131106 - apresentação 3q13 - eng v2static.telefonica.aatb.com.br/arquivos/download/... · 1q13...

Results 3Q13

November, 2013.

2Investor RelationsTelefônica Brasil S.A.

Highlights of the quarter

Operational Financial

Fixed

Mobile

We keep improving in all fronts, guaranteeing strong net additions for the second consecutive quarter, mainly in voice and pay TV.

Stronger acquisition of postpaid capturing 64.5% of net adds in the 3Q13 and the great adoption of data services in the period driving

high outgoing ARPU growth.

-93

1360

1Q13 2Q13 3Q13

-86

118 157

1Q13 2Q13 3Q13

7%9%

12%

1Q13 2Q12 3Q13

17.221.5 24.1

1Q13 2Q13 3Q131Q13 2Q13 3Q13

Outgoing ARPUy-o-y

Mobile data users ** Data cards/packages/M2M

Postpaid net adds *

The consistency of these improvements and cross selling efforts were both reflected in higher revenue per access…

0.7%1.2%

1.5%

1Q13 2Q13 3Q13

Net Operating Service Revenue - yoy

Net Operating Service Revenue per access - R$

29.7 29.930.2

3Q12 2Q13 3Q13

+0.8pp

+2%

… resulting in total service revenue acceleration.

-13

2151

1Q13 2Q13 3Q13

7161,167

1,453

* Thousand.

Pay TV *(excludes MMDS)

Voice *Total net adds *

** Million.

01Operating Performance


Our access evolution reflects the solid performance in total fixed accesses and strong growth in mobile postpaid

AccessesMillion

1 Includes fixed voice, fixed broadband and pay TV.2 Includes pre and postpaid customers.Source: ANATEL.

01

Mobile AccessesMillion

Fixed AccessesMillion

76.8 76.2 76.6

15.1 14.9 15.1

3Q12 2Q13 3Q13

Mobile Fixed1

-0.2%

+0.1%

YoY91.9 91.1 91.7

-0.2%

+0.6%

2

10.7 10.6 10.6

3.8 3.8 3.90.6 0.5 0.6

3Q12 2Q13 3Q13

Fixed Voice Fixed Broadband PayTV

-0.8%

+3.4%

-5.0%

YoY+0.1%

+1.1%15.1 14.9 15.1

58.9 55.5 54.5

18.0 20.7 22.1

3Q12 2Q13 3Q13Prepaid Postpaid

-7.4%

+23.3%

YoY-0.2%

76.8 76.2 76.6

+0.5%


We continue to execute successfully our strategy with a segmented approach in São Paulo,…

01

Areas with copper (countryside of

SP State)

… improving the mix of BB speeds (>4Mbps).

… reflected on the evolution of FBB churn.

Accelerating DTH sales with focus on loyalty…

3Q12 3Q13

-0.3pp

Integrated offersMobile + Fixed

FWT solution achieves a significant growth of net adds

Postpaid customers with fixed integrated offers

jan/13 sep/13

5x

BB net adds above 4Mbps

DTH net adds BB churn

2Q13 3Q13

1.4x

2Q13 3Q13

5x

2Q13 3Q13

4x

1Q13 2Q13 3Q13

Areas with fiber and cable(SP city)

Accelerating FTTH adoption,…

2.1x

FTTH BB and IPTV net adds

5.0x


… intensified by increasingly integrated offers, ...01

CONVERGENCE JOURNEY NEW CONVERGENT OFFER

• Soft launch in Oct, 31st

• Complete portfolio to attend needs in each customer segment of São Paulo State

• Evolution for a unique customer experience: sales, installation, customer care, billing and retention

2012Sale of fixed

services through mobile

channels

Intensification of FWT and Vivo Box out of São Paulo to capture the demand for

fixed services

Crossed discounts and advantages for fixed and

mobile services

OCT/13New

convergent offers including

all services

MultiVivo Total 1 MultiVivo Total 4 MultiVivo Total 10 MultiVivo Total 25 MultiVivo Total 100

