Transcript Titulo

UBS Global Conference
Presentation
November 17, 2004
0
AGENDA
• Brazilian Telecom Market
• Telemar Overview
• Financial Results
1
From State Monopoly to Privatization and Competition
1998
(Duopoly)
2004
(Competition)
RI
Brasil
Telecom
RII
RIV Embratel
(Long Distance)
RIII
Telefonica
Telemar
Telefonica
Brasil Telecom
Telmex/AMX
• 4 incumbents
• 4 Mirror Co’s.
TIM
Vivo
Data
Local
Telemar
Mobile
Major Players
Fixed line
LD
Up to 1998
(State Monopoly)
   
 

 

  


Mobile
VIII
• One Holding Company
• 26 state companies
(fixed/mobile)
X
IX
VII
IV
III
V
I & II
VI
• 10 incumbents
• 10 Mirror Co’s
Degree of Competition
(per service)
Local Fixed line
Long Distance
Broadband
Mobile
Data (Corporate)
: Low
: Medium-High
: Low-Medium
: High
: High
2
Major Telecom Players in Brazil – September/2004
Telemar
Oi
Brasil Telecom
(GSM)
Opportunity & BRT
TIM
(TDMA/GSM)
(TDMA/GSM)
Region I
Region II
15.2 M
39%
Telefonica
5.7 M
10%
Vivo
9.6 M
25%
Embratel (LD Carrier)
(CDMA)
4.0 M
7%
Claro
11.7 M
20%
Fixed line
(TDMA/GSM)
Lines in Service
(Brazil: 39 million*)
National Market Share
Region IV
Mobile
Subscriber Base
(Brazil: 58 million**)
Region III
12.2 M
31%
24.6 M
42%
12.0 M
21%
National Market Share
* Includes smaller incumbents and mirror companies.
** Includes other groups
3
Growth of Customer Base
Fixed Line & Mobile Customer Base – Brazil (millions)
33
Mobile subscribers
Fixed Lines in Service
18
21
23
26
23
14
8
9
8
11
9
14
17
20
3
2
1
31
13
12
1
94
2
95
3
96
35
39
39
29
surpassed fixed lines in
service, posting an annual
growth rate in excess of 30%
(1999 – 2003)
15
4
97
7
98
99
economic uptake going
forward
 Mobile users already
23
20
17
15
39
37
25
 Growth depends on Brazilian
46
5
Fixed Line
Penetration (%)
58
9
1
23
Mobile
Penetration (%)
00
01
02
03
04*
Privatization
PCS Entrants
* September 04
4
Penetration Figures and Forecasts
Fixed: 39 M (Sep/04)
23%
Mobile: 58 M (Sep/04)
33%
 Mobile penetration still has a lot of room
to grow;
70
 Market estimates between 62.8 / 69.8 m
58%
60
50
Max.
42%
Min.
40
30
Mobile*
Fixed Line** 23%
subs by 2004YE;
 Estimated mobile penetration for 2008YE
ranges from 42% to 58% (80 to 100 m
subs);
 Fixed line penetration should be more or
less stable, relying on GDP growth.
20
02
03
04E
05E
06E
07E
08E
* Estimates from: Citigroup, Goldman Sachs, JP Morgan, Merryll Lynch, Pyramid Research.
** Estimates from Yankee Group
5
Broadband Market
Broadband Market Brazil
 Broadband penetration still low in
Brazil (1.9 m accesses by Sep/04)
 ADSL is the dominant technology
(~85% market share);
 Cable has ~10% market share
 Broadband penetration is expected to
grow to 30% of total internet accesses
by 2008*;
 Telemar has a target to increase
broadband penetration from 2% of
fixed lines to 5% by 2006.
Source: Estimates Teleco e Telemar
Broadband Access – ( thousands)
3,547
CAGR
46%
PC Penetration (% of households)
3,831
3,148
2,591
1,874
1,199
1,490
694
130
00
326
01
02
03
Jun_04
Source: *Pyramid Research Estimates
04E
05E
06E
07E
08E
*
2003
6
AGENDA
• Brazilian Telecom Market
• Telemar Overview
• Financial Results
7
Shareholder Structure
Telemar
Participações S.A.
18.9%
TNLP
Tele Norte Leste
Participações S.A.
(TNL)
•(TNL)
Free Float: 81.1%
100%
Contact Center
TMAR
80.9%
Free Float: 19.1%
Fixed line
100%
Mobile
100%
Data Transmission
8
Telemar – Overview
Region I =
• Concession
