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____
Press Release
2nd Quarter 2004 Results
Contacts | Paulo Roberto Cruz Cozza | |
Chief Financial Officer and Director of Investor Relations | ||
Joana Dark Fonseca Serafim | Rafael J. Caron Bósio | |
Investor Relations | Investor Relations | |
(41) 9913-0006 / 312-6862 | (41) 9913-0426 / 312-6862 | |
jserafim@timsul.com.br | rbosio@timsul.com.br | |
Website | ||
http://www.timsulri.com.br |
TELE CELULAR SUL
PARTICIPAÇÕES S.A. ANNOUNCES
ITS CONSOLIDATED RESULTS FOR THE
SECOND QUARTER 2004
Curitiba, July 20, 2004 Tele Celular Sul Participações S.A. (BOVESPA: TCLS3 and TCLS4; and NYSE: TSU), the Holding Company of TIM Sul S.A., a leading provider of cellular telecommunication services in the states of Paraná and Santa Catarina, announces its results for the second quarter 2004 (2Q04). The financial and operational information below, except when otherwise indicated, is presented on a consolidated basis and in Reals - BRL, according to the Brazilian Corporate Law, and the comparisons refer to the second quarter 2003 (2Q03), except when otherwise indicated.
2nd Quarter 2004 Highlights
Fast Overlay: the GSM coverage matched TDMA in record time
Continued innovation: the first to provide EDGE high speed data transmission technology, in our area
284% increase QoQ in net additions and 34% increase in customer base
166% growth in VAS (Value-Added Service) revenue;
39% increase in gross service revenue;
Further improved solid debt profile;
Corporate restructuring: The merger of TND into TSU.
Tele Celular Sul ended the period with equal GSM and TDMA coverage, six months earlier than originally forecasted when the GSM technology was launched in August 2003. One outstanding feature of our GSM network is that it already has the GPRS and EDGE technologies, providing high-speed cell phone data transmission, resulting in a virtual broadband for GSM handsets. The quarter also showed record sales, surpassing even the fourth quarter 2003, when sales surged because of year-end celebrations. As a result, net additions were 225.7 thousand customers, 284% above the second quarter 2003.
The Management
Highlights
2Q04 | 2Q03 | Var.% 2Q04/03 |
1H04 | 1H03 | |
Total Gross Revenue | 462,325 | 333,723 | 38.5% | 884,117 | 651,180 |
Total Net Revenue | 342,001 | 259,691 | 31.7% | 657,760 | 506,314 |
Net Services Revenue | 265,176 | 213,576 | 24.2% | 527,564 | 436,860 |
Net Handsets Sales | 76,825 | 46,115 | 66.6% | 130,196 | 69,454 |
EBITDA 1 | 85,394 | 87,721 | -2.7% | 193,528 | 186,873 |
EBITDA Margin | 25.0% | 33.8% | -8.8 p.p. | 29.4% | 36.9% |
EBITDA Margin (w/o handset sales) | 32.2% | 41.1% | -8.9 p.p. | 36.7% | 42.8% |
EBIT 2 | 23,129 | 29,309 | -21.1% | 69,831 | 69,987 |
Net Income | 18,043 | 21,566 | -16.3% | 50,466 | 50,231 |
Net Income per 1,000 shares R$ | 0.05 | 0.06 | -16.7% | 0.14 | 0.14 |
Profit per ADR (10,000 shares) R$ | 0.50 | 0.60 | -16.7% | 1.40 | 1.40 |
(1) | operating income before net financial expenses, taxes, excluding depreciation, amortization and interests |
(2) | operating income before taxes and interests |
Market
Record Gross adds:+109% | Tele Celular
Sul closed the second quarter 2004 with 2,417,793 lines,
34% more than in the same period of 2003, of which 1,831,560 were prepaid and 586,233
postpaid customers. The postpaid base grew by 11% when
compared to the prior year period. Net additions totaled 225,721 customers, 284% above
the 2Q03. These net additions were exclusively GSM lines. |
Accelerated lines growth |
GSM Overlay
Double Coverage | In less than one year, Tele Celular Sul has matched the coverage of GSM to the existing TDMA coverage, six months earlier than had been forecasted at the launch of the new technology last August. Currently, the 256 cities covered by TDMA also have GSM coverage and the services are therefore extended to 82% of the areas population. By quarter end, our network was comprised of 786 Base Transceiver Stations. |
First one to offer EDGE |
One outstanding feature of the GSM network is that it already has
GPRS and EDGE technologies, providing high-speed cell phone data transmission,
resulting in virtual broadband for GSM handsets. For
the launching of EDGE, the Company is offering a handset at R$ 1,499.00 for postpaid
