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Results presentation 1 q14 eng Results presentation 1 q14 eng Presentation Transcript

  • -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$)
  • 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$470 mln Average throughput analysis where MBB is completed * From To ~ 800 Kbps ~ 2.1 Mbps Number of sites with fiber optic Cities with mobile BB project Number of 3G & 4G Sites Number of Wi-Fi & Small Cell Network Additions in the 1Q14  3G sites: + 111 in Q1 (total 9,185)  4G sites: + 208 in Q1 (total 2,133)  WiFi hotspots: +190 in Q1 (total 904)  MBB cities: + 14 in Q1 + 30% YoY 39 100 2013 2014e +16x *According to TIM independent analysis of the NetMetrics Reports provided by Speedtest.net
  • 0.37 0.31 0.42 0.42 1Q13 1Q14 0.05 0.03 15.0 10.3 12.1 26.8 25.5 44.4 45.5 1Q13 1Q14 QUALITY IMPROVEMENTS  320 cities under the company’s quality plan project in 1Q14  53% of 2014 target achieved in the first quarter Claims at Consumer’s Protection Agency (Procon) (in thds) TIM: Claims at Anatel over 1,000 lines Source: ANATELSource: SINDEC-Procon TIM other TIM’s Quality Plan (#cities) Note: Per economic group 25.9  The least claimed within telcos  Consistent performance in PROCON  Reducing Anatel complaints in all fronts  Network showing remarkable improvements 320 213 1Q14 Target for 1Q14 Source: Company 4 Total Complaints Network Complaints Avg. Market Complaints 2014e (Target for 2014) 599 cities 53% 4Q13
  • 1Q13 1Q14 74.8 76.0 78.5 67.2 71.2 73.9 61.6 66.3 68.7 46.5 49.5 50.6 5 CUSTOMER BASE EVOLUTION Customer Base (mln)  Leading market growth  #1 player in prepaid  #2 player in voice postpaid  Austere disconnection policy Prepaid Recharge (R$; 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
  • % 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
  • 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$30/month Huge data opportunity in-house 27 mln data users Handset market share (Mar/14) TIM’s Customer Base Snapshot Source: IDC Source: GFK GroupSource: Company  The newest communication app by TIM  Provides a new user interface far all communication TIM Protect  TIM Chip for soccer fans: free content of soccer teams  Ensures safety of customer’s devices and information  Simple and reliable platform  Brazil’s largest digital music provider  >32 mln songs downloaded TIM P1 P2 P310% 25% 29% 36% 53% Open Market Operators Innovative Services Prepaid Postpaid Data Offers 73.9 million users +31 mln untapped market 46mln potential data users +15 mln with data handset36% 21% 42%
  • FIXED BROADBAND: LIVE TIM 8 Accelerating Deployment Addressable HH (000 HH) 609 1,138 1Q13 2Q13 3Q13 4Q13 1Q14 sep/12 mar/14 Customer Base (000 users) 75 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Customer Base ARPU (R$; 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
  • 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
  • 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
  • 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
  • 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