1. Contacts:
Tele Nordeste Celular Participações S.A.
Walmir Urbano Kesseli
55.81.3216.2591
Fabíola Almeida
55.81.3216.2594
fabiola.almeida@timnordeste.com.br
Polyana Maciel
55.81.3216.2593
polyana.maciel@timnordeste.com.br
TELE NORDESTE CELULAR PARTICIPAÇÕES S.A.
ANNOUNCES SECOND QUARTER 2001 RESULTS
Recife, Brazil (August 6, 2001) – Tele Nordeste Celular Participações S.A. (NYSE: TND,
BOVESPA: TNEP3, TNEP4) (“Tele Nordeste Celular” or “the Company”), the holding company
controlling the operating companies serving Band A cellular telecommunication clients in the
states of Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco and Alagoas, under the TIM
brand name, announced today its results for the second quarter of 2001 in accordance with
Brazilian GAAP.
! 65% of market share at the end of June 2001;
! 37.6% of EBITDA margin in the quarter, reaching R$75.8 million;
! Reduction of 13.3% at the bad debt expenses quarter over quarter.
Operational Highlights
Commercial activities during the second quarter of 2001 resulted in the consolidated gross
addition of 136,680 clients (of which 93,660, or 68.5%, were prepaid). Consolidated net
additions during the second quarter of 2001 totaled 68,215 clients (of which 65,784, or 96.4%,
were prepaid), as a result of the disconnection of 10,000 clients from the post-paid system
because of bad debt. The purpose of those disconnection was to clean the clients base, as a
way to reduce and control the bad debt. Excluding those disconnection, the consolidated net
additions for the second quarter of 2001 was 78,215 clients.
Together, Tele Nordeste Celular’s operating companies, had a total of 1,624,834 clients on
June 30, 2001, of which 819,034 (50.4%) were post-paid clients and 805,800 (49.6%) were
prepaid clients. The market share at the end of the second quarter of 2001 was estimated at
65%.
The subscriber acquisition cost was R$143 in the second quarter of 2001, compared to R$100
during the first quarter of 2001 and R$132 during the second quarter of 2000. Accumulated for
the year, the subscriber acquisition cost was R$119, compared to R$151, during the same
period of 2000.
As a result of the intensification of the collections and billing activities and the adoption of
rigorous collections procedures and polices, the bad debt levels are showing an improvement.
During the second quarter of 2001, the bad debt was 4.2% of gross revenue, against 4.8%
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2. during the first quarter of 2001 and 11.1% during the second quarter of 2000. Accumulated for
the year the bad debt was 4.5% over the gross revenue, compared to 9.1% during the same
period of 2000.
During the second quarter, there were two strong campaigns: Mother’s Day (with the sale of
subsidized handsets only for the post-paid clients, always linked to one of our special plans,
where the client remains at least one year with our plant) and the Valentines’ Day (with the
launching of the Timmy Duet, where a prepaid client chooses another client and starts to have a
special tariff when calling the chosen number and vice-versa. Timmy Duet is one more initiative
of the Company with the intention of developing the traffic in the prepaid system).
Financial Highlights
Tele Nordeste Celular’s consolidated net income for the second quarter of 2001, was R$ 12.9
million, or R$0.04 per 1,000 shares, against to R$10.1 million during the first quarter of 2001,
and R$916 thousands during the second quarter of 2000. Accumulated consolidated net income
for the year 2001 was R$23.0 million, compared to R$12.1 million, during the same period of
2000.
For the second quarter of 2001, Tele Nordeste Celular reported consolidated EBITDA e EBIT of
R$75.8 million and R$32.4 million, respectively, representing an EBITDA margin of 37.6% and
an EBIT margin of 16.1% over the consolidated net revenue, compared to EBITDA of R$79.2
million and EBIT of R$36.9 million, representing an EBITDA margin of 39.2% and EBIT margin
of 18.3% over the consolidated net revenue reported for the first quarter of 2001, and compared
to EBITDA of R$52.9 million e EBIT of R$21.4 million, representing an EBITDA margin of 25.1%
and an EBIT margin of 10.2% over the consolidated net revenue reported for the second quarter
of 2000.
Accumulated for the year 2001, consolidated EBITDA and EBIT were R$155.1 million and
R$69.4 million, respectively, representing an EBITDA margin of 38.4% and an EBIT margin of
17.2% over the consolidated net revenue, compared to a consolidated EBITDA and EBIT of
R$126.2 million and R$ 68.7 million, respectively, representing an EBITDA margin of 29.7% and
an EBIT margin of 16.2%, during the same period of 2000.
