1
Results PresentationTIM Participações S.A.
2
Agenda
Q1 in Few
Community Expansion
Keeping the Innovation Path
Infrastructure & TIM Fiber Update
Financials Highlights
Outlook and Priorities
3
Consistent Growth: Keeping the Pace
Revenues
Services
Ebitda
Revenues
Ebitda
* Includes Revenues and EBITDA of AES Q1 2011
Reported
Pro-forma*
1Q12 1Q11
4,468 3,752
∆%
+19.1
4,015 3,463 +15.9
1,169 1,033 +13.2
4,468 3,792 +17.8
1,169 1,067 +9.5
Growth driven by mobile business:
Consistency in customer base and revenues expansion
Data acceleration
Increased pressure on Voice services (FMS)
MTR cut started on March – impact of -R$43 mln/
month revenues; -R$22 mln/month Ebitda
Ebit 512 350 +46.4
Speed-up of Network Roll-out:
Capex +83% YoY in Q1 (2G capacity, 3G roll-out)
3G upgraded to 42 Mbps starting from SP
TIM Fiber/TIM integration:
~1,000 antennas connected with fiber n SP/Rio (FTTS)
>1,000 Household connected (TIM Fiber)
Soft launch confirmed for Q2
4
4,468
3,752
4,0153,463
1Q11 1Q12
Post Web
Post Voice
Pre
Tot.
1.8 3.1
8.5 9.9
1Q11 1Q12
Drivers of Revenue Growth: Community Expansion and “Internet for All”
Post Web
Post Voice
Pre
Tot.
Mln R$, Fixed+Mobile
Total Net
Revenues
Revenues
+15.9%Net Service
Revenues
Mln clients, Base EoP
Customer Base
Gross Adds
52.867.2
Net Adds
+17%
+72%
Pre-paid
Post-paid
+28%
+27%
Δ% YoY
45.1 57.6
7.79.6 +25%
Gross Adds Net Adds
1Q YoY1Q
YoY
-2%
+21%
+16%
+14%
+32%
Q1 2011 YoY
Voice Out(local)
Long Distance
VAS
TOTAL
Voice In
+16%
+14%
+19%
+8%
+56%
Q1 2012 YoY
+17%
+17%
+72%
+74%
Gross Rev.
Mobile only
-6% +33%
+125%+64%
+19.1%
5
Smartphone/webphone penetration
% smartphones/total CB (lines), % smarphones/handsets sales
Mobile Internet: the New Wave
∆ YoY
Total
DATA
LD
+13.7%
+32.3%
+21.0%
+18.4%
+33.5%
+38.7%
+20.0%
+47.6%
+41.5%
+20.7%
+49.2%
+34.4%
+18.9%
+56.1%
+16.3%
Mobile Serv. Gross Rev, R$ Mln
Revenues Reshape
# cities
% urban
population
coverage
512488
331273258
2Q 111Q 11 4Q 113Q 11 1Q 12
66.6% 67.1%57.5%56.9%55.8%
3G - Coverage
Voice OUT&Other
-2.4% +4.7% +5.6% +10.5% +8.0%Incoming
+14.6% +14.9% +13.7% +13.9% +13.8%
944897 968974
2,4172,656 2,751
640
958834
734
4,644
1Q11
820829
2,532
5,031
2Q11
690
5,521
VoiceOut&Others
4Q11
1,000
1,034
803
1Q12
LD
2,889
Incoming
Data
5,722
841
3Q11
5,294
Data reached R$1 billion revenues
Data exceeding Long Distance Revenues 2011 2012
<14%
>18%
VAS +400bps
in 1 year12.6%
15.4%
19.5%
26.6%
31.1%
Mar'11 Jun'11 Sep'11 Dec'11 Mar'12
% sold 46% 52% 69% 68% 77%
6
Pressure on Voice (FMS) and Acceleration of Mobile Internet (Business Transformation)
Received Business ErosionGross Revenue Mix
Price Competition (eg. Local and LD)
Billion Minutes Received TIM Approach to Competitive Arena
TIM
Claro
Vivo
25 cents/call
(equal to ~5cent/minute)
16-21 cents/call
5 cents/min
-15/35%
Price aligned
14%
52%
15%
19%
18%
50%
14%
18%
1Q11
LD
In
Local
1Q12
VAS
68%66%
Mobile-
Mobile
Fixed-
Mobile
MTR impact asimmetric for mobile
only operators
–R$43 mln/month revenues
–R$22 mln/month margin (itx costs
66% regulated vs 34% not –SMS,
M-F, itx)
Incoming voice MOU in fast erosion
Organic (-18% YoY) as of FMS
Forcing FMS Mobile Internet
Volumes
Out
Price
Out
monthly unique users22.621.8
20.118.4
17.5
1Q11 2Q11 3Q11 4Q11 1Q12
-8%-7%-14%
-23%-32%
1Q121Q11
10.3
17.5
1 22.22.2 flat
1Q11 1Q12
7
Agenda
Q1 in Few
Community Expansion
Keeping the Innovation Path
Infrastructure & TIM Fiber Update
Financials
Outlook and Priorities
8
34.6 35.8 37.5 39.7 43.5 45.1 47.5 50.6 54.8 57.6
6.5 6.6 7.0 7.27.5 7.7 8.0
8.79.3
9.7
