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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of October, 2009
Commission File Number 001-14491
TIM PARTICIPAÇÕES S.A.
(Exact name of registrant as specified in its charter)
TIM PARTICIPAÇÕES S.A.
(Translation of Registrant's name into English)
Av. das Américas, 3434, Bloco 1, 7º andar Parte
22640-102 Rio de Janeiro, RJ, Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under
cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F _______
Indicate by check mark whether the registrant by furnishing the information contained
in this Form is also thereby furnishing the information to the Commission pursuant to
Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X____
3Q09
2
TIM PARTICIPAÇÕES S.A. Announces its Consolidated
Results for the Third Quarter 2009
BOVESPA1
(lot = 1 share)
TCSL3: R$6.18
TCSL4: R$4.61
NYSE1
(1 ADR = 10 PN shares)
TSU: US$26.24
(1) closing prices of October 29th, 2009
Rio de Janeiro, October 30th, 2009 TIM Participações S.A. (BOVESPA: TCSL3
and TCSL4; and NYSE: TSU), the company which controls directly TIM Celular S.A.
and indirectly TIM Nordeste S.A., announces its results for the third quarter of
2009. TIM Participações S.A. (TIM Participações or TIM) provides
telecommunication services with a national presence.
The following financial and operating information, except where otherwise
indicated, is presented on a consolidated basis and in Brazilian Reais (R$),
pursuant to Brazilian Corporate Law. All comparisons refer to the third quarter of
2008 (3Q08), except when otherwise indicated.
3Q09 Conference Call
Conference Call in English:
October 30th, 2009, at 12:30 AM
Brasília time. (10:30 AM US ET)
Conference Call in Portuguese:
October 30th, 2009, at 14:00 AM
Brasília time. (12:00 AM US ET)
For further information, please
access the Companys website:
www.tim.com.br/ir
Investor Relations Contacts
ri@timbrasil.com.br
(+55 21) 4009-3742 / 4009-3446 /
4009-4017
Avenida das Américas, 3434
Bloco 01 6° andar Barra da Tijuca
Rio de Janeiro, RJ - Brazil
Zip Code 22640-102
Fax: +55 21 4009-3990
3Q09 Highlights
As planned in the 2Q09, the 3Q09 was the back-to-talk period.
Evidences can be seen through the MOU rebound following the success of
Infinity plan. Also, we can see sequential improvements on market share and
post-paid net additions.
On the Brand, TIM raised its advertising spending, increasing to ~29% its
share of investments in media in YTD´09.
Subscriber base: 39.6 million clients, 12.5% up from 3Q08. Such
performance continued to reflect our commercial recovery. Incremental net
share reached 27.3% in 3Q09, well above the same period of 2008 (18.3%).
Infinity plan continued to drive the pre-paid base growth and has
already reached over 11 million users in the 3Q09.
MOU registered 90 min. (vs. 73 min. in 2Q09), following great acceptance of
Infinity plan.
ARPU came at R$26.5 in the quarter, a flat performance when compared
QoQ, despite the strong net adds and ARPM decrease in the last 2 quarters.
Net service revenues increased 5.0% QoQ, to R$3,083 million
reflecting the recovery of pre-paid traffic and post-paid subscriber base
increase.
Gross VAS revenues, stood at R$496 million, up 23.0% on a yearly basis
and accounting for 12% of gross service revenues.
Bad debt: continued to improve, reaching R$ 99.6 million (a drop of -
30.5% YoY), equals to 3.2% of net service revenues.
Total opex remained practically flat QoQ and YoY amounting to R$2,579
million - commercial momentum was partially offset by Efficiency Plan.
EBITDA totaled R$758.8 million, 3.1% higher than 2Q09 as a result of top
line improvement, but still 5.0% lower vs. 3Q08.
Net income was R$61 million, vs. a loss of R$12 million in 3Q08 and R$15
million in 2Q09.
3
Following the path traced at the beginning of the year and giving course to the restructuring
plan, we arrive in the third quarter satisfied with the results achieved especially the
operational results, where we again showed improvement in the quarterly comparison on
the main indicators. These nine months of 2009 have been special for TIM, as we went
through great changes; it was a period of great effort and results.
We started the year by repositioning the company in the market. We turned to restructuring
the company, we sought to regain market, with the launching of innovative offers and
services, and we are working increasingly focused on customer satisfaction, network quality
and innovation.
If in the second quarter, we had a "back to sales" vibe, in this quarter it was the "back to
talk" period, where we had significant improvement in traffic indicator. We also highlight
important advances in our re-launching plan:
Recovery of brand positioning: TIM confirmed Brand Awareness and Top of Mind
again and we also recovered customer satisfaction level in all customer segments.
Growth of customer base: We continue the customer base growth in the pre-paid
(Infinity exceeds 11 million lines) and stopped the downward trend on the post-paid
segment. In this quarter we added 1.8 million total users or 28% vs. the same period of
2008, with highlight to post-paid net additions, which doubled in the quarterly comparison.
Such performance on the incremental net share is largely due to the Infinity plan success.
Network Quality Program: In March we started a major program of monitoring the
quality of our network, reaching 32 cities by the end of the third quarter. The program
involves rigorous field measurement of network performance and includes a comparative
test between the operators. We used the program to perform fine tuning and to provide
quality improvements in the network. In September, we showed a continuous improvement
in Anatels network quality indicator 97.3% of targets achieved.
