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Press Release 1 T07 En


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Press Release 1 T07 En

  1. 1. TIM Participações S.A. 1Q07’s Results May 4th , 2007 1
  2. 2. Main Messages Market Performance Commercial Strategy Financial Performance 2
  3. 3. 1Q07: Continuous Growth in an Increasingly Challenging Market Offers Enrichment & Caring Substantial value Market Solid revenue growth growth Superior subscriber base growth 44% YoY growth of net service Cutting edge in innovation: “Home compared to Brazilian Market: revenue (or 22% excluding the B&K Zone” offer extended to the corporate impact) QoQ: +3.5% vs Market +2.2% segment 40% YoY VAS net revenue growth YoY: +25.2% vs Market +14.3% Dedicated Customer Operations Unit ARPU Performance: on track to Leader in net additions, achieving rebound and maintaining the highest Segmented offers 40.1% of incremental share in 1Q07 ARPU in the market Focus on value and corporate Improved client mix: 21.6% postpaid Solid YoY EBITDA growth and margin segments based on tailor-made and lines, +1p.p. YoY aligned with Company’s guidance customized solution Leader in business segment: +50.3% Channel mix optimization YoY lines growth 17% YoY reduction in subscriber acquisition cost Maintaining our leadership in mobile growth and further consolidate position in the market 3
  4. 4. Main Messages Market Performance Commercial Strategy Financial Performance 4
  5. 5. Outperforming a Growing Market Combining growth with a improved mix Market Lines (Mln) and Penetration Rate TIM lines Evolution (mln) Lines Lines Growth Growth YoY YoY 53.2% 54.2% +6.1p.p. 49.2% 51.2% 48.1% +25.2% +14.3% 25.4 26.3 95.9 99.9 102 .2 24.1 89.4 91.8 22.3 21.0 19.3% 19.4% 19.6% +14.6% 20.6% 20.6% 20.5% 21.3% 21.6% +31.4% 19.5% 19.5% 1Q06 2Q06 3Q06 4Q06 1Q07 1Q06 2Q06 3Q06 4Q06 1Q07 Postpaid mix Postpaid mix Penetration Rate Constantly outperforming market growth: Penetration continued to grow + 25.2% vs. competitors’ average +10.9% Residual market in lower income classes: Continuous improvement of client mix increased need for customized business model (% postpaids over total client base): TIM 21.6% vs competitor's average of 18.9% Source: ANATEL. 5
  6. 6. Continuous Market Share Growth Maintaining the leadership in net additions Market Share Performance 1Q07 Incremental market share -10.2 pp -2.6 pp -1.0% Vivo First -9.1 Mln lines -2.7 Mln lines Player 33.7% 31.1% 30.0% 29.1% 28.4% Others 28.3% 24.3% 25.1% 25.4% 25.8% 23.5% Claro 32.6% 22.8% 23.1% 23.9% 24.1% 21.8% Third Player +1.7 pp +1.7 pp 40.1% +1.6 Mln lines +1.7 Mln lines 1Q06 2Q06 3Q06 4Q06 1Q07 Continuous market share growth Increasing market share based on a Confirming leadership in incremental market share: continuous focus on high-value customers 38.2% in 2006 and 40.1% in 1Q07 43.8% incremental share in postpaid segment in 1Q07 Bringing gap to the 1st player at lowest level ever: 2.6pp Reinforcing our leadership on postpaid segment: 28.4% market share ( +3.6pp YoY) 6 Source: ANATEL.
