Apimec-RIo RIO DE JANEIRO, DECEMBER 15, 2015

Transcription

1 Apimec-RIo RIO DE JANEIRO, DECEMBER 15, 2015

2 IMPORTANT NOTICE This release contains forward-looking statements, according to the U.S. Private Securities Litigation Reform Act of Statements that are not historical facts, including statements about perspectives and expectations, are forward-looking statements. The words "anticipates", "believes", "estimates", "expects", "forecasts", "intends", "plans", and similar terms, when related to the Company or its management, indicate forward-looking statements. These statements reflect the current view of management and are subject to various risks and uncertainties. These statements are based on various assumptions and factors, including general economic, market, industry, and operational factors. Any changes to these assumptions or factors may lead to practical results different from current expectations. Excessive reliance should not be placed on those statements. Forward-looking statements relate only to the date they are made, and the Company is not obligated to update them as new information or future developments arise. AVISO Oi S.A. 1

3 Oi s Strategic Priorities Oi progresses towards its priorities 1. Operational turnaround: cost transformation and network improvement 2. Balance sheet: refinancing and reducing debt; and building a better regulatory environment 3. Corporate governance: completion of migration to the highest standards, with no controlling shareholders 4. Consolidation and market evolution Oi S.A. 1

4 OPERATIONAL TURNAROUND Oi S.A. 2

5 Financial Highlights Greater EFFICIENCY in cost and investment supports EBITDA & OCF IMPROVEMENT TO DELIVER 2015 GUIDANCE Financial highlights R$ million y.o.y 9M15 9M14 y.o.y Brazil Net Service Revenues 1 6,463 6, % 19,588 19, % Net Customer Revenues 2 6,066 6, % 18,400 18, % Routine OPEX 4,775 5, % 14,426 15, % Routine EBITDA 1,740 1, % 5,485 4, % Routine EBITDA Margin 26.7% 23.3% +3.4pp 27.5% 24.0% +3.6pp CAPEX 950 1, % 2,976 4, % Routine EBITDA Capex % 2, % 1 - Exclui receita de aparelhos. 2 - Exclui receita de aparelhos e de uso de rede. Oi S.A. 3

6 Operational Highlights FOCUS on quality and PROFITABILITY OF THE EXISTING CUSTOMER BASE Operational highlights Thousand RGUs y.o.y q.o.q Total - Brazil 71,838 75, % 72, % Residential Fixed Line Broadband Pay TV Residential ARPU 16,524 10,217 5,136 1, ,401 11,128 5,241 1, % -8.2% -2.0% +13.4% +8.3% 16,791 10,440 5,167 1, % -2.1% -0.6% -1.1% +1.2% Personal Mobility Prepaid Postpaid 47,059 40,296 6,763 48,976 41,990 6, % -4.0% -3.2% 47,756 40,719 7, % -1.0% -3.9% Corporate/SMEs Fixed Line Broadband Mobile 7,602 4, ,424 8,004 4, , % -6.6% -4.6% -1.9% 7,778 4, , % -2.0% -1.6% -2.9% Public Telephones % % Oi S.A. 4

7 Brazil Revenues REVENUEs trend improvement in all segments DESPITE MACRO ENVIRONMENT Personal Mobility % y.o.y Q Q Net Revenues % y.o.y Service Revenues Customer Revenues 1 2 Residential % y.o.y Q14 1Q Corporate / SMEs % y.o.y Q14 1Q Excludes handset revenues. 2 - Excludes revenues from handsets and network usage. 4Q14 1Q15 Oi S.A. 5

8 Personal Mobility (Brazil) IMPROVEMENT IN DATA CONSUMPTION DRIVES GROWTH IN BOTH RECHARGES AND ARPU 3G/4G handset penetration % of total base +19pp Postpaid gross ARPU (ex-mtr) Indexed +23.1% Personal mobility customer revenues R$ million Voice Data 37% 39% 49% 54% 56% 1,646 1, % 1,799 1,757 1,780 4Q14 1Q15 4Q14 1Q % Recharges¹ % y.o.y (Financial volume) Q14 1Q % 34% 38% 40% 43% Data / Total 4Q14 1Q Recharges include the prepaid portion of fixed+prepaid offers (OVT). Oi S.A. 6

9 Personal Mobility (Brazil) Oi leads market transformation for all-net model, eliminating the community effect, and expands data offer to use freely Targets Improve revenues and market share Consolidate customers with prepaid multi-sim card Increase share in postpaid segment Project developed over more than 10 months Extensive research program indicated customer needs for more freedom: to surf the internet with no data usage restrictions to speak to any operator at any location Value proposal Much more data to use freely Simplicity with no tricks Minutes to call any operator anywhere in the country All in a single SIM card It includes all offers of prepaid, Controle and postpaid ARPU increase by consolidation of recharges in Oi s prepaid and Controle SIM cards and by postpaid mix improvement Oi S.A. 7

