Annual Report
Total Page:16
File Type:pdf, Size:1020Kb
2007 annual report « 3 » INDEX 01.Company Profile 4 02.NET Serviços Strategy 5 03.Mission, Values and Quality Policy 8 04.Ownership Structure 10 05.Selected Indicators 11 06.Corporate Governance 12 07.Operating Performance 19 08.Products and Services 21 09.Outlook for 2008 23 10.Social Responsibility 24 01.COMPANY PROFILE Net Serviços de Comunicação S.A. (NET) is the largest cable company in Brazil and one of the largest in Latin America, with integrated services that include Pay TV (“NET”), Digital Video (“NET Digital”), High Definition Digital Video (“NET Digital HD”), bidirectional broadband internet access (“NET Vírtua”) and voice (“NET Fone via Embratel”), NET shares are traded on the São Paulo Stock Exchange (Bovespa: NETC3 and NETC4), Nasdaq (NETC) and Latibex (XNET). On the Bovespa, its shares trade on the exchange’s Level 2 corporate-governance listing segment. The investments in the network to increase its bidirectional capacity were important part of the Company’s strategy to become more of a multi-service company and consolidate its market positioning as the leading provider of converging services through NET Combo, its integrated video, data and voice offering. Present in 79 cities in Brazil, including some of the most densely populated metropolitan areas, namely São Paulo, Rio de Janeiro, Belo Horizonte, Porto Alegre, Recife, Brasília, Goiânia, Curitiba and Florianópolis, NET offers voice, pay TV and broadband internet services through a single cable. Cities Bragança São Caetano Goiânia Chapecó SP Caçapava São Vicente Anápolis RS São Paulo Cubatão São J. do Rio Preto MS Santos Diadema Santa B. Oeste Porto Alegre Campinas Guarujá Sumaré Campo Grande Bagé Indaiatuba Hortolândia Taubaté Bento Gonçalves AM Ribeirão Preto Itapetininga Caxias do Sul RJ Franca Itu Manaus Cruz Alta São Carlos Jacareí Rio de Janeiro Erechim PR São José dos Campos Limeira Barra Mansa Farroupilha Bauru Mauá Resende Curitiba Lajeado Jundiaí Mogi das Cruzes Londrina Litoral (diverse cities) MG Sorocaba Mogi -Guaçu Maringá Novo Hamburgo Piracicaba Mogi-Mirim Belo Horizonte Arapongas Passo Fundo Americana Pindamonhangaba Pelotas PE SC Araçatuba Praia Grande Rio Grande Araraquara Rio Claro Recife Florianópolis Santa Cruz do Sul Araras Santa Branca Criciúma Santa Maria Atibaia Santo André GO Joinville Bertioga São Bernardo Brasília Blumenau NET Serviços S.A. | 2007 Annual Report « 5 » The chart below shows the Company’s corporate structure: PLANNING, CONTROL AND POLICIES MSO MKT AND FINANCELEGALDO TECHNOLOGY SERVICES SALES EXECUTION RIO DE BELO INTERIOR SÃO PAULO SOUTH CAMPINAS JANEIRO HORIZONTE BRAZIL BRANCHES 02.NET SERVIÇOS STRATEGY NET’s strategy is based on three basic principles: accelerated growth, sustainable profitability and excellence in customer service. BASIC PRINCIPLES Accelerated growth Sustainable profitrability Excellence in service quality COMPLETE SOLUTION Services, not a produtc RELATIONSHIP Client = greatest asset OPERATING MARKETS Entertainment Communication Information NET Serviços S.A. | 2007 Annual Report Until 2006, the company’s focus was on selling a single product: Pay TV. Starting in 2007, efforts were concentrated on bundled packages offering several different services to the same household. Starting next year, the Company expects to start concentrating on offering products personalized for each individual. Accelerated growth Today NET has a network work that covers 45% of households in the A and B income groups, with 80% of its client base classified under these two income groups. In 2007, the Company consolidated the operations of Vivax, adding 373 thousand new subscribers to its client base. In 2007, NET was the fastest- growing company in the market in both pay TV and broadband. To ensure the success of its strategy of accelerated growth, NET has positioned itself as a complete home solution through its triple play offering. The benefits of the triple play product are higher ARPU (average revenue per user), higher operational efficiency (synergies in costs and infrastructure) and increased customer loyalty. For clients, the benefits are a better cost/benefit relationship (the more NET products the greater the advantage), greater convenience (one-stop shop) and NET service quality (information, entertainment and communication in all rooms of the home). THE BEST PAY TV SOLUTION » Best and most-complete programming – Globosat, Discovery, Fox, Telecine and HBO » High-quality digital image and sound, high definition and DVR – Net Digital » Interactive resources that add value to the experience THE BEST BROADBAND SOLUTION » Faster - Megaflash » Less expensive – no charge for modem, installation and ISP » More convenient – frees up phone line A NEW VOICE OPTION » More economical – free