1 q results 2012 - tpart-eng

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1 q results 2012 - tpart-eng

  1. 1. Results PresentationTIM Participações S.A. 1
  2. 2. Agenda  Q1 in Few  Community Expansion  Keeping the Innovation Path  Infrastructure & TIM Fiber Update  Financials Highlights  Outlook and Priorities 2
  3. 3. Consistent Growth: Keeping the Pace 1Q12 1Q11 ∆% Reported Revenues 4,468 3,752 +19.1 Services 4,015 3,463 +15.9 Ebitda 1,169 1,033 +13.2 Ebit 512 350 +46.4 Revenues 4,468 3,792 +17.8 Pro-forma* Ebitda 1,169 1,067 +9.5 * Includes Revenues and EBITDA of AES Q1 2011Growth driven by mobile business: Speed-up of Network Roll-out: Consistency in customer base and revenues expansion  Capex +83% YoY in Q1 (2G capacity, 3G roll-out)  Data acceleration 3G upgraded to 42 Mbps starting from SP  Increased pressure on Voice services (FMS)  MTR cut started on March – impact of -R$43 mln/ TIM Fiber/TIM integration: month revenues; -R$22 mln/month Ebitda ~1,000 antennas connected with fiber n SP/Rio (FTTS) >1,000 Household connected (TIM Fiber) Soft launch confirmed for Q2 3
  4. 4. Drivers of Revenue Growth: Community Expansionand “Internet for All” Customer Base Revenues Mln clients, Base EoP Mln R$, Fixed+Mobile 8.5 9.9 +17% 4,015 Gross Adds 3,463 Net Service +15.9% +72% Revenues 4,468 Net Adds 1.8 3.1 Δ% YoY 3,752 67.2 +27% 52.8 9.6 +25% Total Net Post-paid 7.7 +19.1% Revenues 45.1 57.6 +28% Pre-paid 1Q11 1Q12 1Q11 1Q12 Gross Adds Net Adds Q1 2011 YoY Q1 2012 YoY Gross Rev. 1Q Mobile only 1Q YoY YoY Voice Out(local) +16% +14% Tot. +17% Tot. +72% Long Distance +21% +16% Pre +17% Pre +74% Voice In -2% +8% Post Voice -6% Post Voice +33% VAS +32% +56% Post Web +64% Post Web +125% TOTAL +14% +19% 4
  5. 5. Mobile Internet: the New Wave Revenues Reshape Smartphone/webphone penetrationMobile Serv. Gross Rev, R$ Mln % smartphones/total CB (lines), % smarphones/handsets sales >18% <14% Data reached R$1 billion revenues 31.1% 26.6% Data exceeding Long Distance Revenues 2011 2012 VAS +400bps 19.5% in 1 year 15.4% 12.6% 5,722 5,521 5,294 5,031 841 4,644 803 829 Mar11 Jun11 Sep11 Dec11 Mar12 820 958 LD 690 834 1,000 734 Data 640 % sold 46% 52% 69% 68% 77% 2,656 2,889 2 ,7 5 1VoiceOut&Others 2,417 2,532 3G - Coverage Incoming 897 944 974 1,034 968 66.6% 67.1% 55.8% 56.9% 57.5% % urban 1Q11 2Q11 3Q11 4Q11 1Q12 population coverage ∆ YoY Total +13.7% +18.4% +20.0% +20.7% +18.9% 488 512 DATA +32.3% +33.5% +47.6% +49.2% +56.1% 331 258 273 LD +21.0% +38.7% +41.5% +34.4% +16.3% # cities Voice OUT&Other +14.6% +14.9% +13.7% +13.9% +13.8% Incoming -2.4% +4.7% +5.6% +10.5% +8.0% 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 5
  6. 6. Pressure on Voice (FMS) and Acceleration ofMobile Internet (Business Transformation) Gross Revenue Mix Received Business Erosion Price Competition (eg. Local and LD)  MTR impact asimmetric for mobile 19% 18% In only operators 15% 14% 25 cents/call –R$43 mln/month revenues LD TIM (equal to ~5cent/minute) –R$22 mln/month margin (itx costs 52% 50% 66% regulated vs 34% not –SMS, Local M-F, itx) 66% 68% Claro 16-21 cents/call -15/35% VAS 14% 18%  Incoming voice MOU in fast erosion 5 cents/min Organic (-18% YoY) as of FMS Vivo Price aligned 1Q11 1Q12 Billion Minutes Received TIM Approach to Competitive Arena 1 Forcing FMS 2 Mobile Internet 2.2 flat 2.2 monthly unique users Volumes 21.8 22.6Fixed- 17.5 Out 20.1Mobile 18.4 17.5 10.3Mobile-Mobile Price -7% -8% -14% Out -23% -32% 1Q11 2Q11 3Q11 4Q11 1Q12 1Q11 1Q12 1Q11 1Q12 6
