apresentação do powerpointri.oi.com.br/oi/web/arquivos/tnlp_apr_20070306_eng.pdf ·...

São Paulo – March 2007

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“Safe Harbor” Statement

This presentation contains forward-looking statements. Statements thatare not historical facts, including statements about our beliefs andexpectations, are forward-looking statements and involve inherent risks anduncertainties. These statements are based on current plans, estimates andprojections, and therefore you should not place undue reliance on them.Forward-looking statements speak only as of the date they are made, and weundertake no obligation to update publicly any of them in light of newinformation or future events


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Brasil Telecom

23%

TMAR

39%

Region I

Region II

Oi (GSM)

13% 3%

BRT GSM

TIM (TDMA/GSM)

25%

Embratel (LD)Telefônica (TSP) Vivo (CDMA) – TEF / PT Claro (TDMA/GSM)

32% 30%

Region IV

23%Region III

Oi Brasil Telecom

Telefonica Telmex / AMX

Main Telecom Groups in Brazil – Subscriber Base - Sep/ 06

Telemig / Tele Norte

5%

CVC / Pension Funds

Region II

Market Share of Fixed Lines in Service Market Share of Mobile Clients

Region I

(Mobile only)

(Mobile only)


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Brazil´s Telecom Market

Telecom Net Revenues (9M06): US$ 27 billion1

Note: 1 Considering Tele Norte Leste, Brasil Telecom, Telesp Fixed, Embratel, Tim Brasil, Vivo, Claro, Telemig and Tele Norte Celular.

2 Fixed-line incumbents

Major Players

Main Services

Source: Company Reports

Other

2%

Telefonica

/ Vivo

32%

Telemar /

Oi

21%

Tim

12%

Telmex /

AMX

20%BRT

13%

Local

29%

Data

9%

Other

6%

Mobile

33%

Handset

Sale

7%

LD

16%

Lo

cal

LD

Mo

bil

e

Data

/B

ro

ad

ban

d

(TF/PT)

(AMX)

(BRT)

Market Share

Op

erati

on

Sta

tus

integrated

pure fixed

integrated

LD Carrier

pure mobile

pure mobile

pure mobile(TSU)

(TNE)

(TSP)

/Embratel (TMX)

2

2

2

2


5

Global industry trends affect local market

Consolidation (M&A) Scale

Convergence of Services One-Stop Shop


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Consolidation: intense M&A activity in the U.S

Source: FCC, US Department of Justice, companies, team analyses

1999 2000 20061997

M&A

1984 1998

1 7 3


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M&A activity in Europe and Asia

Source: Ovum, Morgan Stanley, team analyses

WirelineIntegration Expansion

Date Country Buyer Target operator Type Operation focus

Dec/04 Italy BT Albacom Fixed – CLEC Geographic expansion

Jan/05 France France Telecom Equant Fixed – Dados, IT Vertical integration

Apr/05 Czech Rep Telefonica Cesky Fixed – ILEC Geographic expansion

May/05 France Telecom Italia LibertySurf Fixed – CLEC Geographic expansion

May/05 France Cegetel Neuf Telecom Fixed – CLEC Market share/scale

Nov/05 Denmark Nordic Telephone TDC Fixed/mobile – ILEC Private equity

Jan/06 Japan KDDI Powercom Fixed – CLEC Vertical integration

Jul/04 Denmark TeliaSonera Orange Mobile Market share/scale

May/05 Romania Vodafone Mobifon Mobile Geographic expansion

Jul/05 Spain France Telecom Amena Mobile Geographic expansion

Nov/05 Sweden Telenor Vodafone Sweden Mobile Market share/scale

Dec/05 Turkey Vodafone Telsim Mobil Mobile Geographic expansion

Jan/06 UK Telefonica O2 Mobile Geographic expansion

Mar/06 Japan Softbank Vodafone Japan Mobile Vertical integration

Mobile Integration


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Players/Groups in 2000 Today

Consolidation in Brazil despite regulatory barriers

BCI

Safra

Tomorrow: How Many?

