TIM PARTICIPAÇÕES S.A. Announces its Consolidated
Results for the Fourth Quarter o...
Management Message
2005 was another successful year for TIM Participações. The results show that despite the great
challe...
Operating Performance
Total penetration – Northeastern and South Regions – was estimated at
Market: sharp...
These innovations enhanced and stimulated the use of data and multimedia by our
customers, as refl...
It is important to mention that in 4Q05, as was done along 2005, TIM Participações
kept improving the e...
line and over total initial base. In 2005, these expenses reached R$ 253.2 million and
R$123.9 million, ...
(R$ millions)
EBITDA Reconciliation 4Q05 4Q04 2005 ...
EBIT
EBIT – earnings before interest and taxes – was R$480.8 million in 2005
and R$ 159.6 million ...
Indebtedness
By year’s end, the net cash position amounted to R$ 1.1 billion. Total indebtedness,
...
--------------------------------------------------------------------------------------------------------------------------...
List of Attachments
Attachment 1: Balance Sheet (BR GAAP)
Attachment 2: Income Statement (BR GAAP)
Attachment 3:...
Attachment 1
TIM PARTICIPAÇÕES S.A.
Balance Sheet under the Corpo...
Attachment 2
TIM PARTICIPAÇÕES S.A.
Res...
Attachment 3
TIM PARTICIPAÇÕES S.A.
...
Attachment 4
Operational Indicators for the Northeastern Region
...
Attachment 7
Glossary
...
of 16

Press Releases 4 Q05 En

Published on: Mar 4, 2016
Source: www.slideshare.net


Transcripts - Press Releases 4 Q05 En

  • 1. TIM PARTICIPAÇÕES S.A. Announces its Consolidated Results for the Fourth Quarter of 2005 and Annual Results TIM PARTICIPAÇÕES S.A. Rio de Janeiro, February 1, 2006 – TIM Participações S.A. (BOVESPA: TCSL3 and TCSL4; and NYSE: TSU), TIM Sul S.A. and TIM January 31, 2006 Nordeste Telecomunicações S.A. holding company announces the results for the forth quarter of 2005 (4Q05) and 2005 annual results. BOVESPA TIM Participações S.A. provides mobile telecommunication services (lot of 1,000 shares) TCSL3: R$8.20 through its mobile operators in the states of Paraná, Santa Catarina, TCSL4: R$8.28 Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco, Alagoas and in NYSE the city of Pelotas (RS). The following financial and operational (1 ADR = 10,000 shares) information, except as otherwise indicated, is presented on a TSU: US$ 37.25 Market Value: consolidated basis and in Brazilian Reals, pursuant to the terms of R$ 7.2 billion Brazilian Corporate Law. The comparisons contained herein refer to the US$ 3.3 billion forth quarter of 2004 (4Q04) and 2004 annual results, except as otherwise indicated. 4Q05/2005 Earnings Release 2005 Highlights Conference Call : February 2, 2006, at 2:00 p.m. Brasília Time • TIM wins “Top of Mind 2005” Awards in the mobile services (11:00 a.m. US ET) category, proving the power of the brand. For further information, please • The client base reached 7,513 thousand at the end of access the Company’s website: 2005, up by 32.8% over the previous year. By the year’s www.timpartri.com.br end, 64% of the Company’s customers used GSM Contatos: technology. Paulo Roberto C. Cozza CFO and Investor Relations Officer • Leadership in the postpaid segment: 14.3% growth over Tel: (55 21) 4009 3742 2004, representing 20.3% of total client base at end of E-mail: pcozza@timsul.com.br 2005. Joana Serafim • Successful client retention strategy: monthly average IR Manager Tel: (55 21) 4009-3742/8113-0571 churn rate of 1.8%, one of the lowest rates in the E-mail: jserafim@timbrasil.com.br segment. • Net Service Revenue totaled R$ 2.4 billion, a 14.6% Leonardo Wanderley growth over 2004. In 4Q05, this revenue totaled 656.6 IR Analyst Tel: (55 21) 4009-3751/8113-0547 million, 11.2% and 7.0% over 4T04 and 3T05, respectively. E-mail: lwanderley@timbrasil.com.br • Gross VAS (Value Added Service) revenue was R$ 219.0 Cristiano Pereira million in 2005, up 84.9% over 2004. In the 4Q05, VAS IR Analyst reached 7.7% of gross service revenue. Tel: (55 21) 4009-3751/8113-0582 E-mail: cripereira@timbrasil.com.br • Tight Acquisition Cost Control: 6.6% YoY reduction of SAC. • Profitability Growth: EBITDA reached R$ 1.O billion, 14.3% increase over 2004, with an EBITDA margin of 34.7%, 4Q05 EBITDA margin was 37.1%, 2.2 p.p. and 2.4 p.p. higher than the 4Q04 and 3Q05, respectively. • Record Net Income: R$ 399.2 million in 2005, 50.1% over 2004, with a net margin of 13.7%. 1
