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Annual Goldman Sachs Latin American Investment Forum March 13th & 14th, 2003

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

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Annual Goldman Sachs Latin American Investment Forum March 13th & 14th, 2003

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  1. Annual Goldman Sachs Latin American Investment Forum March 13th & 14th, 2003

  2. 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 • Level 2 ADR (NYSE: TNE): 29% of total shares • Market value: US$ 3.0 billion (Jan/03)

  3. 100.0% 81.0% 100.0% 100.0% TNE – SHAREHOLDERS’ STRUCTURE Tele Norte Leste Participações S.A.(TNE) Treasury TelemarParticipações S.A.* Free float Free float = 19.2% Treasury stock = 1.6% Norte Leste (TMAR) * Controlling Shareholder (53% of voting shares)

  4. 81.7% R$ 4,477 million 18.3% Shares Common 127,949 1/3 Preferred Capital 255,897 2/3 383,846 Total Tele Norte Leste Participações S.A. (TNE) Telemar Participações S.A. NYSE 29.0% Brasil 52.7% Free float TNE – CAPITAL STRUCTURE BNDESPar Fiago AG Telecom ASSECA Participações Lexpart Part. L.F. Tel BrasilCap Brasil Veículos * 53% of TNE common shares ** Including Treasury Stock

  5. Executive Committee • 2 members: TMAR´s and Oi’s CEO Independent Accountants • PricewaterhouseCoopers CORPORATE STRUCTURE General Shareholders’ Meeting • 11 Board members (3 licensed) • Board Committees [Finance; Procurement & CAPEX; Compensation / Stock Option Plan] Board of Directors • 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 Fiscal Committee

  6. DIVIDEND POLICY • All shares have the right to receive a minimum annual payment of 25% of adjusted net income, but • 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 TNE • All shares have the right to receive a minimum annual payment of 25% of adjusted net income, but Preferred shares are entitled to:  Class A Shares (TMAR 5): 10% higher dividend than the one paid to the Common Shares  Class B Shares (TMAR 6): 10% of the Company´s Capital (allocated to this class) TMAR

  7. Oi CEO TMAR CEO MANAGING STRUCTURE Board of Directors Audit Committee Fiscal Committee TNE Executive Committee CFO Strategy and Regulation Internal Audit Treasury/ Investor Relations Public Relations Procurement Financial Planning Legal Counsel Asset Management Controlling TMAR

  8. MAIN ACHIEVEMENTS 2002 1998 International Processes Management/Processes/IT 16 Companies 16 IT Systems 15 Network Platforms 23 Network Management Centers 116 Call Centers All Unified Restructuring 16  1 Services - 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 Services Local Voice and regional LD; Regional Data Communic. Market Vision Market Approach Customer Segmentation Geographic Platform Expansion

  9. ANATEL TARGETS: REAPING THE BENEFITS • Oi’s operational launching • National long distance service • International long distance service • Nationwide data service

  10. + 110% CAGRLIS = 20.4% WIRELINE PLATFORM AND UTILIZATION RATE Million Lines in service (LIS) Million Lines installed (LI) Utilization rate (wireline) 93% 92% 86% 89% 89% 82% 2002 July 1998* 1998 1999 2000 2001 * Acquisition of the Company

  11. +18% YoY CAGR = 23.4% REVENUE GROWTH R$ Mn Gross revenue Net revenue + 132% 1998 1999 2000 2001 2002

  12. OPERATING EXPENSES* R$ Mn Cost of services 2001 Interconnection 6,545 Selling expenses G&A and other expenses 6,545 6,584 4,095 3,470 3,488 2001 2002 6,584 1998 1999 2000 2001 2002 2002 * Ex depreciation and amortization * Ex depreciation and amortization

  13. EMPLOYEES EVOLUTION Consolidated (including Contax and Oi) Total wireline

  14. BAD DEBT PROVISIONS % of gross revenue One time adjustments

  15. EBITDA EVOLUTION – TNE R$ Mn EBITDA margin (%) Net revenue EBITDA 01 99 02 98 00 1998 1999 2000 2001 2002

  16. Net revenue/employee R$ thousand EBITDA/employee R$ thousand Lines in service/employee +700% +490% +375% EMPLOYEE PRODUCTIVITY – TMAR 1998* 1999* 2000* 2001 2002 1998* 1999* 2000* 2001 2002 1998* 1999* 2000* 2001 2002 * 1998, 1999 and 2000 pro-form

  17. Net revenue/ ALIS Cash Costs/ALIS EBITDA/ALIS PRODUCTIVITY RATIOS – TMAR R$ per average line in service (ALIS) +7% -19% +60% 1998* 1999* 2000* 2001 2002 1998* 1999* 2000* 2001 2002 1998* 1999* 2000* 2001 2002

  18. FINANCIAL RESULTS R$ Mn Brazilian Currency devaluation * * Gross of R$ 715 million of interest expenses on swap operations.