  7. 7. Main Messages Market Performance Commercial Strategy Financial Performance 7
  8. 8. Key Competitive Advantage Profound Segmented Offer Marketing Strategy Pillars Community & Convenience Integrated Solutions Innovative Approach TIM Brasil Plans: voice+ National Tariff Plan for multi- TIM Casa and TIM Casa SMS + Data + Roaming regional companies Empresarial Shared Bundles Flexible Bundles TIM + 25 On-Net Promotions TIM Web Mobile (internet TIM Chip Only Segmented Approach and access) Voice and data internacional Cross-Sell products TIM BlackBerry Pearl for roaming for prepaid segment consumer market Customer base also eligible to all promotions Mega TIM - SMS/MMS package 8
  9. 9. Consumer Market and Institutional Campaigns Focus on fostering TIM’s Community concept ► Feliz 07 Centavos (“Happy 07 Cents”) ► Supporting competitive aggressiveness ► Increasing traffic while keeping margins, based on on-net On-net local calls for just R$ 0.07 for postpaid and prepaid TIM’s clients traffic usage ► TIM Mais 60 ► Keeping the pace of post paid acquisition Additional bonuses of 60 min on-net calls ► Supports TIM Brasil Plans sales and customer base growth ► TIM Casa (“Home Zone”) ► Mobile convenience also at home Capturing additional revenues from fixed market > 400 thousands clients at 1Q07 ►Low SAC ► Stimulating usage from new customers TIM chip free of charge, subject to recharge of ► Anticipation of recharge purchase R$15 in 48 hours after activation ► Extra Recharge Promotion ► Leverages usage and average recharge Bonus in minutes equal to the recharge value ► Supports churn rate control Institutional Campaigns: Continuous focus on building up an inspirational brand LIFE QUALITY MIGRATION LEADERSHIP TIM Brand is recognized as reliable and appealing TIM: The 1st operator choice* 9 Source: * Instituto Synovate - Oct/2006
  10. 10. Continuous Focus on top and large customers Tailor-made and customized solution: Enriching portfolio plans TIM Empresa Nacional + Tarifa Zero Brasil + National single tariff plan + Free Front runner in communication between the company’s innovation and flexibility employees anywhere in the country. on corporate services TIM Empresa Mais Meeting the specific Innovative plan, with no minute packages; its flexibility caters for needs of companies with companies wishing to expand their nationwide presence mobile communications. Plans and services that TIM Casa Empresarial allow enhanced mobile Allows savings in mobile-to-fixed calls communications (from 33% to 59%) Launch of several offers Mobile office solution as to remain the leading Most advanced Blackberry handsets portfolio mobile office solution provider (blackberry, voice and data bundles) 10
  11. 11. VAS: Easy & Useful Innovation Maintenance of leadership in VAS segment Innovative initiatives 1Q07 VAS Results Interactive SMS offers in partnership with media VAS Net Revenue (R$Mln) VAS Breakdown companies Reverse Mobile Auction 179 Market campaigns and constant update of contents 127 +40% provided by major players (Universal, Warner, Gameloft, 6.7% 56% 5.9%** 44% Eletronic Arts and others) First-to-market launching VAS tariff plans: Mega TIM – SMS/MMS bundle card 1Q06 1Q07 subscription service model VAS Net Revenue Innovative* Last minute SMS promotions % over Net Service Revenue Traditional Offer of seasonal WAP sites as to promote dates such as Carnaval and Regional Soccer Championship +11 p.p. YoY growth in innovative services Verão Premiado TIM Promotion Java Games Usage Growth YoY MMS P2P: + 381% Data: + 186% Users SMS P2P: + 29.0% MMS P2P: + 237.3% Data: + 80.9% *VAS Innovative= VAS excluding SMS P2P and Voice Mail 11 ** Proforma: %Adjusted by Bill & Keep elimination starting on Jan 1st of 2006.
