T

1
LatAm All-in-One Conference Merrill
Lynch February 04-06, 2009
2
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 Expectatio
ns for the Future
40
1
3
Brazil is a Big Country With International
Relevance
Brazil and its relevant internationally

• 190 MN inhabitants
• 56 MN Households (85 urban)
• US1,460 billion GDP
• 42 of the total Brazilian income is held by
  9.6 of the households
• 74.5 of households with less than 5 minimum
  wages (R2,075 / US888)

gtUS900bn GDP
Germany, Spain, France, Italy, UK
Canada
Japan
USA, BRIC

• Brazil is reaching a new pace of growth
• 10th economy in the world (GDPUS1.3 trillion)
• PC Penetration of 27 per household, 12p.p.
  higher than 2003 numbers
• Some of this increased demand was driven by
  rising incomes and better incomes distribution

Bangladesh, Nigeria, Paquistan, Indonesia
Australia
gt100mn inhabitants
gt3mn km2
Source PNAD 2007 Includes households without
declaration of income and without income.
4
Brazilian telecom market is relevant worldwide
and is the most important market in Latin America

• 5th largest mobile market in the world in June
  08 (133mn), behind
• China 601mn, India 287mn, USA 262mn, Russia
  173mn
• 5th largest fixed telecom market in the world
  (41mn), behind
• China 365mn, USA 172mn, Japan 59mn, Germany
  54mn
• 6th largest internet market in the world
  (44.9mn subscribers on March 08, largest in
  America Latina) and 4th biggest PC market
• Broadband still incipient 10th country Room to
  grow

• Fixed largest fixed market (41mn), 104 above
  second place (Mexico)
• Mobile 133 mn users in June 2008, which is 84
  above Mexico (2nd place). Penetrations of 70 is
  much below Argentina (110), Chile (91) and
  Venezuela (94)
• Broadband (2007) Biggest broadband market in
  Latin America (8mn users 14 of households) vs
  Mexico (6mn 27), Argentina (2mn 20) and Chile
  (1mn 44)
• Internet users 45 mn users, followed by Mexico
  with 24 mn, Argentina with 20 mn and Chile 7 mn
• PC Market
• Brazil has 15 million households with PC in 2007
  (market has been growing approximately 30 per
  year in the last two years)

Source ANATEL, IBGE, Teleco, ML Wireless,
UNCTAD and Internet World Stats
3
5
Brazilian Telecom Sector Evolution
08
03
98
Currently
95
Post-Privatization
Pre-Privatization

• State owned Monopoly
• 26 integrated (Fixed Mobile) operators and 1 LD
  carrier

• Multiple players, after privatization

• Tough in mobile increase in broadband less
  intense in fixed
• Consolidation Trends

• Pent-up demand in fixed and mobile
• Internet access only through dial-up

• Huge growth in fixed and mobile penetration
• Broadband start-up
• Pay-TV incipient

• Maturity of Fixed
• Increase in mobile and broadband markets
• Bundle services expansion, claiming one-stop-shop

6
Competition Main Telecom Groups in Brazil
Market Share of Subscribers and Revenues -
September 2008
National


Telmex / AMX
GVT
Revenues market-share September/08
(Fixed only)
Embratel
Claro

• New Oi (Oi BrT) 30
• Telefónica Vivo 29
• Claro Net Embratel 22
• TIM 12
• GVT 1

Region IV
25
12
5
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
7
Brazilian Telecom Sector Long Term Trends
Traditional fixed services facing adverse
scenario whereas mobile and broadband maintain a
strong rhythm of growth
Brazilian Market (Fixed, Mobile and Broadband)
Access lines (millions)

• Mature local fixed voice
• Accesses losses (FMS in accesses)
• Lower traffic per terminal (FMS in traffic)
• More competitive market in high-end and SME (new
  entrants)
• Penetration 51 of households

191.6
167.7

• Continued expansion in the mobile market with
  strong competition
• Strong market evolution, mainly in the pre-paid
  (naked sim-card) market
• Stable ARPU for the industry
• Different business models
• Penetration 73 of inhabitants

