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-22.5%
1Q13 1Q14
1ST QUARTER HIGHLIGHTS
Financial Results
Mobile Net Services Revenues (Δ% YoY)
Business
Generated
Busines...
714
1,764
2013 2014e
1Q13 1Q14
~11,000
~14,000
2013 2014e
2G
3G
4G
NETWORK EVOLUTION
Investments
Fiber Infrastructure
~19,...
0.37
0.31
0.42 0.42
1Q13 1Q14
0.05 0.03
15.0
10.3 12.1
26.8
25.5
44.4
45.5
1Q13 1Q14
QUALITY IMPROVEMENTS
 320 cities und...
1Q13 1Q14
74.8
76.0 78.5
67.2
71.2 73.9
61.6
66.3 68.7
46.5
49.5
50.6
5
CUSTOMER BASE EVOLUTION
Customer Base
(mln)
 Lead...
% of Customer
Base
1Q12 1Q13 1Q14
+20.1%
1Q12 1Q13 1Q14
5.5
5.8
5.9
Mobile
Data users
6
DATA SERVICES AT A SOLID PACE
Reve...
LEVERAGING ON THE LARGEST COMMUNITY
Access via Mobile
 Notebook sales FY2014e: 8.5 mln
 Tablet sales FY2014e: 11.1 mln
...
FIXED BROADBAND: LIVE TIM
8
Accelerating Deployment
Addressable HH
(000 HH)
609
1,138
1Q13 2Q13 3Q13 4Q13 1Q14
sep/12 mar/...
INTELIG, NOW POSITIONED AS “TIM SOLUÇÕES CORPORATIVAS”
9
The Opportunity Ahead
Market re-positioning
20132012
-
2014
Geogr...
1.22
1.32
1.39
1Q13 1Q141Q13 1Q14
MTR IMPACT ANALYSIS
MTR Impact
MTR Cut Path
-33%
-25%
-11%
-10%
Avg. MTR
Price (R$)
Mobi...
FINANCIAL RESULTS ANALYSIS
Net Revenues
(R$ mln; % YoY)
EBITDA
(R$ mln; % YoY)
Net Income
(R$ mln; % YoY)
624 603
4,087 4,...
CONCLUSIONS AND PERSPECTIVES
12
Offer Innovation
 Slower macroeconomic growth requires evolution of industry
approach
 C...
Results presentation 1 q14 eng
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Results presentation 1 q14 eng

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Transcript of "Results presentation 1 q14 eng"

  1. 1. -22.5% 1Q13 1Q14 1ST QUARTER HIGHLIGHTS Financial Results Mobile Net Services Revenues (Δ% YoY) Business Generated Business Received (MTR mpact) Consolidated EBITDA (Δ% YoY) Consolidated Net Income (Δ% YoY) 1Q13 1Q14 1,317 372 Incoming Outgoing (Long Distance + Usage) VAS 60.3 61.7 10.9 12.2Postpaid 1Q13 1Q14 %YoY +11.9% +2.3%Prepaid Customer Base (mln; Δ% YoY) Mobile Data Users Growth (mln; Δ% YoY) 1Q13 1Q14 Mobile Payback Ratio (SAC/ARPU in months) 1.6x 1.6x 306 1,224 Operational Results 2 +7.6% +21.6% +1.4% +8.9% 26.0% 28.0%EBITDA Margin 71.2 73.9 +3.8% 22 27 1Q13 1Q14 +20.1% 0.13 0.15EPS (R$)
  2. 2. 714 1,764 2013 2014e 1Q13 1Q14 ~11,000 ~14,000 2013 2014e 2G 3G 4G NETWORK EVOLUTION Investments Fiber Infrastructure ~19,700 Km ~37,600 Km BackboneMetro-Areas 3  R$3.8 Billion in FY14e  R$613 mln in 1Q14  >94% in infrastructure This image cannot currently be displayed. 57,300 Km in Fiber+ = 1Q13 1Q14 2G 3G 4G R$613 mln R$470 mln Average throughput analysis where MBB is completed * From To ~ 800 Kbps ~ 2.1 Mbps Number of sites with fiber optic Cities with mobile BB project Number of 3G & 4G Sites Number of Wi-Fi & Small Cell Network Additions in the 1Q14  3G sites: + 111 in Q1 (total 9,185)  4G sites: + 208 in Q1 (total 2,133)  WiFi hotspots: +190 in Q1 (total 904)  MBB cities: + 14 in Q1 + 30% YoY 39 100 2013 2014e +16x *According to TIM independent analysis of the NetMetrics Reports provided by Speedtest.net
  3. 3. 0.37 0.31 0.42 0.42 1Q13 1Q14 0.05 0.03 15.0 10.3 12.1 26.8 25.5 44.4 45.5 1Q13 1Q14 QUALITY IMPROVEMENTS  320 cities under the company’s quality plan project in 1Q14  53% of 2014 target achieved in the first quarter Claims at Consumer’s Protection Agency (Procon) (in thds) TIM: Claims at Anatel over 1,000 lines Source: ANATELSource: SINDEC-Procon TIM other TIM’s Quality Plan (#cities) Note: Per economic group 25.9  The least claimed within telcos  Consistent performance in PROCON  Reducing Anatel complaints in all fronts  Network showing remarkable improvements 320 213 1Q14 Target for 1Q14 Source: Company 4 Total Complaints Network Complaints Avg. Market Complaints 2014e (Target for 2014) 599 cities 53% 4Q13
