TIM Participações - Investor Relations Results Presentation
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TIM Participações – Investor Relations
Results Presentation
Disclaimer
This presentation contains declarations Such forward looking statements are not
that constitute forward looking guarantees of future performance and
statements regarding the intent, belief or involve risks and uncertainties, and actual
current expectations of the customer base, results may differ materially from those
estimates regarding future financial results projected as a result of various factors.
and other aspects of the activities.
Analysts and investors are cautioned not Financial results are presented considering
to place undue reliance on those forward impacts from IFRS 9 & IFRS 15 adoption,
looking statements, which speak only as of disconsidering impacts from IFRS 16
the date of this presentation. TIM Part adoption.
undertakes no obligation to release publicly The normalized numbers reported in this
the results of any revisions to these forward presentation are adjusted by the effects
looking statements. listed below.
Operating Costs and EBITDA normalized by adjustments to the sale-leaseback contract of towers (+R$ 11 thousand in 2Q19, +R$ 1.5 million in 1Q19, R$ 1.1 million in
2Q18 and R$ 220 thousand in 1Q18), tax credit due to the exclusion of ICMS from the calculation basis of PIS/COFINS (-R$ 1,720 million in 2Q19), non-recurring expenses
with legal services connected to the PIS/COFINS court decision (+R$ 3.5 million in 2Q19), loss forecast revision for internal labor, taxes and civil contingencies (+R$ 222
million in 2Q19). Net Financial Results adjusted by monetary correction over tax credits and labor, taxes and civil contingencies (-R$ 1,051 million in 2Q19). Net Income TIM Participações – Investor Relations
normalized by the tax credit and other effects (+R$ 865 million in 2Q19) and deferred taxes (+R$ 30.3 million in 1Q19).
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Results Presentation
Highlights 2Q19: Strong Execution to Overcome External Challenges
Driven by innovative and Developing the network
Solid results
rational market approach towards 5G
+ 2.4% YoY Service Revenues
TIM Black Família as an Refarming sustaining our
Growth Reacceleration
+ 1.0% QoQ entertainment hub network capacity and quality
Rational and selective prepaid Best 4G network quality:
Over delivery
0.2% YoY
+
on cost¹ control
offers to increase acquisition leadership² in coverage
rate availability and latency
Solid EBITDA¹ 500k clients milestone in TIM
+ 6.2% YoY growth Live with 5 new cities
Network sharing with Vivo
37.9% Consistent Margin¹ Exploring new business Preparing for 5G with live
expansion opportunities in IoT network pilots
+1.4p.p. YoY
TIM Participações – Investor Relations
(1) OPEX and EBITDA normalized for the effects detailed in slide 2. 3
(2) According to Tecnoblog News, Jul-19. Results Presentation
Regaining Time-to-Market in B2C segment
Pure Postpaid Mobile ARPU
(R$/mo)
→ TIM Black Família launch: +5.8%
Increasing presence in high-end 23.2
segment 21.9
→ Entertainment Hub: 1st in Brazil
to include Netflix monthly fee
2Q18 2Q19
Postpaid ex-M2M Prepaid ARPU
Control ARPU (R$/mo) (R$/mo)
→ New Campaign: Consistent presence in media 43.7 -1.9% 42.8 +2.9% 11.6
11.2
→ Portability bonus of 1GB
→ Adjusting migration strategy prioritizing
customer base quality 2Q18 2Q19 2Q18 2Q19
Postpaid Base Prepaid Data Users
Prepaid ex-M2M (mln) (mln)
→ New offer: TIM Chip Top (Chip + R$ 10 / two weeks) 18.1
+21.8%
17.2 +4.8%
→ New TIM Ads: Sponsored Data for prepaid customers
→ WhatsApp as a caring channel: Top up, check data usage
and account balance 2Q18 2Q19 2Q18 2Q19
TIM Participações – Investor Relations
4
Results Presentation
TIM Black Família: Entertainment Hub Creating Opportunities Not to
Compete on Price and to Improve Upselling
TIM Black Família
Completing postpaid
portfolio Data Packages (main line + dependents)
Price point starting from 30GB
Core offer
R$ 269.99/mo1 (2 users) 60GB
(3 users) 100GB
1st and unique in Brazil to (4 users) 180GB
include Netflix monthly fee (6 users)
Management of shared data
package
(monthly fee included)
Special caring (new app Entertainment
interface and specialized
human attendant)
Pure Postpaid Gross Adds
(Jul-19 | % over Total) Social
networks
TIM
Black
international roaming package
Família
(WhatsApp + voice calls)
Communication
Services
data unlimited
Others
rollover calls
TIM Participações – Investor Relations
(1) Core offer for three users..
