Press Release 2 T07 En


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Press Release 2 T07 En

  1. 1. TIM Participações S.A. 2Q07’s Results July 23rd, 2007 1
  2. 2. Main Messages Market Performance Commercial Strategy Financial Performance 2
  3. 3. 2Q07: TIM Continues to Deliver Market Leading Results Customer Quality Continuous Value Segment Growth Recognized TIM Brand Improving client mix: postpaid lines reach 22.0% Preferred mobile operator in Brazil on total (+1.4pp YoY). Leader in average client satisfaction 29.0% of Market Share in postpaid Reinforcing our leadership in business segment Largest voice & data coverage Confirming our leadership in net service revenue Innovation Profitability Focusing on Customer’s Total Solid Financial Growth Communication Needs Continuous net service revenue growth TIM Web: internet access solution Steady VAS gross revenue increase TIM Mais Completo: convergent solution ARPU Growth QoQ (mobile + fixed + internet) Further SAC reduction Continous VAS innovation Solid YoY & QoQ EBITDA margin expansion Positive net income Overall growth prospects remaining strong 3
  4. 4. Main Messages Market Performance Commercial Strategy Financial Performance 4
  5. 5. Continued Focus on Value Market Combining Growth with an Improved Mix Market Lines (Mln) and Penetration Rate TIM Lines Evolution (Mln) Lines Lines Growth Growth YoY YoY 54.2% 56.4% 51.2% 53.2% +7.2 p.p. 27.5 49.2% 25.4 26.3 102.2 106.7 24.1 +23.0% 95.9 99.9 22.3 91.8 +16.2% +16.9% 20.5% 21.3% 21.6% 22.0% +31.5% 19.5% 19.3% 19.4% 19.6% 19.6% 20.6% 2Q06 3Q06 4Q06 1Q07 2Q07 2Q06 3Q06 4Q06 1Q07 2Q07 Postpaid mix Penetration Rate Postpaid mix Speeding up market growth lead by GSM Attracting the best customer mix: dominant technology TIM: 22.0% of postpaid (+1.4 p.p. YoY) Increased penetration concentrated in lower Competitors: 18.7% of postpaid (-0.4 p.p. YoY) income classes Source: ANATEL and company´s data. 5
  6. 6. Higher Share on Value Market Selective Customers Acquisition Market Share Performance 2Q07 Segmented Approach TIM Share & Positioning VOLUME -6.8 pp -2.6 pp Total lines 25.8% 2nd PLAYER -6.2 mln lines -2.8 mln lines Postpaid lines 29.0% LEADERSHIP* First 31.1% Net service >30% LEADERSHIP** Player 29.1% revenue VALUE 28.4% Market Share per Segment 2Q07 Mkt Share of Net Adds 25.4% 25.8% 29.0% 24.3% Post Total 26.0% 23.9% 24.6% +3.3p.p. 22.8% Third +1.5 pp +1.2 pp 25.7% Player +1.0p.p. 25.0% 41.5% +1.4 mln lines +1.2 mln lines Pre 22.2% 24.0% 2Q06 2Q07 Prepaid Postpaid 2Q06 3Q06 4Q06 1Q07 2Q07 Higher share and growth on high-value Continued focus on value and not on growth customers: “per se” Postpaid mix of net additions in the 2Q07: TIM Sound market share: 31.2% vs competitor's average of 15.5% 25.8% of market share (+1.5 pp Y-o-Y basis) Leadership in net service revenue Source: ANATEL / Company´s data / Competitors press release. * Based on 1Q07 figures 6 ** Based on 1Q07 figures and confirmed in 2Q07 results already released
  7. 7. Main Messages Market Performance Commercial Strategy Financial Performance 7
  8. 8. Leveraging on Leading Brand Power Confirming the Leadership in Customer Satisfaction Average Satisfaction Index* TIM Brand is recognized as reliable and appealing, 8.69 representative of market values and dreams 8.09 8.06 Winner of all recent key independent surveys: • TIM is the first operator choice • Leader in average client satisfaction through the call center 3rd Player 1st Player • Quality standard in the postpaid heavy user call center service Consumer Preference (%) ** Committed to constant improvement of brand 29 25 perception through creation of new customer operations unit 17 1st Player 3rd Player Sources: * Interscience - May/2007 8 ** Instituto Synovate - May/2007