?Mexican ?

Brazilian ?

Spanish ?

• Article #14 of General Concession Plan (PGO - April/1998) prohibits wireline incumbents from obtainingany other concession in another region as well as any shareholder from participating in the controlling groupof more than one incumbent.

- These restrictions can only be removed with a Presidential Decree

• In addition to the change in PGO, any consolidation involving fixed line incumbents would require:

- Anatel’s approval (“Anuência Prévia” or Previous Consent)

- CADE’s approval (Anti-trust Agency Act)

Regulation

Is Brazilian heading towards a duopoly arena?

http://www.vivo.com.br/home.php

http://www.algar.com.br/

http://www.nextel.com.br/index.htm

http://images.google.com.br/imgres?imgurl=members.tripod.com.br/miracema/claro.jpg&imgrefurl=http://members.tripod.com.br/miracema/&h=152&w=156&sz=6&tbnid=z-pKrtHBT24J:&tbnh=88&tbnw=90&prev=/images%3Fq%3Dclaro%26start%3D100%26hl%3Dpt-BR%26lr%3D%26ie%3DUTF-8%26oe%3DUTF-8%26sa%3DN

http://images.google.com.br/imgres?imgurl=www.londrinatecnopolis.org.br/novo_portal/imprensa/logos/sercomtel.gif&imgrefurl=http://www.londrinatecnopolis.org.br/novo_portal/imprensa/logosparceiros.html&h=180&w=415&sz=5&tbnid=1BcSzsutMXcJ:&tbnh=52&tbnw=119&prev=/images%3Fq%3Dsercomtel%26start%3D40%26hl%3Dpt-BR%26lr%3D%26ie%3DUTF-8%26oe%3DUTF-8%26sa%3DN

http://www.kddi.com/english/index.html

http://images.google.com.br/imgres?imgurl=www.pefran.com.br/institucional/Portfolios/Legal/GIF/box/vicunha.gif&imgrefurl=http://www.pefran.com.br/institucional/legais.asp&h=100&w=129&sz=2&tbnid=MdjQzIsA8ZUJ:&tbnh=65&tbnw=83&prev=/images%3Fq%3Dvicunha%26start%3D20%26svnum%3D10%26hl%3Dpt-BR%26lr%3D%26ie%3DUTF-8%26oe%3DUTF-8%26sa%3DN

../../Documents and Settings/

http://www.nextel.com.br/index.htm

http://www.algar.com.br/

http://images.google.com/imgres?imgurl=www.spei.br/logo_parceiros/inepar.gif&imgrefurl=http://www.spei.br/convenios/corpo.html&h=40&w=140&sz=2&tbnid=YTEJ3XaFKcgJ:&tbnh=25&tbnw=87&prev=/images%3Fq%3Dinepar%2Blogo%26svnum%3D10%26hl%3Den%26lr%3D%26ie%3DUTF-8%26oe%3DUTF-8

http://www.telefonicamoviles.com/

http://images.google.com.br/imgres?imgurl=www.londrinatecnopolis.org.br/novo_portal/imprensa/logos/sercomtel.gif&imgrefurl=http://www.londrinatecnopolis.org.br/novo_portal/imprensa/logosparceiros.html&h=180&w=415&sz=5&tbnid=1BcSzsutMXcJ:&tbnh=52&tbnw=119&prev=/images%3Fq%3Dsercomtel%26start%3D40%26hl%3Dpt-BR%26lr%3D%26ie%3DUTF-8%26oe%3DUTF-8%26sa%3DN

http://www.iberdrola.com/webcorp/wcorp/es/index.html


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R$ million

EBITDA Margin

3,558

5,353

6,1756,531

6,765

2001 2002 2003 2004 2005

35%

45% 44%

41%40%

4,598

9M06

Financial Highlights:

Consolidated Ebitda


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2001 2002 2003 2004 2005 9M06


Capex

• Since 1998: R$ 27 billion

(~US$ 12 billion):

