Transcript Titulo

Corporate Presentation
www.telemar.com.br/ir
June, 2004
Telemar Presentation - Contents
June 2004
1. Highlights – 2003/2004
1
2. Growth Strategy
3
3. Review of Operating Results
12
4. Financial Overview
20
www.telemar.com.br/ir
1
Highlights – Telemar 2003/2004
Region I
= Concession area
for Wireline services
= Mobile license
for Wireless services
Nationwide
= Authorization area
for Long-Distance
and Data services
Goal: Building a fully integrated
telecom service provider
 Change, adaptation and consolidation
 Market share gains in all lines of
businesses
 Selective growth (New Services)
 Consolidation of investments
 Growth in highly competitive markets:
 Long Distance (Nationwide and
International)
 Data & Corporate (Nationwide)
 PCS Mobile Services (Region I)
 Exploring new opportunities:
 Broadband
 Bundling Services
 New Products (residential/SME)
 Wi-Fi hotspots
Target: Ensure a sound financial position,
with increasing returns to shareholders
June 2004
www.telemar.com.br/ir
2
June 2004
1. Highlights – 2003/2004
1
2. Growth Strategy
3
3. Review of Operating Results
12
4. Financial Overview
20
www.telemar.com.br/ir
3
Expansion of Customer Base
millions customers
19.0
CAGR (98-03)
19.5%
16.4
14.8
1.4
3.9
19.5 ~21.6
4.4
6.5
 Ability to anticipate wireless
migration and continue
exceptional growth
performance
11.8
 Capacity to maintain /
9.7
7.8
15.0
15.1
15.1
15.1
increase market share in a
changing telecom landscape
 Target: Continue delivering
1998
1999
2000
2001
Wireline
2002
2003
Mar 04
2004E
customer growth
Wireless
* Company’s acquisition
June 2004
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Fixed Lines in Service
million lines
 Investments for expansion of
fixed line network essentially
completed
14.8
15.0
15.1
15.1
~15.1
 Fully operational digital
platform
 Mix consists of 78%
11.8
9.7
residential, 18% business,
and 4% public phones
7.8
 Wireline penetration is only
~50% of households in Region
I
1998
1999
2000
growth
June 2004
2001
2002
2003
Mar 04
maintenance
2004E
 Obstacle: Gain in wireline
penetration subject to GDP
growth and regulatory
changes
www.telemar.com.br/ir
5
Wireline / ADSL Market in Brazil
Market Share (Brazil v. Region I) – Dec/03
Region I
Brazil
 Velox is already present in 110
Speedy
40%
Other
18%
Turbo
Velox
Other
83%
17%
cities, more than ten times the
availability of broadband
alternatives
 Broadband penetration is
24%
expected to grow to 30% of
nationwide internet access in
the next five years
Velox
18%
PC Penetration (% of households) – Dec/03
 Effort to build sales channels
to penetrate SME clients
together with other bundled
services (LD, wireless)
Average
 Challenge: Capture and
*
retain premium clients
increasing overall ARPU
2003
*Source: Pyramid Research
June 2004
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ADSL Growth
Thousand lines
450
 Highest ADSL growth in Brazil
(+176k lines >37% of 2003
nationwide net adds)
 ADSL represents 82% of
284
broadband access in Brazil
217
 Velox revenues increased by
6
2001
41
2002
2003
1Q04
2004E
Gross Revenue
(R$ million)
128
288% in 2003 with significant
room to grow in coming
periods
 Subscribers reached 217K in
Dec/03 (18% of total
broadband access in Brazil),
and 284k in Mar/04
69
 Target: Increase ADSL
33
2001
June 2004
2002
penetration in Region I from
1.9% of LIS to 5% in 2-3 years
2003
1Q04
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7
Wireless Market in Brazil
Market Share (Brazil v. Region I) – Mar/04
Region I
Brazil
Claro
Oi
20%
9%
 Even with increased
Oi
competition, Oi is still the
highest growth player in its
home market (50% net adds)
20%
Other*
8%
TIM
Other
19%
80%
 Oi reached ~20% market share