Efficiency Plan also plays an important role: Although the main impact of the plan
happened in the last two quarters (Q1 and Q2), it is important to emphasize that it was still
an important source of self-funding and that it supported the improvement of business
performance in the quarter. The plan has brought important savings from
Network/Interconnection, Bad Debt, G&A and IT.
Consistent commercial performance: In this quarter we consolidated the success
of the new Infinity plans, which reached more than eleven million users and we did not
stop there! We launched a new family plan for the post-paid segment, Liberty, which
consists of a flat monthly fee plan and unlimited traffic for on-net calls.
Message from the Management
4
New sales model: In the quarter we introduced another option to our post-paid
customers through a Chip-Only format. The offer consists in a discount on the monthly fee
for users who want only the chip. As for customers point of view: this approach
presents a more attractive tariff plans on services and gives more flexibility to choose the
use of unlocked handsets available in the market. As for Companys point of view: this
strategy approach allows us to reduce SAC and to move the competition from handset to
services, and also to increase the distinctness among peers.
Revenue and EBITDA: On a quarterly comparison, we are improving both, in
revenues and EBITDA. This result reflects the positive signs in the financials following the
new operational dynamic and post-paid base recovery. Even maintaining our commercial
push in this quarter, we preserved our margin through our efficiency plan. On a yearly
comparison, we still felt the negative impacts from the post-paid base deterioration
occurred in 2008, resulting in a revenue performance below the expectation. As for EBITDA,
the reduction is due to higher commercial push in this quarter vs. the slowdown phase
observed in 2H08.
Our bottom line is back to positive results and yet maintaining the upward trend in the
free cash flow.
For the next quarter:
We will keep the growth in the post-paid base and net-share
MOU will continue to increase, driven by the Infinity and Liberty plans with focus
on innovation.
Remain among the leaders in Anatels quality indicators (network and customers
satisfaction)
Maintain leadership in the Top of Mind
Maintain the network infrastructure roll-out
Finally, I am personally proud of the great work we have been doing and I am even more
determined to face with renewed hope and serenity the challenges that lie ahead.
Luca Luciani
5
Brazilian Market Overview
The Brazilian mobile market totaled 166.1 million lines in September, a growth of
18.0% on an annual basis. The penetration rate reached 86.7% in the 3Q09, compared to
73.3% in the same period of 2008. Net additions have been showing some signs of
slowdown by registering a YoY decrease of 14.6% in the 3Q09 and 21.9% YTD.
The market growth continued to be concentrated in the pre-paid segment fueled by double
SIM-Card effect as a result of companies on-net promotions. This segment reached 136.6
million users, representing 82.2% of total market and compares with 81.1% in the 3Q08. As
for the post-paid segment, total users ended the quarter with 29.6 million, an increase of
11.0% on a yearly comparison.
TIMs Performance
Our total subscriber base ended the quarter with 39.6 million clients, 12.5% up
from 3Q08. TIM ended the period with a market share of 23.8% (vs. 23.7% in Q2), as a
result of companys repositioning in the beginning of the year (February) - where market
share was at 23.4%. TIM has been able to present a rebound in market share and
interrupting recent downward trend.
Net additions in the 3Q09 were positive in 1.8 million lines (+27.5% YoY), while the
incremental market share came at 27.3% in the quarter, maintained a consistent pattern
along 2009. Such performance continued to reflect our commercial recovery, as result of
new offerings and continuous effort in advertising.
Subscriber base and Market share
Operational Performance
Net Adds
YoY Growth (%)
Million lines
Pre-paid
20.7%
11.9%
Post-paid
12.5%
+17.3%
-7.6%
+5.3%
+1.4%
Y/Y Q/Q
-17.2%
34.9%
27.5%
Customer Base
Pre-paid
Post-paid
YoY Growth (%)
(000s lines)
+12.5% +4.7%
11.0%
6.8
6.6
6.2
6.2
6.3
28.4
29.8
29.9
31.6
33.3
35.2
36.4
36.1
37.8
39.6
3Q08
4Q08
1Q09
2Q09
3Q09
16.5%
(1)
(250)
(397)
42
87
1,393
1,446
91
1,687
1,687
3Q08
4Q08
1Q09
2Q09
3Q09
1,774
1,729
1,392
(306)
1,196
N/A
-42.9%
+21.2%
N/A
+0.0%
+107.9%
Y/Y
Q/Q
+27.5%
+2.6%
6
In the third quarter of 2009, we were able to post another positive net addition balance on
contracts users, by adding 87k lines and 2x more when compared to the previous quarter.
We continued to push on sales channel (gross and number portability) with a new
commercial approach and portfolio offers. We are also maintaining our efforts with our
retention policy. As a consequence, TIM ended the quarter with 6.3 million users in that
segment.
On the pre-paid side, total users reached 33.3 million, up 17.3% from 3Q08 fueled by the
Infinity plan, which reached over 11 million users, representing 34% of our total non-
contract base.
Our GSM coverage achieved 94% of the countrys urban population, serving around 2.958
cities. Also, our GSM coverage counts with 100% of GPRS and around 75% of EDGE. As for
the 3G coverage, we reached over 55 cities (including all the main metropolitan areas),
available for more than 30% of urban population in Brazil.
7
Marketing & Sales Activities
In the 3Q09, we maintained our efforts to strength our portfolio through new launches and
adding new features to our plans. TIM continued with a strong presence in the media to
communicate the recent launches and to encourage the usage through promotions.
