T

1
Citi's 17th Annual Latin America Conference March
25 - 27, 2009
Investor Relations
2
Agenda
Brazilian Telecommunications Market 2 Oi
Profile, Footprint and Strategy
9 Operational and Financial Results

20 Brasil Telecom Acquisition The
Deal 29 Expectations for the Future

36
1
3
Brazil is a Big Country With International
Relevance
Brazil and its relevant internationally
gtUS900bn GDP

• 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)

Germany, Spain, France, Italy, UK
Canada
Japan
USA, BRIC
Bangladesh, Nigeria, Paquistan, Indonesia
Australia

• Brazil has been more resilient than main
  developed countries in terms of economy growth
• 10th economy in the world
• Declining interest rates, although still one the
  highest worldwide

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 -
December 2008

Telefonica
Telefonica
Vivo
Revenues market-share December/08
National

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

Region III
28
30
National Market Share of Fixed Lines in Service
National Market Share of Mobile Phone Users
Also operates Long Distance and Data
Transmission Nationally
5
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

202
168

• 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 78 of inhabitants

75

• 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
1998
2002
2007
2008
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
10,016
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
08
Source ANATEL Team analysis
7
9
Agenda
Brazilian Telecommunications Market 2 Oi
Profile, Footprint and Strategy
9 Operational and Financial Results

20 Brasil Telecom Acquisition The
Deal 29 Expectations for the Future

36
8
10
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
Integrated
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
Tickers at Bovespa and NYSE TNE (TNLP4 and TNE)
BRTP (BRTP4 and BTP), BRTO (BRTO4 and BTM), TMAR
(TMAR5)
11
Ois Snapshot
Leader in telecom integrated solutions in RI, Oi
is ready to widen this leadership to the whole
country, with the acquisition of BrT

• Leader in integrated telecom solutions in the
  country
• Revenues Generating Units total almost 56 million
  (fixed, mobile, ADSL/cable broadband accesses and
  pay-TV
• Strong execution culture in Region I, overcoming
  targets
• Integration of 16 independent fixed operating
  companies
• After the launch of new services in Region I,
  leadership was always obtained in a very short
  period of time
• Highly qualified management team, focused on the
  execution of the strategy established
• Launch of mobile services in São Paulo (Oct/08)
• Acquisition of Brasil Telecom meets the gap for
  national coverage, and the need of scale in a
  capital-intensive type of business
• Oi now has a size which is comparable to its main
  competitors
• Sustained and long term shareholders value
  proposition
• Solid financial position
• Balance sheet balanced between growth businesses
  (mobile/broadband) with cash cow services (fixed
  line)
• Debt amortization schedule compatible with cash
  flow generation

R billion
CAGR 13.9p.a.
30.0
2.8x

R billion
CAGR 11.6p.a.
10.2
2.4x

Combined revenues. Considering the eliminations
of R242 million, the consolidated net revenue is
R29.8bn BrT numbers Mobile the leadership
was reached after less than 3 years leadership
in the ISP after 7 months (broadband) and after
10 months in the free dial-up
12
Businesses and Domestic Footprint
The New Company Businesses and
Subscribers Millions December/08
Pay-TV
Other businesses
Domestic 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
22.0
30.0
Total
3.8

• 4 cities
• Future national DTH operations

• 54
• 4.8 th.

• 20
• 2.3 th.

• 38
• 1.9 th.

share Brazil
Cities

• 56 million clients (RGUs)
• 28 of total clients in Brazil
• Higher group in revenues, with 30 of all
  revenues in the sector

Source Anatel and Companies
11
13
Data Backbone Footprint
Globenet and Metrored was brought by BrT to add
Oi footprint with Pegasus, transforming the
company in the biggest and most widespread
backbone nationwide
National and International Backbone

• The new company now has a total of
• 138th. Km of fiber optical cable
• 73 thousand km from BrT BrT/Metrored (51 th. Km)
  and GlobeNet¹ (22 th. Km)
• 65 thousand km from Oi
• 30.4 th. Km of metropolitan rings
• 8.4 thousand km from BrT and Metrored
• 22 thousand km from Oi
• Through the national and international backbone,
  the new company can fight for the leadership of
  Corporate Data segment

12
1. Globenet connects Brazil, USA, Bermuda and
Venezuela
14
Strategic Guidelines
Fast integration of Oi and BrT

• Formation of a company with national footprint
  from the integration 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, corporate data segment (nationwide) as well
  as new businesses (e.g., video and internet)
• 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 in 2011

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 expansion nationwide

• Differentiated offers
• Sim-card only model very low acquisition cost
• Focus on bundled services for post-paid

• Use the biggest (and more widespread) national
  data backbone to leverage corporate businesses
• Leverage international data businesses through
  Globenet

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

16
Oi Mobile Bundle offers in the post-paid segment
for both companies
Oi will reinforce BrTs bundle strategy, aiming
to boost net additions, as it happened in Region
I since 2007

