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Results presentation 2 q14 eng
Results presentation 2 q14 eng
Results presentation 2 q14 eng
Results presentation 2 q14 eng
Results presentation 2 q14 eng
Results presentation 2 q14 eng
Results presentation 2 q14 eng
Results presentation 2 q14 eng
Results presentation 2 q14 eng
Results presentation 2 q14 eng
Results presentation 2 q14 eng
Results presentation 2 q14 eng
Results presentation 2 q14 eng
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Results presentation 2 q14 eng

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  • 1. 26k 100k Postpaid segment grew by 7% and postpaid mix over customer base reached 16.5%, while SAC/ARPU remained below 2 months 19% 22% 27% 2Q12 2Q13 2Q14 2nd QUARTER HIGHLIGHTS 2 Operational 2Q13 2Q14 +7% YoY Data as % of revenues Net Revenues: Usage (local + long distance) + VAS Total OPEX (Δ% YoY)11% 9% 2% -3% -7% EBITDA Margin 27% 25% 28% 2Q12 2Q13 2Q14 % of total customer base 15.8% 16.5% 2Q13 2Q14 Mix of postpaid over total base World Cup Figures (in the Stadiums) Live TIM customer base Financial Gross Data Revenue growth at solid pace: R$1.6 bln in 2Q14 Net Revenues “Business Generated” (ex – incoming) grew by 7% YoY Strong cost control: total opex dropped 7% YoY EBITDA grew 8% YoY with margin gain 28% 32% 39% Data users reached 29 mln lines Live TIM crossed 100 thousand customers milestone +3 p.p. +5 p.p. 2Q13 3Q13 4Q13 1Q14 2Q14 Jul/14Jun/13 2Q12 2Q13 2Q14 • Photos sent: 50 mln • Outgoing calls: 5 mln • Data traffic: 26.7 TBMaracanã Stadium
  • 2. CORE BUSINESS ANALYSIS & PERFORMANCE MTR cut full impact in 2Q Handset sales at a healthy level although reduced growth World Cup impact on commercial activities Mobile Service Net Revenues Analysis (% YoY) EBITDA Performance (mln; %YoY) June 2013 June 2014 No Holidays 1 National holiday 3 Brazil’s games (1/2 day holiday) Up to 2 municipal holidays in main cities hosting games Net revenues from MTR-18% -28% 2.4 3.1 2.7 2Q12 2Q13 2Q14 Total units sold (mln) (Local + LD + VAS) Business Received 2Q13 2Q14 1,232 2Q13 2Q14 Reported EBITDA Margin 1 2 3 +7% 24.9% 27.9% EBITDA 3 1Q14 2Q14 -30% Business Generated +3% -1% *MTR Impact +16% +8% 1,331 Total 6 months (YoY) +8% -26% +4% 0% (Incoming MTR + SMS) Ex-MTR Ex-MTR *MTR Impact Ex-MTR ~170 mln* ~96 mln* 1,427
  • 3. 118.5 23.2 2009 2010 2011 2012 2013 Jun/14 2Q13 2Q142Q13 2Q14 READY FOR DATA OPPORTUNITY 4 # Access Growth (users in mln) Brazilian Broadband: Low Average Speed (Mbps) WSJ: “Brazil - The Social Media Capital of the Universe” Fixed Data Experience is Mobile Capturing Data Opportunity Mobile 2.7 2.6 4Q13 1Q14 #2 in Facebook #2 in Twitter 2nd largest market #2 in WhatsApp 10.5 13.7 3.6 2.5 Sources: SocialBakers, e-Marketer, Semiocast, G1.com, Newspaper ‘Folha de São Paulo’ Sources: Anatel, Akamai - State of Internet Source: IDC Tracker Source: Anatel # Total Market Equipment Sold (units in mln) Smartphone & Tablet Notebook & PC 1Q14 2Q14 SMS Web Content & Other 1,500 Data Gross Revenues Mix (R$ mln; %YoY) +22% +1% -8% +29% +33% +45% +72% BOU: Bytes of Use (Megabytes) Days of Use Data Users (# mln users) 23 29 2Q13 2Q14 +24% 2Q13 2Q14 2Q13 2Q14 +40% +30% In May, >45% connections in Brazil were < 2Mbps + 5X ∆ %YoY ∆ %YoY +20% 1,578
