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Results presentation 3 q13 eng
Results presentation 3 q13 eng
Results presentation 3 q13 eng
Results presentation 3 q13 eng
Results presentation 3 q13 eng
Results presentation 3 q13 eng
Results presentation 3 q13 eng
Results presentation 3 q13 eng
Results presentation 3 q13 eng
Results presentation 3 q13 eng
Results presentation 3 q13 eng
Results presentation 3 q13 eng
Results presentation 3 q13 eng
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Results presentation 3 q13 eng

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  • 1. A Quarter in Few 3Q13 YoY 6M13 YoY Total Revenues 5,083 7.6% 9,655 7.1% − Service 4,207 2.6% 8,152 1.9% − VAS 1,362 21.5% 2,377 25.0% 876 40.9% 1,503 47.9% EBITDA 1,252 4.2% 2,456 3.0% CAPEX 1,175 52.3% 1,593 -0.4% 3Q13 YoY 6M13 YoY Postpaid (mln users) 11.9 16.4% 11.4 13.9% MOU (min) 150 8.4% 146 15.1% R$ 18.6 -1.6% R$ 18.3 -2.2% Financial R$ Million − Handset Operational ARPU 2
  • 2. Network Check Point: Mobile BB Plan & Backhauling Backhauling Evolution Key Steps for Improvement: MBB/FTTS Project POP MW  Own fiber reaching ~85% of antennas at major cities. POP MW BSC-RNC Site  Targeting 38 main cities till year end.  FTTS: From 2-8 Mbps link to +100 Mbps. POP MW POP MW  Caching, Peering, Web Acceleration. POP MW  Macro coverage fine tuning for mobile broadband. Results for Recife Our 1st out of 38 cities Downlink throughput (Kbps) 4x MBB Coverage Q2 Q3 2,394 1,660 TIM 979 Market Average 574 Apr/13 Source: TIM Sep/13 3G (HSPA) MBB (HSPA+ DC) 3
  • 3. Network Check Point: Backbone Evolution HLR Resiliency Amazon Fiber Backbone Project Details: Boa Vista Macapá Manaus Belém Jurupari Tucuruí Maceió Porto Velho Increasing number of HLR Centrals. From 3 to 8. Fortaleza Salvador Cuiabá Rondonópolis Brasília Goiânia Belo Horizonte Vitória Campo Grande Preto Rib. Rio de Janeiro Umuarama São Paulo Curitiba Santa Maria Florianópolis Porto Alegre  ~R$200 million  27 cities  1,757 km  Capacity: 75 x 100 Gbps Existing network Network in construction LT Amazonas network 98-08 PURE MOBILE INFRASTRUCTURE 2009 INTELIG ACQUISITION 2011 ATIMUS ACQUISITION FIBER TO THE 2013 RJ & SP AMAZON 2016 MASSIVE LD BACKBONE Fiber Timeline 0 KM of FIBER + 15,000 KM of FIBER 20,500 KM of FIBER 46,000 KM of FIBER By YE13 65,000 KM of FIBER 4
  • 4. Operational Performance (1/2): Base Evolution & Quality Indicators Customer Base Evolution Mix of Post Paid (Million lines; Source: Anatel; TIM) (%; Source: Anatel) D% YoY 69.4 70.3 71.2 72.2 72.9 10.7 10.9 11.4 11.9 59.6 60.8 29% Market Share +16% 60.3 (Lines; Market Share; Source: Anatel) +5% 10.3 4G Update… Post Paid 59.1 3Q12 14.8% 61.0 29% +3% 3Q13 16.4% Pre Paid May/13 3Q12 4Q12 1Q13 2Q13 20% 23% Jun/13 26% Jul/13 Aug/13 Prudent strategy in the auction & efficient roll-out paying-off 3Q13 Customer Care Performance (Points; Complaints over 1000 lines; Average monthly claims. Source: Anatel (last reported); SINDEC) Anatel IDA - Index of Caring Performance 99.9 98.0 92.8 94.9 0.7 93.0 84.9 Claims at Consumer’s Protection Agency (SINDEC - Procon) Anatel Complaints 0.5 0.4 76.1 0.3 0.2 0.2 62.6 Jun-12 Oct-12 Feb-13 Jun-13 0.3 0.3 Jun-12 TIM Oct-12 P1 Feb-13 P3 Jun-13 7,192 7,075 4,176 6,692 4,518 2,961 3,801 2,722 3Q12 4Q12 1Q13 2Q13 3Q13 P4 5