On the Brand re-positioning strategy, we continued to use the Blue Man Group for
institutional campaigns. Regarding the communication format we maintain the focus on
three main pillars: (i) network coverage and quality, (ii) innovative offers and (iii) best
handsets portfolios. As a consequence, TIM has been able to achieve the higher share of
investments in media (~29% in YTD´2009 vs. ~17% in 2008), recovering its Top of mind
position (according to Synovate a third-party survey institute) and the awareness of our
campaigns.
On the commercial front, TIM has been restructuring its commercial channels following a
new segmentation model. In the consumer front, TIM is pursuing the improvement of its
points of sales quality, capillarity and productivity. As a result, TIM was able to reduce
around 5% of its PoS, while gross additions went up 30% in the 3Q09 when compared to
the same period last year. As for the business segment, TIM has been adopting a new
approach to defend and better manage its corporate clients.
Still on the commercial side, TIM has introduced since July, another option for its new and
existing post-paid customers. Through the TIM Chip Avulso, customers can now choose
between a monthly fee discount (up to 20% according to contract plans) for 18 months or
discount in new handset. The new focus consists of another innovative offer, giving more
options for the customer, reducing the intermediation of equipment and concentrating the
benefit in the service.
As for the handset side, TIM kept its position of having the best devices portfolio,
anticipating the launch of the main innovative handsets such as Samsung Galaxy, the first
device with Android (Google mobile software), and also bringing the new iPhone 3GS to
market. Its important to mention that TIM is already the market leader in iPhone sales.
On the pre-paid side, TIM increased the attractiveness of the Infinity Plan by extending
the pay per call concept for long distance calls (to on-net direction only), widening the
community concept to its 40 million customers in all Brazilian states. In order to stimulate
the usage, the price per call was reduced to R$0.25. The Infinity offer continued to support
the growth of the MOU and its customer base already represents more than 30% of pre-
paid base. Also to stimulate usage, the Company launched a few recharge incentive
campaigns during the quarter, such as Recarga Imperdível TIM.
In the Corporate Segment, we started a mass media campaign to promote TIM
Empresa Simples, a convergent plan which combines mobile, fixed and broadband
services in one single bill. In September we launched Liberty Empresas, following our
community concept with a flat fee and unlimited on-net calls (local and long distance,
including free national roaming). The plan targets the SoHo and SME segments.
Marketing & Sales Activities
Maintaining
Innovative
offers
Infinity
already
accounts for
over 30% of
pre-paid base
8
Selected financial data Revenues
Operating Revenues
Total gross revenues reached R$4,630 million in the 3Q09, posting a growth of 2.8%
when compared to previous quarter and a drop of 2.2% on yearly comparison. Gross service
revenues stood at R$4,141 million, up 5.3% on a quarterly basis and down 1.9% when
compared to 3Q08. The main breakdowns and highlights are presented as follows:
Usage and Monthly fee revenues registered an increase of 3.7% QoQ and largely
explained by the increase of our customer base and usage in the period. The performance
reflects the success of i) the Infinity plans, which achieved over 11 million users in a couple
of months and ii) the recharge incentive campaigns - the Recarga Imperdível TIM. As a
result, total MOU reached 90 min., 23.2% higher QoQ. As for the yearly comparison, usage
and monthly fee revenues, reduced 2.5%, still suffering from the long tail in post-paid base
decline (-7.6% YoY) and resulting in a subscriber mix deterioration in the period (from 19%
to 16% in the 3Q09).
Long distance revenues achieved R$471 million in the quarter, an increase of 3.3% when
compared to the 2Q09 - following the higher long distance traffic fueled by Infinity Plan,
which also has included the long distance calls from July onward. As a result, TIM registered
a significant long distance traffic increase - more than 60% when compared to the same
period last year. As for the year-over-year comparison, long distance revenues drop 8.3%,
following lower post-paid base.
Interconnection revenues amounted to R$1,004 million in the 3Q09, up 1.5% from
2Q09, reflecting the subscriber base increase in the period (post-paid +1.4% and pre-paid
Financial Performance
R$ thousands
3Q09
3Q08
2Q09
% Q-o-Q
% Y-o-Y
Gross Revenues
4,629,634
4,731,548
-2.2%
4,504,744
2.8%
Telecommunications Services
4,141,369
4,221,492
-1.9%
3,931,414
5.3%
Usage and Monthly fee
2,041,652
2,094,482
-2.5%
1,968,883
3.7%
Long distance
470,701
513,159
-8.3%
455,576
3.3%
Interconnection
1,003,519
1,136,042
-11.7%
988,799
1.5%
Value added services - VAS
495,583
402,924
23.0%
483,287
2.5%
Others
129,914
74,885
73.5%
34,869
272.6%
Handset sales
488,265
510,056
-4.3%
573,330
-14.8%
Discounts and deductions
(1,292,154)
(1,324,625)
-2.5%
(1,200,492)
7.6%
Taxes and disc. on services
(1,058,021)
(1,106,618)
-4.4%
(995,174)
6.3%
Taxes and disc. on handset sales
(234,133)
(218,007)
7.4%
(205,318)
14.0%
Net Revenues
3,337,480
3,406,923
-2.0%
3,304,252
1.0%
Services
3,083,348
3,114,874
-1.0%
2,936,240
5.0%
Handset revenues
254,132
292,049
-13.0%
368,012
-30.9%
Gross service
revenues:
+5.3% QoQ
Significant
MOU rebound:
90 min.
LD traffic
increased more
than 60% YoY
9
+5.3%). In the yearly comparison, the sharp drop of 11.7% is explained by the decline of
incoming traffic due to strong push of on-net promotions and F2M traffic substitution.
