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Press Release 4 T07 En

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  • 1. TIM Participações S.A. 4Q07 and 2007’s Results March 5th, 2008 1
  • 2. Highlights Market Overview Commercial Strategy Financial Performances 2
  • 3. TIM in 2007 A Recognized Brand… …with a National Footprint…  “Top of Mind”: most remembered mobile Preparing for the Future operator for 5th year  Mobile: first to be consolidated as a national  First mobile choice according to all recent key player independent surveys  Fixed: national licence acquisition in May „07  “Most Admired Company” for 3rd consecutive time  Broadband: frequency acquisitions in Dec ‟07 enabling future national roll-out  Mobile: renewing community concept, Strong Organic Results strengthening loyalty and expanding customer base through operational efficiency Achievement of all 2007 targets  Convergence: development in fixed and ARPU above market average internet markets Positive net income in 4Q07 and in full year  Innovative business model to target Positive net cash flow in 4Q and in full year underpenetrated low-income segments and Drive to Create New Opportunities… …ensuring Sustainable Growth 3
  • 4. Highlights Market Overview Commercial Strategy Financial Performances 4
  • 5. Keep outperforming Market Growth Total Lines (Mln) and Penetration Rate Market Share Performance YoY Growth 63.5% +10.3 p.p. -3.7 pp -1.9 pp 59.4% -3.7 mln lines -2.2 mln lines 54.2% 56.4% 53.2% +21.1% 121.0 First 106.7 112.8 99.9 102.2 Player 29.1% 27.7% +20.4% 25.4% 25.8% +23.0% 25.0% 25.4 26.3 27.5 29.2 31.3 Third 23.9% Player +0.8 pp 4Q06 1Q07 2Q07 3Q07 4Q07 +1.5 pp +1.5 mln lines +1.0 mln lines Competitors Penetration Rate TIM 4Q06 1Q07 2Q07 3Q07 4Q07 Credit expansion and purchase power improvement Postpaid Market Share of 29% Aggressive competitive environment driven by GSM technology Postpaid mix higher than competitors‟ average: 21.7% Increased penetration in lower income classes vs 18.5% Source: ANATEL and company´s data. 5
  • 6. Highlights Market Overview Commercial Strategy Financial Performances 6
  • 7. TIM Brand: Leveraging on Leading National Brand Power Confirming the Leadership in Market's Surveys Top of Mind * Consumer Preference (%) * Consumer Satisfaction ** 27 26 28 8.62 25 8.36 8.36 17 17 1st Player 3rd Player 1st Player 3rd Player 1st Player 3rd Player ► Nationally recognized as a reliable and appealing brand ► Enhancing the loyalty amid brand empowerment ► Winner of all recent key independent surveys:  TIM is the first operator choice  Prefered operator  Leader in average client satisfaction Sources: * Instituto Synovate - October/November/2007 7 ** Interscience - October/2007
  • 8. TIM Strategic Objectives Market evidence Strategic goals To enhance value on the core business Mobile Core Business To consolidate our positioning To increase profitability Convergence Potencial market revenue: To capture fixed and broadband ~R$50bln revenue share Low-ARPU Residual market in lower To ensure profitability of low-end income segment ~60 mln segment 8
  • 9. TIM Offers: Maintaining Strategic Goals Strategy 1Q07 2Q07 3Q07 4Q07 7 centavos “On-net community” offers TIM +60 Tarifa Zero Pre paid loyalty Quem tem TIM tem Mais Mobile offers Low acquisition cost Receba o valor do seu Chip de volta Seu TIM Chip vale Mais offers (TIM chip-only) TIM Music Store Java Games Multimedia & Infotainement TIM Studio Mega TIM Mensagens Mega TIM Wap GPS Navigation Garmin VAS Mobile office & BlackBerry unlimited Smartphone BlackBerry connectivity (1st free month) Offer subscription zero HP Partnership Microsoft Partnership M-finance AirLine Tickets and Check-in 9
  • 10. TIM Offers: Exploring New Opportunities Strategy 2Q07 3Q07 4Q07 Capturing additional revenues from fixed and broadband markets TIM Mais completo  TIM Web: Internet access through USB Modem for Convergence TIM Web TIM Casa Flex laptops and desktops  TIM Mais Completo: Full communication package bundling Mobile Calls + Home Fixed Calls + Internet access  TIM Casa Flex: The best of mobile telephony with the fixed telephony convenience Expanding the addressable market and maintaining the offer profitability: Low-ARPU Plano 1: Micro recharge  Plano 1: Micro prepaid recharge  Reducing the cost of monthly ownership  Higher traffic margins  Special tariff for 3 pre-selected TIM or fixed numbers (R$0.20) 10