74.7

• Broadband growth accelerates
• Fierce competition in areas that concentrate
  high-end clients
• Continuous expansion and falling ARPU
• 3G changes the dynamic of the industry
• Penetration18 of households

27.0
1998
2002
2007
Sep/08
Source ANATEL, Teleco and Team analysis FMS -
Fixed to Mobile Substitution SME - Small
Medium Enterprises
8
Brazilian Telecom Sector Mobile and Broadband
Markets
Net additions have accelerated in the mobile and
broadband markets
million customers
thousand customers
9,577
150.6
7,718
121.0
RIII
99.9
5,656
86.2
RII
3,853
2,280
RI
1,199
665
2005
2006
2007
2008
02
03
04
05
06
07
Set/08
Source ANATEL Team analysis
Source ANATEL Team analysis
7
9
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 Expectatio
ns for the Future
40
8
10
Ois Snapshot
Leader in telecom integrated solutions, Oi
maintains a solid financial position,
continuously achieving managements targets
Net Revenue

• Leader in integrated telecommunications solutions
  in the country
• Revenues Generating Units total 36.1 million,
  including fixed, mobile, broadband accesses (ADSL
  and cable) and TV
• Strong execution culture, overcoming all the
  established targets
• Integration of 16 independent fixed operating
  companies
• Leadership in RI within less than 3 years of
  mobile operations leadership in the ISP
  services after 7 months of start-up (broadband)
  and after 10 months in the free dial-up
• Highly qualified management team and focused on
  the execution of the strategy established
• Solid financial position
• Balance sheet balanced between growth businesses
  (mobile/broadband) with cash cow services (fixed
  line)
• Well distributed debt amortization schedule
• Focus on financial discipline

CAGR 13.9p.a.
R billion
2.8x
EBITDA
CAGR 11.6p.a.
R billion
2.4x
ISP Internet Service Provider
11
Oi Transformation History
Oi is driving the strong growth in all telecom
service in Region I fixed, mobile and internet
Household with Telecom Service - RI million
Accumulated CAPEX R billion 1998 to Sep/08
CAGR
Fixed
Mobile
Internet
24
1
15
19
Fixed
Data/ Broadband
Mobile
Total
Oi Coverage Sep 08 Cities (100 RI 2,995
103mn pop)
00
03
06
03
06
03
06

• Fixed 2,995 cities
• Broadband 428 cities
• Mobile 1.076 cities

Penetration (households)
Source PNAD Pesquisa Nacional de Domicílios
(IBGE)
12
Current Ownership Structure

• BNDESPar 31.383
• Fiago 24.952
• AG Telecom 19. 325

• L. F. Tel 19.325
• Fund. Atlântico 5.015

5.5
17.9
81.9
Fixed line
100
100
100
43
Mobile
Internet Services (ISP)
Cable TV and Broadband
Integrated
Total Capital Currently controlled by TNE,
Way-TV is likely be transferred to TMAR
13
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 Expectatio
ns for the Future
40
12
14
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
15
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
• Cross sell and up sell
• Reduce churn

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

• Differentiated offers
• Sim-card only model very low acquisition cost
• Focus on bundled services for post-paid
• Entrance in new markets (São Paulo)

• Internal processes improvements
• Implementation of best practices
• Capture all synergies with BrT ASAP

• Evaluate opportunities to participate as an agent
  in the consolidation of the Brazilian
  telecommunications industry

16
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
Dec/06
Dec/07
Jun/07
Dec/05
Jun/06
Jun/08
Sep/08
Post-paid
Monthly net adds (thousand)
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.
17
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
Dec/05
Dec/06
Dec/07
Jun/06
Jun/07
Jun/08
Sep/08
Oi Ligadores Results

• Positive impact in new recharges (higher average
  amount and higher number of recharges)
• Clients in Ligadores base (Sep/08) 12.2
  million (67 pre-paid costumer base)

