apresentação 1q12 eng sd -...

Results 1Q12Q

Telefônica Brasil S.A.05.10.2012

Disclaimer

For comparative purposes, the 1Q11 figures were prepared on a combined b i Th th l i ti t d diff f th t d ibasis. Thus, the annual variations presented may differ from those reported in the financial statement filed with CVM through the Quarterly Information – ITR form . This presentation may contain forward looking statements concerning futureThis 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 p yshould 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.

AgendaAgendaOperating Performance.

01

02 Financial Performance.

03Operational Integration.

OperatingOperating Performance

Highlights of the Quarter01

Mobile Market Share

• Leadership expansion in all mobile customer segmentsShare

Corporate Business

• Integration leading to enhanced performance in Large Corps and SMEs

Mobile S i

• Continued accelerated annual growth even with MTR

Business Corps and SMEs

Service Revenue

greduction

EBITDA • Margin of 34% even in the face of integration process and commercial activity during the quarter

• Operational integration process evolving in full force andmatching planned timetable

Operational Sinergy

5Investor RelationsTelefônica Brasil S.A.

In 1Q12 we continue to harvest on our superior data approach…01

in the Mobile and Fixed Space

Our absolute leadership in 3G Coverage and quality…

2.516 2.727 Vivo

…in the Mobile…

An established and solid infrastructure for UBB...

…and Fixed Space.

1.7 MM homes 6 000 KM of1.206

402 657 866 195 488 512 211 250 308

Dec/10 Dec/11 Mar/12

ClaroTimOi

1.7 MM homes passed in UBB in wealthiest regions of SP

6,000 KM of fiber in the FTTH solution

S T l

…is driving data adoption in the smartphone…

x 4

…with a superior solution delivering top edge experience…

Source: Teleco.

1Q11 1Q12

x 4

FTTN

FTTH

> 10 x in Mbps

…and attracting largest majority of the datacard market.

Customers with internet packages

38%40% 42% 43% 43% 43% 44%

…is accelerating adoption for premium customers.

Majority ofx 434%

36%38%

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12Data Market Share UBB C t B

49% data market share

of net additions in

1Q12 1Q11 1Q12

Majority of 1Q12 net adds in FTTH

solution


Data Market Share UBB Customer Base 1Q12

Growth in accesses during the quarter shows the attractiveness of our data and voice offers.

01

Accesses*Million

Net AdditionsThousand

16.7%

3 7%

3,171

50554

1.3%

YoY

15 115,3 15,3

77.186.9 90.0

3.7%

1,732

+83% 505 Fixed Voice

Fixed Broadband

20.5%62,1 71,6 74,8

15,1

2.725 22

685

61 BroadbandMobile PostpaidPay TV

1Q11 4Q11 1Q12

Mobile Fixed**

1.083

(16)(120) (97)

Mobile Prepaid

Source: Anatel.

Mobile Fixed (120) (97)1Q11 1Q12


*Considers 150 thousand TVA customers consolidated in June 2011**Includes fixed voice, fixed broadband and pay TV.

In the mobile business, Telefônica Brazil increased its leadership in all customer segments

01

gMobile Accesses

MillionMobile Market Share

%

20 5%

24 8%

YoY

16 1 16 6

20.5%

62.1 71.6 74.8

4.5%29,5% 29,8%

35,5% 36,5%41,7% 43,8%

19.3%

24.8%

48,7 55,4 58,2

13,3 16,1 16,6

1Q11 4Q11 1Q121Q11 1Q12

Blended Postpaid Broadband

Source: Anatel.

ARPUR$ Harvesting Prepaid Growth

1Q11 4Q11 1Q12Prepaid Postpaid

11 6%

YoY

5 4 6 4

-5.9%-8.9%

23.8 24.6 22.4 12%13%

16%19%

17%23%

-11.1%

11.6%

18,4 18,2 16,4

5,4 6,4 6,0

1Q11 4Q11 1Q12

12% 16%

7% 10%

2Q11 3Q11 4Q11 1Q12

Δ% id t Y Y Δ% f h Y Y


Voice Data Δ% prepaid customers - YoY Δ% of recharge - YoY

In the fixed business, fiber adoption and corporate business performance are the quarter highlights