  • 2. Management Message 2005 was another successful year for TIM Participações. The results show that despite the great challenges and the strong pressure from competitors, the Company not only grew, but also has strengthened the long term positioning of its business. Our client base increased 32.8%, from 5.7 million in December 2004, to 7.5 million at the end of 2005. We kept the market leadership and our ARPU – average revenue per user – continued to be a sector reference. The tight cost control allowed a decrease in subscriber acquisition cost (SAC) of 6.6%. EBITDA increased 14.3%, with an EBITDA Margin of 34.7%. The Service EBITDA Margin reached 43.7% and Net Income totaled R$ 399.2 million – the highest in the Company’s history. TIM Participações chose an innovative path, trying to attract and keep high value clients. At the same time, we continued to increase our client’s satisfaction through a segmented and personalized relationship strategy. Results came in: the Company recorded one of the smallest churn rates in the market. Quality research that has been periodically carried out by recognized institutions also show the improvement in clients’ satisfaction with our services when compared to competitors. In 2005, TIM was awarded “Top of Mind”, for being the first Mobile Telecommunications Company that came to the mind of people, as indicated by the research conducted by “DataFolha”. This recognition shows the power of our brand. GSM network extension allowed us to increase the quality of our products and services, bringing innovative solutions to a larger number of clients. Moreover, this is one of the Company’s competitive advantages: the existing synergy between TIM Participações and the TIM Group, which allows the development of new services using the same technological platform, in a short period of time with reduced costs. In 2006 our strategy is to keep clients’ retention and to continue the development of segmented solutions in order to maintain market leadership. We will continue to pursue the recognition and satisfaction of our clients, while focusing on profitability and thus creating value for shareholders. We are therefore counting on a strong brand, a satisfied client base and on differentiated marketing campaigns. The Management 2
  • 3. Operating Performance Total penetration – Northeastern and South Regions – was estimated at Market: sharp 40.8%, 11.8 p.p. over 2004 though still below the national average penetration of penetration 46.8%, allowing strong growth potential within the region, of which TIM increase Participações is benefiting through its unique service portfolio. Market TIM Participações client base has reached 7,513,331 clients by the end of Leadership 2005, a 32.8% expansion over 2004. As a result, the Company held the leading position, with an estimated market share of 41.1%, stable when compared to the previous quarter (41.3%). Continued postpaid With reference to the customer mix, the postpaid segment grew by 14.3% in expansion 2005, bringing the weight of postpaid clients on the total lines to 20.3%. Net In 2005 the Company has presented the highest level of net additions in its Additions history, with 1,856,733 new clients, 30% higher than the net additions Record recorded in 2004. Client Base – at the end of the period (Thousands) 7,513.3 21% 6,943.3 6,490.1 5,943.9 5,656.6 36% 42% 48% 48% 57% 64% 58% 64% 52% 52% 36% 43% 4Q04 1Q05 2Q05 3Q05 4Q05 GSM TDMA By year end, 64% of TIM Participações’ clients used GSM technology – Fast 4,780,732 customers, representing 72.3% and 54.5% of the client base in the expansion Southern and Northeastern regions, respectively. In 2005, the Company experienced of the GSM 524.7 thousand TDMA to GSM migrations, compared to 400.8 thousand in 2004. base GSM coverage in the TIM Participações’ region reached 662 cities servicing 87.5% of the urban population by the end of 2005. Cities covered by the GSM have access to GPRS, with the additional benefit of the EDGE technology across the South and in main cities of the Northeast Region. 3
