2012-2014 Plan Outline
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2012-2014 Plan Outline

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2012-2014 Plan Outline 2012-2014 Plan Outline Presentation Transcript

  • Telecom Italia Conference Call2012‐14 Plan Outline Telecom Italia – TIM Brasil 2012 14 Plan Outline 2012‐14 Plan Outline LUCA LUCIANI
  • Telecom Italia Conference Call2012‐14 Plan OutlineSafe HarbourThese presentations contain statements that constitute forward‐looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995. These statements appear in a number of places in this presentation and includestatements regarding the intent, belief or current expectations of the customer base, estimates regarding future growthin the different business lines and the global business, market share, financial results and other aspects of the activitiesand situation relating to the Company and the Group.Such forward looking statements are not guarantees of future performance and involve risks and uncertainties and uncertainties,actual results may differ materially from those projected or implied in the forward looking statements as a result ofvarious factors.Forward lookingForward‐looking information is based on certain key assumptions which we believe to be reasonable as of the datehereof, but forward looking information by its nature involves risks and uncertainties, which are outside our control, andcould significantly affect expected results.Analysts are cautioned not to place undue reliance on those forward looking statements, which speak only as of the dateof this presentation. Telecom Italia S.p.A. undertakes no obligation to release publicly the results of any revisions to theseforward looking statements which may be made to reflect events and circumstances after the date of this presentation,including, without limitation, changes in Telecom Italia S.p.A. business or acquisition strategy or planned capitalexpenditures or to reflect the occurrence of unanticipated events. Analysts and investors are encouraged to consult theCompanys Annual Report on Form 20‐F as well as periodic filings made on Form 6‐K, which are on file with the UnitedStates Securities and Exchange Commission. LUCA LUCIANI 1
  • Telecom Italia Conference Call2012‐14 Plan OutlineAgenda TIM B il 2011 R Brasil Results l TIM Brasil Plan Take-Aways LUCA LUCIANI 2
  • Telecom Italia Conference Call2012‐14 Plan OutlineThree Years in Few: Accelerating Growth and Profitability Customer Base Expansion Revenues growthMln Lines R$ Bln $ 3x +18% 18% 13.1 Net Adds +5% Fastest 9.9 0% growing Revenues Company 4.7 Growth YoY 64.1 17.1 51.0 13.7 14.5 41.1Customer Total +56% +25% Base Revenues 2009 2010 2011 2009 2010 2011 Market share EBITDA , EBIT , EBITDA-CAPEX% lines R$ Bln 34% 33% Leading 4xIncremental growth for 2,1 market 20% the 2nd year 1.2 share 1.64 26.5% EBIT 0.5 1.36 Market 25.1% 0.82 Back to #2 share EBITDA-CAPEX 23.6% 2x 2009 2010 2011 2009 2010 2011 EBITDA 3.5 4.2 4.6 LUCA LUCIANI 3
  • Telecom Italia Conference Call2012‐14 Plan OutlineTwo Markets One approach: Simplicity Markets, “Voice is Good” “Internet for All”Total Voice Traffic Volume Example: Infinity Web p yBillion Minutes Push P h on Daily Internet unique >15mln i >15 l unique users per FMS users - Pre paid (Mln) month (Pre+Post) 2x 86.7 9x 2.7 62.5 62 5 38.1 0.3 2009 2010 2011 Aug 10 Dec 11 “Ride the Voice Revenues Simplicity” Data RevenuesVoice Outgoing Revenues D R Data Revenues +49% dataR$ Billion R$ Billion growth in Q4 +34% 13.4 +67% 3.2 11.3 2.2 10.0 1 1.9 2009 2010 2011 2009 2010 2011 Leading the Voice Market with just 2 concepts: Infinity and Liberty (voice and internet) LUCA LUCIANI 4
