Results presentation 1 q14 eng
Transcript of Results presentation 1 q14 eng
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-22.5%
1Q13 1Q14
1ST QUARTER HIGHLIGHTS Financial Results
Mobile Net Services Revenues (Δ% YoY)
Business Generated
Business Received
(MTR mpact)
Consolidated EBITDA (Δ% YoY) Consolidated Net Income (Δ% YoY)
1Q13 1Q14
1,317 372
Incoming
Outgoing (Long Distance
+ Usage)
VAS
60.3 61.7
10.9 12.2 Postpaid
1Q13 1Q14
%YoY
+11.9%
+2.3% Prepaid
Customer Base (mln; Δ% YoY)
Mobile Data Users Growth (mln; Δ% YoY)
1Q13 1Q14
Mobile Payback Ratio (SAC/ARPU in months)
1.6x 1.6x
306 1,224
Operational Results
2
+7.6% +21.6%
+1.4%
+8.9%
26.0% 28.0% EBITDA Margin
71.2 73.9 +3.8%
22 27
1Q13 1Q14
+20.1%
0.13 0.15 EPS (R$)
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714
1,764
2013 2014e
1Q13 1Q14
~11,000
~14,000
2013 2014e
2G
3G
4G
NETWORK EVOLUTION Investments
Fiber Infrastructure
~19,700 Km ~37,600 Km
Backbone Metro-Areas
3
R$3.8 Billion in FY14e
R$613 mln in 1Q14
>94% in infrastructure
This image cannot currently be displayed.
57,300 Km in Fiber + =
1Q13 1Q14
2G
3G
4G
R$613 mln
R$470 mln
Average throughput analysis where MBB is completed *
From To ~ 800 Kbps ~ 2.1 Mbps
Number of sites with fiber optic
Cities with mobile BB project
Number of 3G & 4G Sites Number of Wi-Fi & Small Cell
Network Additions in the 1Q14
3G sites: + 111 in Q1 (total 9,185)
4G sites: + 208 in Q1 (total 2,133)
WiFi hotspots: +190 in Q1 (total 904)
MBB cities: + 14 in Q1
+ 30% YoY
39
100
2013 2014e
+16x
*According to TIM independent analysis of the NetMetrics Reports provided by Speedtest.net
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0.37 0.31
0.42 0.42
1Q13 1Q14
0.05 0.03 15.0
10.3 12.1
26.8
25.5
44.4 45.5
1Q13 1Q14
QUALITY IMPROVEMENTS
320 cities under the company’s quality
plan project in 1Q14
53% of 2014 target achieved in the first
quarter
Claims at Consumer’s Protection Agency (Procon) (in thds)
TIM: Claims at Anatel over 1,000 lines
Source: ANATEL Source: SINDEC-Procon
TIM other
TIM’s Quality Plan (#cities)
Note: Per economic group
25.9
The least claimed within telcos
Consistent performance in PROCON
Reducing Anatel complaints in all fronts
Network showing remarkable
improvements
320
213
1Q14 Targetfor 1Q14
Source: Company
4
Total Complaints Network Complaints
Avg. Market Complaints
2014e
(Target for 2014) 599 cities
53%
4Q13
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1Q13 1Q14
74.8 76.0 78.5
67.2 71.2 73.9
61.6 66.3 68.7
46.5 49.5
50.6
5
CUSTOMER BASE EVOLUTION Customer Base (mln)
Leading market growth
#1 player in prepaid
#2 player in voice postpaid
Austere disconnection policy
Prepaid Recharge (R$; YoY)
1Q12 1Q13
TIM
+3.3%
+3.8%
+3.7%
+2.2%
Source: ANATEL
Source: Company
1Q14
1Q14 x 1Q13
+10%
1Q13 1Q14
15.3%
16.5%
Mix of Postpaid over total base
Distribution Channel (YoY)
1Q13 1Q14
+22%
Source: Company
1Q13 1Q14
+28% # Points of Sales: Mass Channel (retail)
# of Own Stores
Vivo
Claro
Oi
Source: Company
+121bps
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% of Customer Base
1Q12 1Q13 1Q14
+20.1%
1Q12 1Q13 1Q14
5.5
5.8 5.9
Mobile Data users
6
DATA SERVICES AT A SOLID PACE Revenues (R$ bln)