41.1 42.4 44.4 46.951.0 52.8
55.559.2
64.167.2
4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
Customer Base Evolution
Δ YoYMarch
∆%Mln lines
Net Adds
Post-paid
(000)
149 150 341 280 243 223 632317 655 348 125 +56%
+2.1+2.5
+4.1+1.8
+2.7 +3.7+4.9
+1.3
+3.1+14.4
+2.0
+12.4
Δ YoYMarch
+27%
+25%
+28%
YoY %
Pos
Pre
Net Adds
Pre-paid
(000)
1,354 1,103 1,716 2,242 3,838 1,598 3,0532,359 4,219 2,786 1,188 +74%
• Consistent CB expansion on Post-paid and Pre-paid
• Continuous Efficiency Improvements in Go2Market (in a more subsidized context)
SAC
(R$)81 75 63 55 36 36 35 36 28 32
9
23.7% 24.0%24.5%
25.1% 25.1% 25.5%
26.0% 26.5% 26.8%
30.1% 30.2% 30.1% 29.7% 29.5% 29.5% 29.5% 29.5% 29.8%
25.4% 25.3% 25.5% 25.4% 25.4% 25.6%
25.3% 24.9% 24.6%
20.4% 20.1%19.5% 19.4% 19.7%
19.1% 18.8% 18.8% 18.5%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
18% 20% 18% 17% 15% 14% 16% 19% 20%
17% 17% 19% 24% 25% 25% 26% 26% 27%
15% 16% 15% 16% 17% 18% 18% 17% 15%
15% 10% 7% 9% 13% 12% 15% 16% 12%
Market Share Growth
Customer Base ΔYoY
Vivo
TIM
Claro
Oi
1st in YoY CB
growth for 7
Quarters
Oi
Claro
Vivo
„000
4,669
7,603
8,917
1,103
1,598
2,786
1Q10 1Q11 1Q12
Net
Gross
+45%
+74%
+63%
+17%
Peers copying TIM‟s offers
Prepaid CB Mobile Market Share
10
Postpaid growth: a sustainable business model
Bad Debt
Handset Revenues and Capitalized Subsidy
% Gross Revenues
SAC/
ARPU
Bad Debt/
Gross Rev.
2.00% 1.83%1.34%
1.04%0.77%
1.08% 0.95% 0.92% 0.86%
3.12.6
2.3
1.5 1.8 1.6 1.71.3
1.7
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
R$ Mln
286
380424
468 433
732 712664 673
11585 64
26 8 0 0 0 0
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
Capitalized
Subsidy
Handset
Gross
Revenues
6.62 6.96 7.24 7.48 7.70 8.02 8.65
9.31 9.65
1T10 2T10 3T10 4T10 1T11 2T11 3T11 4T11 1T12
Postpaid Customer Base
ANATEL‟s SMP 11 KPI
CB
Mln lines
+25.3%
YoY
Complaints over 1,000 Bills
1.551.69
1.17
0.760.56
11
Agenda
Q1 in Few
Community Expansion
Keeping the Innovation Path
Infrastructure & TIM Fiber Update
Financials
Outlook and Priorities
12
Infinity – The Largest Mobile Community in Brazil
1Q 09 1Q 10 1Q 11 1Q 12
Infinity Web Modem
Unlimited navigation for
R$1.99/day
― speed reduction after 80Mb
Pay when you use
Speed up to 1Mbps
Infinity Voice
56 mln users
Leveraging on
community
Voice out
SMS
Internet for all
Local
LD
M-F
1Q11 1Q12
+27%
25
cents
25
cents
50
cents
local LD M-F
50 cents
per day
On-net/off-net
On-net
1Q11 1Q12
Off-net
2x Revenues
1Q11 1Q12
50 cents
per day
Unique users/day
0
21.7
40.8
56.1Mln lines
Per call
#SMS, Bln
Daily unique users, Mln
1.2
2.8
2.5x Revenues
13.1
16.7
Bln minutes
10x
Infinity at 97%
of prepaid base
13
Liberty – Continuous Offering Innovation
Post-Paid Subs
Data
Voice
9.6
7.7+39%
+21%
Voice: unlimited incoming and 50 minutes outgoing to TIM
numbers and local calls
Data: unlimited data per day (speed reduction after 3Mb)
Promotional Pricing (per day, per service):
Mln lines
1Q 11 1Q 12
Américas
R$ 19.90
Europa/África
R$ 19.90
Ásia/Oceania
R$ 69.90
Voice – More off-net calls bundled
Liberty Liberty + 50R$ 49
SMS – Unlimited messages
Unlimited on/offnet
Pay when you use
R$ 9.90/
month
Handset browsing
Unlimited browsing
Pay when you use
R$ 29.90/
month
1
2
3
4
+25%
14
Liberty Controle benefitsConvenient as Post Paid
(unlimited TIM–TIM calls, local/LD)
Flexible as Pre Paid
(R$10 credit to use on SMS/Web/Fixed)
Liberty Controle – Entering in a New Market Segment
+Infinity benefits
Budget Control
Pay per Day
(e.g R$0.50 SMS/Internet)
Liberty benefitsConvenience of unlimited