  • 4. These innovations enhanced and stimulated the use of data and multimedia by our customers, as reflected by the steady growth of our VAS revenues. Even in the scenario of strong growth and competition, the Company maintained its churn rate average at 1.8% per month in 2005, one of the lowest in the Churn sector. reduction in On a quarterly bases, the performance is even better as demonstrated by a 4Q05 monthly churn rate in 4Q05 of 1.6%, 0.6 p.p. lower when compared to 4Q04 (- 0.5 p.p vs. 3Q 05). Economic-Financial Development Selected Data 1 % 4Q05 4Q04 % Y-o-Y 3Q05 % Q-o-Q 2005 2004 Year Total Gross Revenue 1,073,224 1,001,586 7.2% 986,450 8.8% 3,903,272 3,429,175 13.8% Gross Service Revenue 855,538 773,012 10.7% 796,834 7.4% 3,169,743 2,782,403 13.9% Gross Handset Revenue 217,686 228,574 -4.8% 189,616 14.8% 733,530 646,772 13.4% 0 0 Total Net Revenue 803,683 747,703 7.5% 736,113 9.2% 2,918,216 2,564,632 13.8% Net Services Revenue 656,593 590,598 11.2% 613,901 7.0% 2,430,688 2,120,727 14.6% Net Handsets Sales 147,090 157,105 -6.4% 122,212 20.4% 487,528 443,905 9.8% 0.0% 0.0% EBITDA 298,198 260,815 14.3% 255,150 16.9% 1,013,187 886,246 14.3% EBITDA Margin 37.1% 34.9% 2.2 p.p. 34.7% 2.4 p.p. 34.7% 34.6% 0.1 p.p. 0.0% 0.0% EBIT 159,556 116,929 36.5% 122,333 30.4% 480,832 388,105 23.9% EBIT Margin 19.9% 15.6% 4.3 p.p. 16.6% 3.2 p.p. 16.5% 15.1% 1.4 p.p. 0 0 Net Income 145,034 83,372 74.0% 96,795 49.8% 399,200 265,935 50.1% Note: (1) consolidated data. Operating Revenues The gross service revenue in 2005 totaled R$ 3.2 billion, 13.9% higher than 2004. This growth is not only attributed to the 32.8% growth in the customer base, but also to the steady increase of Value Added Service (VAS) revenues (+84.9% y-o-y reaching R$ 219.0 million in 2005) . The same drivers explain the growth in service gross revenue in the 4Q05 (R$ 855.5 million), 10.7% above that registered in the 4Q04. Handsets The gross handsets revenue in the year was R$ 733.5 million, a 13.4% sales growth increase over 2004, as result of the growth in handsets sold (2.4 million in 2005 vs. 1.9 million in the previous year). Focusing on 4Q05, this revenue was R$ 217.7 million, a 4.8% decrease when compared to 4Q04, taking into account the reduction in the volume of handsets sold in the period (733.9 thousands in the 4Q04 versus 626.7 thousands in the 4Q05). This slowdown is mainly explained by an increase in the pre-paid entry price as a result of a more rational commercial approach: as an example during the month of December 2005 pre-paid entry price was 199 R$ compared to 149 R$ of December 2004. 4
  • 5. It is important to mention that in 4Q05, as was done along 2005, TIM Participações kept improving the enhanced data enabled handsets mix: color display and MMS already represents 21% of the total handsets sold. This is the proof that customers are willing to buy more sophisticated handsets. Hence, total gross revenue was R$ 3.9 billion, or 13.8% higher than the previous year. In 4Q05, total gross revenue was R$ 1.1 billion, 7.2% above 4Q04. Total net revenue was R$ 2.9 billion in 2005 and R$ 803.7 million in 4Q05, a 13.8% and 7.5% increase over last year, respectively. The average revenue per user (ARPU) in 4Q05 was R$ 30.67, posting a ARPU: rebound of 0.9% compared to 3Q05 (R$30.40). expansion in 4Q05 versus 3Q05 Looking closer at 2005, ARPU was R$ 31.34 against the R$ 36.53 posted in 2004 with a reduction mainly due to the large growth of the total client base - in particular the 39% expansion in prepaid customers, and from the discontinuation of long distance services in 2005. It is worth to remind you that, in order to ensure comparability with market standards, all ARPU figures above reported are calculated considering the total net service revenue. Operational Costs and Expenses Stable costs in In 2005, the network and interconnection cost totaled R$ 435.9 million, 4Q05 when 6.3% above the R$ 410.1 million registered in 2004, primarily due to the strong compared to expansion in the customer base and other costs related to the higher capacity and 4Q04 coverage of the GSM network roll-out as well as by the maintenance costs increase due to the overlap of the two existing networks (GSM and TDMA), partially offset by the discontinuation of long-distance services. In the 4Q05, this cost represented R$ 101.3 million, in line with R$ 