tim meeting with investors - april 2014
TRANSCRIPT
MEETING WITH INVESTORS
TIM PARTICIPAÇÕES S.A.
APRIL 2014
KNOWING TIM 2
KNOWING TIM BETTER
Gross Revenues (R$ Bln)
Customer base EoP (Million)
1998 2013 1998 2013
15,000 km fiber optical backbone
5,500 km fiber optical backhauling
Organic Growth
Growth Via
Acquisition
Brazilian Law
“Nível” 1 “Nível” 2
Legal Requirements
Demand for transparency and
disclosures
Highest level of Corporate
Governance
Requirement of protection for
minority shareholders
100% Tag Along
Equal dividends rights
One single class of shares
Strict disclosure policy
Statutory Audit Committee:
• Report to Board of Directors
• Oversight Financial reporting
• Analyze anonymous complaints
Unique Telco company listed on the Novo Mercado
CORPORATE GOVERNANCE
TIM: A Huge Brazilian Company Presence in Brazil since 1998.
13th largest Private Company in Brazil (source: Exame Magazine - 2013).
Approximately R$31 billion of Market Capitalization.
73.6 million customers (27% Share)
The 2nd Player - Market and rev. share
More than 430,000 points of sales
More than 160 own stores
15 Customer Care Centers (16k attendants)
~14,000 Antennas
3,406 cities covered
95% of urban pop. covered
47,000 km of optical fiber network
~12,200 employees
23,000 indirect jobs
R$10.4 billion in taxes payments in 2013
R$3.9 billion invested in 2013
Sales
Network
Social &
Economic
73.4
29.6
GROWTH STRUCTURE
MACRO SCENARIO 3
MACRO SCENARIO: A DIFFERENT OUTLOOK
• Market consensus shows a much softer growth.
• Telecom industry has shown resilience, specially in the mobile side, but it is not completely immune.
• Mobile sector will continue to benefit from fixed-mobile substitution, now also strong on data.
Real GPD Forecast (% YoY Growth)
Inflation Forecast (IPCA: % YoY Growth)
Interest Rate Forecast FX Rate Forecast (R$/U$ - year average) (% Selic Target p.y. – year average)
Source: BaCen
3.3 3.8
2.4 2.3 2.4
2014 2015 2016
Old Scenario
New Scenario
5.5
5.0
5.9
5.6
5.4
2014 2015 2016
Old Scenario
New Scenario
8.7 9.0 8.8
10.9 11.9
10.0
2014 2015 2016
Market Consensus on Feb/12
Market Consensus on Feb/13
2.0 2.1 2.1 2.2
2.5 2.5 2.5 2.3
2014 2015 2016 2017
Market Consensus on Feb/13
Market Consensus on Feb/14
2.2
2013a
8.2%
2013a
6.3%
2013a
2.3%
2013a
Industry Overview
INDUSTRY OVERVIEW 5
BRAZILIAN TELCOS X-RAY
Fixed Mobile
Fixed Mobile Fixed BB/TV Fixed / Mobile
Fixed BB/TV Fixed / Mobile
Fixed BB
Oi FY 2013
Vivo FY 2013
Claro FY 2013
TIM FY 2013
Mobile Fixed Fixed BB TV Group
Customers (000´s) 73.431 662 60 n.d 74.153
Market share 27,1% 1,5% 0,3% n.d ---
Net Revs(R$ Mln) 19.264 657 19.921
Mobile Fixed Fixed BB TV Group
Customers(000´s) 77.245 10.312 4.306 594 92.457
Market share 28,5% 23,0% 19,7% 3,3% ---
Net Revs(R$ Mln) 23.002 11.720 34.722
Mobile Fixed Fixed BB TV Group
Customers (000´s) 50.216 17.775 6.376 829 75.196
Market share 18,5% 39,6% 29,2% 4,6% ---
Net Revs (R$ Mln) 9.290 19.132 28.422
Mobile Fixed Fixed BB TV Group
Customers(000´s) 68.704 10.641 6.564 9.661 95.570
