Post on 16-Jan-2017
TIM Brasil Investor Relations
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TIM Brasil Investor Relations
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A Tough Scenario in 2015
GDP Growth Estimates for 2015 (%YoY)
Inflation Estimates for 2015 (%)
Cut investment program Maintenance of appropriate infrastructure investment
Stick to existing offers A completely new portfolio for all segments
Conventional Course of Action
FX Rate Estimates for 2015 (R$/US$ at year end)
Market Deterioration TIM’s Approach
Defend value of community business model
First mover on SIM Card consolidation with disruptive off-net offers
Jan/15
-23 mln
Dec/15
Mobile Market Users
Cut costs across the board Structural yet selective efficiency program
0.6%
-1.0% -1.5%
-2.8% -3.7%
Dec/14 Mar/15 Jun/15 Sep/15 Dec/15
6.5% 8.1% 9.0% 9.5%
10.7%
Dec/14 Mar/15 Jun/15 Sep/15 Dec/15
2.80 3.20 3.20 3.95 3.90
Dec/14 Mar/15 Jun/15 Sep/15 Dec/15
Source: BCB Focus Report; Anatel
TIM Brasil Investor Relations
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5.54 5.40
2014 2015
2015 Highlights
Total Net Service Revenues (R$bln; %YoY)
EBITDA (R$bln; %YoY; ex-towers sale)
16.3 15.4
2014 2015
-2.6%
Despite a challenging year...
…sustaining a long term strategy…
Efficient approach defended EBITDA
performance
Capex (R$bln; %YoY; ex-license)
Capex intensity bearing fruits
OPEX ex-COGS: -7% YoY
…and repositioning marketing approach with focus on value
SIM card consolidation Quality & Image Focus on 1st SIM
New strategic
positioning
Eliminating dependency from community effect
Focusing on the evolving “Big Middle”
Source: IPC of 2015
Class A
Classes B + C
2%
27%
71%
-0.9 mln
-0.1 mln
Defending EBITDA
4G Coverage
Leadership
+19%
3.9 4.7 -5.8%
Traditional
Innovative
2014 2015
+40%
TIM Brasil Investor Relations
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Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15
17% 21%
84%
-10.6 +1.1
79%
2014 PrepaidNet Adds
PostpaidNet Adds
2015
Old Portfolio New Portfolio
Customer Base Analysis
Prepaid
Postpaid
TIM’s Customer Base (Million users)
76
66
Prepaid Disconnection Analysis (Million users)
May-15 Jul-15 Sep-15 Nov-15
Defending position on 1st SIM users (user base of 1st SIMs, estimated by usage profile)
A better representation of Customer Base
Prepaid Net Adds TIM -10.6mln (Market -28.4mln)
Focus on efficiency and profitability
Maintained leadership on prepaid share and regained #2 on postpaid human*
“pay as you go”
Recurring payment
New View of Voice Customer Base (average users per period)
+19%
-15%
Jan-Oct/15 Nov-Dec/15
Organic Churn
Cleanup
2.7 1.1 1.0 1.0 -0.5
P1 TIM P3 P5 P4
Net adds Post
New Offer *Ex-M2M/Modems
TIM Brasil Investor Relations
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Jan
-15
Feb
-15
Mar
-15
Ap
r-1
5
May
-15
Jun
-15
Jul-
15
Au
g-1
5
Sep
-15
Oct
-15
No
v-1
5
De
c-1
5
ARPU Outgoing
First Take on New Offers
R$7.00 7 days
R$50.00 month
R$99.00 month
Mobile Number Portability (thousand users)
Total Postpaid (net port-in/out)
Traffic Indicators (total base)
120 120
1Q15 2Q15 3Q15 4Q15
340 475
Bytes of Use (MB)
Minutes of Use
+2% Prepaid Recharges
(mln users) ARPU Outgoing
+43% Control Gross
Additions (mln users)
Base New Offer
+46% Postpaid Gross
Additions (mln users)
Base New OfferBase New Offer
ARPU Outgoing
Estimated Actual
Voice traffic mix: cost impact within expected range* (mix of minutes for prepaid users)
Off-net Fixed
On-net
9% 20%
+% Double Digit
+% Double Digit
+% Single Digit
%Port-in/Gross Additions
New Portfolio launch
*Illustrative
TIM Brasil Investor Relations
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36%
45%
Jun/15 Jul/15 Aug/15 Sep/15 Oct/15 Nov/15 Dec/15
