15th Years After…
Building a Solid Organization
→

Start up (privatization process);
→

→

→

Launched national coverage;
→

Acquired fixed ...
Backed by High Level of Investments
Capex

FIBER INFRASTRUCTURE
FROM 0 TO 45.000 KM
OF WHICH ~10k KM BACKHAUL

(R$ Bln)
19...
Resulting in Outstanding Market Position
Mobile is more convenient than Fixed…

Exploring an untapped market

Serving an u...
Pure Mobile Paying Off: Strategic Check
Users’ Preference for Mobile

Low Fixed Broadband Quality

Entering in Data World ...
Looking Ahead
Data Wave Opportunities
61.3 Mln
Brazil`s Internet average
speed according to Akamai

60%
36.8 mln

R$ 80
R$ 70

5%
12%

1...
...Concentrating in the Mobile Segment
Market Transformation
(Total Revenues - R$ Bln)

CAGR ’13-’16
118

120

112
104
Mob...
Keeping Innovative Approach
Liberty Controle Express
 Pushing on Postpaid migration
 Payment via credit card

 TIM SIM ...
And Resulting in Solid Growth

Smart/Web phone Penetration

Voice MOU

(% over total base of lines)

Innovative
Offers Dri...
2014 - 2016 Guidance
Guidance
R$ billion
18,8

2013-2016 CAGR:
Mid Single Digit Growth

Total Net Revenues
2012

2013e

20...
Appendix
Infrastructure Needed in the Data Arena
Backhauling
Evolution

Increased Coverage and Access Capacity

Fiber to the site /...
Where We Are: TIM 2013 Year-to-Date Results

Financial

9M13

YoY

R$ Million

Total Revenues

14,738

7.3%

− Service

12...
Nyse anniversary
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Nyse anniversary