01

p q g gVoice and Fixed Broadband Accesses

MillionFiber to the Home Net Additions

Thousand

0 1%

YoY

14.6 14.6 14.6

-0.3%

0.1%

3 4 3 6 3 7 4 7 5,0 9,2

20,6 20,4

-2.6%

9.1%

11,2 11,0 10,9

3,4 3,6 3,7

1Q11 4Q11 1Q12

4,7 5,0

1Q11 2Q11 3Q11 4Q11 1Q12

Fixed Broadband accesses over Fixed Voice accesses

Corporate* access evolutionThousand

Fixed Accesses Fixed Broadband

Negocios

26% 28% 29% 30% 31% 32% 33% 34%+ 14.3%

25% 26%

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 1Q11 1Q12


* Includes mobile and fixed accesses.

Strong financial results even considering the integration process and strong commercial activity.

01

g y

R$ million 1Q12 1Q11 Δ% YoY

Net Operating Revenue 8,314.3 8,017.5 3.7%

Total Net Operating Service Revenue 8,133.0 7,713.5 5.4%

Wireless Service Revenue 4,924.2 4,367.2 12.8%

Wireline Service Revenue 3,208.7 3,346.4 -4.1%

Net Handset Revenue 181.4 304.0 -40.3%Negocios

EBITDA 2,847.3 2,839.9 0.3%

EBITDA Margin 34.2% 35.4% -1.2 p.p.

Net Result 956.6 1,128.5 -15.2%


FinancialFinancial Performance

Mobile net revenue maintained accelerated growth even in the face of MTR reductions in the quarter

02

Mobile Net Service RevenueR$ Million

q

Mobile Net Service Revenue∆% YoY

12.8%

-3.4%

33.9%

YoY

984 1.334 1.318

4,3675,097 4,924

54.1% 59.2%56.6% 59.3%

13.8%

11.9%

-5.0%

33.9%

2.323 2.661 2.600

1.022 1.059 971

10,3% 12,0%13,9% 12,8%

29.4% 33.3%33.0%

1Q11 4Q11 1Q12

MTR impact2Q11 3Q11 4Q11 1Q12

% Data/Mobile Outgoing RevenueIn order to simplify the analysis the chart does not include ‘Other Revenues’

Network UsageAccess and Usage Data and VAS%Mobile Service Rev./Total RevenueYoY growth excluding MTR impact


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

Data and VAS revenue continue to be the main driver of revenue growth and already accounts for around 27% of net service

02

g yrevenue

Data and VAS RevenueR$ Million

% Data/Mobile Net Service RevenueR$ Million

33.9%

-1 2%

25,0%25,7% 26.2%

26,8%

YoY1,334 1,318

1.2% 22,5%

1Q11 2Q11 3Q11 4Q11 1Q12YoY

59.1%646 664

131

215 208 984

1Q11 2Q11 3Q11 4Q11 1Q12

Customers with internet packages

39.1%

24.7%

321 473 446

532 + 4X

InternetMessaging P2P Other

1Q11 4Q11 1Q12

1Q11 1Q12


Corporate business responds for 48% of the wireline net revenue02

Wireline Net RevenueR$ Million

Revenue Mix per BusinessRegulatory impact

-4.1%

-3.9%

Regulatory impact of 0.7 p.p. yoy 1Q12

14.7%

17.7%

916 1 070 1 050

201 238 237

YoY3,346 3,340 3,209 52,3%47,7%

-13.8% 2.230 2.031 1 922

1.070 1.050

1Q11

2.031 1.922

1Q11 4Q11 1Q1227.4% 32 7%32 0%

53,7%46,3%

Data and Pay TVVoice* OthersCorporateIndividual

27.4% 32.7%32.0%

% Data and Pay TV/Wireline net revenue


*Includes voice, accesses and network usage.

