TIM Brasil
Company Presentation
May, 2020
Disclaimer
This presentation contains declarations that constitute forward looking statements regarding the intent, belief or current expectations of the customer base, estimates regarding future financial results and other aspects of the activities.
Analysts and investors are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation. TIM Part undertakes no obligation to release publicly the results of any revisions to these forward looking statements.
Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those projected as a result of various factors.
Financial results are presented considering impacts from IFRS 16 adoption, except otherwise indicated.
Meeting with Investors | April 2020 TIM Participações - Investor Relations
Agenda
About Us ……………………………………………………………………………………………...……4
Market Overview and TIM Positioning………………………………………………………………. 8
1Q20 Results ………………………………………………………………………………………….....16
Strategic Plan2020-22 ……………………………...……………………….................................... 29
Regulatory Updates …………………………………………………………………………..…....... 47
Meeting with Investors | April 2020 TIM Participações - Investor Relations
ABOUT US
Meeting with Investors | April 2020 TIM Participações - Investor Relations
The Company in a nutshell
Presence in Brazil since 1998
Telecom Italia subsidiary (67% of shares)
ISE (Corporate Sustainability Index) member for 12 years
~R$ 30 billion of Enterprise Value
Introduced the first plan focus on data for smartphones
Best and Wider 4G Coverage
>100k km of fiber optical network throughout the country
Strong legacy in prepaid
Solid Execution in the 2019
Net Serv Rev | |
R$ 16.6B | |
+2.4% YoY | |
EBITDA | Operating |
MARGIN1 | FCF¹ |
46.7% | R$ 2.1B |
Live Revs | |
+30.6% | |
YoY | |
EBITDA1 - | EBITDA1 |
CAPEX | R$ 8.1B |
25% | |
on net | |
revenues |
(1) Normalized.
Solid results with sustainable growth above market average
EBITDA | EBITDA Margin | ||||||||||
(R$ MM) | (%) | ||||||||||
+10.3% | +5.8% | ||||||||||
+13.7% | 6,943 | ||||||||||
6,563 | |||||||||||
5,949 | |||||||||||
5,230 | 39.8% | ||||||||||
38.5% | |||||||||||
36.6% | |||||||||||
33.5% | |||||||||||
2016 | 2017 | 2018 | 2019 | 2016 | 2017 | 2018 | 2019 |
EBITDA - CAPEX | Net Service Revenues | |||||||||||
(R$ MM) | ( YoY) | |||||||||||
2,662 | 2,948 | 5.1% | 4.7% | |||||||||
1.7% | 2,4% | TIM | ||||||||||
2.0% | ||||||||||||
0.5% | ||||||||||||
P3 | ||||||||||||
1,9% | ||||||||||||
1,801 | ||||||||||||
-0.6% | -0.3% | -0.9% | 0,1% | P2 | ||||||||
728 | -4.3% | |||||||||||
-4.3% | -6.5% | -7.1% | P4 | |||||||||
-8,7% | ||||||||||||
2016 | 2017 | 2018 | 2019 | 2016 | 2017 | 2018 | 2019 | |||||
(1) Normalized EBITDA and Margin; (2) 2016-18 KPIs = on pro-forma basis; (3) 2019 KPIs = considering impacts from IFRS 15/9 adoption; | Meeting with Investors | April 2020 | |||||||||||
(4) P3 = considering impacts from IFRS 16 adoption in 2019; (5) Annually updated in March. | TIM Participações - Investor Relations |
Shareholders' structure and highest level of corporate governance
SHAREHOLDERS' STRUCTURE
Telecom Italia S.p.A.
100%
Telecom Italia
Finance S.A.
100%
TIM Brasil Serv. E | Minority |
Part. S.A. | |
67% 33%
TIM Participações S.A.
100%
TIM S.A.
Shares (% of Free Float)
30% | Brazil |
34% | |
USA | |
Rest of World | |
36% |
UNIQUE TELCO COMPANY LISTED ON
THE NOVO MERCADO
- Equal rights: vote, dividends and tag along
- Higher liquidity
- Single class of share (ordinary shares)
- Greater independence of Board of Directors (at least 20%)
- Strict disclosure policy
- Member of ISE for 12 years
Corporate Governance Form
10%
8% | Adopted | |
vs 65% on | Partially adopted | |
average2 | ||
82% | Not adopted | |
COMMITTEES TO REINFORCE AND GUARANTEE SOLID CORPORATE GOVERNANCE
General Assembly
10 members
(4 independents) 3 members
Board of Directors | Fiscal Council | |||
Statutory Audit | 3 members | |||
Committee | (3 independents) | |||
Compensation Board | 3 members | |||
Control and Risk Board | 5 members | |||
(2 independents) | ||||
7 members | ||||
Statutory Board of
Officers
- 40% of independent members
- 30% of female representation: >3x B3 Novo Mercado average
(1) Share position as of Mar-2020; (2) According to EY 2018 report.
Meeting with Investors | April 2020 TIM Participações - Investor Relations
MARKET OVERVIEW AND TIM POSITIONING
Meeting with Investors | April 2020 TIM Participações - Investor Relations
New consumer habits reinforce data service as essential, especially over mobile network
Social network penetration | Internet users | |||||||
(% population) | Time spent per day | 3% | ||||||
(Global ranking position) | Only Wi-Fi | |||||||
2º | Internet - 9h29m | |||||||
24% | ||||||||
2º | 3º | 2º | 2º | |||||
2º | Social Network - 3h34m | Only mobile | ||||||
73% | ||||||||
66% | 59% | 10% | Both | |||||
37% | 27% | 63% | ||||||
6% | Don't know | |||||||
Internet users by device | ||||||||
Paid streaming and car app users | 3% | |||||||
(% of smartphone users) | ||||||||
+24 p.p. | Only computer | |||||||
45% | 64% | 74% | 40% | |||||
26% | 50% | Only mobile | ||||||
56% | 96% | |||||||
Both | ||||||||
+7 p.p | ||||||||
Movies and series | Music | 2017 | 2018 | Mar-20 | A/A |
Source: We are Social, Mobile Time (Opinion Box), Statista, CETIC.
Meeting with Investors | April 2020 TIM Participações - Investor Relations
Traditional services have been losing relevance in this new framework and internet has been gaining prominence
Fixed Voice Penetration
(% of households)
33.5 MM
lines
69% 69% 67% 64% 61% 58% 53%
46%
2012 2013 2014 2015 2016 2017 2018 2019
Pay TV Penetration
(% of households)
15.8 MM | ||||||||
accesses | ||||||||
25% | 28% | 29% | 28% | 27% | 26% | 25% | 22% | |
21% | ||||||||
2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
Mobile Internet Users2 | Fixed Broadband Penetration |
(% of ≥ 10 years population) | (% of households) |
137 MM | 32.6 MM | |||||||||
people | lines | |||||||||
66% | 71% | 74% | ||||||||
56% | ||||||||||
47% | 34% | 36% | 37% | 42% | 44% | 45% | ||||
31% | 27% | 31% | ||||||||
2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
(1) Number of households in 2019 estimated by TIM; (2) CETIC: annually updated in November.
Fixed Broadband Connections Speed
12% | < 2 Mbps | ||||||
41% | 2 - 12 | ||||||
25% | |||||||
12 - 34 | |||||||
23% | > 34 | ||||||
Meeting with Investors | April 2020 | |||||||
TIM Participações - Investor Relations | |||||||
Change in market structure combined with new consumption habits resulted in a transformation in the base profile
Mobile Penetration | 227 MM | ||||||
SIM Cards | |||||||
131% | 135% | 138% | 126% | 118% | 115% | ||
110% | 97% | ||||||
199 | 201 | 203 | 204 | 206 | 208 | 209 | 210 |
2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
Population (MM) | Penetration |
Penetration is decreasing due to the reduction of total
Unique User Penetration | 146 MM | ||||||
people | |||||||
79% | 80% | 79% | 80% | 80% | 79% | ||
76% | |||||||
74% | |||||||
124 | 130 | 137 | 139 | 138 | 142 | 144 | 146 |
2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
Unique user >10 years (MM) | Penetration |
Mobile Base per Segment
(MM)
211 | 212 | 213 | 185 |
165 | 149 | 130 | |
117 | |||
SIM cards: weakening of the "community effect" due to
the decrease in ITX tariff (off-net reduction) and
dissemination of communication apps.
MTR Evolution
(R$ / min)
0,36 | 0,32 | ||||||
0,24 | |||||||
0,16 | |||||||
0,10 | |||||||
0,06 | 0,03 | 0,02 | |||||
2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
The maintenance of a high interconnection tariff pushed the "community effect (on-net)" through the possession of multiple SIM cards.
Mobile market has been experiencing organic growth
in total unique users.
SIM Cards per Unique User
(Unit)
2,00 1,96 1,94
1,73 | 1,64 | 1,54 | ||
1,44 | ||||
1,37 | ||||
2012 2013 2014 2015 2016 2017 2018 2019
SIM consolidation despite the growing number of
mobile users.
44 51 58 62 67
73 | 80 | 85 | |||||
2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
Prepaid | Human Postpaid |
Postpaid base already represents ~50% of unique users, besides that >60 MM Brazilians are in the credit bureau blacklist.
Meeting with Investors | April 2020 | |
(1) Annually updated. | TIM Participações - Investor Relations |
Market revenue dynamic indicates mobile growth, and highlights TIM's evolution
Market | Total Services Net Revenues | ||||
(R$ MM) | -1.0% | |||
CAGR | ||||
119,3 | 118,5 | 116,9 | 113,9 | 113,1 |
49% | 48% | 46% | 47% | 45% |
51% | 52% | 54% | 53% | 55% |
2016 | 2017 | 2018 | 2018 | 2019 |
Mobile | Fixed |
Total Services Net Revenues Share | |||||
(%) | |||||
TIM | 12,3 | 13,1 | 13,9 | 14,2 | 14,7 |
Vivo | 34,6 | 35,6 | 35,7 | 36,5 | 36,8 |
Claro | 29,3 | 29,4 | 30,0 | 30,3 | 31,1 |
Nextel | |||||
2,8 | 2,3 | 1,9 | |||
Oi | 20,9 | 19,7 | 18,5 | 19,0 | 17,5 |
2016 | 2017 | 2018 | 2018 | 2019 |
Market | Mobile Service Net Revenues | ||||
(R$ MM) | +1.7% | |||
CAGR | ||||
61,8 | 62,8 | 61,7 | ||
59,9 | ||||
60,7 | ||||
2016 | 2017 | 2018 | 2018 | 2019 |
Mobile Service Net Revenue Share | |||||
(%) | |||||
TIM | 23,0 | 23,8 | 24,4 | 25,6 | 25,4 |
Vivo | 40,1 | 41,1 | 40,9 | 42,5 | 42,1 |
Claro | 17,6 | 17,8 | 19,2 | 19,3 | 20,7 |
Nextel | 5,5 | 4,4 | |||
3,5 | 11,9 | ||||
Oi | 13,8 | 13,0 | 12,0 | 12,6 | |
2016 | 2017 | 2018 | 2018 | 2019 |
- 2016-2018comparison on pro-forma basis; (2) 2019 vs 2018 disconsidering Nextel figures and excluding impacts from IFRS 16 adoption.
