The document provides financial information for Tele Celular Sul Participações S.A. for the second quarter of 2000:
- Key highlights include the launch of new SMS and banking services, investments to improve coverage and digitalization, and maintaining a market share of 83%.
- Operating revenue was R$221 million, down from the previous quarter due to seasonal factors. EBITDA was R$45.5 million with a 26% margin.
- There was a net loss of R$0.8 million due to higher doubtful accounts, but a net profit of R$11.1 million for the first half of the year.
- Total subscribers reached 1.2 million, up from 1
1. TELE CELULAR SUL PARTICIPAÇÕES S.A.
Contacts
TELE CELULAR SUL PARTICIPAÇÕES S.A.
Ruggero Caterini
Chief Financial Officer and Director of Investor Relations
Joana Dark Fonseca Serafim
Investor Relations
(5541) 312-6862
jserafim@timsul.com.br
Rafael J. Caron Bosio
Investor Relations
(5541) 312-6623
rbosio@timsul.com.br
Website
http://www.telecelularsul.com.br
TELE CELULAR SUL PARTICIPAÇÕES S.A.
ANNOUNCES ITS CONSOLIDATED RESULTS FOR
THE SECOND QUARTER OF 2000
Curitiba, August 3, 2000 – Tele Celular Sul Participações S.A. (NYSE:
TSU; BOVESPA: TCLS3 and TCLS4), the holding Company of Telepar
Celular S.A., Telesc Celular S.A. and CTMR Celular S.A., leading
providers of cellular telecommunications services in Southern Brazil,
announced today its results for the second quarter of 2000.
Highlights of the Second Quarter of 2000
Innovation
During the second quarter of 2000, Tele Celular Sul launched the two-way Short
Message Service. The Company also began offering TIMnet Banking, a system
allowing access to bank data via celular telephone.
Tele Celular Sul, together with Tele Nordeste Celular, created its own Internet portal,
TIMNET.COM, in order to provide advanced, innovative and readily accessible
services such as W-Vas (Wireless Value Added Services). In addition, CSD data
circuits are being installed, allowing the transmission of data through the digital
channel.
Market Segmentation
The segmentation strategy was enhanced with the development of new services for
corporate customers, such as the Plano Empresarial (Corporate Plan), and the Right
Planning program, which aims to encourage customer loyalty, by advising customers
as to the plan better suited to their utilization profile.
Quality of Services
In line with the Company’s Capex program, R$100 million will be invested from June
until the end of the year to broaden coverage and improve the quality of services. The
digitalization process was accelerated and reached 95% of the Radio Base Stations
(ERB) by the end of June 2000. Prices and Traffic
At the end of the second quarter, Tele Celular Sul increased its prices, raising the rates
of the Basic and Economic Service Plans. The TIM-TIM program was introduced to
increase traffic by granting rebates on rates for calls on network made by customers.
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2. Key Figures
In R$ thousand
2Q/00 2Q/99 1Q/00
Total Gross Revenue 221,031 205,538 252,971
Net Operating Revenue 152,950 127,133 161,279
Net Handset Sale Revenue 20,759 31,439 32,765
Total Net Revenue 173,709 158,572 194,044
EBITDA 45,451 57,571 61,059
EBITDA Margin 26% 36% 32%
EBITDA Margin without handset sales 30% 45% 38%
Depreciation 33,452 23,950 28,349
Net Profit (776) 15,139 11,842
Profit per 1,000 shares (R$) - 0.045 0.035
Market Share
The second quarter of 2000 was marked by heightened competition. Despite the
competitive environment, Tele Celular Sul maintained its leadership position in the
market, retaining an estimated 83% market share as of the end of the second quarter.
The total market penetration rate for the period is approximately 10 cell phones per 100
inhabitants.
As of June 30, 2000, the Company had 1.2 million subscribers, of which 426,400 were
prepaid service users.
Operating Revenue
The Company´s gross operating revenue for the second quarter was R$221.0 million,
compared with R$252.9 million registered in the previous quarter. The decrease quarter-
over-quarter is primarily due to seasonal effects related to vacationing during the months
of January and February as well as to the Company’s policy of blocking customers that
have delinquent accounts and the decrease in handsets sales.
