Transcript Titulo

Presentation at the
9th Annual Asia Pacific / GEM Conference
October 04, 2004
New York
Contents
1. Brazilian Telecom Market
1
2. Company Overview
7
www.telemar.com.br/ir
JP Morgan GEM Conference – NY, October/04
1
Brazilian Telecom Market – Customer Base (in millions)
Fixed Line
Penetration
Rate (%)
23
Mobile
23
32 Brazil
23
Penetration
Rate (%)
Brazil
21
26
18
20
14
17
11
37
39
39
39
57
14
46
9
31
25
35
5
29
20
23
15
7
981
99
00
01
02
03
Jun/04
 After doubling in size after privatization
in 1998, further growth of fixed-line
platform more closely linked to the
performance of Brazilian economy.
1
981
99
00
01
02
03
Aug/04
 Brazilian subscriber base still growing
at over 30% p.a., with further room to
increase penetration levels.
Privatization.
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JP Morgan GEM Conference – NY, October/04
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Fixed Line Sector in Brazil – June/2004
Telemar
Brasil Telecom
Region I
Region II
15.2 M
39%
9.6 M
25%
Fixed Lines in Service
(Brazil: 39 m*)
Market Share
Telefonica
Embratel (LD Carrier)
Region IV
Region III
12.2 M
31%
* Includes smaller incumbents and mirror companies.
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Mobile Subscribers in Brazil - June/2004
Vivo – TEL/PT (CDMA)
23.5 m
TIM (TDMA/GSM)
Claro - AMX (TDMA/GSM)
11.1 m
44%
Oi - Telemar (100% GSM)
10.4 m
21%
19%
Opportunity & BRT (TDMA/GSM)*
Subscriber Base Brazil: 54 m**
Market Share
5.1 m**
* Other groups with 0.3 m subscribers (~0.5% market share)
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9%
3.6 m
7%
** Oi announced 5.5 million subs in Aug/04 - Brazil: 57 m subs
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Brazilian Telecom Market - Penetration Figures
Fixed: 39 m (Jun/04)
23%
Mobile: 57 m (Aug/04)
32%
 Mobile penetration still has a lot of room
to grow, helped by economic recovery;
70
60
50
58%
 Anatel estimates between 62.8 / 69.8 m
42%
 Estimated mobile penetration for 2008YE
subs by 2004YE;
Max.
ranges from 42% to 58%;
Min.
40
30
Mobile*
Fixed Line** 23%
 Fixed line penetration should be more or
less stable, following 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
www.telemar.com.br/ir
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Brazilian Telecom Market - Broadband
Broadband Access – ( thousands)
3,547
3,831
3,148
2,591
ADSL
1,874
1,199
technology in Brazil (over 80% market
share);
1,490
694
130
00
 ADSL has become the dominant
326
01
02
03
Jun_04
04E
05E
06E
07E
08E
 Broadband subscriber base expected
to increase by 2.5x through 2008;
PC Penetration (% of households)
 Telemar has a target to increase
broadband penetration from 2% of
fixed lines to 5% by 2006.
2003
Source: Anatel / Teleco / Pyramid Research estimates*
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Contents
1. Brazilian Telecom Market
2. Company Overview
www.telemar.com.br/ir
1
7
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Telemar Overview – June/2004
 TELEMAR is an Integrated Telecom Player
- Leadership in local and long distance services
(15.2 million fixed lines)
Region I
- Over 5 million mobile subscribers (GSM)
- Data, Corporate & Value Added services
Region I I
 Most Liquid stock in Brazil – BOVESPA
TNLP4: US$ 47 m / day ; TNLP3: US$ 3 m / day
Region
III
 Free Float: 82% of total shares
(27% traded at
NYSE: US$ 22 m / day)
 Market value: US$ 5.0 billion (Sep/04)
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Operating and Financial Highlights
Operating
Financial
 Stable fixed-line platform;
 Strong
growth
subscribers;
in
 Consistent top line growth;
mobile
and
ADSL
 Consistent
market share gains in long
distance services;
 Strong
segmented offer
distribution network;
A
and
a
large
state-of-art fiber & satellite backbone
reaching main cities of Brazil, supporting
voice, data and internet services.
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 Mid 40’s EBITDA margins;

