Transcript Titulo

Corporate Presentation
www.telemar.com.br/ir
November, 2004
Telemar Presentation - Contents
1. Highlights
1
2. Growth of Customer Base
3
3. Operating Results
12
4. Debt Position and Financial Ratios
21
Corporate Presentation / November 2004
www.telemar.com.br/ir
1
Highlights
Region I
= Concession area
for Wireline services
= Mobile license
for Wireless services
• 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 area
for Long-Distance
and Data services
• 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$ 41
million/day (Oct/04);
• Strong liquidity at the NYSE (TNE): US$ 15 million/day (Oct/04)
• High Free Float: 81.1% of total shares
• Market value of US$ 5 billion (Oct/04)
Corporate Presentation / November 2004
www.telemar.com.br/ir
2
Shareholder Structure – TNE
BNDESPar - 25%
Fiago – 19.9%
AG Telecom – 10.28%
Telemar
Participações S.A.
ASSECA Participações – 10.27%
Lexpart Part. – 10.28%
L.F. Tel - 10.27%
18.9%
BrasilCap - 5%
Tele Norte Leste
Participações S.A.
(TNL)
•(TNL)
Brasil Veículos - 5%
Fundação SISTEL - 4%
Total Shares: 387.9 million
Free Float 79.5% / Treasury 1.6%
80.9%
Total Shares: 241.7 million
Free Float 18.7% / Treasury 0.4%
100%
Mobile
Corporate Presentation / November 2004
100%
Fixed line
Contact Center
100%
Data Transmission
www.telemar.com.br/ir
3
Expansion of Customer Base
million customers
CAGR (98-03)
19.7%
21.3
~22.4
Main growth 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
2001
Fixed Line
2002
Mobile
2003
Sep_04
2004E
ADSL
* Company’s acquisition
Corporate Presentation / November 2004
www.telemar.com.br/ir
4
Fixed Lines in Service
million lines
 Main investments for expansion
of fixed line network already
completed;
14.8
15.1
15.1
15.2
~15.2
 Fully digital platform in service;
 Fixed line penetration still ~50%
11.8
of households in Region I;
9.7
7.8
 With an 88% utilization rate,
Telemar has some 2 million
lines spare capacity;
 Challenge: Increase in fixed line
1998
1999
2000
2001
growth
Corporate Presentation / November 2004
2002
2003
Sep_04
maintenance
2004E
penetration subject to Brazilian
GDP sustained growth and
regulatory changes.
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5
Fixed Line Sector in Brazil – Sep/2004
LIS (million)*
1998
2001
2002
2003
Sep/04
20.0
37.4
38.8
39.2
39.1
Telemar
Brasil Telecom
Region II
Region I
15.2 M
Fixed Lines in Service
32.7%
9.6 M
20.3%
% of Total Gross Revenue:
Telefonica
Embratel (LD Carrier)
Region III
12.4 M
30.4%
T= R$ 43.6 bn / 9M04
Region IV
16.6%
* Includes smaller incumbents and mirror companies (CTBC, Vesper, GVT and Sercomtel).
Corporate Presentation / November 2004
www.telemar.com.br/ir
6
Broadband Market in Brazil
Market Share Brazil
Sep/04
Dec/03
Br Turbo
24%
Outros
10%
Outros
7%
Virtua
8%
Velox
18%
Speedy
40%
 Broadband clients in Brazil
Virtua
8%
Br Turbo
24%
are 1.9 million (Sep/04);
Velox
23%
 ADSL accounts for 85% of
total broadband access in
Brazil;
Speedy
38%
 Broadband penetration is
*Source: Estimates Teleco e Telemar
expected to grow to 30% of
total internet access in Brazil
by 2008*;
PC Penetration (% of households)
 Challenge: Growth in
Brazil
broadband services in the
medium/long term relies on
increasing PC penetration in
Brazil.