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Nyse anniversary

  1. 1. 15th Years After…
  2. 2. Building a Solid Organization → Start up (privatization process); → → → Launched national coverage; → Acquired fixed license; → 1998 2003 2004 1998 Public offering R$1.7 bi; → Intelig acquisition (~R$0.8bln) Organic Growth Gross Revenues (R$ Bln) Novo Mercado migration; → ISE adherence; → First operator to launch data services: SMS and MMS. Long distance leadership; → 3G launch; → Pioneer on GSM technology; → 2009 Atimus acquisition (~R$1.6bln). 2010 2013 Growth via Acquisitions 27.8 2012 Customer base EoP (Million) 1998 70.3 2012 → Leadership on prepaid and advancing on postpaid. Accessing Capital Market 15,000 km fiber optical backbone 5,500 km fiber optical backhauling → >400,000 points of sale. → >11,800 employees. → Consolidated 2nd player in value and volume. → >23,000 indirect jobs. → Building a robust fixed infrastructure. → Leadership in market net adds. → Recognized as the market innovator. 3
  3. 3. Backed by High Level of Investments Capex FIBER INFRASTRUCTURE FROM 0 TO 45.000 KM OF WHICH ~10k KM BACKHAUL (R$ Bln) 19,4% 19,6% Organic as % Net Rev. 17,7% 18,0% 17,1% 4.63 5,00 4,50 4,00 Acquisitions/ Licenses 3.54 1,60 3,50 3,00 3.76 0,38 0,87 2.77 0,12 2,50 2,00 1,50 Organic 2,67 2,84 3,03 3,39 2,65 + CELL SITES MORE THAN 13.6K 1,00 0,50 - 2009 2010 2011 2012 9M13 Focus on Infrastructure (% of Organic Capex) 7% Commercial and Others 33% Infrastructure 67% 2009 19% 7% 11% + FIBER TO THE SITE MORE THAN 2.800 sites 81% 89% 93% 93% 2010 2011 2012 9M13 4
  4. 4. Resulting in Outstanding Market Position Mobile is more convenient than Fixed… Exploring an untapped market Serving an unsatisfied demand (R$/minute) (Market Share of LD minutes) (% of users using service in last 3 months) 94,1% 93,2% 73,2% 51,8% 50% discount 2006 2007 2008 2009 2010 Mobile 2011 5,9% 2012 26,8% 48,3% 6,8% 53,5% 46,5% 50,1% TIM 64 24 2011 49 2012 5 2010 dez/07 dez/08 dez/09 dez/10 dez/11 dez/12 Fixed 57 18 49,9% Fixed Operators Internet SMS Customer Base Voices Services Data Services (Millions of line; Source: Anatel) (Minutes; Source: TIM) (% of data users over CB; Mln of users; Source: TIM) 70.3 69.4 51.0 Post Paid 41.1 11,4 11,9 11,4 >50% 72.9 11,9 >170 129 136 145 148 27% 150 10,7 4% 59,6 60,3 60,8 61,0 32% 34% XX% 22,1 23,1 24,5 21,3 5% 2012 1Q13 2Q13 3Q13 2016e 17,5 83 43,5 1,6 2009 29% 31% 116 10,3 34,6 72.2 10,9 54,8 Pre Paid 71.2 2010 2011 2012 1Q13 Sources: Company estimates, Anatel, CETIC 13 2Q13 3Q13 2009 2010 2011 2012 1Q13 2Q13 3Q13 2016e 2,5 2009 2010 2011 5
  5. 5. Pure Mobile Paying Off: Strategic Check Users’ Preference for Mobile Low Fixed Broadband Quality Entering in Data World Via Mobile (%Households w/ mobile phones only) ( Brazil’s Average Speed; Source: Akamai) (Mln users; Source: Anatel) 77,9 +18x 48,9% 56,3% 2Q13 52,5 2.4 Mbps 33,2 Mobile 11,4 2009 ANATEL: >50% of fixed broadband connections are below 2Mbps 2012 14,6 Fixed 19 20,2 13,8 4,1 2009 2010 16,3 +77% 2011 2012 Net Revenues EBITDA (% YoY) Aug/13 (% YoY; Not including assets sales; Mobile as TIM) Fixed Incumbents -2,6% -7,0% -6,1% 3Q11 3Q12 3Q13 7,1% 6,9% 3Q12 3Q13 Fixed Incumbents 3Q11 3Q11 -4,3% -14,1% 3Q12 3Q13 3,9% 4,2% 3Q12 3Q13 11,7% 11,6% Mobile -6,2% Mobile 3Q11 6
  6. 6. Looking Ahead
  7. 7. Data Wave Opportunities 61.3 Mln Brazil`s Internet average speed according to Akamai 60% 36.8 mln R$ 80 R$ 70 5% 12% 18% 24% R$ 50 R$ 40 R$ 30 R$ 20 R$ 10 44% 16.2 mln Too Expensive Total Households R$ 100 24% 8.8 mln Lack of (60%) coverage 2% R$ 150 32% 11.8 mln Other Does NOT Possess Internet connection R$ 200 53% of active connections are below 2Mbps 1% ADSL VDSL (40%) 1% R$ 250 2.4 Mbps 2Q13 CABLE FTTH > R$ 250 40% 24.5 mln 39% 48% 59% 65% 71% MBB Possess Internet connection Willingness to pay (% of Households) Households which does NOT possess % of population who used the Internet in the last 3 months per social class 94% Low usage not only in households 47% 14% A Source: CETIC 13 80% B C 68 million people don’t use the Internet in class C, D, E. DE 8
