Transcript Document

TELE NORTE LESTE PARTICIPAÇÕES S.A.
September/02
1
Overview
 Largest Telco in Latin America:
17.7 million lines installed*
14.9 million lines in service*
 Concession Area:
 65% of Brazilian Territory / 93 million people
 40% of Country’s GDP
 Over 21 Million Households
 Tele Density: 16% ( vs. 22% National Average)
 TNLP4: Heaviest Weighted Stock in IBOVESPA
 Free Float: 79% of Total Shares
 Level 2 ADR (NYSE:TNE): 28% of Total Shares
 Market Value: US$ 3.4 billion (August/02)
* In June/02
September/02
2
Corporate Structure
TELEMAR
PARTICIPAÇÕES S.A. **
FREE FLOAT
18.7%
79.0%
TELE NORTE LESTE
2.3% Tresuary
PARTICIPAÇÕES S.A
79.5%
Pegasus
24.4%
HICORP*
OUTSOURCING
TELEMAR
Norte Leste
1.6% Treasuary
TNL ACESSO*
CONTAX*
TNEXT*
Free Float
18.9%
*100% owned Subsidiary
** Controlling Shareholder
September/02
3
Corporate Structure
• Shareholders´ Meetings
•At least one annual general meeting
• Board of Directors
• Monthly Meetings
• 11 board members (+ 11 alternates)
10 shareholders´
representatives plus the CEO
•Independent Accountants
PricewaterhouseCoopers
• Executive Committee
September/02
4
Board Committees
Finance Committee
• Monthly meetings
• 10 members
• Objectives: Review, analyze and advise the Board of Directors on: Financial Risks,
Insurance Policy, Independent Accountants, Internal Audit Program, Budget, etc.
Procurement and Investment Committee
• 6 members
• Objectives: Advise the Board of Directors on procurement and execution on the capital
expenditures program.
Compensation Committee
• Semiannual
• 3 members
• Objectives: Define conditions of employees´ benefits in general and the stock option
program in particular.
September/02
5
Personnel
Full-Time Employees
TMAR
Connect
TNE+Other Subsidiaries
Wireline Total
Oi
Contax
Total
September/02
2Q01
3Q01
4Q01
1Q02
2Q02
% yoy
16,795
15,803
10,663
10,483
10,283
-39%
4,141
6,977
3,417
979
152
-96%
961
1057
976
427
486
-49%
21,897
23,837
15,056
11,889
10,921
-50%
151
286
434
570
663
339%
9,558
12,119
11,981
10,397
11,594
21%
31,606
36,242
27,471
22,856
23,178
-27%
6
Platform Growth
Average LIS
14.9
12.7
10.1
8.2
+19%
1H99
+23%
1H00
+26%
18.1
+17%
1H01
17.7
1H02
14.8
14.8
17.7
14.9
15.2
12.8
11.8
9.7
7.2
8.1
Jul-98
7.8
10.5
8.8
1998
1999
2000
Lines in Service (million)
September/02
2001
Mar-02 Jun-02
Dec02E
Lines Installed (million)
7
Quarterly Net Additions
(in 000)
636
472
993
1,093
767
527
552
192
2Q01
-13
3Q01
Net Additions
September/02
4Q01
1Q02
142
2Q02
Disconnected Lines
8
Revenue Growth
(R$ Mn)
CAGR 25.3%
13,660
10,851
10,103
8,433
6,946
8,122
6,222
5,158
1998
1999
2000
Gross Revenue
September/02
2001
2002E
Net Revenue
9
Employee Productivity - Wireline
1,368
1,245
984
618
Jun_01
614
Sep_01
Dec_01
Mar_02
jun_02
( LIS/ Employees)
September/02
10
Revenue per Employee*
1,380
1,265
907
514
288
1998
(*) Gross
346
1999
2000
2001
1Q02**
2Q02**
Revenue / Full-time wireline employees (R$ 000/year)