and R$ 1,748.00 for prepaid. Shortly the selection of handsets with this
feature will be increased. |
Operating Revenue
166% growth of VAS revenues |
The total gross operating revenue amounted to R$ 462.3 million,
38.5% above the 2Q03. That increment is mainly attributable to the 34% expansion in
the customer base, the 86% increase in the handsets
revenues and the 166% growth in value-added services revenues (VAS). On
July 6, 2003, the Company launched the Código de Seleção de Prestadora (CSP), the Carrier
Selection Code, enabling users to choose their long-distance carrier. The choice of
the carrier for calls made from a cell phone is part of
the requirements of the new system in which the Company has been operating since
December 2002, the Personal Communications Service
(PCS). |
Costs
Costs of Services: - 5.5% |
The cost of services for the period without depreciation and amortization reached the amount of R$ 47.2 million. The 5.5% decrease when compared to the same period of the previous year stems from the decline in interconnection charges and network maintenance costs. |
2Q04 | 2Q03 | Var. % 2Q04/03 |
1H04 | 1H03 | |
Costs of Services 1 | 47,270 | 50,044 | -5.5% | 97,922 | 98,308 |
Costs of handset sales | 107,500 | 56,116 | 91.6% | 176,066 | 85,597 |
Total | 154,770 | 106,160 | 45.8% | 273,988 | 183,905 |
Note: | (1) Before depreciation and amortization. |
Strong clients growth | The cost of handset sales in the quarter amounted to R$ 107.5 million, higher than the R$ 56.1 million in the 2Q03 because of the greater sales volume. In the quarter, 390.9 thousand handsets were sold, a 128.2% increase over the 171.3 thousand handsets sold in the 2Q03. Of the total handsets sold in the period, 84.2% have GSM technology. |
Selling, General and Administrative Expenses
2Q04 | 2Q03 | Var. %
2Q04/03 |
1H04 | 1H03 | |
Sales Expenses 1 and 2 | 69,794 | 40,830 | 70.9% | 127,790 | 81,092 |
General & Administratve Expenses-G&A 2 | 22,692 | 17,409 | 30.3% | 37,748 | 39,007 |
Total | 92,486 | 58,239 | 58.8% | 165,538 | 120,099 |
Note: | (1) Before bad debt expenses; |
(2) Before depreciation and amortization. |
Selling expenses before depreciation, amortization and bad debt were R$ 69.8 million, 70.9% higher than in the 2Q03. This was the result of gross additions in the period of 371,523 versus 177,816 in the 2Q03, a 108.9% increase. The growth in gross additions for the period increased mainly because of selling expenses related to commissions, and the FISTEL tax assessed over each new handset activation. |
The subscriber acquisition cost (SAC) for the period was R$ 121.98, an increase from the R$ 94.98 reported in the 2Q03. In the quarter, the Company focused its selling efforts on increasing the customer base, considering the Mothers Day celebrations which are typically seasonal sales boosters. Marketing campaigns included the offer of subsidies and installments in handset sales, in addition to free usage minutes for calls between Company subscribers. Additionally, handset prices were impacted by the exchange rate variation, the average of which surpassed that of the 2Q03. |
Subscriber Acquisition Cost SAC
General and administrative expenses (G&A) - without depreciation and amortization - totaled R$ 22.6 million, versus R$ 17.4 million in the 2Q03. The increase for the quarter stemmed mainly from extraordinary expenses related to the corporate restructuring. |
Bad debt expenses were R$ 6.1 million, representing 1.3% of the total gross revenue, compared to 1.9% in the 2Q03. In addition, R$ 8.5 million was included as a provision for amounts receivable from others operators. |
EBITDA
In the 2Q04, the EBITDA earnings before income tax, depreciation and amortization reached R$ 85.4 million, versus R$ 87.7 million in the 2Q03. The EBITDA margin was 32.2% over the net services revenue, affected mainly by the increase in the costs of handsets and selling expenses resulting from the increase of customer gross additions and the efforts to expand the GSM network in the period. |
EBITDA and EBITDA Margin
Depreciation and Amortization expenses, including the amortization of the privatization premium, amounted to R$ 62.3 million, an amount 6.5% above the 2Q03, because of the investments made in the network expansion and technological enhancement during the period. |