EBITDA (in US$000)
100
80
60
40
20
00
1Q/00 2Q/00 3Q/00 4Q/00 1Q/01 2Q/01
Consolidated net operating revenue for the second quarter of 2001 reached R$201.8 million,
against to R$202.3 million during the first quarter of 2001, and R$210.8 million during the
second quarter of 2000. Accumulated for the year, consolidated net operating revenue reached
R$404.2 million, against to R$425.3 million during the same period of 2000.
Consolidated net operating revenue during the second quarter of 2001 decreased 0.2% when
compared to the first quarter of 2001. This reduction was due to a lower usage changes
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3. revenue, roughly 13.3%, provoked by the increase of the special plans in our clients base,
which offer lower tariffs for the post-paid clients which option for these kind of plans and signed
a contract with us with the commitment to stay in our plant for a minimum period of 12 months.
These special plans are part of a program to fidelity the clients adopted by the Tele Nordeste
Celular’s operating companies.
Another important factor was the reduction on handsets sales, of roughly 34.5%, caused by the
outsourcing of the distribution of the handsets to the Dealers, nowadays the Tele Nordeste
Celular’s operating companies sell handsets only in their own stories. Considering only the
telecom services revenue there was an increase of 0.5% compared to the first quarter of 2001,
provoked by the increase of 18.0% in the interconnection revenue.
When compared to the second quarter of 2000, consolidated net operating revenue decreased
4.3%. This reduction was mainly due to the lower volume of handset sales, of roughly 74.2%.
Excluding the handsets sales, the telecom services revenue grew 7.3%.
Accumulated for the year, consolidated net operating revenue reached R$404,0 million,
representing a decrease of 5.0%, when compared to the same period of 2000.
Net Operating Revenue (in US$000)
220
215
210
205
200
195
190
1Q/00 2Q/00 3Q/00 4Q/00 1Q/01 2Q/01
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4. Selected Consolidated Financial Data (in thousands of Reais)
st
2001 2000 1 Semester
2º Qtr. 1º Qtr. 2º Qtr. 2001 2000
Revenue
- Usage charges 98,449 113,530 120,184 211,979 256,029
- Monthly subscription payments 43,801 42,733 38,523 86,534 90,716
- Network usage charges 100,329 84,993 66,597 185,322 128,109
- Sale of handsets 9,946 15,191 38,550 25,137 69,924
- Other 960 1,113 1,657 2,073 (51)
Subtotal 253,485 257,560 265,511 511,045 544,727
- Value added and other indirect taxes (51,730) (55,300) (54,718) (107,030) (119,457)
Net Operating Revenue 201,755 202,260 210,793 404,015 425,270
Cost of services and of goods sold
- Depreciation e amortization (31,202) (29,973) (27,368) (61,175) (51,725)
- Personnel (2,521) (2,481) (1,315) (5,002) (4,059)
- Materials and services (106) (137) (92) (243) (204)
- Circuit leasing and related expenses (7,166) (8,849) (8,631) (16,015) (16,619)
- Leases and insurance (3,377) (2,938) (2,246) (6,315) (4,466)
- Cellular handset costs (11,088) (12,545) (36,793) (23,633) (68,512)
- Fistel (242) (182) (293) (424) (400)
- Plant support and maintenance (1,724) (1,761) (95) (3,485) (250)
- Network usage charges (27,313) (27,559) (24,022) (54,872) (50,152)
- Other (1,620) (2,114) (1,497) (3,734) (2,958)
Subtotal (86,359) (88,539) (102,352) (174,898) (199,345)
Gross Profit 115,396 113,721 108,441 229,117 225,925
Consolidated gross profit for the second quarter of 2001 reached R$115.4 million, representing
an increase of 1.5% when compared to the first quarter 2001 and an increase of 6.4% when
compared to the second quarter of 2000. These growth were due to a reduction in the cost of
handsets sales, provoked by the outsourcing of distribution of handsets to the Dealers.
Accumulated for the year 2001, consolidated gross profit reached R$229.1, representing a
growth of 1.4%, when compared to the same period of 2000.