Interconnection revenues as a percentage of total gross revenues reached 22% in 3Q09 (vs.
24% in 3Q08).
Gross VAS revenues, stood at R$496 million in the 3Q09, up 23.0% from R$403 million
reported in the 3Q08. VAS revenues accounted for 12.0% of gross service revenues (vs.
9.5% in the 3Q08). Innovative services, such as data transmission, continue to be the main
driver for such increase by growing 73.8% on yearly basis. The subscriber base of our
broadband offer, TIM Web, increased ~35% in the last 12 months. TIM is also stimulating
data usage through micro browsing. Today, most of our data bundles are being sold as
plug-ins of our new plans along with a complete and exclusive smartphone portfolio.
Gross handsets revenues came at R$488 million in the quarter, dropping 14.8% from
2Q09 and 4.3% when compared to the 3Q08. Despite the strong increase in gross adds
(22.1% QoQ and 29.7% YoY), the Company registered a volume decrease of handsets sold
in the same period by ~10%. The drop reflects the introduction of a new format for the
post-paid customers, through the sales of TIM Chip Only for the segment, giving another
option for the customer. The model aims the reduction of equipment intermediation,
concentrating the benefit on the service side.
Other service revenues reached R$130 million (73.5% YoY), the increase is explained
mainly by higher revenues from canceled contracts fines. In this quarter, revenues from
fines are now booked on other service revenues line, while were previously on other
operational revenues.
Total net revenues in 3Q09 reached R$3,337 million, an increase of 1.0% when compared
to 2Q09 and a decrease of 2.0% compared to 3Q08. Net service revenues continued
present a recovery on a quarterly basis by rising 5.0% to R$3,083 million and reflecting
customer base increase and pre-paid traffic rebound. When comparing to the same period
last year, net service revenues dropped 1.0% - following the loss of post-paid base.
ARPU (average revenue per user) came at R$26.5 in the quarter, a flat trend when
compared to the previous quarter. Despite the strong growth of net additions and ARPM
decrease in the last 2 quarters, the Company succeeded on stabilizing ARPU. When
compared to 3Q08, the decrease of 12.0% was mainly due to post-paid mix deterioration
and lower incoming MOU.
ARPM (average revenue per minute) registered a sharp drop of 19% to R$0.29/min in
the 3Q09 from R$0.36/min on a QoQ comparison, following the rapid increase of Infinity
base, especially on the pre-paid segment. Despite the drop, Infinity pre-paid users are
generating higher ARPU when compared to non-Infinity users.
VAS: 12.0% of
gross service
revenues
ARPU
remained
flat QoQ
Net service
revenue up
5.0% QoQ
10
Selected financial data Operating Costs and Expenses
Operating Costs and Expenses
Total Operating costs and expenses remained fairly stable when compared to previous
quarter and to the same period of last year (+0.4% and -1.1% respectively), amounting at
R$ 2,579 million in the 3Q09. Although commercial activities remained intense in the 3Q09,
the efficiency plan continues to have key role in margin defense. Breakdown details are
presented as follows:
Personnel expenses reached R$145 million, down 5.2% when compared to the same
period last year, partially explained by headcount reduction of 8%, to 9,351 employees
following the organization restructuring aiming efficiency (management layer reduction and
new commercial structure). On a quarterly comparison, the increase of 4.7% is due to the
reversal provisioning from bonuses program occurred in 2Q09.
Selling & Marketing expenses rose 22.1% from the same period of 2008 and 5.3% from
2Q09 to R$873 million in the 3Q09. The increase reflects intense commercial approach, that
in one hand, caused higher expenses on commissioning and Fistel taxes, but in the other
hand, brought substantial improvement on gross addition (+29.7% YoY and +22.1% QoQ).
TIM also maintained in the 3Q09 the same strong presence in the media as observed in the
previous quarter. As a result, advertising expenses went up by ~65% when compared to the
same period of last year.
Network and Interconnection cost totaled R$964 million in the 3Q09, up 4.7% when
compared to 2Q09, mainly due to higher pre-paid traffic volume. It is important to mention
that overall traffic increased by 30% QoQ and concentrated in on-net calls (following Infinity
plan concept). As for the yearly comparison, the drop of 10.5% is explained by the post-paid
base decline and the aforementioned on-net calls effect.
General and Administrative expenses (G&A) reached R$101 million in the 3Q09,
registering a sharp drop of 11.1% in a QoQ, mainly due to lower expenses with IT service
maintenance (contract renegotiation).
R$ thousands
3Q09
3Q08
2Q09
% Q-o-Q
% Y-o-Y
Operating Expenses
(2,578,698)
(2,608,467)
-1.1%
(2,568,236)
0.4%
Personnel expenses
(144,695)
(152,654)
-5.2%
(138,181)
4.7%
Selling & marketing expenses
(873,341)
(715,019)
22.1%
(829,036)
5.3%
Network & interconnection
(964,314)
(1,077,171)
-10.5%
(920,902)
4.7%
General & administrative
(100,955)
(101,496)
-0.5%
(113,541)
-11.1%
Cost Of Goods Sold
(335,308)
(378,071)
-11.3%
(466,727)
-28.2%
Bad Debt
(99,553)
(143,251)
-30.5%
(105,949)
-6.0%
Other operational revenues (expenses)
(60,532)
(40,805)
48.3%
6,100
-
Opex flat
YoY despite
intense
commercial
activity
11
Cost of Goods Sold amounted to R$335 million in the quarter, a drop of 11.3% YoY and
28.2% QoQ. The reduction reflected the strategy of focusing on lower handset sales volume
(-9% YoY and QoQ).
