Results presentation 4 q12 eng

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Results presentation 4 q12 eng

  1. 1. Results PresentationTIM Participações S.A. 1
  2. 2. Business Resilience Against a Strong Headwind Operational Improvement Users, Minutes, Unique Users, %YoY  Leader in customer base +10% +14% growth for the 10th +22% consecutive quarter 150 ~21 70.3 67.2 68.9 69.4 139  Leader in pre-paid 64.1 131 ~18 126 127  #2 in post-paid voice (ex - M2M and Dongles) 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 Customer Base – Mln Minutes of Usage Data Monthly Unique Users - Mln  Record of MoU at 150 min  Smartphone penetration Financials reached 43% of total base R$ Bln, %YoY  Increasing investment to Total Revenues Organic EBITDA Organic Net Income R$3.4 Bln (+12% YoY) ex- 19% 27% 34% licenses 13% 16% 8% 7% 8% -2%% YoY 7% 7% 6%  Organic Net Income FY12 = R$1.5 Bln (+17.4% YoY)  EBITDA – Capex = R$1.6 0.5 Bln (ex-licenses) 5.0 0.4 0.3 4.7 0.3  Proposed dividends of 4.5 1.2 1.2 1.4 4.5 1.2 ~R$743 mln (+39% YoY) 1Q12 2Q12 3Q12 4Q12 1Q12 2Q12 3Q12 4Q12 1Q12 2Q12 3Q12 4Q12 % Margin 26.2 26.7 26.3 28.4 6.1 7.5 9.0 9.2 2
  3. 3. Guidance: Check Point % 2011 2012 Guidance R$ billion Achievement Total Net 17.1 18.8 18.8 100% Revenues (+10%) Organic EBITDA 4.7 5.1 5.1 100% (+10%) Organic Capex 3.0 3.4 3.0 113% Tough Year Underscored by Solid Business Foundation • Resilience of customer base growth • Macroeconomic slowdown Net Service Revenue Evolution and usage (especially data) • Regulatory scrutiny 2.7% • ARPU sequentially improving • Image damage 1.7% 1.8% 13.1% • Good cost control (ITX / network • Increased competition 6.9% costs up 9% while traffic +34%) • Intelig’s business performance Intelig’s • More investments in infrastructure below expectations 2011 YoY MTR Macro 2012 YoY Net Service Impact Business Competition Net Service Revs Impact Regulatory Revs Impact 3
  4. 4. Lessons Learned: Focus on Quality1 One Network for all businesses  Restructuring of the network  More StrengthManagement Change  Intelig, TIM Fiber and TIM  Great resilience Celular network to become  Clear priorities one single entity2  The least claimed Telecom carrier at consumer  Direct report to the CEO, a protection agency (Procon) Structuring new division responsible to  Delivery Anatel’s network plan Quality assure quality measures, as well as customer relation  Improved IDA (Index of caring performance) from 88 pts satisfaction in August to near 93 pts in December (2nd best)3  Launch of a comprehensive  Advertisement with the chairman and employees website, focused on  Anatel Plan disclosure Image network quality  Real coverage footprint Repair  Market campaign focused  Quality KPI’s and network improvement/incidents on transparency disclosure4 3.4 Bi  Focus on mobile 3 Bi +12% 18% of Incremental infrastructure  Incremental Top Line CapEx Investments  Enhanced 3G coverage 2012E 2012A 4
  5. 5. Operations 5+
