TIM Day in London November, 12,2014
Jun 22, 2015
TIM Day in London November, 12,2014
A SOLID HISTORY OF GROWTH
2
TIM’s Position
Long Distance
Leader
2nd in Market Share Overall
Smartphone
Sales Leader
1998 2003 2009 2014
Prepaid
Leader
Gross Revenues (R$ bln)
Customer Base EoP (mln customers)
19 20
25
28 30
2009 2010 2011 2012 2013
3.5
4.2 4.7
5.0 5.2
2009 2010 2011 2012 2013
41 51
64 70 73
2009 2010 2011 2012 2013
EBITDA (R$ bln)
CAGR+12%
CAGR+10% CAGR
+16%
1 2 1 1
4%
12% 11%
52%
2011 20142014
53% 64% 79%
90%
2006 2007 2008 2009
Tablet
Smartphone
56% 48% 42%
34% 27% 27% 23%
• Incoming calls only device
Mobile Penetration (% over population)
DATA THE NEW GROWTH WAVE
Data Penetration (% of data over total revenues in 3Q13)
248 212
166 162 140 139 91
MOU in 2008 (minutes)
• Still a lot of phones without data access • Wi-Fi only devices
PCs, Notebooks, Feature Phones
...was similar to the challenge in data growth now
Challenge in voice growth in 2009…
Goal: increase voice usage Challenge: deliver the best
experience in mobile internet
Source: Anatel and IBGE Source: IDC
Source: Global Matrix
High Growth
“Fear” to use
Low Usage
Handset Sales Share
2006 2007 2008 2009
2011
3
39
81
2013
1Q14
2Q14
3Q14
900 Mhz rollout according to plan (above 600 sites using the new frequency)
Expanding backhauling
INFRASTRUCTURE (R)EVOLUTION
4
Mobile Broadband Update
Cities Covered with MBB project
% of urban population covered
Improving Quality and 4G Services (e.g.: SP)
Reduction in dropped call rates and better overall performance
Higher average throughput rates
Improvement in indoor coverage
Increase in data and voice traffics
30%
31%
32%
Source: ANATEL app
36%
99.0%
97.95%
97.53%
98.36%
Voice Access # Antennas
Investing Efficiently
Big Data analysis for capex allocation
Antenna level return analyses (IRR and payback)
50%
88%
50%
12%
9M13 9M14
Infrastructure Investment Mix (as % of capex)
2G
3G + 4G +38 p.p.
∆ YoY Technology
Small cells in gas stations: agreement with a tower company to install more than 150 small cells inside Totem
BioSite: sustainable coverage, bringing harmony between environment and technology
Innovative Coverage Expansion
After
Before
DRIVEN BY INNOVATION
5
PREPAID MOBILE ACCOUNT/ MONEY
o Partnership: TIM, Mastercard and Caixa Econômica Federal
o Focus on unbanked population ( >50% of prepaid base)
NEW MUSIC PLATFORM
o Partnership TIM and Deezer (top global streaming platform)
o More than 35 million music available for download
o Maintaining leadership position in the mobile music industry in Brazil
INTERNET SHARING PLANS
o Up to 4 devices
o No additional charges
WEEKLY SERVICE PACKAGE o Voice + Data + SMS o R$ 7 per week
NEW M2M PLANS o New data packages
launched for M2M services
Adding Value Through Innovation
NEW APP FOR LANGUAGE COURSES o Games and quizzes help
students developing English skills
blah COMMUNICATION APP
o Integrated communication (VOIP, IM, SMS) App
o First ad campaign
Data Adoption
67% 77%
3Q13 3Q14
24
32
3Q13 3Q14
Smartphone Penetration Over Customer Base (%; ∆ YoY)
Smartphones Share over New Sales (%; ∆ YoY)
Data Users (mln users; % YoY)
+32%
+10 p.p.
25%
44%
3Q13 3Q14
+20 p.p.
Mix of Data Gross Revenues (R$ mln; %YoY)
1Q14 2Q14 3Q14
25% 27% 29% % over total gross
mobile service revenues
SMS
Web
1,500
+29% +39%
+45% +80%
∆ %YoY growth
1,578
Content & Others
1,677
+33%
+72%
+23% +20% +22%
New Data World
43% of data users over total base
TIM Protect
SECURITY SERVICES o Ensures safety of
customer’s devices and information
24.6% 27.4%
3Q13 3Q14
1,252
1,332
3Q13 3Q14
EBITDA (R$ mln; %YoY)
BUSINESS FUNDAMENTALS
6
Core Business Evolution
Mobile Service Net Revenues (% YoY)
EBITDA Margin (% YoY)
(Local + LD + VAS
+ Others)
Business Received
3Q13 3Q14
Business Generated
(Incoming Voice + SMS)
+6.4%
+2.8 p.p.
+5%
-34%
Operating margin
improvement
~0.7% ~0.8%
3Q13 3Q14
Efficient Cost Control
Interconnection Cost (Δ% YoY)
Leased Lines Cost (Δ% YoY)
Bad Debt/Sales (% over gross revenues)
stable
3Q13 3Q14
-36.2%
3Q13 3Q14
-1.8%
306 372
386 366
315 348
9M13 9M14
2Q
1Q
+10.6%
% YoY
3Q
1,007 1,086
+21.6%
-5.2%
+7.9%
2013 2014
Net Income Evolution (R$ mln; % YoY)
Total cost (Δ% YoY) 8.8%
2.3%
-2.9% -7.2% -8.1%
3Q13 4Q13 1Q14 2Q14 3Q14
36.7
38.2
3Q13 3Q1421
13
3Q13 3Q14
Accelerating Operational Performance…
LIVE TIM: EXECUTING ON OPPORTUNITY
7
43
120
3Q13 3Q14
Customer Base (000 users)
Source: Anatel
881
1,366
3Q13 3Q14
Netflix Broadband Ranking (average streaming speed representation)
3Q13 3Q14
ARPU (R$; YoY%)
… with Support of Quality Experience
Addressable Households (000 HH)
Source: Company
+2.8x +55%
+32%
New Line Payback (months)
-38%
Gross Adds (000 users)
18
31
3Q13 3Q14
+74%
Live TIM Net Adds Share (% of SP and RJ market additions)
Average Speed of New Sales (mbps)
+4.1%
16%
31%
Aug/13 Aug/14
Source: Company
CONCLUSION
8
Q3 Conclusions: A good balance between objectives
Perspectives: Moving the plan forward
Strategic… Financial… Operational…
EBITDA
Net Income
+6.4% YoY
+5% YoY
+11% YoY
MBB in 81 cities
OPEX Control
Prepaid leadership
Infrastructure growth
Evolving revenue profile Renewed Mission/ Purpose/Values
New 3-year plan
“To connect and take care
of every customer, so
everyone can do more”
o Industry leadership
o Long term commitment
o 4G license 700MHz
o Tower sale supporting investment plan
Quality
Business Generated
TIM Protagonist
• VOICE
• SMS
• MTR
• DATA
• DIGITAL SERVICES
o Data and digital services leadership
o Infrastructure
o Customer base value
o Customer experience
o One TIM initiative
Data Users (mln users)
Data + VAS (ex-SMS)
Smartphones (over total base)
32 mln 32% YoY
44% +19 p.p. YoY
R$1.3 billion +49% YoY