Bad Debt expenses achieved R$99.6 million, reporting a drop of 30.5% when compared
to R$143 million posted in the 3Q08. Bad debt, as a percentage of net service revenues
reached 3.2%, showing consistent drop every quarter. The performance followed the
actions taken to improve the process with better credit concession and superior collection
process.
Other Net Operational Expenses totaled R$60.5 million in the 3Q09, compared to
R$40.8 million in the same period last year. This line registered an impact mainly due to
reCLASSification of canceled contracts fines, now CLASSified as other service revenue.
Subscriber Acquisition Costs (SAC) in the quarter stood at R$113, a modest increase of
2.1% YoY (to a gross adds of 29.7%) and -6.2% QoQ (to a gross adds of 22.1%).
SAC/ARPU ratio came at 4.3x in 3Q09, vs. 4.5x in the 2Q09 and 3.7x in the same period last
year.
Bad debt
-30.5% YoY
SAC under
strict control
12
EBITDA
EBITDA (earnings before interests, taxes, depreciation and amortization) totaled R$759
million in 3Q09, up 3.1% sequentially, as a result of slight revenue increase and flat
operational costs (discussed above). Despite the intense commercial activities, we are
maintaining our efficiency plan with a strict control on discretionary costs (such as G&A,
Personnel, IT and Bad Debt). On a yearly basis, EBITDA came 5.0% lower than R$798
million posted in 3Q08, largely impacted by the post-paid base decline (-7.6%) and higher
commercial push in this quarter vs. the slowdown phase observed in 2H08. EBITDA
margin reached 22.7% in the quarter (+0.4 p.p. QoQ and -0.7 p.p. YoY).
EBITDA and EBITDA margin
Depreciation and Amortization
Depreciation and amortization accounted for R$664 million, 2.5% higher than R$647
million posted in 2Q09, and 7.4% higher on a yearly comparison. Such increase continued to
be explained by the network deployment.
EBIT
EBIT (earnings before interest and taxes) totaled R$95.1 million in the 3Q09, up 7.4%
when compared to R$88.6 million posted last quarter.
Net Financial Result
Net financial expenses totaled R$61.9 million in the quarter, down 59.6% from the
R$152.9 million in the 3Q08. The drop of R$91.1 million was explained by; 1) positive result
of R$39.8 million from net exchange variation; and 2) positive variation of R$51.3 million
from net financial revenues/expenses, mainly due to the reversion of R$15.3 million of
monetary correction expenses from the adherence to the tax refinancing program (REFIS).
Margin %
22.3%
23.4%
22.7%
R$ Mln
798
609
736
759
3Q08
1Q09
2Q09
3Q09
20.2%
-5.0%
+3.1%
//
13
Income and Social Contribution Taxes
Income and Social Contribution taxes come to a positive result of R$27.6 million,
mainly impacted by the reversion of tax provisioning of our subsidiary, TIM Celular, in
R$38.5 million and by the reversion of provisioning from Income and Social Contribution
taxes contingence in R$14.5 million due to the adherence of REFIS fiscal benefit.
Net Profit
TIM ended the quarter with a net profit of R$60.8 million, improving from the loss of R$12.1
million in 3Q08 and a loss of R$15.2 million in 2Q09.
Capex
Investments totaled R$536 million in the 3Q09, higher than R$511 million registered a year
ago and R$422 million in 2Q09. As a percentage of net revenues, Capex stood at 16%,
being approximately 80% related to Network and IT.
Company maintains the priority on 2G coverage to support the recent strong traffic increase
while preserving quality on voice services. As for the 3G, we are adopting a right on spot
coverage strategy to support our broadband access, with distinctive quality.
Net financial position and free cash flow
Gross Debt amounted to R$3,503 million (of which 60% in the long term), down from
R$3,673 million in 2Q09. Companys debt is composed by long-term financing from BNDES
(Brazilian Development Bank), BNB (Banco do Nordeste do Brasil) and EIB (European
Investment Bank), as well as borrowings from other local and international financial
institutions.
Approximately 33% of our total debt is denominated in foreign currency (USD and JPY), and
it is 100% hedged in local currency. Average cost of debt stood at 9.74% in the 3Q09
compared to 12.54% in the 3Q08.
Cash and Cash equivalents reached R$960 million, resulting in a net debt position
(gross debt less cash and cash equivalents) of R$2,544 million, 12% below 2Q09.
Operating Free Cash Flow was positive in R$392 million, in line with the previous
quarter, representing 12% of net revenues.
Capex:
16% of net
revenues
14
Update on the Intelig Deal: In April this year, TIM signed-up a Merger Agreement with
Intelig. The agreement had among other conditions, Anatels approval and Inteligs financial
restructuring. In the beginning of August, Anatel preliminary approved the acquisition and
we expect to conclude the deal in the short term.
Recent Events
Common
%
Preferred
%
Total
%
TIM BRASIL
650,537,118
81.32
990,098,811
63.94
1,640,635,929
69.86
OTHERS
149,387,687
18.68
558,423,420
36.06
707,811,107
30.14
TOTAL
799,924,805
100.00
1,548,522,231
100.00
2,348,447,036
100.00
OWNERSHIP BREAKDOWN
Ownership Breakdown
15
TIM Participações provides telecommunication services
nationwide through its direct subsidiaries TIM Celular S.A. and
indirect TIM Nordeste S.A. The Company launched its
operations in Brazil in 1998 and consolidated its nationwide
footprint 2002 onwards, thus becoming the first wireless
operator to be present in all of Brazilians states.