  • 11. TIM Broadband: Preparing for the future 3G license acquisition: enlarging capacity Improve TIM convergent offers through wireless broadband Capture new revenue opportunities Protect TIM Customer base TIM Data offering evolution 2007 2008 / 2009 TIM Web, 3G license Offers Evolution: Speed up to 7,2 Mbps GPRS / EDGE acquisition* Speed up to 200 Competitive Plans for broadband Total amount: Kbps R$ 1.3 bln Opportunities on areas with lack of Internet offer The largest data National Coverage network Encouraging use of VAS acquisition Spectrum capacity expasion 15+15 MHz in São Paulo‟s metropolitan area ► According to Abinee**, the PC market in Brazil will grow 16.8% in 2008 and will reach 11.8 million units, of which 67.8% desktops and 32.2% laptops ► At the end of 2007 Brazil still had 23 million users of Internet Dial Up * Acquired through Anatel´s auction in Dec07 11 ** Brazilian Electric and Electronic Industry Association
  • 12. TIM Commercial Approach: Focused on Efficiency Optimization of Sales Channels and SAC Reduction  Largest point of sales capillarity in Brazil  SAC Performance: (R$) Point Of Sales: ………….. 8.600 PoS -18% Retail 65% - 8% Dealers 26% 145 129 Own store / franchise 9% 120 118 Indirect cost 110 Consumer 40% - Comodato 34% 35% 36% - Advertising Tele-sales and Personal 2.010 38% - Others Recharge Points 262k Direct cost 66% 65% 62% 60% 64% - Commission - Subsidy Corporate Small & Medium Business - Anatel‟s fee on net Sellers 580 4Q06 3Q07 4Q07 adds 2006 2007 Key Account Managers 150  Subsidy strategy oriented to maintain the competitiveness Improving channels productivity and efficiency and value customers acquisition and retention  Points of sales grew 7% vs 25% of gross adds in 2007 (17%  Low SAC offer of productivity increase in the year)  Increased electronic recharge revenue breakdown: 55% in  Focus on “TIM Chip Only” strategy: > 60% of total gross in 2007 2007 vs 41% in 2006  Comission based on value  Also stimulating convergent offers 12
  • 13. Highlights Market Overview Commercial Strategy Financial Performances 13
  • 14. Confirming Leadership in Value Net Service Revenue Performance* R$ Bln 3,1 2,9 2,7 2,7 2,8 1st Player  1st operator in Net Service Revenue 3rd Player  Revenue growth driven by valuable customer base increase 4Q06 1Q07 2Q07 3Q07 4Q07 Total Net Revenue Performance R$ Bln YoY Growth YoY Growth R$ Bln Restated Pro forma** 3.4 +10% 3.1 12.4 +23% +15% 10.1 Target: >10% +13% 89% 92% +28% +18% 92% 88% 11% 8% -20% 12% 8% -14% 4Q06 4Q07 2006 2007 Net service revenue Net handsets revenue Net Service Revenue Net Handsets revenue * Source: based on companies 4Q07 reports ** Pro forma: Bill & Keep elimination starting on January 1st 2006. 14
  • 15. ARPU and VAS Performance ARPU Performance Keeping up Premium ARPU in 4Q07 R$ R$ 23% -7% 11% - 4% +1% 37.0 34 34.0 34.5 35.8 31 34.4 28 33.1 4Q06 3Q07 4Q07 2006 2007 Proforma: considering Bill&Keep elimination starting on Jan 2006. 1st Player 3rd Player VAS Performance (% on Gross Service Revenue) R$ Mln +50% +37% 375 1,217 251 886 9.0% 7.5% 7.9% 7.1% 4Q06 4Q07 2006 2007 % Innovative share on VAS Revenue* 49% 63% 43% 52% *Innovative VAS = Total VAS excluding SMS P2P 15
  • 16. Continuous organic EBITDA margin expansion Solid Base Growth with High Value Clients and profitability R$ Mln EBITDA and EBITDA Margin (%) YoY Growth 24.0% YoY Growth 27.1% 23.1% +16% +18% 25.6% 22.4% 915 2,870 787 2,437 4Q06 4Q07 2006 2007 Pro forma* Restated 16 * Bill & Keep elimination starting on January 1st 2006
  • 17. EBITDA and EBITDA Margin Performance Delivering 2007 EBITDA margin R$ Mln (338.5) 2,465.4 (1,174.5) (262.6) (26.7) (67.7) (162.0) 2,869.9 2,436.5 +17.8% YoY, +433.4 Restated Handsets Service Network Selling Bad Debt COGS *Other EBITDA EBITDA 2006 Revenue Revenue Expenses Expenses Expenses 2007 Change -13.7% +27.5% +43.7% +15.6% +58.1% +1.9% +6.9% % YoY +18.1%** +13.4%** +31.9% Excluding exceptional write-off of receivables EBITDA Mg EBITDA Mg 24.0% 23.1% Restated Reported Pro forma 22.4% +0.7pp YoY on a comparable basis * Other Expenses include: G&A, Personnel and Net Other Operating Expenses/Revenues 17 ** Considering Bill & Keep elimination starting on January 2006.