  7. 7. Agenda  Q1 in Few  Community Expansion  Keeping the Innovation Path  Infrastructure & TIM Fiber Update  Financials  Outlook and Priorities 7
  8. 8. Customer Base Evolution Δ YoYMln lines March ∆% +3.1 +4.9 +14.4 +27% +2.7 +3.7 67.2 +1.8 64.1 +4.1 +2.5 59.2 +2.0 +25% +1.3 +2.1 52.8 55.5 9.7 51.0 9.3 46.9 8.7 42.4 44.4 7.7 8.0 41.1 7.5 Pos 7.0 7.2 6.5 6.6 57.6 +12.4 +28% 50.6 54.8 Pre 43.5 45.1 47.5 34.6 35.8 37.5 39.7 Δ YoY March YoY % 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12Net AddsPost-paid 149 150 341 280 243 223 317 632 655 348 125 +56% (000)Net Adds Pre-paid 1,354 1,103 1,716 2,242 3,838 1,598 2,359 3,053 4,219 2,786 1,188 +74% (000) SAC 81 75 63 55 36 36 35 36 28 32 (R$) • Consistent CB expansion on Post-paid and Pre-paid • Continuous Efficiency Improvements in Go2Market (in a more subsidized context) 8
  9. 9. Market Share Growth Peers copying TIM‟s offers „000 Prepaid CB Mobile Market Share 2,786 30.1% 30.2% 30.1% 29.7% 29.5% 29.5% 29.5% 29.5% 29.8% Vivo +74% 1,598 1,103 26.8% +45% 26.0% 26.5%Net 25.4% 25.3% 25.5% 25.4% 25.4% 25.6% 8,917 25.1% 25.1% 25.5% 25.3% 24.9% Claro 24.5% 24.6% 7,603 23.7% 24.0% 4,669 20.4%Gross 20.1% 19.5% 19.4% 19.7% Oi +17% 19.1% 18.8% 18.8% 18.5% +63% 1Q10 1Q11 1Q12 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 1st in YoY CB growth for 7Customer Base ΔYoY Quarters Vivo 18% 20% 18% 17% 15% 14% 16% 19% 20% TIM 17% 17% 19% 24% 25% 25% 26% 26% 27% Claro 15% 16% 15% 16% 17% 18% 18% 17% 15% 15% 10% 7% 9% 13% 12% 15% 16% 12% Oi 9
  10. 10. Postpaid growth: a sustainable business model Postpaid Customer Base Bad DebtMln lines % Gross Revenues +25.3% Bad Debt/ 2.00% 1.83% YoY Gross Rev. 1.34% 1.04% 0.77% 1.08% 0.95% 0.92% 0.86% 9.31 9.65 8.65 7.48 7.70 8.02 6.96 7.24 6.62 3.1 2.6 2.3 CB SAC/ 1.5 1.8 1.6 1.7 1.7 1.3 ARPU 1T10 2T10 3T10 4T10 1T11 2T11 3T11 4T11 1T12 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 ANATEL‟s SMP 11 KPI Handset Revenues and Capitalized SubsidyComplaints over 1,000 Bills R$ Mln 732 712 664 673 1.69 1.55 1.17 Handset 468 433 424 Gross 380 0.76 0.56 Revenues 286 115 85 Capitalized 64 26 8 0 0 0 0 Subsidy 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 10
  11. 11. Agenda  Q1 in Few  Community Expansion  Keeping the Innovation Path  Infrastructure & TIM Fiber Update  Financials  Outlook and Priorities 11
  12. 12. Infinity – The Largest Mobile Community in Brazil Mln lines Infinity at 97% of prepaid base 56.1 Voice out Bln minutesInfinity Voice 40.8 +27% 16.7 local LD M-F 13.156 mln users 21.7 Local 25 25 50 LD cents cents centsLeveraging on 0 M-F Per call 1Q11 1Q12 community 1Q 09 1Q 10 1Q 11 1Q 12 SMS #SMS, Bln On-net/off-net 50 cents 10x On-net per day Off-net 2x Revenues 1Q11 1Q12 Infinity Web Modem  Unlimited navigation for Internet for all R$1.99/day Daily unique users, Mln Unique users/day ― speed reduction after 80Mb 2.8 50 cents per day  Pay when you use 1.2  Speed up to 1Mbps 1Q11 1Q12 2.5x Revenues 12
  13. 13. Liberty – Continuous Offering Innovation1 Voice – More off-net calls bundled Post-Paid Subs Mln lines +25% 9.6 7.7 +39% Data Voice +21% 1Q 11 1Q 12 Liberty R$ 49 Liberty + 50 4 2 SMS – Unlimited messages Unlimited on/offnet R$ 9.90/ Pay when you use month 3 Handset browsing Voice: unlimited incoming and 50 minutes outgoing to TIM numbers and local calls Data: unlimited data per day (speed reduction after 3Mb) Promotional Pricing (per day, per service): Unlimited browsing R$ 29.90/ Américas Europa/África Ásia/Oceania month Pay when you use R$ 19.90 R$ 19.90 R$ 69.90 13