  4. 4. 1Q13 1Q14 74.8 76.0 78.5 67.2 71.2 73.9 61.6 66.3 68.7 46.5 49.5 50.6 5 CUSTOMER BASE EVOLUTION Customer Base (mln)  Leading market growth  #1 player in prepaid  #2 player in voice postpaid  Austere disconnection policy Prepaid Recharge (R$; YoY) 1Q12 1Q13 TIM +3.3% +3.8% +3.7% +2.2% Source: ANATEL Source: Company 1Q14 1Q14 x 1Q13 +10% 1Q13 1Q14 15.3% 16.5% Mix of Postpaid over total base Distribution Channel (YoY) 1Q13 1Q14 +22% Source: Company 1Q13 1Q14 +28% # Points of Sales: Mass Channel (retail) # of Own Stores Vivo Claro Oi Source: Company +121bps
  5. 5. % of Customer Base 1Q12 1Q13 1Q14 +20.1% 1Q12 1Q13 1Q14 5.5 5.8 5.9 Mobile Data users 6 DATA SERVICES AT A SOLID PACE Revenues (R$ bln) 18% 21% 25% % of Gross Services Revenues 26% 31% 36% Users (# mln users) +25.4% +20.4%+24.6%1.0 1.2 1.5 18 22 27Data Gross Revenues 67.2 71.2 73.9 4G Market Share (%; thd users) 3G Market Share (%; mln users) 23% 24% 23% 25% 42% 37% 10% 13% 1Q13 2Q13 3Q13 4Q13 1Q14 25.4 26.6 38.7 13.5 Source: ANATEL TIM 47% 41% 20% 33% 21% 15% 12% 11% 2Q13 3Q13 4Q13 TIM 858 676 321 223 Source: ANATEL 1Q14 Source: Company Source: Company + 39% YoY Other VAS services 105 mln 2.1 mln
  6. 6. LEVERAGING ON THE LARGEST COMMUNITY Access via Mobile  Notebook sales FY2014e: 8.5 mln  Tablet sales FY2014e: 11.1 mln  Smartphone sales FY2014e: 46.7 mln Device sales profile Broadband Willingness to Pay (% of Households) 7 Source: CETIC 2012 5% of HH: Up to R$150/month 24% of HH: Up to R$70/month 59% of HH: Up to R$30/month Huge data opportunity in-house 27 mln data users Handset market share (Mar/14) TIM’s Customer Base Snapshot Source: IDC Source: GFK GroupSource: Company  The newest communication app by TIM  Provides a new user interface far all communication TIM Protect  TIM Chip for soccer fans: free content of soccer teams  Ensures safety of customer’s devices and information  Simple and reliable platform  Brazil’s largest digital music provider  >32 mln songs downloaded TIM P1 P2 P310% 25% 29% 36% 53% Open Market Operators Innovative Services Prepaid Postpaid Data Offers 73.9 million users +31 mln untapped market 46mln potential data users +15 mln with data handset36% 21% 42%
  7. 7. FIXED BROADBAND: LIVE TIM 8 Accelerating Deployment Addressable HH (000 HH) 609 1,138 1Q13 2Q13 3Q13 4Q13 1Q14 sep/12 mar/14 Customer Base (000 users) 75 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Customer Base ARPU (R$; CAGR %) +15% General Satisfaction Offer Billing Call Center 6.0 7.0 8.0 9.0 10.0 TIMP2P1 Market Performance Customer Satisfaction Survey* (Source: TNS Institute Research) 1.5 100 neighborhoods:  41 neighborhoods in SP  59 neighborhoods in RJ * From Dec/13 to Jan/14 8.7 9.0 8.9 9.0 8.3 7.1 8.8 7.6 7.5 5.3 7.5 7.4 8.1 8.0 7.4 TIM Fiber 39.9%Others 61.1% UBB Market Share (SP + RJ) (connections >34Mbps) Source: Anatel Gross Adds (000 users) 7.6 18.3 1Q13 1Q14 +141% Conection Quality Source: TNS Institute Research) Feb/14
