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1July 23rd, 2007
TIM Participações S.A.
2Q07’s Results
2
Main Messages
Market Performance
Commercial Strategy
Financial Performance
3
2Q07: TIM Continues to Deliver Market Leading ResultsCustomer Quality
Innovation Profitability
Improving client mix: postpaid lines reach 22.0% on total (+1.4pp YoY).
29.0% of Market Share in postpaid
Reinforcing our leadership in business segment
Confirming our leadership in net service revenue
Preferred mobile operator in Brazil
Leader in average client satisfaction
Largest voice & data coverage
Continuous net service revenue growth
Steady VAS gross revenue increase
ARPU Growth QoQ
Further SAC reduction
Solid YoY & QoQ EBITDA margin expansion
Positive net income
TIM Web: internet access solution
TIM Mais Completo: convergent solution (mobile + fixed + internet)
Continous VAS innovation
Continuous Value Segment Growth Recognized TIM Brand
Solid Financial GrowthFocusing on Customer’s TotalCommunication Needs
Overall growth prospects remaining strong
4
Main Messages
Market Performance
Commercial Strategy
Financial Performance
5
19.6% 19.4% 19.5% 19.3%
91.8 95.9 99.9 102.2
51.2% 53.2% 54.2% 56.4%
49.2%
2Q06 3Q06 4Q06 1Q07 2Q07
106.7
Source: ANATEL and company´s data.
Continued Focus on Value Market
Market Lines (Mln) and Penetration Rate
Postpaid mix Penetration Rate
Speeding up market growth lead by GSM
dominant technology
Increased penetration concentrated in lower
income classes
TIM Lines Evolution (Mln)
Postpaid mix
Lines
GrowthYoY
Combining Growth with an Improved Mix
Lines
GrowthYoY
+16.9%
+7.2 p.p.
+16.2%
+31.5%
+23.0%
20.5%20.6% 21.3% 21.6%
22.324.1
25.4 26.3
2Q06 3Q06 4Q06 1Q07
22.0%
27.5
2Q07
19.6%
Attracting the best customer mix:
TIM: 22.0% of postpaid (+1.4 p.p. YoY)
Competitors: 18.7% of postpaid (-0.4 p.p. YoY)
6
Continued focus on value and not on growth “per se”
Sound market share:
25.8% of market share (+1.5 pp Y-o-Y basis)
2Q07 Segmented Approach
Selective Customers AcquisitionHigher Share on Value Market
FirstPlayer
ThirdPlayer
Market Share Performance
31.1%
29.1%
24.3%25.4%
22.8%23.9%
2Q06 3Q06 4Q06 1Q07 2Q07
-2.6 pp-2.8 mln lines
28.4%
25.8%
24.6%
+1.5 pp
+1.4 mln lines
+1.2 pp
+1.2 mln lines
-6.8 pp-6.2 mln lines
* Based on 1Q07 figures
29.0%
25.7%25.0%
24.0%
Total lines
Postpaid lines
25.8%
Net service revenue
LEADERSHIP**
LEADERSHIP*
2nd PLAYER
22.2%
2Q07 Mkt Share of Net AddsMarket Share per Segment
TIM Share & Positioning
Prepaid Postpaid
+3.3p.p.
+1.0p.p.
2Q06 2Q07
Post
Pre
29.0%
>30%
41.5%
Total 26.0%
VOLUME
VALUE
Higher share and growth on high-value customers:
Postpaid mix of net additions in the 2Q07: TIM 31.2% vs competitor's average of 15.5%
Leadership in net service revenue
** Based on 1Q07 figures and confirmed in 2Q07 results already released
Source: ANATEL / Company´s data / Competitors press release.