Meeting with Investors | April 2020 TIM Participações - Investor Relations
TIM is well positioned to attend the new demand, with no legacy to defend
Fixed Line Base | Market | |||
-6.9% | +15.7% | |||
(MM) | ||||
CAGR | CAGR | |||
41,2 | 39,6 | |||
37,5 | ||||
Fixed-mobile | 33,5 | 32,6 | ||
substitution | ||||
2016 | 2017 | 2018 | 2019 | 1Q20 |
Pay-TV Base | Market | |||
-6.0% | ||||
(MM) | ||||
CAGR | ||||
18,8 | 18,1 | |||
17,5 | ||||
Traditional-OTT | 15,8 | 15,4 | ||
ssubstitution | ||||
2016 | 2017 | 2018 | 2019 | 1Q20 |
Human Postpaid Base (ex-M2M) | Market | |||
+8.3% | +9.4% | |||
(MM) | ||||
CAGR | CAGR | |||
85,2 | 86,4 | |||
79,8 | ||||
72,7 | ||||
66,6 | ||||
2016 | 2017 | 2018 | 2019 | 1Q20 |
Broadband Base | Market | |||
+6.5% | +22.0% | |||
(MM) | ||||
CAGR | CAGR | |||
33,0 | 33,0 | |||
31,2 | ||||
28,9 | ||||
26,9 | ||||
2016 | 2017 | 2018 | 2019 | 1Q20 |
Meeting with Investors | April 2020 | |
Source: Anatel. | TIM Participações - Investor Relations |
Customer base transformation process, driven by pre-postpaid migration, supported an evolution at the top of the pyramid
TIM Base Mix | |||||
2% | 3% | 4% | 7% | 7% | |
21% | 27% | ||||
32% | +1.1 p.p. | ||||
33% | 34% | ||||
YoY | |||||
77% | 70% | -1.6 p.p | |||
64% | 61% | ||||
59% | |||||
YoY | |||||
2016 | 2017 | 2018 | 2019 | 1Q20 | |
Prepaid | Human Postpaid | M2M |
Mobile Service Revenue Mix | |||||
6% | 6% | 7% | 8% | 7% | |
45% | 52% | ||||
59% | |||||
61% | 63% | +1.3 p.p. | |||
YoY | |||||
49% | 42% | ||||
34% | -1.0 p.p. | ||||
31% | 30% | ||||
YoY | |||||
2016 | 2017 | 2018 | 2019 | 1Q20 | |
Prepaid | Postpaid | Other |
(1) Revenues figures considering IFRS 15 impacts from 2018.
Meeting with Investors | April 2020 TIM Participações - Investor Relations
Complete Portfolio to Address Customer Desires
POSTPAID | TIM Black | TIM Black Família | ||||||||
TIM Controle | Newspaper + Magazines | |||||||||
TIM Pré Top | Newspaper + Magazines | |||||||||
+ Music | ||||||||||
Newspaper + Magazines + | + Music + 1x GB to watch | + Netflix monthly fee | ||||||||
Netflix, Youtube, E+, Looke, | ||||||||||
Entertainment | Newspaper + Magazines | Protection | included | |||||||
Mobile | and Cartoon Network | |||||||||
Portfolio | Social | WhatsApp + Facebook + Messenger + | Facebook + Instagram | Instagram + WhatsApp + | ||||||
(B2C) | all included | |||||||||
+ Twitter (+ R$ 15) | Facebook +Twitter | |||||||||
Communication | ≥ 10GB + unlimited calls | ≥ 60 GB + unlimited calls | ||||||||
≥ 2GB + unlimited calls | ≥ 4GB + unlimited calls | + shared benefits | ||||||||
Services | + GB bonus for portability | |||||||||
+ international roaming | ||||||||||
≥R$ 20.00/two weeks | ≥R$ 49.99/mo | ≥R$ 119.99/mo | ≥R$ 269.99/mo | |||||||
FIBER | Ultra Fibra | |||||||
Internet (WTTx) | Ultra | |||||||
speed from | ||||||||
speed from | ||||||||
UBB | allowance of | 100 mbps to 2 gbps | ||||||
Plans | 40 mbps to 60 mbps | |||||||
Portfolio | 30 GB to 80 GB | |||||||
Value-Added | Protection + Modem | + VoD Partnerships | + Content (VoD, TIM Banca, Ensina) + | |||||
Services | Power Wi-Fi | |||||||
Meeting with Investors | April 2020 TIM Participações - Investor Relations
1Q20 RESULTS
Operating Costs normalized by adjustments to the sale-leaseback contract of towers (+R$ 2.6 million in 1Q20 and +R$ 1.5 million in 1Q19).
Meeting with Investors | April 2020 TIM Participações - Investor Relations
1Q20 Highlights: Solid Execution According to our Plan Until the Impact
of COVID-19
Net Service Revenues | |||
(R$ bln) | Adding back | ||
+1.7% | 2 weeks of COVID-19 | ||
impact in prepaid | |||
would put revenues | |||
on track with | |||
4,0 | 4,1 | 4,1 | original plan. |
~3.0% |
Google Agreement for big data virtualization
New ~500k
1Q19 | 1Q20 | COVID-19 impact | 1Q20e |
partnership
TIM Black Família customer base
Normalized EBITDA and Margin1
(R$ bln)
42,6% | 45,7% | |
+4.5% ex- | ||
IFRS 16.
+8.0%
1,81,9
Cost discipline to ensure deliver
Reinforcing TIM's commitment, top line impacts will be offset by solid execution of costs control and the efficiency delivered on multiple fronts
+29% YoY
TIM Live
Revenues
100%
4G Coverage in PR and SC
1Q191Q20
(1) Normalized for the effects detailed in slide 2. | TIM Participações - Investor Relations | 17 |
Results Presentation | ||
Ongoing Transition From Volume to Value, Although Short-Term Headwinds Bringing Additional Challenges
Mobile ARPU | |
Total | |
(R$ / mo) | |
+4.8% | |
22,8 | 23,9 |
1Q19 | 1Q20 |
Human Postpaid1 | |
(R$ / mo) | |
+4.3% | |
42,6 | 44,5 |
1Q19 | 1Q20 |
Prepaid | |
(R$ / mo) | |
+4.6% | 12,1 |
11,6 | |
1Q19 | 1Q20 |
Better value proposition and improved | Additional incentives for relationship |
commitment adding more resilience | maintenance and to encourage digital shift |
TIM Black Família Base | Actions in accordance |
('000) | |
with customers' historic | |
~500k | commitment avoiding |
churn and future costs of | |
acquisition. |
2Q19 3Q19 4Q19 1Q20
Prepaid Base Mix | Anatel's Satisfaction | |||||
Survey (0-10) | ||||||
-16 p.p. | ||||||
YoY | 7,31 | |||||
TOP | 7,06 | 7,12 | 7,15 | |||
12% | Smart | |||||
72% | Others | |||||
Offer and | Operation | |||||
Acquisition | ||||||
2018 | 2019 | |||||
(1) Ex-M2M. | TIM Participações - Investor Relations | 18 |
Results Presentation | ||
TIM Live Consistency: Another Quarter of Strong Delivery
KPIs evolution on track
ARPU | Customer base | TIM Live Net Revenues | ||||||||||||
(R$/mo) | ('000) | +20% | (R$ mln) | |||||||||||
+6.1% | 84,5 | |||||||||||||
584 | +29% | |||||||||||||
79,6 | ||||||||||||||
486 | ||||||||||||||
11% | ||||||||||||||
32% | ||||||||||||||
≥100 mbps | 11% | |||||||||||||
89% | 68% | |||||||||||||
<100 mbps | 89% | 68% | 112 | 144 | ||||||||||
1Q19 | 1Q20 | 1Q19 | 1Q20 | 1Q19 | 1Q20 | |||||||||
Network rollout increasing potential market | New cluster launched: | New portfolio: 200 mbps with twice the | ||||||||||
TIM Live Coverage1 | Accumulated New OLTs | Betim and Contagem | speed and entertainment content | |||||||||
(# cities) | (# of units) | (MG) | ||||||||||
+93% | 27 | |||||||||||
14 | 25 | |||||||||||
FTTH | 12 | |||||||||||
FTTC | 5 | 5 | ||||||||||
1Q19 | Apr-20 | Jan-19Apr-19Jul-19Oct-19Jan-20 | ||||||||||
(1) Excludes overlapping areas. | TIM Participações - Investor Relations | 19 | ||||||||||
Results Presentation | ||||||||||||
Leveraging on our Robust Infrastructure To Deliver High Quality Experience
Urban Population Coverage | 100% of 4G coverage in PR, | Network designed for all types of use, prioritizing | ||||||||||||
SC and ES, join SP and RJ. | quality and connection stability | |||||||||||||
(%) | ||||||||||||||
4G | 3.5k cities | 4.5G | 1.2k cities | 700 MHz | 2.4k cities | Emerging | apps are enjoying a | |||||||
(+6% YoY) | (+47% YoY) | (+66% YoY) | ||||||||||||
consistent 5-year network evolution. | ||||||||||||||
94% | 68% | 82% | ||||||||||||
Refarming 2.5k cities | VoLTE | NB-IoT | Lowest | |||||||||||
3.5k cities | 3.3k cities | latency | ||||||||||||
(+2% YoY) | (+28% YoY) | (all in ≥3Q19) | 57ms | |||||||||||
77% | 93% | 92% | Up to 4x speed | |||||||||||
required for | ||||||||||||||
USER | video streaming | |||||||||||||
usage | ||||||||||||||
Better voice quality and network | EXPERIENCE | |||||||||||||
12.4 mbps download + | ||||||||||||||
efficiency during increased demand. | CENTRIC1 | 5.1 mbps upload | ||||||||||||
Backbone + Backhaul | Households Covered | |||||||||||||
('000 Km) | (mln) | |||||||||||||
92 | +11.2% | 102 | Greatest 4G | |||||||||||
+95% | 3.5 | 3.6 | availability | |||||||||||
2.5 | 86% of time on | |||||||||||||
1.3 | 4G | |||||||||||||
1Q19 | 1Q20 | FTTH | FTTC | |||||||||||
(1) According to Tecnoblog News from 16/Jan. | TIM Participações - Investor Relations | 20 | ||||||||||||
Results Presentation | ||||||||||||||
Seeking the Future With Beyond Core and Smart Capex Initiatives
Mobile Ad Revenues
(R$ mln)
+73%
1Q191Q20
Financial Services
C6 Partnership
- First telco-bank partnership to develop joint solutions
- More for more: increase attractiveness on client acquisition within a differentiated onboarding experience
- Offer to be launched later this year
- Hybrid partnership model combining fees and equity
Mobile Advertising
TIM Ads trial campaign for
prepaid customers: data package reward for video view.
