121105 - apresentação 3q12 - eng [somente...

Results 3Q12

2Investor RelationsTelefônica Brasil S.A.

Highlights of the quarter

1 Leading integrated player in customer satisfaction index

Consistently achieving benchmark EBITDA margins

Undisputable leader in higher revenue segments with focus on value generation

Sequential improvement in fixed revenue Superior mobile revenue growth in the sector

Launch of our new IPTV offer in October

2

3

4

5


Agenda

Operating Performance01

02 Financial Performance

03 Strategic Highlights

Operating Performance


We continue to present superior quality standards in fixed and mobile

01

Expanding leadership in satisfaction

jul/11 nov/11 mar/12 jul/12

Vivo Embratel GVT Oi

81.7

IDA(Mobile)

72.7

jul/11 nov/11 mar/12 jul/12

Vivo Claro TIM Oi

88.1

IDA(STFC)

98.7

Vivo is among top 2 operators in Fixed IDA for the last 3 months

CSI(Mobile)

CSI(Fixed)

sep/11 jan/12 may/12 sep/12

Vivo Embratel / NET

7.02

7.49

* Ban on sales imposed by Anatel for some of our competitors.** Launch of the Vivo brand for fixed services.

85.5

56.5

77.2

94.0

sep/11 jan/12 may/12 sep/12

Vivo Claro TIM OI

6.97

7.80

6.53

7.31

*

**


A more selective commercial approach focused on value

AccessesMillion

Net AdditionsThousand

1 Includes fixed voice, fixed broadband and pay TV.Source: Anatel.

01

1

67.0 75.7 76.8

15.315.1 15.1

3Q11 2Q12 3Q12

Mobile Fixed

14.6%

-1.6%

YoY

82.490.9 91.9

11.6%

1.1%

3,041-66%

1,035

Selectiveapproach in

mobile additions and

disconnections focused on value

generation

1.120 777

1.870

309

81

37

11

(31) (40) (57) 3Q11 3Q12

Mobile Postpaid Mobile PrepaidFixed Broadband Pay TVFixed Voice


In the mobile business, increased market share in higher revenue segments with rational commercial strategy

Mobile AccessesMillion

Mobile Market Share%

SACR$

01

Source: Anatel.

51.7 58.5 58.9

15.417.2 18.0

3Q11 2Q12 3Q12

Prepaid Postpaid

13.9%

16.9%

YoY

14.6%

67.075.7 76.8

1.4%

*

* Anatel data available since 2Q12.

-13.5%

YoY

% of smartphones over individual postpaid adds

29.5% 29.7%36.8% 36.9%

48.1%

3Q11 3Q12Blended Postpaid Data cards

59.2 51.2

55%

78%

3Q11 3Q12


Sequential improve in ARPU reflect our focus in acquiring and maintaining the best customers

ARPUR$ Efficient Prepaid Growth

ARPU adjusting for MTR effectR$

01

Sustained double digit growth in recharges based on a higher quality customer base

17.7 15.9 16.0

6.1 6.0 6.2

3Q11 2Q12 3Q12Voice Data

-9.8%

0.8%

YoY

-7.1%

23.9 21.9 22.2

1.1%

3Q11 2Q12 3Q12

-4.6%1.3%

23.9 22.5 22.8

13% 14%10%21%

3Q11 3Q12

∆% prepaid customers - YoY∆% of recharges in R$ - YoY


Improving fixed voice churn in the quarter

Voice and Fixed Broadband AccessesMillion

Fixed Voice Net AdditionsThousand

Corporate Net Additions evolution

Fixed Voice

Mobile

Customers with data packages

01 Corporate segment keeps growing in all fronts

3Q11 3Q12

+63%

3Q11 3Q12

+8p.p.

3Q11 3Q12

+40%

-3.4%

5.7%

YoY-0.1%-1.2%

15.3 15.1 15.1

-50%-41%

Growth in customers

with classic lines

(97) (114)(57)

1Q12 2Q12 3Q12

11.1 10.8 10.7

3.6 3.7 3.8

3Q11 2Q12 3Q12

Fixed Voice Fixed Broadband


Consistent results in the quarter reflect our focus on value generation

Negocios

R$ million 3Q12 3Q11 ∆% YoY

Net Operating Revenue 8,463.3 8,293.1 2.1%

Total Net Operating Service Revenue 8,200.6 8,067.7 1.6%

Wireless Service Revenue 5,078.2 4,697.9 8.1%

Wireline Service Revenue 3,122.4 3,369.8 -7.3%

Net Handset Revenue 262.7 225.4 16.6%

EBITDA 2,911.2 2,824.5 3.1%

EBITDA Margin 34.4% 34.1% +0.3 p.p.

