1. 4Q09 Results
Presentation
TIM PARTICIPAÇÕES S.A. | Investors Relations
Rio de Janeiro, February 24th 2010
2. TIM PARTICIPAÇÕES S.A. | Investors Relations
Additional Disclaimer to the Presentation
In the following slides we will present the financial statement analysis. For the sake of simplicity, all
comparisons refer to TIM operations, excluding the effects of Intelig’s Dec/09 operations. As for the
Balance Sheet, the analysis includes Intelig.
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3. TIM PARTICIPAÇÕES S.A. | Investors Relations
Agenda
Repositioning Track
4Q 2009 Results
Perspectives for 2010-2012
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4. TIM PARTICIPAÇÕES S.A. | Investors Relations
TIM Brasil: Repositioning Track
MM lines, EoP
Post-paid Base Pre-paid Base 3 Waves of Development
After 15 months, Reversal of Pre-paid
discontinuation of the clients loss after 34.7
FROM post-paid base erosion repricing/promo 32.9
REPOSITIO- 6.8 30.1 29.9
NING TO 6.4 6.5
6.3
GROWTH 6.2
-0.2 +4.8 Penetration Usage Data
-0.4 -0.3 +0.3
Jan-08 Jan-09 Abr-09 Aug-09 Dec-09 Jan-09 Mar-09 Aug-09 Dec-09
2008
“Difficulties”
2009
“Repositioning”
2010
2010-2012
“Growth”
•Uncompetitive offer: repricing and •Offers innovation: “breaking the rules” •Main growth drivers:
promo stop • Penetration
•Quality Recovery
•Loss of Brand attributes • F-M substitution
TRACK •Efficiency Plan: Savings >R$1 Billion; • Internet
•Little innovation
(~R$800 Mln on the financials) •Need to build own infra-structure / Intelig
•Loss of quality
•Intelig Acquisition integration
•‘Back to growth’ with profitability and cash
Clients loss
QoQ Acceleration 3 Waves of Development
Inertia in 2009 of -R$ 1 Bln
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5. TIM PARTICIPAÇÕES S.A. | Investors Relations
Q4 2009: Visible Signs of Turnaround
• Network Quality (Anatel
• Customer Base: 41.1 MM Ranking) : 100% in December,
(+1.5 MM vs. 3Q) with MOU ~ 100 minutes
• ARPU leader: R$27 (vs. R$26.5
en t
• Bad debt represents 2.5% of
nt
in 3Q)
me
Qu
Qu
Service Revenues: -37%YoY
pm
• Service Revenues: +5.4% QoQ,
op
alil
a ti
• Reduction of Interconnection
elo
due to outgoing traffic (+13%
vvel
ty
y
QoQ) and subsidy costs weight.
De
De
• Trend Inversion of Service
January:
Revenues YoY drop 100%
Anatel Quality
• Infinity: ~18 million 100.0%
99.5%
97.3%
97.3%
Profitability
Profitability 93.4% 94.0%
Service Revenues
1
1Q 2Q 3Q Oct Nov Dec
R$ MM 3,248
2,936 3,083
2,823 • EBITDA: R$ 960 MM, +26% QoQ
+4.0% +5.0% +5.4%
• EBITDA Margin: 28.2% (+542 bps QoQ) EBITDA Margin
28.2%
1Q 2Q 3Q 4Q • Operating FCF: R$ 1.1 Bln 4Q; R$ 0.7 Bln Full Year
22.3% 22.7%
• Net Income: R$ 330 MM, +29% 2009FY vs. 2008FY 20.2%
• Intelig Acquisition: completed
0
1Q 2Q 3Q 4Q
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6. TIM PARTICIPAÇÕES S.A. | Investors Relations
KPI’s Improvements QoQ: Subscriber Base, traffic, ARPU and Revenues
41.1
39.9 40.3
CB MOU ARPU
MM clients oct nov dec Minutes R$
41.1 99
39.6 42
90 110
26.0 26.6 26.5 27.0
41
100 30
37.8 40
73
70 90
>40%
25
36.1
39
80
38
20
37
Total 70
Outgoing
Voice
15
36
60
+4.8% +4.7% +3.8% 35
34
Outgoing 50
+9% 10
40 5
33
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
18 MM Positive
elasticity
Infinity
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TIM: breaking the rules Service Revenues
11
Charge per
10
call
9
8
R$ MM
7
• Infinity: from “charge per Charge per
6
5
minute” to “charge per +4.0% +5.0% +5.4% minute