  6. 6. The only company to gain market share Total Market Share Growth (% of total lines) D YoY #1 Pre-paid 30.1% 30.2% 30.1% 29.7% 29.8% 29.5% 29.5% 29.5% 29.5% 29.6% 29.7% 27.6% 28.3% +63 Bps 29.1% Vivo -45 Bps 221 28.0% 27.2% -78 Bps 640 26.8% 26.9% 26.8% 26.9% 26.5% bps bps 26.0% 25.4%25.3% 25.5% 25.4% 25.6% 24.1% 24.7% +67 Bps 25.4% +42 Bps 24.9% 20.1% 19.5% -53 Bps 23.7%24.0% 25.1% 25.1% 25.5% 25.3% 24.9% 24.6% 24.5% 24.5% 24.6% Claro +0 Bps 2011 2012 20.4% 20.1% #2 Voice Post-paid 19.5% 19.4% 19.7% 19.1% 18.8% 18.8% 18.5% 18.7% 18.7% 18.8% Oi +3 Bps 38.2% 38.4% +21 Bps 22.0% 23.2% +121 Bps The only mobile operator which -282 Bps 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 grew in 2012 23.9% 21.0% 15.3% 16.7% +143 BpsSource: Anatel 2Q12 4Q12 Sales Force Focus on Efficiency Bad Debt Trend (Points of sale EoP) (R$; months) (as % of Gross Revenues) 2010 67 SAC/ 1.5 Own 1.3 1.4 ARPU 2011 81 +96% Stores 2012 131 1.04% 36 0.92% 28 27 0.71% SAC 3Q12 298k +9% Mass -21% -5% Channel 4Q12 QoQ 326k 4Q10 4Q11 4Q12 4Q10 4Q11 4Q12 6
  7. 7. Consumers Complaits: Good position at Anatel and Procons IDA – Index of Attendance (last reported by Anatel) Anatel Ranking of Complaits (last reported by Anatel) (Points) (Index of Complaints under 1,000 access) 0.64 0.63 99.40 100.00 99.90 96.75 97.90 0.50 96.15 95.15 0.47 0.48 0.50 0.50 95.05 98.00 0.47 93.95 97.00 96.70 0.41 89.85 91.00 88.00 89.35 0.39 90.30 0.44 0.34 0.44 TIM 87.90 92.80 TIM 0.40 0.41 89.35 84.01 0.32 0.30 0.26 0.27 0.38 0.24 86.40 86.20 0.27 0.30 84.80 84.85 0.24 0.28 73.26 0.21 0.20 0.20 72.72 73.15 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Source: Anatel Source: Anatel Volume of claims at Consumer’s Protection Agency (Procon) Procon Demands throughout 2012 (# Quarterly claims) (Mln of clients; Thousands of Demands) Best position in 21,618 19,838 Telecom 19,245 18,558 16,013 14,737 12,567 10,687 10,510 9,344 8,882 8,913 8,229 7,693 TIM 7,591 8,745 6,229 7,166 7,648 6,533 4Q11 1Q12 2Q12 3Q12 4Q12 Source: SINDEC data base. Represents 45% of total Procons (12/31/12) Source: SINDEC published in Folha de São Paulo newspaper P1 TIM P3 P4 7
  8. 8. Network and Quality 3G Coverage Anatel Plan: Network Development Anatel Plan: Quality Targets (# Cities, % Urban Population Covered) (Units TRX, Km Fiber) (Preliminary Results)% Urban Pop TRX (000) SMP5 – Call CompletionCovered 72% 54% 66%  241 271 97%  95% 95% 95% 205 205 712 # cities 2012a Anatel 2013e 2014e 2012a Anatel 2013e 2014e 488 Plan Plan 210 Data Channel Elements (000) 741 SMP7 – Drop Call 2010 2011 2012 406  328 517 1.7%  2.0% 2.0% 2.0% 2012a Anatel 2013e 2014e 2012a Anatel 2013e 2014e Organic Capex (ex- 4G license) Plan Plan (Capex/Sales, Mix of Investments) FTTS (Km of Fiber 000) 53 SMP8 – Data Connection Rate  47 19.6% 39  38 99% 95% 98% 98% As % of 18.0% 18.0%Net Revs 3.4 2012a Anatel 2013e 2014e 2012a Anatel 2013e 2014e 3.0 2.8 Plan Plan FTTS (#Sites 000) 3.3 SMP9 – Data Connection Drop Rate Infra 2.7Invest. 2.3 2.7 3.1 1.3  1.3 3%  5% 5% 5% OtherInvest. 0.5 0.3 0.2 2010 2011 2012 2012a Anatel 2013e 2014e 2012a Anatel 2013e 2014e Plan Plan 8
  9. 9. Marketing 9+