Gross Profit (in US$000)
150
100
50
00
1Q/00 2Q/00 3Q/00 4Q/00 1Q/01 2Q/01
Selected Consolidated Financial Data (in thousands of Reais)
st
2001 2000 1 Semester
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5. 2º Qtr. 1º Qtr. 2º Qtr. 2001 2000
Operating Expenses
- Selling 54,820 48,110 56,866 102,930 109,333
- General and administrative 23,179 24,774 24,222 47,953 42,469
- Other operating expenses, net 4,971 3,897 5,999 8,868 5,391
Subtotal 82,970 76,781 87,087 159,751 157,193
- Net financing expenses 10,329 17,114 22,363 27,443 43,336
Total 93,299 93,895 109,450 187,194 200,529
Consolidated net operating expenses decreased 0.6% compared to the first quarter of 2001,
and 14.8% when compared to the second quarter of 2000. The reduction when compared to the
first quarter of 2001 was mainly due to lower financial expenses, while the reduction when
compared to the second quarter of 2000 was due to lower selling expenses (mainly bad debt)
and lower financial expenses.
Accumulated for the year 2001, consolidated net operating expenses reached R$187.2 million,
representing a reduction of 6.6%, when compared to the same period of 2000.
Consolidated bad debt expenses during the second quarter of 2001 reached R$10.7 million,
representing 4.2% over the gross revenue and showing a reduction of 13.3% (from R$12.3
million to R$10.7 million) when compared to the first quarter of 2001, and a reduction of 63.9%
when compared to the second quarter of 2000. Accumulated for the year 2001, consolidated
bad debt expenses reached R$23.0 million, representing 4.5% over the gross revenue, that
means a reduction of 53.8% when compared to the same period of 2000.
Net Operating Expenses (in US$000)
150
100
50
00
1Q/00 2Q/00 3Q/00 4Q/00 1Q/01 2Q/01
Payment of Dividends and Interest on Shareholders’ Equity
Following the instructions of the Ordinary General Shareholders’ Meeting of April 30, 2001, the
Company stated at July 2nd, 2001 the payment of Interest on Shareholders’ Equity and
Dividends for the fiscal year ended December 31. 2000, in a total amount of R$10.3 million, of
this, R$1.2 million were income taxes.
The table below shows the amount per a lot of 1,000 shares, adjusted by the “Taxa Referencial
– TR – a local interest rate, since the distribution date (12/31/2000) until the payment date
(07/02/2001):
Event Net Amount (In Reais)
Tax Immune/Exempt Taxed
Common Preferred Common Preferred
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6. Interest on Own Capital – JSCP
0.0231 0.0231 0.0196 0.0196
Dividends 0.0079 0.0079 0.0079 0.0079
Amortization of Goodwill
On June 30, 2000 Tele Nordeste Celular and its operating companies completed a restructuring
that resulted in the transfer of the premium paid during the privatization process from Bitel
Participações S.A., the parent company of Tele Nordeste Celular, to each one of the operating
companies. This restructuring is aimed at taking advantage of a fiscal benefit estimated at
R$200 million over 8 years, through to 2008, which will be incorporated into their share capital
by the operating companies, with significant financial benefits for them. A proposal for the
merger of the operating companies is awaiting Anatel approval.
During the second quarter of 2001 the consolidated amortization of the premium, net of reversal
of the provision for the integrity of shareholder’s equity, was R$6.3 million, generating a fiscal
benefit on the order of R$5.4 million. Accumulated for the year 2001, the consolidated
amortization of the premium, net of reversal of the provision for the integrity of shareholders’
equity, was R$12.6 million, generating a fiscal benefit on the order of R$11.6 million.
Capitalization of the Fiscal Benefit and Rerained Profits
The Extraordinary General Shareholders Meeting of June 22, 2001 ratified the Company’s
capital increase of R$11.0 million, equivalent to the fiscal benefit generated during the year
2000 and the Company’s capital increase in the amount of R$66.2 million, equivalent to a part
of the retained profits, in order to comply with Brazilian laws, regarding the limit of the profits
reserves in relation to the capital.
After the ratification, the Company’ social capital reached R$186,053,906.53.
ARPU
The blended average revenue per user (ARPU), net of taxes, for the second quarter of 2001
was R$41.42 per month, compared to R$41.83 per month in the first quarter of 2001, and
R$45.63 per month for the second quarter of 2000. These reductions when compared to the first
quarter of 2001 and the second quarter of 2000, were due to the increase of prepaid clients at
out plan.
