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Merril Lynch LatAm Conference

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Merril Lynch LatAm Conference Powered By Docstoc
					LatAm All-in-One Conference
Merrill Lynch
February 04-06, 2009
Agenda




   Brazilian Telecommunications Market   2

   Oi: Transformation History            9

   Our Strategy and its Major Results    13

   Operational and Financial Results     20

   Brasil Telecom Acquisition            28

   Expectations for the Future           40




                                              1
Brazil is a Big Country With International Relevance




   Brazil and its relevant internationally…

                                                                      • 190 MN inhabitants
        >US$900bn
           GDP
                                                                      • 56 MN Households* (85% urban)
                                                                      • US$1,460 billion GDP
                      Germany, Spain,
                                                                      • 42% of the total Brazilian income is held by
                      France, Italy, UK
                                                                      9.6% of the households

                                                                      • 74.5% of households with less than 5 minimum
                  Japan           Canada                              wages (R$2,075 / US$888)
                           USA,
                           BRIC
          Bangladesh,                                                 • Brazil is reaching a new pace of growth
            Nigeria,                  Australia                       • 10th economy in the world (GDP=US$1.3
           Paquistan,
           Indonesia                                                  trillion)
                                                                      • PC Penetration of 27% per household, 12p.p.
                                                                      higher than 2003 numbers
                                                                      • Some of this increased demand was driven by
               >100mn                                                 rising incomes and better incomes distribution
                                          >3mn km2
             inhabitants




Source: PNAD 2007 *Includes households without declaration of income and without income.
                                                                                                                       2
Brazilian telecom market is relevant worldwide and is the most important
market in Latin America



   World                                                           Latin America


     • 5th largest mobile market in the world in
                                                                  • Fixed: largest fixed market (41mn), 104% above
       June 08 (133mn), behind:                                     second place (Mexico)

        – China: 601mn, India: 287mn, USA: 262mn,                 • Mobile: 133 mn users in June 2008, which is 84%
          Russia: 173mn                                             above Mexico (2nd place). Penetrations of 70% is much
                                                                    below Argentina (110%), Chile (91%) and Venezuela
     • 5th largest fixed telecom market in the                      (94%)

       world (41mn), behind:                                      • Broadband (2007): Biggest broadband market in
                                                                    Latin America (8mn users; 14% of households) vs
        – China: 365mn, USA: 172mn, Japan: 59mn,
                                                                    Mexico (6mn; 27%), Argentina (2mn; 20%) and Chile
          Germany: 54mn                                             (1mn; 44%)

     • 6th largest internet market in the world:                  • Internet users: 45 mn users, followed by Mexico with
                                                                    24 mn, Argentina with 20 mn and Chile 7 mn
       (44.9mn subscribers on March 08, largest in
                                                                  • PC Market:
       America Latina) and 4th biggest PC market
                                                                    – Brazil has 15 million households with PC in 2007
        – Broadband still incipient: 10th country › Room               (market has been growing approximately 30% per

          to grow                                                      year in the last two years)




Source: ANATEL, IBGE, Teleco, ML Wireless, UNCTAD and Internet World Stats                                                  3
Brazilian Telecom Sector Evolution



                                                                                                            08
                                                                        03
                                          98
                                                                                      Currently
                95                                   Post-Privatization
                      Pre-Privatization          Focus on universal and
                                                  quality of services
                  Construction of Regulatory                                      Focus on Competition
                   Framework
  Regulation


                  Wireline: Mainly analogyc     Wireline and wireless             Convergence in early
                  Wireless: Analogyc only        expanded                           stages
  Technology
                                                 Platforms clearly differentiated  3G launch
                                                 GSM Launch                        Quadruple-play initiatives
                                                                                     incipient

                  State owned Monopoly          Multiple players, after          Tough in mobile; increase
                  26 integrated (Fixed &         privatization                     in broadband; less intense
  Competition      Mobile) operators and 1 LD                                       in fixed
                   carrier                                                         Consolidation Trends


                  Pent-up demand in fixed       Huge growth in fixed and         Maturity of Fixed
    Market         and mobile                     mobile penetration               Increase in mobile and
                  Internet access only          Broadband start-up                broadband markets
                   through dial-up               Pay-TV incipient                 Bundle services expansion,
                                                                                    claiming one-stop-shop
                                                                                                                  4
 Competition: Main Telecom Groups in Brazil
 Market Share of Subscribers and Revenues - September 2008


                      New Oi***                                      Telefonica***                                 TIM
     Oi + BrT Fixed           Oi + BrT Mobile*                                                                (Mobile only)
                                                          Telefonica                   Vivo**


          Regions I and II         National
                                                                                          National
                                                                                                                    National




      54%                       20%                                    Region III
                                                                                                             25%
                                                         29%                        30%




                  Telmex / AMX                                 GVT
                                                                                    Revenues market-share
         Embratel                     Claro                 (Fixed only)
                                                                                    September/08
                                                                                      • New Oi (Oi + BrT): 30%
                                                                                      • Telefónica + Vivo: 29%
          Region IV                     National               Region II              • Claro + Net + Embratel: 22%
                                                                                      • TIM: 12%

      12%                        25%                      5%                          • GVT: 1%



       National Market Share of Fixed Lines in Service         National Market Share of Mobile Phone Users

* Includes Tele Norte Celular ** Includes Telemig Celular
*** Also operates Long Distance and Data Transmission Nationally                                                               5
 Brazilian Telecom Sector – Long Term Trends
 Traditional fixed services facing adverse scenario whereas mobile and
 broadband maintain a strong rhythm of growth

              Market Trends                                         Brazilian Market (Fixed, Mobile and Broadband)
                                                                    Access lines (millions)
                    Mature local fixed voice
                     – Accesses losses (FMS in accesses)                 Broadband

                     – Lower traffic per terminal (FMS in                Mobile
     Fixed             traffic)                                          Fixed                                    191.6
                     – More competitive market in high-end                                           167.7         9.6
                       and SME (new entrants)
                     – Penetration: 51% of households                                                 7.7
                    Continued expansion in the mobile
                     market with strong competition
                     – Strong market evolution, mainly in the
     Mobile            pre-paid (naked sim-card) market
                                                                                                                   141
                     – Stable ARPU for the industry                                    74.7
                                                                                                     121
                     – Different business models
                                                                                        0.7
                     – Penetration: 73% of inhabitants
                                                                                        35
                  Broadband growth accelerates                          27.0
                   – Fierce competition in areas that
                     concentrate high-end clients                          7
     Broad
                   – Continuous expansion and falling ARPU                              39             39           41
     band
                                                                          20
                   – 3G changes the dynamic of the industry
                   – Penetration:18% of households                         1998         2002         2007        Sep/08


Source: ANATEL, Teleco and Team analysis; FMS - Fixed to Mobile Substitution; SME - Small & Medium Enterprises
                                                                                                                          6
Brazilian Telecom Sector – Mobile and Broadband Markets
Net additions have accelerated in the mobile and broadband markets


 Mobile Market                                               Broadband Market

 million customers                                           thousand customers
                                                                                                                9,577
                                                                 ADSL        Others
                                              150.6                                                     7,718 2,851
                                121.0         37,9
                     99.9                             RIII                                              2,128
                                29,3                                                            5,656
      86.2
                                              38,9
                     24,3                                                                       1,315
      21,3                      32,3                  RII                               3,853
                     27,9                                                                704                    6,726
      25,6                                                                     2,280                    5,590
                                              73,8    RI             1,199       397            4,341
                                59,4
      39,3           47,7                                    665                        3,152
                                                                        216
                                                               135              1,883
                                                                        983
                                                               530
      2005           2006       2007          2008             02       03        04     05       06      07     Set/08



