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TELE NORTE LESTE PARTICIPAÇÕES S.A. March, 2002

TELE NORTE LESTE PARTICIPAÇÕES S.A. March, 2002. Overview. Largest Telco in Latin America: 18.1 million lines installed 14.8 million lines in service Concession Area: Region I 65% of Brazilian Territory 16 states (Rio, Minas, Bahia, …) 93 Million pops (54% of Country´s total)

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TELE NORTE LESTE PARTICIPAÇÕES S.A. March, 2002

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  1. TELE NORTE LESTE PARTICIPAÇÕES S.A. March, 2002

  2. Overview • Largest Telco in Latin America: 18.1 million lines installed 14.8 million lines in service • Concession Area: Region I 65% of Brazilian Territory 16 states (Rio, Minas, Bahia, …) 93 Million pops (54% of Country´s total) 40% of Country’s GDP Over 21 Million Households • Tele Density: 16% ( vs. 22% National Average)

  3. Overview • TNLP4: Heaviest Weighted Stock in IBOVESPA • One of Leading LatAm ADRs’ in the NYSE (TNE) • Market Value: US$ 5.1 billion (March/01) • Free Float: 80% of Total Shares • Investment grade rating: Fitch / BBB- Moody´s / Baa3 S&P / brAA+

  4. 2001 Main Achievements • Corporate Restructuring of wireline business;  Early Compliance with Anatel´s 2003 targets;  Wireline operating restructuring;  Acquisition of PCS license for Region I;

  5. Corporate Restructuring  Consolidation (“16 operating co´s 1 – Telemar Norte Leste”); Operational and administrative efficiency gains; Better utilization of Tax Loss Carry-forwards (R$ 890 million); Market recognition – Animec award. (Braz. Nat´l Investors Assoc.)

  6. Corporate Restructuring - Previous Shareholding Structure TELEMAR PARTICIPAÇÕES S.A Free Float 17.6% 80.1% TELE NORTE LESTE PARTICIPAÇÕES S.A 2.3% 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% Note: percentages reflect TNL holdings; balance is minoritary shareholders

  7. Corporate Restructuring – Current Shareholders´ Structure TELEMAR PARTICIPAÇÕES S.A Free Float 17.6% 80.1% TELE NORTE LESTE PARTICIPAÇÕES S.A 2.3% Treasury 79.6% 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

  8. Shareholders’ Structure TOTAL CAPITAL Total Shares: 378,250 mn Preferred: 252,167 mn Common: 126,083 mn BNDESPar Fiago AG Telecom ASSECA Participações Lexpart Part. L. F. Tel BrasilCap BrasilVeículos 25.0% 19.9% 11.3% 11.3% 11.3% 11.3% 5.0% 5.0% Preferred Shares -----99.7% Brazil ------ 58.1% ADR ------- 41.9% Common Shares ------- 44.4% 17.6% 80.1% Free Float TELEMAR PARTICIPAÇÕES S.A. Common Shares = 52.3% Shares in Treasury = 2.3% Tele Norte Leste Participações S.A. Market Cap = R$ 14.0 billion Dec/01

  9. Early Compliance with Anatel´s 2003 Targetsand other achievements  5.3 million new lines installed; 296 thousand public phones installed; 16,420 localities covered; 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.

  10. Utilization Rate (%) 92% 92% +/-90% 89% 82% 1999 2000 2001 2002E 1998 20,0 Early Compliance with Anatel´s 2003 targets Platform Growth LIS +106% LI +123% 15,0 Lines in Service Lines Installed (in millions)

  11. Wireline Operating Restructuring  Centralization of operational systems; Centralization of operational and administrative activities; Better control and cost management; Improvement of internal processes; Headcount reduction.

  12. Wireline Operating Restructuring Total Employees (ex-Contax) Total Employees (ex-Contax) Average Employees (ex-Contax)

  13. Acquisition of PCS license for Region I Mobile Phone Business  Acquisition of PCS license for Region I (March/2001); USD 1.4 billion of suppliers and banks facilities; R$ 2.2 billion CAPEX in 2001 (R$ 1.2 bn for license); Launching brand name.

  14. 2001- Financial and Operational Results  Revenue growth;  Improvement in gross revenue per employee ratio;  Operating expenses;  Bad debt provision;  EBITDA; • Income statement; • Balance Sheet.

  15. 2001- Financial and Operational Results Revenue Growth (R$ mm) CAGR (2001/98) 25.3% +97% (98/01)

  16. Gross Revenue per Employee (R$ Thousand /year) Average Annual Growth (2001/1998) 46.7% Total employees, but excluding PCS and Contax

  17. 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

  18. 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

  19. 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 Partial Blocking´-outgoing calls: 30 days past due Total Blocking – all calls: 60 days past due Disconnected: 90 days past due % of Total Lines in Service End of Period

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

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

  22. Consolidated Balance Sheet

  23. Total Debt – 2000/2001 30%

  24. 2002 OUTLOOK • Revenue Drivers: - Plant Expansion - New Services – LD - New Markets – Corporate Regions 2 and 3 - ARPU Improvement  Cost Drivers: - Increase of operating efficiencies; - Headcount reduction; - Plant Maintenance - Bad debt control  CAPEX reduction; Net Debt forecast; PCS roll out.

  25. 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

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

  27. 2002 OUTLOOK Cost Drivers • Headcount Reduction - 40% in average 3rd Party services  Bad debt control - less than 5% of Gross RevenueMarketing expenses• wireline (30% reduction)•wireless (as partially deferred)

  28. 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 -75% Wireline Business Wireless Business

  29. Debt Structure – December 2001 (R$ mn) Maturity Profile 2002 14% 2003 2006 and beyond 17% 36% 2004 Cash 1,234 ST 1,371 16% 2005 17% • OF R$ 8,938 million total debt • R$ 5,382 million in foreign currency (60%)* • at average interest rate of LIBOR +7% p.a. • R$ 3,538 million in Brazilian currency (40%): • at average interest rate of + 17% p.a. Net Debt 7,686 Long Term 7,549 TOTAL = 8,920 * Fully Hedged

  30. PCS – Roll Out TNL PCS - ´´Oi´´ ð Apr /02 - Ready to Launch ð 10 States - 160 cities ð Main suppliers: Nokia, Alcatel, Siemens ð Technology GSM/GPRS 12 months target 500,000 Subs ð Operating Agreements Infrastructure Co- siting Interconnection Roaming ð Operating Synergies Billing & Credit Infrastructure & BackOffice Data Base

  31. “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.

  32. 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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