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TELE NORTE LESTE TELE NORTE LESTE PARTICIPAÇÕES S.A.PARTICIPAÇÕES S.A.
March, 2002March, 2002
2
OverviewOverview
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
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+
OverviewOverview
4
2001 Main Achievements2001 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
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.)
Corporate RestructuringCorporate Restructuring
6
TELE NORTE LESTE
PARTICIPAÇÕES S.A
80.1%
17.6%
Corporate RestructuringCorporate Restructuring - Previous Shareholding Previous Shareholding StructureStructure
HICORP
OUTSOURCINGTNL ACESSO CONTAX TNEXTTNL PCS
TELEMAR
PARTICIPAÇÕES S.A
RIO DEJANEIRO
ESPÍRITOSANTO
MINASGERAIS
PIAUÍ
SERGIPE
MARANHÃO PARÁ
ALAGOASRIO GRANDEDO NORTE
CEARÁ
BAHIA
AMAPÁ
PERNAMBUCO
RORAIMA AMAZONAS
PARAÍBA
69%79% 81% 61% 69%86% 76% 64%
83% 78% 73% 64% 55% 81% 60% 75%
Note: percentages reflect TNL holdings; balance is minoritary shareholders
Free Float
2.3% Treasury
7
TELE NORTE LESTE
PARTICIPAÇÕES S.A
80.1% 17.6%
HICORP
OUTSOURCINGTNL ACESSO CONTAX TNEXTTNL PCS
TELEMAR
PARTICIPAÇÕES S.A Free Float
TELEMARNorte Leste
Branches
Bahia
Sergipe Rio Grandedo Norte
Alagoas Pará RoraimaEspíritoSanto
Paraíba
Pernambuco
AmapáCeará
Piauí
MaranhãoMinasGerais
Amazonas
Rio de Janeiro
2.3% Treasury
Corporate RestructuringCorporate Restructuring – Current Shareholders´ StructureCurrent Shareholders´ Structure
79.6%
8
Shareholders’ StructureShareholders’ Structure
Tele Norte Leste
Participações S.A.
Free Float
Preferred Shares -----99.7%
Brazil ------ 58.1%
ADR ------- 41.9%
Common Shares ------- 44.4%
80.1%17.6%
Common Shares = 52.3%
TELEMAR PARTICIPAÇÕES S.A.
Total Shares: 378,250 mn
Preferred: 252,167 mn
Common: 126,083 mn
Shares in Treasury = 2.3%
TOTAL CAPITALBNDESPar
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%
Market Cap = R$ 14.0 billion
Dec/01
9
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.
Early Compliance with Anatel´s 2003 TargetsEarly Compliance with Anatel´s 2003 Targets and other achievementsand other achievements
10
7.2 8.1 7.8 8.89.7
10.5 11.812.8
14.8
18.1 18.1
0
5
10
15
20
jul/98 1998 1999 2000 2001 2002E
Early Compliance with Anatel´s 2003 targetsEarly Compliance with Anatel´s 2003 targets
Platform GrowthPlatform Growth
15,0
Lines in Service
Lines Installed(in millions)
20,0
1998
Utilization Rate (%)
1999 2000 2001 2002E
89%
92% 92%
82%
+/-90%
LIS +106%
LI +123%
11
Centralization of operational systems;
Centralization of operational and administrative activities;
Better control and cost management;
Improvement of internal processes;
Headcount reduction.
Wireline Operating RestructuringWireline Operating Restructuring
12
31,312
24,526 22,922
21,210
-
5.000
10.000
15.000
20.000
25.000
30.000
35.000
1998 1999 2000 2001 2002E
Wireline Operating RestructuringWireline Operating Restructuring
Total Employees (ex-Contax)Total Employees (ex-Contax)
Average Employees (ex-Contax)Average Employees (ex-Contax) Total Employees (ex-Contax)Total Employees (ex-Contax)
24,383 24,563
21,090
15,490
-
5.000
10.000
15.000
20.000
25.000
1998 1999 2000 2001 2002E
13
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.
Acquisition of PCS license for Region IAcquisition of PCS license for Region I
Mobile Phone BusinessMobile Phone Business
14
Revenue growth;
2001- Financial and Operational Results2001- Financial and Operational Results
Improvement in gross revenue per employee ratio;
Operating expenses;
Bad debt provision;
EBITDA;
Income statement;
Balance Sheet.