  14. 14. Liberty Controle – Entering in a New MarketSegmentLiberty benefits Liberty Controle benefits Convenience of unlimited R$ 27/  Convenient as Post Paid monthusage (unlimited TIM–TIM calls, local/LD) Fixed monthly bill  Flexible as Pre Paid (R$10 credit to use on SMS/Web/Fixed) +Infinity benefits Budget Control Brazilian Demographics Population, Mln 182 191 Pay per Day AB 26 42 Liberty Liberty(e.g R$0.50 SMS/Internet) C 63 103 Controle Infinity DE 93 45 2005 2011 14
  15. 15. Best Smartphone Portfolio Drives Internet Browsing Unique Users Per Month Smartphone PenetrationMln clients % of CB 17.5 31% +70% 10.3 13% Revenues VAS 1Q11 1Q12 R$ Bln 1Q11 1Q12 1.00 0.64 +56% Best Device Portfolio Device Portfolio Q1 Sales 1Q11 1Q12 Units 2,368 2,354 Tablets iPad Samsung Liberty Web Tablet (49/month) 21% Galaxy Tab 7” 50% Basic Support 79% Smart- iPhone 4S iPhone 3GS Liberty Web (29.90/month) Internet* 50% phones Galaxy SII Galaxy Y Infinity Web (0.50 /day) 1Q11 1Q12 Modem 14 Mbps 7.2 Mbps Liberty Web Modem (69.90/month) Gross Prod. Revenues Infinity Web Modem (1.99/day) (Mln reais) 433 +55% 673 % of Internet enabler Performance Price devices /gross prod. Rev 77% 94% Best Tariff Plans *Includes modem, tablets and web/smartphones 15
  16. 16. Agenda  Q1 in Few  Community Expansion  Keeping the Innovation Path  Infrastructure & TIM Fiber Update  Financials  Outlook and Priorities 16
  17. 17. Network Integration 1Q12 2Q12  More than 1,000 antennas Advance in FTTS Plan: 12 a FTTS Roll-out SP/RJ # Sites connected with fiber (FTTS) main cities (complete 1,777 1,477Tim Mobile 1,030  Capacity upgraded from SP/Rio and 10 capitals) Network 8Mbps (leased copper based) Starting Leased Lines 1Q12 2Q12 YE2012 to 100Mbps (owned fiber) switch-off (Opex saving) % of 66% 95% 115% existing b Intelig Cust. Connected # access Fiber based last meter Back to commercial 3,045 Intelig/ 1,038 TIM FiberAES Fiber Fiber to the office for Top push for Intelig x3 1,030 TIMNetwork 688 customers (last meters) corporate business 977 Intelig Improving network reliability 1Q11 1Q12 c First Evidences Pre-start Activities Start-up of TIM Fiber Tim Fiber 3,600 Building authorized  First customersResidential 1,100 Building connected connected (testers) 80Mbps Ultra BB measured in field IT dedicated platform Soft launch on May on pre-launch development Commercial launch on Q3 17
  18. 18. Ultra broadband: construction and tests underway MSANs Network 2 Optical Backbone Topology network 1 Network Roll Out: Execution at full speed Technical Tests: Architecture works as designed • Technical lab tests concluded successfully ~3,600 • Field tests underway, with first Friendly User Testers ~1,100 connected on the network: - Download speeds reaching 80 Mbps - Minimal signal attenuation verified on the network 1 2 As is Status MSANs CPEs Speed test : 80Mbps 18
  19. 19. TIM Fiber: On track for the Q3 Commercial Launch TIM Fiber Day timetable confirmedLaunch Phases  Pre-Launch Test Q2 Soft Launch Q3 Commercial LaunchKey objective Technical Trial of the Check of the Business Start of the Commercial solution Readiness OperationsCustomer base Employees + Customers Friendly User Testers Beta Testers Base Build-upGeographic Coverage(SP/RJ) 1 neighborhood 5 neighborhoods 25+ neighborhoodsProduct UBB NakedCommunications n/a BTL ATLChannels n/a Telesales D2D + Telesales 19