Smart Capex
Google Cloud Agreement
01 | Big data virtualization bringing disruptive |
efficiency (Analytics, Machine Learning) and | |
opening future commercial opportunities. |
Network Sharing Agreement | |
02 | with Vivo |
Anatel's and CADE's approval in April. 2G | |
network in 50 cities will be shared as initial | |
effort. | |
TIM Live Project
03 Starting first steps to approach and select partners at the market: NDAs being signed.
TIM Participações - Investor Relations | 21 |
Results Presentation | |
Digital Transformation is Helping to Deliver Efficiencies Today And To Open New Opportunities for Tomorrow
Digital channels are boosting savings:
Normalized Opex Breakdown
(R$ mln) | (YoY) | (YoY) | (YoY) |
Personnel;
+4.7% | 261 | Selling & Mkt; |
YoY | ||
802 -10.2% YoY | ||
Process; 251 | R$ 2,289 | |
+7.1% YoY |
-4.9%
YoY
Bad debt; 189
+9.3% YoY
Traffic; 627
-4.7% YoY | COGS; 159 |
-20.1% YoY |
- Volume driven costs positively impacted by social
distance measures
- Limited exposure to FX volatility: low single digit of our
Opex (ex-COGS)
+19% | -25% |
Meu TIM app | # Human |
unique users | interactions |
(YoY) | (YoY) |
+12% | +12% |
E-Bills | E-Paymentamount |
(Penetration of 66%) | (Penetration of 23%) |
Collection Curve (% of total billed)
+1.6 p.p. | |||
+1.9 p.p. | |||
Jan-19 | May-19 | Sep-19 | Jan-20 |
61-90 days | 91-120 days |
+32% | 20% |
Pure Postpaid | Penetration of |
E-Sales | Postpaid E-Sales |
(YoY) | |
39% | +33% |
Penetration of E- | Recharges |
Recharges | via app |
- Improved collection curve reflect a positive trend in bad debt, which picked up in 3Q19
- Opex ex-bad debt would have decreased 6.0% YoY
(1) OPEX normalized for the effects detailed in slide 2. | TIM Participações - Investor Relations | 22 |
Results Presentation | ||
Resilient Revenue With Strong EBITDA and Consistent Margin Evolution
Net Services Revenues Breakdown | EBITDA Margin (Pro-forma1) | ||||||||||||||||||||||
(R$ mln) | (%) | ||||||||||||||||||||||
33 | -11 | 4.091 | +7.5 p.p. | ||||||||||||||||||||
4.024 | 47 | -2 | 35,5% | 36,5% | 37,6% | ||||||||||||||||||
+1.7% | |||||||||||||||||||||||
32,0% | |||||||||||||||||||||||
30,2% | |||||||||||||||||||||||
1Q19 | Mobile Client | ITX + Other TIM Live | Other Fixed | 1Q20 | |||||||||||||||||||
Generated | Mobile | ||||||||||||||||||||||
1Q16 | 1Q17 | 1Q18 | 1Q19 | 1Q20 | |||||||||||||||||||
Postpaid: +3.7% YoY | Prepaid: -4.5% YoY | ||||||||||||||||||||||
Normalized EBITDA & Margin2
(R$ mln)
42,6% | 45,7% | |
+4.5% ex- | ||
1.926 | ||
IFRS 16. | ||
+8.0% | ||
1.784 | ||
1Q19 | 1Q20 |
Normalized EBITDA2 - CAPEX
(R$ mln)
% Net | 27% | 24% |
Revenues
1.134 -9.9%
1.022
1Q191Q20
Reduction explained by lower Capex level in 1Q19 due to seasonal fluctuation between quarters. 1Q20 Capex in
accordance with our plan.
+39.1% 904
650
1Q191Q20
17% of
2019 Capex
(1) Pro-forma excludes the effects of the adoption of IFRS 9, 15 and 16; (2) EBITDA normalized for the effects detailed in slide 2. | TIM Participações - Investor Relations | 23 |
Results Presentation | ||
COVID-19 Containment Measures Were Implemented on a Regional Basis With a Nationwide Economic Impact
Brazil comparison with other countries
Economic impacts
GDP 2020 weekly forecasts
(YoY)
Coronavirus cases evolution1
(Day 1 set when 50 cases were reached)
3.000.000
300.000
30.000
Social restriction started on
March 17th
Major cities as São Paulo and
Rio de Janeiro started in the
earlier days with others following.
2,0%
Optimistic | |||||
Scenario: -1.1% | |||||
Base Scenario: | |||||
-3,8% | -3.8% | ||||
Pessimistic | |||||
Sep-19 | Nov-19 | Jan-20 | Mar-20 | Scenario: -7.0% |
Brazil | ||||||||
3.000 | China | |||||||
France | ||||||||
300 | Germany | |||||||
Italy | ||||||||
South Korea | ||||||||
30 | Spain | |||||||
1 | 11 | 21 | 31 | 41 | 51 | 61 | 71 | USA |
The estimated percentage of reported cases in
Brazil is between 9-14%2.
Revised growth projections due to outbreak, with
a wide spread between estimates.
Lowest | -28% |
consumer | drop in retail |
sales4 | |
confidence ever3 |
(1) ECDC: data as reported by national authorities (May 3rd); (2) BCG Live Session #3 (April 3rd); (3) FGV's Consumer Confidence Index showed the lowest | TIM Participações - Investor Relations | 24 |
level of the 15-year historical series in April: 58,2 on a scale of 0-200(-22 p.p. MoM); (4) ICVA ("Índice Cielo do Varejo Ampliado") from March 1st to April 11th. | Results Presentation | |
Main Measures to Quickly Respond and Care for our People, Clients and Society
EMPLOYEES | CUSTOMERS | SOCIETY | |||||||||||
Social isolation, people management, and | Service guarantee and maintenance of | ||||||||||||
Supporting the fight against COVID-19 | |||||||||||||
customer relationship, prioritizing digital | |||||||||||||
maintenance of work conditions | |||||||||||||
99.9% of employees on remote work since Mar 20
1
2
Network Adjustments
Strengthening coverage in residential, hospitals and health institutions areas
Digital First
Big Data and Analytics
- First mover with city of Rio de Janeiro partnership
- First joint effort between the 4 operators as data providers for the market
100% of stores closed since Mar 31
3
1st to convert internal call center to remote work
Reinforcing e-Sales & e-Caring channels: Meu TIM, Cognitive IVR and digital service channels such as SMS, Chat TIM, WhatsApp, and digital recharges
Maintaining the Relationship
- More service in exchange for customer engagement continuity
- Temporary adjustments to collection rules and payment terms
Sectorial agreement with OTTs to guarantee service availability
Service prioritization to support the fight - the "Caixa Econômica Federal" case
- 48h for a service implementation (111 code) vs
30 days usually - Quick response to apply zero rating to "Auxílio Emergencial" app (government aid claims)
TIM Participações - Investor Relations | 25 |
Results Presentation | |
Mixed Impacts Coming From the Pandemic. So Far, Negative Effects Were Mostly Concentrated in Prepaid, While Postpaid and Live Are Controlled
PREPAID | Mobile Services Revenue Mix | ||||||||
Revenue mix | Others | ||||||||
shift in the past | |||||||||
49% | Postpaid | ||||||||
63% | |||||||||
years helped | |||||||||
reduce the size | 45% | Prepaid | 30% | ||||||
of the impact. | |||||||||
1Q17 | 3Q17 | 1Q18 | 3Q18 | 1Q19 | 3Q19 | 1Q20 | |||
Recharges are now at mid-teen drop, after
closing March at -20%. This was already a deceleration versus -25% in the early days of the quarantine.
Weekly
Prepaid
Recharges
(R$ mln; EOP)
7-Mar21-Mar4-Apr18-Apr
Digital recharge growing +35% YoY
- Digital experience today building behavior of tomorrow
- Lower commissioning cost: digital channels 2-3 times less costly than traditional ones
POSTPAID AND LIVE
… and also fewer gross | Normal commercial | Bad debt remains a risk, but |
adds | activity at Fixed segment | for 1Q no major impact |
Lower mobile | Human Postpaid Churn | B2C Postpaid Gross Adds | TIM Live Gross Adds | Bad debt | ||||||||
commercial | ||||||||||||
(voluntary; ex-M2M) | (R$ mln) | |||||||||||
activity | 201 | |||||||||||
188 | 187 | 189 | ||||||||||
means lower | ||||||||||||
173 | ||||||||||||
voluntary | ||||||||||||
churn… | ||||||||||||
1Q19 2Q19 3Q19 4Q19 1Q20 | 1Q19 2Q19 3Q19 4Q19 1Q20 | Mar-19Jul-19Nov-19Mar-20 | 1Q19 2Q19 3Q19 4Q19 1Q20 | |||||||||
OTHER EFFECTS
Digital | Meu TIM app | Volume driven | B2B services for | Network |
caring going | costs are | connectivity and | ||
unique users | resilience | |||
up with lower | positively | authentication are | ||
+19% | (traffic)1 | |||
seeing increased | ||||
costs | impacted | |||
YoY | demand | |||
(1) March vs January and February monthly average.
Mobile Fixed Mobile
Data Data Voice
+6% +25% +15%
MoM MoM MoM
TIM Participações - Investor Relations | 26 |
Results Presentation | |
Solid Balance Sheet With Robust Liquidity Position
Strong Liquidity with Additional Credit Lines
February 2020
- (-)R$ 621 mln (BNDES financing amortization) with a cost of debt of approx. 7% p.y.
- (+) R$ 800 mln issued (total amount of two loans from different banks with a cost of debt of approx. 4% p.y. each)
April 2020
- (+) In face of the COVID-19 scenario, R$ 574 mln was contracted due in April 2021 (cost of debt of approx. 6% p.y.)