Regarding the decrease in handset sales, Tele Celular Sul contracted a company
specialized in the sale and distribution of handsets as of May 2000. Therefore, this
company is now in charge of all the logistics involved in the handset sale process. Since
handset sales are not part of Tele Celular Sul’s core business, this will benefit the
Company by eliminating the handset seller credit risk.
2
3. Composition of the Gross Operating Revenue Composition of the Gross Operating Revenue
2nd Quarter/00 - R$ 221.0 million 2 nd Quarter/99- R$ 205.5 million
Handsets Sales
Handsets sales 89,6
17,6 36,2
Others 23,5
0,5
31,4
55,7 47,8
in 76,3
47,9 Airtime
Operating Costs and Expenses
The cost of services rendered for the second quarter of 2000 (excluding the cost of
handset sales) was R$74.8 million, a 6% increase over the preceding quarter. Part of
this increase resulted from higher maintenance costs for hardware, software and
infrastructure associated with the accelerated digitalization and expansion of coverage.
Depreciation expense for the second quarter was R$30.8 million, versus R$26.5 million
in the preceding quarter.
The cost of handset sales for the second quarter was R$23.2 million, representing a
42% reduction over the first quarter of the year.
Composition of Cost of Services Rendered Composition of Costs of Services Rendered
nd
2 Quarter/00 - R$ 75.0 million 2 nd Quarter/99 - R$ 53.6 million
Payroll Third Party
services Fistel Peyroll Third Party
3,0
4,3 Services
Fistel 7,0 10,9 1,0
3,2
Depreciation and
30,9 Amortiization
Depreciation
23,9
and Amortiion 12,5 14,5
10,7 Interconnection
Leased Lines Leased 6,7 interconnecction
Lines
During the second quarter, subsidy levels decreased significantly, bringing the
subscriber acquisition cost (SAC) down to R$132, a 15% reduction over the preceding
quarter, which was R$156.
Selling expenses, excluding doubtful accounts, remained stable despite the highly
competitive environment. They amounted to R$26.6 million in the quarter, versus
R$26.7 million for the preceding quarter.
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4. During the initial phase of implementation of a new billing system, there was a delay in
the issuance of telephone bills and the temporary discontinuance of some practices in
order to expedite billing. Those factors increased the default level to R$22.5 million for
the period.
In addition, a significant number of non-paying customers were blocked during the
second quarter. Nonetheless, the implementation of strict credit and collection policies
has already improved July revenues, indicating lower default levels for the coming
quarters.
General and administrative expenses totaled R$12.7 million in the second quarter, or
R$1.7 million more than the first quarter, but 43% below the year-over-year levels.
Financing Expenses
Net financing expenses for the quarter totaled R$15.5 million, representing a R$1.7
million increase over the first quarter.
Tele Celular Sul's interest-bearing indebtedness was R$307.9 million on June 30, 2000,
representing 40% of shareholders' equity.
EBITDA
EBITDA for the second quarter was R$45.5 million and EBITDA margin was 26%, or
30% excluding the sale of handsets.
Net Result
A R$0.8 million net loss was recorded for the quarter and was attributed solely to the
increase in the expenses due to doubtful accounts in the period. However, the
accumulated net profit for the first half of the year was R$11.1 million, representing
R$0.03 per lot of one thousand shares.
Other Events
On June 28, 2000, Tele Celular Sul paid interest on equity for fiscal year 1999,
equivalent to R$0,0365 per lot of 1,000 common and preferred shares, net of income tax
and adjusted by the Brazilian Reference Rate applicable to the period from December
31, 1999 to the date of actual payment.
On June 30, 2000, a Special General Meeting approved the transfer of the goodwill
premium paid at the time of the privatization to Tele Celular Sul's controlled companies
Telepar Celular, Telesc Celular and CTMR Celular. The goodwill was allocated to Tele
Celular Sul through the merger with 1A2A Participações S.A. in a preceding step.
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5. Operating Revenue
In R$ thousand
2Q00 2Q99 1Q00 1H00 1H99
Handset sales 23.493 36.217 38.347 61.840 55.523
Air Time 93.876 89.577 111.014 204.890 174.913
Subscription fees 47.880 47.760 47.603 95.483 92.240
Interconnection charges 1 55.679 31.444 55.596 111.275 59.620
Others 103 540 411 514 5.966
Gross Operating Income 221.031 205.538 252.971 474.002 388.262
Taxes and Other Deductions (47.322) (46.966) (58.927) (106.249) (84.168)
Net Operating Income 173.709 158.572 194.044 367.753 304.094
Net Operating Income from Services 152.950 127.133 161.279 314.229 256.042
Net Operating Income from Sales 20.759 31.439 32.765 53.524 48.052
Note: (1) The amount relating to the 1Q/00 interconnection charges was reallocated in the statement,
so that R$16.9 million were transferred to Air Time Charges.