In 2001 blocking is carried out on a partial basis, and as a result, only incoming traffic revenues
are generated by these clients. On June 30, the clients base was 49.6% prepaid and 50.4%
postpaid.
Competition (not revised)
The Company estimates that its market share at the end of the second quarter of 2001 was
approximately 65% in terms of number of accesses. The penetration rate in the region at the
end of June 2001 was estimated at 9.0%, against roughly 16.3% Brazilian average (23 million
lines).
Debt Profile
Consolidated debt at June 30, 2001, was R$373.2 million, with R$34.2 million maturing in the
short-term. The debt in foreign currency totaled R$172.0 million, of this R$169.8 million was
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7. totally converted to Reais with pre-fixed costs, in line with the Company’s policy of minimizing
exposure to foreign currency risks and interest rate fluctuations.
Capital Expenditures
During the second quarter of 2001, the company invested R$26.6 million. The investments were
directed to expansion, digitalization and optimization of the network.
On June30, 2001 the Company had 887 radio base stations (RBEs), of which 10 were mobile
and provided service in 307 municipalities that corresponded to coverage of 74.5% of the
population. Network digitalization was of the order of 74.3%; that is, 74.3% of voice channels
were digital, with 92% of its clients using digital handsets.
Human Resources
The number of employees at June 30, 2001, totaled 1,570, including full-time, interns and
temporary employees.
Annexes:
- Selected historical statistics
- EBITDA calculus
- Financial statements as of June 30, 2001 and 2000
This press release contains forward-looking statements. Statements that are not statements of historical fact only reflect the beliefs and
expectations of the Company’s management. The words “anticipates,” “believes,” “estimates,” “expects,” forecasts,” predicts,” “plans, ”
“projects,” and similar words are intended to identify these statements, which necessarily involve known and unknown risks and uncertainties,
forecast or not by the Company. Accordingly, the actual results of operations of the Company may be different from the Company’s current
expectations, and the reader should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of
the date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments.
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8. Consolidated Statistics
nd st nd
2 Qtr/01 1 Qtr/01 2 Qtr/00
Clients
- Total 1,624,834 1,556,619 1,361,669
Net Additions 68,215 45,619 98,417
Market share (%) 65 66 66
Market share marginal (%) 55 77 41
Growth over same period of the previous year (%) 15.1 18.5 78.1
Estimated population of region (in million) 26.4 26.3 26.2
Penetration rate (%)
- Tele Nordeste 6.2 5.9 5.4
- Total 9.5 9.0 8.1
Municipalities covered 307 307 297
MOU total 132 136 151
Churn Total (%) 4.3 5.8 8.9
ARPU (R$)
- Total 41.42 41.83 45.63
SAC – Client acquisition cost (R$) 142.77 100.38 132.43
Digitalization rate (%)
- Network 74 74 66
- Clients 92 90 82
Coverage
- Population 75 75 74
- Geographical area 29 29 28
Workforce 1,570 1,648 1,177
EBITDA (in thousands of Reais)
nd st nd
2 Qtr/01 1 Qtr/01 2 Qtr/00
Net operational revenue 201,755 202,260 210,793
Operational income 22,097 19,826 (1,009)
Depreciation 37,118 35,993 29,741
Amortization of the goodwill 6,294 6,297 1,767
Financial income (8,385) (4,501) (464)
Financial expenses 18,714 21,615 22,827
EBITDA 75,838 79,230 52,862
% EBITDA 37.6 39.2 25.1
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9. Balance Sheet
At June 30, 2001 and June 30, 2000
(In Thousands of Reais)
Parent Company Consolidated
30.06.2001 30.06.2000 30.06.2001 30.06.2000
Assets
Current Assets
Cash and cash equivalents 2,091 524 98,015 10,475
Trade accounts receivable – clients - - 103,952 182,022
Inventories 56 37 7,968 13,678
Telecommunications companies - - 49,526 30,671
Trade accounts receivable – Subsidiaries - 14,453 - -
Recoverable taxes 2,186 3,171 40,870 44,291