   Mobile market maintains fast paced growth                  Broadband: Strong growth in accesses
       – Net additions of 29.7mn in 2008 are 41% higher              – Broadband penetration: 17% of
       than in 2007                                                    households
       – Naked sim card is a national trend                          – ADSL corresponds to 70% of total accesses
       – Region I is still the leader in the mobile
         market growth (49% of Brazilian net adds)

Source: ANATEL; Team analysis
                                                                                                                          7
Agenda




   Brazilian Telecommunications Market   2

   Oi: Transformation History            9

   Our Strategy and its Major Results    13

   Operational and Financial Results     20

   Brasil Telecom Acquisition            28

   Expectations for the Future           40




                                              8
Oi’s Snapshot
Leader in telecom integrated solutions, Oi maintains a solid financial position,
continuously achieving management’s targets


                                                                        Net Revenue
  Leader in integrated telecommunications solutions in the
   country                                                              CAGR: 13.9%p.a.          R$ billion

    – Revenues Generating Units total 36.1 million, including fixed,
      mobile, broadband accesses (ADSL and cable) and TV
                                                                           2.8x
  Strong execution culture, overcoming all the established
                                                                                          17.6
   targets
    – Integration of 16 independent fixed operating companies;                    6.2

    – Leadership in RI within less than 3 years of mobile operations;             1999    2007
      leadership in the ISP* services after 7 months of start-up
      (broadband) and after 10 months in the free dial-up;
                                                                        EBITDA
    – Highly qualified management team and focused on the
      execution of the strategy established                             CAGR: 11.6%p.a.         R$ billion

  Solid financial position
    – Balance sheet balanced between growth businesses
                                                                            2.4x
      (mobile/broadband) with cash cow services (fixed line)                              6.5
    – Well distributed debt amortization schedule                                 2.7

    – Focus on financial discipline
                                                                                  1999    2007



 * ISP – Internet Service Provider
                                                                                                              9
 Oi: Transformation History
 Oi is driving the strong growth in all telecom service in Region I: fixed, mobile and
 internet


    Accumulated CAPEX                                   Household with Telecom Service - RI
    R$ billion; 1998 to Sep/08                          million
                                                                                                        CAGR

                                 9,5      34,0               Fixed               Mobile           Internet

                      5,7
            18,8
                                                                                  24%
                                                                   1%
                                                          15%
                                                                                       16.0
                     Data/                                          10.7                           19%
          Fixed              Mobile       Total
                   Broadband                                    10.4
                                                                                 8.4
                                                          6.9
                                                                                                         3.4
          Oi Coverage – Sep 08                                                                    2.0
          Cities (100% RI = 2,995; 103mn pop)
                                                           00 03 06              03 06            03 06
              • Fixed: 2,995 cities
                                                          29.8 40.5 37.4         32.4 56.2        7.8    12.0
              • Broadband: 428 cities
              • Mobile: 1.076 cities                                 Penetration % (households)




Source: PNAD – Pesquisa Nacional de Domicílios (IBGE)
                                                                                                                10
Current Ownership Structure




             • BNDESPar          31.383% • L. F. Tel             19.325%
             • Fiago             24.952% • Fund. Atlântico        5.015%         • Two public companies: TNE and TMAR
             • AG Telecom        19. 325%
                                                                                    ― TNLP is traded at the Bovespa (TNLP4)
                                                                                       and at NYSE (TNE)

                                                                                    ― TMAR traded only at Bovespa (TMAR5)
                     5.5%*             Telemar
                                  Participações S.A.                             • Telemar Participações owns 53.2% of TNE’s

                                              17.9%*
                                                                                 common shares (17.9% of economic interest)
                                                                                 and 13 million TMAR5 shares (5.5%);
                                 Tele Norte Leste
                              Participações S.A. (TNE)                           • Free Float

                                               81.9%*                               ― TNE: 46.8% of ONs, 100% of PNs and
                                                                                       82.1% of total
                                   Telemar Norte
                                                            Fixed line
                                 Leste S.A. (TMAR)
                                                                                    ― TMAR: 2.6% of ONs, 20.7% of PNs and
                                                                                       12.5% of total
                     100%          43%             100% **           100%
                                                                                 • Recent acquisition of BrTP: 33,3% of PNs,
                                                                                 60,5% of ONs and 43,3% of total capital

            Mobile          Integrated       Cable TV and       Internet
                                              Broadband      Services (ISP)




  * Total Capital ** Currently controlled by TNE, Way-TV is likely be transferred to TMAR                                      11
Agenda




   Brazilian Telecommunications Market   2

   Oi: Transformation History            9

   Our Strategy and its Major Results    13

   Operational and Financial Results     20

   Brasil Telecom Acquisition            28

   Expectations for the Future           40




                                              12
Strategic Guidelines
Fast integration of Oi and BrT




     Formation of one National Company with the combination of two regional companies
      to capture synergies as quick as possible
         -   Identification of quick wins aiming efficiency improvements

     Continuation of growth
         -   Opportunities in mobile markets in Regions II and III, as well as new
             businesses

     Consolidate the leading position in the Brazilian Telecommunication sector

     Reinforce the strategy of differentiation through convergence, with a segmented
      approach (have a single portfolio as soon as possible and a single corporate
      approach to the market)

     Focus on cash generation aiming to reduce the level of debt to 1.5 x EBITDA




                                                                                         13
Operational Guidelines
To face the current market scenario, Oi aims to utilize integration towards achieving
the goal of differentiation

                                                  Quadruple play: Expand Pay TV offering
  Keep the focus on convergence
                                                  Cross sell and up sell
                                                  Reduce churn

                                                  Key element in the offering of integrated services
  Increase the offering of broadband services     Expansion of coverage, availability and speed
                                                  3G Launch (RI and RIII)


                                                  Differentiated offers
  Increase the growth opportunities of our
                                                    – Sim-card only model: very low acquisition cost
  mobile business maintaining profitability
                                                    – Focus on bundled services for post-paid
                                                  Entrance in new markets (São Paulo)

                                                  Internal processes improvements
  Increasing efficiency and control of costs      Implementation of best practices
                                                  Capture all synergies with BrT ASAP


                                                  Evaluate opportunities to participate as an agent
  Act as a consolidation agent                     in the consolidation of the Brazilian
                                                   telecommunications industry

                                                                                                        14
 Oi Mobile: Bundle offers in the post-paid segment
 With a new pace of monthly net adds since 2Q07, “Oi Conta Total” already
 accounts for 26.0% of the total post-paid clients in 3Q08


                                                        “Oi Conta Total” (bundle product) – Customer base
                                                        Thousand users




                                                                                                                          917
                                                                                                                 783

                                                                                                         537
      • Fixed line, mobile and                                                                  335
                                                                       24              212
        Internet bundle                                                        116
      • 5 plans*                                                     Dec/05    Jun/06 Dec/06    Jun/07 Dec/07 Jun/08       Sep/08
      • Unlimited local calls
        between fixed lines                          % Post-paid         1.3     4.8     9.0    14.0      20.7    24.3     26.0
      • Unlimited access to                     Monthly net adds
        internet access                                                          15      16      21        31      41       45
                                                      (thousand)
      • Free long distance
        minute packages




