TIM Participacoes S.A
TIM Participacoes S.A. (TSU), Brazil’s second-largest mobile operator, is 67% owned by Telecom Italia (TI). It has more than 71.5 million customers using its services across 3,400 cities in Brazil, covering 94% of the country’s urban population. While the unemployment rate in Brazil has risen slightly in recent months, it’s still much healthier than it was a decade earlier. Brazilians are earning and consuming more and TI’s wireless business benefits as a result.
TSU currently generates 58% of its revenue from mobile, compared to 42% for its fixed-line business. (Just three years ago, its fixed-line business accounted for 55% of its overall revenue.) The company is first overall in the prepaid market with a 28.53% share, and second in the smaller, postpaid market. Overall, its market share at the end of the first quarter sat at 27%, 180 basis points behind Telefonica Brazil’s (VIV) Vivo mobile.
But with Brazil’s wireless market fairly saturated, the key to TIM’s success will be its value-added services like data plans, etc. In the first quarter of 2013, TIM’s value-added services grew 24% year-over-year and accounted for 21.4% of its mobile revenue, a 330 basis point improvement from Q1 2012. A major reason for this increase is smart phones, which account for 70% of its headset sales — and don’t forget that higher-end phones, lead to higher-price data plans.
TIM’s stock is down 3% year-to-date through July 29 — a heck of a lot better than Brazilian stocks on the whole. Without exports dwelling on its business, I like its future.