Net Result 935.8 1,332.2 -29.8%

01

Financial Performance


Mobile Net Service RevenueR$ Million

Mobile net revenue growth remains healthy during the quarter even in the face of MTR reduction and rational commercial approach

In order to simplify the analysis the chart does not include ‘Other Revenues’.

Network UsageAccess and Usage Data and VAS

Mobile Net Service Revenue∆% QoQ

% Mobile Net Rev. / Total RevenueQoQ growth excluding MTR impact

YoY4,698 4,960 5,078

8.1%

2.4%

11.4%

-6.1%

17.2%

62.2%61.4% 63.1%

MTR impact

4,924 4,960 5,078

1Q12 2Q12 3Q12

2.4% 2.5%-2.5%

2,440 2,650 2,717

997 942 936 1,206 1,351 1,414

3Q11 2Q12 3Q12

02


Data and VAS revenue continue to be the main driver of revenue growth and already accounts for 28% of mobile net service revenue

Data and VAS RevenueR$ Million

InternetMessaging P2P Other

% Data/Mobile Net Service Revenue

407 465 482

606 675 705

193 211 227

3Q11 2Q12 3Q12

18.5%

16.4%

17.2%

4.7%

YoY

17.2%

1,2061,351 1,414

22.5%

25.0% 25.7% 26.2% 26.8% 27.2% 27.8%

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

02


Our efforts to improve the fixed business can already be noticed in revenue growth in the quarter

02

* Includes voice, accesses and network usage.

Wireline Net RevenueR$ Million

Data and Pay TVVoice* Others

Wireline Net Revenue∆% QoQ

-12.4%

-2.1%

17.2%

YoY

QoQ growth

3,209 3,115 3,122

1Q12 2Q12 3Q12

-2.9% 0.2%-3.9%

2,102 1,839 1,841

1,054 1,038 1,031

214 239 251

3Q11 2Q12 3Q12

-7.3%

0.2%

3,3703,115 3,122


Non strategic events + R$40.4

3Q12 YoYadjusted

+2.3%n.a.-5.5%+9.0%+3.2%-4.8%+0.2%

02 Consolidated expenses remained controlled during the quarter with a rational commercial strategy and reducing administrative expenses

R$ Million

1H12 YoYadjusted

+5.5%n.a.+27.3%+6.1%-8.1%-1.0%+2.9%

5,469 5,552 1 129 15 138 14 73

3Q11 Personnel ServicesRendered

Goods Sold SellingExpenses

G&A Other 3Q12

+1.5%-326%-5.5%+9.0%+3.2%-4.8%+0.2%YoY


Growth of recurrent margin in a more competitive landscape

Recurrent EBITDA EBITDA

02

R$ Million

Growth of recurrent EBITDA and EBITDA margin in the quarter, reinforcing the consistent performance of the businessRecurrent MarginRecurrent EBITDA

R$ Million

2,825 2,911

34.1% 34.4%

3Q11 3Q12

EBITDA EBITDA Margin

2,783 2,731 2,871

33.5% 33.1%33.9%

1Q12 2Q12 3Q12


3Q12 EBIT reaches R$1.5 billion, 7% higher yoy

Net Result

Financial ResultEBIT

Net Result Build-up

02

R$ Million R$ Million

1,332

936

87 11 5 499

3Q11 EBITDA D&A FinancialResult

Taxes 3Q12

1,429 1,526

3Q11 3Q12

(41) (36)

3Q11 3Q12

1,332 936

3Q11 3Q12

-29.8%

+6.8%

-11.2%


Capex execution in the quarter focused on network expansion, integration and quality

Net Debt

Capex

02

R$ Million

R$ Million

2,977 3,271

812

12.1%

13.1%

9M11 9M12

LicensesCapex% Capex (-) Licenses / Net Operating Rev.