*OCT Light, OCT 1, OCT2, OCT3 e OCT4, from 50 to 1,000 fixed minutes per month, dial-up internet to Oi Velox 1 mega, Oi Mobile
       shared with up to 3 people.
                                                                                                                                    15
Oi Mobile: Higher pre-paid adds due to the success of “Oi Ligadores” campaign
“Oi Ligadores” campaign is still successful at seizing new pre-paid lines


                                                               Pre-paid clients – “Oi Cartão Total”
                                                               Million users                   TNCP          New Net Adds (mn)

                                                                                                              17.1
                                                                                                               1.3


                                                                                                                       18.3
                                                                                                               15.8
                                                                                                      13.4
                                                                             9.6     10.7     11.2
                                                                     8.5
  • Pre-paid card with            • Monthly Bonus
    credits that can be             for “Oi Cartão                 Dec/05   Jun/06 Dec/06 Jun/07 Dec/07        Jun/08 Sep/08
    used in the mobile,
                                    Total” clients
    fixed line and public                                                    1.11    1.12     0.52    2.15     1.30    1.26
    telephones                    • Minimum
  • “Virtual Recharge”,             Recharge: R$ 10
    with no need of pre-            (bonus R$ 150 to              Oi Ligadores: Results
    paid card                       Oi Mobile or Fixed)
                                                                  • Positive impact in new recharges (higher average
  • Minimum top up:
    R$ 1                          • Lower tariffs in on-          amount and higher number of recharges)
                                    net calls or more
  • Special Credit,                                               • Clients in “Ligadores” base (Sep/08): 12.2 million
    when the client is not          minutes calls
    able to recharge his                                          (67% pre-paid costumer base)
    phone.


Obs: Campaign lauch: recharge from R$10 and R$25 – bonus from R$100 and R$250 for “Oi Móvel” or “Oi Fixo”, respectively.
                                                                                                                               16
Oi Velox: Broadband Service Expansion
In line with growth pace set in the 2Q07, broadband clients expanded by 115 thousand
terminals in 3Q08

 Oi Velox – Subscriber Base                                    Oi Velox – Gross Revenue
 Thousand clients                                              R$ mn
                                      CAGR 02-07: 106%                                                 CAGR 02-07: 102%



                                              26.4%
                                                                                                              23.6%


                                                 1,918*                                            1,121            1,021
                                           1,518   52
                                                                                             915             826
                                   1,118
                                                                                       670
                            805                                                 385
                     496                                                  128
        41
               217                                                  33
       2002   2003   2004   2005    2006   2007    Sep/08          2002 2003 2004 2005 2006 2007             9M07 9M08

% LIS 0.3     1.4    3.3    5.4      7.8    10.7    13.4
                                                            % TNE
                                                                    0.2   0.7    1.7   2.8   3.8    4.5       4.4    5.1
                                                            Revenue




                                   • Operating in 428 cities in September 2008
                                   • Plan to reach 480 cities by the end of 2008


*Includes cable broadband access from Oi Tv (52,000).
                                                                                                                            17
“Oi Móvel”: Strategy Results
Focus on profitability in the mobile segment led Oi to a performance above Brazilian
average regarding EBITDA margin

  Proportional on Post-Paid Plans
  %                            Market Average        Oi
                                                          ARPU
                                                          R$
                                                                                                         Oi    Market
         24%
                 20%     19%      19%    19%       19%
         17%
               14%       18%                               31         31                  31
                                 18%       16%    16%                                               29
                                                                 27             28                            27
      2003     2004    2005    2006      2007    Sep/08                    24                  22        22        21
                                                                                     20
  EBITDA margin
  %                            Market Average        Oi

                                                   34%
                                        28%
         25%
                                  19%
                 19%                              25%
                       16%                24%

                       15%         12%                         2003   2004      2005      2006      2007      3Q08
        6%     4%



      2003     2004    2005    2006     2007     9M08
                                                                                                                        18
Agenda




   Brazilian Telecommunications Market   2

   Oi: Transformation History            9

   Our Strategy and its Major Results    13

   Operational and Financial Results     20

   Brasil Telecom Acquisition            28

   Expectations for the Future           40




                                              19
Revenue Generating Units
Oi Mobile and Oi Velox are the main customer growth drivers


   Oi’s Customer Base
   Revenue Generating Units; million                                         Revenue Generating Units
                                                   +23.3%                     – Growth of 10.4% p.a. (05-07)
                                                                              – Growth acceleration in the last 12 months to
                                                                                23.3%
    CAGR 05-07: 10.4%p.a.
                                                             37.8
                                                                             Oi Fixed
                                                             0,06***
                                                                              – Challenge: keep lines in service
                                       31.7                                   – Market leadership in RI
                            28.6                   30.6
                                                                             Oi Mobile
                26.0
                                                                              – Major driver of growth
                                                              21.9
                                                                               – Increase in market leadership to 31.1%
                                       16.0        14.9
    Oi                      13.1                                             Broadband
  Mobile**       10.3
                                                                              – Offered through Oi Velox and cable
                                                                              – 3G start-up
  Oi Velox*      0.8         1.1        1.5        1.4         1.9
                                                                              – 72% of market-share in RI (2007)

                                                                             Pay TV
                 14.9       14.4                   14.3
                                                                               – Acquisition of Oi TV
   Oi Fixed                            14.2                   13.9
                                                                               – Commercial agreement with Sky
                                                                               – Analyzing opportunities in the DTH business
                                                                               – Reduce churn
                2005        2006       2007      Sep-07      Sep-08


* Considers broadband users from Oi TV since 2Q08; ** Includes Amazônia Celular clients (TNCP) in 2Q08; *** Oi TV clients (Video)
                                                                                                                                    20
Oi Mobile and Oi Velox Client Base
Oi is the only mobile that is increasing market share and also increasing margins.
In the broadband market, growth has been triggered by demand

  Oi Mobile: Customer Evolution and Mix                         Broadband – Client Base
  Million users                                                 Thousand users

   CAGR 05-07: 24.6% p.a.                                        CAGR 05-07: 37.3% p.a.
                                                                                                    +37.7%
     Total        10.3    13.1    16.0     14.9     21.9
                                                                                                             1,918

                                                                                                              1,866*
                                                                                          1,518
                                                                                                  1,393

                                                    18.3                        1,118

                                  13.4                                   805
         Pre                               12.4
                          10.7
                8.5


     Post                                           3.5
                1.9       2.4      2.6     2.5
                                                                         2005    2006     2007    Sep-07     Sep-08
               Dec/05    Dec/06   Dec/07   Sep/07   Sep/08
Market Share                                                  % of                        10.7     9.7       13.4
                26.3      27.4     26.9     27.0    31.1                  5.4    7.8
RI (%)                                                        Res. LIS

EBITDA
                16.1      12.3     27.5     26.0    33.7
Margin



*Broadband accesses via ADSL; +52,000 broadband accesses via cable (Oi-TV).
                                                                                                                       21
Oi - Financial Highlights:
Consolidated Net Revenue (R$ million)


    Consolidated Net Revenue                                                               Main impacts in 9M08 x 9M07

    R$ million
                                                                                          Positive:
                          CAGR 02-07:
                           8.2% p.y.                                                      • Fixed to mobile: increase in Fixed-to-Mobile
                                                   17,584             +6.3%               LD traffic: higher traffic + tariff readjustment
                          15,842   16,747 16,872
                 14,003                                             13,100   13,919       • Data: Oi Velox (higher ADSL customer base
       11,874                                                                             and small increase in average price)