• Fixed line, mobile and Internet bundle
• 5 plans
• Unlimited local calls between fixed lines
• Unlimited access to internet
• Free long distance minute packages

2007
2005
2006
2008
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 Pre-paid adds boosted by Oi
Ligadores campaign at Oi
Pre paid customers have been the major growth
drivers at Oi and BrT
Pre-paid net additions Million users
Advantages of Ois Pre Paid product

• Special Credit, an emergency value (R3.00)
  available for clients upon the charge of R0.60
  in the next recharge
• Virtual Recharge, with no need of pre-paid card
• Minimum top up R 1
• Unique Balance, permitting the client to use its
  pre-paid to originate calls from regular fixed
  lines or public phones

• Monthly Bonus for Oi Cartão Total clients
• Lower tariffs in on-net calls or more minutes
  calls

2007
2005
2006
2008
PULA-PULA MAIS Each minute spent with any call
received shall convert to R1.00 in credits for
off-net outgoing calls.
2005
2006
2007
2008
Obs Campaign lauch recharge from R10 and R25
bonus from R100 and R250 for Oi Móvel or
Oi Fixo, respectively.
16
18
Oi Mobile Strategy Results
Focus on profitability in the mobile segment led
Oi to a performance above Brazilian average
regarding EBITDA margin
Market Average
BRT
Oi
BRT
Market
Market Average
BRT
2005
2006
2007
2008
17
19
Oi Velox Broadband Service Expansion
BrT will bring to Ois business the good job done
in broadband
Broadband net additions Million users
Broadband/data as a of Gross Revenue R billion
2005
2006
2007
2005
2006
2007
2008
2008
2007
2005
2006
2008
2005
2006
2007
2008
Includes cable broadband access from Oi Tv
(52,000).
20
Agenda
Brazilian Telecommunications Market 2 Oi
Profile, Footprint and Strategy
9 Operational and Financial Results

20 Brasil Telecom Acquisition The
Deal 29 Expectations for the Future

36
19
21
Revenue Generating Units
Strong RGU growth at Oi during 2008 the new
company is born with almost 56 million clients
Revenue Generating Units (Million)
OI
RGUs Oi BrT Million
Oi
CAGR 18.9
40.4
31.7
0.06

• Acceleration of growth in the last 12 months to
  27.4
• In the wireless segment, net additions reached
  8.4 mn, being 1.0mn from TNCP and 2.0 mn through
  the mobile start-up in São Paulo

28.6
55.9
0.06
2006
2007
2008
BrT
BrT
CAGR 8.8
15.5

• RGUs growth of 1.7 MM users in 2008, mainly
  influenced by
• 1.3 million mobile clients
• 238 th. broadband net additions users

13.9
13.1
2006
2007
2008
2008
Oi TV clients (Video)
20
22
Mobile Client Base
Similar to the national mobile market, the
prepaid segment have been the major growth
driver, 85 of the groups net additions in 2008
Mobile Clients Million
Oi
Mix Oi BrT Million

• Prepaid in 2008
• 89 of net additions
• 84 of total client base
• Post-paid
• Oi Conta Total amounts to 1.1 million, 28 of
  post-paid base
• Market share of 30.3 and 5.3 in Regions I and
  III, respectively

Oi
24.4
CAGR 36.6
16.0
13.1
30.0
2006
2007
2008
Brasil Telecom
BrT

• Prepaid in 2008
• 91 of net additions
• 82.5 of total client base
• Market share of 14.4 in Region II

CAGR 28.8
5.6
4.3
3.4

• Pré

• National market share of 20 (OiBrT)

2008
2006
2007
2008
21
23
Broadband Client Base
In the broadband market, theres more room to
growth in Region I (Ois Region) due to the lower
penetration
Brasil Telecom
Oi
Millions, of Fixed Lines in Service
Millions, of Fixed Lines in Service
Broadband Clients and Penetration on LIS
2.01
2006
2007
2008
2006
2007
2008
Coverage
1.488
Cities with coverage
451
Cities with coverage
80
14
of total
of total

• Broadband CAGR of 33.4 (2006 to 2008)
• CAPEX has been accelerated in 2008 due to its
  strategic importance
• Additional expansion in 2009 to more than 1.1
  thousand cities

• Broadband CAGR of 15.5 from 2006 to 2008
• Plans of reaching 1.7 thousand cities at the end
  of 2009 in region II

The broadband penetration on fixed lines in
service considers just the ADSL accesses
22
24
Oi - Financial Highlights
Consolidated Gross Revenue (R billion)
Brasil Telecom
Oi
CAGR 06-08
CAGR 06-08
24.3
25.1
27.2
Total
15.1
16.0
17.0
Total
Fixed
Fixed
Mobile
Mobile
2006
2007
2008
2006
2007
2008

• Data service as the main growth driver, boosted
  by the higher ADSL customer base and migration
  towards faster plans. It already accounts for
  22.0 of total revenues (15 in 2006)
• Traditional fixed revenues also stable (CAGR of
  -1.2 from 2006 to 2007)

• Mobile segment as the main growth driver,
  accounting for 23.5 of revenue (14.3 in 2006)
• Stable revenues in the fixed. Broadband / Data
  continue to offset lower revenues from local
  traffic and public phones. It already represents
  12.5 of revenues (10.4 in 2006).