Vivo
in Mar/04
44%
^Includes other operators: Nextel, CTBC, SERCOMTEL, Telemig and Tele
Norte Celular
 Wireless penetration in
Wireless Penetration (%) – Apr/04
Region I (23%) still offers
significant growth potential
 Challenge: Grow subs
Average
by 54% in 2004, with
positive EBITDA margins,
aiming to #2 position in
Region I
*
*Source: Pyramid Research
June 2004
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Wireless Platform
Thousand subscribers
~6,500
3,893
4,408
15%
 Most successful GSM launch
17%
83%
2,236
35
Jun 02
1,401
20%
20%
80%
80%
Dec 02
Jun 03
Dec 03
85%
Mar 04
globally
 4 million subs in 18 months
Dec 04E
adds in Region I since
launching
Post paid
Pre paid
Gross Revenue
(R$ million)
625
564
496
366
 Almost 50% share of all net
391
314
 Oi´s market share (Mar/04)
 Region I: 20%
 Brazil: 9%
184
3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04
June 2004
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Short Message Service - SMS
Thousand messages
66,705
58,140
43,348
 SMS annual revenues
33,706
18,786
achieved a run-rate of R$ 60
million in the last two quarters
26,558
 Oi has a team focused on data
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
services, particularly for the
corporate market
 Oi also launched Wi-Fi
Gross Revenue
(R$ million)
hotspots in early 2004
15.3
14.6
9.3
Target: Increase data ARPU and
7.3
maintain growth of customer base
5.0
3.6
4Q02
June 2004
1Q03
2Q03
3Q03
4Q03
1Q04
www.telemar.com.br/ir
10
Call Center Services
Attendant Positions
>15,000
positive since inception
12,907 12,543
 62% CAGR in attendant
7,337
positions, in line with increase
in customer base and net
revenues (70% CAGR)
4,947
2001
2002
 Focus on profitability: EBITDA
2003
1Q04
2004E
Net Revenues
(R$ million)
421
- Contax currently has 27
customers, including major banks,
utilities, insurance, media,
telecom, retail
223
125
146
 Target: Consolidate #1
position as call center
operator in Brazil
2001
June 2004
2002
2003
1Q04
www.telemar.com.br/ir
11
June 2004
1. Highlights – 2003/2004
1
2. Growth Strategy
3
3. Review of Operating Results
12
4. Financial Overview
20
www.telemar.com.br/ir
12
Consolidated Gross Revenue Breakdown – Mar/2004
Wireline
Data & Corporate
Fixed to Mobile (VC1)
Moderate Growth
13%
Local
60%
InterConnection
6%
Data
7%
High Growth
41%
17%
7%
Long Distance
(includes VC2/3)
9%
Long Distance
Wireless
Mobile
Others(*)
High Growth
High Growth
(*) – Includes advanced voice, public telephones, additional services and Contact Center.
The Company’s four main lines of business provide a healthy
balance between stable cash flow and growth opportunities
June 2004
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13
Growth in Long Distance Services
LD Gross Revenue - R$ million
LD Traffic (million minutes)
2,963
9,510
2,066
1,568
2002
2003
CAGR
(01-03)
6,873
37.5%
885
2001
8,183
CAGR
(01-03)
2001
1Q04
17.6%
2002
2003
LD as a % of Total Revenues (includes F2M)
17%
13%
15%
11%
2001
2002
2003
1Q04
Telemar keeps on regional leadership in LD services in spite of
inter-regional & international calls began only in July 2002
June 2004
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Focus on Data / Corporate Services
Data Revenues (gross) - R$ million
1,184
906
CAGR
787
(01-03)
22.7%
364
2001
2002
2003
1Q04
Major Clients won in 2003
 We won key corporate and
governmental contracts
during 2003
 Our Data revenues increased
by 31% in 2003 and 15% in
2002
 Challenge: Obtain at least
50% (43% in 2003*) of all data
revenues in Region I and have
a nationwide market share of
30% (16% in 2003*)
* Telemar´s estimate
June 2004
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15