Market share 25,3% 23,7% 30,1% 53,6% ---
Net Revs(R$ Mln) 12.770 20.427 33.197
Source: Companies Releases
STILL INCREASING INTERNET PENETRATION AND DATA MARKET
Market Data Revenues Growth 2016 vs. 2012:
>13 bln Reais on Mobile (+100%)
>7 bln Reais on Fixed (+35%)
Source: CETIC´13
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 connection base has currently a speed below 2Mbps
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
Willingness to pay (% of Households)
Total Households Households which does NOT possess
CA
BLE
FT
TH
A
DSL
V
DSL
M
BB
Households with internet connection and breakdown for households without internet connection:
INDUSTRY OVERVIEW 6
Widespread use of Social Media (Social Network Users in Brazil 2011-2017)
INDUSTRY OVERVIEW 7
BRAZILIAN INTERNET USAGE BOOM Internet Penetration in South America (Internet users per 100 inhabitants)
Strong adoption of VoIP and IM (VoIP users in Brazil - mln)
High Penetration of E-commerce (E-commerce revenues in Bln US$)
8.4
11.0
17.0
2010 2011 2012
Amazon lauched operations in Brazil
in Dec/12
83 mln Internet users – Brazil is the 5th largest nation in the world of
internet users
66% 60% 59% 56%
46% 44% 41% 37%
32% 32% 30% 24%
Arg Col Chi Uru Bra Ecu Vem Per Guy Sur Bol Par
56.1 66.2
78.3 88.3
97.8 104.2
110.0
2011 2012 2013 2014 2015 2016 2017
#2 in Facebook active users (76mln) only after US
#2 in Twitter users (41mln) only after US
2nd largest market outside US
22% 18% 18% 13% 11% 7% 6%
% Growth YoY Social media users
0.6
1.9
2.7
3.4
3.9
4.3
2007 2008 2009 2010 2011 2012
28% of mobile users in Brazil use Instant Messaging
apps
Source: SocialBakers, e-Marketer, Semiocast, G1.com, Folha de São Paulo
Mobile 23.0
12.8 9.3
19.3
4.8
Fixed+Data+Pay Tv
11.7
20.4 19.1
0.7
4.9
Total 34.7 33.2 28.4 19.9 4.8 4.9
Viv
o/T
LF
Cla
ro/E
BT/
NET
Oi
TIM
/In
telig
Nex
tel
GV
T
LEVERAGING ON PURE MOBILE COMPETITIVE ADVANTAGE
Long Distance Leader
50% Market Share
2nd Overall
73.4 million customers
Prepaid Leader
28.9% Market Share
Source: Companies Releases, TIM estimates; CETIC jun’13; Akamai ; PNAD - IBGE
FMS Focus
A pure mobile approach is the most suitable strategy to capture both opportunities
Oi
Claro
Vivo
TIM
29.7% 29.5% 29.1%
28.5%
25.1%
26.5% 26.9% 27.1%
25.4%
24.9% 24.9% 25.3%
19.4% 18.8% 18.8%
18.5%
4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
Customer Base Evolution (Market Share)
Entering in Data World Via Mobile (mln users)
Voice FMS: TIM, with no legacies, can only gain on the trend (R$ billion, Net Revenue per Group 2013)
4Q13 x 4Q10
-1.2 p.p
+1.9 p.p
-0.1 p.p
-0.8 p.p
Source: ANATEL
Mobile
Fixed 4.1
14.6
33.1
52.5
94.8
11.4
13.8
16.3 19.1 20.9
2009 2010 2011 2012 2013
+83%
+23x
INDUSTRY OVERVIEW 8
28%
26% 23%
16%
4% 4%
Vivo Claro Oi
TIM GVT Nextel
Revenue Share
Users’ Preference for Mobile (%Households w/ mobile phones only)
EBITDA (% YoY; Not including assets sales; Mobile as TIM,
Vivo numbers estimated)
Low Fixed Broadband Quality (Brazil’s Average Speed; Source: Akamai)
