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Results2Q10
Agenda   Operating Performance   Financial Performance
A quarter highlighted by the acceleratedgrowth of revenues and EBITDA.    th f              d EBITDAAttractiveness of Vivo...
The attractiveness of Vivo results in the customerbase growth and improves customer mix...b         th   di              t...
...a more active customer base that uses themobile phone even more...    bil  h                                           ...
...increasingly more stable, demanding lessefforts t attract and retain customers...  ff t to tt     t  d   t i     t     ...
...increasing the monthly service expenditure...             ARPU – R$            - 7 4%              7.4%                ...
...driven by growing data serviceadoption...  d ti                     o Mobile Internet market share                     ...
...resulting in growth acceleration in servicerevenue and EBITDA, notwithstanding the             d EBITDA    t ith t di  ...
Thus, Vivo consolidates its leadership and buildthe path to sustain this position                         position.  Growi...
Agenda   Operating Performance   Financial Performance
Net Service RevenueR$ million                                                                                      YoY Gro...
Data Revenue + VASR$ million                                                                                Others        ...
Operating Expenses*   R$ million                              + 15%                   - 12%                   + 6%        ...
EBITDA EvolutionR$ million                    +71.8%   +1.7%     +24.2%    +17.4%   -12.2%   +6.4%   +14.8%               ...
EBITDA and Margin              gR$ million      Financial discipline maintain                                             ...
EBIT and Financial ResultR$ million                    EBIT             FINANCIAL RESULT                           + 24.9%...
Net Result and Cash FlowR$ million             + 29.9%                   + 23.0%                                    1Q10  ...
Gross and Net DebtR$ million                  Gross Debt                              Net Debt                       - 29....
CAPEXR$ million             14.9%                                            11.1%                            7.8%        ...
A Successful Journey                                    Launching of                                    HSUPA network     ...
Results2Q10
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Presentation 2Q10

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VIVO - Presentation 2Q10 Results

