Nyse anniversary
Transcript of Nyse anniversary
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15th Years After…
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27.8
2010 20132004 2009
Building a Solid Organization
3
→ Start up (privatization process);
→ Launched national coverage;
→ Pioneer on GSM technology;
→ First operator to launch data
services: SMS and MMS.
→ Acquired fixed license;
→ 3G launch;
→ ISE adherence;
→ Intelig acquisition (~R$0.8bln)
→ Long distance leadership;
→ Novo Mercado migration;
→ Public offering R$1.7 bi;
→ Atimus acquisition (~R$1.6bln).
1998 2003
1998
Gross Revenues
(R$ Bln)
Customer base
EoP (Million)
15,000 km fiber
optical backbone
5,500 km fiber
optical backhauling
Accessing Capital Market
→ Leadership on prepaid and advancing on
postpaid.
→ Consolidated 2nd player in value and volume.
→ Building a robust fixed infrastructure.
→ Leadership in market net adds.
→ >400,000 points of sale.
→ >11,800 employees.
→ >23,000 indirect jobs.
→ Recognized as the market
innovator.
Organic
Growth
Growth via
Acquisitions
2012 1998
70.3
2012
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Backed by High Level of Investments
4
Capex
(R$ Bln)
2,67 2,84 3,03 3,39 2,65
0,87
1,60 0,38
0,12
-
0,50
1,00
1,50
2,00
2,50
3,00
3,50
4,00
4,50
5,00
2009 2010 2011 2012 9M13
Focus on Infrastructure
(% of Organic Capex)
67% 81% 89% 93% 93%
33%19%
11%
7% 7%
2009 2010 2011 2012 9M13
Acquisitions/
Licenses
Organic
Organic as %
Net Rev.
Commercial
and Others
Infrastructure
19,4% 19,6%
17,7% 18,0%
17,1%
FIBER INFRASTRUCTURE
FROM 0 TO 45.000 KM
OF WHICH ~10k KM BACKHAUL
CELL SITES
MORE THAN 13.6K
4.63
3.54 3.76
2.77
FIBER TO THE SITE
MORE THAN 2.800 sites
+
+
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Resulting in Outstanding Market Position
5
Customer Base
(Millions of line; Source: Anatel)
34,643,5
54,859,6 60,3 60,8 61,0
10,3
10,7
10,911,4 11,9 11,4 11,9
2009 2010 2011 2012 1Q13 2Q13 3Q13
Pre
Paid
Post
Paid
70.3
69.4
71.2 72.2 72.9
51.0
Data Services
(% of data users over CB; Mln of users; Source: TIM)
1,6 2,5
17,521,3 22,1 23,1 24,5
2009 2010 2011 2012 1Q13 2Q13 3Q13 2016e
4% 5%
27% 29% 31% 32% 34%
>50%
XX%
83
116129
136145 148 150
>170
2009 2010 2011 2012 1Q13 2Q13 3Q13 2016e
Voices Services
(Minutes; Source: TIM)
Mobile is more convenient than Fixed…
(R$/minute)
2006 2007 2008 2009 2010 2011 2012
50%
discount5,9% 6,8%
26,8%48,3% 46,5% 50,1%
94,1% 93,2%73,2%
51,8% 53,5% 49,9%
dez/07 dez/08 dez/09 dez/10 dez/11 dez/12
Fixed OperatorsTIMFixedMobile
Exploring an untapped market
(Market Share of LD minutes)
Serving an unsatisfied demand
(% of users using service in last 3 months)
518 24
4957
64
2010 2011 2012
SMSInternet
Sources: Company estimates, Anatel, CETIC 13
41.1
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Pure Mobile Paying Off: Strategic Check
6
Users’ Preference for Mobile
(%Households w/ mobile phones only)
Net Revenues
(% YoY)
EBITDA
(% YoY; Not including assets sales; Mobile as TIM)
Low Fixed Broadband Quality
( Brazil’s Average Speed; Source: Akamai)
Entering in Data World Via Mobile
(Mln users; Source: Anatel)
Fixed
Incumbents
Mobile
48,9%56,3%
2009 2012
2Q13 2.4 Mbps
ANATEL: >50% of fixed broadband
connections are below 2Mbps
Mobile
Fixed 4,1
14,6
33,2
52,5
77,9
11,4
13,8
16,3 19 20,2
2009 2010 2011 2012 Aug/13
+18x
+77%
-7,0% -6,1%
-2,6%
3Q11 3Q12 3Q13
-6,2%-4,3%
-14,1%
3Q11 3Q12 3Q13
11,6%
7,1% 6,9%
3Q11 3Q12 3Q13
11,7%
3,9% 4,2%
3Q11 3Q12 3Q13
Fixed
Incumbents
Mobile
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Looking Ahead
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71%
65%
59%
48%
39%
24%
18%
12%
5%
2%
1%
1%
R$ 10
R$ 20
R$ 30
R$ 40
R$ 50
R$ 70
R$ 80
R$ 100
R$ 150
R$ 200
R$ 250
> R$ 250
Source: CETIC 13
Data Wave Opportunities
60%36.8 mln
40%24.5 mln
44%16.2 mln
24%8.8 mln
32%11.8 mln
(40%)
(60%)
61.3 Mln
Possess
Internet
connection
Does NOT
Possess
Internet
connection
Other
Lack of
coverage
Too
Expensive
53% of active connections
are below 2Mbps
Willingness to pay (% of Households)
Total Households Households which does
NOT possess
CA
BL
E
FT
TH
AD
SL
VD
SL
MB
B
8
2Q13 2.4 Mbps
Brazil`s Internet average
speed according to Akamai
94%80%
47%
14%
A B C DE
% of population who used the Internet in the last 3 months per social class
68 million people
don’t use the Internet
in class C, D, E.