  • 5. Operational Performance (2/2): Strong Efficiency Gross Additions SAC* & SAC/ARPU Bad Debt (Million lines; Source: TIM) (R$/gross adds; months) (R$ Million; % of Gross Revs.) SAC/ ARPU 1.8 (months) % of Gross Revs. 33.6 9.7 Commercial 1.6 -31% 30.5 8.7 3Q12 3Q13 3Q12 3Q13 Total Traffic (R$ million) 32.8 28.7 3Q12 *Subscriber Acquisition Cost 3Q13 Leased Lines Costs (Bln minutes) Network 56 Bad Debt SAC (R$) 3Q12 0.7% 80 -9% +17% 1.1% 0% +14% 3Q13 3Q12 3Q13 6
  • 6. Marketing: Keeping the Innovative Approach Liberty Controle Express  Pushing on Postpaid migration  Payment via credit card  TIM SIM blister for each team.  Increase Stickiness ~7x Recent Past jan/13 Young Chip Torcedor  Young segment positioning  Member get member through social network since 2010. 14 Teams alread sponsored +56% sep/13 sep/12 VOICE DATA Recarga Troco Nonstop Innovation sep/13 International LD Infinity Web + SMS TIM Music  Talk unlimited on-net for R$2 for 2 days.  Capture extra “charge”.  Leveraging on micro recharge on physical PoS.  Up selling approach, targeting only customer base.      Internet + unlimited SMS on/off-net.  Pay per day.  Combining Web and SMS offers.  Cross selling WEB and SMS .     US:R$0,20/min. + 8 countries: R$0,50/min FMS initiative. Capturing the unexplored mobile international calls market.  Market attended Today through fixed carries. Unlimited download. Pay R$0.50/day. Over the top service. Increase customer stickiness.  Network friendly.  13 million songs already downloaded. 7
  • 7. Marketing: Smartphone Supporting Data Growth Smartphone Sales Smart/Web phone Penetration (% total handset sale) (% over total base of lines) 3Q12 42% 30% 4Q12 46% 1Q13 46% 2Q13 3Q13 28% 19% 35% 24% 57% 13% Webphone 39% 30% 21% 67% Smartphone  Smartphone approach to support data usage growth. 43% 46% 50% 52%  EBITDA neutral. No subsidy Policy!  Leadership position in market of handset (3Q13) 22% 39% market share of smartphones sold 21% 3Q12 Essencial 4Q12 1Q13 2Q13 Jul 13 Launching entry-level 3G tablet Data Users VAS Revenue Growth (% of Data Users in CB; million users) (% of Mobile Services Gross Revenues; R$ Million) 34% 29% Devices Share at Sales 23% VAS/Revs. 19% 56% 46% Notebook 44% 19.9 3Q12 +23% 24.5 3Q13 1,362 VAS Gross Revs. 1,122 36% Tablets +22% 17% Desktop 3Q12 3Q13 2010 2012 2014 2016 8