4
3
call”
3700
3,248
2
3,083
3500
2,936 3300 Q1 Q2 Q3 Q4
• Liberty: Unlimited talk to 2,823 3100
all TIM community 2900
2700
• ‘Chip Avulso’: without
2500
penalty Q1 Q2 Q3 Q4
• SIM unlock handset YoY -0.5% -1.2% -1.0% +0.3% 5
7. TIM PARTICIPAÇÕES S.A. | Investors Relations
Reinforcement of Brand Positioning
Investments in Advertising Clear and direct communication of offers
Share of investments TV, % Best deals Cheaper cost per
Minute
32% 31% 31%
Player1 30% 34 +4pp 37 +11pp
26% 28% 28%
Player2
25%
25% Player1 35 +3pp 23 -1pp
24% 19% 18%
Player3 17% Player2 29 -5pp 23 -8pp
15% 16% 15%
Player3 29 -7pp 21 -5pp
2006 2007 2008 Jan-Nov ‘09
Communication Waves Brand Credibility
Coverage ‘Mundo Azul’ Coverage Innovation
38 +3pp 34 +10pp
Player1 44 +3pp 28 0pp
Liberty ‘Chip Avulso’
Player2 22 +1pp 25 -7pp
Player3 17 -3pp 32 -3pp
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8. TIM PARTICIPAÇÕES S.A. | Investors Relations
Network Quality: 100% of Anatel’s targets achieved
Increase in Traffic Volume Network quality improvement (Anatel ranking)
MM of total minutes (excluding visitors) % achieved goals in TIM’s network quality
13000
11,956
1
12000
99.5%
98.2% 1
10,458 11000
93.4% 94.0%
9,973 1
90.8%
10,411 9,273
10000
9,045 1
85.5%
1
2008
9000
8,068 100.0% 1
Traffic reduction
1
97.8% 97.3%
7,585 after repricing 8000
1
1
2009
1
70 73 90 99 1
oct nov dec
7000
1
MOU
6000
1
Q1 Q2 Q3 Q4 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
YoY -16.1% -19.1% +0.5% +28.9%
100% of Anatel’s Goals in December (confirmed in Jan.’10)
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9. TIM PARTICIPAÇÕES S.A. | Investors Relations
Agenda
Repositioning Track
4Q 2009 Results
Perspectives for 2010-2012
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10. TIM PARTICIPAÇÕES S.A. | Investors Relations
Main Financials Results
Efficiency Plan: R$0.8 Bln in savings, R$ 0.6Bln of which were reinvested in the Re-Launch Plan (“Self-financing”):
+ R$0.6Bln (+23.4% YoY): advertising, commissions and customer care
- R$0.4 Bln (-8.8% YoY): Network and Interconnection Costs
- R$0.3Bln (-43.6% YoY) : Bad Debt
- R$0.1Bln (-9.3% YoY) : Personnel and G&A
EBITDA: R$959 million in 4Q09 (+26% QoQ) and a 28.2% margin in the quarter; EBITDA FY2009 of R$3,063 million
(+5.6% YoY) and a 23.5% margin (+140 bps vs. 2008)
Net Profit: R$232 million in 2009 (+29% YoY)
Operational Free Cash Flow: positive in R$1,109 million in 4Q09; R$692 million in FY2009
Net Financial Position: R$1,684 million (-R$860 million vs. 3Q) including Intelig
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12. TIM PARTICIPAÇÕES S.A. | Investors Relations
Net Result – 4Q09
R$ Million
330
61
(15)
Y/Y variation due to
(144)
lower impact of tax
(620,9) -32% 2009 benefits (R$104Mn vs. 1Q09 2Q09 3Q09 4Q09
vs. 2008 to R$160Mn)
R$252Mn
958,5
(55,3) 47,8
337,6 330,0
EBITDA Depreciation & Net Financial Taxes and Net Profit
EBIT
4Q09 Amortization Expenses Others
+29%
Net Profit –
2009FY 180 232 Dividends:
Proposal of
R$ 0,125 per PN in
distribution
2008 2009
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13. TIM PARTICIPAÇÕES S.A. | Investors Relations
Operational FCF & Net Financial Position– 4Q09
(TIM + Intelig Dec/09)
Free Operational Cash Flow Net Financial Position
R$ Millions R$ Millions
R$ 860 Mn debt
reduction
(996) 32.1% of Total 1,109
1,149 Net Revenues
249
2,544
1,684
956 1,109 - R$ 116 Mn of
Intelig acquisition
effect
EBITDA Δ Working CAPEX Oper. Oper. Non-Oper.