                                                                                          • Network usage: Offers by mobile operators
                                                                                          which includes mobile-to-fixed calls with reduced
                                                                                          prices

                                                                                          • Mobile Services: Higher subscription
      2002      2003      2004     2005   2006     2007             9M07      9M08
                                                                                          revenues, Outgoing Calls, data/VAS and network
                                                                                          usage due to higher customer base

    Consolidated Revenue Breakdown (Gross Revenue)
                                                                                         Negative:

                Subscri Local                   Network                                  • Public Phones: Mobile companies’ offers for on-
                                   LD Traffic               Data      Other     Mobile
                 ption  Traffic                  usage                                   net and M-F calls at low tariffs

   2002         28.6%     32.9%      12.9%       9.3%       5.6%      7.7%       3.0%    • Local: Lower excess traffic due to mobile offers
                                                                                         of minutes-based plans to on-net & M-F calls with
   2006         27.5%     21.6%      15.3%       3.0%       10.4%     8.0%      14.3%
                                                                                         reduced tariffs
   2007         27.8%     18.6%      14.3%       2.4%       11.4%     7.9%      17.6%
   9M08         25.7%     15.8%      14.5%       2.6%       12.4%     6.3%      22.7%


*Public Telephony, Additional Services and Others
                                                                                                                                              22
Oi - Financial Highlights:
Consolidated EBITDA (R$ million)

                                                                                     EBITDA Margin Reduction – Long Term:
                                                                                     • Increasing stakes of mobile and broadband in revenue mix
          Annual growth                                                              (lower margin services)
                                                           EBITDA Margin
           02-07: 4.0%
                                                          EBITDA Recurring
                                                                                     EBITDA Margin Reduction – 2006:
                                                          Margin
                                                                                     • Interconnection tariff reduction (R$320 mn)
       45.1%                                                                         • Concession renewal fee (R$139 mn)
                  44.1%
                           41.2% 40.0%
                                                                                     • Local and LD tariffs reduction
                                          36.2%     37.0%
                                                                                     • Full-billing for mobile companies (R$63 mn)
                                                              37.8%
                                                                       35.5%
                                                         36.1%
                          6,531 6,765           6,501                                EBITDA Margin in 2007:
                  6,175                 6,102                          32.9%         • Positive non-recurring event in 3Q07 (+R$229mn*)
          5,353
                                                              4,953 4,935            • Positive: Cost of Goods Sold due to the strategy to stop
                                                                 229                 subsidizing handsets in the pre-paid segment
                                                                        356
                                                              4,724                  • Negative: Interconnection (increased fixed to mobile traffic)
                                                                       4,579
                                                                                     and Bad Debt (more flexible credit policy)



                                                                                     EBITDA Margin 9M08:
                                                                                     • 2Q08: negatively impacted by the BrT deal**
                                                                                     • 3Q08: negative impacts of the SP mobile launch (R$42 mn)
                                                                                     + R$23 mn expenses related to the BrT deal. Positive impact
                                                                                     of handset costs and materials.
           2002 2003 2004 2005 2006 2007                      9M07 9M08

* Reversal of labor contingencies (+R$265mn); reversal of personnel provisions (+R$60mn); regulatory provisions (-R$95mn)
** BrT Deal: litigation fee to extinguish lawsuits related to BrT deal (R$ 315 million) and consultancies and legal counsel expenses related to this deal
        (R$ 41 million).                                                                                                                                23
Oi - Financial Highlights:
Net Income (R$ million)


                                02       03       04      05        06        07     9M07      9M08
  Depreciation/Amortization    3,863    3,757    3,502   3,351     3,147     2,605   1,956     2,067
  Net Financial Expenses       2,024    2,178    1,641   1,616     1,290     424      359       706


                                                                                     2007 Bottom-line:

                                                                                     • Better Net Financial Results
                                                                                     -R$866 million below 2006 (lower net debt

                    Annual growth               2,358                                and interest rates)
                     03-07: 82.4%                                                    • Lower Depreciation
                                                                                     -R$542    million     below   2006   (end   of   the
                                                                    -32.2%
                                                                                     depreciation of assets related to Anticipation of
                                                                 1,447               Anatel’s targets)
                                       1,310
                              1,114                                                  9M08 Bottom-line:
                                                                           981
                    751
                                                                                     • Smaller EBITDA in 9M08: positive non-recurring

           213                                                                       events in 3Q07 (R$229 million) and negative
                                                                                     one-time effect (R$356 million) in 9M08
                                                                                     • Negative effect on the net financial expense of
   2002    2003    2004       2005     2006     2007             9M07      9M08      R$367 million
                                                                                     • Higher depreciations/amortization (R$111 mn)
  (416)




                                                                                                                                            24
Oi - Financial Highlights:
Consolidated Capex (R$ billion)




                                 Mobile    Fixed

                                                   179%
                                                           3.6
                                                                   • 9M08 Mix:

                                                                   - 43% fixed, 57% Mobile

                          2.4                              2.1     • 9M08 Focus:
                                  2.3     2.3
    2.0            2.0                                             - Fixed: Number portability, higher
                          0.8     0.7     0.6
           1.7                                                     coverage and increase in the transmission
    0.9            0.7
           0.6                                      1.3            capacity of broadband
                                                    0.2
                                                                   - Mobile: 2G and 3G licenses, 3G network
                          1.6     1.6     1.7              1.5
    1.1    1.1     1.3                                             investments in region I and SP’s network
                                                    1.1
                                                                   investment (2G and 3G)


    2002   2003    2004   2005    2006    2007     9M07    9M08

   % Net Revenue

   17.0% 12.0% 13.0% 14.3% 13.7% 13.2%              9.9%   26.1%




                                                                                                               25
 Oi - Financial Highlights:
 Debt and Cash Flow


    Net Debt                                                                       Gross Debt Amortization
    R$ billion                                                                     R$ million - September/08
                              1.5 x EBITDA                                                                               Foreign currency exposure
                                                                                                         5,653
      9.1                                            9.2                                                                         4,982
              7.8
                      6.5     6.1
                                     4.9                                                                         3,314

                                             2.7
                                                                                                 1,732
                                                                                                                         1,459

                                                                                          584
      2002 2003 2004         2005    2006    2007 Sep/08
                                                                                          2008   2009    2010    2011    2012    2013
                                                                                                                                 onwards
    Free Cash Flow
    R$ billion                                                              Additional Information:

                                                                            • Total Debt of R$17.7 billion and R$8.6 billion Cash
              4.0    4.0    3.5                                             • 8.1% of total debt is exposed to FX fluctuations
                                    3.3    3.3
      2.3                                                2.7
                                                                            • Cost of Debt*: 92.5% of CDI**

                                                                            • FCF in 9M08 impacted by R$4.9 billion non-recurring items:
                                                                               • BrT acquisition (R$3.3 bn of PNs and R$0,4 bn in expenses),
                                                                               • CAPEX to number portability (R$0.6 bn),
                                                                (2.7)          • R$0,35 bn in 2G/3G licenses and
      2002    2003 2004 2005 2006 2007                  9M07 9M08              • R$0,28 billion related to TNCP acquisition



* Does not consider the Yen depreciation against Dollar in the quarter; **Brazilian interest rates.
                                                                                                                                                     26
Agenda