15
6,946
5,158
8,433
6,222
10,851
8,122
13,660
10,103
-
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
18.000
1998 1999 2000 2001 2002E
Gross Revenue Net Revenue
2001- Financial and Operational Results2001- Financial and Operational Results
Revenue Growth (R$ mm)Revenue Growth (R$ mm)
+97% (98/01)
CAGR (2001/98)
25.3%
16
Gross Revenue per Employee Gross Revenue per Employee (R$ Thousand /year)(R$ Thousand /year)
Total employees, but excluding PCS and Contax
287,51345,86
514,49
907,25
-
200
400
600
800
1.000
1.200
1.400
1.600
1998 1999 2000 2001 2002E
Average Annual
Growth
(2001/1998) 46.7%
17
-300
200
700
1200
1700
2200
2700
3200
3700
4200
4700
1998 1999 2000 2001
Cost of Services Selling Expenses G&A Others
Operating Expenses BreakdownOperating Expenses Breakdown
(R$ Million)(R$ Million)
40
17
33
10
33
21
27
19
38
30
32
-10
51
34
25
2,9772,774 2,460
4,328
%
18
Bad Debt Provision (R$ Million)Bad Debt Provision (R$ Million)
812
114
212219
5.9%
2.5%
1.6%2.0%
0
100
200
300
400
500
1998 1999 2000 2001 2002E
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
7,0%
Bad Debt Bad Debt/Gross Revenue
2.8%
4.6%
10.6%
5.2%
1Q01 2Q01 3Q01 4Q01
19
End of Period
Total Partial
% of Total Lines in Service
Line Blocked & DisconnectedLine Blocked & DisconnectedBlocked Lines (in thousands)*
1,1871,152 1,185
945
6.4%8.1%
9.5%8.5%
Mar-01 Jun-01 Sep-01 Dec-01
Disconnected Lines (in thousands)
413472
636
767
1Q01 2Q01 3Q01 4Q01
= 2,288
Partial Blocking´-outgoing calls: 30 days past due
Total Blocking – all calls: 60 days past due
Disconnected: 90 days past due
20
EBITDA (R$ Million)EBITDA (R$ Million)
0%
1998 1999 2000 2001
1,689
2,735
4,032 3,440
-
500
1.000
1.5002.000
2.500
3.0003.500
4.000
4.500
1998 1999 2000 2001
Margin (%)
34,1%
49,6%48,8%54,3%
20%
40%
60%
1998 1999 2000 2001
21
Consolidated Income StatementConsolidated Income Statement
Plant growth
F-M Traffic growth
Debt increase
Var.R$ Millions 1999 2000 2001 01/00
Net Operating Revenue 6,222.3 8,126.9 10,103.1 24.3%
Operating Expenses 2,573.6 2,460.6 4,328.3 75.9%
Interconection Costs 916.4 1,634.8 2,334.6 42.8%
EBITDA 2,732.3 4,031.6 3,440.2 -14.7%
Depreciation and Amortization 2,757.4 2,802.0 2,926.4 4.4%
EBIT 97.9 1,229.6 531.4 -56.8%
Financial Result 42.3 39.5 325.5
Income before Tax and Social Cont. 12.1 1,206.0 203.8 -83.1%
Net Income 95.7 709.4 140.4 -80.2%
EPADR (R$) 0.29 1.90 0.37
22
Consolidated Balance SheetConsolidated Balance Sheet
12/31/00 12/31/01 12/31/00 12/31/01
TOTAL ASSETS 19,472 26,766 TOTAL LIABILITIES 19,472 26,766
Current Assets 6,054 4,951 Current Liabilities 3,566 5,609
Cash and ST Investments 2,093 1,234 Suppliers 1,358 2,199
Accounts Receivables - Services 2,502 2,146 Loans and Financing 786 1,371
Recoverable Taxes 1,144 1,293 Salaries Benefits and Social Securities 186 182
Other Current Assets 315 277 Taxes 548 524
Dividends Payable 458 538
Other Accounts Payable 230 796
Long Term Assets 1,176 1,949
Recoverable Taxes 953 1,561 Long Term Liabilities 3,023 9,072
Other 223 388 Loans and Financing 2,045 7,549
Taxes 882 1,491
Other Accounts Payable 96 31
Permanent Assets 12,241 19,867 Deferred Income 179 2
Investments 42 160 Participação Minoritária 2,368 2,057
Property Plant and Equipment 12,200 19,227 Shareholder´s Equity 10,331 10,023 Deferred - 479 Funds for Capitalization 4 3
23
Total Debt – 2000/2001Total Debt – 2000/2001
30%
R$ Million 2000 2001
Suppliers 1,358 2,199 Other Accounts Payable 230 796 Total 1,589 2,995
Loans and Financing 2,831 8,920 Cash (2,093) (1,234) Total Net Debt 738 7,686
Total Geral 2,327 10,681
CAPEX 2,804 10,061
24
Cost Drivers:- Increase of operating efficiencies;- Headcount reduction;- Plant Maintenance
- Bad debt control
2002 OUTLOOK2002 OUTLOOK
Revenue Drivers: - Plant Expansion - New Services – LD
- New Markets – Corporate Regions 2 and 3- ARPU Improvement
CAPEX reduction;
Net Debt forecast;
PCS roll out.
25
2002 OUTLOOK -Revenue Drivers 2002 OUTLOOK -Revenue Drivers
Platform Expansion (mm)
7.89.7
11.8
14.8
1998 1999 2000 2001 2002
Lines in Service by year end
7.28.6
10.6
13.615.5/15.6
1998 1999 2000 2001 2002
Average Lines in Service
26
• Internet Access • National & International Long Distance Calls • Data Business
New Businesses New Businesses Adding Value Adding Value
Region I
Region III
Region II
27
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)
2002 OUTLOOK2002 OUTLOOK Cost Drivers
28
2002 OUTLOOK2002 OUTLOOKCAPEX Reduction (R$ Bi)
Capex
1998 1999 2000 2001 2002
2.5 2.2 2.8
10.1
2.52001
R$ 10.1 bi 2002
R$ 2.5 bi
Wireline BusinessWireless Business
-75%
29
Debt Structure – December 2001 (R$ mn)Debt Structure – December 2001 (R$ mn)
TOTAL = 8,920
Maturity Profile
17%
14%
16%
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.
36%2006 and beyond
2002
2003
2004
2005
* Fully Hedged
ST 1,371
Long Term 7,549
Net Debt7,686
Cash 1,234
30
PCS – Roll OutPCS – Roll Out
TNL PCS - ´´Oi´´
Apr/02 - Ready to Launch
10 States - 160 cities
Main suppliers: Nokia, Alcatel, Siemens
Technology GSM/GPRS
Operating AgreementsInfrastructure Co-sitingInterconnectionRoaming
Operating SynergiesBilling & CreditInfrastructure & BackOfficeData Base
12 months target 500,000 Subs
31
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.
““SAFE HARBOR” STATEMENTSAFE HARBOR” STATEMENT
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: [email protected]
Visit our new website: http://www.telemar.com.br/ri