140225 - Apresentação 4Q13 - ENGstatic.telefonica.aatb.com.br/Arquivos/Download/933... · 2017-11-09 · Investor Relations Telefônica Brasil S.A. 5 Acceleration in mobile postpaid

Results 4Q13_

Investor RelationsTelefônica Brasil S.A.February, 2014.

Investor RelationsTelefônica Brasil S.A.

2

Highlights of the 4Q13 and the year 2013

Operational Financial

Mobile

Fixed

Reverting historical trends guaranteeing strong net additions for

the third consecutive quarter.

Sustaining superior growth in postpaid additions leading to higher

data adoption and ARPU growth.

-99 -86

118157

215

4Q12 1Q13 2Q13 3Q13 4Q13

0.8 1.5 1.6

37% 39% 40%

4Q12 3Q13 4Q13

Postpaid net adds* and Market Share

** Thousand.

Total net adds**Excludes MMDS

* Million.

HIGHLIGHTS

The

consistency of

these

improvements

is reflected in

total service

revenue

acceleration,…

Net Operating Service Revenue - yoy

0.7% 1.2% 1.5%2.0%

1Q13 2Q13 3Q13 4Q13

+1.3 pp

…diluting costs

and improving

profitability

for the

Company.

29.4% 27.6%31.2%

2Q13 3Q13 4Q13

Recurrent EBITDA Margin

6.87.7

8.0

4Q12 3Q13 4Q13

Data ARPU R$ per month

17.5%

9.7%16.8% 16.8% 19.1%

1Q13 2Q13 3Q13 4Q13

+9.5 pp… resulting in

higher growth

in data

revenues…

Fixed and Mobile Data Revenue - yoy

3

1. Operating Performance


4

Positive annual and quarterly growth in total accesses driven, mainly, by the evolution of mobile postpaid, fixed broadband and TV.

OPERATING

AccessesMillion

1 Includes prepaid and postpaid customers.2 Includes fixed voice, fixed broadband and PayTV.Source: ANATEL.

Mobile AccessesMillion

Fixed AccessesMillion

1.5%

2.2%

YoY

2.2%

76.1 76.6 77.2

15.0 15.1 15.3

91.1 91.7 92.6

4Q12 3Q13 4Q13

Mobile Fixed21

10.6 10.6 10.7

3.7 3.9 3.90.6 0.6 0.615.0 15.1 15.3

4Q12 3Q13 4Q13

Voice Broadband PayTV

1.4%

1.0%

5.1%

6.8%

YoY

57.3 54.5 53.6

18.8 22.1 23.7

76.1 76.6 77.2

4Q12 3Q13 4Q13

Prepaid Postpaid

1.6%

0.9%

1.5%

0.8%

-6.6%

26.0%

YoY

Strict disconnection policy based on

profitability analysis


5

Acceleration in mobile postpaid net additions with value increase, reducing churn and bad debt along the year.

OPERATING

848 7161,167

1,453 1,555

24.7% 25.7% 27.1% 28.9% 30.7%

4Q12 1Q13 2Q13 3Q13 4Q13

Mix of postpaid accesses

Postpaid net additionsThousand

Postpaid market shareex-M2M

Postpaid ChurnR$

Mobile Bad Debt

1.4% 1.3%1.1% 1.1%

1Q13 2Q13 3Q13 4Q13

Bad Debt / Mobile Gross Revenues

1.8% 1.8% 1.8% 1.6% 1.5%

4Q12 1Q13 2Q13 3Q13 4Q13

-0.3 p.p.

39.8% 39.7% 40.2% 41.0% 41.6%

4Q12 1Q13 2Q13 3Q13 4Q13

1.9 p.p.


6

Improving mobile data adoption driving ARPU growth while reducing payback on customers.

ARPUR$

Payback (SAC/ARPU)Months

-1.7%

17.5%

YoY3.8%

Evolution without the 2013 MTR reduction

5.7%

OPERATING

17.1 16.8

6.8 8.0

23.9 24.8

4Q12 4Q13

Voice Data

2.0 2.1 2.1 2.0

1Q13 2Q13 3Q13 4Q13

Controlled payback even with higher additions in

postpaid and 4G.

* Data cards, Data packages and M2M, excluding eventual data user with no data package or plan

Smartphones penetrationWeb and smartphones

Mobile data users and data trafficMillion

15.7 17.2 21.5 24.1 27.6

4Q12 1Q13 2Q13 3Q13 4Q13

Data Access* Data Traffic

75.8%

84.0%

YoY

65.1%

75.4%

4Q12 4Q13

Individual Postpaid

+10.4 p.p.

29.4%44.5%

4Q12 4Q13

Individual Prepaid

+15.1 p.p.


