Transcript Titulo

Annual Goldman Sachs Latin American Investment
Forum
March 13th & 14th, 2003
Overview – December/2002
• Largest integrated telecom company in Brazil
– 15.1 million fixed lines in service (Dec/02)
– 1.4 million mobile subscribers (Dec/02)
• Concession Area
– 65% of Brazilian territory/93 million people
– 40% of country’s GDP
– Over 21 million households
• Leadership in local services (98% market share)
• National and International long distance services
• Regional Mobile services (GSM)
• National Data, Corporate & Value Added Services
• TNLP4: most liquid stock on Brazilian market
• TNE: most liquid Brazilian ADR on NYSE
• Free Float: 82% of total shares
• Market value: US$ 3.0 billion (Jan/03)
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• Level 2 ADR (NYSE: TNE): 29% of total shares
TNE – SHAREHOLDERS’ STRUCTURE
Tele Norte Leste Participações S.A.(TNE)
Telemar
Participações S.A.*
Treasury
2.3%
18.3%
79.4%
Free float
100.0%
100.0%
81.0%
Norte Leste (TMAR)
Free float = 19.2%
Treasury stock = 1.6%
* Controlling Shareholder (53% of voting shares)
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100.0%
TNE – CAPITAL STRUCTURE
Capital
R$ 4,477 million
Shares
Common
1/3
Preferred
127,949
2/3
255,897
383,846
Total
Tele Norte Leste
Participações S.A.
(TNE)
18.3%
81.7%
Telemar
Participações S.A.
5.0%
5.0%
Free float
BNDESPar
25.0%
11.3%
Fiago
AG Telecom
Brasil
52.7%
ASSECA Participações
Lexpart Part.
11.3%
NYSE
29.0%
19.9%
11.3%
BrasilCap
Brasil Veículos
11.3%
* 53% of TNE common shares
** Including Treasury Stock
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L.F. Tel
CORPORATE STRUCTURE
Board of Directors
• 11 Board members (3 licensed)
• Board Committees [Finance; Procurement & CAPEX; Compensation / Stock Option Plan]
Fiscal Committee
• 5 members, appointed by:
– Controlling Shareholder (Telemar Participações) - 3
– Minority Shareholders (voting shares) -1
– Minority Shareholders (preferred shares) -1
• Objectives: review and approve the Company’s accounting issues and procedures
Executive
Committee
• 2 members: TMAR´s and Oi’s CEO
Independent
Accountants
• PricewaterhouseCoopers
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General
Shareholders’
Meeting
DIVIDEND POLICY
• All shares have the right to receive a minimum annual payment
of 25% of adjusted net income, but
TNE
• Preferred Shares (and ADR) are entitled to a minimum of
 6% of the Company´s Capital, or
Whichever is
higher
 3% of the Company´s Shareholders´ Equity
• All shares have the right to receive a minimum annual payment
of 25% of adjusted net income, but
 Class B Shares (TMAR 6): 10% of the Company´s Capital
(allocated to this class)
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TMAR
Preferred shares are entitled to:
 Class A Shares (TMAR 5): 10% higher dividend than the one
paid to the Common Shares
MANAGING STRUCTURE
Board of
Directors
Audit
Committee
Fiscal
Committee
TNE
Executive Committee
TMAR
CEO
Public Relations
Asset Management
CFO
Strategy and
Regulation
Legal Counsel
Treasury/ Investor Relations
Procurement
Financial Planning
Controlling
TMAR
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Internal Audit
Oi CEO
MAIN ACHIEVEMENTS
2002
1998
International
Processes
Services
Local Voice and regional LD;
Regional Data Communic.
