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VIVO - Apresentation of 1st Quarter 2006 Results

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Apresentation of 1st Quarter 2006 Results

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VIVO - Apresentation of 1st Quarter 2006 Results

  1. 1. Vivo Participações 1Q06 Consolidated Results May, 4 2006 1
  2. 2. Highlights Development • Quality : 95.6% Anatel’s goals achieved; • Network and Handsets authentication in progress; • Reduction in PDD. Leadership • Leadership in cellular telephony in Brazil with 33.7% Market Share*; • More than 30 million clients; • More than 8 thousands points of sale (exclusive or not). Capex • Consolidation / Rationalization of IT/IS; • Coverage; • Customer Care to Corporate Segment. • Digital Coverage in all cities where Vivo operates; Technology • More than 79% of covered cities have 1xRTT; • Percentage of Population served with 1xRTT = 86%. • EBITDA of R$717.1 millions on 1Q06; Finance • Positive Operating Cash Flow of R$ 435.8 millions. • Corporate Restructuring successfully implemented; Corporate Governance • Second Stage proposed for incorporation of subsidiaries. * 43.5% in it’s authorized areas. 2
  3. 3. Client Base Evolution +11.8% YoY Growth Percentage + 11.8% + 13.1% 26,958 30,138 + 8.5% 5,761 Post + 6.1% 5,308 + 12.6% 1Q05 1Q06 24,377 21,650 Corporate Client Private Client •Loyalty and Retention •Focus on value clients 1Q05 1Q06 Pre Post 3
  4. 4. Leadership in Distribution & Coverage Only Operator in 3G : 18 Cities with EV-DO Channels of distribution 86% Pop with 1xRTT 1,780 Cities with 1xRTT 8,175 7,113 2,237 325 6,287 116 92 1,752 1,627 3,290 2,935 2,200 4,560 4,062 3,995 Vivo C1 C2 Vivo C1 C2 Retail Third Party Own Stores Cities Covered 4
  5. 5. Innovation & Technology • Improves capacity of voice and data Handsets Models 1XRTT transmission. 7 EV-DO Models 75% 50% with Digital Camera • 3G Access Technology ; • Data Transmission of speed 2.4 Mb/sec; EV-DO • High End Activations: + 25% EV-DO; 25% • More than 80 thousand clients. High + Mid End Low End • High Speed Internet Access; Plack & • More than 12 options of internet access PDA cards and PDA’s; • Enables automated solutions to banks, service sector and industries. TREO 650 Model 5
  6. 6. 1Q06 Main Marketing Actions Vivo bom de papo Fale mais por menos Customer talks to 30 million Features two packages with persons in Brazil for R$0.30 high minute content at per minute promotional prices Recarga em dobro Features the recharge value in double to local calls 6
  7. 7. Loyalty and Retention Focus on Mid and High Range Clients LOYALTY RETENTION Changes for Segmented Segmented Incentive to retain Pre-paid client through discounts Pre-Paid Offer in the exchange for a new handset keeping the Special offers to retain clients. number Program of Points are added and can be used when handset is Points Migration Pre-Post exchanged. Balance of points is sent by SMS. Inform to pre-paid clients the advantages of being a Post-Paid. Overlay CDMA Incentive to change TDMA handsets for CDMA Upgrade of Plans based on points. and Packages Adequate plan to profile maximizing value-for- money to client and increase customer satisfaction Globalmoto Direct mail Enables mid and high range clients to acquire the Globalmoto handset at differentiated prices. 7
  8. 8. Net Revenue R$ million + 0.6% 2,987 2,577 2,594 1,373 1,130 1,206 • Right Planning • Campaigns to incentive the intra network usage; 1,018 1,053 930 • Data transmission ; 140 • Internet access cards; PDA’s 126 143 and SMS. 268 456 315 1Q05 4Q05 1Q06 Handset Other Service Network Usage Monthly Subscription 8