  9. 9. Consumer: A Valuable Marketing Strategy Pushing Usage through Promotion and Total Communication Service Focus on “On-Net Traffic” R$ 0.07 per minute for local on-net and DDI* calls Mothers & * Limited to 20 min/month to specific countries (US / Italy / etc) Valentines’ Day Facing competitors aggressiveness trough continuous offer improvement Working on community concept in order to increase usage Lowering SAC & Stimulating Usage TIM Chip only TIM chip cost refund subject to recharge within 48 hours & Recharge from activation Incentives “Recarga Fácil” followed “Recarga Extra”, maintaining bonus in minutes, according to recharge value Focusing on Total Communication Needs TM Mais Completo: Full communication package combining “TIM Mais Mobile Calls + Home Fixed Calls + Internet access Completo” TIM Web: Internet access through USB Modem for Laptops and USB Modem & “TIM Web” Desktops GPRS / EDGE Fixed license acquisition: to enrich TIM convergent services offers Attracting fixed and data revenue while safeguarding mobile leadershíp Segmenting TIM Casa Offer New TIM Casa New TIM Casa prepaid: More attractive monthly fee, R$9,90 for Prepaid 50 minutes - Boosting sales. 9
  10. 10. Integrated Business Solutions Cross-selling of Voice and Data Service Complete solution for corporate portfolio: meeting the specific needs of companies with nationwide presence Consolidate Mobile office: the widest BlackBerry and Smartphones handset Positioning in portfolio Business Segment Homezone for corporate segment: TIM Casa Empresarial Over 1,000 municipalities with EDGE Data-only offer, leveraging on the widest data network in the 100% GPRS network coverage country : Nosso Link 10
  11. 11. Continuous VAS Innovation Stimulating Data Usage Data Package Cross-selling TIM DATA PACKAGE Innovative Internet access Portfolio Data Plug ins Offer / Bundle includes 1 GB, 250 MB or 40 MB Flexibility and Valid for all TIM Postpaid (Corporate and Consumer) Convenience Data Usage Incentives MEGA TIM WAP: 40MB Bundle through Wap Fast MEGA TIM Mensagens: SMS+MMS Bundle Cards Push on Media Content, Interactivity and Connectivity M-Commerce TIM Music Store Games TIM Studio VAS Stimulation Gol airlines m-service Music content Free Demo Games User Generated (user&usage) Tickets and Check-in download Promotional Content SMS Promotions Games for R$3,99 Cristo Redentor Quiz Torpedo Surpresa Retail promotion (Mellita, Extra e Prestobarba Gillete) 11
  12. 12. Further Segmentation in Subscriber Acquisition Cost SAC Performance R$ 168 -33% Lowering SAC despite better level of customer and handset mix: 113 24.6% YoY growth in postpaid gross adds increasing % of mid-range and high-end handsets 58% Commission sold Subsidy 70% Anatel’s fee on Reduced subsidy strategy with focus on “TIM net adds Chip Only” offer: More than 70% of overall gross adds in 2Q07 vs. 42% Comodato ~40% in 2Q06 30% Advertising Others Postpaid SAC oriented to maintain the 2Q06 2Q07 competitiveness and high-value customers Direct cost Indirect cost acquisition Improved pay-back period: 3.3 months in 2Q07 vs 4.7* months in 2Q06 * Proforma: Bill & Keep elimination starting on January 1st of 2006. 12
  13. 13. Main Messages Market Performance Commercial Strategy Financial Performance 13