7
Main Messages
Market Performance
Commercial Strategy
Financial Performance
8
Confirming the Leadership in Customer Satisfaction
Average Satisfaction Index*
Sources:
Leveraging on Leading Brand Power
Consumer Preference (%) **
TIM Brand is recognized as reliable and appealing, representative of market values and dreams
Winner of all recent key independent surveys:• TIM is the first operator choice• Leader in average client satisfaction through the call center• Quality standard in the postpaid heavy user call center service
Committed to constant improvement of brand perception through creation of new customeroperations unit
* Interscience - May/2007** Instituto Synovate - May/2007
3rd Player
8.09
1st Player
8.068.69
2529
3rd Player
17
1st Player
9
Consumer: A Valuable Marketing Strategy
Pushing Usage through Promotion and Total Communication Service
Facing competitors aggressiveness trough continuous offer improvement
Working on community concept in order to increase usage
R$ 0.07 per minute for local on-net and DDI* calls* Limited to 20 min/month to specific countries (US / Italy / etc)
Mothers &
Valentines’ Day
Focus on “On-Net Traffic”
TIM Chip only
& Recharge
Incentives
Lowering SAC & Stimulating UsageTIM chip cost refund subject to recharge within 48 hours
from activation“Recarga Fácil” followed “Recarga Extra”, maintaining
bonus in minutes, according to recharge value
“TIM Mais
Completo”
& “TIM Web”
Focusing on Total Communication Needs
Attracting fixed and data revenue while safeguarding mobile leadershíp
USB ModemGPRS / EDGE
New TIM Casa
PrepaidNew TIM Casa prepaid: More attractive monthly fee, R$9,90 for
50 minutes - Boosting sales.
Segmenting TIM Casa Offer
TM Mais Completo: Full communication package combining Mobile Calls + Home Fixed Calls + Internet access
TIM Web: Internet access through USB Modem for Laptops and Desktops
Fixed license acquisition: to enrich TIM convergent services offers
10
Integrated Business SolutionsCross-selling of Voice and Data Service
Complete solution for corporate portfolio: meeting the specific
needs of companies with nationwide presence
Mobile office: the widest BlackBerry and Smartphones handset
portfolio
Homezone for corporate segment: TIM Casa Empresarial
Data-only offer, leveraging on the widest data network in the
country : Nosso Link
Consolidate
Positioning in
Business
Segment
Over 1,000 municipalities with EDGE
100% GPRS network coverage
11
Continuous VAS InnovationStimulating Data Usage
Innovative
Offer /
Flexibility and
Convenience
TIM DATA PACKAGEInternet access Portfolio Data Plug insBundle includes 1 GB, 250 MB or 40 MB Valid for all TIM Postpaid (Corporate and Consumer)
Data Package Cross-selling
Push on Media Content, Interactivity and Connectivity
MEGA TIM WAP: 40MB Bundle through Wap FastMEGA TIM Mensagens: SMS+MMS Bundle Cards
Data Usage Incentives
Gol airlines m-serviceTickets and Check-in
Free Demo GamesPromotional
Games for R$3,99
User GeneratedContent SMS Promotions
Cristo RedentorQuizTorpedo SurpresaRetail promotion
(Mellita, Extra e Prestobarba Gillete)
Music content download
M-Commerce TIM Music Store Games TIM Studio VASStimulation
(user&usage)
12
Further Segmentation in Subscriber Acquisition Cost
SAC Performance
Lowering SAC despite better level of customer and handset mix:
24.6% YoY growth in postpaid gross addsincreasing % of mid-range and high-end handsets
sold
Reduced subsidy strategy with focus on “TIM Chip Only” offer:
More than 70% of overall gross adds in 2Q07 vs. ~40% in 2Q06
Postpaid SAC oriented to maintain the competitiveness and high-value customers acquisition
Improved pay-back period:
3.3 months in 2Q07 vs 4.7* months in 2Q06
42%30%
58%
70%
2Q06 2Q07
168
CommissionSubsidyAnatel’s fee on
net adds
ComodatoAdvertisingOthers
113
Direct cost Indirect cost
R$
-33%
* Proforma: Bill & Keep elimination starting on January 1st of 2006.
13
Main Messages
Market Performance
Commercial Strategy
Financial Performance
14
Total Net Revenue Growth
R$ MlnReported Organic*
YoY Growth
* Proforma: Adjusted by Bill & Keep elimination starting on January 1st of 2006.