  • 8. Live TIM: Maintaining the High Speed Mode Net Adds  Accelerating improving ARPU; sales and Customer Base (000 Clients; Source: TIM) (000 Clients; Source: Anatel) 42.6 9.7 1.6 4Q12 1Q13 2Q13 3Q13 3Q12 Clients highly satisfied Clients highly satisfied Network Evolution (000 Addressable Households ; Source: TIM) 804 881 609 General Satisfaction 38 neighborhoods in SP 34 neighborhoods in Rio 1Q13 2Q13 8,3 GVT 7.1% 7,5 OTHER 5.6% 9,0 7,2 8,0 8,0 Conection Quality 3Q13 7,5 Phone Attending 6,9 6.0 6,6 7.0 3Q13 2Q13 TIM 7,3 Bill 257 1Q13 (UBB >34MB ; Source: Anatel) P2 6,9 Offer 522 4Q12 Market Share SP+RJ (August) Source: TNS Market Research P1 4Q12 16.3 6.6 1.2 3Q12 3Q12 26.4 10.1 8.1  Reference as UBB service provider ( >50% net share). 16.2 13.3x  Taking the lead as #1 challenger in Rio and São Paulo; 7,9 9,1 8,7 NET 8.9% 7,7 8.0 LIVE TIM 48.5% VIVO 22.0% 9.0 10.0 OI 7.8% 9
  • 9. Financials: Evolution Analysis EBITDA Analysis Net Revenue Evolution (R$ Million) (R$ Million, % YoY) Thousands +7.6% Service 4,722 +151 -45 +4.2% +254 5,083 1,201 +2.6% 4,100 +107 +40.9% 622 -97 25.4% 4,207 +10 -6 25.3% EBITDA Margin 31.0% Handset +38 31.5% Service EBITDA Margin 1,252 24.6% 30.5% 876 Revenue 3Q12 Δ Mobile Services Δ Fixed Services Δ Handset ΔYoY +3.9% -22.3% EBITDA 3Q12 ΔServ. Revs ΔHandset Margin ΔMkt and Sales ΔYoY +40.9% Revenue 3Q13 +2.6% -55.2% +10.4% ΔNetwork and ITX ΔPers./G&A EBITDA and others 3Q13 -0.7% +1.2% From EBITDA to Net Income (R$ Million) 3,708 -2,045 3Q13: R$315 mln -15.6% YoY 1,663 -202 -454 1,007 EBITDA 9M13 ΔYoY Depreciation/ Amortization EBIT Net Financial Result Taxes and Others Net Income 9M13 +3.4% +2.2% +4.9% +48% -1.9% +2.1% 10
  • 10. Financial Position Capex ~94% in infrastructure (R$ Mln) D Working Capital (R$ Mln) 987 1,175 +52% 853 -10% 252 LT Amazonas 772 +139% 413 923 3Q11 3Q12 OFCF 320 3Q13 D OFCF YoY: +R$471 3Q11 +29% 3Q12 3Q13 Net Debt (R$ Mln) (R$ Mln) 1,458 1,314 1,550 1,446 252 +56% LT Amazonas 843 624 +35% 1,194 3Q11 3Q11 3Q12 3Q13 Net DEBT / EBITDA (trailing 12m) 0.32 3Q12 0.29 3Q13 0.28 11
  • 11. Conclusions
  • 12. Conclusions & Outlook Infrastructure Strategy & Offer Evolution  Continuous deployment of fiber to support data traffic growth.  FTTS will now reach 38 cities by YE2013 from 14.  New backbone routes to increase resilience.  Signed first vendor agreement on small cell coverage to improve network access and quality.  Continuous improvement in network related complaints.  Finalized implementation of new call center and data center architecture.  Accelerated Capex.  Postpaid continuous growth, better customer mix.  Maintaining solid data services growth.  Continuous offer evolution backed by innovative DNA. − International calls. − Infinity Web + SMS. − “Recarga Troco” - “Change” top-up. − +70% of smartphones over new sales. − Good progress on Intelig and Live TIM. Efficiency  Commercial side: − Low SAC. − Payback (SAC/ARPU) under control. − Bad debt stable at low levels.  Network side: − Increasing MOU with stable leased lines costs. − Proprietary infrastructure deployment. Triennial Plan 2014-16 to be disclosed on November 8th. 13

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