  • Telecom Italia Conference Call2012‐14 Plan OutlineEfficiency in Go 2 Market (i e : Post paid) (i.e.: Post-paid) Customer Base Post-Paid Bad Debt and SAC/ARPUMln lines % Revenues, months , 0.6 0.7 2.00% 1.83% 0.3 0.3 0.3 Net 0.2 0.2 Bad 1.34% 1.08% 0.95% 0.2 1.04% 0.77% 0,92%Adds debt 8,005 8,636 9,291 3.1 , 7,222 7,465 7,688 2.6 2.3 3 6,602 6 602 6,944 6 944 1.5 1.8 1.6 1.7 1.3 +24.5% SAC/ CB YoY ARPU 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Anatel’s SMP 11 Indicator* Product Revenues and Capitalized SubsidyCare/1.000 Bills R$ Mln 732 712 664 424 468 433 380 Product 286 1.61 1.55 1.85 1 85 1.91 1 91 1.11 Revenues 1.17 115 85 1.53 1.47 1.69 1.63 Capitalized 1.10 64 26 8 0 0 0.76 Subsidy 0 Jan’11 May’11 Sep’11 Dic’11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11*Care relative to billing problems LUCA LUCIANI 5
  • Telecom Italia Conference Call2012‐14 Plan OutlineAgenda TIM B il 2011 R Brasil Results l TIM Brasil Plan Take-Aways LUCA LUCIANI 6
  • Telecom Italia Conference Call2012‐14 Plan OutlineContinuous Reshaping of the Brazilian TLC Market Market Transformation R$ Billion 106 115 126 134 Pure Mobile Advantage 55 53 Fixed 59 60 (43%) (40%) Mobile over Fixed” : (56%) (52%) towards 60/40 split Force Fixed Mobile Fixed-Mobile 71 81 substitution (voice) 47 55 (60%) Mobile (57%) (44%) (48%) Mobile Internet competitive vs <2 Mbps 2009 2011 2014 2016 wireline BB accesses 96 82 Capital Allocation Fixed 51 29 Voice is Good 2G Capacity (Push the FMS) Mobile 45 53 Intelig Acquisition 2009 2016 52 24 3G Coverage Internet for All TIM Fiber Acquisition Fixed 10 28 (AES Atimus) Mobile M bil 2 8 2009 2016 7 LUCA LUCIANI
  • Telecom Italia Conference Call2012‐14 Plan OutlineLimited BB capabilities from incumbents create 3 opportunitiesfor TIM % of fixed accesses 1. FMS Voice Price per minute Fixed 100% Mobile ~70% 30% 80% 24%~ ~6% 20% Total wireline Voice only BB <2Mbps >2Mbps market accesses nominal speed nominal speed 2. FMS Data 3. TIM Fiber Mln clients 13,2 Selective tt k f the Adsl S l ti attack of th Ad l TIM monthly 6,7 incumbents via Naked VDSL ultra BB unique users (Pre-paid) powered by the 5.500km Optical Fiber Dic/10 Dic/11 in RJ/SP Smartphone p penetration 10% 27% LUCA LUCIANI 8
  • Telecom Italia Conference Call 2012‐14 Plan Outline Internet Booming (“Internet for All ) ( Internet All”) A large potential market With high willingness to use/to buy Huge frustration from fixed linesMln of Brazilian Internet Users 195 Brazilian Households Mln Subscribers Exposed to 15.5 % of Households th Don’t Have Fresh Best fit to Broadband C+D FMS even Market 100% Mobile on Data 117 80% 80% hat Existing Fix C+D Market 60% 24 40% Mobile C+D Broadband 54 A+B 20% 20% Co ce t ated Concentrated in main cities (RJ+SP) BroadBand Narrowband Total Posses Use but Not use Total own 0% 5% 10% 15% 20% 25% 30% (>2 Mbps) (< 2Mbps) Wireline not (up to Users access % of Households that Have Intention To Buy Accesses posses now) AES Atimus acquisition allows TIM to offer a “Internet for All” experience: … the Ultimate Mobile Data … Ultra BB experience for …Internet Café Substitution Experience (powered by Residential and Corporate to target Class C Potential FTTS) (Fixed) Liberty Web Infinity Web TIM Fiber LUCA LUCIANI 9
  • Telecom Italia Conference Call2012‐14 Plan OutlineThe New Integrate Network Approach(“Leveraging AES Atimus Fiber Optic based”)Fiber To The Site/Antenna (3G+ Evolution) MBB Overlay 3 Carriers per antenna Fiber to the Site in top 42 Cities (high 3 sub-carriers of 21 MB each* capacity) Total Available = 360MB 3 Carriers per antenna (spectrum optimization) Upgrade to 21 Mbps (HSPA+) of existing Node-B Liberty Web SIM Based Identification/Billing Single SIM to identify Copper or and bill Fiber Drop WiFi Underlay Wi-Fi offload (e.g. Rocinha) 300 Mb 100MB 200 ports 10 thousand hot spots semi public 50 Mb Rocinha example and 5 main airports Roadmap to extend over 10,000 hot spots by YE 2012 and 25,000 by ‘14 <R$500/Household Infinity Web High Capillarity of the aerial fiber based network (~250 meters to the Home) Flexibility: fast drop at the building Use of existing internal network TIM Fiber LUCA LUCIANI 10