(**) Annualized ratio
September/02
11
Gross Revenue - Quarterly Growth (R$ Mn)
1998
1999
2000
2001
1HALF
49%
46%
46%
47%
2HALF
51%
54%
54%
53%
13,660
10,851
3,684
8,433
2,996
3,570
4Q
2,289
2,840
3,774
3Q
2Q
2,229
3,285
2,568
2.033
5,015
3,915
1Q
1,882
1999
September/02
7,533
6,406
2,447
2000
3,121
2001
3,759
1H02
12
Gross Revenue Breakdown (R$ Mn)
100.0%
1H01
8.8%
11.4%
5.9%
6.9%
24.0%
6,406
43.0%
100.0%
10.0%
1H02
6.0%
6.2%
7,533
10.9%
21.9%
(+18%)
45.0%
Local
September/02
Fixed-
Network
Long
Mobile
Usage
Distance
Data
Other
TOTAL
13
Operating Expense Breakdown (R$ Mn)
1,528
1,266
825
785
849
2,188
24
2Q01
3Q01
4Q01
1Q02
Ex- Interconnection
2Q02
21
1,397
11
1,832
24
11
22
19
29
31
29
20
28
September/02
1,448
4
19
22
1,372
41
30
31
43
41
2Q01
3Q01
4Q01
1Q02
2Q02
Interconnection Cost
Selling Expenses
Cost of Services
G&A Expenses/ Other
%
14
Fixed Mobile Revenue & Interconnection Costs
(R$ Mn)
595
590
589
573
569
576
563
554
548
558
527
497
1Q01
2Q01
3Q01
Net F-M Revenue
September/02
4Q01
1Q02
2Q02
Interconnection Cost
15
Bad Debt Provisions
10.6%
5.1%*
5.2%
5.9%
5.6%
4.9%
4.6%
4.2%
2.8%
87
1Q01
152
2Q01
380
193
210
158
3Q01
4Q01
1Q02
2Q02
R$ Million
% of Gross Revenue
* Normalized Level (excluding non-recurring adjustments)
September/02
Average Average
2001
1H02
16
Consolidated Income Statement
R$ Millions
Net Operating Revenue
Operating Expenses
Cost of Services
Selling Expenses
G&A Expenses
Other Expenses (Revenues), net
Interconection Costs
EBITDA
Equity accounting
Depreciation and Amortization
EBIT
Financial Expenses
Financial Income
Non Operating Expenses (Revenues)
Income before Tax and Social Contribution
Income Tax and Social Contribution
Employee Profit Share
Minority Interest
Net Income
September/02
2Q01
1Q02
2,438.0 2,784.6
822.4
784.5
389.3
426.4
286.2
300.9
176.3
173.3
(29.4) (116.1)
574.4
587.4
1,041.2 1,412.7
(6.9)
6.3
728.9
954.0
319.2
452.4
177.8
322.1
(52.4) (128.9)
(17.7)
2.3
211.5
256.9
15.8
74.3
(1.0)
79.7
39.6
117.0
143.0
2Q02
2,780.4
849.1
418.0
274.5
195.4
(38.8)
599.2
1,332.1
1.5
953.9
376.8
635.8
(135.7)
(1.9)
(121.5)
(45.1)
(76.3)
Var.
2Q02/2Q01
14.0%
3.2%
7.4%
-4.1%
10.8%
32.0%
4.3%
27.9%
-121.7%
30.9%
18.0%
257.6%
159.0%
-89.3%
-157.4%
-385.4%
-100.0%
-100.0%
-165.2%
17
Consolidated Balance Sheet
(R$ Mn)
6/30/2001
12/31/2001
3/31/2002
21,297
26,766
26,261
25,661
4,526
4,950
4,950
4,736
251
1,235
1,044
573
Accounts Receivables - Services
2,537
2,146
2,227
Recoverable Taxes
1,154
1,293
584
276
TOTAL ASSETS
Current Assets
Cash and ST Investments
Other Current Assets
Long Term Assets
Recoverable Taxes
Other
Permanent Assets
Investments
Property Plant and Equipment
Deferred Assets
September/02
6/30/2001 12/31/2001 3/31/2002 6/30/2002
6/30/2002
TOTAL LIABILITIES
21,297
26,766
26,261
25,661
4,149
5,609
4,438
3,386
Suppliers
1,420
2,199
1,648
1,245
2,401
Loans and Financing
1,088
1,388
1,424
1,220
1,309
1,462
Salaries Benefits and Social Sec.