5
Results Presentation
Another Consistent Quarter on TIM Live
TIM Live ARPU UBB Customer Base TIM Live Revenues
(R$) (000 Clients) (R$ mln)
+7.8% 506.6 +30.6% 114.8
78.0 +19.7%
72.3 87.9
423.3
2Q18 2Q19 2Q18 2Q19 2Q18 2Q19
Larger coverage, more opportunity to
High value portfolio driving ARPU Strong and consistent revenue growth
grow
upward → >30% revenue growth for 10
→ Important milestone: >500k clients
→ >55% of sales above 100 Mbps quarters
with ~20% in FTTH
→ FTTH ARPU 18% higher than FTTC → TIM Live represents ~50% of fixed
→ FTTH coverage reached over 1,560k
revenues
households in the quarter
OLTs installed Continuous Efforts to Maintain High Growth
(# of units) Rates
Budget Act New plan
→ 2H19 to show acceleration in adds and
revenues after network catch-up
→ 5 new cities1 with FTTH: totaling 17 cities with
fiber technology
Jan-19 Apr-19 Jul-19 Oct-19 → ~27% of sales come from outside RJ and SP
TIM Participações – Investor Relations
(1) Duque de Caxias (RJ), Francisco Morato (SP), Franco da Rocha (SP), Camaçari (SP) and Anápolis (GO).
6
Results PresentationNot Only B2C: Evolving from Connectivity to Value-Added Service and
Solutions Provider
Porto Seguro Conecta ConectarAGRO Connected Car
→ New M2M customer base: vehicle/fleet → New farm covered: Amagg; → Development of agreements with car
tracking and financial services (POS); manufacturers;
→ Partnership to promote 700MHz 4G in
→ New SIM card management platform: countryside; → Connected sensors to monitor, protect,
upselling opportunity for value-added and maintain the car;
services. → Implemented solutions:
→ Management using new e-SIM platform;
→ Upselling opportunity for human lines
and VAS.
M2M Base
(mln)
+77.3% 3.3
0.8 Porto
1.8 Conecta
2.5
2Q18 2Q19
TIM Participações – Investor Relations
7
Results PresentationInfrastructure Evolution to Digital Transformation
4G Coverage and Capacity Expansions
Once again leading network user experience
4G in 700 MHz Spectrum Refarming Evolution
KPIs
(# Cities | % of Urban Pop.) (# Cities)
64.8% 65.7% 68.0% 4G Coverage 4G Availability1 Latency1
56.2% 2,264 (000 of Cities) (% of Time) (ms)
1.8 GHz 2,135
2Q19
1,426 1,471 1,548 1,393 TIM 3.3 1st TIM 1st TIM 1st
2Q18 82.4 60.9
1,172
276
2Q17 P2 3.1 P2 P3
2.1 GHz 183 72.1 62.7
95
3Q18 4Q18 1Q19 2Q19 P3 2.5 P3 P2
71.9 69.6
>57% of urban population with 4.5G P4 0.9 P4
61.4
P4
72.5
Thousands
Fiber Expansion: Transport and FTTH IT supporting business developments and
building the future
Backhaul FTTH Coverage
(% Sites w/ High Capacity) (mln Households)
→ New IoT Platform
68% 1.6
+5 pts
→ Migration of M2M management system from Porto Conecta
63% 3.8x
→ Network virtualization: new contract to implement 37 data
0.4 centers until 2021
→ New charging and billing capabilities to support marketing
2Q18 2Q19 2Q18 2Q19 actions (family plan) and customer care
TIM Participações – Investor Relations
(1) According to Tecnoblog News, Jul-19.