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Presentation 2Q10

  1. 1. Results2Q10
  2. 2. Agenda Operating Performance Financial Performance
  3. 3. A quarter highlighted by the acceleratedgrowth of revenues and EBITDA. th f d EBITDAAttractiveness of Vivo  Increase in Marketresults in customer base Share for fourgrowth and improves consecutive quarterscustomer mix ... t i...a more stable and  ARPU improvementactive customer base base, and SAC and Ch d d Churnwith increasing stabilizationconsumption......driven by growth  Data Revenuein data services... accounted for 19.4% of the net service revenue...resulting in  Annual growth ofaccelerated growth of 10.7% in the netservice revenue and service revenue andEBITDA. 10.6% in the EBITDA 3
  4. 4. The attractiveness of Vivo results in the customerbase growth and improves customer mix...b th di t i Brand Channels Offers Quality and Coverage Most valuable  The major own  Best cost-benefit ratio  Leader in 3G brand in stores chain in in the market coverage telecom sector* the market  Complete offers with  Consistent  H Huge capillarity ill it data d t and voice d i leadership i A t l’ l d hi in Anatel’s of recharge points quality indicators +19.6 +3.8 QoQ YoY 53.9 56.0 46.8 8.0% 25.5% 2.7% 18.1% Pre paid Post paid Post paid Blended* According to the Brand Finance Consultancy. 4
  5. 5. ...a more active customer base that uses themobile phone even more... bil h Customers MOU VOICE TRAFFIC recharging Minutes Million of minutes % of pre paid customer base + 42.5% +70.1% - 1.7% +1.9% QoQ YoY QoQ YoY 18,398 18,744 116 114 + 5.9 p.p. -4.0% -11.1% 4.4% 0.4% 25 24 80 11,022 27 -1.1% 69.8% 2.3% 114.5% 91 90 53 2Q09 1Q10 2Q10 Outgoing Incoming Outgoing Incoming 5
  6. 6. ...increasingly more stable, demanding lessefforts t attract and retain customers... ff t to tt t d t i t Churn of 2.6% in the quarter, 2 6% quarter SAC Blended* with small variations for more - 15.5% than 10 quarters +2.9% 84 Number Portability 8 69 71 QoQ YoY 13 9 -5.1% 7.6% 9 8 9 12.6% -26.9% 20 16 19 23.9% -3.4% 16 19 21 11.6% 30.5% 27 17 13 -25.4% -52.3% 2Q09 1Q10 2Q10 Subsidy Advertising Comissions Lending Mar/09 Jun/09 Sep/09 Dec/09 Mar/10 Fistel * (70% of marketing expenses + costs of distribution channels + handset subsidy + corporate lending + Fistel)/gross additions. 6
  7. 7. ...increasing the monthly service expenditure... ARPU – R$ - 7 4% 7.4% + 0.8% 27.0 24.8 25.0 Q Q QoQ YoY -5.1% -13.8% 4.7% -3.1% Outgoig Incoming 7
  8. 8. ...driven by growing data serviceadoption... d ti o Mobile Internet market share of 40% o 4 6 million devices with access 4.6 to the 3G network In this context Vivo has absolute leadership o Increase of 44% in Data ARPU Mobile Internet Market Share* 50% 40% 40% 30% Player 1 20% Player 2 y 10% Player 3 0% *Only consider modems and data card. Data updated until Feb/10.Fonte: Anatel e análises internas da Vivo. 8
  9. 9. ...resulting in growth acceleration in servicerevenue and EBITDA, notwithstanding the d EBITDA t ith t di thconsistent cash generation. 2Q10 2Q09* Δ% Net Service Revenue 4,129.8 3,729.4 10.7% EBITDA 1,342.7 1,213.7 10.6% EBITDA Margin 30.5% 30.3% 0.2 p.p. Net Result 236.0 181.7 29.9% Cash Flow after Investments 960.9 836.0 14.9%* The 2009 numbers were reclassified, when applicable, according to the adoption of new accounting practices in Brazil (CPCs). 9
  10. 10. Thus, Vivo consolidates its leadership and buildthe path to sustain this position position. Growing and more active ...generating the expected ...resulting in an EBITDA customer base... return for the investments Margin over 30% for the last in 3G and... 5 quarters... +6 p.p ...supported by a qualitycoverage and high capacity in ...and sustainable cash 2G and 3G... generation. R$417 MM in dividends payment in April 2010. 10
  11. 11. Agenda Operating Performance Financial Performance
  12. 12. Net Service RevenueR$ million YoY Growth % + 10.7% 10 7% 71.8% 71 8% 64.8% + 5.1% 51.8% 4,130 3,929 3 929 3,729 10.7% 3.4% 5.8% 687 802 467 4Q 09/08 1Q 10/09 2Q 10/09 Net Service Revenue Data + VAS 1,463 1,505 1,490 1 490 2Q 10/09 Growth R$ million 1,760 1 760 1,703 1,806 +71.8% 2Q09 1Q10 2Q10 Outgoing Voice Data + VAS +2.6% +1.9% Interconnection In order to simplify the analysis the chart does not include ‘Others”. Others 12
  13. 13. Data Revenue + VASR$ million Others + 71.8% 19% +16.8% SMS+MMS 40% QoQ YoY Vivo Internet 802 41% Others -4.8% 8.5% 687 467 Vivo Internet 16.0% 16 0% 121.4% 121 4% Others 12% SMS + MMS 28.1% 50.8% SMS+MMS 35% Vivo Internet 53% % Net Service Revenue Data Revenue over Service Revenue ...with internet services being reach stage comparable to more the largest part of thi th l t t f this mature markets... revenues. 13 13
  14. 14. Operating Expenses* R$ million + 15% - 12% + 6% - 1% - 9% + 13% 1,046 1,038 897 954 900 449 846 433 394 + 26% + 24% + 26% + 9% + 9% + 1% 167 266 267 269 154 244 133 214 213* Excluding Depreciation. 14
  15. 15. EBITDA EvolutionR$ million +71.8% +1.7% +24.2% +17.4% -12.2% +6.4% +14.8% +10.6% 2Q09 Data + Voice + H. R. Service Goods Selling Others 2Q10 VAS others Rendered Sold Expenses Revenues Costs 15
  16. 16. EBITDA and Margin gR$ million Financial discipline maintain QoQ YoY expenses growth under control. 5.4% 10.6% EBITDA EBITDA Margin 16
  17. 17. EBIT and Financial ResultR$ million EBIT FINANCIAL RESULT + 24.9% 2Q09 Q 1Q10 Q 2Q10 Q 503 (58) 403 402 (101) (122) 2Q09 1Q10 2Q10 17
  18. 18. Net Result and Cash FlowR$ million + 29.9% + 23.0% 1Q10 2Q09 2Q10 Net Margin 18
  19. 19. Gross and Net DebtR$ million Gross Debt Net Debt - 29.5% - 28.5% -14.8% - 4.5% 6,511.1 4,692.6 , 3,937.6 4,803.2 4,588.4 3,355.3 Net Debt/EBITDA of 0.62x; Credit Rating: ‘b AAA’ C dit R ti ‘brAAA’ 19
  20. 20. CAPEXR$ million 14.9% 11.1% 7.8% 595.1 489.2 328.7 % Capex/Net Revenue 20
  21. 21. A Successful Journey Launching of HSUPA network Beggining of operations Cloning Launching of in the Northeast region elimination GSM network Telemigg Focus on Customer Base Corporate Acquisition Restructuring YoY accelerated growth in Revenues Strategic focus and EBITDA on quality Market Share increase for the 4th consecutive quarter t 2003 2004 2005 2006 2007 2008 2009 1H10 21
  22. 22. Results2Q10

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