Deferred income and social contribution taxes 1,080 118 42,728 24,756
Dividends and interest on shareholder’s equity - 4,078 - -
Prepaid expenses 44 - 11,164 10,728
Other assets 1,177 1,704 10,181 16,784
6,634 24,085 364,404 333,405
Noncurrent assets
Loan to subsidiaries 12,509 5,293 - -
Tax incentives - - 2,190 1,912
Deferred income and social contribution taxes - - 153,999 -
Legal deposits - - 3,230 879
12,509 5,293 159,419 2,791
Permanent assets
Investments 597,087 544,312 12,300 1
Property, plant and equipment 4,612 5,297 682,408 704,239
Deferred asset - - - 202,300
601,699 549,609 694,708 906,540
620,842 578,987 1,218,531 1,242,736
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10. Balance Sheet
At June 30, 2001 and June 30, 2000
(In Thousands of Reais)
Parent Company Consolidated
30.06.2001 30.06.2000 30.06.2001 30.06.2000
Liabilities and shareholder’s Equity
Current liabilities
Suppliers 844 926 36,302 74,753
Loans and financing - - 34,168 350,740
Debentures - - 7,764 -
Taxes payable 784 902 35,295 51,098
Salaries and vacation pay 2,304 1,573 5,821 7,322
Subsidiaries 2,973 100 - -
Telecommunication companies - - 14,470 14,118
Dividends and interest shareholder’s equity 2,861 2,400 7,809 7,586
Other liabilities 12,237 1,461 25,998 19,979
22,003 7,362 167,627 525,596
Noncurrent liabilities
Loans and financing - - 138,995 41,920
Debentures - - 200,000 -
Other liabilities - - 903 1,972
- - 339,898 43,892
Minority interest - - 112,167 101,623
Shareholder’s equity
Capital 186,054 108,843 186,054 108,843
Special reserves 193,083 204,068 193,083 204,068
Earnings reserves 170,405 178,922 170,405 178,922
Retained earnings 49,297 79,792 49,297 79,792
598,839 571,625 598,839 571,625
620,842 578,987 1,218,531 1,242,736
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11. Statement of Income
For the quarters and semesters ended June 30,2001 and June 30,2000
(In Thousands of Reais)
Parent Company Consolidated
Quarter Semester Quarter Semester Quarter Semester Quarter Semester
ended ended ended ended ended ended ended ended
30.06.2001 30.06.2001 30.06.2000 30.06.2000 30.06.2001 30.06.2001 30.06.2000 30.06.2000
Revenue
Telecommunication services and
sale of goods - - - - 253,485 511,045 265,511 544,727
Deductions
(taxes and discounts) - - - - (51,730) (107,030) (54,718) (119,457)
Net Revenue - - - - 201,755 404,015 210,793 425,270
Cost of good sold and services
rendered - - - - (86,359) (174,898) (96,450) (199,345)
Gross profit - - - - 115,396 229,117 114,343 225,925
Operating revenues (expenses)
Selling expenses - - - - (54,820) (102,930) (62,768) (109,333)
Administrative and general
expenses (102) (4,440) (1,156) (2,963) (23,179) (47,953) (24,222) (42,469)
Financial expenses (559) (475) (173) (230) (44,830) (40,329) (22,827) (47,832)
Financial income 200 111 1,409 2,143 34,501 12,886 464 4,496
Equity in income of subsidiaries 12,915 28,304 3,867 15,775 - - - -
Other operating income 766 765 - - 3,584 8,945 2,872 3,690
Other operating expenses (77) (872) (1,085) (1,159) (8,555) (17,814) (8,871) (9,081)
Operating income (loss) 13,143 23,393 2,862 13,566 22,097 41,922 (1,009) 25,396
Nonoperating income 31 31 (17) - 1,339 1,496 724 1,029
Nonoperating expenses (35) (36) - - (2,527) (2,668) (347) (545)
Income before income and
social contribution taxes 13,139 23,388 2,845 13,566 20,909 40,750 (632) 25,880
Income and social contribution
taxes - - (439) - (3,913) (8,792) 1,407 (10,183)
Reversal of interest on
shareholder’s equity - - - - - - 1,227 1,227
Employees Interest (244) (433) - - (602) (1,089) (307) (548)
Net income before minority
interest 12,895 22,955 2,406 13,566 16,394 30,869 1,695 16,376
Minority interest - - - - (3,499) (7,914) (779) (4,300)
Net Income (loss) 12,895 22,955 2,406 13,566 12,895 22,955 916 12,076
Net income (loss) per lot of a
thousand shares (R$) 0.0382 0.0680 0.0072 0.0406
Number of shares at June 30,
2001 (thousands) 337,768,635 337,768,635 334,399,028 334,399,028
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