– 80% Fixed line / 20% Mobile

• CAPEX 9M06 = 12.4% of net

revenues

• 2006/2007 Focus:

– Expand and enhance capacity

of data broadband and mobile

platforms

– Quality and Regulatory

Requirements

(Fixed-line network)

• Capex 2006E: R$ 2.4 billion

- 75% Fixed line

25% Mobile

10.1

2.0

1.7

Fixed

Mobile

1.1

0.9

1.1

0.6

7.9

2.0

1.3

0.7

2.4

1.6

0.8

2.2

R$ billion

(1)

(1) Regulatory Targets

( 2) Mobile license: R$ 1.1 billion

(2)

1.1

0.4

1.5


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Free Cash Flow*

(*) – After CAPEX

R$ billion

2.5

3.54.04.0

2.3

-5.9

2001 2002 2003 2004 2005 9M06

FCF yield (12 m) = 28%**

(**) – Based on TNE prices on January 04, 2007 ($14.52)


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Debt Position – Sep/06

3.6

1.92.0

0.3

3.4

1.2

Sep-06 2006 2007 2008 2009 2010+

7.7

9.1

7.8

6.5 6.15.6

2001 2002 2003 2004 2005 Sep-06

Net Debt Amortization Schedule – Sep / 06

• Total Debt = R$ 8.9 billion

C

A

S

H

Main Achievements: - Lower leverage (-39% from 2002)

- Extended maturities (74% of total debt in the long term)

- Lower foreign currency exposure (55% in Sep/06 vs 65% in Dec/05)

- Decreased financial expenses / hedging costs

- Average cost of debt : 98.8% (CDI)

0.88 x EBITDA


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Key Ratios

(*) – EOP

Net Debt* / EBITDA

CAPEX / EBITDA (%) Dividends / EBITDA

EBITDA / Net Interest Expense


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Global industry trends affect local market

Convergence of Services One-Stop Shop

Consolidation (M&A) Scale


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IPTVFixed telephony

Mobile telephony

Pay TV

TV

Voice Data Video

Convergence: multi-services network redefining the telecom industry worldwide

Platform Voice Data Video

Technological barriers

Services fragmented Complementary services

VoIP

2,5/3G*

Notes: *Video Streaming; Non-exhaustive examples

? Digital TV

Wimax

Wimax


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+

Benefits:

• Discounts in Combo Products

• No Adhesion Fee

• Free Modem for Velox

• Free Sky-Directv instalation Kit

Examples of Bundled Services

- Control

Plans

- Loyalty

Plans

- Coverage

- Relationshi

p

“Oi Conta Total” now offering Pay TV (Fixed+Mobile+Broadband+Pay TV)

Post Paid Plans

- Lower Recharge

(R$ 1.00)

- SIM alone

- Bundles with

Fixed Line and

Payphones

Low End“Dose Certa” – Pre-Paid Recharge with only R$ 1.00

Middle-High End

Prepaid Plans


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Oi FLEX - an Oi handset that converges fixed and wireless lines, a single

brand offer...

What is it?

Oi in the street and fixed at home

Mobile phone that works like a fixed phone at home

Benefits

Convergence: Make and receive calls through a fixed

network in one handset

Comfort: Enjoy all mobile phone benefits (one contact

agenda, etc)

Mobility: Reach up to 100 m and answer fixed calls with

mobile, as if it was an extension

Economy: Client are guaranteed best tariffs depending

on plan and type of line


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Way TV Overview

Way TV acquisition

Cable TV and Broadband company operating in MinasGerais

Concession in 4 cities

No Network owned – Capacity leased from Infovias

Bidirecional Network

400,000 homes passed

90,000 total subscribers

46,000 Cable TV/ 44,000 broadband

Strong Growth with low acquisition costs

Region Concession

Net Revenue Breakdown Costs and Expenses Breakdown

Broadband

52.6%

Cable TV

47.4%%

Infovias

30.8%

Content

15.4% Personnel

15.1%

IP

14.8%

Third Party Services

11%

Others

12.8%


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• Ring Tone.• Truetone.• Full track.• Ring Back Tone.• Vídeos. • Interatividade.