Unlimited Local F-F/F-M

1Mbps

Controle: unlimited local M-M, unlimited SMS


4Mbps

Controle: unlimited local M-M, unlimited SMS,

250MB


10Mbps

Unlimited 3GPlus: unlimited local M-M,

unlimited SMS, 60 off-net minutes,1GB


25Mbps

Unlimited 3GPlus: unlimited local M-M,

unlimited SMS, 100 off-net minutes, 2GB

Fit HD: 34 HD channels


100Mbps

Unlimited 4GPlus: unlimited M-M, unlimited

SMS, 100 off-net minutes, 4GB

Fit HD: 33 HD channels


… resulting once again in positive access evolution across all fixed services.

01

Strong performance in net adds… … in all fixed services.

Excludes MMDS

2nd

consecutive quarter with

net adds

Selective adds with

higher ARPU and speeds

Great adoption of

DTH and IPTV

ExcludesMMDS

-41

-99 -86

118

157

3Q12 4Q12 1Q13 2Q13 3Q13

-57 -68-93

1360

3Q12 4Q12 1Q13 2Q13 3Q13

37

-21

20

84

46

3Q12 4Q12 1Q13 2Q13 3Q13

-22-10 -13

21

51

3Q12 4Q12 1Q13 2Q13 3Q13


In the mobile, we accelerated net adds in postpaid, resulting in strong leadership in higher revenue segments

01

Share of postpaid net adds

Market share - postpaid ex-M2M Market share - dongles

Postpaid net adds

Vivo

Player 2Player 3

Player 4

In the 3Q13, Vivo

captured 64.5% of

the market in

postpaid net

additions.

Mix of postpaid accesses

777 848 716

1,1671,453

3Q12 4Q12 1Q13 2Q13 3Q13

23.4% 24.7% 25.7% 27.1% 28.9%Não é possível exibir esta imagem no momento.

Não é possível exibir esta imagem no

Não é possível exibir esta imagem no momento.

Não é possível exibir esta imagem no momento.

Vivo

Player 2

Player 3Player 4

43.6%37.9% 41.2%

58.2%64.5%

3Q12 4Q12 1Q13 2Q13 3Q13

41.0%

21.1%

21.9%

15.0%

3Q12 4Q12 1Q13 2Q13 3Q13

49.6%

28.1%

10.0%

9.7%

3Q12 4Q12 1Q13 2Q13 3Q13


We are driving smartphone penetration and enhancing adoption of data services specially in 3GPlus and 4G plans…

01

Smartphone accesses with 3G Plus plans

Mobile data users and data trafficSmartphone accesses with 4G plansLaunched in April, 2013

Smartphones penetration*

63%71% 75%

3Q12 2Q13 3Q13Individual postpaid

+11 p.p. +15 p.p.

27%38% 42%

3Q12 2Q13 3Q13

Individual prepaid

11.8%

22.2%

QoQ

dec/12 mar/13 jun/13 sep/13

2.2x

jun/13 jul/13 aug/13 sep/13

4x

Improved ARPU with technology evolution

17.2 21.5 24.1

1Q13 2Q13 3Q13

Data access Data Traffic*

* Data cards, Data packages and M2M.

*

* Individuals.

*

* Individuals.

* Web and smartphones.


… accelerating ARPU growth. Selective commercial strategy is reducing acquisition costs and bad debt.

ARPUR$

Outgoing ARPU y-o-y

01

SACR$

Mobile Bad Debty-o-y

-4.6%

YoY

16.0 16.0

6.2 7.7

22.2 23.6

3Q12 3Q13Voice Data

-0.2%

+24.0%

YoY+6.6%

1.4% 1.3%1.1%

1Q13 2Q13 3Q13

Bad Debt / Mobile Gross Revenues

-3.8%1.5%

7.1%9.3%

11.8%

3Q12 4Q12 1Q13 2Q13 3Q13

Evolution without the 2013 MTR reduction

+8.6%

51.2 48.9

3Q12 3Q13


Corporate segment continues to sustain superior performance driven by cross selling and expansion out of São Paulo

01

3Q12 3Q13

3.1x

3Q12 3Q133Q12 3Q13

1.5x

3Q12 3Q13

2.0x

Fixed UBB accessesPortfolio simplification

Fixed voice accessesConsistent growth

FWT gross adds out of SPAmplifying sales channels

+4.0%

M2M Base doubled in 1 year

… and we highlight the extension of fiber optic netw ork out of São Paulo State.