Data: Building the Path for Long Term Growth
Data Penetration on Base (% of customer base)
3G & 4G Users (mln users)
VAS Gross Revenues (R$ mln)
70%
76% 73%
78%
37.5 37.5
2.0 7.1
Dec/14 Dec/15
3G+4G % over Base
52% 67%
6.62
7.74
2014 2015
% Mobile Serv Revenues
28% 35%
75.7 66.2
Others (2G, M2M etc)
4G
3G
73% 85%
27% 15%
2014 2015
Innovative Revenues (% of VAS Gross Revenues)
SMS
Innovative
+39% Data connectivity
(YoY)
+17%
Postpaid
Control
Prepaid
x3.5 YoY Mkt Share: 28%
+35% (YoY)
Flat YoY Mkt Share: 25%
TIM Brasil Investor Relations
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A Year of Infrastructure: TIM 4G Leadership
24 45
411
2013 2014 2015
Cities Covered (4G)2
(# of cities)
Urban Population Covered (4G) (% of urban population)
27% 36%
59%
2013 2014 2015
+32pp
CAPEX per Technology (R$ mln)
2014 2015
4G
2G
3G
Number of Sites (4G) (in thousand)
+133% YoY
-22% YoY
+6% YoY
+387 cities
1.9 3.7 7.7
2013 2014 2015
+4k 4G
Refarming 1,800 Mhz
~65% connected with fiber (1)
13.3 15.0
12.5
Despite the FX headwinds, TIM managed to expand infrastructure above target with
the same Capex plan
Total Pop. Covered2: TIM: 52% P1: 47% P3: 48% P4: 46%
(1) Fiber and other high capacity backhaul (2) Source: Teleco / ANATEL
(+32% YoY)
(+22% YoY) Fiber Backhaul
Fiber Backbone
>70,000 km Total Optical Fiber Network
P1: 193 P3: 164 P4: 83
>70% of Data traffic Carried by high capacity backhaul
TIM Brasil Investor Relations
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Quality Improvements
SpeedTest in 2G/3G Network (By Ookla)¹
1,488
3,586
4Q14 4Q15
538
1,014
4Q14 4Q15
(1) Quarterly average; generated from TIM’s analysis over Ookla Speedtest results. 4Q15 until November, last data available (2) Last data available; Source: Anatel. (3) Total per economic group. Source: SENACON/MJ and Anatel. Broadband customer base as of Nov/15 (last data available).
206
142
4Q14 4Q15
Throughput Downlink (Kbps)
Throughput Uplink (Kbps)
Latency (ms)
Number of states within Anatel’s performance Targets (%)² 2015 Consumer Complaints (Demands at Consumer’s Protection Agency - Procon per 1,000 customers)³
100% 100%
Dec-14 Oct-15
85%
100% 96%
Dec-14 Oct-15
3G
4G
100% 100%
Dec-14 Oct-15
3G
4G
Drop Voice and Accessibility
Data Accessibility 3G/4G
Data Drop 3G/4G
2.8 2.1
1.7
1.1
P4 P3 P1 TIM
TIM Brasil Investor Relations
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Fixed Business Performance
130
232
4Q14 1Q15 2Q15 3Q15 4Q15
Live TIM Base (mln of clients)
Fixed Net Revenues Performance (R$ mln; %YoY)
579 660
x2 +5%
Fixed Revenues2014
ResidentialServices
CorporateServices
Fixed Revenues2015
+14.1%
Live TIM - Market Share of Net Adds (SP and RJ >34Mbps)
+10% ARPU YoY
TIM Fixo: Fixed Voice Service (w/ wireless technology)
Corporate Sales (%YoY)
2014 2015
43.9% 50.2%
6.8% 14.7%
48.0%
34.1%
0.5% 0.5% 4Q14 4Q15
Live TIM
P3
P1
P4
1%
34%
2014 2015
Share of Net Adds
Mkt Share 0.9% 1.4%
+25% +78%
TIM Brasil Investor Relations
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P3 8%
P2 30.2%
TIM 46.9%
P1 14.5%
19,498 17,139
0% -40% -45%
+14%
24% 30%
38%
76% 70%
62%
2013 2014 2015 2016
13.2 13.2
2.5 1.5
2014 2015
Reducing MTR Impact (R$ mln)
Financials: Changing Revenue Pattern Continues
-12.1%
Total Net Revenues Breakdown (R$ mln; %YoY)
2014 2015 Mobile Business
Generated
Fixed Incoming Handsets
Data Transformation (% over net service revenues)
Mobile Service Net Rev. (R$ bln; %YoY)
Voice
Data
~800
~300
Tho
usa
nd
s 1Q12
Resilient “Business Generated” amid a tough year
…in spite of a difficult macro and competitive environment;
…change in handset business strategy led to a sizable reduction of product sales without negatively impacting on margin.
