TELECOM ITALIA GROUP Industrial Plan. Rio de Janeiro, February 20th, 2015 TIM. TIM Brasil Industrial Plan PARTICIPAÇÕES

Transcription

1 TELECOM ITALIA GROUP Industrial Plan Rio de Janeiro, February 20th, 2015 TIM TIM Brasil Industrial Plan PARTICIPAÇÕES

2 Safe harbor This presentation contains statements that constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of the customer base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the activities and situation relating to the Telecom Italia Group. Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those projected or implied in the forward looking statements as a result of various factors. Consequently, Telecom Italia makes no representation, whether expressed or implied, as to the conformity of the actual results with those projected in the forward looking statements. Forward-looking information is based on certain key assumptions which we believe to be reasonable as of the date hereof, but forward looking information by its nature involves risks and uncertainties, which are outside our control, and could significantly affect expected results. 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. Telecom Italia undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telecom Italia business or acquisition strategy or planned capital expenditures or to reflect the occurrence of unanticipated events. Analysts and investors should consult the Company's Annual Report on Form 20-F as well as periodic filings made on Form 6-K, which are on file with the United States Securities and Exchange Commission which may identify factors that affect the forward looking statements included herein. 2

3 Strategic Positioning Internet Market Evolution Mobile Market Revenues Evolution (Mobile Service Net Revenues; %) Revenue Mix Internet Opportunities Most households without internet access Mobile better suited to break price barrier Revenue Mix Internet 60% 12% 4% 57% 27% SMS Voice Outgoing Voice Incoming % 37% 2% SMS Traffic Sharp Decrease (billions of SMS sent) Voice Decline MTR Cut Jan Nov-14 Maturing market: Customer base growth slowdown Consumption migrating from voice to data Mobile Internet is the growth driver and will be the largest mobile market, although Voice remains important 3

4 Data: Connectivity and Beyond Getting People Connected: Broadband Penetration Fixed (% households) 90% 83% 73% 73% Developed markets avg: 75% 55% Δ: 43 p.p. Mobile (% population) 105% 90% 79% 72% Developed markets avg: 82% Δ: 19 p.p. 66% 63% 32% Fra UK USA Jap Rus Bra Jap USA UK Ita Fra Bra Huge gap between Brazil and developed markets Lack of infrastructure: low quality and speed Affordability issues (high prices, combos) Smaller gap between Brazil and developed markets Additional drivers for growth: days of use, data consumption Affordable prices Entering in the Content World Apps Social Video Music Gaming RichCom OTT COOL TRUST Content & Usage Offer Proximity & MPayment Connected Home & In Cars Digital Identity & Security Connectivity Telco QoE* and Caring Pure Connectivity Offer 4 * Quality of Experience

5 State of the art Capex Allocation: Enhance Quality to Increase Returns Network Rollout MBB Project Geographic Area 1,137 cities prioritized due to business relevance, based on IRR and Payback MBB program is addressing >70% of TIM's business, and is the key investment program in High business concentration in few cities allows for a focused infrastructure enhancement program Number of 4G Sites Number of 3G Sites 1.9k 3.7k >15k Number of Wifi & Small Cells 0.7k 1.5k 9.1k 10.4k >14k 5k HetNet % of Urban Covered Population 2G 3G 4G New Coverage Strategy Small Cells MACRO SITES 1,400 sites in ,902 sites in SMALL CELLS 800 sites in ,477 sites in WiFi / Femto / DAS 3,000 WiFi in 2015 >150 DAS in % 95% 78% 86% 79% 27% Technology Capex Allocation TIM LD Backbone 4G 3G Legend 5 2G a Actual e Bdg e Plan e Plan IRU + Construction SWAP until

6 Network and Commercial Synergies Network & Interconnection Savings Business Growth Leased Lines Cost Network & Interconnection Cost Mobile Customer Base (mln customers) Flat network and interconnection cost as a percentage of total costs a 2015e 2016e 2017e 2014a 2015e 2016e 2017e 73.4 Operational Efficiency SAC (Subscriber Acquisition Cost) Bad Debt Data Traffic Expectation (in petabytes) 2014a 2017e 2014a 2017e 3G Data Traffic EBITDA Evolution (R$ without intercompany) Fixed Business Progress EBITDA - Capex LTE Data Traffic 2014a 2017e a 2015e 2016e 2017e

7 Fixed Corporate Solutions & Live TIM Positive Trends Corporate Solutions as a Sustainable Business Revenues from New Sales (R$; YoY) +9x EBITDA FIXED MOBILE CONVERGED SOLUTIONS Drivers: Revenue and EBITDA rebound Sales team resizing and training Customer care unification (F+M) Improvement on service level Fine tuning mobile portfolio Launch of new convergent solutions Live TIM Plan: Accelerating Growth From option value to reality: Customer Base (thousands customers) Investments (R$; YoY) Accelerate growth through incremental investment >500k Focus on keeping customer experience leadership +9x +3x Introduction of new services (Voice and Bluebox) Support the discussion on Banda Larga Para Todos program 60k 130k 7

8 Perspectives A Close Look at Business Performance Guidance MTR Impact Analysis (R$; %) Net Revenues (R$ billion) EBITDA Exposure Net Services Revenues Exposure 31% 24% 18% 12% Near midsingle Continued Growth MTR Cut (% YoY) Mobile Net Revenues Analysis (R$; %) Innovative: Data Content Other Traditional: Voice Incoming SMS e 2016e 2017e -15% -11% -25% % YoY +48% -11% Innovative and Traditional Investments (R$; %) -33% -35% -44% 2013a 2014a 2017e 2012a 2012A 2013A 2013a 2014A 2014a 2015e 2016e 2017e EBITDA (R$ billion) a 2012A 2013a 2013A 2014a 2014A 2015e 2016e 2017e CAPEX (R$ billion) 6.9 Continued Growth, improving margin Innovative Traditional 52% 48% 60% 63% 65% 40% 37% 35% ~9 bln ~5 bln Organic Others/ Licenses CAPEX : >R$14 billion a 2015e 2016e 2017e 2012A 2012a 2013A 2013a 2014A 2014a 2015e 2016e 2017e