Andrea Mangoni, TIM Brasil’s CEO, opened the third quarter conference call with analysts by highlighting that growth in data and smartphone base has driven an 8% net revenue growth for the company to U.S.$2.326 billion (R$4.722 billion) year over year. It also helped create an increase of 7.5% in the EBITDA to U.S.$612.8 million (R$1.244 billion) in the 3Q12 compared to 3Q11. Net income rose 0.4%.
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Mangoni seemed happy even though it wasn’t an easy quarter for TIM. The carrier had its sales banned by the regulatory agency Anatel and faced the accusation that it was deliberately dropping calls, which damaged its image. The carrier was also accused by minority shareholder JVCO Participações, an investment vehicle for Brazilian investor Nelson Tanure, which filed a lawsuit claiming TIM committed earnings fraud and demanding restitution for about $5 billion (R$10 billion) in lost market value.
In addition, earlier this year, the previous CEO of TIM Brasil, Luca Luciani, resigned following a scandal involving the exaggeration of the carrier’s customer base through the use of irregular SIM cards in Italy.
“All of these events have overshadowed our performance,” said the current CEO Mangoni. He explained during the conference call that the macro-economic scenario is good and showed confidence in the outlook for the upcoming months, while he presented what TIM has done to deal with recent events.
“Data traffic growth, smartphone sales and a record level in MOU were very positives aspects,” Mangoni said. Regarding the accusation of deliberately dropping calls, he said that TIM has hired two firms (PwC and Ericsson), which have concluded that the rate of dropped calls on 3/8/12 showed no anomalies. Anatel’s final decision is expected by the end of the year.
As for LTE implementation, TIM released that Huawei, Ericsson and Nokia Siemens Networks will be its vendors. The contracts are signed with 10% to be paid in 4Q12 and 90% to be paid in 2Q13.
TIM executives reinforced that with the end of the sales ban, the gross addition to the customer base returned to the same level as before. TIM highlighted the resilient prepaid growth and a postpaid acceleration on human lines (excluding machine-to-machine).
Highlights from 3Q12 results:
- Leading postpaid voice growth: Yearly growth of 24.8% to 8.2 million lines and confirmed pre-paid leadership (17% YoY growth);
- Total MOU grew to 139 minutes: 7% yearly growth and a new record for the company, mainly due to a solid increase of postpaid voice lines;
- ARPU reached R$18.9: A decrease of 11% YoY (vs. 15.3% in the 2Q12). On quarterly comparison, ARPU grew 3.5%;
- Data growth remained solid: Yearly growth reached 35% with smart/web-phone penetration reaching 39% of total base;
- Adjusted EBITDA margin came at 26.3% (vs. 26.5% in 3Q11), while reported EBITDA margin stood at 25.5%;
- Total investments (CAPEX) reached R$772 million (-9.6% vs. 3Q11), with 92% for infrastructure. Year-to-date Capex reached R$2.371 million (+26.3% vs. 3Q11);
- Live TIM start-up: 120,500 prospective clients registered on the website for the new ultra broadband service. Buildings connected reached 3,026.