23
25
Oi - Financial Highlights
Consolidated EBITDA (R million)
Brasil Telecom
Oi
6,451
6,517
6,501
3,786
3,937
6,348
3,494
6,068
2006
2007
2008
2006
2007
2008
EBITDA Margin ()
36.2
37.1
32.4
EBITDA Margin ()
33.9
34.2
34.8
Recurring Margin ()
36.1
34.8

• Long Term EBITDA margin reduction due to higher
  shares of mobile and broadband services
• Accounting EBITDA was lower in 2008 mainly
  influenced by non-recurring items (positive in
  2007 R169 mn and negative in 2008 R383 mn),
  the latter related to the purchased of BrT

• Consolidated EBITDA in 2008 includes a non
  recurring positive effect of R 176 million, also
  related to the acquisition of the company by Oi

24
26
Oi - Financial Highlights
Net Income (R million)
Brasil Telecom
Oi
2006
2007
2008
2006
2007
2008

• 2007 results boosted positive non-recurring
  results, better net financial results (R866mn
  below 2006) and lower depreciation (R542 mn)
• In 2008, the decline was caused by lower EBITDA
  (non-recurring items and SP launch) and higher
  net financial expenses over the unhedged portion
  of debt

• 2007 results were benefitted by internal
  initiatives to reduce costs, focus on
  profitability in the mobile and lower
  depreciation
• 2008 results benefitted by higher EBITDA and
  lower depreciation (-R369mn), which more than
  compensated higher net financial expenses
  (R104mn)

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
27
Oi - Financial Highlights
Consolidated Capex (R billion)
CAPEX Billion
CAPEX in 2008

• Oi
• 84 directed to growth businesses 57 Mobile and
  e 27 Data/Broadband
• BrT
• 53 directed to growth businesses 43 Mobile and
  10 Data/Broadband
• Extraordinary impacts in 2008
• Fixed infra-structure to enable portability
• Mobile 3G investments (Oi and BrT) and start-up
  in São Paulo (Oi)

Oi
BrT
BrT Oi
7.3
CAGR 26.3
4.6
CAGR 5.7
2.7
2.3
2.3
1.4
1.5
2007
2008
2008
2006
2007
2008
2006
24.8
13.2
13.7
23.7
12.7
14.1
24.6
28
Oi - Financial Highlights
Debt
Gross and Net Debt - Oi Billion

• 6.6 of total debt is exposed to FX fluctuations
• Foreign currency debt due up to 2010 is hedged
• Cost of debt
• Domestic 101 of CDI
• Foreign Libor 2
• Net Debt/Rec. EBITDA 1.5x

20.5
Cash R10.7 bn
Gross Debt Amortization - Oi Billion
9.4
6.9
Dez07
Dez08
Dez08
4.7
4.3
4.0
Gross and Net Debt - BrT Billion
3.1
2.4

• 8.2 of total debt is exposed to FX fluctuations
• Cost of debt
• Domestic 92 of CDI
• Foreign FX 6.9
• Net Debt/EBITDA 0.3x

4.9
4.4
Cash R3.5 bn
From 2014 on
09
10
11
12
13
Dez07
Dez08
Dez08
29
Agenda
Brazilian Telecommunications Market 2 Oi
Profile, Footprint and Strategy
9 Operational and Financial Results

20 Brasil Telecom Acquisition The
Deal 29 Expectations for the Future

36
28
30
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
(4) Mandatory Tender Offer (Tag Along)
Funding Sources
R 4.3 billion in Bank Credit Certificates
() Total Cash Paid
R 3.6 billion in Commercial Papers
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
31
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
32
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
31
33
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

32
34
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
33
35
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.

34
36
Agenda
Brazilian Telecommunications Market 2 Oi
Profile, Footprint and Strategy
9 Operational and Financial Results

20 Brasil Telecom Acquisition The
Deal 29 Expectations for the Future

36
37
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

38
Attachments
39
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.
40
Market As access grows mobile becomes relevant
in sectors total revenues
Brazilian Telecommunication Gross Revenues R
billion
146
131
115
107
95
83
71
Fixed
Mobile
Source Company reports (Tele Norte Leste, Brasil
Telecom, Telesp, Embratel, GVT, Net, Tim Brasil,
Vivo, Claro, Telemig and Tele Norte Celular) and
Telecom
39
41
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
42
New Businesses Oi expanded 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
43
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
42
42
44
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
45
The Acquisition of Brasil Telecom
Regulatory History and Next Steps
History of Regulatory Facts
Next Steps

• Mandatory Tender Offer
• Simplification of the groups structure.

PGO - General Plan of Concession (Plano Geral de
Outorgas)
44
46
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.
47
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.
46
48
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