Operating Costs and Expenses
In R$ thousand
2Q00 2Q99 1Q00 1H00 1H99
Cost of Services and Goods 98.058 87.249 110.506 208.564 162.863
Cost of Services 74.858 53.621 70.427 145.285 107.336
Cost of Goods and Others 23.200 33.628 40.079 63.279 55.527
Operating Expenses 91.425 51.730 82.096 173.521 116.376
Selling Expenses 49.147 22.342 44.444 93.591 41.644
General Administrative Expenses 12.712 21.076 10.964 23.676 35.950
Financing Expenses 21.000 8.765 19.774 40.774 37.382
Other Operating Expenses 8.566 (453) 6.914 15.480 1.400
Operating Costs and Expenses 189.483 138.979 192.602 382.085 279.239
Expenses with Doubtful Accounts – DCLD 22.546 9.385 17.685 40.231 19.410
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6. Highlights
2Q00 2Q99 1Q00 1H00 1H99
Total subscribers 1.205.343 770.873 1.121.531 1.205.343 770.873
Postpaid 778.992 706.965 763.742 778.992 706.965
Prepaid 426.351 63.908 357.789 426.351 63.908
Estimated population in the region (million) 14,7 14,3 14,7 14,7 14,3
Municipalities served 218 193 217 218 193
Penetration ( TSU ) 8% 5% 8% 8% 5%
Market share 83% 94% 85% 83% 94%
Marginal market share 73% 84% 76%
ARPU TOTAL 1 R$44 R$60 R$50 R$47 R$62
ARPU – postpaid 1 R$57 R$61 R$59
ARPU – prepaid 1 R$19 R$22 R$20
MOU Total ( incoming) 75 94 81 77 96
MOU Total ( outgoing) 46 70 60 53 72
MOU - prepaid (outgoing) 16 19 17
MOU -prepaid (incoming) 71 79 75
Investment ( million ) R$7 R$98 R$51 R$57 R$106
Gross Additions 121.200 128.192 133.476 254.676 193.881
Disconnections 37.388 23.027 46.211 83.599 33.389
Churn 2 3% 3% 4% 7% 5%
Points of sale (including own shops) 635 547 610 635 547
Own shops 14 15 16 14 15
Total Staff 1.225 927 1.197 1225 927
Full-time 1.146 537 1.103 1146 537
Contractors and Apprentices 79 39 94 79 390
Notes: (1) Average revenue per subscriber ( Net, excluding handset sale).
(2) Calculated on the average subscriber base.
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7. TELE CELULAR SUL PARTICIPAÇÕES S.A.
BALANCE SHEETS AS OF JUNE 30, 2000 AND MARCH 31, 2000
(Expressed in thousands of Brazilian reais)
(Translation of the original in Portuguese)
A S S E T S
Parent Company . Consolidated .
June 30, 2000 March 31, 2000 June 30, 2000 March 31, 2000
CURRENT ASSETS
Cash and marketable securities 899 20 14,008 1,985
Accounts receivable from services - - 153,775 184,612
Accounts receivable from sales of
products - - 40,227 30,748
Receivable from subsidiaries - - - -
Allowance for doubtful accounts - - (41,868) (27,218)
Inventories - - 19,567 24,776
Dividends receivable - 12,058 - -
Recoverable and deferred taxes 3,206 2,363 21,458 22,451
Prepaid expenses - - 9,396 13,399
Other current assets 1,847 1,559 21,399 16,593
---------- ---------- ---------- ----------
5,952 16,000 237,962 267,346
---------- ---------- ---------- ----------
LONG-TERM ASSETS
Receivable from subsidiaries 135,171 134,431 - -
Recoverable and deferred taxes - - 59,644 44,517
Other long-term assets 1,179 977 14,001 12,264
---------- ---------- ---------- ----------
136,350 135,408 73,645 56,781
---------- ---------- ---------- ----------
PERMANENT ASSETS
Investments 650,971 449,238 20 20
Property and equipment 742 64 782,363 814,284
Deferred assets - - 617,766 17,396
---------- ---------- ------------ ------------
651,713 449,302 1,400,149 831,700
---------- ---------- ------------ ------------
Total assets 794,015 600,710 1,711,756 1,155,827
====== ====== ======= =======
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8. TELE CELULAR SUL PARTICIPAÇÕES S.A.
