Tim   meeting with investors - april 2014
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Tim   meeting with investors - april 2014 Tim meeting with investors - april 2014 Presentation Transcript

  • MEETING WITH INVESTORS TIM PARTICIPAÇÕES S.A. APRIL 2014
  • KNOWING TIM 2 KNOWING TIM BETTER Gross Revenues (R$ Bln) Customer base EoP (Million) 1998 2013 1998 2013 15,000 km fiber optical backbone 5,500 km fiber optical backhauling Organic Growth Growth Via Acquisition Brazilian Law “Nível” 1 “Nível” 2 Legal Requirements Demand for transparency and disclosures Highest level of Corporate Governance Requirement of protection for minority shareholders  100% Tag Along  Equal dividends rights  One single class of shares  Strict disclosure policy  Statutory Audit Committee: • Report to Board of Directors • Oversight Financial reporting • Analyze anonymous complaints Unique Telco company listed on the Novo Mercado CORPORATE GOVERNANCE TIM: A Huge Brazilian Company  Presence in Brazil since 1998.  13th largest Private Company in Brazil (source: Exame Magazine - 2013).  Approximately R$31 billion of Market Capitalization.  73.6 million customers (27% Share)  The 2nd Player - Market and rev. share  More than 430,000 points of sales  More than 160 own stores  15 Customer Care Centers (16k attendants)  ~14,000 Antennas  3,406 cities covered  95% of urban pop. covered  47,000 km of optical fiber network  ~12,200 employees  23,000 indirect jobs  R$10.4 billion in taxes payments in 2013  R$3.9 billion invested in 2013 Sales Network Social & Economic 73.4 29.6 GROWTH STRUCTURE
  • MACRO SCENARIO 3 MACRO SCENARIO: A DIFFERENT OUTLOOK • Market consensus shows a much softer growth. • Telecom industry has shown resilience, specially in the mobile side, but it is not completely immune. • Mobile sector will continue to benefit from fixed-mobile substitution, now also strong on data. Real GPD Forecast (% YoY Growth) Inflation Forecast (IPCA: % YoY Growth) Interest Rate Forecast FX Rate Forecast (R$/U$ - year average)(% Selic Target p.y. – year average) Source: BaCen 3.3 3.8 2.4 2.3 2.4 2014 2015 2016 Old Scenario New Scenario 5.5 5.0 5.9 5.6 5.4 2014 2015 2016 Old Scenario New Scenario 8.7 9.0 8.8 10.9 11.9 10.0 2014 2015 2016 Market Consensus on Feb/12 Market Consensus on Feb/13 2.0 2.1 2.1 2.2 2.5 2.5 2.5 2.3 2014 2015 2016 2017 Market Consensus on Feb/13 Market Consensus on Feb/14 2.2 2013a 8.2% 2013a 6.3% 2013a 2.3% 2013a
  • Industry Overview
  • INDUSTRY OVERVIEW 5 BRAZILIAN TELCOS X-RAY Fixed Mobile Fixed Mobile Fixed BB/TV Fixed / Mobile Fixed BB/TV Fixed / Mobile Fixed BB Oi FY 2013 Vivo FY 2013 Claro FY 2013 TIM FY 2013 Mobile Fixed Fixed BB TV Group Customers (000´s) 73.431 662 60 n.d 74.153 Market share 27,1% 1,5% 0,3% n.d --- Net Revs(R$ Mln) 19.264 657 19.921 Mobile Fixed Fixed BB TV Group Customers(000´s) 77.245 10.312 4.306 594 92.457 Market share 28,5% 23,0% 19,7% 3,3% --- Net Revs(R$ Mln) 23.002 11.720 34.722 Mobile Fixed Fixed BB TV Group Customers (000´s) 50.216 17.775 6.376 829 75.196 Market share 18,5% 39,6% 29,2% 4,6% --- Net Revs (R$ Mln) 9.290 19.132 28.422 Mobile Fixed Fixed BB TV Group Customers(000´s) 68.704 10.641 6.564 9.661 95.570 Market share 25,3% 23,7% 30,1% 53,6% --- Net Revs(R$ Mln) 12.770 20.427 33.197 Source: Companies Releases