Fixed Incumbents
Mobile
41.1% 49.7%
51.0%
2009 2011 2012
3Q13 2.7 Mbps
ANATEL: >50% of fixed broadband connections are below 2Mbps
-5.8%
-1.5% -1.6%
4Q11 4Q12 4Q13
-8.8% 4.5%
-9.2%
4Q11 4Q12 4Q13
11.0%
5.3% 5.7%
4Q11 4Q12 4Q13
9.5% 8.0%
5.1%
4Q11 4Q12 4Q13
Fixed Incumbents
Mobile
Source: PNAD 2012
Net Revenues (% YoY, Vivo numbers estimated)
PURE MOBILE STRATEGY PAYING OFF
INDUSTRY OVERVIEW 9
Recent Results: 4Q13 & 2013 in Few
RESULTS: MAIN HIGHLIGHTS
18.8
19.9
2012 2013
4.1% 1.8%
4.2% 5.2%
1Q 2Q 3Q 4Q
1.4
1.5
2012 2013
• Data Revenues +21.5% in FY13
• EBITDA Margin at 28.9% in 4Q13
• Services EBITDA Margin at 32% in FY13
Financial Performance
Efficiency
Network Improvement
Offer Evolution
Net Revenues (R$ bln)
SAC/ARPU (in months)
EBITDA (Δ% YoY)
• Subs. acquisition costs: R$28 in FY13 -6% YoY
• Leased line cost reduction: -6.0% YoY in FY13
• Bad debt at lowest level: -4.4% YoY in FY13
• 39 cities fully covered with MBB project
• 3G & 4G expansion (4G RAN sharing)
• Network quality plan
• Deployment of LT Amazonas Backbone
• Plans ‘Controle’ and Express
• Promotional top up
• Infinity Web + SMS
• Base mix (Prepaid 83% / Postpaid 17%) dec/12 dec/13
Total Base 73.4 mln users
1.6x 1.5x 1.6x
1.3x
1Q13 2Q13 3Q13 4Q13
Postpaid Customer Base
+6%
Net Income (R$ bln)
12.3
+15%
MBB Small Cells & Wi-fi
Active Fiber
39
2Q13 3Q13 4Q13
786
1Q13 2Q13 3Q13 4Q13
47
1Q13 2Q13 3Q13 4Q13
‘000 Km
10.7
(# of cities)
+4%
+4% in 2013
RECENT RESULTS 11
REVISITING PRIORITIES
• Stabilized and improved network performance
• Prepared network for data evolution
• Optimized Capex and Opex allocation
• Improved customer base mix
• Managed customer base with segmented offers
• Evolved offers toward data and internet services
• TIMmusic: >250k users in 4Q and 32 mln songs downloaded
• Participating actively in industry discussions
• Recovered institutional image and dialogue
• “Open Doors” transparency initiative generated excellent
results on customer interactions (>400k collaborations/month)
• Took corporate governance to the next level (CAE)
• Seeking “Best Company to Work For” status
• Reinforcing compliance culture
• Driving sense of belonging and employee pride
3Q13 4Q13
% of sites with active fiber (FTTS phase 2) on the targeted 35 cities
TIMmusic and Infinity WEB + SMS
WEBSITE + APP “Portas Abertas”
1
Network Quality & Infrastructure
2
Strategy & Offer Evolution
3
4
Institutional Relationships
People & Organization
TV Campaign featuring employees
63%
95%
RECENT RESULTS 12
CUSTOMER BASE EVOLUTION
67.0 71.6
76.1 77.2
59.2
64.1
70.4 73.4
57.5 60.4
65.2
68.7
42.8 45.5
49.2 50.2
Customer Base & Net Additions (mln)
Growing above market
#1 player in prepaid
#2 player in voice postpaid
>3 mln net adds in 2013
Accelerating postpaid
performance
Austere disconnection policy
Base per Segment (% YoY)
3G Market Share (%; mln users)
4G Market Share (%; thd users)
4Q12 3Q12 2Q12 1Q13 3Q11 4Q11 1Q12 2Q13 3Q13 4Q13
TIM
Total Net Adds:
11.3
13.1
8.7
6.2
4.6
6.3
4.9
3.8
