Presentation 3Q10
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Transcript of Presentation 3Q10
Results3Q103Q10
AgendaAgenda
Operating Performance
Financial PerformanceFinancial Performance
A quarter highlighted by sustained revenue th ith i d fit bilitgrowth with increased profitability.
Vivo’s competitive advantage generates high customer base growth, mainly in the postpaid
t
Growth in postpaid higher than the average of total customer basesegment...
...resulting in ARPU i t d i b D t
customer base
ARPU increasing by the second improvement, driven by Data
Revenues...
which combined to a better mix
the second consecutive quarter
2 82 8...which combined to a better mix of additions and efficiency in acquiring customers increases the profitability per client...
21% SAC reduction in relation to the previous year
2.52.82.8
SAC/ARPU (months)p y p
...thus sustaining a high level of revenue growth with substantial increase in
10% growth in Net Service Revenue with
i
SAC/ARPU (months)
substantial increase in profitability.
33.4% Margin.
3
Vivo’s competitive advantage generates high customer base growth mainly in the postpaid
Increase in 3G Promotions designed Largest own The right handset
customer base growth, mainly in the postpaid segment...
Coverage for each segment stores chain portfolioConcept stores with customized services for high-end customers
6.4% 30.3%
QoQ YoY
48.956.0 57.7
+3.1%+18.2%
2.3% 15.3%
Postpaid Blended
4
Prepaid Postpaid
...thus keeping a customer base even more ti i l i t i ll
Customers VOICE TRAFFICMOU
active, mainly in outgoing calls...
RechargingVOICE TRAFFICMOU
+ 29.2%+53.1%
Million of minutes % of prepaid customer base
Minutes
4 2% 10 7%
QoQ YoY
24 25 89
114 115
+ 0.9%
QoQ YoY 18,744 19,600
+4.6%
+ 4.9 p.p.
4.2% -10.7%
0.0% 47.5%90 90
28
24 25 896.0% 5.2%
4 2% 74 8%
12,800
61
3Q09 2Q10 3Q10
4.2% 74.8%
Outgoing Incoming Outgoing Incoming Sep-09 Sep/10
5
...resulting in ARPU improvement, specially in th t i ARPUthe outgoing ARPU...
ARPU – R$
- 7.4%
Outgoing ARPU Evolution
27.225.0 25.2
+ 0.8%
7.4%
QoQ YoY
11.0 9.4 9.3
25.0 25.2
-1.1% -15.5%
Q Q
16.2 15.6 15.9 1.9% -1.9%
3Q09 2Q10 3Q10Outgoing Incoming
6
...driven by the high adoption and profitability of data services...
Growth of 3G Plans Data + VAS ARPU – R$Growth of 3G Plans
Customer Base
+112% 13%
19%
Data ARPU/Total ARPU
7
...which combined with a better mix of additions d ffi i i i i li t i and efficiency in acquiring new clients increases
the profitability per customer...
- 20.5%
SAC Blended* - R$
QoQ YoY 8
7871
- 12.7%
Payback – SAC/ARPUQoQ YoY
17
17 19 16
9 9
7
8 9
7 62
-15.8% -7.0%
-19.8% -22.1%
-17.6% -11.3%
-2.5% -50.8%26
13 13
21 18
3T09 2T10 3T10
-14.1% 5.6%
Subsidy
Comissions
Advertising
Lending
Fistel
* (70% of marketing expenses + costs of distribution channels + handset subsidy + corporate lending +Fistel)/gross additions.
8
...thus keeping a high level of revenue growth ith i d fit bilit lti i with increased profitability resulting in
EBITDA and Profit growth...
R$ million 3Q10 3Q09* Δ %
Net Service Revenue 4,307.6 3,913.3 10.1%
EBITDA 1,537.8 1,396.4 10.1%
EBITDA Margin 33.4% 33.4% 0.0 p.p.
Net Result 601.8 332.7 80.9%
Cash Flow after investments 979.4 245.3 299.3%
* The 3Q09 numbers were reclassified when applicable, according to the adoption of new accounting practices in Brazil (CPCs).
9
...and strengthening the basis for a sustainable long term growthlong term growth.