  8. 8. INTELIG, NOW POSITIONED AS “TIM SOLUÇÕES CORPORATIVAS” 9 The Opportunity Ahead Market re-positioning 20132012 - 2014 Geographic expansion Source: IDC Brazil ICT Business Service Database TIM’s Addressable market (Net service revenues of total addressable market*; R$ bln) Better financial performance M 2014 Expansion:  2014: 7 new cities  2015: 12 new cities  Intelig now positioned as “TIM Soluções Corporativas”  Re-structuring of sales force: multi channel approach  Re-designed service portfolio CAGR 11-14 8.8 9.2 9.8 10.9 7.7 7.6 7.7 7.8 2011 2012 2013e VAS Voice 22.7 2014e 4.3 24.4 5.24.7 5.7 Data 20.8 21.5Total 5.7% 0.4% 7.4% 9.9% …with considerable room to increase revenue share (% of fixed corporate market) 1 2 3 Business Remodeling Path *Companies with more than 100 employees 2% P2 14% P3 25%P1 3% P4 21% P5 35% TIM + M M M M M M M Segment EBITDA-CAPEX Source: Company A Actual A A Net Revenues (with intercompany) 2013 2014
  9. 9. 1.22 1.32 1.39 1Q13 1Q141Q13 1Q14 MTR IMPACT ANALYSIS MTR Impact MTR Cut Path -33% -25% -11% -10% Avg. MTR Price (R$) Mobile Service Net Revenues EBITDA MTR Exposure Net Services Revenues EBITDA 0.32 0.24 0.16 0.36 +5.0% 2012 2013 2014 2015e 10 ~ 27% ~ 14% 1Q10 1Q11 1Q12 1Q13 1Q14 ~ 40% ~ 20% 1Q10 1Q11 1Q12 1Q13 1Q14 Source: Company +1.4% +13.4% +7.6%  MTR cut impact should be reduced following lower exposure  Business generated (outgoing & data) should offset MTR impact Impact of ~ R$ 140 mln
  10. 10. FINANCIAL RESULTS ANALYSIS Net Revenues (R$ mln; % YoY) EBITDA (R$ mln; % YoY) Net Income (R$ mln; % YoY) 624 603 4,087 4,100 Revenue 1Q13 Δ HandsetΔ Fixed Services Revenue 1Q14 Δ Mobile Services -21-42+55 Service Handset 4,711 ΔYoY 4,702 +1.4% -22.9% -3.4% +0.3% 0% -3.4% 269 306 372 1Q12 1Q13 1Q14 +13.9% +21.6% 11 1,224 EBITDA 1Q13 EBITDA 1Q14 ΔHandsets +223 -117 ΔOpex -12 Traffic/Data ΔContribution Margin 26.0% 30.7% 1,317 28.0% 33.2% EBITDA Margin Service EBITDA Margin +8% ΔYoY +7.0% +37.0% +6.1% Business Generated: +8.9% YoY Business Received: -22.5% YoY (+)Mobile: Efficiency (-)Fixed: Repositioning/new brand Cash Flow & NFP (R$ mln) -1,193 -1,374 -1,571 -265 -332 1Q12 1Q13 1Q14 OFCF Non OFCF Net Cash Flow -164 -1,458 -1,706 -1,735 NFP BoP NFP EoP -441 -1,899 -1,555 -1,314 (+) (=) +151 +421 -230 Δ Fistel
  11. 11. CONCLUSIONS AND PERSPECTIVES 12 Offer Innovation  Slower macroeconomic growth requires evolution of industry approach  Competitive landscape remains intense  Regulatory environment: o Upcoming 4G Auction o New consumer regulation framework  World Cup games: airports and stadiums coverage o Wi-fi off loading at Maracanã: in recent test 25% of data traffic were off-loaded  Financial Services: o Initial commercial launch of a “prepaid mobile account” / “mobile money” o A partnership between TIM, “Caixa Econômica Federal” (federal bank) and Mastercard o Focus on “unbanked” population (50% of prepaid base.)  New data offers: more options of data cap for prepaid (10 & 30Mb)  Infinity Turbo 7 launch: services package of R$7 per 7 days all in: o Voice + Web + SMS  4G included in all data package  TIMmusic included in postpaid packages  Live TIM Extreme: new 1Gbps offer  “TIM Soluções Corporativas” / “TIM Empresas” as renewed positioning of fixed and mobile corporate solutions  Business Generated: +8.9% YoY  EBITDA: +7.6% YoY  EBITDA Margin: +200 bps YoY  Net income: +21.6% YoY Solid results in 1Q14 Macro environment highlights Continued infrastructure focus  Coverage densification: macro and micro coverage enlargement  Resilience and network availability  Network control (NOC) internalization completed: o Monitored elements - more than: 12,000 sites, 70,000 km of fiber, 900 IP network elements, 6,700 transmission equipment and 1,300 MSANs  Towers: analyzing opportunities to unlock hidden value
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