102.3 million posted in 4Q04 The cost of goods sold – basically referred to sales of handsets and accessories - reached R$ 536.5 million, 4.4% higher than the R$ 513.7 million in 2004. This increase is primarily due to the 21.1% growth in the volume of handsets sold. In a quarterly basis, such cost amounted R$ 147.7 million, 9.3% lower than in the 4Q04, because to a 14.6% reduction in total of handsets sold in the period. Commercial expenses (without depreciation / amortization / bad debt and personnel) totaled R$564.4 million, 30.2% higher than 2004, primarily due to the 29% growth in gross addition (3,236,192 clients in 2005 versus 2,514,206 in 2004). The higher sales in the period boosted mainly the expenses related to sales commissions and the FISTEL rate - charged on the activation of each 5
  • 6. line and over total initial base. In 2005, these expenses reached R$ 253.2 million and R$123.9 million, respectively. On a quarterly basis, the same drivers affected commercial expenses, which totaled R$ 167.8 million in the 4T05 against R$ 137.4 million in the 4Q04. SAC: The subscribers´ acquisition and retention cost (SAC) reached R$ 116.2, Reduction of which represents a 6.6% reduction over the R$124.4 posted in 2004: This is the 6.6% in the result of strong cost control in the acquisition of new clients. The Company’s rational year versus market strategy was leveraged by the appreciation of the Brazilian Real against the 2004 U.S. Dollar and the lower average purchasing prices of handsets. SAC totaled R$ 109.2 in 4Q05 against the R$ 95.1 registered in 4Q04. The increase is related to subscribers retention cost. General and administrative expenses (G&A) - excluding depreciation/amortization and personnel expenses – totaled R$ 110.7 million in 2005, 5.4% higher than in 2004, due to the increase in third party services expenses. In 4Q05, those expenses totaled R$ 25.4 million against the R$ 21.4 million registered in 4Q04. Personnel expenses totaled R$125.2 million in 2005 and R$ 33.1 million in 4Q05 – 8.2% and 6.6% higher than 2004 and 4Q04, respectively. This increase was due to headcount growth and non-recurring expenses related to the network, as well. Bad debt expenses totaled R$118.0 million in 2005 and R$ 27.8 million in Bad debt: reduction in 4Q05, making a decrease in percentage on total gross revenues from 3.3% in 2004 percentage of to 3.0% in 2005. total gross In 4Q05 the performance was particularly worth of notice as reflected by the revenue reduction of 0.4 p.p when compared to 4Q04 (2.6% vs. 3.0%). This performance was achieved despite the Company adopted more conservative criteria for the bad debt provision, to take into account the strong growth in postpaid customers. It is important to point out that all these procedures are geared to maintain the quality of our client base. EBITDA EBITDA: TIM Participações reported an increase of 14.3% in 2005 EBITDA (earnings Profitability before interest, taxes, depreciation and amortization) amounting R$1.013 billion, Increase compared to R$886.2 million in 2004. EBITDA in 4Q05 reached R$ 298.2 million against the R$ 260.8 million registered in the same period of the previous year. This growth is a further proof that the Company’s strategy was able to deliver a solid and profitable growth despite the strong competitive scenario and record gross additions. 6
  • 7. (R$ millions) EBITDA Reconciliation 4Q05 4Q04 2005 2004 Net Profit 145,034 83,372 399,200 265,935 (+) Provision for Income Tax and Social Contribution 32,866 20,876 130,338 108,036 (+/-) Non-Operational Results 428 399 2,260 4,592 (+/-) Minorities Interest - 23,539 21,464 70,113 (-) Net Financial Results (18,771) (11,257) (72,431) (60,571) EBIT 159,556 116,929 480,832 388,105 (-) Amortization and Depretiation 138,642 143,886 532,356 498,141 EBITDA 298,198 260,815 1,013,188 886,246 4Q05 margin In 2005, EBITDA margin was 34.7% slightly above 2004 figures (34.6%). The increase service EBITDA margin was 43.6%. On a quarterly basis 4Q05 EBITDA margin was 37.1% with a sharp increase when compared to 3Q05 (+2.4 p.p.) and 4Q04’s (+2.2 p.p.). EBITDA (R$ millions) +14% 37.8% 2.4 p.p. 37.1% 34.9% 34.7% 29.3% 298.2 298,2 260.8 260,8 255.2 255,2 1,013.2 1.013,2 249.2 249,2 1.013,2 210.7 210,7 886.3 886,3 886,3 4Q04 1Q05 2Q05 3Q05 4Q05 2004 2005 EBITDA EBITDA Margin Depreciation and Amortization Depreciation and amortization in 2005 was R$ 532.4 million, an increase of 6.9% over 2004, reflecting a 12.2% fixed asset growth in the last year, resulting mainly from the expansion and innovation of both network and information technology infrastructure. In 4Q05, depreciation and amortization totaled R$ 138.6 million versus the R$ 143.9 million registered in 4Q04, a 3.6% decrease, mainly due to the acceleration in 4Q04 of the depreciation of TDMA assets. 7