  12. 12. Optimization of Multi-Channel Sales Focus on efficiency and productivity ~ 8,500 PoS Largest distribution network in Brazil 63% Retail Strengthening of sales workforce and 29% Dealers high-value customer focus Consumer 8% •Own stores Incentives on postpaid acquisition •franchisees Commissioning based on value ~ 1,700 Qualified large account sales staff Tele-sales & Personal Improving channels productivity and ~ 260,000 points efficiency Recharge Increased prepaid gross additions through alternative channels (11% in 1Q07 vs. 4% in 1Q06) ~ 630 Recharge channels expansion (> 40% YoY Business PME Sellers growth of electronic channels) 144 Increased % of electronic recharge revenue over total recharge revenue: KAM 52% in 1Q07 vs 35% in 1Q06 Note: KAM (Key Account Manager) 12
  13. 13. Reducing Subscriber Acquisition Cost SAC performance R$ -17% Declining SAC despite higher level of 150 124 customer and handset mix: 23% YoY growth in postpaid gross adds Commission expanding sales of mid-range and high- end handsets 54% 62% Subsidy Anatel’s fee on Reduced subsidy strategy net adds Comodato Focus on “TIM Chip Only” offer: 46% Advertising > 70% of total gross in 1Q07 38% Others Postpaid discount oriented to maintain the 1Q06 1Q07 competitiveness and high-value customers acquisition Direct cost Indirect cost Improved pay-back period: 3.8 months in 1Q07 vs 4.3 months in 1Q06 13
  14. 14. Main Messages Market Performance Commercial Strategy Financial Performance 14
  15. 15. Solid Net Service Revenues Total net revenue growth YoY Growth R$ Mln Reported Organic* Maintaining 2006FY service revenue 2,843 +38% +19% 2,066 growth trend 94% +44% +22% 89% 40% VAS net revenue growth 11% 6% -17% -17% Handset revenues drop due to SIM Card 1Q06 1Q07 sales push on Net service revenue Net handsets revenue ARPU Performance: on track to rebound ARPU Broadly Stable ARPU* Change YoY (%) R$ 35.2 1Q06 2Q06 3Q06 4Q06 1Q07 34.4 -2% -6% +4p.p. -9% +3 p.p. 1Q06* 1Q07 -12% ilu t i on he d +3 p.p. t cing -15% Keeping ARPU above the market +3 pp. edu R * Proforma: Adjusted by Bill & Keep elimination starting on January 1st of 2006. 15
  16. 16. Continuous Profitability Expansion Margin EBITDA aligned with annual expectations R$ Mln Change % ▲YoY -17.1% +44.1% +98.6% +24.8% +93.5% +13.2% +3.2% YoY Growth * * +22.4% +13.8% Net of Co-billing and Interconnection provisions: +36 Mln, +43% (driven by +40% YoY growth in Post- (451.3) Paid Gross Revenues) 815.0 55.6 (113.6) (83.6) (30.8) (8.0) 14.1 (37.6) Main drivers: 518.3 - Gross Adds: +33% 678.2 573.9 664.1 - Recharges: +25% 1Q06 Deferral of 1Q06 Handsets Service Network Selling Bad COGS Others 1Q07 Deferral of Historical subsidies EBITDA Revenue Revenue Expenses Debt Expenses EBITDA subsidies 1Q07 EBITDA** Reported*** Reported EBITDA Adjusted EBITDA Margin 21.1%* 24.0%* 23.4% 23.8% +2.7pp, +160 Mln on a comparable basis * Proforma: Bill & Keep elimination starting on January 1st of 2006. ** Data released in the 1Q06’s press release. 16 *** Officially restated figure. Others Expenses includes: G&A, Personnel and Net Other Operating Expenses/Revenues
  17. 17. From EBITDA to Bottom Line Δ YoY (Impact on Margins) (R$ mln) +90.2 (44.3) +45.9 +25.8 +10.4 +82.1 R$ Mln 664.1 (582.3) R$24.2 Million (Subsidiary income taxes) R$12.6 Million (amortization of goodwill from privatization, non-cash item) 81.8 (63.3) (19.5) (38.0) EBITDA Depreciation EBIT Net Taxes and Net Income 1Q07 Amortization Financial Others Expenses 17
  18. 18. Sound Financial Health Net financial position Net cash flow R$ Mln Non R$ Mln Operating Operating 4Q06 FCF FCF 1Q07 1Q06 1Q07 (488) (67) OpFCF (1.241) +753 (555) +130 Non-Oper.FCF +883 NoFCF (197) Oper.FCF (1.438) (1,027) (488) (67) (1,582) EBITDA +664 Significant cash flow improvement compared to CAPEX (255) (1,536) in 1Q06 (+R$883 million) mainly due to: Δ Oper. WC (898) 1Q06 (i) Increased Profitability (ii) Reduced impact from Working Capital changes Stable Net Financial Position YoY Negative WC due to cash-out of 4Q06’s CAPEX Gross Debt: R$2.1 billion (of which 87% long term / average annual cost of 11.92% p.y. in 1Q07) Cash and equivalents: R$0.5 billion Net Debt: R$1.6 billion 18
  19. 19. “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. Investor Relations Avenida das Américas, 3434 - Bloco 01 6° andar – Barra da Tijuca Visit our Website: 22640-102 Rio de Janeiro, RJ Phone: +55 21 4009-3742 / 4009-3751/8113-0571 Fax: + 55 41 4009-3314 19