belém M São LuisParks / Leisure Areas M Fortaleza M M Tucuruí Natal Manaus M M Teresina João Pessoa 3G M M Recife 4G MMaceió P. Velho Petrolina Palmas M Rio Branco M Aracaju 2G Cuiabá M Brasília M Salvador M Goiânia M M BHE M M M M M M Vitoria M Campo Grande M Campos Maringa M M M M M M M Rio de Janeiro M São Paulo M M M Curitiba M Metropolitan M Florianópolis M Optical Ring M Porto Alegre 23
  • 24. Business Outlook 24+
  • 25. Conclusions & Outlook Quality Improvement “Commitment with Anatel” Voice Capacity Data Capacity FTTS (Fiber to the Site) (‘000 TRXs) (‘000 channel elements) (‘000 Km Fiber) 95% 115% 96% Done in Done in Done in 328 205 3Q12 3Q12 3Q12 157 +136% 29 38 +30% 139 +31% 2011 3Q12 2012 2011 3Q12 2012 2011 3Q12 2012 Business Fundamentals Remain Solid Customer Base Growth MOU (FMS on Play) Data Revenues Accelerating TIM Fiber Network Roll-Out (Millions) (Minutes) (R$ Billion; % Gross Mob. Serv. Rev.) (‘000 Households) 19% ~590 16% 13% 139 1.1 69.4 130 0.8 59.2 0.6 46.9 123 ~6X Addressable >100 Market (Homes passed) 3Q10 3Q11 3Q12 3Q10 3Q11 3Q12 3Q10 3Q11 3Q12 May/12 Dec/12 Innovative approach 2012 guidance Better regulatory Tax easingOutlook unchanged commitment environment policy 25
  • 26. Appendix 26+
  • 27. 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. 27
  • 28. Historical Data: Financials (R$ Thousand) Description 3Q10 3Q11 4Q11 1Q12 2Q12 3Q12 3Q12 %YoYNet Revenues 3,676,781 4,371,388 4,710,566 4,468,319 4,547,332 4,722,425 8.0% Net Revenues on Services 3,418,253 3,886,617 4,259,425 4,015,418 3,984,174 4,100,249 5.5% Net Revenues on Products 258,528 484,771 451,141 452,900 563,158 622,176 28.3%Operating Expenses (2,641,685) (3,213,950) (3,393,208) (3,299,651) (3,332,903) (3,520,489) 9.5% Personnel expenses (139,797) (158,351) (164,652) (175,997) (186,441) (170,138) 7.4% Selling & marketing expenses (935,324) (1,010,953) (1,079,699) (1,017,959) (922,302) (938,184) -7.2% Network & interconnection (1,075,302) (1,197,827) (1,280,617) (1,298,885) (1,309,694) (1,353,194) 13.0% General & administrative (122,653) (110,262) (133,745) (131,808) (126,310) (152,854) 38.6% Cost Of Goods Sold (274,594) (597,708) (544,674) (533,460) (631,464) (690,398) 15.5% Bad Debt (69,397) (60,825) (62,451) (56,640) (62,050) (80,009) 31.5% Other operational revenues (expenses) (24,618) (78,024) (127,370) (84,902) (94,641) (135,713) 73.9%EBITDA 1,035,096 1,157,438 1,317,358 1,168,652 1,214,403 1,201,936 3.8% EBITDA Margin 28.2% 26.5% 28.0% 26.2% 26.7% 25.5% 96 BpsAdjusted EBITDA 1,035,096 1,157,438 1,317,358 1,168,652 1,214,403 1,244,066 7.5%Adjusted EBITDA Margin 28.2% 26.5% 28.0% 26.2% 26.7% 26.3% 99 BpsDepreciation & amortization (755,545) (644,560) (641,920) (656,629) (664,233) (656,887) 1.9%EBIT 279,551 512,878 675,438 512,024 550,171 545,048 6.3%Net Financial Results (58,840) (61,450) (100,817) (42,178) (63,588) (28,930) -52.9%Income before taxes 220,711 451,429 574,621 469,845 486,583 516,118 14.3% Income tax and social contribution (74,188) (134,796) (173,463) (193,407) (139,796) (198,088) 47.0%Net Income 146,523 316,632 401,158 276,439 346,787 318,030 0.4%Adjusted Net Income 146,523 316,632 401,158 276,439 346,787 369,285 16.6% Description 2010 2011 YTD 2012Net Revenues 14,457,450 17,085,976 13,738,075 Net Revenues on Services 13,571,626 15,353,228 12,099,841 Net Revenues on Products 885,824 1,732,748 1,638,234Operating Expenses (10,263,854) (12,427,669) (10,153,043) Personnel expenses (586,722) (632,828) (532,576) Selling & marketing expenses (3,483,164) (3,933,753) (2,878,445) Network & interconnection (4,227,042) (4,722,261) (3,961,773) General & administrative (484,609) (502,640) (410,972) Cost Of Goods Sold (1,026,091) (2,062,552) (1,855,321) Bad Debt (310,498) (231,529) (198,699) Other operational revenues (expenses) (145,728) (342,105) (315,256)EBITDA 4,193,596 4,657,881 3,584,992 EBITDA Margin 29.0% 27.3% 26.1%Adjusted EBITDA 4,193,596 4,658,307 3,627,122 Adjusted EBITDA Margin 29.0% 27.3% 26.4%Depreciation & amortization (2,993,461) (2,590,865) (1,977,749)EBIT 1,200,135 2,067,442 1,607,243Net Financial Results (245,457) (238,857) (134,696)Income before taxes 954,678 1,828,584 1,472,547 Income tax and social contribution 1,257,038 (547,357) (531,290)Net Income 2,211,716 1,281,228 941,257Adjusted Net Income 776,716 1,281,228 992,512 28
  • 29. Historical Data: Financials (US$ Thousand) Description 3Q10 3Q11 4Q11 1Q12 2Q12 3Q12 3Q12 %YoYNet Revenues 2,101,289 2,672,520 2,615,277 2,524,263 2,315,258 2,327,699 -12.9% Net Revenues on Services 1,953,540 2,376,148 2,364,807 2,268,409 2,028,529 2,021,026 -14.9% Net Revenues on Products 147,749 296,373 250,470 255,855 286,730 306,673 3.5%Operating Expenses (1,509,729) (1,964,901) (1,883,888) (1,864,054) (1,696,936) (1,735,261) -11.7% Personnel expenses (79,895) (96,811) (91,414) (99,425) (94,926) (83,862) -13.4% Selling & marketing expenses (534,540) (618,063) (599,442) (575,070) (469,587) (462,434) -25.2% Network & interconnection (614,538) (732,311) (710,991) (733,772) (666,826) (666,994) -8.9% General & administrative (70,096) (67,411) (74,255) (74,462) (64,310) (75,342) 11.8% Cost Of Goods Sold (156,931) (365,419) (302,399) (301,365) (321,508) (340,299) -6.9% Bad Debt (39,661) (37,186) (34,672) (31,997) (31,593) (39,437) 6.1% Other operational revenues (expenses) (14,069) (47,701) (70,715) (47,963) (48,186) (66,893) 40.2%EBITDA 591,560 707,619 731,389 660,201 618,309 592,438 -16.3% EBITDA Margin 28.2% 26.5% 28.0% 26.2% 26.7% 25.5% 96 BpsAdjusted EBITDA 591,560 707,619 731,389 660,201 618,309 613,204 -13.3% Adjusted EBITDA Margin 28.2% 26.5% 28.0% 26.2% 26.7% 26.3% 99 BpsDepreciation & amortization (431,796) (394,062) (356,390) (370,946) (338,192) (323,782) -17.8%EBIT 159,764 313,557 374,999 289,255 280,118 268,656 -14.3%Net Financial Results (33,627) (37,568) (55,973) (23,828) (32,375) (14,260) -62.0%Income before taxes 126,137 275,988 319,026 265,427 247,742 254,396 -7.8% Income tax and social contribution (42,399) (82,410) (96,305) (109,260) (71,177) (97,638) 18.5%Net Income 83,738 193,579 222,721 156,167 176,566 156,758 -19.0%Adjusted Net Income 83,738 193,579 222,721 156,167 176,566 182,022 -6.0% Description 2010 2011 YTD 2012Net Revenues 8,231,230 10,201,868 7,167,221 Net Revenues on Services 7,724,407 9,163,550 6,317,964 Net Revenues on Products 506,823 1,038,317 849,257Operating Expenses (5,842,070) (7,422,671) (5,296,251) Personnel expenses (333,456) (378,222) (278,212) Selling & marketing expenses (1,982,451) (2,348,218) (1,507,091) Network & interconnection (2,404,499) (2,819,498) (2,067,592) General & administrative (275,650) (300,371) (214,114) Cost Of Goods Sold (587,945) (1,235,395) (963,172) Bad Debt (175,766) (138,555) (103,026) Other operational revenues (expenses) (82,302) (202,411) (163,043)EBITDA 2,389,160 2,778,941 1,870,948 EBITDA Margin 29.0% 27.2% 26.1%Adjusted EBITDA 2,389,160 2,778,941 1,891,714 Adjusted EBITDA Margin 29.0% 27.2% 26.4%Depreciation & amortization (1,700,012) (1,549,236) (1,032,919)EBIT 689,148 1,229,961 838,029Net Financial Results (139,353) (140,652) (70,463)Income before taxes 549,795 1,089,309 767,566 Income tax and social contribution 745,372 (325,734) (278,075)Net Income 1,295,167 763,575 489,491Adjusted Net Income 449,352 763,575 514,755 29