The Company through the GSM technology (Global System for
Mobile Communications), has a national coverage of
approximately 94% of the urban population and provides
services of mobile, fixed, data transmission and Internet access
in high speed, hence offering convergent services to all of its
clients, in a single company.
TIM has a strong positioning in the market due to Innovation
that, throughout its path in Brazil, has become pioneer in the
launch of several products and services such as: multimedia
messages (MMS); TIM Music Store and BlackBerry. In 2008,
the Company strengthened its positioning with the launch of
third generation services under the TIM 3G+ brand, bringing
other innovative services like TIM Web Broadband , Video Call
and TIM TV. In September 2008, TIM launched TIM Fixo the
most competitive and convenient option in fixed residential
telephony, making another important step towards in
convergent services strategy.
TIM Participações is controlled by TIM Brasil Serviços e Participações S.A., a subsidiary of the Telecom Italia
Group. Innovation and quality are two of strategic pillars that TIM shares with its controller, hence allowing a
great competitive advantage in the market. For that, TIM makes substantial investments in technology and
optimizes synergy with its controller group, through the sharing of experiences and adopting best practices
policy, in order to provide innovative solutions to all of its clients. In addition, TIM relies on a specialized staff,
always aware of technological changes in the telecom sector.
This document may contain forward-looking statements. Such statements are not statements of historical fact
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 foreseen, or
not, by the Company. Therefore, the Companys future operating results may differ from current expectations
and readers of this release should not base their assumptions exclusively on the information given herein.
Forward-looking statements only reflect opinions on the date on which they are made and the Company is not
obliged to update them in light of new information or future developments.
About TIM Participações S.A.
Disclaimer
»
National Presence since 2002
»
Network: leadership in coverage
and quality
»
Unique Pure Mobile
convergence offering
»
Sustainability: included in ISE
index
16
EXOS
Attachment 1:
Balance Sheet (BR GAAP)
Attachment 2:
Income Statements (BR GAAP)
Attachment 3:
Cash Flow Statements (BR GAAP)
Attachment 4:
EBITDA Calculation Statement (BR GAAP)
Attachment 5:
Consolidated Operational Indicators
Attachment 6:
Glossary
The Complete Financial Statements, including Explanatory Notes, are available at the
Companys Investor Relations Website: www.tim.com.br/ri
Attachments
17
Attachment 1
TIM PARTICIPAÇÕES S.A.
Balance Sheet (BR GAAP) (R$ Thousand)
DESCRIPTION
3Q09
3Q08
%
2Q09
%
ASSETS
14,510,688
15,256,965
-4.9%
14,518,318
-0.1%
CURRENT ASSETS
5,029,958
5,217,904
-3.6%
4,812,942
4.5%
Cash and cash equivalents
944,142
1,334,437
-29.2%
763,029
23.7%
Short-term investments
15,426
28,361
-45.6%
10,083
53.0%
Accounts receivable
2,428,809
2,649,900
-8.3%
2,470,139
-1.7%
Inventories
397,483
334,441
18.9%
439,149
-9.5%
Recoverable Taxes
777,809
495,852
56.9%
627,150
24.0%
Deferred income and social contribution taxes
14,471
-
-
27,501
-47.4%
Prepaid expenses
329,894
297,550
10.9%
416,782
-20.8%
Derivative contracts
63,329
52,050
21.7%
25,566
147.7%
Other assets
58,595
25,313
131.5%
33,543
74.7%
NONCURRENT
9,480,730
10,039,061
-5.6%
9,705,376
-2.3%
Noncurrent assets
Long-term investments
11,989
10,907
9.9%
9,945
20.6%
Recoverable Taxes
199,577
229,471
-13.0%
262,309
-23.9%
Deferred income and social contribution taxes
110,763
-
-
110,763
0.0%
Judicial deposits
177,153
137,510
28.8%
160,876
10.1%
Prepaid expenses
10,770
11,409
-5.6%
11,808
-8.8%
Derivative contracts
25,675
33,459
-23.3%
65,313
-60.7%
Other assets
7,904
7,267
8.8%
7,017
12.6%
Permanent Assets
Property, plant and equipment
4,450,295
4,681,720
-4.9%
4,452,588
-0.1%
Intangibles
4,366,112
4,768,776
-8.4%
4,494,753
-2.9%
Deferred
120,492
158,542
-24.0%
130,004
-7.3%
LIABILITIES
14,510,688
15,256,965
-4.9%
14,518,318
-0.1%
CURRENT LIABILITIES
4,253,949
5,431,803
-21.7%
3,822,237
11.3%
Suppliers
1,995,329
2,109,642
-5.4%
1,789,795
11.5%
Loans and financing
1,434,510
1,288,801
11.3%
1,103,743
30.0%
Derivative contracts
42,503
48,260
-11.9%
103,633
-59.0%
Salaries and related charges
115,212
134,983
-14.6%
114,955
0.2%
Taxes, charges and contributions
546,743
547,843
-0.2%
579,988
-5.7%
Dividends and interest on shareholders equity payable
20,566
22,097
-6.9%
25,438
-19.2%
Authorizations payable
-
1,163,848
-
-
-
Other liabilities
99,086
116,329
-14.8%
104,685
-5.3%
NONCURRENT LIABILITIES
2,559,944
2,247,527
13.9%
3,064,886
-16.5%
Loans and financing
2,020,745
1,742,084
16.0%
2,471,151
-18.2%
Derivative contracts
94,455
10,978
760.4%
85,410
10.6%
Provision for contingencies
187,366
258,638
-27.6%
256,298
-26.9%
Pension plan
6,229
7,377
-15.6%
6,291
-1.0%
Asset retirement obligations
230,769
207,781
11.1%
225,337
2.4%
Other liabilities
20,380
20,669
-1.4%
20,399
-0.1%
SHAREHOLDERS' EQUITY
7,696,795
7,577,635
1.6%
7,631,195
0.9%
Capital
7,632,371
7,613,610
0.2%
7,632,371
0.0%
Capital reserves
15,569
34,330
-54.6%
15,569
0.0%
Income reserves
147,305
133,509
10.3%
142,516
3.4%
Net Loss for the period
(98,450)
(203,814)
-51.7%
(159,261)
-38.2%
18
Attachment 2
TIM PARTICIPAÇÕES S.A.