Credit lines available ("Stand-by facilities")
- (+) R$ 1.5 bln and R$ 752 mln from BNDES and BNB, respectively, with no commitment fee
FISTEL + Condecine payments postponement
- Brazilian Entities authorized the postponement of the payment of those regulatory taxes providing an important relieve in the short term: R$ 789 mln to be paid starting from Aug/2020
Cash Position & Amortization Schedule2
(R$ mln)
Bank Loans Amortization Schedule
2.252 | Cost of Debt | ||||
Stand-by | 4.23% p.y. | ||||
facilities | |||||
Cash raised | 574 | ||||
(financing)3 | |||||
April/20 CF + | 373 | 1.104 | |||
Others3 | |||||
Cash on | 1.630 | 574 | |||
59 | 122 | ||||
hand 1Q20 | |||||
858 | |||||
Liquidity | 2020 | 2021 | 2022 | 2023 foward |
Gross Debt 1Q202 | Net Financial Position1 | |
(R$ mln) | (R$ mln) | |
Financing | ||
2.143 | 8.526 | |
7.477 |
8.013
Leases
1Q19 | 1Q20 |
(1) Including net lease additions of R$ 1,340 mln related to the adoption of IFRS 16; (2) Post-hedge position; (3) On pro-forma basis, as of April 2020. | TIM Participações - Investor Relations | 27 |
Results Presentation | ||
Adjusting our Short-Term Approach and Ready to Face a Challenging Scenario Ahead
FROM VOLUME TO VALUE
- Offer and customer management consistency
- Exploring opportunities of the new context
DISRUPTIVE EFFICIENCY AND COSTS DISCIPLINE
- Bad debt started to show improvements
- Digitalization accelerated by social transformation
- New smart capex initiatives
- Make or buy initiatives to be announced next quarter
- Strict Capex control in order to maintain profitability guidance
NEW SOURCES OF REVENUES
- New partnership with C6
- Possibility of Google Cloud usage for corporate portfolio expansion
INORGANIC OPPORTUNITIES
- Advancing with Oi mobile assets Due Diligence process
- TIM Live further expansion: ongoing process to find a strategic partner
Guidance: 2020-2022 Plan
- Plan assumptions (e.g. GDP growth of 2% in 2020) no longer represent current economy situation + The duration of the pandemic is not known => More clarity on impacts from COVID 19 are expected by the end of 2Q;
- Commitment to Free Cash Flow:
EBITDA - Capex on Revenues guidance confirmed: >20% in 2020 (Mid-singledigit YoY for EBITDA-Capex)
TIM Participações - Investor Relations | 28 |
Results Presentation | |
STRATEGIC PLAN 2020-22
Meeting with Investors | April 2020 TIM Participações - Investor Relations
Strategic Pillars
It is Time to Move Forward: Evolution Plan to Further Develop Initiatives Already in Place. Transformation Plan to Reshape Company's Skills Over the Next 3 Years
EVOLVE | TRANSFORM |
- Move from volume to value to sustain mobile business growth
- Grow on broadband with financial discipline
- New operating model to address current and future challenges
- Additional growth through adjacent markets
1. INFRASTRUCTURE
2. DISRUPTIVE EFFICIENCY
3. MOBILE (PREPAID, POSTPAID AND B2B)
4.UBB (B2C, B2B)
5. NEW REVENUE SOURCES
6. ESG
Meeting with Investors | April 2020 | 30 |
TIM Participações - Investor Relations | |
Infrastructure Summary
Act Today to Be Ready for the Future
IT to the next level in 18-24 months
Big data | NBA | Cognitive |
evolution | roll-out | systems |
1
Benefits:
Customers' | Time-to- |
market | |
Integrated view | |
Application and | Catalogue |
architecture review | creation |
Network 5 key pillars
Data | 5G | IoT |
Growth | ||
ready | ||
New | Fixed | |
initiatives | Broadband |
New capabilities
Fixed
Wireless
Access
New IoT businesses opportunities
Automation of processes and efficiency increase
Decommissioning Savings
Densification and innovative solutions
Convergent architecture
Evolution | Transformation | Meeting with Investors | April 2020 | 31 |
TIM Participações - Investor Relations | |||
Network Efficiency
Mobile Shift to 4G Network Still in Progress as a Way to Improve Quality and Reduce Cost to Serve
1
4G COVERAGE (# cities)
>4k Total | TRAFFIC MIX EVOLUTION | ||||||||
3.272 | 3.520 | 700 / 850 | |||||||
MHz | |||||||||
2.455 | Better indoor | ||||||||
experience. | |||||||||
1.426 | |||||||||
2018 | 2019 | 2020 | 2021 | 2022 | |||||
4G | |||||||||
76% | 75% | ||||||||
ACCESS NETWORK ('000 SITES)
~22 | ||||||
17 | 19 | 2G / 3G | ||||
92%
2018 | 2019 | 2020 | 2021 | 2022 |
2018 | 2019 | 2020 | 2021 | 2022 |
Meeting with Investors | April 2020
TIM Participações - Investor Relations
32
Network Support and Acceleration | 1 |
Fiber Expansion to Support Business Continuity and Ultrabroadband Acceleration
FTTH (# cities) | HOME PASSED (mln) | |||||||||||||||||
~70 | ~5.5 | |||||||||||||||||
UBB | ||||||||||||||||||
23 | 2,3 | |||||||||||||||||
11 | 1,1 | |||||||||||||||||
2018 | 2019 | 2020 | 2021 | 2022 | 2018 | 2019 | 2020 | 2021 | 2022 | |||||||||
FTTCity (# cities) | BACKBONE + BACKHAUL ('000 km) |
Transport
Network
~1.5 | >130 |
101
90
821
601
2018 | 2019 | 2020 | 2021 | 2022 | 2018 | 2019 | 2020 | 2021 | 2022 | ||
Meeting with Investors | April 2020 | 33 | ||||||||||
TIM Participações - Investor Relations | |||||||||||
Holistic Efficiency Approach
Disruptive Efficiency to Address Industry Challenges
2
Process efficiency | Digital & Automation | ||||||||
Gaps as opportunities: | Brazilians are already | ||||||||
Close gaps and surpass the | digital: unique environment | ||||||||
benchmark. | opportunity. |
Make vs buy
Productivity: focus on the core.
Smart CAPEX
Being competitive: increase return on investment by focusing it where we can apply differentiation.
- Bad Debt (e.g. new credit models, collections systems improvement)
- Legal processes (e.g.
predictive models to reduce JEC expenses - special court for small cases)
- Self-Provisioning(e.g.,
Naked SIM)
- Self-caring:Cognitive
IVR and WhatsApp services (e.g., second invoice, balance check and etc.)
- Self-healing(e.g.,
technical resolution for broadband services)
- Administrative
processes (e.g. ground leasing)
- Pay-rollmanagement IT Planning & Development
- Industrial
agreements (e.g. VIVO
MoU)
- Innovative
Technologies (Massive
MIMO)
-
TIM Live's
Transformation with partnership - Cloudification (storage
as commodity)
Meeting with Investors | April 2020 | 34 |
TIM Participações - Investor Relations | |
Mobile: From Volume to Value | 3 |
Innovation Positioning with Unique Assets to Leverage
Convergence
Premium price
P2
P3
2022
2019
P4 2014
Low price
- Ensuring execution and
customer satisfaction to
succeed.
Innovation
4G: Widest Coverage and Availability.
Regional Leadership: Solid presence in NorthEast and Paraná/Santa Catarina.
Financial Discipline: Positive performance over the last years, leanest Opex structure, capability of cash flow generation.
Meeting with Investors | April 2020 | 35 |
TIM Participações - Investor Relations | |
Mobile: From Volume to Value | 3 |
Move from volume to value to sustain mobile business growth, leveraging CEX
Residual growth: churn management becomes more important
MOBILE UNIQUE USERS (mln) | POSTPAID CHURN RATE (% p.m.) | |||||||||||||
3,5% | 3,8% | |||||||||||||
139 | 146 | Reduce | ||||||||||||
104 | churn | |||||||||||||
-0.6 p.p. until 2022 | ||||||||||||||
→ Eliminate pain points: discount |
management |
→ Lock in high propensity customers |
→ Improve service level |
Playing by opportunity, meeting clients true needs
CUSTOMER BASE MIX (mln)
167 | 185 | Attack all | |
117 | Prepaid | segments | |
30 | 56 | ||
82 | Postpaid | ||
TIM MOBILE CUSTOMER BASE BY SEGMENT (mln)
36 33
20 | 21 | Postpaid >45% in 2022 |
→ Prepaid: acceleration w/ regional + |
smart promo, channel management |
→ Postpaid: brand positioning, and |
outstanding customer service level |
→ SMB: consumerization |
Increasing "share of wallet"
SIM PER UNIQUE USERS1 (mln)
1,9 | 1,7 | 1,4 |
2010 | 2015 | 2020 | 2022 |
ARPU increase
TIM MOBILE ARPU (R$/month)
23,7
22,5
CAGR 19-22:
low to mid single digit
2018 | 2020 | 2022 |
- Unlock upselling opportunities
- Price with "more for more" approach
- Boost big data, data analytics, NBA capabilities
Meeting with Investors | April 2020 | 36 |
TIM Participações - Investor Relations | |
Broadband: Acceleration | 4 |
Broadband Revenues will be the Lever for Fixed Business Growth
FROM EVOLUTION… | +15 | +42% | |||||||
FIXED NET REVENUES (R$) | FTTx CUSTOMER BASE (mln) | ||||||||
cities | households | ||||||||
covered | |||||||||
TIM Live >30% | |||||||||
CAGR 19-22 | |||||||||
FTTH | |||||||||
TIM Live | |||||||||
Others | FTTC | ||||||||
2018 | 2019 | 2020 | 2021 | 2022 | 2018 | 2019 | 2020 | 2021 | 2022 |
Footprint expansion and operational improvement
Cherry picking deployment, Reduce early churn, Improve care and self-care, Reliable bill to cash processes
Differentiation: UBB + Content
OTT content friendly approach, Wi-Fi experience
Meeting with Investors | April 2020 | 37 |
TIM Participações - Investor Relations | |
Broadband: Acceleration
Smart Capex to Ensure Acceleration
BRAZIL'S BROADBAND MARKET
BROADBAND AND FIBER PENETRATION (on HH)
FIBER PENETRATION TOP 5 | |||||
São Paulo | 24% | ||||
Santa Catarina | 23% | ||||
Minas Gerais | 23% | ||||
Broadband | Paraná | 21% | |||
Penetration | Ceará | 19% | |||
0% - 20% | |||||
Brasil | 16% | ||||
20% - 40% | |||||
40% - 60% | |||||
> 60% | |||||
CAGR | |||||
29 | 31 | 33 | +7% | ||
27 | |||||
+79% | |||||
3 | 6 | 10 | |||
Fiber | 2 | ||||
CUSTOMER BASE BY | |||||
TECHONOLOGY (mln) Others | 25 | 26 | 26 | 23 | -3% |
2016 | 2017 | 2018 | 2019 |
4
…TO TRANSFORMATION
Strategic Partnership
Expanding TIM Live's services with the right balance between Sales and Capex, unlocking additional value of this asset
Create in partnership a neutral fiber infrastructure asset in Brazil
Market sound process with an advisor to find the right partner out of the telecom space
(1) Anatel (dec-19), internal analysis.