7

In the fixed, the strategy continued to be successfully executed with a segmented approach in São Paulo,…

Areas with copper (countryside of

SP State)

… while increasing the

FTTH footprint.

… reflected on the

evolution of FBB churn.

Accelerating DTH sales

with focus on loyalty…

Integrated commercial approach

DTH net adds BB churn

2Q13 3Q13 4Q13

4.9x

Areas with ultra broadband

(SP city)

Accelerating FTTH

adoption,…

FTTH BB and IPTV net adds

OPERATING

1Q13 2Q13 3Q13 4Q13

6.8x

2.6x

4Q12 3Q13 4Q13

-0.3 p.p.

2012 2013

FTTH Homes passed

1.8x

Convergent call center

Convergent stores

Selective offers


8

… resulting once again in positive access evolution across all services.

Strong performance in net adds…Thousand

… in all fixed services.Thousand

Excludes MMDS

Selective

adds with

higher ARPU

and speeds

Great

adoption of

IPTV and DTH

ExcludesMMDS

-99-86

118

157

215

4Q12 1Q13 2Q13 3Q13 4Q13

-68 -93

1360

123

4Q12 1Q13 2Q13 3Q13 4Q13

-21

20

8446 39

4Q12 1Q13 2Q13 3Q13 4Q13

-10 -13

2151 53

4Q12 1Q13 2Q13 3Q13 4Q13

OPERATING

Accelerating

fixed voice

sales out of

SP


9

Corporate segment continues to sustain superior performance driven by cross selling and expansion out of São Paulo.

OPERATING

Fixed voice accesses

Consistent

growth

Fixed UBB accessesPortfolio

simplification

FWT gross adds out of

SPAmplifying

sales

channels

In corporate we continue to outperform in core services

Penetration of Data

Packages

Historical

record of

gross adds

Data Center / Housing &

Hosting accesses

Amplifying

our portfolio

M2M accesses

Doubled in 1

year

4Q12 4Q13

+3.0%

4Q12 4Q13

1.5x

4Q12 4Q13

4.3x

4Q12 4Q13

1.9x

4Q12 4Q13

2.3x

4Q12 4Q13

+6 p.p.


D% YoY

10

With sequential improvement in revenues and costs, Recurrent EBITDA Margin achieved 31.2% in the quarter leading to a 30.4% Margin in the year.

4Q13

9,056.7

8,733.1

5,762.7

2,970.4

323.6

2,871.2

31.7%

2,778.3

31.2%

1,231.3

D% QoQ

5.1

5.0

6.0

3.2

7.7

20.6

4.1 p.p.

16.7

3.6 p.p.

62.0

2013

34,721.9

33,410.8

21,691.1

11,719.7

1,311.1

10,575.6

30.5%

10,492.9

30.4%

3,715.9

R$ million

Net Operating Revenue

Net Handset Revenue

EBITDA

EBITDA Margin

Net Result

Wireless Service Revenue

Net Operating Service Revenue

Wireline Service Revenue

Recurrent EBITDA

Recurrent EBITDA Margin

2.4

36.4

-16.7

-7.0 p.p.

-16.5

6.1

1.4

-6.4

-9.2

-3.7 p.p.

OPERATING

11

2. Financial Performance


12

Mobile Service Revenue sustained solid annual growth resulting in the capturing of 66% of market’s incremental revenue along the year.

Mobile Net Service RevenueR$ Million

Share of Incremental Mobile ServiceRevenues*

In order to simplify the analysis the chart does not include ‘Other Revenues’.


5.3%

6.0%

7.1%

FINANCIAL

2,908 2,864 2,891

966 787 797

1,565 1,762 1,864

5,474 5,4395,763

4Q12 3Q13 4Q13

Access and usage Network usage Data and VAS

6.1%7.6%

10,876 11,266

3,830 3,270

5,648 6,877

20,43721,691

2012 2013

-0.6%

YoY

-17.4%

19.1%

3.6%

YoY

-14.6%

21.8%

66%

26%

8%

0%

Vivo Player 2 Player 3 Player 4


* Calculated based on annual mobile net service revenues disclosed in companies’ 2013 annual reports. When not available, mobile net service revenues calculated based on mobile ARPUs and average mobile customer base disclosed by operators in its public reports.


13

Data and value added service revenues continued with a strong evolution driven by soaring internet revenues along the year.

Data and VAS RevenueR$ Million

Mix of Data and VAS RevenueYoY

% over Mobile Net Service Revenue

31.7%

FINANCIAL

19.1%

5.8%

782 956 1,056

527506 468

255300 3401,565

1,7621,864

4Q12 3Q13 4Q13

Internet Messaging P2P VAS

21.8%

2,8263,740

1,921

1,973901

1,1645,648

6,877

2012 2013

35.1%

YoY

-11.3%

33.2%

32.4%

YoY

2.7%

29.2%

27.6%32.4%32.4%28.6%

4Q12 3Q13 4Q13 2012 2013

50.0% 54.4%

34.0% 28.7%

16.0% 16.9%

2012 2013

Internet Messaging P2P VAS

32.4%

YoY2013

2.7%

29.2%

19.4%

YoY2012

23.0%

26.4%

21.7% 21.8%


14

Solid performance in all fixed services resulted in an improved trend of fixed revenues in 2013.