  • STILL INCREASING INTERNET PENETRATION AND DATA MARKET Market Data Revenues Growth 2016 vs. 2012:  >13 bln Reais on Mobile (+100%)  >7 bln Reais on Fixed (+35%) Source: CETIC´13 60% 36.8 mln 40% 24.5 mln 44% 16.2 mln 24% 8.8 mln 32% 11.8 mln (40%) (60%) 61.3 Mln Possess Internet connection Does NOT Possess Internet connection Other Lack of coverage Too Expensive 53% of active connection base has currently a speed below 2Mbps 71% 65% 59% 48% 39% 24% 18% 12% 5% 2% 1% 1% R$ 10 R$ 20 R$ 30 R$ 40 R$ 50 R$ 70 R$ 80 R$ 100 R$ 150 R$ 200 R$ 250 > R$ 250 Willingness to pay (% of Households) Total Households Households which does NOT possess CABLE FTTH ADSL VDSL MBB Households with internet connection and breakdown for households without internet connection: INDUSTRY OVERVIEW 6
  • Widespread use of Social Media (Social Network Users in Brazil 2011-2017) INDUSTRY OVERVIEW 7 BRAZILIAN INTERNET USAGE BOOM Internet Penetration in South America (Internet users per 100 inhabitants) Strong adoption of VoIP and IM (VoIP users in Brazil - mln) High Penetration of E-commerce (E-commerce revenues in Bln US$) 8.4 11.0 17.0 2010 2011 2012 Amazon lauched operations in Brazil in Dec/12 83 mln Internet users – Brazil is the 5th largest nation in the world of internet users 66% 60% 59% 56% 46% 44% 41% 37% 32% 32% 30% 24% Arg Col Chi Uru Bra Ecu Vem Per Guy Sur Bol Par 56.1 66.2 78.3 88.3 97.8 104.2 110.0 2011 2012 2013 2014 2015 2016 2017 #2 in Facebook active users (76mln) only after US #2 in Twitter users (41mln) only after US 2nd largest market outside US 22% 18% 18% 13% 11% 7% 6% % Growth YoY Social media users 0.6 1.9 2.7 3.4 3.9 4.3 2007 2008 2009 2010 2011 2012 28% of mobile users in Brazil use Instant Messaging apps Source: SocialBakers, e-Marketer, Semiocast, G1.com, Folha de São Paulo
  • Mobile 23.0 12.8 9.3 19.3 4.8 Fixed+Data +Pay Tv 11.7 20.4 19.1 0.7 4.9 Total 34.7 33.2 28.4 19.9 4.8 4.9 Vivo/TLF Claro/EB T/NET Oi TIM/ Intelig Nextel GVT LEVERAGING ON PURE MOBILE COMPETITIVE ADVANTAGE Long Distance Leader 50% Market Share 2nd Overall 73.4 million customers Prepaid Leader 28.9% Market Share Source: Companies Releases, TIM estimates; CETIC jun’13; Akamai ; PNAD - IBGE FMS Focus A pure mobile approach is the most suitable strategy to capture both opportunities Oi Claro Vivo TIM 29.7% 29.5% 29.1% 28.5% 25.1% 26.5% 26.9% 27.1% 25.4% 24.9% 24.9% 25.3% 19.4% 18.8% 18.8% 18.5% 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 Customer Base Evolution (Market Share) Entering in Data World Via Mobile (mln users) Voice FMS: TIM, with no legacies, can only gain on the trend (R$ billion, Net Revenue per Group 2013) 4Q13 x 4Q10 -1.2 p.p +1.9 p.p -0.1 p.p -0.8 p.p Source: ANATEL Mobile Fixed 4.1 14.6 33.1 52.5 94.8 11.4 13.8 16.3 19.1 20.9 2009 2010 2011 2012 2013 +83% +23x INDUSTRY OVERVIEW 8 28% 26%23% 16% 4% 4% Vivo Claro Oi TIM GVT Nextel Revenue Share