Obs Campaign lauch recharge from R10 and R25
bonus from R100 and R250 for Oi Móvel or
Oi Fixo, respectively.
18
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 Thousand clients
Oi Velox Gross Revenue R mn
CAGR 02-07 106
CAGR 02-07 102
26.4
1,918
LIS
TNE Revenue
Includes cable broadband access from Oi Tv
(52,000).
19
Oi Móvel Strategy Results
Focus on profitability in the mobile segment led
Oi to a performance above Brazilian average
regarding EBITDA margin
Market Average
Oi
Market
2003
2004
2005
2006
2007
Sep/08
Market Average
2003
2004
2005
2006
2007
3Q08
20
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 Expectatio
ns for the Future
40
19
21
Revenue Generating Units
Oi Mobile and Oi Velox are the main customer
growth drivers

• Revenue Generating Units
• Growth of 10.4 p.a. (05-07)
• Growth acceleration in the last 12 months to
  23.3
• Oi Fixed
• Challenge keep lines in service
• Market leadership in RI
• Oi Mobile
• Major driver of growth
• Increase in market leadership to 31.1
• Broadband
• Offered through Oi Velox and cable
• 3G start-up
• 72 of market-share in RI (2007)
• Pay TV
• Acquisition of Oi TV
• Commercial agreement with Sky
• Analyzing opportunities in the DTH business
• Reduce churn

CAGR 05-07 10.4p.a.
37.8
0,06
31.7
30.6
28.6
26.0
Oi Mobile
Oi Velox
Oi Fixed
Considers broadband users from Oi TV since
2Q08 Includes Amazônia Celular clients (TNCP)
in 2Q08 Oi TV clients (Video)
22
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
Broadband Client Base Thousand users
Oi Mobile Customer Evolution and Mix Million
users
CAGR 05-07 37.3 p.a.
CAGR 05-07 24.6 p.a.
14.9
21.9
Total
16.0
10.3
13.1
1,866
Pre
Post
Dec/05
Dec/06
Dec/07
Sep/07
Sep/08
Market Share RI ()
of Res. LIS
EBITDA Margin
26.0
Broadband accesses via ADSL 52,000 broadband
accesses via cable (Oi-TV).
23
Oi - Financial Highlights
Consolidated Net Revenue (R million)

• Positive
• Fixed to mobile increase in Fixed-to-Mobile LD
  traffic higher traffic tariff readjustment
• Data Oi Velox (higher ADSL customer base 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 revenues,
  Outgoing Calls, data/VAS and network usage due to
  higher customer base

6.3
2002
2003
2004
2005
2006
2007
9M07
9M08

• Negative
• Public Phones Mobile companies offers for
  on-net and M-F calls at low tariffs
• Local Lower excess traffic due to mobile offers
  of minutes-based plans to on-net M-F calls with
  reduced tariffs

Public Telephony, Additional Services and Others
24
Oi - Financial Highlights
Consolidated EBITDA (R million)
EBITDA Recurring Margin

• EBITDA Margin in 2007
• Positive non-recurring event in 3Q07 (R229mn)
  
• Positive Cost of Goods Sold due to the strategy
  to stop subsidizing handsets in the pre-paid
  segment
• Negative Interconnection (increased fixed to
  mobile traffic) and Bad Debt (more flexible
  credit policy)

4,953
4,935

• EBITDA Margin 9M08
• 2Q08 negatively impacted by the BrT deal
• 3Q08 negative impacts of the SP mobile launch
  (R42 mn) R23 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 (R265mn)
reversal of personnel provisions (R60mn)
regulatory provisions (-R95mn) 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).
25
Oi - Financial Highlights
Net Income (R million)

• 9M08 Bottom-line
• Smaller EBITDA in 9M08 positive non-recurring
  events in 3Q07 (R229 million) and negative
  one-time effect (R356 million) in 9M08
• Negative effect on the net financial expense of
  R367 million
• Higher depreciations/amortization (R111 mn)