  • 8. EBIT EBIT – earnings before interest and taxes – was R$480.8 million in 2005 and R$ 159.6 million in the 4Q05, a 23.9% and 36.5% increase when compared to 2004 and 4Q04, respectively. EBIT margin was 16.5% in 2005, 1.4 p.p. over 2004. In 4Q05, the EBIT margin was 19.9%, 4.3 p.p. higher than 4Q04. Net Financial Result TIM Participações net financial result was 19.6% higher than that recorded in 2004, growing from a positive R$ 60.5 million in 2004 to R$ 72.4 million in 2005. In a quarterly comparison, net financial result was positive R$ 18.7 million, a 66.7% increase when compared to the positive R$ 11.3 million registered in the same period of 2004, mainly due to the increase in the average cash allotted for financial investments. Net Income The consolidated net income reached a record of R$ 399.2 million - 50.1% Record higher than 2004, which represents R$ 0.49 per 1,000 share and R$ 4.90 per ADR net income .(10,000 shares). On a quarterly basis, the net income grew by 73.9%, from R$ 83.3 million in 4Q04 to R$ 145 million in 4Q05. Net income margin increased from 10.3% in 2004 to 13.7% in 2005; such expansion was also achieved occurred in the quarterly result, from 11.1% in 4Q04 to 18% in 4Q05. Net Income (R$ Million) +73.9% +73,9% +50.1% 399,2 145,0 145.0 399.2 265,9 96.8 265.9 83.4 84.3 73.1 4Q04 1Q05 2Q05 3Q05 4Q05 2004 2005 8
  • 9. Indebtedness By year’s end, the net cash position amounted to R$ 1.1 billion. Total indebtedness, including loans and financings from BNDES and Banco do Nordeste totaled R$130.8 million, compared to R$ 104.1 million reported at the end of 2004. CAPEX Capital Expenditure in 4Q05 amounted to R$ 348.4 million, totaling R$ 684.5 million invested in 2005, and primarily targeted to the expansion of the GSM network capacity and quality and the development of information technology’ systems, as the following table shows: Capex Investments R$ millions Network 452.9 Information technology 148.0 Comodato 68.3 Others 15.3 Total 684.5 The Company will submit to shareholders approval in Annual General Meeting the R$ 543.2 million 2006 estimated CAPEX. Ownership Breakdown On December 31, 2005, the Capital of TIM Participações S.A. was as following: Common % Preferred % Total % TIM Brasil Serviços e Participações S.A. 150,804,603,591 50.33% 24,053,370,461 4.15% 174,857,974,052 19.88% ADR - 337,323,781,484 58.16% 337,323,781,484 38.35% Others 148,806,027,477 49.67% 218,588,704,147 37.69% 367,394,731,624 41.77% Total 299,610,631,068 100.00% 579,965,856,092 100.00% 879,576,487,160 100.00% 9
  • 10. ----------------------------------------------------------------------------------------------------------------------------------------- Disclaimer This topic may contain forward-looking statements. Such statements are not statements of historical facts, and reflect the beliefs and expectations of the Company's management. The words "anticipates”, "believes”, "estimates”, "expects”, "forecasts”, "plans”, "predicts”, "projects”, "targets" and similar words are intended to identify these statements, which necessarily involve known and unknown risks and uncertainties forecasted by the Company. Therefore, Company’s future operational results may differ from current expectations and whose read this release shall not based his/hers assumptions exclusively in the information herein stated. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments. About TIM Participações S.A. TIM Participações S.A. is the holding company of TIM Sul S.A. and TIM Nordeste Telecomunicações S.A., the mobile telecommunication operators that provides mobile telephony services in the states of Paraná, Santa Catarina, Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco, Alagoas and in the city of Pelotas, in the State of Rio Grande do Sul, an area containing 44.9 million inhabitants. TIM Participações is controlled by TIM Brasil Serviços e Participações S.A., a Brazilian subsidiary of Telecom Italia Group, the only company authorized to operate mobile communications throughout Brazil. TIM Participações offers GSM technology, Global System for Mobile Communications, the most widely used in the world. At the end of December 2005, its network covered 662 cities and served 87.5% of the urban population. The cities covered by the GSM Network also have access to the GPRS and EDGE technologies. These are innovations that facilitate the use of data and multimedia services across the country. The Company boasts one of the widest services and product portfolios, offering solutions tailored to specific needs. TIM is the most widely known brand in both regions, and has been “Top of Mind” since the Company started its operations. 10
  • 11. List of Attachments Attachment 1: Balance Sheet (BR GAAP) Attachment 2: Income Statement (BR GAAP) Attachment 3: Cash Flow Statements (BR GAAP) Attachment 4: Operational Indicators– Northeastern Region Attachment 5: Operational Indicators- Southern Region Attachment 6: Consolidated Operational Indicators– TIM Participações Attachment 7: Glossary 11
  • 12. Attachment 1 TIM PARTICIPAÇÕES S.A. Balance Sheet under the Corporate Law (R$ Thousands) DESCRIPTION 2005 2004 % ASSETS 4,385,062 3,596,156 21.9% CURRENT ASSETS 2,313,439 1,716,347 34.8% Cash and cash equivalents 1,281,768 856,332 49.7% Accounts receivable 723,335 608,122 18.9% Inventories 81,880 47,200 73.5% Recoverable Taxes 114,065 91,154 25.1% Deferred income and social contribution taxes 103,118 108,706 -5.1% Other current assets 9,272 4,833 91.8% NON CURRENT ASSETS 237,026 242,057 -2.1% Related parties 18,618 397 4588.6% Recoverable Taxes 69,947 46,750 49.6% Deferred income and social contribution taxes 117,477 163,114 -28.0% Judicial deposits 26,278 30,291 -13.3% Other 4,706 1,504 212.8% PERMANENT ASSETS 1,834,597 1,637,752 12.0% Investments 8,310 9,890 -16.0% Property, plant and equipment 1,826,288 1,627,862 12.2% LIABILITIES 4,385,062 3,596,156 21.9% CURRENT LIABILITIES 1,480,076 1,078,520 37.2% Trade accounts payable 8,741 11,361 -23.1% Loans and financing 25,707 62,872 -59.1% Suppliers 1,056,721 691,022 52.9% Salaries and related charges 22,685 20,842 8.8% Taxes, charges and contributions 157,666 153,563 2.7% Related parties 45,042 2,944 1430.0% Payable dividends and interest on shareholders' equity 141,606 114,678 23.5% Other 21,909 21,239 3.2% NON CURRENT LIABILITIES 159,043 103,524 53.6% Loans and financing 105,076 41,220 154.9% Trade accounts payable 2,962 - N.A. Taxes, charges and contributions 4,634 26,005 -82.2% Provision for contingencies 42,788 32,602 31.2% Supplementary pension plan 3,584 3,697 -3.1% MINORITY INTEREST - 393,605 N.A. SHAREHOLDERS' EQUITY 2,745,942 2,020,507 35.9% Capital 1,472,075 884,504 66.4% Reserva de capital 192,081 240,634 -20.2% Income reserves 647,298 695,472 -6.9% Net Profit 434,489 199,897 117.4% The complete Financial Statement, including its Explanatory Notes is available on the Website: www.timpartri.com.br 12
  • 13. Attachment 2 TIM PARTICIPAÇÕES S.A. Results (BR GAAP – R$ Thousands) DESCRIPTION 4Q05 4Q04 % 2005 2004 YTD % Gross Revenues 1,073,224 1,001,586 7.2% 3,903,272 3,429,175 13.8% Telecommunications Services 855,538 773,012 10.7% 3,169,743 2,782,403 13.9% Core 789,578 732,092 7.9% 2,950,778 2,664,006 10.8% VAS 65,960 40,920 61.2% 218,965 118,396 84.9% Handset sales and other revenues 217,686 228,574 -4.8% 733,530 646,772 13.4% Handset Sales 217,686 228,574 -4.8% 733,530 646,772 13.4% Discounts and deductions (269,541) (253,883) 6.2% (985,057) (864,543) 13.9% Taxes and discounts on services (198,945) (182,414) 9.1% (739,054) (661,676) 11.7% Taxes and discounts on handset sales (70,597) (71,469) -1.2% (246,002) (202,867) 21.3% Net Revenues 803,683 747,703 7.5% 2,918,216 2,564,632 13.8% Services 656,593 590,598 11.2% 2,430,688 2,120,727 14.6% Handset and other revenues 147,090 157,105 -6.4% 487,528 443,905 9.8% Operating Expenses (505,485) (486,888) 3.8% (1,905,029) (1,678,386) 13.5% Personal expenses (33,120) (31,051) 6.7% (125,164) (115,658) 8.2% Selling & marketing expenses (167,802) (137,449) 22.1% (564,419) (433,418) 30.2% Network & interconnection (101,275) (102,287) -1.0% (435,883) (410,057) 6.3% G&A (25,366) (21,449) 18.3% (110,680) (104,960) 5.4% Cost Of Goods and Service (147,682) (162,776) -9.3% (536,470) (513,662) 4.4% Bad Debt (27,753) (30,148) -7.9% (117,978) (112,605) 4.8% Other operational revenues (expenses) (2,487) (1,728) 44.0% (14,434) 11,976 N.A. EBITDA 298,198 260,815 14.3% 1,013,187 886,246 14.3% EBITDA - Margin over total net revenues 37.1% 34.9% 2.2 p.p 34.7% 34.6% 0.1 p.p Depreciation (97,637) (107,681) -9.3% (377,524) (361,950) 4.3% Amortization (41,005) (36,205) 13.3% (154,832) (136,191) 13.7% EBIT 159,556 116,929 36.5% 480,832 388,105 23.9% EBIT - Margin over total net revenues 19.9% 15.6% 4.3 p.p 16.5% 15.1% 1.4 p.p Other non-operational revenues (expenses) (428) (399) 7.2% (2,260) (4,592) -50.8% Net Financial Results 18,771 11,257 66.8% 72,431 60,571 19.6% Financial expenses (29,944) (21,738) 37.8% (83,634) (68,801) 21.6% Net exchange variance (394) (1,231) -68.0% (2,482) (4,241) -41.5% Financial income 49,110 34,225 43.5% 158,546 133,613 18.7% Net income before taxes and Minorities 177,900 127,787 39.2% 551,002 444,084 24.1% Income tax and social contribution (32,866) (20,876) 57.4% (130,338) (108,036) 20.6% Minority interest - (23,539) N.A. (21,464) (70,113) -69.4% Net Income 145,034 83,372 74.0% 399,200 265,935 50.1% The complete Financial Statement, including its Explanatory Notes are available on the Website: www.timpartri.com.br 13
  • 14. Attachment 3 TIM PARTICIPAÇÕES S.A. Cash Flow Statements (BR GAAP – R$ Thousands) 2005 2004 4Q05 4Q04 EBIT 480,832 388,105 159,556 116,929 Depreciation and Amortization 532,357 498,142 138,641 143,885 Capital Expenditures (684,474) (674,493) (348,359) (309,551) Changes in Net Operating Working Capital 215,806 92,715 422,088 208,419 Provisions for Contingencies 10,186 11,124 15,267 8,343 Free operating cash flow 554,707 315,592 387,193 168,026 Income and Social Contribution Taxes (130,338) (108,036) (32,866) (20,876) Dividends and Interest on Own Capital (92,885) (65,346) - - Loans and Financing 23,642 (72,917) (4,885) 397 Net Financial Income 72,431 60,571 18,771 11,257 Other changes (28,812) 28,425 36,790 38,486 Net Cash Flow 398,745 158,289 405,003 197,290 The complete Financial Statement, including its Explanatory Notes is available on the Website: www.timpartri.com.br 14
  • 15. Attachment 4 Operational Indicators for the Northeastern Region 4T05 4T04 Var. % 3T05 Var.% 2005 2004 Var. % Tri Ano Ano Estimated Population in the Region (million) 28.9 28.6 0.3% 28.8 1.0% 28.9 28.6 1.0% Municipalities Served - GSM 342 308 4.0% 329 11.0% 342 308 11.0% Estimated Total Penetration 34.2% 23.0% 2.9 p.p. 31.3% 11.2 p.p. 34.2% 23.0% 11.2 p.p. Market Share 37.0% 39.9% -0.2 p.p. 37.2% -2.9 p.p. 37.0% 39.9% -2.9 p.p. Total Lines 3,657,046 2,666,346 9.2% 3,349,016 37.2% 3,657,046 2,666,346 37.2% Prepaid 2,934,700 1,975,342 10.4% 2,659,202 48.6% 2,934,700 1,975,342 48.6% Postpaid 722,346 691,004 4.7% 689,814 4.5% 722,346 691,004 4.5% Gross Additions 463,575 338,393 1.5% 456,542 37.0% 1,585,278 997,756 58.9% Net Additions 308,030 134,352 8.9% 282,968 129.3% 990,700 493,821 100.6% Churn 4.6% 7.9% -1.0 p.p 5.6% -3.3 p.p 19.9% 21.0% -1.2 p.p TOTAL ARPU * R$27.31 R$34.33 5.6% R$25.86 -20.4% R$27.73 R$33.72 -17.8% TOTAL MOU 92 91 8.7% 85 1.2% 91 96 -5.8% Investment (R$ million) 179.7 161.1 133.1% 77.1 11.6% 327.0 306.9 6.6% Employees 1,190 1,046 8.5% 1,097 13.8% 1,190 1,046 13.8% * In order to ensure comparability with market standards, all ARPU figures above reported are calculated considering the total net service revenue. Attachment 5 Operational Indicators for the Southern Region 4Q05 4Q04 Var. % 3Q05 Var.