Disclaimer
This presentation contains declarations that constitute forward looking statements regarding the intent, belief or current expectations of the customer base, estimates regarding future financial results and other aspects of the activities.
Analysts and investors are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation. TIM Part undertakes no obligation to release publicly the results of any revisions to these forward looking statements.
Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those projected as a result of various factors.
Financial results are presented considering impacts from IFRS 9 & IFRS 15 adoption, disconsidering impacts from IFRS 16 adoption.
The normalized numbers reported in this presentation are adjusted by the effects listed below.
Operating Costs and EBITDA normalized by adjustments to the sale-leaseback contract of towers (+R$ 11 thousand in 2Q19, +R$ 1.5 million in 1Q19, +R$ 431 thousand in 4Q18, +R$ 1.1 million in 2Q18 and +R$ 220 thousand in 1Q18), tax credit due to the exclusion of ICMS from the calculation basis of PIS/COFINS (-R$ 75 million in 3Q19, -R$ 1,720 million in 2Q19 and -R$ 159 million in 4Q18), non-recurring expenses with legal services connected to the PIS/COFINS court decision (+R$ 4.4 million in 3Q19 and +R$ 3.5 million in 2Q19), loss forecast revision for internal labor, taxes and civil contingencies (+R$ 11 million in 3Q19, +R$ 222 million in 2Q19 and +R$ 157 million in 4Q18) and contractual losses (+R$ 22 million in 3Q19). Net Financial Results adjusted by monetary correction over tax credits and labor, taxes and civil contingencies (- R$ 66 million in 3Q19, -R$ 1,051 million in 2Q19 and -R$ 66 million in 4Q18). Net Income normalized by the tax credit and other effects (+R$ 35 million in 3Q19, +R$ 865 million in 2Q19 and +R$ 23 million in 4Q18), deferred taxes (+R$ 30.3 million in 1Q19) and by the tax credit due to the merger of TIM Celular into TIM S.A. (-R$ 950 million
TIM Participações - Investor Relations
in 3Q18).
Results Presentation
2
2019: Another Year of Evolution with Few Adjustments Along the Way
Restore agile | Best | Assertive | Efficiency | |||
Best | Growth in all | Mindset | ||||
Reclaim offer/ | approach to | adjustment | ||||
accelerate | segments' | spread | ||||
communication | decision making | 4G / 700 MHz | Fixed Ultra | in offers' | ||
innovation | Broadband Ranked | ARPUs | across the | |||
leadership | coverage | by Estadão | portfolio | |||
company | ||||||
Network | 1st | Image | TIM Live | Record high | ||
Refuel | Focus on key | efficiency | Recovery | organization | ||
accountability | areas of the | Spectrum refarming; | 5G tests | recovery | Improved caring; | climate |
culture to | business | Massive-MIMO trials; | in all segments | Network catch-up; | ||
empower | Net adds | results | ||||
MOU with Vivo | ||||||
employees | acceleration | |||||
Continuous growth acceleration during the year
TIM Participações - Investor Relations
Results Presentation
3
FY19 & 4Q Financial Highlights: Consistent Improvement Recovering Momentum
Growth reignited… | High delivery on Efficiency Plan driving consistent |
EBITDA and margin evolution | |
2019 Service Revenues
R$ 16.6bln | +2.4% | 3.2% |
3.0% | ||
2019 EBITDA¹2019 EBITDA Margin¹
R$ 6.8bln +6.7% | 39.1% | +1.6p.p. YoY |
Growth | 2.4% | |||
1.0% | ||||
% YoY | ||||
1Q19 | 2Q19 | 3Q19 | 4Q19 |
Growth | 8.1% | |||
6.2% | 6.8% | |||
% YoY | ||||
5.3% | ||||
1Q19 | 2Q19 | 3Q19 | 4Q19 |
42.9%
39.6%
37.9%
35.7%
1Q19 2Q19 3Q19 4Q19
Strong cash generation…
EBITDA¹ - CAPEX | ||||
% Net | 15% | 17% | ||
Revenues | ||||
+15.9% | ||||
2,945 | ||||
2,540 | 633 | |||
4Q | 449 | |||
mlnR$ | 2Q | 541 | 794 | |
671 | ||||
3Q | 742 | |||
1Q | 808 | 847 | ||
2018 | 2019 |
Combined with a strong balance sheet ready for strategic opportunities