Meeting with Investors | April 2020 | 38 |
TIM Participações - Investor Relations | |
Beyond Core: Leveraging our Assets with Strategic Partnerships | 5 | ||||||||
Exploring B2B New Services | |||||||||
IoT IN LATIN AMERICA | DEVELOP AT SCALE AND MONETIZE IOT | ||||||||
VERTICALS | |||||||||
IoT MARKET SIZE1
Connections | 6,0 | Agriculture | 4G TIM no Campo | Connected Car | |||||||
To | ~750 | agribusiness solutions based | in-car connectivity and | ||||||||
5,0 | |||||||||||
Sole operator in the | First mover: agreement with | ||||||||||
initiative developing | car manufacturer to provide | ||||||||||
(2022) | on IoT. | automation. | |||||||||
4,0 | |||||||||||
3,0 | Transport | From | >3 | k | |||||||
360 | ~5 | ||||||||||
2,0 | To | (2018) | mln | cities with NB-IoT | |||||||
~400 | |||||||||||
(2022) | acres with 4G | ||||||||||
major partners in agro | |||||||||||
1,0 | From | 184 | |||||||||
(2018) | st | ||||||||||
- | place in 4G coverage | ||||||||||
1 in Brazil | |||||||||||
0% | 10% | 20% | 30% | 40% | 50% | 60% | |||||
Share of IoT Revenues | |||||||||||
= USD Revenues (mln) |
(1) Global Data Market Opportunity Forecasts to 2023: Global IoT.
Meeting with Investors | April 2020 | 39 |
TIM Participações - Investor Relations | |
Beyond Core: Leveraging our Assets with Strategic Partnerships
The Mobile Advertising Opportunity
5
VALUE
POOL
5%
50% | DMP |
1
2
3
4
5
Brands
Ad agency
Demand side
Platform
Connection mechanisms
Supply side
Platform
R$ 24.2 bln
digital ad market in 20221
R$ 19 bln
delivered through mobile
>2x upside
for TIM
in 2022
45% | 6 Publisher |
TIM Ads addressable environment
(1) Latin America Digital Ad Spending 2019 eMarketer, internal analysis.
Meeting with Investors | April 2020 | 40 |
TIM Participações - Investor Relations | |
Beyond Core: Leveraging our Assets with Strategic Partnerships
TIM's Positioning as Publisher and Ad-Tech Player
As is | To be |
5
TIM AS PUBLISHER
Exploring owned touch-points (digital and physical) to advertise 3rd parties.
TIM AS AD TECH PLAYER
Leveraging on customer data and ownership to enhance advertisers knowledge.
MOBILE ADS REVENUE (R$ mln)
Opportunistic approach
- SMS to any 3rd parties
- ~R$ 190 mln already generated in mobile ads products
Close the gap
- Exploring Captive Portal interactions to display 3rd parties ads
- New trial contracts signed in the past 2 months
- Fine-tuningand new products development
Becoming a front runner
- Data monetization: enhancing 3rd parties campaigns assertiveness with customer knowledge
- Operators cooperation
- Aligned with LGPD for scoring and new economy
2019 ~190
+35%
2020
+70%
2022
Meeting with Investors | April 2020 | 41 |
TIM Participações - Investor Relations | |
Beyond Core: Leveraging our Assets with Strategic Partnerships | 5 |
FinTech's Playing Field is Moving Fast and We Have a Unique Window of Opportunity
FINANCIAL SERVICES IN BRAZIL
OWNERSHIP PENETRATION OF… (% population)
EXPLORING PARTNERSHIP OPPORTUNITIES
1 | HIGH-END |
Convenience and | |
simplicity. |
2 | LOW-END |
Access to banking | |
services. |
Mobile Unique
Users79%
2
1 | 59% |
Debit Card |
1 | 27% |
Credit Card |
mln
45 Brazilians have no bank account3
R$ 817bln
annual transactions of unbanked population in Brazilian economy3
- Full bank offer
- Commercial partnership
- Value generated by commissions in fees + equity
First mover in telecom +
- Symbiotic partnership (JV like)
- Value generated by profit sharing
83%
top 5 banks' market share
EOP 2020
BCB expects to launch its instant payment system: PIX.
digital banking services.
Exclusive agreement with
Bank C6.
Partners short list under
analysis.
(1) Population > 15 years old (Global Findex Database 2017); (2) Population > 10 years old; (3) Population > 16 years old (Locomotiva).
Meeting with Investors | April 2020 | 42 |
TIM Participações - Investor Relations | |
Beyond Core: Leveraging our Assets with Strategic Partnerships | 5 |
Confirming Innovation Leadership in Telecom Through a Hybrid High-end Partnership with C6 Bank
DESCRIPTION | TIM | C6 BANK |
Role | Sales channel | Provider of banking licenses, |
technology and infrastructure | ||
TIM customer base: increase attractiveness on client acquisition | ||
Target clients | within a differentiated onboarding experience | |
(potential 'VIP' experience for high-end costumers) | ||
Offer | Bank and Telecom account, making life easier for consumer | |
Business structure | Hybrid partnership model combining fees and equity | |
REDUCE CHURN
Distinguished offer through MFS and increased engagement with the clients have a potential to reduce churn in the core telco business.
LOWER COLLECTION COST
The bonus is only guaranteed when the customer pays their invoice or recharge through the
App C6, lowering the cost of collection.
Meeting with Investors | April 2020 | 43 |
TIM Participações - Investor Relations | |
TIM Brasil plans to improve its ESG practices based on its materiality matrix
ESG: TIM's commitment with a positive transformation to all stakeholders
6
Environmental
We want to be green.
Social
New capabilities are a key factor to maintain leadership.
Governance
Efficient mechanisms to fairly balance the interests of all stakeholders, while improving transparency and controls.
- Increasing efficiency and taking advantage of green energy cost reduction
- Developing infrastructure and data center to give more to our customer with less impact from operations
- Improving internal workforce valorization and talent management
- Accessing Brazilian Top Employer ranking based on diversity issues
- Promote digital capabilities and ESG Culture among the employees
- Developing the digital education to support demand for connectivity
- TIM recognized as a company with highest level of commitment to sustainability and corporate governance
- Reinforcing and disseminating the ESG principles to the high risk suppliers
- Adopting best practices regarding compliance, information security and privacy protection ("LGPD")
Eco-efficiency in traffic | |
+75% | |
transmitted | |
Indirect emissions | -70% |
Carbon neutral by 2030 | |
Employees engagement | >MQ3 |
Employees trained on | |
>95% | |
ESG culture | |
Digital capability | |
1k people | |
development | |
Novo Mercado and ISE | |
Maintain | |
ISO 27001 and ISO 37001 | |
Obtain | |
2025
2022
United Nations Agenda: 10 relevant goals for TIM Brasil
Meeting with Investors | April 2020 | 44 |
TIM Participações - Investor Relations | |
TIM Brasil 2020-'22 Targets
Key Performance Indicators (IFRS 15/9)
NET SERVICE REVENUES (% YoY)OPEX (R$ bln)TIM 4,7% | CAGR 2018-21: | CAGR 2018-22: | ||||||||||||||
~3% | ~2% | |||||||||||||||
Mid Single Digit | ||||||||||||||||
2,4% | CAGR 2019-22 | 10,8 | ||||||||||||||
Old Plan 10,6 | ||||||||||||||||
Market | 1,5% | New Plan 10,6 | 10,6 | |||||||||||||
0,4% | ||||||||||||||||
2018 | 2019 | 2020 | 2021 | 2022 | ||||||||||||
2018 | 2019 | 2020 | 2021 | 2022 | ||||||||||||
EBITDA AND MARGIN EXPANSION (R$ bln; %) | EBITDA - CAPEX (R$ bln; %) | ||||||||
≥40% | ≥20% | ||||||||
39,1% | 16,9% | ||||||||
37,5% | 15,0% | ||||||||
6,4 | 6,8 | 2,5 | 2,9 | ||||||
2018 | 2019 | 2020 | 2021 | 2022 | 2018 | 2019 | 2020 | 2021 | 2022 |
(1) Released on March 10th, 2020.
Meeting with Investors | April 2020 | 45 |
TIM Participações - Investor Relations | |
TIM Brasil 2020-'22 Targets
Guidance
GOALS
Revenue Growth Sustainability
Improve
Profitability
Infrastructure Development
Expand Cash Generation
DRIVERS | SHORT TERM TARGETS | LONG TERM TARGETS | |
(2020) | |||
→ | Leverage mobile ARPU improve | Service Revenues Growth: | Service Revenues Growth: |
→ | Expand Residential UBB operations | Mid single digit | Mid single digit |
→ | Tap B2B opportunity | (YoY) | (CAGR '19-'22) |
→ | Accelerate digital transformation | EBITDA Growth: | EBITDA Margin: |
→ | Maintain zero-based budget approach | Mid single digit | ≥40% in 2022 |
→ | Reliable bill to cash process | (YoY) | (≥47% w/ IFRS 16) |
Capex on Net Revenues: | Capex: | ||
→ | Smart and selective Capex approach | R$ 12.0 - 12.5 bln | |
Low 20's | |||
(∑'20-'22) | |||
→ | EBITDA-Capex on Net | EBITDA-Capex on Net | |
Strict financial discipline | Revenues: | Revenues: | |
→ | Continue debt and tax rate optimization | >16% | ≥20% in 2022 |
(>20% w/ IFRS 16) | (≥25% w/ IFRS 16) | ||
(1) KPIs with IFRS 15/9, except when otherwise indicated; (2) Released on March 10th, 2020.
