This document outlines Telecom Italia's 2012-2014 plan for its subsidiary TIM Brasil. It summarizes TIM Brasil's strong growth over the past three years in key metrics like customer base, revenues, EBITDA, and market share. The plan aims to continue this momentum by pursuing three strategies: community expansion to grow the customer base to 90 million lines, leveraging the "Voice is Good" and "Internet for All" concepts to increase voice usage and data adoption, and capitalizing on the fixed-mobile substitution opportunity in Brazil through fiber investments. The integration of TIM's mobile network with AES Atimus' fiber infrastructure will allow TIM to offer broadband and WiFi services nationwide to further its
2. Telecom Italia Conference Call
2012â14 Plan Outline
Safe Harbour
These presentations contain statements that constitute forwardâlooking 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
uncertainties,
actual results may differ materially from those projected or implied in the forward looking statements as a result of
various factors.
Forward looking
Forwardâlooking 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 20âF as well as periodic filings made on Form 6âK, which are on file with the United
States Securities and Exchange Commission.
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4. Telecom Italia Conference Call
2012â14 Plan Outline
Three Years in Few: Accelerating Growth and Profitability
Customer Base Expansion Revenues growth
Mln Lines R$ Bln
$
3x +18%
18%
13.1
Net Adds +5% Fastest
9.9 0% growing
Revenues Company
4.7 Growth YoY
64.1 17.1
51.0 13.7 14.5
41.1
Customer Total
+56% +25%
Base Revenues
2009 2010 2011 2009 2010 2011
Market share EBITDA , EBIT , EBITDA-CAPEX
% lines R$ Bln
34% 33% Leading 4x
Incremental growth for
2,1
market 20% the 2nd year 1.2
share 1.64
26.5% EBIT 0.5
1.36
Market 25.1% 0.82
Back to #2
share EBITDA-CAPEX
23.6% 2x
2009 2010 2011
2009 2010 2011
EBITDA 3.5 4.2 4.6
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5. Telecom Italia Conference Call
2012â14 Plan Outline
Two Markets One approach: Simplicity
Markets,
âVoice is Goodâ âInternet for Allâ
Total Voice Traffic Volume Example: Infinity Web
p y
Billion Minutes
Push
P h on Daily Internet unique
>15mln i
>15 l unique users per
FMS users - Pre paid (Mln) month (Pre+Post)
2x 86.7
9x 2.7
62.5
62 5
38.1
0.3
2009 2010 2011 Aug 10 Dec 11
âRide the
Voice Revenues Simplicityâ Data Revenues
Voice Outgoing Revenues D R
Data Revenues +49% data
R$ Billion R$ Billion growth in Q4
+34% 13.4 +67% 3.2
11.3 2.2
10.0
1 1.9
2009 2010 2011 2009 2010 2011
Leading the Voice Market with just 2 concepts: Infinity and Liberty (voice and internet)
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8. Telecom Italia Conference Call
2012â14 Plan Outline
Continuous Reshaping of the Brazilian TLC Market
Market Transformation
R$ Billion 106 115 126 134 Pure Mobile Advantage
55 53
Fixed 59 60
(43%) (40%) Mobile over Fixedâ :
(56%) (52%) towards 60/40 split
Force Fixed Mobile
Fixed-Mobile
71 81 substitution (voice)
47 55 (60%)
Mobile (57%)
(44%) (48%) Mobile Internet
competitive vs <2 Mbps
2009 2011 2014 2016
wireline BB accesses
96
82 Capital Allocation
Fixed 51 29
Voice is Good 2G Capacity
(Push the FMS) Mobile 45 53
Intelig Acquisition
2009 2016
52
24 3G Coverage
Internet for All TIM Fiber Acquisition
Fixed 10 28 (AES Atimus)
Mobile
M bil 2 8
2009 2016 7
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9. Telecom Italia Conference Call
2012â14 Plan Outline
Limited BB capabilities from incumbents create 3 opportunities
for TIM
% of fixed accesses
1. FMS Voice
Price per minute Fixed
100%
Mobile
~70%
30%
80% 24%~
~6%
20%
Total wireline Voice only BB <2Mbps >2Mbps
market accesses nominal speed nominal speed
2. FMS Data 3. TIM Fiber
Mln clients 13,2
Selective tt k f the Adsl
S l ti attack of th Ad l
TIM monthly 6,7
incumbents via Naked VDSL ultra BB
unique users
(Pre-paid) powered by the 5.500km Optical Fiber
Dic/10 Dic/11 in RJ/SP
Smartphone
p
penetration 10% 27%
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11. Telecom Italia Conference Call
2012â14 Plan Outline
The New Integrate Network Approach
(âLeveraging AES Atimus Fiber Optic basedâ)
Fiber To The Site/Antenna (3G+ Evolution) MBB Overlay