Wireline Net RevenueR$ Million

Wireline Net Revenuey-o-y

(1) Includes voice, accesses and network usage.(2) Includes PayTV and Other Revenues.

FINANCIAL


-3.7%

3.2%

-2.6%

1,805 1,643 1,632

385332 396

895904 942

3,0852,879 2,970

4Q12 3Q13 4Q13

Voice (1) Others (2) Data

-6.4%-5.6%

7,404 6,620

1,5561,449

3,5633,650

12,52211,720

2012 2013

-9.6%

YoY

3.0%

5.2%

-10.6%

YoY

-6.9%

2.5%

-7.8%-6.4%

2012 2013

-1.4 p.p.


15

Recurrent EBITDA Margin of 30.4% in 2013 impacted by commercial efforts to improve fixed trends and increase leadership within valuable mobile clients.

Recurrent EBITDA MarginR$ Million

� Capturing synergies with restructuring

� Growth below inflation

� Increased postpaid base

� Data adoption � Fixed turnaround

Personnel + G&ASubsidies + Selling

Expenses

34.1% +1.0 p.p. -0.2 p.p. -3.6 p.p. -0.8 p.p. -0.1 p.p. 30.4%

+0.9% +1.6% +14.4% +2.2% +8.6% -3.7 p.p.

Impact in

Recurrent

EBITDA Margin

y-o-y

evolution

� Increased net maintenance focused

on quality� Expansion out of São

Paulo� Higher TV content

costs

Services Rendered

FINANCIAL

11,560

10,758 10,529 10,493

10,493

286 -55 -1,033

-229-37

RecurrentEBITDA 2012

Net ServiceRevenues

Personnel + G&A Subsidies +Selling Expenses

ServicesRendered

Others RecurrentEBITDA 2013


16

Net profit favored by benefits resulting from our corporate restructuring.

FINANCIAL

4,452

3,716

699

1,067

151 21

1,161

2012 Non recurrentevents after

associated taxes

Recurrent EBITDA D&A Others Taxes excludingnon recurrent

events

2013

Net ProfitR$ Million

� Acceleration of the MMDS depreciation

� Benefited by corporate events and IOC

Recurrent EBITDA D&A Taxes Adjusted

2013 2012 YoY

Non recurrent events -83 -1,143 1,061

Sale of non strategic assets -80 -1,114 1,035

Organizational restructuring 163 130 33

Rebranding 0 86 -86

Reversal of provision 0 -244 244

Recovery of ICMS -166 0 -166

Taxes associated (34%) 28 388 -360

Non recurrent events after taxes -55 -754 699


17

We executed our Capex according to the guidance for the year while sustaining solid cash flow generation and low leverage.

CapexR$ Million

Net DebtR$ Million

Operating Cash FlowR$ Million

Financial ResultR$ Million

FINANCIAL

2012 2013

Recurrent Operating Cash Flow

-4.8%

-291-215

2012 2013

-26.2%

440

-259

1,800

4Q12 3Q13 4Q13

5,067 5,582

1,050 451

14.9% 16.1%

2012 2013

Licenses Capex % Adjust Capex / Net Revenues

6,117 6,033

Payment of dividends in 2013 in the amount of

R$4.8 billion.

+3.2%

10,054 9,576

Excludes tower sales.

18

3. Our Long Term Vision


19

In 2013 we strengthened our competitive advantages…

STRATEGY

Benchmark in customer care

Best infrastructure and coverage

Excellence in ITBest brand perception

Largest chain of own stores and segmented

customer approach

ISC

3G (thousand cities)

4G (cities)

The largest FTTH footprint in SP State**

Evolution to convergent CRM

Consolidating IT infrastructure in

fewer data centers

Simplifying billing structure

Most valuable brand of the telecom

market for the 9th

consecutive year

Most recalled brand of the telecom

market for the 7th

consecutive year

Elected the most reliable brand for the 6th consecutive year

3.11.6 1.0 0.9


7340

24 24


92 92 87 76

278 299 313 353


IDA ANATEL*

7.4 7.36.8 6.76.9 6.6


Mobile Fixed

* Thousand. Number of complains related to the mobile business and registered in ANATEL from January to November of 2013.** 1.9 million homes passed, being 1.4 million marketable homes.

1 2 3 4


…and are ambitious on our vision for the company in the future.