18%
21%
25%
% of Gross Services Revenues 26%
31% 36%
Users (# mln users)
+25.4% +20.4% +24.6% 1.0 1.2 1.5 18 22 27 Data Gross
Revenues
67.2 71.2
73.9
4G Market Share (%; thd users)
3G Market Share (%; mln users)
23% 24%
23% 25%
42%
37%
10% 13%
1Q13 2Q13 3Q13 4Q13 1Q14
25.4
26.6
38.7
13.5
Source: ANATEL
TIM
47% 41%
20%
33%
21% 15%
12% 11%
2Q13 3Q13 4Q13
TIM
858
676
321
223
Source: ANATEL
1Q14
Source: Company Source: Company
+ 39% YoY Other VAS
services
105 mln 2.1 mln
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LEVERAGING ON THE LARGEST COMMUNITY Access via Mobile
Notebook sales FY2014e: 8.5 mln
Tablet sales FY2014e: 11.1 mln
Smartphone sales FY2014e: 46.7 mln
Device sales profile
Broadband Willingness to Pay (% of Households)
7
Source: CETIC 2012
5% of HH: Up to R$150/month
24% of HH: Up to R$70/month
59% of HH: Up to R$30/month
Huge data opportunity in-house
27 mln data users
Handset market share (Mar/14)
TIM’s Customer Base Snapshot
Source: IDC
Source: GFK Group Source: Company
The newest communication app by TIM
Provides a new user interface far all
communication
TIM Protect
TIM Chip for soccer fans: free content of soccer
teams
Ensures safety of customer’s devices and
information
Simple and reliable platform
Brazil’s largest digital music provider
>32 mln songs downloaded
TIM
P1
P2
P3 10%
25%
29%
36%
53% Open
Market
Operators
Innovative Services
Prepaid Postpaid
Data Offers
73.9 million users
+31 mln untapped market
46mln potential data users
+15 mln with data handset 36%
21%
42%
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FIXED BROADBAND: LIVE TIM
8
Accelerating Deployment Addressable HH (000 HH)
609
1,138
1Q13 2Q13 3Q13 4Q13 1Q14
sep/12 mar/14
Customer Base (000 users) 75
4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
Customer Base ARPU (R$; CAGR %)
+15% General Satisfaction
Offer
Billing
Call Center
6.0 7.0 8.0 9.0 10.0
TIM P2 P1
Market Performance
Customer Satisfaction Survey* (Source: TNS Institute Research)
1.5
100 neighborhoods:
41 neighborhoods in SP
59 neighborhoods in RJ
* From Dec/13 to Jan/14
8.7
9.0
8.9
9.0
8.3
7.1
8.8
7.6
7.5
5.3
7.5
7.4
8.1
8.0
7.4
TIM Fiber
39.9% Others 61.1%
UBB Market Share (SP + RJ) (connections >34Mbps)
Source: Anatel
Gross Adds (000 users)
7.6
18.3
1Q13 1Q14
+141%
Conection Quality
Source: TNS Institute Research) Feb/14
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INTELIG, NOW POSITIONED AS “TIM SOLUÇÕES CORPORATIVAS”
9
The Opportunity Ahead
Market re-positioning
2013 2012
-
2014
Geographic expansion
Source: IDC Brazil ICT Business Service Database
TIM’s Addressable market (Net service revenues of total addressable market*; R$ bln)
Better financial performance
M 2014
Expansion:
2014: 7 new cities
2015: 12 new cities
Intelig now positioned as “TIM
Soluções Corporativas”
Re-structuring of sales force: multi
channel approach
Re-designed service portfolio
CAGR 11-14
8.8 9.2 9.8 10.9
7.7 7.6 7.7 7.8
2011 2012 2013e
VAS
Voice
22.7
2014e
4.3
24.4
5.2 4.7 5.7
Data
20.8 21.5 Total 5.7%
0.4%
7.4%
9.9%
…with considerable room to increase revenue share (% of fixed corporate market)
1 2 3
Business Remodeling Path