0.07x Net Debt /
EBITDAFitchRatings
- R$3.4bln in tax credits (PIS/COFINS Disputes) already in use, full consumption in 3/4 years
(1) EBITDA normalized for the effects detailed in slide 2.. | TIM Participações - Investor Relations | 4 |
Results Presentation | ||
Sustaining Revenue Growth Despite Relevant Challenges
Total Net Revenues Breakdown | (R$ mln) | |||||||||||||||||||
%YoY | ||||||||||||||||||||
MSR: +1.9% | FSR: +11.3% | +0.6% | ||||||||||||||||||
Growth | ||||||||||||||||||||
329 | 115 | 5 | 17,377 | |||||||||||||||||
16,981 | -34 | -18 | ||||||||||||||||||
+2.3% | ||||||||||||||||||||
2018 | Client Generated | TIM Live | Other Fixed | Handsets | 2019 | ||
ITX + Other | |||||||
Revenues | Mobile | ||||||
- Revenue expansion limited by a macroeconomic environment at slow recovery (2019 GDP at ~1%)
- 1H19: Tough competition dynamic, also contributed for a challenging environment
% YoY Growth
Mobile Blended ARPU | Postpaid Revenues (CGR) | ||
23.7 | GrowthYoY% | ||
22.5 | +5.6% | +6.9% | |
2018 | 2019 | 2018 | 2019 |
Prepaid Revenues (CGR) | |
% YoY Growth | -4.9% |
2018 | 2019 |
TIM Live Revenues | |
% YoY Growth | +30.6% |
2018 | 2019 |
TIM Participações - Investor Relations
Results Presentation
5
Mobile Postpaid: Despite Adjustments to Segment's Go-to-Market
Transition from Volume to Value Continues
Commercial approach adjusted: Controlling the quality of migration already reflects in a better churn trend that will help achieve sustainable growth.
+0.6 Postpaid (ex-M2M) ARPU
% (2019 vs 2018)
Postpaid Revenues (CGR)1
Churn control is key to deliver fair share growth
(Consumer churn rate | % p.m.)
Sales still follow on a positive trend
(Human2 gross adds LTM | '000)
+13.8%
Net adds showing first signs of reversal but w/ new benchmark
(Human net adds | '000)
154
75
-149
-270
(YoY)
1Q19 2Q19 3Q19 Oct-19Nov-19Dec-19 | 1Q19 | 2Q19 | 3Q19 | 4Q19 |
1Q19 2Q19 3Q19 4Q19 Future
7.2%
4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 |
Improved value proposition: Increasing perception and high-end positioning to better mix postpaid base.
Entertainment hub for high-end | Device to differentiate | |
positioning: TIM Black Família | Control offer | |
(TIM Black Família net adds) | back to | |
+23% | 2 | nd |
position in | ||
Control market | ||
Top of Mind |
2Q19 3Q19 4Q19
(1) 2018 YoY on a pro-forma basis and 2019 YoY with IFRS 15 impacts. CGR - Client Generated Revenues excludes incoming and other revenues. | TIM Participações - Investor Relations | 6 |
Results Presentation | ||
Prepaid Efforts are Paying Off. Competition Rationality and Macro Recovery can Lead to Further Improvements
+4.2 Prepaid ARPU
% (2019 vs 2018)
Prepaid Revenues (CGR)1
(YoY)
4Q18 1Q19 2Q19 3Q19 4Q19
0.7%
Reversal in trends: Growth above the market average and signs of better days on the spending | ||||
side. | ||||
Rechargers | Spending | |||
(EOP) | (R$ / recharger) | |||
+2.5% | ||||
2016 | 2017 | 2018 Mar-19Jun-19Sep-19Dec-19 | 2018 | 2019 |
Constant presence in the segment: Launch of TIM Pré TOP brought consistency to the Prepaid offer throughout the year.
(now!) | (2Q19) |
1st
(3Q19) | position in |
Prepaid market | |
Top of Mind |
(1) 2018 YoY on a pro-forma basis and 2019 YoY with IFRS 15 impacts. CGR - Client Generated Revenues excludes incoming and other revenues. | TIM Participações - Investor Relations | 7 |
Results Presentation | ||
TIM Live: Positive Signs of the Recovery Plan Begin to Show in the Dynamics of the Customer Base
+8.0% TIM Live ARPU
(2019 vs 2018)
TIM Live Revenues1 (R$ mln)
+26.5% | ||||||
112 | 115 | 127 | 137 | |||
109 | ||||||
4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 |
FTTH expansion: New additions, concentrated on high-end plans, will advance with the new coverage to come.