Depreciation & Amortization
R$ Million
The EBIT earnings before interest and income tax totaled R$ 23.1 million, in comparison with R$ 29.3 million in the 2Q03. |
Net Income
The consolidated net income was R$ 18.0 million and the profit per lot of 1,000 shares was R$ 0.05 versus R$ 0.06 in the 2Q03. |
2Q04 | 2Q03 | Var. % 2Q04/03 |
1H04 | 1H03 | |
Net Income | 18,043 | 21,566 | -16.3% | 50,466 | 50,231 |
Net Income per 1,000 shares R$ | 0.05 | 0.06 | -16.7% | 0.14 | 0.14 |
Profit per ADR (10,000 shares) R$ | 0.50 | 0.60 | -16.7% | 1.40 | 1.40 |
Indebtedness
By quarter end, the Company had R$ 330.9 million in cash, and the gross indebtedness was R$ 62.3 million. |
Low Indebtedness |
|
The net financial revenue for the quarter was R$ 5.6 million, mostly derived from the reduced indebtedness and the interest on cash investments. |
Investment and Free Cash Flow
Positive cash flow | Investments in the 2Q04 were R$ 70.1 million, totaling R$ 113.1 million in the first half of the year, basically directed to the GSM implementation. Year to date, the free cash flow resulting from the operation was R$ 11.8 million, of which R$ 5.2 was registered in the 2Q04. |
Additional Comments
Corporate Restructuring |
On May 31, 2004, the Boards of Directors of Tele Nordeste Celular Participações S.A. (TND) and Tele Celular Sul Participações S.A. (TSU) authorized the execution of the Protocol and Justification of Merger, under which TND will be merged into TSU. |
As a consequence of the merger, and after fulfillment of all of the operational and legal conditions, (i) TND will cease to exist and its shareholders will receive shares of TSU stock, and (ii) TIM Nordeste Telecomunicações S.A., currently held by TND, will be held by TSU, together with the current TSU subsidiary, TIM Sul S.A. The merger is basically designed to reduce the administrative costs involved in maintaining two separate company structures, as well as concentrate the liquidity of the shares of TND and TSU stock. |
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Attachment I - Operational Highlights
2Q04 | 2Q03 | Var.% 2Q04/03 |
1H04 | 1H03 | |
Total Lines | 2,417,793 | 1,811,681 | 33.5% | 2,417,793 | 1,811,681 |
Prepaid | 1,831,560 | 1,285,127 | 42.5% | 1,831,560 | 1,285,127 |
Postpaid | 586,233 | 526,554 | 11.3% | 586,233 | 526,554 |
Estimated Population in the Region (million) | 15.6 | 15.0 | 4.0% | 15.6 | 15.0 |
Municipalities Served | 256 | 255 | 0.4% | 256 | 255 |
Estimated Total Penetration | 30% | 20% | + 10.0 p.p. | 30% | 20% |
Market Share | 51.4% | 59.4% | -8.0 p.p. | 51.4% | 59.4% |
Gross Adds Market Share | 46.6% | 54.6% | -8.0 p.p. | 45.5% | 54.1% |
TOTAL ARPU 1 | R$ 38.2 | R$ 39.4 | -3.1% | R$ 39.5 | R$ 41.0 |
TOTAL MOU | 80 | 92 | -12.5% | 85 | 97 |
SAC | R$ 122 | R$ 95 | 28.4% | R$ 120 | R$ 110 |
Investment (million) | R$ 70 | R$ 24 | 194.7% | R$ 113 | R$ 29 |
Gross Additions | 371,523 | 177,816 | 108.9% | 631,653 | 301,651 |
Net Additions | 225,721 | 58,743 | 284.3% | 361,909 | 88,021 |
Churn 2 | 6.4% | 6.7% | - 0.3 p.p. | 11.7% | 12.1% |
Points of sale (including own stores) | 1.108 | 845 | 31.1% | 1.108 | 845 |
Employees | 1.035 | 972 | 6.5% | 1.035 | 972 |
Note: | (1) Average Net Revenue per Customer |
(2) Calculated on the Average Customer Base |
Attachment II - EBITDA Calculation
2Q04 | 2Q03 | Var. % 2Q04/03 |
1H04 | 1H03 | |
Net Service Revenues | 265,176 | 213,576 | 24.2% | 527,564 | 436,860 |
Net Operating Sales Revenues | 76,825 | 46,115 | 66.6% | 130,196 | 69,454 |
Total Net Revenue | 342,001 | 259,691 | 31.7% | 657,760 | 506,314 |
Operating Profit 1 | 28,700 | 38,443 | -25.3% | 83,027 | 84,960 |
Defered depreciation / amortization | 55,552 | 51,682 | 7.5% | 110,272 | 103,444 |
Amortization of privatization premium | 6,713 | 6,730 | -0.3% | 13,425 | 13,443 |
Financial Revenues | (17,360) | (41,912) | -58.6% | (35,316) | (74,945) |
Financial Expenses | 11,789 | 32,778 | -64.0% | 22,120 | 59,971 |
EBITDA | 85,394 | 87,721 | -2.7% | 193,528 | 186,873 |
EBITDA Margin (%) | 25.0% | 33.8% | - 8.8 p.p. | 29.4% | 36.9% |
EBITDA Margin (%) over net service evenues | 32.2% | 41.1% | - 8.9 p.p. | 36.7% | 42.8% |
Norte: | (1) Included interests in Blah! equity. |
TELE CELULAR SUL PARTICIPAÇÕES S.A.
