press release 2 t08 en

Results

082Q

August 7th, 2008

2

Innovative and Reliable brand: “Living beyond Technology”

TIM PARTICIPAÇÕES S.A. Investor Relations

Opening remarks

Note: 1 - Synovate Institute (Jun/08); 2- Management e Excellence; Revista Razão Contábil and IBRI

First position in Top of mind¹

First position in brand Awareness¹

Choose as the best website in sustainability among the Brazilian telcos²

Best service provider IP NGN Infrastructure of the year – Cisco (2008)

Most innovative application of customer care

– 2008 excellence award (TM forum)

Highlights

Market Overview

Operational Review

Financial Performances

2H08 perspectives

4

1% growth QoQ to R$29.8 despite market

overall drop

The highest ARPU growth among peers

Supported by MOU performance (+7%YoY and

QoQ).

Up 21% QoQ and 49% YoY; leveraged by 3G

10% of net service revenue (vs 7% 2Q07)

Sharp improvement QoQ: -25%;

6.8% of net service revenue (down from 9.6%

in 1Q08).

19% higher than 1Q08 to R$637 Mn;

2pp recovering in EBITDA margin QoQ, despite

partial spill-over of 1Q08 trend.

VAS

BAD DEBT

EBITDA


2Q08 Highlights – An improving quarter

ARPU

Quarterly performance

New pre-paid promotion (TIM 10x, focus on

on-net bonus and ARPM)

Focus on post-paid quality (high-end

customer and better mix)

3G launch (May 1st);

TIM web sale grew by 2x QoQ

Increase content partnership (revenue share

agreement)

Actions

Telesales channel total remodeled;

Stricter credit policy;

Commission based on quality of

acquisitions.

Pre-paid offer focus on profitability

(on-net driven);

Reducing leased lines cost through

in-source plan

Strict control over discretionary costs

Highlights

Market Overview

Operational Review


2H08 perspectives

6


Telecom Industry Overview

Market growth remains strong

(purchase power improvement from low classes)

Market net additions fueled by:

Handset subsidies;

Aggressive on-net promotions;

Naked SIM-Card sales.

TIM geared to capture opportunities:

Alternative player to fixed line monopoly, after the number

portability takes place;

Benefit from strong growth in broadband and PC sales;

Strengthening convergent strategy.

56% 59%64% 66%

69%

% Penetration per

total population

Source: Anatel and internal estimates*

% Penetration per

total households

Mobile

74%70% 71% 71%

Fixed

7%

10%14%

16%

BroadbandMn lines Mn lines

7


Subscriber Base (Mn)

23.1%

32.529.2 31.3

27.5

33.8

Pre-paid segment grew by 26% YoY helped by “TIM 10x” promotion;

Subscriber mix remained above national peers (post-paid stood at 20.2% vs. peers 18.6%);

Churn drop from 9.7% in 2Q07 to 8.4% in 2Q08

Market share fairly stable in the coming quarters;

Focus on customer's share of wallet.

First

Player*

Third

player

•Includes Vivo and Telemig Celular

•Source: ANATEL and company´s data.

TIM Performance

Market Share Performance

2Q07 3Q07 4Q07 1Q08 2Q08

Highlights

Market Overview

Operational Review


2H08 perspectives

9

TIM fixed

license


Roadmap to a Convergent Company

MOBILE

FIXED

Partnership in

Pay TV

TIM Web

TIM Casa Flex

TIM Web

Broadband

TIM Casa

TIM 3G

license

...2006 2007 2008 2008...

Number

portability

Competing on broadband

market with mobility concept

Increase customer's share of

wallet through bundle offers

Capturing opportunities on

fixed voice services through

number portability

Strengthening our mobile

business

Empowered partnership in

Pay TV offers

Convergent Company

+

+

+

=

INTERNET

10

Roll-out / Launching


Third generation launch

Already in main metropolitan

areas;

Eased by our national coverage;

Launch of unlimited TIM Web

data plans (1Mbps or 7.2Mbps);

TIM Web limited data plans:

Automatic upgrade to (1Mbps);

Advantages

SPEED: Upgrade to 1Mbps

and 7Mbps;

SIMPLICITY: All „TIM Chip‟ are

3G ready; Buy & Play concept;

MOBILITY: Wireless internet

anywhere;

ACCESSIBILITY: Any 3G

device and computers.