*
2003
Corporate Presentation / November 2004
*Pyramid Research
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7
ADSL – Telemar (Velox)
ADSL - thousand lines
480
 Velox is already available in 140
429
cities of Region I (more than 10x
the coverage of alternative
technologies);
217
 Subscribers reached 429K in
6
2001
41
2002
2003
Sep_04
2004E
Sep/04, with a penetration of
2.8% of total fixed lines in
service;
 In 9M04, revenues from Velox
Gross Revenue
(R$ million)
260
grew by by 254% compared to
the same period of 2003;
 Target: Increase Velox´s
penetration within Region I to
consolidate customer´s loyalty
and enhance the fixed line
ARPU.
128
33
2001
2002
Corporate Presentation / November 2004
2003
9M04
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8
Mobile Market in Brazil
Market Share (Brazil v. Region I) – Sep/04
Region I**
Brazil
Claro
21%
Oi
 Annual growth rate in mobile
Oi
10%
subscribers is currently over
40% in Brazil;
23%
Other*
7%
20%
 33% mobile penetration in
Other
TIM
Vivo
77%
Brazil and especially in
Region I (27%) still offer
significant growth potential;
42%
*Includes other operators: Nextel, CTBC, SERCOMTEL, Telemig and Tele Norte
Celular
** Oct/04
Mobile Penetration (%) – Oct/04
 Oi´s market share in its region
reached 23% Oct/04;
 Challenge: Increase Oi´s
Brazil
subscriber base to 6.7 million
(+72%) in 2004, with positive
EBITDA margin.
*
*Source: Pyramid Research
Corporate Presentation / November 2004
www.telemar.com.br/ir
9
Mobile Platform - Oi
Subscriber base (thousand)
~6,700
5,093
3,893
2,849
17%
20%
80%
83%
4,408
15%
15%
85%
5,740
competition, Oi has been able
to maintain its leadership in
net additions in its region
(market share of ~35% in
3Q04);
15%
85%
85%
Sep_03 Dec_03 Mar_04 Jun 04 Sep_04 Dec_04*
Post-paid
Prepaid
 In spite of the increased
 Oi´s annual growth as of
Sep/04 around 2.9 million
subscribers (+101% on
Sep/03);
Gross Revenue
(R$ million)
796
699
625
increased by 60% over 3Q03,
while revenue from services
(ex-handset sales) improved
by 82%.
564
496
3Q03
 Total revenue in 3Q04
4Q03
1Q04
Corporate Presentation / November 2004
2Q04
3Q04
www.telemar.com.br/ir
10
Call Center Services
Attendant Positions
15,952
12,907
positive since inception;
7,337
 61% CAGR (01/03) in
4,947
2001
 Focus on profitability: EBITDA
2002
2003
Sep_04
Gross Revenues
(R$ million)
459
500
attendant positions, in line
with increase in customer
base and revenues (70%
CAGR)
- Contax has conquered important
customers, including major banks,
utilities, insurance, media and
retail.
240
159
2001
2002
2003
Corporate Presentation / November 2004
9M04
www.telemar.com.br/ir
11
Consolidated Gross Revenue Breakdown – 9M04
Wireline
Data & Corporate
Fixed to Mobile (VC1)
InterConnection
Moderate Growth
13%
Local
58%
5%
7%
Data
High Growth
40%
17%
9%
9%
Long Distance
(includes VC2/3)
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 combine strong cash
generation and new growth opportunities.
Corporate Presentation / November 2004
www.telemar.com.br/ir
12
Growth in Long Distance Services
LD Gross Revenue - R$ million
LD as a % of Total Revenues*
2,963
2,690
2,066
15%
2,122
15%
13%
11%
1,568
2001
17%
2002
2003
9M03
9M04
2001
2002
2003
9M03
9M04
* Includes F2M (VC2/3)
Telemar holds leadership in LD services in Region I.
Corporate Presentation / November 2004
www.telemar.com.br/ir
13
Data Transmission Services
Data Revenues (gross) - R$ million
1,18 4
1,14 2
 Key corporate and
906
865
787
government contracts
achieved during 2003;
 The annual growth in
2001
2002
2003
9M 03
Major Clients
9M 04
revenues from data services
has been consistently above
30%;
 ADSL services accounted for
23% of total data revenue in
9M04 (+8% in 9M03);
 Target: Expand Telemar´s
offer of data services and
market share in Brazil.
