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TELE NORTE LESTE PARTICIPAÇÕES S.A. Salomon Smith Barney Conference March, 2002

TELE NORTE LESTE PARTICIPAÇÕES S.A. Salomon Smith Barney Conference March, 2002. Overview. Largest Telco in Latin America: 14.8 million lines Concession : 65% of Brazilian Territory Population : 93 Million (54% Country´s total) 40% of Country’s GDP Over 21 Million Households

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TELE NORTE LESTE PARTICIPAÇÕES S.A. Salomon Smith Barney Conference March, 2002

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  1. TELE NORTE LESTE PARTICIPAÇÕES S.A. Salomon Smith Barney Conference March, 2002

  2. Overview • Largest Telco in Latin America: 14.8 million lines • Concession : 65% of Brazilian Territory • Population : 93 Million (54% Country´s total) • 40% of Country’s GDP • Over 21 Million Households • Penetration : 16% ( 22% in Brazil) • TNLP: Heaviest Weighted Company in IBOVESPA • One of Leading LatAm ADRs’ in the NYSE (TNE) • Market Value: US$ 5.95 billion (December/01) • Free Float: 80% of Total Shares • Investment grade rating: Fitch and Moody´s

  3. 2001 Main Achievements • Corporate Restructuring of wireline business;  Anticipation of Anatel´s 2003 targets;  Wireline operating restructuring;  Acquisition of PCS license for Region I;

  4. Corporate Restructuring  Consolidation (“16 1”); Operational and administrative efficiency gains; Better utilization of Fiscal Credits (R$ 890 million); Market recognition – Animec award.

  5. Corporate Restructuring - Previous Shareholding Structure TELEMAR PARTICIPAÇÕES S.A Free Float 17.6% KT 80.4% KT TELE NORTE LESTE PARTICIPAÇÕES S.A 2% Treasury HICORP OUTSOURCING TNL PCS TNL ACESSO CONTAX TNEXT 86% 79% 81% 61% 69% 69% 76% 64% RIO DE JANEIRO MINAS GERAIS BAHIA SERGIPE ALAGOAS RIO GRANDE DO NORTE PERNAMBUCO PARAÍBA ESPÍRITO SANTO CEARÁ PIAUÍ MARANHÃO PARÁ AMAPÁ RORAIMA AMAZONAS 83% 78% 73% 64% 55% 81% 60% 75% % over KT

  6. Corporate Restructuring – Current Shareholders´ Structure TELEMAR PARTICIPAÇÕES S.A Free Float 17.6% KT 80.4% KT TELE NORTE LESTE PARTICIPAÇÕES S.A 2% Treasury HICORP OUTSOURCING TNL PCS TELEMAR Norte Leste TNL ACESSO CONTAX TNEXT Branches Pernambuco Bahia Alagoas Piauí Pará Roraima Espírito Santo Rio de Janeiro Minas Gerais Amazonas Sergipe Rio Grande do Norte Ceará Maranhão Amapá Paraíba

  7. Anticipation of Anatel´s 2003 Targets  5,625 thousand new lines installed; 296 thousand public phones installed; 16,420 localities attended; 77 million inhabitants benefited from the program; Over 97% digitalization rate; Over 17 thousand km of optic fiber network;  US$ 9.7 billion CAPEX since privatization.

  8. Utilization Rate (%) 92% 92% +/-90% 89% 82% 1999 2000 2001 2002E 1998 LIS +90% 20,0 18.1 LI +119% 14.8 12.8 11.8 10.5 9.7 7.8 7.9 1998 1999 2000 2001 Anticipation of Anatel´s 2003 targets Platform Growth 18.1 15,0 10,0 Lines in Service 5,0 Lines Installed (in millions) 0,0 2002E

  9. Wireline Operating Restructuring  Centralization of operational systems; Centralization of operational and administrative activities; Better control and cost management; Improvement of internal process; Head count reduction.