  • Users’ Preference for Mobile (%Households w/ mobile phones only) EBITDA (% YoY; Not including assets sales; Mobile as TIM, Vivo numbers estimated) Low Fixed Broadband Quality (Brazil’s Average Speed; Source: Akamai) Fixed Incumbents Mobile 41.1% 49.7% 51.0% 2009 2011 2012 3Q13 2.7 Mbps ANATEL: >50% of fixed broadband connections are below 2Mbps -5.8% -1.5% -1.6% 4Q11 4Q12 4Q13 -8.8% 4.5% -9.2% 4Q11 4Q12 4Q13 11.0% 5.3% 5.7% 4Q11 4Q12 4Q13 9.5% 8.0% 5.1% 4Q11 4Q12 4Q13 Fixed Incumbents Mobile Source: PNAD 2012 Net Revenues (% YoY, Vivo numbers estimated) PURE MOBILE STRATEGY PAYING OFF INDUSTRY OVERVIEW 9
  • Recent Results: 4Q13 & 2013 in Few
  • RESULTS: MAIN HIGHLIGHTS 18.8 19.9 2012 2013 4.1% 1.8% 4.2% 5.2% 1Q 2Q 3Q 4Q 1.4 1.5 2012 2013 • Data Revenues +21.5% in FY13 • EBITDA Margin at 28.9% in 4Q13 • Services EBITDA Margin at 32% in FY13 Financial Performance Efficiency Network Improvement Offer Evolution Net Revenues (R$ bln) SAC/ARPU (in months) EBITDA (Δ% YoY) • Subs. acquisition costs: R$28 in FY13 -6% YoY • Leased line cost reduction: -6.0% YoY in FY13 • Bad debt at lowest level: -4.4% YoY in FY13 • 39 cities fully covered with MBB project • 3G & 4G expansion (4G RAN sharing) • Network quality plan • Deployment of LT Amazonas Backbone • Plans ‘Controle’ and Express • Promotional top up • Infinity Web + SMS • Base mix (Prepaid 83% / Postpaid 17%) dec/12 dec/13 Total Base 73.4 mln users 1.6x 1.5x 1.6x 1.3x 1Q13 2Q13 3Q13 4Q13 Postpaid Customer Base +6% Net Income (R$ bln) 12.3 +15% MBB Small Cells & Wi-fi Active Fiber 39 2Q13 3Q13 4Q13 786 1Q13 2Q13 3Q13 4Q13 47 1Q13 2Q13 3Q13 4Q13 ‘000 Km 10.7 (# of cities) +4% +4% in 2013 RECENT RESULTS 11
  • REVISITING PRIORITIES • Stabilized and improved network performance • Prepared network for data evolution • Optimized Capex and Opex allocation • Improved customer base mix • Managed customer base with segmented offers • Evolved offers toward data and internet services • TIMmusic: >250k users in 4Q and 32 mln songs downloaded • Participating actively in industry discussions • Recovered institutional image and dialogue • “Open Doors” transparency initiative generated excellent results on customer interactions (>400k collaborations/month) • Took corporate governance to the next level (CAE) • Seeking “Best Company to Work For” status • Reinforcing compliance culture • Driving sense of belonging and employee pride 3Q13 4Q13 % of sites with active fiber (FTTS phase 2) on the targeted 35 cities TIMmusic and Infinity WEB + SMS WEBSITE + APP “Portas Abertas” 1 Network Quality & Infrastructure 2 Strategy & Offer Evolution 3 4 Institutional Relationships People & Organization TV Campaign featuring employees 63% 95% RECENT RESULTS 12
  • CUSTOMER BASE EVOLUTION 67.0 71.6 76.1 77.2 59.2 64.1 70.4 73.4 57.5 60.4 65.2 68.7 42.8 45.5 49.2 50.2 Customer Base & Net Additions (mln)  Growing above market  #1 player in prepaid  #2 player in voice postpaid  >3 mln net adds in 2013  Accelerating postpaid performance  Austere disconnection policy Base per Segment (% YoY) 3G Market Share (%; mln users) 4G Market Share (%; thd users) 4Q123Q122Q12 1Q133Q11 4Q11 1Q12 2Q13 3Q13 4Q13 TIM Total Net Adds: 11.3 13.1 8.7 6.2 4.6 6.3 4.9 3.8 1.1 3.1 3.5 1.0 47% 41% 20% 31% 21% 17% 12% 11% 2Q13 3Q13 4Q13 TIM 538 405 222 145 60.3 60.8 61.0 61.1 10.9 11.4 11.9 12.3 Pre Paid Post Paid 1Q13 2Q13 3Q13 4Q13 %YoY +15% +2% Source: ANATEL Source: ANATEL Source: ANATEL 26% 23%23% 25% 41% 39% 9% 12% 4Q12 1Q13 2Q13 3Q13 4Q13 TIM 22.3 23.6 36.6 11.5 Source: ANATEL 39.3 mln Total Net Adds: 19.6 mln Total Net Adds: 9.3 mln RECENT RESULTS 13