Gaining know-how and innovating in products and services…
...and universalizing the 3G coverageg p
Co-Branded Card Vivo Itaúcard
FINANCIAL SERVICES
the 3G coverage
Mobile Checking Account Bradesco Santander Broker
Mobile Payments with Mobile Payments with MasterCard, Itaú and RedeCard
VIVO’S SERVICE STOREVIVO S SERVICE STORE
MOBILE LEARNING
Language courses through the mobile
10
through the mobile phone
AgendaAgenda
Operating Performance
Financial PerformanceFinancial Performance
Net Service Revenue YoY Growth
%
R$ million
+ 10 1%+ 10.1%
+ 4.3%
4,1304,308
1 537
522 802 843 3,913
3Q 10/09 GrowthR$ million
1 806
1,532 1,490 1,537
1,783 1,806 1,889
3Q09 2Q10 3Q10
+61.4%
Outgoing Voice
Interconnection
Data + VAS
In order to simplify the analysis the chart does not include ‘Other Revenues’
+0.4%+5.9%
In order to simplify the analysis the chart does not include Other Revenues .
12
Data Revenue + VAS
+ 61.4%
R$ million
+5.1%
19.4% 19.6%
QoQ YoY
3.7% 10.5%OthersOthers 12%
802843
97 100 13.3%
7.6% 92.3%Vivo InternetVivo
Internet 54%
SMS+MMS 34%
522
238
425 457 91
1.7% 47.4%SMS + MMS
...and currently represents the largest proportion
of data revenue
194 281 286
238
3Q09 2Q10 3Q10
The Internet Revenue grew above 90%
of data revenue.3Q09 2Q10 3Q10% Net Service Revenue
gfor the 4th consecutive quarter
13
Operating Expenses*R$ million
Service Rendered Goods Sold Selling Expenses+ 15%
925 1,038 1,064
+ 3% - 5%
+ 10%
847 954 896
+ 6%
- 6%
925 ,452 394 431 847 954 896
Fistel, Fust, FuntelH. R.General and Administrative
10%+ 15%
+ 6%
266 281
+ 37%
+ 6%
264
+ 10%
- 2%
154 167 177 206266 281 240 269 264
* Excluding Depreciation.
14
EBITDA EvolutionR$ million
+61.4% +3.1% +36.8% +14.0% -4.5% +23.7%+5.7%
1,396
321113 (76) (163)
20 (48) (26) 1,538
+10.1%
3Q09 Data + VAS
Voice + others
H. R. Service Rendered
Goods Sold
Selling Expenses
Others 3Q10
Revenues CRevenues Costs
15
EBITDA and MargingR$ million
QoQ YoY
14.5% 10.1%
Financial discipline maintain expenses growth under control
EBITDA EBITDA Margin
• 3Q09 was benefited by non Q yrecurrent effects in the amount of R$78 million
16
EBIT and Financial Result
EBIT
R$ million
FINANCIAL RESULT
3Q09 2Q10 3Q10
982
EBIT FINANCIAL RESULT
+ 62.3%
(98) (101)
(64)
605
982
503
3Q09 2Q10 3Q10
17
Net Result and Cash FlowR$ million
Net Result Cash Flow+ 81% + 81%
+ 155%
fi l i
141602
(142)35235
Profit Evolution
333+81%
18
Gross and Net DebtR$ million
- 17.1% - 43.2%
Gross Debt Net Debt
5 167 3
- 6.6%
4 245 1
-28.1%
68%78% 81%
5,167.34,588.4 4,284.5
4,245.13,355.3
2,411.8
32% 22% 19%
3Q09 2Q10 3Q10 3Q09 2Q10 3Q10
Credit Rating: ‘brAAA’
Short Term Long Term
19
CAPEXR$ million
13.0% 11.1%14.7%
675.2
90.1 108.7
117.4 489.2541.5
467.7
105.3 119.7
105.1
327.5 264.4
3Q09 2Q10 3Q10
Network Technology
% Capex/Net Revenue
Others
3Q09 2Q10 3Q10
20
Investors and Shareholders
CustomersShareholders
VIVO VALUESVIVO VALUES
Trust
Enthusiasm
Interaction
Employees and
Interaction
Quality
Simplicity
SustainabilityEmployees and Partners
Sustainability
B i
21
Businesses