Positioning &

partnerships

Push on cross selling offers;

Convergent offers through

wireless network;

TIM + : First notebook

with TIM Chip on-board;

TIM + : TIM mobile

broadband to UOL customer's

base;

TIM + : Pay-TV +

Broadband + Mobile.

http://www.brandsoftheworld.com/download/brand/180486.html

11

Innovative ServicesContent OfferNew facilities


VAS Strategy: Aiming Innovation and Profitability

VAS 3G+

Mobile internet browsing

TIM TV

TIM Music Store

TIM Video Call

Google tools

Orkut WAP (1st in Brazil)

YouTube Mobile

Windows mobile for TIM

smart-phone portfolio

TV channels

UOL Mobile

Sony-BMG content

in exclusivity at TIM

Music Store

TIM auction: a white

label reversal auction

RingBack tones

GPS navigation service

Yellow pages service

VAS revenue: R$397 million (21% QoQ and 49% YoY);

10% of total gross service revenue (7% - 2Q07; 8% - 1Q08)

TIM web broadband sales increased by 2x QoQ (w/ incremental ARPU).

Highlights

Market Overview

Operational Review


2H08 perspectives

13


Net Revenue performance

Outgoing voice revenues: Growth in outgoing due to new

promotions dynamic - with MOU and ARPU rebound QoQ;

Value-added services: Strong growth of 21% QoQ and

49% YoY, as a result of our focus on data package offers

and partnerships with strong content providers:

Incoming revenues: Flat incoming revenues due to

aggressive approach to on-net call‟s promotions for the

market as a whole and also F-M pattern change. TIM

maintains the focus on convergence in order to reduce the

dependence on incoming traffic and to capture new sources

of revenues;

Handset revenues: 22% YoY drop explained by lower

handset price and naked SIM cards sales.

3,060 2,993 3,186

Total Net Revenues

R$ Mn

YoY QoQ

Total revenue +4.1% +6.5%

Service revenue +6.8% +4.7%

Handset revenue -22.4% +38.7%

Net Service Revenue Net Handsets Revenue

LeaderIn QoQGrowth

14

ARPU

R$


1% growth QoQ despite market overall drop and

post-paid mix decline;

Best ARPU among cellcos in 2Q08;

YoY drop due to increase of pre-paid segment and

tariff promotions;

Without incoming effect, ARPU would have

increased by 4.1% QoQ

KPI’s performance (1/2)

ARPU performance:

MOU

Minutes

One of the highest MOU in the market;

Subscriber mix higher quality;

Elasticity effect driven by promotions.

MOU performance:

-14% 7%

+1%

15


Selling expenses increase amid 3G launch;

SAC/ARPU ratio stood at 4.0x (stable QoQ);

Subsidies broadly stable, w/ focus on SIM card

sales.

SAC

R$ -25%

Improving from 1Q results thanks to recovery

actions (e.g.: channel completely remodeled):

2Q still affected by telesales distribution channel;

Expected to reach ~6% of net service revenue for

the FY2008 (given credit policy process revision).

KPI’s performance (2/2)

SAC performance: Bad debt performance:

BAD DEBT

R$ Mn

9.6%¹

6.8%¹

6.1%¹

¹ Bad debt / net service revenue

+5%

+2%

16

Year-over-year drop is still reflecting higher bad debt

provision (amid telesales), and selling and network

expenses (amid 3G launch), slightly offset by VAS

revenues increase (+49%);

Quarterly gain is largely attributed to a better top line

(fueled by VAS and usage performance) and also from

the bad debt recovery and cost control.