2002
2003
2004
2005
2006
2007
9M07
9M08
26
Oi - Financial Highlights
Consolidated Capex (R billion)
179
3.6

• 9M08 Mix
• 43 fixed, 57 Mobile
• 9M08 Focus
• Fixed Number portability, higher coverage and
  increase in the transmission capacity of
  broadband
• Mobile 2G and 3G licenses, 3G network
  investments in region I and SPs network
  investment (2G and 3G)

2.4
2.3
2.3
2.0
2.0
1.7
1.3
2002
2003
2004
2005
2006
2007
9M07
9M08
Net Revenue
27
Oi - Financial Highlights
Debt and Cash Flow
Gross Debt Amortization R million - September/08
1.5 x EBITDA
5,653
4,982
3,314
1,732
1,459
584
Sep/08
2002
2003
2004
2005
2006
2007
onwards
2002
2003
2004
2005
2006
2007
9M07
9M08
Does not consider the Yen depreciation against
Dollar in the quarter Brazilian interest
rates.
28
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 Expectatio
ns for the Future
40
27
29
The Acquisition of Brasil Telecom
The Rationale, vision and support
30
The Acquisition of Brasil Telecom
The Combined Company Businesses and
Subscribers Millions September/08 except for
mobile (November/08)
Pay-TV
Other businesses
Combined Coverage
Fixed
Mobile
Broadband

• Pioneer in m-payment
• Globenet
• 22,000 km of submarine cable linking Brazil,
  Venezuela, Bermuda and USA
• ISP/Portal
• Largest Brazilian ISP
• Leading ISP in regions I and II

1º
1º
1º
Belo Horizonte
4º
1º
1º
Uberlândia
Poços de Caldas
Barbacena
22.1
27.1
Total
3.7

• 4 cities
• Future national DTH operations

• 54
• 4.8 th.

• 20
• 2.3 th.

• 38
• 1.9 th.

share Brazil
Cities

• 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
31
The Acquisition of Brasil Telecom
The Combined Company Operating Details
Major Operating Data September 2008
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
32
The Acquisition of Brasil Telecom
The Combined Company Financials
Major Financial Data Last Twelve Months, ending
in September 2008
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
33
The Acquisition of Brasil Telecom
Regulatory History and Next Steps
History of Regulatory Facts
Next Steps

• Submission of the First Draft of the Tender Offer
  Prospectus to CVM up to February 8, 2003
• Mandatory Tender Offer
• Simplification of the groups structure.

PGO - General Plan of Concession (Plano Geral de
Outorgas)
34
The Acquisition of Brasil Telecom
Acquisition Value and Funding Sources
Cash Disbursements and Total Equity Value R
billion
(1) Purchase of preferred shares in the open
market
(2) Purchase of preferred shares in the Tender
Offer
(3) Acquisition of the Control
Funding Sources
(4) Mandatory Tender Offer (Tag Along)
R 4.3 billion in Bank Credit Certificates
R 3.6 billion in Commercial Papers
() Total Cash Paid
R 2.0 billion in Commercial Paper
(5) Invitel Debt
R 2.0 billion in Cash
R 11.9 billion
() Total Equity Value
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
35
The Acquisition of Brasil Telecom
Benefits of the Acquisition
Sources of Value Creation

• Nationwide mobility offers
• Drivers for mobile revenue growth
• BrT holds mobile market share in RII much below
  fair share
• Low penetration in São Paulo
• Data backbone capillarity in the whole country
• 23 state capitals 29 of the 30 most populated
  cities

• Implementation of Best Practices
• Reduction on the GA structures,
• Third-party services,
• Information technology,
• Lower marketing expenses with national
  advertising
• Product development
• Scale dilution of fixed costs
• Higher negotiation power with suppliers
• Personnel expenses reduction
• Standardize billing and revenue assurance systems
• 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
PL impact to occur in 17 years
36
The Acquisition of Brasil Telecom
New Management
CEO 48 years Graduated aviation engineering,
post graduate in Finance and Marketing from FGV
previous Marketing and Commercial VP at TAM
airlines
Alain Riviere
35
37
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
  56 of the 2,995 municipalities in Region I
  under this service following Anatels schedule

• 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)
• 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.
• Environmental actions

• Public telephony
• Region I Payphone cards acquisition of cards
  with tariffs previously approved by Anatel
  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
38
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
  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 Anatels approval.
• 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.