OCF 3Q09 OCF OCF 4Q09
Capital
R$ 4.2 billion (of which 67% on long term)
Gross Debt
~28% of debt is denominated in foreign currency (100% hedged)
Average Annual Cost 9.7% in 4Q09 vs.13.2% in 4T08 and 9.7% in 3Q09
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14. TIM PARTICIPAÇÕES S.A. | Investors Relations
Agenda
Repositioning Track
4Q 2009 Results
Perspectives for 2010-2012
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15. TIM PARTICIPAÇÕES S.A. | Investors Relations
TIM is Ready to Capture Brazilian Market Opportunity
“Voice is Good” Free-net Philosophy
Liberty = unlimited on-net calls (F-M substitution) Mobile Internet Access (microbrowsing)
Offers & Promo based on community Selective growth of the mobile connectivity
LD for Fixed: economy and simplicity with Intelig market (web via internet key)
Attack to fixed monthly fee (F-F substitution) Social networking
Penetration Usage Data
Market share MOU and ARPU Microbrowsing Browsing
Breaking Rules Convergence
‘Mundo Azul’ = One national rate (local and LD) Integrated Solutions of Fixed,
Infinity = pay per call Mobile, Voice and Data for:
Chip only = exit from handset subsidy market - corporate segment
SIM-unlock = free handset - consumer (selective)
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16. TIM PARTICIPAÇÕES S.A. | Investors Relations
Developing Own Infrastructure
1 2 3
Intelig’s backhauling ring Integrated TIM-Intelig Development of own
connection/strengthening Backbone metro rings
Backbone
Backhauling Metro Key actions
1 Backbone Integration
PoP PoP Leased
lines 5 2 Connection with Intelig MAN
4
Microwaves 3 MAN TIM conclusion
installation
Node-B BTS BTS 4 Development of Microwaves
and Backhauling - radio
Leased lines renegotiation
5
3G/HSDPA 2G/Edge 2G/Edge with OLO’s
Access Access Access
Increase capacity of infrastructure
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17. TIM PARTICIPAÇÕES S.A. | Investors Relations
Conclusion: TIM - market’s #2 player with the greatest speed of QoQ growth
KPI’s Size (Q4) Rank* QoQ Growth
In Bps
+5 MM lines vs. Q1,
41.1 MM #3 + 380 besides having rigorous
Subscriber base
(23.6% Market Share) clean-up to save Fistel
Stop ARPU erosion due
ARPU R$ 27.0 #1 + 200 to outgoing calls
Net Service Revenues R$ 3,248 MM #2 + 540 Higher growth QoQ due
to push on voice
Filling the gap vs.
R$ 959 MM #2 +2,630
EBITDA market leader besides
the intense commercial
effort
Margin EBITDA 28.2% #2 + 540
We are ready for the next step, where we’ll focus on the capture of opportunities:
• Penetration: fresh market from social inclusion
• F-M substitution for Voice
• Selective growth for Data
• “Option Value” Intelig: LD for Fixed and Convergence
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* Without considering Oi’s results (not published yet)
18. TIM PARTICIPAÇÕES S.A. | Investors Relations
“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.
Investor Relations Visit our Website
Avenida das Américas, 3434 - Bloco 01 http://www.tim.com.br/ir
6° andar – Barra da Tijuca
22640-102 Rio de Janeiro, RJ
Phone: +55 21 4009-3742 / 4009-3446 / 4009-3751
Fax: +55 21 4009-3990
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