2. Agenda
Strategic Priorities - Rodrigo Abreu
Q1 Discussions:
Q1 in Few - Rodrigo Abreu
Network and Infrastructure - Rodrigo Abreu
Operations - Lorenzo Lindner
Marketing - Roger Sole
Live TIM - Rogério Takayanagi
Financials - Cláudio Zezza
Conclusions - Rodrigo Abreu
2
3. Strategic Priorities
Network Quality
& Infrastructure
1
Strategy &
Offer Evolution
2
Institutional
Relationships
3
People &
Organization
4
First Impressions Key Strategic Pillars
Fundamentals are strong:
→ Constant innovation approach.
→ Unique market positioning and long term
strategy.
→ Solid and expanding customer base.
→ Team with strong execution track record.
→ Large and efficient sales channel.
→ Rapid deployment of network
infrastructure with own fiber.
And challenges being addressed:
→ Renewed commitment to quality
improvement.
→ Keeping competitive edge with mobile
focus.
3
4. Improving voice & data capacity.
Mobile data as the center of network strategy.
Q1 in Few: Main Highlights
4
3.3%
4.1%
Solid VAS revenue growth.
Improving LD performance.
Overcoming operation start-up challenges.
Growing coverage.
Community strength intact.
Great response to new concepts (Liberty Controle).
181
209
Customer
Confidence
Constant Network
Evolution
Reaccelerating
growth
Accelerating Live
TIM Services
1.0
1.2
4Q12 1Q13
Net Mobile Serv. Rev.
Growth (%YoY)
1Q131Q12
Gross VAS Rev.
(R$ Mln)
+25% +16%
Voice Capacity
(TRX Units 000)
1Q131H12
250
414
+66%
Data Capacity
(Channel Elements units 000)
1Q131H12
- 29%
Time to install (days)
Jan/13 Mar/13
112
609
5.4X
Addressable Market (HH 000)
2Q12 1Q13
67
71
+6%
Customer Base (lines mln)
1Q12 1Q13
Managing competition effects.
Good cost control
269
306
1Q131Q12
+14%
Net Income
(R$ Mln)
Speeding up FTTS deployment.
Strong costumer response.
126
145
+15%
MOU (minutes)
1Q12 1Q13
Offer attractiveness.
6. Development of Infrastructure
6
Optical Fiber Network Evolution
(km of fiber)
28,891
38,951 40,649
47,000
2011 2012 Mar/13 Dec/13*
*According to Anatel Network Plan
FTTS Project Status - 14 Brazilian Main Cities (Stage1)
Manaus
Florianópolis
São Paulo
Macapá
Salvador
Curitiba
Maceio
Recife
Fortaleza
Brasília
Rio de Janeiro
Porto
Alegre
Belém
Aracaju
São Luis
Palmas
Vitoria
Teresina
Belo
Horizonte
Campo Grande
Imperatriz
Goiânia
Cuiaba
Natal
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
MJ.Pessoa
M
M
M
M
M
M
M
M
M
M
M M
M
M
M
MM
M
M
1st phase: Connecting sites with own fiber. Almost 85% of sites in
the 14 main Brazilian cities are connected with own fiber.
3rd phase: Expanding
and fine tuning. Recife
is the first city to reach
this stage.
2nd phase: Light up the fiber and shift data traffic to own lines.
2nd phase is
expected to
be completed
by 4Q13
M Cities of Stage 1
M Cities (additional 30) of Stage 2
Own Network to Support Traffic Growth
(% of total transport network)
52%
80%
48%
20%
2009 2012
Owned
Third Parties
Main Benefits:
• Increasing customer experience (throughput 50x faster than
previous leased links on copper, 2/8Mbps)
• Reduce network congestion
• 4G (LTE) ready
Metro Ring
Own Fiber
(300 Mbps)
Copper
(2-8Mbps)
After FTTSBefore FTTS
• Reducing leased lines costs
12. ARPU Performance
(%YoY; R$)
Postpaid Growth Helping ARPU and MOU Improvements
Voice Postpaid Customer Base
(000 lines; Source: Company and Anatel)
MOU Performance
(minutes)
1Q12 2Q12 4Q123Q12
12
7,168
7,638
8,184
8,703
8,956
+25%
1Q12 2Q12 4Q123Q12 1Q13
1Q13
126 127
150
139
145
Outgoing
Incoming
1Q12 2Q12 4Q123Q12 1Q13
19.1 18.3 19.918.9 18.5
VAS
Voice
-8.0%
-15.3%
-11.0%
-9.5%
-3.6%
Liberty Controle taking up: managing
the large pool of Infinity customer
base.
Express Option (pay by credit card)
might boost adoption of Liberty and
Liberty Controle plans.
+69%
Apr/12 Mar/13
+15%
Controle Plans
Customer
Base
13. 31% 35% 39% 43% 46%
Mobile Broadband and SMS Remain at High Speed Growth
SMS growth
(Days / Million Monthly unique users)
Data users
(Million monthly unique users)
66% 72%
3G coverage
(% of urban
pop.)