  • 4. 2Q13 2Q14 o Brasília o Curitiba o Rio de Janeiro 4Q13 2Q14 4Q13 1Q14 2Q14 INFRASTRUCTURE FOCUSED IN DATA 5 COVERAGE  Homogeneous  Access Upgrade  In all relevant areas  Site densification  Small cell / Wi-Fi CAPACITY  Higher speed  4G roll out  Mobile broadband project acceleration  Backhauling infrastructure AVAILABILITY  Always available  Fine tunning  Fiber rings / redundance  Resilience DATA CENTRIC APPROACH TIM’s Infrastructure Strategy Network in Numbers Number of 3G & 4G Sites Number of Wi-Fi & Small Cell ~11.3 ~11.0 ~13.1 Number of sites with fiber (FTTS) Cities in mobile BB project +3.5x 53 66 1Q14 2Q14 +13 cities BioSite: New approach to coverage  Patent pending +47% 1 2 3 After Before o New frequency at 900 MHz in SP o Better indoor coverage o Addressing capacity requirement Completed actions  Initiating in:
  • 5. 75.7 76.2 79.4 68.9 72.2 74.2 63.0 66.5 68.8 47.8 49.7 51.1 47% 39% 20% 30% 21% 20% 12% 10% 2Q13 2Q14 23% 24% 24% 26% 40% 35% 11% 14% 2Q13 2Q14 2Q13 2Q14 CUSTOMER BASE EVOLUTION 6  # 1 player in prepaid  Strong growth in ‘Controle’ postpaid base  Austere disconnection policy 2Q12 2Q13 TIM Source: ANATEL 2Q14 Vivo Claro Oi 4G Market Share (%; thd users) 3G Market Share (%; mln users) 28.9 30.2 41.5 16.2 Source: ANATEL TIM TIM 1,281 990 655 334 Customer Base (mln) Source: ANATEL +8.4% Source: Company Prepaid Recharge (R$; % YoY) 118 mln 3.3 mln
  • 6. vv GO TO MARKET PROGRESS 7 Equipping Customer Base % of smartphone sales among players in 2Q14 % of smart + webphone on TIM’s base in 2Q14 % of smartphone over new sales in 2Q14 Postpaid o Reduce churn on postpaid o Attract dual SIM card users traffic o Renewed focus on corporate customers o Leveraging on “pure mobile” distinctiveness o Expanding daily tariff scheme to new regions o Simplicity / Transparency R$ 7 weekly service package R$ 0.75 daily offer Prepaid 35% 50% 62% 2Q12 2Q13 2Q14 39% 57% 71% 2Q12 2Q13 2Q14 41% 23% 28% 9% P3 P2 P1 TIM Managing customer base… To Infinity and beyond… Penetration of smart + webphones drives data usage growth Source: GFK Group Source: Company Source: Company
  • 7. 0.36 0.32 0.24 0.16 0.10 0.06 0.03 0.02 2012 2013 2014 2015 2016 2017 2018 2019  Auction expected for September  License period: 15 + 15 years  No additional obligation. Network and Spectrum sharing opportunities  Switch off plan starting at the beginning of 2016  Minimum prices and clean-up costs not yet defined 4G Auction RFP  Leased line (EILD) reference price reduction, in 2016, from ~20% until ~80%  Establish regulated reference prices to leased lines speed up to 34 Mbps  On preliminary ‘static’ simulation show relevant OPEX reduction MTR New Glide Path (R$) Leased Lines - EILD New parameters established New MTR and EILD Analysis Source: Anatel Source: ANATEL, Commissioners Meeting on July 17th Main measures until July, 2014  Cancelation within 48 hours, without human assistance  In case of dropped call, companies must call customer back  Minimum of 30 days for prepaid credits to expire ANATEL's new costumer care policy - RGC Source: ANATEL Resolution 632/2014, GEX Meeting on July 17th REGULATORY UPDATE TIM has been working to improve transparency and caring 8