Net adds | Customer base | ||||||||||
('000) | ('000) | ||||||||||
+21.1% | |||||||||||
30 | 29 | 467 | 566 | ||||||||
21 | 32% | ||||||||||
18 | 19 | 11% | |||||||||
≥100 Mbps | |||||||||||
89% | 68% | <100 Mbps | |||||||||
4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | |||||||
4Q18 | 4Q19 |
Combining relevant content with the best service: Recognition of service quality with a
bundle to appeal the customer.
Best UBB
Best
Fixed BB
TIM Participações - Investor Relations
Results Presentation
8
Mobile Network: Proper Strategy Confirmed by Improved Customer Experience and Independent Measures
Customer experience prioritization: Concentrating on the most important KPIs to guarantee stable and constant access in 4G.
Urban Population Coverage (%) | Mobile Network Experience1 | ||
4G | 4.5G | 1.1k cities | 4G Availability |
3.5k cities | (% of time) | ||
(+6% YoY) | (+44% YoY) |
94%64%
700 MHz | Refarming |
2.3k cities | 2.5k cities |
(+62% YoY) | (+3% YoY) |
81%77%
VoLTE | NB-IoT |
3.4k cities | 3.3k cities |
(+35% YoY) | (all in 2019) |
93%92%
85.7 | 77.7 | 77.3 | |
68.2 | |||
TIM | P3 | P2 | P4 |
Latency | |||
(ms) | |||
58.4 | 61.4 | 68.4 | |
57.4 | |||
TIM | P3 | P2 | P4 |
Innovation to better serve the customer: Massive MIMO application to network stress situations - Copacabana New Year's Eve case.
- ~3 mln people in 4 km length
- 36x moresimultaneous connections
- +60% YoY data traffic increase
- 174k calls (>50% VoLTE )
Main results of massive | ||||
MIMO approach: | ||||
6x | ||||
3x | ||||
throughput | ||||
per user2 | ||||
data | ||||
consumption2 |
(1) According to Tecnoblog News from 16/Jan; (2) Compared to regular access. | TIM Participações - Investor Relations | 9 |
Results Presentation | ||
Fixed Network: Operations Catch-Up to Ensure Future Growth
Acceleration
Cluster approach to expand coverage: Recife's example - cherry-pickingin metropolitan areas.
Paulista Olinda
Recife (PE)
Jaboatão dos Guararapes
+12 launches
in 2019
(totaling 25 covered cities)
New OLTs - Regions Covered
(# of units)
Jan-19 | Apr-19 | Jul-19 | Oct-19Dec-19 | ||
Budget | Act | ||||
FTTH Coverage (# mln households)
+103% | 3.5 | 3.6 |
2.3 | ||
1.1 | ||
FTTH | FTTC |
Backbone + Backhaul
('000 Km)
+11.9% | |
90 | 101 |
+50 OLTs
in 4Q
>5.5 mln
>100k
km
- Renewed commercial capacity.
- 2x FTTH coverage in 2019.
- Transport infrastructure supporting both business
4Q184Q19
TIM Participações - Investor Relations
Results Presentation
10
Continuous Efforts on Cost Control Supported by Ongoing Digitalization
Initiatives
Caring
Billing &
Payment
Acquisition
+18%
Meu TIM
unique users
+18%
E-Bills
(Penetration of ~66%)
+36%
Postpaid E-Sales
(FY19 YoY)
-17%
- Human interactions
+14%
E-Paymentbase
+28%
Control E-Sales
Normalized OPEX¹ Significant Below Inflation | (R$mln ,%YoY) | |||||||||||
2019 OPEX: -0.3% YoY | vs. IPCA2 4.3% | |||||||||||
4Q | 2,637 | -0.7% | 2,619 | |||||||||
3Q | 2,634 | -0.6% | 2,619 | |||||||||
2Q | 2,641 | +0.2% | 2,646 | |||||||||
1Q | 2,698 | -0.2% | 2,694 | |||||||||
2018 | 2019 | |||||||||||
Bad Debt |
Recharges
+55%
Recharges via App
>37%
Penetration of E-Recharges
- Still challeging, but starting to show improvements
- OPEX ex-Bad Debt would have decreased 2.3% YoY in 2019
-6.9% QoQ
201
187
3Q194Q19
(1) OPEX normalized for the effects detailed in slide 2. | TIM Participações - Investor Relations | 11 |
(2) Last twelve months IPCA as of December 2019. | Results Presentation | |
Better Operational Trends Are Supporting a Continuous Evolution of Margin and Cash Generation