  19. CAPEX / Net Revenue 99.6% 48.5% 36.1% 17.1% 34.5% 1998 1999 2000 2001 2002 CONSOLIDATED CAPEX - TNE R$ Mn Wireline Wireless 10,060 2,031 2,000

  20. CONSOLIDATED NET DEBT R$ Mn R$ Mn Dec/01 Dec/02 Total debt • Short term • Long term (-) Cash (-) Long term financ. invest. (=) Net debt 8,937 1,388 7,549 (1,235) - 7,702 10,774 1,769 9,006 (1,513) (141) 9,121

  21. CONSOLIDATED DEBT PROFILE – CURRENCY & COST (DEC/02) % Currency Interest Index Cost of Debt Currency Cost (% p.a.) US$ Libor + 5 Basket 12.3 Real 23.2

  22. CONSOLIDATED DEBT PROFILE – REPAYMENT SCHEDULE (DEC/02) Total debt: R$ 10,774 Mn 2nd half 1st half 2003 2004 2005 2006 2007 2008 2009 onwards

  23. WIRELESS PROJECT ROLLOUT  Oi • ~ 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 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 Distribution • Tight headcount structure: 846 employees • Infrastructure sharing • Outsourcing (including call centers) • Synergies with Telemar • Strong brand name Resource optimization Focus on profitable growth, minimizing OPEX and CAPEX

  24. Oi  POST-LAUNCHING RESULTS Initial targets (July/2002) First achievements (December/2002) • Innovative campaign: 31 years • Differentiated service plans • Diversified handsets offer • 500,000 clients in 12 months • ARPU of R$ 26 • MIX Pre/Post:90%/10% • Market share and gross additions in line with fair market share • 1,400,000 clients in just 6 months • ARPU R$ 33 (first 6 months) • MIX Pre/Post:80%/20% (6 months) • Market share and gross additions well above fair market share

  25. Oi’s SUBSCRIBER BASE – MONTHLY EVOLUTION Thousands of subscribers Prepaid Post-paid 1,401 20% 978 22% 677 80% 502 22% 386 20% 78% 19% 179 78% 80% 21% 81% 79% Jul/02 Aug/02 Sep/02 Oct/02 Nov/02 Dec/02

  26. REVENUE GROWTH STRATEGY Local Service Data & Corporate Integrated Strategy Long Distance Mobility

  27. REVENUE GROWTH STRATEGY Local Service Platform Growth in line with GDP Increase Value Added Services • Maintain leadership in home market • Advanced voice services (corporate/middle market/SOHO) • Best carrier’s carrier – network leverage (home market) • Increase ARPU • Value added services • Reduce interconnection costs (Fixed to Mobile) Local Service Data & Corporate Long Distance Mobility

  28. REVENUE GROWTH STRATEGY Data & Corporate Opportunity to Increase Market Share • Increase offer to SME (home market) • ADSL (high end/SOHO/small businesses) • Nationwide services (corporate level) • Leverage on national backbone (Telemar + Pegasus) • Competitive Service Level Agreements Data & Corporate Local Service Long Distance Mobility

  29. REVENUE GROWTH STRATEGY Long Distance Offer of New Services (Increase Market Share) • Leadership in home market • Conquer new markets (inter-regional/international/SPM – dial code) • Protect existing market • Retail: loyalty/retention programs + promotions • Corporate: best quality (call completion/billing) + competitive service plans (discounts/volume) Local Service Data & Corporate Long Distance Mobility

  30. REVENUE GROWTH STRATEGY Mobile services New Technology + Migration Fixed to Mobile • 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 Local Service Data & Corporate Long Distance Mobility

  31. 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 • Net Debt: flat to small reduction

  32. 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 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: invest@telemar.com.br Visit our website: http://www.telemar.com.br/ri “SAFE HARBOR” STATEMENT

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