Conteúdo:

Show Lulu Santos

• Streaming do show.• Download do show.• Download das músicas.• Download de conteúdo. móvel associado.

• Transmissão do Show.• Interatividade.• Venda de conteúdo móvel e

de banda larga associado.

• Transmissão ao vivo.• Entrevistas/chat com

os artistas.• Concursos/Premiação.

• Matérias sobre o show.• Chamadas incentivando o

uso de interatividade e serviços no Oi.

Oi Magazine

Oi TV

And we distribute content in our multi-platafform…


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21Source: Telemar

Bundled Services

Service Convergence:

One single Brand

Pure Fixed

or

Mobile companies

Oi, One Step Ahead, converging services


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Consolidate leadership in the Region through clear and focused strategy

From Product to Client Approach…

• Improve the knowledge from customers,

seeing them in an integrated view

• Segmentation aiming to align product portfolio

with client’s real needs

• Integrated and innovative offers in the retail

and corporate markets

• Velox and Oi as major growth drivers

• Creation of an internet platform

• Operational excellence, focusing on costs

savings

• Consolidate client’s perception of quality

• Avoid irrational competition

• Partnership for content

• Focus on ARPU instead of traffic

• Customer Focus: integrated and

convergent offers

• Management Processes: aligned

with the strategy and focused on

results

• People: with attitude and

dedicated to serve

• Innovation: new businesses to

regain growth momentum

… building a company based on 4 pillars

• Scale

• Operating/

financial synergies

• Customer loyalty

• Cross selling

• Bundled services


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Important Notice to Our Shareholders

Outstanding shares*

TNE

Common 127.373.900

Preferred 254.747.800

Total 382.121.700

(*) Shareholders owning a direct or indirect controlling stake in the company, shareholders who elect the members of the Board ofDirectors, or any private individual, legal entity or group of same, acting jointly or representing a common interest, that attains a direct orindirect stake equivalent to 5% (five percent) or more of the company’s capital, must send to the CVM (Brazilian Securities commission)and, as the case may be, to the stock exchanges and over-the-counter entities where securities issued by the company may be traded, aswell as publicly disclosing, under the terms of article 5…

Outstanding shares*

TMAR

Common 107.063.093

Preferred (A) 130.440.468

Preferred (B) 1.110.794

Total 238.614.355

In compliance with the terms of article 12 of CVM Instruction no 358*, TELEMAR advises itsshareholders that the Company cannot be held responsible for any public disclosure ofinformation by third parties regarding the acquisition or disposal of equity stakes equivalentto 5% or more of each class of shares or of the rights pertaining to these shares or othersecurities issued by the Company.

(*) - Ex-treasury


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Company Overview

IR Contacts:

Rua Humberto de Campos,

425 / 8º andar -Leblon

Rio de Janeiro - RJ

Phone: ( 55 21) 3131-1314/1315/1316

Fax: (55 21) 3131-1155

E-mail: [email protected]

Visit our website:

www.oi.com.br/ir

We are the leading provider of telecommunications services in RegionI of Brazil, which consists of 16 states, including the states of Rio deJaneiro, Minas Gerais, Bahia, Espirito Santo and Ceará. We are thelargest provider of fixed-line telecommunications services in SouthAmerica based on the total number of lines in service, which we arestarting to market under our Oi Fix brand name. As of December 31,2006, we had 17.1 million fixed-lines installed, of which 100% havebeen digitized, and 14.4 million fixed-lines in service.

We provide mobile telecommunications services in Region I on theGSM technology platform. As of December 31, 2006, Oi hadapproximately 13.1 million subscribers.

We also provide broadband services using ADSL technology. InRegion I, as of December 31, 2006, we had approximately 1.1 millionbroadband subscribers (Oi Velox). We also market voice and dataservices to corporate customers throughout Brazil. The Brazilianstates that comprise Region I represent approximately 64% of thecountry's territory, with a population of 102 million, producingapproximately 41% of Brazil´s GDP.