Meeting with Investors | April 2020 | 46 |
TIM Participações - Investor Relations | |
REGULATORY UPDATES
Meeting with Investors | April 2020 TIM Participações - Investor Relations
Spectrum distribution reflects available capacity, though user experience will also depend on network management
Spectrum Distribution
(Average of MHz / population)
177 | ||||||||||||||||||
148 | 43 | |||||||||||||||||
117 | 44 | 20 | ||||||||||||||||
2,500 MHz | 21 | 25 | 93 | |||||||||||||||
2,100 MHz | 22 | 29 | 13 | 20 | ||||||||||||||
1,800 MHz | 35 | 26 | 29 | 24 | ||||||||||||||
3 | ||||||||||||||||||
900 MHz | 4 | |||||||||||||||||
5 | 21 | 18 | ||||||||||||||||
850 MHz | 11 | 43 | ||||||||||||||||
700 MHz | 20 | 20 | 20 | |||||||||||||||
5 | ||||||||||||||||||
450 MHz | 3 | 5 | 5 | |||||||||||||||
1 | ||||||||||||||||||
Mobile | 14 MHz | 90 MHz | 80 MHz | 20 MHz | 150 MHz | 135 MHz | 100 MHz | 190 MHz | |||
Total | |||||||||||
450 MHz | 700 MHz | 850 MHz | 900 MHz | 1,800 MHz | 2,100 MHz | 2,300 MHz | 2,500 MHz | ||||
Spectrum Cap | <1 GHz = Coverage [35%l----l40%] | >1 GHz <3 GHz = Capacity [30%l----l40%] |
Meeting with Investors | April 2020 TIM Participações - Investor Relations
New spectrum bands under discussion that should be auctioned in 2020
Public Consultation Proposal. | |
Overview of Anatel Public Consultation Proposal for auction rules | Concluded on April 2nd, 2020. |
Frequency
Spectrum Lot proposal | Comments | |||
700 MHz
2.3 GHz
3.5 GHz
26 GHz
10+10 MHz (FDD)
90 MHz (TDD)
400 MHz (TDD)
3,2 GHz (TDD)
1st round: 1x 10+10 MHz (national)
2nd round: 2x 5+5 MHz (national)
1x 50 MHz (regional) + 1x 40 MHz (regional)
1st round: 2x100 and 1x80 MHz (national) + 2x60 MHz (regional) - 1 to
small providers or NewCo
2nd round: 01x20 and 01 x40 MHz (regional)
1st round: 05x400 MHz (national), 03x400 MHz (regional)
2nd round: up to 10x200 MHz (national)+ up to 06x200 MHz (regional)
Left over from 2014 auction 7 different regional areas
There is a 10 MHz guard band at the end of the 2.3 GHz band
- Potential clean-up could be needed to solve coexistence w/ satellite. In the C band, the broadcast channels must be relocated
- The second option for regional lots could be acquired by the winners of the national blocks. Sub-cap: 140 MHz
200 MHz lots, only if 400MHz lots are unsold
Meeting with Investors | April 2020 TIM Participações - Investor Relations
Law 13,879/2019 | The major change in TLC framework in 20 years
LGT (Law 9,472/1997) | Law 13,879/2019 - Amendments to LGT |
Fixed | • Concessions expire in 2025 |
• Reversible assets must return to the Federal | |
Government | |
• Universalization Obligations (PGMU III) | |
• Payphones (TUP) - Locations with > 100 pop., max. | |
distance 300m, min. density 4 Payphone/1k pop. | |
• Individual access - Locations with > 300 pop. in max | |
7 days | |
PGMU IV (Dec./2018) - TUP reduction x FWA in ~1,4k | |
secondary districts |
- Concessions - subsequent renewals (not limited to 2025)
- Migration option from expiring Concessions to Authorizations with no deadline
- Obligation to maintain service in non competitive areas
- Additional broadband investments plan based on
- "NPV balance" expiring Concessions vs adapted Authorization
- Reversible assets
- Public policy areas (and network sharing)
National LD
R I
R II
Regional
Region I
Region II
Region III
Mobile | • Authorizations - Max. 20+20 years (limited to one-time | • Authorizations - Subsequent renewals (not limited to 2 | ||
Spectrum | renewal) | periods) | ||
• | Renewal fee - 2% net revenues biennial payment (cash) | • | Renewal fee - Could be converted into investments | |
• | Tenure - RF assigned only by Anatel (not tradable | • | Tenure - RF transfer among operators (secondary | |
among private players) | market) |
25 MHz
50 MHz
(2020-24)
50 MHz
(2022-2024)
50 MHz
(2023)
Meeting with Investors | April 2020 TIM Participações - Investor Relations
APPENDIX
Meeting with Investors | April 2020 TIM Participações - Investor Relations
Historical Data: P&L
R$ Thousand | ||||||||
Description | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 2019 | 1Q20 | 1Q20 vs 1Q19 | |
(%YoY) | ||||||||
Gross Revenues | 6,104,071 | 6,264,065 | 6,281,682 | 6,533,015 | 25,182,832 | 6,091,893 | -0.2% | |
Service Gross Revenues | 5,833,801 | 5,930,275 | 5,964,999 | 6,091,269 | 23,820,344 | 5,850,561 | 0.3% | |
Mobile Service Gross Revenues | 5,437,748 | 5,518,044 | 5,537,073 | 5,652,167 | 22,145,033 | 5,426,617 | -0.2% | |
Fixed Services Gross Revenue | 396,053 | 412,230 | 427,926 | 439,101 | 1,675,311 | 423,944 | 7.0% | |
Product Gross Revenues | 270,269 | 333,790 | 316,683 | 441,746 | 1,362,488 | 241,332 | -10.7% | |
Taxes and Discounts | (1,913,244) | (2,001,324) | (1,944,619) | (1,946,450) | (7,805,638) | (1,876,585) | -1.9% | |
Taxes and discounts on services | (1,809,384) | (1,866,890) | (1,813,087) | (1,733,828) | (7,223,189) | (1,759,265) | -2.8% | |
Taxes and discounts on product sales | (103,860) | (134,433) | (131,533) | (212,622) | (582,449) | (117,320) | 13.0% | |
Total Net Revenues | 4,190,826 | 4,262,741 | 4,337,063 | 4,586,564 | 17,377,194 | 4,215,308 | 0.6% | |
Net Revenues Services | 4,024,417 | 4,063,385 | 4,151,912 | 4,357,441 | 16,597,155 | 4,091,296 | 1.7% | |
Mobile Service | 3,795,195 | 3,833,492 | 3,918,446 | 4,101,100 | 15,648,232 | 3,840,444 | 1.2% | |
Client generated | 3,506,024 | 3,503,994 | 3,575,665 | 3,786,475 | 14,372,159 | 3,553,013 | 1.3% | |
Interconnection | 138,551 | 105,002 | 122,244 | 111,497 | 477,294 | 111,267 | -19.7% | |
Other Revenues | 150,620 | 224,495 | 220,537 | 203,128 | 798,779 | 176,165 | 17.0% | |
Fixed Service | 229,222 | 229,893 | 233,466 | 256,341 | 948,922 | 250,852 | 9.4% | |
of which TIM Live | 111,848 | 114,750 | 126,694 | 137,435 | 490,727 | 144,392 | 29.1% | |
Net Revenues Products | 166,409 | 199,357 | 185,150 | 229,124 | 780,040 | 124,012 | -25.5% | |
Operating Expenses (Normalized) | (2,406,489) | (2,301,676) | (2,279,645) | (2,275,647) | (9,263,457) | (2,288,994) | -4.9% | |
Personnel expenses | (249,027) | (254,237) | (247,090) | (255,090) | (1,005,444) | (260,807) | 4.7% | |
Selling & marketing expenses | (893,124) | (841,230) | (824,667) | (797,725) | (3,356,746) | (802,052) | -10.2% | |
Network & interconnection | (658,307) | (557,624) | (543,287) | (557,081) | (2,316,298) | (627,460) | -4.7% | |
General & administrative | (133,865) | (135,872) | (147,535) | (159,843) | (577,114) | (162,398) | 21.3% | |
Cost Of Goods Sold | (198,633) | (240,429) | (221,242) | (271,515) | (931,818) | (158,743) | -20.1% | |
Bad Debt | (172,610) | (188,234) | (200,611) | (186,836) | (748,291) | (188,588) | 9.3% | |
Other operational revenues (expenses) | (100,924) | (84,050) | (95,214) | (47,559) | (327,746) | (88,947) | -11.9% | |
EBITDA (Normalized) | 1,784,337 | 1,961,065 | 2,057,418 | 2,310,917 | 8,113,737 | 1,926,314 | 8.0% | |
EBITDA Margin (Normalized) | 42.6% | 46.0% | 47.4% | 50.4% | 46.7% | 45.7% | 3.1 p.p. | |
Depreciation & Amortization | (1,334,210) | (1,297,772) | (1,436,718) | (1,060,281) | (5,128,981) | (1,408,605) | 5.6% | |
Depreciation | (863,100) | (880,142) | (954,602) | (554,875) | (3,252,719) | (935,295) | 8.4% | |
Amortization | (471,110) | (417,630) | (482,116) | (505,406) | (1,876,262) | (473,310) | 0.5% | |
EBIT (Normalized) | 450,127 | 663,293 | 620,700 | 1,250,636 | 2,984,756 | 517,709 | 15.0% | |
EBIT Margin (Normalized) | 10.7% | 15.6% | 14.3% | 27.3% | 17.2% | 12.3% | 1.5 p.p. | |
Net Financial Results (Normalized) | (262,548) | (264,217) | (333,409) | (235,738) | (1,095,912) | (254,575) | -3.0% | |
Financial expenses | (316,877) | (308,867) | (416,212) | (254,464) | (1,296,421) | (325,690) | 2.8% | |
Net exchange variance | 526 | (3,092) | 2,476 | (819) | (908) | 7,220 | 1272.9% | |
Financial income | 53,803 | 47,743 | 80,327 | 19,545 | 201,418 | 63,896 | 18.8% | |
Income Before Taxes (Normalized) | 187,579 | 399,077 | 287,290 | 1,014,898 | 1,888,844 | 263,134 | 40.3% | |
Income Tax and Social Contribution (Normalized) | (35,787) | (56,828) | 206,107 | (96,586) | 16,906 | (98,707) | 175.8% | |
Net Income (Normalized) | 151,792 | 342,249 | 493,398 | 918,311 | 1,905,749 | 164,428 | 8.3% | |
Reported Figures | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 2019 | 1Q20 | 1Q20 vs 1Q19 | |
(%YoY) | ||||||||
Operating Expenses | (2,407,961) | (807,185) | (2,242,563) | (2,275,647) | (7,733,357) | (2,291,581) | -4.8% | |
EBITDA | 1,782,865 | 3,455,556 | 2,094,500 | 2,310,917 | 9,643,838 | 1,923,727 | 7.9% | |
EBIT | 448,655 | 2,157,784 | 657,782 | 1,250,636 | 4,514,857 | 515,122 | 14.8% | |