  9. 9. Data Revenue Evolution R$ million Data Net Revenue Data Net Rev./Service Net Rev. 1Q06 +22% 4Q05 +21% 7.1% 0.8 pp 6.3% 5.8% 0.5 pp 1Q05 1Q05 4Q05 1Q06 9
  10. 10. Data: Services Breakdown Incentive to the Use of Higher Value Added Services Increase in WAP & ZAP 1Q05 1Q06 29% 41% 13% 16% 19% 22% 71% 59% WAP SMS ZAP + others WAP SMS ZAP + others 10
  11. 11. ARPU Blended 1Q05 vs. 1Q06 1Q06 vs. 4Q05 -11.8% -12.4% 28.8 29.0 25.4 ( 0 .9 ) 11.6 13.3 ( 1.5 ) ( 1.9 ) ( 2 .7 ) 10.4 15.5 17.3 15.0 Inbound Outgoing 1Q05 1- Client B ase 2 - Real A RP U 1Q06 2 - Real A RP U 1- Client B ase 4Q05 Gro wth, M ix and Variatio n Variatio n Gro wth, M ix and B usiness Days B usiness Days Outgoing 15.5 (0.2) (0.4) 15.0 (1.9) (0.4) 17.3 Inbound 13.3 (1.3) (1.5) 10.4 (0.7) (0.5) 11.6 11
  12. 12. ARPU Post-Paid 1Q05 vs. 1Q06 1Q06 vs. 4Q05 -3.1% -12.6% 85.5 77.1 74.7 ( 0 ,9 ) 23.7 ( 2 ,0 ) 24.9 ( 0 ,4 ) 21.5 ( 9 ,9 ) 61.8 52.2 53.2 Inbound Outgoing 1Q05 1- Client B ase 2 - Real A RP U 1Q06 2 - Real A RP U 1- Client B ase 4Q05 Gro wth, M ix and Variatio n Variatio n Gro wth, M ix and B usiness Days B usiness Days Outgoing 52.2 (0.1) 1.1 53.2 (8.2) (0.4) 61.8 Inbound 24.9 (1.9) (1.5) 21.5 (1.7) (0.5) 23.7 12
  13. 13. MOU Blended 1Q05 vs. 1Q06 1Q06 vs. 4Q05 -17.5% - 8.9% 81.9 74.1 ( 4 .6 ) 67.5 44.6 ( 2 .7 ) ( 9 .7 ) ( 3 .9 ) 40.0 36.5 37.3 31.0 34.2 Inbound Outgoing 1Q05 1- Client B ase 2 - Real M OU 1Q06 2 - Real M OU 1- Client B ase 4Q05 Gro wth, M ix and Variatio n Variatio n Gro wth, M ix and B usiness Days B usiness Days Outgoing 37.3 (0.5) (5.7) 31.0 (2.0) (1.1) 34.2 Inbound 44.6 (4.1) (4.0) 36.5 (1.9) (1.6) 40.0 13
  14. 14. MOU Post-Paid 1Q05 vs. 1Q06 1Q06 vs. 4Q05 +0.4% -5.4% 210.7 198.6 199.4 7 .1 ( 4 .5 ) 80.1 ( 6 .9 ) ( 6 .4 ) 76.0 80.5 130.6 123.4 118.2 Inbound Outgoing 1Q05 1- Client B ase 2 - Real M OU 1Q06 2 - Real M OU 1- Client B ase 4Q05 Gro wth, M ix and Variatio n Variatio n Gro wth, M ix and B usiness Days B usiness Days Outgoing 118.2 (0.4) 5.6 123.4 (4.5) (2.7) 130.6 Inbound 80.5 (6.0) 1.5 76.0 (2.4) (1.8) 80.1 14
  15. 15. SAC* Strategy focused on Retention and Acquisition of Value Clients -11.3% -7.4% 141 125 135 1Q05 1Q06 4Q05 *SAC Blended 15
  16. 16. Operating Costs* Costs Grow with competitive activity R$ million Cost of 376 services 434 rendered 445 153 Personnel 156 165 412 1Q05 Cost of 433 1Q06 handsets 626 4Q05 564 Selling 728 expenses 951 General & 122 administrative 129 expenses 181 *Depreciation is not included. 16
  17. 17. PDD Reduction Operating and Control Initiatives R$ million 260.8 Structure and Process Initiatives : Authentication of third party Analog and TDMA network; 161.0 - 38.3% Interception of calls posted by Vivo clients in roaming; 88.4 “Credit Scoring”; “Customer screening”; “Management of Consumption”. 1Q05 4Q05 1Q06 17
  18. 18. EBITDA and EBITDA Margin R$ million EBITDA EBIT 27.6% 37.9% 21.8% 977.7 650.1 717.1 446.3 125.5 59.6 1Q05 4Q05 1Q06 1Q05 4Q05 1Q06 EBITDA EBITDA Margin EBIT 18
  19. 19. Gross Debt, Net Debt and Gearing Improvement in Gearing. Short Term Debt is Covered. Gross Debt (R$ million) Net Debt (R$ million) 5,652.8 5,482.6 69% 60% 4,464.4 4,156.3 40% 31% 4Q05 1Q06 4Q05 1Q06 Short Term Long Term Gearing R$ million 8,594 8,416 4,156 4,464 0.48 0.53 Net Debt 4Q05 1Q06 Shareholder's Equity 4Q05 1Q06 19
  20. 20. Net Financial Result Reduction in Financial Expenses R$ million (221.7) (232.4) (186.3) - 16.0% - 19.8% 1Q05 1Q06 4Q05 20