In corporate we continue to outperform in core serv ices…

Rio de Janeiro

Salvador

Recife

Curitiba

Porto Alegre

Brasília

Belo Horizonte

Continuity of our strategic plan to leverage our participation

outside of São Paulo, ensuring the quality of data services to

corporate customers

7 cities delivered in 2013 and we are working to achieve 14 more cities in 2014


01 We continue to create innovative solutions in new areas to expand revenues in digital services

ZUUM enables the realization of payments and transfersfrom a prepaid account

Send or receive money safely as ZUUM uses the USSD network

combined with a chosen password

Registrations can be done through any handset even

without mobile internet access

Anytime top ups, more spending control by checking the balance and recent transactions straight

from the handset

We continue to outperform in innovative services in many different segments.

In May/13, we started to offer to our clients, a pr epaid account solution to capture the potential gro wth in financial services for the unbanked population.

In Brazil, 36% of economically active population does not have a b ank account.


Commercial performance is driving stronger service revenues but costs for growth continue to weigh on margins in the short term

01

3Q13

8,618.2

8,317.7

5,438.7

2,879.0

300.5

2,381.3

27.6%

2,381.3

27.6%

760.2

∆% YoY

1.9

1.5

7.1

-7.7

14.4

-18.2

-6.8 p.p.

-17.1

-6.3 p.p.

-18.8

9M13

25,665.2

24,677.8

15,928.4

8,749.4

987.5

7,704.4

30.0%

7,714.6

30.1%

2,484.6

R$ million

Net Operating Revenue

Net Handset Revenue

EBITDA

EBITDA Margin

Net Result

Wireless Service Revenue

Net Operating Service Revenue

Wireline Service Revenue

Recurrent EBITDA

Recurrent EBITDA Margin

∆% YoY

2.6

61.2

-12.9

-5.4 p.p.

-16.6

6.5

1.1

-7.3

-8.0

-3.5 p.p.


01

FTTH footprint DTH and IPTV offers

Best coverage and absolute leadership in postpaid and

data

Best positioned to capture the

market growth in all

fronts

UBB PayTV Mobile

Benchmark in customer care

Best infrastructure and coverage

Excellence in ITBest brand perception

We are prepared to capture the potential growth in different fronts to keep leading value generation

With the launch of new services, we expect to keep leading value generation the long term sustaining our competitive advantages:

Innovative services

Strategic partnerships and a global division to

address opportunities

1st brand for the 6 th

consecutive year

02Financial Performance


Mobile Net Service RevenueR$ Million

Mobile Service Revenue accelerates achieving annual growth of 9.1% in 3Q13 by excluding the additional 2013 MTR impact

Mobile Net Service Revenue Excluding MTR effect

02

2013 MTR reduction impact

In order to simplify the analysis the chart does no t include ‘Other Revenues’.

Network UsageAccess and Usage Data and VAS

5.4%

YoY


2,717 2,726 2,864

936 780 787

1,414 1,685 1,762

3Q12 2Q13 3Q13

-16.0%

24.6%

5,078 5,219 5,439

7.1%

4.2%5,271 5,311

5,540

1Q13 2Q13 3Q13

4.3%4.3%0.8%

9.1%


Data and value added service revenues continue to show strong evolution, driven by mobile internet growth during the 3Q13

Data and VAS RevenueR$ Million

02

Internet Revenue Annual Growth

InternetMessaging P2P VAS

% over Mobile Net

Service Revenue

+19 p.p.