Net Financial Results | (262,548) | 786,527 | (267,031) | (235,738) | 21,210 | (254,575) | -3.0% | |
Income Tax and Social Contribution | (66,073) | (922,212) | 170,931 | (96,586) | (913,940) | (98,707) | 49.4% | |
Net Income | 120,034 | 2,022,100 | 561,681 | 918,311 | 3,622,127 | 161,841 | 34.8% |
Meeting with Investors | April 2020 TIM Participações - Investor Relations
Historical Data: Cash-Flow
R$ Million | |||||||
Description | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 2019 | 1Q20 | 1Q20 vs 1Q19 |
(%YoY) | |||||||
Initial Cash & Cash Equivalents | 1,076 | 915 | 667 | 876 | 3,534 | 2,285 | 112.4% |
Adjusted Earnings Berfore Taxes | 188 | 399 | 287 | 1,015 | 1,889 | 263 | 40.3% |
Non recurring operating items | (1) | 2,545 | 103 | - | 2,647 | (3) | 75.7% |
D&A | 1,334 | 1,298 | 1,437 | 1,060 | 5,129 | 1,409 | 5.6% |
Income from equity accounting | - | - | - | - | - | - | n.a. |
Provision for legal and administrative proceedings | 95 | 300 | 91 | 62 | 548 | 98 | 3.1% |
Monetary adjustments to deposits, administrative and legal procee | 43 | 132 | 53 | (27) | 200 | 58 | 35.1% |
Interest, monetary and exchange variations of borrowings and othe | 21 | (1,075) | 27 | 76 | (951) | 69 | 226.2% |
Lease interest payable | 210 | 197 | 207 | 207 | 821 | 166 | -20.8% |
Lease interest receivable | (6) | - | - | - | (6) | (5) | -23.1% |
Provision for doubtful debts | 173 | 188 | 201 | 187 | 748 | 189 | 9.3% |
Others | 8 | 10 | 7 | 11 | 36 | 3 | -58.0% |
Decrease (increase) in operating assets | (870) | (1,663) | (79) | 365 | (2,246) | (186) | -78.6% |
Trade accounts receivable | (328) | (174) | (366) | (159) | (1,027) | (151) | -54.0% |
Taxes and contributions recoverable | 97 | (1,750) | (29) | 81 | (1,601) | 245 | 153.3% |
Inventory | (32) | 1 | 3 | 8 | (20) | (65) | 106.8% |
Prepaid expenses | (635) | 221 | 263 | 252 | 101 | (229) | -63.9% |
Judicial deposit | 45 | 34 | 96 | 121 | 296 | 44 | -1.1% |
Other current assets | (17) | 5 | (46) | 63 | 5 | (30) | 77.0% |
Increase (decrease) in operating liabilities | (898) | (1,274) | (230) | 650 | (1,751) | (1,573) | 75.2% |
Payroll and related charges | 34 | (9) | 5 | (22) | 7 | 35 | 4.5% |
Suppliers | (541) | (892) | 30 | 1,002 | (401) | (1,302) | 140.8% |
Taxes, charges and contributions | (113) | (34) | 124 | 62 | 40 | (39) | -65.6% |
Authorizations payable | 8 | (116) | (57) | 65 | (100) | - | -100.0% |
Payments for legal and administrative proceedings | (157) | (160) | (182) | (216) | (715) | (117) | -25.4% |
Deferred revenues | (77) | (51) | (48) | (28) | (204) | (81) | 5.3% |
Other current liabilities | (51) | (11) | (101) | (213) | (377) | (69) | 34.3% |
Net Cash (used in) from operations | 296 | 1,059 | 2,104 | 3,606 | 7,065 | 488 | 64.8% |
Capex | (650) | (945) | (924) | (1,335) | (3,853) | (904) | 39.1% |
Others | 38 | 258 | (283) | 128 | 141 | 621 | 1542.4% |
Net cash used in investment activities | (612) | (687) | (1,207) | (1,207) | (3,713) | (283) | -53.7% |
New borrowing | 1,000 | - | - | - | 1,000 | 800 | -20.0% |
Repayment of borrowing | (135) | (212) | (173) | (204) | (724) | (666) | 394.5% |
Interest paid - borrowing and financings | (15) | (21) | (45) | (16) | (97) | (33) | 116.4% |
Payment of financial lease | (152) | (210) | (210) | (229) | (801) | (213) | 40.7% |
Interest paid - leases | (200) | (199) | (199) | (187) | (785) | (211) | 5.4% |
Dividends and interest on shareholder's equity paid | (343) | (0) | (63) | (364) | (770) | (567) | 65.4% |
Others | 1 | 22 | 1 | 9 | 33 | (7) | n.a. |
Net cash used in financing activities | 156 | (620) | (688) | (991) | (2,143) | (898) | n.a. |
Cash Flow | (160) | (248) | 209 | 1,409 | 1,209 | (694) | 332.4% |
Final Cash & Cash Equivalents | 915 | 667 | 876 | 2,285 | 4,743 | 1,591 | 73.9% |
Meeting with Investors | April 2020 TIM Participações - Investor Relations
Historical Data: Financial Indicators
Description | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 2019 | 1Q20 | 1Q20 vs 1Q19 |
(%YoY) | |||||||
Mobile ARPU (R$) | 22.8 | 23.2 | 23.9 | 25.1 | 23.7 | 23.9 | 4.8% |
Prepaid | 11.6 | 11.6 | 12.0 | 12.9 | 12.0 | 12.1 | 4.6% |
Postpaid | 38.2 | 37.1 | 37.5 | 39.4 | 38.0 | 37.2 | -2.6% |
Postpaid (ex-M2M) | 42.6 | 42.8 | 44.1 | 47.0 | 44.1 | 44.5 | 4.3% |
SAC/Gross Adds (R$) | 62.9 | 51.1 | 50.1 | 44.1 | 51.7 | 59.6 | -5.2% |
TIM Live ARPU (R$) | 79.6 | 78.0 | 81.8 | 83.8 | 80.8 | 84.5 | 6.1% |
CAPEX (R$ Mln) | 650 | 945 | 924 | 1,334 | 3,853 | 904 | 39.1% |
CAPEX ex-licenses (R$Mln) | 650 | 945 | 924 | 1,334 | 3,853 | 904 | 39.1% |
Meeting with Investors | April 2020 TIM Participações - Investor Relations
Historical Data: Operational Indicators
Description | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 2019 | 1Q20 | 1Q20 vs 1Q19 |
(%YoY) | |||||||
Brazilian Wireless Subscriber Base (million) | 228.1 | 228.3 | 228.4 | 226.7 | 226.7 | 226.3 | -0.8% |
Estimated Total Penetration | 99.6% | 98.9% | 98.4% | 96.9% | 96.9% | 96.2% | -3.4 p.p. |
Mobile Customer Base ('000) | 55,083 | 54,972 | 54,527 | 54,447 | 54,447 | 52,826 | -4.1% |
Prepaid | 34,507 | 33,648 | 33,284 | 32,984 | 32,984 | 31,153 | -9.7% |
Postpaid | 20,576 | 21,324 | 21,243 | 21,463 | 21,463 | 21,673 | 5.3% |
Postpaid ex-M2M | 18,207 | 18,059 | 17,770 | 17,820 | 17,820 | 17,880 | -1.8% |
M2M | 2,368 | 3,265 | 3,474 | 3,643 | 3,643 | 3,792 | 60.1% |
4G Users ('000) | 35,672 | 36,430 | 37,340 | 38,641 | 38,641 | 38,620 | 8.3% |
Market Share | 24.1% | 24.1% | 23.9% | 24.0% | 24.0% | 23.35% | -0.8 p.p. |
Prepaid | 27.2% | 27.2% | 27.4% | 28.2% | 28.2% | 27.31% | 0.1 p.p. |
Postpaid | 20.3% | 20.4% | 19.9% | 19.5% | 19.5% | 19.31% | -1.0 p.p. |
Gross Additions (000's) | 5,626 | 6,213 | 5,934 | 6,476 | 24,249 | 5,357 | -4.8% |
Net Additions (000's) | -840 | -111 | -444 | -80 | -1,476 | -1,621 | 93.1% |
Monthly Churn (%) | 3.9% | 3.8% | 3.9% | 4.0% | 3.9% | 4.3% | 0.5 p.p. |
Fixed Telephopny Customer Base ('000) | 946 | 1,006 | 1,051 | 1,079 | 1,079 | 1,101 | 16.4% |
TIM Live Customer Base ('000) | 486 | 507 | 537 | 566 | 566 | 584 | 20.2% |
FTTH Customer Base ('000) | 71 | 98 | 132 | 167 | 167 | 196 | 174.7% |
FTTC Customer Base ('000) | 414 | 408 | 404 | 398 | 398 | 388 | -6.3% |
Handsets sold ('000) | 246 | 244 | 234 | 277 | 1,000 | 174 | -29.4% |
Smartphone Penetration (%) | 85.7% | 86.8% | 86.2% | 87.2% | 87.2% | 87.5% | 1.8 p.p. |
BOU | 2,660 | 2,808 | 3,154 | 3,412 | 3,009 | 3,592 | 35.0% |
MOU | 124 | 124 | 125 | 122 | 124 | 119 | -3.9% |
Employees | 9,411 | 9,414 | 9,540 | 9,700 | 9,700 | 9,588 | 1.9% |
Meeting with Investors | April 2020 TIM Participações - Investor Relations
Brazilian Telcos: Financial X-Ray
To be released
TIM | Vivo | Claro | Oi | |||||||||
1Q20 | 1Q19 | % YoY | 1Q20 | 1Q19 | % YoY | 1Q20 | 1Q19 | % YoY | 4Q19 | 4Q18 | % YoY | |
Total Net Revenues | 4.215 | 4.191 | 0,6% | 10.825 | 10.975 | -1,4% | 9.791 | 9.485 | 3,2% | 4.862 | 5.317 | -8,6% |
Service Revenues | 4.091 | 4.024 | 1,7% | 10.244 | 10.376 | -1,3% | 9.522 | 9.198 | 3,5% | 4.828 | 5.255 | -8,1% |
Mobile Service Revenues | 3.840 | 3.795 | 1,2% | 6.489 | 6.482 | 0,1% | 4.082 | 3.566 | 14,5% | 1.860 | 1.879 | -1,0% |
Fixed Service Revenues | 251 | 229 | 9,4% | 3.754 | 3.894 | -3,6% | 5.440 | 5.632 | -3,4% | 2.969 | 3.375 | -12,1% |
Products Revenues | 124 | 166 | -25,5% | 581 | 598 | -2,9% | 259 | 274 | -5,5% | 34 | 62 | -45,4% |
Organic EBITDA | 1.926 | 1.784 | 8,0% | 4.431 | 4.360 | 1,6% | 3.709 | 3.450 | 7,5% | 1.056 | 1.287 | -17,9% |
Organic EBITDA Margin | 45,7% | 42,6% | 3,1 p.p. | 40,9% | 39,7% | 1,2 p.p. | 37,9% | 36,4% | 1,5 p.p. | 21,7% | 24,2% | -2,5 p.p. |
Capex | 904 | 650 | 39,1% | 1.648 | 1.696 | -2,8% | n.a. | n.a. | n.a. | 1.979 | 2.085 | -5,1% |
Capex/Net Revenues | 21,5% | 15,5% | 5,9 p.p. | 15,2% | 15,5% | -0,2 p.p. | n.a. | n.a. | n.a. | 40,7% | 39,2% | 1,5 p.p. |
EBITDA - Capex | 1.022 | 1.134 | -9,9% | 2.784 | 2.665 | 4,5% | n.a. | n.a. | n.a. | -922 | -798 | 15,6% |
Net Debt | 8.526 | 7.477 | 14,0% | 7.402 | 9.581 | -22,7% | n.a. | n.a. | n.a. | 15.927 | 11.826 | 34,7% |
Net Debt / EBITDA 12M | 1,03 | 1,11 | -7,0% | 0,41 | 0,59 | -30,8% | n.a. | n.a. | n.a. | 3,5 | 2,0 | 75,1% |
ARPU | 23,9 | 22,8 | 4,8% | 29,0 | 29,5 | -1,7% | 24,0 | 18,0 | 20,5% | 16,6 | 16,5 | 0,4% |
Prepaid | 12,1 | 11,6 | 4,6% | 12,5 | 12,1 | 5,0% | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Postpaid (ex-M2M) | 44,5 | 42,6 | 4,3% | 51,3 | 53,2 | -3,6% | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
(1) Vivo = Capex ex-IFRS 16 (it does not consider permanent assets from leasing).