local calls and local charges for domestic long distance (from NET to NET) » Simplicity, convenience and flexibility – flexible basic charge, single fee and charges per minute » Smart services – follow me, caller ID, three-way conference call NET Serviços S.A. | 2007 Annual Report « 7 » Sustainable profitability In 2007, NET Serviços reported year-on-year growth in EBITDA (earnings before interest, tax, depreciation and amortization) of 29% and in Revenue Generating Units of 51%. EBITDA UGR (R$ Millions) 51% 26% 804 5,041 639 3,366 2006 2007 2006 2007 Excellence in service quality NET considers itself a services company, and therefore has worked hard to offer high-quality products and services as well as achieve high levels of customer satisfaction regarding its cable and broadband products and its customer service. The Company offers the best and most complete pay TV programming, which includes Globosat, Discovery, Fox, Telecine and HBO, high-quality digital image and sound, high definition, DVR – Net Digital and interactive resources. Its broadband services are known for their high speed, low cost (no charge for modem, installation and ISP) and convenience (no use of phone line). And the voice service offers savings with free local calls and local rates for domestic long-distance calls (from NET to NET), along with simplicity, convenience and flexible pricing, with flexible basic plans, a single charge, billing per minute, as well as smart services (follow-me, caller ID and three-way conference calls). Focus on products Focus on products per Focus on personalized household products/services 2006 2007/2008 2009 NET Serviços S.A. | 2007 Annual Report 03.MISSION, VALUES AND QUALITY POLICY MISSION “To be the best multi-service cable solution, connecting people to the world from their homes.” We want to be recognized for our service excellence through: » High levels of motivation, responsibility and commitment » Excellent knowledge and involvement with customers, forging strong relationships and high levels of confidence » Continuous modernization and innovation of technologies and internal processes Connecting people to the world from their homes: » Focus on benefiting people and families in their homes » People’s homes are the starting point for connecting them to the world » We want to meet with excellence the expectations of each family member and ensure their satisfaction. We want to take the world to the comfort of people’s homes. We do not want to be merely another option, but rather the best solution for our customers, whether through their computer, telephone, TV or any other media connecting them to the world from their homes. VALUES “Integrity, results, excellence, teamwork and pragmatic attitudes.” Values are the pillars that support the company, guiding it towards the achievement of its objectives. A company’s values describe how it goes about its day-to-day activities to fulfill its mission. » Integrity - Integrity is a fundamental principle in the conduction of our business and relationships. » Results - Generate value for customers, shareholders, employees and partners, thereby ensuring the company’s sustainable growth. » Excellence - Always strive to improve services and continuously develop people. » Teamwork - Share knowledge and obtain results through mutual cooperation, respecting the characteristics of each individual. » Pragmatic attitudes - Act efficiently, quickly and objectively. NET Serviços S.A. | 2007 Annual Report « 9 » QUALITY POLICY “Everybody is responsible for assuring quality and the continuous pursuit of excellence.” The level of customers’ satisfaction with the company is the measure of success of the quality of its products and services. The results of our activities and the constant pursuit of excellence are the pillars supporting the continuous improvement of the quality system. These pillars are continually measured and their progress is regularly assessed. Based on these actions, metrics are then determined to ensure consistent progress in the improvement process. The Quality Policy must be understood and exercised by everyone in the company. This involves mobilizing everyone, without exception, in the challenge of surpassing the expectations of internal and external customers. We must tenaciously pursue service excellence. NET Serviços S.A. | 2007 Annual Report 04.OWNERSHIP STRUCTURE Together, Globo and Telmex, directly or through their respective subsidiaries, currently hold 99% of the common shares; the Globo Group continues to control, through GB, most of the outstanding voting shares, although Telmex has substantial approval rights according to the new shareholders’ agreement. Pursuant to current legislation, because it is not Brazilian, Telmex is prohibited from holding a controlling interest in NET Serviços.