Consolidated expenses increased by 5.6% yoy, affected by non recurrent events and higher commercial activity in the quarter

02

g y qR$ Million

YoY 5.6%n.a.21.9%10.3%-10.7%6.8%31.9%

(5 178)(5.467) (173)

(170) 51 (148) (48) 198

(5.178)

1Q11 P l S i G d S ld S lli G&A Oth 1Q121Q11 Personnel Services Rendered

Goods Sold Selling Expenses

G&A Others 1Q12

Non recurring events

Restructuring R$130 2Restructuring - R$130.2

Brand - R$21.5

Non strategic assets + R$216.5


1Q12 recurrent EBITDA reaches R$2,8 billion and adjusted margin of 33.5%

02

gR$ Million

Adjusted EBITDA

EBITDA34,1% 34,0% 33.5%

35,4%

38,5%2.825 2.927

2.783

3 308

34,2%

Adjusted MarginRecurrent EBITDA

3Q11 4Q11 1Q12

• sale of non strategic assets in the amount of R$216 5 million in the 1Q12 and

2.840 3.308 2.847

1Q11 4Q11 1Q12

Adjusted MarginRecurrent EBITDA

amount of R$216.5 million in the 1Q12 and R$380.1 million in the 4Q11;• non recurrent integration costs in the amount of R$151.7 million in the quarter;

EBITDA EBITDA Margin


1Q12 EBIT reaches R$1.5 billion and net result of R$1 billion02R$ Million

Financial Result1Q11 4Q11 1Q121 985

EBIT

(12)1.756

1.985 1.529

(94)

(63)

1Q11 4Q11 1Q12

Net Result

-15.2%

Net Result Build-up

7

1,1291,462

957

-34.6% 1.129957

7 (234)(51) 106

1Q11 4Q11 1Q12

1Q11 EBITDA D&A Financial Result

Taxes 1Q12


Higher capex execution in the quarter focused on network expansion integration and quality

02

expansion, integration and qualityR$ Million

Gross Debt

Capex6,169 6,204 5,928

-3.9%-4.4%

29% 23% 24%71% 77% 76%

1Q11 4Q11 1Q12

Short Term Long Term9 2%

14,3%

Net Debt

Short Term Long Term

34 2%713

1.164

9,2%

1.980

3.165 2.658

34.2%-16.0%

713

1Q11 1Q12% Capex*/Net Operating Revenue

1Q11 4Q11 1Q12


OperationalOperational Integration

01 We have been keeping our top quality positioning in the mobile and have strengthened the fixedmobile and have strengthened the fixed.

Mobile Attendance Index - IDA Fixed Complaints volume in Anatel

99,495

87,984,8

- 30% - 23%- 21%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Vivo TIM Claro Oi

Best IDAin 36 of

the last 37 months

Anatel STFC Anatel ADSL Anatel TV

months

Mobile Anatel Complaints Ranking

Mar/12Mar/11Source: Teleco.

0,51

0,330,42

0,26

Procon*: Passed from 1st to 6th position in the 2011 ranking

1Q11 2Q11 3Q11 4Q11

Oi TIM Claro VivoSource: Teleco.

Clear position as less

complained company


p y*Foundation for the Consumer Protection.

With improved quality and solid processes we could rebrand our fixed services and restructure our organization executing

02

our fixed services and restructure our organization, executing and delivering the original plan.

Impact in the Main futureImpact in the quarter

Main future benefits

•Stores selling mobile and fixed d t

REBRANDING

R$ 21 5 million

products;•Convergent customer experience;• Improved perception on quality

PERSONNEL

R$ 21,5 million and Unified culture;• Future savings in communication;

• M il i lifi d d

PERSONNEL

R$130,2 million• More agile, simplified and convergent structure;• Future savings in personnel;


01 As an integrated company we also move forward on our convergent approach especially for the corporate customerconvergent approach, especially for the corporate customer.

Infrastructure

- Use of Mobile Infrastructure (HSPA, Fiber and Radio) outside São Paulo to provide corporate services (VPN IP, IP Internet and Metrolan) with better prices and lower opex.

Channels

- Convergent commercial process and integrated direct and indirect channels(sales force, back office, pre and post sales teams), leveraging satisfaction and sales.

New Services

- Vivo Cloud Plus: New IT (IaaS) services for Large Corps using the Vivo brand.

ResultsAfter the integration, level of gross adds went up 44% forAfter the integration, level of gross adds went up 44% for complete solutions*, 34% for mobile and 157% for machine to machine.


* Complete solutions include mobile+datacard+M2M

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