  • Telecom Italia Conference Call2012‐14 Plan OutlineWiFi Off load supporting the “Internet for All” - Rocinha results Off-load Internet All Rocinha results Option 1: Add One Additional Base Station Option 2: Cover With WiFi One additional BTS 25 Access points Throughout : 201 Mbps Average distance: 200m TIM BTS TIM BTS Throughput: 5Ghz Performances: 5,000 TIM BTS simultaneous TIM BTS connections TIM BTS 1-2 Mbps per user Capex p Results Achieved R$ and R$ per MBps ~ 1’500 Mbps ~ 300 K ‐54% Reduced capex Reduced time to market educed e o a e Reduced operating costs 7X   Increased customer experience/speed ~ 137 K Executed Internet for All – LAN Houses already reduced by 25% ~ 200 Mbps Gained company brand image with local and federal government Alternative 1: BTS Alternative 2: WiFi Alternative 1: Alternative 2: BTS WiFi LUCA LUCIANI 11
  • Telecom Italia Conference Call2012‐14 Plan OutlineAgenda TIM B il 2011 R Brasil Results l TIM Brasil Plan Take-Aways LUCA LUCIANI 12
  • Telecom Italia Conference Call2012‐14 Plan Outline2012-142012 14 Drivers of Growth CAGR ‘11 – ‘14 3 Ways of Growth Revenue Growth R$ Billion XX% 17.1 Total 13.8 14.5 Revenue 13.6 15.3 Fixed 12.8 0.7 0.8 0.6 Services Revenues 12.2 12.9 14.5 Mobile 90 25% VAS 200 mou mln lines Incidence 2009 2010 2011 2012 2013 2014 Community Expansion FMS (Voice) Internet for All Mobile Customer Base FMS – Voice (MOU) Internet for All (Mobile Data)Million of lines Minute of usage per line Data D t as % of S i f Service R Revenue ˜200 ˜25% 90 129 14% 116 11% 12% 64 4 51 83 41 +XX% +XX% +XX% Outgoing Voice Revenues 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 LUCA LUCIANI 13
  • Telecom Italia Conference Call2012‐14 Plan OutlineNetwork Continuous Evolution Network roadmap 2G (TRX Installed) 3G roll out 000 TRX Pop % 2G Managing the growth 253 >80% 157 64% Speed up the roll-out in 3G HSPA mode 2011 2014 2011 2014 WiFi >10,000 hot spots by YE2012 FTTS Backbone FTTS Deployment in Top 42 cities % of total traffic 000 km 49.0 50% 24.0 FTTH ~1 Mln households by 2015 42 Cities 14 Cities 25.0 Efficiency ~50,000 km in fiber optic 2011 Swap + 2014 2012 2014 built out 2G (TRX I Installed) ll d) TIM Fib – non capital intensive Fiber it l i t i Metropolitan Street Internal Installation Modem Tim Fiber: a “no Capex intensive” network equipment network approach to offer Residential Ultra BB Aerial ~500 ~2,400 ~2 400 in S SP/RJ network Underground ~1,700 + ~250 + ~125 + ~200 + ~125 = ~500 network LUCA LUCIANI 14
  • Telecom Italia Conference Call2012‐14 Plan OutlineTake-awaysTake aways on main TIM Brasil trends Revenues (New vs Old Plan)Bln R$ New MTR glide path (-20% real term) as of feb’12 Old impacts approx. 250 bp in Revenues and EBITDA 17.1 Growth resulting from further CB, voice MOU and Revenues internet browsing 14.5 For 2012, revenues growth at >10% YoY (vs. 15.5 14.5 R$17.1Bn in 2011) 1yr in advance 2010 2011 2012 2013 2014 Network sinergies from AES Integration Continuous efficiency in Go2Market (no subsidy, SAC/bad debt) Organic CAPEX (as % of Sales) Ebitda Absorbing MTR cut and TIM Fiber start-upBln R$ For 2012, Ebitda growth at >10% YoY (vs. 19.6 R$4.6Bn R$4 6Bn in 2011) % of 17.5 17 5Revenues ˜14% 3.0 3.0 3.0 3.0 Expanding 2G capacity and 3G coverage 2.8 Accelerate FTTS in Top 42 Cities and Wi-fi CAPEX offloading Capex Tim Fiber start-up 2010 2011 2012 2013 2014 CAPEX flat at 3 bn/year; R$9bn in 3 Years LUCA LUCIANI 15