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

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

Special industrial exploration of dedicated line
37
39
The Acquisition of Brasil Telecom
Commitments with ANATEL (3/3)

• Develop specific processes to speed up commercial
  service for the corporate segment (with the
  requirer name, required item and date of request)
  by making available quarterly reports 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 (taking as
  reference the number of employees on February 01,
  2008).

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

• Inform Anatel about Ois operation in the
  international market through quarterly reports.

38
40
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 Expectatio
ns for the Future
40
41
Future scenario brings challenges and
opportunities

• Increase of Internet penetration
• Mobile reaching maturity with increased VAS
  relevance
• Increase of Pay TV penetration

• Continuation of main trends
• Slight reduction in fixed lines and focus on
  alternative plans
• Mobile and broadband as growth drivers
• Fixed companies launching DTH products
• Triple Play Quadruple Play

• Strong competition in mobility (traffic) with
  portability and 3G
• 3G becomes an alternative access for broadband
  retail

• More competition in broadband with 3G/LTE (4G)
  and WiMax
• New competition with alternatives ways of access
  (Skype, for example)

• Auction for LTE (4G) frequency bands
• Regulation of new pro competitive actions (PGR)
• Mobile Interconnection Rates based on cost models
  (VU-M)

• Incumbents permitted to provide IPTV broadcasting
  and/or to buy cable companies through approval
  of
• PL 29 and/or
• New auction for cable licenses
• Auction for WiMax frequency bands

• Next Generation Networks (NGN) / VoIP
• FTTX access becomes significant

• WiMax as possible access solution

42
Consolidated Debt
Even with the various sources of investments, the
company focus on maintaining the investment grate
rating

• Extraordinary dividends (R1.9 bn R1.2 bn to
  TNL and R0.7 bn to TMAR)
• Acquisition of BrT PN shares in (R3.3 bn)
• Acquisition of TNCPs Control and Preferred
  shares (R283 million)
• 2G/3G Licenses (R345 million)

43
Attachments
44
Regulation Brazilian Telecom Market has
experienced important changes in its
institutional/regulatory framework over the past
few years

• General Concessions Plan (PGO)
• Telebrás Break-up and Privatization

• Competition intensifies incumbents allowed to
  offer new services (long distance and data)
  nationwide
• New mobile start-up companies

• Full Billing for mobile companies

• Approval of Cable Law

1995
1997
1998
2000
2002
2005
2006
2007
2008..

• Pulse-minute conversion
• Num. portability
• 3G Auction

• Competition Licenses for fixed line mirror
  companies

• General Law of Telecom creation of ANATEL
• Auction of licenses for 2nd players or Mobile

• New billing rules (pulses to minutes)
  interconnection rates

• Concession contract renewal for incumbent fixed
  line telcos (25 years)

• Cable law revision
• PGO revision
• Full convergence
• (Fixed, Mobile, Broadband, Video)

() The General Concession Plan determines that
MA among fixed-line incumbents is not permitted.
45
Market As access grows mobile becomes relevant
in sectors total revenues
Brazilian Telecommunication Gross Revenues R
billion
124
115
107
95
96
93
83
71
Fixed
Mobile
Source Company reports (Tele Norte Leste, Brasil
Telecom, Telesp Fixa, Embratel, Tim Brasil 1Q08
numbers - , Vivo, Claro, Telemig and Tele Norte
Celular) and Telecom
46
Region I Household InformationRegion I is less
developed when compared to Brazilian average
Household Information PNAD
Region I
Brazil
2007
2006
2003
2005
2006
2007
2003
2005
Income
87 lt 10 min. salaries
90 lt 10 min. salaries
189.8
103.1
Population (mm)
176.7
185.1
186.4
100.7
101.8
96.4
29.8
56.3
Household (mm)
25.8
49.7
53.1
54.6
27.7
28.5