482 488 506

705915 956

227282 300

3Q12 2Q13 3Q13

5.0%

35.5%

32.5%

YoY1,414

24.6%

4.6%

1,6851,762

27.8% 32.3% 32.4%

16.4%

35.5%

3Q12 3Q13


Fixed revenues continue to present positive trends in the year02

Wireline Net RevenueR$ Million

Year-to-date Wireline Net Revenuey-o-y

Data and Pay TVVoice* Others

-10.7%

-0.3%

-16.0%

36.9% 34.8% 33.4%% over Net Operating

Revenue

-1.9%

0.3%

-17.2%


* Includes voice, accesses and network usage.

1,841 1,675 1,643

1,031 1,025 1,028

248 252 208

3Q12 2Q13 3Q13

YoY3,120 2,951 2,879

QoQ

-2.4%

-7.7%

-7.9%-7.3%

9M12 9M13

-0.6 p.p.

-6.6%

-2.4%


02

Adjusted EBITDA MarginR$ Million

� Capturing synergies with restructuring

� Growth below inflation

� Increased postpaid base

� Data adoption � Fixed turnaround

� Increased provisions for contingencies inherent to the

business, specially labor

Personnel + G&A Subsidies + Selling Expenses

Others

8,383

7,715

278 -80 -623

-159 -84

RecurrentEBITDA 9M12

Net OperatingService

Revenues

Personnel +G&A

Subsidies +Selling

Expenses

ServicesRendered

Others RecurrentEBITDA 9M13

33.5% +1.4 p.p. -0.4 p.p. -3.2 p.p. -0.8 p.p. -0.4 p.p. 30.1%

Margins affected in the short term by costs associated to higher commercial activity and quality focus, with control in Personnel and G&A

-1.5 p.p. +1.1% +3.2% +11.6% +2.0% +34.1% -3.5 p.p.

Impact in Recurrent

EBITDA Margin

y-o-y evolution

� Increased net maintenance

focused on quality� Expansion out of

São Paulo� Higher TV content

costs

Services Rendered


02

Net Profit (excluding non recurrent EBITDA events - R$ Million)

� Acceleration of the MMDS

depreciation

� Evolution of financial revenues

associated with financial

investments

� Benefited by societary events

and IOC

Recurrent EBITDA D&A Others Taxes Adjusted

Net profit evolution is favored by the societary consolidation

2,978

2,485

-315-668

-159 30

618

9M12 Non recurrentevents after

associated taxes

RecurrentEBITDA

D&A Others Taxes excludingnon recurrent

events

9M13

9M13 9M12 YoY

Non recurrent events 10 -467 477

Sale of non strategic assets -80 -439 359

Organizational restructuring 90 130 -40

Rebranding 0 86 -86

Reversal of provision 0 -244 244

Taxes associated (34%) -3 159 -162

Taxes ex non recurrent events 7 -308 315


Solid cash flow and balance sheet once again evident

CapexR$ million

02

Net DebtR$ million

Operating Cash FlowR$ million

6,649 6,813

9M12 9M13

2.5%

Financial ResultR$ million

1,096

548

-259

3Q12 2Q13 3Q13

-166-131

9M12 9M13

-21%

3,271 3,377

451

13.1% 13.2%

9M12 9M13Spectrum upgradeCapex% Capex Adj / Net Operating Revenue


In conclusion

� We accelerated net adds in postpaid, resulting in a stronger leadership in higher revenue segments and an increased adoption of data plans, specially in 3GPlus and 4G, sustained by the higher smartphone penetration

� We continue to execute successfully our strategy with a segmented approach in São Paulo, intensified by increasingly integrated offers, resulting once again in positive access evolution across all fixed services

� Fixed Revenue continue to present positive trends in the year

� Mobile Service Revenue accelerates annual growth even excluding the MTR impact, driven by the strong evolution of Data and VAS revenues

Fixed

Mobile

FIN

AN

CIA

L

Revenues

Margin

OP

ER

ATIO

NA

L

� EBITDA Margin affected in the short term by costs to support higher commercial activity and therefore capture future value growth. Always with a quality focus, which is the driving force behind our strategy


Disclaimer

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.

131106 - apresentação 3q13 - eng v2static.telefonica.aatb.com.br/arquivos/download/... · 1q13...

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