All Unified
Restructuring 16  1
- Optimization of Resources;
- Process Standardization;
- Management Centralization;
- Merger of wireline companies;
- Better utilization of tax loss
carry-forwards
Local & Advanced Voice
Domestic & International LD
Nationwide Data Transmission
Contact Center
Network Management / Internet
Market Vision
Market Approach
Geographic
Services
Platform Expansion
Customer Segmentation
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16 Companies
16 IT Systems
15 Network Platforms
23 Network Management Centers
116 Call Centers
Management/Processes/IT
ANATEL TARGETS: REAPING THE BENEFITS
• Oi’s operational launching
• National long distance service
• International long distance service
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• Nationwide data service
WIRELINE PLATFORM AND UTILIZATION RATE
Million Lines in service (LIS)
Million Lines installed (LI)
Utilization rate (wireline)
+ 110%
CAGRLIS =
20.4%
18.1
14.8
11.8
7.8
8.8
89%
July 1998*
1998
* Acquisition of the Company
12.8
10.5
93%
89%
15.1
92%
82%
1999
2000
2001
86%
2002
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7.2
8.1
9.7
17.5
REVENUE GROWTH
R$ Mn
Gross revenue
Net revenue
+ 132%
CAGR =
23.4%
16,091
+18%
YoY
13,660
11,874
10,851
8,433
6,946
10,103
8,122
6,222
1998
1999
2000
2001
2002
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5,158
OPERATING EXPENSES*
R$ Mn
Cost of services
2001
Interconnection
6,545
Selling expenses
18%
6,545
26%
G&A and other
expenses
6,584
21%
4,095
3,470
3,488
35%
2001
2002
6,584
1999
2000
2001
2002
8%
19%
37%
36%
2002
* Ex depreciation and amortization
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1998
EMPLOYEES EVOLUTION
28,736
27,471
24,206
24,511
Consolidated (including
Contax and Oi)
21,090
Total wireline
15,056
9,441
1999
2000
2001
2002
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1998
BAD DEBT PROVISIONS
% of gross revenue
One time
adjustments
5.7%
3.8%
5.6%
4.2%
2.5%
3.0%
2.0%
1Q02
1998
1999
2000
2001
2Q02
3Q02
4Q02
2002
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1.6%
2.8%
EBITDA EVOLUTION – TNE
R$ Mn
EBITDA margin (%)
Net revenue
EBITDA
50%
44%
45%
35%
33%
99
00
01
10,103
02
8,127
6,222
5,290
5,158
4,032
3,558
2,735
1,689
1998
1999
2000
2001
2002
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98
11,874
EMPLOYEE PRODUCTIVITY – TMAR
Lines in service/employee
Net revenue/employee
EBITDA/employee
R$ thousand
R$ thousand
1,604
+375%
+490%
1,257
984
+700%
673
560
385
397
1998* 1999*
213
2000*
2001
* 1998, 1999 and 2000 pro-form
2002
1998*
255
1999*
2000*
2001
2002
70
112
1998*
1999*
191
236
2000*
2001
2002
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322
560
PRODUCTIVITY RATIOS – TMAR
R$ per average line in service (ALIS)
Net revenue/ ALIS
Cash Costs/ALIS
EBITDA/ALIS
+7%
717
722
764
744
767
-19%
+60%
483
474
393
385
379
317
270
234
1998*
1999*
2000*
2001
2002
1998*
1999*
2000*
2001
2002
1998*
1999*
374
2000*
2001
2002
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405
FINANCIAL RESULTS
R$ Mn
12M02
821
502
(1,265)
(2,463)
Interest on Loans/ Debentures
(376)
(824)
Monetary & Exchange Variations
(426)
* (953)
Banking Fees & Monetary Adjustment of
Provision for Contingencies
(219)
(339)
Premium Amortizations, PIS, Confins
(Taxes)
Others
(156)
(88)
(312)
(35)
Net Financial Result
(444)
(1,961)
Financial Expenses
Brazilian
Currency
devaluation
* Gross of R$ 715 million of interest expenses on swap operations.
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Financial Revenue
12M01
CONSOLIDATED CAPEX - TNE
R$ Mn
CAPEX / Net Revenue
Wireline
99.6%
Wireless
48.5%
36.1%
17.1%
10,060
34.5%
1999
2000
2001
2002
2,172
7,888
2,031
2,500
1998
2,244
1999
2,804
2000
2001
2,000
945
700
1,086
1,300
2002
2003E
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1998
CONSOLIDATED NET DEBT
R$ Mn
Dec/01
Dec/02
Total debt
8,937
10,774
• Short term
1,388
1,769
• Long term
7,549
9,006
(1,235)
(1,513)
-
(141)
7,702
9,121
(-) Cash
(-) Long term financ. invest.
(=) Net debt
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R$ Mn
CONSOLIDATED DEBT PROFILE – CURRENCY & COST (DEC/02)
%
Currency
4%
4%
5%
CDI
18%
TJLP
Local
US$
91%
Currency Basket
73%
Fixed Rate (Foreign
Currency)
Floating Rate
(Foreign Currency)
Cost of Debt
Currency
Cost (% p.a.)