  • QUALITY IMPROVEMENT EVIDENCES  Improvement in all key Anatel indicators compared to 2012  Narrowing gap between IDA’s 1st place and TIM (2nd)  Stable Anatel’s complaints metric  Least claimed company at Procon  War Room helping to improve network KPIs Network KPI’s on target (%) (For the main 195 cities) Claims at Consumer’s Protection Agency (Procon) (in thds) Anatel Complaints over 1,000 lines Source: ANATEL Source: SINDEC-Procon 7.6 10.3 6.2 9.2 16.0 11.6 9.3 11.8 4Q11 2Q12 4Q12 2Q13 4Q13 65% 70% 75% 80% 85% 90% mar/13 dec/13 0.24 0.350.34 0.360.38 0.34 0.51 0.55 dec/12 mar/13 jun/13 sep/13 nov/13 TIM other TIM other Anatel’s Index of Caring Performance (in points) Source: ANATEL 98.2 92.4 93.3 91.9 91.1 87.2 84.4 76.2 dec/12 mar/13 jun/13 sep/13 nov/13 TIM other RECENT RESULTS 14
  • MAINTAINING EFFICIENCY 2012 2013 2012 2013 -6.0% SAC - Subscriber Acquisition Cost (R$) Bad Debt (R$ mln) -11% +7% -9% -10%YoY 73 68 56 44 1Q13 2Q13 3Q13 4Q13 29 27 31 24 1Q13 2Q13 3Q13 4Q13 SAC/ Gross Adds SAC/ARPU 1.6x 1.5x 1.6x 1.3x % over gross revenues Product Margin (Revenue – Cost) +22% 10.2 12.5 Handset Sold (mln units) Handset Business (% YoY) +50% Network Cost (% YoY) 2012 2013 Leased Lines (R$ mln) 2012 2013 +15% Total Voice Traffic (bln minutes) 1.0% 0.9% 0.7% 0.6% 2013 Gross adds: 40 millions  Postpaid Base: 12.3 mln +15% YoY  Total Base: 73.4 mln +4.3% YoY 0 Total Data Traffic (megabytes) YTD Nov/12 +78% YTD Nov/13 RECENT RESULTS 15
  • EVOLVING MARKETING PATH IN 2013: TRANSPARENCY, SIMPLICITY, QUALITY & INNOVATION 129 136 148 2011 2012 2013 11% 21% 49% 47% 1Q 2Q 3Q 4Q 24% 48% 78% 64% 38% 26% 29% 8% TIM Operator 1 Operator 2 Operator 3 2013 April July August October Net Adds Postpaid Mix (% Net Adds Postpaid/ Total) 4.4 5.4 18% 21% 2012 2013 VAS Revenue Growth (% of VAS Revenues over Gross Revenues; R$ million) Smart/webphone over new sales (%) Share of handset sales (FY13) (%) +22% Handset & Revenues Highlights Customer Base Highlights 48% 52% Open Market Operators ~39 mln smartphone/webphones users 2013 2012 VAS Prepaid VAS LDIQuality March MOU (Minutes of Use) (minutes) Outgoing ARPU (R$) 1Q13 2Q13 3Q13 4Q13 70% 65% 83% 4Q11 4Q12 4Q13 +15% RECENT RESULTS 16
  • STRATEGY TOWARDS DATA & INTERNET Re-visiting Market Structure TIM’s Position 3% 37% 51% 91%With Telephone Only mobile phone Mobile and fixed phone Households profile Fixed phone only Purchase power Salaries up to R$1.2k Salaries up to R$3.1k Consumption People that access Internet (10 years or +) 57 mln 32 mln 2 mln 81 mln 106 mln 23 mln Households with internet connection (%; CETIC jun’13) 53% of pop. 70% of pop. 27% 43% 55% 4Q11 4Q12 4Q13 BOU (Bytes of Use) (average megabytes per user) Source: Anatel; Company Source: PNAD 2012, CETIC.br TIC Domicílios 2012 18 21 27 4Q11 4Q12 4Q13 Data Users (Monthly unique users; CAGR 11-13 3G Subscribers (mln users; CAGR 11-13) Smart/webphone penetration (% over total base) 7 12 24 4Q11 4Q12 4Q13 Nov/12 Nov/13 Big opportunity for FMS on Data +82% +25% +75% Yes No 24.3 mln of households 83 mln 49% of pop. Fixed Mobile 21% 74% 40% 60% RECENT RESULTS 17