  10. 10. Customer Base Evolution Voice post-paid Base Analysis (ex-M2M and broadband) (Million lines) Customer Base Growth (% YoY) 10.5 10.7 D% YoY Thousands 10.4 10.2 10.4 10.3 +15% 9.9 10.0 9.8 9.4 9.5 9.7 10.7 9.3 +15.5% Total post- 8.3 8.4 8.7 +25% paid 10.3 base 10.0 9.7 Voice post- 4Q12: 519k Net addspost-paid paid base 34% Net share (#2) 9.3 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Source: Anatel 4Q11 1Q12 2Q12 3Q12 4Q12 +75 Bps Voice Growth (MOU) (Minutes; %YoY; Top Up) post- 14.5% 14.4% 14.5% 14.8% 15.3%paid Mix % YoY +1.7% +0.2% +0.2% +6.7% +14.5% +8.8% 59.1 59.6 Top Up Volume 58.9 57.6 210pre-paid 150 139 183 +15% 54.8 131 126 127 4Q11 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12Source: Anatel 10
  11. 11. Data as Key Driver for GrowthProducts Net Revenues Handset Sales Market Share Smart/Web phone Penetration(R$ Million) (% of handset revenues from Jan/12 to Nov/12) (% over total base of lines) +56.4% 1.6x 706 Operators 43.1% 7% 39.1% 622 35.2% 563 54% 25% 31.1% 451 453 46% 30% 26.6% Open Market 38% 4Q11 1Q12 2Q12 3Q12 4Q12 P1 TIM P3 P4 Sales of web/smartphones represented 65% Source: Company estimates 4Q11 1Q12 2Q12 3Q12 4Q12VAS Gross Revenues SMS unique users growth Data users(R$ Million; % of Gross Mobile Services Revenues) (Million Montlhy unique users) (Million monthly unique users) 19.6% 20.5% 18.1% 18.7% +21.5%16.7% +24.6% >21 ~18 +29.7% 1,243 1,132 1,000 1,031 958 4Q11 1Q12 2Q12 3Q12 4Q12 3G coverage (% of urban 66% 72% 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 pop.) 11
  12. 12. Stabilized ARPU QoQ Post-paid and Pre-paid ARPU ARPU (%QoQ) (R$; QoQ%) -6.8% +0.1% +3.4% -4.5% +3.5% +5.1% ARPU 19.1 18.9 19.9 18.3Generated* Post-paid 1Q12 2Q12 3Q12 4Q12Received* 1Q12 2Q12 3Q12 4Q12 YoY% -8.0% -15.3% -11.0% -9.5% +5.6% -2.8% +3.2% Amid a 13.8% MTR cut, ARPU remains stable since Q2 ARPU stabilized on a Quarter over Quarter basis Pre-paid FMS take-uo on voice and data helped ARPU dilution trend Strict churn policy increasing efficiency and ARPU 1Q12 2Q12 3Q12 4Q12 Incoming Outgoing VAS*Generated: Outgoing Voice Services & VAS; Received: Incoming Services 12
  13. 13. Live TIM 13+
  14. 14. Live TIM: Up & Running MSANs Optical BackboneNetwork 2 networkConstruction 1 3 Buildings authorized Building’s connected MSANs installed 7.1 k 8.5 k 3.0 k 4.2 K 405 694 3Q12 4Q12 3Q12 4Q12 3Q12 4Q12 Capex per Client Quality of Service (R$) (Average Speed in Mbps) >700 35 37 500Quality of 20 21Service withLow Cost 1.8 0.4 Market Average Live TIM Live TIM 2012 Dec/15e (nominal) (delivered) Download Upload 14
  15. 15. Live TIM: Speeding-Up with the New OfferMarket Demand Offers(Units) (Units) Launch Promo Actual (jan13) Website Registration 160k Customer Base / Sales Msan Installation Takeup (average) weeks (000 Clients) MKT share per Week per Coverage 10 Customer Base 10% 9 Sales 8 7 6 5 5% 4 3 2 1 0% 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 may/12 jun/12 jul/12 aug/12 sep/12 oct/12 nov/12 dec/12 Week 15
  16. 16. Financials 16+
