15th Years After…
27.8
2010 20132004 2009
Building a Solid Organization
3
→ Start up (privatization process);
→ Launched national coverage;
→ Pioneer on GSM technology;
→ First operator to launch data
services: SMS and MMS.
→ Acquired fixed license;
→ 3G launch;
→ ISE adherence;
→ Intelig acquisition (~R$0.8bln)
→ Long distance leadership;
→ Novo Mercado migration;
→ Public offering R$1.7 bi;
→ Atimus acquisition (~R$1.6bln).
1998 2003
1998
Gross Revenues
(R$ Bln)
Customer base
EoP (Million)
15,000 km fiber
optical backbone
5,500 km fiber
optical backhauling
Accessing Capital Market
→ Leadership on prepaid and advancing on
postpaid.
→ Consolidated 2nd player in value and volume.
→ Building a robust fixed infrastructure.
→ Leadership in market net adds.
→ >400,000 points of sale.
→ >11,800 employees.
→ >23,000 indirect jobs.
→ Recognized as the market
innovator.
Organic
Growth
Growth via
Acquisitions
2012 1998
70.3
2012
Backed by High Level of Investments
4
Capex
(R$ Bln)
2,67 2,84 3,03 3,39 2,65
0,87
1,60 0,38
0,12
-
0,50
1,00
1,50
2,00
2,50
3,00
3,50
4,00
4,50
5,00
2009 2010 2011 2012 9M13
Focus on Infrastructure
(% of Organic Capex)
67% 81% 89% 93% 93%
33%19%
11%
7% 7%
2009 2010 2011 2012 9M13
Acquisitions/
Licenses
Organic
Organic as %
Net Rev.
Commercial
and Others
Infrastructure
19,4% 19,6%
17,7% 18,0%
17,1%
FIBER INFRASTRUCTURE
FROM 0 TO 45.000 KM
OF WHICH ~10k KM BACKHAUL
CELL SITES
MORE THAN 13.6K
4.63
3.54 3.76
2.77
FIBER TO THE SITE
MORE THAN 2.800 sites
+
+
Resulting in Outstanding Market Position
5
Customer Base
(Millions of line; Source: Anatel)
34,643,5
54,859,6 60,3 60,8 61,0
10,3
10,7
10,911,4 11,9 11,4 11,9
2009 2010 2011 2012 1Q13 2Q13 3Q13
Pre
Paid
Post
Paid
70.3
69.4
71.2 72.2 72.9
51.0
Data Services
(% of data users over CB; Mln of users; Source: TIM)
1,6 2,5
17,521,3 22,1 23,1 24,5
2009 2010 2011 2012 1Q13 2Q13 3Q13 2016e
4% 5%
27% 29% 31% 32% 34%
>50%
XX%
83
116129
136145 148 150
>170
2009 2010 2011 2012 1Q13 2Q13 3Q13 2016e
Voices Services
(Minutes; Source: TIM)
Mobile is more convenient than Fixed…
(R$/minute)
2006 2007 2008 2009 2010 2011 2012
50%
discount5,9% 6,8%
26,8%48,3% 46,5% 50,1%
94,1% 93,2%73,2%
51,8% 53,5% 49,9%
dez/07 dez/08 dez/09 dez/10 dez/11 dez/12
Fixed OperatorsTIMFixedMobile
Exploring an untapped market
(Market Share of LD minutes)
Serving an unsatisfied demand
(% of users using service in last 3 months)
518 24
4957
64
2010 2011 2012
SMSInternet
Sources: Company estimates, Anatel, CETIC 13
41.1
Pure Mobile Paying Off: Strategic Check
6
Users’ Preference for Mobile
(%Households w/ mobile phones only)
Net Revenues
(% YoY)
EBITDA
(% YoY; Not including assets sales; Mobile as TIM)
Low Fixed Broadband Quality
( Brazil’s Average Speed; Source: Akamai)
Entering in Data World Via Mobile
(Mln users; Source: Anatel)
Fixed
Incumbents
Mobile
48,9%56,3%
2009 2012
2Q13 2.4 Mbps
ANATEL: >50% of fixed broadband
connections are below 2Mbps
Mobile
Fixed 4,1
14,6
33,2
52,5
77,9
11,4
13,8
16,3 19 20,2
2009 2010 2011 2012 Aug/13
+18x
+77%
-7,0% -6,1%
-2,6%
3Q11 3Q12 3Q13
-6,2%-4,3%
-14,1%
3Q11 3Q12 3Q13
11,6%
7,1% 6,9%
3Q11 3Q12 3Q13
11,7%
3,9% 4,2%
3Q11 3Q12 3Q13
Fixed
Incumbents
Mobile
Looking Ahead
71%
65%
59%
48%
39%
24%
18%
12%
5%
2%
1%
1%
R$ 10
R$ 20
R$ 30
R$ 40
R$ 50
R$ 70
R$ 80
R$ 100
R$ 150
R$ 200
R$ 250
> R$ 250
Source: CETIC 13
Data Wave Opportunities
60%36.8 mln
40%24.5 mln
44%16.2 mln
24%8.8 mln
32%11.8 mln
(40%)
(60%)
61.3 Mln
Possess
Internet
connection
Does NOT
Possess
Internet
connection
Other
Lack of
coverage
Too
Expensive
53% of active connections
are below 2Mbps
Willingness to pay (% of Households)
Total Households Households which does
NOT possess
CA
BL
E
FT
TH
AD
SL
VD
SL
MB
B
8
2Q13 2.4 Mbps
Brazil`s Internet average
speed according to Akamai
94%80%
47%
14%
A B C DE
% of population who used the Internet in the last 3 months per social class
68 million people
don’t use the Internet
in class C, D, E.