155
182
161
140
370
300
Taxes
598
524
500
475
Dividends Payable
168
538
540
135
Other Accounts Payable
720
778
165
170
1,413
1,949
1,778
1,612
1,232
1,561
1,405
1,252
181
388
373
360
15,358
19,867
19,533
19,313
110
160
159
158
14,096
19,244
18,735
18,200
1,152
463
639
955
Current Liabilities
4,185
9,075
9,555
10,078
Loans and Financing
3,160
7,549
7,937
8,481
Contingencies Provisions
1,010
1,492
1,579
1,563
Other Accounts Payable
14
34
39
34
Deferred Income
Minoritary Interest
Shareholder´s Equity
157
2
2,352
10,454
2,057
10,023
Long Term Liabilities
-
2,102
10,166
-
2,107
10,090
18
Lines Blocked
(in 000)
8.1%
8.5%
6.4%
6.1%
1,185
1,152
945
Jun-01
Sep-01
Total
Dec-01
Partial
Partial Blockage (outgoing calls):
30 days past due
Total Blockage (all calls):
60 days past due
Disconnection:
90 days past due
September/02
6.7%
995
912
Mar-02
Jun-02
% of Total Lines in Service
19
Disconnected Lines
(in 000)
4.5%
5.2%
767
3.6%
3.4%
552
527
636
472
3.7%
3.5%
413
1Q01
2Q01
3Q01
Disconnected Lines (000)
September/02
4Q01
1Q02
2Q02
% Average LIS
20
EBITDA Growth (R$ Mn)
5,565
EBITDA
4,744
Margin
2,820
2,745
2,623
49.3%
2,121
44.7%
Net Revenue
Operating
Expenses*
EBITDA
1H01
1H02
(*) Excluding Depreciation and Amortization
September/02
21
EBITDA – Quarterly Statistics
1,413
47%
1,080
1,372
51% 1,332
49%
48%
43%
1,041
901
865
33%
35%
437
17%
1Q01
2Q01
3Q01
4Q01
EBITDA (R$ MM)
September/02
1Q02
2Q02
Average
2001
Average
1H02
EBITDA Margin (%)
22
CAPEX / Net Revenue - 1998/2002
99.6%
48.5%
10,060 10,103
36.1%
34.5%
8,122
14.8%
6,222
5,565
5,158
2,500
2,244
2,804
2,000
825
1998
1999
2000
Capex
2001
Net Revenue
Capex / Net Revenue
September/02
1H02
2002
* Includes PCS
23
CAPEX – Quarterly Statistics - Consolidated
(R$ Bn)
10.1
3.2
1.8
1Q01
3.0
2.1
2Q01
2.0
3Q01
4Q01
Wireline Business
September/02
0.4
0.4
1Q02
2Q02
2001
2002E
Wireless Business
24
Wireline CAPEX 1998 / 2002E (TMAR)
7.9
5.3
2.8
2.5
2.3
2.2
1.3
1.7
1.2
1.0
0.4
1998
1999
2000
2001
wireline CAPEX (R$ bn)
September/02
1H02
2002E
Lines Installed (mn)
25
Debt Structure – 06/30/02
TOTAL DEBT
R$ mn
ST 1,220
2002
8%
2006 and beyond
43%
2003
11%
Cash 573
2004
18%
2005
20%
Net Debt
9,128
DEBT PROFILE
•R$ 6,251 million foreign currency (64%)*:
LIBOR + 5,19% p.a.
Long Term
8,481
TOTAL = 9,701
September/02
•R$ 3,450 million in Brazilian currency (36%):
(+ 17.4% p.a.)
* 100% Hedged
26
Changes in Debt Position – TNE (R$ Mn)
Indebtedness
Jun-01
Sep-01
Dec-01
Mar-02
Jun-02
Change
Jun02/Jun01
Total
Short Term
Long Term
(-) Cash
4,248
1,088
3,160
(251)
8,906
1,160
7,746
(1,870)
8,937
1,388
7,549
(1,235)
9,361
1,424
7,937
(1,044)
9,701
1,220
8,481
(573)
Net Debt
3,997
7,036
7,702
8,317
9,128
5,453
132
5,321
(322)
5,131
Suppliers
Other Accounts Payable
Total
1,420
720
2,140
1,446
765
2,211
2,199
778
2,977
1,648
165
1,813
1,245
170
1,415
(175)
(550)
(725)
Total
6,137
9,247
10,679
10,130
10,543
September/02
4,406
27
OUTLOOK 2002
 Revenue Drivers:
 Cost Drivers:
Rate increase
Platform in service growth
New Services – Long Distance /Data
New Markets
Increase operating efficiencies;
Headcount reduction;
Maintenance costs reduction;
Bad debt control;
Oi – operating / financial expenses
 CAPEX reduction – R$ 2 billion;
 Net Debt under control - less than R$ 9 billion.