  20. 20. Agenda  Q1 in Few  Community Expansion  Keeping the Innovation Path  Infrastructure & TIM Fiber Update  Financials  Outlook and Priorities 20
  21. 21. Consistent EBITDA and Net Income Growth EBITDA Evolution From EBITDA to Net IncomeR$ Mln R$ Mln Handsets Rev.: +164 1,169 COGS: -201 Includes R$34 mln one off tax liability -37 -119 -657 -192 +552 -68 512 1,169 -42 1,033 -193 276 27.5% Ebitda Margin 26.2% 31.1% Service Ebitda Margin 31.1% EBITDA Depreciation/ EBIT Net Taxes Net 1Q12 Amortization Financial and Income EBITDA Var. Var. Var. Var. Var. EBITDA Result Others 1Q12 1Q11 Services Handset Marketing Network Personnel 1Q12 Revenues Margin and Sales and ITX G&A and others ΔYoY +13.2% -3.8% +46.4% +29.3% +86.5% +29.5% expenses EBIT Net IncomeR$ Mln R$ Mln 276 512 213 350 +30% +46% 1Q11 1Q12 1Q11 1Q12 21
  22. 22. Cash Position CAPEX D Working Capital D WC -617 YoY R$ Mln -30 => InventoriesR$ Mln 1Q11 1Q12 Var -142 => Receivables -466 => Payable Network 60% 77% 17 p.p +21 => Others IT 24% 14% -10 p.p Others 16% 8% -7 p.p 689 543 -972 297 +83% -1,285 -1,903 1Q10 1Q11 1Q12 1Q10 1Q11 1Q12 OFCF Net IncomeR$ Mln DOFCF -727 YoY R$ Mln Including TIM Fiber -110 => EBITDA-CAPEX net debt – R$75 Mln -617 => D WC 2,558 1,899 1,671 +14% -549 -714 -1,277 1Q10 1Q11 1Q12 1Q10 1Q11 1Q12 Net DEBT/ EBITDA 0.73x 0.39x 0.40x (trailing 12m) 22
  23. 23. Agenda  Q1 in Few  Community Expansion  Keeping the Innovation Path  Infrastructure & TIM Fiber Update  Financials  Outlook and Priorities 23
  24. 24. 1Q Takeaways Consistency of TIM´s Growth CB Net Revenues Continuous InnovationCompetition  Tariff plans (Passport; Controle; “Me too” approach from 67.2 4,468 Infinity modem) 52.8 3,752 main competitors  Smartphones/tablets ultimate portfolio Increased subsidy and +27% +19%  Seamless 3G/Wi-Fi solution (ex: commissioning Airports; Rocinha) March March Price-down 2011 2012 2011 Q1 2012 Q1 Accelerating Revenue Reshape TIM Network AccelerationRegulation Crossing  1,030 antennas connected (FTTS) 1 Bln barrier with capacity increased from 8 to Smartphone MTR cut asymmetric penetration 100 Mbps (transmission) impact for pure mobile >18% 31.1%  3G+ roll-out at 42Mbps (access) vs. integrated 15% LD 14% EILD price-cut expected 12.6% TIM Fiber launch on scheduling soon Data <14% 4G auction scheduled  1,100 buildings connected March March 2011 Q1 2012 Q1 2011 2012  3,600 building authorized  Early field test: 80 Mbps scored 24
  25. 25. Business Priorities for Q2 Competitive Arena Business Developments - MTR (asymmetric phase) impact • Forcing FMS even more - Long distance commoditization - Infinity‟s community expansion - Liberty accelerating (Passport, Controle) Regulation • Data enter in FMS mode - 4G auction confirmed - Best smartphone portfolio (Apple) - EILD new price expected - Most attractive plans (Pre; Post) - FTTS completed in SP/RJ - 3G+ upgraded to 42 Mbps (access) New Business - Ultra BB residential: confirmed • Benefitting from network sinergies - Intelig (corporate): back to - Switch-off leased line (SP/RJ) commercial push in Q2 - Intelig/AES/TIM network fully integrated by Q2 25

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