STRATEGY

20

Transform customer experience

including channels, customer care and

infrastructure promoting higher satisfaction and

efficiency

SUPER MOBILE

Lead mobile internet in Brazil with differentiated network quality and

customer experience

FIBER COMPANY

Transform ourselves into a Fiber Company delivering best in class fixed

services with efficiency

CONVERGENT CORPORATE SERVICES PROVIDER

Consolidate as the leader in integrated, innovative and customized solutions for

corporate and SMEs

DIG

ITAL

BET

Be a Digital Telco with relevant and innovative services in selected areas

SIM

PLI

FIC

ATIO

NAN

D T

RAN

SFO

RM

ATIO

N


We aim to keep on leading mobile internet in Brazil with differentiated network quality and customer experience…

STRATEGY

21

GR

OW

TH

DIG

ITA

L B

ET

• Accelerate internet adoption in all segments, driving smartphone penetration and usage

• Capture and retain most valuable customers through differentiated network quality

• Create flexible and suitable data plans with the right price mix for improved monetization

• Lead in mobile data capacity and coverage in new technologies (HSPA+, LTE) to support data traffic growth and quality standards

• Leverage online channels in sales and customer care• Develop Network partnerships to improve returns (Virgin, Nextel,

Backbone partnerships…)

• Develop new solutions leveraging on partnerships for selected areas

• Foster mobile payment services, e-health, education among others for all customer segments

SUPER MOBILEEFFIC

IEN

CY


FIBER COMPANY

…and transform ourselves into a Fiber Company delivering best in class fixed services with efficiency.

STRATEGY

22

GR

OW

TH

EFFIC

IEN

CY

DIG

ITA

L B

ET

• Double additional HPs in FTTH in São Paulo during 2014 and accelerate expansion to premium areas of the state with in the coming years

• Offer the highest UBB speeds on the market allowing for differentiated services (e.g. OTT)

• Expand our IPTV offer to broaden the advantage against competition• Increase ARPUs with convergent bundles

• Provide all IP solutions capturing synergies in installation and maintenance • Investment optimization, overlaying cable infrastructure with fiber and

turning off obsolete technologies• Reduce customer care costs with an improved satisfaction• Leverage our mobile infrastructure to provide fixed services nationwide

• Grow selectively in DTH with focus on customer base• Development of new IPTV features and applications • Unlock advertising/e-commerce opportunities with “Big Data”


For Corporate and SMEs our goal is to consolidate as the leader in convergent, innovative and customized solutions.

STRATEGY

23

GR

OW

TH

EFFIC

IEN

CY

DIG

ITA

L B

ET

• Leverage our integrated capabilities to deliver convergent bundles with data as core service for growth

• Consolidate as a strong player in ICT market, covering solutions from simple web hosting to complex outsourcing services

• Expand selectively fixed services out of São Paulo

• Consolidate data center infrastructure and increase virtualization (cloud)

• Create full convergence in both commercial and operational processes (channels, sales force and post sales)

• Capture opportunities in M2M and telemetry (e.g. smart cities)• Grow B2B services in e-health, security and financial services

CONVERGENT CORPORATE SERVICES PROVIDER


24

We have improved our operational results in all fronts in 2013 and will focus on profitability to deliver better financial results in 2014.

Our industry is substantially changing worldwide, consolidation is already happening, data demand is booming, services are maturing and new technologic cycles are becoming more and more capexintensive.

MTR cut, new spectrum auctions, high competitiveness and regulatory issues are among the challenges we have this year.

Besides chasing efficiency in everything we do, we intend to optimize our investment model focusing on technologies that will differentiate us in the market.

Fiber and 4G, the right service and price mix and solid partnerships will improve our returns on capital and increase our value generation.

We are proud to have captured 2/3 of the market growth in mobile revenues this year and to continue to lead in satisfaction and quality indicators from ANATEL. This is showing that we are executing well our strategy having quality as one of our key drivers.

I am confident that we are ahead of our competitors and in the right path to deliver strong results for our shareholders.

PAULO CESAR TEIXEIRA - CEO

STRATEGY


25

Disclaimer

This presentation may contain forward-looking statements concerning future prospects and objectives regarding growth of the subscriber base, a breakdown of the various services to be offered and their respective results. The exclusive purpose of such statements is to indicate how we intend to expand our business and they should therefore not be regarded as guarantees of future performance.

Our actual results may differ materially from those contained in such forward-looking statements, due to a variety of factors, including Brazilian political and economic factors, the development of competitive technologies, access to the capital required to achieve those results, and the emergence of strong competition in the markets in which we operate.

Documents

140225 - Apresentação 4Q13 - ENGstatic.telefonica.aatb.com.br/Arquivos/Download/933... · 2017-11-09 · Investor Relations Telefônica Brasil S.A. 5 Acceleration in mobile postpaid