Solid Normalized¹ EBITDA & Margin | (%; R$ bln, %YoY) | Consistent Margin¹ (Pro-forma2) Evolution | (%;) | |||||||
37.5% | 39.1% | 6 consecutive years of | ||||||||
margin expansion. | 39.8% | |||||||||
38.5% | ||||||||||
EBITDA1 | 6,798 | |||||||||
36.6% | ||||||||||
Margin | 42.9% | +6.7% | ||||||||
40.8% | 6,371 | |||||||||
33.5% | ||||||||||
1,820 | +8.1% | 1,967 | 31.5% | |||||||
EBITDA1 | +8.3 p.p. | |||||||||
4Q18 | 4Q19 | 2018 | 2019 | 2015 | 2016 | 2017 | 2018 | 2019 |
Strong Normalized¹ EBITDA - CAPEX | (R$ mln) | Normalized Net Income¹ Expansion | (R$ mln, %YoY) | |
% Net | 15% | 17% |
Revenues | ||
2,945 | ||
2,540 | +15.9% |
2018 | 2019 |
+32.1% | 2,049 | ||
1,552 | +28.7% | 756 | |
4Q | 587 | ||
3Q | +61.4% | 619 | |
383 | |||
2Q | 336 | +26.0% | 423 |
1Q | 245 | +2.5% | 251 |
2018 | 2019 |
(1) Normalized for the effects detailed in slide 2. | TIM Participações - Investor Relations | 12 |
(2) Pro-forma excludes the effects of the adoption of IFRS 9, 15 and 16. | Results Presentation | |
Solid Balance Sheet and Operating Cash Flow
Net Financial Position¹ | (R$ mln) | |||||||||||||||||
1,465 | ||||||||||||||||||
770 | ||||||||||||||||||
476 | ||||||||||||||||||
163 | ||||||||||||||||||
541 | -347 | |||||||||||||||||
-2.116 | ||||||||||||||||||
NFP 2018 Normalized | Normalized Net | Cash | Dividends Paid Others | NFP 2019 | ||||||||||||||
FOCF | Financial | Taxes | ||||||||||||||||
(ex-license) | Expenses | (IR/CSLL) | ||||||||||||||||
Consolidation of Normalized FOCF¹ Turnaround | (R$ mln) | |||||||||||||||||
1,845 | ||||||||||||||||||
1,059 |
-178
-610
1Q19 | 2Q19 | 3Q19 | 4Q19 |
- Positive seasonality for operating cash flow confirmed
- Net debt reduction to sustain a strong balance sheet: ready for strategic movements
- Shareholder remuneration evolving consistently
Shareholder Remuneration | (Announced R$ mln) | |||||||||
995 | ||||||||||
~3x higher in | 953 | |||||||||
three years | ||||||||||
IOC | 850 | |||||||||
339 | ||||||||||
190 | ||||||||||
Dividends 149 | ||||||||||
103 | ||||||||||
2017 | 2018 | 2019 |
(1) EBITDA, Working Capital and Net Financial Expenses normalized for the effects detailed in slide 2. | TIM Participações - Investor Relations | 13 |
Results Presentation | ||
2019 Targets Delivered Despite a Challenging Environment
2019 GUIDANCE | Back on track and ready for the new | ||||||
challenges | |||||||
Guidance | Short Term | 2019 external assumptions were not met: | |||||
2019 Results | ➢ Slower | and | unbalanced | economic | |||
Metrics | Targets (2019) | ||||||
recovery (GDP ~1% vs 2.5% assumed in | |||||||
1) Service | 3-5% (YoY) | 2.4% | 2H19: | Strategic Plan) | |||
Revenues | +3.1% | ||||||
Mid to High Single | 2020 Main Focus: | ||||||
2) EBITDA Growth | 6.7% | ➢ | Unlocking efficiency in a broader way | ||||
Digit (YoY) | |||||||
(cash approach) | |||||||
3) EBITDA - Capex | > 15% | 16.9% | ➢ B2B: further develop IoT opportunity | ||||
on Revenues | |||||||
➢ Accelerating the movement "from | |||||||
4) IOC Distribution | ~ R$ 1 bln | R$ 995 mln | volume to value" | ||||
➢ Focus on operation quality recovering | |||||||
5) CAPEX | ~ R$ 4 bln | R$ 3.9 bln | customer satisfaction | ||||
➢ Developing new sources of revenues | |||||||
TIM Participações - Investor Relations
Results Presentation
14
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TIM Participações SA published this content on 11 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 February 2020 00:58:02 UTC