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TELE NORTE LESTE PARTICIPAÇÕES S.A. Salomon Smith Barney Conference March, 2002. Overview. Largest Telco in Latin America: 14.8 million lines Concession : 65% of Brazilian Territory Population : 93 Million (54% Country´s total) 40% of Country’s GDP Over 21 Million Households - PowerPoint PPT Presentation
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TELE NORTE LESTE TELE NORTE LESTE PARTICIPAÇÕES S.A.PARTICIPAÇÕES S.A.
Salomon Smith Barney ConferenceSalomon Smith Barney Conference
March, 2002March, 2002
2
TNLP: Heaviest Weighted Company in IBOVESPA
One of Leading LatAm ADRs’ in the NYSE (TNE)
Market Value: US$ 5.95 billion (December/01)
Free Float: 80% of Total Shares
Investment grade rating: Fitch and Moody´s
OverviewOverview
Largest Telco in Latin America: 14.8 million lines
Concession : 65% of Brazilian Territory
Population : 93 Million (54% Country´s total)
40% of Country’s GDP
Over 21 Million Households
Penetration : 16% ( 22% in Brazil)
3
2001 Main Achievements2001 Main Achievements
Corporate Restructuring of wireline business;
Anticipation of Anatel´s 2003 targets;
Wireline operating restructuring;
Acquisition of PCS license for Region I;
4
Consolidation (“16 1”);
Operational and administrative efficiency gains;
Better utilization of Fiscal Credits (R$ 890 million);
Market recognition – Animec award.
Corporate RestructuringCorporate Restructuring
5
TELE NORTE LESTE
PARTICIPAÇÕES S.A
80.4% KT
17.6% KT
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%
% over KT
Free Float
2% Treasury
6
TELE NORTE LESTE
PARTICIPAÇÕES S.A
80.4% KT17.6% KT
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% Treasury
Corporate RestructuringCorporate Restructuring – Current Shareholders´ StructureCurrent Shareholders´ Structure
7
5,625 thousand new lines installed;
296 thousand public phones installed;
16,420 localities attended;
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.
Anticipation of Anatel´s 2003 TargetsAnticipation of Anatel´s 2003 Targets
8
Anticipation of Anatel´s 2003 targetsAnticipation of Anatel´s 2003 targets
Platform GrowthPlatform Growth
0,0
5,0
10,0
15,0
2002E
Lines in Service
Lines Installed(in millions)
20,0
1998
Utilization Rate (%)
1999 2000 2001 2002E
89%
92% 92%
82%
+/-90%
18.1
7.8 7.9
9.710.5
11.812.8
14.8
18.1
1998 1999 2000 2001
LIS +90%
LI +119%
9
Centralization of operational systems;
Centralization of operational and administrative activities;
Better control and cost management;
Improvement of internal process;
Head count reduction.
Wireline Operating RestructuringWireline Operating Restructuring
10
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
(40%)
11
Acquisition of PCS license for Region I (March/2001);
Project Implementation = ready to launch;
USD 1.4 billion of suppliers and banks facilities;
R$ 2.2 billion CAPEX in 2001 (R$ 1.2 bn for license);
Brand name.
Acquisition of PCS license for Region IAcquisition of PCS license for Region I
Mobile Phone BusinessMobile Phone Business
12
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.
13
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%
14
Gross Revenue per Employee Gross Revenue per Employee (R$ Thousand /year)(R$ Thousand /year)
Total directly employees (-) PCS (-) 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
15
-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
%
16
Bad Debt Provision (R$ Million)Bad Debt Provision (R$ Million)
2,8%
4,6%
10,6%
5,2%
1T01 2T01 3T01 4T01
5,1%*
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
17
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
18
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
19
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$) 0,29 1,90 0,37
20
Cost Drivers:- Increase of operating efficiencies;- Headcount reduction;- Plant Maintenance
- Bad debt control
2002 OUTLOOK2002 OUTLOOK
Revenue Drivers: - Plant Expansion - New Services – LD
- New Markets
CAPEX reduction;
Net Debt forecast;
PCS roll out.
21
2002 OUTLOOK -Revenue Drivers 2002 OUTLOOK -Revenue Drivers
Platform Expansion (mm)
7.89.7
11.8
14.8
1998 1999 2000 2001 2002
Lines in Service by year end
7.28.6
10.6
13.615.5/15.6
1998 1999 2000 2001 2002
Average Lines in Service
22
• Internet Access • National & International Long Distance Calls • Data Business
New Businesses New Businesses Adding Value Adding Value
Region I
Region III
Region II
23
2002 OUTLOOK2002 OUTLOOKCAPEX Reduction (R$ 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
24
Debt Structure – December 2001 (R$ mn)Debt Structure – December 2001 (R$ mn)
TOTAL = 8,938
LT DEBT
17%
14%
16%
17%
DEBT PROFILE
•R$ 5,382 million foreign currency (60%)*:
LIBOR +/- 7% p.a.
•R$ 3,556 million in Brazilian currency (40%):
(+/- 17% p.a.)
36%2006 and beyond
2002
2003
2004
2005
* Fully Hedged
ST 1,388
Long Term 7,549
Net Debt7,705
Cash 1,234
25
Launch in 2nd Quarter;
New technology GMS/GPRS, with new services;
Synergies with TMAR (fixed wire line);
Integrated operator (fixed+mobile);
Target of 500,000 clients (market-share: ~2.5%) in the first year;
Sharing of infrastructure lower CAPEX.
PCS – Roll OutPCS – Roll Out
26
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
27
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