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May, 2003

May, 2003. Overview – March/2003. Integrated Telecom Service Provider -15.0 million wirelines in service - 1.7 million wireless clients. Concession Area (Region I) - Local Service and SMP 65% of Brazilian territory/94 million people 40% of country’s GDP Over 21 million households.

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May, 2003

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  1. May, 2003

  2. Overview – March/2003 • Integrated Telecom Service Provider -15.0 million wirelines in service - 1.7 million wireless clients • Concession Area (Region I) - Local Service and SMP • 65% of Brazilian territory/94 million people • 40% of country’s GDP • Over 21 million households • Leadership in local services in Region I (98% market share) • National and international long distance services • Regional mobile services (GSM) • National Data, Corporate & Value Added Services • TNLP4: most liquid stock in Brazilian market • TNE: among the most liquid L.A. ADR at the NYSE /2002 • Free Float: 80% of total shares • Level 2 ADR (NYSE: TNE): 30% of total shares • Market value: US$ 4.2 billion (Apr/03)

  3. 100.0% 79.5% 100.0% 100.0% TNE – Shareholders´Structure Tele Norte Leste Participações S.A. (TNE) Treasury TelemarParticipações S.A.* Free float Free float = 18.9% Treasury stock = 1.6% Norte Leste (TMAR) * Controlling Shareholder (53% of voting shares)

  4. 2.2% R$ 4,644 million 17.9% 79.9% Capital Tele Norte Leste Participações S.A. (TNE) Treasury Stock Telemar Participações S.A. Free float TNE – Capital Structure Shares Common 130,186 Mn 1/3 Total outstanding shares (ex-treasury) 381,8 Mn Preferred 260,371 Mn 2/3 390,557 Mn Total BNDESPar Fiago AG Telecom ASSECA Participações Lexpart Part. L.F. Tel BrasilCap Brasil Veículos * 53% of TNE common shares

  5. OiCEO TMAR CEO Managing Structure Board of Directors Audit Committee Fiscal Committee TNE Executive Committee Strategy and Regulation CFO Internal Audit Treasury Billing Cycle Public Relations Human Resource Procurement Financial Planning Legal Counsel Asset Management Investor Relations Controlling TMAR

  6. Wireline Network – Lines Installed & in Service (million lines) Lines in service (LIS) Lines installed (LI) 1Q03 2002 July 1998* 1998 1999 2000 2001 * Company´s acquisition.

  7. Wireline Network – Broadband Accesses (in thousands) 125 120 90 92 93 DVI (ISDN) 53% 58% 85% 77% 81% 47% Velox (ADSL) 42% 23% 19% 15% Mar/02 Jun/02 Sep/02 Dec/02 Mar/03

  8. Wireline Network – Long Distance Backbone RR AP Belém São Luís Fortaleza PA AM • Cover over 80% of Brazilian Industrial GDP • Interstate transport network • 18,000 km fiber optical cable • 20 integrated metropolitan rings in 18 states • 350 remote satellite stations • 8 Hub satellites • DWDM, SDH and IP MA Terezina CE RN PB PI PE Natal AC AL RO TO SE Recife Aracajú BA MT Maceió Salvador Brasília Montes Claros Goiânia Paracatu MG GO Patrocínio Uberlândia MS Belo Horizonte ES Vitória SP RJ Campinas PR Rio de Janeiro São Paulo Curitiba SC Florianópolis RS Porto Alegre

  9. Wireless Platform - Oi’s subscriber base (in thousands) Prepaid Post-paid 1,722 1,624 1,504 22% 1,401 22% 21% 20% 978 22% 78% 677 78% 79% 502 22% 80% 20% 78% 78% 80% Mar/03 Nov/02 Dec/02 Oct/02 Sep/02 Feb/03 Jan/03

  10. Financial Results 1Q03 – Net Revenues (R$ Mn)

  11. Financial Results 1Q03 – Gross Revenue Breakdown

  12. Consolidated Revenues – Local Services Drivers 1Q03/4Q02 + R$ 67 Mn (+2.5%) Decrease in average lines in service and traffic Fixed to mobile tariff adjustment in February 1Q03/1Q02 Tariff increase in June/02 and traffic growth (5% yoy) Decrease in fixed to mobile traffic (campaigns incentivating fixed-fixed calls) + R$ 246 Mn (+10.5%)

  13. Consolidated Revenues – Long Distance Services Drivers 1Q03/4Q02 Intra-RegionaI: increase in average revenue per minute (lower promotions/ discounts) Inter-regional & International: Increase in traffic and market share Fixed-Mobile: Traffic increase (CSP 31) and tariff adjustment in February + R$ 71 Mn (+11.9%) 1Q03/1Q02 Market share gains in all segments (new services contributed with R$ 77 million) and tariff increases + R$ 204 Mn (+44.1%)