• 16 States including the states of Rio de
  Janeiro, Minas Gerais, Bahia, Espírito Santo and
  Ceará
• Approximately 64 of country's territory
• 103 mm people in 2007
• 41 of Brazilian GDP

41 11 48
Mobile Fixed Accesses Just Fixed Just
Mobile No phone
28 23 11 38
36 12 24 28
36 11 28 25
46 12 41 23
28 10 23 39
29 9 27 35
22 19 10 49
31
19 14 5 81
With computer With internet No internet No
Computer
15 - - 85
19 14 5 81
22 17 5 78
27 21 6 74
13 9 4 87
11 - - 89
16 12 4 84
PNAD Pesquisa Nacional do Domicílio - IBGE
47
New Businesses Oi will expand frontiers to São
Paulo in 2008
Rationale and Capex
Frequencies bought in SP

• 45Mhz in 1.8GHz (includes 5MHz in 900Mhz)
• Band M for whole SP and Band E for the interior
  of SP and CTBC region
• R235mn (R170mn R68mn)

• Lower CAPEX requirements
• Cheaper equipments in USD
• Lower exchange rates
• More profitable pre-paid
• Full-billing
• Lower subsidies
• 2G Licenses were cheaper on a price per MHz basis
• Other favorable variables in the Business Plan
• Lower cost of capital
• Higher penetration expectations

• CAPEX requirements for SP estimated in 2008 of
  R1 billion (including licenses)
• Total value for 3G Licenses (RI RIII
  R867.0 mn)

• 20Mhz in 1.9 GHz
• Band I for the interior and metropolitan SP
• R331.9mn (R144.4mn R187.5mn)

Blocks of SP were sold together with the
Northeast and North part of Brazil
48
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
2G/3G in Region III
3G in Region I

• Approach - Freedom
• Oi customer has the ability of accessing
  broadband through different gadgets fixed,
  mobile, cable, etc
• Launch
• Soft launch in June in 3 cities commercial
  launch in July in the other capitals
• Coverage
• 48 cities
• Offers
• Oi Velox 3G 1Mega R119.90/month
• Oi Velox 3G 600k R79.90/month
• Oi Velox 3G 300k R59.90/month

• The São Paulo operation has an exclusive team
  focused on the region
• Start-up
• Done in October 24th
• Innovative campaign pre-paid services for three
  months for free up to the limit of R20 per day
• Post-paid offers available in Oct 24th
• Status
• More than 1 million customers adhered the
  campaign before the launch
• 1.7 million active clients at the end of 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
49
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
Region I 71
Region I
Region III
Region II
Source Anatel
48
48
50
New Businesses 3G
3G Capex in 2008 estimated in R1.9 billion
including licenses (this amount also includes 2G
CAPEX in SP)
Minimum Price
Price Paid
Blocks
Premium
Band
Size
Rmn
Rmn

RI
RIII / RI
51
Corporate Structure Shareholders Rights

• All shares right to receive a minimum 25 of
  adjusted annual net income.
• Preferred Shares and ADR (254.7mn) minimum of
  6 of Capital (R187.5 million - Dec/07) or 3 of
  Shareholders Equity (R218.4 million Dec/07),
  whichever higher.

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

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

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

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

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

(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.
52
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
companys 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
53
This presentation contains forward-looking
statements. Statements that are not historical
facts, including statements about our beliefs and
expectations, are forward-looking statements and
involve inherent risks and uncertainties. These
statements are based on current plans, estimates
and projections, and therefore you should not
place undue reliance on them. Forward-looking
statements speak only as of the date they are
made, and we undertake no obligation to update
publicly any of them in light of new information
or future events
Rua Humberto de Campos, 425 / 7th floor Leblon -
Rio de Janeiro - RJ E-mail invest_at_oi.net.br
Visit our website www.oi.com.br/ir