   Brazilian Telecommunications Market   2

   Oi: Transformation History            9

   Our Strategy and its Major Results    13

   Operational and Financial Results     20

   Brasil Telecom Acquisition            28

   Expectations for the Future           40




                                              27
The Acquisition of Brasil Telecom
The Rationale, vision and support




   Rationale
                  • Telecom is a scale business due to rapid technological changes and its
                    capital-intensive nature, and consolidations are a natural trend




   Vision          • To create a multinational telecom company, with international presence
                     and over 100 million users
                   • To create a group with a comparable size to that of Oi’s main competitors
                     in Brazil
                   • To create a company with national footprint in data and mobile
                   • To create sustained and long term shareholders value, reflected in the
                     company´s market capitalization



   Support
                   • The acquisition has no significant impact on market concentration




                                                                                                 28
 The Acquisition of Brasil Telecom
 The Combined Company: Businesses and Subscribers
 Millions; September/08 except for mobile (November/08)


 Combined Coverage             Fixed           Mobile                Broadband    Pay-TV                    Other businesses


                                  13,9 1º               24,3    1º     1,9   1º                             • Pioneer in m-
                                                                                                              payment

                                                                                                Belo        Globenet
                                                                                                Horizonte
                                                                                                            • 22,000 km of
                                 8,2     1º      5,3           4º      1,8   1º    Uberlândia                 submarine cable
                                                                                                              linking Brazil,
                                                                                    Poços de                  Venezuela,
                                                                                    Caldas      Barbacena     Bermuda and USA
                Total             22.1                 27.1              3.7
                                                                                                            ISP/Portal
           share Brazil          • 54%            • 20%               • 38%       • 4 cities                • Largest Brazilian
                                                                                  • Future national           ISP
                                 • 4.8 th.        • 2.3 th.           • 1.9 th.     DTH operations          • Leading ISP in
          Cities
                                                                                                              regions I and II




                                       • 53 million clients (RGUs)
                                       • 27% of total clients in Brazil
                                       • Higher group in revenues, with 30% of all revenues in the sector


Source: Anatel and Companies
                                                                                                                                  29
The Acquisition of Brasil Telecom
The Combined Company: Operating Details



       Major Operating Data
       September 2008

         Operating Details                                              Oi               Brasil Telecom              Combined
         Fixed Lines in Service                                       13,096                    8,198                   21,294
             Alternative Plans*                                        5,982                    3,983                    9,965
             % of Lines in Service                                    43,0%                    49,0%                    47,0%
         Mobile Accesses                                              21,867                    5,246                   27,113
             Market-share
                 Original region                                      31.1%                    14.3%                    25.3%
                 Brazil                                               15.5%                     3.7%                    19.2%
             % post-paid                                               16%                      17%                      16%
             ARPU                                                      21.4                     28.8                        -
         Broadband Accesses                                            1,918                    1,762                    3,680
             % Lines in Service                                       13.4%                    21.5%                    16.4%
             ARPU ADSL                                                 45.4                     49.5                        -
         Employees                                                    10,595                  17,760**                  28,265




   * Considering just local alternative plans from Brasil Telecom; ** This considers the fixed, mobile and call center operations, the latter with
     11,868 employees, without which BrT would have 5,802 employees and the combined would be 16,397
The Acquisition of Brasil Telecom
The Combined Company: Financials


       Major Financial Data
       Last Twelve Months, ending in September 2008

         Financials                                                    Oi               Brasil Telecom             Combined
         Gross Revenue                                              26,574                   16,671                  43,245
             % Fixed                                                65.8%                    67.1%                   66.3%
             % Data                                                 12.3%                    20.5%                   15.4%
             % Mobile                                               22.0%                    12.4%                   18.3%
         Net Revenue                                                18,403                   11,303                  29,706
         EBITDA*                                                     6,127                   3,898                   10,025
             EBITDA Margin %                                        33.3%                    34.5%                   33.7%
         Net Profit                                                  1,892                    873                     2,765
         Net Debt                                                    9,150                   1,182                   10,332
             ND to Equity                                             0.9x                    0.2x                     0.6x
             ND to EBITDA                                             1.5x                    0.3x                    1.0x
         Shareholder’s Equity                                       10,175                   5,769                   15,944
         Capex                                                       4,653                   2,189                    6,842
             Capex/Net Revenues                                      25%                      19%                     23%
         Market Values
             Opcos (sept08 / dec08)                            16,265 / 13,480          16,292 / 17,913         32,557 / 31,393
             Holdcos (sept08 / dec08)                          13,253 / 13,141          11,192 / 11,810         24,445 / 24,951

   * No synergies; ** Considering market values of the operating companies; *** This considers the fixed, mobile and call center operations,
     the latter with 11,868 employees, without which BrT would have 5,802 employees and the combined would be 16,397
The Acquisition of Brasil Telecom
Regulatory History and Next Steps


History of Regulatory Facts                                              Next Steps


  04/25/08      Material Fact released, containing details of the deal      Submission of the First Draft of the Tender
                                                                             Offer Prospectus to CVM up to February 8,
  06/17/08      Public Hearing to change the PGO*                            2003

  08/01/08                                                                  Mandatory Tender Offer
                Public Hearing to alter the PGO* closure

  11/05/08 Anatel´s Director Counsel approves PGO* minutes                  Simplification of the group’s structure.
           and remits to Ministry of Communication

 11/20/08 President approves PGO* and publishes the act in
          the Official Gazette

 11/21/08      Telemar submitted to ANATEL a request for approval
               of the acquisition

 12/19/08      Anatel’s approval


 01/08/09      Payment and acquisition of the control




  *PGO - General Plan of Concession (Plano Geral de Outorgas)
                                                                                                                           32
The Acquisition of Brasil Telecom
Acquisition Value and Funding Sources



   Cash Disbursements and Total Equity Value                  Shares Purchases            BRTP                    BRTO
   R$ billion
                                                                                    # shares      %       # shares       %
                                                                                                 21.0                    10.5
                                                              PN Shares            76,645,842            58,956,565
                                                                                                  6                       1
   (1) Purchase of preferred           2,3
   shares in the open market                                     Open Market       55,819,400    15.34   45,590,200      8.12
                                                                 Tender Offer      20,826,442    5.72    13,366,365      2.38
   (2) Purchase of preferred            1,0                                        132,550,88    36.4
   shares in the Tender Offer                                 ON Shares                                  2,279,969       0.41
                                                                                        8         2
                                                                 Control*          81,092,986    22.28        -
   (3) Acquisition of the                     5,4
   Control                                                       Tag Along**       51,457,902    14.14   2,279,869       0.41
                                                                                   209,196,73    57.4                    10.9
                                                              TOTAL                                      61,236,534
   (4) Mandatory Tender                             3,3         Funding Sources         0         8                       2
   Offer (Tag Along)
                                                                 R$ 4.3 billion in Bank Credit Certificates
   (=) Total Cash Paid                           11,9
                                                                 R$ 3.6 billion in Commercial Papers

                                                                 R$ 2.0 billion in Commercial Paper
   (5) Invitel Debt                              1,0
                                                                 R$ 2.0 billion in Cash

                                                                 R$ 11.9 billion
   (=) Total Equity Value                           12,9




  *Considers common shares that were subject to shareholders’ agreements governing the relationship among the controlling
    shareholders; **Mandatory Tender Offers Still to occur – it considers 100% purchase of minorities
                                                                                                                                33
The Acquisition of Brasil Telecom
Benefits of the Acquisition