3 Carriers per antenna
Fiber to the Site in top 42 Cities (high 3 sub-carriers of 21 MB
each*
capacity) Total Available = 360MB
3 Carriers per antenna (spectrum
optimization)
Upgrade to 21 Mbps (HSPA+) of existing
Node-B
Liberty Web SIM Based
Identification/Billing
Single SIM to identify
Copper or
and bill
Fiber
Drop
WiFi Underlay
Wi-Fi offload (e.g. Rocinha) 300 Mb 100MB 200
ports
10 thousand hot spots semi public 50 Mb
Rocinha example and 5 main airports
Roadmap to extend over 10,000 hot
spots by YE 2012 and 25,000 by â14 <R$500/Household
Infinity Web
High Capillarity of the aerial fiber based
network (~250 meters to the Home)
Flexibility: fast drop at the building
Use of existing internal network
TIMÂ Fiber
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12. Telecom Italia Conference Call
2012â14 Plan Outline
WiFi Off load supporting the âInternet for Allâ - Rocinha results
Off-load Internet All Rocinha results
Option 1: Add One Additional Base Station Option 2: Cover With WiFi
One additional BTS 25 Access points
Throughout : 201 Mbps Average distance:
200m
TIM BTS TIM BTS Throughput: 5Ghz
Performances: 5,000
TIM BTS simultaneous
TIM BTS
connections
TIM BTS 1-2 Mbps per user
Capex
p Results Achieved
R$ and R$ per MBps
~ 1â500 Mbps
~ 300 K â54% Reduced capex
Reduced time to market
educed e o a e
Reduced operating costs
7XÂ Â Increased customer experience/speed
~ 137 K
Executed Internet for All â LAN Houses
already reduced by 25%
~ 200 Mbps Gained company brand image with local
and federal government
Alternative 1: BTS Alternative 2: WiFi Alternative 1: Alternative 2:
BTS WiFi
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14. Telecom Italia Conference Call
2012â14 Plan Outline
2012-14
2012 14 Drivers of Growth CAGR â11 â â14
3 Ways of Growth Revenue Growth
R$ Billion
XX%
17.1
Total 13.8 14.5
Revenue
13.6
15.3 Fixed
12.8
0.7 0.8
0.6
Services
Revenues 12.2 12.9 14.5 Mobile
90 25% VAS
200 mou
mln lines Incidence
2009 2010 2011 2012 2013 2014
Community Expansion FMS (Voice) Internet for All
Mobile Customer Base FMS â Voice (MOU) Internet for All (Mobile Data)
Million of lines Minute of usage per line Data
D t as % of S i
f Service R
Revenue
Ë200 Ë25%
90
129 14%
116 11% 12%
64
4
51 83
41 +XX% +XX%
+XX%
Outgoing Voice Revenues
2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014
2009 2010 2011 2012 2013 2014
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15. Telecom Italia Conference Call
2012â14 Plan Outline
Network Continuous Evolution
Network roadmap 2G (TRX Installed) 3G roll out
000 TRX Pop %
2G Managing the growth 253 >80%
157
64%
Speed up the roll-out in
3G
HSPA mode
2011 2014 2011 2014
WiFi >10,000 hot spots by YE2012
FTTS Backbone
FTTS Deployment in Top 42 cities % of total traffic 000 km
49.0
50%
24.0
FTTH ~1 Mln households by 2015 42 Cities
14 Cities 25.0
Efficiency ~50,000 km in fiber optic 2011 Swap + 2014
2012 2014 built out
2G (TRX I
Installed)
ll d) TIM Fib â non capital intensive
Fiber it l i t i
Metropolitan Street Internal
Installation Modem
Tim Fiber: a âno Capex intensiveâ network equipment network
approach to offer Residential Ultra BB Aerial
~500 ~2,400
~2 400
in S
SP/RJ network
Underground
~1,700
+ ~250 + ~125 + ~200 + ~125 = ~500
network
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16. Telecom Italia Conference Call
2012â14 Plan Outline
Take-aways
Take aways on main TIM Brasil trends
Revenues (New vs Old Plan)
Bln R$
New
MTR glide path (-20% real term) as of febâ12
Old impacts approx. 250 bp in Revenues and EBITDA
17.1 Growth resulting from further CB, voice MOU and
Revenues internet browsing
14.5 For 2012, revenues growth at >10% YoY (vs.
15.5
14.5 R$17.1Bn in 2011)
1yr in advance
2010 2011 2012 2013 2014
Network sinergies from AES Integration
Continuous efficiency in Go2Market (no subsidy,
SAC/bad debt)
Organic CAPEX (as % of Sales) Ebitda Absorbing MTR cut and TIM Fiber start-up
Bln R$ For 2012, Ebitda growth at >10% YoY (vs.
19.6 R$4.6Bn
R$4 6Bn in 2011)
% of 17.5
17 5
Revenues Ë14%
3.0 3.0 3.0 3.0 Expanding 2G capacity and 3G coverage
2.8 Accelerate FTTS in Top 42 Cities and Wi-fi
CAPEX
offloading
Capex Tim Fiber start-up
2010 2011 2012 2013 2014
CAPEX flat at 3 bn/year; R$9bn in 3 Years
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