10 Residential (Brazil) Improvement in gross adds reverting net adds trend and higher base PROFITABILITY support revenues recovery Net adds Thousand ARPU Indexed Fixed % Residential ARPU R$ +8.3% +1.2% % Broadband % TV Q14 1Q Q14 1Q15 4Q14 1Q15 Oi S.A. 8

11 Residential (Brazil) Launch of oi play platform and new broadband speeds (VDsl) reinforce oi's positioning IN RESIDENTIAL SEGMENT New broadband portfolio Offer Price* Speeds of 20, 25 and 35 Mega Simplified offer, no price step Available in more than 500 cities 35 Mb R$ Up to 25 Mb R$ Up to 15 Mb R$ Up to 10 Mb R$ Up to 2Mb R$ * Reference of the municipality of Rio de Janeiro Oi Play launch Extension of Oi TV content to multi-devices. Live programming and non-linear content: more than 30 channels and 13,000 titles available. A single website bringing together all content while optimizing the customer browsing experience. Apply to all Oi TV customers. Oi S.A. 9

12 Corporate / SMEs (Brazil) B2B FACES CHALLENGES IN MACROECONOMIC ENVIRONMENT BUT IMPROVES QUALITY OF ITS REVENUES Non-voice revenues % of Corporate revenues Corporate: less voice services dependency Non-traditional services 1,2 Indexed. Revenues TI VAS Channel mix % of Gross Local SMEs: focus on quality and profitability Remote Churn rate Fixed+BB+Mobile Disconnections as a % of the base -12% +4,0pp +17.8% Average time of repair Fixed+BB Hours -68% Average time of installation Fixed+BB Days -45% 1 - IT = Cloud, ICT and Datacenter services; VAS = Managed Services, Security Solutions and Special Projects 2 - figures excludes FIFA contract revenues Oi S.A. 10

13 Operating Costs and Expenses (Brazil) Strict COST control despite high inflation, ENERGY AND Fx Routine operating costs and expenses R$ million Brazilian operations Inflation in the period: +9.5% 5, % , ,775 MTR tariffs cut Lease back from assets sold Handset costs Personnel Interconnection (traffic) Third-party services Network maint. Marketing Rent & insurance Other 15, , % ,426 9M14 MTR tariffs cut Lease back from assets sold Handset costs Personnel Interconnection Third-party Network Marketing Rent & services maint. insurance (traffic) Other 9M15 Oi S.A. 11

14 Operational Turnaround Transversal and structuring projects start generating positive results Launch of Forum of Quality focusing on customer experience Process optimization to reduce revenues leakage Forum of Quality Initiative Impact Marketing and sales Customer service Customer Experience Field operations Billing and collection Downgrades Customers downgrade requests are treated with by a specialized unit reducing ARPU losses Revenue retention R$ +16% Impact Rate Calls/Customer Average time to repair Hours -7% -13% Complaints Revision of processes and adherence control, ensuring that the correct amount is attributed when the bill is contested Value returned to the customer R$ -40% Jul-15 Sep-15 Jul-15 Sep-15 Oi S.A. 12

15 EBITDA and OCF (EBITDA CAPEX) IMPROVEMENTS IN EBITDA AND OCF IN LINE TO DELIVER 2015 GUIDANCE Proforma EBITDA 1 R$ million Brazil Other 1,698 1,836 2,011 1,947 1, % 5,279 5, % Proforma EBITDA minus CAPEX 1 R$ million Brazil Other 1,573 1,689 4Q14 Proforma CAPEX R$ milion 1,928 1Q15 1,816 1,740 4,923 9M14 5,485 9M % 1, ,732 2, % 1,470 4,170 4Q14 1Q15 9M14 9M15 1,108 1,025 1, % 3, % 1,431 1, , ,018 2,976 4Q14 1Q15 9M14 9M routine Oi S.A. 13

16 Oi s Infrastructure CONTRACTs RENEGOTIATION, 2G 3G MIGRATION PLAN, NETWORK SHARING AND ADJUSTMENTs in OFFERS ensure CAPEX OPTIMIZATION WITH QUALITY IMPROVEMENT Renegotiations and network efficiency Contractual renegotiations of mobile Core and Access Traffic cost MoU -32% Mbyte -32% Opportunities for improvement in sharing R$ (MM) 4G Ran Sharing with Tim R$ -45% Consistent improvement in customer experience SMP8 Data connection rate % 99% 98% G to 3G customer migration # of clients 2014/2017 (Only Oi) 2014/2017 (RAN Sharing) Sep/14 Mar/15 Target Values Sep/15 2G -49% -65% Potential improvement of 2G/3G coverage through network sharing agreements with Tim Cities SMP9 Data drop rate % 3G/4G +253% Only voice With data 2G 3G +75% +30% 5% +156% Current Future Current Future Sep/14 Mar/15 Source: ANATEL and Company s data 0.3% Sep/15 Oi S.A. 14