  14. Consolidated Revenues – Data Services Drivers 1Q03/4Q02 + R$ 50 Mn (+22.7%) The Brazilian Data Market is growing by 10% a year. Telemar´s revenue increased by 17.5% yoy and 22.4% qoq, mainly due to market share gains (also helped by Pegasus´ acquisition). Pricing pressure on leased lines (mainly to other providers - EILD) 1Q03/1Q02 + R$ 41 Mn (+17.8%)

  15. Consolidated Revenues – Wireless Services Drivers 1Q03/4Q02 Growth in services (+89%) partly compensating the decrease in handsets sales (-66%) - R$ 100 Mn (-31.2%)

  16. Oi´s Operating & Financial Performance – 1Q03 Gross Revenue (R$ Mn) Net Additions (in Thousands) 500 900 321 184 366 314 Wireless Market-Share Region I (Mar03) Market Share/Net Additions 1Q03 * 10.6% Oi Band A+B 44% 56% Oi 88.4% Band A+B * Region I (Band B net adds estimated)

  17. G&A and Other Selling Cost of services Interconnection Costs & Operating Expenses* - 1Q03 (R$ Mn) 4Q02 G&A / Other 1,966 Cost of services Selling 1,743 Interconnection 1,351 1Q03 1Q02 4Q02 1Q03 * Ex depreciation and amortization

  18. Costs & Operating Expenses – Main Changes - 1Q03/4Q02 (R$ Mn)

  19. Personnel – 1Q03 (full–time employees) TMAR+Oi Contax 29,987 28,736 27,471 24,511 24,206 21,090 2001 1998 1999 2000 2002 Mar/03

  20. Bad Debt Provisions – 1Q03 (% of gross revenue) 1Q02 2Q02 3Q02 4Q02 1Q03

  21. Consolidated EBITDA – 1Q03 (R$ Mn)

  22. Financial Results – 1Q03 (R$ Mn) Increase in interest rates (CDI) and in total debt during 1Q03 * Net of currency swap results.

  23. Consolidated Income Statement – 1Q03 (R$ Mn) Reversal of Income Tax/ Interest on Capital Statement

  24. Consolidated CAPEX – 1Q03 (R$ Mn) 697 509 440 386 185

  25. Debt Position (Mar/03) (R$ Mn)

  26. Debt Profile – Currency & Cost (Mar/03) – After swap effect Currency Interest Rates Cost of Debt Currency Cost US$ Libor + 5% Basket 12.3% Real 25.0%* * Based on CDI at 26.5% p.a.

  27. Debt Profile – Repayment Schedule (Mar/03) (R$ Mn) Total Debt: 11,616

  28. Growth Focus Wireline Services Data & Corporate Integrated Strategy Long Distance Wireless Services

  29. Growth Focus - Local Wireline Services Lower Platform Growth (in line with GDP) Increase in Value Added Services • Maintain leadership in home market • Advanced voice services (corporate/middle market) • Value added services • Increase ARPU • Reduce interconnection costs Local Service Data & Corporate Wireless Services Long Distance

  30. Growth Focus - Data & CorporateServices Growth above the market • Increase penetration in SME (home market) • ADSL (high end residential/SOHO/small businesses) • Nationwide services (corporate level) • Leverage on national backbone (Telemar + Pegasus) • Competitive Service Level Agreements Data & Corporate Local Service Long Distance Wireless Services

  31. Growth Focus - Long Distance Services Offer of New Services (Increase Market Share) Growth above the market • Leadership in home market • Protect existing market • Retail: loyalty/retention programs + promotions • Corporate: best quality (call completion/billing) + competitive service plans (discounts/volume) • Conquer new markets (inter-regional/international/SMP • Leverage on relationship & brand • Leverage on efficiency (lower cost service provider) • Best quality service provider Local Service Data & Corporate Long Distance Wireless Services

  32. GROWTH FOCUS - Wireless Services High Growth + Synergies with Wireline • Market segmentation /Innovative Plans (MTV & Celebrities/Oi Family) • Stimulate data / SMS growth • Increase Focus on Corporate Market • Leverage on competitive advantages • Synergies with wireline company • Regional coverage • GSM technology (speed & features) • Low handset subsidies/aggressive service plans • Increase national & international roaming Local Service Data & Corporate Long Distance Wireless Services

  33. Outlook 2003 • Platform Growth: Wireline: stable Wireless: 1.3 million net adds • Revenue Drivers: (1) DLD, Data and Mobile growth (2) Local tariff increase (June) • Cost: strict control • Bad Debt : ~3.8% of gross revenues • EBITDA TNE: ~ 42% - 45% • CAPEX: R$ 1.8 b (55% TMAR/40% Oi/ 5% Contax) • Net Debt: flat to small reduction YE03/YE02

  34. 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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