usage
Fixed monthly bill
Brazilian Demographics Population, Mln
DE
C
AB
2011
191
45
103
42
2005
182
93
63
26Liberty
LibertyControle
Infinity
R$ 27/
month
15
50%21%
13%
31%
1Q11 1Q12
Best Smartphone Portfolio Drives Internet Browsing
Smartphone PenetrationUnique Users Per Month
Device Portfolio Q1 SalesBest Device Portfolio
Revenues VAS
Liberty Web Tablet (49/month)
Best Tariff Plans
+70%
Mln clients
2,368
50%
1Q12
2,354
79%
1Q11
Basic
Support
Internet*
Gross Prod. Revenues
(Mln reais)
Units
433 673+55%
0.64
1.00
1Q11 1Q12
+56%
10.3
17.5
1Q11 1Q12
% of CB
R$ Bln
Liberty Web (29.90/month)
Infinity Web (0.50 /day)
Liberty Web Modem (69.90/month)
Infinity Web Modem (1.99/day)
Tablets
Smart-
phones
Modem
Performance Price
iPadSamsung
Galaxy Tab 7”
iPhone 4S
Galaxy SII
iPhone 3GS
Galaxy Y
14 Mbps 7.2 Mbps
% of Internet enabler
devices /gross prod. Rev 77% 94%
*Includes modem, tablets and web/smartphones
16
Agenda
Q1 in Few
Community Expansion
Keeping the Innovation Path
Infrastructure & TIM Fiber Update
Financials
Outlook and Priorities
17
Network Integration
# Sites
YE20121Q12
1,0301,477
2Q12
1,777
% of
existing66% 95% 115%
FTTS Roll-out SP/RJa
# access
Intelig Cust. Connectedb
688
977
3,045
x3
Intelig
TIM
TIM Fiber
1Q12
1,030
1,038
1Q11
First Evidencesc
Tim Mobile
Network
Intelig/
AES Fiber
Network
Tim Fiber
Residential
Ultra BB
1Q12 2Q12
More than 1,000 antennas
connected with fiber (FTTS)
Capacity upgraded from
8Mbps (leased copper based)
to 100Mbps (owned fiber)
Advance in FTTS Plan: 12
main cities (complete
SP/Rio and 10 capitals)
Starting Leased Lines
switch-off (Opex saving)
Fiber based last meter
Fiber to the office for Top
customers (last meters)
Improving network reliability
Back to commercial
push for Intelig
corporate business
Pre-start Activities Start-up of TIM Fiber
3,600 Building authorized
1,100 Building connected
IT dedicated platform
development
First customers
connected (testers)
Soft launch on May
Commercial launch on Q3
80Mbpsmeasured in field
on pre-launch
18
Network
Topology2
1
Optical
network
MSANs
Backbone
Ultra broadband: construction and tests underway
As is
Status
~3,600
~1,100
1 2
• Technical lab tests concluded successfully
• Field tests underway, with first Friendly User Testers
connected on the network:
- Download speeds reaching 80 Mbps
- Minimal signal attenuation verified on the network
Network Roll Out: Execution at full speed Technical Tests: Architecture works as designed
MSANs CPEs
Speed test : 80Mbps
19
TIM Fiber: On track for the Q3 Commercial Launch
Customer base
Geographic Coverage
(SP/RJ)
Product
Employees +
Friendly User Testers
n/a BTL ATL
Key objective
1 neighborhood 5 neighborhoods 25+ neighborhoods
UBB Naked
Pre-Launch Test Soft Launch Commercial Launch
Launch Phases
Technical Trial of the
solution
Start of the Commercial
Operations
Check of the Business
Readiness
Beta TestersCustomers
Base Build-up
Communications
Channelsn/a D2D + Telesales
TIM Fiber Day
timetable confirmed
Q2 Q3
Telesales
20
Agenda
Q1 in Few
Community Expansion
Keeping the Innovation Path
Infrastructure & TIM Fiber Update
Financials
Outlook and Priorities
21
EBITDA Evolution
EBIT Net
Financial
Result
Net
Income
1Q12
Taxes
and
Others
512
1,169
Depreciation/
Amortization
276
EBITDA
1Q12
-42
ΔYoY +13.2% -3.8% +46.4% +29.3% +86.5% +29.5%
R$ Mln
From EBITDA to Net Income
Consistent EBITDA and Net Income Growth
-657
-193
350512
1Q11 1Q12
EBIT Net Income
213276
1Q11 1Q12
+46%+30%
R$ Mln R$ Mln
1,033
EBITDA
1Q11
EBITDA
1Q12
-192
Var.