1.1
3.1
3.5
1.0
47%
41%
20%
31%
21%
17%
12% 11%
2Q13 3Q13 4Q13
TIM
538
405
222
145
60.3 60.8 61.0 61.1
10.9 11.4 11.9 12.3
Pre Paid
Post Paid
1Q13 2Q13 3Q13 4Q13
%YoY
+15%
+2%
Source: ANATEL
Source: ANATEL Source: ANATEL
26%
23% 23%
25%
41%
39%
9% 12%
4Q12 1Q13 2Q13 3Q13 4Q13
TIM
22.3
23.6
36.6
11.5
Source: ANATEL
39.3 mln Total Net Adds: 19.6 mln Total Net Adds: 9.3 mln
RECENT RESULTS 13
QUALITY IMPROVEMENT EVIDENCES
Improvement in all key Anatel
indicators compared to 2012
Narrowing gap between IDA’s 1st place
and TIM (2nd)
Stable Anatel’s complaints metric
Least claimed company at Procon
War Room helping to improve network
KPIs
Network KPI’s on target (%) (For the main 195 cities)
Claims at Consumer’s Protection Agency (Procon) (in thds)
Anatel Complaints over 1,000 lines
Source: ANATEL Source: SINDEC-Procon
7.6
10.3
6.2
9.2
16.0
11.6
9.3
11.8
4Q11 2Q12 4Q12 2Q13 4Q13
65%
70%
75%
80%
85%
90%
mar/13 dec/13
0.24
0.35 0.34 0.36 0.38
0.34
0.51 0.55
dec/12 mar/13 jun/13 sep/13 nov/13
TIM other
TIM other
Anatel’s Index of Caring Performance (in points)
Source: ANATEL
98.2 92.4
93.3 91.9
91.1 87.2
84.4 76.2
dec/12 mar/13 jun/13 sep/13 nov/13
TIM other
RECENT RESULTS 14
MAINTAINING EFFICIENCY
2012 2013
2012 2013
-6.0%
SAC - Subscriber Acquisition Cost (R$)
Bad Debt (R$ mln)
-11% +7% -9% -10% YoY
73 68
56
44
1Q13 2Q13 3Q13 4Q13
29 27
31
24
1Q13 2Q13 3Q13 4Q13
SAC/ Gross Adds
SAC/ARPU 1.6x 1.5x 1.6x 1.3x
% over gross revenues
Product Margin (Revenue – Cost)
+22% 10.2
12.5
Handset Sold (mln units)
Handset Business (% YoY)
+50%
Network Cost (% YoY)
2012 2013
Leased Lines (R$ mln)
2012 2013
+15%
Total Voice Traffic (bln minutes)
1.0% 0.9% 0.7% 0.6% 2013 Gross adds:
40 millions
Postpaid Base:
12.3 mln +15% YoY
Total Base:
73.4 mln +4.3% YoY
0
Total Data Traffic (megabytes)
YTD Nov/12
+78%
YTD Nov/13
RECENT RESULTS 15
EVOLVING MARKETING PATH IN 2013: TRANSPARENCY, SIMPLICITY, QUALITY & INNOVATION
129 136
148
2011 2012 2013
11% 21%
49% 47%
1Q 2Q 3Q 4Q
24% 48%
78% 64%
38%
26%
29%
8%
TIM Operator 1
Operator 2 Operator 3
2013 April July August October
Net Adds Postpaid Mix (% Net Adds Postpaid/ Total)
4.4
5.4
18% 21%
2012 2013
VAS Revenue Growth (% of VAS Revenues over Gross Revenues; R$ million)
Smart/webphone over new sales (%)
Share of handset sales (FY13) (%)
+22%
Handset & Revenues Highlights
Customer Base Highlights
48%
52%
Open Market
Operators
~39 mln smartphone/webphones users
2013
2012
VAS Prepaid VAS LDI Quality
March
MOU (Minutes of Use) (minutes)
Outgoing ARPU (R$)
1Q13 2Q13 3Q13 4Q13
70% 65% 83%
4Q11 4Q12 4Q13
+15%
RECENT RESULTS 16
STRATEGY TOWARDS DATA & INTERNET Re-visiting Market Structure
TIM’s Position
3%
37%
51%
91% With Telephone
Only mobile phone
Mobile and fixed phone
Households profile
Fixed phone only
Purchase power
Salaries up to R$1.2k
Salaries up to R$3.1k
Consumption
People that access Internet (10 years or +)
57 mln
32 mln
2 mln
81 mln
106 mln
23 mln
Households with internet connection (%; CETIC jun’13)
53% of pop.
70% of pop.
