TIM presented financial results — indicating drop in Capex and improvement in Opex – in the second quarter of 2017.
TIM achieved revenues of R$3,942 million (+3.2 percent) — mainly driven by 5 percent increase in mobile service revenues. Innovative revenues rose 46.1 percent more than offsetting the reduction in voice services.
Capex of TIM
Capex of TIM totaled R$809 million (–17 percent), keeping approximately 90 percent of the total Capex for infrastructure, mainly related to 3G and 4G technologies. Investment in infrastructure resulted into 72 percent increase in data traffic.
TIM focused on sites densification, expansion of hetnet coverage, frequency refarming and carrier aggregation of two or three frequencies. The hetnet project reached 3.9 thousand new hotspots in the entire country, an increase of 16 percent.
TIM 4G reached 1,850 cities, or 80 percent of the urban population of the country, an increase of more than 200 percent in the number of cities covered. TIM achieved this significant result through spectrum refarming, in addition to releasing an additional 5MHz slot to improve its 4G capacity.
The project used 1.800MHz band and reorganizes the frequency usage according to the spectrum availability in addition to a coverage optimization, using less Capex with better results.
TIM continues to develop its LTE 4G network using the 700MHz frequency, operating in 62 cities of which 10 are capitals.
TIM 3G expanded coverage to 2,916 cities, or 90 percent of the country’s urban population, an increase of 49 percent in terms of covered cities. GSM coverage remained at 95 percent of the urban population.
HIGHLIGHT OF TIM REVENUE
# +15.1 percent of postpaid users (vs. Jun/16): 26 percent of postpaid penetration over user base
# Approximately 40 percent of prepaid gross additions are in recurring offers
# ARPU up 12.6 percent, sixth consecutive quarter of growth
# 4G coverage expanded to 1,850 cities: reaching ~80 percent of urban population;
# Capacity and indoor coverage expansion with the 700Mhz usage: 10 capitals already have this frequency
# Data Revenues accelerated and now represents 60 percent of Mobile Service Revenues (MSR)
# 4G users grew twice against Jun/16 and totaled 22.4 million subs reaching 37 percent of total base
# VAS ARPU reached R$11.6, accelerating growth to +51.5 percent
# Mobile Service Net Revenues sped up the growth to +5.0 percent
# Costs and expenses remained under control, down 2.5 percent
# Normalized EBITDA presented a solid performance in the quarter (+15.5 percent), after service revenues solid performance and Opex under control
# For the 15th consecutive quarter normalized EBITDA Margin expanded, reaching 35.3 percent up 375 bps versus 2Q16
# Net Income reached R$219 million (vs. R$74 million 2Q16)
TIM costs
Network and Interconnection costs fell 4.3 percent due to lower interconnection tariffs (VU-M) and lower structural prices for leased lines.
Network & ITX increased 1.2 percent. TIM said costs are under pressure by the network expansion (+61 percent in 4G sites and +16.7 percent in 3G sites) influencing land rental, energy consumption and maintenance, infrastructure sharing and content providers.
General and Administrative Expenses (G&A) fell 2.8 percent, benefiting from the Efficiency Plan with reductions in several lines, including expenses with third-party services. COGS fell 14.8 percent, amid a 15.3 percent reduction in the volume of equipment sold driven by a reduction in sales to prepaid users.
EBITDA
Normalized EBITDA grew 15.5 percent – due to the consistent improvement in our service revenues, a better first margin contribution as data revenues overtake voice (60 percent of MSR) and strong efforts on the cost side.