Low usage not only in
households
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Market Transformation
(Total Revenues - R$ Bln)
(55%) (50%) (44%) (43%)
(45%)(50%) (56%) (57%)
2009 2011 2013 2016
104
CAGR ’13-’16
Mobile: +3%
Fixed: -2%
120
112118
Data
Mobile
...Concentrating in the Mobile Segment
Data: +18%
Data: +6%
9
Data Services Revenues Growth 2016 vs. 2013
>R$10 bln in Mobile (+62%)
>R$4 bln in Fixed (+18%)
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Keeping Innovative Approach
Chip Torcedor
TIM SIM blister for each
team.
Increase Stickiness
14 Teams alread
sponsored
10
Liberty Controle Express
Pushing on Postpaid migration
Payment via credit card
jan/13 sep/13
~7x
+56%
sep/12 sep/13
Young
Young segment positioning
Member get member through
social network since 2010.
Nonstop
Innovation
VOICE DATA
Recarga Troco International LD Infinity Web + SMS TIM Music
Talk unlimited on-net for
R$2 for 2 days.
Capture extra “charge”.
Leveraging on micro
recharge on physical
PoS.
Up selling approach,
targeting only customer
base.
US:R$0,20/min.
+ 8 countries: R$0,50/min
FMS initiative.
Capturing the unexplored
mobile international calls
market.
Market attended Today
through fixed carries.
Internet + unlimited SMS
on/off-net.
Pay per day.
Combining Web and
SMS offers.
Cross selling WEB and
SMS .
Unlimited download.
Pay R$0.50/day.
Over the top service.
Increase customer
stickiness.
Network friendly.
13 million songs already
downloaded.
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And Resulting in Solid Growth
43%
52%
>75%
2012 Jul 13 2016e
Smart/Web phone Penetration
(% over total base of lines)
136150
>170
2012 3Q13 2016e
Voice MOU
(Minutes)
2012 2013e 2016e
Data Users
(% of Data Users in CB; million users)
VAS Revenue Growth
(% of Mobile Services Gross Revenues; R$ Million)
21%23%
>40%
VAS
Gross
Revs.
VAS/Revs.
+XX%21.3
24.5
2012 3Q13 2016e
29% 34% >50%
+15%XX%
+XX%
Innovative
Offers Driving
Growth and
Differentiation
11
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2014 - 2016 Guidance
12
Total Net Revenues
EBITDA
CAPEX
18,8
2012 2013e 2014e 2015e 2016e
5,0
2012 2013e 2014e 2015e 2016e
R$ billion
R$ billion
0,5
3,2
2012 2013e 2014e 2015e 2016e
R$ billion
Infrastructure
Others/Licenses
3.8
Guidance
2013-2016 CAGR:
Mid Single Digit Growth
2013-2016 CAGR:
Mid Single Digit Growth
Total CAPEX 2014-2016:
~R$11 billion*
*Does not consider 4G licenses (700Mhz).
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Appendix
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Infrastructure Needed in the Data Arena
14
2016MASSIVE LD
BACKBONE
65,000 KM OF FIBER
2013FIBER TO THE
AMAZON
46,000 KM OF FIBER
BY YE13
Fiber to the site / Mobile Broadband
Project Key to Data Growth
Targeting 38 cities in 2013,+100 cities till 2016.
From 2-8 to +100 Mbps.
LTE Ready.
Macro coverage fine tuning.
Focus on IP infrastructure, caching, peering.
Backhauling
Evolution
Fiber base
Infrastructure
INTELIG 15,000KM
2009INTELIG
ACQUISITION
New backbone routes- Increasing resilience.
Increased Coverage and Access Capacity
# new elements
82% urban
population
2013 2014 2015 2016
95% urban
population
#NodeB / eNodeB
(3G + 4G)
# BTS
(2G)
2012 2013e 2014e 2015e 2016e
Small Cell Approach
# new elements
New Sites.
Including
Small Cell.
POP MW
POP MW POP MW
POP MW
BSC-RNC Site
POP MW
Capex Evolution Towards Data
% of total Capex
2013 2014 2015 2016
LTE* 3G 2G
*Includes 2.5GHz RAN Sharing.
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Where We Are: TIM 2013 Year-to-Date Results
15
Operational
Total Revenues
− Service
− VAS*
− Handset
EBITDA
CAPEX
9M13 YoY
14,738 7.3%
12,359 2.1%
2,379 45.2%
3,708 3.4%
R$ Million
9M13 YoY
Postpaid (mln users)
MOU (min)
ARPU
11.9 16.4%
147 12.7%
R$ 18.4 -2.0%
Financial
2,769 +16.8%
3,899 23.7%
• Consistent financial and operational
results even amidst a different macro
scenario
• Continuous growth/acceleration on
postpaid, improving customer base
mix, ARPU evolution.
• Maintaining data services at double
digit growth, underscored by
smartphone sales and innovative
offers.
• Solid improvement on Network and
Quality indicators.
• Executing Fiber-to-the-Site (FTTS)
project and 3G/4G roll-out,
guaranteeing mobile broadband
acceleration.
• Strong efficiency: Industry benchmark
for SAC and bad debt.
• Strong savings on leased lines costs,
even with traffic double digit growth.
Reported figures for TIM Part.
*Gross Mobile Service Revenues