BALANCE SHEETS AS OF JUNE 30, 2000 AND MARCH 31, 2000
(Expressed in thousands of Brazilian reais)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Parent Company . Consolidated .
June 30, 2000 March 31, 2000 June 30, 2000 March 31, 2000
CURRENT LIABILITIES
Loans and financing - - 251,888 241,097
Suppliers 2,408 2,953 25,486 58,418
Taxes and contributions 75 705 - -
Salaries and social charges 4,317 3,801 7,235 6,478
Dividends payable 4,788 15,844 - 18,961
Provision for contingencies - 462 662 1,173
Provision for losses on
shareholders’ equity - - 42,543 -
Payable to subsidiaries - - - -
Direct and indirect taxes - - 24,747 25,386
Other current liabilities 1,350 1,187 19,349 26,112
---------- ---------- ---------- ----------
12,938 24,952 371,910 377,625
---------- ---------- ---------- ----------
LONG-TERM LIABILITIES
Loans and financing - - 56,073 55,224
Provisions 3,466 2,874 3,727 6,851
Provision related to non-tax
deductable portion of goodwill - - 351,544 -
Indirect taxes - - 24,232 14,705
Other long-term liabilities 75 75 75 75
---------- ---------- ---------- ----------
3,541 2,949 435,651 76,855
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
MINORITY INTEREST - - 126,659 128,538
---------- ---------- ---------- ----------
SHAREHOLDERS’ EQUITY
Capital Stock 175,772 175,872 175,772 175,872
Capital Reserves 205,603 - 205,603 -
Legal reserve 16,744 16,744 16,744 16,744
Profit Reserves 126,655 126,655 126,655 126,655
Retained earnings 252,762 253,538 252,762 253,538
---------- ---------- ---------- ----------
777,536 572,809 777,536 572,809
--------- --------- ---------- ----------
Total liabilities and shareholders’ 794,015 600,710 1,711,756 1,155,827
equity
8
9. TELE CELULAR SUL PARTICIPAÇÕES S.A.
BALANCE SHEETS AS OF JUNE 30, 2000 AND MARCH 31, 2000
(Expressed in thousands of Brazilian reais)
CONSOLIDATED STATEMENTS OF INCOME
Parent Company Consolidated
Six months Six months Six months Six months
ended June 30, ended June 30, ended June 30, ended June 30,
2000 1999 2000 1999
Gross revenue - - 474,002 388,262
Deductions - - (106,249) (84,168)
---------------- ---------------- ---------------- ----------------
Net revenue - - 367,753 304,094
Cost of sales - - (208,564) (162,863)
---------------- ---------------- ---------------- ----------------
Gross profit - - 159,189 141,231
Operating income (expenses), net
Selling expenses - - (93,591) (41,644)
General and administrative (1,555) (1,087) (23,676) (35,950)
Financial income (expenses) 10,342 25,390 (29,197) (18,539)
Other operating income (expenses), net (2,204) 104 299 7,485
Income from the investments in subsidiaries 6,176 15,062 - -
---------------- ---------------- ---------------- ----------------
Operating profit (loss) 12,759 39,469 13,024 52,583
Non-operating expenses, net - - 31 (7,940)
---------------- ---------------- ---------------- ----------------
Income before taxes and profit sharing 12,759 39,469 13,055 44,643
Provision for income tax and social contribution (1,011) (8,273) (3,746) (24,095)
Deferred income tax - - - 10,508
Profit sharing (682) - (1,112) (530)
Minority interests - - 2,869 670
---------------- ---------------- ---------------- ----------------
Net profit (loss) 11,066 31,196 11,066 31,196
========= ========= ========= =========
Number of shares outstanding (in thousands) 334,399,027 334,399,027 334,399,027 334,399,027
========= ========= ========= =========
Net profit (loss) per thousand shares 0.03 0.09 0.03 0.09
========= ========= ========= =========