Meeting with Investors | April 2020 TIM Participações - Investor Relations
Brazilian Telcos: Operational X-Ray
TIM | Vivo | Claro | Oi | ||||||||||||
1Q20 | 1Q19 | % YoY | 1Q20 | 1Q19 | % YoY | 1Q20 | 1Q19 | % YoY | 4Q19 | 4Q18 | % YoY | ||||
Mobile Customer Base (MM) | 52.8 | 55.1 | -4.1% | 74.7 | 73.5 | 1.7% | 55.1 | 56.4 | -2.2% | 36.8 | 37.7 | -2.4% | |||
Market Share | 23.3% | 24.1% | -0.8 p.p. | 33.0% | 32.2% | 0.8 p.p. | 24.4% | 24.7% | -0.4 p.p. | 16.2% | 16.4% | -0.2 p.p. | |||
Human Postpaid Customer Base ex-M2M | 17.9 | 18.2 | -1.8% | 33.3 | 32.3 | 3.0% | 20.3 | 17.7 | 14.6% | 10.2 | 8.6 | 19.0% | |||
(MM) | |||||||||||||||
Market Share | 20.7% | 22.5% | -1.8 p.p. | 38.5% | 39.9% | -1.4 p.p. | 23.5% | 21.9% | 1.6 p.p. | 12.0% | 10.8% | 1.3 p.p. | |||
Mix Postpaid | 33.8% | 33.1% | 0.8 p.p. | 44.6% | 44.0% | 0.6 p.p. | 36.9% | 31.4% | 5.4 p.p. | 27.8% | 22.8% | 5.0 p.p. | |||
4G Customer Base (MM) | 38.6 | 35.7 | 8.3% | 50.0 | 42.9 | 16.5% | 37.2 | 32.3 | 15.1% | 24.8 | 21.3 | 16.4% | |||
Market Share | 24.8% | 26.0% | -1.2 p.p. | 32.1% | 31.2% | 0.8 p.p. | 23.8% | 23.5% | 0.3 p.p. | 16.3% | 16.4% | -0.1 p.p. | |||
Mix 4G | 73% | 65% | 8.3 p.p. | 67% | 58% | 8.5 p.p. | 67% | 57% | 10.1 p.p. | 67% | 57% | 10.9 p.p. | |||
Banda Larga >34 Mbps1 | 576,423 | 478,727 | 20.4% | 2,953,910 | 2,320,663 | 27.3% | 6,573,107 | 4,952,816 | 32.7% | 731,564 | 157,989 | 363.0% | |||
Market Share | 3.8% | 5.1% | -1.3 p.p. | 19.5% | 24.9% | -5.3 p.p. | 43.5% | 53.1% | -9.6 p.p. | 5.5% | 1.9% | 3.6 p.p. |
Meeting with Investors | April 2020 TIM Participações - Investor Relations
TIM has different opportunities in terms of regionality
NO | ||||
(Market Share | Mar-20) | 36.1% | |||
BRASIL | Pen: 96.2% | 24.6% | ||
33.0% | -1.7 p.p | 19.8% | ||
19.3% | ||||
25.9% | ||||
23.3% | -0.8 p.p. | CO | ||
16.2% | 37.2% |
34.6% |
16.0% |
-0.2 p.p | 11.7% | |||||||||||||||
PR/SC | ||||||||||||||||
-1.5 p.p | ||||||||||||||||
51.7% | ||||||||||||||||
TIM's Position | ||||||||||||||||
20.3% | ||||||||||||||||
Leader | 16.9% | |||||||||||||||
2nd | 10.4% | |||||||||||||||
3rd | ||||||||||||||||
4th | ||||||||||||||||
RS | ||||||||||||||||
YoY p.p. | ||||||||||||||||
47.0% | ||||||||||||||||
31.6% | ||||||||||||||||
12.8% | ||||||||||||||||
0.0 p.p. | 8.3% | |||||||||||||||
(1) Claro considering Nextel customer base. Source: Anatel.
NE
32.2% | -1.2 p.p. | |||||||
BA/SE | ||||||||
30.3% | ||||||||
36.2% | ||||||||
25.4% | ||||||||
24.8% | ||||||||
12.1% | ||||||||
20.0% | ||||||||
18.8% -0.6 p.p.
MG
42.8% | |||||||||
21.8% | |||||||||
-1.9 p.p. | RJ/ES | ||||||||
19.0% | |||||||||
36.0% | |||||||||
10.8% | |||||||||
33.0% | |||||||||
16.9% +1.4 p.p.
13.8%
SP Capital | |||||||||
41.7% | |||||||||
23.7% | |||||||||
SP Interior | -2.4 p.p. | ||||||||
23.5% | |||||||||
34.3% | 9.3% | ||||||||
32.0% | |||||||||
+1.1 p.p. | |||||||||
22.1% | |||||||||
8.1% | Meeting with Investors | April 2020 | ||||||||
TIM Participações - Investor Relations | |||||||||
TIM & VIVO Network Infrastructure Sharing Agreement
Following the MoU signed in Jul/19, TIM and Vivo reported in Dec/19 the implementation of three different workstreams, on two separate contracts, considering two phases
The Infrastructure Sharing Agreement is mainly focused in capex and opex saving, as well as better frequency usage, especially in cities below 30k inhabitants (approx. 4.400 cities out of 5.570). Finally new coverage opportunities are explored leveraging on cities where only one out the two Operators is present
Approved without restrictions by CADE in Apr/20 (still pending decision on Claro's appeal) and by Anatel in May/20
ContractsDescription
Main expected impacts | Step 11 | Step 2 |
I
2G SWITCH-OFF
(national level)
II
Expansion and
additional
coverage
(4G and 3G)
SINGLE | |
GRID | III |
(less than | |
30k pop.) |
Consolidation
in one Single
Network
- One of the two Operators to switch-off its 2G network, where both Operators are currently present
- The remaining Operator to provide services for both Customer Base
- Full Single Grid approach where one of the two Operators is currently providing 4G/3G technologies
- Possibility to use Spectrum of both Operators to maximize efficiency (MOCN approach) and to reduce investments
- Full Single Grid approach in cases where both Operators are currently providing 4G/3G technologies
- One of the two Operators fully switch-off its network, while the remaining Operator is expected to provide services for both Customer Bases
- Possibility to use Spectrum of both Operators to maximize efficiency (MOCN approach) and to reduce investments
- Opex saving (mainly energy) and limited tower dismount
- Possible reuse of 850 MHz in refarming
- Footprint expansion in 4G/3G with Revenues opportunities in currently unserved markets
- Limited additional investments are expected to open new cities to the other operator
- Mutual usage of available frequencies
- Important Opex saving, due to the possibility to dismount full sites
- Investment saving for higher available capacity, considering the full sharing of available frequencies of both Operators and possible refarming of 3G frequencies
- Mutual usage of available frequencies
- 40% of scope
- 40% of scope
- 25+25 cities
- 100% of scope (≈ 2.700 cities)
- 100% of scope (> 800 cities)
- Perimeter to be extended up to 100% (>1.600 cities) in case of fulfillment of technical conditions
(1) Up to 180 days: after all conditions precedent are fulfilled.
Meeting with Investors | April 2020 TIM Participações - Investor Relations
Recoverable Tax over PIS/COFINS: R$ 3.4 bln from three lawsuits
In 2017 Brazilian Supreme Court stated that ICMS (State Tax) can not be included in the calculation basis of PIS and COFINS (Federal Tax). PIS/COFINS are levied on revenues and the Supreme Court stated that ICMS can not be considered a revenue. Any tax credit generated by this decision when booked incurs in payment of income tax (IR/CSLL).
Leading Case: Favorable | R$ 353mn | R$ 2.876 mn | R$ 148mn | |
decision | Gross Tax credits of: | |||
R$ 3,377 mln1 | ||||
APR/2017 | 4Q18 | 2Q19 | 3Q19 | To be used in ~3/4 years2 |
Booked after final | Booked after final | Final court decision. | ||
court decision: TIM | court decision: TIM | To be booked: TIM | ||
NE | CEL | S.A |
Meeting with Investors | April 2020 TIM Participações - Investor Relations
For further information
Vicente Ferreira
E-mail: vdferreira@timbrasil.com.br
Phone: +55 21 98113-1400
Bernardo Guttmann
E-mail: bguttmann@timbrasil.com.br
Phone: +55 21 98113-1408
Camila Assano
E-mail: cacruz@timbrasil.com.br
Phone: +55 21 98113-4236
Lucas Carneiro
E-mail: lmcarneiro@timbrasil.com.br
Phone: +55 21 98113-1141
Guilherme Kopke
E-mail: gknascimento@timbrasil.com.br
Phone: +55 21 98113-0583
Visit our Website ri.tim.com.br
E-mail: ri@timbrasil.com.br
850 João Cabral de Melo Neto Avenue South Tower - 12th floor
Barra da Tijuca - 22775-057 - Rio de Janeiro, RJ
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TIM Participações SA published this content on 18 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 May 2020 13:15:11 UTC