  • 8. 2Q13 3Q13 4Q13 1Q14 2Q14 TIM SOLUÇÕES CORPORATIVAS: PLAN MOVING FORWARD IN Q2 9 Turnaround Plan on Fixed Business 20132012 - 2014 New sales revenues (R$; YoY) Financial performance  Governance / Efficiency  Business development  Quality and Process Activation time (days) Operational Improvements Paying Off + Segment EBITDA-CAPEX Source: Company Net Revenues (with intercompany) 2013 2014 Business Priorities 4Q13 1Q14 2Q14Plan Phases Highlights Financial sanitization Infrastructure reinforcement Market repositioning o Positive EBITDA o Cost efficiency o Customer base management o New business unit organization o IT renewal plan o Multiservice network launch o New branding o New offers and product launch o Restructured sales force 2H14 Showing results o Sales growth o Revenue rebound Business remodeling driving stable fixed revenues QoQ +19x 2Q13 2Q14 -80%
  • 9. +34% 11.5 18.3 24.5 2Q13 0 1Q14 2Q14 10 Gaining more traction Addressable HH (000 HH) Gross Adds (000 users) Customer Base (000 users)  May/2014 o Live TIM Extreme 1Gbps for R$1,999.90 o Live TIM Blue Box release: optional TV approach  Jul/2014 New speed: 70Mbps for R$119.90 Source: Netflix July 2014 Netflix Broadband Ranking (Average streaming speed representation) 31% Positive Neutral Negative Internet buzz FIXED BROADBAND: LIVE TIM New Offers 126 neighborhoods:  43 neighborhoods in SP  83 neighborhoods in RJ Quality Experience 609 804 1,069 1,138 1,220 2Q13 3Q13 4Q13 1Q14 2Q14 8% 31% 21% 51% 72% 18% 2nd 3rd 4th 5th 6th 1st Source: Gauge 1Q14 Source: Company +113% 10 26k 100k Jul/14Jun/13 Market average
  • 10. 4,065 Thousands 2Q13 2Q14 3,985 170 Thousands 96 2Q13 2Q14 +2.2% FINANCIAL RESULTS ANALYSIS (1/2)Service Net Revenues (R$ mln; % YoY) EBITDA (R$ mln; % YoY) Reported Revenue 2Q13 Reported Revenue 2Q14 3,985 1,232 Reported EBITDA 2Q13 Reported EBITDA 2Q14 +186 -87 Δ Opex/ Others Traffic/Data Δ Contribution Margin 24.9% 31.1% 1,331 27.9% 34.4% EBITDA Margin Service EBITDA Margin +5.8% +4.4% Efficient Cost Control Interconnection (Δ% YoY) Leased Lines Cost (Δ% YoY) % Bad Debt/Sales (% over gross revenues) Net Services Revenues Exposure EBITDA Exposure MTR Impact -2.0% ~ 25% ~ 12% 2Q10 2Q11 2Q12 2Q13 2Q14 ~ 35% ~18% 2Q10 2Q11 2Q12 2Q13 2Q14 MTR Impact +15.8% +8.0% -31.3% -10% ~1% ~1% 2Q13 2Q14 MTR Exposure 1,427 ‘Pro forma’ EBITDA in 2Q14 4,155 ‘Pro forma’ Revenue in 2Q14 stable +208 -253 -36 ΔYoY +6.9% -29.6% -20.5% Δ OthersΔ Business Incoming Δ Business Generated ΔYoY 11
  • 11. -1,227 2,648 -609 -1,654* -1,786 182 +41% FINANCIAL RESULTS ANALYSIS (2/2) Net Income - 6 months (R$ mln; % YoY) Net Debt (R$ mln; % YoY) 12 EBITDA 692 738 6M13 6M14 +6.7% >94% towards infrastructure 6M13 6M14 R$1,657 mlnR$1,593 mln 2G 3G 4G 2G 3G 4G 1,984 4,521 2,537 Thousands Debt Cash Net debt Jun/13 Jun/14 1,031 6,356 5,325 1,749 1,749 Thousands 4,607 3,576 Debt Cash Net debt +110% -48% Investments Cash Flow - 6 months (R$ mln; R$ YoY) YoY Net debt/EBITDA 12M: 0.19x New BNDES Loan CAPEX Δ WC OFCF 6M14 *Considering R$3 mln of LT Amazonas leasing adjustment OFCF 6M13 LT Amazonas Leasing +618 mln
  • 12. Accelerated Network Evolution for Data KEEPING THE STRATEGIC FOCUS ON THE 2nd HALF Consolidating Recent Offers & Innovative Services Strong Institutional Position “Porta Azul” (Blue Door) Evolving the Structure for the New Challenges • Streamlining organization • Adding new talent • Stronger segment focus o Consumer o Corporate o Residential • 4G auction participation • Leadership position • Presence in dialogue with relevant institutions 4G 700MHz Small Cells BioSite Mobile Fixed VAS TIM Protect CONTENT 13 New Positioning DATA CENTRIC APPROACH Coverage 1 2 3 Capacity Availability

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