65,000 KM OF FIBER. 2013. FIBER TO THE. AMAZON. 46,000 KM OF FIBER. BY YE13. Fiber to ... verticals: Finance, ISP (data)
Industrial Plan 2014-2016 TIM Participações
Safe Harbour These presentations contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of the customer base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the activities and situation relating to the Company and the Group. Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those projected or implied in the forward looking statements as a result of various factors. Consequently, Telecom Italia S.p.A. makes no representation, whether expressed or implied, as to the conformity of the actual results with those projected in the forward looking statements. Forward-looking information is based on certain key assumptions which we believe to be reasonable as of the date hereof, but forward looking information by its nature involves risks and uncertainties, which are outside our control, and could significantly affect expected results. Analysts are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation. Telecom Italia S.p.A. undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telecom Italia S.p.A. business or acquisition strategy or planned capital expenditures or to reflect the occurrence of unanticipated events. Analysts and investors are encouraged to consult the Company's Annual Report on Form 20-F as well as periodic filings made on Form 6-K, which are on file with the United States Securities and Exchange Commission. The accounting policies and consolidation principles adopted in the preparation of the Condensed Consolidated Financial Statements as of, and for the nine months ended, 30 September 2013 have been applied on a basis consistent with those adopted in the Annual Consolidated Financial Statements at 31 December 2012, to which reference can be made, except for the new standards and interpretations adopted by the Group, which, other than for the prospective adoption of IFRS 13 ( Fair Value measurement), didn’t impact on the Condensed Consolidated Financial Statements as of, and for the nine months ended, 30 September 2013. Some data for the first quarter 2012, used in comparisons, included into this presentation have been restated as a result of the early adoption, starting from the first half 2012, of the revised version of IAS 19 (Employee Benefits) and the reclassification of Matrix (company that was disposed of on October 31, 2012) from the Business Unit Domestic–Core Domestic to the Business Unit Other Activities. 2
Where We Are: TIM 2013 Year-to-Date Results
Financial
9M13
YoY
R$ Million
Total Revenues
14,738
7.3%
− Service
12,359
2.1%
− VAS*
3,899
23.7%
− Handset
2,379
45.2%
EBITDA
3,708
3.4%
CAPEX
2,769
+16.8%
Operational
9M13
YoY
• 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.
Postpaid (mln users)
11.9
16.4%
MOU (min)
147
12.7%
• Strong efficiency: Industry benchmark for SAC and bad debt.
R$ 18.4
-2.0%
• Strong savings on leased lines costs, even with traffic double digit growth.
ARPU
Reported figures for TIM Part. *Gross Mobile Revenues
3
Macro Scenario: A Different Outlook Real GDP Forecast
Inflation Forecast
(%YoY Growth; Source: BaCen)
(IPCA - %YoY Growth; Source: BaCen) Old Scenario New Scenario
Old Scenario New Scenario 3.8
3.6
3.3 5.8
6.0 5.5
2.4
2.4
2.3
2.4
5.5
5.4
5.5
• Market consensus shows now a softer growth.
5.0
2013
2014
2015
2016
2013
2014
2015
Interest Rate Forecast
FX Rate Forecast
(%Selic Target p.y. - Year average; Source: BaCen)
( R$/US$ - Year average; Source: BaCen)
2016
Market Consensus on Oct/12
Market Consensus on Oct/12
Market Consensus on Oct/13
Market Consensus on Oct/13
10.3
10.3
8.7
9.0
8.8
2014
2015
2016
8.4
10.0
2.3
2.4
2.4
2.0
2.0
2.0
2.1
2013
2014
2015
2016
2.2
• 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.
7.3
2013
4
Still Increasing Internet Penetration and Data Market
61.3 Mln
(40%)
1%
R$ 250
1%
R$ 200
2%
R$ 150
5%
R$ 100
32% 11.8 mln
Other Does NOT Possess Internet connection
60% 36.8 mln
R$ 80 R$ 70
Lack of (60%) coverage
24% 8.8 mln
R$ 50 R$ 40 R$ 30
Too Expensive Total Households
44% 16.2 mln
CABLE FTTH
> R$ 250
R$ 20 R$ 10
12%
ADSL VDSL
53% of active connection base has currently a speed below 2Mbps
18% 24% 39% 48% 59% 65%
MBB
40% 24.5 mln
Possess Internet connection
Willingness to pay (% of Households)
71%
Households which does NOT possess
Source: CETIC 13
Market Data Revenues Growth 2016 vs. 2012: >13 bn Reais on Mobile (+100%) >7 bn Reais on Fixed (+35%) 5
The Opportunity in Brazil and TIM’s Strategic Positioning A. Continue to Explore Voice FMS
B. Lead the Data/Internet Wave
Market
Very large voice market, although declining. High price umbrella in Fixed services. Customer migration to higher plans / hybrid and postpaid.