  • 30% 4Q10 4Q11 4Q12 4Q13 FINANCIAL RESULTS Net Revenues (R$ mln; % YoY) EBITDA (R$ mln) Fixing EBITDA Drags Intelig: EBITDA-CAPEX (R$ mln) FISTEL Payments (R$ bln) MTR Exposure (%) 2,344 3,220 16,420 16,701 Thousands Revenue 2012 Δ HandsetΔ Fixed Services Revenue 2013 Δ Mobile Services +876-255+537 Service Handset 18,764 ΔYoY 19,921 +3.5% -28.0% +37.4% +1.7% +6.2% +37.4% 5,012 EBITDA 2012 EBITDA 2013 ΔMkt and Sales ΔPers./G&A and others -95 -31 ΔNetwork and ITX +40 ΔServ. Revs 26.7% 32.1% +281 5,207 26.1% 32.0% EBITDA Margin Service EBITDA Margin +3.9% ΔYoY +1.7% +2.5% -0.7% +1.4% Leased Lines Cost (% YoY) 1.04 1.04 2012 2013 EBITDA Revenues +28% +11% +8% -5% -12% -10% 0% -1% 1Q 2Q 3Q 4Q 20132012 1Q 2Q 3Q 4Q -6% YoY 2013+9.7% YoY 2012 24% 4Q10 4Q11 4Q12 4Q13 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q - + RECENT RESULTS 18
  • FINANCIAL EVOLUTION 533 743 843 CAPEX Mix (%) Dividends (R$ mln, payout) Profit & Yield 1,278 1,449 1,506 2011 2012 2013 +13% +4% 2011 2012 2013 CAPEX (R$ bln) 3.0 3.8 3.9 2011 2012 2013 +90% in infrastructure  Focus in transport infrastructure  Zero subsidy policy on handsets Total: R$ 3.9 bln 5,207 -3,561* 571 2,216 EBITDA CAPEX Δ WC OFCF *OFCF does not consider R$310 mln of LT Amazonas leasing as CAPEX Net Income (R$ mln) 56% 51% 42% Capex/Sales 18.0% 20.6% 19.4% Investments Operating Free Cash Flow (R$ mln)  OFCF/Net Revenues: 11%  Expansion of +21.4% YoY Payout +39.3% +13.5% RECENT RESULTS 19
  • Live TIM
  • TIM FIBER: RESHAPING THE FIXED BROADBAND MARKET Building Up Size 2.9% 9.1% 2Q12 4Q13 Penetration of new neighborhoods (sales/addressable HH) 7 10 16 18 1Q13 2Q13 3Q13 4Q13 Net Adds in 2013 (000 users) Accelerating Growth Addressable HH (000 HH) 522 1,069 4Q12 1Q13 2Q13 3Q13 4Q13 Customer Base (000 users) Sep/12 Dec/13 60 Changing market dynamics Evolving overall market performance TIM Fiber 44%Other 56% UBB Market Share (SP + RJ) (connections >34Mbps) Average Speed (Mbps) Source: Anatel; Akamai 3Q13 84th position 43rd position * 12 months average of price / Mbps Source: Anatel; Akamai 3Q13 Net Adds speed mix (SP + RJ) (Mbps) Price per Mbps* (R$/Mbps) 4.0 2.8 2012 2013 5.0 1.0 2012 2013 29.8 0.7 2012 2013 GVT NET Vivo 38.9 22.1 13.3 9.8 5.7 5.5 4.9 2.7 Live TIM South Korea Japan US SP + RJ Australia Italy Brazil 1st position 57% 34% 26% 15% 17% 50% 4Q12 4Q13 > 34 Mbps 12 - 34 Mbps < 12 Mbps LIVE TIM 21
  • Business Outlook
  • PERSPECTIVES FOR 2014 Network Evolution Offer & Commercial Strategy  Network coverage expansion with increased rollout of Macro, Small Cells and Wi-Fi HotSpots  Acceleration of Mobile Broadband project from current 40 cities to over 100 cities  Focus on operational excellence and network availability by investing on people, systems and processes  Voice growth with migration to postpaid and bundling for Voice FMS  Speed up data growth with smartphones and tablets, innovative VAS, 4G offers and Data FMS  Fixed business growth coming back with positive