27%
43%
55%
4Q11 4Q12 4Q13
BOU (Bytes of Use) (average megabytes per user)
Source: Anatel; Company
Source: PNAD 2012, CETIC.br TIC Domicílios 2012
18 21
27
4Q11 4Q12 4Q13
Data Users (Monthly unique users; CAGR 11-13
3G Subscribers (mln users; CAGR 11-13)
Smart/webphone penetration (% over total base)
7 12
24
4Q11 4Q12 4Q13
Nov/12 Nov/13
Big opportunity for FMS on Data
+82%
+25% +75%
Yes
No
24.3 mln of households
83 mln 49% of pop.
Fixed
Mobile 21%
74%
40%
60%
RECENT RESULTS 17
30%
4Q10 4Q11 4Q12 4Q13
FINANCIAL RESULTS Net Revenues (R$ mln; % YoY)
EBITDA (R$ mln)
Fixing EBITDA Drags
Intelig: EBITDA-CAPEX (R$ mln)
FISTEL Payments (R$ bln)
MTR Exposure (%)
2,344 3,220
16,420 16,701
Tho
usa
nd
s
Revenue 2012
Δ Handset Δ Fixed Services
Revenue 2013
Δ Mobile Services
+876 -255 +537
Service
Handset
18,764
ΔYoY
19,921
+3.5% -28.0% +37.4%
+1.7%
+6.2%
+37.4%
5,012
EBITDA 2012
EBITDA 2013
ΔMkt and Sales
ΔPers./G&A and others
-95 -31
ΔNetwork and ITX
+40
ΔServ. Revs
26.7%
32.1%
+281 5,207
26.1%
32.0%
EBITDA Margin
Service EBITDA Margin
+3.9%
ΔYoY +1.7% +2.5% -0.7% +1.4%
Leased Lines Cost (% YoY)
1.04 1.04
2012 2013EBITDA
Revenues
+28%
+11%
+8%
-5%
-12%
-10%
0% -1%
1Q 2Q 3Q 4Q
2013 2012
1Q 2Q 3Q 4Q
-6% YoY 2013 +9.7% YoY 2012 24%
4Q10 4Q11 4Q12 4Q13
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
-
+
RECENT RESULTS 18
FINANCIAL EVOLUTION
533
743
843
CAPEX Mix (%)
Dividends (R$ mln, payout)
Profit & Yield
1,278
1,449
1,506
2011 2012 2013
+13%
+4%
2011
2012
2013
CAPEX (R$ bln)
3.0
3.8 3.9
2011 2012 2013
+90% in infrastructure
Focus in transport infrastructure
Zero subsidy policy on
handsets
Total: R$ 3.9 bln
5,207 -3,561*
571 2,216
EBITDA CAPEX Δ WC OFCF
*OFCF does not consider R$310 mln of LT Amazonas leasing as CAPEX
Net Income (R$ mln)
56%
51%
42%
Capex/Sales 18.0% 20.6% 19.4%
Investments
Operating Free Cash Flow (R$ mln)
OFCF/Net Revenues: 11%
Expansion of +21.4% YoY
Payout
+39.3%
+13.5%
RECENT RESULTS 19
Live TIM
TIM FIBER: RESHAPING THE FIXED BROADBAND MARKET Building Up Size
2.9%
9.1%
2Q12 4Q13
Penetration of new neighborhoods (sales/addressable HH)
7
10
16 18
1Q13 2Q13 3Q13 4Q13
Net Adds in 2013 (000 users)
Accelerating Growth
Addressable HH (000 HH)
522
1,069
4Q12 1Q13 2Q13 3Q13 4Q13
Customer Base (000 users)
Sep/12 Dec/13
60
Changing market dynamics Evolving overall market performance
TIM Fiber 44% Other
56%
UBB Market Share (SP + RJ) (connections >34Mbps)
Average Speed (Mbps)
Source: Anatel; Akamai 3Q13
84th position
43rd position
* 12 months average of price / Mbps Source: Anatel; Akamai 3Q13
Net Adds speed mix (SP + RJ) (Mbps)
Price per Mbps* (R$/Mbps)
4.0 2.8
2012 2013
5.0
1.0
2012 2013
29.8
0.7
2012 2013
GVT NET
Vivo
38.9
22.1
13.3
9.8
5.7
5.5
4.9
2.7
Live TIM
South Korea
Japan
US
SP + RJ
Australia
Italy
Brazil
1st position
57% 34%
26%
15%
17%
50%
4Q12 4Q13
> 34 Mbps
12 - 34 Mbps
< 12 Mbps
LIVE TIM 21
Business Outlook
PERSPECTIVES FOR 2014
Network Evolution Offer & Commercial Strategy
Network coverage expansion with increased rollout of Macro, Small Cells and Wi-Fi HotSpots
Acceleration of Mobile Broadband project from current 40 cities to over 100 cities
Focus on operational excellence and network availability by investing on people, systems and processes
Voice growth with migration to postpaid and bundling for Voice FMS
Speed up data growth with smartphones and tablets, innovative VAS, 4G offers and Data FMS
Fixed business growth coming back with positive contribution to results
Restructuring commercial channels Rational approach to pricing
Continuation of Quality Plan monitoring and execution
Expectation of 4G Auction for 700MHz Spectrum
Discussions on Sector Cost Modeling and MTR evolution
Keen attention to competitive environment trends
Recap of 2014-16 Business Plan
Smartphone penetration (Over total base of lines)
VAS Revenue Growth (% of Mobile Gross Rev.)