  8. 8. ...Concentrating in the Mobile Segment Market Transformation (Total Revenues - R$ Bln) CAGR ’13-’16 118 120 112 104 Mobile: +3% Mobile (45%) Data (55%) (50%) (56%) (57%) (50%) (44%) (43%) Data: +18% Fixed: -2% Data: +6% 2009 2011 2013 2016 Data Services Revenues Growth 2016 vs. 2013  >R$10 bln in Mobile (+62%)  >R$4 bln in Fixed (+18%) 9
  9. 9. Keeping Innovative Approach Liberty Controle Express  Pushing on Postpaid migration  Payment via credit card  TIM SIM blister for each team.  Increase Stickiness ~7x jan/13 Young Chip Torcedor  Young segment positioning  Member get member through social network since 2010. 14 Teams alread sponsored sep/13 sep/12 VOICE Nonstop Innovation +56% sep/13 DATA Recarga Troco International LD Infinity Web + SMS TIM Music  Talk unlimited on-net for R$2 for 2 days.  Capture extra “charge”.  Leveraging on micro recharge on physical PoS.  Up selling approach, targeting only customer base.      Internet + unlimited SMS on/off-net.  Pay per day.  Combining Web and SMS offers.  Cross selling WEB and SMS .     US:R$0,20/min. + 8 countries: R$0,50/min FMS initiative. Capturing the unexplored mobile international calls market.  Market attended Today through fixed carries. Unlimited download. Pay R$0.50/day. Over the top service. Increase customer stickiness.  Network friendly.  13 million songs already downloaded. 10
  10. 10. And Resulting in Solid Growth Smart/Web phone Penetration Voice MOU (% over total base of lines) Innovative Offers Driving Growth and Differentiation (Minutes) >170 >75% 150 136 52% 43% 2012 Jul 13 2012 2016e 3Q13 2016e Data Users VAS Revenue Growth (% of Data Users in CB; million users) (% of Mobile Services Gross Revenues; R$ Million) >50% 34% 29% VAS/Revs. >40% 23% 21% XX% +15% 21.3 2012 3Q13 +XX% +XX% 24.5 VAS Gross Revs. 2016e 2012 2013e 2016e 11
  11. 11. 2014 - 2016 Guidance Guidance R$ billion 18,8 2013-2016 CAGR: Mid Single Digit Growth Total Net Revenues 2012 2013e 2014e 2015e 2016e R$ billion 5,0 2013-2016 CAGR: Mid Single Digit Growth EBITDA 2012 2013e 2014e 2015e 2016e R$ billion 3.8 CAPEX Infrastructure Total CAPEX 2014-2016: ~R$11 billion* 3,2 Others/Licenses 0,5 2012 *Does not consider 4G licenses (700Mhz). 2013e 2014e 2015e 2016e 12
  12. 12. Appendix
  13. 13. Infrastructure Needed in the Data Arena Backhauling Evolution Increased Coverage and Access Capacity Fiber to the site / Mobile Broadband Project Key to Data Growth POP MW POP MW BSC-RNC Site  LTE Ready. 82% urban population #NodeB / eNodeB (3G + 4G)  Targeting 38 cities in 2013,+100 cities till 2016.  From 2-8 to +100 Mbps. # new elements 95% urban population # BTS (2G) 2013 2014 2015 2016 POP MW Capex Evolution Towards Data  Macro coverage fine tuning. POP MW POP MW % of total Capex  Focus on IP infrastructure, caching, peering. Fiber base Infrastructure 2013 INTELIG 2009 ACQUISITION FIBER TO THE 2013 AMAZON 2016 MASSIVE LD BACKBONE 2014 LTE* 2015 3G 2016 2G Small Cell Approach # new elements INTELIG 15,000KM 46,000 KM OF FIBER BY YE13 65,000 KM OF FIBER New Sites. Including Small Cell. 2012 2013e  New backbone routes- Increasing resilience. *Includes 2.5GHz RAN Sharing. 2014e 2015e 2016e 14
  14. 14. Where We Are: TIM 2013 Year-to-Date Results Financial 9M13 YoY R$ Million Total Revenues 14,738 7.3% − Service 12,359 2.1% − VAS* 3,899 23.7% − Handset 2,379 45.2% EBITDA 3,708 3.4% CAPEX 2,769 +16.8% Operational 9M13 YoY • Consistent financial and operational results even amidst a different macro scenario • Continuous growth/acceleration on postpaid, improving customer base mix, ARPU evolution. • Maintaining data services at double digit growth, underscored by smartphone sales and innovative offers. • Solid improvement on Network and Quality indicators. • Executing Fiber-to-the-Site (FTTS) project and 3G/4G roll-out, guaranteeing mobile broadband acceleration. Postpaid (mln users) 11.9 16.4% MOU (min) 147 12.7% • Strong efficiency: Industry benchmark for SAC and bad debt. R$ 18.4 -2.0% • Strong savings on leased lines costs, even with traffic double digit growth. ARPU Reported figures for TIM Part. *Gross Mobile Service Revenues 15
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