  • 18. From EBITDA to Bottom Line Positive Net Income R$ Mln Net Income +36% 76.1 183 (285.5) 135 (2,323.7) (2,323.7) 2,869.9 2,869.9 4Q06 4Q07 2006 2007 Annual Positive Net Income (278.9) (278.9) 546.2 (191.3) 76.1 EBITDA 2007 Depreciation EBIT Net Financial Taxes and Net Income Amortization Expenses Others* Change YoY R$ mln +433.4 (89.2) +344.1 +8.2 +9.3 +361.6 * Other non-operating expenses/revenues 18
  • 19. Net Financial Position Net Debt YoY Trend Net Debt QoQ Trend +54 Positive Net R$ Mln +815 Positive Net R$ Mln Cash Flow Cash Flow Non Non OpFCF OpFCF OpFCF OpFCF 2006 2007 3Q07 4Q07 (1,027) 76 (708) (973) 2 (1,788) 916 (101) (973) EBITDA +2,870 EBITDA +915 CAPEX (1,933) CAPEX (1,007) D Oper. WC (175) D Oper. WC +1,008 Gross Debt: R$2.1 billion (of which 63% long term ) Average annual cost: 11.4% in 2007 versus 13.0% in 2006 (10.9% in the 4Q07 versus 13.1% in the 4Q06) 19
  • 20. 2007 Fully achieved Targets 2007 2007 Actual Targets Customer Portfolio (Mln SIM) 31.3 ~29  M/S TIM Brazil on SIM 25.8% ~26%  Total Net Revenues Growth* 14.6% >10%  EBITDA Margin - Organic 23.1% >23%  CAPEX (bln R$) 1.9 > 2**  Op. Free Cash Flow (mln R$) 762 Break Even 2007  * Adjusted considering Bill and Keep Elimination starting from Jan 2006. ** Including 3G and Wi-Max licenses 20
  • 21. Backup 21
  • 22. Accounting changes to 2006 figures: Recap Reported vs Restated 2006 2006 (reported in 4Q06) (restated) Revenue impact +R$22 mln (R$ mln) Reclassification of Other Operating Revenues into reduction of taxes on service revenues referred to a favorable Net Revenues 10,116.1 10,138.2 court decision on PIS and COFINS EBITDA impact -R$56 mln EBITDA 2,492.5 2,436.5 - R$ 30 mln reclassification of Other Operating Revenues into financial revenues referred to a favorable court decision on PIS and COFINS - R$ 26 mln reclassification from financial expenses to cost of goods sold EBITDA Margin 24.6% 24.0% 22.4% Pro forma Bill & Keep* * Considering Bill & Keep elimination as of Jan, 2006 22
  • 23. Accounting changes to 4Q06 figures: Recap Reported vs Restated 4Q06 4Q06 (reported in 4Q06) (restated) (R$ mln) Revenue impact +R$160 mln Handset discounts are fully booked as discounts on handset revenue, instead of being partially allocated to selling Net Revenues 2,918.0 3,077.8 expenses and cost of good sold as before EBITDA 797.5 787.2 EBITDA impact -R$10 mln Reclassification from financial expenses to cost of goods sold EBITDA Margin 27.3% 25.6% 23
  • 24. “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 Visit our Website: Avenida das Américas, 3434 - Bloco 01 http://www.timpartri.com.br 6° andar – Barra da Tijuca 22640-102 Rio de Janeiro, RJ Phone: +55 21 4009-4017 / 4009-3751 / 4009-3446 / 8113-0790 / 8113-0547 / 8113-0024 Fax: + 55 21 4009-3990 24