September, 2008.
0
Institutional Presentation
Agenda
Market
World Mobile Market
Brazilian Mobile Market
Institutional Presentation
Agenda
Market
World Mobile Market
Brazilian Mobile Market
Institutional Presentation
World Users Evolution - billion
3.5
3.7
3.3
2.7
2.2
1.7
1.0
1.2
1.3
0.7
Handsets
Source: Teleco – June 08
2000 2001 2002 2003 2004 2005 2006 2007 1Q08 2Q08
3
Institutional Presentation
Major Markets
601
283
263
173
141
116
Brazil is the 5th
largest mobile market
1º
China
2º
3º
4º
5º
India
US
Russia
Brazil
Source: Merril Lynch - Global Wireless Matrix 3Q08
6º
Indonesia
in the world reaching
141mn handsets in
September 08
Institutional Presentation
Mobile Penetration
Most telecom/media services still
have excellent growth prospects in
Brazil due to the low penetration:
69% in mobile as of June 2008.
Source: Global Wireless Matrix. – 2Q08.
5
Institutional Presentation
Agenda
Market
World Mobile Market
Brazilian Mobile Market
Institutional Presentation
Panorama
• Population*: 189.6 Million
• Homes*: 56.3 Million
• Area: 8,514,215 km²
• GDP**: R$ 2,778.0 Billion
(US$ 1,621.3 Billion)
• GDP per capita**: R$ 14,478
(US$ 8,449)
Source: * Estimated IBGE ** International Monetary Fund, World Economic Outlook Database, estimated 2008.
7
Institutional Presentation
Evolution of mobile telecom in Brazil
Brazil holds
5th place
in the world
mobile telecom
ranking
(in million
of lines)
+ 200% in the
last 5 years
1990 - 1993
Launch of cell
technology in the
main Brazilian cities
1997
Opening of the
Brazilian telecom
market
2005 - 2007
2008F
Introduction of
third generation
technology
8
Institutional Presentation
Mobile Market Evolution
+16%
+21%
+31%
+16%
118
Million
+41%
+33%
+21%
+24%
Source: Teleco and Anatel – 2Q08.
9
Institutional Presentation
Mobile Market Evolution
Source: Anatel – 3Q08.
10
Institutional Presentation
Technologies
Source: Teleco and Anatel – 2Q08.
11
Institutional Presentation
Agenda
Vivo’s History
Customers
Brazilian Market and Vivo
Vivo’s Customer Base
Vivo Escolha Plans
Vivo’s Operating and Financial Performance
Vivo Today
Institutional Presentation
Agenda
Vivo’s History
Customers
Brazilian Market and Vivo
Vivo’s Customer Base
Vivo Escolha Plans
Vivo’s Operating and Financial Performance
Vivo Today
Institutional Presentation
Joint venture formation
Vivo was launched in
April/2003: joint venture
by 7 cell phone carriers,
leaders in their markets,
constituting the largest
cell phone carrier in
Brazil.
+
=
Institutional Presentation
Brand trajectory
2003
2004
2005
2006
CBF Sponsorship
Launch of innovative
products and services
Vivo Launch
Vivo ao Vivo
Vivo Play 3G
Launch of
Vivo Escolha Plans
CBF / World Cup
15
Institutional Presentation
Brand trajectory
2007
2008
Brand repositioning
National coverage
Aggressive promotional pricing
Launch of Digital TV
16
Institutional Presentation
Recognition
Currently, Vivo is Top of Mind in the category and is strongly
associated with the following attributes:
• Most reliable brand
• Greatest coverage
• Best signal quality
• Most advanced technology
• Best mobile telecom option
The brand allies quality of service and vocation for
innovation.
Source: Ipsos Asi BrandGraph tracking - mar/08
17
Institutional Presentation
Recognition
“Most reliable brands in Brazil”
“Most valuable brands”
(IBOPE / 2007)
(Brand Finance / 2007)
For the 4th consecutive year
Vivo is the most reliable
brand in Brazil in the mobile
telecom category.
Vivo is the most valuable
brand in mobile telecom in
Brazil with a total of R$
2.25 billion.