September/02
28
Average Rates for Telecommunication Services*
(R$)
Local Rates
Installation Fee
Residential Subscription
Commercial Subscription
PBX Subscription
Pulses
Readjustment
Jun_02 (%)
2000
50
14.11
21.96
29.3
0.066
2001
50
16.64
25.65
32.62
0.066
2002
30
18.97
29.79
29.79
0.072
Public Telephone Rates
Local
2000
0.05
2001
0.054
2002
0.058
Fixed-Mobile Rate
(per minute)
VC1
VC2
VC3
2000
2001
2002
0.29
0.61
0.69
0.34
0.68
0.77
0.35
0.74
0.85
2.9%
8.8%
10.4%
Intraregional Long-Distance Rates
(per minute)
0 to 50 km
50 to 100 km
100 to 300 km
Over 300 km
2000
0.15
0.24
0.27
0.32
2001
0.17
0.26
0.27
0.28
2002
0.19
0.27
0.29
0.31
11.8%
3.8%
7.4%
10.7%
Network Usage Rates (per minute)
Local
Long-distance
2000
0.04
0.07
2001
0.047
0.074
2002
0.047
0.074
0.0%
0.0%
-40.0%
14.0%
16.1%
-8.7%
9.1%
7.4%
(*) Rates net of taxes, regulated by Anatel
(**) Actual Rates
Disclaimer – The rates are shown as average figures and do not necessarily
correspond to actual rates, which may vary from state to state, according to day of
the week, duration of the call, etc.
September/02
29
New Businesses  Adding Value
National & International Long Distance Calls
Region I
Region II
Outgoing Calls
Incoming Calls
International Calls
September/02
Region III
30
Cost Drivers
 Headcount Reduction - 40% in average
 Third Party Services Reduction
 Bad Debt Control - less than 5% of Gross Revenue (in
average)
 Marketing Expenses
• wireline (30% reduction)
• wireless
September/02
31
2002/2001 - CAPEX Reduction - TNE
CAPEX
10.1
2.5
2.2
1998
1999
2.8
2.0
2001
R$ 10.1 bn
2000
2001
2002
2002
R$ 2.0 bn
-80%
TMAR- Wireline Business
Oi - Wireless Business
September/02
32
Oi
 Current Status
 Tariffs
 CAPEX
September/02
33
TNE – PCS ´´Oi´´ - Current Status
 Financing US$ 1.4 billion credit (suppliers and bank facilities);
 Launching of the brand name (Jan/02);
 Launch of Operations 25th June ;
 14 Metropolitan areas (16 as of 03) – 320 cities;
 Main Suppliers: Nokia, Alcatel, Siemens;
 Distribution channels = over 1,600 point of sales;
 2,000 integrated sites;
 Employees: 663 in June;
 400,000 subscribers in August/02;
 Agreement with 19 countries for International roaming;
 Technology GSM/GPRS - in all Capitals;
 CAPEX through 2004: R$ 2.7 billion (R$ 1.4 billion until 1H02).
September/02
34
Tariffs
Pre-Paid
Tariffs (R$ per minute)
Normal
Oi to Fixed -line
Oi to Oi
1.39
Oi to other cellular company
1.49
Limited
Flat
Oi to Fixed-line
Oi to Oi
Oi to other cellular company
0.34
0.69
0.99
Post- Paid
Monthly Fee (R$)
Minutes
Tariff (R$ / min)
September/02
Oi 40
Oi 80
Oi 160
Oi 300
29.90
47.90
79.90
114.00
40
80
160
300
0.75
0.60
0.50
0.38
35
CAPEX
• 2001 / 2004:
R$ 3.8 bn
R$ 1.1bn – License (2001)
R$ 2.7 bn – Network
• Network CAPEX (R$ bn):
1.1
1.0
1H02
2001
September/02
0.4
2002E
36
2002 – Industry Outlook
 Increasing competition DLD Market (Outgoing calls from Regions 1 and 3)
Data Businesses (Corporate – Nationwide)
 Regulatory Issues
 Interconnection Battle
Long Distance x Local Telcos
Wireline x Wireless
 Use of Universalization Funds (FUST)
 Bad Debt Control – New Procedures
 SMP Rules (Wireless)
 Introduction of 2.5 G (?)
 Beginning of Consolidation / Alliances / Partnership´s
 Cellular/Cellular (Block Strategy – TEM/PT; TIM; Telecom Americas)
 ILEC´s / CLEC´s
 ILEC´s / Mirrors
 ILEC´s / Cellular ( Band B´s / Independents)
 ILEC´s / ISP´s (Flat Rate Model)
September/02
37
“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.
Investor Relations
Rua Humberto de Campos, 425 / 8º andar
Leblon
Rio de Janeiro -RJ
Phone: ( 55 21) 3131-1314/1315/1316/1313
Fax: (55 21) 3131-1155
E-mail: [email protected]
Visit our website: http://www.telemar.com.br/ri
September/02
38