*Companies with more than 100 employees
2%
P2 14%
P3 25% P1
3%
P4 21%
P5 35%
TIM
+
M
M
M
M
M
M
M
Segment EBITDA-CAPEX
Source: Company A Actual
A A
Net Revenues (with intercompany)
2013 2014
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1.22 1.32
1.39
1Q13 1Q141Q13 1Q14
MTR IMPACT ANALYSIS
MTR Impact
MTR Cut Path
-33%
-25%
-11%
-10%
Avg. MTR Price (R$)
Mobile Service Net Revenues EBITDA
MTR Exposure
Net Services Revenues EBITDA
0.32
0.24
0.16
0.36
+5.0%
2012
2013
2014
2015e
10
~ 27%
~ 14%
1Q10 1Q11 1Q12 1Q13 1Q14
~ 40%
~ 20%
1Q10 1Q11 1Q12 1Q13 1Q14
Source: Company
+1.4%
+13.4%
+7.6%
MTR cut impact should be reduced
following lower exposure
Business generated (outgoing &
data) should offset MTR impact
Impact of ~ R$ 140 mln
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FINANCIAL RESULTS ANALYSIS Net Revenues (R$ mln; % YoY)
EBITDA (R$ mln; % YoY)
Net Income (R$ mln; % YoY)
624 603
4,087 4,100
Revenue 1Q13
Δ Handset Δ Fixed Services
Revenue 1Q14
Δ Mobile Services
-21 -42 +55
Service
Handset
4,711
ΔYoY
4,702
+1.4% -22.9% -3.4%
+0.3%
0%
-3.4%
269 306
372
1Q12 1Q13 1Q14
+13.9%
+21.6%
11
1,224
EBITDA 1Q13
EBITDA 1Q14
ΔHandsets
+223 -117
ΔOpex
-12
Traffic/Data ΔContribution Margin
26.0%
30.7%
1,317
28.0%
33.2%
EBITDA Margin
Service EBITDA Margin
+8%
ΔYoY +7.0% +37.0% +6.1%
Business Generated: +8.9% YoY Business Received: -22.5% YoY
(+)Mobile: Efficiency (-)Fixed: Repositioning/new brand
Cash Flow & NFP (R$ mln)
-1,193 -1,374 -1,571
-265 -332
1Q12 1Q13 1Q14
OFCF
Non OFCF
Net Cash Flow -164
-1,458 -1,706 -1,735 NFP BoP
NFP EoP
-441
-1,899 -1,555 -1,314
(+)
(=)
+151 +421
-230 Δ Fistel
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CONCLUSIONS AND PERSPECTIVES
12
Offer Innovation
Slower macroeconomic growth requires evolution of industry approach
Competitive landscape remains intense
Regulatory environment:
o Upcoming 4G Auction
o New consumer regulation framework
World Cup games: airports and stadiums coverage
o Wi-fi off loading at Maracanã: in recent test 25% of data traffic were off-loaded
Financial Services:
o Initial commercial launch of a “prepaid mobile account” / “mobile money”
o A partnership between TIM, “Caixa Econômica Federal” (federal bank) and Mastercard
o Focus on “unbanked” population (50% of prepaid base.)
New data offers: more options of data cap for prepaid (10 & 30Mb)
Infinity Turbo 7 launch: services package of R$7 per 7 days all in:
o Voice + Web + SMS
4G included in all data package
TIMmusic included in postpaid packages
Live TIM Extreme: new 1Gbps offer
“TIM Soluções Corporativas” / “TIM Empresas” as renewed
positioning of fixed and mobile corporate solutions
Business Generated: +8.9% YoY
EBITDA: +7.6% YoY
EBITDA Margin: +200 bps YoY
Net income: +21.6% YoY
Solid results in 1Q14
Macro environment highlights
Continued infrastructure focus
Coverage densification: macro and micro coverage enlargement
Resilience and network availability
Network control (NOC) internalization completed:
o Monitored elements - more than: 12,000 sites, 70,000 km of fiber, 900 IP network elements, 6,700 transmission equipment and 1,300 MSANs
Towers: analyzing opportunities to unlock hidden value