Income Statements (BR GAAP) (R$ Thousand)
DESCRIPTION
3Q09
3Q08
%
2Q09
%
Gross Revenues
4,629,634
4,731,548
-2.2%
4,504,744
2.8%
Telecommunications Services
4,141,369
4,221,492
-1.9%
3,931,414
5.3%
Usage and Monthly fee
2,041,652
2,094,482
-2.5%
1,968,883
3.7%
Long distance
470,701
513,159
-8.3%
455,576
3.3%
Interconnection
1,003,519
1,136,042
-11.7%
988,799
1.5%
Value added services - VAS
495,583
402,924
23.0%
483,287
2.5%
Others
129,914
74,885
73.5%
34,869
272.6%
Handset sales
488,265
510,056
-4.3%
573,330
-14.8%
Discounts and deductions
(1,292,154) (1,324,625)
-2.5%
(1,200,492)
7.6%
Taxes and discounts on services
(1,058,021)
(1,106,618)
-4.4%
(995,174)
6.3%
Taxes and discounts on handset sales
(234,133)
(218,007)
7.4%
(205,318)
14.0%
Net Revenues
3,337,480
3,406,923
-2.0%
3,304,252
1.0%
Services
3,083,348
3,114,874
-1.0%
2,936,240
5.0%
Handset revenues
254,132
292,049
-13.0%
368,012
-30.9%
Operating Expenses
(2,578,698) (2,608,467)
-1.1%
(2,568,236)
0.4%
Personnel expenses
(144,695)
(152,654)
-5.2%
(138,181)
4.7%
Selling & marketing expenses
(873,341)
(715,019)
22.1%
(829,036)
5.3%
Network & interconnection
(964,314)
(1,077,171)
-10.5%
(920,902)
4.7%
General & administrative
(100,955)
(101,496)
-0.5%
(113,541)
-11.1%
Cost Of Goods Sold
(335,308)
(378,071)
-11.3%
(466,727)
-28.2%
Bad Debt
(99,553)
(143,251)
-30.5%
(105,949)
-6.0%
Other operational revenues (expenses)
(60,532)
(40,805)
48.3%
6,100
-
EBITDA
758,782
798,456
-5.0%
736,016
3.1%
EBITDA - Margin
22.7%
23.4% -0.7 p.p
22.3%
0.5 p.p
Depreciation & amortization
(663,684)
(617,988)
7.4%
(647,451)
2.5%
Depreciation
(355,440)
(335,624)
5.9%
(348,712)
1.9%
Amortization
(308,244)
(282,364)
9.2%
(298,739)
3.2%
EBIT
95,098
180,468
-47.3%
88,565
7.4%
EBIT - Margin
2.8%
5.3% -2.4 p.p
2.7%
0.2 p.p
Net Financial Results
(61,866)
(152,942)
-59.5%
(65,856)
-6.1%
Financial expenses
(67,029)
(131,275)
-48.9%
(81,991)
-18.2%
Net exchange variation
(22,651)
(62,449)
-63.7%
(8,639)
162.2%
Financial revenues
27,814
40,782
-31.8%
24,774
12.3%
Income before taxes and Minorities
33,232
27,526
20.7%
22,709
46.3%
Income tax and social contribution
27,579
(39,579)
-
(37,956)
-
Net Income (Loss)
60,811
(12,053)
-
(15,247)
-
19
Attachment 3
TIM PARTICIPAÇÕES S.A.
Cash Flow Statements (BR GAAP) (R$ Thousand)
Attachment 4
TIM PARTICIPAÇÕES S.A.
EBITDA (R$ Thousand)
YoY
QoQ
%
%
EBITDA Reconciliation
3Q09
3Q08
2Q09
Net Income (Loss)
60,811
(12,053)
-
(15,247)
-
(+) Provision for Income Tax and Social Contribution
27,579
(39,579)
-
(37,956)
-
(+) Net Financial Results
(61,866)
(152,942)
-59.5%
(65,856)
-6.1%
EBIT
95,098
180,468
-47.3%
88,565
7.4%
(+) Amortization and Depreciation
(663,684)
(617,988)
7.4%
(647,451)
2.5%
EBITDA
758,782
798,456
-5.0%
736,016
3.1%
3Q09
3Q08
%
2Q09
%
EBIT
95,098
180,468
-47.3%
88,565
7.4%
Depreciation and Amortization
663,684
617,988
7.4%
647,451
2.5%
Capital Expenditures
(535,915)
(510,724)
4.9%
(422,499)
26.8%
Changes in Net Operating Working Capital
168,691
346,580
-51.3%
93,024
81.3%
FREE OPERATING CASH FLOW
391,558
634,312
-38.3%
406,541
-3.7%
Income and Social Contribution Taxes
40,610
(35,375)
-
(27,234)
-
Dividends and Interest on Capital
(13)
(140)
-90.7%
(167,927)
-100.0%
Net Financial Revenue
(61,866)
(152,942)
-59.5%
(65,856)
-6.1%
Other changes
(13,985)
(12,764)
9.6%
(28,222)
-50.4%
NET CASH FLOW
356,304
433,091
-17.7%
117,302
203.7%
20
Attachment 5
TIM PARTICIPAÇÕES S.A.