VAS
(% of Gross Mobile Services Revenues; R$ Million)
640
1,000
1,245
1Q131Q11 1Q12
Web/smartphones sales already
represents 70% of total sales
Handset Sales Market Share Jan-Fev/13
(% of handset revenues; Source: Company)
21%
44%
25%
10%
TIMP1 P3 P4
59%
41%
Open Market
Operators
Smart/Web phone Penetration
(% over total base of lines)
1Q12 2Q12 3Q12 4Q12
1.5x
13.8%
18.1%
21.4%
~18
~22
1Q12 2Q12 3Q12 4Q12 1Q13
13
Enabling customers to use it… … and they are responding.
+25%
1Q13
20.5
23.1
Feb/12 Feb/13
+19%
+13%
Days of
Use
SMS
Users
Gross
Revs
VAS/Revs
+94%
+24%
14. …But Mobile Internet Wave is Still in the Early Stages
14
Brazilian Device Market
(Million Units. Source: IDC)
7.5 6.6
5.5
8.4 8.9 8.8
1.1
3.1
5.8
Desktop Notebook Tablet
Tablet Offers
New Offer
2013e2011 2012
56% of Brazilians listen music at least
once a week in their mobile phone
Legal access
All musics
Unlimited download
Pay when you use
Work in offline mode
Smart Pipe:
Entering in the
OTT world as a
main actor.
15. 4G Launch
15
Fixed to Mobile Substitution will accelerate further with 4G
Release on April, 30th.
FTTS project as the foundation for LTE.
Efficient cost approach with RAN Sharing.
Still a limited handset portfolio.
Developing a next stage of mobile internet
experience.
LTE Opportunity
80%
20%
2G 3G2G 3G 4G LTE
Average
Speed
(Mbps)
CB
Penetration
5x
10x
17. 77.7%
22.3%
1Q12 2Q12 3Q12 4Q12 1Q13
A Full Operating Business Deployed in Less Than a Year
17
First Customer
Award Frost
Launch RJ
AES Atimus
Acquisition
Nov11 May12 Jul12 Sep12 Oct12 Nov12 Dec12 Mar13
Alpha Test
Development OSS/BSS
Launch SP
10,000
Sales
16K
Customers
41% Net
Share
Network Construction
(MSAN and HH Addressable)
Market share (MSAN occupation)
(after 5 months; Source: company estimates)
MSANs
(Cabinet)
Households
Addressable
609k
770
11%
13%
1H12 2H12
8.2%
91.8%
All Speeds Above
34 Mb
Net Share RJ/SP (Jan-Feb’13)
(Source: Anatel and company estimates)
240k
Website
Registration
Live TIM
Live TIMOthers
Others
18. Solving Operational Start-up Difficulties to Gain Customer Satisfaction
Time to Install
(# days)
jan/13 feb/13 mar/13
Driving the Market to a New Speed Level
(Average Download Speed in Mbps)
1.3 1.7 1.8 2.3
35.5
2009 2010 2011 3Q12 Live TIM
(delivered)
43% 42%
26%
51% 52%
38%
6% 6%
36%
Telecom Fixed
Broadband
Live TIM
Delighted Satisfied Unsatisfied
Customer Satisfaction Index
(Source: Study of Bridge of Research Aug/12 and TIM)
Live TIM has 6x
more delighted
customers than
market average.
Capturing Clients Through High Speed Packages
(Source: Informa Telecom & media)
18
15x
Market Average
- 29%
0
2
4
6
8
10
12
14
15 20 25 35 50
R$/Mbps
Download Speed (Mbps)
Live TIM
P1
P2
P3
23. Ready to Go: 4 Steps to Resume Growth
23
Solid Capex investment program.
Significant coverage and capacity improvement through extensive own fiber
infrastructure.
Network Quality War Room approach.
Efficient 4G Investment with RAN sharing.
Continuous evolution of our offer platforms (transparency, simplicity, convenience,
micro-segmentation).
Promoting data usage with handset strategy, new VAS offers (e.g. TIMmusic) and 4G
launch.
Expanding postpaid and business user base.
Developing option value of Live TIM ultra-broadband services.
External Positioning: Innovation, Quality, Transparency.
“Portas Abertas” customer portal for increased transparency and network quality evolution.
Focus on regulatory and institutional dialogue.
People Focus – highly skilled, highly motivated, right organization.
Best Place to Work initiatives.
Renewing Sense of Pride and Belonging – One of Brazil’s Top 15 Companies.
Network Quality
& Infrastructure1
Strategy &
Offer Evolution
2
Institutional
Relationships
3
People &
Organization
4
Solid user base and market positioning, coupled with clear strategic priorities,
strong execution capability and significant investments present the right mix for
TIM Brasil to move to a new growth phase.