Data Users (% Customer Base)
Capex Evolution (% of Capex for Access Network)
43% 55%
>75%
2012 2013 2016e
30% 37%
>50%
2012 2013 2016e
18% 21%
>40%
2012 2013 2016e
3yrs - Plan Guidance:
Revenues: MID single digit
EBITDA: MID single digit
Capex: ~R$11 bln
2013 2014e
2G
3G
LTE
Macro Environment
BUSINESS OUTLOOK 23
STRATEGY: INFRASTRUCTURE EVOLUTION
2016 MASSIVE LD BACKBONE
65,000 KM OF FIBER
2013 FIBER TO THE
AMAZON
46,000 KM OF FIBER BY YE13
Fiber to the site / Mobile Broadband Project Key to Data Growth
Targeting 38 cities in 2013,+100 cities till 2016.
From 2-8 to +100 Mbps.
LTE Ready.
Macro coverage fine tuning.
Focus on IP infrastructure, caching, peering.
INTELIG 15,000KM
2009 INTELIG
ACQUISITION
New backbone routes- Increasing resilience.
82% urban population
2013 2014 2015 2016
95% urban population
#NodeB / eNodeB (3G + 4G)
# BTS (2G)
2012 2013 2014e 2015e 2016e
New Sites Including
Small Cell.
POP MW
POP MW POP MW
POP MW
BSC-RNC Site
POP MW
2013 2014 2015 2016
LTE* 3G 2G
Fiber base Infrastructure
Backhauling Evolution Increased Coverage and Access Capacity
(# new elements)
Capex Evolution Towards Data (% of total Capex)
Small Cell Approach (# new elements)
BUSINESS OUTLOOK 24
OFFER EVOLUTION
136 148
>170
2012 2013 2016e
2012 2013 2016e
18% 21%
>40%
VAS Gross Revs.
VAS/Revs.
21.3
27.5
2012 2013 2016e
30% 37% >50%
BUSINESS OUTLOOK 25
43%
55%
>75%
2012 2013 2016
+xx% +29%
+22% +xx%
Smart/Web phone Penetration (% over total base of lines)
Voice MOU (minutes)
Data Users (% of Data Users in CB; million users)
VAS Revenue Growth (% of Mobile Services Gross Revenues; R$ mln)
TIM PART: 2014-2016 GUIDANCE
Total Net Revenues
EBITDA
CAPEX
18,764 19,921
2012 2013 2014e 2015e 2016e
5,012 5,207
2012 2013 2014e 2015e 2016e
R$ million
R$ million
626
3,139
3,871
3,487
384
2012 2013 2014e 2015e 2016e
R$ million
Infrastructure
Others/Licenses
3,765
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).
