Slide 1: Results January—December 2010
Results January —December / 2010
Slide 2: Prices on February 15, 2011
Prices on February 15, 2011 ON – TLPP3 – R$ 39.00 PN – TLPP4 – R$ 38.80 ADR – TSP – US$ 23.21 Market Cap – R$ 19,675.77 million Telecomunicações de São Paulo S/A – TELESP (BM&FBOVESPA: TLPP3 and TLPP4, NYSE: TSP), releases today its consolidated results for the fourth quarter of 2010, presented in a
Slide 3: Board of Directors' Message
B OARD OF D IRECTORS ’ M ESSAGE The great efforts to quality improvements and a commercial repositioning made 2010 an important year for Telefônica, marked by major advances and achievements. With the continuous focus on services quality and in the improvement of customer relationship, Telefônica ha
Slide 4: Telefonica Earnings Release
Telefonica Earings Rekease— 410 ‘Telecamunicagies de Sao Paulo S/A-TELESP. ‘Sao Paulo, February 16,2011
Slide 5: Revenue generating units and broadband growth
The Company ended in the year of 2010 with 15,100 revenue generating units, a 5.0% growth in relation to the previous year. However, there is a clear change in the mix of provided services, with a significant increase in the access representativeness of broadband on lines in service, which rose from
Slide 6: Financial Highlights
F INANCIAL H IGHLIGHTS As of 2010 the breakdown of Gross Operating Revenues is presented with net values of discounts granted. Consequently, the consolidated information of 2009 were adjusted and showed for comparative purposes using the same criteria.
Slide 7: Net operating revenues and EBITDA in 2010
The Net Operating Revenues in 2010 was R$15,756.1 million, remaining virtually stable in relation to 2009, as well as in the 4Q10 x 4Q09 basis. This effect is mainly justified by a rise of broadband revenues and corporate data, beyond the increase of domestic long distance revenue, explained by high
Slide 8: Operating Revenues
O PERATING REVENUES The gross operating revenue in 2010 totaled R$21,359.0 million, registering a reduction of 1.0% in relation to 2009, compared to a growth of 0.5% in the 4Q10 x 4Q09 basis. The variations are justified by the following items:
Slide 9: Fixed Telephony
Fixed Telephony Local: reached R$10,033.0 million in 2010, a decrease of 6.0% in relation to the R$10,675.3 million registered in 2009. In the 4Q10 x 4Q09 basis, the local fixed telephony revenue registered a drop of 6.2%. The rise in the monthly fee revenue , due to the positive net additions of 39
Slide 10: Pay TV and Others
Pay TV In 2010 totaled R$478.1 million, registering a decrease of 2.9% in relation to the 2009 year. This effect is mainly related to the lower average customer base in the period. However, it is important to highlight the trend change of 4Q10, with 21 thousand net additions, due to the Company’s re
Slide 11: Operating Expenses
O PERATING EXPENSES The operating expenses in 2010 totaled R$10,295.9 million, registering an increase of 4.0% related to 2009, compared to a rise of 0.9% in the 4Q10 x 4Q09 basis. The variations are explained by the following items:
Slide 12: Interconnection, personnel and outsourcing expenses
Interconnection expenses: in 2010 totaled R$4,521.0 million, a rise of 3.1% in relation with the 2009 year, compared to a 7.6% increase in the 4Q10 x 4Q09 basis. Such effects are mainly explained by higher expenses with total unbundled loops, increase of mobile incoming traffic with the “15” use (se
Slide 13: Depreciation and Amortization
Depreciation and Amortization: from R$2,505.5 million in 2009 to R$1,913.5 million in 2010, a decrease of 23.6% explained by the adoption of new terms for determinate categories of assets, which resulted in changes in the useful life time related to those practiced in 2009. Because it is a change in
Slide 14: Financial Data
F INANCIAL D ATA Financial Investments: the Company invests the excess cash and cash equivalents of R$1,547.8 million, mainly in financial investments (Certificados de Depósitos Bancários) in short-term, based on the variation of the CDI. The Company diversifies its exposure investing in different f
Slide 15: Consolidated loans and financing
Cconsoidated Loansin loca currency BNDES Loan ANDES Loan, Loansin foreign curency Mediocréito Totat currency ur TP ur Tae ust ‘Annual Interest Rate Up 373% TP 173% 175% ber'0 Dus Date Unii2025 Unt) 2025 Unt 2024 Short-term 393.809 22.258 5255 aa0ai2 Long-term 132,681 71584 12.049 1.405.314 Total 4.7
Slide 16: Debt maturity by year
Year Amount 2012 412,808, 2013 412,564 2014 410051 From 2015 169911 Total 1,405,314
Slide 17: Telefonica Earnings Release
Telefonica Earings Rekease— 410 ‘Telecamunicagies de Sao Paulo S/A-TELESP. ‘Sao Paulo, February 16,2011
Slide 18: Derivatives
Derivatives: all Company’s financial derivative contracts aim the optimization of financial costs through the protection of exchange risk resulting from assets and liabilities in foreign currency, in accordance to the corporate policy of risk management. Following this, eventual variations on risk f
Slide 19: Telefonica Earnings Release
Telefonica Earings Rekease— 410 ‘Telecamunicagies de Sao Paulo S/A-TELESP. ‘Sao Paulo, February 16,2011
Slide 20: Financial Result
Financial Result: Until the period ended on December 31, 2010, the financial result reached -R$120.7 million, improving R$68.1 million or 36.0% when compared to the same period of 2009, mainly due to lower net debt. In relation to the same quarter of the previous year, the result was better in R$19.