  Sources of Value Creation


   Revenues                                                            Synergies

  – Nationwide mobility offers                                       – Implementation of Best Practices
  – Drivers for mobile revenue growth:                                   Reduction on the G&A structures,
            BrT holds mobile market share in RII much                   Third-party services,
              below fair share                                           Information technology,
            Low penetration in São Paulo                                Lower marketing expenses with national advertising
  – Data backbone capillarity in the whole country                       Product development
           23 state capitals & 29 of the 30 most                    – Scale: dilution of fixed costs
             populated cities
                                                                         Higher negotiation power with suppliers
                                                                         Personnel expenses reduction
                                                                         Standardize billing and revenue assurance systems
   Fiscal and Financial                                                  Optimization of the distribution channels
                                                                          Generation and retention of higher on-net traffic
    – More efficient capital structure
    – PIS/COFINS and income taxes
    – Goodwill amortization*




  * Fiscal benefit to be incorporated in 10 years; P&L impact to occur in 17 years
                                                                                                                               34
The Acquisition of Brasil Telecom
New Management

                                                                             CEO: 48 years; Graduated aviation engineering, post
                                                         Luiz Eduardo        graduate in Finance and Marketing from FGV; previous
                                                                             Marketing and Commercial VP at TAM airlines
                                                             Falco
CFO: 50 years; Graduated in accounting,
MBA from FGV; previous executive Vice                                                     HR: 49 years; Graduated in psychology,
President at Banco Safra                                                                  MBA from FDC/INSEAD; previous HR
                                                                                          manager at Ferrovia Centro Atlântica
International Matters: 67 years;
                                             Alex                  Júlio
Graduated in electronic eng, post graduate   Zornig                Fonseca                Legal: 52 years; Graduated in law and
in telecom (Holland and France) and                                                       business, MBA from Amana Key; post
business (USA); previous CEO at Hispamar                                                  graduate in labor law (Estácio);previous
and BrT                                      Luiz                  Eurico                 legal manager at Telebahia
                                             Perrone               Teles                  Corporate Communication: 51 years;
Strategy and Technology Development: 35                                                   Graduated in business, MBA Coppead and
years; Graduated in computer                                                              INSEAD; previous executive Vice President
engineering, post graduate in computer       Pedro                 George                 at Fininvest
engineering (PUC) and management
(Harvard); previous CEO at Cisco Brasil
                                             Ripper                Moraes                 Executive Planning: 60 years; Graduated
                                                                                          in electronic engineering, post graduate in
Market: 44 years; Graduated in                                                            Industrial Technology (Japan); MBA
engineering, previous CEO at ABC             Joao                  Joao de
                                                                                          (FCO); previous telecom consultant in the
Supermercados                                Silveira               Deus                  Ministry of Communications
Operations: 54 years; Graduated in                                                        Institutional Relations: 60 years;
electrical engineering, post graduate in     Francisco             Jorge                  Graduated in civil engineering, post
telecom technologies in France; previous     Santiago                                     graduate in statistic planning/economic
                                                                    Jardim                eng.; previous Director at Sistel and BrT
Director at Telebrasília and BrT

                                                                                          Regulatory: 39 years; Graduated in social
Administrative: 33 years; Graduated in       Maxim                                        science, post graduate in business in
electrical engineering; MBA from FGV;                              Alain Riviere
previous analyst at Banco Patrimônio
                                             Medvedovsk                                   France; previous Regulatory Director at
                                                                                          Intelig

TI & Engineering: 58 years; Graduated in                                                  Internal Auditing: 57 years; Graduated in
electronic engineering, previous Marketing   Paulo                 Júlio                  accounting, post graduate in Financial
                                                                   Pinto                  Management (Stanford); previous CFO at
and Sales Director at Claro                  Gonçalves
                                                                                          MRS Logística
                                                                                                                                      35
The Acquisition of Brasil Telecom
Commitments with ANATEL (1/3)


              • Local Internet dial-up access: Increase dial-up access availability for local STFC mode to have
  Dial-Up       56% of the 2,995 municipalities in Region I under this service following Anatel’s schedule
  Access
              • Alternative long distance plan – For the municipalities not covered by the local dial-up access
                schedule there will be an alternative National Long Distance (NLD) plan offer with non-geographic
                access code up until December 31, 2010


              • Expand broadband commercial retail offer to all municipalities in Regions I and II (4.8
                thousand municipalities)
  Broadband
  and Data    • Expand optical fiber network in Northern Region to all municipalities of Boa Vista (RR),
                Manaus (AM) and Macapá (AP)
              • Increase the number of municipal head offices in Regions I and II through optical fiber in
                addition to those already existing


              • Extend offering of all existing offers that have national coverage in Region I to Region II until
                Dec31, 2009.
  Mobile
              • Environmental actions


              • Public telephony
                – Region I: Payphone cards acquisition of cards with tariffs previously approved by Anatel
  Fixed           printed on the cover. Exclusive commercialization of payphone cards with tariffs printed in
                  authorized sales posts from Dec31, 2009
                – Region II: conduct a viability study on the above actions to implement in Region II
                                                                                                                    36
 The Acquisition of Brasil Telecom
 Commitments with ANATEL (2/3)


                        • Supply over 2 thousand sets of antenna, decoders and TV sets to public institutions.
                        • Offer on the DTH and cable operations’ basic schedule an independently- produced national
   Pay Tv
                          channel until December 31, 2010.
                        • Focus on efforts to popularize Pay Tv through available offers.


                         • Supply to the Military Forces a voice and data communication system, including notebooks
                           and CPEs, in 66 border posts in Region I and II, for up to 18 months after Anatel’s approval.
   National
   Security              • Propose Memorandum of Understanding with the Brazilian Spatial Agency, Ministry of
                           Communications and Defense Ministry, up to 90 days, in order to collaborate in the Brazilian
                           Geostationary System Project.



   Research &            • Increase the financial resources available for research and development purposes in
   Development             Brazil.



                        • Maintain and increase in each PGO Region the same existing conditions in offers available to
                          the corporate segments of Oi and BrT.
   EILD* and            • Lower the numbers of special requests in Region I to the same level EILD requests in BrT’s Region
   Corporate
                          within 12 months.
                        • Maintain or lower the percentage of Special EILD in Region II.


*Special industrial exploration of dedicated line
                                                                                                                              37
The Acquisition of Brasil Telecom
Commitments with ANATEL (3/3)


                   • Develop specific processes to speed up commercial service for the corporate segment
  Transparency       (with the requirer name, required item and date of request) by making available quarterly reports
  of offers          to Anatel.
                   • Adopt a system to announce in the internet corporate segment offers for 3 months in
                     Regions I and II.
                   • Create a commercial corporate unit in Regions I and II by developing a speed-up process in 3
                     months.
                   • Develop a data system for Anatel that features offers, plans, promotions, benefits and
                     disadvantages of specific offers to the final customer through quarterly electronic reports.


                   • Maintain the consolidated number of employees at the companies until April 25, 2011
  Number of
                     (taking as reference the number of employees on February 01, 2008).
  employees




                   • Renounce in 30 days to the lawsuits made against Anatel (regarding Fistel) by Amazônia
  Lawsuits
                     Celular .
  with Anatel
                   • Discuss with Anatel other open judicial and administrative lawsuits.




