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TELE NORTE LESTE PARTICIPAÇÕES S.A.

TELE NORTE LESTE PARTICIPAÇÕES S.A. Overview. Largest Telco in Latin America: 17.7 million lines installed* 14.9 million lines in service* Concession Area:  65% of Brazilian Territory / 93 million people  40% of Country’s GDP  Over 21 Million Households

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TELE NORTE LESTE PARTICIPAÇÕES S.A.

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  1. TELE NORTE LESTE PARTICIPAÇÕES S.A.

  2. Overview • Largest Telco in Latin America: 17.7 million lines installed* 14.9 million lines in service* • Concession Area:  65% of Brazilian Territory / 93 million people  40% of Country’s GDP  Over 21 Million Households • Tele Density: 16% ( vs. 22% National Average) • TNLP4: Heaviest Weighted Stock in IBOVESPA • Free Float: 79% of Total Shares • Level 2 ADR (NYSE:TNE): 28% of Total Shares • Market Value: US$ 3.4 billion (August/02) * In June/02

  3. Corporate Structure TELEMAR PARTICIPAÇÕES S.A. ** FREE FLOAT 18.7% 79.0% TELE NORTE LESTE PARTICIPAÇÕES S.A 2.3% Tresuary 79.5% HICORP* OUTSOURCING TNEXT* TNL ACESSO* CONTAX* TELEMAR Norte Leste Pegasus 24.4% Free Float 1.6% Treasuary 18.9% *100% owned Subsidiary ** Controlling Shareholder

  4. Corporate Structure • Shareholders´ Meetings • At least one annual general meeting • Board of Directors • Monthly Meetings • 11 board members (+ 11 alternates) 10 shareholders´ representatives plus the CEO • Independent Accountants PricewaterhouseCoopers • Executive Committee

  5. Board Committees • Finance Committee • Monthly meetings • 10 members • Objectives: Review, analyze and advise the Board of Directors on: Financial Risks, Insurance Policy, Independent Accountants, Internal Audit Program, Budget, etc. • Procurement and Investment Committee • 6 members • Objectives: Advise the Board of Directors on procurement and execution on the capital expenditures program. • Compensation Committee • Semiannual • 3 members • Objectives: Define conditions of employees´ benefits in general and the stock option program in particular.

  6. Full-Time Employees 2Q01 3Q01 4Q01 1Q02 2Q02 % yoy TMAR 16,795 15,803 10,663 10,483 10,283 -39% Connect 4,141 6,977 3,417 979 152 -96% TNE+Other Subsidiaries 961 1057 976 427 486 -49% Wireline Total 21,897 23,837 15,056 11,889 10,921 -50% Oi 151 286 434 570 663 339% Contax 9,558 12,119 11,981 10,397 11,594 21% Total 31,606 36,242 27,471 22,856 23,178 -27% Personnel

  7. Platform Growth 14.9 12.7 10.1 8.2

  8. Quarterly Net Additions (in 000) 2Q01 3Q01 4Q01 1Q02 2Q02

  9. Revenue Growth (R$ Mn) CAGR 25.3% +97%

  10. Employee Productivity - Wireline +121% ( LIS/ Employees)

  11. Revenue per Employee* (*) Gross Revenue / Full-time wireline employees (R$ 000/year) (**) Annualized ratio

  12. 1HALF 2HALF 1998 49% 51% 1999 46% 54% 2000 46% 54% 2001 47% 53% Gross Revenue - Quarterly Growth (R$ Mn) 4Q 3Q 7,533 2Q 6,406 5,015 3,915 1Q

  13. 1H02 Gross Revenue Breakdown (R$ Mn) 100.0% 6.9% 1H01 8.8% 5.9% 11.4% 24.0% 6,406 43.0% 100.0% 6.2% 6.0% 7,533 (+18%) 10.0% 10.9% 21.9% 45.0% Local Fixed- Mobile Network Usage Long Distance Data Other TOTAL

  14. Operating Expense Breakdown (R$ Mn) -44% 2,188 -34% 1,832 1,448 1,397 1,372 Ex- Interconnection %

  15. Fixed Mobile Revenue & Interconnection Costs (R$ Mn)

  16. 87 152 380 193 210 158 Bad Debt Provisions R$ Million % of Gross Revenue * Normalized Level (excluding non-recurring adjustments)

  17. Consolidated Income Statement

  18. Consolidated Balance Sheet (R$ Mn)

  19. Lines Blocked (in 000) Partial Blockage (outgoing calls): 30 days past due Total Blockage (all calls): 60 days past due Disconnection: 90 days past due