for fixed line services
• License for
Wireless services
(GSM)
• Integrated Telecom Service Provider (Sep/04)
– 15.2 million fixed lines in service
– 5.7 million mobile subscribers
– 429 thousand ADSL subscribers
• Concession Area (Region I) - Local Service and PCS
– 65% of Brazilian territory/94 million inhabitants
– 40% of country’s GDP
– Over 20 million households
• Leadership in local and long distance services
Nationwide
• Authorization for
fixed line services,
DLD, ILD and Data
• After only 2 years of launching, already #2 position in mobile
subs (Region 1)
• Data, Corporate & Call Center Services (nationwide)
• Most heavily traded shares at Bovespa (TNLP4): US$ 48
million/day (Sept/04);
• Strong liquidity at the NYSE (TNE): US$ 18 million/day (Sep/04)
• High Free Float: 81.1% of total shares
• Market value of US$ 5.1 billion (Sep/04)
9
Main Achievements
1998
2004
International
RI
RII
RIII
Processes
16 Companies / Brandies
16 IT Systems
60 Network Platforms
50 Network Management Centers
116 Call Centers
Restructuring 16  1
- Optimization of Resources;
- Process Standardization;
- Management Centralization;
- Merger of wireline companies;
Services
Local Voice data and regional LD;
Market Approach
Geographic
Market Approach
Product and Service
Management/Processes/IT
All Unified
Services
Local & Advanced Voice
Domestic & International LD
Nationwide Data Transmission
Wireless
Call Center
Network Management / Internet
Market Vision
Customer Segmentation
10
Largest Telco Player with Integrated Operations
Fixed line
Data, Internet &
Corporate
Wireless
• Customer loyalty
• Cross-selling
National Coverage
• Convergent services
• Operating / Financial synergies
DLD / ILD
Broadband
• Scale
Contact Center
 The Company’s six main business lines provide a healthy balance between stable cash
flow and growth opportunities.
 Telemar is the leader or second major player in five out of its six main businesses
11
Sources of Growth: New Customers and New Services
Growth Strategy
Penetration
Growth
Convergence
Full
Telecom
Service
Provider
Innovation
Synergy
• Bundles
• One Stop Shop
• Cross Selling
Existing
Customers
& Services
• CLM (Customer
Lifetime Value
Management)
• Up Selling
New
Customers
Wallet
Share
Growth
New
Services
• Video & VOD
• Fixed-mobile phone
12
Integrated and Convergent Services
• Velox Wi-Fi
• Velox + Oi
• Hotspots
• Wireless banking
transactions
• Wireline SMS
+
• Wireless payment
authorizations
• Oi World (Video)
• Voice Net +
(virtual PBX integrated with Mobile trunks)
• Prepaid Mobile recharge on Fixed Line Bill
• Oi + Public Phone (single card)
• “Oi Family”
(reduced tariff from mobile to family’s fixed line)
13
Some Integrated and Convergent Services
Single Card for Mobile and Public Phone
Recharge Prepaid Mobile
on Fixed line Bill
100 minutes free from
Oi (Mobile) to fixed
Buy a Velox (DSL)
and get an Oi (Mobile)
14
Innovation: House of the future
Telemar is piloting new
revenue generating
services in its
“House of the Future”
Client Expenditure
Breakdown
Existing
New
Content
&
Services
+
Home Office
+
Cross
Selling
Broadband
+
USB
Up Selling
Security
System
Video Telephony
IP Telephony
Kitchen
Fixed Mobile Handset
Kid’s Room
Gaming
Living Room
Wireless
Access
Integrated
Entertainment
Fixed line
+
VOD
Mobile
15
Growth of Customer Base
In millions
CAGR (98-03)
19.7%
21.3
~22.4
Main drivers:
19.2
16.5
14.8