Gross Revenue from Wireless Services
R$ million
 Revenue from wireless
479
business increased by 180%
in 2003
372
26%
Handsets
 Key driver was services
revenue with 700% growth,
resulting mainly from
subscriptions, outgoing calls
& SMS
49%
74%
 EBITDA breakeven reached
51%
Services
after 18 months of operations
 Target: Continue to deliver
4Q03
June 2004
1Q04
significant revenue growth of
50% in 2004 while maintaining
positive EBITDA margins
www.telemar.com.br/ir
16
Consolidated Net Revenues and EBITDA
R$ million
50%
44%
45%
44%
 Delivering consistent revenue
35%
and EBITDA growth in spite of
huge wireline expansion &
wireless startup
14,003
11,874
 Recurring margins stable over
10,103
time, in the mid-40’s
EBITDA for 2001 impacted by
8,122
extraordinary provisions
6,221
6,222
5,353
4,032
3,558
2,735
3,218
1,680
1,486
1999
2000
Net Revenues
June 2004
2001
EBITDA
2002
2003
1Q03
 Target: Maintain 2004
3,689
consolidated EBITDA margin
in mid-40s even with
projected growth of wireless
revenues
1Q04
EBITDA Margin
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17
Consolidated Net Income
R$ million
709
176
213
140
220
96
-112
1Q03
1Q04
-416
1998
2000
1999 2000
1998
1999
June 2004
2001
2001
2003
2002
2002
2003
1Q03 1Q04
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Consolidated CAPEX
R$ billion
10.1
Wireless
 CAPEX 2003: ~12% of net
2.2
revenues (v. 17% in 2002)
 CAPEX 1Q04: R$ 197 million
7.9
(5.4% of net revenues)
 Consolidated CAPEX since
1998: US$10.4 billion
2.8
2.5
Wireline
2.2
2.0
2.0/2.3
1.7
40%
0.9
0.6
0.2
60%
1998 1999 2000 2001 2002 2003 1Q04
2004E
1.1
1.1
 Target: Stabilize CAPEX at
~15% of net revenues to
support growth in wireless
and less regulated services
Anatel Targets
Mobile License
June 2004
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19
1. Highlights – 2003/2004
1
2. Growth Strategy
3
3. Review of Operating Results
12
4. Financial Overview
June 2004
20
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20
Operating Cash Flow after CAPEX
R$ million
CAGR (99-03)
69,1%
4,025
2,302
492
1,233
709
123
1Q04
1Q03
-5,906
1999
1999
2000
2000
2001
2001
2002
2002
2001
1Q03
1Q04
2003
2003
Having met wireline universalization targets and rolled-out Oi,
our cash generation is expected to remain strong
June 2004
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21
Dividend Payments - 1999/2003
US$ million
5.0%
277
2.2%
Dividend yield
1.5%
125
4.6%
1.5%
128
131
142
Dividend *
1999
2000
2001
2002
2003
* includes JCP (interest on capital)
Our goal is to provide high cash returns to shareholders
June 2004
www.telemar.com.br/ir
22
Net Debt Position and Repayment Schedule
R$ million
Net Debt – Mar/04
Gross Debt Repayment Schedule – Mar/04
R$ 8,388 million
R$ 12,005 million
3,348
9,121
7,835
7,703
8,388
2,695
6,700
2,126
1,354
1,254
671
557
2001
2002
2003
1Q04
2004E
2Q04
2S04
2005
2006
2007
2008
2009+
4.6
11.3
22.5
27.9
10.5
5.6
17.6
% of
total
Given our strong cash generation, we should reduce net debt to around
1x EBITDA by year end 2004
June 2004
www.telemar.com.br/ir
23
Key Financial Ratios
Net Debt / EBITDA
(*) – 12 Months EBITDA
CAPEX / EBITDA (%)
Amortization*/ EBITDA (%)
* Principal and interest
Dividends* / EBITDA (%)
* includes JCP (interest on capital)
June 2004
www.telemar.com.br/ir
24
Key Financial Ratios
Enterprise Value / EBITDA
EBITDA / Total Debt Service
June 2004
Market Cap / EBITDA
EBITDA / Net Interest Expense
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25
“Safe Harbor” Statement
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
June 2004
Investor Relations
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
www.telemar.com.br/ir
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