  20. Disconnected Lines (in 000)

  21. EBITDA Margin EBITDA Growth (R$ Mn) 49.3% 44.7% (*) Excluding Depreciation and Amortization

  22. EBITDA – Quarterly Statistics EBITDA (R$ MM) EBITDA Margin (%)

  23. CAPEX / Net Revenue - 1998/2002 99.6% 48.5% 36.1% 34.5% 14.8% * Includes PCS Capex / Net Revenue

  24. CAPEX – Quarterly Statistics - Consolidated (R$ Bn)

  25. Wireline CAPEX 1998 / 2002E (TMAR)

  26. Debt Structure – 06/30/02 TOTAL DEBT 2002 8% 2006 and beyond 2003 43% R$ mn 11% Cash 573 ST 1,220 2004 18% 2005 20% DEBT PROFILE • R$ 6,251 million foreign currency (64%)*: LIBOR + 5,19% p.a. • R$ 3,450 million in Brazilian currency (36%): (+ 17.4% p.a.) Net Debt 9,128 Long Term 8,481 TOTAL = 9,701 * 100% Hedged

  27. Changes in Debt Position – TNE (R$ Mn)

  28. OUTLOOK 2002 • Revenue Drivers: Rate increase Platform in service growth New Services – Long Distance /Data New Markets • Cost Drivers: Increase operating efficiencies; Headcount reduction; Maintenance costs reduction; Bad debt control; Oi – operating / financial expenses  CAPEX reduction – R$ 2 billion; Net Debt under control - less than R$ 9 billion.

  29. Average Rates for Telecommunication Services* (R$)

  30. New Businesses  Adding Value National & International Long Distance Calls Region I 031 Global Region II Outgoing Calls Incoming Calls Region III International Calls

  31. Cost Drivers • Headcount Reduction - 40% in average  Third Party Services Reduction  Bad Debt Control - less than 5% of Gross Revenue (in average)Marketing Expenses• wireline (30% reduction)•wireless

  32. CAPEX 10.1 2.8 2.0 2.5 2.2 1998 1999 2000 2001 2002 2002/2001 - CAPEX Reduction - TNE 2001 10.1 R$ bn 2002 2.0 R$ bn -80% TMAR- Wireline Business Oi - Wireless Business

  33. Oi • Current Status • Tariffs • CAPEX

  34. TNE – PCS ´´Oi´´ - Current Status • Financing US$ 1.4 billion credit (suppliers and bank facilities); Launching of the brand name (Jan/02); Launch of Operations 25th June ; 14 Metropolitan areas (16 as of 03) – 320 cities; Main Suppliers: Nokia, Alcatel, Siemens; Distribution channels = over 1,600 point of sales; 2,000 integrated sites; Employees: 663 in June; 400,000 subscribers in August/02; Agreement with 19 countries for International roaming; Technology GSM/GPRS - in all Capitals; CAPEX through 2004: R$ 2.7 billion (R$ 1.4 billion until 1H02).

  35. Tariffs Pre-Paid Tariffs (R$ per minute) Oi to Fixed -line Oi to Oi Normal Limited Oi to Fixed-line Oi to Oi Oi to other cellular company Flat 1.39 0.34 0.99 Oi to other cellular company 1.49 0.69 Post- Paid Oi 40 Oi 80 Oi 160 Oi 300 Monthly Fee (R$) 29.90 47.90 79.90 114.00 Minutes 40 80 160 300 Tariff (R$ / min) 0.75 0.60 0.50 0.38

  36. CAPEX R$ 1.1bn – License (2001) • 2001 / 2004: R$ 3.8 bn R$ 2.7 bn – Network • Network CAPEX (R$ bn): 1H02

  37. 2002 – Industry Outlook • Increasing competition DLD Market (Outgoing calls from Regions 1 and 3) Data Businesses (Corporate – Nationwide) • Regulatory Issues  Interconnection Battle Long Distance x Local Telcos Wireline x Wireless  Use of Universalization Funds (FUST)  Bad Debt Control – New Procedures  SMP Rules (Wireless) • Introduction of 2.5 G (?) • Beginning of Consolidation / Alliances / Partnership´s Cellular/Cellular (Block Strategy – TEM/PT; TIM; Telecom Americas)  ILEC´s / CLEC´s  ILEC´s / Mirrors  ILEC´s / Cellular ( Band B´s / Independents)  ILEC´s / ISP´s (Flat Rate Model)

  38. “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. Investor Relations Rua Humberto de Campos, 425 / 8º andar Leblon Rio de Janeiro -RJ Phone: ( 55 21) 3131-1314/1315/1316/1313 Fax: (55 21) 3131-1155 E-mail: invest@telemar.com.br Visit our website: http://www.telemar.com.br/ri

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