Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good morning ladies and gentlemen. At this time we would like to welcome everyone to the Telesp Celular Participacoes - TCP - third quarter 2003 conference call. Today, we have a simultaneous webcast, with slide presentation on the Internet that could be accessed at the site www.vivo-sp.com.br. There will be a replay facility for this call on the website.
We inform you that all participants will be able to listen to the conference during the company's presentation. After the company's remarks are over there will be a Q&A section. At that time further instructions will be given. Should any participant need assistance during this conference, please press '*' '0' for an operator.
Before proceeding let me mention that forward looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of TCP management, and on information currently available to the company. Forward-looking statements are not guarantees of performance, they involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future.
Investors should understand that general economic conditions, industry conditions and other operating factors could also affect future results of TCP, and could cause results to differ materially from those expressed in such forward looking statements.
Now I'll turn the conference over to Mr. Francisco Padinha, CEO of Telesp Celular Participacoes. Mr. Padinha, you may begin your conference.
FRANCISCO PADINHA, CEO AND PRESIDENT, TELESP CELULAR PARTICIPACOES: Good morning, or good afternoon, ladies and gentlemen. Thank you for joining us for TCP's Q3 Earnings Release conference call.
This conference call is being simultaneously transmitted over the Internet, and you may access a copy of this presentation from our website www.vivo-sp.com.br, Investor Relations section. Here with me today is Fernando Abella Garcia, CFO, and our Investor Relations team.
I just want to highlight that in order to facilitate comparisons, Q2 2003 is presented on a pro forma basis, consolidating TCO 100%.
To begin on slide three, by updating you on some of the quarterly highlights.
First, there was an improvement in the macroeconomic scenario. The reduction of 5 percentage points in CDI, the domestic interest rates, the slight maintenance of US dollars against Reals and Brazil's counter risk at a very low level, stood at 695 basis points. Additionally, the increase in foreign investments and the approval of some reforms also make us very confident for 2004.
Second, regarding the mobile market. Brazil experienced a significant growth this year when there was a total net additions of 6 million clients in the first nine months of 2003, of which 47% was just in Q3 2003.
Third, TCP has leading the growth of the market. Total net additions in TCP regions - Sao Paulo, Parana, Santa Catarina, north and mid-west - reached 1,436,000 in Q3 compared to 1,079,000 in Q2 2003, according to Anatel's data from September, showing that the entrance of a new competitor has boosted the market.
Fourth, another important event this quarter was the acquisition of BCP by [Claro] which - in our view - was good news because Sao Paulo region won't have a fourth competitor as we forecasted in the beginning of the year. Additionally, we have been competing with [Claro Tess] in area two since the beginning of its operations, so we know the competitor.
Fifth, regarding the Vivo brand. We have been achieving [top of mind] in most of the regions where Vivo is represented, reflecting the successful consolidation of the brands. Additionally, Vivo was recognized as the most admired company within the mobile telecom sector according to [Cathy] capital magazine, and the second of all telcos after Telefonica Fixed Operation.
Sixth - according to the SMP rules, there were two important factors this quarter that I would like to point out.
First, long-distance carrier selection. Since July 6, clients calling from a mobile must choose call-by-call a carrier for their long-distance calls. Consequently long-distance calls VC2 and VC3 are not included in total revenues any more, being substituted by the interconnection revenues.
Second, Bill & Keep. The operators under this regime must operate with the Bill & Keep, which started in August. This means that the interconnection fee is charged for just what exceeds 45% to 55% of the traffic amount to operators. Consequently there will be an impact in the connection revenues, and also on costs.
On slide four you can see that TCP market share of net additions increases 17 percentage points and reached 55% in Q3 2003 and 45% on an accumulated basis, showing that TCP has continued to lead the market growth in its regions, even maintaining a premium strategy.
It's important to point out that GT's market share of net additions reached more than 60%, TC 59%, and TCO 48%. All figures are based on Anatel's data. Total TCP net additions presented a significant growth this quarter and increased 95% compared to Q2 2003, reaching 788,000, reflecting not only the growth in commercial activities of the market, but the reduction of [shares] of TCP's operators showing these achievements of our retention policies.
On slide five you can see that our client base rose 21% year-over-year and 7% quarter-over-quarter. As discussed before, the market has been growing …