TIM Participações S.A. 1Q07 s Results. May 4 th, 2007

Transcription

1 TIM Participações S.A. 1Q07 s Results May 4 th,

2 Main Messages Market Performance Commercial Strategy Financial Performance 2

3 1Q07: Continuous Growth in an Increasingly Challenging Market Offers Enrichment & Caring Substantial value Market growth Solid revenue growth Cutting edge in innovation: Home Zone offer extended to the corporate segment Dedicated Customer Operations Unit Segmented offers Focus on value and corporate segments based on tailor-made and customized solution Channel mix optimization Superior subscriber base growth compared to Brazilian Market: QoQ: +3.5% vs Market +2.2% YoY: +25.2% vs Market +14.3% Leader in net additions, achieving 40.1% of incremental share in 1Q07 Improved client mix: 21.6% postpaid lines, +1p.p. YoY Leader in business segment: +50.3% YoY lines growth 17% YoY reduction in subscriber acquisition cost 44% YoY growth of net service revenue (or 22% excluding the B&K impact) 40% YoY VAS net revenue growth ARPU Performance: on track to rebound and maintaining the highest ARPU in the market Solid YoY EBITDA growth and margin aligned with Company s guidance Maintaining our leadership in mobile growth and further consolidate position in the market 3

4 Main Messages Market Performance Commercial Strategy Financial Performance 4

5 Outperforming a Growing Market Combining growth with a improved mix Market Lines (Mln) and Penetration Rate TIM lines Evolution (mln) 48.1% 49.2% 51.2% 53.2% 54.2% Lines Growth YoY +6.1p.p % Lines Growth YoY +25.2% 19.5% 19.5% 19.3% Postpaid mix Source: ANATEL. 19.4% Penetration Rate 19.6% 1Q06 2Q06 3Q06 4Q06 1Q % Penetration continued to grow Residual market in lower income classes: increased need for customized business model 20.6% 20.6% 20.5% 21.3% 21.6% 1Q06 2Q06 3Q06 4Q06 1Q07 Postpaid mix Constantly outperforming market growth: % vs. competitors average +10.9% Continuous improvement of client mix (% postpaids over total client base): TIM 21.6% vs competitor's average of 18.9% +31.4% 5

6 Continuous Market Share Growth Maintaining the leadership in net additions Market Share Performance 1Q07 Incremental market share First Player pp -9.1 Mln lines 33.7% 31.1% 30.0% 29.1% -2.6 pp -2.7 Mln lines 28.4% -1.0% Others Vivo 28.3% 23.5% 24.3% 25.1% 25.4% 21.8% 22.8% 23.1% 23.9% 25.8% 24.1% Claro 32.6% Third Player +1.7 pp +1.6 Mln lines +1.7 pp +1.7 Mln lines 40.1% 1Q06 2Q06 3Q06 4Q06 1Q07 Continuous market share growth Confirming leadership in incremental market share: 38.2% in 2006 and 40.1% in 1Q07 Bringing gap to the 1 st player at lowest level ever: 2.6pp Increasing market share based on a continuous focus on high-value customers 43.8% incremental share in postpaid segment in 1Q07 Reinforcing our leadership on postpaid segment: 28.4% market share ( +3.6pp YoY) 6 Source: ANATEL.

7 Main Messages Market Performance Commercial Strategy Financial Performance 7

8 Key Competitive Advantage Profound Segmented Offer Marketing Strategy Pillars Community & Convenience TIM Brasil Plans: voice+ SMS + Data + Roaming Shared Bundles On-Net Promotions Segmented Approach and Cross-Sell products Integrated Solutions National Tariff Plan for multiregional companies Flexible Bundles TIM Web Mobile (internet access) TIM BlackBerry Pearl for consumer market Innovative Approach TIM Casa and TIM Casa Empresarial TIM + 25 TIM Chip Only Voice and data internacional roaming for prepaid segment Customer base also eligible to all promotions Mega TIM - SMS/MMS package 8

9 Consumer Market and Institutional Campaigns Focus on fostering TIM s Community concept Feliz 07 Centavos ( Happy 07 Cents ) On-net local calls for just R$ 0.07 for postpaid and prepaid TIM s clients TIM Mais 60 Additional bonuses of 60 min on-net calls Supporting competitive aggressiveness Increasing traffic while keeping margins, based on on-net traffic usage Keeping the pace of post paid acquisition Supports TIM Brasil Plans sales and customer base growth TIM Casa ( Home Zone ) Capturing additional revenues from fixed market Low SAC TIM chip free of charge, subject to recharge of R$15 in 48 hours after activation Extra Recharge Promotion Bonus in minutes equal to the recharge value Mobile convenience also at home > 400 thousands clients at 1Q07 Stimulating usage from new customers Anticipation of recharge purchase Leverages usage and average recharge 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 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 communication between the company s employees anywhere in the country. TIM Empresa Mais Innovative plan, with no minute packages; its flexibility caters for companies wishing to expand their mobile communications. TIM Casa Empresarial Allows savings in mobile-to-fixed calls (from 33% to 59%) Mobile office solution Most advanced Blackberry handsets portfolio + Front runner in innovation and flexibility on corporate services Meeting the specific needs of companies with nationwide presence Plans and services that allow enhanced mobile communications Launch of several offers as to remain the leading mobile office solution provider (blackberry, voice and data bundles) 10