% 2005 2004 Var. % Q-o-Q Y-o-Y Y-o-Y Estimated Population in the Region (million) 15.9 15.8 0.2% 15.9 0.9% 15.9 15.8 0.9% Municipalities Served - GSM 320 297 6.3% 301 7.7% 320 297 7.7% Estimated Total Penetration 52.7% 39.0% 3.8 p.p. 48.9% 13.7 p.p. 52.7% 39.0% 13.7 p.p. Market Share 45.8% 47.9% -0.3 p.p. 46.1% -2.1 p.p. 45.8% 47.9% -2.1 p.p. Total Lines 3,856,285 2,990,252 7.3% 3,594,297 29.0% 3,856,285 2,990,252 29.0% Prepaid 3,050,471 2,343,881 7.6% 2,834,016 30.1% 3,050,471 2,343,881 30.1% Postpaid 805,814 646,371 6.0% 760,281 24.7% 805,814 646,371 24.7% Gross Additions 450,277 518,878 8.3% 415,600 -13.2% 1,650,914 1,516,450 8.9% Net Additions 261,988 361,344 53.9% 170,263 -27.5% 866,033 934,368 -7.3% Churn 5.2% 5.6% -1.9 p.p 7.1% -0.4 p.p 23.7% 24.0% -0.3 p.p TOTAL ARPU * R$29.85 R$35.82 0.6% R$29.69 -16.7% R$30.82 R$36.33 -15.2% TOTAL MOU 77 77 6.8% 72 0.3% 76 83 -8.9% Investment (R$ million) 168.6 147.8 138.0% 70.9 14.1% 357.4 367.9 -2.9% Employees 1,256 1,143 1.0% 1,244 9.9% 1,256 1,143 9.9% * In order to ensure comparability with market standards, all ARPU figures above reported are calculated considering the total net service revenue. Attachment 6 Operational Indicators Consolidated Data – TIM Participações S.A. 4Q05 4Q04 Var. % 3Q05 Var.% 2005 2004 Var. % Q-o-Q Y-o-Y Y-o-Y Estimated Population in the Region (million) 44.9 44.4 0.2% 44.8 1.1% 44.9 44.4 1.1% Municipalities Served - GSM 662 599 5.1% 630 10.5% 662 599 10.5% Estimated Total Penetration 40.8% 29.0% 3.2 p.p. 37.6% 11.8 p.p. 40.8% 29.0% 11.8 p.p. Market Share 41.1% 43.8% -0.2 p.p. 41.3% -2.7 p.p. 41.1% 43.8% -2.7 p.p. Total Lines 7,513,331 5,656,598 8.2% 6,943,313 32.8% 7,513,331 5,656,598 32.8% Prepaid 5,985,171 4,319,223 9.0% 5,493,218 38.6% 5,985,171 4,319,223 38.6% Postpaid 1,528,160 1,337,375 5.4% 1,450,095 14.3% 1,528,160 1,337,375 14.3% Gross Additions 913,852 857,271 4.8% 872,142 6.6% 3,236,192 2,514,206 28.7% Net Additions 570,018 495,696 25.8% 453,231 15.0% 1,856,733 1,428,189 30.0% Churn 4.9% 6.7% -1.5 p.p 6.4% -1.8 p.p 21.9% 22.5% -0.6 p.p TOTAL ARPU * R$30.67 R$36.61 0.9% R$30.40 -16.2% R$31.34 R$36.53 -14.2% TOTAL MOU 84 84 7.9% 78 0.5% 83 90 -7.6% Investment (R$ million) 348.4 308.9 135.5% 147.9 12.8% 684.5 674.9 1.4% Employees 2,446 2,189 4.5% 2,341 11.7% 2,446 2,189 11.7% * In order to ensure comparability with market standards, all ARPU figures above reported are calculated considering the total net service revenue. 15
  • 16. Attachment 7 Glossary Operating indicators Financial Terms Customers = Number of wireless lines in service EBIT = Earnings before interest and tax Gross additions = Total of customers acquired in the EBITDA = Earnings before interest, tax, depreciation and period amortization Net additions = Gross Additions – number of customers EBITDA Margin = EBITDA/ Net Operating Revenue disconnected CAPEX – (capital expenditure) capital investment Market share = Company ’s total number of customers / Subsidy = (net revenue from goods – cost of sales + vendors number of customers in its operating area discounts) / gross additions Marginal Market share = participation of estimated net Net debt = gross debt – cash additions in the operating area. PL – Shareholders ’ Equity Market penetration = Company ’s total number of customers + estimated number of customers of competitors / each 100 inhabitants in the Company ’s Technology and Services operating area Churn rate = number of customers disconnected in the TDMA = Time Division Multiple Access period GSM = Global System for Mobile Communications – A system ARPU = Average Total Net Service Revenue per – storing and coding cell phone data, such as user calls and per customers in the period data, enabling a user to be recognized anywhere in the Blended ARPU = ARPU of the total customer base country by the GSM network. The GSM is now the standard (contract + prepaid) most used in the world. Contract ARPU = ARPU of contract service customers EDGE = Enhanced Data rates for Global Evolution – Prepaid ARPU = ARPU of prepaid service customers technique developed to increase the speed of data MOU = minutes of use – monthly average. in minutes of transmission via cell phone, creating a real broadband for traffic per customer = (Total number of outgoing minutes + handsets with the GSM technology. The first EDGE handsets incoming minutes) / monthly average of customers in the available offer speeds that can reach up to 200 Kbps, period depending on the handset model. Contract MOU = MOU of contract service customers SMS = Short Message Service – ability to send and receive Prepaid MOU = MOU of prepaid service customers alphanumerical messages. SAC = Customer acquisition cost = (marketing expenses + commission + Fistel + “ comodato ” + costs of retention) 16

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