Low CAPEX required;
 Strong cash generation;
 Execution of deleverage policy;
 High dividend yield.
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Telemar Customer Base
Fixed Line (million lines)
14.8
15.0
Mobile (million subs)
15.2
15.1
~15.2
~6.5
5.5
11.8
9.7
4.4
3.9
7.8
2.8
2.2
1.7
1998
1999
2000
2001
2002
2003
Jun_04 2004E
Mar_03 Jun_03 Sep_03 Dec_03 Mar_04 Aug_04 Dec_04E
~450
400
ADSL (thousand subs)
217
6
2001
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41
2002
2003
Aug_04
2004E
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Revenue Growth & Key Drivers
Net Revenue Growth – R$ million
14,003
 Telemar has been delivering strong
11,874
revenue growth in spite of a
modest performance of Brazilian
economy.
10,103
Key Revenue Drivers
New
Services1
Traditional
Services2
 Real growth driven by new segments of
23%
77%
1H02
31%
69%
1H03
mobile, data, broadband and long
distance.
37%
63%
 Revenues from traditional services
broadly in line with inflation (no real
growth).
1H04
1 Domestic
2 Local
and International Long Distance, Mobile, Data and Value Added Services.
voice (fixed), network usage and public phones.
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EBITDA
R$ million
45%
44%
EBITDA Margin
35%
 Recurring EBITDA margins stable
6,221
over time1;
5,353
 Given strong revenue growth in
3,558
3,225
2,974
2001
2002
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2003
1H03 1H04
more competitive segments, we
expect a slight reduction in
consolidated EBITDA margin to
~43% in 2004.
1EBITDA 2001 impacted by non recurring items.
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Free Cash Flow after Capex
R$ million
4,025
2,302
492
1,233
1,064
2001
1999
2002
2000
2003
2,247
1H03 1H04
- Turning point (fixed line
targets/mobile startup)
-5,906
Having met universal service goals and successfully rolled out mobile business, our Free
Cash Flow is expected to remain strong in the coming years.
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Debt Position
R$ million
Debt Repayment Schedule
(Total Debt: R$ 12.2 bn - Jun/04)
Net Debt Evolution
2.2
Net Debt/
EBITDA (x)
1.7
1.3
1.1
9.1
~ 1.0
3.4
2.8
7.8
7.7
7.3
2.4
6.3
1.5
1.4
0.8
2001
2002
2003
Jun_04
2004E
2H04
2005
2006
2007
2008
2009+
 Based on a strong cash generation, we expect to reduce our net debt level to below
1x EBITDA by 2004YE.
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CAPEX
R$ billion
10.1
 CAPEX / 2003: 12% of sales (17% in 2002);
Mobile
 Main investments in fixed line platform
already made;
 Total CAPEX since 1998: ~R$ 22 bn (nearly
US$ 11 bn);
 Target: Stabilize CAPEX at up to 15% of
Fixed Line
2.5
2.8
2.2
2.0
2.0
1.7
sales to support growth in new segments
(mobile, data, broadband and LD).
40%
0.5
1998
1999
2000
2001
2002
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2003
1H04
60%
2004E
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Dividend Payments - 1999/2003
R$ million
5.0%
Dividend yield
1.7%
2.4%
5.1% *
800
1.8%
Dividend Policy

500
224
251
1999
2000

303
2001
2002
All shares have the right to receive a
minimum annual payment of 25% of
adjusted net income;
Preferred Shares and ADR entitled to
a minimum dividend (higher of):
 6% Capital; or
 3% of Shareholder’s Equity
2003
* Based on stock prices on 08/31/04.
Our goal is to continue to provide high cash returns to our shareholders.
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Growth Opportunities
 Increase of PC penetration, broadband access and internet
traffic;
 Sustained growth rates in the mobile market should
leverage our total customer base to exceed 25 million
clients;
 Our fixed and mobile integrated strategy helping to
increase our sales and retain our clients.
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Our view on what the market considers as most relevant threats
 Traffic migration;
 New technologies
/ Alternative products;
 Competition;
 Regulatory Environment.
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JP Morgan GEM Conference – NY, October/04
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“Safe Harbor” Statement
This presentation contains forward-looking statements.
Statements that are not historical facts, including statements
about our beliefs and expectations, are forward-looking
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. Forward-looking 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
www.telemar.com.br/ir
Investor Relations - Telemar
Rua Humberto de Campos, 425 / 8º andar
Leblon
Rio de Janeiro -RJ
Phone: ( 55 21) 3131-1314/1313/1315/1316
Fax: (55 21) 3131-1155
E-mail: [email protected]
Visit our website:
http://www.telemar.com.br/ir
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