11 VAS: Easy & Useful Innovation Maintenance of leadership in VAS segment Innovative initiatives 1Q07 VAS Results Interactive SMS offers in partnership with media companies Reverse Mobile Auction Market campaigns and constant update of contents provided by major players (Universal, Warner, Gameloft, Eletronic Arts and others) First-to-market launching VAS tariff plans: Mega TIM SMS/MMS bundle card subscription service model Last minute SMS promotions Offer of seasonal WAP sites as to promote dates such as Carnaval and Regional Soccer Championship VAS Net Revenue (R$Mln) %** 1Q06 +40% % 1Q07 VAS Net Revenue % over Net Service Revenue VAS Breakdown 44% 56% Innovative* Traditional +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: % MMS P2P: % Data: % *VAS Innovative= VAS excluding SMS P2P and Voice Mail 11 ** Proforma: %Adjusted by Bill & Keep elimination starting on Jan 1 st of 2006.

12 Optimization of Multi-Channel Sales Focus on efficiency and productivity Consumer Business ~ 8,500 PoS 63% 29% 8% ~ 1,700 Tele-sales & Personal ~ 260,000 points Recharge ~ 630 PME Sellers 144 KAM Retail Dealers Own stores franchisees Note: KAM (Key Account Manager) Largest distribution network in Brazil Strengthening of sales workforce and high-value customer focus Incentives on postpaid acquisition Commissioning based on value Qualified large account sales staff Improving channels productivity and efficiency Increased prepaid gross additions through alternative channels (11% in 1Q07 vs. 4% in 1Q06) Recharge channels expansion (> 40% YoY growth of electronic channels) Increased % of electronic recharge revenue over total recharge revenue: 52% in 1Q07 vs 35% in 1Q06 12

13 Reducing Subscriber Acquisition Cost SAC performance R$ -17% % 62% 46% 38% 1Q06 Direct cost 124 1Q07 Indirect cost Commission Subsidy Anatel s fee on net adds Comodato Advertising Others Declining SAC despite higher level of customer and handset mix: 23% YoY growth in postpaid gross adds expanding sales of mid-range and highend handsets Reduced subsidy strategy Focus on TIM Chip Only offer: > 70% of total gross in 1Q07 Postpaid discount oriented to maintain the competitiveness and high-value customers acquisition Improved pay-back period: 3.8 months in 1Q07 vs 4.3 months in 1Q06 13

14 Main Messages Market Performance Commercial Strategy Financial Performance 14

15 Solid Net Service Revenues Total net revenue growth R$ Mln 2,066 2,843 YoY Growth Reported Organic* +38% +19% Maintaining 2006FY service revenue growth trend 89% 94% +44% +22% 40% VAS net revenue growth 11% 6% 1Q06 1Q07 Net service revenue -17% -17% Net handsets revenue Handset revenues drop due to SIM Card sales push on ARPU Performance: on track to rebound R$ ARPU Broadly Stable ARPU* Change YoY (%) 1Q06 2Q06 3Q06 4Q06 1Q07-2% 1Q06* 1Q07-12% -15% Keeping ARPU above the market +3 pp. * Proforma: Adjusted by Bill & Keep elimination starting on January 1 st of % +3 p.p. -6% +3 p.p. +4p.p. Reducing the dilution 15

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 +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) Growth (113.6) (37.6) (83.6) (30.8) (8.0) 14.1 Main drivers: Gross Adds: +33% - Recharges: +25% Q06 Historical EBITDA** EBITDA Margin Deferral of subsidies 1Q06 EBITDA Reported Handsets Revenue *** Service Revenue Network Selling Expenses Bad Debt COGS Others 1Q07 Expenses EBITDA Reported Deferral of subsidies 1Q07 EBITDA Adjusted 21.1%* 24.0%* 23.4% 23.8% +2.7pp, +160 Mln on a comparable basis * Proforma: Bill & Keep elimination starting on January 1 st of ** Data released in the 1Q06 s press release. *** Officially restated figure. Others Expenses includes: G&A, Personnel and Net Other Operating Expenses/Revenues 16

17 From EBITDA to Bottom Line Δ YoY (Impact on Margins) (R$ mln) (44.3) R$ Mln (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) (38.0) (19.5) EBITDA 1Q07 Depreciation Amortization EBIT Net Financial Expenses Taxes and Others Net Income 17

18 Net financial position Sound Financial Health Net cash flow R$ Mln Non Operating Operating FCF FCF 4Q06 1Q07 R$ Mln 1Q06 1Q07 (488) OpFCF (1.241) +753 (67) (555) +130 (1,027) (488) EBITDA +664 CAPEX (255) Δ Oper. WC (898) (67) (1,582) (1,536) in 1Q06 Stable Net Financial Position YoY Negative WC due to cash-out of 4Q06 s CAPEX NoFCF (197) (1.438) +883 Non-Oper.FCF Oper.FCF Significant cash flow improvement compared to 1Q06 (+R$883 million) mainly due to: (i) Increased Profitability (ii) Reduced impact from Working Capital changes 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 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, Bloco 01 6 andar Barra da Tijuca Rio de Janeiro, RJ Phone: / / Fax: Visit our Website: 19