BUSINESS OUTLOOK 26
4G Start Up
Vivo
Claro
Oi
TIM
4G DETAILS
Source: ANATEL
4G Market Share on 2500Mhz (%; thd users)
47%
41%
20%
31%
21%
17%
12% 11%
2Q13 3Q13 4Q13
538
405
222
145
2500 MHZ auction results
Spectrum Characteristics
5800 Mhz 2100 Mhz
850 Mhz
700 Mhz
< 700 Mhz
BTS Range (km)
0 2 4 6 8 10
Numbers of BTS
20 15 10 7 5 2
Band W
Band X
Band V1
Band V2
2500 MHZ rural coverage obligations
X band
W band
V2 band
V1 band
Roadmap
Presidential Decree Nº 5820/06
Rules to the Digital TV migration
2006 2012
ANATEL’s Resolution Creation of a study group to define the future and the
atribution of the band
2013
Ordinance Nº 14/13 Premises to 700 Mhz destination on the SMP
2015 2018
Shutting down Period
Feb/Apr 2013 - Subrange Atribution CP Nov/13 Res. Nº 625/2013 – Atribution of the Subrange
Paid ~R$0.3 bln
Paid ~R$1 bln
Paid ~R$0.8 bln
Paid ~R$0.3 bln
4G START UP 28
Historical Data
CAPEX EVOLUTION Capex Evolution (R$ mln)
Capex per Technology (R$ mln)
Fiber to the site expansion to ~100 cities Benchmark: Anatel Plan for 2012-2014 (R$ bln)
3G
2G
3G
2G
3G
4G
2011
~R$3,800 R$2,983
2014e
5.9 4.8 4.6
2.1
5.0
3.5 2.6
3.4
TIM Claro Vivo Oi
10.9
+31% +52% +98%
Copper
(2-8Mbps)
Before FTTS After FTTS
Metro Ring
Own Fiber
(300 Mbps)
From Copper
To Fiber based
Wi-Fi small cell approach
HISTORICAL DATA 30
Total Capex
2,836
2,983
3,386
3,871
2011
2012
2013 19%
17%
20%
% over sales
2010
18% CAGR
11%
Source: 5th monitoring cycle of mobile telecom improvements plan released by Anatel on Feb/14
8.3
7.2
5.5
Actual from 2012 to Oct/13 Forecasted to Nov/13 until 2014 end
RECENT TOWERS DEALS
HISTORICAL DATA 31
HISTORICAL DATA: FINANCIALS (R$ THOUSAND)
HISTORICAL DATA 32
HISTORICAL DATA: FINANCIALS (US$ THOUSAND)
HISTORICAL DATA 33
HISTORICAL DATA: OPERATIONAL & FINANCIAL RATIOS
ROA: NOPLAT/Avg. Total Assets. Calculation considers organic Net Income and EBITDA
HISTORICAL DATA 34
Shareholders STRUCTURE AND STOCK PERFORMANCE
Stock Performance (base 100)*
0
20
40
60
80
100
120
140
160
180
TIMP3 Ibovespa TSU
*Last price as of 02/14/2014
TIM Celular S.A. Intelig
100%
TIM Brasil Serv. e Part. S.A. Minorities
Telecom Italia International N.V.
Telecom Italia
100%
TIM Participações S.A.
ON: 33% (805,662,701) ON: 67% (1,611,969,946)
100% 100%
HISTORICAL DATA 35
Cofins PIS/ PASEP ICMS Fistel Fust/
FUNTEL
TotalTotal Fust/ FUNTEL
PIS/ PASEP
ICMS Cofins Fistel
2007 2012
2007 2012
% Gross Revenues
TELCOS’ TAX BURDEN & HIGH INVESTMENTS
3% ~1%
28%
~5% 1,5% ~39%
16.3
27.2
6.5
10.1
20% of Revenues
+70%
Taxation represents almost 40% of companies gross revenues.
Tax Burden Composition Mobile Industry Tax Payments (R$ Bln)
Mobile Industry Investments (R$ Bln)
+60%
HISTORICAL DATA 36
SAFE HARBOR AND IR CONTACTS
SAFE HARBOR AND IR CONTACTS 37
Investor Relations Team
Avenida das Américas, 3434 - Bloco 01
6° andar – Barra da Tijuca
22640-102 Rio de Janeiro, RJ
E-mail: [email protected]
Leonardo Wanderley
E-mail: [email protected]
Phone: +55 21 4109-4017
Luiza Chaves
E-mail: [email protected]
Phone: +55 21 4109-3751
Rogério Tostes
E-mail: [email protected]
Phone: +55 21 4109-3742
Vicente Ferreira
E-mail: [email protected]
Phone: +55 21 4109-3360
Visit our Website
www.tim.com.br/ir
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.