1,923 3,116

1,083

3Q11 2Q12 3Q12

-43.7%-65.2%

Strategic Update


In 3Q12 we evolved substantially in the actions included in our 5 strategic pillars

Unm

atch

ed q

ualit

y an

d cu

stom

er s

atis

fact

ion

1

2

3

4

5

03

To provide an unique and integrated VIVO experience to each customer

To strengthen our convergent infrastructure focusing on quality

To continue fostering profitable growth

To drive innovation and capture new opportunities

To transform our operational model


03

Integrated channels and offers are already generating results

Service channels

Integrated stores

Call center – unified intelligence on customers already being used commercially

Enlarging Vivo community creating mutual benefits

Vivo Valoriza

11 million registered customers

Vivo Favoritos

Package of 300 minutes from fixed to 3 selected Vivo mobile customers

Discounts for up selling of mobile/fixed broadband

1. To provide a unique and integrated VIVO experience to each customer


2. To strengthen our convergent infrastructure focusing on quality

03

New Data Center

Starting in 3Q12 the operations of our new state of the art data center

Improved availability and capacity to support business growth in the next 10 years

Allowing for the offering of new services on the cloud

Sustainability: 60% less energy consumed than current sites

Part of a plan to reduce from 8 data center to 3


03

Evolving in technologies with profitability

Profitable expansion of coverage to majority of population (returns well above cost of capital)

Declining equipment costs and rational pricing strategy with limited plans

3G Plus

3G

Marginal capex for expansion to 86% population coverage

Monetizing better experience: Uplift in ARPU (+ R$15)

Importing experience from the Group as well as from our 3G operation:

launch in Germany in July/2012 Soft 4G launch with support in HSPA+

network. Building sustainable towers

4G

3. To continue fostering profitable growthKeep Momentum in Mobile

Increasing attractiveness focused on internet

Higher capacity on 3G Plus plans to improve experience

Launch of new 3G Plus data card portfolio 42% of new smartphones plans already in 3G

Plus

Postpaid

Vivo Sempre Internet: the best offer in the market. Relaunched in 2Q12 with higher franchise per month

Accelerated sales since last quarter (achieved more than 1.2 million additions in one month)

Prepaid


03 3. To continue fostering profitable growth

Delivering results through innovative products

Consolidate leadership in corporate

3Q11 3Q12

70% yoy growth in M2M net adds

30% higher than market growth

+70%

Almost double yoy net adds in PTT

3Q11 3Q12

+94%

Market leader (volume) in online directory (63k subs)

3Q11 3Q12

+53%


03

Improving fixed voice trends New launchings in Fiber and IPTV

Increasing migration to classic lines driven by

Vivo Favoritos

High rates of adoption in the promotion

Reverting trend in classic line net adds with an

ARPU uplift

Reducing fixed-voice churn

Improved quality

Bundling and cross selling fixed + mobile (e.g.

fiber+classic line+favoritos)

Unbeatable broadband speeds

Launch of IPTV in October

Unique platform experience

Discounts for mobile customers

Already available for 1 million homes

in fiber and should reach 1.5 million

homes by 1Q13 including cable and

fiber

R$39.90R$29.90

Protect our value in fixed services

3. To continue fostering profitable growth


03

Vivo Chamada and Vivo Escolha Inteligente: innovative fixed-mobile solutions

Soluciona Câmera: end-to-end video surveillance offer

Segurança Online: complete security suite for smartphones and tablets

Vivo Gestão Integrada: unified vision of the services

M2M Smart Center: complete lifecycle management

VOICE

SECURITY

MANAGED SERVICES

Evolving on our innovation roadmap in corporate…

…and in consumer

210,000 clientsR$3.90 / month

Launched in AugustR$2.90 / month3 million customers in all language options*

4. To drive innovation and capture new opportunities

* Summing up all Kantoo apps.


03 5. To transform our operational model

VIRTUAL CHANNELS

57% 42%

43% 58%

2011 2012 E

Standard Channel

Virtual Channels

Turning Vivo into a virtual Company

Majority of customer attendance volume is already through new virtual channels

Optimize customer management Self-care Own stores productivity Stringent disconnection policy

Drive network efficiency Tower sharing Backbone and backhaul sharing partnerships Continuous analysis of other network sharing

models

Create a culture of excellence Customer and quality-centric Innovation driven Agile

Operational improvements to take our efficiency to next level

Enhance IT infrastructure Private cloud Unified Data center Unified billing infrastructure


Disclaimer03

This presentation may contain forward-looking statements concerning future prospects and objectives regarding growth of the subscriber base, a breakdown of the various services to be offered and their respective results. The exclusive purpose of such statements is to indicate how we intend to expand our business and they should therefore not be regarded as guarantees of future performance.

Our actual results may differ materially from those contained in such forward-looking statements, due to a variety of factors, including Brazilian political and economic factors, the development of competitive technologies, access to the capital required to achieve those results, and the emergence of strong competition in the markets in which we operate.

121105 - apresentação 3q12 - eng [somente...

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