18
Institutional Presentation
Recognition
Overall satisfaction
Vivo holds higher
satisfaction levels
among users than
the market average.
8.41
8.33
Market average
Vivo
Ratings vary from 0 (extremely unsatisfied) to 10 (extremely satisfied).
Source: GFK Total Satisfaction Survey – 2S07
19
Institutional Presentation
Agenda
Vivo’s History
Customers
Brazilian Market and Vivo
Vivo’s Customer Base
Vivo Escolha Plans
Vivo’s Operating and Financial Performance
Vivo Today
Institutional Presentation
Distribution
10%
15%
12%
-2%
29%
Source: Planning and Performance Department – September 2008.
21
Institutional Presentation
Agenda
Vivo’s History
Customers
Brazilian Market and Vivo
Vivo’s Customer Base
Vivo Escolha Plans
Vivo’s Operating and Financial Performance
Vivo Today
Institutional Presentation
Vivo’s Customer Base - Thousands
Source: Planning and Performance Department ;
23
Institutional Presentation
Pre and Post paid plans - Millions
Source: Planning and Performance Department;
24
Institutional Presentation
Agenda
Vivo’s History
Customers
Brazilian Market and Vivo
Vivo’s Customer Base
Vivo Escolha Plans
Vivo’s Operating and Financial Performance
Vivo Today
Institutional Presentation
“Vivo Escolha” Plans
Free Bonuses
Plans
Local
Minutes
Franchise
+ Minutes
SMS Included
on net
Mobile + Fixed
Vivo
Escolha
50
R$ 52.00
=
50 min
Vivo
Escolha
90
R$ 83.00
=
90 min
Vivo
Escolha
180
R$ 129.00
=
Vivo
Escolha
350
R$ 193.00
Vivo
Escolha
650
Vivo
Escolha
900
Vivo
Completo
Long
Distance
and
Roaming
+ SMS and Wap
Favorite
Vivo
Number
SMS + MMS +Wap
Free
-
+
50 min
or
5 min + 30
min
or
50 + 50 +
500 KB
-
&
50
+
50 min
or
15 min +
100 min
or
100 + 100 +
500 KB
-
180 min
&
50
+
150 min
or
15 min +
100 min
or
100 + 100 +
500 KB
or
1,000 min
=
350 min
&
100
+
150 min
or
15 min +
100 min
or
300 + 300 +
2 MB
or
1,000 min
R$ 288.00
=
650 min
&
100
+
300 min
or
30 min +
200 min
or
300 + 300 +
2 MB
or
1,000 min
R$ 354.00
=
900 min
&
100
+
300 min
or
30 min +
200 min
or
300 + 300 +
2 MB
or
1,000 min
R$ 525.00
=
1,400 min
&
100
+
300 min
+
30 min +
200 min
300 + 300 +
2 MB
1,000 min
26
Institutional Presentation
Agenda
Vivo’s History
Customers
Brazilian Market and Vivo
Vivo’s Customer Base
Vivo Escolha Plans
Vivo’s Operating and Financial
Performance
Vivo Today
Institutional Presentation
ARPU – R$
28
Institutional Presentation
SAC and Churn
SAC
CHURN
29
Institutional Presentation
Net Revenue
– R$ million
CAGR 03 - 07:
7.6%
30
Institutional Presentation
EBITDA – R$ million
*Including extraordinary effects of ICMS on Telemig of R$ 240 million.
31
Institutional Presentation
Capex – R$ million
32
Institutional Presentation
Net Debt and Cash Flow – R$ million
33
Institutional Presentation
Agenda
Vivo’s History
Customers
Brazilian Market and Vivo
Vivo’s Customer Base
Vivo Escolha Plans
Vivo’s Operating and Financial Performance
Vivo Today
Institutional Presentation
Today
In the Second Quarter
2008, the clients of
Telemig Celular joined
Vivo’s client base,
becoming part of a
company that is among
the world’s 15 biggest
mobile operators, with a
community of 42.3
million customers.
14º
Brazil
Source: Anatel 3Q08 (Brazil) /Merril Lynch - Global Wireless Matrix 2Q08 (World)
5º
4º
3º
2º
1º
World
35