  14. 14. Solid Net Service Revenues Total Net Revenue Growth YoY Growth R$ Mln Reported Organic* Continuous service revenue growth: 3,060 Total traffic + 43% YoY: focus on +34.5% +17.3% 2,275 on-net call promotion, stimulating usage 91% Customer growth +23% YoY 87% +40.5% +20.2% Handset revenues confirm the trend of the -5.8% previous quarters reflecting strong push on 13% 9% ‘TIM Chip Only’ sales 2Q06 2Q07 Net Service Revenue Net Handsets Revenue MOU / ARPU Performance MOU increase driven by on-net traffic ARPU increase QoQ R$ Min +16% +0.7% 81 94 34.4 34.6 2Q06 2Q07 1Q07 2Q07 Increasing usage Keeping ARPU above the market * Proforma: Adjusted by Bill & Keep elimination starting on January 1st of 2006. 14
  15. 15. Delivering Profitable Growth EBITDA and Margin EBITDA Expansion R$ Mln Bad Debt (as % of net services revenue) 6.0% 5.7% Improving Y-o-Y 0.7% performance 5.3% excluding impact of LD41 from non TIM customers (R$22 mln) (457.5) 2Q06 2Q07 801.8 (53.8) 9.9 0.0 (55.3) (17.0) Main drivers: 743,7 - Gross Adds: +26% 515.7 - Recharges: +32% 2Q06 Handsets Service Network Selling Bad COGS Others 2Q07 EBITDA Revenue Revenue Expenses Expenses Debt Expenses** EBITDA Change % YoY -5.8% +40.5% +103.5% +9.5% +48.9% -2.6% +0.0% +44.2% +20.2%* +9.9%* EBITDA Margin 19.8%* +4.5pp YoY, +228 mln on comparable basis 24.3% Improved Margin QoQ despite negative seasonality * Proforma: Bill & Keep elimination starting on January 1st of 2006. 15 ** Others Expenses includes: G&A, Personnel and Net Other Operating Expenses/Revenues
  16. 16. From EBITDA to Bottom Line YoY (R$ mln) +228.0 (16.0) +212.0 (10.7) +71.3 +272.6 R$ Mln + R$39.3 Mln excluding non recurring items: 2Q07: R$ 19.8 Mln* 2Q06: R$ 30.2 Mln** 743.7 (570.0) R$43.1 Million (Subsidiary income taxes) R$12.6 Million (amortization of goodwill from privatization, non-cash item) R$ 2.5 Million (others non-operational expenses) Positive Bottom Line (81.5) 173.7 (58.2) 34.0 EBITDA Depreciation EBIT Net Taxes and Net Income 2Q07 Amortization Financial Others Expenses * 2Q06: Recovery of` PIS/COFIN taxes credit (positive effect). 16 ** 2Q07: Monetary restatement of contingencies (negative effect).
  17. 17. Net Financial Position Net Debt QoQ Trend Net Cash Flow (OpFCF + Non OpFCF) R$ Mln Non R$ Mln Seasonal Impact (R$781 Mln) OpFCF OpFCF 1Q07 2Q07 341 390 Annual Fistel Net Cash 440 Flow Pro-forma (391) (1,582) 165 Reported Paid (556) (1,973) 2Q07 Dividends EBITDA +744 CAPEX (324) Oper. WC (255) Of which Dividends (440) Positive Net Cash Flow (+R$390 Mln) excluding Positive Operating FCF due to increased profitability seasonal disbursement Gross Debt: R$2.3 billion (of which 89% long term / average annual cost of 11.66% p.y. in 2Q07) Cash and equivalents: R$0.3 billion Net Debt: R$2.0 billion 17
  18. 18. “Safe Harbor” Statements Statements in this presentation, as well as oral statements made by the management of TIM Participações S.A. (the “Company”, or “TIM”), that are not historical fact constitute “forward looking statements” that involve factors that could cause the actual results of the Company to differ materially from historical results or from any results expressed or implied by such forward looking statements. The Company cautions users of this presentation not to place undue reliance on forward looking statements, which may be based on assumptions and anticipated events that do not materialize. Investor Relations Avenida das Américas, 3434 - Bloco 01 6° andar – Barra da Tijuca Visit our Website: 22640-102 Rio de Janeiro, RJ Phone: +55 21 4009-3742 / 4009-3751 / 4009-3446 / 8113-0571 Fax: + 55 41 4009-3314 18