contribution to results  Restructuring commercial channels  Rational approach to pricing  Continuation of Quality Plan monitoring and execution  Expectation of 4G Auction for 700MHz Spectrum  Discussions on Sector Cost Modeling and MTR evolution  Keen attention to competitive environment trends Recap of 2014-16 Business Plan Smartphone penetration (Over total base of lines) VAS Revenue Growth (% of Mobile Gross Rev.) Data Users (% Customer Base) Capex Evolution (% of Capex for Access Network) 43% 55% >75% 2012 2013 2016e 30% 37% >50% 2012 2013 2016e 18% 21% >40% 2012 2013 2016e 3yrs - Plan Guidance:  Revenues: MID single digit  EBITDA: MID single digit  Capex: ~R$11 bln 2013 2014e 2G 3G LTE Macro Environment BUSINESS OUTLOOK 23
  • STRATEGY: INFRASTRUCTURE EVOLUTION 2016 MASSIVE LD BACKBONE 65,000 KM OF FIBER 2013 FIBER TO THE AMAZON 46,000 KM OF FIBER BY YE13 Fiber to the site / Mobile Broadband Project Key to Data Growth  Targeting 38 cities in 2013,+100 cities till 2016.  From 2-8 to +100 Mbps.  LTE Ready.  Macro coverage fine tuning.  Focus on IP infrastructure, caching, peering. INTELIG 15,000KM 2009 INTELIG ACQUISITION  New backbone routes- Increasing resilience. 82% urban population 2013 2014 2015 2016 95% urban population #NodeB / eNodeB (3G + 4G) # BTS (2G) 2012 2013 2014e 2015e 2016e New Sites Including Small Cell. POP MW POP MW POP MW POP MW BSC-RNC Site POP MW 2013 2014 2015 2016 LTE* 3G 2G Fiber base Infrastructure Backhauling Evolution Increased Coverage and Access Capacity (# new elements) Capex Evolution Towards Data (% of total Capex) Small Cell Approach (# new elements) BUSINESS OUTLOOK 24
  • OFFER EVOLUTION 136 148 >170 2012 2013 2016e 2012 2013 2016e 18% 21% >40% VAS Gross Revs. VAS/Revs. 21.3 27.5 2012 2013 2016e 30% 37% >50% BUSINESS OUTLOOK 25 43% 55% >75% 2012 2013 2016 +xx% +29% +22% +xx% Smart/Web phone Penetration (% over total base of lines) Voice MOU (minutes) Data Users (% of Data Users in CB; million users) VAS Revenue Growth (% of Mobile Services Gross Revenues; R$ mln)
  • TIM PART: 2014-2016 GUIDANCE Total Net Revenues EBITDA CAPEX 18,764 19,921 2012 2013 2014e 2015e 2016e 5,012 5,207 2012 2013 2014e 2015e 2016e R$ million R$ million 626 3,139 3,871 3,487 384 2012 2013 2014e 2015e 2016e R$ million Infrastructure Others/Licenses 3,765 Guidance 2013-2016 CAGR: Mid Single Digit Growth 2013-2016 CAGR: Mid Single Digit Growth Total CAPEX 2014-2016: ~R$11 billion* *Does not consider 4G licenses (700Mhz). BUSINESS OUTLOOK 26
  • 4G Start Up
  • Vivo Claro Oi TIM 4G DETAILS Source: ANATEL 4G Market Share on 2500Mhz (%; thd users) 47% 41% 20% 31% 21% 17% 12% 11% 2Q13 3Q13 4Q13 538 405 222 145 2500 MHZ auction results Spectrum Characteristics 5800 Mhz 2100 Mhz 850 Mhz 700 Mhz < 700 Mhz BTS Range (km) 0 2 4 6 8 10 Numbers of BTS 20 15 10 7 5 2 Band W Band X Band V1 Band V2 2500 MHZ rural coverage obligations X band W band V2 band V1 band Roadmap Presidential Decree Nº 5820/06 Rules to the Digital TV migration 2006 2012 ANATEL’s Resolution Creation of a study group to define the future and the atribution of the band 2013 Ordinance Nº 14/13 Premises to 700 Mhz destination on the SMP 2015 2018 Shutting down Period Feb/Apr 2013 - Subrange Atribution CP Nov/13 Res. Nº 625/2013 – Atribution of the Subrange Paid ~R$0.3 bln Paid ~R$1 bln Paid ~R$0.8 bln Paid ~R$0.3 bln 4G START UP 28