Low usage not only in
households
Market Transformation
(Total Revenues - R$ Bln)
(55%) (50%) (44%) (43%)
(45%)(50%) (56%) (57%)
2009 2011 2013 2016
104
CAGR ’13-’16
Mobile: +3%
Fixed: -2%
120
112118
Data
Mobile
...Concentrating in the Mobile Segment
Data: +18%
Data: +6%
9
Data Services Revenues Growth 2016 vs. 2013
>R$10 bln in Mobile (+62%)
>R$4 bln in Fixed (+18%)
Keeping Innovative Approach
Chip Torcedor
TIM SIM blister for each
team.
Increase Stickiness
14 Teams alread
sponsored
10
Liberty Controle Express
Pushing on Postpaid migration
Payment via credit card
jan/13 sep/13
~7x
+56%
sep/12 sep/13
Young
Young segment positioning
Member get member through
social network since 2010.
Nonstop
Innovation
VOICE DATA
Recarga Troco International LD Infinity Web + SMS TIM Music
Talk unlimited on-net for
R$2 for 2 days.
Capture extra “charge”.
Leveraging on micro
recharge on physical
PoS.
Up selling approach,
targeting only customer
base.
US:R$0,20/min.
+ 8 countries: R$0,50/min
FMS initiative.
Capturing the unexplored
mobile international calls
market.
Market attended Today
through fixed carries.
Internet + unlimited SMS
on/off-net.
Pay per day.
Combining Web and
SMS offers.
Cross selling WEB and
SMS .
Unlimited download.
Pay R$0.50/day.
Over the top service.
Increase customer
stickiness.
Network friendly.
13 million songs already
downloaded.
And Resulting in Solid Growth
43%
52%
>75%
2012 Jul 13 2016e
Smart/Web phone Penetration
(% over total base of lines)
136150
>170
2012 3Q13 2016e
Voice MOU
(Minutes)
2012 2013e 2016e
Data Users
(% of Data Users in CB; million users)
VAS Revenue Growth
(% of Mobile Services Gross Revenues; R$ Million)
21%23%
>40%
VAS
Gross
Revs.
VAS/Revs.
+XX%21.3
24.5
2012 3Q13 2016e
29% 34% >50%
+15%XX%
+XX%
Innovative
Offers Driving
Growth and
Differentiation
11
2014 - 2016 Guidance
12
Total Net Revenues
EBITDA
CAPEX
18,8
2012 2013e 2014e 2015e 2016e
5,0
2012 2013e 2014e 2015e 2016e
R$ billion
R$ billion
0,5
3,2
2012 2013e 2014e 2015e 2016e
R$ billion
Infrastructure
Others/Licenses
3.8
Guidance
2013-2016 CAGR:
Mid Single Digit Growth
2013-2016 CAGR:
Mid Single Digit Growth
Total CAPEX 2014-2016:
~R$11 billion*
*Does not consider 4G licenses (700Mhz).
Appendix
Infrastructure Needed in the Data Arena
14
2016MASSIVE LD
BACKBONE
65,000 KM OF FIBER
2013FIBER TO THE
AMAZON
46,000 KM OF FIBER
BY YE13
Fiber to the site / Mobile Broadband
Project Key to Data Growth
Targeting 38 cities in 2013,+100 cities till 2016.
From 2-8 to +100 Mbps.
LTE Ready.
Macro coverage fine tuning.
Focus on IP infrastructure, caching, peering.
Backhauling
Evolution
Fiber base
Infrastructure
INTELIG 15,000KM
2009INTELIG
ACQUISITION
New backbone routes- Increasing resilience.
Increased Coverage and Access Capacity
# new elements
82% urban
population
2013 2014 2015 2016
95% urban
population
#NodeB / eNodeB
(3G + 4G)
# BTS
(2G)
2012 2013e 2014e 2015e 2016e
Small Cell Approach
# new elements
New Sites.
Including
Small Cell.
POP MW
POP MW POP MW
POP MW
BSC-RNC Site
POP MW
Capex Evolution Towards Data
% of total Capex
2013 2014 2015 2016
LTE* 3G 2G
*Includes 2.5GHz RAN Sharing.
Where We Are: TIM 2013 Year-to-Date Results
15
Operational
Total Revenues
− Service
− VAS*
− Handset
EBITDA
CAPEX
9M13 YoY
14,738 7.3%
12,359 2.1%
2,379 45.2%
3,708 3.4%
R$ Million
9M13 YoY
Postpaid (mln users)
MOU (min)
ARPU
11.9 16.4%
147 12.7%
R$ 18.4 -2.0%
Financial
2,769 +16.8%
3,899 23.7%
• Consistent financial and operational
results even amidst a different macro
scenario
• Continuous growth/acceleration on
postpaid, improving customer base
mix, ARPU evolution.
• Maintaining data services at double
digit growth, underscored by
smartphone sales and innovative
offers.
• Solid improvement on Network and
Quality indicators.
• Executing Fiber-to-the-Site (FTTS)
project and 3G/4G roll-out,
guaranteeing mobile broadband
acceleration.
• Strong efficiency: Industry benchmark
for SAC and bad debt.
• Strong savings on leased lines costs,
even with traffic double digit growth.
Reported figures for TIM Part.
*Gross Mobile Service Revenues