Balance Sheet as of
June 30, 2004 and March 31, 2004
In
thousands of reais
(Translation
of the original Portuguese)
Parent Company | Consolidated | |||
Assets | 2Q04 | 1Q04 | 2Q04 | 1Q04 |
Current assets | ||||
Banks | 136 | 122 | 4,883 | 4,774 |
Marketable securities | 260 | 3,109 | 380,104 | 414,638 |
Receivables | 264,375 | 241,820 | ||
Inventories | 24,985 | 20,216 | ||
Prepaid Expenses | 14,361 | 21,894 | ||
Advance to Supliers | 1,140 | 1,134 | ||
Dividends | 18,704 | |||
Recoverable taxes | 73 | 533 | 18,309 | 15,823 |
Deferred taxes | 3,607 | 3,572 | 60,403 | 57,250 |
Interest over shareholders' capital receivable | 11,405 | |||
Other | 739 | 542 | 1,149 | 1,014 |
4,815 | 37,987 | 769,709 | 778,563 | |
Non current assets | ||||
Subsidiaries | ||||
Recoverable taxes | 11,799 | 7,951 | ||
Deferred taxes | 1,639 | 1,444 | 118,041 | 126,389 |
Judicial deposits | 10 | 17,576 | 15,034 | |
Cash Investments | 8,145 | |||
Other | 296 | 285 | ||
1,649 | 1,444 | 155,857 | 149,659 | |
Permanent assets | ||||
Investments | 983,932 | 965,384 | 10,680 | 11,075 |
Property, plant and equipment | 57 | 61 | 688,733 | 669,758 |
Deferred charges | 25,710 | 30,240 | ||
983,989 | 965,445 | 725,123 | 711,073 | |
T o t a l | 990,453 | 1.004,876 | 1.650,689 | 1.639,295 |
The complete financial statements and notes thereto are available at http://www.timsulri.com.br
TELE CELULAR SUL
PARTICIPAÇÕES S.A.