  17. 17. EBITDA & Efficiency EBITDA Evolution (R$ Million) 16 mln of provision on advertising credit ~400 26 mln of provision on Anatel administrative procedures established between 2007/09 +69 +91 -630 +1,067 -202 5,052 -42 5,010 4,658 27.3% 26.9% 26.7% EBITDA Margin 32.4% 32.1% 32.5% Service EBITDA Margin EBITDA Δ Services Δ Handset Δ Marketing Δ Network Δ Pers./G&A Adj. EBITDA Non- Rep. EBITDA 2011 Revenues Margin and Sales and ITX and others 2012 recurring 3Q 2012 ΔYoY +6.9% -20.9% -2.3% +13.3% +11.8% +8.5% +7.6% Handset Business and Commercial Efficiency Leased Lines, Traffic and ITX Costs (%YoY) (Compound Growth Rate - Quarterly) Traffic Handset Business 6.9% Net Product COGS +26% +35% Revenues 2011 2012 2011 2012 2011 2012 Leased ITX costs Commercial Efficiency Lines costs (ex-SMS) 0.2% Gross -0.6% -3.4% Commissioning Adds Expenses -9.3% 2011 2012 2011 2012 2011 2012 2011 2012 17
  18. 18. Net Income & Dividend From EBITDA to Net Income (R$ Million) 5,010 16 + 26 = 42.1 mln – provisions 9.1 mln – monetary adjustments for the administrative procedures -2,689 2,321 -168 -705 1,449 1,500 EBITDA Depreciation/ EBIT Net Financial Taxes and Net Income Adj. Net 2012 Amortization Result Others 2012 Income 2012 ΔYoY +7.6% +3.6% +12.6% -29.7% +29.1% +13.4% +17.4%Organic Net Income Dividend Evolution(R$ Million, CAGR) (R$ Million, CAGR, Reported Payout) +22% +39% 1,500 743 1,278 533 776 497 2010 2011 2012 2010 2011 2012 Payout 22% 42% 51% Ratio 18
  19. 19. Cash Generation 2012 Operational Free Cash Flow Net Debt (R$ Mln) (R$ Mln) R$ 378.2 Mln of 4G Licenses EBITDA: -5,010 5,010 -3,765 D WC: -579 Capex: +3,765 Dividends: +523 ~ R$ 340 Mln of Income Tax: +414 License payable Others: +295 441 -1,824 +579 1,824 +1,232 -151 EBITDA CAPEX Δ WC OFCF%YoY +7.6 +24.4 +7,342 +12.4 2011 Oper. Non-Oper 2012%Net FCF 26.7 20.1 3.1 9.7 Net FCF NetRev. Debt Debt 5.1 Bln for Organic EBITDA in 2012 1.8 Bln of Oper. Free Cash Flow in 2012 3.4 Bln on Organic CapEx in 2012 19
  20. 20. Conclusions & Outlook 20+
  21. 21. Conclusion % Households with only mobile services Fixed price premium over mobile TIM MoU Mobile (minutes) 55%FMS on Play 49% 129 136 116 83 Fixed 2009 2011 2006 2009 2011 2014 2009 2010 2011 2012 2015e Mobile Broadband Access per Social Class Data Monthly Users +600 bps +700 bps x2 x5 (Mln) >21Mobile ~18Data 20% 20% 2010Accelerating 18% 18% 14% 2011 11% 9% 4% A Class B Class C Class D/E Class 4Q11 1Q12 2Q12 3Q12 4Q12 Source: PNAD (national institute of statistics) MTR Path MTR (Mobile Termination Rate) (R$/minute) • Cut implemented • Clear path towards 2016 0.37 0.33MTR & EILD • Great contribution from mobile sector (ARPM -16%YoY) 0.25partially 0.17implemented EILD (Leased lines) • Resolution 590 released (cut up to 30%) • Needed framework to be followed by incumbents • Monopoly break 2012a 2013e 2014e 2015e 21
  22. 22. 2013-2015 Guidance Mobile Customer Base FMS – Voice (MOU) Internet for All (Mobile Data) Million of lines Minutes of usage per line Data as % of Gross Mobile Revenue 250 >200 25% >26% > 90 200 19% 150 20% 70.3 129 15% 64.1 150 116 15% 13% 51.0 100 Double digit 10% Double digit growth growth 50 5% 0 0% 2010 2011 2012 2013e 2014e 2015e 2010 2011 2012 2013e 2014e 2015e 2010 2011 2012 2013e 2014e 2015e 2013 – 2015 Industrial Plan will be released on Feb 8th www.tim.com.br/ir or www.telecomitalia.com/FY2012preliminary-webcast/ita 22

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