Net Service Revenue Net Handsets Revenue
Solid Net Service Revenues
Continuous service revenue growth:Total traffic + 43% YoY: focus on
on-net call promotion, stimulating usageCustomer growth +23% YoY
Handset revenues confirm the trend of the previous quarters reflecting strong push on ‘TIM Chip Only’ sales
R$
MOU / ARPU Performance
ARPU increase QoQ
Keeping ARPU above the market
2Q07
3,060
2,275
2Q0613% 9%
87%91%
+34.5% +17.3%
+40.5% +20.2%
-5.8%
1Q07
34.4 34.6
2Q07
Min
2Q07
94
2Q06
81
+16%
MOU increase driven by on-net traffic
Increasing usage
+0.7%
15
+4.5pp YoY, +228 mln on comparable basis
EBITDA and Margin EBITDA Expansion
Delivering Profitable Growth
2Q06EBITDA
2Q07EBITDA
ServiceRevenue
NetworkExpenses
SellingExpenses
BadDebt
COGSOthers
Expenses**
* Proforma: Bill & Keep elimination starting on January 1st of 2006.** Others Expenses includes: G&A, Personnel and Net Other Operating Expenses/Revenues
R$ Mln
HandsetsRevenue
Main drivers:- Gross Adds: +26%- Recharges: +32%
Change % YoY
EBITDA Margin
515.7
743,7
(55.3)
(457.5)
(53.8)
(17.0)
0.0
801.8
9.9
19.8%* 24.3%
Improving Y-o-Y performance excluding impact of LD41 from non TIM customers (R$22 mln)
Bad Debt (as % of net services revenue)
Improved Margin QoQ despite negative seasonality
2Q06 2Q07
5.3%
5.7%6.0%
0.7%
+40.5% +103.5% +9.5% +48.9% -2.6% +0.0%-5.8% +44.2%
+20.2%* +9.9%*
16
From EBITDA to Bottom Line
EBITDA2Q07
DepreciationAmortization
EBIT NetFinancial Expenses
Taxes and Others
Net Income
YoY
(R$ mln) +228.0 +272.6(16.0) (10.7) +71.3
R$ Mln
+212.0
173.7(81.5)
(570.0)743.7
34.0(58.2)
* 2Q06: Recovery of` PIS/COFIN taxes credit (positive effect).** 2Q07: Monetary restatement of contingencies (negative effect).
+ R$39.3 Mln excluding non recurring items:2Q07: R$ 19.8 Mln*2Q06: R$ 30.2 Mln**
Positive Bottom Line
R$43.1 Million (Subsidiary income taxes)R$12.6 Million (amortization of goodwill from
privatization, non-cash item)R$ 2.5 Million (others non-operational expenses)
17
Net Financial PositionNet Debt QoQ Trend
Gross Debt: R$2.3 billion (of which 89% long term / average annual cost of 11.66% p.y. in 2Q07)
Cash and equivalents: R$0.3 billion
Net Debt: R$2.0 billion
OpFCF1Q07
(1,973)(556)
R$ Mln NonOpFCF
2Q07
Net Cash Flow (OpFCF + Non OpFCF)
Positive Operating FCF due to increased profitability
(1,582) 165
R$ Mln
Reported2Q07
Positive Net Cash Flow (+R$390 Mln) excludingseasonal disbursement
(391)440
Net CashFlow
Pro-forma
341 390
Annual Fistel
PaidDividends
Seasonal Impact (R$781 Mln)
Of whichDividends (440)
EBITDA +744CAPEX (324)
Oper. WC (255)
18
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.
“Safe Harbor” Statements
Investor Relations
Avenida das Américas, 3434 - Bloco 01
6° andar – Barra da Tijuca
22640-102 Rio de Janeiro, RJ
Phone: +55 21 4009-3742 / 4009-3751 / 4009-3446 / 8113-0571
Fax: + 55 41 4009-3314
Visit our Website:
http://www.timpartri.com.br