  • Historical Data
  • CAPEX EVOLUTION Capex Evolution (R$ mln) Capex per Technology (R$ mln) Fiber to the site expansion to ~100 cities Benchmark: Anatel Plan for 2012-2014 (R$ bln) 3G 2G 3G 2G 3G 4G 2011 ~R$3,800R$2,983 2014e 5.9 4.8 4.6 2.1 5.0 3.5 2.6 3.4 TIM Claro Vivo Oi 10.9 +31% +52% +98% Copper (2-8Mbps) Before FTTS After FTTS Metro Ring Own Fiber (300 Mbps) From Copper To Fiber based  Wi-Fi small cell approach HISTORICAL DATA 30 Total Capex 2,836 2,983 3,386 3,871 2011 2012 2013 19% 17% 20% % over sales 2010 18% CAGR 11% Source: 5th monitoring cycle of mobile telecom improvements plan released by Anatel on Feb/14 8.3 7.2 5.5 Actual from 2012 to Oct/13 Forecasted to Nov/13 until 2014 end
  • RECENT TOWERS DEALS HISTORICAL DATA 31
  • HISTORICAL DATA: FINANCIALS (R$ THOUSAND) HISTORICAL DATA 32
  • HISTORICAL DATA: FINANCIALS (US$ THOUSAND) HISTORICAL DATA 33
  • HISTORICAL DATA: OPERATIONAL & FINANCIAL RATIOS ROA: NOPLAT/Avg. Total Assets. Calculation considers organic Net Income and EBITDA HISTORICAL DATA 34
  • Shareholders STRUCTURE AND STOCK PERFORMANCE Stock Performance (base 100)* 0 20 40 60 80 100 120 140 160 180 TIMP3 Ibovespa TSU *Last price as of 02/14/2014 TIM Celular S.A. Intelig 100% TIM Brasil Serv. e Part. S.A. Minorities Telecom Italia International N.V. Telecom Italia 100% TIM Participações S.A. ON: 33% (805,662,701)ON: 67% (1,611,969,946) 100%100% HISTORICAL DATA 35
  • Cofins PIS/ PASEP ICMS Fistel Fust/ FUNTEL TotalTotalFust/ FUNTEL PIS/ PASEP ICMSCofins Fistel 2007 2012 2007 2012 % Gross Revenues TELCOS’ TAX BURDEN & HIGH INVESTMENTS 3% ~1% 28% ~5% 1,5% ~39% 16.3 27.2 6.5 10.1 20% of Revenues +70% Taxation represents almost 40% of companies gross revenues. Tax Burden Composition Mobile Industry Tax Payments (R$ Bln) Mobile Industry Investments (R$ Bln) +60% HISTORICAL DATA 36
  • SAFE HARBOR AND IR CONTACTS SAFE HARBOR AND IR CONTACTS 37 Investor Relations Team Avenida das Américas, 3434 - Bloco 01 6° andar – Barra da Tijuca 22640-102 Rio de Janeiro, RJ E-mail: ri@timbrasil.com.br Leonardo Wanderley E-mail: lwanderley@timbrasil.com.br Phone: +55 21 4109-4017 Luiza Chaves E-mail: luchaves@timbrasil.com.br Phone: +55 21 4109-3751 Rogério Tostes E-mail: rtostes@timbrasil.com.br Phone: +55 21 4109-3742 Vicente Ferreira E-mail: vdferreira@timbrasil.com.br Phone: +55 21 4109-3360 Visit our Website www.tim.com.br/ir Safe Harbor Statements Statements in this presentation, as well as oral statements made by the management of TIM Participações S.A. (the “Company”, or “TIM”), that are not historical fact constitute “forward looking statements” that involve factors that could cause the actual results of the Company to differ materially from historical results or from any results expressed or implied by such forward looking statements. The Company cautions users of this presentation not to place undue reliance on forward looking statements, which may be based on assumptions and anticipated events that do not materialize.