1.4
5.7
6.7
3.9
0.2
0.4
0.5
15.2
15.1
15.2
11.8
 Ability to anticipate the
growth potential of mobile
technology and keep on
expanding customer base;
9.7
7.8
15.1
 Capacity to maintain and
increase market share in a
changing technological and
market environment.
1998
1999
2000
Fixed Line
2001
2002
Mobile
2003
Sep_04
2004E
ADSL
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AGENDA
• Brazilian Telecom Market
• Telemar Overview
• Financial Results
17
CONSOLIDATED NET REVENUE
(R$ million)
14.003
11.571
11.874
10.332
10.103
8.122
5.158
1998
+ 12%
yoy
6.222
1999
2000
2001
2002
2003
9M03
9M04
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EBITDA – ANNUAL EVOLUTION
(R$ million)
EBITDA Margin
50%
44%
35%
45%
44%
45%
33%
43%
6.221
5.353
4.939
4.645
4.032
3.558
+ 6%
yoy
2.735
1.689
1998
1999
2000
2001
2002
2003
9M03
9M04
19
Consolidated CAPEX
R$ billion
100%
CAPEX / NET REV.
48%
36%
98
99
35%
00
01
17%
12%
02
03
 CAPEX 2003: ~12% of net
10%
revenues, compared to 17% in
2002;
9M04
10.1
 CAPEX 9M04: R$ 1,134 million
Wireless
(9.8% of sales);
2.2
 CAPEX since 1998: R$ 22
2.8
2.5
billion;
7.9
2.2
2.0
2.0
Wireline
0.9
1.7
0.6
40%
1.1
0.4
1.1
60%
 CAPEX should stay below
15% of net revenues in the
medium term.
1.1
0.7
1998
1999
2000
2001
2002
2003
9M04
2004E
Anatel Targets and Mobile License (R$1.1 bn)
20
Consolidated Operating Cash Flow after CAPEX
R$ million
CAGR (99-03)
69.1%
4,025
3.097
2,302
492
2.487
1,233
9M04
9M03
+25%
yoy
-5,906
1999
2000
2001
2002
2003
Having met our main fixed line universalization targets and mobile rollout,
our cash generation is expected to remain strong
21
Debt Position
Net Debt Evolution (R$ million)
2.2
Net Debt/
EBITDA
1.7
1.3
9.1
1.1
1.0 x
7.8
7.7
7.0
6.3*
2001
2002
2003
Sep_04
2004E
 Based on a strong cash generation, we expect to reduce our net debt level to below
1x EBITDA by 2004YE.
* To this figure should be added the amount disbursed by the Company on its stock buyback program
22
TNE: Dividend Payments - 1999/2003
US$ million
5.0%
5.5% Dividend yield*
277
2.2%
1.5%
125
1999
1.5%
128
2000
131
142
Dividend /
Interest on
Capital
2001
2002
2003
* Based on stock prices at 10/29/04 .
Our goal is to continue to provide high cash returns to investors
23
Closing remarks
• Ability to timely adjust to market changes, searching for new opportunities
• Re-shaping competition in the mobile market
• Continued increase in market share and revenues
• Sound financial position & increasing returns to shareholders
24
This Presentation is also available in our website at:
www.telemar.com.br/ir
This presentation contains forward-looking
statements. Statements that are not
historical facts, including statements about
our beliefs and expectations, are forwardlooking statements and involve inherent
risks and uncertainties. These statements
are based on current plans, estimates and
projections, and therefore you should not
place undue reliance on them. Forwardlooking statements speak only as of the date
they are made, and we undertake no
obligation to update publicly any of them in
light of new information or future events
Investor Relations
Rua Humberto de Campos, 425 / 8º andar
Leblon
Rio de Janeiro -RJ
Phone: ( 55 21) 3131-1314/1313/1315/1316/1317
Fax: (55 21) 3131-1155
E-mail: [email protected]
Visit our website:
http://www.telemar.com.br/ir
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