Balance
Sheet as of June 31, 2004 and March 31, 2004
In
thousands of reais
(Translation
of the original in Portuguese)
Parent Company | Consolidated | |||
2Q04 | 1Q04 | 2Q04 | 1Q04 | |
Liabilities and stockholders' equity | ||||
Current liabilities | ||||
Suppliers | 2,089 | 51 | 218,423 | 179,784 |
Debt - current portion | 31,983 | 32,003 | ||
Usage License | 17,633 | 17,241 | ||
Passes to other carriers | 28,571 | 24,487 | ||
Deferred revenues | 7,320 | 8,906 | ||
Salaries, charges and social benefits | 637 | 511 | 12,724 | 9,945 |
Taxes, charges and contributions | 65 | 3 | 69,060 | 71,136 |
Accounts payable to relate companies | 1,523 | 260 | ||
Interest on shareholders' equity payable | 1,712 | 28,301 | 3,476 | 16,037 |
Dividends payable | 2,135 | 12,072 | 2,332 | 32,723 |
Other | 20 | 20 | 349 | 273 |
8,181 | 41,218 | 391,871 | 392,535 | |
Noncurrent liabilities | ||||
Debt | 30,282 | 35,146 | ||
Taxes and contributions payable | 42,490 | 50,127 | ||
Provision for pension plan | 3,733 | 3,733 | 3,733 | 3,733 |
Provision for Contingencies | 1,087 | 516 | 14,446 | 13,252 |
4,820 | 4,249 | 90,951 | 102,258 | |
Minority interest | ||||
190,415 | 185,093 | |||
Shareholders' equity | ||||
Paid-up capital | 456,266 | 369,163 | 456,266 | 369,163 |
Capital reserves | 121,463 | 148,565 | 121,463 | 148,565 |
Revenue reserves | 319,422 | 379,423 | 319,422 | 379,423 |
Legal Reserve | 29,835 | 29,835 | 29,835 | 29,835 |
Retained earnings | 50,466 | 32,423 | 50,466 | 32,423 |
977,452 | 959,409 | 977,452 | 959,409 | |
T o t a l | 990,453 | 1.004,876 | 1.650,689 | 1.639,295 |
The complete financial statements and notes thereto are available at http://www.timsulri.com.br
TELE CELULAR SUL
PARTICIPAÇÕES S.A.
Income Statement
Quarters ended June 31
In thousands of reais
(Translation of the original in
Portuguese)
Parent Company | Consolidated | |||||||
2Q04 | 1H04 | 2Q03 | 1H03 | 2Q04 | 1H04 | 2Q03 | 1H03 | |
Gross Revenues | 462,325 | 884,117 | 333,723 | 651,180 | ||||
Deductions from gross revenues | (120,324) | (226,357) | (74,032) | (144,866) | ||||
Net Revenues | 342,001 | 657,760 | 259,691 | 506,314 | ||||
Cost of goods sold and services rendered | (199,582) | (362,730) | (147,838) | (267,664) | ||||
Gross profit | 142,419 | 295,030 | 111,853 | 238,650 | ||||
Operating revenues (expenses) | ||||||||
Selling | (87,040) | (162,397) | (49,437) | (98,675) | ||||
General and administrative | (279) | (364) | (2,027) | (4,256) | (30,803) | (54,081) | (24,281) | (51,180) |
Equity interest in income of subsidiary Co | 20,000 | 52,992 | 27,713 | 61,118 | (2,302) | (3,090) | ||
Other operating income (expense), net | (837) | (1,640) | (210) | (926) | (1,447) | (8,181) | (8,827) | (18,809) |
18,884 | 50,988 | 25,476 | 55,936 | (119,290) | (225,199) | (84,847) | (171,754) | |
Operating profit before financial results | 18,884 | 50,988 | 25,476 | 55,936 | 23,129 | 69,831 | 27,006 | 66,896 |
Financing revenues (expenses) | ||||||||
Financial income | 233 | 683 | 1,059 | 1,988 | 17,360 | 35,316 | 41,912 | 74,945 |
Financial expenses | (276) | (498) | (433) | (627) | (11,789) | (22,120) | (32,778) | (59,971) |
(43) | 185 | 626 | 1,361 | 5,571 | 13,196 | 9,134 | 14,974 | |
Operating profit | 18,841 | 51,173 | 26,102 | 57,297 | 28,700 | 83,027 | 36,140 | 81,870 |
Non-operating income (expenses), net | (1.055) | (1.055) | (614) | (591) | 19 | 150 | ||
Income before taxes and profit sharing | 17,786 | 50,118 | 26,102 | 57,297 | 28,086 | 82,436 | 36,159 | 82,020 |
Income tax and social contribution | 257 | 348 | (5) | (7) | (5,777) | (20,124) | (7,975) | (17,040) |
Minority interest | (4,266) | (11,846) | (6,618) | (14,749) | ||||
Net income for the year | 18,043 | 50,466 | 21,566 | 50,231 | 18,043 | 50,466 | 21,566 | 50,231 |
Net income per thousands shares (R$) | 0,05 | 0,14 | 0,06 | 0,14 | 0,05 | 0,14 | 0,06 | 0,14 |
The complete financial statements and notes thereto are available at http://www.timsulri.com.br
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.
TELE CELULAR SUL PARTICIPACTES, S.A. | ||
Date: July 20, 2004 | By: | /s/ Paulo Roberto Cruz Cozza |
Name: Paulo Roberto Cruz Cozza | ||
Title: Chief Financial Officer |