4Q15
>20% <8%
15.7
14.7
Flat: 0%
~R$1Bln
% of revenues
incoming
outgoing
ARPU and data users growth
Market Share of Smartphones (among operators in 2015)
TIM Brasil Investor Relations
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Financials: Structural Efficiency Program
Opex Performance (ex-COGS and towers sale) (% YoY)
Efficiency Across the Board (% YoY; Δ R$mln YoY)
-44%
-11%
-9%
-7%
-6%
8%
1%
Selling & Marketing
Bad Debt
G&A
ITX & Network
COGS
Personnel Expenses
Others
2013
2014 2015 4Q13 4Q14 4Q15
2014FY: R$13,960
2015FY: R$11,744
-16%
Annual View Quarter View
3 year Efficiency Plan Update
Jan/15 Dec/17
R$ 1 bln
Dec/15
2%
-7% -7%
-2%
-8%
-4%
-7%
Ex- COGS
~ 35%
10.6 9.9
Opex 2014 Growth Inflation Regulatory(ITX)
Efficiency Plan Opex 2015
Opex Evolution (ex-COGS and towers sale) (R$bln; % YoY)
Recurring
-7%
TIM Brasil Investor Relations
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1,546
2,071
2014 2015
5,538 5,395
1,211
28% 31%
2014 2015
2014 2015
Financials: Margin Expansion
EBITDA & Margin (R$ mln; % YoY)
Reducing MTR Impact (R$ mln)
1Q12 4Q15
>25% <10%
Net Income
(R$ mln; %YoY)
0.86 EPS 0.64
First Margin Gain due to Business Reshape (%)
Business anchored by a solid balance sheet
~300
~150
Net Debt (R$ bln) 1.7
1.3
0.23x 0.32x Net Debt/ EBITDA
R$468.6mln
Dividends Proposal
% of EBITDA
Service Margin 35% 36%
-2.6%
Towers Sale
Margin ex-towers
sale
+34% R$839 mln of Towers
Sale
80%
84%
2014 2015
Recurring: -20% YoY
TIM Brasil Investor Relations
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On human* postpaid base
New Portfolio
Conclusion & Perspectives
Maintaining the focus on business development
“Perfect storm” scenario in 2015
Economy deterioration MTR cut impact Voice to Data migration
Strong fundamentals and focus on the long term helped to reduce impacts
Continuous adaptation to new market conditions
Pay as you go Voice centric Market share Community
Recurring Data centric Revenue Share CB management
From…
...to:
48%
Data Users (% over base)
(+2.6 pp YoY)
31.5%
EBITDA Margin (in FY2015)
(+3 pp YoY)
+35%
Innovative Rev (in FY2015)
YoY
68%
Smartphones (% over base)
(+18 pp YoY)
#1 4G Coverage
>70,000 Fiber Network(Km)
2016…
2016-2018 Industrial plan update to be presented on
February 16, 2016
Infrastructure evolution Efficiency
plan on track
#1 On prepaid base
#2
*Total postpaid ex of M2M / modems