   International    • Inform Anatel about Oi’s operation in the international market through quarterly reports.
   Expansion

                                                                                                                         38
Agenda




   Brazilian Telecommunications Market   2

   Oi: Transformation History            9

   Our Strategy and its Major Results    13

   Operational and Financial Results     20

   Brasil Telecom Acquisition            28

   Expectations for the Future           40




                                              39
Future scenario brings challenges and opportunities




                                  Short term                                        Long term


                • Continuation of main trends                      • Increase of Internet penetration
    Market        - Slight reduction in fixed lines and focus on   • Mobile reaching maturity with increased VAS
                     alternative plans                               relevance
                  - Mobile and broadband as growth drivers         • Increase of Pay TV penetration
                • Fixed companies launching DTH products
                • Triple Play ›› Quadruple Play

                • Strong competition in mobility (traffic) with    • More competition in broadband with 3G/LTE
  Competition
                  portability and 3G                                 (4G) and WiMax
                • 3G becomes an alternative access for             • New competition with alternatives ways of
                  broadband retail                                   access (Skype, for example)


                • Incumbents permitted to provide IPTV             • Auction for LTE (4G) frequency bands
   Regulation
                  broadcasting and/or to buy cable companies       • Regulation of new pro competitive actions
                  through approval of:
                                                                     (PGR)
                  - PL #29 and/or
                                                                   • Mobile Interconnection Rates based on cost
                  - New auction for cable licenses
                                                                     models (VU-M)
                • Auction for WiMax frequency bands


                                                                   • Next Generation Networks (NGN) / VoIP
   Technology   • WiMax as possible access solution
                                                                   • FTTX access becomes significant

                                                                                                                   40
Consolidated Debt
Even with the various sources of investments, the company focus on maintaining the
investment grate rating


   Net Debt Evolution           Current Net Debt
   R$ million                   R$ million

                                                                                Future Scenario
       6,083                                 9,160                              • Need of additional R$11 to
                4,883                                                             R$12 billion
                                                                                • From this value, R$8 billion is
                                                                                  already in company’s cash;
                        2,681
                                                                                • Expected leverage of 2.2x
                                                                                  EBITDA
                                                                                • Target: to maintain investment
                                                                                  grade rating
       2005     2006    2007                 9M08


      • Unefficient capital      • Extraordinary dividends (R$1.9 bn: R$1.2
        structure:                 bn to TNL and R$0.7 bn to TMAR)
        • Net debt 0.4x 2007     • Acquisition of BrT PN shares in (R$3.3 bn)
          EBITDA                 • Acquisition of TNCP’s Control and Preferred
                                   shares (R$283 million)
                                 • 2G/3G Licenses (R$345 million)


                                                                                                                    41
Attachments




              42
Regulation: Brazilian Telecom Market has experienced important changes in
its institutional/regulatory framework over the past few years



                                  • General                     • Competition
                                  Concessions                   intensifies:
                                  Plan (PGO)*                   incumbents allowed to
      • Approval                  • Telebrás                    offer new services                              • Full Billing
      of Cable                    Break-up and                  (long distance and                              for mobile
      Law                         Privatization                 data) nationwide                                companies
                                                                • New mobile start-up
                                                                companies



   1995            1997          1998           2000            2002           2005            2006         2007             2008..



                                               • Competition:                                 • Pulse-minute
                                               Licenses for fixed                             conversion
                                               line mirror                                    • Num. portability
                 • General Law of              companies                                      • 3G Auction
                 Telecom: creation of
                 ANATEL
                 • Auction of licenses                              • Concession             • New billing           • Cable law
                 for 2nd players or                                 contract                 rules (pulses to        revision
                 Mobile                                             renewal for              minutes)                •PGO revision
                                                                    incumbent                interconnection         •Full
                                                                    fixed line               rates                   convergence
                                                                    telcos (25                                       (Fixed, Mobile,
                                                                    years)                                           Broadband,
                                                                                                                     Video)
(*) – The General Concession Plan determines that M&A among fixed-line incumbents is not permitted.                                    43
Market: As access grows mobile becomes relevant in sector’s total revenues




   Brazilian Telecommunication Gross Revenues
   R$ billion


                                                45.4%
                                        42.6%
                               39.7%
                       36.8%                                           50.7%
              34.0%                                          46.1%                           • Whereas          fixed      telecom
                                                124
      30.8%                             115
                               107                                                           revenue has grown at an
                        95                                             96                    average of 6.8% annually,
                                                               93
               83                                56
        71                       43      49                                                  mobile revenues has reached
                          35
                 28                                            43      49                    a rate of 20.9% per year
         22
                                                                                             between 2002 and 2007.
                          60    65       66      67
         49      55                                            50      47


        2002 2003 2004 2005 2006 2007                         9M07 9M08

                      Mobile    Fixed           Mobile as % of Total


Source: Company reports (Tele Norte Leste, Brasil Telecom, Telesp Fixa, Embratel, Tim Brasil – 1Q08 numbers - , Vivo, Claro, Telemig and Tele
Norte Celular) and Telecom
                                                                                                                                                44
 Region I – Household Information
 Region I is less developed when compared to Brazilian average



                                                Household Information – PNAD*


                                                                            Region I                   Brazil

                                                                          2003 2005 2006 2007         2003 2005 2006        2007

                                                Income                     90% < 10 min. salaries      87% < 10 min. salaries

                                                Population (mm)           96.4 100.7 101.8 103.1      176.7 185.1 186.4 189.8

                                                Household (mm)            25.8   27.7   28.5   29.8   49.7    53.1   54.6   56.3
     • 16 States: including the
        states of Rio de Janeiro,               Mobile + Fixed Accesses   22%    28%    29%    41%    28%     36%    36%    46%
                                                 Just Fixed               19%    10%     9%    11%     23%    12%    11%    12%
        Minas Gerais, Bahia,
                                                 Just Mobile              10%    23%    27%    48%     11%    24%    28%    41%
        Espírito Santo and Ceará
                                                No phone                  49%    39%    35%    31%    38%     28%    25%    23%
     • Approximately 64% of
                                                With computer             11%    13%    16%    19%    15%     19%    22%    27%
        country's territory
                                                 With internet               -    9%    12%    14%        -   14%    17%    21%
     • 103 mm people in 2007
                                                 No internet                 -    4%     4%     5%        -     5%    5%        6%
     • 41% of Brazilian GDP                     No Computer               89%    87%    84%    81%    85%     81%    78%    74%




* PNAD: Pesquisa Nacional do Domicílio - IBGE
                                                                                                                                 45
New Businesses: Oi will expand frontiers to São Paulo in 2008
Rationale and Capex



 Entrance Conditions: what                          Frequencies bought in SP
 differs from years ago

  • Lower CAPEX requirements                                             • 45Mhz in 1.8GHz (includes
                                                            2G
                                                                           5MHz in 900Mhz)                 • CAPEX
     • Cheaper equipments in USD
                                                                         • Band M for whole SP and           requirements for
     • Lower exchange rates
                                                                           Band E for the interior of SP     SP estimated in
  • More profitable pre-paid                                               and CTBC region                   2008 of R$1
     • Full-billing                                                      • R$235mn (R$170mn +                billion (including
     • Lower subsidies                                                     R$68mn)                           licenses)

  • 2G Licenses were cheaper on                                                                            • Total value for
                                                                         • 20Mhz in 1.9 GHz
    a price per MHz basis                                   3G                                               3G Licenses
                                                                         • Band I for the interior and       (RI + RIII:
  • Other favorable variables in                                           metropolitan SP*                  R$867.0 mn)
    the Business Plan                                                    • R$331.9mn (R$144.4mn +
     • Lower cost of capital                                               R$187.5mn)
     • Higher penetration
       expectations