EBITDA

EBITDA and EBITDA margin

R$ Mn

YoY QoQ

EBITDA -14% +19%

EBITDA margin -4pp +2pp

637535

744

2Q07 1Q08 2Q08

20.0%

24.3%

17.9

535

17.9%

17


EBITDA and EBITDA margin YoY performance

+6.8%Change % YoY

20.0%24.3%

-22.4% +7.6% +19.2% -13.7% +20.7% +12.1%

EBITDA Margin

743.7

188.8 (62.3)(46.9)

(172.8)

51.6

(34.9)(30.5)

636.7

EBITDA

2Q07

Service

Revenue

Handsets

Revenue

Selling

Expenses

Network

Expenses

COGS Bad Debt Other

Expenses

EBITDA

2Q08

Subs base +23%

Total traffic volume +33%

R$ Mln

Selling expenses were up 7.6%

while gross adds grew by 8.7%

18


From EBITDA to bottom line – 2Q08

Change YoY -14.4% 4.6% -76.8% -27.4% -73.9% -

* Other non-operating expenses/revenues

R$ Mn

636.7

40.3

596.3

(59.2) (34.1)

(15.2)

636.7

40.3

596.3

(59.2)

(34.1)

636.7

40.3

596.3

(59.2) (34.1)

(15.2)

636.7

40.3

596.3

(59.2)

(34.1)

EBITDA

2Q08Depreciation

AmortizationEBIT

Net Financial

Expenses

Taxes and

Others*Net Loss

19


Net financial position and FCF – 2Q08

* Excluding 3G

Net cash flow totaled -R$1.115 billion in 2Q

R$ Mn

Net Debt

R$ Mn

(2,096)

(868)

(247) (3,210)

1Q08 OpFCF

Non

OpFCF 2Q08EBITDA WkC Capex* OpFCF*

3G

Licence

637 371

(467)

(868)(1,239)

OpFCF

201

Positive OpFCF in 2Q excluding 3G license

3G license:$1.2 Bi

Of which $207 in

dividend

Operating Free Cash Flow

Gross Debt R$ 4.1 billion (of which 42% long term)

Average annual cost 11.64% in 2Q08 versus 11.66% in 2Q07

Highlights

Market Overview

Operational Review


2H08 perspectives

21

OFFER


2H08 perspectives

Key recovery actions

Profitability &

Operational

excellence

Voice: Refocus on postpaid high value segments, remodeling of prepaid (started

in 2Q08) and innovation of promotional dynamics to enhance ARPM;

VAS: Further push on innovative services leveraging on 3G mobile broadband

and enriching media content;

Convergence: Capture opportunities from mobile BB and NP (as of Sept‟08), by

offering services as alternative player to fixed.

Focus on high margin customers: Deeper segmentation of acquisition,

retention and loyalty strategy;

Commissioning: Increase customer value linked to compensation and develop

profitability targets per channel;

Bad debt: Reorganization of monitoring process with stricter rules for credit

analysis (implemented in 2Q08);

Efficiency: Invest in transmission capacity for cost-effective management and

selective reduction/revision of outsourcing model.

22

2008 guidance revision taking into account:

Revenues – On-net calls pattern increase for the market as a whole and higher handset sale through direct channels - both events

ended up pressuring incoming and handset revenues

Expenses – Anticipating the investments to capture mobile broadband outstanding growth and number portability opportunity;

Reinforcing the call-center services, strengthening loyalty program to high-end clients and enhancing 3G network capacity.

Based on the aforementioned scenario, we are taking a more conservative position on top line and EBITDA margin


2008 guidance revision

Original

target1st Review

Clients Base ~ 37 Mi unchanged

Market Share ~ 26% unchanged

Total Revenue > 12% ~ 9%

EBITDA Margin > 23% unchanged

CAPEX ~ 3.6 R$ Bi unchanged

Update

Review

unchanged

unchanged

> 7%

22.0% ~ 22.5%

unchanged

23


“Safe Harbor” Statements

Statements in this presentation, as well as oral statements made by the management of

TIM Participações S.A. (the “Company”, or “TIM”), that are not historical fact constitute

“forward looking statements” that involve factors that could cause the actual results of

the Company to differ materially from historical results or from any results expressed or

implied by such forward looking statements. The Company cautions users of this

presentation not to place undue reliance on forward looking statements, which may be

based on assumptions and anticipated events that do not materialize.

Investor Relations

Avenida das Américas, 3434 - Bloco 01

6° andar – Barra da Tijuca

22640-102 Rio de Janeiro, RJ

Phone: +55 21 4009-3742 / 4009-3751 / 4009-3446

Fax: +55 21 4009-3990

Visit our Website

http://www.timpartri.com.br

press release 2 t08 en

Documents

tim tim video

tim participaes s

tim chip areeased

tim mobile data plans

growth qoq

investor relations2q08

net service revenue

qoq and49