Marketing
and Sales
1,169
Var.
Personnel
G&A and
others
expenses
-119
Var.
Handset
Margin
-68
Var.
Network
and ITX
-37
Var.
Services
Revenues
27.5% 26.2%Ebitda Margin
Service Ebitda Margin31.1% 31.1%
R$ Mln
+552
Handsets Rev.:
COGS:
+164
-201 Includes R$34 mln
one off tax liability
22
Cash Position
D Working Capital
R$ Mln
CAPEX
R$ Mln
R$ Mln
OFCF
R$ Mln
543
297
689
1Q121Q10 1Q11
+83%
-972
-1,285
1Q10 1Q12
-1,903
1Q11
D WC -617 YoY
-30 => Inventories
-142 => Receivables
-466 => Payable
+21 => Others
-549-714
1Q12
-1,277
1Q111Q10
DOFCF -727 YoY
-110 => EBITDA-CAPEX
-617 => D WC
1Q12
1,899
1Q11
1,671
1Q10
2,558
+14%
Including TIM Fiber
net debt – R$75 Mln
Net DEBT/
EBITDA
(trailing 12m)0.73x 0.39x 0.40x
1Q11 1Q12 Var
Network 60% 77% 17 p.p
IT 24% 14% -10 p.p
Others 16% 8% -7 p.p
Net Income
23
Agenda
Q1 in Few
Community Expansion
Keeping the Innovation Path
Infrastructure & TIM Fiber Update
Financials
Outlook and Priorities
24
1Q Takeaways
Consistency of TIM´s Growth
Accelerating Revenue Reshape
Regulation
MTR cut asymmetric
impact for pure mobile
vs. integrated
EILD price-cut expected
soon
4G auction scheduled
March
2011
March
20122011 Q1 2012 Q1
+27% +19%
March
2011
March
2012
2011 Q1 2012 Q1
15%14%
>18%
<14%
Smartphone
penetration
Competition
“Me too” approach from
main competitors
Increased subsidy and
commissioning
Price-down
Continuous Innovation
Tariff plans (Passport; Controle;
Infinity modem)
Smartphones/tablets ultimate
portfolio
Seamless 3G/Wi-Fi solution (ex:
Airports; Rocinha)
TIM Fiber launch on scheduling
1,100 buildings connected
3,600 building authorized
Early field test: 80 Mbps scored
TIM Network Acceleration
1,030 antennas connected (FTTS)
with capacity increased from 8 to
100 Mbps (transmission)
3G+ roll-out at 42Mbps (access)
52.8
67.23,752
4,468
31.1%
12.6%
Crossing
1 Bln barrier
Data
LD
CB Net
Revenues
25
Business Priorities for Q2
Business Developments
• Forcing FMS even more
- Infinity‟s community expansion
- Liberty accelerating (Passport,
Controle)
• Data enter in FMS mode
- Best smartphone portfolio (Apple)
- Most attractive plans (Pre; Post)
- FTTS completed in SP/RJ
- 3G+ upgraded to 42 Mbps (access)
• Benefitting from network sinergies
- Switch-off leased line (SP/RJ)
- Intelig/AES/TIM network fully
integrated by Q2
Competitive Arena
- MTR (asymmetric phase) impact
- Long distance commoditization
Regulation
- 4G auction confirmed
- EILD new price expected
New Business
- Ultra BB residential: confirmed
- Intelig (corporate): back to
commercial push in Q2