What will happen with Tim in 2008?
It was not at random that Tim won the award Top of Mind 2007 as a brand of mobile operator most remembered in Brazil.
In the last years Tim consolidated an image of an innovative company that seeks to keep leading. In 2002 was the only operator to choose a strategy of national GSM coverage and continues to innovate plans such as Tim house flex.
The pespectives for 2008 are not as promising for Tim as the beginning of 2007. Tim started 2007 threaten Vivo's leadership in market share and revenue. His performance in 2007 didn't result, however, in positions gain.
Tim's Performance in 2007
A comparison of Tim's operational indicators in the 3rd quarter of 2007 (Q307) with the Q306 indicates that, despite the growth of its base, in 2007 it doesn't evolved indicators such as market share, ARPU, churn and MOU.
| - | Q306 | Q307 |
| Market Share | 25.14% | 25.87% |
| Cell Phones (thousands) |
24,085 | 29,160 |
| Net Adds (Jan-Sept/07) | 3,914 | 3,750 |
| Pre-Paid |
79.5% | 77.4% |
| ARPU (R$) | 34.4 | 34.0 |
| Minutes of use (MOU) | 95 | 94 |
| Churn (month) | 2.6% | 2.8% |
SAC R$ * |
146 | 129 |
*Cost of clients acquisition
The same happened with the financial economic performance. Despite the growth in revenue, credited in part in the end of Bill & Keep, Tim kept the same market participation (revenue share).
| R$ Thousands | Jan-Sept/06 |
Jan-Sept/07 |
| Revenue Share | 29% |
29% |
| Total Gross Revenue | 9,784 |
12,547 |
| Net Revenue | 7,061 |
9,066 |
| EBITDA | 1,665 |
1,955 |
| EBITDA Margin (%) | 23.6% |
21.6% |
| EBIT | 4 |
234 |
| Net (loss) Income | -435 |
-107 |
| Investments | 895 |
926 |
| Debt | 1,787 |
1,788 |
The profitability improvement in 2007, with the reduction of injury, was hampered by losses in the amount of $ 173 million not charged in the sale of cell phones devices in the last 4 years, identified with the establishment of a new system of the accounts to be received.
Tim perspectives to 2008
The year of 2008 will bring new challenges to the operator in a different scenario from previous years:
With the joint venture Telemig/Amazon, Vivo will increase its gap in relation to Tim.
The main dispute in 2008 should be between Tim and Claro by 2nd position in market share for cell phones.
Claro has been decreasing this difference that may fall to less than 1 million cell phones by the end of 2007.
The basic question that will determine the future position of Tim is its ability to invest, either in the acquisition of customers, whether in the deployment of 3G.
Tim was already out in the bidding of the Government of Minas to enlarge the coverage of the cell phone to 100% of the cities in the State. A less aggressive implantation of 3G that of course can be a decisive factor for the loss of the 2nd place to Claro.
Telecom Italia goes through changes of direction and controller group, which is part of Telefonica. Even Anatel has taken measures to isolate the influence of Tim in Brazil's Telefonica will be difficult to avoid the search for synergies and investments decisions.
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