Corporate Presentation / November 2004
www.telemar.com.br/ir
14
Consolidated Gross Revenue from Mobile Telephony
R$ million
875
41%
 Accumulated annual growth of
1,454
35%
Handsets
66% (9M04), driven by the
increase in revenues from
mobile services - subscriptions,
outgoing calls & SMS - up 85%
yoy;
 Recurring positive EBITDA
59%
65%
Services
since 1Q04;
 Target: Maintain the expansion
of service revenues while
increasing EBITDA margin.
9M03
Corporate Presentation / November 2004
9M04
www.telemar.com.br/ir
15
Consolidated Net Revenues and EBITDA
R$ million
50%
44%
45%
44%
 Delivering consistent revenue
35%
and EBITDA growth in spite of
strong expansion in the
customer base;
14,003
11,874
 High EBITDA margins, despite
10,103
11,571
10,332
8,127
6,221
6,222
4,032
4,645
3,558
2,735
43%
45%
5,353
the faster growth of mobile
services (where margins are
still below company´s
average);
4,939
 Target 2004: reach a
consolidated EBITDA margin
of ~43% for the year.
1999
2000
Net Revenues
2001
2002
EBITDA
Corporate Presentation / November 2004
2003
9M03
9M04
EBITDA Margin
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16
Consolidated Net Income
R$ million
709
458
176
213
140
96
-301
1998
1999
2000
1998
1999
2000
2001
2001
-416
2002
2002
2003
2003
9M03
9M04
9M03 9M04
Increase in EBITDA and reduction in net debt, with lower financial
expenses, had a positive effect on year to date results (9M04).
Corporate Presentation / November 2004
www.telemar.com.br/ir
17
Consolidated CAPEX
R$ billion
10.1
Wireless
2.2
 CAPEX 2003: ~12% of net
revenues, compared to 17% in
2002;
7.9
 Consolidated CAPEX since
1998: R$ 22 billion;
2.8
2.5
2.2
2.0
2.0
0.9
Wireline
1.7
0.6
1.1
1.1
40%
1.1
0.4
60%
 Target: Stabilize CAPEX
below 15% of net revenues
over the next years.
0.7
1998
1999
2000
2001
2002
2003
9M04
2004E
Anatel Targets and Mobile License (R$1.1 bn)
Corporate Presentation / November 2004
www.telemar.com.br/ir
18
Consolidated Operating Cash Flow after CAPEX
R$ million
CAGR (99-03)
69.1%
4,025
2,302
2,487
492
3,097
1,233
9M03
9M04
-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
Corporate Presentation / November 2004
www.telemar.com.br/ir
19
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 continue to provide high cash returns to investors
Corporate Presentation / November 2004
www.telemar.com.br/ir
20
Net Debt Position and Repayment Schedule
R$ million
Gross Debt Repayment Schedule – Sep/04
Net Debt – Sep/04
R$ 7,000 million
R$ 11,863 million
3,519
9,121
7,834
7,703
7,000
2,863
6,300*
1,692
1,550
877
869
493
2001
2002
2003
Sep_04
2004E
4Q04
4.2
2005
24.1
2006
29.7
2007
13.1
2008
7.4
2009 2010+
7.3
14.2
* To this figure should be added the amount disbursed by
the Company on its stock buyback program.
% of
total
Given our strong cash generation, we expect to reduce net debt to less
than 1x EBITDA by year end 2004
Corporate Presentation / November 2004
www.telemar.com.br/ir
21
Key Financial Ratios
Net Debt* / EBITDA
*EOP
Amortization*/ EBITDA (%)
* Principal and interest
** 12 - Month EBITDA
Net Debt /Enterprise Value*
CAPEX / EBITDA (%)
*EOP
Corporate Presentation / November 2004
www.telemar.com.br/ir
22
Key Financial and Valuation Ratios
Enterprise Value* / EBITDA
Market Cap* / EBITDA
*EOP
*EOP
** 12 - Month EBITDA
** 12 - Month EBITDA
Dividends / EBITDA
Corporate Presentation / November 2004
EBITDA / Net Interest Expense
www.telemar.com.br/ir
23
“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
Corporate Presentation / November 2004
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
www.telemar.com.br/ir
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