8
Results PresentationNew Network Initiatives
Today Future
Increasing assets efficiency 5G: Steps towards commercial launch
→ MOU with Vivo to discuss sharing opportunities aiming → 5G tests on real network in the 3.5GHz frequency
quality improvement and CAPEX / OPEX efficiency
→ Registered download speeds greater than FTTH (>1Gbps)
2G network in a single grid model with more efficient capacity distribution between users
4G network infrastructure in 700Mhz band – cities
withDigitalization Initiatives Together with Strong Execution Help Maintaining
OPEX Under Control
(YoY)
Caring Accumulated Savings in 1st Half
+33% -10%
Meu TIM # Human
unique users (11.1 mln) interactions
2019 ~R$ 330 mln
TIM Brasil’s 2019-21 Industrial Plan estimates savings up
Billing & to R$ 1.2 bln for the 3-year period
Payment
+66% +31% Normalized OPEX¹
E-Bills
(Penetration of ~60%) E-Payment amount
+0.2%
2Q 2,641 2,646
Acquisition
Flat
+55% +40% -0.2% OPEX
Postpaid E-Sales Control E-Sales 1Q 2,698 2,694
2018 2019
Recharges
+71% >35% Bad Debt is still the challenge.
OPEX ex-Bad Debt would have decreased
Penetration of E- 2.2% YoY in 1H19
Recharges via App
Recharges
TIM Participações – Investor Relations
(1) OPEX normalized for the effects detailed in slide 2.
10
Results PresentationFinancial Summary
Total Net Revenues (R$ mln) EBITDA1 & Margin1 Evolution (%; R$ bln, %YoY)
36.6% 37.9%
EBITDA1
Margin
+6.2% 1.62
1.52
+2.4% EBITDA1
2Q18 2Q19
6M19 EBITDA1 +5.8% YoY
Mobile ARPU up by 5.8% YoY, TIM Live grew 30.6% YoY, driving YTD Margin 36.8% (+1.4 p.p YoY)
pushing MSR increase to 1.9% YoY FSR up by 11.3% YoY
Strong EBITDA1 – CAPEX Net Income1 Expansion Pro-forma2 Margin1 Evolution (%)
(R$ mln) (R$ mln, %YoY)
% Net 423 38.6%
13% 16% +26.0% 37.6%
Revenues
336
35.3%
+24.1% 671
541
31.5%
29.5%
2Q18 2Q19 2Q18 2Q19 2Q15 2Q16 2Q17 2Q18 2Q19
6M19 Net Income1: +16.0% YoY
TIM Participações – Investor Relations
(1) EBITDA and Net Income normalized for the effects detailed in slide 2. 11
(2) Pro-forma excludes the effects of the adoption of IFRS 9, 15 and 16.
Results PresentationClosing 1st Half and Preparing to Accelerate Growth
Consistent Delivery with Focus on Annual Looking for Opportunities Ahead to Accelerate Value Creation
Targets
Back to the basics to achieve solid and precision execution;
Focus on Efficiency: Flat Opex in 1H19
Customer satisfaction improvement;
Accelerate TIM Live with large cities and renewed focus in quality;
Consistent EBITDA Growth: +5.8% in 1H19
Continuous deployment of digitalization, automation and advanced analytics;
Development of new verticals (IoT, M2M) and FWA to provide UBB through 5G;
Strong Cash Generation: 18.0% (EBITDA-
Capex over revenues) in 1H19 Exploring advertising as a new source of revenues.
Tax Efficiency: PIS/COFINS Disputes Expectations of a positive external environment by the end of 2019
Concluded (R$3.4bn1 in credits)
Pension reform approval should unlock a positive macroeconomic agenda;
IOE Distribution (~R$ 369mn in July + A new Brazilian proposal for tax reform is evolving, which is extremely important
~R$630mn for the rest of 2019) for country’s development;
Withdrawals of R$42bn from FGTS could support a short term repair in the GDP
growth expectation;
Restore Go-to-Market Approach
More rationality expected in mobile competitive environment going forward.
TIM Participações – Investor Relations
(1) Of which R$3.2bln already booked (R$ 353mln in 4Q18 and R$ 2,876mln in 2Q19).
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