Slide 21: Additional Notes: Recent Corporate Events
A DDITIONAL N OTES 1) R ECENT C ORPORATE E VENTS a) Corporate Restructuring involving A. Telecom S.A . – On December 30, 2009, Telesp´s 30 th Extraordinary General’s Meeting approved the A. Telecom spun-off part and subsequent merger of spun-off part by Telesp. This transaction included the transfer
Slide 22: Changes on the Adopted Accounting Practices
3) C HANGES ON THE A DOPTED A CCOUNTING P RACTICES From 2010 the consolidated information are presented by the Company in accordance with the International Financial Reporting Standards (IFRS) issued by the IASB and in accordance with the pronouncements, interpretations and orientations issued by th
Slide 23: Reclassification of revenues and expenses
- International long distance: presents the sum of revenues from International public telephony and International long distance; and - Data Transmission: presents the sum of Infrastructure rental revenues and Data Transmission. b) Expenses - Personnel expenses: starts to include provision of labor c
Slide 24: Capital Market
C APITAL M ARKET Telesp has common shares (ON) and preferred shares (PN) traded on BM&FBOVESPA under the ticker symbols TLPP3 and TLPP4, respectively. The Company also has ADRs, which are traded on the NYSE, under ticker symbol TSP. The shares TLPP3 and TLPP4 closed the year priced at R$39.30 and R$
Slide 25: Telesp's Stocks Performance
Telesp's Stocks Performance (Baze 100 on December 30, 2009) us Dow Jones Tus tbovespe SP TLPPA 23 0 Dec09 —Fab-10 ‘Apr-10 jun-10——Aug-10 oct.10 Dec-10
Slide 26: Dividends and Interest on Own Capital
D IVIDENDS AND I NTEREST ON O WN C APITAL In accordance to the Company’s Bylaws, the Company shall distribute dividends of at least 25% of adjusted net income for the year, provided that amounts are available, being preferred shares entitled to dividends 10% higher that those attributed to common sh
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Slide 28: Telefonica Earnings Release
Telefonica Earings Rekease— 410 ‘Telecamunicagies de Sao Paulo S/A-TELESP. ‘Sao Paulo, February 16,2011 CC
Slide 29: Consolidated income statement
Domesticlong stance Intemational long stance Data tranerrission Interconnection PayTV Interconnection expenses Personnel expenses Outsourcing expenses Bad Debt provision Taxes Investment gins (losses) Other operating revenues (expenses) arings Before Deprecation/Armartization and Financial Revenues
Slide 30: Telefonica Earnings Release
Telefonica food eee ‘Sao Paulo, February 16,2011
Slide 31: Assets and Liabilities
ASSETS ‘curentaccets Cashand ash equivalents cezn Financial Investments Net accounts receivable from customers Supply and maintenance inventories Deffered and recoverable taxez Derivatives operations Lane and financial investments Recoverable prepa expenses Credit from szzocisted companies Other azz
Slide 32: Telefonica Earnings Release
Telefonica Earings Rekease— 410 ‘Telecamunicagies de Sao Paulo S/A-TELESP. ‘Sao Paulo, February 16,2011
Slide 33: Cash flow statement
(Cash andcach equivalents at the beginning of the period Income before taxes [Non-cash expenses (revenues) Depreciation and amortization Exchange variations on lane and financing Results ofequity accounting (Gsin)/locs on azzet sale Bad debt provision Pension and other post-retirement benefit plans
Slide 34: Telefonica Earnings Release
Telefonica Earings Rekease— 410 ‘Telecamunicagies de Sao Paulo S/A-TELESP. ‘Sao Paulo, February 16,2011 Oe
Slide 35: Tariffs - Fixed Line Services
Slide 36: Tariff notes
Notes: a) Effective as of October 8, 2010, the maximum net tariffs of Local Services, through Anatel's Edict# 6,419 of October 5, 2010, had a readjustment of 0.66% throughout the sectors 31, 32 and 34, incorporating the productivity gain of 2.633%, accordingtothe foreseen rules inthe Concession Agre
Slide 37: Telefonica Earnings Release
Telefonica Earings Rekease— 410 ‘Telecamunicagies de Sao Paulo S/A-TELESP. ‘Sao Paulo, February 16,2011 Oe
Slide 38: Disclaimer
DISCLAIMER This document contains statements that constitute forward-looking statements in its general meaning and within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this document and include statements regarding the intent, b