  21. 21. Capex Main Investments : Network Quality/Capacity; Coverage Expansion – CDMA 1XRTT and EV-DO; Centralized systems and platforms; Corporate segment: handsets and technology. Total Capex % Capex/Net Revenues 878.1 118.6 29% 216.2 535.3 84.0 21% 66.6 281.3 11% 543.3 103.3 384.7 85.9 92.1 1Q05 4Q05 1Q06 1Q05 4Q05 1Q06 Network Technology Others 21
  22. 22. Net Result R$ million 1Q05 4Q05 1Q06 42 (179) (263) 22
  23. 23. Corporate Structure Present Proposed BRASILCEL, NV Mercado BRASILCEL, NV Mercado 62.35% 37.65% 62.35% 37.65% VIVO PARTICIPAÇÕES S.A. VIVO PARTICIPAÇÕES S.A. 100% 100% GLOBAL Global Telergipe Celular Telebahia Celular Telerj Celular Telest Celular Celular CRT Telecom Telesp Celular Tele Centro Oeste Celular TELECOM S.A. Celular 100% Norte Telems Telegoias Telemat Teleron Teleacre TCO IP Brasil Celular Celular Celular Celular Celular Celular Telecom 23
  24. 24. Anatel Standards Leadership in Meeting Quality Goals First Ranked Network Quality Best Performance VIVO C4 C3 C1 C2 VIVO C4 C3 C2 C1 National Ranking among SMP Controlling Competitive Edge Companies SMP Anatel Standards # 2, 3, 5, 6, 7 and 12 (All Indicators) Source: ANATEL (March/2006) 24
  25. 25. Anatel Standards Reduction in Non-Compliance 15.0% 14.0% 12.1% 9.3% 3.8% Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 25
  26. 26. VIVO Social Responsibility Museu da Língua Portuguesa - Estação da Luz - Dedicated to all languages that have influence on the Portuguese language spoken in Brazil. A project sponsored by Vivo Institute since 2002; Second “Caravana do Esporte”, a project sponsored by Vivo Institute. 18 less developed cities will be visited; ACTIONS Inaugurated the “centro esportivo da comunidade Novo Glicério” an NGO Glicerio initiative sponsored by Instituto Vivo; Inaugurated a “Brinquedoteca” (space with toys for kids to spend leisure time) at the pediatrics section of the Santa casa do Pará, sponsored by the Instituto Vivo. 26
  27. 27. Final Remarks Focus on Value Clients Coverage 100% Digital Contract base growth; 100% Digital; Increase in Corporate client base; EV-DO in 18 Municipalities; 1xRTT in more than 79% of the Municipalities; More than 12 models of ZAP and PDA’s. EV-DO – 3G speed of up to 2,4 Mb/sec. Corporate Restructuring System Platforms Stronger Structure; Reduction of PDD in the quarter; Advantage of Synergies; Compliance to Anatel Standards; Simplicity; Authentication networks and handsets in progress . Integrated Platforms. 27
  28. 28. Safe Harbor Clause Forward Looking Statements • This presentation contains statements that constitute forward looking statements in its general meaning and within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this document and include statements regarding the intent, belief or current expectations of the customer base, estimates regarding future growth in the different business lines, market share, financial results and other aspects of the activity and situation relating to the Company. The forward looking statements in this document can be identified, in some instances, by the use of words such as "expects", "anticipates", "intends", "believes", and similar language or the negative thereof or by forward-looking nature of discussions of strategy, plans or intentions. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and actual results may differ materially from those in the forward looking statements as a result of various factors. •Analysts and investors are cautioned not to place undue reliance on those forward looking statements which speak only as of the date of this presentation. 28

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