  • 30. Historical Data: Operational Description 3Q10 3Q11 4Q11 1Q12 2Q12 3Q12 3Q12 %YoYBrazilian Wireless Subscriber Base (000`s) 191,472 227,352 242,232 250,826 256,131 258,861 13.9%Estimated Total Penetration 99.0% 116.5% 123.87% 128.00% 130.44% 131.56% 15 BpsMunicipalities Served (GSM) 3,200 3,259 3,294 3,305 3,312 3,320 1.9%Market Share 24.52% 26.04% 26.46% 26.80% 26.89% 26.81% 3.0%Total Lines (000s) 46,947 59,210 64,083 67,217 68,874 69,408 17.2%Pre-paid Lines (000s) 39,711 50,559 54,778 57,564 58,873 59,146 17.0%Post-paid Lines (000s) 7,236 8,651 9,305 9,653 10,001 10,262 18.6%Gross Additions (000s) 7,463 10,186 11,836 9,880 9,814 8,727 -14.3%Net Additions (000s) 2,522 3,685 4,873 3,134 1,656 534 -85.5%Churn 11.1% 11.6% 11.7% 10.5% 12.1% 11.9% 0.3 bpsTotal ARPU 23.5 21.2 21.9 19.1 18.3 18.9 -10.8%Total MOU 123 130 131 126 127 139 6.5%SAC 55 36 28 32 26 32 -11.1%Handsets Sold (000s) 2,125 3,164 2,847 2,284 2,511 2,512 -20.6%CAPEX (R$ Mln) 526 852 1,150 543 1,057 772 -9.5%CAPEX (US$ Mln) 301 521 639 307 538 380 -27.0%Employees 9,081 10,248 10,562 10,761 10,948 11,333 10.6% 30
  • 31. 2012-14 Drivers of Growth CAGR 11-14 3 Ways of Growth Revenue Growth R$ billion 17.1 Total 13.8 14.5 Double digit Revenue growth 15.3 Fixed 12.8 13.6 0.8 0.6 0.7 Services Revenues 12.2 12.9 14.5 Mobile 90 25% VAS 200 mou mln lines Incidence 2009 2010 2011 2012 2013 2014 Community Expansion FMS (Voice) Internet for All Mobile Customer Base FMS – Voice (MOU) Internet for All (Mobile Data) Million of lines Minutes of usage per line Data as % of Service Revenue 250 ~200 ~25% 200 90 129 116 150 14% 64 83 12% 100 Double digit 11% Double digit 51 Double digit growth growth 41 growth 50 Outgoing Voice Revenues Data Revenues 0 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 31
  • 32. Network Continuous Evolution Network roadmap 2G (TRX Installed) 3G roll out 000 TRX Pop % 2G Managing the growth 271 >80% Speed up the toll out in 3G 157 HSPA mode 64% WiFi >10,000 hot spots 2011 2014 2011 2014 FTTS Deployment in Top 42 cities FTTS Fiber Network FTTH ~1 Mln households by 2015 % of total traffic 000 km Efficiency >50,000 km in fiber optic 50% 53.0 42 Cities 24.1 TIM Fiber TIM Fiber: a “no Capex intensive” 14 Cities 28.9 approach to offer Residential Ultra BB in 2012 2014 2011 Swap + 2014 SP/RJ built out 32
  • 33. Take-aways on main TIM Brasil trends Revenues (New vs Old Plan) R$ Billion MTR glide path (-20% real term) as of feb’12 New impacts approx. 250 bp in Revenues and EBITDA Old Revenues Growth resulting from further CB, voice MOU 17.1 and internet browsing 14.5 For 2012, revenues growth at >10% YoY (vs. 15.5 R$17.1Bln in 2011) 14.5 1yr in advance Network synergies from AES Integration 2010 2011 2012 2013 2014 Continuous efficiency in Go2Market (no subsidy, SAC/bad debt) Ebitda Absorbing MTR cut and TIM Fiber start-up Organic Capex For 2012, Ebitda growth at >10% YoY (vs. R$4.6Bln in 2011) % of Revenues; R$ billion 19.6 20 17.5  Expanding 2G capacity and 3G coverage 15  Accelerate FTTS in Top 42 Cities and Wi-fi 10 offloading 3.0 3.0 3.0 3.0 Capex  Tim Fiber start-up nds 2.8 CAPEX  CAPEX flat at 3 bln/year; R$9bn in 3 Years excluding 4G spectrum license (R$ 382.2 mln) 2010 2011 2012 2013 2014 33
  • 34. 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 PIS/ ICMS Fust/ Total 15% Venezuela 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 34
  • 35. 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 12/31/2012 35
  • 36. 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 36

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