17 Oi s Infrastructure Measures to EXPAND TRANSPORT NETWORK support data TRAFFIC INCREASE AND IMPROVE QUALITY OF CUSTOMERS EXPERIENCE Contracts renegotiation Transport network expansion Increasing data traffic Quality improvement Expansion of Oi s national backbone R$ / Mbps (TX) Modernization of IP network R$ / Mbps (IP) OTN 100G New optical backbone 91% completed Average bandwidth Mbps / user ADSL congestion % congestion -40% -25% +45% -17% 81% completed Former Current Agreement Agreement Former Current Agreement Agreement Jan/15 Jun/15 Sep/15 Dec/15 Projetado Sep/14 Mar/15 Sep/15 Sep/14 Mar/15 Sep/15 Fiber swap Strategy of fiber swap R$ / km -83% Atual Single Edge New IP router network 88% completed IP traffic Tbps +43% ADSL subscribers (>= 10 Mbps) +28% +40% R$ 69% completed Own built Swap Jan/15 Jun/15 Sep/15 Dec/15 Sep/14 Mar/15 Sep/15 Oi S.A. 15

18 BALANCE SHEET Oi S.A. 16

19 Net Debt Variation Operating cash flow improved substantially; NET DEBT impacted by FINANCIAL RESULTs and accounting impact of derivatives Change in net debt R$ million Operating cash flow Q14-5 1Q Accounting and temporary effect: mismatch between MTM and accrual of derivatives converge at the maturity of the contracts 1,519 37,241 34,644 1, million ,958 1,763 Impact from MTM Q14 1Q15 Oct/15 Routine EBITDA Capex WC Judicial deposits + taxes 3T15 Financial results Accounting impact from MTM of derivatives Net Debt Oi S.A. 17

20 Indebtedness Solid LIQUIDITY POSITION to meet short-term obligations Liquidity R$ million Gross debt amortization schedule R$ million 1, ,132 Average debt maturity: 3.7 years 53,656 1,500 19,403 16, ,958 6,899 20,132 8,960 Cash 1,083 11,354 Cash BNB Revol. in R$ Revol. in USD ECAs in USD/EUR Liquidity position Liquidity position Gross debt onwards Oi S.A. 18

21 CORPORATE GOVERNANCE Oi S.A. 19

22 Corporate Governance New CORPORATE GOVERNANCE: pulverized capital, independent BOARD and new BY-LAWS reflecting requisits of novo mercado Execution of the Exchange of Rio Forte Commercial Papers ANATEL approval on alternative structure EGM called on Aug 1 st Extraordinary Shareholder Meeting (EGM) to approve the alternative structure Sep 1 st Oct CorpCo share registration at SEC Pending approval from SEC to the 2013 PT SGPS 20F generated a need to explore alternative structures O i s Board of Directors approved alternative structure: Voluntary conversion from preferred to common shares Changes on Oi s By-Laws to incorporate the Novo Mercado requirements Announcement of Oi s new Board Completion of the conversion of 2/3 of preferred shares into common shares Post-conversion share capital (ex-treasury) Common: 519,751,658 Preferred: 155,915,486 Oi S.A. 20

23 Oi s Strategic Priorities Wrap-up: Oi progresses towards its priorities Operational turnaround: cost transformation and network improvement EBITDA and OCF on track to deliver 2015 guidance*: Routine EBITDA R$ bn Routine EBITDA CAPEX improvement R$ bn Complete sale of PT Portugal Balance sheet: refinancing and reducing debt; and building a better regulatory environment Refinancing and debt payment: focus on improving debt profile Other asset disposals TAC: projects filed with ANATEL Discussion on Concession Terms Corporate governance: completion of migration to the highest standards, with no controlling shareholders Consolidation and market evolution Completion of TmarPart merger, resulting in dispersion of control Oi s new Board already acting New Bylaws already in place, reflecting Novo Mercado governance standards Completion of voluntary conversion of 2/3 of preferred into common shares Signing of a 7-month exclusivity agreement with LetterOne for potential transaction that enables the consolidation of the Brazilian telecommunications sector * Guidance for Brazilian operations. Oi S.A. 21

24 Apimec-RIo RIO DE JANEIRO, DECEMBER 15, 2015 Oi S.A.