* Blocks of SP were sold together with the Northeast and North part of Brazil
                                                                                                                                  46
São Paulo (2G/3G) and 3G in Region I
3G in Region I launched in June; commercial start-up in São Paulo occurred on
October 24 and accounts for more than 1,7 million clients in November


   3G in Region I                                   2G/3G in Region III




   Approach - Freedom
    – Oi customer has the ability of accessing       The São Paulo operation has an exclusive team
      broadband through different gadgets: fixed,     focused on the region
      mobile, cable, etc
                                                     Start-up:
   Launch:                                           – Done in October 24th
    – Soft launch in June in 3 cities; commercial     – Innovative campaign: pre-paid services for
      launch in July in the other capitals              three months for free up to the limit of R$20
                                                        per day
   Coverage
                                                      – Post-paid offers available in Oct 24th
    – 48 cities
                                                     Status
   Offers:
                                                      – More than 1 million customers adhered the
    – Oi Velox 3G 1Mega: R$119.90/month
                                                        campaign before the launch
    – Oi Velox 3G 600k: R$79.90/month
                                                      – 1.7 million active clients at the end of
    – Oi Velox 3G 300k: R$59.90/month                   November (4.6% market-share)
                                                      – Wide-ranging distribution network with more
                                                        than 100 thousand sales spots
                                                      – More than 2 thousand BTSs, covering an
                                                        excess of 90% of São Paulo population



                                                                                                        47
Room to grow penetration in São Paulo
The whole state of São Paulo represents 33% of national GDP and has GDP per capita
54% above Brazilian average: weaker competition leads to low mobile penetration

Mobile Penetration in the States of Brazil: Room to grow in São Paulo
%, December 2008

                                                                                                                                    Brazil: 78%
                                                                                                138%




                                                                    Region III: 89%
                       Region I: 71%                                                                              Region II: 85%

  96%                                                                                                  95%
                                                                                          89%
                                                                                                                                   87%
                                                                                                             83% 85%
        80% 82%                                                                                                        79%
                                                                                                                             82%
                                        76%         75%
                                              72%                                                                                        70%
                                  64%                     63% 63%                                                                              65%
                  61% 59%                                           60% 62%                                                                          60%
                            53%
                                                                              47%

                                                                                    35%




   RJ   MG   ES   AM   RR   PA    AP     PE   RN    SE    AL   CE   PB   BA   PI    MA    SP     DF    MS    MT   GO   PR    SC    RS    RO    AC    TO


                                        Region I                                      Region                           Region II
Source: Anatel                                                                          III
                                                                                                                                                           48
New Businesses: 3G
3G Capex in 2008 estimated in R$1.9 billion including licenses (this amount also
includes 2G CAPEX in SP)

                                                       Minimum     Price
         Blocks                     Band      Size                                Premium
                                                       Price       Paid
                                                       R$mn        R$mn            %

          I - RJ, ES, BA and SE       F      30Mhz      245.50         467.90      90.6%


          X - MG                       I     20Mhz       28.05            42.82    52.6%
   RI
          VII - CTBC-MG                I     20Mhz       11.19            24.39   117.9%



  RIII    III - SP011     North        I     20Mhz      111.84         187.50      67.7%
  / RI

          V - SP int.   Northeast      I     20Mhz       85.98         144.41      68.0%


          Oi Total                                      482.57         867.02      79.7%


          Total of the Auction                        2,859.91       5,338.73      86.7%



                                                                                            49
Corporate Structure: Shareholders Rights




    Shareholder Rights
                                          • All shares: right to receive a minimum 25% of adjusted annual net income.
          Dividends                       • Preferred Shares and ADR (254.7mn): minimum of 6% of Capital (R$187.5 million
                                          - Dec/07) or 3% of Shareholders’ Equity (R$218.4 million – Dec/07), whichever higher.

                                          • Common shares have a tag along right of 80% of the value paid upon acquisition of
          Tag along                         control under existing Corporate Law.
                                          • The Preferred shares do not have tag along rights.

                                          • Common shares have full rights to vote at shareholder meetings.
          Voting Rights
                                          • Preferred shares have right to vote only under specific circumstances (a).


          Board Members                   • Minority shareholders have the right to appoint two board members (within of 11).


                                          • Five members, appointed by:
          Fiscal Committee                  – Controlling Shareholder (Telemar Participações) - 3
          Members                           – Minority Shareholders (voting shares) -1
                                            – Minority Shareholders (preferred shares) -1

          Redemption
                                          • Shareholders have the right to redeem under certain special circumstances (b)
          Rights

  (a) Approval of long term agreements with related parties; redemption of preferred shares; full right to vote if the Company does not pay dividends for
  three consecutive years.
  (b) Issuance buy the Company of a new class of preferred shares; change in preference right of shares; redemption of shares; reduction on statutory
  dividend; merger of the company; change in corporate purpose.
                                                                                                                                                            50
Important Notice to TMAR and TNE Shareholders
December 2008


 CVM Instruction n° 358, art.12: Shareholders owning a direct or indirect controlling stake in the
 company, shareholders who elect the members of the Board of Directors or the Fiscal Council, or any
 private individual, legal entity or group of same, acting jointly or representing a common interest,
 that attains a direct or indirect stake equivalent to 5% (five percent) or more of the company’s
 types or class of shares, must immediately inform the Company, under the terms this article.


                TNL - Tele Norte Leste Participações S.A.
                 Shares              Capital      Treasury    Controlling Shareholders    Free-Float
                 Common:            130,611,732   3,070,731        68,504,187            59,036,814
                 Preferred:         261,223,463   6,475,663           -              254,747,800
                 Total of Shares:   391,835,195   9,546,394        68,504,187        313,784,614

                 TMAR – Telemar Norte Leste

                Shares              Capital       Treasury    Controlling Shareholders    Free-Float
                 Common:            107,063,093       -           104,227,873              2,835,220
                 Preferred A:       130,487,295    223,500        104,328,943            25,934,852
                 Preferred B:         1,063,967       -                     6              1,063,961
                 Total of Shares:   238,614,355    223,500        208,556,822            29,833,559


   In compliance with the terms of article 12 of CVM Instruction n° 358, art.12, TELEMAR advises its
   shareholders that the Company cannot be held responsible for any public disclosure of information by
   third parties regarding the acquisition or disposal of equity stakes equivalent to 5% or more of each
   class of shares or of the rights pertaining to these shares or other securities issued by the Company.
                                                                                                            51
This presentation contains forward-looking statements.
                                                                      IR Contacts
Statements    that     are   not    historical   facts,   including
                                                                      Roberto Terziani           55 21 3131-1211
statements about our beliefs and expectations,                 are
                                                                      Carolina Gava Silveira     55 21 3131-1314
forward-looking statements and involve inherent risks
                                                                      Flavia Oliveira            55 61 3415-1256
and   uncertainties.    These      statements    are based      on
                                                                      Bernardo Guttmann          55 21 3131-1316
current plans, estimates and projections, and therefore
                                                                      Cristiana Ortigão          55 21 3131-1315
you should not place undue reliance on them. Forward-                 Patricia Frajhof           55 21 3131-2918
looking statements speak only as of the date they are
                                                                      Rua Humberto de Campos, 425 / 7th floor
made, and we undertake no obligation to update publicly
                                                                      Leblon - Rio de Janeiro - RJ
any of them in light of new information or future events
                                                                      E-mail: invest@oi.net.br



                                                                      Visit our website:
                                                                      www.oi.com.br/ir




                                                                                                                   52

				
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