Brasil Telecom Participações S.A. Brazil Seventh Annual CEO Conference

Transcription

1 Brasil Telecom Participações S.A. Brazil Seventh Annual CEO Conference March, 2006

2 Our Agenda 1. Competitive Environment 2. BrT s Figures 3. Growth Alternatives 2

3 Our Footprint Third largest RBOC-like Company in Brazil Leadership in fixed telephony in Region II (Acre, Rondônia, Mato Grosso, Mato Grosso do Sul, Tocantins, Goiás, Santa Catarina, Paraná, Rio Grande do Sul and Federal District) 9.5 million lines in service 2.2 million mobile accesses 1.0 million broadband subscribers 3.2 million active Internet clients Metropolitan access networks in São Paulo, Rio de Janeiro and Belo Horizonte 2-ring submarine fiber-optic cable systems, totaling 22,000 km and connecting Brazil, USA, Venezuela and Bermuda 23% of the Brazilian population (43 million inhabitants) and 27% of the country s GDP Note: Position in December 31,

4 Integrated Portfolio Brasil Telecom Local DLD / ILD Data Cyber Data Center Broadband Internet Broadband Access Internet DialDial-up Access Mobile Service Portal 4

5 Structural and Competitive Challenges Portfolio Fixed voice Migration of fixed traffic to mobile Regulatory demands Increase of competition Corporate data Maintain leadership Price pressure Rentability (05) + Fixed voice Stagnation of revenues Value creation Increasing convergence Corp. Data IP Mobile IP Continue growing Profitability Uncertainty about service model Mobile High penetration Limits of profitability + Growth (04 05) Gross revenue in 2005 Trend 5

6 StrategicEmphasisfor thebusiness Portfolio Fixed voice Structural and competitive actions Proactive regulatory approach + Fixed voice Client orientation Extend offering Align OpEx/CapEx with value Data IP Segmented approach Consolidate IP platforms Corporate data Defend corporate market Grow SMEs Sophistication of offers and prices Profitability (05) IP Mobile Mobile Corporate and residential high end focus Gain scale + Growth (04 05) Gross revenues 2005 Gross revenues

7 Key Messages Revenues OpEx CapEx Capital Structure Dividends Policy Minimizing fixed voice erosion Growing profitably in other businesses Optimizing expenditures Investigating potential for savings Renegotiating contracts Minimizing regulatory CapEx Imposing disciplined approach to cash management Focusing on growth engines Optimize capital structure to reduce WACC Maintain conservative liquidity levels Respecting statutory obligations Prioritizing shareholder value creation Optimizing tax planning (interest on shareholder equity) 7

8 Local Market Share Increasing Leadership Intra-sector LD Intra-region LD 95% 91% 84% Mobile Success in New Segments Inter-regional LD International LD 9% 59% 34% 8

9 Gross Revenues (R$ million) Mobile operation was launched Aggressive growth in the data segment % R$ 12,763 R$ 14, % 13.1% 0.7% 89.6% 5.0% 81.9% Fixed Mobile Data 9

10 EBITDA (R$ million) BrT GSM s negative EBITDA, which has not yet reached maturity 2005 EBITDA reached R$2.709 MM (R$642 MM of non recurring items) Adjusted EBITDA in 2005 of R$3,352 MM 26 R$ 3, % 642 3, % 2, EBITDA Non recurring items EBITDA: Earnings before interest, taxes, depreciation and amortization 10

11 Total and Net Debt (R$ million) 74% of the total debt is long term debt R$1.3 billion of foreign currency denominated debt Hedge = 59.8% of foreign currency debt (or 12.2% of the total debt) Indebtedness Other 10% JBIC 9% Consolidated Consolidated Total Debt Cash 4,708 3,227 4,569 2,614 Bond 11% Debenture 18% Net Debt 1,482 1,955 BNDES 52% 11

12 CAPEX (R$ million) 63% reduction in CAPEX for the mobile operation in 2005 CAPEX/Gross Operating Revenues = 13.5% in 2005 R$ 2,868 1,176 R$ 1,978 R$ 2,300 to R$ 2, ,692 1, ,800 to 2, (e) Mobile Operations Fixed Line Operations 12

13 Dividends (R$ million) Dividends + Interest on Shareholders Equity: 31% of accumulated EBITDA in x greater than that registered in % % Dividends/Shareholders' Equity Dividend Yield 13

14 Recent Developments 12% reduction in BrT s work force Expenses with labor severance in 1Q06; Savings with personnel costs and expenses in 2006; Management focusing in the budgetary administration. The debenture holders and other creditors approved waiver and/or adjustment in financial covenants due to the non recurring provisions made on 4Q05. One-year delay for the pulse-minute conversion - ANATEL 14

15 Goals and Design Corporate Governance Project Design Goals Shareholders Structure Corporate Governance Facilitating the relationship and communication among the Board of Directors, Fiscal Council, Audit Committee, shareholders and officers; Improving corporate governance practices; CGO Officers Internal Governance Increasing the effectiveness of decisions linked to corporate governance processes; Catalyst for transparency. 15

16 Convergence in multiple layers IMS (IP Multimedia Subsystem) Integrated transmission Integrated Central Platforms Single operational system Integrated intelligent network platforms Single Terminal (fixed and mobile) Integrated services: Single access number Offering packages with different products Sales and Marketing teams merged One stop shop concept Network Terminal and Services Commercial CTP (Cordless Telephone Profile) UMA (Unlicensed Mobile Access) 16

17 Convergence Value proposal Clients Costs Reduction Convenient use of the same handset (Agenda) Integrated Services Increased quality for the indoor mobile service Brasil Telecom Churn Reduction (exit barrier enhanced) Potential offering for new aggregated value services Increased network efficiency (fixed and mobile) Increased mobile market share Increased broadband reach 17

18 Brasil Telecom 2006 Brasil Telecom s principles: agility, flexibility and hard work; ISPs integration: synergies with the content sharing, technological platforms and sales force; Cost reduction: - Greater efficiency: fixed and mobile operations merger; - Savings with personnel costs and expenses; - Third parties contracts renegotiation. Continuous revaluation process of Brasil Telecom s business plan and budget. 18

19 This presentation contains forward-looking statements. Such statements are not statements of historical fact, and reflect the beliefs and expectations of the Company's management. The words "anticipates, "believes, "estimates, "expects, "forecasts, "intends, "plans, "predicts, "projects" and "targets" and similar words are intended to identify these statements, which necessarily involve known and unknown risks and uncertainties. Accordingly, the actual results of operations of the Company may be different from the Company's current expectations, and the reader should not place undue reliance on these forwardlooking statements. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments. 19

20 Brasil Telecom Participações S.A. Brazil Seventh Annual CEO Conference