Consolidated Operational Indicators
Attachment 6
Glossary
QoQ
YoY
%
%
3Q09
2Q09
3Q08
Brazilian Wireless Subscriber Base (million)
166.1
159.6
140.8
4.1%
18.0%
Estimated Total Penetration
86.7%
83.5%
73.3%
3.2 p.p. 13.4 p.p.
Municipalities Served - TIM GSM
2,958
2,944
2,765
0.5%
7.0%
Market Share
23.8%
23.7%
25.0%
0.1 p.p.
-1.2 p.p.
Total Lines ('000)
39,600
37,826
35,206
4.7%
12.5%
Prepaid
33,297
31,610
28,386
5.3%
17.3%
Postpaid
6,303
6,216
6,820
1.4%
-7.6%
Gross Additions ('000)
5,930
4,855
4,573
22.1%
29.7%
Net Additions ('000)
1,774
1,729
1,392
2.6%
27.5%
Churn
10.9%
8.6%
9.4%
2.3 p.p
1.5 p.p
ARPU (R$)
26.5
26.6
30.1
-0.2%
-12.0%
MOU
90
73
101
23.2%
-10.7%
ARPM (R$)
0.29
0.36
0.30
-19.0%
-1.5%
SAC (R$)
113
120
110
-6.2%
2.1%
Investment (R$ million)
535.9
422.5
510.7
26.8%
4.9%
Employees
9,351
10,174
10,173
-8.1%
-8.1%
Financial Terms
Operational Indicators
Bad Debt (PDD) Provision for estimated amount of accounts
ARPU (Average Revenue per User) Average total net service
receivable.(customer balance).that has been determined to be
Revenue per customers in the period.
uncollectible.
ARPM (Average Revenue per Minute) ARPU / MOU
CAPEX (capital expenditure) capital investment.
Churn rate Percentage of the disconnections from customer
EBIT = Earnings before interest and tax.
base during the period.
EBITDA = Earnings before interest, tax, depreciation and
Customers Number of access in service.
amortization.
Gross additions Total of customers acquired in the period.
EBITDA Margin = EBITDA / Operating Net Revenue.
Market penetration = (Companys total number of customers +
Net Debt = Gross debt cash.
estimated number of customers of competitors) / each 100
Net debt / EBITDA = Index wichs evaluates the Companys
inhabitants in the Companys operating area.
ability to pay its debt with the generation of operating cash of the Market Share Companys total number of customers / number
period.
of customers in its operating area.
Operating Cash Flow = EBITDA CAPEX.
MOU (minutes of use) monthly average in minutes of traffic
PL Shareholders Equity.
per customer = (total number of outgoing minutes + incoming
Subsidy = (net revenue from goods cost of sales + vendors
minutes) / monthly average of customers in the period.
discounts) / gross additions.
Net additions = Gross additions number of customers
Working Capital = Operational current assets operational
disconnected.
current liabilities.
Net share Participation of estimated net additions in the
operating area.
Technology and Services
SAC (Customer acquisition cost) = (marketing expenses +
+ commission + Fistel + comodato + costs of retention).
CSP Carrier Selection Code to long distance calls.
VU-M Value of mobile use of the Cellular Operator network.
EDGE (Enhanced Data rates for Global Evolution) technique
developed to increase the speed of data transmission via cell
phone, creating a real broadband for handsets with the GSM
technology. The first EDGE handsets available offer speed that
can reach up to 200 Kbps, depending on the handset model.
GSM (Global System for Móbile Communications) A system
storing and coding cell phone data, such as user calls and data.
The GSM is now the standard most used in the world.
SMP Personal Mobile Services.
SMS (Short Message Service) Ability to send and receive
alphanumerical messages.
3G/HSDPA (High-Speed Downlink Packet Access) 3G
technology capable of proceed data transmission with higher
speed, allowing the internet access through high speed
connections to mobile users.
WAP (Wireless Application Protocol) Allows access to internet
servers through specific equipment.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
TIM PARTICIPAÇÕES S.A.
Date: October 31, 2009
By: /s/ Claudio Zezza
Name: Claudio Zezza
Title: CFO and Investor
Relations Officer
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements. These statements are statements that are not
historical facts, and are based on management's current view and estimates offuture economic
circumstances, industry conditions, company performance and financial results. The words "anticipates",
"believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are
intended to identify forward-looking statements. Statements regarding the declaration or payment of
dividends, the implementation of principal operating and financing strategies and capital expenditure
plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or
results of operations are examples of forward-looking statements. Such statements reflect the current
views of management and are subject to a number of risks and uncertainties. There is no guarantee that
the expected events, trends or results will a ctually occur. The statements are based on many assumptions
and factors, including general economic and market conditions, industry conditions, and operating
factors. Any changes in such assumptions or factors could cause actual results to differ materially from
current expectations.