  10. Wireline Operating Restructuring Total Employees (ex-Contax) Total Employees (ex-Contax) Average Employees (ex-Contax) (40%)

  11. Acquisition of PCS license for Region I Mobile Phone Business  Acquisition of PCS license for Region I (March/2001); Project Implementation = ready to launch; USD 1.4 billion of suppliers and banks facilities; R$ 2.2 billion CAPEX in 2001 (R$ 1.2 bn for license); Brand name.

  12. 2001- Financial and Operational Results  Revenue growth;  Improvement in gross revenue per employee ratio;  Operating expenses;  Bad debt provision;  EBITDA;  Income statement.

  13. 2001- Financial and Operational Results Revenue Growth (R$ mm) CAGR (2001/98) 25.3% +97% (98/01)

  14. Gross Revenue per Employee (R$ Thousand /year) Total directly employees (-) PCS (-) Contax

  15. Operating Expenses Breakdown (R$ Million) 4,328 10 2,977 17 2,774 2,460 19 % 25 32 33 27 34 30 21 38 40 51 33 -10

  16. Bad Debt Provision (R$ Million) 7,0% 812 5.9% 6,0% 5,0% 4,0% 500 400 3,0% 2.5% 2.0% 300 1.6% 2,0% 212 200 219 114 1,0% 100 0 0,0% 1998 1999 2000 2001 2002E Bad Debt Bad Debt/Gross Revenue

  17. Line Blocked & Disconnected Disconnected Lines (in thousands) Blocked Lines (in thousands)* 9.5%  =2,288 767 8.5% 8.1% 6.4% 636 1,187 1,185 1,152 945 472 413 Mar-01 Jun-01 Sep-01 Dec-01 1Q01 2Q01 3Q01 4Q01 Partial Total % of Total Lines in Service End of Period

  18. Margin (%) 60% 54,3% 48,8% 49,6% 40% 34,1% 20% 2001 1998 1999 2000 EBITDA (R$ Million) 0% 1998 1999 2000 2001

  19. Consolidated Income Statement Plant growth F-M Traffic growth Debt increase

  20. 2002 OUTLOOK • Revenue Drivers: - Plant Expansion - New Services – LD - New Markets  Cost Drivers: - Increase of operating efficiencies; - Headcount reduction; - Plant Maintenance - Bad debt control  CAPEX reduction; Net Debt forecast; PCS roll out.

  21. Lines in Service by year end 14.8 11.8 9.7 7.8 1998 1999 2000 2001 2002 2002 OUTLOOK -Revenue Drivers Platform Expansion (mm) Average Lines in Service 15.5/15.6 13.6 10.6 8.6 7.2 1998 1999 2000 2001 2002

  22. Region I Region II Region III New Businesses  Adding Value • Internet Access • National & International Long Distance Calls • Data Business

  23. Capex 10.1 2.8 2.5 2.5 2.2 1998 1999 2000 2001 2002 2002 OUTLOOK CAPEX Reduction (R$ Bi) 2001 10.1 R$ bi 2002 2.5 R$ bi Wireline Business Wireless Business

  24. Debt Structure – December 2001 (R$ mn) LT DEBT 2002 14% 2006 and beyond 2003 36% 17% 2004 ST 1,388 16% Cash 1,234 2005 17% • DEBT PROFILE • R$ 5,382 million foreign currency (60%)*: • LIBOR +/- 7% p.a. • R$ 3,556 million in Brazilian currency (40%): • (+/- 17% p.a.) Net Debt 7,705 Long Term 7,549 TOTAL = 8,938 * Fully Hedged

  25. PCS – Roll Out • Launch in 2nd Quarter;  New technology GMS/GPRS, with new services; Synergies with TMAR (fixed wire line);Integrated operator (fixed+mobile);Target of 500,000 clients (market-share: ~2.5%) in the first year; Sharing of infrastructure lower CAPEX.

  26. “SAFE HARBOR” STATEMENT 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.

  27. Investor Relations New Address Rua Humberto de Campos, 425 / 8º andar Leblon Rio de Janeiro -RJ Phone: ( 55 21) 3131-1314/1315/1313 Fax: (55 21) 3131-1325/ 3131-1326 E-mail: invest@telemar.com.br Visit our new website: http://www.telemar.com.br/ri

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