Emerging data/internet user population. Large unserved Internet demand. Old Fixed networks legacy + bundle requirement. Mobile as the natural vehicle for inclusion.
Voice Revenues Voice Revenues
Voice Revenues Data Revenues
R$ Bln (R$ bln; Source: TIM)
R$ Bln (R$ bln; Source: TIM)
41.1 42.8 39.9 41.2 33.8
45.7 46.8 46.0*
Mobile
Mobile
39.7 40.4 38.4 36.4 34.1 32.3
Fixed
13.4 2.7
Strategy/ Objectives
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
FMS Customer Base Growth
Customer Base Expansion
15.1
16.7
17.9 8.0
4.0
5.8
19.2
20.4
21.7
Fixed
10.5 13.3
16.7
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
… Massive Mobile Internet Access
Internet and Data For All
C. Manage Existing Customer Base * Excluded non recurrent and non-operational revenues (e.g.: towers sell)
6
Strategy: Infrastructure Evolution Backhauling Evolution
Increased Coverage and Access Capacity
Fiber to the site / Mobile Broadband Project Key to Data Growth
POP MW
POP MW BSC-RNC Site
LTE Ready.
82% urban population #NodeB / eNodeB (3G + 4G)
Targeting 38 cities in 2013,+100 cities till 2016. From 2-8 to +100 Mbps.
# new elements
95% urban population
# BTS (2G) 2013
2014
2015
2016
POP MW
Capex Evolution Towards Data
Macro coverage fine tuning.
POP MW POP MW
% of total Capex
Focus on IP infrastructure, caching, peering.
Fiber base Infrastructure 2013
INTELIG 2009 ACQUISITION
FIBER TO THE 2013 AMAZON
2016
MASSIVE LD BACKBONE
2014 LTE*
2015 3G
2016 2G
Small Cell Approach # new elements
INTELIG 15,000KM
46,000 KM OF FIBER BY YE13
65,000 KM OF FIBER
New Sites. Including Small Cell. 2012
2013e
2014e
2015e
2016e
New backbone routes- Increasing resilience. *Includes 2.5GHz RAN Sharing.
7
Offer Evolution
Smartphone Sales
Smart/Web phone Penetration
Voice MOU
(% total handset sale)
(% over total base of lines)
(Minutes)
42%
3Q12
30%
4Q12
46%
1Q13
46%
19%
67%
3Q13 Smartphone
13%
Webphone
52% 43%
22% 21% 2012
Essencial
Jul 13
(% of Data Users in CB; million users)
(% of Mobile Services Gross Revenues; R$ Million)
>50%
VAS/Revs.
2016e
>40%
23%
21%
3Q13
Devices Sales Share
VAS Revenue Growth
34%
2012
2016e
Data Users
29%
150
136
30%
21%
>170
>75%
35%
24%
57%
2Q13
28%
Innovative Offers Driving Growth and Differentiation
56% 46% Notebook 44%
XX% +15%
21.3
2012
3Q13
XX%
+XX%
24.5
36% Tablets
VAS Gross Revs.
2016e
17% Desktop
2012
2013e
2016e
2010
2012
2014
2016
8
BUSINESS STABILIZATION AND RECOVERY
INTELIG
Fixed Business Evolution Top Line: Recovery Path
• Focus on value, selecting high margin customers. • Selective approach focused on high potential verticals: Finance, ISP (data), Call Center (voice).
2012
2013e
2014e
2015e
2016e
2014e
2015e
2016e
EBITDA: Inflection Point
• Network ready to retake sales. • Increasing addressable market with mobile synergy approach. •
Optimize investment leveraging on multi service networks.
2012
2013e
Addressable Households
Sustainable Growth Mode
TIM FIBER
000
• Leading the market share for speed above 34Mbps (ultra BB offers).
522
881
2012 3Q13
• Leveraging fiber assets in SP and RJ with reduced investment and efficient approach.
2016
UBB Market Share RJ/SP (Aug13) >34 Mbps download speed
• Good potential at SME segment. GVT 7.1%
• Strong support to mobile business w/ small cell backhauling.
OTHER5.6% LIVE TIM
VIVO 22.0%
48.5% NET 8.9% OI 7.8% 9
TIM Part: 2014-2016 Guidance Guidance R$ billion 18.8
2013-2016 CAGR: Mid Single Digit Growth
Total Net Revenues 2012
2013e
2014e
2015e
2016e
R$ billion
2013-2016 CAGR: Mid Single Digit Growth
5.0
EBITDA
2012
2013e
2014e
2015e
2016e
R$ billion 3.8
CAPEX
Infrastructure
Total CAPEX 2014-2016: ~R$11 billion*
3.2
Others/Licenses 0.5 2012 *Does not consider 4G licenses (700Mhz).
2013e
2014e
2015e
2016e 10