US$
Basket
Real
Libor + 5
12.3
23.2
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5%
Interest Index
CONSOLIDATED DEBT PROFILE – REPAYMENT SCHEDULE (DEC/02)
Total debt: R$ 10,774 Mn
28%
20%
18%
16%
2nd
half
9%
1st
half
2003
2004
2005
2006
2007
2008
5%
2009
onwards
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4%
WIRELESS PROJECT ROLLOUT  Oi
Distribution
Resource
optimization
~ 400 cities covered; 48 million people
GPRS coverage in 6 main capitals
2,467 sites (BTS)
CAPEX optimization (co-siting: 971 in / 531 out)
International roaming
Main suppliers: Nokia, Siemens, Alcatel, Ericsson
Coverage focused on
profitable areas
• 1,824 points of sales (breaking exclusivity of
A & B band agreements)
• Diversified channels with high capillarity
– Retail, specialized agents/dealers, stores, telesales
• Corporate sales effort combined with Telemar
Consumer and corporate
focus through high
capillarity and diversity of
channels
•
•
•
•
•
Focus on profitable
growth, minimizing OPEX
and CAPEX
Tight headcount structure: 846 employees
Infrastructure sharing
Outsourcing (including call centers)
Synergies with Telemar
Strong brand name
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Coverage
•
•
•
•
•
•
• Innovative
campaign:
31 years
• Differentiated
service plans
• Diversified
handsets
offer
Initial targets (July/2002)
First achievements (December/2002)
• 500,000 clients in 12 months
• 1,400,000 clients in just 6 months
• ARPU of R$ 26
• ARPU R$ 33 (first 6 months)
• MIX Pre/Post:
90%/10%
• MIX Pre/Post:
80%/20% (6 months)
• Market share and gross additions in
line with fair market share
• Market share and gross additions well
above fair market share
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Oi  POST-LAUNCHING RESULTS
Oi’s SUBSCRIBER BASE – MONTHLY EVOLUTION
Thousands of subscribers
Prepaid
Post-paid
1,401
20%
978
22%
677
502
386
179
20%
19%
21%
81%
80%
80%
22%
78%
78%
79%
Aug/02
Sep/02
Oct/02
Nov/02
Dec/02
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Jul/02
REVENUE GROWTH STRATEGY
Local
Service
Data &
Corporate
Integrated
Strategy
Mobility
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Long
Distance
REVENUE GROWTH STRATEGY
Local Service
•Platform Growth in line with GDP
•Increase Value Added Services
• Maintain leadership in home market
Local
Service
Data &
Corporate
• Advanced voice services
(corporate/middle market/SOHO)
• Best carrier’s carrier – network
leverage (home market)
• Increase ARPU
• Value added services
Mobility
• Reduce interconnection costs
(Fixed to Mobile)
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Long
Distance
REVENUE GROWTH STRATEGY
Data & Corporate
•Opportunity to Increase Market Share
Local
Service
Data &
Corporate
• Increase offer to SME (home market)
• ADSL (high end/SOHO/small
businesses)
• Nationwide services (corporate level)
• Leverage on national backbone
Mobility
(Telemar + Pegasus)
• Competitive Service Level Agreements
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Long
Distance
REVENUE GROWTH STRATEGY
Long Distance
•Offer of New Services (Increase Market Share)
• Leadership in home market
Local
Service
Data &
Corporate
• Conquer new markets (interregional/international/SPM – dial
code)
• Protect existing market
– Retail: loyalty/retention programs
+ promotions
Mobility
– Corporate: best quality (call
completion/billing) + competitive
service plans (discounts/volume)
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Long
Distance
REVENUE GROWTH STRATEGY
Mobile services
•New Technology + Migration Fixed to Mobile
Long
Distance
Data &
Corporate
Mobility
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Local
Service
• Deepen market segmentation
(MTV & Celebrities)
• Stimulate “DATA” + SMS Growth
• Focus on Corporate Businesses
• Leverage on competitive advantages
– Synergies with wireline company
(TMAR)
– Regional coverage
– GSM technology (speed & features)
• Low handset subsidies/aggressive
service plans
• Increase national & international
roaming
OUTLOOK 2003
• Platform: Wireline: in line with GDP
Wireless: +/- 1 million adds
• Revenue: (1) NLD, data and mobile growth
(2) Local and LD tariff increase (June)
• Cost : strict control
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• Net Debt: flat to small reduction
“SAFE HARBOR” STATEMENT
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/ri
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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